Edgio Inc (EGIO) 2023 Q3 法說會逐字稿

Ladies and gentlemen, thank you for standing by. My name is Desiree, and I will be your conference operator today. At this time, I would like to welcome everyone to the Edgio Third Quarter 2023 Earnings Call. (Operator Instructions)

女士們先生們，謝謝你們的支持。我叫 Desiree，今天我將擔任你們的會議操作員。此時，我謹歡迎大家參加 Edgio 2023 年第三季財報電話會議。 （操作員說明）

I would now like to turn the conference over to Sameet Sinha, Vice President of Investor Relations. Please go ahead.

現在我想將會議交給投資者關係副總裁 Sameet Sinha。請繼續。

Good afternoon. Thank you for joining the Edgio third quarter 2020 financial results conference call. This call is being recorded today, November 15, 2023, and will be archived on our website for approximately 10 days. A copy of our Form 10-Q for the third quarter, along with the earnings press release can be found in the Investor Relations section of our website.

午安.感謝您參加 Edgio 2020 年第三季財務業績電話會議。本次通話將於今天（2023 年 11 月 15 日）進行錄音，並將在我們的網站上存檔約 10 天。您可以在我們網站的投資者關係部分找到第三季 10-Q 表格的副本以及收益新聞稿。

Please note that today's comments include forward-looking statements regarding future events and financial performance, including statements regarding guidance for the 2023 fiscal year. These forward-looking statements are subject to risks and uncertainties and involve a number of factors that could cause actual results to differ materially from those expressed or implied by such forward-looking statements. The factors include any impact from macroeconomic trends, the integration of any acquisitions and any impact from geopolitical development.

請注意，今天的評論包括有關未來事件和財務業績的前瞻性陳述，包括有關 2023 財年指導的陳述。這些前瞻性陳述存在風險和不確定性，並涉及許多可能導致實際結果與此類前瞻性陳述明示或暗示的結果有重大差異的因素。這些因素包括宏觀經濟趨勢的影響、收購的整合以及地緣政治發展的影響。

Please see the forward-looking statement disclaimer on the company's earnings press release as well as the sections entitled Risk Factors included in Edgio's filings with the SEC, including our annual report on Form 10-K and quarterly reports on Form 10-Q. Undue reliance should not be placed on forward-looking statements, which speak only as of the date they are made. Edgio disclaims any obligation to update these statements to reflect any new information, future events or circumstances, except as required by law.

請參閱公司收益新聞稿中的前瞻性聲明免責聲明以及 Edgio 向 SEC 提交的文件中包含的標題為「風險因素」的部分，包括我們的 10-K 表年度報告和 10-Q 表季度報告。不應過度依賴前瞻性陳述，這些陳述僅代表發布當日的情況。除法律要求外，Edgio 不承擔更新這些聲明以反映任何新資訊、未來事件或情況的義務。

During the course of today's call, we will be referring to certain non-GAAP financial measures. The GAAP financial measure most directly comparable to each non-GAAP financial measure used or discussed and a reconciliation of the differences between such measures are provided in the earnings press release in our Investor Relations section of our website. These non-GAAP financial measures are not intended to be a substitute for our GAAP financial results.

在今天的電話會議中，我們將提及某些非公認會計準則財務指標。我們網站投資者關係部分的收益新聞稿中提供了與使用或討論的每項非公認會計原則財務指標最直接可比較的公認會計原則財務指標，以及這些指標之間差異的調節表。這些非公認會計準則財務指標並非要取代我們的公認會計準則財務表現。

I will now turn the call over to Bob Lyons, President and CEO. Bob, the floor is yours.

我現在將把電話轉給總裁兼執行長 Bob Lyons。鮑勃，地板是你的。

Thank you, Sameet. Good afternoon, and welcome to our earnings call for the third quarter of 2023. In the fall of 2021, Edgio embarked on a transformational journey. Transformations like these are never easy and require relentlessly working through challenges to unlock the opportunity. This past year has offered us several challenges to navigate, but as expected, in the recent 2 quarters, we have also begun to realize the opportunity.

謝謝你，薩米特。下午好，歡迎參加我們的 2023 年第三季財報電話會議。2021 年秋季，Edgio 踏上了轉型之旅。此類轉型絕非易事，需要不懈地克服挑戰才能釋放機會。過去的一年給我們帶來了一些挑戰，但正如預期的那樣，在最近兩個季度，我們也開始意識到機會。

One of our previously stated strategic objectives was to better align our capital structure with our strategic plans. Specifically, we had 3 goals. First, we wanted to ensure adequate liquidity to continue building on the recent momentum. Second, we wanted to exchange our converts due in 2025 for new 2027 converts to avoid near-term headwinds. And third, we wanted to remove any uncertainty around our NASDAQ listing status without putting more pressure on our stock.

我們先前提出的策略目標之一是使我們的資本結構與我們的策略計劃更能保持一致。具體來說，我們有 3 個目標。首先，我們希望確保充足的流動性，以繼續鞏固近期的勢頭。其次，我們希望將 2025 年到期的轉換者替換為 2027 年新的轉換者，以避免近期的不利因素。第三，我們希望消除納斯達克上市地位的任何不確定性，而不會對我們的股票造成更多壓力。

Over the past 2 quarters, the Board and management team undertook a thorough process to ascertain the best way to accomplish these objectives, including an outreach to over 40 capital providers. That work was accelerated following the transfer of our listing to the NASDAQ capital market, but our overall objectives remained unchanged. As outlined in our 8-K filing yesterday, we have been able to successfully address each of these 3 objectives. Our existing investor Lynrock Lake Master Fund LP exchanged its existing unsecured convertible notes due in 2025 for secured convertible notes due in 2027. Additionally, Lynrock has provided the company with $66 million of new financing. Importantly, these transactions provide us with a strengthened balance sheet and put us in a stronger financial position to continue building on the momentum established in Q2 and Q3. As part of these transactions, we will appoint 2 new independent Board members and reduce the overall board size from 9 to 5. Last, we believe that we have taken the necessary first steps to return us to compliance with NASDAQ.

