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Silver Spring Networks Reports First Quarter 2013 Financial Results



  Silver Spring Networks Reports First Quarter 2013 Financial Results

                      Q1 Non-GAAP Revenue Growth of 24%

         16.5 Million Cumulative Network Endpoints Delivered to Date

Business Wire

REDWOOD CITY, Calif. -- May 01, 2013

Silver Spring Networks, Inc. (NYSE: SSNI) today announced preliminary
unaudited financial results for its first quarter ended March 31, 2013.

Non-GAAP revenue (billings) for the first quarter was $73.8 million, up 24%
year-over-year, driven by growth in product and service revenue. GAAP revenue
was $53.7 million as compared to $55.5 million a year ago.

Non-GAAP gross profit margins were 29.2%, down as expected when compared to
38.4% a year ago, due to changes in non-GAAP revenue mix. GAAP gross profit
margins were 18.9% as compared to 18.2% a year ago.

Non-GAAP net loss was $8.4 million as compared with a non-GAAP net loss of
$5.3 million a year ago. GAAP net loss was $64.4 million as compared with a
GAAP net loss of $18.4 million a year ago. GAAP net loss includes non-cash
charges of $42.1 million in connection with Silver Spring’s initial public
offering. In addition, Silver Spring recorded a non-cash deemed dividend of
$105.0 million related to anti-dilution provisions of certain shares of
preferred stock that were triggered by the initial public offering.

Silver Spring ended the quarter with cash of $142.4 million.

“We had a good first quarter with 24% growth and we signed some terrific new
customers,” said Scott Lang, Chairman, President, and Chief Executive Officer.
“We are seeing strong global market interest for our leading networking
platform, solutions and services as utilities look to modernize their power
grid with technology. We are committed to extending our technology leadership
and delivering significant benefits for our customers.”

Business Highlights (through May 1, 2013)

  * 16.5 million cumulative network endpoints delivered from inception through
    March 31, 2013 – up 27% from a year ago.
  * Dominion Virginia Power contract extension to network homes and businesses
    in Virginia.
  * Masers Energy project to bring smart grid and smart city benefits to
    Malaysia.
  * SP PowerAssets (Singapore Power) agreement for an advanced metering
    project in Singapore.
  * CPS Energy, the largest municipal utility in the United States, contract
    for networking platform, advanced metering and distribution automation
    solutions.
  * Extending networking platform and solutions for the unique needs of
    municipal and cooperative utilities.
  * Priced initial public offering on March 12, 2013 and closed the offering
    on March 18, 2013, raising $86.2 million, net of commissions.

Conference Call

Silver Spring will host a conference call today at 1:30 pm PT (4:30 pm ET) to
review its results for the first quarter ended March 31, 2013 and its outlook
for the future. During the course of this call, Silver Spring may also
disclose material developments affecting its business and/or financial
performance. Listeners may access the conference call live at 888-218-8059
(U.S.) or 913-312-0390 (International), access code 4825924 or via webcast at
http://ir.silverspringnet.com.

About Silver Spring Networks

Silver Spring Networks is a leading networking platform and solutions provider
for smart energy networks. Silver Spring’s pioneering IPv6 networking
platform, with 16.5 million Silver Spring enabled devices delivered, is
connecting utilities to homes and business throughout the world with the goal
of achieving greater energy efficiency for the planet. Silver Spring’s
innovative solutions enable utilities to gain operational efficiencies,
improve grid reliability, and empower consumers to monitor and manage energy
consumption. Silver Spring Networks’ customers include major utilities around
the globe such as Baltimore Gas & Electric, CitiPower & Powercor, Commonwealth
Edison, CPS Energy, Florida Power & Light, Jemena Electricity Networks
Limited, Pacific Gas & Electric, Pepco Holdings, Progress Energy, and
Singapore Power, among others. To learn more, please
visit www.silverspringnet.com.

