TEMPE, AZ, May 06, 2010 (MARKETWIRE via COMTEX) –Limelight Networks, Inc. (NASDAQ:LLNW, news, filings) today reported first quarter 2010 financial results. Highlights included:
-- Revenue of $36 million and gross margins of 42%
-- Spring 2010 Release of Limelight SITE, offering expanded solutions
for enterprise web site and dynamic content acceleration
-- Continued growth of Mobility and Monetization solutions
-- Completed the acquisition of EyeWonder, Inc., a leading rich media
ad serving vendor, after the close of the quarter
“We are pleased with Limelight Networks’ first quarter results and our prospects for the second quarter and full year 2010. The investments we have made in higher value cloud services such as mobility, monetization, and web site acceleration are paying off with deeper customer relationships, revenue growth, and gross margin and EBITDA expansion. Now together with EyeWonder, Limelight Networks is well-positioned to grow as content consumption, marketing dollars and e-commerce activity continue to shift online and onto mobile devices, and as more enterprises look to outsource computing and storage resources to innovative service providers,” said Jeff Lunsford, chairman and chief executive officer.
Financial Highlights
For the first quarter of 2010, the company reported revenue of $36 million, up 9 percent from first quarter 2009 and up 7 percent sequentially. The company also reported EBITDA, adjusted for share-based compensation, litigation expenses, and acquisition-related expenses, of $5.1 million and a non-GAAP net loss, before share-based compensation, litigation expenses, and acquisition-related expenses, of 1 cent per basic share. GAAP net loss was $5.8 million, or 7 cents per basic share.
Capital investments were $4.3 million. The Company ended the quarter with no bank debt and approximately $149 million in cash and short-term marketable securities. A reconciliation of GAAP to non-GAAP net income is included in the below tables.
Second Quarter 2010 Outlook
Limelight Networks anticipates second quarter revenue to be in the range of $41 million to $43 million, including two months of contribution from EyeWonder.
Financial Tables
LIMELIGHT NETWORKS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except per share data)
March 31, December 31,
2010 2009
-------------- --------------
(Unaudited)
ASSETS
Current Assets:
Cash and cash equivalents $ 95,295 $ 89,509
Marketable securities 53,557 64,870
Accounts receivable, net of reserves of
$9,667 and $9,226 at March 31, 2010 and
December 31, 2009, respectively 25,828 26,363
Income taxes receivable 623 617
Prepaid expenses and other current assets 8,919 9,654
-------------- --------------
Total current assets 184,222 191,013
Property and equipment, net 35,776 35,524
Marketable securities 8 12
Goodwill 1,895 619
Other intangible assets, net 4,291 370
Other assets 8,299 8,132
-------------- --------------
Total assets $ 234,491 $ 235,670
============== ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 6,860 $ 5,144
Deferred revenue, current portion 10,650 12,199
Other current liabilities 15,495 14,140
-------------- --------------
Total current liabilities 33,005 31,483
Deferred revenue, less current portion - 1,377
Deferred income tax, less current portion 14 10
-------------- --------------
Total liabilities 33,019 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; 85,228 and 85,011
shares issued and
outstanding at March 31, 2010 and
December 31, 2009, respectively 85 85
Additional paid-in capital 313,217 308,537
Accumulated other comprehensive (loss)
income (131) 93
Accumulated deficit (111,699) (105,915)
-------------- --------------
Total stockholders' equity 201,472 202,800
-------------- --------------
Total liabilities and stockholders' equity $ 234,491 $ 235,670
============== ==============
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,
2010 2009 2009 2008
