Q4 2020 Limelight Networks Inc Earnings Call
Good day and welcome to the Limelight networks Q4, 'twenty 'twenty earnings call and webcast.
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Good afternoon, and thank you for joining limelight networks, 2024th quarter financial results Conference call.
This call is being recorded on February 11th of 'twenty and 'twenty, one will be archived on our website for approximately 10 days.
Let me start by quickly covering the safe Harbor.
We would like to remind everyone that we will be making forward looking statements on this call forward looking statements are all statements that are not strictly statements of historical fact, such as our priorities our expectations, our operational plans business strategies secular trends and product and feature functionality announcements.
Actual results could differ materially from those contemplated by our forward looking statements and reported results should not be considered as an indication of future performance.
For more information please refer to the risk factors discussed on our periodic filings, including our most recent annual report on form 10-K.
The forward looking statements on this call are based on information available to US as of today's date and we disclaim any obligation to update any forward looking statements, except as required by law.
Joining me on the call today is Bob Lyons, our new President and Chief Executive Officer.
Bob will start today's call with a brief introduction I will then review financial results in detail following that Bob will use the remainder of the call to discuss our immediate and longer term plans to drive the sustainable growth and profitability at limelight. We will then open the call for Q&A I'll now turn the call over to Bob.
Thank you Dan and welcome everyone I am thrilled the joined limelight and speak with all of you today.
I joined this company because of the enormous potential in front of US limelight has an impressive list of blue chip customers is competing in a large and growing market and possesses a unique set of capabilities.
All these things are true our landscape is rapidly changing and there are challenges here that need to be addressed.
The growth and profitability of the company today are not where they need to be further a refined strategy and better execution of our critical for our success.
Clearly I believe in our ability to close these gaps and position this company as the leader delivering edge based solutions.
Later on this call I outlined the immediate steps, we are taking to address our challenges and position the company to pursue a rule of 40 performance at this time I'll turn it over to Dan to reported fourth quarter financials Dan.
Thanks, Bob I'm going to start with the top line while.
While we are happy to report full year revenue of $230 million representing growth of 15% over 2019. Our Q4 revenue was $55 4 million, an 8% decrease from Q4 of 2019.
Our top 20 customers accounted for approximately 75 per cent of total fourth quarter revenue.
International customers accounted for 41% of total revenue in Q4 compared to 36% a year ago, approximately 11% of our fourth quarter revenue was the non U S dollar denominated currencies consistent with prior years.
As Bob stated at the opening of this call our growth and profitability are not where they need to be let me provide some context for the Q4 decline in revenue, we experienced record day month and quarterly traffic volumes during the fourth quarter driven by accelerated adoption of direct to consumer streaming services.
However, price compression more than offset higher volume, resulting in year over year decline in revenue.
Bob will explain later the steps we are taking to get in front of these pressures by focusing on improving performance and share with existing customers expanded capabilities and more aggressive new customer growth.
Turning to Cogs and operating expenses cash gross margin in the fourth quarter was 41% price compression in the quarter directly impacted gross margin, we cannot simultaneously offset price declines with increased volume our cost reduction and network efficiency efforts in the quarter.
That said, we believe we can increase margin from these levels throughout 2021, and we have already taken steps to accomplish this.
Specifically, we have added approximately 30 terabits per second of capacity in 2020.
South Korea is one region, where we added capacity in anticipation of new traffic from the existing large customer that traffic didn't materialize and we have been working to reduce our exposure to this underutilized capacity.
It has had an adverse impact of approximately 200 basis points on gross margin over the last several quarters, we expect to reduce that impact by at least half in 2021.
Also as previously reported we have rolled out material enhancements to our automated traffic engineering network capabilities.
Has allowed us to better control of peak traffic within our pumps as we continue to refine these capabilities, we will enable policies to control costs and the alleviate congestion down at the port and vendor level.
Below the Cogs line operating expenses decreased approximately $1 million, primarily due to variable compensation costs.
I will speak in more detail later in the call regarding our efforts to evaluate all operating expenses and their alignment with our longer term strategy.
From a bottom line perspective, we reported a fourth quarter GAAP loss of $8 $3 million or seven cents per basic share compared to GAAP income of $2 $5 million or <unk> <unk> per share in the year ago quarter.
