Q2 2021 Limelight Networks Inc Earnings Call
[music].
Good day, ladies and gentlemen, welcome to the Limelight networks 2021 second quarter financial results Conference call.
At this time all participants are in a listen only mode at the end of the prepared remarks, we will provide instructions for those interested in entering the queue for the question and answer session.
I will now turn the call over to Dan Bombshell Limelight is the Chief Financial Officer.
Good afternoon, Thank you for joining limelight.
Networks 2021 second quarter financial results Conference call.
This call is being recorded today July 29th 'twenty, 'twenty, 1 and will be archived on our website for approximately 10 days.
Let's 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 product and feature functionalities pro forma results and acquisition activities and contributions from acquired businesses.
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 in our periodic filings, including our most recent annual report on form 10-K.
Okay.
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 are Bob Lyons, our President and Chief Executive Officer, and Ajay Kapoor, who will become our new Chief Technology Officer.
We'll start today's call with an update on our improved expand and extend the initiatives as previously discussed. These 3 operational programs are intended to support the improved growth and profitability, including the recently announced the acquisition of move Corporation, which does business under the brand name layer zero.
I'll then review of.
Bob will results following that Bob will use the remainder of the call to discuss aspects of our strategy and corporate initiatives going forward. We will then open the call for Q&A.
I'll now turn the call over to Bob.
Yes.
Thank you Dan and welcome everyone I.
I am pleased to report that the steps, we have taken to improve profitability and our competitive position.
<unk> are beginning to demonstrate improvements in key areas of business performance. The recent organizational and operational improvements have improved our adjusted EBITDA and free cash flow. We expect continued improvement with line of sight to additional identified efficiencies and revenue growth.
While we reaccelerate, our core CDN business with the acquisition of layer zero.
Zero, we have laid the foundation for limelight evolution into a next generation platform that leapfrog the competition.
The acquisition brings on significant technical talent to oversee the limelight evolution as an edge solutions platform we.
We will speak to this a couple of times on this call.
And we will provide additional insights on our strategy here today.
<unk> and further at our strategy session on August 24th.
Consistent with the first quarter, we have continued to take aggressive steps towards improving shareholder value.
As a quick reminder, we have organized our approach into 3 programs are improved program is focused on network performance and operating costs are expand program is focused on revenue growth with existing and new clients.
And the extent program is focused on introducing new solutions that will increase network utilization growth and gross margins we.
We have been very busy and I would like to update you on our progress with each of these programs.
Under our improved program, we have remediated. The previously discussed network performance issues and we continue to improve our cost model.
<unk> achievements. This quarter include our newly formed performance operations team has reduced the buffer rates for some customers by as much as 30% and increased global network throughput by 20%.
As a result revenue from 18 of our top 20 customers has increased 20% year over year.
We have identified.
Additional $8 million in annualized cost of good savings that we expect to contribute approximately $4 million in the second half of this year.
The $15 million of annualized cost actions taken in the first quarter of improved adjusted EBITDA from a loss of $3.3 million to a gain of over $200000.
Additionally.
Right and as revenue ramps in the second half of the year, we expect significant flow through to adjusted EBITDA.
We believe that our improved network performance is the foundation for in year revenue expansion with existing clients fittingly or expand program has focused on this opportunity as well as adding new clients highlights this quarter include.
Previously we had discussed that 2 of our top 10 clients have meaningfully reduced our traffic due to performance concerns both had begun ramping us back up and we expect the ramp to continue supporting our expectation for accelerating revenue growth in the second half of this year.
You may recall that our largest client uses algorithms to LG traffic based on performance.
The focus on the opportunity to optimize our performance in certain regions in order to gain a greater market share of their traffic.
In the quarter, we implemented a win back campaign to focus on past clients that no longer work with US we are in active discussions with several former clients.
1 of which.
<unk> a former top 10 client has completed integration testing and we expect traffic to return soon with an annualized revenue of $6 million.
