SDM 2026 INDUSTRY FORECAST
January 5, 2026
SDM 2026 INDUSTRY FORECAST
January 5, 2026Looking back on 2025 and ahead at the coming year, both the 2026 SDM Security Industry Forecast Study respondents, and an industry panel made up of three security dealer and integrator companies, find a few familiar themes emerging — namely, a wary eye on the economy and a continued emphasis on attracting talent. But there is also tangible excitement about emerging technology advancements and what they will mean for both new and existing customers.
First, the good news. According to the Industry Forecast, last year saw 14% growth in total annual revenue, down slightly from 16% the previous year (and 18% the year before that), but still in the healthy double digits. RMR increased by an average of 23%, up from 20% the past two years. The median RMR dollar amount was up substantially from last year’s median: $100,000 versus $60,000.
This tracks with SDM’s Industry Forecast panelists’ experience. “Our forecast shows our revenue will grow by 15.1% and profits will grow by over 110% in 2025 compared with 2024,” says Shaun Castillo, president, Preferred Technology Inc., Houston, and SDM’s 2023 Systems Integrator of the Year.
“We saw probably about a 10% decrease in installation revenue in 2025, [and] we’ll end our recurring revenue year with between a 12% and 14% increase,” says Josh Dice, president, Security Alarm Corp., Salem, Ill. “So, with our increase in RMR, our increase in service and our increase in inspections, we are expecting our 2025 to end up pretty close from a top line standpoint to our 2024.
The SDM Industry Forecast Panel: 2026
As president of Pref-Tech, SHAUN CASTILLO is responsible for everything Pref-Tech does and fails to do. He takes great pride in leading the exceptional men and women of Pref-Tech that, on a daily basis, work hard to strengthen the company’s family culture and creatively resolve customer pain with the highest level of craftsmanship and service.
Castillo served as Pref-Tech’s vice president of operations for four years before becoming the company’s president in 2009. Prior to Pref-Tech, he served as an officer in the United States Army until he was honorably discharged in July of 2005. During his tenure, he held various positions as a field artillery officer. His service also includes a year of combat operations in Iraq. Castillo is a 2000 graduate of the United States Military Academy at West Point and a regular speaker at security industry events. Image courtesy of Pref-Tech
JOSH DICE has worked in the daily operations of his family’s security company (started in the 1970s) since he was a small child. From holding flashlights to learning to wire tidy panels, Dice and his siblings learned how to get the job done right. These formative years prepared Dice for his current role as president of the company. Dice, alongside his family, has successfully grown the small family business into one of the leading security providers in their region. Dice truly enjoys his work at Security Alarm and has an undeniable passion for growing businesses. Image Courtesy of Security Alarm
SCOTT R. ELKINS is CEO of Zeus Fire and Security, a modern, tech-enabled, national network of fire protection and a security provider known for operational excellence across multiple service lines and end markets. A recognized leader in the security industry, Elkins has been instrumental in developing innovative business models that integrate emerging technologies into practical, scalable solutions. Elkins serves on the board of directors for The Monitoring Association and the Electronic Security Association and is a chairman of NetOne. He is also a board member of The Constitutional Walking Tour of Philadelphia and the former chairman of Valley Forge Educational Services. Additionally, he co-founded Catavault and served on its advisory board.
Elkins is a principal inventor of U.S. Patent No. 7,155,739, which outlines a method and system for secure registration, storage and management of personal authentication credentials over a network. In recognition of his leadership and vision, Elkins was named the 2025 EY Entrepreneur of the Year – Greater Philadelphia for his role in building Zeus Fire and Security into a successful, high-growth enterprise. Elkins earned a Master of Science in organizational dynamics from the University of Pennsylvania. Image courtesy of Zeus Fire and Security
We saw probably about a 10% decrease in installation revenue in 2025 [and] we’ll end our recurring revenue year with between a 12% and 14% increase. So, with our increase in RMR, our increase in service, our increase in inspections, we are expecting our 2025 to end up pretty close from a top line standpoint to our 2024.
“We serve a lot of the education market, so we did see a reduction in education spending,” Dice further explains, noting that the COVID-related funds driving a lot of upgrades started drying up in 2025.
Scott Elkins, CEO, Zeus Fire and Security, Paoli, Pa., says his company’s gross revenues are expected to grow about 49% in 2025, driven by a combination of organic growth and acquisitions of seven companies, while the RMR portion is forecast to increase about 13%. With branches spanning the country from New Jersey to Hawaii, Elkins says there were some regional differences, but, in the end, they balance out.
