SEC Filing | Edgio

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egio-20220930

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)


☑			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2022


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

For the transition period from to

Commission file number 001-33508

EDGIO, Inc.

(Exact name of registrant as specified in its charter)


Delaware						20-1677033
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

11811 North Tatum Blvd., Suite 3031,

Phoenix, AZ 85028

(Address of principal executive offices, including Zip Code)

(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 each exchange on which registered
Common Stock, par value $0.001 per share	EGIO	Nasdaq

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☐	Accelerated filer	☑
Non-accelerated filer	☐	Smaller Reporting Company	☐
		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. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

The number of shares outstanding of the registrant’s Common Stock, par value $0.001 per share, as of November 4, 2022: 221,584,775 shares.

Table of Contents

EDGIO, INC.

FORM 10-Q

Quarterly Period Ended September 30, 2022

TABLE OF CONTENTS


		Page
Note Regarding Forward-Looking Statements		3

PART I. FINANCIAL INFORMATION
Item 1.	FINANCIAL STATEMENTS
	Consolidated Balance Sheets as of September 30, 2022 (Unaudited) and December 31, 2021	4
	Unaudited Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2022 and 2021	5
	Unaudited Consolidated Statements of Comprehensive Loss for the Three and Nine Months Ended September 30, 2022 and 2021	6
	Unaudited Consolidated Statements of Stockholders' Equity for the Three and Nine Months Ended September 30, 2022 and 2021	7
	Unaudited Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2022 and 2021	9
	Notes to Unaudited Consolidated Financial Statements	10
Item 2.	MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	29
Item 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	40
Item 4.	CONTROLS AND PROCEDURES	40

PART II. OTHER INFORMATION
Item 1.	LEGAL PROCEEDINGS	42
Item 1A.	RISK FACTORS	42
Item 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	58
Item 3.	DEFAULTS UPON SENIOR SECURITIES	58
Item 4.	MINE SAFETY DISCLOSURES	58
Item 5.	OTHER INFORMATION	58
Item 6.	EXHIBITS	59
	SIGNATURES	61

Table of Contents

Special Note Regarding Forward-Looking Statement

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements contained in this Quarterly Report on Form 10-Q, other than statements of historical fact, are forward-looking statements. Forward-looking statements generally can be identified by the words “may,” “will,” “expect,” “believe,” “anticipate,” “intend,” “could,” “estimate,” or “continue,” and similar expressions. We have based these forward-looking statements largely on our current expectations and projections about future events, as well as trends that we believe may affect our financial condition, results of operations, business strategy, short-term and long-term business operations and objectives, and financial needs. These statements include, among other things:

•our beliefs regarding delivery traffic growth trends and demand for digital content and edge services;

•our expectations regarding revenue, costs, expenses, gross margin, non-generally accepted accounting principles (“Non-GAAP”) net income (loss), EBITDA, and Adjusted EBITDA and capital expenditures;

•our plans regarding investing in our content delivery network and Application Operations (“AppOps”), our coordinated complete solution to deliver instant, secure website applications, as well as other products and technologies;

•our beliefs regarding the competition within the digital edge platform industry;

•our beliefs regarding the growth of our business and how that impacts our liquidity and capital resources requirements;

•our expectations regarding headcount and our ability to recruit personnel;

•the impact of certain new accounting standards and guidance as well as the time and cost of continued compliance with existing rules and standards;

•our plans with respect to investments in marketable securities;

•our expectations and strategies regarding acquisitions;

•our expectations regarding litigation and other pending or potential disputes;

•our estimations regarding taxes and belief regarding our tax reserves;

•our beliefs regarding the use of Non-GAAP financial measures;

•our approach to identifying, attracting and keeping new and existing clients, our focus on core market growth segments where we have a right-to-win, as well as our expectations regarding client turnover;

•the sufficiency of our sources of funding;

•our beliefs regarding our interest rate risk;

•our beliefs regarding inflation risks;

•our beliefs regarding expense and productivity of and competition for our sales force;

•our beliefs regarding the significance of our large clients; and

•our beliefs regarding the impact of health epidemics and pandemics, including the outbreak of COVID-19, on our current and potential clients, our balance sheet, financial condition, and results of operations.

These forward-looking statements are subject to a number of risks, uncertainties and assumptions, including those described under the caption “Risk Factors” in Part II, Item 1A in this Quarterly Report on Form 10-Q and those discussed in other documents we file with the Securities and Exchange Commission (the “SEC”).