在過去的兩個季度中，董事會和管理團隊進行了徹底的流程，以確定實現這些目標的最佳方式，包括與 40 多家資本提供者聯繫。轉板納斯達克資本市場後，這項工作加快了，但整體目標沒有改變。正如我們昨天的 8-K 文件中所述，我們已經成功實現了這 3 個目標。我們現有的投資者Lynrock Lake Master Fund LP 將其現有的2025 年到期的無擔保可轉換票據交換為2027 年到期的有擔保可轉換票據。此外，Lynrock 還為該公司提供了6,600 萬美元的新融資。重要的是，這些交易為我們提供了更強大的資產負債表，並使我們處於更強大的財務狀況，以繼續鞏固第二季和第三季建立的勢頭。作為這些交易的一部分，我們將任命2 名新的獨立董事會成員，並將董事會總體規模從9 人減少到5 人。最後，我們相信我們已經採取了必要的第一步，使我們恢復遵守納斯達克的規定。

In short, based on our thorough process, we are confident that these steps taken are the best and most complete option to preserve and protect value for our shareholders and drive the company's growth strategies. With these transactions, we look forward to moving forward with a full focus on improving the profitability and growth of the business.

簡而言之，基於我們徹底的流程，我們相信所採取的這些步驟是為股東保留和保護價值並推動公司成長策略的最佳和最完整的選擇。透過這些交易，我們期待著繼續專注於提高業務的獲利能力和成長。

We continue to make progress improving overall profitability toward achieving an adjusted EBITDA margin of at least 15%. We will achieve this by continuing to implement a more efficient company-wide operating model, improving network unit economics and by pivoting to an asset-light capacity strategy.

我們繼續在提高整體獲利能力方面取得進展，以實現至少 15% 的調整後 EBITDA 利潤率。我們將透過持續實施更有效率的全公司營運模式、改善網路單位經濟效益以及轉向輕資產產能策略來實現這一目標。

We remain committed to our plans of reducing run rate costs by $85 million to $90 million by year-end. Approximately 70% of those savings are driven from improved operating efficiency. We have reduced annualized operating expenses by more than $60 million, implying a 28% reduction in total company operating expense year-to-date. Approximately 30% of savings resulted from improved unit economics by reducing our hosting bandwidth and peering costs. Cash gross margins expanded by 130 basis points sequentially.

我們仍致力於實現到年底將營運成本降低 8,500 萬至 9,000 萬美元的計畫。其中約 70% 的節省來自營運效率的提升。我們已將年化營運支出減少了超過 6,000 萬美元，這意味著公司年初至今的總營運支出減少了 28%。大約 30% 的節省是由於透過降低託管頻寬和對等互連成本來提高單位經濟效益。現金毛利率較上季成長 130 個基點。

Our asset-light strategy has resulted in reducing capital intensity to just 1.7% of revenue year-to-date. We continue to execute on our savings road map in the current quarter and well into 2024. With this backdrop, we are on track to deliver adjusted EBITDA breakeven in the fourth quarter. The introduction of new growth-oriented application and security solutions has resulted in the achievement of several industry awards and recognition. We are proud of the progress we made here as we believe these awards reinforce our focus on fully integrated solutions. Edgio now boasts differentiated application, security and streaming solutions powered by our globally scaled edge network natively secured and delivered with deep expertise.

我們的輕資產策略已將資本密集度降低至年初至今僅佔收入的 1.7%。我們在本季和 2024 年繼續執行我們的節約路線圖。在此背景下，我們預計在第四季度實現調整後 EBITDA 盈虧平衡。推出新的以成長為導向的應用程式和安全解決方案已獲得多項行業獎項和認可。我們對在這裡取得的進步感到自豪，因為我們相信這些獎項加強了我們對完全整合解決方案的關注。 Edgio 現在擁有差異化的應用程式、安全性和串流媒體解決方案，這些解決方案由我們的全球規模邊緣網路提供支持，本機安全並以深厚的專業知識提供。

In the third quarter, we broadened our security offering with the release of our API security solution. Consistent with our other security modules, this solution leverages our machine learning capabilities, to inspect both application traffic patterns and content to ensure API endpoints are discovered, managed and secured. This is one of many security product enhancements this year that continue to position us well in this high-growth industry.

第三季度，我們發布了 API 安全解決方案，擴大了我們的安全產品範圍。與我們的其他安全模組一致，該解決方案利用我們的機器學習功能來檢查應用程式流量模式和內容，以確保 API 端點被發現、管理和保護。這是今年眾多安全產品增強功能之一，這些增強功能繼續使我們在這個高成長產業中佔有有利地位。

Adding to the multiple security awards during this year, we recently were named the overall Web Security Solution of the Year Award in the Seventh Annual CyberSecurity Breakthrough Awards. Our security solution is also a finalist in the InfoWorld's Technology of the Year Awards for DevSecOps.

