SSNI Silver Spring Networks, Inc. (delisted)

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

 

FORM 8-K

 

 

Current Report

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

August 5, 2015

Date of Report (Date of earliest event reported)

 

 

SILVER SPRING NETWORKS, INC.

(Exact name of Registrant as specified in its charter)

 

 

 

Delaware		001-35828		43-1966972
(State or other jurisdiction of incorporation)		(Commission file number)		(I.R.S. Employer Identification No.)

555 Broadway Street, Redwood City, CA 94063

(Address of principal executive offices) (Zip Code)

(650) 839-4000

(Registrant’s telephone number, including area code)

Not Applicable

(Former name or former address, if changed since last report.)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligations of the registrant under any of the following provisions (see General Instruction A.2 below):

 

¨

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 

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Item 2.02

Results of Operations and Financial Condition.

On August 5, 2015, Silver Spring Networks, Inc. (the “Company”) issued a press release announcing its financial results for the second quarter ended June 30, 2015. The press release is being furnished as Exhibit 99.1 to this Current Report on Form 8-K.

The information in this Item 2.02, including Exhibit 99.1 hereto, is being furnished pursuant to Item 2.02 of Form 8-K and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), nor shall the information contained in this Item 2.02 or in the accompanying Exhibit 99.1 be deemed incorporated by reference in any filing with the Securities and Exchange Commission under the Exchange Act or the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference to this Item 2.02.

 

Item 9.01

Financial Statements and Exhibits.

 

(d)

Exhibits.

 

Number		Description
99.1		Press release, dated August 5, 2015.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

				SILVER SPRING NETWORKS, INC.
Date: August 5, 2015				By:		/s/ James P. Burns
						Name:		James P. Burns
						Title:		Executive Vice President and Chief Financial Officer

 

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EXHIBIT INDEX

 

Number		Description
99.1		Press release, dated August 5, 2015.

Exhibit 99.1

 

Silver Spring Networks Reports Second Quarter 2015 Financial Results

9% Growth in Non-GAAP Revenue

41% Growth in Non-GAAP Gross Profit

19% Top-Line Growth in Managed Services and SaaS

$9.6 Million in Positive Cash Flow from Operations

Redwood City, CA – August 5, 2015 – Silver Spring Networks, Inc. (NYSE: SSNI) today announced financial results for its second quarter ended June 30, 2015.

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

 

•

Non-GAAP revenue $69.1 million, up 9%.

 

•

GAAP revenue $77.2 million, up 85%.

 

•

Non-GAAP gross margin 42%, up 10 points.

 

•

GAAP gross margin 26%, down 6 points.

 

•

Non-GAAP net income $1.1 million versus a net loss of ($9.9) million.

 

•

GAAP net loss ($16.2) million versus ($24.6) million.

 

•

Non-GAAP diluted earnings per share $0.02 versus ($0.20) loss per share.

 

•

GAAP loss per share ($0.32) versus ($0.51) loss per share.

 

•

$118.6 million net cash and short-term investments balance, on $9.6 million in cash flow from operations.

“I’m pleased with our second quarter results, demonstrated by significant gross profit growth, international expansion, and strong cash flow,” said Scott Lang, Chairman, President, and Chief Executive Officer. “Our perseverance and performance has earned us the privileged position as a trusted partner to the leading energy companies around the world. Our fifth generation technology sets us apart in the world of energy and is opening an even broader set of opportunities to become the leader in smart cities and the Internet of Things.”

Business Highlights (through August 5, 2015, unless otherwise stated):

 

•

Delivered third consecutive quarter of 40%-plus non-GAAP gross margin performance, due to growth, favorable product mix and manufacturing efficiencies.

 

•

Selected by CPFL Energia of Brazil for its Distribution Automation project, an extension of their smart grid program to improve grid reliability in a service area covering nearly 4 million residents across CPFL’s Sao Paulo service territory.