In addition, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, the future events and trends discussed in this Quarterly Report on Form 10-Q may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements.

The forward-looking statements contained herein are based on our current expectations and assumptions and on information available as of the date of the filing of this Quarterly Report on Form 10-Q. We undertake no obligation to revise or publicly release the results of any revision to these forward-looking statements, except as required by law. Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements.

Unless expressly indicated or the context requires otherwise, the terms “Edgio”, “we”, “us”, and “our” in this document refer to Edgio, Inc., a Delaware corporation, and, where appropriate, its wholly owned subsidiaries. All information is presented in thousands, except per share amounts, client count, headcount and where specifically noted.

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

Edgio, Inc.

Consolidated Balance Sheets

(In thousands, except per share data)


	September 30, 2022		December 31, 2021
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	59,306	$	41,918
Marketable securities	11,444		37,367
Accounts receivable, net	122,397		42,217
Income taxes receivable	59		61
Prepaid expenses and other current assets	28,775		13,036
Total current assets	221,981		134,599
Property and equipment, net	91,670		33,622
Operating lease right of use assets	6,680		6,338
Marketable securities, less current portion	40		40
Deferred income taxes	2,745		1,893
Goodwill	171,065		114,511
Intangible assets, net	67,738		14,613
Other assets	7,780		5,485
Total assets	$	569,699	$	311,101
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	39,755	$	11,631
Deferred revenue	6,357		3,266
Operating lease liability obligations	4,396		1,861
Income taxes payable	433		873
Other current liabilities	86,754		19,292
Total current liabilities	137,695		36,923
Convertible senior notes, net	122,416		121,782
Operating lease liability obligations, less current portion	10,511		9,616
Deferred income taxes	95		308
Deferred revenue, less current portion	2,938		116
Other long-term liabilities	710		777
Total liabilities	274,365		169,522
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; 221,583 and 134,337 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively	222		134
Common stock contingent consideration	16,300		—
Additional paid-in capital	797,508		576,807
Accumulated other comprehensive loss	(13,462)		(8,345)
Accumulated deficit	(505,234)		(427,017)
Total stockholders’ equity	295,334		141,579
Total liabilities and stockholders’ equity	$	569,699	$	311,101

The accompanying notes are an integral part of the unaudited consolidated financial statements.

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Edgio, Inc.

Unaudited Consolidated Statements of Operations

(In thousands, except per share data)


	Three months ended September 30,				Nine months ended September 30,
	2022		2021		2022		2021
Revenue	$	121,156	$	55,202	$	253,426	$	154,745
Cost of revenue:
Cost of services (1)	74,421		33,687		155,578		99,708
Depreciation — network	9,841		5,685		20,833		17,293
Total cost of revenue	84,262		39,372		176,411		117,001
Gross profit	36,894		15,830		77,015		37,744
Operating expenses:
General and administrative	22,198		10,532		64,958		30,944
Sales and marketing	14,428		5,987		33,001		21,619
Research and development	30,173		5,205		51,911		16,520
Depreciation and amortization	5,943		730		8,483		1,818
Restructuring charges	4,070		1,770		9,136		10,798
Total operating expenses	76,812		24,224		167,489		81,699
Operating loss	(39,918)		(8,394)		(90,474)		(43,955)
Other income (expense):
Interest expense	(1,317)		(1,308)		(3,945)		(3,899)
Interest income	140		17		200		104
Other, net	(1,082)		(209)		(2,941)		(864)
Total other expense	(2,259)		(1,500)		(6,686)		(4,659)
Loss before income taxes	(42,177)		(9,894)		(97,160)		(48,614)
Income tax expense (benefit)	440		211		(18,943)		718
Net loss	$	(42,617)	$	(10,105)	$	(78,217)	$	(49,332)

Net loss per share:
Basic	$	(0.19)	$	(0.08)	$	(0.46)	$	(0.39)
Diluted	$	(0.19)	$	(0.08)	$	(0.46)	$	(0.39)

Weighted-average shares used in per share calculation:
Basic	220,194		126,791		169,166		125,710
Diluted	220,194		126,791		169,166		125,710

(1) Cost of services excludes amortization related to intangible assets, including technology, customer relationships, and trade names, which are included in depreciation and amortization in total operating expenses.

