NAPCO Security Technologies (NSSC) Q4 2026 earnings summary

Executive summary

• Fiscal 2026 delivered record results, with Q4 net sales up 10% to $55.8 million and annual revenue reaching $202.3 million, driven by strong recurring service and equipment sales.

• Leadership transitioned to a new CEO, maintaining continuity and strategic direction.

• Recurring service revenue grew 13% for the year, with gross margins above 90%, and represented 45% of Q4 revenue.

• Q4 net income rose 52.7% year-over-year to $17.8 million; full-year net income was $43.0 million, down 0.9% due to a $16 million litigation settlement charge.

• The company ended the year with $137.6 million in cash and no debt, supporting growth and capital returns.

Financial highlights

• Q4 net sales increased 10% year-over-year to $55.8 million; recurring service revenue up 12.9% to $25.3 million.

• Full-year revenue rose 11.4% to $202.3 million; adjusted EBITDA reached $66.7 million with a 33% margin.

• Q4 gross margin expanded to 61.3%, aided by IEEPA tariff refunds; recurring service gross margin remained at 90.1%.

• Q4 net income margin: 31.8%; full-year non-GAAP net income margin: 28.3%.

• Free cash flow for the year was $59.2 million, up 15.2% year-over-year, with a margin of 29.3%.

Outlook and guidance

• Strong project pipeline across schools, healthcare, airports, and government, with expectations for continued growth in fiscal 2027.

• Recurring revenue run rate projected at $103 million based on July 2026 figures, expected to rise as hardware sales convert to service revenue.

• MVP cloud-based access control platform anticipated to contribute meaningfully to recurring revenue by year-end.

• Continued investment in R&D and automation to sustain growth and margin protection.