Limelight Networks, Inc. (Nasdaq:LLNW) ("Limelight") today reported
first quarter 2011 financial results. Highlights included:
-- Revenue of $49.8 million
-- Cloud-based services comprised 33% of revenue:
- Mobile internet and tablet computing revenue growth
approximately 300% year-over-year
- Online video platform growth approximately 100% year-over-year
- Site and application acceleration services growth exceeded 100%
year over year
- Enterprise cloud storage growth exceeded 40%
year-over-year
"Limelight is positioned at the intersection of three exciting
trends – 1) the shift of video content and its accompanying
advertising dollars online, 2) the explosive growth of mobile
Internet and tablet computing, and 3) the migration of software
application and IT services into the cloud. We are pleased with how
this strategic positioning, our global scale and our investments in
cloud-based services are leading to healthy growth," said Jeff
Lunsford, chairman and chief executive officer. "Our cloud-based
services, sold alongside our core delivery offerings, are primarily
software-as-a-service offerings that enjoy the technical and
operational benefits of running on Limelight's globally distributed
high-performance computing, storage, and delivery
platform. These services deepen our relationships with
customers by helping them solve complex problems in the cloud more
efficiently than they could with in-house solutions, thereby
creating value within their businesses. With these Q1 results
and the new Limelight Content Management solution we acquired and
announced this week, we are pleased to report that we are tracking
ahead of our previous plan for achieving our target operating
model."
Financial Highlights
For the first quarter of 2011, the Company reported revenue of
$49.8 million, up 38% percent from the first quarter 2010. The
Company also reported adjusted EBITDA of $3.6 million and non-GAAP
net loss, before share-based compensation, litigation expenses,
amortization of intangible assets, and acquisition-related
expenses, of $3.6 million or 3 cents per basic share. GAAP net
loss was $9.8 million, or 9 cents per basic share.
Capital investments were $8.1 million in the
quarter. The Company ended the quarter with no bank debt and
approximately $135 million in cash and short-term marketable
securities.
2011 Outlook
The Company anticipates second quarter revenue to
be in the range of $51.8 to $53.2 million.
Financial Tables
LIMELIGHT NETWORKS,
INC. |
CONDENSED CONSOLIDATED
BALANCE SHEETS |
(In thousands, except
per share data) |
|
|
|
|
|
|
|
March 31, 2011 |
December 31,
2010 |
|
(Unaudited) |
|
ASSETS |
|
|
Current Assets: |
|
|
Cash and cash equivalents |
$ 128,357 |
$ 56,741 |
Marketable securities |
6,399 |
12,009 |
Accounts receivable, net of reserves of
$6,527 and $7,295 at March 31, 2011 and December 31, 2010 |
38,641 |
41,940 |
Income taxes receivable |
745 |
721 |
Prepaid expenses and other current
assets |
10,092 |
9,628 |
Total current assets |
184,234 |
121,039 |
Property and equipment, net |
56,238 |
54,407 |
Marketable securities, less current
portion |
1,612 |
1,755 |
Deferred tax asset, non-current |
948 |
718 |
Goodwill |
95,296 |
94,364 |
Other intangible assets, net |
18,134 |
19,406 |
Other assets |
10,984 |
6,951 |
Total assets |
$ 367,446 |
$ 298,640 |
|
|
|
LIABILITIES AND STOCKHOLDERS'
EQUITY |
|
|
Current Liabilities: |
|
|
Accounts payable |
$ 9,385 |
$ 12,236 |
Deferred revenue, current portion |
6,084 |
6,877 |
Capital lease obligation, current
portion |
1,063 |
1,049 |
Other current liabilities |
16,630 |
20,000 |
Total current liabilities |
33,162 |
40,162 |
Capital lease obligation, less current
portion |
1,479 |
1,750 |
Deferred income tax, less current
portion |
1,281 |
598 |
Other long term liabilities |
2,170 |
21 |
Total liabilities |