The accompanying notes are an integral part of the unaudited consolidated financial statements.

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Edgio, Inc.

Unaudited Consolidated Statements of Comprehensive Loss

(In thousands)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Net loss	$	(42,617)	$	(10,105)	$	(78,217)	$	(49,332)
Other comprehensive loss, net of tax:
Unrealized gain on investments	46		3		13		32
Foreign currency translation loss	(2,095)		(529)		(5,130)		(1,012)
Other comprehensive loss	(2,049)		(526)		(5,117)		(980)
Comprehensive loss	$	(44,666)	$	(10,631)	$	(83,334)	$	(50,312)

The accompanying notes are an integral part of the unaudited consolidated financial statements.

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Edgio, Inc.

Unaudited Consolidated Statements of Stockholders' Equity

(In thousands)

For the Three Months Ended September 30, 2022


	Common Stock
	Shares	Amount		Common Stock Contingent Consideration		Additional Paid-In Capital		Accumulated Other Comprehensive Loss		Accumulated Deficit		Total
Balance June 30, 2022	219,706	$	220	$	16,900	$	793,522	$	(11,413)	$	(462,617)	$	336,612

Net loss	—	—		—		—		—		(42,617)		(42,617)
Change in unrealized gain on available-for-sale investments, net of taxes	—	—		—		—		46		—		46
Foreign currency translation adjustment, net of taxes	—	—		—		—		(2,095)		—		(2,095)
Exercise of common stock options	320	1		—		589		—		—		590
Vesting of restricted stock units	1,315	1		—		(1)		—		—		—
Restricted stock units surrendered in lieu of withholding taxes	(446)	—		—		(1,562)		—		—		(1,562)


Share-based compensation	688	—		—		4,960		—		—		4,960



Issuance of common stock for business acquisition	—	—		—		—		—		—		—
Adjustment to common stock contingent consideration related to business acquisition	—	—		(600)		—		—		—		(600)

Balance September 30, 2022	221,583	$	222	$	16,300	$	797,508	$	(13,462)	$	(505,234)	$	295,334

For the Three Months Ended September 30, 2021


	Common Stock
	Shares	Amount		Additional Paid-In Capital		Accumulated Other Comprehensive Loss		Accumulated Deficit		Total
Balance June 30, 2021	126,705	$	127	$	550,205	$	(7,965)	$	(411,483)	$	130,884

Net loss	—	—		—		—		(10,105)		(10,105)
Change in unrealized gain on available-for-sale investments, net of taxes	—	—		—		3		—		3
Foreign currency translation adjustment, net of taxes	—	—		—		(529)		—		(529)

Vesting of restricted stock units	306	—		—		—		—		—
Restricted stock units surrendered in lieu of withholding taxes	(77)	—		(217)		—		—		(217)


Share-based compensation	—	—		2,854		—		—		2,854


Issuance of common stock for business acquisition	6,878	7		18,426		—		—		18,433
Balance September 30, 2021	133,812	$	134	$	571,268	$	(8,491)	$	(421,588)	$	141,323

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For the Nine Months Ended September 30, 2022


	Common Stock			Common Stock Contingent Consideration		Additional Paid-In Capital		Accumulated Other Comprehensive Loss		Accumulated Deficit		Total
	Shares	Amount
Balance December 31, 2021	134,337	$	134	$	—	$	576,807	$	(8,345)	$	(427,017)	$	141,579

Net loss	—	—		—		—		—		(78,217)		(78,217)
Change in unrealized gain on available-for-sale investments, net of taxes	—	—		—		—		13		—		13
Foreign currency translation adjustment, net of taxes	—	—		—		—		(5,130)		—		(5,130)
Exercise of common stock options	3,515	4		—		8,629		—		—		8,633
Vesting of restricted stock units	2,837	3		—		(3)		—		—		—
Restricted stock units surrendered in lieu of withholding taxes	(934)	—		—		(3,371)		—		—		(3,371)
Issuance of common stock under employee stock purchase plan	280	—		—		728		—		—		728

Share-based compensation	688	—		—		17,300		—		—		17,300


Capital contributions	—	—		—		1,884		—		—		1,884
Issuance of common stock for business acquisition	76,968	77		—		186,119		—		—		186,196
Common stock contingent consideration related to business acquisition, net adjustment	—	$	—	$	16,300	$	—	$	—	$	—	$	16,300
Issuance of common stock for employee compensation arrangements	3,892	4		—		9,415		—		—		9,419
Balance September 30, 2022	221,583	$	222	$	16,300	$	797,508	$	(13,462)	$	(505,234)	$	295,334

