Exhibit 99.1

Rosetta Stone Inc. Reports Fourth Quarter 2009 Results

·                  Total Revenue of $78.3 million, Up 18% from Fourth Quarter 2008

·                  GAAP Net Income of $0.58 Per Share, Up 100% from Fourth Quarter of 2008

·                  International Revenue Growth of More Than 160% Over Fourth Quarter of 2008, and 76% Over Third Quarter of 2009

·                  Full Year Adjusted EBITDA of $48.7 million, Up 34% from 2008

·                  Rosetta Stone’s Next Generation Language-Learning Solution Expected to Be Launched in Third Quarter of 2010

ARLINGTON, Va.—(BUSINESS WIRE)— Rosetta Stone Inc. (NYSE:RST), a leading provider of technology-based language learning solutions, today reported record revenues and earnings for its fourth quarter and year ended December 31, 2009, and announced plans to release the next generation of its award-winning language-learning solution in the third quarter of 2010. The company also provided financial guidance for the first quarter and full-year 2010.

Total revenue for the fourth quarter of 2009 was $78.3 million, an increase of 18%, compared to $66.3 million in the prior-year period. Adjusted EBITDA for the fourth quarter was $21.4 million, an increase of 84% over the $11.6 million reported in the prior-year period. Non-GAAP net income was $12.8 million, or $0.61 per share, an increase of 85% over the $0.33 per share reported in the fourth quarter of 2008. GAAP net income for the fourth quarter was $12.2 million, or $0.58 per share, an increase of 100% over the $0.29 per share reported in the fourth quarter of 2008.

Total revenue for the year was $252.3 million, an increase of 20% over the $209.4 million reported in the prior-year period. Adjusted EBITDA for the year was $48.7 million, an increase of 34% over the $36.4 million reported in the prior-year period. Non-GAAP net income was $27.5 million, or $1.38 per share, an increase of 39% over the $0.99 per share reported in 2008. GAAP net income for the year was $13.4 million, or $0.67 per share, as compared to $13.9 million, or $0.82 per share reported in 2008. For the full-year 2009, free cash flow was a record $32.7 million, up from the $11.3 million generated in 2008.

A reconciliation of GAAP to non-GAAP results, as well as an explanation of these measures, is provided below.

“Strong demand from both consumers and institutions for our industry-leading language-learning solution drove record revenues and earnings in Rosetta Stone’s fourth quarter,” said Tom Adams, president and chief executive officer. “Rosetta Stone’s consumer business delivered solid results on the back of record demand, including unit volume that was 13% above the fourth quarter of last year. Our international businesses saw accelerated growth of more than 160% from the same period last year and represented 11% of total revenue for the quarter. The rapid adoption of our innovative products internationally positions Rosetta Stone well to become the world’s leading language-learning platform.”

Fourth Quarter 2009 Operational and Financial Highlights

·                  Revenue Mix — Product revenue for the fourth quarter was $68.9 million, or 88% of total revenues, while subscription and service revenue was $9.4 million, representing the remaining 12% of total revenues. Consumer revenue grew 16% over the fourth quarter of 2008 to $65.1 million and represented 83% of total revenues. Institutional revenue grew 29% over the fourth quarter of 2008 to $13.2 million over the same period, representing the remaining 17% of total revenues.

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·                  International Growth — International accounted for 11% of the company’s total revenue in the fourth quarter, up from 5% in the same period last year. Rosetta Stone’s international revenue grew to $8.5 million, or 76% over the third quarter of 2009 and more than 160% over the fourth quarter of 2008.

·                  Average Sales Price Per Unit and Unit Volume — Total unit volume increased 13% on a year-over-year basis. Average sales price per unit increased 3% on a year-over-year basis, from $331 to $342, however, the average price sales per unit through our direct channels grew 7% primarily due to greater sales of bundled products.

·                  GAAP and non-GAAP Operating Income — GAAP operating income for the fourth quarter was $18.8 million. Non-GAAP operating income, which excludes stock-based compensation expense and amortization of intangibles, was $19.8 million for the fourth quarter of 2009, or 25% of revenues.

·                  Adjusted EBITDA — Adjusted EBITDA, which excludes the impact of stock-based compensation expense, was $21.4 million, or 27% of revenues, for the fourth quarter of 2009.

·                  Deferred Revenue — Deferred revenue was $26.1 million, a decrease of $1.1 million from the end of the third quarter of 2009.

