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Rosetta Stone Inc. Reports First Quarter 2013 Results

Strategic Shift to Cloud Continues as Company Reports Adjusted EBITDA Growth of 39% to $2.4 Million, Reaffirms Full-Year 2013 Guidance

ARLINGTON, Va.--(BUSINESS WIRE)--May. 8, 2013-- Rosetta Stone Inc. (NYSE:RST), a leading provider of technology-based language-learning solutions, today announced financial results for the first quarter of 2013, as summarized below:

   
US$ thousands Three Months Ended
except per-share data March 31, %
2013   2012 change
Total revenue $63,924 $69,449 -8 %
Total bookings $60,371 $65,267 -8 %
 
Net loss ($4,700 ) ($1,903 ) -147 %
Net loss per share: ($0.22 ) ($0.09 ) -144 %
 
Adjusted net loss (1) ($622 ) ($1,377 ) 55 %
Adjusted net loss per share: (1) ($0.03 ) ($0.07 ) 57 %
 
Adjusted EBITDA (2) $2,409 $1,735 39 %
 
Cash flow from operations ($5,635 ) $2,656 -312 %
Purchases of property and equipment ($2,528 ) ($967 ) -161 %
Free cash flow ($8,163 ) $1,689 -583 %
 
(1) Adjusted net income(loss) and adjusted net income (loss) per share exclude the impact of items related to its litigation with Google Inc., restructuring costs as well as all adjustments related to recording the non-cash tax valuation allowance for deferred tax assets. Adjusted net income(loss) for prior periods has been revised to conform to current definition.
 
(2) Adjusted EBITDA is GAAP net income(loss) plus interest income and expense, income tax benefit and expense, depreciation, amortization and stock-based compensation expenses. Adjusted EBITDA excludes any items related to the litigation with Google Inc., and restructuring costs. Adjusted EBITDA for prior periods has been revised to conform to current definition.
 
Definitions and reconciliations for all non-GAAP measures are provided in this press release.
 

“During the first quarter we started to play a little offense,” said Steve Swad, President and Chief Executive Officer of Rosetta Stone. “We continued our shift to the cloud by emphasizing online and mobile solutions. We acquired Livemocha for its large online community and robust technology platform. And we invested in our Product group by realigning our resources and opening new offices in San Francisco and Austin.” Swad continued, “We also made the important decision to close our remaining U.S. kiosk locations.Overall, I’m pleased that the core channels in our North American Consumer business performed well, growing at mid-single digit rates, and that we are seeing underlying strength in our Institutional business with higher renewal rates and an improved pipeline. Our Rest of World Consumer business still faces challenges, but we are taking steps to stabilize that segment and return it to growth.”

First Quarter 2013 Operational and Financial Highlights

  • Bookings: Total bookings declined 8% in the first quarter year-over-year to $60.4 million. The North American Consumer segment (“NA Consumer”) recorded a 1% decrease in bookings primarily reflecting lower sales from the kiosk channel. Excluding kiosk, NA Consumer bookings increased over 5% year-over-year. The Rest of World Consumer segment (“ROW Consumer”) declined 34%, reflecting decreases in all geographies, with Japan accounting for nearly half of the decrease and the absence of hard-product sales in Germany also impacting bookings. The Institutional segment decreased 2% compared with a year-ago, reflecting the absence of network product this quarter following the company’s decision to curtail selling that product. Institutional segment bookings increased more than 10% year-over-year, excluding the impact of de-emphasized network and CD-product sales.
  • Revenue: Total revenue decreased 8% in the first quarter year-over-year to $63.9 million from $69.4 million a year ago. NA Consumer revenue decreased 4%, reflecting both the shift to Online Learner sales and lower average selling price for Product Units as well as lower kiosk sales. Excluding kiosk, NA Consumer revenue increased in the low-single digits year-over-year. ROW Consumer revenue decreased 30% due to weakness in Japan and the absence of product unit sales in Germany versus the comparable period last year, reflecting the shift to an online-only business. ROW Consumer segment revenue was also impacted by fewer kiosk locations in the first quarter compared with a year ago. Institutional revenue decreased 1% in the first quarter due to the absence of network product sales compared with a year ago. Institutional segment revenue increased over 5% year-over-year, excluding the impact of network product sales.
   
