Q3 FY2026
Filed Oct 8, 2026Q3 revenue declined to $15.3 million and the Company recorded a $(2.9) million net loss, while adjusted gross margin improved to 64.5% and management positioned the business for the holiday sales season.
Net revenue declined approximately 46% year-over-year, net income shifted to a loss of $(2.9) million, and adjusted EBITDA shifted to $(1.4) million, despite higher adjusted gross margin and inventory normalization initiatives.
Key metrics
shortened, hover for the filing’s print| Metric | Value | q/q | y/y |
|---|---|---|---|
| Net revenue, three months ended August 31GAAP | $15.30M | – | approximately 46% year-over-year decrease |
| Cost of goods sold, three months ended August 31GAAP | $3.14M | – | – |
| Gross profit, three months ended August 31GAAP | $12.15M | – | – |
| Gross profit margin, three months ended August 31GAAP | 79.5% | – | – |
| Operating expenses, three months ended August 31GAAP | $15.08M | – | 7% |
| Income from operations, three months ended August 31GAAP | −$2.93M | – | – |
| Foreign currency transaction loss, three months ended August 31GAAP | $(27) | – | – |
| Interest income, three months ended August 31GAAP | $37 | – | – |
| Other income, three months ended August 31GAAP | $9 | – | – |
| Income before income taxes, three months ended August 31GAAP | −$2.91M | – | – |
| Income tax benefit (expense), three months ended August 31GAAP | - | – | – |
| Net income (loss), three months ended August 31GAAP | −$2.91M | – | – |
| Comprehensive income (loss), three months ended August 31GAAP | −$2.90M | – | – |
| Basic net income (loss) per share, three months ended August 31GAAP | $(0.13) | – | – |
| Diluted net income (loss) per share, three months ended August 31GAAP | $(0.13) | – | – |
| Weighted-average number of common shares outstanding - basic, three months ended August 31GAAP | 22,981,181 | – | – |
| Weighted-average number of common shares outstanding - diluted, three months ended August 31GAAP | 22,981,181 | – | – |
| Non-GAAP adjusted EBITDA, three months ended August 31non-GAAP | −$1.36M | – | – |
| Non-GAAP adjusted cost of goods sold, three months ended August 31non-GAAP | $5.42M | – | – |
| Non-GAAP adjusted gross profit, three months ended August 31non-GAAP | $9.87M | – | – |
| Non-GAAP adjusted gross profit margin, three months ended August 31non-GAAP | 64.5% | – | – |
| Net revenue, nine months ended August 31GAAP | $60.73M | – | – |
| Cost of goods sold, nine months ended August 31GAAP | $29.39M | – | – |
| Gross profit, nine months ended August 31GAAP | $31.34M | – | – |
| Gross profit margin, nine months ended August 31GAAP | 51.6% | – | – |
| Operating expenses, nine months ended August 31GAAP | $46.19M | – | – |
| Income from operations, nine months ended August 31GAAP | −$14.85M | – | – |
| Net income (loss), nine months ended August 31GAAP | −$12.20M | – | – |
| Basic net income (loss) per share, nine months ended August 31GAAP | $(0.54) | – | – |
| Diluted net income (loss) per share, nine months ended August 31GAAP | $(0.54) | – | – |
| Non-GAAP adjusted EBITDA, nine months ended August 31non-GAAP | $245 | – | – |
| Non-GAAP adjusted gross profit, nine months ended August 31non-GAAP | $37.41M | – | – |
| Non-GAAP adjusted gross profit margin, nine months ended August 31non-GAAP | 61.6% | – | – |
What drove it
- The approximately 46% year-over-year decrease in net revenue was driven primarily by a decline in e-commerce sales and slower reorder activity from dealers and chain stores following substantial restocking in fiscal Q1 and slower-than-expected sell-through.
- The Company stated that outsourced ammunition production improved ammunition gross margins by approximately 1,200 basis points in the quarter.
- Adjusted gross margin improvement was primarily attributed to improving launcher margins through manufacturing efficiency gains and a continued shift to higher margin products.
- The Company launched and sold through all available refurbished product inventory, which it said drove incremental earnings during the period.
- Byrna completed the acquisition of HERO Defense Systems, LLC, expanding its product portfolio into additional price points and form factors.
- The Company onboarded more than 50 influencers with a combined following of 3.8 million people through Acceleration Partners.
- Management stated it averaged over 29,000 website sessions per day in August, the highest since March of this year, and that website conversion improved from June to August sequentially.
Concerns
- Revenue declined approximately 46% year-over-year to $15.3 million.
- Net income changed from $2.2 million in Q3 2025 to a $(2.9) million loss in Q3 2026.
- Non-GAAP adjusted EBITDA changed from $4.1 million in Q3 2025 to $(1.4) million in Q3 2026.
- Q3 gross profit included a one-time $2.3 million refund of previously paid tariffs.
- Operating expenses increased 7% and included $1.7 million in other one-time costs.
- Cash, cash equivalents and marketable securities declined to $9.4 million at August 31, 2026 from $15.5 million at November 30, 2025.
- Management identified risks that planned inventory reductions may not materialize on the anticipated timeline or could result in additional inventory write-downs or reserves.
