Q2 2024 Byrna Technologies Inc Earnings Call

Participants

Bryan Ganz; President, Chief Executive Officer, Director; Byrna Technologies Inc

David North; Chief Financial Officer; Byrna Technologies Inc

Jeff Van Sinderen; Analyst; B. Riley Financial, Inc.

Jon Hickman; Analyst; Ladenburg Thalmann & Co. Inc.

Presentation

Operator

Good morning, and welcome to Byrna's fiscal second 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 of the company, CEO, Bryan Ganz; CFO, David North; and CFO designee, Lauri Kearnes. Following their remarks, we'll open the call to questions.
Earlier today, Byrna's released results for its fiscal second quarter ended May 31, 2024, a copy of the press release is available on the company's website. Before turning 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 and actual results could differ materially from the statements made today.
Please refer to the burners 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 obligation 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 and 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 would like to turn the call over to Byrna CEO, Bryan Ganz. Sir, please proceed.

Bryan Ganz

Thank you, Kevin, and thank you, everyone, for joining us today. This morning, we filed our 10-Q with the SEC and issued a press release providing our financial results for the fiscal second quarter ended May 31, 2024, as well as highlighting key business cost accomplishments from the year so far.
I'll start by passing the call to David north, our CFO, who will discuss our financial results for Q2. Following his remarks, I'll review our record-breaking quarter, highlighted by $20.3 million in revenue and continued GAAP profitability. I will then offer insights into our operation and discuss our go-forward strategy.
Lastly, we'll open the call to questions from research analysts. David?

David North

Thank you, Bryan, and good morning, everyone. Let's discuss our financial results for the second fiscal quarter ended May 31, 2024. Net revenue for Q2 2024 was $20.3 million. That's up 76% from the $11.5 million we reported in the fiscal second quarter of 2023. This $8.8 million increase is primarily due to the transformational pivot in our advertising strategy, which we kicked off in September of 2023.
The success of our celebrity endorsement strategy resulted in a $7.9 million increase in direct-to-consumer revenues through our web website and Amazon compared to the prior year period. Gross profit for Q2 2024 was $12.6 million or 62% of net revenue compared to $6.2 million or 54% of net revenue for Q2 2023.
The increase in gross profit margin is largely attributable to additional sales through our higher margin direct to consumer channels and was further improved by an intensive component cost reduction effort spearheaded by Byrna's engineering team as well as the economies of scale resulting from increased production volumes.
Operating expenses for Q2 2024 were $10.6 million compared to $7.2 million for Q2 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 as part of the company's new advertising strategy and an increase in payroll, primarily in marketing and engineering as the company improves its capabilities in these areas.
Net income for Q2 2024 was $2.1 million, a $3.2 million improvement from a net loss of approximately $1.1 million for Q2 of 2023.
Adjusted EBITDA, which is a non-GAAP metric for Q2 2024, totaled $2.9 million compared to negative $0.8 million for Q2 2023. Cash and cash equivalents on May 31, 2024, totaled $24.8 million compared to $20.5 million on November 30, 2023, and inventory on May 31, 2024 totaled $15.5 million compared to $13.9 million at November 30, 2023.
The company continues to have no current or long-term debt. As mentioned during our last call, I'll be retiring at the end of this week. I am truly proud of the work we've done at Byrna and the financial milestones we've achieved. We took sales from less than $1 million in the entire fiscal year of 2019, to $20.3 million in the second quarter of 2024.
And we turn Byrna into a thoroughly profitable in the enterprise. I want to thank Bryan for the opportunity to be part of this incredible journey and for his leadership in driving Byrna's mission forward. As a shareholder, I'm confident in the future of the company with Lauri Kearnes, leading our financial department.
Lauri has extensive experience as a public company executive as well suited to help take Byrna's to new heights. I'll be staying on as a consultant to ensure a smooth transition and supporting Lauri, as needed.
And now for me, the floor is open for Lauri.

Good morning, everyone. I'm quite honored to be joining Byrna at a time when the company is building such strong momentum Byrna has recent performance highlighted leaps in year-over-year revenue growth reflects the success of our strategic initiatives and operational efficiencies.
I chose to join Byrna because I'm passionate about the company's mission, to provide innovative less-lethal personal security solutions. My background as a public company, CFO, particularly my experience, driving financial strategy at consumer focus businesses align well with Byrna's needs as we continue to scale and innovate.
The transformational changes implemented by the team have laid a strong foundation for our future trajectory. And I'm eager to leverage my background to further enhance our operations and drive sustained growth. We wish David all the best in his retirement and look forward to continuing to work with him as an adviser to Byrna.
I'll now turn the call back over to Bryan.

