Byrna Technologies Inc. (BYRN) Q3 2021 Earnings Call Transcript

Greetings, and welcome to the Byrna Technologies Fiscal Third Quarter twenty twenty one Earnings Conference Call and Webcast. As a reminder, this conference call is being recorded and all participants are in a listen-only mode. Before turning the call over to Bryan Ganz, Byrna Technologies’ Chief Executive Officer, I will read the Safe Harbor statement. Some discussions made today may include forward-looking statements. Actual results could differ materially from the statements made today. Please refer to Byrna's most recent 10-K and 10-Q filings for a more complete description of risk factors that could affect these projections and assumptions. The company assumes no obligations to update forward-looking statements as a result of new information, future events or otherwise. As this call will include references to non-GAAP results, please see the press release in the Investors section of our website ir.byrna.com. For further information regarding forward-looking statements and reconciliations of non-GAAP results to GAAP results. I'll now turn the call over to Mr. Bryan Ganz. Sir, please go ahead.

Thank you. Good morning. Thank you for joining us for Byrna's twenty twenty one third quarter earnings call. Just as a clarification at the end of the call, we will be taking questions from analysts and investors as time permits. During this quarter, we have continued to execute on our strategy to grow Byrna through increased visibility and brand awareness, new product introductions and the opening of new markets and new sales channels. Our performance in the third quarter was marked by success, I think, in all of these areas. Perhaps most importantly, we completed a successful public offering as all of you know, raising fifty six point eight million dollars after fees, and now with sixty million dollars in the bank and no debt. We really have the resources to fully implement our growth strategy. Compared with Q3 twenty twenty, we have more than doubled our net revenues to eight point seven million with a strong contribution from our international dealer network, although, admittedly we were down from the prior quarter, which benefited from a five million dollar surge in sales attributed to Sean Hannity mentioning the Byrna HD on his nightly show. Gross profit more than doubled to four point nine million, and our gross margin improved to fifty six percent. This margin was higher than we had projected at our last earnings call as the introduction of a number of our new higher margin products offset pressure from growth in our lower margin international sales. We introduced a slate of new game changing products this quarter that are helping us transform our business, scale our brand, improve our margins and open new markets. So we took an important step this quarter to expand from essentially a one product, one sales channel company to a multi-product, multi-channel company with the launch of Byrna's Amazon e-commerce platform, the introduction of the Byrna SD personal security device and the Mission 4 long barrel launcher. At the same time, we expanded our retail footprint with the addition of eighty two Bi-Mart locations throughout the Pacific Northwest. We acquired the assets of Ballistipax and introduced the Byrna Shield product line. We conducted our first learn safe school training program for a public school district in Texas. And we strengthened our management team with the addition of Mike Gillespie, as Chief Operating Officer, many of you may have had a chance to see Mike on our Analyst Day a few weeks ago. And Michael Wager is Chief Strategy Officer, who is going to be tasked with finding strategic opportunities for us. Although, I personally have the privilege each quarter of addressing our investors and discussing our operations and successes, none of it would be possible without the continued hard work and dedication of everyone at Byrna. As I noted during our Analyst Day presentation, the Byrna teammates are a unique breed. They prioritize our mission of saving lives. They sacrifice to achieve our objectives and they live our ideals. These are truly special people, and I cannot thank them enough for what they do every day. This is a script that I wrote last night, but I just want to add something on a personal note. Last night, I left the office at 8:00 P.M., and there were still a half-dozen Byrna team members working away and when I arrived this morning a little past seven, once again the office was already bustling with activity. You cannot buy this type of dedication or loyalty. It is only possible when people truly believe in the mission as is the case with the Byrna team. Now I'm going to hand this call over to David North, our CFO to discuss our third quarter financial performance, and then I'll come back on to discuss some recent developments and take questions.

