@import url(http://finance.paidcontent.org/client/paidcontent/privatelabel.css);
August 12, 2008 at 16:22 PM EDT
Limelight Networks Reports Second Quarter 2008 Results

TEMPE, Ariz., Aug. 12 /PRNewswire-FirstCall/ -- Limelight Networks, Inc. (Nasdaq: LLNW) today reported second-quarter 2008 revenue of $30.3 million and a net loss of $15.3 million, or 18 cents per basic share. Non-GAAP net loss, adjusted for certain charges, was $1.6 million or 2 cents per basic share. EBITDA, adjusted for share-based compensation, litigation and potential damage cost accruals, was $3.9 million. The non-GAAP loss of 2 cents per basic share excludes a charge of 11 cents per basic share related to litigation and potential damage cost accruals, and 5 cents per basic share of share-based compensation.

Reconciliation of GAAP to non-GAAP net income is included in the attached tables.

"We are pleased with our rapid traffic growth and continued progress on network expansion in the second quarter," commented Jeff Lunsford, chairman and chief executive officer, Limelight Networks, Inc. "Limelight Networks continues to be well-positioned as a delivery partner of choice for the largest live and on-demand events in the online world."

Limelight Networks expanded its customer base to approximately 1,300 in the second quarter. The company also continued to build out its network transmission capacity, and expects to achieve 2 terabits per second of capacity during Q3 2008.

Financial Highlights

Second-quarter revenue was $30.3 million, up 22 percent from $24.9 million of non-GAAP revenue in the year-ago second quarter and above the range of guidance previously provided by the Company. Capital purchases were $5.0 million. The Company ended the quarter with no debt and approximately $184 million in cash and short-term marketable securities.

Third-Quarter Outlook

Limelight Networks anticipates third-quarter revenue to be in the range of $30 million to $32 million. The Company also expects substantially reduced potential damage accruals of under $1.0 million related to ongoing litigation.

Conference Call and Web Audiocast

Management will host a quarterly conference call for investors on August 12, 2008 beginning at 2:00 p.m. PDT (5 p.m. EDT). This call can be accessed toll-free at 1-866-713-8562 within the United States or 1-617-597-5310 outside of the U.S. using Conference ID 72650354.



    The conference call will also be audiocast live at http://www.llnw.com. A
replay of the call will also be available from the Company's website for one
week.

                             Financial Statements
                           LIMELIGHT NETWORKS, INC.
                    Condensed Consolidated Balance Sheets
                                (In thousands)
                                 (Unaudited)



                                                    June 30,    December 31,
                                                      2008          2007
                              Assets
    Cash and cash equivalents                       $114,841       $113,824
    Marketable securities                             69,658         83,273
    Accounts receivable, net                          22,070         21,407
    Income tax receivable                              1,545          1,960
    Prepaid expenses and other current assets          9,540          4,469
      Current assets                                 217,654        224,933
    Property and equipment, net                       42,476         46,968
    Marketable securities, less current portion           16             87
    Other assets                                         812          1,440
      Total assets                                  $260,958       $273,428

                Liabilities and stockholders' equity

    Accounts payable                                  $6,126         $8,523
    Accounts payable, related parties                      -            230
    Deferred revenue, current portion                  5,117          4,237
    Provision for litigation                          62,008         48,130
    Other current liabilities                         10,488          9,312
      Current liabilities                             83,739         70,432
    Deferred revenue, less current portion             6,836          8,189
    Other liabilities                                    850            770
      Total liabilities                               91,425         79,391
    Stockholders' equity                             169,533        194,037
      Total liabilities and stockholders' equity    $260,958       $273,428



                           LIMELIGHT NETWORKS, INC.
               Condensed Consolidated Statements of Operations
                    (In thousands, except per share data)
                                 (Unaudited)

