LLNW - Earnings call transcript Q2 2019

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Operator

Good afternoon. And welcome to the Limelight Networks’ Second Quarter 2019 Earnings Conference Call and Webcast. All participants will be in listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions]

is event this note being recorded. Please now Dan Boncel, would like to to over conference the Limelight’s turn I Chief Officer. Accounting ahead. go Please

Dan Boncel

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

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

Forward-looking that our of for priorities, statements statements and historical feature announcements. fact, plans, XXXX our product statements are not strictly trends functionality operational all are beyond, strategies, our such outlook our secular and business as expectations, and

and of should an reported considered as Actual performance. future be results contemplated could results materially statements from not indication differ those forward-looking by our

For to more discussed on periodic filings, Risk annual our in Form our Factors report information, most recent refer including XX-K. the please

this as forward-looking information as on update on any by call statements based date statements any to disclaim law. today’s forward-looking we required of The obligation are us except to available and

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

from session be the will during prepared Sajid. the and Q&A available of end remarks We Bob at

to I over would now turn to like call the Bob Lento.

Bob Lento

good operational many the setting across the quarter, measures. the and second a progress during priorities second quarter financial afternoon. half announced Dan, Today, we good foundation Thanks, multiple results. We on made and strong for

million. were in $XX.X expectations. non-GAAP net loss and Revenue analyst was adjusted million million, net million, These largely second $X.X was in GAAP results the with quarter $X.X loss line was $X.X was EBITDA

top last secure continued quarter the impacted by revenue with our decisions our we align the year made Our and strategy. base customer be our in to to customers second

decisions success. opportunities and drive to us better We coming the quarters. in growth believe to growth long-term continue revenue financial in have invest those positioned We expected for

expect many quarter we are have particular continue the quarter deals operational fourth sequentially initiatives new in a XXXX, and our improved metrics this Many second substantial when trend half of this to and more the impact. financial with in expected and of to strength

One content exclusive for service scale partnership presence with XX capabilities our points EDGE its are of edge provider is such within GRAVITY with more the delivery cloud we global where provider initiative platform Ericsson of networks. than

in While the slowed EDGE plan in our the momentum second after strong, executing quarter CEO on GRAVITY partnership March. remained the departure of with its

CEO. June place in former However, GRAVITY’s EDGE new new Okamoto, leadership Kyle as now executive, is Verizon end the as in of stepped at

partnership, and pleased We Kyle’s engagement seeing and momentum. are very for already enthusiasm improvements with execution our we in are and

are EDGE still we behind plan during made the good quarter. we GRAVITY, While with progress

across We locations have existing countries software. to converted now XX eight operating and GRAVITY infrastructure Limelight’s EDGE

turning is service the milestone provider, our first which is proof PoP, new We providers partnership up GRAVITY, as next-generation software an build in specs. partnership working. also point hardware a reached new is a significant our important it PoP a by utilizing This and is service EDGE for that recently other our within

low in CapEx capacity the service closer were within edge a locations mile with Limelight for providers for provides hard also It reach. to previously expanding us that to

more. discussions They a strong several pipeline have next-generation excited deals has very EDGE service process with in in We with and already of that operators PoP are GRAVITY with providers. place agreements many

to momentum accelerate. expect We now

footprint our GRAVITY the that to Ericsson local that and through at converted access ISPs. have important There is us are and customers is connecting the capacity components and we our capacity are initiatives. we two addition are important capacity into us. our EDGE on and of locations, server which focus network new network software There major expansion to support to locations edge new with added In through the enhancement continue expanding capacity the key capacity to of

At the of second beginning server capacity. per of had terabits edge XX we XXXX,

per XX the achieve for second. to was goal year Our terabits

exceed are We goal this to year. track on at the that point through

expect version our performance designed the is from and that new of throughput. of We increase to drive the a software to that come increased half

been new This years. development in for software the innovation has two past

capacity We are deployment increase CapEx of now in have per at in of over resulting its spend. May least XX% begun and complete an second terabits XX additional server without

in increasing pursuing also important our that are that capacity in includes building aggressive new are We PoPs capacity plan to network customers. PoPs expansion and new existing an geographies

capacity initiatives a in we as started We across our regions where XXX terabits second of per than times with the GRAVITY of globe we network and have XX work PoPs capacity. expanded have these and result three year, and the some by EDGE more over

We logos a growth impact positive our quarter revenue expect have customers in to and these across numerous new added was on future. Customer the the in acquisition efforts quarter with were drive all drive at solid will second expect I expected beyond. in which in highs, bookings pleased regions. new am XXXX revenue especially record second revenue that the half the of we and from second growth

Disney revenue provider latency opportunities high video on quality growth Premier strategy delivering consumer and with recently of direct with launch a to global or broadcast the of are seeing our Amazon matches who in being Examples Video Apple to expected rights in fall. low League exclusive to English this drive won who to line own are Prime both offerings scale. We significant include the their leading some U.K.

