TEMPE, AZ -- (MARKET WIRE) -- 08/05/10 --
Limelight Networks, Inc. (NASDAQ: LLNW) today
reported second quarter 2010 financial results. Highlights included:
-- Record revenue of $42.2 million
-- Continued expansion of value-added services, now 28% of revenue:
-- Mobile revenue growth exceeded 40% sequentially
-- Enterprise web site acceleration revenue growth exceeded 50%
sequentially
-- Professional services growth exceeded 75% year-over-year
-- Expanded solution set to include rich media advertising solutions with
the completion of EyeWonder Inc. acquisition.
-- Continued strategic expansion of solution set to include cloud-based
video publishing and analytics services, with acquisition of Delve
Networks after close of quarter.
-- GAAP gross margin of 44% and cash gross margin of 58%
"We are pleased with Limelight Networks' second quarter results. We have
designed and deployed a globally distributed, high-performance computing
platform which supports an exciting and growing content delivery business.
We have built and acquired, and are now offering innovative solutions that
run on this platform and address multiple complementary growth sectors.
These solutions position Limelight Networks to benefit from three
undeniable macro trends that we believe will fuel our growth for the
foreseeable future -- the shift of content consumption and advertising
dollars online, explosive growth of mobile devices and mobile content
consumption, and the shift of software applications and other IT services
into the cloud," said Jeff Lunsford, chairman and chief executive officer.
Financial Highlights
For the second quarter of 2010, the company reported revenue of $42.2
million, up 31 percent from second quarter 2009 and up 17 percent
sequentially. The company also reported EBITDA, adjusted for share-based
compensation, litigation expenses, and
acquisition-related expenses, of $5.6 million and a non-GAAP net income,
before share-based compensation, litigation expenses, amortization of
intangible assets, and acquisition-related expenses, of $4.9 million or 5
cents per share on a fully diluted basis. GAAP net loss was $2.3 million,
or 2 cents per basic share.
Capital investments were $9.5 million. The Company ended the quarter with
no bank debt and approximately $83 million in cash and short-term
marketable securities. A reconciliation of GAAP to non-GAAP net income is
included in the below tables.
Third Quarter 2010 Outlook
Limelight Networks anticipates third quarter revenue to be in the range of
$46.5 million to $48.5 million.
Financial Tables
LIMELIGHT NETWORKS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except per share data)
June 30, December 31,
2010 2009
------------ ------------
(Unaudited)
ASSETS
Current Assets:
Cash and cash equivalents $ 60,771 $ 89,509
Marketable securities 22,073 64,870
Accounts receivable, net of reserves of
$8,699 and $9,226 at June 30, 2010 and
December 31, 2009 34,479 26,363
Income taxes receivable 787 617
Prepaid expenses and other current assets 9,721 9,654
------------ ------------
Total current assets 127,831 191,013
Property and equipment, net 44,651 35,524
Marketable securities 996 12
Goodwill 94,835 619
Other intangible assets, net 19,331 370
Other assets 7,646 8,132
------------ ------------
Total assets $ 295,290 $ 235,670
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 11,380 $ 5,144
Deferred revenue, current portion 11,462 12,199
Capital lease obligation, current portion 115 -
Other current liabilities 18,258 14,140
------------ ------------
Total current liabilities 41,215 31,483
Deferred revenue, less current portion - 1,377
Capital lease obligation, less current portion 168 -
Deferred income tax, less current portion 668 10
------------ ------------
Total liabilities 42,051 32,870
Commitments and contingencies - -
Stockholders' equity:
Convertible preferred stock, $0.001 par
value; 7,500 shares authorized; 0 shares
issued and outstanding - -
Common stock, $0.001 par value; 150,000
shares authorized; 98,315 and 85,011 shares
issued and outstanding at June 30, 2010 and
December 31, 2009, respectively 98 85
Additional paid-in capital 368,293 308,537
Accumulated other comprehensive (loss) income (1,188) 93
Accumulated deficit (113,964) (105,915)
------------ ------------
Total stockholders' equity 253,239 202,800
------------ ------------
Total liabilities and stockholders' equity $ 295,290 $ 235,670
