Limelight Networks, Inc. (Nasdaq:LLNW) ("Limelight") today reported
second quarter 2011 financial results.
"We were pleased with our progress in the quarter on our
strategic initiatives of growing Limelight's value-added services,
which are now 40% of overall revenue. We believe growing this
portion of our business, which is comprised primarily of
Software-as-a-Service (SaaS) offerings, will help improve our
overall visibility, deepen relationships with customers, and create
sustainable value over the long-term," said Jeff Lunsford, chairman
and chief executive officer. "Revenue in the quarter, however, was
approximately $2 million below our forecast due to
lower-than-expected campaign volume on our EyeWonder rich media
advertising platform and a dip in CDN traffic for two of our
largest customers during a widely followed platform shutdown after
a security breach of a third party's network."
"We are taking steps to reinstate growth in our rich media
business with new products due out early next year, and we have
seen traffic for the two CDN customers return to normal levels.
Looking forward, we are making solid progress in transforming
Limelight from a pure-play content delivery network (CDN) to a
provider of value-added SaaS solutions that run on top of a
market-leading CDN," continued Lunsford.
Specific highlights for the second quarter included:
- Revenue of $50.5 million, representing 20% year-over-year
growth
- Value added services comprised 40% of revenue:
- Mobile internet and tablet computing revenue growth of
approximately 150% year-over-year
- Online video platform growth of approximately 200%
year-over-year
- Site and application acceleration services growth of
approximately 40% year-over-year
- Enterprise cloud storage growth of approximately 60%
year-over-year
Financial Highlights
For the second quarter of 2011, the Company reported revenue of
$50.5 million, adjusted EBITDA of $2.6 million and non-GAAP net
loss, before share-based compensation, litigation expenses,
amortization of intangible assets, and acquisition-related
expenses, of $5.9 million or 5 cents per basic share. GAAP net loss
was $13.9 million, or 12 cents per basic share.
Capital investments were $11.9 million in the
quarter. The Company ended the quarter with no bank debt and
approximately $116 million in cash and short-term marketable
securities.
2011 Outlook
The Company anticipates third quarter revenue to be
in the range of $51.7 to $53.2 million.
Financial Tables
LIMELIGHT
NETWORKS, INC. |
CONDENSED
CONSOLIDATED BALANCE SHEETS |
(In
thousands, except per share data) |
|
|
|
|
|
|
|
June 30, 2011 |
December 31,
2010 |
|
(Unaudited) |
|
ASSETS |
|
|
Current Assets: |
|
|
Cash and cash
equivalents |
$ 109,973 |
$ 56,741 |
Marketable
securities |
6,474 |
12,009 |
Accounts receivable, net
of reserves of $5,398 and $7,295 at June 30, 2011 and December 31,
2010 |
37,008 |
41,940 |
Income taxes
receivable |
946 |
721 |
Prepaid expenses and
other current assets |
12,540 |
9,628 |
Total current assets |
166,941 |
121,039 |
Property and equipment, net |
63,555 |
54,407 |
Marketable securities, less current
portion |
1,567 |
1,755 |
Deferred tax asset, non-current |
944 |
718 |
Goodwill |
113,006 |
94,364 |
Other intangible assets, net |
26,755 |
19,406 |
Other assets |
10,978 |
6,951 |
Total assets |
$ 383,746 |
$ 298,640 |
|
|
|
LIABILITIES AND STOCKHOLDERS'
