Limelight Networks(R) Reports Strong Financial Results for the Fourth Quarter and Full Year 2019

Company Release - 1/29/2020 4:01 PM ET
  • Record revenue of $60.1 million, up 37 percent year over year, up 17% sequentially
  • GAAP basic EPS of $0.02 and Non-GAAP EPS of $0.05
  • EBITDA of $8.1 million and Adjusted EBITDA of $11.4 million
  • Delivered record traffic, exceeding previous record by over 25%

SCOTTSDALE, Ariz.--(BUSINESS WIRE)-- Limelight Networks, Inc. (Nasdaq:LLNW) (Limelight), a leading provider of edge cloud services, today reported record revenue of $60.1 million for the fourth quarter of 2019, up 37% compared to $44.0 million in the fourth quarter of 2018.

Limelight reported GAAP net income of $2.5 million, or $0.02 per basic share for the fourth quarter of 2019, compared to a net loss of $5.2 million, or $0.05 per basic share, in the fourth quarter of 2018.

Non-GAAP net income was $5.8 million, or $0.05 per basic share, for the fourth quarter of 2019, compared to non-GAAP net income of $0.3 million, or break even per basic share, in the fourth quarter of 2018.

EBITDA was $8.1 million for the fourth quarter of 2019, compared to a loss of $0.9 million for the fourth quarter of 2018. Adjusted EBITDA was $11.4 million for the fourth quarter of 2019, compared to $4.6 million for the fourth quarter of 2018.

For the full year ended December 31, 2019, Limelight reported revenue of $200.6 million, an increase of 3% compared to $195.7 million for the year ended December 31, 2018.

Limelight reported GAAP net loss of $16.0 million, or $0.14 per basic share, for the year ended December 31, 2019, compared to net income of $9.8 million, or $0.09 per basic share, in 2018. Net income for the full year of 2018 includes $14.9 million, or $0.12 per basic share, of non-operating income related to the settlement and patent license agreement.

Non-GAAP net loss was $2.3 million, or $0.02 per basic share, for the year ended December 31, 2019, compared to non-GAAP net income of $13.7 million, or $0.12 per basic share, in 2018.

EBITDA was $4.3 million for the year ended December 31, 2019, compared to $28.7 million for the year ended December 31, 2018. Adjusted EBITDA was $18.1 million for the year ended December 31, 2019, compared to $32.5 million for the year ended December 31, 2018.

Limelight ended the fourth quarter with 610 employees and employee equivalents, up from 609 at the end of the third quarter of 2019, and up from 563 in the year ago period.

“The fourth quarter was our best ever performance across multiple financial and non-financial measures as we continued to execute our strategy of focusing on edge services and high-quality video delivery. The business momentum accelerated during the fourth quarter, primarily due to our significant participation in multiple live and on-demand OTT launches by some of the largest media companies in the world. Those companies looked to us as a trusted partner in these launches based on the superior performance of our network, global scale, and strong value proposition, said Bob Lento, Chief Executive Officer at Limelight.

“We are excited about the current and projected industry trends. We believe that we are poised to deliver a record year of volume, revenue and growth on a number of metrics, as our 2020 guidance reflects. OTT launches and demand for low latency-based edge services are predicted to expand globally in 2020 and beyond. We believe that we have unique assets to meet the computational and connectivity challenges of emerging business, both securely and globally. We are grateful for our customers, partners and employees who have helped build this business and position it for continued success,” Mr. Lento added.

Based on current conditions, and compared to 2019, our 2020 guidance implies double digit revenue growth, higher GAAP and Non-GAAP earnings, higher adjusted EBITDA, and lower capital expenditures.

