SSNI
$13.29
Silver Spring Networks Inc
Earnings Details
3rd Quarter September 2016
Thursday, November 03, 2016 4:10:11 PM
Tweet Share Watch
Summary

Silver Spring Networks Inc (SSNI) Recent Earnings

Silver Spring Networks Inc (SSNI) reported a 3rd Quarter September 2016 loss of $0.02 per share on revenue of $74.2 million. The consensus estimate was a loss of $0.10 per share on revenue of $74.8 million. Revenue grew 6.7% on a year-over-year basis.

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
($0.02)
Earnings Whisper
-
Consensus Estimate
($0.10)
Reported Revenue
$74.2 Mil
Revenue Estimate
$74.8 Mil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Silver Spring Networks Reports Third Quarter 2016 Financial Results

Silver Spring Networks, Inc. (SSNI) today announced financial results for its third quarter ended September 30, 2016.

Third Quarter Results (all comparisons made are against the prior year period, unless otherwise stated):

GAAP Results:

-- Revenue was $74.2 million, up 7%.

-- Gross margin was 38.1%, versus 47.5%.

-- Net loss was ($15.2) million versus a net loss of ($0.6) million.

Net loss per diluted share was ($0.29) versus a ($0.01) net loss per share.

$113.4 million in cash, cash equivalents and short-term investments at the end of the quarter, versus $121.9 million.

Non-GAAP Metrics:

-- Billings(1) of $76.1 million, up 2%.

-- Gross margin on billings(2) of 54.9%, versus 44.1%.

-- Non-GAAP net income of $6.9 million versus $4.9 million.

-- Non-GAAP income per fully-diluted share of $0.13, versus $0.10.

"We had another strong quarter, expanding our footprint by approximately 569,000 endpoints, commencing a large smart grid project, and winning additional awards since our last report," said Mike Bell, President and CEO, Silver Spring Networks. "Our third quarter results, and our high-profile awards in 2016, demonstrate the strong position we have built in our smart grid and smart city markets. We see significant potential for continued innovation and growth in our core markets, and a great opportunity to extend Silver Spring’s platform and solutions into the broader Internet of Important Things(TM) opportunity."

(1)Billings previously reported as non-GAAP revenue.

(2)Gross margin on billings previously reported as non-GAAP gross margin.

Business Highlights (through November 3, 2016, unless otherwise stated):

Entered a new collaboration agreement with Singapore Power to expand its AMI deployment by an additional 200,000 electric customers, and to open the platform to other third-party IoT devices in support of Singapore’s "Smart Nation" initiative.

Selected by CPFL Energia to significantly expand its Distribution Automation deployment across 100,000 square kilometersof its service territory over 350 cities in the state of Sao Paulo.

Selected by Baltimore Gas and Electric for a Distribution Automation program, an extension of its existing smart grid investment, to further improve grid reliability and efficiency with connectivity solutions for BGE’s re-closers throughout their entire grid.

Selected by the City of Stockholm to deploy Starfish(TM) Network-as-a-Service to upgrade aging lighting infrastructure with intelligent street light controls in the capital of Sweden.

Named a Visionary in the Gartner Magic Quadrant(1) for Managed Machine-to-Machine Services, Worldwide.

Received prestigious industry awards, including Frost & Sullivan’s Asia Pacific Smart Grid Service Provider of the Year Award, and the CTIA Emerging Technology Award for Industrial IoT. Our customer CESC of India won the 2016 Smart Grid Project of the Year award at the Asian Power Awards for its program with Silver Spring Networks.

Over 24.9 million cumulative network endpoints delivered from inception through September 30, 2016, up 12% from a year ago.

Conference Call

Silver Spring will host a conference call today at 2:00 pm PT (5:00 pm ET) to review its results for the third quarter ended September 30, 2016 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 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 December 15, 2016 and can be accessed at 877-660-6853 (domestic) or 201-612-7415 (international) passcode 13648481. 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 24.9 million devices delivered, Silver Spring 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 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 supplements the results of operations presented in accordance with generally accepted accounting principles, or GAAP, with certain non-GAAP metrics. Silver Spring manages its business, makes planning decisions, evaluates its performance and allocates resources by assessing non-GAAP metrics such as billings, recurring billings, recurring billings per endpoint, cost of billings, gross profit (loss) on billings, gross margin on billings, non-GAAP operating expense, non-GAAP operating income (loss), non-GAAP operating margin, non-GAAP income tax provision (benefit), non-GAAP net income (loss), non-GAAP income (loss) per share, adjusted EBITDA, and total backlog. Silver Spring believes that these non-GAAP 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 gross margin 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, gross profit (loss), gross margin, operating expense, operating loss, net income (loss), net income (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.

