Rosetta Stone Outruns Estimates Again

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Rosetta Stone (NYS: RST) reported earnings on Wednesday. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended Dec. 31 (Q4), Rosetta Stone beat expectations on revenues and exceeded expectations on earnings per share.

Compared to the prior-year quarter, revenue expanded, and GAAP earnings per share shrank to a loss.

Margins shrank across the board.

Revenue details
Rosetta Stone reported revenue of $80.5 million. The four analysts polled by S&P Capital IQ looked for revenue of $67.9 million on the same basis. GAAP reported sales were 8.4% higher than the prior-year quarter's $74.3 million.

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Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.

EPS details
EPS came in at -$0.24. The six earnings estimates compiled by S&P Capital IQ averaged -$0.28 per share. GAAP EPS were -$0.24 for Q4 against $0.24 per share for the prior-year quarter.

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Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.

Margin details
For the quarter, gross margin was 81.6%, 180 basis points worse than the prior-year quarter. Operating margin was -4.1%, 760 basis points worse than the prior-year quarter. Net margin was -6.2%, 1,290 basis points worse than the prior-year quarter.

Looking ahead
Next quarter's average estimate for revenue is $60.6 million. On the bottom line, the average EPS estimate is -$0.44.

Next year's average estimate for revenue is $283.8 million. The average EPS estimate is -$0.50.

Investor sentiment
The stock has a three-star rating (out of five) at Motley Fool CAPS, with 707 members rating the stock outperform and 86 members rating it underperform. Among 190 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 172 give Rosetta Stone a green thumbs-up, and 18 give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Rosetta Stone is hold, with an average price target of $7.67.

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At the time this article was published Seth Jayson had no position in any company mentioned here at the time of publication. You can view his stock holdings here. He is co-advisor ofMotley Fool Hidden Gems, which provides new small-cap ideas every month, backed by a real-money portfolio. The Motley Fool owns shares of Rosetta Stone. Motley Fool newsletter services have recommended buying shares of Rosetta Stone. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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