Bryan Ganz

Thanks, Lauri. Thank you, David. As you can see from the financial results with record sales, record gross profit margins, record net income, record adjusted EBITDA, and record cash flow burn is incredibly well positioned for continued financial success. The key to that success is, of course, continued top line growth for that reason I'd now like to provide an update on Byrna's key growth initiatives and outline our plans for the year ahead and beyond.
Starting with our marketing strategy, as is plainly evident, our pivot last September to a new advertising strategy based on the power of celebrity endorsement is continuing to deliver strong year-over-year revenue growth with the recent addition of more celebrity influencers brands brand recognition continues to grow, driving strong top line growth, particularly in our DTC channels.
We are now working with more than 10 celebrity influencers, including Sean Hannity, Glenn Beck, Bill O'Reilly, Judge Jeanine Pirro, Dan Bongino, Jesse Kelly, Dana Loesch, Michael Berry, Howie Carr and Mike Gallagher.
Our record $20.3 million of revenue in Q2, DTC sales on Byrna.com and Amazon.com accounted for $14.6 million or 72% of that number as compared to $6.8 million or 59% of total revenue in the same period last year. And keep in mind that the DTC sales channel is our highest margin sales channel.
With a gross profit percentage for this past quarter of 69.5%. So the question is this model sustainable simply put? Yes, the current model is sustainable and we expect it to continue to drive impressive year-over-year growth?
Well, we do not anticipate that we will see the extraordinary 6X to 7X ROAS as levels or return on advertising spend that we achieved during the holiday selling season, we are confident that we can maintain a highly accretive 4X to 5X ROAS as ensuring substantial profitability and positioning us for long-term success.
Our current role as target for our discretionary marketing spend is a 5X multiple, which we are continuing to achieve. This means that for every $1 of advertising spend, we are generating at least $5 in DTC sales with a 69.5% gross profit margin for direct-to-consumer sales. This translates into $3.48 in gross profit for every $1 of advertising spend.
With variable expenses running at 10% of sales. The additional profit earned from each incremental dollar of advertising spend is $2.98 or $1.98 net of the advertising spend itself. This translates into a 198% return on investment, even if we were to lower our minimal minimum acceptable ROAS as requirement to 4X for incremental advertising spend, we would still have 140% return on investment.
At a 3X ROAS as each incremental advertising dollar would generate an 80% return on investment. Consequently, sustainability of the celebrity endorser advertising model is not an issue, as we could accept, if necessary, lower ROAS as multiples while still generating ever increasing EBITDA margins.
That said, our goal clearly is to keep our ROAS as high as possible. Towards this end, we are continuously monitoring the performance of not only the influencers themselves, but also the platforms time of day and content of the message. This requires us to look at several variables.
First, we take into account the frequency of the endorsement. We learned early on that there is an optimal frequency for each endorser to frequent and the sales generate do not justify the incremental ad spend two, infrequent and we are unable to reinforce the message. Our goal is to find to maintain the appropriate balance for each influencer.
Secondly, we evaluate the platforms used while radio continues to deliver strong returns, our returns on TV tend to be even higher because people can see the launchers and operation podcasts, on the other hand, have been hit or miss. For some endorsers podcasts are extremely effective for others, not so much. Our goal is to find what works for each endorser.
Third, we evaluate the tone, tenor, and content of the endorsement. We tailor the message to best resonate with each influencer’s audience. Some audiences appreciate a forceful message. In other words, it's a scary world out there and you need to be prepared. Other it does require a more nuanced message focused on the less-lethal nature of Byrna.
Our job is to find what works best for each individual influencers audience and to craft the message best suited to that demographic. With the information gleaned from monitoring all these factors, we can then fine tune our ad spends, selecting the right frequency platform and message for each influencer.
And then allocating additional resources to those influencers who are moving the needle while strategically reducing spend where returns are subpar. So while the celebrity endorsement model may not be infinitely scalable and well, there are diminishing returns over time for any single influencer.
We are confident that we can sustain top-line growth with the celebrity endorser model as a whole through both the expansion and rotation of our roster of endorsers and the judicious management of each influence. So for this reason, the -- question is not really whether Byrna's advertising strategy is sustainable it is the right question to be asking is how far and how fast can we scale this model.
First, as I already mentioned, we believe that there is still significant upside growth to be had simply by expanding our roster of celebrity endorsers. Currently, we are working with just 10 across several platforms, including, among others, iHeart, Westwood One, Salem Media and Radio America.
Not only does each of these networks have many additional influencers that we can work with. But there are also a number of other networks that we have not even begun to tap into.
While our celebrity endorser advertising spend is pretty much locked in for the balance of 2024, we are asking for RFPs from all of the above mentioned networks and others for 2025, so that we can build a program for next year that continues to grow Byrna's brand awareness and market presence by tapping into the audiences of these influencers.
In dollar terms, our goal is to increase our celebrity endorser advertising spend by an incremental 50% in 2025 over 2024.
Next question then is what can we do beyond the celebrity endorser based advertising model? The Byrna marketing team is constantly look to new advertising channels to both augment and amplify our celebrity endorsement model and to expand our reach. Towards this end, we are once again exploring billboards.
As most of you are aware, we used billboards in the past. They proved to be effective growing sales by several hundred percent to the markets where they appeared. Unfortunately, they were not necessarily cost effective generating ROAS as multiples in the 2.5X range.
