Digital River Reports Third Quarter Financial Results

Exceeds revenue and meets earnings expectations

MINNEAPOLIS, Oct. 25, 2007 — Digital River, Inc. (NASDAQ: DRIV), a leading provider of global e-commerce solutions, reported its third quarter financial results.

Third Quarter and Nine Months Ended Sept. 30, 2007
GAAP Results
Third quarter revenue totaled $82.5 million. This is an increase of 10 percent from revenue of $75.3 million in the third quarter of 2006. For the nine months ended Sept. 30, 2007, the Company reported revenue of $252.4 million. This represents a 12 percent increase from revenue of $224.6 million in the similar period of the prior year.

Third quarter GAAP net income was $15.3 million, or $0.35 per diluted share. This compared to net income of $14.8 million, or $0.33 per diluted share, in the third quarter of 2006. These results represent a year-over-year increase of 3 percent in GAAP net income and 6 percent in GAAP diluted net income per share. For the first nine months of 2007, GAAP net income was $50.5 million, or $1.12 per diluted share. This compared to net income of $44.5 million, or $1.04 per diluted share, in the similar period of 2006.

Non-GAAP Results
Based on the Company’s non-GAAP measurements, third quarter non-GAAP net income was $18.8 million, or $0.41 per diluted share. This compared to net income on a similar basis of $18.7 million, or $0.41 per diluted share, in the third quarter of 2006. Non-GAAP net income for the first nine months of 2007 was $61.9 million, or $1.34 per diluted share. This compared to net income on a similar basis of $58.2 million, or $1.32 per diluted share, during the first nine months of 2006.

Non-GAAP net income is computed by starting with GAAP pre-tax income as reported on the Company’s statement of operations, adding back amortization of acquisition-related intangibles and stock-based compensation expense, to calculate non-GAAP pre-tax income. This amount is then taxed at 31 percent, the Company’s current estimated effective tax rate, to arrive at non-GAAP net income. This amount is then divided by fully-diluted GAAP shares outstanding, which includes the impact of the Company’s contingent convertible notes, to derive non-GAAP diluted net income per share. To provide further clarity, a detailed reconciliation on the comparability of the GAAP and non-GAAP data has been provided in table form following the financial statements accompanying this announcement.

“Overall we are pleased with our third quarter financial performance,” said Joel Ronning, Digital River’s CEO.  “Our business continues to be fueled by growth in international markets, and our software and shareware businesses. In addition, we continue to sign key clients in the consumer electronics and game markets, where our expertise in managing global commerce and e-marketing services continues to drive wins with industry leaders.”

2007 Guidance
Forward-looking guidance for the period ending Dec. 31, 2007, is as follows:

Fourth Quarter

• Revenue of $96 million;
• GAAP diluted net income per share of $0.45, including stock-based compensation expense of approximately $3.4 million; and
• Non-GAAP diluted net income per share of $0.53.

Full Year

• Revenue of $348 million;
• GAAP diluted net income per share of $1.57, including stock-based compensation expense of approximately $13.9 million; and
• Non-GAAP diluted net income per share of $1.87.

Management will issue 2008 earnings guidance in conjunction with the Company’s fourth quarter earnings release in January 2008.

Financial Tables

Digital River will hold a third quarter conference call today at 4:45 p.m. Eastern Daylight Time. A live webcast of the conference call can be accessed from http://www.digitalriver.com/2007/q3earnings/. Alternatively, a live broadcast of the call may be heard by using conference ID # 9318373 and dialing (888) 603-6873 inside the United States or Canada, or by calling (973) 582-2706 from international locations. A webcast replay of the call will be archived on Digital River’s corporate Web site.

About Digital River, Inc.
Digital River, Inc., a leading provider of global e-commerce solutions, builds and manages online businesses for more than 40,000 software publishers, consumer technology manufacturers, distributors, online retailers and affiliates. Its multi-channel e-commerce solution, which supports both direct and indirect sales, is designed to help companies of all sizes maximize online revenues as well as reduce the costs and risks of running an e-commerce operation. The company’s comprehensive platform offers site development and hosting, order management, fraud prevention, export controls, tax management, physical and digital product fulfillment, multi-lingual customer service, advanced reporting and strategic marketing services.

Founded in 1994, Digital River is headquartered in Minneapolis with offices in major U.S. cities as well as Cologne, Germany; London, England; Shannon, Ireland; Luxembourg, Luxembourg; Taipei, Taiwan; Tokyo, Japan; and Shanghai, China. For more details about Digital River, visit the corporate Web site at www.digitalriver.com or call 952-253-1234.

Forward-Looking Statements
This press release contains forward-looking statements, including statements regarding the Company’s anticipated future growth, including future financial performance, as well as statements containing the words “anticipates,” “believes,” “plans,” “will,” or “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 those 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 e-commerce market; challenges associated with international expansion; potential consequences surrounding findings of our internal investigation, investigation by a committee of our independent directors and informal SEC inquiry into our stock option granting practices; any potential civil litigation relating to our stock option granting practices; and other risk factors referenced in the Company’s public filings with the Securities and Exchange Commission, including the Annual Report on Form 10-K for the year ended December 31, 2006. The financial information contained in this release should be read in conjunction with the consolidated financial statements and notes thereto included in Digital River’s most recent reports on Form 10-K and Form 10-Q, each as it may be amended from time-to-time.

The forward-looking statements regarding fourth quarter 2007 reflect Digital River’s expectations as of October 25, 2007. Results may be materially affected by many factors, such as changes in global economic conditions and consumer spending, fluctuations in foreign currency rates, the rate of growth of online commerce and the Internet, progress with key partners and other factors. The guidance assumes, among other things, that there are no changes to stock-based compensation expense and anticipated tax rates, and that no additional intangible assets are recorded. Readers are cautioned not to place undue reliance on forward-looking statements, which reflect management's analysis only as of the date hereof. The Company undertakes no obligation to update these forward-looking statements to reflect events or circumstances that may arise after the date hereof.

Digital River is a registered trademark of Digital River, Inc. All other trademarks and registered trademarks are trademarks of their respective owners.

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