- Revenue of $51.3 million, up 4 percent year over year, up 12%
sequentially
- GAAP basic EPS of $(0.02) and Non-GAAP EPS of $0.01
- Confirming accelerated growth in revenue, profitability and
free cash flow for Q4 2019
- Delivered record traffic, exceeding previous record by
approximately 20%
Limelight Networks, Inc. (Nasdaq:LLNW) (Limelight), a leading
provider of edge cloud services, today reported revenue of $51.3
million for the third quarter of 2019, up 4% compared to $49.3
million in the third quarter of 2018. Currency negatively impacted
year-over-year comparison by $0.2 million.
Limelight reported a net loss of $2.8 million, or $(0.02) per
basic share for the third quarter of 2019, compared to a net loss
of $0.3 million, or break-even per basic share, in the third
quarter of 2018.
Non-GAAP net income was $0.6 million, or $0.01 per basic share,
for the third quarter of 2019, compared to non-GAAP net income of
$3.2 million, or $0.03 per basic share, in the third quarter of
2018.
EBITDA was $2.5 million for the third quarter of 2019, compared
to $4.3 million for the third quarter of 2018. Adjusted EBITDA was
$5.8 million for the third quarter of 2019, compared to $7.7
million for the third quarter of 2018.
Limelight ended the third quarter with 609 employees and
employee equivalents, up from 594 at the end of the second quarter
of 2019, and up from 551 in the year ago period.
“We are extremely pleased with our third quarter results. Our
revenue was the highest third quarter revenue ever and our second
highest revenue in any quarter. We also set a new record for
traffic in the quarter, continuing the rapid growth that we have
demonstrated throughout the year. We achieved these results by
accelerating investments in infrastructure and significantly
growing capacity, while still maintaining fiscal discipline by
controlling expenses,” said Bob Lento, Chief Executive Officer at
Limelight.
“We believe the fourth quarter will see year-over-year
acceleration in revenue growth and meaningful improvements in gross
margin and overall profitability. Even at the low end of our
guidance, fourth quarter growth rates exceed 35% year-over-year and
in excess of 15% sequentially. These healthy trends validate our
strategy to focus on video-based edge services. We believe this
positions us for a strong 2020 and beyond and will lead to the
creation of tremendous shareholder value,” Mr. Lento added.
Based on current conditions, we expect 2019 revenue to be
between $200 and $210 million dollars. GAAP net loss is expected to
be approximately $0.10 per share and Non-GAAP earnings per share
should be near breakeven. Capital expenditures should be
approximately $30 million dollars.
Financial Tables
LIMELIGHT NETWORKS, INC. CONDENSED CONSOLIDATED BALANCE
SHEETS (In thousands, except per share data)
September 30,
June 30,
December 31,
2019
2019
2018
(Unaudited) (Unaudited) ASSETS Current assets:
Cash and cash equivalents
$
14,832
$
24,698
$
25,383
Marketable securities
3,218
4,224
25,083
Accounts receivable, net
35,818
31,098
26,041
Income taxes receivable
77
125
122
Prepaid expenses and other current assets
9,522
8,739
14,789
Total current assets
63,467
68,884
91,418
Property and equipment, net
46,304
35,531
27,378
Operating lease right of use assets
12,667
2,701
-
Marketable securities, less current portion
40
40
40
Deferred income taxes
1,474
1,443
1,462
Goodwill
77,051
76,848
76,407
Other assets
7,394
5,848
2,220
Total assets
$
208,397
$
191,295
$
198,925
LIABILITIES AND STOCKHOLDERS' EQUITY Current
liabilities: Accounts payable
$
20,641
$
14,346
$
9,216
Deferred revenue
1,205
1,331
1,883
Operating lease liability obligations
1,870
1,579
-
Income taxes payable
325
270
124
Provision for litigation
-
-
9,000
Other current liabilities
12,516
15,227
12,922
Total current liabilities
36,557
32,753
33,145
Operating lease liability obligations, less current portions
13,331
1,325
-
