10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2012

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from              to             

Commission file number 001-33508

LIMELIGHT NETWORKS, INC.

(Exact name of registrant as specified in its charter)

Delaware	20-1677033
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

222 South Mill Avenue, 8^th Floor

Tempe, AZ 85281

(Address of principal executive offices, including Zip Code)

(602) 850-5000

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer	¨	Accelerated filer	x
Non-accelerated filer	¨  (Do not check if a smaller reporting company)	Smaller reporting company	¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  x

The number of shares outstanding of the registrant’s common stock as of November 1, 2012: 99,132,038 shares.

LIMELIGHT NETWORKS, INC.

FORM 10-Q

Quarterly Period Ended September 30, 2012

TABLE OF CONTENTS

			Page
PART I. FINANCIAL INFORMATION				3
	ITEM 1.	FINANCIAL STATEMENTS (unaudited)		3
		Condensed Consolidated Balance Sheets as of September 30, 2012 and December 31, 2011		3
		Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30,  2012 and 2011		4
		Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three and Nine Months Ended September 30, 2012 and 2011		5
		Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30,  2012 and 2011		6
		Notes to Unaudited Condensed Consolidated Financial Statements for the Three and Nine Months Ended September 30, 2012 and 2011		7
	ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS		21
	ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK		35
	ITEM 4.	CONTROLS AND PROCEDURES		35
PART II. OTHER INFORMATION				36
	ITEM 1.	LEGAL PROCEEDINGS		36
	ITEM 1A.	RISK FACTORS		37
	ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS		51
	ITEM 3.	DEFAULTS UPON SENIOR SECURITIES		52
	ITEM 4.	MINE SAFETY DISCLOSURES		52
	ITEM 5.	OTHER INFORMATION		52
	ITEM 6.	EXHIBITS		53
		SIGNATURES		54
		EXHIBIT INDEX		55

2

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

LIMELIGHT NETWORKS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except per share data)

(Unaudited)

	September 30, 2012			December 31, 2011
ASSETS
Current assets:
Cash and cash equivalents	$	102,468		$	120,349
Marketable securities		27,493			19,850
Accounts receivable, net		28,408			28,045
Income taxes receivable		424			31
Deferred income taxes		42			62
Prepaid expenses and other current assets		11,850			20,646
Total current assets		170,685			188,983
Property and equipment, net		48,076			56,368
Marketable securities, less current portion		24			51
Deferred income taxes, less current portion		1,386			1,177
Goodwill		79,903			80,105
Other intangible assets, net		6,981			9,207
Other assets		9,211			10,454
Total assets	$	316,266		$	346,345
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	6,340		$	6,797
Deferred revenue		7,383			7,287
Capital lease obligations		1,552			1,750
Income taxes payable		722			774
Other current liabilities		11,779			13,195
Total current liabilities		27,776			29,803
Capital lease obligations, less current portion		1,000			2,124
Deferred income taxes		470			580
Deferred revenue, less current portion		850			539
Other long-term liabilities		3,664			4,194
Total liabilities		33,760			37,240
Commitments and contingencies
Stockholders’ equity:
Convertible preferred stock, $0.001 par value; 7,500 shares authorized; 0 shares issued and outstanding		—			—
Common stock, $0.001 par value; 300,000 shares authorized at September 30, 2012 and December 31, 2011; 99,106 and 104,349 shares issued and outstanding at September 30, 2012 and December 31, 2011, respectively		99			104
Additional paid-in capital		455,050			460,845
Contingent consideration		110			219
Accumulated other comprehensive loss		(537	)		(509	)
Accumulated deficit		(172,216	)		(151,554	)
Total stockholders’ equity		282,506			309,105
Total liabilities and stockholders’ equity	$	316,266		$	346,345

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

3

LIMELIGHT NETWORKS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(Unaudited)

	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2012			2011			2012			2011
Revenues	$	45,001		$	42,352		$	133,765		$	125,313
Cost of revenue:
Cost of services (1)		21,313			20,243			62,193			60,912
Depreciation — network		6,970			7,035			20,984			21,008
Total cost of revenue		28,283			27,278			83,177			81,920
Gross profit		16,718			15,074			50,588			43,393
Operating expenses:
General and administrative		8,757			8,416			25,130			23,498
Sales and marketing		11,037			9,176			34,431			29,903
Research and development		4,956			4,360			15,108			12,554
Depreciation and amortization		1,481			1,499			4,329			3,254
Total operating expenses		26,231			23,451			78,998			69,209
Operating loss		(9,513	)		(8,377	)		(28,410	)		(25,816	)
Other income (expense):
Interest expense		(40	)		(89	)		(136	)		(225	)
Interest income		88			186			277			624
Gain on sale of cost basis investment		9,420			—			9,420			—
Other, net		(551	)		(18	)		(582	)		17
Total other income		8,917			79			8,979			416
Loss from continuing operations before income taxes		(596	)		(8,298	)		(19,431	)		(25,400	)
Income tax provision (benefit)		14			(1,896	)		313			(1,329	)
Loss from continuing operations		(610	)		(6,402	)		(19,744	)		(24,071	)
Discontinued operations:
(Loss) income from discontinued operations, net of income taxes		(218	)		11,420			(918	)		5,336
Net (loss) income	$	(828	)	$	5,018		$	(20,662	)	$	(18,735	)
Basic net (loss) income per weighted average share:
Continuing operations	$	(0.01	)	$	(0.06	)	$	(0.19	)	$	(0.22	)
Discontinued operations		0.00			0.10			(0.01	)		0.05
Total	$	(0.01	)	$	0.04		$	(0.20	)	$	(0.17	)
Diluted net (loss) income per weighted average share:
Continuing operations	$	(0.01	)	$	(0.06	)	$	(0.19	)	$	(0.22	)
Discontinued operations		0.00			0.10			(0.01	)		0.05
Total	$	(0.01	)	$	0.04		$	(0.20	)	$	(0.17	)
Shares used in per weighted average share calculations:
Basic		99,359			113,662			102,123			110,231
Diluted		99,359			113,662			102,123			110,231

(1) Cost of services excludes amortization related to intangibles, including existing technologies, customer relationships, and trademarks, which are included in depreciation and amortization

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

4

LIMELIGHT NETWORKS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(In thousands)

(Unaudited)

	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2012			2011			2012			2011
Net (loss) income	$	(828	)	$	5,018		$	(20,662	)	$	(18,735	)
Other comprehensive income (loss), net of tax:
Unrealized gain (loss) on investments		28			(41	)		(16	)		(43	)
Cumulative translation adjustment		—			—			—			494
Foreign exchange translation		994			(1,285	)		(12	)		(113	)
Other comprehensive income (loss), net of tax		1,022			(1,326	)		(28	)		338
Comprehensive income (loss)	$	194		$	3,692		$	(20,690	)	$	(18,397	)

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

5

LIMELIGHT NETWORKS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

	For the Nine Months Ended September 30,
	2012			2011
Operating activities
Net loss	$	(20,662	)	$	(18,735	)
(Loss) income from discontinued operations		(918	)		5,336
Loss from continuing operations		(19,744	)		(24,071	)
Adjustments to reconcile loss from continuing operations to net cash provided by operating activities of continuing operations:
Depreciation and amortization		25,313			24,262
Share-based compensation		10,835			11,694
Deferred income taxes		(299	)		(31	)
Accounts receivable charges		1,105			919
Accretion of marketable securities		365			(90	)
Gain on sale of cost basis investment		(9,420	)		—
Non cash tax benefit associated with sale of discontinued operations		—			(2,165	)
Non cash increase in cost basis investment		(528	)		(679	)
Loss on sale of property and equipment		19			—
Changes in operating assets and liabilities:
Accounts receivable		(1,468	)		384
Prepaid expenses and other current assets		2,986			(1,684	)
Income taxes receivable		(393	)		(268	)
Other assets		(1,554	)		(3,563	)
Accounts payable		2,154			2,324
Deferred revenue		407			(2,561	)
Other current liabilities		(1,023	)		(3,990	)
Income taxes payable		(200	)		(312	)
Other long term liabilities		(531	)		1,002
Net cash provided by operating activities of continuing operations		8,024			1,171
Investing activities
Purchase of marketable securities		(27,280	)		(15,316	)
Maturities of marketable securities		19,285			13,520
Purchases of property and equipment		(17,474	)		(26,872	)
Acquisition of businesses, net of cash acquired		—			(7,360	)
Proceeds from sale of cost basis investment		10,154			—
Cash collected on DG receivable		7,217			—
Proceeds from sale of discontinued operations		—			61,000
Net cash (used in) provided by investing activities of continuing operations		(8,098	)		24,972
Financing activities
Payments on capital lease obligations		(1,322	)		(982	)
Payment of employee tax withholdings related to restricted stock		(601	)		(1,060	)
Cash paid for purchase of common stock		(16,273	)		(9,210	)
Proceeds from exercise of stock options		155			622
Proceeds from secondary public offering, net		—			77,049
Net cash (used in) provided by financing activities of continuing operations		(18,041	)		66,419
Effect of exchange rate changes on cash and cash equivalents		234			(96	)
Discontinued operations
Cash used in operating activities of discontinued operations		—			(2,803	)
Cash used in investing activities of discontinued operations		—			(684	)
Net cash used in discontinued operations		—			(3,487	)
Net (decrease) increase in cash and cash equivalents		(17,881	)		88,979
Cash and cash equivalents, beginning of period		120,349			54,861
Cash and cash equivalents, end of period	$	102,468		$	143,840
Supplement disclosure of cash flow information
Cash paid during the period for interest	$	136		$	135
Cash paid during the period for income taxes	$	1,226		$	1,649
Property and equipment remaining in accounts payable and other current liabilities	$	664		$	783
Property and equipment acquired through leasehold incentives	$	—		$	2,361
Property and equipment acquired through capital leases	$	—		$	2,271
Common stock issued in connection with acquisition of business	$	—		$	8,216
Contingent consideration common stock issued in connection with acquisition of businesses	$	109		$	1,404

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

6

LIMELIGHT NETWORKS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. Nature of Business

Limelight Networks, Inc. (the Company) is a global leader in digital presence management and delivery, including mobility, web and video content management, web application acceleration, cloud storage, consulting, and content delivery services. The Company provides web and video content management services as Software-as-a-Service (SaaS) solutions and cloud storage and content delivery services as Platform-as-a-Service solutions, which other than content delivery services, are referred to collectively as value-added services. The Company derives revenue from the sale of content delivery services and value-added services to its customers. In May 2012, the Company introduced a new digital presence solution, Limelight Orchestrate (Orchestrate), an integrated suite of cloud-based applications which allows organizations to optimize all aspects of their online digital presence across web, mobile, social and large screen channels. Orchestrate provides advanced features for website content management, personalization and targeting, video publishing, mobile enablement, content delivery, transcoding and cloud storage, combined with social media integration and powerful analytics. These services are provided in the cloud and leverage the Company’s global computing platform, which provides highly-available, highly-redundant storage, bandwidth and computing resources as well as connectivity to last-mile broadband network providers. The Company’s global professional services organization help organizations analyze and identify their digital presence requirements. The Company also offers other platform and infrastructure services, such as transit and rack space services. The Company’s solutions and services enable organizations to streamline processes and optimize business results across all customer interaction channels, helping them deliver a high quality online media experience, improve brand awareness, drive revenue and enhance their customer relationships while reducing costs.

The Company provides its services to customers that the Company believes view Internet, mobile and social initiatives as critical to their success, including traditional and emerging media companies, or content publishers, operating in the television, music, radio, newspaper, magazine, movie, videogame, software and social media industries, as well as enterprises, technology companies, and government entities conducting business online.

The Company has operated in the Phoenix metropolitan area since 2001 and elsewhere throughout the United States since 2003. The Company began international operations in 2004.

2. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles, consistent in all material respects with those applied in its financial statements included in its Annual Report on Form 10-K for the fiscal year ended December 31, 2011. Accordingly, they do not include all of the information and footnotes required by U.S. generally accepted accounting principles for complete financial statements. Such interim financial information is unaudited but reflects all adjustments that in the opinion of management are necessary for the fair presentation of the interim periods presented. All such adjustments are, in the opinion of management, of a normal recurring nature. The results of operations presented in this Quarterly Report on Form 10-Q are not necessarily indicative of the results that may be expected for the year ending December 31, 2012 or for any future periods. This Quarterly Report on Form 10-Q should be read in conjunction with the Company’s audited financial statements and footnotes included in its Annual Report on Form 10-K for the fiscal year ended December 31, 2011.

The condensed consolidated financial statements include accounts of the Company and its wholly owned subsidiaries. All significant intercompany balances and transactions have been eliminated. In addition, certain other reclassifications have been made to prior year amounts to conform to the current year presentation.

On September 1, 2011, the Company completed the sale of its EyeWonder LLC and subsidiaries and chors GmbH video and rich media advertising services (EyeWonder and chors) to DG FastChannel, Inc. (now Digital Generation, Inc.) (DG). The sale of EyeWonder and chors met the criteria for discontinued operations during the year ended December 31, 2011. Accordingly, the results of operations related to EyeWonder and chors have been classified as discontinued operations in all periods presented. See further discussion at Note 5.

Use of Estimates

The preparation of consolidated financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts in the consolidated financial statements and accompanying notes. Actual results and outcomes may differ from those estimates.

7

Recent Accounting Pronouncements

As of January 1, 2012, the Company adopted Accounting Standards Update (ASU) 2011-04 related to guidance associated with fair value measurements and disclosures. This ASU clarifies the Financial Accounting Standards Board’s (FASB) intent on current guidance, modifies and changes certain guidance and principles, and expands disclosures concerning Level 3 fair value measurements in the fair value hierarchy (including quantitative information about significant unobservable inputs within Level 3 of the fair value hierarchy). In addition, this ASU requires disclosure of the fair value hierarchy for assets and liabilities not measured at fair value in the balance sheet, but whose fair value is required to be disclosed. Adoption of this new guidance did not have a material impact on the Company’s financial statements.

As of January 1, 2012, the Company adopted ASU 2011-05 related to guidance on the presentation of comprehensive income. The objective of this ASU is to improve the comparability, consistency and transparency of financial reporting and to increase the prominence of items reported in other comprehensive income. This ASU requires an entity to present the components of net income and other comprehensive income and total comprehensive income (which includes net income) either in a single continuous statement of comprehensive income or in two separate but consecutive statements. This ASU eliminates the option to present the components of other comprehensive income as part of the statement of equity, but does not change the items that must be reported in other comprehensive income. This ASU is effective January 1, 2012 and the Company is presenting total comprehensive income in a separate statement. Additionally, in December 2011, FASB deferred the effective date for the requirement in this ASU for presenting reclassification adjustments for each component of accumulated other comprehensive income in both net income and other comprehensive income on the face of the financial statements.

As of January 1, 2012, the Company adopted ASU 2011-08 related to the testing of goodwill for impairment. The objective of this ASU is to simplify goodwill impairment testing by adding a qualitative review step to assess whether the required quantitative impairment analysis is necessary. The ASU permits an entity to first perform a qualitative assessment to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value. If it is concluded that this is the case, it is necessary to perform the prescribed two-step goodwill impairment test. Otherwise, the two-step goodwill impairment test is not required. This ASU was effective for the Company beginning January 1, 2012. Adoption of this new guidance did not have a material impact on the Company’s financial statements.

3. Investments in Marketable Securities

The following is a summary of marketable securities (designated as available-for-sale) at September 30, 2012 (in thousands):

us-gaap:InvestmentsClassifiedByContractualMaturityDateTableTextBlock

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
Government agency bonds	$	10,899	$	5	$	1	$	10,903
Certificate of deposit		2,742		—		—		2,742
Commercial paper		2,998		1		—		2,999
Corporate notes and bonds		10,842		7		—		10,849
		27,481		13		1		27,493
Publicly traded common stock		12		12		—		24
Total marketable securities	$	27,493	$	25	$	1	$	27,517

At September 30, 2012, the Company evaluated its marketable securities, and noted unrealized losses were due to fluctuations in interest rates. Management does not believe any of the unrealized losses represented an other-than-temporary impairment based on its evaluation of available evidence as of September 30, 2012. The Company’s intent is to hold these investments to such time as these assets are no longer impaired. There have been no marketable securities in a continuous unrealized loss position for twelve months or longer.

Expected maturities can differ from contractual maturities because the issuers of the securities may have the right to prepay obligations without prepayment penalties, and the Company views its available-for-sale securities as available for current operations.

The amortized cost and estimated fair value of marketable securities (designated as available-for-sale) at September 30, 2012, by maturity, are shown below (in thousands):

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
Available-for-sale securities
Due in one year or less	$	25,671	$	12	$	—	$	25,683
Due after one year and through five years		1,810		1		1		1,810
	$	27,481	$	13	$	1	$	27,493

8

The following is a summary of marketable securities (designated as available-for-sale) at December 31, 2011 (in thousands):

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
Government agency bonds	$	9,614	$	1	$	1	$	9,614
Certificate of deposit		2,730		—		—		2,730
Commercial paper		1,749		—		—		1,749
Corporate notes and bonds		5,757		1		1		5,757
		19,850		2		2		19,850
Publicly traded common stock		12		39		—		51
Total marketable securities	$	19,862	$	41	$	2	$	19,901

The amortized cost and estimated fair value of marketable securities (designated as available-for-sale) at December 31, 2011, by maturity, are shown below (in thousands):

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
Available-for-sale securities
Due in one year or less	$	19,850	$	2	$	2	$	19,850
Due after one year and through five years		—		—		—		—
	$	19,850	$	2	$	2	$	19,850

4. Business Acquisitions

AcceloWeb, (IL) Ltd. Acquisition

On May 9, 2011, the Company acquired all the issued and outstanding shares of AcceloWeb, (IL) Ltd. (AcceloWeb), a Tel Aviv, Israel-based privately-held provider of advanced technology that helps speed the presentation of websites and applications. The services provided by AcceloWeb align with the Company’s current whole site acceleration strategy, providing a time to market advantage over development of a new product and furthers the Company’s value-added services growth strategy. The aggregate purchase price of approximately $12.0 million consisted of approximately $5.0 million of cash paid at the closing (cash paid net of cash acquired was $4.7 million) and 1,100,629 shares of the Company’s common stock with an estimated fair value of approximately $7.0 million on the acquisition date. The number of common shares issued at the closing was determined on the basis of the average closing market price of the Company’s common shares on the five days preceding the acquisition date. In addition, the purchase price included contingent consideration with an aggregate potential value of $8.0 million ($4.0 million payable in cash and $4.0 million payable in the Company’s common stock), which may be earned upon the achievement of certain performance milestones which will be measured quarterly during the eight full consecutive quarters ending June 30, 2013 (the Earn-Out).

During the quarter ended March 31, 2012, management determined that the achievement of the certain performance milestones was not probable and reversed the previously recorded earn-out liability of $0.8 million. The reversal has been reflected as a reduction to general and administrative expense in the accompanying condensed consolidated statement of operations for the nine month period ended September 30, 2012.

Under the terms of the merger agreement, 188,677 shares of the common stock portion of the purchase price with an estimated fair value on the acquisition date of approximately $1.2 million has been set aside in an escrow account and will be held for a period of up to 18 months following the closing date to satisfy any unresolved indemnification claims. Any potential claims will be settled from escrow with the number of shares of common stock calculated based on the amount of the claim divided by $6.36, adjusted to such number of shares of common stock for stock splits, reverse stock splits, spin offs, recapitalizations, reorganization, reclassification, stock dividends or similar events. Escrow amounts not then subject to settled or pending, unsatisfied or unresolved indemnity claims, will be released as soon as practicable following the end of the 18-month escrow period. The Company has not recognized any indemnification assets as of September 30, 2012.

9

For additional information and a more detailed description of the AcceloWeb acquisition, see Note 4, contained in the Company’s audited consolidated financial statements and notes thereto for the year ended December 31, 2011 included in the Company’s Annual Report on Form 10-K filed with the SEC on March 2, 2012.

Clickability Acquisition

On May 2, 2011, the Company acquired all the issued and outstanding shares of Clickability, Inc. (Clickability), a privately-held SaaS provider of web content management located in San Francisco, California. The services provided by Clickability align with the Company’s current value-added services and furthers the Company’s value-added services growth strategy. The aggregate purchase price of approximately $9.6 million consisted of approximately $4.9 million of cash paid at the closing (cash paid net of cash acquired was $2.7 million), $0.1 million held by the Company to cover future claims and 732,000 shares of the Company’s common stock with an estimated fair value of approximately $4.6 million on the date of acquisition. The Company issued 382,000 common shares with an estimated fair value of approximately $2.4 million at the closing. The number of shares of the Company’s common stock issued as consideration for Clickability was determined on the basis of the average closing market price of the Company’s common shares on the thirty days preceding the acquisition date.

Under the terms of the merger agreement, approximately 350,000 shares of the common stock portion of the purchase price with an estimated fair market value on the acquisition date of approximately $2.2 million and $0.1 million of cash remained unissued and available to cover future claims. Approximately 140,000 of the shares of common stock were subject to a retention holdback for a period of up to 12 months following the closing date and these shares were issued by the Company on May 2, 2012. The remaining 210,000 shares of common stock are subject to an indemnification holdback for a period of up to 18 months following the closing date. Any potential claims will be settled from escrow with the number of shares of common stock calculated based on the amount of the claim divided by $6.83, adjusted to such number of shares of common stock for stock splits, reverse stock splits, spin offs, recapitalizations, reorganization, reclassification, stock dividends, or similar events. Amounts of the indemnification holdback not then subject to a settled or pending indemnity claim will be released as soon as practicable following the end of the 18 month holdback period. The Company has not recognized any indemnification assets as of September 30, 2012.

For additional information and a more detailed description of the Clickability acquisition, see Note 4, contained in the Company’s audited consolidated financial statements and notes thereto for the year ended December 31, 2011 included in the Company’s Annual Report on Form 10-K filed with the SEC on March 2, 2012.

5. Discontinued Operations

On September 1, 2011, the Company completed the sale of its EyeWonder and chors rich media advertising services to DG for net proceeds of $61.0 million ($66.0 million gross cash proceeds less $5.0 million held in escrow) plus an estimated $10.9 million receivable from DG pursuant to the Purchase Agreement dated as of August 30, 2011 by and among the Company, DG and Limelight Networks Germany GmbH. The $5.0 million held in escrow is intended to cover DG’s ordinary operating expenses associated with the integration of EyeWonder and chors. The Company estimates that it will not receive any portion of the funds held in escrow and has excluded such amount from its calculation of the gain on sale of discontinued operations. The Purchase Agreement also includes a provision that would require the Company to refund a portion of the purchase price equal to 1.67 times the amount that revenue related to chors customer WPP and affiliates was below $4.4 million during the period from September 1, 2011 to August 31, 2012 provided that DG does not sell chors to WPP or an affiliate prior to August 31, 2012. In April 2012, DG sold a majority of the assets of chors to an affiliate of WPP and as a result the Company does not have any potential liabilities associated with this provision in the Purchase Agreement.

The $10.9 million receivable from DG was determined by the Company based on estimated future cash payments equal to the excess of certain current assets over certain current liabilities of EyeWonder and chors as of August 30, 2011, as defined in the Purchase Agreement (the Net Working Capital). The Company has estimated the Net Working Capital based on its determination of the current assets and current liabilities in accordance with the relevant provisions of the Purchase Agreement.

As of August 31, 2011, the estimated Net Working Capital related to EyeWonder and chors was comprised of the following (in thousands):

Current assets
Cash and cash equivalents	$	2,677
Accounts receivable		9,643
Income tax receivables		500
Other current assets		528
Total current assets		13,348
Current liabilities
Accounts payable and other current liabilities		(2,494	)
Net Working Capital	$	10,854

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Under the terms of the Purchase Agreement, prior to the Company receiving any additional cash payments from DG, the current liabilities must be settled with cash and cash equivalents and the value of the other current assets. As of August 31, 2011, the excess of the cash and cash equivalents and other current assets over the current liabilities was $0.7 million, with this portion of the Net Working Capital payable to the Company. DG is required to pay the Company the remaining Net Working Capital as the accounts receivable of $9.6 million and income tax receivable of $0.5 million are collected. As of September 30, 2012 approximately $7.8 million of the receivables have been collected by DG and $7.2 million remitted by DG to the Company. At September 30, 2012, approximately $3.1 million is due to the Company. This amount is comprised of net cash due to the Company of $1.3 million; uncollected accounts receivable of $1.7 million and income tax receivable of $0.1 million. During the three and nine months ended September 30, 2012, the Company made certain adjustments totaling $0.1 million and $1.1 million, respectively, to the DG receivable which have been reflected as a charge to discontinued operations. The Company has assessed the collectability of the remaining accounts receivable balance and recorded its estimate of the amount expected to be collected based on historical experience and the financial condition of the underlying customers and collection efforts performed to date. At September 30, 2012, the Company has as allowance for doubtful accounts of $0.4 million. The Company’s estimate of collectability could change significantly if the financial condition of the underlying customers changes or if the economy in general deteriorates. Additional changes to the Company’s estimate of future cash payments will be reflected as an adjustment to income (loss) from discontinued operations in the (loss) gain on sale of discontinued operations line in the table below. After 120 days from the closing of the sale of EyeWonder and chors (the Receivables Collection Period), the Company and DG have the option to have the uncollected accounts receivable assigned to the Company. Following the expiration of the Receivables Collections Period, DG and the Company may mutually agree to extend the Receivables Collections Period in 60 day increments. As of September 30, 2012, DG and the Company had agreed to extend the Receivables Collection Period and the accounts receivable were not assigned to the Company.

The sale of EyeWonder and chors meets the criteria to be reported as discontinued operations. Accordingly, the operating results of EyeWonder and chors have been reclassified to discontinued operations in the accompanying condensed consolidated statements of operations. The Company includes only revenues and costs directly attributable to the discontinued operations, in determining income (loss) from discontinued operations, and not those attributable to the ongoing entity. Accordingly, no general corporate overhead costs have been allocated to discontinued operations. Operating results of discontinued operations for the three and nine months ended September 30, 2012 and 2011, respectively, and the year ended December 31, 2011 are as follows (in thousands, except per share data):

	Three Months Ended September 30,						Nine Months Ended September 30,						Year Ended December 31,
	2012			2011			2012			2011			2011(a)
Revenues	$	—		$	4,907		$	—		$	22,302		$	22,302
Cost of revenues		—			(2,213	)		—			(8,843	)		(8,843	)
General and administrative expenses		—			(1,461	)		163			(5,622	)		(6,055	)
Sales and marketing expenses		—			(1,994	)		—			(8,183	)		(8,183	)
Research and development expenses		—			(1,150	)		—			(4,853	)		(4,853	)
Depreciation and amortization		—			(941	)		—			(3,761	)		(3,761	)
Interest expense		—			(4	)		—			(16	)		(16	)
Interest income		—			13			—			21			21
Other income		—			5			—			33			(525	)
(Loss) gain on sale of discontinued operations, net of income taxes		(218	)		14,323			(1,081	)		14,323			14,756
(Loss) income before income taxes		(218	)		11,485			(918	)		5,401			4,843
Income tax benefit		—			(65	)		—			(65	)		(65	)
(Loss) income from discontinued operations	$	(218	)	$	11,420		$	(918	)	$	5,336		$	4,778
(Loss) income from discontinued operations per weighted average share:
Basic and diluted	$	0.00		$	0.10		$	(0.01	)	$	0.05		$	0.05
Shares used in per weighted average share calculation for discontinued operations:
Basic and diluted		99,359			113,662			102,123			110,231			109,236

(a) Includes operating results of chors and EyeWonder from January 1, 2011 through August 31, 2011.

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6. Accounts Receivable, net

Accounts receivable, net include (in thousands):

	As of September 30, 2012			As of December 31, 2011
Accounts receivable	$	23,399		$	24,260
Unbilled accounts receivable		8,475			8,176
		31,874			32,436
Less: credit allowance		(710	)		(810	)
Less: allowance for bad debt		(2,756	)		(3,581	)
Total accounts receivable, net	$	28,408		$	28,045

7. Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets include (in thousands):

	As of September 30, 2012		As of December 31, 2011
Prepaid bandwidth and backbone services	$	3,765	$	2,544
Receivable from DG		2,703		11,151
Non-income taxes receivable (VAT)		1,901		2,067
Employee advances and prepaid recoverable commissions		425		332
Indemnity claim asset		—		252
Other		3,056		4,300
Total prepaid expenses and other current assets	$	11,850	$	20,646

See further discussion of the receivable from DG in Note 5, Discontinued Operations.

8. Goodwill and Other Intangible Assets

The Company has recorded goodwill and other intangible assets as a result of its business acquisitions. Goodwill is recorded when the purchase price paid for an acquisition exceeds the estimated fair value of the net identified tangible and intangible assets acquired. In each of the Company’s acquisitions, the objective of the acquisition was to expand the Company’s product offerings and customer base and is expected to achieve synergies related to cross-selling opportunities, all of which contributed to the recognition of goodwill.

The changes in the carrying amount of goodwill for the nine months ended September 30, 2012 were as follows (in thousands):

Balance, January 1, 2012	$	80,105
Foreign currency translation adjustment		199
Balance, March 31, 2012		80,304
Foreign currency translation adjustment		(442	)
Balance, June 30, 2012	$	79,862
Foreign currency translation adjustment		41
Balance, September 30, 2012	$	79,903

Other intangible assets that are subject to amortization consist of the following (in thousands):

	As of September 30, 2012
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Existing technologies	$	8,242	$	(3,460	)	$	4,782
Customer relationships		3,412		(1,217	)		2,195
Trademark		160		(156	)		4
Total other intangible assets	$	11,814	$	(4,833	)	$	6,981

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	As of December 31, 2011
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Existing technologies	$	8,347	$	(1,976	)	$	6,371
Customer relationships		3,412		(589	)		2,823
Trade names and trademark		160		(147	)		13
Total other intangible assets	$	11,919	$	(2,712	)	$	9,207

Aggregate expense related to amortization of other intangible assets included in continuing operations for the three months ended September 30, 2012 and 2011 was approximately $0.7 million and $0.8 million, respectively. For the nine months ended September 30, 2012 and 2011, aggregate expense related to the amortization of other intangible assets was approximately $2.1 million and $1.5 million, respectively. Based on the Company’s other intangible assets as of September 30, 2012, aggregate expense related to amortization of other intangible assets is expected to be $0.7 million for the remainder of 2012, and $2.8 million, $2.1 million, $1.1 million and $0.3 million for fiscal years 2013, 2014, 2015 and 2016, respectively.

9. Property and Equipment, net

Property and equipment, net include (in thousands):

	As of September 30, 2012			As of December 31, 2011
Network equipment	$	167,893		$	176,307
Computer equipment		10,198			9,129
Furniture and fixtures		2,596			2,480
Leasehold improvements		6,801			6,775
Other equipment		533			453
		188,021			195,144
Less: accumulated depreciation		(139,945	)		(138,776	)
Total property and equipment, net	$	48,076		$	56,368

During the three months ended September 30, 2012, the Company removed property, plant and equipment and the associated accumulated depreciation of approximately $21.9 million to reflect the retirement of property, plant and equipment that was fully depreciated and no longer in service.

10. Other Assets

Other assets include (in thousands):

	As of September 30, 2012		As of December 31, 2011
Prepaid bandwidth and backbone services	$	6,847	$	7,373
Cost basis investment (Gaikai)		—		1,444
Gaikai escrow balance receivable		1,237		—
Vendor deposits and other		952		1,384
Deferred expenses		175		253
Total other assets	$	9,211	$	10,454

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In May 2010, the Company made a strategic investment in Gaikai Inc. (Gaikai), a private cloud-based gaming technology company that allows users to play major PC and console games through a web browser. In June 2012, Sony Computer Entertainment Inc. (Sony) entered into a definitive agreement to acquire Gaikai for approximately $380 million. In August 2012, Sony completed its acquisition of Gaikai and the Company recorded a gain on sale of its cost basis investment in Gaikai of $9.4 million which has been reflected in other income (expense) in the accompanying condensed consolidated statements of operations for the three and nine months ended September 30, 2012. The carrying value of the Gaikai cost basis investment as of the sale date was approximately $2.0 million. The aggregate selling price was $11.4 million consisting of $10.2 million of cash received and $1.2 million held in escrow for a period of up to 15 months to cover any potential indemnification claims. As of September 30, 2012, the Company is not aware of any potential indemnification claims and has recorded a long term receivable of $1.2 million which is included in other assets in the accompanying condensed consolidated balance sheets.

11. Other Current Liabilities

Other current liabilities consist of the following (in thousands):

	As of September 30, 2012		As of December 31, 2011
Accrued compensation and benefits	$	4,904	$	4,421
Accrued cost of revenue		2,307		3,027
Accrued legal fees		1,426		1,507
Non income taxes payable		539		633
Customer deposits		418		847
Contingent consideration liability		58		152
Other accrued expenses		2,127		2,608
Total other current liabilities	$	11,779	$	13,195

12. Other Long-Term Liabilities

Other long-term liabilities consist of the following (in thousands):

	As of September 30, 2012		As of December 31, 2011
Deferred rent	$	3,664	$	3,352
Contingent consideration liability		—		842
Total other long-term liabilities	$	3,664	$	4,194

13. Contingencies

Akamai Litigation

In June 2006, Akamai Technologies, Inc., or Akamai, and the Massachusetts Institute of Technology, or MIT, filed a lawsuit against the Company in the United States District Court for the District of Massachusetts alleging that the Company was infringing two patents assigned to MIT and exclusively licensed by MIT to Akamai, United States Patent No. 6,553,413 (the ’413 patent) and United States Patent No. 6,108,703 (the ’703 patent). In September 2006, Akamai and MIT expanded their claims to assert infringement of a third, recently issued patent United States Patent No. 7,103,645 (the ’645 patent). In February 2008, a jury returned a verdict in this lawsuit, finding that the Company infringed four claims of the ’703 patent at issue and rejecting the Company’s invalidity defenses for the period April 2005 through December 31, 2007. The jury awarded an aggregate of approximately $45.5 million which includes lost profits, reasonable royalties and price erosion damages. In addition, the jury awarded prejudgment interest which the Company estimated to be $2.6 million at December 31, 2007. The Company recorded an aggregate $48.1 million as a provision for litigation as of December 31, 2007. During the year ended December 31, 2008, the Company estimated its revenue from alleged infringing methods totaled approximately 25% of total revenue. The Company recorded a potential additional provision for litigation totaling $15.5 million, plus additional interest of $2.0 million, for the year ended December 31, 2008. The total provision for litigation at December 31, 2008 was $65.6 million.

On July 1, 2008, the court denied the Company’s Motions for Judgment as a Matter of Law (JMOL), Obviousness, and a New Trial. The court also denied Akamai’s Motion for Permanent Injunction as premature and its Motions for Summary Judgment regarding the Company’s equitable defenses. The court conducted a bench trial in November 2008 regarding the Company’s equitable defenses. The Company also filed a motion for reconsideration of the court’s earlier denial of the Company’s motion for JMOL. The Company’s motion for JMOL was based largely upon a clarification in the standard for a finding of joint infringement articulated by the Federal Circuit in the case of Muniauction, Inc. v. Thomson Corp., released after the court denied the Company’s initial motion for JMOL. On April 24, 2009, the court issued its order and memorandum setting aside the adverse jury verdict and ruling that the Company did not infringe Akamai’s ’703 patent and that the Company was entitled to JMOL. Based upon the court’s April 24, 2009 order, the Company reversed the $65.6 million provision for litigation previously recorded for this lawsuit as the Company no longer believed that payment of any amounts represented by the litigation provision was probable. The court entered final judgment in favor of the Company on May 22, 2009, and Akamai filed its notice of appeal of the court’s decision on May 26, 2009. On December 20, 2010, the Court of Appeals for the Federal Circuit issued its opinion affirming the trial court’s entry of judgment in the Company’s favor. On February 18, 2011, Akamai filed a motion with the Court of Appeals for the Federal Circuit seeking a rehearing and rehearing en banc. On April 21, 2011, the Court of Appeals for the Federal Circuit issued an order denying the petition for rehearing, granting the petition for rehearing en banc, vacating the December 20, 2010 opinion affirming the trial court’s entry of judgment in the Company’s favor, and reinstated the appeal.

14

On August 31, 2012, the Court of Appeals for the Federal Circuit issued its opinion in the case. The court stated that the trial court correctly determined that the Company did not directly infringe Akamai’s ’703 patent and upheld the trial court’s decision to vacate the original jury’s damages award. The court also held that the Company did not infringe Akamai’s ’413 or ’645 patents. A slim majority in this three-way divided opinion also announced a revised legal theory of induced infringement, remanded the case to the trial court, and gave Akamai an opportunity for a new trial to attempt to prove that the Company induced its customers to infringe Akamai’s patent under the court’s new legal standard. The Company will file a petition to appeal this sharply divided Court of Appeals decision to the Supreme Court and will seek to stay any proceedings at the trial court until the Supreme Court rules on that petition. The Company believes that the Court of Appeal’s new induced infringement standard runs counter to the Patent Act and Supreme Court precedent, and it should be overturned by the Supreme Court. Additionally, just as the Company has successfully shown that it does not directly infringe Akamai’s patent, the Company firmly believes that it ultimately would be successful in showing that it does not infringe Akamai’s patent under the majority’s new induced infringement theory, and it will continue to vigorously defend against the allegation. The Company does not believe a loss is probable and therefore no provision for this lawsuit is recorded in the Company’s financial statements.

Legal and other expenses associated with this case have been significant. The Company includes these litigation expenses in general and administrative expenses as incurred, as reported in its consolidated statement of operations.

Other Litigation

The Company is subject to various other legal proceedings and claims, either asserted or unasserted, arising in the ordinary course of business. While the outcome of these claims cannot be predicted with certainty, management does not believe the outcome of any of these matters will have a material adverse effect on its business, financial position, results of operations or cash flows.

Other Matters

The Company is subject to indirect taxation in various states and foreign jurisdictions. Laws and regulations that apply to communications and commerce conducted over the Internet are becoming more prevalent, both in the United States and internationally, and may impose additional burdens on the Company conducting business online or providing Internet-related services. Increased regulation could negatively affect the Company’s business directly, as well as the businesses of its customers. Tax authorities in various states and abroad may impose taxes on the Internet-related revenue the Company generates based on regulations currently being applied to similar but not directly comparable industries. There are many transactions and calculations where the ultimate tax determination is uncertain. In addition, domestic and international taxation laws are subject to change. In the future, the Company may come under audit, which could result in changes to its tax estimates. The Company believes it maintains adequate tax reserves to offset potential liabilities that may arise upon audit. Although the Company believes its tax estimates and associated reserves are reasonable, the final determination of tax audits and any related litigation could be materially different than the amounts established for tax contingencies. To the extent these estimates ultimately prove to be inaccurate, the associated reserves would be adjusted, resulting in the recording of a benefit or expense in the period in which a final determination is made.

