The recession doesn’t seem to be troubling Digital River, Inc. (NASDAQ:DRIV) too much as they continued to execute flawlessly. Q1 revenues of $102.9 million beat the projected $96-$100 million guidance, and slipped a minor 1% over the last year’s $103.6 million. EPS of $0.56 grew over last year’s $0.53 and exceeded the company’s projected EPS of $0.48-$0.53 for the quarter.
By segment, Symantec-related revenue was 32.1% of the quarter’s revenue compared with 36.6% a year ago. Direct Symantec revenue during the quarter was 23.8% compared to 25.5% a year ago. International e-commerce revenues contributed 44.1%, compared with 37.9% in Q1 2008.
Going forward, they are projecting revenues of $95-$97 million with EPS of $0.39-$0.42.
For the year, the company plans to focus on product development and sales execution goals, and they are seeing results in the first quarter itself. In terms of product development, they launched a BlackBerry application store for Research in Motion (RIM). Consumers can now shop in the mobile store from their smartphones to buy and download popular applications. Digital River expects the market for mobile commerce to pick up and recently announced the launch of a new mobile commerce offering that includes a smart online storefront. This storefront tailors its display and payment options for PC computers or mobile devices while aiming to create a user-friendly experience.
The company’s sales goals can be seen to be gaining momentum through the expansion of their relationships with the likes of Eastman Kodak, Symantec and Microsoft. For Kodak, they are now responsible for managing B2B sites for the photography giant’s document imaging and print on demand groups. They will work with Symantec to optimize consumer renewal and upgrade experiences for the former’s OEM and retail programs and support the launch of several new versions of Symantec products. For Microsoft, they rolled out online stores to support the sales of Office for Mac.
Digital River believes that the current economic conditions are ideal for driving consolidation in the retail market. As publishers and consumer electronics companies continue to be squeezed by retailers, direct-to-consumer channels will become a more attractive way to offset declining retail revenues, thus giving Digital River an added advantage.
They continued to expand into the gaming space through partnership agreements. They made an equity investment in Fat Foogoo, an in-game commerce provider, and signed a host and reseller agreement with Play Expert, a provider of in-game community management tools.
During the year Digital River expects to make more business development announcements through acquisitions and global partnerships. The company is surely on the right track. Their stock has also been scaling heights and reached a 52-week high of $41.18 earlier this month. It is currently trading at $38.72 with a market capitalization of $1.48 billion.