Exhibit 99.1

Rosetta Stone Inc. Reports Second Quarter 2013 Results

Company Continues Progress in Its Transformation;

Reports Adjusted EBITDA Growth of Nearly 150% to $2.8 Million

ARLINGTON, VA — August 7, 2013 — Rosetta Stone Inc. (NYSE:RST), a leading provider of technology-based language-learning solutions, today announced financial results for the second quarter of 2013, as summarized below:

US$ thousands	Three Months Ended
except per-share data	June 30,						%
	2013			2012			change
Total revenue	$	62,139		$	60,812		2	%
Total bookings	$	63,083		$	63,043		0	%
Net loss	$	(3,557	)	$	(4,544	)	22	%
Net loss per share:	$	(0.16	)	$	(0.22	)	27	%
Adjusted net loss (1)	$	(839	)	$	(1,829	)	54	%
Adjusted net loss per share: (1)	$	(0.03	)	$	(0.09	)	66	%
Adjusted EBITDA (2)	$	2,786		$	1,123		148	%
Cash flow from operations	$	2,489		$	3,412		-27	%
Purchases of property and equipment	$	(1,684	)	$	(1,031	)	-63	%
Free cash flow	$	805		$	2,381		-66	%

(1)Adjusted net income(loss) and adjusted net income (loss) per share exclude the impact of items related to its litigation with Google, Inc., restructuring costs as well as all adjustments related to recording the non-cash tax valuation allowance for deferred tax assets.  Adjusted net income(loss) for prior periods has been revised to conform to current definition.

(2)Adjusted EBITDA is GAAP net income(loss) plus interest income and expense, income tax benefit and expense, depreciation, amortization and stock-based compensation expenses.  Adjusted EBITDA excludes any items related to the litigation with Google Inc., and restructuring costs. Adjusted EBITDA for prior periods has been revised to conform to current definition.

Definitions and reconciliations for all non-GAAP measures are provided in this press release.

“I was pleased with our results and would characterize the second quarter as another quarter where we showed steady progress against our strategy and we took meaningful actions to improve future results and move us closer to our 2015 targets,” said Steve Swad, President and Chief Executive Officer of Rosetta Stone.  Swad added “We continued our shift to digital, with 25% of Consumer revenue now coming from digital

download and Online Learners and increased our online presence through the acquisition of Livemocha.  We grew our core business, invested in new products and managed expenses, helping us to deliver impressive growth in Adjusted EBITDA.  We also continued to push our transformation forward by closing kiosks, launching our first set of travel apps and extending into the digital reading space with the recent acquisition of Lexia.”

Second Quarter 2013 Operational and Financial Highlights

·Bookings: Total consolidated bookings of $63.1 million were flat compared to the year-ago period.  North American Consumer segment (“NA Consumer”) bookings increased 5% to $39.3 million from $37.3 million primarily reflecting stronger performance in both the direct-to-consumer and retail sales channels, partially offset by a decline in the kiosk channel, which was closed early in the second quarter of 2013.  Excluding the kiosk channel, NA Consumer bookings increased 15% year-over-year.  The Rest of World Consumer segment (“ROW Consumer”) declined 15%, with results due to lower year-over-year bookings in Asia and the UK.  In Germany, results increased sharply, reflecting the lapping of the one year anniversary of the switch to online-only products in that market, while other geographies decreased.  Bookings in the Global Enterprise & Education (“E&E”) segment (previously known as the Institutional segment) decreased 4% compared with a year-ago, reflecting the absence of network product this quarter following the company’s decision to curtail selling that product.  Excluding the impact of de-emphasized network and CD-product sales, core E&E bookings increased 4% year-over-year.

·Revenue: Total revenue increased 2% year-over-year to $62.1 million from $60.8 million.  NA Consumer revenue increased 8%, reflecting stronger performance in both the direct-to-consumer and retail sales channels.  In particular, the direct-to-consumer sales channel benefited from cross-selling to community members of Livemocha, which the company acquired in early April 2013.  Excluding kiosk, NA Consumer revenue increased 18% year-over-year.  ROW Consumer revenue decreased 7% due to decreases in Japan and the UK, offset by modest improvement in Germany.  E&E revenue decreased 7% in the second quarter due mainly to the absence of network product sales compared with a year ago.  E&E revenue increased over 2% year-over-year, excluding the impact of network product sales.

