Digital River, Inc. (DRIV), provider of outsourced e-commerce solutions to various companies in the software and high-tech products, consumer electronics, computer and video games, announced Q1 results last month crossing $100 million for the quarter for the first time ever.

Revenues of $103.6 million beat the market’s expectations of $98.6 million and recorded a 13% increase over the year. EPS of $0.50 was higher than the market’s view of $0.48 even though it slipped from the previous year by 7%.

During the quarter, the company repurchased 3.8 million shares for $138 million.

Going forward, the company is projecting Q2 revenues of $91 million with EPS of $0.33 and annual revenues of $401 million with EPS of $1.89.

The company expanded operations in Europe with a store in the Czech Republic to support Symantec (SYMN) sales and launched sites for Poland, Russia and Turkey. It tied up with Quark, a market leader in desktop publishing software, and is launching new global sites in the Asia Pacific. The company continued to look at acquisitions as a source of growth and mentioned its interest in similar companies in alternative geographies.

The company also expanded in its strategic market areas of games and consumer electronics markets through relationships with Electronic Arts (ERTS), Turbine, Midway, BenQ and Skype. It launched a marketing program called Mass Dynamic Personalization – MDP – that enables it to tailor site flows, personalize shopping experiences and deliver relevant messages for the consumer based on their shopping patterns.

The management feels optimistic about the adverse economic pressures. The company project these conditions to favor outsourcing. Further, the company will benefit as overall retail spending progresses towards online channels, which it empowers.

The stock has risen 21% since the announcement of the results and is currently trading at $39.86.

Websense (WBSN), the Web filtering solutions provider, with billings 10% lower over the year, reported revenues of $86.5 million beating the market’s expectations of $84.6 million. EPS of $0.35 was also higher than the Street’s expectations of $0.31.

During the quarter, the company repurchased approximately 264,000 shares for approximately $5 million.

It blamed its performance on customer attrition, discontinuation of products and OEM partnerships, and in the shortening of the duration of customer contracts from 23.4 months to 20.6 months.

Its merger with SurfControl does not seem to be doing well. With contract durations having slipped, it also experienced de-synergies in its customer base. During the quarter, the company also sold off SurfControl’s consumer filtering product – CyberPatrol.

The company expects revenue to decline each quarter on a sequential basis throughout the remainder of the year. For the year, it maintained its projection of $325 - $335 million revenues with $1.15 - $1.25 EPS.

Despite its performance and current spending pressures on the economy, the management was optimistic about its market standing. Its claimed that the present web 2.0 world required it to be able to identify malware, blended e-mail and web threats. The company believes that it possesses the required technology to be able to combat such threats. Adding to the company's confidence is the fact that it does not foresee any competition in the arena. During the quarter, it bundled web and e-mail products with promotional programs to compete more effectively against its competitors. The company also tied up with encryption partners.

The stock did not react favorably to the results, and is currently trading at $17.70, which is 12% lower since the announcement.

Disclosure: None

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