Press Release

Digital River Announces Nearly 50 Percent Growth in Second Quarter 2002 Revenue
Achieves EPS of $0.05, prior to amortization of acquisition-related expenses

MINNEAPOLIS, July 24, 2002--Digital River, Inc. (NASDAQ: DRIV), a leading global e-commerce outsource provider, today reported revenue of $19.3 million for the quarter ended June 30, 2002. This represents a year-over-year increase of 48.2 percent from revenue of $13.1 million in the second quarter of last year, and a 7.1 percent increase from revenue of $18.1 million last quarter. This performance exceeded the Company's previous second quarter revenue guidance of $17.0 million. Gross margins averaged 82.6 percent in the second quarter, a 670 basis point year-over-year improvement and 100 basis points higher than in the prior quarter.

Net income for the second quarter, prior to the amortization of acquisition-related expenses was $1.3 million, or $0.05 per share, compared to a net loss of $1.2 million, or $0.05 per share, in the second quarter of last year. This performance also exceeded the guidance the Company outlined in a previous announcement and marks the Company's third consecutive quarter of profitability, prior to the amortization of acquisition-related expenses and the first quarter reserve for pending litigation.

Including the amortization of acquisition-related expenses, the net loss for the quarter was $348,000, or $0.01 per share, compared with a net loss of $5.1 million, or $0.21 per share, in the second quarter of last year. At June 30, 2002, cash and investments totaled approximately $32.2 million, a nearly $1.4 million increase from the prior quarter end.

"We are extremely pleased with our second quarter performance despite what continues to be a challenging economic environment," said Joel Ronning, Digital River's CEO. "We again set a new company record for quarterly revenue as we continue to expand our business. Our strong performance has enabled us to further invest in our sales and marketing organization and technology platform to drive our growth into the future."

For the six months ended June 30, 2002, revenue totaled $37.4 million, a 43.3 percent increase from revenue of $26.1 million in the same period last year. Through the first six months of the year, net income, prior to the amortization of acquisition-related expenses and the first quarter reserve for pending litigation, was $1.8 million, or $0.06 per share. This compares to a net loss of $2.8 million, or $0.12 per share in the first half of last year.

"As we look forward to the second half of the year, we are encouraged by the size and quality of our sales pipeline for new clients and the potential to further increase the value of our current client relationships," continued Ronning. "Yet, we are approaching the second half of the year with guarded optimism because of the continued caution in IT spending levels and the unsettled environment in corporate America."

Segmented Financial Results
The Software Services Division generated $15.1 million in revenue for the quarter, a nearly 60 percent increase over revenue in the second quarter of last year. This is also an increase from revenue of $14.7 million in the first quarter of this year. This division had earnings before interest, taxes, depreciation and amortization expense (also known as EBITDA) of $4.6 million for the quarter, representing its seventh consecutive quarter of positive EBITDA.

"The continued success of this division can be attributed primarily to our ability to increase the value of existing client relationships and also close new business," said Jay Kerutis, Digital River's president of its Software Services Division. "Through our very targeted e-marketing efforts, we continue to help our clients increase site traffic, encouraging their end customers to purchase more and more often. Because of our deep operational and transactional history, we can determine best practices, automate them and then leverage them across thousands of clients. This quarter alone, more than 43 percent of our revenue was tied to e-marketing programs that we supported on behalf of our clients. E-Marketing is a core competency for Digital River and a key component of the value proposition we offer our clients."

The E-Business Services (EBS) Division generated $4.2 million in revenue for the quarter. This was an 18 percent increase in revenue from the same period in 2001 and a strong sequential increase from the first quarter. This division's EBITDA loss was $2 million for the quarter as the company continued to invest for the future expected profitability from this business.

"The strong revenue performance in the EBS Division for the second quarter was driven by contributions from acquired assets, one-time projects for new and existing clients, and new client acquisition," said Ronning. "The revenue generated by this division exceeded expectations partially because contracts anticipated to close in the first quarter were delayed to the second quarter. While we are pleased with this quarter's performance, we will maintain our conservative outlook for the remainder of this year regarding organic growth and sales cycles within this division."

Future Expectations
Based on Digital River's second quarter performance, the Company is slightly increasing its 2002 guidance. The Company expects total revenue for the year to be approximately $75 - $77 million. This is a $2 million dollar increase over its previous guidance. The Company expects its Software Services segment revenue to comprise approximately 80 percent of total company revenue for the year. Based on the new revenue projection, the Company also expects earnings per share, prior to the amortization of acquisition-related expenses and reserves for pending litigation, to be $0.24 - $0.26 cents. This is up slightly from the Company's previous guidance of $0.23 - $0.25 cents.

For the third quarter, Digital River expects revenue to total approximately $18 - $19 million. The Company expects the EBS segment to comprise approximately 20 percent of the revenue in the quarter. In the third quarter, the Company expects earnings of $0.05 - $0.06 per share, prior to the amortization of acquisition-related expenses.

About Digital River
Digital River, a leading global e-commerce outsource provider founded in 1994, offers more than 32,000 companies the ability to cut costs and grow their businesses by using its complete e-commerce systems and services. The Company's world-class infrastructure and e-marketing services help grow businesses quickly and profitably while reducing risk. Digital River's commerce services include e-commerce strategy, site development and hosting, order and transaction management, system integration, product fulfillment and returns, e-marketing and customer service. Digital River's clients include Symantec, Motorola, 3M, Polaris, Major League Baseball, H&R Block, Novell, Autodesk, SONICblue, Adaptec and Staples.com. For more details about Digital River, visit the corporate Web site at www.digitalriver.com or call 952-253-1234.

Digital River will hold a second quarter conference call today at 4:45 p.m. Eastern Daylight Time. To access the call, please dial 877-422-0170, or listen to the webcast at http://drhome.digitalriver.com/livehtml/newsite/dr_invest_000.html. Please go to the investor page to access the call and install any necessary audio software.