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Digital River (DRIV)

Q1 2013 Earnings Call

May 02, 2013 4:45 pm ET


Ed Merritt - Vice President of Investor Relations and Treasury

David C. Dobson - Chief Executive Officer

Stephan B. Schulz - Chief Financial Officer, Principal Accounting Officer and Treasurer


Charles Eugene Munster - Piper Jaffray Companies, Research Division

Colin A. Sebastian - Robert W. Baird & Co. Incorporated, Research Division

Craig Nankervis - First Analysis Securities Corporation, Research Division



Good day, ladies and gentlemen, and welcome to the Digital River First Quarter Earnings Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded.

I'd like to introduce your host for today's conference, Mr. Ed Merritt. Please go ahead.

Ed Merritt

Thank you, and welcome, everyone, to Digital River's First Quarter 2013 Earnings Call. I'm Ed Merritt, Digital River's Vice President of Investor Relations, Treasury and Corporate Development.

I'd like to remind you that there may be statements made during the course of this conference call that are not historical facts and are forward-looking in nature. These statements may relate to the company's future growth and financial results and contain the words believe, anticipate, expect, guidance and similar words. These forward-looking statements involve both known and unknown risks, uncertainties and other factors, which may cause actual results to differ materially from expectations.

For a detailed review of these risks, please refer to the company's filings with the Securities and Exchange Commission. Also, a webcast of this call will be available on the Investor Relations section of Digital River's corporate website.

Joining us today from Digital River are David Dobson, our Chief Executive Officer; and Stephan Schulz, our Chief Financial Officer. Dave has been at the company for about 8 weeks now. And many -- for many of you, this is the first opportunity that you had to hear from him. Dave joins with significant experience, working with software and technology leaders such as IBM, CA Technologies and Corel Corporation.

With that, I'm very pleased to introduce you to our new CEO, David Dobson.

David C. Dobson

That's great. Thank you, Ed, and thank you, all, for joining us today. I'd like to begin the call with a few comments about our first quarter, share some of my early impressions after my first 8 weeks here with the company and then provide you with some thoughts on our strategic direction.

I want you to understand how we intend to create significantly more value for our customers and our shareholders going forward. Following my opening comments, I'll turn the call over to Stephan, who will provide more detail on the core's financial performance and then we will open up the call and take your questions.

So before we start with the first quarter review, let me say how truly excited I am to be part of the Digital River team. This company has an incredible base of e-commerce assets. Its deep bench of experience and expertise around the world, our global footprint and a world-class customer base are unmatched in the market. In addition, the company is positioned at the center of an industry, which is not only very strategic and important to our customers, but one of the most exciting areas across the technology services marketplace today.

The market continues to evolve at a very rapid pace, and I believe we have the potential to significantly improve the value we create for our customers and our shareholders. I think this is a great time to be a part of this team.

Now in my first 8 weeks, I've had the chance to meet with many of our largest customers around the world and have traveled extensively to learn from hundreds of our employees. I am now more convinced than ever that we have a significant market opportunity in front of us. I'm very encouraged with the breadth and strength of the relationships we have with our customers, as well as the quality and depth we have in our people around the world. I talked with many customers who see tremendous value in our technology, and our expertise helps them drive their online revenue every day.

Now with that said, I also discovered that we are not executing to our full potential. Our performance over the past few years has been primarily the result of our execution, not any fundamental shifts in our industry or lack of opportunity. Clearly, we need to revisit our growth strategy, refine our business model and improve our execution capacity.

While we are still in the early stages of our strategic transformation, I am pleased to report that we're making solid progress and have taken actions across many areas of the business. The good news is that a company of our size can make meaningful changes in a relatively short period of time. We have already eliminated certain projects and diverted resources to key growth initiatives, as well as made adjustments to the organizational structure. As we continue to execute, our value will become clear to both our customers and our shareholders.

Now during the quarter, it was communicated that Tom Donnelly, our President and Chief Operating Officer, decided to leave the company, and his last day was April 30. As I met and talked with many of our customers and colleagues, it was very clear that Tom's vision, leadership and energy had a very positive impact on our business. So on behalf of our board and all of our employees around the world, I'd like to personally thank Tom for his contributions to Digital River during the past 8 years. We wish him continued success. With Tom's departure, we have eliminated the President and Chief Operating Officer position and have realigned the organization and responsibilities across a number of our senior executives.

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