Non-GAAP Financial Measures

Silver Spring believes that its results of operations under generally accepted
accounting principles, or GAAP, when considered in isolation, may only provide
limited insight into the performance of its business in any given period. As a
result, Silver Spring manages its business, makes planning decisions,
evaluates its performance and allocates resources by assessing non-GAAP
measures such as non-GAAP revenue (billings), cost of non-GAAP revenue
(billings), non-GAAP gross profit (loss), non-GAAP operating loss, non-GAAP
net loss, non-GAAP earnings (loss) per share, and adjusted EBITDA, in addition
to other financial measures presented in accordance with GAAP. Silver Spring
believes that these non-GAAP measures offer valuable supplemental information
regarding the performance of its business, and will help investors better
understand the sales volumes, and gross margin and profitability trends, as
well as the cash flow characteristics, of its business. These non-GAAP
measures should not be considered in isolation from, are not a substitute for,
and do not purport to be an alternative to, revenue, cost of revenue, gross
profit (loss), operating loss, net loss, loss per share or any other
performance measure derived in accordance with GAAP. Silver Spring may
consider whether other significant non-recurring items that arise in the
future should also be excluded in calculating the non-GAAP financial measures
it uses.

Non-GAAP revenue (billings) represents amounts invoiced for products for which
ownership, typically evidenced by title and risk of loss, has transferred or
services that have been provided to the customer, and for which payment is
expected to be made in accordance with normal payment terms. Non-GAAP revenue
excludes amounts for undelivered products, services to be performed in the
future, and amounts paid or payable to customers. Non-GAAP revenue is
initially recorded as deferred revenue and is recognized as GAAP revenue when
all revenue recognition criteria have been met under Silver Spring’s
accounting policies as described in Silver Spring’s filings with the
Securities and Exchange Commission. Silver Spring reconciles revenue to
billings by adding revenue to the change in deferred revenue in a given
period.

Cost of non-GAAP revenue (billings) represents the cost associated with
products and services that have been delivered to the customer, excluding
stock-based compensation and amortization of intangibles. Cost of product
shipments for which revenue is not recognized in the period incurred is
recorded as deferred cost of revenue. Deferred cost of revenue is expensed in
the statement of operations as cost of revenue when the corresponding revenue
is recognized. Costs related to services are expensed in the period incurred.
Silver Spring reconciles cost of revenue to non-GAAP cost of revenue by adding
cost of revenue to the change in deferred cost of revenue, less stock-based
compensation and amortization of intangibles included in cost of revenue, in a
given period.

Non-GAAP gross profit (loss) is the difference between non-GAAP revenue and
cost of non-GAAP revenue.

Non-GAAP operating loss represents operating loss adjusted for non-GAAP
revenue (billings) and cost of non-GAAP revenue (billings) and excludes
expenses related to the amortization of intangible assets, legal settlements,
and stock-based compensation.

Non-GAAP net loss represents net loss adjusted for non-GAAP revenue and cost
of non-GAAP revenue, and excludes expenses related to the amortization of
intangible assets, legal settlements, stock-based compensation, changes in
fair value of preferred stock warrant liabilities and embedded derivatives,
and loss on extinguishment of promissory notes.

Non-GAAP earnings (loss) per share represents non-GAAP net loss divided by
weighted average shares outstanding for the period.

Adjusted EBITDA is net loss adjusted for changes in deferred revenue and
deferred cost of revenue, other (income) expense, net, provision for income
taxes, depreciation and amortization, stock-based compensation and certain
other items management believes affect the comparability of operating results.