This year's fourth quarter includes $2 $2 million of interest expense are almost <unk> <unk> per share.
Adjusted EBITDA was $3 $6 million this quarter versus $11 four in the fourth quarter of 2019.
On to cash flow and the balance sheet.
Operating cash flow in the fourth quarter was $1 $8 million and we paid $3 million per capital expenditures on.
Operating cash flow for the year improved significantly to $21 $3 million compared to $1 $7 million in 2019.
As a result, we ended the quarter with cash and cash equivalents of $123 $7 million.
With strong cash collections the closeout the year, we ended December with the DSO of 49 days.
We anticipate continued DSO performance in 'twenty and 'twenty, one within our normal range of 50 to 60 days.
As of December 31, we had approximately $123 7 million shares outstanding.
In the interest of time I won't go into our full year results. During this call. Please see today's press release for additional details.
At this point in time, we are not going to issue guidance for 2021 with Bob joined the company less than two weeks ago. We are currently evaluating all aspects of the business, including strategy and cost structure, we will provide.
Additional details as we formalize our plans.
I would now like to turn the call back to Bob for additional comments Bob.
Thanks, Dan as I said at the outset of this call. There is enormous opportunity in front of us and we have a solid foundation to build on however, we are not performing as we should be and have work to do to refine our strategy accelerator growth improve our profitability and better execute.
Upon joining last week, the leadership team and I immediately went to work across these areas.
We have defined three priorities with specific actions to improve performance and ensure our near term and long term success.
First we will focus on improving our core CDN business limelight.
Limelight isn't a large and growing market. The one that is very competitive our ability to grow the topline and bottomline requires us to manage our costs and performance better than we are today and better than our competitors.
Going forward, we will be relentless in our pursuit of efficiency and operational excellence, we kicked off a quick strike project that will identify opportunities to reduce cost and improve service performance to ensure this project is thorough and execute at pace. We have engaged the top consulting firm to help us.
Second.
We will expand our core business I have had the opportunity to speak with many of our customers.
We have a strong customer base that our team has done a fantastic job of supporting.
Equipped with improved performance and a cost structure that gives us more pricing flexibility. We have established a win room that will allow us to aggressively pursue greater share of traffic and spend from existing customers. While also growing our pipeline of new opportunities.
Third we will strategically pursue opportunities that extend our core.
We can drive meaningful improvements to profitability and growth by diversifying our capabilities customers and revenue mix.
The biggest brands on the World Trust us to connect their customers to a great digital experience what their needs are changing.
As the global content consumption continues to evolve our customers need more from us going forward, we will more aggressively pursue and invest in opportunities to extend our core and provide robust edge platform capabilities that includes content compute and cyber security solutions.
We will focus on investments that meet the following criteria.
First solutions, where we can establish a clear right to win by leveraging the scale and capability advantage of our global edge network.
Second solutions that will improve overall platform utilization and third solutions that will increase our average sale price and improved revenue diversification.
Over the next 90 days, we're focusing on the strategic priorities I, just outlined which again are improving our core expanding our core and extending our core.
Where necessary, we will make changes adjust our strategic roadmap and refine our market position.
We have many of the pieces needed to be a leader in edge platform solutions and the ability to add the remaining needed pieces.
In addition to quarterly earnings updates when appropriate we will host a virtual strategy update.
This update will provide more details on our refined growth strategy and the opportunities and plans we will pursue.
We will distribute information about this event via a press release approximately one month in advance please be on the look out for more information in the coming months.
Before turning it over to the operator for questions I'd like to close by reiterating how happy I am to be here and how much I believe in this team and what is possible for us.
The opportunity we have at limelight is notable but requires disciplined planning and focused work to capture it.
Well there is no doubt much has been accomplished I know that our best days are ahead of us.
I'm confident in the direction, we are headed and in our ability to execute on a refined strategy and plans to pursue rule of 40 performance.
With that operator, please open the lines for the question and answer session.
Thank you we will now begin the question and answer session.
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Okay.
The queue. Our first question comes from Robert Magic Book.
Hum from my home.
Great. Thanks on the January 8th of press release, you had mentioned that investors should expect to receive 'twenty 'twenty one guidance on this call I understand the change in leadership and strategy, but can you just kind of help us understand what might have changed with the business that you are unable to provide any sense of revenue guidance for Q1 or for the year of today.
