17% revenue growth and 730 basis points of gross margin
improvements underscore record performance
- Revenue of $46.1 million, up 17 percent
year over year
- GAAP gross margin of 48.4%, up 730
basis points, year over year
- GAAP EPS of $(0.02) and Non-GAAP EPS of
$0.02
- 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 $46.1
million for the third quarter of 2017, up 17% compared to $39.5
million in the third quarter of 2016, and up two percent compared
to $45.4 million in the second quarter of 2017. Currency exchange
negatively impacted year-over-year comparison by $0.2 million, or
less than one percent.
Gross margin was 48.4% in the third quarter of 2017, an increase
of 730 basis points from 41.1% in the third quarter of 2016.
On a GAAP basis, Limelight reported a net loss of $1.8 million,
or $0.02 per basic share, for the third quarter of 2017, compared
to a net loss of $6.1 million, or $0.06 per basic share, in the
third quarter of 2016.
Non-GAAP net income was $2.2 million, or $0.02 per basic share,
for the third quarter of 2017, compared to non-GAAP net loss of
$0.3 million, or break-even per basic share, in the third quarter
of 2016.
EBITDA was $3.4 million for the third quarter of 2017, compared
to negative $0.7 million for the third quarter of 2016. Adjusted
EBITDA was $7.4 million for the third quarter of 2017, compared to
$5.1 million for the third quarter of 2016.
Limelight ended the third quarter with 535 employees and
employee equivalents, up from 533 employees at the end of the
second quarter of 2017, and up from 502 employees in the year ago
period.
“We are pleased with Limelight’s third quarter results that
showed sequential improvements even in a seasonally weak quarter,
and marked record achievements across multiple key financial and
non-financial metrics. Customers continue to reward Limelight’s
performance gains by sending us more business, and we believe we
are continuing to take market share. Pricing discipline and
operational efficiencies are driving massive gains in gross margin,
and the significant and continuing improvement in our Net Promoter
Score confirms our customer’s growing satisfaction with the value
they obtain from Limelight,” said Bob Lento, Chief Executive
Officer at Limelight.
“In light of the strength of our results, we are again raising
guidance for Limelight’s full year revenue, gross margin, non-GAAP
earnings per share, and Adjusted EBITDA. We foresee Limelight’s
2017 operating performance to be our best ever, and we plan on
improving further in 2018. As we’ve said before, we operate in a
healthy and growing industry, we are proud to serve our customers,
we are a good partner for our vendors, we are a desirable employer,
and we are acutely focused on delivering exceptional shareholder
returns,” Mr. Lento added.
Based on current conditions, for the full-year 2017, we are
providing the following updates to our previously announced
guidance:
Limelight Networks, Inc.
2017 Guidance October 18, 2017 July 26,
2017 April 24, 2017 February 8, 2017 Revenue $182
to $185 million $180 to $182 million $177 to $181 million $175 to
$180 million Gross margin percentage
Expansion of morethan 450 basispoints over
2016
Expansion of 300 basispoints over 2016
Expansion of 200 basispoints over 2016
Expansion of more than 150basis points
over 2016
Non-GAAP EPS $0.06 to $0.08 $0.05 to $0.07 $0.03 to $0.06
$0.02 to $0.06 Adjusted EBITDA $26 to $29 million $24 to $28
million $23 to $27 million $22 to $27 million Capital
expenditures Approx. $20 million Approx. $20 million Approx. $20
million Approx. $20 million
Financial Tables
LIMELIGHT NETWORKS,
INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In
thousands, except per share data) September 30,
June 30, December 31, 2017 2017
2016 (Unaudited) (Unaudited) ASSETS
Current assets: Cash and cash equivalents $ 20,744 $ 22,972 $
21,734 Marketable securities 36,948 37,624 44,453 Accounts
receivable, net 28,712 28,154 27,418 Income taxes receivable 102
112 125 Prepaid expenses and other current assets 4,453
4,121 4,865 Total current assets
90,959 92,983 98,595 Property and equipment, net 29,835 30,415
30,352 Marketable securities, less current portion 40 40 40
