In the first quarter of 2018, the content delivery specialist saw top-line sales rise 17% year over year to land at $52.1 million. Further down the income statement, adjusted earnings tripled to $0.06 per share. Analysts had been looking for earnings to stay flat compared to the year-ago period, based on sales in the neighborhood of $48 million.
Some companies grow their revenues by offering steep discounts to prospective clients, but Limelight is going the other way. Gross margins expanded from 47.3% to 51.2%, year over year, without weighing down the company's top-line growth.
Management raised their revenue and earnings targets for the full year and outlined an even brighter 2019. Legal charges have been weighing down Limelight's bottom line for a long time, led by a 12-quarter series of payments to rival Akamai Technologies from a bitter patent infringement lawsuit. Those predictable expenses will end five quarters from now, removing a cool $4.5 million expense from each quarterly report.
On top of that, Limelight responded to financial pressures by refocusing on stronger service quality and better customer service, winning business the old-fashioned way.
At this point, Limelight's share prices have doubled over the last 52 weeks, but the stock still looks affordable based on a P/E ratio of just 22.5 times forward earnings and a price-to-book valuation of 3.1. These are deep-discount metrics for a company executing a strong turnaround in real time. Today's price jump makes all kinds of sense.