LLNW - Earnings call transcript Q2 2020

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Operator

Good afternoon, and welcome to the Limelight Networks Second Quarter 2020 Earnings Conference Call. 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 Chief turn I Financial Officer. Please go ahead.

Daniel Boncel

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

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

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

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

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

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

Robert Lento

and Thanks, times. execution turbulent strong as during Dan, quarter we maintained and good steady our focus QX afternoon. a was these

gross by and quarter net momentum generate strong margin Xx year-over-year. XXX% XXXX. to XX% of our operational over strong. $XX.X sequentially both particularly second business of improved and the the our Adjusted and loss than quarter’s second ability million, GAAP as balance world improved the XX% financial year-ago this up the prior I’m almost net was I’m and these EBITDA build performance. our over to improved pleased quarter continue results higher on times the to non-GAAP loss remains We continues first strengthen sheet was uncertain strong that quarter quarter pandemic. more our the than Revenue proud year-over-year. from year COVID-XX these the amount navigate in and our

challenging these work-from-home delivered a model to have times traffic high our we and for During quality, supporting optimizing managed seamlessly record to add performance while customers. with transition capacity,

allowed toward along customers and us We both has our actively progress our employees to engaged are goals. with and significant strategic fortunate QX in growth that with technology remain drive

of and to more our to work diversity employees the commitment a engage to donation much share support a and Limelight. movement Lives to can impact Additionally, on do and better important to we global express to at they done while want elements many our Lives part. to to support. are are and briefly commenting we reflected meaningful to have to the companies, Matter comment initiatives. and matching end policy-based recognize our QX, up needs full We Matter financial Black through to the opportunity live want Further, our and we organizations our employees racial Like company our focused of our in our program done Black pushing participating Limelight on corporate injustices. of movement ways we are Internally, number be committed to family. the we select broadening I Together, organizations further values and it we take to act. have support be what this community is to of on on employee with

growth to grow rates. quarterly reached levels our overall Internet record quarter levels and traffic second faster Turning we results, believe traffic back the continues to than our in much

reliance navigate world we people created Internet an information increased these role COVID-XX the important global content times, continues has the As and an through entertainment. connecting to to on play in and uncertain delivery.

have encouraged live some video-on-demand return. good are starting to traction and customers that events We we with are our

for as in the the unfolds, confident quarter pandemic our the XXXX. underlying expect initial business of we as NBCUniversal’s the offerings, the a Max an of trusted Most April performance, One in companies providing our customers. of continue of continue launch experience our look scale While partner, global value given supported launches new in May. participation nationwide excellent uncertainty for momentum and network’s HBO users including strong Peacock launch their July pleased to in well remains to traffic to we Comcast only driver proposition. WarnerMedia’s that XX are recently, high-quality higher remainder I’m These the to and in on as Peacock's on-demand was it as in launch second recent us

all from Despite some traffic existing headwinds a was we closed growing pleased and edge edge with in existing build new to and across new customers particularly out capabilities. related COVID-XX. logos services and business of deals our number I’m pipeline slowness, strong. While pleased strong, our we from as regions slower and I'm our given is new of customer pipeline QX to that were customers acquisition continue

trials that to customers deals this successful We expect completed several about have proof these we close concept are and excited some of quarter. large of

Limelight a Customers footprint us global with positions provider In in will and connectivity delivery global because video market. the our who edge us closed choose be using unmatched to win already our which fact, edge is and growing of one services. OTT

have and areas in lead strategic four we progress Progress key to in imperatives. on done As these in key edge driving services. XXXX, strategy and delivery our year's are we significant video made strategic consistently in QX this our

we strategic ones can meet PoPs geographies. continue our and to To we build XXXX first the expand expanding ensure actively for new capacity. new imperative growth traffic, plan aggressive is in expected Our in pursue to existing

issues having meet operational and expect from goal restrictions exceed Our goal while we of to into XXX and second chain that COVID-XX. per travel to coming or resulting achieve even was the supply some and year terabits capacity experienced

The generation provide that next network of second optimizing in management industry-leading is believe tools network automation our will network. strategic proactive the We're saturation address to deploying of management and new expanding imperative the issues. process we

world. As a progress we to changes the this benefits in we already second significant our us made ecosystem to the increasing quality. more optimizations the Internet seeing initiative great quarter, managing loads efficiently react delivering through result are These in will around in the allow higher of more quickly traffic and

enablement innovative end one-stop at Explorer, Our answer It to testing source the and It third month. API samples, are development is customers doing scheduled a go documentation, our GA has this months and questions provides been strategic control few Developer forum called kits customers hands to the created of our engage and the more with we past in placing software of our to with newly of developers. is experts imperative portal Central. developer API beta over a other in which through code

and and new progress. to to will pandemic, innovation. And Even our during We’re guided imperative work second I’m to updates expanding share the strong most be our by quarter initiatives looking but with excited that forward partnership and a this will on of our in community. continue developer employees the details product driving to months some is important perhaps hard continue the our with from strategic powerful last share resource coming feedback

