NAPCO revenue rises 1.7% to $49.980 million in first quarter
Key Facts
NAPCO Security Technologies reported revenue of $49.980 million in the first quarter of its fiscal 2027, up 1.7% from the same period a year earlier, according to results released by the company on November 2, 2026. Net income rose 6.9% to $13.009 million, while diluted earnings per share increased 5.9% to $0.36. The company described revenue and profit as records, while reporting divergent performance between its recurring services and equipment sales. The results cover the three months ended September 30, 2026. The published results did not include analyst estimates or data confirming a sharp decline in the stock.
The main growth driver was recurring services revenue, which rose 11.5% to a quarterly record of $26.1 million. The company said its gross margin exceeded 90% during the quarter, placing this high-margin business against weakness in equipment sales. It added that, based on October 2026 revenue, recurring revenue had a potential annual run rate of about $106 million. That represents an increase of $3 million from the run rate the company reported in July 2026. Management said, "Recurring services continue to deliver gross margins above 90%," linking that performance to the stated run rate.
By contrast, equipment revenue fell 7.3% to $23.9 million compared with the same quarter a year earlier. CEO Kevin Buchel attributed the decline to two lock distributors reducing their purchases during the quarter. He said, however, that end-product sales through distributors, or sell-through, rose year over year at both and improved markedly from the previous quarter. Buchel said, "The decline was driven by two lock distributors that reduced their purchases during the quarter." The detail indicates that the decline in reported equipment sales came alongside growth in distributor sell-through, according to the company.
The company’s gross margin improved to 58.7% from 56.6% in the first quarter of fiscal 2026. Adjusted EBITDA rose 3.8% to $15.509 million, compared with $14.942 million a year earlier. The margin for this measure also increased to 31.0% from 30.4%. The results therefore combined modest revenue growth with improved margins and adjusted earnings. But operating earnings performance was not reflected in free cash flow during the period.
Free cash flow fell 79.8% to $2.317 million, compared with $11.444 million in the same period a year earlier. Its margin declined to 4.6% from 23.3%, the widest divergence among the quarterly indicators presented in the results. The drop came alongside increases in net income and adjusted EBITDA, highlighting the difference between accounting earnings and cash generated during the quarter. The available results did not provide an explanation for the decline. The company’s latest annual record extends to revenue of $202.3 million in fiscal 2026, compared with $181.6 million in 2025 and $188.8 million in 2024.
The company said the increase in fiscal 2026 revenue over the prior year included growth of $11.2 million, or 13.0%, in recurring communications services. That earlier development puts the current quarter’s performance in the context of the company’s expansion in recurring revenue, which again delivered double-digit growth and a quarterly record. Management was scheduled to hold a conference call to discuss the quarterly results at 11 a.m. Eastern Time on November 2, 2026. The call gives management an opportunity to provide further details on the results, including the sharp decline in free cash flow. The published results did not provide data on the stock’s movement after the announcement.