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Section 1: 8-K (8-K)

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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 23, 2020
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)
1465 North Scottsdale Road Suite 400
Scottsdale, AZ 85257
(Address, including zip code, of principal executive offices)
(602) 850-5000
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:
 
 
 
 
 
Title of each class
 
Trading Symbol(s)
 
Name of exchange on which registered
Common stock, par value $0.001 per share
 
LLNW
 
NASDAQ
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 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).
 
 
 
 
 
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 23, 2020, Limelight Networks, Inc. issued a press release regarding its financial results for the first quarter ended March 31, 2020, 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 23, 2020
 
 
 
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 23, 2020
Limelight Networks Reports Financial Results for the First Quarter of 2020
Revenue of $57.0 million, up 32% year over year
GAAP basic EPS of $(0.04) and Non-GAAP EPS of break-even
Adjusted EBITDA of $5.6 million
Cash balance of $21.4 million on positive operating cash flow
CFO transition planned
Limelight Networks, Inc. (Nasdaq: LLNW) (Limelight), a leading provider of edge cloud services, today reported revenue of $57.0 million for the first quarter of 2020, up 32 percent, compared to $43.3 million in the first quarter of 2019. Year-over-year currency impact was negative by approximately $0.1 million.
Limelight reported a GAAP net loss of $5.3 million, or $(0.04) per basic share for the first quarter of 2020, compared to net loss of $8.6 million, or $(0.07) per basic share in the first quarter of 2019.
Non-GAAP net loss was $0.2 million or break-even per basic share for the first quarter of 2020, compared to a non-GAAP net loss of $5.1 million, or $(0.04) per basic share in the first quarter of 2019.
EBITDA was $0.5 million for the first quarter of 2020, compared to negative $4.1 million for the first quarter of 2019. Adjusted EBITDA was $5.6 million for the first quarter of 2020 compared to negative $0.6 million for the first quarter of 2019.
Limelight ended the first quarter with 616 employees and employee equivalents, up from 610 at the end of the fourth quarter of 2019, and up from 562 at the end of the first quarter of 2019.
Limelight also announced today that Sajid Malhotra, Chief Financial Officer, will assume the role of Chief Strategy Officer and will be responsible for Corporate Strategy, M&A, and Investor Relations. Dan Boncel, our Vice President Finance, Principal Accounting Officer will assume the role of Chief Financial Officer. Both changes will be effective July 1, 2020.
“We’re very pleased with Limelight’s financial and operational performance, which culminated in the highest first quarter revenue in the company’s history,” Robert Lento, Chief Executive Officer said. “We want to express our gratitude for the tireless commitment of our employees and continued support of our customers and shareholders in the face of unprecedented global disruption from the pandemic. We are truly grateful and fortunate that our business has not experienced the same devastating impact to date as many others. Our thoughts and well wishes go out to those so impacted.
"These trying times are spotlighting the critical role Limelight’s edge services fill in supporting continuity of business and keeping people digitally connected. There is momentum going into the second quarter, primarily driven by the increase of video-on-demand. Nevertheless, in the face of significant uncertainties related to the pandemic, including the absence of live sporting events, we are only increasing the low end of our previous revenue guidance. We remain committed and confident in meeting or exceeding Limelight’s financial goals for 2020 and beyond and delivering the best top-line growth in our history as a public company, as well as corresponding improvements to earnings and adjusted EBITDA.
”We are excited to have Sajid transition into his new role and congratulations to Dan who has demonstrated years of growth and achievement within Limelight.”    
Based on current conditions, our full-year 2020 guidance is updated, and is as follows:



Exhibit 99.1

Limelight Networks, Inc.
2020 Guidance
 
 
 
 
 
 
 
 
 
 
 
April 2020
 
January 2020
 
December 2019
 
Actual 2019
Revenue
 
$225 to $235 million
 
$223 to $235 million
 
$220 to $235 million
 
$200.6 million
GAAP Basic EPS
 
$(0.10) to break-even
 
$(0.10) to break-even
 
$(0.10) to break-even
 
$(0.14)
Non-GAAP EPS
 
Break-even to $0.10
 
Break-even to $0.10
 
Break-even to $0.10
 
$(0.02)
Adjusted EBITDA
 
$25 to $35 million
 
$25 to $35 million
 
$25 to $35 million
 
$18.1 million
Capital expenditures
 
$25 to $30 million
 
$25 to $30 million
 
$25 to $30 million
 
$34.7 million



























Exhibit 99.1

Financial Tables
Limelight Networks, Inc.
Condensed Consolidated Balance Sheets
(In thousands, except per share data)
 
March 31,
2020
 
December 31,
2019
 
(Unaudited)
 
 
ASSETS
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
21,421

 
$
18,335

Accounts receivable, net
34,603

 
34,476

Income taxes receivable
76

 
82

Prepaid expenses and other current assets
11,205

 
9,920

Total current assets
67,305

 
62,813

Property and equipment, net
46,636

 
46,136

Operating lease right of use assets
12,084

 
12,842

Marketable securities, less current portion
40

 
40

Deferred income taxes
1,361

 
1,319

Goodwill
76,867

 
77,102

Other assets
8,721

 
9,117

Total assets
$
213,014

 
$
209,369

LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 
 
Current liabilities:
 
