Press release

Limelight Networks Reports Strong Financial Results for the Second Quarter of 2020

0
Sponsored by Businesswire

Limelight Networks, Inc. (Nasdaq: LLNW) (Limelight), a leading provider of video delivery and edge cloud services, today reported revenue of $58.5 million for the second quarter of 2020, up 28 percent, compared to $45.9 million in the second quarter of 2019. Year-over-year currency impact was negative by approximately $0.1 million.

Limelight reported a GAAP net loss of $1.7 million, or $(0.01) per basic share for the second quarter of 2020, compared to net loss of $7.2 million, or $(0.06) per basic share in the second quarter of 2019.

Non-GAAP net income was $3.5 million or $0.03 per basic share for the second quarter of 2020, compared to a non-GAAP net loss of $3.5 million, or $(0.03) per basic share in the second quarter of 2019.

EBITDA was $4.5 million for the second quarter of 2020, compared to negative $2.2 million for the second quarter of 2019. Adjusted EBITDA was $9.7 million for the second quarter of 2020 compared to $1.4 million for the second quarter of 2019.

Limelight ended the second quarter with 627 employees and employee equivalents, up from 616 at the end of the first quarter of 2020, and up from 594 at the end of the second quarter of 2019.

“This is our best ever second quarter financial performance. Our growth, including the over 400 basis point sequential improvement in gross margin, is due to strong execution of our 2020 strategy. Through our relentless focus on expanding capacity, optimizing proactive management of our network, placing more control in the hands of our customers and driving innovation, we are seeing strength across our business and are raising our revenue guidance for 2020,” said Robert Lento, Chief Executive Officer.

As the world continues to navigate through these uncertain times, we play an important role in connecting people to information and entertainment. COVID-19 has created an increased global reliance on the Internet and content delivery, and we expect to emerge larger and financially stronger when the pandemic ends. The remarkable dedication of our people adapting to the challenging times, and the commitment to meeting increased demand with uncompromised quality for our customers is particularly noteworthy. We recognize many face challenges during these times and will continue our efforts to provide value and help overcome the consequential impact of the pandemic on our communities,” Lento added.

Based on current conditions, our full-year 2020 guidance is updated as follows:

Limelight Networks, Inc.
2020 Guidance
 
 
July 2020 April 2020 December 2019 Actual 2019
Revenue $230 to $240 million $225 to $235 million $220 to $235 million $200.6 million
 
GAAP Basic EPS $(0.10) to break-even $(0.10) to break-even $(0.10) to break-even

$(0.14)

 
Non-GAAP EPS Break-even to $0.10 Break-even to $0.10 Break-even to $0.10

$(0.02)

 
Adjusted EBITDA $28 to $35 million $25 to $35 million $25 to $35 million $18.1 million
 
Capital expenditures $25 to $30 million $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)
 

June 30,

March 31,

December 31,

2020

2020

2019

(Unaudited) (Unaudited)
ASSETS
Current assets:
Cash and cash equivalents

$

18,200

 

$

21,421

 

$

18,335

 

Accounts receivable, net

 

45,246

 

 

34,603

 

 

34,476

 

Income taxes receivable

 

68

 

 

76

 

 

82

 

Prepaid expenses and other current assets

 

10,241

 

 

11,205

 

 

9,920

 

Total current assets

 

73,755

 

 

67,305

 

 

62,813

 

Property and equipment, net

 

48,908

 

 

46,636

 

 

46,136

 

Operating lease right of use assets

 

11,449

 

 

12,084

 

 

12,842

 

Marketable securities, less current portion

 

40

 

 

40

 

 

40

 

Deferred income taxes

 

1,328

 

 

1,361

 

 

1,319

 

Goodwill

 

77,113

 

 

76,867

 

 

77,102

 

Other assets

 

7,915

 

 

8,721

 

 

9,117

 

Total assets

$

220,508

 

$

213,014

 

$

209,369

 

 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable

$

17,004

 

$

14,297

 

$

12,020

 

Deferred revenue

 

934

 

 

726

 

 

976

 

Operating lease liability obligations

 

2,390

 

 

2,046

 

 

2,056

 

Income taxes payable

 

169

 

 

170

 

 

178

 

Other current liabilities

 

17,028

 

 

18,188

 

 

13,398

 

Total current liabilities

 

37,525

 

 

35,427

 

 

28,628

 

Operating lease liability obligations, less current portions

 

