Wrap Technologies(WRAP) - 2025 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Operating expenses were reduced by 26% from Q1 to Q2 2025, declining to $3.3 million from $4.5 million [29] - Year-to-date operating expenses are down 14% compared to the same period last year, from $9.1 million to $7.9 million [29] - Cash flow improvements were noted, with net cash used in operations declining by $2.2 million for the first six months of 2025, down to $5 million compared to $7.2 million in the same period of 2024 [29] - Cash and cash equivalents increased by 16% to $4.2 million as of June 30, 2025, up from $3.6 million at December 31, 2024 [29] - Revenue for Q2 was $1 million, with year-to-date revenue at $1.8 million [30] Business Line Data and Key Metrics Changes - BolaWrap deployments are increasing across diverse law enforcement agencies, with strong usage reported in Colorado, North Carolina, and Canada [10] - Agencies in Florida are evaluating BolaWrap as a strategic replacement for traditional electronic control devices like TASERs [10] - The crisis intervention team in a major Floridian agency reports more frequent BolaWrap use than TASERs, indicating a shift towards safer tools [11] Market Data and Key Metrics Changes - Favorable federal regulatory changes, including the Supreme Court decision in Barnes v. Felix, are driving adoption and sales of BolaWrap [15][16] - Increased inquiries and strategic discussions with customers are being observed due to heightened awareness around safer alternatives to traditional use of force tools [17] Company Strategy and Development Direction - The company has completed its restructuring efforts and is now focused on a renewed go-to-market strategy that emphasizes pre-escalation [5][40] - The introduction of new subscription models, Wrap Ready and Wrap Plus, aims to address customer concerns regarding replacement costs and enhance value propositions [31][32] - The company is expanding into adjacent markets such as healthcare, transportation, and private security, leveraging its existing technology and partnerships [26][64] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the momentum building for Wrap Technologies, citing a sharp increase in purchase orders and positive customer feedback [4][40] - The company believes it is well-positioned to capitalize on the evolving regulatory landscape and increasing demand for safer policing tools [40] - Management highlighted the importance of training and partnerships in driving adoption and success in the market [25][52] Other Important Information - The company has applied for nearly $1 million in DOJ-funded grants to support pre-escalation tools and training [33] - A new counter UAS capability has been developed, targeting a growing market projected to reach $6.8 billion by 2030 [38] - The rebranding of the body-worn camera business line to WrapVision aims to address data sovereignty concerns and enhance product offerings [39] Q&A Session Summary Question: How do you plan to accelerate adoption among law enforcement agencies in the US and internationally? - Management noted that adoption is being driven by regulatory changes and direct engagement with departments, emphasizing the importance of training and connectivity with officers [42][45][50] Question: How do you plan to penetrate non-law enforcement sectors? - The company is already seeing interest from hospitals and correction facilities, with a focus on scaling operations and leveraging data to drive adoption [56][60][64] Question: Are there adjacent product lines or technology upgrades planned in the next eighteen months? - Management confirmed ongoing developments, including counter drone capabilities and enhancements to the body-worn camera line, indicating a strategic focus on expanding product offerings [67][70] Question: What is the status of the company's move to Virginia, and when do you expect production to ramp up? - The company has fully moved to Virginia and is prepared to scale production in response to increasing demand [76][78] Question: How do you see one-time sales versus subscription services as a portion of your revenues? - Management highlighted a strategic shift towards recurring subscription models, which are expected to provide more stable revenue streams compared to one-time sales [80][81]