Content delivery network service provider looks to raise more than $200M in an IPO
Limelight Networks Inc. (Nasdaq: LLNW) is hoping to raise about $201 million in an IPO, the company said in its filings with the Securities and Exchange Commission (SEC) on Thursday. Goldman Sachs and Morgan Stanley are the lead underwriters on the deal.
The company says it will use the money raised to pay off its credit facility (about $23.8 million) and to "acquire complementary businesses, products, services or technologies."
Limelight will trade on the Nasdaq under the symbol LLNW and will be a welcome competitor to Akamai Technologies Inc. (Nasdaq: AKAM) in the public markets. "There are no good public competitors to Akamai right now," Kaufman Bros. LP analyst Ari Moses told Light Reading last month. (See How Likely Is a Limelight IPO?.)
The company has only been around since 2001, but its revenues have grown sharply, thanks to the popularity of using the Internet to distribute video. Limelight boasts a customer base of more than 700 companies and says its revenues jumped to $64.3 million in 2006 from $5 million in 2003.
But Limelight is also having to spend to keep up with its customers' demand, as we've previously reported. (See Limelight Grapples With Growing Pains.) Last year alone it made $40.6 million in capital expenditures related to building out its network.
In 2006 it lost $3.7 million, or 22 cents a share, on revenues of $64.3 million. That compares to a loss of $397,000, or a penny a share, on revenues of $21.3 million a year earlier.
Because the company is so young -- and because it's growing so quickly -- customer concentration is a concern. About 58 percent of its 2006 revenues came from its top 10 customers.
Microsoft Corp. (Nasdaq: MSFT) and its affiliates consistently show up among Limelight's top customers in each of the content deliver markets it serves:
Video: MSNBC, Viacom Inc. (NYSE: VIA)
Music: RadioIO, ABC Radio
Games: Microsoft (Xbox), Valve Corp.
Software: Microsoft, Adobe Systems Inc. (Nasdaq: ADBE)
Social Media: MySpace
Limelight doesn't specify how much of its revenues are directly related to Microsoft. But a hint may be found if Microsoft purchases Limelight's services through resellers. One reseller, CDN Consulting, is counted as one of Limelight's 10 biggest customers. That company "represented in excess of 21% of our total revenue" for 2006, Limelight says in its S-1.
— Phil Harvey, Managing Editor, Light Reading
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