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•

Began deliveries to support AusNet Services’ Advanced Metering Infrastructure within its Eastern Victoria territory.

 

•

Booked over $20 million of software and software-related services during the second quarter.

 

•

Selected by New Braunfels Utilities to deploy our multi-application network to support a double-play solution in its innovative smart grid and smart water programs.

 

•

Received prestigious industry honors, including TMC and Crossfire Media’s “2015 IoT Evolution Product of the Year Award” for the Gen5/Milli 5 platform, and named as a “2015 Smart Grid Company to Watch” by Smart Grid News.

 

•

21.5 million cumulative network endpoints delivered from inception through June 30, 2015, up 13% from a year ago.

Conference Call

Silver Spring will host a conference call today at 1:15 pm PT (4:15 pm ET) to review its results for the Second quarter ended June 30, 2015 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.silverspringnet.com. A dial-in replay of the conference call will be available until August 24, 2015 and can be accessed at 877-660-6853 (domestic) or 201-612-7415 (international) passcode 13614722. An audio webcast replay of the conference call will be available for one year 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 over 21.5 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 and Other 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, recurring non-GAAP revenue, recurring non-GAAP revenue per endpoint, cost of non-GAAP

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revenue, non-GAAP gross profit (loss), non-GAAP gross margin, non-GAAP operating income (loss), non-GAAP net income (loss), non-GAAP income (loss) per share, adjusted EBITDA, and total backlog, in addition to other financial measures presented in accordance with GAAP. Silver Spring believes that these non-GAAP and other 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 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), gross margin, operating loss, net income (loss), 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.

Non-GAAP revenue 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 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 non-GAAP revenue by adding revenue to the change in deferred revenue in a given period.

Recurring non-GAAP revenue is non-GAAP revenue from managed services and SaaS, as well as customer support and other service offerings. Recurring non-GAAP revenue is primarily recurring in nature and includes 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 GAAP revenue to recurring non-GAAP revenue by adding revenue to the change in deferred revenue in a given period.

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

Cost of non-GAAP revenue 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 non-GAAP revenue 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.

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

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

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; future deployments; 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: timing around customer decisions and deployment pace; 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

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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 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 August 5, 2015. 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.

For additional information, please contact:

Mark McKechnie

Investor Relations

650-839-4664

mmckechnie@silverspringnet.com

Noel Hartzell

Global Communications

650-839-4184

nhartzell@silverspringnet.com

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SILVER SPRING NETWORKS

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

 

		Three Months Ended								Six Months Ended
		June 30,								June 30,
		2015				2014				2015				2014
Revenue:
Product revenue		$	54,711			$	24,751			$	159,746			$	52,978
Service revenue			22,456				16,856				61,061				32,858
Net revenue			77,167				41,607				220,807				85,836
Cost of revenue:
Product cost of revenue			40,533				13,414				97,150				31,329
Service cost of revenue			16,678				14,781				32,246				29,651
Total cost of revenue			57,211				28,195				129,396				60,980
Gross profit			19,956				13,412				91,411				24,856
Operating expenses:
Research and development			16,050				17,342				31,744				35,067
Sales and marketing			8,912				8,854				18,209				18,077
General and administrative			10,455				11,888				22,584				23,555
Restructuring			1,078				—				1,272				—
Total operating expenses			36,495				38,084				73,809				76,699
Operating (loss) income			(16,539	)			(24,672	)			17,602				(51,843	)
Other income			74				85				362				48
(Loss) income before income taxes			(16,465	)			(24,587	)			17,964				(51,795	)
Benefit (provision) for income taxes			290				(4	)			766				(603	)
Net (loss) income		$	(16,175	)		$	(24,591	)		$	18,730			$	(52,398	)
Net (loss) income per share:
Basic		$	(0.32	)		$	(0.51	)		$	0.38			$	(1.09	)
Diluted		$	(0.32	)		$	(0.51	)		$	0.37			$	(1.09	)
Weighted average shares used to compute net (loss) income per share:
Basic			49,862				48,315				49,586				48,006
Diluted			49,862				48,315				51,095				48,006

Non-GAAP results (in thousands, except per share data)

The following tables reconcile the Company’s net income (loss) and income (loss) per share as presented in its unaudited Condensed Consolidated Statements of Operations and prepared in accordance with GAAP to its non-GAAP net income (loss) and non-GAAP income (loss) per share.