Limelight Networks, Inc.
2020 Guidance
 
Actual
January 2020December 2019

2019

Revenue$223 to $235 million$220 to $235 million$200.6 million
 
GAAP Basic EPS$(0.10) to Break-even$(0.10) to Break-even

($0.14)

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

($0.02)

 
Adjusted EBITDA$25 to $35 million$25 to $35 million$18.1 million
 
Capital expenditures$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)
 
December 31, September 30, December 31,

2019

2019

2018

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

$

18,335

$

14,832

$

25,383

Marketable securities

 

-

 

3,218

 

25,083

Accounts receivable, net

 

34,476

 

35,818

 

26,041

Income taxes receivable

 

82

 

77

 

122

Prepaid expenses and other current assets

 

9,920

 

9,522

 

14,789

Total current assets

 

62,813

 

63,467

 

91,418

Property and equipment, net

 

46,136

 

46,304

 

27,378

Operating lease right of use assets

 

12,842

 

12,667

 

-

Marketable securities, less current portion

 

40

 

40

 

40

Deferred income taxes

 

1,319

 

1,474

 

1,462

Goodwill

 

77,102

 

77,051

 

76,407

Other assets

 

9,117

 

7,394

 

2,220

Total assets

$

209,369

$

208,397

$

198,925

 
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable

$

12,020

$

20,641

$

9,216

Deferred revenue

 

976

 

1,205

 

1,883

Operating lease liability obligations

 

2,056

 

1,870

 

-

Income taxes payable

 

178

 

325

 

124

Provision for litigation

 

-

 

-

 

9,000

Other current liabilities

 

13,398

 

12,516

 

12,922

Total current liabilities

 

28,628

 

36,557

 

33,145

Operating lease liability obligations, less current portion

 

13,488

 

13,331

 

-

Deferred income taxes

 

239

 

123

 

152

Deferred revenue, less current portion

 

161

 

162

 

42

Other long-term liabilities

 

316

 

300

 

435

Total liabilities

 

42,832

 

50,473

 

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; 118,368, 116,513 and 114,246 shares issued and
outstanding at December 31, 2019, September 30, 2019 and December 31, 2018, respectively

 

118

 

117

 

114

Additional paid-in capital

 

530,285

 

524,758

 

513,682

Accumulated other comprehensive loss

 

(9,210)

 

(9,837)

 

(10,033)

Accumulated deficit

 

(354,656)

 

(357,114)

 

(338,612)

Total stockholders' equity

 

166,537

 

157,924

 

165,151

Total liabilities and stockholders' equity

$

209,369

$

208,397

$

198,925

 
LIMELIGHT NETWORKS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
 
 
Three Months EndedTwelve Months Ended
 
December 31,September 30,PercentDecember 31,PercentDecember 31,December 31,Percent

2019

2019

Change

2018

Change

2019

2018

Change
 
Revenue

$

60,129

$

51,321

17%

$

43,992

37%

$

200,634

$

195,670

3%

Cost of revenue:

 

 

 

Cost of services (1)

 

28,586

 

25,602

12%

 

22,141

29%

 

99,897

 

85,920

16%

Depreciation - network

 

5,288

 

4,961

7%

 

3,941

34%

 

19,193

 

16,277

18%

Total cost of revenue

 

33,874

 

30,563

11%

 

26,082

30%

 

119,090

 

102,197

17%

Gross profit

 

26,255

 

20,758

26%

 

17,910

47%

 

81,544

 

93,473

-13%

Gross profit percentage

 

43.7%

 

40.4%

 

 

40.7%

 

 

40.6%

 

47.8%

 

Operating expenses:

 

 

 

General and administrative (1)

 

7,554

 

7,356

3%

 

7,482

1%

 

30,785

 

32,372

-5%

Sales and marketing (1)

 

10,399

 

10,713

-3%

 

9,484

10%

 

43,078

 

39,553

9%

Research & development (1)

 

5,459

 

5,160

6%

 

5,781

-6%

 

22,534

 

24,075

-6%

Depreciation and amortization

 

328

 

172

91%

 

476

-31%

 

872

 

2,313

-62%

Total operating expenses

 

23,740

 

23,401

1%

 

23,223

2%

 

97,269

 

98,313

-1%

 

 

 

Operating income (loss)

 

2,515

 

(2,643)

NM

 

(5,313)

NM

 

(15,725)

 

(4,840)

NM

 

 

 

Other income (expense):

 

 

 

Interest expense

 

(45)

 

(10)

NM

 

(10)

NM

 

(76)

 

(86)

NM

Interest income

 

25

 

81

NM

 

230

NM

 

427

 

670

NM

Settlement and patent license income

 

-

 

-

NM

 

-

NM

 

-

 

14,900

NM

Other, net

 

169

 

(13)

NM

 

90

NM

 

80

 

(264)

NM

Total other income (expense)

 

149

 