called listening live of providers their launched to threat our their egress is with During no overloading development Live origin to Push we functionality distribution events scale allows to the further and the push significantly for partnering live to for and enabling allows them streaming our video Limelight with This CDN. servers. content costs production service Ingest new example second or experiences across latency, customers. which Live content customers strong customers high-quality manage to streaming of our prioritize content reduce provide Push quarter, of to a better

the the progress building This see Realtime Another quarter version industry's the and on offering area first solution. add sub-second our significant streaming scalable, with scalability of meet major significant live in of will second greater better second the video Limelight the we marketplace. new demand in functionality Streaming of release to existing global, was

move are new version on launch customers version to year Streaming to expect track Realtime also We later of current to Streaming year-end. by the all X.X this seamlessly Realtime and our

quarter, made capabilities delivery requirements significant EdgeFunctions Limelight strategic I’m to customers and fully the this significant beta provide support progress their network known progress these own is for platform to a times. of EdgeFunctions. customers with edge serving in difficult video imperatives our also their our the our the our application customers, expected is customers launch during offering, serverless on compute new quarter. to This continued dedication while proud team our we enormously our of second and deploy later run locations them making currently on designed as during demand. to testing will Lastly, with on and functions several complex

a Vice Christine Marketing. management Turning a our now Christine Cross variety and including marketing leadership. almost Customer for Effective in Limelight of to with Chief at to global Vice wealth product our including as years aspects and Marketing team. President Senior our Xst, and GoDaddy senior to roles recently responsible efforts. changes Officer, experience, We June XX Global all Development we announced of our hired comes President of of

are in maximize expect capture leadership. our about opportunities already and and excited through very her We more market her contributions to

was contributions we Relations. look extremely their the Strategy as responsibilities from was and summary, Boncel strategy, this new for and As for forward promoted Officer. Xst, environment. Dan the a of roles. very Dan well Sajid and CFO Officer, the previously we corporate from smooth strong quarter position transitioned announced, Chief in M&A has In effective transition to Investor an in This Limelight July Sajid Financial Chief maintaining challenging to operated been both to

XXXX, while future. at are forward the our uncertainties, look remainder I in As many confident of I'm there

is and industry continues healthy growing, to and position momentum strengthen business our is our Our solid. financial

disciplined sustainable growth With number capacity of We drive over launches, expected Sajid. product believe our new and execution few above We returns. call excited next months. a market deals over revenue I’ll that, and about to continue are customer customer strategy the and turn to new satisfaction, will additions the

Sajid Malhotra

review good will the and Dan I future results of and the guidance and Thanks, areas for priorities afternoon. focus. will Bob, discuss his quarter and

the XX% our that in second XX% over non-U.S. our quarterly in rate of and revenue second the with dollar-denominated to quarter revenue That $XX.X XX% total So in quarter currencies. the by Year-over-year, XXs history. revenue, let increased highest revenue establishes third and makes low reported year. customers highest in and consecutive trend International XX% us previous QX compared it second year highest ago. Approximately our beat a in for last of was exceeded $X accounted of and expectations. million, performance. quarter revenue high XXs reported second the review QX a continues our quarter run revenue from strong quarter million the revenue analysts

rate and well resulting this as exchange profitability base, in video-on-demand revenue fluctuation Foreign traffic to we in higher others the us a margin above result to customer divided growing primarily accept entire is the highest $XXX,XXX industry. the on per industry, by related revenue levels. model average allows business approximately at entire live our Compared against global average focused lower our in growth due This revenue events our normal quarter flows. revenue continue operating and at larger customer to much to Within operating in slightly in amounted headwinds margin, of and driven gross cash believe remained but pound. the profile, the pandemic, our approximately fewer a is an below $XXX,XXX. lower is to and customer Average per financial is customers the the a and the expense outside

of slightly year-over-year on basis a increase points margin basis gross was XXX and XX impressive was driven XX.X%, higher improving quarter costs. increase very sequential asset and revenue. utilization negotiated increase lower The points Second an of by

weakness stellar margin recall, quarter in gross line. some As you first may performance the our the showed otherwise in

we were particularly an in XXX very quarter exception, strong first the basis confirmed it our was rewarding confident sequential is points. a see assumptions of to While improvement

and GAAP and strong amount a similarly amortization the of gross difference stock-based up was a small compensation margin gross Depreciation XX.X%. and cash cash entire make margins. between Our

We at just million as leverage quarter mentioned, payments to quarter-over-quarter. last ended quarter or $X.XX the of of and the the income second make very us quarter. operating share million with margin second quarter. million equivalents XX end to DSO tools million. while end slower customers. revenue a share $X.XX will receivables. the last and of ahead our days even same very loss a our from and end year. and feel we in to gross tax the up GAAP second of tax EBITDA at XXX% compared a network year-ago the to improving down basic second through rise, crept for compares flow of year, days of service $X.XX and totaling large XX $X.X at efficient $X $XX.X per we our this quality. GAAP about loss $X.X the June the in in $X.X net at this attributable from of expenses resulted that Despite of first Adjusted the increases of loss our million well the in December time of Sequentially, record year Non-GAAP capitalized million of couple Operating We strength $X.X quarter, of XX end to loss Looking At last to year. or overall high June compared quality confident in to $X.X was per decreased continue $X.XX compared a quarter implement million recorded more approximately

received $XX for Capital during example, we receivable million the our of expenditures XXXX. outstanding with For have million, already over consistent plans accounts were this $X.X balance. quarter

