8-K

UNITED STATESSECURITIES AND EXCHANGE COMMISSION
Washington, D.C.   20549


FORM 8-K


Current Report
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934


Date of Report (date of earliest event reported): May 3, 2012


DIGITAL RIVER, INC.
(Exact Name of Registrant as Specified in Its Charter)

Delaware	000-24643	41-1901640
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

10380 Bren Road West, Minnetonka, MN  55343

(Address of principal executive offices)  (Zip Code)

(Registrant’s telephone number, including area code):(952) 253-1234

Not Applicable
(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

⃞ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

⃞ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

⃞ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

⃞ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item  2.02.   Results of Operations and Financial Condition.

On May 3, 2012, Digital River, Inc., a Delaware corporation (“Digital River”), issued a press release announcing its financial results for the three-month period ended March 31, 2012, guidance for Digital River’s quarter ending June 30, 2012, and certain other information. A copy of the press release is furnished as Exhibit 99.1 hereto. The press release includes “safe harbor” language indicating that certain statements about Digital River’s business and other matters contained in the press release are “forward-looking” rather than “historic.” The press release also states that a more thorough discussion of certain factors, which may affect Digital River’s operating results is included, among other sections, under the captions “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Digital River’s Annual Report on Form 10-K for the year ended December 31, 2011, and in Digital River’s other public filings with the SEC available at the SEC’s Web site (http://www.sec.gov).

The attached press release contains certain non-GAAP financial measures. For purposes of Regulation G, a non-GAAP financial measure is a numerical measure of a company’s performance, financial position, or cash flows that either excludes or includes amounts that are not normally excluded or included in the most directly comparable measure calculated and presented in accordance with GAAP. To supplement our consolidated financial statements presented in accordance with GAAP, Digital River has supplied non-GAAP measures of net income and earnings per share, which are adjusted from results based on GAAP to primarily exclude certain expenses as well as the impact of EITF 04-08. We believe that these non-GAAP measures provide useful information to both management and investors by excluding certain expenses that may not be indicative of our core operating results. In addition, because we have historically reported certain non-GAAP results to investors, we believe the inclusion of non-GAAP results provides consistency in our financial reporting. These measures should be considered in addition to results prepared in accordance with GAAP, but are not a substitute for or superior to GAAP results. The non-GAAP measures included in the attached press release have been reconciled to the nearest GAAP measure. As used herein, “GAAP” refers to accounting principles generally accepted in the United States.

Item 9.01 Financial Statements and Exhibits.  

(c) Exhibits.

The following exhibit is furnished with this report:

99.1      Press release dated May 3, 2012, announcing Digital River’s financial results for the three-month period ended March 31, 2012, guidance for Digital River’s quarter ending June 30, 2012, and certain other information.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

		DIGITAL RIVER, INC.
		By:	/s/ Stefan B. Schulz
			Name: Stefan B. Schulz
			Title: Chief Financial Officer
Date:	May 3, 2012

Exhibit Index
Exhibit No.	Description
99.1	Press release dated May 3, 2012, announcing Digital River’s financial results for the three-month period ended March 31, 2012, guidance for Digital River’s quarter ending June 30, 2012, and certain other information.

EX-99.1

Exhibit 99.1

Digital River Reports First Quarter 2012 Financial Results

MINNEAPOLIS--(BUSINESS WIRE)--May 3, 2012--Digital River, Inc. (NASDAQ: DRIV), the revenue growth experts in global cloud commerce, reports its first quarter financial results.

First Quarter Ended March 31, 2012
GAAP Results
First quarter revenue totaled $102.4 million, compared to $98.2 million during the same period in 2011. This result exceeded management’s first quarter revenue guidance of $99 to $101 million.

First quarter GAAP net income was $4.7 million, or $0.14 per diluted share, which compared to GAAP net income of $7.0 million, or $0.18 per diluted share in the first quarter of 2011. These results also exceeded management’s first quarter earnings guidance of $0.09 to $0.13 per diluted share.

Non-GAAP Results
First quarter non-GAAP net income was $11.0 million, or $0.30 per diluted share. This compared to non-GAAP net income of $12.6 million, or $0.31 per diluted share, in the first quarter of 2011. These results were in line with management’s first quarter non-GAAP earnings guidance of $0.27 to $0.30 per diluted share.

