DIGITAL RIVER SALES TOP
$20 MILLION IN THIRD QUARTER

MINNEAPOLIS, Minn., October 25, 1999 -- MINNEAPOLIS, Oct. 25 - Digital River, Inc., (Nasdaq:DRIV) today reported sales of $20,068,000 for the third quarter ended Sept. 30, 1999, up 27 percent from the second quarter of this year and 249 percent from $5,758,000 in last year's third quarter. Gross margins for the quarter increased to 19 percent from 18.9 percent for the second quarter of this year.

The company's third-quarter loss before the effect of amortization of goodwill and acquisition-related costs was $5,413,000, or 26 cents per share. After amortization of goodwill and acquisition related costs, the third-quarter net loss was $8,688,000, or 42 cents per share, compared with a net loss of $3,940,000, or 26 cents per share, in the third quarter of 1998.

For the nine months ended Sept. 30, 1999, sales were $47,589,000 vs. $11,504,000 in the same period last year. This year's nine-month loss before amortization of goodwill and acquisition-related costs was $16,134,000, or 80 cents per share . Including amortization of goodwill and acquisition-related costs, the net loss for the period was $20,711,000, or $1.03 per share, compared with a net loss of $9,292,000 or 74 cents per share in the first nine months last year.

"We're pleased to report another successful quarter for Digital River, not only in terms of key financial measures such as sales growth and improved gross margin, but also in terms of our progress in the strategic positioning of the company," said Joel Ronning, chief executive officer. "Building on the underlying strength of our core business of electronic software delivery, we are developing a complementary array of e-business initiatives that have begun to contribute to our growth and competitive advantage."

"Our core software business is very strong and, with our emerging CommerceBridge business, we achieved a solid expansion in client base and gross margins for the quarter," Ronning continued. "CommerceBridge, which applies our e-commerce outsourcing capabilities outside the software market, has clearly begun to take hold. We are now managing e-commerce for divisions of several major companies and have momentum building into the final quarter of the year.

"The acquisition earlier this month of the PC download assets of Walnut Creek CDROM will strengthen our software business and provide an additional means of distributing eBot with one of the largest providers of digital downloads on the Internet."

Perry Steiner, president, said the early client and customer feedback on the company's new eBot product has been very positive.

"In September we introduced eBot, our exciting new permission-based smart-agent technology, which identifies relevant updates for PC software and helps consumers download free and discounted software, as well as the latest software upgrades, patches and bug fixes," Steiner said. "Ebot was recently named Best Productivity/Internet Product of the Year at the RetailVision Fall'99 conference in Chicago.

"We believe the economics of eBot are very compelling," Steiner added. "Our goal is to have eBot on millions of desktops, and we will work closely with our publisher clients to bring the best discounts to the eBot subscriber base. Because our publishers will have a very efficient and inexpensive communications channel, they have expressed a willingness to increase the margin paid to us. Further, they will achieve better response rates and save on marketing costs - and be able to pass the savings along to the consumer. It is a win-win situation for everyone involved."

During the third quarter Digital River processed 469,000 sales transactions for 401,000 unique customers, Steiner said. That increases the company's cumulative customer data base to more than 2 million unique users.

Digital River, Inc., based in Minneapolis, is the largest online source of software and a leading outsource provider of Web-based commerce solutions. The company provides more than 5,000 software publishers and online retailers with its proprietary technology for Internet delivery of more than 100,000 digital products, including 30,000 software products and applications. For more information, visit Digital River's 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.

Condensed Consolidated Statements of Operations (unaudited)