- Record third quarter revenue of $59.2 million, up 15% year over
year
- GAAP basic EPS of $(0.03) and Non-GAAP EPS of $(0.01)
- Adjusted EBITDA of $5.6 million
- Issued $125.0 million senior convertible notes due 2025
Limelight Networks, Inc. (Nasdaq: LLNW) (Limelight), a leading
provider of video delivery and edge cloud services, today reported
record revenue of $59.2 million for the third quarter of 2020, up
15 percent, compared to $51.3 million in the third quarter of
2019.
Limelight reported a GAAP net loss of $4.0 million, or $(0.03)
per basic share for the third quarter of 2020, compared to a net
loss of $2.8 million, or $(0.02) per basic share in the third
quarter of 2019. GAAP net loss included $1.7 million of interest
expense related to our convertible notes issued during the third
quarter of 2020.
Non-GAAP net loss was $1.2 million or $(0.01) per basic share
for the third quarter of 2020, compared to non-GAAP net income of
$0.6 million, or $0.01 per basic share in the third quarter of
2019. Non-GAAP net loss excluded $0.9 million of interest expense
related to our convertible notes issued during the third quarter of
2020.
EBITDA was $3.7 million for the third quarter of 2020, compared
to $2.5 million for the third quarter of 2019. Adjusted EBITDA was
$5.6 million for the third quarter of 2020 compared to $5.8 million
for the third quarter of 2019.
Limelight ended the third quarter with 620 employees and
employee equivalents, down from 627 at the end of the second
quarter of 2020, and up from 609 at the end of the third quarter of
2019.
“Q3 was a very strong quarter for us on a number of fronts as we
experienced our second highest quarter of revenue ever and made
material progress across our strategic imperatives. Most notable in
the quarter was the expansion of our edge capabilities with the
launch of Edge Functions and gains in our automated traffic
engineering efforts to optimize network performance and customer
experience. As we have consistently done all year, we continue to
make investments in the business to support our strategy of
doubling down on edge innovation with focus on video, media and
gaming customers. We are on track to deliver record revenue and
revenue growth for 2020, along with meaningful increases across
multiple financial and operational metrics. We are well-positioned
to continue delivering value for our customers and growth for our
shareholders.” said Robert Lento, Chief Executive Officer.
We are leaving our full-year 2020 guidance unchanged, except for
the impact of the convertible debt offering interest expense on
GAAP and Non-GAAP EPS. The ranges for GAAP and Non-GAAP EPS have
been adjusted by $0.03 and $0.02, respectively.
Limelight Networks,
Inc.
2020 Guidance
Current Guidance
Previous Guidance
Actual 2019
Revenue
$230 to $240 million
$230 to $240 million
$200.6 million
GAAP Basic EPS
$(0.13) to $(0.03)
$(0.10) to break-even
$(0.14)
Non-GAAP EPS
$(0.02) to $0.08
Break-even to $0.10
$(0.02)
Adjusted EBITDA
$28 to $35 million
$28 to $35 million
$18.1 million
Capital expenditures
$25 to $30 million
$25 to $30 million
$34.7 million
Financial Tables
LIMELIGHT NETWORKS, INC. CONDENSED CONSOLIDATED BALANCE
SHEETS (In thousands, except per share data)
September 30, June 30, December 31,
2020
2020
2019
(Unaudited) (Unaudited) ASSETS Current assets:
Cash and cash equivalents
$
75,169
$
18,200
$
18,335
Marketable securities
49,623
-
-
Accounts receivable, net
42,222
45,246
34,476
Income taxes receivable
81
68
82
Prepaid expenses and other current assets
12,561
10,241
9,920
Total current assets
179,656
73,755
62,813
Property and equipment, net
47,493
48,908
46,136
Operating lease right of use assets
10,844
11,449
12,842
Marketable securities, less current portion
40
40
40
Deferred income taxes
1,428
1,328
1,319
Goodwill
77,126
77,113
77,102
Other assets
7,459
7,915
9,117
Total assets
$
324,046
$
220,508
$
209,369
LIABILITIES AND STOCKHOLDERS' EQUITY Current
liabilities: Accounts payable
$
12,437
$
17,004
$
12,020
Deferred revenue
797
934
976
Operating lease liability obligations
2,654
2,390
2,056
Income taxes payable
153
169
178
Other current liabilities
17,584
17,028
13,398
Total current liabilities
33,625
37,525
28,628
Convertible senior notes, net
99,937
-
-
Operating lease liability obligations, less current portions