14. Net Income (Loss) per Share

The Company calculates basic and diluted earnings per weighted average share based on net income (loss). The Company uses the weighted-average number of common shares outstanding during the period for the computation of basic earnings per share. Diluted earnings per share include the dilutive effect of convertible stock options and restricted stock units (RSUs) in the weighted-average number of common shares outstanding. Net income (loss) from continuing operations is utilized in determining whether potential common shares are dilutive or antidilutive for purposes of computing diluted net income (loss) per share.

15

The following table sets forth the components used in the computation of basic and diluted net income (loss) per share for the periods indicated (in thousands, except per share data):

	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2012			2011			2012			2011
Net loss from continuing operations	$	(610	)	$	(6,402	)	$	(19,744	)	$	(24,071	)
Net (loss) income from discontinued operations		(218	)		11,420			(918	)		5,336
Net (loss) income available to common stockholders	$	(828	)	$	5,018		$	(20,662	)	$	(18,735	)
Basic weighted average common shares		99,359			113,662			102,123			110,231
Basic weighted average common shares		99,359			113,662			102,123			110,231
Dilutive effect of stock options and restricted stock units		—			—			—			—
Diluted weighted average common shares		99,359			113,662			102,123			110,231
Basic and diluted net income (loss) per share:
Continuing operations	$	(0.01	)	$	(0.06	)	$	(0.19	)	$	(0.22	)
Discontinued operations		0.00			0.10			(0.01	)		0.05
Basic and diluted net income (loss) per share	$	(0.01	)	$	0.04		$	(0.20	)	$	(0.17	)

For the three months ended September 30, 2012 and 2011, outstanding options and restricted stock units of approximately 2.2 million and 3.4 million, respectively, were excluded from the computation of diluted net loss per common share because including them would have been anti-dilutive.

For the nine months ended September 30, 2012 and 2011, outstanding options and restricted stock units of approximately 2.2 million and 4.7 million, respectively, were excluded from the computation of diluted net loss per common share because including them would have been anti-dilutive.

15. Stockholders’ Equity

Common Stock

On May 3, 2012, the Company announced a second common stock repurchase plan that authorized the Company to repurchase up to $15 million of its shares of common stock, exclusive of any commissions, markups or expenses, from time to time through December 15, 2012. Any repurchased shares will be cancelled and return to authorized but unissued status. During the three months ended September 30, 2012, the Company purchased and cancelled approximately 1.2 million shares under the second repurchase plan. During the period May 3, 2012 through August 9, 2012, the Company purchased and cancelled approximately 5.7 million shares of common stock for approximately $15.0 million ($15.1 million including commissions) under the second repurchase plan. The Company’s second repurchase plan is complete.

On September 12, 2011, the Company’s board of directors approved a repurchase plan that authorized the Company to purchase up to $25 million of its shares of common stock, exclusive of any commissions, markups or expenses, from time to time through March 12, 2012. During the nine months ended September 30, 2012, the Company purchased and cancelled approximately 0.3 million shares under the initial repurchase plan. During the period September 12, 2011 through March 12, 2012, the Company repurchased and cancelled approximately 9.7 million shares of common stock for approximately $25.0 million ($25.2 million including commissions) under the initial repurchase plan. The Company’s initial repurchase plan is complete.

On October 29, 2012, the Company’s Board of Directors authorized a new $10 million share repurchase plan.

16. Share-Based Compensation

The following table summarizes the components of share-based compensation expense included in the Company’s condensed consolidated statements of operations for the three and nine months ended September 30, 2012 and 2011 (in thousands):

	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2012		2011		2012		2011
Share-based compensation expense by type of award:
Stock options	$	1,766	$	2,424	$	5,540	$	7,308
Restricted stock awards and units		1,897		565		5,295		4,386
Total share-based compensation expense	$	3,663	$	2,989	$	10,835	$	11,694

16

	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2012		2011		2012		2011
Effect of share-based compensation expense on statement of operations by categories:
Cost of services	$	604	$	514	$	1,595	$	1,805
General and administrative expense		1,571		1,093		4,638		4,133
Sales and marketing expense		836		695		2,502		2,932
Research and development expense		652		687		2,100		2,824
Total cost related to share-based compensation expense	$	3,663	$	2,989	$	10,835	$	11,694

Unrecognized share-based compensation expense totaled approximately $21.1 million at September 30, 2012, of which approximately $12.6 million related to stock options and approximately $8.5 million related to restricted stock awards. The Company currently expects to recognize share-based compensation expense of approximately $3.6 million during the remainder of 2012, $9.2 million in 2013 and the remainder thereafter based upon the scheduled vesting of the stock options, restricted stock awards and units outstanding at September 30, 2012.

17. Related Party Transactions

The Company leases office space to an entity in which a member of its board of directors has an ownership interest. During the three and nine months ended September 30, 2012, the Company invoiced this entity approximately $0 and $15,640, respectively, for office space rental. During the three and nine months ended September 30, 2011, the Company invoiced this entity approximately $22,478 and $52,807, respectively, for office space rental.

The Company sells services to entities owned, in whole or in part, by certain of the Company’s executive officers and board of directors. Revenue derived from related parties was approximately 1% of total revenue for the three and nine months ended September 30, 2012 and 2011.

Total outstanding accounts receivable from all related parties as of September 30, 2012 and December 31, 2011 was approximately $1.0 million and $0.4 million, respectively.

18. Leases and Commitments

Operating Leases

The Company is committed to various non-cancelable operating leases for office space and office equipment which expire through 2019. Certain leases contain provisions for renewal options and rent escalations upon expiration of the initial lease terms. Approximate future minimum lease payments over the remaining lease periods as of September 30, 2012 are as follows (in thousands):

2012	$	1,003
2013		3,531
2014		2,922
2015		2,670
2016 and thereafter		6,088
Total minimum payments	$	16,214

Purchase Commitments

The Company has long-term commitments for bandwidth usage and co-location with various networks and Internet service providers, or ISPs. The following summarizes minimum commitments as of September 30, 2012 (in thousands):

2012	$	11,254
2013		31,294
2014		21,116
2015		15,519
2016 and thereafter		3,639
Total minimum payments	$	82,822

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Capital Leases

The Company leases equipment under capital lease agreements which extend through 2016. As of September 30, 2012 and December 31, 2011, the outstanding balance for capital leases was approximately $2.6 million and $3.9 million, respectively. As of September 30, 2012 and December 31, 2011, the Company has recorded assets under capital lease obligations of approximately $5.3 million and $5.3 million, respectively. Related accumulated amortization totaled approximately $2.6 million and $1.4 million, respectively, as of September 30, 2012 and December 31, 2011. The assets acquired under capital leases and the related accumulated amortization is included in property and equipment, net in the condensed consolidated balance sheets. The related amortization is included in depreciation and amortization expense in the condensed consolidated statements of operations. Interest expense related to capital leases was approximately $40,000 and $57,000, respectively, for the three months ended September 30, 2012 and 2011, respectively. For the nine months ended September 30, 2012 and 2011, interest expense related to capital leases was approximately $136,000 and $131,000, respectively.

Future minimum capital lease payments at September 30, 2012 are as follows (in thousands)

2012	$	461
2013		1,377
2014		498
2015		238
2016 and thereafter		138
Total		2,712
Amounts representing interest		(160	)
Present value of minimum lease payments	$	2,552

19. Income taxes

Income taxes for the interim periods presented have been included in the accompanying condensed consolidated financial statements on the basis of an estimated annual effective tax rate. Based on an estimated annual effective tax rate and discrete items, the estimated income tax expense (benefit) from continuing operations for the nine months ended September 30, 2012 and 2011 was approximately $0.3 million and ($1.3) million, respectively. Income tax expense on the loss from continuing operations before taxes was different than the statutory income tax rate primarily due to the Company providing for a valuation allowance on deferred tax assets in certain jurisdictions, and the recording of state and foreign tax expense for the quarter.

The Company files U.S. federal, U.S. state, and foreign income tax returns. For U.S. federal, and in general for U.S. state tax returns, the fiscal 2009 through fiscal 2011 tax years remain open for examination by tax authorities. As of September 30, 2012, the Company is not under any Federal examination.

20. Concentrations

For both the three and nine months ended September 30, 2012 Netflix, Inc. (Netflix) represented approximately 11% of the Company’s total revenue. For the three and nine months ended September 30, 2011 Netflix represented approximately 12% and 11% respectively, of the Company’s total revenue.

Revenue from sources outside North America totaled approximately $14.4 million and $13.5 million, for the three months ended September 30, 2012 and 2011, respectively. For the nine months ended September 30, 2012 and 2011, revenue from sources outside of North America totaled approximately $42.1 million and $38.2 million, respectively.

During the three and nine months ended September 30, 2012, the Company had two countries, Japan and the United States that accounted for 10% or more of the Company’s total revenues. No single country outside of the United States accounted for 10% or more of the Company’s total revenues during the three and nine months ended September 30, 2011.

21. Segment Reporting

The Company operates in one industry segment — content delivery and related services. The Company operates in three geographic areas — North America, EMEA and Asia Pacific.

Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker, or decision making group, in deciding how to allocate resources and in assessing performance. The Company’s chief operating decision maker is its Chief Executive Officer. The Company’s Chief Executive Officer reviews financial information presented on a consolidated basis for purposes of allocating resources and evaluating financial performance. The Company has one business activity and there are no segment managers who are held accountable for operations, operating results and plans for products or components below the consolidated unit level. Accordingly, the Company reports as a single operating segment.

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Revenue by geography is based on the location of the customer from which the revenue is earned. The following table sets forth revenue and long-lived assets by geographic area (in thousands):

	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2012		2011		2012		2011
Domestic revenue	$	30,622	$	28,811	$	91,632	$	87,068
International revenue Asia Pacific		8,069		7,345		22,268		18,982
International revenue EMEA		6,310		6,196		19,865		19,263
Total revenue	$	45,001	$	42,352	$	133,765	$	125,313

The following table sets forth long-lived assets by geographic area (in thousands):

	As of September 30, 2012		As of December 31, 2011
Domestic long-lived assets	$	41,755	$	49,831
International long-lived assets		13,302		15,744
Total long-lived assets	$	55,057	$	65,575

22. Fair Value Measurements

The Company evaluates certain of its financial instruments within the three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include:

Level 1	—	defined as observable inputs such as quoted prices in active markets;
Level 2	—	defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and
Level 3	—	defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions.

As of September 30, 2012 and December 31, 2011, the Company held certain assets and liabilities that are required to be measured at fair value on a recurring basis. These include money market funds, commercial paper, corporate notes and bonds and U.S. Government Agency Bonds, and publicly traded stocks, which are classified as either cash and cash equivalents or marketable securities. The Company also has acquisition-related contingent consideration which is classified as a current liability on the Company’s condensed consolidated balance sheets.

The Company’s financial assets are valued using market prices on both active markets (level 1) and less active markets (level 2). Level 1 instrument valuations are obtained from real-time quotes for transactions in active exchange markets involving identical assets. Level 2 instrument valuations are obtained from readily available pricing sources for comparable instruments or identical instruments in less active markets. Level 3 inputs are valued using models that take into account the terms of the arrangement as well as multiple inputs where applicable, such as estimated units sold and other customer utilization metrics.

The following is a summary of money market funds, marketable securities, other investment-related assets and current liabilities held at September 30, 2012 (in thousands):

			Fair Value Measurements at Reporting Date Using
Description	Total		Quoted Prices In Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Government agency bonds (1)	$	10,903	$	—	$	10,903	$	—
Money market funds (2)		10,160		10,160		—		—
Corporate notes and bonds (1)		11,249		—		11,249		—

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			Fair Value Measurements at Reporting Date Using
Description	Total		Quoted Prices In Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Commercial paper (1) (2)		3,699		—		3,699		—
Certificate of deposit (1)		2,742		—		2,742		—
Publicly traded common stock (1)		24		24		—		—
Total assets measured at fair value	$	38,777	$	10,184	$	28,593	$	—
Liabilities:
Acquisition related contingent consideration	$	58	$	—	$	—	$	58
Total liabilities measured at fair value	$	58	$	—	$	—	$	58

(1) Classified in marketable securities

(2) Classified in cash and cash equivalents

For the nine months ended September 30, 2012, realized gains and losses for marketable securities are reported in interest income, unrealized gains and losses for marketable securities are included in other comprehensive income and expense. For the nine months ended September 30, 2012, the Company had net unrealized losses of approximately $16,000.

The fair value measurement for the contingent consideration is based on significant inputs not observed in the market and thus represents a Level 3 measurement. Level 3 instruments are valued based on unobservable inputs that are supported by little or no market activity and reflect the Company’s own assumptions in measuring fair value.

The progressions of the Company’s Level 3 instruments for the nine months ended September 30, 2012 are shown in the table below (in thousands):

	Acquisition Related Contingent Consideration
Balance at January 1, 2012	$	994
Adjustment to fair value of AcceloWeb contingent consideration		(842	)
Payment of contingent consideration		(94	)
Balance at March 31, 2012	$	58
Adjustment to fair value of AcceloWeb contingent consideration		—
Payment of contingent consideration		—
Balance at June 30, 2012	$	58
Adjustment to fair value of AcceloWeb contingent consideration		—
Payment of contingent consideration		—
Balance at September 30, 2012	$	58

The following is a summary of cash and cash equivalents, marketable securities, other investment-related assets and current liabilities held at December 31, 2011 (in thousands):

			Fair Value Measurements at Reporting Date Using
Description	Total		Quoted Prices In Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Government agency bonds (1)	$	9,614	$	—	$	9,614	$	—
Money market funds (2)		24,855		24,855		—		—
Corporate notes and bonds (1)		5,757		—		5,757		—
Commercial paper (1)		2,749		—		2,749		—

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			Fair Value Measurements at Reporting Date Using
Description	Total		Quoted Prices In Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Certificate of deposit (1)		2,730		—		2,730		—
Publicly traded common stock (1)		51		51		—		—
Total assets measured at fair value	$	45,756	$	24,906	$	20,850	$	—
Liabilities:
Acquisition related contingent consideration	$	994	$	—	$	—	$	994
Total liabilities measured at fair value	$	994	$	—	$	—	$	994

(1) Classified in marketable securities

(2) Classified in cash and cash equivalents

The carrying amount of cash equivalents approximates fair value because their maturity is less than three months. The carrying amount of short-term and long-term marketable securities represents fair value as the securities are marked to market as of each balance sheet date with any unrealized gains and losses reported in stockholders’ equity. The carrying amount of accounts receivable, accounts payable and accrued liabilities approximates fair value due to the short-term maturity of the amounts.

The Company did not estimate the fair value of its cost basis investment at December 31, 2011 because the Company did not identify any events or circumstances that would have a significant adverse effect on the fair value of the investment. Determining fair value is not practicable because the entity in which the Company made the investment is not a publically traded company and information necessary to determine fair value is not available.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the condensed consolidated financial statements and the related notes thereto included elsewhere in this Quarterly Report on Form 10-Q and the audited consolidated financial statements and notes thereto and management’s discussion and analysis of financial condition and results of operations for the year ended December 31, 2011 included in our annual report on Form 10-K filed with the Securities and Exchange Commission (SEC) on March 2, 2012. This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (Exchange Act). Forward-looking statements include statements as to industry trends and future expectations of ours and other matters that do not relate strictly to historical facts. These statements are often identified by the use of words such as “may,” “will,” “expect,” “believe,” “anticipate,” “intend,” “could,” “estimate,” or “continue,” and similar expressions or variations. These statements are based on the beliefs and assumptions of our management based on information currently available to management. Such forward-looking statements are subject to risks, uncertainties and other factors that could cause actual results and the timing of certain events to differ materially from future results expressed or implied by such forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those identified below, and those discussed in the section titled “Risk Factors” set forth in Part II, Item 1A of this Quarterly Report on Form 10-Q and in our other SEC filings, including the Risk Factors set forth in our Annual Report on Form 10-K filed with the SEC on March 2, 2012. We undertake no obligation to update any forward-looking statements to reflect events or circumstances after the date of such statements. Prior period information has been modified to conform to current year presentation.

Overview

We were founded in 2001 as a provider of content delivery network services to deliver digital content over the Internet. We began development of our infrastructure in 2001 and began generating meaningful revenue in 2002. Today, we are a global leader in digital presence management and delivery, including mobility, web and video content management, web application acceleration, cloud storage and consulting, and content delivery services. We provide web and video content management services as Software-as-a-Service (SaaS) solutions and cloud storage and content delivery services as Platform-as-a-Service solutions, which other than content delivery services, are referred to collectively as value-added services (VAS). We derive revenue from the sale of content delivery services and VAS to our customers. In May 2012, we introduced a new digital presence solution, Limelight Orchestrate (Orchestrate), an integrated suite of cloud-based applications which allows organizations to optimize all aspects of their online digital presence across web, mobile, social and large screen channels. Orchestrate provides advanced features for website content management, personalization and targeting, video publishing, mobile enablement, content delivery, transcoding and cloud storage, combined with social media integration and powerful analytics. These services are provided in the cloud and leverage our global computing platform, which provides highly-available, highly-redundant storage, bandwidth and computing resources as well as connectivity to last-mile broadband network providers. Our global professional services organization help organizations analyze and identify their digital presence requirements. We also offer other platform and infrastructure services, such as transit and rack space services. Our solutions and services enable organizations to streamline processes and optimize business results across all customer interaction channels, helping them deliver a high quality online media experience, improve brand awareness, drive revenue and enhance their customer relationships while reducing costs. We operate in one industry segment.

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We provide services to customers that we believe view Internet, mobile and social initiatives as critical to their success, including traditional and emerging media companies, or content publishers, operating in the television, music, radio, newspaper, magazine, movie, videogame, software and social media industries, as well as enterprises, technology companies and government entities conducting business online. We provide services to customers in North America, EMEA and the Asia Pacific region. As of September 30, 2012, we had 1,493 customers worldwide.

In addition to our expanding suite of VAS, we continue to expand the capacity and capabilities, and to enhance the performance and efficiency, of our global computing platform. Although we believe that we may have improved margins in our content delivery services as we expand our customer base and use a greater proportion of our capacity, we expect the majority of our margin increases to result from our VAS increasing as a percentage of our revenue.

On August 31, 2012, the Court of Appeals for the Federal Circuit issued its opinion in our on-going patent litigation with Akamai. The court stated that the trial court correctly determined that we did not directly infringe Akamai’s ’703 patent and upheld the trial court’s decision to vacate the original jury’s damages award. The court also held that we did not infringe Akamai’s ’413 or ’645 patents. A slim majority in this three-way divided opinion also announced a revised legal theory of induced infringement, remanded the case to the trial court, and gave Akamai an opportunity for a new trial to attempt to prove that we induced our customers to infringe Akamai’s patent under the court’s new legal standard. Just as we have successfully shown that we do not directly infringe Akamai’s patent, we firmly believe that we ultimately would be successful in showing we do not infringe Akamai’s patent under the majority’s new induced infringement theory, and we will continue to vigorously defend against the allegation. We do not believe a loss is probable and therefore no provision for this lawsuit is recorded in our financial statements. For additional information, please see “Legal Proceedings” in Part II, Item 1 of this Quarterly Report on Form 10-Q.

In May 2012, our board of directors approved a second common stock repurchase plan in compliance with Rules 10b-18 and 10b5-1 of the Exchange Act that authorized us to repurchase up to $15 million of our shares of common stock, exclusive of any commissions, markups or expenses, from time to time through December 15, 2012. Any repurchased shares will be cancelled and return to authorized but unissued status. During the three months ended September 30, 2012, we repurchased and cancelled approximately 1.2 million shares at an average price per share of approximately $2.63 per share under the second repurchase plan. The price range of the shares repurchased was between $2.46 and $2.75 per share. The total amount expended was approximately $3.1 million ($3.2 million including commissions) under the second repurchase plan. During the nine months ended September 30, 2012, we purchased and cancelled approximately 5.7 million shares of common stock for approximately $15.0 million ($15.1 million including commissions) under the second repurchase plan. Our second stock repurchase plan is now complete.

In May 2010, we made a strategic investment in Gaikai Inc. (Gaikai), a private cloud-based gaming technology company that allows users to play major PC and console games through a web browser. In August 2012, Sony Computer Entertainment Inc. (Sony) completed its acquisition of Gaikai and we recorded a gain on sale of our cost basis investment in Gaikai of $9.4 million which has been reflected in other income (expense) in the accompanying condensed consolidated statements of operations for the three and nine months ended September 30, 2012. The carrying value of the Gaikai cost basis investment as of the sale date was approximately $2.0 million. The aggregate selling price was $11.4 million consisting of $10.2 million of cash received and $1.2 million held in escrow for a period of up to 15 months to cover any potential indemnification claims. As of September 30, 2012, we are not aware of any potential indemnification claims and have recorded a long term receivable of $1.2 million which is included in other assets in the accompanying condensed consolidated balance sheets.

Traffic on our network and our VAS offerings continued to grow during the three month period ended September 30, 2012. This traffic growth was primarily the result of growth in the traffic delivered to existing customers and to a lesser extent to new customers. Our content delivery revenue is generated by charging for traffic delivered. While our traffic continued to grow, our CDN revenue decreased approximately $0.7 million during the three month period ended September 30, 2012, compared to the three month period ended September 30, 2011. The decrease was primarily due to lower reseller revenue and other non-traffic related revenue. In addition, we saw the rate of traffic growth accelerate; however we also saw an increase in price-compression. During the three month period ended September 30, 2012, all of our revenue growth was attributable to our VAS. During 2011, we added new customers through new business and through our business acquisitions, and we also elected not to renew some customers. During the three month period ended September 30, 2012, we continued to add new customers, experienced some attrition and elected not to renew some customers as we continue to focus on customer quality. During the three month period ended September 30, 2012, we averaged 1.8 products per customer. For new customers added during the quarter we averaged 2.2 products. We continue to have success selling new products to our existing customer base.

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Our international revenue continued to grow during the three month period ended September 30, 2012, and we expect this trend to continue as we focus on our strategy of expanding our network and customer base internationally. For the year ended December 31, 2011, revenue derived from customers outside of North America accounted for approximately 30% of our total revenue. For the year ended December 31, 2011, we derived approximately 50% of our international revenue from EMEA and approximately 50% of our international revenue from Asia Pacific. During 2011, no single country outside of the United States accounted for 10% or more of our total revenues.

For the three months ended September 30, 2012 and 2011, revenue derived from customers outside of North America accounted for approximately 32% of our total revenue. For the three months ended September 30, 2012 and 2011, we derived approximately 44% and 46%, respectively, of our international revenue from EMEA and approximately 56% and 54%, respectively, of our international revenue from Asia Pacific.

For the nine months ended September 30, 2012 and 2011, approximately 31% of our total revenues were derived from our operations located outside of North America. For the nine months ended September 30, 2012 and 2011, we derived approximately 47% and 50%, respectively, of our international revenue from EMEA and approximately 53% and 50%, respectively, of our international revenue from Asia Pacific. During the three and nine months ended September 30, 2012, we had two countries, Japan and the United States that accounted for 10% or more of our total revenues. No single country outside of the United States accounted for 10% or more of our total revenues during the three and nine months ended September 30, 2011. We expect our foreign revenue to continue to increase in absolute dollars in 2012. Our business is managed as a single segment, and we report our financial results on this basis.

During any given fiscal period, a relatively small number of customers typically account for a significant percentage of our revenue. For example, in 2011, sales to our top 10 customers accounted for approximately 34% of our total revenue, and we had one customer, Netflix, Inc. (Netflix), which represented more than 10% of our total revenue. For the year ended December 31, 2011, Netflix represented approximately 11% of our total revenue. For the three month periods ended September 30, 2012 and 2011, sales to our top 10 customers accounted for approximately 35% of our total revenue. During each of those periods, we had one customer, Netflix who represented more than 10% of our total revenue. During those periods, Netflix represented approximately 11% and 12%, respectively, of our total revenue. For the nine month periods ended September 30, 2012 and 2011, sales to our top 10 customers accounted for approximately 32% and 34%, respectively, of our total revenue. During each of those periods, we had one customer, Netflix who represented more than 10% of our total revenue. During those periods, Netflix represented approximately 11% of our total revenue. In 2012, we anticipate that our top 10 customer concentration levels will remain consistent with 2011. In the past, the customers that comprised our top 10 customers have continually changed, and our large customers may not continue to be as significant going forward as they have been in the past.

In addition to selling to our direct customers, we maintain relationships with a number of resellers that purchase our services for resale to their end customers. Revenue generated from sales to reseller customers accounted for approximately 4% of our total revenue for the year ended December 31, 2011. For the three and nine months ended September 30, 2012, revenue generated from sales to reseller customers accounted for approximately 3% of our total revenue. For the three and nine months ended September 30, 2011, revenue generated from sales to reseller customers accounted for approximately 4% of our total revenue.

In addition to these revenue-related business trends, our cost of revenue increased in absolute dollars and decreased as a percentage of our total revenue for the three month period ended September 30, 2012, compared to the three month period ended September 30, 2011. The increase in absolute dollars was primarily due to increased payroll and related employee costs for our consulting services personnel, operations personnel who are responsible for monitoring and managing our network and delivering our VAS.

For the nine month period ended September 30, 2012, our cost of revenue increased in absolute dollars and decreased as a percentage of our total revenue compared to the nine month period ended September 30, 2011. The increase in absolute dollars was primarily due to increased payroll and related employee costs for our operations personnel who are responsible for monitoring and managing our network and delivering our VAS, increased professional fees and increases in other costs associated with the delivery of our services as well as additional fees and licenses. These increases were offset by decreased bandwidth and co-locations costs which were primarily due to lower transit costs, offset by an increase in paid peering.

We enter into contracts with third party network and data center providers, with terms typically ranging from several months to several years. Our contracts related to transit bandwidth provided by network operators generally commit us to pay either a fixed monthly fee or monthly fees plus additional fees for bandwidth usage above a specified level. We entered into an agreement with Global Crossing Ltd. (Global Crossing) in January 2009 for use of private lines for additional bandwidth and backbone services with a term of four years from installation. We executed subsequent amendments in September 2009, March 2011 and January 2012 for additional bandwidth and backbone services. The agreement and subsequent amendments required substantial prepayment for such services, and the amendments extended the original term for some services through June 2014. In addition to purchasing services from communications providers, we connect directly to approximately 600 broadband Internet service providers (ISPs), generally without either party paying the other. This industry practice, known as settlement free peering, benefits us by allowing us to place content objects directly on user access networks, which helps us provide higher performance delivery for our customers and eliminate paying transit bandwidth fees to network operators. This practice also benefits the ISP and its customers by allowing them to receive improved content delivery through our local servers and eliminate the cost of transit bandwidth associated with delivery receipt of the traffic. We do not consider these relationships to represent the culmination of an earnings process. Accordingly, we do not recognize as revenue the value to the ISPs associated with the use of our servers nor do we recognize as expense the value of the bandwidth received at discounted or no cost. These peering relationships are mutually beneficial and are not contractual commitments. In addition to settlement free peering, we incur costs for non-settlement free peering as well as costs associated with connecting to the ISPs.

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During 2011, we continued to reduce our network transit bandwidth delivery costs per gigabyte transferred by entering into new supplier contracts with lower pricing and amending existing contracts to take advantage of price reductions from our existing suppliers associated with higher purchase commitments. We anticipate our overall transit bandwidth delivery costs will decrease in absolute dollars as a result of expected reductions in bandwidth costs per unit. In addition, during 2011, we entered into relationships for fixed price paid peering ports that we anticipate will assist in cost management as we continue to increase the volume of traffic moving through our global computing platform. We expect that our overall transit bandwidth delivery costs as a percentage of our total revenue will decrease slightly in 2012 compared to 2011.

For the three month period ended September 30, 2012, operating expenses increased in absolute dollars and increased as a percentage of revenue compared to the three month period ended September 30, 2011. This increase was primarily due to increased sales and marketing expenses, increased research and development costs and increased general and administrative expenses. The increase in sales and marketing expenses was primarily due to increased payroll and related employee costs, due to increased staffing, increased professional fees, primarily for consulting and recruiting fees, and increased costs associated with our website design. The increase in research and development costs was primarily due to increased payroll and related employee costs due to increased staffing. The increase in general and administrative expenses was primarily due to increased professional fees, primarily for outside consulting related to strategic planning for 2013 and beyond, and for legal fees related to intangible property and other corporate legal matters and an increase in stock-based compensation. These increases were off-set by decreases in payroll and related employee costs, and in litigation expenses.

For the nine month period ended September 30, 2012, operating expenses increased in absolute dollars and increased as a percentage of revenue compared to the nine month period ended September 30, 2011. This increase was primarily due to increased sales and marketing expenses, increased research and development costs, increased general and administrative expenses, and increased non-network related depreciation and amortization. The increase in sales and marketing expenses was primarily due to increased payroll and related employee costs, due to increased staffing, increased travel, increased professional fees and increased facility and facility-related costs, offset by a decrease in share-based compensation. The increase in research and development costs was primarily due to increased payroll and related employee costs due to increased staffing. The increase in general and administrative expenses was primarily due to increased professional fees, primarily due to increased consulting and outside professional services, legal fees associated with intellectual property and general corporate legal matters, and recruiting costs. The increase in non-network related depreciation and amortization was primarily due to increased amortization of intangible assets from our business acquisitions as well as increased general and administrative depreciation and amortization.

We make our capital investment decisions based upon evaluation of a number of variables, such as the amount of traffic we anticipate on our network, the cost of the physical infrastructure required to deliver that traffic and the forecasted capacity utilization of our network. Our capital expenditures have varied over time, in particular as we purchased servers and other network equipment associated with our network build-out. For example, in 2009, 2010 and 2011 we made capital purchases of $20.4 million, $33.5 million and $30.4 million, respectively, which represented 16%, 22% and 18%, respectively, of our total revenue. For the nine month periods ended September 30, 2012 and 2011, we made capital investments of $17.4 million and $26.9 million, respectively, which represented 13% and 21%, respectively, of our total revenue. We expect to have ongoing capital expenditure requirements as we continue to invest in, refresh and expand our global computing platform and support our VAS. For 2012, we anticipate making aggregate capital expenditures of approximately 9% to 11% of our total revenue.

We occasionally generate revenue from certain customers that are entities related to certain of our executive officers and directors. For the year ended December 31, 2011 revenue derived from these related parties was less than 1% of our total revenue. For the three and nine month periods ended September 30, 2012, revenue generated from related parties was approximately 1% of our total revenue.

Our future results will be affected by many factors, including factors identified in the section titled “Risk Factors” in Part II, Item 1A of this Quarterly Report on Form 10-Q and our ability to:

• increase our revenue by adding customers and limiting customer cancellations and terminations, as well as increasing the amount of monthly recurring revenue that we derive from our existing customers;

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• manage the prices we charge for our services, as well as the costs associated with operating our network in light of increased competition;

• successfully manage our litigation with Akamai Technologies, Inc. (Akamai) to a favorable conclusion;

• prevent disruptions to our services and network due to accidents or intentional attacks;

• continue to deliver a significant portion of our traffic through settlement free peering relationships which significantly reduce our cost of delivery;

• successfully integrate the businesses we have acquired; and

• successfully manage the disposition of businesses we have divested from.

As a result, we cannot assure you that we will achieve our expected financial objectives, including positive net income.

Critical Accounting Policies and Estimates

Our critical accounting policies are disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2011. During the three months ended September 30, 2012, there have been no significant changes in our critical accounting policies.

Results of Continuing Operations

Three and Nine Months Ended September 30, 2012 Compared to Three and Nine Months Ended September 30, 2011

Revenue

	Three months ended September 30,									Nine months ended September 30,
	2012		2011		Increase (Decrease)		Percent Change			2012		2011		Increase (Decrease)		Percent Change
			(in thousands)									(in thousands)
Revenue	$	45,001	$	42,352	$	2,649		6	%	$	133,765	$	125,313	$	8,452		7	%

Revenue increased 6%, or $2.6 million, to $45.0 million for the three months ended September 30, 2012 as compared to $42.4 million for the three months ended September 30, 2011. The increase in revenue for the three month period ended September 30, 2012 compared to the same period in the prior year was attributable to an increase in our VAS revenue of approximately $3.4 million. Our VAS revenue, which collectively refers to our mobility, web and video content management, web application acceleration, cloud storage and consulting revenue, includes revenue from the date of acquisition of Delve Networks, Inc. (Delve), Clickability, Inc. (Clickability) and AcceloWeb, (IL) Ltd. (AcceloWeb). The increase in VAS revenue was primarily attributable to increases in our video publishing and web content management product offerings. The increase in VAS revenue was offset by a decrease in our content delivery services revenue. During the three month period ended September 30, 2012, we continued to increase the amount of traffic moving through our network; however, our content delivery services revenue decreased approximately $0.7 million. The decrease was primarily due to lower reseller revenue and other non-traffic related revenue. In addition, we saw the rate of traffic growth accelerate; however we also saw an increase in price-compression.

For the nine month period ended September 30, 2012, total revenues increased 7%, or $8.5 million, to $133.8 million as compared to $125.3 million for the nine months ended September 30, 2011. The increase in revenue for the nine month period ended September 30, 2012 compared to the same period in the prior year was primarily attributable to an increase in our VAS revenue of approximately $11.9 million. The increase in VAS revenue was primarily attributable to increases in our web content management, video publishing and cloud storage revenue. The increase in VAS revenue was offset by a decrease in our content delivery services revenue of approximately $3.4 million. Of this decrease, approximately $1.8 million was due to a reduction in our network pop-build and license revenue from Microsoft Corporation (Microsoft).

As of September 30, 2012, we had approximately 1,493 customers compared to approximately 1,602 as of September 30, 2011.

We anticipate our revenues will increase in 2012 compared to 2011, which will include a full year of revenue from our business acquisitions. We expect to deliver more traffic on our network and expect continued growth in our VAS. Additionally, we expect our international revenue to continue to increase in absolute dollars and that our Asia Pacific revenue may continue to grow as a percentage of our total international revenue compared to 2011. In 2012, we anticipate that our customer concentrations levels will remain consistent with 2011. In the past, the customers that comprised our top 10 customers have continually changed, and our large customers may not continue to be as significant going forward as they have been in the past.

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Cost of Revenue

	Three months ended September 30,									Nine months ended September 30,
	2012		2011		Increase (Decrease)		Percent Change			2012		2011		Increase (Decrease)		Percent Change
			(in thousands)									(in thousands)
Cost of revenue	$	28,283	$	27,278	$	1,005		4	%	$	83,177	$	81,920	$	1,257		2	%

Cost of revenue includes fees paid to network providers for bandwidth and backbone, costs incurred for non-settlement free peering and connection to ISPs, and fees paid to data center operators for co-location of our network equipment. Cost of revenue also includes depreciation of network equipment used to deliver our content delivery services, payroll and related costs and share-based compensation for our network operations, and professional services personnel.

Cost of revenue increased 4%, or $1.0 million, to $28.3 million for the three months ended September 30, 2012 as compared to $27.3 million for the three months ended September 30, 2011. This increase was primarily due to an increase in payroll and related employee costs of approximately $0.7 million, primarily due to increased salaries and bonus accrual. Other costs increased approximately $0.2 million, primarily due to an increase in fees and licenses of $0.1 million and an increase in other employee costs of $0.1 million. In addition, we had an increase in professional fees of approximately $0.1 million, and an increase in royalty expenses of approximately $0.1 million. These increases were offset in part by a decrease in bandwidth and co-location fees of $0.1 million and a decrease in travel and travel related expenses of approximately $0.1 million. In addition, cost of revenue share-based compensation expense increased $0.1 million during the three month period ended September 30, 2012 compared to the same period of the prior year.

For the nine months ended September 30, 2012, cost of revenue increased 2%, or $1.3 million, to $83.2 million as compared to $81.9 million for the nine months ended September 30, 2011. This increase was primarily due to an increase in payroll and related employee costs of approximately $1.8 million primarily associated with increased salaries and bonus accrual, increased professional fees of approximately $0.5 million, consisting of approximately $0.4 million of consulting fees and approximately $0.1 million of recruiting fees, an increase in travel costs of approximately $0.1 million, and an increase in other costs of approximately $1.0 million. The increase in other costs was primarily due to $0.4 million of other costs associated with the delivery of our services and increased fees and licenses of approximately $0.4 million. These increases were offset by a decrease of approximately $2.0 million in bandwidth and co-location fees, which was the result of increased peering costs of approximately $2.1 million, offset by a reduction of approximately $4.1 million in transit and co-location fees. For the nine month period ended September 30, 2012 share-based compensation expense decreased $0.2 million compared to the same period of the prior year.

Cost of revenue was composed of the following (in millions):

	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2012		2011		2012		2011
Bandwidth and co-location fees	$	14.0	$	14.1	$	40.9	$	42.9
Depreciation — network		7.0		7.0		21.0		21.0
Payroll and related employee costs		4.6		3.9		13.4		11.6
Share-based compensation		0.6		0.5		1.6		1.8
Professional fees and outside services		0.4		0.3		1.2		0.7
Royalty expenses		0.3		0.2		0.7		0.6
Travel and travel-related expenses		0.2		0.3		0.8		0.7
Other costs		1.2		1.0		3.6		2.6
Total cost of revenues	$	28.3	$	27.3	$	83.2	$	81.9

We anticipate cost of revenue will increase in 2012 compared to 2011, which will include a full year of expenses from our business acquisitions. In 2012, we expect to deliver more traffic on our network, which would result in higher expenses associated with increased bandwidth and peering costs to support increased traffic compared to 2011; however, such costs are likely to be partially offset by lower bandwidth costs per unit. We anticipate depreciation expense related to our network equipment will decrease in 2012 compared to 2011. Additionally, in 2012 we expect an increase in payroll and related costs compared to 2011, as we continue to make investments in our content delivery network to service our customer base as well as increase our VAS personnel. We expect that share-based compensation expense will decrease in 2012 compared to 2011.

