NAPCO Security Technologies, Inc. Reports Fiscal Q1 2027 Results

Recurring service revenue grew 11.5%, while equipment revenue declined 7.3% and free cash flow fell 79.8%.

Rhea-AI Summary

NAPCO Security Technologies (NSSC) reported fiscal first-quarter 2027 revenue of $50.0 million, up year over year for the quarter ended September 30, 2026. Net revenue rose 1.7%, while net income increased 6.9% to $13.0 million and diluted earnings per share rose 5.9% to $0.36. Recurring service revenue increased 11.5% to $26.1 million, with gross margin above 90%; equipment revenue fell 7.3% to $23.9 million.

Gross margin increased to 58.7% from 56.6%. Adjusted EBITDA, a non-GAAP earnings measure, rose 3.8% to $15.5 million. Operating cash flow fell to $2.750 million from $11.637 million, and free cash flow declined 79.8% to $2.317 million. NAPCO puts its prospective annual recurring service revenue run rate at approximately $106 million, based on October 2026 revenue. The board declared a $0.17 quarterly dividend, payable January 4, 2027, to holders of record December 14, 2026.

11 points · 0 major

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0 major · 7 points

Hollow bars mark forward-looking points. How the balance works

Positive

• Moderate pointNet revenue increased 1.7% year over year to $50.0 million in fiscal Q1 2027.
• Moderate pointNet income increased 6.9% year over year to $13.0 million.
• Moderate pointGross margin increased to 58.7% from 56.6% a year earlier.
• Moderate pointOperating income increased 3.5% year over year to $14.117 million.
• Moderate pointAdjusted EBITDA increased 3.8% to $15.5 million; margin reached 31.0%, versus 30.4% a year earlier.

6 minor points

• Minor pointRecurring service revenue rose 11.5% year over year to $26.1 million, with gross margin above 90%.
• Minor pointDiluted earnings per share rose 5.9% year over year to $0.36.
• Minor pointAdjusted EBITDA per share increased 2.4% year over year to $0.43.
• Minor point. Forward-looking: it has not happened yet and may not happen.Prospective annual service revenue run rate is approximately $106 million, NAPCO estimates from October 2026 revenue.
• Minor pointSell-through at both locking distributors grew year over year and improved sequentially.
• Minor pointNet interest income increased to $1.117 million from $0.854 million a year earlier.

Negative

• Moderate pointOperating cash flow fell to $2.750 million from $11.637 million a year earlier.
• Moderate pointFree cash flow declined 79.8% to $2.317 million; margin fell to 4.6% from 23.3%.
• Minor pointEquipment revenue decreased 7.3% year over year to $23.9 million.
• Minor pointResearch and development expense increased to $4.053 million from $3.240 million a year earlier.
• Minor pointSelling, general and administrative expense increased to $12.182 million from $10.963 million a year earlier.

2 minor points

• Minor pointCapital spending increased to $0.433 million from $0.193 million a year earlier.
• Minor pointCash and cash equivalents declined to $123.882 million from $126.928 million at June 30, 2026.

News Explained

NAPCO reported fiscal first-quarter 2027 results; at September 30, 2026, accrued litigation costs were listed as zero, versus $16,000 (amounts in thousands) at June 30, 2026; cash and equivalents were $123,882 and marketable securities were $10,734 (amounts in thousands).

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Key Figures

Net revenue: $50.0 million, up 1.7% Recurring service revenue: $26.1 million, up 11.5% Equipment revenue: $23.9 million, down 7.3% +5 more

Net revenue

$50.0 million, up 1.7%

Fiscal Q1 2027 versus fiscal Q1 2026

Recurring service revenue

$26.1 million, up 11.5%

Fiscal Q1 2027 versus fiscal Q1 2026

Equipment revenue

$23.9 million, down 7.3%

Fiscal Q1 2027 versus fiscal Q1 2026

Gross profit margin

58.7% versus 56.6%

Fiscal Q1 2027 versus fiscal Q1 2026

Net income

$13.0 million, up 6.9%

Fiscal Q1 2027 versus fiscal Q1 2026

Adjusted EBITDA

$15.5 million, up 3.8%

Non-GAAP; fiscal Q1 2027 versus fiscal Q1 2026

Free cash flows

$2.317 million, down 79.8%

Non-GAAP; three months ended September 30, 2026 versus 2025

Quarterly dividend

$0.17 per share

Payable January 4, 2027, to shareholders of record December 14, 2026

Previous Earnings Reports

2 past events · Latest: Aug 24

Same Type 2 events

1. Aug 24

   Q4 and annual results

   24h Move

   -1.3%

   Q4 revenue and recurring service revenue grew; annual revenue reached a record.

