EGIO (2020 - Q4)

Good day, and welcome to the Limelight Networks Q4 2020 Earnings Call and Webcast. All participants will be in listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Dan Boncel, CFO. Please go ahead. Dan Bonc

Good afternoon, and thank you for joining Limelight Networks 2020 fourth quarter financial results conference call. This call is being recorded on February 11, 2021, and will be archived on our website for approximately 10 days. Let me start by quickly covering the Safe Harbor. We would like to remind everyone that we will be making forward-looking statements on this call. Forward-looking statements are all statements that are not strictly statements of historical fact, such as our priorities, our expectations, our operational plans, business strategies, secular trends, and product and feature functionality announcements. Actual results could differ materially from those contemplated by our forward-looking statements, and reported results should not be considered as an indication of future performance. For more information, please refer to the risk factors discussed in our periodic filings, including our most recent Annual Report on Form 10-K. The forward-looking statements on this call are based on information available to us as of today’s date, and we disclaim any obligation to update any forward-looking statements, except as required by law. Joining me on the call today is Bob Lyons, our new President and Chief Executive Officer. Bob will start today’s call with a brief introduction. I’ll then review financial results in detail. Following that, Bob will use a remainder of the call to discuss our immediate and longer-term plans to drive sustainable growth and profitability at Limelight. We’ll then open the call for Q&A. I’ll now turn the call over to Bob.

Thank you, Dan, and welcome, everyone. I am thrilled to join Limelight and speak with all of you today. I joined this company because of the enormous potential in front of us. Limelight has an impressive list of blue chip customers. These competing in a large and growing market and possesses a unique set of capabilities. Well, these things are true. Our landscape is rapidly changing and there are challenges here that need to be addressed. The growth and profitability of the company today are not where they need to be. Further a refined strategy and better execution are critical for our success. Clearly I believe in our ability to close these gaps and position this company as a leader delivering edge-based solutions. Later in this call, I will outline the immediate steps we are taking to address our challenges and position the company to pursue rule-of-40 performance. At this time, I’ll turn it over to Dan to report fourth quarter financials. Dan?

Thanks, Bob. I’m going to start with the top line. While we are happy to report full year revenue of $230 million representing growth of 15% over 2019, our Q4 revenue was $55.4 million in 8% decrease from Q4 2019. Our top 20 customers accounted for approximately 75% of total fourth quarter revenue, international customers accounted for 41% of total revenue in Q4 compared to 36% a year ago, approximately a 11% of our fourth quarter revenue was in non-U.S. dollar denominated currencies consistent with prior years. As Bob stated at the opening of this call, our growth and profitability are not where they need to be. Let me provide some context for the Q4 decline in revenue. We experienced record day, month and quarterly traffic volumes during the fourth quarter driven by accelerated adoption of direct-to-consumers streaming services. However, price compression more than offset higher volume, resulting in year-over-year decline in revenue. Bob will explain later the steps we are taking to get in front of these pressures by focusing on improving performance and share with existing customers, expanded capabilities and more aggressive new customers growth. Turning to COGS and operating expenses. Cash gross margin in the fourth quarter was 41%. Price compression in the quarter directly impacted gross margin. We could not simultaneously offset price declines with increased volume or cost reduction and network efficiency efforts in the quarter. That said, we believe we can increase margin from these levels throughout 2021 and we have already taken steps to accomplish this. Specifically, we have added approximately 30 terabits per second of capacity in 2020. South Korea is one region where we added capacity in anticipation of new traffic from the existing large customer. That traffic didn't materialize and we have been working to reduce our exposure to this underutilized capacity. It has had an adverse impact of approximately 200 basis points on gross margin over the last several quarters. We expect to reduce that impact by at least half in 2021. Also, as previously reported, we have rolled out material enhancements to our automated traffic engineering network capabilities. This has allowed us to better control peak traffic within our PoPs. As we continue to refine these capabilities, we will enable policies to control costs and they alleviate congestion down at the port and vendor level. Below the COGS line, operating expenses decreased approximately $1 million, primarily due to variable compensation costs. Bob will speak in more detail later in the call regarding our efforts to evaluate all operating expenses and their alignment with our longer term strategy. From a bottom line perspective, we reported a fourth quarter GAAP loss of $8.3 million or $0.07 per basic share compared to GAAP income of $2.5 million or $0.02 per share in the year ago quarter. This year's fourth quarter includes $2.2 million of interest expense or almost $0.02 per share. Adjusted EBITDA was $3.6 million this quarter versus $11.4 million in the fourth quarter of 2019. On to cash flow and the balance sheet. Operating cash flow in the fourth quarter was $1.8 million and we paid $3 million for capital expenditures. Operating cash flow for the year improved significantly to $21.3 million compared to $1.7 million in 2019. As a result, we ended the quarter with cash and cash equivalents of $123.7 million. With strong cash collections to close out the year, we ended December with a DSO of 49 days. We anticipate continued DSO performance in 2021 within our normal range of 50 to 60 days. As of December 31, we had approximately 123.7 million shares outstanding. In the interest of time, I won't go into our full year results during this call. Please see today's press release for additional details. At this point in time, we are not going to issue guidance for 2021. With Bob joining the company less than two weeks ago, we are currently evaluating all aspects of the business, including strategy and cost structure. We will provide additional details as we formalize our plans. I would now like to turn the call back to Bob for additional comments. Bob?

