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Press Release -- February 9th, 2016
Source: Limelight Networks
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Press Releases Events & Presentations Company Overview About us Management Board of Directors Stock Information Corporate Governance Corporate Governance Documents Contact the Board Audit Committee Charter Committee Composition Corporate Governance Hotline Investor FAQs SEC Filings Contact Information Search Advanced search Limelight Networks(R) Reports Financial Results for the Fourth Quarter and Full Year of 2015

  • Q4 Revenue of $42.7 million
  • GAAP EPS of $(0.04), Non-GAAP EPS break-even
  • $73.0 million of cash, cash equivalents and marketable securities, up $3.0 million from Q3 2015
  • 2016 revenue expected to be between $180 and $195 million
Tuesday, February 9, 2016 2:01 pm MST

Dateline:

TEMPE, Ariz.
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Public Company Information:

NASDAQ:
LLNW

TEMPE, Ariz.–(BUSINESS WIRE)–Limelight Networks, Inc. (NASDAQ:LLNW, news, filings) (Limelight), a global leader in digital content delivery, today reported revenue of $42.7 million for the fourth quarter of 2015, up 5 percent, compared to $40.7 million in the fourth quarter of 2014, and up six percent when adjusting for the impact of foreign currency fluctuations.

GAAP gross margins were 41.0% in the fourth quarter of 2015, an increase of 140 basis points from 39.6% in the fourth quarter of 2014, and up 320 basis points from 37.8% in the third quarter of 2015.

On a GAAP basis, Limelight reported a loss from continuing operations of $4.1 million, or $0.04 per basic share, for the fourth quarter of 2015, compared to a loss from continuing operations of $5.0 million, or $0.05 per basic share in the fourth quarter of 2014. Non-GAAP net loss was $0.4 million, or break-even per basic share for the fourth quarter of 2015, compared to a non-GAAP net loss of $2.1 million, or $0.02 per basic share in the fourth quarter of 2014.

EBITDA from continuing operations was $2.1 million for the fourth quarter of 2015, compared to negative $1.2 million for the fourth quarter of 2014. Adjusted EBITDA was $5.3 million for the fourth quarter of 2015 compared to $1.5 million for the fourth quarter of 2014.

For the full year ended December 31, 2015, Limelight reported revenue of $170.9 million compared to $162.3 million for the year ended December 31, 2014. Revenue in 2014 included $11.3 million of revenue from Netflix. Currency fluctuations negatively impacted full year 2015 results by $3.3 million.

GAAP gross margins were 39.9% for the year ended December 31, 2015, compared to 39.1% for the year ended December 31, 2014.

On a GAAP basis, Limelight reported a loss from continuing operations of $24.0 million, or $0.24 per basic share, for the year ended December 31, 2015, compared to a loss from continuing operations of $24.9 million, or $0.25 per basic share, in 2014.

Non-GAAP net loss was $11.2 million, or $0.11 per basic share, for the year ended December 31, 2015, compared to a non-GAAP net loss of $12.3 million, or $0.13 per basic share, in the same period of 2014.

EBITDA from continuing operations was negative $4.8 million for the year ended December 31, 2015, compared to negative $6.5 million for the year ended December 31, 2014. Adjusted EBITDA was $6.9 million for the year ended December 31, 2015, compared to $4.8 million for the year ended December 31, 2014.

Limelight ended the fourth quarter with 509 employees and employee equivalents, down from 556 at the end of the third quarter of 2015, and down from 520 at the end of 2014.

Commenting on the fourth quarter and full year results, Chief Executive Officer, Robert Lento said, “In 2015 we achieved strong operational and financial improvements. Customer Net Promoter Score, customer attrition, network performance, and voluntary employee turnover all saw material improvements. We grew at the top end of the industry ranges, improved our gross margin, and exited the year with a strong quarter. We expect to build on this performance throughout 2016. Our position in the industry remains strong and is improving.”

“We believe that years of an intensive, anti-competitive legal battle, has adversely affected our equity value, but we also believe it is our responsibility to defend the interests of our company, our talented employees, and our valued customers against predatory tactics. We will continue to vigorously pursue avenues to eliminate or reduce the potential damages in our longstanding patent fight, while remaining focused on driving business performance that will lead to better alignment between our share price and our view of the company’s equity value.”

