I’ve spent the majority of my career reinvigorating companies with perceived challenges, and, in each case, setting specific goals to reach optimal outcomes. Despite each situation being unique, I have learned that the one constant is the need to remain focused on what drives value creation for a company’s key stakeholders, specifically clients, shareholders, and employees. When I joined Limelight in early 2021, I quickly realized that we were failing these key stakeholders and got to work identifying the issues and creating the path to value creation.
Back to the basics: Our clients were frustrated as our performance and engagement were not where they needed to be. We were so focused on chasing ‘shiny balls’ that we lost focus on the important things. In response, we put their needs front and center by focusing our best talent on our operational performance, simplifying our support model, and improving our account coverage.
Optimized cost structure: We completed an in-depth analysis around cost simplification and aligned them with revenue and planned profitability. We also established detailed and clear growth plans by region, with a weekly revenue war room to monitor and manage progress.
Incentivized high performance: Having successful, reliable, and motivated employees is essential to driving results, so we wanted to make sure that our employees’ incentives were aligned with business objectives. We implemented a new high-performance culture, which included a redesigned compensation and incentive program, an employee development program, and a company-wide performance program with clearly defined objectives and plans.
We made progress rather quickly, and, within just a few quarters, our global performance ranking had catapulted from unranked to the leadership position. Our improved client sentiment drove more traffic on our platform, resulting in a return to growth and increasing profitability. We took the business from double-digit declines to organic growth within a couple of quarters. Our employee engagement score also made significant improvements. It felt like we were on the right track to creating value, but we knew our job wasn’t done.
Building on the momentum, in the fall of last year, we outlined our strategic vision of building a company that drives business value by delivering solutions that would be powered by our globally-scaled edge platform. Doing so would deliver clients unmatched performance, protection, and productivity, provide shareholders with much more value and create a destination culture for high-performing employees.
The first step in Limelight’s transformation was the acquisition of Layer0, our first edge-enabled solution. This acquisition provided a framework for developers to build third-generation web applications, and much-needed software architecture skills, and launched our cybersecurity strategy. We closed the Layer0 acquisition in Q4 2021 and fully integrated these assets into our global edge platform, as well as launched our first security product, by the end of Q1 2022.
In Q2 2022, we completed our transformational acquisition of Edgecast. This acquisition diversified and doubled our revenue, strengthened our balance sheet, and continued our push into security, thereby meaningfully expanding our scale and product profile of edge-enabled solutions – both key building blocks to improve profitability and accelerate growth. We also took that opportunity to rebrand our company as Edgio. As with many acquisitions, Edgecast comes with several benefits but also brings some near-term challenges. The business was carved out of a larger company. And that company was recently carved out of an even larger company. For those of us that have been doing this for a while, we know this means several layers of complexity. So while the assets we acquired are very good, they came with minimal systems, processes, and no corporate supporting functions. Like most things in life, capturing big opportunities requires us to first overcome a set of challenges. This is no exception.
This past week was a very good reminder to me that while we’ve made great progress on our transformation journey, we need to make sure that our stakeholders share the same level of excitement. To get that done, we must be more transparent about the complexities, challenges, and wins along the way. Much like last year, we will move quickly, with focus, discipline, and a clear plan to improve our growth trajectory and continue our transformation. I would like to take this opportunity to share our plans for the next two quarters, which are focused on three objectives:
First, we will continue to simplify our business to better align our costs with our revenue. We have clearly defined plans in place, supported by strategic initiatives that will reduce both costs of goods and operating expenses. We have put into motion more than $20 million in net run rate synergies of the $60 million in total that have been identified. These planned actions will result in meaningful gross margin and adjusted EBITDA improvements and provide a clear line of sight to achieve our stated objective of a double-digit adjusted EBITDA margin run rate as we exit 2023.
Second, we will position our Media solutions to capture secular tailwinds. We are integrating our Uplynk, Delivery, and OpenEdge products into an efficient Media solutions platform that lowers client operational costs and increases content monetization.
Uplynk provides an industry-leading set of features that reduces the complexity of mission-critical tasks and provides rich analytics for media companies, further entrenching our platform in their workflows. Our Delivery platform is the second largest and most performant in the world and our OpenEdge product extends this platform directly into an ISP’s network, improving performance, reducing operating costs, saving energy, and lowering our capital intensity. These capabilities taken together uniquely enable our Media clients to reduce operating costs and improve content monetization.
Third, we will accelerate the growth of our Applications solutions, which include web applications and WAAP security. Our Applications solutions platform offers a suite of products that provides a one-stop shop for developers looking to build third-generation, highly performant, and secure web properties.
Our acquisitions of Layer0 and Edgecast have enabled us to launch a leading Web Application and API Protection security product. Soon, we will further expand the value of this platform with the launch of our advanced Bot solution, currently in beta. In addition to performance and security, our solution allows development teams to ship twice as fast.
In short, our Applications solution platform powers the fastest websites in the world and reduces the attack surface, all while lowering operational costs for clients. As a result, our pipeline has grown triple digits for our Applications solutions from the beginning of the year. While bookings continue to grow, we can do better. Our immediate plans to do so include:
Nancy Maluso, our new CMO, has joined Edgio. She has over 25 years of experience in sales and marketing leadership and most recently has been working with Forrester’s clients to create high-performing sales and marketing engines.
We have established a global tiger team that has all the resources it needs to go after and win deals.
We are very close to launching our Advanced BOT capabilities in our WaaP product. We are confident our solution performs much better than any other in the market today.
We are working with a technological research and consulting firm to unpack our markets and build a laser-focused approach to our target buyers. Creating a clear go-to-market strategy will enable our teams to align and win together.
Our integration efforts over this past quarter have enabled us to diversify our revenue and establish ourselves as a credible security vendor. Our Applications solutions do, in fact, create unmatched performance, protection, and productivity for our clients and will support accelerating growth.
What does this all mean? To me, it proves that our business fundamentals are strong and our strategic vision is coming to fruition. We have strengthened our balance sheet and management team, and have a clear line of sight to reducing our costs toward building into our 2024 objective of double-digit adjusted EBITDA margin and meaningfully improved gross margins.
As we did last year, we will execute with speed, focus, and discipline. We will continue to transform Edgio and capture the opportunity that is uniquely possible for us. I thank you all for your continued commitment to our customers and our business.