Limelight Networks Reports Financial Results for the First Quarter of 2020

Company Release - 4/23/2020 4:01 PM ET
  • Revenue of $57.0 million, up 32% year over year
  • GAAP basic EPS of $(0.04) and Non-GAAP EPS of break-even
  • Adjusted EBITDA of $5.6 million
  • Cash balance of $21.4 million on positive operating cash flow
  • CFO transition planned

SCOTTSDALE, Ariz.--(BUSINESS WIRE)-- Limelight Networks, Inc. (Nasdaq: LLNW) (Limelight), a leading provider of edge cloud services, today reported revenue of $57.0 million for the first quarter of 2020, up 32 percent, compared to $43.3 million in the first quarter of 2019. Year-over-year currency impact was negative by approximately $0.1 million.

Limelight reported a GAAP net loss of $5.3 million, or $(0.04) per basic share for the first quarter of 2020, compared to net loss of $8.6 million, or $(0.07) per basic share in the first quarter of 2019.

Non-GAAP net loss was $0.2 million or break-even per basic share for the first quarter of 2020, compared to a non-GAAP net loss of $5.1 million, or $(0.04) per basic share in the first quarter of 2019.

EBITDA was $0.5 million for the first quarter of 2020, compared to negative $4.1 million for the first quarter of 2019. Adjusted EBITDA was $5.6 million for the first quarter of 2020 compared to negative $0.6 million for the first quarter of 2019.

Limelight ended the first quarter with 616 employees and employee equivalents, up from 610 at the end of the fourth quarter of 2019, and up from 562 at the end of the first quarter of 2019.

Limelight also announced today that Sajid Malhotra, Chief Financial Officer, will assume the role of Chief Strategy Officer and will be responsible for Corporate Strategy, M&A, and Investor Relations. Dan Boncel, our Vice President Finance, Principal Accounting Officer will assume the role of Chief Financial Officer. Both changes will be effective July 1, 2020.

“We’re very pleased with Limelight’s financial and operational performance, which culminated in the highest first quarter revenue in the company’s history,” Robert Lento, Chief Executive Officer said. “We want to express our gratitude for the tireless commitment of our employees and continued support of our customers and shareholders in the face of unprecedented global disruption from the pandemic. We are truly grateful and fortunate that our business has not experienced the same devastating impact to date as many others. Our thoughts and well wishes go out to those so impacted.

"These trying times are spotlighting the critical role Limelight’s edge services fill in supporting continuity of business and keeping people digitally connected. There is momentum going into the second quarter, primarily driven by the increase of video-on-demand. Nevertheless, in the face of significant uncertainties related to the pandemic, including the absence of live sporting events, we are only increasing the low end of our previous revenue guidance. We remain committed and confident in meeting or exceeding Limelight’s financial goals for 2020 and beyond and delivering the best top-line growth in our history as a public company, as well as corresponding improvements to earnings and adjusted EBITDA.

”We are excited to have Sajid transition into his new role and congratulations to Dan who has demonstrated years of growth and achievement within Limelight.”

Based on current conditions, our full-year 2020 guidance is updated, and is as follows:

 
Limelight Networks, Inc.
2020 Guidance
 
 

April 2020

 

January 2020

 

December 2019

 

Actual 2019

Revenue

$225 to $235 million

 

$223 to $235 million

 

$220 to $235 million

 

$200.6 million

 

 

 

 

 

 

 

GAAP Basic EPS

$(0.10) to break-even

 

$(0.10) to break-even

 

$(0.10) to break-even

 

$(0.14)

 

 

 

 

 

 

 

Non-GAAP EPS

Break-even to $0.10

 

Break-even to $0.10

 

Break-even to $0.10

 

$(0.02)

 

 

 

 

 

 

 

Adjusted EBITDA

$25 to $35 million

 

$25 to $35 million

 

$25 to $35 million

 

$18.1 million

 

 

 

 

 

 

 

Capital expenditures

$25 to $30 million

 

$25 to $30 million

 

$25 to $30 million

 

$34.7 million

 

Financial Tables

LIMELIGHT NETWORKS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except per share data)
 
