TEMPE, Ariz.--(BUSINESS WIRE)--
Limelight Networks (Nasdaq: LLNW), a leading content delivery
network (CDN) for digital media, today reported financial results for
the quarter ended September 30, 2007.
The company reported third-quarter GAAP revenue of $29.2 million
and Non-GAAP revenue of $28.0 million, representing growth of 67% and
61%, respectively, over the $17.5 million of revenue the company
reported for the third quarter of 2006. The company reported adjusted
EBITDA for the quarter of $4.9 million and raised earnings guidance
for the full year. The company reported non-GAAP diluted earnings per
share of $0.03 and a GAAP net loss per basic share of $(0.04) per
share. A reconciliation of GAAP to Non-GAAP financial measures is
provided in the table below.
"Limelight Networks' innovative and differentiated content
delivery platform is seeing rapid growth as a solution of choice for
companies in the online video, music, game, software and social media
sectors," commented Jeff Lunsford, chairman and chief executive
officer. "We are very pleased with our performance in the quarter and
with the strong customer and revenue growth achieved."
Operating highlights in the quarter include:
-- The launch of LimelightHD, an innovative new service which
provides end-users with a high-fidelity, high-definition media
experience by bypassing the often congested public Internet
and delivering HD content directly to "last-mile" broadband
access networks;
-- Record bookings, signing contracts with over 200 net new
customers in the quarter and adding 112 net new customers into
production, raising total production customers to 988;
-- Solidifying Limelight's position as an industry thought leader
with the highly regarded Digital Media 2010 event;
-- Expansion of Limelight's network footprint with two new
delivery regions in the Asia Pacific theater; and
-- Achieving significant progress in the Company's five-year
strategic partnership with Microsoft.
"We believe Limelight Networks is in a unique position," commented
Lunsford, "to continue to advance the delivery and monetization of
rich media over the Internet through innovation and collaboration with
our strong network of customers and partners."
Guidance
For the fourth quarter of 2007, the company anticipates:
-- GAAP and Non-GAAP revenue to be in the range of $28.0
million to $30.0 million
-- Adjusted EBITDA to be in the range $4.0 million to $5.0
million
-- Capex to be in the range of $8.0 million to $9.0 million
For the full year of 2007, the company anticipates:
-- GAAP revenue to be in the range of $102 million to
$104 million
-- Non-GAAP revenue to be in the range of $104.3 million to
$106.3 million
-- Adjusted EBITDA to be in the range of $20.7 million to $21.7
million
-- Capex to be in the range of $30.0 million to $31.0 million
Conference Call
Management will conduct a conference call scheduled to begin at 2
p.m. PST (5 p.m. EST) on Monday, November 5, 2007 to review the
company's financial results and its outlook for the remainder of 2007.
To participate in the conference call, please call toll-free
877-574-8878 (or 706-634-6364 for international callers) approximately
10 minutes prior to the start time. You may also listen to the
conference call live via the Internet at www.llnw.com or
www.earnings.com. These websites will also host an archive of the
call.
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. 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.
Financial Statements
LIMELIGHT NETWORKS, INC.
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)
September 30, December 31,
2007 2006
------------- ------------
Assets
Cash and cash equivalents $ 128,750 $ 7,611
Marketable securities, short-term 65,370 --
Accounts receivable, net 18,431 17,526
Income tax receivable 4,136 2,980
Deferred income taxes, current -- 362
Prepaid expenses and other current
assets 5,506 3,011
------------ -----------
Current assets 222,193 31,490
Property and equipment, net 47,544 41,784
Marketable securities, long-term 69 285
Deferred income taxes 259 106
Other assets 1,458 759
------------ -----------
Total assets $ 271,523 $ 74,424
============ ===========
Liabilities and stockholders'
equity
Accounts payable $ 1,805 $ 6,419
Accounts payable, related parties 17 781
Deferred revenue, current portion 431 197
Credit facilities, current portion -- 2,938
Capital lease obligations, current
portion -- 245
Deferred income tax, current portion 33 --
Other current liabilities 13,748 6,314
------------ -----------
Current liabilities 16,034 16,894
Deferred revenue, less current portion 11,860 --
Credit facilities, less current portion -- 20,456
Capital lease obligations, less current
portion -- 5
Deferred income taxes, less current
portion 30 --
Other liabilities 30 30
------------ -----------
Total liabilities 27,954 37,385
Stockholders' equity 243,569 37,039
------------ -----------
Total liabilities and stockholders'
equity $ 271,523 $ 74,424
============ ===========
LIMELIGHT NETWORKS, INC.
