Rosetta Stone 2012 Annual Report Download - page 43

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Table of Contents
The following table sets forth these unit and online learner metrics for the years ended December 31, 2012, 2011 and 2010:

Product software revenue includes sales of our Rosetta Stone Version 4  product. We anticipate the mix of product units will shift from
our traditional CD-ROM product to digital downloads in future periods. There is no difference in price between the two options.
Revenue from product software decreased $1.9 million from the year ended December 31, 2011 to the year ended December 31, 2012, driven by a
8% decrease in the average revenue per unit, partially offset by a 8% increase in the number of units sold, compared to the prior year period. Revenue
from product software increased $2.0 million from the year ended December 31, 2010 to the year ended December 31, 2011, driven by an 11% increase
in the number of units sold offset by a 9% decrease in the average revenue per unit, compared to the prior year period. Average revenue per product
software unit has decreased as we have experimented with different price points and promotional offerings since the introduction of Version 4 
in 2010 including distribution partnerships within the daily deals market. The increase in product software units is due to our expansion into
international markets and decreasing price points.

Revenue from paid online learners increased $6.9 million from the year ended December 31, 2011 to the year ended December 31, 2012, driven by
a 157% increase in the number of paid online learners as of December 31, 2012, compared to the prior period. This increase was partially offset by a
decrease in the average revenue per online learner due to continued testing of online products at different price points. Revenue from paid online learners
increased $1.8 million from the year ended December 31, 2010 to the year ended December 31, 2011, driven by a 58% increase in the number of paid
online learners as of December 31, 2011, compared to the prior period.


We derive revenue from sales of language learning solutions consisting of product software, audio practice products, professional services, 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 product software products and sold as a solution.
Our professional services include training, implementation services and dedicated conversational coaching associated with Rosetta Stone .
Rosetta Stone  online, combines dedicated conversational coaching and an online software subscription. Rosetta Stone Version 4 ,
which
40

  

Product software revenue $ 198,075 $ 199,963 $ 197,996
Paid online learner revenues 14,999 8,063 6,267
Total consumer revenues $ 213,074 $ 208,026 $ 204,263
Product software units 629,779 585,774 526,455
Total paid online learners 68,393 26,567 16,762
Average revenue per product software unit $ 315 $ 341 $ 376
Average revenue per online learner $ 26 $ 35 $ 35