LLNW Limelight Networks Inc

- Revenue of $33.2 million, a 10% increase from first quarter 2008 TEMPE, Ariz., May 6 /PRNewswire-FirstCall/ -- Limelight Networks, Inc. (NASDAQ:LLNW) today reported first quarter 2009 financial results. "Limelight Networks achieved solid year-over-year revenue growth during the first quarter. We continued to see strong demand for our core content delivery and storage services, and were pleased with the market reception for LimelightSITE and a favorable ruling in our patent litigation with Akamai. We believe that continued Internet adoption presents us with attractive growth opportunities and that our eight years of innovation, our global scale and our network-based architecture are the optimal solution for publishers, enterprises, and governments advancing their online presence," commented Jeff Lunsford, chairman and chief executive officer, Limelight Networks, Inc. Financial Highlights For the first quarter of 2009, the company reported revenue of $33.2 million, up 10% percent from $30.2 million in the same period last year, and EBITDA, adjusted for share-based compensation, litigation and the reversal of a previously recorded damage accrual, of $4.7 million. Non-GAAP net loss, before stock based compensation, litigation costs, and reversal of a previously recorded damage accrual, was $2.1 million or 2 cents per basic share. GAAP net earnings were $55.1 million, or 66 cents per basic share and 64 cents on a fully-diluted basis. These earnings include the reversal of a previously recorded damage accrual of $66 million as a result of the Massachusetts Federal District Court order finding that we do not infringe the Akamai 703 patent. Capital purchases incurred were $4.6 million. The Company ended the quarter with no bank debt and approximately $162 million in cash and short-term marketable securities. A reconciliation of GAAP to non-GAAP net income is included in the attached tables. Second-Quarter Outlook Limelight Networks anticipates second quarter revenue to be in the range of $32.2 million to $33.2 million. Financial Tables LIMELIGHT NETWORKS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands, except per share data) March 31, December 31, 2009 2008 ---- ---- (Unaudited) ASSETS Current Assets: Cash and cash equivalents $146,791 $138,180 Marketable securities 15,197 36,463 Accounts receivable, net of reserves of $8,585 and $7,565 at March 31, 2009 and December 31, 2008, respectively 34,238 33,482 Income taxes receivable 164 7 Prepaid expenses and other current assets 8,427 7,834 ----- ----- Total current assets 204,817 215,966 Property and equipment, net 37,721 40,185 Marketable securities, less current portion 8 13 Other assets 4,939 628 ----- --- Total assets $247,485 $256,792 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Accounts payable $11,770 $8,920 Deferred revenue, current portion 10,328 9,865 Provision for litigation - 65,645 Other current liabilities 9,785 14,928 ----- ------ Total current liabilities 31,883 99,358 Deferred revenue, less current portion 6,018 7,303 ----- ----- Total liabilities 37,901 106,661 Commitments and contingencies - - Stockholders' equity: Convertible preferred stock, $0.001 par value; 7,500 shares authorized; 0 shares issued and outstanding - - Common stock, $0.001 par value; 150,000 shares authorized; 83,792 and 83,405 shares issued and outstanding at March 31, 2009 and December 31, 2008, respectively 84 83 Additional paid-in capital 295,155 290,593 Accumulated other comprehensive income 15 260 Accumulated deficit (85,670) (140,805) ------- -------- Total stockholders' equity 209,584 150,131 ------- ------- Total liabilities and stockholders' equity $247,485 $256,792 ======== ======== LIMELIGHT NETWORKS, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share data) (Unaudited) Three Months Ended ------------------ March December March December 31, 31, 31, 31, 2009 2008 2008 2007 ---- ---- ---- ---- Revenue $33,175 $35,898 $30,202 $29,132 Costs and operating expenses Cost of revenue * + 21,471 21,881 20,672 18,435 General and administrative * + 12,444 15,550 13,329 7,961 Sales and marketing * 8,139 9,231 8,142 8,619 Research & development * 1,910 2,072 1,590 1,385 Provision for litigation (65,645) 1,295 7,134 48,130 ------- ----- ----- ------ Total costs and operating expenses (21,681) 50,029 50,867 84,530 Operating income (loss) 54,856 (14,131) (20,665) (55,398) Interest expense (11) (11) (21) (6) Interest income 383 669 1,891 2,035 Other income (expense) 227 (375) 170 (177) --- ---- --- ---- Income (loss) before taxes 55,455 (13,848) (18,625) (53,546) Income tax expense (benefit) 320 94 (183) 1,799 --- --- ---- ----- Net income (loss) $55,135 $(13,942) $(18,442) $(55,345) ======= ======== ======== ======== Net income (loss) per share: Basic $0.66 $(0.17) $(0.22) $(0.67) Diluted $0.64 $(0.17) $(0.22) $(0.67) Shares used in per share calculations: Basic 83,515 83,192 82,623 82,140 Diluted 85,968 83,192 82,623 82,140 * Includes share-based compensation (see supplemental table for figures) + Includes depreciation (see supplemental table for figures) LIMELIGHT NETWORKS, INC. SUPPLEMENTAL FINANCIAL DATA (In thousands) (Unaudited) Three Months Ended ------------------ March December March December 31, 31, 31, 31, 2009 2008 2008 2007 ---- ---- ---- ---- Supplemental financial data (in thousands): Share-based compensation: Cost of revenues $551 $585 $507 $479 General and administrative 2,131 3,028 1,665 1,454 Sales and marketing 1,189 1,262 1,306 1,272 Research and development 616 633 482 420 --- --- --- --- Total share-based compensation $4,487 $5,508 $3,960 $3,625 ====== ====== ====== ====== Depreciation and amortization: Network-related depreciation $6,548 $6,862 $6,013 $5,429 Other depreciation 540 455 247 278 --- --- --- --- Total depreciation and amortization $7,088 $7,317 $6,260 $5,707 ====== ====== ====== ====== Capital expenditures: Capital expenditures (cash and accrual) $4,572 $5,151 $3,095 $5,136 ====== ====== ====== ====== Net (decrease) increase in cash, cash equivalents and marketable securities $(12,660) $(2,015) $(2,475) $3,032 ======== ======= ======= ====== End of period statistics: Approximate number of active customers 1,365 1,336 1,232 1,157 Number of employees 296 294 244 237 LIMELIGHT NETWORKS, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited) Three Months Ended ------------------ March December March December 31, 31, 31, 31, 2009 2008 2008 2007 ---- ---- ---- ---- Cash flows from operating activities: Net income (loss) $55,135 $(13,942) $(18,442) $(55,345) Adjustments to reconcile net loss to net cash (used in) provided by operating activities: Depreciation and amortization 7,088 7,317 6,260 5,707 Share-based compensation 4,487 5,508 3,960 3,625 Deferred income tax (benefit) expense - (9) (234) 33 Excess tax benefit related to stock option exercises - 177 - (1,596) Provision for litigation (65,645) 1,295 7,134 48,130 (Income) loss on foreign currency exchange (31) (149) - 42 Accounts receivable charges 3,288 3,961 1,562 2,268 Accretion of debt discount - - - - Accretion of marketable securities - (6) (453) (530) Loss on marketable securities - - 55 387 Changes in operating assets and liabilities: Accounts receivable (3,840) (6,169) (2,271) (5,243) Prepaid expenses and other current assets (593) 1,695 87 1,037 Income taxes receivable (157) 1,480 594 2,742 Other assets (4,311) 32 564 11 Accounts payable (1,223) (531) (4,634) 3,613 Accounts payable, related parties - - (80) 230 Deferred revenue (822) 416 301 135 Other current liabilities (5,144) 718 5,035 (4,449) Other long term liabilities - (770) 1 740 --- ---- --- --- Net cash (used in) provided by operating activities (11,768) 1,023 (561) 1,537 ------- ----- ---- ----- Cash flows from investing activities: Purchases of property and equipment (754) (3,537) (2,435) (2,081) Purchase of marketable securities - - (34,725) 20,300 Sale of marketable securities 21,300 17,125 44,200 (37,569) Net cash provided by (used in) investing activities 20,546 13,588 7,040 (19,350) ------ ------ ----- ------- Cash flows from financing activities: Escrow funds returned from share repurchase - - - 1,190 Tax benefits from share- based compensation - (177) - - Excess tax benefit related to stock option exercises - - - 1,573 Proceeds from exercise of stock options and warrants 76 34 107 175 Proceeds from initial public offering, net of issuance costs - - - (47) --- --- --- --- Net cash provided by (used in) financing activities 76 (143) 107 2,891 --- ---- --- ----- Effect of exchange rate changes on cash and cash equivalents (243) 566 (156) (4) ---- --- ---- --- Net increase (decrease) in cash and cash equivalents 8,611 15,034 6,430 (14,926) Cash and cash equivalents, beginning of period 138,180 123,146 113,824 128,750 ------- ------- ------- ------- Cash and cash equivalents, end of period $146,791 $138,180 $120,254 $113,824 ======== ======== ======== ======== Use of Non-GAAP Financial Measures To evaluate our business, we consider and use Non-GAAP net income and EBITDA adjusted for share-based compensation and litigation and damage costs as a supplemental measure of operating performance. We consider Non-GAAP net income to be an important indicator of overall business performance because it allows us to illustrate the impact of the effects of share-based compensation, litigation expenses and provision for litigation. We define EBITDA as GAAP net income before interest income, interest expense, other income and expense, provision for income taxes, depreciation and amortization. We define EBITDA adjusted for share-based compensation and litigation and damage costs as EBITDA plus expenses that we do not consider reflective of our ongoing operations. We use EBITDA adjusted for share-based compensation and litigation and damage costs as a supplemental measure to review and assess operating performance. We also believe use of EBITDA adjusted for share-based compensation and litigation and damage costs facilitates investors' use of operating performance comparisons from period to period. The terms Non-GAAP net income, EBITDA and EBITDA adjusted for share-based compensation and litigation and damage costs are not defined under U.S. generally accepted accounting principles, or U.S. GAAP, and are not measures of operating income, operating performance or liquidity presented in accordance with U.S. GAAP. Our Non-GAAP net income, EBITDA and EBITDA adjusted for share-based compensation and litigation and damage costs have limitations as analytical tools, and when assessing our operating performance, Non-GAAP net income, EBITDA and EBITDA adjusted for share-based compensation and litigation and damage costs should not be considered in isolation, or as a substitute for net income (loss) or other consolidated income statement data prepared in accordance with U.S. GAAP. Some of these limitations include, but are not limited to: -- EBITDA and EBITDA adjusted for share-based compensation and litigation and damage costs do not reflect our cash expenditures or future requirements for capital expenditures or contractual commitments; -- they do not reflect changes in, or cash requirements for, our working capital needs; -- they do not reflect the cash requirements necessary for litigation costs; -- they do not reflect the interest expense, or the cash requirements necessary to service interest or principal payments, on our debt; -- they do not reflect income taxes or the cash requirements for any tax payments; -- although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will be replaced sometime in the future, and EBITDA and EBITDA adjusted for share-based compensation and litigation and damage costs do not reflect any cash requirements for such replacements; -- while share-based compensation is a component of operating expense, the impact on our financial statements compared to other companies can vary significantly due to such factors as the assumed life of the options and the assumed volatility of our common stock; and -- other companies may calculate EBITDA and EBITDA adjusted for share-based compensation and litigation and damage costs differently than we do, limiting their usefulness as comparative measures. We compensate for these limitations by relying primarily on our GAAP results and using Non-GAAP Net Income and EBITDA adjusted for share-based compensation and litigation and damage costs only as supplemental support for management's analysis of business performance. Non-GAAP Net Income, EBITDA and EBITDA adjusted for share-based compensation and litigation and damage costs are calculated as follows for the periods presented in thousands: Reconciliation of Non-GAAP Financial Measures In accordance with the requirements of Regulation G issued by the