EGIO - Earnings call transcript Q2 2022

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Operator

Hello, and welcome to today's EGIO Q2 2022 Financial Results Conference Call. My name is Elliot, and I’ll coordinating your call today. [Operator Instructions] I would now like to hand over to Sameet Sinha with HAL. The floor is yours. Please go ahead.

Sameet Sinha

afternoon. Good joining quarter for conference financial EGIO call. the you XXXX second results Thank being X, days today, be call safe recorded This is August by covering our for harbor. start archived website XXXX approximately me XX Let quickly the on will and like we be We statements to making everyone call. this remind forward-looking that would will on

pro plans, facts our priorities, functionalities, our acquisition statements contemplated statements Actual statements are be from results results, activities that of acquired could and as results businesses. Forward-looking forma secular not not strictly indication product our such and contributions operational business are all statements strategies, trends, of by historical from expectations, future differ materially performance. considered should and those as an forward-looking our reported feature

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

Joining results and guidance. Boncel, brief business and me Lyons, Bob are today and Edgecast. review with CFO. call start and and the Dan Dan an will with today's update discussion results EVP integration and President of on a call then financial our the CEO; Bob on will

of our Bob. the corporate Bob the turn time and use discuss remainder strategy will that, aspects going the Following to will forward. of initiatives over call now I to

Bob Lyons

remain quarter our to on positive has previous and XXXX, only [ph] and less of we of million, year-over-year. everyone. quarters organic EGIO largely three In company improve this expanded Sameet, Limelight we contributed million, momentum second $XX.X $XX.X the the blocks additional business. two with and skill solutions been demonstrating the contributed growth formed approximately and XXXX a capacity to combined our improvement forecasted $XX.X headline continue on accelerate acquired We have very months later edge-enabled of XXX% build growth. profitability building when capacity to needs with diversified revenue of more an an transformational about closed of of welcome, of not XX% Edgecast of year-over-year XX% combination. Edgecast you, acquisition Thank excited is in Edgecast than aspects supply by row was EGIO. This all mitigated We across in [ph] ordered has million. since and capacity, chain It way the this highlighted support previously concerns. the we year.

this this are for well next growth gross positioned margin temporary albeit continued in quarter. impact through We year, for year resulting and into a

gross expect sequentially We to improving going forward. margins continue

hourly at recent opportunities. high-growth pipeline the we successfully XX% the [ph] continues implemented our Our have also In to and on AppOps our this high-margin, phase focused first of heavily grow plan. year closing, integration

that, of indicated achieved expanded $XX at resulted initial low. least will achieved well Of million half we first our has in Our synergie, synergy plan. which at in after quarters have least $XX in million diligence the Post-closing, analysis already $XX.X an of twp opportunity million. ahead deep of be

All planned rate are net be of run these figures. to

solid more our and XXXX completed There in XXXX and lock profitability guidance. be companies. of up have can for work we detail the revenue We levels before combined first also bottom done is plan the provide to

very current to on - However, outlook. feel our it's provide we some do important

leading development a XX% revenue provider. that to builders committed not risk. additional solutions would opportunity utilization simplify outlook year and in to this market to platform edge-enabled opportunity imply an to taking $XXX and provide unmet $XX providing year-over-year And last $XXX Currently, we become revenue for what be [indiscernible], XXXX somewhere growth million. we We to This for solution upside EBITDA bold operators. XX% edge-enabled XXXX. commercial with meaningfully million adjusted X% XXXX and adjusted large be and outlined expect in believe synergies approximately expansion downsize security does speed of that We EBITDA include exceeds improvements, and steps improves from between million to or

is We have, on capabilities cloud from bodes provide up offer commitment. for high-margin Streaming, that We in support We AppOps, us. disrupted work App currently approximately will Edgio platform. in application suite, currently our our expected fact, representing made and the each which [indiscernible] AppOps Edgio this in each edge Edgio Delivery significant products. solution of powerful benefits scale X CDN believe development include Security, XX% massively emerging Edge, delivered best-in-class solutions, and comprehensive revenue to high security platform This solution and sector. growth world. solution Security be most they of is of pf Platform Collectively, highly App App the and

