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

TEMPE, 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 Tables

LIMELIGHT 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,
 201220122011201120122011
Supplemental 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) 65,488
Cash and cash equivalents, beginning of period 102,468 95,029 143,840 106,971 120,349 54,861
Cash and cash equivalents, end of period $ 108,915 $ 102,468 $ 120,349 $ 143,840 $ 108,915 $ 120,349

Use 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 $ 18,404

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 877-388-8480 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

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