Napco Security Technologies, Inc.

For fiscal Q3 2026, net revenue increased 11.8% to $49.2 million versus $44 million a year ago. Gross profit rose 17.4% to $29.5 million, and gross margin expanded to 60% from 57.2%; recurring service gross margin was 90.4% and equipment gross margin was 28.7%. Non-GAAP net income increased 36.9% to $13.9 million, or $0.39 per diluted share, and adjusted EBITDA rose 20.2% to $15.8 million with a 32.2% margin. For the 9 months ended March 31, 2026, revenue rose 11.9% to $146.5 million, non-GAAP EPS was $1.10, and adjusted EBITDA was $46.1 million. Looking ahead, management said recurring service revenue is running at an approximately $101 million annual rate, but did not provide formal next-quarter or full-year guidance.

Dick Soloway kept his comments brief and ceded the operational detail to management, which fit the call’s generally confident tone. Kevin Buchel framed the quarter as validation that NAPCO’s strategy of combining hardware with recurring services is working, and repeatedly emphasized the company’s growing installed base, strong market demand, and expanding opportunities in schools, commercial fire, and access control. He also highlighted the S&P SmallCap 600 inclusion as a milestone, but said execution and long-term value creation remain the focus.

Andrew Vuono said the quarter benefited from broad-based growth, with recurring monthly service revenue up 15.4% to $24.9 million and equipment revenue up 8.4% to $24.2 million. He pointed to gross margin expansion to 60% and recurring service gross margin of 90.4%, while equipment gross margin improved to 28.7% due to mix, higher locking volumes, price increases, and less discounting. He also noted $125 million in cash and marketable securities, no debt, $42 million in free cash flow for the 9 months, and a 16.3% effective tax rate for the 9-month period. On capital allocation, Kevin said the $0.15 quarterly dividend continues, the $16 million litigation settlement should not affect dividends, and the company could consider M&A or buybacks if opportunities fit its criteria.

Analysts focused on pricing and discounting discipline, whether lower discounting could pressure equipment volume or recurring revenue, and how much traction MVP is seeing. Management said this year’s pricing backdrop is less aggressive than last year, but discounting is being managed more tightly to protect margins; they said that should improve profitability even if the mix of pricing actions differs. On MVP, Kevin said meaningful recurring revenue is not expected until about October, roughly 18 months after ISC West last year, while on M&A he said the company has cash and inbound interest but no deal is imminent. In response to tariff questions, Andrew said average tariff cost has run at just under $2 million annually at the current 10% level and that they do not expect exposure to increase from here.