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Press Release

Limelight Networks Reports Fourth-Quarter and Full Year 2007 Results

Company Release - 2/19/2008 4:01 PM ET

TEMPE, Ariz., Feb. 19 /PRNewswire-FirstCall/ -- Limelight Networks, Inc. (Nasdaq: LLNW) today reported fourth quarter and full year results for the period ended December 31, 2007.

"2007 was a year of strong growth for Limelight Networks. We added over 450 new customers, substantially expanding our domestic and international market presence and winning key new customers in the online game, social media, and mainstream entertainment market segments, all while growing our peak traffic levels over 90%," said Jeff Lunsford, chairman and CEO, Limelight Networks, Inc.

For the fourth quarter 2007, the Company generated $29.1 million of GAAP (generally accepted accounting principles) revenue with a net loss of $0.08 per basic share. For the full year, the Company reported GAAP revenue of $103.1 million with a GAAP net loss of $0.41 per basic share.

The Company generated non-GAAP revenue for the fourth quarter 2007 of $29.9 million, adjusted EBITDA of $4.9 million and non-GAAP net income of $0.01 per basic share. For the full year, the Company reported non-GAAP revenue of $106.2 million, adjusted EBITDA of $21.5 million and non-GAAP net income of $0.09 per basic share -- see reconciliation to GAAP measures attached.

    During the fourth quarter, the Company:
    -- Signed contracts with over 200 new customers.
    -- Added over 170 net new customers into production, a new quarterly
       record, raising the total number of production customers to over 1,150.
    -- Was named the exclusive content delivery network for the world's first
       studio-backed feature film to be released online, in conjunction with
       Blockbuster, Inc., and Microsoft Silverlight.
    -- Announced Brightcove, Fox Interactive Media, MSN Video and Rajshri.com
       as customers for the LimelightHD service.
    -- Introduced support for Adobe Flash Media Streaming Server 3.
    -- Strengthened the Company's senior leadership team, with the appointment
       of Philip C. Maynard as senior vice president, chief legal officer, and
       secretary; and Roxanne Ivory, as vice president of global marketing.

"More organizations are moving digital assets online and looking to make them instantly available in high-fidelity to end-users. Limelight Networks' scalable architecture uniquely addresses the challenges inherent in this task. We believe we have a strong and compelling solution to continue supporting our customers' high-growth initiatives within this exciting market," added Lunsford.

First Quarter 2008 Outlook

The Company anticipates revenue to be in the range of $30.0 million to $32.0 million, non-GAAP net income to be in the range of $0.02 to $0.03 per basic share and adjusted EBITDA to be in the range of $2.0 million to $4.0 million, after including litigation-related costs during the quarter of $3.5 to $4.0 million.

Conference Call and Web Audiocast

Management will host a quarterly conference call for investors beginning at 2:00 p.m. PST (5 p.m. EST) on Tuesday, February 19, 2008. This call can be accessed toll-free at 1-877-574-8878 within the United States or 1-706-634-6364 outside of the U.S. using Conference ID 33463019. The conference call will also be audiocast live at http://www.llnw.com and a replay will be available following the call from the Company's website.

    Financial Statements



                           LIMELIGHT NETWORKS, INC.
                    Condensed Consolidated Balance Sheets
                                (In thousands)
                                 (Unaudited)
                                                  December 31,   December 31,
                                                     2007            2006
                Assets
    Cash and cash equivalents                      $113,824         $7,611
    Marketable securities, short-term                83,273              -
    Accounts receivable, net                         22,338         17,526
    Income tax receivable                             1,190          2,980
    Deferred income taxes                                 -            362
    Prepaid expenses and other current assets         4,469          3,011
       Current assets                               225,094         31,490
    Property and equipment, net                      46,968         41,784
    Investment in marketable securities                  87            285
    Deferred income taxes                                 -            106
    Other assets                                      1,440            759
       Total assets                                $273,589        $74,424

