Limelight Networks, Inc. News
Limelight Networks Reports First Quarter 2008 Results
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
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
"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
Capital purchases were
"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
Second-Quarter Outlook
Limelight Networks anticipates second-quarter revenue to be in the range of
Conference Call and Web Audiocast
Management will host a quarterly conference call for investors beginning at
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.
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