Record second quarter revenue of $74.3 million, up 54% year over year

Raises synergy target from Edgecast acquisition to $60 million

Raises 2022 revenue guidance and issues 2023 outlook

Edgio, Inc. (NASDAQ:EGIO), securely powering the most performant applications, delivery, and streaming experiences at the edge, today reported strong financial results for the second quarter ended June 30, 2022. Continuing four consecutive quarters of improved profitability, expanding market share, and extending its product portfolio –bolstered by two transformative acquisitions – Edgio's solutions are demonstrating value and delivering meaningful impact.

"We continue to successfully execute on our multi-year transformation plan. In the past 12 months, we have completed two acquisitions, overhauled all aspects of our operating model, removed significant costs, and implemented a new growth-oriented commercial team. Our solutions are demonstrating proof of value, our clients are doing more with us as we innovate our technology business and continue to develop solutions to respond to dynamically evolving needs. While our strategy benefits from sector tailwinds, our innovation will allow us to continue to capture market share, sustain growth and improve profitability," said Bob Lyons, President and Chief Executive Officer.

"Second quarter 2022 revenue was ahead of plan and a historical best as we continue building on the momentum established late last year. While we do not intend to provide 2023 guidance until later this year, we have completed our initial bottom-up outlook for next year. We remain very excited about these transformative acquisitions and the foundation now in place to support our strategic objective of being the global leader in edge-enabled solutions for the outcome buyer – a technology company that can deliver continuously improving growth and profitability to our shareholders," said Lyons.

Q2 2022 highlights:

Revenue of $74.3 million, an expansion of 54% from the previous year:

Limelight contributed $61.5 million, a 27% year over year expansion, resulting from core business growth and the addition of Layer0 revenue.
Edgio had its third consecutive quarter of double-digit growth, a clear indication of the company's ability to capture market share.
Edgecast contributed $12.8 million in the quarter.

Gross margin was 30%, up 1050 basis points year over year:

A large in-quarter capacity acquisition and the integration of Edgecast's excess network capacity had a temporary negative impact.
New capacity will support planned Q3 and Q4 increased demand resulting from new content, Thursday Night Football and a large software client committing to double their traffic.
Online capacity adequately mitigates previously highlighted supply chain concerns.

Edgio's solutions: A foundation for continued growth and profitability improvement:

Edgio AppOps provides the most powerful, comprehensive integrated cloud security, development and CDN solution suite in the world.

App Security: The most complete web application and API protection solution in the market, it includes DDoS, WAF and Bot Management capabilities, and recently stopped a 355 million packets per second DDoS attack - one of the largest ever blocked.
App Edge: Modern web development tools proven to double developer velocity.
App Platform: Integrated suite of edge application CDN and compute services.

Edgio Delivery, the second largest and the most performant edge delivery platform, boasts approximately 230 terabits per second and is delivered across more than 300 global PoPs.

Edgio Streaming is a mission-critical streaming platform that supports some of the most demanding, well-known companies with a unique ability to capture usage data that can be used to continuously improve viewer experience. Edgio will manage more than 30,000 live events and insert over 50 billion ads for clients this year.

Updating 2022 Guidance:

"We have implemented the first phase of our target operating model and have a clear line of sight to achieving our targeted pro forma financial performance. Based on current conditions, we are updating guidance for the remainder of 2022 as follows," said Dan Boncel, Chief Financial Officer.

Edgio, Inc.
2022 Guidance

	August 2022	April 2022
Revenue	$380 to $390 million	$240 to $250 million

Adjusted EBITDA	$13 to $16 million	$24 to $28 million

Capital expenditures	Less than 10% of revenue	$20 to $25 million

Forward-Looking Outlook

"While we will not provide 2023 guidance until later this year, we have completed our initial deep dive combined pro-forma analysis and would like to share our initial outlook," continued Boncel.

The company completed the Edgecast acquisition on June 15 and has successfully implemented the first phase of integration.
Management has identified additional synergy opportunities beyond the original $50 million and now expects at least $60 million in annualized run rate synergies.
Management has achieved $17.5 million of synergies to date, well ahead of plan.
Initial 2023 revenue outlook of between $550 and $560 million, and adjusted EBITDA that exceeds $65 million.
An implied revenue expansion of 44% and adjusted EBITDA margin expansion from 4% in 2022 to 12% in 2023.
Approximately 45% of total revenue falling into the high margin and recurring profile.