------------ ------------ ------------ ------------
Revenue $ 36,087 $ 33,625 $ 33,175 $ 35,898
Costs and operating
expenses
Cost of revenue * + 20,983 22,167 21,471 21,881
General and
administrative * + 8,893 10,066 12,444 15,550
Sales and
marketing * 9,387 8,672 8,139 9,231
Research &
development * 2,645 2,059 1,910 2,072
Provision for
litigation - - (65,645) 1,295
------------ ------------ ------------ ------------
Total costs and
operating expenses 41,908 42,964 (21,681) 50,029
Operating (loss)
income (5,821) (9,339) 54,856 (14,131)
Interest expense (1) (5) (11) (11)
Interest income 302 295 383 669
Other income
(expense) (25) (146) 227 (375)
------------ ------------ ------------ ------------
(Loss) income
before income
taxes (5,545) (9,195) 55,455 (13,848)
Income tax expense 240 531 320 94
------------ ------------ ------------ ------------
Net (loss) income $ (5,785) $ (9,726) $ 55,135 $ (13,942)
============ ============ ============ ============
Net (loss) income
per share:
Basic $ (0.07) $ (0.11) $ 0.66 $ (0.17)
Diluted $ (0.07) $ (0.11) $ 0.64 $ (0.17)
Shares used in per
share
calculations:
Basic 85,119 84,770 83,515 83,192
Diluted 85,119 84,770 85,968 83,192
* 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 31, December 31, March 31, December 31,
2010 2009 2009 2008
------------ ------------- ------------ ------------
Supplemental
financial data:
Share-based
compensation:
Cost of revenues $ 598 $ 642 $ 551 $ 585
General and
administrative 1,835 1,801 2,131 3,028
Sales and marketing 1,206 1,236 1,189 1,262
Research and
development 704 648 616 633
------------ ------------- ------------ ------------
Total share-based
compensation $ 4,343 $ 4,327 $ 4,487 $ 5,508
============ ============= ============ ============
Depreciation and
amortization:
Network-related
depreciation $ 4,778 $ 5,352 $ 6,548 $ 6,862
Other depreciation
and amortization 766 652 540 455
------------ ------------- ------------ ------------
Total depreciation
and amortization $ 5,544 $ 6,004 $ 7,088 $ 7,317
============ ============= ============ ============
Capital
expenditures:
Capital
expenditures (cash
and accrual) $ 5,540 $ 1,905 $ 4,572 $ 5,151
============ ============= ============ ============
Net (decrease)
increase in cash,
cash equivalents
and marketable
securities $ (5,531) $ 1,561 $ (12,660) $ (2,015)
============ ============= ============ ============
End of period
statistics:
Approximate number
of active
customers 1,370 1,370 1,365 1,336
Number of employees 342 328 296 294
LIMELIGHT NETWORKS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Three Months Ended
----------------------------------------------
March 31, December March 31, December
2010 31, 2009 2009 31, 2008
---------- ---------- ---------- ----------
Cash flows from operating
activities:
Net (loss) income $ (5,785) $ (9,726) $ 55,135 $ (13,942)
Adjustments to reconcile
net loss to net cash
provided by (used in)
operating activities:
Depreciation and
amortization 5,544 6,004 7,088 7,317
Share-based
compensation 4,343 4,327 4,487 5,508
Deferred income tax
(benefit) expense - - - (9)
Excess tax shortfalls
related to stock
option exercises - - - 177
Provision for
litigation - - (65,645) 1,295
Loss (gain) on
foreign exchange 49 20 (31) (149)
Loss on sale of
property and
equipment 89 - - -
Accounts receivable
charges 1,169 774 3,288 3,961
Accretion of debt
discount - - - -
Accretion of
marketable
securities 24 89 - (6)
Changes in operating
assets and
liabilities:
Accounts receivable (305) 555 (3,840) (6,169)
Prepaid expenses
and other current
assets 685 (514) (593) 1,695
Income taxes
receivable (53) (424) (157) 1,480
Other assets (167) 917 (4,311) 32
Accounts payable 264 (6) (1,223) (531)
Deferred revenue (3,105) (1,506) (822) 416
Other current
liabilities (2,081) 4,587 (5,144) 718
Other long term
liabilities - - - (770)
---------- ---------- ---------- ----------
Net cash provided by
(used in) operating
activities 671 5,097 (11,768) 1,023
