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Press Release

Limelight Networks(R) Reports Third Quarter 2010 Results

Company Release - 11/5/2010 8:00 AM ET

TEMPE, AZ -- (MARKET WIRE) -- 11/05/10 -- Limelight Networks, Inc. (NASDAQ: LLNW) today reported third quarter 2010 financial results. Highlights included:

  • Record revenue of $49.8 million

  • Continued expansion of value-added services, now 34% of revenue:

    • Mobile revenue growth exceeded 35% sequentially

    • Enterprise storage revenue growth exceeded 30% sequentially

    • Professional services growth exceeded 50% sequentially

  • Expansion of the company's portfolio of web acceleration solutions for the enterprise

  • Achievement of break-even non-GAAP net income

"We are pleased with our financial performance as we enter the second phase of Limelight's growth. Consumers are pulling massive amounts of content onto a rapidly expanding universe of Internet-connected devices, creating growing waves of traffic on our platform. This rapid growth creates complexity for publishers and businesses, and Limelight is experiencing strong reception for our complementary, value-added services that help these customers meet the challenges of this new environment. These services, such as mobile video delivery, web site acceleration, cloud storage, rich media advertising and video platform solutions, are helping us deepen the strategic conversations we are having with our customers, as we are now helping them grow the revenue side of their businesses," said Jeff Lunsford, chairman and chief executive officer.

Financial Highlights

For the third quarter of 2010, the company reported revenue of $49.8 million, up 53 percent from the third quarter 2009 and up 18 percent sequentially. The company also reported adjusted EBITDA of $7.1 million and non-GAAP net income, before share-based compensation, litigation expenses, amortization of intangible assets, and acquisition-related expenses, of $0.3 million or break even per share on a fully diluted basis. GAAP net loss was $6 million, or 6 cents per basic share.

Capital investments were $11.7 million. The Company ended the quarter with no bank debt and approximately $71 million in cash and short-term marketable securities. A reconciliation of GAAP to non-GAAP net income is included in the below tables.

Fourth Quarter 2010 Outlook

Limelight Networks anticipates fourth quarter revenue to be in the range of $51.5 million to $53.5 million.

Financial Tables

                         LIMELIGHT NETWORKS, INC.
                  CONDENSED CONSOLIDATED BALANCE SHEETS
                  (In thousands, except per share data)


                                              September 30,  December 31,
                                                  2010           2009
                                              -------------  -------------
                                               (Unaudited)
                    ASSETS
Current Assets:
  Cash and cash equivalents                   $      52,229  $      89,509
  Marketable securities                              18,421         64,870
  Accounts receivable, net of reserves of
   $7,491 and $9,226 at September 30, 2010
   and December 31, 2009                             39,085         26,363
  Income taxes receivable                               862            617
  Prepaid expenses and other current assets           8,891          9,654
                                              -------------  -------------
Total current assets                                119,488        191,013
Property and equipment, net                          51,785         35,524
Marketable securities, less current portion           2,024             12
Goodwill                                             97,975            619
Other intangible assets, net                         19,912            370
Other assets                                          7,520          8,132
                                              -------------  -------------
Total assets                                  $     298,704  $     235,670
                                              =============  =============

     LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
  Accounts payable                            $      10,909  $       5,144
  Deferred revenue, current portion                  10,049         12,199
  Capital lease obligation, current portion             970              -
  Other current liabilities                          19,464         14,140
                                              -------------  -------------
Total current liabilities                            41,392         31,483
Deferred revenue, less current portion                    -          1,377
Capital lease obligation, less current
 portion                                              1,706              -
Deferred income tax, less current portion               602             10
Other long term liabilities                              21              -
                                              -------------  -------------
Total liabilities                                    43,721         32,870
Commitments and contingencies                             -              -
Stockholders' equity:
  Convertible preferred stock, $0.001 par
   value; 7,500 shares authorized; 0 shares
   issued and outstanding                                 -              -
  Common stock, $0.001 par value; 150,000
   shares authorized; 98,995 and 85,011
   shares issued and outstanding at September
   30, 2010 and December 31, 2009,
   respectively                                          99             85
  Additional paid-in capital                        374,053        308,537
  Accumulated other comprehensive income                750             93
  Accumulated deficit                              (119,919)      (105,915)
                                              -------------  -------------
Total stockholders' equity                          254,983        202,800
                                              -------------  -------------
Total liabilities and stockholders' equity    $     298,704  $     235,670
                                              =============  =============