What to watch
- Holiday sales-period inventory normalization, sell-through and working capital efficiency.
- Whether refreshed marketing programs, the creator network, media partnerships and the expanded dealer base generate customer acquisition, improved retail productivity and sequential improvement.
- Sustainability of the gross-margin benefit from outsourced ammunition production, manufacturing efficiency and higher-margin product mix.
- Integration and anticipated benefits of the HERO Defense Systems, LLC acquisition.
- Cash generation and cash resources as the Company funds operations, inventory and strategic initiatives.
Balance sheet and cash flow
- Cash, cash equivalents and marketable securities as of August 31, 2026: $9.4 million, compared to $9.0 million at August 31, 2025, and $15.5 million at November 30, 2025.
- Cash and cash equivalents as of August 31, 2026: $8,418 (Amounts in thousands), compared to $13,727 at November 30, 2025.
- Marketable Securities as of August 31, 2026: $1,001 (Amounts in thousands), compared to $1,754 at November 30, 2025.
- Accounts receivable, net as of August 31, 2026: $2,538 (Amounts in thousands), compared to $10,840 at November 30, 2025.
- Inventory, net as of August 31, 2026: $29,974 (Amounts in thousands), compared to $32,694 at November 30, 2025.
- Inventory on August 31, 2026 totaled $30.0 million, compared to $34.1 million at August 31, 2025, and $32.7 million at November 30, 2025.
- Total current assets as of August 31, 2026: $45,752 (Amounts in thousands), compared to $63,696 at November 30, 2025.
- Total assets as of August 31, 2026: $64,583 (Amounts in thousands), compared to $84,488 at November 30, 2025.
- Total current liabilities as of August 31, 2026: $8,265 (Amounts in thousands), compared to $17,094 at November 30, 2025.
- Total liabilities as of August 31, 2026: $9,464 (Amounts in thousands), compared to $18,731 at November 30, 2025.
- Total Stockholders’ Equity as of August 31, 2026: $55,119 (Amounts in thousands), compared to $65,757 at November 30, 2025.
- No debt balance was reported.
Analysis
Byrna reported a materially weaker fiscal third quarter on revenue and earnings. Net revenue was $15.3 million, versus $28.2 million in Q3 2025, with the Company citing lower e-commerce sales and slower dealer and chain-store reorders after substantial fiscal Q1 restocking and slower-than-expected sell-through. The revenue decline was accompanied by a shift from $2.2 million of net income to a $(2.9) million net loss and from $4.1 million of non-GAAP adjusted EBITDA to $(1.4) million. For the nine months ended August 31, net revenue was $60,733, net loss was $(12,198), and non-GAAP adjusted EBITDA was $245.
Gross margin was the principal offset to the sales decline. GAAP gross profit margin was 79.5%, compared with 60.1% in Q3 2025, but Q3 2026 gross profit included a $2.3 million refund of previously paid tariffs. On a non-GAAP basis, adjusted gross margin was 64.5%, compared with 60.1%. Management attributed the adjusted-margin improvement to manufacturing efficiency gains in launchers, a continued shift to higher-margin products, and the transition of ammunition production to an outsourced model, which it said improved ammunition gross margins by approximately 1,200 basis points in the quarter.
Expenses remained elevated against the reduced revenue base. Operating expenses were $15.1 million, up 7% from $14.1 million, reflecting new marketing initiatives and $1.7 million in other one-time costs, partly offset by lower variable selling expenses. The Company is increasing marketing activity through creators, media partnerships and dealer support while also adding senior leadership for retail, channel growth, brand and marketing. It also completed the acquisition of HERO Defense Systems, LLC and sold through all available refurbished product inventory during the quarter.
Liquidity and inventory productivity are key areas of focus entering the holiday period. Cash, cash equivalents and marketable securities totaled $9.4 million at August 31, 2026, down from $15.5 million at November 30, 2025. Inventory totaled $30.0 million, compared with $32.7 million at November 30, 2025. Management expects further inventory normalization, especially during the holiday sales period, to improve working capital efficiency and cash generation. The release did not provide quantitative forward revenue, margin, expense, tax-rate or earnings guidance, but management expects sequential improvement as it approaches fiscal year-end.
Management, verbatim
Our results in the quarter reflect our ongoing transition, but we are now starting to see positive signs of new initiatives taking hold and expect to improve sequentially as we approach the end of our fiscal year.
Conn Davis, CEO
Heading into our critical holiday sales season, we believe we have established a foundation for many of the transformation initiatives and are now focused on executing against them and building momentum.
Conn Davis, CEO
As these initiatives come together, we expect to see more substantial inventory sell through, leading to improved cash generation and overall results.
Conn Davis, CEO
Not in the filing
stated, not guessed- Quantitative forward guidance for revenue, gross margin, operating expenses, tax rate, earnings, EBITDA and cash flow.
- Previous-period outlook or guidance for comparison.
- Prior-quarter figures for the reported income-statement and non-GAAP metrics.
- Operating cash flow and free cash flow.
- Debt balances or debt maturities.
- Share repurchases, dividends or other capital-return activity.
- Revenue by operating segment.
- Non-GAAP earnings per share.
- A quantitative tax rate.
AlphAI analysis generated from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was cross-checked against the filing text; consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.