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Press Release

Limelight Networks(R) Reports Second Quarter 2013 Financial Results

Company Release - 8/7/2013 4:00 PM ET

TEMPE, Ariz., Aug. 7, 2013 (GLOBE NEWSWIRE) -- Limelight Networks, Inc. (Nasdaq:LLNW) ("Limelight"), a global leader in Digital Presence Management, today announced second quarter 2013 financial results.

"Today Limelight reported revenue for the second quarter of 2013 of $42.8 million and an adjusted EBITDA loss of approximately $500,000. This quarter's results while disappointing, reflect the impact of changes we are making to implement our long term mission of helping customers better engage digital audiences," said Bob Lento, Chief Executive Officer. "We have launched several initiatives bringing renewed discipline and speed to product development and network operations. Customer support and satisfaction is a top priority, as is ensuring that Limelight is an employer of choice in our markets. We have also established a clear process for identifying customers who value quality, performance, availability, and service, while moving away from contracts that do not provide long-term economic value. These changes, while necessary, may affect short-term results. With these initiatives underway, we are accelerating time to market for product releases, increasing network capacity, and driving sales efficiencies." 

Recent Business Highlights

Limelight continues to enhance its position as a leader in the Digital Presence Management marketplace.

  • Second quarter 2013 value added services were 36% of total revenue, up from 35% in the first quarter of 2013.
  • Limelight Launched Orchestrate V2.0 and outlined our roadmap of innovation that we believe will lead us to our vision of a fully integrated and operationalized Digital Presence platform.
  • Increased available network capacity for new and existing customers by 2 Terabits per second.

Financial Results for Limelight's 2013 second quarter included:

  • Revenue from continuing operations of $42.8 million.
  • An adjusted EBITDA loss of approximately $500,000.
  • Cash flows from operations of $4.7 million.  
  • Non-GAAP net loss of $7.2 million, or $0.07 cents per basic share.
  • GAAP loss from continuing operations of $11.2 million, or $0.12 cents per basic share.
  • Capital expenditures of $4.5 million.
  • The Company ended the quarter with no bank debt and approximately $119 million in cash and cash equivalents and short-term marketable securities.

Financial Tables

LIMELIGHT NETWORKS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except per share data)
     
  June 30,  December 31, 
  2013 2012
  (Unaudited)  
ASSETS    
Current assets:    
 Cash and cash equivalents  $ 82,111  $ 108,915
 Marketable securities  36,755  19,040
 Accounts receivable, net   24,494  26,602
 Income taxes receivable  310  471
 Deferred income tax   67  38
 Prepaid expenses and other current assets  10,107  12,308
Total current assets  153,844  167,374
Property and equipment, net  33,990  41,251
Marketable securities, less current portion  8  18
Deferred income tax, less current portion  2,908  2,838
Goodwill  80,493  80,278
Other intangible assets, net  5,007  6,387
Other assets  6,129  6,735
Total assets  $ 282,379  $ 304,881
     
LIABILITIES AND STOCKHOLDERS' EQUITY    
Current liabilities:    
 Accounts payable  $ 8,229  $ 6,730
 Deferred revenue  6,542  6,892
 Capital lease obligation  777  1,301
 Income taxes payable  841  519
 Other current liabilities  11,455  14,866
Total current liabilities  27,844  30,308
Capital lease obligation, less current portion  501  824
Deferred income tax  376  461
Deferred revenue, less current portion  2,230  797
Other long-term liabilities  4,980  5,261
Total liabilities  35,931  37,651
Commitments and contingencies  --  --
Stockholders' equity:    
Convertible preferred stock, $0.001 par value; 7,500 shares authorized; no shares issued and outstanding  --  --
Common stock, $0.001 par value; 300,000 shares authorized at June 30, 2013 and December 31, 2012;    
96,836 and 98,038 shares issued and outstanding at June 30, 2013 and December 31, 2012, respectively  97  98
Additional paid-in capital  453,083  452,258
Contingent consideration  33  33
Accumulated other comprehensive loss  (2,945)  (709)
Accumulated deficit  (203,820)  (184,450)
Total stockholders' equity  246,448  267,230
Total liabilities and stockholders' equity  $ 282,379  $ 304,881
 
LIMELIGHT NETWORKS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
           
  Three Months Ended Six Months Ended
           
  June 30, March 31, June 30, June 30, June 30,
  2013 2013 2012 2013 2012
           
Revenues  $ 42,763  $ 45,813  $ 44,447  $ 88,576  $ 88,763
Cost of revenue:          
 Cost of services *  21,870  22,052  20,379  43,923  40,880
 Depreciation - network  6,120  6,680  7,184  12,800  14,013
Total cost of revenue  27,990  28,732  27,563  56,723  54,893
Gross profit  14,773  17,081  16,884  31,853  33,870
Operating expenses:          
 General and administrative *   8,365  8,073  8,053  16,438  16,373
 Sales and marketing *  10,699  10,484  11,762  21,183  23,394
 Research & development *  5,650  5,741  4,986  11,391  10,152
 Depreciation and amortization  1,442  1,450  1,450  2,892  2,848
Total operating expenses  26,156  25,748  26,251  51,904  52,767
           
