Robert W. Baird

2013 Growth Stock Conference Chicago, IL

May 9, 2013

Certain information contained in this presentation and certain comments today constitute forward-looking statements for

purposes of the safe harbor provisions of The Private Securities Litigation Reform Act of 1995. 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 our language learning solutions; the advantages of our

products, services, technology, brand and business model as compared to others; our strategic focus; 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; the appeal and efficacy of our products and services; our

expectations regarding capturing lifetime value and a broader range of market segments through such offerings; our plans

regarding expansion of our marketing initiatives and sales force; our international operations and growth plans; our plans

regarding our kiosks and retail relationships; our plans regarding our Institutional business; the impact of any revisions to

our pricing strategy; our ability to manage and grow our business and execute our business strategy; our financial

performance; our actions to realign our cost structure and revitalizing our go-to-market strategy; our plans to transition our

distribution to more online in the consumer space; our mergers and acquisitions plans; our plans with respect to

Livemocha; adverse trends in general economic conditions and the other factors including the “Risk Factors” more fully

described in the Company's filings with the U.S. Securities and Exchange Commission (SEC), including the Company’s

annual report on Form 10-K for the year period ended December 31, 2012, which is on file with the SEC. We encourage

you to review those factors before making any investment decision. You should not place undue reliance on forward-

looking statements because they involve factors that are, in some cases, beyond our control and that could materially

affect actual results, levels of activity, performance, or achievements.

Today’s presentation and discussion also contains references to non-GAAP financial measures. The full definition and

reconciliation of those measures is available in our Form 8-K filed with the SEC on May 8, 2013. 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. 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. Our definitions of non-GAAP measures may not be comparable to the definitions used by other

companies, and we encourage you to review and understand all our financial reporting before making any investment

decision.

Safe Harbor

2

Tom Pierno

Chief Financial Officer

Executive Summary – Transforming Rosetta Stone

New Management team currently executing a turnaround

• New CEO, CFO, Heads of Consumer, Institutional, Product, & Brand in last 18 months

Accelerating Shift to the Cloud

• Shifting away from CDs in a box to online and download

• Changing consumer channel mix to online and away from kiosk

• Pushing into recurring subscription services and digital

Investing to deliver innovative new products

• Hired new product head and building team

• Changing organizational culture to improve flexibility, innovation and speed to market

• Acquired state-of-the-art platform capabilities (Livemocha)

Investing in under-resourced Institutional segment

• Investing in sales teams and systems to drive growth

• Tapping International opportunity

Improving Financial Profile

• Focusing on top line growth and margin expansion

• 2015 Goals of $400+MM of Revenue and 10-13% Adjusted EBITDA margins

4

Company Profile

Founded 1992

Language learning solutions

‒ Technology-based

‒ 30+ languages

Based in Arlington, VA

‒ ~1,550 employees1

‒ Global locations

Two main segments:

– Global Consumer

– Global Institutions

1) Full-time and part-time as of 12/31/12

Source: Rosetta Stone 2012 10-k

Worldwide Bookings ($MM)

Growth 7% -2% 4%

5

2010 2011 2012

$279.9

$273.2

$284.4

Business Overview

1) Includes Consumer and Institutional markets, except for Korea and Japan (market sizes Consumer only)

Source: Rosetta Stone; Nielsen study 2007

$80B+ Global Market1 Leading Brand

Multiple Channels

Innovative Technology & Products

Strategic Geographic Footprint

Strong Balance Sheet

U.S.

$6.7B

UK & Germany

$5.6B

Brazil

$9.3B

Japan

$10.3B

Korea

$9.1B

Bookings Mix in 2012

($MM)

Concentrated in

top markets:

International

Consumer

Global Institutions

U.S. Consumer

6

Vision for 2015

LIVE mobile

Community

Global footprint—east and west Worldwide recognition as

educational leader

Vibrant community of engaged learners

interacting online and via mobile

Unparalleled awareness and distribution

through strategic alliances

Adaptive

“Anyone—anywhere, anytime—can learn using Rosetta Stone.”

