Edgio Inc (EGIO) 2012 Q2 法說會逐字稿

Good day, ladies and gentlemen. Welcome to the Limelight Networks 2012 Second Quarter Financial Results Conference Call. At this time, all participants are in a listen-only mode. At the end of the prepared remarks, we'll provide instructions for those interested in entering the queue for the question-and-answer session.

I will now turn the call over to Doug Lindroth, CFO. Please go ahead.

Good morning, and thank you for joining the Limelight Networks second quarter 2012 financial results conference call. This call is being recorded on August 2, 2012 and will be archived on our website for approximately 10 days. If you are online, we have updated our standard investor presentation and you can find it in PDF format within the Investor section of our website.

Some portions of this conference call may include forward-looking statements, as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements are all statements that are not strictly statements of historical facts, such as statements regarding future events or future financial performance, including, but not limited to, statements relating to Limelight Networks' market opportunity and future business prospects, guidance on financial results, statements concerning anticipated future growth and profitability, as well as management's plans, goals, strategies, expectations, hopes and beliefs, and statements concerning the anticipated effects of pending or completed business combinations or other strategic transactions.

These forward-looking statements are subject to risks, uncertainties and other factors that could cause actual results to differ materially from those contained, projected or implied in the forward-looking statements, including the inherent risks associated with litigation, particularly intellectual property-based litigation. Reported results should not be considered an indication of future performance. Factors that could cause actual results to differ are included in the Company's periodic filings with the Securities and Exchange Commission.

I would now like to introduce Jeff Lunsford, Limelight's Chief Executive Officer.

Good morning. In the second quarter, Limelight continued to make steady progress in our transformation from a provider of Internet infrastructure services to a provider of high-value Software as a Service and cloud-based solutions that help companies manage their digital presence across all customer interaction channels. Revenue, however, came in slightly below our expectations, as a result of lower revenue on the CDN side of the business and another soft quarter from Professional Services that held back growth of our overall value-added services portfolio. In spite of this, we operated in a disciplined manner and achieved our targeted bottom line results for the reporting period.

Most importantly, for the prospects of long-term value creation, our digital presence management strategy continue to be validated by pipeline growth and by the fact that almost half of our Q2 bookings were for Software as a Service and cloud-based services related to digital presence management. Companies around the globe are focused on improving the management of their digital presence across web, mobile, social and large screen channels. Five years ago, companies could rely on one content management software package to manage their digital presence because the website was the only digital channel for customer interaction.

Today, in an attempt to keep up with the increasing ubiquity and complexity of mobile devices, the increasing importance and influence of social channels and broadband fueled growth of over-the-top delivery to large screens, companies have ended up working with four to six different content management, publishing and processing systems and different infrastructure service providers. This approach is expensive, impedes efficient workflow, affects consistency, and leads to a sub-optimal digital presence. Limelight is the first company to envision and build an integrated digital presence management solution, which allows our customers to accomplish all of this and more and to do it atop one of the world's preeminent, high-performance digital presence delivery platforms.

Q2 brought many positive endorsements of our digital presence management strategy, including, one, a multi-year agreement with Broadridge Financial, a leading provider of investor communications and technology-driven solutions that leverages a full range of our digital presence management suite. Broadridge also engaged Limelight's global services team for their expertise, orchestrating their digital presence with a focus on website marketing acceleration.

Two, an extension of our agreement with BMC Software to add video delivery in addition to Web Content Management. BMC has been a CDN customer of Limelight for several years. Three, a recently expanded reseller agreement with Ray Networks, a strategic partner in Israel, to sell our entire digital presence management solution set. Both companies see growing opportunities in Israel for our digital presence management suite of services and we have already signed new customers as part of this three-year extended agreement.

Additional customers embracing our digital presence strategy and utilizing more and more modules of the suite included F5 Networks, SunTrust Banks, Rhapsody International, InterfaceFLOR, TMZ and Deluxe Digital. We are excited to be thought leaders in digital presence management. We are helping define this new category and are unique in providing a comprehensive solution to a problem that so clearly needs to be solved.

