Business Wire | Jul 20, 2020 04:01PM EDT

Limelight Networks Reports Strong Financial Results for the Second Quarter of 2020

Jul. 20, 2020

SCOTTSDALE, Ariz.--(BUSINESS WIRE)--Jul. 20, 2020--Limelight Networks, Inc. (Nasdaq: LLNW) (Limelight), a leading provider of video delivery and edge cloud services, today reported revenue of $58.5 million for the second quarter of 2020, up 28 percent, compared to $45.9 million in the second quarter of 2019. Year-over-year currency impact was negative by approximately $0.1 million.

Limelight reported a GAAP net loss of $1.7 million, or $(0.01) per basic share for the second quarter of 2020, compared to net loss of $7.2 million, or $(0.06) per basic share in the second quarter of 2019.

Non-GAAP net income was $3.5 million or $0.03 per basic share for the second quarter of 2020, compared to a non-GAAP net loss of $3.5 million, or $(0.03) per basic share in the second quarter of 2019.

EBITDA was $4.5 million for the second quarter of 2020, compared to negative $2.2 million for the second quarter of 2019. Adjusted EBITDA was $9.7 million for the second quarter of 2020 compared to $1.4 million for the second quarter of 2019.

Limelight ended the second quarter with 627 employees and employee equivalents, up from 616 at the end of the first quarter of 2020, and up from 594 at the end of the second quarter of 2019.

"This is our best ever second quarter financial performance. Our growth, including the over 400 basis point sequential improvement in gross margin, is due to strong execution of our 2020 strategy. Through our relentless focus on expanding capacity, optimizing proactive management of our network, placing more control in the hands of our customers and driving innovation, we are seeing strength across our business and are raising our revenue guidance for 2020," said Robert Lento, Chief Executive Officer.

As the world continues to navigate through these uncertain times, we play an important role in connecting people to information and entertainment. COVID-19 has created an increased global reliance on the Internet and content delivery, and we expect to emerge larger and financially stronger when the pandemic ends. The remarkable dedication of our people adapting to the challenging times, and the commitment to meeting increased demand with uncompromised quality for our customers is particularly noteworthy. We recognize many face challenges during these times and will continue our efforts to provide value and help overcome the consequential impact of the pandemic on our communities," Lento added.

Based on current conditions, our full-year 2020 guidance is updated as follows:

Limelight Networks, Inc.2020 Guidance July 2020 April 2020 December 2019 Actual 2019Revenue $230 to $240 $225 to $235 $220 to $235 $200.6 million million million million GAAP Basic EPS $(0.10) to $(0.10) to $(0.10) to $(0.14) break-even break-even break-even Non-GAAP EPS Break-even to Break-even to Break-even to $(0.02) $0.10 $0.10 $0.10 Adjusted EBITDA $28 to $35 $25 to $35 $25 to $35 $18.1 million million million million Capital $25 to $30 $25 to $30 $25 to $30 $34.7expenditures million million million million

Financial Tables

LIMELIGHT NETWORKS, INC.CONDENSED CONSOLIDATED BALANCE SHEETS(In thousands, except per share data) June 30, March 31, December 31,

2020 2020 2019

(Unaudited) (Unaudited)ASSETSCurrent assets:Cash and cash equivalents $ 18,200 $ 21,421 $ 18,335

Accounts receivable, net 45,246 34,603 34,476

Income taxes receivable 68 76 82

Prepaid expenses and other current 10,241 11,205 9,920 assetsTotal current assets 73,755 67,305 62,813

Property and equipment, net 48,908 46,636 46,136

Operating lease right of use assets 11,449 12,084 12,842

Marketable securities, less current 40 40 40 portionDeferred income taxes 1,328 1,361 1,319

Goodwill 77,113 76,867 77,102

Other assets 7,915 8,721 9,117

Total assets $ 220,508 $ 213,014 $ 209,369

LIABILITIES AND STOCKHOLDERS' EQUITYCurrent liabilities:Accounts payable $ 17,004 $ 14,297 $ 12,020

Deferred revenue 934 726 976

Operating lease liability obligations 2,390 2,046 2,056

Income taxes payable 169 170 178

Other current liabilities 17,028 18,188 13,398

Total current liabilities 37,525 35,427 28,628

Operating lease liability 12,316 12,983 13,488 obligations, less current portionsDeferred income taxes 283 262 239