Thanks, Robert This is Dan.
At that point in time, we didn't have the leadership change in place we were announcing the date of the earnings and we are.
The estimated that we would come out with guidance at that time.
But with with Bob Lyons now being the only on the job for two weeks, we just felt that it's prudent for him to take some time evaluate the team evaluate what he wants to do and focus on and then we can adjust accordingly, and so we're going to undergo that process relatively quickly within the next several weeks as we mentioned we have.
Engage the consulting firm to help us.
And so we will come out with.
We'll come out with additional information as we worked through that process, but that that's kind of of the process that we went through and deciding either.
At the time coming out with guidance and now deciding to just hold off for a minute, let's take a step back pause and figure out where we want to go from here.
Hey, Robert It's Bob Nice to meet you, let me just add another piece of that.
I think it's important to note that I'm, a very strong proponent of transparency and accountability and also I need to build credibility with you all and so to do that the right way I need to take the time to make sure we get it right, but I can tell you is there is no burning platform. So there's really nothing that we're trying to run from it really is nothing more than when we do.
Come out we're going to definitely be accountable to what we commit and I wanted to make sure that I have a little bit more time to get that right for you.
Yes that makes sense, Bob nice to meet you as well it just kind of building on that in your prepared remarks, you mentioned reevaluating your cost structure of few times can you just give us some sense of the line items of your enough position to bite size without negatively impacting the business and then ultimately what youre lots of our margin profile look like.
Yeah. It's a great question, so I would say in the near term the way we're approaching it is we're looking at everything I think the best way to think about it is not so much as we're going to do an event and take our cost down, but rather were approaching it and saying we've got a <unk>.
<unk> of the cost structure for the company. So we can participate in more of this industry and when you look at the CDN space Theres really two big drivers that either of our disallow you two.
Participate in more volume and one is performance with customers on the other one is price and the only way we're going to be more competitive on on the price front is to make sure. Our costs are on check so with that we're approaching it looking at three dimensions of our cost structure first obviously looking at operating costs and where we can be more efficient. There secondly, looking at architectural cost some of the things that we may have done over the.
The years that the added cost that maybe we can rethink and then third obviously strategic cost where we can drive more synergies with the.
The different aspects of our strategy that we'll talk about more detail. So we're taking a very comprehensive approach from that what we expect to do is have we call. It a quick hits project on purpose. We expect to have some quick hits come out of that and then going forward, we'll continue to build on that with the <unk>.
Relentless continuous improvement model around cost.
Cost management really needs to become a key driver of our ongoing strategy as the company.
Bob It would be great. If you could just build on the comments you made about expanding the product portfolio of doesn't make sense to make the Pashto was offering security services like WAF and Ddos in house to grow.
Customer Arco.
Yes, So let me talk about security per second scenario, where I have a lot of experience.
What I've been doing for the last several years and.
The best way to think about what we're doing today is the same thing that everybody else is doing but that's not really where the big opportunity is the big opportunity is and what's happening in the security space and let me put a little color on that and on packet for you overall.
The overall security spend is about a 250 $260 billion of industry growing out of anywhere from a 30% to 20% CAGR.
But the challenge is if you looked at the way the security in the industry has grown up over the last 20 years, it's really focused on perimeter oriented tools.
And that worked really well when you had your own data center and when you can keep all of your assets inside your four walls, but what's happening today is if you think about with five G with mobile with cloud with SaaS all of those things are essentially making a permanent strategy obsolete and so what's happening in the security industry as that industry is going through a major transformation.
And interestingly edge platform is the place the can solve that problem because really what you're solving for now as you are solving for the new perimeter as each individual user wherever they happen to be if they're sitting on the Starbucks sitting at their home sitting in the office and so the security needs of transform and address those things. So when you look at what we're doing today.
No different than what a lot of people are doing but when you look at where the opportunity really is we have an ability given our unique set of assets with our global edge platform. So really play in that space on a much more compelling way.
We've got some work to do to figure out exactly how we're going to do that but more of more to come on that.
And just just one last question site cash from me I know youre not guiding to 2021, but just how should investors think broadly about CDN price compression as we look into next year is there any reason to think that these pricing pressures lately.