Perhaps as important the traffic pattern was modeled largely to leverage our off peak capacity as a result, we anticipate an improvement of network utilization of approximately.
<unk> 300 basis points.
Last we are excited to have Eric Armstrong joined US as senior Vice President of growth. Most recently he was vice president of North American sales and services at our harmonic a global leader in streaming broadcast and service provider of video infrastructure and will help continue our efforts to accelerate growth.
Continued expansion of revenue and profitability also requires us to extend our product scope to higher margin products that leverage our global private networks. We are excited to announce the pending acquisition of layer Zero Corporation layer zero is a SaaS based application acceleration and deployment platform for developers there.
<unk> flagship product enables us to capitalize on the.
Spring trend of developers utilizing the edge to better address application performance overall productivity and reduce the attack surface.
We believe that the combined layer zero capabilities and our proprietary global networks will give limelight the best application delivery solution in the market.
With the acquisition of layers.
Zero, we will be immediately launching a new web application acceleration and deployment solution. We believe that our solution will benchmark better than alternative offers on performance price and productivity.
We expect <unk> to contribute over $20 million of incremental revenue in 2022.
We have identified approximately $3 million of additional annualized cost synergies.
Externally. We also believe that layer zero will be accretive to adjusted EBITDA in 2022, and this acquisition meaningfully improves our software product management and engineering capabilities RJ Kapoor layer zero founder will joined limelight as our Chief Technology Officer.
He brings with him an entrepreneurial spirit and approximately 90 team members that.
That will be instrumental in our vision for enabling our solution set within our global edge networks for developers.
Zero currently serves customers such as coach United Airlines, We've all fashion shoe Carnival, Kate Spade sharper image and several top 50 U S banks.
We are very happy with the progress of the team has made in such a short time.
But much work remains to be done.
We will continue our relentless pursuit of operational excellence, restoring client confidence improving performance and returning value to our shareholders.
We will continue to communicate our progress as well as our opportunities to improve.
I believe that our improved performance our cost management.
And the launch of our new application acceleration and deployment solution positions limelight to capture more market share.
At this time I will turn the call over to Dan to report second quarter financials Dan.
Thanks, Bob.
Revenue for the second quarter was $48.3 million of decline of 17% from the second quarter of 2000.
On 'twenty.
As Bob noted, we believe the operational improvements implemented over the last several months and the alignment of our client success team with the metrics that matter most of our clients position us well to participate and expanded market share and traffic gains as more and more new content is released despite short term headwinds due to easing COVID-19 restriction.
Restrictions, resulting in changing the streaming patterns. We are confident the actions. We are taking will increase our ability to grow profitable revenue long term.
Our top 20 clients accounted for approximately 78% of total second quarter revenue compared to 79% last year international clients accounted for 39% of.
Total revenue in Q2 compared to 38% of a year ago, approximately 11% of our second quarter revenue was the non us dollar denominated currencies up from 10% last year.
Cash gross margins declined to 33% from 51% in the second quarter of last year, our largely fixed cost structure of coupled with a concentration.
Centralia of large video streaming clients results in the sub optimal network utilization.
Our network has high demand for a relatively short period of 4 to 6 hours each evening in each region.
All of this remains true our cash gross margin, while the high sensitivity to overall demand patterns and network utilization.
We will improve our network utilization by focusing on Onboarding more software download customers and extending into the web application delivery space with the acquisition of layers zero, both of which generate significantly more off peak traffic.
Went back opportunities in the software download area are expected to drive utilization improvements in the second half.
Per year.
Yeah.
We have recently improved alignment and focus on our global infrastructure with the regional management structure. We believe this alignment will further improve our ability to capture opportunities in the markets, we serve resulting in continuously improving our performance utilization and cash gross margin.
Half of our operating expenses were $19 million the decrease of 29% for $5.6 million.
Excluding restructuring and transition related costs, which totaled $2.2 million in the second quarter and $11.7 million in the first quarter of 2021.