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’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.

Recurring billings are billings from Managed services and SaaS, as well as customer support and other service offerings. Recurring billings are primarily recurring in nature and include managed services, hosting and software maintenance, and support fees, as well as one-time Managed services and SaaS set up fees. Customer support and other services are provided to customers outside of Managed services and SaaS offerings, and are also recurring in nature. Silver Spring reconciles recurring revenue to recurring billings by adding revenue to the change in deferred revenue in a given period.

Recurring billings per endpoint represents a trailing twelve-month recurring billings revenue per cumulative endpoint shipped from inception to date.

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 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.

Gross profit (loss) on billings is the difference between billings and cost of billings.

Gross margin on billings is gross profit (loss) on billings as a percentage of billings.

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

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

Non-GAAP operating margin is non-GAAP operating income (loss) as a percentage of billings.

Non-GAAP income tax provision (benefit) represents income tax provision (benefit) excluding income tax benefit related to acquisitions.

Non-GAAP net income (loss) represents net income (loss) adjusted for changes in deferred revenue and deferred cost of revenue, and excludes expenses related to the amortization of intangible assets, stock-based compensation, acquisition-related charges, income tax benefit related to acquisitions, restructuring and legal settlements.

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

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

Total backlog represents future product and service billings that Silver Spring 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; customer and industry activity; future deployments; expected benefits from our products; future innovation; future product availability; future growth and market opportunity; 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’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 and customer adoption risks related to new product introductions and innovation, including our new fifth generation networking platform and products; 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; 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’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 November 3, 2016. 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.

(3) Gartner, Magic Quadrant for Managed M2M Services, Worldwide, 17 October 2016

Gartner does not endorse any vendor, product or service depicted in its research publications, and does not advise technology users to select only those vendors with the highest ratings or other designation. Gartner research publications consist of the opinions of Gartner’s research organization and should not be construed as statements of fact. Gartner disclaims all warranties, expressed or implied, with respect to this research, including any warranties of merchantability or fitness for a particular purpose.

