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llnw-20210211

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):

February 11, 2021

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 February 11, 2021, Limelight Networks, Inc. issued a press release regarding its financial results for the fourth quarter and full year ended December 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						Limelight Networks, Inc. Press Release dated February 11, 2021 (furnished herewith).
104.0						Cover Page Interactive Data File (embedded within the Inline XBRL document)

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: February 11, 2021

By:

/s/ Michael DiSanto

Michael DiSanto

Chief Administrative and Legal Officer & Secretary

Document

Exhibit 99.1

February 11, 2021

Limelight Networks Reports Fourth-quarter and Full-year 2020 Results

•Record annual revenue of $230.2 million increases 15% from 2019

•2020 GAAP net loss of $(19.3) million versus $(16.0) million in 2019

•Full-year Adjusted EBITDA of $24.5 million rises 35% from 2019

•Bob Lyons named new President and Chief Executive Officer

Limelight Networks, Inc. (Nasdaq: LLNW) (Limelight), a leading provider of video delivery and edge cloud services, today reported results for its fourth quarter and year ended December 31, 2020.

Fourth-quarter Results

For the 2020 fourth quarter, the company generated revenue of $55.4 million, compared to $60.1 million in the fourth quarter of 2019.

GAAP net loss was $(8.3) million, or $(0.07) per basic share for the 2020 fourth quarter, compared to net income of $2.5 million, or $0.02 per basic share in the 2019 period. GAAP net loss included $2.2 million of interest expense related to Limelight’s senior convertible notes issued during the 2020 third quarter.

Non-GAAP net loss was $(3.8) million or $(0.03) per basic share for the 2020 fourth quarter, versus non-GAAP net income of $5.8 million, or $0.05 per basic share in 2019. The non-GAAP net loss excluded $1.0 million of interest expense related to the company’s convertible notes noted above.

Fourth-quarter adjusted EBITDA was $3.6 million, versus $11.4 million for the fourth quarter of 2019.

“I am excited to join Limelight, a company with an impressive list of blue-chip customers, in a large and growing market with a unique set of capabilities and solid foundation to build on,” said Bob Lyons, President and Chief Executive Officer. “Our global network and connectivity to billions of people, combined with the digital transformation creates enormous opportunity for us in edge content delivery, computing and cybersecurity.”

“Our immediate focus is the challenges we faced in the fourth quarter, specifically top-line growth and the resulting pressure on margins. Quite frankly, performance in these areas is not where it should be. I believe in our ability to close the gaps and position Limelight as a leader delivering edge-based solutions. While there is no doubt much has been accomplished, I know that our best days are ahead of us. I am confident in the direction we are headed, in our ability to better execute on a refined strategy and pursue rule-of-40 performance,” said Lyons.

Full-year Results

For the full year ended December 31, 2020, Limelight reported revenue of $230.2 million, a 15% increase from $200.6 million in 2019.

The company’s 2020 GAAP net loss was $(19.3) million, or $(0.16) per basic share, versus a net loss of $(16.0) million, or $(0.14) per basic share, in 2019. The 2020 GAAP net loss included $3.8 million of interest expense related to Limelight’s senior convertible notes noted above.

Exhibit 99.1

Non-GAAP net loss was $(1.6) million, or $(0.01) per basic share, for the year ended December 31, 2020, compared to non-GAAP net loss of $(2.3) million, or $(0.02) per basic share, in 2019.

Limelight reported adjusted EBITDA of $24.5 million for 2020, compared to $18.1 million in 2019.

The company does not plan to issue guidance for 2021 at this time. With new leadership and active efforts underway to evaluate all aspects of the business strategy and cost structure, the focus is on immediate and long-term steps to position the company as a leader delivering edge-based solutions. Additional details will be provided as the company formalizes these plans.

Said Lyons, “Limelight delivered a successful year on multiple fronts – but we have work to do. Our industry is on an upward trajectory – and we enter 2021 laser-focused on building a platform for profitable growth.”