US$ thousands Three Months Ended
March 31,
2013   2012 % change
Revenue from:
North America Consumer $41,385 $43,084 -4%
Rest of World Consumer

8,570

12,204

-30%
Total Consumer 49,955 55,288 -10%
Institutional

13,969

14,161

-1%
Total $63,924 $69,449 -8%
 
  • Adjusted EBITDA: Adjusted EBITDA for the first quarter increased 39% to $2.4 million from $1.7 million. The improvement in Adjusted EBITDA was due to lower operating expenses that offset the decline in first quarter revenue. Cost of Goods Sold decreased $3.2 million due to lower hard-product box costs, a shift to online offerings and lower studio coaching costs. Sales and marketing expenses and general and administrative (G&A) expenses also both decreased by $1.3 million and $1.1 million, respectively. The reduction in sales and marketing expense was due to marketing efficiencies and lower expenses from the reduced kiosk channel, compared with a year ago, while the decrease in G&A expense reflected improvements in bad debt, lower personnel expenses and lower depreciation expense. Research and development costs increased $1.1 million, reflecting the investment being made in product development. Adjusted EBITDA includes approximately $2.7 million of add-backs, mainly related to severance associated with headcount reductions and an adjustment to our international facilities requirements.
  • Adjusted Net Loss and Adjusted EPS: Rosetta Stone recorded Adjusted Net Loss of $0.6 million in the first quarter 2013, compared to Adjusted Net Loss of $1.4 million in the first quarter of 2012. Adjusted Net Loss per share was $0.03 compared to an Adjusted Net Loss of $0.07 per share in the prior year period.
  • Balance Sheet and Cash Flow: Cash, cash equivalents and short-term investments decreased $8.9 million to $139.4 million at March 31, 2013 from $148.3 million at December 31, 2012. The company has no debt. Free cash flow in the first quarter was ($8.2) million compared with $1.7 million a year ago. The decline in free cash flow reflects a decrease in working capital versus the year ago period and an increase in capital expenditures. Capital expenditures were $2.5 million in the first quarter compared with $1.0 million a year ago.

Financial Outlook

The company is re-affirming the following guidance for the full year 2013:

         
2013 Guidance        
  Range
($ Millions)   Low   High
Revenue $280   $290
Growth rate from 2012 2% 6%
 
Adjusted EBITDA $16 $18
Growth rate from 2012 16% 30%
 
Adjusted Net Income ($1) $1
Growth rate from 2012 66% 134%
 
Adjusted EPS ($0.02) $0.04
Growth rate from 2012 87% 127%
 
Shares Outstanding (MM) 21.5 21.5
 
Capital Expenditures $5 $8
 

Non-GAAP Financial Measures

This press release contains several non-GAAP financial measures.

Adjusted EBITDA is GAAP net income or loss plus interest income and expense, income tax benefit and expense, depreciation, amortization and stock-based compensation expenses. Adjusted EBITDA excludes any items related to the litigation with Google Inc., restructuring costs and transaction and other costs associated with mergers and acquisitions. Adjusted EBITDA for prior periods has been revised to conform to current definition.

Adjusted net loss and adjusted net loss per share exclude the impact of items related to its litigation with Google Inc., restructuring costs and transaction and other costs associated with mergers and acquisitions as well as all adjustments related to recording the non-cash tax valuation allowance for deferred tax assets.

Free cash flow is cash flow from operations less cash used in purchases of property and equipment.

Bookings represent executed sales contracts received by the Company that are either recorded immediately as revenue or as deferred revenue.

