SSNI
$11.45
Silver Spring Networks Inc
$.21
1.87%
Earnings Details
4th Quarter December 2016
Tuesday, February 21, 2017 4:10:01 PM
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Summary

Silver Spring Networks Provides 2017 Revenue Above Estimates

Silver Spring Networks Inc (SSNI) reported a 4th Quarter December 2016 loss of $0.10 per share on revenue of $66.3 million. The consensus estimate was a loss of $0.12 per share on revenue of $76.0 million. Revenue fell 66.7% compared to the same quarter a year ago.

The company said in its conference call it expects first quarter revenue of $45.0 million to $50.0 million and 2017 revenue of $400.0 million to $420.0 million. The current consensus estimate is revenue of $74.1 million for the quarter ending March 31, 2017 and revenue of $329.0 million for the year ending December 31, 2017.

Silver Spring Networks Inc provides networking platform and solutions that enable utilities to transform the power grid infrastructure into the smart grid. The Company operates in United States, Australia and rest of world.

Results
Reported Earnings
($0.10)
Earnings Whisper
-
Consensus Estimate
($0.12)
Reported Revenue
$66.3 Mil
Revenue Estimate
$76.0 Mil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Silver Spring Networks Reports Fourth Quarter and Full Year 2016 Financial Results

Silver Spring Networks, Inc. (SSNI) today announced preliminary financial results for its fourth quarter and full year ended December 31, 2016.

Fourth Quarter Financial Highlights (all comparisons made are against the prior year period, unless otherwise stated):

GAAP results:

-- Revenue was $66.3 million, versus $199.2 million.

Cost of revenue was $37.8 million, or 57.1% of revenue, versus $97.9 million or 49.1%.

-- Operating expense was $41.9 million, versus $35.6 million.

Tax expense was $0.2 million. Other income (expense) was ($0.2) million.

Basic share count was 52.0 million. In the case of a net income position, fully-diluted share count would have been 54.4 million.

Quarter-ending cash, cash equivalents, and short-term investments was $118.3 million.

Non-GAAP metrics(1):

-- Billings were $77.7 million, up 4%.

Cost of billings was $39.0 million or 50.2% of billings, versus $39.6 million or 52.9%.

-- Non-GAAP operating expense was $35.3 million, versus $27.4 million.

"We enter 2017 in a strong position, with solid fourth quarter results and several new international awards. In 2016, we achieved record bookings, with major awards from Con Edison, Entergy and Pacific Power, generated over $20.7 million in operating cash flow for the year, and finished the year with more than 25.5 million cumulative network endpoints delivered," said Mike Bell, President and Chief Executive Officer. "We are focused on ramping production of our Gen5 platform for our major upcoming deployments, driving international growth, and expanding our platform to additional smart utility applications and new vertical markets within the broader Internet of Important Things(TM) opportunity."

Business Highlights (through February 21, 2017, unless otherwise stated):

Over 25.5 million cumulative network endpoints delivered from inception through December 31, 2016, up 11% from a year ago.

Working with customers that represent over 26 million incremental homes and businesses that are piloting or deploying our technology in phases.

Total backlog of $1.165 billion as of December 31, 2016, up over 50% from the end of last year.

We congratulate AEP Ohio, which recently received regulatory approval for its smart grid program from the Public Utility Commission of Ohio (PUCO), to deploy our multi-application IPv6 IoT network canopy and advanced metering infrastructure to nearly 900,000 homes and businesses in its Ohio service territory.

Selected by CESC Limited of India to deploy our multi-application IPv6 IoT platform to connect approximately 237,000 homes and businesses in CESC’s franchises in the cities of Kota and Bharatpur. Silver Spring Networks will also deploy Operations Optimizer(TM) to these cities through a SaaS model.

Selected by Dubai Electricity and Water Authority (DEWA) to deploy our multi-application IoT network canopy across the Emirate of Dubai to securely and reliably provide connectivity for various services, such as energy and water.

