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Press Release -- February 14th, 2011
Source: Limelight Networks
Tags: Content Delivery, Earnings, Equipment, Exchange, Expansion, Video

Limelight Networks(R) Reports Fourth Quarter and Full Year 2010 Results

TEMPE, Ariz., Feb 14, 2011 (GlobeNewswire via COMTEX) --

Limelight Networks, Inc. (NASDAQ:LLNW, news, filings) today reported fourth quarter and full-year 2010 financial results. Highlights included:

  --  Record Q4 revenue of $55.2 million and full-year 2010 revenue of $183.3
      million
  --  Q4 Core content delivery business revenue growth of 21% year-over-year
  --  Continued expansion of cloud-based and consulting services, which
      comprised 36% of Q4 revenue:
  --  Q4 Mobile revenue growth exceeded 200% year-over-year
  --  Q4 Site and application acceleration services growth exceeded 150% year
      over year
  --  Q4 Enterprise cloud storage growth exceeded 40% year-over-year
  --  Q4 Online video platform growth exceeded 110% year-over-year
  --  Achievement of $0.01 of non-GAAP net income per share in Q4, excluding
      acquisition-related income tax expense

"Limelight Networks' content delivery and cloud-based services have become embedded into the fabric of the Internet, which has, through computers, tablets, smartphones and Internet-connected televisions, become embedded into the fabric of our lives. We believe that our globally distributed, high-performance computing platform, and the solutions that run on it, are unique within the technology industry, positioning us well for continued growth and market share gains in 2011. We are focused on delivering value to our customers and helping them improve the efficacy of their online businesses in a world where content and ad dollars continue to shift online, the mobile web continues its rapid growth, and enterprise IT applications continue to migrate into the cloud," said Jeff Lunsford, chairman and chief executive officer.

Financial Highlights

For the fourth quarter of 2010, the Company reported revenue of $55.2 million, up 64 percent from the fourth quarter 2009 and up 11 percent sequentially from Q3 2010. The Company also reported Adjusted EBITDA of $8.1 million and non-GAAP net earnings, before share-based compensation, litigation expenses, amortization of intangible assets, and acquisition-related expenses, of $1.5 million, excluding acquisition-related income tax expense, or 1 cent per share on a fully diluted basis. GAAP net loss was $6.3 million, or 6 cents per basic share.

For the full year of 2010, the Company reported revenue of $183.3 million, compared to $131.7 million in 2009. The Company also reported Adjusted EBITDA of $25.8 million and non-GAAP net income, before share-based compensation, litigation expenses, amortization of intangible assets, and acquisition-related expenses, of $4.6 million or 5 cents per share on a fully diluted basis. GAAP net loss was $20.4 million, or 22 cents per basic share. A reconciliation of GAAP to non-GAAP net income is included in the tables that are attached to this earnings release.

Capital investments were $8.9 million for the fourth quarter and $34.3 million for the year. The Company ended the year with no bank debt and approximately $69 million in cash and short-term marketable securities.

2011 Outlook

The Company anticipates first quarter revenue to be in the range of $48.0-$49.5 million and full year revenue to increase 15 to 20% over 2010 reported revenue.

Financial Tables

                   LIMELIGHT NETWORKS, INC.
            CONDENSED CONSOLIDATED BALANCE SHEETS
            (In thousands, except per share data)

                                     December     December
                                        31,         31,

                                       2010         2009
                                    -----------  ----------
                                    (Unaudited)
               ASSETS
  Current Assets:
   Cash and cash equivalents           $ 56,741    $ 89,509
   Marketable securities                 12,009      64,870
   Accounts receivable, net of
    reserves of $7,243 and $9,226
    at December 31, 2010 and
    December 31, 2009                    41,940      26,363
   Income taxes receivable                  721         617
   Prepaid expenses and other
    current assets                        9,628       9,654
                                    -----------  ----------
  Total current assets                  121,039     191,013
  Property and equipment, net            54,407      35,524
  Marketable securities, less
   current portion                        1,755          12
  Deferred tax asset, non-current           718          --
  Goodwill                               94,364         619
  Other intangible assets, net           19,406         370

  Other assets                            6,951       8,132
                                    -----------  ----------

  Total assets                        $ 298,640   $ 235,670
                                    ===========  ==========

   LIABILITIES AND STOCKHOLDERS'
                EQUITY
  Current Liabilities:
   Accounts payable                    $ 12,236     $ 5,144
   Deferred revenue, current
    portion                               6,877      12,199
   Capital lease obligation,
    current portion                       1,049          --