·                  Cash and Cash Equivalents — At December 31, 2009, cash and cash equivalents were $95.2 million, an increase of $24.0 million from September 30, 2009.

Launch of Next Generation Language Learning Solution Scheduled for Third Quarter

Rosetta Stone today also announced that Rosetta Stone® Version 4 TOTALe™, the next generation of its award-winning and critically acclaimed language-learning solution, has been scheduled for release in the third quarter of 2010. Features of Rosetta Stone Version 4 TOTALe will include:

·                  The combination of Rosetta Stone’s industry-leading language-learning course with live online conversational coaching sessions facilitated by native speakers offered though Rosetta Studio™, along with access to Rosetta World™, the company’s online language-learning community.

·                  The product will be offered as a single solution and delivered throughout Rosetta Stone’s U.S. retail distribution network. Rosetta Stone customers who have purchased Version 3 software products will have the opportunity to purchase an upgrade to Rosetta Stone Version 4 TOTALe upon its release.

Rosetta Stone Version 4 TOTALe is expected to be priced at a slight premium to Rosetta Stone’s current Version 3 software products, making them affordable for the consumer while offering better long-term economics for the company.

In conjunction with the overall Rosetta Stone Version 4 TOTALe launch, the company is also planning to release an introductory offering at a sub-$200 price point. This introductory solution will enable a new segment of learners to experience Rosetta Stone.

In addition to launching Rosetta Stone Version 4 TOTALe in the second half of 2010, Rosetta Stone is developing an iPhone/mobile application, the project name for which is “Rosetta Stone Mini,” designed to appeal to an emerging part of the market, including providing travelers with a sub-two-hour learning experience in a new language.

“With versions of TOTALe online since August 2009, and having received stellar reviews from customers and major media outlets and tested by a third-party for its efficacy, we are preparing to launch in the third quarter Rosetta Stone Version 4 TOTALe, a single-solution offering that adds live conversational practice and social learning activities to our core language-learning course,” said Adams. “From a technological perspective, Rosetta Stone Version 4 TOTALe will integrate locally-installed versions of our products with

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online socialization features, enabling learners to receive the best of both offline and online worlds. We are excited to launch a platform that will provide even more predictable, controllable user outcomes, and create long-term relationships with language learners. We also look forward to addressing an even broader audience with our planned Rosetta Stone Version 4 TOTALe introductory offering and our ‘Rosetta Stone Mini’ application for the iPhone and related mobile devices.”

Financial Outlook for the First Quarter and Full-Year 2010

Rosetta Stone today provided financial guidance for the first quarter and full-year 2010.

First Quarter 2010:

·                  Total revenue of $58 million to $60 million, with total sales bookings of approximately the same amount

·                  Non-GAAP diluted net income per share of $0.07 to $0.09, and GAAP diluted net income per share of $0.04 to $0.06

·                  Operating EBITDA (Adjusted EBITDA plus the change in deferred revenue) of $3.1 million to $3.6 million

·                  Diluted weighted-average shares outstanding of approximately 21.2 million

Rosetta Stone’s guidance regarding first quarter 2010 GAAP net income reflects the expectation that it will incur approximately $3.5 million in litigation expenses related to its previously disclosed lawsuit seeking to prevent Google Inc. from infringing upon Rosetta Stone’s trademarks, including a trial which is expected to be held in the second quarter.

Full-Year 2010:

·                  Total revenue of $286 million to $299 million, with total sales bookings of between $310 million and $325 million

·                  Non-GAAP diluted net income per share of $0.90 to $1.00, and GAAP diluted net income per share of $0.78 to $0.88

·                  Operating EBITDA of $58 million to $65 million

·                  Diluted weighted-average shares outstanding of approximately 21.5 million

Rosetta Stone’s expectations regarding 2010 GAAP net income reflect the following anticipated expenses:

·                  Expenses associated with the launch of the Rosetta Stone Version 4 TOTALe product offering of approximately $7.5 million during the second and third quarters of 2010. These expenses represent the non-recurring marketing expenses related to market launch activities, as well as the write-off of obsolete inventory as the company replaces its Version 3 packaging with Rosetta Stone Version 4 TOTALe packaging.

·                  Litigation expenses of approximately $6.0 million related to the company’s previously disclosed lawsuit seeking to prevent Google Inc. from infringing upon Rosetta Stone’s trademarks.