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General and Administrative

	Three months ended September 30,									Nine months ended September 30,
	2012		2011		Increase (Decrease)		Percent Change			2012		2011		Increase (Decrease)		Percent Change
			(in thousands)									(in thousands)
General and administrative	$	8,757	$	8,416	$	341		4	%	$	25,130	$	23,498	$	1,632		7	%

General and administrative expenses consist primarily of the following components:

• payroll, share-based compensation and other related costs, including related expenses for executive, finance, legal, business applications, internal network management, human resources and other administrative personnel;

• fees for professional services and litigation expenses;

• rent and other facility-related expenditures for leased properties;

• the provision for doubtful accounts; and

• non-income related taxes.

General and administrative expenses increased 4%, or $0.3 million, to $8.7 million for the three month period ended September 30, 2012 as compared to $8.4 million for the three month period ended September 30, 2011. This increase was primarily due to an increase in professional fees of $0.7 million, primarily for outside consulting fees related to strategic planning for 2013 and beyond, and for legal fees related to intangible property and other corporate legal matters. In addition, our stock-based compensation increased $0.5 million. These increases were off-set by a decrease in payroll and related employee costs of $0.5 million, primarily due to a severance payment that was made in the third quarter of 2011 and a decrease in litigation expenses of $0.4 million. Additionally, we had a decrease in bad debt of $0.1 million, and a decrease in travel and travel-related expenses of $0.1 million. Other expenses increased $0.2 million, primarily due to increased fees, licenses and non-income taxes, and to a lesser extent increased facilities and facility related costs. Other expenses include such items as rent, utilities, telephone, insurance, fees and licenses, office supplies and property taxes.

For the nine months ended September 30, 2012, general and administrative expenses increased 7%, or $1.6 million, to $25.1 million as compared to $23.5 million for the nine months ended September 30, 2011. The increase in general and administrative expenses for the nine month period ended September 30, 2012 compared to the nine month period ended September 30, 2011 was primarily due to an increase in professional fees of $1.9 million which was due to increased consulting and outside professional services of $1.1 million, legal fees related to intellectual property matters of $0.4 million, increased general legal fees of approximately $0.3 million, as well as increased recruiting fees of approximately $0.3 million, offset by lower legal fees associated with business acquisitions of approximately $0.2 million. In addition, our stock-based compensation increased $0.5 million, and bad debt expense increased $0.2 million. These increases were offset by a decrease in payroll and payroll-related costs of $0.1 million, and a decrease in travel and travel-related costs of $0.1 million. Other costs increased $0.1 million which was primarily due to increased facilities and facilities-related costs of $0.5 million, primarily due to our relocation to our new worldwide headquarters in Tempe, Arizona in April 2011, and increased fees, licenses and non-income taxes of $0.5 million, off-set by the reversal of previously recorded contingent consideration for which we no longer believe that payment is probable of approximately $0.8 million and reduced office supplies of approximately $0.2 million. Other expenses include such items as rent, utilities, telephone, insurance, fees and licenses and property taxes.

Additionally, general and administrative share-based compensation expense increased $0.5 million for the three and nine month periods ended September 30, 2012 compared to the prior year.

General and administrative expense was composed of the following (in millions):

	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2012		2011		2012		2011
Professional fees		2.3		1.6		6.1		4.2
Payroll and related employee costs		2.0		2.5		6.9		7.0
Share-based compensation		1.6		1.1		4.6		4.1
Bad debt expense		0.2		0.3		1.1		0.9
Litigation expenses		0.1		0.5		0.2		1.1
Travel and travel-related expenses		0.1		0.2		0.5		0.6
Other expenses		2.4		2.2		5.7		5.6
Total general and administrative	$	8.7	$	8.4	$	25.1	$	23.5

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In 2012, we expect our general and administrative expenses to increase in absolute dollars and remain consistent as a percentage of revenue compared to 2011. In 2012, which will include a full year of expenses from our business acquisitions, we expect increased professional fees; increased costs and fees associated with intellectual property and, increased facility costs compared to 2011. We expect that these increases will be offset by lower litigation costs in 2012 compared to 2011. We expect that share-based compensation expense will decrease as a percentage of revenue in 2012 compared to 2011. In 2013, we expect our general and administrative expense to decrease as a percentage of our revenue compared to 2012, as we expect our costs to grow slower than our total revenue.

Sales and Marketing

	Three months ended September 30,									Nine months ended September 30,
	2012		2011		Increase (Decrease)		Percent Change			2012		2011		Increase (Decrease)		Percent Change
			(in thousands)									(in thousands)
Sales and marketing	$	11,037	$	9,176	$	1,861		20	%	$	34,431	$	29,903	$	4,528		15	%

Sales and marketing expenses consist primarily of payroll and related costs, share-based compensation and commissions for personnel engaged in marketing, sales and service support functions, professional fees, travel and travel-related expenses and advertising and promotional expenses.

Sales and marketing expenses increased 20%, or $1.8 million, to $11.0 million for the three month period ended September 30, 2012 compared to $9.2 million for the three month period ended September 30, 2011. The increase in sales and marketing expenses was primarily due to an increase in payroll and related employee costs of $0.7 million, primarily due to increased salaries and benefits due to increased staffing, an increase in professional fees and outside services of $0.4 million, primarily for consulting and recruiting fees, an increase in travel and travel-related expenses of $0.1 million, an increase in marketing expenses of $0.1 million and an increase in other costs of $0.4 million. The increase in other costs was primarily due to increased facility and facility-related costs, costs associated with our website design, increased fees and licenses and increased office supplies. In addition share-based compensation for sales and marketing personnel increased $0.1 million.

For the nine months ended September 30, 2012, sales and marketing expenses increased 15%, or $4.5 million, to $34.4 million as compared to $29.9 million for the nine months ended September 30, 2011. The increase in sales and marketing expenses for the nine months ended September 30, 2012 compared to the nine months ended September 30, 2011 was primarily due to an increase in payroll and related employee costs of $2.8 million, primarily due to increased salaries and benefits of $1.9 million, and to a lesser extent increased variable compensation costs of $0.9 million, an increase in travel and travel-related expenses of $0.8 million, an increase in professional fees of $0.4 million, primarily for consulting, outside services and recruiting fees, and an increase in other costs of $1.0 million. The increase in other costs was primarily due to increased facility and facility-related costs, fees and licenses, office supplies and costs associated with our website design. These increases were offset by a decrease in marketing expenses of $0.1 million. Additionally, sales and marketing share-based compensation expense decreased $0.4 million for the nine month period ended September 30, 2012 compared to the same period of the prior year.

Sales and marketing expense was composed of the following (in millions):

	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2012		2011		2012		2011
Payroll and related employee costs	$	6.5	$	5.8	$	20.8	$	18.0
Travel and travel-related expenses		0.9		0.8		3.1		2.3
Share-based compensation		0.8		0.7		2.5		2.9
Professional fees and outside services		0.7		0.3		1.5		1.1
Marketing programs		0.6		0.5		1.8		1.9
Other expenses		1.5		1.1		4.7		3.7
Total sales and marketing	$	11.0	$	9.2	$	34.4	$	29.9

We anticipate our sales and marketing expense will increase in 2012 in both absolute dollars and as a percentage of revenue compared to 2011. In 2012, we anticipate that the increase in absolute dollars, which will include a full year of expenses from our business acquisitions, will be due to an expected increase in salaries and related employee costs for our sales and marketing personnel, primarily due to increased staffing and increased variable compensation, an increase in travel and travel-related expenses, and increases in facility and facility-related expenses for our sales and marketing personnel compared to 2011. We expect that share-based compensation expense in 2012 will remain consistent with 2011 as a percentage of revenue.

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Research and Development

	Three months ended September 30,									Nine months ended September 30,
	2012		2011		Increase (Decrease)		Percent Change			2012		2011		Increase (Decrease)		Percent Change
			(in thousands)									(in thousands)
Research and development	$	4,956	$	4,360	$	596		14	%	$	15,108	$	12,554	$	2,554		20	%

Research and development expenses consist primarily of payroll and related costs and share-based compensation expense for research and development personnel who design, develop, test and enhance our services, network and software.

Research and development expenses increased 14%, or $0.6 million, to $5.0 million for the three month period ended September 30, 2012 as compared to $4.4 million for the three month period ended September 30, 2011. The increase in research and development expenses was primarily due to an increase of $0.4 million in payroll and related employee costs, and increases in professional fees of $0.2 million and other costs of $0.1 million. The increase in payroll and related employee costs was primarily due to our hiring of additional network and software engineering personnel. The increase in professional fees was due to increased consulting costs and recruiting fees. Other expenses include such items as telephone, fees and licenses, office supplies and other employee costs.

For the nine months ended September 30, 2012, research and development expenses increased 20%, or $2.5 million, to $15.1 million for the nine months ended September 30, 2012 as compared to $12.6 million for the nine month period ended September 30, 2011. The increase in research and development expenses was primarily due to an increase of $2.8 million in payroll and related employee costs and increases in professional fees of $0.1 million, travel and travel related costs $0.1 million and in other costs of $0.2 million. The increase in payroll and related employee costs was primarily due to our hiring of additional network and software engineering personnel. Other expenses include such items as telephone, fees and licenses, office supplies and other employee costs. Additionally, research and development share-based compensation expense decreased $0.7 million for the nine month period ended September 30, 2012 compared to the same period of the prior year.

Research and development expense was composed of the following (in millions):

	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2012		2011		2012		2011
Payroll and related employee costs	$	3.7	$	3.3	$	11.3	$	8.5
Share-based compensation		0.7		0.7		2.1		2.8
Professional fees and outside services		0.3		0.1		0.7		0.6
Travel and travel-related expenses		0.1		0.2		0.4		0.3
Other expenses		0.2		0.1		0.6		0.4
Total research and development	$	5.0	$	4.4	$	15.1	$	12.6

We anticipate that our research and development expenses will increase in 2012 which will include a full year of expenses from our business acquisitions, in absolute dollars and increase as a percentage of revenue compared to 2011 as we continue to make investments in our core technology and refinements and additions to our other service offerings. In 2012, we expect increased payroll and related employee costs associated with continued hiring of research and development personnel compared to 2011. Additionally, in 2012, we expect that share-based compensation expense will remain consistent with 2011 as a percentage of revenue.

Depreciation and Amortization (Operating Expenses)

	Three months ended September 30,										Nine months ended September 30,
	2012		2011		Increase (Decrease)			Percent Change			2012		2011		Increase (Decrease)		Percent Change
			(in thousands)										(in thousands)
Depreciation and amortization	$	1,481	$	1,499	$	(18	)		(1	)%	$	4,329	$	3,254	$	1,075		33	%

Depreciation expense consists of depreciation on equipment and furnishing used by general administrative, sales and marketing and research and development personnel. Amortization expense consists of amortization of intangible assets acquired in business combinations.

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Depreciation and amortization expenses remained constant at $1.5 million for the three months ended September 30, 2012, as compared to the three months ended September 30, 2011. For the three months ended September 30, 2012, amortization of intangibles was approximately $0.7 million.

For the nine months ended September 30, 2012, depreciation and amortization expenses increased 33%, or $1.0 million, to $4.3 million, as compared to $3.3 million for the nine months ended September 30, 2011. The increase in depreciation and amortization expense was due to an increase of approximately $0.6 million in amortization of intangibles acquired in business combinations, and to an increase general and administrative depreciation and amortization of approximately $0.5 million. For the nine months ended September 30, 2012, amortization of intangibles was approximately $2.1 million.

Based on our intangible assets at September 30, 2012, we expect amortization of other intangible assets to be approximately $0.7 million for the remainder of 2012, and $2.8 million, $2.1 million, $1.1 million and $0.3 million for fiscal years 2013, 2014, 2015 and 2016, respectively.

Interest Expense

	Three months ended September 30,										Nine months ended September 30,
	2012		2011		Increase (Decrease)			Percent Change			2012		2011		Increase (Decrease)			Percent Change
			(in thousands)										(in thousands)
Interest expense	$	40	$	89	$	(49	)		(55	)%	$	136	$	225	$	(89	)		(40	)%

Interest expense decreased to $40,000 for the three month period ended September 30, 2012, as compared to $89,000 for the three month period ended September 30, 2011. Interest expense for the three month period ended September 30, 2012, was comprised of interest paid on capital leases. Interest expense for the three month period ended September 30, 2011, was comprised of interest paid on capital leases of approximately $57,000, the accretion of contingent consideration related to our business acquisition of AcceloWeb of approximately $19,000 and bank fees of approximately $13,000.

For the nine months ended September 30, 2012, interest expense decreased to $136,000, as compared to $225,000 for the nine months ended September 30, 2011. Interest expense for the nine month period ended September 30, 2012, was primarily comprised of interest paid on capital leases. Interest expense for the nine month period ended September 30, 2011, was comprised of interest paid on capital leases of approximately $131,000, the accretion of contingent consideration related to our business acquisition of AcceloWeb of approximately $80,000 and bank fees of approximately $14,000.

As of September 30, 2012, with the exception of our capital leases, we had no outstanding credit facilities.

Interest Income

	Three months ended September 30,										Nine months ended September 30,
	2012		2011		Increase (Decrease)			Percent Change			2012		2011		Increase (Decrease)			Percent Change
			(in thousands)										(in thousands)
Interest income	$	88	$	186	$	(98	)		(53	)%	$	277	$	624	$	(347	)		(56	)%

Interest income includes interest earned on invested cash balances and marketable securities.

Interest income decreased $0.1 million to $0.1 million for the three months ended September 30, 2012, as compared to $0.2 million for the three months ended September 30, 2011. Interest income decreased $0.3 million, to $0.3 million for the nine months ended September 30, 2012, as compared to $0.6 million for the nine months ended September 30, 2011. The decrease in interest income during the three and nine month periods ended September 30, 2012 was primarily due to lower interest rates on our cash and marketable securities balances.

Other Income (Expense)

	Three months ended September 30,											Nine months ended September 30,
	2012			2011			Increase (Decrease)		Percent Change			2012			2011		Increase (Decrease)			Percent Change
				(in thousands)											(in thousands)
Other income (expense)	$	(551	)	$	(18	)	$	533		2,961	%	$	(582	)	$	17	$	(599	)		(3,524	)%

Other expense was approximately $(0.6) million for three months ended September 30, 2012, as compared to $(18,000) for the three months ended September 30, 2011. Other expense for the three months ended September 30, 2012 and 2011, respectively, consists primarily of foreign currency transaction gains and losses.

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For the nine months ended September 30, 2012, other expense was approximately $(0.6) million as compared to $17,000 other income for the nine months ended September 30, 2011. Other income (expense) for the nine months ended September 30, 2012 and 2011 consisted primarily of foreign currency transaction gains and losses.

Income Tax Expense

	Three months ended September 30,										Nine months ended September 30,
	2012		2011			Increase (Decrease)		Percent Change			2012		2011			Increase (Decrease)		Percent Change
			(in thousands)										(in thousands)
Income tax expense (benefit)	$	14	$	(1,896	)	$	1,910		101	%	$	313	$	(1,329	)	$	1,642		124	%

Based on an estimated annual effective tax rate and discrete items, the estimated income tax expense from continuing operations for the three months ended September 30, 2012 and 2011 was $14,000 and ($1.9) million, respectively. Income tax expense on the loss from continuing operations before taxes was different than the statutory income tax rate primarily due to our providing for a valuation allowance on deferred tax assets in certain jurisdictions, and recording of state and foreign tax expense for the quarter. The effective income tax rate is based primarily upon forecasted income or loss for the year, the composition of the income or loss in different countries, and adjustments, if any, for the potential tax consequences, benefits or resolutions for tax audits.

Loss from Discontinued Operations

	Three months ended September 30,											Nine months ended September 30,
	2012			2011		Increase (Decrease)			Percent Change			2012			2011		Increase (Decrease)			Percent Change
				(in thousands)											(in thousands)
Income (loss) from discontinued operations	$	(218	)	$	11,420	$	(11,638	)		(102	)%	$	(918	)	$	5,336	$	(6,254	)		(117	)%

On September 1, 2011, we completed the sale of EyeWonder LLC and subsidiaries and chors GmbH video and rich media advertising services (EyeWonder and chors) to DG FastChannel, Inc. (now Digital Generation, Inc.) (DG). The sale of EyeWonder and chors met the criteria for discontinued operations during the year ended December 31, 2011. Accordingly, the results of operations related to EyeWonder and chors were classified as discontinued operations in the periods presented. See Note 5 of Notes to Unaudited Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for additional information about our discontinued operations.

Liquidity and Capital Resources

To date, we have financed our operations primarily through the following transactions:

• private sales of common and preferred stock and subordinated notes;

• an initial public offering of our common stock in June 2007;

• an underwritten public offering of our common stock in March 2011;

• borrowing on capital leases;

• borrowing on credit facilities;

• sale of EyeWonder and chors in September 2011;

• sale of our cost basis investment in Gaikai in August 2012; and

• cash generated by operations.

As of September 30, 2012, our cash, cash equivalents and marketable securities classified as current totaled $130.0 million. Included in this amount is approximately $4.4 million of cash and cash equivalents held outside the United States.

Operating Activities

Net cash provided by operating activities of continuing operations increased by $6.8 million, with net cash provided by operating activities of continuing operations equaling $8.0 million for the nine month period ended September 30, 2012, compared to net cash provided by operating activities of continuing operations of approximately $1.2 million for the nine month period ended September 30, 2011. The increase in operating cash flows from continuing operations in the nine month period ended September 30, 2012 compared to the nine month period ended September 30, 2011 was primarily due to a larger net loss from continuing operations in 2011 compared to 2012 and to changes in operating assets and liabilities. Cash provided by operating activities of continuing operations related to changes in operating assets and liabilities was $0.4 million in the nine months ended September 30, 2012 compared to $8.7 million of cash used in the nine months ended September 30, 2011. The difference relates primarily to changes in accounts receivable, prepaid and other current assets, other assets, deferred revenue, other current liabilities and other long term liabilities during each period.

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We expect that cash provided by operating activities of continuing operations may not be sufficient to cover new purchases of property and equipment and potential litigation expenses associated with patent litigation in 2012. The timing and amount of future working capital changes and our ability to manage our days sales outstanding will also affect the future amount of cash used in or provided by operating activities.

Investing Activities

Net cash used in investing activities of continuing operations was $8.1 million for the nine months ended September 30, 2012, compared to cash provided in investing activities of $25.0 million for the nine months ended September 30, 2011. Net cash used in investing activities was principally comprised of cash used for the purchase of short-term marketable securities and capital expenditures primarily for computer equipment associated with the build-out and expansion of our global computing platform, offset by cash generated from maturities of short-term marketable securities, cash collected on the DG receivable and proceeds from the sale of our investment in Gaikai.

On May 9, 2011, we acquired AcceloWeb, a privately-held provider of advanced technology that helps speed the presentation of web sites and applications located in Tel Aviv, Israel. The purchase price included both cash and company stock for the acquisition. Cash paid, net of cash acquired, was $4.7 million.

On May 2, 2011, we acquired Clickability, a privately-held SaaS provider of web content management located in San Francisco, California. The purchase price included both cash and company stock for the acquisition. Cash paid, net of cash acquired, was $2.8 million.

On September 1, 2011, we sold EyeWonder and chors to DG for net proceeds of $61.0 million ($66.0 million gross cash proceeds less $5.0 million held in escrow) plus an estimated $10.9 million receivable. As of September 30, 2012, approximately $7.2 million of the receivable had been received from DG.

In May 2010, we made a strategic investment in Gaikai, a private cloud-based gaming technology company that allows users to play major PC and console games through a web browser. In June 2012, Sony entered into a definitive agreement to acquire Gaikai for approximately $380 million. In August 2012, we received approximately $10.2 million in proceeds from the sale of our investment in Gaikai and could potentially receive an additional $1.2 million depending upon the amount of indemnification claims made during the 15 month indemnification period.

We expect to have ongoing capital expenditure requirements as we continue to invest in and expand our content delivery network. We anticipate making aggregate capital expenditures of approximately 9% to 11% of our total revenue in 2012.

Financing Activities

Net cash used in financing activities of continuing operations was approximately $18.0 million for the nine month period ended September 30, 2012, compared to $66.4 million of net cash provided by financing activities of continuing operations for the nine month period ended September 30, 2011. Net cash used in financing activities in the nine months ended September 30, 2012 related to payments made for the purchase of shares of our common stock under our stock repurchase plans of approximately $16.3 million, payments of employee tax withholdings related to restricted stock units of approximately $0.6 million and payments made on our capital lease obligations of approximately $1.3 million, offset by cash received from the exercise of stock options of $0.2 million.

Net cash provided by financing activities of continuing operations was $66.4 million for the nine months ended September 30, 2011 and related to proceeds from the public offering of our common stock of approximately $77.0 million and the exercise of stock options of $0.6 million, offset by payments made for the purchase of our common stock of approximately $9.2 million, employee tax withholdings related to restricted stock units of approximately $1.1 million and payments made on our capital lease obligations of approximately $1.0 million.

As of September 30, 2012, we had no outstanding debt other than the aforementioned capital leases.

In May 2012, our board of directors approved a second common stock repurchase plan in compliance with Rules 10b-18 and 10b-5-1 of the Exchange Act that authorizes us to repurchase up to $15 million of our shares of common stock, exclusive of any commissions, markups or expenses, from time to time through December 15, 2012. Any repurchased shares will be cancelled and return to authorized but unissued status. During the nine month period ended September 30, 2012, we purchased and cancelled approximately 5.7 million shares of common stock for approximately $15.0 million ($15.1 million including commissions) under the second repurchase plan. Our second stock repurchase plan is now complete.

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On March 2, 2011, we completed an underwritten public offering of our common stock in which we sold and issued 11,500,000 shares of our common stock, including 1,500,000 shares subject to the underwriters’ over-allotment option, at a price to the public of $7.10 per share. The newly issued shares of common stock began trading on the Nasdaq Global Select Market on March 2, 2011. We raised a total of approximately $81.7 million in gross proceeds from the offering, or approximately $77.0 million in net proceeds after deducting underwriting discounts and commissions of approximately $3.9 million and other offering costs of approximately $0.8 million.

Changes in cash, cash equivalents and marketable securities are dependent upon changes in, among other things, working capital items such as deferred revenues, accounts payable, accounts receivable, accrued provision for litigation and various accrued expenses, as well as changes in our capital and financial structure due to debt repurchases and issuances, stock option exercises, sales of equity investments and similar events.

We believe that our existing cash, cash equivalents and marketable securities will be sufficient to meet our anticipated cash needs for at least the next 12 months. If the assumptions underlying our business plan regarding future revenue and expenses change, or if unexpected opportunities or needs arise, we may seek to raise additional cash by selling equity or debt securities.

Contractual Obligations, Contingent Liabilities and Commercial Commitments

In the normal course of business, we make certain long-term commitments for operating leases, primarily office facilities, bandwidth and computer rack space. These leases expire on various dates ranging from 2012 to 2019. We expect that the growth of our business will require us to continue to add to and increase our long-term commitments in 2012 and beyond. As a result of our growth strategies, we believe that our liquidity and capital resources requirements will grow in 2013.

The following table presents our contractual obligations and commercial commitments, as of September 30, 2012 over the next five years and thereafter (in thousands):

	Payments Due by Period
Contractual obligations as of September 30, 2012	Total		Less than 1 year		1-3 years		3-5 years		More than 5 years
Operating Leases
Bandwidth leases	$	26,731	$	17,153	$	8,485	$	1,093	$	—
Rack space leases		56,091		19,099		30,896		6,095		1
Real estate leases		16,214		3,693		5,785		4,031		2,705
Total operating leases		99,036		39,945		45,166		11,219		2,706
Capital leases		2,712		1,649		865		198		—
Total commitments	$	101,748	$	41,594	$	46,031	$	11,417	$	2,706

Off Balance Sheet Arrangements

As of September 30, 2012, we were not involved in any off-balance sheet arrangements, as defined in Item 303(a)(4)(ii) of SEC Regulation S-K.

Use of Non-GAAP Financial Measures

To evaluate our business, we consider and use Non-GAAP net income (loss) and Adjusted EBITDA as a supplemental measure of operating performance. These measures include the same adjustments that management takes into account when it reviews and assesses operating performance on a period-to-period basis. We consider Non-GAAP net income (loss) to be an important indicator of overall business performance because it allows us to illustrate the impact of the effects of share-based compensation, litigation expenses, amortization of intangibles, acquisition related expenses, gain on sales of cost basis investment and discontinued operations. We define EBITDA as GAAP net income (loss) before interest income, interest expense, gain on sales of cost basis investment, other income and expense, provision for income taxes, depreciation and amortization and discontinued operations. We believe that EBITDA provides a useful metric to investors to compare us with other companies within our industry and across industries. We define Adjusted EBITDA as EBITDA adjusted for operational expenses that we do not consider reflective of our ongoing operations. We use Adjusted EBITDA as a supplemental measure to review and assess operating performance. We also believe use of Adjusted EBITDA facilitates investors’ use of operating performance comparisons from period to period. In addition, it should be noted that our performance-based executive officer bonus structure is tied closely to our performance as measured in part by certain non-GAAP financial measures.

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In our November 1, 2012 earnings press release, as furnished on Form 8-K, we included Non-GAAP net loss, EBITDA and Adjusted EBITDA. The terms Non-GAAP net loss, EBITDA and Adjusted EBITDA are not defined under United States GAAP, and are not measures of operating income, operating performance or liquidity presented in accordance with United States GAAP. Our Non-GAAP net loss, EBITDA and Adjusted EBITDA have limitations as analytical tools, and when assessing our operating performance, Non-GAAP net loss, EBITDA and Adjusted EBITDA should not be considered in isolation, or as a substitute for net loss or other consolidated income statement data prepared in accordance with United States GAAP. Some of these limitations include, but are not limited to:

• EBITDA and Adjusted EBITDA do not reflect our cash expenditures or future requirements for capital expenditures or contractual commitments;

• they do not reflect changes in, or cash requirements for, our working capital needs;

• they do not reflect the cash requirements necessary for litigation costs;

• they do not reflect the interest expense, or the cash requirements necessary to service interest or principal payments, on our debt that we may incur;

• they do not reflect income taxes or the cash requirements for any tax payments;

• although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will be replaced sometime in the future, and EBITDA and Adjusted EBITDA do not reflect any cash requirements for such replacements;

• while share-based compensation is a component of operating expense, the impact on our financial statements compared to other companies can vary significantly due to such factors as the assumed life of the options and the assumed volatility of our common stock; and

• other companies may calculate EBITDA and Adjusted EBITDA differently than we do, limiting their usefulness as comparative measures.

We compensate for these limitations by relying primarily on our GAAP results and using Non-GAAP net income (loss) and Adjusted EBITDA only as supplemental support for management’s analysis of business performance. Non-GAAP net income (loss), EBITDA and Adjusted EBITDA are calculated as follows for the periods presented.

Reconciliation of Non-GAAP Financial Measures

In accordance with the requirements of Regulation G issued by the SEC, we are presenting the most directly comparable GAAP financial measures and reconciling the Non-GAAP financial metrics to the comparable GAAP measures.

Reconciliation of GAAP Net (Loss) Income to Non-GAAP Net Loss

(In thousands)

(Unaudited)

	Three Months Ended												Nine Months Ended
	September 30, 2012			June 30, 2012			September 30, 2011			June 30, 2011			September 30, 2012			September 30, 2011
GAAP net (loss) income	$	(828	)	$	(9,828	)	$	5,018		$	(13,935	)	$	(20,662	)	$	(18,735	)
Share-based compensation		3,663			3,221			2,989			4,872			10,835			11,694
Litigation defense expenses		148			(31	)		463			269			166			1,075
Acquisition related expenses		48			68			(41	)		559			(372	)		659
Amortization of intangibles		721			729			774			605			2,144			1,531
Gain on sale of cost basis investment		(9,420	)		—			—			—			(9,420	)		—
Loss (income) from discontinued operations		218			391			(11,420	)		2,766			918			(5,336	)
Non-GAAP net loss	$	(5,450	)	$	(5,450	)	$	(2,217	)	$	(4,864	)	$	(16,391	)	$	(9,112	)

Reconciliation of GAAP Net (Loss) Income to EBITDA to Adjusted EBITDA

(In thousands)

(Unaudited)

	Three Months Ended												Nine Months Ended
	September 30, 2012			June 30, 2012			September 30, 2011			June 30, 2011			September 30, 2012			September 30, 2011
GAAP net (loss) income	$	(828	)	$	(9,828	)	$	5,018		$	(13,935	)	$	(20,662	)	$	(18,735	)
Depreciation and amortization		8,451			8,634			8,534			8,520			25,313			24,262
Interest expense		40			46			89			100			136			225
Gain on sale of cost basis investment		(9,420	)		—			—			—			(9,420	)		—
Interest and other (income) expense		463			(139	)		(168	)		(286	)		304			(641	)
Income tax expense (benefit)		14			163			(1,896	)		429			313			(1,329	)
Loss (income) from discontinued operations		218			391			(11,420	)		2,766			918			(5,336	)
EBITDA	$	(1,062	)	$	(733	)	$	157		$	(2,406	)	$	(3,098	)	$	(1,554	)
Share-based compensation		3,663			3,221			2,989			4,872			10,835			11,694
Litigation defense expenses		148			(31	)		463			269			166			1,075
Acquisition related expenses		48			68			(41	)		559			(372	)		659
Adjusted EBITDA	$	2,797		$	2,525		$	3,568		$	3,294		$	7,531		$	11,874

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Interest Rate Risk

Our exposure to market risk for changes in interest rates relates primarily to our debt and investment portfolio. In our investment portfolio, we do not use derivative financial instruments. Our investments are primarily with our commercial and investment banks and, by policy, we limit the amount of risk by investing primarily in money market funds, United States Treasury obligations, high quality corporate and municipal obligations and certificates of deposit. Our outstanding capital lease obligations bear fixed interest rates and fluctuations in interest rates. We do not believe that a 10% change in interest rates would have a significant impact on our interest income, operating results or liquidity.

Foreign Currency Risk

We operate in North America, EMEA and Asia-Pacific. As a result of our international business activities, our financial results could be affected by factors such as changes in foreign currency exchange rates or economic conditions in foreign markets, and there is no assurance that exchange rate fluctuations will not harm our business in the future. We have foreign currency exchange rate exposure on our results of operations as it relates to revenues and expenses denominated in foreign currencies. A portion of our cost of revenues and operating expenses are denominated in foreign currencies as are revenues associated with certain international customers. To the extent that the U.S. dollar weakens, similar foreign currency denominated transactions in the future will result in higher revenues and higher cost of revenues and operating expenses, with expenses having the greater impact on our financial results. Similarly, our revenues and expenses will decrease if the U.S. dollar strengthens against these foreign currencies. Although we will continue to monitor our exposure to currency fluctuations, and, where appropriate, may use financial hedging techniques in the future to minimize the effect of these fluctuations, we are not currently engaged in any financial hedging transactions. We performed a sensitivity analysis of our foreign currency exposure as of December 31, 2011 to assess the potential impact of fluctuations in exchange rates for all foreign denominated revenues and expenses. Assuming a 10% weakening of the U.S. dollar relative to our foreign currency denominated revenues and expenses, our net loss for the year ended December 31, 2011 and the nine months ended September 30, 2012 would have been higher by approximately $3.0 million and $2.2 million, respectively. There are inherent limitations in the sensitivity analysis presented, primarily due to the assumption that foreign exchange rate movements across multiple jurisdictions are similar and would be linear and instantaneous. As a result, the analysis is unable to reflect the potential effects of more complex markets or other changes that could arise which may positively or negatively affect our results of operations.

Inflation Risk

We do not believe that inflation has had a material effect on our business, financial condition or results of operations. If our costs were to become subject to significant inflationary pressures, we may not be able to fully offset such higher costs through price increases. Our inability or failure to do so could harm our business, financial condition and results of operations.

ITEM 4. CONTROLS AND PROCEDURES

Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures

We are responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in SEC Rule 13a-15(e) and 15d-15(e). We maintain disclosure controls and procedures, as such term is defined in SEC Rule 13a-15(e) and 15d-15(e), that are designed to ensure that information required to be disclosed in our reports under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow for timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

In the previously filed financial statements included in our Form 10-Q for the period ended March 31, 2012 and the period ended June 30, 2012, we improperly classified cash collected from DG related to the sale of EyeWonder and chors as cash provided by operating activities of continuing operations in the unaudited Condensed Consolidated Statements of Cash Flows. The correction of the classification error resulted in a decrease to net cash provided by operating activities of continuing operations and a decrease to net cash used in investing activities of continuing operations of $5.8 million for the three months ended March 31, 2012. For the six months ended June 30, 2012, the correction of the classification error resulted in a decrease to net cash provided by operating activities of continuing operations and a decrease to net cash used in investing activities of continuing operations of $6.8 million. As a result of the error, we identified a material weakness in our system of internal controls over financial reporting with regard to evaluating the proper cash flow classification of cash collected from DG. The Company corrected the classification error in its third quarter Form 10-Q and amended its March 31, 2012 Form 10-Q and June 30, 2012 Form 10-Q to reflect the correct classification.

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Since the date of discovery of this material weakness and through the date of this Form 10-Q, we are taking steps which we feel will strengthen our internal controls, including implementing a stronger review process around the preparation of our consolidated statement of cash flows and updating our processes and procedures to ensure that accounting personnel have sufficient guidance to remediate the material weakness.

The actions we are taking to remediate this material weaknesses are subject to continued management review supported by confirmation and testing, as well as oversight by the Audit Committee of our Board of Directors. The material weakness continues to exist at September 30, 2012.

As required by SEC Rule 13a-15(b), we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of September 30, 2012. Based on the foregoing, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not effective as of September 30, 2012 due to the material weakness described above.

Changes in Internal Control over Financial Reporting

There have been no other changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fiscal quarter ended September 30, 2012 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

We are involved in litigation with Akamai and the Massachusetts Institute of Technology (MIT) relating to a claim of patent infringement. The action was filed in June 2006 in the United States District Court for the District of Massachusetts. The trial date was set for February 2008 with respect to four claims in United States Patent No. 6,108,703 (the ’703 patent). Before trial, Akamai waived by stipulation its claims of indirect or induced infringement and proceeded to trial only on the theory of direct infringement. In February 2008, a jury returned a verdict in this lawsuit, finding that we infringed four claims of the ’703 patent at issue and rejecting our invalidity defenses. The jury awarded an aggregate of approximately $45.5 million which includes lost profits, reasonable royalties and price erosion damages for the period April 2005 through December 31, 2007. In addition, the jury awarded pre-judgment interest which we estimated to be $2.6 million at December 31, 2007. We recorded the aggregate $48.1 million as a provision for litigation as of December 31, 2007. During 2008, we recorded an additional provision of approximately $17.5 million for potential additional infringement damages and interest. On July 1, 2008, the court denied our motions for Judgment as a Matter of Law (JMOL), Obviousness, and a New Trial. The court also denied Akamai’s Motion for Permanent Injunction as premature and denied its Motions for Summary Judgment regarding our equitable defenses. The court conducted a bench trial in November 2008 regarding our equitable defenses. We also filed a motion for reconsideration of the court’s earlier denial of our motion for JMOL. Our motion for reconsideration of JMOL was based largely upon a clarification in the standard for a finding of joint infringement articulated by the Federal Circuit in the case of Muniauction, Inc. v. Thomson Corp., released after the court denied our initial motion for JMOL. On April 24, 2009 the court issued its order and memorandum setting aside the adverse jury verdict and ruling that we did not infringe Akamai’s ’703 patent and that we were entitled to JMOL. Based upon the court’s April 24, 2009 order, we reversed the $65.6 million provision for litigation previously recorded for this lawsuit as we no longer believed that payment of any amounts represented by the litigation provision was probable. The court entered final judgment in our favor. Akamai filed a notice of appeal of the court’s decision on May 26, 2009. On December 20, 2010 the Court of Appeals for the Federal Circuit issued its opinion affirming the trial court’s entry of judgment in our favor. On February 18, 2011, Akamai filed a motion with the Court of Appeals for the Federal Circuit seeking a rehearing and rehearing en banc. On April 21, 2011, the Court of Appeals for the Federal Circuit issued an order denying the petition for rehearing, granting the petition for rehearing en banc, vacating the December 20, 2010 opinion affirming the trial court’s entry of judgment in our favor, and reinstated the appeal.

On August 31, 2012, the Court of Appeals for the Federal Circuit issued its opinion in the case. The court stated that the trial court correctly determined we did not directly infringe Akamai’s ’703 patent and upheld the trial court’s decision to vacate the original jury’s damages award. The court also held that we did not infringe Akamai’s ’413 or ’645 patents. A slim majority in this three-way divided opinion also announced a revised legal theory of induced infringement, remanded the case to the trial court, and gave Akamai an opportunity for a new trial to attempt to prove that we induced our customers to infringe Akamai’s patent under the court’s new legal standard. We will file a petition to appeal this sharply divided Court of Appeals decision to the Supreme Court and will seek to stay any proceedings at the trial court until the Supreme Court rules on that petition. We believe that the Court of Appeals new induced infringement standard runs counter to the Patent Act and Supreme Court precedent, and that it should be overturned by the Supreme Court. Additionally, just as we have successfully shown that we do not directly infringe Akamai’s patent, we firmly believe that we ultimately would be successful in showing we do not infringe Akamai’s patent under the majority’s new induced infringement theory. We will continue to vigorously defend against the allegation; however, we cannot provide any assurance that the lawsuit ultimately will be resolved in our favor. An adverse ruling could seriously impact our ability to conduct significant portions of our business and to offer certain of our products and services to our customers. A permanent injunction could prevent us from operating our content delivery services or from delivering certain types of traffic, which could impact the viability of those portions of our business. Any adverse ruling, in turn, would harm our revenue, market share, reputation, liquidity and overall financial position. We are not able at this time to estimate the range of a potential loss nor in light of the status of the litigation do we believe a loss is probable, and therefore no provision for this lawsuit is recorded in our financial statements.

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In the ordinary course of our business, we are also involved in a limited number of other legal actions, both as plaintiff and defendant, and could incur uninsured liability in any one or more of them. With respect to pending legal actions to which we are a party, although the outcomes of these actions are not generally determinable, we believe that the ultimate resolution of these matters will not have a material adverse effect on our financial position, cash flows or results of operations. Litigation relating to the content delivery services industry is not uncommon, and we are, and from time to time have been, subject to such litigation. No assurances can be given with respect to the extent or outcome of any such litigation in the future.

