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Edgio Reports Second Quarter 2023 Results

With 10-Q filed, Company regains compliance with applicable Nasdaq Listing Rules

Q2 2023 revenue of $95.8 million, 51% year over year growth

Applications bookings QTD in 3Q 2023 already ahead of 2Q 2023 levels and more than double from 1Q 2023 bookings

YTD 2023 Capital expenditure, net of payments from ISPs, was $2.6 million or 1.3% of revenue

Edgio, Inc. (Nasdaq: EGIO) (Edgio), the platform of choice to power unmatched speed, security and simplicity at the edge, today reported financial results for the second quarter ended June 30, 2023 along with the filing of its Quarterly Report on Form 10-Q for the period ended June 30, 2023. With this filing, the Company is now compliant with the periodic reporting requirements for continued listing under Nasdaq Listing Rule 5250(c)(1) (the “Listing Rule”).

“We had a stronger than expected second quarter with better financial performance and significant improvements in leading indicators. Our transformation is on track and we expect second quarter revenue to be the low point for the year as revitalized sales and commercial motions are reducing churn, driving new product adoption, and increasing conversion of our growing pipeline," said Bob Lyons, President and CEO of Edgio. “Driven by sustained revenue growth, gross margin expansion and cost savings, we expect to deliver substantial year over year improvements in Adjusted EBITDA and free cash flow in 2024.”

Recent Business Highlights:

  • QTD Applications bookings already ahead of second quarter levels with new client wins and existing client expansion
  • QTD Applications bookings more than doubled from bookings in 1Q 2023
  • Customer churn was 1% in the second quarter versus 4% in 4Q22 and logo churn declined 40% in the same period
  • Continued new product momentum with API Security solution in General Availability
  • Awarded “Competitive Strategy Leadership Award” by Frost & Sullivan
  • On track to operationalize approximately $85-90 million of expected run rate cost savings, by end of 2023 and forecasted higher by end of 2024
  • Bolstered leadership team with the appointment of Todd Hinders as Chief Revenue Officer
  • Notable wins for Applications include a 15,000 employee safety & security solutions company in Europe, a leading Asian webtoon company, a leading global consumer brand and an IR500 domestic pet supplies retailer.
  • Achieved Amazon Web Services (AWS) Retail Competency designation with Edgio’s Applications Platform and Uplynk now available in AWS Marketplace.

Second Quarter Financial highlights:

Revenue

  • Revenue of $95.8 million, 51% year over year growth due to the inclusion of the Edgecast acquisition. Sequential decline of 6.1% was driven by normal summer seasonality and previously communicated churn and elongated booking cycle.

Gross margin

  • GAAP gross margin was 26.4%, compared to 28.4% year over year and 30.4% quarter over quarter.
  • Non-GAAP gross margin was 26.9%, compared to 29.1% year over year and 31.2% quarter over quarter.
  • Cash gross margin was 30.8%, compared to 39.7% year over year and 34.7% quarter over quarter. Cash gross margin was impacted by the seasonal decline in traffic consistent with having a high fixed cost structure, partially offset by savings from previously announced cost containment efforts.

Operating expenses

  • GAAP operating expenses, including share-based compensation of $3.4 million, restructuring charges of $3.3 million to achieve cost synergies, restatement related expenses of $2.6 million, and acquisition and legal related expenses of $1.0 million, were 61% of revenue versus 62.4% in the first quarter of 2023.
  • Non-GAAP operating expenses, excluding share-based compensation, restructuring charges, restatement related expenses, and acquisition and legal related expenses, were 50.7% of revenue versus 54.3% in the first quarter of 2023.
  • Cash operating expenses, excluding share-based compensation, restructuring charges, restatement related expenses, and acquisition and legal related expenses, depreciation and amortization were 44.8% of revenue versus 48.8% in the first quarter of 2023. Sequential decline in cash operating expenses was primarily due to realization of cost savings from previously announced cost containment efforts.

Adjusted EBITDA

  • Adjusted EBITDA for the quarter was a loss of $13.4 million, compared to a loss of $14.4 million in the first quarter of 2023 due to lower gross profit partially offset by realization of cost savings.

Capital Expenditure

  • Year-to-date capital expenditure, net of payments from ISPs, was $2.6 million or 1.3% of revenue.
  • We expect to continue to be efficient with our capital expenditure as a result of stronger operational discipline, leveraging our excess capacity and due to higher revenue contribution from software solutions that have lower capital requirements.

Cash, Cash Equivalents, and Marketable Securities

  • Cash, cash equivalents, and marketable securities were $36.2 million for the quarter, compared to $48.2 million for the first quarter of 2023.
  • Cash flow used in operations during the quarter was $12.4 million.

