Koss (KOSS) investor relations material

Executive summary

• Net sales for the quarter ended December 31, 2025, were $2.86M, down 19.6% year-over-year, mainly due to lower European sales; six-month sales rose 2.6% to $6.93M, driven by a large custom order in the Education segment.

• Gross margin declined to 29.0% from 39.5% year-over-year, impacted by tariffs and product mix; six-month gross margin was 35.5%.

• Operating loss for the quarter was $1.01M, compared to a $0.14M loss in the prior year; net loss was $565K for the quarter and $322K for the six months.

• Non-recurring licensing income of $250K was recognized, offset by equivalent legal expenses.

Financial highlights

• Export sales fell 55.5% year-over-year for the quarter, while domestic sales rose 3.1%.

• Selling, general, and administrative expenses increased 19.3% year-over-year for the quarter, mainly due to legal fees and higher deferred compensation expense; six-month SG&A was $3.52M, up from $3.36M.

• Interest income for the six months was $496K, up from $459K year-over-year.

• Cash and cash equivalents at quarter-end were $2.5M, with $13.0M in short-term and $4.0M in long-term investments.

• Basic and diluted net loss per share for Q2: $0.06; for six months: $0.03.

Outlook and guidance

• Management expects continued volatility from tariffs, inflation, and global trade tensions, with potential impacts on costs, consumer demand, and supply chain.

• The company plans pricing actions to offset higher input costs and will monitor macroeconomic and geopolitical risks.

• Strong sales gains in the Education market for the first two quarters, but offset by non-recurring prior year European sales uplift.

• Direct-to-consumer business grew 13% year-over-year and now represents 25% of total sales.