Limelight Networks Reports Record Fourth Quarter Results and Provides Strong Guidance for 2022
01/20/2022 - 04:02 PM
SCOTTSDALE, Ariz. , Jan. 20, 2022 /PRNewswire/ -- Limelight Networks, Inc. (Nasdaq: LLNW) (Limelight), a leading provider of edge enabled content delivery and AppOps solutions at the edge, today reported financial results for the fourth quarter ended December 31 , 2021. Delivering on several key milestones in its 2021 strategic plan, the company reported significant revenue, gross margin, and adjusted EBITDA growth quarter over quarter.
"As expected, our fourth quarter built on the momentum exhibited in the third quarter. Revenue for the fourth quarter came in at $62.9 million , up 14% quarter over quarter and year over year. Gross Margin was 35.4% , up 670 basis points quarter over quarter and Adjusted EBITDA margin was 15% , up from 11% in the third quarter of 2021. On an organic basis, revenue growth was 7% and we generated over $3 million in free cash flow. Layer0 contributed $3.8 million in the quarter bringing their total contribution to the year to $4.5 million , in line with guidance of $4 -5 million," said Bob Lyons , President and Chief Executive Officer.
"We have made meaningful progress in our core business with dramatic performance improvements in our network, a revitalized go-to-market strategy and new product cadence. We are changing the narrative around Limelight from a usage-based network to a high growth, higher margin edge enabled solutions company," said Lyons. "Our integrated solution set is seeing significant traction, be it among startups or multi-billion companies, and across verticals such as financial services, consumer products and telecom. We are already gaining share of the incremental TAM we outlined in our August strategy session last year."
"We are executing against our strategy and remain confident in our ability to build on this progress and continue delivering on our Improve-Expand-Extend framework," said Lyons."
Improve : Continued improvement in operational performance and cost structure:
Our client sentiment metric improved double digits in the second half of 2021, across our global top 20. First quarterly revenue growth of our core content delivery solution in six quarters. New traffic records with December 5th exceeding the previous record by 18% . December was the highest traffic month with traffic exceeding the previous record by 14% . Previous records had been established about a year ago. Quarter over quarter cash gross margin expansion of almost 500 basis points and year over year expansion of 380 basis points. Completion of $30 million in planned annualized costs savings. Improved operating leverage resulting in a 46% adjusted EBITDA flow through of the sequential quarterly revenue growth, while accelerating our investment in our go-to-market efforts. Expand: Existing client and new logo growth driving meaningful revenue expansion:
14% quarter over quarter and year over year revenue growth delivering organic growth of 7% year over year. 18 of Top 20 Limelight customers grew revenue more than 20% for the third quarter in a row. Total Bookings increased 45% quarter over quarter. Many new opportunities were closed in the fourth quarter, with more than 10 of those averaging greater than $100,000 in Annual Contract Value. New client wins include a large consumer products company with more than 100 household brands. We have made significant productivity improvements in our land and expand motions and are now increasing capacity at an accelerated pace. We expect to mostly complete sales team hiring goals by 1Q22, a quarter ahead of plan. The pipeline for both solution sets - Content Delivery and AppOps - continues to grow. Extend : Extension of new growth products:
