UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
May 6, 2010
LIMELIGHT NETWORKS, INC.
(Exact name of Registrant as specified in its charter)
| Delaware | 001-33508 | 20-1677033 | ||
| (State or other jurisdiction of incorporation or organization) |
(Commission File Number) | (I.R.S. Employer Identification Number) |
2220 W. 14th Street
Tempe, AZ 85281
(Address, including zip code, of principal executive offices)
(602) 850-5000
(Registrant’s telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
| Item 2.02 | Results of Operations and Financial Condition. |
On May 6, 2010, Limelight Networks, Inc. issued a press release regarding its financial results for the first quarter ended March 31, 2010 and certain other information. The full text of this press release is furnished herewith as Exhibit 99.1.
The information in this Form 8-K and the Exhibit attached hereto shall not be deemed “filed” for purposes of Section 18 of the Securities Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that Section, or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
| Item 9.01 | Financial Statements and Exhibits. |
(d) Exhibits
| Exhibit Number |
Description | |
| 99.1 |
Limelight Networks, Inc. Press Release dated May 6, 2010 (furnished herewith). |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| LIMELIGHT NETWORKS, INC. | ||||||
| Dated: May 6, 2010 | By: | /s/ Philip C. Maynard | ||||
| Philip C. Maynard Senior Vice President, Chief Legal Officer and Secretary | ||||||
EXHIBIT INDEX
| Exhibit Number |
Description | |
| 99.1 |
Limelight Networks, Inc. Press Release dated May 6, 2010 (furnished herewith). |
Exhibit 99.1
Limelight Networks® Reports First Quarter 2010 Results
TEMPE, AZ — (May 5, 2010) — Limelight Networks, Inc. (NASDAQ: LLNW) today reported first quarter 2010 financial results. Highlights included:
| • | Revenue of $36 million and gross margins of 42% |
| • | Spring 2010 Release of Limelight SITE, offering expanded solutions for enterprise web site and dynamic content acceleration |
| • | Continued growth of Mobility and Monetization solutions |
| • | Completed the acquisition of EyeWonder, Inc., a leading rich media ad serving vendor, after the close of the quarter |
“We are pleased with Limelight Networks’ first quarter results and our prospects for the second quarter and full year 2010. The investments we have made in higher value cloud services such as mobility, monetization, and web site acceleration are paying off with deeper customer relationships, revenue growth, and gross margin and EBITDA expansion. Now together with EyeWonder, Limelight Networks is well-positioned to grow as content consumption, marketing dollars and e-commerce activity continue to shift online and onto mobile devices, and as more enterprises look to outsource computing and storage resources to innovative service providers,” said Jeff Lunsford, chairman and chief executive officer.
Financial Highlights
For the first quarter of 2010, the company reported revenue of $36 million, up 9 percent from first quarter 2009 and up 7 percent sequentially. The company also reported EBITDA, adjusted for share-based compensation, litigation expenses, and acquisition-related expenses, of $5.1 million and a non-GAAP net loss, before share-based compensation, litigation expenses, and acquisition-related expenses, of 1 cent per basic share. GAAP net loss was $5.8 million, or 7 cents per basic share.
Capital investments were $4.3 million. The Company ended the quarter with no bank debt and approximately $149 million in cash and short-term marketable securities. A reconciliation of GAAP to non-GAAP net income is included in the below tables.
Second Quarter 2010 Outlook
Limelight Networks anticipates second quarter revenue to be in the range of $41 million to $43 million, including two months of contribution from EyeWonder.
