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Earnings Call Analysis
Summary
Q3-2024
In Q3 2024, Byrna Technologies reported record revenue of $20.9 million, a staggering 194% increase from the previous year, thanks to an effective advertising strategy leveraging celebrity endorsements. Gross profit rose to 62.4%, significantly aided by higher direct-to-consumer sales, which represented 74% of revenues. The company also achieved a net income of $1 million, reversing last year's loss, and anticipates nearly 100% growth for the full year, estimating Q4 revenue at $25 million. Operational expansions, including new retail stores and production capabilities, prepare Byrna for continued success as it aims for sustained growth into 2025.
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 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.
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 Kerns, 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 a 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 in Amazon compared to the prior year period.
For the first 9 months of 2024, net revenue totaled $57.8 million, which is up 114% from $27 million in the first 9 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 an intensive cost component reduction effort, which was spearheaded by Byrna's engineering team and the economies of scale resulted resulting from increased production volumes. For the first 9 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 9 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 9 months of 2024, net income was $3.1 million compared to a net loss of $7.4 million in the first 9 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 9 months to $6.3 million, an $8.1 million improvement from the prior year. Cash and cash equivalents at August 31, 2024, and totaled $20.1 million compared to $20.5 million at November 30, 2023. The 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 sequential growth from Q2 to Q3, which was now our fourth consecutive quarter of sequential growth, the seasonal -- the slow seasonal effect of Q3 was overwhelmed by the strong growth for Byrna.
The 4 quarters of sequential growth highlights the continued impact our celebrity endorsement advertising strategy. And I think also the ongoing normalization of both less-lethal product category and Byrna's growing brand awareness. Since launching the celebrity endorsement advertising program in Q4 of last year, we've consistently maintained a minimum ROE or return on advertising spend of at least 5x, which is highly accretive to Byrna's bottom line. This has resulted in driving burnito profitability. As a result of this, Byrna is now a stable, profitable enterprise with positive cash flow and as Lauri mentioned, approximately $20 million of 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 a number of influencers that have been on board for many months, including Glenn Beck, Bill O'Reilly, Judge Jeanine Puro, Dan Bongino, and [ Jesse Cole ]. In fact, Sean Hannity, our original celebrity endorser had been promoting Burner 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, a 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 the 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 we 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 that there is still significant upside growth to be had simply by expanding our roster of celebrity endorsers on terrestrial radio, podcast and the smaller cable networks.
Currently, we are working with celebrity endorsers across several platforms including iHeart, Westwood One, Sale of 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 2 to 3 additional personalities each quarter. We recently signed [indiscernible] on TBN and we 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 continue to normalize the less lethal industry. To date, Byrna has been featured on more than 2 dozen news programs on channels such as ABC, Fox, News Max, News Nation 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 are not running a sale which proves that when people learn about Byrna and the nonlethal 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 international 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 [ By Mart ] 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 as compared to our 2024 spend. We are holding our growth in advertising spend to 50% for 2025, as you need to keep in mind are a manufacturer and we cannot outpace our ability to produce launches. We are not selling insurance or software that can be easily 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 burner retail stores. As of today, we have signed lease agreements for new stores in Nashville, Tennessee, Scottsdale, Arizona; and sale of 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 2 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 80% rate. That means 8 out of 10 people that shoot the product by 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 legal 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, [indiscernible].
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 a years 2 and 3, 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 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 for LatAm's losses as it's 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 3 years should Byrna LATAM reach critical scale and should it be able to implement the accounting and internal controls necessary to be part of a U.S. public company. In the meantime, Byrna will continue to manufacture burner 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. So this means that once a Mexican citizen completes the training program, they are able to legally use our launches 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 both -- 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 us 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. and 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, 4 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 it reduces the risk of a supply chain disruption by having ammo produced here in the U.S. It shortens our lead time, and it ensures 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 2 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.
And 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 by our public relations firm. Also, as we continue to expand the roster 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. And as we find more and more new customers, each of them bring their own cadre of friends and family with them.
On top of this advertising-driven growth, the launch of our retail -- of our new retail stores and mobile trailers will provide additional sales channels and brand visibility. The introduction of new products, including the Compact launch during the 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 and 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 and it represents 85% of the approximately 2.88 million shares sold in 2021. We even after buying the $3 million of Byrna's stock, we still have an additional $7 million of dry powder that we can 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 in setting the stage for further top and bottom line growth, ensuring that burner 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.
[Operator Instructions]. Our first question is coming from Jeff Van Sinderen from B. Riley Securities.
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.
Yes. As you saw, we can produce approximately $18,000 -- 18,000 launches in one shift facility. We are -- this coming month and next month, probably selling somewhere 18,000 launches or more a month. So we clearly need to be expanding our production capacity. The good thing is we've got a second and third chip open to us as a guy who's been in the manufacturing business, most of my life, you hate to see a factory run at just one shift. So we're excited about utilizing the factory more fully.
So we think that next year we'll probably be pushing production up to 24,000 launches a month, maybe 28,000 launches a month. And we clearly have the capability of doing that. What we need to do is to hire more people and Jeff, that was one of the reasons that I wanted to raise the wages. It has a very, very modest impact on the cost of the launcher and, in fact, is more than offset by the increased volume. So even with the increased wages, the cost of the launch will go down as we expand our production.
In terms of the supply chain, we have been adding suppliers continuously. I've spoken for a long time about the all-truck strategy. And we are very close to being there. When this port strike came about, we only had one product that would have been affected by the port strike out of the 115 components that go into producing a launcher. So we're really in very, very good shape from a supply chain standpoint Almost every single product now has a dual source. Some of the products that are not quite there yet are accessories and not critical to the production of launches. So we're excited to expand the capacity, and we're in a good position to do so.
