Leapfrog doubles Q3 profit

Strong Leapster Explorer sales and new product introductions boost sales and profit.
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Leapfrog has announced its financial results for the third quarter ended September 30th, 2010.

Net sales for the quarter were $138 million, up 23 per cent from $111.9 million for the same quarter a year ago.

The firm says that strong Leapster Explorer sales, continued strength in learning toys aided by the introduction of new products, including My Own Leaptop, and broader retail distribution, drove the sales growth.

Net sales from the US segment for the quarter were $110.8 million, up 23 per cent, compared to $89.9 million a year ago.

Net sales from the international segment were $27.2 million for the quarter, up 23 per cent compared to $22.1 million a year ago, and were unaffected by changes in foreign currency exchange rates.

Income from operations for the quarter was $16.2 million, an improvement of $7.2 million, or 79 per cent, compared to $9.1 million a year ago.

Bill Chiasson, chief executive officer, commented: "We have good momentum as we head into the critical holiday season. Globally, our point-of-sale results are strong, aided by the recent introduction of the highly innovative Leapster Explorer Mobile Learning System, as well as the continued growth of the Tag Reading System.

"Additionally, we continue to grow our Learning Path ecosystem, which now has about four million connected customers, to create unique and personalized communications. This is up from approximately three million connected consumers as we entered the year.

"As a result, we are poised to deliver strong sales growth for the year, as well as improved profitability."

The results for the third quarter have led the firm to reaffirm its full year 2010 guidance. Leapfrog expects net sales to increase 15 to 20 per cent compared to 2009; gross margin to be between 41 and 43 per cent; and net income per share to be between 20 and 30 cents compared to a net loss per share of four cents in 2009.

"Our third quarter sales growth reflects the breadth of our product portfolio and continued momentum of the Leapster Explorer platform," said Mark Etnyre, chief financial officer.

"The sales growth, combined with our ongoing cost discipline, contributed to the significant earnings per share improvement."

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