NAPCO Security Tech (NASDAQ: NSSC) reported Q3 EPS of $0.05, $0.02 worse than the analyst estimate of $0.07. Revenue for the quarter came in at $20.8 million versus the consensus estimate of $21.5 million.

• Net sales were $20.8 million, as compared to $19.8 million for the same quarter last year.
• Recurring monthly revenue (\"RMR\") for the third quarter increased 68% compared to the same quarter a year ago and grew 14% sequentially.
• Gross margin for the third quarter increased to 32.0% as compared to 30.8% for the same quarter last year.
• Earnings per share (diluted) for the third quarter was $0.05 as compared to $0.06 for the same quarter last year.

Richard Soloway, Chairman and President commented, "Our investments in our future continue to position NAPCO solidly, for optimal sales growth. This past quarter saw the massive launch of our StarLink Connect® Series of Universal Alarm Communicators with Connected Home Services. One of the largest product introductions in our Company\'s history, the StarLink product entry considerably extends our market presence in the RMR-oriented Alarm/Event Communication and Remote Connected Home Services Category. As a testament to its uniqueness and market potential, StarLink Connect was awarded both the ISC West - SIA New Product Showcase \'Best in Residential and Monitoring Solutions Award\' and the \'2017 Most Valuable Product Award\' in the home controls category from Security Sales and Integration. The StarLink Connect product solution will enable us to command a substantial share of the large and growing IoT market space. While this launch impacted our SG&A this quarter, we feel it is an important investment in our future. We are pleased that our sales once again exceeded the $20 million mark, which is the point where we begin to see the leverage from our manufacturing facility. Hence the gross margin increased 120 basis points to 32%.\"

Mr. Soloway continued \"The StarLink Connect introduction, coupled with our already considerable market presence with StarLink® 3G/4G, Verizon CDMA and StarLink Commercial Fire/Intrusion alarm communicators, continued to drive considerable growth of subscription-based recurring monthly revenue, with a 68% increase in Q3, versus the same period a year ago. The Company will continue it\'s unrelenting focus on expanding our service-based income."

Mr. Soloway added "This past quarter also saw our Continental Access Control Division\'s debut of the UniVerse® POE ( Power-over-ethernet) Single Door Controller, as well as its much anticipated, new CA4K Access Control Software Platform. UniVerse fills the commercial need for a miniature,(it fits in a light switch enclosure), cost-effective, easily-installed networked access control system. This product integrates well with all of NAPCO\'s other products, such as Alarm Lock electronic access control locks and NAPCO intrusion and fire systems, delivering a labor-saving, economical solution for the Education or Health Care vertical markets. The CA4K Access Control Software launch establishes our position in the cloud-based, Access Control as a Service (ACaaS) market. This Continental product entry enables our Company and integrators to provide a cloud-based, access control solution to our mutual customers, saving them considerable investment in infrastructure and IT expenditures and subsequently delivering a recurring monthly service income stream to NAPCO. The ACaaS market is forecast to have robust growth going forward."

Mr. Soloway concluded "Our fiscal 2017 is progressing well and our strategic direction in focusing on key growth markets, many of them with substantial RMR growth potential, is meeting with success. We look forward to a continuation of systematic, steady increases in our business and a strong finish to our fiscal year."

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