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Section 1: 8-K (8-K)

Document


 

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):
April 17, 2019
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)
222 South Mill Avenue, 8th Floor
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))
 
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
 
 
 
 
 
Emerging growth company
 
¨

 
 
 
 
 
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
 
¨








Item 2.02
Results of Operations and Financial Condition.
On April 17, 2019, Limelight Networks, Inc. issued a press release regarding its financial results for the first quarter ended March 31, 2019, 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
 













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: April 17, 2019
 
 
 
By:
 
/s/ Michael DiSanto
 
 
 
 
 
 
Michael DiSanto
Chief Administrative and Legal Officer & Secretary




 




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Section 2: EX-99.1 (EXHIBIT 99.1)

Exhibit
Exhibit 99.1

April 17, 2019
Limelight Networks Reports Financial Results for the First Quarter of 2019
Q1 Revenue of $43.3 million
Q1 GAAP EPS of $(0.07) and Non-GAAP EPS of $(0.04)
Cash and marketable securities of $38.7 million
Confirming full year guidance
Limelight Networks, Inc. (Nasdaq: LLNW) (Limelight), a leading provider of edge cloud services, today reported revenue of $43.3 million for the first quarter of 2019, down 17 percent, compared to $52.1 million in the first quarter of 2018. Currency negatively impacted year-over-year comparison by $0.3 million.
Limelight reported a net loss of $8.6 million, or $(0.07) per basic share for the first quarter of 2019, compared to net income of $0.1 million, or break-even per basic and fully diluted share in the first quarter of 2018.
Non-GAAP net loss was $5.1 million or $(0.04) per basic share for the first quarter of 2019, compared to non-GAAP net income of $6.2 million, or $0.06 per basic share in the first quarter of 2018.
EBITDA was negative $4.1 million for the first quarter of 2019, compared to positive $4.9 million for the first quarter of 2018. Adjusted EBITDA was negative $0.6 million for the first quarter of 2019 compared to positive $11.0 million for the first quarter of 2018.
Limelight ended the first quarter with 562 employees and employee equivalents, down from 563 at the end of the fourth quarter of 2018, and up from 544 at the end of the first quarter of 2018.
Commenting on the first quarter, Chief Executive Officer, Robert Lento said, “We entered 2019 expecting that first quarter financial results would mark the low point for the year, but would set the foundation for our best year ever across many financial and operational measures. Results were largely in line with our expectations as we invested heavily in opportunities that we believe will yield significant revenue in the second half of 2019. With the first quarter now behind us, we expect 2019 to show meaningful sequential improvement going forward, and our year-over-year growth rate in both percentages and actual dollars should be our best in many years.
“The industry and our business is seeing demand pick up, and we are expanding our footprint and building capacity and capability to meet this global demand. To that end, customer churn showed significant improvement, pipeline growth of opportunities with both new and existing customers was very good, organic expansion of our network and conversion of Ericsson's PoPs picked up pace, Limelight Realtime Streaming received widespread recognition, and edge computing continued to attract mega trials. This traction gives us confidence to confirm our full-year guidance.”
Based on current conditions, our full-year 2019 guidance is unchanged, and is as follows:






Exhibit 99.1



2019 Guidance Table
Limelight Networks, Inc.
2019 Guidance
 
 
 
 
 
 
 
April 17, 2019
 
January 30, 2019
Revenue
 
$215 to $225 million
 
$215 to $225 million
GAAP Basic EPS
 
Break-even to $0.10
 
Break-even to $0.10
Non-GAAP EPS
 
$0.10 to $0.20
 
$0.10 to $0.20
Adjusted EBITDA
 
$30 to $40 million
 
$30 to $40 million
Capital expenditures
 
$20 to $24 million
 
$20 to $24 million





Exhibit 99.1

Financial Tables
Limelight Networks, Inc.
Condensed Consolidated Balance Sheets
(In thousands, except per share data)
 
March 31,
2019
 
December 31,
2018
 
(Unaudited)
 
