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Press Release

Limelight Networks(R) Reports First Quarter 2012 Results and Announces $15 Million Stock Repurchase Program

Company Release - 5/3/2012 4:03 PM ET

TEMPE, Ariz., May 3, 2012 (GLOBE NEWSWIRE) -- Limelight Networks, Inc. (Nasdaq:LLNW) ("Limelight") today reported first quarter 2012 financial results.

"Limelight Networks' suite of high-value solutions allow our customers to manage their entire digital presence across web, mobile, social, and large screen channels on one platform," said Jeff Lunsford, chairman and chief executive officer. "These cloud-based solutions are being well-received by customers and prospects, and contributed to 66% year-over-year growth in our value added services. Our high-performance global compute and delivery platform allows us to offer advanced features across mobile, video and content management, website acceleration, content delivery, transcoding, live streaming, social enablement and cloud storage. The integration of these differentiates Limelight from point solution providers and allows our customers to streamline their workflow, deliver exceptional multi-screen experiences to their customers, and enhance their bottom lines."

Specific highlights for the first quarter included:

  • Revenue of $44.3 million, representing 7% year-over-year growth from continuing operations
  • Value added services revenue growth of 66% year-over-year
  • Value added services comprised 31% of revenue:

-- Limelight video platform and mobile revenue grew in excess of 80% year-over-year

-- Enterprise cloud storage revenue grew in excess of 50% year-over-year

-- Site and application acceleration services revenue grew in excess of 45% year-over-year

Financial Highlights

For the first quarter of 2012, the Company reported revenue of $44.3 million from continuing operations, adjusted EBITDA of $2.2 million and non-GAAP net loss, before share-based compensation, litigation expenses, amortization of intangible assets, acquisition-related expenses, and discontinued operations of $5.5 million or 5 cents per basic share. GAAP net loss from continuing operations was $9.7 million, or 9 cents per basic share.

Capital investments were $5.7 million in the quarter. The Company ended the quarter with no bank debt and approximately $137 million in cash and cash equivalents and short-term marketable securities.

Stock Buyback Program

During the first quarter, the Company repurchased approximately $1.2 million of common stock under the repurchase plan. The Company has completed its initial repurchase program, having repurchased approximately 9.7 million shares of common stock for approximately $25.2 million (including commissions) at an average price of $2.59 per share since commencement. In addition, on May 2, 2012, our Board of Directors authorized a new $15 million share repurchase program. 

Q2 2012 Outlook

The Company anticipates second quarter revenue to be in the range of $45-46 million. 

Financial Tables

LIMELIGHT NETWORKS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except per share data)
     
  March 31, 2012  December 31, 2011 
  (Unaudited)  
ASSETS    
Current Assets:    
 Cash and cash equivalents  $ 108,733  $ 120,349
 Marketable securities  27,914  19,850
 Accounts receivable, net of reserves of $4,417 and $4,391 at March 31, 2012 and December 31, 2011  27,339  28,045
 Deferred income tax   53  62
 Income taxes receivable  80  31
 Prepaid expenses and other current assets  15,179  20,646
Total current assets  179,298  188,983
Property and equipment, net  52,903  56,368
Marketable securities, less current portion  40  51
Deferred income tax, less current portion  1,273  1,177
Goodwill  80,304  80,105
Other intangible assets, net  8,598  9,207
Other assets  12,239  10,454
Total assets  $ 334,655  $ 346,345
     
LIABILITIES AND STOCKHOLDERS' EQUITY    
Current Liabilities:    
 Accounts payable  $ 3,519  $ 6,797
 Deferred revenue  7,903  7,287
 Capital lease obligation  1,741  1,750
 Income taxes payable  287  774
 Other current liabilities  12,393  13,195
Total current liabilities  25,843  29,803
Capital lease obligation, less current portion  1,697  2,124
Deferred income tax  566  580
Deferred revenue, less current portion  696  539
Other long term liabilities  3,687  4,194
Total liabilities  32,489  37,240
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 March 31, 2012 and December 31, 2011;    
104,245 and 104,349 shares issued and outstanding at March 31, 2012 and December 31, 2011, respectively  104  104
 Additional paid-in capital  463,579  460,845
 Contingent consideration  110  219
 Accumulated other comprehensive loss  (67)  (509)
 Accumulated deficit  (161,560)  (151,554)
Total stockholders' equity  302,166  309,105
Total liabilities and stockholders' equity  $ 334,655  $ 346,345
 
