Napco Security Technologies (Nasdaq: NSSC), makers of the iBridge home automation platform, recently announced fiscal third-quarter earnings of $1.83 million, as compared to $952,000 for the same quarter last year.
Third quarter net sales increased 7 percent to $22.2 million, which marked a record Q3 performance. For the nine-months ended March 31, net sales increased 5 percent to $64.4 million. The increase was attributed primarily to a rise in SaaS recurring service revenue, access control products, and door-locking hardware.
Gross profit for the third quarter increased 6 percent to $8.9 million, and for the nine-month period, it increased 5 percent to $25.9 million.
R&D expenses for the quarter were said to be $1.78 million, or 7.5 percent of sales as compared to $1.7 million or 8.2 percent of sales last year. For the nine months, R&D expenses were relatively constant at $4.9 million or 7.6 percent of sales as compared to $4.9 million or 8 percent of sales last year.
Operating income for Q3 increased 68 percent to $1.9 million as compared to $1.1 million during the same period the year prior. For the nine-months, operating income increased 42 percent to $4.1 million as compared to $2.9 million the prior year.
Napco reported a cash balance as of March 31 was $4.3 million as compared to $3.5 million on June 30, 2017. Working capital as of March 31 was $40.5 million as compared to $40.8 million on June 30, 2017.
Napco Focus on Recurring Revenue, School Security
During an earnings call with analysts on Monday, Napco CEO and President Richard Soloway said SaaS recurring revenues increased 49 percent during the third quarter and now has an annual run rate of $12.9 million. He attributed the growth to the company’s StarLink alarm communicators for intrusion, fire, and connected home applications.
Soloway emphasized SaaS recurring revenue and school security as two paradigm shifts in the company’s business, both of which remain positive forces, he said.
“The school security opportunity continues to remain significant for us. As a reminder, the total addressable market is very large with over 100,000 K-12 schools and over 10,000 houses and universities in the U.S.,” he said.
“Many of these schools have little or no security in place to protect them from the constant threat of violent incidences. We believe that going forward the amount of new spending on security and safety products from school will continue at a strong rate for the foreseeable future.”
Napco shares have risen 25 percent since the beginning of the year. The stock has risen slightly more than 4 percent in the last 12 months.
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