Selected by Oklahoma Gas & Electric (OGE) to deploy our IPv6 IoT platform and Streetlight.Vision control software to connect and manage up to 250,000 LED street lights within its Oklahoma service territory.

Expanded Starfish(TM) distribution channel through a reseller alliance with Ameresco to assist cities and other public lighting operators to deliver smart street lighting programs and other IoT applications and services such as smart water, traffic signals and distributed energy resources.

Extended smart city reach through a new go-to-market alliance with Panasonic Corporation of North America to leverage our Starfish Internet of Things (IoT) platform and Panasonic’s CityNOW portfolio to transform the street light into a multi-use host for multiple smart and sustainable applications.

Full Year 2016 Results (all comparisons made are against the prior year period, unless otherwise stated)

GAAP Results:

-- Revenue was $311.0 million, versus $489.6 million.

Cost of revenue was $172.8 million, or 55.6% of revenue, versus $263.8 million or 53.9%.

-- Operating expense was $158.1 million, versus $142.8 million.

-- Tax expense was $2.4 million. Other income (expense) was $0.7 million.

Basic share count was 51.4 million. In the case of a net income position, fully-diluted share count would have been 53.7 million.

Non-GAAP Metrics:

-- Billings were $294.6 million, up 4%.

Cost of billings was $150.9 million or 51.2% of billings, versus $159.3 million or 56.5%.

-- Non-GAAP operating expense was $130.2 million, versus $114.1 million.

Conference Call

Silver Spring Networks will host a conference call today at 2:00 pm PT (5:00 pm ET) to review its results for the fourth quarter and full year ended December 31, 2016 and its outlook for the future. During the course of this call, Silver Spring Networks may also disclose material developments affecting its business and/or financial performance. Listeners may access the conference call live at 877-407-0832 (U.S.) or 201-689-8433 (International) or via webcast at http://ir.ssni.com. A dial-in replay of the conference call will be available until April 11, 2017 and can be accessed at 877-660-6853 (domestic) or 201-612-7415 (international) passcode 13653868. An audio webcast replay of the conference call will be available for one year at http://ir.ssni.com.

About Silver Spring Networks

Silver Spring Networks enables the Internet of Important Things(TM) by reliably and securely connecting things that matter. Cities, utilities, and companies on five continents use the company’s cost-effective, high-performance IoT network and data platform to operate more efficiently, get greener, and enable innovative services that can improve the lives of millions of people. With more than 25.5 million devices delivered, Silver Spring Networks provides a proven standards-based platform safeguarded with military grade security. Silver Spring Networks’ customers include Baltimore Gas & Electric, CitiPower & Powercor, ComEd, Consolidated Edison, CPS Energy, Florida Power & Light, Pacific Gas & Electric, Pepco Holdings, and Singapore Power. Silver Spring Networks has also deployed networks in Smart Cities including Copenhagen, Glasgow, Paris, Providence, and Stockholm. To learn more, visit www.ssni.com.

Non-GAAP and Other Financial Metrics

Silver Spring Networks supplements the results of operations presented in accordance with generally accepted accounting principles, or GAAP, with certain non-GAAP metrics. Silver Spring Networks manages its business, makes planning decisions, evaluates its performance and allocates resources by assessing non-GAAP and other financial metrics such as billings, cost of billings, non-GAAP operating expense, and total backlog. Silver Spring Networks believes that these non-GAAP and other financial metrics, when taken together with the corresponding GAAP financial measures, offer valuable supplemental information regarding the performance of its business, and will help investors better understand the sales volumes and profitability trends, as well as the cash flow characteristics, of its business. The non-GAAP metrics 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, operating expense, or any other performance measure derived in accordance with GAAP. Silver Spring Networks 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.

