Digital River Beats First Quarter Revenue and Per Share Expectations.Business Editors & Technology Writers MINNEAPOLIS--(BUSINESS WIRE)--April 25, 2001 Company Operations are Cash Flow Positive in Q1 Digital River, Inc. (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on :DRIV DRIV Drive (street type) ), the leading global Commerce Service Provider (CSP (1) (Certified Systems Professional) An earlier award for successful completion of an ICCP examination in systems development. See ICCP. (2) (Commerce Service P ), today reported revenues of $13.0 million for the quarter ended March 31, 2001. This represents a sequential increase of 30-percent from revenue of $10.1 million in the fourth quarter, and a year-over-year increase of 90-percent from revenue of $6.9 million in the first quarter of 2000. At March 31, 2001, cash and investments totaled $32.7 million, an increase of $800,000 from year-end year-end also year·end n. The end of a year. adj. Occurring or done at the end of the year: a year-end audit. Noun 1. levels. The net loss prior to goodwill amortization and acquisition-related costs was $1.6 million, or $0.07 per share, in the first quarter, a 32-percent improvement from the fourth quarter net loss of $2.4 million, or $0.11 per share, and significantly better than consensus analyst estimates of a loss of $0.10 per share. The net loss for the quarter, including goodwill amortization and acquisition-related costs, was $6.2 million, or $0.28 per share, compared with a net loss of $5.4 million, or $0.24 per share, in the fourth quarter. "Digital River continues to set the pace as the leading Commerce Service Provider," said Joel Joel, book of the Bible Joel, prophetic book of the Bible. It is a collection of the oracles of an otherwise unknown prophet, dated variously from the 9th to the 3d cent. B.C., though a date in c.400 B.C. is likely. Ronning Ronning, Rønning, or Rönning can mean
Ronning continued, "Because of our confidence in our company and future, we also announced a share repurchase Share Repurchase A program by which a company buys back its own shares from the marketplace, reducing the number of outstanding shares. This is usually an indication that the company's management thinks the shares are undervalued. program of up to $5 million of our outstanding shares." Industry-Leading Software and Digital Commerce Services The Software Services Division generated $10.5 million in revenue for the Company in the quarter, versus revenues of $7.7 million in the fourth quarter. The division had earnings before income taxes, depreciation and amortization expenses (EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become ) of $1.6 million for the quarter, a more than seven-fold Adj. 1. seven-fold - having seven units or components septuple, sevenfold multiple - having or involving or consisting of more than one part or entity or individual; "multiple birth"; "multiple ownership"; "made multiple copies of the speech"; "his multiple increase from $229,000 in Q4. The strong first quarter performance of the Software Services Division was the result of seasonal product sales as well as the January January: see month. launch of global sites for Symantec (Symantec Corporation, Cupertino, CA, www.symantec.com) A software company founded in 1982 by Dr. Gary Hendrix. It was acquired by Gordon Eubanks in 1984 and released its Q&A file manager the following year. In 1990, it merged with Peter Norton Computing, Inc. , a leading software publisher. "Digital River is the number one provider of e-commerce e-commerce, commerce conducted over the Internet, most often via the World Wide Web. E-commerce can apply to purchases made through the Web or to business-to-business activities such as inventory transfers. services for the software publishing market," said Jay Kerutis, Digital River's president of its Software and Digital Commerce Services Division. "Thousands of companies depend on us to help grow and sustain their businesses. We have grown our business by adding new top-tier clients and by generating incremental Additional or increased growth, bulk, quantity, number, or value; enlarged. Incremental cost is additional or increased cost of an item or service apart from its actual cost. sales through e-marketing campaigns for current clients." Execution of E-Business (Electronic-BUSINESS) Doing business online. The term is often used synonymously with e-commerce, but e-business is more of an umbrella term for having a presence on the Web. Services Strategy The E-Business Services Division generated $2.5 million in revenue for the Company in the quarter, a sequential increase of nearly 10-percent, from $2.2 million in the fourth quarter. The division's EBITDA loss was $2.5 million for the quarter. Digital River's E-Business Services Division added eight new client contracts in the first quarter, resulting in a total of 53 client contracts, at March 31, 2001. New contracts announced since the end of the fourth quarter include Brunswick Brunswick, cities, United States Brunswick. 1 City (1990 pop. 16,433), seat of Glynn co., SE Ga., on St. Simon's Sound near the Atlantic coast; laid out 1771–72, inc. 1856. It is a port of entry with numerous container docks. Bowling and Billiards billiards, any one of a number of games played with a tapered, leather-tipped stick called a cue and various numbers of balls on a rectangular, cloth-covered slate table with raised and cushioned edges. , GemPlus and strategic partnerships with Lightning Source and Ingram