SILVER SPRING NETWORKS, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
Three Months Ended
Nine Months Ended
September 30,
September 30,
2016
2015
2016
2015
Revenue:
Product
$
50,463
$
50,093
$
153,232
$
209,839
Services
23,723
19,412
91,526
80,473
Net revenue
74,186
69,505
244,758
290,312
Cost of revenue:
Product
29,249
21,377
86,668
118,527
Services
16,695
15,141
48,308
47,387
Total cost of revenue
45,944
36,518
134,976
165,914
Gross profit
28,242
32,987
109,782
124,398
Operating expenses:
Research and development
18,165
15,837
51,583
47,581
Sales and marketing
10,425
7,900
28,597
26,109
General and administrative
11,667
9,305
33,752
31,889
2,204
--
2,204
--
Impairment of intangible assets
Restructuring
--
339
39
1,611
Total operating expenses
42,461
33,381
116,175
107,190
Operating (loss) income
(14,219 )
(394 )
(6,393 )
17,208
Other income (loss), net
113
(99 )
887
263
(Loss) income before income taxes
(14,106 )
(493 )
(5,506 )
17,471
(Provision) benefit for income taxes
(1,143 )
(129 )
(2,136 )
637
Net (loss) income
$
(15,249 )
$
(622 )
$
(7,642 )
$
18,108
Net (loss) income per share:
Basic
$
(0.29 )
$
(0.01 )
$
(0.15 )
$
0.36
Diluted
$
(0.29 )
$
(0.01 )
$
(0.15 )
$
0.35
Weighted average shares used to compute net (loss) income per share:
Basic
51,743
50,188
51,244
49,789
Diluted
51,743
50,188
51,244
51,257
Reconciliation of GAAP to non-GAAP results (in thousands, except
per share data)
The following tables reconcile the Company’s net (loss) income and
net (loss) income per share as presented in its unaudited Condensed
Consolidated Statements of Operations and prepared in accordance
with GAAP to its non-GAAP net income and non-GAAP net income per
share.
Three Months Ended
Nine Months Ended
September 30,
September 30,
2016
2015
2016
2015
Net (loss) income
$
(15,249 )
$
(622 )
$
(7,642 )
$
18,108
Change in deferred revenue, net of foreign currency translation
1,958
5,192
(27,854 )
(83,376 )
Change in deferred cost of revenue, net of foreign currency
9,404
(6,712 )
17,728
40,292
translation
Amortization of intangibles
193
421
989
1,252
Stock-based compensation
7,898
5,853
21,839
21,537
Acquisition-related charges
508
559
1,534
2,045
Income tax benefit related to Detectent acquisition
--
(114 )
--
(1,128 )
Restructuring
--
339
39
1,611
2,204
--
2,204
--
Impairment of intangible assets
Non-GAAP net income
$
6,916
$
4,916
$
8,837
$
341
Non-GAAP net income per share:
Basic
$
0.13
$
0.10
$
0.17
$
0.01
Diluted
$
0.13
$
0.10
$
0.17
$
0.01
Weighted average shares used to compute non-GAAP net income (loss)
per share:
Basic
51,743
50,188
51,244
49,789
Diluted
53,896
51,713
53,500
51,257
SILVER SPRING NETWORKS, INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
September 30,
December 31,
2016
2015 (a)
ASSETS
Current assets:
Cash and cash equivalents
$
48,048
$
65,264
Short-term investments
65,310
59,181
Accounts receivable
45,031
47,813
Inventory
5,297
4,545
Deferred cost of revenue
196,301
196,868
Prepaid expenses and other current assets
11,552
10,835
Total current assets
371,539
384,506
Property and equipment, net
29,800
14,106
Goodwill and intangible assets
11,197
14,390
Deferred cost of revenue, non-current
21,909
38,882
Deferred tax assets, non-current
993
1,069
Other long-term assets
2,004
4,772
Total assets
$ 437,442
$
457,725
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities:
Accounts payable
$
22,430
$
30,623
Deferred revenue
290,696
305,471
Accrued and other liabilities
39,211
42,751
Total current liabilities
352,337
378,845
Deferred revenue, non-current
83,200
96,342
Other liabilities, non-current
23,202
16,403
Total liabilities
458,739
491,590
Total stockholders’ deficit
