SEC Info - Limelight Networks/Inc - S-1/A

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		Alternative Formats (RTF, XML, et al.) Business Capitalization Certain Relationships and Related Party Transactions Description of Capital Stock Dilution Dividend Policy Experts Legal Matters Management Management s Discussion and Analysis of Financial Condition and Results of Operations Principal and Selling Stockholders Prospectus Summary Risk Factors Selected Consolidated Financial Data Shares Eligible for Future Sale Special Note Regarding Forward-Looking Statements Table of Contents Underwriting Use of Proceeds Where You Can Find Additional Information
1	1st Page
"	Prospectus Summary
"	Risk Factors
"	Special Note Regarding Forward-Looking Statements
"	Use of Proceeds
"	Dividend Policy
"	Capitalization
"	Dilution
"	Selected Consolidated Financial Data
"	Management s Discussion and Analysis of Financial Condition and Results of Operations
"	Business
"	Management
"	Certain Relationships and Related Party Transactions
"	Principal and Selling Stockholders
"	Description of Capital Stock
"	Shares Eligible for Future Sale
"	Underwriting
"	Legal Matters
"	Experts
"	Where You Can Find Additional Information
"	Table of Contents

As filed with the Securities and Exchange Commission on May 21, 2007

Registration No. 333-141516

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

AMENDMENT NO. 2
TO

FORM S-1

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

LIMELIGHT NETWORKS, INC.

(Exact name of Registrant as specified in its charter)


Delaware	7389	20-1677033
(State or other jurisdiction of incorporation or organization)	(Primary Standard Industrial Classification Code Number)	(I.R.S. Employer Identification Number)

2220 W. 14^th Street

Tempe, AZ 85281

(602) 850-5000

(Address, including zip code, and telephone number, including area code, of Registrant’s principal executive offices)

Jeffrey W. Lunsford

Chairman and Chief Executive Officer

Limelight Networks, Inc.

2220 W. 14^th Street

Tempe, AZ 85281

(602) 850-5000

(Name, address, including zip code, and telephone number, including area code, of agent for service)

Copies to:


Mark L. Reinstra, Esq. Mario M. Rosati, Esq. Alexander D. Phillips, Esq. Wilson Sonsini Goodrich & Rosati, P.C. 650 Page Mill Road Palo Alto, CA 94304-1050 (650) 493-9300		Kevin P. Kennedy, Esq. Simpson Thacher & Bartlett LLP 2550 Hanover Street Palo Alto, CA 94304 (650) 251-5000

Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this Registration Statement.

If any of the securities being registered on this Form are being offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, as amended (the “Securities Act”), check the following box. o

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration number of the earlier effective registration statement for the same offering. o

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration number of the earlier effective registration statement for the same offering. o

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

If delivery of the prospectus is expected to be made pursuant to Rule 434, check the following box. o

CALCULATION OF REGISTRATION FEE

Amount

Proposed Maximum

Title of Each Class of

to be

Offering Price

Aggregate

Amount of

Securities to be Registered

Registered(1)

Per Share

Offering Price(2)

Registration Fee(3)

Common Stock, $0.001 par value

16,560,000 shares

12.00

198,720,000

6,101


(1)		Includes common stock issuable upon the exercise of the underwriters’ option to purchase additional shares.


(2)		Estimated solely for the purpose of computing the amount of the registration fee pursuant to Rule 457(a) under the Securities Act of 1933, as amended.


(3)		Previously paid.

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act or until the Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

The information in this prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities nor does it seek an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

Subject to Completion, Dated May 21, 2007

14,400,000 Shares

Common Stock

This is an initial public offering of shares of common stock of Limelight Networks, Inc.

Limelight Networks is offering 11,400,000 of the shares to be sold in the offering. The selling stockholders identified in this prospectus are offering an additional 3,000,000 shares. Limelight Networks will not receive any of the proceeds from the sale of the shares being sold by the selling stockholders.