EQUITY |
|
|
Current Liabilities: |
|
|
Accounts payable |
$ 11,596 |
$ 12,236 |
Deferred revenue, current
portion |
6,595 |
6,877 |
Capital lease obligation,
current portion |
1,477 |
1,049 |
Other current
liabilities |
19,429 |
20,000 |
Total current liabilities |
39,097 |
40,162 |
Capital lease obligation, less current
portion |
2,065 |
1,750 |
Deferred income tax, less current
portion |
1,786 |
598 |
Other long term liabilities |
8,774 |
21 |
Total liabilities |
51,722 |
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; 300,000 shares authorized at June 30, 2011 and 150,000
shares authorized at December 31, 2010; 113,900 and 100,068
shares issued and outstanding at June 30, 2011 and December 31,
2010, respectively. |
114 |
100 |
Additional paid-in
capital |
479,645 |
380,338 |
Contingent
consideration |
219 |
1,608 |
Accumulated other
comprehensive income |
2,065 |
329 |
Accumulated deficit |
(150,019) |
(126,266) |
Total stockholders' equity |
332,024 |
256,109 |
Total liabilities and stockholders'
equity |
$ 383,746 |
$ 298,640 |
|
|
|
LIMELIGHT NETWORKS,
INC. |
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS |
(In thousands, except
per share data) |
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended |
Six Months
Ended |
|
|
|
|
|
|
|
|
June 30,
2011 |
March 31,
2011 |
June 30,
2010 |
March 31,
2010 |
June 30,
2011 |
June 30,
2010 |
|
|
|
|
|
|
|
Revenue |
$ 50,539 |
$ 49,817 |
$ 42,195 |
$ 36,087 |
$ 100,355 |
$ 78,281 |
Costs and operating expenses |
|
|
|
|
|
|
Cost of
revenue * † |
31,861 |
29,412 |
23,825 |
20,983 |
61,273 |
44,807 |
General and
administrative * †† |
13,054 |
10,764 |
11,212 |
8,893 |
23,818 |
20,105 |
Sales and
marketing * |
13,023 |
13,894 |
11,319 |
9,387 |
26,916 |
20,706 |
Research &
development * |
6,279 |
5,618 |
3,478 |
2,645 |
11,898 |
6,122 |
Provision for
litigation |
-- |
-- |
-- |
-- |
-- |
-- |
Total costs and operating expenses |
64,217 |
59,688 |
49,834 |
41,908 |
123,905 |
91,740 |
|
|
|
|
|
|
|
Operating loss |
(13,678) |
(9,871) |
(7,639) |
(5,821) |
(23,550) |
(13,459) |
|
|
|
|
|
|
|
Interest expense |
(105) |
(42) |
(7) |
(1) |
(147) |
(8) |
Interest income |
259 |
187 |
255 |
302 |
446 |
557 |
Other income (expense) |
33 |
30 |
28 |
(25) |
64 |
3 |
Loss before taxes |
(13,491) |
(9,696) |
(7,363) |
(5,545) |
(23,187) |
(12,907) |
Income tax expense (benefit) |
444 |
122 |
(5,098) |
240 |
566 |
(4,857) |
|
|
|
|
|
|
|
Net loss |
$ (13,935) |
$ (9,818) |
$ (2,265) |
$ (5,785) |
$ (23,753) |
$ (8,050) |
|
|
|
|
|
|
|
Net loss per share: |
|
|
|
|
|
|
Basic |
$ (0.12) |
$ (0.09) |
$ (0.02) |
$ (0.07) |
$ (0.22) |
$ (0.09) |
Diluted |
$ (0.12) |
$ (0.09) |
$ (0.02) |
$ (0.07) |
$ (0.22) |
$ (0.09) |
|
|
|
|
|
|
|
Shares used in per share calculations: |
|
|
|
|
|
|
Basic |
113,113 |
103,917 |
93,889 |
85,119 |
108,515 |
89,504 |
Diluted |
113,113 |
103,917 |
93,889 |
85,119 |
108,515 |
89,504 |
|
|
|
|
|
|
|
* Includes share-based
compensation (see supplemental table for figures) |
|
|
|
|
|
|
|
|
|
|
|
† Includes depreciation (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 |
Six Months
Ended |
|
June 30,
2011 |
March 31,
2011 |
June 30,
2010 |
March 31,
2010 |
June 30,
2011 |
June 30,
2010 |
Supplemental financial data (in
thousands): |
|
|
|
|
|
|
Share-based
compensation: |
|
|
|
|
|
|
Cost of revenues |
$ 767 |
$ 616 |
$ 583 |