                         LIMELIGHT NETWORKS, INC.
              CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                  (In thousands, except per share data)
                                (Unaudited)


                          Three Months Ended            Nine Months Ended
                --------------------------------------  ------------------

               September           September           September  September
                   30,    June 30,     30,    June 30,     30,       30,
                  2010      2010      2009      2009      2010      2009
                --------  --------  --------  --------  --------  --------
Revenues        $ 49,803  $ 42,195  $ 32,530  $ 32,333  $128,084  $ 98,038
Costs and
 operating
 expenses
  Cost of
   revenues * †   27,946    23,825    20,907    21,078    72,753    63,456
  General and
   administra-
   tive * †       10,393    11,212     7,032     6,937    30,499    26,413
  Sales and
   marketing *    12,724    11,319     8,060     7,716    33,429    23,915
  Research &
   development *   4,491     3,478     2,024     1,944    10,614     5,878
  Provision for
   litigation          -         -         -         -         -   (65,645)
                --------  --------  --------  --------  --------  --------
Total costs and
 operating
 expenses         55,554    49,834    38,023    37,675   147,295    54,017

Operating (loss)
 income           (5,751)   (7,639)   (5,493)   (5,342)  (19,211)   44,021

Interest expense      (6)       (7)      (11)      (11)      (13)      (33)
Interest income      210       255       330       337       767     1,050

Other income
 (expense)          (120)       28        15      (111)     (117)      131
                --------  --------  --------  --------  --------  --------
(Loss) income
 before taxes     (5,667)   (7,363)   (5,159)   (5,127)  (18,574)   45,169
Income tax
 expense
 (benefit)           287    (5,098)       61       171    (4,570)      552
                --------  --------  --------  --------  --------  --------
Net (loss)
 income         $ (5,954) $ (2,265) $ (5,220) $ (5,298) $(14,004) $ 44,617
                ========  ========  ========  ========  ========  ========

Net (loss)
 income per
 share:
  Basic         $  (0.06) $  (0.02) $  (0.06) $  (0.06) $  (0.15) $   0.53
  Diluted       $  (0.06) $  (0.02) $  (0.06) $  (0.06) $  (0.15) $   0.51

Shares used in
 per share
 calculations:
  Basic           98,634    93,889    84,489    84,033    92,547    84,012
  Diluted         98,634    93,889    84,489    84,033    92,547    87,708


*  Includes share-based compensation (see supplemental table for figures)

†  Includes depreciation and amortization (see supplemental table for
   figures)






                          LIMELIGHT NETWORKS, INC.
                        SUPPLEMENTAL FINANCIAL DATA
                              (In thousands)
                                (Unaudited)


                          Three Months Ended            Nine Months Ended
                --------------------------------------  ------------------
               September           September           September  September
                   30,    June 30,     30,    June 30,     30,       30,
                  2010      2010      2009      2009      2010      2009
                --------  --------  --------  --------- --------  --------
Supplemental
 financial data
 (in thousands):
Share-based
 compensation:
Cost of
 revenues       $    645  $    583  $    638  $     582 $  1,827  $  1,772
General and
 administrative    1,779     1,577     1,805      1,820    5,190     5,755
Sales and
 marketing         1,311     1,272     1,293      1,253    3,789     3,734
Research and
 development         819       728       633        626    2,252     1,876
                --------  --------  --------  --------- --------  --------
Total share-based
 compensation   $  4,554  $  4,160  $  4,369  $   4,281 $ 13,058  $ 13,137
                ========  ========  ========  ========= ========  ========

Depreciation and
 amortization:
Network-related
 depreciation   $  5,878  $  5,324  $  6,018  $   6,133 $ 15,980  $ 18,699
Other
 depreciation
 and
 amortization        680       688       568        532    1,963     1,640
Amortization of
 intangible
 assets            1,354       915        59          -    2,441        59
                --------  --------  --------  --------- --------  --------
Total
 depreciation
 and
 amortization   $  7,912  $  6,927  $  6,645  $   6,665 $ 20,384  $ 20,398
                ========  ========  ========  ========= ========  ========

Net (decrease)
 increase in
 cash, cash
 equivalents
 and marketable
 securities     $(11,166) $(65,020) $(11,497) $   2,331 $(81,717) $(21,826)
                ========  ========  ========  ========= ========  ========