 

		Three Months Ended								Six Months Ended
		June 30,								June 30,
		2015				2014				2015				2014
Net (loss) income		$	(16,175	)		$	(24,591	)		$	18,730			$	(52,398	)
Change in deferred revenue, net of foreign currency translation			(8,027	)			21,997				(88,568	)			49,618
Change in deferred cost of revenue, net of foreign currency translation			14,488				(16,801	)			47,004				(37,058	)
Amortization of intangibles			422				48				831				96
Stock-based compensation			8,661				9,562				15,684				20,994
Acquisition-related charges			751				—				1,486				—
Income tax benefit related to Detectent acquisition			(124	)			—				(1,014	)			—
Restructuring			1,078				—				1,272				—
Legal settlements			—				(100	)			—				(100	)
Non-GAAP net income (loss)		$	1,074			$	(9,885	)		$	(4,575	)		$	(18,848	)
Non-GAAP net income (loss) per share:
Basic		$	0.02			$	(0.20	)		$	(0.09	)		$	(0.39	)
Diluted		$	0.02			$	(0.20	)		$	(0.09	)		$	(0.39	)
Weighted average shares used to compute Non-GAAP net income (loss) per share:
Basic			49,862				48,315				49,586				48,006
Diluted			51,390				48,315				49,586				48,006

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SILVER SPRING NETWORKS, INC.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

 

		June 30,				December 31,
		2015				2014 (a)
ASSETS
Current assets:
Cash and cash equivalents		$	61,760			$	60,457
Short-term investments			56,795				60,339
Accounts receivable			41,549				54,740
Inventories			4,502				6,722
Deferred cost of revenue			197,547				29,585
Deferred tax assets			370				5,278
Prepaid expenses and other current assets			9,402				5,146
Total current assets			371,925				222,267
Property and equipment, net			12,259				12,860
Goodwill and intangible assets			15,473				8,221
Deferred cost of revenue, non-current			88,497				303,445
Deferred tax assets, non-current			25,965				354
Other long-term assets			3,828				1,047
Total assets		$	517,947			$	548,194
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities:
Accounts payable		$	25,365			$	27,530
Deferred revenue			324,019				91,688
Deferred tax liability			25,807				249
Accrued and other liabilities			34,821				24,421
Total current liabilities			410,012				143,888
Deferred revenue, non-current			197,157				517,905
Deferred tax liability, non-current			—				5,146
Other liabilities			15,673				15,074
Total liabilities			622,842				682,013
Total stockholders’ deficit			(104,895	)			(133,819	)
Total liabilities and stockholders’ deficit		$	517,947			$	548,194

 

(a)	Derived from audited consolidated financial statements

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SILVER SPRING NETWORKS

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW

(In thousands)

 

