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Press release from GlobeNewswire (a Nasdaq OMX company)

Limelight Networks(R) Reports Fourth Quarter and Full Year 2012 Financial Results

Tuesday, February 19, 2013

Limelight Networks(R) Reports Fourth Quarter and Full Year 2012 Financial Results13:00 EST Tuesday, February 19, 2013TEMPE, Ariz., Feb. 19, 2013 (GLOBE NEWSWIRE) -- Limelight Networks, Inc. (Nasdaq:LLNW) ("Limelight"), a global leader in Digital Presence Management, today announced fourth quarter and full year 2012 financial results. Limelight reported revenue for the fourth quarter of 2012 of $46.5 million and revenue for the full year of $180.2 million. "In today's global online economy, the imperative for organizations to optimize their Digital Presence is becoming clear," said Bob Lento, Chief Executive Officer. "I am excited to be leading Limelight. I believe there is unlocked potential in our company and opportunity in the market that can help us generate returns for our customers, employees and shareholders. Effectively engaging audiences through the online device of their choice, is now a critical requirement for our customers. Limelight's Orchestrate Digital Presence platform is well positioned to help organizations create, manage, and deliver engaging, personalized content to their global audiences."Recent Business Highlights Limelight continues to enhance its position as a leader in the Digital Presence Management marketplace. Fourth quarter 2012 value added services were 32% of total revenue and grew 14% year-over-year. Limelight received Frost & Sullivan's 2012 Global Product Line Strategy Award in the Online Video Platform market. During the fourth quarter of 2012, Limelight appointed Indu Kodukula as Chief Operating Officer and Bob Lento as interim Chief Executive Officer. In January 2013, Mr. Lento became Limelight's full time Chief Executive Officer. On February 12, 2013, Limelight announced George Vonderhaar as Chief Sales Officer. The company also recently appointed Jonathan Smith as Managing Director and Vice President of Europe, Middle East and Africa. These recent additions complement the management changes above and, in conjunction with the appointments of a new Chief Marketing Officer and head of Professional Services earlier in 2012, create a management team ready to execute in 2013.Financial highlights for Limelight's 2012 fourth quarter included: Revenue from continuing operations of $46.5 million, up 1% year-over-year from fourth quarter 2011. Adjusted EBITDA of $2.4 million. Cash flows from operations of $4.5 million. Non-GAAP net loss, before share-based compensation, litigation expenses, amortization of intangible assets, acquisition-related expenses, and discontinued operations of $5.6 million or $0.06 cents per basic share. GAAP loss from continuing operations was $10.3 million, or $0.10 cents per basic share. Capital expenditures were $0.9 million.Financial highlights for Limelight's full year 2012 included: Revenue of $180.2 million from continuing operations, up 5% year-over-year from 2011. Adjusted EBITDA of $9.9 million. Cash flows from operations of $12.5 million. Non-GAAP net loss, before share-based compensation, litigation expenses, amortization of intangible assets, acquisition-related expenses, gain on sale of cost basis investment and discontinued operations of $22.0 million or $0.22 cents per basic share. GAAP loss from continuing operations was $30.0 million, or $0.30 cents per basic share. Capital expenditures were $18.4 million. The Company ended the year with no bank debt and approximately $128 million in cash and cash equivalents and short-term marketable securities.Stock Buyback Program During the fourth quarter, the Company repurchased approximately $4.6 million of common stock under the $10 million repurchase plan authorized by the Board of Directors on October 29, 2012. The Board of Directors has authorized the repurchase of a total of $50 million in common stock under three separate repurchase plans, the first of which was authorized in September 2011. Since the inception of the first plan, through the end of the fourth quarter of 2012, the Company has repurchased approximately $44.5 million of common stock.Financial TablesLIMELIGHT NETWORKS, INC.CONDENSED CONSOLIDATED BALANCE SHEETS(In thousands, except per share data)        December 31, December 31,  20122011 (Unaudited) ASSETS     Current assets:     Cash and cash equivalents  $ 108,915  $ 120,349 Marketable securities  19,040  19,850 Accounts receivable, net of reserves of $4,070 and $4,391 at December 31, 2012 and December 31, 2011  26,602  28,045 Income taxes receivable  471  31 Deferred income