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Press Release

Limelight Networks(R) Reports Third Quarter 2013 Financial Results

Company Release - 11/5/2013 4:00 PM ET
  • GAAP Revenue of $42.7 million, gross margin of 37%, loss from continuing operations of $10.9 million, or $0.11 per basic share
  • Non-GAAP net loss of $6.7 million, or $0.07 per basic share, break-even adjusted EBITDA
  • $112 million, or $1.15 per share, of cash and cash equivalents and marketable securities
  • Launched Orchestrate V2.5 to support faster content delivery

TEMPE, Ariz., Nov. 5, 2013 (GLOBE NEWSWIRE) -- Limelight Networks, Inc. (Nasdaq:LLNW) ("Limelight"), a global leader in Digital Presence Management, today reported revenue of $42.7 million for the quarter ended September 30, 2013, compared to $42.8 million for the quarter ended June 30, 2013, and compared to $45.0 million for the third quarter of 2012.

For the third quarter, on a GAAP basis, gross margin was 37%, and loss from continuing operations was $10.9 million or $0.11 per basic share. Gross margin was flat compared to the same period in 2012 when the company reported a loss from continuing operations of $0.6 million, or $0.01 per share. The third quarter of 2012 included a $9.4 million gain on the sale of the Company's cost basis investment in Gaikai Inc.

On a non-GAAP basis net loss was $6.7 million, or $0.07 per basic share compared to a non-GAAP net loss of $5.5 million or $0.05 per basic share in the third quarter of 2012.

"This quarter we took another step forward in our turnaround and simplification plan," said Bob Lento, Chief Executive Officer. "With our focus on account management, and initiatives to grow profitable revenue, we held quarter over quarter revenue flat, despite a significant decline in revenue from one of our largest customers. Our commitment to our customers through product and operational excellence is unwavering and we continued to invest in capacity and capabilities which we believe will help us create long-term customer relationships and grow revenue and profitability."

Financial Tables

     
LIMELIGHT NETWORKS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except per share data)
     
  September 30, December 31,
  2013 2012
  (Unaudited)  
ASSETS    
Current assets:    
Cash and cash equivalents  $ 79,222  $ 108,915
Marketable securities  33,043  19,040
Accounts receivable, net  25,667  26,602
Income taxes receivable  339  471
Deferred income tax  83  38
Prepaid expenses and other current assets  10,232  12,308
Total current assets  148,586  167,374
Property and equipment, net  33,291  41,251
Marketable securities, less current portion  6  18
Deferred income tax, less current portion  2,862  2,838
Goodwill  80,658  80,278
Other intangible assets, net  4,343  6,387
Other assets  5,796  6,735
Total assets  $ 275,542  $ 304,881
     
LIABILITIES AND STOCKHOLDERS' EQUITY    
Current liabilities:    
Accounts payable  $ 8,008  $ 6,730
Deferred revenue  6,015  6,892
Capital lease obligation  589  1,301
Income taxes payable  969  519
Other current liabilities  12,450  14,866
Total current liabilities  28,031  30,308
Capital lease obligation, less current portion  412  824
Deferred income tax  357  461
Deferred revenue, less current portion  1,931  797
Other long-term liabilities  4,832  5,261
Total liabilities  35,563  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 September 30, 2013 and December 31, 2012; 97,239 and 98,038 shares issued and outstanding at September 30, 2013 and December 31, 2012, respectively  97  98
Additional paid-in capital  456,153  452,258
Contingent consideration  33  33
Accumulated other comprehensive loss  (1,566)  (709)
Accumulated deficit  (214,738)  (184,450)
Total stockholders' equity  239,979  267,230
Total liabilities and stockholders' equity  $ 275,542  $ 304,881
     
           
LIMELIGHT NETWORKS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
           
           
  Three Months Ended Nine Months Ended
           
  September 30, June 30, September 30, September 30, September 30,
  2013 2013 2012 2013 2012
           
Revenues  $ 42,656  $ 42,763  $ 45,001  $ 131,232  $ 133,765
Cost of revenue:          
Cost of services *  21,773  21,870  21,313  65,696  62,193
Depreciation - network  5,278  6,120  6,970  18,078  20,984
Total cost of revenue  27,051  27,990  28,283  83,774  83,177
Gross profit  15,605  14,773  16,718  47,458  50,588
Operating expenses:          
General and administrative *  8,609  8,365  8,757  25,047  25,130
Sales and marketing *  10,363  10,699  11,037  31,545  34,431
Research and development *  5,423  5,650  4,956  16,814  15,108
Depreciation and amortization  1,433  1,442  1,481  4,325  4,329
Total operating expenses  25,828  26,156  26,231  77,731  78,998
           