2023 Guidance:

"Our second quarter performance and early signs of positive momentum in leading indicators demonstrates our strategy and execution are on track. We are focused on growing the business with the right economic model and get it to a sustainable trajectory soon,” said Stephen Cumming, CFO, “We expect sequential revenue growth for the rest of the year, with associated improvements in cash gross margins. Combined with a meaningful step down in our operating expense structure, we reiterate our expectation for Adjusted EBITDA break even in the fourth quarter.”

For 2023, our guidance is unchanged and we are currently expecting:

  • Revenue between $392 million and $398 million.
  • Adjusted EBITDA range of negative $37 million to negative $31 million, implying Adjusted EBITDA margin between negative 9.5% and negative 8%.
  • Capital expenditure between $10 million and $13 million, implying 2.5% and 3.5% of revenue.

Financial Tables

Edgio, Inc.

Consolidated Balance Sheets

(In thousands, except per share data)

 

 

June 30,

2023

 

March 31,

2023

 

December 31,

2022

 

(Unaudited)

 

(Unaudited)

 

 

ASSETS

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

$

36,188

 

 

$

32,787

 

 

$

55,275

 

Marketable securities

 

 

 

 

15,396

 

 

 

18,734

 

Accounts receivable, net

 

63,563

 

 

 

82,461

 

 

 

84,627

 

Income taxes receivable

 

155

 

 

 

373

 

 

 

105

 

Prepaid expenses and other current assets

 

36,778

 

 

 

36,987

 

 

 

36,374

 

Total current assets

 

136,684

 

 

 

168,004

 

 

 

195,115

 

Property and equipment, net

 

73,667

 

 

 

72,976

 

 

 

73,467

 

Operating lease right of use assets

 

4,816

 

 

 

5,053

 

 

 

5,290

 

Deferred income taxes

 

2,925

 

 

 

2,388

 

 

 

2,338

 

Goodwill

 

168,775

 

 

 

168,961

 

 

 

169,156

 

Intangible assets, net

 

80,948

 

 

 

86,348

 

 

 

91,661

 

Other assets

 

2,582

 

 

 

2,586

 

 

 

5,353

 

Total assets

$

470,397

 

 

$

506,316

 

 

$

542,380

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Accounts payable

$

63,799

 

 

$

48,312

 

 

$

52,776

 

Deferred revenue

 

10,132

 

 

 

10,500

 

 

 

9,286

 

Operating lease liability obligations

 

3,621

 

 

 

4,483

 

 

 

4,557

 

Income taxes payable

 

3,155

 

 

 

3,286

 

 

 

3,133

 

Financing obligations

 

8,944

 

 

 

6,839

 

 

 

6,346

 

Other current liabilities

 

55,271

 

 

 

76,947

 

 

 

76,160

 

Total current liabilities

 

144,922

 

 

 

150,367

 

 

 

152,258

 

Convertible senior notes, net

 

123,070

 

 

 

122,849

 

 

 

122,631

 

Operating lease liability obligations, less current portion

 

7,730

 

 

 

8,066

 

 

 

9,181

 

Deferred income taxes

 

1,431

 

 

 

602

 

 

 

596

 

Deferred revenue, less current portion

 

2,247

 

 

 

2,333

 

 

 

2,949

 

Financing obligations, less current portion

 

14,208

 

 

 

12,738

 

 

 

13,784

 

Other long-term liabilities

 

858

 

 

 

721

 

 

 

1,658

 

Total liabilities

 

294,466

 

 

 

297,676

 

 

 

303,057

 

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; 223,380, 222,702, and 222,232 shares issued and outstanding as of June 30, 2023, March 31, 2023, and December 31, 2022, respectively

 

223

 

 

 

223

 

 

 

222

 

Common stock contingent consideration

 

16,300

 

 

 

16,300

 

 

 

16,300

 

Additional paid-in capital

 

814,405

 

 

 

811,571

 

 

 

807,507

 

Accumulated other comprehensive loss

 

(11,321

)

 

 

(11,430

)

 

 

(11,665

)

Accumulated deficit

 

(643,676

)

 

 

(608,024

)

 

 

(573,041

)

Total stockholders’ equity

 

175,931

 

 

 

208,640

 

 

 

239,323

 

Total liabilities and stockholders’ equity

$

470,397

 

 

$

506,316

 

 

$

542,380

 

Edgio, Inc.

