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þ
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QUARTERLY 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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Large accelerated filer
o
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Accelerated filer
þ
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Non-accelerated filer
o
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Smaller Reporting Company
o
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(Do not check if a smaller reporting company)
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Page
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PART I. FINANCIAL INFORMATION
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Item 1.
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FINANCIAL STATEMENTS (unaudited)
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Consolidated Balance Sheets as of March 31, 2015 (Unaudited) and December 31, 2014
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Unaudited Consolidated Statements of Operations for the Three Months Ended March 31, 2015 and 2014
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Unaudited Consolidated Statements of Comprehensive Loss for the Three Months Ended March 31, 2015 and 2014
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Unaudited Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2015 and 2014
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Notes to Unaudited Consolidated Financial Statements
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Item 2.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
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Item 3.
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QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
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Item 4.
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CONTROLS AND PROCEDURES
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PART II. OTHER INFORMATION
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Item 1.
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LEGAL PROCEEDINGS
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Item 1A.
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RISK FACTORS
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Item 2.
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UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
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Item 3.
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DEFAULTS UPON SENIOR SECURITIES
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Item 4.
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MINE SAFETY DISCLOSURES
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Item 5.
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OTHER INFORMATION
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Item 6.
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EXHIBITS
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SIGNATURES
|
|
|
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|
•
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our expectations regarding revenue, costs and expenses;
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•
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our plans regarding investing in our content delivery network, as well as other products and technologies;
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•
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our beliefs regarding the growth of, and competition within, the content delivery industry;
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•
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our beliefs regarding the growth of our business and how that impacts our liquidity and capital resources requirements;
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•
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our expectations regarding hiring and headcount;
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•
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the impact of certain new accounting standards and guidance;
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•
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our plans with respect to investments in marketable securities;
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•
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our expectations and strategies regarding acquisitions;
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•
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our expectations regarding the Akamai litigation and other pending or potential disputes;
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•
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our estimations regarding taxes and belief regarding our tax reserves;
