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þ
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.
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Delaware
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20-1677033
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification No.)
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Title of each class
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Name of each exchange on which registered
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Common Stock, $0.001 par value
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NASDAQ Global Select Market
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Large accelerated filer
o
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Accelerated filer
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Non-accelerated filer
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Smaller Reporting Company
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(Do not check if a smaller reporting company)
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Page
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PART I
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Item 1.
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Item 1A.
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Item 1B.
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Item 2.
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Item 3.
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Item 4.
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PART II
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Item 5.
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Item 6.
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Item 7.
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Item 7A.
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Item 8.
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Item 9.
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Item 9A.
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Item 9B.
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PART III
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Item 10.
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Item 11.
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Item 12.
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Item 13.
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Item 14.
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PART IV
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Item 15.
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•
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Improved Video Quality
.
Consumers are continuing to consume online streaming video in record numbers. As the 2014 world cup demonstrated and online providers, such as YouTube, demonstrate, online video is rapidly growing towards becoming a primary method by which users consume video content, whether it’s via their personal computers (PCs), smartphones, tablets, or connected televisions. Yet, consumers continue to expect the same quality experience online as they would have in viewing a television. To keep up with the consumer expectations, organizations have been forced to increase quality to provide a “broadcast-like” experience. For example, with the recent advent of 4K resolution devices, several large-scale online video providers are already streaming in this new format that requires, in most cases, four times the bandwidth of a traditional high definition stream. We believe that as more content is made available in 4K resolution (coupled with increasing sales of 4K-ready devices like televisions), more consumers will want to consume the higher-quality content, resulting in increased strain on Internet architecture and infrastructure.
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•
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Growth of digital downloads.
W
ith the growing availability of higher bandwidth connections to connected devices, consumers are becoming more accustomed to making purchases of movies, music, games, and applications digitally from a variety of retailers. As a result, consumers accept larger download sizes. For example, recent releases of popular games have topped 50 gigabytes (GBs) in size. As digital purchases of massive files increases, we believe that this will cause more strain on the Internet’s infrastructure resulting in additional pressure on organizations and service providers to take steps to avoid congestion, latency, lengthening download times, and increasingly interrupted downloads, all of which we believe would undermine an organization’s ability to deliver the best possible digital experience.
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•
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Shift to over the top technology (OTT) and television everywhere (TVE).
Recent service provider announcements of services for cord-cutters
coupled with broadcasters and other content providers announcing plans to provide content directly to consumers illustrates the shift towards internet protocol television (IPTV) OTT, and consumer demand for online streaming services. As day-to-day consumption of video content shifts to Internet-based delivery (either via OTT or TVE), we believe this will put an increasing strain on the Internet putting additional pressure on organizations and service providers to take steps to protect the quality of the end-user experience as this increasing segment of traffic competes with other Internet activities, such as browsing websites and downloading digital content.
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•
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The Internet of Things.
Connected devices communicate with each other and with server-based resources via the Internet. Although it is unclear as to how much bandwidth this “background communication” will consume, as more devices become connected and begin communicating with each other and other resources, this traffic will compete with other Internet traffic such as streaming video and digital downloads. We believe that the Internet of Things may complicate an organization’s ability to utilize the Internet to deliver high quality digital experiences.
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•
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Webpage size.
In our recent annual study,
The State of the User Experience
, over 1000 surveyed respondents indicated that performance of a website was the most important aspect in satisfaction with a digital experience. According to the HTTPArchive, as of July 2014, the top 1000 websites had surpassed 1600K (1.6mb) in average size. This increasing webpage size demonstrates that organizations are building more complex, interactive, and engaging digital experiences. We believe that larger websites will become the norm as consumer bandwidth increases. We believe, through a highly congested Internet, these websites will become increasingly harder to deliver at the level of performance that users expect.
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The continued growth of online video.
Consumers are increasingly demanding and consuming, and publishers are increasingly making available for these consumers, video, music, and other forms of rich media over the Internet. In particular, we anticipate that consumer demand for online video will continue to grow rapidly. This anticipation is supported by Cisco’s annual report of Internet traffic and consumer behavior that predicts by 2017, over 70% of Internet traffic will be online video. Based on this trend, we expect that businesses will continue to incorporate video into their digital marketing efforts as a way to further differentiate their message from competitors and generate new opportunities for engagement. This anticipation is further supported by a report from BI Research finding that video ad revenue will increase at a three-year compound annual growth rate (CAGR) of 19.5% through 2016. KPCB analyst Mary Meeker’s 2014 Internet Trends report shows video consumption on mobile devices is also growing rapidly.
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Mobile First.
We believe that mobile is becoming increasingly important as a primary method users use to interact with online content, a position supported by Google’s 2012 “The Multi-Screen World” study that among other things, concluded that consumers typically utilize four devices every day to consume content-smartphones, tablets, PCs, and TVs. The study further indicated that consumers start many activities on their mobile devices and finish them on larger screens. KPCB analyst Mary Meeker’s 2014 Internet Trends report also shows that between 2013 and 2014 mobile usage for accessing the web in some countries doubled as a percentage of overall web access with clear growth in all regions around the globe. Ultimately, mobile devices enable consumers to remain connected and engaged with an organization’s story when they are away from their primary computers or TVs and it’s clear that consumers are employing these devices more often to do so. But in order for those consumers to remain engaged, the experience must be consistent across devices. An organization’s dynamic content and video has to be accessible regardless of device and provide the same engagement and interaction with those users. These findings were further supported by Nielsen Research’s 2014 digital-consumer-report.
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•
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The continued migration of information technology (IT) services into the cloud.
Enterprises may seek to decrease infrastructure expenditures by moving to a “cloud-based” model in which application delivery and storage are available on-demand and paid for on an as-needed basis. We anticipate that the core cloud computing market will continue to grow at a rapid pace as the cloud increasingly becomes a mainstream IT strategy embraced by corporate enterprises and government agencies. This core market includes platform-as-a-service (PaaS) and infrastructure-as-a-service (IaaS) offerings, as well as the cloud-delivered software used to build and manage a cloud environment.
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Increasing user expectations for digital experience performance.
Websites are becoming increasingly complex and large while user expectations for website performance are becoming more demanding, a situation that we explored in our annual
State of the User Experience
report that explores consumer feelings and expectations around digital experiences. We anticipate that these demanding consumer expectations will drive a continued need for website and web application acceleration services. The combination of performance expectation coupled with multi-device delivery creates a considerable challenge for most organizations.
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Increasing need for scalable storage.
According to International Data Corporation, the amount of data created each year has grown rapidly and from 2013 to 2020, the digital universe will grow by a factor of 10, more than doubling every two years. We believe this rapid growth in data production will create demand for flexible and scalable storage mechanisms to support growing libraries of digital content. We anticipate the need for digital content storage to increase because of the growing demand for video and other types of digital content as well as other trends like the continued migration of IT services into the cloud.
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The evolution of digital marketing.
As the global online economy has continued to expand and grow, it has become increasingly difficult for businesses to capture consumer attention. Because of this difficulty, we anticipate that marketing will continue to evolve from broadcast advertising and other marketing messages to engaging with users through conversations associated with content in a variety of places including websites and social networks. We believe this kind of engagement requires that content be increasingly comprised of video and rich media, and be
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Reduction of IT involvement.
As businesses rely increasingly on cloud-based services they will require more intuitive web-based interfaces that enable adoption and usage of the cloud-based services by the entire company or organization, regardless of location, with less direct IT support required.
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Business rules-based content delivery.
Consumers increasingly expect the ability to consume any form of media content online. To meet this expectation, traditional media companies are making their enormous libraries of content, such as television shows and movies, available for viewing online. Content providers often have regulations with respect to where they can display their content. Accordingly, companies require powerful features that enable them to control where content is stored, for how long, and in what regions it can be delivered.
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Ability to scale capacity to handle rapidly accelerating demand.
Online businesses must scale delivery of their web presence smoothly as the quantity of their site visitors or audience increases to avoid delays for users. When a large number of users simultaneously access a particular digital content asset like a website or video, the operator must be able to meet that surge in demand without making users wait. Rapidly accelerating demand can be related to a single event, such as a breaking news story or seasonal shopping, or can be spread across an entire library of content, such as when a social media website surges in popularity. The continued increase in video and other rich media consumption, and the growing size of digital content objects, contributes to concerns that Internet bandwidth may be supply constrained in the future.
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Ability to easily publish and deliver online video.
As the consumer demand for online video grows, businesses and organizations may be required to adopt video into their marketing messages. However, there are a host of complexities involved in developing and implementing a “video publishing workflow.” Businesses will require intuitive tools that will enable them to manage their video portfolio, and quickly and efficiently publish and deliver their video content at scale with quality performance. Additionally, businesses will require that video content can be converted automatically for quality playing on any mobile device with the opportunity to integrate advertisements into on-demand assets.
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Addressing mobile users.
With the increasing popularity of smartphones and tablets, businesses and organizations must ensure that their content, whether dynamic web pages or video, display properly in their mobile format. However, adding this requirement to existing content publishing workflows may greatly complicate internal processes that may result in delays for making content available to end users. Additionally, because many mobile devices have separate requirements, businesses will require features for automatically delivering correctly formatted content.
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Reliability and Consistency.
Throughout the path data must traverse to reach a user, problems with the underlying infrastructure supporting the Internet can occur. For example, servers can crash or network connections can fail. Network, datacenter, or service provider outages can mean frustrated users, lost audiences, and missed revenue opportunities. Businesses require a massively redundant network that they can rely on to ensure a reliable and consistent delivery of their digital experiences.
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•
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Security.
Maintaining effective security is a challenge for any enterprise that operates an Internet presence. Threats, denial of service attacks, viruses, and piracy can impact online web presence in many ways, including compromising personal and sensitive information, loss of customer trust and loyalty, loss of revenue, and negative publicity and brand reputation. Businesses require services that employ a number of software and network features to mitigate the risk of unauthorized access to content and network-related attacks against web properties, digital content, and applications. In 2014, there were a number of high profile security incidents that continue to raise the awareness, and strategic importance of security in our industry.
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•
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Content delivery services
improve the reliability and performance of digital content by using our global network to deliver rich media files such as video, music, games, and software, or live streaming of corporate or entertainment events. We support all major formats as well as dynamic and static webpages.
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Mobile delivery services
help publishers deliver properly-formatted, device-optimized video to almost any media-enabled mobile device as well as to present dynamic pre-, mid-, or post-roll video and audio advertising into media that is delivered to mobile or connected users. These mobility services automatically detect the requesting mobile device and provide a version of the content suitable to that device.
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•
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Video content management services
help organizations publish, manage, syndicate, analyze, and monetize video content through a cloud-based service. Services here also include off-the-shelf players for quick deployment, a mobile application to capture video in the field, and monetization features that enable customers to integrate advertising into the video playback experience.
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•
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Performance services
improve web experiences by speeding up the loading of web pages for faster action and providing consistent performance from any geography for dynamic and personalized content, online commerce transactions, and web applications.
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•
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Cloud storage services
provide customers with a scalable, redundant, geographically diverse storage of media and enterprise content offering policies for global geographic placement, content workflow, and business logic controls.
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•
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Enterprise Web
addresses the complexities of delivering high performing website content globally to any device.
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Media and Broadcasters
addresses the complexities of publishing and delivering digital video content to global audiences on any devices.
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•
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Gaming
addresses the complexities of distributing, promoting, and updating video games across PC, consoles, and mobile devices.
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Densely configured, high-capacity.
Our global network consists of dense clusters of specially configured servers organized into large, multi-tiered, logical delivery locations. The extensive storage capacity of these logical locations leads to fewer cache misses to our network of servers than we believe would occur in other content delivery network (CDN) architectures and provides significant scalability and responsiveness to surges in end-user demand. The clustering of many high-performance CPUs provide us with aggregated computational power.
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Many connections to other networks.
Our logical locations are directly connected to hundreds of ISPs and other user access networks, which are computer networks connected to end-users. In addition, for dedicated connectivity between our logical locations, we operate a dedicated fiber optic backbone and metro area networks. Also, our infrastructure has multiple connections to the Internet. In combination, these connections enable us to frequently bypass the often-congested public Internet, improving the delivery speed of content.
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Intelligent software to manage the network.
We have developed proprietary software that manages our global network. This software manages, among other things, the delivery of digital content, the retrieval of dynamic content, storage and retrieval of objects, activity logging, and information reporting.
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Name
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Age
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Position
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Robert A. Lento
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53
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President, Chief Executive Officer and Director
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Peter J. Perrone
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47
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Senior Vice President, Chief Financial Officer and Treasurer
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Philip C. Maynard
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60
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Senior Vice President, Chief Legal Officer and Secretary
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Charles Kirby Wadsworth
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58
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Chief Marketing Officer
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George E. Vonderhaar
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54
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Chief Sales Officer
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Sajid Malhotra
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51
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Senior Vice President, Strategy, Facilities, Investors Relations and Procurement
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•
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continued price declines arising from significant competition;
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increasing settlement fees for certain peering relationships;
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•
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failure to increase sales of our Orchestrate Platform services;
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increases in electricity, bandwidth and rack space costs or other operating expenses, and failure to achieve decreases in these costs and expenses relative to decreases in the prices we can charge for our Orchestrate Platform services and products;
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inability to maintain our prices relative to our costs;
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failure of our current and planned services and software to operate as expected;
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loss of any significant customers or loss of existing customers at a rate greater than our increase in new customers or our sales to existing customers;
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failure to increase sales of our Orchestrate Platform services to current customers as a result of their ability to reduce their monthly usage of our services to their minimum monthly contractual commitment;
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failure of a significant number of customers to pay our fees on a timely basis or at all or failure to continue to purchase our Orchestrate Platform services in accordance with their contractual commitments; and
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inability to attract high quality customers to purchase and implement our current and planned services.