Thanks, Dan. As I said at the outset of this call, there is enormous opportunity in front of us and we have a solid foundation to build on. However, we are not performing as we should be and have work to do to refine our strategy, accelerate our growth, improve our profitability and better execute. Upon joining last week, the leadership team and I immediately went to work across these areas. We have defined three priorities with specific actions to improve performance and ensure our near-term and long-term success. First, we will focus on improving our core CDN business. Limelight is in a large and growing market, the one that is very competitive. Our ability to grow the top line and bottom line requires us to manage our costs and performance better than we are today and better than our competitors. Going forward, we will be relentless in our pursuit of efficiency and operational excellence. We kicked off a quick strike project that will identify opportunities to reduce costs and improve service performance. To ensure this project is thorough, and executed at pace, we have engaged a top consulting firm to help us. Second, we will expand our core business. I have had the opportunity to speak with many of our customers. We have a strong customer base that our team has done a fantastic job of supporting. Equipped with improved performance and a cost structure that gives us more pricing flexibility we have established a win room that will allow us to aggressively pursue greater share traffic and spend from existing customers while also growing our pipeline of new opportunities. Third, we will strategically pursue opportunities that extend our core. We can drive meaningful improvements to profitability and growth by diversifying our capabilities, customers and revenue mix. The biggest brands in the world trust us to connect their customers to a great digital experience, but their needs are changing. As global content consumption continues to evolve our customers need more from us. Going forward, we will more aggressively pursue and invest in opportunities to extend our core and provide robust Edge Platform capabilities that includes content, compute and cybersecurity solutions. We will focus on investments that meet the following criteria. First, solutions where we can establish a clear right to win by leveraging the scale and capability advantage of our global edge network, second, solutions that will improve overall platform utilization and third, solutions that will increase our average sale price and improve revenue diversification. Over the next 90 days, we're focusing on the strategic priorities I just outlined which again are, improving our core, expanding our core and extending our core. Where necessary we will make changes, adjust our strategic roadmap and refine our market position. We have many of the pieces needed to be a leader in Edge Platform solutions and the ability to add the remaining needed pieces. In addition to quarterly earnings updates, when appropriate we will host a virtual strategy update. This update will provide more details on our refined growth strategy and the opportunities and plans we will pursue. We will distribute information about this event via a press release approximately one-month in advance, please be on the lookout for more information in the coming months. Before turning it over to the operator for questions, I'd like to close by reiterating how happy I am to be here and how much I believe in this team and what is possible for us. The opportunity we have at Limelight is notable, but requires disciplined planning, and focused work to capture it. While there is no doubt, much has been accomplished I know that our best days are ahead of us. I am confident in the direction we are headed and in our ability to execute on a refined strategy and plans to pursue rule-of-40 performance. With that Operator, please open the lines for the question-and-answer session.

Thank you. [Operator Instructions] Our first question comes from Robert Majek with Raymond James. Please go ahead.

Great. Thanks. On the January 8, press release you had mentioned that investors should expect to receive 2021 guidance on this call. I understand the change in leadership and strategy, but can you just kind of help us understand what might've changed with the business that you're unable to provide any sense of revenue guidance for Q1 or for the year today?

