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Rosetta Stone Inc. Reports Third Quarter 2012 Results

Rosetta Stone Inc. (NYSE:RST), a leading provider of technology-based language-learning solutions, today announced financial results for the third quarter 2012, as summarized below:

   
US$ thousands Three Months Ended
except per-share data September 30, %
2012   2011 change
Total revenue $64,279 $64,202 0%
Bookings1 $72,125 $66,062 9%
 
Net loss (33,390) (1,177) -2,737%
Net loss per share $(1.58) $(0.06) -2,533%
 
Adjusted Net loss1,2 (1,748) (1,177) -49%
Adjusted Net loss per share1,2 $(0.08) $(0.06) -33%
 
Adjusted EBITDA1 $1,827 $(1,791) 202%
 
Cash flow from operations 5,424 (2,010) 370%
Purchases of property and equipment (941) (2,443) -61%
Free cash flow1 4,483 (4,453) 201%
 

1Definitions and reconciliations for all non-GAAP measures are provided in this press release.
2 Excludes impact of legal expenses related to the lawsuit against Google, Inc. and all adjustments related to recording a non-cash tax valuation allowance for deferred tax assets.

Steve Swad, President and Chief Executive Officer of Rosetta Stone, said, “We had a good third quarter with bookings up 9% year-over-year with double-digit growth in our consumer business and single-digit growth in our institutional business. We also did a better job managing our expenses and we made progress shifting the business online with over 57,000 consumer Online Learners and over 80% of our institutional business online.” Swad added, “We grew consumer Online Learners by 115% since the beginning of the year and by 167% versus this time last year. We operated more efficiently and lowered expenses, including reducing our kiosk expenses and lowering our international media spend which allowed us to deliver Adjusted EBITDA of $1.8 million, more than double the $1.8 million loss a year ago.”

Third Quarter 2012 Operational and Financial Highlights

  • Bookings grew 9%: Total bookings increased 9% year-over-year to $72.1 million from $66.1 million. The increase reflected an 11% increase in Consumer bookings as well as 4% growth in Institutional bookings related to signing new and renewal deals that will be recognized over time. Growth in Consumer bookings was due entirely to an 18% increase in the US, offset by a 10% decrease in International compared with last year.
  • Revenue up slightly: Consolidated revenue of $64.3 million increased slightly from $64.2 million a year ago. US Consumer revenue increased 5% reflecting double-digit growth in the company’s direct-to-consumer (DTC) channel, offset by lower contribution from the kiosk channel as the company operated 60 fewer kiosks on average. International Consumer revenue declined 8% primarily due to a decrease in revenues from Japan, in part the result of operating fewer kiosks, and lower sales in Germany, reflecting the shift to an online-only model, partially offset by an increase in Korea from increased sales in the home shopping TV channel. The Institutional business decreased 6% mainly due to the non-renewal of the Army and Marines contracts last year, partially offset by increases in Corporate and International.
   
US$ thousands Three Months Ended
September 30,   September 30,

%

2012 2011

change

Revenue from:
US Consumer $39,681 $37,710 5%
International Consumer 10,094 11,002 -8%
Total Consumer 49,775 48,712 2%
Institutional 14,504 15,490 -6%
Total 64,279 64,202 0%
 
  • Adjusted EBITDA: Adjusted EBITDA for the third quarter was $1.8 million, an increase of $3.6 million from ($1.8) million in the third quarter of 2011. The improvement in Adjusted EBITDA was mainly due to the small increase in revenues combined with a 7% or $2.7 million reduction in sales and marketing, partially offset by a $0.4 million increase in general and administrative (G&A) expenses and an increase in research and development costs.
  • Valuation Allowance for Deferred Tax Assets: The Company recorded a non-cash charge of $25.6 million in the third quarter of 2012 to establish a valuation allowance against its deferred tax assets (“DTAs”) primarily in the United States. In accordance with US GAAP, Rosetta Stone evaluates its DTAs quarterly to determine if valuation allowances are required. This determination was based on several factors, including whether the company had a three-year historical cumulative pre-tax loss, which the Company crossed in the third quarter, and as a result, the Company recorded a non-cash charge to income tax expense. Establishment of this valuation allowance does not preclude the company from utilizing the DTAs in the future to reduce cash tax payments.
  • Net Income: Rosetta Stone recorded a net loss of $33.4 million in the third quarter 2012, compared to a net loss of $1.2 million in the third quarter of 2011. Net loss per share was $1.58 compared to a net loss of $0.06 per share in the prior year period. Net loss for the quarter included the impact of the valuation allowance established against its deferred tax assets. Excluding the impact of this valuation allowance and Google-related legal costs of $1.0 million, Adjusted net loss was $1.7 million compared to a loss of $1.2 million a year ago while Adjusted net loss per share was $0.08 compared with $0.06 net loss per share a year ago.
  • Balance Sheet and Cash Flow: Cash, cash equivalents and short-term investments were $126.1 million at September 30, 2012, an increase of $9.8 million compared with $116.3 million at December 31, 2011 and an increase of $14.8 million from the prior year period. The company has no debt. Net cash provided by operating activities in the quarter was $5.4 million compared with ($2.0) million a year ago. Capital expenditures were $0.9 million. Free cash flow for the quarter was $4.5 million, compared with ($4.5) million in the third quarter of 2011.

