- Q1 Revenue of $41.4 million
- GAAP Gross margin of 40.2%, up 120
basis points
- GAAP EPS of $(0.06), Non-GAAP EPS of
$(0.01)
Limelight Networks, Inc. (Nasdaq:LLNW) (Limelight), a global
leader in digital content delivery, today reported revenue of $41.4
million for the first quarter which ended March 31, 2016, down 2
percent, compared to $42.3 million in the first quarter of 2015,
and down 1 percent when adjusting for the impact of foreign
currency fluctuations.
GAAP gross margin was 40.2% in the first quarter of 2016, an
increase of 120 basis points from 39.0% in the first quarter of
2015.
On a GAAP basis, Limelight reported a net loss of $5.9 million,
or $0.06 per basic share, for the first quarter of 2016, compared
to a net loss of $5.7 million, or $0.06 per basic share in the
first quarter of 2015. Non-GAAP net loss was $1.3 million or $0.01
per basic share for the first quarter of 2016, compared to a
non-GAAP net loss of $2.4 million, or $0.02 per basic share in the
first quarter of 2015. Non-GAAP net loss for the first quarter of
2016 excludes $3.5 million of share-based compensation and $1.2
million of litigation related expense.
EBITDA was negative $0.7 million for the first quarter of 2016,
compared to negative $2.7 million for the first quarter of 2015.
Adjusted EBITDA was $4.0 million for the first quarter of 2016
compared to $0.4 million for the first quarter of 2015.
During the quarter, Limelight drew $12.8 million of debt from an
existing bank line and ended the quarter with $87 million of cash
and cash equivalents compared to $73 million at the end of the
fourth quarter of 2015.
Limelight ended the first quarter with 501 employees and
employee equivalents, down from 509 at the end of the fourth
quarter of 2015, and down from 533 at the end of the first quarter
of 2015.
For the full year 2016, Limelight expects revenues to be between
$180 and $188 million. Gross margin is expected to improve by over
200 basis points compared to the full year 2015. Non-GAAP net
loss/income is expected to be between $(0.05) and $0.05 per share.
Capital expenditures for the full year 2016 should be under $20
million.
Commenting on the first quarter results, Chief Executive
Officer, Robert Lento said, “I am pleased with the quarter’s
performance. While revenue was slightly short of our expectations,
gross margin and Adjusted EBITDA showed solid improvement. With
limited capital expenditures and utilizing software enhancements,
we added material capacity to our infrastructure while also
improving performance.”
“Recent developments in the longstanding litigation with Akamai
in the ‘703 patent case have capped the upper end of our potential
range of loss at $63 million dollars. We continue to pursue all
reasonable channels to reduce or completely eliminate this
exposure. We are driving hard to move from a cash consuming,
unprofitable entity to a cash generating, profitable enterprise.
The management team is strongly invested in achieving this
goal, as evidenced by several of our senior leaders taking half of
their salary in equity each month throughout 2016. We believe this
quarter’s operating and financial results reinforce that the
company is on the right track, and our growing confidence is
reflected in our revised guidance.”
Financial Tables
LIMELIGHT NETWORKS, INC. CONDENSED CONSOLIDATED
BALANCE SHEETS (In thousands, except per share data)
March 31, December 31,
2016 2015 (Unaudited)
ASSETS Current assets: Cash and cash equivalents $ 24,141 $
44,680 Marketable securities - 28,322 Accounts receivable, net
27,452 26,795 Income taxes receivable 186 170 Deferred income taxes
83 89 Prepaid expenses and other current assets 6,054
9,578 Total current assets 57,916 109,634 Property
and equipment, net 33,330 36,143 Marketable securities, less
current portion 40 40 Restricted cash 62,790 - Deferred income
taxes, less current portion 1,207 1,252 Goodwill 76,370 76,143
Other assets 2,071 2,415 Total assets $
233,724 $ 225,627
LIABILITIES AND
STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $
7,585 $ 9,137 Deferred revenue 3,379 2,890 Capital lease
obligations 821 466 Income taxes payable 85 204 Other current
liabilities 8,619 10,857 Total current
liabilities 20,489 23,554 Long-term debt 12,790 - Capital lease