Forward-Looking Statements

This press release contains forward-looking statements that involve risks and
uncertainties. These forward-looking statements include statements regarding
the momentum in Silver Spring Networks’ business, future growth and future
financial results. Statements including words such as "anticipate", "believe",
"estimate" or "expect" and statements in the future tense are forward-looking
statements. These forward-looking statements are preliminary estimates and
expectations based on current information and are subject to business and
economic risks and uncertainties that could cause actual events or actual
future results to differ materially from the expectations set forth in the
forward-looking statements. Important factors that could cause results to
differ materially from the statements herein include: general economic risks;
specific economic risks in different geographies and among different
industries; failure to maintain or increase renewals and increase business
from existing customers; uncertainties around continued success in sales
growth and market share gains; lengthy sales cycles with no assurances that a
prospective customer will select Silver Spring’s products and services;
amounts included in backlog may not result in billings or revenue; adverse
publicity about, or consumer or political opposition to, the smart grid;
security breaches involving smart grid products or services; the ability to
integrate technology into third-party devices and Silver Spring’s relationship
with third-party manufacturers; execution risks related to new product
introductions and innovation; the ability to attract and retain personnel,
including members of Silver Spring’s management team; changes in strategy;
technological changes that make Silver Spring’s products and services less
competitive; dependence on a limited number of key suppliers and customers;
competition, particularly from larger companies with more resources than
Silver Spring; risks related to retention of management; international
business uncertainties; the ability to acquire and integrate other businesses;
and other risk factors set forth from time to time in Silver Spring’s filings
with the SEC, copies of which are available free of charge at the SEC’s
website at www.sec.gov. All forward-looking statements in this press release
reflect Silver Spring’s expectations as of May 1, 2013. Silver Spring
undertakes no obligation, and expressly disclaims any obligation, to update
any forward-looking statements in this press release in light of new
information or future events. In addition, the preliminary financial results
set forth in this press release are estimates based on information currently
available to Silver Spring. While Silver Spring believes these estimates are
meaningful, they could differ from the actual amounts that Silver Spring
ultimately reports in its Quarterly Report on Form 10-Q for the fiscal quarter
ended March 31, 2013. Silver Spring assumes no obligation and does not intend
to update these estimates prior to filing its Form 10-Q for the fiscal quarter
ended March 31, 2013.

 
SILVER SPRING NETWORKS
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
                                                      
                               Three Months Ended
                               March 31,
                               2013                       2012
Revenue:
Product revenue                $    41,720                $    47,940
Service revenue                     11,983                     7,514       
Net revenue                         53,703                     55,454
                                                           
Cost of revenue:
Product cost of revenue             25,743                     33,380
Service cost of revenue             17,826                     12,007      
Total cost of revenue               43,569                     45,387
                                                           
Gross profit                        10,134                     10,067
                                                           
Operating expenses:
Research and development            25,119                     15,970
Sales and marketing                 10,453                     8,291
General and                         14,136                     7,505       
administrative
Total operating expenses            49,708                     31,766
                                                           
Operating loss                      (39,574     )              (21,699    )
                                                           
Other income (expense)
Interest expense                    (1,052      )              (924       )
Conversion of promissory
notes and remeasurement             (23,676     )              4,249       
of warrants and
derivatives
Other income (expense),             (24,728     )              3,325
net
                                                           
Loss before provision for           (64,302     )              (18,374    )
income taxes
                                                           
Provision for income                64                         58          
taxes
Net loss                            (64,366     )              (18,432    )
                                                           
Deemed dividend to
convertible preferred               (105,000    )              -           
stockholders
Net loss attributable to       $    (169,366    )         $    (18,432    )
common stockholders
                                                           
Net loss per share
Basic & diluted net loss
per share attributable to      $    (16.18      )         $    (5.06      )
common stockholders
                                                           
Weighted average number
of shares used in
computation
Basic & diluted                     10,469                     3,641
                                                           
Non-GAAP results (in
thousands, except per
share data)
The following tables reconcile the Company's net loss and loss per share as
presented in its unaudited Condensed Consolidated Statements of Operations and
prepared in accordance with GAAP to its non-GAAP net loss and non-GAAP loss
per share.
                                                           
