Q4 2019 Earnings Call
Financial and operational performance Revenue in the fourth quarter was 60.1 million dollars.
Up 37% year-over-year and was our highest quarterly Revenue ever. I'm very pleased that we were profitable this quarter generating gaap. Net income of 2.5 million dollars non-GAAP net income was 5.8 million dollars and adjusted ebitda was a record eleven point four million dollars and more than doubled the prior-year amount off.
We are extremely proud of this quarter's results which were a strong finish to 2019 this time last year. We said we would generate steady sequential Revenue growth throughout 29th team and I'm proud to report today that we did just that building revenue from forty-three million dollars in the first quarter of 2019 to $46 million in Q2 251 million three, and finally a record sixty million dollars in the fourth quarter.
For the full year 2019 Revenue was 200.6 Million up 3% Year-over-year. non-GAAP laws for 2019 was $2,000 and adjusted ebitda was 18.1 million dollars. These results are an indication that are customer focused strategy is working. We make great progress and multiple priorities during 2019 instead of solid foundation for a strong performance across many operational and financial measures in 2020 and Beyond.
Customer acquisition accelerated in the fourth quarter as the number of new customers signed increased over 20% year-over-year and sequentially with numerous logos added across all regions customer turn in the fourth quarter continue to decline reaching the lowest level on record. We're pleased that both new and existing customers are recognizing our high-quality services off and trust us to deliver the best experience for their customers traffic continue to accelerate in the fourth quarter and reached record levels again, which were over to represent higher than our previous record that in the third quarter of 2019. In fact, we set a new record for traffic every quarter of 2019. We're excited about this momentum in our business office and expect it to continue in 2020 and Beyond
The strong demand we experienced during the fourth quarter was primarily due to our significant participation in multiple live and on-demand Ott launches Prestige largest media companies in the world these companies look to us as the trusted partner in these launches based on the performance of our Network global scale and strong value proposition out. For example, well Disney and apple launched their Ott offerings in the fourth quarter as scheduled. We worked hard in 2019 to help make these sizable launches successful and we are very pleased off-limits resulted in us continuing to serve their traffic.
We also see.
Order the Amazon streaming of the English Premier League, which was the first time a major sporting event was available only through internet streaming devices given the importance of this page Amazon and the industry. I joined Amazon and our team in the War Room in London and personally witnessed the hard work of our team goes inside that room and Global support this important event. I was delighted to witness first-hand the quality of services being delivered and the cooperation and cohesive interaction between our teams internally and each other with Amazon which resulted in a great outcome for both companies.
These new launches and events are very exciting for our industry. And again, I'm very proud that these and other iconic media companies trusted and continue to trust Limelight.
In the fourth quarter, we made good progress in Edge Services, which leverages our infrastructure and software to address. Our customers needs at the edge for low-latency computers and connectivity. We continue to gain Traction in the marketplace as we close. The number of New Edge Services deals in the fourth quarter, and we have a strong and growing pipeline jobs particularly pleased with the growing Revenue contribution from our Edge Services offerings as its Revenue in 2019 more than doubled over the prior year. We expect to see continued acceleration in education is revenue in 2020 and Beyond we believe our platform aligns well with the requirements services and we continue to focus our efforts on video Centric opportunities and applications where low latency and global scale matter including security data analytics and media workflows.
we continue to evolve our
platform in the fourth quarter working to build out additional offerings that we believe at important capabilities that our customers care about
let me take a few minutes to describe a couple of initiatives that are currently underway one initiative is our work on limelight real-time streaming later this year. We expect to launch a second major countries, which will build on our existing offering of the industry's first Global scalable sub-second live video streaming Solution by adding greater functionality and scalability to better meet the significant demand. We see in the marketplace. We also expect this new version will allow us to capture a greater share of the sizable Revenue opportunity for subsequent Global delivery.
