SILVER SPRING NETWORKS INC - FORM 8-K - EX-99.1

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Exhibit 99.1

LOGO

Silver Spring Networks Reports Third Quarter 2013 Financial Results

Record $94.2 Million Non-GAAP Revenue

Record Non-GAAP Gross Profit Margin of 42%

Generated $21 Million in Operating Cash Flow

Redwood City, CA – October 30, 2013 – Silver Spring Networks, Inc. (NYSE: SSNI) today announced preliminary unaudited financial results for its third quarter and nine month period ended September 30, 2013.

Q3 Results

Non-GAAP revenue (billings) for the third quarter was $94.2 million, up 11% year-over-year, driven by new customer deployments. GAAP revenue was $72.5 million as compared to $39.6 million a year ago.

Non-GAAP gross profit margin was 42.0%, up from 31.4% a year ago, primarily due to a higher mix of higher margin revenue. GAAP gross profit margin was 32.0% as compared to 11.2% a year ago.

Non-GAAP net income was $9.7 million as compared with breakeven a year ago. GAAP net loss was $12.3 million as compared with a GAAP net loss of $26.9 million a year ago.

Silver Spring generated $21.1 million in operating cash flow during the quarter and ended the quarter with $143.4 million in cash and investments and no debt outstanding.

“I am pleased with our third quarter results, generating strong gross profit margins and cash flow, and we are on track to achieve our 2013 annual guidance with 18% growth,” said Scott Lang, Chairman, President, and Chief Executive Officer. “We are executing on our business model by delivering the most innovative technology and services to our clients.”

Business Highlights (through October 30, 2013, unless otherwise stated)

•

17.5 million cumulative network endpoints delivered from inception through September 30, 2013 – up 17% from a year ago.

•

CPFL Energia in Brazil completes successful first phase of network and advanced metering deployment for industrial customers – first commercial scale smart grid deployment in Brazil driving significant energy and operational savings.

•

EDP Distribuição in Portugal expands network, advanced metering and distribution automation pilot – technology minimizing customer interruptions and enabling smarter integration of renewables.

•

Metrix partnership in New Zealand to network 37 thousand homes and businesses – retailers now able to deliver comprehensive energy information to consumers in a disaggregated energy market.

•

Citelum partnership in Copenhagen – to establish a citywide network connecting 20 thousand street lights.

•

Sacramento Municipal Utility District renews managed services agreement for five years – helping drive greater operational efficiency, provide disaster recovery capability and deliver flexible and secure environments.

Year to Date Results

Non-GAAP revenue (billings) for the nine month period ended September 30, 2013, was $254.4 million, up 16% year-over-year, driven by growth in new customer deployments. GAAP revenue was $229.7 million as compared to $146.7 million a year ago.

Non-GAAP gross profit margin was 34.2%, as compared with 34.1% a year ago. GAAP gross profit margin was 35.5% as compared to 14.4% a year ago.

Non-GAAP net loss was $3.2 million as compared with a non-GAAP net loss of $6.3 million year ago. GAAP net loss was $67.2 million as compared with a GAAP net loss of $68.7 million a year ago. GAAP net loss includes non-cash charges of $42.1 million in connection with Silver Spring’s initial public offering.

Conference Call

Silver Spring will host a conference call today at 1:30 pm PT (4:30 pm ET) to review its results for the third quarter ended September 30, 2013 and its outlook for the future. During the course of this call, Silver Spring may also disclose material developments affecting its business and/or financial performance. Listeners may access the conference call live at 877-407-0832 (U.S.) or 201-689-8433 (International) or via webcast at http://ir.silverspringnet.com.

About Silver Spring Networks

Silver Spring Networks is a leading networking platform and solutions provider for smart energy networks. Silver Spring’s pioneering IPv6 networking platform, with 17.5 million Silver Spring enabled devices delivered, is connecting utilities to homes and business throughout the world with the goal of achieving greater energy efficiency for the planet. Silver Spring’s innovative solutions enable utilities to gain operational efficiencies, improve grid reliability, and empower consumers to monitor and manage energy consumption. Silver Spring Networks’ customers include major utilities around the globe such as Baltimore Gas & Electric, CitiPower & Powercor, Commonwealth Edison, CPS Energy, Florida Power & Light, Jemena Electricity Networks Limited, Pacific Gas & Electric, Pepco Holdings, Progress Energy, and Singapore Power, among others. To learn more, please visit www.silverspringnet.com.

Non-GAAP Financial Measures

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

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

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

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

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

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

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

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

Forward-Looking Statements

This press release contains forward-looking statements that involve risks and uncertainties. These forward-looking statements include statements regarding the momentum in Silver Spring Networks’ business, future growth and future financial results. Statements including words such as “anticipate”, “believe”, “estimate” or “expect” and statements in the future tense are forward-looking statements. These forward-looking statements are preliminary estimates and expectations based on current information and are subject to business and economic risks and uncertainties that could cause actual events or actual future results to differ materially from the expectations set forth in the forward-looking statements. Important factors that could cause results to differ materially from the statements herein include: general economic risks; specific economic risks in different geographies and among different industries; failure to maintain or increase renewals and increase business from existing customers; uncertainties around continued success in sales growth and market share gains; lengthy sales cycles with no assurances that a prospective customer will select Silver Spring’s products and services; amounts included in backlog may not result in billings or revenue; adverse publicity about, or consumer or political opposition to, the smart grid; security breaches involving smart grid products or services; the ability to integrate technology into third-party devices and Silver Spring’s relationship with third-party manufacturers; execution risks related to new product introductions and innovation; the ability to attract and retain personnel, including members of Silver Spring’s management team; changes in strategy; technological changes that make Silver Spring’s products and services less competitive; dependence on a limited number of key suppliers and

