NAPCO’s business model ‘working exactly as intended,’ says CEO

AMITYVILLE, N.Y.—The subscription-focused strategy of NAPCO Security Technologies continues to pay off, with recurring service revenue (RSR) scaling alongside equipment sales to drive record results in the company’s second quarter fiscal year 2026. 

During a recent conference call, Chairman and CEO Richard Soloway told analysts that Q2 revenue reached a record $48.2 million, driven by double-digit growth across both RSR and equipment sales, expanding margins and strengthening operating leverage. 

“Together, these results reinforce that our business model is working exactly as intended,” he said. “Our Q2 performance and results for the first half of fiscal 2026 reflect strong execution and meaningful progress against our long-term strategy.” 

RSR remains core growth engine 

At the center of that strategy, Soloway said, is NAPCO’s RSR platform. The company reported RSR increased 12.5% year over year to $23.8 million in Q2, with a 90.2% gross margin. 

“Our RSR platform continues to deliver consistent, high margin growth,” he said. “This steady, high-quality revenue stream provides predictability, strong cash generation and long-term value creation.” 

During the call, analysts asked about adoption of NAPCO’s MVP cloud-based access control platform, which launched in late 2025, and when it might begin contributing meaningfully to RSR. President and COO Kevin Buchel noted that while MVP was not expected to materially impact RSR during the first half of the fiscal year, early signs are encouraging. 

“This is really more of a second half of calendar ’26 story,” Buchel said. “By the first or second quarter of fiscal ’27, we should start to see more meaningful contributions. It takes time – this new concept for locking dealers - but we believe they’re going to love it, because now they're going to get recurring revenue like the alarm people get.” 

Equipment channel strength and pricing 

CFO Andrew Vuono also attributed the quarter’s net revenue growth to an increase in cellular radio activations. 

“We expect radio sales to continue to be a key contributor to overall equipment revenue, which in turn drives continued growth in our highly profitable recurring service revenue,” he said. 

Overall, equipment revenue rose 12% year over year to $24.3 million in Q2, a result Buchel said underscores the strength of NAPCO’s channel relationships. 

“I’m particularly pleased with equipment growth,” Buchel said. “It reflects the durability of our distributor and dealer relationships, as well as the impact of the price increases implemented at the end of fiscal 2025, which are performing as expected.” 

ADI partnership opens doors  

When asked about NAPCO’s partnership with ADI Global Distribution and dealer penetration via ADI’s channel, Buchel described the relationship as “great.” He noted that ADI has introduced NAPCO to some of the world’s largest dealers, particularly through fire radio deployments.  

Buchel added that NAPCO hopes to expand the ADI partnership to include locking dealers, as well. “If we can get them really cooking on the locking, that would be tremendous, so we're working hard on that,” Buchel said.  

Soloway echoed Buchel’s optimism, pointing to the collaborative nature of the partnership. “We bring innovation, and they bring great ideas,” he said. “It’s a strong collaboration, and it’s driving solid growth. You’re going to see a lot more of that going forward.” 

Confidence in fiscal 2026 and beyond 

Looking ahead, Soloway said NAPCO remains optimistic about the remainder of fiscal 2026 and beyond. 

“Demand across our product portfolio remains strong,” he said. “Our recurring service revenue base continues to expand, and our operating discipline remains firmly in place. We’ve diversified our distribution channels, implemented pricing actions, continued enhancing the StarLink platform, and invested in automation and technology designed to sustain growth and expand margins.”