- Q1 Revenue of $52.1 million, up 16
percent year over year
- Q1 GAAP gross margin of 51.2%, up 390
basis points, year over year
- Q1 GAAP EPS of break-even and Non-GAAP
EPS of $0.06
- Raising 2018 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 $52.1
million for the first quarter of 2018, up 16 percent, compared to
$44.7 million in the first quarter of 2017, and up 8% compared to
$48.2 million in the fourth quarter of 2017. Currency favorably
impacted year-over-year comparison by $0.5 million and the
sequential comparison by $0.3 million.
GAAP gross margin was 51.2% in the first quarter of 2018, an
increase of 390 basis points from 47.3% in the first quarter of
2017.
Limelight reported net income of $0.1 million, or break-even per
basic and fully diluted share, for the first quarter of 2018,
compared to a net loss of $3.3 million, or loss of $0.03 per basic
share, for the first quarter of 2017.
Non-GAAP net income was $6.2 million, or $0.06 per basic share,
for the first quarter of 2018, compared to non-GAAP net income of
$1.6 million, or $0.02 per basic share, for the first quarter of
2017.
EBITDA was $4.9 million for the first quarter of 2018, compared
to $1.7 million for the first quarter of 2017. Adjusted EBITDA was
$11.0 million for the first quarter of 2018 compared to $6.7
million for the first quarter of 2017.
Limelight ended the first quarter with 544 employees and
employee equivalents, up from 533 at the end of the fourth quarter
of 2017, and up from 528 at the end of the first quarter of
2017.
“Limelight has started 2018 on a strong note, with double-digit
revenue growth, gross margins in excess of 50 percent, and positive
GAAP profitability. We are raising our full-year guidance and are
excited about the opportunities that surround us. We continue to be
encouraged by healthy growth trends for content delivery, and we
are pleased with the completion of certain matters we think will be
of value to Limelight shareholders going forward. For example, in
recent months, Goldman Sachs successfully exited its large equity
ownership stake in Limelight, which erases a decade-long stock
overhang issue. Separately, Limelight also entered into a
definitive agreement with Akamai with regard to all outstanding
litigation, bringing to an end an equally longstanding legal battle
between the two companies,” said Bob Lento, Chief Executive Officer
at Limelight Networks.
“We continue to expand Limelight’s product features and
functionality, and improve our efficiency and reliability, to
enable Limelight customers to better achieve their goals. We
believe Limelight’s focus on quality will allow us to remain
disciplined in our approach to pricing. Our business purpose is
secure, global delivery of digital content, and we will remain true
to our mission. And our initiatives to build out Edge Computing
solutions, and expand into adjacent markets, remain on track,”
Lento added.
Weighing early strength in Limelight’s financial and operational
performance and what the company perceives as favorable industry
tailwinds, Limelight is providing the following updates to its
previously announced full-year 2018 guidance, issued on February 7,
2018:
Revenue is expected to be in the range of $198 to $202 million,
up from previously issued guidance of $196 to $200 million. Gross
margin expectation is now an improvement of over 150 basis points,
up from our previous guidance of a 100 basis point improvement.
GAAP EPS is expected to be between $0.07 and $0.11. Non-GAAP EPS is
expected to be between $0.13 and $0.17 per share, up from $0.11 and
$0.15 per share. Adjusted EBITDA is now expected to be between $33
and $37 million, compared to our previous guidance of between $32
and $36 million. At the same time, operational efficiency will
allow us to deliver these higher results with lower capital
deployment. We now expect capital expenditures to be between $20
and $22 million, down from our previous expectation of between $22
and $24 million.