the in the phase successfully and complete completed of broader have protection API product first We market. and have web application the security strategy most

and digitalized for WAF capabilities, have y product tech larger ever the all. reported Our Verizon better had of Management [indiscernible] Scripts, security at name to one our million we impact some few. at DDoS, includes a place XXX Bot In solution Citibank solution and recorded Symantec, Accenture, that no just and package

the XXX second second delivered Our of XXX performing boast largest world. delivery making the and globe, us solution in across most the to than approximately hops edge-capacity per terabits more

our underrated us and spread companies. usage most applications well-known growth to demanding capture in this continued We combined some revenue, continuously added This representing head solution solution mission-critical viewer enables provide also Streaming previously streaming for and capacity wherever and to improve and edge prove well of the our not goes, with clients seamlessly in going can terabite possible high capacity to us and that entree positions the Limelight forward. XX additional able real our capacity quarter was and of data portfolio, most XX% are enabling clients. gas approximately may streaming for to our performance experience viewer the be time. organic offer have viewer us to

solution s their more billion manage XX new or event indicate streaming is meeting will needs, alone. live content and as we daily My XX,XXX rapidly our over circled with fore have [indiscernible] expand. exceeding fact, our conversations as and this year clients partner than In

to continue in process contest look greater and our through We for Day. strategic at unpacking work to the detail Analyst our of forward strategy capabilities planning our

new multiyear successfully we commercial best-in-class In transformational and team. of Our car successfully our our XX moved date. $XX past solutions and plan. us overhauled have operating We rule performing a two model. is we powered by of acquisitions vector to the have positions from TV on continue our completed [indiscernible] aspects massive platform, linear-streaming such edge benefit as scale million of In months, and well implemented to execute short, tailwinds

is sustained value solutions Our that will continue and and to to to demonstrating share the [indiscernible] of our are our strategy we believe do as best market this is a all more capture clients with growth. We continue of business of course

As we company confident period, XX% greater with look free beyond growth a to EBITDA oriented gross we and our than ability in positive margin, technology remain our XX% cash planning be a flow.

to calendars. time, plan our will and this financials. our We un-waivered more in call on We unpacking map. will be will At continue detail, turn we over details greater for second unpack upcoming go I property announcing plan the market date financial quarter At road and Analyst Day, finalizing the to to to Dan strategy, heading suite.

Dan Boncel

Edge second the to up XX% per a contributed the the quarter XX Thank and basis points. days quarter was $XX.X XXXX, the the of Cap were results forma Revenue up quarter of second to during second from of an expected prior second quarter consecutive XX.X%, and in revenue our terabits Bob. for gross $XX.X XX from $XX.X order XX.X% We of over year-over-year double-digit growth capacity growth increase in expanded you, the year. second support XX% traffic. Limelight supporting growth million, for percentage and included. the in contributed XXXX million quarter over third margins added of Pro XXX million,

inclusion of $XX.X and expenses, last traffic the few were restructuring expect Edge XX and revenue integration close. expenses gross we increase improves, margin XX% operating up realize expansion June Pro As from Cap, the and XX% forma the excluding The Cap ramps post of in or stock-based from by million over quarters. continued next Edge compensation, utilization we synergies acquisition-related operating is driven expenses year. expenses

Edge taking steps began of across $XX and charge Second of primarily model, connection estimated were This charges acquisition legal-related we benefits business. in the an immediately operating XX resulting restructuring over severance to savings employees implement target in the transaction approximately Cap our $XX will with quarter to close, for million. approximately million million. annualized following related a result in $X.X Also,

tons annualized Bob an mentioned, synergy realized additional we and million $XX.X already savings realize to expect million-plus in As synergies. of $XX have

spend million, incremental increase adjusted XXXX well and Edge due operating below as Cap. during quarter on quarter added first from XXXX. slightly an $XX.X the EBITDA as the the additional securities marketable was capacity to totaled quarter from $XX of million expenses even Cash of Second

