Rosetta Stone 2013 Annual Report Download - page 48
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Table of Contents
Product
$156,792
$180,919
$(24,127)
(13.3)%
Subscription and service
107,853
92,322
15,531
16.8 %
Total revenue
264,645
273,241
(8,596)
(3.1)%
Cost of product revenue
32,191
33,684
(1,493)
(4.4)%
Cost of subscription and service revenue
13,523
15,226
(1,703)
(11.2)%
Total cost of revenue
45,714
48,910
(3,196)
(6.5)%
$218,931
$224,331
$(5,400)
(2.4)%
Gross margin percentages
82.7%
82.1%
0.6%
Cost of Product Revenue
Cost of product revenue for the year ended December 31, 2013 was $32.2 million, a decrease of $1.5 million, or 4% from the year ended December 31,
2012. As a percentage of product revenue, cost of product revenue increased to 20% from 19% for the year ended December 31, 2013 compared to the prior
year period. The percent increase in cost as a percentage of revenue was primarily attributable to a decline in product revenue while fixed costs remained the
same. The dollar decrease in cost of product is due to the decrease in product revenue.
We are exploring the possibility of moving more of our business online, which should reduce the cost of product revenue as we produce and ship fewer
CDs. However, in that scenario, we could experience a temporary increase in the cost of our product revenue as we scrap existing packaging and develop and
set up packaging for new products.
Cost of Subscription and Service Revenue
Cost of subscription and service revenue for the year ended December 31, 2013 was $13.5 million, a decrease of $1.7 million, or 11% from the year
ended December 31, 2012. As a percentage of subscription and service revenue, cost of subscription and service revenue decreased to 13% from 17% for the
year ended December 31, 2013 compared to the prior year period. Beginning in the fourth quarter of 2012, we capped the number of studio sessions compared
to our former unlimited policy, decreasing our coaching costs for the year-ended December 31, 2013.
Sales and marketing
$146,104
$150,882
$(4,778)
(3.2)%
Research and development
33,995
23,453
10,542
44.9 %
General and administrative
56,432
55,262
1,170
2.1 %
Lease abandonment
842
—
842
n/a
Total operating expenses
$237,373
$229,597
$7,776
3.4 %
45