- Revenue of $50.2 million, up 11 percent
year over year
- GAAP gross margin of 49.4%, up 230
basis points, year over year
- GAAP basic EPS of $0.14 and Non-GAAP
EPS of $0.04
- Cash and marketable securities of $45.6
million
- Raises revenue guidance for full year
2018, with lower capital expenditures
Limelight Networks, Inc. (Nasdaq:LLNW) (Limelight), a global
leader in digital content delivery, today reported revenue of $50.2
million for the second quarter of 2018, up 11% compared to $45.4
million in the second quarter of 2017. Currency did not materially
impact reported revenue in the quarter.
Gross margin was 49.4% in the second quarter of 2018, an
increase of 230 basis points from 47.1% in the second quarter of
2017.
On a GAAP basis, Limelight reported net income of $15.2 million,
or $0.14 per basic share and $0.13 per fully diluted share, for the
second quarter of 2018, compared to a net loss of $1.6 million, or
$0.01 per basic share, in the second quarter of 2017. Net income in
the second quarter of 2018 included $14.9 million of non-operating
income ($0.13 per basic share and $0.12 per fully diluted share)
related to a settlement and patent license agreement.
Non-GAAP net income was $4.0 million, or $0.04 per basic share,
for the second quarter of 2018, compared to $2.9 million, or $0.03
per basic share, in the second quarter of 2017.
EBITDA was $20.3 million for the second quarter of 2018,
compared to $3.4 million for the second quarter of 2017. Adjusted
EBITDA was $9.2 million for the second quarter of 2018, compared to
$7.9 million for the second quarter of 2017.
Limelight ended the second quarter with 549 employees and
employee equivalents, up from 544 at the end of the first quarter
of 2018, and up from 533 in the year ago period.
“Limelight’s customers rewarded us once again in the second
quarter of 2018, for our commitment to providing them with the best
tools, value, reliability, and customer care. Limelight’s revenues
grew more than 11% over the prior year quarter, driven by video
delivery services. Limelight generated strong operating cash flow
for the quarter, and further strengthened its balance sheet. After
raising full-year guidance in April, we remain on track to achieve
those results, on even lower capital expenditures. We’re pleased
with Limelight’s results through the half-year mark, and owe great
thanks to each of our committed employees for putting us on track
to make 2018 our best year yet,” said Bob Lento, Chief Executive
Officer, Limelight Networks.
“Financial discipline, along with continued investments in
people, technology, and services, and our deep understanding of the
intricacies of delivering content closer to the consumer, uniquely
position Limelight to capitalize on emerging opportunities in
low-latency, secure, Edge computing, analytics and communications.
We continue to find opportunities to tune our infrastructure for
sustained, cost efficient growth, to fully exploit Limelight’s
unique Edge-centric platform, and to generate higher shareholder
returns,” Lento added.
Based on current conditions, we are raising our previously
issued guidance on April 19, 2018 for revenue, from $198 to $202
million to $200 to $203 million. Gross margin percentage
improvement, GAAP earnings per share, non-GAAP earnings per share,
and adjusted EBITDA remain unchanged. We now expect capital
expenditures to be below $20 million for the full year, down from
our previous expectation of between $20 and $22 million.
