- Revenue of $33.2 million, a 10% increase from first quarter 2008
- Reversal of $66 million accrual due to favorable ruling from Federal District Court of Massachusetts
- Launch of LimelightSITE(TM) with over 150 customers, entry into enterprise and e-commerce sectors
- Addition of approximately 35 net new customers
TEMPE, Ariz., May 6 /PRNewswire-FirstCall/ -- Limelight Networks, Inc. (Nasdaq: LLNW) today reported first quarter 2009 financial results.
"Limelight Networks achieved solid year-over-year revenue growth during the first quarter. We continued to see strong demand for our core content delivery and storage services, and were pleased with the market reception for LimelightSITE and a favorable ruling in our patent litigation with Akamai. We believe that continued Internet adoption presents us with attractive growth opportunities and that our eight years of innovation, our global scale and our network-based architecture are the optimal solution for publishers, enterprises, and governments advancing their online presence," commented Jeff Lunsford, chairman and chief executive officer, Limelight Networks, Inc.
Financial Highlights
For the first quarter of 2009, the company reported revenue of $33.2 million, up 10% percent from $30.2 million in the same period last year, and EBITDA, adjusted for share-based compensation, litigation and the reversal of a previously recorded damage accrual, of $4.7 million.
Non-GAAP net loss, before stock based compensation, litigation costs, and reversal of a previously recorded damage accrual, was $2.1 million or 2 cents per basic share. GAAP net earnings were $55.1 million, or 66 cents per basic share and 64 cents on a fully-diluted basis. These earnings include the reversal of a previously recorded damage accrual of $66 million as a result of the Massachusetts Federal District Court order finding that we do not infringe the Akamai 703 patent.
Capital purchases incurred were $4.6 million. The Company ended the quarter with no bank debt and approximately $162 million in cash and short-term marketable securities. A reconciliation of GAAP to non-GAAP net income is included in the attached tables.
Second-Quarter Outlook
Limelight Networks anticipates second quarter revenue to be in the range of $32.2 million to $33.2 million.
Financial Tables
LIMELIGHT NETWORKS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except per share data)
March 31, December 31,
2009 2008
---- ----
(Unaudited)
ASSETS
Current Assets:
Cash and cash equivalents $146,791 $138,180
Marketable securities 15,197 36,463
Accounts receivable, net of reserves of
$8,585 and $7,565 at March 31, 2009
and December 31, 2008, respectively 34,238 33,482
Income taxes receivable 164 7
Prepaid expenses and other current assets 8,427 7,834
----- -----
Total current assets 204,817 215,966
Property and equipment, net 37,721 40,185
Marketable securities, less current portion 8 13
Other assets 4,939 628
----- ---
Total assets $247,485 $256,792
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $11,770 $8,920
Deferred revenue, current portion 10,328 9,865
Provision for litigation - 65,645
Other current liabilities 9,785 14,928
----- ------
Total current liabilities 31,883 99,358
Deferred revenue, less current portion 6,018 7,303
----- -----
Total liabilities 37,901 106,661
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; 83,792 and 83,405
shares issued and outstanding at
March 31, 2009 and December 31, 2008,
respectively 84 83
Additional paid-in capital 295,155 290,593
Accumulated other comprehensive income 15 260
Accumulated deficit (85,670) (140,805)
------- --------
Total stockholders' equity 209,584 150,131
------- -------
Total liabilities and stockholders' equity $247,485 $256,792
======== ========
LIMELIGHT NETWORKS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
Three Months Ended
------------------
