Byrna Technologies Inc.
For the period ended Feb 28, 2026. Filed Apr 9, 2026.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Feb 28, 2026 · Filed Apr 9, 2026
BYRN$3.83+2.4%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2025-08-31; filed 2025-10-09.
0001437749-25-030736
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-02-28; filed 2026-04-09.
0001437749-26-011820
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 71 previous paragraphs and 56 current paragraphs.
31 unchanged; 14 reworded; 11 added; 19 removed; 7 previous and 0 current paragraphs rearranged.
Tables are not compared: 3 previous and 2 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (11)
Current report
Byrna Technologies Inc. designs, manufactures, retails and distributes less lethal personal security solutions intended for situations that do not require the use of lethal force. Our mission is to empower individuals to protect themselves and others, and our product strategy emphasizes ease of use, effectiveness, and reliability in both consumer and professional safety environments. We also develop tools intended to serve as alternatives to traditional firearms for law enforcement and private security customers with the goal of reducing firearm related incidents and supporting de-escalation practices. Our strategy includes positioning Byrna® as a consumer lifestyle brand associated with personal confidence and safety, while expanding our product portfolio to broaden market reach and drive sales growth from both new and existing customers.
Current report
We believe demand for less lethal products in the United States and internationally continues to rise and that this category will remain a growing segment of the broader security market. We plan to meet this demand by manufacturing and distributing our Byrna® SD, Byrna LE and most recently our Byrna CL launchers, along with continued expansion of our accessory and ammunition offerings.
Current report
Beginning in fiscal year 2025, we also reorganized our operations into two reportable sales channels, Direct‑to‑Consumer (“DTC”) and Wholesale (dealer/distributor), to align with our expanded omnichannel strategy, the opening of Company‑operated retail stores, and increased penetration into national retail chains and international distributors.
Current report
The Company operates primarily in the United States and Canada through wholly owned subsidiaries.
Current report
Segment Results
Current report
Direct‑to‑Consumer (DTC)
Current report
DTC revenue decreased to $18.1 million in the first fiscal quarter of 2026 compared to $19.9 million in the prior year period, primarily driven by a decline in direct‑to‑customer sales through the Company’s online channels, including Amazon and the Company’s website.
Current report
Wholesale (Dealer/Distributor)
Current report
Wholesale revenue increased to $10.7 million in the first fiscal quarter of 2026 compared to $6.3 million in the prior year period, reflecting (i) expanded relationships with national and regional retailers, (ii) enhanced engagement with distributors, and (iii) increased law‑enforcement interest.
Current report
Cost of goods sold was $11.6 million in the first fiscal quarter of 2026 compared to $10.3 million in the prior year period. This increase of $1.3 million, or 12.6%, is primarily due to the increase in sales volumes. Cost of goods sold attributable to Direct‑to‑Consumer (“DTC”) was $6.3 million in the first fiscal quarter of 2026, compared to $7.0 million in the prior year period. Cost of goods sold attributable to Wholesale was $5.3 million in the first fiscal quarter of 2026, compared to $3.3 million in the prior year period.
Current report
Net income was $0.8 million for the three months ended February 28, 2026, a decrease of $0.9 million compared to $1.7 million for the three months ended February 28, 2025.
Removed paragraphs (19)
Previous report
Byrna Technologies is a designer, manufacturer, retailer and distributor of innovative technological solutions for security situations that do not require the use of lethal force. Our mantra isLive Safe, and our core mission is to empower individuals to safely and fully engage in life and adventure. Our design team’s directive is to build easy-to-use self-defense tools to enhance the safety of our customers and their loved ones at home and outdoors. We are also focused on developing tools that can be used instead of firearms by professional law enforcement and private security customers to reduce shootings and facilitate trust between police and the communities they seek to serve. Our strategy is to establish Byrna® as a consumer lifestyle brand associated with the confidence people can achieve by knowing they can protect themselves, their loved ones and those around them. We believe we have a significant opportunity to leverage the Byrna brand to expand our product line, broaden our user base and generate increasing sales from new and existing customers.
Previous report
We believe that the United States, along with many other parts of the world, is experiencing a significant spike in the demand for less-lethal products and that the less-lethal market will be one of the faster growing segments of the security market over the next decade. We plan to respond to this demand for less-lethal products through the serial production and distribution of the Byrna® SD and expansion of the Byrna product line.