Financial Outlook

The company is providing the following update to its guidance for the full year 2012:

  • Increasing the range of Adjusted EBITDA* by $2 million to $8 million to $10 million from $6 million to $8 million.
  • Maintaining the range of Adjusted net loss** at $6 million to $4 million, but improving Adjusted net loss per share** to a range of $0.20 to $0.30. These figures exclude the Google legal expenses and all adjustments related to recording the valuation allowance so that they are comparable to our previous guidance of a net loss of $4 million to $6 million and net loss per share of $0.20 to $0.33.
  • Lowering the range for capital expenditures to $5 million to $8 million compared with previous guidance of $8 million to $11 million.

*Adjusted EBITDA excludes legal expenses related to the lawsuit against Google Inc. and any restructuring costs.

**Adjusted net loss and Adjusted net loss per share exclude the impact of legal expenses related to the lawsuit against Google, Inc. and all adjustments related to recording the non-cash tax valuation allowance for deferred tax assets.

Non-GAAP Financial Measures

This press release contains several non-GAAP financial measures. Adjusted EBITDA is GAAP net income or loss plus interest income and expense, income tax benefit and expense, depreciation, amortization and stock-based compensation expenses. Adjusted EBITDA excludes any expenses related to the lawsuit against Google Inc., and any restructuring costs. Adjusted EBITDA for prior periods has been revised to conform to current definition. Adjusted net loss and adjusted net loss per share exclude the impact of legal expenses related to its lawsuit against Google, Inc. and all adjustments related to recording the non-cash tax valuation allowance for deferred tax assets. Free cash flow is cash flow from operations less cash used in purchases of property and equipment. Bookings represent executed sales contracts received by the Company that are either recorded immediately as revenue or as deferred revenue. Management believes that these non-GAAP measures of financial results provide useful information to investors regarding certain financial and business trends relating to the Company’s financial condition and results of operations. Management uses these non-GAAP measures to compare the Company's performance to that of prior periods for trend analyses, for purposes of determining executive incentive compensation, and for budgeting and planning purposes. These measures are used in monthly financial reports prepared for management and in quarterly financial reports presented to the Company's board of directors. Management believes that the use of these non-GAAP financial measures provides an additional tool for investors to use in evaluating ongoing operating results and trends and in comparing the Company's financial measures with other software companies, many of which present similar non-GAAP financial measures to investors.

Management typically excludes the amounts described above when evaluating the Company’s operating performance and believes that the resulting non-GAAP measures are useful to investors and financial analysts in assessing the Company’s operating performance due to the following factors:

  • Amortization of Acquired Intangibles. Amortization costs and the related tax effects are fixed at the time of an acquisition, and then amortized over a period of several years after the acquisition and generally cannot be changed or influenced by management after the acquisition.
  • Stock-based Compensation. Although stock-based compensation is an important aspect of compensation of the Company’s employees and executives, stock-based compensation expense is generally fixed at the time of grant, then amortized over a period of several years after the grant of the stock-based instrument, and generally cannot be changed or influenced by management after the grant. In addition, the impact of shares granted under these plans is considered in the Company’s EPS calculation to the extent the shares are dilutive.
  • Bookings. Although revenue is an important aspect of measuring Company performance, the Company believes total sales bookings can be a valuable indicator of the Company's performance. The Company is transitioning to a greater amount of subscription sales, which results in an increasing portion of sales being recorded as deferred revenue.

