Operator: Good day, ladies and gentlemen. Welcome to the Limelight Networks 2021 Fourth Quarter Financial Results Conference Call. [Operator Instructions] I will now turn the call over to Sameet Sinha, VP, Investor Relations and Corporate Development.

Sameet Sinha: Good afternoon. Thank you for joining the Limelight Networks 2021 fourth quarter financial results conference call. This call is being recorded today, January 20, 2022 and 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 facts, such as our priorities, our expectations, our operational plans, business strategies, secular trends, product and feature functionalities, pro forma results, acquisition activity 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 report annual Form 10-K and quarterly reports on Form 10-Q. 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 Dan Boncel, our EVP and CFO. Bob will start today’s call with a brief discussion of the results and an update on our improve, expand and extend initiatives. Dan will then review financial results and guidance. 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 will now turn the call over to Bob. Bob?

Bob Lyons: Thank you, Sameet and welcome everyone. In the fourth quarter, we continued to build on the momentum started in the third quarter. We had strong sequential revenue growth, gross margin and adjusted EBITDA margin expansion Additionally, we delivered positive non-GAAP EPS and generated over $3 million in free cash flow for the quarter. Revenue came in at $62.9 million, up 14% quarter-over-quarter and year-over-year. Organic revenue growth was 7% year-over-year. Our core content delivery revenue returned to year-over-year growth for the first time in six quarters. Cash gross margin was 44.6%, up almost 500 basis points quarter-over-quarter and 380 basis points year-over-year. Adjusted EBITDA margin improved to 15%, up from 11% in the third quarter. Layer0 contributed $3.8 million in the quarter, bringing their total contribution in the year to $4.5 million, in line with our guidance of $4 million to $5 million for the year. And this, despite the fact the deal closed 3 weeks later than expected. The underlying momentum of the business, supported by leading indicators validates our strategy and demonstrates we have, in fact, achieved positive momentum in the business. The growth of our pipeline is one of those leading indicators and is much more diverse, thanks to our product roadmap and technology strategy. Delivery of our edge-enabled solutions through Jamstack and the Layer0 platform appeals to a broad range of customers via startups, banks, consumer product companies or telecom. The evolution of Limelight from a media CDN focus to an edge-enabled software solutions company anchored by the high-growth high margins AFOP solutions is well underway. We have been reporting our progress using the improve, expand, extend framework. As a reminder, our improve program is focused on network performance and operating cost. Our expand program is focused on revenue growth with existing and new clients and our extend program is focused on introducing new edge-enabled solutions that increase network utilization, growth and gross margins. Let me highlight the progress we have made in the fourth quarter against this framework. Under our improve program, we have meaningfully improved overall network performance and have fully remediated the performance problems identified in the beginning of last year. Additionally, we continue to make operational and architectural improvements toward reducing our cost footprint. Improve highlights include, as reported in our last call, third-party load balancing and data analytics from PerfOps continues to rate Limelight’s performance at number one or number two for global CDNs for the second quarter in a row. When compared to January of 2021, we have improved from not being listed in the top 20 to now being consistently ranked number one in the highly competitive North American market. This is an important proof point of the performance improvements we have and continue making to our network. December 5 was a record traffic day, with traffic exceeding the previous record by 18%. December was our highest traffic month, up 14% from our previous record almost a year ago. Customer confidence is back and we continue strengthening our customer relationships. We have completed our $30 million of planned annualized cost savings. Additional opportunities remain largely within the gross margin line and we will continue to pursue these to help fund our planned growth initiatives. Our client sentiment scores saw very material gains in 2021, increasing by double-digits in the second half of the year across our global top 20. We continue to see sustained customer satisfaction and confidence in our improved performance and increase value as a strategic partner. Network utilization continues to be a focus given its impact on gross margin and EBITDA. We have improved overall utilization from the mid-teens in the second quarter to approaching 20% in the fourth quarter. Fittingly, our expand program benefits from these operational improvements by supporting the addition of new clients and expanding existing clients. Highlights this quarter include