“We’re pleased with our results in the quarter, beating our revenue target and coming in at the top-end of our earnings range,” said Joel Ronning, Digital River’s CEO. “While we are maintaining a slightly cautious outlook on the European economy, we continue to invest for the future, developing some great products in cloud-based subscriptions and building out our catalog of APIs to simplify the process of onboarding new clients. Our mission is to continually strengthen our position as the revenue growth experts in global cloud commerce.”

Guidance
Management’s forward-looking financial expectations for the second quarter are as follows:

• Revenue, ranging from $92 to $94 million;
• GAAP EPS, ranging from break-even to a loss of $0.02 per diluted share using an 18 percent tax rate;
• Non-GAAP EPS, ranging from $0.17 to $0.19 per diluted share.

A detailed table providing a reconciliation of the company’s GAAP and non-GAAP earnings guidance estimates can be found accompanying this press release.

Digital River will hold a conference call today at 4:45 p.m. EDT to discuss first quarter financial results. A live webcast of Digital River’s earnings conference call can be accessed on the Investor Relations section of its corporate website. Alternatively, a live broadcast of the call may be heard by using conference ID #67901992 and dialing +1 (408) 427-3861. A webcast replay of the call will be archived on Digital River’s corporate website.

About Digital River, Inc.
Digital River, Inc., the revenue growth experts in global cloud commerce, builds and manages online businesses for software and game publishers, consumer electronics manufacturers, distributors, online retailers and affiliates. Its multi-channel 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 a global commerce operation. The company’s comprehensive platform offers site development and hosting, order management, global payments, cloud-based billing, fraud management, 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 across the U.S., Asia, Europe and South America. For more details about Digital River, visit the corporate website, call +1 952-253-1234, or follow the company on Twitter.

Non-GAAP Net Income Calculation
Digital River’s non-GAAP net income is computed by adjusting GAAP pre-tax income as reported on the company’s statement of operations by adding back amortization of acquisition-related intangibles, stock-based compensation expense, intangible impairments, unrealized investment gain or loss and restructuring costs, net of a 21 percent tax rate. Non-GAAP diluted earnings per share is calculated using the “if-converted” method with respect to the issuance of the company’s 2004 and 2010 convertible notes, which includes shares reserved upon conversion of 199,828 and 7,022,027, respectively. In computing non-GAAP diluted earnings per share, adjust non-GAAP net income to add back debt interest and issuance cost amortization expenses, net of the tax benefit, and then divide this amount by fully diluted shares outstanding. This amount, representing the fully diluted earnings computation, is selected to represent non-GAAP diluted earnings per share for each period presented. 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 release.

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,” “expects,” or “guidance” 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 operating history and variability of operating results; competition in the commerce market; challenges associated with international expansion; the variability of foreign exchange rates; any breach or compromise of the company’s security systems; our ability to successfully manage our business while undertaking significant internal investments; our ability to execute upon our payments strategy and expand our business in this sector; our ability to achieve favorable tax rates in our international operations; 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 Dec. 31, 2011. 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 for the remainder of fiscal 2012 reflect management’s expectations as of May 3, 2012. Results may be materially affected by many factors, such as changes in global conditions in the financial services markets 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. 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.

Digital River, Inc.
First Quarter Results
(Unaudited, in thousands)
Subject to reclassification
Consolidated Balance Sheets
	March 31,			December 31,
	2012			2011
Assets
Current assets
Cash and cash equivalents	$	475,355		$	497,193
Short-term investments		225,669			223,349
Accounts receivable, net of allowance of $4,870 and $4,613		58,147			64,811
Deferred tax assets		8,495			8,532
Prepaid expenses and other		41,035			35,719
Total current assets		808,701			829,604
Property and equipment, net		48,674			51,537
Goodwill		286,431			281,858
Intangible assets, net of accumulated amortization of $88,174 and $85,542		16,818			18,324
Long-term investments		96,059			99,047
Deferred income taxes		23,007			21,433
Other assets		7,743			8,973
Total assets	$	1,287,433		$	1,310,776
Liabilities and stockholders' equity
Current liabilities
Accounts payable	$	202,265		$	243,410
Accrued payroll		15,128			17,523
Deferred revenue		7,072			8,633
Other accrued liabilities		49,888			42,577
Total current liabilities		274,353			312,143
Non-current liabilities
Convertible senior notes		353,805			353,805
Other liabilities		12,390			12,556
Total non-current liabilities		366,195			366,361
Total liabilities		640,548			678,504
Stockholders' equity
Preferred Stock, $.01 par value; 5,000,000 shares authorized; no shares issued or outstanding		-			-
Common Stock, $.01 par value; 120,000,000 shares authorized; 48,846,879 and 47,248,765 shares issued		488			472
Treasury stock at cost; 11,937,440 and 11,741,310 shares		(344,378	)		(340,946	)
Additional paid-in capital		713,717			708,941
Retained earnings		276,506			271,769
Accumulated other comprehensive income (loss)		552			(7,964	)
Stockholders' equity		646,885			632,272
Total liabilities and stockholders' equity	$	1,287,433		$	1,310,776