Financial Tables
LIMELIGHT
NETWORKS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except per share data) June 30,
March 31, December 31, 2018 2018
2017 (Unaudited) (Unaudited) ASSETS
Current assets: Cash and cash equivalents $ 28,719 $ 19,863 $
20,912 Marketable securities 16,851 23,832 28,404 Accounts
receivable, net 31,862 32,433 32,381 Income taxes receivable 153
224 98 Prepaid expenses and other current assets 18,147
5,717 5,397 Total current assets
95,732 82,069 87,192 Property and equipment, net 26,303 27,371
28,991 Marketable securities, less current portion 40 40 40
Deferred income taxes 1,550 1,546 1,506 Goodwill 76,648 77,027
77,054 Other assets 2,235 2,174
1,665 Total assets $ 202,508 $ 190,227 $
196,448
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities: Accounts payable $ 6,179 $ 10,376 $ 4,439
Deferred revenue 965 950 1,187 Income taxes payable 219 72 452
Provision for litigation 18,000 18,000 18,000 Other current
liabilities 12,269 11,495 18,507
Total current liabilities 37,632 40,893 42,585 Deferred
income taxes 124 159 144 Deferred revenue, less current portion 37
16 16 Provision for litigation, less current portion - 4,500 9,000
Other long-term liabilities 389 411
558 Total liabilities 38,182 45,979 52,303
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; 112,478, 110,657 and 110,824 shares
issued and outstanding at June 30, 2018, March 31, 2018 and
December 31, 2017, respectively 112 111 111 Additional paid-in
capital 506,684 500,305 502,312 Accumulated other comprehensive
loss (9,324 ) (7,861 ) (8,328 ) Accumulated deficit (333,146
) (348,307 ) (349,950 ) Total stockholders' equity
164,326 144,248 144,145
Total liabilities and stockholders' equity $ 202,508 $
190,227 $ 196,448
LIMELIGHT NETWORKS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In
thousands, except per share data) (Unaudited)
Three Months Ended Six Months Ended
June 30, March 31, Percent June 30,
Percent June 30, June 30, Percent
2018 2018 Change 2017 Change
2018 2017 Change Revenue $ 50,249
$ 52,114 -4% $ 45,370 11% $ 102,363 $
90,105 14% Cost of revenue: Cost of services (1) 21,206
21,054 1% 19,464 9% 42,260 38,471 10% Depreciation - network
4,196 4,380 -4% 4,531 -7%
8,576 9,088 -6% Total cost of revenue
25,402 25,434 0% 23,995 6%
50,836 47,559 7% Gross profit 24,847
26,680 -7% 21,375 16% 51,527 42,546 21% Gross profit percentage
49.4 % 51.2 % 47.1 % 50.3 % 47.2 % Operating expenses: General and
administrative (1) 7,517 9,522 -21% 6,804 10% 17,038 15,319 11%
Sales and marketing (1) 10,022 10,280 -3% 8,997 11% 20,302 18,265
11% Research & development (1) 6,073 6,339 -4% 6,715 -10%
12,412 12,934 -4% Depreciation and amortization 633
588 8% 597 6% 1,221
1,186 3% Total operating expenses 24,245
26,729 -9% 23,113 5%
50,973 47,704 7% Operating income
(loss) 602 (49 ) NM (1,738 ) NM 554 (5,158 ) NM Other income
(expense): Interest expense (7 ) (59 ) NM (10 ) NM (66 ) (24 ) NM
Interest income 134 130 3% 121 11% 263 239 10% Settlement and
patent license income 14,900 - NM - NM 14,900 - NM Other, net
(221 ) 112 NM 153 NM (109
) 241 NM Total other income 14,806
183 NM 264 NM 14,988
456 NM Income (loss) before income taxes
15,408 134 NM (1,474 ) NM 15,542 (4,702 ) NM Income tax expense
(benefit) 249 (15 ) NM 151 NM
234 260 NM Net income (loss)
15,159 149 NM (1,625 ) NM
15,308 (4,962 ) NM Net income (loss) per
share: Basic $ 0.14 $ 0.00 $ (0.01 ) $ 0.14 $
(0.05 ) Diluted $ 0.13 $ 0.00 $ (0.01 ) $ 0.13
$ (0.05 ) Weighted average shares used in per share
calculation: Basic 111,356 110,761 108,422 111,059 107,893 Diluted
120,033 118,909 108,422 119,454 107,893 (1) Includes
share-based compensation (see supplemental table for figures)
LIMELIGHT NETWORKS, INC.
