Digital River Exceeds First Quarter Revenue and Earnings Expectations
Raises full year revenue and non-GAAP EPS Guidance
MINNEAPOLIS, May 1, 2008 — Digital River, Inc. (NASDAQ: DRIV), a leading provider of global e-commerce solutions, reports its first quarter financial results.
First Quarter Ended March 31, 2008
GAAP Results
First quarter revenue totaled $103.6 million, an increase of 13 percent from $91.6 million during the same period in 2007. These results exceeded management’s first quarter revenue guidance of $98.5 million.
First quarter GAAP net income was $18.3 million or $0.43 per diluted share, including approximately $3 million of stock-based compensation expense, and compared to GAAP net income of $20.7 million or $0.46 per diluted share, in the first quarter of 2007. These results exceeded management’s guidance of $0.40 per diluted share for the first quarter.
Non-GAAP Results
First quarter non-GAAP net income was $21.6 million or $0.50 per diluted share, which compared to non-GAAP net income of $25.0 million, or $0.54 per diluted share in the first quarter of 2007. These results exceeded management’s guidance of $0.48 per diluted share for the first quarter.
Non-GAAP net income is computed by starting with GAAP pre-tax income as reported on the Company’s statement of operations, then adding back amortization of acquisition-related intangibles and stock-based compensation expense, to calculate non-GAAP pre-tax income. This amount is then taxed at 31 percent to arrive at non-GAAP net income. This amount is then divided by fully-diluted GAAP shares outstanding, which includes the impact of the Company’s contingent convertible notes, to derive non-GAAP diluted net income per share. To provide further clarity, a detailed reconciliation on the comparability of the GAAP and non-GAAP data has been provided in table form following the financial statements accompanying this release.
“We are pleased with the results we delivered in the first quarter, which exceeded our expectations. We made great progress signing new agreements with top clients in both the games and consumer electronics markets,” said Joel Ronning, Digital River’s CEO. “We expect these wins and our investments in our core business and new technologies to accelerate revenue growth in the second half of the year.”
2008 Guidance
Forward-looking guidance for the quarter ending June 30, 2008, is as follows:
Second Quarter
- Revenue of $91 million;
- GAAP diluted net income per share of $0.25, including stock-based compensation expense of $3.5 million; and
- Non-GAAP diluted net income per share of $0.33.
Full Year
Forward-looking guidance for the period ending December 31, 2008, is as follows:
- Revenue of $401 million;
- GAAP diluted net income per share of $1.58, including stock-based compensation expense of $13.7 million; and
- Non-GAAP diluted net income per share of $1.89.
Financial Tables
Digital River will hold a conference call today at 4:45 p.m. EDT to discuss first quarter financial results. A live webcast of the conference call can be accessed from http://www.digitalriver.com/2008/q1earnings/. Alternatively, a live broadcast of the call may be heard by using conference ID #43161389 and dialing (888) 218-6314 inside the United States or Canada, or by calling (706) 634-9714 from international locations. A webcast replay of the call will be archived on Digital River’s corporate Web site.
About Digital River, Inc.
Digital River, Inc., a leading provider of global e-commerce solutions, builds and manages online businesses for software publishers, consumer technology manufacturers, distributors, online retailers and affiliates. Its multi-channel e-commerce solution, which supports both direct and indirect sales, is designed to help companies of all sizes maximize online revenues as well as reduce the costs and risks of running an e-commerce operation. The company’s comprehensive platform offers site development and hosting, order management, fraud prevention, export controls, tax management, physical and digital product fulfillment, multi-lingual customer service, advanced reporting and strategic marketing services.
Founded in 1994, Digital River is headquartered in Minneapolis with offices in major U.S. cities as well as Cologne, Germany; London, England; Shannon, Ireland; Luxembourg, Luxembourg; Stockholm, Sweden; Taipei, Taiwan; Tokyo, Japan; and Shanghai, China. For more details about Digital River, visit the corporate Web site at www.digitalriver.com or call 952-253-1234.
Forward-Looking Statements
This press release contains forward-looking statements, including statements regarding the Company’s anticipated future growth, including future financial performance, as well as statements containing the words “anticipates,” “believes,” “plans,” “will,” or “expects” and similar words. Such forward-looking statements involve known and unknown risks, uncertainties and other factors, which may cause the actual results, performance or achievements of the Company, or industry results, to differ materially from those expressed or implied by such forward-looking statements. Such factors include, among others: the Company’s operating history and variability of operating results; competition in the e-commerce market; challenges associated with international expansion; potential consequences surrounding findings of our internal investigation and informal SEC inquiry into our stock option granting practices; any potential civil litigation relating to our stock option granting practices; our ability to successfully manage our business while undertaking significant internal investments; and other risk factors referenced in the Company’s public filings with the Securities and Exchange Commission, including the Annual Report on Form 10-K for the year ended December 31, 2007. The financial information contained in this release should be read in conjunction with the consolidated financial statements and notes thereto included in Digital River’s most recent reports on Form 10-K and Form 10-Q, each as it may be amended from time-to-time.
The forward-looking statements regarding second quarter and full year 2008 reflect Digital River’s expectations as of May 1, 2008. Results may be materially affected by many factors, such as changes in global economic conditions and consumer spending, fluctuations in foreign currency rates, the rate of growth of online commerce and the Internet, progress with key partners and other factors. The guidance assumes, among other things, that there are no changes to stock-based compensation expense and anticipated tax rates. Readers are cautioned not to place undue reliance on forward-looking statements, which reflect management's analysis only as of the date hereof. The Company undertakes no obligation to update these forward-looking statements to reflect events or circumstances that may arise after the date hereof.
Digital River is a registered trademark of Digital River, Inc. All other trademarks and registered trademarks are trademarks of their respective owners.
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