I would answer it this way I think anytime you are in the industry like this there's always going to be some price compression.
And so that's one of the reasons why we have to build that into the DNA of our of our company that we're managing for that having said that the.
Of the customers that I've talked to which I've talked to a number at this point all of them of said look we're willing to pay a little bit of of premium. If you can bring more value to the table and that's why we're really focused on two things get our costs, where they need to be at the same time meaningfully improve our performance in their eyes, and so we're always going to have price pressure I don't see it.
It's hard to predict but I see there is something we can do a better job with R.
Our peers in the marketplace are doing a better job with it. So we've got to we've got to do that as well.
Thanks, a lot of Bob I appreciate all of the color on looking forward to the analyst day. Thank.
Thank you my question.
Our next question comes from Rishi <unk> with D. A Davidson. Please go ahead.
Hey, guys. Thanks, so much for taking my questions and Bob Welcome looking forward to working with you on.
Wanted to maybe start on on the top 20 customers. If my math is right.
Your your your are proof of your top 20 actually declined 11% sequentially from Q3 to Q3, the Q4 and I don't think we've ever seen a sequential drop that bank with your largest customers.
Havent seen even on a sequential decline with the ARPA of your largest customers.
So I'd say at least seven quarters ago. So maybe can you tell us a little bit more about what's going on with your top 20 customers is there just more pricing compression going on there with these customers was there some level of attrition in.
And just share of traffic and any color you can provide there would be helpful.
Yes Rishi.
Our top plenty of customers represent 75% of our of our revenue when we have price compression with those large customers. It shows up in our numbers.
At a higher degree than what our competitors have with their broader customer base and so part of our strategy going forward is is to improve our core expand our core and extend our core with all of that driving diversification of our customer base.
And so when we had the price compression that we experienced in the fourth quarter with the larger of our customers and our top 20.
The reason for that <unk> decline and that's something that we realize that we have the fixed and diversify and thats, what our strategy will be going forward.
Got it that's helpful and then want to drill it maybe a little bit more into the the pricing compression because I think of lot of us are really surprised to see a sequential decline in total revenue from Q3 of the Q4, given all of the tailwind in the quarter right I mean, lockdowns, where we're a lot stricter you had to.
Gaming launches of OTT.
Kind of you name it a strong E commerce season, and sort of see declined sequentially I think it was a little bit of a surprise.
Maybe I mean it is this all pricing compression or are there other factors here and pricing compression has been an ongoing theme that that we've seen in that you've talked about what was it that led to pricing compression being so severe in Q4 versus in the other quarters. This year.
Here.
Yes, it was the significant.
The level of customer, where we experienced the price compression.
Really the story, it's the larger the largest of our customers, where we had some price compression that flow through in the fourth quarter versus the third quarter.
Got it that's helpful and last one from me and I'll hop.
But Bob I know I don't want to get too far ahead of the analyst day.
But you know you've talked about this industry a lot of lifecycle of the industry growing you know at least high single digits, if not faster than you've mentioned, it's a it's a growing and large market.
Obviously youre not.
Close to market growth rates, right now and I imagine it'll it'll be a while before you can how is how should we I guess high level be thinking about the timeline to at least return to market growth rates I'm sure. There's an aspirational goal of exceeding that and gaining share but I mean are we talking is that a couple of quarters is out of couple of years what is that.
On the timeline generally speaking look like.
Let me yes.
Yes, that's of Great question, Let me answer it this way and tell you how we're thinking about it and my initial observations so.
In the CDN market, which I think it was what you're referring to and I'm going to ask you to reframe that but im going to the first address that question in the CDN market. It is growing and you're right. We're growing at less than market share and the reason for that is that we've had a strategy of largely focuses on large enterprise customers.
Selling CDN and.
What we've got to do to be able to return the growth is really.
Two things, what we said in the call, which is improve our core by reducing our cost and improving our performance and I will talk about performance in the second and then secondly, we've also got to figure out ways that we can participate in more of the mid market and Theres. Some things that we can do in R&D to make that happen and those of the two things that are going to returns there. The first one of those performance in cost it can happen pretty.
Quickly.
One of the reasons that we are doing the quick strike project as well as the windows and the idea. There basically is if we can very quickly get our cost in a place where we can have more flexibility with pricing.
