The 10-second takeaway
For the quarter ended March 31 (Q1), Rosetta Stone beat expectations on revenue and exceeded expectations on earnings per share.
Compared to the prior-year quarter, revenue improved significantly and GAAP loss per share dropped.
Margins expanded across the board.
Rosetta Stone tallied revenue of $69.4 million. The four analysts polled by S&P Capital IQ expected a top line of $60.5 million on the same basis. GAAP reported sales were 22% higher than the prior-year quarter's $57.0 million.
Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.
EPS came in at -$0.09. The five earnings estimates compiled by S&P Capital IQ anticipated -$0.41 per share. GAAP EPS were -$0.09 for Q1 versus -$0.45 per share for the prior-year quarter.
Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.
For the quarter, gross margin was 80.6%, 70 basis points better than the prior-year quarter. Operating margin was -3.4%, 2,050 basis points better than the prior-year quarter. Net margin was -2.7%, 1,360 basis points better than the prior-year quarter.
Next quarter's average estimate for revenue is $67.6 million. On the bottom line, the average EPS estimate is -$0.16.
Next year's average estimate for revenue is $277.7 million. The average EPS estimate is -$0.27.
The stock has a three-star rating (out of five) at Motley Fool CAPS, with 702 members out of 792 rating the stock outperform, and 90 members rating it underperform. Among 169 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 150 give Rosetta Stone a green thumbs-up, and 19 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 $8.67.
Over the decades, small-cap stocks like Rosetta Stone have provided market-beating returns, provided they're value-priced and have solid businesses. Read about a pair of companies with a lock on their markets in "Too Small to Fail: Two Small Caps the Government Won't Let Go Broke." Click here for instant access to this free report.
- Add Rosetta Stone to My Watchlist.