End of period
 statistics:
Approximate
 number of
 active
 customers         1,780     1,655     1,370      1,370    1,780     1,370
Number of
 employees           660       609       321        301      660       321




                         LIMELIGHT NETWORKS, INC.
              CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                              (In thousands)
                                (Unaudited)


                          Three Months Ended            Nine Months Ended
                --------------------------------------  ------------------
               September           September           September  September
                   30,    June 30,     30,    June 30,     30,       30,
                  2010      2010      2009      2009      2010      2009
                --------  --------  --------  --------  --------  --------

Cash flows from
 operating
 activities:
  Net (loss)
   income       $ (5,954) $ (2,265) $ (5,220) $ (5,298) $(14,004) $ 44,617
  Adjustments
   to reconcile
   net (loss)
   income to
   net cash
   provided by
   (used in)
   operating
   activities:
    Depreciation
     and
     amortization  7,912     6,927     6,645     6,665    20,384    20,398
    Share-based
     compensation  4,554     4,160     4,369     4,281    13,058    13,137
    Deferred
     income taxes    (71)     (119)        -         -      (190)        -
    Income
     tax benefit
     related
     to business
     acquisition       -    (5,768)        -         -    (5,768)        -
    Provision
     for
     litigation        -         -         -         -         -   (65,645)
    (Gain)
     loss on
     foreign
     currency
     transactions    159      (213)        7       205        (5)      181
    Loss on sale
     of property
     and equipment    58         5         -         -       152         -
    Accounts
     receivable
     charges         585       588       329       622     2,342     4,239
    Accretion of
     marketable
     securities      (50)      300      (298)     (157)      274      (455)
    Changes in
     operating
     assets and
     liabilities:
      Accounts
       receivable (5,089)     (112)   (1,648)    7,281    (5,506)    1,793
      Prepaid
       expenses
       and other
       current
       assets        539       (86)   (1,475)      721     1,138    (1,347)
      Income
       taxes
       receivable    (69)      280      (159)      140       158      (176)
      Other
       assets         62     1,111    (4,152)      149     1,006    (8,314)
      Accounts
       payable       (74)   (1,223)      244    (4,219)   (1,033)   (5,198)
      Deferred
       revenue    (1,913)      728      (291)     (972)   (4,290)   (2,085)
      Other
       current
       liabilities   755     1,192       358    (1,918)     (134)   (6,704)
      Other long
       term lia-
       bilities       41       (19)        -         -        21         -
                --------  --------  --------  --------  --------  --------
  Net cash
   provided by
   (used in)
   operating
   activities      1,445     5,486    (1,291)    7,500     7,603    (5,559)
                --------  --------  --------  --------  --------  --------

Cash flows from
 investing
 activities:
    Purchases of
     property and
     equipment   (11,675)   (9,480)  (10,586)   (5,308)  (25,405)  (16,648)
    Purchase of
     marketable
     securities   (8,715)   (2,000)  (32,905)  (12,830)  (27,470)  (45,735)
    Sale of
     marketable
     securities   12,405    33,180     2,000     9,100    73,585    32,400
    Acquisition
     of
     businesses,
     net of
     cash
     acquired     (2,622)  (61,903)        -        22   (66,529)       22
                --------  --------  --------  --------  --------  --------
  Net cash
   (used in)
   provided by
   investing
   activities    (10,607)  (40,203)  (41,491)   (9,016)  (45,819)  (29,961)
                --------  --------  --------  --------  --------  --------

Cash flows from
 financing
 activities:
    Proceeds
     from
     exercise
     of stock
     options         335       100        72        92       462       240
                --------  --------  --------  --------  --------  --------
  Net cash
   provided by
   (used in)
   financing
   activities        335       100        72        92       462       240
                --------  --------  --------  --------  --------  --------
  Effect of
   exchange
   rate changes
   on cash           285        92        (5)     (205)      474      (453)
                --------  --------  --------  --------  --------  --------
Net (decrease)
 increase in
 cash and cash
 equivalents      (8,542)  (34,525)  (42,715)   (1,629)  (37,280)  (35,733)
Cash and cash
 equivalents,
 beginning of
 period           60,771    95,296   145,162   146,791    89,509   138,180
                --------  --------  --------  --------  --------  --------
Cash and cash
 equivalents,
 end of period  $ 52,229  $ 60,771  $102,447  $145,162  $ 52,229  $102,447
                ========  ========  ========  ========  ========  ========