   Other current liabilities             21,608      14,140
                                    -----------  ----------
  Total current liabilities              41,770      31,483
  Deferred revenue, less current
   portion                                   --       1,377
  Capital lease obligation, less
   current portion                        1,750          --
  Deferred income tax, less
   current portion                          598          10

  Other long term liabilities                21          --
                                    -----------  ----------
  Total liabilities                      44,139      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;
    100,068 and 85,011 shares
    issued and
   outstanding at December 31,
    2010 and December 31, 2009,
    respectively                            100          85
   Additional paid-in capital           380,338     308,537
   Accumulated other comprehensive
    income                                  329          93

   Accumulated deficit                (126,266)   (105,915)
                                    -----------  ----------

  Total stockholders' equity            254,501     202,800
                                    -----------  ----------
  Total liabilities and
   stockholders' equity               $ 298,640   $ 235,670
                                    ===========  ==========


                                         LIMELIGHT NETWORKS, INC.
                             CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (In thousands, except per share data)
                                               (Unaudited)



                                               Three Months Ended                  Twelve Months Ended
                                 ----------------------------------------------  -----------------------

                                 December     September   December    September   December     December
                                 31,            30,         31,         30,          31,         31,

                                    2010        2010        2009        2009        2010         2009
                                 ----------  ----------  ----------  ----------  -----------  ----------

  Revenues                         $ 55,243    $ 49,803    $ 33,625    $ 32,530    $ 183,327   $ 131,663
   Costs and operating expenses
   Cost of revenues * †       29,966      27,946      22,167      20,907      102,719      85,623
   General and administrative *
    †                         11,621      10,393      10,066       7,032       42,119      36,479
   Sales and marketing *             13,323      12,724       8,672       8,060       46,752      32,587
   Research & development *           5,141       4,491       2,059       2,024       15,755       7,937

   Provision for litigation              --          --          --          --           --    (65,645)
                                 ----------  ----------  ----------  ----------  -----------  ----------
  Total costs and operating
   expenses                          60,051      55,554      42,964      38,023      207,345      96,981

  Operating (loss) income           (4,808)     (5,751)     (9,339)     (5,493)     (24,018)      34,682

  Interest expense                     (64)         (6)         (5)        (11)         (77)        (39)
  Interest income                       147         210         295         330          914       1,345

  Other (expense) income              (105)       (120)       (146)          15        (222)        (14)
                                 ----------  ----------  ----------  ----------  -----------  ----------
  (Loss) income before taxes        (4,830)     (5,667)     (9,195)     (5,159)     (23,403)      35,974

  Income tax expense (benefit)        1,518         287         531          61      (3,052)       1,084
                                 ----------  ----------  ----------  ----------  -----------  ----------

  Net (loss) income               $ (6,348)   $ (5,954)   $ (9,726)   $ (5,220)   $ (20,351)    $ 34,890
                                 ==========  ==========  ==========  ==========  ===========  ==========

  Net (loss) income per share:
   Basic                           $ (0.06)    $ (0.06)    $ (0.11)    $ (0.06)     $ (0.22)      $ 0.41
   Diluted                         $ (0.06)    $ (0.06)    $ (0.11)    $ (0.06)     $ (0.22)      $ 0.40

  Shares used in per share
   calculations:
   Basic                             99,557      98,634      84,770      84,489       94,300      84,202
   Diluted                           99,557      98,634      84,770      84,489       94,300      87,972

  * 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                   Twelve Months Ended
                                    ----------------------------------------------  ------------------------

                                     December    September   December   September    December     December
                                       31,          30,         31,        30,          31,          31,

                                       2010        2010        2009       2009         2010         2009
                                    ----------  -----------  --------  -----------  -----------  -----------
  Supplemental financial data (in
   thousands):
  Share-based compensation:
  Cost of revenues                       $ 614        $ 645     $ 642        $ 638      $ 2,441      $ 2,414
  General and administrative             1,691        1,779     1,801        1,805        6,881        7,556
  Sales and marketing                    1,234        1,311     1,236        1,293        5,023        4,970

  Research and development                 804          819       648          633        3,056        2,523
                                    ----------  -----------  --------  -----------  -----------  -----------

  Total share-based compensation       $ 4,343      $ 4,554   $ 4,327      $ 4,369     $ 17,401     $ 17,463
                                    ==========  ===========  ========  ===========  ===========  ===========