that closely term these strategic needs. to pleased the CDNs indicative be a of believe to supports like focus. capacity delivery their that We one to our are with are address initiatives these working longer customers trend We of

you well We share are to the we expect others in near future. as these with opportunities as about excited

in our while traffic, some traffic record am particularly previous without delivered we the and was over June record during April Throughout major in first than in record events customer quarter, HBO’s the any higher XX% which of customer major second that quarter Thrones participated we Game May. quarter, including set the in pleased generated we I events.

to baseline it second our expect this the half. We momentum continue excited are in about business and in

to streaming natively video browsers continue solution scale the Limelight first Realtime by a is major of degree industry’s is interest We sub-second and Streaming, that high live see in global devices. which supported

the closed Realtime deals second number quarter, we more trials. have and a several engaged new actively of Streaming During deals in

robust also have continue to pipeline. a We

releases on will to new working customers, momentum. additional important are expect We functionality, our feature software accelerate we introduce to our which

can establishes this yet that as for this with our at global While material a do in with the of we we or increase us differentiator broadcasters offering are leader opportunity are is nature for long-term and it the is a in is discussions sub-second changing as delivery. that not a the driving traffic, us is only provider industry this pleased Realtime scale. video offering clearly Limelight Streaming new revenue

edge services, new closed leverages address pleased are deals have a needs to the We our of pipeline. infrastructure the latency and progress continued second with also number strong at quarter, our In which connectivity. in for edge edge we customers’ our and a low growing service and

excited to We continue opportunity business. about be services our edge to grow the

our generate second be in summary, of first to quarter financial the expectations to performance we track of on largely In and in four half quarters and continue sequential analysts’ growth. line XXXX with was

multiple with strong we second believe of year, partnerships, for we and across customers existing at much positioned a beginning product new and regions, have the has us lines across dimensions all which half. the activity multiple both momentum our and expansion Since generated various

important confident and us our as will that quality to year forward, low fronts. is I growing, opportunity existing healthy I latency, XXXX As look new other and believe come be environment needs. We ever innovative with in and are many customers video our delivery new remain an best high industry on and we events, launches, major rich offerings

XXXX. We and in we decisions to drive and network will believe continue customer the results for even needs an lay capacity, our expand to product the our our efforts build and serve yield right innovation invest foundation and people footprint, and better

global am like industry pleased XXXX. and of would with excited the have for work together the I moment half have generated as first serve our the we my I been future. in gratitude never our express at momentum the as am hard this in and I about they to team

With that, our over XXXX. in for detail to the quarter guidance financial to the performance call I Sajid second will turn greater discuss and

Sajid Malhotra

was top, Good increased Bob. third sequentially. million, growth the The the quarters. is in sequential second Starting down but X% our $XX.X year-over-year, at XX X% quarter Thanks, afternoon. last highest revenue the in

amounted was denominated Approximately in the headwinds quarter accounted X%. in revenue International approximately our total quarter a currencies. QX, to $XXX,XXX, customers second year for Foreign to compared dollar in exchange revenue XX% of non-U.S. almost XX% of XX% ago.

Our top XX account XX% to XX% last revenue, year. total compared of for approximately our customers

volume sequential growth. delivered a Second fourth grow very quarters. we quarter quarter core we than business believe pleased in to and than revenue lighter the industry and Knowing that, faster are we typically continues pace the is growth. The third with had and first

are momentum as our capacity, added is and good consumed getting edge we continue quarter pipeline it see during have strong. adding the new the We is customers and to services

huge Our slightly in implementation, network This our to expand new both is geographies. the allow relationship see ISP while we work to opportunities with and its broaden teams are many performing local its are and scope. we undertaking with Ericsson will project behind us a in

revenue, at second. reached per capacity the the network beyond XX total our approximately Moving of end terabits quarter, second

that increase throughout Our saw continued continue. to we the and necessary traffic traffic We record we delivered quarter. of in quarter deliver the amount expect is to second network expansion steady the a in

increased Akamai second year, netted second $XXX,XXX, income sales expense expense million. income to and R&D income $XX.X $XXX,XXX. last and settlement decreased immaterial expense recorded expense income G&A to quarter, million compared $X last in increased and marketing the of $XXX,XXX and quarter the other year. excluding Interest in

share from basis, settlement. to per $X.XX million Akamai year, basic was per per compared of GAAP $X.XX lost $X.X share EBITDA last for we the share a quarterXXXX. second coming quarter, $X.XX On Adjusted earnings the this

second the cash securities million at $X.X operations generated and Cash second had was million $XX end in quarter. the of We marketable quarter. the from of

