Rosetta Stone 2011 Annual Report Download - page 47

Table of Contents
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 and website;
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.
On February 22, 2012, our board of directors promoted chief financial officer Stephen M. Swad, to president and chief executive officer ("CEO"). As our
CEO assumes his new role, he is conducting an assessment of the company's critical areas over the coming months. The primary areas of focus will be:
further stabilizing the U.S. Consumer market;
regaining positive momentum in Asia;
taking steps to improve margins across all of our businesses, both in the U.S. and internationally; and
examining and evaluating ways to grow our institutional business.
While it will take some time to carry out this assessment, there are some opportunities for short-term actions to improve performance that we will be
looking to effect, such as eliminating marketing investments that have low expected yields and better leveraging our worldwide G&A infrastructure. As this
process evolves, it is possible that we may record one-time expenses associated with transition to our new strategy.
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
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