Condensed Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)
Three Months Ended
------------------------------------------------
September 30, June 30, September 30, June 30,
2007 2007 2006 2006
------------- -------- ------------- --------
Revenues $ 29,190 $ 21,436 $ 17,454 $ 14,841
Costs and operating
expenses:
Cost of revenues
(1) (3) 17,773 14,835 10,200 7,266
General and
administrative
(1) (3) 8,117 8,831 4,679 2,275
Sales and
marketing (1) 7,421 6,404 1,860 1,497
Research and
development (1) 1,294 1,541 1,193 437
------------ ------- ------------ -------
Total costs and
operating
expenses 34,605 31,611 17,932 11,475
------------ ------- ------------ -------
Operating income
(loss) (5,415) (10,175) (478) 3,366
Interest expense (2) (18) (821) (373) (519)
Interest income 2,456 573 79 --
Other income 33 -- 70 --
------------ ------- ------------ -------
Income (loss) before
income taxes (2,944) (10,423) (702) 2,847
Income tax expense 181 221 688 1,125
------------ ------- ------------ -------
Net income (loss) $ (3,125) $(10,644) $ (1,390) $ 1,722
============= ======= ============ =======
Net income (loss)
allocable to common
stockholders $ (3,125) $(10,644) $ (1,390) $ 1,417
============ ======= ============ =======
Net income (loss)
per share:
Basic $ (0.04) $ (0.23) $ (0.09) $ 0.04
Diluted $ (0.04) $ (0.23) $ (0.09) $ 0.04
Shares used in per
share calculations:
Basic 82,045 45,791 15,670 31,648
Diluted 82,045 45,791 15,670 39,606
Nine Months Ended
-----------------------------
September 30, September 30,
2007 2006
------------- -------------
Revenues $ 73,979 $ 43,133
Costs and operating expenses:
Cost of revenues (1) (3) 47,106 22,746
General and administrative (1) (3) 24,723 8,553
Sales and marketing (1) 16,843 4,391
Research and development (1) 4,119 1,951
------------ ------------
Total costs and operating expenses 92,791 37,641
------------ ------------
Operating income (loss) (18,812) 5,492
Interest expense (2) (1,412) (1,397)
Interest income 3,118 79
Other income 33 70
------------ ------------
Income (loss) before income taxes (17,073) 4,244
Income tax expense 602 2,642
------------ ------------
Net income (loss) $ (17,675) $ 1,602
============ ============
Net income (loss) allocable to common
stockholders $ (17,675) $ 1,065
============ ============
Net income (loss) per share:
Basic $ (0.35) $ 0.04
Diluted $ (0.35) $ 0.03
Shares used in per share calculations:
Basic 49,929 27,502
Diluted 49,929 32,774
(1) Includes share-based compensation (see supplemental table for
figures)
(2) Includes zero and approximately $424K of deferred financing fees
for the three and nine month periods ended September 30, 2007
(3) Includes depreciation (see supplemental table for figures)
LIMELIGHT NETWORKS, INC.
