TEMPE, Ariz., Aug. 12 /PRNewswire-FirstCall/ -- Limelight Networks, Inc.
(Nasdaq: LLNW) today reported second-quarter 2008 revenue of $30.3 million and
a net loss of $15.3 million, or 18 cents per basic share. Non-GAAP net loss,
adjusted for certain charges, was $1.6 million or 2 cents per basic share.
EBITDA, adjusted for share-based compensation, litigation and potential damage
cost accruals, was $3.9 million. The non-GAAP loss of 2 cents per basic share
excludes a charge of 11 cents per basic share related to litigation and
potential damage cost accruals, and 5 cents per basic share of share-based
compensation.
Reconciliation of GAAP to non-GAAP net income is included in the attached
tables.
"We are pleased with our rapid traffic growth and continued progress on
network expansion in the second quarter," commented Jeff Lunsford, chairman
and chief executive officer, Limelight Networks, Inc. "Limelight Networks
continues to be well-positioned as a delivery partner of choice for the
largest live and on-demand events in the online world."
Limelight Networks expanded its customer base to approximately 1,300 in
the second quarter. The company also continued to build out its network
transmission capacity, and expects to achieve 2 terabits per second of
capacity during Q3 2008.
Financial Highlights
Second-quarter revenue was $30.3 million, up 22 percent from $24.9 million
of non-GAAP revenue in the year-ago second quarter and above the range of
guidance previously provided by the Company. Capital purchases were $5.0
million. The Company ended the quarter with no debt and approximately $184
million in cash and short-term marketable securities.
Third-Quarter Outlook
Limelight Networks anticipates third-quarter revenue to be in the range of
$30 million to $32 million. The Company also expects substantially reduced
potential damage accruals of under $1.0 million related to ongoing litigation.
Conference Call and Web Audiocast
Management will host a quarterly conference call for investors on August
12, 2008 beginning at 2:00 p.m. PDT (5 p.m. EDT). This call can be accessed
toll-free at 1-866-713-8562 within the United States or 1-617-597-5310 outside
of the U.S. using Conference ID 72650354.
The conference call will also be audiocast live at http://www.llnw.com. A
replay of the call will also be available from the Company's website for one
week.
Financial Statements
LIMELIGHT NETWORKS, INC.
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)
June 30, December 31,
2008 2007
Assets
Cash and cash equivalents $114,841 $113,824
Marketable securities 69,658 83,273
Accounts receivable, net 22,070 21,407
Income tax receivable 1,545 1,960
Prepaid expenses and other current assets 9,540 4,469
Current assets 217,654 224,933
Property and equipment, net 42,476 46,968
Marketable securities, less current portion 16 87
Other assets 812 1,440
Total assets $260,958 $273,428
Liabilities and stockholders' equity
Accounts payable $6,126 $8,523
Accounts payable, related parties - 230
Deferred revenue, current portion 5,117 4,237
Provision for litigation 62,008 48,130
Other current liabilities 10,488 9,312
Current liabilities 83,739 70,432
Deferred revenue, less current portion 6,836 8,189
Other liabilities 850 770
Total liabilities 91,425 79,391
Stockholders' equity 169,533 194,037
Total liabilities and stockholders' equity $260,958 $273,428
LIMELIGHT NETWORKS, INC.
Condensed Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)
Three Months Ended Six Months Ended
June 30, March 31, June 30, March 31, June 30, June 30,
2008 2008 2007 2007 2008 2007
Revenues $30,314 $30,202 $21,436 $23,353 $60,516 $44,789
Costs and
operating
expenses:
Cost of
revenues *+ 19,751 20,672 14,835 14,497 40,423 29,332
General and
administr-
ative*+ 9,463 13,329 8,831 7,774 22,791 16,605
Sales and
marketing * 8,965 8,142 6,404 3,018 17,107 9,422
Research and
development * 1,694 1,590 1,541 1,285 3,284 2,826
Provision for
litigation 6,743 7,134 - - 13,878 -
Total costs
and operating
expenses 46,616 50,867 31,611 26,574 97,483 58,185
Operating loss (16,302) (20,665) (10,175) (3,221) (36,967) (13,396)
Interest expense (11) (21) (821) (573) (33) (1,394)
Interest income 1,334 1,891 573 89 3,226 662
Other income
(expense) (377) 170 - - (207) -
Loss before income
taxes (15,356) (18,625) (10,423) (3,705) (33,981) (14,128)
Income tax
(benefit)
expense (25) (183) 221 200 (208) 421
Net loss $(15,331) $(18,442) $(10,644) $(3,905) $(33,773)$(14,549)
Net loss
allocable to
common
stockholders $(15,331)$(18,442)$(10,644)$(3,905) $(33,773)$(14,549)
Net loss per
share:
Basic $(0.18) $(0.22) $(0.23) $(0.18) $(0.41) $(0.43)
Diluted $(0.18) $(0.22) $(0.23) $(0.18) $(0.41) $(0.43)
Shares used in
per share
calculations:
Basic 82,889 82,623 45,791 21,945 82,756 33,871
Diluted 82,889 82,623 45,791 21,945 82,756 33,871
* Includes stock-related compensation (see supplemental table for
figures)
+ Includes depreciation (see supplemental table for figures)
LIMELIGHT NETWORKS, INC.