Financial Tables
LIMELIGHT NETWORKS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands,
except per share data) March 31, December
31, 2018 2017 (Unaudited) ASSETS
Current assets: Cash and cash equivalents $ 19,863 $ 20,912
Marketable securities 23,832 28,404 Accounts receivable, net 32,433
32,381 Income taxes receivable 224 98 Prepaid expenses and other
current assets 5,717 5,397 Total
current assets 82,069 87,192 Property and equipment, net 27,371
28,991 Marketable securities, less current portion 40 40 Deferred
income taxes 1,546 1,506 Goodwill 77,027 77,054 Other assets
2,174 1,665 Total assets $ 190,227 $
196,448
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities: Accounts payable $ 10,376 $ 4,439 Deferred
revenue 950 1,187 Income taxes payable 72 452 Provision for
litigation 18,000 18,000 Other current liabilities 11,495
18,507 Total current liabilities 40,893 42,585
Deferred income taxes 159 144 Deferred revenue, less current
portion 16 16 Provision for litigation, less current portion 4,500
9,000 Other long-term liabilities 411 558
Total liabilities 45,979 52,303 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; 110,657 and 110,824 shares issued and outstanding at
March 31, 2018 and December 31, 2017, respectively 111 111
Additional paid-in capital 500,305 502,312 Accumulated other
comprehensive loss (7,861 ) (8,328 ) Accumulated deficit
(348,307 ) (349,950 ) Total stockholders' equity
144,248 144,145 Total liabilities and
stockholders' equity $ 190,227 $ 196,448
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 2018
2017 Change 2017 Change Revenues
$ 52,114 $ 48,186 8% $ 44,735 16% Cost of
revenue: Cost of services (1) 21,054 20,665 2% 19,007 11%
Depreciation - network 4,380 4,544 -4%
4,557 -4% Total cost of revenue 25,434
25,209 1% 23,564 8% Gross profit 26,680
22,977 16% 21,171 26% Gross profit percentage
51.2%
47.7%
47.3%
Operating expenses: General and administrative (1) 9,522 8,656 10%
8,514 12% Sales and marketing (1) 10,280 8,997 14% 9,267 11%
Research & development (1) 6,339 5,965 6% 6,220 2% Depreciation
and amortization 588 587 0% 589
0% Total operating expenses 26,729
24,205 10% 24,590 9% Operating loss (49
) (1,228 ) -96% (3,419 ) -99% Other income (expense):
Interest expense (59 ) (38 ) 55% (14 ) 321% Interest income 130 128
2% 117 11% Other, net 112 204 -45%
87 29% Total other income 183
294 -38% 190 -4% Income (loss) before
income taxes 134 (934 ) -114% (3,229 ) -104% Income tax (benefit)
expense (15 ) (22 ) -32% 108 -114%
Net income (loss) $ 149 $ (912 ) -116% $ (3,337 )
-104% Net income (loss) per share: Basic $ 0.00
$ (0.01 ) $ (0.03 ) Diluted $ 0.00 $ (0.01 ) $ (0.03
) Weighted average shares used in per share calculation:
Basic 110,761 110,128 107,363 Diluted 118,909 110,128 107,363
(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, 2018 2017 2017
Share-based compensation: Cost of services $ 357 $
375 $ 359 General and administrative 1,810 1,729 1,534 Sales and
marketing 603 622 620 Research and development 597
576 562 Total share-based
compensation $ 3,367 $ 3,302 $ 3,075
Depreciation and amortization: Network-related
depreciation $ 4,380 $ 4,544 $ 4,557 Other depreciation and
amortization 588 587 589
Total depreciation and amortization $ 4,968 $ 5,131
$ 5,146 Net decrease in cash, cash
equivalents and marketable securities: $ (5,621 ) $ (8,376 ) $
(5,359 )
End of period statistics:
Approximate number of active customers 703 717 813 Number of
employees and employee equivalents 544 533 528
LIMELIGHT NETWORKS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In
thousands) (Unaudited) Three
Months Ended March 31, December 31,
March 31, 2018 2017 2017
Operating activities Net income (loss) $ 149 $ (912 ) $
(3,337 ) Adjustments to reconcile net income (loss) to net