  Depreciation and amortization:
  Network-related depreciation         $ 6,387      $ 5,878   $ 5,352      $ 6,018     $ 22,367     $ 24,051
  Other depreciation and
   amortization                            497          680       619          568        2,460        2,259
  Amortization of intangible
   assets                                1,458        1,354        33           59        3,899           92
                                    ----------  -----------  --------  -----------  -----------  -----------
  Total depreciation and
   amortization                        $ 8,342      $ 7,912   $ 6,004      $ 6,645     $ 28,726     $ 26,402
                                    ==========  ===========  ========  ===========  ===========  ===========

  Net (decrease) increase in cash,
   cash equivalents

  and marketable securities          $ (2,169)   $ (11,166)   $ 1,561   $ (11,497)   $ (83,886)   $ (20,265)
                                    ==========  ===========  ========  ===========  ===========  ===========

  End of period statistics:

  Approximate number of active
   customers                             1,824        1,780     1,370        1,370        1,824        1,370
  Number of employees                      689          660       328          321          689          328


                                                 LIMELIGHT NETWORKS, INC.
                                     CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                     (In thousands)
                                                       (Unaudited)



                                                               Three Months Ended                 Twelve Months Ended
                                                 ----------------------------------------------  ----------------------

                                                  December    September   December    September   December     December
                                                    31,         30,         31,         30,          31,         31,

                                                    2010        2010        2009        2009        2010         2009
                                                 ----------  ----------  ----------  ----------  -----------  ---------


  Cash flows from operating activities:
   Net (loss) income                              $ (6,348)   $ (5,954)   $ (9,726)   $ (5,220)   $ (20,351)   $ 34,890
   Adjustments to reconcile net (loss)
    income to net cash provided by
   (used in) operating activities:
    Depreciation and amortization                     8,342       7,912       6,004       6,645       28,726     26,402
    Share-based compensation                          4,343       4,554       4,327       4,369       17,401     17,463
    Deferred income taxes                             (807)        (71)          --          --        (997)         --
    Income tax expense (benefit) related to
     business acquisition                             1,899          --          --          --      (3,869)         --
    Provision for litigation                             --          --          --          --           --   (65,645)
    Loss (gain) on foreign currency
     transactions                                        22         159          20           7           17        201
    Loss on sale of property and equipment               27          58          --          --          179         --
    Accounts receivable (recovery) charges             (16)         585         774         329        2,326      5,013
    Accretion of marketable securities                   85        (50)          89       (298)          359      (366)
    Changes in operating assets and
     liabilities:
     Accounts receivable                            (2,857)     (5,089)         555     (1,648)      (8,363)      2,348
     Prepaid expenses and other current
      assets                                          (306)         539       (516)     (1,475)          832    (1,863)
     Income taxes receivable                            141        (69)       (424)       (159)          299      (600)
     Other assets                                       611          62         917     (4,152)        1,617    (7,396)
     Accounts payable                                 1,875        (74)         (6)         244          842    (5,204)
     Deferred revenue                               (2,588)     (1,913)     (1,506)       (291)      (6,878)    (3,591)
     Other current liabilities                        2,454         755       4,875         358        2,951    (1,361)

     Other long term liabilities                       (20)          41          --          --           --         --
                                                 ----------  ----------  ----------  ----------  -----------  ---------
   Net cash provided by (used in) operating
    activities                                        6,857       1,445       5,383     (1,291)       15,091        291
                                                 ----------  ----------  ----------  ----------  -----------  ---------

  Cash flows from investing activities:
    Purchases of property and equipment             (8,903)    (11,675)     (3,759)    (10,586)     (34,308)   (20,407)
    Purchase of marketable securities               (1,039)     (8,715)    (25,500)    (32,905)     (28,509)   (71,235)
    Sale of marketable securities                     7,516      12,405      10,900       2,000       81,101     43,300
    Acquisition of businesses, net of cash
     acquired                                            --     (2,622)          --          --     (66,529)         22
                                                 ----------  ----------  ----------  ----------  -----------  ---------
   Net cash (used in) provided by investing
    activities                                      (2,426)    (10,607)    (18,359)    (41,491)     (48,245)   (48,320)
                                                 ----------  ----------  ----------  ----------  -----------  ---------

  Cash flows from financing activities:
    Payment on capital lease obligations              (409)          --          --          --        (409)         --
    Payment of employee tax withholdings
     related to restricted stock                      (948)          --       (286)          --      (1,579)      (753)