2. Nov 04

   Q1 earnings results

   24h Move

   -10.6%

   Fiscal Q1 2025 revenue and net income rose, with recurring service revenue growth.

24h Move is the share-price change in the day after each event; other market factors may also have contributed.

Key Terms

gaap, non-gaap, adjusted ebitda

3 terms

gaap financial

"Results are reported in accordance with U.S. generally accepted accounting principles ("GAAP")"

GAAP, or Generally Accepted Accounting Principles, are a set of standardized rules and guidelines that companies follow when preparing their financial statements. They ensure consistency, transparency, and comparability across different companies, making it easier for investors to understand and compare financial information accurately. This helps investors make informed decisions based on trustworthy and uniform financial reports.

View in glossary

non-gaap financial

"and are also reported adjusting for certain items ("Non-GAAP")"

Non-GAAP refers to financial measures that companies use to show their earnings or performance without including certain expenses or income that are often added back to give a different picture. It matters because it can make a company's results look better or more favorable, but it may also hide important costs, so investors need to look at both GAAP (official rules) and non-GAAP numbers to get a full understanding.

View in glossary

adjusted ebitda financial

"Non-GAAP Adjusted EBITDA increased 3.8% to a First Quarter record"

Adjusted EBITDA is a way companies measure how much money they make from their core operations, like running a business, by removing certain costs or income that aren’t part of regular business activities. It helps investors see how well a company is doing without distractions from unusual expenses or gains, making it easier to compare companies or track performance over time.

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AMITYVILLE, N.Y., Nov. 2, 2026 /PRNewswire/ -- NAPCO Security Technologies, Inc. (NASDAQ: NSSC), one of the leading manufacturers and designers of high-tech electronic security equipment, wireless communication devices for intrusion and fire alarm systems and the related recurring service revenues as well as a provider of school safety solutions, today announced financial results for its first quarter of fiscal year 2027.  Results are reported in accordance with U.S. generally accepted accounting principles ("GAAP") and are also reported adjusting for certain items ("Non-GAAP"). A reconciliation between GAAP and Non-GAAP operating results is provided at the end of this press release.  

First Quarter 2027 Financial Results as Compared to First Quarter 2026

• Net revenue increased 1.7% to a First Quarter record $50.0 million
• Recurring service revenue ("RSR") increased 11.5% to a Quarterly record $26.1 million, with over 90% gross margin
• RSR has a prospective annual run rate of approximately $106 million based on October 2026 recurring service revenues
• Equipment revenue decreased 7.3% to $23.9 million
• Gross profit margin increased to 58.7.% vs 56.6% in prior fiscal year quarter
• Net Income increased 6.9% YoY to a First Quarter record $13.0 million
• Diluted Net Income per share increased 5.9% to $0.36
• Non-GAAP Adjusted EBITDA increased 3.8% to a First Quarter record $15.5 million with an Adjusted EBITDA Margin of 31.0%, compared to $14.9 million with an Adjusted EBITDA Margin of 30.4% in the prior fiscal year quarter
• The board declared a quarterly dividend of $.17 per share, payable on January 4, 2027, to shareholders of record on December 14, 2026.

Kevin Buchel, CEO and President, commented, "Our Fiscal Q1 performance reflects continued positive financial results. We achieved record Q1 revenue of $50.0 million and record Q1 Adjusted EBITDA of $15.5 million, which was bolstered by our recurring service revenue. Our RSR continues to deliver gross margins of over 90% and has a prospective run rate of approximately $106 million, a $3 million increase from the run rate we reported in July 2026. While equipment revenue declined year-over-year, the decrease was driven by two locking distributors reducing their purchases during the quarter. Importantly, sell-through at both distributors grew year-over-year and strengthened meaningfully on a sequential basis. We view sell-through as the truest indicator of end-market demand, and these trends reinforce our confidence in the underlying health of the business.

We are pleased to continue our dividend program of which the quarterly dividend will be $0.17 per share, which will be paid on January 4, 2027, to shareholders of record on December 14, 2026."