	Three Months Ended
	June 30,
US$ thousands	2013		2012		% change
Revenue from:
North America Consumer	$	39,934	$	36,918	8	%
Rest of World Consumer	7,478		8,053		-7	%
Total Consumer	47,412		44,971		5	%
Global Enterprise & Education	14,727		15,841		-7	%
Total	$	62,139	$	60,812	2	%

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·Adjusted EBITDA: Adjusted EBITDA for the second quarter increased 148% to $2.8 million from $1.1 million.  The improvement in Adjusted EBITDA was due to an increase in revenue combined with lower operating expenses, after adjusting for one-time items.  Cost of Goods Sold decreased $1.1 million due to mix shift to lower-cost digital offerings and lower hard-product and studio coaching costs.  Sales and marketing expenses decreased by $2.0 million.  The reduction in sales and marketing expense was due to marketing efficiencies and lower kiosk expenses resulting from the closing of the company’s remaining 56 U.S. kiosk locations in the quarter.  General and administrative (G&A) expenses increased by $0.7 million due in part to the addition of Livemocha.  Research and development costs increased $2.6 million, reflecting the investment being made in product development and the additional costs from the Livemocha acquisition including product personnel.  Adjusted EBITDA includes approximately $2.5 million of adjustments, mainly related to severance and lease termination costs associated with the shuttering of our U.S. kiosks and costs associated with the Livemocha acquisition.

·Adjusted Net Loss and Adjusted EPS: Adjusted Net Loss was $0.8 million in the second quarter of 2013, compared to Adjusted Net Loss of $1.8 million in the second quarter of 2012.  Adjusted Net Loss per share was $0.03 compared to an Adjusted Net Loss of $0.09 per share in the prior year period.

·Balance Sheet and Cash Flow: Cash at the end of the quarter was $132.1 million, a $7.3 million decrease from $139.4 million at March 31, 2013.  The decrease was mainly due to the company’s $8.2 million acquisition, net of cash acquired, of Livemocha in the quarter.  The balance sheet remains debt-free.  Deferred revenue increased $1.7 million in the quarter to $61.6 million.  Free cash flow in the second quarter was $0.8 million compared with $2.4 million a year ago.  The decline in free cash flow reflects a decrease in working capital versus the year ago period and an increase in capital expenditures to $1.7 million in the second quarter compared with $1.0 million a year ago.

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Financial Outlook

With the company’s acquisition of Lexia Learning Systems, Inc. on August 1, 2013, the company is subject to purchase accounting adjustments which will impact the comparability of guidance issued prior to the announcement of the acquisition.  Going forward the company will provide guidance on a pro forma basis, which excludes the impact of these purchase accounting adjustments.  The company is providing the following guidance for the full year 2013, which includes the expected contribution from Lexia for the last five months of the year:

	Guidance Before Impact of Lexia					Lexia Acquisition Impact			Updated Guidance
	Range					5-Month Results			Range
($ Millions)	Low			High		Range			Low			High
Pro Forma Revenue	$	280		$	290	$	7-$8		$	287		$	298
Pro Forma Adjusted EBITDA	$	16		$	18	$	(1-$2	)	$	14		$	17
Pro Forma Adjusted Net Income	$	(1	)	$	1	$	(1-$2	)	$	(3	)	$	0
Pro Forma Adjusted EPS	$	(0.02	)	$	0.04	$	(0.05-$0.10	)	$	(0.12	)	$	(0.01	)
Shares Outstanding (MM)	21.5			21.5					21.5			21.5
Capital Expenditures	$	5		$	8				$	5		$	8

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 items related to the litigation with Google Inc., restructuring costs and transaction and other costs associated with mergers and acquisitions. 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 items related to the litigation with Google Inc., restructuring costs and transaction and other costs associated with mergers and acquisitions as well as all adjustments related to recording the non-cash tax valuation allowance for deferred tax assets.

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·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.

