NAPCO SECURITY TECHNOLOGIES, INC Revenue Disclosure
NOTE 2 – Revenue Recognition and Contracts with Customers
The Company is engaged in one major line of business: the development, manufacture, and distribution of security products, encompassing access control systems, door security products, intrusion and fire alarm systems, alarm communication services, and video surveillance products for commercial and residential use. The Company also provides wireless communication service for intrusion and fire alarm systems on a monthly basis. These products are used for commercial, residential, institutional, industrial and governmental applications, and are sold worldwide principally to independent distributors, dealers and installers of security equipment. Sales to unaffiliated customers are primarily shipped from the United States.
As of June 30, 2025 and 2024, the Company included refund liabilities of approximately $4,790,000 and $6,295,000, respectively, in accrued expenses within the Consolidated Balance Sheets. As of June 30, 2025 and 2024, the Company included return-related assets of approximately $1,152,000 and $1,586,000, respectively, in other current assets.
As a percentage of gross sales, sales returns, rebates and allowances were 6%, 7% and 7% for the fiscal years ended June 30, 2025, 2024 and 2023, respectively.
The Company disaggregates revenue from contracts with customers into major product lines. The Company determines that disaggregating revenue into these categories achieves the disclosure objective to depict how the nature, amount, timing, and uncertainty of revenue and cash flows are affected by economic factors. As noted in the accounting policy footnote, the Company’s business consists of one operating segment. Following is the disaggregation of revenues based on major product lines (in thousands):
Fiscal year ended June 30, | |||||||||
| 2025 |
| 2024 |
| 2023 | ||||
Major Product Lines: |
|
|
|
|
| ||||
Intrusion and access alarm products | $ | 33,084 | $ | 39,372 | $ | 47,344 | |||
Door locking devices |
| 62,207 |
| 73,699 |
| 62,718 | |||
Services |
| 86,330 |
| 75,749 |
| 59,935 | |||
Total Revenues | $ | 181,621 | $ | 188,820 | $ | 169,997 | |||
The following table represents the allowance for credit losses accounts as of the respective years ending June 30 (in thousands):
| Balance at beginning of period |
| Charged to costs and expenses |
| Deductions/ (recoveries) |
| Balance at end of period | |||||
For the Year Ended June 30, 2023: | ||||||||||||
Allowance for credit losses | $ | 243 | $ | 6 | $ | (118) | $ | 131 | ||||
For the Year Ended June 30, 2024: | ||||||||||||
Allowance for credit losses | $ | 131 | $ | — | $ | (99) | $ | 32 | ||||
For the Year Ended June 30, 2025: |
| |||||||||||
Allowance for credit losses | $ | 32 | $ | — | $ | (7) | $ | 25 | ||||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Aug 25, 2025 | Showing above |
| 2024 | Aug 29, 2024 | |
| 2023 | Sep 8, 2023 | |
| 2022 | Aug 29, 2022 | |
| 2021 | Sep 13, 2021 | |
| 2020 | Sep 15, 2020 | |
| 2019 | Sep 13, 2019 | |
About Revenue Disclosures
Revenue disclosures under ASC 606 explain how a company identifies performance obligations, allocates transaction prices, and determines when revenue is recognized. This section is essential for understanding whether reported revenue reflects genuine economic activity or aggressive accounting choices. Analysts examine the mix of point-in-time versus over-time recognition, which directly affects revenue timing and comparability.
Key signals: rising contract liabilities (deferred revenue) suggest strong future revenue visibility, while declining contract assets may indicate slowing project milestones. Watch for variable consideration estimates — rebates, returns, and performance bonuses that require management judgment. Significant changes in disaggregated revenue by geography or product line can reveal shifting business mix before it appears in headline numbers. Compare revenue growth against contract liability growth to assess sustainability, and scrutinize any changes in the timing of recognition that coincide with earnings pressure.