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KOSS CORP (KOSS)·Q4 2025 Earnings Summary

Executive Summary

  • Q4 FY2025 revenue grew 6.6% year over year to $3.08M, while net loss widened to $0.23M and EPS was $(0.02); sequentially, revenue rose from $2.78M in Q3, but losses persisted .
  • Growth was driven by export markets (+~49%) and strong European distributor performance (+>100%), plus DTC growth (+~18%) on new products and higher online traffic; domestic distributors and e-tailers were headwinds .
  • Management flagged tariff headwinds on China-sourced goods that are expected to pressure margins as inventory sells through, while freight costs are expected to stabilize next quarter with a dedicated partner .
  • No earnings call transcript or Wall Street consensus estimates were available via S&P Global for Q4; results should be assessed versus internal expectations and multi-quarter trends .

What Went Well and What Went Wrong

What Went Well

  • Export strength: “~49% increase in sales to export markets… two largest European distributors were up over 100%, mostly led by new product sales.”
  • DTC momentum: “DTC market grew approximately 18%… attributed to new product introductions and higher online traffic from enhanced advertising efforts.”
  • FY margin tailwinds: “A favorable sales mix, along with sales of higher margin new products, yielded an improved gross margin in the current fiscal year.”

What Went Wrong

  • Domestic softness: Declines in orders from domestic distributors (excess inventory of non-Koss product) and lower e-tailer sales offset growth .
  • Margin pressure emerging: Management expects newly imposed tariffs on goods from China to adversely impact margins as inventory sells through .
  • Cost base: Q4 SG&A was $1.55M vs $1.49M prior year, contributing to operating losses despite revenue growth .

Financial Results

Sequential Quarterly Results (Q2 → Q3 → Q4 FY2025)

MetricQ2 2025Q3 2025Q4 2025
Net Sales ($USD)$3,557,086 $2,781,006 $3,084,210
Gross Profit ($USD)$1,404,957 $1,084,672 $1,111,044
SG&A ($USD)$1,546,741 $1,603,678 $1,550,243
Net Income ($USD)$94,142 $(316,742) $(232,696)
Diluted EPS ($USD)$0.01 $(0.03) $(0.02)

Year-over-Year Comparison (Q4 FY2024 vs Q4 FY2025)

MetricQ4 2024Q4 2025
Net Sales ($USD)$2,893,401 $3,084,210
Gross Profit ($USD)$1,167,794 $1,111,044
SG&A ($USD)$1,485,557 $1,550,243
Net Income ($USD)$(110,369) $(232,696)
Diluted EPS ($USD)$(0.01) $(0.02)

Margins

MetricQ2 2025Q3 2025Q4 2025
Gross Profit Margin %39.50%*39.00%*36.02%*
EBIT Margin %-3.99%*-18.66%*-46.64%*
Net Income Margin %2.65%*-11.39%*-7.54%*

Values retrieved from S&P Global.*

Segment Breakdown

SegmentQ4 2025 RevenueNotes
Consolidated$3,084,210 Company does not disclose revenue by segment in releases

KPIs and Operating Drivers

KPIQ2 2025Q3 2025Q4 2025
Export sales growthEuropean market sales >100% YoY for first half; export strength drove growth Substantial increase to distributors in Europe & Asia; new product success ~49% export increase; two largest European distributors >100% growth
DTC sales growthGreater DTC sales contributed to first-half growth DTC contributed to sales growth YTD ~18% growth; DTC now nearly a quarter of FY sales; +16.5% FY uptick
Education marketLower sales to education market Near 60% drop due to postponement of a large project No specific update; domestic distributors/e-tailers weak
Gross margin trendFirst-half GM 38.1% vs 32.3% prior year +600 bps improvement over nine months vs prior year FY margin improved but tariffs expected to pressure margins
Freight costsSlight increases; anticipate further rises Monitoring supply chain/tariffs; mitigation plan Expect freight costs to stabilize next quarter

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Gross MarginNext quarter / near termNot providedTariff headwinds on China-sourced goods expected to adversely impact margins as inventory sells through Lowered (qualitative)
Freight CostsNext quarterSlight increases anticipated earlier Expected to stabilize with dedicated freight partner Improved (qualitative)
Product Costs (Tariffs)FY2026Not providedRecent tariff announcements will significantly impact product costs; mitigation strategy to be finalized/implemented Headwind (qualitative)
RevenueFY2026Not providedNo numerical guidance; commentary highlights export/DTC momentum and domestic softness Maintained (no formal guidance)

Earnings Call Themes & Trends

No earnings call transcript found for Q4 FY2025; themes derived from press releases.