Management does not consider these non-GAAP measures in isolation or as an alternative to financial measures determined in accordance with GAAP. The principal limitation of these non-GAAP financial measures is that they exclude significant expenses and income that are required by GAAP to be recorded in the Company's financial statements. In addition, they are subject to inherent limitations, because they reflect the exercise of judgments by management about which expenses and items of income are excluded from these non-GAAP financial measures and may not be calculated in the same manner as other companies’ similarly titled non-GAAP measures.

In order to compensate for these limitations, management presents its non-GAAP financial measures in connection with its GAAP results. The company urges investors to review the reconciliation of its non-GAAP financial measures to the comparable GAAP financial measures, which it includes in press releases announcing earnings information, including this press release, and not to rely on any single financial measure to evaluate the company's business.

Reconciliation tables of the most comparable GAAP financial measures to the non-GAAP measures used in this press release are included at the end of this release.

Investor Webcast

This news release and the accompanying tables should be read in conjunction with the additional content that is available on the company’s website.

In conjunction with this announcement, Rosetta Stone will host a webcast today at 4:30 p.m. eastern time (ET) to discuss the results and the company’s business outlook. The webcast will be available live on the Investor Relations page of the company’s website at http://investors.rosettastone.com.

Investors may also dial in to the conference line using one of the following numbers:

1-877-407-4018 (toll-free) or

1-201-689-8471 (toll/international)

A recorded replay of the webcast will be available on the “Investor Relations” page of the company’s web site http://investors.rosettastone.com after the live discussion. The replay will also be available beginning at 7:30PM ET until November 21, 2012 via telephone at the following numbers:

1-877-870-5176 (toll-free) or

1-858-384-5517 (toll/international)

Pass Code: 403092

About Rosetta Stone

Rosetta Stone Inc. provides cutting-edge interactive technology that is changing the way the world learns languages. The company’s proprietary learning techniques—acclaimed for their power to unlock the natural language-learning ability in everyone—are used by schools, businesses, government organizations and millions of individuals around the world. Rosetta Stone offers courses in 30 languages, from the most commonly spoken (like English, Spanish and Mandarin) to the less prominent (including Swahili, Swedish and Tagalog). The company was founded in 1992 on the core beliefs that learning to speak a language should be a natural and instinctive process, and that interactive technology can activate the language immersion method powerfully for learners of any age. Rosetta Stone is based in Arlington, VA., and has offices in Harrisonburg, VA, Boulder, CO, Tokyo, Seoul, London, and Sao Paulo.

“Rosetta Stone” is a registered trademark or trademark of Rosetta Stone Ltd. in the United States and other countries.

Cautionary Statement Regarding Forward-Looking Statements

Certain statements in this press release are forward-looking statements, including our guidance for future financial performance and operating targets, and our long-term growth prospects. In this context, forward-looking statements often address our expected future business and financial performance, and often contain words such as “project,” “believe,” “plan,” “expect,” “anticipate,” “estimate,” “intend,” “should,” “would,” “could,” “potentially,” “seek,” “may,” “likely,” “will,” “financial outlook,” “strategy,” or “continue.” These forward-looking statements reflect the company's current views with respect to future events and are subject to certain risks, uncertainties, and assumptions. A number of important factors could cause actual results or events to differ materially from those indicated by such forward-looking statements, including demand for language learning software; the advantages of our products, services, technology, brand and business model as compared to others; our strategic focus; our ability to maintain effective internal controls or to remediate material weaknesses; our cash needs and expectations regarding cash flow from operations; our product development plans; the appeal and efficacy of our products; our expectations regarding capturing lifetime value and a broader range of market segments through such offerings; our plans regarding expansion of our marketing initiatives and sales force; our international expansion and growth plans; our plans regarding our kiosks and retail relationships; our plans regarding our Institutional business; the impact of any revisions to our pricing strategy; our ability to manage and grow our business and execute our business strategy; our financial performance; our actions to stabilize our business in the U.S. consumer market including realigning our cost structure and revitalizing our go-to-market strategy; our plans to transition our distribution to more online in the consumer space; adverse trends in general economic conditions and the other factors described more fully in the company's filings with the U.S. Securities and Exchange Commission (SEC), including the company’s annual report on Form 10-K for the fiscal year ended December 31, 2011, which is on file with the SEC. The company assumes no obligation to update the information in this communication, except as otherwise required by law. Readers are cautioned not to place undue reliance on these forward-looking statements that speak only as of the date hereof.