Consolidated Statements of Operations

(In thousands, except per share data)

(Unaudited)

 

 

 

 

 

 

 

Three Months Ended

 

Six Months Ended

 

 

June 30,

 

March 31,

 

Percent

 

June 30,

 

Percent

 

June 30,

 

June 30,

 

Percent

 

 

 

2023

 

 

 

2023

 

 

Change

 

 

2022

 

 

Change

 

 

2023

 

 

 

2022

 

 

Change

Revenue

$

95,765

 

 

$

101,948

 

 

(6

)%

 

$

63,586

 

 

51

%

 

$

197,713

 

 

$

118,925

 

 

66

%

Cost of revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of services (1)

 

66,742

 

 

 

67,353

 

 

(1

)%

 

 

38,718

 

 

72

%

 

 

134,095

 

 

 

71,391

 

 

88

%

Depreciation — network

 

3,788

 

 

 

3,610

 

 

5

%

 

 

6,791

 

 

(44

)%

 

 

7,398

 

 

 

12,639

 

 

(41

)%

Total cost of revenue

 

70,530

 

 

 

70,963

 

 

(1

)%

 

 

45,509

 

 

55

%

 

 

141,493

 

 

 

84,030

 

 

68

%

Gross profit

 

25,235

 

 

 

30,985

 

 

(19

)%

 

 

18,077

 

 

40

%

 

 

56,220

 

 

 

34,895

 

 

61

%

Gross profit percentage

 

26.4

%

 

 

30.4

%

 

 

 

 

28.4

%

 

 

 

 

28.4

%

 

 

29.3

%

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

General and administrative (1)

 

14,480

 

 

 

16,836

 

 

(14

)%

 

 

26,812

 

 

(46

)%

 

 

31,316

 

 

 

42,645

 

 

(27

)%

Sales and marketing (1)

 

16,167

 

 

 

19,622

 

 

(18

)%

 

 

10,834

 

 

49

%

 

 

35,789

 

 

 

18,461

 

 

94

%

Research and development (1)

 

18,739

 

 

 

21,016

 

 

(11

)%

 

 

12,171

 

 

54

%

 

 

39,755

 

 

 

21,749

 

 

83

%

Depreciation and amortization

 

5,692

 

 

 

5,607

 

 

2

%

 

 

1,508

 

 

277

%

 

 

11,299

 

 

 

2,540

 

 

345

%

Restructuring charges

 

3,336

 

 

 

500

 

 

567

%

 

 

4,368

 

 

(24

)%

 

 

3,836

 

 

 

5,066

 

 

(24

)%

Total operating expenses

 

58,414

 

 

 

63,581

 

 

(8

)%

 

 

55,693

 

 

5

%

 

 

121,995

 

 

 

90,461

 

 

35

%

Operating loss

 

(33,179

)

 

 

(32,596

)

 

NM

 

 

 

(37,616

)

 

NM

 

 

 

(65,775

)

 

 

(55,566

)

 

NM

 

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

(1,701

)

 

 

(1,577

)

 

NM

 

 

 

(1,458

)

 

NM

 

 

 

(3,278

)

 

 

(2,888

)

 

NM

 

Interest income

 

152

 

 

 

397

 

 

NM

 

 

 

33

 

 

NM

 

 

 

549

 

 

 

60

 

 

NM

 

Other, net

 

(545

)

 

 

(809

)

 

NM

 

 

 

(1,146

)

 

NM

 

 

 

(1,354

)

 

 

(1,859

)

 

NM

 

Total other expense

 

(2,094

)

 

 

(1,989

)

 

NM

 

 

 

(2,571

)

 

NM

 

 

 

(4,083

)

 

 

(4,687

)

 

NM

 

Loss before income taxes

 

(35,273

)

 

 

(34,585

)

 

NM

 

 

 

(40,187

)

 

NM

 

 

 

(69,858

)

 

 

(60,253

)

 

NM

 

Income tax (benefit) expense

 

379

 

 

 

398

 

 

NM

 

 

 

(19,589

)

 

NM

 

 

 

777

 

 

 

(19,383

)

 

NM

 

Net loss

 

(35,652

)

 

 

(34,983

)

 

NM

 

 

 

(20,598

)

 

NM

 

 

 

(70,635

)

 

 

(40,870

)

 

NM

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

$

(0.16

)

 

$

(0.16

)

 

 

 

$

(0.14

)

 

 

 

$

(0.32

)

 

$

(0.28

)

 

 

Diluted

$

(0.16

)

 

$

(0.16

)

 

 

 

$

(0.14

)

 

 

 

$

(0.32

)

 

$

(0.28

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average shares used in per share calculation:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

222,914

 

 

 

222,462

 

 

 

 

 

151,776

 

 

 

 

 

222,688

 

 

 

143,652

 

 

 

Diluted

 

222,914

 

 

 

222,462

 

 

 

 

 

151,776

 

 

 

 

 

222,688

 

 

 

143,652

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Includes share-based compensation and acquisition and legal related charges (see supplemental table for figures)

Edgio, Inc.

