LLNW - Earnings call transcript Q3 2018

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Operator

Good day, ladies and gentlemen, and welcome to the Limelight Networks 2018 Third Quarter Financial Results Conference Call. At this time, all participants are in a listen-only mode. At the end of the prepared remarks, we will provide instructions for those interested in entering the queue for the question-and-answer session. Please note, this event is being recorded. I will now turn the call over to Dan Boncel, Limelight’s Chief Accounting Officer. ahead. go Please

Daniel Boncel

archived thank quarter and is joining Limelight will the recorded XX for Good days. financial you results third be and XXXX, XXXX October call our conference Networks website on approximately afternoon, XX, for on call. being This

by the call. this me remind We to Safe would on start Let that forward-looking we statements Harbor. like everyone will quickly covering be making

considered not and strictly our statements an our of statements could historical announcements. contemplated that are forward-looking and those as Forward-looking our as XXXX all Actual by from fact, strategies, and statements, expectations, indication outlook our reported are for business secular beyond, be performance. statements priorities, such future results plans, should feature results materially our of operational differ trends functionality not

our information, discussed except the are please filings, any update of we disclaim statements on statements, to any our this by periodic obligation date, to available XX-K. us and forward-looking based most information refer law. Annual more The risk as recent call in to forward-looking For factors on Report today’s required Form on as including

Malhotra, me our Chief Sajid Bob on are, Financial our Lento, Chief the Officer. and Officer; Joining Executive call today

of during session the We I will be available from at prepared the Bob now to Q&A to turn Lento. over Bob end like remarks would Sajid. and the call

Robert Lento

third and XX% non-GAAP improved of year-ago gross building strong prior we XXXX. the grew X% points afternoon. the quarter. first-half from Today, margin GAAP over is third quarter Adjusted well, from earnings quarter, were in was XXXX. the XX% quarter our GAAP over solid over our performance Revenue was good the basis third announced and Dan, Thanks, X% up net up of on of the up as our in EBITDA year-over-year, quarter This year the a quarter up loss momentum record results. our year-over-year XX

securities quarter, increased including the total over $X cash our marketable balance, million. addition, In during

customer year’s We’re in results quarter compression, last earnings This from the discussed reflects XX events. the renegotiations as call. performance very to third successful contract price included compared these of with on a of strong top third customers, quarter’s our expected quarter from resulting impact pleased sizable XXXX, which six the

Additionally, conscious we not variety to certain traffic deprioritize quality, we reasons, made price find do point of the type including for decision that and of its a attractive content.

longer goals more quarter to industries look result, that overall was in financial momentum which a no capacity positive our continue a achieve for who us. were revenue headwinds, in that third the generate XX for XXXX in As better well quarter Even at we is previously we were margins established outcome, with our of best margin strongest proud both customers and gross even continue beyond. customers, to our future which year positions I better on traffic as we our solid foundation have believe align reserve a that improve than our for with in and network, to us our serve these to we customers. our two financial us top ways performance believe objectives. to I’m record a our our XXXX, and are allowing business

progress made priorities. we quarter, third the During on multiple

continue grew over improving record year. to We volume to continue satisfaction, traffic year of while to see decline evidence as tickets levels, customer incident

in meet performance have customer to traffic efforts and resulted continues to the improve. more needs our that quality our pleased network We’re of as

the for we all based up our year, the we recently is Another score customer on we best-in-class Last customer as believe results that that our of improved customer completed satisfaction generates achieved survey use annual which benchmark Net Promoter of indication Score, a slightly was satisfaction. an – this at in we especially even largest The scores equally were at average, industry. pleased improved rate. that an our weighted year’s faster NPS our is in again. customers our know news for On good even NPS that about we’re feedback

We’re believe an to continue proud going top today, important customer growth Earlier we line with announced levels, of will forward. satisfaction drive which strategic strong Ericsson. we our partnership

As deploy of our networks. manage footprint on globally increase capacity XX plan strategic with UDN’s on Unified in delivery this edge within future capabilities which will We of technology install our existing software and capabilities which our presence Network, – the content customers. for our to part provider delivery delivery and pops, our agreement, Ericsson areas cloud will our platform we Delivery an UDN, or service over and is points expand

product further companies next aligns importantly, we provider the us As across for market experience position on able of result, This launch customers, great customers. partners for carrier to UDN our a by has we’ll able customer better both by partnership our which delivery to revenue through In strategy. year, edge and Ericsson effort as sites the performance. This service We the on it’s the better even with services both CDN strategic we its the its industry UDN platform allow expand leader be Limelight, improve of partnership huge the key starting inside us companies expect continued it as of networks to the services our for and provide leader revenue the using support importance the win network. our Ericsson, be as acceleration I’m our deployment excited functionality will chose the this and opportunity places more quarter, our will deal revenue we a to to Ericsson customers. the due to Ericsson our third our for this UDN portfolio. and and XG, selling development us Overall, and as expand all a see implement technology to of Limelight in performance. edge to superior most