38,092 |
42,531 |
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; 112,149 and 100,068 shares issued and
outstanding at March 31, 2011 and December 31, 2010,
respectively |
112 |
100 |
Additional paid-in capital |
463,358 |
380,338 |
Contingent consideration |
219 |
1,608 |
Accumulated other comprehensive
income |
1,749 |
329 |
Accumulated deficit |
(136,084) |
(126,266) |
Total stockholders' equity |
329,354 |
256,109 |
Total liabilities and stockholders'
equity |
$ 367,446 |
$ 298,640 |
|
|
LIMELIGHT NETWORKS,
INC. |
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS |
(In thousands, except
per share data) |
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended |
|
March 31,
2011 |
December 31,
2010 |
March 31,
2010 |
December 31,
2009 |
|
|
|
|
|
Revenue |
$ 49,817 |
$ 55,243 |
$ 36,087 |
$ 33,625 |
Costs and operating expenses |
|
|
|
|
Cost of revenue * † |
29,412 |
29,966 |
20,983 |
22,167 |
General and
administrative * † |
10,764 |
11,621 |
8,893 |
10,066 |
Sales and marketing * |
13,894 |
13,323 |
9,387 |
8,672 |
Research & development * |
5,618 |
5,141 |
2,645 |
2,059 |
Total costs and operating expenses |
59,688 |
60,051 |
41,908 |
42,964 |
|
|
|
|
|
Operating loss |
(9,871) |
(4,808) |
(5,821) |
(9,339) |
|
|
|
|
|
Interest expense |
(42) |
(64) |
(1) |
(5) |
Interest income |
187 |
147 |
302 |
295 |
Other income (expense) |
30 |
(105) |
(25) |
(146) |
|
|
|
|
|
Loss before income taxes |
(9,696) |
(4,830) |
(5,545) |
(9,195) |
Income tax expense |
122 |
1,518 |
240 |
531 |
|
|
|
|
|
Net loss |
$ (9,818) |
$ (6,348) |
$ (5,785) |
$ (9,726) |
|
|
|
|
|
Net loss per share: |
|
|
|
|
Basic |
$ (0.09) |
$ (0.06) |
$ (0.07) |
$ (0.11) |
Diluted |
$ (0.09) |
$ (0.06) |
$ (0.07) |
$ (0.11) |
|
|
|
|
|
Shares used in per share calculations: |
|
|
|
|
Basic |
103,917 |
99,557 |
85,119 |
84,770 |
Diluted |
103,917 |
99,557 |
85,119 |
84,770 |
|
|
|
|
|
|
|
|
|
|
* 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,
2011 |
December 31,
2010 |
March 31,
2010 |
December 31,
2009 |
Supplemental financial
data: |
|
|
|
|
Share-based
compensation: |
|
|
|
|
Cost of revenues |
$ 616 |
$ 614 |
$ 598 |
$ 642 |
General and administrative |
1,544 |
1,691 |
1,835 |
1,801 |
Sales and marketing |
1,244 |
1,234 |
1,206 |
1,236 |
Research and development |
874 |
804 |
704 |
648 |
Total share-based compensation |
$ 4,278 |
$ 4,343 |
$ 4,343 |
$ 4,327 |
|
|
|
|
|
Depreciation and
amortization: |
|
|
|
|
Network-related depreciation |
$ 6,726 |
$ 6,387 |
$ 4,778 |
$ 5,352 |
Other depreciation and amortization |
532 |
497 |
595 |
619 |
Amortization of intangible assets |
1,423 |
1,458 |
171 |
33 |
Total depreciation and amortization |
$ 8,681 |
$ 8,342 |
$ 5,544 |
$ 6,004 |
|
|
|
|
|
Net increase (decrease) in cash, cash
equivalents and marketable securities |
$ 65,863 |
$ (2,169) |
$ (5,531) |
$ 1,561 |
|
|
|
|
|
End of period
statistics: |
|
|
|
|
Approximate number of active
customers |
1,771 |
1,824 |
1,370 |
1,370 |
Number of employees |
708 |
689 |
342 |
328 |
|
|
LIMELIGHT NETWORKS,
INC. |
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS |
(In
thousands) |
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended |
|
March 31, 2011 |
December 31,
2010 |
March 31, 2010 |
December 31,
2009 |
|
|
|
|
|
|
|
|
|
|
Cash flows from operating
activities: |
|
|
|
|
Net loss |
$ (9,818) |
$ (6,348) |
$ (5,785) |
$ (9,726) |
Adjustments to reconcile net
loss to net cash provided by (used in) operating activities: |
|
|
Depreciation and amortization |
8,681 |
8,342 |
5,544 |
6,004 |
Share-based compensation |
4,278 |
4,343 |
4,343 |
4,327 |
Deferred income tax benefit |
(100) |
(807) |
-- |
-- |
Income tax expense related to business
acquisition |
-- |
1,899 |
-- |
-- |
Loss (gain) on foreign currency
transactions |
53 |
22 |
49 |
20 |
Loss (gain) on sale of property and
