NAPCO Security Technologies (NSSC) Q2 2026 earnings summary

Executive summary

• Achieved record Q2 revenue of $48.2 million, up 12.2% year-over-year, driven by double-digit growth in both equipment and recurring service revenues.

• Net income rose 29% to $13.5 million for the quarter, with diluted EPS increasing to $0.38 from $0.28.

• Recurring service revenue grew 12.5% year-over-year to $23.8 million, maintaining a 90.2% gross margin and representing about 50% of total revenue.

• Appointed Joseph Paczynski (also referenced as Pipczynski) as Chief Revenue Officer to accelerate revenue growth and strengthen go-to-market execution.

• Board declared a quarterly dividend of $0.15 per share, a 7% increase, payable April 3, 2026.

Financial highlights

• Equipment revenue for Q2 was $24.3 million, up 12% year-over-year, driven by strong performance in door locking and intrusion/access products.

• Gross profit margin improved to 58.6% for the quarter, up from 57% in the prior year.

• Adjusted EBITDA for Q2 was $15.35 million (margin 31.9%), up from 28.4% last year.

• Free cash flow for Q2 was $14.5 million, with a margin of 30.1%.

• Cash and cash equivalents increased to $104.9 million as of December 31, 2025; no debt.

Outlook and guidance

• Confident in sustaining momentum through fiscal 2026, with expectations for continued growth in recurring and equipment revenue.

• MVP cloud-based access control platform expected to contribute more meaningfully to recurring revenue in the second half of calendar 2026 and into fiscal 2027.

• No further broad-based price increases planned for the remainder of the year; current pricing fully reflected in Q3 and Q4.

• Management expects sufficient cash flow and liquidity to meet operational and capital needs for the next twelve months.

• No material impact from tariffs or macroeconomic conditions is expected in the near term, but ongoing monitoring continues.