                               Three Months Ended           Six Months Ended
                     June 30,  March 31, June 30, March 31, June 30, June 30,
                       2008      2008      2007     2007      2008    2007
    Revenues        $30,314    $30,202   $21,436  $23,353   $60,516  $44,789
    Costs and
     operating
     expenses:
      Cost of
       revenues *+   19,751     20,672    14,835   14,497    40,423   29,332
      General and
       administr-
       ative*+        9,463     13,329     8,831    7,774    22,791   16,605
      Sales and
       marketing *    8,965      8,142     6,404    3,018    17,107    9,422
      Research and
       development *  1,694      1,590     1,541    1,285     3,284    2,826
      Provision for
       litigation     6,743      7,134         -        -    13,878        -
        Total costs
         and operating
         expenses    46,616     50,867    31,611   26,574    97,483   58,185
    Operating loss  (16,302)   (20,665)  (10,175)  (3,221)  (36,967) (13,396)
    Interest expense    (11)       (21)     (821)    (573)      (33)  (1,394)
    Interest income   1,334      1,891       573       89     3,226      662
    Other income
     (expense)         (377)       170         -        -      (207)       -
    Loss before income
     taxes          (15,356)   (18,625)  (10,423)  (3,705)  (33,981) (14,128)
    Income tax
     (benefit)
     expense            (25)      (183)      221      200      (208)     421
    Net loss       $(15,331)  $(18,442) $(10,644) $(3,905) $(33,773)$(14,549)

    Net loss
     allocable to
     common
     stockholders  $(15,331)  $(18,442) $(10,644) $(3,905) $(33,773)$(14,549)
    Net loss per
     share:
      Basic          $(0.18)    $(0.22)   $(0.23)  $(0.18)   $(0.41)  $(0.43)
      Diluted        $(0.18)    $(0.22)   $(0.23)  $(0.18)   $(0.41)  $(0.43)
    Shares used in
     per share
     calculations:
      Basic          82,889     82,623    45,791   21,945    82,756   33,871
      Diluted        82,889     82,623    45,791   21,945    82,756   33,871


    *     Includes stock-related 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            Six Months Ended
                      June 30,  March 31, June 30, March 31, June 30, June 30,
                        2008       2008    2007     2007     2008     2007
    Supplemental
     financial data
     (in thousands):
    Stock-related
     compensation:
    Cost of revenues    $558      $507    $346     $242    $1,064    $588
    General and
     administrative    1,698     1,665   3,754    3,743     3,363   7,497
    Sales and
     marketing         1,431     1,306   1,152      235     2,738   1,387
    Research and
     development         598       482   1,007      851     1,080   1,858
      Total stock-
       related
       compensation   $4,285    $3,960  $6,259   $5,071    $8,245 $11,330
    Depreciation and
     amortization:
    Network-related
     depreciation     $6,192    $6,013  $5,020   $4,688   $12,205  $9,708
    Other depreciation   311       247     174      137       557     311
      Total
       depreciation
       and
       amortization   $6,503    $6,260  $5,194   $4,825   $12,762 $10,019
    Capital
     expenditures:
    Capital
     expenditures
     (cash and
      accrual)        $5,013    $3,095  $8,769   $5,575    $8,108 $14,344
    Net increase
     (decrease) in
     cash, cash
     equivalents and
     marketable
     securities     $(10,194)  $(2,475)$174,891  $4,995 $(12,669)$179,886
    End of period
     statistics:
      Number of
       customers
       under
       recurring
       contract        1,291     1,232      876     726    1,291     876
      Number of
       employees         250       244      215     167      250     215



                           LIMELIGHT NETWORKS, INC.
               Condensed Consolidated Statements of Cash Flows
                                (In thousands)
                                 (Unaudited)