		Three months ended September 30,
		(dollars in thousands)
								% Increase/
Financial Highlights		2026			2025			(decrease)
GAAP Results
Net Revenue		$	49,980		$	49,168		1.7	%
Gross Profit		$	29,352		$	27,846		5.4	%
Gross Profit Margin			58.7	%		56.6	%
Operating Income		$	14,117		$	13,643		3.5	%
Net Income		$	13,009		$	12,165		6.9	%
Diluted Earnings Per Share		$	0.36		$	0.34		5.9	%
Non-GAAP Results
Adjusted EBITDA		$	15,509		$	14,942		3.8	%
Adjusted EBITDA Margin			31.0	%		30.4	%
Adjusted EBITDA Per Share		$	0.43		$	0.42		2.4	%
Free Cash Flows		$	2,317		$	11,444		(79.8)	%
Free Cash Flows Margin			4.6	%		23.3	%

Conference Call Information

Management will conduct a conference call at 11 a.m. ET today, November 2, 2026, and in order to participate please go to the Investor Relations section of the Company website at https://investor.napcosecurity.com/events-presentations or choose https://app.webinar.net/ndlaQ1yQy3W. Alternatively, interested parties may participate in the call by dialing (US) 1-800-836-8184 or (International) 1-646-357-8785.  A replay of the webcast will be available on the Investor Relations section of the Company's website.

About NAPCO Security Technologies, Inc.

NAPCO Security Technologies, Inc., is one of the leading manufacturers and designers of high-tech electronic security devices, wireless recurring communication services for intrusion and fire alarm systems as well as a provider of school safety solutions, The Company consists of four Divisions: NAPCO, plus three wholly owned subsidiaries: Alarm Lock, Continental Instruments, and Marks USA. Headquartered in Amityville, New York, its products are installed by tens of thousands of security professionals worldwide in commercial, industrial, institutional, residential and government applications. NAPCO products have earned a reputation for innovation, technical excellence and reliability, positioning the Company for growth in the multi-billion dollar and rapidly expanding electronic security market. For additional information on NAPCO, please visit the Company's web site at http://www.napcosecurity.com.

Safe Harbor Statement

This press release contains forward-looking statements that are based on current expectations, estimates, forecasts and projections of future performance based on management's judgment, beliefs, current trends, and anticipated product performance. These forward-looking statements include, but are not limited to, statements relating to supply chain challenges and developments; the growth of recurring service revenues and annual run rate; the strength of our balance sheet; our expectations regarding future results; the introduction of new access control and locking products; the opportunities for school security products; the opportunities for fire alarm products; and our ability to execute our business strategies. Actual results, performance or achievements could differ materially from those anticipated in such forward-looking statements because of certain factors, including those risk factors set forth in the Company's filings with the Securities and Exchange Commission, such as our annual report on Form 10-K and quarterly reports on Form 10-Q. Other unknown or unpredictable factors or underlying assumptions subsequently proved to be incorrect could cause actual results to differ materially from those in the forward-looking statements. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, level of activity, performance, or achievements. You should not place undue reliance on these forward-looking statements. All information provided in this press release is as of today's date, unless otherwise stated, and the Company undertakes no duty to update such information, except as required under applicable law.

*Non-GAAP Financial Measures

Certain non-GAAP measures are included in this press release, including non-GAAP operating income, non-GAAP net income, non-GAAP net income per share (diluted), non-GAAP net income margin, Adjusted EBITDA, Adjusted EBITDA per share (diluted), Adjusted EBITDA per share margin, Free Cash Flow and Free Cash Flow margin. We define non-GAAP net income as GAAP net income plus litigation settlement costs. We define Adjusted EBITDA as GAAP net income plus income tax expense, less net interest income (expense), stock-based compensation, non-recurring legal expenses, litigation settlement costs, and depreciation and amortization expenses.  Non-GAAP net income margin is non-GAAP net income divided by revenue. Adjusted EBITDA margin is Adjusted EBITDA divided by revenue. We define Free Cash Flow (FCF) as net cash provided by operating activities less capital expenditures. FCF margin is the FCF divided by revenue. These non-GAAP measures are provided to enhance the user's overall understanding of our financial performance. By excluding these charges our non-GAAP results provide information to management and investors that is useful in assessing NAPCO's core operating performance and in comparing our results of operations on a consistent basis from period to period. Our use of non-GAAP financial measures has certain limitations in that such non-GAAP financial measures may not be directly comparable to those reported by other companies. For example, the terms used in this press release, such as Adjusted EBITDA, do not have a standardized meaning. Other companies may use the same or similarly named measures, but exclude different items, which may not provide investors with a comparable view of our performance in relation to other companies. The presentation of this information is not meant to be a substitute for the corresponding financial measures prepared in accordance with generally accepted accounting principles. Investors are encouraged to review the reconciliation of GAAP to non-GAAP financial measures set forth above.

