Rosetta Stone Inc. reported unaudited consolidated earnings results for the third quarter and nine months ended September 30, 2017. For the quarter, the company reported total revenue of $46,206,000 against $48,693,000 a year ago. The revenue growth rate includes the benefit of purchase accounting impacts on acquired deferred revenue. Loss from operations was $2,312,000 against $4,183,000 a year ago. Profit before income taxes was $2,352,000 against loss of $3,659,000 a year ago. Net loss was $3,231,000 against $5,452,000 a year ago. Net loss per share basic and diluted was $0.14 against $0.25 per share a year ago. Net cash provided by operating activities was $17,305,000 against $6,479,000 a year ago. Purchases of property and equipment were $3,510,000 against $3,694,000 a year ago. Adjusted EBITDA was $2,699,000 against $2,415,000 a year ago. Free cash flow, a non-GAAP financial measure was $13,795,000 against $2,785,000 a year ago. The year-over-year improvement in free cash flow reflects the company's lower net loss, plus favorable changes in working capital and a 5% reduction in capital expenditures. The company's capital expenditures primarily relate to capitalized labor on product and IT projects. The company reported that revenues decreased 5% as growth in Lexia was offset by declines at language businesses driven by the continuing effect of the restructuring and repositioning. Sales overall increased in the quarter, while loss per share was cut roughly in half driven by a $4.4 million decrease in operating expenses, 11th consecutive quarterly decrease.

For the nine months, the company reported total revenue of $139,804,000 against $142,411,000 a year ago. Loss from operations was $2,032,000 against $23,156,000 a year ago. Loss before income taxes was $1,551,000 against $20,687,000 a year ago. Net loss was $3,912,000 against $21,937,000 a year ago. Net loss per share basic and diluted was $0.18 against $1.00 per share a year ago. Net cash provided by operating activities was $12,677,000 against net cash used in operating activities of $5,946,000 a year ago. Purchases of property and equipment were $8,903,000 against $9,628,000 a year ago. Adjusted EBITDA was $11,756,000 against $907,000 a year ago. Free cash flow was $3,774,000 against $15,574,000 a year ago.

For the year 2017, the company expects total revenues to be in the range of between $184 million and $187 million, which is up from between $182 million and $185 million previously. The company's expected GAAP net loss to between $10 million and $12 million, which is an improvement from between $13 million and $15 million previously, and The company expects adjusted EBITDA to be approximately $35 million and free cash flow to improve to around $30 million by 2020, representing margins of 15% and 13%, respectively.