Rosetta Stone Proves Its Worth (RST)

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By Douglas A. McIntyre Updated Published

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Rosetta Stone, Inc. (NYSE: RST) just gave us its first earnings report that had a full quarter’s worth public data in it.  The language learning software solution provider did not disappoint.  In fact, this is a solid report.

The company posted quarterly figures of $0.23 EPS on $56.5 million in revenues.  The estimates from Thomson Reuters were $0.13 EPS and $54.7 million in revenues.  If you include the costs associated with coming public and some other items, its loss was -$0.42 EPS.

Guidance looks ample here as well. The company sees the coming quarter coming in at $0.33 to $0.35 EPS and revenues of $64.5 million to $66.5 million.  Thomson Reuters has estimates listed as $0.30 EPS and almost $65.3 million in revenues.

For the fiscal year, these figures were put at $0.56 to $0.60 EPS net, but $1.22 to $1.26 non-GAAP EPS.  Revenues were put at $245 to $248 million.  Thomson Reuters had those figures listed as $1.04 non-GAAP EPS and $242.8 million in revenues.

Rosetta Stone shares closed up 5% at $27.31 with the strong market today, and shares are up around $28.75 in the after-hours session.  Its post-IPO range has been $21.33 to $32.54.

We now have some forward valuation figures to throw out there.  The market cap before the effect of after-hours trading was $555 million.  For this year at the mid-point of guidance, we have forward multiples of 22-times earnings and right at 2.25-times revenues.

JON C. OGG
JULY 30, 2009

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About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.

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