TEMPE, Ariz.--(BUSINESS WIRE)--
Limelight Networks (Nasdaq: LLNW), a leading content delivery
network (CDN) for digital media, today announced that it expects 2007
third-quarter GAAP revenue to be in the range of $28.6 million to
$29.1 million and non-GAAP revenue to be in the range of $27.5 million
to $28.0 million, compared to earlier expectations of GAAP and
non-GAAP revenue in the range of $27.0 million to $28.0 million and
$25.5 million and $26.5 million, respectively, as provided on August
9, 2007. The Company also expects to report improved GAAP and non-GAAP
net loss for the third quarter, compared with previously issued
guidance. During the quarter, Limelight signed in excess of 175 new
customer contracts, increasing Limelight's active customer count to
approximately 1,000. Complete financial results for the third-quarter
are expected to be released during the week of November 5.
The Company also announced that it has determined a need to
restate previously filed financial statements to reflect higher
historical revenue and improved historical losses for the year ended
December 31, 2006 and the quarters ended March 31 and June 30, 2007,
which financial statements should no longer be relied upon. The
Company will in the near future file a Current Report on Form 8-K to
amend previously filed financial statements for the year ended
December 31, 2006 and the quarter ended March 31, 2007 and also will
file an amendment to its previously filed Quarterly Report on Form
10-Q for the quarter ended June 30, 2007, in each case to correct two
errors the Company discovered as follows:
First, in connection with a customer inquiry, the Company
conducted an internal review of monthly customer billings and
discovered that one customer had been under-billed for CDN services
for a 15-month period extending back to July 2006. The amended
billings to this customer, which have since been collected, resulted
in increased revenue of approximately $0.9 million related to the year
ended December 31, 2006 and $0.5 million and $0.2 million related to
the three months ended March 31, 2007 and June 30, 2007, respectively.
When the Company reports its third-quarter 2007 revenue, it will
include approximately $0.1 million associated with this billing
correction.
Second, in the course of implementing a stock option
administration system, the Company discovered an error in the
calculation of its stock-based compensation expense under SFAS 123R
primarily pertaining to the service period over which certain
compensation expense will be recognized. Correcting this error shifts
the period during which originally computed expense will be recognized
resulting in previously reported stock-based compensation expense
increasing by approximately $0.1 million related to the year ended
December 31, 2006 and reducing previously reported stock-based
compensation expense by approximately $0.5 million and $0.4 million
related to the three months ended March 31, 2007 and June 30, 2007,
respectively.
As a result of the errors in its previously filed financial
statements, the Company determined that it had two material weaknesses
in its internal controls. Specifically, the control environment in
place was not sufficient to ensure that customer contract terms
associated with contract amendments were correctly maintained within
the Company's customer billing system. Subsequently, the Company has
modified its control environment to include reconciliation of monthly
customer bookings to monthly revenue results along with a detailed
review of monthly revenue by customer by senior management. The
Company has also implemented periodic internal reviews of the customer
billing system inputs. The combination of these enhancements along
with existing internal controls concerning revenue recognition
remediates the control weakness.
In addition, the Company's controls associated with calculation of
stock-based compensation expense under SFAS 123R were not sufficient
to ensure that the calculations were accurate with respect to service
and vesting periods. Previously, the Company was using a manual
process to calculate stock-based compensation expense. During the
third quarter of 2007, the Company engaged a third-party firm to
administer its employee stock option plan. Associated with this
change, the Company implemented the vendor's automated stock
administration system. The implementation of this system, in
combination with a complete audit of employee stock option data inputs
and resulting outputs of the system, remediates this control weakness.
Reconciliation of non-GAAP measures
In accordance with requirements of Regulation G issued by the
Securities and Exchange Commission, the Company is presenting a
reconciliation of the non-GAAP revenue guidance to comparable GAAP
measures in millions for the quarter ending September 30, 2007 as
follows, in millions:
Low High
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GAAP Revenue Guidance $28.6 $29.1
Deferred Custom Services (2.6) (2.6)
Amortization of Deferred Services Revenue (0.1) (0.1)
Earned Custom CDN Services 1.6 1.6
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Non-GAAP Revenue guidance $27.5 $28.0
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Earnings Call
Limelight expects to release financial results for its third
quarter ended September 30, 2007 during the week of November 5, 2007.
Further details of the date, time and call-in information for the call
will be announced at a later date.
About Limelight Networks
Limelight Networks is a high-performance content delivery network
for digital media, providing massively scalable, global delivery
solutions for on-demand and live Internet distribution of video,
music, games, software and social media. Limelight Networks'
infrastructure is optimized for the large object sizes, large content
libraries, and large audiences associated with compelling rich media
content. Limelight is the content delivery network of choice for over
1,000 companies, including many of the world's top Internet, media and
entertainment companies, including Microsoft Xbox Live, Sony
Playstation 3, Akimbo, Amazon Unbox(TM), Belo Interactive, Brightcove,
"BuyMusic" @ Buy.com, DreamWorks, LLC, Facebook, FOXNews.com, IFILM,
ITV Play, MSNBC.com, NC Interactive and Valve Software. For more
information, visit www.llnw.com.
Safe-Harbor Statement
This press release contains forward-looking statements concerning
the outlook for the Company's revenues, net loss and stock-based
compensation expense for the third-quarter of 2007, as well as the
amendments to the Company's previously issued financial statements.
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, 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: Limelight Networks
Contact: Limelight Networks
Matt Hale, Chief Financial Officer, 602-850-5000
or
Silverman Heller Associates
Phil Bourdillon/Gene Heller, 310-208-2550