Let's review few highlights regarding specific applications within the suite. In the online video and mobile area, combined revenue for Limelight Video Platform and Limelight Mobile, which are key components of our Orchestrate digital presence management solution, grew in excess of 45% year-over-year. IDC estimates that online video platform's revenue will grow at a CAGR of 27% from over $400 million in 2011 to over $1 billion in 2015. Our Online Video Platform service is differentiated through the integration of the service with our other SaaS services and through the efficiencies and advantages our customers enjoy through our global high-performance network.

Coupled with this Online Video Platform category is our SaaS solution for Web Content Management, Dynamic Site Platform. According to Gartner, the Web Content Management market was over $1.2 billion in 2011 and has a CAGR of 14%. Revenue here adjusted for deferred revenue write-downs caused by M&A accounting has now accelerated to 16% year-over-year from flat a year ago, as we had forecast for you on the last call. We expect growth rates to continue to increase into 2013 as we deliver on our growing pipeline of opportunities in this area.

Regarding Limelight Accelerate, the speed and performance of an end user's experience is a key element of digital presence. Limelight's Accelerate service decreases the time it takes for users of any device to interact with a website, resulting in more completed transactions, more successful conversions and increased visitor loyalty. Revenue for our Accelerate services grew in excess of 45% year-over-year.

Regarding Agile Storage, in the quarter we continued to migrate new and existing customers to Limelight Agile Storage, our high-performance, differentiated cloud storage offering, which leverages our massively provisioned global computing platform. Agile Storage offers unique global geographic placement, business process management and business policy controls to simplify administrative overhead, reduced long-term IT costs and ensure compliance to regulatory standards. Cloud storage revenue grew approximately 17% year-over-year.

Consulting services declined 19% on a year-over-year basis and held down the overall VAS, value-added services, growth. Our services team is retooling the higher-value services, helping customers assess, design, plan and implement their digital presence strategies, which is moving up the stack from the prior practice, which was more infrastructure deployment related. We anticipate our new leadership and focus will reverse the downtrend, bringing us more strategic, longer term and recurring revenue projects.

In the content delivery area, we continue to focus on signing only smart business and on being disciplined on price. That business was essentially flat with a very slight decline and something less than 1%, which was mostly currency year-over-year. So essentially flat year-over-year. To leverage our IP in this area, we launched a new managed content delivery offering called Limelight Deploy. Deploy allows network, mobile and cable operators to install and operate our caching technology within their own infrastructure and enables them to more efficiently handle the content congesting their networks. We're also creating new and compelling value-added services revenue for both their business customers and end subscribers. Limelight Deploy, together with that complete stack of SaaS applications and Professional Services, uniquely qualify us to help operators capitalize on this opportunity.

Overall, we believe our strategy is sound, moving into higher-growth, higher-value solutions that leverage our unique technology and infrastructure resource, expanding our traditional customer segments, and opening up longer-term, more strategic customer relationships.

I'll now hand the call to Doug Lindroth to review our financials. Doug?

Thanks, Jeff. Please note the following financial results that I will be discussing are for continuing operations and exclude EyeWonder and chors from current and prior periods. For more information regarding the discontinued operations, please see our earnings press release that we issued today and our Form 10-Q that we'll file in the next few days.

During the second quarter, Limelight Networks recorded total revenue of $44.4 million, up 7% from the second quarter of 2011 and up 0.3% from Q1 of 2012. As Jeff mentioned, we came in below our guidance range, as a result of lower revenue on the CDN side of the business and another soft quarter from Professional Services that held back growth of our overall value-added services portfolio. The stronger US dollar also had a negative impact on our revenue compared to our guidance and the prior periods.

Overall, our value-added services continued to demonstrate traction in the market. Value-added services revenue grew 28% year-over-year on an as-reported basis. Value-added services revenue was 32% of total revenue during the second quarter, compared to 27% in the same period of 2011 and up 31% from Q1 of 2012.