Supplemental Financial Data
(In thousands)
(Unaudited)
Three Months Ended
------------------------------------------------
September 30, June 30, September 30, June 30,
2007 2007 2006 2006
------------- -------- ------------- --------
Supplemental
financial data (in
thousands):
Share-based
compensation:
Cost of revenues $ 422 $ 346 $ 135 $ 93
General and
administrative 1,702 3,754 2,097 21
Sales and marketing 1,289 1,152 85 69
Research and
development 542 1,007 735 46
------------ ------- ------------ -------
Total share-based
Compensation $ 3,955 $ 6,259 $ 3,052 $ 229
Depreciation and
amortization:
Network-related
depreciation $ 5,602 $ 5,020 $ 2,900 $ 2,035
Other depreciation 268 174 63 44
------------ ------- ------------ -------
Total depreciation
and amortization $ 5,870 $ 5,194 $ 2,963 $ 2,079
Capital
expenditures:
Purchases of
property and
equipment $ 12,094 $ 5,461 $ 16,895 $ 6,962
Net increase
(decrease) in cash,
cash equivalents
and marketable
securities $ 6,407 $174,891 $ 8,019 $ (506)
End of period
statistics:
Number of
production
customers under
recurring
contract 988 876 625 523
Number of
employees 219 214 108 91
Nine Months Ended
----------------------------
September 30, September 30,
2007 2006
------------- -------------
Supplemental financial data (in
thousands):
Share-based compensation:
Cost of revenues $ 1,010 $ 257
General and administrative 9,199 2,139
Sales and marketing 2,676 192
Research and development 2,400 805
------------ ------------
Total share-based Compensation $ 15,285 $ 3,393
Depreciation and amortization:
Network-related depreciation $ 15,310 $ 6,408
Other depreciation 579 135
------------ ------------
Total depreciation and amortization $ 15,889 $ 6,543
Capital expenditures:
Purchases of property and equipment $ 20,650 $ 27,327
Net increase (decrease) in cash, cash
equivalents and marketable securities $ 186,293 $ 8,053
End of period statistics:
Number of production customers under
recurring contract 988 625
Number of employees 219 108
LIMELIGHT NETWORKS, INC.
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
Three Months Ended
------------------------------------------------
September 30, June 30, September 30, June 30,
2007 2007 2006 2006
------------- -------- ------------- --------
Cash flows from
operating
activities:
Net income (Loss) $ (3,125) $(10,644) $ (1,390) $ 1,722
Adjustments to
reconcile net
income to net
cash provided by
(used in)
operating
activities:
Depreciation and
amortization 5,870 5,194 2,963 2,079
Share-based
compensation 3,955 6,259 3,052 229
Deferred income
tax expense
(benefit) (294) 1,048 (1) 80
Accounts
receivable
charges 1,689 1,170 242 177
Accretion of
debt discount -- 383 33 --
Accretion of
marketable
securities (277) -- -- --
Changes in
operating
assets and
liabilities:
Accounts
receivable 1,202 (7,641) (2,978) (2,542)
Prepaid
expenses and
other
current
assets (143) (545) (908) (301)
Income taxes
receivable 412 (848) 144 (80)
Other assets (153) (426) (25) (127)
Accounts
payable (1,883) (2,981) 8,785 1,431
Accounts
payable,
related
parties (19) (763) (958) 958
Deferred
revenue and
Other
current
liabilities 10,471 9,018 860 720
------------ ------- ------------ -------
Net cash provided
(used in) by
operating
activities: 17,705 (776) 9,819 4,346
------------ ------- ------------ -------
Cash flows from
investing
activities:
Purchase of
marketable
securities (43,411) (28,589) -- --
Sale of
marketable
securities 7,000 -- -- --
Purchases of
property and
equipment (12,094) (5,461) (16,895) (6,962)
------------ ------- ------------ -------
Net cash used in
investing
activities (48,505) (34,050) (16,895) (6,962)
------------ ------- ------------ -------
Cash flows from
financing
activities:
Borrowings on
credit
facilities -- -- 2,500 2,515
Payments on
credit
facilities -- (23,818) (11,435) (327)
Borrowings on
line of credit -- -- -- --
Payments on line
of credit -- (1,500) (1,000) --
Payments on
capital lease
obligations -- (91) (72) (79)
Payments on
notes payable
-- related
parties -- -- -- --
Escrow funds
returned from
share
repurchase 1,029 2,091 412 --
Tax benefit from
share-based
compensation -- -- -- --
Proceeds from
exercise of
stock options 4 -- 1,840 1
Net proceeds
from preferred
stock issuance -- -- 126,423 --
Repurchase of
common stock -- -- (102,121) --
