LIMELIGHT NETWORKS, INC. (LLNW, Financial) filed Quarterly Report for the period ended 2009-09-30.
LIMELIGHT NETWORKS INC. is a content delivery partner enabling the next wave of Internet business and entertainment. More than 1300 Internet entertainment software and technology brands trust their robust scalable platform to monetize their digital assets by delivering a brilliant online experience to their global audience. LimeLight's architecture bypasses the busy public Internet using a dedicated optical network that interconnects thousands of servers and delivers massive files at the speed of light -- directly to the access networks that consumers use every day. LimeLight's proven network and passion for service assures their customers that every object in their library will be instantly delivered to every user every time. Limelight Networks, Inc. has a market cap of $299.8 million; its shares were traded at around $3.55 with and P/S ratio of 2.3.
Cost of revenue decreased 3%, or $0.7 million, to $20.9 million for the three months ended September 30, 2009 as compared to $21.6 million for the three months ended September 30, 2008. This decrease was primarily due to a decrease in aggregate bandwidth and co-location fees of $0.5 million and lower depreciation expense on network equipment of $0.6 million. These decreases were partially off-set by an increase in payroll and related employee costs of $0.5 million. The decrease in bandwidth and co-location fees is due to a reduction in the cost per megabyte of traffic moving through our network and to a lesser extent the recovery of value added
For the nine months ended September 30, 2009, cost of revenues increased 2%, or $1.5 million, to $63.4 million as compared to $62.0 million for the nine months ended September 30, 2008. This increase was primarily due to an increase in payroll and related employee costs of $2.0 million associated with increased staff. This increase was partially off-set by decreases in bandwidth and co-location fees of $0.4 million due to a reduction in the cost per megabyte of traffic moving through our network, lower depreciation expense of network equipment of $0.1 million due to certain network assets being fully depreciated and a decrease in royalty expenses of $0.2 million. During the three and nine month periods ended September 30, 2009, we recognized $21,000 and $63,000, respectively, of deferred costs associated with revenue related to the multi-element arrangement entered into during the second quarter of 2007. As of September 30, 2009, there was $0.1 million of deferred costs remaining to be amortized ratably into cost of services over a 44 month period that commenced in July 2007.
Additionally, cost of revenue includes share-based compensation of approximately $0.6 million and $1.8 million, respectively, for both the three and nine months ended September 30, 2009 and 2008, resulting from our application of ASC 718 (formerly FAS 123R).
General and administrative expenses decreased 58%, or $8.7 million, to $6.4 million for the three months ended September 30, 2009 as compared to $15.1 million for the three months ended September 30, 2008. The decrease in general and administrative expenses for the three months ended September 30, 2009 compared to the three months ended September 30, 2008 was primarily due to a decrease of $7.8 million in litigation expenses primarily related to our litigation with Akamai and MIT, Level 3 and the class action lawsuits filed against us beginning in August 2007, a decrease of $0.7 million in bad debt expense, a decrease of $0.1 million in payroll and related employee costs, and a decrease of $0.3 million in other expenses. These decreases were partially offset by an increase in professional fees of $0.1 million. For the nine months ended September 30, 2009, general and administrative expenses decreased 34%, or $12.6 million, to $24.7 million as compared to $37.3 million for the nine months ended September 30, 2008. The decrease in general and administrative expenses for the nine months ended September 30, 2009 compared to the nine months ended September 30, 2008 was primarily due to a decrease of $11.6 million in litigation expenses, a decrease of $0.9 million in professional fees, a decrease in bad debt expense of $0.8 million and a decrease in other costs of $0.8 million. The decrease in other costs is primarily due to a decrease in property taxes of approximately $0.5 million. Other expenses include such items rent, utilities, telephone, insurance, travel and travel related expenses, fees and licenses and property taxes. These decreases were partially offset by an increase in payroll and related employee costs of $0.7 million.
Additionally, general and administrative share-based compensation expense increased $0.1 million and $0.8 million, respectively for the three and nine month periods ended September 30, 2009 compared to the same periods of the prior year.
