TEMPE, Ariz., May 8 /PRNewswire-FirstCall/ -- Limelight Networks, Inc.
(Nasdaq: LLNW) today reported first-quarter 2008 revenue of $30.2 million, and
a GAAP net loss of $18.4 million, or 22 cents per basic share. Non-GAAP net
loss, adjusted for certain charges, was $2.0 million, or 2 cents per share.
EBITDA adjusted for share-based compensation, litigation and damage costs, was
$2.1 million. Limelight Networks' non-GAAP EPS loss of 2 cents per basic share
excludes a charge of 15 cents per basic share related to litigation and damage
costs 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 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 Jeff Lunsford, chief
executive officer, Limelight Networks, Inc.
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 $30.2 million, up 29 percent from $23.4 million
in the year-ago first quarter and within the range of guidance previously
provided by the Company.
"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 Matt Hale, chief financial officer, Limelight
Networks, Inc.
Capital purchases were $3.1 million, down from $5.6 million in last year's
first quarter.
"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 $195
million in cash and short-term marketable securities.
Second-Quarter Outlook
Limelight Networks anticipates second-quarter revenue to be in the range
of $28 million to $30 million.
Conference Call and Web Audiocast
Management will host a quarterly conference call for investors beginning
at 2:00 p.m. PST (5:00 p.m. EST). This call can be accessed toll-free at
1.800.561.2718 within the United States or 1.617.614.3525 outside of the U.S.
using Conference ID 50345649.
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.
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.