 
 
Accounts payable
$
14,297

 
$
12,020

Deferred revenue
726

 
976

Operating lease liability obligations
2,046

 
2,056

Income taxes payable
170

 
178

Other current liabilities
18,188

 
13,398

Total current liabilities
35,427

 
28,628

Operating lease liability obligations, less current portion
12,983

 
13,488

Deferred income taxes
262

 
239

Deferred revenue, less current portion
161

 
161

Other long-term liabilities
318

 
316

Total liabilities
49,151

 
42,832

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; 119,642 and 118,368 shares issued and outstanding at March 31, 2020 and December 31, 2019, respectively
120

 
118

Additional paid-in capital
534,205

 
530,285

Accumulated other comprehensive loss
(10,549
)
 
(9,210
)
Accumulated deficit
(359,913
)
 
(354,656
)
Total stockholders’ equity
163,863

 
166,537

Total liabilities and stockholders’ equity
$
213,014

 
$
209,369

 
 
 
 

 



Exhibit 99.1

Limelight Networks, Inc.
Condensed Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)
 
Three Months Ended
 
March 31,
 
December 31,
 
Percent
 
March 31,
 
Percent
 
2020
 
2019
 
Change
 
2019
 
Change
Revenue
$
57,012

 
$
60,129

 
(5
)%
 
$
43,280

 
32
 %
Cost of revenue:
 
 
 
 
 
 
 
 
 
Cost of services (1)
31,113

 
28,586

 
9
 %
 
22,941

 
36
 %
Depreciation — network
5,150

 
5,288

 
(3
)%
 
4,317

 
19
 %
Total cost of revenue
36,263

 
33,874

 
7
 %
 
27,258

 
33
 %
Gross profit
20,749

 
26,255

 
(21
)%
 
16,022

 
30
 %
Gross profit percentage
36.4
%
 
43.7
%
 
 
 
37.0
%
 
 
Operating expenses:
 
 
 
 
 
 
 
 
 
General and administrative (1)
7,882

 
7,554

 
4
 %
 
7,535

 
5
 %
Sales and marketing (1)
11,894

 
10,399

 
14
 %
 
10,972

 
8
 %
Research and development (1)
5,618

 
5,459

 
3
 %
 
5,901

 
(5
)%
Depreciation and amortization
341

 
328

 
4
 %
 
245

 
39
 %
Total operating expenses
25,735

 
23,740

 
8
 %
 
24,653

 
4
 %
Operating (loss) income
(4,986
)
 
2,515

 
NM

 
(8,631
)
 
NM

Other income (expense):
 
 
 
 
 
 
 
 
 
Interest expense
(10
)
 
(45
)
 
NM

 
(10
)
 
NM

Interest income
25

 
25

 
NM

 
212

 
NM

Other, net
(110
)
 
169

 
NM

 
(6
)
 
NM

Total other income (expense)
(95
)
 
149

 
NM

 
196

 
NM

(Loss) income before income taxes
(5,081
)
 
2,664

 
NM

 
(8,435
)
 
NM

Income tax expense
176

 
206

 
NM

 
124

 
NM

Net (loss) income
$
(5,257
)
 
$
2,458

 
NM

 
$
(8,559
)
 
NM

 
 
 
 
 
 
 
 
 
 
Net (loss) income per share:
 
 
 
 
 
 
 
 
 
Basic
$
(0.04
)
 
$
0.02

 
 
 
$
(0.07
)
 
 
Diluted
$
(0.04
)
 
$
0.02

 
 
 
$
(0.07
)
 
 
 
 
 
 
 
 
 
 
 
 
Weighted average shares used in per share calculation:
 
 
 
 
 
 
 
 
 
Basic
118,964

 
117,603

 
 
 
114,410

 
 
Diluted
118,964

 
123,801

 
 
 
114,410

 
 
 
 
 
 
 
 
 
 
 
 
(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,
 
December 31,
 
March 31,
 
2020
 
2019
 
2019
Share-based compensation:
 
 
 
 
 
Cost of services
$
763

 
$
376

 
$
411

General and administrative
2,241

 
1,858

 
2,094

Sales and marketing
1,228

 
597

 
484

Research and development
832

 
484

 
467

Total share-based compensation
$
5,064

 
$
3,315

 
$
3,456

 
 
 
 
 
 
Depreciation and amortization:
 
 
 
 
 
Network-related depreciation
$
5,150

 
$
5,288

 
$
4,317

Other depreciation and amortization
341

 
328

 
245

Total depreciation and amortization
$
5,491

 
$
5,616

 
$
4,562

 
 
 
 
 
 
Net increase (decrease) in cash, cash equivalents and marketable securities:
$
3,086

 
$
285

 
$
(11,825
)
 
