Digital River Reports First Quarter Results
Exceeds quarterly revenue and earnings expectations
MINNEAPOLIS, April 26, 2007 — Digital River, Inc. (NASDAQ: DRIV), a leading provider of global e-commerce solutions, today reported its first quarter results.
Q1 2007 Revenue
First quarter revenue totaled $91.6 million. This is an increase of 17 percent from revenue of $78.0 million in the first quarter of 2006.
Q1 2007 GAAP Results
First quarter GAAP net income was $20.7 million, or $0.46 per diluted share, including $3.5 million of stock-based compensation expense. This compared to net income of $16.4 million, or $0.41 per diluted share, including $3.4 million of stock-based compensation expense in the first quarter of 2006. These results represent a year-over-year increase of 26 percent in GAAP net income and 12 percent in GAAP diluted net income per share.
Q1 2007 Non-GAAP Results
Based on the Company’s non-GAAP measurements, first quarter non-GAAP net income was $25.0 million, or $0.54 per diluted share, compared to net income, on a similar basis, of $20.7 million, or $0.50 per diluted share in the first quarter of 2006. This represents a year-over-year increase of 21 percent in non-GAAP net income and 8 percent in non-GAAP diluted net income per share.
Non-GAAP net income is computed by starting with GAAP pre-tax income as reported on the Company’s statement of operations, adding back amortization of acquisition-related intangibles and stock-based compensation expense, to calculate non-GAAP pre-tax income. This figure is then taxed at 31 percent, the Company’s current estimated effective tax rate, 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 announcement.
“Our focus on operational execution and commitment to increasing our value proposition for clients and prospects continues to pay off,” said Joel Ronning, Digital River’s CEO. “In the first quarter, we delivered another strong financial performance, beating both our revenue and earnings expectations. Our strategic marketing services, ability to execute in global markets, and incremental gains from new and existing client accounts all helped drive our solid first quarter results.”
Q2 2007 Guidance
Forward-looking guidance for the second quarter ending June 30, 2007, is as follows:
- Revenue of $85 million;
- GAAP diluted net income per share of $0.39, including stock-based compensation expense of $3.6 million; and
- Non-GAAP diluted net income per share of $0.46.
Full Year 2007 Guidance
Forward-looking guidance for the full year ending December 31, 2007, remains unchanged and is as follows:
- Revenue of $380 million;
- GAAP diluted net income per share of $1.86, including stock-based compensation expense of $14.1 million; and
- Non-GAAP diluted net income per share of $2.14.
Financial Tables
Digital River will hold a first quarter conference call today at 4:45 p.m. Eastern Daylight Time. A live webcast of the conference call can be accessed from http://www.digitalriver.com/2007q1earnings/. Alternatively, a live broadcast of the call may be heard by using conference ID # 4174394 and dialing 866-293-8972 inside the United States or Canada, or by calling 913- 312-1232 from international locations. A webcast replay of the call will be archived on the Company’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 more than 40,000 software publishers, manufacturers, distributors and online retailers. 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; Taipei, Taiwan; and Tokyo, Japan. 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 the expansion of its global business infrastructure, and 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 limited 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, investigation by a committee of our independent directors and informal SEC inquiry into our stock option granting practices; any potential civil litigation relating to our stock option granting practices; 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, 2006. 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 2007 and full year 2007 reflect Digital River’s expectations as of April 26, 2007. 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 and other factors. The guidance assumes, among other things, that there are no changes to stock-based compensation expense and anticipated tax rates, and that no additional intangible assets are recorded. 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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