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Limelight Networks Reports First Quarter 2008 Results

- Grew revenue to $30.2 million, a 29% increase from the year-ago first-quarter

- Signed 183 new customers, up from 84 new customers in last year's first quarter, including 35 international and 77 signed in March

- Introduced Limelight Live Event Services - a solution of professional services and advanced technologies - enabling content producers to broadcast live events

- Announced content delivery network support for Microsoft Silverlight DRM powered by PlayReady

- Launched content delivery network support for Adobe Flash Media Server 3

- Received first patent award for digital rights management technology

Company Release - 5/8/2008 4:00 PM ET

TEMPE, Ariz., May 8 /PRNewswire-FirstCall/ -- Limelight Networks, Inc. (Nasdaq: LLNW) today reported first-quarter 2008 revenue of $30.2 million, and a GAAP net loss of $18.4 million, or 22 cents per basic share. Non-GAAP net loss, adjusted for certain charges, was $2.0 million, or 2 cents per share. EBITDA adjusted for share-based compensation, litigation and damage costs, was $2.1 million. Limelight Networks' non-GAAP EPS loss of 2 cents per basic share excludes a charge of 15 cents per basic share related to litigation and damage costs and 5 cents per basic share of share-based compensation.

Reconciliation of GAAP to non-GAAP net income is included in the attached tables.

"We are pleased with our customer addition rate, platform advancements, additions to our service suite, and progress towards our goal of delivering a brilliant client and end-user experience. Our number of new customer wins was up over 110% compared to the same quarter last year - despite an unfavorable verdict in our ongoing litigation with Akamai. Over 40% of these new customers were signed in March, after the verdict was announced, clearly demonstrating continued confidence in our business," said Jeff Lunsford, chief executive officer, Limelight Networks, Inc.

Business Drivers

Limelight Networks signed 183 new customers in the first quarter, up significantly from 84 signed in the same quarter a year ago. Of those new customer wins, 35 were international, and 77 occurred in the month of March. The Company also saw early success with its newly announced Live Event Services product, continued growth of its electronic software delivery products, expanded agreements with existing customers, and international expansion in the quarter.

Solid Financial Footing

First-quarter revenue was $30.2 million, up 29 percent from $23.4 million in the year-ago first quarter and within the range of guidance previously provided by the Company.

"We are focused on continued growth of recurring revenues and further diversification of revenue streams, including extending our business into the enterprise sector. Our top 20 customers now account for 58% of total revenue, down from 64% a year ago," said Matt Hale, chief financial officer, Limelight Networks, Inc.

Capital purchases were $3.1 million, down from $5.6 million in last year's first quarter.

"We continue to make operational improvements throughout the business, including software platform enhancements and improvements in infrastructure performance," commented Hale.

Limelight Networks ended the quarter with no debt and approximately $195 million in cash and short-term marketable securities.

Second-Quarter Outlook

Limelight Networks anticipates second-quarter revenue to be in the range of $28 million to $30 million.

Conference Call and Web Audiocast

Management will host a quarterly conference call for investors beginning at 2:00 p.m. PST (5:00 p.m. EST). This call can be accessed toll-free at 1.800.561.2718 within the United States or 1.617.614.3525 outside of the U.S. using Conference ID 50345649.

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)

                                                    March 31,    December 31,
                                                      2008           2007
                                 Assets
    Cash and cash equivalents                       $120,254       $113,824
    Marketable securities                             74,423         83,273
    Accounts receivable, net                          22,115         21,407
    Income tax receivable                              1,366          1,960
    Prepaid expenses and other current assets          5,008          4,469
      Current assets                                 223,166        224,933
    Property and equipment, net                       43,963         46,968
    Marketable securities, less current portion           32             87
    Other assets                                         876          1,440
      Total assets                                  $268,037       $273,428

                  Liabilities and stockholders' equity

    Accounts payable                                  $4,929         $8,523
    Accounts payable, related parties                    150            230
    Deferred revenue, current portion                  5,399          4,237
    Provision for litigation                          55,264         48,130
    Other current liabilities                         14,753          9,312
      Current liabilities                             80,495         70,432
    Deferred revenue, less current portion             7,328          8,189
    Other liabilities                                    771            770
      Total liabilities                               88,594         79,391
    Stockholders' equity                             179,443        194,037
      Total liabilities and stockholders' equity    $268,037       $273,428



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

                                        Three Months Ended
                           March 31,  December 31,   March 31,  December 31,
                             2008         2007         2007         2006

    Revenues               $30,202      $29,132      $23,353      $22,110
    Costs and operating
     expenses:
      Cost of revenues
       (1)(2)               20,672       18,435       14,497       13,232
      General and
       administrative
       (1)(2)               13,329        7,961        7,774       10,061
      Sales and marketing
       (1)                   8,142        8,619        3,018        2,450
      Research and
       development (1)       1,590        1,385        1,285        1,200
      Provision for
       Litigation            7,134       48,130            -            -
        Total costs and
         operating expenses 50,867       84,530       26,574       26,943
    Operating loss         (20,665)     (55,398)      (3,221)      (4,833)
    Interest expense           (21)          (6)        (573)        (431)
    Interest income          1,891        2,035           89          129
    Other income (expense)     170         (177)           -          105

