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Press release from GlobeNewswire (a Nasdaq OMX company)

Limelight Networks(R) Reports First Quarter 2011 Results

Thursday, May 05, 2011

Limelight Networks(R) Reports First Quarter 2011 Results13:00 EDT Thursday, May 05, 2011TEMPE, Ariz., May 5, 2011 (GLOBE NEWSWIRE) -- Limelight Networks, Inc. (Nasdaq:LLNW) ("Limelight") today reported first quarter 2011 financial results. Highlights included: -- Revenue of $49.8 million -- Cloud-based services comprised 33% of revenue: Mobile internet and tablet computing revenue growth approximately 300% year-over-year   Online video platform growth approximately 100% year-over-year   Site and application acceleration services growth exceeded 100% year over year   Enterprise cloud storage growth exceeded 40% year-over-year "Limelight is positioned at the intersection of three exciting trends – 1) the shift of video content and its accompanying advertising dollars online, 2) the explosive growth of mobile Internet and tablet computing, and 3) the migration of software application and IT services into the cloud. We are pleased with how this strategic positioning, our global scale and our investments in cloud-based services are leading to healthy growth," said Jeff Lunsford, chairman and chief executive officer. "Our cloud-based services, sold alongside our core delivery offerings, are primarily software-as-a-service offerings that enjoy the technical and operational benefits of running on Limelight's globally distributed high-performance computing, storage, and delivery platform. These services deepen our relationships with customers by helping them solve complex problems in the cloud more efficiently than they could with in-house solutions, thereby creating value within their businesses. With these Q1 results and the new Limelight Content Management solution we acquired and announced this week, we are pleased to report that we are tracking ahead of our previous plan for achieving our target operating model."Financial Highlights For the first quarter of 2011, the Company reported revenue of $49.8 million, up 38% percent from the first quarter 2010. The Company also reported adjusted EBITDA of $3.6 million and non-GAAP net loss, before share-based compensation, litigation expenses, amortization of intangible assets, and acquisition-related expenses, of $3.6 million or 3 cents per basic share. GAAP net loss was $9.8 million, or 9 cents per basic share. Capital investments were $8.1 million in the quarter. The Company ended the quarter with no bank debt and approximately $135 million in cash and short-term marketable securities.2011 Outlook The Company anticipates second quarter revenue to be in the range of $51.8 to $53.2 million. Financial TablesLIMELIGHT NETWORKS, INC.CONDENSED CONSOLIDATED BALANCE SHEETS(In thousands, except per share data)              March 31, 2011December 31, 2010  (Unaudited)  ASSETS     Current Assets:     Cash and cash equivalents  $ 128,357  $ 56,741 Marketable securities  6,399  12,009 Accounts receivable, net of reserves of $6,527 and $7,295 at March 31, 2011 and December 31, 2010  38,641  41,940 Income taxes receivable  745  721 Prepaid expenses and other current assets  10,092  9,628 Total current assets  184,234  121,039 Property and equipment, net  56,238  54,407 Marketable securities, less current portion  1,612  1,755 Deferred tax asset, non-current  948  718 Goodwill  95,296  94,364 Other intangible assets, net  18,134  19,406 Other assets  10,984  6,951 Total assets  $ 367,446  $ 298,640      LIABILITIES AND STOCKHOLDERS' EQUITY     Current Liabilities:     Accounts payable  $ 9,385  $ 12,236 Deferred revenue, current portion  6,084  6,877 Capital lease obligation, current portion  1,063  1,049 Other current liabilities  16,630  20,000 Total current liabilities  33,162  40,162 Capital lease obligation, less current portion  1,479  1,750 Deferred income tax, less current portion  1,281  598 Other long term liabilities  2,170  21 Total liabilities  38,092  42,531 Commitments and contingencies  --  -- Stockholders' equity:     Convertible preferred stock, $0.001 par value; 7,500 shares authorized; 0 shares issued and outstanding  --  -- Common stock, $0.001 par value; 150,000 shares authorized; 112,149 and 100,068 shares issued and outstanding at March 31, 2011 and December 31, 2010, respectively  112  100 Additional paid-in capital  463,358  380,338 Contingent consideration  219  1,608 Accumulated other comprehensive income   1,749  329 Accumulated deficit  (136,084)  (126,266) Total stockholders' equity  329,354  256,109 Total liabilities and stockholders' equity  $ 367,446  $ 298,640    LIMELIGHT NETWORKS, INC.CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(In thousands, except per share data)(Unaudited)                   Three Months Ended  March 31, 2011December 31, 2010March 31, 2010December 31, 2009           Revenue  $ 49,817  $ 55,243  $ 36,087  $ 33,625 Costs and operating expenses         Cost of revenue * †  29,412  29,966  20,983  22,167 General and administrative * †  10,764  11,621  8,893  10,066 Sales and marketing *  13,894  13,323  9,387  8,672 Research & development *  5,618  5,141  2,645  2,059 Total costs and operating expenses  59,688  60,051  41,908  42,964           Operating loss  (9,871)  (4,808)  (5,821)  (9,339)           Interest expense  (42)  (64)  (1)  (5) Interest income  187  147  302  295 Other income (expense)  30  (105)  (25)  (146)           Loss before income taxes  (9,696)  (4,830)  (5,545)  (9,195) Income tax expense  122  1,518  240  531           Net loss  $ (9,818)  $ (6,348)  $ (5,785)  $ (9,726)           Net loss per share:         Basic  $ (0.09)  $ (0.06)  $ (0.07)  $ (0.11) Diluted  $ (0.09)  $ (0.06)  $ (0.07)  $ (0.11)           Shares used in per share calculations:         Basic  103,917  99,557  85,119  84,770 Diluted  103,917  99,557  85,119  84,770                     * Includes share-based compensation (see supplemental table for figures)           † Includes depreciation (see supplemental table for figures)    LIMELIGHT NETWORKS, INC.SUPPLEMENTAL FINANCIAL DATA(In thousands)(Unaudited)                      Three Months Ended  March 31, 2011December 31, 2010March 31, 2010December 31, 2009Supplemental financial data:        Share-based compensation:         Cost of revenues  $ 616  $ 614  $ 598  $ 642 General and administrative  1,544  1,691  1,835  1,801 Sales and marketing  1,244  1,234  1,206  1,236 Research and development  874  804  704  648 Total share-based compensation  $ 4,278  $ 4,343  $ 4,343  $ 4,327          Depreciation and amortization:         Network-related depreciation  $ 6,726  $ 6,387  $ 4,778  $ 5,352 Other depreciation and amortization  532  497  595  619 Amortization of intangible assets  1,423  1,458  171  33 Total depreciation and amortization  $ 8,681  $ 8,342  $ 5,544  $ 6,004           Net increase (decrease) in cash, cash equivalents and marketable securities  $ 65,863  $ (2,169)  $ (5,531)  $ 1,561          End of period statistics:         Approximate number of active customers   1,771  1,824  1,370  1,370 Number of employees  708  689  342  328    LIMELIGHT NETWORKS, INC.CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(In thousands)(Unaudited)                      Three Months Ended  March 31, 2011December 31, 2010March 31, 2010December 31, 2009                    Cash flows from operating activities:         Net loss  $ (9,818)  $ (6,348)  $ (5,785)  $ (9,726) Adjustments to reconcile net loss to net cash provided by (used in) operating activities:     Depreciation and amortization  8,681  8,342  5,544  6,004 Share-based compensation  4,278  4,343  4,343  4,327 Deferred income tax benefit  (100)  (807)  --  -- Income tax expense related to business acquisition  --  1,899  --  -- Loss (gain) on foreign currency transactions  53  22  49  20 Loss (gain) on sale of property and equipment  --  (107)  89  -- Accounts receivable charges  233  (1,259)  1,169  774 Accretion of marketable securities  49  85  24  89 Changes in operating assets and liabilities:         Accounts receivable  3,013  (1,614)  (305)  555 Prepaid expenses and other current assets  (464)  (306)  685  (516) Income taxes receivable  (119)  141  (53)  (424) Other assets  (4,033)  611  (167)  917 Accounts payable  (1,217)  1,875  264  (6) Deferred revenue  (793)  (2,588)  (3,105)  (1,506) Other current liabilities  (2,978)  2,454  (2,081)  4,875 Other long term liabilities  84  (20)  --  -- Net cash (used in) provided by operating activities  (3,131)  6,723  671  5,383          Cash flows from investing activities:         Purchase of marketable securities  (1,410)  (1,039)  (16,755)  (25,500) Sale of marketable securities  6,970  7,516  28,000  10,900 Purchases of property and equipment  (8,050)  (8,769)  (4,250)  (3,759) Acquisition of business, net of cash acquired  --  --  (2,004)  -- Net cash (used in) provided by investing activities  (2,490)  (2,292)  4,991  (18,359)          Cash flows from financing activities:         Payments on capital lease obligations  (257)  (409)  --  -- Proceeds from exercise of stock options  415  1,486  27  34 Proceeds from secondary public offering, net  77,169  --  --  -- Payment of employee tax withholdings related to restricted stock  (234)  (948)  --  (286) Net cash provided by (used in) financing activities  77,093  129  27  (252) Effect of exchange rate changes on cash   144  (48)  97  290Net increase (decrease) in cash and cash equivalents  71,616  4,512  5,786  (12,938)Cash and cash equivalents, beginning of period   56,741  52,229  89,509  102,447Cash and cash equivalents, end of period  $ 128,357  $ 56,741  $ 95,295  $ 89,509Use of Non-GAAP Financial Measures To evaluate our business, we consider and use Non-GAAP net income (loss) and Adjusted EBITDA as a supplemental measure 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 because it allows us to illustrate the impact of the effects of share-based compensation, litigation expenses, amortization of intangibles and acquisition related expenses. We define EBITDA as GAAP net income (loss) before interest income, interest expense, other income and expense, provision for income taxes and, depreciation and amortization. We believe that EBITDA provides a useful metric to investors to compare us with other companies within our industry and across industries. We define Adjusted EBITDA as EBITDA adjusted for operational expenses that we do not consider reflective of our ongoing operations. We use Adjusted EBITDA as a supplemental measure to review and assess operating performance. We also believe use of Adjusted EBITDA facilitates investors' use of operating performance comparisons from period to period. In addition, it should be noted