Financial Tables

EDGIO, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except per share data)

	June 30,			March 31,			December 31,
	2022			2022			2021
	(Unaudited)			(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	55,175		$	27,175		$	41,918
Marketable securities		22,158			34,751			37,367
Accounts receivable, net		108,445			55,040			42,217
Income taxes receivable		58			63			61
Prepaid expenses and other current assets		32,107			16,044			13,036
Total current assets		217,943			133,073			134,599
Property and equipment, net		106,059			34,792			33,622
Operating lease right of use assets		7,124			6,064			6,338
Marketable securities, less current portion		40			40			40
Deferred income taxes		2,866			1,822			1,893
Goodwill		163,489			113,463			114,511
Intangible assets, net		72,655			13,827			14,613
Other assets		7,334			4,779			5,485
Total assets	$	577,510		$	307,860		$	311,101

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	19,800		$	15,599		$	11,631
Deferred revenue		4,790			2,189			3,266
Operating lease liability obligations		4,755			1,754			1,861
Income taxes payable		262			215			873
Other current liabilities		75,391			20,403			19,292
Total current liabilities		104,998			40,160			36,923
Convertible senior notes, net		122,202			121,991			121,782
Operating lease liability obligations, less current portions		11,352			9,209			9,616
Deferred income taxes		100			303			308
Deferred revenue, less current portion		1,530			282			116
Other long-term liabilities		716			721			777
Total liabilities		240,898			172,666			169,522
Commitments and contingencies
Stockholders' equity:
Convertible preferred stock, $0.001 par value; 7,500 shares authorized; no shares issued and outstanding		-			-			-
Common stock, $0.001 par value; 300,000 shares authorized; 219,706, 138,178 and 134,337 shares issued and outstanding at June 30, 2022, March 31, 2022 and December 31, 2021, respectively		220			138			134
Additional paid-in capital		793,522			590,249			576,807
Contingent consideration		16,900			-			-
Accumulated other comprehensive loss		(11,413	)		(9,004	)		(8,345	)
Accumulated deficit		(462,617	)		(446,189	)		(427,017	)
Total stockholders' equity		336,612			135,194			141,579
Total liabilities and stockholders' equity	$	577,510		$	307,860		$	311,101

EDGIO, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)

	Three Months Ended													Six Months Ended

	June 30,			March 31,			Percent		June 30,			Percent		June 30,			June 30,			Percent
	2022			2022			Change		2021			Change		2022			2021			Change

Revenue	$	74,312		$	57,959		28	%	$	48,348		54	%	$	132,270		$	99,543		33	%
Cost of revenue:
Cost of services (1)		46,088			35,070		31	%		32,976		40	%		81,157			66,021		23	%
Depreciation - network		5,903			5,089		16	%		5,929		0	%		10,992			11,608		-5	%
Total cost of revenue		51,991			40,159		29	%		38,905		34	%		92,149			77,629		19	%
Gross profit		22,321			17,800		25	%		9,443		136	%		40,121			21,914		83	%
Gross profit percentage		30.0	%		30.7	%				19.5	%				30.3	%		22.0	%
Operating expenses:
General and administrative (1)		26,927			15,833		70	%		7,515		258	%		42,760			20,412		109	%
Sales and marketing (1)		10,946			7,627		44	%		5,784		89	%		18,573			15,631		19	%
Research & development (1)		12,161			9,577		27	%		5,187		134	%		21,738			11,315		92	%
Depreciation and amortization		1,508			1,032		46	%		549		175	%		2,540			1,089		133	%
Restructuring charges		4,368			698		526	%		2,155		103	%		5,066			9,028		-44	%
Total operating expenses		55,910			34,767		61	%		21,190		164	%		90,677			57,475		58	%

Operating loss		(33,589	)		(16,967	)	98	%		(11,747	)	186	%		(50,556	)		(35,561	)	42	%

Other income (expense):
Interest expense		(1,315	)		(1,313	)	0	%		(1,305	)	1	%		(2,628	)		(2,591	)	1	%
Interest income		33			27		22	%		42		-21	%		60			87		-31	%
Other, net		(1,146	)		(713	)	61	%		(440	)	160	%		(1,859	)		(655	)	184	%
Total other expense		(2,428	)		(1,999	)	21	%		(1,703	)	43	%		(4,427	)		(3,159	)	40	%

Loss before income taxes		(36,017	)		(18,966	)	90	%		(13,450	)	168	%		(54,983	)		(38,720	)	42	%
Income tax (benefit) expense		(19,589	)		206		NM			248		NM			(19,383	)		507		NM

Net loss	$	(16,428	)	$	(19,172	)	-14	%	$	(13,698	)	20	%	$	(35,600	)	$	(39,227	)	-9	%

