管理層發言
Good morning, and welcome to Byrna's Fiscal Third Quarter 2024 Earnings Conference Call. My name is Kevin, and I'll be your operator for today's call. Joining us for today's presentation are the company's CEO, Bryan Ganz; and CFO, Lauri Kearnes. Following the remarks, we'll open the call to questions. Earlier today, Byrna released results for its fiscal third quarter ended August 31, 2024. A copy of the press release is available on the company's website. Before I turn the call over to Bryan Ganz, Byrna Technologies Chief Executive Officer, I'll read the safe harbor statement. Some discussions held today 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 for further information regarding forward-looking statements and reconciliations of non-GAAP results to GAAP results. Now, I'd like to turn the call over to Byrna's CEO, Bryan Ganz. Sir, please proceed.
Thank you, Kevin, and thank you, everyone for joining us today. This morning, we issued a press release providing our financial results for the fiscal third quarter ended August 31, 2024, as well as highlighting key business accomplishments for the quarter. We'll be filing our 10-Q with the SEC on Friday of this week. I'll start by passing the call to Lauri Kearnes, our CFO, who will discuss our financial results for the third quarter. Following her remarks, I'll review the operational highlights for the third quarter, which resulted in the record $20.9 million of revenue and our continued GAAP and non-GAAP EBITDA profitability. I will then offer insights into our go-forward strategy. Lastly, I'll open the call to questions from our covering research analysts. Lauri?
Thank you, Bryan, and good morning, everyone. Let's review our financial results for the fiscal Q3 ended August 31, 2024. Net revenue for Q3 2024 was $20.9 million, a 194% jump from the $7.1 million reported in the fiscal third quarter of 2023. This $13.8 million increase is primarily due to the transformational shift in our advertising strategy, which began in September 2023. The ongoing success of our Celebrity Endorsement Strategy helps drive the $10.5 million increase in direct-to-consumer revenues through our website and Amazon compared to the prior year's period. For the first nine months of 2024, net revenue totaled $57.8 million, which is up 114% from $27 million in the first nine months of 2023. Gross profit for Q3 2024 was $13 million or 62.4% of net revenue, compared to $3.2 million or 44.6% of net revenue for Q3 2023. The improvement in gross profit margin is largely attributable to additional sales through our higher margin DTC channels and an intensive cost component reduction effort, which was spearheaded by Byrna's engineering team and the economies of scale resulting from increased production volumes.
For the first nine months of 2024, gross profit was $35.2 million or 60.9% of net revenue, compared to $14.6 million or 54.1% of net revenue for the same period in 2023. Operating expenses for Q3 2024 were $12.2 million compared to $7.3 million for Q3 2023. The increase in operating expenses was driven by an increase in variable selling costs such as freight and sales transaction processing fees, an increase in marketing spend related to the company's new advertising strategy, and an increase in payroll primarily in marketing and engineering as the company made focused improvements in these areas. For the first nine months of 2024, operating expenses were $32.6 million compared to $21.5 million for the same period in 2023, reflecting a 52% year-over-year increase. Net income for Q3 2024 was $1 million, a $5.1 million improvement from a net loss of $4.1 million for Q3 2023. For the first nine months of 2024, net income was $3.1 million compared to a net loss of $7.4 million in the first nine months of 2023, which was a $10.5 million improvement.
Adjusted EBITDA, a non-GAAP metric for Q3 2024 totaled $1.9 million compared to a negative $2.4 million for Q3 2023. This brings adjusted EBITDA for the first nine months to $6.3 million, an $8.1 million improvement from the prior year. Cash and cash equivalents at August 31, 2024, totaled $20.1 million compared to $20.5 million at November 30, 2023. Inventory at August 31, 2024, totaled $19.8 million compared to $13.9 million at November 30, 2023. The company has no current or long-term debt. I'll now turn the call back over to Bryan.
Thanks, Lauri. As you can see from the financial results, we are continuing to see significant growth even during what is traditionally a seasonally slow quarter for us with the dog days of summer. For the quarter, revenues were up 194% compared to the same period last year. For the full year, revenues are expected to be up by almost 100%. What we didn't initially expect was sequential growth from Q2 to Q3, which was now our fourth consecutive quarter of sequential growth. The seasonal slow effect of Q3 was overwhelmed by the strong growth for Byrna. The four quarters of sequential growth highlight the continued impact of our celebrity endorsement advertising strategy. I also think the ongoing normalization of both the less-lethal product category and Byrna's growing brand awareness are contributing factors. Since launching the Celebrity Endorsement Advertising program in Q4 of last year, we've consistently maintained a minimum ROAS or return on advertising spend of at least 5x, which is highly accretive to Byrna's bottom line.