Supplemental Financial Data
(In thousands)
(Unaudited)
Three Months Ended Six Months Ended
June 30, March 31, June 30, March 31, June 30, June 30,
2008 2008 2007 2007 2008 2007
Supplemental
financial data
(in thousands):
Stock-related
compensation:
Cost of revenues $558 $507 $346 $242 $1,064 $588
General and
administrative 1,698 1,665 3,754 3,743 3,363 7,497
Sales and
marketing 1,431 1,306 1,152 235 2,738 1,387
Research and
development 598 482 1,007 851 1,080 1,858
Total stock-
related
compensation $4,285 $3,960 $6,259 $5,071 $8,245 $11,330
Depreciation and
amortization:
Network-related
depreciation $6,192 $6,013 $5,020 $4,688 $12,205 $9,708
Other depreciation 311 247 174 137 557 311
Total
depreciation
and
amortization $6,503 $6,260 $5,194 $4,825 $12,762 $10,019
Capital
expenditures:
Capital
expenditures
(cash and
accrual) $5,013 $3,095 $8,769 $5,575 $8,108 $14,344
Net increase
(decrease) in
cash, cash
equivalents and
marketable
securities $(10,194) $(2,475)$174,891 $4,995 $(12,669)$179,886
End of period
statistics:
Number of
customers
under
recurring
contract 1,291 1,232 876 726 1,291 876
Number of
employees 250 244 215 167 250 215
LIMELIGHT NETWORKS, INC.
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
Three Months Ended Six Months Ended
June 30, March 31, June 30, March 31, June 30, June 30,
2008 2008 2007 2007 2008 2007
Cash flows
from operating
activities:
Net loss $(15,331) $(18,442)$(10,644)$(3,905) $(33,773) $(14,549)
Adjustments to
reconcile
net loss
to net
cash
provided by
(used in)
operating
activities:
Depreciation
and
amortization 6,503 6,260 5,194 4,824 12,762 10,019
Stock-based
compensation 4,285 3,960 6,259 5,071 8,245 11,330
Deferred income
tax expense
(benefit) 23 (234) 1,048 (467) (211) 580
Provision for
litigation 6,743 7,134 - - 13,878 -
Loss on foreign
exchange 232 - - - 232 -
Accounts
receivable
charges 1,925 1,562 1,170 677 3,487 1,847
Accretion of
debt discount - - 383 41 - 424
Accretion of
marketable
securities 21 (453) - - (432) -
Loss on
marketable
securities 16 55 - - 71 -
Changes in
operating assets
and liabilities:
Accounts
receivable (1,880) (2,271) (7,641) 1,998 (4,151) (5,643)
Prepaid
expenses
and other
current
assets (4,452) 87 (545) (1,809) (4,365) (2,354)
Income
taxes
receivable (129) 594 (848) 310 465 (538)
Other assets 67 564 (426) (119) 631 (545)
Accounts
payable (73) (4,634) (2,980) (732) (4,707) (3,712)
Accounts
payable,
related
parties (150) (80) (763) 1 (230) (762)
Deferred
revenue (774) 301 3,612 20 (473) 3,632
Other
current
liabilities(3,859) 5,035 5,405 630 1,176 6,035
Other long
term
liabilities (1) 1 - - - -
Net cash (used
in) provided
by operating
activities: (6,834) (561) (776) 6,540 (7,395) 5,764
Cash flows from
investing
activities:
Purchase of
marketable
securities (30,400) (34,725)(28,589) - (65,125) (28,589)
Sale of
marketable
securities 34,825 44,200 - - 79,025 -
Purchases of
property and
equipment (4,231) (2,435) (5,461) (3,095) (6,666) (8,556)
Net cash used
in investing
activities 194 7,040 (34,050) (3,095) 7,234 (37,145)
Cash flows from
financing activities:
Payments on
credit
facilities - - (23,818) - - (23,818)
Borrowings on
line of credit - - - 1,500 - 1,500
Payments on
line of credit - - (1,500) - - (1,500)
Payments on
capital lease
obligations - - (91) (159) - (250)
Payments on
notes payable
- related
parties - - - - - -
Escrow funds
returned from
share
repurchase 1,070 - 2,091 298 1,070 2,389
Excess tax
benefits
related to
stock option
exercises - - - 23 - 23
Proceeds from
exercise of
stock options
and warrants 53 107 - 31 160 31
Proceeds from
initial public
offering, net
of issuance
costs - - 204,498 - - 204,498
Net cash provided
by financing
activities 1,123 107 181,180 1,693 1,230 182,873
Effect of
exchange rate
changes on cash 104 (156) - - (52) -
Net increase
(decrease) in
cash and cash
equivalents (5,413) 6,430 146,354 5,138 1,017 151,492