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their satisfaction or dissatisfaction with our services;
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the prices of our services;
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the prices of services offered by our competitors;
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discontinuation by our customers of their Internet or web-based content distribution business;
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mergers and acquisitions affecting our customer base; and
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reductions in our customers’ spending levels.
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•
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cease selling, incorporating or using products or services that incorporate the challenged intellectual property;
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pay substantial damages;
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obtain a license from the holder of the infringed intellectual property right, which license may or may not be available on reasonable terms or at all; or
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redesign products or services.
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our ability to increase sales to existing customers and attract new customers to our content delivery and other Orchestrate Platform services;
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the addition or loss of large customers, or significant variation in their use of our content delivery and other Orchestrate Platform services;
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costs associated with current or future intellectual property lawsuits and other lawsuits;
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service outages or third party security breaches to our platform or to one or more of our customers’ platforms;
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the amount and timing of operating costs and capital expenditures related to the maintenance and expansion of our business, operations and infrastructure;
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the timing and success of new product and service introductions by us or our competitors;
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•
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the occurrence of significant events in a particular period that result in an increase in the use of our content delivery and other Orchestrate Platform services, such as a major media event or a customer’s online release of a new or updated video game or operating system;
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•
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changes in our pricing policies or those of our competitors;
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•
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the timing of recognizing revenue;
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•
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limitations of the capacity of our global network and related systems;
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•
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the timing of costs related to the development or acquisition of technologies, services or businesses;
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•
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the potential write-down or write-off of intangible or other long-lived assets;
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•
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general economic, industry and market conditions (such as the fluctuations experienced in the stock and credit markets during the recent deterioration of global economic conditions) and those conditions specific to Internet usage;
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•
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limitations on usage imposed by our customers in order to limit their online expenses; and
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•
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war, threat of war or terrorist actions, including cyber terrorism targeted broadly, at us, or our customers, or both, and inadequate cyber security.
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•
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increased expenses associated with sales and marketing, deploying services and maintaining our infrastructure in foreign countries;
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•
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competition from local content delivery service providers, many of which are very well positioned within their local markets;
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•
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challenges caused by distance, language and cultural differences;
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•
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unexpected changes in regulatory requirements preventing or limiting us from operating our global network or resulting in unanticipated costs and delays;
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•
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interpretations of laws or regulations that would subject us to regulatory supervision or, in the alternative, require us to exit a country, which could have a negative impact on the quality of our services or our results of operations;
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•
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longer accounts receivable payment cycles and difficulties in collecting accounts receivable;
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•
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corporate and personal liability for violations of local laws and regulations;
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•
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currency exchange rate fluctuations and repatriation of funds;
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•
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potentially adverse tax consequences;
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•
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credit risk and higher levels of payment fraud; and
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•
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foreign exchange controls that might prevent us from repatriating cash earned in countries outside the United States.
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•
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implementing customer orders for services;
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delivering these services; and
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•
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timely and accurate billing for these services.
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•
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announcements of technological innovations, new services or service enhancements, strategic alliances or significant agreements by us or by our competitors;
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commencement or resolution of, our involvement in and uncertainties arising from, litigation, particularly our current litigation with Akamai and MIT;
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changes in the estimates of our operating results or changes in recommendations by any securities analysts that elect to follow our common stock;
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•
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establish that members of the board of directors may be removed only for cause upon the affirmative vote of stockholders owning a majority of our capital stock;
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authorize the issuance of “blank check” preferred stock that could be issued by our board of directors to increase the number of outstanding shares and thwart a takeover attempt;
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limit who may call special meetings of stockholders;
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prohibit stockholder action by written consent, thereby requiring stockholder actions to be taken at a meeting of the stockholders;
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•
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establish advance notice requirements for nominations for election to the board of directors or for proposing matters that can be acted upon at stockholder meetings;
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provide for a board of directors with staggered terms; and
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•
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provide that the authorized number of directors may be changed only by a resolution of our board of directors.
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Item 5.
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Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
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High
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Low
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||||
2013:
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||||
First Quarter
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$
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2.52
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$
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2.03
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Second Quarter
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$
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2.50
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$
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1.80
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Third Quarter
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$
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2.56
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$
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1.89
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Fourth Quarter
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$
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2.08
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$
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1.82
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2014:
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||||
First Quarter
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$
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2.39
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|
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$
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1.88
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Second Quarter
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$
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3.25
|
|
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$
|
1.91
|
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Third Quarter
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$
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3.15
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|
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$
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2.16
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Fourth Quarter
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$
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2.99
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|
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$
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2.11
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Period
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Total Number of Shares Purchased
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Average Price Paid Per Share (1)
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Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (2)
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Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (2)
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||||
October 1, - October 31, 2014
|
|
—
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|
|
—
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|
|
—
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|
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12,509
|
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November 1, - November 30, 2014
|
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247,000
|
|
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2.81
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|
|
247,000
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|
|
11,818
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December 1, - December 31, 2014
|
|
524,543
|
|
|
2.84
|
|
|
524,543
|
|
|
10,338
|
|
|
|
771,543
|
|
|
|
|
771,543
|
|
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(1)
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Includes commissions, markups and expenses
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(2)
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On February 12, 2014, our board of directors authorized a $15,000 share repurchase program. Under the current authorization, we may repurchase shares periodically in the open market or through privately negotiated transactions,
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|
Limelight Networks, Inc.
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||||||||||||||||||
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Year Ended December 31,
|
||||||||||||||||||
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2014
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|
2013
|
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2012
|
|
2011
|
|
2010
|
||||||||||
Revenues
|
$
|
162,259
|
|
|
$
|
173,433
|
|
|
$
|
180,236
|
|
|
$
|
171,292
|
|
|
$
|
154,223
|
|
Cost of revenue:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cost of services (1)
|
82,176
|
|
|
88,783
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|
|
85,226
|
|
|
82,976
|
|
|
73,630
|
|
|||||
Depreciation — network
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16,673
|
|
|
22,942
|
|
|
27,992
|
|
|
28,030
|
|
|
22,224
|
|
|||||
Total cost of revenue
|
98,849
|
|
|
111,725
|
|
|
113,218
|
|
|
111,006
|
|
|
95,854
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|
|||||
Gross profit
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63,410
|
|
|
61,708
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|
|
67,018
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|
|
60,286
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|
|
58,369
|
|
|||||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
||||||||||
General and administrative (1)
|
28,176
|
|
|
31,904
|
|
|
34,500
|
|
|
30,672
|
|
|
28,358
|
|
|||||
Sales and marketing (1)
|
37,458
|
|
|
41,474
|
|
|
45,044
|
|
|
40,110
|
|
|
38,757
|
|
|||||
Research and development (1)
|
20,965
|
|
|
22,003
|
|
|
20,182
|
|
|
17,163
|
|
|
10,895
|
|
|||||
Depreciation and amortization
|
3,529
|
|
|
5,804
|
|
|
5,843
|
|
|
4,787
|
|
|
2,460
|
|
|||||
Total operating expenses
|
90,128
|
|
|
101,185
|
|
|
105,569
|
|
|
92,732
|
|
|
80,470
|
|
|||||
Operating loss
|
(26,718
|
)
|
|
(39,477
|
)
|
|
(38,551
|
)
|
|
(32,446
|
)
|
|
(22,101
|
)
|
|||||
Other income (expense):
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest expense
|
(32
|
)
|
|
(76
|
)
|
|
(177
|
)
|
|
(299
|
)
|
|
(62
|
)
|
|||||
Interest income
|
276
|
|
|
321
|
|
|
356
|
|
|
752
|
|
|
910
|
|
|||||
Gain on sale of cost basis investment
|
—
|
|
|
—
|
|
|
9,420
|
|
|
—
|
|
|
—
|
|
|||||
Other, net
|
1,821
|
|
|
4,643
|
|
|
(602
|
)
|
|
(311
|
)
|
|
(250
|
)
|
|||||
Total other income (expense)
|
2,065
|
|
|
4,888
|
|
|
8,997
|
|
|
142
|
|
|
598
|
|
|||||
Loss from continuing operations before
income taxes
|
(24,653
|
)
|
|
(34,589
|
)
|
|
(29,554
|
)
|
|
(32,304
|
)
|
|
(21,503
|
)
|
|||||
Income tax provision (benefit)
|
203
|
|
|
387
|
|
|
481
|
|
|
(2,238
|
)
|
|
727
|
|
|||||
Loss from continuing operations
|
(24,856
|
)
|
|
(34,976
|
)
|
|
(30,035
|
)
|
|
(30,066
|
)
|
|
(22,230
|
)
|
|||||
Discontinued operations:
|
|
|
|
|
|
|
|
|
|
||||||||||
Income (loss) from discontinued operations,
net of income taxes
|
265
|
|
|
(426
|
)
|
|
(2,861
|
)
|
|
4,778
|
|
|
1,879
|
|
|||||
Net loss
|
$
|
(24,591
|
)
|
|
$
|
(35,402
|
)
|
|
$
|
(32,896
|
)
|
|
$
|
(25,288
|
)
|
|
$
|
(20,351
|
)
|
Net (loss) income per share:
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic and diluted
|
|
|
|
|
|
|
|
|
|
||||||||||
Continuing operations
|
$
|
(0.25
|
)
|
|
$
|
(0.36
|
)
|
|
$
|
(0.30
|
)
|
|
$
|
(0.28
|
)
|
|
$
|
(0.24
|
)
|
Discontinued operations
|
—
|
|
|
(0.01
|
)
|
|
(0.02
|
)
|
|
0.05
|
|
|
0.02
|
|
|||||
Total
|
$
|
(0.25
|
)
|
|
$
|
(0.37
|
)
|
|
$
|
(0.32
|
)
|
|
$
|
(0.23
|
)
|
|
$
|
(0.22
|
)
|
Weighted average shares used in per share
calculation:
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic and diluted
|
98,365
|
|
|
96,851
|
|
|
101,283
|
|
|
109,236
|
|
|
94,300
|
|
|
Limelight Networks, Inc.
|
||||||||||||||||||
|
Year Ended December 31,
|
||||||||||||||||||
|
2014
|
|
2013
|
|
2012
|
|
2011
|
|
2010
|
||||||||||
Cost of services
|
$
|
1,956
|
|
|
$
|
1,873
|
|
|
$
|
2,117
|
|
|
$
|
2,419
|
|
|
$
|
2,359
|
|
General and administrative
|
4,741
|
|
|
5,971
|
|
|
6,511
|
|
|
6,132
|
|
|
5,984
|
|
|||||
Sales and marketing
|
2,317
|
|
|
2,245
|
|
|
3,104
|
|
|
3,776
|
|
|
4,840
|
|
|||||
Research and development
|
1,477
|
|
|
2,256
|
|
|
2,743
|
|
|
3,554
|
|
|
2,999
|
|
|||||
Total
|
$
|
10,491
|
|
|
$
|
12,345
|
|
|
$
|
14,475
|
|
|
$
|
15,881
|
|
|
$
|
16,182
|
|
|
Limelight Networks, Inc.