       
ROSETTA STONE INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
(unaudited)
 
 
Three Months Ended Nine Months Ended
September 30, September 30,
2012 2011 2012 2011
Revenue:
Product $ 42,462 $ 44,183 $ 127,534 $ 134,541
Subscription and service   21,817   20,019   67,006   53,381
Total revenue 64,279 64,202 194,540 187,922
 
Cost of revenue:
Cost of product revenue 7,858 7,862 24,087 25,430
Cost of subscription and service revenue   3,327   3,447   11,892   8,861
Total cost of revenue 11,185 11,309 35,979 34,291
       
Gross profit   53,094   52,893   158,561   153,631
 
Operating expenses
Sales and marketing 37,113 39,821 110,641 118,175
Research and development 5,177 4,991 17,944 17,829
General and administrative   14,474   14,115   41,050   42,731
Total operating expenses   56,764   58,927   169,635   178,735
 
Loss from operations (3,670) (6,034) (11,074) (25,104)
 
Other income and (expense):
Interest income 42 62 141 224
Interest expense - (1) - (5)
Other income (expense)   (27)   34   (71)   83
Total other income (expense) 15 95 70 302
 
Loss before income taxes (3,655) (5,939) (11,004) (24,802)
Income tax expense (benefit)   29,735   (4,762)   28,833   (9,794)
 
Net loss $ (33,390) $ (1,177) $ (39,837) $ (15,008)
 
Net loss per share:
Basic $ (1.58) $ (0.06) $ (1.90) $ (0.72)
Diluted $ (1.58) $ (0.06) $ (1.90) $ (0.72)
 
Common shares and equivalents outstanding:
Basic weighted average shares   21,073   20,780   21,004   20,724
Diluted weighted average shares   21,073   20,780   21,004   20,724
   
ROSETTA STONE INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except per share amounts)
(unaudited)
September 30 December 31,
2012 2011
 
 
Assets
Current assets:
Cash and cash equivalents $ 126,046 $ 106,516
Restricted cash 58 74
Short term investments - 9,711

Accounts receivable (net of allowance for doubtful accounts of $1,299 and $1,951, respectively)

39,685 51,997
Inventory 6,765 6,723
Prepaid expenses and other current assets 6,306 7,081
Income tax receivable 9,750 7,678
Deferred income taxes   13     10,985
Total current assets 188,623 200,765
 
Property and equipment, net 16,983 20,869
Goodwill 34,867 34,841
Intangible assets, net 10,835 10,865
Deferred income taxes 123 8,038
Other assets   1,884     1,803
Total assets $ 253,315   $ 277,181
 
Liabilities and stockholders' equity
Current liabilities:
Accounts payable $ 6,959 $ 7,291
Accrued compensation 13,211 11,703
Other current liabilities 28,407 34,911
Deferred revenue   53,787     49,375
Total current liabilities 102,364 103,280
 
Deferred revenue 4,002 2,520
Deferred income taxes 8,102 -
Other long-term liabilities   213     176
Total liabilities 114,681 105,976
 
Commitments and contingencies
 
Stockholders' equity:

Preferred stock, $0.001 par value; 10,000 and 10,000 authorized; zero and zero shares issued and outstanding September 30, 2012 and December 31, 2011, respectively

Non-designated common stock, $0.00005 par value, 190,000 and 190,000 shares authorized, 21,839 and 21,258 shares issued and outstanding at September 30, 2012 and December 31, 2011, respectively

2 2
Additional paid-in capital 158,861 151,823
Accumulated income (loss) (20,755 ) 19,082
Accumulated other comprehensive income   526     298
Total stockholders' equity   138,634     171,205
Total liabilities and stockholders' equity $ 253,315   $ 277,181
 
       
ROSETTA STONE INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
 
Three Months Ended Nine Months Ended
September 30, September 30,
2012 2011 2012 2011
 
Cash Flows From Operating Activities:
Net loss (33,390 ) (1,177 ) (39,837 ) (15,008 )

Adjustments to reconcile net loss to cash provided by (used in) operating activities