tax  38  62 Prepaid expenses and other current assets  12,308  20,646 Total current assets  167,374  188,983 Property and equipment, net  41,251  56,368 Marketable securities, less current portion  18  51 Deferred income tax, less current portion  2,838  1,177 Goodwill  80,278  80,105 Other intangible assets, net  6,387  9,207 Other assets  6,735  10,454 Total assets  $ 304,881  $ 346,345      LIABILITIES AND STOCKHOLDERS' EQUITY     Current liabilities:     Accounts payable  $ 6,730  $ 6,797 Deferred revenue  6,892  7,287 Capital lease obligation  1,301  1,750 Income taxes payable  519  774 Other current liabilities  14,866  13,195 Total current liabilities  30,308  29,803 Capital lease obligation, less current portion  824  2,124 Deferred income tax  461  580 Deferred revenue, less current portion  797  539 Other long-term liabilities  5,261  4,194 Total liabilities  37,651  37,240 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; 300,000 shares authorized at December 31, 2012 and December 31, 2011; 98,038 and 104,349 shares issued and outstanding at December 31, 2012 and December 31, 2011, respectively  98  104 Additional paid-in capital  452,258  460,845 Contingent consideration  33  219 Accumulated other comprehensive loss  (709)  (509) Accumulated deficit  (184,450)  (151,554) Total stockholders' equity  267,230  309,105 Total liabilities and stockholders' equity  $ 304,881  $ 346,345      LIMELIGHT NETWORKS, INC.CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(In thousands, except per share data)(Unaudited)                              Three Months EndedTwelve Months Ended                December 31,September 30,December 31,September 30,December 31,December 31,  201220122011201120122011               Revenues  $ 46,471  $ 45,001  $ 45,979  $ 42,352  $ 180,236  $ 171,292 Cost of revenue:             Cost of services  21,529  21,313  20,644  20,243  83,723  81,556 Depreciation - network  7,009  6,970  7,022  7,035  27,992  28,030 Total cost of revenue  28,538  28,283  27,666  27,278  111,715  109,586 Gross profit  17,933  16,718  18,313  15,074  68,521  61,706 Operating expenses:             General and administrative *  10,873  8,757  8,640  8,416  36,003  32,138 Sales and marketing *  10,613  11,037  10,178  9,176  45,044  40,081 Research & development *  5,075  4,956  4,592  4,360  20,182  17,146 Depreciation and amortization  1,514  1,481  1,533  1,499  5,843  4,787 Total operating expenses  28,075  26,231  24,943  23,451  107,072  94,152               Operating loss  (10,142)  (9,513)  (6,630)  (8,377)  (38,551)  (32,446)               Other income (expense):             Interest expense  (41)  (40)  (74)  (89)  (177)  (299) Interest income  79  88  128  186  356  752 Gain on sale of cost basis investment  --  9,420  --  --  9,420  -- Other, net  (20)  (551)  (328)  (18)  (602)  (311) Total other income (expense)  18  8,917  (274)  79  8,997  142               Loss from continuing operations before income taxes  (10,124)  (596)  (6,904)  (8,298)  (29,554)  (32,304) Income tax expense (benefit)  167  14  (909)  (1,896)  481  (2,238)               Loss from continuing operations  (10,291)  (610)  (5,995)  (6,402)  (30,035)  (30,066)               Discontinued operations:             (Loss) income from discontinued operations, net of income taxes  (1,943)  (218)  (558)  11,420  (2,861)  4,778               Net (loss) income  $ (12,234)  $ (828)  $ (6,553)  $ 5,018  $ (32,896)  $ (25,288)               Net (loss) income per share:             Basic             Continuing operations  $ (0.10)  $ (0.01)  $ (0.06)  $ (0.06)  $ (0.30)  $ (0.28) Discontinued operations  $ (0.02)  $ --   $ --   $ 0.10  $ (0.02)  $ 0.05 Total  $ (0.12)  $ (0.01)  $ (0.06)  $ 0.04  $ (0.32)  $ (0.23)               Diluted             Continuing operations  $ (0.10)  $ (0.01)  $ (0.06)  $ (0.06)  $ (0.30)  $ (0.28) Discontinued operations  $ (0.02)  $ --   $ --   $ 0.10  $ (0.02)  $ 0.05 Total  $ (0.12)  $ (0.01)  $ (0.06)  $ 0.04  $ (0.32)  $ (0.23)               Shares used in per share calculations:             Basic  98,765  99,359  106,253  113,662  101,283  109,236 Diluted  98,765  99,359  106,253  113,662  101,283  109,236               *         Includes share-based compensation (see supplemental table for figures)      LIMELIGHT NETWORKS, INC.SUPPLEMENTAL FINANCIAL DATA(In thousands)(Unaudited)                              Three Months EndedTwelve Months Ended                December 31,September 30,December 31,September 30,December 31,December 31,  201220122011201120122011Supplemental financial data (in thousands):                          Share-based compensation:                           Cost of revenues  $ 522  $ 604  $ 614  $ 514  $ 2,117  $ 2,419 General and administrative  1,873  1,571  2,000  1,093  6,511  6,132 Sales and marketing  601  836  844  695  3,104  3,776 Research and development  644  652  730  687  2,743  3,554               Total share-based compensation  $ 3,640  $ 3,663  $ 4,188  $ 2,989  $ 14,475  $ 15,881              Depreciation and amortization:                           Network-related depreciation  $ 7,009  $ 6,970  $ 7,022  $ 7,035  $ 27,992  $ 28,030 Other depreciation and amortization  787  760  714  725  2,972  2,437 Amortization of intangible assets  727  721  819  774  2,871  2,350               Total depreciation and amortization  $ 8,523  $ 8,451  $ 8,555  $ 8,534  $ 33,835  $ 32,817                             Net (decrease) increase in cash, cash equivalents and marketable securities:  $ (2,012)  $ 5,340  $ (17,545)  $ 44,248  $ (12,277)  $ 73,277              End of period statistics:                           Approximate number of active customers  1,451  1,493  1,565  1,602  1,451  1,565               Number of employees  511  517  482  473  511  482      LIMELIGHT NETWORKS, INC.CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(In thousands)(Unaudited)                                          Three Months EndedTwelve Months Ended                December 31,September 30,December 31,September 30,December 31,December 31,  201220122011201120122011                            Cash flows from operating activities:             Net (loss) income  $ (12,234)  $ (828)  $ (6,553)  $ 5,018  $ (32,896)  $ (25,288) (Loss) income from discontinued operations  (1,943)  (218)  (558)  11,420  (2,861)  4,778 Net loss from continuing operations  (10,291)  (610)  (5,995)  (6,402)  (30,035)  (30,066)               Adjustments to reconcile net loss from continuing operations to net cash provided by operating activities of continuing operations:             Depreciation and amortization  8,523  8,451  8,555  8,534  33,835  32,817 Share-based compensation  3,640  3,663  4,188  2,989  14,475  15,881 Deferred income taxes  261  (125)  (183)  43  (38)  (214) (Gain) loss on foreign currency transactions  --  --  (18)  --  --  (18) Loss on sale of property and equipment  70  6  --  --  89  -- Accounts receivable charges  905  221  262  298  2,010  1,181 Accretion of marketable securities  107  123  27  (81)  472  (63) Non cash tax benefit associated with sale of discontinued operations  --  --  (407)  (2,165)  --  (2,572) Non cash increase in cost basis investment  --  --  (359)  (397)  (528)  (1,038) Gain on sale of cost basis investment  --  (9,420)  --  --  (9,420)  -- Changes in operating assets and liabilities:             Accounts receivable  901  (446)  (379)  (1,623)  (567)  5 Prepaid expenses and other current assets  (76)  1,534  1,102  (1,028)  2,910  (582) Income taxes receivable  (47)  (135)  452  (106)  (440)  184 Other assets  (72)  580  (296)  370  (1,626)  (3,859) Accounts payable  265  2,176  (4,815)  2,666  2,419  (2,491) Deferred revenue  (544)  142  1,540  45  (137)  (1,021) Other current liabilities  1,040  (732)  754  (1,467)  17  (3,236) Income taxes payable  (55)  (22)  (1,045)  (573)  (255)  (1,357) Other long term liabilities  (119)  (72)  341  549  (649)  1,344 Net cash provided by operating activities of continuing operations  4,508  5,334  3,724  1,652  12,532  4,895              Cash flows from investing activities:             Purchase of marketable securities  --  (3,098)  (7,396)  (9,688)  (27,280)  (22,712) Maturities of marketable securities  8,340  5,103  1,412  2,350  27,625  14,932 Purchases of property and equipment  (916)  (7,362)  (3,491)  (7,529)  (18,390)  (30,363) Acquisition of businesses, net of cash acquired  --  --  --  133  --  (7,360) Proceeds from sale of cost basis investment  --  10,154  --  --  10,154  -- Proceeds from sale of discontinued operations  224  367  --  61,000  7,441  61,000 Net cash provided by (used in) investing activities of continuing operations  7,648  5,164  (9,475)  46,266  (450)  15,497              Cash flows from financing activities:             Payments on capital lease obligations  (427)  (441)  (402)  (352)  (1,749)  (1,384) Payment of employee tax withholdings related to restricted stock  (81)  (83)  (133)  (113)  (682)  (1,196) Cash paid for purchase of common stock  (4,578)  (3,171)  (15,164)  (9,210)  (20,851)  (24,373) Proceeds from exercise of stock options  34  30  109  136  189  733 Proceeds from secondary public offering, net  --  --  --  (48)  --  77,049 Net cash (used in) provided by financing activities of continuing operations  (5,052)  (3,665)  (15,590)  (9,587)  (23,093)  50,829 Effect of exchange rate changes on cash