Non-GAAP Financial Measures

This press release contains five non-GAAP financial measures: non-GAAP net income, non-GAAP net income per share, Adjusted EBITDA, Operating EBITDA and non-GAAP operating income. These measures differ from GAAP in that they exclude amortization primarily related to acquired intangibles,

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stock-based compensation expenses, IPO-related compensation expenses, and fees associated with the company’s canceled secondary stock offering in August 2009. Adjusted EBITDA is GAAP net income or loss plus interest expense, income tax expense, depreciation, amortization and stock-based compensation expenses, IPO-related compensation expenses and fees associated with the company’s canceled secondary stock offering in August 2009. Operating EBITDA is Adjusted EBITDA plus the change in deferred revenue. An additional non-GAAP financial measure in this press release is total sales bookings, which represents executed sales contracts received by the company that are either recorded immediately as revenue or as deferred revenue. In addition, constant currency represents revenues with the cost/benefit of currency movements removed. Management uses the measure so that business results can be viewed without the impact of fluctuations in foreign currency exchange rates, thereby facilitating period-to-period comparisons of Rosetta Stone’s international business performance. Management believes that these non-GAAP measures of financial results provide useful information to investors regarding certain financial and business trends relating to the company’s financial condition and results of operations. Management uses these non-GAAP measures to compare the company’s performance to that of prior periods for trend analyses, for purposes of determining executive incentive compensation, and for budgeting and planning purposes. These measures are used in monthly financial reports prepared for management and in quarterly financial reports presented to the company’s Board of Directors. Management believes that the use of these non-GAAP financial measures provides an additional tool for investors to use in evaluating ongoing operating results and trends and in comparing the company’s financial measures with other software companies, many of which present similar non-GAAP financial measures to investors.

Management typically excludes the amounts described above when evaluating the company’s operating performance and believes that the resulting non-GAAP measures are useful to investors and financial analysts in assessing the company’s operating performance due to the following factors:

·                  Amortization of Acquired Intangibles. Amortization costs and the related tax effects are fixed at the time of an acquisition, and then amortized over a period of several years after the acquisition and generally cannot be changed or influenced by management after the acquisition.

·                  Stock-based Compensation. Although stock-based compensation is an important aspect of compensation of the company’s employees and executives, stock-based compensation expense is generally fixed at the time of grant, then amortized over a period of several years after the grant of the stock-based instrument, and generally cannot be changed or influenced by management after the grant.

·                  IPO-related Compensation. Although the IPO-related compensation was an important aspect of compensation for the company’s key employees that played a material role in the growth and success of the company, it was an award that was triggered by the company’s initial public offering in April 2009.

·                  Fees Associated with Canceled Secondary Stock Offering. As part of a canceled secondary stock offering in August 2009 the company incurred certain legal, accounting, and printing expenses that are one-time in nature and not reflective of the company’s underlying performance.

·                  Total Sales Bookings. Although revenues are an important aspect of measuring company performance, the company believes total sales bookings will better reflect the company’s performance as the company transitions to a greater amount of subscription sales resulting in the recording of increased deferred revenue to be recognized in periods after the initial sales are completed.

·                  Deferred Revenue. At the time a customer enters into a binding subscription agreement, the company classifies the amounts received, as well as the amounts on billed and uncollected amounts due from customers, in advance of revenue recognition as deferred revenue. As the company transitions to a greater amount of subscription sales the company believes its GAAP earnings will no longer be reflective of the company’s underlying performance and as such believes adding the changes in deferred revenue to its Adjusted EBITDA will better reflect the company’s operating performance.

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Management does not consider these non-GAAP measures in isolation or as an alternative to financial measures determined in accordance with GAAP. The principal limitation of these non-GAAP financial measures is that they exclude significant expenses and income that are required by GAAP to be recorded in the company’s financial statements. In addition, they are subject to inherent limitations, because they reflect the exercise of judgments by management about which expenses and items of income are excluded from these non-GAAP financial measures and may not be calculated in the same manner as other companies’ similarly titled non-GAAP measures.

In order to compensate for these limitations, management presents its non-GAAP financial measures in connection with its GAAP results. Rosetta Stone urges investors to review the reconciliation of its non-GAAP financial measures to the comparable GAAP financial measures, which it includes in press releases announcing earnings information, including this press release, and not to rely on any single financial measure to evaluate the company’s business.