Management believes that these non-GAAP measures of financial results provide useful information to investors regarding certain financial and business trends relating to the Company’s financial condition and results of operations. Management uses these non-GAAP measures to compare the Company's performance to that of prior periods for trend analyses, for purposes of determining executive incentive compensation, and for budgeting and planning purposes. These measures are used in monthly financial reports prepared for management and in quarterly financial reports presented to the Company's board of directors. Management believes that the use of these non-GAAP financial measures provides an additional tool for investors to use in evaluating ongoing operating results and trends and in comparing the Company's financial measures with other software companies, many of which present similar non-GAAP financial measures to investors.

Management typically excludes the amounts described above when evaluating the Company’s operating performance and believes that the resulting non-GAAP measures are useful to investors and financial analysts in assessing the Company’s operating performance, due to the following factors:

  • Amortization of Acquired Intangibles. Amortization costs and the related tax effects are fixed at the time of an acquisition, and then amortized over a period of several years after the acquisition and generally cannot be changed or influenced by management after the acquisition.
  • Stock-based Compensation. Although stock-based compensation is an important aspect of compensation of the Company’s employees and executives, stock-based compensation expense is generally fixed at the time of grant, then amortized over a period of several years after the grant of the stock-based instrument, and generally cannot be changed or influenced by management after the grant. In addition, the impact of shares granted under these plans is considered in the Company’s EPS calculation to the extent the shares are dilutive.
  • Bookings. Although revenue is an important aspect of measuring Company performance, the Company believes total sales bookings can be a valuable indicator of the Company's performance. The Company is transitioning to a greater amount of subscription sales, which results in an increasing portion of sales being recorded as deferred revenue.

Management does not consider these non-GAAP measures in isolation or as an alternative to financial measures determined in accordance with GAAP. The principal limitation of these non-GAAP financial measures is that they exclude significant expenses and income that are required by GAAP to be recorded in the Company's financial statements. In addition, they are subject to inherent limitations, because they reflect the exercise of judgments by management about which expenses and items of income are excluded from these non-GAAP financial measures and may not be calculated in the same manner as other companies’ similarly titled non-GAAP measures.

In order to compensate for these limitations, management presents its non-GAAP financial measures in connection with its GAAP results. The company urges investors to review the reconciliation of its non-GAAP financial measures to the comparable GAAP financial measures, which it includes in press releases announcing earnings information, including this press release, and not to rely on any single financial measure to evaluate the company's business.

Reconciliation tables of the most comparable GAAP financial measures to the non-GAAP measures used in this press release are included at the end of this release.

Investor Webcast

This news release and the accompanying tables should be read in conjunction with the additional content that is available on the company’s website.

In conjunction with this announcement, Rosetta Stone will host a webcast today at 4:30 p.m. eastern time (ET) to discuss the results and the company’s business outlook. The webcast will be available live on the Investor Relations page of the company’s website at http://investors.rosettastone.com.

Investors may also dial in to the conference line using one of the following numbers:

1-877-407-9039 (toll-free) or

1-201-689-8470 (toll/international)

A recorded replay of the webcast will be available on the “Investor Relations” page of the company’s web site http://investors.rosettastone.com after the live discussion. The replay will also be available beginning at 7:30PM ET until May 22, 2013 via telephone at the following numbers:

1-877-870-5176 (toll-free) or

1-858-384-5517 (toll/international)

Pass Code: 413176

About Rosetta Stone

Rosetta Stone Inc. provides cutting-edge interactive technology that is changing the way the world learns languages. The company’s proprietary learning techniques—acclaimed for their power to unlock the natural language-learning ability in everyone—are used by schools, businesses, government organizations and millions of individuals around the world. Rosetta Stone offers courses in over 30 languages, from the most commonly spoken (like English, Spanish and Mandarin) to the less prominent (including Swahili, Swedish and Tagalog). The company was founded in 1992 on the core beliefs that learning to speak a language should be a natural and instinctive process, and that interactive technology can activate the language immersion method powerfully for learners of any age. Rosetta Stone is based in Arlington, VA., and has offices in Harrisonburg, VA, Boulder, CO, Tokyo, Seoul, London, and Sao Paulo.

“Rosetta Stone” is a registered trademark or trademark of Rosetta Stone Ltd. in the United States and other countries.