                                                           
                               Three Months Ended
                               March 31,
                               2013                       2012
Net loss                       $    (64,366     )         $    (18,432    )
Change in deferred
revenue, net of foreign             20,068                     4,049
currency translation
Change in deferred cost
of revenue, net of                  (15,423     )              7,894
foreign currency
translation
Amortization of
intangibles in cost of              48                         48
revenue
Conversion of promissory
notes and remeasurement             23,676                     (4,249     )
of warrants and
derivatives
Convertible notes                   935                        706
accretion / interest
Stock-based compensation            26,668                     4,717
                                                           
Non-GAAP net income            $    (8,394      )         $    (5,267     )
(loss)
                                                           
Non-GAAP loss per share
Basic & diluted                $    (0.80       )         $    (1.45      )
                                                           
Weighted average number
of shares used in
computation
Basic & diluted                     10,469                     3,641
                                                                           

SILVER SPRING NETWORKS, INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except par values)
                                                                 
                                                                   
                                                   March 31,      December 31,
                                                   2013           2012 (a)
ASSETS
Current assets:
Cash and cash equivalents                          $ 142,354      $ 72,646
Accounts receivable                                  49,989         56,528
Inventory                                            12,295         7,731
Deferred cost of revenue                             73,699         45,298
Prepaid expenses and other current assets            4,560          3,456     
                                                                   
Total current assets                                 282,897        185,659
                                                                   
Property and equipment, net                          12,368         12,701
Deferred cost of revenue, non-current                186,873        199,865
Deferred tax assets, non-current                     8,273          8,265
Other long-term assets                               3,894          11,254
                                                                   
TOTAL ASSETS                                       $ 494,305      $ 417,744   
                                                                   
LIABILITIES, CONVERTIBLE PREFERRED STOCK AND
STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable                                   $ 26,548       $ 28,104
Accrued liabilities                                  17,782         14,831
Deferred revenue                                     169,105        89,838
Current portion of capital lease obligations         1,475          1,647
Deferred tax liability                               7,897          7,897     
                                                                   
Total current liabilities                            222,807        142,317
                                                                   
Deferred revenue, non-current                        359,071        418,218
Preferred stock warrant liability                    -              11,261
Convertible promissory notes and embedded            -              56,319
derivatives
Other liabilities                                    16,426         18,412
                                                                   
Convertible preferred stock:
$0.001 par value; no shares authorized, issued
and outstanding, and aggregate liquidation
preference of $0 as of March 31, 2013; 26,072        -              270,725
shares authorized, 22,366 shares issued and
outstanding, and aggregate liquidation
preference of $381,338 as of December 31, 2012
                                                                   
Stockholders’ equity (deficit):
Preferred stock, $0.001 par value, 10,000 shares
authorized and no shares issued or outstanding       -              -
as of March 31, 2013; no shares authorized,
issued or outstanding,as of December 31, 2012
Common stock, $0.001 par value; 1,000,000 shares
authorized, 46,551 shares issued and outstanding
as of March 31, 2013; 80,000 shares authorized       46             4
and 3,764 shares issued and outstanding as of
December 31, 2012
Additional paid-in capital                           510,864        51,078
Accumulated other comprehensive income               (89      )     (136     )
Accumulated deficit                                  (614,820 )     (550,454 )
                                                                   
Total stockholders’ deficit                          (103,999 )     (499,508 )
                                                                   
TOTAL LIABILITIES, CONVERTIBLE PREFERRED STOCK     $ 494,305      $ 417,744   
AND STOCKHOLDERS' DEFICIT
                                                                   
(a) Derived from audited consolidated financial
statements
                                                                   

SILVER SPRING NETWORKS
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
(In thousands)
                                                                  
                                                 Three Months Ended
                                                 March 31,
                                                 2013              2012
                                                                    