Another initiative is our serverless compute capabilities also known as Edge functions. We expect this offering to provide a platform for our customers to deploy their own application functions into our Network Edge locations and run them on demand.
We are planning to bring Edge functions to Market with function specifically aimed at supporting the requirements of our video delivery customers. We're scheduled to begin Data customer draws this quarter off expect to launch General availability in the second quarter of this year.
We are seeing a tremendous amount of customer interest in that functions and we're very excited about this new offering as I look forward at 2020. I see an exciting time in our industry wage additional Ott. Offerings are expected demand is accelerating excess capacity seems relatively limited and the competitive landscape appears stable. We anticipated these markets and damage and made the decision in early 2018 to double down on providing the best quality video delivery in the world. Now, the expected market trends are working in our favor as we look forward to Disney plus continuing to launch an additional countries and other large Ott launches announced for 2020 including HBO Max and NBC's peacock offering among others Thursday. We're working closely with these customers enjoy the successful launch of these services.
Or to build on our lead and video delivery. We've identified for strategic imperatives for this year. The first is capacity after doubling capacity in 2019 200 terabytes per second. We expect to add at least another 30 therapist for 2nd of capacity in 2020. We expect to take full advantage of the cost efficiency initiatives completed in 2019, which would allow us to reduce capex on a year-over-year basis. We believe these efforts will position as well to serve the strong demand. We see from our customers and drive Revenue growth in the future.
The second is expanding our ProActive Management of the network. We believe the implementation of new Next Generation Network management. Tools will allow us to handle increasing traffic laws with greater efficiency and drive higher quality. Third is placing more control in the hands of our customers the plan to accomplish this by continuing to build out our box of apis which will our customers to ingest and analyze critical data that will allow them to make Better Business decisions and improve their end user experiences.
and lastly
But most importantly is driving Innovation Edge functions and Limelight real-time streaming are just too specific offerings. We are developing to satisfy customer needs and help differentiate us from the, we expect the successful implementation of these initiatives will demonstrate to our customers that we are listening to their feedback of facilitating continued Revenue growth for years to come home. I'm very pleased that our strategic decision to focus on online video delivery capabilities is starting to pay off for our customers and for our stakeholders, we believe our strategy and resulting twenty-twenty strategic imperatives will drive customer satisfaction Revenue growth and sustainable above market returns.
In summary, this was an excellent quarter concluding a great year. I'd like to thank our Global Workforce for all their hard work and making 2019 one of the best years and lime light bulb and I'm confident it will serve as a foundation for even better twenty-twenty with that. I'll turn the call over to side here to discuss the fourth quarter financial performance and greater detail and our guidance twenty-twenty. Thanks Bob and good afternoon. I'm very pleased with the quarter. We just reported and the business momentum. We are seeing entering twenty-twenty. We establish new record highs on several Financial metrics this quarter including beating our best quarter by almost eight million dollars. We feel confident that the growth we are delivering is amongst the highest. If not, they may I assist in the industry and also believe our profitability is much much higher than the profitability of other companies comparably sized in our industry.
They're leaving 2019.
Much stronger than where we started and confident that we are well-positioned for an even better 20 20. Let me discuss the quarter in Greater detail.
As you just heard from Bob Revenue in the fourth quarter was 60% $1000000 up 37% year-over-year 60.1 million is our highest reported quarterly revenue office in our company's history beating the previous record by over 15% sequential Revenue growth at 17% is also the best on record while I took a little bit longer than initially expected to return to revenue growth after Cutting Loose some unprofitable business in 2018 or results this quarter or exactly why we made the decisions. We make a full year revenue of 200.6 million dollars increased 3% year-over-year.
