Rosetta Stone (RST - Get Report) shares surged to an eight-year high Thursday after the education software provider smashed Wall Street forecasts with a narrower-than-expected loss and a robust revenue outlook.
Rosetta stone said late Wednesday it still expects to book a full-year loss of around $15 million, but nonetheless impressed the Street with a revenue forecast of $191 million, a figure that would mark a 10% gain from 2018. Analysts also cheered the group's transition from software sales to subscription-based revenues, which some said would make profit and margin growth more predictable.
Rosetta Stone shares were marked 30.13% higher by mid-afternoon trading in New York and changing hands at $20.30 each, the highest in at least eight years and a move that values the Arlington County, Virginia-based group at just over $463 million.
"2018 was a transformative year for Rosetta Stone, marked by exceptional growth in our Literacy business, re-imaged products in our Language business and the completion of the transition of our company to subscription sales," said CEO John Hass of the group's full year earnings late Thursday.
"The result is a more balanced, and better positioned Rosetta Stone, with a future clearly focused on leveraging our two biggest assets - our growing presence in U.S. K12 schools and our iconic brand," he noted.