TEMPE, AZ -- (MARKET WIRE) -- 11/05/10 --
Limelight Networks, Inc. (NASDAQ: LLNW) today
reported third quarter 2010 financial results. Highlights included:
- Record revenue of $49.8 million
- Continued expansion of value-added services, now 34% of revenue:
- Mobile revenue growth exceeded 35% sequentially
- Enterprise storage revenue growth exceeded 30%
sequentially
- Professional services growth exceeded 50% sequentially
- Expansion of the company's portfolio of web acceleration solutions for
the enterprise
- Achievement of break-even non-GAAP net income
"We are pleased with our financial performance as we enter the second phase
of Limelight's growth. Consumers are pulling massive amounts of content
onto a rapidly expanding universe of Internet-connected devices, creating
growing waves of traffic on our platform. This rapid growth creates
complexity for publishers and businesses, and Limelight is experiencing
strong reception for our complementary, value-added services that help
these customers meet the challenges of this new environment. These
services, such as mobile video delivery, web site acceleration, cloud
storage, rich media advertising and video platform solutions, are helping
us deepen the strategic conversations we are having with our customers, as
we are now helping them grow the revenue side of their businesses," said
Jeff Lunsford, chairman and chief executive officer.
Financial Highlights
For the third quarter of 2010, the company reported revenue of $49.8
million, up 53 percent from the third quarter 2009 and up 18 percent
sequentially. The company also reported adjusted EBITDA of $7.1 million and
non-GAAP net income, before share-based compensation, litigation expenses,
amortization of intangible assets, and acquisition-related expenses, of
$0.3 million or break even per share on a fully diluted basis. GAAP net
loss was $6 million, or 6 cents per basic share.
Capital investments were $11.7 million. The Company ended the quarter with
no bank debt and approximately $71 million in cash and short-term
marketable securities. A reconciliation of GAAP to non-GAAP net income is
included in the below tables.
Fourth Quarter 2010 Outlook
Limelight Networks anticipates fourth quarter revenue to be in the range of
$51.5 million to $53.5 million.
Financial Tables
LIMELIGHT NETWORKS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except per share data)
September 30, December 31,
2010 2009
------------- -------------
(Unaudited)
ASSETS
Current Assets:
Cash and cash equivalents $ 52,229 $ 89,509
Marketable securities 18,421 64,870
Accounts receivable, net of reserves of
$7,491 and $9,226 at September 30, 2010
and December 31, 2009 39,085 26,363
Income taxes receivable 862 617
Prepaid expenses and other current assets 8,891 9,654
------------- -------------
Total current assets 119,488 191,013
Property and equipment, net 51,785 35,524
Marketable securities, less current portion 2,024 12
Goodwill 97,975 619
Other intangible assets, net 19,912 370
Other assets 7,520 8,132
------------- -------------
Total assets $ 298,704 $ 235,670
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 10,909 $ 5,144
Deferred revenue, current portion 10,049 12,199
Capital lease obligation, current portion 970 -
Other current liabilities 19,464 14,140
------------- -------------
Total current liabilities 41,392 31,483
Deferred revenue, less current portion - 1,377
Capital lease obligation, less current
portion 1,706 -
Deferred income tax, less current portion 602 10
Other long term liabilities 21 -
------------- -------------
Total liabilities 43,721 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; 98,995 and 85,011
shares issued and outstanding at September
30, 2010 and December 31, 2009,
respectively 99 85
Additional paid-in capital 374,053 308,537
Accumulated other comprehensive income 750 93
Accumulated deficit (119,919) (105,915)
------------- -------------
Total stockholders' equity 254,983 202,800
------------- -------------
Total liabilities and stockholders' equity $ 298,704 $ 235,670
============= =============
LIMELIGHT NETWORKS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
Three Months Ended Nine Months Ended
-------------------------------------- ------------------
September September September September
30, June 30, 30, June 30, 30, 30,
2010 2010 2009 2009 2010 2009
-------- -------- -------- -------- -------- --------
Revenues $ 49,803 $ 42,195 $ 32,530 $ 32,333 $128,084 $ 98,038
Costs and
operating
expenses
Cost of
revenues * † 27,946 23,825 20,907 21,078 72,753 63,456
General and
administra-
tive * † 10,393 11,212 7,032 6,937 30,499 26,413
Sales and
marketing * 12,724 11,319 8,060 7,716 33,429 23,915
Research &
development * 4,491 3,478 2,024 1,944 10,614 5,878
Provision for
litigation - - - - - (65,645)
-------- -------- -------- -------- -------- --------
Total costs and
operating
expenses 55,554 49,834 38,023 37,675 147,295 54,017
Operating (loss)
income (5,751) (7,639) (5,493) (5,342) (19,211) 44,021
Interest expense (6) (7) (11) (11) (13) (33)
Interest income 210 255 330 337 767 1,050
Other income
(expense) (120) 28 15 (111) (117) 131
-------- -------- -------- -------- -------- --------
(Loss) income
before taxes (5,667) (7,363) (5,159) (5,127) (18,574) 45,169
Income tax
expense
(benefit) 287 (5,098) 61 171 (4,570) 552
-------- -------- -------- -------- -------- --------
Net (loss)
income $ (5,954) $ (2,265) $ (5,220) $ (5,298) $(14,004) $ 44,617
======== ======== ======== ======== ======== ========
Net (loss)
income per
share:
Basic $ (0.06) $ (0.02) $ (0.06) $ (0.06) $ (0.15) $ 0.53
Diluted $ (0.06) $ (0.02) $ (0.06) $ (0.06) $ (0.15) $ 0.51
Shares used in
per share
calculations:
Basic 98,634 93,889 84,489 84,033 92,547 84,012
Diluted 98,634 93,889 84,489 84,033 92,547 87,708
* Includes share-based compensation (see supplemental table for figures)
† Includes depreciation and amortization (see supplemental table for
figures)
LIMELIGHT NETWORKS, INC.
