First Quarter Ended March 31, 2011
First quarter revenue totaled $98.2 million, compared to $98.7 million during the same period in 2010. This result was in line with management’s first quarter revenue guidance of $98 million.
First quarter GAAP net income was $7.0 million, or $0.18 per diluted share, which compared to GAAP net income of $7.0 million, or $0.18 per diluted share, in the first quarter of 2010. These results exceeded management’s first quarter earnings guidance of $0.16 per diluted share.
First quarter non-GAAP net income was $12.6 million, or $0.31 per diluted share. This compared to non-GAAP net income of $12.4 million, or $0.32 per diluted share, in the first quarter of 2010. The company’s results exceeded management’s first quarter earnings guidance of $0.29 per diluted share.
Non-GAAP net income is computed by starting with GAAP pre-tax income as reported on the company’s statement of operations, then adding back amortization of acquisition-related intangibles, stock-based compensation expense, unrealized investment gain or loss, and restructuring costs. This amount is then taxed at 21 percent to arrive at non-GAAP net income. Non-GAAP net income per diluted share is then calculated by adjusting non-GAAP net income, adding back debt interest expense and issuance cost amortization, net of tax benefit. This amount is then divided by fully-diluted shares outstanding to derive non-GAAP diluted net income per share. To provide further clarity, a detailed reconciliation on the comparability of the GAAP and non-GAAP data has been provided in table form following the financial statements accompanying this release.
“Our first quarter earnings exceeded expectations,” said Joel Ronning, Digital River’s CEO. “We saw strength across multiple geographies and vertical markets and continued to win new business in software, consumer electronics and games. At the same time, we are leveraging our World Payments solution to further diversify into markets such as e-retail, travel, entertainment and online services. We are maintaining our optimistic outlook for 2011 as evidenced by our strong second quarter revenue guidance.”
Management’s forward-looking financial expectations for the second quarter and revised full year 2011 are as follows:
For the second quarter ending June 30, 2011, management expects approximately:
For the full year ending December 31, 2011, management expects approximately:
Digital River will hold a conference call today at 4:45 p.m. EDT to discuss first quarter financial results. A live webcast of Digital River’s earnings conference call can be accessed on the Investor Relations section of its corporate website. Alternatively, a live broadcast of the call may be heard by using conference ID #57407867 and dialing (877) 303-3145 inside the United States or Canada, or by calling +1 (408) 427-3861 from international locations. A webcast replay of the call will be archived on Digital River’s corporate website.
About Digital River, Inc.
Digital River, Inc., a leading provider of global e-commerce solutions, builds and manages online businesses for software and game publishers, consumer electronics manufacturers, distributors, online retailers and affiliates. Its multi-channel e-commerce solution, which supports both direct and indirect sales, is designed to help companies of all sizes maximize online revenues as well as reduce the costs and risks of running an e-commerce operation. The company’s comprehensive platform offers site development and hosting, order management, fraud management, export controls, tax management, physical and digital product fulfillment, multi-lingual customer service, advanced reporting and strategic marketing services.
Founded in 1994, Digital River is headquartered in Minneapolis with offices across the U.S., Asia, Europe and South America. For more details about Digital River, visit the corporate website, follow the company on Twitter or call +1 952-253-1234.
Access the Q1 2011 Financial Tables.
This press release contains forward-looking statements, including statements regarding the company’s anticipated future growth, including future financial performance, as well as statements containing the words “anticipates,” “believes,” “plans,” “will,” or “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 those expressed or implied by such forward-looking statements. Such factors include, among others: the company’s operating history and variability of operating results; competition in the e-commerce market; challenges associated with international expansion; the variability of foreign exchange rates; our ability to successfully manage our business while undertaking significant internal investments; our ability to execute upon our payments strategy and expand our business in this sector; our ability to achieve favorable tax rates in our international operations; and other risk factors referenced in the company’s public filings with the Securities and Exchange Commission, including the Annual Report on Form 10-K for the year ended Dec. 31, 2010. The financial information contained in this release should be read in conjunction with the consolidated financial statements and notes thereto included in Digital River’s most recent report on Form 10-K, each as it may be amended from time-to-time.
The forward-looking statements regarding second quarter and full year 2011 reflect Digital River’s expectations as of April 28, 2011. Results may be materially affected by many factors, such as changes in global conditions in the financial services markets and consumer spending, fluctuations in foreign currency rates, the rate of growth of online commerce and the Internet, progress with key partners and other factors. The guidance assumes, among other things, that there are no changes to stock-based compensation expense and anticipated tax rates. Readers are cautioned not to place undue reliance on forward-looking statements, which reflect management’s analysis only as of the date hereof. The company undertakes no obligation to update these forward-looking statements to reflect events or circumstances that may arise after the date hereof.
Digital River is a registered trademark of Digital River, Inc. All other trademarks and registered trademarks are trademarks of their respective owners.
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