March 31, December 31,

 

2020

 

 

 

2019

 

(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents

$

21,421

 

$

18,335

 

Accounts receivable, net

 

34,603

 

 

34,476

 

Income taxes receivable

 

76

 

 

82

 

Prepaid expenses and other current assets

 

11,205

 

 

9,920

 

Total current assets

 

67,305

 

 

62,813

 

Property and equipment, net

 

46,636

 

 

46,136

 

Operating lease right of use assets

 

12,084

 

 

12,842

 

Marketable securities, less current portion

 

40

 

 

40

 

Deferred income taxes

 

1,361

 

 

1,319

 

Goodwill

 

76,867

 

 

77,102

 

Other assets

 

8,721

 

 

9,117

 

Total assets

$

213,014

 

$

209,369

 

 
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable

$

14,297

 

$

12,020

 

Deferred revenue

 

726

 

 

976

 

Operating lease liability obligations

 

2,046

 

 

2,056

 

Income taxes payable

 

170

 

 

178

 

Other current liabilities

 

18,188

 

 

13,398

 

Total current liabilities

 

35,427

 

 

28,628

 

Operating lease liability obligations, less current portions

 

12,983

 

 

13,488

 

Deferred income taxes

 

262

 

 

239

 

Deferred revenue, less current portion

 

161

 

 

161

 

Other long-term liabilities

 

318

 

 

316

 

Total liabilities

 

49,151

 

 

42,832

 

Commitments and contingencies
Stockholders' equity:
Convertible preferred stock, $0.001 par value; 7,500 shares authorized; no shares issued and outstanding

 

-

 

 

-

 

Common stock, $0.001 par value; 300,000 shares authorized; 119,642 and 118,368 shares issued and
outstanding at March 31, 2020 and December 31, 2019, respectively

 

120

 

 

118

 

Additional paid-in capital

 

534,205

 

 

530,285

 

Accumulated other comprehensive loss

 

(10,549

)

 

(9,210

)

Accumulated deficit

 

(359,913

)

 

(354,656

)

Total stockholders' equity

 

163,863

 

 

166,537

 

Total liabilities and stockholders' equity

$

213,014

 

$

209,369

 

 
 
LIMELIGHT NETWORKS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
 
Three Months Ended
 
March 31,December 31,PercentMarch 31,Percent

 

2020

 

 

 

2019

 

 

Change

 

 

2019

 

 

Change

 
Revenue

$

57,012

 

$

60,129

 

-5%

$

43,280

 

32%

Cost of revenue:

 

 

Cost of services (1)

 

31,113

 

 

28,586

 

9%

 

22,941

 

36%

Depreciation - network

 

5,150

 

 

5,288

 

-3%

 

4,317

 

19%

Total cost of revenue

 

36,263

 

 

33,874

 

7%

 

27,258

 

33%

Gross profit

 

20,749

 

 

26,255

 

-21%

 

16,022

 

30%

Gross profit percentage

 

36.4

%

 

43.7

%

 

 

37.0

%

 

Operating expenses:

 

 

General and administrative (1)

 

7,882

 

 

7,554

 

4%

 

7,535

 

5%

Sales and marketing (1)

 

11,894

 

 

10,399

 

14%

 

10,972

 

8%

Research & development (1)

 

5,618

 

 

5,459

 

3%

 

5,901

 

-5%

Depreciation and amortization

 

341

 

 

328

 

4%

 

245

 

39%

Total operating expenses

 

25,735

 

 

23,740

 

8%

 

24,653

 

4%

 

 

Operating (loss) income

 

(4,986

)

 

2,515

 

NM

 

(8,631

)

NM

 

 

Other income (expense):

 

 

Interest expense

 

(10

)

 

(45

)

NM

 

(10

)

NM

Interest income

 

25

 

 

25

 

NM

 

212

 

NM

Other, net

 

(110

)

 

169

 

NM

 

(6

)

NM

Total other income (expense)

 

(95

)

 

149

 

NM

 

196

 

NM

 

 

(Loss) income before income taxes

 

(5,081

)

 

2,664

 