While we're disappointed in the continued lag in revenue contribution from Professional Services, the rest of the value-added services portfolio performed in line with our expectations. We had strong year-over-year growth from the combined Online Video Platform and Mobile group, and from Web Content Management. As we announced last quarter, we brought in a new Head of Professional Services Group, formerly from SuccessFactors and IBM Global Services. We expect that this group will start scaling and contributing to year-over-year growth in Q4.

During the second quarter, Limelight's international operations represented 31% of total revenue, which was up from 30% in the same period of 2011. We reported second quarter adjusted EBITDA of $2.5 million compared to $3.3 million for the second quarter of 2011 and $2.2 million last quarter. Our Q2 GAAP loss from continuing operations was $9.4 million or $0.10 per basic share compared to a GAAP loss from continuing operations of $11.2 million or $0.10 per basic share in the same period in 2011.

We also reported second quarter non-GAAP net loss before stock-based compensation, litigation costs, amortization of intangibles, acquisition-related expenses, and discontinued operations of $5.5 million or $0.05 per basic share, compared to a non-GAAP net loss of approximately $4.9 million or $0.04 per basic share in Q2 of 2011. Please refer to the tables included in our press release for a reconciliation of GAAP measures to these non-GAAP measures.

GAAP gross margin was 38% during Q2, up from 32% in Q2 of last year and flat to Q1. Gross margin was flat in Q2 compared to Q1, as a result of higher depreciation expense, offset by higher revenue contribution from our value-added services. Gross margins increased over last year due primarily to the increased contribution of revenue from our value-added services and a reduction in our bandwidth costs. Cash gross margin was 55% for Q2, up from 51% in the same period last year.

During the second quarter, our operating expenses were $26.3 million, a decrease of approximately $0.3 million from last quarter and an increase of $2.1 million from Q2 2011. Our cash operating expenses decreased from Q1, as a result of reductions in employee incentive compensation, audit costs, and the fact that we held our annual sales kickoff meeting during Q1. These costs were offset by increases related to additional headcount in sales and marketing, and research and development, as well as non-income taxes and fees.

Total depreciation and amortization for the second quarter was $8.6 million, up from the first quarter of $8.2 million and up from $8.5 million in the second quarter of 2011. The increase compared to Q1 2012 is related to increased network depreciation. Depreciation and amortization in the second quarter includes $7.2 million of network-related depreciation. Stock-based compensation expenses for the quarter were $3.2 million compared to $4 million last quarter and $4.9 million in Q2 of 2011.

Moving on to the balance sheet, our combined cash and short-term marketable securities balance on June 30 was approximately $125 million, down from approximately $137 million in the first quarter. The decrease in cash and marketable securities is primarily related to the repurchase of approximately $11.9 million of our common stock and capital expenditures of approximately $4.4 million, offset by cash flow from operations of approximately $5.5 million. Days sales outstanding for the quarter were 57 days, up from 56 days the previous quarter and flat to Q2 2011.

Regarding guidance, for the third quarter of 2012, we expect to achieve revenue in the range of $44 million to $45.5 million. Our value-added services revenue will be approximately 33% to 34% of total revenue in Q3. For this revenue range, we'd expect gross margins to be 38% to 39%. Stock-based comp expenses for Q3 are expected to be approximately $3.8 million. Capital expenditures are expected to be approximately $4 million to $5 million.

We anticipate our third quarter operating expenses, excluding stock-based compensation, litigation expenses and acquisition-related expenses, will increase by approximately $500,000 to $700,000 from Q2 due to an increase in Company-wide employee compensation, increased audit and consulting costs, offset by decreases in employee-related travel and event costs.

With that, I will turn it back to Jeff.

Thanks, Doug. Hopefully, this update provides helpful insight into what we've accomplished in the transformation of Limelight into an innovative provider of high value, high-performance integrated cloud-based services that help businesses more efficiently and more effectively manage their digital presence across the web, mobile, social and large screen channels.