Net loss per share:
Basic	$	(0.11	)	$	(0.14	)			$	(0.11	)			$	(0.25	)	$	(0.31	)
Diluted	$	(0.11	)	$	(0.14	)			$	(0.11	)			$	(0.25	)	$	(0.31	)

Weighted average shares used in per share calculation:
Basic		151,776			135,528					126,050					143,652			125,170
Diluted		151,776			135,528					126,050					143,652			125,170

(1)	Includes share-based compensation (see supplemental table for figures)

EDGIO, INC.
SUPPLEMENTAL FINANCIAL DATA
(In thousands)
(Unaudited)

	Three Months Ended							Six Months Ended
	June 30,		March 31,			June 30,		June 30,			June 30,
	2022		2022			2021		2022			2021
Share-based compensation:

Cost of services	$	326	$	408		$	458	$	734		$	704
General and administrative		2,166		2,103			1,874		4,269			7,902
Sales and marketing		1,376		1,181			395		2,557			958
Research and development		3,423		3,320			614		6,743			985
Restructuring and transition related charges		-		-			917		-			2,271

Total share-based compensation	$	7,291	$	7,012		$	4,258	$	14,303		$	12,820

Depreciation and amortization:

Network-related depreciation	$	5,903	$	5,089		$	5,929	$	10,992		$	11,608
Other depreciation and amortization		336		246			549		582			1,089
Amortization of intangible assets		1,172		786			-		1,958			-

Total depreciation and amortization	$	7,411	$	6,121		$	6,478	$	13,532		$	12,697

Net increase (decrease) in cash, cash equivalents and marketable securities:	$	15,407	$	(17,359	)	$	2,608	$	(1,952	)	$	(4,187	)

End of period statistics:

Approximate number of active clients		1,000		577			533		1,000			533

Number of employees and employee equivalents		1,317		556			459		1,317			459

EDGIO, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)

	Three Months Ended									Six Months Ended
	June 30,			March 31,			June 30,			June 30,			June 30,
	2022			2022			2021			2022			2021
Operating activities
Net loss	$	(16,428	)	$	(19,172	)	$	(13,698	)	$	(35,600	)	$	(39,227	)

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization		7,411			6,121			6,478			13,532			12,697
Share-based compensation		7,291			7,012			4,258			14,303			12,820
Foreign currency remeasurement loss (gain)		441			242			257			683			186
Deferred income taxes		(19,278	)		(2	)		(71	)		(19,280	)		(81	)
Gain on sale of property and equipment		(10	)		-			(107	)		(10	)		(107	)
Accounts receivable charges		6			272			381			278			847
Amortization of premium on marketable securities		204			280			573			484			1,182
Non-cash interest expense		211			209			201			420			400
Changes in operating assets and liabilities:
Accounts receivable		(4,861	)		(13,095	)		3,903			(17,956	)		5,962
Prepaid expenses and other current assets		(1,451	)		(3,174	)		(7	)		(4,625	)		439
Income taxes receivable		(553	)		(2	)		46			(555	)		10
Other assets		292			834			513			1,126			912
Accounts payable and other current liabilities		23,046			3,625			1,523			26,671			6,732
Deferred revenue		2,778			(911	)		(273	)		1,867			(357	)
Income taxes payable		52			(655	)		68			(603	)		141
Other long term liabilities		(2	)		(55	)		(108	)		(57	)		(111	)
Net cash provided by (used in) operating activities		(851	)		(18,471	)		3,937			(19,322	)		2,445

Investing activities
Purchases of marketable securities		(1,340	)		(6,839	)		(20,537	)		(8,179	)		(31,411	)
Sale and maturities of marketable securities		13,784			9,087			25,818			22,871			31,715
Purchases of property and equipment		(12,975	)		(5,350	)		(2,986	)		(18,325	)		(9,614	)
Proceeds from sale of property and equipment		10			-			107			10			107
Cash acquired in acquisition of business, net of transaction costs		30,374			492			-			30,866			-
Net cash provided by (used in) investing activities		29,853			(2,610	)		2,402			27,243			(9,203	)

Financing activities
Payment of debt issuance costs					-			(30	)		-			(30	)
Payment of employee tax withholdings related to restricted stock vesting		(524	)		(1,285	)		(427	)		(1,809	)		(1,098	)
Proceeds from employee stock plans		785			7,986			2,613			8,771			5,460
Net cash provided by financing activities		261			6,701			2,156			6,962			4,332
Effect of exchange rate changes on cash and cash equivalents		(1,263	)		(363	)		(50	)		(1,626	)		(304	)
Net increase (decrease) in cash and cash equivalents		28,000			(14,743	)		8,445			13,257			(2,730	)
Cash and cash equivalents, beginning of period		27,175			41,918			35,620			41,918			46,795
Cash and cash equivalents, end of period	$	55,175		$	27,175		$	44,065		$	55,175		$	44,065