---------- ---------- ---------- ----------
Cash flows from investing
activities:
Purchases of property
and equipment (4,250) (3,759) (754) (3,537)
Purchase of
marketable
securities (16,755) (25,500) - -
Sale of marketable
securities 28,000 10,900 21,300 17,125
Purchased business,
chors, net of cash
acquired (2,004) - - -
---------- ---------- ---------- ----------
Net cash provided by
(used in) investing
activities 4,991 (18,359) 20,546 13,588
---------- ---------- ---------- ----------
Cash flows from financing
activities:
Tax benefits from
share-based
compensation - - - (177)
Proceeds from
exercise of stock
options and warrants 27 34 76 34
Proceeds from initial
public offering, net
of issuance costs - - - -
---------- ---------- ---------- ----------
Net cash provided by
(used in) financing
activities 27 34 76 (143)
---------- ---------- ---------- ----------
Effect of exchange rate
changes on cash 97 290 (243) 566
---------- ---------- ---------- ----------
Net increase (decrease) in
cash and cash equivalents 5,786 (12,938) 8,611 15,034
Cash and cash equivalents,
beginning of period 89,509 102,447 138,180 123,146
---------- ---------- ---------- ----------
Cash and cash equivalents,
end of period $ 95,295 $ 89,509 $ 146,791 $ 138,180
========== ========== ========== ==========
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 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
and damage 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
------------------------------------------------------
March 31, December 31, March 31, December 31,
2010 2009 2009 2008
------------ ------------ ------------ ------------
GAAP net (loss)
income $ (5,785) $ (9,726) $ 55,135 $ (13,942)
Provision for
litigation - - (65,645) 1,295
Share-based
compensation 4,343 4,327 4,487 5,508
Litigation defense
expenses 392 827 3,945 4,576
Acquisition related
expenses 604 1,481 - -
------------ ------------ ------------ ------------
Non-GAAP net loss $ (446) $ (3,091) $ (2,078) $ (2,563)
============ ============ ============ ============
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
------------------------------------------------------
March 31, December 31, March 31, December 31,
2010 2009 2009 2008
------------ ------------ ------------ ------------
GAAP net (loss)
income $ (5,785) $ (9,726) $ 55,135 $ (13,942)
Add:
depreciation
and
amortization 5,544 6,004 7,088 7,317
Add: interest
expense 1 5 11 11
Less: interest and
other income (277) (149) (610) (294)
Add: income tax
(benefit)
expense 240 531 320 94
------------ ------------ ------------ ------------
EBITDA (277) (3,335) 61,944 (6,814)
Add: provision
for litigation - - (65,645) 1,295
Add: share-based
compensation 4,343 4,327 4,487 5,508
Add: litigation
defense
expenses 392 827 3,945 4,576
Add: acquisition
related
expenses 604 1,481 - -
------------ ------------ ------------ ------------
EBITDA adjusted for
share-based
compensation,
litigation
expenses,
provision for
litigation and
acquisition
expenses $ 5,062 $ 3,300 $ 4,731 $ 4,565
============ ============ ============ ============
Conference Call
At approximately 4:30 p.m. EDT (1:30 p.m. PDT) today, management will host a quarterly conference call. Investors can access this call toll-free at 1-866-700-6293 within the United States or 1-617-213-8835 outside of the U.S., using participant passcode 62014300. 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 on any mobile or Internet-connected device, enabling them to enhance their brand presence, build stronger customer relationships, optimize their advertising, and monetize their digital assets. For more information, please visit http://www.limelightnetworks.com or follow us on Twitter at http://www.twitter.com/llnw/.
Copyright 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
Media Contact:
Paul Alfieri of Limelight Networks, Inc.
+1-917-297-4241
palfieri@llnw.com
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