Limelight Networks(TM) Reports Third Quarter 2009 Results

November 04, 2009 --

TEMPE, AZ -- (Marketwire) -- 11/04/09 -- Limelight Networks, Inc. (NASDAQ: LLNW) today reported third quarter 2009 financial results.

-- Revenue of $32.5 million -- Launch of next-generation XD Platform, with Adaptive Intelligence, to provide advanced levels of performance and increased insight into real-time Internet and delivery conditions -- Launch of LimelightREACH and LimelightADS, two new services that provide turnkey capabilities for customizing and monetizing media delivery on mobile and other connected devices

"The Internet continues to transform and advance the way people live, work and play around the world. Tomorrow's Internet will involve more real-time data flow and content consumption across a growing mix of computers, laptops, netbooks, game consoles, televisions, set-top boxes, and mobile devices, the combination of which will allow consumers to enjoy content, access information and conduct transactions anytime, anywhere. With our recently announced XD Platform and the mobility and monetization solutions we released during the quarter, we are positioning Limelight Networks to be a core provider of cloud-based services within this transformed world, helping forward-thinking media, entertainment, enterprise and government organizations leverage the next-generation Internet's capabilities to differentiate from their competitors and better serve their constituents," said Jeff Lunsford, CEO of Limelight Networks.

Financial Highlights

For the third quarter of 2009, the company reported revenue of $32.5 million, up 1 percent from $32.3 million in the second quarter of 2009, and EBITDA, adjusted for share-based compensation and litigation costs, of $5.8 million.

Non-GAAP net loss, before stock based compensation and litigation costs, was $.6 million or 1 cent per basic share. GAAP net loss was $5.2 million, or 6 cents per basic share.

Capital investments were $10.6 million. The Company ended the quarter with no bank debt and approximately $153 million in cash and short-term marketable securities. A reconciliation of GAAP to non-GAAP net income is included in the attached tables.

Fourth-Quarter Outlook

Limelight Networks anticipates fourth quarter revenue to be in the range of $32.5 million to $34 million.

