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Press Release

Limelight Networks Reports Fourth Quarter and Full Year 2008 Results

- Record revenue of $36 million for the fourth quarter of 2008, a 23% increase from fourth quarter 2007

- Average annualized revenue per customer (AARPC) growth of 6% in Q4 through continued focus on high-quality customers

- Addition of over 30 net new customers in Q4 and continued expansion in enterprise and public sectors

- Record network traffic levels in Q4; finished the year with over 25% video CDN market share*

Company Release - 2/26/2009 7:01 AM ET

TEMPE, Ariz., Feb. 26 /PRNewswire-FirstCall/ -- Limelight Networks, Inc. (Nasdaq: LLNW) today reported fourth-quarter and full-year 2008 financial results.

"Limelight Networks achieved strong sequential and year-over-year revenue growth in the fourth quarter. Consumers and businesses continue to migrate online to source information, enjoy entertainment media, and conduct commerce. With our robust network-based architecture and disciplined operations, we believe we are well-positioned to capitalize on this long-term trend and grow our business in 2009 even amidst challenging times," commented Jeff Lunsford, chairman and chief executive officer, Limelight Networks, Inc.

Financial Highlights

For the fourth quarter of 2008, the company reported revenue of $36 million, up 23 percent from $29 million in the same period last year, and a net loss of $14 million, or 17 cents per basic share.

Non-GAAP net loss, adjusted for certain charges, was $2.6 million or 3 cents per basic share. The non-GAAP loss of 3 cents per basic share excludes a charge of 6 cents per basic share related to litigation and potential damage cost accruals, and 7 cents per basic share of share-based compensation. EBITDA, adjusted for share-based compensation, litigation and potential damage cost accruals, was $4.6 million. Capital purchases incurred were $5.2 million. The Company ended the quarter with no bank debt and approximately $175 million in cash and short-term marketable securities.

For the full year 2008, the company reported revenue of $130 million with a net loss of 76 cents per basic share. Non-GAAP net loss, adjusted for certain charges, was $6.7 million, or 8 cents per basic share.

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

First-Quarter Outlook

Limelight Networks anticipates first-quarter revenue to be in the range of $32 million to $33 million.

    Financial Tables



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

                                               December 31,       December 31,
                                                   2008               2007
                                                (Unaudited)
                   ASSETS
    Current Assets:
      Cash and cash equivalents                   $138,180          $113,824
      Marketable securities                         36,463            83,273
      Accounts receivable, net of reserves of
       $7,565 and $4,022 at December 31, 2008
       and 2007, respectively                       33,482            21,407
      Income taxes receivable                            7             1,960
      Prepaid expenses and other current assets      7,834             4,469
    Total current assets                           215,966           224,933
    Property and equipment, net                     40,185            46,968
    Marketable securities, less current portion         13                87
    Other assets                                       628             1,440
    Total assets                                  $256,792          $273,428

    LIABILITIES AND STOCKHOLDERS' EQUITY
    Current Liabilities:
      Accounts payable                              $8,920            $8,523
      Accounts payable, related parties                  -               230
      Deferred revenue, current portion              9,865             4,237
      Provision for litigation                      65,645            48,130
      Other current liabilities                     14,928             9,312
    Total current liabilities                       99,358            70,432
    Deferred revenue, less current portion           7,303             8,189
    Other long-term liabilities                          -               770
    Total liabilities                              106,661            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; 83,406
       and 82,541 shares issued and
       outstanding at December 31, 2008
       and December 31, 2007, respectively              83                83
      Additional paid-in capital                   290,593           271,586
      Accumulated other comprehensive income           260               106
      Accumulated deficit                         (140,805)          (77,738)
    Total stockholders' equity                     150,131           194,037
    Total liabilities and stockholders' equity    $256,792          $273,428



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

                                                 Three Months Ended

                                        December  September December September
                                        31, 2008   30, 2008  31, 2007 30, 2007

    Revenue                              $35,898   $33,116   $29,132  $29,190
    Costs and operating expenses
      Cost of revenue  *  o               21,881    21,557    18,435   17,773
      General and administrative  *  o    15,550    15,455     7,961    8,117
      Sales and marketing  *               9,231     8,577     8,619    7,421
      Research & development  *            2,072     2,008     1,385    1,294
      Provision for litigation             1,295     2,343    48,130        -
    Total costs and operating expenses    50,029    49,940    84,530   34,605