International customers accounted for 36% of total revenue in Q4 compared to forty 1% a year ago approximately 11% of a fourth-quarter revenue office in on US dollar denominated currency exchange Tailwinds in the quarter amounted to approximately $200,000 due to fluctuations in the pound average revenue per customer jump to $100,000 up from $83,000 last quarter and $67,000 a year ago. This is our entire Revenue / our entire customer base and we believe it is the best in the industry again based on analyst estimates for the quarter. We believe we delivered the highest sequential and year-over-year revenue growth among our competitors.
moving on to expense
During the fourth quarter. We delivered a record amount of traffic. We accomplished this by doubling our network capacity in 2019 to almost 60 terabytes per second of capacity is not enabled by software enhancements and significant Capital deployment as a result our bandwidth appearing and colocation cost increase 5.3 million dollars year-over-year depreciation expense also increased 1.3 million dollars a year over year due to the increased amount of network equipment added to support these increased traffic levels as we leverage the infrastructure and gain more efficient. These are gross margin improved be increased margin by a very impressive three hundred basis points, quarter-over-quarter operating expenses increased $500,000 primarily due to increased head count in sales and marketing.
We deported Gap income of 2.5 million dollars in the fourth quarter or two cents per basic share compared to a 5% loss in Q4 last year. non-GAAP income was $5,000 or $0.05 per basic share compared to break even non-GAAP EPS last year our gaap. Net income has been higher only on a couple of instances when we had an operating or one-time items in the quarter. Our non-GAAP income was the second highest in the company history adjusted ebitda was eleven point four million dollars for the fourth quarter 2019 a record for the company. We had cash and cash equivalents of 18.3 million dollars at the end of the fourth quarter strong operating cash inflow in the quarter of eight point five thousand dollars allowed for Capital expenditures of ten point five million dollars, which was higher than previously expected to ensure high-quality delivery of the tremendous levels of traffic demand. We were seen
additionally accounts payable and
Other current liabilities decreased 2.4 million dollars in the quarter at the end of the fourth quarter DSO was down to 48 days compared to 52 days at the end of last year. We expect d s o to khong the range of 50 to 55 days. So if I look at the overall position, the accounts receivable dollars were up as expected and associated with the revenue growth accounts payable dollars were down capex was higher and yet cash was up slightly. I believe this is a good outcome and it shows we are funding our own growth a balance sheet remains strong and we remain as of December 31st, we had approximately 118.4 million shares outstanding totally employee count at the end of the quarter was 600-1047 from the last year and up one from the end of last quarter.
This past December be issued our 2020 guidance based on current conditions. We are narrowing the range by raising the lower end of the midpoint of a 2020 annual revenue guidance. We currently expect Revenue to be between $223 and $235 million dollars like 2019. We expense we expect sequential quarterly Revenue growth throughout 2020 and we expect first-half growth in excess of 20% over 2019 other elements of a guidance remain unchanged. We continue to expect Capital expenditures at reduced levels and between twenty-five and thirty million dollars for the year. 2019 has been a tremendous fear for lime light bulb while the full-year headline Revenue shows only moderate growth. I would remind everyone this is a run rate business throughout 2018 revenues were in sequential decline. We started 20 Jun.
19 with q1
lower than Q4 2018
May I place the huge bed set a clear strategy on video delivery first our Revenue base of unprofitable businesses bought a new members to the leadership team started to deploy additional capacity. Even as we had some exist capacity hired even more sales and marketing Association Associates and sent a clear message to our customers and the industry we would be ready to deliver high-quality performance. Then Limelight ever has and be true Partners in their Global growth.
As the year progressed Revenue grew every quarter gross margin improved every quarter profitability improved every quarter gaap and non-GAAP net income improved every quarter and ebitda and adjusted ebitda improved every quarter the rate of change accelerated in the second half and ended with a very strong fourth-quarter. There were many non-believers off as evidenced by the 5x increase in a short position and there were many things that could go wrong at the same time. We had endorsement from a long-term shareholders and the analyst Community with the encouragement of aboard the commitment of our employees the collaboration with our customers and an undeniable belief that we have the right strategy at the right time and we were determined we are sincerely thankful to you all for this confidence. This is a great time for the industry as massive amounts of traffic is moving from satellite cable and broadcast industry wage.
to internet-based delivery add services
And low-latency are in Broad Demand with double-digit growth and improving profitability We believe We have set the path to generate shareholder returns in excess of the market and our competitors off with that. Let's open the call up for your questions operator. We will now begin the question-and-answer session to ask a question. You may press * then 1 on your touchtone phone off. If you are using a speaker phone, please pick up your handset before pressing the keys. If at anytime your question has been addressed and you would like to withdraw your question, please press * then two months at this time. We will pause momentarily to assemble our roster.
