Earnings: Limelight Networks Q4 Revs Up 31 Percent; Claims Gains On Social Media; Hurt By Strike?

CDN Limelight Networks (NSDQ: LLNW) has reported Q4 revenues of $29.1 million, up 31 percent year-over-year from $22.1 million. Net loss expanded to $6.2 million ($.08 per share), from $4.9 million ($.25 per share) in the equivalent year-ago period. It claims it would have made a slight profit, excluding share-based compensation and litigation expenses. The company attributed its to-line growth to customer wins in the online gaming, social media and general entertainment categories. Altogether for 2007, Limelight added 450 new customers, with 200 new signed customers in the fourth quarter. Sequentially, revenue growth was virtually flat.

Release | Webcast (5:00 PM ET)

Conference call: With its stock sliding after hours — it’s currently down over 13 percent — Limelight’s management spent a lot of the call making excuses for the fact that its numbers proved disappointing. Among the claimed reasons: the writers strike. This is a bit of a head scratcher, since the conventional wisdom is that the strike, if anything, would drive more customers online. But CEO Jeff Lunsford explained: “New content out there is what draws people online.” For what it’s worth, Akamai (NSDQ: AKAM) claimed not to be seeing an effect from the strike during its call. For the most part, this is an issue that effects guidance more than the past quarter. Lunsford claimed that another headwind was changing business models among its customers. Meaning: A number of Limelight’s customers are high-growth, low-profit startups and the company wants to accommodate them. The company believes it’s a good long-term strategy to accommodate these customers, since some, like MySpace, become big winners down the road (true, but then again, Limelight lost much of its MySpace business to Akamai, which sort of negates this point). Other factors which management pointed to to explain its numbers, included its system of revenue deferral, non-GAAP revenue (i.e. strategic service revenue) and stock-based compensation — none of which makes the job of understanding this company any easier.