Thanks, Bryan and thanks everyone for joining us today. Today, I'll review the financial results for the fiscal third quarter ended August thirty one, twenty twenty one, provide an update on the company's liquidity position, and discuss the company's full year twenty twenty one outlook. Revenues for the third quarter of twenty twenty one were eight point seven million dollars compared to four point two million dollars in the third quarter of twenty twenty. The increase was driven by higher e-commerce and international sales, new product launches, and growing market awareness of the Byrna product portfolio. Third quarter gross profit rose at a faster rate than net revenues, up one hundred and thirty percent to four point nine million dollars from two point one million dollars in last year's third quarter. Gross profit margin was fifty six point two percent of net revenue compared to fifty point seven percent of net revenues in last year's third quarter and fifty six point four percent last quarter. These improvements were driven by higher sales volumes, greater manufacturing efficiencies following investments in the company's U.S. production facility and the introduction of new higher margin products. Gross margins were essentially flat compared to the immediately preceding prior quarter as higher margins from new product sales were offset by an increase in lower margin international sales. Operating expenses for the third quarter were six point seven million dollars compared to two point seven million dollars in the prior year period, and five point five million for the previous quarter. The year-over-year increase was driven largely by investments in corporate infrastructure necessary to support Byrna's continuing growth. This included expanding and retaining our management team and administrative staff, which resulted in a payroll increase of one point five million dollars and a one million dollar increase in long-term stock-based compensation expense from last year's third quarter. The increase also reflected higher variable expenses such as freight, which rose by zero point three million dollars and insurance which also increased by zero point three million dollars from last year's third quarter, and also incremental costs including public company costs, legal expenses, and increased R&D expenditures. Third quarter operating expenses were one point one million dollars higher than operating expenses of five point five million dollars reported for the second quarter. This increase is primarily due to the further expansion of, and incentives to retain our management team in support of continued growth, including zero point three million dollars due to increases in headcount, zero point four million dollar increase in the accrual for annual bonuses and zero point one million dollars increase in stock compensation expense. In order to promote continuing growth, we also increased marketing expenses by zero point two million dollars over the prior quarter. Legal expenses were zero point three million dollars higher, primarily due to the one-time cost of an investment in protection of our intellectual property. Finally, insurance expense increased by zero point one million dollars. Net loss for the third quarter of twenty twenty one was one point eight million dollars, or zero point zero eight dollars per share compared with a net loss of zero point six million dollars, or zero point zero four per share in the third quarter of twenty twenty. Adjusted for approximately one million dollars of non-cash stock-based compensation costs, non-GAAP adjusted net loss was approximately zero point nine million dollars, or zero point zero four dollars per share compared to a loss of zero point five million dollars or zero point zero four dollars per share in last year's third quarter. Non-GAAP adjusted EBITDA was a loss of zero point nine million dollars compared with a loss of zero point five million dollars for the third quarter of fiscal year twenty twenty. For twenty twenty one year-to-date, the company was reporting a modest profit of forty eight thousand dollars, adjusted for non-cash items including depreciation, amortization and approximately two point five million dollars of non-cash stock-based compensation costs. Non-GAAP adjusted net income is approximately two point four million dollars, or zero point zero seven dollars per share. As of August thirty one, we had an open order backlog of approximately four hundred thousand dollars with e-commerce orders being fulfilled in an average of two to three days. Now turning to the balance sheet, we ended the third quarter with the strongest balance sheet in our history following the completion of our public offering in July of twenty twenty one. At that time, the company issued and sold an aggregate of two million eight hundred and seventy five thousand registered shares of its common stock at a price of twenty one dollars per share. The net proceeds to the company after deducting four point four million dollars in underwriting discounts and commissions and offering expenses were approximately fifty six million dollars. We ended the quarter with fifty eight point four million dollars of available cash and no current or long-term debt on our balance sheet. We intend to use the proceeds from the offering to fund the working capital needs of the company's continued growth and to take advantage of strategic acquisition opportunities. Following the public offering, our total share count at quarter end was twenty three million six hundred and three thousand nine hundred ninety six shares. We've continued to focus on inventory management and sourcing initiatives in anticipation of growth. We currently have approximately nine thousand three hundred finished SD and HD launchers in stock and enough raw materials and componentry on hand to build another five thousand. For the opening of Byrna's Amazon store in August and our desire, we are able to handle a surge in sales. We believe that this has been the prudent approach particularly considering fulfillment issues we faced due to surges, while we were building capacity over the past two years. We are reiterating our fiscal year twenty twenty one revenue guidance of forty million dollars to forty two million dollars reflecting year-over-year growth of approximately one hundred and forty six percent at the midpoint of the range. The guidance is based on the company's current order flow and the growth expected from one, the recent and planned introduction of new products. Two, e-commerce sales by our dedicated Amazon store that kicked off at the end of August this year. Three, anticipated increases in domestic and international dealer sales. And four, broader brand awareness among customers. With respect to gross margin, our fiscal year twenty twenty one expectation calls for a range of fifty three percent to fifty six percent as compared to a gross margin of forty five point three percent in fiscal year twenty twenty. The anticipated improvement in gross margin is expected to be driven by the planned introduction of new higher margin products and the benefits of our investments in the Fort Wayne production facility.

