- Revenue of $42.0 million and GAAP
$0.08, Non-GAAP $0.04 net loss per basic share
- $70 million of cash, cash equivalents
and marketable securities
- 2015 revenue guidance remains unchanged
at between $170 and $174 million
- Entered into $25 million revolving
credit facility
Limelight Networks, Inc. (Nasdaq:LLNW) (Limelight), a global
leader in digital content delivery, today reported revenue of $42.0
million for the third quarter ended September 30, 2015, compared to
$39.0 million in the third quarter of 2014, an increase of eight
percent.
During the third quarter of 2014, revenue from Netflix was $1.2
million. Revenue was also negatively impacted in the third quarter
of 2015 by changes in foreign currency of approximately $1.0
million, compared to the third quarter of 2014. Adjusting for the
impact of these items, revenue increased by 14 percent period over
period.
GAAP gross margins were 37.8% in the third quarter of 2015, a
decrease of 360 basis points from 41.4% in the third quarter of
2014. Gross margins in the third quarter of 2014 were positively
impacted by high margin Netflix revenue and a $1.1 million
nonrecurring credit received from a co-location provider.
On a GAAP basis, Limelight reported a loss from continuing
operations of $7.8 million, or $0.08 per basic share, for the third
quarter of 2015, compared to a loss from continuing operations of
$5.1 million, or $0.05 per basic share, in the third quarter of
2014.
Non-GAAP net loss was $4.3 million, or $0.04 per basic share,
for the third quarter of 2015 compared to a non-GAAP net loss of
$2.2 million, or $0.02 per basic share, in the third quarter of
2014.
EBITDA from continuing operations was negative $3.0 million for
the third quarter of 2015 compared to negative $1.2 million for the
third quarter of 2014. Adjusted EBITDA was $0.3 million for the
third quarter of 2015 compared to $1.4 million for the third
quarter of 2014.
Limelight ended the third quarter with 556 employees, down from
563 employees at the end of the second quarter of 2015, and up from
509 employees in the year ago period. In October, Limelight reduced
its workforce by 44 employees, or approximately 8% of its global
workforce.
Based on current conditions, for the full-year 2015, Limelight’s
revenue guidance remains unchanged at between $170 and $174
million. Non-GAAP net loss is now expected to be between $0.10 and
$0.14 per share, compared to previous guidance of a net loss of
between $0.10 and $0.16 per share. Capital expenditures remain
unchanged for the full-year 2015 at between $22 and $26
million.
Limelight expects 2016 revenue will be between $180 and $195
million and Non-GAAP net income (loss) will be between $(0.05) and
$0.05.
Commenting on the results, Chief Executive Officer Robert Lento
said, “We are pleased to report the highest period over period
revenue growth since 2011. Our Net Promoter Score is up very
strongly, and our network resilience, performance and throughput is
up and we continue to deliver record levels of traffic volume.
While we are disappointed that the Federal Circuit ruling on August
13 in our long-standing patent dispute isn’t aligned with prior
rulings in our favor, our plan is to continue to vigorously defend
our position with the courts. In light of that ruling, we have
taken steps that we believe will allow us to have adequate access
to cash, through our balance sheet and our recently signed credit
facility, to address the range of reasonably possible outcomes.
Coupled with our operational efficiency efforts already underway,
we believe, we will be cash flow neutral to slightly positive in
2016.”
He added, “We see ourselves playing an increasingly important
role in the secure and global delivery of large and rich Content.
The industry is experiencing healthy secular trends. What we do is
important to our customers and to the competitive landscape. We
will direct our efforts to strengthen our product portfolio, our
customer relationships, our patent portfolio, and our financial
performance. We are determined to profitably grow the company.”