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•
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our beliefs regarding the use of Non-GAAP financial measures;
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•
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our approach to identifying, attracting and keeping new and existing customers, as well as our expectations regarding customer turnover;
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•
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the sufficiency of our sources of funding;
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•
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our belief regarding our interest rate risk; and
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•
|
our beliefs regarding the significance of our large customers;
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(Unaudited)
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||||
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March 31,
2015 |
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December 31,
2014 |
||||
ASSETS
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|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
45,508
|
|
|
$
|
57,767
|
|
Marketable securities
|
35,436
|
|
|
35,317
|
|
||
Accounts receivable, net
|
27,357
|
|
|
22,622
|
|
||
Income taxes receivable
|
218
|
|
|
237
|
|
||
Deferred income taxes
|
77
|
|
|
78
|
|
||
Prepaid expenses and other current assets
|
8,240
|
|
|
9,625
|
|
||
Total current assets
|
116,836
|
|
|
125,646
|
|
||
Property and equipment, net
|
34,062
|
|
|
32,636
|
|
||
Marketable securities, less current portion
|
40
|
|
|
40
|
|
||
Deferred income taxes, less current portion
|
1,309
|
|
|
1,364
|
|
||
Goodwill
|
76,020
|
|
|
76,133
|
|
||
Other intangible assets, net
|
858
|
|
|
1,071
|
|
||
Other assets
|
3,646
|
|
|
4,451
|
|
||
Total assets
|
$
|
232,771
|
|
|
$
|
241,341
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
8,059
|
|
|
$
|
7,065
|
|
Deferred revenue
|
3,471
|
|
|
3,509
|
|
||
Capital lease obligations
|
—
|
|
|
223
|
|
||
Income taxes payable
|
166
|
|
|
248
|
|
||
Other current liabilities
|
11,351
|
|
|
14,383
|
|
||
Total current liabilities
|
23,047
|
|
|
25,428
|
|
||
Capital lease obligations, less current portion
|
—
|
|
|
135
|
|
||
Deferred income taxes
|
144
|
|
|
170
|
|
||
Deferred revenue, less current portion
|
241
|
|
|
405
|
|
||
Other long-term liabilities
|
2,749
|
|
|
3,040
|
|
||
Total liabilities
|
26,181
|
|
|
29,178
|
|
||
Commitments and contingencies
|
|
|
|
||||
Stockholders’ equity:
|
|
|
|
||||
Convertible preferred stock, $0.001 par value; 7,500 shares authorized; no shares issued
and outstanding
|
—
|
|
|
—
|
|
||
Common stock, $0.001 par value; 300,000 shares authorized at March 31, 2015, and
December 31, 2014; 99,534 and 98,409 shares issued and outstanding at March 31, 2015, and December 31, 2014, respectively
|
99
|
|
|
98
|
|
||
Additional paid-in capital
|
467,413
|
|
|
464,294
|
|
||
Accumulated other comprehensive loss
|
(10,796
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)
|
|
(7,786
|
)
|
||
Accumulated deficit
|
(250,126
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)
|
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(244,443
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)
|
||
Total stockholders’ equity
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206,590
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|
|
212,163
|
|
||
Total liabilities and stockholders’ equity
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$
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232,771
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|
|
$
|
241,341
|
|
|
Three Months Ended March 31,
|
||||||
|
2015
|
|
2014
|
||||
Revenues
|
$
|
42,329
|
|
|
$
|
41,170
|
|
Cost of revenue:
|
|
|
|
||||
Cost of services (1)
|
21,657
|
|
|
21,566
|
|
||
Depreciation — network
|
4,153
|
|
|
4,337
|
|
||
Total cost of revenue
|
25,810
|
|
|
25,903
|
|
||
Gross profit
|
16,519
|
|
|
15,267
|
|
||
Operating expenses:
|
|
|
|
||||
General and administrative
|
6,850
|
|
|
7,028
|
|
||
Sales and marketing
|
10,276
|
|
|
10,254
|
|
||
Research and development
|
6,263
|
|
|
4,578
|
|
||
Depreciation and amortization
|
640
|
|
|
1,066
|
|
||
Total operating expenses
|
24,029
|
|
|
22,926
|
|
||
Operating loss
|
(7,510
|
)
|
|
(7,659
|
)
|
||
Other income (expense):
|
|
|
|
||||
Interest expense
|
(4
|
)
|
|
(12
|
)
|
||
Interest income
|
74
|
|
|
70
|
|
||
Other, net
|
1,812
|
|
|
17
|
|
||
Total other income (expense)
|
1,882
|
|
|
75
|
|
||
Loss before income taxes
|
(5,628
|
)
|
|
(7,584
|
)
|
||
Income tax expense
|
55
|
|
|
56
|
|
||
Net loss
|
$
|
(5,683
|
)
|
|
$
|
(7,640
|
)
|
|
|
|
|
||||
Net loss per share:
|
|
|
|
||||
Basic and diluted
|
$
|