ITEM 1A. RISK FACTORS

Investments in the equity securities of publicly traded companies involve significant risks. Our business, prospects, financial condition or operating results could be materially adversely affected by the risks identified below, as well as other risks not currently known to us or that we currently consider immaterial. The trading price of our common stock could decline due to any of these risks, and you may lose all or part of your investment. In assessing the risks described below, you should also refer to the information contained in this Quarterly Report on Form 10-Q, including our unaudited condensed consolidated financial statements and the related notes, as well as our Annual Report on Form 10-K for the year ended December 31, 2011 and other documents that we file from time to time with the SEC.

Risks Related to Our Business

We currently face competition from established competitors and may face competition from others in the future.

We compete in markets that are intensely competitive, rapidly changing and characterized by constantly declining prices and vendors offering a wide range of content delivery solutions. We have experienced and expect to continue to experience increased competition, and particularly aggressive price competition. Many of our current competitors, as well as a number of our potential competitors, have longer operating histories, greater name recognition, broader customer relationships and industry alliances and substantially greater financial, technical and marketing resources than we do. As a consequence of the competitive dynamics in our market we have experienced reductions in our prices, which in turn adversely affect our revenue, gross margin and operating results.

Our primary competitors for content delivery services include Akamai, Level 3 Communications, AT&T, Amazon, CDNetworks, Edgecast, and Internap Network Services Corporation, which acquired VitalStream. Also, as a result of the growth of the content delivery market, a number of companies have recently entered or are currently attempting to enter our market, either directly or indirectly, some of which may become significant competitors in the future. Given the relative ease by which customers typically can switch among content delivery service providers, differentiated offerings or pricing by competitors could lead to a rapid loss of customers. Some of our current or potential competitors may bundle their offerings with other services, software or hardware in a manner that may discourage content providers from purchasing the services that we offer. In addition, as we expand internationally, we face different market characteristics and competition with local content delivery service providers, many of which are very well positioned within their local markets. Increased competition could result in price reductions and revenue shortfalls, loss of customers and loss of market share, which could harm our business, financial condition and results of operations.

Our primary competitors for our SaaS services include Brightcove, Ooyala, Unicorn Media, Sitecore, Adobe, Crown Peak and Interwoven, as well as open source products such as Drupal. However, the competitive landscape is different from content delivery in this area in that changing vendors can be costly and complicated for the customer, which could make it difficult for us to attract new customers and increase our market share. If we are unable to increase our customer base and increase our market share, our business, financial condition and results of operations may suffer.

If we are unable to sell our services at acceptable prices relative to our costs, our revenue and gross margins will decrease, and our business and financial results will suffer.

Prices for content delivery services have fallen in recent years and are likely to fall further in the future. We have invested significant amounts in purchasing capital equipment to increase the capacity of our global computing network. For example, in 2009, 2010 and 2011 we invested $20.4 million, $33.5 million and $30.4 million, respectively, in capital expenditures primarily for computer equipment associated with the build-out and expansion of our global computing network. For the nine month period ended September 30, 2012, we invested $17.4 million. Our investments in our infrastructure are based upon our assumptions regarding future demand and also prices that we will be able to charge for our services. These assumptions may prove to be wrong. If the price that we are able to charge customers to deliver their content falls to a greater extent than we anticipate, if we over-estimate future demand for our services or if our costs to deliver our services do not fall commensurate with any future price declines, we may not be able to achieve acceptable rates of return on our infrastructure investments and our gross profit and results of operations may suffer dramatically.

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During 2012, as we further expand our global computing network and the suite of content delivery services and VAS and begin to refresh our network equipment, we expect our capital expenditures to be approximately 9% to 11% of our total revenue. As a consequence, we are dependent on significant future growth in demand for our services to justify these additional expenditures. If we fail to generate significant additional demand for our services, our results of operations will suffer, and we may fail to achieve planned or expected financial results. There are numerous factors that could, alone or in combination with other factors, impede our ability to increase revenue, moderate expenses or maintain gross margins, including:

• continued price declines arising from significant competition with respect to content delivery services and our VAS;

• increasing settlement fees for certain peering relationships;

• failure to increase sales of our core content delivery services or to grow our VAS;

• increases in electricity, bandwidth and rack space costs or other operating expenses, and failure to achieve decreases in these costs and expenses relative to decreases in the prices we can charge for our services and products;

• inability to maintain our prices relative to our costs;

• failure of our current and planned services and software to operate as expected;

• loss of any significant customers or loss of existing customers at a rate greater than our increase in new customers or our sales to existing customers;

• failure to increase sales of our services to current customers as a result of their ability to reduce their monthly usage of our services to their minimum monthly contractual commitment;

• failure of a significant number of customers to pay our fees on a timely basis or at all or failure to continue to purchase our services in accordance with their contractual commitments; and

• inability to attract high quality customers to purchase and implement our current and planned services.

We expect a significant and increasing portion of our revenue to be derived from our VAS offerings. Our VAS tend to have higher gross margins than our content delivery services. Our revenue from VAS offerings comprised approximately 26% of our total revenue for the year ended December 31, 2011. For the three and nine month periods ended September 30, 2012, VAS comprised approximately 35% and 32%, respectively, of our total revenue. We do not have a long history of offering these VAS, and we may not be able to achieve the growth rates in such services revenue that we or our investors expect. There are numerous companies that compete in providing VAS, and many of these companies have greater financial and sales resources than we do. We may not be successful in competing against current and new providers of VAS. If we are unable to achieve the growth rates in our VAS revenue that we expect, our revenue and operating results could be significantly and negatively affected.

If we are unable to develop new services and enhancements to existing services or fail to predict and respond to emerging technological trends and customers’ changing needs, our operating results may suffer.

The market for our content delivery services and VAS is characterized by rapidly changing technology, evolving industry standards and new product and service introductions. Our operating results depend on our ability to predict user preferences or industry changes, and modify our solutions and services on a timely basis or develop and introduce new services into existing and emerging markets. The process of developing new technologies is complex and uncertain. We must commit significant resources to developing new services or enhancements to our existing services before knowing whether our investments will result in services the market will accept. Furthermore, we may not execute successfully our technology initiatives because of errors in planning or timing, technical hurdles that we fail to overcome in a timely fashion, misunderstandings about market demand or a lack of appropriate resources. As prices for content delivery services continue to fall, we will increasingly rely on new product offerings and other VAS to maintain or increase our gross margins. Failures in execution, delays in bringing new or improved products or services to market, failure to effectively integrate service offerings or market acceptance of new services we introduce could result in competitors providing those solutions before we do, which could lead to loss of market share, revenue and earnings.

Rapidly evolving technologies or new business models could cause demand for our content delivery services and VAS to decline or could cause these services to become obsolete.

Customers or third parties may develop technological or business model innovations that address content management and delivery requirements in a manner that is, or is perceived to be, equivalent or superior to our content delivery services and VAS. If competitors introduce new products or services that compete with or surpass the quality or the price or performance of our services, we may be unable to renew our agreements with existing customers or attract new customers at the prices and levels that allow us to generate attractive rates of return on our investment. For example, one or more third parties might develop improvements to current peer-to-peer technology, which is a technology that relies upon the computing power and bandwidth of its participants, such that this technological approach is better able to deliver content in a way that is competitive to our content delivery services, or even makes content delivery services obsolete. We may not anticipate such developments and may be unable to adequately compete with these potential solutions. In addition, our customers’ business models may change in ways that we do not anticipate, and these changes could reduce or eliminate our customers’ needs for content delivery or digital asset management services. If this occurred, we could lose customers or potential customers, and our business and financial results would suffer. As a result of these or similar potential developments, in the future it is possible that competitive dynamics in our market may require us to reduce our prices, which could harm our revenue, gross margin and operating results.

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More individuals are using mobile devices to access the Internet, and the solutions developed for these devices may not be widely deployed.

The number of people who access the Internet through devices other than PCs, including mobile devices, game consoles and television set-top devices, has increased dramatically in the past few years. The lower resolution, functionality and memory associated with alternative devices make the use of our service offerings through these devices more difficult and potentially less effective. If we are unable to deliver our service offerings to a substantial number of alternative device users or if we are slow to develop services and technologies that are more compatible with mobile devices, we will fail to capture a significant share of an increasingly important portion of the market. Such a failure could limit our ability to compete effectively in an industry that is rapidly growing and changing.

Any unplanned interruption in the functioning of our network or services or attacks on our internal information technology systems could lead to significant costs and disruptions that could reduce our revenue and harm our business, financial results and reputation.

Our business is dependent on providing our customers with fast, efficient and reliable distribution of content delivery and digital asset management services over the Internet. Many of our customers depend primarily or exclusively on our services to operate their businesses. Consequently, any disruption of our services could have a material impact on our customers’ businesses. Our network or services could be disrupted by numerous events, including natural disasters, failure or refusal of our third party network providers to provide the necessary capacity or access, failure of our software or global computing platform infrastructure and power losses. In addition, we deploy our servers in third party co-location facilities, and these third-party co-location providers could experience system outages or other disruptions that could constrain our ability to deliver our services. We may also experience disruptions caused by software viruses, unauthorized hacking of our systems or other cyber attacks by unauthorized users. Any unauthorized hacking of our systems or other cyber attacks by unauthorized users could lead to the unauthorized release of confidential information which could damage our business.

While we have not experienced any significant, unplanned disruption of our services to date, our network may fail in the future. Despite our significant infrastructure investments, we may have insufficient communications and server capacity to address these or other disruptions, which could result in interruptions in our services. Any widespread interruption of the functioning of our content delivery services and VAS for any reason would reduce our revenue and could harm our business and financial results. If such a widespread interruption occurred or if we failed to deliver content to users as expected during a high-profile media event, game release or other well-publicized circumstance, our reputation could be damaged severely. Moreover, any disruptions or security breaches could undermine confidence in our services and cause us to lose customers or make it more difficult to attract new ones, either of which could harm our business and results of operations.

We are a party to a lawsuit with a significant competitor, and an adverse outcome in that lawsuit is possible, which could have a significant, adverse effect on our financial condition and operations. If an injunction were entered against us, it could force us to cease providing some significant portion of our content delivery services.

We are currently a defendant in one significant lawsuit (see discussion in “Legal Proceedings” in Part II, Item 1 of this Quarterly Report on Form 10-Q). We cannot provide any assurance that the ultimate outcome of the lawsuit with Akamai will not be materially adverse to us. The expenses of defending this lawsuit and other lawsuits to which we are or may become a party, particularly fees paid to our lawyers and expert consultants, have been significant and may continue to adversely affect our operating results during the pendency of such lawsuits. Also, this litigation has been a distraction to our management in operating our business.

On August 31, 2012, the Court of Appeals for the Federal Circuit issued its opinion in Akamai Technologies, Inc. v. Limelight Networks, Inc. The court stated that the trial court correctly determined that we did not directly infringe Akamai’s ’703 patent, and as such it upheld the trial court’s decision to vacate the original jury’s damages award (see discussion in “Legal Proceedings” in Part II, Item 1 of this Quarterly Report on Form 10-Q for a description of that damages award). The court also held that we did not infringe Akamai’s ’413 or ’645 patents. A slim majority in this three-way divided opinion also announced a revised legal theory of induced infringement, remanded the case to the trial court, and gave Akamai an opportunity for a new trial to attempt to prove that we induced our customers to infringe Akamai’s patent under the court’s new legal standard. We will file a petition to appeal this sharply divided Court of Appeals decision to the Supreme Court and will seek to stay any proceedings at the trial court until the Supreme Court rules on that petition. We believe that we do not infringe Akamai’s patents and we will continue to vigorously defend against the allegation; however, we cannot provide any assurance that the lawsuit ultimately will be resolved in our favor. An adverse ruling could seriously impact our ability to conduct our business and to offer our products and services to our customers. A permanent injunction could prevent us from operating our content delivery services or from delivering certain types of traffic, which could impact the viability of our business. Any adverse ruling, in turn, would harm our revenue, market share, reputation, liquidity and overall financial position.

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We are from time to time party to other lawsuits in addition to that described above. Lawsuits are expensive to defend and to prosecute, and require a diversion of management time and attention away from other activities to pursue the defense or prosecution of such matters. Adverse ruling in such lawsuits either alone or cumulatively may have an adverse impact on our revenue, expenses, market share, reputation, liquidity and overall financial position.

We need to defend our intellectual property and processes against patent or copyright infringement claims, which may cause us to incur substantial costs and threaten our ability to do business.

Companies, organizations or individuals, including our competitors, may hold or obtain patents or other proprietary rights that would prevent, limit or interfere with our ability to make, use or sell our services or develop new services, which could make it more difficult for us to operate our business. From time to time, we may receive inquiries from holders of patents inquiring whether we infringe their proprietary rights. Companies holding Internet-related patents or other intellectual property rights are increasingly bringing suits alleging infringement of such rights or otherwise asserting their rights and seeking licenses. In addition, many of our agreements with customers require us to indemnify such customers for third-party intellectual property infringement claims against them. Pursuant to such agreements, we may be required to defend such customers against certain claims which could cause us to incur additional significant costs. Any litigation or claims, whether or not valid, could result in substantial costs and diversion of resources. See “Legal Proceedings” in Part II, Item 1 of this Quarterly Report on Form 10-Q. In addition, if we are determined to have infringed upon a third party’s intellectual property rights, we may be required to do one or more of the following:

• cease selling, incorporating or using products or services that incorporate the challenged intellectual property;

• pay substantial damages;

• obtain a license from the holder of the infringed intellectual property right, which license may or may not be available on reasonable terms or at all; or

• redesign products or services.

If we are forced to take any of these actions, our business may be seriously harmed. In the event of a successful claim of infringement against us and our failure or inability to obtain a license to the infringed technology, our business and operating results could be harmed.

Our business will be adversely affected if we are unable to protect our intellectual property rights from unauthorized use or infringement by third parties.

We rely on a combination of patent, copyright, trademark and trade secret laws and restrictions on disclosure to protect our intellectual property rights. These legal protections afford only limited protection, and, as of September 30, 2012, we have 42 currently issued U.S. patents. Monitoring infringement of our intellectual property rights is difficult, and we cannot be certain that the steps we have taken will prevent unauthorized use of our intellectual property rights. We have applied for patent protection in a number of foreign countries, but the laws in these jurisdictions may not protect our proprietary rights as fully as in the United States. Furthermore, we cannot be certain that any pending or future patent applications will be granted, that any future patent will not be challenged, invalidated or circumvented, or that rights granted under any patent that may be issued will provide competitive advantages to us.

We use certain “open-source” software the use of which could result in our having to distribute our proprietary software, including our source code, to third parties on unfavorable terms which could materially affect our business.

Certain of our service offerings use software that is subject to open-source licenses. Open-source code is software that is freely accessible, usable and modifiable. Certain open-source code is governed by license agreements, the terms of which could require users of such open-source code to make any derivative works of such open-source code available to others on unfavorable terms or at no cost. Because we use open-source code, we may be required to take remedial action to protect our proprietary software. Such action could include replacing certain source code used in our software, discontinuing certain of our products or taking other actions that could divert resources away from our development efforts.

In addition, the terms relating to disclosure of derivative works in many open-source licenses are unclear. We periodically review our compliance with the open-source licenses we use and do not believe we will be required to make our proprietary software freely available. However, if a court interprets one or more such open-source licenses in a manner that is unfavorable to us, we could be required to make our software available at no cost.

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If we fail to manage future growth effectively, we may not be able to market and sell our services successfully.

Our future operating results depend to a large extent on our ability to manage expansion and growth successfully. Risks that we face in undertaking this expansion include: training new sales personnel in our varied and increasing offerings, to become productive and generate revenue; forecasting revenue; controlling expenses and investments in anticipation of expanded operations; implementing and enhancing our global computing platform and administrative infrastructure, systems and processes; addressing new markets; and expanding international operations. A failure to manage our growth effectively could materially and adversely affect our ability to market and sell our products and services.

If we fail to maintain proper and effective internal controls or fail to implement our controls and procedures with respect to acquired or merged operations, our ability to produce accurate financial statements could be impaired, which could adversely affect our operating results, our ability to operate our business and investors’ views of us.

We must ensure that we have adequate internal financial and accounting controls and procedures in place so that we can produce accurate financial statements on a timely basis. We are required to spend considerable effort on establishing and maintaining our internal controls, which is costly and time-consuming and needs to be re-evaluated frequently.

We have operated as a public company since June 2007, and we will continue to incur significant legal, accounting and other expenses as we comply with the Sarbanes-Oxley Act of 2002, as well as new rules implemented from time to time by the SEC and the Nasdaq Global Select Market. These rules impose various requirements on public companies, including requiring changes in corporate governance practices, increased reporting of compensation arrangements and other requirements. Our management and other personnel will continue to devote a substantial amount of time to these compliance initiatives. Moreover, new rules and regulations will likely increase our legal and financial compliance costs and make some activities more time-consuming and costly. These rules and regulations could also make it more difficult for us to attract and retain qualified persons to serve on our board of directors, our board committees or as executive officers.

Section 404 of the Sarbanes-Oxley Act of 2002 requires that we include in our annual report our assessment of the effectiveness of our internal control over financial reporting and our audited financial statements as of the end of each fiscal year. Furthermore, our independent registered public accounting firm, Ernst & Young LLP (E&Y), is required to report on whether it believes we maintained, in all material respects, effective internal control over financial reporting as of the end of the year. We successfully completed our assessment and obtained E&Y’s attestation as to the effectiveness of our internal control over financial reporting as of December 31, 2011, 2010 and 2009, respectively. Our continued compliance with Section 404 will require that we incur substantial expense and expend significant management time on compliance related issues, including our efforts in implementing controls and procedures related to acquired or merged operations. We currently do not have an internal audit group and use an international accounting firm to assist us with our assessment of the effectiveness of our internal controls over financial reporting. In future years, if we fail to timely complete this assessment, or if E&Y cannot timely attest, there may be a loss of public confidence in our internal controls, the market price of our stock could decline, and we could be subject to regulatory sanctions or investigations by the Nasdaq Global Select Market, the SEC or other regulatory authorities, which would require additional financial and management resources. In addition, any failure to implement required new or improved controls, or difficulties encountered in their implementation, could harm our operating results or cause us to fail to timely meet our regulatory reporting obligations.

In the previously filed financial statements included in our Form 10-Q for the period ended March 31, 2012 and the period ended June 30, 2012, we improperly classified cash collected from DG related to the sale of EyeWonder and chors as cash provided by operating activities of continuing operations in the unaudited Condensed Consolidated Statements of Cash Flows. As a result of the error, we identified a material weakness in our system of internal controls over financial reporting with regard to evaluating the proper cash flow classification of cash collected from DG. The Company corrected the classification error in its third quarter Form 10-Q and amended its March 31, 2012 Form 10-Q and June 30, 2012 Form 10-Q to reflect the correct classification.

Since the date of discovery of this material weakness and through the date of this Form 10-Q, we are taking steps which we feel will strengthen our internal controls, including implementing a stronger review process around the preparation of our consolidated statement of cash flows and updating our processes and procedures to ensure that accounting personnel have sufficient guidance to remediate the material weakness.

The actions we are taking to remediate this material weaknesses are subject to continued management review supported by confirmation and testing, as well as oversight by the Audit Committee of our Board of Directors. We cannot assure you that material weaknesses or significant deficiencies will not occur in the future and that we will be able to remediate such weaknesses or deficiencies in a timely manner, which could impair our ability to accurately and timely report our financial position, results of operations or cash flows.

We may lose customers if they elect to develop content delivery services and other competitive VAS solutions internally.

Our customers and potential customers may decide to develop their own content delivery, web and video content management and other digital presence management solutions rather than outsource these solutions to services providers like us. This is particularly true as our customers increase their operations and begin expending greater resources on delivering their content using third party solutions. If we fail to offer content delivery, web and video content management and other related services that are competitive to in-sourced solutions, we may lose additional customers or fail to attract customers that may consider pursuing this in-sourced approach, and our business and financial results would suffer.

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We may lose customers if they are unable to build business models that effectively monetize delivery of their content.

Some of our customers will not be successful in selling advertising or otherwise monetizing the content we deliver on their behalf and consequently may not be successful in creating a profitable business model. This will result in some of our customers discontinuing their Internet or web-based business operations and discontinuing use of our services and solutions. Further, weakness and related uncertainty in the global financial markets and economy — which has included, among other things, significant reductions in available capital and liquidity from banks and other providers of credit, substantial reductions and/or fluctuations in equity and currency values worldwide and concerns that portions of the worldwide economy may be in a prolonged recessionary period — may materially adversely impact our customers’ access to capital or willingness to spend capital on our services or in some cases, ultimately cause the customer to file for protection from creditors under applicable insolvency or bankruptcy laws or simply go out of business. This uncertainty may also impact our customers’ levels of cash liquidity, which could affect their ability or willingness to timely pay for services that they will order or have already ordered from us. From time to time we discontinue service to customers for non-payment of services. We expect further customers may discontinue operations or not be willing or able to pay for services that they have ordered from us. Further loss of customers may adversely affect our financial results.

Our business depends on a strong brand reputation, and if we are not able to maintain and enhance our brands, our business will suffer.

We believe that maintaining and enhancing the “Limelight Networks” brand is important to expanding our base of customers and maintaining brand loyalty among customers, particularly in North America where brand perception can impact the competitive position in other markets worldwide, and that the importance of brand recognition will increase due to the growing number of competitors providing similar services and solutions. Maintaining and enhancing our brand may require us to make substantial investments in research and development and in the marketing of our solutions and services and these investments may not be successful. If we fail to promote and maintain the “Limelight Networks” brand, or if we incur excessive expenses in this effort, our business and results of operations could be adversely impacted. We anticipate that, as our market becomes increasingly competitive, maintaining and enhancing our brand may become increasingly difficult and expensive. Maintaining and enhancing our brand will depend largely on our ability to be a technology leader and to continue to provide high quality solutions and services, which we may not do successfully.

We depend on a limited number of customers for a substantial portion of our revenue in any fiscal period, and the loss of, or a significant shortfall in demand from these customers could significantly harm our results of operations.

During any given fiscal period, a relatively small number of customers typically account for a significant percentage of our revenue. For example, in 2009, 2010 and 2011, sales to our top 10 customers accounted for approximately 36%, 34% and 34%, respectively, of our total revenue. During the nine month period ended September 30, 2012, sales to our top 10 customers accounted for approximately 32% of our total revenue. During the nine month period ended September 30, 2012, we had one customer, Netflix, which represented more than 10% of our total revenue. During that period, Netflix represented approximately 11% of our total revenue. During 2011, we had one customer, Netflix, which represented more than 10% of our total revenue. For the year ended December 31, 2011, Netflix represented approximately 11% of our total revenue. During 2010, we had no customer that accounted for more than 10% of our total revenue. During 2009 we had one customer, Microsoft, which represented more than 10% of our total revenue. For the year ended December 31, 2009, Microsoft represented approximately 14% of our total revenue. Netflix, Microsoft and other large customers may not continue to be as significant going forward as they have been in the past. For example, during 2012, we anticipate that our revenue from Microsoft will decline from that earned in 2011 and 2010 and as a percent of our total revenue.

In the past, the customers that comprised our top 10 customers have continually changed, and we also have experienced significant fluctuations in our individual customers’ usage of our services. As a consequence, we may not be able to adjust our expenses in the short term to address the unanticipated loss of a large customer during any particular period. As such, we may experience significant, unanticipated fluctuations in our operating results which may cause us to not meet our expectations or those of stock market analysts, which could cause our stock price to decline.

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If we are unable to attract new customers or to retain our existing customers, our revenue could be lower than expected and our operating results may suffer.

In addition to adding new customers, to increase our revenue, we must sell additional services to existing customers and encourage existing customers to increase their usage levels. If our existing and prospective customers do not perceive our services to be of sufficiently high value and quality, we may not be able to retain our current customers or attract new customers. We sell our services pursuant to service agreements that generally include some form of financial minimum commitment. Our customers have no obligation to renew their contracts for our services after the expiration of their initial commitment, and these service agreements may not be renewed at the same or higher level of service, if at all. Moreover, under some circumstances, some of our customers have the right to cancel their service agreements prior to the expiration of the terms of their agreements. This fact, in addition to the changing competitive landscape in our market, means that we cannot accurately predict future customer renewal rates or usage rates. Our customers’ renewal rates may decline or fluctuate as a result of a number of factors, including:

• their satisfaction or dissatisfaction with our services;

• the prices of our services;

• the prices of services offered by our competitors;

• discontinuation by our customers of their Internet or web-based content distribution business;

• mergers and acquisitions affecting our customer base; and

• reductions in our customers’ spending levels.

If our customers do not renew their service agreements with us or if they renew on less favorable terms, our revenue may decline and our business may suffer. Similarly, our customer agreements often provide for minimum commitments that are often significantly below our customers’ historical usage levels. Consequently, even if we have agreements with our customers to use our services, these customers could significantly curtail their usage without incurring any penalties under our agreements. In this event, our revenue would be lower than expected and our operating results could suffer.

It also is an important component of our growth strategy to market our services and solutions to industries, such as enterprise and the government. As an organization, we do not have significant experience in selling our services into these markets. We have only recently begun a number of these initiatives, and our ability to successfully sell our services into these markets to a meaningful extent remains unproven. If we are unsuccessful in such efforts, our business, financial condition and results of operations could suffer.

Our results of operations may fluctuate in the future. As a result, we may fail to meet or exceed the expectations of securities analysts or investors, which could cause our stock price to decline.

Our results of operations may fluctuate as a result of a variety of factors, many of which are outside of our control. If our results of operations fall below the expectations of securities analysts or investors, the price of our common stock could decline substantially. In addition to the effects of other risks discussed in this section, fluctuations in our results of operations may be due to a number of factors, including:

• our ability to increase sales to existing customers and attract new customers to our content delivery services and VAS;

• the addition or loss of large customers, or significant variation in their use of our content delivery services and VAS;

• costs associated with current or future intellectual property lawsuits and other lawsuits;

• service outages or third party security breaches to our platform or to one or more of our customers’ platforms;

• the amount and timing of operating costs and capital expenditures related to the maintenance and expansion of our business, operations and infrastructure;

• the timing and success of new product and service introductions by us or our competitors;

• the occurrence of significant events in a particular period that result in an increase in the use of our content delivery services and VAS, such as a major media event or a customer’s online release of a new or updated video game;

• changes in our pricing policies or those of our competitors;

• the timing of recognizing revenue;

• limitations of the capacity of our global computing platform and related systems;

• the timing of costs related to the development or acquisition of technologies, services or businesses;

• the potential write-down or write-off of goodwill associated with business operations that have been disposed of, such as goodwill currently on our balance sheet associated with the initial acquisitions of EyeWonder and chors;

• general economic, industry and market conditions (such as the fluctuations experienced in the stock and credit markets during the recent deterioration of global economic conditions) and those conditions specific to Internet usage;

• limitations on usage imposed by our customers in order to limit their online expenses; and

• war, threat of war or terrorist actions, including cyber terrorism targeted broadly, at us, or our customers, or both, and inadequate cyber security.

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We believe that our revenue and results of operations may vary significantly in the future and that period-to-period comparisons of our operating results may not be meaningful. You should not rely on the results of one period as an indication of future performance.

After being profitable in 2004 and 2005, we were unprofitable in 2006, 2007, 2008, 2010 and 2011 primarily due to increased share-based compensation expense and litigation costs, which could affect our ability to achieve and maintain profitability in the future. We would have been unprofitable in 2009, had we not reversed a significant reserve for litigation.

Our adoption of ASC 718 (formerly FAS 123R) in 2006 substantially increased the amount of share-based compensation expense we record and has had a significant impact on our results of operations. After being profitable in 2004 and 2005, we were unprofitable in 2006, 2007, 2008, 2010 and 2011 partially due to our share-based compensation expense which was $0.1 million in 2005, $9.2 million in 2006, $18.9 million in 2007, $18.1 million in 2008, $16.2 million in 2010, and $15.9 million in 2011. We were profitable in 2009 due to the reversal of a significant reserve for litigation; however, our share-based compensation was still significant at $17.5 million for the year. This significant amount of share-based compensation expense reflects an increase in the level of stock options, restricted stock and restricted stock unit (RSU) grants. For the nine month period ended September 30, 2012, our share-based compensation expense was approximately $10.8 million. Our unrecognized share-based compensation expense totaled $21.1 million at September 30, 2012 based on current outstanding stock options and restricted stock units, of which we expect to amortize $3.6 million during the remainder of 2012, $9.2 million in 2013 and the remainder thereafter based upon the scheduled vesting of the options, restricted stock and RSUs outstanding at that time. Our share-based compensation expense could adversely affect our ability to achieve and maintain profitability in the future. In 2006, we were sued by Akamai and MIT alleging infringement of certain patents, and, in December 2007, we were sued by Level 3 Communications alleging infringement of certain patents. We have incurred, and will potentially continue to incur, significant costs associated with litigation. These costs were $3.1 million, $7.3 million, $20.8 million, $5.4 million, $2.1 million and $1.4 million, respectively, in 2006, 2007, 2008, 2009, 2010 and 2011, respectively. For the nine month period ended September 30, 2012, we incurred approximately $0.2 million in litigation costs. These costs may continue to be significant during 2012.

We generate our revenue primarily from the sale of content delivery services, and the failure of the market for these services to expand as we expect or the reduction in spending on those services by our current or potential customers would seriously harm our business.

While we offer our customers a number of services and solutions associated with our global computing platform, we generate the majority of our revenue from charging our customers for the content delivered on their behalf through our global computing platform. We are subject to an elevated risk of reduced demand for these services. Furthermore, if the market for delivery of rich media content in particular does not continue to grow as we expect or grows more slowly, then we may fail to achieve a return on the significant investment we are making to prepare for this growth. Our success, therefore, depends on the continued and increasing reliance on the Internet for delivery of media content and our ability to cost-effectively deliver these services. Factors that may have a general tendency to limit or reduce the number of users relying on the Internet for media content, the amount of content consumed by our customers’ users or the number of providers making this content available online include a general decline in Internet usage, litigation involving our customers and third party restrictions on online content, including copyright restrictions, digital rights management and restrictions in certain geographic regions, system impairments or outages, including those caused by hacking or cyber attacks, as well as a significant increase in the quality or fidelity of offline media content beyond that available online to the point where users prefer the offline experience. The influence of any of these factors may cause our current or potential customers to reduce their spending on content delivery services, which would seriously harm our operating results and financial condition.

Many of our significant current and potential customers are pursuing emerging or unproven business models which, if unsuccessful, could lead to a substantial decline in demand for our content delivery services and VAS.

Because the proliferation of broadband Internet connections and the subsequent monetization of content libraries for distribution to Internet users are relatively recent phenomena, many of our customers’ business models that center on the delivery of rich media and other content to users remain unproven. For example, social media companies have been among our top recent customers and are pursuing emerging strategies for monetizing the user content and traffic on their websites. Our customers will not continue to purchase our content delivery services and VAS if their investment in providing access to the media stored on or deliverable through our global computing platform does not generate a sufficient return on their investment. A reduction in spending on services by our current or potential customers would seriously harm our operating results and financial condition.

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We may have difficulty scaling and adapting our existing architecture to accommodate increased traffic and technology advances or changing business requirements, which could lead to the loss of customers and cause us to incur unexpected expenses to make network improvements.

Our content delivery services and VAS are highly complex and are designed to be deployed in and across numerous large and complex networks. Our global computing platform infrastructure has to perform well and be reliable for us to be successful. The greater the user traffic and the greater the complexity of our solutions and services, the more resources we will need to invest in additional infrastructure and support. Further, as a result of our on-going litigation in the Akamai Technologies, Inc. v. Limelight Networks, Inc. lawsuit (including the adverse jury verdict in February 2008 in that matter which verdict was overturned by the court’s April 24, 2009 order granting our motion for JMOL), we made significant investment in designing and implementing changes to our network architecture in order to implement our content delivery services in a manner we believe does not infringe the claims of Akamai’s ’703 patent as alleged in the February 2008 trial. We have spent and expect to continue to spend substantial amounts on the purchase and lease of equipment and data centers and the upgrade of our technology and network infrastructure to handle increased traffic over our network, implement changes to our network architecture and integrate existing solutions and to roll out new solutions and services. This expansion is expensive and complex and could result in inefficiencies, operational failures or defects in our network and related software. If we do not implement such changes or expand successfully, or if we experience inefficiencies and operational failures, the quality of our solutions and services and user experience could decline. From time to time, we have needed to correct errors and defects in our software or in other aspects of our network. In the future, there may be additional errors and defects that may harm our ability to deliver our services, including errors and defects originating with third party networks or software on which we rely. These occurrences could damage our reputation and lead us to lose current and potential customers. We must continuously upgrade our infrastructure in order to keep pace with our customers’ evolving demands. Cost increases or the failure to accommodate increased traffic or these evolving business demands without disruption could harm our operating results and financial condition.

Our operations are dependent in part upon communications capacity provided by third party telecommunications providers. A material disruption of the communications capacity we have leased could harm our results of operations, reputation and customer relations.

We lease private line capacity for our backbone from a third party provider, Global Crossing. Our contracts for private line capacity with Global Crossing generally have terms of three to four years. In January 2012, March 2011, and January and September 2009, we amended our agreement with Global Crossing to enhance the private line capacity for our backbone. The communications capacity we have leased may become unavailable for a variety of reasons, such as physical interruption, technical difficulties, contractual disputes, or the financial health of our third party provider. Further, Level 3 Communications LLC, one of our direct competitors recently acquired Global Crossing. Although alternative providers are available, it would be time consuming and expensive to identify and obtain alternative third party connectivity, and accordingly we are dependent on Global Crossing in the near term. Failure of Global Crossing could jeopardize utilization of the service fees pre-paid by us under our agreement with Global Crossing. Additionally, as we grow, we anticipate requiring greater private line capacity than we currently have in place. If we are unable to obtain such capacity on terms commercially acceptable to us or at all, our business and financial results would suffer. We may not be able to deploy on a timely basis enough network capacity to meet the needs of our customer base or effectively manage demand for our services.

Our business depends on continued and unimpeded access to third party controlled end-user access networks.

Our content delivery services depend on our ability to access certain end-user access networks in order to complete the delivery of rich media and other online content to end-users. Some operators of these networks may take measures, such as the deployment of a variety of filters, that could degrade, disrupt or increase the cost of our or our customers’ access to certain of these end-user access networks by restricting or prohibiting the use of their networks to support or facilitate our services, or by charging increased fees to us, our customers or end-users in connection with our services. This or other types of interference could result in a loss of existing customers, increased costs and impairment of our ability to attract new customers, thereby harming our revenue and growth.

In addition, the performance of our infrastructure depends in part on the direct connection of our global computing platform to a large number of end-user access networks, known as peering, which we achieve through mutually beneficial cooperation with these networks. In some instances, network operators charge us for the peering connections. If, in the future, a significant percentage of these network operators elected to no longer peer with our network or peer with our network on less favorable economic terms, then the performance of our infrastructure could be diminished, our costs could increase and our business could suffer.

If our ability to deliver media files in popular proprietary content formats was restricted or became cost-prohibitive, demand for our content delivery services could decline, we could lose customers and our financial results could suffer.

Our business depends on our ability to deliver media content in all major formats. If our legal right or technical ability to store and deliver content in one or more popular proprietary content formats, such as Adobe Flash or Windows Media, was limited, our ability to serve our customers in these formats would be impaired and the demand for our content delivery services and VAS would decline by customers using these formats. Owners of propriety content formats may be able to block, restrict or impose fees or other costs on our use of such formats, which could lead to additional expenses for us and for our customers, or which could prevent our delivery of this type of content altogether. Such interference could result in a loss of existing customers, increased costs and impairment of our ability to attract new customers, which would harm our revenue, operating results and growth.

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As part of our business strategy, we may acquire businesses or technologies and may have difficulty integrating these operations.

We may seek to acquire businesses or technologies that are complementary to our business. For example, in May 2009, we acquired substantially all of the assets of Kiptronic, Inc., a developer of mobility and monetization solutions for content publishers; in January 2010, we acquired chors, an on-line and direct marketing solutions provider located in Germany; in April 2010, we acquired EyeWonder, a provider of interactive digital advertising products and services to advertisers; in July 2010, we acquired Delve, a provider of online video solutions to manage, publish, measure and monetize high quality video content on the Internet; and in May 2011, we acquired Clickability, a SaaS provider of web content management located in San Francisco, California, and AcceloWeb, a provider of advanced technology that helps speed the presentation of websites and applications located in Tel Aviv, Israel. We subsequently sold the EyeWonder and chors business operations in September 2011. Acquisitions involve a number of risks to our business, including the difficulty of integrating the operations, services, solutions and personnel of the acquired companies, the potential disruption of our ongoing business, the potential distraction of management, the possibility that our business culture and the business culture of the acquired companies will not be compatible, the difficulty of incorporating or integrating acquired technology and rights with or into our other services and solutions, expenses related to the acquisition and to the integration of the acquired companies, the impairment of relationships with employees and customers as a result of any integration of new personnel, risks related to the businesses of acquired companies that may continue to impact the businesses following the merger and potential unknown liabilities associated with acquired companies. Any inability to integrate services, solutions, operations or personnel in an efficient and timely manner could harm our results of operations.

In order to realize the expected benefits and synergies of our acquisition of acquired businesses, we must meet a number of significant challenges, including:

• integrating the management teams, strategies, cultures, technologies and operations of the businesses;

• retaining and assimilating the key personnel of each company;

• retaining existing customers; and

• implementing and retaining uniform standards, controls, procedures, policies and information systems.

It is possible that the integration process could result in the loss of the technical skills and management expertise of key employees, the disruption of each company’s ongoing businesses or inconsistencies in standards, controls, procedures and policies due to possible cultural conflicts or differences of opinions on technical decisions and services. A failure to integrate the acquired organizations successfully could adversely affect our ability to maintain relationships with customers, suppliers and employees or to achieve the anticipated benefits of an acquisition. Even if we are able to integrate acquired business operations successfully, these integrations may not result in the realization of the full benefits of synergies, cost savings, innovation and operational efficiencies that may be possible from these integrations, and these benefits may not be achieved within a reasonable period of time.

We have limited prior experience as a company in this complex process of acquiring and integrating businesses. If we are not successful in completing acquisitions that we may pursue in the future, we may be required to reevaluate our business strategy, and we may incur substantial expenses and devote significant management time and resources without a productive result. In addition, future acquisitions will require the use of our available cash or dilutive issuances of securities. Future acquisitions or attempted acquisitions could also harm our ability to achieve profitability. We may also experience significant turnover from the acquired operations or from our current operations as we integrate businesses.

If we are unable to retain our key employees and hire qualified sales and technical personnel, our ability to compete could be harmed.

