• Q2 revenue up 39 percent year-over-year
• Q2 GAAP diluted EPS up 15 percent year-over-year
• Q2 non-GAAP diluted EPS up 41 percent year-over-year
MINNEAPOLIS, July 27, 2006 - Digital River, Inc. (NASDAQ: DRIV), a global leader in e-commerce outsourcing, today reported its second quarter 2006 financial results.
Second quarter revenue totaled $71.3 million, an increase of 39 percent from revenue of $51.1 million in the second quarter of 2005.
Q2 GAAP Results
Second quarter GAAP net income was $13.3 million, or $0.30 per diluted share, including $3.5 million of stock-based compensation expense. This compared to net income of $10.2 million, or $0.26 per diluted share, including no stock-based compensation expense in the second quarter of 2005. These results represent a year-over-year increase of 30 percent in GAAP net income and 15 percent in GAAP diluted net income per share.
Q2 Non-GAAP Results
Based on the Company’s non-GAAP measurements, second quarter non-GAAP net income was $18.7 million, or $0.41 per diluted share, compared to net income, on a similar basis, of $12.1 million, or $0.29 per diluted share in the second quarter of 2005. This represents a year-over-year increase of 54 percent in non-GAAP net income and 41 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.
Six Months Ended June 30, 2006, Revenue:
In the first half of 2006, the Company reported revenue of $149.3 million. This represents a 41 percent increase from revenue of $105.7 million in the similar period of the prior year.
Six Months Ended June 30, 2006, GAAP Results:
In the first half of 2006, GAAP net income was $29.7 million, or $0.70 per diluted share, including $6.9 million of stock-based compensation expense. This compared to net income of $24.3 million, or $0.61 per diluted share, including no stock-based compensation expense in the first half of 2005.
Six Months Ended June 30, 2006, Non-GAAP Results:
Based on the Company’s non-GAAP measurements, non-GAAP net income in the first half of 2006 was $39.4 million, or $0.91 per diluted share, compared to net income on a similar basis of $26.8 million, or $0.65 per diluted share in the first half of 2005.
“We are pleased with our solid second quarter results,” said Joel Ronning, Digital River’s CEO. “During last quarter, we continued to excel in global online markets, winning new business, and expanding our footprint and infrastructure. The ability to manage complex global online operations and our expertise in marketing to local online shoppers in worldwide geographies have proven to be the most compelling differentiators for Digital River in the market today.
“We have secured significant incremental business from major clients and expect to be awarded more. We plan to provide additional details on these wins in the near future,” continued Ronning. “We believe this new business represents a strong endorsement of our value proposition and core business model, and will fuel growth in 2007 and beyond.”
Q3 2006 Guidance
Forward-looking guidance for the third quarter ending September 30, 2006, is as follows:
- Revenue of $74.0 million;
- GAAP diluted net income per share of $0.31, including stock-based compensation expense of $3.6 million; and
- Non-GAAP diluted net income per share of $0.38.
Full Year 2006 Guidance
Forward-looking guidance for the full year ending December 31, 2006, is as follows:
- Revenue of $305 million;
- GAAP diluted net income per share of $1.37, including stock-based compensation expense of $14.1 million; and
- Non-GAAP diluted net income per share of $1.74.
Digital River will hold a second 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/2006q2earnings/. Alternatively, a live broadcast of the call may be heard by using conference ID # 7600156 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.