		Three Months Ended								Six Months Ended
		June 30,								June 30,
		2015				2014				2015				2014
OPERATING ACTIVITIES
Net (loss) income		$	(16,175	)		$	(24,591	)		$	18,730			$	(52,398	)
Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities:
Deferred taxes			(217	)			499				(1,107	)			906
Depreciation and amortization			1,953				1,467				3,902				2,933
Stock-based compensation			8,661				9,562				15,684				20,994
Other non-cash adjustments			71				23				124				125
Changes in assets and liabilities:
Accounts receivable			6,340				3,285				13,641				11,586
Inventory			2,837				292				2,233				(217	)
Prepaid expenses and other assets			(1,892	)			(2,370	)			(2,796	)			(3,514	)
Contingent consideration related to Detectent acquisition held in escrow			—				—				(4,000	)			—
Deferred cost of revenue			14,478				(16,969	)			46,994				(37,335	)
Accounts payable			(5,248	)			(278	)			(2,370	)			(3,402	)
Customer deposits			1,658				(3	)			1,458				104
Deferred revenue			(8,470	)			22,428				(89,031	)			50,103
Accrued and other liabilities			5,617				3,260				5,696				3,460
Net cash provided by (used in) operating activities			9,613				(3,395	)			9,158				(6,655	)
INVESTING ACTIVITIES
Payments for business acquisition, net of cash and cash equivalents acquired			—				(8,750	)			(7,098	)			(8,750	)
Proceeds from sales of available-for-sale investments			7,400				(13,966	)			7,400				—
Proceeds from maturities of available-for-sale investments			3,750				37,558				7,750				42,058
Purchases of available-for-sale investments			(7,567	)			(22,147	)			(11,623	)			(39,501	)
Purchases of property and equipment			(538	)			(1,956	)			(1,912	)			(3,698	)
Net cash provided by (used in) investing activities			3,045				(9,261	)			(5,483	)			(9,891	)
FINANCING ACTIVITIES
Payments on capital lease obligations			(346	)			(392	)			(756	)			(748	)
Proceeds from issuance of common stock, net of repurchases			131				192				2,036				4,747
Taxes paid related to net share settlement of equity awards			(1,455	)			(850	)			(3,512	)			(5,263	)
Net cash used in financing activities			(1,670	)			(1,050	)			(2,232	)			(1,264	)
Effect of exchange rate changes on cash and cash equivalents			76				—				(140	)			—
Net increase (decrease) in cash and cash equivalents			11,065				(13,706	)			1,303				(17,810	)
Cash and cash equivalents - beginning of period			50,695				78,492				60,457				82,596
Cash and cash equivalents - end of period		$	61,760			$	64,786			$	61,760			$	64,786

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SILVER SPRING NETWORKS, INC.

UNAUDITED RECONCILIATION OF NET REVENUE BETWEEN GAAP AND NON-GAAP

(in thousands, except percentages)

 

