The 10-second takeaway
For the quarter ended Dec. 31 (Q4), Rosetta Stone missed slightly on revenues and met expectations on earnings per share.
Compared to the prior-year quarter, revenue contracted slightly. Non-GAAP earnings per share expanded. GAAP earnings per share expanded.
Margins expanded across the board.
Rosetta Stone notched revenue of $78.7 million. The five analysts polled by S&P Capital IQ expected to see revenue of $80.1 million on the same basis. GAAP reported sales were the same as the prior-year quarter's.
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 $0.15. The two earnings estimates compiled by S&P Capital IQ forecast $0.15 per share. Non-GAAP EPS were $0.15 for Q4 against -$0.24 per share for the prior-year quarter. GAAP EPS were $0.18 for Q4 compared to -$0.24 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 83.6%, 200 basis points better than the prior-year quarter. Operating margin was 6.4%, much better than the prior-year quarter. Net margin was 5.1%, much better than the prior-year quarter.
Next quarter's average estimate for revenue is $67.2 million. On the bottom line, the average EPS estimate is $0.07.
Next year's average estimate for revenue is $289.4 million. The average EPS estimate is $0.30.
The stock has a three-star rating (out of five) at Motley Fool CAPS, with 665 members out of 753 rating the stock outperform, and 88 members rating it underperform. Among 167 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 147 give Rosetta Stone a green thumbs-up, and 20 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 $13.67.
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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 recommends Rosetta Stone. The Motley Fool owns 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.