Koss Corporation Reports Third Quarter Results

Rhea-AI Summary

Koss Corporation (NASDAQ: KOSS) reported its Q3 FY2025 results with mixed performance. Net sales increased by 5.4% to $2.78M compared to $2.64M in Q3 FY2024. However, the company posted a net loss of $316,742 ($0.03 per share), slightly higher than the $313,780 loss in the prior year. For the nine-month period, sales grew 1.8% to $9.54M, while net loss improved to $642,135 from $840,542. The company saw significant growth in European and Asian markets due to new product success, but faced a 60% decline in education market sales. Margin improved by 600 basis points in the first nine months, though partially offset by obsolete product write-offs. Management expressed concerns about potential impacts from new China tariffs on product costs and is developing strategic responses.

Positive

• Net sales increased 5.4% YoY to $2.78M in Q3 FY2025
• Nine-month net loss improved to $642,135 from $840,542 YoY
• Substantial sales growth in European and Asian markets
• 600 basis points margin improvement in first nine months of FY2025
• Direct-to-consumer sales showing continued growth

Negative

• Q3 FY2025 net loss of $316,742, slightly worse than previous year
• 60% drop in education market sales due to project postponement
• Lower sales to domestic distributors
• Write-off of obsolete products affecting margins
• Potential negative impact from new China tariffs on product costs

Insights

Financial Analyst

Koss reports 5.4% Q3 sales growth but continued losses; margin improvements offset by rising expenses; Chinese tariffs pose significant risk.

Koss Corporation's Q3 FY2025 results present a mixed financial picture. Quarterly sales increased 5.4% year-over-year to $2.78 million, yet the company still recorded a net loss of $316,742, slightly worse than the $313,780 loss in Q3 FY2024. For the nine-month period, revenue grew 1.8% to $9.54 million with net losses improving to $642,135 from $840,542.

The gross profit margin improvement of over 600 basis points for the nine-month period is significant, primarily resulting from normalized transit costs compared to the elevated levels that hampered previous year's performance. However, this improvement is being substantially neutralized by two factors: write-offs of obsolete inventory and a concerning 10.5% increase in SG&A expenses (rising to $1.6 million from $1.45 million). This expense growth at nearly double the rate of sales growth is preventing operational profitability.

The geographic sales pattern reveals a strategic bright spot: international distribution channels in Europe and Asia are performing well, particularly with new product lines. However, this success is largely counterbalanced by a dramatic 60% drop in education market sales due to a postponed large project, alongside weaker domestic distributor performance.

Of particular concern is management's acknowledgment of tariff vulnerability, with "a substantial portion" of products sourced from China. While executives indicate they've developed mitigation strategies, this external pressure threatens to erode the hard-won margin improvements. Currently, interest income ($208,175 for Q3) provides a financial cushion, representing about 65% of what would be needed to reach breakeven - a temporary buffer but not a solution to fundamental operational challenges.

MILWAUKEE, May 08, 2025 (GLOBE NEWSWIRE) -- Koss Corporation (NASDAQ: KOSS) (the “Company”), the U.S. based high-fidelity headphone company, has reported its results for the third quarter ended March 31, 2025.

Net sales for the three months ended March 31, 2025 were $2,781,006 compared to $2,637,606 for the same three-month period in the prior year, an increase of $143,400, or 5.4%. The net loss for the third quarter ended March 31, 2025 was $316,742 compared to a net loss of $313,780 for the third quarter of the prior fiscal year. Basic and diluted net loss per common share for the third quarter of fiscal years 2025 and 2024 was $0.03.

For the nine months ended March 31, 2025, net sales $9,539,960, an increase of $168,292, or 1.8%, over the net sales of $9,371,668 for the comparable period in the prior year. The net loss of $642,135 for the nine months ended March 31, 2025 showed an improvement to the net loss of $840,542 for the same nine-month period in the prior year. Basic and diluted net loss per common share was $0.07 and $0.09 for the nine months ended March 31, 2025 and 2024, respectively.

“A substantial increase in sales to our distributors in Europe and Asia, mainly a result of the success of new product sales, was the primary driver of the improvement in overall sales for the fiscal year-to-date March 2025 period over the same period in the prior year,” Michael J. Koss, Chairman and CEO, said today. “Direct-to-consumer (DTC) sales continue to contribute to the sales growth but unfortunately, a near 60% drop in sales to the education markets, due to postponement of a large project, combined with lower sales to our domestic distributors, mostly offset the favorability.”

