Digital River Launches New Product


E-commerce solutions provider Digital River Inc. (DRIV) has recently announced the launch of its newest set of applications named The App Practice, a part of Digital River Global marketing solution. This set is particularly designed to offer improved e-business solutions to online traders across international borders.

The company’s latest applications provide an excellent platform to its users for allocating online marketing and sales of digital and physical products through various operating systems. Furthermore, The App Practice is likely to help online traders maximize their revenues and enhance consumers’ buying experience across multiple digital channels and global geographies.

Digital River’s customized solutions package is expected to help retailers support their digital monetization and online growth strategies. Moreover, in order to provide a convenient easy-to-use e-store shopping experience, Digital River has created a tool that automatically generates customized app store and cloud payment services for the buyers.

Management stated that the newly introduced application is expected to positively influence the online buyer-seller relation and also cater to ameliorating global online retail market standards. Currently the company is focusing on diversifying its software business into complementary markets, which include consumer electronics and games.

Earlier, Digital River reported revenues of $102.4 million in the first quarter of 2012, up 4.3% from the year ago quarter. Management is cautiously optimistic for the remainder of fiscal 2012 and is encouraged by the growth in the sales pipeline, new product roadmap and recent wins in the business-to-business software market.

Even though Digital River globally established itself in the cloud-commerce business, the competitive market condition may hinder its growth in future. The company faces tough competition from Ellie Mae, Inc. (ELLI), NetEase, Inc. (NTES) and VeriSign, Inc. (VRSN), who are rapidly strengthening their potentials through expanding their businesses worldwide.

The current Zacks Consensus Estimates for Digital River are 4 cents and 69 cents for the second quarter of 2012 and for fiscal 2012, respectively. As the current macro-economic conditions continue to be challenging, the company continues to have a Zacks #4 Rank, which translates into a short-term ‘Sell’ rating. Nevertheless, in the long run, we maintain a Neutral recommendation on the stock.

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