 
ASSETS
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
16,499

 
$
25,383

Marketable securities
22,142

 
25,083

Accounts receivable, net
29,505

 
26,041

Income taxes receivable
124

 
122

Prepaid expenses and other current assets
12,276

 
14,789

Total current assets
80,546

 
91,418

Property and equipment, net
32,996

 
27,378

Operating lease right of use assets
3,012

 

Marketable securities, less current portion
40

 
40

Deferred income taxes
1,508

 
1,462

Goodwill
76,707

 
76,407

Other assets
4,199

 
2,220

Total assets
$
199,008

 
$
198,925

LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 
 
Current liabilities:
 
 
 
Accounts payable
$
17,858

 
$
9,216

Deferred revenue
1,524

 
1,883

Operating lease liability obligations
1,620

 

Income taxes payable
186

 
124

Provision for litigation
4,500

 
9,000

Other current liabilities
11,656

 
12,922

Total current liabilities
37,344

 
33,145

Operating lease liability obligations, less current portion
1,630

 

Deferred income taxes
128

 
152

Deferred revenue, less current portion
105

 
42

Other long-term liabilities
263

 
435

Total liabilities
39,470

 
33,774

Commitments and contingencies
 
 
 
Stockholders’ equity:
 
 
 
Convertible preferred stock, $0.001 par value; 7,500 shares authorized; no shares issued and outstanding

 

Common stock, $0.001 par value; 300,000 shares authorized; 114,874 and 114,246 shares issued and outstanding at March 31, 2019 and December 31, 2018, respectively
115

 
114

Additional paid-in capital
516,251

 
513,682

Accumulated other comprehensive loss
(9,657
)
 
(10,033
)
Accumulated deficit
(347,171
)
 
(338,612
)
Total stockholders’ equity
159,538

 
165,151

Total liabilities and stockholders’ equity
$
199,008

 
$
198,925

 
 
 
 

 



Exhibit 99.1

Limelight Networks, Inc.
Condensed Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)
 
Three Months Ended
 
March 31,
 
Dec. 31,
 
Percent
 
March 31,
 
Percent
 
2019
 
2018
 
Change
 
2018
 
Change
Revenue
$
43,280

 
$
43,992

 
(2
)%
 
$
52,114

 
(17
)%
Cost of revenue:
 
 
 
 
 
 
 
 
 
Cost of services (1)
22,941

 
22,141

 
4
 %
 
21,054

 
9
 %
Depreciation — network
4,317

 
3,941

 
10
 %
 
4,380

 
(1
)%
Total cost of revenue
27,258

 
26,082

 
5
 %
 
25,434

 
7
 %
Gross profit
16,022

 
17,910

 
(11
)%
 
26,680

 
(40
)%
Gross profit percentage
37.0
%
 
40.7
%
 
 
 
51.2
%
 
 
Operating expenses:
 
 
 
 
 
 
 
 
 
General and administrative (1)
7,535

 
7,482

 
1
 %
 
9,522

 
(21
)%
Sales and marketing (1)
10,972

 
9,484

 
16
 %
 
10,280

 
7
 %
Research and development (1)
5,901

 
5,781

 
2
 %
 
6,339

 
(7
)%
Depreciation and amortization
245

 
476

 
(49
)%
 
588

 
(58
)%
Total operating expenses
24,653

 
23,223

 
6
 %
 
26,729

 
(8
)%
Operating loss
(8,631
)
 
(5,313
)
 
62
 %
 
(49
)
 
NM

Other income (expense):
 
 
 
 
 
 
 
 
 
Interest expense
(10
)
 
(10
)
 
NM

 
(59
)
 
NM

Interest income
212

 
230

 
NM

 
130

 
NM

Other, net
(6
)
 
90

 
NM

 
112

 
NM

Total other income (expense)
196

 
310

 
NM

 
183

 
NM

(Loss) income before income taxes
(8,435
)
 
(5,003
)
 
NM

 
134

 
NM

Income tax expense (benefit)
124

 
190

 
NM

 
(15
)
 
NM

Net (loss) income
$
(8,559
)
 
$
(5,193
)
 
NM

 
$
149

 
NM

 
 