$ 598 |
$ 1,384 |
$ 1,181 |
General and administrative |
2,052 |
1,544 |
1,577 |
1,835 |
3,596 |
3,412 |
Sales and marketing |
1,221 |
1,244 |
1,272 |
1,206 |
2,464 |
2,478 |
Research and development |
1,325 |
874 |
728 |
704 |
2,199 |
1,432 |
Total share-based compensation |
$ 5,365 |
$ 4,278 |
$ 4,160 |
$ 4,343 |
$ 9,643 |
$ 8,503 |
|
|
|
|
|
|
|
Depreciation and
amortization: |
|
|
|
|
|
|
Network-related depreciation |
$ 7,430 |
$ 6,726 |
$ 5,324 |
$ 4,778 |
$ 14,156 |
$ 10,102 |
Other depreciation and amortization |
730 |
532 |
688 |
595 |
1,262 |
1,283 |
Amortization of intangible assets |
1,889 |
1,423 |
915 |
171 |
3,312 |
1,087 |
Total depreciation and amortization |
$ 10,049 |
$ 8,681 |
$ 6,927 |
$ 5,544 |
$ 18,730 |
$ 12,472 |
|
|
|
|
|
|
|
Net (decrease) increase in cash, cash
equivalents and marketable securities |
$ (18,354) |
$ 65,863 |
$ (64,954) |
$ (5,531) |
$ 47,509 |
$ (70,485) |
|
|
|
|
|
|
|
End of period
statistics: |
|
|
|
|
|
|
Approximate number of active
customers |
1,873 |
1,771 |
1,655 |
1,370 |
1,873 |
1,655 |
Number of employees |
763 |
708 |
609 |
342 |
763 |
609 |
|
|
|
LIMELIGHT NETWORKS,
INC. |
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS |
(In
thousands) |
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended |
Six Months
Ended |
|
|
|
|
|
|
|
|
June 30,
2011 |
March 31,
2011 |
June 30,
2010 |
March 31,
2010 |
June 30,
2011 |
June 30,
2010 |
|
|
|
|
|
|
|
Cash flows from operating
activities: |
|
|
|
|
|
Net loss |
$ (13,935) |
$ (9,818) |
$ (2,265) |
$ (5,785) |
$ (23,753) |
$ (8,050) |
|
|
|
|
|
|
|
Adjustments to reconcile net
loss to net cash provided by (used in) operating activities: |
|
|
Depreciation and
amortization |
10,049 |
8,681 |
6,927 |
5,544 |
18,730 |
12,472 |
Share-based compensation |
5,365 |
4,278 |
4,160 |
4,343 |
9,643 |
8,503 |
Deferred income tax
benefit |
(84) |
(100) |
(119) |
-- |
(184) |
(119) |
Income tax benefit related to
business acquisition |
-- |
-- |
(5,768) |
-- |
-- |
(5,768) |
Loss (gain) on foreign currency
transactions |
21 |
53 |
(213) |
49 |
74 |
(164) |
Loss (gain) on sale of property
and equipment |
-- |
-- |
5 |
89 |
-- |
94 |
Accounts receivable
charges |
385 |
233 |
588 |
1,169 |
618 |
1,757 |
Accretion of marketable
securities |
(58) |
49 |
300 |
24 |
(9) |
324 |
Non cash cost basis
investment |
(282) |
-- |
-- |
-- |
(282) |
-- |
Changes in operating assets and
liabilities: |
|
|
|
|
|
|
Accounts receivable |
2,230 |
3,013 |
(112) |
(305) |
5,243 |
(417) |
Prepaid expenses and
other current assets |
(261) |
(464) |
(86) |
685 |
(725) |
599 |
Income taxes
receivable |
(100) |
(119) |
280 |
(53) |
(219) |
227 |
Other assets |
350 |
(4,033) |
1,111 |
(167) |
(3,683) |
944 |
Accounts payable |
4 |
(1,217) |
(1,223) |
264 |
(1,213) |
(959) |
Deferred revenue |
(1,782) |
(793) |
728 |
(3,105) |
(2,575) |
(2,377) |
Other current
liabilities |
(224) |
(2,978) |
1,192 |
(2,081) |
(3,202) |
(889) |
Other long term
liabilities |
368 |
84 |
(19) |
-- |
451 |
(19) |
Net cash provided by (used in) operating
activities |
2,046 |
(3,131) |
5,486 |
671 |
(1,086) |
6,158 |
|
|
|
|
|
|
|
Cash flows from investing
activities: |
|
|
|
|
|
Purchase of marketable
securities |
(4,218) |
(1,410) |
(2,000) |
(16,755) |
(5,628) |
(18,755) |
Sale of marketable
securities |
4,200 |
6,970 |
33,180 |
28,000 |
11,170 |
61,180 |
Purchases of property and
