NAPCO Security Technologies Reports Record Q1 Revenue of $50 Million as Recurring Service Sales Rise 11.5%

NAPCO Security Technologies, Inc. (NASDAQ:NSSC) reported record first-quarter fiscal 2027 revenue of $50 million, an increase of 1.7% from $49.2 million a year earlier, supported by continued growth in its recurring service business.

The electronic security equipment manufacturer reported net income of $13 million, up 6.9% year over year, while diluted earnings per share increased 5.9% to $0.36 from $0.34.

Adjusted EBITDA rose 3.8% to a first-quarter record of $15.5 million, compared with $14.9 million in the corresponding period last year.

Recurring Service Revenue Reaches Quarterly Record

NAPCO’s recurring service revenue increased 11.5% to a quarterly record of $26.1 million, with gross margins exceeding 90%.

Based on October 2026 recurring service revenue, the company reported a prospective annualised revenue run rate of approximately $106 million, an increase of $3 million from the figure reported in July.

However, equipment revenue declined 7.3% to $23.9 million, reflecting reduced purchases by two distributors of the company’s locking products.

Chief Executive Officer Kevin Buchel said the distributors’ sales to end customers increased year over year and improved sequentially, despite their lower purchases from NAPCO.

“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,” Buchel said.

Profit Margins Improve Despite Lower Equipment Sales

NAPCO’s gross profit increased 5.4% to $29.4 million, while its gross profit margin improved to 58.7% from 56.6% in the previous year.

Operating income rose 3.5% to $14.1 million, compared with $13.6 million a year earlier.

The adjusted EBITDA margin increased to 31.0% from 30.4%, reflecting the contribution of higher-margin recurring service revenue.

Adjusted EBITDA per share increased to $0.43 from $0.42.

However, free cash flow declined 79.8% to $2.3 million from $11.4 million, with the free cash flow margin falling to 4.6% from 23.3%.

The company did not provide an explanation for the sharp decline in free cash flow in the supplied announcement.

NAPCO Declares Quarterly Dividend of $0.17 Per Share

NAPCO’s board declared a quarterly cash dividend of $0.17 per share, continuing the company’s shareholder distribution programme.

The dividend will be payable on January 4, 2027, to shareholders of record as of December 14, 2026.

Management highlighted the continued expansion of recurring service revenue as a factor supporting the company’s profitability and financial performance.

Outlook

NAPCO’s first-quarter results showed modest overall revenue growth alongside stronger recurring service sales and improved profit margins.

The company’s recurring revenue business continues to provide a significant contribution to earnings, although equipment sales declined during the quarter.

Investors will be monitoring whether equipment orders recover, recurring service revenue maintains its growth trajectory and free cash flow improves following the substantial year-on-year decline.

Management is scheduled to discuss the results during a conference call on November 2, 2026.

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