    Loss before income
     taxes                 (18,625)     (53,546)      (3,705)      (5,030)
    Income tax (benefit)
     expense                  (183)       1,799          200          (51)
    Net loss              $(18,442)    $(55,345)     $(3,905)     $(4,979)
    Net loss allocable
     to common
     stockholders         $(18,442)    $(55,345)     $(3,905)     $(4,979)
    Net loss per share:
      Basic                 $(0.22)      $(0.67)      $(0.18)      $(0.25)
      Diluted               $(0.22)      $(0.67)      $(0.18)      $(0.25)
    Shares used in per
     share calculations:
      Basic                 82,623       82,140       21,945       19,882
      Diluted               82,623       82,140       21,945       19,882


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



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

                                          Three Months Ended
                           March 31,  December 31,    March 31,  December 31,
                              2008         2007         2007         2006

    Supplemental financial
     data (in thousands):

    Share-based compensation:
    Cost of revenues          $507         $479         $242         $201
    General and
     administrative          1,665        1,454        3,743        4,655
    Sales and marketing      1,306        1,272          235          143
    Research and development   482          420          851          856
      Total share-based
       Compensation         $3,960       $3,625       $5,071       $5,855

    Depreciation and
     amortization:
    Network-related
     depreciation           $6,013       $5,429       $4,688       $3,908
    Other depreciation         247          278          137           91
      Total depreciation
       and amortization     $6,260       $5,707       $4,825       $3,999

    Capital expenditures:
    Capital Expenditures
     (cash and accrual)     $3,095       $5,135       $5,575      $17,109

    Net increase (decrease)
     in cash, cash
     equivalents and
     marketable
     securities            $(2,475)      $3,032       $4,995      $(3,501)
    End of period
     statistics:
      Number of production
       customers under
       recurring contract    1,232        1,157          726          693
      Number of employees      244          239          167          123



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

                                           Three Months Ended
                           March 31,  December 31,   March 31,  December 31,
                             2008         2007         2007         2006
    Cash flows from
     operating activities:
      Net loss            $(18,442)     $(55,345)     $(3,905)      $(4,979)
      Adjustments to
       reconcile net loss
       to net cash provided
       by operating
       activities:
        Depreciation and
         amortization        6,260         5,707        4,824         3,999
        Share-based
         compensation        3,960         3,625        5,071         5,855
        Deferred income tax
         (benefit) expense    (176)           33         (467)         (470)
        Excess tax benefits
         related to stock
         option exercises        -        (1,596)           -             -
        Accounts receivable
         charges             1,562         2,268          677           743
        Accretion of debt
         discount                -             -           41            74
        Accretion of
         marketable
         securities           (453)         (530)           -             -
        Gain on sale of
         property and
         equipment               -             -            -          (175)
        (Gain) Loss on
         foreign exchange     (106)           42            -             -
        Loss on investment      55           387            -             -
        Unrealized (gain)
         loss on marketable
         securities            (58)            -            -             -
        Changes in operating
         assets and
         liabilities:
          Accounts
           receivable       (2,271)       (5,243)       1,998        (6,313)
          Prepaid expenses
           and other current
           assets               87         1,037       (1,809)         (499)
          Income taxes
           receivable          594         2,742          310        (3,124)
          Other assets         564            11         (119)         (162)
          Accounts payable  (4,678)        3,613         (732)       (6,074)
          Accounts payable,
           related parties     (80)          230            1           781
          Deferred revenue     301           135           20             -
          Provision for
           litigation        7,134        48,130            -             -
          Other current
           liabilities       5,035        (4,449)         630         2,161
          Other long term
           liabilities           1           740            -             -
      Net cash (used in)
       provided by operating
       activities:            (711)        1,536        6,540        (8,183)
    Cash flows from
     investing
     activities:
        Purchase of
         marketable
         securities        (34,725)       (2,081)           -             -
        Sale of marketable
         securities         44,200        20,300            -             -
        Purchases of
         property and
         equipment          (2,441)      (37,569)      (3,095)      (13,282)
        Net cash provided
         by (used in)
         investing
         activities          7,034       (19,350)      (3,095)      (13,282)
    Cash flows from
     financing
     activities:
        Borrowings on
         credit facilities       -             -            -        23,818
        Payments on credit
         facilities              -             -            -        (7,749)
        Borrowings on line
         of credit               -             -        1,500             -
        Payments on capital
         lease obligations       -             -         (159)          (71)
        Payments on notes
         payable - related
         parties                 -             -            -             -
        Escrow funds
         returned from
         share repurchase        -         1,190          298           317
        Excess tax benefits
         related to stock
         option exercises        -         1,573           23         1,627
        Proceeds from
         exercise of stock
         options and warrants  107           175           31           200
        Proceeds from
         preferred stock
         issuance                -             -            -          (107)
        Proceeds from initial
         public offering,
         net of issuance costs   -           (47)           -             -
        Effects of exchange
         rate changes on cash
         and cash equivalents    -            (4)           -             -
      Net cash provided by
       financing activities    107         2,887        1,693        18,035
      Net increase (decrease)
       in cash and cash
       equivalents           6,430       (14,926)       5,138        (3,430)
      Cash and cash
       equivalents,
       beginning
       of period           113,824       128,750        7,611        11,041
      Cash and cash
       equivalents, end
       of period          $120,254      $113,824      $12,749        $7,611