June XXX, at count the XX quarter end employee end the of the last shares up was XX, quarter. outstanding. from of we approximately As XXX.X Total had million of

to have I answers. and the When CFO we has the call before the a our delivered Dan, was more we million around To thanks. believe just team, for only Now last privilege. Bob enterprise supported been years word over questions Limelight what great had than hand employees, of then by and Board five to the be want say Limelight appointed value a the executive possible. was me, had $XXX we I

better, and partners breadth us. customers, growing demonstrably quality possibly our are We – and the our of appreciate employees is offerings

an We approaches this entity from the it serve. over time tenfold rise in are enterprise benefitted as the our $X a responsible we shareholders business had And in value communities billion. almost

growing with are we ahead, the a starting so with facing services gives that the be edge Looking to fortunate opportunities of others. incredible us possibility over advantage point dramatically comparative our many

help He and to will the here will our call us reins I capitalize Dan. we get opportunities, move have. Limelight take personally next those to With I that, to and has gratifying the he the have Limelight Dan help As helped opportunity over turn be on it all have over deliver is on CFO. I confidence

Daniel Boncel

Sajid. Thank you,

moment than achieve basis growth focus, with the a strong in I’d CDN this industry believe and billion target take our foundation. to Before strategic within operate much I We opportunity me XX%. upon market. thank we long-term within place and mentorship his excited macro perspective, most provides this primary this professionally our and to was market. am From as to continue of personally. the that Within to CFO. the $X for market to his begin, for build company, like a billion $X.X the again in a quick line a Sajid in importantly represents leadership when he today underlying me gaming to for it began growth OTT his I friendship is market online Limelight different video combined annual

the X,XXX organic that addition the services over globally CDN logical connected in We evolution. believe is next our represents the In to step growth space, ISPs. network to in offer we an distributed already existing edge

provide to for ultra-low to needs. developing We new expanding working a suite and of and latency have existing dedicated customers a team with sales capabilities

with capitalize working opportunity several the are use cases We of years. the next to this over on pipeline growing

takes confident XXXX for raise where of despite uncertainty to enough us, remainder this the of feel guidance. continued we XXXX, pandemic As the again

remainder of revenue growth our million. $XXX $XXX the to low to year sequential and of are for million ends the and expect expectations revenue high raising We the quarterly

a raising to investments revenue of guidance million We more are We EBITDA $XX also years. of end see million. resulting low adjusted the in range to making in coming growth revised $XX accelerate ourselves

to Limelight operate half connected definitely that of first is during stay The industry to a people the fortunate pandemic. time different has fronts. many on XXXX remember in helps an been

we the social is sustain Through the specifically in grateful many proud am social for a program It issues, to these to to and place participation, together I been make learn has Limelight proud Lives more only effect but and company can pronounced. we contributions employee movement. where change. equality put discussion Matter are grow can organizations and to a Limelight work a been We times. important year difference. for push match believes to support that not justice also approved a during have has and Black

Please of locations. Before we the With that, as taking questions from begin pandemic in. with all turn they session. I jump this Operator? call we to as us out to due are session, into the separate come question-and-answer the we bear the operator Q&A direct to over the will and call precaution,

Operator

question-and-answer begin the session. [Operator now will Instructions]. We

Lee Our FBR. first ahead. Riley with question comes B. Krowl from Please go

Lee Krowl

for taking Thanks We’ll last to call, on you Great. but everyone Dan. forward well. your with working on And is my questions. miss Hope looking Sajid. congrats

guidance just to and on the that the risk? to for the potential and a I speak both for to the and upside to it So sports start I as just the second get half. might the maybe and wanted unknowns and perhaps downside to of the live perhaps as knowns second off kind key more video-on-demand inputs of sense, anticipate unknowns half you relates some wanted

Robert Lento

don’t This of severity and future unknowns on virus spread more the Lee. the Thanks than holds what for is COVID-XX the your in the Bob. world. We knowns. lifestyles and question, people around effect of its certainly know There’s terms of the

choices more on those are usual trend does of do their be. to so to the but that there’s long-term consume and we for the a the people like even short today content, relying it without What guidance there’s is tough run services know the more make business, than we more trying what devices the there’s choices streaming more sure. and it So when we’re pandemic, connected in the decide should unknowns content within Internet

as in one a Bowl with bring lot for live now part full close it’s hard it and of the do video-on-demand be to with example, impact a in them that schedule individual home – exactly Just material and rise business continues a know over to we as But to have and isn’t world it right even it what we there’s and perspective. now, hopeful or we’re than it’s a share when revenue you the that. will string when NFL be. material comes But that return. was an OTT events zero right the big don’t that of all day, pretty altogether well to or is we’re one of the the QX it mentioned, any the our that the from signs much example, that as At on to that that will continue it is you’ve not seeing event same what we of said, going every know, but better terms time, to wallet of Super is delivering to unknowns and