 
LIMELIGHT NETWORKS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
         
         
  Three Months Ended
         
  March 31, 2012 December 31, 2011 March 31, 2011 December 31, 2010
         
Revenues  $ 44,316  $ 45,979  $ 41,403  $ 43,024
Costs and operating expenses        
 Cost of revenues * †  27,330  27,666  26,265  26,672
 General and administrative * †  9,718  10,173  7,162  7,913
 Sales and marketing *  11,632  10,178  10,798  9,724
 Research & development *  5,166  4,592  3,691  3,351
Total costs and operating expenses  53,846  52,609  47,916  47,660
         
Operating loss   (9,530)  (6,630)  (6,513)  (4,636)
         
Interest expense  (50)  (74)  (36)  (59)
Interest income  106  128  184  143
Other income (expense)  (86)  (328)  3  (89)
         
Loss from continuing operations before income taxes  (9,560)  (6,904)  (6,362)  (4,641)
Income tax provision (benefit)   137  (909)  138  (383)
         
Loss from continuing operations  (9,697)  (5,995)  (6,500)  (4,258)
         
Discontinued operations:        
 Loss from discontinued operations, net of income taxes  (309)  (558)  (3,318)  (2,090)
         
Net loss  $ (10,006)  $ (6,553)  $ (9,818)  $ (6,348)
         
Net loss per share:        
 Basic        
 Continuing operations  $ (0.09)  $ (0.06)  $ (0.06)  $ (0.04)
 Discontinued operations  $ (0.01)  $ --   $ (0.03)  $ (0.02)
 Total  $ (0.10)  $ (0.06)  $ (0.09)  $ (0.06)
         
 Diluted        
 Continuing operations  $ (0.09)  $ (0.06)  $ (0.06)  $ (0.04)
 Discontinued operations  $ (0.01)  $ --   $ (0.03)  $ (0.02)
 Total  $ (0.10)  $ (0.06)  $ (0.09)  $ (0.06)
         
Shares used in per share calculations:        
 Basic  104,226  106,253  103,917  99,557
 Diluted  104,226  106,253  103,917  99,557
         
         
* 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
         
  March 31, 2012 December 31, 2011 March 31, 2011 December 31, 2010
       
Supplemental financial data (in thousands):      
         
Share-based compensation:        
         
Cost of revenues  $ 506  $ 614  $ 576  $ 580
General and administrative  1,777  2,000  1,270  1,410
Sales and marketing  837  844  1,138  1,137
Research and development  831  730  849  780
         
Total share-based compensation  $ 3,951  $ 4,188  $ 3,833  $ 3,907
         
Depreciation and amortization:      
         
Network-related depreciation  $ 6,829  $ 7,022  $ 6,657  $ 6,330
Other depreciation and amortization  703  714  400  379
Amortization of intangible assets  695  819  151  140
         
Total depreciation and amortization  $ 8,227  $ 8,555  $ 7,208  $ 6,849
         
         
Net (decrease) increase in cash, cash equivalents and marketable securities:  $ (3,563)  $ (17,545)  $ 65,638  $ (3,045)
         
         
End of period statistics:        
         
Approximate number of active customers  1,562  1,565  1,552  1,567
         
Number of employees  504  482  424  405
 
 
LIMELIGHT NETWORKS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
         
         
  Three Months Ended
         
  March 31, 2012 December 31, 2011 March 31, 2011 December 31, 2010
         
         
Cash flows from operating activities:        
Net loss  $ (10,006)  $ (6,553)  $ (9,818)  $ (6,348)
Loss from discontinued operations  (309)  (558)  (3,318)  (2,090)
Net loss from continuing operations  (9,697)  (5,995)  (6,500)  (4,258)
         
Adjustments to reconcile net loss to net cash provided by operating activities:        
Depreciation and amortization  8,227  8,555  7,208  6,849
Share-based compensation  3,951  4,188  3,833  3,907
Deferred income taxes  (112)  (183)  (79)  (728)
(Gain) loss on foreign currency transactions  --  (18)  --  --
(Gain) loss on sale of property and equipment  --  --  --  (104)
Accounts receivable charges  426  262  233  121
Accretion of marketable securities  99  27  49  85
Non cash tax benefit associated with sale of discontinued operations  --  (407)  --  --
Non cash increase in cost basis investment  (374)  (359)  (73)  --
Changes in operating assets and liabilities:        
 Accounts receivable  280  (379)  1,160  (768)
 Prepaid expenses and other current assets  5,478  1,102  (909)  156
 Income taxes receivable  (35)  452  (125)  41
 Other assets  (2,130)  (296)  (3,941)  594
 Accounts payable  (625)  (4,815)  (833)  1,286
 Deferred revenue  774  1,540  (775)  (2,796)
 Other current liabilities  (1,246)  754  (1,923)  (1,537)
 Income taxes payable  (500)  (1,045)  (51)  (314)
 Other long term liabilities  (508)  341  84  --
Net cash provided by (used in) operating activities  4,008  3,724  (2,642)  2,534
         
