Analysts were pleased with Digital River Inc.'s strong sales growth in the first quarter, but said some some risk remains, after the e-commerce software company posted an adjusted first-quarter profit above Wall Street expectations.
Digital River on Thursday said higher expenses helped tug down earnings nearly 12 percent, but results topped Wall Street expectations by a penny on an adjusted basis. Shares rose in aftermarket trading.
Total expenses rose to $83 million from $68.6 million a year earlier.
The company also forecast 2008 sales above expectations, although the company's profit outlook missed analyst estimates, also by a penny.
Digital River Chief Executive Joel Ronning said Digital River made progress signing new agreements with clients in the games and consumer electronics markets.
"We expect these wins and our investments in our core business and new technologies to accelerate revenue growth in the second half of the year," Ronning said in a statement.
Goldman Sachs analyst Sasa Zorovic said first-quarter sales of $103.6 million topped her estimate of $98 million, but warned that spending is on the rise, which is of particular risk, especially given a sluggish U.S. economy.
First-quarter sales also topped the $98.5 million expected by RBC Capital Markets analyst Robert Breza, who rates the stock "Outperform."
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