Thanks, David. Let me start with Amazon. I receive more inquiries about Amazon than anything else, so I thought it would be a good starting point. At the end of August, we launched on Amazon to introduce the new Byrna SD. The sales contribution for the third quarter was minimal, amounting to about forty-nine thousand dollars in sales during the last few days of August. However, we believe Amazon will increasingly become an important sales channel over time, and we're already noticing a positive trend. In the past month, Amazon sessions increased from around seven hundred fifty per day in the first week of September to approximately three thousand sessions per day by the last week of September. While this is still under fifteen percent of the nearly twenty-two thousand average daily sessions on Byrna's website during September, the traffic on Amazon is growing rapidly, and we anticipate that activity on our Amazon storefront will eventually equal or surpass that on our Byrna website. We've also observed a significant rise in Byrna Nation members, now totaling one hundred eighty-five thousand subscribers, up from around thirty-five thousand at the start of this year. Our e-commerce platforms are crucial to our strategy. For instance, our website, Byrna.com, had an average of twenty-one thousand nine hundred sessions in September compared to seven thousand six hundred sixty in September of twenty twenty, marking a one hundred eighty-six percent increase over the past year. During the same period, Byrna Nation email subscriptions surged from around thirty thousand to one hundred eighty-five thousand, which is a five hundred percent increase, and our open rate exceeds forty percent. This list helps us keep our members informed about new products, special offers, and updates on non-lethal self-defense. In addition to our e-commerce presence, retail is essential for acquiring new customers, especially for a young company like Byrna. Customers want to physically experience the product, and many prefer to purchase it from a trusted location. Essentially, there are two types of consumers regarding buying habits: those who favor online shopping and those who prefer brick-and-mortar stores. While there is some overlap, it isn’t as significant as one might expect. We notice that our retail stores often direct traffic to our website, as people visit in-store and then shop online, and vice versa. We plan to heavily focus on developing our retail presence over the next several quarters. As I mentioned earlier, with our recent capital raise, Byrna can now initiate several new marketing campaigns that we've been anticipating. Specifically, starting on October eleventh, Byrna will commence a billboard campaign in five test markets: San Diego, Kansas City, Dallas, St. Louis, and Orlando. If this campaign performs as expected, we plan to expand it to many more cities. We will also initiate a Direct Mail campaign, sending out more than three hundred fifty thousand pieces of direct mail in October. Although conversion rates for Direct Mail are typically low, even a one percent conversion rate could yield a return on advertising spend of over ten times. We're acquiring targeted email lists and will send emails to over five hundred thousand gun enthusiasts, one of our core demographics. This is also a cost-efficient method for reaching potential customers. We've engaged a firm to assist with our influencer campaign, which will feature ten to fifteen anchor influencers launching content in October, followed by another twenty-five to thirty influencers in November. While influencer campaigns can be unpredictable, successful ones can deliver substantial returns. For instance, one of our customers shared a video showcasing them using the Byrna to fend off a home invasion. This video went viral on YouTube, garnering over six million views and driving significant traffic to our website. Additionally, we’ll initiate an SMS Text Message Marketing Campaign, allowing Byrna to communicate with Byrna Nation members via text, which typically has higher open rates compared to email. Lastly, we'll kick off a Print Media Advertising campaign this October with ads in various magazines, including Gun Digest, Conceal Carry, and RV Living, among others. Another avenue for revenue growth is through new product introductions, and I want to review some of the launches during Q3. First, we introduced the Byrna Banshee personal safety alarm. We aimed to advertise it on platforms where we couldn't promote our main security device while also offering a price point product for visitors to our store. Our Byrna HD had an average order value over four hundred eighty dollars for first-time customers, which is a significant purchase. Hence, we were concerned that many visitors might leave without making a purchase. By offering the affordable Byrna Banshee at twenty-nine dollars and ninety-nine cents, we provide an accessible product. The Banshee is a personal safety alarm that can attach to bags or belt loops and emits a loud one hundred thirty-decibel siren and flashing strobe to deter potential threats. We launched the Banshee on July twenty-two, produced an initial run of two thousand, and sold out within forty-eight hours. To date, we've sold over five thousand seven hundred Banshees since the launch, and we believe it will make an excellent stocking stuffer for Christmas. We also introduced the Byrna Eco-Kinetic sixty-eight caliber round. As part of our success, we have sold millions of non-biodegradable rounds, which often end up littered in lawns across America. It was essential for our management team to create projectiles that were not only biodegradable but also water-soluble, dissolving in weeks when exposed to the elements. The Eco-Kinetic round is made from food products and is entirely safe for the environment, even if ingested by pets or children. It replaces both the Kinetic and Inert practice rounds and is one of the lowest-priced non-lethal rounds on the market at twenty-five cents per round when purchased in a four hundred count container. Since its launch on August first, we've shipped more than one point two five million Eco-Kinetic rounds, not including the tens of thousands included in our Byrna HD and SD ready kits. We expect the