Reconciliation tables of the most comparable GAAP financial measures to the non-GAAP measures used in this press release are included at the end of this release.

Webcast and Conference Call

This news release and the accompanying tables should be read in conjunction with the additional content that is available on the company’s website, which includes supplemental financial information as well as a webcast of a conference call that the company will host to discuss the fourth quarter 2009 financial results and its outlook for fiscal year 2010. The conference call is scheduled for February 25, 2010 at 4:30 p.m. eastern time (ET).

To access this call, dial 888-203-1112 (domestic) or 719-457-0820 (international). Additionally, a live webcast of the conference call will be available at http://investors.RosettaStone.com. Please access the web site at least 15 minutes prior to the start of the call to register and download and install any necessary software.

Following the conference call, a replay will be available until March 11, 2010 at 888-203-1112 (domestic) or 719-457-0820 (international). The replay pass code is 4809607. The webcast of this conference call will be archived. Individuals can access the webcast, as well as the press release and supplemental financial information, at http://investors.RosettaStone.com.

About Rosetta Stone

Rosetta Stone Inc. is changing the way the world learns languages. Rosetta Stone provides interactive solutions that are acclaimed for the speed and power to unlock the natural language-learning ability in everyone. Available in more than 30 languages, Rosetta Stone language-learning solutions are used by schools, organizations and millions of individuals in over 150 countries throughout the world. The company was founded in 1992 on the core beliefs that learning a language should be natural and instinctive and that interactive technology can replicate and activate the immersion method powerfully for learners of any age. The company is based in Arlington, Va. For more information, visit RosettaStone.com.

“Rosetta Stone”, “TOTALe”, “Rosetta World” and “Rosetta Studio” are trademarks of Rosetta Stone Ltd.

Cautionary Statement Regarding Forward-Looking Statements

Certain statements in this press release are forward-looking statements, including our guidance for the first quarter of 2010 and the full year 2010, our long-term growth prospects, the expected release dates of Rosetta Stone Version 4 TOTALe and “Rosetta Stone Mini”, the costs of our launch of Rosetta Stone Version 4 TOTALe and our litigation with Google. In this context, forward-looking statements often

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address our expected future business and financial performance, and often contain words such as “project,” “believe,” “plan,” “expect,” “anticipate,” “estimate,” “intend,” “should,” “would,” “could,” “potentially,” “seek,” “may,” or “will.” These forward-looking statements reflect the company’s current views with respect to future events and are subject to certain risks, uncertainties, and assumptions. A number of important factors could cause actual results or events to differ materially from those indicated by such forward-looking statements, including: demand for language learning software; the advantages of our products, technology, brand and business model as compared to others; our ability to maintain effective internal controls or to remediate material weaknesses; our cash needs and expectations regarding cash flow from operations; our product development plans, including our plans to introduce Rosetta Stone Version 4 TOTALe and the “Rosetta Stone Mini”; our plans regarding expansion of our marketing initiatives and sales force; our international expansion plans; our plans to increase our kiosks and retail relationships; our ability to manage and grow our business and execute our business strategy; our financial performance; the general economic downturn and related impact on consumer spending in particular; the costs associated with our lawsuit against Google, seeking to prevent Google from infringing upon our trademarks; and the costs associated with being a public company and the other factors described more fully in the company’s filings with the Securities and Exchange Commission, including the company’s quarterly report on Form 10-Q for the quarterly period ended September 30, 2009, filed with the U.S. Securities and Exchange Commission on November 13, 2009. The company assumes no obligation to update the information in this communication, except as otherwise required by law. Readers are cautioned not to place undue reliance on these forward-looking statements that speak only as of the date hereof.

ROSETTA STONE INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share amounts)

(unaudited)

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ROSETTA STONE INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except per share amounts)

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ROSETTA STONE INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share amounts)

(unaudited)

ROSETTA STONE INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share amounts)

(unaudited)

ROSETTA STONE INC.

Reconciliation of Net Income to Adjusted EBITDA

(in thousands)

(unaudited)

Contacts

Rosetta Stone Inc.
Investor Contact:
Christopher Martin, 703-387-5927
cmartin@rosettastone.com
or
Media Contact:
Reilly Brennan, 703-387-5863
rbrennan@rosettastone.com

Source: Rosetta Stone Inc.