|
||||||||||||||||||
|
Year Ended December 31,
|
||||||||||||||||||
|
2014
|
|
2013
|
|
2012
|
|
2011
|
|
2010
|
||||||||||
Consolidated Balance Sheet Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents and marketable
securities, current
|
$
|
93,084
|
|
|
$
|
118,462
|
|
|
$
|
127,955
|
|
|
$
|
140,199
|
|
|
$
|
66,870
|
|
Non-current marketable securities
|
40
|
|
|
46
|
|
|
18
|
|
|
51
|
|
|
103
|
|
|||||
Working capital
|
100,218
|
|
|
123,265
|
|
|
137,066
|
|
|
159,180
|
|
|
127,280
|
|
|||||
Property and equipment, net
|
32,636
|
|
|
32,905
|
|
|
41,251
|
|
|
56,368
|
|
|
52,891
|
|
|||||
Total assets
|
241,341
|
|
|
268,298
|
|
|
304,881
|
|
|
346,345
|
|
|
298,640
|
|
|||||
Long-term debt, less current portion
|
135
|
|
|
358
|
|
|
824
|
|
|
2,124
|
|
|
1,641
|
|
|||||
Total stockholders’ equity
|
212,163
|
|
|
237,331
|
|
|
267,230
|
|
|
309,105
|
|
|
256,109
|
|
|
Year Ended December 31,
|
|||||||||||||||||||
|
2014
|
|
2013
|
|
2012
|
|||||||||||||||
Revenues
|
$
|
162,259
|
|
|
100.0
|
%
|
|
$
|
173,433
|
|
|
100.0
|
%
|
|
$
|
180,236
|
|
|
100.0
|
%
|
Cost of revenue
|
98,849
|
|
|
60.9
|
%
|
|
111,725
|
|
|
64.4
|
%
|
|
113,218
|
|
|
62.8
|
%
|
|||
Gross profit
|
63,410
|
|
|
39.1
|
%
|
|
61,708
|
|
|
35.6
|
%
|
|
67,018
|
|
|
37.2
|
%
|
|||
Total operating expenses
|
90,128
|
|
|
55.5
|
%
|
|
101,185
|
|
|
58.3
|
%
|
|
105,569
|
|
|
58.6
|
%
|
|||
Operating loss
|
(26,718
|
)
|
|
(16.5
|
)%
|
|
(39,477
|
)
|
|
(22.8
|
)%
|
|
(38,551
|
)
|
|
(21.4
|
)%
|
|||
Total other income
|
2,065
|
|
|
1.3
|
%
|
|
4,888
|
|
|
2.8
|
%
|
|
8,997
|
|
|
5.0
|
%
|
|||
Loss from continuing operations before income taxes
|
(24,653
|
)
|
|
(15.2
|
)%
|
|
(34,589
|
)
|
|
(19.9
|
)%
|
|
(29,554
|
)
|
|
(16.4
|
)%
|
|||
Income tax provision
|
203
|
|
|
0.1
|
%
|
|
387
|
|
|
0.2
|
%
|
|
481
|
|
|
0.3
|
%
|
|||
Loss from continuing operations
|
(24,856
|
)
|
|
(15.3
|
)%
|
|
(34,976
|
)
|
|
(20.2
|
)%
|
|
(30,035
|
)
|
|
(16.7
|
)%
|
|||
Discontinued operations:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Income (loss) from discontinued operations, net of
income taxes |
265
|
|
|
0.2
|
%
|
|
(426
|
)
|
|
(0.2
|
)%
|
|
(2,861
|
)
|
|
(1.6
|
)%
|
|||
Net loss
|
$
|
(24,591
|
)
|
|
(15.2
|
)%
|
|
$
|
(35,402
|
)
|
|
(20.4
|
)%
|
|
$
|
(32,896
|
)
|
|
(18.3
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
•
|
EBITDA from continuing operations and Adjusted EBITDA do not reflect our cash expenditures or future requirements for capital expenditures or contractual commitments;
|
•
|
they do not reflect changes in, or cash requirements for, our working capital needs;
|
•
|
they do not reflect the cash requirements necessary for litigation costs;
|
•
|
they do not reflect the interest expense, or the cash requirements necessary to service interest or principal payments, on our debt that we may incur;
|
•
|
they do not reflect income taxes or the cash requirements for any tax payments;
|
•
|
although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will be replaced sometime in the future, and EBITDA from continuing operations and Adjusted EBITDA do not reflect any cash requirements for such replacements;
|
•
|
while share-based compensation is a component of operating expense, the impact on our financial statements compared to other companies can vary significantly due to such factors as the assumed life of the options and the assumed volatility of our common stock; and
|
•
|
other companies may calculate EBITDA from continuing operations and Adjusted EBITDA differently than we do, limiting their usefulness as comparative measures.
|
|
Year Ended December 31,
|
||||||||||
|
2014
|
|
2013
|
|
2012
|
||||||
U.S. GAAP net loss
|
$
|
(24,591
|
)
|
|
$
|
(35,402
|
)
|
|
$
|
(32,896
|
)
|
Share-based compensation
|
10,491
|
|
|
12,345
|
|
|
14,475
|
|
|||
Litigation defense expenses
|
817
|
|
|
450
|
|
|
527
|
|
|||
Acquisition related expenses
|
—
|
|
|
176
|
|
|
(388
|
)
|
|||
Amortization of intangible assets
|
1,138
|
|
|
2,843
|
|
|
2,871
|
|
|||
Gain on sale of cost basis investment
|
—
|
|
|
—
|
|
|
(9,420
|
)
|
|||
Loss (gain) on sale of the WCM business
|
62
|
|
|
(3,836
|
)
|
|
—
|
|
|||
(Income) loss from discontinued operations
|
(265
|
)
|
|
426
|
|
|
2,861
|
|
|||
Non-GAAP net loss
|
$
|
(12,348
|
)
|
|
$
|
(22,998
|
)
|
|
$
|
(21,970
|
)
|
|
Year Ended December 31,
|
||||||||||
|
2014
|
|
2013
|
|
2012
|
||||||
U.S. GAAP net loss
|
$
|
(24,591
|
)
|
|
$
|
(35,402
|
)
|
|
$
|
(32,896
|
)
|
Depreciation and amortization
|
20,202
|
|
|
28,746
|
|
|
33,835
|
|
|||
Interest expense
|
32
|
|
|
76
|
|
|
177
|
|
|||
Gain on sale of cost basis investment
|
—
|
|
|
—
|
|
|
(9,420
|
)
|
|||
Loss (gain) on sale of the WCM business
|
62
|
|
|
(3,836
|
)
|
|
—
|
|
|||
Interest and other (income) expense
|
(2,159
|
)
|
|
(1,128
|
)
|
|
246
|
|
|||
Income tax provision
|
203
|
|
|
387
|
|
|
481
|
|
|||
(Income) loss from discontinued operations
|
(265
|
)
|
|
426
|
|
|
2,861
|
|
|||
EBITDA from continuing operations
|
$
|
(6,516
|
)
|
|
$
|
(10,731
|
)
|
|
$
|
(4,716
|
)
|
Share-based compensation
|
10,491
|
|
|
12,345
|
|
|
14,475
|
|
|||
Litigation defense expenses
|
817
|
|
|
450
|
|
|
527
|
|
|||
Acquisition related expenses
|
—
|
|
|
176
|
|
|
(388
|
)
|
|||
Adjusted EBITDA
|
$
|
4,792
|
|
|
$
|
2,240
|
|
|
$
|
9,898
|
|
•
|
sustained decline in our stock price due to a decline in our financial performance due to the loss of key customers, loss of key personnel, emergence of new technologies or new competitors;
|
•
|
decline in overall market or economic conditions leading to a decline in our stock price; and
|
•
|
decline in observed control premiums paid in business combinations involving comparable companies.
|
•
|
the sale of the Web Content Management (WCM) business in December 2013. Revenue from our WCM-related business was approximately $12 million for the year ended December 31, 2013.
|
•
|
the expiration of our content delivery contract with Netflix in July 2014. Revenue from Netflix was approximately $11 million and $20 million for the years ended December 31, 2014 and 2013, respectively.
|
•
|
our active customers worldwide decreased to 1,095 as of December 31, 2014 compared to 1,295 as of December 31, 2013. Approximately 25% of the decrease in customers is attributable to the sale of the WCM business.
|
|
Year Ended December 31,
|
||||||||||||
|
2014
|
|
2013
|
||||||||||
Bandwidth and co-location fees
|
$
|
55,274
|
|
|
34.1
|
%
|
|
$
|
59,447
|
|
|
34.3
|
%
|
Depreciation - network
|
16,673
|
|
|
10.3
|
%
|
|
22,942
|
|
|
13.2
|
%
|
||
Payroll and related employee costs
|
17,691
|
|
|
10.9
|
%
|
|
18,951
|
|
|
10.9
|
%
|
||
Share-based compensation
|
1,957
|
|
|
1.2
|
%
|
|
1,873
|
|
|
1.1
|
%
|
||
Other costs
|
7,254
|
|
|
4.5
|
%
|
|
8,512
|
|
|
4.9
|
%
|
||
Total cost of revenue
|
$
|
98,849
|
|
|
60.9
|
%
|
|
$
|
111,725
|
|
|
64.4
|
%
|
•
|
decreased bandwidth and co-location fees as a result of our focus on renegotiating our fixed rate infrastructure contracts to variable rate based on traffic levels. Additionally, during the third quarter of 2014, we recorded a nonrecurring $1,100 credit related to an over billing from one of our co-location providers;
|
•
|
decreased network depreciation as a result of a decrease in capital expenditures beginning in 2012;
|
|
Year Ended December 31,
|
||||||||||||
|
2014
|
|
2013
|
||||||||||
Payroll and related employee costs
|
$
|
10,347
|
|
|
6.4
|
%
|
|
$
|
10,206
|
|
|
5.9
|
%
|
Professional fees and outside services
|
6,003
|
|
|
3.7
|
%
|
|
7,762
|
|
|
4.5
|
%
|
||
Share-based compensation
|
4,741
|
|
|
2.9
|
%
|
|
5,971
|
|
|
3.4
|
%
|
||
Other costs
|
7,085
|
|
|
4.4
|
%
|
|
7,965
|
|
|
4.6
|
%
|
||
Total general and administrative
|
$
|
28,176
|
|
|
17.4
|
%
|
|
$
|
31,904
|
|
|
18.4
|
%
|
•
|
decreased professional fees and outside services primarily due to lower general legal fees (patent defense costs and commercial and employment issues) and reduced consulting fees;
|
•
|
decreased share-based compensation; and
|
•
|
decreased other costs which was primarily lower facilities, bad debt expense and office supplies, partially offset by increased franchise taxes and software fees.
|
|
Year Ended December 31,
|
||||||||||||
|
2014
|
|
2013
|
||||||||||
Payroll and related employee costs
|
$
|
24,016
|
|
|
14.8
|
%
|
|
$
|
24,799
|
|
|
14.3
|
%
|
Share-based compensation
|
2,317
|
|
|
1.4
|
%
|
|
2,245
|
|
|
1.3
|
%
|
||
Marketing programs
|
1,467
|
|
|
0.9
|
%
|
|
2,822
|
|
|
1.6
|
%
|
||
Other costs
|
9,658
|
|
|
6.0
|
%
|
|
11,608
|
|
|
6.7
|
%
|
||
Total sales and marketing
|
$
|
37,458
|
|
|
23.1
|
%
|
|
$
|
41,474
|
|
|
23.9
|
%
|
•
|
decreased payroll and related employee costs primarily due to reduced sales personnel and lower variable compensation;
|
•
|
decreased marketing and public relations spending; and
|
•
|
decreased other costs primarily related to reduced subscription based services, lower facilities and facility related costs, reduced costs associated with employee events, and lower travel related expenses.
|
|
Year Ended December 31,
|
||||||||||||
|
2014
|
|
2013
|
||||||||||
Payroll and related employee costs
|
$
|
15,887
|
|
|
9.8
|
%
|
|
$
|
16,568
|
|
|
9.6
|
%
|
Share-based compensation
|
1,478
|
|
|
0.9
|
%
|
|
2,256
|
|
|
1.3
|
%
|
||
Other costs
|
3,600
|
|
|
2.2
|
%
|
|
3,179
|
|
|
1.8
|
%
|
||
Total research and development
|
$
|
20,965
|
|
|
12.9
|
%
|
|
$
|
22,003
|
|
|
12.7
|
%
|
•
|
decreased payroll and related employee costs due to lower average salaries and transitioning of our network and software engineering work to lower cost locations; and
|
•
|
decreased share-based compensation.
|
|
Year Ended December 31,
|
||||||||||||
|
2013
|
|
2012
|
||||||||||
Bandwidth and co-location fees
|
$
|
59,447
|
|
|
34.3
|
%
|
|
$
|
56,716
|
|
|
31.5
|
%
|
Depreciation - network
|
22,942
|
|
|
13.2
|
%
|
|
27,992
|
|
|
15.5
|
%
|
||
Payroll and related employee costs
|
18,951
|
|
|
10.9
|
%
|
|
18,075
|
|
|
10.0
|
%
|
||
Share-based compensation
|
1,873
|
|
|
1.1
|
%
|
|
2,117
|
|
|
1.2
|
%
|
||
Other costs
|
8,512
|
|
|
4.9
|
%
|
|
8,318
|
|
|
4.6
|
%
|
||
Total cost of revenue
|
$
|
111,725
|
|
|
64.4
|
%
|
|
$
|
113,218
|
|
|
62.8
|
%
|
•
|
bandwidth and co-location fees which increased primarily due to increased peering costs and rack fees as a result of an increase in traffic delivered;
|
•
|
payroll and related employee costs increased due to increased operations personnel; and
|
|
Year Ended December 31,
|
||||||||||||
|
2013
|
|
2012
|
||||||||||
Payroll and related employee costs
|
$
|
10,206
|
|
|
5.9
|
%
|
|
$
|
9,388
|
|
|
5.2
|
%
|
Professional fees and outside services
|
7,762
|
|
|
4.5
|
%
|
|
8,123
|
|
|
4.5
|
%
|
||
Share-based compensation
|
5,971
|
|
|
3.4
|
%
|
|
6,511
|
|
|
3.6
|
%
|
||
Bad debt expense
|
965
|
|
|
0.6
|
%
|
|
2,010
|
|
|
1.1
|
%
|
||
Other costs
|
7,000
|
|
|
4.0
|
%
|
|
8,468
|
|
|
4.7
|
%
|
||
Total general and administrative
|
$
|
31,904
|
|
|
18.4
|
%
|
|
$
|
34,500
|
|
|
19.1
|
%
|
•
|
a decrease in other costs which was primarily due to lower non-income taxes due to a recovery of use tax, decreased fees and licenses and decreased facilities and facilities related costs;
|
•
|
decreased bad debt expense due to lower past due and unrecoverable amounts from certain customers; and
|
•
|
decreased stock based compensation for administrative personnel.