Previous report
On January 10, 2023, we created a new joint venture, Byrna LATAM, with Fusady S.A. ("Fusady") located in Uruguay, to expand our operations and presence in South American markets. We held 51% of the stock in Byrna LATAM, and the remaining 49% of stock in Byrna LATAM was held by Fusady. Under the terms of the joint venture, we did not control the Byrna LATAM. On August 19, 2024 we sold our 51% ownership interest to Fusady for $1 and entered into an exclusive distribution, manufacturing and licensing agreement with Byrna LATAM. The LATAM Licensing Agreement allows Byrna LATAM to exclusively manufacture the Byrna SD launcher and ammunition in certain South American countries and requires Byrna LATAM to pay us a royalty on Byrna products manufactured. The LATAM Share Purchase Agreement also includes put and call rights based on defined triggers that expire August 19, 2029.
Previous report
Cost of goods sold was $11.3 million in the second fiscal quarter of 2025 compared to $7.8 million in the prior year period. This increase of $3.5 million, or 44.9%, is primarily due to the increase in sales volumes.
Previous report
Net income was $2.2 million for the three months ended August 31, 2025, an improvement of $1.2 million compared to $1.0 million for the three months ended August 31, 2024.
Previous report
Nine months ended August 31, 2025 as compared to nine months ended August 31, 2024:
Previous report
Net Revenue
Previous report
The Company presents revenue net of returns, allowances, and discounts. Net revenues were $82.9 million in the nine months ended August 31, 2025 which represents an increase of $25.1 million, or 43.4%, as compared to the prior year period revenues of $57.8 million. Most of the increase in revenue can be attributed to a new marketing strategy, implemented in September of 2023, shifting advertising efforts away from social media platforms and towards celebrity endorsers. Direct to customer sales, via Amazon and our website, which increased by $7.7 million, or 17.3%, from $44.4 million in the nine months ended August 31, 2024 to $52.1 million in the nine months ended August 31, 2025. Sales to domestic dealers and retailers also improved, increasing by 122.4% to $21.8 million from $9.8 million in the nine months ended August 31, 2024. Sales to international markets, including Canada, increased from $3.6 million in the nine months ended August 31, 2024 to $7.9 million in the nine months ended August 31, 2025. In addition, the Company recognized $1.1 million in royalty revenue related to the LATAM Licensing Agreement during the nine months ended August 31, 2025.
Previous report
Cost of Goods Sold
Previous report
Cost of goods sold was $32.5 million in the nine months ended August 31, 2025, compared to $22.6 million in the prior year period. This increase of $9.9 million, or 43.9%, is primarily due to the increase in sales volumes.
Previous report
Gross Profit
Previous report
Operating Expenses
Previous report
Other Income (Expense)
Previous report
We recorded $0.3 million of foreign currency transaction loss during the nine months ended August 31, 2025, compared to $0.4 million during the nine months ended August 31, 2024. We recorded $0.4 million of interest income during the nine months ended August 31, 2025, compared to $0.9 million in the nine months ended August 31, 2024.
Previous report
Income Tax Provision
Previous report
Net Income
Previous report
Net income was $6.3 million for the nine months ended August 31, 2025, an improvement of $3.2 million compared to $3.1 million for the nine months ended August 31, 2024.
Previous report
Non-GAAP Financial Measures
Previous report
Adjusted EBITDA
Reworded paragraphs (14)
Previous wording
Our business strategy is twofold: (1) to fulfill the growing demand for less-lethal products in the law enforcement, correctional services, and private security markets and (2) to provide civilians – including those whose work or daily activities may put them at risk of being a victim – with easy access to an effective, non-lethal way to protect themselves and their loved ones from threats to their person or property.
Current wording
Our business strategy is twofold: (1) to fulfill the growing demand for less-lethal products in the law enforcement, correctional services, and private security markets and (2) to provide civilians – including those whose work or daily activities may put them at risk of being a victim – with easy access to an effective, less-lethal way to protect themselves and their loved ones from threats to their person or property.
Previous wording
The Company presents revenue net of returns, allowances, and discounts. Net revenues were $28.2 million in the second fiscal quarter of 2025 which represents an increase of $7.3 million, or 35.1%, as compared to the prior year period revenues of $20.9 million. Most of the increase in revenue can be attributed to a new marketing strategy, implemented in September of 2023, shifting advertising efforts away from social media platforms and towards celebrity endorsers. Direct to customer sales, via Amazon and our website, increased by $0.2 million, or 1.4%, from $16.1 million in the third fiscal quarter of 2024 to $16.3 million in the same fiscal quarter of 2025. Sales to domestic dealers and retailers also improved in the three months ended August 31, 2025, increasing by 155.2% to $8.7 million from $3.4 million in the three months ended August 31, 2024. Sales to international markets, including Canada, increased from $1.3 million in the three months ended August 31, 2024 to $2.9 million in the three months ended August 31, 2025. In addition, the Company recognized $0.3 million in royalty revenue related to the LATAM Licensing Agreement during the third fiscal quarter of 2025.