Prior to this offering, there has been no public market for the common stock. It is currently estimated that the initial public offering price will be between $10.00 and $12.00 per share. Application has been made for listing on the Nasdaq Global Market under the symbol “LLNW.”

See “Risk Factors” on page 8 to read about factors you should consider before buying shares of the common stock.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.


	Per Share	Total

Initial public offering price	$	$
Underwriting discount
Proceeds, before expenses, to Limelight Networks
Proceeds, before expenses, to the selling stockholders

To the extent that the underwriters sell more than 14,400,000 shares of common stock, the underwriters have the option to purchase up to an additional 2,160,000 shares from Limelight Networks at the initial public offering price less the underwriting discount.

The underwriters expect to deliver the shares against payment in New York, New York on , 2007.


Goldman, Sachs & Co.	Morgan Stanley


Jefferies & Company	Piper Jaffray

Friedman Billings Ramsey

Prospectus dated , 2007

PROSPECTUS SUMMARY

This summary highlights information contained elsewhere in this prospectus. Before deciding whether to buy shares of our common stock, you should read this summary and the more detailed information in this prospectus, including our financial statements and related notes, and especially the discussion of the risks of investing in our common stock under the heading “Risk Factors.”

Limelight Networks, Inc.

Limelight Networks is a leading provider of high-performance content delivery network services. We digitally deliver content for traditional and emerging media companies, or content providers, including businesses operating in the television, music, radio, newspaper, magazine, movie, videogame and software industries. Using Limelight’s content delivery network, or CDN, content providers are able to provide their end-users with a high-quality media experience for rich media content, including video, music, games, software and social media.

As consumer demand for media content over the Internet has increased, and as enabling technologies such as broadband access to the Internet have proliferated, consumption of rich media content has become increasingly important to Internet end-users and therefore to the content providers that serve them. eMarketer estimates that at the end of 2006, nearly 60% of all Internet users regularly watched videos online, and approximately 80% are expected to do so by the end of 2010. We developed our services and architected our network specifically to meet the unique demands content providers face in delivering rich media content to large audiences of demanding Internet end-users. Our comprehensive solution delivers content providers a high-quality, highly scalable, highly reliable offering at a low cost. As of May 2007, approximately 800 customers are using Limelight Networks to deliver the high-quality media experiences that their consumers seek online.

Content providers seeking to deliver rich media content to end-users via the Internet have two primary alternatives: deliver content using basic Internet connectivity or utilize a CDN. The basic Internet, which is a complex network of networks, is effective for delivering many types of content but can be ineffective for delivering rich media content with satisfactory performance. Internet protocols are designed to reliably transport data packets, but the packets can be lost or delayed in transit. When data packets are lost or delayed during the delivery of rich media content, the result is noticeable to users because playback is interrupted. This interruption causes songs to skip, videos to freeze and downloads to be slower than acceptable for demanding consumers. This lack of performance and its dramatic effect on user experience make the delivery of rich media content via the basic Internet extremely challenging.

In response to this challenge, some content providers have chosen to invest significant capital to build the infrastructure of servers, storage and networks necessary to bypass, as much as possible, the public Internet. The substantial capital outlay and the development of the expertise and other technical resources required to manage such a complex infrastructure can be time-consuming and prohibitively expensive for all but the largest companies. As a result, many companies have chosen to rely on one or more CDNs for the delivery of their content. Most early CDNs were built and configured to deliver the objects typically found in basic web sites such as photos or graphics, but were not configured for the large files and large content libraries associated with today’s rich media.