(0.06
|
)
|
|
$
|
(0.08
|
)
|
|
|
|
|
||||
Weighted average shares used in per share calculation:
|
|
|
|
||||
Basic and diluted
|
98,636
|
|
|
97,946
|
|
(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
|
|
Three Months Ended March 31,
|
||||||
|
2015
|
|
2014
|
||||
Net loss
|
$
|
(5,683
|
)
|
|
$
|
(7,640
|
)
|
Other comprehensive income (loss), net of tax:
|
|
|
|
||||
Unrealized gain on investments
|
61
|
|
|
7
|
|
||
Foreign exchange translation (loss) gain
|
(3,071
|
)
|
|
153
|
|
||
Other comprehensive income (loss), net of tax
|
(3,010
|
)
|
|
160
|
|
||
Comprehensive loss
|
$
|
(8,693
|
)
|
|
$
|
(7,480
|
)
|
|
Three Months Ended March 31,
|
||||||
|
2015
|
|
2014
|
||||
Operating activities
|
|
|
|
||||
Net loss
|
$
|
(5,683
|
)
|
|
$
|
(7,640
|
)
|
Adjustments to reconcile net loss to net cash used in operating activities:
|
|
|
|
||||
Depreciation and amortization
|
4,793
|
|
|
5,403
|
|
||
Share-based compensation
|
3,069
|
|
|
2,579
|
|
||
Foreign currency remeasurement gain
|
(1,691
|
)
|
|
(12
|
)
|
||
Deferred income taxes
|
(53
|
)
|
|
(23
|
)
|
||
Accounts receivable charges
|
246
|
|
|
160
|
|
||
Amortization of premium on marketable securities
|
58
|
|
|
173
|
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Accounts receivable
|
(4,980
|
)
|
|
(1,979
|
)
|
||
Prepaid expenses and other current assets
|
1,150
|
|
|
(1,073
|
)
|
||
Income taxes receivable
|
(2
|
)
|
|
(21
|
)
|
||
Other assets
|
792
|
|
|
617
|
|
||
Accounts payable
|
382
|
|
|
3,808
|
|
||
Deferred revenue
|
(203
|
)
|
|
(831
|
)
|
||
Other current liabilities
|
(2,105
|
)
|
|
(2,972
|
)
|
||
Income taxes payable
|
(52
|
)
|
|
(106
|
)
|
||
Other long term liabilities
|
(269
|
)
|
|
(173
|
)
|
||
Net cash used in operating activities
|
(4,548
|
)
|
|
(2,090
|
)
|
||
Investing activities
|
|
|
|
||||
Purchases of marketable securities
|
(9,956
|
)
|
|
(5,197
|
)
|
||
Maturities of marketable securities
|
9,840
|
|
|
4,380
|
|
||
Purchases of property and equipment
|
(6,666
|
)
|
|
(3,065
|
)
|
||
Net cash used in investing activities
|
(6,782
|
)
|
|
(3,882
|
)
|
||
Financing activities
|
|
|
|
||||
Payments on capital lease obligations
|
(358
|
)
|
|
(160
|
)
|
||
Payment of employee tax withholdings related to restricted stock vesting
|
(1,107
|
)
|
|
(864
|
)
|
||
Cash paid for purchase of common stock
|
(957
|
)
|
|
—
|
|
||
Proceeds from exercise of stock options and employee stock plans
|
1,975
|
|
|
117
|
|
||
Net cash used in financing activities
|
(447
|
)
|
|
(907
|
)
|
||
Effect of exchange rate changes on cash and cash equivalents
|
(482
|
)
|
|
137
|
|
||
Net decrease in cash and cash equivalents
|
(12,259
|
)
|
|
(6,742
|
)
|
||
Cash and cash equivalents, beginning of period
|
57,767
|
|
|
85,956
|
|
||
Cash and cash equivalents, end of period
|
$
|
45,508
|
|
|
$
|
79,214
|
|
Supplemental disclosure of cash flow information
|
|
|
|
||||
Cash paid during the period for interest
|
$
|
4
|
|
|
$
|
11
|
|
Cash paid during the period for income taxes, net of refunds
|
$
|
178
|
|
|
$
|
198
|
|
Property and equipment expenditures remaining in accounts payable and other current liabilities
|
$
|
3,072
|
|
|
$
|
2,503
|
|
|
Amortized
Cost
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Losses
|
|
Estimated
Fair Value
|
||||||||
Certificate of deposit
|
$
|
17,520
|
|
|
$
|
7
|
|
|
$
|
7
|
|
|
$
|
17,520
|
|
Commercial paper
|
1,499
|
|
|
—
|
|
|
—
|
|
|
1,499
|
|
||||
Corporate notes and bonds
|
15,453
|
|
|
14
|
|
|
10
|
|
|
15,457
|
|
||||
Convertible debt security
|
1,000
|
|
|
—
|
|
|
—
|
|
|
1,000
|
|
||||
Total marketable securities
|
$
|
35,472
|
|
|
$
|
21
|
|
|
$
|
17
|
|
|
$
|
35,476
|
|
|
Amortized
Cost
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Losses
|
|
Estimated
Fair Value
|
||||||||
Available-for-sale securities
|
|
|
|
|
|
|
|
||||||||
Due in one year or less
|
$
|
20,139
|
|
|
$
|
5
|
|
|
$
|
8
|
|
|
$
|
20,136
|
|
Due after one year and through five years
|
15,333
|
|
|
16
|
|
|
9
|
|
|
15,340
|
|
||||
|
$
|
35,472
|
|
|
$
|
21
|
|
|
$
|
17
|
|
|
$
|
35,476
|
|
|
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 securities
|
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
|
|
|
March 31,
|
|
December 31,
|
||||
|
2015
|
|
2014
|
||||
Accounts receivable
|
$
|
18,430
|
|
|
$
|
14,507
|
|
Unbilled accounts receivable
|
10,756
|
|
|
9,949
|
|
||
|
29,186
|
|
|
24,456
|
|
||
Less: credit allowance
|
(500
|
)
|
|
(380
|
)
|
||
Less: allowance for doubtful accounts
|
(1,329
|
)
|
|
(1,454
|
)
|
||
Total accounts receivable, net
|
$
|
27,357
|
|
|
$
|
22,622
|
|
•
|
sustained decline in our 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 our stock price; and
|
•
|
decline in observed control premiums paid in business combinations involving comparable companies.
|
|
March 31,
|
|
December 31,
|
||||
|
2015
|
|
2014
|
||||
Network equipment
|
$
|
194,417
|
|
