Yesterday, Digital River, Inc. (DRIV), reported revenues of $96.6 million, down 1.8% year over year and 6.1% sequentially and in line with consensus estimate of $96.5 million. Revenues came in towards the high end of the management’s guidance of $95 million – $97 million. Quarterly sales would have been higher but for unfavorable exchange rates that hurt year-over-year revenue by about $4.6 million.

DRIV provides e-commerce solutions to software publishers and retailers around the world.

Sales and marketing expenses declined 1.1% year over year. However, sales and marketing costs are projected to increase in the second half of 2009 due to increases in headcount. Product R&D expense declined 1.8% year over year. R&D expense is also estimated to increase in the second half of the year as DRIV hires additional development resources to deliver new products and services. G&A costs were down almost 18% year over year.

GAAP operating margin came in

Digital River, Inc. (DRIV), a leading provider of global e-commerce solutions, announced yesterday that it will outsource a majority of its global customer service operations along with realigning certain other resources. Digital River is an example of an emerging trend known as “Software as a Service".

The company plans to outsource its global customer service operations to Tennessee-based Sitel, a leading global business process outsourcing provider. Management stated most customer email and phone inquiries will be managed by Sitel’s customer service centers from September onwards. Sitel has more than 150 facilities worldwide. Digital River delivers software and other digital goods online to over 40,000 customers.

The company plans to eliminate 120 positions globally primarily related to the outsourcing of customer service operations. This organizational change is expected to drive efficiencies for the company beginning in the fourth quarter of 2009.

On the other hand, Digital River is becoming more market focused. It