The first question is from Lee kro fer, please go ahead great. Thanks for taking my question guys and congrats on a record quarter. Thanks. So just wanted to start out on the revenue guidance. I think you kind of alluded to it in your commentary around, you know, the Investments throughout 2019, but you guys pick up Revenue guidance from the December Outlook slightly, but even kind of stayed flat curious if there's kind of some implied reinvestment there or some sort of utilization around margins that I applied any commentary be great know. I think the range of outcomes in the ibadah is wide enough, you know to move that by a little amount. I didn't think makes sense at the same time Revenue. We were feeling better about and as we do and if we continue to feel better over the course of the year, we continue to give guidance accordingly.
God
And then you guys kind of alluded to solid solid customer pipeline building in Q4 curious kind of the composition of the customer pipeline is it skewed toward kind of the video streaming offering or is it kind of new deployments in Edge in serverless?
So the pipeline is pretty strong right now. We feel good about the mix as well. We're very focused on video and within a video customers the use of our services capabilities for those customers. So a lot of it is one in the same. There are some Edge service deals that are not video related. But the majority of the pipeline is video delivery and video-based Edge services that we're providing and and see what I would say is we expect the video based pipeline to be strong right? This is our Core Business. This is the largest volume you want to constantly have that but I think in terms of the delta or the changing the incremental additions that are getting added the rate of change in the edge business is quite remarkable and we are very pleased with the traction that we're seeing there. So I think this is a really good thing we focused on Thursday.
I think that is happening.
We believe that for a video customers we can provide them with ad on edge like services or Edge services that complement the video services that we provide to them. We feel very good about what's happening there and then there are some stand-alone opportunities for some Edge services and we feel very good about what we see there.
Got it. And then last time for me just curious if you guys could provide some updated thoughts on the Ericsson relationship and the media and build out. I'll take that one off. So as you know, we entered into the Ericsson relationship late in 2018-2019 really didn't go as as Bland they had some changes which you know in the end were excited about but, you know took a little momentum and so we didn't accomplish as much in 2019 as we had hoped who long as we do our planning for 2020. We are assuming that we will get more capacity through the build out that we're doing with Edge gravity. So today we have about 38,000. I think we'll add 30 or more Pops this year and the pops will be on average larger in size than we have a pretty conservative view of
of Revenue
You know cuz there's two sides of that relationship right one is in providing capacity to us directly with the operators. And the other is revenue off from the use of that capacity by the Erickson or the operator. So we have a fairly conservative you this year on both the capacity that we will Implement and the revenue that 15. I still believe that it is an important long-term strategic relationship for us and an important part of building out our Edge service capabilities, but you know, we we're we've got a more conservative view of what we'll accomplish this year than we had this time last year.
Got it. Thanks for taking my questions. If work on the quarter guys, thank you Lee. The next question is from Jeff with craig-hallum, please go ahead with great. Thanks guys congrats great quarter got to be pleased with that a couple of several for me. Yeah. I wanted to see if I could start with the margins on the Gap front 44% of the gross margin line and Kia. How should we think about that behaving as we progress through 20?
