Overview

• US security equipment maker's fiscal Q3 revenue rose yr/yr, slightly missing analyst expectations

• Adjusted EBITDA for fiscal Q3 beat analyst estimates

• Company took $16 mln litigation settlement charge, leading to GAAP net loss for quarter

Outlook

• Company did not provide specific financial guidance for future quarters or the full year in press release

Result Drivers

• RECURRING SERVICE REVENUE - Double-digit growth in recurring service revenue, which made up 51% of Q3 revenue and maintained gross margins over 90%, supported overall results

• MARGIN EXPANSION - Overall gross profit margin rose to 60.0% from 57.2% a year earlier, reflecting improved revenue mix and operational performance

Company press release: ID:nPn19qwnTa

Key Details

Metric	Beat/Miss	Actual	Consensus Estimate
Q3 Revenue	Slight Miss*	$49.20 mln	$49.28 mln (6 Analysts)
Q3 Adjusted EBITDA	Beat	$15.80 mln	$14.06 mln (6 Analysts)
Q3 Gross Margin		60.00%

*Applies to a deviation of less than 1%; not applicable for per-share numbers.

Analyst Coverage

• The current average analyst rating on the shares is "buy" and the breakdown of recommendations is 6 "strong buy" or "buy", no "hold" and no "sell" or "strong sell"

• The average consensus recommendation for the communications & networking peer group is "buy"

• Wall Street's median 12-month price target for NAPCO Security Technologies Inc is $49.50, about 6% above its May 1 closing price of $46.72

• The stock recently traded at 30 times the next 12-month earnings vs. a P/E of 25 three months ago

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