58

NM

 

310

NM

 

431

 

15,220

NM

 

 

 

Income (loss) before income taxes

 

2,664

 

(2,585)

NM

 

(5,003)

NM

 

(15,294)

 

10,380

NM

Income tax expense

 

206

 

166

NM

 

190

NM

 

750

 

538

NM

 

 

 

Net income (loss)

 

2,458

 

(2,751)

NM

 

(5,193)

NM

 

(16,044)

 

9,842

NM

 
Net income (loss) per share:
Basic

$

0.02

$

(0.02)

$

(0.05)

$

(0.14)

$

0.09

Diluted

$

0.02

$

(0.02)

$

(0.05)

$

(0.14)

$

0.08

 
Weighted average shares used in per share calculation:
Basic

 

117,603

 

116,270

 

113,578

 

115,890

 

112,114

Diluted

 

123,801

 

116,270

 

113,578

 

115,890

 

120,010

 
(1) 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,December 31,December 31,

2019

2019

2018

2019

2018

 
 
Share-based compensation:
 
Cost of services

$

376

$

331

$

756

$

1,495

$

1,815

General and administrative

 

1,858

 

2,006

 

2,792

 

8,098

 

8,458

Sales and marketing

 

597

 

584

 

963

 

2,263

 

2,837

Research and development

 

484

 

437

 

974

 

1,922

 

2,720

 
Total share-based compensation

$

3,315

$

3,358

$

5,485

$

13,778

$

15,830

 
Depreciation and amortization:
 
Network-related depreciation

$

5,288

$

4,961

$

3,941

$

19,193

$

16,277

Other depreciation and amortization

 

328

 

172

 

476

 

872

 

2,313

 
Total depreciation and amortization

$

5,616

$

5,133

$

4,417

$

20,065

$

18,590

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

$

285

$

(10,872)

$

(2,169)

$

(32,131)

$

1,150

 
 
End of period statistics:
 
Approximate number of active customers

 

599

 

609

 

649

 

599

 

649

 
Number of employees and employee equivalents

 

610

 

609

 

563

 

610

 

563

 

 

LIMELIGHT NETWORKS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
 
 
Three Months EndedTwelve Months Ended
 
December 31,September 30,December 31,December 31,December 31,

2019

2019

2018

2019

2018

 
Operating activities
Net income (loss)

$

2,458

$

(2,751)

$

(5,193)

$

(16,044)

$

9,842

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

 

5,616

 

5,133

 

4,417

 

20,065

 

18,590

Share-based compensation

 

3,315

 

3,358

 

5,485

 

13,778

 

15,830

Settlement and patent license income

 

-

 

-

 

-

 

-

 

(14,900)

Foreign currency remeasurement (gain) loss

 

79

 

21

 

(65)

 

(25)

 

(162)

Deferred income taxes

 

300

 

(61)

 

103

 

270

 

17

(Gain) loss on sale of property and equipment

 

-

 

(5)

 

(6)

 

(56)

 

(137)

Accounts receivable charges

 

519

 

580

 

449

 

1,793

 

902

Amortization of premium on marketable securities

 

1

 

9

 

33

 

30

 

115

Realized loss on marketable securities

 

9

 

-

 

-

 

9

 

-

Changes in operating assets and liabilities:
Accounts receivable

 

823

 

(5,300)

 

(343)

 

(10,228)

 

5,438

Prepaid expenses and other current assets

 

(324)

 

(885)

 

64

 

(1,101)

 

(2,466)

Income taxes receivable

 

(3)

 

45

 

25

 

40

 

(31)

Other assets

 

(1,547)

 

781

 

201

 

(4,188)

 

(558)

Accounts payable and other current liabilities

 

(2,383)

 

(2,798)

 

(1,807)

 

1,292

 

(4,333)

Deferred revenue

 

(232)

 

(112)

 

1,004

 

(789)

 

1,089

Income taxes payable

 

(143)

 

61

 

17

 

61

 

(333)

Payments related to litigation, net

 

-

 

-

 

(1,520)

 

(3,040)

 

(9,060)

Other long term liabilities

 

15

 

16

 

51

 

(121)

 

(121)

Net cash provided by (used in) operating activities

 

8,503

 

(1,908)

 

2,915

 

1,746

 