    Operating loss                       (14,131)  (16,824)  (55,398)  (5,415)

    Interest expense                         (11)      (11)       (6)     (18)
    Interest income                          669     1,203     2,035    2,456
    Other income (expense)                  (375)      410      (177)      33

    Loss before taxes                    (13,848)  (15,222)  (53,546)  (2,944)
    Income tax expense                        94       130     1,799      181

    Net income loss                     $(13,942) $(15,352) $(55,345) $(3,125)

    Net loss per share:
      Basic                               $(0.17)   $(0.18)   $(0.67)  $(0.04)
      Diluted                             $(0.17)   $(0.18)   $(0.67)  $(0.04)

    Shares used in per share calculations:
      Basic                               83,192    83,022    82,140   82,045
      Diluted                             83,192    83,022    82,140   82,045


                                                    Twelve Months Ended

                                                December 31,      December 31,
                                                    2008              2007

    Revenue                                       $129,530          $103,111
    Costs and operating expenses
      Cost of revenue  *  o                         83,861            65,541
      General and administrative  *  o              53,796            32,684
      Sales and marketing  *                        34,916            25,462
      Research & development  *                      7,365             5,504
      Provision for litigation                      17,515            48,130
    Total costs and operating expenses             197,453           177,321

    Operating loss                                 (67,923)          (74,210)

    Interest expense                                   (55)           (1,418)
    Interest income                                  5,098             5,153
    Other income (expense)                            (171)             (144)

    Loss before taxes                              (63,051)          (70,619)
    Income tax expense                                  16             2,401

    Net income loss                               $(63,067)         $(73,020)

    Net loss per share:
      Basic                                         $(0.76)           $(1.26)
      Diluted                                       $(0.76)           $(1.26)

    Shares used in per share calculations:
      Basic                                         82,932            57,982
      Diluted                                       82,932            57,982

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



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

                                                 Three Months Ended

                                      December  September  December  September
                                      31, 2008   30, 2008  31, 2007  30, 2007
    Supplemental financial
     data (in thousands):

    Share-based compensation:

    Cost of revenues                     $585       $594      $479     $422
    General and administrative          3,028      1,669     1,454    1,702
    Sales and marketing                 1,262      1,400     1,272    1,289
    Research and development              633        642       420      542

    Total share-based compensation     $5,508     $4,305    $3,625   $3,955

    Depreciation and amortization:

    Network-related depreciation       $6,862     $6,607    $5,429   $5,602
    Other depreciation                    455        343       278      268

    Total depreciation and
     amortization                      $7,317     $6,950    $5,707   $5,870

    Capital expenditures:

    Capital expenditures (cash and
     accrual)                          $5,151     $6,803    $5,136   $7,291

    Net increase (decrease) in cash,
     cash equivalents and marketable
     securities                       $(2,015)   $(7,844)   $3,032   $6,370

    End of period statistics:

    Number of customers under recurring
     contract                           1,336      1,304     1,157      988
    Number of employees                   294        285       237      218



                                                    Twelve Months Ended

                                                December 31,      December 31,
                                                    2008              2007
    Supplemental financial data (in thousands):

    Share-based compensation:

    Cost of revenues                              $2,243            $1,489
    General and administrative                     8,060            10,653
    Sales and marketing                            5,400             3,948
    Research and development                       2,355             2,820

    Total share-based compensation               $18,058           $18,910

    Depreciation and amortization:

    Network-related depreciation                 $25,675           $20,739
    Other depreciation                             1,356               857

    Total depreciation and amortization          $27,031           $21,596

    Capital expenditures:

    Capital expenditures (cash and accrual)      $20,062           $26,771

    Net increase (decrease) in cash, cash
     equivalents and marketable securities      $(22,528)         $189,288

    End of period statistics:

    Number of customers under recurring contract   1,336             1,157
    Number of employees                              294               237



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

                                                 Three Months Ended

                                        December September  December September
                                        31, 2008  30, 2008  31, 2007 30, 2007


