Press Release

Digital River Reports 35 Percent Year-Over-Year Revenue Growth for 2002
Company exceeds guidance and announces earnings per share of $0.15, prior to the amortization of acquisition-related expenses for the fourth quarter

MINNEAPOLIS, MN, Janaury 29, 2003--Digital River®, Inc. (NASDAQ: DRIV), a leading global e-commerce outsource provider, today reported revenue of $21.5 million for the quarter ended December 31, 2002. This represents a quarterly year-over-year increase of 21 percent from revenue of $17.7 million in the fourth quarter of 2001, and a 14 percent increase from revenue of $18.9 million in the third quarter of 2002.

Net income, prior to the amortization of acquisition-related expenses, was $4.5 million, or $0.15 per share, in the fourth quarter. The fourth quarter performance was an $0.11 per share improvement from earnings per share of $0.04, prior to the amortization of intangibles and other acquisition-related expenses, in the fourth quarter of 2001.

Digital River's performance marks its second quarter of net income profitability as calculated by U.S. Generally Accepted Accounting Principles (GAAP). In the fourth quarter, net income totaled $3.3 million, or $0.11 per share, on a GAAP basis. This compares to a net loss of $3.5 million or $0.14 per share in the same period last year and net income of $98,000 in the third quarter of 2002.

"I'm excited to say that in 2002 we substantially grew revenue, enhanced the financial strength of the company and continued to solidify our leadership position in the outsourced e-commerce market," said Joel Ronning, Digital River's CEO. "We not only exceeded revenue and EPS expectations in the fourth quarter, but we emerged from 2002 with a strong cash position and as a profitable business on a GAAP basis. We believe we are one of only a handful of large public Internet companies that can claim profitability on this basis - and clearly, profitability is a key benchmark of success. While we were able to achieve numerous financial milestones and increase operational efficiencies in 2002, we are looking forward to an even stronger 2003."

Digital River also reported that gross margins in the fourth quarter averaged 83.7 percent, an approximate 240 basis point improvement over last year's gross margin. This is also an approximate 250 basis point improvement from the third quarter. At December 31, 2002, cash and investments totaled $40.8 million, a $5.5 million increase from September 30, 2002, and a $9.1 million increase from December 31, 2001.

"Our strong fourth quarter performance affirms the scalability of our business model and the power of the e-commerce engine that we've created," said Ronning. "This is evidenced by significant improvement in key financial metrics, including a nearly 25 percent improvement in revenue per employee over 2001. We're successfully managing the size of our organization, leveraging our platform, adding new clients with minimal expense, and seeing the results fall to the bottom line. We believe that this shows the core strength of our business model and is a key competitive differentiator."

For the year ended December 31, 2002, revenue totaled $77.8 million, a nearly 35 percent increase from $57.8 million in 2001. In 2002, net income prior to the amortization of acquisition-related costs and litigation and other charges was $7.7 million, or $0.26 per share. In 2001, the net loss prior to the amortization of intangibles and other acquisition-related costs was $2.2 million, or $0.09 per share. The 2002 GAAP net loss totaled $0.5 million, or $0.02 per share, compared with a net loss of $19.2 million, or $0.79 per share in 2001.

Segmented Financials
Digital River's Software Services generated $18.0 million in revenue for the company in the fourth quarter, a more than 25 percent improvement from revenue of $14.3 million in the fourth quarter of 2001. This performance is also a 16 percent increase from revenue of $15.5 million in the third quarter. The segment's earnings before interest, taxes, depreciation and amortization (EBITDA) were $7.3 million in the fourth quarter of 2002.

E-Business Services generated $3.5 million in revenue for the company in the fourth quarter. This was a slight increase from revenue of $3.4 million for both the fourth quarter of 2001 and the third quarter of 2002. The segment's EBITDA loss was $1.3 million for the quarter. This reflects significant improvement from the EBITDA losses of $2.2 million in the third quarter and $2.7 million in the fourth quarter of 2001.

"Our business continues to benefit from actions taken to improve performance across the company," said Carter Hicks, Digital River's CFO. "As we discussed last quarter, we consolidated the teams that support E-Business and Software Services. As a result of this integration, we've created a single operational organization to more efficiently align our resources against business goals and have already seen bottom line benefits from these actions."

Future Expectations
In the first quarter of 2003, Digital River expects to generate revenue of $21.5 million, a nearly 20 percent improvement from the first quarter of 2002. The E-Business segment revenue is expected to comprise approximately 15-20 percent of revenue in the quarter. The company expects earnings per share for the first quarter of $0.13, prior to the amortization of acquisition-related costs, and $0.09 on a GAAP basis.

In 2003, Digital River continues to expect revenue to total $91 - 93 million, an increase of 17 - 20 percent from 2002. 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, and $0.35 to $0.37 on a GAAP basis.

Digital River will hold a fourth quarter conference call today at 4:45 p.m. Eastern Standard 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 andtransaction management, system integration, product fulfillment and returns, e-marketing and customer service. Digital River's clients include Symantec, Motorola, 3M, Major League Baseball Advanced Media, H&R Block, Novell, Autodesk, and Staples.com. For more details about Digital River, visit the corporate Web site at www.digitalriver.com or call 952-253-1234.

Forward-Looking Statements
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 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.

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.