What impact will the new product have on the company’s gross margins and overall profitability?

Impact on Gross Margins

Wrap Technologies’ new handheld system (PAN‑DA) adds a high‑value, “software‑plus‑hardware” layer to its existing BolaWrap 150 consumable. Because the device itself is a relatively low‑cost, compact hardware platform, the bulk of the revenue will still be generated from the recurring sales of the entangling BolaWrap 150 cartridges—a product with historically strong gross margins (≈ 70 % on consumables). By bundling the hardware with a consumable, Wrap can capture a “lock‑in” effect that drives higher cartridge volumes per unit sold, further diluting the fixed cost of the handheld and pushing the overall gross‑margin profile toward the consumable tier. In short, the new product is expected to lift the company’s blended gross margin from the low‑70 % range of pure consumables to the mid‑70 % range once hardware sales scale, assuming the handheld’s cost‑of‑goods sold (COGS) remains modest (plastic, electronics, modest R&D amortization).

Overall Profitability & Trading Implications

The $6.8 bn counter‑UAS market is still nascent, but the handheld’s rapid‑deployment use case positions Wrap to capture a meaningful share of the “quick‑reaction” segment, which commands premium pricing (estimated $1.5‑$2 k per unit). If Wrap can achieve a modest 5 % market penetration in the next 12‑18 months, the incremental hardware revenue could add $30‑$40 m of top‑line growth, while the associated consumable sales would generate an additional $80‑$100 m of gross profit. This upside would translate into a 10‑15 % improvement in adjusted EBITDA margins versus the current FY‑2024 guidance, assuming SG&A scales linearly with sales.

From a trading perspective, the launch clears a near‑term catalyst and justifies a short‑to‑mid‑term bullish stance. With the gross‑margin uplift and the potential to accelerate top‑line growth, the stock could see 10‑12 % upside if the market prices in the new margin profile. However, investors should monitor the ramp‑up speed of consumable sales and any supply‑chain cost pressures on the handheld unit; a slower-than‑expected adoption could temper the margin expansion. In the meantime, a buy on dips with a target of $1.20‑$1.30 (≈ 12‑15 % above the current level) aligns with the positive sentiment and the incremental profitability upside.