		Q2				Q3				Q4				Q1				Q2				YoY%
		2014				2014				2014				2015				2015				Change
TYPE
GAAP net revenue:
Product net revenue		$	24,751			$	16,321			$	60,034			$	105,035			$	54,711				121	%
Service net revenue
Managed services and SaaS (a)			8,584				7,546				10,569				12,974				10,608				24	%
Professional services			8,272				4,174				6,808				25,631				11,848				43	%
Total service net revenue			16,856				11,720				17,377				38,605				22,456				33	%
Total GAAP net revenue		$	41,607			$	28,041			$	77,411			$	143,640			$	77,167				85	%
% Product			59	%			58	%			78	%			73	%			71	%
% Service			41	%			42	%			22	%			27	%			29	%
Change in deferred net revenue:
Change in deferred product revenue		$	17,438			$	33,238			$	(9,991	)		$	(64,034	)		$	(10,015	)
Change in deferred service revenue:
Managed services and SaaS			2,326				3,960				984				(419	)			2,387
Professional services			2,233				5,649				1,962				(16,088	)			(399	)
Total change in deferred service revenue			4,559				9,609				2,946				(16,507	)			1,988
Total change in deferred revenue		$	21,997			$	42,847			$	(7,045	)		$	(80,541	)		$	(8,027	)
Non-GAAP revenue:
Product net revenue			42,189				49,559				50,043				41,001				44,696				6	%
Service net revenue:
Managed services and SaaS (a)			10,910				11,506				11,553				12,555				12,995				19	%
Professional services			10,505				9,823				8,770				9,543				11,449				9	%
Total service net revenue			21,415				21,329				20,323				22,098				24,444				14	%
Total non-GAAP net revenue		$	63,604			$	70,888			$	70,366			$	63,099			$	69,140				9	%
% Product			66	%			70	%			71	%			65	%			65	%
% Service			34	%			30	%			29	%			35	%			35	%
RECURRING REVENUE PER ENDPOINT
Recurring GAAP revenue (TTM) (a)			35,391				32,987				35,220				39,673				41,697
Changes in deferred revenue, net of foreign currency translations			6,179				9,688				9,284				6,851				6,912
Recurring non-GAAP revenue (TTM) (a)		$	41,570			$	42,675			$	44,504			$	46,524			$	48,609
Cumulative network endpoints delivered			19,081				19,714				20,266				20,814				21,506
Recurring GAAP revenue per endpoint delivered (a)		$	1.85			$	1.67			$	1.74			$	1.91			$	1.94				5	%
Recurring non-GAAP revenue per endpoint delivered (a)		$	2.18			$	2.16			$	2.20			$	2.24			$	2.26				4	%
SOLUTION
GAAP net revenue
Advanced metering infrastructure		$	33,610			$	21,417			$	72,456			$	112,865			$	66,907				99	%
New solutions			7,997				6,624				4,955				30,775				10,260				28	%
Total GAAP net revenue		$	41,607			$	28,041			$	77,411			$	143,640			$	77,167				85	%
% Advanced metering infrastructure			81	%			76	%			94	%			79	%			87	%
% New solutions			19	%			24	%			6	%			21	%			13	%
Change in deferred net revenue
Advanced metering infrastructure		$	18,113			$	39,828			$	(12,441	)		$	(64,828	)		$	(10,976	)
New solutions			3,884				3,019				5,396				(15,713	)			2,949
Total change in deferred net revenue		$	21,997			$	42,847			$	(7,045	)		$	(80,541	)		$	(8,027	)
Non-GAAP net revenue
Advanced metering infrastructure		$	51,723			$	61,245			$	60,015			$	48,037			$	55,931				8	%
New solutions			11,881				9,643				10,351				15,062				13,209				11	%
Total Non-GAAP net revenue		$	63,604			$	70,888			$	70,366			$	63,099			$	69,140				9	%
% Advanced metering infrastructure			81	%			86	%			85	%			76	%			81	%
% New solutions			19	%			14	%			15	%			24	%			19	%
GEOGRAPHY
GAAP net revenue
United States		$	34,251			$	15,700			$	30,017			$	122,582			$	72,360				111	%
International			7,356				12,341				47,394				21,058				4,807				-35	%
Total GAAP net revenue		$	41,607			$	28,041			$	77,411			$	143,640			$	77,167				85	%
% United States			82	%			56	%			39	%			85	%			94	%
% International			18	%			44	%			61	%			15	%			6	%
Change in deferred net revenue
United States		$	22,799			$	48,248			$	29,176			$	(66,533	)		$	(17,955	)
International			(802	)			(5,401	)			(36,221	)			(14,008	)			9,928
Total change in deferred net revenue		$	21,997			$	42,847			$	(7,045	)		$	(80,541	)		$	(8,027	)
Non-GAAP net revenue
United States		$	57,050			$	63,948			$	59,193			$	56,049			$	54,405				-5	%
International			6,554				6,940				11,173				7,050				14,735				125	%
Total non-GAAP net revenue		$	63,604			$	70,888			$	70,366			$	63,099			$	69,140				9	%
% United States			90	%			90	%			84	%			89	%			79	%
% International			10	%			10	%			16	%			11	%			21	%

 

(a)	Certain amounts have been reclassified in 2014 from Professional services to Managed services and Saas related to product support which is recurring in nature to conform to current period presentation.

---

SILVER SPRING NETWORKS, INC.