Current wording
The Company presents revenue net of returns, allowances, and discounts. Net revenues were $29.0 million in the first fiscal quarter of 2026 which represents an increase of $2.8 million, or 10.7%, as compared to the prior year period revenues of $26.2 million. The increase was primarily driven by higher wholesale dealer and distributor sales, which increased by $4.4 million. Direct to customer sales, via Amazon and our website, decreased by $1.8 million, or 8.9%, from $19.9 million in the first fiscal quarter of 2025 to $18.1 million in the same fiscal quarter of 2026. Sales to domestic dealers and retailers improved in the three months ended February 28, 2026, increasing by 114.9% to $10.1 million from $4.7 million in the three months ended February 28, 2025. Sales to international markets, including Canada, decreased from $2.0 million in the three months ended February 28, 2025 to $1.3 million in the three months ended February 28, 2026, which includes $0.2 million in royalty revenue related to the LATAM Licensing Agreement during the first fiscal quarter of 2026.
Previous wording
Gross profit is calculated as total revenue less cost of goods sold and gross margin is calculated as gross profit divided by total revenue. Included as cost of goods sold are costs associated with the production and procurement of products, such as labor and overhead, inbound freight costs, manufacturing depreciation, purchasing and receiving costs, and inspection costs. Gross profit was $16.9 million in the third fiscal quarter of 2025, or 60.1% of net revenue, as compared to gross profit of approximately $13.0 million, or 62.4% of net revenue, in the prior year period. The decrease was primarily due to a shift in sales channel mix as a larger proportion of sales were generated through wholesale channels, which typically carry lower gross margins than our higher-margin ecommerce sales.
Current wording
Gross profit is calculated as total revenue less cost of goods sold, and gross margin is calculated as gross profit divided by total revenue. Cost of goods sold includes costs associated with the production and procurement of products, including labor and overhead, inbound freight, manufacturing depreciation, purchasing and receiving costs, and inspection costs. Gross profit was $17.4 million during the first fiscal quarter of 2026, or 59.9% of net revenue, compared to gross profit of approximately $15.9 million, or 60.8% of net revenue, in the prior‑year period. The decrease in gross margin was primarily driven by a shift in sales mix toward Wholesale and Retail channels, which generally carry lower average selling prices than Direct‑to‑Consumer (“DTC”) sales, as well as higher manufacturing costs recognized in cost of goods sold during the period related to production variances.
Previous wording
Operating expenses were $14.1 million in the third fiscal quarter of 2025, an increase of $1.9 million, as compared to the prior year period expenses of $12.2 million. The increase is due to an increase of $0.8 million in marketing expenses, an increase of $0.8 million in variable expenses, which increase in proportion to sales volume, an increase of $0.3 million in employee compensation costs.
Current wording
Operating expenses were $16.5 million in the first fiscal quarter of 2026, an increase of $2.3 million, as compared to the prior year period expenses of $14.2 million. The increase is due to an increase of $1.3 million in marketing expenses, as the company incurred additional marketing costs to support business growth, an increase of $0.2 million in variable expenses, which increased in proportion to sales volume, an increase of $0.7 million in professional fees, largely attributable to higher accounting, audit, legal, and recruitment‑related costs, a $0.3 million increase in employee compensation costs, and an increase in credit losses of $0.4 million related to a higher allowance for certain customer receivables recorded during the quarter.
Previous wording
We recorded $0.1 million of foreign currency transaction loss during the three months ended August 31, 2025 compared to $0.1 million during the three months ended August 31, 2024. We recorded $0.1 million of interest income during the three months ended August 31, 2025 compared to $0.3 million in the three months ended August 31, 2024.
Current wording
We recorded $0.2 million and $0.1 million of foreign currency transaction loss during the three months ended February 28, 2026 and 2025, respectively. We recorded $0.1 million of interest income during the three months ended February 28, 2026 compared to $0.2 million in the three months ended February 28, 2025.
