Limelight Networks narrows losses in third quarter, sees good Q4

Limelight Networks says it’s continuing to face higher than normal churn among some of its smaller customers as the tough economy continues to take its toll on the content delivery market, but CEO Jeff Lunsford told analysts the third quarter also brought Limelight “a nice increase in the annual contract value from quarter-to-quarter so we felt like from the forward looking indicator, bookings, were positive.”

Limelight reported a third quarter loss of $5.2 million, or six cents per share, narrowing its losses from last year’s third quarter when the content delivery networks company was in the red $15.4 million or 18 cents per share. Even with a net loss, Limelight topped analysts’ estimates for the quarter.  Limelight said revenue for the quarter of $32.5 million was off slightly from the same period last year when it brought in $33.1 million. The Tempe, Ariz.-based company is projecting revenue to be slightly up in the fourth quarter, in the range of $32.5 million to $34 million.

The third-quarter saw Limelight launch its new LimelightREACH and LimelightADS services, both of which are designed to help monetize Internet content, as well as its next-gen XD Platform.

Speaking to analysts during a conference call yesterday afternoon, Lunsford said the company had grown its customer base to 1,307, had signed contracts with more than 100 new customers in the quarter and was continuing to work to rid itself of “less attractive ones.”

The third quarter also saw a rise in average traffic, but was strained by continuing price declines for CDN services of  30 percent to 35 percent. Lunsford said he expected the price declines to moderate through 2010 to more historic levels of 20 percent to 25 percent year-over-year.

More problematic was an anticipated reduction in Limelight’s revenue stream from Microsoft--its largest customer, making up about 15 percent of Limelight’s quarterly revenue--over the next couple of years as Microsoft continued to migrate to its own CDN. Limelight, Lunsford said is “going to do anything we can to continue to be primary service provider to them for the traffic that they do not deliver over their own CDN.”

On the new technology front, Limelight has seen between five and 10 customers beta testing its XD Platform, an “adaptive intelligence” technology the company hopes will help it maintain its growth and give it an edge in its battle with chief rival Akamai for dominance in the $1.4 billion CDN market.

“With our recently announced XD Platform and the mobility and monetization solutions we released during the quarter, we are positioning Limelight Networks to be a core provider of cloud-based services" Lunsford said.

For more:
- see this press release

Related articles:
Is Limelight's XD Platform a game changer? 
Limelight 1Q revenue up 10% over 2008

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