Stock-based compensation expense 2,477 1,836 6,208 4,977
Bad debt expense 739 401 1,335 709
Depreciation and amortization 1,748 2,184 6,230 6,439
Deferred income tax benefit 28,096 (2,493 ) 26,940 471
Loss on sales of equipment 372 2 752 18
Net change in:
Restricted cash (13 ) (4 ) 15 19
Accounts receivable (5,165 ) 4,358 11,149 12,345
Inventory (479 ) 1,121 1 1,361
Prepaid expenses and other current assets 136 820 785 1,371
Income tax receivable 660 (3,991 ) (2,080 ) (12,232 )
Other assets 987 1,108 (78 ) (208 )
Accounts payable 2,491 (2,019 ) (377 ) 738
Accrued compensation (298 ) (1,859 ) 1,476 (1,462 )
Other current liabilities 1,123 (4,069 ) (6,690 ) (3,712 )
Excess tax benefit from stock options exercised 18 (334 ) - (365 )
Other long-term liabilities (1,640 ) 164 (44 ) 152
Deferred revenue   7,562     1,942     5,707     370  
Net cash provided by (used in) operating activities   5,424     (2,010 )   11,492     (4,017 )
 
Cash Flows From Investing Activities:
Purchases of property and equipment (941 ) (2,443 ) (2,939 ) (7,908 )
Proceeds from (purchases of) available-for-sale securities 1,599 105 9,711 (1,801 )
Acquisition, net of cash acquired   -     -     -     (75 )
Net cash provided by (used in) investing activities   658     (2,338 )   6,772     (9,784 )
 
Cash Flows From Financing Activities:
Proceeds from the exercise of stock options 830 559 830 639
Tax benefit of stock options exercised (18 ) 334 - 365
Payments under capital lease obligations   (2 )   (1 )   (5 )   (6 )
Net cash provided by financing activities   810     892     825     998  
 
Increase (decrease) in cash and cash equivalents 6,892 (3,456 ) 19,089 (12,803 )
 
Effect of exchange rate changes in cash and cash equivalents   380     (291 )   441     114  
 
Net increase (decrease) in cash and cash equivalents 7,272 (3,747 ) 19,530 (12,689 )
 
Cash and cash equivalents—beginning of period   118,774     106,814     106,516     115,756  
 
Cash and cash equivalents—end of period $ 126,046   $ 103,067   $ 126,046   $ 103,067  
 
       
ROSETTA STONE INC.
Reconciliation of Net Loss to Adjusted EBITDA
(in thousands)
(unaudited)
 
 
Three Months Ended Nine Months Ended
September 30, September 30,
  2012     2011     2012     2011  
 
Net loss $ (33,390 ) $ (1,177 ) $ (39,837 ) $ (15,008 )
Interest (income)/expense, net (42 ) (61 ) (141 ) (219 )
Income tax expense (benefit) 29,735 (4,762 ) 28,833 (9,794 )
Depreciation and amortization 1,748 2,184 6,230 6,439
Stock-based compensation 2,477 1,836 6,208 4,977
Other EBITDA Adjustments   1,299     189     3,392     443  
 
Adjusted EBITDA* $ 1,827   $ (1,791 ) $ 4,685   $ (13,162 )
 

*Adjusted EBITDA equals GAAP net income or loss plus interest income and expense, income tax benefit and expense, depreciation, amortization, stock-based compensation expenses, restructuring costs and any expenses related to the previously disclosed lawsuit against Google, Inc.
Prior period Adjusted EBITDA has been conformed to current definition.

       
ROSETTA STONE INC.
Reconciliation of Net Loss to Adjusted Net Loss
(in thousands except per share amounts)
(unaudited)
 
 
Three Months Ended Nine Months Ended
September 30, September 30,
2012 2012
Adjusted Adjusted
Net loss Loss per share Net Loss Loss per share
Net loss as reported $ (33,390 ) $ (1.58 ) $ (39,837 ) $ (1.90 )
Expenses related to Google lawsuit 966 $ 0.05 1,096 $ 0.05
Income taxes - valuation allowance 30,676 $ 1.46 32,301 $ 1.54
       
 
Adjusted Net Loss* $ (1,748 ) $ (0.08 ) $ (6,440 ) $ (0.31 )
 

*Adjusted Net Loss equals GAAP net loss adjusted for expenses related to the lawsuit against Google, Inc. and all impacts related to recording the valuation allowance.

