What makes a dollar of recurring revenue come back on its own, and how owners grow the base they already have.
In 2025, the project side of the security business slowed down and the recurring side set a record.
SDM Magazine’s 2026 SDM 100 put total recurring monthly revenue across the hundred largest security dealers at $740 million as of December 31, 2025, the highest the report has recorded in a decade, with 90 percent of those companies reporting RMR growth. The same companies described a year of hesitation on the project side: longer approval cycles, customers pausing capital decisions, and steady proposal activity that converted slowly into signed work.
The base was doing the job it exists to do. It holds a company steady when the project calendar will not. But a base is not one thing. It is thousands of individual dollars, each with its own reason for coming back next month, and those reasons are not equally strong. We wrote in the five fundamentals that drive the value of a commercial security company that a dollar of revenue which comes back on its own is worth far more than a dollar you have to win twice. This is the closer look: what makes a dollar the first kind, and where an owner finds the next one.
The year the base carried
SDM’s 2026 Industry Forecast found the same pattern from the other end of the market. Among the dealers and integrators who carry recurring revenue, 69 percent said theirs went up in 2025, and the ones that grew it added 23 percent on average.
Total revenue was still growing, but more slowly each year: 14 percent in the same survey, down from 16 percent the year before and 18 percent the year before that.
One dealer on SDM’s forecast panel described the shape of his year precisely: installation revenue down about 10 percent, recurring revenue up 12 to 14 percent across monitoring, service, and inspections, and a top line that finished close to the prior year. The projects fell. The base made up the difference.
None of that says anything about who ran their company well. Equipment costs moved, borrowing costs moved, and customers took longer to say yes. In a year like that, the largest single difference between two good companies is the base each one walked in with. Which is also why recurring revenue is not a settled subject, even at companies with plenty of it: roughly one in four dealers and integrators in the same forecast named generating recurring revenue among their top business challenges for 2026.
Not every dollar is the same dollar
Every dollar in a recurring base comes back for a reason, and in an established company several reasons are usually at work at once.
Some come back because an agreement says so and the service behind it is being delivered. Some come back out of habit: a month-to-month arrangement, an agreement whose term ended years ago, a service the company has always performed and always invoiced. Some come back because one person keeps the relationship warm, and the customer stays for that person. And some come back because changing providers would be inconvenient this year.
All of them are real revenue and all of them are worth having. Only the first is independent of everything else. The rest depend on a habit holding, a person staying, or a customer’s circumstances not changing.
Nobody sets out to build a base that way. An account gets added during a busy quarter. A renewal gets handled with a phone call, because that is faster and the customer is a friend. A service that started as a favor becomes a line on the invoice. Every one of those was a reasonable call, and sorting out which is which years later is maintenance rather than correction.
Four questions that sort a base
An owner and a controller can work through these for the fifty largest accounts in a morning, and the answers are usually more interesting than the totals.
1. Does it renew without a decision?
Some agreements continue on their own terms until someone ends them. Others closed quietly at the end of a term and have run on goodwill since. Others were always month to month, often at the customer’s request. The first kind renews without anyone doing anything. The rest renew because a relationship is holding, and it usually is. But a relationship is not an agreement, and the difference only shows up when something changes.
Most billing systems can produce a list of recurring accounts with contract dates attached, and where that field was never filled in, the agreements answer for the largest accounts in an afternoon. Month to month is not a problem. Not knowing which dollars depend on somebody remembering something is.
2. Does it travel?
Agreements differ on what happens to the promise inside them when a company changes hands. Some are silent on assignment. Some permit it outright. Some ask for the customer’s written consent first.
All three are workable. Not knowing which one you have is the only version that costs anything, because it turns a known step into a surprise. And it matters well before any sale: the same language surfaces when a bank looks at a credit line, when a partner buys in, and when an owner hands the company to a son, a daughter, or a key employee. Having counsel read it once turns the answer into a fact instead of a question.
3. Does it keep pace?
Many monitoring and service agreements written over the last two decades allow the company to adjust rates on notice, annually or at renewal. In plenty of companies, that provision has been used once, or never.