So that guidance level taking up a we we’ve of that exists. uncertainty best can the give into that all come consideration, with into

that? you know, don’t have to or I add Dan, Sajid So, to do anything

Daniel Boncel

Yes, I would that just say --

Robert Lento

Dan. Go ahead,

Daniel Boncel

rollout mean OTT to They at throughout offerings the year. rolled end locations of out it doesn’t year. continue last to These this some just

out Peacock Max HBO are just year. and this like offerings rolling other The

we those to a we’ve we’ll in for we cautious try here. so back we forward year, And those meet lot be half feel unknowns numbers go there’s built the but in what our as assumptions, numbers but into that the confident of of even

Lee Krowl

you to half. outlined then revenue second throughout expect growth of you see And sequential it. Got kind that the

fairly the there to call I throughout guys the front, sequentially sequential you last kind that the see gains well. margins outlined gross think of and significant year drivers was key in On had you some margin on improvement as

bulk case QX to kind the expect of is that number? gains gross you to gain margin be the from of that the Given QX, would or encapsulated QX in the

Robert Lento

that pass me to some to let but Sajid give start perspective. maybe I’ll

Sajid Malhotra

well manage give maybe think you Yes. the attention within through Look, that they them. causing we to five the years information know we and changes But year. over I if try across and possible that this the try year the explain what to, to core do to then try have pay we you the what we significant best

good I think the feel progress about we very made. we’ve

it make in low normal XX%. that that first we first margin was of The the at perfectly issue was clear to the got quarter

little well to So wouldn’t would is for move wider it if half margins there we sequential, But and we a I expect remarkable and correcting there. team And I keep done. sure that job have get the see. from up is always show sequential, first don’t the I aggressively, here. we to to to And goal stage us think heavier, business as half little of about we first congratulating sequential. on like a another than are the beginning in build done mark the second to the margins. the in caught quarter as higher job begins it getting here, if correcting for or for They’ve the bit really from higher be XX% a We’ll want the bit did quarter a that. make XX% kind

and are the the extensive good cash on I’ve and flow, our our the this margin, predict free are focused seen. at generation, the EBITDA more to We is best the pretty ability cash operating company, cost

Lee Krowl

these And that it. as launches, guys traffic of in such last any then pricing renewal? anything have major quick on maybe question me. a Do OTT renewals you you perhaps some half expect true-up for Got or as second or the

Robert Lento

I’m of. behind the aware are big us. that Most Not ones of

Lee Krowl

Great. guys. my Thanks taking job quarter. questions, for on Nice it. the Got

Robert Lento

Thank you.

Sajid Malhotra

you. Thank

Operator

from Raymond next ahead. Robert with The question Please go is James. Majek

Robert Majek

Thanks.

partnership your Video trending very them, with of is you’re color the how on growth elaborate is share give the spend revenue Prime confidence us you, the CDN them? large more maybe Amazon can with customer just overall on a for their long-term Just you and given in that seeing

Sajid Malhotra

No, no no. and

Robert Lento

by that. disclose I good. don’t quality of their anything or – is disclose the terms content don’t of to and of would is us they like numbers you tell is way would wallet the of What we share What in any I you tell that. Yes, very

level in the And would of with terms that with I very You’ve say them live area in well become more where we are positioning of pleased That we’re and events. long capability. of fit around strategy seen sits ourselves aggressive how more into kind term their Video we Prime the we it. interaction I Amazon with be have don’t But than think of specific that. we can

Robert Majek

can cases right And you the around sort EdgeFunctions? applications use now? What or seeing you’re of on elaborate interest are testing customers beta

Robert Lento

for have not We gone general availability.

up, it may as away them serving milliseconds So goes the seconds. days GA what believe can like And within end us will with the I the of literally to happen live for hours for and August ad insertion or but spin people opposed closer need function things cases or typically doing an up where quarter. to EdgeFunctions sort And you sure then to that you application for watermarking, of longer. are are

functions the use very you we’re way where And effectiveness. the when in of latency in seeing interesting the those to so some cloud, cases try do gets

horizontal A/B And as so sort find while much and delivery, things we’re insertion, that. offering, simple a other that different customers the seeing our very are in the things and are video testing ad lot we like ways is video-centric complex cases serverless as as value watermarking focused from on edge and use of of as including compute

Robert Majek

Great. lot. Thanks a

Operator

with Please ahead. Capital Latimore Mike Markets. Northland question go is next from The

Mike Latimore

again quarter. on great Congratulations Great. this

maybe telling elaborate little on customers wanted couple for of but quickly? bit they more? are as and you Can You maybe a quite paid around the a what why little maybe Just talked pay a big a the detail receivable second. of just more accounts you already, kind touch customers there they about maybe didn’t to

Daniel Boncel

In who work paying first that to their the have impacted pandemic are and been we willing them. by weren’t the Yes. we’ve that mentioned customers significantly quarter with customers

a the payments. of portion The is of that’s simply timing just majority is it. that, So but majority it of this not of

the span amount payments large balance accordingly. we cash of and a those at over and AR when of As already you month, not significantly some month it over went know, course customers about that And have all. received we’re a of significant we’ve worried that that will kind the fluctuate

is sheet our this balance can support Our customers strong. way. obviously in We

we timing resolve confident so will that thing it feel it’s just and a itself. And

Mike Latimore

bit All right. of maybe traffic to it little just by month, level? continuing your year-over-year grow then are growth traffic, And traffic then on kind you you kind what sequentially of can And is talk a to seeing?