obligations, less current portion 2,345 1,436 Deferred income taxes
141 137 Deferred revenue, less current portion 77 92 Other
long-term liabilities 2,137 2,311 Total
liabilities 37,979 27,530 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; 103,399 and 102,299 shares issued and
outstanding at March 31, 2016 and December 31, 2015,
respectively
103 102 Additional paid-in capital 480,092 477,202 Accumulated
other comprehensive loss (10,109 ) (10,812 ) Accumulated deficit
(274,341 ) (268,395 ) Total stockholders' equity
195,745 198,097 Total liabilities and
stockholders' equity $ 233,724 $ 225,627
LIMELIGHT NETWORKS, INC. CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS (In thousands, except per share
data) (Unaudited)
Three Months Ended March 31,
December 31, Percent March 31, Percent
2016 2015 Change
2015 Change Revenues $ 41,422
$ 42,739 -3 % $ 42,329 -2 % Cost of revenue:
Cost of services (1) 20,110 20,388 -1 % 21,657 -7 % Depreciation -
network 4,668 4,811 -3 % 4,153
12 % Total cost of revenue 24,778
25,199 -2 % 25,810 -4 % Gross profit 16,644
17,540 -5 % 16,519 1 % Gross profit percentage 40.2 % 41.0 % 39.0 %
Operating expenses: General and administrative (1) 6,808 5,509 24 %
6,850 -1 % Sales and marketing (1) 8,903 8,101 10 % 10,276 -13 %
Research & development (1) 6,325 6,678 -5 % 6,263 1 %
Depreciation and amortization 623 1,005
-38 % 640 -3 % Total operating expenses 22,659
21,293 6 % 24,029 -6 %
Operating loss (6,015 ) (3,753 ) 60 % (7,510 ) -20 % Other
income (expense): Interest expense (179 ) (25 ) 616 % (4 ) 4375 %
Interest income 6 86 -93 % 74 -92 % Other, net 400
(407 ) -198 % 1,812 -78 % Total other income
(expense) 227 (346 ) -166 % 1,882
-88 % Loss before income taxes (5,788 ) (4,099 ) 41 %
(5,628 ) 3 % Income tax expense 158 46
243 % 55 187 % Net loss $ (5,946 ) $ (4,145 )
43 % $ (5,683 ) 5 % Net loss per share: Basic and
diluted $ (0.06 ) $ (0.04 ) $ (0.06 ) Weighted average
shares used in per share calculation: Basic and diluted 102,693
101,391 98,636 (1) Includes share-based compensation
(see supplemental table for figures)
LIMELIGHT
NETWORKS, INC. SUPPLEMENTAL FINANCIAL DATA (In
thousands) (Unaudited)
Three Months Ended March 31, December
31, March 31, 2016
2015 2015 Share-based
compensation: Cost of services $ 473 $ 563 $ 513 General
and administrative 1,826 1,002 1,406 Sales and marketing 737 716
689 Research and development 460 582
461 Total share-based compensation $ 3,496 $
2,863 $ 3,069
Depreciation and amortization:
Network-related depreciation $ 4,668 $ 4,811 $ 4,153 Other
depreciation and amortization 617 544 443 Amortization of
intangible assets 6 461 197
Total depreciation and amortization $ 5,291 $ 5,816 $
4,793 Net
increase (decrease) in cash,
cash equivalents and marketable securities: $ (48,861 ) $ 3,427 $
(12,140 )
End of period statistics:
Approximate number of active customers 926 963 1,080 Number
of employees and employee equivalents 501 509 533
LIMELIGHT NETWORKS, INC. CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS (In thousands)
(Unaudited) Three Months
Ended March 31, December 31, March
31, 2016 2015
2015 Operating activities Net loss $
(5,946 ) $ (4,145 ) $ (5,683 ) Adjustments to reconcile net
loss to net cash provided by (used in) operating activities:
Depreciation and amortization 5,291 5,816 4,793 Share-based
compensation 3,496 2,863 3,069 Foreign currency remeasurement
(gain) loss (301 ) 492 (1,691 ) Deferred income taxes 82 67 (53 )
Accounts receivable charges (116 ) 299 246 Amortization of premium
on marketable securities 19 42 58 Realized loss on marketable
securities 32 - - Changes in operating assets and liabilities:
Accounts receivable (540 ) 57 (4,980 ) Prepaid expenses and other
current assets 3,583 (490 ) 1,150 Income taxes receivable (13 ) 9
(2 ) Other assets 342 1,477 792 Accounts payable and other current
liabilities (4,005 ) (425 ) (1,723 ) Deferred revenue 473 (681 )
(203 ) Income taxes payable (127 ) (2 ) (52 ) Other long term
liabilities 900 1,358 (269 ) Net
cash provided by (used in) operating activities 3,170
6,737 (4,548 )
Investing
activities Purchases of marketable securities - - (9,956 ) Sale
and maturities of marketable securities 28,315 5,700 9,840
Restricted cash (62,790 ) - - Purchases of property and equipment
(1,421 ) (3,960 ) (6,666 ) Net cash (used in)