Benefits of our Solution to Customers

We have designed our CDN solution specifically to handle the demanding requirements of delivering rich media content over the Internet. Our solution enables content providers to provide their end-users with high-quality experiences across any digital media type, content library size or audience

scale without expending the capital and developing the expertise needed to build and manage their own networks. Our CDN solution delivers the following benefits to our customers:

High-Quality User Experience

We enable users to receive their requested content such as movies, television shows, games, songs and software downloads in a timely manner and to enjoy a high-quality media experience. We accomplish this, in part, by delivering content from servers that can be closer to users than a content provider’s own servers, and by delivering more than half of our content volume directly to a user’s access network, bypassing much of the congestion typically experienced in the public Internet. We also operate a dedicated high-speed (10 gigabits per second) backbone that enables us to move content quickly between locations on our network.

High Scalability Across Media Type, Library Size, and Audience Size

Our current global delivery capability exceeds 1 terabit per second. This capacity allows us to support traffic spikes associated with special one-time or unexpected events. Our highly scalable infrastructure also enables us to maintain our performance levels as our customers’ audiences grow, media file sizes increase and content libraries expand.

High Reliability

Our distributed CDN architecture, managed by our proprietary software, seamlessly and automatically responds in real time to network and data center outages. Each of our CDN locations connects to multiple Internet backbone and broadband Internet service provider networks, and has multiple redundant servers, enabling us to continue serving content even if a particular network connection or server fails.

Comprehensive Solution

We can begin delivery services for a new customer within days of a customer’s placement of an order. We also support both download and streaming delivery in a broad variety of formats, including Adobe Flash, MP3 audio, QuickTime, RealNetworks RealPlayer and Windows Media. In addition, our value-added services include a web-based customer portal that provides management information reports and a download manager that simplifies the downloading process for the end-user. Lastly, we offer custom services to address customers’ non-standard delivery needs.

Low Content Delivery Costs

Our content delivery services enable customers to avoid the substantial upfront and ongoing capital requirements of upgrading and maintaining their data centers and networks in order to deliver media content themselves. Customers benefit from the lower cost associated with the delivery of content using our infrastructure, which is designed specifically for delivering rich media content, and the expertise we have acquired from serving our customers.

Our Strategy

Our strategic goal is to be the provider of choice in the delivery of rich media content. Key elements of our strategy include:


	•	Continuing to focus on customers with rich media content, a market which we believe represents a stable and growing business opportunity;

	•	Expanding our CDN infrastructure to address significant growth opportunities and increase our market penetration in key international markets, including Europe and the Asia Pacific region;

	•	Continuing to innovate in order to enhance our content delivery capabilities;


	•	Expanding our CDN capacity to further advantages associated with the scale of our network;


	•	Enhancing our sales and distribution channels to broaden our customer relationships and deepen our penetration of existing customer accounts; and

	•	Expanding our partner relationships to further complement our service offerings.

Risks Affecting Us

There are numerous risks and uncertainties that may affect our financial and operating performance and our growth. You should carefully consider all of the risks discussed in “Risk Factors,” which begins on page 8, before investing in our common stock. These risks include the following:


	•	the limited operating history in our market, which makes evaluating our business and future prospects difficult;

	•	the possibility that we might not manage our future growth effectively;


	•	the possibility that we could be permanently enjoined from offering our CDN services as a result of the patent infringement lawsuit filed against us by Akamai Technologies, Inc. and the Massachusetts Institute of Technology, which is similar to other lawsuits in which the same plaintiffs have been at least partially successful in the past;


	•	the highly competitive nature of the CDN market, and the adverse consequences if we are unable to compete effectively; and

	•	the possibility that rapidly evolving technologies or new business models could cause demand for our CDN services to decline or could cause these services to become obsolete.

Corporate Information

We were formed as an Arizona limited liability company, Limelight Networks, LLC, in June 2001 and converted into a Delaware corporation, Limelight Networks, Inc., in August 2003. Our principal executive offices are located at 2220 W. 14th Street, Tempe, Arizona 85281, and our telephone number is (602) 850-5000. Our website address is www.limelightnetworks.com. The information on, or accessible through, our website is not part of this prospectus. References in this prospectus to “Limelight Networks,” “Limelight,” “we,” “us” and “our” refer to Limelight Networks, Inc. and its subsidiaries and predecessor entity.

