Limelight Networks, Inc. reports 229% Net Income growth in 2018 and 6.1% Revenue growth
01/30/2019 • About Limelight Networks, Inc. (
$LLNW) • By InTwits
Limelight Networks, Inc. reported 2018 financial results today. Here are the key drivers of the company's long term financial model:
- Limelight Networks, Inc. spends a lot for Stock Based Compensation (SBC): average SBC/Revenue for 2014-2018 is 0.0%. Average EBITDA Margin for the same period was -4.2%
- Limelight Networks, Inc. has high CAPEX intensity: 5 year average CAPEX/Revenue was 10.2%. At the same time it's a lot of higher than industry average of 5.2%.
- CAPEX is quite volatile: $0m in FY2018, $1m in FY2017, $3m in FY2016, $5m in FY2015, $2m in FY2014
- The company has unprofitable business model: ROIC is -3.1%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
The company's Revenue increased on 6.1%. Revenue growth showed slowdown in 18Q4 - it was -8.7% YoY. Despite revenue decline the EBITDA margin expanded. EBITDA Margin surged on 24.8 pp from 20.4% to 45.2% in 2018.
Gross Margin showed almost no change in 2018. Gross Margin followed a growing trend at 2.5 pp per annum in the last 5 years. SG&A as a % of Revenue showed almost no change in 2018.
Net Income margin increased on 9.2 pp from -4.1% to 5.0% in 2018.
Investments (CAPEX, working capital and M&A)
In 2018 Limelight Networks, Inc. had CAPEX/Revenue of 8.2%. Limelight Networks, Inc.'s CAPEX/Revenue decreased on 6.2 pp from 14.5% in 2015 to 8.2% in 2018. It's average level of CAPEX/Revenue for the last three years was 8.4%. Limelight Networks, Inc. maintained rich investment policy and has spent a lot to CAPEX (117% of EBITDA).
Return on investment
The company operates at negative ROIC (-3.1%) and low but positive ROE (6.4%). ROIC increased on 2.6 pp from -5.7% to -3.1% in 2018. ROE jumped on 11.8 pp from -5.4% to 6.4% in 2018. During 2014-2018 ROIC bottomed in 2016 at -42.9% and was growing since that time. During the last 5 years ROE bottomed in 2016 at -44.0% and was growing since that time.
Leverage (Debt)
The company has no debt. Cash surged on 21.4%.
Valuation and dividends
Limelight Networks, Inc.'s trades at EV/EBITDA 23.7x and P/E 35.7x.
Management team
The company's CEO Robert A Lento is a founder and has spent 6 years with the company. The company's CFO Sajid Malhotra has spent 3 years with the company.
Financial and operational results
FY ended 12/31/2018
Limelight Networks, Inc. ($LLNW) key annual financial indicators| mln. $ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 162.3 | 170.9 | 168.2 | 184.4 | 195.7 | 6.1% |
| Gross Profit | 63.4 | 68.1 | 71.3 | 87.8 | 93.5 | 6.5% |
| SG&A | 65.6 | 62.9 | 63.0 | 68.2 | 71.9 | 5.5% |
| EBITDA | -6.5 | -4.8 | -51.9 | 12.4 | 13.8 | 10.5% |
| Net Income | -24.6 | -24.0 | -73.9 | -7.6 | 9.8 | |
Balance Sheet
|
|---|
| Cash | 57.8 | 44.7 | 21.7 | 20.9 | 25.4 | 21.4% |
| Short Term Debt | 0.2 | 0.5 | 0.0 | 0.0 | 0.0 | |
| Long Term Debt | 0.1 | 1.4 | 0.0 | 0.0 | 0.0 | |
Cash flow
|
|---|
| Capex | 18.6 | 24.7 | 9.6 | 20.7 | 16.1 | -22.3% |
Ratios
|
|---|
| Revenue growth | -6.4% | 5.3% | -1.6% | 9.6% | 6.1% | |
| EBITDA growth | -39.3% | -26.1% | 978.4% | -124.0% | 10.5% | |
|
|---|
| Gross Margin | 39.1% | 39.9% | 42.4% | 47.6% | 47.8% | 0.1% |
| EBITDA Margin | -4.0% | -2.8% | -30.9% | 6.7% | 7.0% | 0.3% |
| SG&A, % of revenue | 40.5% | 36.8% | 37.4% | 37.0% | 36.8% | -0.2% |
| Net Income Margin | -15.2% | -14.0% | -43.9% | -4.1% | 5.0% | 9.2% |
| CAPEX, % of revenue | 11.5% | 14.5% | 5.7% | 11.2% | 8.2% | -3.0% |
|
|---|
| ROIC | -11.8% | -12.4% | -42.9% | -5.7% | -3.1% | 2.6% |
| ROE | -10.9% | -11.7% | -44.0% | -5.4% | 6.4% | 11.8% |
| Net Debt/EBITDA | | | | -1.7x | -1.8x | -0.2x |
Limelight Networks, Inc. ($LLNW) key quoterly financial indicators
| mln. $ | 18Q1 | 18Q2 | 18Q3 | 18Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 52 | 50 | 49 | 44 | | 16.5% | 10.8% | 7.0% | -8.7% |
| EBITDA | 5 | 5 | 4 | -1 | | 184.8% | 41.5% | 25.5% | -123.0% |
| Net Income | 0 | 15 | -0 | -5 | | | | | |
Balance Sheet
|
|---|
| Cash | 20 | 29 | 29 | 25 | | 3.7% | 25.0% | 38.2% | 21.4% |
| Short Term Debt | 0 | 0 | 0 | 0 | | | | | |
| Long Term Debt | 0 | 0 | 0 | 0 | | | | | |
Ratios
|
|---|
| Gross Margin | 51.2% | 49.4% | 48.7% | 40.7% | | 3.9% | 2.3% | 0.4% | -7.0% |
| EBITDA Margin | 9.4% | 9.5% | 8.7% | -2.0% | | 5.6% | 2.1% | 1.3% | -10.1% |
| Net Income Margin | 0.3% | 30.2% | -0.6% | -11.8% | | 7.7% | 33.7% | 3.3% | -9.9% |
Peers in Internet Services & Infrastruc
Below we provide Limelight Networks, Inc. benchmarking against other companies in Internet Services & Infrastruc industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.