|
|
Year Ended December 31,
|
||||||||||||
|
2013
|
|
2012
|
||||||||||
Payroll and related employee costs
|
$
|
24,799
|
|
|
14.3
|
%
|
|
$
|
27,293
|
|
|
15.1
|
%
|
Share-based compensation
|
2,245
|
|
|
1.3
|
%
|
|
3,104
|
|
|
1.7
|
%
|
||
Marketing programs
|
2,822
|
|
|
1.6
|
%
|
|
2,599
|
|
|
1.4
|
%
|
||
Other costs
|
11,608
|
|
|
6.7
|
%
|
|
12,048
|
|
|
6.7
|
%
|
||
Total sales and marketing
|
$
|
41,474
|
|
|
23.9
|
%
|
|
$
|
45,044
|
|
|
25.0
|
%
|
•
|
payroll and related employee costs decreased due to lower salaries and lower variable compensation on reduced revenue and lower headcount; and
|
•
|
stock-based compensation decreased due to lower headcount in our sales organization.
|
|
Year Ended December 31,
|
||||||||||||
|
2013
|
|
2012
|
||||||||||
Payroll and related employee costs
|
$
|
16,568
|
|
|
9.6
|
%
|
|
$
|
15,006
|
|
|
8.3
|
%
|
Share-based compensation
|
2,256
|
|
|
1.3
|
%
|
|
2,743
|
|
|
1.5
|
%
|
||
Other costs
|
3,179
|
|
|
1.8
|
%
|
|
2,433
|
|
|
1.3
|
%
|
||
Total research and development
|
$
|
22,003
|
|
|
12.7
|
%
|
|
$
|
20,182
|
|
|
11.2
|
%
|
•
|
increased payroll and related employee costs due to increased salaries for network and software engineering personnel; and
|
•
|
increased other costs primarily due to higher consulting costs.
|
•
|
accounts receivable increased $1,600 during the year ended December 31, 2014 due to the timing of billings net of collections as compared to a $2,581 decrease in the comparable 2013 period;
|
•
|
prepaid expenses and other current assets increased $1,792 during the year ended December 31, 2014 versus a decrease of $1,222 for the comparable 2013 period due primarily to prepayment of software licenses in 2014 partially offset by amortization of prepaid bandwidth expenses;
|
•
|
other assets decreased $1,607 during the year ended December 31, 2014 versus a decrease of $519 for the comparable 2013 period due to the amortization of bandwidth expenses paid in prior periods;
|
•
|
accounts payable increased $2,276 during the year ended December 31, 2014 versus a decrease of $2,192 for the comparable 2013 period due to timing of vendor payments;
|
•
|
deferred revenue decreased $1,109 during the year ended December 31, 2014 versus an increase of $4 for the comparable 2013 period due to changes in WCM deferred revenue balances in the prior period; and
|
•
|
other current liabilities decreased $2,154 during the year ended December 31, 2014 versus an increase of $384 for the comparable 2013 period primarily due to the application of customer deposits to their receivable balances.
|
•
|
accounts receivable decreased $2,581 during the year ended December 31, 2013 due to the timing of billings net of collections as compared to a $567 increase in the comparable 2012 period;
|
•
|
prepaid expenses and other current assets and other long-term assets decreased $1,741 due to the amortization of certain prepaid vendor contracts and the collection of non-income tax related receivables during the year ended December 31, 2013 versus the comparable 2012 period; and
|
•
|
accounts payable decreased $2,192 during the year ended December 31, 2013 versus the comparable 2012 period due to timing of vendor payments.
|
|
|
Payments Due by Period
|
||||||||||||||||||
|
|
|
|
Less than
|
|
|
|
|
|
More than
|
||||||||||
|
|
Total
|
|
1 year
|
|
1-3 years
|
|
3-5 years
|
|
5 years
|
||||||||||
Operating Leases
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Bandwidth leases
|
|
$
|
18,386
|
|
|
$
|
12,472
|
|
|
$
|
5,401
|
|
|
$
|
513
|
|
|
$
|
—
|
|
Rack space leases
|
|
24,245
|
|
|
19,193
|
|
|
4,355
|
|
|
697
|
|
|
—
|
|
|||||
Real estate leases
|
|
15,062
|
|
|
3,990
|
|
|
5,932
|
|
|
4,129
|
|
|
1,011
|
|
|||||
Total operating leases
|
|
57,693
|
|
|
35,655
|
|
|
15,688
|
|
|
5,339
|
|
|
1,011
|
|
|||||
Capital leases
|
|
376
|
|
|
238
|
|
|
138
|
|
|
—
|
|
|
—
|
|
|||||
Other purchase obligations
|
|
769
|
|
|
576
|
|
|
193
|
|
|
—
|
|
|
—
|
|
|||||
Total commitments
|
|
$
|
58,838
|
|
|
$
|
36,469
|
|
|
$
|
16,019
|
|
|
$
|
5,339
|
|
|
$
|
1,011
|
|
|
Page
|
|
December 31,
2014 |
|
December 31,
2013 |
||||
ASSETS
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
57,767
|
|
|
$
|
85,956
|
|
Marketable securities
|
35,317
|
|
|
32,506
|
|
||
Accounts receivable, net
|
22,622
|
|
|
21,430
|
|
||
Income taxes receivable
|
237
|
|
|
371
|
|
||
Deferred income taxes
|
78
|
|
|
93
|
|
||
Prepaid expenses and other current assets
|
9,625
|
|
|
8,192
|
|
||
Total current assets
|
125,646
|
|
|
148,548
|
|
||
Property and equipment, net
|
32,636
|
|
|
32,905
|
|
||
Marketable securities, less current portion
|
40
|
|
|
46
|
|
||
Deferred income taxes, less current portion
|
1,364
|
|
|
1,307
|
|
||
Goodwill
|
76,133
|
|
|
77,035
|
|
||
Other intangible assets, net
|
1,071
|
|
|
2,354
|
|
||
Other assets
|
4,451
|
|
|
6,103
|
|
||
Total assets
|
$
|
241,341
|
|
|
$
|
268,298
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
7,065
|
|
|
$
|
5,473
|
|
Deferred revenue
|
3,509
|
|
|
3,523
|
|
||
Capital lease obligations
|
223
|
|
|
466
|
|
||
Income taxes payable
|
248
|
|
|
799
|
|
||
Other current liabilities
|
14,383
|
|
|
15,022
|
|
||
Total current liabilities
|
25,428
|
|
|
25,283
|
|
||
Capital lease obligations, less current portion
|
135
|
|
|
358
|
|
||
Deferred income taxes
|
170
|
|
|
321
|
|
||
Deferred revenue, less current portion
|
405
|
|
|
1,500
|
|
||
Other long-term liabilities
|
3,040
|
|
|
3,505
|
|
||
Total liabilities
|
29,178
|
|
|
30,967
|
|
||
Commitments and contingencies
|
|
|
|
||||
Stockholders’ equity:
|
|
|
|
||||
Convertible preferred stock, $0.001 par value; 7,500 shares authorized; 0 shares issued
and outstanding
|
—
|
|
|
—
|
|
||
Common stock, $0.001 par value; 300,000 shares authorized at December 31, 2014 and,
2013; 98,409 and 97,677 shares issued and outstanding at December 31, 2014 and
2013, respectively
|
98
|
|
|
98
|
|
||
Additional paid-in capital
|
464,294
|
|
|
458,748
|
|
||
Accumulated other comprehensive loss
|
(7,786
|
)
|
|
(1,663
|
)
|
||
Accumulated deficit
|
(244,443
|
)
|
|
(219,852
|
)
|
||
Total stockholders’ equity
|
212,163
|
|
|
237,331
|
|
||
Total liabilities and stockholders’ equity
|
$
|
241,341
|
|
|
$
|
268,298
|
|
|
Years Ended December 31,
|
||||||||||
|
2014
|
|
2013
|
|
2012
|
||||||
Revenues
|
$
|
162,259
|
|
|
$
|
173,433
|
|
|
$
|
180,236
|
|
Cost of revenue:
|
|
|
|
|
|
||||||
Cost of services (1)
|
82,176
|
|
|
88,783
|
|
|
85,226
|
|
|||
Depreciation — network
|
16,673
|
|
|
22,942
|
|
|
27,992
|
|
|||
Total cost of revenue
|
98,849
|
|
|
111,725
|
|
|
113,218
|
|
|||
Gross profit
|
63,410
|
|
|
61,708
|
|
|
67,018
|
|
|||
Operating expenses:
|
|
|
|
|
|
||||||
General and administrative
|
28,176
|
|
|
31,904
|
|
|
34,500
|
|
|||
Sales and marketing
|
37,458
|
|
|
41,474
|
|
|
45,044
|
|
|||
Research and development
|
20,965
|
|
|
22,003
|
|
|
20,182
|
|
|||
Depreciation and amortization
|
3,529
|
|
|
5,804
|
|
|
5,843
|
|
|||
Total operating expenses
|
90,128
|
|
|
101,185
|
|
|
105,569
|
|
|||
Operating loss
|
(26,718
|
)
|
|
(39,477
|
)
|
|
(38,551
|
)
|
|||
Other income (expense):
|
|
|
|
|
|
||||||
Interest expense
|
(32
|
)
|
|
(76
|
)
|
|
(177
|
)
|
|||
Interest income
|
276
|
|
|
321
|
|
|
356
|
|
|||
Gain on sale of cost basis investment
|
—
|
|
|
—
|
|
|
9,420
|
|
|||
Other, net
|
1,821
|
|
|
4,643
|
|
|
(602
|
)
|
|||
Total other income (expense)
|
2,065
|
|
|
4,888
|
|
|
8,997
|
|
|||
Loss from continuing operations before income taxes
|
(24,653
|
)
|
|
(34,589
|
)
|
|
(29,554
|
)
|
|||
Income tax provision
|
203
|
|
|
387
|
|
|
481
|
|
|||
Loss from continuing operations
|
(24,856
|
)
|
|
(34,976
|
)
|
|
(30,035
|
)
|
|||
Discontinued operations:
|
|
|
|
|
|
||||||
Income (loss) from discontinued operations, net of income taxes
|
265
|
|
|
(426
|
)
|
|
(2,861
|
)
|
|||
Net loss
|
$
|
(24,591
|
)
|
|
$
|
(35,402
|
)
|
|
$
|
(32,896
|
)
|
Net loss per share:
|
|
|
|
|
|
||||||
Basic and diluted
|
|
|
|
|
|
||||||
Continuing operations
|
$
|
(0.25
|
)
|
|
$
|
(0.36
|
)
|
|
$
|
(0.30
|
)
|
Discontinued operations
|
—
|
|
|
(0.01
|
)
|
|
(0.02
|
)
|
|||
Total
|
$
|
(0.25
|
)
|
|
$
|
(0.37
|
)
|
|
$
|
(0.32
|
)
|
Weighted average shares used in per share calculation:
|
|
|
|
|
|
||||||
Basic and diluted
|
98,365
|
|
|
96,851
|
|
|
101,283
|
|
(1)
|
Cost of services excludes amortization related to intangibles, including existing technologies, customer relationships, and trade names and trademarks, which are included in depreciation and amortization
|
|
Years Ended December 31,
|
||||||||||
|
2014
|
|
2013
|
|
2012
|
||||||
Net loss
|
$
|
(24,591
|
)
|
|
$
|
(35,402
|
)
|
|
$
|
(32,896
|
)
|
Other comprehensive loss, net of tax:
|
|
|
|
|
|
||||||
Unrealized loss on marketable securities
|
(68
|
)
|
|
(13
|
)
|
|
(28
|
)
|
|||
Foreign exchange translation
|
(6,055
|
)
|
|
(941
|
)
|
|
(172
|
)
|
|||
Other comprehensive loss, net of tax
|
(6,123
|
)
|
|
(954
|
)
|
|
(200
|
)
|
|||
Comprehensive loss
|
$
|
(30,714
|
)
|
|
$
|
(36,356
|
)
|
|
$
|
(33,096
|
)
|
|
Common Stock
|
|
Additional
Paid-In
Capital
|
|
Contingent
Consideration
|
|
Accumulated
Other
Comprehensive
Income (Loss)
|
|
Accumulated
Deficit
|
|
Total
|
|||||||||||||||
|
Shares
|
|
Amount
|
|
||||||||||||||||||||||
Balance at December 31, 2011
|
104,349
|
|
|
$
|
104
|
|
|
$
|
460,845
|
|
|
$
|
219
|
|
|
$
|
(509
|
)
|
|
$
|
(151,554
|
)
|
|
$
|
309,105
|
|
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(32,896
|
)
|
|
(32,896
|
)
|
||||||
Change in unrealized loss on
available-for-sale
investments, net of taxes
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(28
|
)
|
|
—
|
|
|
(28
|
)
|
||||||
Foreign currency
translation adjustment, net of taxes |
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(172
|
)
|
|
—
|
|
|
(172
|
)
|
||||||
Exercise of common stock
options
|
175
|
|
|
—
|
|
|
190
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
190
|
|
||||||
Vesting of restricted stock units
|
2,451
|
|
|
3
|
|
|
(3
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Restricted stock units
surrendered in lieu of
withholding taxes
|
(788
|
)
|
|
(1
|
)
|
|
(1,903
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,904
|
)
|
||||||
Common stock received from
escrow in settlement of
EyeWonder indemnity claims
|
(110
|
)
|
|
—
|
|
|
(398
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(398
|
)
|
||||||
Issuance of common stock for
contingent consideration
|
61
|
|
|
—
|
|
|
186
|
|
|
(186
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Issuance of common stock for
business acquisitions
|
350
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Purchase of common
stock |
(8,450
|
)
|
|
(8
|
)
|
|
(21,134
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(21,142
|
)
|
||||||
Share-based compensation -
continuing operations
|
—
|
|
|
—
|
|
|
14,475
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
14,475
|
|
||||||
Balance at December 31, 2012
|
98,038
|
|
|
$
|
98
|
|
|
$
|
452,258
|
|
|
$
|
33
|
|
|
$
|
(709
|
)
|
|
$
|
(184,450
|
)
|
|
$
|
267,230
|
|
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(35,402
|
)
|
|
(35,402
|
)
|
||||||
