Revenue during the quarter went down marginally by 2.23 percent to $48.69 million from $49.80 million in the previous year period. Gross margin for the quarter expanded 21 basis points over the previous year period to 82.81 percent. Operating margin for the quarter stood at negative 8.59 percent as compared to a negative 17.20 percent for the previous year period.

Operating loss for the quarter was $4.18 million, compared with an operating loss of $8.56 million in the previous year period.

However, the adjusted EBITDA for the quarter stood at $2.42 million compared to negative $1.62 million in the prior year second quarter. At the same time, adjusted EBITDA margin stood at 4.96 percent for the quarter compared to negative 3.25 percent in the last year period.

"This was a solid quarter of achievement across all facets of Rosetta Stone. Our results reflect the fundamentally strong growth at Lexia and the ongoing investments we are making to support its long-term growth. In addition, ongoing expense reductions have resulted in seven consecutive quarters of favorable year-over-year comparisons and the lowest level of total operating expenses since the first quarter 2009, despite the fact that we now operate three distinct businesses," said John Hass, chairman, president and chief executive officer. "Our focus on product innovation was evident again this past quarter with the September launch of Catalyst, our most comprehensive language solution for businesses. This product has strong potential to expand our impact in the enterprise language learning marketplace and we're already seeing strong interest and buy-in from existing customers and new prospects."

The company has spent $9.59 million cash to meet investing activities during the nine month period as against cash outgo of $9.36 million in the last year period.

The company has spent $0.58 million cash to carry out financing activities during the nine month period as against cash outgo of $0.48 million in the last year period.

Cash and cash equivalents stood at $32.22 million as on Sep. 30, 2016, down 6.24 percent or $2.15 million from $34.37 million on Sep. 30, 2015.

Working capital remains negative
Working capital of Rosetta Stone Inc was negative $63.44 million on Sep. 30, 2016 compared with negative $42.30 million on Sep. 30, 2015. Current ratio was at 0.61 as on Sep. 30, 2016, down from 0.72 on Sep. 30, 2015.

Cash conversion cycle (CCC) has decreased to 20 days for the quarter from 66 days for the last year period. Days sales outstanding went down to 78 days for the quarter compared with 86 days for the same period last year.

Days inventory outstanding has decreased to 44 days for the quarter compared with 82 days for the previous year period. At the same time, days payable outstanding was almost stable at 102 days for the quarter, when compared with the previous year period.