Our strategy is to keep scaling our high performance global digital presence delivery solutions with lower capital requirements, while building a complementary high value suite of software-as-a-Service and cloud-based solutions for digital presence management, which are differentiated from other points solutions through their interoperability and the fact they're run on our global platform.

While disappointed in the slight revenue miss in Q2, we're excited to execute on the opportunities our digital strategy presents for us in 2012 and beyond. Factoring in Q2 run rate, we are targeting to exit 2012 with our value-added services on the $70 to $75 million dollar annualized revenue run rate, growing at 30% to 40% year-over-year. This will provide us with a great foundation for having a suite of value-added services that we believe can achieve a run rate of approximately $100 million in recurring revenue with SaaS like gross margins in the latter half of 2013.

At this time. We'll open the line up for questions. Operator?

(Operator Instructions) Dave Hilal, FBR.

Great, thank you. A few questions. First, you talked about currency being a negative hit. Can you quantify the impact in the quarter, as well as Q3 guidance?

Hi, Dave. It is Doug here. In the quarter, when you look at it from where we guided, it was approximately $100,000 negative headwind based on the strong US dollar, when you look at it how it impacted us on a comparable basis from a year-over-year is about $200,000 impact.

And in terms of guidance?

In terms of guidance, we don't separate it out from how we guide and what we're expecting it. It's factored in where we think rates will be during the quarter. So that's factored into our guidance.

Okay. On the CDN business, it was down sequentially -- flattish year-over-year, down sequentially. Would you attribute that just to pricing, volumes? I'm sure it's some combination of both, but maybe which one would you give most credit to causing it to be down sequentially and it looks like it very well could be down sequentially again in Q3?

I think it was a blend, David, and Doug can give you more color, but a little bit less traffic we anticipated, a little bit more price degradation we anticipated. Pricing is still in that 20% to 30% year-over-year. Unit price decline range, which is more healthy than we saw two years ago, but also as we said, we're selective in the business that we're taking, we're driving. We want to grow that business, but we don't want to take the capital-intensive deals.

And so our focus is to build the SaaS business on top of the CDN revenue base and we are not focused on -- we could grow that business at a higher topline, but it would require more CapEx. So the strategy is, keep growing CDN, traffic is still growing, keep expanding it in key markets. But don't do it in a way that consumes a bunch of capital because we're getting a much higher return on capital in the capital that we invest in the growth of the SaaS business.

So if we further drilled into volumes, it's not same necessarily to existing customers. Their volumes are growing slower. It's more that you are bringing on less new volume in terms of new customers, because you are being a little bit more economically sensitive. Is that a different way to phrase it?

Well, there's 1,500 customers here. So I think it's a general business practice, but on the Investor section of the webpage is the updated traffic graph and you can see that traffic is still growing, quite healthy. So, as I said, there is business out there that we could take that would grow that business faster, but it would drive up CapEx. And as we've said, I think, three quarters ago, we first really started emphasizing sort of capital-light growth strategy where SaaS solutions are really getting traction and the digital presence strategy really getting traction, and we think that's the best return on capital.

And so we're not going to chase revenue or growth in areas of the CDN business where that's what you need to do, we're taking business from customers and looking into customers, our favorite customers are the ones that believe in the integrated suite and CDN is just part of why they come to Limelight. They actually come to Limelight because we help to manage their entire digital presence on one platform and consolidates that are working with four or five vendors, and having poor workflow and an expensive solution, they can work with us, and that does include CDN. So we're focused on those folks all day long and not chase the big video guys who are trying to derive price for pure video delivery and not use the other value-added services.

Understand. And then -- go ahead, Doug.

I was just going to add the other way to look at it is, Jeff was talking about the capital-light piece. In the first half of 2012, our CapEx was about $10 million or roughly 11% of revenue compared to where we were last year at 18%. So for us, the strategy is paying off. When you look at cash flow during Q2, $5.5 million of cash flow from operations and a little over $4 million of CapEx. So between those two measures, we like that profile.