Dan Boncel: Thanks Bob. Revenue for the fourth quarter was $62.9 million, a growth of 14% from the fourth quarter of 2020. Layer0 contributed $3.8 million, which implies 7% organic growth in the quarter. This is a significant recovery from revenue declines of 17% and 8% in the last two quarters. We have returned to year-over-year quarterly revenue growth and expect that to continue throughout 2022, but more on guidance in a moment. We delivered this performance despite global supply chain headwinds. Barring this macro event, we would have come in at or above the high end of guidance. Our top 20 clients accounted for approximately 74% of total fourth quarter revenue compared to 75% last year. Cash gross margins expanded to 44.6% from 39.8% in the third quarter due to revenue growth, higher traffic and realizing cost reduction measures. Total cash operating expenses were $18.4 million or 29% of revenue, down from 34% of revenue in the fourth quarter of 2020. We continue to realize the benefits from our improved management of operating costs. As previously mentioned, we continue to invest in sales and marketing and have hired ahead of plan given our ability to attract qualified talent. The aforementioned operational improvements resulted in a meaningful sequential increase of adjusted EBITDA to $9.7 million from $6.1 million in the third quarter. This represents approximately 60% improvement sequentially. Also, scaling revenue and the corresponding operating leverage in the business allowed for 46% flow-through of the sequential revenue growth. Cash and marketable securities totaled $79.3 million, an increase of $3.5 million. We spent $3.7 million for capital expenditures. DSO at the end of the quarter was 64 days compared to 77 days at the end of September. And as expected, it is migrating back to our historical range of 50 to 60 days. On to guidance, based on our rigorous budgeting process, forecast from our larger clients and being cognizant of hardware supply chain constraints as well as COVID-related traffic patterns, we are guiding 2022 revenue in the range of $240 million to $250 million implying a 10% to 15% top line growth. Based on our previously provided guidance of $20 million in 2022 revenue for Layer0, this implies our organic business growth of 3% to 8%. With existing products seeing traction and new products to be launched over the next few months, we are also accelerating investments in rebuilding our sales team. And as previously mentioned we expect to complete most of the hiring in the first quarter. As a result, we are guiding to an adjusted EBITDA range of $24 million to $28 million for 2022. This implies GAAP EPS loss in the range of $0.22 to $0.27 and non-GAAP EPS loss in the range of $0.01 to $0.06. This range of guidance is what we view as a highly expected outcome. One final note, for modeling purposes, we expect about 141 million shares outstanding at the end of 2022. With that, I will turn the call back to Bob.

Bob Lyons: Thanks, Dan. I thought it would be helpful to take a few minutes to talk about three topics that are important to us and I am sure are important to you

Operator: [Operator Instructions] The first question is from the line of Colby Synesael with Cowen & Company. You may proceed.

Michael Elias: Hi, this is Michael on for Colby. Two questions, if I may. I think you may have addressed this earlier, but I just wanted to clarify. Last quarter, you had noted that two of the top 20 CDN customers that you had, had not fully rebounded or didn’t rebound as quickly as expected. Have you seen the traffic from these customers rebound fully now, instead of back above what was the prior high watermark for those customers? And then second, you’ve talked about additional cost savings opportunities that you can drive in 2022. Any color on how much of that is baked into your current guidance? Thank you.

Bob Lyons: Hey, Michael. Thanks. This is Bob. How are you? Two great questions. The first one, in regards to the two that came back, we started to see that traffic come back in Q4. We plan conservatively for this year. So we have them in flat year-over-year. But I would tell you, coming out of the gates, they are proving to be ramping faster than we have planned. So that’s a positive thing. It’s early, obviously, and so we will see how the whole year plays out. But we see them as strong relationships. They are coming back. And if they come back at a rate that we’re seeing right now, that will be good news for us, but it’s still only in January. So we will see. But we’re feeling pretty good about those relationships. And the second question, with the cost savings, yes. And the second question – so there were a number of things. You might recall back in previous quarters, we talked about the fact that there were operational savings that we wanted to get last year, which we did. That was $30 million. We’ve also identified a number of architectural savings that essentially are going to hit the gross margin line. And we have closely identified – we have some of that baked into the plan, what we think is a reasonable number. There is an opportunity to outpace those savings. But when you – anytime you’re doing architectural changes to your network, you want to be very thoughtful, slow, methodical. And so we took a pretty conservative approach to that based on the fact that we don’t want to go too fast and get savings and then go back to some performance problems. So we took a very cautious approach in the plan. But there is meaningful opportunities for us to improve our gross margins to numbers that will allow us to support continued growth going forward, investments in growth.