The hesitation is fair. No owner wants to hand a fifteen-year customer a reason to start shopping. But costs moved in 2025 for everyone in this industry, and a base priced several years ago is quietly funding those increases out of the company’s own margin. The workable version is modest, consistent, well noticed, and applied to customers whose service calls get answered on time. That last part is the whole argument: a rate adjustment lands very differently at a company the customer is glad to have. And we wrote in the attrition ledger that a cluster of price departures after an adjustment tells an owner exactly how the base responded. Do it once, write down what happened, and the next decision has a record behind it.
4. Does it pay for itself?
Every company has a few accounts that absorb service hours far out of proportion to what they pay, usually for a plain reason: an aging system, a site expanded piecemeal over fifteen years, or a scope that grew while the agreement stayed where it was.
Knowing the cost to serve, at least roughly and at least for the largest accounts, changes what happens next. The answer is rarely to walk away from a long customer. It is usually a system refresh worth proposing, or an agreement that finally matches the work. There is a benefit inside the company too: when the cost of serving an account is visible, the service team stops absorbing a pricing question as a scheduling problem, and the case for the right number of hands on a site gets easier to make.
The next dollar is already on the books
Each of those questions has a growth answer waiting on the other side of it, and the most dependable recurring growth in this business comes from customers a company already serves.
The rate you already have the right to take. This one runs on a calendar. Agreements set notice periods, billing cycles need lead time, and customers deserve to hear about a change well before they see it. A January adjustment is a September decision. If a rate review is going to happen for 2027, this is the season it gets made.
The second service. Most established companies serve customers who buy one thing from them and buy the second thing somewhere else. Inspections, where fire and life safety are part of the business. Managed or hosted access control. Video verification and remote video monitoring, which one dealer on SDM’s forecast panel singled out for carrying a much higher recurring revenue rate. At least 60 percent of respondents to that same forecast expected 2026 revenue increases from video, managed services, and access control. One SDM 100 company described its own version of the shift as adding value rather than simply raising price, by bundling services and service plans into the offer. The customers who already trust the company are the shortest path to any of it.
The agreement nobody ever wrote. Long-time customers served on time and materials are a familiar feature of established companies, and the relationship is often excellent. Converting it into a service agreement gives the customer a predictable number and a defined response, and gives the company contracted revenue in place of revenue that has to be re-won every time something breaks. It also evens out the service schedule, which the technicians notice first.
One caution belongs next to all three: a new recurring line is a bench question before it is a market question, which is the case we made in the depth chart. The companies that add one successfully are the ones with someone ready to carry it who is not already carrying something else.
What a serious reader sees
Reading companies is a large part of my job, and this series has been plain about where that reading starts: with the customer retention record, and with the attrition ledger that proves it. The composition of the base is the very next page.
Size is the easiest number to obtain and the least informative on its own. What a reader is assembling is a picture of how a base behaves. How much of it renews on its own terms. How concentrated it is in the largest customers. When rates last moved, and what happened when they did. What it costs the company to deliver. We wrote in the clean file about whether a company’s records agree with one another. This is the question underneath that one: once they agree, what do they describe?
And what we said about the file is just as true of the base. We rarely meet a finished one. Most bases carry every kind of dollar, because they were assembled over decades by people making sensible calls in busy years. Contracted, current, sensibly priced revenue is a head start an owner gives themselves. It has never been an entry requirement with us.
Where we stand
We built Halo Service Partners on the conviction that in commercial security, trust is the product. A recurring base is that conviction expressed as arithmetic: a monthly count of the customers who renew their trust without being asked to.
Continuity is the center of how we partner, and the base is one of the clearest reasons why. The name stays, the team stays, and the customer relationships stay, because those relationships are what the base is made of. ProTech Security and Verified Security both run under their own names today, with the leaders and teams who built them still serving the customers who know them.
A base is also where a platform behind a company shows up early: the second service line an owner has been meaning to add, the technology and training to deliver it well, and shared resources in hiring, finance, marketing, and technology, with operators nearby who have solved the same problems. Founders choose their own path forward: step back, stay on to lead, or take a larger role across the platform.
If you’re thinking about the future
If you own a commercial security company and you are thinking about its future, in any direction, we are glad to compare notes: on the base, on the market, and on what your next chapter could look like. Whatever your base is made of today, the conversation starts there.