·Pro Forma Revenue is GAAP revenue plus the purchase accounting impact on acquired deferred revenue

·Pro Forma Adjusted EBITDA is Adjusted EBITDA (as defined above) plus the purchase accounting impact on acquired deferred revenue less the purchase accounting impact on acquired deferred commissions

·Pro Forma Adjusted  Net Income/(Loss) and Pro Forma Adjusted EPS are Adjusted Net Income/(Loss) and Adjusted Net Income/(Loss) per Share (as defined above) plus the purchase accounting impact on acquired deferred revenue less the purchase accounting impact on acquired deferred commissions

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

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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:

1-877-407-9039 (toll-free) or

1-201-689-8470 (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

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replay will also be available beginning at 7:30PM ET until August 21, 2013 via telephone at the following numbers:

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

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

Pass Code: 418197

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 over 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, Austin, TX, San Francisco, CA, Seattle, WA, Boston, MA, Tokyo, Seoul, London, Dubai 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 within the meaning of the Private Securities Litigation Reform Act of 1995, 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,” “guidance,” “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 solutions; 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

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regarding cash flow from operations; our product development plans; the appeal and efficacy of our products and services; 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 operations and growth plans; our plans regarding our kiosks and retail relationships; our plans regarding our E&E 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 realign our cost structure and revitalize our go-to-market strategy; our plans to transition our distribution to more online in the Consumer business; our mergers and acquisitions plans; our plans related to Lexia and Livemocha; our ability to successfully integrate Lexia and Livemocha into our business; 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, 2012, 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.

Investor Contact:	Media Contact:
Steve Somers, CFA	Jonathan Mudd
ssomers@rosettastone.com	jmudd@rosettastone.com
703-387-5876	571-357-7148
Source: Rosetta Stone Inc.

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ROSETTA STONE INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share amounts)

(unaudited)

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2013			2012			2013			2012
Revenue:
Product	$	35,458		$	37,543		$	73,049		$	85,073
Subscription and service	26,681			23,269			53,013			45,188
Total revenue	62,139			60,812			126,062			130,261
Cost of revenue:
Cost of product revenue	6,998			7,122			13,938			16,229
Cost of subscription and service revenue	3,226			4,198			6,550			8,565
Total cost of revenue	10,224			11,320			20,488			24,794
Gross profit	51,915			49,492			105,574			105,467
Operating expenses
Sales and marketing	33,144			35,125			70,203			73,529
Research and development	9,093			6,493			16,451			12,766
General and administrative	13,634			12,919			26,222			26,576
Lease Abandonment	35			—			828			—
Total operating expenses	55,906			54,537			113,704			112,871
Loss from operations	(3,991		)	(5,045		)	(8,130		)	(7,404		)
Other income and (expense):
Interest income	43			21			84			99
Interest expense	—			—			(45		)	—
Other income (expense)	(9		)	320			410			(44		)
Total other income (expense)	34			341			449			55
Loss before income taxes	(3,957		)	(4,704		)	(7,681		)	(7,349		)
Income tax (benefit) provision	(400		)	(160		)	576			(902		)
Net loss	$	(3,557	)	$	(4,544	)	$	(8,257	)	$	(6,447	)
Net loss per share:
Basic	$	(0.16	)	$	(0.22	)	$	(0.38	)	$	(0.31	)
Diluted	$	(0.16	)	$	(0.22	)	$	(0.38	)	$	(0.31	)
Common shares and equivalents outstanding:
Basic weighted average shares	21,569			20,995			21,465			20,969
Diluted weighted average shares	21,569			20,995			21,465			20,969

ROSETTA STONE INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except per share amounts)

(unaudited)

	June 30,			December 31,
	2013			2012
Assets
Current assets:
Cash and cash equivalents	$	132,070		$	148,190
Restricted cash	64			73
Accounts receivable (net of allowance for doubtful accounts of $983 and $1,297, respectively)	41,735			49,946
Inventory	5,939			6,581
Prepaid expenses and other current assets	7,788			5,204
Income tax receivable	254			1,104
Deferred income taxes	136			79
Total current assets	187,986			211,177
Property and equipment, net	17,134			17,213
Goodwill	39,718			34,896
Intangible assets, net	15,952			10,825
Deferred income taxes	210			260
Other assets	1,335			1,484
Total assets	$	262,335		$	275,855
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	9,344		$	6,064
Accrued compensation	15,398			16,830
Other current liabilities	25,916			36,387
Deferred revenue	56,399			59,195
Total current liabilities	107,057			118,476
Deferred revenue	5,187			4,221
Deferred income taxes	8,954			8,400
Other long-term liabilities	863			155
Total liabilities	122,061			131,252
Commitments and contingencies
Stockholders’ equity:
Preferred stock, $0.001 par value; 10,000 and 10,000 authorized; zero and zero shares issued and outstanding June 30, 2013 and December 31, 2012, respectively	—			—
Non-designated common stock, $0.00005 par value, 190,000 and 190,000 shares authorized, 22,535 and 21,951 shares issued and outstanding at June 30, 2013 and December 31, 2012, respectively	2			2
Additional paid-in capital	164,982			160,693
Accumulated loss	(25,006		)	(16,749		)
Accumulated other comprehensive income	296			657
Total stockholders’ equity	140,274			144,603
Total liabilities and stockholders’ equity	$	262,335		$	275,855