    Cash flows from operating
     activities:
      Net loss                         $(13,942) $(15,353) $(55,345)  $(3,125)
      Adjustments to reconcile net
       loss to net cash provided by
       (used in) operating activities:
        Depreciation and amortization     7,317     6,950     5,707     5,870
        Share-based compensation          5,508     4,305     3,625     3,955
        Deferred income tax (benefit)
         expense                           (779)      129        33      (294)
        Excess tax benefit related to
         stock option exercises               -         -    (1,596)        -
        Provision for litigation          1,295     2,343    48,130         -
        Loss (income) on foreign
         currency exchange                 (149)      (30)       42         -
        Accounts receivable charges       2,563     1,802     2,268     1,689
        Accretion of debt discount            -         -         -         -
        Accretion of marketable
         securities                          (6)       11      (530)     (277)
        Loss on marketable securities         -         -       387         -
        Changes in operating assets
         and liabilities:
          Accounts receivable            (4,771)  (11,006)   (5,243)    1,202
          Prepaid expenses and other
           current assets                 1,695       417     1,037      (143)
          Income taxes receivable         1,480         8     2,742       412
          Other assets                       32       153        11      (153)
          Accounts payable                 (531)    2,348     3,613    (1,883)
          Accounts payable, related
           parties                                      -       230       (19)
          Deferred revenue                  416     4,799       135     8,462
          Other current liabilities         718     3,555    (4,449)    2,009
          Other long term liabilities         -       (64)      740         -
      Net cash provided by (used in)
       operating activities                 846       367     1,537    17,705

    Cash flows from investing activities:
        Purchases of property and
         equipment                       (3,537)   (7,870)   (2,081)  (12,094)
        Purchase of marketable
         securities                                     -    20,300   (43,411)
        Sale of marketable securities    17,125    16,000   (37,569)    7,000
      Net cash provided by (used in)
       investing activities              13,588     8,130   (19,350)  (48,505)

    Cash flows from financing activities:
        Payments on credit facilities         -         -         -         -
        Borrowings on line of credit          -         -         -         -
        Payments on line of credit            -         -         -         -
        Payments on capital lease
         obligations                          -         -         -         -
        Escrow funds returned from
         share repurchase                     -         -     1,190     1,029
        Excess tax benefit related to
         stock option exercises               -         -     1,573         -
        Proceeds from exercise of
         stock options and warrants          34        31       175         4
        Proceeds from initial public
         offering, net of issuance costs      -         -       (47)     (586)
      Net cash provided by financing
       activities                            34        31     2,891       447
      Effect of exchange rate changes
       on cash and cash equivalents         566      (223)       (4)        -
    Net increase (decrease) in cash
     and cash equivalents                15,034     8,305   (14,926)  (30,353)
    Cash and cash equivalents,
     beginning of period                123,146   114,841   128,750   159,103
    Cash and cash equivalents, end of
     period                            $138,180  $123,146  $113,824  $128,750


                                                     Twelve Months Ended

                                                 December 31,     December 31,
                                                     2008             2007
    Cash flows from operating activities:
       Net loss                                   $(63,067)          $(73,020)
       Adjustments to reconcile net loss
        to net cash provided by (used in)
        operating  activities:
          Depreciation and amortization             27,031             21,596
          Share-based compensation                  18,058             18,910
          Deferred income tax (benefit) expense       (861)               318
          Excess tax benefit related to stock
           option exercises                              -             (1,596)
          Provision for litigation                  17,515             48,130
          Loss (income) on foreign currency
           exchange                                   (167)                42
          Accounts receivable charges                7,852              5,805
          Accretion of debt discount                     -                424
          Accretion of marketable securities          (427)              (805)
          Loss on marketable securities                 71                387
          Changes in operating assets and
           liabilities:
            Accounts receivable                    (19,928)            (9,686)
            Prepaid expenses and other
             current assets                         (2,253)            (1,458)
            Income taxes receivable                  1,953              2,616
            Other assets                               816               (687)
            Accounts payable                        (2,890)            (1,982)
            Accounts payable, related parties         (230)              (551)
            Deferred revenue                         4,742             12,229
            Other current liabilities                5,448              3,595
            Other long term liabilities                  -                740
       Net cash provided by (used in)
        operating activities                        (6,337)            25,007

    Cash flows from investing activities:
          Purchases of property and equipment      (18,073)           (22,731)
          Purchase of marketable securities        (65,125)          (109,570)
          Sale of marketable securities            112,150             27,300
       Net cash provided by (used in)
        investing activities                        28,952           (105,001)