Eco-Kinetic round to become a best-seller as consumers appreciate its eco-friendliness and engage in recreational use of the Byrna. We plan to promote a recreational campaign, encouraging shooting practice at home, which will naturally boost sales of ammo and accessories, while also helping users become more proficient with their personal security devices for potential self-defense situations. Next, we launched the Byrna HD XL, an extended version of the HD designed for consumers wanting to fire more rounds at higher speeds. The HD XL incorporates a longer barrel and the Byrna Boost, allowing the usage of a twelve-gram CO2 cartridge. Selling for one hundred dollars more than the standard HD, the XL made up twenty-five percent of all HD launcher sales in Q3, helping to enhance Byrna’s gross profit margin. The Byrna SD Launcher represents our next-generation device. It is the natural evolution from the extremely popular HD model with improvements like an enhanced trigger, a honeycomb grip, and better sighting. The Byrna SD became available on August twenty-six and was initially exclusive to Amazon but can now be ordered directly through our website and retail network. Priced at three hundred ninety-nine dollars for the basic SD ready kit, it’s forty dollars more than the HD, allowing us to improve profit margins while also enhancing customer satisfaction. We also introduced the Byrna M4 high-capacity rifle at the end of the quarter. This model is based on technology acquired from the Mission acquisition, extending our presence into law enforcement and private security, as well as appealing to gun enthusiasts. The M4 fires rounds at three hundred twenty-five feet per second and has already sold six hundred sixty units since August first at a price of eight hundred ninety-nine dollars. While I’ve received feedback that its resemblance to an actual AR might limit appeal to gun owners, we believe providing non-lethal devices to individuals who might otherwise consider lethal options is a step towards our goal of saving lives. In August, we announced the acquisition of certain assets of Ballistipax, a company that created a single-handed deployable bulletproof backpack. This purchase included inventory, patents, trademarks, and other assets, which we deemed vital in broadening our protective offerings. On August twentieth, we launched the Byrna Shield Ballistic Backpack, featuring a patented, concealable, and readily deployable armor system. We’ve sold one hundred sixty backpacks since then. The Byrna Shield looks like an ordinary backpack until deployed, transforming into full body armor capable of resisting multiple rounds and includes an anti-bleed kit for immediate attention to gunfire victims. We believe this backpack will resonate with our Byrna Nation members and others seeking discreet access to full body armor without the intimidation of a tactical vest. One of the first purchasers was the DEA, acquiring five backpacks for a trial program. We’ll focus on promoting the Byrna Shield for school safety officers, who would benefit from being prepared for active shooter situations without the intimidation of tactical gear, coupled with the capability to respond to victims of gunfire. We have several new products slated for release by the end of this year and into twenty twenty-two. The Byrna MLR is a law enforcement-only weapon that's expected to launch shortly, available in semi-automatic and fully automatic configurations capable of firing twelve rounds per second. The MLR will have a one hundred twenty shot capacity and can fire rounds at three hundred forty feet per second. Already, we have significant interest from law enforcement customers. We’ve also discussed the Byrna LE, a security device aimed at law enforcement, scheduled for a first quarter twenty twenty-two release. It resembles the Byrna SD but features a new valve system for much higher muzzle velocity, fiber optic sights, a seven plus one magazine, and capabilities for extreme cold weather. Initially, it will be available to law enforcement before being offered to our consumer market. Moreover, we will launch the Byrna TCR, or Tactical Compact Rifle, later this quarter. This will be the first launcher manufactured in-house using IP from the Mission acquisition, designed for ease of use as a semi-automatic device that can fire nineteen rounds in rapid succession at over three hundred feet per second. Its design is distinct from other shoulder-fired launchers, as it utilizes readily available twelve-gram CO2 cartridges. Next year, we plan to introduce our Pump Action Launcher, notable as the first launcher intended to fire Byrna’s patented fintail projectile. These projectiles will improve accuracy, payload capacity, and speed over longer distances than traditional round ball projectiles, offering law enforcement a way to disarm threats from as far as one hundred fifty feet without resorting to lethal measures. We showcased this launcher prototype to several police and sheriff departments in June. Before the PAL launches, we aim to release a twelve gauge round featuring the sixty-eight caliber fintail projectile, which will provide access to the owners of nearly one hundred million shotguns in the U.S. This will offer a highly effective non-lethal round without requiring a costly Pump Action Launcher. We expect to sell the twelve gauge rounds in five and ten count boxes at around seven dollars each. In the third quarter, we formed a dedicated team to bring Byrna’s suite of non-lethal products to law enforcement and private security markets. This team trained and certified eighty-five law enforcement officers and private security professionals from thirty agencies as Byrna instructors, increasing the total to over one hundred fifty agencies using our products. In conclusion, I am proud of the remarkable progress our company has made this year. Sales in twenty twenty-one have already surpassed one hundred percent compared to the full year of twenty twenty. Given our Amazon launch, new marketing strategies, and a strong development pipeline for new products, we feel well positioned for significant growth in twenty twenty-two and beyond. Now, I’d like to turn it back over to the operator for questions from our analysts and institutional investors.