Our future success depends upon the continued services of our executive officers and other key technology, sales, marketing and support personnel who have critical industry experience and relationships that they rely on in implementing our business plan. None of our other key employees is bound by an employment agreement for any specific term. There is increasing competition for talented individuals with the specialized knowledge to deliver content delivery services and VAS and this competition affects both our ability to retain key employees and hire new ones. The loss of the services of any of our key employees could disrupt our operations, delay the development and introduction of our services, and negatively impact our ability to sell our services.

We face risks associated with international operations that could harm our business.

We have operations in numerous foreign countries and may continue to expand our sales and support organizations internationally. As part of our growth strategy, we intend to expand our sales and support organizations internationally, as well as to further expand our international network infrastructure. We have limited experience in providing our services internationally and such expansion could require us to make significant expenditures, including the hiring of local employees, in advance of generating any revenue. As a consequence, we may fail to achieve profitable operations that will compensate our investment in international locations. We are subject to a number of risks associated with international business activities that may increase our costs, lengthen our sales cycle and require significant management attention.

These risks include:

• increased expenses associated with sales and marketing, deploying services and maintaining our infrastructure in foreign countries;

• competition from local content delivery service providers, many of which are very well positioned within their local markets;

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• challenges caused by distance, language and cultural differences;

• unexpected changes in regulatory requirements preventing or limiting us from operating our global computing platform or resulting in unanticipated costs and delays;

• interpretations of laws or regulations that would subject us to regulatory supervision or, in the alternative, require us to exit a country, which could have a negative impact on the quality of our services or our results of operations;

• longer accounts receivable payment cycles and difficulties in collecting accounts receivable;

• corporate and personal liability for violations of local laws and regulations;

• currency exchange rate fluctuations;

• potentially adverse tax consequences;

• credit risk and higher levels of payment fraud; and

• foreign exchange controls that might prevent us from repatriating cash earned in countries outside the United States.

We are subject to the effects of fluctuations in foreign exchange rates, which could affect our operating results.

The financial condition and results of operations of our operating foreign subsidiaries are reported in the relevant local currency and are then translated into U.S. dollars at the applicable currency exchange rate for inclusion in our consolidated U.S. dollar financial statements. Also, although a large portion of our customer agreements are denominated in U.S. dollars, we may be exposed to fluctuations in foreign exchange rates with respect to customer agreements with certain of our international customers. Exchange rates between these currencies and U.S. dollars in recent years have fluctuated significantly and may do so in the future. In addition to currency translation risk, we incur currency transaction risk whenever one of our operating subsidiaries enters into a transaction using a different currency than the relevant local currency. Given the volatility of exchange rates, we may be unable to manage our currency transaction risks effectively. Currency fluctuations could have a material adverse effect on our future international sales and, consequently, on our financial condition and results of operations.

Internet-related and other laws relating to taxation issues, privacy, data security and consumer protection and liability for content distributed over our network, could harm our business.

Laws and regulations that apply to communications and commerce conducted over the Internet are becoming more prevalent, both in the United States and internationally, and may impose additional burdens on companies conducting business online or providing Internet-related services such as ours. Increased regulation could negatively affect our business directly, as well as the businesses of our customers, which could reduce their demand for our services. For example, tax authorities abroad may impose taxes on the Internet-related revenue we generate based on where our internationally deployed servers are located. In addition, domestic and international taxation laws are subject to change. Our services, or the businesses of our customers, may become subject to increased taxation, which could harm our financial results either directly or by forcing our customers to scale back their operations and use of our services in order to maintain their operations. In addition, the laws relating to the liability of private network operators for information carried on, processed by or disseminated through their networks are unsettled, both in the United States and abroad. Network operators have been sued in the past, sometimes successfully, based on the content of material disseminated through their networks. We may become subject to legal claims such as defamation, invasion of privacy and copyright infringement in connection with content stored on or distributed through our network. In addition, our reputation could suffer as a result of our perceived association with the type of content that some of our customers deliver. If we need to take costly measures to reduce our exposure to these risks, or are required to defend ourselves against such claims, our financial results could be negatively affected.

Several other federal laws also could expose us to liability and impose significant additional costs on us. For example, the Digital Millennium Copyright Act has provisions that limit, but do not eliminate, our liability for the delivery of customer content that infringe copyrights or other rights, so long as we comply with certain statutory requirements. In addition, the Children’s Online Privacy Protection Act restricts the ability of online services to collect information from minors and the Protection of Children from Sexual Predators Act of 1998 requires online service providers to report evidence of violations of federal child pornography laws under certain circumstances. Also, there are emerging regulation and industry standards regarding the collection and use of personal information and protecting the security of data on networks. Compliance with these laws, regulations and standards is complex and any failure on our part to comply with these regulations may subject us to additional liabilities.

Privacy concerns could lead to legislative and other limitations on our ability to use “cookies” and video player “cookies” that are crucial to our ability to provide services to our customers.

Our ability to compile data for customers depends on the use of “cookies” and video player “cookies” to identify certain online behavior that allows our customers to measure a website or video’s effectiveness. A cookie is a small file of information stored on a user’s computer that allows us to recognize that user’s browser or video player when the user makes a request for a web page or to play a video. Government authorities inside the United States concerned with the privacy of Internet users have suggested limiting or eliminating the use of cookies. Bills aimed at regulating the collection and use of personal data from Internet users are currently pending in United States Congress and many state legislatures. Attempts at such regulation may be drafted in such a way as to limit or prohibit the use of technology like cookies, thereby creating restrictions that could reduce our ability to use them. In addition, the Federal Trade Commission and the Department of Commerce have conducted hearings regarding user profiling, the collection of non-personally identifiable information and online privacy.

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Our foreign operations may also be adversely affected by regulatory action outside the United States. For example, the European Union has adopted a directive addressing data privacy that limits the collection, disclosure and use of information regarding European Internet users. In addition, the European Union has enacted an electronic communications directive that imposes certain restrictions on the use of cookies and also places restrictions on the sending of unsolicited communications. Each European Union member country was required to enact legislation to comply with the provisions of the electronic communications directive by October 31, 2003 (though not all have done so). Germany has also enacted additional laws limiting the use of user profiling, and other countries, both in and out of the European Union, may impose similar limitations.

Internet users may directly limit or eliminate the placement of cookies on their computers by using third-party software that blocks cookies, or by disabling or restricting the cookie functions of their Internet browser software and in their video player software. Internet browser software upgrades also may result in limitations on the use of cookies. Technologies like the Platform for Privacy Preferences Project may limit collection of cookies. Plaintiffs’ attorneys also have organized class action suits against companies related to the use of cookies and several companies, including companies in the Internet advertising industry, have had claims brought against them before the Federal Trade Commission regarding the collection and use of Internet user information. We may be subject to such suits in the future, which could limit or eliminate our ability to collect such information. If our ability to use cookies were substantially restricted due to the foregoing, or for any other reason, we would have to generate and use other technology or methods that allow the gathering of user data in order to provide services to customers. This change in technology or methods could require significant reengineering time and resources, and may not be complete in time to avoid negative consequences to our business. In addition, alternative technology or methods might not be available on commercially reasonable terms, if at all. If the use of cookies is prohibited and we are not able to efficiently and cost effectively create new technology, our business, financial condition and results of operations would be materially adversely affected. In addition, any compromise of security that results in the release of Internet users’ and/or our customers’ data could seriously limit the adoption of our service offerings as well as harm our reputation and brand, expose us to liability and subject us to reporting obligations under various state laws, which could have an adverse effect on our business. The risk that these types of events could seriously harm our business is likely to increase as the amount of data stored for customers on our servers and the number of countries where we operate has been increasing, and we may need to expend significant resources to protect against security breaches, which could have an adverse effect on our business, financial condition or results of operations.

If we are required to seek funding, such funding may not be available on acceptable terms or at all.

We may need to obtain funding due to a number of factors beyond our control, including a shortfall in revenue, increased expenses, final adverse judgments in litigation matters, increased investment in capital equipment or the acquisition of significant businesses or technologies. We believe that our cash, cash equivalents and marketable securities classified as current plus cash from operations will be sufficient to fund our operations and proposed capital expenditures for at least the next 12 months. However, we may need or desire funding before such time. If we do need to obtain funding, it may not be available on commercially reasonable terms or at all. If we are unable to obtain sufficient funding, our business would be harmed. Even if we were able to find outside funding sources, we might be required to issue securities in a transaction that could be highly dilutive to our investors or we may be required to issue securities with greater rights than the securities we have outstanding today. We might also be required to take other actions that could lessen the value of our common stock, including borrowing money on terms that are not favorable to us. If we are unable to generate or raise capital that is sufficient to fund our operations, we may be required to curtail operations, reduce our capabilities or cease operations in certain jurisdictions or completely.

Our business requires the continued development of effective business support systems to support our customer growth and related services.

The growth of our business depends on our ability to continue to develop effective business support systems. This is a complicated undertaking requiring significant resources and expertise. Business support systems are needed for:

• implementing customer orders for services;

• delivering these services; and

• timely and accurate billing for these services.

Because our business plan provides for continued growth in the number of customers that we serve and services offered, there is a need to continue to develop our business support systems on a schedule sufficient to meet proposed service rollout dates. The failure to continue to develop effective business support systems could harm our ability to implement our business plans and meet our financial goals and objectives.

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Changes in financial accounting standards or practices may cause adverse, unexpected financial reporting fluctuations and affect our reported results of operations.

A change in accounting standards or practices can have a significant effect on our operating results and may affect our reporting of transactions completed before the change is effective. New accounting pronouncements and varying interpretations of existing accounting pronouncements have occurred and may occur in the future. Changes to existing rules or the questioning of current practices may adversely affect our reported financial results or the way we conduct our business. For example, our adoption of ASC 718 (formerly FAS 123R) in 2006 increased the amount of share-based compensation expense we recorded. This, in turn, has impacted our results of operations for the periods since this adoption and has made it more difficult to evaluate our recent financial results relative to prior periods.

We have incurred, and will continue to incur significantly increased costs as a result of operating as a public company, and our management is required to devote substantial time to compliance initiatives.

As a public company, we have incurred, and will continue to incur, significant accounting and other expenses that we did not incur as a private company. These expenses include increased accounting, legal and other professional fees, insurance premiums, investor relations costs, and costs associated with compensating our independent directors. In addition, the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and the Sarbanes-Oxley Act of 2002, as well as rules subsequently implemented by the SEC and the Nasdaq Global Select Market, impose additional requirements on public companies, including requiring changes in corporate governance practices. For example, the listing requirements of the Nasdaq Global Select Market require that we satisfy certain corporate governance requirements relating to independent directors, audit committees, distribution of annual and interim reports, stockholder meetings, stockholder approvals, solicitation of proxies, conflicts of interest, stockholder voting rights and codes of conduct. Our management and other personnel need to devote a substantial amount of time to these compliance initiatives. Moreover, these rules and regulations have increased our legal and financial compliance costs and make some activities more time-consuming and costly. For example, these rules and regulations make it more difficult and more expensive for us to obtain director and officer liability insurance. These rules and regulations could also make it more difficult for us to identify and retain qualified persons to serve on our board of directors, our board committees or as executive officers.

Divestiture of our EyeWonder and chors rich media advertising services, or future divestitures of other businesses or product lines that we have acquired or will acquire, may materially adversely affect our financial condition, results of operations or cash flows, or may result in impairment charges that may adversely affect our results of operations.

We continue to evaluate the performance of all of our businesses and may sell businesses or product lines in the future. For example, on August 30, 2011, we announced that we entered into an agreement to sell our EyeWonder and chors rich media advertising unit to DG. The transaction closed on September 1, 2011. Divestitures involve risks, including difficulties in the separation of operations, services, products and personnel, the diversion of management’s attention from other business concerns, the disruption of our business, the potential loss of key employees and the retention of uncertain contingent liabilities related to the divested business, any of which could result in a material adverse affect to our financial condition, results of operations or cash flows. In addition, we have acquired goodwill and intangible assets in business combinations, including the acquisitions of EyeWonder and chors in 2010. A substantial portion of this goodwill remains on our balance sheet. We follow the provisions of ASC 805, “Business Combinations” (ASC 805) and ASC 350, “Goodwill and Other Intangible Assets” (ASC 350). We also follow the provisions of ASC 360, “Accounting for the Impairment or Disposal of Long-lived Assets” (ASC 360). In accordance with these standards, goodwill is not amortized. Under ASC 350, goodwill is subject to impairment testing annually or whenever events or changes in circumstances indicate that the carrying amount may not be fully recoverable. As of September 30, 2012, we had $79.9 million in goodwill which will be subject to potential future impairments which could have a material adverse effect on our financial condition and results of operations. Our intangible assets are carried at cost and are subject to amortization. In accordance with ASC 360, our intangible assets are subject to impairment testing whenever changes in circumstances indicate that the carrying value may not be fully recoverable. Divestitures of previously acquired businesses, such as the divestiture of the EyeWonder and chors rich media advertising services, may result in significant asset impairment charges, including those related to goodwill and other intangible assets, which could have a material adverse effect on our financial condition and results of operations. Future impairment may result from, among other things, deterioration in the performance of the acquired business or product line, adverse market conditions and changes in the competitive landscape, adverse changes in applicable laws or regulations, including changes that restrict the activities of the acquired business or product line, changes in accounting rules and regulations, and a variety of other circumstances. The amount of any impairment is recorded as a charge to the statement of operations. We may never realize the full value of our goodwill and intangible assets, and any determination requiring the write-off of a significant portion of these assets may have an adverse effect on our financial condition and results of operations. We cannot assure you that we will be successful in managing these or any other significant risks that we encounter in divesting a business or product line.

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Failure to effectively expand our sales and marketing capabilities could harm our ability to increase our customer base and achieve broader market acceptance of our services.

Increasing our customer base and achieving broader market acceptance of our services will depend to a significant extent on our ability to expand our sales and marketing operations. Historically, we have concentrated our sales force at our headquarters in Tempe, Arizona. However, we are also building a field sales force to augment our sales efforts and to bring our sales personnel closer to our current and potential customers. Developing such a field sales force has been and will continue to be expensive and we have limited knowledge in developing and operating a widely dispersed sales force. As a result, we may not be successful in developing an effective sales force, which could cause our results of operations to suffer.

We believe that there is significant competition for both inside and direct sales personnel with the sales skills and technical knowledge that we require. Our ability to achieve significant growth in revenue in the future will depend, in large part, on our success in recruiting, training and retaining sufficient numbers of inside and direct sales personnel. We have expanded our sales and marketing personnel from a total of 13 at December 31, 2004 to 168 at December 31, 2011. As of September 30, 2012, we had 200 sales and marketing personnel. New hires require significant training and, in most cases, take a significant period of time before they achieve full productivity. Our recent hires and planned hires may not become as productive as we would like, and we may be unable to hire or retain sufficient numbers of qualified individuals in the future in the markets where we do business. Our business will be seriously harmed if these expansion efforts do not generate a corresponding significant increase in revenue.

If the accounting estimates we make, and the assumptions on which we rely, in preparing our financial statements prove inaccurate, our actual results may be adversely affected.

Our financial statements have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and judgments about, among other things, taxes, revenue recognition, share-based compensation costs, contingent obligations and doubtful accounts. These estimates and judgments affect the reported amounts of our assets, liabilities, revenue and expenses, the amounts of charges accrued by us, and related disclosure of contingent assets and liabilities. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances and at the time they are made. If our estimates or the assumptions underlying them are not correct, we may need to accrue additional charges or reduce the value of assets that could adversely affect our results of operations, investors may lose confidence in our ability to manage our business and our stock price could decline.

Risks Related to Ownership of Our Common Stock

Our limited operating history makes evaluating our business and future prospects difficult, and may increase the risk of your investment.

We were founded in 2001. A significant amount of our growth, in terms of employees, operations and revenue, has occurred. For example, our revenue has grown from $5.0 million in 2003 to $65.2 million in 2006 to $171.3 million in 2011. As a consequence, we have a limited operating history which makes it difficult to evaluate our business and our future prospects. We have encountered, and will continue to encounter, risks and difficulties frequently experienced by growing companies in rapidly changing industries, such as the risks described in this Quarterly Report on Form 10-Q. If we do not address these risks successfully, our business will be harmed.

The trading price of our common stock has been, and is likely to continue to be, volatile.

The trading prices of our common stock and the securities of technology companies generally have been highly volatile. Factors affecting the trading price of our common stock will include:

• variations in our operating results;

• announcements of technological innovations, new services or service enhancements, strategic alliances or significant agreements by us or by our competitors;

• commencement or resolution of, our involvement in and uncertainties arising from, litigation, particularly our current litigation with Akamai and MIT;

• recruitment or departure of key personnel;

• changes in the estimates of our operating results or changes in recommendations by any securities analysts that elect to follow our common stock;

• developments or disputes concerning our intellectual property or other proprietary rights;

• the gain or loss of significant customers;

• market conditions in our industry, the industries of our customers and the economy as a whole; and

• adoption or modification of regulations, policies, procedures or programs applicable to our business.

In addition, if the market for technology stocks or the stock market in general experiences loss of investor confidence, the trading price of our common stock could decline for reasons unrelated to our business, operating results or financial condition. The trading price of our common stock might also decline in reaction to events that affect other companies in our industry even if these events do not directly affect us.

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If securities or industry analysts do not publish research or reports about our business or if they issue an adverse or misleading opinion or report, our stock, our stock price and trading volume could decline.

The trading market for our common stock will be influenced by the research and reports that industry or securities analysts publish about us or our business. If any of the analysts who cover us issue an adverse or misleading opinion regarding our stock, our stock price would likely decline. If one or more of these analysts cease coverage of our company or fail to publish reports on us regularly, we could lose visibility in the financial markets, which in turn could cause our stock price or trading volume to decline.

Insiders have substantial control over us and will be able to influence corporate matters.

As of September 30, 2012, our directors and executive officers and their affiliates beneficially owned, in the aggregate, approximately 43% of our outstanding common stock, including approximately 31% beneficially owned by investment entities affiliated with Goldman, Sachs & Co. These stockholders are able to exercise significant influence over all matters requiring stockholder approval, including the election of directors and approval of significant corporate transactions, such as a merger or other sale of our company or its assets. This concentration of ownership could limit other stockholders’ ability to influence corporate matters and may have the effect of delaying or preventing a third party from acquiring control over us.

Future equity issuances or a sale of a substantial number of shares of our common stock may cause the price of our common stock to decline.

Because we may need to raise additional capital in the future to continue to expand our business and our research and development activities, among other things, we may conduct additional equity offerings. If we or our stockholders sell substantial amounts of our common stock (including shares issued upon the exercise of options and warrants) in the public market, the market price of our common stock could fall. A decline in the market price of our common stock could make it more difficult for us to sell equity or equity-related securities in the future at a time and price that we deem appropriate.

Management has broad discretion as to the use of the proceeds from our underwritten public offerings of our common stock, and we may not use the proceeds effectively.

Our management has broad discretion in the application of the net proceeds from the recently completed underwritten public offering of our common stock and could spend the proceeds in ways that do not improve our results of operations or enhance the value of our common stock. Our failure to apply these funds effectively could have a material adverse effect on our business, delay the development of our product candidates and cause the price of our common stock to decline.

Anti-takeover provisions in our charter documents and Delaware law could discourage, delay or prevent a change in control of our company and may affect the trading price of our common stock.

Provisions of our amended and restated certificate of incorporation and bylaws, as well as provisions of Delaware law, could make it more difficult for a third party to acquire us, even if doing so would benefit our stockholders. These provisions:

• establish that members of the board of directors may be removed only for cause upon the affirmative vote of stockholders owning a majority of our capital stock;

• authorize the issuance of “blank check” preferred stock that could be issued by our board of directors to increase the number of outstanding shares and thwart a takeover attempt;

• limit who may call special meetings of stockholders;

• prohibit stockholder action by written consent, thereby requiring stockholder actions to be taken at a meeting of the stockholders;

• establish advance notice requirements for nominations for election to the board of directors or for proposing matters that can be acted upon at stockholder meetings;

• provide for a board of directors with staggered terms; and

• provide that the authorized number of directors may be changed only by a resolution of our board of directors.

In addition, Section 203 of the Delaware General Corporation Law, which imposes certain restrictions relating to transactions with major stockholders, may discourage, delay or prevent a third party from acquiring us.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Use of Proceeds from Public Offerings of Common Stock

On June 7, 2007, our registration statement on Form S-1 (No. 333-141516) was declared effective in connection with our initial public offering. The offering closed on June 13, 2007, and, as a result, we received net proceeds of approximately $203.9 million after underwriters’ discounts and commissions of approximately $15.6 million and additional offering-related costs of approximately $4.0 million.

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In June 2007, we used $23.8 million of the net proceeds to repay the outstanding balance of our credit facility with Silicon Valley Bank. For the year ended December 31, 2011, we made capital expenditures of $30.4 million and expect aggregate capital expenditures of approximately 9% to 11% of total revenue in 2012. We may also use a portion of our net proceeds to fund acquisitions of complementary businesses, products or technologies. In May 2011, we acquired AcceloWeb, for which we used $4.7 million and could use an additional $4.0 million if certain performance milestones are achieved. In May 2011, we also acquired Clickability, for which we used $2.8 million. In July 2010, we acquired Delve, for which we used approximately $2.6 million, net of cash acquired, and could use an additional $1.2 million if certain financial targets are achieved. In April 2010, we acquired EyeWonder for which we used approximately $62.0 million, net of cash acquired and, in January 2010, we acquired chors for which we used approximately $2.0 million, net of cash acquired at the closing, and used an additional $0.3 million in 2011 for the achievement of specific financial targets during 2010. During 2012, pending the uses described above, we intend to invest the net proceeds in a variety of short-term, interest-bearing, investment grade securities. Depending upon the final outcome of pending litigation, a portion of the net proceeds may be used to satisfy a final damages judgment, if any.

Issuer Purchases of Equity Securities

The following is a summary of our repurchases of our common stock during the three month period ended September 30, 2012:

Period	Total Number of Shares Purchased		Average Price Paid per Share(1)		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs(2)		Approximate Dollar Value of Shares that May Yet Be  Purchased Under the Plans or Programs(2)
July 1, — July 31, 2012		533,300	$	2.74		533,300	$	1,479,906
August 1, — August 31, 2012		583,000	$	2.55		583,000	$	2,678
September 1, — September 30, 2012		—	$	—		—	$	—
Total		1,116,300	$	2.64		1,116,300

(1) Includes commissions, markups and expenses.

(2) We announced a second repurchase plan that authorized us to use up to $15 million to repurchase shares of our common stock, exclusive of any commissions, markups or expenses, on May 3, 2012. All repurchased shares were cancelled and returned to authorized but unissued status. As of September 30, 2012, our second repurchase plan was complete.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

Not applicable

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable

ITEM 5. OTHER INFORMATION

Not applicable

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ITEM 6. EXHIBITS

		Incorporated by Reference
Exhibit Number	Exhibit Description	Form		File No.		Exhibit		Filing Date		Provided Herewith
3.02	Amended and Restated Certificate of Incorporation of Limelight Networks, Inc., as currently in effect		8-K		001-33508		3.1		6/14/11
3.04	Amended and Restated Bylaws of Limelight Networks, Inc.		S-1		333-141516		3.4		3/22/07
10.29	Employment Agreement between the Registrant and Charles Kirby Wadsworth dated June 22, 2012.										X
31.01	Certification of Principal Executive Officer Pursuant to Securities Exchange Act Rule 13a-14(a).										X
31.02	Certification of Principal Financial Officer Pursuant to Securities Exchange Act Rule 13a-14(a).										X
32.01	Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350 and Securities Exchange Act Rule 13a-14(b).*										X
32.02	Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350 and Securities Exchange Act Rule 13a-14(b).*										X
101.INS	XBRL INSTANCE DOCUMENT **										X
101.SCH	XBRL TAXONOMY EXTENSION SCHEMA DOCUMENT **										X
101.CAL	XBRL TAXONOMY EXTENSION CALCULATION LINKBASE DOCUMENT **										X
101.DEF	XBRL TAXONOMY EXTENSION DEFINITION LINKBASE DOCUMENT **										X
101.LAB	XBRL TAXONOMY EXTENSION LABEL LINKBASE DOCUMENT **										X
101.PRE	XBRL TAXONOMY EXTENSION PRESENTATION **										X

* This certification is not deemed “filed” for purposes of Section 18 of the Securities Exchange Act, or otherwise subject to the liability of that section. Such certification will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, except to the extent that Limelight Networks, Inc. specifically incorporates it by reference.

** In accordance with Rule 406T of Regulation S-T, XBRL (Extensible Business Reporting Language) information deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, and otherwise is not subject to liability under these sections.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	LIMELIGHT NETWORKS, INC.
Date: November 5, 2012	By:	/s/ Douglas S. Lindroth
		Douglas S. Lindroth
		Senior Vice President, Chief Financial Officer and Treasurer (Principal Financial Officer and Principal Accounting Officer)

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EXHIBIT INDEX

		Incorporated by Reference
Exhibit Number	Exhibit Description	Form		File No.		Exhibit		Filing Date		Provided Herewith
3.02	Amended and Restated Certificate of Incorporation of Limelight Networks, Inc., as currently in effect		8-K		001-33508		3.1		6/14/11
3.04	Amended and Restated Bylaws of Limelight Networks, Inc.		S-1		333-141516		3.4		3/22/07
10.29	Employment Agreement between the Registrant and Charles Kirby Wadsworth dated June 22, 2012.										X
31.01	Certification of Principal Executive Officer Pursuant to Securities Exchange Act Rule 13a-14(a).										X
31.02	Certification of Principal Financial Officer Pursuant to Securities Exchange Act Rule 13a-14(a).										X
32.01	Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350 and Securities Exchange Act Rule 13a-14(b).*										X
32.02	Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350 and Securities Exchange Act Rule 13a-14(b).*										X
101.INS	XBRL INSTANCE DOCUMENT **										X
101.SCH	XBRL TAXONOMY EXTENSION SCHEMA DOCUMENT **										X
101.CAL	XBRL TAXONOMY EXTENSION CALCULATION LINKBASE DOCUMENT **										X
101.DEF	XBRL TAXONOMY EXTENSION DEFINITION LINKBASE DOCUMENT **										X
101.LAB	XBRL TAXONOMY EXTENSION LABEL LINKBASE DOCUMENT **										X
101.PRE	XBRL TAXONOMY EXTENSION PRESENTATION **										X

* This certification is not deemed “filed” for purposes of Section 18 of the Securities Exchange Act, or otherwise subject to the liability of that section. Such certification will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, except to the extent that Limelight Networks, Inc. specifically incorporates it by reference.

** In accordance with Rule 406T of Regulation S-T, XBRL (Extensible Business Reporting Language) information deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, and otherwise is not subject to liability under these sections.

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EX-10.29

Exhibit 10.29

LIMELIGHT NETWORKS, INC.

CHARLES KIRBY WADSWORTH EMPLOYMENT AGREEMENT

This Employment Agreement (the “Agreement”) is entered into as of June 22, 2012 (the “Signing Date”), by and between Limelight Networks, Inc. (the “Company”) and Charles Kirby Wadsworth (“Executive”).

1. Duties and Scope of Employment.

(a) Positions and Duties. No later than June 30, 2012, Executive will commence service as the Company’s Chief Marketing Officer (“CMO”). Executive will report to the Company’s Chief Executive Officer (the “CEO”). The date on which Executive actually commences such service as the Company’s CMO shall be the “Effective Date.” As of the Effective Date, Executive will render such business and professional services in the performance of his duties, consistent with Executive’s position within the Company, as will reasonably be assigned to him by the CEO. Without limiting the foregoing, immediate goals will include, inter alia, design and implementation of marketing programs and initiatives that will expand the Company’s brand, significantly and measurably improve lead generation and conversion, demonstrably and measurably leverage new-age marketing mediums, enhance customer community development, implement external and internal messaging programs that align sales materials and training with marketing messaging and implement comprehensive improvements in the product marketing area. The period Executive is employed by the Company under this Agreement is referred to herein as the “Employment Term.” In the event that Executive fails to begin full-time employment with the Company by June 30, 2012, this Agreement and any equity awards to be granted pursuant to the terms hereof shall be null and void upon the date of such failure. Executive will be based in Boston, Massachusetts but will spend such time in the Company’s Tempe, Arizona, San Diego, California and San Francisco, California offices, and will travel on Company business to such other locations and for such periods, as may be necessary or appropriate to carry out his responsibilities or as may be directed by the Company’s CEO.

(b) Obligations. During the Employment Term, Executive, except as provided in this Agreement, will devote Executive’s full business efforts and time to the Company and will use good faith efforts to discharge Executive’s obligations under this Agreement to the best of Executive’s ability and in accordance with each of the Company’s written corporate guidance and ethics guidelines, conflict of interests policies, code of conduct and other policies and procedures as the Company may adopt from time to time. For the duration of the Employment Term, Executive agrees not to actively engage in any other employment, occupation, or consulting activity for any direct or indirect remuneration without the prior approval of the CEO (which approval will not be unreasonably withheld); provided, however, that Executive may, without the approval of the CEO, serve in any capacity with any civic, educational, professional, industry or charitable organization, provided such services do not interfere with Executive’s obligations to Company, are disclosed in writing to the Company and are otherwise consistent with the Company’s policies.

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(i) Executive hereby represents, warrants and covenants to the Company that as of the Effective Time, Executive will not be a party to any contract, understanding, agreement or policy, written or otherwise, that will be breached by Executive’s entering into, or performing services under, this Agreement. Executive further represents that he has disclosed to the Company in writing all threatened, pending, or actual claims that are unresolved and still outstanding as of the Signing Date, in each case, against Executive of which he is aware, if any, as a result of his employment with any previous employer or his membership on any boards of directors.

(c) Other Entities. Executive agrees to serve if appointed, without additional compensation, as an officer and director for each of the Company’s subsidiaries, partnerships, joint ventures, limited liability companies and other affiliates, including entities in which the Company has a significant investment as determined by the Company. As used in this Agreement, the term “affiliates” will mean any entity controlled by, controlling, or under common control of the Company.

2. At-Will Employment. Executive and the Company agree that Executive’s employment with the Company constitutes “at-will” employment. Executive and the Company acknowledge that this employment relationship may be terminated at any time, upon written notice to the other party, with or without good cause or for any or no cause, at the option either of the Company or Executive. However, as described in this Agreement, Executive may be entitled to severance benefits depending upon the circumstances of Executive’s termination of employment.

3. Compensation.

(a) Base Salary. Commencing with the Effective Date, the Company will pay Executive an annual salary of $250,000 as compensation for his services (such annual salary, as is then effective, to be referred to herein as “Base Salary”). Executive’s Base Salary will be subject to annual review. The Base Salary will be paid periodically in accordance with the Company’s normal payroll practices and will be subject to the usual, required withholdings.

(b) Annual Incentive. Executive will be eligible to receive annual cash incentives payable for the achievement of performance goals established by the Board of Directors of the Company (the “Board”) or by the Compensation Committee of the Board (the “Committee”). During calendar year 2012, Executive’s target annual incentive (“Target Annual Incentive”) will be $50,000 (20% of Executive’s Base Salary), which shall be pro rated for the portion of calendar year 2012 during which Executive is an employee of the Company. The actual earned annual cash incentive, if any, payable to Executive for any performance period will depend upon the extent to which the applicable performance goal(s) specified by the Committee are achieved. Any annual cash incentives earned pursuant to this Section 3(b) will be paid to Executive as soon as reasonably practicable following the date on which such annual cash incentives are earned, but in no event will be paid later than March 15 of the year following the year in which such annual cash incentives are earned.

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(c) Equity Awards.

(i) Subject to Committee approval, on the grant date set by the Committee, the Company will issue to Executive 150,000 Restricted Stock Units (“RSUs”) pursuant the Company’s 2007 Equity Incentive Plan (the “Plan). The RSUs will be granted under and subject to the terms, definitions and provisions of the Plan. One-third (1/3^rd) of the RSUs will vest one year anniversary of the Effective Date, and an additional one-twelfth (1/12^th) will vest on the first day of each September, December, March and June, thereafter, provided Executive continues to be a Service Provider through each such vesting date.

(ii) Executive may from time to time be issued stock options, RSUs or other equity awards under the Plan or a successor plan. Such awards together with the equity awards issued pursuant to this Agreement may be referred to in this Agreement as Equity Awards.

(iii) In the event that the Company consummates a Change of Control transaction, 50% of Executive’s then outstanding unvested Equity Awards will vest immediately. In the event Executive’s employment is terminated in connection with a Change of Control, the balance of Executive’s then outstanding Equity Awards may vest as provided in Section 7(b) below.

4. Employee Benefits.

(a) Generally. Executive will be eligible to participate in accordance with the terms of all Company employee benefit plans, policies and arrangements that are applicable to other officers of the Company, as such plans, policies and arrangements may exist from time to time.

(b) Vacation. Executive will be entitled to receive paid annual vacation in accordance with Company policy for other vice president level officers, but with vacation accrual of not less than two (2) weeks per year.

5. Expenses. The Company will reimburse Executive for reasonable travel, entertainment and other business expenses, including professional association fees, incurred by Executive in the furtherance of the performance of Executive’s duties hereunder. All reimbursements to Executive by the Company pursuant to this Section 5 shall be in accordance with the Company’s expense reimbursement policy as in effect from time to time.

6. Termination of Employment. In the event Executive’s employment with the Company terminates for any reason, Executive will be entitled to any (a) unpaid Base Salary accrued up to the effective date of termination; (b) unpaid, but earned and accrued annual incentive for any completed fiscal year as of his termination of employment; (c) pay for accrued but unused vacation; (d) benefits or compensation as provided under the terms of any employee benefit and compensation agreements or plans applicable to Executive; (e) unreimbursed business expenses required to be reimbursed to Executive; and (f) rights to indemnification Executive may have under the Company’s Certificate of Incorporation, Bylaws and this Agreement as applicable. In the event Executive’s employment with the Company terminates for any reason (other than Cause), Executive will be entitled to exercise any outstanding vested stock options until the first to occur of: (i) the date that is three months following the later of such termination of employment or the date upon which Executive ceases to be a Service Provider (as defined in the Plan), (ii) the applicable scheduled expiration date of such award (in the absence of any termination of employment) as set forth in the

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award agreement, or (iii) the ten (10) year anniversary of the award’s original date of grant. For purposes of clarity, the term “expiration date” shall be the scheduled expiration of the option agreement and not the period that Executive shall be entitled to exercise such option. In addition, if the termination is by the Company without Cause, Executive will be entitled to the amounts and benefits specified in Section 7.

7. Severance.

(a) Termination Without Cause other than in Connection with a Change of Control. If Executive’s employment is terminated by the Company without Cause and such termination is not in Connection with a Change of Control, then, subject to Section 8, Executive will receive: (i) continued payment of Executive’s Base Salary (subject to applicable tax withholdings) for three (3) months, such amounts to be paid in accordance with the Company’s normal payroll policies; (ii) the actual earned cash incentive, if any, payable to Executive for the current year, pro-rated to the date of termination, with such pro-rated amount to be calculated by multiplying the current year’s Target Annual Incentive by a fraction with a numerator equal to the number of days inclusive between the start of the current calendar year and the date of termination and a denominator equal to 365, such amounts to be paid at the same time as similar bonus payments are made to the Company’s other executive officers, and (iii) reimbursement for premiums paid for continued health benefits for Executive (and any eligible dependents) under the Company’s health plans until the earlier of (A) three (3) months, payable when such premiums are due (provided Executive validly elects to continue coverage under the Consolidated Omnibus Budget Reconciliation Act (“COBRA”)), or (B) the date upon which Executive and Executive’s eligible dependents become covered under similar plans. For purposes of clarity, the Compensation Committee of the Board of Directors shall determine, in good faith, the extent to which any cash incentive has been earned by Executive.

(b) Termination Without Cause or Resignation for Good Reason in Connection with a Change of Control. If Executive’s employment is terminated by the Company without Cause or Executive terminates voluntarily for Good Reason and the termination is in Connection with a Change of Control, then, subject to Section 8, Executive will receive: (i) continued payment of Executive’s Base Salary for the year in which the termination occurs (subject to applicable tax withholdings), for three (3) months, such amounts to be paid in accordance with the Company’s normal payroll policies; (ii) the payment in an amount equal to 100% of Executive’s Target Annual Incentive for the year in which the termination occurs (subject to applicable tax withholdings), such amounts to be paid in accordance with the Company’s normal payroll policies over the course of three (3) months; (iii) 100% of Executive’s then outstanding unvested Equity Awards will vest, and (iv) reimbursement for premiums paid for continued health benefits for Executive (and any eligible dependents) under the Company’s health plans until the earlier of (A) three (3) months, payable when such premiums are due (provided Executive validly elects to continue coverage under COBRA), or (B) the date upon which Executive and Executive’s eligible dependents become covered under similar plans.

(c) Voluntary Termination or Termination for Cause. If Executive’s employment is terminated voluntarily or is terminated for Cause by the Company, then, except as provided in Section 6, (i) all further vesting of Executive’s outstanding Equity Awards will terminate

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immediately and stock options shall be exercisable as provided in Section 6; (ii) all payments of compensation by the Company to Executive hereunder will terminate immediately, and (iii) Executive will be eligible for severance benefits only in accordance with the Company’s then established plans. In the event that Executive’s employment is terminated due to death or Disability, twenty-five percent (25%) of Executive’s then unvested Equity Awards shall vest.

8. Conditions to Receipt of Severance: No Duty to Mitigate.

(a) Separation Agreement and Release of Claims. The receipt of any severance or other benefits pursuant to Section 7 will be subject to Executive signing and not revoking a separation agreement and release of claims in a form acceptable to the Company and provided that such release of claims becomes effective and irrevocable no later than sixty (60) days following the termination date (such deadline, the “Release Deadline”). The Company shall deliver such form to Executive within five (5) business days after the date of termination. No severance or other benefits pursuant to Section 7 will be paid or provided until the separation agreement and release of claims becomes effective and irrevocable. If the separation agreement and release of claims does not become effective by the Release Deadline, Executive will forfeit any rights to severance or benefits under this Agreement. Any severance payments or benefits under this Agreement that would be considered Deferred Compensation Severance Benefits (as defined in Section 24), will be paid on, or, in the case of installments, will not commence until, the sixtieth (60^th) day following Executive’s “separation from service”, or, if later, such time as required by Section 24. Any installment payments that would have been made to Executive during the sixty (60) day period immediately following Executive’s “separation from service” but for the preceding sentence will be paid to Executive on the sixtieth (60^th) day following Executive’s “separation from service” and the remaining payments will be made as provided in this Agreement. If Executive should die before all of the severance amounts have been paid, such unpaid amounts will be paid in a lump-sum payment promptly following such event to Executive’s designated beneficiary, if living, or otherwise to the personal representative of Executive’s estate.