Limelight Networks and the Limelight Networks logo are trademarks of Limelight Networks, Inc. All other trademarks, service marks and trade names appearing in this prospectus are the property of their respective owners.

THE OFFERING


Common stock offered by Limelight Networks		11,400,000 shares


Common stock offered by the selling stockholders		3,000,000 shares


Common stock to be outstanding after this offering		78,333,587 shares


Use of proceeds		We expect to use the net proceeds from this offering to fund capital expenditures for network and other equipment, as well as for working capital and other general corporate purposes. We currently anticipate making aggregate capital expenditures of approximately $35.0 million to $45.0 million in each of 2007 and 2008, which will be partially funded by the net proceeds of this offering. In addition, we intend to use approximately $23.8 million of the net proceeds to repay the outstanding balance under our credit facility. We also may use a portion of the net proceeds to acquire complementary businesses, products, services or technologies. We will not receive any proceeds from the sale of shares in this offering by the selling stockholders. See “Use of Proceeds.”


Proposed Nasdaq Global Market symbol		LLNW

The number of shares of common stock to be outstanding after this offering is based on 66,933,587 shares outstanding as of March 31, 2007 and excludes:


	•	6,159,627 shares of common stock issuable upon exercise of options outstanding as of March 31, 2007 at a weighted average exercise price of $2.94 per share;


	•	1,757,828 shares of common stock reserved for future issuance under our Amended and Restated 2003 Incentive Compensation Plan as of March 31, 2007, plus an additional 500,000 shares that we reserved for issuance under this plan in April 2007; and


	•	7,500,000 shares of common stock reserved for future issuance under our 2007 Equity Incentive Plan adopted in April 2007, subject to future adjustment as more fully described in “Management — Employee Benefit Plans.”

Unless otherwise noted, all information in this prospectus assumes:


	•	no exercise by the underwriters of their option to purchase up to an additional 2,160,000 shares of our common stock;


	•	a 3-for-2 forward stock split of our outstanding capital stock that was effected in May 2007;


	•	the conversion of each outstanding share of preferred stock into one share of common stock upon the closing of this offering; and

	•	the filing of our amended and restated certificate of incorporation prior to closing of this offering.

Summary Financial Data

The following tables provide our summary consolidated financial data. The summary consolidated statement of operations data for each of the three years in the period ended December 31, 2006 have been derived from our audited consolidated financial statements included elsewhere in this prospectus. The summary consolidated statement of operations data for the three months ended March 31, 2006 and 2007, and the actual summary consolidated balance sheet data as of March 31, 2007, have been derived from our unaudited consolidated financial statements included elsewhere in this prospectus. Our unaudited summary consolidated financial data as of March 31, 2007 and for the three months ended March 31, 2006 and 2007 have been prepared on the same basis as the annual consolidated financial statements and include all adjustments, which include only normal recurring adjustments, necessary for the fair presentation of this data in all material respects. You should read this information together with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and related notes included elsewhere in this prospectus. Our historical results are not necessarily indicative of the results to be expected in any future period.


										Three Months
										Ended
	Year Ended December 31,									March 31,
	2004			2005			2006			2006			2007
										(unaudited)
	(in thousands, except per share data)

Consolidated Statement of Operations Data:
Revenue	$	11,192		$	21,303		$	64,343		$	10,838		$	22,876
Cost of revenue:
Cost of services(1)		4,834			9,037			25,662			3,807			9,809
Depreciation — network		775			2,851			10,316			1,473			4,688

Total cost of revenue		5,609			11,888			35,978			5,280			14,497

Gross profit		5,583			9,415			28,365			5,558			8,379
Operating expenses:
General and administrative(1)		2,147			4,107			18,274			1,571			8,136
Sales and marketing(1)		2,078			3,078			6,841			1,034			3,018
Research and development(1)		231			462			3,151			321			1,285
Depreciation and amortization		69			100			226			28			137