Use of Non-GAAP Financial Measures

To evaluate our business, we consider and use Non-GAAP net income (loss) and Adjusted EBITDA as a supplemental measure of operating performance. These measures include the same adjustments that management takes into account when it reviews and assesses operating performance on a period-to-period basis. We consider Non-GAAP net income (loss) to be an important indicator of overall business performance because it allows us to illustrate the impact of the effects of share-based compensation, litigation expenses, provision for litigation, amortization of intangibles and acquisition related expenses. We define EBITDA as GAAP net income (loss) before interest income, interest expense, other income and expense, provision for income taxes and, depreciation and amortization. We believe that EBITDA provides a useful metric to investors to compare us with other companies within our industry and across industries. We define Adjusted EBITDA as EBITDA adjusted for operational expenses that we do not consider reflective of our ongoing operations. We use Adjusted EBITDA as a supplemental measure to review and assess operating performance. We also believe use of Adjusted EBITDA facilitates investors' use of operating performance comparisons from period to period. In addition, it should be noted that our performance-based executive officer bonus structure is tied closely to our performance as measured in part by certain non-GAAP financial measures.

The terms Non-GAAP net income (loss), EBITDA and Adjusted EBITDA are not defined under United States generally accepted accounting principles, or United States GAAP, and are not measures of operating income, operating performance or liquidity presented in accordance with United States GAAP. Our Non-GAAP net income (loss), EBITDA and Adjusted EBITDA have limitations as analytical tools, and when assessing our operating performance, Non-GAAP net income (loss), EBITDA and Adjusted EBITDA should not be considered in isolation, or as a substitute for net income (loss) or other consolidated income statement data prepared in accordance with United States GAAP. Some of these limitations include, but are not limited to:

  • EBITDA and Adjusted EBITDA do not reflect our cash expenditures or future requirements for capital expenditures or contractual commitments;

  • they do not reflect changes in, or cash requirements for, our working capital needs;

  • they do not reflect the cash requirements necessary for litigation costs;

  • they do not reflect the interest expense, or the cash requirements necessary to service interest or principal payments, on our debt that we may incur;

  • they do not reflect income taxes or the cash requirements for any tax payments;

  • although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will be replaced sometime in the future, and EBITDA and Adjusted EBITDA do not reflect any cash requirements for such replacements;

  • while share-based compensation is a component of operating expense, the impact on our financial statements compared to other companies can vary significantly due to such factors as the assumed life of the options and the assumed volatility of our common stock; and

  • other companies may calculate EBITDA and Adjusted EBITDA differently than we do, limiting their usefulness as comparative measures.

We compensate for these limitations by relying primarily on our GAAP results and using Non-GAAP net income (loss) and Adjusted EBITDA only as supplemental support for management's analysis of business performance. Non-GAAP net income (loss), EBITDA and Adjusted EBITDA are calculated as follows for the periods presented in thousands:

Reconciliation of Non-GAAP Financial Measures

In accordance with the requirements of Regulation G issued by the Securities and Exchange Commission, the Company is presenting the most directly comparable GAAP financial measures and reconciling the non-GAAP financial metrics to the comparable GAAP measures.

                         LIMELIGHT NETWORKS, INC.
  Reconciliation of GAAP Net Income (Loss) to Non-GAAP Net Income (Loss)
                              (In thousands)
                                (Unaudited)



                          Three Months Ended            Nine Months Ended
                --------------------------------------  ------------------
               September           September           September  September
                   30,    June 30,     30,    June 30,     30,       30,
                  2010      2010      2009      2009      2010      2009
                --------  --------  --------  --------  --------  --------

GAAP net (loss)
 income         $ (5,954) $ (2,265) $ (5,220) $ (5,298) $(14,004) $ 44,617

Provision for
 litigation            -         -         -         -         -   (65,645)
Share-based
 compensation      4,554     4,160     4,369     4,281    13,058    13,137
Litigation
 defense
 expenses              9     1,726       273       367     2,127     4,585
Acquisition
 related
 expenses            345       409         -         -     1,358         -
Amortization of
 intangible
 assets            1,354       915        59         -     2,441        59
                --------  --------  --------  --------  --------  --------