that our performance-based executive officer bonus structure is tied closely to our performance as measured in part by certain non-GAAP financial measures. The terms Non-GAAP net income (loss), EBITDA and Adjusted EBITDA are not defined under United States generally accepted accounting principles, or United States GAAP, and are not measures of operating income, operating performance or liquidity presented in accordance with United States 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 United States 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;   they do not reflect changes in, or cash requirements for, our working capital needs;   they do not reflect the cash requirements necessary for litigation costs;   they do not reflect the interest expense, or the cash requirements necessary to service interest or principal payments, on our debt that we may incur;   they 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 EBITDA and Adjusted EBITDA differently than we do, limiting their usefulness as comparative measures. We compensate for these limitations by relying primarily on our GAAP results and using Non-GAAP net income (loss) 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 Regulation G issued by the Securities and Exchange Commission, the Company is presenting the most directly comparable GAAP financial measures and reconciling the non-GAAP financial metrics to the comparable GAAP measures.LIMELIGHT NETWORKS, INC.Reconciliation of GAAP Net Income (Loss) to Non-GAAP Net Income (Loss)(In thousands)(Unaudited)                      Three Months Ended  March 31, 2011December 31, 2010March 31, 2010December 31, 2009           GAAP net (loss) income   $ (9,818)  $ (6,348)  $ (5,785)  $ (9,726)           Share-based compensation  4,278  4,343  4,343  4,327 Litigation defense expenses  344  22  392  827 Acquisition related expenses  141  169  604  1,481 Amortization of intangibles  1,423  1,458  171  33           Non-GAAP net loss   $ (3,632)  $ (356)  $ (275)  $ (3,058)    LIMELIGHT NETWORKS, INC.Reconciliation of GAAP Net Income (Loss) to EBITDA to Adjusted EBITDA(In thousands)(Unaudited)                      Three Months Ended  March 31, 2011December 31, 2010March 31, 2010December 31, 2009           GAAP net (loss) income   $ (9,818)  $ (6,348)  $ (5,785)  $ (9,726)           Add: depreciation and amortization  8,681  8,342  5,544  6,004 Add: interest expense  42  64  1  5 Less: interest and other income (expense)  (217)  (42)  (277)  (149) Add: income tax (benefit) expense  122  1,518  240  531           EBITDA  (1,190)  3,534  (277)  (3,335)           Add: share-based compensation  4,278  4,343  4,343  4,327 Add: litigation defense expenses  344  22  392  827 Add: acquisition related expenses  141  169  604  1,481           Adjusted EBITDA   $ 3,573  $ 8,068  $ 5,062  $ 3,300Conference Call At approximately 4:10 p.m. EDT (1:10 p.m. PDT), management will host a quarterly conference call for investors. Investors can access this call toll-free at 877-388-8480 within the United States or +1 678-809-1592 outside of the U.S. The conference call will also be audiocast live from http://www.llnw.com and a replay will be available following the call from the Company's website.Safe-Harbor Statement This press release contains forward-looking statements concerning, among other things, the outlook for the Company's revenues, net loss and stock-based compensation expenses, customer growth, market growth, pricing pressures, expansion into additional market segments, product and services improvements, the integration of acquired businesses and litigation and acquisition related expenses. Forward-looking statements represent the current judgment and expectations of Limelight Networks and are not guarantees and are subject to a number of risks and uncertainties that could cause actual results to differ materially including, but not limited to, risks and uncertainties discussed in the Company's Annual Report on Form 10K and other filings with the Securities and Exchange Commission and the final review of the results and amendments and preparation of quarterly financial statements, including consultation with our outside auditors. Accordingly, readers are cautioned not to place undue reliance on any forward-looking statements. The Company assumes no duty or obligation to update or revise any forward-looking statements for any reason.About Limelight Networks, Inc. Limelight Networks, Inc. (Nasdaq:LLNW) provides solutions that enable business and technology decision makers to profit from the shift of content and advertising to the online world, the explosive growth of mobile and connected devices, and the migration of IT applications and services into the cloud. Approximately 1800 customers worldwide use Limelight's massively scalable software services to engage audiences, enhance brand presence, analyze viewer preferences, optimize advertising, manage and monetize digital assets, and ultimately build stronger customer relationships. For more information, please visit http://www.limelightnetworks.com or follow us on Twitter at www.twitter.com/llnw. Copyright (C) 2011 Limelight Networks, Inc. All rights reserved. EyeWonder is a trademark of Limelight Networks, Inc. All product or service names are the property of their respective owners.CONTACT: Paul Alfieri Limelight Networks, Inc. +1-646-875-8835 palfieri@llnw.com