Rosetta Stone Optimistic in Challenging Times

May 15, 2020: Volume 27, Number 10

Rosetta Stone (Herndon, VA) management is confident in the strength of its business as education models change.

“The team remained focused and delivered a terrific Q1, even while transitioning to an entirely remote work environment, highlighted by year-over-year consolidated bookings growth of 20%, and incredibly meaningful new initiatives to support customers in this time of great uncertainty and pain for many,” chairman and CEO John Hass said. “Programs like unlimited site licenses for all existing K-12 literacy and language customers for the rest of the school year and a free three-month student license through our Consumer Language business to support families whose children were now learning from home are examples of our customer first approach.”

Hass is confident that when the pandemic is under control and life returns to some degree of normalcy, there will be even greater appreciation for the power of adaptive, blended learning, and in particular, Rosetta Stone’s ability to deliver solutions that leverage the power of software to enable personalized, adaptive instruction and provide data to inform educators.

In mid-March, under a program called Learn From Home, Rosetta Stone offered every existing customer a free, unlimited site license to any company curriculum product and to its educator professional development platform, Lexia Academy, until the end of the school year. In the seven weeks that followed, approximately 9,600 schools took advantage of the offer, tripling the number of whole school site licenses supported. Within those schools, approximately 2.8 million student accounts were created, and more than 800,000 students began using these licenses. Company data indicates students who are using Lexia Core5 literacy curriculum from home are showing a 60% increase in progress in terms of activities completed.

“Offering free licenses to customers is relatively easy, supporting them in a way that provides real value to schools and their learners is extraordinarily difficult,” Lexia president Nicholas Gaehde said, adding he believes Rosetta Stone is setting the standard for schools during this crisis and enhancing its reputation in the marketplace as a result.

More than ever, schools are looking for solutions that deliver personalized learning, give teachers the data they need to inform instruction and can support learning in a virtual environment, Gaehde said. As educators address the learning gap that has occurred during this time of transition and school closures, they will need programs and partners that have a proven track record for accelerating learning; research has shown that Lexia solutions can close the literacy gap, he added.

Funding Outlook

Another factor that can support growth this year, according to Gaehde, is the $13 billion that will be distributed to states through Title I formulas under the CARES Act. “In many cases, these funds may be used to replace decreased funding at the state and local levels as tax revenues shrink or are deferred, but we do expect there will be funding available for our solutions, especially as districts look to enhance their remote learning capabilities in response to the pandemic,” Gaehde said.

Clarity around budgets is choppy state-by-state with about one-half the states understanding the CARES Act funding and communicating that down to districts where Lexia is starting to see active conversations, Gaehde said. However, the other half of states have not communicated yet with districts, holding back and being careful not to commit until they have visibility into funding.

“In terms of the state budgets, I think there obviously is concern about not just this year, but future years,” Gaehde said. However, he continued, the $13 billion that is being delivered to districts, and an additional $3 million being delivered to governors, gives districts flexibility to do things that historically were not able to be done and comes with a stipulation that if the money is not spent it will have to be returned.





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