Rosetta Stone Expands Enterprise and Education Solution - Analyst Blog

Rosetta Stone Inc. ( RST ) continues to expand its portfolio. The leading provider of technology-based language learning solutions recently added the new Rosetta Stone Language Learning Suite to its Enterprise & Education solution portfolio.

Rosetta Stone's new learning suite will not only add instructional content ranging from introductory to advanced levels of language training, but also tailor the content to meet the specific needs of business and educational institutions worldwide. It will be made available in 24 languages worldwide.

The new learning suite will enable teachers to integrate online language learning in a blended model in the classroom. Enterprises,government and non-profit organizations, on the other hand, can take advantage of content tailored for their business and offer their employees live tutoring services to accelerate progress.

Frequent update of its solution suites has been a major growth catalyst for Rosetta Stone. Acquisitions of strategic business solutions providers has also helped the company to expand its enterprise and education business. In the recent past, Rosetta Stone has acquired a number of companies that include Vivity Labs and Tell Me More (Jan 2014) and Livemocha Inc. and Lexia Learning Systems Inc. ( 2013) .

Among these, the acquisition of France-based Tell Me More has been important. Tell Me More significantly expands Rosetta Stone's Global Enterprise & Education business. With a significant presence in Europe, Tell Me More offers a robust suite of Software-as-a-Service ("SaaS") based language learning products and services that provide intermediate, advanced and business language solutions in nine languages.

We believe that Rosetta Stone's expanding mobile product portfolio will boost top-line growth in the near term. However, Rosetta Stone's premium priced subscription service faces significant competition from the likes of Fluenz, Living Language, Babbel, Mango and Duolingo, which offer much cheaper (also free) products. This will continue to hurt Rosetta Stone's top line and profitability, going forward.

Moreover, the frequent acquisitions may weigh on margins going forward. Also, the seasonal nature of the industry in which the firm operates remains a concern.

Currently, Rosetta Stone has a Zack Rank # 5 (Strong Sell). Some better-ranked stocks in the industry include Aspen Tech Inc. ( ASPN ) with a Zacks Rank # 1 (Strong Buy), and Advent Software ( ADVS ) and Aci Worldwide ( ACI ), both with a Zacks Rank #2 (Buy).

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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