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Press Release

Limelight Networks(R) Reports Second Quarter 2011 Results

Company Release - 8/8/2011 4:00 PM ET

TEMPE, Ariz., Aug. 8, 2011 (GLOBE NEWSWIRE) -- Limelight Networks, Inc. (Nasdaq:LLNW) ("Limelight") today reported second quarter 2011 financial results.

"We were pleased with our progress in the quarter on our strategic initiatives of growing Limelight's value-added services, which are now 40% of overall revenue. We believe growing this portion of our business, which is comprised primarily of Software-as-a-Service (SaaS) offerings, will help improve our overall visibility, deepen relationships with customers, and create sustainable value over the long-term," said Jeff Lunsford, chairman and chief executive officer. "Revenue in the quarter, however, was approximately $2 million below our forecast due to lower-than-expected campaign volume on our EyeWonder rich media advertising platform and a dip in CDN traffic for two of our largest customers during a widely followed platform shutdown after a security breach of a third party's network."

"We are taking steps to reinstate growth in our rich media business with new products due out early next year, and we have seen traffic for the two CDN customers return to normal levels. Looking forward, we are making solid progress in transforming Limelight from a pure-play content delivery network (CDN) to a provider of value-added SaaS solutions that run on top of a market-leading CDN," continued Lunsford.

Specific highlights for the second quarter included:

  • Revenue of $50.5 million, representing 20% year-over-year growth
  • Value added services comprised 40% of revenue:
    • Mobile internet and tablet computing revenue growth of approximately 150% year-over-year
    • Online video platform growth of approximately 200% year-over-year
    • Site and application acceleration services growth of approximately 40% year-over-year
    • Enterprise cloud storage growth of approximately 60% year-over-year

Financial Highlights

For the second quarter of 2011, the Company reported revenue of $50.5 million, adjusted EBITDA of $2.6 million and non-GAAP net loss, before share-based compensation, litigation expenses, amortization of intangible assets, and acquisition-related expenses, of $5.9 million or 5 cents per basic share. GAAP net loss was $13.9 million, or 12 cents per basic share.

Capital investments were $11.9 million in the quarter. The Company ended the quarter with no bank debt and approximately $116 million in cash and short-term marketable securities.

2011 Outlook

The Company anticipates third quarter revenue to be in the range of $51.7 to $53.2 million. 

Financial Tables

 

LIMELIGHT NETWORKS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except per share data)
     
     
  June 30,
2011
December 31,
2010
  (Unaudited)  
ASSETS    
Current Assets:    
 Cash and cash equivalents  $ 109,973  $ 56,741
 Marketable securities  6,474  12,009
 Accounts receivable, net of reserves of $5,398 and $7,295 at June 30, 2011 and December 31, 2010  37,008  41,940
 Income taxes receivable  946  721
 Prepaid expenses and other current assets  12,540  9,628
Total current assets  166,941  121,039
Property and equipment, net  63,555  54,407
Marketable securities, less current portion  1,567  1,755
Deferred tax asset, non-current  944  718
Goodwill  113,006  94,364
Other intangible assets, net  26,755  19,406
Other assets  10,978  6,951
Total assets  $ 383,746  $ 298,640
     
LIABILITIES AND STOCKHOLDERS' EQUITY    
Current Liabilities:    
 Accounts payable  $ 11,596  $ 12,236
 Deferred revenue, current portion  6,595  6,877
 Capital lease obligation, current portion  1,477  1,049
 Other current liabilities  19,429  20,000
Total current liabilities  39,097  40,162
Capital lease obligation, less current portion  2,065  1,750
Deferred income tax, less current portion  1,786  598
Other long term liabilities  8,774  21
Total liabilities  51,722  42,531
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; 300,000 shares authorized at June 30, 2011 and 150,000 shares authorized at
  December 31, 2010; 113,900 and 100,068 shares issued and outstanding at June 30, 2011 and December 31, 2010, respectively.
 114  100
 Additional paid-in capital  479,645  380,338
 Contingent consideration  219  1,608
 Accumulated other comprehensive income   2,065  329
 Accumulated deficit  (150,019)  (126,266)
Total stockholders' equity  332,024  256,109
Total liabilities and stockholders' equity  $ 383,746  $ 298,640

 

 
 
 
LIMELIGHT NETWORKS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
             
             
  Three Months Ended Six Months Ended
             
  June 30,
2011
March 31,
2011
June 30,
2010
March 31,
2010
June 30,
2011
June 30,
2010
             