Deferred income taxes
123
140
152
Deferred revenue, less current portion
162
149
42
Other long-term liabilities
300
283
435
Total liabilities
50,473
34,650
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; 116,513,
115,760 and 114,246 shares issued and outstanding at September 30,
2019, June 30, 2019 and December 31, 2018, respectively
117
116
114
Additional paid-in capital
524,758
520,375
513,682
Accumulated other comprehensive loss
(9,837
)
(9,483
)
(10,033
)
Accumulated deficit
(357,114
)
(354,363
)
(338,612
)
Total stockholders' equity
157,924
156,645
165,151
Total liabilities and stockholders' equity
$
208,397
$
191,295
$
198,925
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
2019
2019
Change
2018
Change
2019
2018
Change
Revenue
$
51,321
$
45,904
12
%
$
49,315
4
%
$
140,505
$
151,678
-7
%
Cost of revenue: Cost of services (1)
25,602
22,769
12
%
21,519
19
%
71,311
63,779
12
%
Depreciation - network
4,961
4,628
7
%
3,761
32
%
13,905
12,337
13
%
Total cost of revenue
30,563
27,397
12
%
25,280
21
%
85,216
76,116
12
%
Gross profit
20,758
18,507
12
%
24,035
-14
%
55,289
75,562
-27
%
Gross profit percentage
40.4
%
40.3
%
48.7
%
39.4
%
49.8
%
Operating expenses: General and administrative (1)
7,356
8,340
-12
%
7,851
-6
%
23,231
24,890
-7
%
Sales and marketing (1)
10,713
10,994
-3
%
9,766
10
%
32,679
30,068
9
%
Research & development (1)
5,160
6,013
-14
%
5,882
-12
%
17,075
18,294
-7
%
Depreciation and amortization
172
127
35
%
616
-72
%
545
1,837
-70
%
Total operating expenses
23,401
25,474
-8
%
24,115
-3
%
73,530
75,089
-2
%
Operating (loss) income
(2,643
)
(6,967
)
NM
(80
)
NM
(18,241
)
473
NM
Other income (expense): Interest expense
(10
)
(10
)
NM
(10
)
NM
(30
)
(76
)
NM
Interest income
81
110
NM
177
NM
402
440
NM
Settlement and patent license income
-
-
NM
-
NM
-
14,900
NM
Other, net
(13
)
(70
)
NM
(246
)
NM
(89
)
(355
)
NM
Total other income (expense)
58
30
NM
(79
)
NM
283
14,909
NM
(Loss) income before income taxes
(2,585
)
(6,937
)
NM
(159
)
NM
(17,958
)
15,382
NM
Income tax expense
166
255
NM
113
NM
544
347
NM
Net (loss) income
$
(2,751
)
$
(7,192
)
NM
$
(272
)
NM
$
(18,502
)
$
15,035
NM
Net (loss) income per share: Basic
$
(0.02
)
$
(0.06
)
$
(0.00
)
$
(0.16
)
$
0.13
Diluted
$
(0.02
)
$
(0.06
)
$
(0.00
)
$
(0.16
)
$
0.13
Weighted average shares used in per share calculation: Basic
116,270
115,275
112,760
115,318
111,626
Diluted
116,270
115,275
112,760
115,318
120,025
(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,
2019
2019
2018
2019
2018
Share-based compensation: Cost of
services
$
331
$
377
$
352
$
1,119
$
1,059
General and administrative
2,006
2,140
1,887
6,240
5,666
Sales and marketing
584
598
638
1,666
1,874
Research and development
437
534
544
1,438
1,746
Total share-based compensation
$
3,358
$
3,649
$
3,421
$
10,463
$
10,345
Depreciation and amortization: Network-related
depreciation
$
4,961
$
4,628
$
3,761
$
13,905
$
12,337
Other depreciation and amortization
172
127
616
545
1,837
Total depreciation and amortization
$
5,133
$
4,755
$
4,377
$
14,450
$
14,174
Net increase (decrease) in cash, cash equivalents and
marketable securities:
$
(10,872
)
$
(9,719
)
$
7,065
$
(32,416
)
$
3,319
End of period statistics: Approximate
number of active customers
609
621
667
609
667
Number of employees and employee equivalents
609
594
551
609
551
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,
2019
2019
2018
2019
2018
Operating activities Net (loss) income
$
(2,751
)
$
(7,192
)
$
(272
)
$
(18,502
)
$
15,035
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities: Depreciation and
amortization
5,133
4,755
4,377
14,450
14,174
Share-based compensation
3,358
3,649
3,421
10,463
10,345
Settlement and patent license income
-
-
-
-
(14,900
)
Foreign currency remeasurement (gain) loss
21
(135
)
64
(104
)
(97
)
Deferred income taxes
(61
)
82
(16
)
(30
)
(86
)
(Gain) loss on sale of property and equipment
(5
)
(21
)
(18
)
(56
)
(131
)
Accounts receivable charges