This has resulted in Byrna achieving profitability. As a result of this, Byrna is now a stable, profitable enterprise with positive cash flow, and as Lauri mentioned, approximately $20 million in cash in the bank. Today, we are working with more than 10 celebrity influencers who are actively evangelizing Byrna's less-lethal mission and helping to normalize less-lethal weapons as a legitimate alternative to lethal force. Most importantly, we are continuing to see success with several influencers that have been on board for many months, including Glenn Beck, Bill O'Reilly, Judge Jeanine Pirro, Dan Bongino, and Jesse Kelly. In fact, Sean Hannity, our original celebrity endorser, has been promoting Byrna for well over a year now and is still generating more than $1 million a month in sales. Our high margin DTC or direct-to-consumer business continues to be the dominant factor in our sales growth.
Of the $20.9 million in revenue in Q3, DTC sales on byrna.com and amazon.com accounted for $15.5 million or 74% of total sales, compared to just $5 million or 70% of total revenue in the same period last year. Keep in mind that the DTC sales channel is our highest margin sales channel with a gross profit percentage of 68.7% in this past quarter. While we were initially focused solely on terrestrial radio, when we pivoted away from social media advertising, we have since expanded to additional advertising mediums, including podcast and TV. Keep in mind that the reason our advertising program is generating such strong results, however, is not the medium; it's the endorser. As I've said before, we took a page out of Phil Knight's playbook at Nike by using celebrity endorsers. That said, we are now beginning to run traditional 30 second ads on News Max. These ads do not feature an endorser and they're doing extremely well, generating a 6.3x ROAS since inception and a 5.6x ROAS over the past 13 weeks.
Based on our success with Newsmax, we started advertising on TBN and News Nation and have been approached by OEN and the CW. As Byrna gains greater brand awareness and the less-lethal industry gains greater public acceptance, we expect that additional broadcast and cable networks will start to allow us to advertise. In fact, personally, I suspect that it's only a matter of time before we're able to run our ads on FOX, CNN, and MSNBC. Even without the ability currently to advertise on these mainstream broadcast and cable networks, we believe there is still significant upside growth to be had simply by expanding our roster of celebrity endorsers on terrestrial radio, podcasts, and the smaller cable networks. Currently, we are working with celebrity endorsers across several platforms including iHeart, Westwood One, Salem Media, and Radio America, among others. Not only does each of these networks have many additional celebrity endorsers that we can work with, but there are also a number of other networks that we have not even begun to tap into.
Looking ahead, we plan to continue growing our celebrity influencer program by adding two to three additional personalities each quarter. We recently signed Governor Mike Huckabee on TBN and have agreements in place with Nephew Tommy of the Steve Harvey Show and Dave Ramsey, two extremely well-known celebrities. These celebrities are set to kick off in the next few months. In addition to our paid advertising, we have been pursuing the earned media route with the help of a public relations firm. Our goal is to both drive brand awareness for Byrna and to continue to normalize the less-lethal industry. To date, Byrna has been featured on more than two dozen news programs on channels such as ABC, FOX, Newsmax, NewsNation, and numerous local radio and television shows. Interestingly, not every interview is about the benefits of less-lethal. Many of these interviews are simply about business, like the port strike or inflation, or law enforcement topics such as school shootings or the trouble at the border.
Nevertheless, these interviews help legitimize Byrna and establish me, Luan Pham, our Sales and Marketing Officer; and Josh Sherrard, Head of Law Enforcement, as credible spokespeople. While the goal is not necessarily to drive immediate sales, when I was on FOX News with Dana Perino last week, web sessions jumped from 200 people to more than 1,900 people while I was on air and drove record revenues for a day in which we were not running a sale, which proves that when people learn about Byrna and the non-lethal industry, sales go up. The added benefit is that it drives people to look for Byrna, not just online, but also at brick-and-mortar stores. Over the last few weeks, Bass Pro Shop and Cabela has upgraded our status from a regional pilot program to a national account. This increased our store count from 42 stores to 137 stores and allowed us to bring on a significant number of additional new products.