============ ============
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,
2010 2010 2009 2009 2010 2009
-------- -------- -------- -------- -------- --------
Revenue $ 42,195 $ 36,087 $ 32,333 $ 33,175 $ 78,281 $ 65,508
Costs and
operating
expenses
Cost of
revenue * 23,825 20,983 21,078 21,471 44,807 42,549
General and
administrat-
ive * 11,212 8,893 6,937 12,444 20,105 19,381
Sales and
marketing * 11,319 9,387 7,716 8,139 20,706 15,855
Research &
development * 3,478 2,645 1,944 1,910 6,122 3,854
Provision for
litigation - - - (65,645) - (65,645)
-------- -------- -------- -------- -------- --------
Total costs and
operating
expenses 49,834 41,908 37,675 (21,681) 91,740 15,994
Operating
(loss) income (7,639) (5,821) (5,342) 54,856 (13,459) 49,514
Interest
expense (7) (1) (11) (11) (8) (22)
Interest income 255 302 337 383 557 720
Other income
(expense) 28 (25) (111) 227 3 116
-------- -------- -------- -------- -------- --------
(Loss) income
before taxes (7,363) (5,545) (5,127) 55,455 (12,907) 50,328
Income tax
(benefit)
expense (5,098) 240 171 320 (4,857) 492
-------- -------- -------- -------- -------- --------
Net (loss)
income $ (2,265) $ (5,785) $ (5,298) $ 55,135 $ (8,050) $ 49,836
======== ======== ======== ======== ======== ========
Net (loss)
income per
share:
Basic $ (0.02) $ (0.07) $ (0.06) $ 0.66 $ (0.09) $ 0.60
Diluted $ (0.02) $ (0.07) $ (0.06) $ 0.64 $ (0.09) $ 0.57
Shares used in
per share
calculations:
Basic 93,889 85,119 84,033 83,515 89,504 83,774
Diluted 93,889 85,119 84,033 85,968 89,504 87,249
* Includes share-based 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,
2010 2010 2009 2009 2010 2009
--------- -------- ------- --------- --------- ---------
Supplemental
financial
data (in
thousands):
Share-based
compensation:
Cost of
revenues $ 583 $ 598 $ 582 $ 551 $ 1,181 $ 1,134
General and
administrat-
ive 1,577 1,835 1,820 2,131 3,412 3,950
Sales and
marketing 1,272 1,206 1,253 1,189 2,478 2,442
Research and
development 728 704 626 616 1,432 1,242
--------- -------- ------- --------- --------- ---------
Total
share-based
compensation $ 4,160 $ 4,343 $ 4,281 $ 4,487 $ 8,503 $ 8,768
========= ======== ======= ========= ========= =========
Depreciation
and
amortization:
Network-
related
depreciation $ 5,324 $ 4,778 $ 6,133 $ 6,548 $ 10,102 $ 12,681
Other
depreciation 1,603 766 532 540 2,370 1,072
--------- -------- ------- --------- --------- ---------
Total
depreciation
and
amortization $ 6,927 $ 5,544 $ 6,665 $ 7,088 $ 12,472 $ 13,753
========= ======== ======= ========= ========= =========
Net
(decrease)
increase in
cash, cash
equivalents
and
marketable
securities $ (64,954) $ (5,531) $ 2,331 $ (12,660) $ (70,485) $ (10,329)
========= ======== ======= ========= ========= =========
End of period
statistics:
Approximate
number of
active
customers 1,655 1,370 1,370 1,365 1,655 1,370
Number of
employees 609 342 301 296 609 301
LIMELIGHT NETWORKS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Three Months Ended
------------------------------------------
June 30, March 31, June 30, March 31,
2010 2010 2009 2009
--------- --------- --------- ---------
Cash flows from operating
activities:
Net (loss) income $ (2,265) $ (5,785) $ (5,298) $ 55,135
Adjustments to reconcile net
(loss) income to net cash
provided by (used
in) operating activities:
Depreciation and
amortization 6,927 5,544 6,665 7,088
Share-based compensation 4,160 4,343 4,281 4,487
Deferred income taxes (119) - - -
Income tax benefit
related to business
acquisition (5,768) - - -
Provision for litigation - - - (65,645)
(Gain) loss on foreign
currency transactions (213) 49 205 (31)
Loss on sale of property
and equipment 5 89 - -
Accounts receivable
charges 588 1,169 622 3,288
Accretion of marketable
securities 300 24 (157) -
Changes in operating
assets and liabilities:
Accounts receivable (112) (305) 7,281 (3,840)
Prepaid expenses and
other current assets (86) 685 721 (593)
Income taxes receivable 280 (53) 140 (157)
Other assets 1,111 (167) 149 (4,311)
Accounts payable (1,223) 264 (4,219) (1,223)
Deferred revenue 728 (3,105) (972) (822)
Other current
liabilities 1,192 (2,081) (1,918) (5,144)
Other long term
liabilities (19) - - -
--------- --------- --------- ---------
Net cash provided by (used
in) operating activities 5,486 671 7,500 (11,768)
--------- --------- --------- ---------
Cash flows from investing
activities:
Purchases of property and
equipment (9,480) (4,250) (5,308) (754)