|
$
|
192,145
|
|
Computer equipment
|
12,782
|
|
|
12,169
|
|
||
Furniture and fixtures
|
2,596
|
|
|
2,718
|
|
||
Leasehold improvements
|
7,455
|
|
|
7,351
|
|
||
Other equipment
|
564
|
|
|
570
|
|
||
Total property and equipment
|
217,814
|
|
|
214,953
|
|
||
Less: accumulated depreciation and amortization
|
(183,752
|
)
|
|
(182,317
|
)
|
||
Total property and equipment, net
|
$
|
34,062
|
|
|
$
|
32,636
|
|
|
March 31,
|
|
December 31,
|
||||
|
2015
|
|
2014
|
||||
Accrued compensation and benefits
|
$
|
3,458
|
|
|
$
|
5,266
|
|
Accrued cost of revenue
|
2,182
|
|
|
2,031
|
|
||
Accrued legal fees
|
1,275
|
|
|
1,292
|
|
||
Deferred rent
|
1,236
|
|
|
1,277
|
|
||
Other accrued expenses
|
3,200
|
|
|
4,517
|
|
||
Total other current liabilities
|
$
|
11,351
|
|
|
$
|
14,383
|
|
|
March 31,
|
|
December 31,
|
||||
|
2015
|
|
2014
|
||||
Deferred rent
|
$
|
2,248
|
|
|
$
|
2,511
|
|
Income taxes payable
|
501
|
|
|
529
|
|
||
Total other long term liabilities
|
$
|
2,749
|
|
|
$
|
3,040
|
|
|
Three Months Ended March 31,
|
||||||
|
2015
|
|
2014
|
||||
Net loss
|
$
|
(5,683
|
)
|
|
$
|
(7,640
|
)
|
Basic and diluted weighted average outstanding shares of common stock
|
98,636
|
|
|
97,946
|
|
||
Basic and diluted net loss per share
|
$
|
(0.06
|
)
|
|
$
|
(0.08
|
)
|
|
|
|
Unrealized
|
|
|
||||||
|
|
|
Gains (Losses) on
|
|
|
||||||
|
Foreign
|
|
Available for
|
|
|
||||||
|
Currency
|
|
Sale Securities
|
|
Total
|
||||||
Balance, December 31, 2014
|
$
|
(7,743
|
)
|
|
$
|
(43
|
)
|
|
$
|
(7,786
|
)
|
Other comprehensive (loss) income before reclassifications
|
(3,071
|
)
|
|
61
|
|
|
(3,010
|
)
|
|||
Amounts reclassified from accumulated other comprehensive
income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|||
Net current period other comprehensive (loss) income
|
(3,071
|
)
|
|
61
|
|
|
(3,010
|
)
|
|||
Balance, March 31, 2015
|
$
|
(10,814
|
)
|
|
$
|
18
|
|
|
$
|
(10,796
|
)
|
|
Three Months Ended March 31,
|
||||||
|
2015
|
|
2014
|
||||
Share-based compensation expense by type:
|
|
|
|
||||
Stock options
|
$
|
1,182
|
|
|
$
|
1,230
|
|
Restricted stock units
|
1,813
|
|
|
1,293
|
|
||
ESPP
|
74
|
|
|
56
|
|
||
Total share-based compensation expense
|
$
|
3,069
|
|
|
$
|
2,579
|
|
Share-based compensation expense included in the consolidated statements of operations:
|
|
|
|
||||
Cost of services
|
$
|
513
|
|
|
$
|
504
|
|
General and administrative expense
|
1,406
|
|
|
1,200
|
|
||
Sales and marketing expense
|
689
|
|
|
525
|
|
||
Research and development expense
|
461
|
|
|
350
|
|
||
Total share-based compensation expense
|
$
|
3,069
|
|
|
$
|
2,579
|
|
Remainder of 2015
|
$
|
2,868
|
|
2016
|
3,127
|
|
|
2017
|
2,756
|
|
|
2018
|
2,826
|
|
|
2019
|
1,265
|
|
|
Thereafter
|
985
|
|
|
Total minimum payments
|
$
|
13,827
|
|
Remainder of 2015
|
$
|
24,772
|
|
2016
|
10,664
|
|
|
2017
|
2,108
|
|
|
2018
|
1,071
|
|
|
2019
|
401
|
|
|
Thereafter
|
13
|
|
|
Total minimum payments
|
$
|
39,029
|
|
|
March 31,
|
|
December 31,
|
||||
|
2015
|
|
2014
|
||||
Americas
|
$
|
24,014
|
|
|
$
|
22,505
|
|
International
|
10,906
|
|
|
11,202
|
|
||
Total long-lived assets
|
$
|
34,920
|
|
|
$
|
33,707
|
|
|
|
|
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)
|
$
|
118
|
|
|
$
|
118
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Corporate notes and bonds (1)
|
15,457
|
|
|
—
|
|
|
15,457
|
|
|
—
|
|
||||
Commercial paper (1)
|
1,499
|
|
|
|
|
1,499
|
|
|
|
||||||
Certificate of deposit (1)
|
17,520
|
|
|
—
|
|
|
17,520
|
|
|
—
|
|
||||
Convertible debt security (1)
|
1,000
|
|
|
—
|
|
|
—
|
|
|
1,000
|
|
||||
Total assets measured at fair value
|
$
|
35,594
|
|
|
$
|
118
|
|
|
$
|
34,476
|
|
|
$
|
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:
|
|
|
|
|
|
|
|
||||||||
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
|
|
Three Months Ended March 31,
|
||||||||||||
|
2015
|
|
2014
|
||||||||||
Revenues
|
$
|
42,329
|
|
|
100.0
|
%
|
|
$
|
41,170
|
|
|
100.0
|
%
|
Cost of revenue
|
25,810
|
|
|
61.0
|
%
|
|
25,903
|
|
|
62.9
|
%
|
||
Gross profit
|
16,519
|
|
|
39.0
|
%
|
|
15,267
|
|
|
37.1
|
%
|
||
Total operating expenses
|
24,029
|
|
|
56.8
|
%
|
|
22,926
|
|
|
55.7
|
%
|
||
Operating loss
|
(7,510
|
)
|
|
(17.7
|
)%
|
|
(7,659
|
)
|
|
(18.6
|
)%
|
||
Total other income (expense)
|
1,882
|
|
|
4.4
|
%
|
|
75
|
|
|
0.2
|
%
|
||
Loss before income taxes
|
(5,628
|
)
|
|
(13.3
|
)%
|
|
(7,584
|
)
|
|
(18.4
|
)%
|
||
Income tax expense
|
55
|
|
|
0.1
|
%
|
|
56
|
|
|
0.1
|
%
|
||
Net loss
|
$
|
(5,683
|
)
|
|
(13.4
|
)%
|
|
$
|
(7,640
|
)
|
|
(18.6
|
)%
|
•
|
EBITDA 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 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 and Adjusted EBITDA differently than we do, limiting their usefulness as comparative measures.
|
|
Three Months Ended
|
||||||||||
|
March 31,
|
|
Dec. 31,
|
|
March 31,
|
||||||
|
2015
|
|
2014
|
|
2014