Right, understand. Okay. Let me switch to value-added services. You talked about the growth rates of some of the key components. Can you size again for us, specifically remind us on Professional Services, how big of a piece that is? And then within the other value-added services that are growing quite well, storage, platform, acceleration, et cetera, remind us maybe which are the biggest pieces of that revenue stream?

Doug, can you take that?

Sure. Yes, it hasn't moved from a rank order and as we've said in the past, we don't give out the specifics of each, but I'm happy to rank them. So storage is the largest component in there, followed by WCM and then our combined Online Video Platform and Mobile, and then next is ProServe. So the largest two being the Storage and the Web Content Management, and then you jump down, I mean, it's not too far apart between the OVP and Mobile, Professional Services, and then we have our Accelerate products.

Okay. And then my last question. What was the share count at the end of the quarter?

Let's see, I believe the final share count was right around 100 million.

Okay, great. Thank you, guys.

You're welcome.

And, Dave, just to chime in and add color on the PS, well, I mentioned that that business in that revenue stream has shifted. In the prior years, our Professional Services team actually helped people deploy infrastructure. So they would help people take down Rackspace and install servers and open up POPs. And the new mission for that group, starting a couple quarters ago, is to actually go out and work with businesses to assess what their digital presence strategy is, what is the purpose of their digital presence strategy, how can they optimize it, what technology tools can they use. So it's a much more valuable relationship and it leads to obviously cross-sell and up-sell of our additional products. And so those big infrastructure projects in the old days were lumpier and did not lead to us becoming a long-term valued and trusted advisor to the executive team of our clients.

Whereas today, the engagements that these guys are working on are increasingly ones where we go in with the executive team and say, all right, you have a regular business and you have a digital side of your business, what is your strategy there and what are your business objectives, and how can we invest and advance your digital presence to achieve those business objectives? That is what we're excited about, and again, is sort of a situation where we're just not chasing big lumpy, low-margin infrastructure deals in Professional Services, because we're focused on the future and on the digital presence strategy.

That's helpful. Thank you.

Mike Olson, Piper Jaffray.

Hey, good morning. Just a couple numbers questions. The $100 million value-added services revenue in 2013, is that the expected revenue from VAS in the year, or is that the run rate that you think you'll exit the year at?

That will be an annualized run rate that we said we believe we're targeting to achieve it at some point in the second half of 2013, Mike. And exactly when, I don't know, but that's sort of the SaaS methodology of taking your monthly run rate, multiply by 12.

Okay. And then just, I think you said this, but -- so value-added services was 32% in the quarter, and what did you say it was in -- I could look this up or what did you say it was in Q2 of last year?

Q2 of last, Doug, it was 31%.

Okay.

Sorry, no. Sorry, sorry, 27%.

27%, okay, and 31% last quarter?

Correct.

Okay, cool. Thanks very much.

You're welcome.

Michael Turits, Raymond James.

Hey, guys. Couple of questions. First of all, in the quarter, any impact of Netflix starting to move traffic off and what was Netflix as a percentage of revenue?

They were (multiple speakers).

We don't talk about specifics. We do talk about their revenue if they were 10% or Doug can comment on that. They announced publicly that they are going to start installing, well, actually licensed or giving open source caching technology, if telcos want to install it. And I think they've said 5% to 10% of traffic was being delivered on that. We still see them growing on our network, Michael. That's probably all I should say, because our customers or further we not talk about their traffic patterns. Doug, can you talk about the percentage of revenue?

Sure, yes, they were at 10% or just under 11% in the quarter similar to Q1.

Okay. And then what -- on the value-added services side, can you tell us what the value-added services group overall grew, excluding Professional Services? And if you got it for comparison, what that was last quarter?

I don't have that separate breakout. I can do that and get back with you on pulling that number out. But we've always looked at it as a group.

