Limelight's repricing, traffic growth could pay off in 2019, analyst says

Limelight last week lowered its guidance for fiscal 2018, but analysts at Cowen Equity Research see reason to be optimistic about 2019 thanks to repricing and traffic growth.“Earlier this year, we made the decision to move forward with a video-centric strategy, which led to foregoing certain sources of revenue to focus on more robust, faster-growing opportunities better aligned with our long-term goals. We also underwent periodic repricing of certain major accounts, from which we expect disproportionately positive revenue growth in 2019. Thus, we are revising our expectations for 2018,” said Limelight CEO Bob Lento in a statement. “At the same time, we are increasingly confident regarding our outlook, as demonstrated by our positive 2019 guidance."Cowen analyst Jonathan Charbonneau noted that Limelight previously disclosed it had repriced six of its top 10 customers and that it has continued to deprioritize traffic where pricing is the most important factor.“To that point, the company also had previously noted two customers that were previously top 10 customers had left for competitors and are no longer on the Limelight network. One of those customers left prior to 3Q18 and the other prior to 4Q18. As a result, Limelight was simply not able to backfill the lost revenue/traffic quick enough in 4Q18 in order to be able to hit prior 2018 guidance,” Charbonneau wrote in a research note.