Nautilus reported sales of $38.1 million in the third quarter, an increase of 1.7 percent from the same quarter in 2011. The gross margin improved by 6.5 percentage points to 48.7 percent, primarily due to higher direct sales of high-margin products. Net income improved to $1.0 million, including a loss from discontinued operations of $0.3 million. In the same quarter last year, the company had registered a net loss of $0.1 million.