 
 
 
 
 
End of period statistics:
 
 
 
 
 
Approximate number of active customers
573

 
599

 
643

 
 
 
 
 
 
Number of employees and employee equivalents
616

 
610

 
562





Exhibit 99.1

Limelight Networks, Inc.
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
 
Three Months Ended
 
March 31,
 
Dec. 31,
 
March 31,
 
2020
 
2019
 
2019
Operating activities
 
 
 
 
 
Net (loss) income
$
(5,257
)
 
$
2,458

 
$
(8,559
)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
 
 
 
 
 
Depreciation and amortization
5,491

 
5,616

 
4,562

Share-based compensation
5,064

 
3,315

 
3,456

Foreign currency remeasurement (gain) loss
(397
)
 
79

 
10

Deferred income taxes
(44
)
 
300

 
(51
)
Gain on sale of property and equipment

 

 
(30
)
Accounts receivable charges
158

 
519

 
257

Amortization of premium on marketable securities

 
1

 
12

Realized loss on marketable securities

 
9

 

Changes in operating assets and liabilities:
 
 
 
 
 
Accounts receivable
(285
)
 
823

 
(3,720
)
Prepaid expenses and other current assets
(1,433
)
 
(324
)
 
(474
)
Income taxes receivable
3

 
(3
)
 
(2
)
Other assets
626

 
(1,547
)
 
(1,737
)
Accounts payable and other current liabilities
5,892

 
(2,383
)
 
2,243

Deferred revenue
(250
)
 
(232
)
 
(297
)
Income taxes payable
2

 
(143
)
 
62

Payments related to litigation, net

 

 
(1,520
)
Other long term liabilities
6

 
15

 
(175
)
Net cash provided by (used in) operating activities
9,576

 
8,503

 
(5,963
)
Investing activities
 
 
 
 
 
Purchases of marketable securities

 

 
(9,266
)
Sale and maturities of marketable securities

 
3,211

 
12,224

Purchases of property and equipment
(6,863
)
 
(10,480
)
 
(5,018
)
Proceeds from sale of property and equipment

 

 
29

Net cash used in investing activities
(6,863
)
 
(7,269
)
 
(2,031
)
Financing activities
 
 
 
 
 
Payment of employee tax withholdings related to restricted stock vesting
(1,515
)
 
(1,079
)
 
(894
)
Proceeds from employee stock plans
2,138

 
3,290

 
8

Net cash provided by (used in) financing activities
623

 
2,211

 
(886
)
Effect of exchange rate changes on cash and cash equivalents
(250
)
 
58

 
(4
)
Net (decrease) increase in cash and cash equivalents
3,086

 
3,503

 
(8,884
)
Cash and cash equivalents, beginning of period
18,335

 
14,832

 
25,383

Cash and cash equivalents, end of period
$
21,421

 
$
18,335

 
$
16,499

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. 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. 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,



Exhibit 99.1

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
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 Income (Loss) to Non-GAAP Net Income (Loss)
(In thousands)
(Unaudited
 
Three Months Ended
 
March 31, 2020
 
December 31, 2019
 
March 31, 2019
 
Amount
 
Per Share
 
Amount
 
Per Share
 
Amount
 
Per Share
U.S. GAAP net (loss) income
$
(5,257
)
 
$
(0.04
)
 
$
2,458

 
$
0.02

 
$
(8,559
)
 
$
(0.07
)
Share-based compensation
5,064

 
0.04

 
3,315

 
0.03

 
3,456

 
0.03

Non-GAAP net income (loss)
$
(193
)
 
$

 
$
5,773

 
$
0.05

 
$
(5,103
)
 
$
(0.04
)
 
 
 
 
 
 
 
 
 
 
 
 
Weighted average shares used in per share calculation:
 
 
118,964

 
 
 
117,603

 
 
 
114,410


Limelight Networks, Inc.
Reconciliation of U.S. GAAP Net Income (Loss) to EBITDA to Adjusted EBITDA
(In thousands)
(Unaudited)
 
Three Months Ended
 
March 31,
 
Dec. 31,
 
March 31,
 
2019
 
2019
 
2019
U.S. GAAP net (loss) income
$
(5,257
)
 
$
2,458

 
$
(8,559
)
Depreciation and amortization
5,491

 
5,616

 
4,562

Interest expense
10

 
45

 
10

Interest and other (income) expense
85

 
(194
)
 
(206
)
Income tax expense
176

 
206

 
124

EBITDA
$
505

 
$
8,131

 
$
(4,069
)
Share-based compensation
5,064

 
3,315

 
3,456

Adjusted EBITDA
$
5,569

 
$
11,446

 
$
(613
)
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 23, 2020, 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) 2020 Limelight Networks, Inc. All rights reserved. All product or service names are the property of their respective owners.
Source: Limelight Networks
CONTACT:
Limelight Networks, Inc.
Sajid Malhotra, 602-850-5778
[email protected]
Ticker Slug:
Ticker: LLNW
Exchange: NASDAQ



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