We ability added have the back the in collateral. We [ph] for facility $XX and that capital the $XX on quarter. existing spent unused based to expenditures outsize bench million credit an million

Our than liquidity target to provides balance believe sheet business investing and capital in that model continue current was tighten operating stronger liquidity and our years the it position and recessionary our strength adequate today the is continue. as before continue to We markets acquisition.

approximately receivable cost balance to of million $XX actions Accounts receivables $XXX Edge have our to aggressive We and increased Cap. will take continue due to further million strengthening from sheet.

have the customers credit expected, We agent of is reviewed history. high-quality composed blue-chip with and as stronger in it detail

be We range the XX-day expect DSO to post XX- to in integration.

revenue client and $XXX These of solutions. assume million to updating will full from $XX streaming the high-margin be million year million we capture locks previously our the numbers EBITDA we follows, the are adjusted of XXXX, million. to range and $XX of disclosed revenue XX% guidance For AppOps expect $XXX as streaming overall range and

this We increased adjusted the of year we and diversified mix. throughout next gross planned and year synergies realize continually improve benefit expect and EBITDA and utilization revenue margins as to

year, million this a beyond look range $XX for revenue in $XXX outlook to of million at our least $XXX we EBITDA As adjusted XXXX of million. preliminary indicates

to XXXX, cash turn positive margins longer-term Bob. in XX% to that, call and XX% objective back adjusted the Beyond we growth, I gross will double-digit our with of to confidence free continue With sustained ability EBITDA over our have revenue and achieve flow.

Bob Lyons

commitment. to committed we improving steps deliver We client and on to toward that Dam. Thanks, e, shareholder and bold continue really taking

short of doubt the no opportunities. in those on progress us of us on remain we and was made to opportunities are in have the front we we order, While focused capture required

we close independent have class. by across unparalleled We fact, a sharing edge our in hours largest best while as one of gaming subtle products We are the the are with and day number social world do now the outlook. which live capabilities, our includes event in we shifts are do where current industry people in have [ph] client-first a they believe platforms see we that changes I'll iboss our are. well and are, observations security, of streaming and currently and I in our some company, media, performance, applications, any positions but streaming, some cover see not eyeballs to these wherever weakness in glass portfolio, they viewing, how

help no to cyber streaming of risk across sophisticated continues box, a delivering continued day, streaming only and add rather The our is to but solutions. the share. our brand growth way to and trends Edgio headlines around high-stage cash aforementioned to of environment market of and consumer clients longer indicative security Our every expectations meet is capture for a attacks more the make delivery the world, tied secure differentiate larger, ability is

The see opportunities need we and all needs to sheet. productivity, for is address continue The those versus for incremental a and for momentum unmet currently creates speed tools. for have economic tools to strong and balance to solutions are competitors. companies positioned that security, outcome-based environment our a We large

that We strategy. a expansion us well believes at creation strengthening with the coupled additional in to consider. have who Colo our believe challenging capital performance markets partner strong our opportunities both, [ph] value provide as will as We

be value. of scale, our our We platform, accretive and will again to the remain that capabilities our use expand inquisitive relative and that expand deals focus shareholder extend as security edge on always, we'll will

made the have quarters quarters three delivered of and have meaningful positive six We growth. year-over-year progress revenue past in

continued continuation Our year-over-year improvement margins and leading and adjusted XXXX with EBITDA. indicators momentum XX% of support to growth this a gross expected of in

strengthen the to continue management. team We our Board to from

members talent added excited three to very and and are We Edgio. expertise the bring have Board they to

Edgio demonstrating growth. the about and our Chief our Officer as excited appointments also our to is our and are such Security transformative Legal We ability Officer. Information and realizing recent improve quickly Chief profitability vision

market. win have right We in a to $XX block of have and a clear highly assembled attractive the establish billion foundation solutions building that a

continues Thank achieve company first be their for from that, With up Latimore we We know look today continued Northland us. our forward polite session. please uniquely Instructions] question-and-answer operator, strengthen. open [Operator to Capital working what you. Our to support thank for to Mike and to line comes investors Markets. together the question the from Our for