Michael Elias: Perfect. And if I could squeeze one more question in, you just talked about margins and the opportunity to expand on. And also in the press release, you highlighted that you see yourselves driving higher margins as you transition to that edge-enabled business. How are you currently thinking about like the long-term margin potential for this business as you complete the transition? Thank you.

Bob Lyons: Yes. I think I touched on this at the Analyst Day a little bit, and I’ll go back to that conversation. I appreciate you were there if I remember right. The way we think about it is we really think about us in two businesses. Think about this us a core content delivery business. We’ve historically had challenges in that margin. We’d like to get that north of 50%, so somewhere between 50% and 60%. We see a path to get there based on the things I just talked about. It’s not going to happen super quickly, but it’s not a Sunday conversation either. It’s very thoughtful over the next 12 to 15 months kind of thing. When you look at our AppOps business, that’s more of a SaaS-like business and those margins, north of 70% and so when you blend those two things together, we will improve our overall margin just by running the business more efficiently with the things we have planned for this year. But as we have more AppOps revenue is a part of that kind of weighted average, our overall margins will go up as well. So when you take that, as we improve that number, you should see us looking at north of 60% kind of on a strategic basis, but we are not going to put any timelines around that at this point.

Michael Elias: Perfect. Thank you so much, guys.

Operator: Thank you Mr. [indiscernible]. The next question is from the line of Mike Latimore with Northland Capital. Please proceed.

Mike Latimore: Thanks and congratulations on the strong results there. In terms of Layer0 in the quarter, can you provide any color just on the bookings, how the bookings play out in the quarter for Layer0, whether sequentially or year-over-year? And then is this new logo or expansion kind of deals?

Bob Lyons: Yes. Sure, I’ll take that. Thanks, Mike. It’s nice getting congratulations on the quarter. So I appreciate that. On Layer0, we came out with the guidance of roughly $4 million to $5 million of Layer0 revenue for the year. We would have exceeded that number had we closed the deal in the time line that we originally thought it was going to happen. And so we feel really good about the Layer0 momentum that’s being developed, the product launch that came out a couple of months ago that we announced and continued feature functionality announcements around that product. In next year’s guide, we have approximately $20 million of Layer0 revenue. And so if you just take a look at the run rate right now at roughly $13 million to $14 million and model that out to the number that we’re expecting in ‘22, we feel very strongly about the potential and the growth that we have in the model and even an opportunity for some upside there.

Mike Latimore: Great. And then with regard to the sort of the two big customers, I think you said you’ve modeled that kind of flat, but they are exceeding the expectation so far. I think one of the drivers of that was just more new content coming online. I guess is that still one of the key drivers? And how is that going?

Bob Lyons: Yes. That’s a component of it. New content always helps, and that helps everyone who’s involved with the delivery of that particular customer’s content. But I think the bigger opportunity and what we’re starting to see here in Q4 and into Q1 already is the performance improvements. I think are actually contributing to some market share gains that we’re seeing. There is still not a ton of new content coming out for particularly our largest customer. But we’re still seeing some pretty nice traffic gains from where we were in Q2 and Q3. And I think that’s solely based on our performance and our relationship with that customer that we feel is very strong.

Dan Boncel: Yes. I’d like to add to that one. Yes, one more addition to that, Mike. We’re coming out of the gate pretty strong. And one of the questions I asked the team is, hey, what’s driving that? And the answer when we did the research was it’s a number of customers across the board. So it’s just general good performance across the board, which is also nice. There is no concentrate in that performance.

Mike Latimore: Okay, thanks. Thank you. Good luck.

Operator: Thank you, Mr. Latimore. The next question is from the line of James Breen with William Blair. You may proceed.

James Breen: Thanks for taking the question. Just a couple of questions on traffic. You noted in the press release that you hit new traffic records on December 5. Just some thoughts there around was it a broader market expansion? Do you gain back share or are you sort of growing your share in line with where the market is? Any comments you have just around pricing in general. How much did you have to give up from a pricing perspective to gain the traffic? Thanks.