We believe the circumstances are now sufficiently different to merit another trial of this advertising medium as our product is becoming more broadly accepted and our ad buying power more formidable, we are now getting quotes from the large billboard companies that are significantly lower than what we were paying previously unmeasured as measured on a CPM or cost per thousand basis.
We are hopeful that the reduced rates will allow us to achieve an acceptable ROAS as on billboards, as billboards are an almost infinitely scalable advertising medium. We are also exploring television advertising for the same reason we know that it is effective in the past. It was simply not cost effective with returns in the 3X ROAS range.
With the increasing normalization of the less lethal market and with Byrna's growing public awareness, we are already being approached by a number of smaller cable and broadcast channels that are interested in working with us. We will be devoting approximately 10% of our advertising budget to television for the balance of 2024 Avid proved successful in terms of ROAS, as we will increase our commitment to this channel for 2025.
Finally, we are looking at partnerships with other industry players that work with the same demographic as Berto. One of the more interesting opportunities we are currently exploring is a partnership with USCCA or the United States Concealed Carry Association.
USCCA is a membership organization that provides education, training and insurance to gun owners if they were to be arrested or sued in civil court after using their firearm or frankly any other means of self-defense. They also provide extensive gun safety education and training.
The USCCA currently has over 800,000 members. We believe that these 800,000 gun owners are also our target demographic as they are the most responsible gun owners interested in protecting their families but doing so in the safest and most responsible manner possible.
We believe that there's an enormous cross marketing opportunity for both companies. Specifically, we would want to offer the Byrna line of self-defense products to USCCA members, providing them with a non-lethal option, lower down on the continuum of force.
At the same time, we believe that many of Byrna's customers would be interested in the USCCA membership for training and for legal preparation in the event they find themselves charged with the crime or facing civil suit after using the Byrna for self-defense.
In short, the management team at Byrna is not sitting on our hands nor resting on its laurels. Rather, we are constantly expanding and refining the program, the programs that are working, while at the same time exploring new advertising channels as we look to increase the public's awareness that there are viable alternatives to lethal force.
We are convinced that there is significant growth potential for both Byrna specifically and for our industry generally as less-lethal becomes more broadly recognized as legitimate product category over the last 5.5 years since the Byrna was launched, sales have climbed from little more than [$200,000] a year to more than [$200,000] a day. That is a CAGR, a compound annual growth rate of 160%.
But the by the way, over the same period, our stock has appreciated just 37% a year. More importantly, despite selling this and seeing this massive growth in sales, we still have captured less than one quarter of 1% of our core constituency gun owners. What is a reasonable goal within this demographic, 5%, 10%, 20%? There are 100 million gun owners in the United States.
Even a modest 10% market penetration over the next 10 years would result in more than $10 billion in revenue based on the current estimated lifetime value of a burn, a customer and that does not take into account families that don't own a gun but want something to protect themselves.
It does not have to take into account our law-enforcement sales or the international market. So while we cannot yet know whether the TAM can support $500 million in annual revenues or $1 billion in annual revenues, we do know that there remains significant upside opportunity from here.
I'd now like to take this opportunity to update everyone on our retail store strategy, which we have alluded to in our last earnings call. We remain convinced that there is a very real opportunity to reach customers through dedicated Byrna at retail stores.
As I previously explained, we opened a dedicated company owned Byrna store in Las Vegas two years ago. This store has proven that a dedicated Byrna retail location with a shooting range for potential customers that tried the product before making a purchase is an extremely effective marketing tool and is economically viable on a standalone basis.
One of the reasons for this success is that when potential customers can demo the product, there is an 80% conversion rate. That means eight out of 10 people that walk into the store walk out with a burner. This compares to just slightly over 1% conversion rate in our online store.
Our Las Vegas store is currently operating at a run rate of about $1 million a year in sales and generating a 65% gross profit margin with relatively modest operating cost compared to most retail store models. At this level of sales, the Byrna stores generating contribution margins of approximately 35%.
As previously stated, based on the success of this first location and the success of the premier dealer model. We now intend to open three to four more company-owned retail stores before the end of the year. We've tentatively selected Scottsdale Nashville, the greater Boston area and somewhere in Southern California for these pilot stores.
Our goal will be to use these stores to both fully prove out the concept and to refine the store model. So specifically, we will use these stores to perfect the look and feel of the physical premises, develop the store, operating manuals, build-out, employee training, program, 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.
If these stores perform on par with the Las Vegas store, we will then look out to look to roll out a hybrid retail store model later next year, consisting of a combination of company-owned and franchised stores. We believe the market could easily support 100 or more Byrna stores across the United States.
The precise split between company-owned and franchised stores will be determined based on how quickly we feel that we could support the rollout of new stores from a product availability perspective, if we believe that we could rollout 100 stores in short order, we would need to rely more heavily on franchisees to be able to rollout such a large number of stores quickly.
