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LIMELIGHT NETWORKS, INC. Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: November 9, 2011 04:17PM

LIMELIGHT NETWORKS, INC. (LLNW) filed Quarterly Report for the period ended 2011-09-30. Limelight Networks Inc. has a market cap of $360 million; its shares were traded at around $3.16 with and P/S ratio of 1.9.



Highlight of Business Operations:

Historically, we have derived a portion of our revenue from outside of the United States. Our international revenue has grown recently, and we expect this trend to continue as we focus on our strategy of expanding our network and customer base internationally. For the year ended December 31, 2010, revenue derived from customers outside North America accounted for approximately 27% of our total revenue. For the year ended December 31, 2010 we derived approximately 57% of our international revenue from EMEA and approximately 43% of our international revenue from Asia Pacific. For the three month periods ended September 30, 2011 and 2010, revenue derived from customers outside North America accounted for approximately 32% and 30%, respectively, of our total revenue. For the nine month periods ended September 30, 2011 and 2010 revenue derived from customers outside North America accounted for approximately 31% and 28%, respectively, of our total revenue. For the three and nine month periods ended September 30, 2011, we derived approximately 46% and 50%, respectively, of our international revenue from EMEA and approximately 54% and 50%, respectively, of our international revenue from Asia Pacific. We expect foreign revenue to continue to increase in absolute dollars in 2011. Our international business is managed as a single-geographic segment, and we report our financial results on this basis.

Revenue increased 6%, or $2.4 million, to $42.4 million for the three months ended September 30, 2011 as compared to $40.0 million for the three months ended September 30, 2010. The increase in revenue for the three month period ended September 30, 2011 compared to the same period in the prior year was primarily attributable to an increase in our value-added services revenue of approximately $5.1 million. Our value-added services revenue, which collectively refers to our SaaS solutions for mobility, web and video content management, web application acceleration, cloud storage, and consulting, includes revenue from the date of acquisition of Delve, Clickability and AcceloWeb. The increase in value-added services revenue is primarily attributable to increases in our web content management, storage, video publishing and mobile product offerings. The increase in value-added services revenue was offset by a decrease in our CDN revenue of approximately $2.7 million. Of this decrease, approximately $2.2 million is due to a reduction in our network pop-build and license revenue from Microsoft. We continued to increase the amount of traffic moving through our network; however the revenue generated from the increase in traffic grew at a much lower rate and we continue to see a decline in our average unit sales price and a decline in network services revenue. For the nine month period ended September 30, 2011, total revenues increased 13%, or $14.1 million, to $125.3 million as compared to $111.2 million for the nine months ended September 30, 2010. The increase in revenue for the nine month period ended September 30, 2011 compared to the same period in the prior year was attributable to an increase in our value-added services revenue of approximately $14.1 million. The increase in value-added services revenue was attributable to increases in our web content management, storage, video publishing and mobile product offerings. As of September 30, 2011, we had approximately 1,602 customers compared to approximately 1,565 as of September 30, 2010. This increase in customers is primarily the result of new customers acquired through our acquisitions of Clickability and AcceloWeb.

For the nine months ended September 30, 2011, cost of revenues increased 21%, or $14.0 million, to $81.9 million as compared to $67.9 million for the nine months ended September 30, 2010. These increases were primarily due to an increase in aggregate bandwidth and co-location fees of $5.9 million due to higher traffic levels, increased peering costs, and increased amounts of deployed network assets, an increase in depreciation of $5.1 million, due to increased amounts of deployed assets, as we continue to build-out our expanding network and to refresh our network equipment, and an increase in payroll and related employee costs of $2.5 million associated with increased staff to build and operate our CDN, as well as increased operations personnel from our business acquisitions whose primary focus is on our delivery of value-added services. Additionally, we had increases in professional fees and outside services of $0.3 million, an increase in travel and travel-related expenses of $0.3 million and an increase in royalty expense of $0.3 million. These increases were offset by a decrease in other costs of $0.5 million. The decrease in other costs is primarily related to $0.8 million of costs in 2010 associated with the sale of equipment to a customer and reduced fees and licenses of approximately $0.2 million. These decreases were offset by an increase of approximately $0.5 million in other costs associated with the delivery of our services.

Sales and marketing expenses decreased 8%, or $0.8 million, to $9.2 million for the three months ended September 30, 2011, as compared to $10.0 million for the three months ended September 30, 2010. The decrease in sales and marketing expenses for the three months ended September 30, 2011 compared to the three months ended September 30, 2010 was primarily due to a decrease in payroll and related employee costs of $0.6 million. This decrease was the result of lower variable compensation ($0.9 million) offset by an increase in salaries of approximately $0.3 million, primarily due to increased staffing, plus the addition of sales and marketing personnel from our business acquisitions. In addition, share-based compensation decreased $0.6 million when compared to the same period of the prior year. These decreases were offset by an increase in other costs of $0.3 million, primarily due to increased facilities and facility related costs of approximately $0.2 million and employee events of approximately $0.1 million.

For the nine months ended September 30, 2011, sales and marketing expenses increased 4%, or $1.0 million, to $29.9 million, as compared to $28.9 million for the nine months ended September 30, 2010. The increase in sales and marketing expenses for the nine month period ended September 30, 2011 compared to the nine month period ended September 30, 2010 was primarily due to an increase in marketing programs of approximately $0.9 million and an increase in other costs of $1.3 million offset by a decrease in share-based compensation of $0.8 million and a decrease in payroll and payroll related expenses of $0.3 million. The increase in other costs was primarily due to increased employee events of $0.5 million, increased fees and licenses of $0.3 million, increased facility and facility related costs of $0.3 million, and an increase in telephone costs of $0.2 million. Other expenses include such items as rent and property taxes for our Europe and Asia Pacific sales offices, telephone, and office supplies.

Read the The complete Report



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