NAPCO delivers solid FY25 performance with 10% RSR growth and strategic tariff response

AMITYVILLE, N.Y.—NAPCO Security Technologies Chairman and CEO Richard Soloway credits his company’s ability to focus on its long-term strategy amidst “a fair share of headwinds” for its strong Q4 and full-year 2025.  

Soloway told investors during NAPCO’s earnings call that even through microeconomic uncertainty and tariff-related pressures over the past year, the company continued to deliver best-in-class solutions, maintain operational discipline and invest for sustainable growth.  

RSR profitability & stability  

NAPCO's monthly recurring service revenue (RSR) increased 10% in Q4 to $22.4 million and its 12-month RSR increased 14% to $86.3 million. 

“Our recurring revenue model continues to provide significant profitability and stability and a strong foundation for future innovation and customer engagement,” Soloway said.   

Although equipment sales for Q4 decreased 5% and sales for the full year decreased 16% year over year, Soloway cited a 27% increase compared to the prior quarter. He said he was “encouraged” by hardware sales in Q4 and with the company’s ability to adapt to shifting demand.  

“Our ability to control inventory, manage supply chain complexity and continue delivering on customer commitments has put us in a strong position,” he said.  

‘Tariff chaos’ 

On tariffs, Soloway pointed out that, “while we cannot predict how that will play out, we have taken proactive steps both operationally and strategically, to address this.” An 8.5% pricing adjustment in April FY25, which came alongside a standard 5% annual price increase, contributed to a 23% gross margin for equipment revenue in Q4 FY25 (down from 31% last year), with an additional 5% annual adjustment effective mid-July FY25. 

“The pricing adjustments we have implemented are a key part of that, and we expect to see its impact starting in Q1,” he said.  

"We believe we are in an advantageous position as compared to some of our competitors,” added NAPCO President and COO Kevin Buchel. “Our supply chain planning, pricing strategies and balance sheet strength give us a competitive advantage in navigating these challenges.”  

Soloway was asked by one investor: With some distributors taking down inventories, should there be concern around where channel inventories sit today, given a broader buy ahead related to tariff-driven price increases? 

“We expect distributors to buy more,” Soloway said. “The tariff chaos has kind of cleared up. The distributors know that we're the best game in town when it comes to tariffs. With some of the other competitors, it's a little chaotic, and they don't know where the tariffs are going. Our fourth quarter sales were not only tariff-driven, but (there was) also real demand. We expect that to continue.”  

Heavy R&D investment  

Soloway lauded NAPCO’s continued heavy investment in R&D contributing to expanded recurring revenue opportunities across its product line. He told investors that “one of the most exciting of these” is its MVP platform, a new cloud-based access control system that integrates with locking hardware to enable remote building entry management.  

“It represents a brand-new recurring revenue stream for us and for our dealers,” he said. “We believe MVP can potentially be a game changer and become a foundational contributor to our growth over the coming years.”