Napco Security Technologies Inc. (NASDAQ: NSSC) reported fiscal third‑quarter 2026 results that included a revenue of $49.2 million, a 11.8% year‑over‑year increase, and a non‑GAAP net income of $13.9 million, up 36.9% from the prior year. The company also announced a quarterly dividend of $0.15 per share, payable on July 3 2026 to shareholders of record on June 12 2026, and confirmed a cash balance of $114.4 million at quarter‑end.
Revenue fell slightly short of consensus estimates of $49.24 million, missing by $0.04 million. Recurring service revenue grew 15.4% to $24.9 million, while equipment revenue increased 12% to $24.2 million. Gross profit margin expanded to 60.0% from 57.2% year‑over‑year, driven by higher service margins and an improved equipment gross margin that rose to roughly 29% from about 27% in the prior year.
The company’s non‑GAAP earnings per share of $0.39 beat the consensus estimate of $0.33 by $0.06, a 18% lift. The beat was largely attributable to disciplined cost management, a favorable mix shift toward high‑margin recurring service contracts, and pricing power in the door‑locking product line. CEO Richard Soloway said the results were "positive financial results, including record Q3 Adjusted EBITDA of $15.8 million, which was sustained by our recurring service revenue with its continued year over year double digit growth, and the consistent demand for our door‑locking products that drove growth in our equipment revenue and improved equipment gross margins."
GAAP net income for the quarter was a loss of $0.4 million, a result of a $16.0 million litigation settlement charge that was not included in the non‑GAAP figures. The settlement removed a one‑time drag on the GAAP bottom line and clarified the company’s underlying profitability for investors.
The company’s recurring service revenue now represents about 51% of total sales, underscoring the stability of its business model. With a debt‑free balance sheet and $114.4 million in cash, Napco is positioned to fund future growth initiatives, including the upcoming MVP Cloud‑Based Access Control Platform slated for launch in October 2026. The dividend program continues to provide a steady return to shareholders while preserving capital for strategic investments.
Market reaction to the earnings was broadly positive, with pre‑market trading indicating gains between 2.9% and 4.9%. Investors highlighted the EPS beat, margin expansion, and robust recurring revenue growth as key drivers of the favorable response, while noting the slight revenue miss and the impact of the litigation settlement on GAAP results.
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