Financial Tables
LIMELIGHT NETWORKS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except per share data)
| March 31, 2010 |
December 31, 2009 |
|||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| Current Assets: |
||||||||
| Cash and cash equivalents |
$ | 95,295 | $ | 89,509 | ||||
| Marketable securities |
53,557 | 64,870 | ||||||
| Accounts receivable, net of reserves of $9,667 and $9,226 at March 31, 2010 and December 31, 2009, respectively |
25,828 | 26,363 | ||||||
| Income taxes receivable |
623 | 617 | ||||||
| Prepaid expenses and other current assets |
8,919 | 9,654 | ||||||
| Total current assets |
184,222 | 191,013 | ||||||
| Property and equipment, net |
35,776 | 35,524 | ||||||
| Marketable securities |
8 | 12 | ||||||
| Goodwill |
1,895 | 619 | ||||||
| Other intangible assets, net |
4,291 | 370 | ||||||
| Other assets |
8,299 | 8,132 | ||||||
| Total assets |
$ | 234,491 | $ | 235,670 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current Liabilities: |
||||||||
| Accounts payable |
$ | 6,860 | $ | 5,144 | ||||
| Deferred revenue, current portion |
10,650 | 12,199 | ||||||
| Other current liabilities |
15,495 | 14,140 | ||||||
| Total current liabilities |
33,005 | 31,483 | ||||||
| Deferred revenue, less current portion |
— | 1,377 | ||||||
| Deferred income tax, less current portion |
14 | 10 | ||||||
| Total liabilities |
33,019 | 32,870 | ||||||
| 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; 85,228 and 85,011 shares issued and outstanding at March 31, 2010 and December 31, 2009, respectively |
85 | 85 | ||||||
| Additional paid-in capital |
313,217 | 308,537 | ||||||
| Accumulated other comprehensive (loss) income |
(131 | ) | 93 | |||||
| Accumulated deficit |
(111,699 | ) | (105,915 | ) | ||||
| Total stockholders’ equity |
201,472 | 202,800 | ||||||
| Total liabilities and stockholders’ equity |
$ | 234,491 | $ | 235,670 | ||||
LIMELIGHT NETWORKS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
| Three Months Ended | ||||||||||||||||
| March 31, 2010 |
December 31, 2009 |
March 31, 2009 |
December 31, 2008 |
|||||||||||||
| Revenue |
$ | 36,087 | $ | 33,625 | $ | 33,175 | $ | 35,898 | ||||||||
| Costs and operating expenses |
||||||||||||||||
| Cost of revenue * + |
20,983 | 22,167 | 21,471 | 21,881 | ||||||||||||
| General and administrative * + |
8,893 | 10,066 | 12,444 | 15,550 | ||||||||||||
| Sales and marketing * |
9,387 | 8,672 | 8,139 | 9,231 | ||||||||||||
| Research & development * |
2,645 | 2,059 | 1,910 | 2,072 | ||||||||||||
| Provision for litigation |
— | — | (65,645 | ) | 1,295 | |||||||||||
| Total costs and operating expenses |
41,908 | 42,964 | (21,681 | ) | 50,029 | |||||||||||
| Operating (loss) income |
(5,821 | ) | (9,339 | ) | 54,856 | (14,131 | ) | |||||||||
| Interest expense |
(1 | ) | (5 | ) | (11 | ) | (11 | ) | ||||||||
| Interest income |
302 | 295 | 383 | 669 | ||||||||||||
| Other income (expense) |
(25 | ) | (146 | ) | 227 | (375 | ) | |||||||||
| (Loss) income before income taxes |
(5,545 | ) | (9,195 | ) | 55,455 | (13,848 | ) | |||||||||
| Income tax expense |
240 | 531 | 320 | 94 | ||||||||||||
| Net (loss) income |
$ | (5,785 | ) | $ | (9,726 | ) | $ | 55,135 | $ | (13,942 | ) | |||||
| Net (loss) income per share: |
||||||||||||||||
| Basic |
$ | (0.07 | ) | $ | (0.11 | ) | $ | 0.66 | $ | (0.17 | ) | |||||
| Diluted |
$ | (0.07 | ) | $ | (0.11 | ) | $ | 0.64 | $ | (0.17 | ) | |||||
| Shares used in per share calculations: |
||||||||||||||||
| Basic |
85,119 | 84,770 | 83,515 | 83,192 | ||||||||||||
| Diluted |
85,119 | 84,770 | 85,968 | 83,192 | ||||||||||||
| * | 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 | |||||||||||||||
| March 31, 2010 |
December 31, 2009 |
March 31, 2009 |
December 31, 2008 |
||||||||||||
| Supplemental financial data: |
|||||||||||||||
| Share-based compensation: |
|||||||||||||||
| Cost of revenues |
$ | 598 | $ | 642 | $ | 551 | $ | 585 | |||||||
| General and administrative |
1,835 | 1,801 | 2,131 | 3,028 | |||||||||||
| Sales and marketing |
1,206 | 1,236 | 1,189 | 1,262 | |||||||||||
| Research and development |
704 | 648 | 616 | 633 | |||||||||||
| Total share-based compensation |
$ | 4,343 | $ | 4,327 | $ | 4,487 | $ | 5,508 | |||||||
| Depreciation and amortization: |
|||||||||||||||
| Network-related depreciation |
$ | 4,778 | $ | 5,352 | $ | 6,548 | $ | 6,862 | |||||||
| Other depreciation and amortization |
766 | 652 | 540 | 455 | |||||||||||