Think that's the way I think about this is I'm focused on the operating margins. First of all and the movement of all of the work that we do into cash and ebitda and we get into opportunities where you have some low-cost lower pecs items. You have some opportunities with some high-cost Optics items. We look at it on a deal-by-deal basis. The business is changing enough, but I feel confident that as the business grows. There is margin Improvement. I I mean you see it and going from third quarter to fourth quarter with a three hundred basis point Improvement on an $8,000 movement in terms of revenue from 51 and change 260 and change right? So that is the kind of Leverage that we hope to see I think there is room for us to improve on a cost life. I think there is absolute leverage and productivity improvements that we can make in our infrastructure that further help the margin and I think those items compensate for wage
the price compression that
We go ahead and instill into the marketplace, right? So we are drivers of all of those things in a very manage basis and feel very good about the profile of the business and as it's developing. I mean, I was very pleased with an eight million dollar increase in the revenue sequentially and the drop in the rated date and if you see next year's numbers, you know, I mean at the midpoint we are suggesting, you know, something close to em, you know, sixty-five sixty-six percent growth in ebitda on a 15% like growth in Revenue. So that is the flow through that I care about most and then I do care about the geography of the numbers, but I think we have opportunity everywhere.
I
Yep, definitely helpful. And then if I could maybe put a little finer point on the progression through the year the variability from Q4 to q1 sequentially in the past five years all over the places is is as far down as down three sequentially and as good as update, sequentially, I'm sure there's a lot of variables into that. I know you don't guide the quarter but what what would you guide us to think about in terms of how can I ask you one behaves here? I know you had partial quarters and some ramps you maybe had some one time or it's just hard to think about that.
Let me comment on it and then I'll pass it.
So, I mean this, you know generally speaking Q4 is seasonally hi quarter in the CDN industry. There are certain events and things that can happen that can make you one, you know stronger, you know from year to year. But as we look at the movement from the last quarter to this quarter, you know, we certainly see seasonality taking place, you know any time there's initial launches like you saw with apple and Disney, there's always sort of this flurry of activity to begin with and then things tend to stabilize some things like the Amazon EPL games. They happened last quarter and will not happen this quarter, although they'll happen again in the fourth quarter of next year. And so all things being considered, you know, we we see you for truly being a season of Lehigh quarter and nothing happening event wise wage.
Q1 that can make you one difference
And then it would normally be we are suggesting, you know growth like we have not seen q1 over to one last year and following that along with you too. Right? So the first job growth implied of 20-plus percent suggest that we are looking at numbers that are pretty strong for us and I'm just being cautious right? I mean it is easy to apologize for numbers that get better, but I don't want to keep sending here and regretting the fact that we gave guidance that was ahead of you know, what we could achieve so one step at a time.
Fair enough in last last one for me. Maybe if you focus back on sales and pipeline you gave some Snippets there about some of the edge and and other meaningful improvements. Maybe if you comment on two things one just to Value the pipeline sort of late-stage pipeline Now versus you know, a quarter go to three or four quarters ago save a trend of the total value of pipe and then obviously made some changes, you know leadership wise on the sales side going back a little ways and maybe just talk about where you are in terms of the changes that that were implemented along along side with leadership, um, you know sort of coming to fruition and how is that how is that playing itself through in the pipeline?
Yeah, so let me start by saying we're very pleased with the progress that.
Um, I've made as you remember it was about this time last year that we announced that Martha had joined our team to run sales office and like Paleteria joined to run our strategic initiatives and I would say as we sit here A year later, you know, we've done a very good job of bringing faith and discipline to the sales force. We've added more coverage from a sales perspective. And so while those people were added Through The Years, you know, we're going into this year with, you know, those people fully trained and starting to build Pipeline and that was a progression through last year. So I'm really pleased with the work the time and his management team have done the pipeline generally speaking from a qualified pipeline is not only up but there are higher-quality birth.
