LLNW stock rose more than 7% in after-hours trading on January 20, 2022, after the company reported earnings and revenueThe income statement provides a summary of a company's revenue and expenses over a specified period of time, typically a year or a quarter. It shows the company's total revenue, th... beats.
Limelight Networks Reports Record Fourth Quarter Results and Provides Strong Guidance for 2022
Limelight Networks, Inc. (Nasdaq: LLNW) (Limelight), a leading provider of edge enabled content delivery and AppOps solutions at the edge, today reported financial results for the fourth quarter ended December 31, 2021. Delivering on several key milestones in its 2021 strategic plan, the company reported significant revenue, gross margin, and adjusted EBITDA growth quarter over quarter. Limelight Networks reported Q4 adjusted EPS of 2c versus the consensus estimate of 1c. The company reported Q4 revenue of $62.9M versus the consensus estimate of $61.57M.
“As expected, our fourth quarter built on the momentum exhibited in the third quarter. Revenue for the fourth quarter came in at $62.9 million, up 14% quarter over quarter and year over year. Gross Margin was 35.4%, up 670 basis points quarter over quarter and Adjusted EBITDA margin was 15%, up from 11% in the third quarter of 2021. On an organic basis, revenue growth was 7% and we generated over $3 million in free cash flowThe cash flow statement provides a detailed overview of the cash inflows and outflows of a company over a specified period of time. It includes cash received from operations, inves.... Layer0 contributed $3.8 million in the quarter bringing their total contribution to the year to $4.5 million, in line with guidance of $4-5 million,” said Bob Lyons, President and Chief Executive Officer.
“We have made meaningful progress in our core business with dramatic performance improvements in our network, a revitalized go-to-market strategy and new product cadence. We are changing the narrative around Limelight from a usage-based network to a high growth, higher margin edge enabled solutions company,” said Lyons. “Our integrated solution set is seeing significant traction, be it among startups or multi-billion companies, and across verticals such as financial services, consumer products and telecom. We are already gaining share of the incremental TAM we outlined in our August strategy session last year.”
“We are executing against our strategy and remain confident in our ability to build on this progress and continue delivering on our Improve-Expand-Extend framework,” said Lyons.”
Improve: Continued improvement in operational performance and cost structure:
- Our client sentiment metric improved double digits in the second half of 2021, across our global top 20.
- First quarterly revenue growth of our core content delivery solution in six quarters.
- New traffic records with December 5th exceeding the previous record by 18%. December was the highest traffic month with traffic exceeding the previous record by 14%. Previous records had been established about a year ago.
- Quarter over quarter cash gross margin expansion of almost 500 basis points and year over year expansion of 380 basis points.
- Completion of $30 million in planned annualized costs savings.
- Improved operating leverage resulting in a 46% adjusted EBITDA flow through of the sequential quarterly revenue growth, while accelerating our investment in our go-to-market efforts.
Expand: Existing client and new logo growth driving meaningful revenue expansion:
- 14% quarter over quarter and year over year revenue growth delivering organic growth of 7% year over year.
- 18 of Top 20 Limelight customers grew revenue more than 20% for the third quarter in a row.
- Total Bookings increased 45% quarter over quarter.
- Many new opportunities were closed in the fourth quarter, with more than 10 of those averaging greater than $100,000 in Annual Contract Value.
- New client wins include a large consumer products company with more than 100 household brands.
- We have made significant productivity improvements in our land and expand motions and are now increasing capacity at an accelerated pace. We expect to mostly complete sales team hiring goals by 1Q22, a quarter ahead of plan.
- The pipeline for both solution sets – Content Delivery and AppOps – continues to grow.
Extend: Extension of new growth products:
- In the fourth quarter, we launched the Layer0 by Limelight offering for web applications, which is our flagship product for the AppOps segment. This is the first new product resulting from our acquisition of Layer0 and empowers development teams to ship up to twice as fast and offer sub-second page loads.
- This was followed by the GraphQL caching and serverless hosting functionality. Layer0 has solved the key challenge of caching GraphQL APIs at the network edge, which is not supported by traditional web CDNs.
- In a few weeks we will be launching our Security offerings to round out the suite and improve our value proposition for outcome buyers.
- EdgeXtend continued to build on the momentum we saw over the last few quarters. We expect continued growth in this product in 2022.