XXXX. to that of each in increase quarters the expect in We remaining

settlement second We the the year related million Akamai total we capital million. the final bringing spent to our our in million quarter, During in to expenditures $XX payment $XX.X the for quarter, $XX.X approximately XXXX. made in second to

we customers half to and As requesting you in are the are customers see, demand meet back prospective can the spending of year. on the

XX expected quarter, DSO end days. to was to the second XX last of end days days, XX of of the At compared our XX at days year, within range the

free. sheet We debt are payables revenue, Our to down remain the previous while very balance compared remains up on Receivables are higher strong. quarter.

approximately we XXth, had XXX.X June million outstanding. of shares As

was count Total quarter the sales consistent XXX, end last additional functions quarter to our strategy. increase in year. personnel at end is relates up should primarily the employee and from count non-customer the with XX of Employee stable. second The remain the

a let key highlight few getting guidance, me points. to Before

lease for our since are new is inception been quarters. are we Scottsdale. in headquarters begins and signed location, we XX-year which have a Occupancy where construction. First, September temporary moving from the under to in We currently we currently Tempe

most cash called we this construction all and it occupation this no as amortized of some life The one-time move the our results. spend significant of of over is it the are carries charges lease. with to operating There are absorbing within related out as even

the we six our contacts second well negotiated of in did revenue XXXX, base. XX% major quarter Next, over of representing

similar Some a again we expect yield that investors magnitude material renegotiations concern case. will have don’t said, we to year. to be that continue any their and believe this Meanwhile, that now of would anniversary the result

to address major time. We this renegotiation price no have at

was align impact at with three were XX hard, customers. our hit customers, content and that year, with ways tough our the top last same but time the all third in It not points we price Then the starting fully decision It is strategy. as quarter result our three among parted absorbed. did a about

half up edge we and traffic million. departures first and our aligned renegotiations over strategy. a with Taken customers of have $XX price replaced all together, about and with the customer year, results it the tune impacted to In revenue, video

then multiply It’s now and best by look previous growth the and and way expected exit growing start quarter to to expectations the monitor rate. the add four to it rate measure and at future industry is the our time of

XXXX a but of revenue, we on run ended revenues with For exited $XXX in rate XQ million. XXXX example, also at in $XX we $XXX million million

When coming you growth this do, infrastructure-as-a-service provide its platform-as-a-service reason And consistency, run sequential for rate for varied its or this relevant. predictability the is baseline we quarters. as establishes

third second group. And growth quarter the quarter. to the to the growth from it are we sequential within analyst we possibly quarter the turned we will appears our that XX% very the tide I for the we believe sequential continue than leading coming the peer for predicting higher of revenue in competitors, single-digit have beat and consensus year-over-year the believe first from to growth at the look When declines industrial higher we group. X% quarters quarter We in exhibit growth fourth numbers will high in

the delayed This of scope expected to some expect We are even control. revenue as for these envisioned. expected and we place we fully significant even in come beyond some to reasons generating projects take events, more what our to originally from have been to expand fruition

Based range $XXX we of million. on million $XXX revenue our view in current the expect to

to midpoint and first and of XXXX. almost growth of growth. We over over the sequential implies rate the QX second half show improvement expect range, increase a XX% XXXX QX of second our year-over-year XX% a over half updated half At the this

we exceeding -- XXXX those that see XXXX, more about when guidance. rates give into We growth extending but

be to We around expect per loss $X.XX breakeven. EPS non-GAAP to be GAAP around and

to capital expect We approximately million. $XX expenditures

call the questions. up any let’s open With for that,

Operator

Michael [Operator Raymond James. Turits Instructions] question from ahead. comes with Please The go first

Robert Majek

Good Michael today. in Majek afternoon. This is for filling actually Robert

Bob Lento

Robert. Hi,

Robert Majek

Hi.

you like You GRAVITY. of if us made reiterate you remarks, EDGE your visibility? in Streaming signed you is the have large so some addressed driving business you contracts new give from strong in hoping that is back already there and part are could further I that is the wondering core just confidence I just the have Realtime some know of ramping some prepared in and was your it that from partnerships But what give half.

Bob Lento

a Well, we things, momentum a One, Streaming. Realtime at are right? it’s gaining of combination of number

The the our the into will the onboarded value second the ramp We up of obviously get are half, because stronger edge gaining year we in be of business. go they that full fall. half the momentum first will we and in second services with half customers as typically you that

and there projects, as initiatives major there, Disney there strong are consumers to for out others other then out there directly And to well. go example, are very, and Apple, very announced projects some both

in at And that, that and the so, new as the signed. of we layering look existing in customers customers our traffic new customer already growth the from our top on we

with and time, very customers growth. of to we sequential drive for business a can but that, top their On that We initiatives. growth with own done year-over-year market pretty feel going confident quarter-to-quarter continue have we are that now long significant

Robert Majek

That’s additional helpful. year? or release. just more us for an color on press I one what EBITDA you And me, EBITDA might don’t give guide margins see some Can be the from in just

Sajid Malhotra

number, comp. one only There’s which stock-based Yeah. adjustment to EBITDA is our

the we accounting GAAP gone measures. really So and adopted ahead

year so, it then I and ahead will it’s to And comp -- go I for stock-based the mean, easy above… that, the just map number is to

Bob Lento

Above $X million.

