Press Release

Digital River Announces 35 Percent Year-Over-Year Revenue Increase in Q3
Company Achieves GAAP Profitability for the First Time in Operating History

MINNEAPOLIS, MN, October 23, 2002--Digital River, Inc. (NASDAQ: DRIV), a leading global e-commerce outsource provider, today reported revenue of $18.9 million for the quarter ended September 30, 2002. This represents a year-over-year increase of 35 percent from revenue of $14.0 million in the third quarter of 2001. The Company's solid third quarter financial performance was also marked by a significant milestone. Digital River recorded its first quarter of net income profitability as calculated by Generally Accepted Accounting Principles (GAAP), since becoming a public company in 1998.

Net income for the third quarter, prior to the amortization of acquisition-related expenses, was $1.5 million, or $0.05 per share. This compares to a net loss, on a similar basis, of $462,000, or $0.02 per share, in the third quarter of last year. On a GAAP basis, net income for the third quarter was $98,000, compared to a net loss of $4.4 million or $0.18 per share in the third quarter of 2001. As of September 30, 2002, cash and investments totaled $35.3 million dollars, a $3.1 million dollar increase from June 30th.

"We continue to hit key financial milestones, including increasing cash and profitability," said Joel Ronning, Digital River's CEO. "Achieving GAAP profitability in particular is a significant accomplishment, especially in this challenging market. Our GAAP profitability also provides an important competitive differentiator. We are one of very few public companies in the Internet sector that are profitable on this basis. This fact combined with the sheer volume of traffic and online sales we are running through our e-commerce system positions us among the leaders in e-commerce."

For the nine months ended September 30, 2002, revenue totaled $56.3 million, a 40 percent increase from $40.1 million in the same period last year. For the first nine months of this year, net income, prior to the first quarter reserve for pending litigation and other charges and the amortization of acquisition-related expenses was $3.3 million, or $0.11 per share. This compares to a net loss of $3.3 million, or $0.14 per share for the first nine months of last year.

"Our third quarter performance reflects the increasing acceptance of outsourcing, the continued growth in the Internet and the growing propensity to buy online," said Ronning. "However, the slowdown in IT spending and the uncertain timing of a near-term economic recovery call for careful and prudent management of our business and future expectations. Given the varying market conditions, we are approaching the end of the year with guarded optimism."

Segmented Financials
Software Services generated $15.5 million in revenue in the quarter, a more than 45 percent improvement from revenue of $10.6 million in the third quarter of 2001. Its earnings before interest, taxes, depreciation and amortization (EBITDA) was $5.1 million and represents the eighth consecutive quarter of profitability on that basis.

E-Business Services generated $3.4 million in revenue in the third quarter. This performance was flat to revenue in the third quarter of 2001. E-Business Services' EBITDA loss was $2.2 million for the quarter.

"Although we are pleased with our combined year-over-year growth rates, we have made strategic organizational changes to drive even more efficiencies through our company," said Jay Kerutis, Digital River's President of Software and Digital Commerce Services. "We have consolidated the respective sales and operational groups that support our Software and E-Business Services Divisions. Sales, client services, account management and development have now been redirected to cross over and support all clients regardless of whether they fall into the software publishing, manufacturing or retail verticals. We believe the integration of these organizations will give us a more unified sales approach and create more operational flexibility. While we will continue to vigorously support our entire client base, we believe the consolidation of these functions will provide increased efficiencies and expense reductions in the fourth quarter and beyond."

Future Expectations
In the fourth quarter of 2002, Digital River expects to generate revenue of approximately $20 million, with Software Services expected to generate approximately 80-85 percent of that total. Digital River anticipates earnings per share of $0.14, prior to the amortization of acquisition-related expenses, and $0.10 per share, on a GAAP basis, in the fourth quarter.

For 2002, the company expects total revenue to be approximately $76.3 million, a 32 percent improvement from revenue of $57.8 million in 2001. The company also expects full year 2002 earnings per share to be $0.25, prior to the first quarter reserve for pending litigation and other charges, and the amortization of acquisition-related expenses.

In 2003, Digital River expects revenue to total $91 to $93 million, an increase of 19 to 22 percent from 2002. In addition, Digital River expects to generate $15.9 to $16.6 million of net income, prior to the amortization of acquisition-related expenses. This represents a 112 to 121 percent improvement from anticipated net income in 2002 of $7.5 million prior to the first quarter reserve for pending litigation and other charges, and the amortization of acquisition-related expenses. The company believes that this performance will result in earnings per share of $0.50 to $0.52, prior to the amortization of acquisition-related costs in 2003. On a GAAP basis, the company expects earnings per share of $0.35 to $0.37.

"I am pleased with the future guidance that we have provided and the fact that we continue to realize the financial benefits of our highly scalable business model," said Carter Hicks, Digital River's CFO. "Next year we believe that earnings per share will more than double based on an expected 20 percent increase in revenue. We are confident in the solid growth potential for this company as we run more volume through the relatively fixed cost infrastructure that we've built."

Digital River will hold a third 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.

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 is a registered trademark of Digital River, Inc. All other company and product names are trademarks, registrations or copyrights of their respective owners.

Forward-Looking Statements
Except for the historical information contained herein, this press release contains forward-looking statements, including statements containing the word "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 differ materially 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; competition in the electronic commerce market; and other risk factors referenced in the Company's public filings with the Securities and Exchange Commission.