Previous wording
For the nine months ended August 31, 2025 and August 31, 2024, we recorded $1.7 million of income tax expense and$0.1 millionof income tax benefit, respectively. For the nine months ended August 31, 2025 and August 31, 2024, the effective tax rate was 18.3% and 0.2%, respectively. Our tax rate differs from the statutory rate of 21.0% due to the effects of state taxes net of federal benefit, the foreign tax rate differential as a result of Byrna South Africa, effects of permanent non-deductible expenses, and other effects.
Current wording
For the three months ended February 28, 2026 and February 28, 2025, we recorded less than $0.1 million ofincome tax benefit and$0.1 millionof income tax expense, respectively. For the three months ended February 28, 2026 and February 28, 2025, the effective tax rate was (0.4)% and 6.4%, respectively. The effective tax rate for the three months ended February 28, 2026 reflects discrete excess tax benefits related to the vesting of stock‑based compensation awards, which more than offset tax expense on pre‑tax income. Our tax rate differs from the statutory rate of 21.0% due to the effects of state taxes net of federal benefit, the foreign tax rate differential as a result of Byrna South Africa, permanent non-deductible expenses, and discrete items related to stock‑based compensation.
Previous wording
Cash and cash equivalents as of August 31, 2025 totaled $6.5 million, a decrease of $10.3 million from $16.8 million of cash and cash equivalents as of November 30, 2024.
Current wording
Cash and cash equivalents as of February 28, 2026 totaled $7.5 million, a decrease of $6.2 million from $13.7 million of cash and cash equivalents as of November 30, 2025.
Previous wording
Cash used in operating activities was $11.5 million for the nine months ended August 31, 2025 compared to cash provided by operations of $4.5 million during the prior year period. Net income was $6.3 million compared to $3.1 million for the nine months ended August 31, 2025 and August 31, 2024, respectively. Significant changes in noncash and working capital activity are as follows:
Current wording
Cash used in operating activities was $4.4 million for the three months ended February 28, 2026 compared to cash used in operations of $3.8 million during the prior year period. Net income was $0.8 million compared to $1.7 million for the three months ended February 28, 2026 and February 28, 2025, respectively. Significant changes in noncash and working capital activity are as follows:
Previous wording
Non-cash activity includes stock-based compensation expense of $2.3 million for the nine months ended August 31, 2025, compared to $2.6 million for the nine months ended August 31, 2024; depreciation and amortization expense of $1.6 million for the nine months ended August 31, 2025, compared to $1.1 million for the nine months ended August 31, 2024; and a loss on disposal of fixed assets of $0.6 million for the nine months ended August 31, 2025 compared to less than $0.1 million for the nine months ended August 31, 2024. In addition to the non-cash activities mentioned above, the Company recognized a deferred tax asset of $1.7 million for the nine months ended August 31, 2025, compared to less than $0.1 million for the nine months ended August 31, 2024.
Current wording
Non-cash activity includes stock-based compensation expense of $0.5 million for the three months ended February 28, 2026, compared to $0.8 million for the three months ended February 28, 2025; and depreciation and amortization expense of $0.6 million for the three months ended February 28, 2026, compared to $0.4 million for the three months ended February 28, 2025; In addition to the non-cash activities mentioned above, the Company recognized a deferred tax asset of less than $0.1 million for the three months ended February 28, 2026, compared to $0.4 million for the three months ended February 28, 2025.
Previous wording
Inventory increased during the nine months ended August 31, 2025 by $14.1 million compared to a increase of $5.9 million for the nine months ended August 31, 2024. Accounts receivable increased by $6.2 million during the nine months ended August 31, 2025 as compared to a decrease of $0.8 million for the nine months ended August 31, 2024. Accounts payable and accrued liabilities decreased during the nine months ended August 31, 2025 by $0.4 million compared to an increase of $5.0 million for the nine months ended August 31, 2024. Prepaid expenses and other current assets increased by $1.9 million during the nine months ended August 31, 2025 compared to an increase of $1.2 million during the nine months ended August 31, 2024. Operating lease liabilities decreased by $0.4 million during the nine months ended August 31, 2025 compared to a decrease of $0.5 million during the nine months ended August 31, 2024. Deferred revenues decreased $1.5 million during the nine months ended August 31, 2025 compared to a decrease of $1.1 million for the nine months ended August 31, 2024.