Brand extension beyond language

7

Strategic Focus Through 2015

Leverage Brand

Expand Distribution

Innovate Platform

Provide solutions that go

deeper into language…and

beyond language. Enable choice, mobility,

community and smart

delivery of content to

meet customer needs.

Leverage alliances to

meet learners where

they are: classroom,

workplace, home, and

on-the-go—all over the

world.

Balance margins and growth investments

8

Increase shareholder value

•Consumer Paid Online Learners increased ~95% to >80k

• Institutional segment selling 95% as online service

•Digital downloads + online learner revenue ~20% of Total Consumer

Continued Transformation to Online & Digital

•Acquired new talent to accelerate new product development

•Opened new offices in Austin & San Francisco to tap talent pools

•Reduced ~70 product positions in Virginia

Re-aligned & Invested in Product Group

•Made decision to shutter remaining 50+ U.S. kiosk locations

•Completed that action in April, 2013

•Re-deploying resources to more profitable N.A. DTC & retail channels

Progress in Shifting Consumer Channel Mix

•Provides flexible, cloud-based platform to develop new products

•Expands global reach with community of ~16MM members

•Provides access to customers at different price points Acquired Livemocha

•Adjusted EBITDA grew 39% yr/yr to $2.4MM

•Adjusted EBITDA margin increased to 3.8% from 2.5% a year ago

Continued Adjusted EBITDA & Margin

Improvement

1Q13 Review

Rosetta Stone Inc. © 2013 9

• Launched Android app and “Navigator” travel app suite

• Plans to develop products and launch a Kids franchise

• Upgrading platform with Livemocha acquisition

Innovating & Investing in Product

• Low double-digit bookings growth

• Weighted towards 2nd Half Growth in Institutional

• DTC and Retail channels up >5% in 1Q13

• Selling more online access and digital downloads

Growth in Core N. American Consumer

• Adopted new go-to-market strategy in Japan

• Implementing new tactics in other International markets

Plans in Place for ROW Consumer

• Focus on companies with products or technologies, where RST can leverage brand, distribution and scale

• Go deeper in language and into adjacencies

Continue to Evaluate M&A Opportunities

2013 Priorities Still in Focus

Rosetta Stone Inc. © 2013 10

1Q13 Financial Review

11

FY Bookings and Revenue

FY Company Bookings1 FY Company Revenue

-8% Yr/Yr -8% Yr/Yr

1. Bookings represent executed sales contracts received by the company that are either recorded immediately as

revenue or as deferred revenue.

$ millions

Rosetta Stone Inc. © 2013 12

$56.0

$58.0

$60.0

$62.0

$64.0

$66.0

1Q12 1Q13

$65.3

$60.4

$60.0

$62.0

$64.0

$66.0

$68.0

$70.0

1Q12 1Q13

$69.4

$63.9

Bookings for Segments

$ millions

North America Consumer

• Total -1% • Core1 >5%

• Total -2% • Core3 >8%

Rest of World Consumer Institutional

• Total -34% • Core2 >-25%

Rosetta Stone Inc. © 2013 13

$-

$10.0

$20.0

$30.0

$40.0

$50.0

1Q12 1Q13 $-

$2.0

$4.0

$6.0

$8.0

$10.0

$12.0

$14.0

1Q12 1Q131. Core is North American Consumer excluding Kiosk bookings

2. Core is ROW Consumer excluding box-product bookings in Germany

3. Core is Institutional excluding network and CD-product bookings

$-

$2.0

$4.0

$6.0

$8.0

$10.0

$12.0

1Q12 1Q13

Adjusted EBITDA Grew & Margin Expanded

$1.7

$2.4 2.5%

3.8%

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

4.0%

$-

$0.5

$1.0

$1.5

$2.0

$2.5

$3.0

1Q12 1Q13

Ad

just

ed

EB

ITD

A M

argi

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Ad

just

ed

EB

ITD

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MM

)

14

Adjusted EBITDA and Free Cash Flow

Adjusted EBITDA1 Free Cash Flow2

$ millions

Rosetta Stone Inc. © 2013 15

1. Adjusted EBITDA is GAAP net income or loss plus interest income and expense, income tax benefit and expense, depreciation, amortization and stock-

based compensation expenses. Adjusted EBITDA excludes any items related to the litigation with Google Inc., restructuring costs and transaction and

other costs associated with mergers and acquisitions.