Yes, I mean that'd helpful. We all understand that ProServe can move up and down and trying to shift it around. So just to give us a better feel for what the demand trend is relative to products less -- product services [viscom] versus ProServe, that'd be real helpful. I guess to -- sorry to flip back this, but back on the CDN side, it does look like their guide implies down again next quarter. What are your thoughts on when that should start to see some sequential growth?

Well, again, our biggest focus on growth is getting the SaaS business to $100 million run rate and seeing the return on capital, building those deeper relationships with customers. And our general strategy is to hold CDN revenues steady, and to sort of find that sweet spot, we're in a -- not chewing up a bunch of CapEx to chase revenue growth and we feel like that's what we're doing. We were light this quarter, so we're not happy about that, but it was not wildly light. And so I think the guide is the guide and it's a result of our business strategy and where our priorities are and where we think the best place to invest capital and hire people (inaudible).

I guess just one more, Jeff and Doug. Well, you had $1 million in free cash flow this quarter, which is great. How committed are you to having -- to being free cash flow positive on a quarter-in quarter-out basis, and are there any seasonal trends that we should expect in that over, say, the next four to six quarters?

Well, I'd say, Michael, what we're committed to is growing our digital presence management platform and that is the priority. That is where -- I think as you and I discussed after our last quarter, that is where we believe we will create substantial value for our shareholders. The customers in the market are delighted to have one vendor to work with and they're delighted that it runs on a high-performance platform, so they get both. They get an integrated suite to manage digital presence and they get the great performance that they used to from Limelight.

And so, what we see there is less price pressure on all products. We see higher gross margin. We see longer multi-year contracts. It's just the revenue quality in that, that it comes out of those Software as a Service solutions, is much, much higher than sort of typical year-to-year CDN deals. So that is our focus, is growing the digital presence management business.

We have, obviously, deployed capital in buying back almost 15% of our shares outstanding. And so we also do think about cash gen, excess cash and that type of thing, but we believe the digital presence management opportunity is incredibly attractive and growing that business is number one, number two, number three priority.

All right. Thanks a lot. [As we've written], this strategy makes sense to us. Congrats on either way, driving some free cash flow this quarter, and good luck.

Thank you.

(Operator Instructions) Donna Jaegers, D.A. Davidson.

All right. Can you guys hear me?

Yes, hey, Donna.

Hi, good morning. Jeff, last quarter, you had talked about your confidence in value-added services because of the sale -- your sales funnel had doubled in the first quarter. Can you give us any sort of update on what that sales funnel looks like, how it's moving through the funnel? Any sort of color there?

Yes. And I think what we've said is, it had grown 50% year-over-year and that the percentage of value-added services is much higher year-over-year. And so the sales pipeline has held steady. Our bookings in Q2 were in the mid-40% of value-added services or in the 40s, I don't know the exact number and we won't get that granular, but driving to where. In the second half of this year, we'd love to see over half our bookings in that with their higher revenue quality business. And hopefully that answers your question.

Yes, that helps. You called out Limelight Deploy on your script, but you didn't mention if you were in beta with any customers. Can you talk about prospects there?

Well, we announced the XO partnership with their Concentric business unit, and we have existing relationships with Bell Canada, with Bestel, and with Bharti. And we have multiple active conversations going on with other telcos. We're fine, these tend to be about a one-year sales cycle, because you're usually dealing with a large international telco and it's complicated as far as, first, have to select a vendor and then take 90 days plus to actually negotiate a contract.

We see very interesting deals in the pipeline that would allow us to expand the footprint of our CDN with very low CapEx. And this is a managed CDN offering, where we'd sell our software on their infrastructure and get that out at reach, and don't have to go take Rackspace down ourselves and/or sometimes we invest the CapEx in the servers, sometimes they do and/or sometimes they become resellers like XO did of our entire stack. So it's kind of a long answer to your question, but there is a pipeline out there and multiple very interesting opportunities.