Use of Non-GAAP Financial Measures

To evaluate our business, we consider and use non-generally accepted accounting principles (Non-GAAP) net income (loss), EBITDA and Adjusted EBITDA as supplemental measures of operating performance. These measures include the same adjustments that management takes into account when it reviews and assesses operating performance on a period-to-period basis. We consider Non-GAAP net income (loss) to be an important indicator of overall business performance. We define Non-GAAP net income (loss) to be U.S. GAAP net income (loss) adjusted to exclude share-based compensation, non-cash interest expense, restructuring and transition related charges, acquisition and legal related expenses, and amortization of intangible assets. We believe that EBITDA provides a useful metric to investors to compare us with other companies within our industry and across industries. We define EBITDA as U.S. GAAP net income (loss) adjusted to exclude depreciation and amortization, interest expense, interest and other (income) expense, and income tax expense (benefit). We define Adjusted EBITDA as EBITDA adjusted to exclude share-based compensation, restructuring and transition related charges and acquisition and legal related expenses. We use Adjusted EBITDA as a supplemental measure to review and assess operating performance. Our management uses these Non-GAAP financial measures because, collectively, they provide valuable information on the performance of our on-going operations, excluding non-cash charges, taxes and non-core activities (including interest payments related to financing activities). These measures also enable our management to compare the results of our on-going operations from period to period, and allow management to review the performance of our on-going operations against our peer companies and against other companies in our industry and adjacent industries. We believe these measures also provide similar insights to investors and enable investors to review our results of operations "through the eyes of management."

Furthermore, our management uses these Non-GAAP financial measures to assist them in making decisions regarding our strategic priorities and areas for future investment and focus. The terms Non-GAAP net income (loss), EBITDA and Adjusted EBITDA are not defined under U.S. GAAP, and are not measures of operating income, operating performance or liquidity presented in accordance with U.S. GAAP. Our Non-GAAP net income (loss), EBITDA and Adjusted EBITDA have limitations as analytical tools, and when assessing our operating performance, Non-GAAP net income (loss), EBITDA and Adjusted EBITDA should not be considered in isolation, or as a substitute for net income (loss) or other consolidated income statement data prepared in accordance with U.S. GAAP. Some of these limitations include, but are not limited to:

EBITDA and Adjusted EBITDA do not reflect our cash expenditures or future requirements for capital expenditures or contractual commitments;
These measures do not reflect changes in, or cash requirements for, our working capital needs;
Non-GAAP net income (loss) and Adjusted EBITDA do not reflect the cash requirements necessary for litigation costs, including provision for litigation and litigation expenses;
These measures do not reflect the interest expense, or the cash requirements necessary to service interest or principal payments, on our debt that we may incur;
These measures do not reflect income taxes or the cash requirements for any tax payments;
Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will be replaced sometime in the future, and EBITDA and Adjusted EBITDA do not reflect any cash requirements for such replacements;
While share-based compensation is a component of operating expense, the impact on our financial statements compared to other companies can vary significantly due to such factors as the assumed life of the options and the assumed volatility of our common stock; and
Other companies may calculate Non-GAAP net income (loss), EBITDA and Adjusted EBITDA differently than we do, limiting their usefulness as comparative measures.

We compensate for these limitations by relying primarily on our U.S. GAAP results and using Non-GAAP net income (loss), EBITDA, and Adjusted EBITDA only as supplemental support for management's analysis of business performance. Non-GAAP net income (loss), EBITDA and Adjusted EBITDA are calculated as follows for the periods presented in thousands:

Reconciliation of Non-GAAP Financial Measures

In accordance with the requirements of Item 10(e) of Regulation S-K, we are presenting the most directly comparable U.S. GAAP financial measures and reconciling the unaudited Non-GAAP financial metrics to the comparable U.S. GAAP measures. Per share amounts may not foot due to rounding.