Purchase of marketable
securities (2,000) (16,755) (12,830) -
Sale of marketable
securities 33,180 28,000 9,100 21,300
Acquisition of
businesses, net of cash
acquired (61,903) (2,004) 22 -
--------- --------- --------- ---------
Net cash (used in) provided
by investing activities (40,203) 4,991 (9,016) 20,546
--------- --------- --------- ---------
Cash flows from financing
activities:
Proceeds from exercise of
stock options 100 27 92 76
--------- --------- --------- ---------
Net cash provided by (used
in) financing activities 100 27 92 76
--------- --------- --------- ---------
Effect of exchange rate
changes on cash 92 97 (205) (243)
--------- --------- --------- ---------
Net (decrease) increase in cash
and cash equivalents (34,525) 5,786 (1,629) 8,611
Cash and cash equivalents,
beginning of period 95,296 89,509 146,791 138,180
--------- --------- --------- ---------
Cash and cash equivalents, end
of period $ 60,771 $ 95,295 $ 145,162 $ 146,791
========= ========= ========= =========
Six Months Ended
--------------------
June 30, June 30,
2010 2009
--------- ---------
Cash flows from operating
activities:
Net (loss) income $ (8,050) $ 49,836
Adjustments to reconcile net
(loss) income to net cash
provided by (used
in) operating activities:
Depreciation and
amortization 12,472 13,753
Share-based compensation 8,503 8,768
Deferred income taxes (119) -
Income tax benefit
related to business
acquisition (5,768) -
Provision for litigation - (65,645)
(Gain) loss on foreign
currency transactions (164) 174
Loss on sale of property
and equipment 94 -
Accounts receivable
charges 1,757 3,910
Accretion of marketable
securities 324 (157)
Changes in operating
assets and liabilities:
Accounts receivable (417) 3,441
Prepaid expenses and
other current assets 599 128
Income taxes receivable 227 (17)
Other assets 944 (4,162)
Accounts payable (959) (5,442)
Deferred revenue (2,377) (1,794)
Other current
liabilities (889) (7,061)
Other long term
liabilities (19) -
--------- ---------
Net cash provided by (used
in) operating activities 6,158 (4,268)
--------- ---------
Cash flows from investing
activities:
Purchases of property and
equipment (13,730) (6,062)
Purchase of marketable
securities (18,755) (12,830)
Sale of marketable
securities 61,180 30,400
Acquisition of
businesses, net of cash
acquired (63,907) 22
--------- ---------
Net cash (used in) provided
by investing activities (35,212) 11,530
--------- ---------
Cash flows from financing
activities:
Proceeds from exercise of
stock options 127 168
--------- ---------
Net cash provided by (used
in) financing activities 127 168
--------- ---------
Effect of exchange rate
changes on cash 189 (448)
--------- ---------
Net (decrease) increase in cash
and cash equivalents (28,738) 6,982
Cash and cash equivalents,
beginning of period 89,509 138,180
--------- ---------
Cash and cash equivalents, end
of period $ 60,771 $ 145,162
========= =========
Use of Non-GAAP Financial Measures
To evaluate our business, we consider and use Non-GAAP net income (loss)
and EBITDA adjusted for share-based compensation, litigation and damage
costs and acquisition related expenses as a supplemental measure 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 because
it allows us to illustrate the impact of the effects of share-based
compensation, litigation expenses, provision for litigation, amortization
of intangible assets, and acquisition related expenses. 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 believe that EBITDA provides a useful metric to investors
to compare us with other companies within our industry and across
industries. We define EBITDA adjusted for share-based compensation,
litigation and damage costs and acquisition related expenses as EBITDA plus
expenses that we do not consider reflective of our ongoing operations. We
use EBITDA adjusted for share-based compensation, litigation and damage
costs and acquisition related expenses as a supplemental measure to review
and assess operating performance. We also believe use of EBITDA adjusted
for share-based compensation, litigation and damage costs and acquisition
related expenses facilitates investors' use of operating performance
comparisons from period to period. In addition, it should be noted that our
performance-based executive officer bonus structure is tied closely to our
performance as measured in part by certain non-GAAP financial measures.