(21,297 )
(33,865 )
Total liabilities and stockholders’ deficit
$ 437,442
$
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
Nine Months Ended
September 30,
September 30,
2016
2015
2016
2015
OPERATING ACTIVITIES
Net (loss) income
$
(15,249 )
$
(622 )
$
(7,642 )
$
18,108
Adjustments to reconcile net (loss) income to net cash provided by
operating activities:
Deferred taxes
(17 )
172
94
(935 )
2,204
--
2,204
--
Impairment of intangible assets
Depreciation and amortization
2,096
1,990
6,332
5,892
Stock-based compensation
7,898
5,853
21,839
21,537
Other non-cash adjustments
659
230
772
354
Changes in assets and liabilities:
Accounts receivable
1,967
(2,568 )
2,826
11,073
Inventory
(2,811 )
810
(750 )
3,043
Prepaid expenses and other assets
1,013
(1,396 )
2,957
(4,192 )
Landlord incentives related to lease
4,513
--
6,788
--
--
--
--
(4,000 )
Contingent consideration related to Detectent acquisition held in
escrow
Deferred cost of revenue
9,359
(6,686 )
17,595
40,308
Accounts payable
(10,082 )
2,239
(8,908 )
(131 )
Customer deposits
1,037
(1,307 )
1,031
151
Deferred revenue
1,927
4,841
(28,061 )
(84,190 )
Accrued and other liabilities
631
716
(4,400 )
6,412
Net cash provided by operating activities
5,145
4,272
12,677
13,430
INVESTING ACTIVITIES
--
--
--
(7,098 )
Payments for business acquisition, net of cash and cash
equivalents acquired
Proceeds from sales of available-for-sale investments
16,273
4,086
39,217
11,486
Proceeds from maturities of available-for-sale investments
8,720
1,500
10,970
9,250
Purchases of available-for-sale investments
(45,401 )
(7,287 )
(56,355 )
(18,910 )
Purchases of property and equipment
(6,125 )
(1,617 )
(23,369 )
(3,529 )
Net cash (used in) investing activities
(26,533 )
(3,318 )
(29,537 )
(8,801 )
FINANCING ACTIVITIES
Payments on capital lease obligations
--
(238 )
(285 )
(994 )
Proceeds from issuance of common stock
2,010
1,619
4,238
3,655
Taxes paid related to net share settlement of equity awards
(549 )
(456 )
(4,169 )
(3,968 )
Net cash provided by (used in) financing activities
1,461
925
(216 )
(1,307 )
Effect of exchange rate changes on cash and cash equivalents
(4 )
(184 )
(140 )
(324 )
Net (decrease) increase in cash and cash equivalents
(19,931 )
1,695
(17,216 )
2,998
Cash and cash equivalents - beginning of period
67,979
61,760
65,264
60,457
Cash and cash equivalents - end of period
$
48,048
$
63,455
$
48,048
$
63,455
SILVER SPRING NETWORKS, INC.
UNAUDITED RECONCILIATION OF NET REVENUE BETWEEN GAAP AND NON-GAAP
(in thousands, except percentages)
Q3
Q4
Q1
Q2
Q3
YoY%
TYPE
2015
2015
2016
2016
2016
Change
Net revenue:
Product
$ 50,093
$
143,202
$
32,852
$
69,917
$
50,463
1 %
Services
Managed services and SaaS
11,223
37,142
11,068
24,570
14,090
26 %
Professional services
8,189
18,903
4,700
27,465
9,633
18 %
Total services
19,412
56,045
15,768
52,035
23,723
22 %
Total net revenue
$ 69,505
$
199,247
$
48,620
$ 121,952
$
74,186
7 %
% Product
72 %
72 %
68 %
57 %
68 %
% Services
28 %
28 %
32 %
43 %
32 %
Change in deferred net revenue:
Change in deferred product revenue
$
1,785
$
(95,194 )
$
12,883
$ (23,804 )
$
(568 )
Change in deferred services revenue:
Managed services and SaaS
1,397
(22,896 )
1,820
(9,650 )
1,641
Professional services
2,010
(6,169 )
5,591
(16,652 )
885
Total change in deferred services revenue
3,407
(29,065 )
7,411
(26,302 )
2,526
Total change in deferred revenue
$
5,192
$ (124,259 )
$
20,294
$ (50,106 )
$
1,958
Billings(1)
Product
$ 51,878
$
48,008
$
45,735
$
46,113
$
49,895
-4 %
Services
Managed services and SaaS
12,620
14,246
12,888
14,920
15,731
25 %
Professional services
10,199
12,734
10,291
10,813
10,518
3 %
Total services
22,819