At this time, we will be conducting a question-and-answer session. Our first question is from Jeff Van Sinderen from B. Riley. Please proceed with your question.

Good morning, everyone and thanks for taking my question. Can you speak more about the new products that are being added to Amazon or plans to add new products to Amazon, since I know Amazon is a topic on a number of people's minds?

We started off with a limited number of products at Amazon because they gave us limited quote-unquote shelf space. So initially, we could have one thousand units at Amazon within the first week and as they saw the traffic, they raised that to three thousand, and we've added additional products; they have now raised that limit again. We are adding ammunition and holsters and lasers, additional colors. Our goal will be for Amazon to carry everything that we carry on the Byrna website. So, I don't know how long it will take, the way these algorithms work, as the more success we have, the more they promote the product and the more shelf space they give us, but our intention is to have the complete range available on Amazon.

Okay. And then I just wanted to touch on, I know there was another sadly, another school shooting this week that was in the news. Just maybe, if you could touch on your strategy going after the school market, what are the milestones that maybe we should look for in the school market over the next year or so?

The school market presents an interesting scenario. We initially developed Byrna because we were focused on products for law enforcement and military, which meant engaging with the government—a process that can be lengthy and complex due to budget and bureaucracy. As a result, we shifted our attention to the consumer market. Our success there has drawn interest from law enforcement agencies, and we are currently training the ATF, who are now purchasing Byrna products. However, the process remains slow. We have worked with one hundred fifty law enforcement agencies out of a total of eighteen thousand five hundred in the U.S. We're experiencing similar challenges in making inroads with schools. Despite our ongoing presentations, we need approvals from school resource officers, principals, and superintendents. Therefore, we haven't incorporated any projections for the school program into our plans. Personally, I am very invested in this project and would love to see Byrna's Shield and personal security devices distributed to every school resource officer in America. However, I'm uncertain about the speed of this development. We are committed to dedicating resources to this effort and will maintain our focus on it.

Okay. Great. And then if I can squeeze in one more. I know you've added new accounts recently and new retailers. And anymore color you can give us on the latest trends you're seeing in the dealer channel? And then I know that's a focus just anything we should look for over the next couple of quarters in new retailers?