On the other hand, if we feel that we can only support 20 new stores a year, we will likely keep these as company-owned operations. Keep in mind that even at a $0.5 million in sales per year per location, 100 stores would require us to ramp up production by 100,000 units. Just to support our retail locations.
At $1 million per location, we would need to produce an additional 200,000 units annually. This would be in addition to the 50,000 to 100,000 additional annual units we will need to produce simply to support the growth we expect from our current DTC and dealer business while we are confident our current facility can be expanded to support these volumes. It cannot happen overnight.
As we have seen this year, it has taken us more than six months to increase production by 8,000 units a month. For all the reasons just stated, we are very excited about the retail store opportunity and possibilities.
This could be an entirely new leg of the sales and distribution stool for Byrna up a channel that could ultimately be as large as our online sales channel. We will continue to keep everyone apprised of our progress in rolling out these first few locations.
Law enforcement. Last quarter, we discussed exploring whether we should expand the resources devoted to our law enforcement efforts that conclusion we have reached is that the high cost of marketing to domestic law enforcement, coupled with the cost of our products when compared to many of our competitors results in a subpar return on investment compared with other opportunities develop the Byrna as such as obviously e-commerce and retail stores.
For this reason, we have made the decision not to dedicate additional monetary resources to our domestic law enforcement program at this time. That said, law enforcement is important to Byrna, as it provides the credibility and social prove necessary to support our consumer business.
So while we will not devote additional monetary Roost resources to growing our presence in this market. We will continue to take steps to further professionalize our law enforcement program, improving the range of products and services offered to our law enforcement and private security customers.
This will include reintroducing our iconic 40-millimeter impact around the Byrna BIP to our law enforcement customers as some of our older investors will remember several years ago, we sold our original 40 millimeter business, including the IP and Molds to Facta Global of Canada when we pivoted to our current consumer base model.
Facta Global was our largest 40-millimeter to consumer at the time and a global leader in 40 millimeter sales and training as part of the sale Byrna negotiated royalty on every BPS sold worldwide, and we retain the exclusive rights to sell the blip in the United States. As part of Byrna's revamped law enforcement program Byrna will once again be offering the 40-millimeter beef to our law enforcement consumers.
In terms of financial resources. However, our law enforcement and military efforts will continue to be focused primarily on the international markets where there are fewer but larger agencies and there's a greater acceptance of less-lethal weapons.
These large international agencies can place much larger order, much larger orders than we typically see in the US which results in a better return on investment for Byrna. This can be seen with the several large international and military orders we have filled in recent quarters.
Notably, we just announced that we received an order for 2,500 launchers from a prominent Central American Armed Forces unit. So far, we have delivered 1,500 out of the 2,500 unit, a larger order. The balance of the order will be delivered this quarter and we believe will be followed up by a string of similarly sized orders over the next 12 months.
This win underscores our expanding influence in the region and further enhances our reputation globally, adding valuable social proof that supports our sales initiatives. Additionally, our success in South America's first and further demonstrated the global demand for less-lethal solutions.
Now, I'd like to speak a little bit about production to keep up with this growing demand, we have been increasing our production capacity throughout the year. Specifically, we increased production to 48,600 units for the quarter, hitting our internal goal of 18,000 units produced in the month of May. At the start of this year, we are producing less than 10,000 units per month.
With the expansion of our launch or production capacity we've been able to successfully work through our backlog, and we are now building inventory for the expected upswing in demand during the upcoming holiday season. While we do not hope forward we also want to be prepared for any surge in demand that may result from a spike in civil unrest in the wake of the upcoming presidential election.
As we look to next year, it is clear that we must continue to ramp up production capacity and we are taking steps to do so in addition to expanding our launch of production capacity, however, we must also expand our ammunition production capacity.
Accordingly, we are in the process of building a US-based ammunition production facility that will be located just a few miles from our launch or production facility in Fort Wayne. We hope to have this new facility up and running by year end.
This move is aimed at one, increasing our overall ammo capacity to reducing the risk of supply chain disruption, three shortening lead times and four, gaining greater control over the manufacturing process to ensure that we have the highest quality rounds in the market.
With this facility, we can guarantee that we can meet the forecast forecasted demand for our high margin ammunition products, even if international shipments become more difficult for any reason.
In conclusion, our success in significantly increasing consumer demand through new advertising strategies, combined with the planned expansion of our retail store program and our continued international law enforcement efforts is expected to sustain top line growth throughout 2024 and 2025.
At the same time, the expansion of our production capacity and the resulting manufacturing efficiencies we have been able to achieve should mean continued improvements in both gross and net margins. In short, Byrna is well positioned to build upon our recent successes, setting the stage for further top and bottom line growth, ensuring that Byrna remains at the forefront of the less lethal industry.
And I'll turn it back over to the operator.

