Rosetta Stone 2010 Annual Report Download - page 45
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Table of Contents
our success in expanding our brand;
the evolution of our product and service offerings; and
our ability to expand our presence and reach geographically.
We believe the primary factors that affect our financial performance include the following:
customer acceptance of our product and service offerings;
continued product and service innovation;
average revenue per customer;
direct marketing variables, including:
print, television and radio media discounts and rates;
the relevance of our advertising;
online pay-per-click and other online advertising rates;
internal and external call center conversion rates; and
website traffic and conversion rates;
customer brand loyalty;
the number and quality of our kiosk locations;
our presence in international markets; and
cross-channel management of consumer and institutional markets.
We believe that our multi-channel marketing and distribution models are fundamental to our success. Specifically, we focus on educating customers
about the many benefits of our products and services by leveraging our advertising and kiosk network in order to drive website and call center traffic.
Components of Our Statement of Operations
Revenue
We derive revenue from sales of language learning solutions consisting of packaged software and audio practice products and online software
subscriptions. Revenue is presented as product revenue or subscription and service revenue in our consolidated financial statements. Our audio practice
products are normally combined with our packaged software products and sold as a solution.
Revenue is primarily derived from the sale of packaged software and audio practice products, online software subscriptions and professional services.
Our professional services include training, implementation services and dedicated conversational coaching associated with Rosetta Stone TOTALe. Rosetta
Stone TOTALe online, which was released in July 2009, combines dedicated conversational coaching and an online software subscription. Rosetta Stone
Version 4 TOTALe, which was released in September 2010, combines packaged software and dedicated conversational coaching. The content of our packaged
software and subscription offerings are the same. We simply offer our customers the ability to choose which format they prefer without differentiating the
learning experience. We began bundling time-based subscription licenses of our web-based TOTALe services with perpetual licenses of our Rosetta Stone
Version 3 language learning solutions in the U.S. consumer market as part of our Rosetta Stone Version 4 TOTALe launch. As a result, we defer
approximately 15%-20% of each of these bundled sales over the term of the subscription license.
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