10-Q · May 7, 2026
Koss Corporation reported Q3 2026 results with a slight revenue increase of 1.6% year-over-year to $2.82 million, but also a deeper net loss of $544,762 compared to a loss of $310,831 a year prior. The company struggled…
Earnings analysis · 10-K
KOSS earnings analysis
Filed August 27, 2026 · Our reading of the company's report
The latest report
Koss delivered modest revenue growth and a smaller annual loss, supported by strong domestic and DTC performance, improved operating cash flow and substantial liquidity. However, reported gross-margin expansion depended…
Read full summary
Koss delivered modest revenue growth and a smaller annual loss, supported by strong domestic and DTC performance, improved operating cash flow and substantial liquidity. However, reported gross-margin expansion depended heavily on $753,000 of tariff refunds; excluding the refund, gross margin declined to 36.1%, while operating margin remained negative at approximately 11.6%. The new acquisition strategy offers potential diversification but is offset by significant China/Taiwan supply concentration, evolving tariffs, export weakness and rising dependence on Amazon.
Gross and operating margin
How much of each revenue dollar the business keeps.
One point per quarterly or annual filing. Both margins are shares of that report's revenue.
From revenue to operating profit
Where each $100 of revenue went in this report.
Cost of sales, operating expenses, and what remained. Figures are rounded to whole dollars.
How we read each report
Our analysis across the last few reports.
Our model's reading of each filing, not the share price or the market's reaction. Annual and quarterly reports each occupy one position.
Reported figures
- Earnings per share
- $-0.04
- Segment
- Single reportable segment: design, manufacture and sale of stereo headphones and related personal-listening accessories; fiscal 2026 revenue was $13,020,773.
What stood out
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Domestic and DTC Sales Drove Growth
Fiscal 2026 net sales increased 3.1% to $13,020,773 from $12,624,170. Domestic sales rose 21.2% to $10,869,826, while DTC sales increased 20.6% and represented approximately 30% of total sales.
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Reported Margin Rose on Tariff Refunds
Reported gross margin improved to 41.9% from 37.8%, but the improvement was substantially driven by $753,000 of tariff refunds recognized as a reduction of cost of sales. Excluding that refund, gross margin was 36.1%, down 170 basis points year over year.
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Broad Personal-Listening Product Portfolio
The company operates as a single headphones and related-accessories segment and markets high-fidelity, Bluetooth, speaker, computer, telecommunications and active-noise-canceling products. Research and development spending increased to $229,736 from $213,870, while the company continued to emphasize new product introductions.
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Acquisition Strategy Expands Addressable Business
Management announced a diversification-by-acquisition strategy intended to acquire strong cash-flow businesses and produce recurring revenue streams in the $2 million to $4 million EBITDA range over the next one to five years. The company cautions that SG&A is expected to increase during the acquisition phase.
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Strong Liquidity and Improved Cash Flow
Liquidity remained substantial, with $3,020,840 of cash and cash equivalents, $16,803,056 of U.S. Treasury investments and $5,000,000 of available credit capacity at June 30, 2026. Operating cash flow improved to $439,207 from $(214,908), aided by approximately $1.0 million of tariff refunds and a $512,000 IRS refund.
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Conservative Capital Allocation
Capital deployment remained conservative: capital expenditures were $316,486, including $269,000 for the third roof-section replacement, while no shares were repurchased in fiscal 2026 or 2025 and no dividends were declared. The company had $2,139,753 remaining under its authorized repurchase program and no outstanding bank borrowings.
What to watch
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China/Taiwan and Supplier Concentration
More than 90% of products are sourced from contract manufacturing facilities in China and Taiwan, and one vendor represented approximately 71% of manufacturing costs versus 68% in fiscal 2025. The filing states that replacing a supplier after a disaster or supply suspension could take an estimated six to twelve months.
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Uncertain Replacement Tariff Regime
Tariff exposure has materially changed: the 10% Section 122 global import surcharge expired July 24, 2026, while replacement Section 301 measures generally impose additional duties of 10% or 12.5% on imports from a broad group of economies, including China. Fiscal 2026 included $753,000 of recognized tariff refunds, but the company says future duty burden depends on product classification, origin, entry date and exclusions.
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Growing Amazon Channel Dependence
Amazon DTC sales accounted for more than 22% of fiscal 2026 net sales, up from 19% in fiscal 2025, and the company has no long-term contract requiring Amazon to continue ordering. A reduction or cessation of Amazon purchases could therefore materially affect operating results.
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European and Export Market Weakness
Export sales declined 41.2% to $2,150,947, with European distributors reluctant to hold more than minimum inventory levels. The filing also notes that sales outside the United States represented nearly 17% of fiscal 2026 net sales, exposing demand to currency, geopolitical and economic weakness.
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Acquisition Execution and Financing Risk
The acquisition strategy introduces execution and financial risks before any transaction is completed. Management states that it may finance acquisitions with borrowing, which could increase indebtedness and financial obligations, while integration could cause management distraction, unanticipated liabilities, impairment charges and higher expenses.
Management's outlook
No quantitative revenue or EPS guidance is provided in the 10-K. Management describes a diversification-by-acquisition strategy targeting predictable recurring revenue streams in the $2 million to $4 million EBITDA range over the next one to five years.
Earlier filings 4
10-Q · January 30, 2026
Koss reported quarterly net sales of $2,861,379 for the three months ended December 31, 2025, down from $3,557,086 in the prior-year quarter, producing a GAAP net loss of $565,407 (diluted EPS $(0.06)). Gross margin…
10-Q · October 31, 2025
Koss reported strong sequential and year-over-year revenue growth with first-quarter net sales of $4,070,778 (up $868,910 or 27.1% vs. $3,201,868 a year earlier) and returned to profitability with net income of $243,729…
10-K · August 29, 2025
Koss reports fiscal 2025 net sales of $12,624,170 (up from $12,265,069 in FY2024) while continuing to operate as a single reporting segment (stereo headphones and accessories). The company emphasizes a large IP…
This is our reading of a public filing, not the filing itself. Analysis can contain errors; check the source document for full context.