Yes. Thanks Robert, this is Dan. At that point in time, we didn't have the leadership change in place. We were announcing the date of the earnings and we estimated that we would come out with guidance at that time. But with Bob Lyons now being only on the job for two weeks, we just felt that it's prudent for him to take some time, evaluate the team, evaluate what he wants to do and focus on, and then we can adjust accordingly. And so we're going to undergo that process relatively quickly within the next couple of weeks, as we mentioned, we've engaged a consulting firm to help us. And so we'll come out with – we'll come out with additional information as we work through that process, but that's kind of the process that we went through in deciding either – at the time coming out with guidance and now deciding to just hold off for a minute, let's take a step back, pause and figure out where we want to go from here.

Hey Robert, it's Bob, nice to meet you. Let me just add another piece to that. I think it's important to note that I'm a very strong proponent of transparency and accountability. And also I need to build credibility with you all and so. To do that at the right way, I need to take the time to make sure we get it right. What I can tell you is there is no burning platform, so there's really nothing that we're trying to run from. It really is nothing more than when we do come out we're going to definitely be accountable to what we commit. And I want to make sure that I have a little bit more time to get that right for you.

Yes. That makes sense, Bob and nice to meet you as well. And just kind of building on that, in your prepared remarks, you mentioned reevaluating your cost structure a few times. Can you just give us some sense of the line items you're in a position to right-size without negatively impacting the business and then ultimately what your long-term margin profile could look like?

Yes. That's a great question. So I would say in the near-term, the way we're approaching it is we're looking at everything. I think the best way to think about it is not so much as we're going to do an advent and take our costs down, but rather we're approaching it and saying, we've got a right-size of the cost structure for the company so we can participate more in this industry. And when you look at the CDN space, there's really two big drivers that either allow or disallow you to participate in more volume. And one is performance with customers and the other one is price. And the only way we're going to be more competitive on the price front is to make sure our costs are in check. So with that, we're approaching it, looking at three-dimensions of our cost structure. First obviously looking at operating costs and where we can be more efficient there. Secondly, looking at architectural costs, some of the things that we may have done over the years that add to cost that maybe we can rethink, and then third, obviously strategic costs where we can drive more synergies with different aspects of our strategy that we'll talk about in more detail. So we're taking a very comprehensive approach. From that what we expect to do is have – we call it a quick hits project on purpose. We expect to have some quick hits come out of that and then going forward, we'll continue to build on that with very relentless, continuous improvement model around costs. Cost management really needs to become a key driver of our ongoing strategy as a company.

Bob, it would be great if you could just build on the comment you made about expanding the product portfolio. Does it make sense to make a push towards offering security services like WAF and DDoS in-house to grow customer ARPU?

Yes. So let me talk about security for a second. Scenario, where I have a lot of experience given what I've been doing for the last several years and the best way to think about it, what we're doing today is the same thing that everybody else is doing, but that's not really where the big opportunity is. The big opportunity is in what's happening in the security space. And let me put a little color on that and then I’ll pack it for you. Overall security spend is about $250 billion to $260 billion industry, growing at anywhere from a 13% to 20% CAGR, but the challenge is if you look at the way the security industry has grown up over the last 20 years, it's really focused on perimeter oriented tools. And that worked really well when you had your own data center, when you can keep all of your assets inside your four walls. But what's happening today is if you think about with 5G, with mobile, with cloud, with SaaS all those things are essentially making a perimeter strategy obsolete. And so what's happening in the security industry is that industry is going through a major transformation. And interestingly, Edge Platform is the place that can solve that problem, because really what you're solving for now is you're solving for the new perimeters, each individual user, wherever they happen to be, if they're sitting in a Starbucks, sitting at their home, sitting in their office. And so security needs to transform and address those things. So when you look at what we're doing today, it's no different than what a lot of people are doing, but when you look at where the opportunity really is we have an ability, given our unique set of assets with our global Edge Platform to really play in that space in a much more compelling way. We've got some work to do to figure out exactly how we're going to do that, but more to come on that.

And just one last question if I can for me, I know you're not guiding to 2021, but just how should investors think broadly about CDN price compression as we look into next year? Is there any reason to think that these pricing pressures may be?