Financial Tables

LIMELIGHT NETWORKS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands, except per share data) September 30, December 31, 2009 2008 ------------- ------------- (Unaudited) ASSETS Current Assets: Cash and cash equivalents $ 102,447 $ 138,180 Marketable securities 50,367 36,463 Accounts receivable, net of reserves of $9,149 and $7,565 at September 30, 2009 and December 31, 2008, respectively 27,692 33,482 Income taxes receivable 184 7 Prepaid expenses and other current assets 9,206 7,834 ------------- ------------- Total current assets 189,896 215,966 Property and equipment, net 39,653 40,185 Marketable securities, less current portion 16 13 Goodwill 619 - Other intangible assets, net 404 - Other assets 9,048 628 ------------- ------------- Total assets $ 239,636 $ 256,792 ============= ============= LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Accounts payable $ 7,180 $ 8,920 Deferred revenue, current portion 12,077 9,865 Provision for litigation - 65,645 Other current liabilities 8,905 14,928 ------------- ------------- Total current liabilities 28,162 99,358 Deferred revenue, less current portion 3,006 7,303 ------------- ------------- Total liabilities 31,168 106,661 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; 84,667 and 83,405 shares issued and outstanding at September 30, 2009 and December 31, 2008, respectively 85 83 Additional paid-in capital 304,466 290,593 Accumulated other comprehensive income 105 260 Accumulated deficit (96,188) (140,805) ------------- ------------- Total stockholders' equity 208,468 150,131 ------------- ------------- Total liabilities and stockholders' equity $ 239,636 $ 256,792 ============= ============= LIMELIGHT NETWORKS, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share data) (Unaudited) Three Months Ended Nine Months Ended -------------------------------------- ------------------ September September September September 30, June 30, 30, June 30, 30, 30, 2009 2009 2008 2008 2009 2008 -------- -------- -------- -------- -------- -------- Revenue $ 32,530 $ 32,333 $ 33,116 $ 30,314 $ 98,038 $ 93,632 Costs and operating expenses Cost of revenue * † 20,907 21,078 21,557 19,751 63,456 61,980 General and administrative * † 7,032 6,937 15,455 9,463 26,413 38,247 Sales and marketing * 8,060 7,716 8,577 8,965 23,915 25,684 Research & development * 2,024 1,944 2,008 1,694 5,878 5,293 Provision for litigation - - 2,343 6,743 (65,645) 16,220 -------- -------- -------- -------- -------- -------- Total costs and operating expenses 38,023 37,675 49,940 46,616 54,017 147,424 Operating income (loss) (5,493) (5,342) (16,824) (16,302) 44,021 (53,792) Interest expense (11) (11) (11) (11) (33) (43) Interest income 330 337 1,203 1,334 1,050 4,428 Other income (expense) 15 (111) 410 (377) 131 203 -------- -------- -------- -------- -------- -------- Income (loss) before taxes (5,159) (5,127) (15,222) (15,356) 45,169 (49,204) Income tax expense (benefit) 61 171 130 (25) 552 (78) -------- -------- -------- -------- -------- -------- Net income (loss) $ (5,220) $ (5,298) $(15,352) $(15,331) $ 44,617 $(49,126) ======== ======== ======== ======== ======== ======== Net income (loss) per share: Basic $ (0.06) $ (0.06) $ (0.18) $ (0.18) $ 0.53 $ (0.59) Diluted $ (0.06) $ (0.06) $ (0.18) $ (0.18) $ 0.51 $ (0.59) Shares used in per share calculations: Basic 84,489 84,033 83,022 82,889 84,012 82,845 Diluted 84,489 84,033 83,022 82,889 87,708 82,845 * 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 Nine Months Ended -------------------------------------- ------------------ September September September September 30, June 30, 30, June 30, 30, 30, 2009 2009 2008 2008 2009 2008 -------- --------- -------- -------- -------- -------- Supplemental financial data (in thousands): Share-based compensation: Cost of revenues $ 638 $ 582 $ 594 $ 558 $ 1,772 $ 1,658 General and administrative 1,805 1,820 1,669 1,698 5,755 5,031 Sales and marketing 1,293 1,253 1,400 1,431 3,734 4,137 Research and development 633 626 642 598 1,876 1,723 -------- --------- -------- -------- -------- -------- Total share-based compensation $ 4,369 $ 4,281 $ 4,305 $ 4,285 $ 13,137 $ 12,549 ======== ========= ======== ======== ======== ======== Depreciation and amortization: Network-related depreciation $ 6,018 $ 6,133 $ 6,607 $ 6,192 $ 18,699 $ 18,812 Other depreciation 627 532 343 311 1,699 901 -------- --------- -------- -------- -------- -------- Total depreciation and amortization $ 6,645 $ 6,665 $ 6,950 $ 6,503 $ 20,398 $ 19,713 ======== ========= ======== ======== ======== ======== Capital expenditures: Capital expenditures (cash and accrual) $ 11,070 $ 4,113 $ 6,803 $ 5,013 $ 19,755 $ 14,911 ======== ========= ======== ======== ======== ======== Net (decrease) increase in cash, cash equivalents and marketable securities $(11,497) $ 2,331 $ (7,844) $(10,194) $(21,826) $(20,513) ======== ========= ======== ======== ======== ======== End of period statistics: Approximate number of active customers 1,370 1,370 1,304 1,291 1,370 1,304 Number of employees 321 301 285 250 321 285 LIMELIGHT NETWORKS, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited) Three Months Ended Nine Months Ended -------------------------------------- ------------------ September September September September 30, June 30, 30, June 30, 30, 30, 2009 2009 2008 2008 2009 2008 -------- -------- -------- -------- -------- -------- Cash flows from operating activities: Net income (loss) $ (5,220) $ (5,298) $(15,353) $(15,331) $ 44,617 $(49,126) Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities: Depreciation and amortization 6,645 6,665 6,950 6,503 20,398 19,713 Share-based compensation 4,369 4,281 4,305 4,285 13,137 12,549 Deferred income tax (benefit) expense - - 129 23 - (82) Provision for litigation - - 2,343 6,743 (65,645) 16,220 (Income) loss on foreign currency exchange 7 205 (30) 12 181 (18) Accounts receivable charges 329 622 1,802 1,925 4,239 5,289 Accretion of marketable securities (298) (157) 11 21 (455) (421) Loss on marketable securities - - - 16 - 71 Changes in operating assets and liabilities: Accounts receivable(1,648) 7,281 (11,006) (1,880) 1,793 (15,157) Prepaid expenses and other current assets (1,475) 721 417 (4,452) (1,347) (3,948) Income taxes receivable (159) 140 8 (129) (176) 473 Other assets (4,152) 149 153 67 (8,314) 784 Accounts payable 244 (4,219) 2,348 (73) (5,198) (2,359) Accounts payable, related parties - - - (150) - (230) Deferred revenue (291) (972) 4,799 (774) (2,085) 4,326 Other current liabilities 358 (1,918) 3,555 (3,859) (6,704) 4,733 Other long term liabilities - - (64) 64 - - -------- -------- -------- -------- -------- -------- Net cash provided by (used in) operating activities (1,291) 7,500 367 (6,989) (5,559) (7,183) -------- -------- -------- -------- -------- -------- Cash flows from investing activities: Purchases of property and equipment (10,586) (5,308) (7,870) (4,231) (16,648) (14,536) Purchase of marketable securities (32,905) (12,830) - (30,400) (45,735) (65,125) Sale of marketable securities 2,000 9,100 16,000 34,825 32,400 95,025 Cash acquired in business acquisition - 22 - - 22 - -------- -------- -------- -------- -------- -------- Net cash provided by (used in) investing activities (41,491) (9,016) 8,130 194 (29,961) 15,364 -------- -------- -------- -------- -------- -------- Cash flows from financing activities: Escrow funds returned from share repurchase - - - 1,070 - 1,070 Proceeds from exercise of stock options and warrants 72 92 31 53 240 191 -------- -------- -------- -------- -------- -------- Net cash provided by financing activities 72 92 31 1,123 240 1,261 -------- -------- -------- -------- -------- -------- Effect of exchange rate changes on cash and cash equivalents (5) (205) (223) 259 (453) (120) -------- -------- -------- -------- -------- -------- Net increase (decrease) in cash and cash equivalents (42,715) (1,629) 8,305 (5,413) (35,733) 9,322 Cash and cash equivalents, beginning of period 145,162 146,791 114,841 120,254 138,180 113,824 -------- -------- -------- -------- -------- -------- Cash and cash equivalents, end of period $102,447 $145,162 $123,146 $114,841 $102,447 $123,146 ======== ======== ======== ======== ======== ========