26,980
23,179
25,733
26,249
15 %
Total Billings(1)
$ 74,697
$
74,988
$
68,914
$
71,846
$
76,144
2 %
% Product
69 %
64 %
66 %
64 %
66 %
% Services
31 %
36 %
34 %
36 %
34 %
RECURRING REVENUE PER ENDPOINT
Recurring revenue (TTM)
$ 45,374
$
71,947
$
70,041
$
84,003
$
86,870
Change in deferred revenue, net of foreign currency
4,349
(19,531 )
(17,292 )
(29,329 )
(29,085 )
translations
Recurring Billings (TTM)(1)
$ 49,723
$
52,416
$
52,749
$
54,674
$
57,785
Cumulative network endpoints delivered
22,321
22,954
23,652
24,399
24,968
Recurring revenue per endpoint delivered
$
2.03
$
3.13
$
2.96
$
3.44
$
3.48
71 %
Recurring billings per endpoint delivered(1)
$
2.23
$
2.28
$
2.23
$
2.24
$
2.31
4 %
SOLUTION
Net revenue
Advanced metering infrastructure
$ 60,149
$
181,892
$
40,514
$ 105,181
$
66,203
10 %
New solutions
9,356
17,355
8,106
16,771
7,983
-15 %
Total net revenue
$ 69,505
$
199,247
$
48,620
$ 121,952
$
74,186
7 %
% Advanced metering infrastructure
87 %
91 %
83 %
86 %
89 %
% New solutions
13 %
9 %
17 %
14 %
11 %
Change in deferred net revenue
Advanced metering infrastructure
$
3,586
$ (123,525 )
$
16,957
$ (45,184 )
$
(2,078 )
New solutions
1,606
(734 )
3,337
(4,922 )
4,036
Total change in deferred net revenue
$
5,192
$ (124,259 )
$
20,294
$ (50,106 )
$
1,958
Billings(1)
Advanced metering infrastructure
$ 63,735
$
58,367
$
57,471
$
59,997
$
64,125
1 %
New solutions
10,962
16,621
11,443
11,849
12,019
10 %
Total Billings(1)
$ 74,697
$
74,988
$
68,914
$
71,846
$
76,144
2 %
% Advanced metering infrastructure
85 %
78 %
83 %
84 %
84 %
% New solutions
15 %
22 %
17 %
16 %
16 %
GEOGRAPHY
Net revenue
United States
$ 53,113
$
177,896
$
45,222
$ 118,539
$
43,381
-18 %
International
16,392
21,351
3,398
3,413
30,805
88 %
Total net revenue
$ 69,505
$
199,247
$
48,620
$ 121,952
$
74,186
7 %
% United States
76 %
89 %
93 %
97 %
58 %
% International
24 %
11 %
7 %
3 %
42 %
Change in deferred net revenue
United States
$ 12,467
$ (116,859 )
$
8,468
$ (57,666 )
$
21,085
International
(7,275 )
(7,400 )
11,826
7,560
(19,127 )
Total change in deferred net revenue
$
5,192
$ (124,259 )
$
20,294
$ (50,106 )
$
1,958
Billings(1)
United States
$ 65,580
$
61,037
$
53,690
$
60,873
$
64,466
-2 %
International
9,117
13,951
15,224
10,973
11,678
28 %
Total Billings(1)
$ 74,697
$
74,988
$
68,914
$
71,846
$
76,144
2 %
% United States
88 %
81 %
78 %
85 %
85 %
% International
12 %
19 %
22 %
15 %
15 %
(1) We have revised the presentation of several of our non-GAAP
financial measures previously reported.
SILVER SPRING NETWORKS, INC.
UNAUDITED SUPPLEMENTAL FINANCIAL INFORMATION
(in thousands, except percentages and headcount)
Q3
Q4
Q1
Q2
Q3
YoY%
CASH FLOW DATA
2015
2015
2016
2016
2016
Change
Operating cash flow
$
4,272
$
6,257
$
3,730
$
3,802
(a)
$
5,145
20 %
Operating cash flow - TTM
27,054
19,687
23,872
18,061
(a)
18,934
-30 %
BALANCE SHEET DATA
Cash, cash equivalents and short-term investments
$ 121,915
$
124,445
$ 125,369
$
113,064
$ 113,358
-7 %
Deferred net revenue
Beginning of quarter
$ 521,176
$
526,000
$ 401,813
$
421,987
$ 371,934
Add: billings during the quarter
74,697
74,988
68,914
71,846
76,144
Less: revenue recognized during the quarter
(69,505 )
(199,247 )
(48,620 )
(121,952 )
(74,186 )
Foreign currency translation adjustment and other
(368 )
72
(120 )
53
4
End of quarter
$ 526,000
$
401,813
$ 421,987
$
371,934
$ 373,896
Deferred cost of revenue
Beginning of quarter
$ 286,044
$
292,730
$ 235,750
$
244,486
$ 227,559
Add: cost of billings during the quarter
41,759
39,640
38,779
38,817
34,364
Add: stock-based compensation, amortization of intangible assets,
1,471
1,280
1,512
1,600
2,176
and acquisition related charges deferred during the quarter