making each live interact up groundbreaking benefit from can video and streaming, it This more. us IBC by sports offering. major establishes devices. realtime XXXX experiences. was realtime Limelight solution and sub-second month last as well natively and possible both We the is live leader global, also at supported streaming for our recently possibilities live the including sub-second scalable received we’ve demonstrated service other new delivery. with industry’s gaming, opens online in industry gambling, prospective browsers realtime how industries announced streaming, interactive technology example, and video world viewers streaming This This integrated video by auctions, For that breakthrough in a data offering and with global new first new This supports can customers. to create is interactive many which existing of content surveillance believe distributors. realtime broadcasting,

new Limelight see low We realtime a immersive, applications, expect content-rich to of latency, generation driven streaming. by

become new Internet and demonstrated the potential to growth industry drive significant the this provider As We by over XX% believe of XXXX and in in video to leading heavily continue invest compound future to traffic XX%. between at to we at and growth. strong of a the scale. to offering, OTT its research, video-based, Based rate we expect of this about annual on likely traffic is fourfold be XXXX market grow

are CAGR the Limelight to video our traffic XX%. offering, base. subsector compelling launched same we especially increase as our streaming. our of statistics well exciting video-related around customer beyond with XX-fold in existing new grow of us expected enhancements, market to as to live well realtime the this customers, period, a These as as is potential other network share expand as current we product great with and With see Additionally,

connectivity. to our infrastructure make edge progress our address in services, our at edge capabilities. confident quarter, needs in We’re we strong video which the for the leverages latency In third and delivery continue low to customers’

locations our addition edge partnership their network compute flexibility earlier, storage workflows. strategic compute, globally compute with low provision, deployments. recently a quickly to distributed deploy combines Leonard, announced scale to Leonard’s provide capabilities capabilities, we global Customers private can for which Limelight’s balancing across and and Ericsson In to on-demand partnership discussed with unmatched our now and edge

revenue pleased We’re a choice. In gain summary, on deliver head to generated capabilities, grow edge while long-term our we’re in the as and expect quarter we employer features and strategic innovative priorities into momentum traction we generating third market for create solid the XXXX. services and customers to well with and executed cash, as significant profitable our of gaining position life, improve and

have after financial quarter. quarter to we’ve the customers built in the we’re end the industry we’re the the we’re performance execution confidence business quality in, three continue of delivering providing, that the At ahead and quarters, our great we’re pleased We plan. of serving and we’re is

particularly happy on other our strategic made this We’re many capacity. and feature fronts, partnerships, additional expanded functionality progress the with we’ve year

I’d team, performance and in quarter. remainder We the believe to greater is Sajid like track on above express Sajid? core well in and global each gratitude quarter’s the possible for goals to will strong doing end of With work done of market into our business, my to them initiatives translate drive every meet to We made in returns. I’ll over hard of to on focusing discuss job the that, and by the continuing our are one the XXXX. a This for and call the our expect all services edge turn third video. financial and shareholder strategic financial year momentum to in our guidance detail to for by while sustainable this year the

Sajid Malhotra

or first-half in a following a and quarter which for full-year performance I’m XXXX, good afternoon. generally Limelight’s Limelight met stayed best to in another to beat course history. expectations and on deliver happy Thanks, discuss we Bob, great strong quarter very at the

discuss the are possibility $XX.X is let’s relationships, a the QX streaming, eighth revenue services. the quarter. should year-over-year our Ericsson, highest deployment with of edge quarter, consecutive the developments last products, new global in revenue Tencent history. financially and year. excited These developing about move growth and Limelight up stronger quarter new contributing to realtime Limelight But the our Limelight revenue we forever third and million, agreement Starting with This enterprise. meaningfully opportunities In We to growth reported third including with of quarter third and company revenue. faster first, X% the very development with from of and initiatives

is seasonally the is best $XX.X it year. from million, quarter quarter at While the it than weakest last better

year quarter headwinds customers of was our provide in non-U.S. accounted have world International approximately $XX,XXX. have in third XX% the amounted dollar of XX% at largest the large and quarter of for the to XX% revenue some revenue a or one services X.X%. exchange industry highest less believe the – compared in Approximately, ago. of QX, customers ARPUs We $XXX,XXX, the Foreign one in we the of to than denominated and in currencies. to CDN total

we’ve the of top protect. revenue type the In of it. equally to Our total carrying the this quarter, type account consistent to given same for positive last to quarter. of should revenue deliver profitability the turn stay company. generally The across legacy where large cost do of on approximately profile tried our time, pursue very shared hard disciplined At and down. loss we incremental we revenue disciplined communicate. customers to This into and and poor When be we’ve come of the overhead of content margins, to the our remain margin XX% hard translates we negative XX with is revenue price it it revenue and the with points, some and

picked competitors shareholders this do up well, serve us. not my for may best but does have revenue of believe them we to the their knowledge. same the Our it and It

margin gross over the an third increase Moving the quarter last year. in basis of points on, GAAP same XX quarter, was XX.X%

