Limelight Networks, Inc. (Nasdaq: LLNW) (Limelight), a leading
provider of content delivery services and AppOps at the edge, today
reported financial results for the first quarter ended March 31,
2022. Delivering on several key milestones in its 2022 strategic
plan, the company reported significant revenue, gross margin, and
adjusted EBITDA growth year over year.
“First quarter 2022 results were ahead of plan as we continue
building on the momentum established in the second half of 2021.
Revenue for the first quarter came in at $58.0 million, up 13% year
over year. Gross Margin was 30.7%, up 630 basis points year over
year and Adjusted EBITDA was $2 million versus a loss of $3.3
million in the first quarter of 2021,” said Bob Lyons, President,
and Chief Executive Officer.
“In the quarter, our operational improvements and renewed client
focus have driven record traffic with 17 of Limelight’s top 20
highest historical traffic days landing in the quarter,” said
Lyons. “We are proud of achieving the top performance spot in the
world for edge CDN networks. This distinction anchors the
transformation of Limelight from a media CDN to a leading edge
enabled technology solutions company.”
“We continue to execute against our Improve, Expand and Extend
strategic framework, and remain confident in our ability to build
on this progress,” said Lyons.
Improve: Continued improvement in operational performance
and cost structure:
- Client sentiment metric maintained high ratings for the third
quarter in a row, across our global top 20.
- Record traffic with 17 of Limelight’s top 20 highest historical
traffic days landing in this quarter. Traffic sources were
broad-based, spanning streaming, live events, software downloads,
and gaming across both large and small clients.
- Year over year cash gross margin expansion of 420 basis
points.
- Year over year flowthrough of revenue growth to adjusted EBITDA
of 77%.
Expand: Existing client and new logo growth driving
meaningful revenue expansion:
- 13% year over year revenue growth with organic growth of
6%.
- 19 of Top 20 Limelight customers grew revenue more than
20%.
- Customer additions were the highest they have been in the
previous five quarters. This positive momentum spans both our
delivery and AppOps solutions.
- Total company pipeline has grown more than 30% from the
beginning of the year, with Layer0 pipeline growing by triple
digits.
- Mostly completed the planned rebuild of our sales and marketing
teams which should drive momentum in the second half of the
year.
Extend: Extension of new growth products:
- Transformational acquisition of Edgecast - a meaningful step
toward our strategy to become a leading edge enabled software
solutions company.
- With Edgecast, we will be one of the largest and most
performant independent edge platforms with a significant increase
in scale, security, live events and video capabilities.
- Layer0 contributed $3.8 million in the quarter and is tracking
well toward its full year guide of at least $20 million in high
growth, high gross margin revenue.
- We strengthened our security capabilities with the launch of
Layer0 Security Platform consisting of WAF, DDoS and Bot Management
solutions.
First Quarter 2022 Financial Results
- Revenue of $58.0 million, up 13% from the first quarter of
2021.
- GAAP net loss of $19.2 million, or $(0.14) per basic share, an
improvement of $6.3 million from the net loss of $25.5 million, or
$(0.21) per basic share, in the first quarter of 2021. GAAP net
loss included $5.1 million in acquisition and legal related charges
in the first quarter of 2022 and restructuring and transition
related charges of $11.7 million in the first quarter of 2021.
- Non-GAAP net loss was $5.4 million, or $(0.04) per basic share,
an improvement of $5.6 million from the Non-GAAP net loss of $11.0
million, or $(0.09) per basic share, in the first quarter of
2021.
- Adjusted EBITDA was $2.0 million, an improvement of $5.2
million from a loss of $3.3 million in the first quarter of
2021.
- EBITDA was $(10.9) million, an improvement of $6.7 million from
$(17.6) million for the first quarter of 2021.
- Cash, cash equivalents and marketable securities total $61.9
million at the end of the first quarter 2022.
