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Limelight Networks Reports Third Quarter 2008 Results

- Grew revenue to $33.1 million, a 9% sequential increase from the second quarter and 18% increase from third-quarter 2007 non-GAAP revenue of $28.0 million

- Grew AARPC (average annualized revenue per customer) by 8% through continued focus on high-quality customers

- Delivered over 70 million video streams for NBCOlympics.com on MSN

Company Release - 11/6/2008 4:03 PM ET

TEMPE, Ariz., Nov. 6 /PRNewswire-FirstCall/ -- Limelight Networks, Inc. (Nasdaq: LLNW) today reported third-quarter 2008 revenue of $33.1 million and a net loss of $15.4 million, or 18 cents per basic share. Non-GAAP net loss, adjusted for certain charges, was $0.5 million or 1 cent per basic share. EBITDA, adjusted for share-based compensation, litigation and potential damage cost accruals, was $5 million. The non-GAAP loss of 1 cent per basic share excludes a charge of 13 cents per basic share related to litigation and potential damage cost accruals, and 5 cents per basic share of share-based compensation.

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

"Disciplined execution enabled us to achieve strong sequential growth in the third quarter," commented Jeff Lunsford, chairman and chief executive officer, Limelight Networks, Inc. "We experienced new traffic records across our network and, even in this tough economic environment, are continuing to see attractive growth opportunities within the media, software, game and enterprise customer segments."

Financial Highlights

Third-quarter revenue was $33.1 million, up 18 percent from $28.0 million of non-GAAP revenue in the year-ago third quarter and above the high end of the range of guidance previously provided by the Company. Capital purchases incurred were $6.8 million. The Company ended the quarter with no bank debt and approximately $177 million in cash and short-term marketable securities.

Fourth-Quarter Outlook

Limelight Networks anticipates fourth-quarter revenue to be in the range of $33 million to $34 million. The Company also expects substantially reduced potential damage accruals of under $750 thousand plus accrued interest related to ongoing litigation.



                            LIMELIGHT NETWORKS, INC.
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                      (In thousands, except per share data)

                                                September 30,     December 31,
                                                     2008              2007
                                                 (Unaudited)
                   ASSETS
    Current Assets:
      Cash and cash equivalents                   $123,146          $113,824
      Marketable securities                         53,509            83,273
      Accounts receivable, net of
       reserves of $5,401 at September
       30, 2008 and $4,022 at December
       31, 2007, respectively                       31,274            21,407
      Income taxes receivable                        1,419             1,960
      Prepaid expenses and other current
       assets                                        9,262             4,469
    Total current assets                           218,610           224,933
    Property and equipment, net                     42,355            46,968
    Marketable securities, less current portion         16                87
    Other assets                                       656             1,440
    Total assets                                  $261,637          $273,428

    LIABILITIES AND STOCKHOLDERS' EQUITY
    Current Liabilities:
      Accounts payable                              $7,560            $8,523
      Accounts payable, related parties                  -               230
      Deferred revenue, current portion              7,987             4,237
      Provision for litigation                      64,350            48,130
      Other current liabilities                     14,043             9,312
    Total current liabilities                       93,940            70,432
    Deferred revenue, less current portion           8,765             8,189
    Other long-term liabilities                        797               770
    Total liabilities                              103,502            79,391
    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;
       150,000 shares authorized; 83,082
       and 82,541 shares issued and
      outstanding at September 30, 2008
       and December 31, 2007,
       respectively                                     83                83
      Additional paid-in capital                   285,219           271,586
      Accumulated other comprehensive income          (304)              106
      Accumulated deficit                         (126,863)          (77,738)
    Total stockholders' equity                     158,135           194,037
    Total liabilities and stockholders' equity    $261,637          $273,428



                           LIMELIGHT NETWORKS, INC.
               CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                    (In thousands, except per share data)
                                 (Unaudited)