Supplemental Financial Data

(In thousands)

(Unaudited)

 

 

 

 

 

 

 

Three Months Ended

 

Six Months Ended

 

 

June 30.

 

March 31,

 

June 30,

 

June 30.

 

June 30.

 

2023

 

2023

 

2022

 

2023

 

2022

Share-based compensation:

 

 

 

 

 

 

 

 

 

Cost of services

$

321

 

$

679

 

$

326

 

$

1,000

 

$

734

General and administrative

 

1,151

 

 

1,416

 

 

2,166

 

 

2,567

 

 

4,269

Sales and marketing

 

375

 

 

617

 

 

1,376

 

 

992

 

 

2,557

Research and development

 

1,512

 

 

2,488

 

 

3,423

 

 

4,000

 

 

6,743

Total share-based compensation

$

3,359

 

$

5,200

 

$

7,291

 

$

8,559

 

$

14,303

 

 

 

 

 

 

 

 

 

 

Acquisition and legal related charges:

 

 

 

 

 

 

 

 

 

Cost of services

$

182

 

$

111

 

$

70

 

$

293

 

$

70

General and administrative

 

261

 

 

589

 

 

14,522

 

 

850

 

 

19,629

Sales and marketing

 

49

 

 

42

 

 

 

 

91

 

 

Research and development

 

549

 

 

410

 

 

22

 

 

959

 

 

22

Total acquisition and legal related charges

$

1,041

 

$

1,152

 

$

14,614

 

$

2,193

 

$

19,721

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization:

 

 

 

 

 

 

 

 

 

Network-related depreciation

$

3,788

 

$

3,610

 

$

6,791

 

$

7,398

 

$

12,639

Other depreciation and amortization

 

292

 

 

294

 

 

336

 

 

586

 

 

582

Amortization of intangible assets

 

5,400

 

 

5,313

 

 

1,172

 

 

10,713

 

 

1,958

Total depreciation and amortization

$

9,480

 

$

9,217

 

$

8,299

 

$

18,697

 

$

15,179

 

 

 

 

 

 

 

 

 

 

End of period statistics:

 

 

 

 

 

 

 

 

 

Approximate number of active clients

 

888

 

 

900

 

 

1,000

 

 

888

 

 

1,000

 

 

 

 

 

 

 

 

 

 

Number of employees and employee equivalents

 

862

 

 

982

 

 

1,098

 

 

862

 

 

1,098

Use of Non-GAAP Financial Measures

To evaluate our business, we consider and use non-generally accepted accounting principles (“Non-GAAP”) net loss, EBITDA, and Adjusted EBITDA as supplemental measures of operating performance. These measures include the same adjustments that our management takes into account when it reviews and assesses operating performance on a period-to-period basis. We consider Non-GAAP net loss to be an important indicator of our overall business performance. We define Non-GAAP net loss to be U.S. GAAP net loss, adjusted to exclude share-based compensation, non-cash interest expense, restructuring charges, acquisition and legal related expenses, amortization of intangible assets, and restatement related expenses. We believe that EBITDA provides a useful metric to investors to compare us with other companies within our industry and across industries. We define EBITDA as U.S. GAAP net loss, adjusted to exclude interest expense, interest and other (income) expense, income tax expense, and depreciation and amortization. We define Adjusted EBITDA as EBITDA adjusted to exclude share-based compensation, restructuring charges, acquisition and legal related expenses, and restatement related expenses. We use Adjusted EBITDA as a supplemental measure to review and assess operating performance. Our management uses these Non-GAAP financial measures because, collectively, they provide valuable information on the performance of our on-going operations, and they also enable us to compare against our peer companies and against other companies in our industry and adjacent industries. We believe these measures also provide similar insights to investors, and enable investors to review our results of operations “through the eyes of management.”