除了今年獲得的多個安全獎項之外，我們最近還在第七屆年度網路安全突破獎中被評為年度整體網路安全解決方案獎。我們的安全解決方案也入圍了 InfoWorld 的 DevSecOps 年度技術獎決賽。

A key element of our value proposition has always been to simplify the buyer experience. We recently announced the availability of our enterprise-level Protect and Perform Applications Bundle to do just that. This bundle combines Tier 1 web performance capabilities, our full web security suite and enterprise-level security operations support services, all in a single comprehensive package with a simple and predictable price model.

我們價值主張的關鍵要素始終是簡化買家體驗。我們最近宣布推出企業級保護和執行應用程式捆綁包來實現這一目標。該捆綁包結合了第 1 層 Web 效能功能、我們完整的 Web 安全套件和企業級安全營運支援服務，所有這些都在一個具有簡單且可預測的價格模型的綜合包中。

Applications Version 7 released in April of this year continues to be rolled out as an upgrade to existing customers. Upon adoption, customers have one quick access to the full breadth of our solution suite along with the new simplified bundled pricing model.

今年 4 月發布的應用程式版本 7 將作為現有客戶的升級繼續推出。採用後，客戶可以快速存取我們的解決方案套件的全部範圍以及新的簡化的捆綁定價模型。

In our media business, we recently announced a strategic partnership with leading streaming technology vendors to provide a simplified, cost-effective and comprehensive linear, live or on-demand OTT solution led by Edgio's managed services offering. Our partnership with Wurl announced last week will enable fast syndication via our Uplynk service.

在我們的媒體業務中，我們最近宣布與領先的串流媒體技術供應商建立策略合作夥伴關係，以提供由 Edgio 託管服務產品主導的簡化、經濟高效且全面的線性直播或點播 OTT 解決方案。我們上週宣布與 Wurl 合作，將透過我們的 Uplynk 服務實現快速聯合。

During our last quarterly call, we outlined the many steps we have taken to support stabilization and expansion of our revenue. These steps include implementation of a client success team, the overhaul of our go-to-market capabilities, improved enablement of our commercial teams and channel program that expands our [routes] to market.

在上一季的電話會議中，我們概述了為支持穩定和擴大收入而採取的許多措施。這些步驟包括組建客戶成功團隊、全面改革我們的上市能力、改進我們的商業團隊的支持以及擴大我們的市場[路線]的通路計劃。

In the third quarter, bookings for our application suite improved by more than 150% from the previous quarter and more than 400% from the first quarter. The improved momentum was balanced across both new customer acquisition and existing customer expansion with new customer bookings growing almost 400% and expansion bookings growing almost 300% sequentially.

第三季度，我們的應用程式套件的預訂量比上一季度增長了 150% 以上，比第一季增長了 400% 以上。新客戶獲取和現有客戶擴展均取得了平衡，新客戶預訂量環比增長近 400%，擴展預訂量環比增長近 300%。

Churn has also meaningfully declined with revenue churn declining more than 35% sequentially. In the third quarter, expansion revenue outpaced churn for the first time. We expect this trend to continue in the fourth quarter and well into 2024.

客戶流失率也顯著下降，營收流失率比上一季下降了 35% 以上。第三季度，擴張收入首次超過客戶流失速度。我們預計這一趨勢將在第四季度持續到 2024 年。

Our qualified pipeline continues to grow and the conversion rate of that pipeline has more than doubled since the first quarter. Equally important, sales productivity measured by cost of acquisition to bookings also improved by 40% in the same period.

我們的合格管道持續成長，自第一季以來，該通路的轉換率增加了一倍以上。同樣重要的是，同期以獲取預訂成本衡量的銷售效率也提高了 40%。

Highlights from the third quarter bookings include a competitive takeout of a $250 billion automotive group in Europe, a large North American pet supply retailer with more than 1,600 retail stores and Cebu Pacific Airlines, where we improved their web response time by 41%. We also upsold security solutions to a large hardware company in Asia, a leading health food company in the U.S., a unicorn e-commerce platform in Brazil and a media company in India.

第三季預訂的亮點包括對歐洲一家價值2500 億美元的汽車集團、一家擁有1,600 多家零售店的北美大型寵物用品零售商以及宿務太平洋航空​​公司的競爭性收購，我們將他們的網絡響應時間縮短了41%。我們也向亞洲的一家大型硬體公司、美國一家領先的保健食品公司、巴西的獨角獸電子商務平台和印度的媒體公司推銷安全解決方案。

The diversity and scope of these commercial wins are directly attributable to the breadth of our capabilities and our ability to demonstrably improve performance, operating efficiency and security. All of this is directly attributable to the release of Applications Version 7 in April. We have also seen ongoing industry consolidation in our legacy CDM business with Lumen and StackPath, both shuttering their CDN offerings. This trend speaks to the challenges in the CDN industry, but also offers validation of the strategic steps that we have taken to reposition the company.

這些商業勝利的多樣性和範圍直接歸因於我們能力的廣度以及我們顯著提高性能、營運效率和安全性的能力。所有這一切都直接歸因於四月份應用程式版本 7 的發布。我們也看到 Lumen 和 StackPath 等傳統 CDM 業務正在進行產業整合，兩家公司都關閉了 CDN 產品。這一趨勢說明了 CDN 產業面臨的挑戰，但也驗證了我們為重新定位公司所採取的策略步驟。

We continue to see opportunity in the delivery business through our Open Edge supported asset-light strategy. This approach will improve profitability and return on invested capital while continually providing quality and performance at a fair price to our customers.

