Limelight Networks Falls Sharply After Reporting Q3 Losses

Limelight Networks is down 28% in trading Friday after it reported third-quarter 2020 results on Thursday, despite higher revenues.

Limelight Networks Inc.  (LLNW) - Get Report is down 28% in trading Friday after reporting a third-quarter 2020 net loss of $4 million or $0.03 per share compared to a net loss of $2.8 million or $0.02 per share in the third quarter of the previous year.

The company said on Thursday that it posted revenue for the third-quarter ending September increased year over year to $59.2 million from $51.3 million, according to the company’s statement.

The GAAP-net loss included $1.7 million of interest expense related to the company’s convertible notes issued during the third quarter of 2020.

Analysts polled by Capital IQ had expected a non-GAAP net income of $0.02 per share.

Limelight Networks 2020 revenue guidance was reaffirmed to range between $230 million and $240 million, up from $200.6 million last year. Shares have climbed more than 50% this year through Thursday’s close, according to media reports.

“Most notable in the quarter was the expansion of our edge capabilities with the launch of Edge Functions and gains in our automated traffic engineering efforts to optimize network performance and customer experience,” said Robert Lento, Chief Executive Officer.

He said that the company plans to double down on edge innovation with a focus on video, media and gaming customers, adding that the company is well-positioned to continue delivering value.

Several analysts were optimistic about the company’s content delivery long-term potential as it benefits from strong video traffic trends, according to Bloomberg.

Michael Latimore, an analyst from Northland Securities surveyed by Bloomberg, said that a midpoint of full-year guidance implies no year-over-year fourth-quarter growth despite several large customers added. Latimore is expecting to see more signs of top-line re-acceleration before recommending shares.

Other analysts such as Jeff Van Rhee from Craig-Hallum Capital Group finds the underlying margin dynamics “troubling” and is concerned about the company’s ability to “show the leverage and growth that would make the shares attractive.” Rhee downgraded to hold from buy with PT to $5 from $9.

In September, Limelight Networks agreed to partner with global online video platform company Katapy to grow edge-computing solutions and advance customers' online video experiences.

Limelight Networks Inc. is a U.S-based leading provider of digital content delivery, video, cloud security, and edge computing services.