- Revenue of $45.4 million, up 4 percent
year over year
- GAAP gross margin of 47.1%, up 390
basis points, year over year
- GAAP EPS of $(0.01) and Non-GAAP EPS of
$0.03
- Cash and marketable securities of $60.6
million
- Raising 2017 revenue, gross margin,
Non-GAAP earnings per share and Adjusted EBITDA guidance
Limelight Networks, Inc. (Nasdaq:LLNW) (Limelight), a global
leader in digital content delivery, today reported revenue of $45.4
million for the second quarter of 2017, up four percent compared to
$43.6 million in the second quarter of 2016, and up one percent
compared to $44.7 million in the first quarter of 2017. Currency
headwinds negatively impacted year-over-year comparison by $0.3
million, or one percent.
Gross margin was 47.1% in the second quarter of 2017, an
increase of 390 basis points from 43.2% in the second quarter of
2016.
On a GAAP basis, Limelight reported a net loss of $1.6 million,
or $0.01 per basic share, for the second quarter of 2017, compared
to a net loss of $57.9 million, or $0.56 per basic share, in the
second quarter of 2016. The second quarter of 2016 net loss
included a $54 million provision for litigation related to the
settlement of the Akamai lawsuit.
Non-GAAP net income was $2.9 million, or $0.03 per basic share,
for the second quarter of 2017, compared to non-GAAP net income of
$0.6 million, or $0.01 per basic share, in the second quarter of
2016.
EBITDA was $3.4 million for the second quarter of 2017, compared
to negative $52.4 million for the second quarter of 2016. Adjusted
EBITDA was $7.9 million for the second quarter of 2017, compared to
$6.2 million for the second quarter of 2016.
Limelight ended the second quarter with 533 employees and
employee equivalents, up from 528 employees at the end of the first
quarter of 2017, and up from 512 employees in the year ago
period.
“Our second quarter results continued to show meaningful
year-over year improvements across revenue, margin, profitability
and cash flow measures. Our performance improvements have
strengthened our financial profile and improved our competitive
position. Demand for our capabilities and services is growing and
our R&D investments and strategic focus are continuing to gain
traction. We continue to pursue numerous internal and external
opportunities to accelerate growth and profitability and expect
their realization to generate incremental shareholder returns,”
said Bob Lento, Chief Executive Officer at Limelight.
“Our solid and consistent first half performance coupled with
growing confidence as to our second half outlook, leads us to
expect that we can deliver full year 2017 results above our
previous guidance. We believe we may deliver close to double digit
revenue growth for the two remaining quarters, and along with
improving margins and continuing expense discipline, Limelight’s
2017 performance could represent our best year since we became a
publicly traded company,” Mr. Lento added.
Based on current conditions, for the full-year 2017, we are
providing the following updates to our previously announced
guidance for 2017:
Limelight Networks, Inc.2017 Guidance
2017 Guidance July 26, 2017
April 24, 2017 February 8, 2017 Revenue $180 to $182
million $177 to $181 million $175 to $180 million Gross
margin percentage
Expansion of 300 basispoints over 2016
Expansion of 200 basispoints over 2016
Expansion of more than 150basis points
over 2016
Non-GAAP EPS $0.05 to $0.07 $0.03 to $0.06 $0.02 to $0.06
Adjusted EBITDA $24 to $28 million $23 to $27 million $22 to
$27 million Capital expenditures Approx. $20 million Approx.
$20 million Approx. $20 million
Financial Tables
LIMELIGHT NETWORKS, INC.CONDENSED CONSOLIDATED
BALANCE SHEETS(In thousands, except per share data)
June 30,2017 March
31,2017 December 31,2016
(Unaudited) (Unaudited) ASSETS Current assets:
Cash and cash equivalents $ 22,972 $ 19,152 $ 21,734 Marketable
securities 37,624 41,676 44,453 Accounts receivable, net 28,154
26,191 27,418 Income taxes receivable 112 99 125 Prepaid expenses
and other current assets 4,121 3,989
4,865 Total current assets 92,983 91,107 98,595
Property and equipment, net 30,415 30,204 30,352 Marketable
securities, less current portion 40 40 40 Deferred income taxes
1,307 1,193 1,105 Goodwill 77,032 76,702 76,243 Other assets
1,802 1,806 1,794 Total assets $
203,579 $ 201,052 $ 208,129
LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities:
Accounts payable $ 10,763 $ 8,558 $ 8,790 Deferred revenue 1,741