Less: cost of revenue during the quarter
(36,518 )
(97,902 )
(31,623 )
(57,409 )
(45,944 )
Foreign currency translation adjustment and other
(26 )
2
68
65
55
End of quarter
$ 292,730
$
235,750
$ 244,486
$
227,559
$ 218,210
STOCK-BASED COMPENSATION
Cost of goods sold
$
1,197
$
1,006
$
1,328
$
1,389
$
2,082
74 %
Research and development
1,771
1,277
2,025
2,241
2,593
46 %
Sales and marketing
914
665
831
726
943
3 %
General and administrative
1,971
1,994
2,716
2,685
2,280
16 %
$
5,853
$
4,942
$
6,900
$
7,041
$
7,898
35 %
EMPLOYEES
645
652
673
708
709
10 %
HOMES & BUSINESSES
Cumulative network endpoints delivered*
22,321
22,954
23,652
24,399
24,968
12 %
*Endpoints refer to communication modules in electric meters
(a)
After the release of earnings disclosing the results of the three
and six months ended June 30, 2016, we identified an adjustment in
which cash provided by operating activities and cash used in
investing activities were overstated by $0.3 million. This
adjustment was reflected in the condensed consolidated statements
of cash flows for the six months ended June 30, 2016, included in
our Form 10-Q filed on August 9, 2016. The amounts for Q2’16 in
the table above have been revised as such to reflect this
adjustment.
SILVER SPRING NETWORKS, INC.
UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(in thousands, except per share data and percentages)
Q3
Q4
Q1
Q2
Q3
YOY %
QUARTERLY RECONCILIATION OF RESULTS
2015
2015
2016
2016
2016
Change
Gross profit
$
32,987
$
101,345
$
16,997
$
64,543
$
28,242
-14 %
Change in deferred revenue, net of foreign currency translation
5,192
(124,259 )
20,294
(50,106 )
1,958
Change in deferred cost of revenue, net of foreign currency
(6,712 )
56,982
(8,668 )
16,992
9,404
translation
Amortization of intangible assets
260
259
169
195
79
Stock-based compensation
1,197
1,006
1,328
1,389
2,082
Acquisition-related charges
14
15
15
16
15
Gross profit on billings(1)
$
32,938
$
35,348
$
30,135
$
33,029
$
41,780
27 %
Gross margin % (as a % of net revenue)
47 %
51 %
35 %
53 %
38 %
Gross margin on billings(1)
44 %
47 %
44 %
46 %
55 %
Operating expenses
$
33,381
$
35,600
$
35,920
$
37,794
$
42,461
27 %
Amortization of intangible assets
(161 )
(163 )
(252 )
(180 )
(114 )
Stock-based compensation
(4,656 )
(3,936 )
(5,572 )
(5,652 )
(5,816 )
Acquisition-related charges
(545 )
(491 )
(501 )
(494 )
(493 )
Impairment of intangible assets
--
--
--
--
(2,204 )
Restructuring
(339 )
(60 )
(39 )
--
--
Legal settlements
--
(3,595 )
--
--
--
Non-GAAP operating expenses
$
27,680
$
27,355
$
29,556
$
31,468
$
33,834
22 %
Operating (loss) income
$
(394 )
$
65,745
$
(18,923 )
$
26,749
$
(14,219 )
-3509 %
Change in deferred revenue, net of foreign currency translation
5,192
(124,259 )
20,294
(50,106 )
1,958
Change in deferred cost of revenue, net of foreign currency
(6,712 )
56,982
(8,668 )
16,992
9,404
translation
Amortization of intangible assets
421
422
421
375
193
Stock-based compensation
5,853
4,942
6,900
7,041
7,898
Acquisition-related charges
559
506
516
510
508
Impairment of intangible assets
--
--
--
--
2,204
Restructuring
339
60
39
--
--
Legal settlements
--
3,595
--
--
--
Non-GAAP operating income
$
5,258
$
7,993
$
579
$
1,561
$
7,946
51 %
Income tax provision
$
129
$
3,708
$
32
$
961
$
1,143
786 %
Income tax benefit related to Detectent acquisition
114
--
--
--
--
Non-GAAP income tax provision
$
243
$
3,708
$
32
$
961
$
1,143
370 %
Net (loss) income
$
(622 )
$
61,878
$
(18,514 )
$
26,121
$
(15,249 )
-2352 %
Change in deferred revenue, net of foreign currency translation
5,192
(124,259 )
20,294
(50,106 )
1,958
Change in deferred cost of revenue, net of foreign currency