Okay. Great. And then your gross margins came in well above what we were looking for. And considering the production ramp, what do you expect or I guess any thoughts on gross margin for Q4, and then any change in promotional plans -- sorry, any change in [indiscernible].
I'll let Lauri take the gross margin question, if you don't mind, Lauri.
Sure. Yes. 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. 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 5 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. It may have a somewhat negative impact on margins, but I wouldn't imagine that to be more than maybe 1 percentage point.
[Operator Instructions]. Our next question is coming from Matt Koranda from ROTH Capital Partners.
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 sort of above that range or below.
Yes. We're -- I mean, we're now 10 and a half months into the year. So it's not too much of a stretch to give where we think we're going to be for the year. As I said, we're running at a $25 million clip. I don't see any reason we would be less than that. There is the possibility that we're more, but I don't know. September is generally a weaker month in the fourth quarter. But this is, honestly, Matt, above where we had anticipated being. We didn't expect to be up at $25 million. If we're at $25 million, that clearly is going to put us over $80 million. Last year, we were $42 million, and that was the reason I gave that will be up by 100%.
We are not giving guidance because we don't see any real benefit from it. But we know that there's been very strong momentum. We don't expect the momentum to stop. We're seeing the ability to attract more and more celebrity endorsers. We're seeing a continued normalization of the product. We're seeing our retail investors increasing their purchases. And this is before we bring on the new retail stores before we bring on the new products. So we think that there'll be pretty good growth for next year. But we're loath to put a number to it.
Okay. Fair enough. And then I wanted to see if you could maybe just dig a layer deeper around the promotions that you ran in the third quarter. Maybe just any learnings in terms of what induces consumer demand. I noticed there were some 10% of sort of promotions that were run in August. I assume there's probably more in plan for the fourth quarter. How should we think about that heading into sort of that critical Black Friday period? And maybe just since Black Friday and Cyber Monday are kind of happening pretty late in your quarter, maybe any commentary around how that impacts the fourth quarter versus the first.
Yes. So first on the last part of that, Matt. So Black Friday this year, right, is November 29, I think it's 29. Anyway, our fiscal year-end is November 30. So as you can imagine, a lot of the sales from Black Friday, Cyber Monday, those are actually going to fall into our first quarter because we're not going to have a lot of those delivered other than maybe some Amazon ones, but it's really late for us on the fiscal year.
I think some of the learnings that we had, I think, 10% -- when we do 10% off-site wide, and we also did 10% off the LE for the first time in that August call, that certainly drove some traffic. We know that these prime days on Amazon, we've got the best products like -- some of the products we've got the best product badge for the air guns in the category for Amazon now. So that is certainly helping to drive that additional sales. And as Bryan said, it was -- yesterday, it was more than 5x what we would normally do on a day in Amazon.
Yes. So we don't expect another Amazon sale this quarter. We'll have the prime sales, and then we'll have a Black Friday sale. Amazon will be the same as Byrna we traditionally run a burn a Black Friday at the end of October. So that will really be the sale that impacts Q3. That will probably -- Q4, excuse me. And that will probably be a 5-day sale again, in the 10% range. There's a lot of people that wait for that sale. We want to make sure everybody gets stuff in time for Christmas.
The other thing we're seeing is we're seeing incredible power in our e-mail list. So our e-mail list has grown this year from -- we had 201,000 e-mail subscribers that were active. In other words, if they had bought something or engaged with us over the last 90 days as of the end of last year. At the end of September, that list had grown to 526,000 active e-mail subscribers. Every time we send an e-mail out, we see a jump in sales. We have traditionally run 2 e-mails a week because you have to have a balance between annoying people so much that they start to unsubscribe and getting the message out. We are now moving that to 3 e-mails a week for Q4 because of the holiday season. And we keep very, very close analysis of our unsubscribed rate. And I will tell you, the unsubscribe rate is now down to 0.12%. So about 0.1%. At the end of last year, it was 0.47%.
So we've seen our e-mail unsubscribed list rate go down. even as the size of our e-mail list has grown. And not every e-mail is about a call to action. A lot of these are about people using the Byrna, stories of people as to why they bought the Byrna, they're about topical events. So they're interesting and they get people to open the e-mail. What we've discovered is that when they open the e-mail, we have a click-through rate of over 50%. So it really doesn't matter what we're talking about on the e-mail. We just want them to open the e-mail and to click through to our website, and then we see growth in sales.
So we're doing 2 things. One, we're having a sale in October, the Byrna Black Friday sale, as Lauri said, the actual Black Friday sale that happens at the end of November, will have some effect, but a very modest effect in Q4. Most of that effect will be in Q1 of next year. But we have gone from 2 to 3 e-mails a week and we think that, that will have some effect.
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, maybe 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.
Yes. So we expect -- we're bringing on 3 new endorsers this quarter, and we expect that rate to somewhat stay consistent for next year. And we're growing our marketing spend by about $200,000 a month. So in Q2, we were at about $800,000 a month. In Q3, we're at about $1 million a month. This quarter, we're at about $1.2 million a month. And we expect it to continue to grow at that rate. That's why I'm saying, I think over next year, we'll probably be at a 50% growth rate in terms of marketing spend. And so long as our ROAS stays consistent at 5%. And again, we see no reason that it wouldn't we'll see a commensurate increase in DTC sales.
We 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 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.