透過我們的開放邊緣支援的輕資產策略，我們繼續看到交付業務的機會。這種方法將提高獲利能力和投資資本回報率，同時不斷以公平的價格向我們的客戶提供品質和性能。

In summary, the foundation required to support our strategic pivot is now in place. We continue to move the company toward our vision of profitability and growth, supported by our differentiated edge-enabled solutions.

總而言之，支持我們的策略支點所需的基礎現已就位。在我們差異化的邊緣支援解決方案的支持下，我們將繼續推動公司實現盈利和成長的願景。

Now I will turn the call over to Stephen to discuss second quarter results. Stephen?

現在我將把電話轉給史蒂芬討論第二季的業績。史蒂芬？

Thank you, Bob. As expected, second quarter revenue was the bottom for the year. Revenues for the third quarter of 2023 were $97 million, sequentially increasing by 1.3%, driven by improved seasonality, our successful efforts in reducing churn and high conversion of bookings to revenue.

謝謝你，鮑伯。如預期，第二季營收為全年最低。 2023 年第三季的營收為 9,700 萬美元，季增 1.3%，這得益於季節性改善、我們在減少客戶流失方面所做的成功努力以及預訂轉化為收入的高轉換率。

Moving to gross margin. Cash gross margin, which excludes the impact from stock-based compensation, acquisition-related expenses and depreciation and amortization was 32.1%, up 130 basis points sequentially. The sequential improvement was due to higher revenue and our continued cost-saving initiatives, partially offset by higher switching costs related to a cloud platform services provider impacting gross margin by approximately 300 basis points. We expect most of this incremental cost to be nonrecurring going forward.

轉向毛利率。現金毛利率（不包括股票薪酬、收購相關費用以及折舊和攤銷的影響）為 32.1%，比上一季增加 130 個基點。連續改善是由於收入增加和我們持續的成本節約舉措所致，但部分被與雲端平台服務提供者相關的較高轉換成本所抵消，影響毛利率約 300 個基點。我們預計未來大部分的增加成本將是非經常性。

Turning to operating expenses. Cash operating expenses, excluding share-based compensation, restructuring charges, acquisition and legal-related charges, depreciation and amortization were $40.7 million or 41.9% of revenue, down from $42.9 million or 44.8% in the second quarter of 2023.

轉向營運費用。現金營運支出（不包括股權激勵、重組費用、收購和法律相關費用、折舊和攤提）為4,070 萬美元，佔收入的41.9%，低於2023 年第二季的4,290 萬美元，佔營收的44.8 %。

We continue to make significant progress in our cost reduction initiatives. We are executing well on our planned acquisition synergies and operational efficiency programs while investing in new product introductions and our revitalized sales and marketing motions.

我們在降低成本的措施上繼續取得重大進展。我們在計劃中的收購協同效應和營運效率計劃上執行得很好，同時投資於新產品的推出以及振興的銷售和行銷活動。

Cash R&D expense decreased by $2.8 million sequentially to $13.9 million, approximately 14.3% of revenues from $16.7 million or 17.4% of revenues as we saw a full quarter benefit from previously announced organizational restructuring.

現金研發費用比上一季減少280 萬美元，至1,390 萬美元，約佔收入的14.3%，從1,670 萬美元或占收入的17.4% 減少，因為我們看到整個季度都受益於先前宣布的組織重組。

Cash, sales and marketing expense decreased $750,000 sequentially to $15 million or 15.5% of revenue from $15.7 million or 16.4% of revenues as we saw the remaining benefit from transitioning the commercial team to a more productive territory-based go-to-market model.

現金、銷售和行銷費用比上一季減少了75 萬美元，從1570 萬美元（佔收入的16.4%）降至1500 萬美元（佔收入的15.5%），因為我們看到了將商業團隊轉變為更高效的區域為基礎的上市模式所帶來的剩餘好處。

Cash G&A expense increased by $1.3 million sequentially to $11.8 million or 12.2% of revenue from $10.5 million or 10.9% of revenue. Previously announced cost containment efforts were partially offset by onetime accounting and legal fees.

現金管理及行政費用比上一季增加 130 萬美元，從 1,050 萬美元（佔營收的 10.9%）增至 1,180 萬美元（佔營收的 12.2%）。先前宣布的成本控制措施被一次性會計和法律費用部分抵消。

Share-based compensation included in operating expenses was $3.3 million versus the second quarter at $3 million. Restructuring charges were $72,000 compared to $3.3 million for the second quarter of 2023.

包含在營運費用中的股份薪酬為 330 萬美元，而第二季為 300 萬美元。重組費用為 72,000 美元，而 2023 年第二季的重組費用為 330 萬美元。

Acquisition and legal-related charges included in COGS and operating expenses in connection with the EdgeCast acquisition were approximately $0.5 million compared to approximately $1 million for the second quarter.

與 EdgeCast 收購相關的 COGS 和營運費用中包含的收購和法律相關費用約為 50 萬美元，而第二季約為 100 萬美元。

Adjusted EBITDA for the third quarter of 2023 was a loss of $9.5 million compared to a loss of $13.4 million in the second quarter of 2023 due to higher revenues and continued execution on cost saving initiatives, which have resulted in sequential decline in our cost structure.

2023 年第三季調整後 EBITDA 虧損 950 萬美元，而 2023 年第二季虧損 1,340 萬美元，原因是營收增加和持續執行成本節約舉措，導致我們的成本結構連續下降。

Moving to the balance sheet and cash flow. Cash and cash equivalents and marketable securities totaled $27.6 million, a decrease of approximately $8.6 million from the second quarter of 2023. Third quarter 2023 capital expenditure was $2.3 million or 2.4% of revenues.