                               Three Months Ended           Nine Months Ended
                     September   June   September   June  September  September
                         30,      30,      30,       30,      30,       30,
                        2008     2008     2007      2007     2008      2007

    Revenue          $33,116   $30,314  $29,190   $21,436   $93,632   $73,979
    Costs and
     operating
     expenses
      Cost of
       revenue* **    21,557    19,751   17,773    14,835    61,980    47,106
      General
       and
       adminis-
       trative* **    15,455     9,463    8,117     8,831    38,247    24,723
      Sales and
       marketing*      8,577     8,965    7,421     6,404    25,684    16,843
      Research &
       development*    2,008     1,694    1,294     1,541     5,293     4,119
      Provision for
       litigation      2,343     6,743        -         -    16,220       -
    Total costs
     and operating
      expenses        49,940    46,616   34,605    31,611   147,424    92,791

    Operating loss   (16,824)  (16,302)  (5,415)  (10,175)  (53,792)  (18,812)

    Interest expense     (11)      (11)     (18)     (821)      (43)   (1,412)
    Interest income    1,203     1,334    2,456       573     4,428     3,118
    Other income
     (expense)           410      (377)      33         -       203        33

    Loss before
     taxes           (15,222)  (15,356)  (2,944)  (10,423)  (49,204)  (17,073)
    Income tax
     expense
     (benefit)           130       (25)     181       221       (78)      602

    Net income
    (loss)          $(15,352) $(15,331) $(3,125) $(10,644) $(49,126) $(17,675)

    Net loss
     per share:
      Basic           $(0.18)   $(0.18)  $(0.04)   $(0.23)   $(0.59)   $(0.35)
      Diluted         $(0.18)   $(0.18)  $(0.04)   $(0.23)   $(0.59)   $(0.35)

    Shares used
     in per share
     calculations:
      Basic           83,022    82,889   82,045    45,791    82,845    49,929
      Diluted         83,022    82,889   82,045    45,791    82,845    49,929


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

    ** Includes depreciation (see supplemental table for figures)



                           LIMELIGHT NETWORKS, INC.
                         SUPPLEMENTAL FINANCIAL DATA
                                (In thousands)
                                 (Unaudited)

                          Three Months Ended           Nine Months Ended
                     September  June  September   June  September  September
                       30,       30,     30,       30,      30,      30,
                      2008      2008    2007      2007     2008     2007
    Supplemental
     financial
     data
     (in thousands):
    Share-based
     compensation:
    Cost of
     revenues         $594      $558    $422      $346    $1,658    $1,010
    General
     and
     administrative  1,669     1,698   1,702     3,754     5,031     9,199
    Sales
     and
     marketing       1,400     1,431   1,289     1,152     4,137     2,676
    Research
     and
     development       642       598     542     1,007     1,723     2,400

    Total
     share-based
     compensation   $4,305    $4,285  $3,955    $6,259   $12,549   $15,285

    Depreciation
     and
     amortization:
    Network-
     related
     depreciation   $6,607    $6,192  $5,602    $5,020   $18,812   $15,310
    Other
     depreciation      343       311     268       174       901       579

    Total
     depreciation
     and
     amortization   $6,950    $6,503  $5,870    $5,194   $19,713   $15,889

    Capital
     expenditures:
    Capital
     expenditures
     (cash and
     accrual)       $6,803    $5,013  $7,291    $8,769   $14,911   $21,635

    Net
     increase
     (decrease)
     in cash,
     cash
     equivalents
     and
     marketable
     securities    $(7,844) $(10,194) $6,370  $174,891  $(20,513) $186,256

    End of
     period
     statistics:
    Number of
     customers
     under
     recurring
     contract        1,304     1,291     988       876     1,304       988
    Number of
     employees         285       252     218       213       285       218



                           LIMELIGHT NETWORKS, INC.
               CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                (In thousands)
                                 (Unaudited)

