Digital River Reports Fourth Quarter and Full Year 2013 Financial Results
- Fourth quarter revenue of $101.2 million, up 3 percent year-over-year
- Fourth quarter break-even GAAP EPS; and non-GAAP EPS of $0.22 per diluted share, at the high end of guidance
- Continued strong, organic payments growth in the fourth quarter of 29 percent year-over-year
MINNEAPOLIS — Feb. 5, 2014 — Digital River, Inc. (NASDAQ: DRIV), a leading global provider of Commerce-as-a-Service solutions, reported financial results for the fourth quarter and full year of 2013.
Fourth Quarter and Full-Year Ended December 31, 2013
Fourth quarter revenue totaled $101.2 million, exceeding management’s fourth quarter revenue guidance of $96.5 to $100.5 million. For the full year 2013, revenue was $389.7 million, exceeding management’s full year 2013 revenue guidance of $385 to $389 million. In 2012, fourth quarter revenue from continuing operations was $98.1 million, and full year revenue from continuing operations was $370.5 million.
Fourth quarter 2013 GAAP net loss from continuing operations was $0.1 million or $0.00 per share, exceeding management’s fourth quarter GAAP guidance of a net loss from continuing operations of $0.10 to $0.03 per share. For the full year 2013, GAAP net loss from continuing operations was $18.5 million or a net loss of $0.58 per share, exceeding management’s full year 2013 GAAP guidance of a net loss from continuing operations of $0.67 to $0.60 per share. In 2012, fourth quarter GAAP net loss from continuing operations was $188.8 million or $5.77 per share, and full year GAAP net loss from continuing operations was $183.6 million or $5.53 per share.
Fourth quarter 2013 non-GAAP diluted net income from continuing operations was $8.3 million or $0.22 per diluted share, which was at the high end of management’s fourth quarter non-GAAP guidance of $0.17 to $0.22 per diluted share. For the full year 2013, non-GAAP diluted net income from continuing operations was $20.0 million or $0.61 per diluted share, at the high end of management’s non-GAAP guidance of $0.56 to $0.61 per diluted share. In 2012, fourth quarter non-GAAP diluted net income from continuing operations was $12.9 million or $0.32 per diluted share, and full year non-GAAP diluted net income from continuing operations was $41.4 million or $1.02 per diluted share.
“I am pleased to report that we closed the year with solid results. Our revenue performance was driven by strong holiday sales through our customers’ commerce channels and the continued, strong organic growth of our global payments offerings,” said David Dobson, Digital River’s CEO. “We remain committed to creating more value for our customers and shareholders. The strategic transformation framework, which we initiated in 2013, is driving our execution priorities. As a result of the progress we have made, we have increased customer retention, expanded our business with existing customers, and started to win new customers in selected segments. As a result, we are going to redeploy some of the financial capacity we created in the fourth quarter to accelerate our technology transformation, continue to expand our global footprint and increase our investment in payments to sustain the rapid growth of this part of our business.”
During the fourth quarter, the company repurchased approximately $7.3 million of common stock. All transactions took place in the open market.
First Quarter and Full Year 2014 Guidance
Management’s forward-looking financial expectations for the first quarter of 2014 are as follows:
- Revenue, ranging from $92.0 to $95.0 million
- GAAP EPS, ranging from a net loss of $0.15 to a net loss of $0.09 per share
- Non-GAAP EPS, ranging from $0.07 to $0.11 per diluted share, using a 21 percent tax rate
Management’s forward-looking financial expectations for the full year 2014 are as follows:
- Revenue, ranging from $365 to $378 million, representing a revenue decline of 3 percent to 6 percent compared to revenue from continuing operations in 2013
- GAAP EPS, ranging from a net loss of $0.53 to a net loss of $0.39 per share
- Non-GAAP EPS, ranging from $0.35 to $0.45 per diluted share, using a 21 percent tax rate
A detailed table providing a reconciliation of the company’s GAAP and non-GAAP earnings guidance estimates can be found at the end of this press release.
Digital River will host an open-access audio webcast and conference call today at 4:45 p.m. EST to discuss fourth quarter and full year 2013 financial results. The live audio webcast can be accessed on the Investor Relations section of its corporate website. Alternatively, to listen to the live broadcast of the call, dial +1 (408) 427-3861 and use conference ID # 31354966. A webcast and audio replay of the presentation will be archived on Digital River’s corporate website.
About Digital River, Inc.
Backed by 20 years of e-commerce experience, Digital River is recognized as a leading global provider of Commerce-as-a-Service solutions. Companies of all sizes rely on Digital River’s multi-tenant, SaaS commerce, payments and marketing services to manage and grow their online businesses. In 2013, Digital River processed more than $30 billion in online transactions, connecting B2B and B2C digital products and cloud service companies as well as branded manufacturers with buyers across multiple devices and channels, and nearly every country in the world.
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.
Non-GAAP Net Income Calculation
Digital River’s non-GAAP net income (loss) from continuing operations is computed by adjusting GAAP pre-tax income from continuing operations as reported on the company’s statement of operations by adding back, when applicable, amortization of acquisition-related intangibles, stock-based compensation expense, intangible impairments, restructuring related costs, litigation settlement related costs, acquisition and integration costs, realized and unrealized investment gains or losses, and goodwill impairments, net of a 21 percent tax rate. Non-GAAP diluted earnings per share from continuing operations is calculated using the “if-converted” method with respect to the issuance of the company’s 2004 and 2010 convertible notes. In computing non-GAAP diluted earnings per share from continuing operations, if an increase in earnings per share will not result, adjust non-GAAP net income from continuing operations to add back debt interest and issuance cost amortization expenses, net of the tax benefit, and then divide this amount by fully diluted shares outstanding. This amount, representing the fully diluted earnings computation, is selected to represent non-GAAP diluted earnings per share from continuing operations for each period presented. 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.
This press release contains forward-looking statements, including statements regarding the company’s anticipated future growth and future financial performance, as well as statements containing the words “anticipates,” “believes,” “plans,” “will,” “expects,” or “guidance” 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 commerce and payments markets; challenges associated with international expansion; the variability of foreign exchange rates; any breach or compromise of the company’s security systems; our ability to successfully manage our business while undertaking significant technical initiatives; 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, 2012. 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 reflect management’s expectations as of February 5, 2014. 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 online payments, progress with key partners, and other factors. The guidance assumes, among other things, that there are no material 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 or future guidance to reflect events or circumstances that may arise after the date hereof.