Yes, I would answer it this way. I think anytime you're in an industry like this, there's always going to be some price compression. And so that's one of the reasons why we have to build that into DNA of our – we're a company that we're managing for that. Having said that, the customers that I've talked to, which I've talked to a number at this point all of them have said, look we're willing to pay a little bit of a premium if you can bring more value to the table. And that's why we're really focused on two things; get our costs where they need to be, at the same time meaningfully improve our performance in their eyes. And so we're always going to have price pressure, I don't see it. It's hard to predict, but I see it as something we can do a better job. Our peers in the marketplace are doing a better job with this, so we've got to do that as well.

Thanks a lot Bob. Appreciate all the color and looking forward to the Analyst Day.

Thank you, likewise.

Our next question comes from Rishi Jaluria with D.A. Davidson. Please go ahead.

Hey guys, thanks so much for taking my questions and Bob welcome looking-forward to working with you. I wanted to maybe start on the top 20 customers, if my math is right, your ARPU for your top 20 actually declined 11% sequentially from Q3 to Q4. And I don't think we've ever seen a sequential drop that big with your largest customers. And I haven't seen the sequential decline with ARPU for your largest customers since, I'd say at least seven quarters ago. So maybe, can you tell us a little bit more about what's going on with your top 20 customers? Is there just more pricing compression going on there with these customers? Was there some level of attrition in just share of traffic and any color you can provide there would be helpful?

Yes. Hey, Rishi. So our top 20 customers represent 75% of our revenue. When we have price compression with those large customers, it shows up in our numbers at a higher degree than what our competitors have with their broader customer base. And so part of our strategy going forward is to improve our core, expand our core and extend our core with all of that driving diversification of our customer base. And so when we have the price compression that we experienced in the fourth quarter with the larger of our customers in our top 20, that's the reason for that ARPU decline. And that's something that we realized that we have to fix and diversify, and that's what our strategy will be going forward.

Got it. That's helpful. And then want to drill maybe a little bit more into the pricing compression, because I think a lot of us are really surprised to see a sequential decline in total revenue from Q3 to Q4 given all the tailwinds in the quarter, right. I mean, lockdowns were a lot stricter, you had two gaming launches, OTT kind of you name it, a strong e-commerce season. And so to see a decline sequentially I think is a little bit of a surprise, maybe, A, is this all pricing compression or are there other factors here? And pricing compression has been an ongoing theme that we've seen and that you've talked about, what was it that led to pricing compression being so severe in Q4 versus in the other quarters this year?

Yes, it was the significant the level of customer where we experienced the price compression. That's really the story. It's the largest of our customers, where we had some price compression that flooded through in the fourth quarter versus the third quarter.

Got it, that's helpful. And last one for me and I'll hop. But Bob, I know I don't want to get too far ahead of the Analyst Day. But you've talked about this industry or Limelight talked about the industry growing, at least high-single digits if not faster and you've mentioned it's a growing and large market. Obviously you're not close to market growth rates right now. And I imagine it'll be a while before you can. How should we – I guess, high level be thinking about the timeline to at least return to market growth rates. I’m sure there’s an aspirational goal of exceeding that and gaining share. But I mean are we talking is that a couple quarters, is that a couple years? What does that timeline generally speaking look like?

Yes, let me – yes, it’s a great question. Let me answer it this way and tell you how we’re thinking about it and my initial observations. So in the CDN market, which I think it was what you were referring to, and I’m going to ask you to reframe that, but I’m going to first address that question. In the CDN market, it is growing and you’re right. We’re growing at less than market share. And the reason for that is that we’ve had a strategy that largely focuses on large enterprise customers selling CDN and what we’ve got to do to be able to return to growth is really two things. What we said in the call, which is improve our core by reducing our costs and improving our performance and I’ll talk about performance in a second. And then secondly, we’ve also got to figure out ways that we can participate in more of the mid-market. And there is some things that we can do in R&D to make that happen. And those are the two things that are going to return us there. The first one of those performance and costs, it can happen pretty quickly. One of the reasons that we are doing the quick strike project as well as the wind desk. And the idea there basically is if we can very quickly get our costs in a place where we can have more flexibility with pricing. We can also focus on performance and I’m going to talk about that a little bit more. We can go back to our existing customers, all of which are spending a lot more money with other of our competitors and really try to compete for that revenue. So that’ll be more immediate. And then of course, as we diversify our capabilities and look to be able to expand in more mid-market and smaller regional so forth. We can expand there as well. But let me double click on the performance piece. What I mean by that, it’s an interesting industry, because on the one hand, if you asked me, hey, how was your performance today? I would say, well, based on the numbers we do good, and that would be true. On the other hand, if you said, what’s the biggest thing you can do to grow the business. I’d say improved performance. And they – those two things seem contradictory. But the reason that is that our customers use a number of CDNs and they’re sophisticated enough to be able to route traffic based on, all CDNs have things they do well and things they don’t do as well as others. And so our customers route traffic based on that. And so we’re of course going to have a great numbers. What we’ve got to really focused on is the traffic we’re not getting and what performance we have to improve to get that. And so those are the things that we can do to drive more near-term growth in revenue, obviously make sure that we’re priced at a place that allows us to participate in that. The fact that we’re putting a wind desk in place tells you that we’re looking to do that more near-term, but I’m not going to set expectations around that. And then of course, as we look to expand our abilities into the mid-market and other things, that’ll be a little bit more on the horizon, but all of that will be done with a sense of urgency.