Exhibit 99.1

Financial Tables

Limelight Networks, Inc.

Condensed Consolidated Balance Sheets

(In thousands, except per share data)


	December 31, 2020		September 30, 2020	December 31, 2019
	(Unaudited)		(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	46,795	75,169	$	18,335
Marketable securities	76,928		49,623	—
Accounts receivable, net	31,675		42,222	34,476
Income taxes receivable	68		81	82
Prepaid expenses and other current assets	15,588		12,561	9,920
Total current assets	171,054		179,656	62,813
Property and equipment, net	46,418		47,493	46,136
Operating lease right of use assets	10,150		10,844	12,842
Marketable securities, less current portion	40		40	40
Deferred income taxes	1,530		1,428	1,319
Goodwill	77,753		77,126	77,102
Other assets	7,233		7,459	9,117
Total assets	$	314,178	324,046	$	209,369
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	4,587	12,437	$	12,020
Deferred revenue	933		797	976
Operating lease liability obligations	2,465		2,654	2,056
Income taxes payable	253		153	178
Other current liabilities	17,560		17,584	13,398
Total current liabilities	25,798		33,625	28,628
Convertible senior notes, net	100,945		99,937	—
Operating lease liability obligations, less current portion	11,265		11,745	13,488
Deferred income taxes	279		251	239
Deferred revenue, less current portion	220		230	161
Other long-term liabilities	479		579	316
Total liabilities	138,986		146,367	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; 123,653, 122,824 and 118,368 shares issued and outstanding at December 31, 2020, September 30, 2020 and December 31, 2019, respectively	124		123	118
Additional paid-in capital	556,512		552,559	530,285
Accumulated other comprehensive loss	(7,511)		(9,379)	(9,210)
Accumulated deficit	(373,933)		(365,624)	(354,656)
Total stockholders’ equity	175,192		177,679	166,537
Total liabilities and stockholders’ equity	$	314,178	324,046	$	209,369

Exhibit 99.1

Limelight Networks, Inc.

Condensed Consolidated Statements of Operations

(In thousands, except per share data)

(Unaudited)


	Three Months Ended													Twelve Months Ended
	Dec. 31,			Sept. 30,			Percent		Dec. 31,			Percent		Dec. 31,			Dec. 31,			Percent
	2020			2020			Change		2019			Change		2020			2019			Change
Revenue	$	55,394		$	59,243		(6)	%	$	60,129		(8)	%	$	230,194		$	200,634		15	%
Cost of revenue:
Cost of services (1)	33,103			31,905			4	%	28,586			16	%	125,509			99,897			26	%
Depreciation — network	5,468			5,602			(2)	%	5,288			3	%	21,579			19,193			12	%
Total cost of revenue	38,571			37,507			3	%	33,874			14	%	147,088			119,090			24	%
Gross profit	16,823			21,736			(23)	%	26,255			(36)	%	83,106			81,544			2	%
Gross profit percentage	30.4		%	36.7		%			43.7		%			36.1		%	40.6		%
Operating expenses:
General and administrative (1)	7,464			7,751			(4)	%	7,554			(1)	%	31,284			30,785			2	%
Sales and marketing (1)	9,666			10,456			(8)	%	10,399			(7)	%	42,945			43,078			—	%
Research and development (1)	5,066			5,425			(7)	%	5,459			(7)	%	21,680			22,534			(4)	%
Depreciation and amortization	542			384			41	%	328			65	%	1,591			872			82	%
Total operating expenses	22,738			24,016			(5)	%	23,740			(4)	%	97,500			97,269			—	%
Operating (loss) income	(5,915)			(2,280)			NM		2,515			NM		(14,394)			(15,725)			NM
Other income (expense):
Interest expense	(2,183)			(1,674)			NM		(45)			NM		(3,939)			(76)			NM
Interest income	29			10			NM		25			NM		69			427			NM
Other, net	28			25			NM		169			NM		(368)			80			NM
Total other (expense) income	(2,126)			(1,639)			NM		149			NM		(4,238)			431			NM
(Loss) income before income taxes	(8,041)			(3,919)			NM		2,664			NM		(18,632)			(15,294)			NM
Income tax expense	268			66			NM		206			NM		645			750			NM
Net (loss) income	$	(8,309)		$	(3,985)		NM		$	2,458		NM		$	(19,277)		$	(16,044)		NM