TopicPrevious Mentions (Q2 FY2025)Previous Mentions (Q3 FY2025)Current Period (Q4 FY2025)Trend
Export/Europe strengthEurope sales >100% YoY first half; export strength on new products Strong distributor demand in Europe/Asia; new products drove growth ~49% export growth; two largest European distributors >100% Improving
DTC executionGreater DTC contribution to growth DTC continues to contribute ~18% DTC growth; nearly 25% of FY sales; +16.5% FY Improving
Tariffs/macroMonitoring tariffs; anticipate cost rises Tariffs to significantly impact product costs; mitigation plan Tariff headwinds to margins as inventory sells through Worsening
Freight/logisticsSlight increases; further rises possible Monitoring supply chain; actions as needed Expect stabilization next quarter Improving
Domestic distributors/e-tailersLower sales than prior year Domestic distributors lower; education market -60% Domestic distributor declines and lower e-tailer sales offset growth Worsening

Management Commentary

  • “The increase in sales for the quarter was fueled by an approximately 49% increase in sales to our export markets… sales to our two largest European distributors were up over 100%, mostly led by new product sales.” — Michael J. Koss, Chairman & CEO
  • “The Direct-to-Consumer (DTC) market grew approximately 18%… attributed to new product introductions and higher online traffic from enhanced advertising efforts.” — Michael J. Koss
  • “A favorable sales mix, along with sales of higher margin new products, yielded an improved gross margin in the current fiscal year. However, we anticipate headwinds from newly imposed tariffs on goods from China that will have an adverse impact on margins as the inventory sells through.” — Michael J. Koss
  • “Gross margins increased to 38.1% for the first half… compared to 32.3% for the same period in the prior year.” — Michael J. Koss
  • “Margin improvement of over 600 basis points during the first nine months… 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.” — Michael J. Koss

Q&A Highlights

No earnings call transcript was available for Q4 FY2025; there were no disclosed Q&A clarifications beyond press release commentary .

Estimates Context

  • Wall Street consensus estimates via S&P Global were unavailable for EPS and revenue in Q4 FY2025; no count of estimates was provided. Results should be evaluated against historical trends rather than a formal consensus.
  • Actual revenue was $3.08M; EPS was $(0.02). With limited coverage, estimate revisions are unlikely to be a near-term driver until visibility on tariffs and domestic channel normalization improves .

Key Takeaways for Investors

  • Export and DTC momentum are strong, providing a diversified revenue base that partially offsets domestic channel weakness; watch sustainability of European distributor demand and DTC share growth approaching ~25% of sales .
  • Tariff-driven cost headwinds are the principal near-term margin risk; expect gross margin pressure until higher-cost inventory sells through and mitigation strategies take effect .
  • Freight stabilization next quarter could provide a modest tailwind to COGS, partially offsetting tariff impact .
  • SG&A discipline will be important given persistent operating losses; Q4 SG&A was up year over year, constraining operating leverage despite revenue growth .
  • With no formal guidance and limited sell-side coverage, the stock’s narrative will hinge on tangible progress in domestic distribution clean-up, tariff mitigation, and continued new product-driven demand .
  • Near-term trading: sensitivity to any updates on tariff mitigation and domestic channel normalization; medium-term thesis: leverage export/DTC strengths, maintain product innovation cadence, and execute margin recovery as logistics normalize .

Appendix: Additional Details

  • Q4 FY2025 interest income: $212,555, partially offsetting operating losses .
  • Weighted-average diluted shares Q4 FY2025: 9,390,855 .