Don't Buy Rosetta Stone Until It Can Translate Cost Cuts Into Cash Flow
Rosetta Stone's Terminal Decline Continues Despite Acquisitions And Accounting Changes
Ian Bezek • 24 Comments
Ian Bezek • 24 Comments
Jul. 7, 2015, 4:17 PM
- Rosetta Stone (NYSE:RST) has hired "outside financial and legal advisors to assist management and its Board with their ongoing comprehensive review to analyze potential options to improve financial performance and enhance shareholder value."
- The language software vendor received a buyout offer from RDG Capital in May. The next month, activist Osmium Partners (9.7% stake) called for a sale, while arguing a major buyout premium is possible.
Jun. 8, 2015, 12:10 PM
- Rosetta Stone's (NYSE:RST) shares "could transact to a strategic buyer at a price of $16 per share or better," argues #2 shareholder Osmium Partners (9.7% stake) in an open letter.
- Osmium thinks Disney, Houghton Mifflin, Pearson, or InterActive Corp. (among others) could potentially bid, and that Rosetta's Enterprise & Education (E&E) software ops are especially appealing, owing to their high margins, 80%+ annual renewal rate, and 100% reliance on SaaS/subscription-based revenue. Major cross-selling opportunities are seen for strategic acquirers looking to offer Rosetta's language software to education clients.
- Rosetta jumped two weeks ago after Mergermarket reported P-E investors had made a $9-$10/share offer to buy the company. Soon afterwards, Rosetta confirmed it had received an offer, and said it would "carefully evaluate" it.
May 29, 2015, 9:39 AM
- Following a Thursday afternoon Mergermarket report stating the company has received a buyout offer in the $9-$10/share range, Rosetta Stone (NYSE:RST) says its board "has received an expression of interest from RDG Capital Fund Management," and that it will "carefully evaluate" the proposal.
- Rosetta, which traded above $10 as recently as early March, reiterates it's "actively implementing its strategic plan, which it believes will deliver attractive value for shareholders."
May 28, 2015, 6:31 PM
- Mergermarket reports a group of P-E investors have offered to buy Rosetta Stone (NYSE:RST) for $9-$10/share. The language software vendor has jumped to $7.07 in AH trading.
- The rumored buyout price range is still well below the levels Rosetta traded at two years ago. Mergermarket's report comes two months after CEO Stephen Swad resigned, and was replaced on an interim basis by director/ex-Goldman partner A. John Hass.
Dec. 19, 2013, 9:11 AM
- Rosetta Stone (RST) acquires Fit Brains developer Vivity Labs for $12M cash, expanding Rosetta's offerings outside language learning into "adjacent categories of technology-driven education." Transaction close is expected in Jan.
- Vivity's flagship app, Fit Brains Trainer, has been downloaded nearly 5M times in the last year.
- Rosetta expects Vivity to contribute revenue of $3M-$5M in 2014 and EBITDA of $1M-$2M. Beyond 2015, Rosetta expects double-digit revenue and EBITDA growth.
Dec. 11, 2013, 10:48 AM
- Rosetta Stone (RST +0.9%) acquires Europe-focused, B2B language-learning software company Tell Me More for €20.75M ($28M).
- 95% of Tell Me More's €18.5 million ($25 million) business is focused on corporate and higher education verticals, with a significant presence in Europe as well as in China.
- The company has more than 3K customers worldwide and offers solutions covering 9 languages.
- Rosetta stone expects to achieve significant cost synergies by streamlining the 2 companies' sales forces under the Rosetta Stone brand and taking advantage of Rosetta's scale.
- Management expects the acquisition to contribute bookings of $25M-$27M in 2014. The impact to EBITDA is seen at $3M-$4M after excluding $3M-$4M in integration costs. Beyond 2014, the company sees "modest top-line growth" and EBITDA margins of 25% or greater.
Jul. 25, 2013, 9:49 AM
Rosetta Stone, Inc. provides technology-based language learning solutions. It develops, markets and sells language learning solutions consisting of software products, online services and audio practice tools under the Rosetta Stone brand. The company's software products are sold on a direct... More
Industry: Multimedia & Graphics Software
Country: United States
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