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. Billings excludes amounts for undelivered products, services to be performed in the future, and amounts paid or payable to customers. Billings are initially recorded as deferred revenue and are then recognized as revenue when all revenue recognition criteria has been met under Silver Spring Networks’ accounting policies as described in Silver Spring Networks’ filings with the Securities and Exchange Commission. Silver Spring Networks reconciles revenue to billings by adding revenue to the change in deferred revenue in a given period.

Cost of billings represents the cost associated with products and services that have been delivered to the customer, excluding stock-based compensation, amortization of intangibles and acquisition-related charges. 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 Networks reconciles cost of revenue to cost of billings by adding cost of revenue and the change in deferred cost of revenue, less stock-based compensation, amortization of intangibles and acquisition-related charges, included in cost of revenue in a given period.

Non-GAAP operating expense consists of research and development, sales and marketing, and general and administrative expenses, excluding amortization and impairment of intangible assets, stock-based compensation, acquisition-related charges, restructuring and legal settlements.

Total backlog represents future product and service billings that Silver Spring Networks expects to generate pursuant to contracts entered into with its utility customers and meter manufacturers. Total backlog includes order backlog, which represents future billings for open purchase orders and other firm commitments.

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 market opportunity; the scope and timing of future deployments; expected benefits from our products; future investment; future innovation; customer and market activity; 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: timing around customer decisions and deployment pace; receipt by our customers of required regulatory approvals; dependence on a limited number of customers and key suppliers; 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; the expansion of our target markets, including the IoT market; lengthy sales cycles with no assurances that a prospective customer will select Silver Spring Networks’ 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 Networks’ relationship with third-party manufacturers; execution and customer adoption risks related to new product introductions and innovation, including our fifth generation networking platform and products; the ability to attract and retain personnel, including members of Silver Spring Networks’ management team; changes in strategy; technological changes that make Silver Spring Networks’ products and services less competitive; competition, particularly from larger companies with more resources than Silver Spring; international business uncertainties; the ability to acquire and integrate other businesses; and other risk factors set forth from time to time in Silver Spring Networks’ 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 February 21, 2017. 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.

(1) For this and future earnings reports, Silver Spring Networks will no longer report certain non-GAAP financial metrics, including gross profit on billings, gross margin on billings, and non-GAAP operating income (loss). Silver Spring Networks will continue to report billings, cost of billings, and non-GAAP operating expense. Silver Spring Networks will also provide additional GAAP measures used internally by management to adjust GAAP measures in order to assess its business performance, which can also be used by investors to derive metrics comparable to previously reported non-GAAP metrics. For more information, please refer to the conference call Silver Spring Networks hosted on February 13, 2017, a replay of which is available on our website at http://ir.ssni.com.