“I wouldn’t say that one market is experiencing more or less growth as a whole,” Elkins says. “What I will say is that markets seem to experience growth differently at different times. So what might be impacting the Midwest today may not be impacting the Northeast, but it might be coming to the Northeast or vice versa. Over the course of a year, it usually evens itself out. We’ve seen construction starts down quite a bit in the Midwest in early 2025, but those, too, are coming back.”
The Panel Talks RMR
SDM: How did your company’s 2025 recurring monthly revenue (RMR) change compared with 2024? And how do you expect 2026 RMR will change compared with 2025?
Elkins: Our 2025 recurring revenue increased by just about 13%, which was a combination of organic and inorganic growth. For 2026, we’re forecasting a similar increase. I think the speed at which new technology takes hold could certainly have a positive impact on those numbers.
Dice: We’ll end our recurring revenue year with between a 12% and 14% net increase. We’re expecting our 2025 to end up pretty close from a top-line standpoint to our 2024 numbers, so we’re forecasting again between 12% and 14% for next year. Obviously, attrition’s going to affect that number, since those are net numbers we’re talking about, but I agree with Scott that technology is going to have a big impact on that. Take video monitoring for example, which has a much higher recurring revenue rate. If we can figure out how to sell that and better educate the market on that, that’s going to have a significant impact on our 2026 recurring revenue.
The Panel Talks Sales for 2026
SDM: What is one factor you feel will most significantly affect sales of security systems by your company this year?
Dice: The number one thing is the economy. Every year, over the past five years, begins with a question mark. What’s the economy going to be like next year? And so that’s probably what I think about the most, with some of the verticals we work with, with schools, healthcare, government spending [being] a part of that. How many grants are they going to get?
I also think about AI and where it’s going, especially with central stations. Are we going to start losing that human factor? What’s that going to do? That’s a question mark. But probably the biggest thing is the economy and how much spending is going to happen in 2026.
Elkins: Josh is right, it’s the economy, the technology, the changes to our industry and what it’s going to look like a year from now, three years from now, five years from now. Absolutely, those are things that keep me up at night. But, at the end of the day, for me, it’s how do we ensure that our people, our team members, those in the field, those out of the office remain truly connected and are working? We live in a world that’s becoming ever more disconnected.
Castillo: We recently expanded our sales team and will continue to do so. We will also continue to narrow the team’s focus on our core customer profile and core vertical markets.
Looking Ahead
This year, when asked about expectations for 2026, Industry Forecast respondents were a bit more cautiously optimistic than last year, with 63% predicting a mean increase of 15% and 29% predicting revenues will stay the same; 8% expect a decrease. This more closely follows the real results seen last year (50% experienced an increase and 40% stayed the same, versus the predicted 70% increase and 26% believing revenue would stay the same).
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What is driving this slight dip in enthusiasm? When asked about top business challenges, Industry Forecast respondents led with “finding/retaining employees,” which was also the top concern last year, followed by increasing sales, competing effectively and protecting profit margins. Asked about the top factors that will have the most impact on sales in 2026 (positively or negatively), economic conditions once again topped the list, as it has for the past several years.
Product-wise, video, managed services and access control are predicted to increase in 2026 by at least 60% of respondents, with 71% predicting increases in revenues to come from video analytics, AI and on-prem or cloud-based video surveillance. Monitoring, perimeter, fire alarm and intrusion are expected to increase by over 40% of respondents.
Among our panelists, there is similar optimism, and acknowledgment of many of these factors.
We believe we have great products and solutions to sell, along with superior service. We simply need more people to sell it.
The Panel Talks Emerging Technologies & Opportunities for 2026
SDM: What are the products and services driving your customers to purchase or upgrade their systems in 2026?
Castillo: Customers are finally leveraging the power of security system data. They are connecting the data to AI engines for better analysis, decision-making and automation. I expect the rate of change in this segment of our industry to continue to increase.
On the service side, growth of our service team has been tremendous this year. They have evolved from bridging the gaps between projects and executing warrant work to significantly enhancing the customer experience. I expect our service team to continue finding ways to increase our value to customers throughout the next year. Lastly, Texas has become a major player in the data center space. We do not target that market currently, but we plan to do so in the coming year.
Elkins: I think what we call the “Core 4” — burg, fire, access and video — will still be strong in 2026. So, I think all four of those offerings, whether individually or packaged as a combined offer, will certainly help create growth in 2026. But I also think that new technologies, such as remote video monitoring, AI and other tools that help make systems smarter, will certainly help accelerate growth in 2026. And you’re going to see that across the entire industry regardless of size of company or geography.