In the fourth quarter, we launched the Layer0 by Limelight offering for web applications, which is our flagship product for the AppOps segment. This is the first new product resulting from our acquisition of Layer0 and empowers development teams to ship up to twice as fast and offer sub-second page loads. This was followed by the GraphQL caching and serverless hosting functionality. Layer0 has solved the key challenge of caching GraphQL APIs at the network edge, which is not supported by traditional web CDNs. In a few weeks we will be launching our Security offerings to round out the suite and improve our value proposition for outcome buyers. EdgeXtend continued to build on the momentum we saw over the last few quarters. We expect continued growth in this product in 2022. Strategic priorities for 2022:
Productive growth capacity: Supported by the improved productivity of our land-and-expand motions, we will continue to increase the capacity of our commercial teams. Edge architecture: Implementation of identified architectural improvements with a targeted 30% increase in capacity and throughput. Automation: Leveraging the application skills acquired with Layer0, we will improve automation across our platform and operations. This will improve efficiency, quality and increase productivity. Developer Ecosystem: We will continue to invest in targeted developer communities to further accelerate our AppOps mindshare. Edge enabled solutions: We will continue to release new and improved edge enabled solutions with a focus on core IP that delivers the best price-performance feature set for the outcome buyer by leveraging our edge platform.Fourth Quarter 2021 Financial Results
Revenue of $62.9 million , up 14% from the third quarter of 2021 and compared to the fourth quarter of 2020. GAAP net loss of $7.7 million , or $(0.06) per basic share, an improvement of $2.4 million from the net loss of $10.1 million , or $(0.08) per basic share, in the third quarter of 2021. GAAP net loss was $8.3 million , or $(0.07) per basic share in the fourth quarter of 2020. GAAP net loss included $2.6 million in restructuring and transition related charges in the fourth quarter and $1.8 million in the third quarter of 2021, respectively. Non-GAAP net income was $2.4 million , or $0.02 per basic share, an improvement of $3.9 million from the Non-GAAP net loss of 1.5 million, or $(0.01) per basic share, in the third quarter of 2021. Non-GAAP net loss was $3.8 million , or $(0.03) per basic share in the fourth quarter of 2020. Adjusted EBITDA was $9.7 million , an improvement of $3.6 million from $6.1 million for the third quarter of 2021. Adjusted EBITDA was $3.6 million for the fourth quarter of 2020. EBITDA was $0.5 million , an improvement of $2.5 million from $(2.0) million for the third quarter of 2021. EBITDA was breakeven for the fourth quarter of 2020. Cash, cash equivalents and marketable securities total $79.3 million at the end of the fourth quarter 2021. Limelight ended the fourth quarter of 2021 with 552 employees and employee equivalents, up from 529 at the end of the third quarter of 2021, and down from 618 at the end of the fourth quarter of 2020. Guidance
"In the second half of 2021 we established a sustainable trajectory and in 2022, we expect to build on the momentum and the progress. We have a revitalized network, a growing sales team and new products which should drive continued growth in both solution sets, Content Delivery and AppOps" said Lyons.
Limelight Networks, Inc.
2022 Guidance
January 2022
Revenue
$240 t o $250 million
GAAP Basic EPS
$(0.27) t o $(0.22)
Non-GAAP EPS
$(0.06) t o $(0.01)
Adjusted EBITDA
$24 t o $28 million
Capital expenditures
$20 t o $25 million
Financial Tables
LIMELIGHT NETWORKS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except per share data)
December 31,
September 30,
December 31,
2021
2021
2020
(Unaudited)