Furthermore, our management uses these Non-GAAP financial measures to assist them in making decisions regarding our strategic priorities and areas for future investment and focus. The terms Non-GAAP net loss, EBITDA, and Adjusted EBITDA are not defined under U.S. GAAP, and are not measures of operating income, operating performance or liquidity presented in accordance with U.S. GAAP. Our Non-GAAP net loss, EBITDA, and Adjusted EBITDA have limitations as analytical tools, and when assessing our operating performance, Non-GAAP net loss, EBITDA, and Adjusted EBITDA should not be considered in isolation, or as a substitute for net income (loss) or other consolidated income statement data prepared in accordance with U.S. GAAP. Some of these limitations include, but are not limited to:

  • Non-GAAP net loss, EBITDA, and Adjusted EBITDA do not reflect our cash expenditures or future requirements for capital expenditures or contractual commitments;
  • These measures do not reflect changes in, or cash requirements for, our working capital needs;
  • Non-GAAP net loss, EBITDA, and Adjusted EBITDA do not reflect the cash requirements necessary for litigation costs, including provision for litigation and litigation expenses;
  • These measures do not reflect the interest expense, or the cash requirements necessary to service interest or principal payments, on our debt;
  • These measures 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 Non-GAAP net loss, EBITDA, and Adjusted EBITDA differently than we do, limiting their usefulness as comparative measures.

We compensate for these limitations by relying primarily on our U.S. GAAP financial results and using Non-GAAP net loss, EBITDA, and Adjusted EBITDA only as supplemental support for management’s analysis of business performance. Non-GAAP net loss, EBITDA, and Adjusted EBITDA are calculated as follows for the periods presented in thousands.

Reconciliation of Non-GAAP Financial Measures

In accordance with the requirements of Item 10(e) of Regulation S-K, we are presenting the most directly comparable U.S. GAAP financial measures and reconciling the unaudited Non-GAAP financial metrics to the comparable U.S. GAAP measures. Per share amounts may not foot due to rounding.

Forward-looking non-GAAP financial measures are presented without reconciliations of such forward-looking non-GAAP measures because the GAAP financial measures are not accessible on a forward-looking basis and reconciling information is not available without unreasonable effort due to the inherent difficulty in forecasting and quantifying certain amounts that are necessary for such reconciliations, including adjustments reflected in our reconciliation of historic non-GAAP financial measures, the amounts of which, based on historical experience, could be material.

Edgio, Inc.

Reconciliation of U.S. GAAP Net Loss to Non-GAAP Net Loss

(In thousands)

(Unaudited)

 

 

 

 

 

 

 

Three Months Ended

 

Six Months Ended

 

 

June 30, 2023

 

March 31, 2023

 

June 30, 2022

 

June 30, 2023

 

June 30, 2022

 

 

Amount

 

Per

Share

 

Amount

 

Per

Share

 

Amount

 

Per

Share

 

Amount

 

Per

Share

 

Amount

 

Per

Share

U.S. GAAP net loss

$

(35,652

)

 

$

(0.16

)

 

$

(34,983

)

 

$

(0.16

)

 

$

(20,598

)

 

$

(0.14

)

 

$

(70,635

)

 

$

(0.32

)

 

$

(40,870

)

 

$

(0.28

)

Share-based compensation

 

3,359

 

 

 

0.02

 

 

 

5,200

 

 

 

0.02

 

 

 

7,291

 

 

 

0.05

 

 

 

8,559

 

 

 

0.04

 

 

 

14,303

 

 

 

0.10

 

Non-cash interest expense

 

220

 

 

 

 

 

 

218

 

 

 

 

 

 

211

 

 

 

 

 

 

438

 

 

 

 

 

 

420

 

 

 

 

Restructuring charges

 

3,336

 

 

 

0.01

 

 

 

500

 

 

 

 

 

 

4,368

 

 

 

0.03

 

 

 

3,836

 

 

 

0.02

 

 

 

5,066

 

 

 

0.04

 

Acquisition and legal related expenses

 

1,041

 

 

 

 

 

 

1,152

 

 

 

0.01

 

 

 

14,614

 

 

 

0.10

 

 

 

2,193

 

 

 

0.01

 

 

 

19,721

 

 

 

0.14

 

Amortization of intangible assets

 

5,400

 

 

 

0.02

 

 

 

5,313

 

 

 

0.02

 

 

 

1,172

 

 

 

0.01

 

 

 

10,713

 

 

 

0.05

 

 

 

1,958

 

 

 

0.01

 

Restatement related expenses

 

2,588

 

 

 

0.01

 

 

 

2,175

 

 

 

0.01

 

 

 

 

 

 

 

 

 

4,763

 

 

 

0.02

 

 

 

 

 

 

 

Non-GAAP net loss

$

(19,708

)

 

$

(0.09

)

 

$

(20,425

)

 

$

(0.09

)

 

$

7,058

 

 

$

0.05

 

 

$

(40,133

)

 

$

(0.18

)

 

$

598

 

 

$

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average shares used in per share calculation:

 

 

 

222,914

 

 

 

 

 

222,462

 

 

 

 

 

151,776

 

 

 

 

 

222,688

 

 

 

 

 

143,652

 

Edgio, Inc.