and cash equivalents  (508)  606  447  (420)  (274)  351              Cash flows from discontinued operations:             Cash used in operating activities of discontinued operations  (149)  --  (2,597)  (899)  (149)  (5,400) Cash used in investing activities of discontinued operations  --  --  --  (143)  --  (684) Net cash used in discontinued operations  (149)  --  (2,597)  (1,042)  (149)  (6,084)Net increase (decrease) in cash and cash equivalents  6,447  7,439  (23,491)  36,869  (11,434)  65,488Cash and cash equivalents, beginning of period  102,468  95,029  143,840  106,971  120,349  54,861Cash and cash equivalents, end of period  $ 108,915  $ 102,468  $ 120,349  $ 143,840  $ 108,915  $ 120,349Use 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, acquisition related expenses, gain on sale of cost basis investment and discontinued operations. We define EBITDA as GAAP net income (loss) before interest income, interest expense, gain on sale of cost basis investment, other income and expense, provision for income taxes, depreciation and amortization, and discontinued operations. 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 EndedTwelve Months Ended                December 31,September 30,December 31,September 30,December 31,December 31,  201220122011201120122011               GAAP net (loss) income  $ (12,234)  $ (828)  $ (6,553)  $ 5,018  $ (32,896)  $ (25,288)               Share-based compensation  3,640  3,663  4,188  2,989  14,475  15,881 Litigation defense expenses  361  148  301  463  527  1,376 Acquisition related expenses  (17)  48  117  (41)  (388)  776 Amortization of intangible assets  727  721  819  774  2,871  2,350 Gain on sale of cost basis investment  --  (9,420)  --  --  (9,420)  -- Loss (income) from discontinued operations  1,943  218  558  (11,420)  2,861  (4,778)               Non-GAAP net loss  $ (5,580)  $ (5,450)  $ (570)  $ (2,217)  $ (21,970)  $ (9,683)      LIMELIGHT NETWORKS, INC. Reconciliation of GAAP Net Income (Loss) to EBITDA to Adjusted EBITDA(In thousands)(Unaudited)                              Three Months EndedTwelve Months Ended                December 31,September 30,December 31,September 30,December 31,December 31,  201220122011201120122011               GAAP net (loss) income  $ (12,234)  $ (828)  $ (6,553)  $ 5,018  $ (32,896)  $ (25,288)               Depreciation and amortization  8,523  8,451  8,555  8,534  33,835  32,817 Interest expense  41  40  74  89  177  299 Gain on sale of cost basis investment  --  (9,420)  --  --  (9,420)  -- Interest and other (income) expense  (59)  463  200  (168)  246  (441) Income tax expense (benefit)  167  14  (909)  (1,896)  481  (2,238) Loss (income) from discontinued operations  1,943  218  558  (11,420)  2,861  (4,778)               EBITDA  (1,619)  (1,062)  1,925  157  (4,716)  371               Share-based compensation  3,640  3,663  4,188  2,989  14,475  15,881 Litigation defense expenses  361  148  301  463  527  1,376 Acquisition related expenses  (17)  48  117  (41)  (388)  776               Adjusted EBITDA  $ 2,365  $ 2,797  $ 6,531  $ 3,568  $ 9,898  $ 18,404Conference 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 877-388-8480 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.limelight.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 or annual 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) is a global leader in Digital Presence Management. Limelight's Orchestrate Digital Presence Platform is an integrated suite of cloud-based Software as a Service (SaaS) applications, which allows organizations to optimize all aspects of their online digital presence across web, mobile, social, and large screen channels. Orchestrate leverages Limelight's scalable, high-performance global network to offer advanced features for: web content management; website personalization; content targeting; online video publishing; mobile enablement and monetization; content delivery; transcoding; and cloud storage – combined with social media integration and powerful analytics. Limelight's team of digital presence experts helps organizations streamline processes and optimize business results across all customer interaction channels to deliver exceptional multi-screen experiences, improve brand awareness, drive revenue, and enhance their customer relationships – all while reducing costs. For more information, please visit www.limelight.com, and be sure to follow us on Twitter at www.twitter.com/llnw. Copyright (C) 2013 Limelight Networks, Inc. All rights reserved. All product or service names are the property of their respective owners.CONTACT: Gillian Reckler 602-753-6965 ir@llnw.com Amber Winans 510-984-1526 bhavacom.com