For the Nine Months Ended September 30, 2021


	Common Stock			Additional Paid-In Capital		Accumulated Other Comprehensive Loss		Accumulated Deficit		Total
	Shares	Amount
Balance December 31, 2020	123,653	$	124	$	556,512	$	(7,511)	$	(373,933)	$	175,192
Cumulative effect of adoption of new accounting pronouncement	—	—		(21,733)		—		1,677		(20,056)
Net loss	—	—		—		—		(49,332)		(49,332)
Change in unrealized gain on available-for-sale investments, net of taxes	—	—		—		32		—		32
Foreign currency translation adjustment, net of taxes	—	—		—		(1,012)		—		(1,012)
Exercise of common stock options	1,935	2		4,545		—		—		4,547
Vesting of restricted stock units	1,401	1		(1)		—		—		—
Restricted stock units surrendered in lieu of withholding taxes	(410)	—		(1,314)		—		—		(1,314)
Issuance of common stock under employee stock purchase plan	355	—		913		—		—		913

Share-based compensation	—	—		13,920		—		—		13,920


Issuance of common stock for business acquisition	6,878	$	7	$	18,426	$	—	$	—	$	18,433
Balance September 30, 2021	133,812	$	134	$	571,268	$	(8,491)	$	(421,588)	$	141,323

The accompanying notes are an integral part of the unaudited consolidated financial statements.

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Edgio, Inc.

Unaudited Consolidated Statements of Cash Flows

(In thousands)


	Nine Months Ended September 30,
	2022		2021
Operating activities
Net loss	$	(78,217)	$	(49,332)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization	29,316		19,111
Share-based compensation	22,656		16,477
Foreign currency remeasurement loss (gain)	614		(66)
Deferred income taxes	(19,117)		(198)
Gain on sale of property and equipment	(47)		(219)
Accounts receivable charges	671		1,047
Amortization of premium on marketable securities	526		1,597
Noncash interest expense	634		604
Changes in operating assets and liabilities, net of amounts acquired in business combinations:
Accounts receivable	(33,136)		(13,037)
Prepaid expenses and other current assets	(1,521)		1,678
Income taxes receivable	(721)		4
Other assets	(200)		2,017
Accounts payable and other current liabilities	52,437		8,163
Deferred revenue	4,831		4,640
Income taxes payable	(424)		210
Other long-term liabilities	(57)		(26)
Net cash used in operating activities	(21,755)		(7,330)
Investing activities
Purchases of marketable securities	(19,781)		(44,838)
Sale and maturities of marketable securities	45,191		84,000
Purchases of property and equipment	(20,516)		(11,909)
Proceeds from sale of property and equipment	47		219
Cash acquired in (used for) acquisition of business	30,866		(30,968)
Net cash provided by (used in) investing activities	35,807		(3,496)
Financing activities


Payment of debt issuance costs	—		(30)
Payments of employee tax withholdings related to restricted stock vesting	(3,371)		(1,315)
Proceeds from employee stock plans	9,361		5,460
Net cash provided by financing activities	5,990		4,115
Effect of exchange rate changes on cash and cash equivalents	(2,654)		(499)
Net increase (decrease) in cash and cash equivalents	17,388		(7,210)
Cash and cash equivalents, beginning of period	41,918		46,795
Cash and cash equivalents, end of period	$	59,306	$	39,585
Supplemental disclosure of cash flow information
Cash paid during the period for interest	$	4,405	$	4,460
Cash paid during the period for income taxes, net of refunds	$	1,202	$	714
Common stock issued in connection with acquisition of business	$	186,196	$	18,433
Common stock contingent consideration related to business combination	$	16,300	$	—
Common stock issued for employee compensation arrangements	$	9,419	$	—
Property and equipment remaining in accounts payable and other current liabilities	$	1,298	$	1,166

The accompanying notes are an integral part of the unaudited consolidated financial statements.

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Edgio, Inc.

Notes to Unaudited Consolidated Financial Statements

September 30, 2022

1. Nature of Business

Edgio, Inc. (“Edgio”), a provider of content delivery services, edge security, video services, AppOps and Jamstack application architecture, provides powerful tools to optimize and deliver digital experiences. Edgio offers one of the largest, best-optimized private networks coupled with a global team of industry experts to provide edge services that are fast, secure and reliable.