OPERATING ACTIVITIES
                                                                    
Net loss                                         $ (64,366 )       $ (18,432 )
Adjustments to reconcile net loss
to net cash used in operating
activities:
Depreciation and amortization                      1,677             1,787
Stock-based compensation                           26,668            4,717
Conversion of promissory notes and
remeasurement of warrants and                      23,676            (4,249  )
derivatives
Other non-cash adjustments                         980               395
Changes in assets and liabilities:
Accounts receivable                                6,539             817
Inventory                                          (4,564  )         (821    )
Prepaid expenses and other current                 (1,121  )         155
assets
Deferred cost of revenue                           (15,410 )         7,894
Other assets                                       2,322             (644    )
Accounts payable                                   (1,637  )         (3,262  )
Accrued liabilities                                (1,887  )         (665    )
Customer deposits                                  (241    )         (5,891  )
Deferred revenue                                   20,121            4,049
Other liabilities                                  (1,670  )         806      
Net cash used in operating                         (8,913  )         (13,344 )
activities
                                                                    
INVESTING ACTIVITIES
                                                                    
Decrease in restricted cash                        -                 140
Purchases of property and                          (1,323  )         (1,398  )
equipment
Net cash used in investing                         (1,323  )         (1,258  )
activities
                                                                    
FINANCING ACTIVITIES
                                                                    
Payment upon termination of
preferred stock warrants of a                      (12,000 )         -
related party
Proceeds from initial public                       86,238            -
offering, net of offering costs
Proceeds from private placement of                 12,000            -
common stock with a related party
Payments on capital lease                          (453    )         (258    )
obligations
Proceeds from sale-leaseback                       -                 716
transaction
Proceeds from issuance of
convertible notes, net of paid                     -                 28,993
issuance costs
Proceeds from issuance of common                   14                295
stock, net of repurchases
Taxes paid related to net share                    (5,855  )         -        
settlement of equity awards
Net cash provided by financing                     79,944            29,746   
activities
                                                                    
Net increase in cash and cash                      69,708            15,144
equivalents
Cash and cash equivalents -                        72,646            71,687   
beginning of period
Cash and cash equivalents - end of               $ 142,354         $ 86,831   
period
                                                                              

SILVER SPRING NETWORKS, INC.
UNAUDITED RECONCILIATION OF NET REVENUE BETWEEN GAAP AND NON-GAAP
(in thousands, except percentages)
                                                                                 
                 Q1           Q2           Q3           Q4           Q1           YoY%
TYPE             CY12         CY12         CY12         CY12         CY13         Change
GAAP net
revenue
Product net      $ 47,940     $ 43,958     $ 30,394     $ 40,332     $ 41,720     -13  %
revenue
Service net
revenue
Managed
services and       3,392        3,992        4,756        4,018        4,559      34   %
SaaS
Professional       4,122        3,634        4,478        5,721        7,424      80   %
Total service    $ 7,514      $ 7,626      $ 9,234      $ 9,739      $ 11,983     59   %
net revenue
Total GAAP net   $ 55,454     $ 51,584     $ 39,628     $ 50,071     $ 53,703     -3   %
revenue
% Product          86     %     85     %     77     %     81     %     78     %
% Service          14     %     15     %     23     %     19     %     22     %
                                                                                   
Change in
deferred net
revenue
Change in
deferred         $ (2,518 )   $ 13,710     $ 37,545     $ 25,793     $ 14,702
product
revenue
Change in
deferred
service
revenue
Managed
services and       3,416        4,329        3,555        6,441        3,825
SaaS
Professional       3,151        4,410        4,493        3,271        1,541   
Total change
in deferred        6,567        8,739        8,048        9,712        5,366   
service
revenue
Total change
in deferred      $ 4,049      $ 22,449     $ 45,593     $ 35,505     $ 20,068
revenue
                                                                                   