All right. That’s a super helpful. Thank you.

Our next question comes from Mike Latimore with Northland Capital Markets. Please go ahead.

Great. Thanks. Yes. I guess Dan, did you give the volume growth and the price decline in the quarter? I thought I heard that, but I did get it down.

No. We mentioned that we experienced record day, months and quarterly traffic volumes, but that’s price compression more than offset that.

Okay, right. In terms of just traffic volume growth rates, did they change much from last quarter?

The growth rates were consistent with what we’ve experienced throughout the year, I would say. And so we took the level up in Q2 with the COVID lockdowns and that just continues throughout Q3 and into Q4, I think with seasonality.

Okay. And then the – it sounds like the price compression came from a couple of your largest customers. I guess what prompted that a new price requirements, was it sort of ended contracts, new launches, more competition? Just any color on that would be great.

Yes. I think competition as well as volume growth, we have contracts with volume tiers in them already and due to the accelerated growth in traffic volumes that we experienced throughout the year. In some cases, they’ve exceeded the established volume tiers already, and that brings people to the table and we make balanced decisions on whether or not to participate. In those renegotiations based on where we see the traffic going and how we can drive costs out of the system. But you get the initial step down in pricing as volume then ramp back up. And so that’s what I was saying. It’s going to be our job to diversify that, that customer base and that revenue base. So we don’t get these huge step down in prices that stick out like a sore thumb that we’ve experienced here. And that’s the strategy that we’re going to employ going forward and expect to make progress on that in relatively short order.

Right, yes. Okay. And then last one on edge revenues, you’ve given some color on just how much edge contributed revenues over time? Like what -- do you have the number for 2020?

Yes, it was under 10% in total. But it has grown pretty rapidly over the course of the last couple of years. We started a couple of years ago with really nothing. And it grew from nothing to a couple of million to upper-single digits to just under 10%.

Okay. Very good. Thank you. Thanks very much.

Our next question comes from Eric Martinuzzi with Lake Street. Please go ahead.

Yes. I wanted to focus on the Q4 price compression as well. Obviously, you had an outlook towards the end of October, and then things changed that that changed that took place in the last two months of the quarter. Was that – because you talked about competition and volume tiers, are these volume tiers with the big impetus there on the volume tiers or on the competitive side.

It was a mix of both.

Okay. And I know you guys you’re fighting for traffic every day and your customers aren’t exclusive to you, but as far as a tradeoff between making a price concession, is there anything else that you get out of that an extension of the term or some other concession from the large customer?

Yes, I mean it’s really going to come back to our performance and how well we can perform for them that we’ll continue our relationship with them and where that goes. If we can differentiate ourselves from our competition in terms of performance, you hold an upper life against everyone else. And so that’s what we’re focusing on to in the near-term to drive continued gain of market share from our largest customers, as well as new customers.

Okay. And then one last one for Bob, strategically, you’ve talked about, you’re introducing the cybersecurity element to what is as you put it a pretty robust platform. How do we get there? Is this internally developed? Is this acquired? If it is an M&A strategy, do you have targets in mind?