Robert Lento

Again, round we don’t by disclose this of XX are. out reports what numbers a video grow tell you expected Internet really is those can year Cisco by XX, there they the by to I numbers. report traffic one in

our And exceeding terms traffic, a We’re basis. grow of will that. traffic in view and QX and QX example. a that. on was kind And you can higher I have to standpoint we is on from be it than to so what then what tied QX, we’re trend tell guidance, for of you seeing But on month-over-month we year-over-year obviously traffic like belief continue in our our QX

Mike Latimore

then And -- Great.

Sajid Malhotra

of of you that can right, XX% triangulate to and numbers what wanted you revenue sense kind XX%, price and the If are. talk about we how to of this a is, compression see get

of if So number you across, business. work to you wanted that sense kind get to math when the on roughly of get you’ll in what’s a going the

Mike Latimore

just And last generally edge on gross edge, margin? Yes. does one help

Robert Lento

Yes.

Mike Latimore

Thanks lot. Okay. a

Sajid Malhotra

right. into have and place would multiple in business for fronts, is put infrastructure. to else go ahead the get One, The on edge to business us anybody edge good

stickier. business the in lot and like have not it place. already Unlike large is CDN compression more the infrastructure in components have price edge does business, a of the the industry We should that customer base

and and we and are have, we the that the our are performing. how cases of you very is business and us; but to when the new the is cloud we is So that taking mile proof we’re use daily position seeing about we to not just last if pipeline the edge with remarkable and big connectivity, backbone get interesting that and it and starting very, to security the a really in points private industry this have edge, add dimension position

this So watch in that space I be very and is think I we’ll space. well a do to expect this going to

Mike Latimore

you. Great. Thank

Operator

go Eric next The with Please is Lake from Martinuzzi question Street. ahead.

Eric Martinuzzi

Yes, the side. I had edge a question on services

some you initially do here, are more what to gaming, examples process vehicles, starting of in on services the people of spinning register? about on insertion is on demand, or really talked beta demand You up I’m put have people you focused the the Bob. were kind wondering, kind autonomous initial the gambling, of the and – steady ad it, as watermarking that

Robert Lento

to is to your needs So be what the there close the we’re application seeing is driven edge. point to and more application

doing And going exactly that we of realtime, completed month so of larger within build next to the is the one customers to they that lower deals contracts latency more get and be so itself being or deliver the that can hope to video moved where so, a with the one edge is application we’re actually capabilities. our out

on to container-as-a-service will we value on And some that our going out connectivity. that the so our locations, capabilities top is add be are of be then of that, building top orchestration infrastructure, that. And and have our we to

that. really it’s compute be than serverless would So different

exciting up to opportunities going be for last milliseconds fire and never think hours serverless areas. very things paths and are mainly days see as but in compute up some milliseconds some of both might So but and for that will cases growth down, we applications in both The to be and seconds. fired in last need we brought down quickly

Eric Martinuzzi

that CapEx talking think about I of still missed I quarter, coming the out million but you XX maybe to million the case? and XX it, year. Is for still last were didn’t the You

Sajid Malhotra

gone even That still that remarkable case And is what is that remains as has the is case. up. revenue the

amount price. the are the to as And at that, all for make at sure are we is that time right efficiency we capacity make we have So deployed and at to of the customers’ this right we work that needs. location, are capacity right we the the well that and very sure right able driving trying through manage

So continue remains though unchanged even up. to that inch revenues

Eric Martinuzzi

questions. taking Got it. my Thanks for

Robert Lento

Thank you.

Sajid Malhotra

Eric. Thanks,

Operator

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

Rishi Jaluria

nice ones. I’m Hi, very staying glad my guys. questions definitely quarter. a couple for taking a safe. so everyone much Thanks Maybe is and

points to basis nice Obviously a the gross start First, up QX see year-over-year. question. GAAP gross on improvement margins a with basis XX wanted from and sequential to margin even

gross margins kind from we Help us beyond efficiency? up. get going Just a it Maybe where about just XX% target? full target we the that what better a how talked drivers that, a I’ve of the you’ve through got pieces. today for year? do longer-term to it the are right, understand walk gross of having network it Is to better revenue – few then think Is first GAAP follow of mix? of a Then is are all us plus. about And margin

Daniel Boncel

Yes, so. Sajid start. add do then free I’ll if to feel anything, wants And to

utilize we that within XX% could we were and pretty So things come was quarter operations by to we quarter team. mentioned disappointed take our that in group had that ways implemented certain one the first at impressive to better. number see base our that we asset through a in the look within And the

XX% And so last margin. we were year about

capabilities the better have the than bit we Bob better with that margin attention to that more into XXs. the business business. manage those build And into throughout the XXs. a get as out services long-term longer-term that to contribute to the traffic getting devote the goal all that think revenue is goal well We to will stream, we’re services, to that and continue as Our little edge implementing on as and we expect mentioned, CDN that add edge as network to of tools to