|
||||||
U.S. GAAP net loss
|
$
|
(5,683
|
)
|
|
$
|
(5,007
|
)
|
|
$
|
(7,640
|
)
|
Share-based compensation
|
3,069
|
|
|
2,691
|
|
|
2,579
|
|
|||
Litigation defense expenses
|
19
|
|
|
(3
|
)
|
|
273
|
|
|||
Amortization of intangible assets
|
197
|
|
|
204
|
|
|
337
|
|
|||
Loss on sale of the WCM business
|
—
|
|
|
—
|
|
|
62
|
|
|||
Non-GAAP net loss
|
$
|
(2,398
|
)
|
|
$
|
(2,115
|
)
|
|
$
|
(4,389
|
)
|
|
Three Months Ended
|
||||||||||
|
March 31,
|
|
Dec. 31,
|
|
March 31,
|
||||||
|
2015
|
|
2014
|
|
2014
|
||||||
U.S. GAAP net loss
|
$
|
(5,683
|
)
|
|
$
|
(5,007
|
)
|
|
$
|
(7,640
|
)
|
Depreciation and amortization
|
4,793
|
|
|
4,646
|
|
|
5,403
|
|
|||
Interest expense
|
4
|
|
|
6
|
|
|
12
|
|
|||
Loss on sale of the WCM business
|
—
|
|
|
—
|
|
|
62
|
|
|||
Interest and other (income) expense
|
(1,886
|
)
|
|
(880
|
)
|
|
(149
|
)
|
|||
Income tax expense
|
55
|
|
|
22
|
|
|
56
|
|
|||
EBITDA
|
$
|
(2,717
|
)
|
|
$
|
(1,213
|
)
|
|
$
|
(2,256
|
)
|
Share-based compensation
|
3,069
|
|
|
2,691
|
|
|
2,579
|
|
|||
Litigation defense expenses
|
19
|
|
|
(3
|
)
|
|
273
|
|
|||
Adjusted EBITDA
|
$
|
371
|
|
|
$
|
1,475
|
|
|
$
|
596
|
|
|
Three Months Ended March 31,
|
|||||||||||||
|
|
|
|
|
$
|
|
%
|
|||||||
|
2015
|
|
2014
|
|
Change
|
|
Change
|
|||||||
Revenue
|
$
|
42,329
|
|
|
$
|
41,170
|
|
|
$
|
1,159
|
|
|
2.8
|
%
|
|
Three Months Ended March 31,
|
||||||||||||
|
2015
|
|
2014
|
||||||||||
Bandwidth and co-location fees
|
$
|
14,269
|
|
|
33.7
|
%
|
|
$
|
14,797
|
|
|
35.9
|
%
|
Depreciation - network
|
4,153
|
|
|
9.8
|
%
|
|
4,337
|
|
|
10.5
|
%
|
||
Payroll and related employee costs
|
5,073
|
|
|
12.0
|
%
|
|
4,368
|
|
|
10.6
|
%
|
||
Share-based compensation
|
513
|
|
|
1.2
|
%
|
|
504
|
|
|
1.2
|
%
|
||
Other costs
|
1,802
|
|
|
4.3
|
%
|
|
1,897
|
|
|
4.6
|
%
|
||
Total cost of revenue
|
$
|
25,810
|
|
|
61.0
|
%
|
|
$
|
25,903
|
|
|
62.9
|
%
|
•
|
decreased bandwidth and co-location fees as a result of our focus on improving our gross margins. We have renegotiated certain bandwidth contracts from fixed rates to variable decreasing this expense. We have been investing in new servers and network equipment resulting in reduced co-location fees;
|
|
Three Months Ended March 31,
|
||||||||||||
|
2015
|
|
2014
|
||||||||||
Payroll and related employee costs
|
$
|
2,959
|
|
|
7.0
|
%
|
|
$
|
2,461
|
|
|
6.0
|
%
|
Professional fees and outside services
|
1,004
|
|
|
2.4
|
%
|
|
1,309
|
|
|
3.2
|
%
|
||
Share-based compensation
|
1,406
|
|
|
3.3
|
%
|
|
1,200
|
|
|
2.9
|
%
|
||
Other costs
|
1,481
|
|
|
3.5
|
%
|
|
2,058
|
|
|
5.0
|
%
|
||
Total general and administrative
|
$
|
6,850
|
|
|
16.2
|
%
|
|
$
|
7,028
|
|
|
17.1
|
%
|
•
|
decreased professional fees for both accounting and general legal services; and
|
•
|
lower other costs, which was primarily reduced fees and licenses and litigation expenses.
|
|
Three Months Ended March 31,
|
||||||||||||
|
2015
|
|
2014
|
||||||||||
Payroll and related employee costs
|
$
|
6,755
|
|
|
16.0
|
%
|
|
$
|
6,781
|
|
|
16.5
|
%
|
Share-based compensation
|
689
|
|
|
1.6
|
%
|
|
525
|
|
|
1.3
|
%
|
||
Marketing programs
|
473
|
|
|
1.1
|
%
|
|
371
|
|
|
0.9
|
%
|
||
Other costs
|
2,359
|
|
|
5.6
|
%
|
|
2,577
|
|
|
6.3
|
%
|
||
Total sales and marketing
|
$
|
10,276
|
|
|
24.3
|
%
|
|
$
|
10,254
|
|
|
24.9
|
%
|
•
|
increased share-based compensation; and
|
•
|
increased marketing and public relations spending related to trade shows.
|
|
Three Months Ended March 31,
|
||||||||||||
|
2015
|
|
2014
|
||||||||||
Payroll and related employee costs
|
$
|
4,820
|
|
|
11.4
|
%
|
|
$
|
3,692
|
|
|
9.0
|
%
|
Share-based compensation
|
461
|
|
|
1.1
|
%
|
|
350
|
|
|
0.9
|
%
|
||
Other costs
|
982
|
|
|
2.3
|
%
|
|
536
|
|
|
1.3
|
%
|
||
Total research and development
|
$
|
6,263
|
|
|
14.8
|
%
|
|
$
|
4,578
|
|
|
11.1
|
%
|
•
|
increased payroll and related employee costs due to increased headcount as we expand our research and development activities; and
|
•
|
increased other costs primarily due to increased professional fees for consulting and recruiting.
|
•
|
accounts receivable increased $4,980 during the three months ended March 31, 2015, due to the timing of billings net of collections and an increase in our days sales outstanding (DSO) due to longer payment terms with certain large customers as compared to a $1,979 increase in the comparable 2014 period;
|
•
|
prepaid expenses and other current assets decreased $1,150 during the three months ended March 31, 2015, due to the timing of amortization of prepaid bandwidth expenses versus an increase of $1,073 for the comparable 2014 period; and
|
•
|
other current liabilities decreased $2,105 during the three months ended March 31, 2015, primarily due to the payment of 2014 accrued compensation and decreases in other accrued expenses versus a decrease of $2,972 for the comparable 2014 period.
