Edgio, Inc. (NASDAQ:EGIO) Q2 2023 Earnings Call Transcript

Stephen Cumming: Yes. I’ll just add just one comment, Jeff, to that, but I think it’s important to note, certainly, we went through a fairly substantial restatement and unfortunately, that does take some wind out of our sales. Certainly, there’s a hesitancy from our customer base that sort of elongated the sales cycle, and sort of natural fear, uncertainty, and doubt when you’re – not in compliance. So, I think that sort of created a little bit more headwind for us as we came into the first half of this year. Obviously, that’s behind us now. And you can see from our results, our churns very much more contained, and we’re starting to get to this inflection point for growth in the second half sequentially.

Jeff Van Rhee: Okay. Got it. And then on the revenue, you mentioned do not expect growth in general out of the media or CDN side of the business. It might be worth just taking a second to talk about the revenue split, how you break up the business. And if media is flattish, how do you think about the other sectors?

Robert Lyons: Yes, do you want to take that, Stephen?

Stephen Cumming: Yes. Yes. So, I think you saw from our commentary in our prepared remarks, right, we’re seeing a very strong pipeline, and we’re seeing some really strong bookings activities certainly in our apps and security side. In fact, we’ve seen sequential booking increases since the beginning of this year. So, we’re building that machine now, and so, we do expect those will be the growth engines of the company. I don’t want to put growth rates around at this point in time. But as we get to this inflection point in the second half, we’ll see a little bit of uptick in delivery for the second half of this year, just partly, because of the seasonality of the business. But we certainly see some very strong bookings activity in our apps and security side as well as Uplynk.

Jeff Van Rhee: And the delivery side is roughly what as a percent of revenue?

Stephen Cumming: It’s roughly about 50%, give or take.

Jeff Van Rhee: Okay. And then last one…?

Robert Lyons: Hi Jeff, if I can just add one more comment to that. We spent a lot of time and certainly talking about the easiest way for us to go get growth is with delivery, because you can turn it out fast, but it’s also the lowest margin, and it also requires CapEx to expand the capacity to do that. And so, well the other part of the other 50% of the business is a much better profile and it takes a little bit longer to drive growth, because you got the lead time. We think that’s the better answer to the long-term for the business, and so that’s where we’re focused.

Jeff Van Rhee: Understood. And then last, I guess, just for me on the cost cut side. I know I think you reiterated the target of $85 million, $90 million by the end of the year. Where are you now? As of the end of Q2, how much of that have you taken out of that $85 million to $90 million run rate expense?

Stephen Cumming: Yes. I would say tough to put a specific number on it, Jeff. But a lot of that, as you’ve seen from our numbers, has come out from the OpEx line. Some of the COGS items are fairly substantial renegotiations with our vendors, and takes a while to unwind contracts. So just as a frame of reference, we’re at what, 44.8% of sales now for our OpEx, we were at, what, $56 million exiting 2022, and we’re now down to $43 million OpEx. So, we’ve seen sort of $50 million of run rate savings. Some of that was in the previous year on our other cost-saving initiatives, but a large portion of that is behind us. So, we’re probably sort of 40-ish-plus million there, and obviously, a lot more to happen in the second half, probably more in the COGS line and less in the OpEx.