Top companies by Revenue growth, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Liberated Syndication Inc ($LSYN) | | | | 20.4% | 108.0% |
| GTT Communications, Inc. ($GTT) | | 78.1% | 41.3% | 58.7% | 80.1% |
| MongoDB, Inc. ($MDB) | | | | 55.3% | 63.8% |
| Twilio Inc. ($TWLO) | | 87.9% | 66.1% | 43.9% | 62.9% |
| Okta, Inc. ($OKTA) | | | 109.5% | 86.6% | 60.0% |
| |
|---|
| Median (15 companies) | 25.5% | 13.9% | 15.8% | 13.7% | 19.2% |
|---|
| Limelight Networks, Inc. ($LLNW) | | 5.3% | -1.6% | 9.6% | 6.1% |
Top companies by Gross margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Liberated Syndication Inc ($LSYN) | | | 68.1% | 77.5% | 84.9% |
| VeriSign, Inc. ($VRSN) | 81.3% | 81.8% | 82.6% | 83.4% | 84.2% |
| Wix.com Ltd. ($WIX) | 81.6% | 82.8% | 84.4% | 83.7% | 79.0% |
| MongoDB, Inc. ($MDB) | | | 68.0% | 70.5% | 74.2% |
| Carbonite, Inc. ($CARB) | 68.5% | 71.6% | 70.6% | 70.7% | 71.2% |
| |
|---|
| Median (15 companies) | 53.1% | 55.4% | 61.5% | 65.0% | 66.4% |
|---|
| Limelight Networks, Inc. ($LLNW) | 39.1% | 39.9% | 42.4% | 47.6% | 47.8% |
Top companies by EBITDA margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| VeriSign, Inc. ($VRSN) | 62.2% | 63.0% | 65.2% | 65.0% | 67.1% |
| Liberated Syndication Inc ($LSYN) | | | 32.0% | -29.9% | 32.2% |
| Internap Corporation ($INAP) | 20.0% | 21.0% | -5.4% | 28.4% | 30.5% |
| Akamai Technologies, Inc. ($AKAM) | 37.5% | 34.8% | 33.9% | 27.6% | 29.4% |
| Endurance International Group Holdings, Inc. ($EIGI) | 23.2% | 24.0% | 14.8% | 20.0% | 26.0% |
| |
|---|
| Median (15 companies) | 6.1% | 2.9% | -2.8% | -7.1% | 16.8% |
|---|
| Limelight Networks, Inc. ($LLNW) | -4.0% | -2.8% | -30.9% | 6.7% | 7.0% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Akamai Technologies, Inc. ($AKAM) | 16.2% | 20.2% | 13.5% | 16.7% | 14.9% |
| 21Vianet Group, Inc. ($VNET) | 32.6% | 29.0% | 15.8% | 11.7% | 12.8% |
| Internap Corporation ($INAP) | 24.0% | 17.5% | 14.9% | 12.7% | 12.1% |
| GTT Communications, Inc. ($GTT) | 2.8% | 3.8% | 4.6% | 5.1% | 5.2% |
| Carbonite, Inc. ($CARB) | 11.8% | 7.1% | 3.2% | 7.2% | 4.4% |
| |
|---|
| Median (15 companies) | 3.9% | 3.8% | 3.3% | 3.8% | 3.0% |
|---|
| Limelight Networks, Inc. ($LLNW) | 11.5% | 14.5% | 5.7% | 11.2% | 8.2% |
Top companies by ROIC, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| VeriSign, Inc. ($VRSN) | 60.6% | 68.7% | 65.2% | 54.3% | 81.9% |
| Liberated Syndication Inc ($LSYN) | | | | -13.2% | 12.1% |
| Akamai Technologies, Inc. ($AKAM) | 15.5% | 12.5% | 11.9% | 7.9% | 8.2% |
| Endurance International Group Holdings, Inc. ($EIGI) | 1.0% | 4.2% | -2.3% | 2.0% | 7.5% |
| GoDaddy Inc. ($GDDY) | -3.3% | -1.7% | 2.9% | 2.7% | 4.6% |
| |
|---|
| Median (16 companies) | -2.4% | -4.4% | -11.3% | -14.6% | 1.4% |
|---|
| Limelight Networks, Inc. ($LLNW) | -11.8% | -12.4% | -42.9% | -5.7% | -3.1% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| GTT Communications, Inc. ($GTT) | 3.1x | 7.4x | 6.8x | 7.2x | 12.7x |
| Internap Corporation ($INAP) | 5.1x | 5.3x | | 6.5x | 6.9x |
| Endurance International Group Holdings, Inc. ($EIGI) | 7.3x | 6.0x | 11.8x | 7.8x | 5.8x |
| GoDaddy Inc. ($GDDY) | 14.0x | 5.4x | 2.3x | 6.8x | 3.9x |
| VeriSign, Inc. ($VRSN) | 1.9x | 2.5x | 2.2x | 2.6x | 1.8x |
| |
|---|
| Median (9 companies) | 3.1x | 3.9x | 2.2x | 6.5x | 1.8x |
|---|
| Limelight Networks, Inc. ($LLNW) | | | | -1.7x | -1.8x |