|
|
|
Payments Due by Period
|
||||||||||||||||||
|
|
|
|
Less than
|
|
|
|
|
|
More than
|
||||||||||
|
|
Total
|
|
1 year
|
|
1-3 years
|
|
3-5 years
|
|
5 years
|
||||||||||
Operating Leases
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Bandwidth leases
|
|
$
|
17,328
|
|
|
$
|
12,184
|
|
|
$
|
4,700
|
|
|
$
|
444
|
|
|
$
|
—
|
|
Rack space leases
|
|
21,105
|
|
|
17,073
|
|
|
3,389
|
|
|
643
|
|
|
—
|
|
|||||
Real estate leases
|
|
13,827
|
|
|
3,212
|
|
|
5,793
|
|
|
4,022
|
|
|
800
|
|
|||||
Total operating leases
|
|
52,260
|
|
|
32,469
|
|
|
13,882
|
|
|
5,109
|
|
|
800
|
|
|||||
Other purchase obligations
|
|
596
|
|
|
550
|
|
|
46
|
|
|
—
|
|
|
—
|
|
|||||
Total commitments
|
|
$
|
52,856
|
|
|
$
|
33,019
|
|
|
$
|
13,928
|
|
|
$
|
5,109
|
|
|
$
|
800
|
|
•
|
a general decline in Internet usage;
|
•
|
third party restrictions on online content (including copyright restrictions, digital rights management and restrictions in certain geographic regions);
|
•
|
system impairments or outages, including those caused by hacking or cyber attacks; and
|
•
|
a significant increase in the quality or fidelity of offline media content beyond that available online to the point where users prefer the offline experience.
|
•
|
continued price declines arising from significant competition;
|
•
|
increasing settlement fees for certain peering relationships;
|
•
|
failure to increase sales of our Orchestrate Platform services;
|
•
|
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;
|
•
|
failure of our current and planned services and software to operate as expected;
|
•
|
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;
|
•
|
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;
|
•
|
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
|
•
|
inability to attract high quality customers to purchase and implement our current and planned services.
|
•
|
their satisfaction or dissatisfaction with our services;
|
•
|
the prices of our services;
|
•
|
the prices of services offered by our competitors;
|
•
|
discontinuation by our customers of their Internet or web-based content distribution business;
|
•
|
mergers and acquisitions affecting our customer base; and
|
•
|
reductions in our customers’ spending levels.
|
•
|
cease selling, incorporating or using products or services that incorporate the challenged intellectual property;
|
•
|
pay substantial damages;
|
•
|
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
|
•
|
redesign products or services.
|
•
|
training new sales personnel in our offerings to become productive and generate revenue;
|
•
|
forecasting revenue;
|
•
|
controlling expenses and investments in anticipation of expanded operations;
|
•
|
implementing and enhancing our global network and administrative infrastructure, systems and processes;
|
•
|
addressing new markets; and
|
•
|
expanding our international operations.
|
•
|
our ability to increase sales to existing customers and attract new customers to our content delivery and other Orchestrate Platform services;
|
•
|
the addition or loss of large customers, or significant variation in their use of our content delivery and other Orchestrate Platform services;
|
•
|
costs associated with current or future intellectual property lawsuits and other lawsuits;
|
•
|
service outages or third party security breaches to our platform or to one or more of our customers’ platforms;
|
•
|
the amount and timing of operating costs and capital expenditures related to the maintenance and expansion of our business, operations and infrastructure;
|
•
|
the timing and success of new product and service introductions by us or our competitors;
|
•
|
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;
|
•
|
changes in our pricing policies or those of our competitors;
|
•
|
the timing of recognizing revenue;
|
•
|
limitations of the capacity of our global network and related systems;
|
•
|
the timing of costs related to the development or acquisition of technologies, services or businesses;
|
•
|
the potential write-down or write-off of intangible or other long-lived assets;
|
•
|
general economic, industry and market conditions (such as fluctuations experienced in the stock and credit markets during times of deteriorated global economic conditions) and those conditions specific to Internet usage;
|
•
|
limitations on usage imposed by our customers in order to limit their online expenses; and
|
•
|
war, threat of war or terrorist actions, including cyber terrorism targeted broadly, at us, or our customers, or both, and inadequate cyber security.
|
•
|
slowing demand for our services,
|
•
|
increasing competition and competitive pricing pressures,
|
•
|
any inability to generally provide our services in a cost-effective manner,
|
•
|
the incurrence of unforeseen expenses, difficulties, complications and delays, and
|
•
|
other risks described in this annual report on Form 10-Q.
|
•
|
the difficulty of integrating the operations, services, solutions and personnel of the acquired companies;
|
•
|
the potential disruption of our ongoing business;
|
•
|
the potential distraction of management;
|
•
|
the possibility that our business culture and the business culture of the acquired companies will not be compatible;
|
•
|
the difficulty of incorporating or integrating acquired technology and rights with or into our other services and solutions;
|
•
|
expenses related to the acquisition and to the integration of the acquired companies;
|
•
|
the impairment of relationships with employees and customers as a result of any integration of new personnel;
|
•
|
employee turnover from the acquired companies or from our current operations as we integrate businesses;
|
•
|
risks related to the businesses of acquired companies that may continue to impact the businesses following the merger; and
|
•
|
potential unknown liabilities associated with acquired companies.
|
•
|
increased expenses associated with sales and marketing, deploying services and maintaining our infrastructure in foreign countries;
|
•
|
competition from local content delivery service providers, many of which are very well positioned within their local markets;
|
•
|
challenges caused by distance, language and cultural differences;
|
•
|
unexpected changes in regulatory requirements preventing or limiting us from operating our global network or resulting in unanticipated costs and delays;
|
•
|
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;
|
•
|
longer accounts receivable payment cycles and difficulties in collecting accounts receivable;
|
•
|
corporate and personal liability for violations of local laws and regulations;
|
•
|
currency exchange rate fluctuations and repatriation of funds;
|
•
|
potentially adverse tax consequences;
|
•
|
credit risk and higher levels of payment fraud; and
|
•
|
foreign exchange controls that might prevent us from repatriating cash earned in countries outside the United States.
