got DRIV last Friday, hoping for a Monday gap. Gap never happened, so held.
Now with yesterday's news, looks like I got lucky.
Also, The Sept 10 calls (DQI-IB) seem very attractive here
(BSNS WIRE) Digital River Announces a Nearly 40 Percent Improvement in Year
Digital River Announces a Nearly 40 Percent Improvement in Year-Over-Year
Revenue; Company Also Announces Key Management Additions
Business Editors
MINNEAPOLIS--(BUSINESS WIRE)--April 24, 2002--Digital River, Inc.
(Nasdaq:DRIV), a leading global e-commerce outsource provider, today
reported revenue of $18.1 million for the quarter ended March 31,
2002. This represents a year-over-year increase of nearly 40 percent
from revenue of $13.0 million in the first quarter of last year, and a
sequential increase from revenue of $17.7 million last quarter. This
performance was consistent with the Company's previous guidance of
$18.0 million. Gross margins averaged 81.6 percent in the first
quarter, an 860 basis point year-over-year improvement and 30 basis
points higher than the prior quarter.
Net income for the first quarter, prior to certain charges and the
amortization of acquisition-related expenses was $0.5 million, or
$0.02 per share, compared to a net loss of $1.6 million, or $0.07 per
share, in the first quarter of last year. This performance was also in
line with the range of expectations that the Company outlined in a
previous announcement. The net loss for the quarter, including the
impact of the $2.5 million reserve established for pending litigation
and the closing of one of its offices and the amortization of
acquisition-related expenses, was $3.5 million, or $0.13 per share,
compared with a net loss of $6.2 million, or $0.28 per share, in the
first quarter of last year.
"Despite what has been a very challenging period for our industry,
we have emerged as a strong company and a market leader in e-commerce
outsourcing," said Joel Ronning, Digital River's CEO. "We have
accomplished another key milestone, as we recorded our highest level
of quarterly revenue and gross margin in our operating history. Going
forward, we plan to focus on several key areas to accelerate revenue
growth. We've already made key additions to our senior management
team, and will be expanding our sales force and launching new
strategic marketing programs."
Further delivering on its acquisition strategy, late in the first
quarter the company announced its tenth and eleventh acquisitions in
the past three years. The Company acquired certain assets and related
liabilities of Beyond.com Corporation, a leading provider of
e-commerce technology, and CCNow.com, a single source provider of
e-commerce services for thousands of small businesses. Both of these
acquisitions were neutral to Digital River's first quarter earnings,
but are expected to be accretive to earnings commencing in the second
quarter of this year. Terms of these transactions have been disclosed
in previous public filings.
"We believe these acquisitions will be valuable additions to the
Digital River platform," said Ronning. "They are squarely targeted at
markets in which we are building critical mass. We will continue to
look for acquisition opportunities that further strengthen our market
leadership position, are accretive to earnings and support our
long-term growth objectives."
Segmented Financial Results
The Software Services Division generated $14.7 million in revenue
in the quarter, a nearly 40 percent increase over revenue in the first
quarter of last year and a sequential increase from revenue of $14.3
million in the fourth quarter. The division had earnings before
interest, taxes, depreciation and amortization expense (also known as
EBITDA) of $4.4 million for the quarter, representing the division's
sixth consecutive quarter of positive EBITDA.
"Digital River is the number one provider of e-commerce services
for the software publishing market. Thousands of companies depend on
us to help grow and sustain their businesses," said Jay Kerutis,
Digital River's president of its Software Services Division. "Even
during this challenging period, our business continues to grow as a
result of new clients and the incremental sales we help generate
through the personalized e-marketing campaigns we design for our
existing clients."
The E-Business Services (EBS) Division generated $3.4 million in
revenue in the quarter. This was a more than 33 percent increase in
revenue from the same period in 2001 and flat to fourth quarter
levels. The division's EBITDA loss was $2.5 million for the quarter.
"Despite longer sales cycles for potential clients than previously
anticipated, I am pleased with our sales pipeline, both in terms of
size and quality," said Ronning. "During the quarter, we took
significant steps to solidify our product offering, further develop
our go-forward technology platform and expand our markets. We continue
to set the standard for those in our industry. Our keen focus on
return-on-investment for our clients makes us an invaluable partner to
them and forms the basis for our ongoing relationships."
Future Expectations
For the full year 2002, the Company continues to expect total
revenue to be approximately $73-75 million. Digital River expects the
software services segment revenue to comprise approximately 78 percent
of the total company revenue. In a prior announcement, the Company had
indicated that it believed that earnings per share for the year would
be $0.23 to $0.25, prior to the first quarter charges and the
amortization of acquisition-related expenses. Digital River is
reiterating those expectations.
For the second quarter, the Company anticipates a seasonal pattern
consistent with prior years, including a seasonally slower quarter for
the Software Services Division. Digital River expects second quarter
revenue to total approximately $17.0 million, a 30 percent increase
from the second quarter of last year. The Company expects the
e-business segment to comprise approximately 23 percent of the revenue
in the quarter. The Company expects that reduced operating expense
levels in the second quarter will offset the anticipated seasonal drop
in software revenue. As a result, second quarter earnings are expected
to total $0.02 per share, prior to the amortization of
acquisition-related expenses.