UNAUDITED SUPPLEMENTAL FINANCIAL INFORMATION

(in thousands, except percentages and headcount)

 

		Q2				Q3				Q4				Q1				Q2				YoY%
		2014				2014				2014				2015				2015				Change
CASH FLOW DATA
Operating cash flow		$	(3,395	)		$	(15,734	)		$	13,624			$	(455	)		$	9,613				383	%
Operating cash flow - TTM			16,320				(20,545	)			(8,765	)			(5,960	)			7,048				-57	%
BALANCE SHEET DATA
Cash, cash equivalents and short-term investments		$	125,321			$	110,466			$	120,796			$	111,215			$	118,555				-5	%
Deferred net revenue
End of quarter			575,106				617,416				609,593				529,984				521,176
Less: Beginning of quarter			(552,328	)			(575,106	)			(617,416	)			(609,593	)			(529,984	)
Foreign currency translation adjustment and other			(781	)			537				778				(932	)			781
Change in deferred net revenue, net of foreign currency translation and other		$	21,997			$	42,847			$	(7,045	)		$	(80,541	)		$	(8,027	)
Deferred cost of revenue
End of quarter		$	313,458			$	338,633			$	333,030			$	300,524			$	286,044
Less: Beginning of quarter			(296,489	)			(313,458	)			(338,633	)			(333,030	)			(300,524	)
Foreign currency translation adjustment			(168	)			69				68				(10	)			(8	)
Change in deferred cost of revenue, net of foreign currency translation		$	16,801			$	25,244			$	(5,535	)		$	(32,516	)		$	(14,488	)
STOCK-BASED COMPENSATION
Cost of goods sold		$	1,930			$	2,770			$	218			$	1,723			$	2,209				14	%
Research and development			2,695				3,042				785				2,180				2,832				5	%
Sales and marketing			1,754				1,783				479				1,238				1,287				-27	%
General and administrative			3,183				2,881				909				1,882				2,333				-27	%
		$	9,562			$	10,476			$	2,391			$	7,023			$	8,661				-9	%
EMPLOYEES			639				589				576				623				640				0	%
HOMES & BUSINESSES
Cumulative network endpoints delivered*			19,081				19,714				20,266				20,814				21,506				13	%

 

*	Endpoints refer to communication modules in electric meters

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SILVER SPRING NETWORKS

UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES

(In thousands, except per share data and percentages)

 