- Limelight ended the first quarter of 2022 with 556 employees
and employee equivalents, up from 552 at the end of the fourth
quarter of 2021, and from 510 at the end of the first quarter of
2021.
Guidance
“Given we anticipate closing the Edgecast acquisition in the
next 30-60 days, we are maintaining our full year guidance. We
expect to begin working with the Edgecast team on a bottom-up
forecast for the remainder of the year immediately after we close
and will provide combined guidance for the year as we finish that
process,” said Dan Boncel, Chief Financial Officer. “In the short
term, we expect second quarter revenue to be consistent with the
first. With continued tight management of network and operating
expenses, we would expect gross margin and adjusted EBITDA margin
to continue its methodical expansion.”
Limelight Networks,
Inc.
2022 Guidance
April 2022
Revenue
$240 to $250 million
GAAP Basic EPS
$(0.27) to $(0.22)
Non-GAAP EPS
$(0.06) to $(0.01)
Adjusted EBITDA
$24 to $28 million
Capital expenditures
$20 to $25 million
Update on Edgecast Transaction and Corporate
Rebranding
“Integration planning is well underway,” said Lyons, “We believe
the combined company will be uniquely positioned to provide
unmatched performance, productivity, and security value at the edge
for the outcome buyer. We will do this for a more diversified set
of clients with better end-to-end services, a more complete edge
solutions platform and an exceptionally scaled global network. We
are looking to capture this dynamic as we start a new phase as
Edgio.”
Financial Tables
LIMELIGHT NETWORKS, INC. CONDENSED
CONSOLIDATED BALANCE SHEETS (In thousands, except per share
data)
March 31,
December 31,
2022
2021
(Unaudited) ASSETS Current assets: Cash and cash
equivalents
$
27,175
$
41,918
Marketable securities
34,751
37,367
Accounts receivable, net
55,040
42,217
Income taxes receivable
63
61
Prepaid expenses and other current assets
16,044
13,036
Total current assets
133,073
134,599
Property and equipment, net
34,792
33,622
Operating lease right of use assets
6,064
6,338
Marketable securities, less current portion
40
40
Deferred income taxes
1,822
1,893
Goodwill
113,463
114,511
Intangible assets, net
13,827
14,613
Other assets
4,779
5,485
Total assets
$
307,860
$
311,101
LIABILITIES AND STOCKHOLDERS' EQUITY Current
liabilities: Accounts payable
$
15,599
$
11,631
Deferred revenue
2,189
3,266
Operating lease liability obligations
1,754
1,861
Income taxes payable
215
873
Other current liabilities
20,403
19,292
Total current liabilities
40,160
36,923
Convertible senior notes, net
121,991
121,782
Operating lease liability obligations, less current portions
9,209
9,616
Deferred income taxes
303
308
Deferred revenue, less current portion
282
116
Other long-term liabilities
721
777
Total liabilities
172,666
169,522
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; 138,178
and 134,337 shares issued and outstanding at March 31, 2022 and
December 31, 2021, respectively
138
134
Additional paid-in capital
590,249
576,807
Accumulated other comprehensive loss
(9,004
)
(8,345
)
Accumulated deficit
(446,189
)
(427,017
)
Total stockholders' equity
135,194
141,579
Total liabilities and stockholders' equity
$
307,860
$
311,101
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
2022
2021
Change
2021
Change
Revenue
$
57,959
$
62,885
-8
%
$
51,195
13
%
Cost of revenue: Cost of services (1)
35,070
35,065
0
%
33,021
6
%
Depreciation - network
5,089
5,215
-2
%
5,679
-10
%
Total cost of revenue
40,159
40,280
0
%
38,700
4
%
Gross profit
17,800
22,605
-21
%
12,495
42
%
Gross profit percentage
30.7
%
35.9
%
24.4
%
Operating expenses: General and administrative (1)
15,833
9,147
73
%
12,948
22
%