Change in unrealized
loss on available-for-sale
investments, net of taxes
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(13
|
)
|
|
—
|
|
|
(13
|
)
|
||||||
Foreign currency translation
adjustment, net of taxes
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(941
|
)
|
|
—
|
|
|
(941
|
)
|
||||||
Exercise of common stock
options
|
143
|
|
|
—
|
|
|
38
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
38
|
|
||||||
Vesting of restricted stock units
|
2,032
|
|
|
2
|
|
|
(2
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Restricted stock units
surrendered in lieu of
withholding taxes
|
(593
|
)
|
|
—
|
|
|
(1,304
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,304
|
)
|
||||||
Issuance of common stock for
settlement of contingent
consideration
|
11
|
|
|
—
|
|
|
33
|
|
|
(33
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Issuance of common stock
under employee stock
purchase plan
|
135
|
|
|
—
|
|
|
225
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
225
|
|
||||||
Purchase of common stock
|
(2,089
|
)
|
|
(2
|
)
|
|
(4,845
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4,847
|
)
|
||||||
Share-based compensation —
continuing operations
|
—
|
|
|
—
|
|
|
12,345
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
12,345
|
|
||||||
Balance at December 31, 2013
|
97,677
|
|
|
$
|
98
|
|
|
$
|
458,748
|
|
|
$
|
—
|
|
|
$
|
(1,663
|
)
|
|
$
|
(219,852
|
)
|
|
$
|
237,331
|
|
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(24,591
|
)
|
|
(24,591
|
)
|
|
Common Stock
|
|
Additional
Paid-In
Capital
|
|
Contingent
Consideration
|
|
Accumulated
Other
Comprehensive
Income (Loss)
|
|
Accumulated
Deficit
|
|
Total
|
|||||||||||||||
|
Shares
|
|
Amount
|
|
||||||||||||||||||||||
Change in unrealized
loss on available-for-sale
investments, net of taxes
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(68
|
)
|
|
—
|
|
|
(68
|
)
|
||||||
Foreign currency translation
adjustment, net of taxes
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(6,055
|
)
|
|
—
|
|
|
(6,055
|
)
|
||||||
Exercise of common stock
options
|
522
|
|
|
1
|
|
|
893
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
894
|
|
||||||
Vesting of restricted stock units
|
2,385
|
|
|
2
|
|
|
(2
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Restricted stock units
surrendered in lieu of
withholding taxes
|
(725
|
)
|
|
(1
|
)
|
|
(1,643
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,644
|
)
|
||||||
Issuance of common stock
under employee stock
purchase plan
|
269
|
|
|
—
|
|
|
488
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
488
|
|
||||||
Purchases of common stock
|
(1,719
|
)
|
|
(2
|
)
|
|
(4,681
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4,683
|
)
|
||||||
Share-based compensation —
continuing operations
|
—
|
|
|
—
|
|
|
10,491
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10,491
|
|
||||||
Balance at December 31, 2014
|
98,409
|
|
|
$
|
98
|
|
|
$
|
464,294
|
|
|
$
|
—
|
|
|
$
|
(7,786
|
)
|
|
$
|
(244,443
|
)
|
|
$
|
212,163
|
|
|
Years Ended December 31,
|
||||||||||
|
2014
|
|
2013
|
|
2012
|
||||||
Operating activities
|
|
|
|
|
|
||||||
Net loss
|
$
|
(24,591
|
)
|
|
$
|
(35,402
|
)
|
|
$
|
(32,896
|
)
|
Income (loss) from discontinued operations
|
265
|
|
|
(426
|
)
|
|
(2,861
|
)
|
|||
Net loss from continuing operations
|
(24,856
|
)
|
|
(34,976
|
)
|
|
(30,035
|
)
|
|||
Adjustments to reconcile net loss from continuing operations to net cash provided by operating activities of continuing operations:
|
|
|
|
|
|
||||||
Depreciation and amortization
|
20,202
|
|
|
28,746
|
|
|
33,835
|
|
|||
Share-based compensation
|
10,491
|
|
|
12,345
|
|
|
14,475
|
|
|||
Foreign currency remeasurement gain
|
(2,167
|
)
|
|
(531
|
)
|
|
(103
|
)
|
|||
Deferred income taxes
|
(359
|
)
|
|
(328
|
)
|
|
(38
|
)
|
|||
Loss on disposal of property and equipment
|
—
|
|
|
442
|
|
|
89
|
|
|||
Accounts receivable charges
|
408
|
|
|
965
|
|
|
2,010
|
|
|||
Amortization (accretion) of premium (discount) on marketable securities
|
459
|
|
|
639
|
|
|
472
|
|
|||
Non cash tax benefit associated with sale of discontinued operations
|
(59
|
)
|
|
—
|
|
|
—
|
|
|||
Non cash increase in cost basis investment
|
—
|
|
|
—
|
|
|
(528
|
)
|
|||
Gain on sale of cost basis investment
|
—
|
|
|
—
|
|
|
(9,420
|
)
|
|||
Gain on sale of the Web Content Management business
|
—
|
|
|
(3,836
|
)
|
|
—
|
|
|||
Changes in operating assets and liabilities:
|
|
|
|
|
|
||||||
Accounts receivable
|
(1,600
|
)
|
|
2,581
|
|
|
(567
|
)
|
|||
Prepaid expenses and other current assets
|
(1,792
|
)
|
|
1,222
|
|
|
2,910
|
|
|||
Income taxes receivable
|
150
|
|
|
105
|
|
|
(440
|
)
|
|||
Other assets
|
1,607
|
|
|
519
|
|
|
(1,626
|
)
|
|||
Accounts payable
|
2,276
|
|
|
(2,192
|
)
|
|
2,419
|
|
|||
Deferred revenue
|
(1,109
|
)
|
|
4
|
|
|
(137
|
)
|
|||
Other current liabilities
|
(2,154
|
)
|
|
384
|
|
|
17
|
|
|||
Income taxes payable
|
(233
|
)
|
|
305
|
|
|
(255
|
)
|
|||
Other long term liabilities
|
(796
|
)
|
|
(798
|
)
|
|
(649
|
)
|
|||
Net cash provided by operating activities of continuing operations
|
468
|
|
|
5,596
|
|
|
12,429
|
|
|||
Investing activities
|
|
|
|
|
|
||||||
Purchase of marketable securities
|
(25,482
|
)
|
|
(59,047
|
)
|
|
(27,280
|
)
|
|||
Maturities of marketable securities
|
22,150
|
|
|
44,901
|
|
|
27,625
|
|
|||
Purchases of property and equipment
|
(18,581
|
)
|
|
(18,575
|
)
|
|
(18,390
|
)
|
|||
Proceeds from the sale of cost basis investment
|
—
|
|
|
1,237
|
|
|
10,154
|
|
|||
Proceeds from sale of the Web Content Management business
|
—
|
|
|
12,341
|
|
|
—
|
|
|||
Proceeds from the sale of discontinued operations
|
414
|
|
|
124
|
|
|
7,441
|
|
|||
Net cash used in investing activities of continuing operations
|
(21,499
|
)
|
|
(19,019
|
)
|
|
(450
|
)
|
|||
Financing activities
|
|
|
|
|
|
||||||
Payments on capital lease obligations
|
(466
|
)
|
|
(1,301
|
)
|
|
(1,749
|
)
|
|||
Payment of employee tax withholdings related to restricted stock
|
(1,795
|
)
|
|
(2,372
|
)
|
|
(683
|
)
|
|||
Cash paid for purchase of common stock
|
(4,542
|
)
|
|
(5,512
|
)
|
|
(20,851
|
)
|
|||
Proceeds from exercise of stock options and employee stock plan
|
1,381
|
|
|
263
|
|
|
190
|
|
|||
Net cash used in financing activities of continuing operations
|
(5,422
|
)
|
|
(8,922
|
)
|
|
(23,093
|
)
|
|||
Effect of exchange rate changes on cash and cash equivalents
|
(1,732
|
)
|
|
(606
|
)
|
|
(171
|
)
|
|||
Discontinued operations
|
|
|
|
|
|
||||||
Cash used in operating activities of discontinued operations
|
(4
|
)
|
|
(8
|
)
|
|
(149
|
)
|
|||
Net (decrease) increase in cash and cash equivalents
|
(28,189
|
)
|
|
(22,959
|
)
|
|
(11,434
|
)
|
|||
Cash and cash equivalents, beginning of year
|
85,956
|
|
|
108,915
|
|
|
120,349
|
|
|||
Cash and cash equivalents, end of year
|
$
|
57,767
|
|
|
$
|
85,956
|
|
|
$
|
108,915
|
|
Supplement disclosure of cash flow information
|
|
|
|
|
|
||||||
Cash paid during the year for interest
|
$
|
32
|
|
|
$
|
76
|
|
|
$
|
178
|
|
Cash paid during the year for income taxes, net of refunds
|
$
|
647
|
|
|
$
|
321
|
|
|
$
|
1,428
|
|
Property and equipment remaining in accounts payable and other current liabilities
|
$
|
2,983
|
|
|
$
|
1,709
|
|
|
$
|
948
|
|
Property and equipment acquired through leasehold incentives
|
$
|
—
|
|
|
$
|
386
|
|
|
$
|
—
|
|
Contingent consideration common stock issued in connection with acquisition of businesses
|
$
|
—
|
|
|
$
|
33
|
|
|
$
|
186
|
|
Property acquired due to vendor concession
|
$
|
—
|
|
|
$
|
250
|
|
|
$
|
—
|
|
Network equipment
|
3 years
|
Computer equipment and software
|
3 years
|
Furniture and fixtures
|
3 years
|
Other equipment
|
3-5 years
|
|
Amortized
Cost
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Losses
|
|
Estimated
Fair Value
|
||||||||
Certificate of deposit
|
11,040
|
|
|
2
|
|
|
32
|
|
|
11,010
|
|
||||
Commercial paper
|
1,498
|
|
|
—
|
|
|
1
|
|
|
1,497
|
|
||||
Corporate notes and bonds
|
21,876
|
|
|
7
|
|
|
33
|
|
|
21,850
|
|
||||
Convertible debt security
|
1,000
|
|
|
—
|
|
|
—
|
|
|
1,000
|
|
||||
Total marketable securities
|
$
|
35,414
|
|
|
$
|
9
|
|
|
$
|
66
|
|
|
$
|
35,357
|
|
|
Amortized
Cost
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Losses
|
|
Estimated
Fair Value
|
||||||||
Available-for-sale securities
|
|
|
|
|
|
|
|
||||||||
Due in one year or less
|
$
|
19,798
|
|
|
$
|
5
|
|
|
$
|
9
|
|
|
$
|
19,794
|
|
Due after one year and through five years
|
15,616
|
|
|
4
|
|
|
57
|
|
|
15,563
|
|
||||
|
$
|
35,414
|
|
|
$
|
9
|
|
|
$
|
66
|
|
|
$
|
35,357
|
|
|
Amortized
Cost
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Losses
|
|
Estimated
Fair Value
|
||||||||
Government agency bonds
|
$
|
261
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
261
|
|
Certificate of deposit
|
4,080
|
|
|
—
|
|
|
4
|
|
|
4,076
|
|
||||
Commercial paper
|
2,200
|
|
|
—
|
|
|
—
|
|
|
2,200
|
|
||||
Corporate notes and bonds
|
26,001
|
|
|
15
|
|
|
7
|
|
|
26,009
|
|
||||
|
32,542
|
|
|
15
|
|
|
11
|
|
|
32,546
|
|
||||
Publicly traded common stock
|
12
|
|
|
—
|
|
|
6
|
|
|
6
|
|
||||
Total marketable securities
|
$
|
32,554
|
|
|
$
|
15
|
|
|
$
|
17
|
|
|
$
|
32,552
|
|
|
Amortized
Cost
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Losses
|
|
Estimated
Fair Value
|
||||||||
Available-for-sale securities
|
|
|
|
|
|
|
|
||||||||
Due in one year or less
|
$
|
17,031
|
|
|
$
|
2
|
|
|
$
|
5
|
|
|
$
|
17,028
|
|
Due after one year and through five years
|
15,511
|
|
|
13
|
|
|
6
|
|
|
15,518
|
|
||||
|
$
|
32,542
|
|
|
$
|
15
|
|
|
$
|
11
|
|
|
$
|
32,546
|
|
|
Years Ended December 31,
|
||||||||||
|
2014
|
|
2013
|
|
2012
|
||||||
General and administrative expenses
|
(4
|
)
|
|
(15
|
)
|
|
163
|
|
|||
Gain (loss) on sale of discontinued operations, net of income taxes
|
269
|
|
|
(411
|
)
|
|
(3,024
|
)
|
|||
Income (loss) before income taxes
|
265
|
|
|
(426
|
)
|
|
(2,861
|
)
|
|||
Income tax expense
|
—
|
|
|
—
|
|
|
—
|
|
|||
Income (loss) from discontinued operations
|
$
|
265
|
|
|
$
|
(426
|
)
|
|
$
|
(2,861
|
)
|
Income (loss) from discontinued operations per weighted average share:
|
|
|
|
|
|
||||||
Basic and diluted
|
$
|
—
|
|
|
$
|
(0.01
|
)
|
|
$
|
(0.02
|
)
|
Shares used in per weighted average share calculation for discontinued operations:
|
|
|
|
|
|
||||||
Basic and diluted
|
98,365
|
|
|
96,851
|
|
|
101,283
|
|
|
December 31,
|
||||||
|
2014
|
|
2013
|
||||
Accounts receivable
|
$
|
14,507
|
|
|
$
|
17,497
|
|
Unbilled accounts receivable
|
9,949
|
|
|
5,943
|
|
||
|
24,456
|
|
|
23,440
|
|
||
Less: credit allowance
|
(380
|
)
|
|
(610
|
)
|
||
Less: allowance for doubtful accounts
|
(1,454
|
)
|
|
(1,400
|
)
|
||
Total accounts receivable, net
|
$
|
22,622
|
|
|
$
|
21,430
|
|
•
|
sustained decline in the Company’s stock price due to a decline in its financial performance due to the loss of key customers, loss of key personnel, emergence of new technologies or new competitors;
|
•
|
decline in overall market or economic conditions leading to a decline in its stock price; and
|
•
|
decline in observed control premiums paid in business combinations involving comparable companies.
