MINNEAPOLIS--April 27, 2006--Digital River, Inc. (NASDAQ:DRIV):
-- Q1 revenue up 43 percent year-over-year
-- Q1 GAAP diluted EPS up 17 percent year-over-year
-- Q1 non-GAAP diluted EPS up 39 percent year-over-year
Digital River, Inc. (NASDAQ:DRIV), a global leader in e-commerce outsourcing, today reported its first quarter 2006 financial results.
First quarter revenue totaled $78.0 million. This is an increase of 43 percent from revenue of $54.5 million in the first quarter of 2005.
Q1 GAAP Results
First quarter GAAP net income was $16.4 million, or $0.41 per diluted share, including $3.4 million of stock-based compensation expense. This compared to net income of $14.0 million, or $0.35 per diluted share, including no stock-based compensation expense in the first quarter of 2005. The Company`s effective tax rate was 31 percent in the first quarter of 2006 compared to 26 percent in the first quarter of 2005. These results represent a year-over-year increase of 17 percent in GAAP net income and 17 percent in GAAP diluted net income per share.
Q1 Non-GAAP Results
Based on the Company`s non-GAAP measurements, first quarter non-GAAP net income was $20.7 million, or $0.50 per diluted share, compared to net income, on a similar basis, of $14.7 million, or $0.36 per diluted share in the first quarter of 2005. This represents a year-over-year increase of 41 percent in non-GAAP net income and 39 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 beginning in 2006, stock-based compensation expense, to calculate non-GAAP pre-tax income. This figure is then taxed at 31 percent, the Company`s anticipated 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.
"We are pleased with our first quarter results," said Joel Ronning, Digital River`s CEO. "We continue to capitalize on multiple expansion opportunities being generated by global markets, recent acquisitions, and Digital River`s oneNetwork marketplace and marketForce strategic marketing services. Looking forward, we plan to intensify our efforts in these strategic growth areas."
Q2 2006 Guidance
Forward-looking guidance for the second quarter ending June 30, 2006, is as follows:
-- Revenue of $70.0 million;
-- GAAP diluted net income per share of $0.28, including stock-based compensation expense of $3.6 million; and
-- Non-GAAP diluted net income per share of $0.37.
Full Year 2006 Guidance
Forward-looking guidance for the full year ending December 31, 2006, is as follows:
-- Revenue of $300 million;
-- GAAP diluted net income per share of $1.36, including stock-based compensation expense of $14.2 million; and
-- Non-GAAP diluted net income per share of $1.70.
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/2006q1earnings/. Alternatively, a live broadcast of the call may be heard by using conference ID # 7257453 and dialing 888-896-0863 inside the United States or Canada, or by calling 973-582-2741 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 global leader in e-commerce outsourcing, 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.
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" 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; 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, 2005. 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.