Limelight Networks, Inc.

Good day, ladies and gentlemen. Welcome to the Limelight Network's 2021 Second Quarter Financial Results Conference Call. At this time, all participants are in a listen-only mode. At the end of the prepared remarks, we will provide instructions for those interested in entering the queue for the question and answer session. I will now turn the call over to Dan Bontel, Limelight's Chief Financial Officer.

Good afternoon. Thank you for joining Limelight Network's 2021 second quarter financial results conference call. This call is being recorded today, July 29th, 2021, and will be archived on our website for approximately 10 days. Let me start by quickly covering the safe harbor. We would like to remind everyone that we will be making forward-looking statements on this call. Forward-looking statements are all statements that are not strictly statements of historical facts, such as our priorities, our expectations, our operational plans, business strategies, secular trends, product and future functionalities, pro forma results, and acquisition activities and contributions from acquired businesses. Actual results could differ materially from those contemplated by our forward-looking statements, and reported results should not be considered as an indication of future performance. For more information, please refer to the risk factors discussed in our periodic filings, including our most recent annual report on Form 10-K. forward-looking statements on this call are based on information available to us as of today's date and we disclaim any obligation to update any forward-looking statements except as required by law joining me on the call today are bob lyons our president and chief executive officer and ajay kapoor who will become our new chief technology officer bob will start today's call with an update on our improve expand and extend initiatives As previously discussed, these three operational programs are intended to support improved growth and profitability, including the recently announced acquisition of Move Corporation, which does business under the brand name Layer Zero. I'll then review financial results. Following that, Bob will use the remainder of the call to discuss aspects of our strategy and corporate initiatives going forward. We will then open the call for Q&A. I'll now turn the call over to Bob.

Thank you, Dan, and welcome, everyone. I am pleased to report that the steps we have taken to improve profitability and our competitive position are beginning to demonstrate improvements in key areas of business performance. The recent organizational and operational improvements have improved our adjusted EBITDA and free cash flow. We expect continued improvement with line of sight to additional identified efficiencies and revenue growth. While we re-accelerate our core CDN business with the acquisition of Layer 0, we have laid the foundation for Limelight's evolution into a next generation platform that leapfrogs the competition. The acquisition brings on significant technical talent to oversee Limelight's evolution as an edge solutions platform. We will speak to this a couple of times on this call and we'll provide additional insights on our strategy here today and further at our strategy session on August 24th. Consistent with the first quarter, we have continued to take aggressive steps towards improving shareholder value. As a quick reminder, we have organized our approach into three programs. Our IMPROVE program is focused on network performance and operating costs. Our EXPAND program is focused on revenue growth with existing and new clients, and our EXTEND program is focused on introducing new solutions that will increase network utilization, growth, and gross margins. We have been very busy, and I would like to update you on our progress with each of these programs. Under our IMPROVE program, we have remediated the previously discussed network performance issues, and we continue to improve our cost model. This quarter include our newly formed performance operation team has reduced rebuffer rates for some customers by as much as 30% and increased global network throughput by 20%. As a result, revenue from 18 of our top 20 customers has increased 20% year over year. We have identified an additional $8 million in annualized cost of goods savings that we expect to contribute approximately $4 million in the second half of this year. The $15 million of annualized cost actions taken in the first quarter have improved adjusted EBITDA from a loss of $3.3 million to a gain of over $200,000. Additionally, as revenue ramps in the second half of the year, we expect significant flow through to adjusted EBITDA. We believe that our improved network performance is the foundation for in-year revenue expansion with existing clients. Fittingly, our expand program has focused on this opportunity as well as adding new clients. Highlights this quarter include, previously we had discussed that two of our top 10 clients had meaningfully reduced our traffic due to performance concerns. Both have begun ramping us back up, and we expect the ramp to continue supporting our expectation for accelerating revenue growth in the second half of this year. You may recall that our largest client uses algorithms to allocate traffic based on performance. We are focused on the opportunity to optimize our performance in certain regions in order to gain a greater market share of their traffic. In the quarter, we implemented a win-back campaign to focus on past clients that no longer work with us. We are in active discussions with several former clients, one of which a former top 10 client has completed integration testing and we expect traffic to return soon with an annualized revenue of $6 million. Perhaps as important, the traffic pattern was modeled largely to leverage our off-peak capacity As a result, we anticipate an improvement in network utilization of approximately 300 basis points. Last, we are excited to have Eric Armstrong join us as Senior Vice President of Growth. Most recently, he was Vice President of North American Sales and Services at Harmonic, a global leader in streaming, broadcast, and service provider video infrastructure, and will help continue our efforts to accelerate growth. Continued expansion of revenue and profitability also requires us to extend our product scope to higher margin products that leverage our global private network. We are excited to announce the pending acquisition of Layer Zero Corporation. Layer Zero is a SaaS-based application acceleration and deployment platform for developers. Their flagship product enables us to capitalize on the accelerating trend of developers utilizing the edge to better address application performance, overall productivity, and reduce the attack surface. We believe that the combined Layer Zero capabilities and our proprietary global network will give Limelight the best application delivery solution in the market. With the acquisition of Layer Zero, we will be immediately launching a new web application acceleration and deployment solution. We believe that our solution will benchmark better than alternative offers on performance, price, and productivity. We expect Layer Zero to contribute over $20 million of incremental revenue in 2022. We have identified approximately $3 million of additional annualized cost synergies. We also believe that Layer Zero will be accretive to adjusted EBITDA in 2022. And this acquisition meaningfully improves our software product management and engineering capabilities. Ajay Kapoor, Layer Zero's founder, will join Limelight as our chief technology officer. Ajay brings with him an entrepreneurial spirit and approximately 90 team members that will be instrumental in our vision for enabling our solution set within our global edge network for developers. Layer Zero currently serves customers such as Coach, United Airlines, Revolve Fashion, Shoe Carnival, Kate Spade, Sharper Image, and several top 50 US banks. We are very happy with the progress the team has made in such a short time, but much work remains to be done. We will continue our relentless pursuit of operational excellence, restoring client confidence, improving performance, and returning value to our shareholders. We will continue to communicate our progress as well as our opportunities to improve. I believe that our improved performance, our cost management, and the launch of our new application acceleration and deployment solution positions Limelight to capture more market share. At this time, I will turn the call over to Dan to report second quarter financials. Dan?