Digital River Announces Fourth Quarter and Full Year 2009 Financial Results

Digital River, Inc. (NASDAQ: DRIV), a leading provider of global e-commerce solutions, reports its fourth quarter and full year financial results.

Fourth Quarter and Full Year Ended Dec. 31, 2009

GAAP Results

Fourth quarter revenue totaled $104.9 million, compared to $95.9 million during the same period in 2008. These results exceeded management’s fourth quarter revenue guidance of $94 - 98 million. For the full year 2009, Digital River reported revenue of $403.8 million, compared to $394.2 million reported in 2008.

Fourth quarter GAAP net income was $13.6 million, or $0.36 per diluted share. This compared to GAAP net income of $16.5 million, or $0.41 per diluted share, in the fourth quarter of 2008. These results exceeded management’s fourth quarter earnings guidance of $0.18 - $0.22 per diluted share. For the full year 2009, GAAP net income was $53.0 million, or $1.41 per diluted share. This compared to GAAP net income of $63.6 million, or $1.55 per diluted share, during the same period in 2008.

Non-GAAP Results

Fourth quarter non-GAAP net income was $15.3 million, or $0.40 per diluted share. This compared to non-GAAP net income of $19.8 million, or $0.48 per diluted share, in the fourth quarter of 2008. These results exceeded management’s fourth quarter earnings guidance of $0.30 - $0.34 per diluted share. For the full year 2009, non-GAAP net income was $67.8 million, or $1.80 per diluted share. This compared to non-GAAP net income of $78.3 million, or $1.86 per diluted share in 2008.

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, stock-based compensation expense and restructuring related charges to calculate non-GAAP pre-tax income. This amount is then taxed at 27 percent to arrive at non-GAAP net income. This amount is then divided by fully-diluted GAAP shares outstanding 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.

"In the fourth quarter, we reported record revenue and our results exceeded expectations. For the first time since the recession hit, we are seeing top-line, year-over-year growth rates in line with 2007 and 2008 organic growth rates,” said Joel Ronning, Digital River’s CEO. "As part of our 2010 operating plan, we expect returns on our recent investments in sales and new products, while we focus on improving our scalability and efficiency.”

First Quarter 2010 Guidance

Management’s expectation for forward-looking guidance for the first quarter, ending March 31, 2010, is as follows:

• Total revenue of $95 - $99 million;
  • Revenue, excluding Symantec, is expected to be approximately $80 - $81 million;
  • Revenue related to Symantec products is expected to be between $15 - $18 million;
• GAAP diluted net income per share of $0.05 - $0.10, assuming a 27 percent tax rate; and
• Non-GAAP diluted net income per share of $0.18 - $0.23, assuming a 27 percent tax rate.

Digital River will hold a conference call today at 4:45 p.m. EST to discuss fourth quarter and full year financial results. A live webcast of Digital River’s earnings conference call can be accessed at http://www.digitalriver.com/2009/investorrelations/. Alternatively, a live broadcast of the call may be heard by dialing (888) 263-2834 inside the United States or Canada, or by calling +1 (913) 312-1481 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 and game publishers, consumer electronics 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 across the U.S., Asia, Europe and South America. For more details about Digital River, visit the corporate Web site at www.digitalriver.com or call +1 952-253-1234.

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 extent and timing by Symantec of the migration of business to its in-house solution; 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 and Form 10-K/A for the year ended Dec. 31, 2008. 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, Form 10-K/A and Form 10-Q, each as it may be amended from time-to-time.

The forward-looking statements regarding first quarter 2010 reflect Digital River’s expectations as of Jan. 28, 2010. 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.