• Q2
revenue up 39 percent year-over-year
• Q2 GAAP diluted EPS up 15 percent
year-over-year
• Q2 non-GAAP diluted EPS up 41 percent year-over-year
MINNEAPOLIS - July 27, 2006 --
Digital River, Inc. (NASDAQ: DRIV), a global leader in e-commerce outsourcing,
today reported its second quarter 2006 financial results.
Q2
Revenue
Second quarter revenue totaled $71.3 million, an
increase of 39 percent from revenue of $51.1 million in the second quarter of
2005.
Q2 GAAP Results
Second quarter GAAP
net income was $13.3 million, or $0.30 per diluted share, including $3.5 million
of stock-based compensation expense. This compared to net income of $10.2
million, or $0.26 per diluted share, including no stock-based compensation
expense in the second quarter of 2005. These results represent a year-over-year
increase of 30 percent in GAAP net income and 15 percent in GAAP diluted net
income per share.
Q2 Non-GAAP Results
Based
on the Company’s non-GAAP measurements, second quarter non-GAAP net income was
$18.7 million, or $0.41 per diluted share, compared to net income, on a similar
basis, of $12.1 million, or $0.29 per diluted share in the second quarter of
2005. This represents a year-over-year increase of 54 percent in non-GAAP net
income and 41 percent in non-GAAP diluted net income per share.
Non-GAAP
net income is computed by starting with GAAP pre-tax income as reported on the
Company’s statement of operations, adding back amortization of
acquisition-related intangibles, and beginning in 2006, stock-based compensation
expense, to calculate non-GAAP pre-tax income. This figure is then taxed at 31
percent, the Company’s anticipated effective tax rate, to arrive at non-GAAP net
income. This amount is then divided by fully-diluted GAAP shares outstanding,
which includes the impact of the Company’s contingent convertible notes, 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
announcement.
Six Months Ended June 30, 2006,
Revenue:
In the first half of 2006, the Company reported
revenue of $149.3 million. This represents a 41 percent increase from revenue of
$105.7 million in the similar period of the prior year.
Six
Months Ended June 30, 2006, GAAP Results:
In the first half of
2006, GAAP net income was $29.7 million, or $0.70 per diluted share, including
$6.9 million of stock-based compensation expense. This compared to net income of
$24.3 million, or $0.61 per diluted share, including no stock-based compensation
expense in the first half of 2005.
Six Months Ended June 30,
2006, Non-GAAP Results:
Based on the Company’s non-GAAP
measurements, non-GAAP net income in the first half of 2006 was $39.4 million,
or $0.91 per diluted share, compared to net income on a similar basis of $26.8
million, or $0.65 per diluted share in the first half of 2005.
“We are
pleased with our solid second quarter results,” said Joel Ronning, Digital
River’s CEO. “During last quarter, we continued to excel in global online
markets, winning new business, and expanding our footprint and infrastructure.
The ability to manage complex global online operations and our expertise in
marketing to local online shoppers in worldwide geographies have proven to be
the most compelling differentiators for Digital River in the market
today.
“We have secured significant incremental business from major
clients and expect to be awarded more. We plan to provide additional details on
these wins in the near future,” continued Ronning. “We believe this new business
represents a strong endorsement of our value proposition and core business
model, and will fuel growth in 2007 and beyond.”
Q3 2006
Guidance
Forward-looking guidance for the third quarter ending
September 30, 2006, is as follows:
- Revenue of $74.0 million;
- GAAP
diluted net income per share of $0.31, including stock-based compensation
expense of $3.6 million; and
- Non-GAAP diluted net income per share of
$0.38.
Full Year 2006 Guidance
Forward-looking guidance for the full year ending December 31, 2006, is as
follows:
- Revenue of $305 million;
- GAAP diluted net income per share
of $1.37, including stock-based compensation expense of $14.1 million; and
-
Non-GAAP diluted net income per share of $1.74.
Digital River will hold a
second quarter conference call today at 4:45 p.m. Eastern Daylight Time. A live
webcast of the conference call can be accessed from
http://www.digitalriver.com/2006q2earnings/. Alternatively, a live broadcast of
the call may be heard by using conference ID # 7600156 and dialing 888-896-0863
inside the United States or Canada, or by calling 973-582-2741 from
international locations. A webcast replay of the call will be archived on the
Company’s corporate Web site.
Digital River's Q2-2006 Financial
Tables
About Digital River, Inc.
Digital River,
Inc., a global leader in e-commerce outsourcing, builds and manages online
businesses for more than 40,000 software publishers, manufacturers, distributors
and online retailers. 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 prevention, 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 in major U.S. cities
as well as Cologne, Germany; London, England; Shannon, Ireland; Luxembourg,
Luxembourg; Taipei, Taiwan; and Tokyo, Japan. For more details about Digital
River, visit the corporate Web site at www.digitalriver.com or call
952-253-1234.
Forward-Looking Statements
This
press release contains forward-looking statements, including statements
regarding the Company’s anticipated future growth, including the expansion of
its global business infrastructure, and 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 limited operating
history and variability of operating results; competition in the e-commerce
market; challenges associated with international expansion; 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
December 31, 2005. 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 third quarter 2006 and full year 2006 reflect Digital
River’s expectations as of July 27, 2006. Results may be materially affected by
many factors, such as changes in global economic conditions and consumer
spending, fluctuations in foreign currency rates, the rate of growth of online
commerce and the Internet and other factors. The guidance assumes, among other
things, that there are no changes to stock-based compensation expense and
anticipated tax rates, and that no additional intangible assets are recorded.
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. Fireclick is a registered trademark of Fireclick, Inc. All other
company and product names are trademarks, registrations or copyrights of their
respective owners.
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