Rosetta Stone Continues Migration to the Cloud, Exits Remaining U.S. Kiosks

  Rosetta Stone Continues Migration to the Cloud, Exits Remaining U.S. Kiosks

        Language-Learning Company to Discontinue Low-Margin Operation

Business Wire

ARLINGTON, Va. -- April 4, 2013

Rosetta Stone (NYSE:RST) announced today that it will close all 56 of its
remaining kiosk locations in the U.S. as it accelerates a transition to
cloud-based learning solutions. As part of the move, the company will reduce
its headcount by approximately 45 full-time and 200 part-time employees. Over
the past 18 months, Rosetta Stone has been intensifying its focus on online
sales and digital downloads, and the discontinuation of its kiosks—located
predominantly in malls and airports—advances its cloud-based business
strategy.

“This is another step in the transformation of Rosetta Stone,” said President
and Chief Executive Officer Steve Swad. “Not long ago, kiosks played a
critical role in building our brand and distributing our products. But today,
learners expect us to come to them via the cloud, and that’s what we’re doing.
By meeting customers where they are, we are pursuing our vision of a world
where anyone—anywhere, anytime—can learn using Rosetta Stone.”

The kiosk channel closure follows on the heels of Rosetta Stone’s April 2
acquisition of Seattle-based Livemocha, which brings with it one of the
world’s largest online language-learning communities and a powerful, scalable
technology platform. In March, the company opened new offices in Austin, TX
and San Francisco, CA—two of the country’s most prominent recruiting pools for
high-tech employees—to reinvigorate its product development organization.
Taken together, these actions signal that Rosetta Stone is leaning into the
explosive growth of cloud-based learning.

Rosetta Stone’s kiosks had come to represent a shrinking portion of the
company’s overall sales mix, especially as their revenue contribution was
eclipsed in 2012 by growth from the web channel and the rising popularity of
digital downloads. The company has closed over 100 kiosks since 2011, and by
exiting its remaining locations, it sheds a low-margin channel and positions
itself to invest in more profitable channels going forward.

“This is the right move for Rosetta Stone,” said Swad, “and it sets us up for
long-term growth. Certainly it’s difficult to let go of sales associates who
have represented our brand well over the years. But this is part of a larger
strategy for Rosetta Stone, and it makes us a more nimble and innovative
cloud-based learning company.”

About Rosetta Stone Inc.

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, Austin, TX, San Francisco,
CA, Seattle, WA, Tokyo, Seoul, London, Sao Paulo and Dubai.

Contact:

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