(6,712 )
56,982
(8,668 )
16,992
9,404
translation
Other expense (income), net
99
159
(441 )
(333 )
(113 )
Provision for income taxes
129
3,708
32
961
1,143
Depreciation and amortization
1,990
1,930
2,132
2,104
2,096
Stock-based compensation
5,853
4,942
6,900
7,041
7,898
Acquisition-related charges
559
506
516
510
508
Impairment of intangible assets
--
--
--
--
2,204
Restructuring
339
60
39
--
--
Legal settlements
--
3,595
--
--
--
Adjusted EBITDA
$
6,827
$
9,501
$
2,290
$
3,290
$
9,849
44 %
(1) We have revised the presentation of several of our non-GAAP
financial measures previously reported.
SILVER SPRING NETWORKS, INC.
RECONCILIATION OF GAAP TO NON-GAAP MEASURES
(in thousands, except percentages)
Three Months Ended September 30, 2016
Gross Profit
Gross Margin
Change in
Stock-based
Amortization of
Acquisition-
Gross Profit on
Gross Margin on
Deferred Revenue
Compensation
Intangible Assets
Related Costs
Billings (b)
Billings (b)
and
Deferred Cost
of Revenue (a)
Product
$
21,214
42.0 %
$
8,836
$
515
$
79
$
-
$
30,644
61.4 %
Services
Managed services and SaaS
4,612
32.7 %
1,641
719
-
15
6,987
44.4 %
Professional services
2,416
25.1 %
885
848
-
-
4,149
39.4 %
Total services
7,028
29.6 %
2,526
1,567
-
15
11,136
42.4 %
Total gross profit
$
28,242
38.1 %
$
11,362
$
2,082
$
79
$
15
$
41,780
54.9 %
Three Months Ended September 30, 2015
Gross Profit
Gross Margin
Change in
Stock-based
Amortization of
Acquisition-
Gross Profit on
Gross Margin on
Deferred Revenue
Compensation
Intangible Assets
Related Costs
Billings (b)
Billings (b)
and Deferred
Cost
of Revenue (a)
Product
$
28,716
57.3 %
$
(4,927 )
$
252
$
260
$
-
$
24,301
46.8 %
Services
Managed services and SaaS
3,137
28.0 %
1,397
438
-
14
4,986
39.5 %
Professional services
1,134
13.8 %
2,010
507
-
-
3,651
35.8 %
Total services
4,271
22.0 %
3,407
945
-
14
8,637
37.9 %
Total gross profit
$
32,987
47.5 %
$
(1,520 )
$
1,197
$
260
$
14
$
32,938
44.1 %
Nine Months Ended September 30, 2016
Gross Profit
Gross Margin
Change in
Stock-based
Amortization of
Acquisition-
Gross Profit on
Gross Margin on
Deferred Revenue
Compensation
Intangible Assets
Related Costs
Billings (b)
Billings (b)
and Deferred
Cost
of Revenue (a)
Product
$
66,564
43.4 %
$
6,239
$
1,282
$
443
$
-
$
74,528
52.6 %
Services
Managed services and SaaS
22,718
45.7 %
(6,189 )
1,689
-
46
18,264
41.9 %
Professional services
20,500
49.0 %
(10,176 )
1,828
-
-
12,152
38.4 %
Total services
43,218
47.2 %
(16,365 )
3,517
-
46
30,416
40.5 %
Total gross profit
$ 109,782
44.9 %
$ (10,126 )
$
4,799
$
443
$
46
$ 104,944
48.4 %
Nine Months Ended September 30, 2015
Gross Profit
Gross Margin
Change in
Stock-based
Amortization of
Acquisition-
Gross Profit on
Gross Margin on
Deferred Revenue
Compensation
Intangible Assets
Related Costs
Billings (b)
Billings (b)
and Deferred
Cost
of Revenue (a)
Product
$
91,312
43.5 %
$ (31,972 )
$
1,039
$
782
$
-
$
61,161
44.5 %
Services
Managed services and SaaS
10,734
30.8 %
3,365
1,680
-
85
15,864
41.6 %
Professional services
22,352
48.9 %
(14,477 )
2,410
-
-
10,285
33.0 %
Total services
33,086
41.1 %
(11,112 )
4,090
-
85
26,149
37.7 %
Total gross profit
$ 124,398
42.8 %
$ (43,084 )
$
5,129
$
782
$
85
$
87,310
42.2 %
(a)
Amounts presented net of foreign currency translation.
(b)
We have revised the presentation of several of our non-GAAP
financial measures previously reported.

http://cts.businesswire.com/ct/CT?id=bwnews&sty=20161103006609r1&sid=cmtx6&distro=nx&lang=en

View source version on businesswire.com: http://www.businesswire.com/news/home/20161103006609/en/

SOURCE: Silver Spring Networks, Inc.

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