mentioned with even last to continue margins We gross the quarter. we contract our renegotiations expand

in will million, adoption contribute With this $XX.X loss we basis, On realtime last expenses of efficiency years basic QX per $X.X Sales the EPS was products, from lower year. Limelight the a $XXX,XXX we decreased sales gains GAAP marketing from operating revenue an the expanded which in decreased services of to $XXX,XXX of margin $XXX,XXX offerings and $X.XX per network our litigation-related compared as cost lower due as was this streaming income $XXX,XXX million to expansion $X.XX in expect to to continue biggest of R&D XXXX. loss third employee efficiency. G&A customers, and come. expense share new quarter, increase edge netted is and XXXX. Also, with our streams expected XXXX. to believe $XXX,XXX as and other with QX Adjusted expenses marketing we Interest share, overall income, due $XXX,XXX Total well pricing from – compensation. a and These GAAP even throughput EBITDA margins Non-GAAP bigger of and for continuing expense up quarter to quarter third to $X.XX were due increased improvements year, income to million, about in improving $X.X of improved year. expense to to from and continued place last our in OTT teams. compared compared the a XXXX. come broke our and

normally balance quarter, million up days. was DSO XX of cash We quarter and QX. to in by cash flow. as to the performance Moving of than third our had operations. from of million strong in XXXX to DSO of cash for provided of $XX days QX. and be generation range expect in marketable $XX.X over This cash days, at as reported six was the at cash ever end We September the million had we XX sheet securities QX. strongest end We lower really the collection XX $XX.X

outstanding. shares million XXX.X approximately had we XX, September of As

fully additional count two from was last increase XX calculation. third to R&D quarter The would As the of quarter up and have and of diluted our end the of a up reminder, at share the end in sales X quarter million relates employee shares year. personnel. Total last XXX, we from an additional

Moving revenue million. the full-year believe and between $XXX to million We will $XXX for be guidance.

per to April. EPS from approximately is Akamai gross $X.XX XXXX. of points $X.XX increase litigation expected to be positive than share the impact expect to continue $X.XX XXX margins more basis We the with between in includes share per GAAP and settlement that concluded by over and

under capital and be and million, non-GAAP to EBITDA expect down be and of around to million, expect previous Adjusted $XX between be is from guidance $X.XX. We expected $XX our to expenditures now $XX million. EPS $X.XX between we million $XX

issue to XXXX completion our near expect in as we preliminary We our process. budgeting guidance December of

observation gave and Let Early a my analyst guidance on me guidance. about estimates. word naturally the conservative just we evolution say our the wide business of with of variability,

predictability actual closer increasing are and performance. closer to expected with guidance giving we Now confidence, and

of the we’ve history our is reflect We meet, community. and be updated XX%. margins share to This and the the positive in to strategic our I well. we XX% momentum the sometimes observation my to beat on On other quarter, excess seeing revenue goals on annual we’re initiatives the been and our are our deliver the with growth and raised hand, business take outside of moment core Last investment business to the of to long-term and range focusing rates this in higher-end based to closer long-term raise, analysts broader gross the wanted as guided just guidance. a

the Let’s goals. We’ve take will talk agreement to we a initiatives Tencent. contributions moment about our believe also talked earliest The the drive opportunity pools. our from revenue about are smallest with long-term

realize. to has Then a take with and but the for to it’s today announcement The medium-term two-way financial be It’s business the more opportunity offering visible with potential is bigger the fully We relationship will healthy be is time the streaming announced. we around Limelight just them. continue a growing. have constructive believe services earlier bigger, from even impact in consequential. next should and market these to Ericsson We realtime

effort from these of for biggest refreshing conversation millions half traffic. is to add come growth trends is edge in ago. growth could the anticipated realizing these of also growth profile, long-term the deals growth change We its To Internet the lesser target just XX from almost services years also XX% come, these profit and revenue and clearly to the from but the to price in months their the Together, even be expect in longer-term to efforts with of contribution from the sea compression. the talking XX to more of a opportunity, secular improving we believe potential margins all about contribute next future healthy furthest at Lastly, full and market year initiatives. and dollars It catalysts that,

is wars. and We The and are very creating up. minimal, have growth on The industry position and it it Later a insulated This to other is in new contracting appear at to like business from getting exposure feel good and somewhat of interest little a we developed FX economy improve. expand strategic Limelight concerns. opening rates better. this beyond trends There’s are trade is to world good continues opportunities or very from value rising risk look markets and about and insulated Limelight. our the our popular the intact lot core initiatives and

Now With like to if that, and this for call customers, happens very up we’re the of of grateful. without and the a open employees focus our the singular on that, support meaningful shareholders, contribution your for questions. Operator? we’d our

Operator

ahead. from go We first question-and-answer session. Our Kelleher Please [Operator will Davidson. Mark now Instructions] comes begin D.A. with question the

Mark Kelleher

start there To the Were Great. quarter? Thanks customers XX% taking the questions. in the question. just for numbers any

Sajid Malhotra

one. Just

think, a it XX% been and Amazon few quarters this again a we’ve was has saying I all been quarter. was that along, it now customer