Cautionary Statement Regarding Forward-Looking Statements

Certain statements in this press release are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including our guidance for future financial performance and operating targets, and our long-term growth prospects. In this context, forward-looking statements often address our expected future business and financial performance, and often contain words such as “project,” “believe,” “plan,” “expect,” “anticipate,” “estimate,” “intend,” “should,” “would,” “could,” “potentially,” “seek,” “may,” “likely,” “will,” “financial outlook,” “guidance,” “strategy,” or “continue.” These forward-looking statements reflect the company's current views with respect to future events and are subject to certain risks, uncertainties, and assumptions. A number of important factors could cause actual results or events to differ materially from those indicated by such forward-looking statements, including demand for language learning solutions; the advantages of our products, services, technology, brand and business model as compared to others; our strategic focus; our ability to maintain effective internal controls or to remediate material weaknesses; our cash needs and expectations regarding cash flow from operations; our product development plans; the appeal and efficacy of our products and services; our expectations regarding capturing lifetime value and a broader range of market segments through such offerings; our plans regarding expansion of our marketing initiatives and sales force; our international operations and growth plans; our plans regarding our kiosks and retail relationships; our plans regarding our Institutional business; the impact of any revisions to our pricing strategy; our ability to manage and grow our business and execute our business strategy; our financial performance; our actions to realign our cost structure and revitalize our go-to-market strategy; our plans to transition our distribution to more online in the Consumer segment; our mergers and acquisitions plans; our plans related to Livemocha; adverse trends in general economic conditions and the other factors described more fully in the company's filings with the U.S. Securities and Exchange Commission (SEC), including the company’s annual report on Form 10-K for the fiscal year ended December 31, 2012, which is on file with the SEC. The company assumes no obligation to update the information in this communication, except as otherwise required by law. Readers are cautioned not to place undue reliance on these forward-looking statements that speak only as of the date hereof.

 
ROSETTA STONE INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
(unaudited)
   
 
Three Months Ended
March 31,
2013 2012
Revenue:
Product $ 37,592 $ 47,530
Subscription and service   26,332     21,919  
Total revenue 63,924 69,449
 
Cost of revenue:
Cost of product revenue 6,940 9,108
Cost of subscription and service revenue   3,324     4,366  
Total cost of revenue 10,264 13,474
   
Gross profit   53,660     55,975  
 
Operating expenses
Sales and marketing 37,060 38,404
Research and development 7,357 6,273
General and administrative 12,588 13,657
Lease Abandonment   793     -  
Total operating expenses   57,798     58,334  
 
Loss from operations (4,138 ) (2,359 )
 
Other income and (expense):
Interest income 41 78
Interest expense (45 ) -
Other income (expense)   419     (364 )
Total other income (expense) 415 (286 )
 
Net loss before income taxes (3,723 ) (2,645 )
Income tax provision (benefit)   977     (742 )
 
Net loss $ (4,700 ) $ (1,903 )
 
Net loss per share:
Basic $ (0.22 ) $ (0.09 )
Diluted $ (0.22 ) $ (0.09 )
 
Common shares and equivalents outstanding:
Basic weighted average shares   21,360     20,942  
Diluted weighted average shares   21,360     20,942  
 
 
ROSETTA STONE INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except per share amounts)
(unaudited)
 
 
  March 31,   December 31,
2013 2012
 
 
Assets
Current assets:
Cash and cash equivalents $ 139,311 $ 148,190
Restricted cash 41 73

Accounts receivable (net of allowance for doubtful accounts of $618 and $1,297, respectively)

38,783 49,946
Inventory 7,267 6,581
Prepaid expenses and other current assets 7,722 5,204
Income tax receivable 670 1,104
Deferred income taxes   75     79  
Total current assets 193,869 211,177
 
Property and equipment, net 17,099 17,213
Goodwill 34,868 34,896
Intangible assets, net 10,815 10,825
Deferred income taxes 250 260
Other assets   1,389     1,484  
Total assets $ 258,290   $ 275,855  
 