Non-GAAP net
 income (loss)  $    308  $  4,945  $   (519) $   (650) $  4,980  $ (3,247)
                ========  ========  ========  ========  ========  ========




                         LIMELIGHT NETWORKS, INC.
  Reconciliation of GAAP Net Income (Loss) to EBITDA to Adjusted EBITDA
                              (In thousands)
                                (Unaudited)



                          Three Months Ended            Nine Months Ended
                --------------------------------------  ------------------
               September           September           September  September
                   30,    June 30,     30,    June 30,     30,       30,
                  2010      2010      2009      2009      2010      2009
                --------  --------  --------  --------  --------  --------

GAAP net (loss)
 income         $ (5,954) $ (2,265) $ (5,220) $ (5,298) $(14,004) $ 44,617

   Depreciation
    and
    amortization   7,912     6,927     6,645     6,665    20,384    20,398
   Interest
    expense            6         7        11        11        13        33
   Interest and
    other
    income
    (expense)        (90)     (283)     (346)     (226)     (650)   (1,181)
   Income tax
    (benefit)
    expense          287    (5,098)       61       171    (4,570)      552
                --------  --------  --------  --------  --------  --------
EBITDA             2,161      (712)    1,151     1,323     1,173    64,419

   Provision
    for
    litigation         -         -         -         -         -   (65,645)
   Share-based
    compensation   4,554     4,160     4,369     4,281    13,058    13,137
   Litigation
    defense
    expenses           9     1,726       273       367     2,127     4,585
   Acquisition
    related
    expenses         345       409         -         -     1,358         -
                --------  --------  --------  --------  --------  --------

Adjusted EBITDA $  7,069  $  5,583  $  5,793  $  5,971  $ 17,716  $ 16,496
                ========  ========  ========  ========  ========  ========

Conference Call

At approximately 8:30 a.m. EDT (5:30 p.m. PDT), management will host a quarterly conference call for investors. Investors can access this call toll-free at 1-866-578-5747 within the United States or 1-617-213-8054 outside of the U.S. using Participant Passcode 73516687. The conference call will also be audiocast live from http://www.llnw.com and a replay will be available for one week.

Safe-Harbor Statement

This press release contains forward-looking statements concerning, among other things, the outlook for the Company's revenues, net loss and stock-based compensation expenses, customer growth, market growth, pricing pressures, expansion into additional market segments, product and services improvements, the integration of acquired businesses and litigation and acquisition related expenses. Forward-looking statements represent the current judgment and expectations of Limelight Networks and are not guarantees and are subject to a number of risks and uncertainties that could cause actual results to differ materially including, but not limited to, risks and uncertainties discussed in the Company's Annual Report on Form 10K and other filings with the Securities and Exchange Commission and the final review of the results and amendments and preparation of quarterly financial statements, including consultation with our outside auditors. Accordingly, readers are cautioned not to place undue reliance on any forward-looking statements. The Company assumes no duty or obligation to update or revise any forward-looking statements for any reason.

About Limelight Networks, Inc.

Limelight Networks, Inc. (NASDAQ: LLNW) provides solutions that enable business and technology decision makers to profit from the shift of content and advertising to the online world, the explosive growth of mobile and connected devices, and the migration of IT applications and services into the cloud. Over 1700 customers worldwide use Limelight's massively scalable software services to engage audiences, enhance brand presence, analyze viewer preferences, optimize advertising, manage and monetize digital assets, and ultimately build stronger customer relationships. For more information, please visit http://www.limelightnetworks.com or follow us on Twitter at www.twitter.com/llnw.

Copyright © 2010 Limelight Networks, Inc. All rights reserved. EyeWonder is a trademark of Limelight Networks, Inc. All product or service names are the property of their respective owners.

CONTACT:
Paul Alfieri
Limelight Networks, Inc.
+1-646-875-8835
palfieri@llnw.com

Media Contacts

Steve Milmore
smilmore@llnw.com
or
Deborah Hohler
dhohler@llnw.com

Investor Contact

ir@llnw.com

Limelight Networks, Inc.

222 S. Mill Ave.
Tempe AZ 85281
602-850-5000
limelight.com

Transfer Agent

American Stock Transfer and Trust Company
59 Maiden Lane
Plaza Level
New York, NY 10038
Phone: (800) 937-5449
Fax: (718) 236-4588
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