Sales and marketing (1)
7,627
8,141
-6
%
9,835
-22
%
Research & development (1)
9,577
5,149
86
%
6,113
57
%
Depreciation and amortization
1,032
976
6
%
540
91
%
Restructuring charge
698
2,627
NM
6,873
NM
Total operating expenses
34,767
26,040
34
%
36,309
-4
%
Operating loss
(16,967
)
(3,435
)
NM
(23,814
)
NM
Other income (expense): Interest expense
(1,313
)
(1,346
)
NM
(1,286
)
NM
Interest income
27
30
NM
45
NM
Other, net
(713
)
(243
)
NM
(214
)
NM
Total other expense
(1,999
)
(1,559
)
NM
(1,455
)
NM
Loss before income taxes
(18,966
)
(4,994
)
NM
(25,269
)
NM
Income tax expense
206
435
NM
260
NM
Net loss
$
(19,172
)
$
(5,429
)
NM
$
(25,529
)
NM
Net loss per share: Basic
$
(0.14
)
$
(0.04
)
$
(0.21
)
Diluted
$
(0.14
)
$
(0.04
)
$
(0.21
)
Weighted average shares used in per share calculation: Basic
135,528
134,023
124,290
Diluted
135,528
134,023
124,290
(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,
2022
2021
2021
Share-based compensation: Cost of services
$
408
$
243
$
246
General and administrative
2,103
2,311
6,028
Sales and marketing
1,181
915
563
Research and development
3,320
788
371
Restructuring and transition related charges
-
(254
)
1,354
Total share-based compensation
$
7,012
$
4,003
$
8,562
Depreciation and amortization: Network-related
depreciation
$
5,089
$
5,215
$
5,679
Other depreciation and amortization
246
249
540
Amortization of intangible assets
786
727
-
Total depreciation and amortization
$
6,121
$
6,191
$
6,219
Net increase (decrease) in cash, cash equivalents and
marketable securities:
$
(17,359
)
$
3,499
$
(6,795
)
End of period statistics: Approximate number of
active clients
577
580
527
Number of employees and employee equivalents
556
552
510
LIMELIGHT NETWORKS, INC. CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands)
(Unaudited) Three Months Ended
March 31,
December 31,
March 31,
2022
2021
2021
Operating activities Net loss
$
(19,172
)
$
(5,429
)
$
(25,529
)
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities: Depreciation and
amortization
6,121
6,191
6,219
Share-based compensation
7,012
4,003
8,562
Foreign currency remeasurement (gain) loss
242
208
(71
)
Deferred income taxes
(2
)
(216
)
(10
)
Gain on sale of property and equipment
-
(28
)
-
Accounts receivable charges
272
35
466
Amortization of premium on marketable securities
280
282
609
Noncash interest expense
209
207
199
Changes in operating assets and liabilities: Accounts receivable
(13,095
)
3,928
2,059
Prepaid expenses and other current assets
(3,174
)
288
446
Income taxes receivable
(2
)
(51
)
(36
)
Other assets
834
1,944
399
Accounts payable and other current liabilities
3,625
740
5,209
Deferred revenue
(911
)
(5,519
)
(84
)
Income taxes payable
(655
)
435
73
Other long term liabilities
(55
)
326
(3
)
Net cash (used in) provided by operating activities
(18,471
)
7,344
(1,492
)
Investing activities Purchases of marketable
securities
(6,839
)
(17,238
)
(10,874
)
Sale and maturities of marketable securities
9,087
15,760
5,897
Purchases of property and equipment
(5,350
)
(3,901
)
(6,628
)
Proceeds from sale of property and equipment
-
28
-
Acquisition of business, net of cash acquired
492
-
-
Net cash used in investing activities
(2,610
)
(5,351
)
(11,605
)
Financing activities Payment of employee tax
withholdings related to restricted stock vesting
(1,285
)
(311
)
(671
)
Proceeds from employee stock plans
7,986
725
2,847
Net cash provided by financing activities
6,701
414
2,176
Effect of exchange rate changes on cash and cash equivalents
(363
)
(74
)
(254
)
Net increase (decrease) in cash and cash equivalents
(14,743
)
2,333
(11,175
)
Cash and cash equivalents, beginning of period
41,918
39,585
46,795
Cash and cash equivalents, end of period
$