SILVER SPRING NETWORKS, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
Three Months Ended
Twelve Months Ended
December 31,
December 31,
2016
2015
2016
2015
Revenue:
Product
$
40,386
$
143,202
$ 193,618
$
353,041
Services
25,864
56,045
117,390
136,518
66,250
199,247
311,008
489,559
Total revenue
Cost of revenue:
Product
19,915
83,903
106,583
202,430
Services
17,918
13,999
66,226
61,386
Total cost of revenue
37,833
97,902
172,809
263,816
Gross profit
28,417
101,345
138,199
225,743
Operating expenses:
Research and development
19,090
13,714
70,673
61,295
Sales and marketing
10,809
7,343
39,406
33,452
General and administrative
12,049
14,483
45,801
46,372
Impairment of intangible assets
--
--
2,204
--
Restructuring
--
60
39
1,671
Total operating expenses
41,948
35,600
158,123
142,790
Operating (loss) income
(13,531 )
65,745
(19,924 )
82,953
Other (expense) income, net
(217 )
(159 )
670
104
(Loss) income before income taxes
(13,748 )
65,586
(19,254 )
83,057
Provision for income taxes
(239 )
(3,708 )
(2,375 )
(3,071 )
Net (loss) income
$
(13,987 )
$
61,878
$ (21,629 )
$
79,986
Net (loss) income per share:
Basic
$
(0.27 )
$
1.23
$
(0.42 )
$
1.60
Diluted
$
(0.27 )
$
1.19
$
(0.42 )
$
1.55
Weighted average shares used to compute net (loss) income per share:
Basic
52,039
50,481
51,444
49,963
Diluted
52,039
52,167
51,444
51,524
SILVER SPRING NETWORKS, INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
December 31,
December 31,
2016
2015 (a)
ASSETS
Current assets:
Cash and cash equivalents
$
50,383
$
65,264
Short-term investments
67,876
59,181
Accounts receivable
44,770
47,813
Inventory
8,040
4,545
Deferred cost of revenue
194,769
196,868
Prepaid expenses and other current assets
12,536
10,835
Total current assets
378,374
384,506
Property and equipment, net
28,986
14,106
Goodwill and intangible assets
11,005
14,390
Deferred cost of revenue, non-current
26,639
38,882
Deferred tax assets, non-current
481
1,069
Other long-term assets
1,643
4,772
Total assets
$ 447,128
$
457,725
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities:
Accounts payable
$
26,785
$
30,623
Deferred revenue
292,260
305,471
Accrued and other liabilities
44,146
42,751
Total current liabilities
363,191
378,845
Deferred revenue, non-current
93,149
96,342
Other liabilities, non-current
22,324
16,403
Total liabilities
478,664
491,590
Total stockholders’ deficit
(31,536 )
(33,865 )
Total liabilities and stockholders’ deficit
$ 447,128
$
457,725
(a) Derived from audited consolidated financial statements.
SILVER SPRING NETWORKS, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
(in thousands)
Three Months Ended
Twelve Months Ended
December 31,
December 31,
2016
2015
2016
2015
OPERATING ACTIVITIES
Net (loss) income
$
(13,987 )
$
61,878
$
(21,629 )
$
79,986
Adjustments to reconcile net (loss) income to net cash provided by
operating activities:
Deferred taxes
520
(557 )
614
(1,492 )
Impairment of intangible assets
--
--
2,204
--
Depreciation and amortization
2,291
1,930
8,623
7,822
Tax benefit from shared-based award activity
83
153
83
153
Excess tax benefit from share-based payment awards
(83 )
(153 )
(83 )
(153 )
Stock-based compensation