Reconciliation of U.S. GAAP Net Loss to EBITDA to Adjusted EBITDA

(In thousands)

(Unaudited)

 

 

 

 

 

 

 

Three Months Ended

 

Six Months Ended

 

 

June 30,

 

March 31,

 

June 30,

 

June 30,

 

June 30,

 

 

2023

 

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

U.S. GAAP net loss

$

(35,652

)

 

$

(34,983

)

 

$

(20,598

)

 

$

(70,635

)

 

$

(40,870

)

Depreciation and amortization

 

9,480

 

 

 

9,217

 

 

 

8,299

 

 

 

18,697

 

 

 

15,179

 

Interest expense

 

1,701

 

 

 

1,577

 

 

 

1,458

 

 

 

3,278

 

 

 

2,888

 

Interest and other (income) expense

 

393

 

 

 

412

 

 

 

1,113

 

 

 

805

 

 

 

1,799

 

Income tax expense (benefit)

 

379

 

 

 

398

 

 

 

(19,589

)

 

 

777

 

 

 

(19,383

)

EBITDA

$

(23,699

)

 

$

(23,379

)

 

$

(29,317

)

 

$

(47,078

)

 

$

(40,387

)

Share-based compensation

 

3,359

 

 

 

5,200

 

 

 

7,291

 

 

 

8,559

 

 

 

14,303

 

Restructuring charges

 

3,336

 

 

 

500

 

 

 

4,368

 

 

 

3,836

 

 

 

5,066

 

Acquisition and legal related expenses

 

1,041

 

 

 

1,152

 

 

 

14,614

 

 

 

2,193

 

 

 

19,721

 

Restatement related expenses

 

2,588

 

 

 

2,175

 

 

 

 

 

 

4,763

 

 

 

 

Adjusted EBITDA

$

(13,375

)

 

$

(14,352

)

 

$

(3,044

)

 

$

(27,727

)

 

$

(1,297

)

Edgio, Inc.

Reconciliation of U.S. GAAP Financial Measures to Non-GAAP Financial Measures

(In thousands)

(Unaudited)

 

 

 

 

 

 

 

Three Months Ended

 

Six Months Ended

 

 

June 30,

2023

 

March 31,

2023

 

June 30,

2022

 

June 30,

2023

 

June 30,

2022

GAAP gross profit

$

25,235

 

 

$

30,985

 

 

$

18,077

 

 

$

56,220

 

 

$

34,895

 

Share-based compensation

 

321

 

 

 

679

 

 

 

326

 

 

 

1,000

 

 

 

734

 

Acquisition and legal related charges

 

182

 

 

 

111

 

 

 

70

 

 

 

293

 

 

 

70

 

Non-GAAP gross profit

$

25,738

 

 

$

31,775

 

 

$

18,473

 

 

$

57,513

 

 

$

35,699

 

Non-GAAP gross margin

 

26.9

%

 

 

31.2

%

 

 

29.1

%

 

 

29.1

%

 

 

30.0

%

 

 

 

 

 

 

 

 

 

 

GAAP general and administrative expense

$

14,480

 

 

$

16,836

 

 

$

26,812

 

 

$

31,316

 

 

$

42,645

 

Share-based compensation

 

1,151

 

 

 

1,416

 

 

 

2,166

 

 

 

2,567

 

 

 

4,269

 

Acquisition and legal related charges

 

261

 

 

 

589

 

 

 

14,522

 

 

 

850

 

 

 

19,629

 

Restatement related expenses

 

2,588

 

 

 

2,175

 

 

 

 

 

 

4,763

 

 

 

 

Non-GAAP general and administrative expense

$

10,480

 

 

$

12,656

 

 

$

10,124

 

 

$

23,136

 

 

$

18,747

 

 

 

 

 

 

 

 

 

 

 

GAAP sales and marketing expense

$

16,167

 

 

$

19,622

 

 

$

10,834

 

 

$

35,789

 

 

$

18,461

 

Share-based compensation

 

375

 

 

 

617

 

 

 

1,376

 

 

 

992

 

 

 

2,557

 

Acquisition and legal related charges

 

49

 

 

 

42

 

 

 

 

 

 

91

 

 

 

 

Non-GAAP sales and marketing expense

$

15,743

 

 

$

18,963

 

 

$

9,458

 

 

$

34,706

 

 

$

15,904

 

 

 

 

 

 

 

 

 

 

 

GAAP research and development expense

$

18,739

 

 

$

21,016

 

 