We can and we can also focus on performance and I'm going to talk about that a little bit more we can go back to our existing customers all of which are spending.
A lot more money with other of our competitors and really try to compete for that revenue.
So that'll be more immediate and then of course as we diversify our capabilities and look to be able to expand and more mid market and smaller regional so forth. We can we can expand there as well, but let me double click on the performance piece and.
And what I mean by that it's an interesting industry because.
On the one hand, if you asked me Hey.
How is your performance today, I would say well based on the numbers, we do good and that would be true on the other hand, if you said, what's the biggest thing you can do to grow the business I would say improved performance in those two things seem contradictory, but the reason that is is that our customers use of number of CDN.
And they are sophisticated enough to be able to route traffic based on all CDN type of things, they do well and the things they don't do as well as others and so our customers road traffic based on that and so we are of course going to have great numbers. What we've got a really focused on is the traffic, we're not getting and what performance we have to improve to get that in the so those are the things that we can do to drive more near term growth on.
And obviously make sure that were priced at a place that allows us to participate in that.
The fact that we're putting of Windows can place tells you that we're looking to do that more near term, but I'm not going to set expectations around that and then of course as we look to expand our abilities into the mid market and other things that'll be a little bit more on the horizon, but.
All of that will be done with.
On a sense of urgency.
Alright, that's super helpful. Thank you.
Our next question comes from Mike Latimore with Northland Capital markets. Please go ahead.
Great. Thanks, Yeah.
I guess, Dan did you give the the volume growth in the price decline on the quarter I thought I heard that but I didn't get it down.
We mentioned that we experienced record day month, and quarterly traffic volumes, but that price compression more than offset debt.
Okay.
In terms of just the volume of traffic volume growth rates did they change much from last quarter.
The growth rates were consistent with what we've experienced throughout the year I would say and so we took the level of up in Q2.
The Covid Lockdowns and that just continued throughout Q3 and into Q4 I think with seasonality.
Okay.
And then the.
It sounds like the price compression came from a couple of your largest customers I guess.
What what prompted.
Is that.
The new price requirements was it sort of end of contracts new launches more competition, just any color on that would be great.
I think competition as well as volume growth. The game, we have contracts with volume tiers in them already and due to the accelerated growth in traffic volume that we experienced throughout the year.
In some cases, they've exceeded the established volume tiers already and that brings people back to the table and we make balance decisions on whether or not to participate.
In those.
Re negotiations based on where we see the traffic going and how we can drive costs out of the system, but you get the as you get the initial step down in pricing as volume ramps back up and so that's what I was saying it's going to.
Going to be our job to diversify that customer base in that revenue base. So we don't get these huge step down in prices that stick out like a sore thumb that we've experienced share and thats the strategy that we're going to employ going forward.
And expect to make progress on net in relatively short order.
Great Okay.
Okay and then the last one on.
Edge revenue, you've given some color on just how much edge contributed revenues overtime.
Do you have the number for 2020.
Yes, it was under 10% in total, but it has grown pretty rapidly over the course of the last couple of years. We started a couple of years ago with really nothing and it grew from the from nothing to a couple of million to upper single digits.
Just under 10%.
Okay.
Okay. Thanks very much.
Our next question come from Eric Martinez.
But like the Street. Please go ahead.
Yes, I wanted to focus on the Q4 price compression as well obviously you had on outlook towards the end of October and then things changed.
The net change that took place in the last two months of the quarter.
Is that was that because you talked about competition in volume tiers of these volume tiers with the.
The impetus there on the volume tiers or on the competitive side.
It was the mix of both.
Okay, and I know you guys Youre fighting for traffic every day and your customers aren't exclusive to you, but as far as a trade off between.
Making of price concession.
Is there.
Is there anything else that you get out of that.
An extension of the term.
Or some other concession from the large customer.
Yes, I mean, it's really going to come back to our performance on how well we can perform for them that we will continue our relationship with them and where that goes if we can differentiate ourselves from our competition in terms of performance.
You hold the number in.
The upper life against everyone else and so that's what we're focusing on.
On the near term to drive.
Gain of market share from our largest customers as well as <unk>.
New customers.
Okay, and then one last one for Bob strategically you've talked about you're introducing the cyber security element to.
What is as you put it out of a pretty robust platform how.