equipment |
-- |
(107) |
89 |
-- |
Accounts receivable charges |
233 |
(1,259) |
1,169 |
774 |
Accretion of marketable securities |
49 |
85 |
24 |
89 |
Changes in operating assets and
liabilities: |
|
|
|
|
Accounts receivable |
3,013 |
(1,614) |
(305) |
555 |
Prepaid expenses and other current
assets |
(464) |
(306) |
685 |
(516) |
Income taxes receivable |
(119) |
141 |
(53) |
(424) |
Other assets |
(4,033) |
611 |
(167) |
917 |
Accounts payable |
(1,217) |
1,875 |
264 |
(6) |
Deferred revenue |
(793) |
(2,588) |
(3,105) |
(1,506) |
Other current liabilities |
(2,978) |
2,454 |
(2,081) |
4,875 |
Other long term liabilities |
84 |
(20) |
-- |
-- |
Net cash (used in) provided by operating
activities |
(3,131) |
6,723 |
671 |
5,383 |
|
|
|
|
|
Cash flows from investing
activities: |
|
|
|
|
Purchase of marketable securities |
(1,410) |
(1,039) |
(16,755) |
(25,500) |
Sale of marketable securities |
6,970 |
7,516 |
28,000 |
10,900 |
Purchases of property and equipment |
(8,050) |
(8,769) |
(4,250) |
(3,759) |
Acquisition of business, net of cash
acquired |
-- |
-- |
(2,004) |
-- |
Net cash (used in) provided by investing
activities |
(2,490) |
(2,292) |
4,991 |
(18,359) |
|
|
|
|
|
Cash flows from financing
activities: |
|
|
|
|
Payments on capital lease
obligations |
(257) |
(409) |
-- |
-- |
Proceeds from exercise of stock
options |
415 |
1,486 |
27 |
34 |
Proceeds from secondary public offering,
net |
77,169 |
-- |
-- |
-- |
Payment of employee tax withholdings
related to restricted stock |
(234) |
(948) |
-- |
(286) |
Net cash provided by (used in) financing
activities |
77,093 |
129 |
27 |
(252) |
Effect of exchange rate changes on
cash |
144 |
(48) |
97 |
290 |
Net increase (decrease) in cash and
cash equivalents |
71,616 |
4,512 |
5,786 |
(12,938) |
Cash and cash equivalents, beginning
of period |
56,741 |
52,229 |
89,509 |
102,447 |
Cash and cash equivalents, end of
period |
$ 128,357 |
$ 56,741 |
$ 95,295 |
$ 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,
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 |
|
March 31, 2011 |
December 31,
2010 |
March 31, 2010 |
December 31,
2009 |
|
|
|
|
|
GAAP net (loss) income |
$ (9,818) |
$ (6,348) |
$ (5,785) |
$ (9,726) |
|
|
|
|
|
Share-based compensation |
4,278 |
4,343 |
4,343 |
4,327 |
Litigation defense expenses |
344 |
22 |
392 |
827 |
Acquisition related expenses |
141 |
169 |
604 |
1,481 |
Amortization of intangibles |
1,423 |
1,458 |
171 |
33 |
|
|
|
|
|
Non-GAAP net loss |
$ (3,632) |
$ (356) |
$ (275) |
$ (3,058) |
|
|
LIMELIGHT NETWORKS,
INC. |
Reconciliation of GAAP
Net Income (Loss) to EBITDA to Adjusted EBITDA |
(In
thousands) |
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended |
|
March 31, 2011 |
December 31,
2010 |
March 31, 2010 |
December 31,
2009 |
|
|
|
|
|
GAAP net (loss) income |
$ (9,818) |
$ (6,348) |
$ (5,785) |
$ (9,726) |
|
|
|
|
|
Add: depreciation and amortization |
8,681 |
8,342 |
5,544 |
6,004 |
Add: interest expense |
42 |
64 |
1 |
5 |
Less: interest and other income
(expense) |
(217) |
(42) |
(277) |
(149) |
Add: income tax (benefit) expense |
122 |
1,518 |
240 |
531 |
|
|
|
|
|
EBITDA |
(1,190) |
3,534 |
(277) |
(3,335) |
|
|
|
|
|
Add: share-based compensation |
4,278 |
4,343 |
4,343 |
4,327 |
Add: litigation defense expenses |
344 |
22 |
392 |
827 |
Add: acquisition related expenses |
141 |
169 |
604 |
1,481 |
|
|
|
|
|
Adjusted EBITDA |
$ 3,573 |
$ 8,068 |
$ 5,062 |
$ 3,300 |
Conference Call
At approximately 4:10 p.m. EDT (1:10 p.m. PDT),
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.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. Approximately 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.
CONTACT: Paul Alfieri
Limelight Networks, Inc.
+1-646-875-8835
palfieri@llnw.com
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