7,970
4,942
29,809
26,479
Other non-cash adjustments
114
412
886
766
Changes in assets and liabilities:
Accounts receivable
316
(3,675 )
3,142
7,398
Inventory
(2,740 )
(853 )
(3,490 )
2,190
Prepaid expenses and other assets
(622 )
(936 )
2,335
(5,128 )
Landlord incentives related to lease
--
--
6,788
--
--
--
--
(4,000 )
Contingent consideration related to Detectent acquisition held in
escrow
Deferred cost of revenue
(3,174 )
56,978
14,421
97,286
Accounts payable
4,425
3,232
(4,483 )
3,101
Customer deposits
(970 )
(599 )
61
(448 )
Deferred revenue
11,480
(124,115 )
(16,581 )
(208,305 )
Accrued and other liabilities
2,462
7,620
(1,938 )
14,032
Net cash provided by operating activities
8,085
6,257
20,762
19,687
INVESTING ACTIVITIES
--
--
--
(7,098 )
Payments for business acquisition, net of cash and cash
equivalents acquired
Proceeds from sales of available-for-sale investments
2,000
4,204
41,217
15,690
Proceeds from maturities of available-for-sale investments
--
--
10,970
9,250
Purchases of available-for-sale investments
(4,940 )
(5,270 )
(61,295 )
(24,180 )
Purchases of property and equipment
(1,447 )
(1,821 )
(24,816 )
(5,350 )
Net cash (used in) investing activities
(4,387 )
(2,887 )
(33,924 )
(11,688 )
FINANCING ACTIVITIES
Payments on capital lease obligations
--
(169 )
(285 )
(1,163 )
Proceeds from issuance of common stock
281
139
4,519
3,794
Excess tax benefit from share-based payment awards
83
153
83
153
Taxes paid related to net share settlement of equity awards
(1,756 )
(1,820 )
(5,925 )
(5,788 )
Net cash (used in) financing activities
(1,392 )
(1,697 )
(1,608 )
(3,004 )
Effect of exchange rate changes on cash and cash equivalents
29
136
(111 )
(188 )
Net increase (decrease) in cash and cash equivalents
2,335
1,809
(14,881 )
4,807
Cash and cash equivalents - beginning of period
48,048
63,455
65,264
60,457
Cash and cash equivalents - end of period
$
50,383
$
65,264
$
50,383
$
65,264
SILVER SPRING NETWORKS, INC.
UNAUDITED RECONCILIATION OF REVENUE BETWEEN GAAP AND NON-GAAP
(QUARTERLY)
(in thousands, except percentages)
Q4
Q1
Q2
Q3
Q4
YoY%
REVENUE AND BILLINGS BY TYPE
2015
2016
2016
2016
2016
Change
Revenue:
Product
$
143,202
$ 32,852
$
69,917
$
50,463
$ 40,386
-72 %
Services
Managed services and SaaS
37,142
11,068
24,570
14,090
15,581
-58 %
Professional services
18,903
4,700
27,465
9,633
10,283
-46 %
Total services
56,045
15,768
52,035
23,723
25,864
-54 %
Total revenue
$
199,247
$ 48,620
$ 121,952
$
74,186
$ 66,250
-67 %
% Product
72 %
68 %
57 %
68 %
61 %
% Services
28 %
32 %
43 %
32 %
39 %
Change in deferred revenue:
Product
$
(95,194 )
$ 12,883
$ (23,804 )
$
(568 )
$
7,155
Services
Managed services and SaaS
(22,896 )
1,820
(9,650 )
1,641
1,427
Professional services
(6,169 )
5,591
(16,652 )
885
2,867
Total services
(29,065 )
7,411
(26,302 )
2,526
4,294
Total change in deferred revenue
$ (124,259 )
$ 20,294
$ (50,106 )
$
1,958
$ 11,449
Billings
Product
$
48,008
$ 45,735
$
46,113
$
49,895
$ 47,541
-1 %
Services
Managed services and SaaS
14,246
12,888
14,920
15,731
17,008
19 %
Professional services
12,734
10,291
10,813
10,518
13,150
3 %
Total services
26,980
23,179
25,733
26,249
30,158
12 %