 
 
 
 
 
 
 
 
Net income (loss) per share:
 
 
 
 
 
 
 
 
 
Basic
$
(0.07
)
 
$
(0.05
)
 
 
 
$

 
 
Diluted
$
(0.07
)
 
$
(0.05
)
 
 
 
$

 
 
 
 
 
 
 
 
 
 
 
 
Weighted average shares used in per share calculation:
 
 
 
 
 
 
 
 
 
Basic
114,410

 
113,578

 
 
 
110,761

 
 
Diluted
114,410

 
113,578

 
 
 
118,909

 
 
 
 
 
 
 
 
 
 
 
 
(1) Includes share-based compensation (see supplemental table for figures)




Exhibit 99.1

Limelight Networks, Inc.
Supplemental Financial Data
(In thousands)
(Unaudited)
 
Three Months Ended
 
March 31,
 
Dec. 31,
 
March 31,
 
2019
 
2018
 
2018
Share-based compensation:
 
 
 
 
 
Cost of services
$
411

 
$
756

 
$
357

General and administrative
2,094

 
2,792

 
1,810

Sales and marketing
484

 
963

 
603

Research and development
467

 
974

 
597

Total share-based compensation
$
3,456

 
$
5,485

 
$
3,367

 
 
 
 
 
 
Depreciation and amortization:
 
 
 
 
 
Network-related depreciation
$
4,317

 
$
3,941

 
$
4,380

Other depreciation and amortization
245

 
476

 
588

Total depreciation and amortization
$
4,562

 
$
4,417

 
$
4,968

 
 
 
 
 
 
Net increase (decrease) in cash, cash equivalents and marketable securities:
$
(11,825
)
 
$
(2,169
)
 
$
(5,621
)
 
 
 
 
 
 
End of period statistics:
 
 
 
 
 
Approximate number of active customers
643

 
649

 
703

 
 
 
 
 
 
Number of employees and employee equivalents
562

 
563

 
544





Exhibit 99.1

Limelight Networks, Inc.
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
 
Three Months Ended
 
March 31,
 
Dec. 31,
 
March 31,
 
2019
 
2018
 
2018
Operating activities
 
 
 
 
 
Net (loss) income
$
(8,559
)
 
$
(5,193
)
 
$
149

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
 
 
 
 
 
Depreciation and amortization
4,562

 
4,417

 
4,968

Share-based compensation
3,456

 
5,485

 
3,367

Foreign currency remeasurement loss (gain)
10

 
(65
)
 
110

Deferred income taxes
(51
)
 
103

 
41

Gain on sale of property and equipment
(30
)
 
(6
)
 
(16
)
Accounts receivable charges
257

 
449

 
218

Amortization of premium on marketable securities
12

 
33

 
33

Changes in operating assets and liabilities:
 
 
 
 
 
Accounts receivable
(3,720
)
 
(343
)
 
(270
)
Prepaid expenses and other current assets
(474
)
 
64

 
882

Income taxes receivable
(2
)
 
25

 
(124
)
Other assets
(1,737
)
 
201

 
(495
)
Accounts payable and other current liabilities
2,243

 
(1,807
)
 
(2,286
)
Deferred revenue
(297
)
 
1,004

 
130

Income taxes payable
62

 
17

 
(397
)
Payments related to litigation, net
(1,520
)
 
(1,520
)
 
(4,500
)
Other long term liabilities
(175
)
 
51

 
(151
)
Net cash (used in) provided by operating activities
(5,963
)
 
2,915

 
1,659

Investing activities
 
 
 
 
 
Purchases of marketable securities
(9,266
)
 
(4,669
)
 

Sale and maturities of marketable securities
12,224

 
3,500

 
4,515

Purchases of property and equipment
(5,018
)
 
(5,618
)
 
(1,990
)
Proceeds from sale of property and equipment
29

 
4

 
16

Net cash (used in) provided by investing activities
(2,031
)
 
(6,783
)
 
2,541

Financing activities
 
 
 
 
 
Payment of employee tax withholdings related to restricted stock vesting
(894
)
 
