NAPCO leans on recurring services to jolt revenues

AMITYVILLE, N.Y.—NAPCO Security Technologies Chairman and CEO Richard Soloway highlighted the strength of NAPCO’s recurring revenue model and its resilience amid macroeconomic challenges during its recent Q1 2026 earnings call.  

Financial results for the first quarter of 2026 saw NAPCO report record net revenues of $49.2 million - a 11.7% YoY increase – and recurring service revenue (RSR) of $23.4 million – a 1.1% YoY increase with a 90% gross margin.  

“Our first quarter results, which reflect record Q1 revenue, continue the momentum we reported from Q4 of fiscal 2025,” Soloway told investors. “It’s a reflection of our continued focus on long-term growth and resiliency of our business.” 

Soloway emphasized the steady profitability of NAPCO’s recurring revenue streams, which include subscription-based services and monitoring solutions. This model has proven to be a cornerstone of the company’s financial stability, even as global economic pressures and tariff uncertainties have impacted the broader security technology sector. 

Despite these headwinds, NAPCO’s equipment revenue also showed encouraging performance with an increase of 12.3% YoY to $25.7 million for the quarter.  

“This demonstrates the continued strength of our relationships with our distributors and our dealers,” executive vice president Kevin Buchel said of the strong Q1 equipment revenue figures.  

Expanding recurring revenue through innovation 

The heart of NAPCO’s growth strategy is a commitment to innovation that not only enhances security solutions but also drives recurring revenue, Soloway told investors, citing the company’s MVP cloud-based access control platform, which integrates seamlessly with its locking hardware. 

MVP features a subscription-based revenue stream for both NAPCO and its dealer network, reinforcing the company’s shift toward higher-margin, service-oriented offerings designed to meet the needs of a broad customer base. 

“We believe MVP has the potential to be a game changer, extending our leadership into hosted access control and reinforcing our strategy of pairing innovative hardware with cloud-based services to drive higher margin recurring revenue,” Soloway said.  

Securing schools, saving lives   

Soloway noted that one area where NAPCO continues to make “real impact” is school security, calling it “one of the most critical challenges of our time.”  

“We're proud to partner with school districts nationwide, providing integrated solutions that include our Trilogy and Marks lock sets and enterprise scale access control systems,” he said. “These platforms are secure, scalable, and aligned with the Partner Alliance for Safer Schools (PASS) program standards, giving educators and administrators solutions they can trust.”   

NAPCO’s unique value proposition lies in its integrated approach, Soloway said. “We know we have the solutions,” he said. “We’re the only company that does locking, access and alarms. We’re the one-stop shop that a lot of schools need.” 

Despite the company’s success in the education sector, both executives stressed that much work remains. “Even after hundreds of shootings a year in the U.S., it’s a tragedy that a lot of schools haven’t installed (security systems) yet,” Buchel said. 

Confident and growth-focused  

NAPCO’s outlook remains optimistic heading into Q2, with the company focused on executing its growth strategy and delivering value to shareholders. 

“We remain encouraged with our ability to weather the various microeconomic challenges we encountered in fiscal 2025,” Soloway said. “We’ve started fiscal 2026 with positive momentum and confidence in our ability to continue to execute on our plan to provide enhanced shareholder value and growth through the balance of the fiscal year.”