opportunities in there in terms of
Being aligned with our strategy. It's not perfect yet. It's still work to be done. And there's probably opportunities in the market that we're not covering. So I wouldn't say our sales forces long enough to ensure that we're you know, getting every at the industry has to offer but I'm very pleased with the progress Saddam and his team have made and feel much better about where we are in sales and and in in our strategy on edge then you know, we we've a year ago and and just you know, you've heard me say this and I've spoken with many of you on the call before you know, what Tom brought to the table was the process orientation around the function and we are very pleased. I mean the organization today is more data-driven than it ever has been off. The process is a better than they have been before we are looking at monitoring at every stage of the deal. I would give you like last week was the sales kick off where we bring our Global sales team in. Yep.
or you know the start of the year and and and in most businesses have been you know, you kind of draw down at the end of the
Good and then build back over the course of the year and then at the end of the quarter again you draw down and then build again. I thought that we had done a great job of closing some really really good business down to the wire down last days of December and then when we looked at the pipeline starting this year and what is happening and where we are there is just a ton of good activity. And and I I think there ought to be pleased about I mean, we are very happy about the state of that business and its Global, you know, we just got an email a couple of days ago from our team in India. They just closed a very big opportunity there that was to take away from one of our competitors. And so we not only feel good about quality that pipeline but also the geographic diversity of it as well. And this may be more information than you want to hear or that I'm supposed to give on a call like this, but the theme for RS was, you know, we select the details and what we're really trying to instill in dead.
Every Limelight employee is that this is a detailed business and when we sweat the details, we perform better for our customers. We perform better for our shareholders and we provide opportunities for each other and we're really carrying, you know, kind of that theme forward and injecting that into everything we do whether it's inspection of sales pipeline to change how we build up the network and how we manage it everyday how we built, you know, every aspect of the company. We're really trying to drive a you know, it's the details that will we be a competitive differentiation for us.
Sounds good. Thank.
Skies hope you feel better about and thanks again on the on the answers and Greek order. Thank you feel better than I have. Good news. Good to hear. The next question is from Colby synesael with Colin and Company, please go ahead great. Thank you. Bye guys two questions. If I might first off. Just curious. Can you give us a sense? What you think your market share has been with these new video launches relative to your overall market share in the industry, uh said differently. Do you think you're out punching your weight? And is there more opportunity to take more share off and then secondly any big price renewal risk that we should be thinking about throughout 2020, maybe more in the first half second half just to kind of point us in the right direction and as it relates to these, you know bigger video deals that you're signing now, what's what's the structure of those look like those 1 year deals, and we should assume that they'll be some bigger renewals happening.
the fourth quarter of 2020
Here just any color on that as well. Thank you. Yeah, well, that's a lot to remember so I'll get it all remind me if I miss anything in terms of contracts, they're typically off one year, but even when they're multi-year, we either build into a multi-year contract a predetermined price depression on a regular bulb annual basis, but whether the contracts multi or not, we find ourselves in price discussions on an annual basis. So you should assume that you know, we are trying to put ourselves in a position where on an annual basis as we achieve efficiencies throughout our business, whether it's increasing comfort of our servers or better pricing on bandwidth, we're better utilization of our space and power that we are trying to find ways to pass that to our customers to enable them to grow their businesses faster. So nothing unusual birth.
About this year versus any other year, but yes.
We will basically renegotiate almost every contract and they're they're you know, spread throughout the year. And so yes that'll happen until our market share. And if you look at the CDN industry in general, I'm very confident that our market share is much higher in video delivery than it is in the industry in general but our customers who don't really I mean I've got, you know a pretty good idea in lots of places, but our customers really don't share with us or exact percentage of the total package, you know, we can tell for example, if we're in a customer where they have five CD ends and you know, we know what our volume is versus their total we can obviously do that math and know that you know, I'm getting more or less than the average of twenty on if they're five but really we don't have very good data on that, but I'm very confident that our Market chef.