How do we get there is this internally developed as acquired if it is an M&A strategy do you have targets in mind, yes.
Great question.
We will not get there by doing it fully internally.
A lot of work to do to come back with specific plans, but what I would offer you is that I know the space very well and I know where the opportunities are.
What it takes the win there and.
It's worth really understanding how we can be a big player on there is no surprise you've heard it with some of our competitors talking about and some recent acquisitions and the reason for that is the opportunity is just really meaningful and we really want to participate in that place and think we can do it in a compelling way.
I understand thanks, and good luck.
Thank you.
Our next question comes from Colby <unk> with Cowen Inc. Please go ahead.
Hi, This is Michael on for Colby two questions if I may.
First you talked about going after the mid market.
Improving more of.
The revenue diversification.
Part of that will you need to expand the sales force in order to more aggressively pursue that opportunity and also as we think about just the price of two questions. I mean, what how would you frame the risk of additional decline of pricing declines as we go through 2021 do you expect any of these larger additional larger customers to come back from the <unk>.
Any color would be greatly appreciated. Thank you, yes sure. Thanks, Michael This is Bob So first I'll start with the expanding diversifying the revenue there's really two things we're going to do there obviously look to do broaden our capabilities around edge of really three things as delivery edge platform and edge security and.
We'll spend more time talking about them when we come back with our strategy, but as far as the mid market really winning in the mid market space is more than just more salespeople mid market buyers are what I call more outcome buyers versus capability buyers theyre looking for somebody to come in and do the job for them and oftentimes the best way to get access to that market is through channel partners.
But most importantly, we've got to make sure that our value proposition of our platform is consumable for them. They are really more focused on dashboards and UI and ease of use versus the richness of of features and functionality. So so the win in the mid market space is a combination of making sure that our our platform has the right features and the experience for the mid market.
And then we also get to those customers through the right channels and that'll be part of the conversation that we're having going forward and we'll talk more about when we have a strategy session.
And then on the price compression on one thing I would say is that.
One of the things that I'm looking at is.
What drives price compression and I think there is one there is a natural price compression on the market that everybody experiences and that's going to be the nature of the Beast that we've got to just do a better job of getting in front of but I think secondarily.
The market is getting much more aggressive with where that willingness to pay prices and that's why we've really got to get our cost structure in place, where we can get down so I think and I don't really know this but it's just an early observation that some of our price compression has been a result of maybe being price a little bit above market of normalizing so based on that I would.
Expect to see once we adjust these things that we.
So we might see some less headwinds on that although it's never going away.
Perfect. Thank you for that and one other question is would you say that quarter over quarter you saw from each true in the way the customers perceived the GOR performance.
Because you mentioned on a few times I just want to get a sense. If there's anything the change on the performance on it.
I don't know I don't think so like our customers demand the best performance at a price point that they can get in the market and so that's consistent year over year quarter over quarter, Yeah, and you know just the double click on that performance thing I'll tell you. The difference on how we think about it if you look at our performance and what we do day to day.
I've spoken to almost all of our top customers and they're very happy with what we do and we have good conversations, but if youre of growth minded company you start focusing on what youre not getting and what performance you have to have to get that and that's really where when I say, we're going to double click on performance. So we can go after the parts of the market that today, we are not participating in.
Perfect. Thank you very much of that I appreciate it.
Thank you.
Our next question comes from James Breen with William Blair. Please go ahead.
Thanks for taking the questions just a couple of again sort of on the follow up of some of these questions have already been asked.
In the quarter, you said the traffic was up.
From your own experience given how much traffic was up across the industry do you feel like you.
Loss of market share and that was sort of part of the reason for the sequential decline in revenue and then secondly on some of these contracts can you give us a little color around it.
The customer hits, the price hits of volume benchmark and coming back from the table on the repricing of reprice throughout their whole contract and Thats, why youre seeing sort of hub.
An immediate step down then you have to grow into as the volume to go up.
I'll answer your first question. Your second question first yes, yes that is the way. It works typically is that pricing then resets from like one.
The second question on market share I would say in some cases, we gained market share and in others, we didn't do so well.
And again, it's all going back to performance.
And how we perform with each individual customer in the geographic region that they're focused on.
And what capacity we have in those regions and so that's what's under evaluation for us here going forward.
