PRESS RELEASE
DIGITAL
RIVER REPORTS RECORD SALES FOR THIRD QUARTER
AND NINE MONTHS
MINNEAPOLIS, Oct. 20 -- In its first disclosure of
quarterly results since its initial public offering in
August, Digital River, Inc., (Nasdaq:DRIV) today reported
more than an eightfold increase in third-quarter sales
from the third quarter last year, and a 65-percent increase
from this year's second quarter.
Digital River's sales were $5,758,000 for the quarter
ended Sept. 30, 1998, compared with $683,000 in the third
quarter of 1997. The company's net loss for this year's
third quarter was $3,940,000, or 26 cents per share, compared
with a net loss of $922,000, or 11 cents per share, in
the same period last year.
For the nine months ended Sept. 30, 1998, sales were $11,504,000,
more than a tenfold increase from $1,144,000 in the first
nine months of 1997. The net loss was $9,292,000, or 74
cents per share, this year vs. a net loss of $2,098,000,
or 30 cents per share for the first nine months of 1997.
Said CEO Joel Ronning: "Digital River is the leading provider
of electronic commerce outsourcing solutions for the sale
of software over the Internet. We believe that we have
become the market leader in one of the most compelling
shifts of retail sales to the Internet -- the digital
download of software products directly to the desktop.
"Our business strategy of pursuing outsourcing relationships
with software publishers and online retailers is proving
to be successful, and we continue to aggressively add
new clients and grow sales off of our existing sites.
During the quarter, an additional 187 software publishers
and 416 online retailers have chosen to outsource with
Digital River, bringing our total number of clients to
2,071. With these contracts we added more than 8,000 products
to our vast product library, giving us more than 131,000
total products - 24,000 of which are software applications."
Perry Steiner, president, said, "The power of Digital
River's network continues to increase. We are unique because
we manage Web stores on behalf of our clients and sell
our publishers' products through our network of retailers.
As an enabler, we have the opportunity to grow our sales
in two ways - by increasing sales through our existing
client base and through adding new publisher and retailing
clients. The combination of publishers and retailers in
the Digital River network creates a compounding effect.
"We have processed transactions for 213,000 unique consumers
through Sept. 30, with 40 percent of the consumers coming
in the third quarter, and our consumer database continues
to grow rapidly." "We are making investments in infrastructure
and new product initiatives that will further leverage
the market leadership position we have in software deliver
over the Internet," Ronning added. "Industry analyst Jupiter
Communications has said that it expects online software
sales to reach $2.3 billion by the year 2002 as software
sales migrate to the Internet. Digital River is well positioned
to exploit this market opportunity."
Digital River, based in Minneapolis, offers the world's
largest online database of software products. The company
has contracted with more than 2,000 software publishers
and online retailers to provide its proprietary technology
for Internet delivery of more than 131,000 software and
other digital products. Tech Squared Inc. (OTC Bulletin
Board:TSQD) controls 19 percent of Digital River's common
stock. For more information, visit the Digital River Web
site at http://www.digitalriver.com.
Except for the historical information contained herein, this press release contains forward-looking statements, including statements containing the words, "believes," "anticipates," "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 be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include, among others: the Company's limited operating history and variability of operating results; market acceptance of electronic software delivery; the Company's ability to maintain relationships with software publishers and online retailers; competition in the electronic commerce market; and other risk factors referenced in the Company's public filings with the Securities and Exchange Commission. |
Digital
River, Inc.
Third Quarter Results
(in thousands, except per share amounts)
Condensed Consolidated Balance Sheets |
| |
September
30, 1998 |
December
31, 1997 |
| Assets |
. |
. |
|
Current
assets
|
. |
. |
|
Cash
and investments
|
$28,251 |
$2,126 |
|
Other
current assets
|
1,472 |
194 |
|
Total
current assets
|
29,723 |
2,320 |
| |
|
|
|
Property
and equipment, net
|
3,134 |
903 |
| |
|
|
|
Other
Assets
|
104 |
182 |
|
Total
Assets
|
$32,961 |
$3,405 |
| |
|
|
| Liabilities and
shareholders' equity |
. |
. |
|
Current
liabilities
|
. |
. |
|
Accounts
payable
|
$2,655 |
$720 |
|
Accrued
payroll and other liabilities
|
961 |
356 |
|
Total
current liabilities
|
3,616 |
1,076 |
| |
|
|
|
Shareholders'
equity
|
29,345 |
2,329 |
|
Total
liabilities and shareholders' equity
|
$32,961 |
$3,405 |
|
|
Condensed
Consolidated Statements of Operations
|
| |
Three
months ended
September 30,
|
Three
months ended
December 31,
|
| . |
| Sales |
| Cost
of sales |
|
Gross
profit
|
| |
| Operating
expenses |
|
Sales
and marketing
|
|
Product
development and operations
|
|
General
and administrative
|
|
Total
operating expenses
|
|
Loss
from operations
|
| |
| Interest
income, net |
| Net
loss |
| |
| Net
loss per share |
| |
| Weighted
average shares outstanding |
|
|
1998
|
1997
|
|
$5,758
|
$683 |
| 4,819 |
561 |
| 939 |
122 |
| |
|
| . |
. |
| 3,105 |
246 |
| 1,292 |
530 |
| 751 |
264 |
| 5,148 |
1,070 |
| (4,209) |
(948) |
| |
|
| 269 |
26 |
| $(3,940) |
$(922) |
| |
|
| $(.26) |
$(.11) |
| |
|
| 14,894 |
8,418 |
|
|
1998
|
1997
|
| $11,504 |
$1,144 |
| 9,610 |
940 |
| 1,894 |
204 |
| |
|
| . |
. |
| 6,538 |
875 |
| 2,903 |
945 |
| 2,164 |
527 |
| 11,605 |
2,347 |
| (9,711) |
(2,143) |
| |
|
| 419 |
45 |
| $(9,292) |
$(2,098) |
| |
|
| $(.74) |
$(.30) |
| |
|
| 12,484 |
7,098 |
|
|
Give us a call at 1.952.253.8858. Or e-mail us at investorrelations@digitalriver.com.
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