The 10-second takeaway
For the quarter ended Sep. 30 (Q3), Rosetta Stone beat expectations on revenues and missed expectations on earnings per share.
Compared to the prior-year quarter, revenue was unchanged and GAAP loss per share grew.
Gross margins grew, operating margins grew, net margins shrank.
Rosetta Stone logged revenue of $64.3 million. The five analysts polled by S&P Capital IQ looked for sales of $61.0 million on the same basis. GAAP reported sales were 0.1% higher than the prior-year quarter's $64.2 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 -$0.08. The two earnings estimates compiled by S&P Capital IQ averaged -$0.05 per share. GAAP EPS were -$1.58 for Q3 versus -$0.06 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 82.6%, 20 basis points better than the prior-year quarter. Operating margin was -5.7%, 370 basis points better than the prior-year quarter. Net margin was -51.9%, 5,010 basis points worse than the prior-year quarter.
Next quarter's average estimate for revenue is $79.1 million. On the bottom line, the average EPS estimate is $0.06.
Next year's average estimate for revenue is $270.3 million. The average EPS estimate is -$0.18.
The stock has a three-star rating (out of five) at Motley Fool CAPS, with 678 members out of 767 rating the stock outperform, and 89 members rating it underperform. Among 155 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 136 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 $12.67.
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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 of Motley 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 recommend 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.