Yes, great question. I – we will not get there by doing it fully internally. We have a lot of work to do to come back with specific plans. But what I would offer you is that I know the space very well, and I know where the opportunities are. I know what it takes to win there. And it’s worth really understanding how we can be a big player in there. No surprise. You’ve heard it with some of our competitors talking about in some recent acquisitions. And the reason for that is the opportunity is just really meaningful and we really want to participate in that place and think we can do it in a compelling way.

Understand. Thanks and good luck.

Thank you.

Our next question comes from Colby Synesael with Cowen and Co. Please go ahead.

This is Michael on for Colby. Two questions, if I may. First, you talked about going after the mid-market and improving your revenue diversification. As part of that will you need to stand the salesforce in order to more aggressively pursue that opportunity? And also as we think about just the pricing compression, I mean what we – how would you frame the risk of additional decline – pricing declines as we go through 2021? Do you expect any of these larger – additional larger customers to come back to the table? Any color would be greatly appreciated. Thank you.

Yes, sure. Thanks, Michael. It’s Bob. So first I’ll start with the expanding – diversifying the revenue. There’s really two things we’re going to do there. Obviously look to do broaden our capabilities around edge, really three things as delivery, edge platform and edge security. And that we’ll spend more time talking about that when we come back with our strategy. But as far as the mid-market really winning in the mid-market space is more than just more salespeople. Mid-market buyers are I call more outcome buyers versus capability buyers. They’re looking for somebody to come in and do the job for them. And oftentimes the best way to get access to that market is through channel partners. But most importantly, we’ve got to make sure that our value proposition, our platform is consumable for them. They’re really more focused on dashboards and UI and ease of use versus richness of features and functionality. So to win in the mid-market space is a combination of making sure that our platform has the right features and experience for the mid-market. And then we also get to those customers through the right channels. And that’ll be a part of the conversation that we’re having going forward. And we’ll talk more about when we have our strategy session. And then on the price compression, one thing I would say is that – one of the things that I’m looking at is, what drives price compression. And I think there’s one, there’s a natural price compression in the market that everybody experiences, and that’s going to be the nature of the beast that we’ve got to just do a better job of getting in front of. But I think secondarily, the market is getting much more aggressive with where that willingness to pay prices. And that’s why we’ve really got to get our cost structure in place where we can get down. So I think, and I don’t really know this, but it’s just an early observation that some of our price compression has been a result of maybe being priced a little bit above market and normalizing. So based on that, I would expect to see once we adjust these things that we might see some less headwinds on that, although, it’s never going away.

Perfect. Thanks for that. And one other question is, would you say that quarter-over-quarter, you saw any change in the way the customers perceived your performance. Because you mentioned that a few times. I just want to get a sense if there’s changed on the performance side.

I don’t think so. Like, our customers demand that, the best performance at a price point that they can get in the market. And so that’s consistent year-over-year, quarter-over-quarter.

Yes. And just to double click on that performance thing, I’ll tell you the difference in how I think about it. If you look at our performance and what we do day-to-day, I’ve spoken to almost all of our top customers, and they’re very happy with what we do and we have good conversations. But if you’re a growth minded company, you start focusing on what you’re not getting and what performance you have to have to get that. And that’s really where – when I say, we’re going to double-click on performance, so we can go after the parts of the market that today we’re not participating in.

Perfect. Thank you very much for that. Appreciate it.

Thank you.

Our next question comes from James Breen with William Blair. Please go ahead

Thanks for taking the questions. Just a couple again, sort of on a follow-up, some of these questions you’ve already been asked. In the quarter, you said the traffic was up just from your own experience, given how much traffic was up across the industry. Do you feel like you lost some market share, and that was sort of part of the reason for the sequential decline in revenue. And then secondly, on some of these contracts, can you give us a little color around, if a customer hits a price, hits a volume benchmark and comes back to the table and you reprice. Is it reprice throughout their whole contract and that’s why you’re seeing sort of an immediate step down that then you have to grow into as, as the volumes go up. Thanks.

Yes. I’ll answer your first question – your second question first. Yes. Yes. That is the way it works typically, is that pricing then resets from like one. The second question on market share, I would say in some cases, we gain market share and others we didn’t do so well. And again, it’s all going back to performance and how we perform with each individual customer, the geographic region that they’re focused on. And what capacity we have in those regions. And so that’s what’s under evaluation for us here going forward.