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LIMELIGHT NETWORKS INC. is a content delivery partner enabling the next wave of Internet business and entertainment. More than 1300 Internet entertainment software and technology brands trust their robust scalable platform to monetize their digital assets by delivering a brilliant online experience to their global audience. LimeLight's architecture bypasses the busy public Internet using a dedicated optical network that interconnects thousands of servers and delivers massive files at the speed of light -- directly to the access networks that consumers use every day. LimeLight's proven network and passion for service assures their customers that every object in their library will be instantly delivered to every user every time. Limelight Networks, Inc. has a market cap of $299.8 million; its shares were traded at around $3.55 with and P/S ratio of 2.3.
Highlight of Business Operations:
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 2006, 2007 and 2008, we made capital purchases of $40.4 million, $26.5 million and $20.1 million, respectively. For the three and nine month periods ended September 30, 2009, we made capital investments of $11.1 million and $19.8 million, respectively. We continue to see improvements in the efficiency of our network allowing us to meet traffic growth with less investment, however, we expect to have ongoing capital expenditure requirements, as we continue to invest in and expand our CDN. For 2009, we currently anticipate making aggregate capital expenditures of approximately 18% to 19% of total revenue for the year.Cost of revenue decreased 3%, or $0.7 million, to $20.9 million for the three months ended September 30, 2009 as compared to $21.6 million for the three months ended September 30, 2008. This decrease was primarily due to a decrease in aggregate bandwidth and co-location fees of $0.5 million and lower depreciation expense on network equipment of $0.6 million. These decreases were partially off-set by an increase in payroll and related employee costs of $0.5 million. The decrease in bandwidth and co-location fees is due to a reduction in the cost per megabyte of traffic moving through our network and to a lesser extent the recovery of value added
For the nine months ended September 30, 2009, cost of revenues increased 2%, or $1.5 million, to $63.4 million as compared to $62.0 million for the nine months ended September 30, 2008. This increase was primarily due to an increase in payroll and related employee costs of $2.0 million associated with increased staff. This increase was partially off-set by decreases in bandwidth and co-location fees of $0.4 million due to a reduction in the cost per megabyte of traffic moving through our network, lower depreciation expense of network equipment of $0.1 million due to certain network assets being fully depreciated and a decrease in royalty expenses of $0.2 million. During the three and nine month periods ended September 30, 2009, we recognized $21,000 and $63,000, respectively, of deferred costs associated with revenue related to the multi-element arrangement entered into during the second quarter of 2007. As of September 30, 2009, there was $0.1 million of deferred costs remaining to be amortized ratably into cost of services over a 44 month period that commenced in July 2007.
Additionally, cost of revenue includes share-based compensation of approximately $0.6 million and $1.8 million, respectively, for both the three and nine months ended September 30, 2009 and 2008, resulting from our application of ASC 718 (formerly FAS 123R).
General and administrative expenses decreased 58%, or $8.7 million, to $6.4 million for the three months ended September 30, 2009 as compared to $15.1 million for the three months ended September 30, 2008. The decrease in general and administrative expenses for the three months ended September 30, 2009 compared to the three months ended September 30, 2008 was primarily due to a decrease of $7.8 million in litigation expenses primarily related to our litigation with Akamai and MIT, Level 3 and the class action lawsuits filed against us beginning in August 2007, a decrease of $0.7 million in bad debt expense, a decrease of $0.1 million in payroll and related employee costs, and a decrease of $0.3 million in other expenses. These decreases were partially offset by an increase in professional fees of $0.1 million. For the nine months ended September 30, 2009, general and administrative expenses decreased 34%, or $12.6 million, to $24.7 million as compared to $37.3 million for the nine months ended September 30, 2008. The decrease in general and administrative expenses for the nine months ended September 30, 2009 compared to the nine months ended September 30, 2008 was primarily due to a decrease of $11.6 million in litigation expenses, a decrease of $0.9 million in professional fees, a decrease in bad debt expense of $0.8 million and a decrease in other costs of $0.8 million. The decrease in other costs is primarily due to a decrease in property taxes of approximately $0.5 million. Other expenses include such items rent, utilities, telephone, insurance, travel and travel related expenses, fees and licenses and property taxes. These decreases were partially offset by an increase in payroll and related employee costs of $0.7 million.
Additionally, general and administrative share-based compensation expense increased $0.1 million and $0.8 million, respectively for the three and nine month periods ended September 30, 2009 compared to the same periods of the prior year.
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