(b) Non-solicitation and Non-competition. The receipt of any severance or other benefits pursuant to Section 7 is subject to Executive agreeing that during the Employment Term and for twelve (12) months thereafter, Executive will comply with all of the restrictive covenants contained in the Confidential Information Agreement (as defined in Section 12 below), including without limitation, the non-compete, non-solicitation of employees and non-solicitation of customers covenants contained in Section 5 of the Confidential Information Agreement.

(c) Nondisparagement. During the Employment Term and for twelve (12) months thereafter, Executive and the Company in its official communications will not knowingly and materially disparage, criticize, or otherwise make any derogatory statements regarding the other. The Company will instruct its officers and directors to not knowingly and materially disparage, criticize, or otherwise make any derogatory statements regarding Executive. Notwithstanding the foregoing, nothing contained in this agreement will be deemed to restrict Executive, the Company or any of the Company’s current or former officers and/or directors from providing factual information to any governmental or regulatory agency (or in any way limit the content of any such information) to the extent they are requested or required to provide such information pursuant to applicable order, subpoena, law or regulation.

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(d) Other Requirements. Executive’s receipt of continued severance payments pursuant to Section 7 will be subject to Executive continuing to comply with the terms of the Confidential Information Agreement and the provisions of this Section 8.

(e) No Duty to Mitigate. Executive will not be required to mitigate the amount of any payment contemplated by this Agreement, nor will any earnings that Executive may receive from any other source reduce any such payment.

9. Excise Tax. In the event that the benefits provided for in this Agreement constitute “parachute payments” within the meaning of Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”) and will be subject to the excise tax imposed by Section 4999 of the Code (the “Excise Tax”), then Executive’s severance benefits payable under the terms of this Agreement will be either (a) delivered in full, or (b) delivered as to such lesser extent which would result in no portion of such severance benefits being subject to the Excise Tax, whichever of the foregoing amounts, taking into account the applicable federal, state and local income taxes and the Excise Tax, results in the receipt by Executive on an after-tax basis, of the greatest amount of severance benefits. Any reduction in payments and/or benefits required by this Section 9 will occur in the following order: (1) reduction of cash payments; (2) reduction of vesting acceleration of equity awards; and (3) reduction of other benefits paid or provided to Executive. In the event that acceleration of vesting of equity awards is to be reduced, such acceleration of vesting will be cancelled in the reverse order of the date of grant for Executive’s equity awards. If two or more equity awards are granted on the same date, each award will be reduced on a pro-rata basis.

10. Definitions.

(a) Cause. For purposes of this Agreement, “Cause” will mean:

(i) Acts or omissions constituting gross negligence, recklessness or willful misconduct on the part of Executive with respect to Executive’s obligations under this Agreement or otherwise relating to the business of Company;

(ii) Any act of personal dishonesty taken by Executive in connection with his responsibilities as an employee of the Company with the intention or reasonable expectation that such action may result in the substantial personal enrichment of Executive;

(iii) Executive’s conviction of, or plea of nolo contendere to, a felony that the Board reasonably believes has had or will have a material detrimental effect on the Company’s reputation or business;

(iv) A breach of any fiduciary duty owed to the Company by Executive that has a material detrimental effect on the Company’s reputation or business;

(v) Executive being found liable in any Securities and Exchange Commission or other civil or criminal securities law action or entering any cease and desist order with respect to such action (regardless of whether or not Executive admits or denies liability);

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(vi) Executive (A) obstructing or impeding; (B) endeavoring to obstruct, impede or improperly influence, or (C) failing to materially cooperate with, any investigation authorized by the Board or any governmental or self-regulatory entity (an “Investigation”). However, Executive’s failure to waive attorney-client privilege relating to communications with Executive’s own attorney in connection with an Investigation will not constitute “Cause”;

(vii) Executive’s disqualification or bar by any governmental or self-regulatory authority from serving in the capacity contemplated by this Agreement or Executive’s loss of any governmental or self-regulatory license that is reasonably necessary for Executive to perform his responsibilities to the Company under this Agreement, if (A) the disqualification, bar or loss continues for more than thirty (30) days, and (B) during that period the Company uses its good faith efforts to cause the disqualification or bar to be lifted or the license replaced. While any disqualification, bar or loss continues during Executive’s employment, Executive will serve in the capacity contemplated by this Agreement to whatever extent legally permissible and, if Executive’s employment is not permissible, Executive will be placed on leave (which will be paid to the extent legally permissible); or

(b) Change of Control. For purposes of this Agreement, “Change of Control” will mean the occurrence of any of the following events:

(i) The consummation by the Company of a merger or consolidation of the Company with any other corporation, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than 50% of the total voting power represented by the voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation;

(ii) The approval by the stockholders of the Company, or if stockholder approval is not required, approval by the Board, of a plan of complete liquidation of the Company or an agreement for the sale or disposition by the Company of all or substantially all of the Company’s assets; or

(iii) Any “person” (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended), other than Goldman Sachs and its related funds and entities, becoming the “beneficial owner” (as defined in Rule 13d-3 under said Act), directly or indirectly, of securities of the Company representing 50% or more of the total voting power represented by the Company’s then outstanding voting securities.

(c) Continuance Period. For purposes of this Agreement, “Continuance Period” will mean the period of time beginning on the date of the termination of Executive’s employment and ending on the date on which Executive is no longer receiving Base Salary payments under Section 7.

(d) Disability. For purposes of this Agreement, “Disability” will mean Executive’s absence from his responsibilities with the Company on a full-time basis for 120 calendar days in any consecutive twelve (12) month period as a result of Executive’s mental or physical illness or injury.

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(e) In Connection with a Change of Control. For purposes of this Agreement, a termination of Executive’s employment with the Company is “in Connection with a Change of Control” if Executive’s employment is terminated within three (3) months prior to the execution of an agreement that results in a Change of Control or twelve (12) months following a Change of Control.

(f) Good Reason. For purposes of this Agreement, “Good Reason” means Executive’s voluntary resignation of employment within twelve (12) months following a Change of Control because of the existence of any of the following reasons and which reason(s) continue following the expiration of any cure period (as discussed below), without Executive’s written consent:

(i) A significant, material reduction of Executive’s duties, position, or responsibilities, relative to Executive’s duties, position, or responsibilities in effect immediately prior to the Change of Control. A change of title alone is not Good Reason;

(ii) A material reduction in Executive’s cash compensation (either Base Salary, or Base Salary and Annual Incentive Target combined) as in effect immediately prior to such reduction. Notwithstanding the foregoing, a one-time reduction that also is applied to other similarly situated executive officers of the Company and which one-time reduction reduces the cash compensation by a percentage reduction of 10% or less in the aggregate will not be deemed material and will not constitute “Good Reason”;

(iii) A material change in the geographic location from which Executive must perform services (that is, a requirement that Executive re-locate his permanent residence away from the Boston, Massachusetts area), it being recognized that Executive may routinely be required to travel in performance of his business duties; or

(iv) A material breach by the Company (or its successor) of any material contractual obligation owed Executive pursuant to this Agreement (including, without limitation, the failure of the Company to obtain the assumption of this Agreement by a successor).

Executive will not resign for Good Reason following a Change of Control without first providing the Company with written notice within thirty (30) days of the event that Executive believes constitutes “Good Reason” specifically identifying the acts or omissions constituting the grounds for Good Reason and a reasonable cure period of not less than thirty (30) days.

11. Indemnification. Subject to applicable law, Executive will be provided indemnification to the maximum extent permitted by the Company’s Certificate of Incorporation or Bylaws, including, if applicable, any directors and officers insurance policies, with such indemnification to be on terms determined by the Board or any of its committees, but on terms no less favorable than provided to any other Company executive officer or director and subject to the terms of any separate written indemnification agreement.

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12. Confidential Information. Executive will execute the form of At-Will Employment, Confidential Information, Inventions Assignment and Arbitration Agreement, appended hereto as Exhibit A (the “Confidential Information Agreement”). In the event of any inconsistency between the terms of this Agreement and the terms of the Confidential Information Agreement, this Agreement will prevail.

13. Assignment. This Agreement will be binding upon and inure to the benefit of (a) the heirs, executors and legal representatives of Executive upon Executive’s death, and (b) any successor of the Company. Any such successor of the Company will be deemed substituted for the Company under the terms of this Agreement for all purposes. For this purpose, “successor” means any person, firm, corporation, or other business entity which at any time, whether by purchase, merger, or otherwise, directly or indirectly acquires all or substantially all of the assets or business of the Company. None of the rights of Executive to receive any form of compensation payable pursuant to this Agreement may be assigned or transferred except by will or the laws of descent and distribution. Any other attempted assignment, transfer, conveyance, or other disposition of Executive’s right to compensation or other benefits will be null and void. This Section 13 will in no way prevent Executive from transferring any vested property he owns.

14. Notices. All notices, requests, demands and other communications called for hereunder will be in writing and will be deemed given (a) on the date of delivery if delivered personally; (b) one (1) day after being sent overnight by a well-established commercial overnight service, or (c) four (4) days after being mailed by registered or certified mail, return receipt requested, prepaid and addressed to the parties or their successors at the following addresses, or at such other addresses as the parties may later designate in writing:

If to the Company:

222 South Mill Ave. , Suite 800

Tempe, Arizona 85281

Attn: Human Resources

If to Executive:

at the last residential address known by the Company.

15. Severability. If any provision hereof becomes or is declared by a court of competent jurisdiction to be illegal, unenforceable, or void, this Agreement will continue in full force and effect without said provision.

16. Arbitration. The parties agree that any and all disputes arising out of the terms of this Agreement, Executive’s employment by the Company, Executive’s service as an officer or director of the Company, or Executive’s compensation and benefits, their interpretation and any of the matters herein released, will be subject to binding arbitration in accordance with the terms of section 12 of the Confidential Information Agreement. The Parties further agree that the prevailing party in any arbitration will be entitled to injunctive relief in any court of competent jurisdiction to enforce the arbitration award. The parties hereby agree to waive their right to have any dispute between

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them resolved in a court of law by a judge or jury. This paragraph will not prevent either party from seeking injunctive relief (or any other provisional remedy) from any court having jurisdiction over the Parties and the subject matter of their dispute relating to Executive’s obligations under this Agreement and the Confidential Information Agreement.

17. Integration. This Agreement, together with the Confidential Information Agreement and the forms of equity award agreements that describe Executive’s outstanding Equity Awards, represents the entire agreement and understanding between the parties as to the subject matter herein and supersedes all prior or contemporaneous agreements whether written or oral. No waiver, alteration, or modification of any of the provisions of this Agreement will be binding unless in a writing and signed by duly authorized representatives of the parties hereto. In entering into this Agreement, no party has relied on or made any representation, warranty, inducement, promise, or understanding that is not in this Agreement. To the extent that any provisions of this Agreement conflict with those of any other agreement to be signed upon Executive’s hire, the terms in this Agreement will prevail.

18. Waiver of Breach. The waiver of a breach of any term or provision of this Agreement, which must be in writing, will not operate as or be construed to be a waiver of any other previous or subsequent breach of this Agreement.

19. Survival. The Confidential Information Agreement and the Company’s and Executive’s responsibilities under Sections 6, 7, 8, and 11 will survive the termination of this Agreement.

20. Headings. All captions and Section headings used in this Agreement are for convenient reference only and do not form a part of this Agreement.

21. Tax Withholding. All payments made pursuant to this Agreement will be subject to withholding of applicable taxes.

22. Governing Law. This Agreement will be governed by the laws of the state of Arizona without regard to its conflict of laws provisions.

23. Acknowledgment. Executive acknowledges that he has had the opportunity to discuss this matter with and obtain advice from his private attorney, has had sufficient time to, and has carefully read and fully understands all the provisions of this Agreement, and is knowingly and voluntarily entering into this Agreement.

24. Code Section 409A.

(a) Notwithstanding anything to the contrary in this Agreement, no severance payable to Executive, if any, pursuant to this Agreement, when considered together with any other severance payments or separation benefits that are considered deferred compensation under Section 409A of the Code and the final regulations and any guidance promulgated thereunder (“Section 409A”) (together, the “Deferred Compensation Separation Benefits”) will be payable until Executive has a “separation from service” within the meaning of Section 409A.

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(b) Notwithstanding anything to the contrary in this Agreement, if Executive is a “specified employee” within the meaning of Section 409A at the time of Executive’s termination (other than due to death), then the Deferred Compensation Separation Benefits that are payable within the first six (6) months following Executive’s separation from service, will become payable on the first payroll date that occurs on or after the date six (6) months and one (1) day following the date of Executive’s separation from service. All subsequent Deferred Compensation Separation Benefits, if any, will be payable in accordance with the payment schedule applicable to each payment or benefit. Notwithstanding anything herein to the contrary, if Executive dies following Executive’s separation from service but prior to the six (6) month anniversary of the separation, then any payments delayed in accordance with this paragraph will be payable in a lump sum as soon as administratively practicable after the date of Executive’s death and all other Deferred Compensation Separation Benefits will be payable in accordance with the payment schedule applicable to each payment or benefit. Each payment and benefit payable under this Agreement is intended to constitute separate payments for purposes of Section 1.409A-2(b)(2) of the Treasury Regulations.

(c) Any amount paid under this Agreement that satisfies the requirements of the “short-term deferral” rule set forth in Section 1.409A-1(b)(4) of the Treasury Regulations will not constitute Deferred Compensation Separation Benefits for purposes of clause (i) above.

(d) Any amount paid under this Agreement that qualifies as a payment made as a result of an involuntary separation from service pursuant to Section 1.409A-1(b)(9)(iii) of the Treasury Regulations that do not exceed the Section 409A Limit will not constitute Deferred Compensation Separation Benefits for purposes of clause (i) above. For purposes of this Agreement, “Section 409A Limit” will mean the lesser of two (2) times: (i) Executive’s annualized compensation based upon the annual rate of pay paid to Executive during the Company’s taxable year preceding the Company’s taxable year of Executive’s termination of employment as determined under Treasury Regulation 1.409A-1(b)(9)(iii)(A)(1) and any Internal Revenue Service guidance issued with respect thereto; or (ii) the maximum amount that may be taken into account under a qualified plan pursuant to Section 401(a)(17) of the Code for the year in which Executive’s employment is terminated.

(e) The foregoing provisions are intended to comply with the requirements of Section 409A so that none of the severance payments and benefits to be provided hereunder will be subject to the additional tax imposed under Section 409A, and any ambiguities herein will be interpreted to so comply. The Company and Executive agree to work together in good faith to consider amendments to this Agreement and to take such reasonable actions which are necessary, appropriate or desirable to avoid imposition of any additional tax or income recognition prior to actual payment to Executive under Section 409A.”

25. Counterparts. This Agreement may be executed in counterparts, and each counterpart will have the same force and effect as an original and will constitute an effective, binding agreement on the part of each of the undersigned.

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IN WITNESS WHEREOF, each of the parties has executed this Agreement, in the case of the Company by a duly authorized officer, as of the day and year written below.

COMPANY:

LIMELIGHT NETWORKS, INC.
/s/ Jeff Lunsford	Date: June 22, 2012
Jeff Lunsford, Chief Executive Officer
EXECUTIVE:
/s/ Charles Kirby Wadsworth	Date: June 22, 2012
Charles Kirby Wadsworth

[SIGNATURE PAGE TO WADSWORTH EMPLOYMENT AGREEMENT]

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Exhibit A

FORM OF CONFIDENTIAL INFORMATION AGREEMENT

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EX-31.01

EXHIBIT 31.01

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

I, Jeffrey W. Lunsford, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Limelight Networks, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 5, 2012	By:	/s/ Jeffrey W. Lunsford
		Jeffrey W. Lunsford
		President, Chief Executive Officer and Chairman
		(Principal Executive Officer)

EX-31.02

EXHIBIT 31.02

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

I, Douglas S. Lindroth, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Limelight Networks, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 5, 2012	By:	/s/ Douglas S. Lindroth
		Douglas S. Lindroth
		Senior Vice President, Chief Financial Officer and Treasurer
		(Principal Financial Officer and Principal Accounting Officer)

EX-32.01

EXHIBIT 32.01

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

Pursuant to

18 U.S.C. Section 1350,

As Adopted pursuant to

Section 906 of the Sarbanes-Oxley Act of 2002

I, Jeffrey W. Lunsford, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the quarterly report of Limelight Networks, Inc. on Form 10-Q for the period ended September 30, 2012, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in such quarterly report on Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of Limelight Networks, Inc.

Date: November 5, 2012	By:	/s/ Jeffrey W. Lunsford
		Jeffrey W. Lunsford
		President, Chief Executive Officer and Chairman
		(Principal Executive Officer)

A signed original of this written statement required by Section 906 has been provided to Limelight Networks, Inc. and will be retained by, Limelight Networks Inc. and furnished to the Securities and Exchange Commission or its staff upon request. This certification “accompanies” the Form 10-Q to which it relates, is not deemed filed with the Securities and Exchange Commission and is not to be incorporated by reference into any filing of the Company under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended (whether made before or after the date of the Form 10-Q), irrespective of any general incorporation language contained in such filing.

EX-32.02

EXHIBIT 32.02

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

Pursuant to

18 U.S.C. Section 1350,

As Adopted pursuant to

Section 906 of the Sarbanes-Oxley Act of 2002

I, Douglas S. Lindroth, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the quarterly report of Limelight Networks, Inc. on Form 10-Q for the period ended September 30, 2012, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in such quarterly report on Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of Limelight Networks, Inc.

Date: November 5, 2012	By:	/s/ Douglas S. Lindroth
		Douglas S. Lindroth
		Senior Vice President, Chief Financial Officer and Treasurer
		(Principal Financial Officer and Principal Accounting Officer)

A signed original of this written statement required by Section 906 has been provided to Limelight Networks, Inc. and will be retained by, Limelight Networks Inc. and furnished to the Securities and Exchange Commission or its staff upon request. This certification “accompanies” the Form 10-Q to which it relates, is not deemed filed with the Securities and Exchange Commission and is not to be incorporated by reference into any filing of the Company under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended (whether made before or after the date of the Form 10-Q), irrespective of any general incorporation language contained in such filing.

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Net Income (Loss) per Share (Tables)

9 Months Ended

Sep. 30, 2012

Net Income (Loss) per Share [Abstract]

Computation of basic and diluted net income (loss) per share

	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2012			2011			2012			2011
Net loss from continuing operations	$	(610	)	$	(6,402	)	$	(19,744	)	$	(24,071	)
Net (loss) income from discontinued operations		(218	)		11,420			(918	)		5,336
Net (loss) income available to common stockholders	$	(828	)	$	5,018		$	(20,662	)	$	(18,735	)
Basic weighted average common shares		99,359			113,662			102,123			110,231
Basic weighted average common shares		99,359			113,662			102,123			110,231
Dilutive effect of stock options and restricted stock units		—			—			—			—
Diluted weighted average common shares		99,359			113,662			102,123			110,231
Basic and diluted net income (loss) per share:
Continuing operations	$	(0.01	)	$	(0.06	)	$	(0.19	)	$	(0.22	)
Discontinued operations		0.00			0.10			(0.01	)		0.05
Basic and diluted net income (loss) per share	$	(0.01	)	$	0.04		$	(0.20	)	$	(0.17	)

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Goodwill and Other Intangible Assets (Details 1) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Schedule of Other intangible assets subject to amortization
Gross Carrying Amount	$ 11,814	$ 11,919
Accumulated Amortization	(4,833)	(2,712)
Net Carrying Amount	6,981	9,207
Existing technologies [Member]
Schedule of Other intangible assets subject to amortization
Gross Carrying Amount	8,242	8,347
Accumulated Amortization	(3,460)	(1,976)
Net Carrying Amount	4,782	6,371
Customer relationships [Member]
Schedule of Other intangible assets subject to amortization
Gross Carrying Amount	3,412	3,412
Accumulated Amortization	(1,217)	(589)
Net Carrying Amount	2,195	2,823
Trademark [Member]
Schedule of Other intangible assets subject to amortization
Gross Carrying Amount	160
Accumulated Amortization	(156)
Net Carrying Amount	4
Trade names and trademark [Member]
Schedule of Other intangible assets subject to amortization
Gross Carrying Amount		160
Accumulated Amortization		(147)
Net Carrying Amount		$ 13

XML

Discontinued Operations (Details) (USD $) In Thousands, unless otherwise specified	Aug. 31, 2011
Current assets
Cash and cash equivalents	$ 2,677
Accounts receivable	9,643
Income tax receivables	500
Other current assets	528
Total current assets	13,348
Current liabilities
Accounts payable and other current liabilities	(2,494)
Net Working Capital	$ 10,854

XML

Leases and Commitments (Details 1) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012
Minimum purchase commitments
2012	$ 11,254
2013	31,294
2014	21,116
2015	15,519
2016 and thereafter	3,639
Total minimum payments	$ 82,822

XML

Goodwill and Other Intangible Assets (Details Textual) (USD $) In Millions, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Goodwill and Other Intangible Assets (Textual) [Abstract]
Aggregate expense related to amortization of other intangible assets	$ 0.7	$ 0.8	$ 2.1	$ 1.5
Remainder of 2012	0.7		0.7
2013	2.8		2.8
2014	2.1		2.1
2015	1.1		1.1
2016	$ 0.3		$ 0.3

XML

Fair Value Measurements (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Jun. 30, 2012	Mar. 31, 2012	Dec. 31, 2011
Assets:
Total assets measured at fair value	$ 38,777			$ 45,756
Liabilities:
Acquisition related contingent consideration	58			994
Total liabilities measured at fair value	58			994
Quoted Prices In Active Markets for Identical Assets (Level 1) [Member]
Assets:
Total assets measured at fair value	10,184			24,906
Liabilities:
Acquisition related contingent consideration
Total liabilities measured at fair value
Significant Other Observable Inputs (Level 2) [Member]
Assets:
Total assets measured at fair value	28,593			20,850
Liabilities:
Acquisition related contingent consideration
Total liabilities measured at fair value
Significant Unobservable Inputs (Level 3) [Member]
Assets:
Total assets measured at fair value
Liabilities:
Acquisition related contingent consideration	58	58	58	994
Total liabilities measured at fair value	58			994
Government agency bonds [Member]
Assets:
Total assets measured at fair value	10,903			9,614
Government agency bonds [Member] | Quoted Prices In Active Markets for Identical Assets (Level 1) [Member]
Assets:
Total assets measured at fair value
Government agency bonds [Member] | Significant Other Observable Inputs (Level 2) [Member]
Assets:
Total assets measured at fair value	10,903			9,614
Government agency bonds [Member] | Significant Unobservable Inputs (Level 3) [Member]
Assets:
Total assets measured at fair value
Money market funds [Member]
Assets:
Total assets measured at fair value	10,160			24,855
Money market funds [Member] | Quoted Prices In Active Markets for Identical Assets (Level 1) [Member]
Assets:
Total assets measured at fair value	10,160			24,855
Money market funds [Member] | Significant Other Observable Inputs (Level 2) [Member]
Assets:
Total assets measured at fair value
Money market funds [Member] | Significant Unobservable Inputs (Level 3) [Member]
Assets:
Total assets measured at fair value
Corporate notes and bonds [Member]
Assets:
Total assets measured at fair value	11,249			5,757
Corporate notes and bonds [Member] | Quoted Prices In Active Markets for Identical Assets (Level 1) [Member]
Assets:
Total assets measured at fair value
Corporate notes and bonds [Member] | Significant Other Observable Inputs (Level 2) [Member]
Assets:
Total assets measured at fair value	11,249			5,757
Corporate notes and bonds [Member] | Significant Unobservable Inputs (Level 3) [Member]
Assets:
Total assets measured at fair value
Commercial paper [Member]
Assets:
Total assets measured at fair value	3,699			2,749
Commercial paper [Member] | Quoted Prices In Active Markets for Identical Assets (Level 1) [Member]
Assets:
Total assets measured at fair value
Commercial paper [Member] | Significant Other Observable Inputs (Level 2) [Member]
Assets:
Total assets measured at fair value	3,699			2,749
Commercial paper [Member] | Significant Unobservable Inputs (Level 3) [Member]
Assets:
Total assets measured at fair value
Certificate of deposit [Member]
Assets:
Total assets measured at fair value	2,742			2,730
Certificate of deposit [Member] | Quoted Prices In Active Markets for Identical Assets (Level 1) [Member]
Assets:
Total assets measured at fair value
Certificate of deposit [Member] | Significant Other Observable Inputs (Level 2) [Member]
Assets:
Total assets measured at fair value	2,742			2,730
Certificate of deposit [Member] | Significant Unobservable Inputs (Level 3) [Member]
Assets:
Total assets measured at fair value
Publicly traded common stock [Member]
Assets:
Total assets measured at fair value	24			51
Publicly traded common stock [Member] | Quoted Prices In Active Markets for Identical Assets (Level 1) [Member]
Assets:
Total assets measured at fair value	24			51
Publicly traded common stock [Member] | Significant Other Observable Inputs (Level 2) [Member]
Assets:
Total assets measured at fair value
Publicly traded common stock [Member] | Significant Unobservable Inputs (Level 3) [Member]
Assets:
Total assets measured at fair value

XML

Investments in Marketable Securities (Details Textual)	Sep. 30, 2012 security
Investments in Marketable Securities (Textual) [Abstract]
Marketable securities in a continuous unrealized loss position for twelve months or longer	0

XML

Prepaid Expenses and Other Current Assets (Tables)

9 Months Ended

Sep. 30, 2012

Prepaid Expenses and Other Current Assets [Abstract]

Summary of Prepaid expenses and other current assets

	As of September 30, 2012		As of December 31, 2011
Prepaid bandwidth and backbone services	$	3,765	$	2,544
Receivable from DG		2,703		11,151
Non-income taxes receivable (VAT)		1,901		2,067
Employee advances and prepaid recoverable commissions		425		332
Indemnity claim asset		—		252
Other		3,056		4,300
Total prepaid expenses and other current assets	$	11,850	$	20,646

XML

Fair Value Measurements (Details 1) (USD $) In Thousands, unless otherwise specified			3 Months Ended
	Sep. 30, 2012	Dec. 31, 2011	Sep. 30, 2012 Significant Unobservable Inputs (Level 3) [Member]	Jun. 30, 2012 Significant Unobservable Inputs (Level 3) [Member]	Mar. 31, 2012 Significant Unobservable Inputs (Level 3) [Member]
Progressions of the Company's Level 3 instruments
Beginning Balance	$ 58	$ 994	$ 58	$ 58	$ 994
Adjustment to fair value of AcceloWeb contingent consideration					(842)
Payment of contingent consideration					(94)
Ending Balance	$ 58	$ 994	$ 58	$ 58	$ 58

XML

Income Taxes (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Income taxes (Textual) [Abstract]
Estimated income tax expense (benefit) from continuing operations	$ 14	$ (1,896)	$ 313	$ (1,329)

XML

Property and Equipment, net (Details Textual) (USD $) In Millions, unless otherwise specified	3 Months Ended
	Sep. 30, 2012
Property and Equipment, net (Textual) [Abstract]
Property, Plant and Equipment, Dispositions	$ 21.9

XML

Segment Reporting (Details 1) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Long-lived assets by geographical area
Domestic long-lived assets	$ 41,755	$ 49,831
International long-lived assets	13,302	15,744
Total long-lived assets	$ 55,057	$ 65,575

XML

Segment Reporting (Details Textual)	9 Months Ended
	Sep. 30, 2012 Location Segment
Segment Reporting (Textual) [Abstract]
Number of industry segment	1
Number of geographic areas	3

XML

Leases and Commitments (Details 2) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Future minimum capital lease payments
2012	$ 461
2013	1,377
2014	498
2015	238
2016 and thereafter	138
Total	2,712
Amounts representing interest	(160)
Present value of minimum lease payments	$ 2,552	$ 3,900

XML

Income Taxes

9 Months Ended

Sep. 30, 2012

Income taxes [Abstract]

Income taxes

19. Income taxes

Income taxes for the interim periods presented have been included in the accompanying condensed consolidated financial statements on the basis of an estimated annual effective tax rate. Based on an estimated annual effective tax rate and discrete items, the estimated income tax expense (benefit) from continuing operations for the nine months ended September 30, 2012 and 2011 was approximately $0.3 million and ($1.3) million, respectively. Income tax expense on the loss from continuing operations before taxes was different than the statutory income tax rate primarily due to the Company providing for a valuation allowance on deferred tax assets in certain jurisdictions, and the recording of state and foreign tax expense for the quarter.

The Company files U.S. federal, U.S. state, and foreign income tax returns. For U.S. federal, and in general for U.S. state tax returns, the fiscal 2009 through fiscal 2011 tax years remain open for examination by tax authorities. As of September 30, 2012, the Company is not under any Federal examination.

XML

Discontinued Operations (Details Textual) (USD $)	3 Months Ended	9 Months Ended	12 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2012	Aug. 31, 2012	Sep. 01, 2011	Sep. 30, 2012 DG Fast Channel, Inc. [Member]	Aug. 31, 2011 DG Fast Channel, Inc. [Member]	Sep. 30, 2012 DG Fast Channel, Inc. [Member] Minimum [Member]
Discontinued Operations (Textual) [Abstract]
Excess cash, cash equivalents and other current assets over the current liabilities						$ 700,000
Remaining Net Working Capital - accounts receivable						9,600,000
Remaining Net Working Capital - income tax receivable						500,000
Receivables collected					7,800,000
Remaining receivable from DG							2,700,000
Receivables Collection Period					120 days
Extend Period for Receivables Collections					60 days
Discontinued Operations (Additional Textual) [Abstract]
Amount of net proceeds from sale				61,000,000
Amount of gross proceeds from sale				66,000,000
Amount of net proceeds from sale held in escrow				5,000,000
Estimated receivable from DG				10,900,000
Potential refund of purchase price factor			1.67
Revenue related to chors customer WPP and affiliates			4,400,000
Proceeds from account receivables remitted by DG		7,217,000
Adjustments made to receivable	100,000	1,100,000
Amount due to the company	3,100,000	3,100,000
Net cash due to the Company	1,300,000	1,300,000
Uncollected accounts receivable	1,700,000	1,700,000
Income tax receivable	100,000	100,000
Allowance for doubtful accounts	$ 400,000	$ 400,000

XML

Segment Reporting (Tables)

9 Months Ended

Sep. 30, 2012

Segment Reporting [Abstract]

Revenue earned by geographic area

	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2012		2011		2012		2011
Domestic revenue	$	30,622	$	28,811	$	91,632	$	87,068
International revenue Asia Pacific		8,069		7,345		22,268		18,982
International revenue EMEA		6,310		6,196		19,865		19,263
Total revenue	$	45,001	$	42,352	$	133,765	$	125,313

Long-lived assets by geographical area

	As of September 30, 2012		As of December 31, 2011
Domestic long-lived assets	$	41,755	$	49,831
International long-lived assets		13,302		15,744
Total long-lived assets	$	55,057	$	65,575

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Segment Reporting (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Revenue earned by geographic area
Total revenue	$ 45,001	$ 42,352	$ 133,765	$ 125,313
Domestic revenue [Member]
Revenue earned by geographic area
Total revenue	30,622	28,811	91,632	87,068
International revenue Asia Pacific [Member]
Revenue earned by geographic area
Total revenue	8,069	7,345	22,268	18,982
International revenue EMEA [Member]
Revenue earned by geographic area
Total revenue	$ 6,310	$ 6,196	$ 19,865	$ 19,263

XML

Other Current Liabilities (Tables)

9 Months Ended

Sep. 30, 2012

Other Current Liabilities [Abstract]

Other current liabilities

	As of September 30, 2012		As of December 31, 2011
Accrued compensation and benefits	$	4,904	$	4,421
Accrued cost of revenue		2,307		3,027
Accrued legal fees		1,426		1,507
Non income taxes payable		539		633
Customer deposits		418		847
Contingent consideration liability		58		152
Other accrued expenses		2,127		2,608
Total other current liabilities	$	11,779	$	13,195

XML

Prepaid Expenses and Other Current Assets (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Summary of Prepaid expenses and other current assets
Prepaid bandwidth and backbone services	$ 3,765	$ 2,544
Receivable from DG	2,703	11,151
Non-income taxes receivable (VAT)	1,901	2,067
Employee advances and prepaid recoverable commissions	425	332
Indemnity claim asset		252
Other	3,056	4,300
Total prepaid expenses and other current assets	$ 11,850	$ 20,646

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Share-Based Compensation (Details Textual) (USD $) In Millions, unless otherwise specified	Sep. 30, 2012
Share-Based Compensation (Textual) [Abstract]
Unrecognized share-based compensation expense total	$ 21.1
Unrecognized share-based compensation expense related to stock options	12.6
Unrecognized share-based compensation expense related to restricted stock awards	8.5
Share-based compensation expense for the remainder of 2012	3.6
Share-based compensation expense for 2013	$ 9.2

XML

Other Long-Term Liabilities (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Other long-term liabilities
Deferred rent	$ 3,664	$ 3,352
Contingent consideration liability		842
Total other long-term liabilities	$ 3,664	$ 4,194

XML

Business Acquisitions (Details) (USD $)	9 Months Ended				1 Months Ended	9 Months Ended		1 Months Ended	9 Months Ended
	Sep. 30, 2011	Sep. 30, 2012	Dec. 31, 2011	May 09, 2011	May 31, 2011 AcceloWeb, (IL) Ltd. Acquisition [Member]	Sep. 30, 2012 AcceloWeb, (IL) Ltd. Acquisition [Member] Quarter	May 09, 2011 AcceloWeb, (IL) Ltd. Acquisition [Member]	May 31, 2011 Clickability Acquisition [Member]	Sep. 30, 2012 Clickability Acquisition [Member]	May 02, 2011 Clickability Acquisition [Member]
Business Acquisitions (Textual) [Abstract]
The aggregate purchase price							$ 12,000,000			$ 9,600,000
Cash paid net of cash acquired	7,360,000				4,700,000			2,700,000
Cash paid for acquisition				5,000,000						4,900,000
Shares issued for acquisition					1,100,629			732,000
Estimated fair value of common stock issued on acquisition date							7,000,000			4,600,000
Purchase price included contingent consideration potential value		58,000	994,000				8,000,000
Contingent consideration payable in cash							4,000,000
Contingent consideration payable in common stock							4,000,000
Number of consecutive quarter in which contingent consideration will be measured						8
Reversed previously recorded earn-out liability						800,000
Amount held in Escrow						1,200,000			2,200,000
Price per share used for calculation of potential claims						$ 6.36			$ 6.83
Maximum period holding of shares held in escrow						18 months
Number of shares of common stock issued at closing date								382,000
Estimated fair value of common stock issued on closing date										2,400,000
Number of shares of common stock held in escrow						188,677			350,000
Indemnification holdback shares									210,000
Retention holdback shares									140,000
Number of days considered for average closing market price calculation					5 days			30 days
Amount held by Company to cover future claims										100,000
Percentage of indemnification holdback									60.00%
Cash will remain unissued and available to cover future claims									$ 100,000
Indemnification holdback period									18 months
Retention holdback period									12 months

XML

Investments in Marketable Securities

9 Months Ended

Sep. 30, 2012

Investments in Marketable Securities [Abstract]

Investments in Marketable Securities

3. Investments in Marketable Securities

The following is a summary of marketable securities (designated as available-for-sale) at September 30, 2012 (in thousands):

us-gaap:InvestmentsClassifiedByContractualMaturityDateTableTextBlock

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
Government agency bonds	$	10,899	$	5	$	1	$	10,903
Certificate of deposit		2,742		—		—		2,742
Commercial paper		2,998		1		—		2,999
Corporate notes and bonds		10,842		7		—		10,849
		27,481		13		1		27,493
Publicly traded common stock		12		12		—		24
Total marketable securities	$	27,493	$	25	$	1	$	27,517

At September 30, 2012, the Company evaluated its marketable securities, and noted unrealized losses were due to fluctuations in interest rates. Management does not believe any of the unrealized losses represented an other-than-temporary impairment based on its evaluation of available evidence as of September 30, 2012. The Company’s intent is to hold these investments to such time as these assets are no longer impaired. There have been no marketable securities in a continuous unrealized loss position for twelve months or longer.

Expected maturities can differ from contractual maturities because the issuers of the securities may have the right to prepay obligations without prepayment penalties, and the Company views its available-for-sale securities as available for current operations.