Non-GAAP
revenue
Product net      $ 45,422     $ 57,668     $ 67,939     $ 66,125     $ 56,422     24   %
revenue
Service net
revenue
Managed
services and       6,808        8,321        8,311        10,459       8,384      23   %
SaaS
Professional       7,273        8,044        8,971        8,992        8,965      23   %
Total service    $ 14,081     $ 16,365     $ 17,282     $ 19,451     $ 17,349     23   %
net revenue
Total non-GAAP   $ 59,503     $ 74,033     $ 85,221     $ 85,576     $ 73,771     24   %
net revenue
% Product          76     %     78     %     80     %     77     %     76     %
% Service          24     %     22     %     20     %     23     %     24     %
                                                                                   
                                                                                   
SOLUTION
GAAP net
revenue
Advanced
metering         $ 50,162     $ 45,303     $ 34,086     $ 46,250     $ 45,149     -10  %
infrastructure
Distribution
automation and     5,292        6,281        5,542        3,821        8,554      62   %
demand side
management
Total GAAP net   $ 55,454     $ 51,584     $ 39,628     $ 50,071     $ 53,703     -3   %
revenue
% Advanced
metering           90     %     88     %     86     %     92     %     84     %
infrastructure
% Distribution
automation and     10     %     12     %     14     %     8      %     16     %
demand side
management
                                                                                   
Change in
deferred net
revenue
Advanced
metering         $ 3,116      $ 22,238     $ 44,880     $ 32,208     $ 23,219
infrastructure
Distribution
automation and     933          211          713          3,297        (3,151 )
demand side
management
Total change
in deferred      $ 4,049      $ 22,449     $ 45,593     $ 35,505     $ 20,068
net revenue
                                                                                   
Non-GAAP net
revenue
Advanced
metering         $ 53,278     $ 67,541     $ 78,966     $ 78,458     $ 68,368     28   %
infrastructure
Distribution
automation and     6,225        6,492        6,255        7,118        5,403      -13  %
demand side
management
Total Non-GAAP   $ 59,503     $ 74,033     $ 85,221     $ 85,576     $ 73,771     24   %
net revenue
% Advanced
metering           90     %     91     %     93     %     92     %     93     %
infrastructure
% Distribution
automation and     10     %     9      %     7      %     8      %     7      %
demand side
management
                                                                                   
                                                                                   
GEOGRAPHY
GAAP net
revenue
United States    $ 52,954     $ 47,415     $ 35,110     $ 46,421     $ 50,747     -4   %
International      2,500        4,169        4,518        3,650        2,956      18   %
Total GAAP net   $ 55,454     $ 51,584     $ 39,628     $ 50,071     $ 53,703     -3   %
revenue
% United           95     %     92     %     89     %     93     %     94     %
States
%                  5      %     8      %     11     %     7      %     6      %
International
                                                                                   
Change in
deferred net
revenue
United States    $ (1,774 )   $ 16,183     $ 38,325     $ 21,927     $ 8,839
International      5,823        6,266        7,268        13,578       11,229  
Total change
in deferred      $ 4,049      $ 22,449     $ 45,593     $ 35,505     $ 20,068
net revenue
                                                                                   
Non-GAAP net
revenue
United States    $ 51,180     $ 63,598     $ 73,435     $ 68,348     $ 59,586     16   %
International      8,323        10,435       11,786       17,228       14,185     70   %
Total non-GAAP   $ 59,503     $ 74,033     $ 85,221     $ 85,576     $ 73,771     24   %
net revenue
% United           86     %     86     %     86     %     80     %     81     %
States
%                  14     %     14     %     14     %     20     %     19     %
International
                                                                                   

SILVER SPRING NETWORKS, INC.
UNAUDITED SUPPLEMENTAL FINANCIAL INFORMATION
(in thousands, except percentages and headcount)
                                                                                             
                   Q1             Q2             Q3             Q4             Q1             YoY%
                   CY12           CY12           CY12           CY12           CY13           Change
                                                                                               