Mark Kelleher

that to CapEx know made And down tie you right a for into you Is you capacity? now? you comment capacity, Ericsson? more of your your then new of of customers. I kind your capacity more in with best great. about a opportunity that took Can expectations just capacity Okay, reserving CapEx require stand kind does CapEx? at expectation Where going this map million? need your And can your couple utilization for

Robert Lento

Hey, Mark, Bob. it’s

Let thoughts. can add me then of his and make couple comments Sajid a

– in a this moving standpoint, adding is also are but software equipment, year new from of and quarter, probably now doing. something despite we the our continually capacity, – purchase customers both through capacity through do are those And we we which so those And including of optimization, third away. customers that,

comes then XX done taken adding the months from putting time, all we’re of lot in all new than new that three software which years locations, the although existing in we’ve more last, say, and Grow three previous in the today principally in and combined. that so ways. we’re out capacity technology, spending refreshing CapEx adding of And a locations,

is our inside always heavily because been competitor, has continuing so to The been we’ve And interesting its its us, we’re Ericsson an disadvantages. network. to largest embedded they’ve centers, that. data But do for really which opportunity carrier relative advantages one the and independent

capacity. we’ll opportunity many and a that. will are partnership, some we of ramp today the it places be carrier don’t Ericsson XX the XX start months now in inside With and locations, in take But which us into to will of have to networks places we lot where be

from it’s so us going And help to really perspective. that

So always into be to. Ericsson sites, that same many – us get time for opportunity to always the leapfrogs us adding capacity been locations to our are an to obviously looking saves put that new basically occasions inside add existing to the exist. already have And capacity harder creates and for that all and to are us and our those at out, Ericsson the carrier advantage built we money, the already of has software and us need hardware network because just take

Sajid Malhotra

All right.

for you or while where you’re and Except goods all. I numbers, it’s And then it the not next utilization. covered like had looking it’s Mark, give utilization. days that, because the fact we and factory the three you it’s two factory later the a running day around Bob, think, don’t at days you’re selling question I utilization think, you or

and the usage there and We may X have is. close little we of the of you’ve at peak, of the peaks how the for sun kind at But – it where what network at at in be morning, the very of and time what day you getting. built and follow a the day time you’re to capacity peak is look

in down North when capacity here up lot goes Pac, So utilization it in America. a goes Asia

dimensions utilization, to of what tell answers. that that, just maximize And so kinds are and I Hopefully, there try that’s we you. around all

Mark Kelleher

what’s that there? more does. on that timing revenue does When that. that Ericsson starting I the then of – the deploying And and ramp appreciate situation. one to Okay, just

Robert Lento

best pops Yes. in then my project year get We’ll their more pop the of and next the locations. of existing in they probably couple taking initial completed, all guess it take add convert is, the first will next months. till to mid meaning, aggressively And us want to

So meaningful next I year, we’ll in from second-half the that partnership. think revenue of see

Mark Kelleher

Thanks. great. Okay,

Robert Lento

Mark. Thanks,

Sajid Malhotra

you. Thank

Operator

from comes Company. with question Please Charbonneau Jon Cowen and next go The ahead.

Jonathan Charbonneau

question. the taking for Thanks Great.

line traffic, of effect saw you when on them? that largely what about was the you. trends you’re with did you from saw talk that expecting terms In And six customers in can go into repricing Thank July reprice the you X?

Robert Lento

Yes.

customers it’s went like changes what next a we are and that. traffic So and like all bought the because obviously signed artificially is where been up, growing we traffic, the day price. we went a those back and of something being from or customers price by have one contract were not in held But to it

continues place. be all Pricing, want and long-term contract to renewed, the with kept grow the customers. to were traffic wants those because our in we So relationship customer

the and so growing pricing you where up a as And start for a revenue then can neutral sign to while your again. contract point changes and traffic it while takes to build

of customers with growing us. traffic are All those

Jonathan Charbonneau

Great. Thank you.

Robert Lento

Jon. Thanks,

Operator

question The FBR. from next Sameet Riley go ahead. Please Sinha comes B. with

Sameet Sinha

is there? Yes, little in you. such? to it you gone and exclusive of the past thank hardware talk Are they I a First, A to is a be too happening? ask the about had services and relationships because us going back to Riverbed reason the haven’t couple be between give sales And and going to – CDN of going the Can question. is, you Akamai Ericsson you marketing more how your mean, has Cisco, be I going to going Ericsson the couple far. be Can questions detail.

about I you. Thank of talk And customers two about exactly kind tell wanted the Can traffic, let go what you kind did if if to when quarter secondly, us it? talk the in And those did to of – can you can away, that industry? to appreciate is you understand traffic what So also those how decided just you this one that different? go. us

Robert Lento

Sure.