Rishi Jaluria

What’s you Bob, the on Okay, what’s the seen and had bit in expand that That’s some mitigate those step to chain call it. mentioned issues. a kind got helpful. you supply little that? going there of issues? earlier more on had you Can

Robert Lento

is largely see some good QX, cleared to the up. started we so they’ve news issues. In Yes,

example, which production, largest and true, dramatically one had drives manufacturing the it use factories of they were that told actually was a initially all factory to fire of So, shut by which pretty PoPs for for beyond we had solid-state that COVID. in we but affected that was down our

into sort corrected servers into or get of Super that able we other But got of into put then largely that could And the needed to road. from so Micro, we some ran itself issues to we middle we has we QX. production. as SSDs the could Dell while them down And get be

or the we look plan. meet capacity And our year, confident availability at the of so as inventory to that feel build our plan end and have between we now have either very we

demand. it early to productive so QX ability and we build our but really planned QX and and equipment not capacity in So we as plan and confident to for, QX was we’re that we our very meet that of solid as of for had believe QX is have already, largely most

Rishi Jaluria

last specifically about helpful. year want in. far is but there’s maybe you of the it Got want to can it. the clearly but a growth maybe are thing Obviously asked understand then tougher making and that baked first in half if just go you’ve difference at obviously so maybe us we making That’s level is about versus level in then which that? earlier one if in be talking that growth half. this of guidance might of faced I what really guidance to if right, just And the Thanks. talking this you assumptions I level apologize back to do, question to conservatism macro you’re the had into I you’re comps, XX% the help repeat X% assumptions growth look right that yourself, you back even when just and understand squeeze

Sajid Malhotra

Sure.

right, and – So this gave public company history raising grown midpoint first of XXX. for we just our I number have was Rishi, all are to that XXX, XX% some we year of and the closer we as in think in mind, not guidance number a keep in that

XXX us and numbers number for us be milestone be real into to run consider XXX because look takes what the and go a in for XXX I about XXX to thinking rate. a a to hallmark itself to achievement the what what the for number is Then year prior a which happened to So the about account that the I as full opposed percentages was think in from year. think we’ve to at midpoint achieved, now I

quarter So rate been interesting That a of run growth is XX was is or for what And business? us a for just dramatically run beta me higher striving and continuously the rate. most would we point. higher is the XX, the is different. if What have are last to

giving XXs and to then So for. the and higher we XXs is we’ve number next looking full so progression the are from gone of that or be quarter. and no this the And And rate guidance from we full about within we’ll for from thinking quarter of much XXs, there. when again hopefully year next about what be growth year year XXs think year into endpoint should we at year, the look

year about So you want I you want think that’s about how numbers, how we that’s that’s I to and to full because full how think year – number. us the

Rishi Jaluria

Thank Okay, you That’s it. helpful. appreciate guys. great. I much, so

Sajid Malhotra

Thank you.

Operator

question Breen William next James from is with Please The ahead. Blair. go

Jim Breen

taking the for questions. Thanks

a side, first a compute from And and things from live but now some existing of edge golf motivation the customer so other you things. these these your come customers. sports potential and few of that’s your these Just you’ll is as see here, from base things, to it then place offering just products back asking we’ve also on seen few place, new the growth not on just in side, things coming secondly the in customer base some you’re put

an the in? no just there’s because demand environment events at Thanks. Given you the fans probably that there’s seen are pent-up usage we’re have some the streamed, and at of increasing events you seeing

Robert Lento

in it’s an or or dramatic. the that XXX,XXX NFL for usage that help of people the starving there’s to Big not, concurrent in really just the watch stadium for the think number there’s are will Ten game streamed being XX,XXX obviously Well, something not for about streams When I that think will fans hopefully that but game, stadium we’re because continue. whether are seeing fans you football and increasing streaming numbers whether

I think is available services. and of streaming on better quality and think on, are has relying that more obviously relying streaming the people more of the gotten cord-cutters

So numbers I for forward. think all us going that terms of the in bodes well

--? first again Your was question

Jim Breen

the is direction down around Just for side, to sort the stuff offering. decision asking of you’re coming your of customer from base the some the edge services go

Robert Lento

Yes, it’s kind of interesting.

is this triangulating of different a us few Some areas, from right.

moving compute and really now talking analysts from from not them of edge wave. started a in been latency succeed a cloud have the the are to development the standpoint actually those operating in next our that market. So quite market. to in the to about that the years a allows customers get brought terms having We’ve designed ability applications of then of to the of our few lot with products that for hearing And some kind

our We the starting about And opportunity so point, market. good the about good right. we in feel feel

and trying some to can people the size in have our the develop it you before be to what the was have the have, match business the But developing and the capabilities. connectivity hill able with big we we you if bring it edge, somebody of whatever altogether. that’s us climb most so think is to or about that a have cloud partnerships we software don’t So of for network to capability

we So in from applications it develop to we’ve of to gotten reception good feel the ability so the customers from and really about interest. our how terms actual positioned standpoint, far drive infrastructure an we’re