轉向資產負債表和現金流量。現金和現金等價物以及有價證券總計 2,760 萬美元，比 2023 年第二季減少約 860 萬美元。2023 年第三季資本支出為 230 萬美元，佔收入的 2.4%。

Over the last 9 months, we have initiated tighter CapEx spending goals, which have resulted in CapEx significantly below historical levels. DSO for the second quarter was 63 days, up slightly from the second quarter.

在過去 9 個月中，我們啟動了更嚴格的資本支出目標，這導致資本支出顯著低於歷史水準。第二季的 DSO 為 63 天，較第二季略有增加。

Now moving to guidance. Strong product execution and improved go-to-market motions helped overcome the continued softness in the macro environment. Our broad product portfolio and the value proposition of our solutions are resonating with customers and we're seeing improvements in our leading indicators, which Bob outlined earlier. We remain focused on executing on cost-saving opportunities and are on track to deliver the $85 million to $90 million of run rate savings by year-end.

現在轉向指導。強大的產品執行力和改進的上市行動幫助克服了宏觀環境的持續疲軟。我們廣泛的產品組合和解決方案的價值主張引起了客戶的共鳴，我們看到我們的領先指標有所改善，鮑勃之前概述了這一點。我們仍然專注於執行節省成本的機會，並預計在年底前實現 8500 萬至 9000 萬美元的運行率節省。

Our guidance for the fourth quarter and the full year are, for the fourth quarter of 2023, we expect revenue in the range of $96 million to $98 million. This implies full year revenue range of $391 million to $393 million or a growth of 15.5% to 16% year-over-year.

我們對第四季和全年的指導是，2023 年第四季的營收預計在 9,600 萬美元至 9,800 萬美元之間。這意味著全年收入範圍為 3.91 億美元至 3.93 億美元，年增 15.5% 至 16%。

For the fourth quarter of 2023, we expect adjusted EBITDA in the range of between negative $1 million and positive $1 million. For the year, we expect adjusted EBITDA in the range of negative $38 million to negative $36 million. And for the fourth quarter of 2023, we expect capital expenditure in the range of $3 million to $6 million. For the full year 2023 we expect CapEx in the range of $10 million to $13 million. This implies CapEx as a percent of revenue of about 2.6% to 3.3%.

對於 2023 年第四季度，我們預計調整後 EBITDA 在負 100 萬美元到正 100 萬美元之間。今年，我們預計調整後 EBITDA 將在負 3,800 萬美元至負 3,600 萬美元之間。我們預計 2023 年第四季的資本支出將在 300 萬至 600 萬美元之間。我們預計 2023 年全年的資本支出將在 1,000 萬美元至 1,300 萬美元之間。這意味著資本支出佔收入的百分比約為 2.6% 至 3.3%。

Now let me provide you more context around our guidance. We are accelerating our focus on revenue quality and unit economics. As a result, we are guiding a flat revenue sequentially in the fourth quarter at the midpoint. We expect cash gross margin to expand by approximately 400 basis points sequentially due to continued cost-saving initiatives, reduction in cloud platform services provider and margin improvements as we focus on revenue quality.

現在讓我為您提供有關我們指導的更多背景資訊。我們正在加快對收入品質和單位經濟效益的關注。因此，我們預計第四季的營收將環比持平。由於持續的成本節約措施、雲端平台服務提供者的減少以及我們專注於收入品質而提高的利潤率，我們預計現金毛利率將環比增長約 400 個基點。

As previously communicated, we expect breakeven adjusted EBITDA in the fourth quarter. To put it in perspective, at the midpoint of fourth quarter guidance we've reduced cash expenses by almost $90 million on an annualized basis.

如同先前所傳達的，我們預計第四季將實現盈虧平衡調整後 EBITDA。客觀地說，在第四季指導的中期，我們已將年化現金支出減少了近 9,000 萬美元。

As Bob mentioned, we've made significant progress transforming the cost structure of Edgio by driving synergies and efficiencies in our operating costs and expenses.

正如 Bob 所提到的，我們透過提高營運成本和費用的綜效和效率，在改變 Edgio 的成本結構方面取得了重大進展。

Our operational expenses declined since the beginning of the year by 28%, and we expect further reduction in the fourth quarter, which will set us up for further adjusted EBITDA margin expansion in 2024.

自年初以來，我們的營運費用下降了 28%，我們預計第四季度將進一步減少，這將為我們在 2024 年進一步擴大調整後的 EBITDA 利潤率奠定基礎。

With that, I'll turn the call back to Bob for some closing remarks.

之後，我會將電話轉回給鮑勃，讓他做一些結束語。

Thank you, Stephen. I want to wrap up by reiterating that our transformation from a first-generation CDN platform into a third-generation edge solutions platform continues to progress. We now have the foundation in place to continue to move the company toward our vision of profitability and growth supported by differentiated edge-enabled solutions.

謝謝你，史蒂芬。最後我想重申，我們從第一代 CDN 平台到第三代邊緣解決方案平台的轉型仍在繼續取得進展。現在，我們已經奠定了基礎，可以繼續推動公司實現由差異化邊緣支援解決方案支援的獲利和成長願景。

With that, operator, please open up the lines for the question-and-answer session.

那麼，接線員，請打開問答環節。

(Operator Instructions) Your first question comes from the line of Frank Louthan with Raymond James.