Operating loss  (10,223)  (11,383)  (9,513)  (30,273)  (28,410)
           
Other income (expense):          
Interest expense  (15)  (21)  (40)  (64)  (136)
Interest income  89  79  88  238  277
Gain on sale of cost basis investment  --  --  9,420  --  9,420
Other, net  (557)  143  (551)  154  (582)
Total other (expense) income  (483)  201  8,917  328  8,979
           
Loss from continuing operations before income taxes  (10,706)  (11,182)  (596)  (29,945)  (19,431)
Income tax expense  197  51  14  328  313
           
Loss from continuing operations  (10,903)  (11,233)  (610)  (30,273)  (19,744)
           
Discontinued operations:          
Loss from discontinued operations, net of income taxes  (15)  --  (218)  (15)  (918)
           
Net loss  $ (10,918)  $ (11,233)  $ (828)  $ (30,288)  $ (20,662)
           
Net loss per share:          
Basic          
Continuing operations  $ (0.11)  $ (0.12)  $ (0.01)  $ (0.31)  $ (0.19)
Discontinued operations  $ (0.00)  $ --   $ --   $ (0.00)  $ (0.01)
Total  $ (0.11)  $ (0.12)  $ (0.01)  $ (0.31)  $ (0.20)
           
Diluted          
Continuing operations  $ (0.11)  $ (0.12)  $ (0.01)  $ (0.31)  $ (0.19)
Discontinued operations  $ (0.00)  $ --   $ --   $ (0.00)  $ (0.01)
Total  $ (0.11)  $ (0.12)  $ (0.01)  $ (0.31)  $ (0.20)
           
Shares used in per share calculations:          
Basic  96,949  96,257  99,359  96,675  102,123
Diluted  96,949  96,257  99,359  96,675  102,123
           
* Includes share-based compensation (see supplemental table for figures)        
           
           
LIMELIGHT NETWORKS, INC.
SUPPLEMENTAL FINANCIAL DATA
(In thousands)
(Unaudited)
           
  Three Months Ended Nine Months Ended
           
  September 30, June 30, September 30, September 30, September 30,
  2013 2013 2012 2013 2012
Supplemental financial data (in thousands):          
           
Share-based compensation:          
           
Cost of revenues  $ 499  $ 513  $ 604  $ 1,518  $ 1,594
General and administrative  1,591  1,605  1,571  4,817  4,638
Sales and marketing  638  595  836  1,896  2,503
Research and development  495  514  652  1,569  2,100
           
Total share-based compensation  $ 3,223  $ 3,227  $ 3,663  $ 9,800  $ 10,835
           
Depreciation and amortization:          
           
Network-related depreciation  $ 5,278  $ 6,120  $ 6,970  $ 18,078  $ 20,984
Other depreciation and amortization  722  724  760  2,164  2,185
Amortization of intangible assets  711  718  721  2,161  2,144
           
Total depreciation and amortization  $ 6,711  $ 7,562  $ 8,451  $ 22,403  $ 25,313
           
           
Net (decrease) increase in cash, cash equivalents and marketable securities:  $ (6,603)  $ (1,341)  $ 5,340  $ (15,702)  $ (10,265)
           
           
End of period statistics:          
           
Approximate number of active customers  1,341  1,358  1,493  1,341  1,493
           
Number of employees  508  495  517  508  517
           
           
LIMELIGHT NETWORKS, INC.    
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS    
(In thousands)    
(Unaudited)    
           
           
  Three Months Ended Nine Months Ended
           
  September 30, June 30, September 30, September 30, September 30,
  2013 2013 2012 2013 2012
           
Operating activities          
Net loss  $ (10,918)  $(11,233)  $ (828)  $ (30,288)  $ (20,662)
Loss from discontinued operations  (15)  --  (218)  (15)  (918)
Net loss from continuing operations  (10,903)  (11,233)  (610)  (30,273)  (19,744)
           
Adjustments to reconcile net loss to net cash provided by operating activities:        
Depreciation and amortization  6,711  7,562  8,451  22,403  25,313
Share-based compensation  3,223  3,227  3,663  9,800  10,835
Deferred income taxes  80  (118)  (125)  (209)  (299)
Foreign currency remeasurement (gain) loss  641  (284)  517  (504)  173
Loss on sale of property and equipment  3  22  6  25  19
Accounts receivable charges  225  207  221  758  1,105
Amortization of premium on marketable securities  182  184  123  462  365
Gain on sale of cost basis investment  --  --  (9,420)  --  (9,420)
Non cash increase in cost basis investment  --  --  --  --  (528)
Changes in operating assets and liabilities:          
 Accounts receivable  (1,398)  2,835  (446)  177  (1,468)
 Prepaid expenses and other current assets  (33)  878  1,534  1,930  2,986
 Income taxes receivable  (17)  7  (135)  131  (393)
 Other assets  341  461  580  908  (1,554)
 Accounts payable  252  946  2,176  1,102  2,154
 Deferred revenue  (827)  (615)  142  256  407
 Other current liabilities  803  708  (732)  (436)  (1,023)
 Income taxes payable  96  53  (22)  456  (200)
 Other long term liabilities  (166)  (167)  (72)  (448)  (531)
Net cash (used in) provided by operating activities  (787)  4,673  5,851  6,538  8,197
           