March December March December
31, 31, 31, 31,
2009 2008 2008 2007
---- ---- ---- ----
Revenue $33,175 $35,898 $30,202 $29,132
Costs and operating expenses
Cost of revenue * + 21,471 21,881 20,672 18,435
General and
administrative * + 12,444 15,550 13,329 7,961
Sales and marketing * 8,139 9,231 8,142 8,619
Research & development * 1,910 2,072 1,590 1,385
Provision for litigation (65,645) 1,295 7,134 48,130
------- ----- ----- ------
Total costs and operating
expenses (21,681) 50,029 50,867 84,530
Operating income (loss) 54,856 (14,131) (20,665) (55,398)
Interest expense (11) (11) (21) (6)
Interest income 383 669 1,891 2,035
Other income (expense) 227 (375) 170 (177)
--- ---- --- ----
Income (loss) before taxes 55,455 (13,848) (18,625) (53,546)
Income tax expense (benefit) 320 94 (183) 1,799
--- --- ---- -----
Net income (loss) $55,135 $(13,942) $(18,442) $(55,345)
======= ======== ======== ========
Net income (loss) per share:
Basic $0.66 $(0.17) $(0.22) $(0.67)
Diluted $0.64 $(0.17) $(0.22) $(0.67)
Shares used in per share
calculations:
Basic 83,515 83,192 82,623 82,140
Diluted 85,968 83,192 82,623 82,140
* 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
------------------
March December March December
31, 31, 31, 31,
2009 2008 2008 2007
---- ---- ---- ----
Supplemental financial data
(in thousands):
Share-based compensation:
Cost of revenues $551 $585 $507 $479
General and administrative 2,131 3,028 1,665 1,454
Sales and marketing 1,189 1,262 1,306 1,272
Research and development 616 633 482 420
--- --- --- ---
Total share-based compensation $4,487 $5,508 $3,960 $3,625
====== ====== ====== ======
Depreciation and amortization:
Network-related depreciation $6,548 $6,862 $6,013 $5,429
Other depreciation 540 455 247 278
--- --- --- ---
Total depreciation and
amortization $7,088 $7,317 $6,260 $5,707
====== ====== ====== ======
Capital expenditures:
Capital expenditures
(cash and accrual) $4,572 $5,151 $3,095 $5,136
====== ====== ====== ======
Net (decrease) increase in
cash, cash equivalents
and marketable securities $(12,660) $(2,015) $(2,475) $3,032
======== ======= ======= ======
End of period statistics:
Approximate number of active
customers 1,365 1,336 1,232 1,157
Number of employees 296 294 244 237
LIMELIGHT NETWORKS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Three Months Ended
------------------
March December March December
31, 31, 31, 31,
2009 2008 2008 2007
---- ---- ---- ----
Cash flows from operating
activities:
Net income (loss) $55,135 $(13,942) $(18,442) $(55,345)
Adjustments to reconcile
net loss to net cash
(used in) provided by
operating activities:
Depreciation and
amortization 7,088 7,317 6,260 5,707
Share-based compensation 4,487 5,508 3,960 3,625
Deferred income tax
(benefit) expense - (9) (234) 33
Excess tax benefit
related to stock option
exercises - 177 - (1,596)
Provision for litigation (65,645) 1,295 7,134 48,130
(Income) loss on foreign
currency exchange (31) (149) - 42
Accounts receivable
charges 3,288 3,961 1,562 2,268
Accretion of debt discount - - - -
Accretion of marketable
securities - (6) (453) (530)
Loss on marketable
securities - - 55 387
Changes in operating
assets and liabilities:
Accounts receivable (3,840) (6,169) (2,271) (5,243)
Prepaid expenses and
other current assets (593) 1,695 87 1,037
Income taxes receivable (157) 1,480 594 2,742
Other assets (4,311) 32 564 11
Accounts payable (1,223) (531) (4,634) 3,613
Accounts payable,
related parties - - (80) 230
Deferred revenue (822) 416 301 135
Other current liabilities (5,144) 718 5,035 (4,449)
Other long term
liabilities - (770) 1 740
--- ---- --- ---
Net cash (used in) provided by
operating activities (11,768) 1,023 (561) 1,537
------- ----- ---- -----
Cash flows from investing
activities:
Purchases of property
and equipment (754) (3,537) (2,435) (2,081)
Purchase of marketable
securities - - (34,725) 20,300