Based on current conditions, Limelight is providing revenue guidance of between $180 million and $195 million for 2016. GAAP gross margin is expected to improve by 200 basis points over 2015 results. Non-GAAP net loss is expected to be between $(0.05) and $0.05 per share for 2016. Capital expenditures are expected to be approximately $20 million dollars.

Financial Tables

LIMELIGHT NETWORKS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except per share data)
December 31, December 31,
2015 2014
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 44,680 $ 57,767
Marketable securities 28,322 35,317
Accounts receivable, net 26,795 22,622
Income taxes receivable 170 237
Deferred income taxes 89 78
Prepaid expenses and other current assets 9,578 9,625
Total current assets 109,634 125,646
Property and equipment, net 36,143 32,636
Marketable securities, less current portion 40 40
Deferred income taxes, less current portion 1,252 1,364
Goodwill 76,143 76,133
Other intangible assets, net 15 1,071
Other assets 2,400 4,451
Total assets $ 225,627 $ 241,341
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable $ 9,137 $ 7,065
Deferred revenue 2,890 3,509
Capital lease obligations 466 223
Income taxes payable 204 248
Other current liabilities 10,857 14,383
Total current liabilities 23,554 25,428
Capital lease obligations, less current portion 1,436 135
Deferred income taxes 137 170
Deferred revenue, less current portion 92 405
Other long-term liabilities 2,311 3,040
Total liabilities 27,530 29,178
Commitments and contingencies
Stockholders’ equity:
Convertible preferred stock, $0.001 par value; 7,500 shares authorized; no shares issued and outstanding – –
Common stock, $0.001 par value; 300,000 shares authorized; 102,299 and 98,409 shares issued and
outstanding at December 31, 2015 and December 31, 2014, respectively 102 98
Additional paid-in capital 477,202 464,294
Accumulated other comprehensive loss (10,812 ) (7,786 )
Accumulated deficit (268,395 ) (244,443 )
Total stockholders’ equity 198,097 212,163
Total liabilities and stockholders’ equity $ 225,627 $ 241,341
LIMELIGHT NETWORKS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
Three Months Ended Twelve Months Ended
December 31, September 30, Percent December 31, Percent December 31, December 31, Percent
2015 2015 Change 2014 Change 2015 2014 Change
Revenues $ 42,739 $ 42,049 2 % $ 40,727 5 % $ 170,912 $ 162,259 5 %
Cost of revenue:
Cost of services (1) 20,388 21,502 -5 % 20,613 -1 % 84,818 82,176 3 %
Depreciation – network 4,811 4,636 4 % 3,985 21 % 17,975 16,673 8 %
Total cost of revenue 25,199 26,138 -4 % 24,598 2 % 102,793 98,849 4 %
Gross profit 17,540 15,911 10 % 16,129 9 % 68,119 63,410 7 %
Gross profit percentage 41.0 % 37.8 % 39.6 % 39.9 % 39.1 %
Operating expenses:
General and administrative (1) 5,509 6,586 -16 % 6,210 -11 % 25,027 28,176 -11 %
Sales and marketing (1) 8,101 9,489 -15 % 9,103 -11 % 37,868 37,458 1 %
Research & development (1) 6,678 7,429 -10 % 6,014 11 % 28,016 20,965 34 %
Depreciation and amortization 1,005 648 55 % 661 52 % 2,929 3,529 -17 %
Total operating expenses 21,293 24,152 -12 % 21,988 -3 % 93,840 90,128 4 %
Operating loss (3,753 ) (8,241 ) -54 % (5,859 ) -36 % (25,721 ) (26,718 ) -4 %
Other income (expense):
Interest expense (25 ) – 100 % (6 ) 317 % (29 ) (32 ) -9 %
Interest income 86 82 5 % 73 18 % 317 276 15 %
Other, net (407 ) 473 -186 % 807 -150 % 1,748 1,821 -4 %
Total other income (expense) (346 ) 555 -162 % 874 -140 % 2,036 2,065 -1 %
Loss from continuing operations before income taxes (4,099 ) (7,686 ) -47 % (4,985 ) -18 % (23,685 ) (24,653 ) -4 %
Income tax expense 46 76 -39 % 22 109 % 267 203 32 %
Loss from continuing operations (4,145 ) (7,762 ) -47 % (5,007 ) -17 % (23,952 ) (24,856 ) -4 %
Discontinued operations:
Income from discontinued operations, net of income taxes – – NA – NA – 265 NA
Net loss $ (4,145 ) $ (7,762 ) -47 % $ (5,007 ) -17 % $ (23,952 ) $ (24,591 ) -3 %
Net loss per share:
Basic and diluted
Continuing operations $ (0.04 ) $ (0.08 ) $ (0.05 ) $ (0.24 ) $ (0.25 )
Discontinued operations – – – – 0.00
Total $ (0.04 ) $ (0.08 ) $ (0.05 ) $ (0.24 ) $ (0.25 )
Weighted average shares used in per share calculation:
Basic and diluted 101,391 100,552 98,637 100,105 98,365
(1) Includes share-based compensation (see supplemental table for figures)
LIMELIGHT NETWORKS, INC.
SUPPLEMENTAL FINANCIAL DATA
(In thousands)
(Unaudited)
Three Months Ended Twelve Months Ended
December 31, September 30, December 31, December 31, December 31,
2015 2015 2014 2015 2014
Share-based compensation:
Cost of services $ 563 $ 400 $ 490 $ 2,047 $ 1,956
General and administrative 1,002 1,513 1,202 5,398 4,741
Sales and marketing 716 643 624 2,657 2,317
Research and development 582 568 375 2,236 1,477
Total share-based compensation $ 2,863 $ 3,124 $ 2,691 $ 12,338 $ 10,491
Depreciation and amortization:
Network-related depreciation $ 4,811 $ 4,636 $ 3,985 $ 17,975 $ 16,673
Other depreciation and amortization 544 445 457 1,866 2,391
Amortization of intangible assets 461 203 204 1,063 1,138
Total depreciation and amortization $ 5,816 $ 5,284 $ 4,646 $ 20,904 $ 20,202
Net increase (decrease) in cash, cash equivalents and marketable securities: $ 3,427 $ (5,342 ) $ (8,172 ) $ (20,082 ) $ (25,384 )
End of period statistics:
Approximate number of active customers 963 981 1,095 963 1,095