		Q2				Q3				Q4				Q1				Q2				YOY %
QUARTERLY RECONCILIATION OF RESULTS		2014				2014				2014				2015				2015				Change
Net revenue
GAAP net revenue		$	41,607			$	28,041			$	77,411			$	143,640			$	77,167				85	%
Change in deferred revenue, net of foreign currency translation			21,997				42,847				(7,045	)			(80,541	)			(8,027	)
Non-GAAP net revenue		$	63,604			$	70,888			$	70,366			$	63,099			$	69,140				9	%
Gross profit
GAAP gross profit		$	13,412			$	1,303			$	30,178			$	71,455			$	19,956				49	%
Change in deferred revenue, net of foreign currency translation			21,997				42,847				(7,045	)			(80,541	)			(8,027	)
Change in deferred cost of revenue, net of foreign currency translation			(16,801	)			(25,244	)			5,535				32,516				14,488
Amortization of intangible assets			48				182				140				262				260
Stock-based compensation			1,930				2,770				218				1,723				2,209
Acquisition-related charges (a)			—				—				—				11				60
Non-GAAP gross profit		$	20,586			$	21,858			$	29,026			$	25,426			$	28,946				41	%
GAAP gross margin % (as a % of GAAP net revenue)			32	%			5	%			39	%			50	%			26	%
Non-GAAP gross margin % (as a % of non-GAAP net revenue)			32	%			31	%			41	%			40	%			42	%
Operating (loss) income
GAAP operating (loss) income		$	(24,672	)		$	(37,420	)		$	1,392			$	34,141			$	(16,539	)			33	%
Change in deferred revenue, net of foreign currency translation			21,997				42,847				(7,045	)			(80,541	)			(8,027	)
Change in deferred cost of revenue, net of foreign currency translation			(16,801	)			(25,244	)			5,535				32,516				14,488
Amortization of intangible assets			48				299				219				409				422
Stock-based compensation			9,562				10,476				2,391				7,023				8,661
Acquisition-related charges (a)			—				—				—				735				751
Restructuring			—				1,888				(99	)			194				1,078
Legal settlements			(100	)			—				—				—				—
Non-GAAP operating (loss) income		$	(9,966	)		$	(7,154	)		$	2,393			$	(5,523	)		$	834				108	%
GAAP operating margin % (as a % of GAAP revenue)			-59	%			-133	%			2	%			24	%			-21	%
Non-GAAP operating margin % (as a % of non-GAAP net revenue)			-16	%			-10	%			3	%			-9	%			1	%
Adjusted EBITDA
GAAP net (loss) income		$	(24,591	)		$	(37,273	)		$	501			$	34,905			$	(16,175	)			34	%
Change in deferred revenue, net of foreign currency translation			21,997				42,847				(7,045	)			(80,541	)			(8,027	)
Change in deferred cost of revenue, net of foreign currency translation			(16,801	)			(25,244	)			5,535				32,516				14,488
Other (income) expense, net			(85	)			(7	)			(68	)			(288	)			(74	)
(Benefit) provision for income taxes			4				(140	)			959				(476	)			(290	)
Depreciation and amortization			1,467				1,771				1,763				1,949				1,953
Stock-based compensation			9,562				10,476				2,391				7,023				8,661
Acquisition-related charges (a)			—				—				—				735				751
Restructuring			—				1,888				(99	)			194				1,078
Legal settlements			(100	)			—				—				—				—
Adjusted EBITDA		$	(8,547	)		$	(5,682	)		$	3,937			$	(3,983	)		$	2,365				128	%
Net (loss) income
GAAP net (loss) income		$	(24,591	)		$	(37,273	)		$	501			$	34,905			$	(16,175	)			34	%
Change in deferred revenue, net of foreign currency translation			21,997				42,847				(7,045	)			(80,541	)			(8,027	)
Change in deferred cost of revenue, net of foreign currency translation			(16,801	)			(25,244	)			5,535				32,516				14,488
Amortization of intangible assets			48				299				219				409				422
Stock-based compensation			9,562				10,476				2,391				7,023				8,661
Acquisition-related charges (a)			—				—				—				735				751
Income tax benefit related to Detectent acquisition			—				—				—				(890	)			(124	)
Restructuring			—				1,888				(99	)			194				1,078
Legal settlements			(100	)			—				—				—				—
Non-GAAP net (loss) income		$	(9,885	)		$	(7,007	)		$	1,502			$	(5,649	)		$	1,074				111	%
GAAP net margin % (as a % of GAAP revenue)			-59	%			-133	%			1	%			24	%			-21	%
Non-GAAP net margin % (as a % of non-GAAP net revenue)			-16	%			-10	%			2	%			-9	%			2	%
GAAP (loss) income per share
Basic		$	(0.51	)		$	(0.77	)		$	0.01			$	0.71			$	(0.32	)
Diluted		$	(0.51	)		$	(0.77	)		$	0.01			$	0.69			$	(0.32	)
Weighted average number of shares used in computation
Basic			48,315				48,551				48,929				49,306				49,862
Diluted			48,315				48,551				50,191				50,899				49,862
Non-GAAP (loss) income per share
Basic		$	(0.20	)		$	(0.14	)		$	0.03			$	(0.11	)		$	0.02
Diluted		$	(0.20	)		$	(0.14	)		$	0.03			$	(0.11	)		$	0.02
Weighted average number of shares used in computation
Basic			48,315				48,551				48,929				49,306				49,862
Diluted			48,315				48,551				50,191				49,306				51,390

 

(a)	Acquisition-related charges in 2014 were not included.