1,845 2,138 Income taxes payable 334 193 188 Provision for
litigation 18,000 18,000 18,000 Other current liabilities
12,722 10,600 12,836 Total
current liabilities 43,560 39,196 41,952 Deferred income taxes 147
154 152 Deferred revenue, less current portion 15 13 22 Provision
for litigation, less current portion 18,000 22,500 27,000 Other
long-term liabilities 1,057 1,238
1,435 Total liabilities 62,779 63,101 70,561
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; 109,248, 107,979 and 107,059 shares
issued and outstanding at June 30, 2017, March 31, 2017 and
December 31, 2016, respectively 109 108 107 Additional paid-in
capital 497,018 493,567 490,819 Accumulated other comprehensive
loss (9,045 ) (10,067 ) (11,038 ) Accumulated deficit
(347,282 ) (345,657 ) (342,320 ) Total stockholders'
equity 140,800 137,951 137,568
Total liabilities and stockholders' equity $ 203,579
$ 201,052 $ 208,129
LIMELIGHT
NETWORKS, INC.CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS(In thousands, except per share
data)(Unaudited)
Three Months Ended Six Months Ended
June 30,2017 March 31,2017
PercentChange June 30,2016
PercentChange June 30,2017 June
30,2016 PercentChange Revenues $
45,370 $ 44,735 1 % $ 43,560 4 % $ 90,105
$ 84,982 6 % Cost of revenue: Cost of services (1)
19,464 19,007 2 % 20,271 -4 % 38,471 40,380 -5 % Depreciation -
network 4,531 4,557 -1 % 4,489
1 % 9,088 9,157 -1 % Total cost
of revenue 23,995 23,564 2 %
24,760 -3 % 47,559 49,537 -4 %
Gross profit 21,375 21,171 1 % 18,800 14 % 42,546 35,445 20 % Gross
profit percentage 47.1 % 47.3 % 43.2 % 47.2 % 41.7 % Operating
expenses: General and administrative (1) 6,804 8,514 -20 % 7,241 -6
% 15,319 14,049 9 % Sales and marketing (1) 8,997 9,267 -3 % 8,117
11 % 18,265 17,020 7 % Research & development (1) 6,715 6,220 8
% 6,289 7 % 12,934 12,614 3 % Depreciation and amortization 597 589
1 % 626 -5 % 1,186 1,249 -5 % Provision for litigation -
- NA 54,000 NA -
54,000 NA Total operating expenses 23,113
24,590 -6 % 76,273 -70 %
47,704 98,932 -52 % Operating loss
(1,738 ) (3,419 ) -49 % (57,473 ) -97 % (5,158 ) (63,487 ) -92 %
Other income (expense): Interest expense (10 ) (14 ) -29 %
(279 ) -96 % (24 ) (459 ) -95 % Interest income 121 117 3 % 8 1413
% 239 14 1607 % Other, net 153 87 76 %
(79 ) -294 % 241 321 -25 % Total
other income (expense) 264 190 39 %
(350 ) -175 % 456 (124 ) -468 %
Loss before income taxes (1,474 ) (3,229 ) -54 % (57,823 ) -97 %
(4,702 ) (63,611 ) -93 % Income tax expense 151
108 40 % 115 31 % 260
273 -5 % Net loss (1,625 )
(3,337 ) -51 % (57,938 ) -97 % (4,962 )
(63,884 ) -92 % Net loss per share: Basic and diluted $
(0.01 ) $ (0.03 ) $ (0.56 ) $ (0.05 ) $ (0.62 ) Weighted
average shares used in per share calculation: Basic and diluted
108,422 107,363 103,904 107,893 103,299
(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 30,2017 March
31,2017 June 30,2016 June
30,2017 June 30,2016
Share-based compensation: Cost of services $ 364 $
359 $ 436 $ 723 $ 909 General and administrative 1,674 1,534 1,677
3,208 3,503 Sales and marketing 617 620 638 1,237 1,375 Research
and development 600 562 542
1,162 1,002 Total share-based
compensation $ 3,255 $ 3,075 $ 3,293 $ 6,330 $
6,789
Depreciation and amortization:
Network-related depreciation $ 4,531 $ 4,557 $ 4,489 $ 9,088 $
9,157 Other depreciation and amortization 597 589 620 1,186 1,237
Amortization of intangible assets - -
6 - 12 Total depreciation
and amortization $ 5,128 $ 5,146 $ 5,115 $ 10,274
$ 10,406 Net increase (decrease) in
cash, cash equivalents and marketable securities: $ (232 ) $ (5,359
) $ 6,744 $ (5,591 ) $ (42,117 )
End of period
statistics: Approximate number of active customers 779
813 904 779 904 Number of employees and employee equivalents
533 528 512 533 512
LIMELIGHT NETWORKS,
INC.CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS(In thousands)(Unaudited)
Three Months Ended Six
Months Ended June 30,2017 March
31,2017 June 30,2016 June
30,2017 June 30,2016 Operating
activities Net loss $ (1,625 ) $ (3,337 ) $ (57,938 ) $ (4,962
) $ (63,884 ) Adjustments to reconcile net loss to net cash
provided by operating activities: Depreciation and amortization
5,128 5,146 5,115
10,274
10,406 Share-based compensation 3,255 3,075 3,293 6,330 6,789
Provision for litigation - - 54,000 - 54,000 Foreign currency
remeasurement loss 290 289 467 579 166 Deferred income taxes (94 )
(50 ) (68 ) (144 ) 14 Gain on sale of property and equipment (17 )
