Digital River, Inc. Q3 2008 (Qtr End 9/30/08) Earnings Call Transcript

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Question-and-Answer Session

Operator

(Operator Instructions) Our first question comes from Jeetil Patel - Deutsche Bank Securities.

Jeetil Patel - Deutsche Bank Securities

In terms of the weakness, is it more so internationally or domestically as you progressed into September and so far in October? If there are any differences out there, maybe international from a constant currency basis may be holding up better?

Second, can you talk about whether the weakness in the business is more on the ASP pressure; what I mean by that is product ASPS; or is it actually just pure transaction volumes?

Joel A. Ronning

I’m looking across at Tom but my belief is that it was fairly even across both our North American and primarily the European operations. We saw the slowdown. What was interesting is that on the 15^th of September I saw step function happen in the consumer sales. It was a very defined departure from what we’d seen year-over-year and actually week-over-week. It looked like it was global.

I think it’s a combination. We’ve seen ASPs come down a little bit but I think mostly it’s just we’re getting fewer sales.

Thomas M. Donnelly

I think it’s overall more of a volume thing. I think Europe has performed a little bit better but very, very marginally better, and just overall it’s transaction volume and traffic is just down a bit. We’ve had what I would call a couple of dead cat bounce days where all of a sudden we think we’re back to normal and then it seems to settle down again. So we’re really seeing odd things and I think we’re just in the low end of the range here assuming that it stays steady with October because it has kind of steadied out. If we see some upside, perhaps we can move up into the upper part of the range there.

Jeetil Patel - Deutsche Bank Securities

Can you give us a sense of what the margins look like on foreign currency translation? I assume that’s running probably 40% to 50% and that can affect the profitability as the dollar strengthens.

And then Joel, can you compare this against what you probably saw behavior wise back in 2000? Was it any different this time versus back then when the bubble burst? I know your business did pretty well but I’m sure there was a bit of a slowdown on the consumer end. Any way to characterize how this looks relative to that? Similar, strange or different? Any perspective?

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