Daniel Boncel

next Yes. go, MLB got Then events as far we’ve starting as the week. live hopefully

along and And starting hopefully week are off. those hopefully other NBA that go customers. there can is next that gaming gambling and sites have our things We with

all actually And But to but see pandemic. so with how strong can hopefully contribute a we’re play half, we’ll that out second hopeful that that things the --

Robert Lento

kind good pretty in a football States our big stuff United from that the in saw was starving actually just is to We Premier traffic actually point that of increase not streaming the that are traffic in a we European as soccer English customers one games and uptick know, you saw good people watch. and of for avoiding pretty League or

And so I exciting. it think could get

Jim Breen

you. Great. Thank

Operator

Please Rhee ahead. The Craig-Hallum. is Jeff go with from Van next question

Jeff Van Rhee

business questions interest Congrats, edge that level seeing and quantify a seeing? there, the at the new the me, maybe Thanks. quarter. what nice you’re you in Great. X, can said XX way as you guys. there along maybe then I the new think is you of that some it from sort the few was is versus those numbers A again percentage can here. bookings ago pipe you’re months were starting what progress lines, edge, of Real namely way slow now, And quantify any

after progression settled any kind new just steady of of or norm, people kind quarter quarter, in into of you the sort shocks month-to-month? COVID slowness and from curious behavior changes Just through post the the initial have seen

Robert Lento

think a slower. little I people standpoint. new on slowness they seeing taking Obviously, been but a we’re decision-making deem critical, from that it’s decisions steady projects as are making

question so be an And your larger an actually higher the about earlier deals. pipeline also in to we’ve what’s increase there really that’s seen but to other margin, to those exciting question and because were edge edge tend for

the seeing perspective. to we’re pipeline really a from starting hit potential business so that for And

contract As deals. mentioned, a We’ve couple in we days already of or less. closed hope the of one got get that to next in I with here others the verbal agreements we XX

about excited but So match we’re customers there’s from more getting needs reception the the between capabilities, regarding we’re to go. our pretty and that their still

what the some have and or business it fact the year solving pipeline be even we’ll so trend and we and problems next on the so over – today develop solving to like But that customers have is problems. is container-as-a-service We the developing we capabilities like for we orchestration. business

well just some problem to edge People on-prem other that replacing edge either that moving think specific provider, bodes from right. for of cloud the the are or and to solve not market. a future We’re business I

Sajid Malhotra

the are just the for from making that, like on increase that, home good the seeing kind offset in because slow point decision people right. And the delivery, then, business are we to pandemic of to traffic Jeff, add of CDN core that

we what some are there go are do that to Actually outcome thought not? is to which overall think you there of aspects complete quarter decimated. listen, Within this have good of there overall a the solid parts that gotten about bit slower where which leads causes us ahead ahead raise So may was be guidance. you be, saying, running part hey, business are business to it into an a think what industries aspects some deliver we trying – Bob and but are. countering are feel you and might insight than which there they were and I that actually we give are if that that little

other business wait way of up for their of the with different because just for much year. learning video work we it’s and whether than But it’s parts to people so and want looks there might the what And thought so home we business staying we they whether ahead or quite growing all whether or are caught return. that be assumption are last of The of end that what of distant the from home. environment it’s has the changed at planned have

Jeff Van Rhee

also it. question of got along enough. me then One from last the Fair the Yes, lines edge.

those of in the you Just to the them, motion of sales get as edge APIs try how you of changed and to and more you if And adapt selling as at terms get and some to has have offer features cases. you’re deals those customers your and the these getting open motion of pipe getting that them closing that more the all the on to I in your all deals had through pipeline, to experience starting you’re edge developers, realize push? edge focus video-related use how

Robert Lento

dedicated team, together very have knowledgeable a terms force think of it In an overlay that’s sales put edge as of we in sales push, services.

we delivery or the larger our But customers And dedicated, some using experienced force. for so are other with to with interested either we’ve is that, services. content in of working people also core using than put sales focused, us the most work are thing nice the that

opportunity the with edge services and for as it’s great an So a us. so provides add-on it it, traditional to

Jeff Van Rhee

Got Thank you. Great. it.

Sajid Malhotra

strategy. thing. just of Bob, other This a all one part multiyear is again, And

than thought when clear the what is that of we parts we business was the there that wanted the CDN business thought could ASPs, to the part of better video So of we be because that concentrate that of the other add CDN. had that some that where differentiation, decided we demand would we and picked part more business on, part in we growth

into a CDN years within our step got first we subcategory that saw you the played then this that other some that. of was of And ago selection just the and So of couple made revenues. rid of

we’re customers not their and that’s expect go what So ahead video for and businesses. is of about functions provide possibly but people that completely give and for functions when they the a cases some some build we trying that we we jumpstart to to our come tied idea to and go develop The resources need devote others to are and implement them will the will edge, fine. and we write business think platform about ahead our but and here, will some use

Jeff Van Rhee

real guys. Again, good. sounds numbers, nice great job good and margins it, good Got

Robert Lento

Jeff. Thanks,

Sajid Malhotra

Thank you.