          Liabilities and stockholders' equity
    Accounts payable                                 $8,522         $6,419
    Accounts payable, related parties                   230            781
    Deferred revenue, current portion                 4,237            197
    Credit facilities, current portion                    -          2,938
    Capital lease obligations, current portion            -            245
    Other current liabilities                         9,312          6,314
       Current liabilities                           22,301         16,894
    Deferred revenue, less current portion            8,189              -
    Credit facilities, less current portion               -         20,456
    Capital lease obligations, less current portion       -              5
    Other liabilities                                     -             30
       Total liabilities                             30,490         37,385
    Stockholders' equity                            243,099         37,039
       Total liabilities and stockholders' equity  $273,589        $74,424



                           LIMELIGHT NETWORKS, INC.
               Condensed Consolidated Statements of Operations
                    (In thousands, except per share data)
                                 (Unaudited)

                             Three Months Ended            Twelve Months Ended
                    December September December September  December   December
                        31,      30,      31,      30,        31,        31,
                       2007     2007     2006     2006       2007       2006
    Revenues         $29,132  $29,190  $22,110  $17,454    $103,111   $65,243
    Costs and
     operating
     expenses:
       Cost of
        revenues
        (1)(3)        18,435   17,773   13,232   10,200      65,541    35,978

       General and
        administrative
        (1)(3)         7,030    8,117   10,061    4,679      31,752    18,614
       Sales and
        marketing (1)  8,619    7,421    2,450    1,860      25,462     6,841
       Research and
        development
        (1)            1,385    1,294    1,200    1,193       5,504     3,151
       Total costs
        and
        operating
        expenses      35,469   34,605   26,943   17,932     128,259    64,584
    Operating income
     (loss)           (6,337)  (5,415)  (4,833)    (478)    (25,148)      659
    Interest
     expense (2)          (6)     (18)    (431)    (373)     (1,418)   (1,828)
    Interest income    2,035    2,456      129       79       5,153       208
    Other income        (177)      33      105       70        (144)      175

    Income (loss)
     before income
     taxes            (4,485)  (2,944)  (5,030)    (702)    (21,557)     (786)
    Income tax
     expense           1,798      181      (51)     688       2,401     2,591
    Net loss         $(6,283) $(3,125) $(4,979) $(1,390)   $(23,958)  $(3,377)
    Net loss
     allocable to
     common
     stockholders    $(6,283) $(3,125) $(4,979) $(1,390)   $(23,958)  $(3,377)
    Net loss per share:
       Basic          $(0.08)  $(0.04)  $(0.25)  $(0.09)     $(0.41)   $(0.13)
       Diluted        $(0.08)  $(0.04)  $(0.25)  $(0.09)     $(0.41)   $(0.13)
    Shares used in
     per share
     calculations:
       Basic          82,140   82,045   19,882   15,670      57,982    25,597
       Diluted        82,140   82,045   19,882   15,670      57,982    25,597

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

     (2) Includes zero and approximately $424K of deferred financing fees for
         the three and twelve month periods ended December 31, 2007

     (3) Includes depreciation (see supplemental table for figures)



                           LIMELIGHT NETWORKS, INC.
                         Supplemental Financial Data
                                (In thousands)
                                 (Unaudited)

                               Three Months Ended          Twelve Months Ended
                      December September December September December  December
                          31,      30,      31,      30,        31,      31,
                         2007     2007     2006     2006       2007     2006
    Supplemental
     financial
     data (in thousands):
    Share-based
     compensation:
    Cost of revenues      $479     $422     $201     $136    $1,489     $459
    General and
     administrative      1,454    1,702    4,655    2,097    10,653    6,794
    Sales and marketing  1,272    1,289      143       84     3,948      334
    Research and
     development           420      542      856      735     2,820    1,661

       Total share-based
        Compensation    $3,625   $3,955   $5,855   $3,052   $18,910   $9,248