    Cash flows from financing activities:
          Payments on credit facilities                  -            (23,818)
          Borrowings on line of credit                   -              1,500
          Payments on line of credit                     -             (1,500)
          Payments on capital lease obligations          -               (250)
          Escrow funds returned from share
           repurchase                                1,070              4,607
          Excess tax benefit related to stock
           option exercises                              -              1,596
          Proceeds from exercise of stock options
           and warrants                                225                211
          Proceeds from initial public offering,
           net of issuance costs                         -            203,865
       Net cash provided by financing activities     1,295            186,211
       Effect of exchange rate changes on cash and
        cash equivalents                               446                 (4)
    Net increase (decrease) in cash and cash
     equivalents                                    24,356            106,213
    Cash and cash equivalents, beginning of
     period                                        113,824              7,611
    Cash and cash equivalents, end of period      $138,180           $113,824



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

                                                   Three Months Ended

                                         December September December September
                                         31, 2008  30, 2008 31, 2007 30, 2007

    GAAP revenue                          $35,898  $33,116  $29,132  $29,190

    Deferred traffic revenue                    -        -        -   (2,645)

    Deferred custom CDN services                -        -      729    1,504

    Non-GAAP revenue                      $35,898  $33,116  $29,861  $28,049


                                                     Twelve Months Ended

                                                December 31,      December 31,
                                                    2008              2007

    GAAP revenue                                  $129,530          $103,111

    Deferred traffic revenue                             -                 -

    Deferred custom CDN services                         -             3,053

    Non-GAAP revenue                              $129,530          $106,164



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

                                                 Three Months Ended

                                         December September December September
                                         31, 2008  30, 2008 31, 2007 30, 2007

    GAAP net loss                       $(13,942) $(15,352) $(55,345) $(3,125)

    Deferred revenue                           -         -       729   (1,141)
    Deferred cost of traffic and services      -         -        21      649
    Provision for litigation               1,295     2,343    48,130        -
    Share-based compensation               5,508     4,305     3,625    3,955
    Litigation defense expenses            4,576     8,189     2,772    2,002

    Non-GAAP net (loss) income           $(2,563)    $(515)     $(68)  $2,340


                                                     Twelve Months Ended

                                                 December 31,     December 31,
                                                     2008             2007

    GAAP net loss                                 $(63,067)         $(73,020)

    Deferred revenue                                     -             3,053
    Deferred cost of traffic and services                -              (265)
    Provision for litigation                        17,515            48,130
    Share-based compensation                        18,058            18,910
    Litigation defense expenses                     20,799             7,295

    Non-GAAP net (loss) income                     $(6,695)           $4,103



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

                                                 Three Months Ended

                                         December September December September
                                         31, 2008  30, 2008 31, 2007 30, 2007

    GAAP net loss                       $(13,942) $(15,352) $(55,345) $(3,125)

        Add: depreciation and
             amortization                  7,317     6,950     5,707    5,870
        Add: interest expense                 11        11         6       18
        Less: interest and other income     (294)   (1,613)   (1,858)  (2,490)
        Plus income tax (benefit) expense     94       130     1,799      181
    EBITDA                                (6,814)   (9,874)  (49,691)     454
        Add: deferred revenue                  -         -       729   (1,141)
        Add: provision for litigation      1,295     2,343    48,130        -
        Add: share-based compensation      5,508     4,305     3,625    3,955
        Add: litigation defense
             expenses                      4,576     8,189     2,772    2,002
        Less: deferred traffic and
              service costs                    -         -       (21)    (649)

    Adjusted EBITDA                       $4,565    $4,963    $5,586   $5,919


                                                     Twelve Months Ended

                                                December 31,      December 31,
                                                    2008              2007

    GAAP net loss                                 $(63,067)         $(73,020)

         Add: depreciation and amortization         27,031            21,596
         Add: interest expense                          55             1,418
         Less: interest and other income            (4,927)           (5,009)
         Plus income tax (benefit) expense              16             2,401
    EBITDA                                         (40,892)          (52,614)
         Add: deferred revenue                           -             3,053
         Add: provision for litigation              17,515            48,130
         Add: share-based compensation              18,058            18,910
         Add: litigation defense expenses           20,799             7,295
         Less: deferred traffic and service costs        -               265

    Adjusted EBITDA                                $15,480           $24,509


Conference Call

Management will host a quarterly conference call for investors beginning at 8:00 a.m. ET (5 a.m. PT) on February 26, 2009. This call can be accessed toll-free at 1-866-272-9941 within the United States or 1-617-213-8895 outside of the U.S. using Conference ID 76676134.

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 first quarter of 2009, 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.

    * Source: Frost & Sullivan, Worldwide Content Delivery Markets, January
      2009

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) 2009 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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