                          Three Months Ended                Nine Months Ended
                     September  June   September   June    September September
                       30,      30,       30,       30,       30,       30,
                      2008     2008      2007      2007      2008      2007
    Cash
     flows
     from
     operating
     activities:
    Net loss        $(15,353) $(15,331) $(3,125) $(10,644) $(49,126) $(17,675)
    Adjustments
     to reconcile
     net loss to
     net cash
     provided by
     (used in)
     operating
     activities:
      Depreciation
       and
       amortization    6,951     6,502    5,870     5,194    19,713    15,889
      Share-based
       compensation    4,304     4,285    3,955     6,259    12,549    15,285
      Deferred
       income tax
       (benefit)
       expense           129        23     (294)    1,048       (82)      286
      Provision
       for
       litigation      2,343     6,743        -         -    16,220         -
      Loss
        (income)
        on foreign
        currency
        exchange         (30)       12        -         -       (18)        -
      Accounts
       receivable
       charges         1,802     1,925    1,689     1,170     5,289     3,536
      Accretion
       of debt
       discount            -         -        -       383         -       424

      Accretion
       of
       marketable
       securities         11        21     (277)        -      (421)     (277)
      Loss on
       marketable
       securities          -        16        -         -        71
      Changes in
       operating
       assets and
       liabilities:
        Accounts
         receivable  (11,006)   (1,880)   1,202    (7,641)  (15,157)   (4,441)
        Prepaid
         expenses
         and other
         current
         assets          417   (4,452)     (143)     (545)   (3,948)   (2,495)
        Income
         taxes
         receivable        8     (129)      412      (848)      473      (126)
        Other assets     153       67      (153)     (426)      784      (698)
        Accounts
         payable       2,348      (73)   (1,883)   (2,980)   (2,359)   (5,595)
        Accounts
         payable,
         related
         parties           -     (150)      (19)     (763)     (230)     (781)
        Deferred
         revenue       4,799     (774)    8,462     3,612     4,326    12,094
        Other
         current
         liabilities   3,555   (3,859)    2,009     5,405     4,733     8,044
        Other
         long
         term
         liabilities     (64)      64         -         -         -         -
      Net cash
       provided
       by (used in)
       operating
       activities        367   (6,990)   17,705      (776)   (7,183)   23,470

    Cash flows
     from
     investing
     activities:
      Purchases
       of
       property
       and
       equipment      (7,870)  (4,231)  (12,094)   (5,461)  (14,536)  (20,650)
      Purchase
       of
       marketable
       securities          -  (30,400)  (43,411)  (28,589)  (65,125)  (72,001)
      Sale of
       marketable
       securities     16,000   34,825     7,000         -    95,025     7,000
    Net cash
     provided by
     (used in)
     investing
     activities        8,130      194   (48,505)  (34,050)   15,364   (85,651)

    Cash flows
     from
     financing
     activities:
      Payments
       on
       credit
       facilities          -        -         -   (23,818)        -   (23,818)
      Borrowings
       on line
       of credit           -        -         -        -          -     1,500
      Payments
       on line
       of credit           -        -         -    (1,500)        -    (1,500)
      Payments on
       capital
       lease
       obligations         -        -         -       (91)        -      (250)
      Escrow funds
       returned
       from share
       repurchase          -    1,070     1,029     2,091     1,070     3,418
      Excess tax
       benefit
       related to
       stock option
       exercises           -        -         -         -         -        23
      Proceeds from
       exercise of
       stock options
       and warrants       31       53         4         -       191        35
      Proceeds from
       initial
       public
       offering,
       net of issuance
       costs               -        -      (586)  204,498         -   203,912
     Net cash
      provided
      by financing
      activities          31    1,123       447   181,180     1,261   183,320
     Effect of
      exchange
      rate changes
      on cash and
      cash
      equivalents       (223)     260                          (120)
    Net
     increase
     (decrease)
     in cash
     and cash
     equivalents       8,305   (5,413)  (30,353)  146,354     9,322   121,139
    Cash and
     cash
     equivalents,
     beginning
     of period       114,841  120,254   159,103    12,749   113,824     7,611
    Cash and
     cash
     equivalents,
     end of
     period         $123,146 $114,841  $128,750  $159,103  $123,146  $128,750