Total Billings
$
74,988
$ 68,914
$
71,846
$
76,144
$ 77,699
4 %
% Product
64 %
66 %
64 %
66 %
61 %
% Services
36 %
34 %
36 %
34 %
39 %
REVENUE AND BILLINGS BY SOLUTION
Revenue:
Advanced metering infrastructure
$
181,892
$ 40,514
$ 105,181
$
66,203
$ 57,148
-69 %
New solutions
17,355
8,106
16,771
7,983
9,102
-48 %
Total revenue
$
199,247
$ 48,620
$ 121,952
$
74,186
$ 66,250
-67 %
% Advanced metering infrastructure
91 %
83 %
86 %
89 %
86 %
% New solutions
9 %
17 %
14 %
11 %
14 %
Change in deferred revenue
Advanced metering infrastructure
$ (123,525 )
$ 16,957
$ (45,184 )
$
(2,078 )
$
2,528
New solutions
(734 )
3,337
(4,922 )
4,036
8,921
Total change in deferred revenue
$ (124,259 )
$ 20,294
$ (50,106 )
$
1,958
$ 11,449
Billings
Advanced metering infrastructure
$
58,367
$ 57,471
$
59,997
$
64,125
$ 59,676
2 %
New solutions
16,621
11,443
11,849
12,019
18,023
8 %
Total Billings
$
74,988
$ 68,914
$
71,846
$
76,144
$ 77,699
4 %
% Advanced metering infrastructure
78 %
83 %
84 %
84 %
77 %
% New solutions
22 %
17 %
16 %
16 %
23 %
REVENUE AND BILLINGS BY GEOGRAPHY
Revenue:
United States
$
177,896
$ 45,222
$ 118,539
$
43,381
$ 53,087
-70 %
International
21,351
3,398
3,413
30,805
13,163
-38 %
Total revenue
$
199,247
$ 48,620
$ 121,952
$
74,186
$ 66,250
-67 %
% United States
89 %
93 %
97 %
58 %
80 %
% International
11 %
7 %
3 %
42 %
20 %
Change in deferred revenue
United States
$ (116,859 )
$
8,468
$ (57,666 )
$
21,085
$
8,880
International
(7,400 )
11,826
7,560
(19,127 )
2,569
Total change in deferred revenue
$ (124,259 )
$ 20,294
$ (50,106 )
$
1,958
$ 11,449
Billings
United States
$
61,037
$ 53,690
$
60,873
$
64,466
$ 61,967
2 %
International
13,951
15,224
10,973
11,678
15,732
13 %
Total Billings
$
74,988
$ 68,914
$
71,846
$
76,144
$ 77,699
4 %
% United States
81 %
78 %
85 %
85 %
80 %
% International
19 %
22 %
15 %
15 %
20 %
SILVER SPRING NETWORKS, INC.
UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP MEASURES (QUARTERLY)
(in thousands)
Three Months Ended December 31, 2016
Cost of Revenue
Change in Deferred
Stock-based
Amortization of
Acquisition-
Cost of Billings
Cost of Revenue (a)
Compensation
Intangible Assets
Related Costs
Cost of Revenue / Cost of Billings:
Product
$
19,915
$
3,177
$
(455 )
$
(79 )
$
-
$
22,558
Services
Managed services and SaaS
9,762
-
(680 )
-
-
9,082
Professional services
8,156
-
(810 )
-
(15 )
7,331
Total services
$
17,918
$
-
$ (1,490 )
$
-
$
(15 )
$
16,413
Total Cost of Revenue / Cost of Billings
$
37,833
$
3,177
$ (1,945 )
$
(79 )
$
(15 )
$
38,971
Operating
Stock-based
Amortization and
Restructuring &
Acquisition-
Non-GAAP
Expenses
Compensation
Impairment of
Litigation
Related Costs
Operating
Intangible
Expenses
Assets
Operating Expenses / Non-GAAP Operating Expenses:
Research and development
$
19,090
$
(2,450 )
$
-
$
-
$
(311 )
$
16,329
Sales and marketing
10,809
(1,152 )
(105 )
-
(66 )
9,486
General and administrative
12,049
(2,423 )
(8 )
-
(117 )
9,501
Impairment of intangible assets
-
-
-
-
-
-
Restructuring
-
-
-
-
-
-
Total Operating Expenses / Non-GAAP Operating Expenses
$
41,948
$
(6,025 )
$
(113 )
$
-
$
(494 )
$
35,316
Three Months Ended December 31, 2015
Cost of Revenue
