Digital River 2005 Annual Report Download - page 4

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2005 Financial Results
We believe the impressive financial results we achieved during 2005 reflect not only our drive to succeed, but also our
commitment to exceed the expectations of our clients, their customers and our shareholders. For the full year ended
2005, Digital River reported revenue of $220.4 million, a 43 percent increase from $154.1 million in 2004. GAAP net income
totaled $54.3 million or $1.36 per diluted share, at an effective tax rate of 24 percent. This compared to net income of
$35.3 million or $0.96 per diluted share at an effective tax rate of 3 percent in 2004.
In 2005, cash flow from operations reached a record $119.8 million, an increase of approximately 41 percent compared to
2004. We closed 2005 with approximately $352.3 million in cash and short-term investments.
Key Market Opportunities in 2006
As we look to 2006, we plan to create even more value for our clients by taking advantage of growth opportunities in six
key areas:
The digital market –The shift to online purchasing, and from physical to digital software delivery continues to
accelerate in domestic and international markets. These trends play to our core strengths and we intend to help
our clients capitalize on them.
The global marketplace – We plan to open more new regional offices overseas. We intend to staff the offices with
sales, marketing and operational specialists to help us increase our localized support for our existing clients and
attract new global accounts.
The high-tech and consumer electronics markets – The acquisition of Commerce5 — a leader in outsourced
e-commerce solutions for high-tech manufacturing and consumer electronics markets — creates new opportunities
for us in markets that are highly complementary to our core software business. We plan to extend our marketForce
services to Commerce5’s large, brand name clients, and take advantage of the natural affinities between our clients’
product lines to generate more sales.
Affiliate and online retail markets – During 2005, we more than tripled the number of affiliate sign-ups and sales
generated through our oneNetwork marketplace. Our goal is to generate more revenue for our clients, deliver
deeper margins and further strengthen our client relationships.
LETTER TO THE SHAREHOLDERS
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