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents
$ 41,918
$ 39,585
$ 46,795
Marketable securities
37,367
36,201
76,928
Accounts receivable, net
42,217
46,179
31,675
Income taxes receivable
61
62
68
Prepaid expenses and other current assets
13,036
13,396
15,588
Total current assets
134,599
135,423
171,054
Property and equipment, net
32,885
36,392
46,418
Operating lease right of use assets
7,413
7,683
10,150
Marketable securities, less current portion
40
40
40
Deferred income taxes
1,908
1,693
1,530
Goodwill
114,511
105,221
77,753
Intangible assets, net
14,613
23,680
-
Other assets
5,485
5,972
7,233
Total assets
$ 311,454
$ 316,104
$ 314,178
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable
$ 11,631
$ 13,768
$ 4,587
Deferred revenue
3,266
7,965
933
Operating lease liability obligations
1,861
1,966
2,465
Income taxes payable
888
443
253
Other current liabilities
21,934
17,950
17,560
Total current liabilities
39,580
42,092
25,798
Convertible senior notes, net
121,782
121,576
100,945
Operating lease liability obligations, less current portions
9,616
10,045
11,265
Deferred income taxes
308
308
279
Deferred revenue, less current portion
116
307
220
Other long-term liabilities
777
453
479
Total liabilities
172,179
174,781
138,986
Commitments and contingencies
Stockholders' equity:
Convertible preferred stock, $0.00 1 par value; 7,500 shares authorized; no shares issued and outstanding
-
-
-
Common stock, $0.00 1 par value; 300,000 shares authorized; 134,337 133,812 and 123,653 shares issued and
outstanding at December 31, 2021, September 30, 2021 and December 31, 2020, respectively
134
134
124
Additional paid-in capital
576,807
571,268
556,512
Accumulated other comprehensive loss
(8,345)
(8,491)
(7,511)
Accumulated deficit
(429,321)
(421,588)
(373,933)
Total stockholders' equity
139,275
141,323
175,192
Total liabilities and stockholders' equity
$ 311,454
$ 316,104
$ 314,178
LIMELIGHT NETWORKS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
Three Months Ended
Twelve Months Ended
December 31,
September 30,
Percent
December 31,
Percent
December 31,
December 31,
Percent
2021
2021
Change
2020
Change
2021
2020
Change
Revenue
$ 62,885
$ 55,202
14%
$ 55,394
14%
$ 217,630
$ 230,194
-5%
Cost of revenue:
Cost of services (1)
35,434
33,687
5%
33,103
7%
135,142
125,509
8%
Depreciation - network
5,215
5,685
-8%
5,468
-5%
22,508
21,579
4%
Total cost of revenue
40,649
39,372
3%
38,571
5%
157,650
147,088
7%
Gross profit
22,236
15,830
40%
16,823
32%
59,980
83,106
-28%
Gross profit percentage
35.4%
28.7%
30.4%
27.6%
36.1%
Operating expenses:
General and administrative (1)
10,415
10,532
-1%
7,464
40%
41,359
31,284
32%
Sales and marketing (1)
8,433
5,987
41%
9,666
-13%
30,051
42,945
-30%
Research & development (1)
5,524
5,205
6%
5,066
9%
22,044
21,680
2%
Depreciation and amortization
976
730
34%
542
80%
2,794
1,591
76%
Restructuring charges
2,627
1,770
NM
-
NM
13,425
-
NM
Total operating expenses
27,975
24,224
15%
22,738
23%
109,673
97,500
12%
Operating loss
(5,739)
(8,394)
NM
(5,915)
NM
(49,693)
(14,394)
NM
Other income (expense):
Interest expense
(1,346)
(1,308)
NM
(2,183)
NM
(5,245)
(3,939)
NM
Interest income
30
17
NM
29
NM
134
69
NM
Other, net
(243)
(209)
NM
28
NM
(1,108)
(368)
NM
Total other expense
(1,559)
(1,500)
NM
(2,126)
NM
(6,219)
(4,238)
NM
Loss before income taxes
(7,298)
(9,894)
NM
(8,041)
NM
(55,912)
(18,632)
NM
Income tax expense
435
211
NM
268
NM
1,153
645
NM
Net loss
$ (7,733)
$ (10,105)
NM
$ (8,309)
NM
$ (57,065)
$ (19,277)
NM
Net loss per share:
Basic
$ (0.06)
$ (0.08)
$ (0.07)
$ (0.45)
$ (0.16)
Diluted
$ (0.06)
$ (0.08)
$ (0.07)
$ (0.45)
$ (0.16)
Weighted average shares used in per share calculation:
Basic
134,023
126,791
123,225
127,789
121,196
Diluted
134,023
126,791
123,225
127,789
121,196
(1) Includes share-based compensation (see supplemental table for figures)
LIMELIGHT NETWORKS, INC.