Koss further noted, “margin improvement of over 600 basis points during the first nine months of fiscal year 2025 compared to the same period last year was primarily a result of the adverse impact on prior year’s margins from the sell-through of inventory brought in at higher transit costs. The write-off of some obsolete products during the current year partially offset those gains.”

Additionally, Koss commented, “Given that a substantial portion of the Company’s products are sourced from China, the recent tariff announcements will have a significant impact on product costs. We are closely monitoring the latest updates and the potential impacts on our operations and financial condition. We have developed a strategic response and will finalize and implement as appropriate to mitigate adverse effects.”

About Koss Corporation

 Koss Corporation markets a complete line of high-fidelity headphones, wireless Bluetooth® speakers, computer headsets, telecommunications headsets, active noise canceling headphones, and wireless headphones.

Forward-Looking Statements

This press release contains forward-looking statements. These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as “aims,” "anticipates," "believes," "estimates," "expects," "intends," "plans," “thinks,” "may," "will," “shall,” "should," “could,” “would,” "forecasts," "predicts," "potential," "continue," or the negative of such terms and other comparable terminology. These statements are based on currently available operating, financial and competitive information and are subject to various risks and uncertainties. Actual events or results may differ materially. In evaluating forward-looking statements, you should specifically consider various factors that may cause actual results to vary from those contained in the forward-looking statements, such as general economic conditions, inflationary cost environment, supply chain disruption, the impacts of public health events, such as pandemics, geopolitical instability and war, consumer demand for the Company's and its customers' products, competitive and technological developments, foreign currency fluctuations, and costs of operations. Shareholders, potential investors and other readers are urged to consider these factors carefully in evaluating the forward-looking statements and are cautioned not to place undue reliance on such forward-looking statements. The forward-looking statements made herein are only made as of the date of this press release and the Company undertakes no obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances or new information. In addition, such uncertainties and other operational matters are discussed further in the Company's quarterly and annual filings with the Securities and Exchange Commission.

KOSS CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
	Three Months Ended								Nine Months Ended
	March 31								March 31
	2025				2024				2025				2024
Net sales	$	2,781,006			$	2,637,606			$	9,539,960			$	9,371,668
Cost of goods sold		1,696,334				1,796,083				5,877,405				6,354,015
Gross profit		1,084,672				841,523				3,662,555				3,017,653
Selling, general and administrative expenses		1,603,678				1,451,247				4,960,478				4,572,049
Loss from operations		(519,006	)			(609,724	)			(1,297,923	)			(1,554,396	)
Interest income		208,175				214,814				667,219				636,482
Loss before income tax provision (benefit)		(310,831	)			(394,910	)			(630,704	)			(917,914	)
Income tax provision (benefit)		5,911				(81,130	)			11,431				(77,372	)
Net loss	$	(316,742	)		$	(313,780	)		$	(642,135	)		$	(840,542	)
Loss per common share:
Basic	$	(0.03	)		$	(0.03	)		$	(0.07	)		$	(0.09	)
Diluted	$	(0.03	)		$	(0.03	)		$	(0.07	)		$	(0.09	)
Weighted-average number of shares:
Basic		9,375,795				9,254,795				9,346,952				9,243,559
Diluted		9,375,795				9,254,795				9,346,952				9,243,559

CONTACT:		Michael J. Koss Chairman & CEO (414) 964-5000 mjkoss@koss.com

FAQ

What were Koss Corporation's (KOSS) Q3 2025 earnings results?

Koss reported Q3 FY2025 net sales of $2.78M (up 5.4% YoY) with a net loss of $316,742 or $0.03 per share, compared to a net loss of $313,780 in Q3 FY2024.

How did KOSS perform in international markets during Q3 2025?

Koss saw substantial sales growth in European and Asian markets, primarily driven by the success of new product sales through their distributors.

What challenges did Koss face in Q3 2025?

Koss faced a 60% drop in education market sales due to project postponement, lower domestic distributor sales, and concerns about potential impacts from new China tariffs.

How did Koss's margins perform in the first nine months of FY2025?

Koss achieved a 600 basis points margin improvement compared to the same period last year, though gains were partially offset by obsolete product write-offs.

What is Koss's strategy regarding the new China tariffs?

Koss is closely monitoring tariff updates and developing strategic responses to mitigate potential adverse effects on product costs and operations.