ROSETTA STONE INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2013			2012			2013			2012
Cash Flows From Operating Activities:
Net loss	$	(3,557	)	$	(4,544	)	$	(8,257	)	$	(6,447	)
Adjustments to reconcile net loss to cash provided by (used in) operating activities, net of business acquisitions
Stock-based compensation expense	2,036			2,096			3,704			3,731
Bad debt expense	465			431			227			596
Depreciation and amortization	2,224			2,046			4,596			4,482
Deferred income tax benefit	(925		)	158			(627		)	(1,156		)
Loss on disposal of equipment	64			348			205			380
Net change in:
Restricted cash	(23		)	5			9			28
Accounts receivable	(3,125		)	(1,261		)	8,010			16,314
Inventory	1,298			1,189			552			480
Prepaid expenses and other current assets	(9		)	146			(2,568		)	649
Income tax receivable	398			(1,504		)	811			(2,740		)
Other assets	6			144			10			(1,065		)
Accounts payable	3,156			(2,281		)	2,947			(2,868		)
Accrued compensation	4,853			3,850			(1,559		)	1,774
Other current liabilities	(5,543		)	207			(9,796		)	(7,813		)
Excess tax benefit from stock options exercised	—			(18		)	—			(18		)
Other long-term liabilities	(35		)	9			336			1,596
Deferred revenue	1,206			2,391			(1,747		)	(1,855		)
Net cash provided by (used in) operating activities	2,489			3,412			(3,147		)	6,068
Cash Flows From Investing Activities:
Purchases of property and equipment	(1,684		)	(1,031		)	(4,212		)	(1,998		)
Proceeds from (purchases of) available-for-sale securities	—			4,805			—			8,112
Acquisition, net of cash acquired	(8,180		)	—			(8,180		)	—
Net cash (used in) provided by investing activities	(9,864		)	3,774			(12,392		)	6,114
Cash Flows From Financing Activities:
Proceeds from the exercise of stock options	1,448			—			1,798			—
Repurchase of shares from exercised stock options	(1,040		)	—			(1,040		)	—
Tax benefit of stock options exercised	—			18			—			18
Proceeds from equity offering, net of issuance costs	(171		)	—			(171		)	—
Payments under capital lease obligations	(3		)	(1		)	(196		)	(3		)
Net cash provided by financing activities	234			17			391			15
(Decrease) increase in cash and cash equivalents	(7,141		)	7,203			(15,148		)	12,197
Effect of exchange rate changes in cash and cash equivalents	(100		)	(502		)	(972		)	61
Net (decrease) increase in cash and cash equivalents	(7,241		)	6,701			(16,120		)	12,258
Cash and cash equivalents—beginning of period	139,311			112,073			148,190			106,516
Cash and cash equivalents—end of period	$	132,070		$	118,774		$	132,070		$	118,774

ROSETTA STONE INC.

Reconciliation of GAAP Net Loss to Adjusted EBITDA

(in thousands)

(unaudited)

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2013			2012			2013			2012
GAAP net loss	$	(3,557	)	$	(4,544	)	$	(8,257	)	$	(6,447	)
Interest (income)/expense, net	(43		)	(21		)	(39		)	(99		)
Income tax (benefit) expense	(400		)	(160		)	576			(902		)
Depreciation and amortization	2,168			2,046			3,924			4,482
Depreciation related to restructuring	56			—			672			—
Stock-based compensation	2,036			2,096			3,704			3,731
Other EBITDA Adjustments	2,526			1,706			4,614			2,093
Adjusted EBITDA*	$	2,786		$	1,123		$	5,194		$	2,858

* 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 items related to the litigation with Google Inc., restructuring costs and transaction and other costs associated with mergers and acquisitions. Adjusted EBITDA for prior periods has been revised to conform to current definition.

ROSETTA STONE INC.