NAPCO SECURITY TECHNOLOGIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
		September 30, 2026			June 30, 2026
		(in thousands, except share data)
Assets
Current Assets
Cash and cash equivalents		$	123,882		$	126,928
Marketable securities			10,734			10,637
Accounts and other receivable, net of allowance for credit losses of $129 and $101 as of September 30, 2026 and June 30, 2026, respectively			29,248			35,975
Inventories			34,130			30,118
Income tax receivable			1,523			—
Prepaid expenses and other current assets			3,838			4,325
Total Current Assets			203,355			207,983
Inventories - non-current			9,195			9,256
Property, plant and equipment, net			9,202			9,238
Intangible assets, net			2,919			2,990
Deferred income taxes			1,777			4,105
Operating lease - Right-of-use asset			4,838			4,906
Other assets			185			190
Total Assets		$	231,471		$	238,668
Liabilities and Stockholders' Equity
Current Liabilities
Accounts payable		$	7,749		$	6,925
Accrued expenses			9,275			8,546
Accrued litigation costs			—			16,000
Accrued salaries and wages			5,036			4,484
Dividends payable			6,081			5,365
Accrued income taxes			—			1,134
Total Current Liabilities			28,141			42,454
Accrued income taxes			—			33
Operating lease liability			5,142			5,179
Total Liabilities			33,283			47,666
Commitments and Contingencies (Note 13)
Stockholders' Equity
Common Stock, par value $0.01 per share; 100,000,000 shares authorized; 39,883,051 shares issued; and 35,768,437 shares outstanding as of both September 30, 2026 and June 30, 2026, respectively.			399			399
Additional paid-in capital			25,628			25,355
Retained earnings			228,331			221,403
Treasury Stock, at cost, 4,114,614 shares as of both September 30, 2026 and June 30, 2026			(56,315)			(56,315)
Accumulated other comprehensive income			145			160
Total Stockholders' Equity			198,188			191,002
Total Liabilities and Stockholders' Equity		$	231,471		$	238,668

 

NAPCO SECURITY TECHNOLOGIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
		Three Months ended September 30,
		2026			2025
		(in thousands, except for share and per share data)
Revenue:
Equipment revenue		$	23,850		$	25,739
Service revenue			26,130			23,429
Total revenue			49,980			49,168
Cost of Revenue:
Cost of equipment revenue			18,043			19,046
Cost of service revenue			2,585			2,276
Total cost of revenue			20,628			21,322
Gross Profit			29,352			27,846
Operating Expenses:
Research and development			4,053			3,240
Selling, general, and administrative			12,182			10,963
Litigation settlement			(1,000)			—
Total operating expenses			15,235			14,203
Operating Income			14,117			13,643
Other Income:
Interest income, net			1,117			854
Other income, net			115			138
Income before Provision for Income Taxes			15,349			14,635
Provision for Income Taxes			2,340			2,470
Net Income		$	13,009		$	12,165
Income Per Share:
Basic		$	0.36		$	0.34
Diluted		$	0.36		$	0.34
Weighted Average Number of Shares Outstanding:
Basic			35,768,000			35,658,000
Diluted			35,881,000			35,865,000

 

NAPCO SECURITY TECHNOLOGIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
		Three Months ended September 30,
		2026			2025
		(in thousands)
Cash Flows from Operating Activities
Net Income		$	13,009		$	12,165
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization			540			570
Realized gain on sales of marketable securities			(114)			(92)
Charge (recovery) of credit losses			28			(1)
Change to inventory reserve			(109)			(354)
Deferred income taxes			2,328			1,681
Stock-based compensation expense			273			309
Changes in operating assets and liabilities:
Accounts and other receivable			6,699			(561)
Inventories			(3,842)			(177)
Prepaid expenses and other current assets			487			(305)
Income tax receivable			(1,523)			(1,993)
Other assets			5			4
Accounts payable, accrued expenses, accrued litigation costs, accrued salaries and wages, accrued income taxes			(15,031)			391
Net Cash Provided by Operating Activities			2,750			11,637
Cash Flows from Investing Activities
Purchases of property, plant, and equipment			(433)			(193)
Purchases of marketable securities			(3,570)			(2,540)
Proceeds from sales of marketable securities			3,572			8,407
Net Cash (Used In) Provided by Investing Activities			(431)			5,674
Cash Flows from Financing Activates
Dividends paid			(5,365)			(4,992)
Net Cash Used in Financing Activities			(5,365)			(4,992)
Net (decrease) increase in Cash and Cash Equivalents			(3,046)			12,319
Cash and Cash Equivalents - Beginning			126,928			83,081
Cash and Cash Equivalents - Ending		$	123,882		$	95,400
Supplemental Cash Flow Information
Income taxes paid, net of refunds received		$	2,701		$	3,104
Non-Cash Investing and Financing Transactions
Dividends declared and not paid		$	6,081		$	4,992

 