Deferred revenue, less current 265 161 161 portionOther long-term liabilities 304 318 316

Total liabilities 50,693 49,151 42,832

Commitments and contingenciesStockholders' equity:Convertible preferred stock, $0.001 - - - par value; 7,500 shares authorized;no shares issued and outstandingCommon stock, $0.001 par value;300,000 shares authorized; 121,692,119,642 and 118,368 shares issued andoutstanding at June 30, 2020, March 122 120 118 31, 2020 and December 31, 2019,respectivelyAdditional paid-in capital 541,363 534,205 530,285

Accumulated other comprehensive loss (10,031 ) (10,549 ) (9,210 )

Accumulated deficit (361,639 ) (359,913 ) (354,656 )

Total stockholders' equity 169,815 163,863 166,537

Total liabilities and stockholders' $ 220,508 $ 213,014 $ 209,369 equity

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, Percent June 30, Percent June 30, June 30, Percent

2020 2020 Change 2019 Change 2020 2019 Change



Revenue $ 58,546 $ 57,012 3 % $ 45,904 28 % $ 115,558 $ 89,184 30 %

Cost of revenue:Cost of 29,389 31,113 -6 % 22,769 29 % 60,502 45,710 32 %services (1)Depreciation - 5,360 5,150 4 % 4,628 16 % 10,510 8,944 18 %networkTotal cost of 34,749 36,263 -4 % 27,397 27 % 71,012 54,654 30 %revenueGross profit 23,797 20,749 15 % 18,507 29 % 44,546 34,530 29 %

Gross profit 40.6 % 36.4 % 40.3 % 38.5 % 38.7 % percentageOperating expenses:General and 8,187 7,882 4 % 8,340 -2 % 16,069 15,875 1 %administrative(1)Sales and 10,929 11,894 -8 % 10,994 -1 % 22,823 21,966 4 %marketing (1)Research & 5,572 5,618 -1 % 6,013 -7 % 11,189 11,915 -6 %development(1)Depreciation 323 341 -5 % 127 154 % 665 372 79 %andamortizationTotal 25,011 25,735 -3 % 25,474 -2 % 50,746 50,128 1 %operatingexpenses

Operating loss (1,214 ) (4,986 ) NM (6,967 ) NM (6,200 ) (15,598 ) NM



Other income (expense):Interest (71 ) (10 ) NM (10 ) NM (82 ) (20 ) NMexpenseInterest 6 25 NM 110 NM 31 321 NMincomeOther, net (312 ) (110 ) NM (70 ) NM (421 ) (76 ) NM

Total other (377 ) (95 ) NM 30 NM (472 ) 225 NM(expense)income

Loss before (1,591 ) (5,081 ) NM (6,937 ) NM (6,672 ) (15,373 ) NMincome taxesIncome tax 136 176 NM 255 NM 311 378 NMexpense

Net loss $ (1,727 ) $ (5,257 ) NM $ (7,192 ) NM $ (6,983 ) $ (15,751 ) NM



Net loss per share:Basic $ (0.01 ) $ (0.04 ) $ (0.06 ) $ (0.06 ) $ (0.14 )

Diluted $ (0.01 ) $ (0.04 ) $ (0.06 ) $ (0.06 ) $ (0.14 )



Weightedaverage shares used in persharecalculation:Basic 120,230 118,964 115,275 119,597 114,843

Diluted 120,230 118,964 115,275 119,597 114,843



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

LIMELIGHT NETWORKS, INC.SUPPLEMENTAL FINANCIAL DATA(In thousands)(Unaudited) Three Months Ended Six Months Ended June 30, March June 30, June 30, June 30, 31, 2020 2020 2019 2020 2019

Share-basedcompensation: Cost of services $ 792 $ 763 $ 377 $ 1,555 $ 788

General and 2,257 2,241 2,140 4,498 4,234 administrativeSales and marketing 1,322 1,228 598 2,550 1,082