At the same time, both Sportsman's Warehouse and Buymart substantially increased their purchases in anticipation of the upcoming holiday season due to strong customer interest and a growing acceptance of less-lethal as a legitimate alternative to lethal force. As these outlets increased their efforts to move to Byrna, we are hopeful that we can convince them to open stores within a store. This model has proven quite successful at a number of FFL gun stores, and I think can be successfully adopted by these Big-Box Retailers. With the new partnerships kicking off at the end of the fourth quarter, we expect our discretionary marketing spend to tick up by $200,000 a month this quarter. As I look to 2025, we expect to further increase our budget for celebrity influencers by approximately 50% for the year compared to our 2024 spend. We are holding our growth in advertising spend to 50% for 2025, as you need to keep in mind, we are a manufacturer and we cannot outpace our ability to produce launches.
We are not selling insurance or software that can easily be downloaded. We are solving complicated products built from over 100 parts, most of which are unique custom-made components. Moreover, Byrna launches must be airtight, holding air at over 800 psi. And of course, most importantly, they must be able to reliably stop an assailant. Beyond our advertising efforts, we are actively expanding our retail store footprint as we see a strong opportunity to reach customers through dedicated Byrna retail stores. As of today, we have signed lease agreements for new stores in Nashville, Tennessee; Scottsdale, Arizona; and Salem, New Hampshire with plans to finalize a lease in Pasadena in the next few weeks. We also intend to open a retail location at our new Byrna ammo manufacturing facility in Fort Wayne. These new stores are based on the successful proof-of-concept store that we opened in Las Vegas two years ago.
The Las Vegas store currently has a run rate of more than $1 million a year at a 65% gross profit margin, with relatively modest operating cost when you compare it to other retail stores. At this level of sales, the Byrna store is generating contribution margins of approximately 35%. Moreover, customers who demoed our products in-store convert at around an 80% rate; that means eight out of ten people that shoot the product buy a launcher. This compares to our online conversion rate of 1.2%. We intend to open these new stores in the coming months with most of them opened by the end of this calendar year. Our goal is to use these stores to further validate and refine our store model as we prepare for a much broader rollout. Specifically, we plan to use these stores to perfect the look and feel of the physical premises, develop the store operating manuals, build out the employee training programs, develop and debug the ERP and point-of-sale computer systems, work out the advertising strategies, and finalize the products and services to be offered at these stores.
If the stores perform as expected, we will begin rolling out additional retail stores later next year. We believe that the market could easily support 100 or more of these stores across the U.S. The precise split between company-owned or franchise stores will be determined based on how quickly we feel that we could support the rollout of new stores from a product availability perspective. In other words, how quickly can we manufacture the product to support these stores? If we believe we could roll out 100 stores in short order, we will need to rely more heavily on franchisees to be able to roll out such a large number of stores quickly. On the other hand, if we determined that we could only support 20 new stores a year, we will likely keep these as company-owned store operations because the margins, of course, are much, much higher. We will update you in the near future as we open these locations.
On the international front, as our store model comes online, we're making strong progress overseas. As you may have seen, we made several announcements throughout the quarter that demonstrate our traction in Latin America and highlight the region's significant growth potential, with deployments in Uruguay and the expanding programs in Argentina such as the airport security agency, so we are now carried by every airport guard all through Argentina. We continue to be the leading solution as these large law enforcement agencies shift towards less-lethal alternatives. Because of this success in South America, we made the strategic decision in Q3 to transfer our 51% stake in Byrna LATAM to our joint venture partner, Fusady. We felt that the accounting and reporting requirements of a U.S. public company limited the ability of our start-up company in Argentina to rapidly grow. This agreement enables Byrna to fully recognize the revenue from future sales to Byrna LATAM and also to earn royalties on every launcher produced in Argentina.
The royalty starts at $45 per launcher and grows to $55 and $65 in the years two and three, respectively. Based on current projections, this should add more than $1 million in royalty income next year. By restructuring our relationship, we have optimized our ability to allocate resources more effectively while Byrna LATAM can now operate more nimbly on developing opportunities, particularly with major law enforcement agencies in the region. We will provide dedicated support to Byrna LATAM as it pushes to gain access in key markets, particularly Brazil. Importantly, this sale means that Byrna no longer needs to report LATAM's losses in its early years of operation in our financial statements, which will improve our reported net income and will allow us to focus on our core markets. We have structured the deal, so that we have the right to reacquire our stake in three years should Byrna LATAM reach critical scale and implement the accounting and internal controls necessary to be part of a U.S. public company.
