Locking is 66% of equipment sales. MVP is just starting out. It's gaining some traction. We expect to see more as we demonstrate upgrades and ship the new versions.
— Kevin Buchel
03Detailed Report
NSSC
Company NSSC
Period
Q1 2026
CurrencyUSD
Report TypeQuarterly Earnings
GeneratedJun 13, 2026
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Executive Summary
Napco Security Technologies delivered a strong fiscal Q1 2026, highlighted by record quarterly revenue of $49.2 million, up 11.7% year-over-year. Recurring revenue continued to build robustly, up 11.6% to $23.5 million and now representing approximately half of total sales, underscored by a very high recurring gross margin of 90.3%. The quarter also featured a sequential improvement in equipment gross margin (26.0%, up 300 basis points from Q4 fiscal 2025) and a solid profitability runway with operating income of $13.6 million and net income of $12.2 million, or $0.34 per diluted share. Importantly, NSSC remains debt-free with a cash balance of about $106 million and a cash position that supports a quarterly dividend of $0.14 per share, declared for January 2, 2026. Management highlighted ongoing pricing actions tied to tariffs and annual price increases, with expectations that the full impact will materialize in coming quarters. The company remains positioned for durable growth through StarLink recurring services and the MVP cloud-based access control platform, which pairs hardware and cloud software to unlock a sizable recurring revenue opportunity across millions of doors. The Dominican Republic manufacturing footprint provides cost advantages and tariff resilience, while school security and ADI distribution continue to present meaningful long-term opportunities. Overall, NSSC’s growth thesis rests on a high-margin recurring revenue engine, expanded product capabilities, and an asset-light, debt-free balance sheet that affords capital allocation optionality.
Key Performance Indicators
Revenue
Decreasing
49.17M
QoQ: 11.84% | YoY: -2.31%
Gross Profit
Stable
27.85M
56.63% margin
QoQ: 10.82% | YoY: 0.00%
Operating Income
Decreasing
13.64M
QoQ: 22.40% | YoY: -2.30%
Net Income
Decreasing
12.17M
QoQ: 20.18% | YoY: -10.12%
EPS
Decreasing
0.34
QoQ: 21.43% | YoY: -8.11%
Revenue Trend
Margin Analysis
Financial Highlights
Revenue and profitability:
- Net revenue (quarter ended Sep 30, 2025): $49.168 million, up 11.7% YoY. Equipment revenue: $25.6 million, up 11.8% YoY; Recurring revenue: $23.5 million, up 11.6% YoY.
- Gross profit: $27.846 million; gross margin: 56.6% (vs 55.9% prior year). Recurring services gross profit: $21.2 million; recurring gross margin: 90.3% (vs 91.1% prior year). Equipment gross profit: $6.6 million; equipment gross margin: 25.7% (vs 23.6% prior year, up 300 bps sequentially from Q4).
- Operating income: $13.64 million; operating margin: 27.75%. EBITDA/Adjusted EBITDA: $14.9 million; adjusted EBITDA margin: 30.4%.
- Net income: $12.17 million; net income margin: 24.74%; EPS (diluted): $0.34.
- Tax rate: 16.9% for the quarter.
- Cash flow and liquidity: Net cash provided by operating activities: $11.6 million; capital expenditures: $0.193 million; free cash flow: $11.44 million. Cash and cash equivalents and marketable securities: $105.8 million; debt: $0; current ratio: 7.5x; working capital: $159.2 million.
- Per-share and capitalization: Weighted average shares outstanding (diluted): ~35.86 million; total stockholders’ equity: $176.11 million; total assets: $205.97 million.
- Recurring revenue run rate: Approximately $95 million annualized (as of Oct 2025), up from $94 million (July 2025).
Key insights from the call: management emphasized that recurring revenue remains a durable driver of profitability (nearly half of total sales) with high gross margins, and highlighted MVP as a strategic, cloud-enabled recurring revenue opportunity. The company also underscored tariff-driven price actions and ongoing benefits from price increases in fiscal 2026, with expectations of larger gains in coming quarters. The balance sheet remains debt-free, enabling potential acquisitions while continuing shareholder returns via the dividend.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
49.17M
-2.31%
11.84%
Gross Profit
27.85M
0.00%
10.82%
Operating Income
13.64M
-2.30%
22.40%
Net Income
12.17M
-10.12%
20.18%
EPS
0.34
-8.11%
21.43%
Key Financial Ratios
Management Insights Available for Members
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