DIGITAL RIVER REPORTS RECORD SALES FOR
FOURTH QUARTER AND FISCAL 1999

MINNEAPOLIS, Minn., January 27, 2000 -- Digital River, Inc., (Nasdaq:DRIV) today reported sales of $27,461,000 for the fourth quarter ended Dec. 31, 1999, a 37 percent sequential increase from the third quarter of 1999 and a 192 percent increase from $9,407,000 in the fourth quarter of 1998. Fourth-quarter gross margin increased to 19.4 percent from 19.0 percent for the third quarter of 1999 and from 16.3 percent in the fourth quarter of 1998.

The company's fourth-quarter loss before the effect of amortization of goodwill and acquisition-related costs was $4,634,000, or 22 cents per share. After amortization of goodwill and acquisition related costs, the fourth-quarter net loss was $6,943,000, or 33 cents per share, compared with a net loss of $4,506,000, or 26 cents per share, in the fourth quarter of 1998.

For the year ended Dec. 31, 1999, sales were $75,050,000, compared with $20,911,000 for 1998. The loss before amortization of goodwill and acquisition-related costs was $20,767,000, or $1.02 per share, for 1999. Including amortization of goodwill and acquisition-related costs, the net loss for the year was $27,653,000, or $1.36 per share, compared with a net loss of $13,798,000, or $1.01 per share, in 1998.

"Our fourth-quarter results illustrate how our business mission has expanded in the past year - and expanded dramatically," said Joel Ronning, chief executive officer. "It's no secret that we dominate e-commerce outsourcing in the software vertical market. We are a force in the online software market, and we continue to grow this segment of our business aggressively.

But when we evaluate our technology and services - and our market position - it's clear that our true core competency is e-commerce outsourcing. As an outsource partner, we are managing e-commerce systems for over 6,000 clients. Put simply, we are the largest e-commerce Application Service Provider in the world sitting on a proprietary platform."

Earlier today, Digital River announced that it is segmenting its business into two divisions - Software and Digital Commerce Services and E-Business Services. Both lines of business contributed to the company's fourth-quarter growth in sales and margins, Ronning said. "We will invest significantly this year to build the E-Business Services division and to capitalize on the market opportunity we see for our sell-side business-to-business e-commerce solutions," Ronning said. "We plan to increase our spending by $18 to $20 million in 2000 over 1999 levels , but have not changed our commitment to drive this company to profitability. Again, our goal for the Software and Digital Commerce Services division is to be profitable before depreciation and amortization by December of this year."

"Beginning with the first quarter of 2000 we will report results for our two divisions on a segment basis," said Perry Steiner, president. "Our goal will be to show that our Software division is moving rapidly toward profitability, and give the revenue, margins and growth of our E-Business division so that we can demonstrate to our investors that we are making progress on both fronts."

Steiner said that during the fourth quarter Digital River processed more than 605,000 net orders and that the number of unique registered end-users in the company's database reached 2.8 million.

"We had another great quarter in Software Services, adding significant new publisher clients including Autodesk, Intuit, Hasbro, TurboLinux and Fox Interactive, as well as major online retailers Egghead and Dixons," Steiner said.

"In E-Business Services, we now have contracts to manage e-commerce for divisions of a number of substantial companies, including Fujitsu, 3M, Hewlett Packard, 3Com and Sega. During the fourth quarter we signed clients such as the United States Golf Association and Beamscope and entered into a strategic relationship with Gage Marketing, a fulfillment partner to 75 of the Fortune 100."

Digital River is a global leader in e-commerce outsourcing. The company provides more than 6,000 companies with a complete e-commerce solution including site design, hosting, and system management. The company develops front-to-back e-commerce solutions for software publishers, online retailers and other large corporations including Fujitsu, Autodesk, Hasbro, Staples, Adaptec, 3M, CompUSA, ScanSoft, eGames, Sega, Fox Interactive and Egghead.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.