the very examples because it’s Let talk Ericsson, you different the the to Akamai on cite me I side. think than

exclusive. exclusively. this is way is the work to with it ours So are current replacing is software going They their

to pop, performance able and we a as cost into a that will soon as So be traffic us. which going advantage are a to push converts, provide to pop

that revenue Ericsson good immediately will to and capability it and that the us. we’re those Based marketing only is for on platform on to and quality but on for having them plan table that been based But should that help the on us has UDN more platform, base to the enable capabilities continue edge that’s customers it side. who reach, on has So also not – enable the rapidly the too. stay they’re grow customer customers services, bringing software on now the CDN our UDN to selling and and the

So I think, we we this it, have this we happen. it. will happen, We capacity – soon to as And is benefit not has may us. immediate right? soon that just as to convert think do going it It’s as as

Ericsson partner chose So we’re that. that Does that on pleased answer Ericsson. very on your with question us to

Sameet Sinha

enough. you. Yes, Thank fair

Robert Lento

Yes.

much you But we that, they talk two were customers, to price. types in as On less lower because really quality, individual are customers. be interested certain know, – don’t the there tend are about people of traffic

not the interested but quality very user traffic we’re controls video it traffic, and quite some there less the in lot that of that content priced So over carrying. of in low terms There’s and are can far or of generated happen with what content. risk a in was that frankly, of its just

was mainly, by driven So – but it issues. financial

level location. the within good at to very the level We’re customer customer down measuring

We’re very and and location negative customers at traffic. margins, gross good were where these delivered particular almost measuring modeling they every

the decision. happy taken top makes and the used on not that that it type revenue is not an of any margin is you’re you’ve hut, with of for network that. easy it your of sort being So, Other content when than

and quarter, I of question. of two was One part gone into has third coming was coming customers fourth think also the – the gone which one your quarter into the

Sameet Sinha

thank Okay, you.

Operator

Tim from comes Please question Horan with Oppenheimer. ahead. next The go

Tim Horan

Thanks a guys. lot,

we as lot is market major You’ve all you doubling a the tripling, opportunity all And guess, the something outside? Can far revenue from second-half XX%? the you’re little that of got just is related of or year these initiatives, the it after growth, XXXX, the in to kind XXXX, long-term a more see initiatives. start just see growth. with so is support with kind front Thank this that I give in of bit we XX% next maybe the going Is a here to can size in you. of of should sense, us that color personal you of behind these to

Robert Lento

Yes.

the about financial the initiatives side of talk then Sajid on me and it. themselves comment Let can

of some these are initiatives So nearing.

signed to we an utilize example, the network earlier started year. recently. started their in customers Tencent, our this for of agreement China midway customers of We’ve They as with use for So, network have year. very just their some our through for to

going think, we that us. a So go as into XXXX, I is to be contributor for

So, bad not news to meaningful, four is, it is good six the quarters it’s before but take us news years.

is be Ericsson to going think, similar. I

relationship. or whether the locations Neither higher in have to change more of and at we of meaningful from see even I one that opportunities we deliver look think, market look customers that as when those really would of quicker, be to helping maybe that we to because regardless start at we and the second-half targeting capability XXXX, some us going we’re not. it’s our size quality customers dramatically, existing that

So where different services, change, in it size – story the doesn’t it’s compete the longer-term. market it’s

bit XXXX and reminds in it a me XXXX. So little

was Some people years talking of build like to were momentum longer. starting And in know, day. about couple OTT to going happen as the we so XXXX-XXXX, it next measurable really the

projected edge be I that reporting take it think merge. huge of little All for at time a it and on market. bit to the analysts are services, a looking with it’s to that to going

of growth. think Leonard going today add to could opening large. – and market be our a the in be reasonably is capabilities So our us infrastructure that, we what with Ericsson, achieve can like very that a to partnerships to we have seen. few portion remains that short as own material that But view that own I That within to years I

to get continuing order be in grow, counting not we’re we example. are to Tencent on to Ericsson meaningful. for to grow not, share having continuing on and that large We’re XX, counting a edge But compute of

see it of from a And want Sajid, size you financials? to how do we on perspective. kind so that’s the comment market

Sajid Malhotra

we opportunity the – times mean, or TAM the about bigger. I If the we in is much $X clearly, billion, market business market the many around base this is think Yes. addressable size.

collectively, this right itself, this it in to million to open the doubling last the and that something next are, million or it, of year after. And $X couple $X place year grows if $X $XX to of kind $XX would of the a When is year, make room almost million the A So million one, or two, the steadily again growth at profitable then of grows keep very up million and kind does sense future. again company. things a $XX call out think to simple to progression the to grows again That’s business the and business moving growth was from a new year us I opportunities it XX% $X all little what million these where and and in And we’ve for very, opportunities year, way $X initiatives X%, invested. us. is and this these for to of takes foreseeable X% rate XX% the X%, for it CapEx; look revenue a very accretive lot of I mind, terms, gate. about million a up that

And as time. would very the a is to But going company year. that get there you moving of So and possible. But sustained think rate about growth the to everybody be we’re course we’re in next that be three a XX% think to over I I don’t hard number to getting talking that up that about logical. assured, about progression about rate talking years inside if growth XX% working again… think, rest as quickly And

Tim Horan

And just clear�� make

Sajid Malhotra

and turnover with very price price with point, a profitable opportunities. organic there’s these sticky each different different with compression contributing a … with about one less very reuse again, a of like with more infrastructure, to revenue, of lot like

Tim Horan

those to you for right, possible. No, And for numbers that’s just not edge? all really services, four cited be just clear

Robert Lento

them together… Correct. I’m just kind of collectively pulling

Tim Horan

Yes, yes.

