- Q1 Revenue of $43.3 million
- Q1 GAAP EPS of $(0.07) and Non-GAAP EPS
of $(0.04)
- Cash and marketable securities of $38.7
million
- Confirming full year guidance
Limelight Networks, Inc. (Nasdaq: LLNW) (Limelight), a leading
provider of edge cloud services, today reported revenue of $43.3
million for the first quarter of 2019, down 17 percent, compared to
$52.1 million in the first quarter of 2018. Currency negatively
impacted year-over-year comparison by $0.3 million.
Limelight reported a net loss of $8.6 million, or $(0.07) per
basic share for the first quarter of 2019, compared to net income
of $0.1 million, or break-even per basic and fully diluted share in
the first quarter of 2018.
Non-GAAP net loss was $5.1 million or $(0.04) per basic share
for the first quarter of 2019, compared to non-GAAP net income of
$6.2 million, or $0.06 per basic share in the first quarter of
2018.
EBITDA was negative $4.1 million for the first quarter of 2019,
compared to positive $4.9 million for the first quarter of 2018.
Adjusted EBITDA was negative $0.6 million for the first quarter of
2019 compared to positive $11.0 million for the first quarter of
2018.
Limelight ended the first quarter with 562 employees and
employee equivalents, down from 563 at the end of the fourth
quarter of 2018, and up from 544 at the end of the first quarter of
2018.
Commenting on the first quarter, Chief Executive Officer, Robert
Lento said, “We entered 2019 expecting that first quarter
financial results would mark the low point for the year, but would
set the foundation for our best year ever across many financial and
operational measures. Results were largely in line with our
expectations as we invested heavily in opportunities that we
believe will yield significant revenue in the second half of 2019.
With the first quarter now behind us, we expect 2019 to show
meaningful sequential improvement going forward, and our
year–over-year growth rate in both percentages and actual dollars
should be our best in many years.
“The industry and our business is seeing demand pick up, and we
are expanding our footprint and building capacity and capability to
meet this global demand. To that end, customer churn showed
significant improvement, pipeline growth of opportunities with both
new and existing customers was very good, organic expansion of our
network and conversion of Ericsson’s PoPs picked up pace, Limelight
Realtime Streaming received widespread recognition, and edge
computing continued to attract mega trials. This traction gives us
confidence to confirm our full-year guidance.”
Based on current conditions, our full-year 2019 guidance is
unchanged, and is as follows:
Limelight Networks, Inc. 2019 Guidance
April 17, 2019 January 30, 2019 Revenue $215
to $225 million $215 to $225 million GAAP Basic EPS
Break-even to $0.10 Break-even to $0.10 Non-GAAP EPS $0.10
to $0.20 $0.10 to $0.20 Adjusted EBITDA $30 to $40 million
$30 to $40 million Capital expenditures $20 to $24 million
$20 to $24 million
Financial Tables
LIMELIGHT NETWORKS, INC. CONDENSED CONSOLIDATED
BALANCE SHEETS (In thousands, except per share data)
March 31, December 31,
2019 2018 (Unaudited)
ASSETS Current assets: Cash and cash equivalents $ 16,499 $
25,383 Marketable securities 22,142 25,083 Accounts receivable, net
29,505 26,041 Income taxes receivable 124 122 Prepaid expenses and
other current assets 12,276 14,789
Total current assets 80,546 91,418 Property and equipment, net
32,996 27,378 Operating lease right of use assets 3,012 -
Marketable securities, less current portion 40 40 Deferred income
taxes 1,508 1,462 Goodwill 76,707 76,407 Other assets 4,199
2,220 Total assets $ 199,008 $ 198,925
LIABILITIES AND STOCKHOLDERS' EQUITY Current
liabilities: Accounts payable $ 17,858 $ 9,216 Deferred revenue
1,524 1,883 Operating lease liability obligations 1,620 - Income
taxes payable 186 124 Provision for litigation 4,500 9,000 Other
current liabilities 11,656 12,922 Total
current liabilities 37,344 33,145 Operating lease liability
obligations, less current portions 1,630 - Deferred income taxes
128 152 Deferred revenue, less current portion 105 42 Other
long-term liabilities 263 435 Total
liabilities 39,470 33,774 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; 114,874 and 114,246 shares issued and
outstanding at March 31, 2019 and December 31, 2018,
respectively
115 114 Additional paid-in capital 516,251 513,682 Accumulated
other comprehensive loss (9,657 ) (10,033 ) Accumulated deficit
(347,171 ) (338,612 ) Total stockholders' equity
159,538 165,151 Total liabilities and
stockholders' equity $ 199,008 $ 198,925
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
2019 2018 Change
2018 Change Revenue $ 43,280
$ 43,992 -2% $ 52,114 -17% Cost of revenue:
Cost of services (1) 22,941 22,141 4% 21,054 9% Depreciation -
network 4,317 3,941 10% 4,380
-1% Total cost of revenue 27,258 26,082
5% 25,434 7% Gross profit 16,022 17,910 -11%
26,680 -40% Gross profit percentage 37.0 % 40.7 % 51.2 % Operating
expenses: General and administrative (1) 7,535 7,482 1% 9,522 -21%
Sales and marketing (1) 10,972 9,484 16% 10,280 7% Research &
development (1) 5,901 5,781 2% 6,339 -7% Depreciation and
amortization 245 476 -49% 588
-58% Total operating expenses 24,653