11,745
12,316
13,488
Deferred income taxes
251
283
239
Deferred revenue, less current portion
230
265
161
Other long-term liabilities
579
304
316
Total liabilities
146,367
50,693
42,832
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; 122,824,
121,692 and 118,368 shares issued and outstanding at September 30,
2020, June 30, 2020 and December 31, 2019, respectively
123
122
118
Additional paid-in capital
552,559
541,363
530,285
Accumulated other comprehensive loss
(9,379
)
(10,031
)
(9,210
)
Accumulated deficit
(365,624
)
(361,639
)
(354,656
)
Total stockholders' equity
177,679
169,815
166,537
Total liabilities and stockholders' equity
$
324,046
$
220,508
$
209,369
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 Change
September 30,
Percent Change
September 30,
September 30,
Percent Change
2020
2020
2019
2020
2019
Revenue
$
59,243
$
58,546
1
%
$
51,321
15
%
$
174,801
$
140,505
24
%
Cost of revenue: Cost of services (1)
31,905
29,389
9
%
25,602
25
%
92,406
71,311
30
%
Depreciation - network
5,602
5,360
5
%
4,961
13
%
16,112
13,905
16
%
Total cost of revenue
37,507
34,749
8
%
30,563
23
%
108,518
85,216
27
%
Gross profit
21,736
23,797
-9
%
20,758
5
%
66,283
55,289
20
%
Gross profit percentage
36.7
%
40.6
%
40.4
%
37.9
%
39.4
%
Operating expenses: General and administrative (1)
7,751
8,187
-5
%
7,356
5
%
23,820
23,231
3
%
Sales and marketing (1)
10,456
10,929
-4
%
10,713
-2
%
33,279
32,679
2
%
Research & development (1)
5,425
5,572
-3
%
5,160
5
%
16,614
17,075
-3
%
Depreciation and amortization
384
323
19
%
172
123
%
1,049
545
92
%
Total operating expenses
24,016
25,011
-4
%
23,401
3
%
74,762
73,530
2
%
Operating loss
(2,280
)
(1,214
)
NM
(2,643
)
NM
(8,479
)
(18,241
)
NM
Other income (expense): Interest expense
(1,674
)
(71
)
NM
(10
)
NM
(1,756
)
(30
)
NM
Interest income
10
6
NM
81
NM
40
402
NM
Other, net
25
(312
)
NM
(13
)
NM
(396
)
(89
)
NM
Total other (expense) income
(1,639
)
(377
)
NM
58
NM
(2,112
)
283
NM
Loss before income taxes
(3,919
)
(1,591
)
NM
(2,585
)
NM
(10,591
)
(17,958
)
NM
Income tax expense
66
136
NM
166
NM
377
544
NM
Net loss
$
(3,985
)
$
(1,727
)
NM
$
(2,751
)
NM
$
(10,968
)
$
(18,502
)
NM
Net loss per share: Basic
$
(0.03
)
$
(0.01
)
$
(0.02
)
$
(0.09
)
$
(0.16
)
Diluted
$
(0.03
)
$
(0.01
)
$
(0.02
)
$
(0.09
)
$
(0.16
)
Weighted average shares used in per share calculation: Basic
122,363
120,230
116,270
120,519
115,318
Diluted
122,363
120,230
116,270
120,519
115,318
(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,
2020
2020
2019
2020
2019
Share-based compensation: Cost of services
$
130
$
792
$
331
$
1,685
$
1,119
General and administrative
1,272
2,257
2,006
5,770
6,240
Sales and marketing
206
1,322
584
2,756
1,666
Research and development
315
880
437
2,027
1,438
Total share-based compensation
$
1,923
$
5,251
$
3,358
$
12,238
$
10,463
Depreciation and amortization: Network-related
depreciation
$
5,602
$
5,360
$
4,961
$
16,112
$
13,905
Other depreciation and amortization
384
323
172
1,049
545
Total depreciation and amortization
$
5,986
$
5,683
$
5,133
$
17,161
$
14,450
Net increase (decrease) in cash, cash equivalents and
marketable securities:
$
106,592
$
(3,221
)
$
(10,872
)
$
106,457
$
(32,416
)
End of period statistics: Approximate
number of active customers
534
560
609
534
609
Number of employees and employee equivalents
620
627
609
620
609
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,
2020
2020
2019
2020
2019
Operating activities Net loss
$
(3,985
)
$
(1,727
)
$
(2,751
)
$
(10,968
)
$
(18,502
)
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities: Depreciation and
amortization
5,986
5,683
5,133
17,161
14,450
Share-based compensation
1,923
5,251
3,358
12,238
10,463
Foreign currency remeasurement loss (gain)
27
257
21
(113
)
(104
)
Deferred income taxes
(95
)
59
(61
)
(80
)
(30
)
Gain on sale of property and equipment
(1
)
-
(5
)
(1
)
(56
)
Accounts receivable charges
163
155
580
476
1,274
Amortization of premium on marketable securities
87
-
9
87
29
Noncash interest expense
868
-
-
868
-
Changes in operating assets and liabilities: Accounts receivable
2,862
(10,798
)
(5,300
)
(8,221
)
(11,051
)
Prepaid expenses and other current assets
(2,232
)
986
(885
)
(2,679
)
(777
)
Income taxes receivable
(10
)
10
45
3
43
Other assets
757
1,121
781
2,504