Current wording
Inventory increased during the three months ended February 28, 2026 by $0.3 million compared to an increase of $3.2 million for the three months ended February 28, 2025. Accounts receivable increased by $0.9 million during the three months ended February 28, 2026 as compared to an increase of $0.3 million for the three months ended February 28, 2025. Accounts payable and accrued liabilities decreased during the three months ended February 28, 2026 by $5.1 million compared to a decrease of $1.9 million for the three months ended February 28, 2025. Prepaid expenses and other current assets increased by $0.4 million during the three months ended February 28, 2026 compared to an increase of $0.5 million during the three months ended February 28, 2025. Operating lease liabilities decreased by $0.2 million during the three months ended February 28, 2026 compared to a decrease of $0.1 million during the three months ended February 28, 2025. Deferred revenues decreased $0.1 million during the three months ended February 28, 2026 compared to a decrease of $1.3 million for the three months ended February 28, 2025.
Previous wording
Cash provided by investing activities was $0.6 million for the nine months ended August 31, 2025 compared to $1.4 million cash used for the nine months ended August 31, 2024. The prior year period investing activities primarily relates to the purchases of property and equipment while the current period relates to purchases of property and equipment, acquisition of Federal Firearms Licenses, and proceeds from sale of marketable securities. Property and equipment increased during the nine months ended August 31, 2025 by $4.6 million compared to an increase of $1.4 million for the nine months ended August 31, 2024. Proceeds from the sale of property and equipment during the nine months ended August 31, 2025, was $0.1 million compared to less than $0.1 million for the nine months ended August 31, 2024. Marketable debt securities decreased during the nine months ended August 31, 2025 by $6.4 million. There were no marketable debt securities held during the same period in the prior year. Capital expenditures were higher than typical in the first half of the fiscal year due to the build out of retail stores and new ammunition manufacturing facility. Capital expenditures are expected to decrease in the fourth quarter of the current fiscal year.
Current wording
Cash flows used in investing activities was $0.6 million for the three months ended February 28, 2026 compared to $5.3 million cash used for the three months ended February 28, 2025. The prior year period investing activities primarily relates to the purchases of property and equipment and marketable securities while the current period relates to purchases of property and equipment. Property and equipment increased during the three months ended February 28, 2026 by $0.6 million compared to purchases of $2.6 million for the three months ended February 28, 2025. During the three months ended February 28, 2025, the Company purchased $2.7 million of marketable debt securities. There were no purchases of marketable debt securities during the three months ended February 28, 2026.
Previous wording
Cash provided by financing activities was $0.1 million for the nine months ended August 31, 2025 compared to cash used in financing activities of $3.9 million for the nine months ended August 31, 2024. The current year amount was primarily composed of proceeds from stock option exercises of $0.3 million, taxes paid on issuances of restricted stock units of $0.1 million, and payments of $0.1 million for repurchases of common stock. The prior year amount was primarily composed of proceeds from stock option exercises of $0.1 million, stock repurchases of $3.2 million and taxes paid on issuances of restricted stock units of $0.8 million.
Current wording
Cash flows used in financing activities was $1.0 million for the three months ended February 28, 2026, compared to cash provided by financing activities of $0.1 million for the three months ended February 28, 2025. The current year amount was primarily composed of taxes paid on issuances of restricted stock units of less than $0.1 million and payments of $1.0 million for repurchases of common stock. The prior year amount was primarily composed of proceeds from stock option exercises and taxes paid on issuances of restricted stock units.
Previous wording
We require significant capital to meet our obligations as they become due. Throughout the next twelve months, we intend to fund our operations primarily from the funds raised through our operations. We may pursue secondary equity offerings or debt financings to provide working capital and satisfy debt obligations. There can be no assurance as to the availability or terms upon which such financing and capital might be available in the future. If we are required to raise capital to support our operations and are unable to secure additional funding, we may be forced to curtail or suspend our business plans.
Current wording
We require significant capital to meet our obligations as they become due. Throughout the next twelve months, we expect to fund our operations primarily from cash generated from operations. The Company also has access to an existing credit facility, as discussed in Note 24, Credit Facility, which may be used, but is not currently anticipated to be drawn, to provide additional liquidity if needed. We may pursue additional equity offerings or debt financings to provide working capital and satisfy debt obligations. There can be no assurance as to the availability or terms upon which such financing and capital might be available in the future. If we are required to raise additional capital to support our operations and are unable to secure additional funding, we may be forced to curtail or suspend our business plans.
Previous wording
Our unaudited condensed consolidated financial statements are based on the selection and application of significant accounting policies, which require management to make significant estimates and assumptions. Our significant accounting policies are outlined in Note 4, “Summary of Significant Accounting Policies,” in the Notes to Consolidated Financial Statements included in Item 8 of the 2024 10-K. During the three and nine months ended August 31, 2025, there were no significant changes to our critical accounting policies from those described in our 2024 10-K.