SUPPLEMENTAL FINANCIAL DATA
(In thousands)
(Unaudited)
Three Months Ended Nine Months Ended
-------------------------------------- ------------------
September September September September
30, June 30, 30, June 30, 30, 30,
2010 2010 2009 2009 2010 2009
-------- -------- -------- --------- -------- --------
Supplemental
financial data
(in thousands):
Share-based
compensation:
Cost of
revenues $ 645 $ 583 $ 638 $ 582 $ 1,827 $ 1,772
General and
administrative 1,779 1,577 1,805 1,820 5,190 5,755
Sales and
marketing 1,311 1,272 1,293 1,253 3,789 3,734
Research and
development 819 728 633 626 2,252 1,876
-------- -------- -------- --------- -------- --------
Total share-based
compensation $ 4,554 $ 4,160 $ 4,369 $ 4,281 $ 13,058 $ 13,137
======== ======== ======== ========= ======== ========
Depreciation and
amortization:
Network-related
depreciation $ 5,878 $ 5,324 $ 6,018 $ 6,133 $ 15,980 $ 18,699
Other
depreciation
and
amortization 680 688 568 532 1,963 1,640
Amortization of
intangible
assets 1,354 915 59 - 2,441 59
-------- -------- -------- --------- -------- --------
Total
depreciation
and
amortization $ 7,912 $ 6,927 $ 6,645 $ 6,665 $ 20,384 $ 20,398
======== ======== ======== ========= ======== ========
Net (decrease)
increase in
cash, cash
equivalents
and marketable
securities $(11,166) $(65,020) $(11,497) $ 2,331 $(81,717) $(21,826)
======== ======== ======== ========= ======== ========
End of period
statistics:
Approximate
number of
active
customers 1,780 1,655 1,370 1,370 1,780 1,370
Number of
employees 660 609 321 301 660 321
LIMELIGHT NETWORKS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Three Months Ended Nine Months Ended
-------------------------------------- ------------------
September September September September
30, June 30, 30, June 30, 30, 30,
2010 2010 2009 2009 2010 2009
-------- -------- -------- -------- -------- --------
Cash flows from
operating
activities:
Net (loss)
income $ (5,954) $ (2,265) $ (5,220) $ (5,298) $(14,004) $ 44,617
Adjustments
to reconcile
net (loss)
income to
net cash
provided by
(used in)
operating
activities:
Depreciation
and
amortization 7,912 6,927 6,645 6,665 20,384 20,398
Share-based
compensation 4,554 4,160 4,369 4,281 13,058 13,137
Deferred
income taxes (71) (119) - - (190) -
Income
tax benefit
related
to business
acquisition - (5,768) - - (5,768) -
Provision
for
litigation - - - - - (65,645)
(Gain)
loss on
foreign
currency
transactions 159 (213) 7 205 (5) 181
Loss on sale
of property
and equipment 58 5 - - 152 -
Accounts
receivable
charges 585 588 329 622 2,342 4,239
Accretion of
marketable
securities (50) 300 (298) (157) 274 (455)
Changes in
operating
assets and
liabilities:
Accounts
receivable (5,089) (112) (1,648) 7,281 (5,506) 1,793
Prepaid
expenses
and other
current
assets 539 (86) (1,475) 721 1,138 (1,347)
Income
taxes
receivable (69) 280 (159) 140 158 (176)
Other
assets 62 1,111 (4,152) 149 1,006 (8,314)
Accounts
payable (74) (1,223) 244 (4,219) (1,033) (5,198)
Deferred
revenue (1,913) 728 (291) (972) (4,290) (2,085)
Other
current
liabilities 755 1,192 358 (1,918) (134) (6,704)
Other long
term lia-
bilities 41 (19) - - 21 -
-------- -------- -------- -------- -------- --------
Net cash
provided by
(used in)
operating
activities 1,445 5,486 (1,291) 7,500 7,603 (5,559)
-------- -------- -------- -------- -------- --------
Cash flows from
investing
activities:
Purchases of
property and
equipment (11,675) (9,480) (10,586) (5,308) (25,405) (16,648)
Purchase of
marketable
securities (8,715) (2,000) (32,905) (12,830) (27,470) (45,735)
Sale of
marketable
securities 12,405 33,180 2,000 9,100 73,585 32,400
Acquisition
of
businesses,
net of
cash
acquired (2,622) (61,903) - 22 (66,529) 22
-------- -------- -------- -------- -------- --------
Net cash
(used in)
provided by
investing
activities (10,607) (40,203) (41,491) (9,016) (45,819) (29,961)
-------- -------- -------- -------- -------- --------
Cash flows from
financing
activities:
Proceeds
from
exercise
of stock
options 335 100 72 92 462 240
-------- -------- -------- -------- -------- --------
Net cash
provided by
(used in)
financing
activities 335 100 72 92 462 240
-------- -------- -------- -------- -------- --------
Effect of
exchange
rate changes
on cash 285 92 (5) (205) 474 (453)
-------- -------- -------- -------- -------- --------
Net (decrease)
increase in
cash and cash
equivalents (8,542) (34,525) (42,715) (1,629) (37,280) (35,733)
Cash and cash