Question and Answer Session

Operator

Thank you (Operator Instructions) Jeff Van Sinderen, B. Riley Securities.

Jeff Van Sinderen

Good morning, everyone. Aet me say congratulations, Tom, thanks for taking my questions. Wanted to circle back to the ROAS. And I'm wondering what sort of traction levels you're seeing as you add the newer or let's call it the latest influencers, your program? In other words, how do you think about adding more advertising influencers at this point and the ROAS that you're expecting to get from each new one?

Bryan Ganz

Sorry, Jeff, first off, thank you very much. I appreciate the question. As we stated, we are currently using a 5X ROAS as the threshold. So both the existing celebrity endorsers and the new celebrity endorsers must maintain that 5X ROAS as for us to continue to support their efforts.
Right now, that does not seem to be an issue. And we anticipate as we go into the holiday season, that the ROAS as levels will increase on So interestingly, you never know. We have brought on some celebrity endorsers given them an eight week or 12-week trial program and then determine that for whatever reason they just they're not resonating with their audience.
They're getting ROAS at levels that do not achieve our minimum threshold and we do not re-up. So all of the new celebrity endorsers that we've mentioned are achieving the same ROAS levels as the original celebrity endorsers.

Jeff Van Sinderen

Okay, great to hear. And then I'm curious on the -- I know you mentioned expanding into cable or just into television in general and more openness there, I think on some of those platforms, is there early traction you can point to there? And then also, what are your plans now for expansion there?

Bryan Ganz

Well, we started off advertising on television with Newsmax. So Newsmax approached us said that they would be willing to run our ads. And we've had a very strong return on advertising spend with our advertising on Newsmax. Now we have also been approached by several other of slightly smaller networks the Newsmax.
Some have worked, some have not and I think it's really dependent upon the audience on. I think when we look at the audience, it breaks down really into two different groups of people, those people that are willing to protect themselves and their family if they are put in a position of needing to do so and those people that are not.
And we don't do particularly well with the audience that is not willing to use pepper spray or a non-lethal logic protect themselves. So it is not everyday cable channel that will work for us. I think it is again very dependent on the particular audience that these Noos networks reach.

