Napco Security Technologies(NASDAQ) NSSC

Napco Security Technologies makes high-tech electronic security and alarm devices. It helps schools, businesses, and homeowners stay safe with smart locks. The company also runs cellular services that monitor fire and break-ins.

Locking Down the Market

• Communication Services: Cellular and cloud access for fire and intrusion alarms; accounts for approximately 48% of total revenue for fiscal year 2026.
• Door Security Products: Electronic locks with push-buttons or card readers and mechanical deadbolts; generated $69.1 million in revenue in fiscal year 2026.
• Intrusion and Fire Alarms: Control panels, detectors, and keypads that sense and signal break-ins; generated $28.1 million in revenue in fiscal year 2026.
• Video Surveillance Systems: Cameras, control panels, and software used to monitor locations remotely.

Strategic Shifts and New Markets

• Shifted focus toward mandatory commercial fire systems and cellular communication services to replace traditional landlines.
• Expanded into the healthcare industry with specialized locksets designed for safety in hospitals and correctional facilities.
• Developed specialized lock and access control solutions for the school security market, targeting K-12 schools and universities.
• Settled a legal dispute in fiscal year 2026 for a one-time charge of $16 million.

A Unique Manufacturing Setup

The company manufactures over 90% of its products in a vertically integrated, low-cost facility in the Dominican Republic. It provides technical support for complex security problems directly from its headquarters in Amityville, New York.

The Scorecard

• Net revenue was $202.3 million in fiscal year 2026, up 11.4% year over year.
• Recurring service revenue was $97.5 million in fiscal year 2026, up 13% year over year.
• Non-GAAP adjusted EBITDA was $66.7 million in fiscal year 2026, up 27.9% year over year.
• Net income was $43.0 million in fiscal year 2026, down 1% year over year.

Final Thoughts

Napco has transitioned from an equipment manufacturer into a high-margin service provider for the security industry. This shift toward recurring revenue from cellular monitoring supports consistent income and the potential for profitability.