Edgio to restate previously issued financial statements following error

Edgio announced that it will restate its previously issued financial statements for the years ended December 31, 2021 and 2020, as well as quarterly eeports for 2022 and 2021 related to the revenue recognition of its Open Edge Solution. The company said, "The Company and the Audit Committee identified an error in the Company’s historic accounting treatment of Edgio’s Open Edge solution. Edgio’s Open Edge solution is a fully managed content delivery network ("CDN") service that embeds Edgio’s content delivery platform directly into internet service provider ("ISP") clients’ networks (the "Impacted Transactions"). The Impacted Transactions had a revenue sharing arrangement under which Edgio and ISP clients shared revenue from the traffic that runs through a point of presence ("PoP") using Edgio’s content delivery platform. Based on the Company’s review to-date of a sample of the Impacted Transactions related to Edgio’s large customers, which remains ongoing, the Company believes the sale of Open Edge equipment should be accounted for as financing leases, in which (1) the up-front payments received from the Company’s customers associated with the transaction are recognized as a financing liability on the balance sheet, with the related equipment costs remaining in fixed assets and depreciated over time, and (2) pursuant to lease accounting, the revenue sharing payments made by Edgio to the customers allocated between cost of sales and lease payments, as an offset on the balance sheet against the lease liability. While the Company’s determination regarding the revised accounting treatment for the Impacted Transactions is based on management’s evaluation of a sample of the Impacted Transactions, the Company has not yet completed its evaluation of all such transactions and could reach a different determination as to the remaining transactions."