(75 ) (134 ) (92 ) (134 ) Accounts receivable charges (recoveries)
241 249 83 490 (33 ) Amortization of premium on marketable
securities 80 83 - 163 19 Realized loss on sale of marketable
securities - - - - 32 Changes in operating assets and liabilities:
Accounts receivable (2,204 ) 978 2,497 (1,226 ) 1,957 Prepaid
expenses and other current assets (47 ) 914 (191 ) 867 3,392 Income
taxes receivable (8 ) 29 51 21 38 Other assets 11 (3 ) 166 8 508
Accounts payable and other current liabilities 3,861 (1,160 ) 1,566
2,701 (2,439 ) Deferred revenue (101 ) (302 ) (934 ) (403 ) (461 )
Income taxes payable 138 (4 ) 72 134 (55 ) Payments for provision
for litigation (4,500 ) (4,500 ) - (9,000 ) - Other long term
liabilities (185 ) (197 ) (1,237 )
(382
) (337 ) Net cash provided by operating activities
4,223 1,135 6,808 5,358
9,978
Investing activities
Purchases of marketable securities (2,993 ) (4,526 ) - (7,519 ) -
Sale and maturities of marketable securities 6,994 7,250 - 14,244
28,315 Change in restricted cash - - - - (62,790 ) Purchases of
property and equipment (4,733 ) (5,745 ) (259 ) (10,478 ) (1,680 )
Proceeds from sale of property and equipment 22
58 - 80 -
Net cash used in investing activities (710 ) (2,963 )
(259 ) (3,673 ) (36,155 )
Financing
activities Principal payments on capital lease obligations - -
(319 ) - (478 ) Payment of employee tax withholdings related to
restricted stock vesting (880 ) (1,036 ) (298 ) (1,916 ) (944 )
Proceeds from line of credit - - - - 12,790 Proceeds from employee
stock plans 1,077 111 813
1,188 856 Net cash provided by (used
in) financing activities 197 (925 ) 196
(728 ) 12,224 Effect of exchange rate
changes on cash and cash equivalents 110 171
(1 ) 281 158
Net
increase (decrease) in cash and cash equivalents 3,820 (2,582 )
6,744 1,238 (13,795 )
Cash and cash equivalents, beginning of
period 19,152 21,734 24,141
21,734 44,680
Cash and cash
equivalents, end of period $ 22,972 $ 19,152 $
30,885 $ 22,972 $ 30,885
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 provision for
litigation, 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 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 provision for litigation, 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 Loss to Non-GAAP Net Income (Loss)(In
thousands)(Unaudited)
Three Months
Ended Six Months Ended June 30, 2017
March 31, 2017 June 30, 2016 June 30, 2017
June 30, 2016 Amount Per Share Amount
Per Share Amount Per Share Amount
Per Share Amount Per Share U.S. GAAP
net loss $ (1,625 ) $ (0.01 ) $ (3,337 ) $ (0.03 ) $ (57,938 ) $
(0.56 ) $ (4,962 ) $ (0.05 ) $ (63,884 ) $ (0.62 ) Provision
for litigation - - - - 54,000 0.52 - - 54,000 0.52 Share-based
compensation 3,255 0.03 3,075 0.03 3,293 0.03 6,330 0.06 6,789 0.07
Litigation expenses 1,276 0.01 1,909 0.02 1,271 0.01 3,185 0.03
2,449 0.02 Amortization of intangible assets -
- - - 6
0.00 - - 12
0.00 Non-GAAP net income (loss) $ 2,906 $ 0.03
$ 1,647 $ 0.02 $ 632 $ 0.01 $
4,553 $ 0.04 $ (634 ) $ (0.01 )
Weighted average shares used in per share calculation 108,422
107,363 103,904 107,893 103,299
LIMELIGHT NETWORKS, INC.Reconciliation of
U.S. GAAP Net Loss to EBITDA to Adjusted EBITDA(In
thousands)(Unaudited) Three Months
Ended Six Months Ended June 30,2017
March 31,2017 June 30,2016 June
30,2017 June 30,2016 U.S. GAAP net
loss $ (1,625 ) $ (3,337 ) $ (57,938 ) $ (4,962 ) $ (63,884 )
Depreciation and amortization 5,128 5,146 5,115 10,274
10,406 Interest expense 10 14 279 24 459 Interest and other
(income) expense (274 ) (204 ) 71 (480 ) (335 ) Income tax expense
151 108 115 260
273 EBITDA $ 3,390 $ 1,727 $ (52,358 )
$ 5,116 $ (53,081 ) Provision for litigation - - 54,000 -
54,000 Share-based compensation 3,255 3,075 3,293 6,330 6,789
Litigation expenses 1,276 1,909
1,271 3,185 2,449
Adjusted EBITDA $ 7,921 $ 6,711 $ 6,206 $
14,631 $ 10,157
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. EST (1:30 p.m. PST) today, management
will host a quarterly conference call for investors. Investors can
access this call toll-free at 888-317-6016 within the United States
or +1 412-317-6016 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 26, 2017, 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) 2017 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/20170726006122/en/
Limelight Networks, Inc.Sajid Malhotra,
602-850-5778ir@llnw.com
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