Reconciliation of GAAP Net Loss to Adjusted Net Loss

(in thousands, except per share amounts)

(unaudited)

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2013			2012			2013			2012
GAAP net loss	$	(3,557	)	$	(4,544	)	$	(8,257	)	$	(6,447	)
Items related to litigation with Google, Inc., restructuring and other related costs, acquisition costs	2,582			1,706			5,286			2,093
Income tax adjustments *	136			1,009			1,510			1,148
Adjusted net loss	$	(839	)	$	(1,829	)	$	(1,461	)	$	(3,206	)
GAAP net loss per share	$	(0.16	)	$	(0.22	)	$	(0.38	)	$	(0.31	)
Items related to litigation with Google, Inc. restructuring and other related costs	0.12			0.08			0.25			0.10
Income tax adjustments *	0.01			0.05			0.07			0.05
Adjusted net loss per share **	$	(0.03	)	$	(0.09	)	$	(0.06	)	$	(0.16	)
Basic weighted average shares	21,569			20,995			21,465			20,969
Diluted weighted average shares	21,569			20,995			21,465			20,969

* For adjusted net income(loss) purposes, we use a 39% effective tax rate which represents the projected, long term effective tax rate on adjusted pretax income. Our adjusted tax rate assumes full use of loss and credit carryforwards without reduction for valuation allowances.

** Adjusted net loss and adjusted net loss per share exclude the impact of items related to its litigation with Google, Inc., restructuring costs and transaction and other costs associated with mergers and acquisitions as well as all adjustments related to recording the non-cash tax valuation allowance for deferred tax assets.

Rosetta Stone Inc.

Business Metrics

(in thousands)

	Quarter-Ended										Quarter-Ended										Quarter-Ended
	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		3/31/13		6/30/13
Net Bookings by Market
North America Consumer	29,814		36,828		35,562		55,209		157,413		41,733		37,295		42,283		57,870		179,181		41,303		39,321
Rest of World Consumer	14,996		12,910		11,945		14,166		54,017		12,550		8,113		10,488		10,034		41,185		8,310		6,879
Worldwide Consumer	44,810		49,738		47,507		69,375		211,430		54,283		45,408		52,771		67,904		220,366		49,613		46,200
Global Enterprise and Education	10,770		16,973		18,555		15,459		61,757		10,984		17,635		19,354		16,423		64,396		10,758		16,883
Total	55,580		66,711		66,062		84,834		273,187		65,267		63,043		72,125		84,327		284,762		60,371		63,083
YoY Growth (%)
North America Consumer	-28	%	-5	%	-14	%	6	%	-9	%	40	%	1	%	19	%	5	%	14	%	-1	%	5	%
Rest of World Consumer	50	%	58	%	21	%	-7	%	25	%	-16	%	-37	%	-12	%	-29	%	-24	%	-34	%	-15	%
Worldwide Consumer	-13	%	6	%	-7	%	3	%	-3	%	21	%	-9	%	11	%	-2	%	4	%	-9	%	2	%
Global Enterprise and Education	18	%	-1	%	-17	%	7	%	-2	%	2	%	4	%	4	%	6	%	4	%	-2	%	-4	%
Total	-9	%	4	%	-10	%	4	%	-2	%	17	%	-5	%	9	%	-1	%	4	%	-8	%	0	%
% of Total Net Bookings
North America Consumer	54	%	55	%	54	%	65	%	57	%	64	%	59	%	59	%	69	%	63	%	68	%	62	%
Rest of World Consumer	27	%	20	%	18	%	17	%	20	%	19	%	13	%	14	%	12	%	14	%	14	%	11	%
Worldwide Consumer	81	%	75	%	72	%	82	%	77	%	83	%	72	%	73	%	81	%	77	%	82	%	73	%
Global Enterprise and Education	19	%	25	%	28	%	18	%	23	%	17	%	28	%	27	%	19	%	23	%	18	%	27	%
Total	100	%	100	%	100	%	100	%	100	%	100	%	100	%	100	%	100	%	100	%	100	%	100	%
Revenue by Market
North America Consumer	28,061		38,606		37,710		53,184		157,561		43,084		36,918		39,878		52,946		172,826		41,385		39,934
Rest of World Consumer	14,601		12,014		11,002		12,848		50,465		12,204		8,053		9,903		10,088		40,248		8,570		7,478
Worldwide Consumer	42,662		50,620		48,712		66,032		208,026		55,288		44,971		49,781		63,034		213,074		49,955		47,412
Global Enterprise and Education	14,316		16,123		15,490		14,494		60,423		14,161		15,841		14,498		15,667		60,167		13,969		14,727
Total	56,978		66,743		64,202		80,526		268,449		69,449		60,812		64,279		78,701		273,241		63,924		62,139
YoY Growth (%)
North America Consumer	-32	%	0	%	2	%	19	%	-2	%	54	%	-4	%	6	%	0	%	10	%	-4	%	8	%
Rest of World Consumer	49	%	57	%	13	%	-17	%	18	%	-16	%	-33	%	-10	%	-21	%	-20	%	-30	%	-7	%
Worldwide Consumer	-17	%	9	%	5	%	10	%	2	%	30	%	-11	%	2	%	-5	%	2	%	-10	%	5	%
Global Enterprise and Education	21	%	13	%	8	%	2	%	11	%	-1	%	-2	%	-6	%	8	%	0	%	-1	%	-7	%
Total	-10	%	10	%	5	%	8	%	4	%	22	%	-9	%	0	%	-2	%	2	%	-8	%	2	%
% of Total Revenue
North America Consumer	49	%	58	%	59	%	66	%	58	%	62	%	61	%	62	%	67	%	63	%	65	%	64	%
Rest of World Consumer	26	%	18	%	17	%	16	%	19	%	18	%	13	%	15	%	13	%	15	%	13	%	12	%
Worldwide Consumer	75	%	76	%	76	%	82	%	77	%	80	%	74	%	77	%	80	%	78	%	78	%	76	%
Global Enterprise and Education	25	%	24	%	24	%	18	%	23	%	20	%	26	%	23	%	20	%	22	%	22	%	24	%
Total	100	%	100	%	100	%	100	%	100	%	100	%	100	%	100	%	100	%	100	%	100	%	100	%