（操作員說明）您的第一個問題來自 Frank Louthan 和 Raymond James 的線路。

I wanted to get a little -- appreciate the color on the outlook for the fourth quarter. Looking forward, how should we think about EBITDA next year? Is this kind of the low and we should expect sort of a cross over next quarter or Q1 to [permanent] EBITDA positive going forward. And then can you give us an idea of when we can expect breakeven and positive free cash flow. That's the first question -- first set of question or so. And then second one, how is the exit of StackPath or Lumen done for your delivery business? Has that changed anything?

我想了解一下第四季的前景。展望未來，我們該如何看待明年的 EBITDA？這是一種低點嗎？我們應該預計下個季度或第一季將出現交叉，從而實現[永久] EBITDA 正值。然後您能否告訴我們何時可以達到損益兩平和正自由現金流。這是第一個問題——第一組問題左右。那麼第二個問題，你們的外送業務，StackPath或Lumen的退出是怎麼做的？這改變了什麼嗎？

Yes, Frank, this is Stephen here. Yes. I mean as you can see, we've made great progress with regards to our EBITDA progression. If you take the first half of this year, we had an EBITDA loss of $28 million. I think based on the midpoint of our guidance, we're going to be somewhere a loss of $10 million in the second half of this year, and that's getting us to a breakeven EBITDA in Q4.

是的，弗蘭克，這是史蒂芬。是的。我的意思是，正如您所看到的，我們在 EBITDA 方面取得了巨大進步。如果以今年上半年為例，我們的 EBITDA 損失為 2,800 萬美元。我認為，根據我們指導的中點，今年下半年我們將虧損 1000 萬美元，這將使我們在第四季度實現盈虧平衡 EBITDA。

So you should expect as we go into 2024 with all the cost-saving initiatives that we're going to see continued expansion of EBITDA. Obviously, I don't want to put numbers on that -- around that. But we've taken a lot of cost take out. A lot of that was primarily in the OpEx, I would say, in the first half of this year. And now you can see we're transitioning to more COGS reduction, our gross margin lift. So expect a continual expansion of EBITDA as we go into next year. There will be a little bit of seasonality certainly in the first half, but we should see continued progression.

因此，您應該預計，隨著我們採取所有成本節約舉措，進入 2024 年，我們將看到 EBITDA 持續擴張。顯然，我不想為此提供數字。但我們已經去掉了很多成本。我想說，今年上半年，其中很多主要是在營運支出。現在您可以看到我們正在轉向進一步降低銷售成本，提高毛利率。因此，預計 EBITDA 將在明年持續成長。上半年肯定會有一點季節性，但我們應該看到持續的進展。

With regards to free cash flow, we're going to be working through some of the net working capital true-up. So again, as EBITDA expansion throughout the year and certainly into the second half, we should be turning free cash flow positive. Bob, I don't know, if you want to comment on the StackPath?

關於自由現金流，我們將進行一些淨營運資本調整。因此，隨著 EBITDA 在全年（尤其是下半年）的擴張，我們應該將自由現金流轉為正值。 Bob，我不知道你是否想對 StackPath 發表評論？

Yes, I'll do that. Look, I think the way to think about the dynamics that you saw with StackPath and Lumen is really 2 things for us. I think one, I think it underpins the challenges in the traditional way of running the CDN business. And when 2 companies walk away from that business, literally, it kind of speaks volumes as to the challenges. So -- and that's certainly not new to any of us. I think it also underpins the importance of why we have repositioned the company over the last 2 years as a edge-enabled solutions company focused on app security and moving up stack and video and why those moves are so important.

是的，我會這麼做。聽著，我認為思考你在 StackPath 和 Lumen 中看到的動態對我們來說實際上是兩件事。我認為第一，我認為它支撐了傳統的 CDN 業務運作方式所面臨的挑戰。當兩家公司放棄該業務時，從字面上看，這足以說明所面臨的挑戰。所以——這對我們任何人來說當然都不是什麼新鮮事。我認為這也證明了為什麼我們在過去兩年中將公司重新定位為專注於應用程式安全以及升級堆疊和視訊的邊緣解決方案公司，以及為什麼這些舉措如此重要。

So I think strategically, it just validates all the moves we've making over the last 2 years.

所以我認為從戰略上講，這只是驗證了我們在過去兩年中採取的所有舉措。

I think operationally, we've seen some inbound opportunities from that. I think the way we think about it is it's an opportunity for us to become one of the less number of parties in the space. But we've got to make sure that we can actually generate the positive return on invested capital that we need to. And that's why that asset-light strategy is so important.

我認為在營運上，我們從中看到了一些入境機會。我認為我們的想法是，這對我們來說是一個機會，可以成為該領域少數幾方之一。但我們必須確保我們能夠真正產生我們所需的投資資本回報。這就是為什麼輕資產策略如此重要。

So the way we think about that business, it is a challenging business in the industry right now. We think that the asset-light strategy that we're pursuing will allow us to navigate that industry much more effectively and do it in a way that we can actually generate EBITDA and return on invested capital for our shareholders, which is why we're really pushing that strategy hard. And no doubt as the industry consolidates, just provides more opportunity for us as long as we can do that.

因此，我們對該業務的看法是，目前該業務在該行業中是一項具有挑戰性的業務。我們認為，我們正在追求的輕資產策略將使我們能夠更有效地駕馭該行業，並以一種能夠真正為股東產生 EBITDA 和投資資本回報率的方式做到這一點，這就是我們的原因確實在努力推動這項策略。毫無疑問，隨著產業整合，只要我們能做到這一點，就會為我們提供更多機會。

Next question comes from the line of Eric Martinuzzi with Lake Street.

