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LIMELIGHT NETWORKS, INC. Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: May 8, 2012 01:28PM

LIMELIGHT NETWORKS, INC. (LLNW) filed Quarterly Report for the period ended 2012-03-31. Limelight Netwk has a market cap of $305.8 million; its shares were traded at around $2.5 with and P/S ratio of 1.8.



Highlight of Business Operations:

Our international revenue has continued to grow, 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, 2011 revenue derived from customers outside North America accounted for approximately 30% of our total revenue. For the year ended December 31, 2011, we derived approximately 50% of our international revenue from EMEA and approximately 50% of our international revenue from Asia Pacific. We anticipate that our Asia Pacific revenue may continue to grow as a percentage of our total international revenue. During 2011, no single country outside of the United States accounted for 10% or more of our total revenues. For the three month periods ended March 31, 2012 and 2011, respectively, revenue derived from customers outside North America accounted for approximately 31% and 30%, respectively, of our total revenue. For the three month periods ended March 31, 2012 and 2011, we derived approximately 49% and 55%, respectively, of our international revenue from EMEA and approximately 51% and 45%, respectively, of our international revenue from Asia Pacific. No single country outside of the United States accounted for 10% or more of our total revenues during the three month periods ended March 31, 2012 and 2011, respectively. We expect foreign revenue to continue to increase in absolute dollars in 2012. Our business is managed as a single segment, and we report our financial results on this basis.

We make our capital investment decisions based upon careful evaluation of a number of variables, such as the amount of traffic we anticipate on our network, the cost of the physical infrastructure required to deliver that traffic, and the forecasted capacity utilization of our network. Our capital expenditures have varied over time, in particular as we purchased servers and other network equipment associated with our network build-out. For example, in 2009, 2010, and 2011 we made capital purchases of $20.4 million, $33.5 million, and $30.4 million, respectively, which represented 16%, 22% and 18%, respectively, of total revenue for each of those years. For the three month period ended March 31, 2012, we made capital investments of $5.7 million, which represented 13% of total revenue for that period. We expect to have ongoing capital expenditure requirements as we continue to invest in, refresh and expand our global computing platform. For 2012, we currently anticipate making aggregate capital expenditures of approximately 9% to 11% of total revenue.

Revenue increased 7%, or $2.9 million, to $44.3 million for the three month period ended March 31, 2012 as compared to $41.4 million for the three month period ended March 31, 2011. The increase in revenue for the three month period ended March 31, 2012 as compared to the three month period ended March 31, 2011 was primarily attributable to an increase in our VAS revenue of approximately $5.4 million. Our VAS revenue, which collectively refers to our 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 VAS revenue is primarily attributable to increases in our web content management, storage, video publishing and site and application acceleration service offerings. The increase in VAS revenue was offset by a decrease in our content delivery services revenue of approximately $2.5 million. During the three month period ended March 31, 2012, we continued to increase the amount of traffic moving through our network; however, our core content delivery services revenue decreased approximately $0.7 million and we had a decrease of approximately $1.8 million in our network pop-build and license revenue from Microsoft. As of March 31, 2012, we had 1,562 customers as compared to 1,552 as of March 31, 2011.

Cost of revenue increased 4%, or approximately $1.0 million, to $27.3 million for the three month period ended March 31, 2012 as compared to $26.3 million for the three month period ended March 31, 2011. These increases were primarily due to an increase in payroll and related employee costs of approximately $0.7 million primarily associated with increased staff from our business acquisitions. Additionally, we had increases in professional fees and outside services of $0.2 million, primarily due to an increase in outside consulting expense, and we had an increase in other costs of approximately $0.6 million. The increase in other costs was primarily related to $0.4 million of other costs associated with the delivery of our services, and increased fees and licenses of approximately $0.2 million. These increases were offset by a decrease of approximately $0.5 million in aggregate bandwidth and co-location fees, which was the result of increased peering costs of approximately $1.2 million, off-set by a reduction of approximately $0.7 million in transit and co-location fees. In addition, depreciation increased approximately $0.1 million, due to increased amounts of deployed assets, as we continue to build-out our expanding network and to refresh our network equipment.

Sales and marketing expenses increased 8%, or $0.8 million, to $11.6 million for the three month period ended March 31, 2012 compared to $10.8 million for the three month period ended March 31, 2011. The increase in sales and marketing expenses was primarily due to an increase in payroll and related employee costs of $0.9 million, primarily due to increased salaries of $0.6 million, which includes approximately $0.2 million of salaries from our business acquisitions, and to a lesser extent increased variable compensation costs of $0.3 million, an increase in travel and travel-related expenses of $0.3 million, an increase in professional fees and outside services of $0.1 million, and an increase in other costs of $0.1 million. The increase in other costs was primarily due to increased facility and facility-related costs and increased fees and licenses. These increases were offset by a decrease in marketing expenses of $0.3 million.

Read the The complete Report



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