We were incorporated in Delaware in 2003, and have operated in the Phoenix metropolitan area since 2001 and elsewhere throughout the United States since 2003. We began international operations in 2004. On June 15, 2022, we changed our corporate name from Limelight Networks, Inc. to Edgio, Inc.

On June 15, 2022, Edgio completed the acquisition (the “Edgecast Acquisition”) of all of the outstanding shares of common stock of Edgecast Inc., a California corporation (“Edgecast”), and certain Edgecast-related businesses and assets from College Parent, L.P., a Delaware limited partnership (“College Parent”), for total purchase consideration of $202,446. The total purchase consideration included 76,920 shares of our common stock. Edgecast is a leading provider of edge security, content delivery and video services. Edgio accounted for the acquisition in accordance with ASC 805, Business Combinations, which requires the assets acquired and liabilities assumed to be recognized on the balance sheet at their fair values as of the acquisition date.

2. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited interim consolidated financial statements have been prepared pursuant to the rules and regulations of the SEC. They do not include all of the information and footnotes required by U.S. generally accepted accounting principles (“U.S. GAAP”) for complete financial statements. Such interim financial information is unaudited but reflects all adjustments that are, in the opinion of management, necessary for the fair presentation of the interim periods presented and of a normal recurring nature. This quarterly report on Form 10-Q should be read in conjunction with our audited financial statements and footnotes included in our annual report on Form 10-K for the fiscal year ended December 31, 2021. All information is presented in thousands, except per share amounts and where specifically noted.

The consolidated financial statements include accounts of Edgio and our wholly owned subsidiaries. All significant intercompany balances and transactions have been eliminated. In addition, certain other reclassifications have been made to prior year amounts to conform to the current year presentation.

Use of Estimates

The preparation of the consolidated financial statements and related disclosures in conformity with U.S. GAAP requires management to make judgments, assumptions, and estimates that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results and outcomes may differ from those estimates. The results of operations presented in this quarterly report on Form 10-Q are not necessarily indicative of the results that may be expected for the year ending December 31, 2022, or for any future periods.

Recent Accounting Standards

Adopted Accounting Standards

None

Recently Issued Accounting Standards

None

Significant Accounting Policies

There have been no changes in the significant accounting policies from those that were disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021.

3. Business Acquisitions

Edgecast Acquisition

On June 15, 2022, we closed the acquisition of 100% of the equity interests of Edgecast for an estimated total purchase consideration of $202,446.

The following table presents the allocation of the estimated purchase price consideration for Edgecast:


Consideration:
Common stock	$	195,565
Common stock - contingent consideration	16,300
Less: Consideration allocated to employee compensation arrangements	(9,419)
Total consideration allocated to Edgecast Acquisition	$	202,446

The purchase price was defined within the purchase agreement as $270,000 in Edgio common stock at a reference price of $4.1168 (determined using a 30-day volume-weighted average price (“VWAP”) of Edgio’s common stock price prior to the execution of the purchase agreement), and adjustments for customary working capital adjustments. The fair value of our common stock consideration of 80,812 shares, is based on the opening price of our common stock of $2.42 per share on the acquisition closing date. Inclusive within the common stock consideration, and pursuant to the purchase agreement, Edgio issued 7,287 shares of common stock in exchange for cash from College Parent of $30,000. As the economic substance of this issuance was to provide additional cash to Edgecast for liabilities that existed prior to the business combination and the transaction occurred on June 15, 2022, Edgio concluded that this was part of the business combination, and therefore, should be considered as part of the consideration transferred in exchange for the acquisition of Edgecast. The estimated purchase consideration was also adjusted for 3,892 shares issued for employee compensation arrangements accounted for as separate transactions as further discussed below.