12,316

 

 

12,983

 

 

13,488

 

Deferred income taxes

 

283

 

 

262

 

 

239

 

Deferred revenue, less current portion

 

265

 

 

161

 

 

161

 

Other long-term liabilities

 

304

 

 

318

 

 

316

 

Total liabilities

 

50,693

 

 

49,151

 

 

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; 121,692, 119,642 and 118,368 shares issued and
outstanding at June 30, 2020, March 31, 2020 and December 31, 2019, respectively

 

122

 

 

120

 

 

118

 

Additional paid-in capital

 

541,363

 

 

534,205

 

 

530,285

 

Accumulated other comprehensive loss

 

(10,031

)

 

(10,549

)

 

(9,210

)

Accumulated deficit

 

(361,639

)

 

(359,913

)

 

(354,656

)

Total stockholders’ equity

 

169,815

 

 

163,863

 

 

166,537

 

Total liabilities and stockholders’ equity

$

220,508

 

$

213,014

 

$

209,369

 

LIMELIGHT NETWORKS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(Unaudited)

 

 

 

 

Three Months Ended

Six Months Ended

 

 

June 30, March 31,

Percent

June 30, Percent June 30, June 30,

Percent

 

2020

 

 

2020

 

Change

 

2019

 

Change

 

2020

 

 

2019

 

Change

 

 

Revenue

$

58,546

 

$

57,012

 

3

%

$

45,904

 

28

%

$

115,558

 

$

89,184

 

30

%

Cost of revenue:

 

 

Cost of services (1)

 

29,389

 

 

31,113

 

-6

%

 

22,769

 

29

%

 

60,502

 

 

45,710

 

32

%

Depreciation – network

 

5,360

 

 

5,150

 

4

%

 

4,628

 

16

%

 

10,510

 

 

8,944

 

18

%

Total cost of revenue

 

34,749

 

 

36,263

 

-4

%

 

27,397

 

27

%

 

71,012

 

 

54,654

 

30

%

Gross profit

 

23,797

 

 

20,749

 

15

%

 

18,507

 

29

%

 

44,546

 

 

34,530

 

29

%

Gross profit percentage

 

40.6

%

 

36.4

%

 

 

40.3

%

 

38.5

%

 

38.7

%

 

Operating expenses:

 

 

General and administrative (1)

 

8,187

 

 

7,882

 

4

%

 

8,340

 

-2

%

 

16,069

 

 

15,875

 

1

%

Sales and marketing (1)

 

10,929

 

 

11,894

 

-8

%

 

10,994

 

-1

%

 

22,823

 

 

21,966

 

4

%

Research & development (1)

 

5,572

 

 

5,618

 

-1

%

 

6,013

 

-7

%

 

11,189

 

 

11,915

 

-6

%

Depreciation and amortization

 

323

 

 

341

 

-5

%

 

127

 

154

%

 

665

 

 

372

 

79

%

Total operating expenses

 

25,011

 

 

25,735

 

-3

%

 

25,474

 

-2

%

 

50,746

 

 

50,128

 

1

%

 

 

Operating loss

 

(1,214

)

 

(4,986

)

NM

 

(6,967

)

NM

 

(6,200

)

 

(15,598

)

NM

 

 

 

Other income (expense):

 

 

 

Interest expense

 

(71

)

 

(10

)

NM

 

(10

)

NM

 

(82

)

 

(20

)

NM

Interest income

 

6

 

 

25

 

NM

 

110

 

NM

 

31

 

 

321

 

NM

Other, net

 

(312

)

 

(110

)

NM

 

(70

)

NM

 

(421

)

 

(76

)

NM

Total other (expense) income

 

(377

)

 

(95

)

NM

 

30

 

NM

 

(472

)

 

225

 

NM

 

 

 

Loss before income taxes

 

(1,591

)

 

(5,081

)

NM

 

(6,937

)

NM

 

(6,672

)

 

(15,373

)

NM

Income tax expense

 

136

 

 

176

 

NM

 

255

 

NM

 

311

 

 

378

 

NM

 

 

Net loss

$

(1,727

)

$

(5,257

)

NM

$

(7,192

)

NM

$

(6,983

)

$

(15,751

)

NM

 

 

Net loss per share:

 

 

Basic

$

(0.01

)

$

(0.04

)

 

$

(0.06

)

$

(0.06

)

$

(0.14

)

 

Diluted

$

(0.01

)