provided by investing activities (35,896 ) 1,740
(6,782 )
Financing activities Principal
payments on capital lease obligations (159 ) (95 ) (358 ) Payment
of employee tax withholdings related to restricted stock vesting
(646 ) (348 ) (1,107 ) Cash paid for purchase of common stock - -
(957 ) Proceeds from line of credit 12,790 - - Proceeds from
employee stock plans 43 1,287
1,975 Net cash provided by (used in) financing activities
12,028 844 (447 ) Effect of
exchange rate changes on cash and cash equivalents 159
(93 ) (482 )
Net (decrease) increase in
cash and cash equivalents (20,539 ) 9,228 (12,259 )
Cash and
cash equivalents, beginning of period 44,680
35,452 57,767
Cash and cash
equivalents, end of period $ 24,141 $ 44,680 $
45,508
Use of Non-GAAP Financial Measures
To evaluate our business, we consider and use non-generally
accepted accounting principles (Non-GAAP) net loss, EBITDA 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, and amortization of
intangible assets. We believe that EBITDA provides a useful metric
to investors to compare us with other companies within our industry
and across industries. We define EBITDA as U.S. GAAP net loss
adjusted to exclude interest and other (income) expense, interest
expense, income tax expense, and depreciation and amortization. We
define Adjusted EBITDA as EBITDA 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 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 and Adjusted EBITDA have
limitations as analytical tools, and when assessing our operating
performance, Non-GAAP net loss, EBITDA 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 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;
- Adjusted EBITDA does 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 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
U.S. GAAP results and using Non-GAAP net income (loss), EBITDA, 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
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 March 31, 2016 December
31, 2015 March 31, 2015 Amount Per Share
Amount Per Share Amount Per Share
U.S. GAAP net loss $ (5,946 ) $ (0.06 ) $ (4,145 ) $ (0.04 )
$ (5,683 ) $ (0.06 ) Share-based compensation 3,496 0.03
2,863 0.03 3,069 0.03 Litigation expenses 1,178 0.01 402 0.00 19
0.00 Amortization of intangible assets 6 0.00
461 0.00 197
0.00 Non-GAAP net loss $ (1,266 ) $ (0.01 ) $
(419 ) $ (0.00 ) $ (2,398 ) $ (0.02 ) Weighted
average shares used in per share calculation 102,693 101,391 98,636
LIMELIGHT NETWORKS, INC. Reconciliation of
U.S. GAAP Net Loss to EBITDA to Adjusted EBITDA (In
thousands) (Unaudited)
Three Months Ended March 31, December
31, March 31, 2016
2015 2015 U.S. GAAP net
loss $ (5,946 ) $ (4,145 ) $ (5,683 ) Depreciation and
amortization 5,291 5,816 4,793 Interest expense 179 25 4 Interest
and other (income) expense (406 ) 321 (1,886 ) Income tax expense
158 46 55 EBITDA $
(724 ) $ 2,063 $ (2,717 ) Share-based compensation 3,496
2,863 3,069 Litigation expenses 1,178 402
19 Adjusted EBITDA $ 3,950 $
5,328 $ 371
For future periods, we are unable to provide a reconciliation of
EBITDA and Adjusted EBITDA to net loss as a result of the
uncertainty regarding, and the potential variability of, the
amounts of depreciation and amortization, interest expense,
interest and other (income) expense and income tax expense, that
may be incurred in the future.
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 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 full year 2016; gross margin, non-GAAP
net income (loss) and capital expenditures for the full year 2016;
our ability to generate cash for the full year 2016; our
expectations regarding the Akamai litigation and related potential
damages; 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 at www.SEC.gov. All information provided in this
release and in the attachments is as of April 27, 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) 2016 Limelight Networks, Inc. All rights reserved.
All product or service names are the property of their respective
owners.
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version on businesswire.com: http://www.businesswire.com/news/home/20160427006647/en/
Limelight Networks, Inc.Sajid Malhotra,
602-850-5778ir@llnw.com
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