Proceeds from
initial public
offering, net
of issuance
costs (586) 204,498 -- --
------------ ------- ------------ -------
Net cash provided
by financing
activities 447 181,180 16,547 2,110
------------ ------- ------------ -------
Net increase
(decrease) in
cash and cash
equivalents (30,353) 146,354 9,471 (506)
Cash and cash
equivalents,
beginning of
period 159,103 12,749 1,570 2,077
------------ ------- ------------ -------
Cash and cash
equivalents, end
of period $ 128,750 $159,103 $ 11,041 $ 1,571
============ ======= ============ =======
Nine Months Ended
----------------------------
September 30, September 30,
2007 2006
------------- -------------
Cash flows from operating activities:
Net income (Loss) $(17,675) $ 1,602
Adjustments to reconcile net income to
net cash provided by (used in)
operating activities:
Depreciation and amortization 15,889 6,543
Share-based compensation 15,285 3,393
Deferred income tax expense
(benefit) 286 (1)
Accounts receivable charges 3,536 419
Accretion of debt discount 424 69
Accretion of marketable securities (277) --
Changes in operating assets and
liabilities:
Accounts receivable (4,441) (8,102)
Prepaid expenses and other
current assets (2,495) (1,572)
Income taxes receivable (126) 144
Other assets (698) (261)
Accounts payable (5,595) 9,799
Accounts payable, related parties (781) (362)
Deferred revenue and Other
current liabilities 20,138 2,805
------- --------
Net cash provided (used in) by
operating activities: 23,470 14,476
------- --------
Cash flows from investing activities:
Purchase of marketable securities (72,001) --
Sale of marketable securities 7,000 --
Purchases of property and equipment (20,650) (27,327)
------- --------
Net cash used in investing
activities (85,651) (27,327)
------- --------
Cash flows from financing activities:
Borrowings on credit facilities -- 9,055
Payments on credit facilities (23,818) (11,933)
Borrowings on line of credit 1,500 --
Payments on line of credit (1,500) (1,000)
Payments on capital lease
obligations (250) (171)
Payments on notes payable -- related
parties -- (195)
Escrow funds returned from share
repurchase 3,418 412
Tax benefit from share-based
compensation 23 --
Proceeds from exercise of stock
options 35 1,886
Net proceeds from preferred stock
issuance -- 126,423
Repurchase of common stock -- (102,121)
Proceeds from initial public
offering, net of issuance costs 203,912 --
------- --------
Net cash provided by financing
activities 183,320 22,356
------- --------
Net increase (decrease) in cash and
cash equivalents 121,139 9,505
Cash and cash equivalents, beginning
of period 7,611 1,536
------- --------
Cash and cash equivalents, end of
period $128,750 $ 11,041
======= ========
Use of Non-GAAP Financial Measures
In evaluating our business, we consider and use Non-GAAP revenue,
Non-GAAP net income and Adjusted EBITDA as a supplemental measure of
our operating performance. We consider Non-GAAP revenue and net income
measurements to be an important indicator of overall performance of
the company because it allows us to illustrate the impact of revenue
generated from our multi-element contract as well as to eliminate the
effects of share-based compensation and litigation expense. We define
EBITDA as GAAP net income before net interest expense, provision for
income taxes, depreciation and amortization. We define Adjusted EBITDA
as EBITDA plus income from our multi-element contract and expenses
that we do not consider reflective of our ongoing operations. We use
Adjusted EBITDA as a supplemental measure to review and assess our
operating performance. We also believe use of Adjusted EBITDA
facilitates investors' use of operating performance comparisons from
period to period and company to company by backing out potential
differences caused by variations in such items as capital structures
(affecting relative interest expense and share-based compensation
expense), the book amortization of intangibles (affecting relative
amortization expense), the age and book value of facilities and
equipment (affecting relative depreciation expense) and other non cash
expenses. We also present Adjusted EBITDA because we believe it is
frequently used by securities analysts, investors and other interested
parties as a measure of financial performance.