|
•
|
implementing customer orders for services;
|
•
|
delivering these services; and
|
•
|
timely and accurate billing for these services.
|
•
|
announcements of technological innovations, new services or service enhancements, strategic alliances or significant agreements by us or by our competitors;
|
•
|
commencement or resolution of, our involvement in and uncertainties arising from, litigation, particularly our current litigation with Akamai and MIT;
|
•
|
changes in the estimates of our operating results or changes in recommendations by any securities analysts that elect to follow our common stock;
|
•
|
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;
|
•
|
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;
|
•
|
limit who may call special meetings of stockholders;
|
•
|
prohibit stockholder action by written consent, thereby requiring stockholder actions to be taken at a meeting of the stockholders;
|
•
|
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;
|
•
|
provide for a board of directors with staggered terms; and
|
•
|
provide that the authorized number of directors may be changed only by a resolution of our board of directors.
|
Period
|
|
Total Number of Shares Purchased
|
|
Average Price Paid Per Share (1)
|
|
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (2)
|
|
Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (2)
|
||||||
January 1, - January 31, 2015
|
|
293,300
|
|
|
$
|
2.79
|
|
|
293,300
|
|
|
$
|
9,525
|
|
February 1, - February 28, 2015
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
9,525
|
|
March 1, - March 31, 2015
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
9,525
|
|
|
|
293,300
|
|
|
$
|
2.79
|
|
|
293,300
|
|
|
|
(1)
|
Includes commissions, markups and expenses
|
(2)
|
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, in accordance with applicable securities rules regarding issuer repurchases. All repurchased shares were canceled and returned to authorized but unissued status.
|
|
|
Incorporated by Reference
|
||||
Exhibit
Number
|
Exhibit Description
|
Form
|
File No.
|
Exhibit
|
Filing
Date
|
Provided
Herewith
|
|
|
|
|
|
|
|
3.01
|
Amended and Restated Certificate of Incorporation of Limelight Networks, Inc.
|
8-K
|
001-33508
|
3.1
|
6/14/11
|
|
|
|
|
|
|
|
|
3.02
|
Second Amended and Restated Bylaws of Limelight Networks, Inc.
|
8-K
|
001-33508
|
3.2
|
2/19/13
|
|
|
|
|
|
|
|
|
10.1
|
Transition and employment agreement between the Registrant and Philip C. Maynard dated March 2, 2015
|
|
|
|
|
X
|
|
|
|
|
|
|
|
10.2
|
Employment agreement between the Registrant and Michael D. DiSanto effective April 1, 2015
|
|
|
|
|
X
|
|
|
|
|
|
|
|
31.1
|
Certification of Principal Executive Officer Pursuant to Securities Exchange Act Rule 13a-14(a).
|
|
|
|
|
X
|
|
|
|
|
|
|
|
31.2
|
Certification of Principal Financial Officer Pursuant to Securities Exchange Act Rule 13a-14(a).
|
|
|
|
|
X
|
|
|
|
|
|
|
|
32.1
|
Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350 and Securities Exchange Act Rule 13a-14(b).*
|
|
|
|
|
X
|
|
|
|
|
|
|
|
32.2
|
Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350 and Securities Exchange Act Rule 13a-14(b).*
|
|
|
|
|
X
|
|
|
|
|
|
|
|
101.INS
|
XBRL INSTANCE DOCUMENT
|
|
|
|
|
X
|
|
|
|
|
|
|
|
101.SCH
|
XBRL TAXONOMY EXTENSION SCHEMA DOCUMENT
|
|
|
|
|
X
|
|
|
|
|
|
|
|
101.CAL
|
XBRL TAXONOMY EXTENSION CALCULATION LINKBASE DOCUMENT
|
|
|
|
|
X
|
|
|
|
|
|
|
|
101.DEF
|
XBRL TAXONOMY EXTENSION DEFINITION LINKBASE DOCUMENT
|
|
|
|
|
X
|
|
|
|
|
|
|
|
101.LAB
|
XBRL TAXONOMY EXTENSION LABEL LINKBASE DOCUMENT
|
|
|
|
|
X
|
|
|
|
|
|
|
|
101.PRE
|
XBRL TAXONOMY EXTENSION PRESENTATION LINKBASE DOCUMENT
|
|
|
|
|
X
|
|
|
LIMELIGHT NETWORKS, INC.
|
|
|
|
|
|
Date:
|
May 1, 2015
|
By:
|
/
S
/ P
ETER
J. P
ERRONE
|
|
|
|
Peter J. Perrone
Senior Vice President,
Chief Financial Officer and Treasurer
(Principal Financial Officer)
|
A.
|
The Company and Executive entered into that certain Employment Agreement dated as of October 16, 2007 (the “Original Agreement”) which was subsequently amended as of December 30, 2008 (the “First Amendment”) and also amended as of November 16, 2012 (the “Second Amendment”). The term “Employment Agreement” as used herein means the Original Agreement as amended by both the First and Second Amendments and the Indemnification Agreement. Employee and the Company also entered into an At-will Employment, Confidential Information Invention Assignment and Arbitration Agreement dated as of October __, 2007, (the “Inventions Agreement”) and an Indemnification Agreement dated as of October 1, 2008, (the “Indemnity Agreement”).
|
B.
|
The Company and Executive intend that Executive’s employment with the Company will terminate without cause effective as of March 31, 2015, but Executive will remain as a service provider until December 31, 2015 reasonably available to advise and consult on legal transition matters including currently pending litigation matters as further provided in this Agreement.
|
C.