2. Free cash flow is cash flow from operations less cash used in purchases of property and equipment.

$-

$0.5

$1.0

$1.5

$2.0

$2.5

1Q12 1Q13

$1.7

$2.4

$(10.0)

$(8.0)

$(6.0)

$(4.0)

$(2.0)

$-

$2.0

1Q12 1Q13

$1.7

$(8.2)

39 % Yr/Yr -582 % Yr/Yr

Deferred Revenue and Cash Balance Grew

$ millions

Deferred Revenue Ending Cash

26 % Yr/Yr 18% Yr/Yr

Rosetta Stone Inc. © 2013 16

$-

$10.0

$20.0

$30.0

$40.0

$50.0

$60.0

1Q12 1Q13

$47.7

$59.9

$-

$20.0

$40.0

$60.0

$80.0

$100.0

$120.0

$140.0

1Q12 1Q13

$118.5 $139.4

Product Units and Paid Online Learners

Product Units and ARPU1 Paid Online Learners and ARPU1

Rosetta Stone Inc. © 2013

1. ARPU is defined as average revenue per unit.

Units and Paid Online Learners in 000s

17

109

140 134

203

143 130

146

211

142

$379

$349 $346

$313

$367

$319 $313

$277

$312

1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13

Product Units (000's) Product Unit ARPU

16 17 22 27

41 49

57

68

81

$30 $34

$39 $36

$28 $27 $24 $24 $26

1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13

Paid Ending Online Learners (000's)

Paid Ending Online Learners Monthly ARPU

• Online Learners continue to grow at high double-digit rates

• Online Learner ARPU stable over past year

Consumer Online + Digital Download Growing

94%

80%

5%

12%

0% 8%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

1Q12 1Q13

Box Revenue Paid Online Learner Revenue Digital Download Revenue

Percentages may not add to 100% due to rounding

18

Summary Balance Sheet 12/31/2011 12/31/2012

Cash, cash equivalents and short term investments $148.3 $139.3

Accounts receivables, net $49.9 $38.8

Inventory $6.6 $7.3

Total Assets $275.9 $258.3

Deferred revenue $63.4 $59.9

Debt - -

Total liabilities $131.6 $116.9

Equity $144.3 $141.4

Total liabilities and stockholders’ equity $275.9 $258.3

$ millions

Balance Sheet Remains Strong

Rosetta Stone Inc. © 2013 19

Rosetta Stone Inc. © 2013

Financial Outlook – No Changes to 2013 Guidance

1. Adjusted EBITDA is GAAP net income/(loss) plus interest income and expense, income tax benefit and expense, depreciation, amortization and stock-based

compensation expenses. Adjusted EBITDA excludes any items related to the litigation with Google Inc., restructuring costs and transaction and other costs

associated with mergers and acquisitions.

2. Adjusted net income/(loss) and adjusted net income/(loss) per share exclude the impact of items related to the litigation with Google, Inc., restructuring costs and

transaction and other costs associated with mergers and acquisitions.

3. For adjusted net income/(loss) purposes, we use a 39% effective tax rate which represents the projected, long term effective tax rate. Our adjusted tax rate

assumes full use of loss and credit carryforwards without reduction for valuation allowances.

Revenue (MM) $280 to $290

Adjusted EBITDA (MM) $16 to $18

Adjusted net income/(loss) (MM) ($1) to $1

Adjusted net income/(loss) per share ($0.02) to $0.04

Shares outstanding (MM) ~ 21.5

Capital expenditures (MM) $5 to $8

2013 Guidance

20