in video delivery is higher the
It is in general and yes, we're punching above our weight. You know, when you think about the fact that there's not there's not ten people that can do what we do but there are you know a handful and they're very strong, you know back by very very strong companies whether it's you know, Akamai or Verizon or CenturyLink or Amazon web services. I mean, they're very strong strongly backed competitors and our advantage at Limelight is we invest 100% of our attention on c d n and the founding products that security or storage or Edge services, but highly optimizing everything we do for video delivery and we're not distracted by trying to become a security only play or you know performance e-commerce play and New Media security end you media, you know computer and media or very folk Club.
on video delivery, uh
And so I do think we punch above our weight to use your your analogy and then you started by asking a question. What market share price compression and just d e o d o i mean deal terms vary from company to company. But basically it's a transaction oriented business. We're more traffic we deliver more Revenue we get um, and in many cases as traffic increases price will decrease as part of pricing structure without any renegotiation needed just just to sum it up. I mean it relates then to your your Revenue range of the the 2:23 to 2:35, you know, the the big Delta there that is is just a function of what is that traffic growth more so than it is concerned or debate around pricing or repricing events that you know are going to be taking place in 2020 dead.
Yeah, I tell you the.
There's always some risk on on pricing but we don't see anything that would be abnormal there as we look forward but obviously, you know as Disney for example watching other countries how successful with the launch be right some of that has to do with how how good is the quality I provide but most of it has to do with their marketing and their acceptance from a product standpoint, you know, will NBC Peacock, you know, you've listened to the same calls from Comcast talking about that as I have, you know, does it launched on time at a high degree of confidence that it will off and how quickly does it, you know build a you know, a customer base same thing for other launches around the world, you know, how much viewership shifts as we go into Superbowl Olympics World Cup all the different events around the world. How much growth is there on internet-enabled devices, you know dead.
Comes from broadcast. There's a lot of variability in
And and a lot of that we don't control but we do control is our performance and we are a laser focused on that. Yeah, and we'll be I mean because I'm trying to read into your question and I think you and others have concerned because in 2018 meteorite we had six big customers a tree price and one of them was quite major and significant and it kind of caused a slight hiccup in our results. We do not have anything like that in our profile today. So we have kind of the standard operating principles and guidelines and what we expect in the industry. Some of it is factored in it is spread out over the course of the year and it is not anything that is out of whack or a large customer that is got pricing that is dead disconnected with market pricing etcetera that I see this that is out of line with what our business plans call for and then you know the the point on share shift I mean
The part of the industry that we are operating in on video. Like I said in my comments, you know, there is real business that's coming from other Industries. So if I'm performing Services, I have to take business from one of my direct competitors and convince the customer moved to me in this case. We're talking about entire wage traffic that's moving from a completely different industry and a different set of companies to our industry from broadcast from cable from satellite. And I think we are participating in that in fact that and helping our customers and I think that is helping us that is helping the industry should help everybody in the industry, but given the best we've placed the improvements we made in our performance. I mean the life of a few years ago would not be able to get as higher share today. I'm confident as we do today because of the Investments we've made
Great. Thank you very much guys. Thanks.
The next question is from Tim Herron with Oppenheimer, please go ahead.
Oh, thanks guys, just a couple of follow-ups. So have you seen pricing Trends change all that much. It looks like a pretty substantial increase in volume. I mean, you know pricing had been pretty brutal in terms of the clients for a couple of years has has that, you know, slowed down or improve the change that you directory at all.
Yeah, but I wouldn't say it's improved. It hasn't gotten any worse. And I think it's manageable where it is again in order for the customers that we deal with ought to be able to expand their business. We have to drive and find more efficient ways to deliver more content, you know without the bills going through the roof of them and Thursday. We're very focused on that the key for us is to managed at our cost come down at a slightly faster rate than our in our prices do but it's a it's a key imperatives for for us and for our competitors to find ways to drive efficiency. So our customers can can drive, you know adoption in the in the marketplace started. Yeah, and you get the benefits on the costing side as well. Right? So we used to have one gig length. We went to ten gig links then forty $25 and forty now hundred links, right and each link then takes up a card on.
