Swad added, “At our Investor Day in May of this year, I laid out my strategy and priorities for the company, which are (i) leveraging our brand, (ii) innovating our platform and (iii) expanding distribution. I believe that we are executing on that strategy and Rosetta Stone is making progress towards our goals.”Second Quarter 2012 Operational and Financial Highlights
- Revenue decreased 9%: Revenue decreased 9% to $60.8 million reflecting the rationalization of less efficient kiosks, lower sales internationally and a decline in the Institutional business because of the non-renewal of the Army and Marines contracts last year.
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- Adjusted EBITDA: Adjusted EBITDA for the second quarter was $1.1 million, an increase of $2.4 million from ($1.3) million in the second quarter of 2011. The improvement in Adjusted EBITDA was predominantly driven by a reduction in sales and marketing expenses, including a decrease in media spending, as well as a decrease in general and administrative expenses. Adjusted EBITDA in the quarter includes approximately $1.7 million of restructuring and other one-time costs.
- Net Income: Rosetta Stone recorded a net loss of $4.5 million in the second quarter 2012, compared to a net loss of $4.6 million in the second quarter of 2011. Net loss per share was $0.22 unchanged from a net loss of $0.22 per share in the prior year period.
- Balance Sheet and Cash Flow: Cash, cash equivalents and short-term investments were $120.4 million at June 30, 2012, an increase of $4.1 million compared with $116.3 million at December 31, 2011 and an increase of $5.2 million from the prior year period. The company has no debt. Net cash provided by operating activities in the quarter was $3.4 million compared with ($2.9) million a year ago. Capital expenditures were $1.0 million. Free cash flow for the quarter was $2.4 million, compared with ($5.8) million in the second quarter of 2011.
- Increasing the bottom end of the range for Adjusted EBITDA* to $6 million for a range of $6 million to $8 million with Adjusted EBITDA margin of approximately 2% to 3% compared with previous guidance of $5 million to $8 million.
- Capital expenditures of $8 million to $11 million