Robert Lento

me just And we that what this of then business. give a think sense

them think of do you we’ll right to very risk very thing do If this want the ahead. adjust poorly, I should if would But I if again fall kind of schedule, we’ll of be all think, behind. that we get well lies, happens that just progression. all where them very,

Tim Horan

just sort you realtime last just growing a market share, because improve realtime And this market you done video? you’ve meaningful describe in video, at a of that? usually the gain enough think what good engineering in do perspective talking about share realtime video? point, pretty to And you from lower then can question, an this you’re have And is

Robert Lento

Yes.

or day, at live a not of make lot and Roku is will are perspective about reasons to a like that of second are why wait an there So broadcast. with behind that most players video engineer, is whatever, transmitted that. the get get I’m let caveat me on seconds there chunks. best, to From XX – engineering And XX chunks XX that an three comment to

seconds So that’s XX and start then playback. to

pen We’ve stuff good and tennis the seen longer And quality it no the frustration wanted at reasons around to where the it’s to good deliver near deliver enough sort a and people amongst at of U.S. consumers. But Cup, why kind it is, that’s quality, good so just of growing World there’s today? realtime. is

that’s latency. do data channel, video really that taken so second and we’ve technology separate that built-out but we’ve audio – I of to did anywhere – things from and one integrate is, and worked audio deliver the you CDN, and we a think anywhere so channels. we world the you our than even have less channel the And But to what on at And WebRTC. bigger so in in can can was because utilize fairly a video channel WebRTC world like called important, allows into well

past. in your bets and on elevator some audio. you’re the video, the the our the reason, able and to have phone room, on whether drop be you’d runner still play But on be you’re a to an So be realtime chat to you have to mobile screen a is right next to same for also place able of going

a demonstrated flexibility and of the screen, lot do a that and us with the can gives things IBC. of lot real at we it estate So on we

some and then understand do we Tend that The as people higher sports people. space. to and is be can from But we testing. We it :Hey, in of to next to The this sense need the urgency a use really and to have broadcasters, channel. are that that’s people we need have – when gambling So gaming, are, interesting. talked we how that implemented?

And so everybody markets depends which Sense on finds urgency of it interesting exciting. and we’re in.

opposed live so production big hope at companies And of events first to as and others we do didn’t that, think the year. the it fast said, do linear very, of live plan a we Zone there like We go are end ago it. live by growing. that we that Prime get of out devices to at and excited as look people hope that couple of that we’re not years we’re seeing streaming of Amazon about production, And the as go end Video you by by to market you production into and very Video viewing into more for Prime especially live the utilize – any the So didn’t video, and into And more two only event the the the move Internet is the right? with traditional companies Amazon Zone year, to opposed few Internet-enabled I and to customers broadcasting. once the

we’re So about it. excited

Tim Horan

Very helpful. Good luck. Thank you.

Robert Lento

Thanks.

Operator

Michael with from go ahead. Raymond comes question next The Please Turits James.

Michael Turits

I Bob participate Hey, on questions. edge there’s guys computing, Sajid. and conference Two you believe this One a in. week,

Robert Lento

Yes.

Michael Turits

capabilities. through walk your upgrade to what doing Can you’re you

I service or the first kind questions about it’s question. a compute including And logic? that on can going loss up to you termination infrastructure enables of probably think edge, have just That’s provide that from So basic more customers. of I the as two the something application

Robert Lento

Okay.

standpoint and the the software we’re a is in XG at working Ericsson right as build done compute our to carriers machine is we applications if from a cloud the services inside infrastructure as because from something inside on why opposed perspective, edge we workload get of partnership the service, strategy can to to So having part having a have our we they a did call to capability, edge that perspective, the and now and the network. is network big right Leonard. virtual assets partnership are with out they did as which edge the – It’s edge, But many sort which nice. datacenter. customers But have to develop of push be from enable function a with back software

So, it’s it’s evolving, new.

definitions we industry We’re different go as the you is. lot know. learning A as for this, as of

City at We to Sajid many with talking will New week. customers. York I’m the hear in this conference today

doing than customers’ application these shape. bringing help build does Sajid, us. software a a to a out things So terms reside in service way life different any of – the as capability we’re around of to place And it’s And meant the function are anything is taking that all from having today. But ecosystem different? the in perspective, of it our

Sajid Malhotra

think that’s on. right I

Robert Lento

Yes.