NM

 

(8,435

)

NM

Income tax expense

 

176

 

 

206

 

NM

 

124

 

NM

 

 

Net (loss) income

$

(5,257

)

$

2,458

 

NM

$

(8,559

)

NM

 
 
Net (loss) income per share:
Basic

$

(0.04

)

$

0.02

 

$

(0.07

)

Diluted

$

(0.04

)

$

0.02

 

$

(0.07

)

 
Weighted average shares used in per share calculation:
Basic

 

118,964

 

 

117,603

 

 

114,410

 

Diluted

 

118,964

 

 

123,801

 

 

114,410

 

 
(1) Includes share-based compensation (see supplemental table for figures)
 
LIMELIGHT NETWORKS, INC.
SUPPLEMENTAL FINANCIAL DATA
(In thousands)
(Unaudited)
 
Three Months Ended
 
March 31,December 31,March 31,

2020

 

2019

 

2019

 
 
Share-based compensation:
 
Cost of services

$

763

$

376

$

411

 

General and administrative

 

2,241

 

1,858

 

2,094

 

Sales and marketing

 

1,228

 

597

 

484

 

Research and development

 

832

 

484

 

467

 

 
Total share-based compensation

$

5,064

$

3,315

$

3,456

 

 
Depreciation and amortization:
 
Network-related depreciation

$

5,150

$

5,288

$

4,317

 

Other depreciation and amortization

 

341

 

328

 

245

 

 
Total depreciation and amortization

$

5,491

$

5,616

$

4,562

 

 
 
Net increase (decrease) in cash, cash equivalents and marketable securities:

$

3,086

$

285

$

(11,825

)

 
 
End of period statistics:
 
Approximate number of active customers

 

573

 

599

 

643

 

 
Number of employees and employee equivalents

 

616

 

610

 

562

 

 
LIMELIGHT NETWORKS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
 
Three Months Ended
 
March 31,December 31,March 31,

 

2020

 

 

2019

 

 

2019

 

 
Operating activities
Net (loss) income

$

(5,257

)

$

2,458

 

$

(8,559

)

 
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization

 

5,491

 

 

5,616

 

 

4,562

 

Share-based compensation

 

5,064

 

 

3,315

 

 

3,456

 

Foreign currency remeasurement loss (gain)

 

(397

)

 

79

 

 

10

 

Deferred income taxes

 

(44

)

 

300

 

 

(51

)

Gain on sale of property and equipment

 

-

 

 

-

 

 

(30

)

Accounts receivable charges

 

158

 

 

519

 

 

257

 

Amortization of premium on marketable securities

 

-

 

 

1

 

 

12

 

Realized loss on marketable securities

 

-

 

 

9

 

 

-

 

Changes in operating assets and liabilities:
Accounts receivable

 

(285

)

 

823

 

 

(3,720

)

Prepaid expenses and other current assets

 

(1,433

)

 

(324

)

 

(474

)

Income taxes receivable

 

3

 

 

(3

)

 

(2

)

Other assets

 

626

 

 

(1,547

)

 

(1,737

)

Accounts payable and other current liabilities

 

5,892

 

 

(2,383

)

 

2,243

 

Deferred revenue

 

(250

)

 

(232

)

 

(297

)

Income taxes payable

 

2

 

 

(143

)

 

62

 

Payments related to litigation, net

 

-

 

 

-

 

 

(1,520

)

Other long term liabilities

 

6

 

 

15

 

 

(175

)

Net cash provided by (used in) operating activities

 

9,576

 

 

8,503

 

 

(5,963

)

 
Investing activities
Purchases of marketable securities

 

-

 

 

-

 

 

(9,266

)

Sale and maturities of marketable securities

 

-

 

 

3,211

 

 

12,224

 

Purchases of property and equipment

 

(6,863

)

 

(10,480

)

 

(5,018

)

Proceeds from sale of property and equipment

 

-

 

 

-

 

 

29

 

Net cash used in investing activities

 

(6,863

)

 

(7,269

)

 

(2,031

)

 
Financing activities
Payment of employee tax withholdings related to restricted stock vesting

