10-Q · May 5, 2026
Napco Security Technologies reported strong Q3 2026 results, exceeding both revenue and EPS expectations with actual figures of $49.167 million in revenue and $0.39 in EPS compared to estimates of $49.155 million and…
Earnings analysis · 10-K
NSSC earnings analysis
Filed August 24, 2026 · Our reading of the company's report
The latest report
NAPCO delivered strong underlying fiscal 2026 growth, led by 13.0% recurring-service revenue growth, improved equipment margins and $61.145 million of operating cash flow. The integrated product platform, high-margin…
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NAPCO delivered strong underlying fiscal 2026 growth, led by 13.0% recurring-service revenue growth, improved equipment margins and $61.145 million of operating cash flow. The integrated product platform, high-margin communications services and Dominican Republic manufacturing footprint support the strategy, but reported net income and operating margin were pressured by a one-time $16.000 million litigation settlement. The outlook remains neutral because the filing provides no quantitative fiscal 2027 guidance and introduces significant AI-related component constraints, ongoing litigation exposure and a post-year-end leadership transition.
Gross and operating margin
How much of each revenue dollar the business keeps.
One point per quarterly or annual filing. Both margins are shares of that report's revenue.
From revenue to operating profit
Where each $100 of revenue went in this report.
Cost of sales, operating expenses, and what remained. Figures are rounded to whole dollars.
Where revenue came from
The business segments reported by the company.
Shares of the segments disclosed in this filing, largest first.
How we read each report
Our analysis across the last few reports.
Our model's reading of each filing, not the share price or the market's reaction. Annual and quarterly reports each occupy one position.
Reported figures
- Earnings per share
- $1.2
What stood out
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Recurring Services Drove Growth
Fiscal 2026 revenue increased 11.4% to $202.316 million, with recurring service revenue up 13.0% to $97.528 million. Service revenue represented approximately 48% of total revenue and carried a 90.3% gross margin.
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Gross Margin Expanded
Overall gross margin expanded to 59.2% from 55.6% in fiscal 2025. Equipment gross margin increased to 30.3% from 23.6%, although management said approximately 50 basis points of the overall 2026 margin benefited from tariffs.
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Integrated Platform Differentiates
Management emphasizes an integrated platform spanning intrusion alarms, access control, connectivity and locking devices. It states that approximately 12 competitors exist, but believes none manufactures all key building-security product categories under one roof.
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Locking And Fire Products Led Mix
Door-locking revenue rose 11.1% to $69.132 million, supported by approximately 6.1% pricing increases and approximately 5.0% higher sales volume. Intrusion product revenue increased 14.3% to $28.056 million, primarily driven by fire radio communicators, while access alarm revenue declined 11.0% to $7.600 million.
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Strong Liquidity Supports Investment
Operating cash flow increased to $61.145 million from $53.527 million in fiscal 2025. The company ended fiscal 2026 with $126.928 million of cash and cash equivalents, no outstanding debt, and a $20 million revolving credit facility expiring in February 2029.
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Focused Product And Cost Roadmap
NAPCO plans to continue developing recurring-revenue products and invested $13.791 million in R&D, equal to 6.8% of revenue, while expanding school-safety and healthcare offerings. The Dominican Republic facility manufactures over 90% of products and provides a vertically integrated, lower-cost manufacturing base.
What to watch
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AI Demand May Constrain Components
The filing identifies AI data-center expansion as a materially changed supply-chain risk: suppliers may prioritize AI and cloud customers, causing longer lead times, higher prices, allocation restrictions or shortages for NAPCO’s electronic components. A shortage of one critical component could delay finished-product shipments even when other materials are available.
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Litigation Remains A Material Overhang
The company accrued a $16.000 million litigation settlement charge in fiscal 2026, reducing reported net income to $43.027 million from $43.406 million despite revenue growth. A separate derivative action remains partly outstanding and was stayed for 180 days beginning in August 2026 while a special litigation committee investigates; the company states that potential additional losses cannot currently be estimated.
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Leadership Transition Raises Execution Risk
A post-year-end leadership transition became effective July 8, 2026: the former Chairman and CEO became Founder and Executive Chairman, while the former President and COO became CEO and President. Their new agreements provide annual base salaries of $800,000 and $900,000, respectively, with target cash bonuses and equity awards each equal to 50% of base salary, creating execution and key-person risk during the transition.
Management's outlook
The 10-K provides no quantitative fiscal 2027 revenue or EPS guidance; annual outlook was deferred to the earnings press release/call.
Earlier filings 4
10-Q · November 3, 2025
Napco reported Q1 revenue of $49.168M and diluted EPS of $0.34, both up versus the year-ago quarter (revenue +$5.165M, EPS +$0.04). Both equipment and service businesses grew, gross margin expanded to 56.66% and…
10-K · August 25, 2025
Napco reported fiscal 2025 net sales of $181.6 million (down from $188.8M in 2024) and net income of $43.4 million (down $6.4M vs. 2024). The company continued to shift mix toward high-margin recurring communication…
10-Q · May 5, 2025
Napco reported quarterly net sales of $43,961,000 and diluted EPS of $0.28 for the three months ended March 31, 2025. Service revenues grew while equipment revenues contracted, supporting a higher gross margin (57.2%)…
This is our reading of a public filing, not the filing itself. Analysis can contain errors; check the source document for full context.