27,175
$
41,918
$
35,620
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, non-cash interest expense, restructuring and
transition related charges, acquisition and legal related 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 share-based compensation,
restructuring and transition related charges and acquisition and
legal related 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
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
March 31, 2022
December 31, 2021
March 31, 2021
Amount
Per Share
Amount
Per Share
Amount
Per Share
U.S. GAAP net loss
$
(19,172
)
$
(0.14
)
$
(5,429
)
$
(0.04
)
$
(25,529
)
$
(0.21
)
Share-based compensation
7,012
0.05
4,257
0.03
2,644
0.02
Non-cash interest expense
209
0.00
207
0.00
199
0.00
Restructuring and transition related charges
698
0.01
2,627
0.02
11,700
0.09
Acquisition and legal related expenses
5,107
0.04
377
0.00
-
-
Amortization of intangible assets
786
0.01
727
0.01
-
-
Non-GAAP net (loss) income
$
(5,360
)
$
(0.04
)
$
2,766
$
0.02
$
(10,986
)
$
(0.09
)
Weighted average shares used in per share calculation
135,528
134,023
124,290
LIMELIGHT NETWORKS, INC. Reconciliation of
U.S. GAAP Net Loss to EBITDA to Adjusted EBITDA (In
thousands) (Unaudited)
Three Months Ended
March 31,
December 31,
March 31,
2022
2021
2021
U.S. GAAP net loss
$
(19,172
)
$
(5,429
)
$
(25,529
)
Depreciation and amortization
6,121
6,191
6,219
Interest expense
1,313
1,346
1,286
Interest and other (income) expense
686
213
169
Income tax expense
206
435
260
EBITDA
$
(10,846
)
$
2,756
$
(17,595
)
Share-based compensation
7,012
4,257
2,644
Restructuring and transition related charges
698
2,627
11,700
Acquisition and legal related expenses
5,107
377
-
Adjusted EBITDA
$
1,971
$
10,017
$
(3,251
)
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 7:30 a.m. EDT (4:30 a.m. PDT) today, management
will host a quarterly conference call for investors. Interested
parties can access the call by dialing (844)-200-6205 from the
United States or (929)-526-1599 internationally, with access code
088169. 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, areas of investment, and product launches.
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 clients, unforeseen changes
in our hiring patterns, adverse outcomes in litigation,
experiencing expenses that exceed our expectations, and acquisition
activities and contributions from acquired businesses. 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 28, 2022, and we
undertake no duty to update this information in light of new
information or future events, unless required by law.
About Limelight
Limelight (NASDAQ: LLNW) is an industry leader in providing
edge-enabled solutions to deliver fast, secure digital experiences
on a global scale. We offer powerful tools that optimize, protect,
and deliver our clients' valuable digital assets in an increasingly
competitive marketplace. From content delivery and AppOps to
Jamstack application architecture and web security, we are uniquely
positioned to leverage our global private network and
client-obsessed experts to help our customers win. The world’s
largest brands trust Limelight and we invite you to learn more
about us by visiting www.limelight.com, Twitter, Facebook, and
LinkedIn.
Copyright (C) 2022 Limelight Networks, Inc. All rights reserved.
All product or service names are the property of their respective
owners.
Source: Limelight Networks
Ticker Slug:
Ticker: LLNW
Exchange: NASDAQ
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version on businesswire.com: https://www.businesswire.com/news/home/20220428005216/en/
Limelight Networks, Inc. Sameet Sinha, 646-337-8909
ir@llnw.com
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