Sajid Malhotra

…$X million.

Robert Majek

a Thanks it. Got lot.

Operator

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

Jon Charbonneau

for Thanks questions. taking the Great.

in talk on competitive between obviously would talk environment? competitive IPO. about a from, us clarify, guess, the also of pricing their and is give and revenue delays others then you that to given XXXX say much customer There versus How can the would the recently environment decline guidance how partnership? you lot just of Ericsson terms of Just coming environment? how I an the in has update been you this And major fastly

Bob Lento

So $XX in let have difference our pieces. three But with Sajid movers relative actually add the his months forecast $XX and I mean, -- million been ago, tons million there’s at big when six to somewhere start can were we we our might to me three always are -- really that thoughts. the today in and or moving of expectations look that that there’s months range. then

pushed in reasons. good or news or of the are either they implementation for that not lost. their has initiatives quarters implementation they just corporate a the couple -- is, Now are been by we didn’t They behind projects

-- good our succeed help succeed in impact our the the to strong so we a feel them terms and of of about And their for that. in material. was marketplace probably ability in their position ability still in to while delivering example them, Ericsson’s

third that be. We it our our hedged it and will by would or that about came in it with by to into original what think was number even this analyst including concluding forecast hedging going guidance the our into XX% their we all that we be hedged the and a year number of thought XX% we way, of half before plan

But contract new with that there still is same at it’s leadership time exclusive, multiyear in the -- place. still

are on changed us. hasn’t We the view of reenergizing going impact we our terms XXXX and pretty for Limelight. XXXX into go so has value but really momentum material dramatically, of to seeing a Its in be to still changed as feel we it’s

time change We do see last of do shifted terms versus bit years. at more in there terms aggressive this over that the In more last don’t of few a landscape, a really the or year last change from really this It there’s much little could see we of year. it’s we much handful competition, people hasn’t what a scale. or whose some or of -- in quarter quarter out

But based competitive we our we the customers, today customers. deliver and that we don’t in change have position major versus quality really from our with our competition to high see on like we feedback ability we much the of get the video environment Sajid? a and like we our --

Sajid Malhotra

had Yeah. trying a will we had And $X figure that expected you think between we $X said million Ericsson. out, and are I million just from because bit, little somewhere I to clarify

question think, going would think I before. a range the had low-single we And be before where around digits, because in from guidance I becomes [ph] now the were expectation high-single one digits. you

customer of end change So end all now, that to low from the can the you one situation. or actually then high attribute to one

are that mean, of couple more things you, tell there would a I are time. taking But I

us. example, revenue with customer is relationship Tencent. talked our about Tencent a for we generating For now

started from some up field opens It begin on, get we now that. of do break and to their that one, base to was opportunities revenue really zero ecosystem. of kind to to other customers to within their generate had get we of which So important

Bob Lento

will it take three But was that time or two about quarters.

Sajid Malhotra

further be shouldn’t We along. Correct.

Bob Lento

Than we it Right. be. originally would thought

Sajid Malhotra

Right.

very opportunity more APIs for the The be done right? specialization data, to needed is way still requires very large the in that are of from terms integration But done, it there. taking it’s moving present customers we some much and it’s forward, billing is their But So time. our etcetera. and we

of well. say The it perform to in the about what guidance of So that’s is. kind where I base continues business terms would

rate from a monthly run June attention You get a had quarterly over to pay to May April continued lot a improve basis in report a QX to We on did a basis. basis, monthly on of on QX.

June September the August, continue expect to better second quarter We into rate to be July, the to improve the and than third quarter.

Apple. And then are that customers with expect of get of a share projects to sizeable These on it’s the we existing the marketplace, about coming are happening us from events or we or Bob all and with in that significant lot a Disney Amazon that with expect the talked opportunities. whether for

So, real get project understanding, to we there work done. trying and I belief, is the are is that mean, underway

we I compare I two companies. the we first we valuation cognizant IPO quarter, and approach I the When those into talk as between ourselves. some fourth and the do quarter quarter of growth attributes to that think and as look be will new marketplace listen, at explain the can in going sit there it, of year. second are think, But next I rates in mean, the we and about back and the how difference very I we

both growth which a CDN biggest sub-segment, good characteristics pretty CDN operate all we industry. is business. operate feel I in part operate we think but They are delta. in Otherwise, within one I our that we of another, about the

have both It’s we as business I this in XXXX. seven-digit larger. large ‘XX businesses. coming grow will from that. again We maybe numbers believe over It theirs, is edge in had as grown XXXX. ours significantly that, Within in

on continues. We strong business the growth edge have and pipeline so a that

I Beyond financials generate the financials, able I much look when mean, EBITDA. revenue are think, we positive growth, stronger. are the at our I to

free to able cash flow. are We generate

for foreseeable the some it We intend time. have do for We doing to future. it been