Change in Deferred
Stock-based
Amortization of
Acquisition-
Cost of Billings
Cost of Revenue (a)
Compensation
Intangible Assets
Related Costs
Cost of Revenue / Cost of Billings:
Product
$
83,903
$ (56,982 )
$
(250 )
$
(259 )
$
-
$
26,412
Services
Managed services and SaaS
7,592
-
(271 )
-
-
7,321
Professional services
6,407
-
(485 )
-
(15 )
5,907
Total services
$
13,999
$
-
$
(756 )
$
-
$
(15 )
$
13,228
Total Cost of Revenue / Cost of Billings
$
97,902
$ (56,982 )
$ (1,006 )
$
(259 )
$
(15 )
$
39,640
Operating
Stock-based
Amortization and
Restructuring &
Acquisition-
Non-GAAP
Expenses
Compensation
Impairment of
Litigation
Related Costs
Operating
Intangible
Expenses
Assets
Operating Expenses / Non-GAAP Operating Expenses:
Research and development
$
13,714
$
(1,277 )
$
-
$
-
$
(311 )
$
12,126
Sales and marketing
7,343
(665 )
(155 )
-
(64 )
6,459
General and administrative
14,483
(1,994 )
(8 )
(3,595 )
(116 )
8,770
Impairment of intangible assets
-
-
-
-
-
-
Restructuring
60
-
-
(60 )
-
-
Total Operating Expenses / Non-GAAP Operating Expenses
$
35,600
$
(3,936 )
$
(163 )
$ (3,655 )
$
(491 )
$
27,355
(a) Amounts presented net of foreign currency translation.
SILVER SPRING NETWORKS, INC.
UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP MEASURES (YEAR TO
DATE)
(in thousands)
Twelve Months Ended December 31, 2016
Cost of Revenue
Change in Deferred
Stock-based
Amortization of
Acquisition-
Cost of Billings
Cost of Revenue (a)
Compensation
Intangible Assets
Related Costs
Cost of Revenue / Cost of Billings:
Product
$
106,583
$ (14,551 )
$ (1,737 )
$
(522 )
$
-
$
89,773
Services
Managed services and SaaS
36,772
-
(2,415 )
-
-
34,357
Professional services
29,454
-
(2,592 )
-
(61 )
26,801
Total services
$
66,226
$
-
$ (5,007 )
$
-
$
(61 )
$
61,158
Total Cost of Revenue / Cost of Billings
$
172,809
$ (14,551 )
$ (6,744 )
$
(522 )
$
(61 )
$
150,931
Operating
Stock-based
Amortization and
Restructuring &
Acquisition-
Non-GAAP
Expenses
Compensation
Impairment of
Litigation
Related Costs
Operating
Intangible
Expenses
Assets
Operating Expenses / Non-GAAP Operating Expenses:
Research and development
$
70,673
$
(9,309 )
$
-
$
-
$ (1,243 )
$
60,121
Sales and marketing
39,406
(3,652 )
(626 )
-
(262 )
34,866
General and administrative
45,801
(10,104 )
(33 )
-
(477 )
35,187
Impairment of intangible assets
2,204
-
(2,204 )
-
-
-
Restructuring
39
-
-
(39 )
-
-
Total Operating Expenses / Non-GAAP Operating Expenses
$
158,123
$ (23,065 )
$ (2,863 )
$
(39 )
$ (1,982 )
$
130,174
Twelve Months Ended December 31, 2015
Cost of Revenue
Change in Deferred
Stock-based
Amortization of
Acquisition-
Cost of Billings
Cost of Revenue (a)
Compensation
Intangible Assets
Related Costs
Cost of Revenue / Cost of Billings:
Product
$
202,430
$ (97,274 )
$ (1,288 )
$ (1,041 )
$
-
$
102,827
Services
Managed services and SaaS
31,663
-
(2,037 )
-
-
29,626
Professional services
29,723
-
(2,810 )
-
(100 )
26,813
Total services
$
61,386
$
-
$ (4,847 )
$
-
$
(100 )
$
56,439
Total Cost of Revenue / Cost of Billings
$
263,816
$ (97,274 )
$ (6,135 )
$ (1,041 )
$
(100 )
$
159,266
Operating
Stock-based
Amortization and
Restructuring &
Acquisition-
Non-GAAP