Cash flows from investing activities:        
Purchase of marketable securities  (15,469)  (7,396)  (1,410)  (1,039)
Maturities of marketable securities  7,303  1,412  6,970  7,339
Purchases of property and equipment  (5,680)  (3,491)  (7,973)  (8,321)
Net cash used in investing activities  (13,846)  (9,475)  (2,413)  (2,021)
         
Cash flows from financing activities:        
Payments on capital lease obligations  (436)  (402)  (227)  (192)
Proceeds from exercise of stock options  118  109  415  1,486
Proceeds from secondary public offering, net  --  --  77,169  --
Cash paid for repurchase of common stock  (1,161)  (15,164)  --  --
Payment of employee tax withholdings related to restricted stock  (259)  (133)  (234)  (950)
Net cash (used in) provided by financing activities  (1,738)  (15,590)  77,123  344
Effect of exchange rate changes on cash  (40)  447  234  21
         
Cash flows from discontinued operations:        
Cash (used in) provided by operating activities of discontinued operations  --  (2,597)  (1,111)  3,040
Cash used in investing activities of discontinued operations  --  --  (77)  (591)
Net cash (used in) provided by discontinued operations  --  (2,597)  (1,188)  2,449
Net (decrease) increase in cash and cash equivalents  (11,616)  (23,491)  71,114  3,327
Cash and cash equivalents, beginning of period   120,349  143,840  54,861  51,534
Cash and cash equivalents, end of period  $ 108,733  $ 120,349  $ 125,975  $ 54,861

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, acquisition related expenses and discontinued operations. We define EBITDA as GAAP net income (loss) before interest income, interest expense, other income and expense, provision for income taxes, depreciation and amortization, and discontinued operations. 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
         
  March 31, 2012 December 31, 2011 March 31, 2011 December 31, 2010
         
GAAP net loss  $ (10,006)  $ (6,553)  $ (9,818)  $ (6,348)
         
Share-based compensation  3,951  4,188  3,833  3,907
Litigation defense expenses  49  301  344  22
Acquisition related expenses  (488)  117  141  169
Amortization of intangible assets  695  819  151  140
Loss from discontinued operations  309  558  3,318  2,090
         
Non-GAAP net loss  $ (5,490)  $ (570)  $ (2,031)  $ (20)
 
 
LIMELIGHT NETWORKS, INC.
Reconciliation of GAAP Net Income (Loss) to EBITDA to Adjusted EBITDA
(In thousands)
(Unaudited)
         
         
  Three Months Ended
         
  March 31, 2012 December 31, 2011 March 31, 2011 December 31, 2010
         
GAAP net loss  $ (10,006)  $ (6,553)  $ (9,818)  $ (6,348)
         
Depreciation and amortization  8,227  8,555  7,208  6,849
Interest expense  50  74  36  59
Interest and other (income) expense  (20)  200  (187)  (54)
Income tax expense (benefit)   137  (909)  138  (383)
Loss from discontinued operations  309  558  3,318  2,090
         
EBITDA  (1,303)  1,925  695  2,213
         
Share-based compensation  3,951  4,188  3,833  3,907
Litigation defense expenses  49  301  344  22
Acquisition related expenses  (488)  117  141  169
         
Adjusted EBITDA   $ 2,209  $ 6,531  $ 5,013  $ 6,311

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) is a trusted provider of integrated cloud-based applications that leverage Limelight's scalable, high-performance, global computing platform. We give organizations whose Internet, mobile, and social initiatives are critical to their success a complete solution to upload, manage, publish, monetize, accelerate, and analyze their online and mobile content. The Limelight team of experts and end-to-end offering allow customers to streamline all of the processes throughout the content lifecycle and optimize the performance of content across all channels — empowering them to quickly and cost-effectively orchestrate a successful digital presence that improves brand awareness, drives revenue, and enhances customer relationships. For more information, please visit www.limelight.com or follow us on Twitter at www.twitter.com/llnw.

Copyright (C) 2012 Limelight Networks, Inc. All rights reserved. All product or service names are the property of their respective owners.

CONTACT: Heather Miller
         215-867-8600 ext. 239
         media@llnw.com
Source: Limelight Networks

Media Contacts

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smilmore@llnw.com
or
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Investor Contact

ir@llnw.com

Limelight Networks, Inc.

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

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