cash provided by (used in) operating activities: Depreciation and
amortization 4,968 5,131 5,146 Share-based compensation 3,367 3,302
3,075 Foreign currency remeasurement loss 110 140 289 Deferred
income taxes 41 (108 ) (50 ) Gain on sale of property and equipment
(16 ) (316 ) (75 ) Accounts receivable charges 218 217 249
Amortization of premium on marketable securities 33 55 83 Changes
in operating assets and liabilities: Accounts receivable (270 )
(3,886 ) 978 Prepaid expenses and other current assets 882 (887 )
914 Income taxes receivable (124 ) 4 29 Other assets (495 ) 249 (3
) Accounts payable and other current liabilities (2,286 ) (730 )
(1,160 ) Deferred revenue 130 (507 ) (302 ) Income taxes payable
(397 ) 69 (4 ) Payments for provision for litigation (4,500 )
(4,500 ) (4,500 ) Other long term liabilities (151 )
(206 ) (197 ) Net cash provided by (used in) operating
activities 1,659 (2,885 ) 1,135
Investing activities Purchases of marketable
securities - (4,547 ) (4,526 ) Sale and maturities of marketable
securities 4,515 13,012 7,250 Purchases of property and equipment
(1,990 ) (4,919 ) (5,745 ) Proceeds from sale of property and
equipment 16 14 58 Net
cash provided by (used in) investing activities 2,541
3,560 (2,963 )
Financing
activities Payment of employee tax withholdings related to
restricted stock vesting (1,606 ) (1,925 ) (1,036 ) Cash paid for
purchase of common stock (3,800 ) - - Proceeds from employee stock
plans 30 1,448 111 Net
cash used in financing activities (5,376 ) (477 )
(925 ) Effect of exchange rate changes on cash and cash
equivalents 127 (30 ) 171
Net
(decrease) increase in cash and cash equivalents (1,049 ) 168
(2,582 )
Cash and cash equivalents, beginning of period
20,912 20,744 21,734
Cash and cash equivalents, end of period $ 19,863 $
20,912 $ 19,152
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. 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 (In thousands) (Unaudited)
Three Months Ended March 31, 2018 December
31, 2017 March 31, 2017 Amount Per Share
Amount Per Share Amount Per Share
U.S. GAAP net income (loss) $ 149 $ 0.00 $ (912 ) $ (0.01 )
$ (3,337 ) $ (0.03 ) Share-based compensation 3,367 0.03
3,302 0.03 3,075 0.03 Litigation expenses 2,670 0.02
1,470 0.01 1,909
0.02 Non-GAAP net income $ 6,186 $ 0.06 $ 3,860
$ 0.04 $ 1,647 $ 0.02
Weighted average basic shares used in per share calculation 110,761
110,128 107,363
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, 2018 2017 2017 U.S. GAAP net
income (loss) $ 149 $ (912 ) $ (3,337 ) Depreciation and
amortization 4,968 5,131 5,146 Interest expense 59 38 14 Interest
and other (income) expense (242 ) (332 ) (204 ) Income tax
(benefit) expense (15 ) (22 ) 108
EBITDA $ 4,919 $ 3,903 $ 1,727 Share-based
compensation 3,367 3,302 3,075 Litigation expenses 2,670
1,470 1,909 Adjusted
EBITDA $ 10,956 $ 8,675 $ 6,711
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.
2018 Guidance Table
Limelight Networks, Inc. 2018
Guidance 2018 Guidance April 19, 2018
February 7, 2018 Revenue $198 to $202 million $196 to $200
million Gross margin percentage
Expansion of more than 150basis points
over 2017
Expansion of more than 100 basispoints
over 2017
GAAP EPS $0.07 to $0.11 $(0.07) to $(0.03) Non-GAAP
EPS $0.13 to $0.17 $0.11 to $0.15 Adjusted EBITDA $33 to $37
million $32 to $36 million Capital expenditures $20 to $22
million $22 to $24 million
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, GAAP net income, 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 19, 2018, 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) 2018 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/20180419006353/en/
Limelight Networks, Inc.Sajid Malhotra,
602-850-5778ir@llnw.com
Limelight Networks (NASDAQ:LLNW)
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