(985
)
 
(1,606
)
Cash paid for purchase of common stock

 

 
(3,800
)
Proceeds from employee stock plans
8

 
1,374

 
30

Net cash (used in) provided by financing activities
(886
)
 
389

 
(5,376
)
Effect of exchange rate changes on cash and cash equivalents
(4
)
 
184

 
127

Net decrease in cash and cash equivalents
(8,884
)
 
(3,295
)
 
(1,049
)
Cash and cash equivalents, beginning of period
25,383

 
28,678

 
20,912

Cash and cash equivalents, end of period
$
16,499

 
$
25,383

 
$
19,863

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 and litigation expenses. 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 (benefit). We define Adjusted EBITDA as EBITDA adjusted to exclude share-based compensation and litigation 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



Exhibit 99.1

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:





Exhibit 99.1

Reconciliation of Non-GAAP Financial Measures
Limelight is presenting the most directly comparable U.S. GAAP financial measures and reconciling the 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 Income (Loss) to Non-GAAP Net Income (Loss)
(In thousands)
(Unaudited
 
Three Months Ended
 
March 31, 2019
 
December 31, 2018
 
March 31, 2018
 
Amount
 
Per Share
 
Amount
 
Per Share
 
Amount
 
Per Share
U.S. GAAP net (loss) income
$
(8,559
)
 
$
(0.07
)
 
$
(5,193
)
 
$
(0.05
)
 
$
149

 
$

Share-based compensation
3,456

 
0.03

 
5,485

 
0.05

 
3,367

 
0.03

Litigation expenses

 

 
3

 

 
2,670

 
0.02

Non-GAAP net (loss) income
$
(5,103
)
 
$
(0.04
)
 
$
295

 
$

 
$
6,186

 
$
0.06

 
 
 
 
 
 
 
 
 
 
 
 
Weighted average shares used in per share calculation:
 
 
114,410

 
 
 
113,578

 
 
 
110,761



Limelight Networks, Inc.
Reconciliation of U.S. GAAP Net Income (Loss) to EBITDA to Adjusted EBITDA
(In thousands)
(Unaudited)
 
Three Months Ended
 
March 31,
 
December 31,
 
March 31,
 
2019
 
2018
 
2018
U.S. GAAP net (loss) income
$
(8,559
)
 
$
(5,193
)
 
$
149

Depreciation and amortization
4,562

 
4,417

 
4,968

Interest expense
10

 
10

 
59

Interest and other (income) expense
(206
)
 
(320
)
 
(242
)
Income tax expense (benefit)
124

 
190

 
(15
)
EBITDA
$
(4,069
)
 
$
(896
)
 
$
4,919

Share-based compensation
3,456

 
5,485

 
3,367

Litigation expenses

 
3

 
2,670

Adjusted EBITDA
$
(613
)
 
$
4,592

 
$
10,956

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. Investors can access this call toll-free at 877-296-5190 within the United States or +1 412-317-5233 outside of the U.S. The conference call will also be audio cast



Exhibit 99.1

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, capital expenditures, and our future prospects. 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 customers, unforeseen changes in our hiring patterns, adverse outcomes in litigation, and experiencing expenses that exceed our expectations. 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 April 17, 2019, and we undertake no duty to update this information in light of new information or future events, unless required by law.
About Limelight
Limelight Networks Inc., (NASDAQ: LLNW), a leading provider of digital content delivery, video, cloud security, and edge computing services, empowers customers to provide exceptional digital experiences. Limelight’s edge services platform includes a unique combination of global private infrastructure, intelligent software, and expert support services that enable current and future workflows. For more information, please visit www.limelight.com, follow us on Twitter, Facebook and LinkedIn.
Copyright (C) 2019 Limelight Networks, Inc. All rights reserved. All product or service names are the property of their respective owners.
Source: Limelight Networks
Language:
English
CONTACT:
Limelight Networks, Inc.
Sajid Malhotra, 602-850-5778
ir@llnw.com
Ticker Slug:
Ticker: LLNW
Exchange: NASDAQ



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