So that kind of delta I understand. don’t

capital are. of intensity question a spending there’s at and run the scale, are capital then the lot smaller the with business to more we they go than a And business,

are those kind financials. of So the

I am ability like. sub-second at mean, press comes, of what’s can functionality. first Then mean, look things feature on we mean, years do we by that I in anything we have two our disclosure public okay, to standpoint, the a speak just I terms we push going ability a ago. available data. release put to I out from

separate So some the capability it of the them but not may with relevant other marketplace, us. be in that players really from does

real are go working our and back for seeing, there reporting we think and I making done. So delivering hard get actually to get track numbers is opportunity correct what on our us trajectory business, are our to that and to against those, we a

answer, it addressed. long for Sorry to the but, needed I mean, be

Jon Charbonneau

great. very That’s No. Thank you much.

Sajid Malhotra

Yeah.

Operator

Jaluria from comes with The D.A. next Davidson. Rishi Please ahead. question go

Bob Lento

welcome. Rishi,

Rishi Jaluria

guys. you. just on be and want guidance the make Good I just of want couple to I from sure to A back Hey, with I understand. start me me questions Thank main. points, think fully don’t the to belabor let I and

about $XX Can help the type down somewhere Ericsson around you So are it without for from guidance million the numbers, the exact partnership. bringing year down There’s just giving $X full the maybe factors -- guidance? the can other we you quantify call million. just impact bringing

Sajid Malhotra

a of start the think, of at had we the firstly, range where outcomes. year, we So, started I

Some to the for end the us of the hit things really needed to upper of well go guidance. really,

things, business, of we other things ordinary were the take thought we end. the just the be should On if course lower at

talked As to about analyst the what was into and we we community talk guidance. that built

wait group kind I think back as will when the loaded we this actually begins transpire. so is that half at sell what the for side least a say, whole, to and of

how then as and adoption, get we well do, is and well be how rate et to number is our happen could Whereas, as seven of of community has the hoping question XXX that far the on a if reference north the within of as in the eight things cetera. we and fashion they were which north all timely guidance. group executed So these sell closer to side dual was been a what

with was we very couple Included that that had were the large significant. deal first the Ericsson. instead of We hoping happening We large pushing the it fourth. happen like fourth what of launch were in a there quarter. Tencent the edge with is is in and things It business into an Included the a in customer a do that were launch could quarter then from deals. very would in edge

I us. game think it changer have been for would a

But that’s provider. they launch a the is at continuing. prerogative with and The fine. ahead It customer’s companies do pool we them. and of if expanding. testing bigger be put them. digital go got together the to the strategy the a to But from decide want alpha their and to a We later date, is We that’s beta did selected did with

But is be millions. it being and small revenue, to in dollars going of instead the millions millions single-digit of of

So think, we it on. in we I have have, business, to I stride just mean, take this move and

Rishi Jaluria

there from did growth perspective, Got returning mean the continued sequential be QX. to about I sequential definitely just now we through revenue talking year And see we Okay. margin improvement the expect it. from in QX? that especially you are a QX a That’s gross Sajid, in right? QX to and Should helpful. improvement

Sajid Malhotra

Yes.

Rishi Jaluria

Okay. helpful. That’s very

Sajid Malhotra

last that customer that price underutilized just we we year will with gross Yes. the That’s our were in course and And improvements gross and of what very big stranded with took back. point material with the a different. margin infrastructure build hit took down over go We made margin re-pricing. was the had left

Rishi Jaluria

it. Got Okay.

Sajid Malhotra

have and any we don’t improvements major price of renovations. to same quarters. So time I At the and tackle test infrastructure the the across COGS our expect I so, yes, the continue absorption

Rishi Jaluria

it. Got

hop Okay. And perspective then I think and housekeeping will two I a from off.

on should of headquarter all to year? CapEx, that start out, is the to that starting or this that with going build any be year First, show when is up new next

Sajid Malhotra

so on And that we No. items -- taking, some expenses there I believe There items the of Like significant to are least taking one other with would to that and not all are the able income is and move right? candidly one that might talked associated was are side, this of pretty I items be there item puts the be think of statement at this about us. The the year. a that the that takes for It’s reconcile not there place. unknown you largest and item. the was

over -- moving people and… almost can We so brand well have with got XXX fixtures furniture physically them the imagine new and in along you area spaces,

Bob Lento

All is being the year. this cash

Sajid Malhotra

Yeah.