Bob Lyons: Yes. On the traffic, I mean, December was really strong for us. And as you can imagine, some of our larger customers, especially some of the larger download customers, around the holiday season, they see a significant uptick in traffic as new gaming consoles and new games come out. And we participated in that, especially on a customer that we’d like go up a couple of years ago based on some price points that they wanted to get to that we didn’t feel were profitable. But based on how we’re structured now, the cost savings that we have in place, the load balancing that we have in place with that particular customer, we’re able to make that an attractive proposition for both parties. So I think that was primarily the driver of traffic as well as, as – mentioned, the broader base of our customer, 18 of the top 20 continues to grow at a significant pace, like – that grew at over 20% for the third quarter in a row. And so we’re very excited about that. Diversification of our customer base continues to move along. And it’s because those 18 of the top 20 customers continue to grow their traffic with us based on our performance improvements. And then your second question was related to – remind me what your second question was?

James Breen: Just on the pricing [ph] in general in the market.

Dan Boncel: Yes, pricing. In 2020, I think with COVID and the significant amount of new direct-to-consumer options that were available, we saw a little bit higher of a price compression than what we had in the previous years. And so I think that’s starting to normalize. We can model in a 15% to 20% price compression generally. And we feel pretty comfortable with that within our ‘22 guidance, and that being offset by significant continued growth with primarily those 18 of the top 20 customers.

Bob Lyons: Yes. And one other thing I would add about pricing, and I alluded to this a couple of quarters ago, when we built our plan this year, where we had clients that would have a material impact on us, so price were to change. We actually had conversations with them and tried to bake in to the best extent we can and the anticipation we have in the plan that we put in the guidance. So to the best of our ability, we’re trying to make pricing a nonfactor in the conversations. It’s a normal course of our business that we have to manage proactively and not have it be an event for us. And I think we’ve done a good job of that this year heading into the year.

James Breen: Great. And then maybe strategically around – as you highlight the value of the edge network, how do you bring more developers into the fold in terms of getting them on your platform and the appetite you’re providing?

Bob Lyons: Yes. There is a couple of things we’re doing there, and that’s a really important part of our strategy. In fact, we have a person dedicated to driving that strategy in the company, makes every day focus on that. And there is a couple of things that we’re doing

James Breen: Great. Thanks.

Bob Lyons: Thank you.

Operator: Thank you, Mr. Breen. The next question is from the line of Jeff Van Rhee with Craig-Hallum. You may proceed.

Jeff Van Rhee: Great, thank you. Congrats, guys. Real nice numbers here. A number of questions for me. Bob, on the sales side, it sounds like the hiring has gone very well. And you said you may hit your target a quarter early by the end of Q1. What’s the catalyst? And how are you considering or thinking about either the next tranche of sales hiring? What do you need to see? How do you think about that?

Bob Lyons: Yes. I think – so the way we’re doing it is we built a plan that we wanted to get to a certain capacity that will support the numbers – we built an asymmetric plan. So there is probably a 70% chance of overachieving the plan and a 30% chance of underachieving the plan. And we wanted to build the sales capacity to match that risk profile. And so we will get to that at the end of Q1, which is a quarter ahead of where we expected. And then we’re going to kind of digest that, give us a chance to really prove those numbers out. And then if we see the productivity that we expect to see, we can go back and look to do that again. But we really plan the company in 98 day sprint right now. And so we will continue monitoring that. We’re really happy with the caliber of people we’re getting. I think people really love the story and are buying into the strategy. And it’s a great place for a salesperson to be with a product that they really know they can sell. So – but you want to take a step forward, measure, observe, make any adjustments and then take your next big step. So as we get to the next quarter, we will probably have more information about how that’s working and what our steps going forward are and where we want to press forward. Our goal, quite frankly, is to be able to have a conversation and say, hey, you know what, we’re going to spend some of our EBITDA on expanding our sales because we’re doing so well with it. But we’d like to actually have that success under our belt before we actually have that conversation.

Jeff Van Rhee: Fair enough. Gross margin was quite a bit ahead of me this quarter, Dan. How do you think about that playing as we kind of chunk through the quarters in this fiscal?

Dan Boncel: Yes. I mean we are very pleased with the gross margin improvement quarter-over-quarter. That’s the second consecutive quarter that had significant momentum in that line. Utilization, as we’ve been talking about, is the key driver. And so that is the key driver in the quarter. As we head into next year, we continue to see gross margin expansion as we get the full year benefit of some of these cost savings that we’ve implemented as well as continued growth within the Layer0 product lines that we get better margins on than the existing core CDN business given the asset-light sort of SaaS platform, revenue stream that, that relates. And so we’re estimating another 400 to 500 basis points of margin improvement going into ‘22 based on that diversification of the product offering as well as continued realization of our cost savings as we go throughout the year.