EDGIO, INC.
Reconciliation of U.S. GAAP Net Loss to Non-GAAP Net Income (Loss)
(In thousands)
(Unaudited)

	Three Months Ended																		Six Months Ended
	June 30, 2022						March 31, 2022						June 30, 2021						June 30, 2022						June 30, 2021
	Amount			Per Share			Amount			Per Share			Amount			Per Share			Amount			Per Share			Amount			Per Share
U.S. GAAP net loss	$	(16,428	)	$	(0.11	)	$	(19,172	)	$	(0.14	)	$	(13,698	)	$	(0.11	)	$	(35,600	)	$	(0.25	)	$	(39,227	)	$	(0.31	)

Share-based compensation		7,291			0.05			7,012			0.05			3,341			0.03			14,303			0.10			5,985			0.05
Non-cash interest expense		211			0.00			209			0.00			201			0.00			420			0.00			400			0.00
Restructuring and transition related charges		4,368			0.03			698			0.01			2,155			0.02			5,066			0.04			13,855			0.11
Acquisition and legal related expenses		14,167			0.09			5,107			0.04			-			-			19,274			0.13			-			-
Amortization of intangible assets		1,172			0.01			786			0.01			-			-			1,958			0.01			-			-

Non-GAAP net (loss) income	$	10,781		$	0.07		$	(5,360	)	$	(0.04	)	$	(8,001	)	$	(0.06	)	$	5,421		$	0.04		$	(18,987	)	$	(0.15	)

Weighted average basic shares used in per share calculation					151,776						135,528						126,050						143,652						125,170

EDGIO, INC.
Reconciliation of U.S. GAAP Net Loss to EBITDA to Adjusted EBITDA
(In thousands)
(Unaudited)

	Three Months Ended									Six Months Ended
	June 30,			March 31,			June 30,			June 30,			June 30,
	2022			2022			2021			2022			2021
U.S. GAAP net loss	$	(16,428	)	$	(19,172	)	$	(13,698	)	$	(35,600	)	$	(39,227	)

Depreciation and amortization		7,411			6,121			6,478			13,532			12,697
Interest expense		1,315			1,313			1,305			2,628			2,591
Interest and other (income) expense		1,113			686			398			1,799			568
Income tax (benefit) expense		(19,589	)		206			248			(19,383	)		507

EBITDA	$	(26,178	)	$	(10,846	)	$	(5,269	)	$	(37,024	)	$	(22,864	)

Share-based compensation		7,291			7,012			3,341			14,303			5,985
Restructuring and transition related charges		4,368			698			2,155			5,066			13,855
Acquisition and legal related expenses		14,167			5,107			-			19,274			-

Adjusted EBITDA	$	(352	)	$	1,971		$	227		$	1,619		$	(3,024	)

For future periods, we are unable to provide a reconciliation of EBITDA and Adjusted EBITDA to net income (loss) as a result of the uncertainty regarding, and the potential variability of, the amounts of depreciation and amortization, interest expense, interest and other (income) expense and income tax expense (benefit), that may be incurred in the future.

Conference Call

At approximately 4:30 p.m. EDT (1:30 p.m. PDT) today, management will host a quarterly conference call for investors. Interested parties can access the call by dialing (844) 200-6205 from the United States or (929) 526-1599 internationally, with access code 974364. The conference call will also be audio cast live from www.edg.io and a replay will be available following the call from the Edgio website.

Forward-Looking Statements

This press release contains forward-looking statements that involve risks and uncertainties. These statements include, among others, statements regarding our expectations regarding revenue, gross margin, non-GAAP net income (loss), capital expenditures, and our future prospects, areas of investment, and product launches. Our expectations and beliefs regarding these matters may not materialize. The potential risks and uncertainties that could cause actual results or outcomes to differ materially from the results or outcomes predicted include, among other things, reduction of demand for our services from new or existing clients, unforeseen changes in our hiring patterns, adverse outcomes in litigation, experiencing expenses that exceed our expectations, and acquisition activities and contributions from acquired businesses. A detailed discussion of these factors and other risks that affect our business is contained in our SEC filings, including our most recent reports on Forms 10-K and 10-Q, particularly under the heading "Risk Factors." Copies of these filings are available online on our investor relations website at investors.edgio.com and on the SEC website at www.SEC.gov. All information provided in this release and in the attachments is as of August 8, 2022, and we undertake no duty to update this information in light of new information or future events, unless required by law.

About Edgio

Edgio (NASDAQ:EGIO) is an edge-enabled software solutions provider powering unmatched, secure digital experiences through a seamlessly integrated delivery, applications and streaming platform. Our globally-scaled technology and expert services fuel the world's top brands with the capacity to deliver the fastest, most dynamic, and frictionless education, entertainment, events and applications to every user. Dedicated to providing unparalleled client care and extending value every step of the way, Edgio is a partner of choice, driving about 20 percent of worldwide internet traffic to support the most popular shows, movies, sports, games and music, and instant-loading websites. To learn more, visit edg.io and follow us on Twitter, LinkedIn and Facebook.

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Edgio Reports Second Quarter Financial Results