Total operating expenses		4,525			7,747			28,492			2,954			12,576

Operating income (loss)		1,058			1,668			(127	)		2,604			(4,197	)
Other income (expense):
Interest expense		(189	)		(955	)		(1,782	)		(505	)		(585	)
Interest income		1			—			208			—			89
Other income (expense)		(48	)		(16	)		175			—			—

Total other income (expense)		(236	)		(971	)		(1,399	)		(505	)		(496	)

Income (loss) before income taxes		822			697			(1,526	)		2,099			(4,693	)
Income tax expense (benefit) (2)		306			300			2,187			829			(258	)

Net income (loss)	$	516		$	397		$	(3,713	)	$	1,270		$	(4,435	)

Net income (loss) allocable to common stockholders	$	317		$	185		$	(3,713	)	$	1,245		$	(4,435	)

Net income (loss) per common share:
Net income (loss) per common share — basic	$	0.01		$	0.01		$	(0.22	)	$	0.04		$	(0.20	)

Net income (loss) per common share — diluted	$	0.01		$	0.00		$	(0.22	)	$	0.03		$	(0.20	)

Weighted average shares used in calculating net income (loss) per common share — basic		34,688			34,737			25,592			35,188			21,886
Weighted average shares used in calculating net income (loss) per common share — diluted		38,420			40,526			25,592			42,951			21,886

Other Operating Data:
Active customers at period end(3)		268			392			693			456			727
Revenue per customer (in thousands)(4)	$	42		$	54		$	93		$	24		$	31
Adjusted EBITDA (in thousands)(5)	$	1,868		$	4,697		$	21,284		$	4,218		$	6,640


(1)		Includes stock-based compensation as follows:


	Year Ended December 31,						Three Months Ended March 31,
	2004		2005		2006		2006		2007
							(unaudited)
	(in thousands)

Cost of services	$	—	$	—	$	459	$	29	$	242
General and administrative		14		94		6,686		21		4,242
Sales and marketing		—		—		329		38		235
Research and development		—		—		1,660		24		851

Total	$	14	$	94	$	9,134	$	112	$	5,570


(2)		In 2006, approximately $7.6 million in stock-based compensation expense was not deductible for tax purposes by us, which resulted in the incurrence of income tax expense despite our having generated a loss before income taxes in this period. We expect to continue to incur non-deductible stock-based compensation expense in the future. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Basis of Presentation — Income Tax Expense.”


(3)		We define active customers as those that generated revenue for us within 30 days of the period end.


(4)		Revenue per customer equals revenue for the period divided by the number of active customers with respect to each period.


(5)		We calculate Adjusted EBITDA as follows:


	Year Ended December 31,								Three Months Ended March 31,
	2004			2005		2006			2006		2007
									(unaudited)
	(in thousands)

Net income (loss)	$	516		$	397	$	(3,713	)	$	1,270	$	(4,435	)
Plus: depreciation and amortization		844			2,951		10,542			1,502		4,825
Plus: interest expense		189			955		1,782			505		585
Less: interest income		(1	)		—		(208	)		—		(89	)
Plus (less): income tax expense (benefit)		306			300		2,187			829		(258	)

EBITDA	$	1,854		$	4,603	$	10,590		$	4,106	$	628
Plus: stock-based compensation		14			94		9,134			112		5,570
Plus: litigation expenses recoverable from escrow		—			—		1,560			—		442

Adjusted EBITDA	$	1,868		$	4,697	$	21,284		$	4,218	$	6,640

Limelight Networks/Inc · S-1/A · On 5/21/07

Filed On 5/21/07 5:01pm ET · SEC File 333-141516 · Accession Number 950153-7-1192

Pre-Effective Amendment to Registration Statement (General Form) · Form S-1
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Limelight Networks/Inc · S-1/A · On 5/21/07

Filed On 5/21/07 5:01pm ET · SEC File 333-141516 · Accession Number 950153-7-1192

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