Limelight sees record OTT traffic, offset by live-event declines

Limelight CFO Sajid Malhotra said the traffic was largely a result of over-the-top video streaming. (Getty Images)

Limelight Networks reported that its first quarter 2020 revenue was $57 million, up 32% year-over-year, setting a company record for first quarter revenue.

Limelight CEO Bob Lento said the strong demand the company saw in Q1 was partially due to business from new on-demand OTT offerings, including NBC's Peacock service, which has been launched to some Comcast subscribers.

RELATED: NBCU readies Peacock preview launch despite COVID-19 impact

In addition, due to the coronavirus situation, the company saw record traffic levels that were 30% greater on a year-over-year basis, starting in the last two weeks of March and continuing to the present. 

Limelight CFO Sajid Malhotra said the traffic was largely a result of over-the-top (OTT) video streaming.

“On the flip side, we also have many customers in industries such as broadcasting of live sporting events and betting or travel sites, who have been adversely impacted,” said Malhotra, according to a Seeking Alpha transcript.

“As the world started to shut down, we saw two things,” said Lento. “One obviously traffic -- live events go to zero. Any one live event, even one as large as the Super Bowl, isn't really material enough to affect any one quarter's results. But when you add up a string of those throughout a quarter, because we stream live events almost on a daily basis somewhere in the world, it's pretty material.”

But at the same time, Lento said the video-on-demand side of Limelight’s business went up in a pretty material way. That traffic was more steady throughout the day than prior to the pandemic. “We saw more traffic in off-peak hours than we would normally see. The peak was still up, but you saw more underneath that peak than you normally would.”

The executives made a point that all the changes in network traffic were seen in only two or three weeks of a 13-week quarter. 

“Despite our strong overall performance in the first quarter there is significant uncertainty from a macroeconomic perspective, said Malhotra.

The company’s CapEx for 2019 was close to $35 million. And for 2020, it’s sticking with its plan to invest between $25 million and $30 million in CapEx.

“To ensure we can meet the expected growth of online traffic, we are actively pursuing our aggressive network capacity expansion plan for 2020 that includes increasing capacity in existing PoPs and building new PoPs in new geographies that are important to our customers,” said Lento.

Limelight technology

During the first quarter, Limelight finalized a new service called Live Push Ingest, which allows content providers to push live streaming video content to Limelight for distribution across its CDN. The product is designed to help customers simplify their video workflows, reduce egress costs and scale up to meet the needs of the largest live streaming events without overloading their origin servers.

Limelight has also been beta-testing its new serverless compute capabilities, known as EdgeFunctions. The offering will allow customers to deploy their own application functions into Limelight’s network edge locations and run them on-demand. “Its functions will have use cases specifically aimed at supporting the requirements of our video delivery customers, and it is generating a tremendous amount of customer interest,” said Lento. The company expects to launch EdgeFunctions commercially in the second quarter.