Napco’s fourth quarter saw a positive market response, reflecting management’s focus on channel normalization and recurring revenue expansion. The company highlighted strong growth in both equipment and service revenue, with improved gross margins attributed to reduced discounting and disciplined pricing. CEO Richard Soloway credited the company’s ability to maintain high gross margins in recurring revenue streams, particularly through the StarLink platform, as a key driver. The addition of a new Chief Revenue Officer was also noted as a move to further strengthen sales and support continued momentum across product lines.
Is now the time to buy NSSC? Find out in our full research report (it’s free for active Edge members).
Napco (NSSC) Q4 CY2025 Highlights:
- Revenue: $48.17 million vs analyst estimates of $47.82 million (12.2% year-on-year growth, 0.7% beat)
- Adjusted EPS: $0.37 vs analyst estimates of $0.31 (19.4% beat)
- Adjusted EBITDA: $15.35 million vs analyst estimates of $13.86 million (31.9% margin, 10.8% beat)
- Operating Margin: 30.6%, up from 26% in the same quarter last year
- Market Capitalization: $1.56 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Napco’s Q4 Earnings Call
- Jeremy Hamblin (Craig-Hallum): Asked about distributor inventory levels and gross margin improvements; President Kevin Buchel explained that channel normalization and less discounting supported stronger margins, with further margin upside targeted for hardware.
- Hamblin: Inquired about the MVP platform’s adoption timeline; Buchel indicated meaningful recurring revenue contributions are expected in the second half of next year, with early dealer response being positive.
- James Ricchiuti (Needham & Co.): Questioned the sustainability of pricing benefits; CFO Andrew Vuono clarified that recent price increases are now fully reflected, with no further broad adjustments planned for this year.
- Peter Costa (Mizuho): Sought an update on the ADI partnership and product penetration; Buchel and CEO Soloway described strong fire radio sales via ADI and ongoing efforts to expand locking product sales within that channel.
- Lance Vitanza (TD Cowen): Asked about the project sales funnel and StarLink’s outlook; Buchel noted a healthy project pipeline and significant runway for StarLink radios as the market transitions away from copper lines.
Catalysts in Upcoming Quarters
In upcoming quarters, our team will be watching (1) the pace of MVP cloud platform adoption and its impact on recurring revenue, (2) further improvements in equipment gross margins as pricing and product mix evolve, and (3) continued penetration of StarLink radios amid regulatory-driven infrastructure upgrades. We will also monitor progress on channel expansion and capital allocation initiatives.
Napco currently trades at $43.56, up from $36.89 just before the earnings. Is the company at an inflection point that warrants a buy or sell? The answer lies in our full research report (it’s free).
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