23,223 6% 26,729 -8% Operating loss
(8,631 ) (5,313 ) 62% (49 ) NM Other income (expense):
Interest expense (10 ) (10 ) NM (59 ) NM Interest income 212 230 NM
130 NM Other, net (6 ) 90 NM 112
NM Total other income (expense) 196 310
NM 183 NM (Loss) income before income taxes
(8,435 ) (5,003 ) NM 134 NM Income tax expense (benefit) 124
190 NM (15 ) NM Net (loss)
income $ (8,559 ) $ (5,193 ) NM $ 149 NM Net
income (loss) per share: Basic $ (0.07 ) $ (0.05 ) $ 0.00
Diluted $ (0.07 ) $ (0.05 ) $ 0.00 Weighted average
shares used in per share calculation: Basic 114,410 113,578 110,761
Diluted 114,410 113,578 118,909 (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, 2019
2018 2018
Share-based compensation: Cost of services $ 411 $
756 $ 357 General and administrative 2,094 2,792 1,810 Sales and
marketing 484 963 603 Research and development 467
974 597 Total share-based
compensation $ 3,456 $ 5,485 $ 3,367
Depreciation and amortization: Network-related
depreciation $ 4,317 $ 3,941 $ 4,380 Other depreciation and
amortization 245 476 588
Total depreciation and amortization $ 4,562 $ 4,417
$ 4,968 Net increase (decrease) in
cash, cash equivalents and marketable securities: $ (11,825 ) $
(2,169 ) $ (5,621 )
End of period statistics:
Approximate number of active customers 643 649 703
Number of employees and employee equivalents 562 563 544
LIMELIGHT NETWORKS, INC. CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS (In thousands)
(Unaudited) Three Months
Ended March 31, December 31, March
31, 2019 2018
2018 Operating activities Net (loss)
income $ (8,559 ) $ (5,193 ) $ 149 Adjustments to reconcile
net income (loss) to net cash provided by (used in) operating
activities: Depreciation and amortization 4,562 4,417 4,968
Share-based compensation 3,456 5,485 3,367 Foreign currency
remeasurement loss (gain) 10 (65 ) 110 Deferred income taxes (51 )
103 41 Gain on sale of property and equipment (30 ) (6 ) (16 )
Accounts receivable charges 257 449 218 Amortization of premium on
marketable securities 12 33 33 Changes in operating assets and
liabilities: Accounts receivable (3,720 ) (343 ) (270 ) Prepaid
expenses and other current assets (474 ) 64 882 Income taxes
receivable (2 ) 25 (124 ) Other assets (1,737 ) 201 (495 ) Accounts
payable and other current liabilities 2,243 (1,807 ) (2,286 )
Deferred revenue (297 ) 1,004 130 Income taxes payable 62 17 (397 )
Payments related to litigation, net (1,520 ) (1,520 ) (4,500 )
Other long term liabilities (175 ) 51
(151 ) Net cash (used in) provided by operating activities
(5,963 ) 2,915 1,659
Investing activities Purchases of marketable securities
(9,266 ) (4,669 ) - Sale and maturities of marketable securities
12,224 3,500 4,515 Purchases of property and equipment (5,018 )
(5,618 ) (1,990 ) Proceeds from sale of property and equipment
29 4 16 Net cash (used
in) provided by investing activities (2,031 ) (6,783
) 2,541
Financing activities Payment of
employee tax withholdings related to restricted stock vesting (894
) (985 ) (1,606 ) Cash paid for the purchase of common stock - -
(3,800 ) Proceeds from employee stock plans 8
1,374 30 Net cash (used in) provided by
financing activities (886 ) 389 (5,376
) Effect of exchange rate changes on cash and cash equivalents
(4 ) 184 127
Net increase
(decrease) in cash and cash equivalents (8,884 ) (3,295 )
(1,049 )
Cash and cash equivalents, beginning of period
25,383 28,678 20,912
Cash and cash equivalents, end of period $ 16,499 $
25,383 $ 19,863
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 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 (benefit). 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.
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 (Loss) (In
thousands) (Unaudited)
Three Months Ended March 31,
2019 December 31, 2018 March 31, 2018
Amount Per Share Amount Per Share
Amount Per Share U.S. GAAP net (loss) income $
(8,559 ) $ (0.07 ) $ (5,193 ) $ (0.05 ) $ 149 $ 0.00
Share-based compensation 3,456 0.03 5,485 0.05 3,367 0.03
Litigation expenses - - 3
0.00 2,670 0.02 Non-GAAP net
(loss) income $ (5,103 ) $ (0.04 ) $ 295 $ 0.00 $
6,186 $ 0.06 Weighted average shares used in per
share calculation 114,410 113,578 110,761
LIMELIGHT
NETWORKS, INC. Reconciliation of U.S. GAAP Net Income (Loss)
to EBITDA to Adjusted EBITDA (In thousands)
(Unaudited) Three Months
Ended March 31, December 31, March
31, 2019 2018
2018 U.S. GAAP net (loss) income $ (8,559 ) $
(5,193 ) $ 149 Depreciation and amortization 4,562 4,417
4,968 Interest expense 10 10 59 Interest and other (income) expense
(206 ) (320 ) (242 ) Income tax expense (benefit) 124
190 (15 ) EBITDA $ (4,069 ) $ (896 ) $
4,919 Share-based compensation 3,456 5,485 3,367 Litigation
expenses - 3 2,670
Adjusted EBITDA $ (613 ) $ 4,592 $ 10,956
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, 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 April 17, 2019, 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, follow us
on Twitter, Facebook and LinkedIn.
Copyright (C) 2019 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/20190417005620/en/
Limelight Networks, Inc.Sajid Malhotra,
602-850-5778ir@llnw.com
Limelight Networks (NASDAQ:LLNW)
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