Also, the momentum we saw and continue to see in our fire alarm business has been truly incredible. I think it’s one of the most resilient parts of the industry. Last year, we truly doubled down on building a stronger foundation, from expanding our fire focus sales team to launching new in-house training and certification programs to really raise the bar for our entire organization. We also established a centralized engineering center of excellence that brings our fire talent together to share expertise and solve complex challenges across our entire network. So, when you combine what we believe to be really significant industry tailwinds, such as stricter code enforcement, new additions to NFPA 72 and the massive demand for testing and inspection and service, we just see a tremendous runway ahead. Fire is really not just about regulatory requirements; it’s a long-term business relationship that you develop with your customer. Our ability to deliver high quality code-driven solutions at scale is the thing that I think I’m most excited about in 2026.
The last thing is to double down on ZeusAI and the ability to provide customers with actionable, intelligent data from systems already in place or for systems that we will install in 2026.
Dice: We’re expecting to continue to be strong in access control, fire alarm upgrades and video alarm monitoring; those are the three areas that we’re expecting to see tremendous growth in.
One of our big focuses this year, and that we’ll continue to focus on next year, is just tapping into our existing customers. Late in 2024, we had a little bit of a slump in our sales, and our backlog got a little bit lower than we like to have it. So, we took four of our technicians and sent them out to visit existing customers. They would test the system and then would offer to go over new technology with the customer. Well, over a two- to four-week period, they sold over $100,000 worth of new technology to our existing customers. What we realized with that exercise was we have a lot of opportunity with our own existing customers. So, growing our inside sales team, making appointments with existing customers, and getting back in front of them with regularity has been a big part of our 2025 success, and we plan to continue that into 2026.
Lastly, fire continues to be stronger and stronger for us. We’ve grown our inspection department by an average of 10% to 15% a year, and we’ve added a couple more employees in that department. Anything fire-related, we’re expecting to see growth in, but specifically inspections, and we’re starting to look into getting into the extinguishers and some of the suppression opportunities.
“We haven’t finalized our 2026 revenues yet, but I believe it will land somewhere around $80 million (up from $71 million in 2025),” Castillo says. “We believe we have great products and solutions to sell, along with superior service. We simply need more people to sell it.”
Dice is predicting about 10% growth in 2026. “We believe that access control is going to continue to be strong, especially in the hosted access world. We’ve had a lot of conversions about moving from traditional access control to hosted,” he says. “In the fire alarm space, addressable fire alarm systems came out 20 – 30 years ago, and I think you’re starting to see a lot of those start to need replacing. So, we’re predicting the fire market is going to continue to be strong. AI is going to continue to drive the video market.”
While expressing some concerns over the economy, Dice is overall optimistic. “For the last 10 years, at the beginning of each year, I sit and think, ‘How are we going to do better than last year?’ And, you know what? We usually do better than last year. So, I don’t know where it’s going to come from, but it usually comes from somewhere.”
Elkins has a similar outlook; He expects 2026 growth to line up with prior years. “I think the speed at which new technology takes hold could certainly have a positive impact on those numbers,” he says. “And sure … I think the economy could also have an impact. And the geopolitical environment could certainly have an opportunity to cross those numbers to pull it back a bit.”
Regardless, Elkins isn’t worried. “Whatever we think is probably going to come and surprise us is probably not the thing that’s going to come and surprise us,” he says. “We are probably worrying about the wrong thing. So, we’re going to do what we always do at Zeus and across the industry, and we’re going to prepare ourselves for any eventuality. And then we’re going to deal with it head on. ... I’m not a gambling person, so I wouldn’t bet on which way the economy’s going, but I would bet on the fact that, as leaders, we’re going to deal with it no matter what happens and what comes our way, and we’re going to continue to endure. … When I think back to the Great Recession, or even further to 9/11, or the early days of COVID, and think about all of the uncertainty that’s taken place over my 36 years in the industry, the security industry has continued to endure, and I expect it will in 2026 as well.”
The Panel Talks Competition & Acquisitions
SDM: What do you view as your company’s greatest competition in 2026? What is your acquisition strategy for the coming year?
Elkins: I think our biggest competition really isn’t another company. There’s plenty of room out there for all of us. I think it’s staying in line on what priorities are important for our business. We’re driving major initiatives across technology, integration, talent, M&A and organic growth with so much opportunity in front of us. We’ve never been a company that stands still, and 2026 will be about channeling our momentum with clarity, focus and extreme discipline.
