Shares of NAPCO Security Technologies, Inc. (NSSC) plummeted over 17% in premarket trading on Friday, November 4, 2024, after the company reported fiscal first-quarter earnings that fell short of Wall Street's expectations.

For the quarter ended September 30, 2024, NAPCO reported record quarterly net income of $11.2 million, or $0.30 per diluted share, up 7% from the same period last year. However, the earnings per share missed analysts' consensus estimate of $0.35.

The company's revenue for the quarter grew 6% year-over-year to $44 million but still missed the average analyst forecast of $47.7 million. NAPCO attributed the revenue miss to a decline in door locking sales, with locking products accounting for approximately 60% of the company's equipment revenue. The decline was primarily due to several locking distributors' efforts to lower their inventory levels.

While NAPCO reported strong growth in its recurring service revenue, which increased 22% to $21.1 million, the robust sales of cellular radio communication devices had a negative impact on the company's overall equipment gross margins. The equipment gross margin for the quarter was 24%, compared to 28% in the same period last year.

Despite the earnings and revenue miss, NAPCO maintained its quarterly dividend of $0.125 per share, payable on January 3, 2025, to shareholders of record on December 12, 2024. The company's balance sheet remained strong, with cash and cash equivalents, other investments, and marketable securities totaling $102.2 million as of September 30, 2024.