Earnings Preview: Digital River

| About: Digital River, (DRIV)

Digital River (NASDAQ:DRIV) is expected to report Q2 earnings after market close Wednesday, July 30, with a conference call scheduled for 4:30 pm ET.


The consensus estimate is 33c for EPS and $91.02M for revenue, according to First Call. Management guidance from the last earnings call was for Q2 revenue of $91M. Guidance for FY08 was for $1.89 and $401M in revenue.

Analyst Views

Stanford is looking for Digital River to report in-line with consensus -- perhaps slightly better, given the company's historical trends of managing expectations and its belief that the company's outlook is usually conservative. Stanford believes that some upside is possible from the video gaming vertical, where data suggests online sales are growing dramatically. The firm remains bullish on Digital River's longer-term business outlook.

Friedman Billings says the worst may finally be behind Digital River now that the majority of the transition of Symantec's (NASDAQ:SYMC) global subscription business is completed. That said, Friedman believes Digital River will continue to be in the "investor penalty box" until the company proves the all-important Symantec relationship is poised for solid growth without any additional hiccups. The firm expects its estiamtes and the Street estimates to not change materially from the current Q3 consensus of $96.4M and 45c; FY08 $401.3M and $1.90.

Key issues for the conference call: Forward guidance; and commentary on the nascent Microsoft (NASDAQ:MSFT) and Electronic Arts (ERTS) relationships.