$

(0.04

)

 

$

(0.06

)

$

(0.06

)

$

(0.14

)

 

 

 

Weighted average shares used in per share calculation:

 

 

Basic

 

120,230

 

 

118,964

 

 

 

115,275

 

 

119,597

 

 

114,843

 

 

Diluted

 

120,230

 

 

118,964

 

 

 

115,275

 

 

119,597

 

 

114,843

 

 

 

 

(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, March 31, June 30, June 30, June 30,

 

2020

 

2020

 

2019

 

 

2020

 

 

2019

 

 
Share-based compensation:
 
Cost of services

$

792

 

$

763

$

377

 

$

1,555

 

$

788

 

General and administrative

 

2,257

 

 

2,241

 

2,140

 

 

4,498

 

 

4,234

 

Sales and marketing

 

1,322

 

 

1,228

 

598

 

 

2,550

 

 

1,082

 

Research and development

 

880

 

 

832

 

534

 

 

1,712

 

 

1,001

 

 
Total share-based compensation

$

5,251

 

$

5,064

$

3,649

 

$

10,315

 

$

7,105

 

 
Depreciation and amortization:
 
Network-related depreciation

$

5,360

 

$

5,150

$

4,628

 

$

10,510

 

$

8,944

 

Other depreciation and amortization

 

323

 

 

341

 

127

 

 

665

 

 

372

 

 
Total depreciation and amortization

$

5,683

 

$

5,491

$

4,755

 

$

11,175

 

$

9,316

 

 
 
Net increase (decrease) in cash, cash equivalents and marketable securities:

$

(3,221

)

$

3,086

$

(9,719

)

$

(135

)

$

(21,544

)

 
 
End of period statistics:
 
Approximate number of active customers

 

560

 

 

573

 

621

 

 

560

 

 

621

 

 
Number of employees and employee equivalents

 

627

 

 

616

 

594

 

 

627

 

 

594

 

 
LIMELIGHT NETWORKS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
           
           
  Three Months Ended   Six Months Ended
           
  June 30,   March 31,   June 30,   June 30,   June 30,
 

 

2020

 

 

 

2020

 

 

 

2019

 

 

 

2020

 

 

 

2019

 

           
Operating activities          
Net loss  

$

(1,727

)

 

$

(5,257

)

 

$

(7,192

)

 

$

(6,983

)

 

$

(15,751

)

           
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:          
Depreciation and amortization  

 

5,683

 

 

 

5,491

 

 

 

4,755

 

 

 

11,175

 

 

 

9,316

 

Share-based compensation  

 

5,251

 

 

 

5,064

 

 

 

3,649

 

 

 

10,315

 

 

 

7,105

 

Foreign currency remeasurement loss (gain)  

 

257

 

 

 

(397

)

 

 

(135

)

 

 

(140

)

 

 

(125

)

Deferred income taxes  

 

59

 

 

 

(44

)

 

 

82

 

 

 

15

 

 

 

31

 

Gain on sale of property and equipment  

 

 

 

 

 

 

 

(21

)

 

 

 

 

 

(51

)

Accounts receivable charges  

 

155

 

 

 

158

 

 

 

437

 

 

 

313

 

 

 

694

 

Amortization of premium on marketable securities  

 

 

 

 

 

 

 

8

 

 

 

 

 

 

20

 

Changes in operating assets and liabilities:          
Accounts receivable  

 

(10,798

)

 

 

(285

)

 

 

(2,031

)

 

 

(11,083

)

 

 

(5,751

)

Prepaid expenses and other current assets  

 

986

 

 

 

(1,433

)

 

 

582

 

 

 

(447

)

 

 

108

 

Income taxes receivable  

 

10

 

 

 

3

 

 

 

 

 

 

13

 

 

 

(2

)

Other assets  

 

1,121

 

 

 

626

 

 

 

(1,685

)

 

 

1,747

 

 

 

(3,422

)

Accounts payable and other current liabilities  

 

1,045

 

 

 

5,892

 

 

 

4,230

 

 

 

6,937

 

 

 

6,473

 

Deferred revenue  

 

313

 

 

 

(250

)

 

 

(148

)

 

 

63

 

 

 

(445

)

Income taxes payable  

 

 

 

 

2

 

 

 

81

 

 

 

2

 

 

 

143

 

Payments related to litigation, net  

 

 

 

 

 

 

 

(1,520

)

 

 

 