|
The Parties also intend to resolve any and all disputes, claims, complaints, grievances, charges, actions, petitions, and demands that the Executive may have against the Company, including, but not limited to, any and all claims arising out of or in any way related to Executive’s employment with or termination of his employment with the Company.
|
1.
|
Definitions
. The following terms will have the following meanings as used in this Agreement. Also, defined terms identified with an initial capital letter and not defined
|
a.
|
Transition Period
means the period beginning on the Effective Date and ending on March 31, 2015 (the “Separation Date”).
|
b.
|
Consulting Period
means the period beginning on the Separation Date and ending on December 31, 2015 (the “Consulting Expiration Date”).
|
c.
|
Equity Awards
means all stock options (“Options”) and restricted stock units (“RSUs”) granted to Executive and currently outstanding as of the Effective Date.
|
d.
|
Continued Vesting Date
means September 30, 2015.
|
2.
|
Performance of Duties During Transition Period
. During the Transition Period Executive will continue to perform all of his duties and responsibilities as Senior Vice President, Chief Legal Officer and Secretary, provided however the parties intend and expect that certain of Executive’s duties and responsibilities may be transitioned to his successor, interim successor or another person prior to the Separation Date. Executive will work diligently and in good faith to train and prepare his successor or interim successor to assume the responsibilities of Chief Legal Officer and to effect a smooth transition of his duties and responsibilities to his successor or interim successor. Executive’s employment will terminate on the Separation Date.
|
3.
|
Performance of Duties During Consulting Period
. During the Consulting Period Executive agrees, subject to his reasonable availability and upon reasonable request by the Company, to provide advice and consultation regarding the transition of legal matters pending as of the Separation Date, including pending litigation matters, and as such shall remain a service provider as defined in the Plan during the Consulting Period. The parties do not anticipate that such advisory and consulting work will exceed 100 hours during the Consulting Period. If such work exceeds 100 hours during the Consulting then Executive may invoice the Company, and Company agrees to pay Executive, for such additional work at the rate of $300 per hour. All work under this section 3 will be subject to and covered by all rights under Company insurance and to indemnification rights Executive has as of the Effective Date under the Company’s Certificate of Incorporation, Bylaws, this Agreement, or the Indemnity Agreement.
|
4.
|
Termination on the Separation Date
. On the Separation Date, subject to Section 6 (release of claims), Executive will receive: (i) unpaid Base Salary accrued through the Separation Date; (ii) benefits or compensation as provided under the terms of any executive benefit and compensation agreements or plans applicable to Executive through the effective date of termination; (iii) unreimbursed business expenses required to be reimbursed to Executive; (iv) rights to indemnification Executive may have under the Company’s Certificate of Incorporation, Bylaws, this Agreement, and/or the Indemnity Agreement,
|
5.
|
Continued Vesting of Equity Awards Through the Continued Vesting Date
. Executive’s existing Equity Awards will continue to vest in accordance with the existing vesting schedules through the Continued Vesting Date. All Equity Awards unvested as of the end of the Continued Vesting Date will be forfeited on that date. Executive will be entitled to exercise outstanding vested Options until the first to occur of: (i) December 31, 2015, (ii) the applicable scheduled expiration date of such award as set forth in the award agreement, or (iii) the ten (10) year anniversary of the award’s original date of grant. For purposes of clarity, the term “expiration date” shall be the scheduled expiration of the option agreement and not the period that Executive shall be entitled to exercise such option.
|
6.
|
Release of Claims
. The receipt of any benefits pursuant to Sections 4(v) – (vi), and 5 is subject to and conditioned upon Executive signing and not revoking a release of claims in a form reasonably acceptable to the Company (and substantially in the form attached hereto as Exhibit A) and honoring all continuing covenants in this Agreement, the Employment Agreement (including without limitation the provisions of section 9 thereof) and the Inventions Agreement. No severance or other benefits pursuant to those provisions will be paid or provided until the release of claims becomes effective.
|
7.
|
Letter of Recommendation
. If Executive continues to perform his duties in good faith and to the best of his abilities throughout the Transition Period, the Company will provide a favorable letter of recommendation for Executive if and when requested.
|
8.
|
Amendment of Employment Agreement
. This Agreement amends the Employment Agreement and supersedes the Employment Agreement to the extent provisions between the documents are inconsistent, and in particular, this Agreement supersedes the provisions of section 8 of the Employment Agreement regarding severance benefits. For the avoidance of doubt, if Executive is entitled to any benefits under this Agreement, Executive shall not be entitled to any different or additional benefits under the
|
9.
|
Integration
. This Agreement, together with the Employment Agreement, Inventions Agreement, Indemnity Agreement and the forms of equity award agreements that describe Executive’s outstanding Equity Awards, represents the entire agreement and understanding between the parties as to the subject matter herein and supersedes all prior or contemporaneous agreements whether written or oral.
|
10.
|
Notices
. Section 13 of the Employment Agreement, Notices, is amended to include the following updated address for notices to the Company:
|
1.
|
I have reviewed this quarterly report on Form 10-Q 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:
|
May 1, 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 quarterly report on Form 10-Q 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:
|
May 1, 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:
|
May 1, 2015
|
By:
|
/s/ R
OBERT
A. L
ENTO
|
|
|
Name:
|
Robert A. Lento
|
|
|
Title:
|
President, Chief Executive Officer and Director
(Principal Executive Officer)
|
Date:
|
May 1, 2015
|
By:
|
/s/ P
ETER
J. P
ERRONE
|
|
|
Name:
|
Peter J. Perrone
|
|
|
Title:
|
Senior Vice President,
Chief Financial Officer and Treasurer
(Principal Financial Officer)
|