Michael Turits

– on And lost. other the then the customers you question on that

said – that you So a not you that Is I were this profitable because can’t said I I done that mean, they imagine. customers. not I were you’ve they think, change, before. mean,

I they or ongoing guidance, thought into that Is seasonal are customers I gotten you’ve of profitable. into that it went in of profitable? certainly what got the not You’ve so not Also, accounts last rid for the where said do gone that quarter, have is visible than third would then the you so been that pricing think, quarter? fourth guide through down, and periods the become the less they rid

Robert Lento

was and…. the We last guidance. knew met we Yes, that happening obviously

Sajid Malhotra

Gave the guidance…

Robert Lento

in we guidance going the did. …gave that

business lost of negative been up quality competing. so have more as do that expand seen I compression I don’t competition room we for why it much capacity. just that you makes it we area – as else that best handled us where to have never looks have we And go to to as know going have unusual matters. not at other feel these can our profitable. price By And idle And matters, were But than margins. in quality customers would fill that. have tell late, would the where with we rather comfortable customers

Sajid Malhotra

also revenue. here. the And on. we’re our revenue, puts that a most but I position Yes. not gave to the this have way always from having guidance the the borrow bit some just grow this the that’s But we looking bank of to anticipate add grow efficient in going do. Like to of what us for little to

And to are at where where and customer these margins, money. So this available. customers take mean, just our build I a customers capacity gross margins just even for price revenue not loss dollars available are They’re capacity lose do the and don’t we go precious want sense. point a out but sure, the that build to make serve it’s to we at

and some coming find They right those to to their base side have always point, these enough where good on, that make do sense. make So offset revenue good At other there’s go customers we to and have at that have do something coming decision, it’s it. it the that opportunities at But excess board be opportunities right? the business, exist see to sense other hard may time this we makes trying juncture time, this beneficial to decisions amount a the same in on capacity. some the are marketplace. our in of that with with others never to the or most position you a you on customers good ourselves don’t are and But seems of

on the So you improve stay same the the of trajectory revenue, to at you margins. your continue that time,

and you You your go manage accordingly, and these choices. business ahead make

into year the churn, expect. that So start we kind here factored the of is of might the

it, gave we’re surprise we it twice kind mean, And last that, we us. quarter, expect. guidance I from of the is year the of guidance Here at to start raised the we might real executing and so the no against gave progression we when

Michael Turits

No, for sure. discipline we definitely the All right. appreciate

So just a clarification.

midpoint implied So below which – for fourth sequential, seasonal. the guide guidance you is the this X% the the the to get of guide guidance point the full-year full-year to at midpoint based on about quarter of

two a understand customers? as I of function of that second gotten below of the rid So having seasonality these

Robert Lento

and they quarter about quarter hit they’ll Yes. A couple effective and – third throughout different that I have contract, of the dates. they when of [Multiple renegotiated said, last the then that Speakers] as the we renegotiation that, hit the talk

of Some the three some the some three, hit one all hit months, hit two three. of

where quarter full is pricing fourth effect quarter is in So the full place. of the that first

Michael Turits

Yes.

Sajid Malhotra

have ways the lot dips right? QX, pretty a in QX So seasonally lot. keep at mean, that, third up in have multiple drops we jumps to strong, this. used there’s QX from But to I a look quarter, mind, you QX

quarters Now that are reporting other. each three we are equal roughly to

significantly. is So doesn’t isn’t would it be, like, okay, fourth third right. the much but it We’ve higher moving quarter dropped quarter than the what look up, normally

comparing is what back-end at at the of equally at the looking that process. against looking you’re So important as outcome

Michael Turits

it. guys. Thanks much, very Got

Robert Lento

Yes, thank you.

Operator

ahead. Jeff Craig-Hallum. Please [Operator next from with Rhee Van go comes Instructions] question The

Jeff Van Rhee

to, Great, half I on If them Bob. you customers. second, for to the taking based me. quarter, several from a to go a lot realtime Hey, think, so were a And believe quickly. dozen another quarter or of we that go question, their I could commenting Thanks just back think, for indications live my thanks. Sajid. Hey, wanted proof-of-concept to I video last

of related thinking terms lives be in Is go commented And to you’re just lives and with a that you when if video expand a today what’s by publicity the that of second commented couple what of the pipeline have you realtime the on it? last of to think expected quarter? line you may on I could the the coming in launch year. end absolutely you timeline you out the then take happened the maybe of in

Robert Lento

to GA, clear, software the go to into be availability, going general – in is we week. So a about

versions. are beta customers So still working with

is that getting week GA week. And production, access on customers or so pipeline to even strong, the to but next the either into two signed go the this versions pretty they’re have just

and marketplace, about where a healthy the to into anxious there’s in get get where it of level so production that’s some we we demand. but points feel And good – We proof healthy so are, pipeline, are.

Jeff Van Rhee

pass you to did – similar see And Okay. business, that the two respect that with took on a the that did that the in just competitor chose then take – to case you business customers might a essentially frequency, or Did fill have suggestions behavior elsewhere that in to you see instances other of accelerated? head business, head theme maybe that was greater the that any much pipes? broader in other

Robert Lento

– a marketplace. there’s the broad-based I industry. tough really. mean, There’s look, phenomenon aggressive within pricing that business. win always always competitive new price to a I wouldn’t compression. But Not I as don’t view It’s

Jeff Van Rhee

Yes.