SUPPLEMENTAL FINANCIAL DATA (In thousands)
(Unaudited) Three Months Ended Six
Months Ended June 30, March 31, June
30, June 30, June 30, 2018 2018
2017 2018 2017 Share-based
compensation: Cost of services $ 350 $ 357 $ 364 $ 707 $
723 General and administrative 1,969 1,810 1,674 3,779 3,208 Sales
and marketing 633 603 617 1,236 1,237 Research and development
605 597 600 1,202
1,162 Total share-based compensation $ 3,557 $ 3,367
$ 3,255 $ 6,924 $ 6,330
Depreciation and amortization: Network-related
depreciation $ 4,196 $ 4,380 $ 4,531 $ 8,576 $ 9,088 Other
depreciation and amortization 633 588
597 1,221 1,186 Total
depreciation and amortization $ 4,829 $ 4,968 $ 5,128
$ 9,797 $ 10,274 Net increase
(decrease) in cash, cash equivalents and marketable securities: $
1,875 $ (5,621 ) $ (232 ) $ (3,746 ) $ (5,591 )
End of period statistics: Approximate number of
active customers 689 703 779 689 779 Number of employees and
employee equivalents 549 544 533 549 533
LIMELIGHT NETWORKS, INC. CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS (In thousands)
(Unaudited) Three Months Ended Six
Months Ended June 30, March 31, June
30, June 30, June 30, 2018 2018
2017 2018 2017 Operating
activities Net income (loss) $ 15,159 $ 149 $ (1,625 ) $ 15,308
$ (4,962 ) Adjustments to reconcile net income (loss) to net
cash provided by operating activities: Depreciation and
amortization 4,829 4,968 5,128 9,797 10,274 Share-based
compensation 3,557 3,367 3,255 6,924 6,330 Settlement and patent
license income (14,900 ) - - (14,900 ) - Foreign currency
remeasurement (gain) loss (271 ) 110 290 (161 ) 579 Deferred income
taxes (111 ) 41 (94 ) (70 ) (144 ) Gain on sale of property and
equipment (97 ) (16 ) (17 ) (113 ) (92 ) Accounts receivable
charges (recoveries) 78 218 241 296 490 Amortization of premium on
marketable securities 25 33 80 58 163 Changes in operating assets
and liabilities: Accounts receivable 493 (270 ) (2,204 ) 223 (1,226
) Prepaid expenses and other current assets (655 ) 882 (47 ) 227
867 Income taxes receivable 61 (124 ) (8 ) (63 ) 21 Other assets
(72 ) (495 ) 11 (567 ) 8 Accounts payable and other current
liabilities (3,298 ) (2,286 ) 3,861 (5,584 ) 2,701 Deferred revenue
37 130 (101 ) 167 (403 ) Income taxes payable 160 (397 ) 138 (237 )
134 Payments for provision for litigation (1,520 ) (4,500 ) (4,500
) (6,020 ) (9,000 ) Other long term liabilities (19 )
(151 ) (185 ) (170 ) (382 ) Net cash provided
by operating activities 3,456 1,659
4,223 5,115 5,358
Investing activities Purchases of marketable securities - -
(2,993 ) - (7,519 ) Sale and maturities of marketable securities
7,000 4,515 6,994 11,515 14,244 Purchases of property and equipment
(4,291 ) (1,990 ) (4,733 ) (6,281 ) (10,478 ) Proceeds from sale of
property and equipment 97 16 22
113 80 Net cash provided by
(used in) investing activities 2,806 2,541
(710 ) 5,347 (3,673 )
Financing activities Payment of employee tax withholdings
related to restricted stock vesting (1,206 ) (1,606 ) (880 ) (2,812
) (1,916 ) Cash paid for purchase of common stock - (3,800 ) -
(3,800 ) - Proceeds from employee stock plans 4,032
30 1,077 4,062
1,188 Net cash provided by (used in) financing activities
2,826 (5,376 ) 197 (2,550
) (728 ) Effect of exchange rate changes on cash and cash
equivalents (232 ) 127 110
(105 ) 281
Net increase (decrease) in cash
and cash equivalents 8,856 (1,049 ) 3,820 7,807 1,238
Cash
and cash equivalents, beginning of period 19,863
20,912 19,152 20,912
21,734
Cash and cash equivalents, end of
period $ 28,719 $ 19,863 $ 22,972 $ 28,719
$ 22,972
Use of Non-GAAP Financial Measures
To evaluate our business, we consider and use non-generally
accepted accounting principles (Non-GAAP) net income (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 income (loss) to be an important indicator of overall
business performance. We define Non-GAAP net income (loss) to be
U.S. GAAP net income (loss) adjusted to exclude the settlement and
patent license income, share-based compensation and litigation
expenses. 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 income
(loss) adjusted to exclude depreciation and amortization, interest
expense, interest and other (income) expense, and income tax
expense. We define Adjusted EBITDA as EBITDA adjusted to exclude
the settlement and patent license income, share-based compensation
and litigation expenses. We use Adjusted EBITDA as a supplemental
measure to review and assess operating performance. Our management
uses these Non-GAAP financial measures because, collectively, they
provide valuable information on the performance of our on-going
operations, excluding non-cash charges, taxes and non-core
activities (including interest payments related to financing
activities). These measures also enable our management to compare
the results of our on-going operations from period to period, and
allow management to review the performance of our on-going
operations against our peer companies and against other companies
in our industry and adjacent industries. We believe these measures
also provide similar insights to investors, and enable investors to
review our results of operations “through the eyes of
management.”
