Napco Security Technologies (NASDAQ:NSSC) shares fell 5.9% after the release of its Q4 2024 financial results, which came in below analysts’ expectations. The company’s revenue declined by 9.7% year over year to $42.93 million, missing Wall Street estimates by 13.9%.

GAAP earnings per share (EPS) stood at $0.28, falling 16.7% short of the consensus estimate of $0.34. Adjusted EBITDA also disappointed, coming in at $12.18 million versus the expected $14.6 million. The operating margin decreased to 26% from 29% in the same quarter last year.

The revenue decline was primarily due to weaker sales of alarm systems, access control devices, and locking mechanisms. Two key distributors reduced purchases: one implemented a corporate-wide inventory reduction strategy, while the other underwent management restructuring, which delayed transaction approvals.

However, Napco’s recurring service revenue (RSR) segment showed resilience, growing by 14.4% to $21.2 million, with a gross margin increase to 91%. Analysts project that Napco’s revenue will grow by 15.4% over the next 12 months, indicating potential recovery in equipment sales and the success of new products.