Current wording
Our unaudited condensed consolidated financial statements are based on the selection and application of significant accounting policies, which require management to make significant estimates and assumptions. Our significant accounting policies are outlined in Note 4, “Summary of Significant Accounting Policies,” in the Notes to Consolidated Financial Statements included in Item 8 of the 2025 10-K. During the three months ended February 28, 2026, there were no significant changes to our critical accounting policies from those described in our 2025 10-K.
Rearranged previous paragraphs (7)
Previous report — wording carried elsewhere
For the three months ended August 31, 2025 and August 31, 2024, we recorded $0.6 million anda nominal amountof income tax expense, respectively. For the three months ended August 31, 2025 and August 31, 2024, the effective tax rate was 20.56% and 0.1%, respectively. Our tax rate differs from the statutory rate of 21.0% due to the effects of state taxes net of federal benefit, the foreign tax rate differential as a result of Byrna South Africa, effects of permanent non-deductible expenses, and other effects.
Previous report — wording carried elsewhere
Gross profit is calculated as total revenue less cost of goods sold and gross margin is calculated as gross profit divided by total revenue. Included as cost of goods sold are costs associated with the production and procurement of products, such as labor and overhead, inbound freight costs, manufacturing depreciation, purchasing and receiving costs, and inspection costs. Gross profit was $50.4 million in the nine months ended August 31, 2025, or 60.8% of net revenue, as compared to gross profit of approximately $35.2 million, or 60.9% of net revenue, in the prior year period. The decrease was primarily due to a shift in sales channel mix as a larger proportion of sales were generated through wholesale channels, which typically carry lower gross margins than our higher-margin ecommerce sales.
Previous report — wording carried elsewhere
Operating expenses were $42.5 million in the nine months ended August 31, 2025, an increase of $9.9 million, as compared to the prior year period expenses of $32.6 million. The increase is due to an increase of $3.3 million in marketing expenses, an increase of $2.7 million in variable expenses, which increase in proportion to sales volume, and an increase of $2.4 million in employee compensation costs.
Previous report — wording carried elsewhere
In addition to providing financial measurements based on generally accepted accounting principles in the United States (GAAP), we provide an additional financial metric that is not prepared in accordance with GAAP (non-GAAP) with presenting non-GAAP adjusted EBITDA. Management uses this non-GAAP financial measure, in addition to GAAP financial measures, to understand and compare operating results across accounting periods, for financial and operational decision making, for planning and forecasting purposes and to evaluate our financial performance. We believe that this non-GAAP financial measure helps us to identify underlying trends in our business that could otherwise be masked by the effect of certain expenses that we exclude in the calculations of the non-GAAP financial measure.
Previous report — wording carried elsewhere
Accordingly, we believe that this non-GAAP financial measure reflects our ongoing business in a manner that allows for meaningful comparisons and analysis of trends in the business and provides useful information to investors and others in understanding and evaluating our operating results, enhancing the overall understanding of our past performance and future prospects.
Previous report — wording carried elsewhere
This non-GAAP financial measure does not replace the presentation of our GAAP financial results and should only be used as a supplement to, not as a substitute for, our financial results presented in accordance with GAAP. There are limitations in the use of non-GAAP measures, because they do not include all the expenses that must be included under GAAP and because they involve the exercise of judgment concerning exclusions of items from the comparable non-GAAP financial measure. In addition, other companies may use other non-GAAP measures to evaluate their performance, or may calculate non-GAAP measures differently, all of which could reduce the usefulness of our non-GAAP financial measure as a tool for comparison.
Previous report — wording carried elsewhere
Adjusted EBITDA is defined as net income as reported in our Condensed Consolidated Statements of Operations and Comprehensive Income excluding the impact of (i) depreciation and amortization; (ii) income tax provision (benefit); (iii) interest income (expense); (iv) stock-based compensation expense, (v) impairment loss and (vi) one-time, non-recurring other expenses or income. Our Adjusted EBITDA measure eliminates potential differences in performance caused by variations in capital structures (affecting finance costs), tax positions, the cost and age of tangible assets (affecting relative depreciation expense) and the extent to which intangible assets are identifiable (affecting relative amortization expense). We also exclude certain one-time and non-cash costs. Reconciliation of Adjusted EBITDA to net income, the most directly comparable GAAP measure, is as follows (in thousands):