    Proceeds from exercise of stock options           1,486         335          34          72        1,948        274
                                                 ----------  ----------  ----------  ----------  -----------  ---------
   Net cash provided by (used in) financing
    activities                                          129         335       (252)          72         (40)      (479)
                                                 ----------  ----------  ----------  ----------  -----------  ---------

   Effect of exchange rate changes on cash             (48)         285         290         (5)          426      (163)
                                                 ----------  ----------  ----------  ----------  -----------  ---------
  Net increase (decrease) in cash and cash
   equivalents                                        4,512     (8,542)    (12,938)    (42,715)     (32,768)   (48,671)
  Cash and cash equivalents, beginning of
   period                                            52,229      60,771     102,447     145,162       89,509    138,180
                                                 ----------  ----------  ----------  ----------  -----------  ---------

  Cash and cash equivalents, end of period         $ 56,741    $ 52,229    $ 89,509   $ 102,447     $ 56,741   $ 89,509
                                                 ==========  ==========  ==========  ==========  ===========  =========


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                  Twelve Months Ended
                                    ----------------------------------------------  -----------------------

                                     December    September   December    September   December     December
                                       31,         30,         31,         30,          31,         31,

                                       2010        2010        2009        2009        2010         2009
                                    ----------  ----------  ----------  ----------  -----------  ----------

  GAAP net (loss) income             $ (6,348)   $ (5,954)   $ (9,726)   $ (5,220)   $ (20,351)    $ 34,890

  Provision for litigation                  --          --          --          --           --    (65,645)
  Share-based compensation               4,343       4,554       4,327       4,369       17,401      17,463
  Litigation defense expenses               22           9         827         273        2,149       5,412
  Acquisition related expenses             169         345       1,481          --        1,527       1,481
  Amortization of intangible
   assets                                1,458       1,354          33          59        3,899          92
                                    ----------  ----------  ----------  ----------  -----------  ----------


  Non-GAAP net (loss) income           $ (356)       $ 308   $ (3,058)     $ (519)      $ 4,625   $ (6,307)
                                    ==========  ==========  ==========  ==========  ===========  ==========


                                         LIMELIGHT NETWORKS, INC.
                  Reconciliation of GAAP Net Income (Loss) to EBITDA to Adjusted EBITDA
                                             (In thousands)
                                               (Unaudited)



                                               Three Months Ended                 Twelve Months Ended
                                 ----------------------------------------------  ----------------------

                                  December    September   December    September   December     December
                                    31,         30,         31,         30,          31,         31,

                                    2010        2010        2009        2009        2010         2009
                                 ----------  ----------  ----------  ----------  -----------  ---------

  GAAP net (loss) income          $ (6,348)   $ (5,954)   $ (9,726)   $ (5,220)   $ (20,351)   $ 34,890

   Depreciation and
    amortization                      8,342       7,912       6,004       6,645       28,726     26,402
   Interest expense                      64           6           5          11           77         39
   Interest and other income
    (expense)                          (42)        (90)       (149)       (346)        (692)    (1,331)

   Income tax (benefit) expense       1,518         287         531          61      (3,052)      1,084
                                 ----------  ----------  ----------  ----------  -----------  ---------

  EBITDA                              3,534       2,161     (3,335)       1,151        4,708     61,084

   Provision for litigation              --          --          --          --           --   (65,645)
   Share-based compensation           4,343       4,554       4,327       4,369       17,401     17,463
   Litigation defense expenses           22           9         827         273        2,149      5,412

   Acquisition related expenses         169         345       1,481          --        1,527      1,481
                                 ----------  ----------  ----------  ----------  -----------  ---------


  Adjusted EBITDA                   $ 8,068     $ 7,069     $ 3,300     $ 5,793     $ 25,785   $ 19,795
                                 ==========  ==========  ==========  ==========  ===========  =========


Conference Call

At approximately 4:05 p.m. EST (1:05 p.m. PST), management will host a quarterly conference call for investors. Investors can access this call toll-free at 1-877-388-8480 within the United States or +1 678-809-1592 outside of the U.S. 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 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 1800 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 (C) 2011 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.

This news release was distributed by GlobeNewswire, www.globenewswire.com

SOURCE: Limelight Networks

CONTACT: Paul Alfieri of Limelight Networks, Inc.
+1-646-875-8835, palfieri@llnw.com

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