Furthermore, our management uses these Non-GAAP financial
measures to assist them in making decisions regarding our strategic
priorities and areas for future investment and focus.
The terms Non-GAAP net income (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 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 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;
- Non-GAAP net income (loss) and Adjusted
EBITDA do not reflect the cash requirements necessary for
litigation costs, including provision for litigation and litigation
expenses;
- 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 Non-GAAP
net income (loss), 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 Income (Loss) to Non-GAAP Net
Income (In thousands) (Unaudited)
Three Months Ended Six Months Ended June 30,
2018 March 31, 2018 June 30, 2017 June 30,
2018 June 30, 2017 Amount Per Share
Amount Per Share Amount Per Share
Amount Per Share Amount Per Share
U.S. GAAP net income (loss) $ 15,159 $ 0.14 $ 149 $ 0.00 $
(1,625 ) $ (0.01 ) $ 15,308 $ 0.14 $ (4,962 ) $ (0.05 )
Settlement and patent license income (14,900 ) (0.13 ) - - - -
(14,900 ) (0.13 ) - - Share-based compensation 3,557 0.03 3,367
0.03 3,255 0.03 6,924 0.06 6,330 0.06 Litigation expenses
215 0.00 2,670 0.02 1,276
0.01 2,885 0.03
3,185 0.03 Non-GAAP net income $
4,031 $ 0.04 $ 6,186 $ 0.06 $ 2,906 $ 0.03
$ 10,217 $ 0.09 $ 4,553 $ 0.04
Weighted average basic shares used in per share
calculation 111,356 110,761 108,422 111,059 107,893
LIMELIGHT NETWORKS, INC. Reconciliation of U.S.
GAAP Net Income (Loss) to EBITDA to Adjusted EBITDA (In
thousands) (Unaudited) Three Months
Ended Six Months Ended June 30, March
31, June 30, June 30, June 30, 2018
2018 2017 2018 2017 U.S. GAAP
net income (loss) $ 15,159 $ 149 $ (1,625 ) $ 15,308 $ (4,962 )
Depreciation and amortization 4,829 4,968 5,128 9,797 10,274
Interest expense 7 59 10 66 24 Interest and other (income) expense
87 (242 ) (274 ) (154 ) (480 ) Income tax expense (benefit)
249 (15 ) 151 234
260 EBITDA $ 20,331 $ 4,919 $ 3,390 $ 25,251 $ 5,116
Settlement and patent license income (14,900 ) - - (14,900 )
- Share-based compensation 3,557 3,367 3,255 6,924 6,330 Litigation
expenses 215 2,670 1,276
2,885 3,185 Adjusted EBITDA $
9,203 $ 10,956 $ 7,921 $ 20,160 $
14,631
For future periods, we are unable to provide a reconciliation of
EBITDA and Adjusted EBITDA to net income (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.
2018 Guidance Table
Limelight
Networks, Inc. 2018 Guidance July 19,
2018 April 19, 2018 February 7, 2018 Revenue
$200 to $203 million
$198 to $202 million $196 to $200 million Gross margin
percentage No change
Expansion of 150 basispoints over 2017
Expansion of more than 100basis points
over 2017
GAAP EPS No change $0.07 to $0.11 $(0.07) to $(0.03)
Non-GAAP EPS No change $0.13 to $0.17 $0.11 to $0.15
Adjusted EBITDA No change $33 to $37 million $32 to $36 million
Capital expenditures Below $20 million $20 to $22 million
$22 to $24 million
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 877-296-5190 within the United States
or +1 412-317-5233 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 expectations regarding revenue,
gross margin, non-GAAP net income, capital expenditures,
litigation, and our future prospects. 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 July 19, 2018, 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, 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 Limelight Orchestrate
Platform includes a global infrastructure with a fully-integrated
suite of capabilities and services to help you address all your
content delivery needs. The Orchestrate Platform solves your most
important content delivery challenges so you can deliver the next
great digital experience anywhere. For more information, please
visit www.limelight.com and follow us
on Twitter, Facebook and LinkedIn.
Copyright (C) 2018 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: https://www.businesswire.com/news/home/20180719005792/en/
Limelight Networks, Inc.Sajid Malhotra,
602-850-5778ir@llnw.com
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