Digital River (DRIV) raises guidance, stock up

| About: Digital River, (DRIV)

Digital River, which builds and manages e-commerce web sites for software publishers and other vendors including Symantec, Autodesk, Staples and H&R Block, beat Q4 estimates and raised guidance. DRIV was up about 8% in late trading. Details as follows:

Q4 Results

  • Revenue of $48.0 million, up 77% year over year, beat company guidance of $42.5 million.
  • Pro-forma EPS of $0.43 beat the consensus estimate of $0.35, and was up from $0.20 a year earlier. Pro-forma EPS excludes amortization of acquisition-related expenses and a litigation reserve credit.
  • Gross margin was 88.7%, 351 basis points higher than a year earlier and 361 basis points higher than Q3.
  • Balance sheet: cash and investments totaled $292.1 million, up $160.2 million from a year earlier, and $34.6 million from Q3.

Q1 Guidance

  • Revenue of $48.5 million.
  • GAAP EPS of
    $0.30, pro forma EPS of $0.40.

Full Year 2005 Guidance

  • Revenue of $195.0 million, higher than previous guidance of $188 million.
  • GAAP EPS of $0.93, higher than previous guidance of
  • Pro forma EPS of $1.63, higher than previous
    guidance of $1.58. (Pro forma EPS for 2004 was $1.24.)

Here's what Joel Ronning, Digital River's CEO, said about 2005 strategy in the press release:

"Since the company was launched, Digital River aggressively expanded beyond its roots of providing a base e-commerce engine. On top of our world-class infrastructure, we added new strategic marketing programs, opened international markets and developed technologies to provide our clients with new customers and revenue streams. During the coming year, we intend to build even more value into our model by offering our clients access to what we believe can become the world's largest hub for the online sales of digital products. We intend to achieve this goal by further externalizing the catalog of digital content that we've amassed through an expanding network of software and content publishers, online portals, content sites and online retailers. It will be our job to manage the catalog, handle the online orders, deliver the digital products, collect the license royalties and pay our clients. We intend to invest heavily in the network in 2005 and beyond."

DRIV chart below.

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