Digital River, Inc.
First Quarter Results
(Unaudited, in thousands, except per share amounts)
Subject to reclassification
Consolidated Statements of Operations
	Three months ended
	March 31,
	2012			2011
Revenue	$	102,443		$	98,185
Costs and expenses (exclusive of depreciation and amortization expense shown separately below):
Direct cost of services		3,628			4,163
Network and infrastructure		12,757			12,612
Sales and marketing		43,026			37,706
Product research and development		16,003			15,620
General and administrative		12,666			10,756
Depreciation and amortization		5,339			5,405
Amortization of acquisition-related intangibles		1,849			2,122
Total costs and expenses		95,268			88,384
Income from operations		7,175			9,801
Interest income		1,139			1,475
Interest expense		(2,240	)		(2,257	)
Other income (expense), net		(297	)		(134	)
Income before income taxes		5,777			8,885
Income tax expense		1,040			1,866
Net income	$	4,737		$	7,019
Net income per share - basic	$	0.14		$	0.19
Net income per share - diluted	$	0.14		$	0.18
Shares used in per share calculation - basic		33,608			37,230
Shares used in per share calculation - diluted		34,010			38,254
Calculation of GAAP Diluted Net Income Per Share
	Three months ended
	March 31,
	2012			2011
GAAP net income	$	4,737		$	7,019
Add back debt interest expense and issuance cost amortization, net of tax benefit		20			20
Adjusted net income for GAAP EPS calculation	$	4,757		$	7,039
Net income per share - diluted	$	0.14		$	0.18
Shares used in per share calculation - diluted		34,010			38,254

Digital River, Inc.
First Quarter Results
(Unaudited, in thousands)
Subject to reclassification
Consolidated Statements of Cash Flows
	Three months ended March 31,
	2012			2011
Operating Activities:
Net income	$	4,737		$	7,019
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Amortization of acquisition-related intangibles		1,849			2,122
Provision for doubtful accounts		476			(97	)
Depreciation and amortization		5,339			5,405
Debt issuance cost amortization		494			505
Stock-based compensation expense		5,961			4,955
Excess tax benefits from stock-based compensation		(46	)		(1,418	)
Deferred and other income taxes		(2,578	)		1,152
Change in operating assets and liabilities (net of acquisitions):
Accounts receivable		6,833			(1,399	)
Prepaid and other assets		(4,197	)		(3,938	)
Accounts payable		(44,238	)		(6,733	)
Deferred revenue		(1,637	)		629
Income tax payable		2,887			(419	)
Other accrued liabilities		1,051			(19,099	)
Net cash used in operating activities		(23,069	)		(11,316	)
Investing Activities:
Purchases of investments		(62,213	)		(109,115	)
Sales of investments		60,614			37,799
Purchases of equipment and capitalized software		(2,413	)		(4,507	)
Net cash used in investing activities		(4,012	)		(75,823	)
Financing Activities:
Debt issuance costs		-			(342	)
Exercise of stock options		1,457			214
Repurchase of restricted stock to satisfy tax withholding obligation		(3,432	)		(5,563	)
Excess tax benefits from stock-based compensation		46			1,418
Net cash used in financing activities		(1,929	)		(4,273	)
Effect of exchange rate changes on cash		7,172			10,552
Net decrease in cash and cash equivalents		(21,838	)		(80,860	)
Cash and cash equivalents, beginning of period		497,193			565,086
Cash and cash equivalents, end of period	$	475,355		$	484,226
Cash paid for interest on convertible senior notes	$	55		$	55
Cash paid for income taxes	$	496		$	832