Investing activities          
Purchase of marketable securities  (3,841)  (7,931)  (3,098)  (49,811)  (27,280)
Maturities of marketable securities  7,426  5,000  5,103  35,321  19,285
Purchases of property and equipment  (5,563)  (4,519)  (7,362)  (12,685)  (17,474)
Proceeds from sale of cost basis investment  --  --  10,154  --  10,154
Proceeds from sale of discontinued operations  5  119  367  124  7,217
Net cash (used in) provided by investing activities  (1,973)  (7,331)  5,164  (27,051)  (8,098)
           
Financing activities          
Payments on capital lease obligations  (278)  (417)  (441)  (1,124)  (1,322)
Proceeds from exercise of stock options  27  2  30  29  155
Cash paid for purchase of common stock  --  --  (3,171)  (5,512)  (16,273)
Payment of employee tax withholdings related to restricted stock  (180)  (771)  (83)  (2,309)  (601)
Net cash used in financing activities  (431)  (1,186)  (3,665)  (8,916)  (18,041)
Effect of exchange rate changes on cash and cash equivalents  310  (208)  89  (256)  61
           
Discontinued operations          
Cash used in operating activities of discontinued operations  (8)  --  --  (8)  --
Net (decrease) increase in cash and cash equivalents  (2,889)  (4,052)  7,439  (29,693)  (17,881)
Cash and cash equivalents, beginning of period   82,111  86,163  95,029  108,915  120,349
Cash and cash equivalents, end of period  $ 79,222  $ 82,111  $ 102,468  $ 79,222  $ 102,468
           

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, gain on sale of cost basis investment and discontinued operations. We define EBITDA as GAAP net income (loss) before interest income, interest expense, gain on sale of cost basis investment, 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 Nine Months Ended
           
  September 30, June 30, September 30, September 30, September 30,
  2013 2013 2012 2013 2012
           
U.S. GAAP net loss  $ (10,918)  $ (11,233)  $ (828)  $ (30,288)  $ (20,662)
           
Share-based compensation  3,223  3,227  3,663  9,800  10,835
Litigation defense expenses  149  109  148  299  166
Acquisition related expenses  146  (9)  48  113  (372)
Amortization of intangible assets  711  718  721  2,161  2,144
Gain on sale of cost basis investment  --  --  (9,420)  --  (9,420)
Loss from discontinued operations  15  --  218  15  918
           
Non-GAAP net loss  $ (6,674)  $ (7,188)  $ (5,450)  $ (17,900)  $ (16,391)
           
           
LIMELIGHT NETWORKS, INC.
Reconciliation of U.S. GAAP Net Loss to EBITDA to Adjusted EBITDA
(In thousands)
(Unaudited)
           
  Three Months Ended Nine Months Ended
           
  September 30, June 30, September 30, September 30, September 30,
  2013 2013 2012 2013 2012
           
U.S. GAAP net loss  $ (10,918)  $ (11,233)  $ (828)  $ (30,288)  $ (20,662)
           
Depreciation and amortization  6,711  7,562  8,451  22,403  25,313
Interest expense  15  21  40  64  136
Gain on sale of cost basis investment  --  --  (9,420)  --  (9,420)
Interest and other (income) expense  468  (222)  463  (392)  304
Income tax expense   197  51  14  328  313
Loss from discontinued operations  15  --  218  15  918
           
EBITDA  (3,512)  (3,821)  (1,062)  (7,870)  (3,098)
           
Share-based compensation  3,223  3,227  3,663  9,800  10,835
Litigation defense expenses  149  109  148  299  166
Acquisition related expenses  146  (9)  48  113  (372)
           
Adjusted EBITDA (loss)   $ 6  $ (494)  $ 2,797  $ 2,342  $ 7,531
           

Conference Call

At approximately 4:30 p.m. EST (1:30 p.m. PST) 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. 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
         ir@llnw.com
         (602) 850-5000

         famaPR on behalf of Limelight Networks
         (617) 986-5020
         limelight@famapr.com

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Source: Limelight Networks

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Limelight Networks, Inc.

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

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