                             LIMELIGHT NETWORKS, INC.
                Reconciliation of GAAP Revenue to Non-GAAP Revenue
                                  (In thousands)
                                   (Unaudited)

                               Three Months Ended         Nine Months Ended
                   September   June   September    June  September September
                      30,       30,       30,       30,      30,      30,
                     2008      2008      2007      2007     2008     2007

    GAAP revenue      NA        NA     $29,190   $21,436     NA     $73,979
    Deferred
     traffic
     revenue                            (2,645)    2,645                  -
    Deferred
     custom
     CDN
     services                            1,504       820              2,324
    Non-GAAP
     revenue          NA        NA     $28,049   $24,901     NA     $76,303



                           LIMELIGHT NETWORKS, INC.
      Reconciliation of GAAP Net Income (Loss) to Non-GAAP Net Income (Loss)
                                  (In thousands)
                                   (Unaudited)

                                 Three Months Ended         Nine Months Ended
                      September   June  September   June   September September
                         30,       30,     30,       30,       30,       30,
                        2008      2008    2007      2007      2008      2007

    GAAP net loss   $(15,352) $(15,331)$(3,125) $(10,644) $(49,126) $(17,675)

    Deferred
     revenue               -         -  (1,141)    3,465         -     2,324
    Deferred
     cost of
     traffic
     and
     services              -         -     649      (935)        -      (286)
    Provision
     for
     litigation        2,343     6,743       -         -    16,220         -
    Share-based
     compensation      4,305     4,285   3,955     6,259    12,549    15,285
    Litigation
     related
     expenses          8,189     2,667   2,002     1,636    16,222     4,523

    Non-GAAP net
     (loss) income     $(515) $(1,636)  $2,340     $(219)  $(4,135)   $4,171



                           LIMELIGHT NETWORKS, INC.
    Reconciliation of GAAP Net Income (Loss) to EBITDA to Adjusted EBITDA
                                (In thousands)
                                 (Unaudited)

                             Three Months Ended            Nine Months Ended
                    September    June   September  June   September September
                        30,       30,      30,      30,       30,      30,
                       2008      2008     2007     2007      2008     2007

    GAAP net loss   $(15,352) $(15,331) $(3,125) $(10,644) $(49,126) $(17,675)

      Add:
       depreciation
       and
       amortization    6,950     6,503    5,870     5,194    19,713    15,889
      Add: interest
       expense            11        11       18       821        43     1,412
      Less: interest
       and other
       income         (1,613)     (957)  (2,490)     (573)   (4,631)   (3,151)
      Plus income
       tax (benefit)
       expense           130       (25)     181       221       (78)      602
    EBITDA            (9,874)   (9,799)     454    (4,981)  (34,079)   (2,923)
      Add:
       deferred
       revenue             -         -   (1,141)    3,465         -     2,324
      Add:
       provision
       for
       litigation      2,343     6,743        -         -    16,220         -
      Add:
       share-based
       compensation    4,305     4,285    3,955     6,259    12,549    15,285
      Add:
       litigation
       related
       expenses        8,189     2,667    2,002     1,636    16,222     4,523
      Less:
       deferred
       traffic
       and service
       costs               -         -      649      (935)        -      (286)

    Adjusted EBITDA   $4,963    $3,896   $5,919    $5,444   $10,912   $18,923

Conference Call

Management will host a quarterly conference call for investors beginning at 3:00 p.m. MT (5 p.m. ET). This call will be audiocast live at http://www.llnw.com. It can also be accessed toll-free at 1-866-761-0748 within the United States or 1-617-614-2706 outside of the U.S using Conference ID 89097839. A replay will be available from the company's website following the call.

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 third 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. Read our blog at http://blog.llnw.com or visit http://www.limelightnetworks.com for more information.

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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