| Total depreciation and amortization |
$ | 5,544 | $ | 6,004 | $ | 7,088 | $ | 7,317 | |||||||
| Capital expenditures: |
|||||||||||||||
| Capital expenditures (cash and accrual) |
$ | 5,540 | $ | 1,905 | $ | 4,572 | $ | 5,151 | |||||||
| Net (decrease) increase in cash, cash equivalents and marketable securities |
$ | (5,531 | ) | $ | 1,561 | $ | (12,660 | ) | $ | (2,015 | ) | ||||
| End of period statistics: |
|||||||||||||||
| Approximate number of active customers |
1,370 | 1,370 | 1,365 | 1,336 | |||||||||||
| Number of employees |
342 | 328 | 296 | 294 | |||||||||||
LIMELIGHT NETWORKS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
| Three Months Ended | ||||||||||||||||
| March 31, 2010 |
December 31, 2009 |
March 31, 2009 |
December 31, 2008 |
|||||||||||||
| Cash flows from operating activities: |
||||||||||||||||
| Net (loss) income |
$ | (5,785 | ) | $ | (9,726 | ) | $ | 55,135 | $ | (13,942 | ) | |||||
| Adjustments to reconcile net loss to net cash provided by (used in) operating activities: |
||||||||||||||||
| Depreciation and amortization |
5,544 | 6,004 | 7,088 | 7,317 | ||||||||||||
| Share-based compensation |
4,343 | 4,327 | 4,487 | 5,508 | ||||||||||||
| Deferred income tax (benefit) expense |
— | — | — | (9 | ) | |||||||||||
| Excess tax shortfalls related to stock option exercises |
— | — | — | 177 | ||||||||||||
| Provision for litigation |
— | — | (65,645 | ) | 1,295 | |||||||||||
| Loss (gain) on foreign exchange |
49 | 20 | (31 | ) | (149 | ) | ||||||||||
| Loss on sale of property and equipment |
89 | — | — | — | ||||||||||||
| Accounts receivable charges |
1,169 | 774 | 3,288 | 3,961 | ||||||||||||
| Accretion of debt discount |
— | — | — | — | ||||||||||||
| Accretion of marketable securities |
24 | 89 | — | (6 | ) | |||||||||||
| Changes in operating assets and liabilities: |
||||||||||||||||
| Accounts receivable |
(305 | ) | 555 | (3,840 | ) | (6,169 | ) | |||||||||
| Prepaid expenses and other current assets |
685 | (514 | ) | (593 | ) | 1,695 | ||||||||||
| Income taxes receivable |
(53 | ) | (424 | ) | (157 | ) | 1,480 | |||||||||
| Other assets |
(167 | ) | 917 | (4,311 | ) | 32 | ||||||||||
| Accounts payable |
264 | (6 | ) | (1,223 | ) | (531 | ) | |||||||||
| Deferred revenue |
(3,105 | ) | (1,506 | ) | (822 | ) | 416 | |||||||||
| Other current liabilities |
(2,081 | ) | 4,587 | (5,144 | ) | 718 | ||||||||||
| Other long term liabilities |
— | — | — | (770 | ) | |||||||||||
| Net cash provided by (used in) operating activities |
671 | 5,097 | (11,768 | ) | 1,023 | |||||||||||
| Cash flows from investing activities: |
||||||||||||||||
| Purchases of property and equipment |
(4,250 | ) | (3,759 | ) | (754 | ) | (3,537 | ) | ||||||||
| Purchase of marketable securities |
(16,755 | ) | (25,500 | ) | — | — | ||||||||||
| Sale of marketable securities |
28,000 | 10,900 | 21,300 | 17,125 | ||||||||||||
| Purchased business, chors, net of cash acquired |
(2,004 | ) | — | — | — | |||||||||||
| Net cash provided by (used in) investing activities |
4,991 | (18,359 | ) | 20,546 | 13,588 | |||||||||||
| Cash flows from financing activities: |
||||||||||||||||
| Tax benefits from share-based compensation |
— | — | — | (177 | ) | |||||||||||
| Proceeds from exercise of stock options and warrants |
27 | 34 | 76 | 34 | ||||||||||||
| Proceeds from initial public offering, net of issuance costs |
— | — | — | — | ||||||||||||
| Net cash provided by (used in) financing activities |
27 | 34 | 76 | (143 | ) | |||||||||||
| Effect of exchange rate changes on cash |
97 | 290 | (243 | ) | 566 | |||||||||||
| Net increase (decrease) in cash and cash equivalents |
5,786 | (12,938 | ) | 8,611 | 15,034 | |||||||||||
| Cash and cash equivalents, beginning of period |
89,509 | 102,447 | 138,180 | 123,146 | ||||||||||||
| Cash and cash equivalents, end of period |
$ | 95,295 | $ | 89,509 | $ | 146,791 | $ | 138,180 | ||||||||
