The 10-second takeaway
For the quarter ended March 31 (Q1), Digital River beat expectations on revenues and beat expectations on earnings per share.
Compared to the prior-year quarter, revenue increased and GAAP earnings per share contracted significantly.
Gross margins grew, operating margins dropped, and net margins dropped.
Digital River booked revenue of $102.4 million. The 11 analysts polled by S&P Capital IQ predicted revenue of $100.2 million on the same basis. GAAP reported sales were 4.3% higher than the prior-year quarter's $98.2 million.
Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.
EPS came in at $0.30. The 12 earnings estimates compiled by S&P Capital IQ anticipated $0.29 per share. GAAP EPS of $0.14 for Q1 were 22% lower than the prior-year quarter's $0.18 per share.
Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.
For the quarter, gross margin was 84.0%, 110 basis points better than the prior-year quarter. Operating margin was 7.0%, 300 basis points worse than the prior-year quarter. Net margin was 4.6%, 250 basis points worse than the prior-year quarter.
Next quarter's average estimate for revenue is $94.4 million. On the bottom line, the average EPS estimate is $0.20.
Next year's average estimate for revenue is $405.8 million. The average EPS estimate is $1.23.
The stock has a three-star rating (out of five) at Motley Fool CAPS, with 309 members rating the stock outperform and 23 members rating it underperform. Among 92 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 88 give Digital River a green thumbs-up, and four give it a red thumbs-down.
Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Digital River is hold, with an average price target of $21.09.
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Seth Jayson had no position in any company mentioned here at the time of publication. You can view his stock holdings here. He is co-advisor of Motley Fool Hidden Gems, which provides new small-cap ideas every month, backed by a real-money portfolio. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.