In the meantime, Byrna will continue to manufacture Byrna products, maintain local inventory, offer customer service in the local language, manage invoicing and collections in the local currency. Ultimately, this move is expected to optimize operations and increase efficiencies across both North and South America. This quarter, we also expanded our sales reach into Mexico. After working with our distributor in the country to partner with one of the country's government offices, we were able to create a federally certified training program for our products. This means that once a Mexican citizen completes the training program, they are able to legally use our launchers throughout the country. In conclusion, as our international presence grows, particularly with our recent expansions in Latin America and Mexico, Byrna is experiencing very strong demand across both consumer and institutional channels.
This has continued into the start of the fourth quarter. In September, our first month of the first quarter and traditionally, our weakest month of the seasonally strong fourth quarter, sales were $8.3 million or $275,000 a day. This is up from $220,000 a day in the quarter we just finished. The math is quite easy. If we continue this run rate, and we have every reason to believe we will, sales for the quarter should be $25 million compared to analyst consensus of $21.65 million for the quarter. What makes this all the more remarkable is that in 2018, the year before we introduced the Byrna Launcher, our sales for the entire year was $252,000. We now do more than that every single day, Saturdays and Sundays included. As we continue to post record sales, our focus has shifted to scaling up production to meet the increasing demand. In Q3, we produced over 55,000 units, allowing us to build sufficient inventory to support the anticipated strong holiday selling season, the election surge, and to prepare for the upcoming launch of our Compact Launcher in summer of 2025.
To further boost our production capacity, we are implementing a partial second shift this quarter with plans to operate a full second shift by the end of Q1 of 2025. Additionally, we're adding a third production line, which can be used for new products, engineering builds, and rework. We are also scaling up domestic ammunition production in Q4 by building a new facility four miles from our existing launcher facility in Fort Wayne, Indiana. The new ammunition facility, expected to be operational by year-end, will help us increase our overall capacity for ammunition, reduce the risk of supply chain disruption by having ammo produced here in the U.S., shorten our lead time, and ensure that we can offer the full range of ammunition that is made in America. Even before the recent port strike discussions, we had already begun dual sourcing key components as part of our long-term strategy to mitigate supply chain risks.
These efforts continue to help us maintain supply continuity if an issue arises, like this port strike or a worldwide pandemic in the future. Last week, I was at the factory, and I announced that we were raising the starting wage for our production line workers by $2 an hour or roughly 10%. We've also raised wages for all factory employees by 10% effective this week. In addition, we're offering bonuses for perfect attendance records that can add up to $2,500 a year and we are giving our employees a third week of vacation after two years of service. We decided to make these changes to attract and retain the very best talent. With this increase, we are now one of the best paying companies in Fort Wayne. This is not just about remaining competitive in the labor market; it's about ensuring that we have the very best workers to meet the growing demand and to maintain high levels of productivity and quality.
This investment in our workforce is part of a broader strategy to sustain operational efficiencies as we continue to grow. These investments are critical to maintaining our growth momentum without interruption. At the same time, our initiatives like dual sourcing and scaling domestic production are designed to drive long-term efficiencies and support growth. By scaling our launcher and ammunition production capabilities, we are positioning Byrna to meet the continued expected growth in demand while we prepare for the launch of our Compact Launcher and future product lines later next year. In conclusion, we believe that we are now just scratching the surface of our total addressable market, and we have a significant runway for future growth. While we don't expect to maintain the same 100% annual growth rate that we're experiencing this year and while we do not expect Q1 2025 to be higher sales revenue than Q4 of '24, we are confident that this momentum will carry us to record growth in profits in 2025, driven by the continued momentum of our advertising program and the free earned publicity generated by our public relations firm.
Also, as we continue to expand the roster of celebrity endorsers and maintain a 5x ROAS, we will see sales growth simply from the additional celebrity endorsers. We also expect this exposure to drive incremental sales, not only through the advertising itself, but through the add-on effect of friends and family recommendations. Friends and family is still one of our most significant drivers of sales. As we find more and more new customers, each of them brings their own cadre of friends and family with them. On top of this advertising-driven growth, the launch of our retail stores and mobile trailers will provide additional sales channels and brand visibility. The introduction of new products, including the Compact Launcher in summer 2025, is also expected to drive incremental growth as we expand our target audience to include women and those seeking smaller, easier to carry, and easier to conceal alternatives.