We have started to realize the savings anticipated from the actions taken in March.
March of this year as well as improved management of all operating costs.
We expect the restructuring and transition related charges to be approximately $2 million for the remainder of the year as we continue to evaluate opportunities to further optimize our performance and cost structure.
The aforementioned operational improvements resulted in a meaningful.
The sequential increase in adjusted EBITDA to a positive $200000 from a loss of over $3 million in the first quarter.
Cash and marketable securities totaled $119.6 million, an increase of $2.6 million, we paid $4.1 million related to restructuring and transition related expenses.
<unk> and the capital expenditures were $3 million during the quarter.
DSO at the end of the quarter was 42 days compared to 51 days at the end of March We anticipate continued DSO performance in 2021 within our normal range of 50 to 60 days.
On the guidance, we are leaving our current expectations unchanged.
Except for capital expenditures, we currently expect capex to be in the range of 15% to $20 million for the year compared to previous guidance of 20% to $25 million as the efficiency gains through software enhancements and focus on better asset utilization are expected to provide the capacity needed to meet our revenue guidance.
We do recognize there.
Timing risks associated with expected traffic ramp in Q3 and Q4.
As we discussed on our last quarter earnings call. We will continue to monitor this risk and communicate any adjustments should it be necessary early indications are that we are ramping traffic, but there is risk associated with the rate of ramp and to what extent post COVID-19.
<unk> took patterns continue.
Offsetting these risks are a few new growth assumptions in our model. These include the wind back of the large software download client that will heavily utilize our off peak traffic capacity. This represents $3 million of in year revenue in an annualized revenue target of $6 million.
Also the.
The acquisition of layers zero provides the ability to immediately expand their existing product offering to bundle with our delivery service with existing clients and we expect to contribute approximately $20 million 2022.
Let me take a moment to add a bit more color on the layers zero acquisition.
We believe that layer zero of fits perfectly.
The traveling into our strategy of adding new high margin high growth SaaS solutions that leverage our global private delivery network.
In short we are combining the benefits of our world class Global edge networks with layers of <unk> unmatched application performance and developer productivity capabilities to create a leading.
Perfect solution with higher margins high growth and that improves our network utilization.
By offering this type of product solution, we expect to diversify our customer base with more SaaS oriented revenue versus our traditional non committed of usage base.
As we grow this product offerings, it will lead to customer.
Leading our growth reduction in revenue concentration risk and a more predictable revenue stream.
Approximately 65% of layers of <unk> revenue is contracted recurring subscription SaaS based revenue with a gross margin of over 70%.
<unk> flagship product is growing rapidly at well over.
<unk> com per cent per quarters layers Aero was operating at essentially a breakeven level on an EBITDA basis, we expect the gain $3 million of cost synergies on an annual run rate basis. Once we get through closing the transaction and integrating the teams.
Under the terms of the definitive agreement limelight of tends to acquire layer zero for approximately 55 million.
Subject to customary closing adjustments and an equity pool to retain this talented team and introduce new products driving our future growth trajectory.
With that I will turn the call over at the box.
Thanks, Dan.
We continue to be energized with the opportunity that lies in front of us the acquisition of layers zero is a very strong.
The board and our strategy to position limelight is the leading provider of edge orchestration solutions.
The technology that layer zero brings to us will allow us to offer a solution set and a performance level that we and our competitors have not been able to offer in the past market research tells us customers value of sub second powered websites.
The developers also.
You want the ability to access the edge of a global network to create their front end applications preview of the content and deploy instantly. They also want to deliver their applications on a platform that includes our basic security needs such as WAF Ddos and threat detection.
By combining the SaaS assets of layer zero with the global edge platform of limelight.
We believe our application delivery solution will drive significant value for our customers, including driving better performance for our clients with web site speeds that are 4 times faster than current competitive alternatives.
Proving developer productivity with our James stack toolset, making of simple to deploy web apps built for the edge and providing a holistic.