                                Three Months Ended           Six Months Ended
                       June 30, March 31, June 30, March 31, June 30, June 30,
                          2008    2008      2007    2007       2008      2007
    Cash flows
     from operating
     activities:
      Net loss      $(15,331) $(18,442)$(10,644)$(3,905) $(33,773)  $(14,549)
      Adjustments to
       reconcile
       net loss
       to net
       cash
       provided by
       (used in)
       operating
       activities:
        Depreciation
         and
         amortization  6,503     6,260   5,194    4,824    12,762    10,019
        Stock-based
         compensation  4,285     3,960   6,259    5,071     8,245    11,330
        Deferred income
         tax expense
         (benefit)        23      (234)  1,048     (467)    (211)       580
        Provision for
         litigation    6,743     7,134       -        -    13,878         -
        Loss on foreign
         exchange        232         -       -        -       232         -
        Accounts
         receivable
         charges       1,925     1,562   1,170       677    3,487     1,847
        Accretion of
         debt discount     -         -     383        41        -       424
        Accretion of
         marketable
         securities       21      (453)      -        -      (432)        -
        Loss on
         marketable
         securities       16        55       -        -        71         -
        Changes in
         operating assets
         and liabilities:
          Accounts
           receivable (1,880)   (2,271) (7,641)    1,998   (4,151)   (5,643)
          Prepaid
           expenses
           and other
           current
           assets     (4,452)       87    (545)   (1,809)  (4,365)   (2,354)
          Income
           taxes
           receivable   (129)      594    (848)      310      465      (538)
          Other assets    67       564    (426)     (119)     631      (545)
          Accounts
           payable       (73)   (4,634) (2,980)     (732)  (4,707)   (3,712)
          Accounts
           payable,
           related
           parties      (150)      (80)   (763)        1     (230)     (762)
          Deferred
           revenue      (774)      301   3,612        20     (473)    3,632
          Other
           current
           liabilities(3,859)    5,035   5,405       630    1,176      6,035
          Other long
           term
           liabilities    (1)        1       -        -         -        -
      Net cash (used
       in) provided
       by operating
       activities:    (6,834)     (561)   (776)    6,540   (7,395)    5,764
    Cash flows from
     investing
     activities:
        Purchase of
         marketable
         securities  (30,400)  (34,725)(28,589)       -   (65,125)  (28,589)
        Sale of
         marketable
         securities   34,825    44,200       -        -    79,025        -
        Purchases of
         property and
         equipment    (4,231)   (2,435) (5,461)  (3,095)   (6,666)   (8,556)
        Net cash used
         in investing
         activities      194     7,040 (34,050)  (3,095)    7,234   (37,145)
    Cash flows from
     financing activities:
        Payments on
         credit
         facilities        -         - (23,818)       -         -   (23,818)
        Borrowings on
         line of credit    -         -       -    1,500         -     1,500
        Payments on
         line of credit    -         -  (1,500)       -         -   (1,500)
        Payments on
         capital lease
         obligations       -         -     (91)    (159)        -     (250)
        Payments on
         notes payable
         - related
         parties           -         -       -        -         -        -
        Escrow funds
         returned from
         share
         repurchase    1,070         -   2,091      298     1,070    2,389
        Excess tax
         benefits
         related to
         stock option
         exercises         -         -       -       23         -       23
        Proceeds from
         exercise of
         stock options
         and warrants     53       107       -       31       160       31
        Proceeds from
         initial public
         offering, net
         of issuance
         costs             -         - 204,498        -         -  204,498
      Net cash provided
       by financing
       activities      1,123       107 181,180    1,693     1,230  182,873
      Effect of
       exchange rate
       changes on cash   104      (156)      -        -       (52)      -
      Net increase
       (decrease) in
       cash and cash
       equivalents    (5,413)    6,430  146,354   5,138     1,017  151,492
      Cash and cash
       equivalents,
       beginning of
       period        120,254   113,824   12,749   7,611   113,824    7,611
      Cash and cash
       equivalents,
       end of
       period       $114,841  $120,254 $159,103 $12,749  $114,841 $159,103

Use of Non-GAAP Financial Measures

To evaluate our business, we consider and use Non-GAAP revenue, Non-GAAP net income (loss) and Adjusted EBITDA as a supplemental measure of operating performance. We consider Non-GAAP revenue and net income (loss) to be an important indicator of overall business performance because it allows us to illustrate the impact of the effects from our multi-element contract as well as eliminate 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 define Adjusted EBITDA as EBITDA plus income from our multi-element contract and 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.

The terms Non-GAAP revenue, net income (loss), EBITDA and Adjusted EBITDA 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 revenue, net income (loss), EBITDA and Adjusted EBITDA have limitations as analytical tools, and when assessing our operating performance, Non-GAAP revenue, net income, 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;
     --   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 and damages accruals;
     --   they do not reflect the interest expense, or the cash requirements
          necessary to service interest or principal payments, on our debt;
     --   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 Revenue, Net Income (Loss) and Adjusted EBITDA only as supplemental support for management's analysis of business performance. Non-GAAP Revenue, 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.