Your line ahead. is open. Please go

Mike Latimore

news all what customer second you. percent the of the as guess, part year, look largest to on through would contribute here. Diversification Congratulations as an expect your Thank a acquisition, is you the half of you the of revenue? I important

Bob Lyons

client that XX%. how are Mike, key high-margin and our did higher let client that I'll doing? not is have have be it's parts Dan. around also will mix one and a acquisition only was the We'll diversification. we that but above of client Bob. you this product But only one diversify of revenue, revenue of

is. for traditionally that been who It's get large probably us. can a customer very You

been closer historically, they've XX%. So to running

a that's concentration client. So significant the of large in

Dan Boncel

other from delivery strong have only very the locked service, a with service. their would The clients Verizon place traffic, was put continue contract in acquisition. that with the in Edge only to add be large not there X-year but on into their thing along is agreements we them They with and Cap Yes. other I we based streaming

delivering be could we're that that a good the thing up on that so level, for And that's performing another traffic gets one them. based for how and them to but

Mike Latimore

any touched about Have potential the changes a or of on you seen of influence sales inflation then kind or? bit And Okay. cycles? little consumer the activity. you enterprise on What just recession

Bob Lyons

as tend great our question, a you -- and Mike. spending on money is seen with for reducing that. to that's really us, more is seeing Interestingly, historically, at But not on my where are mean cycle solutions focused holding giving solutions, you are slowdown. enterprise here experience people what it. look in less That when that our well see definitely we've our that Yes, thesis to are sales TCO. we on to in I is

So in can there's where answer better actually still their a us come trim better companies that believe with better better we performance opportunity forward productivity. security, an to and for provide and their budget move people

or that with lot time our actually And that. putting started we kind less about really a you we've campaigns. more XX so launching team have spent of of ago. focused campaigns on marketing days Basically, together can

the best But we're out the a try of to traditional take cycle is the so and advantage And FR to to going ability. that of basically. in sales sales that thing our extending

Mike Latimore

Great. Good luck. Thank you.

Operator

Our next question comes from Frank Louthan from Raymond James.

open. is line Your

Frank Louthan

Thanks. about be And range it we would as then How year on would you. of on with -- some out Thank Have is a either sort you. -- of the you the any similar revenue may as expect that? little EdgeCast, it now should at for Great. or customers of CapEx, looked think initially? percentage that a business maybe business more higher diversify to portfolio bit of the they have a of little in running higher next want -- the concern you've a we CD concentration

Dan Boncel

Frank. almost was one first really that important this the the That actually overlap take customers. at I'll there is Thanks no all was deal one. of of parts very in Great.

that we all. so don't And see at

You might more us. recall wants of and client the side want stability that that actually one Edgio had over client to either client a on we better. They like do big actually with

meaningfully. client that expanding actually we're So

and a X to Go much to little true actually at the they probably on that look overlap stable rated where more. would willing a had had so alternative the the that we've in is, that ones else were market so We the maybe somebody And other individual as I more us company opposite no than they're in today. lean sentiment is -- effect. than overall, were given say a they're They geez,

So was that second was the again? what that question one. I'm sorry,

Frank Louthan

a CapEx, Or the similar you higher On start will a of term? the to that could into little out revenue? longer percentage be before get similar it

Dan Boncel

and Historically, higher if then you definitely we get revenue we think we reducing concentration reduce businesses. come factors, But related non-CDN in it about give X the that's low to company at about at it capital tell X you XX%. our will you later up One, the CapEx you think are of the better as guidance shows we reasons. out how I'll qualitatively those Yes. will how we've know, expect for as That intensity. a as run have year.