Prior period data has been modifed 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.

Rosetta Stone Inc.

Business Metrics

(in thousands)

	Quarter-Ended															Quarter-Ended															Quarter-Ended
	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			3/31/13			6/30/13
Unit Metrics
Product Unit Volume (thousands)	108.5			140.0			134.3			202.9			585.8			143.0			129.7			146.5			210.7			629.8			141.8			148.6
Paid Online Learners (thousands)	16.4			17.1			21.5			26.6			26.6			41.2			48.7			57.4			68.4			68.4			80.6			85.1
YoY Growth (%)
Product Units	-14		%	24		%	14		%	20		%	11		%	32		%	-7		%	9		%	4		%	8		%	-1		%	15		%
Paid Online Learners	30		%	20		%	21		%	58		%	58		%	151		%	185		%	167		%	157		%	157		%	95		%	75		%
Average Net Revenue Per Unit ($)
Average Net Revenue per Product Unit	$	379		$	349		$	346		$	313		$	341		$	367		$	319		$	313		$	277		$	315		$	312		$	275
Average Net Revenue per Online Learner (monthly)	$	30		$	34		$	39		$	36		$	35		$	28		$	27		$	24		$	24		$	26		$	26		$	25
YoY Growth (%)
Average Net Revenue per Product Unit	-4		%	-12		%	-9		%	-9		%	-9		%	-3		%	-9		%	-9		%	-11		%	-8		%	-15		%	-14		%
Average Net Revenue per Online Learner	-10		%	-2		%	10		%	3		%	0		%	-6		%	-22		%	-37		%	-32		%	-25		%	-7		%	-6		%
# of Kiosks (end of period)
North America	144			117			114			103			103			57			56			57			57			57			56			—
Europe	15			16			14			13			13			1			1			1			1			1			—			0
Asia Pacific	78			76			69			58			58			44			42			39			29			29			22			20
Total # of Kiosks (end of period)	237			209			197			174			174			102			99			97			87			87			78			20
Revenues by Geography
United States	41,271			53,418			51,708			65,725			212,122			54,914			50,810			52,167			65,856			223,747			52,791			52,163
International	15,707			13,325			12,494			14,801			56,327			14,535			10,002			12,112			12,845			49,494			11,133			9,976
Total	56,978			66,743			64,202			80,526			268,449			69,449			60,812			64,279			78,701			273,241			63,924			62,139
Revenues by Geography (as a %)
United States	72		%	80		%	81		%	82		%	79		%	79		%	84		%	81		%	84		%	82		%	83		%	84		%
International	28		%	20		%	19		%	18		%	21		%	21		%	16		%	19		%	16		%	18		%	17		%	16		%
Total	100		%	100		%	100		%	100		%	100		%	100		%	100		%	100		%	100		%	100		%	100		%	100		%

Prior period data has been modifed 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.