Number of employees and employee equivalents

509

 556 520

509

 520
LIMELIGHT NETWORKS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Three Months Ended Twelve Months Ended
December 31, September 30, December 31, December 31, December 31,
2015 2015 2014 2015 2014
Operating activities
Net loss $ (4,145 ) $ (7,762 ) $ (5,007 ) $ (23,952 ) $ (24,591 )
Income from discontinued operations – – – – 265
Net loss from continuing operations (4,145 ) (7,762 ) (5,007 ) (23,952 ) (24,856 )
Adjustments to reconcile net loss to net cash provided by (used in) operating activities of continuing operations:
Depreciation and amortization 5,816 5,284 4,646 20,904 20,202
Share-based compensation 2,863 3,124 2,691 12,338 10,491
Foreign currency remeasurement loss (gain) 492 (488 ) (1,100 ) (1,591 ) (2,167 )
Deferred income taxes 67 94 (174 ) 46 (359 )
Accounts receivable charges 299 268 (75 ) 1,037 408
Amortization of premium on marketable securities 42 46 85 194 459
Non cash tax benefit associated with income from discontinued operations – – – – (59 )
Changes in operating assets and liabilities:
Accounts receivable 57 4,025 (104 ) (5,210 ) (1,600 )
Prepaid expenses and other current assets (490 ) 498 (747 ) (194 ) (1,792 )
Income taxes receivable 9 24 95 44 150
Other assets 1,477 578 616 3,064 1,607
Accounts payable and other current liabilities (425 ) (1,156 ) (977 ) 85 122
Deferred revenue (681 ) (568 ) (216 ) (932 ) (1,109 )
Income taxes payable (2 ) (78 ) (19 ) (80 ) (233 )
Other long term liabilities 1,358 (225 ) (251 ) 688 (796 )
Net cash provided by (used in) operating activities of continuing operations 6,737 3,664 (537 ) 6,441 468
Investing activities
Purchases of marketable securities – (4,899 ) (7,813 ) (16,821 ) (25,482 )
Maturities of marketable securities 5,700 5,160 6,600 22,620 22,150
Purchases of property and equipment (3,960 ) (8,693 ) (4,597 ) (24,714 ) (18,581 )
Proceeds from sale of discontinued operations – – – – 414
Net cash provided by (used in) investing activities of continuing operations 1,740 (8,432 ) (5,810 ) (18,915 ) (21,499 )
Financing activities
Payments on capital lease obligations (95 ) – (54 ) (453 ) (466 )
Payment of employee tax withholdings related to restricted stock vesting (348 ) (335 ) (340 ) (2,627 ) (1,795 )
Cash paid for purchase of common stock – – (2,042 ) (957 ) (4,542 )
Proceeds from line of credit – – – – –
Proceeds from employee stock plans 1,287 212 414 4,018 1,381
Net cash provided by (used in) financing activities of continuing operations 844 (123 ) (2,022 ) (19 ) (5,422 )
Effect of exchange rate changes on cash and cash equivalents (93 ) (159 ) (892 ) (594 ) (1,732 )
Discontinued operations
Cash used in operating activities of discontinued operations – – – – (4 )
Net increase (decrease) in cash and cash equivalents 9,228 (5,050 ) (9,261 ) (13,087 ) (28,189 )
Cash and cash equivalents, beginning of period 35,452 40,502 67,028 57,767 85,956
Cash and cash equivalents, end of period $ 44,680 $ 35,452 $ 57,767 $ 44,680 $ 57,767

