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Digital River Shows Growth in Q3

Digital River , a business ASP, today reported that its third quarter revenue for 2001 was $14.0 million, up 84 percent from third quarter of 2000 ($7.6 million). The current quarterly earnings also represent a 7-percent increase from revenue of $13.1 million in the second quarter of this year.

While reporting positive growth, the Eden Prairie, Minn-based provider of ecommerce services to enterprise Web sites, also announced a third-quarter net loss (prior to goodwill amortization and acquisition related costs)of $462,000 or $0.02 per share. However, this represent a significant year-over-yaer improvement of 92 percent. In the third quarter of 2000, Digial River reported a loss of $0.25 loss per share. Also, last quarter, the company net loss was $1.2 million (or $0.05 per share).

The net loss for the quarter, including goodwill amortization and acquisition related costs, was $4.4 million (or $0.18 per share) compared to a net loss of $8.1 million (or $0.37 per share) in the third quarter of 2000. This performance also compares with a net loss of $5.1 million (or $0.21 per share) last quarter. At September 30, 2001, cash and investments totaled $25.4 million.

For the nine-month period that ended September 30, 2001, total revenue was $40.1 million, a 90-percent increase from $21.1 million in the same period last year. Through the first nine months of this year, the net loss prior to amortization of goodwill and acquisition related costs was $3.3 million (or $0.14 per share). The net loss, including the amortization of goodwill and acquisition related costs, totaled $15.7 million (or $0.66 per share)

Digital River's management also points to what it calls "two significant company milestones."

  • For the first time since becoming a public company in 1998, Digital River recorded positive EBITDA (earnings before interest, taxes, depreciation and amortization) of $590,000 in the third quarter.
  • September was the first month that Digital River achieved profitability on a company-wide basis, prior to goodwill amortization and acquisition-related costs.

Digital River recently completed two acquisitions. It bought substantially all of the assets and related liabilities of Orbit Commerce, an e-business outsource provider. In addition, the company acquired the assets of RegSoft, a company that specializes in e-commerce outsourcing services for software publishers and authors. Digital River's agreements with these two companies mark the seventh and eighth acquisitions the company has made in two-and-a-half years.

"Throughout these acquisitions, we have demonstrated expertise in integrating clients, assimilating cultures and consolidating operations to make acquisitions accretive to our bottom line," said Bob Strawman, Digital River's CFO.

In September, Digital River was named an ASPnews Top 20 ASP.