    Depreciation and
     amortization:
    Network-related
     depreciation       $5,428   $5,602   $3,908   $2,900   $20,739  $10,316
    Other depreciation     278      268       91       63       857      226
       Total
        depreciation
        and
        amortization    $5,706   $5,870   $3,999   $2,963   $21,596  $10,542
    Capital
     expenditures:

    Capital Expenditures
    (cash & accrual)    $5,136   $7,291  $17,109  $12,710   $26,771  $40,339

    Net increase
     (decrease)
     in cash, cash
     equivalents and
     marketable
     securities         $3,032   $6,370  $(3,501)  $9,471  $189,288   $6,005
    End of period
     statistics:
       Number of
        production
        customers under
        recurring
       contract          1,159      988      693      625     1,159      693
       Number of
       employees           239      219      123      108       239      123



                           LIMELIGHT NETWORKS, INC.
               Condensed Consolidated Statements of Cash Flows
                                (In thousands)
                                 (Unaudited)

                              Three Months Ended           Twelve Months Ended
                     December September December September  December  December
                         31,     30,       31,      30,        31,       31,
                        2007    2007      2006     2006       2007      2006
    Cash flows from
     operating
     activities:
    Net loss          $(6,283) $(3,125) $(4,979) $(1,390)  $(23,958) $(3,377)
    Adjustments
     to reconcile
     net loss to
     net cash
     provided by
     (used in)
     operating
     activities:
       Depreciation
        and
        amortization    5,706    5,870    3,999    2,963     21,596   10,542

       Share-based
        compensation    3,625    3,955    5,855    3,052     18,910    9,248
       Deferred income
        tax expense
        (benefit)          33     (294)    (470)      (1)       319     (471)
       Accounts
        receivable
        charges         1,337    1,689      743      242      4,873    1,162

       Accretion of
        debt discount       -        -       74       33        424      143
       Accretion of
        marketable
        securities       (530)    (277)       -        -       (807)       -
       Gain on sale
        of property
        and equipment       -        -     (175)       -          -     (175)
       Loss on foreign
        exchange           42        -        -        -         42        -
       Loss on
        investment        387        -        -        -        387        -
       Changes in
        operating assets
        and liabilities:
          Accounts
           receivable  (5,244)   1,202   (6,313)  (2,978)    (9,685) (14,415)

          Prepaid
           expenses
           and other
           current
           assets       1,037     (143)    (499)    (908)    (1,458)  (2,071)

          Income taxes
           receivable   2,946      412   (3,124)     144      2,820   (2,980)
          Other assets      7     (153)    (162)     (25)      (691)    (423)
          Accounts
           payable      3,614   (1,883)  (6,074)   8,785     (1,981)   3,725
          Accounts
           payable,
           related
           parties        230      (19)     781     (958)      (551)     419
          Deferred
           revenue and
           Other current
           liabilities (4,314)  10,471    2,161      860     15,824    4,966
          Other long
           term
           liabilities    (30)       -        -        -        (30)       -

       Net cash provided
        (used in) by
        operating
        activities:     2,563   17,705   (8,183)   9,819     26,034    6,293
    Cash flows from
     investing
     activities:
       Purchase of
        marketable
        securities    (37,569) (43,411)       -        -   (109,570)       -
       Sale of
        marketable
        securities     20,300    7,000        -        -     27,300        -
       Purchases of
        property and
        equipment      (2,081) (12,094) (13,282) (16,895)   (22,731) (40,609)

       Net cash used
        in investing
        activities    (19,350) (48,505) (13,282) (16,895)  (105,001) (40,609)
    Cash flows from
     financing
     activities:
       Borrowings on
        credit
        facilities          -        -   23,818    2,500          -   32,873

       Payments on
        credit
        facilities          -        -   (7,749) (11,435)   (23,818) (19,682)

       Borrowings on
        line of credit      -        -        -        -      1,500        -

       Payments on
        line of credit      -        -        -   (1,000)    (1,500)  (1,000)
       Payments on
       capital lease
        obligations         -        -      (71)     (72)      (250)    (242)

       Payments on notes
        payable -
        related parties     -        -        -        -          -     (195)