The purchase agreement contains an “earn-out” or contingent consideration provision in the event that the price of our common stock exceeds certain thresholds during the period ending on the third anniversary of the acquisition date of the transaction (the “Earnout Period”), Edgio will be required to issue approximately up to an additional 12,685 shares of our common stock to College Parent (the “common stock contingent consideration”). If during the Earnout Period, the closing share price of our common stock exceeds the following share prices for 10 trading days in any 30 consecutive trading day period the following number of shares of our common stock will be issued: (a) approximately 5,398 shares of our common stock if the closing share price of our common stock exceeds $6.1752 per share, (b) approximately 4,048 shares of our common stock if the closing share price of our common stock exceeds $8.2336 per share, and (c) approximately 3,239 shares of our common stock if the closing share price of our common stock exceeds $10.2920 per share. Edgio estimated that the fair value of the common stock contingent consideration, with the assistance of a third-party valuation specialist using a Monte Carlo simulation, and initially concluded it was $16,900 as of the acquisition date. During the three months ended September 30, 2022, Edgio updated the preliminary fair value of the contingent consideration from $16,900 to $16,300 as a measurement period adjustment, which impacted stockholders' equity and goodwill.

As a result of the Edgecast Acquisition, certain cash awards that existed for Edgecast’s employees require the transferred employee to provide services to Edgio in the post-combination period in order for the cash award to be earned. When the awards are earned, Edgio will pay the employees the amount earned and subsequently be reimbursed by College Parent or College Parent will directly pay the employee the amount earned. Edgio considered whether the employee awards are part of the Edgecast Acquisition, and part of purchase consideration, or separate transactions, and not part of purchase accounting. Under ASC 805, a transaction entered into by or on behalf of the acquirer or primarily for the benefit of the acquirer or the combined entity, rather than primarily for the benefit of the acquiree (or its former owners) before the combination, is likely to be a separate transaction. The employee awards represent compensation for post-combination services rendered to Edgio and the reimbursement right was initiated by Edgio for the future economic benefit of the combined entity. Accordingly, Edgio concluded the employee awards represent transactions separate from the Edgecast Acquisition. Edgio allocated $9,419 of the total consideration transferred to College Parent to the employee compensation arrangements based on the post-combination fair value of the employee awards. As service is required to be rendered for the award to be earned, Edgio will recognize expense as the employee performs service. The employee compensation arrangements related to post-combination services and the related reimbursement right resulted in the recognition of $6,573 in prepaid expenses and other current assets and $2,846 in other assets on June 15, 2022.

During the three and nine months ended September 30, 2022, Edgio recorded $3,865 and $4,863, in compensation expense to the unaudited consolidated statements of operations as a result of the employee compensation arrangements,

respectively. Of the $3,865 of compensation expense, $674, $184, $292, and $2,715 was recorded to cost of services, general and administrative, sales and marketing, and research and development, respectively. Of the $4,863 of compensation expense, $880, $362, $333, and $3,288, was recorded to cost of services, general and administrative, sales and marketing, and research and development, respectively. The employee compensation arrangements are time-based vesting only and the unrecognized compensation expense was $4,556 as of September 30, 2022, of which $1,572 is expected to be recognized during the remainder of 2022, $2,559 in 2023, and the remainder thereafter.

The Edgecast Acquisition was accounted for under the acquisition method of accounting and the operating results of Edgecast have been included in our consolidated financial statements as of the acquisition date. Under the acquisition method of accounting, the aggregate amount of consideration paid by us was allocated to Edgecast’s net tangible assets and intangible assets based on their estimated fair values as of the acquisition date. The excess of the purchase price over the value of the net tangible assets and intangible assets was recorded to goodwill. The factors contributing to the recognition of goodwill were based upon our conclusion that there are strategic and synergistic benefits that are expected to be realized from the acquisition. Goodwill, which is non-deductible for tax purposes, represents expected synergies and the assembled workforce at the time of the acquisition.

The following table summarizes the preliminary allocation of the purchase consideration to the acquisition date fair value of the assets, including intangible assets, liabilities assumed and related goodwill acquired:


Cash (inclusive of $30,000 as described above)	$	30,037
Accounts receivable (a)	47,765
Prepaid expenses and other current assets (a)	6,835
Property and equipment (a)	61,718
Operating lease right of use assets	1,365
Goodwill (a)	58,512
Intangible assets
Customer relationships	11,000
Technology	49,000
Other assets	393
Total assets acquired	266,625
Accounts payable and accrued liabilities	6,917
Deferred revenue	1,060
Operating lease liability obligations	3,071
Other current liabilities (a)	32,159
Operating lease liability obligations, less current portion	2,531
Deferred income taxes	18,433
Deferred revenue, less current portion	8
Total liabilities	64,179
Total purchase consideration	$	202,446

(a) During the third quarter of 2022, we identified measurement period adjustments related to preliminary fair value estimates. The total adjustments included a decrease to property and equipment of $6,348, a decrease to other current liabilities of $1,204, a decrease to accounts receivable of $788, and an increase to prepaid expenses and other current assets of $166. Measurement period adjustments are recognized in the reporting period in which the adjustments are determined and calculated as if the accounting had been completed at the acquisition date.