What we've discovered is that the retailers that are best for us are companies like this new retailer Bi-Mart. Bi-Mart has ordered numerous times this quarter since coming on board. Bi-Mart is sort of a mini Walmart. It's sort of a general merchandise store that caters to a broad population within its regional footprint. So that tells us that other stores like Walmart should be a target for us. And we are currently in discussions with many of the sort of big box stores that you would imagine. And I think that this is an approach that we should take, where we found that we are not making good headway is with the FFLs, with the firearms dealers themselves as those of you who are firearms owners know many of these locations people are buzzed in, there is not a lot of foot traffic going up and down, the aisles; people go to a gun store specifically to buy something that they want either ammunition or a specific weapon that they want. And rarely buy something on a whim when going to a gun store. So we are not going to focus our efforts on going after the gun market through gun stores. We think going after the gun market to gun shows through things like the Print Media advertising that we're talking about, the email campaign that we're talking about, but we're going to try to pull back on our efforts to sell through federally licensed firearms dealers and refocus our attention on more general merchandise stores.

Okay. Thanks so much and best of luck for the rest of the quarter.

Thank you very much, Jeff.

Our next question is from Brian Gesuale from Raymond James. Please proceed with your question.

Hey. Good morning and thanks for taking my question. Bryan, can you maybe talk a little bit about how you might see the evolution of product sales during the holiday season? What incremental marketing you may do? How we might start thinking about the seasonality of natural shape of the business over the course of a given year?

Up until this point, we haven't had enough product to really engage in the holiday season. Last year, we didn't run any promotions. This year, I'm pleased to say that our product situation has significantly improved. As David North mentioned, we are using some of the cash we raised to substantially increase our inventory levels to prepare for a surge in demand. Due to our unusual fiscal year ending at the end of November, Black Friday or Cyber Monday sales won't be reflected in this quarter, as we will ship sales only after November 30, which falls on a Tuesday. However, we anticipate significant consumer demand, especially since we now have a large installed user base of over 110,000 launchers sold, and these customers continue to purchase ammunition. We are introducing additional products ranging from apparel to the Byrna Banshee, as well as new Eco-Kinetic rounds and holsters. We plan to launch a strong Black Friday and Cyber Monday campaign, and because our year-end is November 30, we may also host something like Byrna Friday a week or two before Black Friday to capture some holiday sales in the fourth quarter. However, I expect that most of the holiday sales will ultimately be reported in Q1 of next year.

That makes sense. And so we would obviously expect Q1 to sequentially grow off of your Q4, not only with the momentum and inherent growth in the business, but perhaps even maybe a little bit of a bigger increase sequentially than we typically see?

Yes. I would have to say that's right. Q1 should seasonally be a strong quarter for us.

Terrific. You've really grown out kind of awareness. You've got one hundred and eighty five thousand email subscribers. Can you talk maybe about potentially making these subscription models available? It seems like the ammunition is tracking ahead of plan, presumably that leads to more used cartridges. Are there any plans underway to get some subscribers from that list and maybe how might you think that could progress over time?

You're welcome to join the management because you're thinking exactly as we do. We are planning on introducing a subscription model. We're going to kick it off with Amazon, because Amazon purchases are very familiar with subscription models. Up until this point, we've really been constrained on ammo. And we've been particularly constrained because we had a sole source supplier. If people read through Byrna Nation or Byrna Owners group, I think the one consistent complaint has been the fact that we don't have a regular supply of ammo or we haven't had a regular supply of ammo. Some of the quality problems we have with ammo, with the introduction of the Eco-Kinetic round and with the introduction of our own production of ammo now. So we are actually producing Byrna Pepper ourselves. We are producing Byrna training or Byrna Inert rounds ourselves, in addition to the third-party supplier that we are buying from. We do have ample supply of ammo. We will be introducing ammo in more configurations. So we've always sold the Inert rounds in ninety-five count. We'll be introducing a twenty-five count this month. We think that would be an ideal thing for the subscription model. So we will test out the markets on the subscription model first with Amazon, and then if that’s successful, roll it out to the Byrna website as well.

It sounds exciting. And maybe just final one for me, can you maybe give us just a little bit of help on how we want to think about OpEx growth as you're in this hyper growth period over the course of the next twelve or eighteen months and how you just see that running its course?

I want to be completely honest with you. I was not satisfied with the operational expenses for this quarter, and we are making efforts to lower what I consider structural operational expenses. This includes costs related to payroll and other infrastructure. I have already reduced payroll by over five hundred and thirty thousand dollars on an annual basis. David, would you like to discuss what we are doing in this area?