Net (loss) income per share:
Basic	$	(0.07)		$	(0.03)				$	0.02				$	(0.16)		$	(0.14)
Diluted	$	(0.07)		$	(0.03)				$	0.02				(0.16)			(0.14)

Weighted average shares used in per share calculation:
Basic	123,225			122,363					117,603					121,196			115,890
Diluted	123,225			122,363					123,801					121,196			115,890

(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						Twelve Months Ended
	Dec. 31,		Sept. 30,		Dec. 31,		Dec. 31,		Dec. 31,
	2020		2020		2019		2020		2019
Share-based compensation:
Cost of services	$	313	$	130	$	376	$	1,998	$	1,495
General and administrative	1,840		1,272		1,858		7,611		8,098
Sales and marketing	764		206		597		3,519		2,263
Research and development	562		315		484		2,589		1,922
Total share-based compensation	$	3,479	$	1,923	$	3,315	$	15,717	$	13,778

Depreciation and amortization:
Network-related depreciation	$	5,468	$	5,602	$	5,288	$	21,579	$	19,193
Other depreciation and amortization	542		384		328		1,591		872
Total depreciation and amortization	$	6,010	$	5,986	$	5,616	$	23,170	$	20,065

Net increase (decrease) in cash, cash equivalents and marketable securities:	$	(1,069)	$	106,592	$	285	$	105,388	$	(32,131)

End of period statistics:
Approximate number of active customers	527		534		599		527		599

Number of employees and employee equivalents	618		620		610		618		610

Exhibit 99.1

Limelight Networks, Inc.

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)


	Three Months Ended						Twelve Months Ended
	Dec. 31,		Sept. 30,		Dec. 31,		Dec. 31,		Dec. 31,
	2020		2020		2019		2020		2019
Operating activities
Net (loss) income	$	(8,309)	$	(3,985)	$	2,458	$	(19,277)	$	(16,044)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization	6,010		5,986		5,616		23,170		20,065
Share-based compensation	3,479		1,923		3,315		15,717		13,778
Foreign currency remeasurement (gain) loss	327		27		79		214		(25)
Deferred income taxes	(14)		(95)		300		(94)		270
Loss (gain) on sale of property and equipment	7		(1)		—		6		(56)
Accounts receivable charges	325		163		519		801		1,793
Amortization of premium on marketable securities	519		87		1		606		30
Realized loss on marketable securities	(3)		—		9		(3)		9
Noncash interest expense	1,070		868		—		1,938		—
Changes in operating assets and liabilities:
Accounts receivable	10,221		2,862		823		2,000		(10,228)
Prepaid expenses and other current assets	(3,038)		(2,232)		(324)		(5,717)		(1,101)
Income taxes receivable	16		(10)		(3)		19		40
Other assets	258		757		(1,547)		2,762		(4,188)
Accounts payable and other current liabilities	(9,228)		1,222		(2,383)		(1,069)		1,292
Deferred revenue	126		(172)		(232)		17		(789)
Income taxes payable	86		(17)		(143)		71		61
Payments related to litigation, net	—		—		—		—		(3,040)
Other long term liabilities	(99)		276		15		167		(121)
Net cash provided by operating activities	1,753		7,659		8,503		21,328		1,746
Investing activities
Purchases of marketable securities	(36,064)		(52,690)		—		(88,754)		(10,279)
Sale and maturities of marketable securities	8,272		2,900		3,211		11,172		35,364
Purchases of property and equipment	(2,957)		(7,180)		(10,480)		(25,085)		(34,704)
Proceeds from sale of property and equipment	1		1		—		2		51
Net cash used in investing activities	(30,748)		(56,969)		(7,269)		(102,665)		(9,568)
Financing activities
Proceeds from issuance of debt, net	—		121,600		—		121,600		—
Purchase of capped calls	—		(16,413)		—		(16,413)		—
Payment of debt issuance costs	(75)		(784)		—		(859)		—
Payment of employee tax withholdings related to restricted stock vesting	(891)		(1,041)		(1,079)		(4,878)		(3,607)
Proceeds from employee stock plans	1,377		2,598		3,290		10,068		4,406
Net cash provided by financing activities	411		105,960		2,211		109,518		799
Effect of exchange rate changes on cash and cash equivalents	210		319		58		279		(25)
Net increase (decrease) in cash and cash equivalents	(28,374)		56,969		3,503		28,460		(7,048)
Cash and cash equivalents, beginning of period	75,169		18,200		14,832		18,335		25,383
Cash and cash equivalents, end of period	$	46,795	$	75,169	$	18,335	$	46,795	$	18,335