And then just one follow up to that.
Over the course of the last few years, we've seen certain quarters, where there seemed like there was one.
The company out there or two that were really aggressive in the quarter did you see that this quarter from any of your competitors in terms of NAV.
Little bit of irrational pricing trying to grab some revenue and market share.
Given the environment.
Yeah, I mean, I think given what we've seen over the last several years, you're going to have that consistently where someone has some capacity that they want to fill and they are going to go fill it in one way or another and so we have to.
We have to.
Make sure that our network is performing at a level that can.
Get that traffic.
And differentiate our service from the competitors that maybe maybe.
Outpacing the market as far as price compression.
Great. Thanks.
Again, if you'd like to ask a question. Please press Star then one.
Our next question comes from Jeff Van <unk> with Craig Hallum. Please go ahead.
Great. Thanks, Thanks for taking my questions just a few from me guys. The.
That's the kind of of the missing just fully understanding what happened in the quarter, what's the breadth of of the sort of the headwind I mean, if he had the sort of boil it down to where does the 80% of the damage take places. This is this coming from five customers it really boiled down to one or two or three.
Just any sense on on the breadth of players where most of the impact was felt.
Yes, again, given given the the concentration.
Concentration of customer of.
Revenue within a small number of customer.
It's less than five any particular quarter.
Within that top 20, obviously of the top five are much more significant than the bottom five and so when you have something happened within those top five it's going to show up more.
But I mean is this more of like one or two or you saw some trends across all five.
It was a couple of it.
Wasn't all five.
Okay.
The 10% customers in the quarter.
There were two that will come out in our K that will be filed tomorrow.
Got it and then last one from me just as it is I think Bob as you know because you were kind of framing.
Getting into a more competitive position as it relates to the the cost structure.
Granted and no complaints if you don't have an answer because you've just got it in the seat, but I know you're trying to size up the networks does anything stand out at this point, where when you compare yourselves to peers you just feel like the <unk>.
The network architecture might be flawed theres other things in there that really stand out to you yet.
No actually it's interesting you asked that question I was just talking to somebody in.
When you're at this point I think seven days on the job.
Ask yourself, okay, what I expected coming in and I would say I've had more positive.
Surprises or feelings of the negative I think when I look at the network.
We have as I started it said it early on we don't have a burning platform. We are of very good network. There are some things we need to do to it to be more competitive in the mid market space as I talked about we have to do a better job of being able to solve for smaller objects.
<unk> improved the UI and the configure ability. So we can be more addressable smaller and mid sized customers, but but those are all very fixable things that we can do so no major issues I think it really boils down to we've just got to focus on making sure. Our costs are in line with where the market is pricing things. So that we can get the rate of return on invested capital.
We've got to improve the utilization.
All of our network of that'll help a lot.
That'll help both by.
The wind is going after the regions, where we can improve utilization of the targeted way and it will also help when we start putting other solutions on the network that have different demand patterns. So we're going to focus on that.
But but other than that no no major issues. It really is just.
Initially focused on execution focus on cost and then.
The strategy right. So that we can continue to improve utilization and when you do that you'll just start to see the gross margins get to where they need to be it's not going to happen overnight obviously, but.
The good news is we've seen of done in this industry. So I don't have to ask you guys of speculate or suspend disbelief. It really is nothing more than the execution issue for us on the strategy issue and so that's what we're going to focus on.
Fair enough one last if I could sneak it in the real time streaming I think was one of the pivots that was that was the push to get into a higher differentiation of higher margin.
Space, if you will any updates there in terms of what you witnessed this quarter.
No real update for you where that continues to rollout and limited availability.
Experiencing a good pipeline of customers from.
From for that product and that's been and POC are underway.
And.
We will evaluate how that goes from there.
Got it okay. Thanks for taking my questions.
Thank you.
This concludes our question and answer session I would like to turn the conference back over the BOP lines for any closing remarks.
Thank you operator, and thank you everyone for joining us today I look forward of working with everybody and continuing the conversation. We enter 2021 laser focused on building a platform for profitable growth. Our industry is on an upward trajectory and we are positioning limelight to take advantage of of that growth. We are optimistic in our ability to do so and we look forward to updating you on our progress at the end of.
The first quarter.
Thank you.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.