NAPCO SECURITY TECHNOLOGIES, INC.
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL DATA*
(unaudited)
(in thousands, except share and per share data)
				Non-GAAP Adjustments
				Litigation			Tax
	GAAP			Settlement			Adjustments (1)			Non-GAAP
Three months ended September 30, 2026
Revenue	$	49,980		$	—		$	—		$	49,980
Gross Profit		29,352			—			—			29,352
Operating Expenses		15,235			1,000			—			16,235
Operating Income		14,117			(1,000)			—			13,117
Net Income		13,009			(1,000)			108			12,117
Non-GAAP adjusted net income margin											24.2	%
Non-GAAP adjusted net income per share - diluted										$	0.34
Three months ended September 30, 2025
Revenue	$	49,168		$	—		$	—		$	49,168
Gross Profit		27,846			—			—			27,846
Operating Expenses		14,203			—			—			14,203
Operating Income		13,643			—			—			13,643
Net Income		12,165			—			—			12,165
Non-GAAP adjusted net income margin											24.7	%
Non-GAAP adjusted net income per share - diluted										$	0.34
	Three months ended September 30,
	2026			2025
Denominator:
Weighted average shares outstanding
Basic, as reported		35,768,000			35,658,000
Effect of Dilutive Securities		113,000			207,000
Diluted, (Denominator)		35,881,000			35,865,000

1.	The 'with or without' method is utilized to determine the income tax effect of all Non-GAAP adjustments.

 

NAPCO SECURITY TECHNOLOGIES, INC.
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL DATA*
(unaudited)
(in thousands, except share and per share data)
	Three months ended September 30,
	2026			2025
Non-GAAP adjusted EBITDA:
Net income, as reported	$	13,009		$	12,165
Interest income, net		(1,117)			(854)
Provision for income taxes		2,340			2,470
Depreciation and amortization		540			570
Non-GAAP EBITDA		14,772			14,351
Adjustments:
Stock based compensation		273			309
Nonrecurring legal expense(1)		1,464			282
Litigation settlement(2)		(1,000)			—
Total adjustments		737			591
Non-GAAP adjusted EBITDA	$	15,509		$	14,942
Non-GAAP adjusted EBITDA margin		31.0	%		30.4	%
Non-GAAP per share data:
Non-GAAP adjusted EBITDA per share - diluted	$	0.43		$	0.42
Denominator:
Weighted average shares outstanding
Basic, as reported		35,768,000			35,658,000
Effect of Dilutive Securities		113,000			207,000
Diluted, (Denominator)		35,881,000			35,865,000

1.	Nonrecurring Legal Expenses, which are net of any insurance reimbursements, are legal fees that are determined not to be of a normal recuring nature and expenses necessary to operate the business
2.	Litigation settlement costs, which are net of any insurance reimbursements, were determined not to be of a recurring nature and costs that are not in the normal cost of business or necessary to operate the business

 

		Three months ended September 30,
		(dollars in thousands)
		2026			2025
Free cash flow:
Net Cash Provided by Operating Activities		$	2,750		$	11,637
Less: Purchases of property, plant, and equipment			(433)			(193)
Free Cash Flow(1)		$	2,317		$	11,444
Free Cash Flow Margin(1)			4.6	%		23.3	%

1.	Free cash flow is calculated as net cash provided by operating activities less capital expenditures. Free cash flow margin is the free cash flow divided by revenue.

Contacts:
Francis J. Okoniewski
Vice President of Investor Relations
NAPCO Security Technologies, Inc.
Office 800-645-9445 x 374
Mobile 516-404-3597
fokoniewski@napcosecurity.com

View original content:https://www.prnewswire.com/news-releases/napco-security-technologies-inc-reports-fiscal-q1-2027-results-302925823.html

SOURCE NAPCO Security Technologies, Inc.

FAQ

AI-generated questions and answers. How Rhea-AI works. Not financial advice.

What were NAPCO's fiscal Q1 2027 revenue and earnings?

NAPCO reported $50.0 million in revenue and $0.36 in diluted earnings per share for the quarter ended September 30, 2026. Revenue increased 1.7% and diluted earnings per share increased 5.9% year over year. Net income rose 6.9% to $13.0 million.

When will NAPCO pay its declared quarterly dividend?

NAPCO will pay its declared $0.17 per-share quarterly dividend on January 4, 2027, to shareholders of record on December 14, 2026.

Why did NAPCO's equipment revenue decline in fiscal Q1 2027?

NAPCO attributed the equipment revenue decline to two locking distributors reducing purchases during the quarter. Sell-through at both distributors nevertheless grew year over year and improved sequentially.