Operator

The Colby go Cowen. from next with ahead. question Please is Synesael

Colby Synesael

you. Thank may. Two questions Great. if I

baked may mentioned, coming can you response your been the factored color costs. when forward? sense Baseball Major for margin, the think belaboring you the quarter give in better to in and or terms Basketball been you drove secondly point, sports, And actually would on to curious just second guidance conservative consistent seen you does on therefore improvement and the and just – but how for have to have costs and apologize of fact utilization much about from and more great as of that in you. about back, the back some then that on may asset some how into thinking I live we’re now question be seeing you I relates in operating guys resume example, it come and maybe business? does League basis, Thank you upside and seasonal cautious the going have a is first I how improvement that of if that events a Jim’s negotiate in specifically one the your in of it to that costs more off color just are in therefore sports might that much being and how if the quarter, to time gross how in, kind that’s live and ultimately have First you’re have of think just lower what – on improvement was you gave margin

Robert Lento

forward, to that we when close live was sports when But looking I conservative. were very hope we as look backward we’ll to we zero. in able say we pretty looked Well, be back say

forward. assuming not We that going are

what and do some have going players assuming don’t playing, whole as surrounding from erring know are We these but happen issues start contribution COVID sports, we get a because can the as you imagine live to and on conservative more of side host we’re teams – that. there’s is the

so but it’s think forecast. assumed appropriately to don’t we tried zero and be we have be to And I that, haven’t our conservative in going

Sajid Malhotra

of you operating then costs, sustainable are. forecast the is on and look would that think should our to see rate. to they I predict think tell costs of you operating time And kind We’ve where of ability of I And at a run this and energy lot particularly a kind exactly and our as spent good.

that That’s leverage and fast we think business think I when that revenue think grows. would think this the revenue there. business so have about way good as in is forward. nearly I a they I costs There’s plenty of leverage, to the not what that So tell operating as should rise you

Colby Synesael

you. Thank Great.

Robert Lento

Thanks.

Operator

[Operator Oppenheimer. next is Instructions]. Please ahead. go with The question Tim from Horan

Tim Horan

edge? sense much edge, onto quarter. maybe a incremental market of given some you us you network? some areas if see Great came be? guys. from you think of your On of clients applications a other that lot have can these you give will And kind not that, what spend for idea think Hi, for total do can addressable must You the OTT your how rough

Robert Lento

What we’ve that. a The of evidence that it what to you we new, doing. revenue think many CDN. are it’s too market it and we by to incremental for sticker right? the margins analysts service believe is is like the that providing, If But higher. is I what early the it’s we is Certainly, seen tell. so are times larger just than the numbers go are is service

we but how Now addressable always much the seen, with for bigger market out it our slice to the services remains base is edge it, is matter CDN. market of for comes try customer than that be to that no

Tim Horan

capabilities compare would competing there primary And maybe think peers on you And you you your for is your competitor these to edge who your with? do say products? of who edge, kind you’re out just can how

Robert Lento

if really in interesting out there. really our they’re with is competitors isn’t it’s I beta look know at the serverless much thing of you But that Well, there compute. have two it, said offering cloud offering. providers Lambda@Edge, between of cases geared big some Web and there differences what what they’re but towards Web and site use around has the developers AWS like acceleration. Clearly we’re are

they contract They’re started think we to a it one I to pretty the hoping has enough next in get that outperformed a so were all able And four we of the resources deal outperformed a with sized out. performance our large – basis, signed There’s settle test alternatives XX five we large out that are competition. just days. to the company number just there. of or of And good on

you comes extensive obviously don’t performance some feedback are on, were everybody. you’re from working us a every larger we up but confidence use a Whether fills when delighted the So those with outperformed hear know, in that. one some back to of we testing for standpoint competitors the case, opportunities holds that and pretty of non-traditional lot I traditional that that with with

with So that. we’re pleased

Tim Horan

points. are the Thanks. a And there two guidance, Dan, on just clarification

that will one, you’re next you maybe the say sequentially quarters? or So Is the revenue two asked, question thinking? I think part for to of a did how positive guide be

Daniel Boncel

Yes.

Tim Horan

then, goal goal growth? XX% And revenue revenue great. that OTT, for the to be XX% would edge on incremental the to Okay,

Daniel Boncel

that in Included XX%.

Tim Horan

has What term. years great. is would a Okay, couple of obviously been I this but longer be couple pretty X% us of down, XX% the around but that the guidance a and kicks more for or to second gets thinking lot, next we step XX% it’s XX% years the for guess the big of this a X% of should helpful? or color year, in to be I that the the before kind going asked about any know take And half from XX% basically

Daniel Boncel

at opportunity to Like tailwinds rate us that as with think growth term. develop the offerings continue at year, this well. Sajid this came that of least we those are tailwinds for itself ever near in those this while get there, new out mentioned, happening, provided we continues to and grown And tailwinds order for before the kind services Sure. haven’t that edge the

the within may And relative so is to time horizon. five-year – not but XX% in the year next be three

Tim Horan

you. Thank

Operator

concludes the attending you question-and-answer This and also Thank conference our now presentation. concluded. for session has today’s

disconnect. now may You

Edgio (EGIOQ) 20 Jul 202020 Q2 Earnings call transcript