Solution that includes the observer ability tools self service on boarding edge compute server less compute and other capabilities that will be utilized in our existing content delivery solution.
Later zero will immediately add approximately 80, new clients the limelight global network with an average annual spend of 160.
The list of colors.
We believe there are thousands of companies who currently are underserved by the existing provider. These companies are looking for an end to end solution that improves performance productivity and has security embedded in the functionality of the service I.
I look forward to sharing more details of the future of limelight at our August 24th strategy session.
<unk> thousand please join us for the discussion for feedback and questions will be welcome.
We will issue a press release with the island and webcast information on August 10 with that operator. Please open the lines for the question on answer session.
We will now begin the question and answer session to ask a question you May press star.
And then 1 on your Touchtone phone.
If youre using a speakerphone please pick up your handset before pressing the keys to withdraw your question. Please press Star then 2 at this time, we will pause momentarily to assemble our roster.
The first question will be from James.
With William Blair.
Thanks for thanks for taking the question.
Just a couple.
1 can you just talk about you obviously revenue is down this quarter of $48 million sequentially.
Was that sort of a broad based weakness or any of the comfort of the couple of customers and then what's your confidence in.
That in this quarter sort of be the bottom.
In terms of your your is the core.
Core business historically, and then as you think about closing on later zero in August.
Any thoughts on how much that can add in the back half of the year you talked about another deal that could add sort of 6 million annualized which would be 3 of the back half, but in order to get to.
James on the guidance you need to do about $120 million the back half. So just trying to piecing together here from where we are today and the way we will be at the end of the year. Thanks.
Yeah. Thanks, Jim This is Dan I appreciate the questions and listen I think we're adding the inflection point with the company I do think that Q2 represents the low end of.
Of our reported revenue numbers and we're really excited about what the addition of layer zero is going to bring as well as the future of what we see from our existing customer base. We mentioned that 18 of the 20, the 18 of our top 20 customers actually.
Increased their revenue by 20% this year. So we had a couple.
Couple of our bigger customers that didn't see the traffic growth of that these other customers had seen but we think that the performance improvements on the operational efficiencies that we have put in place have really shown through for many of our other customers and we're excited that that ramp will continue in the back half of the year and Thats what gives us confidence.
We can hit those.
Growth targets that we set for the back half of the year end of Q3 and the Q4.
Hey, Jim It's Bob of I'd, just add to that I think.
It's largely driven by.
Really 1 customer.
It has seen a little bit of of post COVID-19 softness.
Do people, just getting out as well as lack.
<unk> of content.
We don't expect that to continue but.
That's really what's driving that I think the issues that were self inflicted the channel mix of revenue in the past we've addressed those and so at this point, it's really going to be more market driven and that's going to come back. The only question for us is really win.
The other I think important point is that.
So we've done a lot of work on the cost side of.
Since that equation over the last for months.
And so when that revenue does come back it's going to flow pretty heavily to the EBIT line. So.
Should be good on both fronts in it so it's really not a challenge of performance. It's really just waiting to see how the market shapes up with an area, we happen to be pretty concentrated with the customer.
And just last.
Last question.
On layers of Euro you talked about 20 million of revenue in 2022.
Can you give us any color around what that company is growing at now.
For the pace of perspective thanks.
Yeah, I mentioned that it's growing 30% quarter over quarter, and we expect those trends to continue.
And.
So with that said the.
Backing down from the $20 million in 'twenty, 2 you can get to roughly $4 million to $5 million in the in the back half of this year that will contribute also to that revenue ramp that we are suggesting with our guidance.
Perfect. Thank you.
Thanks for your question will be from Eric.
Eric <unk> of Lake Street.
Yes, just to follow up on that for most recently.
Comments, you just made about the revenue so the the <unk>.
<unk> that you've reiterated now includes how much revenue from layer zero.
About $4 million to $5 million, we expect back half of the year.
It's growing growing significantly as we head into 2022.
