Edgio Reports Second Quarter Financial Results

·8 min read

Record second quarter revenue of $74.3 million, up 54% year over year

Raises synergy target from Edgecast acquisition to $60 million

Raises 2022 revenue guidance and issues 2023 outlook

TEMPE, Ariz., August 08, 2022--(BUSINESS WIRE)--Edgio, Inc. (Nasdaq: EGIO), securely powering the most performant applications, delivery, and streaming experiences at the edge, today reported strong financial results for the second quarter ended June 30, 2022. Continuing four consecutive quarters of improved profitability, expanding market share, and extending its product portfolio –bolstered by two transformative acquisitions – Edgio’s solutions are demonstrating value and delivering meaningful impact.

"We continue to successfully execute on our multi-year transformation plan. In the past 12 months, we have completed two acquisitions, overhauled all aspects of our operating model, removed significant costs, and implemented a new growth-oriented commercial team. Our solutions are demonstrating proof of value, our clients are doing more with us as we innovate our technology business and continue to develop solutions to respond to dynamically evolving needs. While our strategy benefits from sector tailwinds, our innovation will allow us to continue to capture market share, sustain growth and improve profitability," said Bob Lyons, President and Chief Executive Officer.

"Second quarter 2022 revenue was ahead of plan and a historical best as we continue building on the momentum established late last year. While we do not intend to provide 2023 guidance until later this year, we have completed our initial bottom-up outlook for next year. We remain very excited about these transformative acquisitions and the foundation now in place to support our strategic objective of being the global leader in edge-enabled solutions for the outcome buyer – a technology company that can deliver continuously improving growth and profitability to our shareholders," said Lyons.

Q2 2022 highlights:

Revenue of $74.3 million, an expansion of 54% from the previous year:

  • Limelight contributed $61.5 million, a 27% year over year expansion, resulting from core business growth and the addition of Layer0 revenue.

  • Edgio had its third consecutive quarter of double-digit growth, a clear indication of the company’s ability to capture market share.

  • Edgecast contributed $12.8 million in the quarter.

Gross margin was 30%, up 1050 basis points year over year:

  • A large in-quarter capacity acquisition and the integration of Edgecast’s excess network capacity had a temporary negative impact.

  • New capacity will support planned Q3 and Q4 increased demand resulting from new content, Thursday Night Football and a large software client committing to double their traffic.

  • Online capacity adequately mitigates previously highlighted supply chain concerns.

Edgio’s solutions: A foundation for continued growth and profitability improvement:

Edgio AppOps provides the most powerful, comprehensive integrated cloud security, development and CDN solution suite in the world.

Edgio Delivery, the second largest and the most performant edge delivery platform, boasts approximately 230 terabits per second and is delivered across more than 300 global PoPs.

Edgio Streaming is a mission-critical streaming platform that supports some of the most demanding, well-known companies with a unique ability to capture usage data that can be used to continuously improve viewer experience. Edgio will manage more than 30,000 live events and insert over 50 billion ads for clients this year.

Updating 2022 Guidance:

"We have implemented the first phase of our target operating model and have a clear line of sight to achieving our targeted pro forma financial performance. Based on current conditions, we are updating guidance for the remainder of 2022 as follows," said Dan Boncel, Chief Financial Officer.

Edgio, Inc.

2022 Guidance

August 2022

April 2022

Revenue

$380 to $390 million

$240 to $250 million

Adjusted EBITDA

$13 to $16 million

$24 to $28 million

Capital expenditures

Less than 10% of revenue

$20 to $25 million

Forward-Looking Outlook

"While we will not provide 2023 guidance until later this year, we have completed our initial deep dive combined pro-forma analysis and would like to share our initial outlook," continued Boncel.

  • The company completed the Edgecast acquisition on June 15 and has successfully implemented the first phase of integration.

  • Management has identified additional synergy opportunities beyond the original $50 million and now expects at least $60 million in annualized run rate synergies.

  • Management has achieved $17.5 million of synergies to date, well ahead of plan.

  • Initial 2023 revenue outlook of between $550 and $560 million, and adjusted EBITDA that exceeds $65 million.

  • An implied revenue expansion of 44% and adjusted EBITDA margin expansion from 4% in 2022 to 12% in 2023.

  • Approximately 45% of total revenue falling into the high margin and recurring profile.