equipment |
(11,911) |
(8,050) |
(9,480) |
(4,250) |
(19,961) |
(13,730) |
Acquisition of businesses, net
of cash acquired |
(7,493) |
-- |
(61,903) |
(2,004) |
(7,493) |
(63,907) |
Net cash (used in) provided by investing
activities |
(19,422) |
(2,490) |
(40,203) |
4,991 |
(21,912) |
(35,212) |
|
|
|
|
|
|
|
Cash flows from financing
activities: |
|
|
|
|
|
Payments on capital lease
obligations |
(433) |
(257) |
-- |
-- |
(690) |
-- |
Proceeds from exercise of stock
options |
71 |
415 |
100 |
27 |
487 |
127 |
Proceeds from secondary public
offering, net |
(72) |
77,169 |
-- |
-- |
77,097 |
-- |
Payment of employee tax
withholdings related to restricted stock |
(713) |
(234) |
-- |
-- |
(947) |
-- |
Net cash (used in) provided by financing
activities |
(1,147) |
77,093 |
100 |
27 |
75,947 |
127 |
Effect of exchange rate changes on
cash |
139 |
144 |
92 |
97 |
283 |
189 |
Net (decrease) increase in cash and
cash equivalents |
(18,384) |
71,616 |
(34,525) |
5,786 |
53,232 |
(28,738) |
Cash and cash equivalents, beginning
of period |
128,357 |
56,741 |
95,296 |
89,509 |
56,741 |
89,509 |
Cash and cash equivalents, end of
period |
$ 109,973 |
$ 128,357 |
$ 60,771 |
$ 95,295 |
$ 109,973 |
$ 60,771 |
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 |
Six Months
Ended |
|
|
|
|
|
|
|
|
June 30,
2011 |
March 31,
2011 |
June 30,
2010 |
March 31,
2010 |
June 30,
2011 |
June 30,
2010 |
|
|
|
|
|
|
|
GAAP net loss |
$ (13,935) |
$ (9,818) |
$ (2,265) |
$ (5,785) |
$ (23,753) |
$ (8,050) |
|
|
|
|
|
|
|
Share-based compensation |
5,365 |
4,278 |
4,160 |
4,343 |
9,643 |
8,503 |
Litigation defense expenses |
269 |
344 |
1,726 |
392 |
612 |
2,118 |
Acquisition related expenses |
559 |
141 |
409 |
604 |
700 |
1,013 |
Amortization of intangible assets |
1,889 |
1,423 |
915 |
171 |
3,312 |
1,087 |
|
|
|
|
|
|
|
Non-GAAP net (loss) income |
$ (5,853) |
$ (3,632) |
$ 4,945 |
$ (275) |
$ (9,486) |
$ 4,671 |
|
|
|
LIMELIGHT NETWORKS,
INC. |
Reconciliation of GAAP
Net Income (Loss) to EBITDA to Adjusted EBITDA |
(In
thousands) |
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended |
Six Months
Ended |
|
|
|
|
|
|
|
|
June 30, 2011 |
March 31, 2011 |
June 30, 2010 |
March 31, 2010 |
June 30, 2011 |
June 30, 2010 |
|
|
|
|
|
|
|
GAAP net loss |
$ (13,935) |
$ (9,818) |
$ (2,265) |
$ (5,785) |
$ (23,753) |
$ (8,050) |
|
|
|
|
|
|
|
Depreciation and
amortization |
10,049 |
8,681 |
6,927 |
5,544 |
18,730 |
12,472 |
Interest expense |
105 |
42 |
7 |
1 |
147 |
8 |
Interest and other income
(expense) |
(292) |
(217) |
(283) |
(277) |
(510) |
(560) |
Income tax expense
(benefit) |
444 |
122 |
(5,098) |
240 |
566 |
(4,857) |
EBITDA |
(3,629) |
(1,190) |
(712) |
(277) |
(4,820) |
(987) |
|
|
|
|
|
|
|
Share-based compensation |
5,365 |
4,278 |
4,160 |
4,343 |
9,643 |
8,503 |
Litigation defense
expenses |
269 |
344 |
1,726 |
392 |
612 |
2,118 |
Acquisition related
expenses |
559 |
141 |
409 |
604 |
700 |
1,013 |
|
|
|
|
|
|
|
Adjusted EBITDA |
$ 2,564 |
$ 3,573 |
$ 5,583 |
$ 5,062 |
$ 6,135 |
$ 10,647 |
Conference Call
At approximately 4:30 p.m. EDT (1:30 p.m. PDT) 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 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 1870
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.limelight.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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