And do they make a contribution to EBITDA do they weigh against the prior EBITDA guidance and you're overcoming that with more cost cuts or what's the impact of attacks.
The layer zero was operates all of breakeven on the Standalone basis, we plan on adding.
The salespeople into the mix in order to sell the new product that we're going to be introducing as well as marketing of that new product, but with them operating on the Standalone EBITDA breakeven basis. We do believe that there are cost efficiencies that we can drive into the.
The results of the company.
The combined with limelight.
Some of them.
Ultimately $3 million and so we do think that that will come in in the relatively short amount of time.
And it will improve EBITDA coming out of the fourth quarter of this year.
Okay, and then just to be clear debt position.
As of yet to close it will close in August of that correct.
Yeah.
<unk> designed it yesterday announced that signing yesterday and then we expect a couple of weeks.
Okay. Thanks, I'll turn it over the Mike.
The next question comes from Colby <unk> of Cowen and company.
Hi, This is Michael on for Colby 2 questions.
If I'm not mistaken the last quarter, you said that you expected revenue and gross margins to be flat quarter over quarter and this quarter. We saw a sequential decline. So my question is the mean as it stands how would you describe your visibility into the you know into the business and for your guidance and then secondly on.
If I may related to the software downloads, if I'm not mistaken I believe from 2019 of the company backed away from doing software downloads and I think the reason was because it was unprofitable just wondering whats changed in that area and why your pivot.
Pivoting to pursue that now thank you.
Okay, Yeah. So I mean, 1 of the struggles that we obviously have the visibility into.
On the traffic and market share of the traffic that we get from our existing customer subset and so 1 of the things that I'm really excited about with the lawyers zero product and capabilities that are going to be coming online with us is that ability to.
To have that exclusive contract with the customer.
A more predictable revenue stream that we can.
And then layer into our forecasting process and that is in a high growth area that we're <unk>.
Starting to contribute more and more to revenue on the longer term basis, and so while we do lack of the.
So the with our current subset of customers the the product and capabilities that come on line with layers zero.
Or are completely different from what we've experienced in the past and we do.
I believe that we have visibility in the line of sight into the growth in the third quarter and fourth quarter of this year.
With.
The additional content coming on line with the addition of Microsoft and the software download type of business that we're getting.
Getting back into and what has changed there is the ability.
To manage and monitor that type of traffic within our network.
That allows.
Visit does too.
Provide better pricing and incentives for the type of traffic that those customers can deliver for us for that we can deliver for them.
And provide the value proposition for them to move to us because we can we can monitor that traffic in.
Moving around within regions.
<unk> at off peak times to better utilize the networks.
Got it thank you.
The next question will be from Jeff Van <unk> of Craig Hallum.
Great. Thanks for taking my questions guys. Just a couple for me for me.
With respect to layer zero.
While the through I guess I'm curious, if you could sort of compare and contrast of the.
The sales process the path.
For the customer capture so what are the sales per layer zero look like versus your core products. When you think about.
The buyer are these are the similar buyers of the similar sales motions and processes.
Keith or Marc lease structures.
The synergy is just how are those choosing to come together and play together.
Yeah. Thanks, Jeff This is Ajay Kapoor.
On it today and our CEO of layer zero and does seem to be CTO.
The first half of questions all right yeah.
Thanks to Bob and Dan.
For the similar.
On bringing us on me and the team are extremely thrilled and very.
Very excited about what we can do together as of.
The joint forces in the market.
As it relates to go to market for our products and the evolution of that product within and on the line like networks.
There is definitely.
It's more of a transactional mid market.
Engine.
Net debt will be that we're going to be bringing in it we're going to be scaling.
That's 1 piece of it and other piece of it is that there is more committed contract revenue.
So it's the higher velocity model, but it's building committed contracts in <unk>.
<unk> forms of revenue.