We are also strategically investing in initiatives designed to enhance shareholder value. In the third quarter, we authorized a $10 million share buyback, and we have already repurchased $3 million in shares at an average price of $10.25, demonstrating our confidence in Byrna's long-term potential growth. This brings the total number of shares repurchased to date to 2,458,634 shares at an average price of $8.31, representing 85% of the approximately 2.88 million shares sold in 2021. Even after buying the $3 million of Byrna's stock, we still have an additional $7 million of dry powder that we can use to buy additional stock if we determine we need to do this. At the same time, our expansion of production capacity and improvements in manufacturing efficiency are expected to continue and will result in an improvement in both gross and net margins. As we scale, Byrna has become a self-sustaining profitable cash-flowing enterprise that is well-positioned for sustained growth in 2025 and 2026.
In short, we are building on our successes, setting the stage for further top and bottom line growth, ensuring that Byrna remains at the forefront of our industry. And this concludes my prepared remarks. Operator, if there are questions from any of our analysts, I'd be happy to take them at this time.
分析師問答
Thank you. We will now begin the question-and-answer session. Our first question is from Jeff Van Sinderen from B. Riley Securities. Your line is now live.
Hello. Good morning, everyone, and let me say, congratulations on the considerable progress that you guys are making and the strong metrics that reflect that. Can you speak a little bit more about adding the other shift as we get into Q1, where that will bring you in terms of production capacity? And then, I guess, how you're further evolving the supply chain for that ramp? I know you touched a little bit on that. And then, also kind of where inventory stands today versus the current sales trend that seems to be really strong and just kind of expected sales during the peak holiday period?
We can produce approximately 18,000 launches in one shift at our facility. This coming month and next month, we expect to sell around 18,000 launches or more each month. Therefore, we need to expand our production capacity. Fortunately, we have the option to add a second and third shift. As someone with extensive experience in manufacturing, I dislike seeing a factory operating with just one shift. We are eager to utilize the factory more fully. Next year, we anticipate pushing production to about 24,000 launches a month, potentially reaching 28,000 launches. We clearly have the capability to achieve this. Our focus now is on hiring more people, which is why I wanted to raise wages. The wage increase has a modest impact on the cost of the launcher, which is more than offset by the increased production volume. Even with the higher wages, the launcher costs will decrease as we scale up production.
Regarding our supply chain, we have been continuously adding suppliers. I've previously discussed our all-truck strategy, and we are nearing its implementation. When the port strike occurred, only one of our products, out of the 115 components required for a launcher, was impacted. Thus, we are in a very good position from a supply chain perspective; nearly every product now has a dual source, and the few products that don’t are accessories that are not critical to launcher production. We are excited about expanding capacity and feel well-prepared to do so.
Okay, great. Your gross margins exceeded our expectations. Considering the production ramp, what are your expectations for gross margin in Q4? Also, are there any changes to your promotional plans?
I'll let Lauri take the gross margin question, if you don't mind, Lauri.
Sure. Yeah. I mean I think we expect gross margin to stay pretty close to that for Q4; could be a slight uptick, but because of the sales and the promotional sales that we will be running in Q4, I don't expect much of an uptick. We're looking for more of an uptick on gross margin going into 2025.
And the second half of your question, Jeff, was about promotions.
Yeah.
So the interesting thing is, we were running at a $25 million clip for September. There were no sales in September. We will have a sale in October. In fact, today is the second day of Prime days. Just to give you a little heads up here, we sold more yesterday on Amazon than we normally do in five days on Amazon, and we expect to do the same. So we would expect sales for Prime days and also for Black Friday to have some impact on revenues. Although, it may have a somewhat negative impact on margins, but I wouldn't imagine that to be more than maybe 1 percentage point.
Okay. Great. Thanks so much for taking my questions. I’ll take the rest offline.
Thank you.
Thank you. Our next question is coming from Matt Koranda from ROTH Capital Partners. Your line is now live.
Hey, everybody. Congrats on the great results. So maybe just wanted to cover the commentary that it sounded like you were making there, Bryan, during the prepared remarks. I guess, you don't give official guidance, but it sounded like you did say that revenue could be up by as much as 100% for the full year. And I think you also mentioned there was a run rate in September, if we pull that forward that could result in about $25 million in revenue for the fourth quarter. So just wanted to hear about the sort of the range of outcomes that you expect for the fourth quarter and some of the swing factors that might drive you above that range or below?
