Napco Security Technologies, Inc. Q1 2027 Earnings Recap

NAPCO shares fell 18.4% after earnings, with softer equipment revenue the clearest likely disappointment: management attributed it to lower purchases from two locking distributors, despite higher end-customer sales. Recurring revenue continued to grow, but the quarter’s equipment weakness may have raised concern about near-term growth.

Key Takeaways

• Annualized recurring revenue run rate reached approximately **$106 million**, up **$3 million** from the level reported in August; recurring service revenue grew at a double-digit rate.
• Recurring service gross margins remained **above 90%**.
• Equipment revenue was softer, primarily due to purchasing patterns at two locking distributors; management said those distributors’ combined end-customer sales increased year over year and sequentially.
• Management emphasized that distributor inventory and purchasing decisions can affect quarterly equipment revenue, while maintaining a healthy, growing equipment business remains a priority.