Why Byrna Shares Are Sliding Today

Byrna Technologies Inc BYRN reported a second-quarter FY23 revenue decrease of nearly 1% year-on-year to $11.51 million, missing the consensus of $12 million.

The decrease in sales was primarily due to a $1.4 million decline in international orders.

The company reported an EPS loss of $(0.05), missing the Street view of $0.01 EPS.

Gross margin increased 120 basis points Y/Y to 53.9%. Meanwhile, the gross profit margin was down from 62.0% in Q1 2023 due to both customer mix and unfavorable manufacturing variances resulting from lower production volumes and resulting scrap as the factory worked to get the Byrna LE into serial production.

Operating expenses for Q2 fell 19.73% Y/Y to $7 million. The decrease in operating expenses was primarily due to a reduction of $0.6 million in non-stock compensation payroll costs, a decrease in marketing spend of $0.6 million, and lower professional fees and insurance costs of $0.4 million.

Cash and equivalents at quarter-end totaled $15.4 million. The company has no current or long-term debt.

Ban On Advertising - Guidance Withdrawn: "While we made good progress in production, cost management and dealer sales, we faced a setback in direct-to-consumer sales. In late March, Meta and Google simultaneously implemented a ban on any advertising by Byrna on their platforms, classifying Byrna as a 'contraband' product. Google has since backed off its position slightly, allowing ads that do not show the launcher to run on YouTube; however, Meta has been unrelenting in its advertising on all Meta platforms, including Facebook and Instagram," the company noted.

Due to the uncertainty created by the ban, Byrna has decided to withdraw its previously communicated guidance for the fiscal year 2023.

"These challenges resulted in an immediate falloff in web traffic...," the company noted.

While FY23 guidance has been withdrawn, Byrna still expects to improve its top- and bottom-line performance in fiscal 2023.

Price Action: BYRN shares are trading lower by 15.8% at $4.39 on the last check Tuesday.