Securities and Exchange Commission, the Company is presenting the most directly comparable GAAP financial measures and reconciling the non-GAAP financial metrics to the comparable GAAP measures LIMELIGHT NETWORKS, INC. Reconciliation of GAAP Net Income (Loss) to Non-GAAP Net Income (Loss) (In thousands) (Unaudited) Three Months Ended ------------------ March December March December 31, 31, 31, 31, 2009 2008 2008 2007 ---- ---- ---- ---- GAAP net income (loss) $55,135 $(13,942) $(18,442) $(55,345) Deferred revenue - - - 729 Deferred cost of traffic and services - - - 21 Provision for litigation (65,645) 1,295 7,134 48,130 Share-based compensation 4,487 5,508 3,960 3,625 Litigation defense expenses 3,945 4,576 5,366 2,772 ----- ----- ----- ----- Non-GAAP net loss $(2,078) $(2,563) $(1,982) $(68) ======= ======= ======= ==== LIMELIGHT NETWORKS, INC. Reconciliation of GAAP Net Income (Loss) to EBITDA to EBITDA Adjusted for Share-Based Compensation and Litigation and Damage Costs (In thousands) (Unaudited) Three Months Ended ------------------ March December March December 31, 31, 31, 31, 2009 2008 2008 2007 ---- ---- ---- ---- GAAP net income (loss) $55,135 $(13,942) $(18,442) $(55,345) Add: depreciation and amortization 7,088 7,317 6,260 5,707 Add: interest expense 11 11 21 6 Less: interest and other income (610) (294) (2,062) (1,858) Plus income tax (benefit) expense 320 94 (183) 1,799 --- --- ---- ----- EBITDA 61,944 (6,814) (14,406) (49,691) Add: provision for litigation (65,645) 1,295 7,134 48,130 Add: share-based compensation 4,487 5,508 3,960 3,625 Add: litigation defense expenses 3,945 4,576 5,366 2,772 ----- ----- ----- ----- EBITDA adjusted for share-based compensation, litigation and damage costs $4,731 $4,565 $2,054 $4,836 ====== ====== ====== ====== Conference Call Management will host a quarterly conference call for investors today beginning at 4:30 p.m. EDT (1:30 p.m. PDT). This call can be accessed toll-free at 1-866-362-4832 within the United States or 1-617.597.5364 outside of the U.S. using Participant Passcode 68176220. The conference call will also be audiocast live from http://www.llnw.com/ and a replay will be available following the call from the Company's website. Safe-Harbor Statement This press release contains forward-looking statements concerning, among other things, the outlook for the Company's revenues, net loss and stock-based compensation expense for the first quarter of 2009, customer growth, market growth, pricing pressures, expansion into additional market segments, product and services improvements and litigation and related expenses. Forward-looking statements are not guarantees and are subject to a number of risks and uncertainties that could cause actual results to differ materially including, but not limited to, risks and uncertainties discussed in the Company's Annual Report on Form 10K and other filings with the Securities and Exchange Commission and the final review of the results and amendments and preparation of quarterly financial statements, including consultation with our outside auditors. Accordingly, readers are cautioned not to place undue reliance on any forward-looking statements. The Company assumes no duty or obligation to update or revise any forward-looking statements for any reason. About Limelight Networks, Inc. Limelight Networks, Inc. (NASDAQ:LLNW) is trusted by the world's most innovative enterprise, entertainment, technology, and software brands to improve the performance and profitability of web sites and end-user experiences. Our scalable, on-demand managed infrastructure solutions provide global reach and consistently high availability, by routing traffic over a private fiber-optic backbone rather than through the often-congested, unpredictable public Internet. For more information, visit our web site (http://www.limelightnetworks.com/), read our blog (http://blog.llnw.com/), or follow @llnw on Twitter. Copyright (C) 2009 Limelight Networks, Inc. All rights reserved. All product or service names are the property of their respective owners DATASOURCE: Limelight Networks, Inc. CONTACT: Paul Alfieri of Limelight Networks, Inc., +1-917-297-4241, Web Site: http://www.limelightnetworks.com/

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