Jeff Van Rhee: That’s helpful. I think, Bob, you mentioned security is coming. You’re pretty fast and furious, I guess, with the new launches and introductions. But just can you level set expectations? What kind of impact do you think security can have to the margins, revenues, just how do you level set it?

Bob Lyons: Yes. I think – so there is a couple of ways we’re thinking about security. I think initially, it’s really making sure that all of our products, particularly AppOps and our CDN has very robust native security. As I talked about before, it’s like having seatbelts and airbags in your car. You kind of expect it. And then the second phase of that is where we can really start to robustly go out and sell security as an enterprise solution. Both of those are on the slate for this year. And so you’ll see some announcements here in the next few weeks this quarter for sure. But we will do our first big release around security. And then probably every quarter after that, you will start to see meaningful announcements around that. And we are looking both organically as well as inorganically as well.

Jeff Van Rhee: Yes. Okay. And last for me, that you referenced and I missed it earlier in the call, something about supply chain. Can you just revisit that, supply chain headwinds?

Bob Lyons: Yes. So, where the supply chain impacts us is getting hardware, servers. Whether it’s on our CDN network or whether we need it for our EdgeXtend product, we had a number of deals that we could have closed in Q4 and Q3 for that matter. But we are really managing that. There is a huge backlog with servers. And so we are not – everybody is challenged with that. We are navigating through that. And we have got to balance deals that we can close versus capacity we need for peak time in December. And so we did a pretty good job in December. But we definitely left some deals on the table because of that, and we will pick them up in the next few quarters. And that’s just something that we are all dealing with. It’s the industry where we are right now. We have deep relationships. We are a big buyer. And so we have been able to navigate that pretty successfully. And we anticipate we still will. But it does sometimes force us to have deals slide into the next quarter that we didn’t expect to.

Jeff Van Rhee: Yes. Okay. Really, nice progress here guys. Thank you for taking the questions. I appreciate it.

Bob Lyons: Thank you.

Operator: Thank you, Mr. Van Rhee. The next question is from the line of Brett Feldman with Goldman Sachs. You may proceed.

Brett Feldman: Great. Thanks for taking the questions. So, you obviously are expecting some solid growth from the Layer0 acquisition this year. I was curious if you could give us a little more insight into the visibility. In other words, how much of that forecast do you already see in the funnel? And I would also be interested in an understanding of the growth that you are expecting, to what extent is that leveraging the combination of their existing capabilities with your CDN? In other words, you are selling the solution. You expect to sell solutions that are capitalizing on both of them, or is this still just really the funnel and the capabilities that Layer0 came in with such that you would still have all that incremental upside as you further integrate the business?

Bob Lyons: Yes. Thanks, Brett. We feel really good about the visibility into the revenue projections going into ‘22. Their product is something that customers go out and buy versus the opposite where we have to go and sell and have our salespeople in front of their technology people to sell it. Like this is the product that people come to buy. And that’s evidenced in – as well as the partnership with Layer0 coming into Limelight. We closed a significant opportunity with a well-known large consumer product company that we wouldn’t be able to have – we wouldn’t have gotten on our own with Limelight. And I don’t know if Layer0 would have gotten on their own. And so the partnership of the two companies coming together and offering an integrated product with the CDN product attached to it gives us the confidence that the $20 million number that we are putting out there for ‘22 is achievable with some upside there. So, we feel really good about that acquisition and the technology that it brings to the platform.

Dan Boncel: Yes. Brett, the way I would think about it is there is really kind of three broad sets of capabilities that we need to have to really play at the full value. One is obviously the edge network, which we have addressed this past year. The second is the Layer0 Jamstack capabilities, which we also address. So, those two things are fully integrated and we get the full value out of both of those solutions. And it is a one plus one equals four story. But in addition to that, security is also a part of that conversation. That’s why we are really focused on that. And the announcements that we will have here this quarter will really shore up that part of – that third leg of the stool, if you will. And then we will continue building on all three of those things.

Brett Feldman: Thanks. Okay. Thank you.

Bob Lyons: Thank you.

Operator: Thank you, Mr. Feldman. The next question is from the line of Eric Martinuzzi with Lake Street Capital. You may proceed.