The terms Non-GAAP net income (loss), EBITDA and EBITDA adjusted for
share-based compensation, litigation and damage costs and acquisition
related expenses 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 (loss), EBITDA and EBITDA adjusted for share-based
compensation, litigation and damage costs and acquisition related expenses
have limitations as analytical tools, and when assessing our operating
performance, Non-GAAP net income (loss), EBITDA and EBITDA adjusted for
share-based compensation, litigation and damage costs and acquisition
related expenses 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, litigation
costs and acquisition related expenses 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;
-- 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,
litigation and damage costs and acquisition related expenses 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, litigation and damage costs and acquisition
related expenses 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 (loss) and EBITDA adjusted for
share-based compensation, litigation and damage costs and acquisition
related expenses only as supplemental support for management's analysis of
business performance. Non-GAAP Net Income (loss), EBITDA and EBITDA
adjusted for share-based compensation, litigation and damage costs and
acquisition related expenses 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.
LIMELIGHT NETWORKS, INC.
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,
2010 2010 2009 2009 2010 2009
-------- -------- -------- -------- -------- --------
GAAP net (loss)
income $ (2,265) $ (5,785) $ (5,298) $ 55,135 $ (8,050) $ 49,836
Provision for
litigation - - - (65,645) - (65,645)
Share-based
compensation 4,160 4,343 4,281 4,487 8,503 8,768
Litigation
defense
expenses 1,726 392 367 3,945 2,118 4,312
Acquisition
related
expenses 409 604 - - 1,013 -
Amortization of
intangible
assets 915 171 - - 1,087 -
-------- -------- -------- -------- -------- --------
Non-GAAP net
income (loss) $ 4,945 $ (275) $ (650) $ (2,078) $ 4,671 $ (2,729)
======== ======== ======== ======== ======== ========
LIMELIGHT NETWORKS, INC.
Reconciliation of GAAP Net Income (Loss) to EBITDA to EBITDA
Adjusted for Share-Based Compensation, Litigation Expenses, Provision for
Litigation and Acquisition Expenses
(In thousands)
(Unaudited)
Three Months Ended Six Months Ended
-------------------------------------- ------------------
June 30, March 31, June 30, March 31, June 30, June 30,
2010 2010 2009 2009 2010 2009
-------- -------- -------- -------- -------- --------
GAAP net (loss)
income $ (2,265) $ (5,785) $ (5,298) $ 55,135 $ (8,050) $ 49,836
Depreciation
and
amortization 6,927 5,544 6,665 7,088 12,472 13,753
Interest
expense 7 1 11 11 8 22
Interest and
other
income
(expense) (283) (277) (226) (610) (560) (836)
Income tax
(benefit)
expense (5,098) 240 171 320 (4,857) 492
-------- -------- -------- -------- -------- --------
EBITDA (712) (277) 1,323 61,944 (987) 63,267
Provision
for
litigation - - - (65,645) - (65,645)
Share-based
compensation 4,160 4,343 4,281 4,487 8,503 8,768
Litigation
defense
expenses 1,726 392 367 3,945 2,118 4,312
Acquisition
related
expenses 409 604 - - 1,013 -
-------- -------- -------- -------- -------- --------
EBITDA adjusted
for share-based
compensation,
litigation
expenses,
provision for
litigation,
and acquisition
expenses $ 5,583 $ 5,062 $ 5,971 $ 4,731 $ 10,647 $ 10,702
======== ======== ======== ======== ======== ========
Conference Call
At approximately 4:30 p.m. EDT (1:30 p.m. PDT), management will host a
quarterly conference call for investors. Investors can access this call
toll-free at 1-866-578-5747 within the United States or 1-617-213-8054
outside of the U.S. using Participant Passcode 73516687. The conference
call will also be audiocast live from http://www.llnw.com and a replay will
be available for one week.
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 expenses, customer growth, market growth, pricing
pressures, expansion into additional market segments, product and services
improvements, the integration of acquired businesses and litigation and
acquisition related expenses. Forward-looking statements represent the
current judgment and expectations of Limelight Networks and 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) provides on-demand software,
platform, and infrastructure services that help global businesses reach and
engage audiences online or on any mobile or connected device, enabling them
to enhance their brand presence, build stronger customer relationships,
analyze viewer preferences, optimize their advertising, and manage and
monetize their digital assets. For more information, please visit
http://www.limelightnetworks.com or follow us on Twitter at
www.twitter.com/llnw.
Copyright © 2010 Limelight Networks, Inc. All rights reserved. EyeWonder
is a trademark of Limelight Networks, Inc. All product or service names are
the property of their respective owners.
CONTACT:
Paul Alfieri
Limelight Networks, Inc.
+1-646-875-8835
palfieri@llnw.com