Financial Tables
LIMELIGHT NETWORKS, INC. CONDENSED CONSOLIDATED BALANCE
SHEETS (In thousands, except per share data)
September 30, December
31, 2015 2014 (Unaudited) ASSETS
Current assets: Cash and cash equivalents $ 35,452 $ 57,767
Marketable securities 34,123 35,317 Accounts receivable, net 27,151
22,622 Income taxes receivable 185 237 Deferred income taxes 72 78
Prepaid expenses and other current assets 9,156
9,625 Total current assets 106,139 125,646 Property
and equipment, net 40,077 32,636 Marketable securities, less
current portion 40 40 Deferred income taxes, less current portion
1,260 1,364 Goodwill 76,096 76,133 Other intangible assets, net 470
1,071 Other assets 3,857 4,451 Total
assets $ 227,939 $ 241,341
LIABILITIES AND
STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $
10,358 $ 7,065 Deferred revenue 3,636 3,509 Capital lease
obligations - 223 Income taxes payable 121 248 Other current
liabilities 12,972 14,383 Total current
liabilities 27,087 25,428 Capital lease obligations, less current
portion - 135 Deferred income taxes 133 170 Deferred revenue, less
current portion 27 405 Other long-term liabilities 2,354
3,040 Total liabilities 29,601 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 at September 30, 2015 and December 31,
2014;100,892 and 98,409 shares issued and outstanding at September
30, 2015 and December 31, 2014, respectively
101 98 Additional paid-in capital 473,399 464,294 Accumulated other
comprehensive loss (10,912 ) (7,786 ) Accumulated deficit
(264,250 ) (244,443 ) Total stockholders' equity
198,338 212,163 Total liabilities and
stockholders' equity $ 227,939 $ 241,341
LIMELIGHT NETWORKS, INC. CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS (In thousands, except per share
data) (Unaudited)
Three Months Ended
Nine Months Ended September 30, June
30, Percent September 30, Percent
September 30, September 30, Percent
2015 2015 Change 2014 Change
2015 2014 Change Revenues $ 42,049
$ 43,795 -4 % $ 39,020 8 % $ 128,173 $
121,533 5 % Cost of revenue: Cost of services (1) 21,502
21,271 1 % 18,672 15 % 64,430 61,563 5 % Depreciation - network
4,636 4,376 6 % 4,207 10
% 13,164 12,688 4 % Total cost of
revenue 26,138 25,647 2 % 22,879
14 % 77,594 74,251 5 % Gross
profit 15,911 18,148 -12 % 16,141 -1 % 50,579 47,282 7 % Gross
profit percentage 37.8 % 41.4 % 41.4 % 39.5 % 38.9 % Operating
expenses: General and administrative (1) 6,586 6,081 8 % 7,295 -10
% 19,518 21,966 -11 % Sales and marketing (1) 9,489 10,002 -5 %
8,731 9 % 29,767 28,356 5 % Research & development (1) 7,429
7,646 -3 % 5,514 35 % 21,338 14,951 43 % Depreciation and
amortization 648 635 2 % 825
-21 % 1,924 2,868 -33 % Total
operating expenses 24,152 24,364 -1 %
22,365 8 % 72,547 68,141
6 % Operating loss (8,241 ) (6,216 ) 33 % (6,224 ) 32 %
(21,968 ) (20,859 ) 5 % Other income (expense): Interest
expense - - NA (7 ) -100 % (4 ) (26 ) -85 % Interest income 82 75 9
% 66 24 % 231 203 14 % Other, net 473 (131 )
-461 % 1,192 -60 % 2,155 1,014
113 % Total other income (expense) 555
(56 ) -1091 % 1,251 -56 % 2,382
1,191 100 % Loss from continuing operations before
income taxes (7,686 ) (6,272 ) 23 % (4,973 ) 55 % (19,586 ) (19,668
) 0 % Income tax expense 76 90 -16 %
98 -22 % 221 181 22 %
Loss from continuing operations (7,762 ) (6,362 ) 22 %
(5,071 ) 53 % (19,807 ) (19,849 ) 0 % Discontinued
operations: (Loss) income from discontinued operations, net of
income taxes - - NA (4 ) -100 %
- 265 -100 % Net loss $ (7,762 )
$ (6,362 ) 22 % $ (5,075 ) 53 % $ (19,807 ) $ (19,584 ) 1 %
Net loss per share: Basic and diluted Continuing operations $ (0.08
) $ (0.06 ) $ (0.05 ) $ (0.20 ) $ (0.20 ) Discontinued operations
- - (0.00 ) -
0.00 Total $ (0.08 ) $ (0.06 ) $ (0.05 ) $ (0.20 ) $
(0.20 ) Weighted average shares used in per share
calculation: Basic and diluted 100,552 99,841 98,458 99,676 98,274
(1) Includes share-based compensation (see
