Koss (KOSS) Q1 2026 earnings summary

Executive summary

• Net sales for the quarter ended September 30, 2025 increased 27.1% year-over-year to $4.07 million, driven by a large education order, 22.5% growth in direct-to-consumer sales, and strong growth in Asia, partially offset by lower European sales.

• Gross margin improved to 40.0% from 36.6% in the prior year, reflecting favorable customer mix and lower impact from fixed manufacturing costs.

• Operating expenses declined 7.5% year-over-year due to lower compliance, legal, and deferred compensation costs.

• Net income was $244,000, reversing a net loss of $420,000 in the prior year quarter.

• DTC sales growth was supported by new product launches and expanded colorways.

Financial highlights

• Net sales: $4,070,778, up from $3,201,868 year-over-year.

• Gross profit: $1,628,692 (40.0% margin), up from $1,172,926 (36.6%).

• Operating loss narrowed to $46,040 from $637,133.

• Interest income rose to $293,128 from $220,358.

• Net income per share: $0.03 basic and diluted, compared to $(0.05) in the prior year.

Outlook and guidance

• Management expects continued volatility from tariffs, inflation, and supply chain disruptions, with potential pricing actions to offset higher costs.

• The company is monitoring macroeconomic and geopolitical risks, including the impact of the U.S. government shutdown and ongoing trade negotiations with China.

• Management is closely monitoring tariff changes, as increased tariffs on China-produced goods could significantly impact operations.

• The company plans to act to minimize negative effects from potential tariff increases.