The amortized cost and estimated fair value of marketable securities (designated as available-for-sale) at September 30, 2012, by maturity, are shown below (in thousands):

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
Available-for-sale securities
Due in one year or less	$	25,671	$	12	$	—	$	25,683
Due after one year and through five years		1,810		1		1		1,810
	$	27,481	$	13	$	1	$	27,493

The following is a summary of marketable securities (designated as available-for-sale) at December 31, 2011 (in thousands):

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
Government agency bonds	$	9,614	$	1	$	1	$	9,614
Certificate of deposit		2,730		—		—		2,730
Commercial paper		1,749		—		—		1,749
Corporate notes and bonds		5,757		1		1		5,757
		19,850		2		2		19,850
Publicly traded common stock		12		39		—		51
Total marketable securities	$	19,862	$	41	$	2	$	19,901

The amortized cost and estimated fair value of marketable securities (designated as available-for-sale) at December 31, 2011, by maturity, are shown below (in thousands):

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
Available-for-sale securities
Due in one year or less	$	19,850	$	2	$	2	$	19,850
Due after one year and through five years		—		—		—		—
	$	19,850	$	2	$	2	$	19,850

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Contingencies (Details) (USD $) In Millions, unless otherwise specified	1 Months Ended		12 Months Ended
	Feb. 29, 2008 Claim	Dec. 31, 2007	Dec. 31, 2008	Apr. 24, 2009	Sep. 30, 2006 Patent	Jun. 30, 2006 Patent
Contingencies (Textual) [Abstract]
Number of patents Company was infringing					3	2
Number of claims Company infringed	4
Aggregate of lost profits, reasonable royalties and price erosion damages		$ 45.5
Prejudgment interest		2.6
Provision for litigation		48.1	65.6	65.6
Revenue from alleged infringing methods			25.00%
Additional provision			15.5
Additional interest			$ 2.0

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Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 2012

Fair Value Measurements [Abstract]

Summary of money market funds, marketable securities, other investment-related assets and current liabilities

			Fair Value Measurements at Reporting Date Using
Description	Total		Quoted Prices In Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Government agency bonds (1)	$	10,903	$	—	$	10,903	$	—
Money market funds (2)		10,160		10,160		—		—
Corporate notes and bonds (1)		11,249		—		11,249		—
Commercial paper (1) (2)		3,699		—		3,699		—
Certificate of deposit (1)		2,742		—		2,742		—
Publicly traded common stock (1)		24		24		—		—
Total assets measured at fair value	$	38,777	$	10,184	$	28,593	$	—
Liabilities:
Acquisition related contingent consideration	$	58	$	—	$	—	$	58
Total liabilities measured at fair value	$	58	$	—	$	—	$	58

			Fair Value Measurements at Reporting Date Using
Description	Total		Quoted Prices In Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Government agency bonds (1)	$	9,614	$	—	$	9,614	$	—
Money market funds (2)		24,855		24,855		—		—
Corporate notes and bonds (1)		5,757		—		5,757		—
Commercial paper (1)		2,749		—		2,749		—
Certificate of deposit (1)		2,730		—		2,730		—
Publicly traded common stock (1)		51		51		—		—
Total assets measured at fair value	$	45,756	$	24,906	$	20,850	$	—
Liabilities:
Acquisition related contingent consideration	$	994	$	—	$	—	$	994
Total liabilities measured at fair value	$	994	$	—	$	—	$	994

Progressions of the Company's Level 3 instruments

	Acquisition Related Contingent Consideration
Balance at January 1, 2012	$	994
Adjustment to fair value of AcceloWeb contingent consideration		(842	)
Payment of contingent consideration		(94	)
Balance at March 31, 2012	$	58
Adjustment to fair value of AcceloWeb contingent consideration		—
Payment of contingent consideration		—
Balance at June 30, 2012	$	58
Adjustment to fair value of AcceloWeb contingent consideration		—
Payment of contingent consideration		—
Balance at September 30, 2012	$	58

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Summary of Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2012

Summary of Significant Accounting Policies [Abstract]

Basis of Presentation

Basis of Presentation

The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles, consistent in all material respects with those applied in its financial statements included in its Annual Report on Form 10-K for the fiscal year ended December 31, 2011. Accordingly, they do not include all of the information and footnotes required by U.S. generally accepted accounting principles for complete financial statements. Such interim financial information is unaudited but reflects all adjustments that in the opinion of management are necessary for the fair presentation of the interim periods presented. All such adjustments are, in the opinion of management, of a normal recurring nature. The results of operations presented in this Quarterly Report on Form 10-Q are not necessarily indicative of the results that may be expected for the year ending December 31, 2012 or for any future periods. This Quarterly Report on Form 10-Q should be read in conjunction with the Company’s audited financial statements and footnotes included in its Annual Report on Form 10-K for the fiscal year ended December 31, 2011.

The condensed consolidated financial statements include accounts of the Company and its wholly owned subsidiaries. All significant intercompany balances and transactions have been eliminated. In addition, certain other reclassifications have been made to prior year amounts to conform to the current year presentation.

On September 1, 2011, the Company completed the sale of its EyeWonder LLC and subsidiaries and chors GmbH video and rich media advertising services (EyeWonder and chors) to DG FastChannel, Inc. (now Digital Generation, Inc.) (DG). The sale of EyeWonder and chors met the criteria for discontinued operations during the year ended December 31, 2011. Accordingly, the results of operations related to EyeWonder and chors have been classified as discontinued operations in all periods presented. See further discussion at Note 5.

Use of Estimates

Use of Estimates

The preparation of consolidated financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts in the consolidated financial statements and accompanying notes. Actual results and outcomes may differ from those estimates.

Recent Accounting Pronouncements

Recent Accounting Pronouncements

As of January 1, 2012, the Company adopted Accounting Standards Update (ASU) 2011-04 related to guidance associated with fair value measurements and disclosures. This ASU clarifies the Financial Accounting Standards Board’s (FASB) intent on current guidance, modifies and changes certain guidance and principles, and expands disclosures concerning Level 3 fair value measurements in the fair value hierarchy (including quantitative information about significant unobservable inputs within Level 3 of the fair value hierarchy). In addition, this ASU requires disclosure of the fair value hierarchy for assets and liabilities not measured at fair value in the balance sheet, but whose fair value is required to be disclosed. Adoption of this new guidance did not have a material impact on the Company’s financial statements.

As of January 1, 2012, the Company adopted ASU 2011-05 related to guidance on the presentation of comprehensive income. The objective of this ASU is to improve the comparability, consistency and transparency of financial reporting and to increase the prominence of items reported in other comprehensive income. This ASU requires an entity to present the components of net income and other comprehensive income and total comprehensive income (which includes net income) either in a single continuous statement of comprehensive income or in two separate but consecutive statements. This ASU eliminates the option to present the components of other comprehensive income as part of the statement of equity, but does not change the items that must be reported in other comprehensive income. This ASU is effective January 1, 2012 and the Company is presenting total comprehensive income in a separate statement. Additionally, in December 2011, FASB deferred the effective date for the requirement in this ASU for presenting reclassification adjustments for each component of accumulated other comprehensive income in both net income and other comprehensive income on the face of the financial statements.

As of January 1, 2012, the Company adopted ASU 2011-08 related to the testing of goodwill for impairment. The objective of this ASU is to simplify goodwill impairment testing by adding a qualitative review step to assess whether the required quantitative impairment analysis is necessary. The ASU permits an entity to first perform a qualitative assessment to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value. If it is concluded that this is the case, it is necessary to perform the prescribed two-step goodwill impairment test. Otherwise, the two-step goodwill impairment test is not required. This ASU was effective for the Company beginning January 1, 2012. Adoption of this new guidance did not have a material impact on the Company’s financial statements.

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Fair Value Measurements

9 Months Ended

Sep. 30, 2012

Fair Value Measurements [Abstract]

Fair Value Measurements

22. Fair Value Measurements

The Company evaluates certain of its financial instruments within the three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include:

Level 1	—	defined as observable inputs such as quoted prices in active markets;
Level 2	—	defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and
Level 3	—	defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions.

As of September 30, 2012 and December 31, 2011, the Company held certain assets and liabilities that are required to be measured at fair value on a recurring basis. These include money market funds, commercial paper, corporate notes and bonds and U.S. Government Agency Bonds, and publicly traded stocks, which are classified as either cash and cash equivalents or marketable securities. The Company also has acquisition-related contingent consideration which is classified as a current liability on the Company’s condensed consolidated balance sheets.

The Company’s financial assets are valued using market prices on both active markets (level 1) and less active markets (level 2). Level 1 instrument valuations are obtained from real-time quotes for transactions in active exchange markets involving identical assets. Level 2 instrument valuations are obtained from readily available pricing sources for comparable instruments or identical instruments in less active markets. Level 3 inputs are valued using models that take into account the terms of the arrangement as well as multiple inputs where applicable, such as estimated units sold and other customer utilization metrics.

The following is a summary of money market funds, marketable securities, other investment-related assets and current liabilities held at September 30, 2012 (in thousands):

			Fair Value Measurements at Reporting Date Using
Description	Total		Quoted Prices In Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Government agency bonds (1)	$	10,903	$	—	$	10,903	$	—
Money market funds (2)		10,160		10,160		—		—
Corporate notes and bonds (1)		11,249		—		11,249		—
Commercial paper (1) (2)		3,699		—		3,699		—
Certificate of deposit (1)		2,742		—		2,742		—
Publicly traded common stock (1)		24		24		—		—
Total assets measured at fair value	$	38,777	$	10,184	$	28,593	$	—
Liabilities:
Acquisition related contingent consideration	$	58	$	—	$	—	$	58
Total liabilities measured at fair value	$	58	$	—	$	—	$	58

(1) Classified in marketable securities

(2) Classified in cash and cash equivalents

For the nine months ended September 30, 2012, realized gains and losses for marketable securities are reported in interest income, unrealized gains and losses for marketable securities are included in other comprehensive income and expense. For the nine months ended September 30, 2012, the Company had net unrealized losses of approximately $16,000.

The fair value measurement for the contingent consideration is based on significant inputs not observed in the market and thus represents a Level 3 measurement. Level 3 instruments are valued based on unobservable inputs that are supported by little or no market activity and reflect the Company’s own assumptions in measuring fair value.

The progressions of the Company’s Level 3 instruments for the nine months ended September 30, 2012 are shown in the table below (in thousands):

	Acquisition Related Contingent Consideration
Balance at January 1, 2012	$	994
Adjustment to fair value of AcceloWeb contingent consideration		(842	)
Payment of contingent consideration		(94	)
Balance at March 31, 2012	$	58
Adjustment to fair value of AcceloWeb contingent consideration		—
Payment of contingent consideration		—
Balance at June 30, 2012	$	58
Adjustment to fair value of AcceloWeb contingent consideration		—
Payment of contingent consideration		—
Balance at September 30, 2012	$	58

The following is a summary of cash and cash equivalents, marketable securities, other investment-related assets and current liabilities held at December 31, 2011 (in thousands):

			Fair Value Measurements at Reporting Date Using
Description	Total		Quoted Prices In Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Government agency bonds (1)	$	9,614	$	—	$	9,614	$	—
Money market funds (2)		24,855		24,855		—		—
Corporate notes and bonds (1)		5,757		—		5,757		—
Commercial paper (1)		2,749		—		2,749		—
Certificate of deposit (1)		2,730		—		2,730		—
Publicly traded common stock (1)		51		51		—		—
Total assets measured at fair value	$	45,756	$	24,906	$	20,850	$	—
Liabilities:
Acquisition related contingent consideration	$	994	$	—	$	—	$	994
Total liabilities measured at fair value	$	994	$	—	$	—	$	994

(1) Classified in marketable securities

(2) Classified in cash and cash equivalents

The carrying amount of cash equivalents approximates fair value because their maturity is less than three months. The carrying amount of short-term and long-term marketable securities represents fair value as the securities are marked to market as of each balance sheet date with any unrealized gains and losses reported in stockholders’ equity. The carrying amount of accounts receivable, accounts payable and accrued liabilities approximates fair value due to the short-term maturity of the amounts.

The Company did not estimate the fair value of its cost basis investment at December 31, 2011 because the Company did not identify any events or circumstances that would have a significant adverse effect on the fair value of the investment. Determining fair value is not practicable because the entity in which the Company made the investment is not a publically traded company and information necessary to determine fair value is not available.

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Property and Equipment, net (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Property and equipment, net
Property and equipment, gross	$ 188,021	$ 195,144
Less: accumulated depreciation	(139,945)	(138,776)
Total property and equipment, net	48,076	56,368
Network equipment [Member]
Property and equipment, net
Property and equipment, gross	167,893	176,307
Computer equipment [Member]
Property and equipment, net
Property and equipment, gross	10,198	9,129
Furniture and fixtures [Member]
Property and equipment, net
Property and equipment, gross	2,596	2,480
Leasehold improvements [Member]
Property and equipment, net
Property and equipment, gross	6,801	6,775
Other equipment [Member]
Property and equipment, net
Property and equipment, gross	$ 533	$ 453

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Investments in Marketable Securities (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Summary of marketable securities available-for-sale
Gross Unrealized Gains	$ 25	$ 41
Amortized Cost, Total marketable securities	27,493	19,862
Gross Unrealized Losses	1	2
Estimated Fair Value	27,517	19,901
Government agency bonds [Member]
Summary of marketable securities available-for-sale
Amortized Cost	10,899	9,614
Gross Unrealized Gains	5	1
Gross Unrealized Losses	1	1
Estimated Fair Value	10,903	9,614
Certificate of deposit [Member]
Summary of marketable securities available-for-sale
Amortized Cost	2,742	2,730
Gross Unrealized Gains
Gross Unrealized Losses
Estimated Fair Value	2,742	2,730
Commercial paper [Member]
Summary of marketable securities available-for-sale
Amortized Cost	2,998	1,749
Gross Unrealized Gains	1
Gross Unrealized Losses
Estimated Fair Value	2,999	1,749
Corporate notes and bonds [Member]
Summary of marketable securities available-for-sale
Amortized Cost	10,842	5,757
Gross Unrealized Gains	7	1
Gross Unrealized Losses		1
Estimated Fair Value	10,849	5,757
Debt securities [Member]
Summary of marketable securities available-for-sale
Amortized Cost	27,481	19,850
Gross Unrealized Gains	13	2
Gross Unrealized Losses	1	2
Estimated Fair Value	27,493	19,850
Publicly traded common stock [Member]
Summary of marketable securities available-for-sale
Amortized Cost, Publicly traded common stock	12	12
Gross Unrealized Gains	12	39
Gross Unrealized Losses
Estimated Fair Value	$ 24	$ 51

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Investments in Marketable Securities (Tables)

9 Months Ended

Sep. 30, 2012

Investments in Marketable Securities [Abstract]

Summary of marketable securities available-for-sale

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
Government agency bonds	$	10,899	$	5	$	1	$	10,903
Certificate of deposit		2,742		—		—		2,742
Commercial paper		2,998		1		—		2,999
Corporate notes and bonds		10,842		7		—		10,849
		27,481		13		1		27,493
Publicly traded common stock		12		12		—		24
Total marketable securities	$	27,493	$	25	$	1	$	27,517

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
Government agency bonds	$	9,614	$	1	$	1	$	9,614
Certificate of deposit		2,730		—		—		2,730
Commercial paper		1,749		—		—		1,749
Corporate notes and bonds		5,757		1		1		5,757
		19,850		2		2		19,850
Publicly traded common stock		12		39		—		51
Total marketable securities	$	19,862	$	41	$	2	$	19,901

Amortized cost and estimated fair value of marketable securities by maturity

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
Available-for-sale securities
Due in one year or less	$	25,671	$	12	$	—	$	25,683
Due after one year and through five years		1,810		1		1		1,810
	$	27,481	$	13	$	1	$	27,493

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
Available-for-sale securities
Due in one year or less	$	19,850	$	2	$	2	$	19,850
Due after one year and through five years		—		—		—		—
	$	19,850	$	2	$	2	$	19,850

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Discontinued Operations (Tables)

9 Months Ended

Sep. 30, 2012

Discontinued Operations [Abstract]

Estimated Net Working Capital related to Eye Wonder and chors

Current assets
Cash and cash equivalents	$	2,677
Accounts receivable		9,643
Income tax receivables		500
Other current assets		528
Total current assets		13,348
Current liabilities
Accounts payable and other current liabilities		(2,494	)
Net Working Capital	$	10,854

Operating results of discontinued operations

	Three Months Ended September 30,						Nine Months Ended September 30,						Year Ended December 31,
	2012			2011			2012			2011			2011(a)
Revenues	$	—		$	4,907		$	—		$	22,302		$	22,302
Cost of revenues		—			(2,213	)		—			(8,843	)		(8,843	)
General and administrative expenses		—			(1,461	)		163			(5,622	)		(6,055	)
Sales and marketing expenses		—			(1,994	)		—			(8,183	)		(8,183	)
Research and development expenses		—			(1,150	)		—			(4,853	)		(4,853	)
Depreciation and amortization		—			(941	)		—			(3,761	)		(3,761	)
Interest expense		—			(4	)		—			(16	)		(16	)
Interest income		—			13			—			21			21
Other income		—			5			—			33			(525	)
(Loss) gain on sale of discontinued operations, net of income taxes		(218	)		14,323			(1,081	)		14,323			14,756
(Loss) income before income taxes		(218	)		11,485			(918	)		5,401			4,843
Income tax benefit		—			(65	)		—			(65	)		(65	)
(Loss) income from discontinued operations	$	(218	)	$	11,420		$	(918	)	$	5,336		$	4,778
(Loss) income from discontinued operations per weighted average share:
Basic and diluted	$	0.00		$	0.10		$	(0.01	)	$	0.05		$	0.05
Shares used in per weighted average share calculation for discontinued operations:
Basic and diluted		99,359			113,662			102,123			110,231			109,236

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Summary of Significant Accounting Policies

9 Months Ended

Sep. 30, 2012

Summary of Significant Accounting Policies [Abstract]

Summary of Significant Accounting Policies

2. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles, consistent in all material respects with those applied in its financial statements included in its Annual Report on Form 10-K for the fiscal year ended December 31, 2011. Accordingly, they do not include all of the information and footnotes required by U.S. generally accepted accounting principles for complete financial statements. Such interim financial information is unaudited but reflects all adjustments that in the opinion of management are necessary for the fair presentation of the interim periods presented. All such adjustments are, in the opinion of management, of a normal recurring nature. The results of operations presented in this Quarterly Report on Form 10-Q are not necessarily indicative of the results that may be expected for the year ending December 31, 2012 or for any future periods. This Quarterly Report on Form 10-Q should be read in conjunction with the Company’s audited financial statements and footnotes included in its Annual Report on Form 10-K for the fiscal year ended December 31, 2011.

The condensed consolidated financial statements include accounts of the Company and its wholly owned subsidiaries. All significant intercompany balances and transactions have been eliminated. In addition, certain other reclassifications have been made to prior year amounts to conform to the current year presentation.

On September 1, 2011, the Company completed the sale of its EyeWonder LLC and subsidiaries and chors GmbH video and rich media advertising services (EyeWonder and chors) to DG FastChannel, Inc. (now Digital Generation, Inc.) (DG). The sale of EyeWonder and chors met the criteria for discontinued operations during the year ended December 31, 2011. Accordingly, the results of operations related to EyeWonder and chors have been classified as discontinued operations in all periods presented. See further discussion at Note 5.

Use of Estimates

The preparation of consolidated financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts in the consolidated financial statements and accompanying notes. Actual results and outcomes may differ from those estimates.

Recent Accounting Pronouncements

As of January 1, 2012, the Company adopted Accounting Standards Update (ASU) 2011-04 related to guidance associated with fair value measurements and disclosures. This ASU clarifies the Financial Accounting Standards Board’s (FASB) intent on current guidance, modifies and changes certain guidance and principles, and expands disclosures concerning Level 3 fair value measurements in the fair value hierarchy (including quantitative information about significant unobservable inputs within Level 3 of the fair value hierarchy). In addition, this ASU requires disclosure of the fair value hierarchy for assets and liabilities not measured at fair value in the balance sheet, but whose fair value is required to be disclosed. Adoption of this new guidance did not have a material impact on the Company’s financial statements.

As of January 1, 2012, the Company adopted ASU 2011-05 related to guidance on the presentation of comprehensive income. The objective of this ASU is to improve the comparability, consistency and transparency of financial reporting and to increase the prominence of items reported in other comprehensive income. This ASU requires an entity to present the components of net income and other comprehensive income and total comprehensive income (which includes net income) either in a single continuous statement of comprehensive income or in two separate but consecutive statements. This ASU eliminates the option to present the components of other comprehensive income as part of the statement of equity, but does not change the items that must be reported in other comprehensive income. This ASU is effective January 1, 2012 and the Company is presenting total comprehensive income in a separate statement. Additionally, in December 2011, FASB deferred the effective date for the requirement in this ASU for presenting reclassification adjustments for each component of accumulated other comprehensive income in both net income and other comprehensive income on the face of the financial statements.

As of January 1, 2012, the Company adopted ASU 2011-08 related to the testing of goodwill for impairment. The objective of this ASU is to simplify goodwill impairment testing by adding a qualitative review step to assess whether the required quantitative impairment analysis is necessary. The ASU permits an entity to first perform a qualitative assessment to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value. If it is concluded that this is the case, it is necessary to perform the prescribed two-step goodwill impairment test. Otherwise, the two-step goodwill impairment test is not required. This ASU was effective for the Company beginning January 1, 2012. Adoption of this new guidance did not have a material impact on the Company’s financial statements.

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Accounts Receivable, net (Tables)

9 Months Ended

Sep. 30, 2012

Accounts Receivable, net [Abstract]

Summary of accounts receivable, net

	As of September 30, 2012			As of December 31, 2011
Accounts receivable	$	23,399		$	24,260
Unbilled accounts receivable		8,475			8,176
		31,874			32,436
Less: credit allowance		(710	)		(810	)
Less: allowance for bad debt		(2,756	)		(3,581	)
Total accounts receivable, net	$	28,408		$	28,045

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Share-Based Compensation (Tables)

9 Months Ended

Sep. 30, 2012

Share-Based Compensation [Abstract]

Components of share-based compensation expense

	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2012		2011		2012		2011
Share-based compensation expense by type of award:
Stock options	$	1,766	$	2,424	$	5,540	$	7,308
Restricted stock awards and units		1,897		565		5,295		4,386
Total share-based compensation expense	$	3,663	$	2,989	$	10,835	$	11,694
Effect of share-based compensation expense on statement of operations by categories:
Cost of services	$	604	$	514	$	1,595	$	1,805
General and administrative expense		1,571		1,093		4,638		4,133
Sales and marketing expense		836		695		2,502		2,932
Research and development expense		652		687		2,100		2,824
Total cost related to share-based compensation expense	$	3,663	$	2,989	$	10,835	$	11,694

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Goodwill and Other Intangible Assets (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Sep. 30, 2012	Jun. 30, 2012	Mar. 31, 2012
Schedule of changes in the carrying amount of goodwill
Beginning Balance	$ 79,862	$ 80,304	$ 80,105
Foreign currency translation adjustment	41	(442)	199
Ending Balance	$ 79,903	$ 79,862	$ 80,304

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Leases and Commitments (Details Textual) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011	Dec. 31, 2011
Leases and Commitments (Textual) [Abstract]
Outstanding balance for capital leases	$ 2,552,000		$ 2,552,000		$ 3,900,000
Recorded assets under capital lease obligations	5,300,000		5,300,000		5,300,000
Related accumulated amortization total	2,600,000		2,600,000		1,400,000
Interest expense related to capital leases	$ 40,000	$ 57,000	$ 136,000	$ 131,000

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Condensed Consolidated Balance Sheets (Unaudited) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Current assets:
Cash and cash equivalents	$ 102,468	$ 120,349
Marketable securities	27,493	19,850
Accounts receivable, net	28,408	28,045
Income taxes receivable	424	31
Deferred income taxes	42	62
Prepaid expenses and other current assets	11,850	20,646
Total current assets	170,685	188,983
Property and equipment, net	48,076	56,368
Marketable securities, less current portion	24	51
Deferred income taxes, less current portion	1,386	1,177
Goodwill	79,903	80,105
Other intangible assets, net	6,981	9,207
Other assets	9,211	10,454
Total assets	316,266	346,345
Current liabilities:
Accounts payable	6,340	6,797
Deferred revenue	7,383	7,287
Capital lease obligations	1,552	1,750
Income taxes payable	722	774
Other current liabilities	11,779	13,195
Total current liabilities	27,776	29,803
Capital lease obligations, less current portion	1,000	2,124
Deferred income taxes	470	580
Deferred revenue, less current portion	850	539
Other long-term liabilities	3,664	4,194
Total liabilities	33,760	37,240
Commitments and contingencies
Stockholders' equity:
Convertible preferred stock, $0.001 par value; 7,500 shares authorized; 0 shares issued and outstanding
Common stock, $0.001 par value; 300,000 shares authorized at September 30, 2012 and December 31, 2011; 99,106 and 104,349 shares issued and outstanding at September 30, 2012 and December 31, 2011, respectively	99	104
Additional paid-in capital	455,050	460,845
Contingent consideration	110	219
Accumulated other comprehensive loss	(537)	(509)
Accumulated deficit	(172,216)	(151,554)
Total stockholders' equity	282,506	309,105
Total liabilities and stockholders' equity	$ 316,266	$ 346,345

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Investments in Marketable Securities (Details 1) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Amortized cost and estimated fair value of marketable securities by maturity
Gross unrealized gains	$ 25	$ 41
Gross unrealized losses	1	2
Estimated Fair Value	27,517	19,901
Debt securities [Member]
Amortized cost and estimated fair value of marketable securities by maturity
Amortized cost	27,481	19,850
Gross unrealized gains	13	2
Gross unrealized losses	1	2
Estimated Fair Value	27,493	19,850
Due in one year or less [Member]
Amortized cost and estimated fair value of marketable securities by maturity
Amortized Cost, Due in one year or less	25,671	19,850
Gross Unrealized Gains, Due in one year or less	12	2
Gross Unrealized Losses, Due in one year or less		2
Estimated Fair Value, Due in one year or less	25,683	19,850
Due after one year and through five years [Member]
Amortized cost and estimated fair value of marketable securities by maturity
Amortized Cost, Due after one year and through five years	1,810
Gross Unrealized Gains, Due after one year and through five years	1
Gross Unrealized Losses, Due after one year and through five years	1
Estimated Fair Value, Due after one year and through five years	$ 1,810

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Condensed Consolidated Statements of Cash Flows (Unaudited) (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011
Operating activities
Net loss	$ (20,662)	$ (18,735)
(Loss) income from discontinued operations, net of income taxes	(918)	5,336
Loss from continuing operations	(19,744)	(24,071)
Adjustments to reconcile loss from continuing operations to net cash provided by operating activities of continuing operations:
Depreciation and amortization	25,313	24,262
Share-based compensation	10,835	11,694
Deferred income taxes	(299)	(31)
Accounts receivable charges	1,105	919
Accretion of marketable securities	365	(90)
Gain on sale of cost basis investment	(9,420)
Non cash tax benefit associated with sale of discontinued operations		(2,165)
Non cash increase in cost basis investment	(528)	(679)
Loss on sale of property and equipment	19
Changes in operating assets and liabilities:
Accounts receivable	(1,468)	384
Prepaid expenses and other current assets	2,986	(1,684)
Income taxes receivable	(393)	(268)
Other assets	(1,554)	(3,563)
Accounts payable	2,154	2,324
Deferred revenue	407	(2,561)
Other current liabilities	(1,023)	(3,990)
Income taxes payable	(200)	(312)
Other long term liabilities	(531)	1,002
Net cash provided by operating activities of continuing operations	8,024	1,171
Investing activities
Purchase of marketable securities	(27,280)	(15,316)
Maturities of marketable securities	19,285	13,520
Purchases of property and equipment	(17,474)	(26,872)
Acquisition of businesses, net of cash acquired		(7,360)
Proceeds from sale of cost basis investment	10,154
Cash collected in DG receivable	7,217
Proceeds from sale of discontinued operations		61,000
Net cash (used in) provided by investing activities of continuing operations	(8,098)	24,972
Financing activities
Payments on capital lease obligations	(1,322)	(982)
Payment of employee tax withholdings related to restricted stock	(601)	(1,060)
Cash paid for purchase of common stock	(16,273)	(9,210)
Proceeds from exercise of stock options	155	622
Proceeds from secondary public offering, net		77,049
Net cash (used in) provided by financing activities of continuing operations	(18,041)	66,419
Effect of exchange rate changes on cash and cash equivalents	234	(96)
Discontinued operations
Cash used in operating activities of discontinued operations		(2,803)
Cash used in investing activities of discontinued operations		(684)
Net cash used in discontinued operations		(3,487)
Net (decrease) increase in cash and cash equivalents	(17,881)	88,979
Cash and cash equivalents, beginning of period	120,349	54,861
Cash and cash equivalents, end of period	102,468	143,840
Supplement disclosure of cash flow information
Cash paid during the period for interest	136	135
Cash paid during the period for income taxes	1,226	1,649
Property and equipment remaining in accounts payable and other current liabilities	664	783
Property and equipment acquired through leasehold incentives		2,361
Property and equipment acquired through capital leases		2,271
Common stock issued in connection with acquisition of business		8,216
Contingent consideration common stock issued in connection with acquisition of businesses	$ 109	$ 1,404

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Other Assets (Details Textual) (USD $)	1 Months Ended		3 Months Ended	9 Months Ended
	Aug. 31, 2012	Jun. 30, 2012	Sep. 30, 2012	Sep. 30, 2012	Dec. 31, 2011
Other Assets (Textual) [Abstract]
Purchase price of Gaikai		$ 380,000,000
Gain on sale of cost basis investment			9,420,000	9,420,000
Carrying value of Gaikai cost basis investment	2,000,000	2,000,000			1,444,000
Aggregate selling price of cost basis investment			11,400,000	11,400,000
Proceeds from sales of investment in Gaikai	10,200,000
Maximum period to cover potential indemnification claims				15 months
Amount held in Escrow			1,200,000	1,200,000
Gaikai escrow balance receivable			$ 1,237,000	$ 1,237,000

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Property and Equipment, net (Tables)

9 Months Ended

Sep. 30, 2012

Property and Equipment, net [Abstract]

Property and equipment, net

	As of September 30, 2012			As of December 31, 2011
Network equipment	$	167,893		$	176,307
Computer equipment		10,198			9,129
Furniture and fixtures		2,596			2,480
Leasehold improvements		6,801			6,775
Other equipment		533			453
		188,021			195,144
Less: accumulated depreciation		(139,945	)		(138,776	)
Total property and equipment, net	$	48,076		$	56,368

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Stockholders' Equity (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended			6 Months Ended		9 Months Ended	1 Months Ended
	Sep. 30, 2012	Aug. 09, 2012	Mar. 31, 2012	Jun. 30, 2012	Mar. 12, 2012	Sep. 30, 2012	Oct. 29, 2012 Share Repurchase Program [Member]	May 31, 2012 Share Repurchase Program [Member]	Sep. 30, 2011 Share Repurchase Program [Member]
Stockholders' Equity (Textual) [Abstract]
Amount of common stock repurchases authorized							$ 10	$ 15	$ 25
Stockholders' Equity (Additional Textual) [Abstract]
Stock repurchased and retired during period shares		5.7			9.7	0.3
Stock repurchased and retired during period values		15.0			25.0
Cash paid for common stock including commissions		$ 15.1			$ 25.2
Period in force for stock repurchase program			Mar. 12, 2012	Dec. 15, 2012
Shares repurchased during the period	1.2

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Share-Based Compensation

9 Months Ended

Sep. 30, 2012

Share-Based Compensation [Abstract]

Share-Based Compensation

16. Share-Based Compensation

The following table summarizes the components of share-based compensation expense included in the Company’s condensed consolidated statements of operations for the three and nine months ended September 30, 2012 and 2011 (in thousands):

	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2012		2011		2012		2011
Share-based compensation expense by type of award:
Stock options	$	1,766	$	2,424	$	5,540	$	7,308
Restricted stock awards and units		1,897		565		5,295		4,386
Total share-based compensation expense	$	3,663	$	2,989	$	10,835	$	11,694
Effect of share-based compensation expense on statement of operations by categories:
Cost of services	$	604	$	514	$	1,595	$	1,805
General and administrative expense		1,571		1,093		4,638		4,133
Sales and marketing expense		836		695		2,502		2,932
Research and development expense		652		687		2,100		2,824
Total cost related to share-based compensation expense	$	3,663	$	2,989	$	10,835	$	11,694

Unrecognized share-based compensation expense totaled approximately $21.1 million at September 30, 2012, of which approximately $12.6 million related to stock options and approximately $8.5 million related to restricted stock awards. The Company currently expects to recognize share-based compensation expense of approximately $3.6 million during the remainder of 2012, $9.2 million in 2013 and the remainder thereafter based upon the scheduled vesting of the stock options, restricted stock awards and units outstanding at September 30, 2012.

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Other Assets (Tables)

9 Months Ended

Sep. 30, 2012

Other Assets [Abstract]

Other assets

	As of September 30, 2012		As of December 31, 2011
Prepaid bandwidth and backbone services	$	6,847	$	7,373
Cost basis investment (Gaikai)		—		1,444
Gaikai escrow balance receivable		1,237		—
Vendor deposits and other		952		1,384
Deferred expenses		175		253
Total other assets	$	9,211	$	10,454

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Leases and Commitments

9 Months Ended

Sep. 30, 2012

Leases and Commitments [Abstract]

Leases and Commitments

18. Leases and Commitments

Operating Leases

The Company is committed to various non-cancelable operating leases for office space and office equipment which expire through 2019. Certain leases contain provisions for renewal options and rent escalations upon expiration of the initial lease terms. Approximate future minimum lease payments over the remaining lease periods as of September 30, 2012 are as follows (in thousands):

2012	$	1,003
2013		3,531
2014		2,922
2015		2,670
2016 and thereafter		6,088
Total minimum payments	$	16,214

Purchase Commitments

The Company has long-term commitments for bandwidth usage and co-location with various networks and Internet service providers, or ISPs. The following summarizes minimum commitments as of September 30, 2012 (in thousands):

2012	$	11,254
2013		31,294
2014		21,116
2015		15,519
2016 and thereafter		3,639
Total minimum payments	$	82,822

Capital Leases

The Company leases equipment under capital lease agreements which extend through 2016. As of September 30, 2012 and December 31, 2011, the outstanding balance for capital leases was approximately $2.6 million and $3.9 million, respectively. As of September 30, 2012 and December 31, 2011, the Company has recorded assets under capital lease obligations of approximately $5.3 million and $5.3 million, respectively. Related accumulated amortization totaled approximately $2.6 million and $1.4 million, respectively, as of September 30, 2012 and December 31, 2011. The assets acquired under capital leases and the related accumulated amortization is included in property and equipment, net in the condensed consolidated balance sheets. The related amortization is included in depreciation and amortization expense in the condensed consolidated statements of operations. Interest expense related to capital leases was approximately $40,000 and $57,000, respectively, for the three months ended September 30, 2012 and 2011, respectively. For the nine months ended September 30, 2012 and 2011, interest expense related to capital leases was approximately $136,000 and $131,000, respectively.

Future minimum capital lease payments at September 30, 2012 are as follows (in thousands)

2012	$	461
2013		1,377
2014		498
2015		238
2016 and thereafter		138
Total		2,712
Amounts representing interest		(160	)
Present value of minimum lease payments	$	2,552

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Related Party Transactions (Details) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011	Dec. 31, 2011
Related Party Transactions (Textual) [Abstract]
Percentage of revenue derived from related parties	1.00%	1.00%	1.00%	1.00%
Invoiced for office space rental	$ 0	$ 22,478	$ 15,640	$ 52,807
Total outstanding accounts receivable from all related parties	$ 1,000,000		$ 1,000,000		$ 400,000

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Nature of Business

9 Months Ended

Sep. 30, 2012

Nature of Business [Abstract]

Nature of Business

1. Nature of Business

Limelight Networks, Inc. (the Company) is a global leader in digital presence management and delivery, including mobility, web and video content management, web application acceleration, cloud storage, consulting, and content delivery services. The Company provides web and video content management services as Software-as-a-Service (SaaS) solutions and cloud storage and content delivery services as Platform-as-a-Service solutions, which other than content delivery services, are referred to collectively as value-added services. The Company derives revenue from the sale of content delivery services and value-added services to its customers. In May 2012, the Company introduced a new digital presence solution, Limelight Orchestrate (Orchestrate), an integrated suite of cloud-based applications which allows organizations to optimize all aspects of their online digital presence across web, mobile, social and large screen channels. Orchestrate provides advanced features for website content management, personalization and targeting, video publishing, mobile enablement, content delivery, transcoding and cloud storage, combined with social media integration and powerful analytics. These services are provided in the cloud and leverage the Company’s global computing platform, which provides highly-available, highly-redundant storage, bandwidth and computing resources as well as connectivity to last-mile broadband network providers. The Company’s global professional services organization help organizations analyze and identify their digital presence requirements. The Company also offers other platform and infrastructure services, such as transit and rack space services. The Company’s solutions and services enable organizations to streamline processes and optimize business results across all customer interaction channels, helping them deliver a high quality online media experience, improve brand awareness, drive revenue and enhance their customer relationships while reducing costs.

The Company provides its services to customers that the Company believes view Internet, mobile and social initiatives as critical to their success, including traditional and emerging media companies, or content publishers, operating in the television, music, radio, newspaper, magazine, movie, videogame, software and social media industries, as well as enterprises, technology companies, and government entities conducting business online.

The Company has operated in the Phoenix metropolitan area since 2001 and elsewhere throughout the United States since 2003. The Company began international operations in 2004.