supplemental table for figures)
LIMELIGHT
NETWORKS, INC. SUPPLEMENTAL FINANCIAL DATA (In
thousands) (Unaudited)
Three Months Ended Nine
Months Ended September 30, June 30,
September 30, September 30, September 30,
2015 2015 2014 2015 2014
Share-based compensation: Cost of services $
400 $ 571 $ 464 $ 1,484 $ 1,466 General and administrative 1,513
1,476 1,174 4,395 3,539 Sales and marketing 643 608 567 1,940 1,693
Research and development 568 625
382 1,654 1,102 Total
share-based compensation $ 3,124 $ 3,280 $ 2,587
$ 9,473 $ 7,800
Depreciation and
amortization: Network-related depreciation $ 4,636 $
4,376 $ 4,207 $ 13,164 $ 12,688 Other depreciation and amortization
445 434 566 1,322 1,934 Amortization of intangible assets
203 201 259 602
934 Total depreciation and amortization $
5,284 $ 5,011 $ 5,032 $ 15,088 $ 15,556
Net decrease in cash, cash equivalents and
marketable securities: $ (5,342 ) $ (6,027 ) $ (6,200 ) $ (23,509 )
$ (17,212 )
End of period statistics:
Approximate number of active customers 981 1,035 1,134 981 1,134
Number of employees 556 563 509 556 509
LIMELIGHT NETWORKS, INC. CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS (In thousands)
(Unaudited)
Three Months Ended Nine Months
Ended September 30, June 30, September
30, September 30, September 30, 2015
2015 2014 2015 2014 Operating
activities Net loss $ (7,762 ) $ (6,362 ) $ (5,075 ) $ (19,807
) $ (19,584 ) Income from discontinued operations -
- (4 ) - 265 Net
loss from continuing operations (7,762 ) (6,362 ) (5,071 ) (19,807
) (19,849 ) Adjustments to reconcile net loss to net cash
provided by (used in) operating activities of continuing
operations: Depreciation and amortization 5,284 5,011 5,032 15,088
15,556 Share-based compensation 3,124 3,280 2,587 9,473 7,800
Foreign currency remeasurement (gain) loss (488 ) 96 (1,207 )
(2,083 ) (1,067 ) Deferred income taxes 94 (62 ) 17 (21 ) (185 )
Accounts receivable charges 268 224 (29 ) 738 483 Amortization of
premium on marketable securities 46 48 88 152 374 Non cash tax
benefit associated with income from discontinued operations - - - -
(59 ) Changes in operating assets and liabilities: Accounts
receivable 4,025 (4,312 ) 1,652 (5,267 ) (1,496 ) Prepaid expenses
and other current assets 498 (1,352 ) (1,617 ) 296 (1,045 ) Income
taxes receivable 24 13 (53 ) 35 55 Other assets 578 217 63 1,587
991 Accounts payable and other current liabilities (1,156 ) 3,389
622 510 1,099 Deferred revenue (568 ) 520 (86 ) (251 ) (893 )
Income taxes payable (78 ) 52 (95 ) (78 ) (214 ) Other long term
liabilities (225 ) (175 ) (310 ) (669 )
(545 ) Net cash provided by (used in) operating activities
of continuing operations 3,664 587
1,593 (297 ) 1,005
Investing activities Purchases of marketable securities
(4,899 ) (1,965 ) (2,986 ) (16,820 ) (17,669 ) Maturities of
marketable securities 5,160 1,920 2,685 16,920 15,550 Purchases of
property and equipment (8,693 ) (5,395 ) (5,075 ) (20,754 ) (13,984
) Proceeds from sale of discontinued operations -
- - - 414
Net cash used in investing activities of continuing operations
(8,432 ) (5,440 ) (5,376 ) (20,654 )
(15,689 )
Financing activities Payments on
capital lease obligations - - (89 ) (358 ) (412 ) Payment of
employee tax withholdings related to restricted stock vesting (335
) (837 ) (284 ) (2,279 ) (1,455 ) Cash paid for purchase of common
stock - - (1,296 ) (957 ) (2,500 ) Proceeds from exercise of stock
options and employee stock plan 212 544
233 2,731 967 Net cash
used in financing activities of continuing operations (123 )
(293 ) (1,436 ) (863 ) (3,400 ) Effect
of exchange rate changes on cash and cash equivalents (159 )
140 (1,153 ) (501 ) (840 )
Discontinued operations Cash used in operating activities of
discontinued operations - - (4 )
- (4 )
Net (decrease) increase in cash and
cash equivalents (5,050 ) (5,006 ) (6,376 ) (22,315 ) (18,928 )
Cash and cash equivalents, beginning of period 40,502