and investments to to us is you so -- CapEx. And lower the Linux percentage capacity making more Edge that CapEx, in have actually other revenue generally then are without a things Xtend going the third two, number to having thing been product on the reduces actually one, of allows have spend that. our And then and number we've

the in to many willing to year, very want where are that margin that we of things success things good all because We're indicators opportunities next get X and us available those as better sure to those to. go gross make things. to at see quick into that really yet the to point invest we term to X very we in want into there CapEx we so getting and We get a capture in more we're a we it get get because that. And payback, early there's which all So short not driving. efficient those and it it translates call definitely at

CapEx. But to have the say closer would much the with more we as I will we how speaking, and So a of The end timing even. better the really get not get question call that only is to idea there. year, generally we'll efficient we're

Frank Louthan

you complete lending as as conversion? percentage the on Okay. of are where the And far

Dan Boncel

really and production it's putting completion now done conversation. we've actually in rollout So it the is of it a

particularly combination having we're more roll it without thoughtfully out QX, traffic. the into of QX a also any and impact, we got and getting that that take it's then equipment We've kind creating to do of so going of that. and advantage And ensure

say as inning second as probably or of third specific a So far the in frame, I would the time engagements. we're X

Operator

from We now David Street. to Lake Please Martin go turn ahead.

Q –Unidentified Analyst

Its [ph] Eric Lake Martinuzzi Street.

regarding as the expansion using capacity seems the out already outlook for quarter being came you question in it margins or but was the in given you of sufficient -- like a the that it Just a made gross after is you and

Dan Boncel

Yes.

So the a amount in we XX of terabits. capacity capacity, quarter added is

to year, order of actually the support we in half coming second the get volumes XXXX of we when rolling up. we that equipment add clear needed were visibility last out so order going we support that that for the didn't And capacity in into we have are to the to revenue forecast to

And so -- it in, came build had that us actually that a just happened a in for lot during of CapEx that the order we lot quarter. of to out

that we so the going exactly opportunity knowing when took can edge is to without that close. And out to deal roll

better Bob amost know recently utilizing quickly that because in XX second As capacity the rolled gene were we mentioned, we now that didn't have we can the to those as down by also out, going did vendors. are CapEx get better utilizing the kind that we come but think the hedge as we we've that

Q –Unidentified Analyst

it XXX than larger Got that gross XX margin things are far as minutes as you. the as gross And that are then you step as talking narrow noncash at of we up a can in QX. down bit? expansion improvement federal kind for to far as us of What -- far you we're a that? as Are talked is QX, opportunity, sequential talking about utilization talking we a or cash looking or

Dan Boncel

as the in margin on And as as continue well we from increase the we coming increase of think I to. build triple-digit the that that's to that Apax in and revenue stream we're amount Yes, the higher-margin revenue saying pretty greater Viper improvements sequential expect then gross utilization. than safe

Q –Unidentified Analyst

of the question And Okay. me synergy incremental red the synergies $XX Whereas around -- last the that acquisition, her. that to source then up synergies million. Guest incremental from from is for Edge what

Dan Boncel

going center, maybe of -- have at -- more sitting these a that combination X building as we other and to big had look rows a each pricing EdgeCast as things. a and stack it's power from synergy those we in of same When the you is in collapse the So of we apart straight actually of can in well. lot A gross a line. part now margin have data couple the server centers

before close, look a much so hands -- good so bit And little really we the were could able engineers the was only and the was get and our close, able to can it to under covers information we more we dig was Once was on. estimate really initial our conservative. were there and news we let that we get in

to we're of so bottom take able more And line. that

system just the then savings. related largely natural opportunities the costs bndwidth and taking it's other go advantage of redundancy So over and in the to that -- redundancy obviously the

Q –Unidentified Analyst

you, Thank

Operator

Bob This for Lyons, CEO, concludes I'll back now hand remarks. final it to

Bob Lyons

analysts Thank Okay. and everyone, joining and have our Great. look today. our you, us Thank to investors, day. forward We continuing you, sharing progress and with Elliot. great for conversations a

Operator

now for to your call Today's thank has We'd participation. you concluded. like

your now lines. may You disconnect

Edgio (EGIOQ) 9 Aug 222022 Q2 Earnings call transcript