Revenue  $ 50,539  $ 49,817  $ 42,195  $ 36,087  $ 100,355  $ 78,281
Costs and operating expenses            
 Cost of revenue * †  31,861  29,412  23,825  20,983  61,273  44,807
 General and administrative * ††  13,054  10,764  11,212  8,893  23,818  20,105
 Sales and marketing *  13,023  13,894  11,319  9,387  26,916  20,706
 Research & development *  6,279  5,618  3,478  2,645  11,898  6,122
 Provision for litigation  --  --  --  --  --  --
Total costs and operating expenses  64,217  59,688  49,834  41,908  123,905  91,740
             
Operating loss  (13,678)  (9,871)  (7,639)  (5,821)  (23,550)  (13,459)
             
Interest expense  (105)  (42)  (7)  (1)  (147)  (8)
Interest income  259  187  255  302  446  557
Other income (expense)  33  30  28  (25)  64  3
Loss before taxes  (13,491)  (9,696)  (7,363)  (5,545)  (23,187)  (12,907)
Income tax expense (benefit)   444  122  (5,098)  240  566  (4,857)
             
Net loss   $ (13,935)  $ (9,818)  $ (2,265)  $ (5,785)  $ (23,753)  $ (8,050)
             
Net loss per share:            
 Basic  $ (0.12)  $ (0.09)  $ (0.02)  $ (0.07)  $ (0.22)  $ (0.09)
 Diluted  $ (0.12)  $ (0.09)  $ (0.02)  $ (0.07)  $ (0.22)  $ (0.09)
             
Shares used in per share calculations:            
 Basic  113,113  103,917  93,889  85,119  108,515  89,504
 Diluted  113,113  103,917  93,889  85,119  108,515  89,504
             
* Includes share-based compensation (see supplemental table for figures)        
             
† Includes depreciation (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 Six Months Ended
  June 30,
2011
March 31,
2011
June 30,
2010
March 31,
2010
June 30,
2011
June 30,
2010
Supplemental financial data (in thousands):            
Share-based compensation:            
Cost of revenues  $ 767  $ 616  $ 583  $ 598  $ 1,384  $ 1,181
General and administrative  2,052  1,544  1,577  1,835  3,596  3,412
Sales and marketing  1,221  1,244  1,272  1,206  2,464  2,478
Research and development  1,325  874  728  704  2,199  1,432
Total share-based compensation  $ 5,365  $ 4,278  $ 4,160  $ 4,343  $ 9,643  $ 8,503
             
Depreciation and amortization:            
Network-related depreciation  $ 7,430  $ 6,726  $ 5,324  $ 4,778  $ 14,156  $ 10,102
Other depreciation and amortization  730  532  688  595  1,262  1,283
Amortization of intangible assets  1,889  1,423  915  171  3,312  1,087
Total depreciation and amortization  $ 10,049  $ 8,681  $ 6,927  $ 5,544  $ 18,730  $ 12,472
             
Net (decrease) increase in cash, cash equivalents
and marketable securities
 $ (18,354)  $ 65,863  $ (64,954)  $ (5,531)  $ 47,509  $ (70,485)
             
End of period statistics:            
Approximate number of active customers   1,873  1,771  1,655  1,370  1,873  1,655
Number of employees  763  708  609  342  763  609

 

 
 
 
LIMELIGHT NETWORKS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
             
             
  Three Months Ended Six Months Ended
             
  June 30,
2011
March 31,
2011
June 30,
2010
March 31,
2010
June 30,
2011
June 30,
2010
             
Cash flows from operating activities:          
Net loss  $ (13,935)  $ (9,818)  $ (2,265)  $ (5,785)  $ (23,753)  $ (8,050)
             
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:    
Depreciation and amortization  10,049  8,681  6,927  5,544  18,730  12,472
Share-based compensation  5,365  4,278  4,160  4,343  9,643  8,503
Deferred income tax benefit  (84)  (100)  (119)  --  (184)  (119)
Income tax benefit related to business acquisition  --  --  (5,768)  --  --  (5,768)
Loss (gain) on foreign currency transactions  21  53  (213)  49  74  (164)
Loss (gain) on sale of property and equipment  --  --  5  89  --  94
Accounts receivable charges  385  233  588  1,169  618  1,757
Accretion of marketable securities  (58)  49  300  24  (9)  324
Non cash cost basis investment  (282)  --  --  --  (282)  --
Changes in operating assets and liabilities:            
 Accounts receivable  2,230  3,013  (112)  (305)  5,243  (417)
 Prepaid expenses and other current assets  (261)  (464)  (86)  685  (725)  599
 Income taxes receivable  (100)  (119)  280  (53)  (219)  227
 Other assets  350  (4,033)  1,111  (167)  (3,683)  944
 Accounts payable  4  (1,217)  (1,223)  264  (1,213)  (959)
 Deferred revenue  (1,782)  (793)  728  (3,105)  (2,575)  (2,377)
 Other current liabilities  (224)  (2,978)  1,192  (2,081)  (3,202)  (889)
 Other long term liabilities  368  84  (19)  --  451  (19)
Net cash provided by (used in) operating activities  2,046  (3,131)  5,486  671  (1,086)  6,158
             