Use of Non-GAAP Financial Measures

To evaluate our business, we consider and use non-generally accepted accounting principles (Non-GAAP) net loss, EBITDA from continuing operations and Adjusted EBITDA as supplemental measures 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 loss to be an important indicator of overall business performance. We define Non-GAAP net loss to be U.S. GAAP net loss, adjusted to exclude share-based compensation, litigation expenses, amortization of intangible assets, the gain (loss) on sale of our web content management (WCM) business and discontinued operations. We believe that EBITDA from continuing operations provides a useful metric to investors to compare us with other companies within our industry and across industries. We define EBITDA from continuing operations as U.S. GAAP net loss adjusted to exclude interest and other (income) expense, interest expense, income tax expense, depreciation and amortization, discontinued operations and gain (loss) on sale of WCM. We define Adjusted EBITDA as EBITDA from continuing operations adjusted to exclude share-based compensation and litigation expenses. 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, as well as across companies.

The terms Non-GAAP net loss, EBITDA from continuing operations and Adjusted EBITDA are not defined under 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 loss, EBITDA from continuing operations and Adjusted EBITDA have limitations as analytical tools, and when assessing our operating performance, Non-GAAP net loss, EBITDA from continuing operations and Adjusted EBITDA should not be considered in isolation, or as a substitute for net 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 from continuing operations and Adjusted EBITDA do not reflect our cash expenditures or future requirements for capital expenditures or contractual commitments;
  • these measures do not reflect changes in, or cash requirements for, our working capital needs;
  • these measures do not reflect the cash requirements necessary for litigation costs;
  • these measures do not reflect the interest expense, or the cash requirements necessary to service interest or principal payments, on our debt that we may incur;
  • these measures 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 from continuing operations 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 from continuing operations and Adjusted EBITDA differently than we do, limiting their usefulness as comparative measures.

We compensate for these limitations by relying primarily on our U.S. GAAP results and using Non-GAAP net income (loss), EBITDA from continuing operations, and Adjusted EBITDA only as supplemental support for management’s analysis of business performance. Non-GAAP net income (loss), EBITDA from continuing operations and Adjusted EBITDA are calculated as follows for the periods presented in thousands:

Reconciliation of Non-GAAP Financial Measures

Limelight is presenting the most directly comparable U.S. GAAP financial measures and reconciling the non-GAAP financial metrics to the comparable U.S. GAAP measures. Per share amounts may not foot due to rounding.

