Edgio, the new power player in the CDN industry, reported earnings on August 8, 2022. Once fierce rivals, Limelight and EdgeCast have come together to reshape the competitive landscape.
It’s the first time they are reporting combined earnings, so it’ll take several quarters before we can start comparing y-o-y and quarter-over-quarter metrics. The biggest takeaway of the earnings call, 2023 revenue is expected to be in the range of $550M to $560M.
- July 2021: Limelight acquires Layer0
- Sept 2021: Apollo acquires EdgeCast
- March 2022: Limelight acquires EdgeCast
- June 2022: Limelight completes acquisition of EdgeCast
Although their revenue isn’t as much as Akamai’s, it’s enough to rearrange vendor rankings. Akamai and Edgio are the top two CDNs in delivery today. Each vendor has the economies of scale to support events requiring Tbps of network capacity, and they can price out the competition in large volume deals.
Where does that leave Fastly in the delivery category? Third place. More on Fastly next week. Other categories would be security, edge, etc. Cloudflare is a different beast altogether.
Before we discuss our observations, let’s review some interesting data points from Q2-2022 earnings.
- 2023 revenue expected to be in the range of $550M to $560M
- 230+ Tbps network capacity and 300 PoPs
- Three product categories: AppOps, Delivery, and Streaming
- AppOps represents 20% of revenue
- Streaming represents 25% of revenue
Industry Consolidation and Multi-CDN Strategy
Limelight acquiring EdgeCast is redefining the notion of multi-CDN. Several years ago, there were several vendor options available in the multi-CDN approach: Akamai, EdgeCast, Limelight, Level 3, Fastly, and DIY (do-it-yourself).
Today, multi-CDN means Akamai, Edgio, and DIY. Lumen (ex-Level 3) is a telco that sells connectivity, data, and voice solutions, and CDN is an afterthought.
AppOps and Edge Computing
Edgio is in a good place because they are more than just a CDN. Their AppOps offering is a high-margin business that more than makes up the lower-margin delivery business.
Think of AppOps as Jamstack, an architectural approach to designing websites and web applications. It’s also a movement that is pivotal in advancing the notion of edge computing.
Edgio AppOps competes fiercely against Netlify, Vercel, and the like. However, Edgio’s product supports forty different web application frameworks, compared to twenty by Netlify. Not that it matters. However, AppOps runs on its network. Thus, its cost structure is significantly less than Netlify’s.
Akamai and Fastly have no Jamstack-like product at the moment. And Cloudflare is playing catchup, having launched its Netlify killer in April 2021.
AppOpps is also PLG-based, where developers can sign up easily online without sales reps getting involved. Product-led Growth and Sales-led Growth is the future model for the CDN industry.
Cloudflare has proved this.
For now, Edgio is the most exciting CDN in the industry.