              Reconciliation of GAAP Revenue to Non-GAAP Revenue
                                (In thousands)
                                 (Unaudited)


                                 Three Months Ended          Six Months Ended
                       June 30, March 31, June 30, March 31, June 30, June 30,
                         2008     2008     2007      2007     2008     2007
    GAAP Revenue         $NA       $NA   $21,436      $NA     $NA   $44,789

    Deferred Traffic
     Revenue               -         -     2,645        -       -     2,645
    Deferred Custom
     CDN Services Revenue  -         -       820        -       -       820

    Non-GAAP Revenue     $NA       $NA   $24,901      $NA     $NA   $48,254



    Reconciliation of GAAP Net Income (Loss) to Non-GAAP Net Income (Loss)
                                (In thousands)
                                 (Unaudited)


                            Three Months Ended            Six Months Ended
                     June 30, March 31, June 30, March 31,  June 30, June 30,
                        2008      2008    2007     2007      2008    2007

    GAAP net loss   $(15,331) $(18,442)$(10,644) $(3,905) $(33,773)$(14,549)
      Deferred
       revenue                                                        3,465
      Deferred cost
       of traffic
       and services                        (935)                       (935)
      Provision for
       potential
       litigation
       damages         6,743     7,134       -        -     13,878       -
      Share-based
       compensation    4,285     3,960    6,259    5,071     8,245   11,330
      Litigation
       defense
       expenses        2,667     5,366    1,636      885     8,033    2,521
    Non-GAAP net
     (loss) income   $(1,636)  $(1,982)   $(219)  $2,051   $(3,617)  $1,832



         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             Six Months Ended
                    June 30, March 31, June 30, March 31,  June 30, June 30,
                        2008      2008    2007     2007      2008    2007

    GAAP net loss   $(15,331) $(18,442)$(10,644) $(3,905) $(33,773)$(14,549)
      Add:
       depreciation
       and
       amortization    6,503     6,260    5,194    4,825    12,762   10,019
      Add: interest
       expense            11        21      821      573        33    1,394
      Less: interest
       and other income (957)   (2,061)    (573)     (89)   (3,019)    (662)
      Plus income tax
       (benefit)
       expense           (25)     (183)     221      200      (208)     421
    EBITDA           $(9,799) $(14,405) $(4,981)  $1,604  $(24,205) $(3,377)
      Add: deferred
       revenue                            3,465                       3,465
      Add: provision
       for litigation  6,743     7,134       -        -     13,878       -
      Add: share-
       based
       compensation    4,285     3,960    6,259    5,071     8,245   11,330
      Add: litigation
       defense
       expenses        2,667     5,366    1,636      885     8,033    2,521
      Less: deferred
       traffic and
       service costs                       (935)                       (935)
    Adjusted EBITDA   $3,896    $2,055   $5,444   $7,560    $5,951  $13,004

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 expense for the second quarter of 2008, 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 a content delivery partner enabling the next wave of Internet business and entertainment. More than 1300 Internet, entertainment, software, and technology brands trust our robust, scalable platform to monetize their digital assets by delivering a brilliant online experience to their global audience. Our architecture bypasses the busy public Internet using a dedicated optical network that interconnects thousands of servers and delivers massive files at the speed of light - directly to the access networks that consumers use every day. Our proven network and passion for service provides our customers confidence that every object in their library will be delivered to every user, every time. Read our blog at http://blog.llnw.com or visit http://www.limelightnetworks.com for more information.

Copyright (C) 2008 Limelight Networks, Inc. All rights reserved. All product or service names are the property of their respective owners

SOURCE Limelight Networks, Inc.

Related Stocks:
Stock Market XML and JSON Data API provided by FinancialContent Services, Inc.
Nasdaq quotes delayed at least 15 minutes, all others at least 20 minutes.
Markets are closed on certain holidays. Stock Market Holiday List
By accessing this page, you agree to the following
Privacy Policy and Terms and Conditions.
Press Release Service provided by PRConnect.
Stock quotes supplied by Six Financial
Postage Rates Bots go here