$

12,171

 

 

$

39,755

 

 

$

21,749

 

Share-based compensation

 

1,512

 

 

 

2,488

 

 

 

3,423

 

 

 

4,000

 

 

 

6,743

 

Acquisition and legal related charges

 

549

 

 

 

410

 

 

 

22

 

 

 

959

 

 

 

22

 

Non-GAAP research and development expense

$

16,678

 

 

$

18,118

 

 

$

8,726

 

 

$

34,796

 

 

$

14,984

 

 

 

 

 

 

 

 

 

 

 

GAAP depreciation and amortization

$

5,692

 

 

$

5,607

 

 

$

1,508

 

 

$

11,299

 

 

$

2,540

 

Amortization of intangibles

 

(5,400

)

 

 

(5,313

)

 

 

(1,172

)

 

 

(10,713

)

 

 

(1,958

)

Non-GAAP depreciation and amortization

$

292

 

 

$

294

 

 

$

336

 

 

$

586

 

 

$

582

 

 

 

 

 

 

 

 

 

 

 

GAAP operating loss

$

(33,179

)

 

$

(32,596

)

 

$

(37,616

)

 

$

(65,775

)

 

$

(55,566

)

Share-based compensation

 

3,359

 

 

 

5,200

 

 

 

7,291

 

 

 

8,559

 

 

 

14,303

 

Amortization of intangibles

 

5,400

 

 

 

5,313

 

 

 

1,172

 

 

 

10,713

 

 

 

1,958

 

Restatement related expenses

 

2,588

 

 

 

2,175

 

 

 

 

 

 

4,763

 

 

 

 

Acquisition and legal related charges

 

1,041

 

 

 

1,152

 

 

 

14,614

 

 

 

2,193

 

 

 

19,721

 

Restructuring charges

 

3,336

 

 

 

500

 

 

 

4,368

 

 

 

3,836

 

 

 

5,066

 

Non-GAAP operating loss

$

(17,455

)

 

$

(18,256

)

 

$

(10,171

)

 

$

(35,711

)

 

$

(14,518

)

 

 

 

 

 

 

 

 

 

 

GAAP pre-tax loss

$

(35,273

)

 

$

(34,585

)

 

$

(40,187

)

 

$

(69,858

)

 

$

(60,253

)

Share-based compensation

 

3,359

 

 

 

5,200

 

 

 

7,291

 

 

 

8,559

 

 

 

14,303

 

Amortization of intangibles

 

5,400

 

 

 

5,313

 

 

 

1,172

 

 

 

10,713

 

 

 

1,958

 

Acquisition and legal related charges

 

1,041

 

 

 

1,152

 

 

 

14,614

 

 

 

2,193

 

 

 

19,721

 

Restructuring charges

 

3,336

 

 

 

500

 

 

 

4,368

 

 

 

3,836

 

 

 

5,066

 

Non-cash interest expense

 

220

 

 

 

218

 

 

 

211

 

 

 

438

 

 

 

420

 

Restatement related expenses

 

2,588

 

 

 

2,175

 

 

 

 

 

 

4,763

 

 

 

 

Non-GAAP pre-tax loss

$

(19,329

)

 

$

(20,027

)

 

$

(12,531

)

 

$

(39,356

)

 

$

(18,785

)

 

 

 

 

 

 

 

 

 

 

GAAP net loss

$

(35,652

)

 

$

(34,983

)

 

$

(20,598

)

 

$

(70,635

)

 

$

(40,870

)

Share-based compensation

 

3,359

 

 

 

5,200

 

 

 

7,291

 

 

 

8,559

 

 

 

14,303

 

Amortization of intangibles

 

5,400

 

 

 

5,313

 

 

 

1,172

 

 

 

10,713

 

 

 

1,958

 

Acquisition and legal related charges

 

1,041

 

 

 

1,152

 

 

 

14,614

 

 

 

2,193

 

 

 

19,721

 

Restructuring charges

 

3,336

 

 

 

500

 

 

 

4,368

 

 

 

3,836

 

 

 

5,066

 

Non-cash interest expense

 

220

 

 

 

218

 

 

 

211

 

 

 

438

 

 

 

420

 

Restatement related expenses

 

2,588

 

 

 

2,175

 

 

 

 

 

 

4,763

 

 

 

 

Non-GAAP net (loss) income

$

(19,708

)

 

$

(20,425

)

 

$

7,058

 

 

$

(40,133

)

 

$

598

 

Non-GAAP fully weighted-average basic shares

 

222,914

 

 

 

222,462

 

 

 

151,776

 

 

 

222,688

 

 

 

143,652

 

Non-GAAP fully weighted-average diluted shares

 

222,914

 

 

 

222,462

 

 

 

151,776

 

 

 

222,688

 

 

 

143,652

 

Non-GAAP net (loss) income per Non-GAAP basic share

$

(0.09

)

 

$

(0.09

)

 

$

0.05

 

 

$

(0.18

)

 

$

 

Non-GAAP net (loss) income per Non-GAAP diluted share

$

(0.09

)

 

$

(0.09

)

 

$

0.05

 

 

$

(0.18

)

 

$

 

Edgio, Inc.