Financial Tables

EDGIO, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except per share data)

June 30,

March 31,

December 31,

2022

2022

2021

(Unaudited)

(Unaudited)

ASSETS

Current assets:

Cash and cash equivalents

$

55,175

$

27,175

$

41,918

Marketable securities

22,158

34,751

37,367

Accounts receivable, net

108,445

55,040

42,217

Income taxes receivable

58

63

61

Prepaid expenses and other current assets

32,107

16,044

13,036

Total current assets

217,943

133,073

134,599

Property and equipment, net

106,059

34,792

33,622

Operating lease right of use assets

7,124

6,064

6,338

Marketable securities, less current portion

40

40

40

Deferred income taxes

2,866

1,822

1,893

Goodwill

163,489

113,463

114,511

Intangible assets, net

72,655

13,827

14,613

Other assets

7,334

4,779

5,485

Total assets

$

577,510

$

307,860

$

311,101

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

Accounts payable

$

19,800

$

15,599

$

11,631

Deferred revenue

4,790

2,189

3,266

Operating lease liability obligations

4,755

1,754

1,861

Income taxes payable

262

215

873

Other current liabilities

75,391

20,403

19,292

Total current liabilities

104,998

40,160

36,923

Convertible senior notes, net

122,202

121,991

121,782

Operating lease liability obligations, less current portions

11,352

9,209

9,616

Deferred income taxes

100

303

308

Deferred revenue, less current portion

1,530

282

116

Other long-term liabilities

716

721

777

Total liabilities

240,898

172,666

169,522

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; 219,706, 138,178 and 134,337 shares issued and outstanding at June 30, 2022, March 31, 2022 and December 31, 2021, respectively

220

138

134

Additional paid-in capital

793,522

590,249

576,807

Contingent consideration

16,900

-

-

Accumulated other comprehensive loss

(11,413

)

(9,004

)

(8,345

)

Accumulated deficit

(462,617

)

(446,189

)

(427,017

)

Total stockholders' equity

336,612

135,194

141,579

Total liabilities and stockholders' equity

$

577,510

$

307,860

$

311,101

EDGIO, INC.

CONDENSED 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

2022

2022

Change

2021

Change

2022

2021

Change

Revenue

$

74,312

$

57,959

28

%

$

48,348

54

%

$

132,270

$

99,543

33

%

Cost of revenue:

Cost of services (1)

46,088

35,070

31

%

32,976

40

%

81,157

66,021

23

%

Depreciation - network

5,903

5,089

16

%

5,929

0

%

10,992

11,608

-5

%

Total cost of revenue

51,991

40,159

29

%

38,905

34

%

92,149

77,629

19

%

Gross profit

22,321

17,800

25

%

9,443

136

%

40,121

21,914

83

%

Gross profit percentage

30.0

%

30.7

%

19.5

%

30.3

%

22.0

%

Operating expenses:

General and administrative (1)

26,927

15,833

70

%

7,515

258

%

42,760

20,412

109

%

Sales and marketing (1)

10,946

7,627

44

%

5,784

89

%

18,573

15,631

19

%

Research & development (1)

12,161

9,577

27

%

5,187

134

%

21,738

11,315

92

%

Depreciation and amortization

1,508

1,032

46

%

549

175

%

2,540

1,089

133

%

Restructuring charges

4,368

698

526

%

2,155

103

%

5,066

9,028

-44

%

Total operating expenses

55,910

34,767

61

%

21,190

164

%

90,677

57,475

58

%

Operating loss

(33,589

)

(16,967

)

98

%

(11,747

)

186

%

(50,556

)

(35,561

)

42

%

Other income (expense):

Interest expense

(1,315

)

(1,313

)

0

%

(1,305

)

1

%

(2,628

)

(2,591

)

1

%

Interest income

33

27

22

%

42

-21

%

60

87

-31

%

Other, net

(1,146

)

(713

)

61

%

(440

)

160

%

(1,859

)

(655

)

184

%

Total other expense

(2,428

)

(1,999

)

21

%

(1,703

)

43

%

(4,427

)

(3,159

)

40

%

Loss before income taxes

(36,017

)

(18,966

)

90

%

(13,450

)

168

%

(54,983

)

(38,720

)

42

%

Income tax (benefit) expense

(19,589

)

206

NM

248

NM

(19,383

)

507

NM

Net loss

$

(16,428

)

$

(19,172

)

-14

%

$

(13,698

)

20

%

$

(35,600

)

$

(39,227

)

-9

%

Net loss per share:

Basic

$

(0.11

)

$

(0.14

)

$

(0.11

)

$

(0.25

)

$

(0.31

)

Diluted

$

(0.11

)

$

(0.14

)

$

(0.11

)

$

(0.25

)

$

(0.31

)

Weighted average shares used in per share calculation:

Basic

151,776

135,528

126,050

143,652

125,170

Diluted

151,776

135,528

126,050

143,652

125,170

(1)

Includes share-based compensation (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,

2022

2022

2021

2022

2021

Share-based compensation:

Cost of services

$

326

$

408

$

458

$

734

$

704

General and administrative

2,166

2,103

1,874

4,269

7,902

Sales and marketing

1,376

1,181

395

2,557

958

Research and development

3,423

3,320

...