To facilitate a comparison between the reported periods, the company has presented both GAAP and non-GAAP financial measures. GAAP financial measures include expenses related to non-cash compensation, changes in the fair value of warrants, severance costs and a benefit from the sale of certain state income tax benefits derived from net operating losses. Operating income, net income and diluted income per share have been adjusted to report non-GAAP financial measures that exclude these items.These non-GAAP measures are provided to enhance investors' overall understanding of the company's current financial performance and the company's prospects for the future. These measures should be considered, in addition to results, prepared in accordance with GAAP but should not be considered as substitute or superior to GAAP results. Reconciliation between GAAP and non-GAAP financial measures is included in the press release issued earlier today. With me on the call are Jesse Sutton, Chief Executive Officer; and Mike Vesey, Chief Financial Officer. I'd now like to turn the call over to Jesse. Jesse Sutton Thanks, Todd. I'll open the call with some highlights and an overview of our performance in the first quarter. Mike will follow with the financial review, and I'll conclude with an update on our product slate for the rest of the year, after which, we'll be happy to take your questions. In Q1, a year ago, we experienced growth of over 60% as we introduced the Zumba Fitness brand to the world of interactive entertainment. In Q1 of this year, we are pleased to show that we followed up that breakout performance with another strong quarter and with substantial year-over-year growth. Sales grew 37% year-over-year to $66.2 million in the quarter fueled by the strong global sales of the industry's leading fitness title, Zumba Fitness. In addition to solid catalog sales of Zumba 1, we launched Zumba 2 on the Wii, which has gotten off to a great start and sold over 1 million units worldwide in its first 3 months. At the same time, we were able to reinvest some of our earnings in the marketing and development of our most important brands, as well as our new emerging Social and Mobile business. As a result, we delivered over 35% revenue growth in Q1 with healthy gross margins of 35% and a non-GAAP operating margin of over 12%. We also delivered a robust release slate this holiday season, easily one of the largest in the company's history, including Zumba Fitness 2, Cooking Mama 4 for 3DS and Camping Mama for the DS, Alvin & The Chipmunks: Chipwrecked, Twister Mania, Hulk Hogan's Main Event, Jillian Michaels' Fitness Adventure, JAWS: Ultimate Predator, as well as a number of other innovative and fun Kinect and 3DS titles.
Finally, Zumba Fitness Rush came out last month on Kinect for Xbox 360 and has been very well received. It was recently rated a 9 out of 10 by the Official Xbox Magazine. And as been featured on national media, including the Today Show with Kathy Lee and Hoda, The Martha Stewart Show, LIVE! With Kelly, On-Air with Ryan Seacrest, OK! Magazine, a number of local news programs and even on TMZ. We worked directly with Microsoft to develop and launch this title as the most technologically advanced Zumba Fitness game to date, as well as the most feature-rich addition in our Zumba Fitness franchise. Rush was designed from the ground up for Kinect, fully utilizing the platform's full-body, motion-sensing capabilities and voice recognition, as well as the HD graphics and online functionality of the Xbox LIVE platform, and we believe is a very high-quality, motion-based fitness game that should have long legs on the rapidly growing Kinect platform. We have previously announced our first 2 downloadable content add-on packs for Zumba Fitness Rush with more digital content to come later this year for the Xbox LIVE marketplace.Read the rest of this transcript for free on seekingalpha.com