Can Edgio Turn Things Around?

Content delivery networks (CDNs) are taking the spotlight lately, as they morph into more secure edge development platforms that deliver web content at top speed. And competition is heating up as companies look to differentiate their services.

It's not an easy market. The need to maintain sizable global networks while keeping pace with enterprise demand for more than merely Internet delivery services, has the handful of market leaders angling for position. Meanwhile, the leading cloud providers offer their own CDN services, making competition even fiercer. Smaller firms are falling by the wayside, as evidenced by StackPath, once a Futuriom 50 firm, selling its CDN accounts to Akamai earlier this year. And in October 2023, Lumen likewise sold its accounts to Akamai.

No company knows the realities of the CDN market better than Edgio (Nasdaq: EGIO), which has suffered its own set of problems over the past two years. Having been formed in June 2022 after Limelight Networks purchased Yahoo CDN Edgecast, Edgio has suffered from a lack of profitability. Charges related to restructuring and lower-than-expected revenues dogged the stock after the merged company's debut.

More was to follow. Accounting issues got the firm in trouble with the U.S. Securities and Exchange Commission (SEC) and Nasdaq early in 2023, forcing Edgio to restate multiple past financials and face shareholder investigations and other headaches.

Refocusing on the Edge

Edgio is confronting these challenge by refocusing its services on lowering cost and improving performance for enterprise customers. It's also aggressively adding security features to its application development environment, specifically targeting DevSecOps (the blending of app development with security and operations).

“CDNs have become distracted from websites,” said Ajay Kapur, CTO and general manager of applications at Edgio, in an interview with Futuriom. He said that instead of focusing on what customers really need, some CDNs are throwing multiple tools at enterprises, including development and security aids, and leaving it up to those enterprises to make sense of it all. The result is less security and slower performance, he said.

In contrast, Edgio has taken an approach geared simultaneously to development and security. Earlier this year, the company released a version of its application development platform, Applications Platform v7, that united the capabilities of the three companies from which Edgio was formed in June 2022. To review: Edgio was founded from the union of two CDNs, Limelight Networks and Yahoo CDN Edgecast. A previous Limelight acquisition, Layer0, contributed a SaaS-based application acceleration and development platform, which became key to the recent Applications Platform v7.

That platform has become germane to how Edgio is approaching the DevSecOps market. In August 2023, Edgio also made available an API Security solution for the platform, which deploys machine learning to identify and mitigate threats to application programming interfaces (APIs). The add-in is part of a Web Application and API Protection (WAAP) solution for the Applications Platform v7.

A Customer Jumps Ship to Edgio

Edgio is claiming significant customer wins with its refocused CDN. Indeed, it claims to have lured dozens of customers away from market leader Akamai (Nasdaq: AKAM). While it's tough to get customers to go on record that they’ve shifted to Edgio from other CDNs, at least one is willing to testify. Kyle Rao, president of Secure Medical, told Futuriom that his IT staff shifted from Akamai to Edgio due to a performance issue on their website.

For the 26-year-old online telemedicine firm, its web pages are at the heart of its business, and security is paramount. Further, despite having used Akamai for several years, the firm believed it was still vulnerable to costs charged by Akamai for traffic during a potential attack, as well as for any traffic spikes.

“We saw that Edgio was cheaper and offered better tools and support,” said Rao. “Edgio offers a single, comprehensive package.” The firm also liked the layered security and improved performance they found with Edgio. “Our programmers could see immediately that pages were loading faster,” Rao said. How much faster? The cache hit rate (the amount of content requests fulfilled) showed 61%, up from 40% before the transition.

Kyle Rao, president, Secure Medical. Source: Secure Medical

Edgio Aims for Transformation

Taking business from Akamai is satisfying to Edgio, and doing so will be part of the company's ongoing transformation, even as it continues to struggle with managing costs and profitability. Whether investors get on board remains to be seen.

Still, the dark days are behind it, Edgio says. Within the past month, the company has settled shareholder litigation, arranged an extension for its revised financial reporting, scored $66 million in new financing, revamped its board of directors, and announced a slew of new business during its latest quarterly report. The firm is still struggling out of the mire, as shown in its low stock price, but so far, management is determined that the future looks bright.

“[T]he foundation required to support our strategic pivot is now in place,” said CEO Bob Lyons on the latest earnings call. “We continue to move the company toward our vision of profitability and growth, supported by our differentiated edge-enabled solutions.”