Koss Posts 7% Revenue Gain in Fiscal Q4

Key Points

• Revenue rose 6.6% to $3.08 million, driven by strong export and Direct-to-Consumer (DTC) channel growth.

• Koss' net loss widened to $232,696 as margins fell and operating expenses rose.

• Management provided no financial guidance, but it did warn of future margin pressure from new China tariffs.

• These 10 stocks could mint the next wave of millionaires ›

Koss (NASDAQ:KOSS), a well-known producer of stereo headphones, delivered its fiscal fourth quarter earnings on Thursday, Aug. 28. The most significant news from this announcement was a 6.6% increase in revenue to $3.08 million, mainly driven by international sales and growth in the Direct-to-Consumer channel. The company’s GAAP net loss was $232,696, compared to $110,369 in the same period last year.

Overall, the period showed that while sales momentum has returned, persistent cost and margin challenges continue to impact profitability.

Source: Koss. Note: The fiscal 2025 second quarter ended on June 30, 2025.

Inside the Business: What Drives Koss

Koss manufactures and sells a wide range of personal listening products, particularly stereo headphones. The company is recognized for its high-fidelity audio designs and has a long-standing presence in the market. Its primary business revolves around designing, producing, and distributing headphones and related accessories, catering to both consumers and institutional buyers worldwide.

Recently, its focus has been on expanding sales beyond the United States, investing in Direct-to-Consumer digital channels, and launching new products. Success for Koss depends heavily on its brand reputation, ability to introduce innovative products, and skill in managing both supply chain operations and international relationships. Making the right calls on inventory, manufacturing, and marketing remains central to its performance.

Quarter in Review: Key Developments and Metrics

Fourth-quarter revenue rose 6.6%, driven by growth in export markets and higher Direct-to-Consumer sales. International -- or "export" -- sales increased roughly 49%, with sales to the two largest European distributors more than doubling, thanks mostly to new product launches. The Direct-to-Consumer channel, which refers to products sold directly via the company’s website and online efforts, accounted for nearly 25% of total sales in FY2025, growing about 16.5% compared to FY2024. Management pointed to stronger online advertising and website improvements as reasons for this DTC momentum.

On the other hand, domestic distributor and U.S. education sector sales saw softness. Orders from American distributors were down, partly due to excess inventory of non‑Koss products, and Koss noted that some educational institution orders were delayed pending budget approval.

GAAP gross profit declined 4.9% compared to Q4 FY2024, with gross margin slipping to 36%. Management explained that the overall annual margin improved in FY2025 and anticipates headwinds from newly imposed tariffs on goods from China, which are expected to adversely impact margins as inventory sells through. These new tariffs, alongside increased supply chain costs, weighed on profitability. GAAP selling, general, and administrative expenses rose 4.4% to $1.55 million.

On the product front, new launches continued to be key contributors to sales gains, especially in Europe. Koss's product range, including wired and wireless stereo headphones, has found favor with distributors in several international regions. However, growing reliance on a handful of major European customers raises future performance risks if demand patterns change. Koss did not announce a dividend, so there were no changes to report.

Looking Ahead

Koss did not provide any financial guidance for the upcoming quarter or fiscal year, so there is no official revenue or earnings outlook from management. In the earnings discussion, the company did warn that newly imposed tariffs on goods from China are likely to put further downward pressure on margins in the near term. Management is also cautiously optimistic that freight costs will stabilize next quarter, which could help offset some of the additional expense.

With Direct-to-Consumer and international expansion as ongoing themes, investors will want to watch for further updates on Koss’s channel diversification and response to rising input costs. Exposure to tariffs, trade disputes, and any future changes in major customer relationships are key areas to monitor.

Revenue and net income are presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.

Where to invest $1,000 right now

When our analyst team has a stock tip, it can pay to listen. After all, Stock Advisor’s total average return is 1,069%* — a market-crushing outperformance compared to 186% for the S&P 500.

They just revealed what they believe are the 10 best stocks for investors to buy right now, available when you join Stock Advisor.

See the stocks »

*Stock Advisor returns as of August 25, 2025

Motley Fool Markets Team is a Foolish AI, based on a variety of Large Language Models (LLMs) and proprietary Motley Fool systems. The Motley Fool takes ultimate responsibility for the content of these articles. Motley Fool Markets Team cannot own stocks and so it has no positions in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.