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, litigation and damage costs and acquisition related expenses 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, provision for litigation and acquisition related expenses. 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, litigation and damage costs and acquisition related expenses as EBITDA plus expenses that we do not consider reflective of our ongoing operations. We use EBITDA adjusted for share-based compensation, litigation and damage costs and acquisition related expenses as a supplemental measure to review and assess operating performance. We also believe use of EBITDA adjusted for share-based compensation, litigation and damage costs and acquisition related expenses 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, litigation and damage costs and acquisition related expenses 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, litigation and damage costs and acquisition related expenses have limitations as analytical tools, and when assessing our operating performance, Non-GAAP net income (loss), EBITDA and EBITDA adjusted for share-based compensation, litigation and damage costs and acquisition related expenses 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, litigation and damage costs and acquisition related expenses 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, litigation and damage costs and acquisition related expenses 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, litigation and damage costs and acquisition related expenses 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, litigation and damage costs and acquisition related expenses only as supplemental support for management’s analysis of business performance. Non-GAAP Net Income (loss), EBITDA and EBITDA adjusted for share-based compensation, litigation and damage costs and acquisition related expenses 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 | ||||||||||||||||
| March 31, 2010 |
December 31, 2009 |
March 31, 2009 |
December 31, 2008 |
|||||||||||||
| GAAP net (loss) income |
$ | (5,785 | ) | $ | (9,726 | ) | $ | 55,135 | $ | (13,942 | ) | |||||
| Provision for litigation |
— | — | (65,645 | ) | 1,295 | |||||||||||
| Share-based compensation |
4,343 | 4,327 | 4,487 | 5,508 | ||||||||||||
| Litigation defense expenses |
392 | 827 | 3,945 | 4,576 | ||||||||||||
| Acquisition related expenses |
604 | 1,481 | — | — | ||||||||||||
| Non-GAAP net loss |
$ | (446 | ) | $ | (3,091 | ) | $ | (2,078 | ) | $ | (2,563 | ) | ||||
LIMELIGHT NETWORKS, INC.
Reconciliation of GAAP Net Income (Loss) to EBITDA to EBITDA
Adjusted for Share-Based Compensation, Litigation Expenses, Provision for
Litigation and Acquisition Expenses
(In thousands)
(Unaudited)
| Three Months Ended | ||||||||||||||||
| March 31, 2010 |
December 31, 2009 |
March 31, 2009 |
December 31, 2008 |
|||||||||||||
| GAAP net (loss) income |
$ | (5,785 | ) | $ | (9,726 | ) | $ | 55,135 | $ | (13,942 | ) | |||||
| Add: depreciation and amortization |
5,544 | 6,004 | 7,088 | 7,317 | ||||||||||||
| Add: interest expense |
1 | 5 | 11 | 11 | ||||||||||||
| Less: interest and other income |
(277 | ) | (149 | ) | (610 | ) | (294 | ) | ||||||||
| Add: income tax (benefit) expense |
240 | 531 | 320 | 94 | ||||||||||||
| EBITDA |
(277 | ) | (3,335 | ) | 61,944 | (6,814 | ) | |||||||||
| Add: provision for litigation |
— | — | (65,645 | ) | 1,295 | |||||||||||
| Add: share-based compensation |
4,343 | 4,327 | 4,487 | 5,508 | ||||||||||||
| Add: litigation defense expenses |
392 | 827 | 3,945 | 4,576 | ||||||||||||
| Add: acquisition related expenses |
604 | 1,481 | — | — | ||||||||||||
| EBITDA adjusted for share-based compensation, litigation expenses, provision for litigation and acquisition expenses |
$ | 5,062 | $ | 3,300 | $ | 4,731 | $ | 4,565 | ||||||||
Conference Call
At approximately 4:30 p.m. EDT (1:30 p.m. PDT) today, management will host a quarterly conference call. Investors can access this call toll-free at 1-866-700-6293 within the United States or 1-617-213-8835 outside of the U.S., using participant passcode 62014300. The conference call will also be audiocast live from http://www.llnw.com and a replay will be available for one week.
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 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) provides on-demand software, platform, and infrastructure services that help global businesses reach and engage audiences on any mobile or connected device, enabling them to enhance their brand presence, build stronger customer relationships, optimize their advertising, and monetize their digital assets. For more information, please visit http://www.limelightnetworks.com or follow us on Twitter at www.twitter.com/llnw. Copyright © 2010 Limelight Networks, Inc. All rights reserved. EyeWonder is a trademark of Limelight Networks, Inc. All product or service names are the property of their respective owners
CONTACT: Paul Alfieri of Limelight Networks, Inc., +1-646-875-8835, palfieri@llnw.com