(2,641
)
Accounts payable and other current liabilities
1,222
1,045
(2,798
)
8,159
3,675
Deferred revenue
(172
)
313
(112
)
(109
)
(557
)
Income taxes payable
(17
)
-
61
(15
)
204
Payments related to litigation, net
-
-
-
-
(3,040
)
Other long term liabilities
276
(15
)
16
265
(137
)
Net cash provided by (used in) operating activities
7,659
2,340
(1,908
)
19,575
(6,757
)
Investing activities Purchases of marketable
securities
(52,690
)
-
-
(52,690
)
(10,279
)
Sale and maturities of marketable securities
2,900
-
1,000
2,900
32,153
Purchases of property and equipment
(7,180
)
(8,085
)
(7,750
)
(22,128
)
(24,224
)
Proceeds from sale of property and equipment
1
-
5
1
51
Net cash provided by (used in) investing activities
(56,969
)
(8,085
)
(6,745
)
(71,917
)
(2,299
)
Financing activities Proceeds from issuance of debt,
net
121,600
-
-
121,600
-
Purchase of capped calls
(16,413
)
-
-
(16,413
)
-
Payment of debt issuance costs
(784
)
-
-
(784
)
-
Payment of employee tax withholdings related to restricted stock
vesting
(1,041
)
(1,430
)
(1,015
)
(3,987
)
(2,528
)
Proceeds from employee stock plans
2,598
3,954
13
8,691
1,116
Net cash provided by (used in) financing activities
105,960
2,524
(1,002
)
109,107
(1,412
)
Effect of exchange rate changes on cash and cash equivalents
319
-
(211
)
69
(83
)
Net increase (decrease) in cash and cash equivalents
56,969
(3,221
)
(9,866
)
56,834
(10,551
)
Cash and cash equivalents, beginning of period
18,200
21,421
24,698
18,335
25,383
Cash and cash equivalents, end of period
$
75,169
$
18,200
$
14,832
$
75,169
$
14,832
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 share-based
compensation and non-cash interest expense. 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 share-based compensation. 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
In accordance with the requirements of Item 10(e) of Regulation
S-K, we are presenting the most directly comparable U.S. GAAP
financial measures and reconciling the unaudited 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 Income (Loss) (In thousands)
(Unaudited) Three Months Ended Nine
Months Ended September 30, 2020 June 30,
2020 September 30, 2019 September 30, 2020
September 30, 2019 Amount Per Share
Amount Per Share Amount Per Share
Amount Per Share Amount Per Share
U.S. GAAP net loss
$
(3,985
)
$
(0.03
)
$
(1,727
)
$
(0.01
)
$
(2,751
)
$
(0.02
)
$
(10,968
)
$
(0.09
)
$
(18,502
)
$
(0.16
)
Share-based compensation
1,923
0.02
5,251
0.04
3,358
0.03
12,238
0.10
10,463
0.09
Non-cash interest expense
868
0.01
-
-
-
-
868
0.01
-
-
Non-GAAP net (loss) income
$
(1,194
)
$
(0.01
)
$
3,524
$
0.03
$
607
$
0.01
$
2,138
$
0.02
$
(8,039
)
$
(0.07
)
Weighted average basic shares used in per share
calculation
122,363
120,230
116,270
120,519
115,318
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,
2020
2020
2019
2020
2019
U.S. GAAP net loss
$
(3,985
)
$
(1,727
)
$
(2,751
)
$
(10,968
)
$
(18,502
)
Depreciation and amortization
5,986
5,683
5,133
17,161
14,450
Interest expense
1,674
71
10
1,756
30
Interest and other (income) expense
(35
)
306
(68
)
356
(313
)
Income tax expense
66
136
166
377
544
EBITDA
$
3,706
$
4,469
$
2,490
$
8,682
$
(3,791
)
Share-based compensation
1,923
5,251
3,358
12,238
10,463
Adjusted EBITDA
$
5,629
$
9,720
$
5,848
$
20,920
$
6,672
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.
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 877 296 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 (loss), capital expenditures, 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 October 22, 2020, 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, Inc. (NASDAQ: LLNW), a leading provider of
digital content delivery, video, cloud security, and edge computing
services, empowers customers to provide exceptional digital
experiences. Limelight’s edge services platform includes a unique
combination of global private infrastructure, intelligent software,
and expert support services that enable current and future
workflows. For more information, visit www.limelight.com, and
follow us on Twitter, Facebook and LinkedIn.
Copyright (C) 2020 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/20201022005946/en/
Limelight Networks, Inc. Sajid Malhotra, 602-850-5778
ir@llnw.com
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