Yeah. I mean, looking at it from the big picture, and I think in our last call, I said that we should expect OpEx to continue growing as sales continue growing, but not at the rate that we had seen in the prior year. That continues to be the case, and that's just the natural development of maturity of the company. Right now, we are in the fourth quarter and so, naturally, we are going through the intensive process of building out our budget for next year, and we'll be looking at all of this in that context, but something very biggest change between this quarter and in the prior quarter and that's that capital range. We've got fifty six million dollars in the bank. It's very safely invested, but that means that it could vary a little current, and we've got to figure out how to invest in marketing and also in people to promote the growth of those sales. So we do not expect to have quarter-on-quarter increases of this percentage that we've seen from Q2 to Q3. And we do expect to see continuing gradual growth in this number, however.

We are currently investing heavily in our marketing efforts, similar to how sailors spend recklessly. We are launching several marketing programs this quarter and plan to continue spending aggressively on marketing. However, we intend to be more cautious with our infrastructure expenditures and explore ways to control those costs. Increasing brand recognition is essential for us, as very few people are familiar with Byrna. In conversations with others, I often find that only about one in twenty or one in fifty individuals know who we are or what we do. Therefore, expanding our brand visibility will be a priority, and any increase in operating expenses will primarily be focused on marketing initiatives.

That's great. Thanks so much. I'll jump back into the queue.

Okay. Thank you.

Our next question is from Jim McIlree from Dawson James. Please proceed with your question.

Thank you. Good morning. I was hoping you could share with us data that you have on purchases by customers after the initial purchase of launcher, that is, if I purchased a launcher a year ago, how much in additional sales do you average with that customer for accessories, ammo, maybe an additional launcher, things like that? Do you have those statistics and can you share that with us?

I don't have those statistics readily available, but they are following industry trends. If we examine the Mission acquisition, Mission was a more established company with around fifty percent of its income from recurring sales. Similarly, PepperBall, which has several employees who transitioned to us, also derives about fifty percent of its revenue from recurring sales. Of the twenty to twenty-two thousand visitors to our website, half are first-time visitors and half are returning. Over time, we hope that as our growth stabilizes in the long run, repeat sales will constitute fifty percent of our business. Generally, in this industry, customers tend to spend as much on ammunition and accessories in the first eighteen months as they did on the initial purchase. It's important to note that while we have sold one hundred and ten thousand launchers, the sale numbers were much lower during the first eight quarters. The majority of the launchers sold occurred in the last two quarters. Currently, approximately eighty percent of our customers return to order at least once within the first ninety days, with about twenty percent ordering five times in that same period. We anticipate that this aspect of our business will grow as our user base expands.

And thank you, that's helpful. And just to clarify, Bryan, the metric that you mentioned, a purchaser spending as much in the next eighteen months that they did on the launcher that is currently or that's what you saw initially?

No. That's a statistic for the firearms industry. When we were developing our model for Byrna, we looked at similar industries. In the firearms sector, people were spending as much on ammunition and accessories in the first eighteen months, even before ammunition prices skyrocketed. Another relevant point from the firearms industry is that the average gun owner in the United States owns three and a half firearms. Typically, after buying a firearm, they use it frequently, going to the range and purchasing plenty of ammo and accessories. After about eighteen months, their usage tends to decline, and they often purchase another firearm. For example, if they initially owned a revolver, they might then buy a nine millimeter. With our new product launches, including the long guns and the upcoming Byrna LE and Byrna PE, we believe we can capitalize on this trend. Those who appreciate their Byrna HD will likely want the latest model, benefiting not only from recurring sales of ammunition and accessories for their existing launcher but also enjoying brand loyalty that leads them to purchase additional products.

Okay. That’s helpful.

And we have seen that happen, so of the Mission 4, which was not an insignificant quantity, we sold six hundred and sixty in two months at nine hundred dollars each. So this is about six hundred thousand dollars of sales. This was all to existing Byrna customers. So we have not advertised, this at all outside of our own ecosystem. So this was all sold off of emails to our existing Byrna Nation subscribers. We are in the process of putting together creative for advertising programs. So we think that our thesis that we will see our customers come back and buy our new products has proven to be true.

We have reached the end of the question-and-answer session. And I will now turn the call over to Mr. Bryan Ganz for closing remarks.

Thank you very much. I want to express my gratitude to everyone for their support. I assure you that we remain as committed and convinced as ever in the Byrna Mission and the Byrna thesis. We strongly believe that we are just at the very early stages, merely beginning to tap into the market regarding brand awareness and growth, and we are excited about the prospects for this quarter and for 2022 and beyond. Thank you again for your support.

This concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation.