The 10-second takeaway
For the quarter ended June 30 (Q2), Digital River beat slightly on revenues and beat expectations on earnings per share.
Compared to the prior-year quarter, revenue expanded slightly. Non-GAAP earnings per share shrank significantly. GAAP earnings per share contracted to a loss.
Margins dropped across the board.
Digital River reported revenue of $92.5 million. The eight analysts polled by S&P Capital IQ expected revenue of $91.1 million on the same basis. GAAP reported sales were the same as the prior-year quarter's.
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 $0.04. The eight earnings estimates compiled by S&P Capital IQ predicted $0.03 per share. Non-GAAP EPS of $0.04 for Q2 were 80% lower than the prior-year quarter's $0.20 per share. GAAP EPS were -$0.03 for Q2 compared to $0.01 per share for the prior-year quarter.
Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.
For the quarter, gross margin was 65.3%, much worse than the prior-year quarter. Operating margin was -7.2%, 830 basis points worse than the prior-year quarter. Net margin was -0.9%, 110 basis points worse than the prior-year quarter. (Margins calculated in GAAP terms.)
Next quarter's average estimate for revenue is $92.5 million. On the bottom line, the average EPS estimate is $0.07.
Next year's average estimate for revenue is $400.0 million. The average EPS estimate is $0.60.
The stock has a three-star rating (out of five) at Motley Fool CAPS, with 297 members out of 324 rating the stock outperform, and 27 members rating it underperform. Among 81 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 77 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 $15.67.
Internet software and services are being consumed in radically different ways, on new and increasingly mobile devices. Is Digital River on the right side of the revolution? Check out the changing landscape and meet the company that Motley Fool analysts expect to lead "The Next Trillion-dollar Revolution." Click here for instant access to this free report.
- Add Digital River to My Watchlist.
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. The Motley Fool has no position in any of the stocks mentioned. 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.