Eric Martinuzzi: Congrats on the quarter, and I really like the 2022 guide there. I did have a question about seasonality. I am not sure if I missed it or not. But historically – and I know history is a little bit distorted here between COVID and the company’s own issues. But we would have seen about a sequential step-down of about 10% or so between Q4 revenue and Q1 revenue. Does that still hold true given all the other puts and takes that we have experienced here over the last 18 months?

Dan Boncel: Yes. Thanks, Eric. I think you are right on that number, and that’s what we are projecting. And then for progression throughout ‘22, we expect as we continue to build the pipeline of the Layer0 product. And as we continue to make performance improvements and continue to gain the growth with those larger direct-to-consumer streaming products on the CDN side, we feel that there is progression throughout the year. And as we continue to build on the SaaS-type revenue stream that the Layer0 platform provides us, then that seasonality will become a little more muted. But where we are at right now is, I think 10% is a good number going into Q1.

Eric Martinuzzi: Okay. And then one other question, I took a look at the CapEx that you spent for the year, the $15.8 million, and then looking at your forecast for 2022, it looks like roughly $7 million at the midpoint incremental spend. Where are you pointing those incremental CapEx dollars in 2022 versus 2021?

Dan Boncel: Yes. I would say that two major areas. We want to improve our cashing capabilities and increase that because when we are able to store more content closer to the end users that just provides better performance, more reliability. And so we are looking at new servers that will increase those capabilities for us. And then I would say the other item is we are looking at transitioning our operating system from its current free BSD base to a Linux space. And that’s going to require some CapEx spend as well. And so we are looking at that and building that into the forecast. That will lead to the incremental dollars that we are spending in ‘22.

Bob Lyons: And Eric, just to put some color on that, that incremental spend, to give you some dimensions, the cashing that Dan talked about, we have identified opportunities where you are seeing less than 12-month paybacks on that CapEx. So, it’s a very good IRR, a very good return. And then on the Linux, that’s where we get that 30% productivity lift that we referenced, that will obviously hit the gross margin line. And we are really focused on gross margins. We think that’s an important thing to fix. And so that’s where that additional CapEx goes. The one will drive revenue and the other one will drive gross margins.

Eric Martinuzzi: Understand. That covers it for me.

Bob Lyons: Thanks.

Operator: Thank you, Mr. Martinuzzi. The next question is from the line of Rudy Kessinger with D.A. Davidson. You may proceed.

Rudy Kessinger: Yes. Thanks for taking my question. Dan, if I go back to Eric’s question, if we assume the 10% step-down from Q4 to Q1, it would clearly imply kind of several million of growth sequentially from Q1 to Q2 to Q3, which are historically seasonally tough quarters just with traffic trends, etcetera. And so what gives you conviction, even excluding Layer0, which might grow sequentially without the seasonality. But what gives you conviction that in the core CDN business you guys could grow in those historically tough quarters?

Dan Boncel: Yes. Walking through the math, so with that $20 million guide that we have on Layer0 built into the numbers, we are guiding to somewhere in the neighborhood of 3% to 8% growth on the core CDN business. And I think with the progress that we are seeing on performance and we did see growth in the largest of – 18 of our top 20 customers. And that’s been consistent over the last several quarters. As we have worked our way out of this drop that we came into the year with, that – those couple of items give us the confidence that, that sequential growth quarter-over-quarter is achievable.

Rudy Kessinger: And then kind of maybe with those 18 top 20 customers, I guess, with customers we have spoken to, they kind of look at you guys and the other CDNs out there. And they will first start with your capacity that you have available and then allocate traffic, based on your performance, but keeping that ceiling based on your capacity. I guess with those 18 of the top 20 that you have been growing 20% year-over-year with the last couple of quarters, are you coming anywhere close to kind of your ceiling with those customers based on your capacity, or do you still see plenty of runway to continue gaining share with them?

