From August 2021 to Now: A Framework for a Bold Strategic Vision
Throughout my career, I have maintained that the greatest opportunities often lie within the biggest challenges. Edgio has been no exception to this point of view. We are strategically reshaping Edgio into a more profitable and growth-oriented company, one that is better equipped to compete. This opportunity lies within the challenges associated with merging two comparably sized companies, addressing unanticipated technical accounting adjustments that require a historical restatement, macroeconomic headwinds, and navigating a capital market that I am told is the most challenging for small-cap stocks in several decades.
Despite that, what continues to remain true is the growing need to support a digital-first world where consumers expect access to content – whether it’s streaming video or web applications – at lightning-fast speed and personalized to their needs. Whether you’re an eCommerce leader looking to strengthen your digital presence or a media provider grappling with how to accelerate content delivery and monetization, industry leaders everywhere are evolving their technology and delivery architectures to meet the digital demands of today’s users. And many are shifting to a direct-to-consumer (DTC) model. Edgio recognized this trend back in August of 2021 when, at our Analyst Day, we shared our company vision and strategic framework for the transformation of what was then Limelight Networks into an edge-enabled solutions company.
Limelight spent twenty years building one of the most scaled, powerful, and performant networks in the world. This network is now the foundation of Edgio’s edge platform. We outlined then that through this foundation, we can help our clients reduce operating costs, increase monetization, and deliver better user experiences – all via edge-enabled web applications and video streaming solutions. At that time, we also boldly stated that security could not only be more affordable but also more effective and that we would have a compelling cybersecurity story to tell.
Our belief was – and continues to be – that this strategy serves as the bedrock for a technology company that would not only thrive and grow but also generate profits. This required us to rethink everything. So we did.
In 2021, we communicated a three-pillar strategic framework that would help us focus on the things that would have the most impact. Since then, we have made continual progress and continue to add new goals around these pillars. They include:
Improve our core: We recognized the need to ensure that our core business should be more profitable and that our platform performance should meet best-in-class standards. To do that, our culture had to be grounded in accountability, efficiency, driving outcomes and innovation. We committed to aggressively improve our profitability and performance by strengthening our team and investing in more innovative ways to manage our platform toward our stated objective of double-digit adjusted EBITDA margins.
Expand our core: We have spent more than twenty years delivering high-quality content across the globe on behalf of our blue-chip media and technology clients. Supported with better cost and performance, we believed that we could expand this business, not only by delivering high-quality content, but also by improving our clients’ monetization, and simplifying streaming operations while improving viewer experience. And, as the industry has adapted to meet the demands of digital transformation and direct-to-consumer business models, it has become increasingly clear that performance enhancement at the edge is essential. Our belief is that edge computing is the best place to improve customer lifetime value by seamlessly integrating performance, scale, security and experience capabilities.
Extend our core: Our globally-scaled, efficient, and performant edge platform can now power high-stakes web properties with unmatched performance, security, and productivity. On average, we have seen our clients’ paint time reduced by more than 50% and shopping cart conversion rates increase by 34%. In our most recent implementation, we helped a large brand achieve a passing core web vitals score in just 45 days. We are proving every day that our best-in-class performance, security and developer capabilities power unmatched business outcomes for our clients.
I think it is fair to say that Edgio is a dramatically different company today than the Limelight Networks of 2021 – one that is meaningfully more aligned with the strategic vision outlined at that Analyst Day. Let me share with you some of the critical steps we’ve taken to shape Edgio into a growing and profitable edge-enabled solutions company.
Steps in Our Evolution to Edge-Enabled Solutions
Since 2021, we have completed two acquisitions that established the necessary groundwork to support our strategy.
In the Fall of 2021, we acquired Layer0 which helped us improve our cost and performance with its modern automation capabilities. With the acquisition, we combined the benefits of Limelight’s global edge network with Layer0’s edge orchestration, application acceleration, and developer workflow capabilities. It also provided our first opportunity to extend our applications and security capabilities with Layer0’s next-generation web application development and machine learning capabilities. This acquisition also added much-needed product management and SaaS development skills. All of this has proven to be the strong foundation upon which our Applications Platform is built.
Two quarters later we acquired Edgecast. This acquisition improved our operational scale and doubled our revenue, placing us in the upper echelon of our industry. Additionally, it extended our security capabilities by adding an enterprise-class web application and API protection (WAAP) solution. These capabilities, combined with the Layer0 capabilities, enable us to deliver on our promise of having a compelling cybersecurity story to tell. With the Edgecast acquisition, we also acquired an industry-leading video workflow and streaming platform in Uplynk. Uplynk promises to be a key ingredient to expand our video streaming beyond commoditized delivery and into the highly valued workflow and orchestration areas of streaming.
The combination of Limelight, Layer0 and Edgecast has created a powerful CDN edge network that boasts 300 PoPs with 250 Tbps of peak capacity. Why is this significant? With this reach and capacity, our edge platform has the ability to reach end users around the world in mere milliseconds, roughly equivalent to a blink of an eye. And we can do that with seamlessly integrated security that works the way it is supposed to. We are truly excited about this powerful set of capabilities and will continue to enhance them – because it is this platform that allows us to create unmatched value from connected experiences.