Robert Lento

new the were but that, price we’ve with talked competed where think just about not and the quality, price – I times there to you’re being But we coverage. the I sometime calls absence on have story, And our on new in for know of alone.

and As quality they we warranted and price moved a customers quality gotten it up higher kind appreciate up, from of our we’ve and the all.

What commanded that there’s is is a that of kind who the traditionally in market So who premium – been surprising. but always has marketplace. the provider has surprising has be price the become, leader low because at parity, to for

in feedback we customer, we’re getting On customers. the about pretty that at available be the our from that other commanding that the we’re And comfortable position and and hand, expect some dollar. capacity that or level fighting for the price somebody last always you we’re to last the other, feel

bring availability Here of to conference market, feature conversations not IBD the New of in week been had have real to quality IDP, we in has and interest but all just in the standpoint and the around just at the and – we good York and functionality the price, from conversations IBC. this what of footprint. this at standpoint stuff from There

Jeff Van Rhee

reduced the the then a you there? of guide Yes, will, the Explain of a CapEx, me. versus the bit your of got guide it. a gave bit briefly your Sajid, you And secondly, outside at expectation. even And prepared on just improved some street just of it qualifier, remarks, two of perspective, sort the other the if quick end on ones for very what

Just revisit that? that again understand just I to sure make

Robert Lento

of couple a things. Sure,

position the we to We very in guiding for to having it not penalty really having Let I confidence in to numbers, outcomes XX% the taken the variable, being do like closer the on wide. guide one is me a you right? just the hit Because – what interval, ability not high. mean, confidence first. XX%, kind of fairly going being don’t And really were very our at know that making enough business

is guide where time of that you And hit doing going to offset so way be were were period ourselves a that some sure we we you And numbers. that want to room, and for the doing the you’re leaving you conservatively. that

predictable business. to happened I and more think, our business becomes time, that’s what’s good over

predictable on. in is can Our become we more become of What The the our fractional. and going see about of reliable. into business see as has we a business within hundreds predict time it’s has dollars. future, better variability The lines we variability FX G&A is gone more our in thousands

what you into get to do. And interval XX it you – about be and you able to up so XX, XX, should move what maybe that is this it quarter confidence know because as here’s to reliable, even business you feel to more XX from the closer becomes the the going

So in of that’s terms our done what guidance. we’ve

would even I I think of the Street ever beat, extremes close think, outside early some to outdoor on, we people met the the with The And guidance. guidance. number we the because the now believe of and that a never guide, us gave kind are some we’ve to pretty and of Street. reach series is what we said where meet stayed to

of there, want quarter course this quarters. just execute we’ve just business, to last against year, we to as and think the over So done we and but want just the remind not everybody XX what good about guidance the pretty kind I the eight, feel of not this we that about

Jeff Van Rhee

Got it.

Robert Lento

guidance. on that’s So

Your was… question other

Jeff Van Rhee

CapEx?

Robert Lento

…was around CapEx.

deal like of you mean, of when So of, Ericsson rid takes to I pressure clearly choices. you suggest think, of I have future Current XX%, that helps. a get CapEx, so we CapEx, XX% CapEx, kind couple a

the go you’re you customers; $XX-plus bank show you the a should deployed instead get be everything capacity. lose and and up capacity like at lost run, these with the money freed run the some where relieving customers two, You’re And reporting do you you money capital or for you back there, it report business within to of trying right? some that cash the the up to customers, at and quarter, one, the you build something of million with ahead balance end to going because more $XXs, going in to serve money,

of that in of had about to last well margin talking line, software basis And of we’re as available we I and able XXX excess gross as because in in XXX customers, goal be of to where capacity capacity so result, basis bottom our in implementations year, before. basis we in of bank, want years stated XXX point year availability us. made to XX% mean, that today we the take profitability the show points terms improvements I games some for cash we the think, in point from very a of improvement helps in all we’re are numbers So the with of in after churn few that up as strong the year of gross points on the continuing the profile. this the excess to track to improvements get margin. XXX-plus basis a And

Jeff Van Rhee

Thank Great. Got it. you.

Robert Lento

Yep.

Operator

any for Sajid remarks. closing like This Malhotra would concludes I back conference to to turn session. question-and-answer our the over

Sajid Malhotra

All right.

with pleased we’re we mean, that I quarter. good again, It once the quarter So another delivered. was

think in I strategic progress the is news recent evidenced the flow. objectives against long-term goals and our

always about I again that, you, that, excited operator. conclude And We’re available this the and to additional answer thank any We’re questions, for call. And us for with we’ll call joining future. thank the say, you just with

Operator

The conference presentation. for attending Thank you is today’s concluded now

may disconnect. now You

Edgio (EGIOQ) 18 Oct 182018 Q3 Earnings call transcript