Liabilities and stockholders' equity
Current liabilities:
Accounts payable $ 5,770 $ 6,064
Accrued compensation 10,325 16,830
Other current liabilities 31,284 36,387
Deferred revenue   55,929     59,195  
Total current liabilities 103,308 118,476
 
Deferred revenue 3,934 4,221
Deferred income taxes 8,697 8,400
Other long-term liabilities   911     155  
Total liabilities 116,850 131,252
 
Commitments and contingencies
 
Stockholders' equity:

Preferred stock, $0.001 par value; 10,000 and 10,000 authorized; zero and zero shares issued and outstanding March 31, 2013 and December 31, 2012, respectively

Non-designated common stock, $0.00005 par value, 190,000 and 190,000 shares authorized, 22,134 and 21,951 shares issued and outstanding at March 31, 2013 and December 31, 2012, respectively

2 2
Additional paid-in capital 162,711 160,693
Accumulated loss (21,449 ) (16,749 )
Accumulated other comprehensive income   176     657  
Total stockholders' equity   141,440     144,603  
Total liabilities and stockholders' equity $ 258,290   $ 275,855  
 
   
ROSETTA STONE INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
 
Three Months Ended
March 31,
  2013     2012  
 
Cash Flows From Operating Activities:
Net loss $ (4,700 ) $ (1,903 )

Adjustments to reconcile net loss to cash provided by (used in) operating activities, net of business acquisitions

Stock-based compensation expense 1,668 1,635
Bad debt expense (238 ) 165
Depreciation and amortization 2,372 2,436
Deferred income tax benefit 298 (1,314 )
Loss on sales of equipment 141 32
Net change in:
Restricted cash 32 23
Accounts receivable 11,135 17,575
Inventory (746 ) (709 )
Prepaid expenses and other current assets (2,559 ) 503
Income tax receivable 413 (1,236 )
Other assets 5 (1,209 )
Accounts payable (209 ) (587 )
Accrued compensation (6,412 ) (2,076 )
Other current liabilities (4,253 ) (8,020 )
Other long-term liabilities 371 1,587
Deferred revenue   (2,953 )   (4,246 )
Net cash provided by (used in) operating activities   (5,635 )   2,656  
 
Cash Flows From Investing Activities:
Purchases of property and equipment (2,528 ) (967 )
Proceeds from (purchases of) available-for-sale securities   -     3,307  
Net cash provided by (used in) investing activities   (2,528 )   2,340  
 
Cash Flows From Financing Activities:
Proceeds from the exercise of stock options 349 -
Payments under capital lease obligations   (193 )   (2 )
Net cash provided by (used in) financing activities   156     (2 )
 
Increase (decrease) in cash and cash equivalents (8,007 ) 4,994
 
Effect of exchange rate changes in cash and cash equivalents   (872 )   563  
 
Net increase (decrease) in cash and cash equivalents (8,879 ) 5,557
 
Cash and cash equivalents—beginning of period   148,190     106,516  
 
Cash and cash equivalents—end of period $ 139,311   $ 112,073  
   
ROSETTA STONE INC.
Reconciliation of Net Loss to Adjusted EBITDA
(in thousands)
(unaudited)
 
 
Three Months Ended
March 31,
  2013     2012  
 
Net loss $ (4,700 ) $ (1,903 )
Interest (income)/expense, net 4 (78 )
Income tax expense (benefit) 977 (742 )
Depreciation and amortization 1,757 2,436
Depreciation related to restructuring 615 -
Stock-based compensation 1,668 1,635
Other EBITDA Adjustments   2,088     387  
 
Adjusted EBITDA* $ 2,409   $ 1,735  
 
* Adjusted EBITDA is GAAP net income or loss plus interest income and expense, income tax benefit and expense, depreciation, amortization and stock-based compensation expenses. Adjusted EBITDA excludes any items related to the litigation with Google Inc., restructuring costs and transaction and other costs associated with mergers and acquisitions. Adjusted EBITDA for prior periods has been revised to conform to current definition.
   
