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
PHOENIX–Sep. 12, 2023— 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.
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.