Use of Non-GAAP Financial Measures

To evaluate our business, we consider and use Non-GAAP net income and EBITDA adjusted for share-based compensation and litigation and damage costs as a supplemental measure of operating performance. We consider Non-GAAP net income 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 and provision for litigation. We define EBITDA as GAAP net income before interest income, interest expense, other income and expense, provision for income taxes, depreciation and amortization. We define EBITDA adjusted for share-based compensation and litigation and damage costs as EBITDA plus expenses that we do not consider reflective of our ongoing operations. We use EBITDA adjusted for share-based compensation and litigation and damage costs as a supplemental measure to review and assess operating performance. We also believe use of EBITDA adjusted for share-based compensation and litigation and damage costs facilitates investors' use of operating performance comparisons from period to period.

The terms Non-GAAP net income, EBITDA and EBITDA adjusted for share-based compensation and litigation and damage costs 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 net income, EBITDA and EBITDA adjusted for share-based compensation and litigation and damage costs have limitations as analytical tools, and when assessing our operating performance, Non-GAAP net income, EBITDA and EBITDA adjusted for share-based compensation and litigation and damage costs should not be considered 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 EBITDA adjusted for share-based compensation and
          litigation and damage costs 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 and damages accruals;
     --   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 will  be replaced sometime in
          the future, and EBITDA and EBITDA adjusted for share-based
          compensation and litigation and damage costs 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 EBITDA adjusted for share-
          based compensation and litigation and damage costs 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 EBITDA adjusted for share-based compensation and litigation and damage costs only as supplemental support for management's analysis of business performance . Non-GAAP Net Income, EBITDA and EBITDA adjusted for share-based compensation and litigation and damage costs 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 Net Income (Loss) to Non-GAAP Net Income (Loss)
                                (In thousands)
                                 (Unaudited)

                                         Three Months Ended
                           March 31,  December 31,   March 31,  December 31,
                             2008         2007         2007         2006

    GAAP net loss         $(18,442)    $(55,345)     $(3,905)     $(4,979)

      Provision for
       litigation            7,134       48,130            -            -
      Share-based
       compensation          3,960        3,625        5,071        5,855
      Litigation defense
       expenses              5,366        2,772          885        2,296
      Deferred CDN Services
       not yet delivered         -          729            -            -
      Deferred cost of
       traffic and services      -           21            -            -
    Non-GAAP net (loss)
     income                $(1,982)        $(68)      $2,051       $3,172



         Reconciliation of GAAP Net Income (Loss) to EBITDA to EBITDA
    Adjusted for Share-Based Compensation and Litigation and Damage Costs
                                (In thousands)
                                 (Unaudited)

                                      Three Months Ended
                           March 31,  December 31,   March 31,  December 31,
                             2008         2007         2007         2006

    GAAP net loss         $(18,442)    $(55,345)     $(3,905)     $(4,979)

      Add: depreciation
       and amortization      6,260        5,707        4,825        3,999
      Add: interest
       expense                  21            6          573          431
      Less: interest and
       other income         (2,062)      (1,858)         (89)        (234)
      Plus income tax
       expense (benefit)      (183)       1,799          200          (51)
    EBITDA                $(14,406)    $(49,691)      $1,604        $(834)
      Add: provision for
       litigation            7,134       48,130            -            -
      Add: share-based
       compensation          3,960        3,625        5,071        5,855
      Add: litigation
       defense expenses      5,366        2,772          885        2,296
    EBITDA adjusted for
     share-based
     compensation,
     litigation and
     damage costs           $2,054       $4,836       $7,560       $7,317

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 expense for the second quarter of 2008, customer growth, market growth, pricing pressures, expansion into additional market segments, product and services improvements and litigation and related expenses. 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, 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 content delivery partner enabling the next wave of Internet business and entertainment. More than 1300 Internet, entertainment, software, and technology brands trust our robust, scalable platform to monetize their digital assets by delivering a brilliant online experience to their global audience. Our architecture bypasses the busy public Internet using a dedicated optical network that interconnects thousands of servers and delivers massive files at the speed of light - directly to the access networks that consumers use every day. Our proven network and passion for service provides our customers confidence that every object in their library will be delivered to every user, every time. For more information, visit http://www.limelightnetworks.com .

SOURCE Limelight Networks, Inc.

Contact: Paul Alfieri, +1-917-297-4241, palfieri@llnw.com, or Matt Hale, +1-602-850-5045, mhale@llnw.com, both of Limelight Networks, Inc.

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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