So which will the see spent of in in cash you then over the is are course, and are is that in statement, expenses much the of taken lease of period. now, the flow and it life not some that getting cash amortized there

Rishi Jaluria

Got it.

Bob Lento

expense… an From

Rishi Jaluria

Yeah. Okay. That’s helpful.

Bob Lento

in the expense we an we line standpoint, From Yeah. in are with roughly that expenses had Tempe…

Sajid Malhotra

Right.

…moving forward, right, so.

Sajid Malhotra

is This or rent not a going to update add major to Yeah. an increase.

Rishi Jaluria

All right.

customer one I think Amazon, XX% quarter? And were the Okay. then a they just the in last

Sajid Malhotra

Yes.

Rishi Jaluria

Okay. Very Got it. All time. the so right. well. Thank you much, guys. I appreciate

Bob Lento

only the were they XX% And customer.

Rishi Jaluria

Yeah. Thank you.

Operator

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

Tim Horan

the be Sajid, industry and just are accelerate in to type think segment just or right the growth going of Thanks, market? you material are kind whole of is are seeing in you next you the the share into year you or quarter think do gaining do you of to guys. to fourth going

Bob Lento

delivering I the at that quality is quality that and those video that growing of matches point than much for middle video a the think non-discriminate segment I higher price for our faster up think customers the the example, obviously, rate are capabilities. software, the night. better in And want delivering with

strategy move DT, to growth and all think of coming the the particularly that adopted So rates we where of the kind on right the we toward are the will high Board market are themselves the we participating we services part in well see. subscription-based that of lend

XX% of business our more than is Now, video for us, total our business.

told that I I think last you quarter.

I the any don’t breakdown businesses, know have I don’t as the same companies what video case, is is versus kind between So non-video, other experience their if of that idea.

to well to But of that attention healthy industry every and about for I think us yield will for seeing we store on. industry overall. do it’s we an part participating care video-on-demand, than for ultra-low of will that have bring go streaming trend the bodes continue latency, what and because and but lot focused on we video, market better infrastructure are I forward that as this, a built the believe I we this video, look think a we We to because the it our customers. of say to latency, results in this it’s element industry. or low whether I to others

Tim Horan

going also it you gain because are to like? you And think be sounds share

Bob Lento

Within the video yeah. market for sure,

Tim Horan

network lost capacity about you just talk color can bit. have your But growing you customers, little a give a can then are the and volumes asset you amount more utilization little added a know you lot of there? I massive bit on And of have a

Bob Lento

I mean, get rid that happened and have you customers price last the with underutilization the you occurred year, of in so see Well, we three renegotiations you and -- changes were margin. So right? that the price gross

still but impact renegotiations price impact the departure don’t course, Of margin, gross do they hit we customers believe that but of utilization, the absolutely utilization.

necessary At much have from get our necessary a standard same we -- environment the doing back have team to building actually on where we we up the can and with lot maximize that how the the R&D of we time into can been have placed network industry we software servers. been and effort come

possible. servers have the XX. to The traffic asset or is focused of we if on servers push whole services we on. capacity that’s what and take and able to get generic as point and off them able gigabit server return the lends the to a utilization expenditures to shelf much XX them, purpose-built squeeze is price capacity as to we those idea not been so I have to as better deliver to can as So much between what itself somehow be think, been per that’s But get capital out and and lot

good by need us very and more, they Now have the as way. a have happened, they capacity and where getting idea are very, benefit has this coming it been time, we it. much capacity the seen us help capacity our from in need from telling adding very because we need, procuring significant when increase a how customers software same about they we our At

are we Board leave coming invest ahead at go just that I and it to that. ready of for then because demand on and the willing will and So get

Tim Horan

the I Well, a that imply capacity a in your I lot trying network, year this next XX% because revenue mean, -- you with essentially we trying needed you next to year? growth excess like are lot I I implying that XX%. you are of to of guess, am need growth that you your revenue capacity to get around year -- that that, XX% get and have am revenues to does meet for and doubled at CapEx

Bob Lento

No.

our envision not few XXs. do don’t XX%, expenditures I now, XXs to been XX% going been beyond years right for doing us for of it stand I and the our it’s if CapEx or guidance capital suspect our has things the the the sufficient going should be we that demand. and know to the meet last in be As have range giving but range I gross

Tim Horan

Thank you.

Bob Lento

Thanks.

Operator

open. Van Please your Rhee, The next line question with ahead. is from comes Rhee Jeff Van Mr. go Craig-Hallum.

