Limelight Networks (EGIO -3.01%) reported third-quarter results last Thursday. The mixed report triggered a sharp sell-off on the stock, and Limelight's shares closed 32% lower on Friday. If you've been looking for a chance to pick up a few shares of this exciting tech stock on the cheap, this is it.

You see, Limelight's investors didn't actually have much reason to slam their "sell" buttons last week.

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Why the stock crashed last week

At first glance, Limelight's third-quarter results looked like a mixed bag. Sales rose 15% year over year to $59.2 million while the bottom line swung to a loss of $0.01 per share. The Street consensus had pointed to earnings near $0.02 per share on revenue in the neighborhood of $58.9 million. Investors were quick to shrug off the healthy revenue growth and focus on the earnings miss.

That would make sense if Limelight's lower earnings stemmed from a previously undetected flaw in the content delivery network (CDN) expert's business model. In reality, the entire shortfall was explained by interest payments on a new debt offering of $106 million. The company had no long-term debt on its balance sheet before these convertible notes were added in July. Limelight didn't take on this debt in order to keep the lights on during a time of crisis, but to bolster its balance sheet and open the door to a new range of tactical and strategic options.

Putting the cash infusion to work

To be clear, Limelight hasn't actually used any of its debt-based cash reserves yet. All of it remains on the balance sheet in the form of short-term investments and actual cash. CFO Dan Boncel expects to invest some of it in building out the company's edge computing infrastructure.

In a phone interview, Boncel said:

Our core CDN business is expected to contribute 8% to 10% of our 15% long-term revenue growth rate. The incremental 5% growth in edge computing started out from a much lower base, so year over year, that bit will grow a lot faster. Edge computing sales have almost doubled in 2020 over 2019, and it was zero just three years ago. Part of the reason why we got that $105 million dollars is to be able to invest in that space.

Limelight is also expanding its CDN capacity quickly in order to keep up with the demands of a growing number of video-streaming customers.

"We have capacity in the network of somewhere between 70 and 80 terabits per second in total. We added 30 TB last year and another 30 TB this year," Boncel said. "We are going to add another 20 to 25 TB this year, so we are falling a little short of the 100 TB goal for the year. But we will have sufficient capacity to serve the needs of all our customers."

The company isn't just throwing buckets of money into new network capacity willy nilly. It's not the size of the network, but how you use it, after all.

"It's one thing to have a lot of capacity in aggregate and another to have enough capacity where it is needed," Boncel said. "If all our bandwidth demand comes from the U.S. but all of our capacity sits in Germany or South Korea, that extra capacity doesn't help. So for us, it is more important to have capacity in the right place and I think we will have that through the rest of the year."

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It's time to buy Limelight Networks

I can't wait to see how Limelight decides to invest its debt-based cash reserves. Taking full advantage of the unique CDN market today should boost Limelight's long-term value significantly, and a modest quarterly interest payment looks like a small price to pay for this exciting growth opportunity.

The stock is trading near its 52-week lows right now, more than 50% below July's multi-year highs. The investment window is wide open for this well-run veteran in the explosive CDN market.