Limelight Networks Reports Strong Traffic Trends

Goldman Sachs has published a research report on Limelight Networks, Inc.

following strong traffic and pricing trends in the company's 3Q. In the report, Goldman Sachs writes "Limelight reported strong 3Q revenue and EPS in-line with our estimate. Takeaways from the quarter: (1) 3Q saw accelerated growth in legacy CDN revenue, up 22% yoy (+32% yoy ex-Microsoft) driven by strong traffic and better pricing. (2) The company announced that the Netflix contract has been extended to 2013 with an incrementally higher share of traffic. (3) Pricing pressure has moderated over the course of the year, and core CDN offerings see less pricing impact when bundled with VAS. (4) The Microsoft licensing contract ends in February 2011 and will negatively impact legacy CDN revenues (about $2 mn per quarter) and gross margins in CY11. (5) Revenue guidance for 4Q was below our/Street estimates, though is likely conservative. That said, there are some concerns regarding traction in the EyeWonder business as we head into busy ad months." Goldman Sachs maintains its Neutral rating and $6 price target. Limelight Networks, Inc. closed Friday at $6.60.