Digital River Reports Fourth Quarter and Full Year 2010 Financial Results

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MINNEAPOLIS — Jan. 27, 2011 — Digital River, Inc. (NASDAQ: DRIV), a leading provider of global e-commerce solutions, reports its fourth quarter and full year financial results.

Fourth Quarter and Full Year Ended Dec. 31, 2010

GAAP Results

Fourth quarter revenue totaled $97.7 million, compared to $104.9 million during the same period in 2009. These results were at the top end of management’s fourth quarter revenue guidance of $95 – $98 million. For the full year 2010, Digital River reported revenue of $363.2 million, compared to $403.8 million reported in 2009.

Fourth quarter GAAP net income was $5.4 million, or $0.14 per diluted share, and compared to GAAP net income of $13.6 million, or $0.36 per diluted share, in the fourth quarter of 2009. This year’s results were in line with management’s fourth quarter earnings guidance of $0.12 – $0.15 per diluted share, adjusted for the issuance of the convertible debt. For the full year 2010, GAAP net income was $15.7 million, or $0.41 per diluted share, and compared to GAAP net income of $49.8 million, or $1.32 per diluted share, during the same period in 2009.

Non-GAAP Results

Fourth quarter non-GAAP net income was $11.7 million, or $0.29 per diluted share. This compared to non-GAAP net income of $15.3 million, or $0.40 per diluted share, in the fourth quarter of 2009. The company’s results exceeded management’s fourth quarter earnings guidance of $0.25 – $0.28 per diluted share, adjusted for the issuance of the convertible debt. For the full year 2010, non-GAAP net income was $33.9 million, or $0.88 per diluted share. This compared to non-GAAP net income of $67.8 million, or $1.80 per diluted share in 2009.

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 27 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 fourth quarter revenue was strong and non-GAAP earnings exceeded expectations. Overall, 2010 was one of the best years of operational execution in the history of the company,” said Joel Ronning, Digital River’s CEO. “We entered last year with an objective to replace 30 percent of our revenue after the loss of a major client and align our expenses with our growth profile. We not only accomplished that but also exited 2010 a much more diversified business. In 2011, we see more opportunity for sustainable growth across more markets than ever before and are extremely optimistic about our future.”

2011 Guidance

Management’s forward-looking financial expectations for first quarter and full year 2011 are as follows:

For the first quarter ending March 31, 2011, Digital River expects approximately:

For the full year ending December 31, 2011, Digital River expects approximately:

Note, as part of this release, Digital River has provided a non-GAAP financial table that revises historical non-GAAP measures, using the company’s new 21 percent tax rate for comparability purposes.

Digital River will hold a conference call today at 4:45 p.m. EST to discuss fourth quarter and full year 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 #35996781 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.

Access the Q4 and Full Year 2010 Financial Tables.

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, call +1 952-253-1234, or follow the company on Twitter.

Forward-looking Statement

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 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 Form 8-K dated October 25, 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 reports on Form 10-K and Form 10-Q, each as it may be amended from time-to-time.

The forward-looking statements regarding first quarter 2011 reflect Digital River’s expectations as of Jan. 27, 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.