Our acquisition strategy is to continue to acquire in markets that we find desirable and partner with companies that we find desirable and continue to densify markets in which we already operate. So, we’ll do more of what we did in 2025. We’ll do it with great purpose, and we’ll expand the Zeus network of family companies. We’re looking forward to growing that network, working with more great leaders and bringing more incredible talent into the organization.
Dice: We serve a pretty rural area, so our biggest competitors are the national competitors out there. But, you know, we really look at our greatest competitors as ourselves. We’re always competing against ourselves to try to be better. I never like comparing ourselves to other companies because I think the best measuring stick we can use is, “Who is Security Alarm and how can we continue to do better?”
On acquisitions, we hope to acquire at least one company in 2026. Our last acquisition was probably over 30 years ago. All our growth has been organic. One of the challenges that we’re expecting to face, especially in the geographical area that we’re in, is in order for us to continue the momentum that we’ve been growing at [for] the last five to 10 years, we believe that an acquisition is going to be a key part of that success.
Castillo: Our greatest competition is ourselves. We don’t worry much about what others are doing. We listen to our customers, do our best to look at ourselves honestly and focus on what we can control to improve our customers’ experiences. That said, we’ve elected to forego any outside investment, grow organically and build a multi-generational company. Private equity-backed competitors have significant capital to win projects at tight margins, hire our employees and expand rapidly into the geographies we serve. We must, therefore, give customers and employees compelling reasons beyond money to work with us. That burden gets heavy at times! I hope and pray our commitment to do good work, be extremely responsive and love people well will resonate with customers and employees. On the acquisition front, our goal is not to acquire and not to be acquired!
I think AI is going to serve us all very well. It might sound a little scary, and, for sure, it feels scary from time to time, but I can’t wait to embrace it and see where it takes us.
Technology Evolution
One of the most talked about technology in the security industry these days has to be AI. Both Industry Forecast respondents and the panel expect that this rapidly advancing technology will likely have one of the greatest impacts on 2026.
“I’m excited to work with customers to leverage their security and security-related data to make better business decisions, reduce risks, increase profits and build more resilient organizations,” Castillo says. “The products and solutions available to us now are incredible tools to do just that.”
Dice is excited about AI’s potential to help with his own business, where he has already started to use it to help with PowerPoint presentations, emails and similar tasks. “The sky’s the limit when it comes to your imagination, but I really see it helping a lot with certain office tasks, data entry, interpreting information that needs to be dumped into a database and helping with sales proposals,” he says. “Obviously, our industry is focused on what it can do with cameras and identifying people and vehicles and all that, but I think we’re just really starting to scratch the surface on what it’ll be able to help us with.”
Elkins offers this advice when it comes to AI, or any other disrupting technology in the security industry: “We are at … the nascent stage of where AI data and the human experience are really coming together, and I’m so excited about what that means for us in this industry and, frankly, for the rest of the world. I think it’s going to create opportunities that we can’t even imagine at this point. But I do think it’s going to have a material impact and a positive impact on our industry. In the last 36 years, there’s been a lot of change, and, every time, whether it was an outside entrant coming into the space or a new technology and wondering if it was going to be good or bad for business, I think the answer — for those of us who have embraced and taken advantage of the opportunity — is that it’s always been good. I think AI is going to serve us all very well. It might sound a little scary, and, for sure, it feels scary from time to time, but I can’t wait to embrace it and see where it takes us.”
The Panel Talks Economy, AI & Hopes for the Security Industry
SDM spoke with two of our panelists, Josh Dice of Security Alarm and Scott Elkins of Zeus Fire and Security, about their thoughts on where the economy is heading, the fast rise of AI and what excites them about being in the security industry at this time. Sakorn Sukkasemsakorn / iStock / Getty Images Plus via Getty Images
Editor’s Note: This article is based primarily on a report produced by Clear Seas Research, “SDM Industry Forecast,” produced in November 2025. To learn more about the report, see more charts, or to purchase, visit sdmmag.com/annual-security-industry-forecast.
Clear Seas Research is a full service, B-to-B market research company focused on making the complex clear. Custom research solutions include brand positioning, new product development, customer experiences and marketing effectiveness solutions. Clear Seas offers a broad portfolio of primary, syndicated research reports and powers the leading B-to-B panel for corporate researchers, myCLEARopinion Panel, in the architecture, engineering, construction, food, beverage, manufacturing, packaging and security industries.