equivalents,
beginning of
period 60,771 95,296 145,162 146,791 89,509 138,180
-------- -------- -------- -------- -------- --------
Cash and cash
equivalents,
end of period $ 52,229 $ 60,771 $102,447 $145,162 $ 52,229 $102,447
======== ======== ======== ======== ======== ========
Use of Non-GAAP Financial Measures
To evaluate our business, we consider and use Non-GAAP net income (loss)
and Adjusted EBITDA 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 intangibles
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 and, 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 Adjusted
EBITDA as EBITDA adjusted for operational 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. 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 Adjusted EBITDA are not
defined under United States generally accepted accounting principles, or
United States GAAP, and are not measures of operating income, operating
performance or liquidity presented in accordance with United States GAAP.
Our Non-GAAP net income (loss), EBITDA and Adjusted EBITDA have limitations
as analytical tools, and when assessing our operating performance, Non-GAAP
net income (loss), 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 United States 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;
- they do not reflect the interest expense, or the cash requirements
necessary to service interest or principal payments, on our debt that we
may incur;
- 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 net income (loss) and Adjusted EBITDA only as
supplemental support for management's analysis of business performance.
Non-GAAP 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.
LIMELIGHT NETWORKS, INC.
Reconciliation of GAAP Net Income (Loss) to Non-GAAP Net Income (Loss)
(In thousands)
(Unaudited)
Three Months Ended Nine Months Ended
-------------------------------------- ------------------
September September September September
30, June 30, 30, June 30, 30, 30,
2010 2010 2009 2009 2010 2009
-------- -------- -------- -------- -------- --------
GAAP net (loss)
income $ (5,954) $ (2,265) $ (5,220) $ (5,298) $(14,004) $ 44,617
Provision for
litigation - - - - - (65,645)
Share-based
compensation 4,554 4,160 4,369 4,281 13,058 13,137
Litigation
defense
expenses 9 1,726 273 367 2,127 4,585
Acquisition
related
expenses 345 409 - - 1,358 -
Amortization of
intangible
assets 1,354 915 59 - 2,441 59
-------- -------- -------- -------- -------- --------
Non-GAAP net
income (loss) $ 308 $ 4,945 $ (519) $ (650) $ 4,980 $ (3,247)
======== ======== ======== ======== ======== ========
LIMELIGHT NETWORKS, INC.
Reconciliation of GAAP Net Income (Loss) to EBITDA to Adjusted EBITDA
(In thousands)
(Unaudited)
Three Months Ended Nine Months Ended
-------------------------------------- ------------------
September September September September
30, June 30, 30, June 30, 30, 30,
2010 2010 2009 2009 2010 2009
-------- -------- -------- -------- -------- --------
GAAP net (loss)
income $ (5,954) $ (2,265) $ (5,220) $ (5,298) $(14,004) $ 44,617
Depreciation
and
amortization 7,912 6,927 6,645 6,665 20,384 20,398
Interest
expense 6 7 11 11 13 33
Interest and
other
income
(expense) (90) (283) (346) (226) (650) (1,181)
Income tax
(benefit)
expense 287 (5,098) 61 171 (4,570) 552
-------- -------- -------- -------- -------- --------
EBITDA 2,161 (712) 1,151 1,323 1,173 64,419
Provision
for
litigation - - - - - (65,645)
Share-based
compensation 4,554 4,160 4,369 4,281 13,058 13,137
Litigation
defense
expenses 9 1,726 273 367 2,127 4,585
Acquisition
related
expenses 345 409 - - 1,358 -
-------- -------- -------- -------- -------- --------
Adjusted EBITDA $ 7,069 $ 5,583 $ 5,793 $ 5,971 $ 17,716 $ 16,496
======== ======== ======== ======== ======== ========
Conference Call
At approximately 8:30 a.m. EDT (5:30 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 solutions that enable
business and technology decision makers to profit from the shift of content
and advertising to the online world, the explosive growth of mobile and
connected devices, and the migration of IT applications and services into
the cloud. Over 1700 customers worldwide use Limelight's massively scalable
software services to engage audiences, enhance brand presence, analyze
viewer preferences, optimize advertising, manage and monetize digital
assets, and ultimately build stronger customer relationships. 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