A PC and you can have multiple.
PCS on Iraq only to be able to drive so much traffic and each PC could only do one or two gigs today. We've got, you know, we're doing 20x the capacity our server could do just three fifty five years ago and and and ready for another up pick on that number. So, you know, we are constantly making improvements in our cost the idea is to make sure that Improvement some of that gets invested back in the business in the form of R&D in the proper form of sales and marketing some of it flows back to the customer in terms of pricing and price compression which then enables other revenue streams and further expansions of models and businesses to move to the internet and some of it is retained for shareholders in terms of earnings. I mean, that is the balance that we are constantly trying to get too. But if we don't do that, you're still buying CDs and DVDs at Best Buy, I mean this is because of price compression that you see all of this movement that's happening.
Marketplace and quality and quality, of course a great point and on the on the quality front.
Give me your focus and your execution. Can you point your customers material differences in your quality versus your competitors terms of latency or you know capacity or any other measurements Jitter? It depends on what the customer is measuring. You know, what I would say is in a multi CD an environment where confident that we are performing in the top tier when it comes to Performance, you know, once in a while, you'll get the opportunity to see you know, graphs of us compared to our competitors and we're very confident that we are producing, you know, very high quality for our customers as compared to our competition to refine to know for the solution that a customer is looking for so long the the service like generic to you or you know to the industry is one thing but we will find you into what the customer really wants and places a priority on you know access to first by being able to start as wage.
Because somebody places play or the throughput or the download time that it takes to download a file all of those things.
State get taken into consideration and just lastly it doesn't seem like there's a lot of seasonality in the video viewership fourth-quarter the first quarter of third-quarter the fourth quarter, but could you give us any indication of how much of the incremental growth came from what you thought was one-time events or one-time volume growth, you know from third the fourth quarter or you know any color at all. Let me not break that out. But I do see seasonality between the fourth quarter and first quarter to some degree. So I think if you're looking at the Delta, right the street is looking at um, if I'm looking at the estimates roughly right about five six million dollars lower Thursday and the first the fourth quarter numbers, I mean, you can break it out into the three buckets that we talked about and if you assume the third a third a third you won't really be off by that much it. It's in that category but not as the weather gets warmer. I mean, that's why we talked about it that our second and third quarter typically sees a dip because of seasonality and then we have a very strong fourth-quarter around with the Christmas holidays and dead.
All of the new games and video and time off and live events that take place in that time frame. So we typically get a very strong seasonal fourth-quarter that is
Kind of the seasonality in the business. So we we plan for that and and that's what we're seeing. Thank you.
Again, if you have a question, please press * then 1 the next question is From Russia with d a Davidson, please go ahead.
Hey guys, thanks. Hey, thanks for taking my questions. Definitely a nice quarter. Maybe a couple ones one of the start on the cash flow side if I walk.
Hello, mr. Jewelry, his line disconnected. So this concludes our question-and-answer session. I'd like to do about maybe hold on. Just give me 1 minute lady. Let's just see if he can get back on. I don't know what happened. Okay, one moment, please. And if the other questions we can take those at this time. I don't see anybody in the queue.
And if it doesn't connect in a minute, we can we can reconnect with him on the line. So that's yeah, we won't keep the call that long time. But in the meantime, I mean before we may close. Close. I just wanted to let you know where you go ahead and post our visit as we travel around there on our website. If there are follow-on questions. Feel free to call me. You have my cell number and phone numbers. So we are here to answer your questions. If if there's need for a visit or when we happen to be traveling. I'm happy to stop by and see you again. Thanks, you know as always this is just very Time full for the relationship we have and thankful to the employees for the businesses that they're helping build here.
I don't see receipt joining back on so.
We can follow up with them separately. Then the operator you can go ahead and the call.
Okay. Did you have any other closing remarks? That's good. Thank you very much. Okay, the conference is now concluded. Thank you for attending today's presentation. You may now disconnect.
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