580
437
157
1,274
453
Amortization of premium on marketable securities
9
8
24
29
82
Changes in operating assets and liabilities: Accounts receivable
(5,300
)
(2,031
)
5,558
(11,051
)
5,781
Prepaid expenses and other current assets
(885
)
582
(2,757
)
(777
)
(2,530
)
Income taxes receivable
45
-
7
43
(56
)
Other assets
781
(1,685
)
(192
)
(2,641
)
(759
)
Accounts payable and other current liabilities
(2,798
)
4,230
3,058
3,675
(2,526
)
Deferred revenue
(112
)
(148
)
(82
)
(557
)
85
Income taxes payable
61
81
(113
)
204
(350
)
Payments related to litigation, net
-
(1,520
)
(1,520
)
(3,040
)
(7,540
)
Other long term liabilities
16
22
(4
)
(137
)
(173
)
Net cash (used in) provided by operating activities
(1,908
)
1,114
11,692
(6,757
)
16,807
Investing activities Purchases of marketable
securities
-
(1,013
)
(15,962
)
(10,279
)
(15,962
)
Sale and maturities of marketable securities
1,000
18,929
8,850
32,153
20,365
Purchases of property and equipment
(7,750
)
(11,456
)
(4,214
)
(24,224
)
(10,495
)
Proceeds from sale of property and equipment
5
17
18
51
131
Net cash (used in) provided by investing activities
(6,745
)
6,477
(11,308
)
(2,299
)
(5,961
)
Financing activities Payment of employee tax
withholdings related to restricted stock vesting
(1,015
)
(619
)
(996
)
(2,528
)
(3,808
)
Cash paid for purchase of common stock
-
-
-
-
(3,800
)
Proceeds from employee stock plans
13
1,095
737
1,116
4,799
Net cash (used in) provided by financing activities
(1,002
)
476
(259
)
(1,412
)
(2,809
)
Effect of exchange rate changes on cash and cash equivalents
(211
)
132
(166
)
(83
)
(271
)
Net (decrease) increase in cash and cash equivalents
(9,866
)
8,199
(41
)
(10,551
)
7,766
Cash and cash equivalents, beginning of period
24,698
16,499
28,719
25,383
20,912
Cash and cash equivalents, end of period
$
14,832
$
24,698
$
28,678
$
14,832
$
28,678
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 the settlement and
patent license income, 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
the settlement and patent license income, 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 Nine Months Ended September 30, 2019
June 30, 2019 September 30, 2018 September 30,
2019 September 30, 2018 Amount Per Share
Amount Per Share Amount Per Share
Amount Per Share Amount Per Share
U.S. GAAP net (loss) income
$
(2,751
)
$
(0.02
)
$
(7,192
)
$
(0.06
)
$
(272
)
$
(0.00
)
$
(18,502
)
$
(0.16
)
$
15,035
$
0.13
Settlement and patent license income
-
-
-
-
-
-
-
-
(14,900
)
(0.13
)
Share-based compensation
3,358
0.03
3,649
0.03
3,421
0.03
10,463
0.09
10,345
0.09
Litigation expenses
-
-
-
-
19
0.00
-
-
2,904
0.03
Non-GAAP net income (loss)
$
607
$
0.01
$
(3,543
)
$
(0.03
)
$
3,168
$
0.03
$
(8,039
)
$
(0.07
)
$
13,384
$
0.12
Weighted average basic shares used in per share
calculation
116,270
115,275
112,760
115,318
111,626
LIMELIGHT NETWORKS, INC. Reconciliation of U.S.
GAAP Net Income (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,
2019
2019
2018
2019
2018
U.S. GAAP net (loss) income
$
(2,751
)
$
(7,192
)
$
(272
)
$
(18,502
)
$
15,035
Depreciation and amortization
5,133
4,755
4,377
14,450
14,174
Interest expense
10
10
10
30
76
Interest and other (income) expense
(68
)
(40
)
69
(313
)
(85
)
Income tax expense
166
255
113
544
347
EBITDA
$
2,490
$
(2,212
)
$
4,297
$
(3,791
)
$
29,547
Settlement and patent license income
-
-
-
-
(14,900
)
Share-based compensation
3,358
3,649
3,421
10,463
10,345
Litigation expenses
-
-
19
-
2,904
Adjusted EBITDA
$
5,848
$
1,437
$
7,737
$
6,672
$
27,896
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. EST (1:30 p.m. PST) 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 October 16, 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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20191016005734/en/
Limelight Networks, Inc. Sajid Malhotra, 602-850-5778
ir@llnw.com
Limelight Networks (NASDAQ:LLNW)
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