CASH FLOW DATA
                                                                                               
Operating cash     $ (13,344  )   $ (14,737  )   $ (10,199  )   $ 14,002       $ (8,913   )   33   %
flow
Operating cash       (26,893  )     (34,008  )     (43,330  )     (24,278  )     (19,847  )   26   %
flow - TTM
                                                                                               
BALANCE SHEET
DATA
Cash, cash
equivalents        $ 86,831       $ 71,176       $ 59,624       $ 72,646       $ 142,354      64   %
and short-term
investments
Deferred net
revenue
End of quarter       404,509        426,958        472,551        508,056        528,176
Less:
Beginning of         (400,460 )     (404,509 )     (426,958 )     (472,551 )     (508,056 )
quarter
Foreign
currency             -              -              -              -              (52      )
translation
adjustment
Change in
deferred net
revenue, net       $ 4,049        $ 22,449       $ 45,593       $ 35,505       $ 20,068    
of foreign
currency
translation
Deferred cost
of revenue
End of quarter       198,409        203,312        227,170        245,163        260,572
Less:
Beginning of         (206,303 )     (198,409 )     (203,312 )     (227,170 )     (245,163 )
quarter
Foreign
currency             -              -              -              -              14        
translation
adjustment
Change in
deferred cost
of revenue,        $ (7,894   )   $ 4,903        $ 23,858       $ 17,993       $ 15,423    
net of foreign
currency
translation
                                                                                               
                                                                                               
STOCK-BASED
COMPENSATION
Cost of goods      $ 832          $ 640          $ 521          $ 560          $ 6,724        708  %
sold
Research and         1,318          1,101          876            934            9,544        624  %
development
Sales and            915            725            632            550            3,346        266  %
marketing
General and          1,652          1,423          1,188          1,225          7,054        327  %
administrative
Total              $ 4,717        $ 3,889        $ 3,217        $ 3,269        $ 26,668       465  %
                                                                                               
EMPLOYEES            572            573            570            566            572          0    %
                                                                                               
HOMES &
BUSINESSES
Cumulative
network              12,988         13,981         14,967         15,781         16,507       27   %
endpoints
delivered*
*Endpoints refer to communication modules in electric meters
 

SILVER SPRING NETWORKS
UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(In thousands, except per share data and percentages)
                                                                                      
                                                                                        
                 Q1            Q2            Q3            Q4            Q1            YOY %
                 CY12          CY12          CY12          CY12          CY13          Change
QUARTERLY
RECONCILIATION
OF RESULTS
                                                                                        
Net revenue
GAAP net         $ 55,454      $ 51,584      $ 39,628      $ 50,071      $ 53,703      -3   %
revenue
Change in
deferred
revenue, net       4,049         22,449        45,593        35,505        20,068   
of foreign
currency
translation
Non-GAAP net     $ 59,503      $ 74,033      $ 85,221      $ 85,576      $ 73,771      24   %
revenue
                                                                                        
Gross profit
GAAP gross       $ 10,067      $ 6,670       $ 4,434       $ 10,548      $ 10,134      1    %
profit
Change in
deferred
revenue, net       4,049         22,449        45,593        35,505        20,068
of foreign
currency
translation
Change in
deferred cost
of revenue,        7,894         (4,903  )     (23,858 )     (17,993 )     (15,423 )
net of foreign
currency
translation
Amortization
of intangibles     48            48            48            48            48
in cost of
revenue
Stock-based        832           640           521           560           6,724    
compensation
Non-GAAP gross   $ 22,890      $ 24,904      $ 26,738      $ 28,668      $ 21,551      -6   %
profit
GAAP gross
margin % (as a     18      %     13      %     11      %     21      %     19      %
% of GAAP net
revenue)
Non-GAAP gross
margin % (as a     38      %     34      %     31      %     34      %     29      %
% of non-GAAP
net revenue)
                                                                                        