 

 

(3,040

)

Other long term liabilities  

 

(15

)

 

 

6

 

 

 

22

 

 

 

(11

)

 

 

(152

)

Net cash provided by (used in) operating activities  

 

2,340

 

 

 

9,576

 

 

 

1,114

 

 

 

11,916

 

 

 

(4,849

)

           
Investing activities          
Purchases of marketable securities  

 

 

 

 

 

 

 

(1,013

)

 

 

 

 

 

(10,279

)

Sale and maturities of marketable securities  

 

 

 

 

 

 

 

18,929

 

 

 

 

 

 

31,153

 

Purchases of property and equipment  

 

(8,085

)

 

 

(6,863

)

 

 

(11,456

)

 

 

(14,948

)

 

 

(16,474

)

Proceeds from sale of property and equipment  

 

 

 

 

 

 

 

17

 

 

 

 

 

 

46

 

Net cash provided by (used in) investing activities  

 

(8,085

)

 

 

(6,863

)

 

 

6,477

 

 

 

(14,948

)

 

 

4,446

 

           
Financing activities          
Payment of employee tax withholdings related to restricted stock vesting  

 

(1,430

)

 

 

(1,515

)

 

 

(619

)

 

 

(2,945

)

 

 

(1,513

)

Proceeds from employee stock plans  

 

3,954

 

 

 

2,138

 

 

 

1,095

 

 

 

6,092

 

 

 

1,103

 

Net cash provided by (used in) financing activities  

 

2,524

 

 

 

623

 

 

 

476

 

 

 

3,147

 

 

 

(410

)

Effect of exchange rate changes on cash and cash equivalents  

 

 

 

 

(250

)

 

 

132

 

 

 

(250

)

 

 

128

 

Net increase (decrease) in cash and cash equivalents  

 

(3,221

)

 

 

3,086

 

 

 

8,199

 

 

 

(135

)

 

 

(685

)

Cash and cash equivalents, beginning of period  

 

21,421

 

 

 

18,335

 

 

 

16,499

 

 

 

18,335

 

 

 

25,383

 

Cash and cash equivalents, end of period  

$

18,200

 

 

$

21,421

 

 

$

24,698

 

 

$

18,200

 

 

$

24,698

 

           

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. 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 Six Months Ended
 
June 30, 2020 March 31, 2020 June 30, 2019 June 30, 2020 June 30, 2019
Amount Per Share Amount Per Share Amount Per Share Amount Per Share Amount Per Share
 
U.S. GAAP net loss

$

(1,727

)

$

(0.01

)

$

(5,257

)

$

(0.04

)

$

(7,192

)

$

(0.06

)

$

(6,983

)

$

(0.06

)

$

(15,751

)

$

(0.14

)

 
Share-based compensation

 

5,251

 

 

0.04

 

 

5,064

 

 

0.04

 

 

3,649

 

 

0.03

 

 

10,315

 

 

0.09

 

 

7,105

 

 

0.06

 

 
Non-GAAP net income (loss)

$

3,524

 

$

0.03

 

$

(193

)

$

(0.00

)

$

(3,543

)

$

(0.03

)

$

3,332

 

$

0.03

 

$

(8,646

)

$

(0.08

)

 
 
Weighted average basic shares used in per share calculation

 

120,230

 

 

118,964

 

 

115,275

 

 

119,597

 

 

114,843

 

 
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, March 31, June 30, June 30, June 30,

 

2020

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

 
U.S. GAAP net loss

$

(1,727

)

$

(5,257

)

$

(7,192

)

$

(6,983

)

$

(15,751

)

 
Depreciation and amortization

 

5,683

 

 

5,491

 

 

4,755

 

 

11,175

 

 

9,316

 

Interest expense

 

71

 

 

10

 

 

10

 

 

82

 

 

20

 

Interest and other (income) expense

 

306

 

 

85

 

 

(40

)

 

390

 

 

(245

)

Income tax expense

 

136

 

 

176

 

 

255

 

 

311

 

 

378

 

 
EBITDA

$

4,469

 

$

505

 

$

(2,212

)

$

4,975

 

$

(6,282

)

 
Share-based compensation

 

5,251

 

 

5,064

 

 

3,649

 

 

10,315

 

 

7,105

 

 
Adjusted EBITDA

$

9,720

 

$

5,569

 

$

1,437

 

$

15,290

 

$

823

 

 

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 July 20, 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.