Operating loss   (11,383)  (8,667)  (9,367)  (20,051)  (18,897)
           
Other income (expense):          
 Interest expense  (21)  (27)  (46)  (48)  (96)
 Interest income  79  70  83  149  189
 Other, net  143  568  56  711  (30)
Total other income  201  611  93  812  63
           
Loss from continuing operations before income taxes  (11,182)  (8,056)  (9,274)  (19,239)  (18,834)
Income tax expense   51  80  163  131  300
           
Loss from continuing operations  (11,233)  (8,136)  (9,437)  (19,370)  (19,134)
           
Discontinued operations:          
 Loss from discontinued operations, net of income taxes  --  --  (391)  --  (700)
           
Net loss  $ (11,233)  $ (8,136)  $ (9,828)  $ (19,370)  $ (19,834)
           
Net loss per share:          
 Basic          
 Continuing operations  $ (0.12)  $ (0.08)  $ (0.10)  $ (0.20)  $ (0.18)
 Discontinued operations  $ --   $ --   $ --   $ --   $ (0.01)
 Total  $ (0.12)  $ (0.08)  $ (0.10)  $ (0.20)  $ (0.19)
           
 Diluted          
 Continuing operations  $ (0.12)  $ (0.08)  $ (0.10)  $ (0.20)  $ (0.18)
 Discontinued operations  $ --   $ --   $ --   $ --   $ (0.01)
 Total  $ (0.12)  $ (0.08)  $ (0.10)  $ (0.20)  $ (0.19)
           
Shares used in per share calculations:          
 Basic  96,257  96,818  102,783  96,538  103,505
 Diluted  96,257  96,818  102,783  96,538  103,505
           
* Includes share-based compensation (see supplemental table for figures)
 
LIMELIGHT NETWORKS, INC.
SUPPLEMENTAL FINANCIAL DATA
(In thousands)
(Unaudited)
           
  Three Months Ended Six Months Ended
           
  June 30, March 31, June 30, June 30, June 30,
  2013 2013 2012 2013 2012
Supplemental financial data (in thousands):          
           
Share-based compensation:          
           
Cost of revenues  $ 513  $ 505  $ 485  $ 1,018  $ 991
General and administrative  1,605  1,621  1,290  3,226  3,067
Sales and marketing  595  663  829  1,258  1,666
Research and development  514  561  617  1,075  1,448
           
Total share-based compensation  $ 3,227  $ 3,350  $ 3,221  $ 6,577  $ 7,172
           
Depreciation and amortization:          
           
Network-related depreciation  $ 6,120  $ 6,680  $ 7,184  $ 12,800  $ 14,013
Other depreciation and amortization  724  718  721  1,442  1,424
Amortization of intangible assets  718  732  729  1,450  1,424
           
Total depreciation and amortization  $ 7,562  $ 8,130  $ 8,634  $ 15,692  $ 16,861
           
Net (decrease) increase in cash, cash equivalents and marketable securities:  $ (1,341)  $ (7,758)  $ (12,042)  $ (9,099)  $ (15,605)
           
End of period statistics:          
           
Approximate number of active customers  1,358  1,406  1,494  1,358  1,494
           
Number of employees  495  499  528  495  528
 
LIMELIGHT NETWORKS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
           
  Three Months Ended Six Months Ended
           
  June 30, March 31, June 30, June 30, June 30,
  2013 2013 2012 2013 2012
           
Cash flows from operating activities:          
Net loss  $ (11,233)  $ (8,136)  $ (9,828)  $ (19,370)  $ (19,834)
Loss from discontinued operations  --  --  (391)  --  (700)
Net loss from continuing operations  (11,233)  (8,136)  (9,437)  (19,370)  (19,134)
           
Adjustments to reconcile net loss to net cash provided by operating activities:          
Depreciation and amortization  7,562  8,130  8,634  15,692  16,861
Share-based compensation  3,227  3,350  3,221  6,577  7,172
Deferred income taxes  (118)  (171)  (62)  (289)  (174)
Foreign currency remeasurement gain  (284)  (861)  (247)  (1,145)  (344)
Loss on sale of property and equipment  22  --  13  22  13
Accounts receivable charges  207  326  458  533  884
Amortization of premium on marketable securities  184  96  143  280  242
Non cash tax benefit associated with sale of discontinued operations  --  --  --  --  --
Non cash increase in cost basis investment  --  --  (154)  --  (528)
Changes in operating assets and liabilities:          
 Accounts receivable  2,835  (1,260)  (1,302)  1,575  (1,022)
 Prepaid expenses and other current assets  878  1,085  1,813  1,963  1,452
 Income taxes receivable  7  141  (223)  148  (258)
 Other assets  461  106  (4)  567  (2,134)
 Accounts payable  946  (96)  603  850  (22)
 Deferred revenue  (615)  1,698  (509)  1,083  265
 Other current liabilities  708  (1,947)  955  (1,239)  (291)
 Income taxes payable  53  307  322  360  (178)
 Other long term liabilities  (167)  (116)  50  (282)  (458)
Net cash provided by operating activities  4,673  2,652  4,274  7,325  2,346
           