The terms Non-GAAP revenue and net income, EBITDA and Adjusted
EBITDA 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 revenue and net income, EBITDA and Adjusted EBITDA
have limitations as analytical tools, and when assessing our operating
performance, you should not consider Non-GAAP revenue and net income,
EBITDA and Adjusted EBITDA 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;
-- they do not reflect changes in, or cash requirements for, our
working capital needs;
-- 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 often will have to
be replaced 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 assumed life of the options and assumed volatility
of our common stock; and
-- other companies may calculate EBITDA and Adjusted EBITDA
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 Adjusted EBITDA only
supplementally. Non-GAAP Net Income, 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 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 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,
2007 2007 2006 2006 2007 2006
--------- ------- --------- ------- --------- ---------
GAAP
Revenue $ 29,190 $21,436 $ 17,454 $14,841 $ 73,979 $ 43,133
Deferred
Traffic
Revenue (2,645) 2,645 -- -- -- --
Deferred
Custom
CDN
Services 1,504 820 -- -- 2,324 --
-------- ------ -------- ------ -------- --------
Non-GAAP
Revenue $ 28,049 $24,901 $ 17,454 $14,841 $ 76,303 $ 43,133
======== ====== ======== ====== ======== ========
Reconciliation of GAAP Net Income (Loss) to Non-GAAP Net Income (Loss)
(In thousands, except per share data)
(Unaudited)
Three Months Ended
------------------------------------------------
September 30, June 30, September 30, June 30,
2007 2007 2006 2006
------------- -------- ------------- --------
GAAP net income
(loss) $(3,125) $(10,644) $(1,390) $1,722
Share-based
compensation 3,955 6,259 3,052 229
Litigation
expenses 2,002 1,636 825 --
Deferred revenue (1,141) 3,465 -- --
Deferred cost of
traffic and
services 649 (935) -- --
------ ------- ------ -----
Non-GAAP net income $ 2,340 $ (219) $ 2,487 $1,951
====== ======= ====== =====
Nine Months Ended
----------------------------
September 30, September 30,
2007 2006
------------- -------------
GAAP net income (loss) $ (17,675) $ 1,602
Share-based compensation 15,285 3,393
Litigation expenses 4,523 825
Deferred revenue 2,324 --
Deferred cost of traffic and services (286) --
------------ ------------
Non-GAAP net income $ (4,171) $ 5,820
============ ============
Reconciliation of GAAP Net Income (Loss) to EBITDA to Adjusted EBITDA
(In thousands, except per share data)
(Unaudited)
Three Months Ended
------------------------------------------------
September 30, June 30, September 30, June 30,
2007 2007 2006 2006
------------- -------- ------------- --------
GAAP net income
(loss) $ (3,125) $(10,644) $ (1,390) $ 1,722
Add: depreciation
and amortization 5,870 5,194 2,963 2,079
Add: interest
expense 18 821 373 519
Less: interest
income (2,490) (573) (79) --
Plus income tax
expense 181 221 688 1,125
------------ ------- ------------ -------
EBITDA $ 454 $ (4,981) $ 2,555 $ 5,445
Add: share-based
compensation 3,955 6,259 3,052 229
Add: litigation
expenses
recoverable from
escrow (1) 1,001 818 413 --
Add: deferred
traffic and
services revenue (1,141) 3,465 -- --
Less: deferred
traffic and
service costs 649 (935) -- --
------------ ------- ------------ -------
Adjusted EBITDA $ 4,918 $ 4,626 $ 6,020 $ 5,674
============ ======= ============ =======
Nine Months Ended
----------------------------
September 30, September 30,
2007 2006
------------- -------------
GAAP net income (loss) $(17,675) $ 1,602
Add: depreciation and amortization 15,889 6,543
Add: interest expense 1,412 1,397
Less: interest income (3,151) (79)
Plus income tax expense 602 2,642
------- ------
EBITDA $ (2,923) $12,105
Add: share-based compensation 15,285 3,393
Add: litigation expenses recoverable
from escrow (1) 2,261 413
Add: deferred traffic and services
revenue 2,324 --
Less: deferred traffic and service
costs (286) --
------- ------
Adjusted EBITDA $ 16,661 $15,911
======= ======
(1) During 2006, we repurchased stock in a transaction with a total
value of $102.1 million. Selling stockholders agreed to hold
$10.1 million of the proceeds to offset specific claims for
reimbursement associated with the Akamai lawsuit and other
undisclosed obligations that may arise. For the three month
periods ended September 30, 2007 and 2006, we had $1.0 million
and $0.4 million, respectively, of litigation costs subject to
reimbursement from this escrow. For the nine month periods ended
September 30, 2007 and 2006, we had $2.3 million and $0.4
million, respectively, of litigation costs subject to
reimbursement from this escrow.
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