Bob Lyons: Yes. I think there is a couple of things to think about there. I think when you talk about capacity, there is overall network capacity, which is how we have traditionally thought about it. But the other capacity is things like cash. And cash is really what drives performance. When somebody has a big library, more of that library we can get closer to the end user, the better the performance is going to be. And that’s why we are making those investments we talked about in CapEx are on cash. So, we look at capacity. We are looking at our cash capacity. We are making investments there. That’s actually going to have a much better improvement in performance and revenue than gross capacity. But gross capacity also, when we do the architectural improvements, we think we will get a 30% lift in capacity and the existing footprint that we have. And so that – to your point, when you have the performance improvements with the cash combined with the additional capacity, we should see the revenue come in. We are also improving the utilization overall. We highlighted that we went from middle-teens to approaching 20%. We think we can get past that, particularly when we are doing all peak things, which we are starting to sell a lot more of now as well. So, those three things combined allows us to get the growth without having to go crazy on capacity. Just manage our capacity better and make expansions where it’s appropriate to make.

Rudy Kessinger: Got it. And then just lastly, because I guess on security, certainly, some of your competitors have had some security products out there for a while. So, just how do you think about, at this stage coming out with security products that are differentiated or maybe have some advantages versus your peers?

Bob Lyons: Yes. I think generally, the way to think about it is security historically has been very perimeter-oriented. When you have all your assets sitting in a data center or in a corporation, you build a big moat around those. And with everything moving to a distributed world with cloud and SaaS and microservices and now people working virtually, that model has a lot of challenges. And so well, a lot of our competitors have been in security for a long time. I think where security is going is quite a bit different than where it has been. And so we have the opportunity to come in at a point where there is, quite frankly, a big inflection point in the security industry. So, we have to do those perimeter things, which we are doing, but we have some ideas where we can really differentiate in an edge-based era or cloud-based era, where we can really excel, particularly when you combine it with our AppOps solutions. I would expect that much like we did last year, we will come out sometime midyear this year and have a deep strategic conversation, Analyst Day, if you will. And we will cover things like security in more depth when we have all of our story buttoned up there and have a little bit more to talk about. But we do feel confident we can be relevant in that space.

Operator: Thank you, Mr. Kessinger. The next question is from the line of Frank Louthan with Raymond James. You may proceed.

Frank Louthan: Great. Thank you. Back to the CapEx, if you hit the higher end of your range of guidance, what would that translate to in terms of new growth, or would it be more acceleration of the projects that you have underway?

Dan Boncel: Yes. I would say that it’s primarily related to the project that we highlighted with cash and the transformation of the operating system to Linux. But with those, as Bob mentioned, one, the Linux is designed to improve throughput, which will drive gross margin and the cashing will improve our performance. We have done some trials with several tops of the footprint that we are moving towards. And it had very favorable outcome, which is leading us to the expectation that as Bob mentioned, the ROI on net equipment is less than a year to turn that around. And so we feel really good about those opportunities and expanding both the top line as well as the margin line through that CapEx.

Frank Louthan: Great. And I apologize if you addressed this earlier in the call. I missed it. Walk us through where you are with getting some of the layers of your software engineers and automating some of the legacy Limelight network? And can you translate that into any of that 400 basis points to 500 basis points of margin benefit that you are talking about being able to achieve?

Dan Boncel: Yes. So, we are fully integrated now. The Layer0 team is fully integrated. It’s all one team. Ajay is our CTO, and his engineers are embedded with our development and product teams. And there are a couple of different pieces – and Ajay has been very focused on how we can improve the revenue and performance and gross margins. And there is a couple of areas. You hit on one, automation. So, there you will start seeing – starting this quarter and second quarter, we are going to start to be very aggressive with automation. They are already working on things stuff in kind of testing and pilots. We will roll that out. And then obviously, we have talked about the cashing and we talked about the Linux upgrades. And all those things are really also part and parcel with some of the skills we picked up, combined with our infrastructure team. Really, the beauty of that, we gained a significant amount of software skills combined with our significant infrastructure and scale skills. And together, they have really been able to figure out ways to be much more efficient as a company. But to answer your question, that’s happening now. And you will start to see those improvements. We actually have improvements every quarter built into the plan based on that automation.

Frank Louthan: Alright. That sounds great. Thank you.

Operator: Thank you, Mr. Louthan. There are no additional questions waiting at this time. So, I will pass the call over to Bob Lyons for any additional remarks.

Bob Lyons: Thank you, operator, and thank you, everyone, for joining us today. We look forward to communicating our progress and continuing our transparent conversation with analysts and investors. We wish you good health and happiness in the New Year. Thank you.

Operator: That concludes today’s call. Thank you for your participation. You may now disconnect your lines.

Earnings Transcript for EGIO - Q4 Fiscal Year 2021

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