|
Balance, December 31, 2012
|
$
|
80,278
|
|
Foreign currency translation adjustment
|
556
|
|
|
Disposition of the WCM business
|
(3,799
|
)
|
|
Balance, December 31, 2013
|
$
|
77,035
|
|
Foreign currency translation adjustment
|
(902
|
)
|
|
Balance, December 31, 2014
|
$
|
76,133
|
|
|
December 31,
|
||||||
|
2014
|
|
2013
|
||||
Network equipment
|
$
|
192,145
|
|
|
$
|
180,896
|
|
Computer equipment and software
|
12,169
|
|
|
11,073
|
|
||
Furniture and fixtures
|
2,718
|
|
|
2,723
|
|
||
Leasehold improvements
|
7,351
|
|
|
7,162
|
|
||
Other equipment
|
570
|
|
|
570
|
|
||
|
214,953
|
|
|
202,424
|
|
||
Less: accumulated depreciation
|
(182,317
|
)
|
|
(169,519
|
)
|
||
Total property and equipment, net
|
$
|
32,636
|
|
|
$
|
32,905
|
|
|
December 31,
|
||||||
|
2014
|
|
2013
|
||||
Accrued compensation and benefits
|
$
|
5,266
|
|
|
$
|
6,682
|
|
Accrued cost of revenue
|
2,031
|
|
|
1,833
|
|
||
Accrued legal fees
|
1,292
|
|
|
1,769
|
|
||
Deferred rent
|
1,277
|
|
|
1,074
|
|
||
Other accrued expenses
|
4,517
|
|
|
3,664
|
|
||
Total other current liabilities
|
$
|
14,383
|
|
|
$
|
15,022
|
|
|
December 31,
|
||||||
|
2014
|
|
2013
|
||||
Deferred rent
|
$
|
2,511
|
|
|
$
|
3,384
|
|
Income taxes payable
|
529
|
|
|
121
|
|
||
Total other long term liabilities
|
$
|
3,040
|
|
|
$
|
3,505
|
|
|
2014
|
|
2013
|
|
2012
|
||||||
Loss from continuing operations
|
$
|
(24,856
|
)
|
|
$
|
(34,976
|
)
|
|
$
|
(30,035
|
)
|
Income (loss) from discontinued operations
|
265
|
|
|
(426
|
)
|
|
(2,861
|
)
|
|||
Net loss
|
$
|
(24,591
|
)
|
|
$
|
(35,402
|
)
|
|
$
|
(32,896
|
)
|
Basic and diluted weighted average outstanding shares of common stock
|
98,365
|
|
|
96,851
|
|
|
101,283
|
|
|||
Basic and diluted loss per share:
|
|
|
|
|
|
||||||
Continuing operations
|
$
|
(0.25
|
)
|
|
$
|
(0.36
|
)
|
|
$
|
(0.30
|
)
|
Discontinued operations
|
—
|
|
|
(0.01
|
)
|
|
(0.02
|
)
|
|||
Basic and diluted net loss per share
|
$
|
(0.25
|
)
|
|
$
|
(0.37
|
)
|
|
$
|
(0.32
|
)
|
|
|
|
Unrealized
|
|
|
||||||
|
|
|
Gains (Losses) on
|
|
|
||||||
|
Foreign
|
|
Available for
|
|
|
||||||
|
Currency
|
|
Sale Securities
|
|
Total
|
||||||
Balance, December 31, 2013
|
$
|
(1,688
|
)
|
|
$
|
25
|
|
|
$
|
(1,663
|
)
|
Other comprehensive loss before reclassifications
|
(6,055
|
)
|
|
(68
|
)
|
|
(6,123
|
)
|
|||
Amounts reclassified from accumulated other comprehensive income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|||
Net current period other comprehensive loss
|
(6,055
|
)
|
|
(68
|
)
|
|
(6,123
|
)
|
|||
Balance, December 31, 2014
|
$
|
(7,743
|
)
|
|
$
|
(43
|
)
|
|
$
|
(7,786
|
)
|
|
Number of
Shares
|
|
Weighted
Average
Exercise
Price
|
|||
|
(In thousands)
|
|
|
|||
Balance at December 31, 2011
|
13,348
|
|
|
$
|
5.23
|
|
Granted
|
2,972
|
|
|
2.40
|
|
|
Exercised
|
(176
|
)
|
|
1.08
|
|
|
Cancelled
|
(1,834
|
)
|
|
6.10
|
|
|
Balance at December 31, 2012
|
14,310
|
|
|
4.58
|
|
|
Granted
|
4,902
|
|
|
2.19
|
|
|
Exercised
|
(143
|
)
|
|
0.26
|
|
|
Cancelled
|
(3,087
|
)
|
|
3.87
|
|
|
Balance at December 31, 2013
|
15,982
|
|
|
4.00
|
|
|
Granted
|
4,215
|
|
|
2.40
|
|
|
Exercised
|
(522
|
)
|
|
1.71
|
|
|
Cancelled
|
(2,803
|
)
|
|
4.15
|
|
|
Balance at December 31, 2014
|
16,872
|
|
|
3.66
|
|
Options Outstanding
|
|
Options Exercisable
|
||||||||||||||
Exercise Price
|
|
Number of
Options
Outstanding
|
|
Weighted
Average
Remaining
Contractual
Life (Years)
|
|
Weighted
Average
Exercise
Price
|
|
Number of
Options
Exercisable
|
|
Weighted
Average
Exercise
Price
|
||||||
|
|
(In thousands)
|
|
|
|
|
|
(In thousands)
|
|
|
||||||
$ 0.00 — $ 1.50
|
|
493
|
|
|
1.2
|
|
$
|
0.38
|
|
|
493
|
|
|
$
|
0.38
|
|
$ 1.51 — $ 3.00
|
|
9,535
|
|
|
8.5
|
|
2.26
|
|
|
3,439
|
|
|
2.18
|
|
||
$ 3.01 — $ 4.50
|
|
2,621
|
|
|
3.3
|
|
3.74
|
|
|
2,458
|
|
|
3.78
|
|
||
$ 4.51 — $ 6.00
|
|
1,533
|
|
|
4.9
|
|
5.16
|
|
|
1,458
|
|
|
5.15
|
|
||
$ 6.01 — $ 7.50
|
|
1,633
|
|
|
1.4
|
|
6.46
|
|
|
1,620
|
|
|
6.46
|
|
||
$ 7.51 — $ 15.00
|
|
1,057
|
|
|
3.5
|
|
11.06
|
|
|
1,042
|
|
|
11.10
|
|
||
|
|
16,872
|
|
|
|
|
|
|
10,510
|
|
|
|
|
Years Ended December 31,
|
|||||||
|
2014
|
|
2013
|
|
2012
|
|||
RSUs with service-based vesting conditions
|
6,820
|
|
|
5,286
|
|
|
4,232
|
|
Performance-based RSUs
|
—
|
|
|
—
|
|
|
349
|
|
Unvested RSUs
|
6,820
|
|
|
5,286
|
|
|
4,581
|
|
|
Number of
Units
|
|
Weighted
Average
Fair Value
|
|||
|
(In thousands)
|
|
|
|||
Balance at December 31, 2011
|
3,851
|
|
|
$
|
3.66
|
|
Granted
|
4,085
|
|
|
2.37
|
|
|
Vested
|
(2,450
|
)
|
|
2.68
|
|
|
Cancelled
|
(905
|
)
|
|
3.17
|
|
|
Balance at December 31, 2012
|
4,581
|
|
|
2.74
|
|
|
Granted
|
4,970
|
|
|
2.15
|
|
|
Vested
|
(2,032
|
)
|
|
2.53
|
|
|
Cancelled
|
(2,233
|
)
|
|
2.78
|
|
|
Balance at December 31, 2013
|
5,286
|
|
|
2.24
|
|
|
Granted
|
5,542
|
|
|
2.33
|
|
|
Vested
|
(2,385
|
)
|
|
2.28
|
|
|
Cancelled
|
(1,623
|
)
|
|
2.22
|
|
|
Balance at December 31, 2014
|
6,820
|
|
|
2.30
|
|
|
Years Ended December 31,
|
||||||||||
|
2014
|
|
2013
|
|
2012
|
||||||
Share-based compensation expense by type:
|
|
|
|
|
|
||||||
Stock options
|
$
|
4,704
|
|
|
$
|
6,617
|
|
|
$
|
7,426
|
|
Restricted stock units
|
5,609
|
|
|
5,671
|
|
|
7,049
|
|
|||
ESPP
|
178
|
|
|
57
|
|
|
—
|
|
|||
Total share-based compensation expense
|
$
|
10,491
|
|
|
$
|
12,345
|
|
|
$
|
14,475
|
|
Share-based compensation expense included in the consolidated statements of operations:
|
|||||||||||
Cost of services
|
$
|
1,956
|
|
|
$
|
1,873
|
|
|
$
|
2,117
|
|
General and administrative expense
|
4,741
|
|
|
5,971
|
|
|
6,511
|
|
|||
Sales and marketing expense
|
2,317
|
|
|
2,245
|
|
|
3,104
|
|
|||
Research and development expense
|
1,477
|
|
|
2,256
|
|
|
2,743
|
|
|||
Total share-based compensation expense
|
$
|
10,491
|
|
|
$
|
12,345
|
|
|
$
|
14,475
|
|
2015
|
$
|
3,990
|
|
2016
|
3,152
|
|
|
2017
|
2,780
|
|
|
2018
|
2,850
|
|
|
2019
|
1,279
|
|
|
Thereafter
|
1,011
|
|
|
Total minimum payments
|
$
|
15,062
|
|
2015
|
$
|
32,241
|
|
2016
|
8,483
|
|
|
2017
|
1,466
|
|
|
2018
|
857
|
|
|
2019
|
353
|
|
|
Thereafter
|
—
|
|
|
Total minimum payments
|
$
|
43,400
|
|
2015
|
$
|
238
|
|
2016
|
134
|
|
|
2017
|
4
|
|
|
2018
|
—
|
|
|
2019
|
—
|
|
|
Thereafter
|
—
|
|
|
Total
|
376
|
|
|
Amounts representing interest
|
(18
|
)
|
|
Present value of minimum lease payments
|
$
|
358
|
|
|
Years Ended December 31,
|
||||||||||
|
2014
|
|
2013
|
|
2012
|
||||||
(Loss) income from continuing operations before income taxes:
|
|
|
|
|
|
||||||
United States
|
$
|
(25,025
|
)
|
|
$
|
(34,789
|
)
|
|
$
|
(29,991
|
)
|
Foreign
|
372
|
|
|
200
|
|
|
437
|
|
|||
|
$
|
(24,653
|
)
|
|
$
|
(34,589
|
)
|
|
$
|
(29,554
|
)
|
|
Years Ended December 31,
|
|||||||||||||||||||
|
2014
|
|
2013
|
|
2012
|
|||||||||||||||
|
Amount
|
|
Percent
|
|
Amount
|
|
Percent
|
|
Amount
|
|
Percent
|
|||||||||
U.S. federal statutory tax rate
|
$
|
(8,629
|
)
|
|
35
|
%
|
|
$
|
(12,106
|
)
|
|
35
|
%
|
|
$
|
(10,344
|
)
|
|
35
|
%
|
Impact related to sale of discontinued operations
|
(143
|
)
|
|
1
|
%
|
|
—
|
|
|
—
|
%
|
|
—
|
|
|
—
|
%
|
|||
Valuation allowance
|
7,424
|
|
|
(30
|
)%
|
|
12,958
|
|
|
(37
|
)%
|
|
10,329
|
|
|
(35
|
)%
|
|||
Foreign income taxes
|
(26
|
)
|
|
—
|
%
|
|
221
|
|
|
(1
|
)%
|
|
351
|
|
|
(1
|
)%
|
|||
State income taxes
|
26
|
|
|
—
|
%
|
|
80
|
|
|
—
|
%
|
|
(20
|
)
|
|
—
|
%
|
|||
Non-deductible expenses
|
1,335
|
|
|
(6
|
)%
|
|
(783
|
)
|
|
2
|
%
|
|
168
|
|
|
(1
|
)%
|
|||
Uncertain tax positions
|
201
|
|
|
(1
|
)%
|
|
14
|
|
|
—
|
%
|
|
(18
|
)
|
|
—
|
%
|
|||
Share-based compensation
|
—
|
|
|
—
|
%
|
|
—
|
|
|
—
|
%
|
|
—
|
|
|
—
|
%
|
|||
Other
|
15
|
|
|
—
|
%
|
|
3
|
|
|
—
|
%
|
|
15
|
|
|
—
|
%
|
|||
Provision for income taxes
|
$
|
203
|
|
|
(1
|
)%
|
|
$
|
387
|
|
|
(1
|
)%
|
|
$
|
481
|
|
|
(2
|
)%
|
|
December 31,
|
||||||
|
2014
|
|
2013
|
||||
Deferred tax assets:
|
|
|
|
||||
Share-based compensation
|
$
|
13,613
|
|
|
$
|
12,797
|
|
Net operating loss and tax credit carry-forwards
|
33,519
|
|
|
25,052
|
|
||
Deferred revenue
|
2,089
|
|
|
2,808
|
|
||
Accounts receivable reserves
|
556
|
|
|
537
|
|
||
Fixed assets
|
4,813
|
|
|
5,751
|
|
||
Other
|
1,693
|
|
|
2,267
|
|
||
Total deferred tax assets
|
56,283
|
|
|
49,212
|
|
||
Deferred tax liabilities:
|
|
|
|
||||
Intangible assets
|
(177
|
)
|
|
(738
|
)
|
||
Prepaid expenses
|
(144
|
)
|
|
(164
|
)
|
||
Other
|
(36
|
)
|
|
(65
|
)
|
||
Total deferred tax liabilities
|
(357
|
)
|
|
(967
|
)
|
||
Valuation allowance
|
(54,654
|
)
|
|
(47,166
|
)
|
||
Net deferred tax assets
|
$
|
1,272
|
|
|
$
|
1,079
|
|
|
Unrecognized
Tax Benefits
|
||
Balance at January 1, 2013
|
$
|
1,757
|
|
Additions for tax positions related to current year
|
—
|
|
|
Settlements
|
—
|
|
|