                                   
Rosetta Stone Inc.
Business Metrics
(in thousands)
                                         
Quarter-Ended Quarter-Ended Quarter-Ended
 
3/31/10   6/30/10   9/30/10   12/31/10   2010 3/31/11   6/30/11   9/30/11   12/31/11   2011 3/31/12   6/30/12   9/30/12   12/31/12   2012

Net Bookings by Market

 
US Consumer 41,631 38,746 41,138 52,243 173,758 29,814 36,828 35,562 54,786 156,990 41,237 37,240 42,042
International Consumer 10,029   8,177   9,860   15,176   43,242 14,996   12,910   11,945   14,589   54,440 13,046   8,168   10,729        
Worldwide Consumer 51,660 46,923 50,998 67,419 217,000 44,810 49,738 47,507 69,375 211,430 54,283 45,408 52,771
 
Worldwide Institutional 9,108   17,110   22,307   14,395   62,920 10,770   16,973   18,555   15,459   61,757 10,984   17,635   19,354        
Total 60,768   64,033   73,305   81,814   279,920 55,580   66,711   66,062   84,834   273,187 65,267   63,043   72,125        
 
YoY Growth (%)
US Consumer 6% -9% -19% -11% -9% -28% -5% -14% 5% -10% 38% 1% 18%
International Consumer 304%   168%   135%   93%   146% 50%   58%   21%   -4%   26% -13%   -37%   -10%        
Worldwide Consumer 23% 3% -7% 1% 4% -13% 6% -7% 3% -3% 21% -9% 11%
 
Worldwide Institutional 8% 28% 5% 37% 18% 18%   -1%   -17%   7%   -2% 2%   4%   4%        
Total 21% 9% -4% 6% 7% -9%   4%   -10%   4%   -2% 17%   -5%   9%        
 
% of Total Net Bookings
US Consumer 69% 60% 56% 64% 62% 54% 55% 54% 65% 57% 63% 59% 58%
International Consumer 16%   13%   14%   18%   15% 27%   20%   18%   17%   20% 20%   13%   15%        
Worldwide Consumer 85% 73% 70% 82% 78% 81% 75% 72% 82% 77% 83% 72% 73%
 
Worldwide Institutional 15%   27%   30%   18%   23% 19%   25%   28%   18%   23% 17%   28%   27%        
Total 100%   100%   100%   100%   100% 100%   100%   100%   100%   100% 100%   100%   100%        
 
 

Revenue by Market

 
US Consumer 41,407 38,748 36,902 44,516 161,573 28,061 38,606 37,710 52,794 157,171 42,671 36,895 39,681
International Consumer 9,815   7,651   9,708   15,516   42,690 14,601   12,014   11,002   13,238   50,855 12,617   8,074   10,094        
Worldwide Consumer 51,222 46,399 46,610 60,032 204,263 42,662 50,620 48,712 66,032 208,026 55,288 44,969 49,775
 
Worldwide Institutional 11,792   14,249   14,316   14,248   54,605 14,316   16,123   15,490   14,494   60,423 14,161   15,843   14,504        
Total 63,014   60,648   60,926   74,280   258,868 56,978   66,743   64,202   80,526   268,449 69,449   60,812   64,279        
 
YoY Growth (%)
US Consumer 5% -8% -28% -25% -16% -32% 0% 2% 19% -3% 52% -4% 5%
International Consumer 297%   154%   137%   101%   147% 49%   57%   13%   -15%   19% -14%   -33%   -8%        
Worldwide Consumer 22% 3% -16% -10% -2% -17% 9% 5% 10% 2% 30% -11% 2%
 
Worldwide Institutional 39%   23%   21%   26%   26% 21%   13%   8%   2%   11% -1%   -2%   -6%        
Total 25%   7%   -9%   -5%   3% -10%   10%   5%   8%   4% 22%   -9%   0%        
 
% of Total Revenue
US Consumer 66% 64% 61% 60% 62% 49% 58% 59% 66% 58% 62% 61% 62%
International Consumer 15%   13%   16%   21%   17% 26%   18%   17%   16%   19% 18%   13%   15%        
Worldwide Consumer 81% 77% 77% 81% 79% 75% 76% 76% 82% 77% 80% 74% 77%
 
Worldwide Institutional 19%   23%   23%   19%   21% 25%   24%   24%   18%   23% 20%   26%   23%        
Total 100%   100%   100%   100%   100% 100%   100%   100%   100%   100% 100%   100%   100%        
 
 