Jeff Van Rhee

you got have now. I on was I mute.

am here. I Sorry,

me expand guys. bring that Could are were features just had it from couple a little the -- you a some I of there. upcoming that going the to Thanks. product, gating you you a to somewhat bit? open think features on you referenced RTS that factor just blown The really So

Bob Lento

functionality. things SDK needed already whether I that’s out that more in rate. either come it, the the so Customers -- customers have bit with, and already getting or out our capability, that think is we ABR are we asking then and process to coming in two that can our always, for feature of were But hands mobile cover which big

So fly and bitrates the been of already on completed. adjustment that’s can accommodate we

third our first to was are revenue But brought these and what have areas now I in blockers would us. The available were there’s addressed. obviously road year, feedback in them customers we important the So that We customers. the we map. of the quarter a two then always half call those to have

Jeff Van Rhee

on customer stabilized. forward. the quarter I And higher-quality/larger retention about it talk total customer that going thoughts count like with looked talk understand getting in total focus customer it of were last just had and counts talk that context, you the customers. the I you and somewhat touched respect about it. you to retention, bit, to Got on could But just then, levels record think, a retention,

Bob Lento

revenue. grow, customer but on So count we focused see are we like less the to than would we are that

is, there And sure, quarter, have for that signed so the in I second and up thing that for customers we example, like customers new. that were we obviously the lost, then as

expected customers losing. we average from have customer those the are implies per than revenue the of is which is that exceeds much what new The that is higher revenue and and that lost, we revenue the signing ones from the true we are that obviously

small have Customer of So add stabilization. really point, to customers where customers focus, the has looking will To and quality that we we been we scale that seen we are the performance. so will to focusing and greater highest world have with continue years to are here, we year-over-year-over-year. And that HBOs have the success in on. more churn, are at point, we I that opposed we believe with this global that’s and as improved pleased meet your

only segmentation, -- as of there that lots that looking with that and is at can customer get a are we that they lots reach, look places small few customers customers, capacity. the for people to customers small global And and are capacity But can places of for there go. go capability medium-sized

because in to can market ability larger that we and having grows suppliers the as not despite take win our we the And in are the the mix once typically interested multiple seat customer believe only we a but at having of so competition share. table customers proven get

Sajid Malhotra

for say, three the within we customers, them. are of both have stable, down or to say, stream, account top with just And so of top year departure data in for customers had to, But our on dropped talked and you having the even out -- last just it -- year, we that think still one I points you XX I’d XX later, XX%. our a point said right? let’s got top replacing XX% okay, script. revenue total trouble couple about our So number the customers XX% to accounting But XX%, XX if year, like that about that you of of last

gives we are lines XX% why you want XX that and big place customers and customers XXX with of importance of we very the we the are accounting very, along much of replacing the so at So an of big idea for total what kind end. high

seen anybody But got a that that, higher from even with haven’t that numbers they have ARPU. suggests I

Our was what per higher. okay, is I highest revenue to will and say, in revenue my customer, and and enterprise it industry even if is needless sub-segment per say the the customer that best be

Jeff Van Rhee

half couple large longer going. not that longer would They let’s hitting half Got one to base very it. these actually in two -- Got to guide, new you is delay. that but more I you more then it Ericsson can million segment And or more. $XX to were it. of that’s just deals say took existing related little reduction to remaining the targets. is the get more took The the due the call just -- volume just a Of just roughly maybe that, ramp

of sort existing to related new more something Just versus projects? customers legacy

Bob Lento

customers them. it’s first development from more on required just we of a get with up And lot starting brought example initially existing It and new them Tencent we lot to we we what than thought. an beside as thought. side taking you revenue about it’s from Well, more work longer than the are bit expecting our were a about now

be are we today. to ago so nine building and And six We months we from where we are there. thought would

to -- where stuff there’s to than that launch one originally two -- and company a decision like example us just one there’s or for they for happens. made what told then two quarters so the plan project And later

we existing a existing the out more losing revenue set. or traffic losing the us thought they to new goals deals. had base to competitor would It’s largely But that we flat customers customers taking new initiatives versus or with longer or doing about achieve originally than less

Jeff Van Rhee

And Yeah. just… Got it.

Bob Lento

I at something customer I could too that cost that. my saw customer here is departure nothing. in million that more none there has say and base, point of been have -- me one I look or to

Jeff Van Rhee

top XX one guide the recall last now, I of changed? spending are of list? the on, of was things your quarter, but what’s talk on Got terms its on expectations it. it. CapEx, if I about You you clarification from And Got to in then the of just XX delta where the kind lot Yeah. to think, here April XX, what’s a spend

Bob Lento

Yes.

as still think to XX. within put number out that at below in a saying I unchanged to it. XX trying still hopefully, sure at be I will as was am I make I to approximately we mean, I come XX. could So It -- that look there slightly of largely that. just

And it largely we the move to capacity us. out the not at I start the But we than course will in think demand set there of progressing related how to is ordinary ahead CapEx of are from that think nothing build-out little There’s that’s being over of go the for out year before. that of the requested the that, about I you the is our is that do of have a of bit year. what to more the known other

Jeff Van Rhee

Got Great… it.