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"During the quarter, we took significant steps to solidify so·lid·i·fy v. so·lid·i·fied, so·lid·i·fy·ing, so·lid·i·fies v.tr. 1. To make solid, compact, or hard. 2. To make strong or united. v.intr. our product offering and expand our markets," said Ronning. "We continue to set the standard for those in our industry. Our focus on return-on-investment for our clients makes us an invaluable partner and forms the basis of our ongoing relationships." Future Expectations Digital River expects to achieve overall Company profitability in the fourth quarter of 2001, when it expects to generate $0.01 of earnings per share, prior to the amortization of goodwill. For 2001, Digital River anticipates revenues to increase approximately 83-percent from the prior year, to $57 million. The Company anticipates a seasonal pattern consistent with prior years, including a slower second quarter, and strong growth during the remainder of the year. The Company expects a loss per share, prior to goodwill amortization, of $0.22 for 2001. In the second quarter, the Company expects to generate revenue of $12.4 million. The E-Business Services Division revenue is projected to be approximately 27-percent of total revenue in the second quarter. Digital River anticipates that the second quarter loss per share, prior to goodwill amortization and acquisition-related expenses, will be $0.10. The Company expects cash balances to decrease by $7 million in the second quarter. In addition to the EBITDA loss, the decline is comprised primarily of $3 million related to a decrease in payables Payables Related: Accounts payable from the anticipated seasonal decline in software product gross sales Gross Sales A measure of overall sales that isn't adjusted for customer discounts or returns, calculated simply by adding all sales invoices, and not including operating expenses, cost of goods sold, payment of taxes, or any other charge. and approximately $2 million in capital expenditures. Cash balances are anticipated to total in excess of $20 million at December December: see month. 31, 2001. About Digital River Founded in 1994, Digital River is a leading global Commerce Service Provider (CSP), offering thousands of companies complete e-commerce systems and services. The Company's world-class infrastructure and professional services (job) professional services - A department of a supplier providing consultancy and programming manpower for the supplier's products. are proven to 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 ful·fill also ful·fil tr.v. ful·filled, ful·fill·ing, ful·fills also ful·fils 1. To bring into actuality; effect: fulfilled their promises. 2. and returns, e-marketing and customer service. Digital River's clients include Symantec, Fujitsu, 3M, Siemens, Nabisco, Polaris, Novell, Autodesk, SONICblue and Adaptec. For more details about Digital River, visit the corporate Web site at www.digitalriver.com or call 952-253-1234. Digital River will hold a first quarter conference call today at 4:45 p.m. Eastern Standard Time. To access the call, please dial 877-422-0170, or go to the investor page on the Digital River website (www.digitalriver.com) and install any necessary audio software. Digital River is a registered trademark of Digital River, Inc. All other trademarks and registered trademarks are trademarks of their respective owners. Forward-Looking Statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. 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.
Digital River, Inc.
First Quarter Results
(unaudited, in thousands, except per share amounts)
Condensed Consolidated Balance Sheets
March 31, 2001 December 31, 2000
Assets
Current assets
Cash and investments $ 32,714 $ 31,897
Other current assets 8,378 6,026
------ ------
Total current assets 41,092 37,923
Property and equipment, net 14,423 13,570
Goodwill and other assets 23,778 17,910
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Total assets $ 79,293 $ 69,403
Liabilities and stockholders
equity
Current liabilities
Accounts payable $ 19,734 $ 14,339
Deferred revenue 1,631 1,833
Accrued payroll and other
liabilities 4,905 4,713
------ ------
Total current liabilities 26,270 20,885
Stockholders equity 53,023 48,518
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Total liabilities and stockholders
equity $ 79,293 $ 69,403
Condensed Consolidated Statements of Operations
Three months ended
March 31,
2001 2000
Revenue $ 13,047 $ 6,883
Costs and expenses:
Direct cost of services 557 295
Network and infrastructure 2,964 1,790
Sales and marketing 6,785 6,479
Product research and development 2,469 3,663
General and administrative 1,097 1,234
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Loss before interest, tax,
depreciation and amortization (825) (6,578)
Depreciation and amortization 1,120 703
Amortization of goodwill and
acquisition related costs 4,644 5,394
------ ------
Loss from operations (6,589) (12,675)
Interest income 348 684
------ ------
Net loss $ (6,241) $ (11,991)
Net loss per share before
amortization of goodwill and
acquisition costs $ (.07) $ (.32)
Net loss per share $ (.28) $ (.58)
Weighted average shares outstanding 22,482 20,775
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