Okay. And then last question on the lawsuit timing, you guys getting any calls from the court, that would give us any sort of guide as far as when we might expect a decision from the -- on the patent infringement suit?

No, unfortunately, we have no schedule and we're just running our business.

And there's been no change in the people on the quarter or anything like that that would postpone it. So it should be in the next few months?

I wouldn't hazard a guess anytime and this thing has been going on for six years. And so I'm not sure if it'll happen in a couple of months, couple of weeks, or a couple of years. We've, obviously, prevailed twice and have also built out a very interesting portfolio of our own intellectual property and we're just running our businesses.

Okay, thanks.

Aaron Schwartz, Jefferies.

Hi, good morning. Thanks for taking the question. This is Fatima on behalf of Aaron. I was wondering if you could help sort of quantify the CDN revenue that you're not taking on simply because it's lower margin and it's directional sort of guidance, that would be really helpful?

It's hard to quantify that, Fatima. I think you can just sort of look at the CapEx profile. As Doug said, last year, first half, 18% revenue. This year first half was 11% of revenue. And so we're -- it's not an exact formula for -- if we took CapEx back to 18%, then revenue would grow X. There's probably some correlation there, but it's not an exact formula.

I think the point is we could grow it. It would require more CapEx, and we think that so to spend an extra $10 million CapEx on the CDN business this year, we should -- if we're going to invest it anywhere, we should invest in building out the SaaS products. And we definitely are still investing capital in the CDN platform, but we think it's at the right intersection of growth versus cash, capital deployment. When you look at the opportunities we have in the digital presence stack, it is an alternative place as to deploy that capital.

That's helpful. Thank you. And just with respect to the number of products that customers are bundling. So as you're strategically moving away from kind of the lower-margin CDN type services, are you seeing a steady uptick in the number of products customers are buying?

Our average new -- the new customers that we signed up in the quarter averaged about two products per -- or services per contract with the new relationships. And that's a good indication and as we have more and more products in the market, our goal would be to drive cross-sell and up-sell and increase that ratio both for existing customers and for the new customers we sign.

Yes, Jeff, another way to look at is too, we had the most happen this quarter, where we had approximately 50 existing Limelight customers add either Limelight Video Platform or Web Content Management services to their existing delivery services. So that was the most uptick we had during one quarter.

And in that instance, do you find discounting an opportunity or a challenge there, because you've had these sort of entrenched relationships with these existing customers?

We see that as an opportunity. We've talked about it on prior quarter calls to the amount of discounting when we're doing that bundle, especially on the CDN pricing side, is much less. So we're much closer to list price when we bundle than when we do it standalone.

Fair enough. And the very last one from me. Could you speak to headcount addition expectations for the back half of the year and even at a higher level for calendar 2013, and [where] you're looking to add resources? Is it on the Professional Services side or more on the sales and on demand generation side? And that's all for me. Thank you.

Sure. I think we've never really given hiring forecast other than to say, you could tend to think of headcount growing at the same rate as revenue plus or minus 5%. I think we are still hiring people in international markets as we expand our international footprint. And last year, we've hired a good number in Asia and that team is doing great. We are still hiring in R&D.

We are building out Professional Services team. And then if you look at our target model [of the team], it shows you where we anticipate we'll get leverage as we scale. So G&A, we got about the G&A platform. We need to support [to form] a company. So we should get good leverage from here forward off of G&A.

Sales and marketing, we should get good leverage. You will see us investing and expanding the Limelight brand into this whole digital presence management space, and that's just an overall part of the strategy. But over time, we will get leverage off the sales and marketing [team as well].

That's helpful. Thank you.

Thank you. I believe, operator, it looks like there are no further questions. Is that correct?

Yes, that's correct, sir.

All right. Well, thank you all for joining us this morning and we will speak with you on any after calls that we have scheduled. And thank you for your time. Operator, at this time, we'll conclude the call.

Thank you. Ladies and gentlemen, that does conclude today's conference. You may all disconnect and have a wonderful day.