WRAP (WRAP) Q3 2025: Subscription Revenue Hits 12% as Non-Lethal Ecosystem Gains Scale
WRAP’s third quarter marked a decisive pivot from hardware sales to an integrated, recurring revenue model built around non-lethal public safety solutions. The company’s ecosystem approach—blending devices, training, and policy support—gained traction with law enforcement, federal, and international customers. Momentum in subscription adoption and new federal manufacturing capacity signal a business model inflection, positioning WRAP for scale and improved margins.
Summary
- Business Model Shift: Subscription and systems sales are now central, moving WRAP beyond transactional hardware.
- Operational Expansion: U.S. manufacturing and federal alignment open new addressable markets and procurement channels.
- Growth Platform Established: Ecosystem integration and policy-led adoption set the stage for multi-sector expansion.
Performance Analysis
WRAP’s Q3 results validate its transformation from a device manufacturer to a provider of integrated non-lethal response solutions. The company reported $2 million in gross revenue, with 12% now subscription-based—an early but important signal of recurring revenue traction. Segment performance was led by higher-margin system sales (BolaWrap, WRAP Tactics, and WRAP Vision), while managed services contributed lower-margin professional services revenue. The shift toward integrated, multi-year contracts is beginning to drive margin expansion and predictability.
Operationally, adoption data from 516 law enforcement agencies showed accelerating use of BolaWrap—outpacing legacy tools like tasers and pepper spray amid tightening use-of-force policies. The new Norton, Virginia manufacturing hub, opened in September, anchors WRAP’s “Made in America” strategy and supports both scaling and federal procurement eligibility. Internationally, agencies are renewing subscriptions and expanding training programs, while federal initiatives (via WRAP Federal) are positioning the company for upcoming Department of Defense and Homeland Security modernization efforts.
- Recurring Revenue Inflection: Subscription-based sales now represent a material and growing share of revenue, supporting gross margin improvement.
- Integrated System Sales Drive Growth: Expansion of the product family and ecosystem approach is delivering higher-margin sales across multiple customer types.
- Operational Leverage Emerging: Manufacturing investment and workforce ramp-up signal readiness for scale and broader distribution.
With hiring focused on sales and marketing, WRAP is entering an offensive growth phase, supported by clearer identity and market fit. Early evidence suggests the recurring model and ecosystem integration are resonating with both domestic and international customers.
Executive Commentary
"The third quarter represented our strongest in the past two years, delivering $2 million in gross revenue, 12% of which came from subscription-based sales, suggesting a clear improvement in our core fundamentals. We believe it also marked a pivotal stage in our transformation. From being a straightforward device manufacturer, becoming a provider of nonlethal response subscription solutions, for law enforcement and for counter UAS operations."
Scott Cullen, Chief Executive Officer
"Our RAP tactics platform is a subscription platform and it provides behavioral scenario-based officer training. It's now active in agencies such as Highland Park in Illinois, Lee County in Florida, both of which have converted to recurring subscription models that combine BOLARAP use with ongoing digital learning analytics and performance tracking."
Jared Novak, President & Chief Operating Officer
Strategic Positioning
1. Recurring Revenue Ecosystem
WRAP’s business model now centers on an integrated ecosystem of tools, training, and policy support, designed to create multi-year customer relationships through subscription contracts. This approach transforms the company’s revenue base from transactional hardware sales to predictable, higher-margin recurring revenue, evidenced by early traction in agencies converting to the RAP Tactics platform.
2. Policy-Led Market Expansion
Policy alignment is now a core pillar of WRAP’s go-to-market strategy, as departments face stricter use-of-force standards. By collaborating with policy advisors and integrating training, WRAP positions its solutions as compliant, forward-looking alternatives—expanding its relevance as agencies seek to modernize their response protocols.
3. Federal and International Growth Levers
WRAP Federal, a DCAA-compliant division, positions the company for defense and homeland security procurement, while international momentum is supported by reorder activity and subscription renewals. The new U.S. manufacturing hub not only supports domestic content requirements but also serves as a demonstration and training center for federal and global partners.
4. Technological Differentiation and Ecosystem Integration
Product innovation—such as integrating BolaWrap technology on drones (DFRX) and expanding into body-worn cameras and VR training— extends WRAP’s value proposition beyond law enforcement to commercial, healthcare, and infrastructure protection. The company’s proprietary approach to non-lethal response offers a unique market position as policies and customer needs evolve.
Key Considerations
WRAP’s Q3 results reflect a business at the inflection point of scale, with a clear identity and operational momentum. The following factors will shape its trajectory:
Key Considerations:
- Subscription Adoption Pace: The rate at which agencies convert to recurring models will determine revenue predictability and margin expansion.
- Federal and Defense Penetration: Success in aligning with federal procurement standards and winning modernization initiatives will drive outsized growth potential.
- Policy and Training Integration: Continued focus on policy alignment and integrated training is essential for driving usage and minimizing risk for agencies.
- Operational Execution: Scaling manufacturing and expanding the salesforce must translate into sustainable order volume and backlog growth.
- Commercial and International Upside: Execution in adjacent sectors—private security, healthcare, and international markets—will test the ecosystem’s adaptability and market fit.
Risks
WRAP’s transformation brings execution risk, especially as the company ramps hiring and manufacturing ahead of large-scale order visibility. Federal procurement cycles are long and complex, and success depends on continued policy adoption and agency buy-in. International expansion is subject to regulatory, currency, and geopolitical volatility, while competitive threats from established less-lethal providers remain.
Forward Outlook
For Q4 2025, WRAP’s management signaled:
- Continued focus on growing recurring subscription revenue and expanding integrated system sales.
- Further ramp-up of sales and marketing capacity to accelerate adoption across U.S. and international agencies.
For full-year 2025, management emphasized:
- Margin expansion through mix shift toward higher-margin recurring revenue streams.
- Strategic investment in federal and commercial market development.
Management highlighted that clarity of market fit, operational scale, and policy-led adoption are expected to drive the next phase of growth, with a focus on execution and customer retention.
Takeaways
WRAP’s Q3 demonstrates a credible pivot to a recurring, ecosystem-driven business model, with early signs of operational and market traction.
- Integrated Non-Lethal Ecosystem: The shift to subscription and systems sales is driving higher margins and stickier customer relationships, with policy and training integration as key differentiators.
- Federal and International Opportunity: New manufacturing capacity and federal alignment position WRAP to compete for large-scale contracts, while international reorder momentum supports global expansion.
- Execution Watchpoint: Investors should monitor the pace of agency conversions, federal contract wins, and the ability to translate operational ramp-up into sustained order growth.
Conclusion
WRAP’s third quarter marks a strategic turning point, with the company now operating as a systems provider in the fast-evolving non-lethal public safety market. Execution on recurring revenue, federal penetration, and ecosystem integration will define its trajectory into 2026.
Industry Read-Through
WRAP’s ecosystem approach and policy-led adoption highlight a broader shift in the public safety and defense sectors toward integrated, non-lethal solutions that blend hardware, software, and training. As agencies face mounting scrutiny over use-of-force incidents, demand for alternatives to legacy less-lethal tools is rising, benefiting companies with recurring revenue models and policy expertise. Manufacturers and technology providers in adjacent markets—such as drones, body cameras, and training platforms—should note the accelerating convergence of devices, data, and policy as a driver of procurement decisions and competitive differentiation.