NAPCO Security Technologies reported record first-quarter fiscal 2027 revenue and net income, as growth in recurring service revenue more than offset weaker equipment sales. The security-products maker also declared a quarterly dividend of 17 cents per share.
The quarter ended Sept. 30. Recurring services continued to be the stronger growth and margin driver, while free cash flow fell sharply from a year earlier.
- Revenue rose 1.7% to $50.0 million, a first-quarter record. Recurring service revenue increased 11.5% to a quarterly record $26.1 million. Equipment revenue fell 7.3% to $23.9 million.
- Recurring services carried gross margins above 90%. Based on October revenue, NAPCO put the business’s prospective annual run rate at about $106 million, up roughly $3 million from the run rate it reported in July.
- Profitability improved. Gross profit rose 5.4% to $29.4 million, and gross margin increased to 58.7% from 56.6%. Operating income grew 3.5% to $14.1 million.
- Net income increased 6.9% to $13.0 million, or 36 cents per diluted share, up from 34 cents a year earlier.
- Adjusted EBITDA, a non-GAAP measure, rose 3.8% to a first-quarter record $15.5 million. Its margin increased to 31.0% from 30.4%.
- Free cash flow was $2.3 million, down from $11.4 million in the year-earlier quarter. Free-cash-flow margin declined to 4.6% from 23.3%.
- Management attributed the equipment-sales decline to lower purchases by two lock distributors. It said sales through those distributors to end customers grew year over year and strengthened sequentially.
- The 17-cent dividend is payable Jan. 4, 2027, to shareholders of record on Dec. 14, 2026.
The results show recurring services growing faster than equipment sales and contributing high margins, while overall revenue and earnings still reached first-quarter records. The sizable year-over-year decline in free cash flow stands apart from the improvement in reported profit and adjusted EBITDA.