SUPPLEMENTAL FINANCIAL DATA
(In thousands)
(Unaudited)
Three Months Ended
Twelve Months Ended
December 31,
September 30,
December 31,
December 31,
December 31,
2021
2021
2020
2021
2020
Share-based compensation:
Cost of services
$ 590
$ 438
$ 313
$ 1,732
$ 1,998
General and administrative
3,489
2,301
1,840
13,692
7,611
Sales and marketing
1,186
640
764
2,784
3,519
Research and development
1,120
662
562
2,767
2,589
Restructuring and transition related charges
(254)
(384)
-
1,633
-
Total share-based compensation
$ 6,131
$ 3,657
$ 3,479
$ 22,608
$ 15,717
Depreciation and amortization:
Network-related depreciation
$ 5,215
$ 5,685
$ 5,468
$ 22,508
$ 21,579
Other depreciation and amortization
249
409
542
1,746
1,591
Amortization of intangible assets
727
321
-
1,048
-
Total depreciation and amortization
$ 6,191
$ 6,415
$ 6,010
$ 25,302
$ 23,170
Net increase (decrease) in cash, cash equivalents and marketable securities:
$ 3,499
$ (43,750)
$ (1,069)
$ (44,438)
$ 105,388
End of period statistics:
Approximate number of active clients
580
581
527
580
527
Number of employees and employee equivalents
552
529
618
552
618
LIMELIGHT NETWORKS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Three Months Ended
Twelve Months Ended
December 31,
September 30,
December 31,
December 31,
December 31,
2021
2021
2020
2021
2020
Operating activities
Net loss
$ (7,733)
$ (10,105)
$ (8,309)
$ (57,065)
$ (19,277)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization
6,191
6,415
6,010
25,302
23,170
Share-based compensation
6,131
3,657
3,479
22,608
15,717
Foreign currency remeasurement (gain) loss
200
(252)
327
134
214
Deferred income taxes
(231)
(117)
(14)
(429)
(94)
(Gain) loss on sale of property and equipment
(28)
(112)
7
(247)
6
Accounts receivable charges
35
200
325
1,082
801
Amortization of premium on marketable securities
282
415
519
1,879
606
Realized loss on marketable securities
-
-
(3)
-
(3)
Non-cash interest expense
207
204
1,070
811
1,938
Changes in operating assets and liabilities:
Accounts receivable
3,928
(18,999)
10,221
(9,109)
2,000
Prepaid expenses and other current assets
288
1,239
(3,038)
1,966
(5,717)
Income taxes receivable
(51)
(6)
16
(47)
19
Other assets
1,604
1,105
258
3,621
2,762
Accounts payable and other current liabilities
1,261
1,431
(9,228)
9,424
(1,069)
Deferred revenue
(5,519)
4,997
126
(879)
17
Income taxes payable
448
69
86
658
71
Other long term liabilities
327
84
(99)
301
167
Net cash provided by (used in) operating activities
7,340
(9,775)
1,753
10
21,328
Investing activities
Purchases of marketable securities
(17,238)
(13,427)
(36,064)
(62,076)
(88,754)
Sale and maturities of marketable securities
15,760
52,285
8,272
99,760
11,172
Purchases of property and equipment
(3,901)
(2,295)
(2,957)
(15,810)
(25,085)
Proceeds from sale of property and equipment
28
112
1
247
2
Acquisition of business, net of cash acquired
-
(30,968)
-
(30,968)
-
Net cash (used in) provided by investing activities
(5,351)
5,707
(30,748)
(8,847)
(102,665)
Financing activities
Proceeds from issuance of debt, net
-
-
-
-
121,600
Purchase of capped calls
-
-
-
-
(16,413)
Payment of debt issuance costs
-
-
(75)
(30)
(859)
Payment of employee tax withholdings related to restricted stock vesting
(311)
(217)
(891)
(1,626)
(4,878)
Proceeds from employee stock plans
725
-
1,377
6,185
10,068
Net cash provided by (used in) financing activities
414
(217)
411
4,529
109,518
Effect of exchange rate changes on cash and cash equivalents
(70)
(195)
210
(569)
279
Net increase (decrease) in cash and cash equivalents
2,333
(4,480)
(28,374)
(4,877)
28,460
Cash and cash equivalents, beginning of period
39,585
44,065
75,169
46,795
18,335
Cash and cash equivalents, end of period
$ 41,918
$ 39,585
$ 46,795
$ 41,918
$ 46,795
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 share-based compensation, non-cash interest expense, restructuring and transition related charges, acquisition and legal related expenses, and amortization of intangible assets. 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 share-based compensation, restructuring and transition related charges and acquisition and legal related 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