下一個問題來自 Eric Martinuzzi 與湖街 (Lake Street) 的合作。

Yes. I wanted to get a little bit deeper into the refinancing transaction, and congrats on getting that buttoned up here. We finished out the September quarter with $28 million in cash, and we had at the time on 9/30, we had the $125 million of convertible notes. And then obviously, with yesterday's financing, we pick up $66 million in cash. It looks like we paid out $6 million to clear around 5% of the $125 million convertible notes but we've got the remaining $119 million. So I just wanted to know, with all those puts and takes, can you give us kind of a November 15 pro forma cash and pro forma debt?

是的。我想更深入地了解再融資交易，恭喜你在這裡解決了這個問題。我們在 9 月季度結束時擁有 2800 萬美元的現金，並且在 9 月 30 日，我們擁有 1.25 億美元的可轉換票據。顯然，透過昨天的融資，我們獲得了 6,600 萬美元的現金。看起來我們支付了 600 萬美元來清算 1.25 億美元可轉換票據中的約 5%，但我們也得到了剩餘的 1.19 億美元。所以我只是想知道，有了所有這些看跌期權和看跌期權，您能給我們 11 月 15 日的預計現金和預計債務嗎？

Yes. Proforma debt is going to be somewhere around $183 million and I think with all the puts and takes, cash is going to be about $88 million.

是的。預計債務約為 1.83 億美元，我認為加上所有看跌期權和看跌期權，現金約為 8800 萬美元。

Okay. All right. And then the business, as it is today, and the business as it is a year from now, I'm not looking for 2024 specifics on the revenue, but you've historically characterized your business is about 50% CDN, 25%, apps, and 25% streaming. How does that look a year from now?

好的。好的。然後是今天的業務，以及一年後的業務，我不是在尋找 2024 年收入的具體情況，但您歷史上描述的業務約為 50% CDN、25%、應用程式和 25% 的串流媒體。一年後情況如何？

Yes. I mean, Eric, this is Stephen again. I would say just the sort of growth trajectories of the business, you're going to continue to see the nondelivery piece growing faster than delivery. And so you should expect, as we exit '24 and move into '25 that the apps and Uplynk business are becoming a larger portion of the overall company revenues. We're about, as you said, about 50% delivery stay and then 25% split between the other 2 businesses. But they are going to grow disproportionately faster than delivery. So there will be a higher portion of the mix as we go out in the subsequent years.

是的。我是說，埃里克，這又是史蒂芬。我想說的是，按照業務的成長軌跡，您將繼續看到非交付部分的成長速度快於交付部分。因此，您應該預料到，隨著我們退出 24 年並進入 25 年，應用程式和 Uplynk 業務將成為公司整體收入的更大部分。正如您所說，我們大約保留 50% 的送貨時間，然後由其他兩家企業分配 25%。但它們的成長速度將遠遠快於交付速度。因此，當我們在接下來的幾年中推出時，混合比例將會更高。

Next question comes from the line of Daniel Hibshman with Craig-Hallum Capital Group.

下一個問題來自 Craig-Hallum Capital Group 的 Daniel Hibshman。

This is Daniel on for Jeff Van Rhee. Just on the cost saving initiatives, Stephen, in terms of costs coming out yet. Is there -- I would have thought with the risks that we've sort of reached sort of a new level of OpEx, is there room for more OpEx to come out yet? And then maybe specifically double-clicking on the potential COGS savings, in particular, you emphasized that more for '24. Just where if you could drill down at all, do you see efficiency opportunities in COGS?

我是傑夫·範·李 (Jeff Van Rhee) 的丹尼爾。史蒂芬，就成本節約措施而言，目前尚未公佈成本。我本想考慮到我們已經達到了營運支出新水準的風險，是否還有更多營運支出的空間？然後，也許會特別雙擊潛在的銷貨成本節省，特別是，您在 24 年強調了這一點。如果您可以深入研究，您是否在 COGS 中看到了提高效率的機會？

Yes. I mean I would say, firstly, we've made great progress with regards to the OpEx reductions. If you think about it from where we were in Q4 of 2022, we've got to a run rate about 28% reduction, about $60 million annualized. As we go into Q4, based on the guidance, there is going to be further OpEx reductions. I think it works out to be about $36 million, $37 million. So that's down from where we were in Q3. And I think we're going to be largely through most of those reductions. And as I said earlier, we're going to be [transit] but more COGS reductions. Some of those initiatives are more lengthy in terms of renegotiating with our bandwidth providers and colos, et cetera. But already, you can see on flat revenue guide to Q4 you're seeing our gross margin expand by 400-plus basis points. So you're really going to start to see that gross margin improvement and cost reductions kick in, in Q4 and into 2024.

是的。我的意思是，我想說，首先，我們在營運支出削減方面取得了巨大進展。如果你從 2022 年第四季的情況來看，我們的運作率將減少約 28%，年化費用約為 6,000 萬美元。當我們進入第四季度時，根據指導，營運支出將進一步減少。我認為大約是 3600 萬美元、3700 萬美元。所以這比第三季的情況有所下降。我認為我們將在很大程度上完成大部分削減。正如我之前所說，我們將[過境]但更多地降低銷售成本。其中一些措施在與我們的頻寬提供者和託管服務商等重新談判方面需要更長的時間。但您已經可以在第四季的營收持平指南中看到我們的毛利率成長了 400 多個基點。因此，從第四季度到 2024 年，您確實會開始看到毛利率提高和成本降低。

And Daniel, let me add a little more color to that tie to a little bit more of a strategic perspective. So we -- 2 of the 3 pillars on driving costs out are improved unit economics and the asset-light strategy. And the stuff that Stephen just highlighted, which is reducing our peering and our hosting costs and those like types of things is really around improving unit economics, which is the large part of our COGS today. The asset-light strategy really gets that strategically where we partner with people who have those things already don't have to pay for them and we can take a lot of cost out of the system and focus on delivering our software on top of that.

