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October 11, 2009

Digital River loses Symantec e-commerce contract

Symantec to move online traffic to its internally developed e-commerce system

By CBR Staff Writer

Digital River, a provider of global e-commerce services, revealed that it has been notified by Symantec that the existing e-commerce agreement with the company will not be extended. The agreement, under which Digital River provides a variety of e-commerce-related services to Symantec, expires on June 30, 2010.

Symantec informed Digital River on October 9 that it expects to move all of the online traffic currently outsourced to Digital River to an internally developed Symantec e-commerce system before the current contract expires. Symantec has not yet informed Digital River regarding the timing of its migration plans or the nature of the support it will require from Digital River during the transition period.

Reportedly in 2008, sales of products for Symantec accounted for 24.3% of Digital River revenue and sales derived from proprietary Digital River services sold to Symantec consumers accounted for 9.4% of Digital River revenue. For Digital River’s quarter ended June 30, 2009, sales of Symantec products accounted for 22.5% of revenue and related services revenues accounted for 7.5% of revenue.

Digital River also revealed that it expects financial results for the third quarter ending September 30, 2009, will be at or slightly above the top end of the guidance it provided on July 29, 2009. At that time, the company said it expected third quarter revenue of $96.5m to $98.5m.

The company also said it expects sequential revenue from its non-Symantec business to have grown at approximately 8% during the third quarter, compared to approximately 2% sequential growth during the second quarter 2009.

Joel Ronning, CEO of Digital River, said: “While Symantec is still our largest customer, the proportion of Symantec revenues relative to our other customers has declined significantly over the past few years as our non-Symantec business has grown at an increasing rate.

“Our company is financially strong, our new business pipeline remains healthy, and sales activity in the software, consumer electronics and business-to-business sectors continues to grow. As more businesses move to online sales and distribution, Digital River is well positioned for future growth and we are confident in our ability to unlock potential in key markets.”

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