Let me highlight some of the more notable accomplishments against our framework that we’ve achieved in the last twelve months:
Improving our core
We have eliminated more than $74M in cost of revenue and operating costs on a run-rate basis. This included approximately $30M under the Limelight banner, and an additional $44M under Edgio.
We will continue to operationalize additional cost savings to reach our goal of $60 million and be disciplined about our spend.
When we entered 2021, our CDN performance was not rated in the top 20 globally by leading third-party CDN benchmarking firms. Since then, we have vaulted our performance to the top of that list and are consistently rated in the top three for global performance as compared to our peers.
Expanding our core
With improved CDN Delivery performance, our largest media and technology clients have returned to year-over-year organic growth with us.
Our Open Edge solution seamlessly integrates our CDN with an ISP’s network. This strategy enables us to operate in a more ‘asset light’ model, while improving throughput performance and reducing our cost of revenue.
Our Uplynk platform is recognized as an industry-leading video workflow and orchestration streaming platform. We enable clients to monetize effectively with advanced advertising solutions for inserting ads, monitoring performance, and refining revenue strategies, including our industry-leading Server-Side Ad Insertion (SSAI) technology.
Uplynk also provides the platform that enables broadcasters to streamline and deliver their over-the-top (OTT) content, meeting viewers where they watch, and reducing operating costs.
We have underscored our strong dedication to the Edgio Media Platform by appointing Eric Black as the new CTO/GM of Media Services. Eric is a renowned veteran in the streaming industry, having been an executive at NBC for many years. His addition to our team is a testament to the exceptional value that Edgio provides to the industry.
Extending our core
In late 2021, we launched our edge-enabled Layer0 product, now called Edgio Applications. This solution powers the fastest websites in the world, a bold claim we can comfortably stand behind and are willing to compare against any of our competitors.
In 3Q22, we boosted our security offering with the launch of our WAAP security product and quickly established ourselves as a credible cybersecurity company.
We followed that launch by announcing our advanced dual WAF solution, followed that by launching our Bot product, and enhanced our DDoS offering with DDoS Scrubbing.
Within a few short months, we have established ourselves as a cybersecurity company worth watching. Our machine learning advanced offerings have not only been granted a patent, with another pending but more importantly, have demonstrated unparalleled productivity and performance for our clients.
In 3Q22, we signed our first eight-figure deal with a leading security company and deployed our application solution into one of the world’s largest fintech companies, displacing a major competitor. These customers chose Edgio due to our unique ability to seamlessly integrate scale-enabled performance, security, and programmability at the edge. We are excited to see these early wins from our large tech-savvy companies, further validating the efficacy of our strategy and our solutions.
We continue to focus on accelerating our momentum by making meaningful improvements to our culture, organization, and talent. We have implemented our target operating model that fully integrates us into “One Edgio.” This model is flatter, more agile, and more efficient. In the past twelve months we have announced several new appointments including a new Chief Financial Officer, Chief Accounting Officer, Head of FP&A, Chief Legal Officer, Chief Marketing Officer, Chief Information and Security Officer and Chief Customer Success Officer. A picture is worth a thousand words so let me share a roadmap picture with key highlights.
A Look Ahead
Our planning process for 2023 is now complete, and we are excited about the year ahead. Building upon our three strategic pillars, we anticipate 2023 to be a transformative year for Edgio. We take great pride in our roadmap and the momentum we have generated thus far. Along with several notable highlights, we have made numerous feature and platform upgrades that will fortify our platform and enhance our solutions’ capabilities. Although we cannot detail them all, we are confident that these upgrades will result in a more robust platform and more powerful solutions.
Let me highlight some of our key objectives for this year.
Improving our core
We are constantly looking at ways to improve the performance and reduce the cost of our core edge platform. Throughout 2023, we will continue to unify, modernize and automate our edge solution platform that should improve our gross margins and EBITDA over time.
Expanding our core
We are committed to expanding our presence in the media industry through several innovative initiatives. Firstly, we plan to double down on Open Edge for ISPs, which will allow us to expand our capacity in an asset-light manner. We also intend to leverage the integration of Uplynk and Delivery to develop a one-of-a-kind solution for media companies. We are also making significant enhancements to our Uplynk solution to better address the evolving needs of media broadcasters and sports streaming companies.
Extending our core
As we extend the solutions we can power from our platform, we will stay true to our goal of offering a holistic solution approach with a unified stack and workflow manageable through a single console. We believe this approach is the best way to deliver top line growth AND bottom line productivity for our clients.
Today, we launched our next-generation, unified Application Platform 7.0. This release brings together the best features of the three companies we have combined. The platform improves product innovation and velocity, customer onboarding, automation, and solutions efficacy, all at the scale of our global platform. We will continue to build on the channel partnerships acquired from Edgecast and expand into other channels and marketplaces. We are currently sharing our Applications 7.0 platform with existing channel partners and are seeing a lot of excitement about its capabilities, most notably in the area of security. We also continue to explore new partnerships and are excited to start delivering our solutions through AWS Marketplace.
As we begin Q2, I want to reiterate my continued belief in Edgio. Transformations are not linear and come with plenty of bumps and bruises. The challenges we have had to navigate have been real and no doubt difficult for the team to navigate. Despite that fact, the significant opportunity that lies on the other side of them is also real. We are in fact making significant progress against the strategy we shared in August of 2021 and remain focused on executing that plan. Be on the lookout for more exciting updates as we continue to build the company we committed to building in August of 2021.