Reconciliation of U.S. GAAP Gross Profit to U.S. Non-GAAP Gross Profit to Cash Gross Profit

(In thousands)

(Unaudited)

 

 

 

 

 

 

 

Three Months Ended

 

Six Months Ended

 

 

June 30,

2023

 

March 31,

2023

 

June 30,

2022

 

June 30,

2023

 

June 30,

2022

GAAP gross profit

$

25,235

 

 

$

30,985

 

 

$

18,077

 

 

$

56,220

 

 

$

34,895

 

Share-based compensation expense

 

321

 

 

 

679

 

 

 

326

 

 

 

1,000

 

 

 

734

 

Acquisition and legal related charges

 

182

 

 

 

111

 

 

 

70

 

 

 

293

 

 

 

70

 

Non-GAAP gross profit

 

25,738

 

 

 

31,775

 

 

 

18,473

 

 

 

57,513

 

 

 

35,699

 

Non-GAAP gross margin

 

26.9

%

 

 

31.2

%

 

 

29.1

%

 

 

29.1

%

 

 

30.0

%

 

 

 

 

 

 

 

 

 

 

Depreciation

 

3,788

 

 

 

3,610

 

 

 

6,791

 

 

 

7,398

 

 

 

12,639

 

Cash gross profit

$

29,526

 

 

$

35,385

 

 

$

25,264

 

 

$

64,911

 

 

$

48,338

 

Cash gross margin

 

30.8

%

 

 

34.7

%

 

 

39.7

%

 

 

32.8

%

 

 

40.6

%

Conference Call

At approximately 4:30 p.m. EDT (1:30 p.m. PDT) today, management will host a quarterly conference call for investors. Interested parties can access the call by dialing (800) 715-9871 from the United States or (646) 307-1963 internationally, with access code 7179917. The conference call will also be audio cast live from www.edg.io and a replay will be available following the call from the Edgio website.

Forward-Looking Statements

This press release contains forward-looking statements that involve risks and uncertainties. These statements include, among others, statements regarding our expectations regarding revenue, gross margin, non-GAAP net loss, EBITDA, Adjusted EBITDA, Adjusted EBITDA margin, capital expenditures, run-rate savings, churn reductions, and pipeline conversions, including the impacts of seasonality, our ability to drive long-term value creation for our shareholders, our ability to achieve Adjusted EBITDA profitability, reduce our fixed costs and our breakeven point, and align our cost structure with our revenue baseline, our ability to leverage excess capacity and exercise operational discipline, the integration of Edgecast and our future prospects, areas of investment, and product launches. Our expectations and beliefs regarding these matters may not materialize. The potential risks and uncertainties that could cause actual results or outcomes to differ materially from the results or outcomes predicted include, among other things, reduction of demand for our services from new or existing clients, unforeseen changes in our hiring patterns, adverse outcomes in litigation, experiencing expenses that exceed our expectations, and acquisition activities and contributions from acquired businesses. A detailed discussion of these factors and other risks that affect our business is contained in our SEC filings, including our most recent reports on Forms 10-K and 10-Q, particularly under the heading “Risk Factors.” Copies of these filings are available online on our investor relations website at investors.edg.io and on the SEC website at www.SEC.gov. All information provided in this release and in the attachments is as of September 12, 2023, and we undertake no duty to update this information in light of new information or future events, unless required by law.

About Edgio

Edgio (NASDAQ: EGIO) helps companies deliver online experiences and content faster, safer, and with more control. Its developer-friendly, globally scaled edge network, combined with fully integrated application and media solutions, provide a single platform for the delivery of high-performing, secure web properties and streaming content. Through this fully integrated platform and end-to-end edge services, companies can deliver content quicker and more securely, thus boosting overall revenue and business value. To learn more, visit edg.io and follow us on Twitter, LinkedIn and Facebook.

Copyright (C) 2023 Edgio, Inc. All rights reserved. All product or service names are the property of their respective owners.

Contacts

Edgio, Inc.

Investor relations: Sameet Sinha, 602-850-4973

ir@edg.io

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