ROSETTA STONE INC.
Reconciliation of GAAP Net Loss to Adjusted Net Loss
(in thousands, except per share amounts)
(unaudited)
 
 
Three Months Ended
March 31,
  2013     2012  
GAAP net loss $ (4,700 ) $ (1,903 )
Items related to litigation with Google, Inc., restructuring and other related costs, acquisition costs 2,703 387
Income tax adjustments *   1,375     139  
Adjusted net loss $ (622 ) $ (1,377 )
 
GAAP net loss per share $ (0.22 ) $ (0.09 )
Items related to litigation with Google, Inc. restructuring and other related costs 0.13 $ 0.02
Income tax adjustments *   0.06   $ 0.01  
Adjusted net loss per share ** $ (0.03 ) $ (0.07 )
 
Diluted weighted average shares 21,360 20,942
 
* For adjusted net income(loss) purposes, we use a 39% effective tax rate which represents the projected, long term effective tax rate on adjusted pretax income. Our adjusted tax rate assumes full use of loss and credit carryforwards without reduction for valuation allowances.
 
** Adjusted net loss and adjusted net loss per share exclude the impact of items related to its litigation with Google, Inc., restructuring costs and transaction and other costs associated with mergers and acquisitions as well as all adjustments related to recording the non-cash tax valuation allowance for deferred tax assets.
                             
Rosetta Stone Inc.
Business Metrics
(in thousands)
                             
Quarter-Ended Quarter-Ended Quarter-Ended
 
3/31/11   6/30/11   9/30/11   12/31/11   2011 3/31/12   6/30/12   9/30/12   12/31/12   2012 3/31/13

Net Bookings by Market

 
North America Consumer 29,814 36,828 35,562 55,209 157,413 41,733 37,295 42,283 57,870 179,181 41,303
Rest of World Consumer 14,996   12,910   11,945   14,166   54,017 12,550   8,113   10,488   10,034   41,185 8,310
Worldwide Consumer 44,810 49,738 47,507 69,375 211,430 54,283 45,408 52,771 67,904 220,366 49,613
 
Worldwide Institutional 10,770   16,973   18,555   15,459   61,757 10,984   17,635   19,354   16,423   64,396 10,758
Total 55,580   66,711   66,062   84,834   273,187 65,267   63,043   72,125   84,327   284,762 60,371
 
YoY Growth (%)
North America Consumer -28% -5% -14% 6% -9% 40% 1% 19% 5% 14% -1%
Rest of World Consumer 50%   58%   21%   -7%   25% -16%   -37%   -12%   -29%   -24% -34%
Worldwide Consumer -13% 6% -7% 3% -3% 21% -9% 11% -2% 4% -9%
 
Worldwide Institutional 18%   -1%   -17%   7%   -2% 2%   4%   4%   6%   4% -2%
Total -9%   4%   -10%   4%   -2% 17%   -5%   9%   -1%   4% -8%
 
% of Total Net Bookings
North America Consumer 54% 55% 54% 65% 57% 64% 59% 59% 69% 63% 68%
Rest of World Consumer 27%   20%   18%   17%   20% 19%   13%   14%   12%   14% 14%
Worldwide Consumer 81% 75% 72% 82% 77% 83% 72% 73% 81% 77% 82%
 
Worldwide Institutional 19%   25%   28%   18%   23% 17%   28%   27%   19%   23% 18%
Total 100%   100%   100%   100%   100% 100%   100%   100%   100%   100% 100%
 
 

Revenue by Market

 
North America Consumer 28,061 38,606 37,710 53,184 157,561 43,084 36,918 39,878 52,946 172,826 41,385
Rest of World Consumer 14,601   12,014   11,002   12,848   50,465 12,204   8,053   9,903   10,088   40,248 8,570
Worldwide Consumer 42,662 50,620 48,712 66,032 208,026 55,288 44,971 49,781 63,034 213,074 49,955
 
Worldwide Institutional 14,316   16,123   15,490   14,494   60,423 14,161   15,841   14,498   15,667   60,167 13,969
Total 56,978   66,743   64,202   80,526   268,449 69,449   60,812   64,279   78,701   273,241 63,924
 