Sale of marketable
securities 21,300 17,125 44,200 (37,569)
Net cash provided by (used
in) investing activities 20,546 13,588 7,040 (19,350)
------ ------ ----- -------
Cash flows from financing
activities:
Escrow funds returned
from share repurchase - - - 1,190
Tax benefits from share-
based compensation - (177) - -
Excess tax benefit
related to stock option
exercises - - - 1,573
Proceeds from exercise
of stock options and
warrants 76 34 107 175
Proceeds from initial
public offering, net of
issuance costs - - - (47)
--- --- --- ---
Net cash provided by (used
in) financing activities 76 (143) 107 2,891
--- ---- --- -----
Effect of exchange rate
changes on cash and cash
equivalents (243) 566 (156) (4)
---- --- ---- ---
Net increase (decrease) in cash
and cash equivalents 8,611 15,034 6,430 (14,926)
Cash and cash equivalents,
beginning of period 138,180 123,146 113,824 128,750
------- ------- ------- -------
Cash and cash equivalents,
end of period $146,791 $138,180 $120,254 $113,824
======== ======== ======== ========
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;
-- 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
LIMELIGHT NETWORKS, INC.
Reconciliation of GAAP Net Income (Loss) to Non-GAAP Net Income (Loss)
(In thousands)
(Unaudited)
Three Months Ended
------------------
March December March December
31, 31, 31, 31,
2009 2008 2008 2007
---- ---- ---- ----
GAAP net income (loss) $55,135 $(13,942) $(18,442) $(55,345)
Deferred revenue - - - 729
Deferred cost of traffic and
services - - - 21
Provision for litigation (65,645) 1,295 7,134 48,130
Share-based compensation 4,487 5,508 3,960 3,625
Litigation defense expenses 3,945 4,576 5,366 2,772
----- ----- ----- -----
Non-GAAP net loss $(2,078) $(2,563) $(1,982) $(68)
======= ======= ======= ====
LIMELIGHT NETWORKS, INC.
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 December March December
31, 31, 31, 31,
2009 2008 2008 2007
---- ---- ---- ----
GAAP net income (loss) $55,135 $(13,942) $(18,442) $(55,345)
Add: depreciation and
amortization 7,088 7,317 6,260 5,707
Add: interest expense 11 11 21 6
Less: interest and other income (610) (294) (2,062) (1,858)
Plus income tax (benefit)
expense 320 94 (183) 1,799
--- --- ---- -----
EBITDA 61,944 (6,814) (14,406) (49,691)
Add: provision for litigation (65,645) 1,295 7,134 48,130
Add: share-based compensation 4,487 5,508 3,960 3,625
Add: litigation defense
expenses 3,945 4,576 5,366 2,772
----- ----- ----- -----
EBITDA adjusted for share-based
compensation, litigation
and damage costs $4,731 $4,565 $2,054 $4,836
====== ====== ====== ======
Conference Call
Management will host a quarterly conference call for investors today beginning at 4:30 p.m. EDT (1:30 p.m. PDT). This call can be accessed toll-free at 1-866-362-4832 within the United States or 1-617.597.5364 outside of the U.S. using Participant Passcode 68176220. The conference call will also be audiocast live from http://www.llnw.com and a replay will be available following the call from the Company's website.
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 first quarter of 2009, 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 trusted by the world's most innovative enterprise, entertainment, technology, and software brands to improve the performance and profitability of web sites and end-user experiences. Our scalable, on-demand managed infrastructure solutions provide global reach and consistently high availability, by routing traffic over a private fiber-optic backbone rather than through the often-congested, unpredictable public Internet. For more information, visit our web site (http://www.limelightnetworks.com), read our blog (http://blog.llnw.com), or follow @llnw on Twitter.
Copyright (C) 2009 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 of Limelight Networks, Inc., +1-917-297-4241, palfieri@llnw.com