Cash and cash
equivalents,
beginning of
period 120,254 113,824 12,749 7,611 113,824 7,611
Cash and cash
equivalents,
end of
period $114,841 $120,254 $159,103 $12,749 $114,841 $159,103
Use of Non-GAAP Financial Measures
To evaluate our business, we consider and use Non-GAAP revenue, Non-GAAP
net income (loss) and Adjusted EBITDA as a supplemental measure of operating
performance. We consider Non-GAAP revenue and net income (loss) to be an
important indicator of overall business performance because it allows us to
illustrate the impact of the effects from our multi-element contract as well
as eliminate the effects of share-based compensation, litigation expenses and
provision for litigation. We define EBITDA as GAAP net income (loss) before
interest income, interest expense, other income and 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 operating performance. We also
believe use of Adjusted EBITDA facilitates investors' use of operating
performance comparisons from period to period.
The terms Non-GAAP revenue, net income (loss), 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, net
income (loss), EBITDA and Adjusted EBITDA have limitations as analytical
tools, and when assessing our operating performance, Non-GAAP revenue, net
income, 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;
-- 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 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 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 Revenue, Net Income (Loss) and Adjusted EBITDA only
as supplemental support for management's analysis of business performance.
Non-GAAP Revenue, 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 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 Six Months Ended
June 30, March 31, June 30, March 31, June 30, June 30,
2008 2008 2007 2007 2008 2007
GAAP Revenue $NA $NA $21,436 $NA $NA $44,789
Deferred Traffic
Revenue - - 2,645 - - 2,645
Deferred Custom
CDN Services Revenue - - 820 - - 820
Non-GAAP Revenue $NA $NA $24,901 $NA $NA $48,254
Reconciliation of GAAP Net Income (Loss) to Non-GAAP Net Income (Loss)
(In thousands)
(Unaudited)
Three Months Ended Six Months Ended
June 30, March 31, June 30, March 31, June 30, June 30,
2008 2008 2007 2007 2008 2007
GAAP net loss $(15,331) $(18,442)$(10,644) $(3,905) $(33,773)$(14,549)
Deferred
revenue 3,465
Deferred cost
of traffic
and services (935) (935)
Provision for
potential
litigation
damages 6,743 7,134 - - 13,878 -
Share-based
compensation 4,285 3,960 6,259 5,071 8,245 11,330
Litigation
defense
expenses 2,667 5,366 1,636 885 8,033 2,521
Non-GAAP net
(loss) income $(1,636) $(1,982) $(219) $2,051 $(3,617) $1,832
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 Six Months Ended
June 30, March 31, June 30, March 31, June 30, June 30,
2008 2008 2007 2007 2008 2007
GAAP net loss $(15,331) $(18,442)$(10,644) $(3,905) $(33,773)$(14,549)
Add:
depreciation
and
amortization 6,503 6,260 5,194 4,825 12,762 10,019
Add: interest
expense 11 21 821 573 33 1,394
Less: interest
and other income (957) (2,061) (573) (89) (3,019) (662)
Plus income tax
(benefit)
expense (25) (183) 221 200 (208) 421
EBITDA $(9,799) $(14,405) $(4,981) $1,604 $(24,205) $(3,377)
Add: deferred
revenue 3,465 3,465
Add: provision
for litigation 6,743 7,134 - - 13,878 -
Add: share-
based
compensation 4,285 3,960 6,259 5,071 8,245 11,330
Add: litigation
defense
expenses 2,667 5,366 1,636 885 8,033 2,521
Less: deferred
traffic and
service costs (935) (935)
Adjusted EBITDA $3,896 $2,055 $5,444 $7,560 $5,951 $13,004
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. Read our blog at
http://blog.llnw.com or visit http://www.limelightnetworks.com for more
information.
Copyright (C) 2008 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, +1-917-297-4241, palfieri@llnw.com, or Matt Hale, +1-602-850-5045, mhale@llnw.com, both of Limelight Networks, Inc.