Expenses
Compensation
Impairment of
Litigation
Related Costs
Operating
Intangible
Expenses
Assets
Operating Expenses / Non-GAAP Operating Expenses:
Research and development
$
61,295
$
(8,060 )
$
-
$
-
$
(451 )
$
52,784
Sales and marketing
33,452
(4,105 )
(601 )
-
(87 )
28,659
General and administrative
46,372
(8,179 )
(32 )
(3,595 )
(1,913 )
32,653
Impairment of intangible assets
-
-
-
-
-
-
Restructuring
1,671
-
-
(1,671 )
-
-
Total Operating Expenses / Non-GAAP Operating Expenses
$
142,790
$ (20,344 )
$
(633 )
$ (5,266 )
$ (2,451 )
$
114,096
(a) Amounts presented net of foreign currency translation.
SILVER SPRING NETWORKS, INC.
UNAUDITED SUPPLEMENTAL FINANCIAL DATA AND OTHER INFORMATION
(in thousands, except percentages and headcount)
Q4
Q1
Q2
Q3
Q4
YoY%
SUPPLEMENTAL FINANCIAL DATA
2015
2016
2016
2016
2016
Change
STOCK-BASED COMPENSATION
Cost of goods sold
$
1,006
$
1,328
$
1,389
$
2,082
$
1,945
93 %
Research and development
1,277
2,025
2,241
2,593
2,450
92 %
Sales and marketing
665
831
726
943
1,152
73 %
General and administrative
1,994
2,716
2,685
2,280
2,423
22 %
TOTAL STOCK-BASED COMPENSATION
$
4,942
$
6,900
$
7,041
$
7,898
$
7,970
61 %
CASH FLOW DATA
Operating cash flow
$
6,257
$
3,730
$
3,802
$
5,145
$
8,085
29 %
Operating cash flow - trailing twelve months
19,687
23,872
18,061
18,934
20,762
5 %
BALANCE SHEET DATA
Cash, cash equivalents and short-term investments
$ 124,445
$ 125,369
$ 113,064
$ 113,358
$ 118,259
-5 %
OTHER INFORMATION
HOMES & BUSINESSES
Network endpoints delivered during quarter*
633
698
747
569
564
-11 %
Cumulative network endpoints delivered*
22,954
23,652
24,399
24,968
25,532
11 %
*Endpoints refer to communication modules in electric meters
EMPLOYEES
652
673
708
709
702
8 %
SILVER SPRING NETWORKS, INC.
UNAUDITED SUPPLEMENTAL TRENDED GAAP FINANCIAL DATA
(in thousands)
Q4
Q1
Q2
Q3
Q4
2015
2016
2016
2016
2016
Gross profit
$
101,345
$
16,997
$
64,543
$
28,242
$
28,417
Other GAAP financial data related to
gross profit:
Change in deferred revenue, net of foreign currency translation
(124,259 )
20,294
(50,106 )
1,958
11,449
Change in deferred cost of revenue, net of foreign currency
56,982
(8,668 )
16,992
9,404
(3,177 )
translation
Amortization of intangible assets
259
169
195
79
79
Stock-based compensation
1,006
1,328
1,389
2,082
1,945
Acquisition-related charges
15
15
16
15
15
Operating expenses
$
35,600
$
35,920
$
37,794
$
42,461
$
41,948
Other GAAP financial data included in
operating expenses:
Amortization of intangible assets
163
252
180
114
113
Stock-based compensation
3,936
5,572
5,652
5,816
6,025
Acquisition-related charges
491
501
494
493
494
Impairment of intangible assets
--
--
--
2,204
--
Restructuring
60
39
--
--
--
Legal settlements
3,595
--
--
--
--
Other statement of operations line items
Other (expense) income, net
$
(159 )
$
441
$
333
$
113
$
(217 )
Provision for income taxes
(3,708 )
(32 )
(961 )
(1,143 )
(239 )

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SOURCE: Silver Spring Networks, Inc.

Silver Spring Networks, Inc.
Mark McKechnie, 669-770-4664
Investor Relations
markm@ssni.com
or
Amy Nunnemacher, 669-770-4183
Global Communications
pr@ssni.com