The first-quarter net loss slimmed to $27.4m, from $30.4m a year ago.
The firm said revenue slipped to $58.3m from $60.9m over the same period.
The company reiterated its forecast for annual sales growth in the mid-to-high teens on a percentage basis for fiscal 2008, and said it "expects a nominal loss for the year."
"We entered 2008 expecting the first half to be weak ahead of new product launches. First quarter results were slightly better than our expectations due primarily to the continued strength of our Educational Gaming business, led by our Leapster product," said Jeff Katz, president and CEO.
"More importantly our 2008 product launches are on track. We begin shipments of our Tag reading system (pictured) in less than two weeks and our new educational gaming systems, Leapster 2 and Didj, will ship this summer. We expect that these new products will contribute to significant sales growth and margin improvement in the back half of the year."
Net sales from the US totalled $40.6m for the first quarter 2008, compared with $43.4m for the first quarter 2007. International sales were $12.7m for the first quarter 2008, compared with $12.5m for the first quarter 2007.
Following the release of the results shares closed up 47 cents, or 5.5 percent, at $8.98 on the New York Stock Exchange.
Bill Chiasson, chief financial officer, stated, "Overall, we met our expectations for the quarter. Sales slightly exceeded our plan and operating expenses were down approximately nine per cent, consistent with our expectations. Gross profit dollars met our expectations but gross margins were down from last year, due to strong reorders of our Leapster product, which caused hardware sales to outpace software sales. Our overall guidance for the full year 2008 is unchanged."