Aug 24, 2026 earnings call — Recurring revenue growth and leadership transition
Management said annualized recurring revenue run rate has reached approximately $103 million, based on July recurring revenues.
Revenue $0.1B (est $0.1B) · EPS $0.50 (est $0.39)
Key quotes
"Based on our July recurring revenues, our annualized recurring revenue run rate has reached approximately $103 million an important milestone that reflects the strength of our connected services strategy and the increasing value of our installed base."
"Overall gross profit for the quarter benefited by approximately 600 basis points from AIIPA tariff refunds."
"MVP creates an entirely new recurring revenue stream for NAPCO and our dealers."
Analyst Q&A 5
supply chain and MVP launch timing
Q (Matt Summerville · D. A. Davidson): He asked about current supply chain challenges, mitigation steps, and whether shipments are being hurt. He also asked for an update on the MVP launch and how the project funnel compares to a year or two ago.
A: Management said they have not been impacted so far and are actively negotiating with suppliers to keep pricing and shipments stable. They expect the MVP to start producing meaningful recurring revenue around October or November. They also said the project funnel is larger than a year or two ago, but they only discuss projects once orders are in place.
"We have not been impacted at all, but it is fair for us to say that this is something we are going to have to deal with." — Kevin S. Buchel (CEO)
margins and distributor demand
Q (James Ricchiuti · Needham and Company): He asked how higher door-locking sales and large radio sales affected equipment gross margins and what to expect in Q1. He also asked about current demand trends with large distributors.
A: Management said strong radio sales lowered equipment gross margin this quarter because radios carry lower gross margin, but those sales create recurring revenue later. They noted a 5, 6, 7 month gap between shipping radios and realizing recurring revenue. For demand, they said distributors are currently in a good place with healthy inventory and sell-through.
"However, it leads to the beautiful recurring revenue, which is the big prize In our case, it comes later." — Kevin S. Buchel (CEO)
recurring revenue cadence and acquisitions
Q (Lance Vitanza · TD Cowen): He asked whether recurring service revenue could grow faster than the prior $2 million per quarter pace and whether that growth would be back-half weighted. He also asked if strategic priorities or capital allocation might differ from past approaches.
A: Management said the recurring revenue run rate should rise toward the back end of the year because there is a roughly six-month delay from hardware sales to recurring revenue. They said MVP could add further upside if it contributes. On strategy, they said they may pursue acquisitions only if the fit is right, they have the cash, and they will avoid deals that hurt margins; they also noted R&D was increased by 10%.
"So, yes, back end, my hope is that it goes up Now MVP, if it is a contributor by then, we hope it will be, that just adds to it." — Kevin S. Buchel (CEO)
ADI partnership and school demand
Q (Jaeson Schmidt · Lake Street): He asked how the relationship with distributor ADI is progressing and whether the university market is stronger than K-12 based on the current funnel.
A: Management said ADI has been a strong, organized partner and that ADI buys many intrusion and fire radios. They are working to expand ADI into the locking side and ADI has trained branches on MVP products. Management said both university and K-12 markets are strong and many schools still need equipment.
"We are trying to get them into the locking side And they have actually trained many of their branches on the MVP products." — Kevin S. Buchel (CEO)
pricing, discounts, and OpEx plans
Q (Jeremy Hamblin · Craig Hallum): He asked how discounting and pricing discipline will be managed in fiscal 27 and what incremental OpEx might be expected for R&D or SG&A in 2027.
A: Management said fiscal 26 showed improved discipline around rebate programs and less quarter-end discounting, and they expect to continue that into fiscal 27. They do not expect major SG&A increases other than adding IT talent for cyber and possible legal unknowns. On R&D, they said they will fund needed hires to support product development and recurring revenue, and R&D spend will rise as required but not wildly.
"I think it just reflects the discipline that we saw in fiscal 26, and we are expecting more of you know, into 2027." — Andrew J. Vuono (CFO)