Research and 880 832 534 1,712 1,001 development Total share-based $ 5,251 $ 5,064 $ 3,649 $ 10,315 $ 7,105 compensation Depreciation andamortization: Network-related $ 5,360 $ 5,150 $ 4,628 $ 10,510 $ 8,944 depreciationOther depreciation 323 341 127 665 372 and amortization Total depreciation $ 5,683 $ 5,491 $ 4,755 $ 11,175 $ 9,316 and amortization Net increase(decrease) in cash, $ (3,221 ) $ 3,086 $ (9,719 ) $ (135 ) $ (21,544 )cash equivalents andmarketablesecurities: End of periodstatistics: Approximate number of 560 573 621 560 621 active customers Number of employees 627 616 594 627 594 and employeeequivalents

LIMELIGHT NETWORKS, INC.CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(In thousands)(Unaudited) Three Months Ended Six Months Ended June 30, March 31, June 30, June 30, June 30, 2020 2020 2019 2020 2019

Operating activitiesNet loss $ (1,727 ) $ (5,257 ) $ (7,192 ) $ (6,983 ) $ (15,751 )

Adjustmentsto reconcilenet income(loss) to net cash providedby (used in)operatingactivities:Depreciation 5,683 5,491 4,755 11,175 9,316 and amortizationShare-based 5,251 5,064 3,649 10,315 7,105 compensationForeigncurrency 257 (397 ) (135 ) (140 ) (125 )remeasurementloss (gain)Deferred 59 (44 ) 82 15 31 income taxesGain on sale - - (21 ) - (51 )of property and equipmentAccounts 155 158 437 313 694 receivable chargesAmortizationof premium on - - 8 - 20 marketablesecuritiesChanges inoperating assets andliabilities:Accounts (10,798 ) (285 ) (2,031 ) (11,083 ) (5,751 )receivablePrepaidexpenses and 986 (1,433 ) 582 (447 ) 108 other currentassetsIncome taxes 10 3 - 13 (2 )receivableOther assets 1,121 626 (1,685 ) 1,747 (3,422 )

Accountspayable and 1,045 5,892 4,230 6,937 6,473 other currentliabilitiesDeferred 313 (250 ) (148 ) 63 (445 )revenueIncome taxes - 2 81 2 143 payablePaymentsrelated to - - (1,520 ) - (3,040 )litigation,netOther long (15 ) 6 22 (11 ) (152 )term liabilitiesNet cashprovided by 2,340 9,576 1,114 11,916 (4,849 )(used in) operatingactivities Investing activitiesPurchases of - - (1,013 ) - (10,279 )marketable securitiesSale andmaturities of - - 18,929 - 31,153 marketablesecuritiesPurchases of (8,085 ) (6,863 ) (11,456 ) (14,948 ) (16,474 )property and equipmentProceeds fromsale of - - 17 - 46 property andequipmentNet cashprovided by (8,085 ) (6,863 ) 6,477 (14,948 ) 4,446 (used in) investingactivities Financing activitiesPayment ofemployee taxwithholdings (1,430 ) (1,515 ) (619 ) (2,945 ) (1,513 )related torestrictedstock vestingProceeds from 3,954 2,138 1,095 6,092 1,103 employee stock plansNet cashprovided by 2,524 623 476 3,147 (410 )(used in) financingactivitiesEffect ofexchange rate - (250 ) 132 (250 ) 128 changes on cash and cashequivalentsNet increase(decrease) in (3,221 ) 3,086 8,199 (135 ) (685 )cash and cashequivalentsCash and cashequivalents, 21,421 18,335 16,499 18,335 25,383 beginning ofperiodCash and cash $ 18,200 $ 21,421 $ 24,698 $ 18,200 $ 24,698 equivalents, end of period

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, excluding non-cash charges, taxes and non-core activities (including interest payments related to financing activities). These measures also enable our management to compare the results of our on-going operations from period to period, and allow management to review the performance of our on-going operations against our peer companies and against other companies in our industry and adjacent industries. We believe these measures also provide similar insights to investors, and enable investors to review our results of operations "through the eyes of management."

Furthermore, our management uses these Non-GAAP financial measures to assist them in making decisions regarding our strategic priorities and areas for future investment and focus.