Digital River, Inc.
GAAP to non-GAAP Reconciliations
(Unaudited, in thousands, except per share amounts)
UTILIZING 21% EFFECTIVE INCOME TAX RATE
									Twelve months
	Three months ended								ended
	March 31,		June 30,		September 30,		December 31,		December 31,
	2011		2011		2011		2011		2011
GAAP pre-tax income	$	8,885	$	140	$	3,587	$	2,999	$	15,611
Add back amortization of acquisition-related intangibles		2,122		2,205		2,184		11,529		18,040
Add back stock-based compensation expense		4,955		5,731		5,549		5,879		22,114
Add back unrealized investment gain/loss		-		-		-		1,995		1,995
Subtotal		15,962		8,076		11,320		22,402		57,760
Income tax expense @ 21%		3,352		1,696		2,377		4,705		12,130
Non-GAAP net income		12,610		6,380		8,943		17,697		45,630
Add back debt interest expense and issuance cost amortization, net of tax benefit		1,420		20		1,413		1,413		5,659
Adjusted net income for non-GAAP EPS calculation	$	14,030	$	6,400	$	10,356	$	19,110	$	51,289
Non-GAAP net income per share - diluted	$	0.31	$	0.17	$	0.23	$	0.45	$	1.15
Shares used in per share calculation - diluted		45,276		38,181		44,821		42,207		44,532
	Three months
	ended
	March 31,
	2012
GAAP pre-tax income	$	5,777
Add back amortization of acquisition-related intangibles		1,849
Add back stock-based compensation expense		5,961
Add back restructuring related costs		395
Subtotal		13,982
Income tax expense @ 21%		2,936
Non-GAAP net income		11,046
Add back debt interest expense and issuance cost amortization, net of tax benefit		1,409
Adjusted net income for non-GAAP EPS calculation	$	12,455
Non-GAAP net income per share - diluted	$	0.30
Shares used in per share calculation - diluted		41,032
Breakdown of stock-based compensation expense
	Three months
	ended
	March 31,
	2012
Direct cost of services	$	60
Network and infrastructure		364
Sales and marketing		2,168
Product research and development		735
General and administrative		2,634
Total	$	5,961

Digital River, Inc.
Non-GAAP Guidance
(Unaudited, in millions except per share amounts)
Revenue Guidance Table
	2011 Actual
	Three months ended									Twelve Months Ended
	March 31,			June 30,		September 30,		December 31,		December 31,
	2011			2011		2011		2011		2011
Commerce	$	74.6		$	70.1	$	72.5	$	89.6	$	306.8
Support Business		23.6			22.4		22.9		22.4		91.3
Total Revenue	$	98.2		$	92.5	$	95.4	$	112.0	$	398.1
	2012 Actual
	Three months ended
	March 31,
	2012
Commerce	$	82.1
Support Business		20.3
Total Revenue	$	102.4
	2012 Guidance
	Q2 2012
	Low Guidance			High Guidance
Commerce	$	72.4		$	73.9
Support Business		19.6			20.1
Total Expected Revenue	$	92.0		$	94.0
Non-GAAP Guidance Reconciliation
	Q2 2012
	Low Guidance			High Guidance
Expected GAAP net income (loss) per share - diluted	$	(0.02	)	$	-
Add back amortization of acquisition-related costs, net of tax		0.04			0.04
Add back stock-based compensation expense, net of tax		0.15			0.15
Tax Variability		-			-
Expected non-GAAP diluted net income per share	$	0.17		$	0.19
Projected Shares Used in Per Share Calculation
	Q2 2012
	Low Guidance			High Guidance
Shares used in per share calculation - GAAP diluted		34.0			34.0
Shares used in per share calculation - non-GAAP diluted		34.5			34.5

CONTACT:
Digital River, Inc.
Investor Relations Contact:
Ed Merritt, 952-225-3362
Vice President, Investor Relations
investorrelations@digitalriver.com
or
Media Relations Contact:
Gerri Dyrek, 952-225-3719
Group Vice President, Corporate Communications
gdyrek@digitalriver.com