Wrap Technologies doubles Q2 revenue as ATF ruling opens private security market
Gross margins expand to 75% and liabilities fall to $2 million as company targets federal grants and counter-UAS opportunities
Wrap Technologies, Inc. reported doubled revenue for the second quarter of 2026, marking a significant acceleration as the company transitions from a single-product entity to a diversified portfolio serving federal, state, and private sectors. The growth was underpinned by a pivotal July determination from the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), which classified the company’s BolaWrap device as an 'instrument restraint and rescue tool' rather than a weapon. This regulatory clarification removes a long-standing barrier to entry in the private security market, which management identifies as substantially larger than the domestic law enforcement sector.
Operational efficiency improved markedly during the period, with gross margins expanding to 75% and total liabilities reducing from $3.9 million to $2 million following the termination of the company’s former office lease. The firm also delivered initial training to the Department of Homeland Security (DHS) subsequent to a recent purchase order, reinforcing its foothold in federal procurement. Management maintains its target for 100% year-over-year revenue growth, although it noted that the timing of one or two significant orders could cause this target to fluctuate as the year progresses.
A core component of the company’s strategic shift involves moving from one-time product sales to a 'readiness' subscription model. This approach utilises a new Learning Management System (LMS) to generate recurring revenue through scalable training focused on officer judgment and persuasion skills. CEO Scot Cohen highlighted that this training focus is designed to make the product more attractive to law enforcement insurance carriers, which are central to the go-to-market strategy for unarmed security officers.
The company has also acquired exclusive U.S. and NATO rights to Frenel’s TriCore technology, providing a structural advantage in counter-UAS and threat detection markets. This technology is being targeted at 'RF-silent' drone detection needs at the border, identifying threats that advanced thermal systems may miss. Management expressed a bias toward accelerating investment if market traction for these new technologies develops as expected, while currently maintaining a disciplined spending profile around a $3 million breakeven point.
Future revenue sustainability is expected to be driven by the convergence of regulatory changes, the return of public safety funding, and the integration of sensing technologies into core public safety offerings. The company is actively pursuing 11 active Department of Justice grant programs and exploring U.S. government funding through the International Narcotics and Law Enforcement Affairs (INL) to bridge funding gaps for international opportunities, including a potential deal with the Chilean government. While Chilean business is excluded from the 2026 forecast, the strategic focus remains aligned with Washington D.C. to meet established federal requirements.