Deferred income taxes 1,393 1,307 1,105 Goodwill 76,925 77,032
76,243 Other assets 1,794 1,802
1,794 Total assets $ 200,946 $ 203,579 $
208,129
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities: Accounts payable $ 8,804 $ 10,763 $ 8,790
Deferred revenue 1,694 1,741 2,138 Income taxes payable 383 334 188
Provision for litigation 18,000 18,000 18,000 Other current
liabilities 15,665 12,722 12,836
Total current liabilities 44,546 43,560 41,952 Deferred
income taxes 146 147 152 Deferred revenue, less current portion 15
15 22 Provision for litigation, less current portion 13,500 18,000
27,000 Other long-term liabilities 859 1,057
1,435 Total liabilities 59,066 62,779 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; 109,638, 109,248 and 107,059 shares
issued and outstanding at September 30, 2017, June 30, 2017 and
December 31, 2016, respectively 110 109 107 Additional paid-in
capital 499,487 497,018 490,819 Accumulated other comprehensive
loss (8,679 ) (9,045 ) (11,038 ) Accumulated deficit
(349,038 ) (347,282 ) (342,320 ) Total stockholders'
equity 141,880 140,800 137,568
Total liabilities and stockholders' equity $ 200,946
$ 203,579 $ 208,129
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 2017 2017 Change 2016
Change 2017 2016 Change Revenues
$ 46,069 $ 45,370 2% $ 39,473 17% $ 136,173
$ 124,456 9% Cost of revenue: Cost of services (1)
19,287 19,464 -1% 18,834 2% 57,758 59,214 -2% Depreciation -
network 4,506 4,531 -1% 4,401
2% 13,594 13,558 0% Total cost
of revenue 23,793 23,995 -1%
23,235 2% 71,352 72,772 -2%
Gross profit 22,276 21,375 4% 16,238 37% 64,821 51,684 25% Gross
profit percentage
48.4%
47.1%
41.1%
47.6%
41.5%
Operating expenses: General and administrative (1) 8,079 6,804 19%
8,033 1% 23,397 22,082 6 % Sales and marketing (1) 8,836 8,997 -2%
7,711 15% 27,100 24,730 10% Research & development (1) 6,443
6,715 -4% 5,626 15% 19,377 18,241 6% Depreciation and amortization
603 597 1% 613 -2% 1,789 1,862 -4% Provision for litigation
- - NA - NA -
54,000 NA Total operating expenses 23,961
23,113 4% 21,983 9%
71,663 120,915 -41% Operating loss
(1,685 ) (1,738 ) -3% (5,745 ) -71% (6,842 ) (69,231 ) -90%
Other income (expense): Interest expense (18 ) (10 ) 80% (406 )
-96% (42 ) (865 ) -95% Interest income 127 121 5% 8 1488% 365 22
1559% Other, net 8 153 -95% 151
-95% 249 472 -47% Total other
income (expense) 117 264 -56%
(247 ) -147% 572 (371 ) -254% Loss
before income taxes (1,568 ) (1,474 ) 6% (5,992 ) -74% (6,270 )
(69,602 ) -91% Income tax expense 188 151
25% 130 45% 448 404
11% Net loss (1,756 ) (1,625 ) 8%
(6,122 ) -71% (6,718 ) (70,006 ) -90%
Net loss per share: Basic and diluted $ (0.02 ) $ (0.01 ) $ (0.06 )
$ (0.06 ) $ (0.67 ) Weighted average shares used in per
share calculation: Basic and diluted 109,342 108,422 104,860
108,376 103,819 (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,
2017 2017 2016 2017 2016
Share-based compensation: Cost of services $
352 $ 364 $ 209 $ 1,075 $ 1,118 General and administrative 1,565
1,674 1,616 4,773 5,119 Sales and marketing 611 617 641 1,848 2,016
Research and development 584 600
521 1,746 1,523 Total share-based
compensation $ 3,112 $ 3,255 $ 2,987 $ 9,442 $
9,776
Depreciation and amortization:
Network-related depreciation $ 4,506 $ 4,531 $ 4,401 $ 13,594 $
13,558 Other depreciation and amortization 603 597 611 1,789 1,848
Amortization of intangible assets - -
2 - 14 Total depreciation and
amortization $ 5,109 $ 5,128 $ 5,014 $ 15,383
$ 15,420 Net increase (decrease) in cash, cash
equivalents and marketable securities: $ (2,904 ) $ (232 ) $ 43,515
$ (8,495 ) $ 1,398
End of period statistics:
Approximate number of active customers 753 779 875 753 875
Number of employees and employee equivalents 535 533 502 535
502
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, 2017 2017 2016 2017 2016
Operating activities Net loss $ (1,756 ) $ (1,625 ) $
(6,122 ) $ (6,718 ) $ (70,006 ) Adjustments to reconcile net
loss to net cash provided by operating activities: Depreciation and
amortization 5,109 5,128 5,014 15,383 15,420 Share-based
compensation 3,112 3,255 2,987 9,442 9,776 Provision for litigation
- - - - 54,000 Foreign currency remeasurement (gain) loss 79 290