 

(1,515

)

 

(1,079

)

 

(894

)

Proceeds from employee stock plans

 

2,138

 

 

3,290

 

 

8

 

Net cash provided by (used in) financing activities

 

623

 

 

2,211

 

 

(886

)

Effect of exchange rate changes on cash and cash equivalents

 

(250

)

 

58

 

 

(4

)

Net increase (decrease) in cash and cash equivalents

 

3,086

 

 

3,503

 

 

(8,884

)

Cash and cash equivalents, beginning of period

 

18,335

 

 

14,832

 

 

25,383

 

Cash and cash equivalents, end of period

$

21,421

 

$

18,335

 

$

16,499

 

Use of Non-GAAP Financial Measures

To evaluate our business, we consider and use non-generally accepted accounting principles (Non-GAAP) net income (loss), EBITDA and Adjusted EBITDA as supplemental measures of operating performance. These measures include the same adjustments that management takes into account when it reviews and assesses operating performance on a period-to-period basis. We consider Non-GAAP net income (loss) to be an important indicator of overall business performance. We define Non-GAAP net income (loss) to be U.S. GAAP net income (loss) adjusted to exclude share-based compensation. We believe that EBITDA provides a useful metric to investors to compare us with other companies within our industry and across industries. We define EBITDA as U.S. GAAP net income (loss) adjusted to exclude depreciation and amortization, interest expense, interest and other (income) expense, and income tax expense. We define Adjusted EBITDA as EBITDA adjusted to exclude share-based compensation. We use Adjusted EBITDA as a supplemental measure to review and assess operating performance. Our management uses these Non-GAAP financial measures because, collectively, they provide valuable information on the performance of our on-going operations, excluding non-cash charges, taxes and non-core activities (including interest payments related to financing activities). These measures also enable our management to compare the results of our on-going operations from period to period, and allow management to review the performance of our on-going operations against our peer companies and against other companies in our industry and adjacent industries. We believe these measures also provide similar insights to investors, and enable investors to review our results of operations “through the eyes of management.”

Furthermore, our management uses these Non-GAAP financial measures to assist them in making decisions regarding our strategic priorities and areas for future investment and focus.

The terms Non-GAAP net income (loss), EBITDA and Adjusted EBITDA are not defined under 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 (loss), EBITDA and Adjusted EBITDA have limitations as analytical tools, and when assessing our operating performance, Non-GAAP net income (loss), EBITDA and Adjusted EBITDA should not be considered in isolation, or as a substitute for net income (loss) or other consolidated income statement data prepared in accordance with 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;
  • These measures do not reflect changes in, or cash requirements for, our working capital needs;
  • Non-GAAP net income (loss) and Adjusted EBITDA do not reflect the cash requirements necessary for litigation costs, including provision for litigation and litigation expenses;
  • These measures do not reflect the interest expense, or the cash requirements necessary to service interest or principal payments, on our debt that we may incur;
  • These measures do not reflect income taxes or the cash requirements for any tax payments;
  • Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will be replaced sometime in the future, and EBITDA and Adjusted EBITDA do not reflect any cash requirements for such replacements;
  • While share-based compensation is a component of operating expense, the impact on our financial statements compared to other companies can vary significantly due to such factors as the assumed life of the options and the assumed volatility of our common stock; and
  • Other companies may calculate Non-GAAP net income (loss), EBITDA and Adjusted EBITDA differently than we do, limiting their usefulness as comparative measures.

We compensate for these limitations by relying primarily on our U.S. GAAP results and using Non-GAAP net income (loss), EBITDA, and Adjusted EBITDA only as supplemental support for management's analysis of business performance. Non-GAAP net income (loss), EBITDA and Adjusted EBITDA are calculated as follows for the periods presented in thousands:

Reconciliation of Non-GAAP Financial Measures

In accordance with the requirements of Item 10(e) of Regulation S-K, we are presenting the most directly comparable U.S. GAAP financial measures and reconciling the unaudited Non-GAAP financial metrics to the comparable U.S. GAAP measures. Per share amounts may not foot due to rounding.