Bob Lento

regions lot that us I to my my actually has amount articulated time to is demand, that not am not capital building yeah, the am against I and see. mean, of this anticipating of most in the would -- and demand a they capital that region I the now is been is this capacity like this or is

Jeff Van Rhee

Got it. it. Good Got deal.

you. Thank Okay.

Operator

B. Instructions] question Please from Lee [Operator comes The with Krowl ahead. FBR. next go Riley

Lee Krowl

upon -- first you existing I the taking just operating talked the for some out if what guide have quo had taking it’s everyone’s wanted contingent but Thanks expectations? different, customers slightly all of customers ask added versus customers to me I you and guys. about guys that you new that in the were maybe part in and my second And half to is status additions. half just at guidance the sneaking Hey, take in versus half And the prior figure it recently just on questions together. questions end. just want second

Bob Lento

or not. have customers expectations are they So let me maybe whether out trending what half, the ask different onboarded obviously as I go we -- we a are mean, second towards know question. been and into which

bringing risk guidance that material we to pretty terms we we the and -- sign customers In are revenue in from, minimized yet second of have have the of in that counting half on way. by dramatic and down, a

close we I what expecting tell in current some we expecting is where are reduced have range would to is is contribution at to you what is the it some it are of second half. outcomes. from business that And and so -- the dramatically what true be But revenue the to was

Lee Krowl

Yeah.

Sajid Malhotra

of me. to and reporting variances, the are gone why -- So think because own where good I And good mean, you versus we or were because million I am why as kind is to or we were $X the want out to third million are fourth of it is quarter while really, million, today. the their by off situation I results have add, question but just the get its back way results don’t on a I our plan really and I story did those miss your results on deviates half derisk own Lee, for by $X $X to

us And put the half. and I we going first second story we got to as the good into half have tell a behind think

amongst begins I quarter to fourth to year-over-year and the or at third industry. rate, grow sequentially. very It then think possibly the the the high highest industry in the the highest begins a revenue in grow in in

And in faith in numbers. the reflected community our putting the not much was numbers, as is it as analyst consensus

the I tell plan, feel it that of and and risk take -- was we story is just it on this the go a transpires. So take and then the about out out plan, prudent, focus -- of the execute what certain as the ahead unidentified

Lee Krowl

previously just then contributing XQ. begin And revenue expected in clarification, of it. UDN I you Got guys know, point to a

it is has yet revenue it to or online? of currently you generating Just curious, come kind for

Sajid Malhotra

is. It

Bob Lento

we at less revenue. Yeah. this but is than it It expected generating is, point

Sajid Malhotra

convergence. to process the process, X flows gen of We There’s was back that businesses, care that conversion the billing, needed to see to together, be make hit. the major customer to the that start revenue tie We convert a taken needed sure do of, and X fully and begin integrated, ahead two etcetera, forth do done, done, all done. gen milestone needed to between go the

are done I done. had So that think to things getting be

it’s you not it’s again, little have then leadership restarts. it a bit think when pause change, and I of a business takes a unnatural --

good about and As we in are and that good we gets that see happen. having with them happy pass think behind will -- really conversations are I things and rule and

play than Like XG. they on began. are in in They I said, I mean, we we of are play IoT broader mean have I big big when keep business. the a that a scope having side conversations in edge mind have the and

engaged virtually partner the So conversation we with the have. with can with CDN we broader conversations that become are this much than just

Lee Krowl

makes Is for need sense. do OpEx hiring That question, adding rest of just you some then, products. newer to to have these some built expectation it. the you continue you that been Got the year? you expect And kind the guys have headcount an headcount of or the sales address of

Bob Lento

I built fast think initially. we have

the more expect is covering but not pace. of also But we incremental just the it adding expect rate of at to also additions for and geographies. continue same don’t volume, change some So

Middle When have are have we would China, when entering able to some like geographies to are the there. market, physical we want there. new presence presence entering So the America would and Latin we in there. East, we we to into feet be on are we entering the presence street When like

unique sometimes latency the example, customers. capabilities, marketplace the of breadth gaming a we doing what for attacking are with we time, same low the At with are with very

in look expertise that, area. So in through more that you

business we and we we So and will have. and that the continue on support ahead to gone the plan have added that,

Lee Krowl

you for questions. taking Thank my it. Got

Bob Lento

Rishi. on other and welcome again the any to questions? And to appointment and you Congratulations

Operator

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

Sajid Malhotra

Thanks. Great.

happy a we I all. the of like would I phone day questions be always, tomorrow. visit, be And for mean, visit you Thank if as will or the available so, just just And on face and that, All you to right, I we after or answer before I a will call. rest to thanks am am want the you happy call. we call you for me. with I today, get know, again meeting face let the any schedule to with to close, right to just the call, available conclude to would

Bob Lento

Thank you.

Operator

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

now disconnect. may You

Edgio (EGIOQ) 17 Jul 192019 Q2 Earnings call transcript