Strategic priorities for 2022:
- Productive growth capacity: Supported by the improved productivity of our land-and-expand motions, we will continue to increase the capacity of our commercial teams.
- Edge architecture: Implementation of identified architectural improvements with a targeted 30% increase in capacity and throughput.
- Automation: Leveraging the application skills acquired with Layer0, we will improve automation across our platform and operations. This will improve efficiency, quality and increase productivity.
- Developer Ecosystem: We will continue to invest in targeted developer communities to further accelerate our AppOps mindshare.
- Edge enabled solutions: We will continue to release new and improved edge enabled solutions with a focus on core IP that delivers the best price-performance feature set for the outcome buyer by leveraging our edge platform.
Fourth Quarter 2021 Financial Results
- Revenue of $62.9 million, up 14% from the third quarter of 2021 and compared to the fourth quarter of 2020.
- GAAP net loss of $7.7 million, or $(0.06) per basic share, an improvement of $2.4 million from the net loss of $10.1 million, or $(0.08) per basic share, in the third quarter of 2021. GAAP net loss was $8.3 million, or $(0.07) per basic share in the fourth quarter of 2020. GAAP net loss included $2.6 million in restructuring and transition related charges in the fourth quarter and $1.8 million in the third quarter of 2021, respectively.
- Non-GAAP net income was $2.4 million, or $0.02 per basic share, an improvement of $3.9 million from the Non-GAAP net loss of 1.5 million, or $(0.01) per basic share, in the third quarter of 2021. Non-GAAP net loss was $3.8 million, or $(0.03) per basic share in the fourth quarter of 2020.
- Adjusted EBITDA was $9.7 million, an improvement of $3.6 million from $6.1 million for the third quarter of 2021. Adjusted EBITDA was $3.6 million for the fourth quarter of 2020.
- EBITDA was $0.5 million, an improvement of $2.5 million from $(2.0) million for the third quarter of 2021. EBITDA was breakeven for the fourth quarter of 2020.
- Cash, cash equivalents and marketable securities total $79.3 million at the end of the fourth quarter 2021.
- Limelight ended the fourth quarter of 2021 with 552 employees and employee equivalents, up from 529 at the end of the third quarter of 2021, and down from 618 at the end of the fourth quarter of 2020.
“In the second half of 2021 we established a sustainable trajectory and in 2022, we expect to build on the momentum and the progress. We have a revitalized network, a growing sales team and new products which should drive continued growth in both solution sets, Content Delivery and AppOps” said Lyons. Limelight Networks sees FY22 adjusted EPS (6c)-(1c) versus the consensus estimate of (4c). The company sees FY22 revenue of $240M-$250M versus the consensus estimate of $241.18M.
Limelight Networks upgraded to Strong Buy from Market Perform at Raymond James
On December 20, 2021, Raymond James analyst Frank Louthan upgraded Limelight Networks to Strong Buy from Market Perform with a $5 price target. Louthan tells investors in a research note that the combination of new CEO Bob Lyons, SVP of Growth Eric Armstrong, and CTO Ajay Kapur has embarked on a solid transition, applying a combination of new sales, new products, and improved operational discipline to the legacy CDN business. The analyst sees the combination driving higher sales and a stronger valuation.
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📈 LLNW Stock Technical Analysis
The long and short term trends are both positive. LLNW is part of the IT Services industry. There are 152 other stocks in this industry. LLNW outperforms 80% of them. LLNW is currently trading in the middle of its 52 week range. The S&P500 Index however is trading in the upper part of its 52 week range, so LLNW is lagging the market slightly.
There is a support zone ranging from 3.68 to 3.72. There is also a support zone ranging from 3.42 to 3.47. These support zones are formed by a combination of multiple trend lines in multiple time frames.
There is a resistance zone ranging from 3.76 to 3.79. This zone is formed by a combination of multiple trend lines in multiple time frames.
Although LLNW has an excellent technical rating, it does not offer a high quality setup at the moment. LLNW stock has a Setup Rating of 3. Price movement has been a little bit too volatile to find a nice entry and exit point. It is probably a good idea to wait for a consolidation first. Click here to sign up for email alerts on when LLNW stock consolidates and has a Setup Rating of 8 or higher.