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Condensed Consolidated Balance Sheets (Parenthetical) (Unaudited) (USD $) In Thousands, except Per Share data, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Condensed Consolidated Balance Sheets [Abstract]
Convertible preferred stock, par value	$ 0.001	$ 0.001
Convertible preferred stock, shares authorized	7,500	7,500
Convertible preferred stock, shares issued	0	0
Convertible preferred stock, shares outstanding	0	0
Common stock, par value	$ 0.001	$ 0.001
Common stock, shares authorized	300,000	300,000
Common stock, shares issued	99,106	104,349
Common stock, shares outstanding	99,106	104,349

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Other Current Liabilities

9 Months Ended

Sep. 30, 2012

Other Current Liabilities [Abstract]

Other Current Liabilities

11. Other Current Liabilities

Other current liabilities consist of the following (in thousands):

	As of September 30, 2012		As of December 31, 2011
Accrued compensation and benefits	$	4,904	$	4,421
Accrued cost of revenue		2,307		3,027
Accrued legal fees		1,426		1,507
Non income taxes payable		539		633
Customer deposits		418		847
Contingent consideration liability		58		152
Other accrued expenses		2,127		2,608
Total other current liabilities	$	11,779	$	13,195

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Document and Entity Information	9 Months Ended
	Sep. 30, 2012	Nov. 01, 2012
Document and Entity Information [Abstract]
Entity Registrant Name	LIMELIGHT NETWORKS, INC.
Entity Central Index Key	0001391127
Document Type	10-Q
Document Period End Date	Sep. 30, 2012
Amendment Flag	false
Document Fiscal Year Focus	2012
Document Fiscal Period Focus	Q3
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		99,132,038

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Other Long-Term Liabilities

9 Months Ended

Sep. 30, 2012

Other Long-Term Liabilities [Abstract]

Other Long-Term Liabilities

12. Other Long-Term Liabilities

Other long-term liabilities consist of the following (in thousands):

	As of September 30, 2012		As of December 31, 2011
Deferred rent	$	3,664	$	3,352
Contingent consideration liability		—		842
Total other long-term liabilities	$	3,664	$	4,194

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Fair Value Measurements (Details Textual) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Fair Value Measurements (Textual) [Abstract]
Net unrealized losses	$ 28	$ (41)	$ (16)	$ (43)
Cash equivalent maturity date			3 months

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Condensed Consolidated Statements of Operations (Unaudited) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended				9 Months Ended
	Sep. 30, 2012		Sep. 30, 2011		Sep. 30, 2012		Sep. 30, 2011
Condensed Consolidated Statements of Operations [Abstract]
Revenues	$ 45,001		$ 42,352		$ 133,765		$ 125,313
Cost of revenue:
Cost of services	21,313	[1]	20,243	[1]	62,193	[1]	60,912	[1]
Depreciation - network	6,970		7,035		20,984		21,008
Total cost of revenue	28,283		27,278		83,177		81,920
Gross profit	16,718		15,074		50,588		43,393
Operating expenses:
General and administrative	8,757		8,416		25,130		23,498
Sales and marketing	11,037		9,176		34,431		29,903
Research and development	4,956		4,360		15,108		12,554
Depreciation and amortization	1,481		1,499		4,329		3,254
Total operating expenses	26,231		23,451		78,998		69,209
Operating loss	(9,513)		(8,377)		(28,410)		(25,816)
Other income (expense):
Interest expense	(40)		(89)		(136)		(225)
Interest income	88		186		277		624
Gain on sale of cost basis investment	9,420				9,420
Other, net	(551)		(18)		(582)		17
Total other income	8,917		79		8,979		416
Loss from continuing operations before income taxes	(596)		(8,298)		(19,431)		(25,400)
Income tax provision (benefit)	14		(1,896)		313		(1,329)
Loss from continuing operations	(610)		(6,402)		(19,744)		(24,071)
Discontinued operations:
(Loss) income from discontinued operations, net of income taxes	(218)		11,420		(918)		5,336
Net (loss) income	$ (828)		$ 5,018		$ (20,662)		$ (18,735)
Basic net (loss) income per weighted average share:
Continuing operations	$ (0.01)		$ (0.06)		$ (0.19)		$ (0.22)
Discontinued operations	$ 0.00		$ 0.10		$ (0.01)		$ 0.05
Total	$ (0.01)		$ 0.04		$ (0.20)		$ (0.17)
Diluted net (loss) income per weighted average share:
Continuing operations	$ (0.01)		$ (0.06)		$ (0.19)		$ (0.22)
Discontinued operations	$ 0.00		$ 0.10		$ (0.01)		$ 0.05
Total	$ (0.01)		$ 0.04		$ (0.20)		$ (0.17)
Shares used in per weighted average share calculations:
Basic	99,359		113,662		102,123		110,231
Diluted	99,359		113,662		102,123		110,231

[1] Cost of services excludes amortization related to intangibles, including existing technologies, customer relationships, and trademarks, which are included in depreciation and amortization

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Accounts Receivable, net

9 Months Ended

Sep. 30, 2012

Accounts Receivable, net [Abstract]

Accounts Receivable, net

6. Accounts Receivable, net

Accounts receivable, net include (in thousands):

	As of September 30, 2012			As of December 31, 2011
Accounts receivable	$	23,399		$	24,260
Unbilled accounts receivable		8,475			8,176
		31,874			32,436
Less: credit allowance		(710	)		(810	)
Less: allowance for bad debt		(2,756	)		(3,581	)
Total accounts receivable, net	$	28,408		$	28,045

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Discontinued Operations

9 Months Ended

Sep. 30, 2012

Discontinued Operations [Abstract]

Discontinued Operations

5. Discontinued Operations

On September 1, 2011, the Company completed the sale of its EyeWonder and chors rich media advertising services to DG for net proceeds of $61.0 million ($66.0 million gross cash proceeds less $5.0 million held in escrow) plus an estimated $10.9 million receivable from DG pursuant to the Purchase Agreement dated as of August 30, 2011 by and among the Company, DG and Limelight Networks Germany GmbH. The $5.0 million held in escrow is intended to cover DG’s ordinary operating expenses associated with the integration of EyeWonder and chors. The Company estimates that it will not receive any portion of the funds held in escrow and has excluded such amount from its calculation of the gain on sale of discontinued operations. The Purchase Agreement also includes a provision that would require the Company to refund a portion of the purchase price equal to 1.67 times the amount that revenue related to chors customer WPP and affiliates was below $4.4 million during the period from September 1, 2011 to August 31, 2012 provided that DG does not sell chors to WPP or an affiliate prior to August 31, 2012. In April 2012, DG sold a majority of the assets of chors to an affiliate of WPP and as a result the Company does not have any potential liabilities associated with this provision in the Purchase Agreement.

The $10.9 million receivable from DG was determined by the Company based on estimated future cash payments equal to the excess of certain current assets over certain current liabilities of EyeWonder and chors as of August 30, 2011, as defined in the Purchase Agreement (the Net Working Capital). The Company has estimated the Net Working Capital based on its determination of the current assets and current liabilities in accordance with the relevant provisions of the Purchase Agreement.

As of August 31, 2011, the estimated Net Working Capital related to EyeWonder and chors was comprised of the following (in thousands):

Current assets
Cash and cash equivalents	$	2,677
Accounts receivable		9,643
Income tax receivables		500
Other current assets		528
Total current assets		13,348
Current liabilities
Accounts payable and other current liabilities		(2,494	)
Net Working Capital	$	10,854

Under the terms of the Purchase Agreement, prior to the Company receiving any additional cash payments from DG, the current liabilities must be settled with cash and cash equivalents and the value of the other current assets. As of August 31, 2011, the excess of the cash and cash equivalents and other current assets over the current liabilities was $0.7 million, with this portion of the Net Working Capital payable to the Company. DG is required to pay the Company the remaining Net Working Capital as the accounts receivable of $9.6 million and income tax receivable of $0.5 million are collected. As of September 30, 2012 approximately $7.8 million of the receivables have been collected by DG and $7.2 million remitted by DG to the Company. At September 30, 2012, approximately $3.1 million is due to the Company. This amount is comprised of net cash due to the Company of $1.3 million; uncollected accounts receivable of $1.7 million and income tax receivable of $0.1 million. During the three and nine months ended September 30, 2012, the Company made certain adjustments totaling $0.1 million and $1.1 million, respectively, to the DG receivable which have been reflected as a charge to discontinued operations. The Company has assessed the collectability of the remaining accounts receivable balance and recorded its estimate of the amount expected to be collected based on historical experience and the financial condition of the underlying customers and collection efforts performed to date. At September 30, 2012, the Company has as allowance for doubtful accounts of $0.4 million. The Company’s estimate of collectability could change significantly if the financial condition of the underlying customers changes or if the economy in general deteriorates. Additional changes to the Company’s estimate of future cash payments will be reflected as an adjustment to income (loss) from discontinued operations in the (loss) gain on sale of discontinued operations line in the table below. After 120 days from the closing of the sale of EyeWonder and chors (the Receivables Collection Period), the Company and DG have the option to have the uncollected accounts receivable assigned to the Company. Following the expiration of the Receivables Collections Period, DG and the Company may mutually agree to extend the Receivables Collections Period in 60 day increments. As of September 30, 2012, DG and the Company had agreed to extend the Receivables Collection Period and the accounts receivable were not assigned to the Company.

The sale of EyeWonder and chors meets the criteria to be reported as discontinued operations. Accordingly, the operating results of EyeWonder and chors have been reclassified to discontinued operations in the accompanying condensed consolidated statements of operations. The Company includes only revenues and costs directly attributable to the discontinued operations, in determining income (loss) from discontinued operations, and not those attributable to the ongoing entity. Accordingly, no general corporate overhead costs have been allocated to discontinued operations. Operating results of discontinued operations for the three and nine months ended September 30, 2012 and 2011, respectively, and the year ended December 31, 2011 are as follows (in thousands, except per share data):

	Three Months Ended September 30,						Nine Months Ended September 30,						Year Ended December 31,
	2012			2011			2012			2011			2011(a)
Revenues	$	—		$	4,907		$	—		$	22,302		$	22,302
Cost of revenues		—			(2,213	)		—			(8,843	)		(8,843	)
General and administrative expenses		—			(1,461	)		163			(5,622	)		(6,055	)
Sales and marketing expenses		—			(1,994	)		—			(8,183	)		(8,183	)
Research and development expenses		—			(1,150	)		—			(4,853	)		(4,853	)
Depreciation and amortization		—			(941	)		—			(3,761	)		(3,761	)
Interest expense		—			(4	)		—			(16	)		(16	)
Interest income		—			13			—			21			21
Other income		—			5			—			33			(525	)
(Loss) gain on sale of discontinued operations, net of income taxes		(218	)		14,323			(1,081	)		14,323			14,756
(Loss) income before income taxes		(218	)		11,485			(918	)		5,401			4,843
Income tax benefit		—			(65	)		—			(65	)		(65	)
(Loss) income from discontinued operations	$	(218	)	$	11,420		$	(918	)	$	5,336		$	4,778
(Loss) income from discontinued operations per weighted average share:
Basic and diluted	$	0.00		$	0.10		$	(0.01	)	$	0.05		$	0.05
Shares used in per weighted average share calculation for discontinued operations:
Basic and diluted		99,359			113,662			102,123			110,231			109,236

(a) Includes operating results of chors and EyeWonder from January 1, 2011 through August 31, 2011.

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Related Party Transactions

9 Months Ended

Sep. 30, 2012

Related Party Transactions [Abstract]

Related Party Transactions

17. Related Party Transactions

The Company leases office space to an entity in which a member of its board of directors has an ownership interest. During the three and nine months ended September 30, 2012, the Company invoiced this entity approximately $0 and $15,640, respectively, for office space rental. During the three and nine months ended September 30, 2011, the Company invoiced this entity approximately $22,478 and $52,807, respectively, for office space rental.

The Company sells services to entities owned, in whole or in part, by certain of the Company’s executive officers and board of directors. Revenue derived from related parties was approximately 1% of total revenue for the three and nine months ended September 30, 2012 and 2011.

Total outstanding accounts receivable from all related parties as of September 30, 2012 and December 31, 2011 was approximately $1.0 million and $0.4 million, respectively.

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Contingencies

9 Months Ended

Sep. 30, 2012

Contingencies [Abstract]

Contingencies

13. Contingencies

Akamai Litigation

In June 2006, Akamai Technologies, Inc., or Akamai, and the Massachusetts Institute of Technology, or MIT, filed a lawsuit against the Company in the United States District Court for the District of Massachusetts alleging that the Company was infringing two patents assigned to MIT and exclusively licensed by MIT to Akamai, United States Patent No. 6,553,413 (the ’413 patent) and United States Patent No. 6,108,703 (the ’703 patent). In September 2006, Akamai and MIT expanded their claims to assert infringement of a third, recently issued patent United States Patent No. 7,103,645 (the ’645 patent). In February 2008, a jury returned a verdict in this lawsuit, finding that the Company infringed four claims of the ’703 patent at issue and rejecting the Company’s invalidity defenses for the period April 2005 through December 31, 2007. The jury awarded an aggregate of approximately $45.5 million which includes lost profits, reasonable royalties and price erosion damages. In addition, the jury awarded prejudgment interest which the Company estimated to be $2.6 million at December 31, 2007. The Company recorded an aggregate $48.1 million as a provision for litigation as of December 31, 2007. During the year ended December 31, 2008, the Company estimated its revenue from alleged infringing methods totaled approximately 25% of total revenue. The Company recorded a potential additional provision for litigation totaling $15.5 million, plus additional interest of $2.0 million, for the year ended December 31, 2008. The total provision for litigation at December 31, 2008 was $65.6 million.

On July 1, 2008, the court denied the Company’s Motions for Judgment as a Matter of Law (JMOL), Obviousness, and a New Trial. The court also denied Akamai’s Motion for Permanent Injunction as premature and its Motions for Summary Judgment regarding the Company’s equitable defenses. The court conducted a bench trial in November 2008 regarding the Company’s equitable defenses. The Company also filed a motion for reconsideration of the court’s earlier denial of the Company’s motion for JMOL. The Company’s motion for JMOL was based largely upon a clarification in the standard for a finding of joint infringement articulated by the Federal Circuit in the case of Muniauction, Inc. v. Thomson Corp., released after the court denied the Company’s initial motion for JMOL. On April 24, 2009, the court issued its order and memorandum setting aside the adverse jury verdict and ruling that the Company did not infringe Akamai’s ’703 patent and that the Company was entitled to JMOL. Based upon the court’s April 24, 2009 order, the Company reversed the $65.6 million provision for litigation previously recorded for this lawsuit as the Company no longer believed that payment of any amounts represented by the litigation provision was probable. The court entered final judgment in favor of the Company on May 22, 2009, and Akamai filed its notice of appeal of the court’s decision on May 26, 2009. On December 20, 2010, the Court of Appeals for the Federal Circuit issued its opinion affirming the trial court’s entry of judgment in the Company’s favor. On February 18, 2011, Akamai filed a motion with the Court of Appeals for the Federal Circuit seeking a rehearing and rehearing en banc. On April 21, 2011, the Court of Appeals for the Federal Circuit issued an order denying the petition for rehearing, granting the petition for rehearing en banc, vacating the December 20, 2010 opinion affirming the trial court’s entry of judgment in the Company’s favor, and reinstated the appeal.

On August 31, 2012, the Court of Appeals for the Federal Circuit issued its opinion in the case. The court stated that the trial court correctly determined that the Company did not directly infringe Akamai’s ’703 patent and upheld the trial court’s decision to vacate the original jury’s damages award. The court also held that the Company did not infringe Akamai’s ’413 or ’645 patents. A slim majority in this three-way divided opinion also announced a revised legal theory of induced infringement, remanded the case to the trial court, and gave Akamai an opportunity for a new trial to attempt to prove that the Company induced its customers to infringe Akamai’s patent under the court’s new legal standard. The Company will file a petition to appeal this sharply divided Court of Appeals decision to the Supreme Court and will seek to stay any proceedings at the trial court until the Supreme Court rules on that petition. The Company believes that the Court of Appeal’s new induced infringement standard runs counter to the Patent Act and Supreme Court precedent, and it should be overturned by the Supreme Court. Additionally, just as the Company has successfully shown that it does not directly infringe Akamai’s patent, the Company firmly believes that it ultimately would be successful in showing that it does not infringe Akamai’s patent under the majority’s new induced infringement theory, and it will continue to vigorously defend against the allegation. The Company does not believe a loss is probable and therefore no provision for this lawsuit is recorded in the Company’s financial statements.

Legal and other expenses associated with this case have been significant. The Company includes these litigation expenses in general and administrative expenses as incurred, as reported in its consolidated statement of operations.

Other Litigation

The Company is subject to various other legal proceedings and claims, either asserted or unasserted, arising in the ordinary course of business. While the outcome of these claims cannot be predicted with certainty, management does not believe the outcome of any of these matters will have a material adverse effect on its business, financial position, results of operations or cash flows.

Other Matters

The Company is subject to indirect taxation in various states and foreign jurisdictions. Laws and regulations that apply to communications and commerce conducted over the Internet are becoming more prevalent, both in the United States and internationally, and may impose additional burdens on the Company conducting business online or providing Internet-related services. Increased regulation could negatively affect the Company’s business directly, as well as the businesses of its customers. Tax authorities in various states and abroad may impose taxes on the Internet-related revenue the Company generates based on regulations currently being applied to similar but not directly comparable industries. There are many transactions and calculations where the ultimate tax determination is uncertain. In addition, domestic and international taxation laws are subject to change. In the future, the Company may come under audit, which could result in changes to its tax estimates. The Company believes it maintains adequate tax reserves to offset potential liabilities that may arise upon audit. Although the Company believes its tax estimates and associated reserves are reasonable, the final determination of tax audits and any related litigation could be materially different than the amounts established for tax contingencies. To the extent these estimates ultimately prove to be inaccurate, the associated reserves would be adjusted, resulting in the recording of a benefit or expense in the period in which a final determination is made.

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Property and Equipment, net

9 Months Ended

Sep. 30, 2012

Property and Equipment, net [Abstract]

Property and Equipment, net

9. Property and Equipment, net

Property and equipment, net include (in thousands):

	As of September 30, 2012			As of December 31, 2011
Network equipment	$	167,893		$	176,307
Computer equipment		10,198			9,129
Furniture and fixtures		2,596			2,480
Leasehold improvements		6,801			6,775
Other equipment		533			453
		188,021			195,144
Less: accumulated depreciation		(139,945	)		(138,776	)
Total property and equipment, net	$	48,076		$	56,368

During the three months ended September 30, 2012, the Company removed property, plant and equipment and the associated accumulated depreciation of approximately $21.9 million to reflect the retirement of property, plant and equipment that was fully depreciated and no longer in service.

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Other Current Liabilities (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Other current liabilities
Accrued compensation and benefits	$ 4,904	$ 4,421
Accrued cost of revenue	2,307	3,027
Accrued legal fees	1,426	1,507
Non income taxes payable	539	633
Customer deposits	418	847
Contingent consideration liability	58	152
Other accrued expenses	2,127	2,608
Total other current liabilities	$ 11,779	$ 13,195

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Prepaid Expenses and Other Current Assets

9 Months Ended

Sep. 30, 2012

Prepaid Expenses and Other Current Assets [Abstract]

Prepaid Expenses and Other Current Assets

7. Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets include (in thousands):

	As of September 30, 2012		As of December 31, 2011
Prepaid bandwidth and backbone services	$	3,765	$	2,544
Receivable from DG		2,703		11,151
Non-income taxes receivable (VAT)		1,901		2,067
Employee advances and prepaid recoverable commissions		425		332
Indemnity claim asset		—		252
Other		3,056		4,300
Total prepaid expenses and other current assets	$	11,850	$	20,646

See further discussion of the receivable from DG in Note 5, Discontinued Operations.

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Goodwill and Other Intangible Assets

9 Months Ended

Sep. 30, 2012

Goodwill and Other Intangible Assets [Abstract]

Goodwill and Other Intangible Assets

8. Goodwill and Other Intangible Assets

The Company has recorded goodwill and other intangible assets as a result of its business acquisitions. Goodwill is recorded when the purchase price paid for an acquisition exceeds the estimated fair value of the net identified tangible and intangible assets acquired. In each of the Company’s acquisitions, the objective of the acquisition was to expand the Company’s product offerings and customer base and is expected to achieve synergies related to cross-selling opportunities, all of which contributed to the recognition of goodwill.

The changes in the carrying amount of goodwill for the nine months ended September 30, 2012 were as follows (in thousands):

Balance, January 1, 2012	$	80,105
Foreign currency translation adjustment		199
Balance, March 31, 2012		80,304
Foreign currency translation adjustment		(442	)
Balance, June 30, 2012	$	79,862
Foreign currency translation adjustment		41
Balance, September 30, 2012	$	79,903

Other intangible assets that are subject to amortization consist of the following (in thousands):

	As of September 30, 2012
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Existing technologies	$	8,242	$	(3,460	)	$	4,782
Customer relationships		3,412		(1,217	)		2,195
Trademark		160		(156	)		4
Total other intangible assets	$	11,814	$	(4,833	)	$	6,981

	As of December 31, 2011
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Existing technologies	$	8,347	$	(1,976	)	$	6,371
Customer relationships		3,412		(589	)		2,823
Trade names and trademark		160		(147	)		13
Total other intangible assets	$	11,919	$	(2,712	)	$	9,207

Aggregate expense related to amortization of other intangible assets included in continuing operations for the three months ended September 30, 2012 and 2011 was approximately $0.7 million and $0.8 million, respectively. For the nine months ended September 30, 2012 and 2011, aggregate expense related to the amortization of other intangible assets was approximately $2.1 million and $1.5 million, respectively. Based on the Company’s other intangible assets as of September 30, 2012, aggregate expense related to amortization of other intangible assets is expected to be $0.7 million for the remainder of 2012, and $2.8 million, $2.1 million, $1.1 million and $0.3 million for fiscal years 2013, 2014, 2015 and 2016, respectively.

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Other Assets

9 Months Ended

Sep. 30, 2012

Other Assets [Abstract]

Other Assets

10. Other Assets

Other assets include (in thousands):

	As of September 30, 2012		As of December 31, 2011
Prepaid bandwidth and backbone services	$	6,847	$	7,373
Cost basis investment (Gaikai)		—		1,444
Gaikai escrow balance receivable		1,237		—
Vendor deposits and other		952		1,384
Deferred expenses		175		253
Total other assets	$	9,211	$	10,454

In May 2010, the Company made a strategic investment in Gaikai Inc. (Gaikai), a private cloud-based gaming technology company that allows users to play major PC and console games through a web browser. In June 2012, Sony Computer Entertainment Inc. (Sony) entered into a definitive agreement to acquire Gaikai for approximately $380 million. In August 2012, Sony completed its acquisition of Gaikai and the Company recorded a gain on sale of its cost basis investment in Gaikai of $9.4 million which has been reflected in other income (expense) in the accompanying condensed consolidated statements of operations for the three and nine months ended September 30, 2012. The carrying value of the Gaikai cost basis investment as of the sale date was approximately $2.0 million. The aggregate selling price was $11.4 million consisting of $10.2 million of cash received and $1.2 million held in escrow for a period of up to 15 months to cover any potential indemnification claims. As of September 30, 2012, the Company is not aware of any potential indemnification claims and has recorded a long term receivable of $1.2 million which is included in other assets in the accompanying condensed consolidated balance sheets.

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Net Income Loss per Share (Details Textual) (Stock options and restricted stock (RSUs) [Member]) In Millions, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Stock options and restricted stock (RSUs) [Member]
Net Loss per Share (Textual) [Abstract]
Outstanding options and restricted stock units	2.2	3.4	2.2	4.7

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Share-Based Compensation (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Components of share-based compensation expense
Share-based compensation	$ 3,663	$ 2,989	$ 10,835	$ 11,694
Stock options [Member]
Components of share-based compensation expense
Share-based compensation	1,766	2,424	5,540	7,308
Restricted stock awards and units [Member]
Components of share-based compensation expense
Share-based compensation	1,897	565	5,295	4,386
Cost of services [Member]
Components of share-based compensation expense
Share-based compensation	604	514	1,595	1,805
General and administrative expense [Member]
Components of share-based compensation expense
Share-based compensation	1,571	1,093	4,638	4,133
Sales and marketing expense [Member]
Components of share-based compensation expense
Share-based compensation	836	695	2,502	2,932
Research and development expense [Member]
Components of share-based compensation expense
Share-based compensation	$ 652	$ 687	$ 2,100	$ 2,824

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Net Income (Loss) per Share (Details) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011	Dec. 31, 2011
Computation of basic and diluted net income (loss) per share
Loss from continuing operations	$ (610)	$ (6,402)	$ (19,744)	$ (24,071)
(Loss) income from discontinued operations, net of income taxes	(218)	11,420	(918)	5,336	4,778
Net loss	$ (828)	$ 5,018	$ (20,662)	$ (18,735)
Basic weighted average common shares	99,359	113,662	102,123	110,231
Dilutive effect of stock options and restricted stock units
Diluted weighted average common shares	99,359	113,662	102,123	110,231
Basic and diluted loss per share:
Continuing operations	$ (0.01)	$ (0.06)	$ (0.19)	$ (0.22)
Discontinued operations	$ 0.00	$ 0.10	$ (0.01)	$ 0.05
Basic and diluted net income (loss ) per share	$ (0.01)	$ 0.04	$ (0.20)	$ (0.17)

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Goodwill and Other Intangible Assets (Tables)

9 Months Ended

Sep. 30, 2012

Goodwill and Other Intangible Assets [Abstract]

Schedule of changes in the carrying amount of goodwill

Balance, January 1, 2012	$	80,105
Foreign currency translation adjustment		199
Balance, March 31, 2012		80,304
Foreign currency translation adjustment		(442	)
Balance, June 30, 2012	$	79,862
Foreign currency translation adjustment		41
Balance, September 30, 2012	$	79,903

Schedule of Other intangible assets subject to amortization

	As of September 30, 2012
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Existing technologies	$	8,242	$	(3,460	)	$	4,782
Customer relationships		3,412		(1,217	)		2,195
Trademark		160		(156	)		4
Total other intangible assets	$	11,814	$	(4,833	)	$	6,981

	As of December 31, 2011
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Existing technologies	$	8,347	$	(1,976	)	$	6,371
Customer relationships		3,412		(589	)		2,823
Trade names and trademark		160		(147	)		13
Total other intangible assets	$	11,919	$	(2,712	)	$	9,207

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Accounts Receivable, net (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Summary of Accounts receivable, net
Accounts receivable	$ 23,399	$ 24,260
Unbilled accounts receivable	8,475	8,176
Total accounts receivable, gross	31,874	32,436
Less: credit allowance	(710)	(810)
Less: allowance for bad debt	(2,756)	(3,581)
Total accounts receivable, net	$ 28,408	$ 28,045

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Stockholders' Equity

9 Months Ended

Sep. 30, 2012

Stockholders' Equity [Abstract]

Stockholders' Equity

15. Stockholders’ Equity

Common Stock

On May 3, 2012, the Company announced a second common stock repurchase plan that authorized the Company to repurchase up to $15 million of its shares of common stock, exclusive of any commissions, markups or expenses, from time to time through December 15, 2012. Any repurchased shares will be cancelled and return to authorized but unissued status. During the three months ended September 30, 2012, the Company purchased and cancelled approximately 1.2 million shares under the second repurchase plan. During the period May 3, 2012 through August 9, 2012, the Company purchased and cancelled approximately 5.7 million shares of common stock for approximately $15.0 million ($15.1 million including commissions) under the second repurchase plan. The Company’s second repurchase plan is complete.

On September 12, 2011, the Company’s board of directors approved a repurchase plan that authorized the Company to purchase up to $25 million of its shares of common stock, exclusive of any commissions, markups or expenses, from time to time through March 12, 2012. During the nine months ended September 30, 2012, the Company purchased and cancelled approximately 0.3 million shares under the initial repurchase plan. During the period September 12, 2011 through March 12, 2012, the Company repurchased and cancelled approximately 9.7 million shares of common stock for approximately $25.0 million ($25.2 million including commissions) under the initial repurchase plan. The Company’s initial repurchase plan is complete.

On October 29, 2012, the Company’s Board of Directors authorized a new $10 million share repurchase plan.

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Concentrations

9 Months Ended

Sep. 30, 2012

Concentrations [Abstract]

Concentrations

20. Concentrations

For both the three and nine months ended September 30, 2012 Netflix, Inc. (Netflix) represented approximately 11% of the Company’s total revenue. For the three and nine months ended September 30, 2011 Netflix represented approximately 12% and 11% respectively, of the Company’s total revenue.

Revenue from sources outside North America totaled approximately $14.4 million and $13.5 million, for the three months ended September 30, 2012 and 2011, respectively. For the nine months ended September 30, 2012 and 2011, revenue from sources outside of North America totaled approximately $42.1 million and $38.2 million, respectively.

During the three and nine months ended September 30, 2012, the Company had two countries, Japan and the United States that accounted for 10% or more of the Company’s total revenues. No single country outside of the United States accounted for 10% or more of the Company’s total revenues during the three and nine months ended September 30, 2011.

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Discontinued Operations (Details 1) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011	Dec. 31, 2011
Operating results of discontinued operations
Revenues		$ 4,907		$ 22,302	$ 22,302
Cost of revenues		(2,213)		(8,843)	(8,843)
General and administrative expenses		(1,461)	163	(5,622)	(6,055)
Sales and marketing expenses		(1,994)		(8,183)	(8,183)
Research and development expenses		(1,150)		(4,853)	(4,853)
Depreciation and amortization		(941)		(3,761)	(3,761)
Interest expense		(4)		(16)	(16)
Interest income		13		21	21
Other income		5		33	(525)
(Loss) gain on sale of discontinued operations, net of income taxes	(218)	14,323	(1,081)	14,323	14,756
(Loss) income before income taxes	(218)	11,485	(918)	5,401	4,843
Income tax benefit		(65)		(65)	(65)
(Loss) income from discontinued operations	$ (218)	$ 11,420	$ (918)	$ 5,336	$ 4,778
(Loss) income from discontinued operations per weighted average share:
Basic and diluted	$ 0.00	$ 0.10	$ (0.01)	$ 0.05	$ 0.05
Shares used in per weighted average share calculation for discontinued operations:
Basic and diluted	99,359	113,662	102,123	110,231	109,236

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Leases and Commitments (Tables)

9 Months Ended

Sep. 30, 2012

Leases and Commitments [Abstract]

Future minimum lease payments over remaining lease periods

2012	$	1,003
2013		3,531
2014		2,922
2015		2,670
2016 and thereafter		6,088
Total minimum payments	$	16,214

Minimum Purchase commitments

2012	$	11,254
2013		31,294
2014		21,116
2015		15,519
2016 and thereafter		3,639
Total minimum payments	$	82,822

Future minimum capital lease payments

2012	$	461
2013		1,377
2014		498
2015		238
2016 and thereafter		138
Total		2,712
Amounts representing interest		(160	)
Present value of minimum lease payments	$	2,552

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Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Condensed Consolidated Statements of Comprehensive Income (Loss) [Abstract]
Net (loss) income	$ (828)	$ 5,018	$ (20,662)	$ (18,735)
Other comprehensive income (loss), net of tax:
Unrealized gain (loss) on investments	28	(41)	(16)	(43)
Cumulative translation adjustment				494
Foreign exchange translation	994	(1,285)	(12)	(113)
Other comprehensive (loss) income, net of tax	1,022	(1,326)	(28)	338
Comprehensive income (loss)	$ 194	$ 3,692	$ (20,690)	$ (18,397)

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Business Acquisitions

9 Months Ended

Sep. 30, 2012

Business Acquisitions [Abstract]

Business Acquisitions

4. Business Acquisitions

AcceloWeb, (IL) Ltd. Acquisition

On May 9, 2011, the Company acquired all the issued and outstanding shares of AcceloWeb, (IL) Ltd. (AcceloWeb), a Tel Aviv, Israel-based privately-held provider of advanced technology that helps speed the presentation of websites and applications. The services provided by AcceloWeb align with the Company’s current whole site acceleration strategy, providing a time to market advantage over development of a new product and furthers the Company’s value-added services growth strategy. The aggregate purchase price of approximately $12.0 million consisted of approximately $5.0 million of cash paid at the closing (cash paid net of cash acquired was $4.7 million) and 1,100,629 shares of the Company’s common stock with an estimated fair value of approximately $7.0 million on the acquisition date. The number of common shares issued at the closing was determined on the basis of the average closing market price of the Company’s common shares on the five days preceding the acquisition date. In addition, the purchase price included contingent consideration with an aggregate potential value of $8.0 million ($4.0 million payable in cash and $4.0 million payable in the Company’s common stock), which may be earned upon the achievement of certain performance milestones which will be measured quarterly during the eight full consecutive quarters ending June 30, 2013 (the Earn-Out).

During the quarter ended March 31, 2012, management determined that the achievement of the certain performance milestones was not probable and reversed the previously recorded earn-out liability of $0.8 million. The reversal has been reflected as a reduction to general and administrative expense in the accompanying condensed consolidated statement of operations for the nine month period ended September 30, 2012.

Under the terms of the merger agreement, 188,677 shares of the common stock portion of the purchase price with an estimated fair value on the acquisition date of approximately $1.2 million has been set aside in an escrow account and will be held for a period of up to 18 months following the closing date to satisfy any unresolved indemnification claims. Any potential claims will be settled from escrow with the number of shares of common stock calculated based on the amount of the claim divided by $6.36, adjusted to such number of shares of common stock for stock splits, reverse stock splits, spin offs, recapitalizations, reorganization, reclassification, stock dividends or similar events. Escrow amounts not then subject to settled or pending, unsatisfied or unresolved indemnity claims, will be released as soon as practicable following the end of the 18-month escrow period. The Company has not recognized any indemnification assets as of September 30, 2012.

For additional information and a more detailed description of the AcceloWeb acquisition, see Note 4, contained in the Company’s audited consolidated financial statements and notes thereto for the year ended December 31, 2011 included in the Company’s Annual Report on Form 10-K filed with the SEC on March 2, 2012.

Clickability Acquisition

On May 2, 2011, the Company acquired all the issued and outstanding shares of Clickability, Inc. (Clickability), a privately-held SaaS provider of web content management located in San Francisco, California. The services provided by Clickability align with the Company’s current value-added services and furthers the Company’s value-added services growth strategy. The aggregate purchase price of approximately $9.6 million consisted of approximately $4.9 million of cash paid at the closing (cash paid net of cash acquired was $2.7 million), $0.1 million held by the Company to cover future claims and 732,000 shares of the Company’s common stock with an estimated fair value of approximately $4.6 million on the date of acquisition. The Company issued 382,000 common shares with an estimated fair value of approximately $2.4 million at the closing. The number of shares of the Company’s common stock issued as consideration for Clickability was determined on the basis of the average closing market price of the Company’s common shares on the thirty days preceding the acquisition date.

Under the terms of the merger agreement, approximately 350,000 shares of the common stock portion of the purchase price with an estimated fair market value on the acquisition date of approximately $2.2 million and $0.1 million of cash remained unissued and available to cover future claims. Approximately 140,000 of the shares of common stock were subject to a retention holdback for a period of up to 12 months following the closing date and these shares were issued by the Company on May 2, 2012. The remaining 210,000 shares of common stock are subject to an indemnification holdback for a period of up to 18 months following the closing date. Any potential claims will be settled from escrow with the number of shares of common stock calculated based on the amount of the claim divided by $6.83, adjusted to such number of shares of common stock for stock splits, reverse stock splits, spin offs, recapitalizations, reorganization, reclassification, stock dividends, or similar events. Amounts of the indemnification holdback not then subject to a settled or pending indemnity claim will be released as soon as practicable following the end of the 18 month holdback period. The Company has not recognized any indemnification assets as of September 30, 2012.

For additional information and a more detailed description of the Clickability acquisition, see Note 4, contained in the Company’s audited consolidated financial statements and notes thereto for the year ended December 31, 2011 included in the Company’s Annual Report on Form 10-K filed with the SEC on March 2, 2012.

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Other Assets (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Aug. 31, 2012	Jun. 30, 2012	Dec. 31, 2011
Other assets
Prepaid bandwidth and backbone services	$ 6,847			$ 7,373
Cost basis investment (Gaikai)		2,000	2,000	1,444
Gaikai escrow balance receivable	1,237
Vendor deposits and other	952			1,384
Deferred expenses	175			253
Total other assets	$ 9,211			$ 10,454

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Leases and Commitments (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012
Future minimum lease payments over remaining lease periods
2012	$ 1,003
2013	3,531
2014	2,922
2015	2,670
2016 and thereafter	6,088
Total minimum payments	$ 16,214

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Segment Reporting

9 Months Ended

Sep. 30, 2012

Segment Reporting [Abstract]

Segment Reporting

21. Segment Reporting

The Company operates in one industry segment — content delivery and related services. The Company operates in three geographic areas — North America, EMEA and Asia Pacific.

Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker, or decision making group, in deciding how to allocate resources and in assessing performance. The Company’s chief operating decision maker is its Chief Executive Officer. The Company’s Chief Executive Officer reviews financial information presented on a consolidated basis for purposes of allocating resources and evaluating financial performance. The Company has one business activity and there are no segment managers who are held accountable for operations, operating results and plans for products or components below the consolidated unit level. Accordingly, the Company reports as a single operating segment.

Revenue by geography is based on the location of the customer from which the revenue is earned. The following table sets forth revenue and long-lived assets by geographic area (in thousands):

	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2012		2011		2012		2011
Domestic revenue	$	30,622	$	28,811	$	91,632	$	87,068
International revenue Asia Pacific		8,069		7,345		22,268		18,982
International revenue EMEA		6,310		6,196		19,865		19,263
Total revenue	$	45,001	$	42,352	$	133,765	$	125,313

The following table sets forth long-lived assets by geographic area (in thousands):

	As of September 30, 2012		As of December 31, 2011
Domestic long-lived assets	$	41,755	$	49,831
International long-lived assets		13,302		15,744
Total long-lived assets	$	55,057	$	65,575

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Concentrations (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Concentrations (Textual) [Abstract]
Percentage of Company's total revenue from Netflix	11.00%	12.00%	11.00%	11.00%
Revenue from foreign sources	$ 14.4	$ 13.5	$ 42.1	$ 38.2
Foreign countries accounting specified percentage of revenue	Company had two countries, Japan and the United States that accounted for 10% or more of the Company’s total revenues during those periods	No single country outside of the United States accounted for 10% or more of the Company’s total revenues during those periods	Company had two countries, Japan and the United States that accounted for 10% or more of the Company’s total revenues during those periods	No single country outside of the United States accounted for 10% or more of the Company’s total revenues during those periods

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Other Long-Term Liabilities (Tables)

9 Months Ended

Sep. 30, 2012

Other Long-Term Liabilities [Abstract]

Other long-term liabilities

	As of September 30, 2012		As of December 31, 2011
Deferred rent	$	3,664	$	3,352
Contingent consideration liability		—		842
Total other long-term liabilities	$	3,664	$	4,194

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Net Income (Loss) per Share

9 Months Ended

Sep. 30, 2012

Net Income (Loss) per Share [Abstract]

Net Income (Loss) per Share

14. Net Income (Loss) per Share

The Company calculates basic and diluted earnings per weighted average share based on net income (loss). The Company uses the weighted-average number of common shares outstanding during the period for the computation of basic earnings per share. Diluted earnings per share include the dilutive effect of convertible stock options and restricted stock units (RSUs) in the weighted-average number of common shares outstanding. Net income (loss) from continuing operations is utilized in determining whether potential common shares are dilutive or antidilutive for purposes of computing diluted net income (loss) per share.

The following table sets forth the components used in the computation of basic and diluted net income (loss) per share for the periods indicated (in thousands, except per share data):

	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2012			2011			2012			2011
Net loss from continuing operations	$	(610	)	$	(6,402	)	$	(19,744	)	$	(24,071	)
Net (loss) income from discontinued operations		(218	)		11,420			(918	)		5,336
Net (loss) income available to common stockholders	$	(828	)	$	5,018		$	(20,662	)	$	(18,735	)
Basic weighted average common shares		99,359			113,662			102,123			110,231
Basic weighted average common shares		99,359			113,662			102,123			110,231
Dilutive effect of stock options and restricted stock units		—			—			—			—
Diluted weighted average common shares		99,359			113,662			102,123			110,231
Basic and diluted net income (loss) per share:
Continuing operations	$	(0.01	)	$	(0.06	)	$	(0.19	)	$	(0.22	)
Discontinued operations		0.00			0.10			(0.01	)		0.05
Basic and diluted net income (loss) per share	$	(0.01	)	$	0.04		$	(0.20	)	$	(0.17	)

For the three months ended September 30, 2012 and 2011, outstanding options and restricted stock units of approximately 2.2 million and 3.4 million, respectively, were excluded from the computation of diluted net loss per common share because including them would have been anti-dilutive.

For the nine months ended September 30, 2012 and 2011, outstanding options and restricted stock units of approximately 2.2 million and 4.7 million, respectively, were excluded from the computation of diluted net loss per common share because including them would have been anti-dilutive.