Operating loss
GAAP operating   $ (21,699 )   $ (22,291 )   $ (24,467 )   $ (20,187 )   $ (39,574 )   -82  %
loss
Change in
deferred
revenue, net       4,049         22,449        45,593        35,505        20,068
of foreign
currency
translation
Change in
deferred cost
of revenue,        7,894         (4,903  )     (23,858 )     (17,993 )     (15,423 )
net of foreign
currency
translation
Amortization
of intangibles     48            48            48            48            48
in cost of
revenue
Stock-based        4,717         3,889         3,217         3,269         26,668   
compensation
Non-GAAP
operating        $ (4,991  )   $ (808    )   $ 533         $ 642         $ (8,213  )   -65  %
income (loss)
GAAP operating
margin % (as a     -39     %     -43     %     -62     %     -40     %     -74     %
% of GAAP
revenue)
Non-GAAP
operating
margin % (as a     -8      %     -1      %     1       %     1       %     -11     %
% of non-GAAP
net revenue)
                                                                                        
Adjusted
EBITDA
GAAP net loss    $ (18,432 )   $ (23,407 )   $ (26,868 )   $ (21,010 )   $ (64,366 )   -249 %
Change in
deferred
revenue, net       4,049         22,449        45,593        35,505        20,068
of foreign
currency
translation
Change in
deferred cost
of revenue,        7,894         (4,903  )     (23,858 )     (17,993 )     (15,423 )
net of foreign
currency
translation
Other (income)     (3,325  )     1,078         2,028         902           24,728
expense, net
Provision for      58            38            373           (79     )     64
income taxes
Depreciation
and                1,787         1,857         1,815         1,796         1,677
amortization
Stock-based        4,717         3,889         3,217         3,269         26,668   
compensation
Adjusted         $ (3,252  )   $ 1,001       $ 2,300       $ 2,390       $ (6,584  )   -102 %
EBITDA
                                                                                        
Net loss
GAAP net loss    $ (18,432 )   $ (23,407 )   $ (26,868 )   $ (21,010 )   $ (64,366 )   -249 %
Change in
deferred
revenue, net       4,049         22,449        45,593        35,505        20,068
of foreign
currency
translation
Change in
deferred cost
of revenue,        7,894         (4,903  )     (23,858 )     (17,993 )     (15,423 )
net of foreign
currency
translation
Amortization
of intangibles     48            48            48            48            48
in cost of
revenue
Convertible
notes              706           1,012         1,069         1,081         935
accretion /
interest
Conversion of
promissory
notes and
remeasurement      (4,249  )     (151    )     830           (308    )     23,676
of warrants
and
derivatives
Stock-based        4,717         3,889         3,217         3,269         26,668   
compensation
Non-GAAP net     $ (5,267  )   $ (1,063  )   $ 31          $ 592         $ (8,394  )   -59  %
income (loss)
GAAP net
margin % (as a     -33     %     -45     %     -68     %     -42     %     -120    %
% of GAAP
revenue)
Non-GAAP net
margin % (as a     -9      %     -1      %     0       %     1       %     -11     %
% of non-GAAP
net revenue)
                                                                                        
Diluted income
(loss) per
share
GAAP loss per    $ (5.06   )   $ (6.38   )   $ (7.30   )   $ (5.65   )   $ (16.18  )
share*
Non-GAAP
income (loss)    $ (1.45   )   $ (0.29   )   $ 0.01        $ 0.16        $ (0.80   )
per share
^* GAAP loss
per share is
based on net
loss
attributable
to common
stockholders
                                                                                        
Weighted
average number
of shares used
in computation
Basic &            3,641         3,669         3,682         3,720         10,469
Diluted
                                                                                        

Contact:

Silver Spring Networks, Inc.
Tricia Gugler, 650-839-4504
Investor Relations
tgugler@silverspringnet.com
Noel Hartzell, 650-839-4184
Global Communications
nhartzell@silverspringnet.com
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