So those are a couple of components that are there and we have found that the persona that we go into and they tend to be in some cases, the same industries such as media on software and in other cases different industries. So we're expanding to different industries, such as e-commerce travel hospitality and a variety of just kind of the big content web.
We're predicting 10 providers that are out there so the persona on the people at the company tend to be different but it's of a big expansion of whom we could talk to in the market.
Yes.
Yes, I guess just a follow up on that then as you were building the business.
1 of the deals what was the typical competitive we don't.
The cost for those who would you hold the most you know.
Web com the at the end of the day.
It's interesting because of the category of Jam Sac is a new and rapidly expanding 1 so we would come in and we didn't need to always we could complement and work alongside the application delivery networks.
And the typical.
The.
The names you know there so it wasn't always competitive as it was additive and we continue to see that.
Potentially be the case for a bit so so what someone would come in and say they just need developers to be able to release features more quickly they need a sub second website because of <unk>.
<unk> is coming and saying that theyre going to rank websites and they are ranking websites.
Based on that speed. So it was through those dimensions of that people bought on each.
Even when.
It was using used alongside 1 of the hyper cloud vendors or 1 of the edge application delivery networks.
Hum.
Okay Fair enough and then I guess just back to the sort of the core.
The existing.
The business to date.
On Obama Dan on the on the traffic trends in the quarter, maybe just spend a minute longer talking about what what you observed overall in terms of traffic growth pricing.
Covid specific behaviors evolve start to finish during the quarter.
Yeah. This is Bob I'll take that and then.
Then feel free to chime in I think.
Well the way, we think about it.
The primary question, we're trying to solve obviously is how do we position the company to create shareholder value going forward and there are really 3 things that we've got to be confident in order to make that true.
The first is there a bounce from the historical performance and certainly the recent few quarters.
Don't trends secondly, what will that balance look like and third kind of balance be sustainable and continuously improved upon and so when you look at those 3 questions.
On the.
So we're pretty confident the bounce happens in this quarter Q3.
All of the things we're seeing I think the answer your question I've had conversations with all of our top client.
Clients.
We're not seeing pricing issues. The fact that verified that were pretty in line with market I think the only headwind. We are seeing at this point, it's really just people not watching as much TV right now and and.
And waiting for that to come back around of normalized people are getting out of the house now finally for the first time.
But based on that.
Youll see the bounce on the acute and <unk>.
Q3, the <unk>.
And then becomes as what's the trajectory of that look like and we're waiting to see that that's where the risk is right now.
And then how do we make sure that sustained I think all of the things that we've done around improving performance.
Sure is that our core business will continue to grow in the sustainable way and the addition of things like move web allows the.
We started that and give us other channels of growth and profitability of gross margin improvement. So we feel pretty good about all of that and I think the last an important point as of <unk>.
Given that we don't currently don't want to Jinx us, but we don't currently see.
Any surprises with pricing pressure or anything like that right now the work we've done on the cost savings as traffic does come back.
Of the diverse which it will we see that doing a pretty good job on the bottom line for us as well given how we've really tightened up the business over the last quarter on a half.
Yeah, and I'll just ask for it.
The spec items onto that.
We have these growth expectations for Q3, and Q4 and that is for.
To some extent predicated on new content in.
Jack streaming patterns of returning to normal I think people were a little tired of being cooped up of not being able to do things out in public and that has impacted the growth in the second quarter, but we see that coming back in the in the third and fourth quarter.
In addition, we've expanded pretty rapidly in Latin America with some partners.
On.
There.
As.
As quickly as we build that capacity.
It's been it's being taken up in demand from our existing set of customers and so we're going to continue along that strategy and continue to work with our partners.
South America to continue to add capacity and we expect that.
The capacity to continue to be in demand.
Yes.
The large software download customer will also contribute to the revenue growth and traffic.
The increase in traffic in the back half of the year as well so all of those things I feel really good about.
Like I said I do think this is an inflection.
Inc. For the company that we are on an upward trajectory.
And we're looking forward to that growth and <unk> seen that flow.