The fair values assigned to tangible assets acquired and liabilities assumed are based on management’s estimates and assumptions and certain amounts noted above are preliminary and subject to change during the remaining measurement period as we obtain additional information for the preliminary fair value estimates of the assets acquired and liabilities assumed. The primary preliminary estimates that are not yet finalized relate to certain assets and liabilities assumed, identifiable intangible assets, deferred income taxes and residual goodwill. Edgio expects to finalize the valuation as soon as practicable, but not later than one year from the acquisition date.

The fair value of acquired property and equipment was valued using the market approach and indirect cost approach and primarily consists of computer and networking equipment. The weighted-average depreciation period for the acquired property and equipment was 2.9 years at the acquisition date. The fair value of the acquired intangible assets was determined as follows, customer relationships, utilizing the excess earnings method, and technology, utilizing the relief from royalty method. The weighted-average amortization period of the acquired intangible assets was 8.5 years for customer relationships and 4.0 years for technology at the acquisition date. The deferred income tax liability was $18,433, primarily as a result of the fair value attributable to the identifiable intangible assets.

During the three months ended September 30, 2022, Edgecast represented $62,231 of our total revenue and $8,306 of loss included in our consolidated net loss. During the nine months ended September 30, 2022, Edgecast represented $75,005 of our total revenue and $8,293 of loss included in our consolidated net loss.

Transaction costs incurred by us in connection with the Edgecast Acquisition were $4,520 and $23,902 for the three and nine months ended September 30, 2022, respectively, and were recorded within general and administrative expenses in our unaudited consolidated statements of operations.

Unaudited Pro Forma Financial Information

The following unaudited pro forma combined financial information presents combined results of Edgio and Edgecast as if the acquisition of Edgecast has occurred on January 1, 2021:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Revenue	$	121,156	$	134,706	$	399,958	$	401,810
Net loss	$	(33,635)	$	(33,541)	$	(93,096)	$	(137,415)

These unaudited pro forma combined financial statements include adjustments to reflect fair value adjustments related to property and equipment depreciation, customer relationships and technology amortization, compensation expense related to the employee compensation arrangements, exclusion of interest income related to loan receivables settled at the acquisition date, and the effects of the adjustments on income taxes and net loss. Additionally, the pro forma adjustments include adjustments to reflect non-recurring transaction costs of $4,520 and $23,902, incurred in the three and nine months ended September 30, 2022, respectively, and non-recurring restructuring charges related to the Edgecast Acquisition of $1,090 and $4,804 incurred in the three and nine months ended September 30, 2022, respectively, as of the beginning of the comparable prior reporting period.

The pro forma financial information is not intended to represent or be indicative of the actual results of operations of the combined business that would have been reported had the acquisition of Edgecast been completed at the beginning of the fiscal year 2021, nor is it representative of future operating results of Edgio.

Moov Acquisition

In September 2021, we closed the acquisition of 100% of the equity interests of Moov Corporation (“Moov”), a California corporation doing business as Layer0, a sub-scale SaaS based application acceleration and developer support platform, for total purchase consideration of $52,487. The total purchase consideration included $34,054 in cash, and 6,878 shares of our common stock valued at $18,433 at the acquisition date.

The following table presents the allocation of the purchase price for Moov:


Consideration:
Cash	$	34,054
Common stock	18,433
Total consideration	$	52,487

The fair value of our common stock consideration of 6,878 shares, is based on the closing price of our common stock of $2.68 per share on the acquisition closing date.

The following table summarizes the final allocation of the purchase consideration to the acquisition date fair value of the assets, including intangible assets, liabilities assumed and related goodwill acquired:


Cash	$	3,130
Accounts receivable	2,514

Prepaid expenses and other current assets (a)	1,052



Goodwill (a)	35,669
Intangible assets:

Trade name	91
Customer relationships	7,090
Technology	8,480

Total assets acquired	58,026
Accounts payable and accrued liabilities	2,432
Deferred revenue	3,107







Total liabilities	5,539
Total purchase consideration	$	52,487