The terms Non-GAAP net income (loss), EBITDA and Adjusted EBITDA are not defined under U.S. GAAP, and are not measures of operating income, operating performance or liquidity presented in accordance with U.S. GAAP. Our Non-GAAP net income (loss), EBITDA and Adjusted EBITDA have limitations as analytical tools, and when assessing our operating performance, Non-GAAP net income (loss), EBITDA and Adjusted EBITDA should not be considered in isolation, or as a substitute for net income (loss) or other consolidated income statement data prepared in accordance with U.S. GAAP. Some of these limitations include, but are not limited to:

* EBITDA and Adjusted EBITDA do not reflect our cash expenditures or future requirements for capital expenditures or contractual commitments; * These measures do not reflect changes in, or cash requirements for, our working capital needs; * Non-GAAP net income (loss) and Adjusted EBITDA do not reflect the cash requirements necessary for litigation costs, including provision for litigation and litigation expenses; * These measures do not reflect the interest expense, or the cash requirements necessary to service interest or principal payments, on our debt that we may incur; * These measures do not reflect income taxes or the cash requirements for any tax payments; * Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will be replaced sometime in the future, and EBITDA and Adjusted EBITDA do not reflect any cash requirements for such replacements; * While share-based compensation is a component of operating expense, the impact on our financial statements compared to other companies can vary significantly due to such factors as the assumed life of the options and the assumed volatility of our common stock; and * Other companies may calculate Non-GAAP net income (loss), EBITDA and Adjusted EBITDA differently than we do, limiting their usefulness as comparative measures.

We compensate for these limitations by relying primarily on our U.S. GAAP results and using Non-GAAP net income (loss), EBITDA, and Adjusted EBITDA only as supplemental support for management's analysis of business performance. Non-GAAP net income (loss), EBITDA and Adjusted EBITDA are calculated as follows for the periods presented in thousands:

Reconciliation of Non-GAAP Financial Measures

In accordance with the requirements of Item 10(e) of Regulation S-K, we are presenting the most directly comparable U.S. GAAP financial measures and reconciling the unaudited Non-GAAP financial metrics to the comparable U.S. GAAP measures. Per share amounts may not foot due to rounding.

LIMELIGHT NETWORKS, INC.Reconciliation of U.S. GAAP Net Loss to Non-GAAP Net Income (Loss)(In thousands)(Unaudited) Three Months Ended Six Months Ended June 30, 2020 March 31, 2020 June 30, 2019 June 30, 2020 June 30, 2019 Amount Per Share Amount Per Share Amount Per Share Amount Per Share Amount Per Share U.S. GAAP $ (1,727 ) $ (0.01 ) $ (5,257 ) $ (0.04 ) $ (7,192 ) $ (0.06 ) $ (6,983 ) $ (0.06 ) $ (15,751 ) $ (0.14 )net loss Share-based 5,251 0.04 5,064 0.04 3,649 0.03 10,315 0.09 7,105 0.06 compensation Non-GAAP net $ 3,524 $ 0.03 $ (193 ) $ (0.00 ) $ (3,543 ) $ (0.03 ) $ 3,332 $ 0.03 $ (8,646 ) $ (0.08 )income(loss) Weightedaveragebasic shares 120,230 118,964 115,275 119,597 114,843 used in persharecalculation

LIMELIGHT NETWORKS, INC.Reconciliation of U.S. GAAP Net Loss to EBITDA to Adjusted EBITDA(In thousands)(Unaudited) Three Months Ended Six Months Ended June 30, March 31, June 30, June 30, June 30, 2020 2020 2019 2020 2019

U.S. GAAP net loss $ (1,727 ) $ (5,257 ) $ (7,192 ) $ (6,983 ) $ (15,751 )

Depreciation and 5,683 5,491 4,755 11,175 9,316 amortization Interest expense 71 10 10 82 20

Interest and 306 85 (40 ) 390 (245 ) other (income) expense Income tax 136 176 255 311 378 expense EBITDA $ 4,469 $ 505 $ (2,212 ) $ 4,975 $ (6,282 )

Share-based 5,251 5,064 3,649 10,315 7,105 compensation Adjusted EBITDA $ 9,720 $ 5,569 $ 1,437 $ 15,290 $ 823



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. EDT (1:30 p.m. PDT) 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 live from http://www.limelight.com and a replay will be available following the call from the Limelight website.

Forward-Looking Statements

This press release contains forward-looking statements that involve risks and uncertainties. These statements include, among others, statements regarding our expectations regarding revenue, gross margin, non-GAAP net income (loss), capital expenditures, and our future prospects. 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 July 20, 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, visit www.limelight.com, and 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.

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CONTACT: Limelight Networks, Inc. Sajid Malhotra, 602-850-5778 ir@llnw.com