LIMELIGHT NETWORKS, INC.
Reconciliation of U.S. GAAP Net Income (Loss) to Non-GAAP Net Income (Loss)
(In thousands)
(Unaudited)
 
Three Months Ended
 
March 31, 2020December 31, 2019March 31, 2019
AmountPer ShareAmountPer ShareAmountPer Share
 
U.S. GAAP net (loss) income

$

(5,257

)

$

(0.04

)

$

2,458

$

0.02

$

(8,559

)

$

(0.07

)

 
Share-based compensation

 

5,064

 

 

0.04

 

 

3,315

 

0.03

 

3,456

 

 

0.03

 

 
Non-GAAP net (loss) income

$

(193

)

$

(0.00

)

$

5,773

$

0.05

$

(5,103

)

$

(0.04

)

 
 
Weighted average shares used in per share calculation

 

118,964

 

 

117,603

 

114,410

 

 
LIMELIGHT NETWORKS, INC.
Reconciliation of U.S. GAAP Net Income (Loss) to EBITDA to Adjusted EBITDA
(In thousands)
(Unaudited)
 
Three Months Ended
 
March 31,December 31,March 31,

 

2020

 

 

2019

 

 

2019

 

 
U.S. GAAP net (loss) income

$

(5,257

)

$

2,458

 

$

(8,559

)

 
Depreciation and amortization

 

5,491

 

 

5,616

 

 

4,562

 

Interest expense

 

10

 

 

45

 

 

10

 

Interest and other (income) expense

 

85

 

 

(194

)

 

(206

)

Income tax expense

 

176

 

 

206

 

 

124

 

 
EBITDA

$

505

 

$

8,131

 

$

(4,069

)

 
Share-based compensation

 

5,064

 

 

3,315

 

 

3,456

 

 
Adjusted EBITDA

$

5,569

 

$

11,446

 

$

(613

)

 

For future periods, we are unable to provide a reconciliation of EBITDA and Adjusted EBITDA to net income (loss) as a result of the uncertainty regarding, and the potential variability of, the amounts of depreciation and amortization, interest expense, interest and other (income) expense and income tax expense, that may be incurred in the future.

Conference Call

At approximately 4:30 p.m. EDT (1:30 p.m. PDT) today, management will host a quarterly conference call for investors. Investors can access this call toll-free at 877 296 5190 within the United States or +1 412 317 5233 outside of the U.S. The conference call will also be audio cast live from http://www.limelight.com and a replay will be available following the call from the Limelight website.

Forward-Looking Statements

This press release contains forward-looking statements that involve risks and uncertainties. These statements include, among others, statements regarding our expectations regarding revenue, gross margin, non-GAAP net income (loss), capital expenditures, and our future prospects. Our expectations and beliefs regarding these matters may not materialize. The potential risks and uncertainties that could cause actual results or outcomes to differ materially from the results or outcomes predicted include, among other things, reduction of demand for our services from new or existing customers, unforeseen changes in our hiring patterns, adverse outcomes in litigation, and experiencing expenses that exceed our expectations. A detailed discussion of these factors and other risks that affect our business is contained in our SEC filings, including our most recent reports on Forms 10-K and 10-Q, particularly under the heading “Risk Factors.” Copies of these filings are available online on our investor relations website at investors.limelightnetworks.com and on the SEC website at www.SEC.gov. All information provided in this release and in the attachments is as of April 23, 2020, and we undertake no duty to update this information in light of new information or future events, unless required by law.

About Limelight

Limelight Networks, Inc. (NASDAQ: LLNW), a leading provider of digital content delivery, video, cloud security, and edge computing services, empowers customers to provide exceptional digital experiences. Limelight’s edge services platform includes a unique combination of global private infrastructure, intelligent software, and expert support services that enable current and future workflows. For more information, visit www.limelight.com, and follow us on Twitter, Facebook and LinkedIn.

Copyright (C) 2020 Limelight Networks, Inc. All rights reserved. All product or service names are the property of their respective owners.

Limelight Networks, Inc.
Sajid Malhotra, 602-850-5778
ir@llnw.com

Source: Limelight Networks