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%, representing 45% of Q4 revenue and driven by StarLink radio sales.

• Q4 net income rose 52.7% to $17.8 million; full-year net income was $43 million, down 0.9% due to a $16 million litigation settlement charge.

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 diluted EPS was $0.50 (up 51.5% YoY, including $0.09 from tariff refunds); full-year diluted EPS was $1.20 (up 0.8% YoY, including $0.03 from tariff refunds and -$0.40 from litigation settlement).

• 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 in the back half of fiscal 2027 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.