       Escrow funds
        returned from
        share
        repurchase      1,190    1,029      317      412      4,608      729

       Tax benefit from
        share-based
        compensation      543        -    1,627        -        566    1,627
       Proceeds from
        exercise of
        stock options     128        4      200    1,840        162    2,086

       Net proceeds
        from preferred
        stock issuance      -        -     (107) 126,423          -  126,316

       Repurchase of
        common stock        -        -        - (102,121)         - (102,121)
       Proceeds from
        initial public
        offering, net
        of issuance
        costs               -     (586)       -        -    203,912        -
    Net cash provided by
     financing
     activities         1,861      447   18,035   16,547    185,180   40,391

    Net increase
     (decrease) in
     cash and cash
     equivalents      (14,926) (30,353)  (3,430)   9,471    106,213    6,075
    Cash and cash
     equivalents,
     beginning of
     period           128,750  159,103   11,041    1,570      7,611    1,536
    Cash and cash
     equivalents, end
     of period       $113,824 $128,750   $7,611  $11,041   $113,824   $7,611

Use of Non-GAAP Financial Measures

In evaluating our business, we consider and use non-GAAP revenue, non-GAAP net income and Adjusted EBITDA as a supplemental measure of our operating performance. We consider non-GAAP revenue and net income measurements to be an important indicator of overall performance of the Company because it allows us to illustrate the impact of revenue generated from our multi-element contract as well as to eliminate the effects of share-based compensation and litigation expense. We define EBITDA as GAAP net income before net interest expense, provision for income taxes, depreciation and amortization. We define Adjusted EBITDA as EBITDA plus income from our multi-element contract and expenses that we do not consider reflective of our ongoing operations. We use Adjusted EBITDA as a supplemental measure to review and assess our operating performance. We also believe use of Adjusted EBITDA facilitates investors' use of operating performance comparisons from period to period and company to company by backing out potential differences caused by variations in such items as capital structures (affecting relative interest expense and share-based compensation expense), the book amortization of intangibles (affecting relative amortization expense), the age and book value of facilities and equipment (affecting relative depreciation expense) and other non cash expenses. We also present Adjusted EBITDA because we believe it is frequently used by securities analysts, investors and other interested parties as a measure of financial performance.

The terms non-GAAP revenue and net income, EBITDA and Adjusted EBITDA are not defined under U.S. generally accepted accounting principles, or U.S. GAAP, and are not measures of operating income, operating performance or liquidity presented in accordance with U.S. GAAP. Our non-GAAP revenue and net income, EBITDA and Adjusted EBITDA have limitations as analytical tools, and when assessing our operating performance, you should not consider non-GAAP revenue and net income, EBITDA and Adjusted EBITDA in isolation, or as a substitute for net income (loss) or other consolidated income statement data prepared in accordance with U.S. 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 interest expense, or the cash requirements
       necessary to service interest or principal payments, on our debt;

    -- 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 often will have to be replaced in the
       future, and EBITDA and Adjusted EBITDA do not reflect any cash
       requirements for such replacements;

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

    -- compared to other companies can vary significantly due to such factors
       as assumed life of the options and 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 and Adjusted EBITDA only supplementally. Non-GAAP Net Income, 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.




              Reconciliation of GAAP Revenue to Non-GAAP Revenue
                                (In thousands)
                                 (Unaudited)

                             Three Months Ended           Twelve Months Ended
                    December September December September December December
                        31,      30,      31,      30,       31,      31,
                       2007     2007     2006     2006      2007     2006
    GAAP Revenue     $29,132  $29,190  $22,110  $17,454  $103,111  $65,243

    Deferred
     Traffic Revenue       -   (2,645)       -        -         -        -
    Deferred Custom
     CDN Services        722    1,504        -        -     3,047        -

    Non-GAAP Revenue $29,854  $28,049  $22,110  $17,454  $106,158  $65,243



    Reconciliation of GAAP Net Income (Loss) to Non-GAAP Net Income (Loss)
                                (In thousands)
                                 (Unaudited)