19,722

 
Investing activities
Purchases of marketable securities

 

-

 

-

 

(4,669)

 

(10,279)

 

(20,631)

Sale and maturities of marketable securities

 

3,211

 

1,000

 

3,500

 

35,364

 

23,865

Purchases of property and equipment

 

(10,480)

 

(7,750)

 

(5,618)

 

(34,704)

 

(16,113)

Proceeds from sale of property and equipment

 

-

 

5

 

4

 

51

 

135

Net cash used in investing activities

 

(7,269)

 

(6,745)

 

(6,783)

 

(9,568)

 

(12,744)

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

 

(1,079)

 

(1,015)

 

(985)

 

(3,607)

 

(4,793)

Cash paid for the purchase of common stock

 

-

 

-

 

-

 

-

 

(3,800)

Proceeds from employee stock plans

 

3,290

 

13

 

1,374

 

4,406

 

6,173

Net cash provided by (used in) financing activities

 

2,211

 

(1,002)

 

389

 

799

 

(2,420)

Effect of exchange rate changes on cash and cash equivalents

 

58

 

(211)

 

184

 

(25)

 

(87)

Net increase (decrease) in cash and cash equivalents

 

3,503

 

(9,866)

 

(3,295)

 

(7,048)

 

4,471

Cash and cash equivalents, beginning of period

 

14,832

 

24,698

 

28,678

 

25,383

 

20,912

Cash and cash equivalents, end of period

$

18,335

$

14,832

$

25,383

$

18,335

$

25,383

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
(In thousands)
(Unaudited)
 
 
Three Months EndedTwelve Months Ended
 
December 31, 2019September 30, 2019December 31, 2018December 31, 2019December 31, 2018
AmountPer ShareAmountPer ShareAmountPer ShareAmountPer ShareAmountPer Share
 
U.S. GAAP net income (loss)

$

2,458

$

0.02

$

(2,751)

$

(0.02)

$

(5,193)

$

(0.05)

$

(16,044)

$

(0.14)

$

9,842

$

0.09

 
Settlement and patent license income

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

(14,900)

 

(0.13)

Share-based compensation

 

3,315

 

0.03

 

3,358

 

0.03

 

5,485

 

0.05

 

13,778

 

0.12

 

15,830

 

0.14

Litigation expenses

 

-

 

-

 

-

 

-

 

3

 

0.00

 

-

 

-

 

2,907

 

0.03

 
Non-GAAP net income

$

5,773

$

0.05

$

607

$

0.01

$

295

$

0.00

$

(2,266)

$

(0.02)

$

13,679

$

0.12

 
 
Weighted average shares used in per share calculation

 

117,603

 

116,270

 

113,578

 

115,890

 

112,114

 
LIMELIGHT NETWORKS, INC.
Reconciliation of U.S. GAAP Net Loss to EBITDA to Adjusted EBITDA
(In thousands)
(Unaudited)
 
 
Three Months EndedTwelve Months Ended
 
December 31,September 30,December 31,December 31,December 31,

2019

2019

2018

2019

2018

 
U.S. GAAP net income (loss)

$

2,458

$

(2,751)

$

(5,193)

$

(16,044)

$

9,842

Depreciation and amortization

 

5,616

 

5,133

 

4,417

 

20,065

 

18,590

Interest expense

 

45

 

10

 

10

 

76

 

86

Interest and other (income) expense

 

(194)

 

(68)

 

(320)

 

(507)

 

(406)

Income tax expense

 

206

 

166

 

190

 

750

 

538

 
EBITDA

$

8,131

$

2,490

$

(896)

$

4,340

$

28,650

Settlement and patent license income

 

-

 

-

 

-

 

-

 

(14,900)

Share-based compensation

 

3,315

 

3,358

 

5,485

 

13,778

 

15,830

Litigation expenses

 

-

 

-

 

3

 

-

 

2,907

 
Adjusted EBITDA

$

11,446

$

5,848

$

4,592

$

18,118

$

32,487

 

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 January 29, 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, 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.

Source: Limelight Networks

Ticker Slug:

Ticker: LLNW
Exchange: NASDAQ

Limelight Networks, Inc.
Sajid Malhotra, 602-850-5778
ir@llnw.com

Source: Limelight Networks, Inc.