DRIV - Started a position in my e-Commerce enabling group.
Digital River provides comprehensive electronic commerce outsourcing solutions to software publishers and online retailers. DRIV derives its revenue primarily from sales of third party software. For the three months ended 3/31/00, sales rose from $11.7 million to $32.8 million. Net loss rose from $5.3 million to $12 million. Revenues reflect growth in the software publisher and online retailer clients. Higher loss reflects lower margin software publisher clients.
DRIV got beaten down due to shortfall of sales estimate for Q2, at 30-31.5 mil:
Digital River Announces Second Quarter 2000 Expectations
MINNEAPOLIS, Jun. 15, 2000 - Digital River, Inc., (Nasdaq:DRIV) today announced it expects sales for the second quarter ending June 30, 2000 to be in the range of $30 million to $31.5 million, which is lower than the consensus analyst estimate. The company believes it will meet or better the consensus loss per share estimate for the quarter.
"The expected results are related to greater than anticipated seasonality in our Software Services division," said Joel Ronning, chief executive officer. "The second quarter is typically slower in the software market and a lack of new product offerings from our client base compounded the situation.
"We continue to believe we are on track to meet the previously announced profitability targets of profit before depreciation and amortization in our Software Services division by December of 2000 and overall company profitability before depreciation and amortization in latter 2001.
"On other positive notes, we continue to see strong growth in our E-Business Services division and expect we will meet consensus sales estimates for this division for the e second quarter. We also expect to have some important new Software Services division clients coming on board in the third quarter as well as begin to see the benefit of new service offerings including expanded volume licensing and purchase order capabilities."
Digital River (Nasdaq: DRIV) is the world's largest Commerce Service Provider (CSP). The company provides more than 7,000 companies with a complete e-commerce solution including site design, hosting and system management. The company develops e-commerce solutions for manufacturers, distributors, retailers, software publishers and other large corporations including Fujitsu, 3M, Coors, Dell, MicronPC, Autodesk, Hasbro, Staples.com, Cyberian Outpost, Adaptec, CompUSA, ScanSoft, Fox Interactive and Egghead.com.
This sales shortfall puts the company on a negative sequential growth for the first time (Q1 sales = 32.8 mil), though doubles same Q last year (15.8 mil). Current Market cap of 181 mil puts it at 1.64 X trailing 12 months sales (including Q2 estimated). Current cash position (30 mil) should provide great support for DRIV to achieve profitability by 2001.
Very cheap compared to EXDS which is selling at a P/S of 51X, considering that they provide these services:
Commerce Design
- Commerce Strategy & Goals
- Site Design & Construction
- Shopping Basket Design
Commerce Management
- Transaction Processing
- Fraud Screening
- Fulfillment Management
- Data Center Management
- Legacy Systems Integration
- Customer Service & Support
- Site Security
Commerce Growth
- Online Reporting
- Best Practices Online Marketing
- Campaign Management
- Promotions Planning & Execution |