Consumer Revenue by Channel

 
DTC 31,026 25,142 27,500 34,496 118,164 31,856 30,984 31,177 42,368 136,385 36,839 30,951 35,130
Kiosk 9,391 8,683 7,392 9,533 34,999 7,312 7,368 6,987 8,504 30,171 6,483 4,564 4,103
Global Retail 9,608 11,200 9,832 15,413 46,053 2,585 10,752 9,015 14,265 36,616 10,999 8,122 8,911
Home School 1,197   1,374   1,886   590   5,047 909   1,516   1,533   895   4,854 967   1,332   1,631        
Total 51,222   46,399   46,610   60,032   204,263 42,662   50,620   48,712   66,032   208,026 55,288   44,969   49,775        
 
YoY Growth (%)
DTC 24% -5% -6% -2% 2% 3% 23% 13% 23% 15% 16% 0% 13%
Kiosk 14% -7% -25% -28% -14% -22% -15% -5% -11% -14% -11% -38% -41%
Global Retail 34% 46% -27% -12% 0% -73% -4% -8% -7% -20% 325% -24% -1%
Home School -19%   -12%   -28%   -50%   -26% -24%   10%   -19%   52%   -4% 6%   -12%   6%        
Total 22%   3%   -16%   -10%   -2% -17%   9%   5%   10%   2% 30%   -11%   2%        
 
% of Total Consumer Revenue
DTC 61% 54% 59% 57% 58% 75% 61% 64% 64% 66% 66% 69% 71%
Kiosk 18% 19% 16% 16% 17% 17% 15% 14% 13% 15% 12% 10% 8%
Global Retail 19% 24% 21% 26% 23% 6% 21% 19% 22% 17% 20% 18% 18%
Home School 2%   3%   4%   1%   2% 2%   3%   3%   1%   2% 2%   3%   3%        
Total 100%   100%   100%   100%   100% 100%   100%   100%   100%   100% 100%   100%   100%        
 
 

Unit Metrics

 
Product Unit Volume (thousands) 126.3 112.9 117.6 169.7 526.5 108.5 140.0 134.3 202.9 585.8 143.0 129.7 146.5
Paid Online Learners (thousands) 12.6 14.2 17.7 16.8 16.8 16.4 17.1 21.5 26.6 26.6 41.2 48.7 57.4
 
YoY Growth (%)
Product Units -14% 24% 14% 20% 11% 32% -7% 9%
Paid Online Learners 30% 20% 21% 58% 58% 151% 185% 167%
 
Average Net Revenue Per Unit ($)
Average Net Revenue per Product Unit $395 $398 $382 $343 $376 $379 $349 $346 $313 $341 $367 $319 $313
Average Net Revenue per Online Learner (monthly) $33 $35 $35 $35 $33 $30 $34 $39 $36 $31 $28 $27 $24
 
YoY Growth (%)
Average Net Revenue per Product Unit -4% -12% -9% -9% -9% -3% -9% -9%
Average Net Revenue per Online Learner -10% -2% 10% 3% -7% -6% -22% -37%

 

 

# of Kiosks (end of period)

 
US 190 186 180 173 173 144 117 114 103 103 57 56 57
Europe 9 10 13 15 15 15 16 14 13 13 1 1 1
Asia Pacific 41 50 64 71 71 78 76 69 58 58 44 42 39
Total # of Kiosks (end of period) 240 246 257 259 259 237 209 197 174 174 102 99 97
 

Revenues by Geography

 
United States 52,476 52,139 50,390 57,624 212,629 41,271 53,418 51,708 65,725 212,122 54,914 50,810 52,167
International 10,538   8,509   10,536   16,656   46,239 15,707   13,325   12,494   14,801   56,327 14,535   10,002   12,112        
Total 63,014   60,648   60,926   74,280   258,868 56,978   66,743   64,202   80,526   268,449 69,449   60,812   64,279        
 
Revenues by Geography (as a %)
United States 83% 86% 83% 78% 82% 72% 80% 81% 82% 79% 79% 84% 81%
International 17%   14%   17%   22%   18% 28%   20%   19%   18%   21% 21%   16%   19%        
Total 100%   100%   100%   100%   100% 100%   100%   100%   100%   100% 100%   100%   100%        
 
 
 
 
 
 

Checks

Consumer Revenue 0 0 0 0 0 0 0 0 0 0 0 0 0
Total Revenue 0 0 0 0 0 0 0 0 0 0 0 0 0
 
 
Prior period data has been modified where applicable to conform to current presentation for comparative purposes.
Immaterial rounding differences may be present in this data in order to conform to Financial Statement totals.

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