Jeff Van Sinderen

Okay. Fair enough. And then if I could just squeeze in one more on thoughts on what we should expect for gross margins, operating expenses on just kind of any sense you could give us there as we think about the next quarter or two, just wondering if we should see further expansion leverage?

Bryan Ganz

Yes. I'm going to actually turn this over to Lauri.

Hey Jeff. Yes, I mean, I think on the gross margin, we've been doing a lot of work around on designing for manufacturability. We've done some SKU rationalization. So we're going to continue in that. And we just launched an initiative of lean manufacturing within our facilities. So I think all of those are going to continue to lead to slight increase in margin. And obviously, if it's also the mix of the direct to consumer being in the 70% of ourselves, 72% to 74% of our sales. That should lead to slight improvement in gross margins going forward.
And as far as operating expenses, Bryan mentioned the ROAS, we're looking at 5X. So that's kind of where we see our marketing sales and marketing expenses, the variable expenses, about 10% of sales. So that's our Amazon fees, credit card fees, freight out the rest of the operating expenses should remain fairly stable. I mean, as you grow, you'll see a little bit of incremental some people cost in there, but fairly stable in the short term on those.

Jeff Van Sinderen

Okay. Great. Thanks, Lauri, and welcome to Bryan. I'll let someone else jump in.

Thank you.

Operator

(Operator Instructions) Jon Hickman, Ladenburg Thalmann.

Jon Hickman

Hey, Bryan.

Bryan Ganz

Hey, Jon.

Jon Hickman

Could you elaborate a little more on the production side? I think you said you're doing 18,000 a month now. And what do you expect that to get to by the end of the year?

Bryan Ganz

So we've hit 18,000 a month in May, and we expect to continue to run at the level of 18,000 a month for the balance of the year. And we are not selling 18,000 launchers a month. We're selling closer to 12,000 or 13,000 launches a month at this point.
So by producing 18,000 launchers, it's allowed us both to work through the backlog and to start building inventory for the Q4 period. We are now taking steps so that as we get into 2025, we will be able to once again increase our production. But each increase, it's not like turning a variable dial. It happens somewhat in plateaus because we have to add, either another shift or another line or a bunch more workers.
So we would expect that as we get into Q1 of next year, we'll probably start to ramp up from the current 18,000 units a month to some number above that. I don't know whether it's 22,000 or 25,000, but I wouldn't see expect to see that increase prior to 2025.

Jon Hickman

Okay. And then, unless I missed it, you didn't mention the smaller on launcher and when you like, who are you still plan on having that out by the end of this fiscal year?

Bryan Ganz

No. It will not be out by the end of this fiscal year. We have first, we never really expected to hit that. I will say that know the development is going according to plan. We're excited about this. We expect to see that out sometime in the second half of 2025.

Jon Hickman

The second half of the calendar year or the fiscal year?

Bryan Ganz

Well, they're very close. So, yes, I was thinking second half of the calendar year, but yes, somewhere around this time next year.

Jon Hickman

Okay. And then I have a question for Lori. Your operating expenses are like over $10 million a year or $10 million a quarter. Is there any thought to breaking those out in the different categories, sales and marketing, that kind of thing?

Yes. I mean, I think it might be helpful, especially to see those variable expenses sales and marketing. That's something that we could look at. I think that would be helpful for you all to understand the components a little bit better. So I'll take that down to look at going forward.

Jon Hickman

This analysts would appreciate that.

Okay.

Bryan Ganz

And just Jon for back of the envelope, as Laurie said, the variable costs are, and let's just use $10 million of a bogey for the quarterly OpEx, -- 10% of our sales or $20 million is variable. So that was $2 million of the $10 million. If you are at a 5X ROAS as and we are expecting, let's say, $15 million in DTC business, that's going to be another $3 million of the $10 million. There's about $0.5 million of professional costs, public company costs.
There's another $3.5 million of people costs and then there's $1 million and everything else. And that's sort of the bigger buckets. Laurie can give you more granular detail at it when you get on a private call with her, but that's sort of the 30,000 foot breakdown of the expenses.

Jon Hickman

Okay. Thank you.

Operator

Thank you. (Operator Instructions) If there are no further questions, I'd like to turn the floor back over to management for any further or closing comments.

Bryan Ganz

Thank you, Kevin. And again, thank you, everyone. We appreciate your continued interest in Byrna. And to our investors, thank you for your continued support.

Operator

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.