Rosetta Stone Earnings: Here’s Why Investors are Not Excited Now

Rosetta Stone, Inc. (NYSE:RST) had a loss and beat Wall Street’s expectations, BUT came up short on beating the revenue expectation. The revenue miss is a negative sign to shareholders seeking high growth out of the company. Shares are down 0.61%.

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Rosetta Stone, Inc. Earnings Cheat Sheet

Results: Adjusted Earnings Per Share increased to $-0.03 in the quarter versus EPS of $-0.09 in the year-earlier quarter.

Revenue: Decreased 7.99% to $63.9 million from the year-earlier quarter.

Actual vs. Wall St. Expectations: Rosetta Stone, Inc. reported adjusted EPS loss of $0.03 per share. By that measure, the company beat the mean analyst estimate of $-0.08. It missed the average revenue estimate of $64.48 million.

Quoting Management: “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.”

Key Stats (on next page)…

Revenue decreased 18.81% from $78.7 million in the previous quarter. EPS decreased to $-0.03 in the quarter versus EPS of $0.15 in the previous quarter.

Looking Forward: Analysts have a more negative outlook for the company’s next-quarter performance. Over the past three months, the average estimate for next quarter’s earnings has fallen from a loss of $0.04 to a loss $0.09. For the current year, the average estimate has moved down from a profit of $0.11 to a profit of $0.03 over the last ninety days.

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(Company fundamentals provided by Xignite Financials. Email any earnings discrepancies to earnings [at] wallstcheatsheet.com)