Use of Non-GAAP Financial Measures

To evaluate our business, we consider and use Non-GAAP net income (loss) and EBITDA adjusted for share-based compensation and litigation and damage costs 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 and provision for litigation. We define EBITDA as GAAP net income (loss) before interest income, interest expense, other income and expense, provision for income taxes, 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 EBITDA adjusted for share-based compensation and litigation and damage costs as EBITDA plus expenses that we do not consider reflective of our ongoing operations. We use EBITDA adjusted for share-based compensation and litigation and damage costs as a supplemental measure to review and assess operating performance. We also believe use of EBITDA adjusted for share-based compensation and litigation and damage costs 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 EBITDA adjusted for share-based compensation and litigation and damage costs are not defined under U.S. generally accepted accounting principles, or 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 EBITDA adjusted for share-based compensation and litigation and damage costs have limitations as analytical tools, and when assessing our operating performance, Non-GAAP net income (loss), EBITDA and EBITDA adjusted for share-based compensation and litigation and damage costs 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 EBITDA adjusted for share-based compensation and litigation and damage costs 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 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 EBITDA adjusted for share-based compensation and litigation and damage costs 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 EBITDA adjusted for share- based compensation and litigation and damage costs 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 EBITDA adjusted for share-based compensation and litigation and damage costs only as supplemental support for management's analysis of business performance. Non-GAAP Net Income (loss), EBITDA and EBITDA adjusted for share-based compensation and litigation and damage costs 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 Nine Months Ended -------------------------------------- ------------------ September September September September 30, June 30, 30, June 30, 30, 30, 2009 2009 2008 2008 2009 2008 -------- -------- -------- -------- -------- -------- GAAP net income (loss) $ (5,220) $ (5,298) $(15,352) $(15,331) $ 44,617 $(49,126) Provision for litigation - - 2,343 6,743 (65,645) 16,220 Share-based compensation 4,369 4,281 4,305 4,285 13,137 12,549 Litigation defense expenses 273 367 8,189 2,667 4,585 16,222 -------- -------- -------- -------- -------- -------- Non-GAAP net loss $ (578) $ (650) $ (515) $ (1,636) $ (3,306) $ (4,135) ======== ======== ======== ======== ======== ======== LIMELIGHT NETWORKS, INC. Reconciliation of GAAP Net Income (Loss) to EBITDA to EBITDA Adjusted for Share-Based Compensation and Litigation and Damage Costs (In thousands) (Unaudited) Three Months Ended Nine Months Ended -------------------------------------- ------------------ September September September September 30, June 30, 30, June 30, 30, 30, 2009 2009 2008 2008 2009 2008 -------- -------- -------- -------- -------- -------- GAAP net income (loss) $ (5,220) $ (5,298) $(15,352) $(15,331) $ 44,617 $(49,126) Add: depreciation and amortization 6,645 6,665 6,950 6,503 20,398 19,713 Add: interest expense 11 11 11 11 33 43 Less: interest and other income (346) (226) (1,613) (957) (1,181) (4,631) Plus income tax (benefit) expense 61 171 130 (25) 552 (78) -------- -------- -------- -------- -------- -------- EBITDA 1,151 1,323 (9,874) (9,799) 64,419 (34,079) Add: provision for litigation - - 2,343 6,743 (65,645) 16,220 Add: share-based compensation 4,369 4,281 4,305 4,285 13,137 12,549 Add: litigation defense expenses 273 367 8,189 2,667 4,585 16,222 -------- -------- -------- -------- -------- -------- EBITDA adjusted for share-based compensation, litigation and damage costs $ 5,793 $ 5,971 $ 4,963 $ 3,896 $ 16,496 $ 10,912 ======== ======== ======== ======== ======== ========

Conference Call

At approximately 4:30 p.m. EST (1:30 p.m. PST) today, management will host a quarterly conference call for investors. Access to the call will be provided by both telephone dial-in and via live Internet broadcast.

To access this conference call by telephone dial 1-866-831-6234 within the United States or 1-617-213-8854 outside of the U.S. using passcode 80947579. To access the live Internet broadcast, visit http://www.llnw.com. A replay of the call will also be available from http://www.llnw.com for one week following the conclusion of the event.

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 and litigation and related expenses. Forward-looking statements 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) is trusted by the world's most innovative enterprise, entertainment, technology, and software brands to improve the performance and profitability of web sites and end-user experiences. Our scalable, on-demand managed infrastructure solutions provide global reach and consistently high availability, by routing traffic over a private fiber-optic backbone rather than through the often-congested, unpredictable public Internet. For more information, visit our web site (http://www.limelightnetworks.com), read our blog (http://blog.llnw.com), or follow @llnw (http://www.twitter.com/llnw) on Twitter.

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CONTACT:
Paul Alfieri
Limelight Networks, Inc.
+1-917-297-4241
Email Contact

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