Digital River Announces Third Quarter Financial Results
MINNEAPOLIS, Oct. 28, 2008 — Digital River, Inc. (NASDAQ: DRIV), a leading provider of global e-commerce solutions, reports its third quarter financial results.
Third Quarter and Nine Months Ended Sept. 30, 2008
GAAP Results
Third quarter revenue totaled $96.3 million, an increase of 16.7 percent from $82.5 million during the same period in 2007.
For the nine months ended Sept. 30, 2008, Digital River reported revenue of $298.3 million. This represents an 18.2 percent increase from revenue of $252.4 million in the similar period of the prior year.
Third quarter GAAP net income was $15.6 million, or $0.39 per diluted share, and compared to GAAP net income of $15.3 million, or $0.35 per diluted share, in the third quarter of 2007.
For the nine months ended Sept. 30, 2008, GAAP net income was $47.1 million, or $1.15 per diluted share. This compared to GAAP net income of $50.5 million, or $1.12 per diluted share, in the similar period of 2007.
Non-GAAP Results
Third quarter non-GAAP net income was $19.2 million, or $0.46 per diluted share. This compared to non-GAAP net income of $19.9 million, or $0.44 per diluted share, in the third quarter of 2007.
Non-GAAP net income for the first nine months of 2008 was $58.5 million, or $1.39 per diluted share. This compared to non-GAAP net income of $65.5 million, or $1.42 per diluted share, in the similar period of 2007.
Non-GAAP net income is computed by starting with GAAP pre-tax income as reported on the Company’s statement of income, 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 27 percent to arrive at non-GAAP net income through the third quarter of 2008. This amount is then divided by fully-diluted GAAP shares outstanding, which includes shares underlying the Company’s convertible senior 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.
"Our third quarter results were tempered by a combination of factors, including the sharp strengthening of the dollar and a sudden decline in consumer spending beginning in mid-September. However, given the rapid developments in the macro economy, we were pleased with our ability to manage expenses, while executing against our business plan," said Joel Ronning, Digital River’s CEO. "During the quarter, we continued to make solid progress expanding in our primary markets, including software, consumer electronics and games. With a solid balance sheet, strong cash flow and a track record of profitability, we remain confident in our long-term growth prospects."
2008 Guidance
Forward-looking guidance for the quarter ending Dec. 31, 2008, is as follows:
Fourth Quarter
- Revenue of approximately $94 - $97 million;
- GAAP diluted net income per share of $0.34 - $0.39, assuming a 27.5 percent tax rate; and
- Non-GAAP diluted net income per share of $0.43 - $0.48, assuming a 27 percent tax rate.
Full Year
Forward-looking guidance for the period ending Dec. 31, 2008, is as follows:
- Revenue of approximately $392 - $395 million;
- GAAP diluted net income per share of $1.49 - $1.53, assuming a 26.3 percent tax rate; and
- Non-GAAP diluted net income per share of $1.82 - $1.86, assuming a 27 percent tax rate.
Digital River will hold a conference call today at 4:45 p.m. EDT to discuss third quarter financial results. A live webcast of the conference call can be accessed from http://www.digitalriver.com/2008/q3earnings/. Alternatively, a live broadcast of the call may be heard by using conference ID # 68370474 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.
Financial tables can be viewed here.
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 management, 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; the variability of foreign exchange rates; our ability to successfully manage our business while undertaking significant internal investments; our ability to achieve favorable tax rates in our international operations; 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 fourth quarter and full year 2008 reflect Digital River’s expectations as of Oct. 28, 2008. Results may be materially affected by many factors, such as changes in global conditions in the financial services markets 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.
###
|