Press Release

FOR IMMEDIATE RELEASE

DIGITAL RIVER, INC., ANNOUNCES
SECOND QUARTER 1999 RESULTS

MINNEAPOLIS, Minn., July 20, 1999 -- Digital River, Inc., (Nasdaq:DRIV) today reported sales of $15,814,000 for the second quarter ended June 30, 1999, up 35 percent from the first quarter of this year and 355 percent from $3,476,000 in last year's second quarter.

The company's second-quarter loss before the effect of amortization of goodwill and acquisition-related costs was $5,376,000, or 27 cents per share. The second-quarter net loss, which includes amortization of goodwill and acquisition related costs, was $6,678,000, or 33 cents per share, compared with a net loss of $3,797,000, or 30 cents per share, in the second quarter of 1998.

For the six months ended June 30, 1999, sales were $27,521,000 vs. $5,746,000 in the same period last year. This year's first-half loss before amortization of goodwill and acquisition-related costs was $10,720,000, or 54 cents per share . The net loss for the period, which includes amortization of goodwill and acquisition-related costs, was $12,022,000, or 60 cents per share, compared with a net loss of $5,352,000 or 47 cents per share in the first six months last year.

"The second quarter was a very strong period for Digital River, both in the performance of our core business of electronic software delivery and in the development of related business initiatives," said Joel Ronning, chief executive officer. "We found solid overall sales growth in our existing client base, coupled with the addition of sales generated by new clients activated during the quarter and incremental sales from our Shareware business. We also increased gross margins significantly during the quarter."

Early in the second quarter, Digital River acquired two of the major Web-commerce service providers to the shareware market - Maagnum Internet Group and Public Software Library Ltd. It acquired a third - Universal Commerce, Inc. - shortly before the close of the period.

"We are pleased with the early contribution of our Shareware business and with the development of our CommerceBridge business," said Perry Steiner, Digital River's president. "CommerceBridge is a comprehensive e-commerce outsourcing service that is still in its early stages but promises to further solidify our position as a leading provider of digital commerce services. We have signed CommerceBridge contracts with divisions of companies such as Fujitsu, 3M, Hewlett Packard, 3Com and Sega, among others."

Earlier today, Digital River announced a significant technology enhancement within its i-stream(SM) download management utility that will allow users to automatically find and download updates and fixes for the programs on their computers. This permission-based smart-agent technology will be available free to all Internet users. "We will be releasing the product with added functionality later this quarter," Ronning said. "We will continue to add new features over time and our goal is to be on millions of desktops with this product."

Another new initiative in its very early stages - Digital River's entry into providing outsourced solutions for downloadable music - has generated 20 client contracts, the company reported.

"Digital River processed 405,000 sales transactions for 345,000 unique customers in the second quarter," Steiner said. "Our cumulative consumer database of consumer purchasers to date is now in excess of 1.6 million unique users, including users from our recent acquisitions."

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 6,000 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.

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