                              Three Months Ended           Twelve Months Ended
                     December September December September December December
                        31,      30,       31,      30,      31,      31,
                       2007     2007      2006     2006     2007     2006
    GAAP net loss    $(6,283)  $(3,125) $(4,979) $(1,390) $(23,958) $(3,377)

       Share-based
        compensation   3,625     3,955    5,855    3,052    18,910    9,248
       Litigation
        expenses       2,772     2,002    2,296      825     7,295    3,121
       Deferred revenue  722    (1,141)       -        -     3,047        -
       Deferred cost
        of traffic and
        services          21       649        -        -      (205)       -

    Non-GAAP net
     income             $857    $2,340   $3,172   $2,487    $5,089   $8,992
    Non-GAAP net income
     basic share       $0.01     $0.03    $0.16    $0.16     $0.09    $0.35



    Reconciliation of GAAP Net Income (Loss) to EBITDA to Adjusted EBITDA
                                (In thousands)
                                 (Unaudited)

                              Three Months Ended           Twelve Months Ended
                     December September December September December December
                        31,       30,      31,      30,      31,       31,
                       2007      2007     2006     2006     2007      2006
    GAAP net loss    $(6,283)  $(3,125) $(4,979) $(1,390) $(23,958) $(3,377)

       Add:
        depreciation
        and
        amortization   5,706     5,870    3,999    2,963    21,596   10,542
       Add: interest
        expense            6        18      431      373     1,418    1,828
       Less: interest/
       other income   (1,858)   (2,490)    (234)    (149)   (5,009)    (383)
       Plus income
        tax expense
        (benefit)      1,798       181      (51)     688     2,401    2,591
    EBITDA             $(631)     $454    $(834)  $2,485   $(3,552) $11,201
       Add: share-based
        compensation   3,625     3,955    5,855    3,052    18,910    9,248
       Add: litigation
        expenses
        recoverable from
        escrow (1)     1,132     1,001    1,148      413     3,394    1,561
       Add: deferred
        traffic and
        services revenue 722    (1,141)       -        -     3,047        -
       Less: deferred
        traffic and
        service costs    (21)     (649)       -        -       265        -
    Adjusted EBITDA   $4,869    $4,918   $6,169   $5,950   $21,534  $22,010


    (1) During 2006, we repurchased stock in a transaction with a total value
        of $102.1 million. Selling stockholders agreed to hold
        $10.1 million of the proceeds to offset specific claims for
        reimbursement associated with the Akamai lawsuit and other undisclosed
        obligations that may arise. For the three month periods ended
        December 31, 2007 and 2006, we had $1.1 million and $1.1 million,
        respectively, of litigation costs subject to reimbursement from this
        escrow. For the twelve month periods ended December 31, 2007 and 2006,
        we had $3.4 million and $1.6 million, respectively, of litigation
        costs subject to reimbursement from this escrow.


Safe-Harbor Statement

This press release contains forward-looking statements concerning the outlook for the Company's revenues, net loss and stock-based compensation expense for the first quarter of 2008. Forward-looking statements 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, 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

Limelight Networks, Inc. (Nasdaq: LLNW) is enabling new business models by re-inventing content distribution over the Internet.

The Company operates a content delivery network that bypasses the busy public Internet to bring media content directly to an online audience. This architecture is optimized to securely store and instantly deliver any digital asset in a media library, through thousands of servers interconnected by a dedicated global optical network, and direct connections to more than 900 access networks around the world.

A trusted partner with a passion for customer service and proactive support, Limelight Networks helps maximize the online presence of thousands of entertainment, technology, enterprise and government organizations. For more information, visit http://www.limelightnetworks.com.

Copyright (C)2008 Limelight Networks, Inc. All rights reserved. All product or service names are the property of their respective owners

SOURCE Limelight Networks, Inc.

Contact: Paul Alfieri of Limelight Networks, Inc., +1-917-297-4241, 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

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