Reduction for tax positions of prior years
|
—
|
|
|
Balance at December 31, 2013
|
1,757
|
|
|
Additions for tax positions related to current year
|
—
|
|
|
Additions for tax positions related to prior years
|
312
|
|
|
Settlements
|
—
|
|
|
Adjustment related to foreign currency translation
|
(4
|
)
|
|
Reductions related to the lapse of applicable statute of limitations
|
(22
|
)
|
|
Reduction for tax positions of prior years
|
—
|
|
|
Balance at December 31, 2014
|
$
|
2,043
|
|
|
Years Ended December 31,
|
||||||||||
|
2014
|
|
2013
|
|
2012
|
||||||
Long-lived Assets
|
|
|
|
|
|
||||||
Americas
|
$
|
22,505
|
|
|
$
|
26,502
|
|
|
$
|
36,513
|
|
International
|
11,202
|
|
|
8,757
|
|
|
11,125
|
|
|||
Total long-lived assets
|
$
|
33,707
|
|
|
$
|
35,259
|
|
|
$
|
47,638
|
|
Level 1
|
—
|
defined as observable inputs such as quoted prices in active markets;
|
Level 2
|
—
|
defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and
|
Level 3
|
—
|
defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions.
|
|
|
|
Fair Value Measurements at Reporting Date Using
|
||||||||||||
Description
|
Total
|
|
Quoted Prices In Active Markets for Identical Assets
(Level 1)
|
|
Significant
Other
Observable
Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Money market funds (2)
|
$
|
57
|
|
|
$
|
57
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Corporate notes and bonds (1)
|
21,850
|
|
|
—
|
|
|
21,850
|
|
|
—
|
|
||||
Commercial paper (1)
|
1,497
|
|
|
—
|
|
|
1,497
|
|
|
—
|
|
||||
Certificate of deposit (1)
|
11,010
|
|
|
—
|
|
|
11,010
|
|
|
—
|
|
||||
Convertible debt security (1)
|
1,000
|
|
|
—
|
|
|
—
|
|
|
1,000
|
|
||||
Total assets measured at fair value
|
$
|
35,414
|
|
|
$
|
57
|
|
|
$
|
34,357
|
|
|
$
|
1,000
|
|
(1)
|
Classified in marketable securities
|
(2)
|
Classified in cash and cash equivalents
|
|
|
|
Fair Value Measurements at Reporting Date Using
|
||||||||||||
Description
|
Total
|
|
Quoted Prices In Active Markets for Identical Assets
(Level 1) |
|
Significant
Other
Observable
Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Government agency bonds (1)
|
$
|
261
|
|
|
$
|
—
|
|
|
$
|
261
|
|
|
$
|
—
|
|
Money market funds (2)
|
9,740
|
|
|
9,740
|
|
|
—
|
|
|
—
|
|
||||
Corporate notes and bonds (1)
|
26,009
|
|
|
—
|
|
|
26,009
|
|
|
—
|
|
||||
Commercial paper (1)
|
2,200
|
|
|
—
|
|
|
2,200
|
|
|
—
|
|
||||
Certificate of deposit (1)
|
4,076
|
|
|
—
|
|
|
4,076
|
|
|
—
|
|
||||
Publicly traded common stock (1)
|
6
|
|
|
6
|
|
|
—
|
|
|
—
|
|
||||
Total assets measured at fair value
|
$
|
42,292
|
|
|
$
|
9,746
|
|
|
$
|
32,546
|
|
|
$
|
—
|
|
(1)
|
Classified in marketable securities
|
(2)
|
Classified in cash and cash equivalents
|
|
For the Three Months Ended
|
||||||||||||||
|
March 31,
2014
|
|
June 30,
2014
|
|
Sept. 30,
2014 (a)
|
|
Dec. 31,
2014
|
||||||||
Revenues
|
$
|
41,170
|
|
|
$
|
41,343
|
|
|
$
|
39,020
|
|
|
$
|
40,727
|
|
Gross profit
|
$
|
15,267
|
|
|
$
|
15,873
|
|
|
$
|
16,141
|
|
|
$
|
16,129
|
|
Loss from continuing operations
|
$
|
(7,640
|
)
|
|
$
|
(7,138
|
)
|
|
$
|
(5,071
|
)
|
|
$
|
(5,007
|
)
|
Income (loss) from discontinued operations
|
$
|
—
|
|
|
$
|
269
|
|
|
$
|
(4
|
)
|
|
$
|
—
|
|
Net loss
|
$
|
(7,640
|
)
|
|
$
|
(6,869
|
)
|
|
$
|
(5,075
|
)
|
|
$
|
(5,007
|
)
|
Basic and diluted net loss per share from continuing
operations
|
$
|
(0.08
|
)
|
|
$
|
(0.07
|
)
|
|
$
|
(0.05
|
)
|
|
$
|
(0.05
|
)
|
Basic and diluted net loss per share from discontinued
operations
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Basic and diluted net loss per share
|
$
|
(0.08
|
)
|
|
$
|
(0.07
|
)
|
|
$
|
(0.05
|
)
|
|
$
|
(0.05
|
)
|
Basic and diluted weighted average common shares
outstanding
|
97,946
|
|
|
98,419
|
|
|
98,458
|
|
|
98,637
|
|
|
For the Three Months Ended
|
||||||||||||||
|
March 31,
2013
|
|
June 30,
2013
|
|
Sept. 30,
2013
|
|
Dec. 31,
2013 (b)
|
||||||||
Revenues
|
$
|
45,813
|
|
|
$
|
42,763
|
|
|
$
|
42,656
|
|
|
$
|
42,200
|
|
Gross profit
|
$
|
16,777
|
|
|
$
|
14,417
|
|
|
$
|
15,240
|
|
|
$
|
15,275
|
|
Loss from continuing operations
|
$
|
(8,136
|
)
|
|
$
|
(11,233
|
)
|
|
$
|
(10,903
|
)
|
|
$
|
(4,704
|
)
|
Loss from discontinued operations
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(15
|
)
|
|
$
|
(411
|
)
|
Net loss
|
$
|
(8,136
|
)
|
|
$
|
(11,233
|
)
|
|
$
|
(10,918
|
)
|
|
$
|
(5,115
|
)
|
Basic and diluted net loss per share from continuing operations
|
$
|
(0.08
|
)
|
|
$
|
(0.12
|
)
|
|
$
|
(0.11
|
)
|
|
$
|
(0.05
|
)
|
Basic and diluted net loss per share from discontinued
operations
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Basic and diluted net loss per share
|
$
|
(0.08
|
)
|
|
$
|
(0.12
|
)
|
|
$
|
(0.11
|
)
|
|
$
|
(0.05
|
)
|
Basic and diluted weighted average common shares
outstanding
|
96,818
|
|
|
96,257
|
|
|
96,949
|
|
|
97,380
|
|
Plan category
|
Number of securities to be issued upon exercise of outstanding options, warrants and rights (a)
|
|
Weighted-average exercise price of outstanding options, warrants and rights (b)
|
|
Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c)
|
||||
Equity compensation plans approved by security holders
|
16,872
|
|
|
$
|
3.66
|
|
|
5,446
|
|
Equity compensation plans not approved by security holders
|
—
|
|
|
—
|
|
|
—
|
|
|
Total
|
16,872
|
|
|
$
|
3.66
|
|
|
5,446
|
|
(a)
|
Documents included in this annual report on Form 10-K.
|
(1)
|
Financial Statements.
See Item 8 — Financial Statements and Supplementary Data included in this annual report on Form 10-K.
|
(2)
|
Financial Schedules.
The schedule listed below is filed as part of this annual report on Form 10-K:
|
|
Page
|
Schedule II — Valuation and Qualifying Accounts
|
(b)
|
Exhibits.
The exhibits required by Item 601 of Regulation S-K are listed in the Exhibit Index immediately preceding the exhibits and are incorporated herein.
|
|
|
LIMELIGHT NETWORKS, INC.
|
|
|
|
|
|
Date:
|
February 17, 2015
|
By:
|
/
S
/ P
ETER
J. P
ERRONE
|
|
|
|
Peter J. Perrone
Senior Vice President,
Chief Financial Officer and Treasurer
(Principal Financial Officer)
|
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
/
S
/ R
OBERT
A. L
ENTO
|
|
President, Chief Executive Officer and Director (Principal Executive Officer)
|
|
February 17, 2015
|
Robert A. Lento
|
|
|
|
|
|
|
|
|
|
/
S
/ P
ETER
J. P
ERRONE
|
|
Senior Vice President, Chief Financial Officer and Treasurer (Principal Financial Officer)
|
|
February 17, 2015
|
Peter J. Perrone
|
|
|
|
|
|
|
|
|
|
/
S
/ D
ANIEL
R. B
ONCEL
|
|
Vice President, Finance (Principal Accounting Officer)
|
|
February 17, 2015
|
Daniel R. Boncel
|
|
|
|
|
|
|
|
|
|
/
S
/ W
ALTER
D. A
MARAL
|
|
Non-Executive Chairman of the Board and Director
|
|
February 17, 2015
|
Walter D. Amaral
|
|
|
|
|
|
|
|
|
|
/S/ G
RAY
H
ALL
|
|
Director
|
|
February 17, 2015
|
Gray Hall
|
|
|
|
|
|
|
|
|
|
/
S
/ J
EFFREY
T. F
ISHER
|
|
Director
|
|
February 17, 2015
|
Jeffrey T. Fisher
|
|
|
|
|
|
|
|
|
|
/
S
/ J
OSEPH
H. G
LEBERMAN
|
|
Director
|
|
February 17, 2015
|
Joseph H. Gleberman
|
|
|
|
|
|
|
|
|
|
/
S
/ F
REDRIC
W. H
ARMAN
|
|
Director
|
|
February 17, 2015
|
Fredric W. Harman
|
|
|
|
|
|
|
|
|
|
/
S
/ D
AVID
C. P
ETERSCHMIDT
|
|
Director
|
|
February 17, 2015
|
David C. Peterschmidt
|
|
|
|
|
|
|
|
|
|
|
|
|
Additions
|
|
Deductions
|
|
|
|||||||||
Description
|
Balance at
Beginning
of Period
|
|
Charged to
Costs and
Expenses
|
|
Charged
Against
Revenue
|
|
Write-Offs
Net of
Recoveries
|
|
Balance at
End of Period
|
|||||||
Year ended December 31, 2012:
|
|
|
|
|
|
|
|
|
|
|||||||
Allowances deducted from asset accounts:
|
|
|
|
|
|
|
|
|
|
|||||||
Reserves for accounts receivable
|
$
|
4,391
|
|
|
2,062
|
|
|
(170
|
)
|
|
2,213
|
|
|
$
|
4,070
|
|
Deferred tax asset valuation allowance
|
$
|
36,215
|
|
|
10,000
|
|
|
—
|
|
|
—
|
|
|
$
|
46,215
|
|
Year ended December 31, 2013:
|
|
|
|
|
|
|
|
|
|
|||||||
Allowances deducted from asset accounts:
|
|
|
|
|
|
|
|
|
|
|||||||
Reserves for accounts receivable
|
$
|
4,070
|
|
|
965
|
|
|
(30
|
)
|
|
2,995
|
|
|
$
|
2,010
|
|
Deferred tax asset valuation allowance
|
$
|
46,215
|
|
|
951
|
|
|
—
|
|
|
—
|
|
|
$
|
47,166
|
|
Year ended December 31, 2014:
|
|
|
|
|
|
|
|
|
|
|||||||
Allowances deducted from asset accounts:
|
|
|
|
|
|
|
|
|
|
|||||||
Reserves for accounts receivable
|
$
|
2,010
|
|
|
408
|
|
|
(230
|
)
|
|
354
|
|
|
$
|
1,834
|
|
Deferred tax asset valuation allowance
|
$
|
47,166
|
|
|
7,488
|
|
|
—
|
|
|
—
|
|
|
$
|
54,654
|
|
Exhibit
Number
|
|
Exhibit Title
|
2.1(1)
|
|
Agreement and Plan of Merger by and among Registrant, Elvis Merger Sub One Corporation, Elvis Merger Sub Two LLC, EyeWonder, Inc., John J. Vincent, as Stockholder Representative and Deutsche Bank National Trust, as Escrow Agent, dated December 21, 2009.