We're now 10.5 months into the year, so it's reasonable to share our expectations for the year. Currently, we're on track for a $25 million run rate, and I don't foresee it being less than that. There's a chance we could exceed that figure, but I’m unsure since September tends to be a weaker month in the fourth quarter. However, this is actually higher than we had initially expected. We anticipated not reaching $25 million, and if we do, it will push us over $80 million. Last year, our revenue was $42 million, and that's why I noted a potential 100% increase. We're not providing guidance because we don’t see significant value in doing so. We recognize strong momentum, which we don't expect to diminish. We're attracting more celebrity endorsers, our product is becoming more normalized, and our retail investors are increasing their purchases. This is all happening before we open new retail stores and launch new products. We believe there will be good growth next year, but we're hesitant to assign a specific number to it.
I would like to delve deeper into the promotions you executed in the third quarter and any insights regarding what drives consumer demand. I noticed there were some promotions offering discounts in August, and I'm assuming there are more planned for the fourth quarter. How should we approach this as we get closer to the important Black Friday period? Additionally, since Black Friday and Cyber Monday occur relatively late in your quarter, could you provide any thoughts on how that might affect the fourth quarter compared to the first?
Black Friday this year is on November 29, and our fiscal year ends on November 30. Therefore, many of the sales from Black Friday and Cyber Monday will actually be recorded in our first quarter, as most deliveries won't happen until after that date, aside from a few from Amazon. Through our experiences, we found that a 10% discount site-wide, as well as a 10% discount on LE during the August sale, helped increase traffic. Additionally, our products have received ‘best products’ badges on Amazon in the air gun category, which is contributing to increased sales. As Bryan mentioned, our sales yesterday on Amazon were more than five times our usual daily volume.
So we don't anticipate another Amazon sale this quarter. We will have the Prime sales, followed by a Black Friday sale. Amazon's approach will be similar to Byrna's. We typically hold a Byrna Black Friday at the end of October, which will significantly impact Q4. This sale will likely last for five days and will offer around 10% off. Many customers wait for this sale, and we want to ensure deliveries are made in time for Christmas. Additionally, we're experiencing impressive engagement with our email list. Our active email subscribers have increased this year from 201,000 at the end of last year to 526,000 at the end of September. Every email we send results in a boost in sales. Historically, we sent two emails a week to avoid overwhelming subscribers, but for Q4, due to the holiday season, we are increasing that to three emails a week. We carefully monitor our unsubscribe rate, which has dropped to 0.12% from 0.47% at the end of last year, even as our email list has expanded.
Not every email includes a sales pitch; many share stories about using the Byrna or highlight current events, making them engaging enough for recipients to open. We've found that once they open our emails, our click-through rate exceeds 50%. Consequently, the topic of the emails isn't critical; our goal is simply to encourage opens and clicks to our website, resulting in increased sales. So, we are conducting a Byrna Black Friday sale in October. The actual Black Friday sale at the end of November will have some impact, but it will be modest in Q4, with most of its effects felt in Q1 of next year. Moreover, our increase from two to three emails per week should positively influence results.
Okay. Super helpful. Maybe just one more, if I could sneak one in. So on marketing, you mentioned that there may be some new advertising channels opening up, Bryan. So it sounds like perhaps some mainstream sort of cable news channels may present an opportunity. Just wondering if you were willing to put a time frame on that, where you think it could happen, what that would open up for you in terms of marketing dollars to be spent? Any color on that would be great.
We are bringing on three new endorsers this quarter, and we expect that pace to continue into next year. Additionally, we are increasing our marketing spend by about $200,000 each month. In Q2, our spending was approximately $800,000 per month, increasing to about $1 million in Q3, and now reaching around $1.2 million this quarter. We anticipate that trend to continue, projecting a 50% growth rate in marketing expenditures for the next year. As long as our return on ad spend remains steady at 5%, we expect to see a corresponding rise in direct-to-consumer sales.
Okay. Great. Appreciate it. I’ll jump back in queue. Thank you.
Thank you. We’ve reached the end of our question-and-answer session. I'd like to turn the floor back over to management for any further or closing comments.
Well, I just want to say to everybody, thank you very much. We appreciate your support. Obviously, we're very pleased with the continued growth in Byrna and our continued acceptance by the media generally and by all of our customers. So once again, thank you very much, and we’ll talk to you shortly.
Thank you. That does conclude today's teleconference and webcast. You may disconnect your line at this time and have a wonderful day. We thank you for your participation today.