Robert.
And adjusted EBIT.
Fair enough. Thanks, so much.
Again, if you have a question. Please press Star then 1.
The next question will be from Rudy Kessinger of D. A davidson.
Hey, guys. Thanks, Thanks for taking my questions.
I'm curious if you could talk to you know kind of the share that you guys had loss of a couple of your key customers just how much of that have you gotten at back of your all the way back to where you were in EMEA on what point did you achieve that was.
Like simple during the quarter or earlier on and then also could you talk to maybe some of the early signs of success.
Success, you guys of pad moving traffic from the.
Of the peak hours for the off peak and sort of how youre going about that to encourage those customers to move.
Yes, so on.
Les this is Bob Thanks, Rudy and then Dan feel free to chime in as the.
You know the there were a couple of areas, where we lost traffic due to performance.
The performance was share I think and in 1 case in particular.
We lost all of the share than they were of top 10 client.
That client is now back and starting.
I'll start ramp and it's early days on that and so.
It's 1 of the areas, where we're going to see of lift going into Q3 and Q4.
And I think the other customers, where we might've had a fraction of the percent percentage decrease those are also ramping back up so we're really not seeing headwinds today from performance. We do have some time to ramp it back it seems to go away.
Quicker then it comes back but it is coming back and so thats 1 of the areas, where we're looking closely at monitoring as we go in the back half of the year, that's 1 of the the risk areas.
Yes, yes, yes.
Yes, and again, the operational performance and the metrics in the in the <unk>.
Focus of our customer success.
Access teams on the metrics that matter to our customers, we can see that really making a difference with their engagement with us and we feel that.
That will that will all continue as we continue to work through the different sort.
1 of things that our customers are working on and want us to work with them the partner with them going forward.
And then to your question.
You know how do we use of peak traffic.
It's not really feasible to try to shift viewing patterns to a piece of what we have to do is use that of peak capacity for other things and so obviously, we talked about the file download business and the way that we've been able to position that to be actually profitable for us and the growth engine.
[noise] about and then also doing things like move web, which is very complementary to our off peak traffic and then we'll talk about how we're going to do that in more depth of our August 24 of strategy session. We have a lot of thoughts around that and that is the key part of our strategy of out of leverage that off the traffic.
Alright, I'm, sorry up the capacity.
Got it and then I'm.
<unk> for <unk>.
Eric on the call or not but.
I'd be curious what are kind of his top priority near term, especially with the layer zero sales team coming in and trying to integrate those.
Yes, no he's not on the call. We're very excited to have Eric I think we spent a lot of time doing a search for the right person.
I'm not sure pretty excited he knows our business very well he knows the industry very well he has a lot of contacts in the.
Avenues in the clients that we don't have today as well as some of our existing clients, we're pretty excited about that.
Of the strength of Eric is really that he has a very strong builder and operator of sales and demand Gen teams.
And probably 1 of the best that we've seen.
We talked to I can't tell you how many people we've talked to as candidates. We had a lot of really good candidates, but he really rose above all of them in that capacity in 1 of the things that we've said is look we're going to give the the company more products growth products to sell and then we want to expand and build a high growth team and Erik has demonstrated that the company just came from demonstrating 40.
The growth in.
In the same space and we're really excited to have his capabilities and have him really build the team out. So I think the strength of him are going to be his ability to build the team out really drive high performance sales processes around that and his.
Connections in the industry to be able to leverage those to really help us accelerate.
40% of the success, we have on the sales and marketing on the things.
The demand Gen of the company.
Got it that's it for me thank you.
This concludes our question and answer session I would now like to turn the conference back over to Bob Lyons for any closing remarks.
Thank you operator, and thank you everyone for joining US today, we look forward to presenting our vision and further detail on our strategy session on Thursday August 24th have a great evening. Thank you.
Thank you. The conference has now concluded. Thank you all for attending today's presentation. You may now disconnect have a great day.
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Okay.
Okay.
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