Cash flows from investing activities:          
Purchase of marketable securities  (7,931)  (38,039)  (8,713)  (45,970)  (24,182)
Maturities of marketable securities  5,000  22,895  6,879  27,895  14,182
Purchases of property and equipment  (4,519)  (2,603)  (4,432)  (7,122)  (10,112)
Proceeds from sale of discontinued operations  119  --  1,011  119  6,850
Net cash used in investing activities  (7,331)  (17,747)  (5,255)  (25,078)  (13,262)
           
Cash flows from financing activities:          
Payments on capital lease obligations  (417)  (429)  (445)  (846)  (881)
Proceeds from exercise of stock options  2  --  7  2  125
Cash paid for purchase of common stock  --  (5,512)  (11,941)  (5,512)  (13,102)
Payment of employee tax withholdings related to restricted stock  (771)  (1,358)  (259)  (2,129)  (518)
Net cash used in financing activities  (1,186)  (7,299)  (12,638)  (8,485)  (14,376)
Effect of exchange rate changes on cash and cash equivalents  (208)  (358)  (85)  (566)  (28)
Net decrease in cash and cash equivalents  (4,052)  (22,752)  (13,704)  (26,804)  (25,320)
Cash and cash equivalents, beginning of period   86,163  108,915  108,733  108,915  120,349
Cash and cash equivalents, end of period  $ 82,111  $ 86,163  $ 95,029  $ 82,111  $ 95,029

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 U.S. GAAP Net Loss to Non-GAAP Net Loss
(In thousands)
(Unaudited)
           
  Three Months Ended Six Months Ended
           
  June 30, March 31, June 30, June 30, June 30,
  2013 2013 2012 2013 2012
           
U.S. GAAP net loss  $ (11,233)  $ (8,136)  $ (9,828)  $ (19,370)  $ (19,834)
           
Share-based compensation  3,227  3,350  3,221  6,577  7,172
Litigation defense expenses  109  42  (31)  151  18
Acquisition related expenses  (9)  (24)  68  (33)  (419)
Amortization of intangible assets  718  732  729  1,450  1,424
Loss from discontinued operations  --  --  391  --  700
           
Non-GAAP net loss  $ (7,188)  $ (4,036)  $ (5,450)  $ (11,225)  $ (10,939)
 
LIMELIGHT NETWORKS, INC.
Reconciliation of U.S. GAAP Net Loss to EBITDA to Adjusted EBITDA
(In thousands)
(Unaudited)
           
  Three Months Ended Six Months Ended
           
  June 30, March 31, June 30, June 30, June 30,
  2013 2013 2012 2013 2012
           
U.S. GAAP net loss  $ (11,233)  $ (8,136)  $ (9,828)  $ (19,370)  $ (19,834)
           
Depreciation and amortization  7,562  8,130  8,634  15,692  16,861
Interest expense  21  27  46  48  96
Interest and other (income) expense  (222)  (638)  (139)  (860)  (159)
Income tax expense   51  80  163  131  300
Loss from discontinued operations  --  --  391  --  700
           
EBITDA  (3,821)  (537)  (733)  (4,359)  (2,036)
           
Share-based compensation  3,227  3,350  3,221  6,577  7,172
Litigation defense expenses  109  42  (31)  151  18
Acquisition related expenses  (9)  (24)  68  (33)  (419)
           
Adjusted (loss) EBITDA   $ (494)  $ 2,831  $ 2,525  $ 2,336  $ 4,735

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 or annual 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 global leader in Digital Presence Management. The Limelight Orchestrate Digital Presence Management Platform ("the Orchestrate Platform") is an integrated suite of cloud-based Software as a Service (SaaS) and Infrastructure as a Service (IaaS) applications and services that allow organizations to optimize all aspects of their online digital presence across web, mobile, social, and large screen channels. The Orchestrate Platform leverages Limelight's scalable, high-performance global network to offer advanced features for: content delivery; website personalization; content targeting; online video publishing; mobile enablement and monetization; web content management; transcoding; and cloud storage – combined with social media integration and powerful analytics. Limelight's team of digital presence experts help organizations streamline processes and optimize business results across all customer interaction channels to deliver exceptional multi-screen experiences, improve brand awareness, drive revenue, and enhance their customer relationships – all while reducing costs. For more information, please visit www.limelight.com, and be sure to follow us on Twitter at www.twitter.com/llnw.

Copyright (C) 2013 Limelight Networks, Inc. All rights reserved. All product or service names are the property of their respective owners.

CONTACT: Gillian Reckler
         602-753-6965
         ir@llnw.com

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Source: Limelight Networks

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Investor Contact

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Limelight Networks, Inc.

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

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