Limelight Networks, Inc. (LLNW)

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Limelight Networks (LLNW)

Q3 2012 Earnings Call

November 01, 2012 5:00 pm ET


Gillian Reckler

Jeffrey W. Lunsford - Executive Chairman, Chief Executive Officer and President

Douglas S. Lindroth - Chief Financial Officer, Principal Accounting Officer, Senior Vice President and Treasurer


David M. Hilal - FBR Capital Markets & Co., Research Division

James Wesman

Aaron Schwartz - Jefferies & Company, Inc., Research Division

Donna Jaegers - D.A. Davidson & Co., Research Division



Good day, ladies and gentlemen. Welcome to the Limelight Networks 2012 Third Quarter Financial Results Conference Call. [Operator Instructions] I will now turn the call over to Gillian Reckler, Limelight's Director of Investor Relations.

Gillian Reckler

Good afternoon, and thank you for joining the Limelight Networks' Third Quarter 2012 Financial Results Conference Call. This call is being recorded on November 1, 2012, and will be archived on our website for approximately 10 days. If you are online, we have updated our standard investor presentation, and you can find it in PDF format within the Investors section of our website.

Some portions of this conference call may include forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements are all statements that are not strictly statements of historical fact, such as statements regarding future events or future financial performance, including, but not limited to, statements regarding Limelight Networks' market opportunity and future business prospects, guidance on financial results, statements concerning anticipated future growth and profitability, as well as management's plans, goals, strategies, expectation, hopes and beliefs and statements concerning the anticipated effects of pending or completed business combination or other strategic transactions.

These forward-looking statements are subject to risks, uncertainties and other factors that could cause actual results to materially differ from those contained, projected, or implied in the forward-looking statements, including the inherent risks associated with litigation, particularly intellectual property-based litigation.

Reported results should not be considered an indication of future performance. Factors that could cause actual results to differ are included in the company's periodic filings with the Securities and Exchange Commission.

I would now like to introduce Jeff Lunsford, Limelight's Chief Executive Officer.

Jeffrey W. Lunsford

Thanks, Gillian. Good afternoon. The digital world grows in importance with every passing day. Every company desiring to achieve success in this new world must now operate with 2 faces, a physical presence and a digital presence. Increasingly, buying decisions are being influenced by information buyers learn about a company through its digital presence. By the time a prospect walks into a store or calls a sales rep, they've already usually formed an opinion of a company and its offerings based on what they experienced in the digital realm. Reviewing website content, mobile content, product and service reviews through social channels, et cetera. As result, the stewardship of an organization's digital presence has become a critical success factor worthy of executive suite attention.

In response to these trends, Limelight has developed Orchestrate, the industry's first integrated digital presence management platform. We are unique in our approach to solving this critical problem, and we are seeing great traction in the market, with 28% year-over-year growth of our value-added services.

Revenue in the third quarter was $45 million, of which 35% was generated by these value-added services. The value proposition for the integrated suite of digital presence management surface -- services within Orchestrate is resonating, and we saw new customers purchase an average of 2.2 products in Q3, as they established their initial relationship with Limelight.

We also continue to see traction in upsells into our base, especially with Limelight Video Platform. Core content delivery revenue in the quarter declined 2% on a year-over-year basis, and Doug will give you -- will provide further information on that momentarily.

Limelight is proud to be at the forefront of the burgeoning digital presence management movement. Let's expand further on what we mean by digital presence, because this is important. Simply put, digital presence is the sum of every digital touch point a company has with its audience across every type of online channel, mobile, social, web, living room and all other digitally delivered points of customer interaction.

Pressures are growing quickly on organizations to optimize their digital presence. A recent study commissioned by Google found that 90% of us now use multiple screens, PCs, tablets, smartphones and smart TVs to research or buy online. Business-to-business buyers are no exception. In a recent survey by McCallum Layton, 71% of business buyers reported routinely researching vendor websites and industry press websites and downloading online white papers during their buying processes.

Organizations are just now beginning to take advantage of the power of an optimized, online digital presence and they need help from solutions like Orchestrate, which take advantage of the opportunity presented by this multi-screen, multichannel world, and we believe this creates opportunity for Limelight.

Users are coming to expect rich, dynamic content delivered with fast, reliable performance to any type of device they choose. We saw very creative multi-screen campaigns emerge during this summer's Olympic Games, and are now seeing advertisers, creative agencies and increasingly, business-to-business marketing organizations acting on the new imperative to offer a consistent integrated digital presence across all digital touch points.

To accomplish this goal, organizations have a choice. They can cobble together a variety of standalone technologies to manage their digital presence. But working with 4 to 6 different content management, publishing, processing systems and infrastructure service providers seems an expensive and inefficient proposition, likely leading to suboptimal digital presence experiences, higher costs and lower customer conversion rates.

Read the rest of this transcript for free on seekingalpha.com