|
|
|
|
2.2(2)
|
|
Purchase Agreement dated as of August 30, 2011 by and among DG FastChannel, Inc., Limelight Networks, Inc. and Limelight Networks Germany GmbH.
|
|
|
|
3.1(3)
|
|
Amended and Restated Certificate of Incorporation of the Registrant, as currently in effect.
|
|
|
|
3.2(4)
|
|
Amended and Restated Bylaws of the Registrant, as currently in effect.
|
|
|
|
4.1(5)
|
|
Specimen Common Stock Certificate of the Registrant.
|
|
|
|
4.2(5)
|
|
Amended and Restated Investors’ Rights Agreement dated July 12, 2006.
|
|
|
|
10.1(5)
|
|
Form of Indemnification Agreement for directors and officers.
|
|
|
|
10.2(5)
|
|
Amended and Restated 2003 Incentive Compensation Plan and form of agreement thereunder.
|
|
|
|
10.3(5)
|
|
2007 Equity Incentive Plan and form of agreement thereunder.
|
|
|
|
10.4†(6)
|
|
Bandwidth/Capacity Agreement between the Registrant and Global Crossing Bandwidth, Inc., dated August 29, 2001, and amendments thereto.
|
|
|
|
10.4.01†(7)
|
|
Amendments to Bandwidth/Capacity Agreement between the Registrant and Global Crossing Bandwidth, Inc., dated August 29, 2001.
|
|
|
|
10.4.02†(8)
|
|
Amendment #23 to Bandwidth/Capacity Agreement between the Registrant and Global Crossing Bandwidth, Inc., dated August 29, 2001, as amended.
|
|
|
|
10.4.03†(9)
|
|
Amendment #24 to Bandwidth/Capacity Agreement between the Registrant and Global Crossing Bandwidth, Inc., dated August 29, 2001, as amended.
|
|
|
|
10.5(10)
|
|
Form of At-Will Employment, Confidential Information, Invention Assignment, and Arbitration Agreement for officers and employees.
|
|
|
|
10.6(11)
|
|
Employment Agreement between the Registrant and Philip C. Maynard effective October 22, 2007.
|
|
|
|
10.6.01(12)
|
|
Amendment to Employment Agreement between the Registrant and Philip C. Maynard dated December 30, 2008.
|
|
|
|
10.7(13)
|
|
Master Executive Bonus and Management Bonus Plan.
|
|
|
|
10.8(14)
|
|
Form of 2007 Equity Incentive Plan Restricted Stock Unit Agreement.
|
|
|
|
10.9(15)
|
|
Form of 2007 Equity Incentive Plan Restricted Stock Unit Agreement for Non-U.S. Employees.
|
|
|
|
10.10(16)
|
|
Standard Office Lease between the Registrant and GateWay Tempe LLC dated as of July 20, 2010.
|
|
|
|
10.11(17)
|
|
Employment Agreement between the Registrant and Charles Kirby Wadsworth dated June 22, 2012.
|
|
|
|
10.12(18)
|
|
Interim CEO Employment Agreement between the Registrant and Robert A. Lento dated November 8, 2012.
|
|
|
|
10.13(19)
|
|
Employment Agreement between the Registrant and Robert A. Lento dated January 22, 2013.
|
|
|
|
10.14(20)
|
|
Employment Agreement between the Registrant and George Vonderhaar dated January 22, 2013.
|
|
|
|
10.15(21)
|
|
Limelight Networks, Inc. 2013 Employee Stock Purchase Plan.
|
|
|
|
10.16(22)
|
|
Employment Agreement between the Registrant and Peter J. Perrone dated July 23, 2013.
|
|
|
|
10.17
|
|
Employment Agreement between the Registrant and Sajid Malhotra dated March 24, 2014.
|
|
|
|
21.1(23)
|
|
List of subsidiaries of the Registrant.
|
|
|
|
23.1
|
|
Consent of Ernst & Young LLP, Independent Registered Public Accounting Firm.
|
|
|
|
24.1
|
|
Power of Attorney (See signature page).
|
|
|
|
31.1
|
|
Certification of Chief Executive Officer pursuant to Securities Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
31.2
|
|
Certification of Chief Financial Officer pursuant to Securities Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
32.1*
|
|
Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
32.2*
|
|
Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
101.INS
|
|
XBRL INSTANCE DOCUMENT.
|
|
|
|
101.SCH
|
|
XBRL TAXONOMY EXTENSION SCHEMA DOCUMENT.
|
|
|
|
101.CAL
|
|
XBRL TAXONOMY EXTENSION CALCULATION LINKBASE DOCUMENT.
|
|
|
|
101.DEF
|
|
XBRL TAXONOMY EXTENSION DEFINITION LINKBASE DOCUMENT.
|
|
|
|
101.LAB
|
|
XBRL TAXONOMY EXTENSION LABEL LINKBASE DOCUMENT.
|
|
|
|
101.PRE
|
|
XBRL TAXONOMY EXTENSION PRESENTATION LINKBASE DOCUMENT.
|
(1)
|
Incorporated by reference to Exhibit 2.1 of the Registrant’s Current Report on Form 8-K filed on December 21, 2009.
|
(2)
|
Incorporated by reference to Exhibit 2.1 of the Registrant’s Current Report on Form 8-K filed on September 6, 2011.
|
(3)
|
Incorporated by reference to Exhibit 3.1 of the Registrant’s Current Report on Form 8-K filed on June 14, 2011.
|
(4)
|
Incorporated by reference to Exhibit 3.2 of the Registrant's Form 8-K filed on February 29, 2013.
|
(5)
|
Incorporated by reference to the same number exhibit of the Registrant’s Form S-1 Registration Statement (Registration No. 333-141516), declared effective by the Securities and Exchange Commission on June 7, 2007.
|
(6)
|
Incorporated by reference to Exhibit 10.10 of the Registrant’s Form S-1 Registration Statement (Registration No. 333-141516), declared effective by the Securities and Exchange Commission on June 7, 2007.
|
(7)
|
Incorporated by reference to Exhibit 10.10.01 of the Registrant’s Quarterly Report on Form 10-Q filed on August 14, 2008.
|
(8)
|
Incorporated by reference to Exhibit 10.10.02 of the Registrant’s Annual Report on Form 10-K filed on March 13, 2009.
|
(9)
|
Incorporated by reference to Exhibit 10.10.03 of the Registrant’s Quarterly Report on Form 10-Q filed on November 6, 2009.
|
(10)
|
Incorporated by reference to Exhibit 10.12 of the Registrant’s Form S-1 Registration Statement (Registration No. 333-141516), declared effective by the Securities and Exchange Commission on June 7, 2007.
|
(11)
|
Incorporated by reference to Exhibit 99.2 of the Registrant’s Current Report on Form 8-K filed on November 13, 2007.
|
(12)
|
Incorporated by reference to Exhibit 99.7 of the Registrant’s Current Report on Form 8-K filed on December 31, 2008.
|
(13)
|
Incorporated by reference to Exhibit 99.1 of the Registrant’s Current Report on Form 8-K filed on May 19, 2009.
|
(14)
|
Incorporated by reference to Exhibit (a)(1)(I) of the Registrant’s Schedule TO filed on May 15, 2008.
|
(15)
|
Incorporated by reference to Exhibit (a)(1)(J) of the Registrant’s Schedule TO filed on May 15, 2008.
|
(16)
|
Incorporated by reference to Exhibit 10.32 of the Registrant’s Quarterly Report on Form 10-Q filed on November 5, 2010.
|
(17)
|
Incorporated by reference to Exhibit 10.29 of the Registrant’s Quarterly Report on Form 10-Q filed on November 5, 2012.
|
(18)
|
Incorporated by reference to Exhibit 10.20 of the Registrant's Annual Report on Form 10-K filed on March 1, 2013.
|
(19)
|
Incorporated by reference to Exhibit 10.21 of the Registrant’s Annual Report on Form 10-K filed on March 1, 2013.
|
(20)
|
Incorporated by reference to Exhibit 10.22 of the Registrant's Annual Report on Form 10-K filed on March 1, 2013.
|
(21)
|
Incorporated by reference to Exhibit 10.23 of the Registrant's Quarterly Report on Form 10-Q filed on August 8, 2013.
|
(22)
|
Incorporated by reference to Exhibit 10.24 of the Registrant's Quarterly Report on Form 10-Q filed on August 8, 2013.
|
(23)
|
Incorporated by reference to Exhibit 21.1 of the Registrant's Annual Report on Form 10-K filed on February 20, 2014.
|
*
|
This exhibit shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that Section, nor shall it be deemed incorporated by reference in any filings under the Securities Act of 1933 or the Securities Exchange Act of 1934, whether made before or after the date hereof and irrespective of any general incorporation language in any filings.
|
†
|
Confidential treatment has been requested or granted for portions of this exhibit by the Securities and Exchange Commission.
|
(1)
|
Registration Statement Form S-3 (File No. 333-170609) of Limelight Networks, Inc.
|
(2)
|
Registration Statement (Form S-8 No. 333-147830) pertaining to the Amended and Restated 2003 Incentive Compensation Plan and the 2007 Equity Incentive Plan
|
(3)
|
Registration Statement (Form S-8 No. 333-159132) pertaining to the 2007 Equity Incentive Plan
|
(4)
|
Registration Statement (Form S-8 No. 333-165436) pertaining to the 2007 Equity Incentive Plan
|
(5)
|
Registration Statement (Form S-8 No. 333-176760) pertaining to the 2007 Equity Incentive Plan
|
(6)
|
Registration Statement (Form S-8 No. 333-181280) pertaining to the 2007 Equity Incentive Plan
|
(7)
|
Registration Statement (Form S-8 No. 333-187052) pertaining to the 2007 Equity Incentive Plan
|
(8)
|
Registration Statement (Form S-8 No. 333-190572) pertaining to the 2013 Employee Stock Purchase Plan
|
(9)
|
Registration Statement (Form S-8 No. 333-194143) pertaining to the 2007 Equity Incentive Plan;
|
1.
|
I have reviewed this annual report on Form 10-K of Limelight Networks, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date:
|
February 17, 2015
|
By:
|
/s/ R
OBERT
A. L
ENTO
|
|
|
Name:
|
Robert A. Lento
|
|
|
Title:
|
President, Chief Executive Officer and Director
(Principal Executive Officer)
|
1.
|
I have reviewed this annual report on Form 10-K of Limelight Networks, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date:
|
February 17, 2015
|
By:
|
/s/ P
ETER
J. P
ERRONE
|
|
|
Name:
|
Peter J. Perrone
|
|
|
Title:
|
Senior Vice President,
Chief Financial Officer and Treasurer
(Principal Financial Officer)
|
Date:
|
February 17, 2015
|
By:
|
/s/ R
OBERT
A. L
ENTO
|
|
|
Name:
|
Robert A. Lento
|
|
|
Title:
|
President, Chief Executive Officer and Director
(Principal Executive Officer)
|
Date:
|
February 17, 2015
|
By:
|
/s/ P
ETER
J. P
ERRONE
|
|
|
Name:
|
Peter J. Perrone
|
|
|
Title:
|
Senior Vice President,
Chief Financial Officer and Treasurer
(Principal Financial Officer)
|