45,508 73,404 57,767
85,956
Cash and cash equivalents, end of
period $ 35,452 $ 40,502 $ 67,028 $ 35,452
$ 67,028
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
defense expenses, amortization of intangible assets, discontinued
operations and the gain (loss) on sale of our web content
management (WCM) business. 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 defense 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 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
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 United States 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
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
In accordance with the requirements of Item 10(e) of Regulation
S-K, Limelight is presenting the most directly comparable GAAP
financial measures and reconciling the non-GAAP financial metrics
to the comparable 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
Nine Months Ended September 30, 2015 June
30, 2015 September 30, 2014 September 30, 2015
September 30, 2014 Amount Per Share
Amount Per Share Amount Per Share
Amount Per Share Amount Per Share
U.S. GAAP net loss $ (7,762 ) $ (0.08 ) $ (6,362 ) $ (0.06 )
$ (5,075 ) $ (0.05 ) $ (19,807 ) $ (0.20 ) $ (19,584 ) $ (0.20 )
Share-based compensation 3,124 0.03 3,280 0.03 2,587 0.03
9,473 0.10 7,800 0.08 Litigation defense expenses 140 0.00 (1,174 )
(0.01 ) 10 0.00 (1,015 ) (0.01 ) 819 0.01 Amortization of
intangible assets 203 0.00 201 0.00 259 0.00 602 0.01 934 0.01 Loss
on sale of the Web Content Management business - - - - - - - - 62
0.00 Loss (income) from discontinued operations -
- - - 4
- - - (265 )
(0.00 ) Non-GAAP net loss $ (4,295 ) $ (0.04 ) $
(4,055 ) $ (0.04 ) $ (2,215 ) $ (0.02 ) $ (10,747 ) $ (0.11 ) $
(10,234 ) $ (0.10 ) Weighted average shares used in
per share calculation 100,552 99,841 98,458 99,676 98,274
LIMELIGHT NETWORKS, INC. Reconciliation of U.S.
GAAP Net Loss to EBITDA to Adjusted EBITDA (In
thousands) (Unaudited)
Three Months Ended
Nine Months Ended September 30, June
30, September 30, September 30, September
30, 2015 2015 2014 2015 2014
U.S. GAAP net loss $ (7,762 ) $ (6,362 ) $ (5,075 ) $
(19,807 ) $ (19,584 ) Depreciation and amortization 5,284
5,011 5,032 15,088 15,556 Interest expense - - 7 4 26 Loss on sale
of the Web Content Management business - - - - 62 Interest and
other (income) expense (555 ) 56 (1,258 ) (2,386 ) (1,279 ) Income
tax expense 76 90 98 221 181 Loss (income) from discontinued
operations - - 4 -
(265 ) EBITDA from continuing operations $
(2,957 ) $ (1,205 ) $ (1,192 ) $ (6,880 ) $ (5,303 )
Share-based compensation 3,124 3,280 2,587 9,473 7,800 Litigation
defense expenses 140 (1,174 ) 10
(1,015 ) 819 Adjusted EBITDA $ 307
$ 901 $ 1,405 $ 1,578 $ 3,316
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 audio cast 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 fourth quarter and full year 2015 and
full year 2016; non-GAAP net loss and capital expenditures for the
full-year 2015; our non-GAAP net income (loss) for the full-year
2016, the growth of our business; the performance of our services;
our expectations regarding the Akamai litigation, and our
relationship with our customers. Our expectations and beliefs
regarding these matters may not materialize. The potential risk and
uncertainties that could cause actual results to differ materially
from the results predicted include, among other things, reduction
of demand for our services from new or existing customers,
unforeseen changes in our hiring patterns, 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
at www.SEC.gov. All information provided in this release and in the
attachments is as of November 3, 2015, 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.
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Limelight Networks, Inc.Sajid Malhotra,
602-850-5778ir@llnw.com
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