And then just one follow-up to that. Over the course of the last few years, we’ve seen certain quarters where there seemed like there was one particular company out there or two that were really aggressive in the quarter. Did you see that this quarter from any of your competitors, in terms of maybe a little bit of irrational pricing, trying to grab some revenue and market share given the environment?

Yes, I mean, I think given what we’ve seen over the last several years, you’re going to have that consistently, where someone has some capacities that they want to fill and they’re going to go fill it in one way or another. And so we have to make sure that our network is performing at a level that can get that traffic and differentiate our service from the competitors that maybe get maybe outpacing the market as far as price compression goes.

Great, thanks.

[Operator Instructions] Our next question comes from Jeff Van Rhee with Craig-Hallum. Please go ahead.

Great, thanks. Thanks for taking my questions. Just a few for me, guys, the back to the kind of the missing and just fully understanding what happened in the quarter. What’s the breadth of the sort of the headwind. I mean, if you had to sort of boil it down to where did 80% of the damage take place? Is this coming from five customers that really boiled down to one or two or three? Just any sense on, on the breadth of players where most of the impact was felt?

Yes. Again, given the concentration of customer – of revenue within a small number of customer, it’s less than five, any particular quarter. But within that top 20, obviously the top five are much more significant than the bottom five. And so when you have something happened within those top five, it’s going to show up more.

Yes, but I mean, is this more like one or two or you saw some trends across to all five?

It was a couple, it wasn’t all five.

Okay. 10% customers in the quarter.

There were two that’ll come out in our case, that’ll be filed tomorrow.

Got it. And then last one for me just, is it – as I think Bob, as you were kind of framing getting into a more competitive position as it relates to the cost structure. Granted and no complaints, if you don’t have an answer, because you just got in the seat belt, but I know you’re trying to size up the network. Does anything stand out at this point where when you compare yourselves to peers, you just feel like the network architecture might be flawed? There’s other things in there that really stand out to you yet.

No, actually, it’s interesting you asked that question. I was just talking to somebody and when you’re at this point, I think seven days on the job, you always ask yourself, okay, is it what I expected coming in? And I would say I’ve had more positive surprises or feelings, the negative. I think when I look at the network, we have as I started said it early on, we don’t have a burning platform. We have a very good network. There’s some things we need to do to it, to be you know, more competitive in the mid-market space as I talked about. And then we have to do a better job of being able to solve for smaller objects and improve the UI and the configurability. So we can be more addressable, this smaller and mid-sized customers, but those are all very fixable things that we can do. So no major issues, I think it really boils down to, we’ve just got to focus on making sure our costs are in line with where the market is pricing things. So that we can get the right return on invested capital. We’ve got to improve the utilization of our network. That’ll help a lot. And that’ll help both by the wind desks going after regions, where we can improve utilization in a target way. And it will also help when we start putting other solutions on the network that have different demand patterns. So we’re going to focus on that. But other than that, no major issues. And it really is just initially focused on execution, focused on costs and then get the strategy, right. So that we can continue to improve utilization and when you do that, you’ll just start to see the gross margins, get to where they need to be. It’s not going to happen overnight, obviously, but the good news is, we’ve seen it done in this industry. So I don’t have to ask you guys to speculate or suspend disbelief. It really is nothing more than an execution issue for us and a strategy issue. And so that’s what we’re going to focus on.

Fair enough. One last, if I could sneak it in. The real-time streaming, I think was one of the pivots that was a push to get into a higher differentiation, higher margin space, if you will. Any updates there in terms of what you’ve witnessed this score.

No real update for you where that continues to roll out in limited availability. We’re experiencing a good pipeline of customers from – for that product and testing and POC are underway and we’ll evaluate how that goes from there.

Got it, okay. Thanks for taking my questions.

Thank you.

This concludes our question-and-answer session. I would like to turn the conference back over to Bob Lyons for any closing remarks.

Thank you, operator, and thank you everyone for joining us today. I look forward to working with everybody in continuing the conversation. We enter 2021 laser focused on building a platform for profitable growth. Our industry is in an upward trajectory and we are positioning Limelight to take advantage of that growth. We are optimistic in our ability to do so, and we look forward to updating you on our progress at the end of the first quarter. Thank you.

The conference is now concluded. Thank you for attending today’s presentation. You may now disconnect.