In accordance with the requirements of Item 10(e) of Regulation S-K, we are presenting the most directly comparable U.S. GAAP financial measures and reconciling the unaudited 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 Loss to Non-GAAP Net Income (Loss)
(In thousands)
(Unaudited)
Three Months Ended
Twelve Months Ended
December 31, 2021
September 30, 2021
December 31, 2020
December 31, 2021
December 31, 2020
Amount
Per Share
Amount
Per Share
Amount
Per Share
Amount
Per Share
Amount
Per Share
U.S. GAAP net loss
$ (7,733)
$ (0.06)
$ (10,105)
$ (0.08)
$ (8,309)
$ (0.07)
$ (57,065)
$ (0.45)
$ (19,277)
$ (0.16)
Share-based compensation
6,385
0.05
4,041
0.03
3,479
0.03
16,411
0.13
15,717
0.13
Non-cash interest expense
207
0.00
204
0.00
1,070
0.01
811
0.01
1,938
0.02
Restructuring and transition related charges
2,627
0.02
1,770
0.01
-
-
18,252
0.14
-
-
Acquisition and legal related expenses
199
0.00
2,263
0.02
-
-
2,640
0.02
-
-
Amortization of intangible assets
727
0.01
321
0.00
-
-
1,048
0.01
-
-
Non-GAAP net income (loss)
$ 2,412
$ 0.02
$ (1,506)
$ (0.01)
$ (3,760)
$ (0.03)
$ (17,903)
$ (0.14)
$ (1,622)
$ (0.01)
Weighted average basic shares used in per share calculation
134,023
126,791
123,225
127,789
121,196
LIMELIGHT NETWORKS, INC.
Reconciliation of U.S. GAAP Net Loss to EBITDA to Adjusted EBITDA
(In thousands)
(Unaudited)
Three Months Ended
Twelve Months Ended
December 31,
September 30,
December 31,
December 31,
December 31,
2021
2021
2020
2021
2020
U.S. GAAP net loss
$ (7,733)
$ (10,105)
$ (8,309)
$ (57,065)
$ (19,277)
Depreciation and amortization
6,191
6,415
6,010
25,302
23,170
Interest expense
1,346
1,308
2,183
5,245
3,939
Interest and other (income) expense
213
192
(57)
974
299
Income tax expense
435
211
268
1,153
645
EBITDA
$ 452
$ (1,979)
$ 95
$ (24,391)
$ 8,776
Share-based compensation
6,385
4,041
3,479
16,411
15,717
Restructuring and transition related charges
2,627
1,770
-
18,252
-
Acquisition and legal related expenses
199
2,263
-
2,640
-
Adjusted EBITDA
$ 9,663
$ 6,095
$ 3,574
$ 12,912
$ 24,493
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. Interested parties can access the call by dialing (844)-200-6205 from the United States or (929)-526-1599 internationally, with access code 647856. 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 (loss), capital expenditures, and our future prospects, areas of investment, and product launches. 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 clients, unforeseen changes in our hiring patterns, adverse outcomes in litigation, experiencing expenses that exceed our expectations, and acquisition activities and contributions from acquired businesses. 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 20, 2022 , and we undertake no duty to update this information in light of new information or future events, unless required by law.
About Limelight
Limelight (NASDAQ: LLNW) is an industry leader in providing edge-enabled solutions to deliver fast, secure digital experiences on a global scale. We offer powerful tools that optimize, protect and deliver our clients' valuable digital assets in an increasingly competitive marketplace. From content delivery and AppOps to Jamstack application architecture and web security, we are uniquely positioned to leverage our global private network and client-obsessed experts to help our customers win. The world's largest brands trust Limelight and we invite you to learn more about us by visiting www.limelight.com , Twitter, Facebook and LinkedIn.
Copyright (C) 2022 Limelight Networks, Inc. All rights reserved. All product or service names are the property of their respective owners.
Source: Limelight Networks
View original content to download multimedia:https://www.prnewswire.com/news-releases/limelight-networks-reports-record-fourth-quarter-results-and-provides-strong-guidance-for-2022-301465328.html
SOURCE Limelight Networks