The CDN provider Limelight Networks (LLNW, Financial) demonstrated healthy progress in the second quarter of 2014, beating the consensus estimates on both the top as well as the bottom lines. Moreover, its recently divested web content management business made significant contribution of $3.1 million to its revenue during the second-quarter.
Its revenue for the second-quarter came in at $41.3 million, a drop of 3.5% as compared to $42.8 million in the same quarter last year that surpassed the consensus estimates of $39.62 million in revenue for the quarter. Limelight also made significant improvement in its net loss to $(0.04) per share as against net loss of $(0.07) per share in the corresponding period a year earlier, beating the consensus forecasts of $(0.07) net loss per share.
Looking ahead, Robert Lento, chief executive officer, said that the company continues to invest in its infrastructure competences, rationalize its business process, enhance its reporting and analytics proficiencies and boost the customer experience. Further, he also added that the company has made noteworthy progress in customer satisfaction, reduced customer churn, employee turnover and augmented financial performance.
Limelight Networks has additionally raised its top-line guidance for the full year, which is now expected to range between $155 million and $159 million from $152 million and $158 million released at the advancing of the year. However, the company expects its revenue and gross margins to relatively decline with respect to the second-quarter revenue and gross margin due to exit of its most renowned digital content solution Netflix. Limelight also expects higher revenue for the fourth-quarter 2014.
Digital devices to drive its growth ahead
According to the recent report by Nielson that states that the propagation of digital devices has pushed the legacy viewing methods of video to advanced seamless viewing capabilities, which in turn is driving growth for CDN solutions. The report further adds that people in the United States on an average possess four digital devices and spend on an average approximately 60 hours a week consuming content across devices. While there remains a good strength of people who still like watching video on their TV rather than online and on mobile devices, the gap is speedily closing as the consumers are now exploring more video through their mobile or digital devices
Meanwhile, Limelight has recently declared availability of its innovative Limelight Orchestrate solution for media and broadcasters. This solution is expected to deliver superior workflow solution to broadcasters and media content owners so as to offer high-quality video to their online customers with enhanced speed and simplicity. The Limelight Orchestrate solution should assist the company compensating the benefits of its Netflix digital content solutions, which is expected to get closed shortly.
In addition, limelight orchestrate, a cloud based solution is also believed to minimize the growing complication of content publishing and reduce speed time-to-market while focusing on accessibility, performance, scalability and safeguard that will certainly help video content owners and broadcasters to effectively deliver the growing digital video content to its customers across the world. Besides, the digital content solutions will not only deliver cohesive and efficient solutions swiftly and securely but also expected to increase the abilities of the broadcasters and video content owners to monetize that content.
Limelight Networks remains on track with its engagement model that focuses on expanding the value to the existing customers as well as to obtain new clients that should accelerate its growth going forward. Limelight during the second quarter has acquired a number of potential clients who will be exploring its digital content and web-based solutions such as Limelight Orchestrate for their customers across the world.
For example, one of the largest electronic manufactures in South Korea has recently selected Limelight for using its dynamic web acceleration services. The electronic manufacturer had opted for its content delivery service in the first-quarter to strengthen its distribution of software to their mobile devices to make software updates more cost effective and manageable.
Limelight Network is also receiving a great response for its content delivery services as one of the leading U.S. sports and entertainment solutions providers; it selected its content delivery services to avail both live as well as on-demand content while a European video games retail company opted for Limelight for exploring its video and content delivery service to strengthen its distribution of all their video trailers to customers across the world. Additionally, a financial company in the Middle East selected its video and content delivery service to support video on their website and live streaming.
Wrapping up
Limelight Network is making good progress with growing portfolio of customers across the world for its highly recognized CDN solutions for mobile, gaming and online platforms that should assist the company to compete with rivals such as Verizon (NYSE: VZ) and Akamai Technologies (AKAM, Financial) who are leading the market share in the content delivery networking market. Moreover, the analysts have estimated CAGR of 12.00% for next five years that indicate sound growth prospect for the company in the long-run. While Akamai has CAGR growth rate of 15.57% for the next five year but the stock is quite expensive.