LIMELIGHT NETWORKS, INC.
Reconciliation of U.S. GAAP Net Loss to Non-GAAP Net Loss
(In thousands)
(Unaudited)
Three Months Ended Twelve Months Ended
December 31, 2015 September 30, 2015 December 31, 2014 December 31, 2015 December 31, 2014
Amount Per Share Amount Per Share Amount Per Share Amount Per Share Amount Per Share
U.S. GAAP net loss $ (4,145 ) $ (0.04 ) $ (7,762 ) $ (0.08 ) $ (5,007 ) $ (0.05 ) $ (23,952 ) $ (0.24 ) $ (24,591 ) $ (0.25 )
Share-based compensation 2,863 0.03 3,124 0.03 2,691 0.03 12,338 0.12 10,491 0.11
Litigation expenses 402 0.00 140 0.00 (3 ) (0.00 ) (613 ) (0.01 ) 817 0.01
Amortization of intangible assets 461 0.00 203 0.00 204 0.00 1,063 0.01 1,138 0.01
Loss on sale of the Web Content Management business – – – – – – – – 62 0.00
(Loss) income from discontinued operations – – – – – – – – (265 ) (0.00 )
Non-GAAP net loss $ (419 ) $ (0.00 ) $ (4,295 ) $ (0.04 ) $ (2,115 ) $ (0.02 ) $ (11,164 ) $ (0.11 ) $ (12,348 ) $ (0.13 )
Weighted average shares used in per share calculation 101,391 100,552 98,637 100,105 98,365
LIMELIGHT NETWORKS, INC.
Reconciliation of U.S. GAAP Net Loss to EBITDA to Adjusted EBITDA
(In thousands)
(Unaudited)
Three Months Ended Twelve Months Ended
December 31, September 30, December 31, December 31, December 31,
2015 2015 2014 2015 2014
U.S. GAAP net loss $ (4,145 ) $ (7,762 ) $ (5,007 ) $ (23,952 ) $ (24,591 )
Depreciation and amortization 5,816 5,284 4,646 20,904 20,202
Interest expense 25 – 6 29 32
Loss on sale of the Web Content Management business – – – – 62
Interest and other expense (income) 321 (555 ) (880 ) (2,065 ) (2,159 )
Income tax expense 46 76 22 267 203
(Loss) income from discontinued operations – – – – (265 )
EBITDA from continuing operations $ 2,063 $ (2,957 ) $ (1,213 ) $ (4,817 ) $ (6,516 )
Share-based compensation 2,863 3,124 2,691 12,338 10,491
Litigation expenses 402 140 (3 ) (613 ) 817
Adjusted EBITDA $ 5,328 $ 307 $ 1,475 $ 6,908 $ 4,792

Conference Call

At approximately 4:30 p.m. EST (1:30 p.m. PST) today, management will host a quarterly conference call for investors. Investors can access this call toll-free at 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.limelight.com and a replay will be available following the call from the Limelight website.

Forward-Looking Statements

This press release contains forward-looking statements that involve risks and uncertainties. These statements include, among others, statements regarding our strategic focus; our expectations regarding revenues for the full year 2016; gross margin, non-GAAP net income (loss) and capital expenditures for the full year 2016; the growth of our business; the performance of our services; our expectations regarding the Akamai litigation; our future prospects; and our position in our industry. Our expectations and beliefs regarding these matters may not materialize. The potential risks and uncertainties that could cause actual results or outcomes to differ materially from the results or outcomes predicted include, among other things, reduction of demand for our services from new or existing customers, unforeseen changes in our hiring patterns, adverse outcomes in litigation, and experiencing expenses that exceed our expectations. A detailed discussion of these factors and other risks that affect our business is contained in our SEC filings, including our most recent reports on Forms 10-K and 10-Q, particularly under the heading “Risk Factors.” Copies of these filings are available online on our investor relations website at investors.limelightnetworks.com and on the SEC website atwww.SEC.gov. All information provided in this release and in the attachments is as of February 9, 2016, and we undertake no duty to update this information in light of new information or future events, unless required by law.

About Limelight

Limelight Networks (NASDAQ: LLNW), a global leader in digital content delivery, empowers customers to better engage online audiences by enabling them to securely manage and globally deliver digital content, on any device. The company’s award winning Limelight Orchestrate™ platform includes an integrated suite of content delivery technology and services that helps organizations secure digital content, deliver exceptional multi-screen experiences, improve brand awareness, drive revenue, and enhance customer relationships — all while reducing costs. For more information, please visit www.limelight.com, read our blog, follow us on Twitter, Facebook and LinkedIn and be sure to visit Limelight Connect.”

Copyright (C) 2015 Limelight Networks, Inc. All rights reserved. All product or service names are the property of their respective owners.

Contact:

Limelight Networks, Inc.
Sajid Malhotra, 602-850-5778
ir@llnw.com

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