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 non-cash interest expense. 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,

Exhibit 99.1

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.

Exhibit 99.1

Limelight Networks, Inc.

Reconciliation of U.S. GAAP Net Income (Loss) to Non-GAAP Net Income (Loss)

(In thousands)

(Unaudited)


	Three Months Ended												Twelve Months Ended
	December 31, 2020				September 30, 2020				December 31, 2019				December 31, 2020				December 31, 2019
	Amount		Per Share		Amount		Per Share		Amount		Per Share		Amount		Per Share		Amount		Per Share
U.S. GAAP net (loss) income	$	(8,309)	$	(0.07)	$	(3,985)	$	(0.03)	$	2,458	$	0.02	$	(19,277)	$	(0.16)	$	(16,044)	$	(0.14)
Share-based compensation	3,479		0.03		1,923		0.02		3,315		0.03		15,717		0.13		13,778		0.12
Noncash interest expense	1,070		0.01		868		0.01		—		—		1,938		0.02		—		—
Non-GAAP net (loss) income	$	(3,760)	$	(0.03)	$	(1,194)	$	(0.01)	$	5,773	$	0.05	$	(1,622)	$	(0.01)	$	(2,266)	$	(0.02)

Weighted average shares used in per share calculation:			123,225				122,363				117,603				121,196				115,890

Limelight Networks, Inc.

Reconciliation of U.S. GAAP Net Income (Loss) to EBITDA to Adjusted EBITDA

(In thousands)

(Unaudited)


	Three Months Ended						Twelve Months Ended
	December 31,		September 30,		December 31,		December 31,		December 31,
	2020		2020		2019		2020		2019
U.S. GAAP net (loss) income	$	(8,309)	$	(3,985)	$	2,458	$	(19,277)	$	(16,044)
Depreciation and amortization	6,010		5,986		5,616		23,170		20,065
Interest expense	2,183		1,674		45		3,939		76
Interest and other (income) expense	(57)		(35)		(194)		299		(507)
Income tax expense	268		66		206		645		750
EBITDA	$	95	$	3,706	$	8,131	$	8,776	$	4,340
Share-based compensation	3,479		1,923		3,315		15,717		13,778
Adjusted EBITDA	$	3,574	$	5,629	$	11,446	$	24,493	$	18,118

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 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

Exhibit 99.1

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 February 11, 2021, 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, and follow us on Twitter, Facebook and LinkedIn.

Source: Limelight Networks

CONTACT:

Limelight Networks, Inc.

Dan Boncel, 602-850-4810

ir@llnw.com

Ticker Slug:

Ticker: LLNW

Exchange: NASDAQ