YoY Growth (%)
North America Consumer -32% 0% 2% 19% -2% 54% -4% 6% 0% 10% -4%
Rest of World Consumer 49%   57%   13%   -17%   18% -16%   -33%   -10%   -21%   -20% -30%
Worldwide Consumer -17% 9% 5% 10% 2% 30% -11% 2% -5% 2% -10%
 
Worldwide Institutional 21%   13%   8%   2%   11% -1%   -2%   -6%   8%   0% -1%
Total -10%   10%   5%   8%   4% 22%   -9%   0%   -2%   2% -8%
 
% of Total Revenue
North America Consumer 49% 58% 59% 66% 58% 62% 61% 62% 67% 63% 65%
Rest of World Consumer 26%   18%   17%   16%   19% 18%   13%   15%   13%   15% 13%
Worldwide Consumer 75% 76% 76% 82% 77% 80% 74% 77% 80% 78% 78%
 
Worldwide Institutional 25%   24%   24%   18%   23% 20%   26%   23%   20%   22% 22%
Total 100%   100%   100%   100%   100% 100%   100%   100%   100%   100% 100%
 
 

Unit Metrics

 
Product Unit Volume (thousands) 108.5 140.0 134.3 202.9 585.8 143.0 129.7 146.5 210.7 629.8 141.8
Paid Online Learners (thousands) 16.4 17.1 21.5 26.6 26.6 41.2 48.7 57.4 68.4 68.4 80.6
 
YoY Growth (%)
Product Units -14% 24% 14% 20% 11% 32% -7% 9% 4% 8% -1%
Paid Online Learners 30% 20% 21% 58% 58% 151% 185% 167% 157% 157% 95%
 
Average Net Revenue Per Unit ($)
Average Net Revenue per Product Unit $379 $349 $346 $313 $341 $367 $319 $313 $277 $315 $312
Average Net Revenue per Online Learner (monthly) $30 $34 $39 $36 $35 $28 $27 $24 $24 $26 $26
 
YoY Growth (%)
Average Net Revenue per Product Unit -4% -12% -9% -9% -9% -3% -9% -9% -11% -8% -15%
Average Net Revenue per Online Learner -10% -2% 10% 3% 0% -6% -22% -37% -32% -25% -7%
 
 

# of Kiosks (end of period)

 
North America 144 117 114 103 103 57 56 57 57 57 56
Europe 15 16 14 13 13 1 1 1 1 1 -
Asia Pacific 78 76 69 58 58 44 42 39 29 29 22
Total # of Kiosks (end of period) 237 209 197 174 174 102 99 97 87 87 78
 

Revenues by Geography

 
United States 41,271 53,418 51,708 65,725 212,122 54,914 50,810 52,167 65,856 223,747 52,791
International 15,707   13,325   12,494   14,801   56,327 14,535   10,002   12,112   12,845   49,494 11,133
Total 56,978   66,743   64,202   80,526   268,449 69,449   60,812   64,279   78,701   273,241 63,924
 
Revenues by Geography (as a %)
United States 72% 80% 81% 82% 79% 79% 84% 81% 84% 82% 83%
International 28%   20%   19%   18%   21% 21%   16%   19%   16%   18% 17%
Total 100%   100%   100%   100%   100% 100%   100%   100%   100%   100% 100%
 

Source: Rosetta Stone Inc.

Rosetta Stone Inc.
Investor Contact:
Steve Somers, CFA, 703-387-5876
ssomers@rosettastone.com
or
Media Contact:
Jonathan Mudd, 571-357-7148
jmudd@rosettastone.com

"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: Statements in this press release regarding Rosetta Stone PR's business which are not historical facts are "forward-looking statements" that involve risks and uncertainties. For a discussion of such risks and uncertainties, which could cause actual results to differ from those contained in the forward-looking statements, see "Risk Factors" in the Company's Annual Report or Form 10-K for the most recently ended fiscal year.
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