343 658 509 Deferred income taxes (73 ) (94 ) (39 ) (217 ) (25 )
Gain on sale of property and equipment (2 ) (17 ) (162 ) (94 ) (296
) Accounts receivable charges 242 241 69 732 36 Amortization of
premium on marketable securities 65 80 - 228 19 Realized loss on
sale of marketable securities - - - - 32 Changes in operating
assets and liabilities: Accounts receivable (800 ) (2,204 ) 1,944
(2,026 ) 3,901 Prepaid expenses and other current assets (322 ) (47
) 941 545 4,333 Income taxes receivable 13 (8 ) 16 34 54 Other
assets 13 11 50 21 558 Accounts payable and other current
liabilities 2,048 3,861 1,769 4,749 (670 ) Deferred revenue (47 )
(101 ) (1,091 ) (450 ) (1,552 ) Income taxes payable 46 138 (21 )
180 (76 ) Payments for provision for litigation (4,500 ) (4,500 )
(4,500 ) (13,500 ) (4,500 ) Other long term liabilities (202
) (185 ) (213 ) (584 ) (550 ) Net cash
provided by operating activities 3,025 4,223
985 8,383 10,963
Investing activities Purchases of marketable
securities (2,864 ) (2,993 ) - (10,383 ) - Sale and maturities of
marketable securities 3,500 6,994 - 17,744 28,315 Change in
restricted cash - - 62,790 - - Purchases of property and equipment
(5,328 ) (4,733 ) (2,986 ) (15,806 ) (4,666 ) Proceeds from sale of
property and equipment 3 22 -
83 - Net cash (used in) provided
by investing activities (4,689 ) (710 ) 59,804
(8,362 ) 23,649
Financing
activities Principal payments on capital lease obligations - -
(4,207 ) - (4,685 ) Payment of employee tax withholdings related to
restricted stock vesting (655 ) (880 ) (362 ) (2,571 ) (1,306 )
Proceeds from line of credit - - (12,790 ) - - Proceeds from
employee stock plans 12 1,077 48
1,200 904 Net cash (used in)
provided by financing activities (643 ) 197
(17,311 ) (1,371 ) (5,087 ) Effect of exchange
rate changes on cash and cash equivalents 79
110 37 360 195
Net increase (decrease) in cash and cash equivalents (2,228
) 3,820 43,515 (990 ) 29,720
Cash and cash equivalents,
beginning of period 22,972 19,152
30,885 21,734 44,680
Cash and cash equivalents, end of period $ 20,744 $
22,972 $ 74,400 $ 20,744 $ 74,400
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 Nine Months Ended September 30, 2017
June 30, 2017 September 30, 2016 September 30,
2017 September 30, 2016 Amount Per Share
Amount Per Share Amount Per Share
Amount Per Share Amount Per Share
U.S. GAAP net loss $ (1,756 ) $ (0.02 ) $ (1,625 ) $ (0.01 )
$ (6,122 ) $ (0.06 ) $ (6,718 ) $ (0.06 ) $ (70,006 ) $ (0.67 )
Provision for litigation - - - - - - - - 54,000 0.52
Share-based compensation 3,112 0.03 3,255 0.03 2,987 0.03 9,442
0.09 9,776 0.09 Litigation expenses 863 0.01 1,276 0.01 2,837 0.03
4,048 0.04 5,286 0.05 Amortization of intangible assets -
- - - 2
0.00 - - 14
0.00 Non-GAAP net income (loss) $ 2,219
$ 0.02 $ 2,906 $ 0.03 $ (296 )
$
0.00 $ 6,772 $ 0.06 $ (930 ) $ (0.01 )
Weighted average shares used in per share calculation
109,342 108,422 104,860 108,376 103,819
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, 2017 2017
2016 2017 2016 U.S. GAAP net loss $
(1,756 ) $ (1,625 ) $ (6,122 ) $ (6,718 ) $ (70,006 )
Depreciation and amortization 5,109 5,128 5,014 15,383 15,420
Interest expense 18 10 406 42 865 Interest and other (income)
expense (135 ) (274 ) (159 ) (614 ) (494 ) Income tax expense
188 151 130 448
404 EBITDA $ 3,424 $ 3,390 $ (731 ) $
8,541 $ (53,811 ) Provision for litigation - - - - 54,000
Share-based compensation 3,112 3,255 2,987 9,442 9,776 Litigation
expenses 863 1,276 2,837
4,048 5,286 Adjusted EBITDA $
7,399 $ 7,921 $ 5,093 $ 22,031 $ 15,251
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 October 18, 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, 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) 2017 Limelight Networks, Inc. All rights reserved.
All product or service names are the property of their respective
owners.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20171018006355/en/
Limelight Networks, Inc.Sajid Malhotra,
602-850-5778ir@llnw.com
Limelight Networks (NASDAQ:LLNW)
Historical Stock Chart
From Feb 2024 to Mar 2024
Limelight Networks (NASDAQ:LLNW)
Historical Stock Chart
From Mar 2023 to Mar 2024