丹尼爾，讓我從戰略角度為這條領帶添加更多色彩。因此，我們降低成本的三個支柱中的兩個是改善單位經濟效益和輕資產策略。史蒂芬剛才強調的東西，即減少我們的對等互連和託管成本以及諸如此類的事情，實際上是圍繞提高單位經濟效益，這是我們今天的 COGS 的很大一部分。輕資產策略確實從策略上實現了這一點，我們與已經擁有這些東西的人合作，而無需為它們付費，我們可以從系統中節省大量成本，並專注於在此基礎上交付我們的軟體。

So when you look at those 2 things together, we'll continue to improve costs on the unit economics by just running what we have more efficiently. And then the asset-light strategy will take more chunky costs out as we strategically think about our capacity differently as well as reduce our capital intensity at the same time.

因此，當您將這兩件事放在一起考慮時，我們將透過更有效地運行我們現有的設備來繼續改善單位經濟效益的成本。然後，輕資產策略將節省更多的成本，因為我們從策略上以不同的方式思考我們的產能，同時降低我們的資本密集度。

And then just one more for me, kind of following up in a similar vein talking something about stepping away from less attractive revenue. I just wanted to zoom in there. Was that mostly in relation to this quarter? Or is that something you see as ongoing? And then just any boundaries you could put around what sort of scope of impact that might mean for revenue and also on the upside for gross margins?

然後對我來說還有一個，以類似的方式跟進，談論放棄不太有吸引力的收入。我只是想放大那裡。這主要與本季有關嗎？或者您認為這是持續進行的事情嗎？然後，您可以對這對收入和毛利率的上升可能意味著什麼樣的影響範圍設定任何界限？

Yes. I think -- I'll let Steve add any color he wants, but I'll just frame it for you. I think the way to think about it is actually a lot like what we just talked about in managing our costs. So the way that our business works is you essentially pay for capacity when you hit peak and then that's the level that you pay for, for the rest of the year. And so if we have customers who have super spiky business, let's say, for a couple of hours once a week, it drives our cost up and then the rest of the week we're paying for, but we're not using it. So it's really about looking at how do we manage traffic and optimize that yield so that we're not driving cost up and spikes, if you will, and carrying that cost across the rest of the business. And it really -- it's customer by customer. There's a handful of -- actually less than a handful of customers that caused most of that for us, and we're working with them to just smooth out the traffic and find other ways around that to reduce our overall threshold -- cost threshold.

是的。我想——我會讓史蒂夫添加他想要的任何顏色，但我只會為你框起來。我認為思考這個問題的方式其實很像我們剛才談到的管理成本。因此，我們業務的運作方式是，您在達到高峰時基本上為容量付費，然後這就是您在一年中剩餘時間支付的水平。因此，如果我們的客戶的業務量非常大，比如說，每週一次幾個小時，這會增加我們的成本，然後我們在一周的剩餘時間裡支付費用，但我們沒有使用它。因此，這實際上是關於我們如何管理流量並優化收益，這樣我們就不會推高成本和高峰（如果你願意的話），並將該成本轉移到其他業務部門。事實上，這是逐一客戶的。有少數——實際上不到少數的客戶給我們造成了大部分的損失，我們正在與他們合作，以平滑流量並找到其他方法來解決這個問題，以降低我們的整體門檻——成本門檻。

I'll just add a little color to that. Obviously, we're deliberately focusing on quality of revenue and focusing on our margins. I would say we've sort of been implementing direct margin thresholds and sort of weeding out poor quality revenue. But in terms of the overall impact going forward, I don't think we can quite sort of look at that sort of a straight coming out of revenue. So we're going to our clients and sort of renegotiating on contracts and some are amenable to sort of adding new services and new products to their existing business. So it's not just coming straight out of revenue, but certainly, we're going to be very thoughtful in terms of the type of business we're taking going forward and with a big focus on improving our EBITDA margin.

我會為此添加一點顏色。顯然，我們有意關注收入品質和利潤。我想說，我們一直在實施直接保證金門檻，並淘汰品質較差的收入。但就未來的整體影響而言，我認為我們無法完全看待這種直接來自收入的情況。因此，我們將與客戶就合約進行重新談判，有些客戶願意在現有業務中添加新服務和新產品。因此，這不僅僅是直接來自收入，當然，我們將非常考慮我們未來開展的業務類型，並專注於提高我們的 EBITDA 利潤率。

(Operator Instructions). There are no further questions at this time. Mr. Lyons, I turn the call back over to you.

（操作員說明）。目前沒有其他問題。里昂斯先生，我將電話轉回給您。

Okay. Great. Thank you, everyone, for joining us today. We look forward to sharing our progress and continuing our conversations with analysts and investors as we go forward and have a great rest of your day. Thank you.

好的。偉大的。謝謝大家今天加入我們。我們期待與分析師和投資者分享我們的進展，並繼續與我們的對話，祝您有個愉快的一天。謝謝。

This concludes today's conference call. You may now disconnect.

今天的電話會議到此結束。您現在可以斷開連線。