Management Changes
In order to position itself to meet its long-term growth
objectives, the Company has also announced the addition of several key
management positions in the area of sales and product marketing. The
additions include Tom Venable, senior vice president of EBS Sales;
Dave Rech, vice president of account management; and Dave Alampi, vice
president of product marketing and management.
Also, the Company has announced the resignation of its chief
financial officer, Bob Strawman. Mr. Strawman has resigned for
personal reasons and will remain with the Company for the next several
months during the transition to the new CFO.
Digital River has also announced that Carter Hicks, previously its
senior vice president of operations, will become the Company's new
CFO. Prior to joining Digital River, Mr. Hicks served as CFO for
Oppenheimer, Wolff and Donnelly LLP, a Minneapolis-based international
law firm, as well as Globelle USA, an electronics distributor. He was
also the general auditor for Grand Metropolitan and the Pillsbury
Company as well as an audit partner of Peat, Marwick, Mitchell and
Company (now KPMG).
"I'd like to take this opportunity to thank Bob for his support
and dedication during his four year tenure with Digital River and we
wish him good luck in the future," said Ronning. "I am very pleased to
announce the addition of Carter as our new CFO. Carter has already had
tremendous impact and has made significant contributions to our
organization. The skill set that he brings has been an invaluable
asset in helping us manage our growth. I am excited by all of the
additions to our already strong management team and I look forward to
our future."
About Digital River
Digital River, a leading global e-commerce outsource provider
founded in 1994, offers more than 32,000 companies the ability to cut
costs and grow their businesses by using its complete e-commerce
systems and services. The company's world-class infrastructure and
e-marketing services help grow businesses quickly and profitably while
reducing risk. Digital River's commerce services include e-commerce
strategy, site development and hosting, order and transaction
management, system integration, product fulfillment and returns,
e-marketing and customer service. Digital River's clients include
Symantec, Motorola, Fujitsu, 3M, Siemens, Polaris, Major League
Baseball, Novell, Autodesk, SONICblue, Adaptec and Staples.com. For
more details about Digital River, visit the corporate Web site at
www.digitalriver.com or call 952-253-1234.
Digital River is a registered trademark of Digital River, Inc. All
other company and product names are trademarks, registrations or
copyrights of their respective owners.
Digital River will hold a first quarter conference call today at
4:45 p.m. Eastern Daylight Time. To access the call, please dial
877-422-0170, or listen to the webcast at
drhome.digitalriver.com.
Please go to the investor page to access the call and install any
necessary audio software.
Forward-Looking Statements
Except for the historical information contained herein, this press
release contains forward-looking statements, including statements
containing the words, "believes," "anticipates," "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 any future results,
performance or achievements 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 electronic commerce market; and other risk
factors referenced in the Company's public filings with the Securities
and Exchange Commission.
-0-
*T
Digital River, Inc.
First quarter results
(Unaudited, in thousands, except per share amounts)
Condensed Consolidated Balance Sheets
March 31, Dec. 31,
2002 2001
-------------------
Assets
Current assets
Cash and investments $30,825 $31,655
Other current assets 12,011 10,174
-------------------
Total current assets 42,836 41,829
Property and equipment, net 15,990 16,146
Goodwill and other assets 28,598 20,252
-------------------
Total assets $87,424 $78,227
===================
Liabilities and stockholders' equity
Current liabilities
Notes payable $ - $ 2,500
Accounts payable 29,740 19,360
Deferred revenue 889 1,106
Accrued payroll and other liabilities 6,332 4,839
-------------------
Total current liabilities 36,961 27,805
Stockholders' equity 50,463 50,422
-------------------
Total liabilities and stockholders' equity $87,424 $78,227
===================
Condensed Consolidated Statements of Operations
Three months ended
March 31,
2002 2001
-------------------
Revenue $18,070 $13,047
Costs and expenses:
Direct cost of services 615 557
Network and infrastructure 2,712 2,964
Sales and marketing 8,013 6,785
Product research and development 3,274 2,469
General and administrative 1,615 1,097
Pending litigation and other charges 2,500 -
-------------------
Loss before interest, taxes,
depreciation and amortization (659) (825)
Depreciation and amortization 1,374 1,120
Amortization of acquisition related expenses 1,549 4,644
-------------------
Loss from operations (3,582) (6,589)
Interest income 52 348
-------------------
Net loss $(3,530) $(6,241)
===================
Net earnings (loss) per share before pending
litigation and other charges and amortization of
acquisition related expenses $ 0.02 $ (0.07)
Net loss per share before amortization of
acquisition related expenses $ (0.07) $ (0.07)
Net loss per share $ (0.13) $ (0.28)
Weighted average shares outstanding - basic 26,449 22,482
Weighted average shares outstanding - diluted 29,978 n/a
*T
--30--cr/ms*
CONTACT: Digital River, Inc., Minneapolis
Investor Contact:
Al Galgano, 952/253-8406
agalgano@digitalriver.com
or
Media Contact:
Gerri Dyrek, 952/253-8396
gdyrek@digitalriver.com |