Cash flows from investing activities:          
Purchase of marketable securities  (4,218)  (1,410)  (2,000)  (16,755)  (5,628)  (18,755)
Sale of marketable securities  4,200  6,970  33,180  28,000  11,170  61,180
Purchases of property and equipment  (11,911)  (8,050)  (9,480)  (4,250)  (19,961)  (13,730)
Acquisition of businesses, net of cash acquired  (7,493)  --  (61,903)  (2,004)  (7,493)  (63,907)
Net cash (used in) provided by investing activities  (19,422)  (2,490)  (40,203)  4,991  (21,912)  (35,212)
             
Cash flows from financing activities:          
Payments on capital lease obligations  (433)  (257)  --  --  (690)  --
Proceeds from exercise of stock options  71  415  100  27  487  127
Proceeds from secondary public offering, net  (72)  77,169  --  --  77,097  --
Payment of employee tax withholdings related to restricted stock  (713)  (234)  --  --  (947)  --
Net cash (used in) provided by financing activities  (1,147)  77,093  100  27  75,947  127
Effect of exchange rate changes on cash  139  144  92  97  283  189
Net (decrease) increase in cash and cash equivalents  (18,384)  71,616  (34,525)  5,786  53,232  (28,738)
Cash and cash equivalents, beginning of period   128,357  56,741  95,296  89,509  56,741  89,509
Cash and cash equivalents, end of period  $ 109,973  $ 128,357  $ 60,771  $ 95,295  $ 109,973  $ 60,771

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, 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 Six Months Ended
             
  June 30,
2011
March 31,
2011
June 30,
2010
March 31,
2010
June 30,
2011
June 30,
2010
             
GAAP net loss  $ (13,935)  $ (9,818)  $ (2,265)  $ (5,785)  $ (23,753)  $ (8,050)
             
Share-based compensation  5,365  4,278  4,160  4,343  9,643  8,503
Litigation defense expenses  269  344  1,726  392  612  2,118
Acquisition related expenses  559  141  409  604  700  1,013
Amortization of intangible assets  1,889  1,423  915  171  3,312  1,087
             
Non-GAAP net (loss) income   $ (5,853)  $ (3,632)  $ 4,945  $ (275)  $ (9,486)  $ 4,671

 

 
 
 
LIMELIGHT NETWORKS, INC.
Reconciliation of GAAP Net Income (Loss) to EBITDA to Adjusted EBITDA
(In thousands)
(Unaudited)
             
             
  Three Months Ended Six Months Ended
             
  June 30, 2011 March 31, 2011 June 30, 2010 March 31, 2010 June 30, 2011 June 30, 2010
             
GAAP net loss  $ (13,935)  $ (9,818)  $ (2,265)  $ (5,785)  $ (23,753)  $ (8,050)
             
Depreciation and amortization  10,049  8,681  6,927  5,544  18,730  12,472
Interest expense  105  42  7  1  147  8
Interest and other income (expense)  (292)  (217)  (283)  (277)  (510)  (560)
Income tax expense (benefit)   444  122  (5,098)  240  566  (4,857)
EBITDA  (3,629)  (1,190)  (712)  (277)  (4,820)  (987)
             
Share-based compensation  5,365  4,278  4,160  4,343  9,643  8,503
Litigation defense expenses  269  344  1,726  392  612  2,118
Acquisition related expenses  559  141  409  604  700  1,013
             
Adjusted EBITDA  $ 2,564  $ 3,573  $ 5,583  $ 5,062  $ 6,135  $ 10,647

Conference Call

At approximately 4:30 p.m. EDT (1:30 p.m. PDT) today, management will host a quarterly conference call for investors. Investors can access this call toll-free at 877-388-8480 within the United States or +1 678-809-1592 outside of the U.S. The conference call will also be audiocast live from http://www.limelight.com and a replay will be available following the call from the Company's website.

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. Approximately 1870 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.limelight.com or follow us on Twitter at www.twitter.com/llnw.

Copyright (C) 2011 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
Source: Limelight Networks

Media Contacts

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smilmore@llnw.com
or
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dhohler@llnw.com

Investor Contact

ir@llnw.com

Limelight Networks, Inc.

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

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