customers; competition, particularly from larger companies with more resources than Silver Spring; risks related to retention of management; international business uncertainties; the ability to acquire and integrate other businesses; and other risk factors set forth from time to time in Silver Spring’s filings with the SEC, copies of which are available free of charge at the SEC’s website at www.sec.gov. All forward-looking statements in this press release reflect Silver Spring’s expectations as of October 30, 2013. Silver Spring undertakes no obligation, and expressly disclaims any obligation, to update any forward-looking statements in this press release in light of new information or future events. In addition, the preliminary financial results set forth in this press release are estimates based on information currently available to Silver Spring. While Silver Spring believes these estimates are meaningful, they could differ from the actual amounts that Silver Spring ultimately reports in its Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2013. Silver Spring assumes no obligation and does not intend to update these estimates prior to filing its Form 10-Q for the fiscal quarter ended September 30, 2013.

For additional information, please contact:

Tricia Gugler

Investor Relations

650-839-4504

tgugler@silverspringnet.com

Noel Hartzell

Global Communications

650-839-4184

nhartzell@silverspringnet.com

SILVER SPRING NETWORKS

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)


	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2013			2012			2013			2012
Revenue:
Product revenue	$	56,650		$	30,394		$	146,366		$	122,292
Service revenue		15,831			9,234			83,328			24,374

Net revenue		72,481			39,628			229,694			146,666

Cost of revenue:
Product cost of revenue		34,844			22,846			100,152			88,358
Service cost of revenue		14,411			12,348			47,932			37,137

Total cost of revenue		49,255			35,194			148,084			125,495

Gross profit		23,226			4,434			81,610			21,171

Operating expenses:
Research and development		16,980			15,480			60,851			46,872
Sales and marketing		7,424			6,822			26,514			21,732
General and administrative		10,937			6,599			35,952			21,024

Total operating expenses		35,341			28,901			123,317			89,628

Operating income (loss)		(12,115	)		(24,467	)		(41,707	)		(68,457	)

Other income (expense)
Interest expense		(54	)		(1,198	)		(1,290	)		(3,351	)
Conversion of promissory notes and remeasurement of warrants and derivatives		—			(830	)		(23,676	)		3,570

Other income (expense), net		(54	)		(2,028	)		(24,966	)		219

Income (loss) before provision for income taxes		(12,169	)		(26,495	)		(66,673	)		(68,238	)

Provision for income taxes		100			373			492			469

Net income (loss)	$	(12,269	)	$	(26,868	)	$	(67,165	)	$	(68,707	)
Deemed dividend to convertible preferred stockholders		—			—			(105,000	)		—

Net income (loss) attributable to common stockholders	$	(12,269	)	$	(26,868	)	$	(172,165	)	$	(68,707	)

Net income (loss) per share
Basic net income (loss) per share attributable to common stockholders	$	(0.26	)	$	(7.30	)	$	(4.96	)	$	(18.75	)
Diluted net income (loss) per share attributable to common stockholders	$	(0.26	)	$	(7.30	)	$	(4.96	)	$	(18.75	)

Weighted average number of shares used in computation
Basic		46,729			3,682			34,733			3,664
Diluted		46,729			3,682			34,733			3,664

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 September 30,						Nine Months Ended September 30,
	2013			2012			2013			2012
Net income (loss)	$	(12,269	)	$	(26,868	)	$	(67,165	)	$	(68,707	)
Change in deferred revenue, net of foreign currency translation		21,735			45,593			24,744			72,091
Change in deferred cost of revenue, net of foreign currency translation		(6,842	)		(23,858	)		(30,028	)		(20,867	)
Amortization of intangibles in cost of revenue		48			48			144			144
Conversion of promissory notes and remeasurement of warrants and derivatives		—			830			23,676			(3,570	)
Convertible notes accretion / interest		—			1,069			935			2,787
Stock-based compensation		6,990			3,217			44,503			11,823

Non-GAAP net income (loss)	$	9,662		$	31		$	(3,191	)	$	(6,299	)

Non-GAAP income (loss) per share
Basic	$	0.21		$	0.01		$	(0.09	)	$	(1.72	)
Diluted	$	0.19		$	0.00		$	(0.09	)	$	(1.72	)

Weighted average number of shares used in computation
Basic		46,729			3,682			34,733			3,664
Diluted		49,620			29,556			34,733			3,664

SILVER SPRING NETWORKS, INC.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except par values)


	September 30, 2013			December 31, 2012 (a)
ASSETS
Current assets:
Cash and cash equivalents	$	81,865		$	72,646
Short-term investments		61,566			—
Accounts receivable		59,587			56,528
Inventory		6,997			7,731
Deferred cost of revenue		65,869			45,298
Prepaid expenses and other current assets		5,615			3,456

Total current assets		281,499			185,659

Property and equipment, net		12,857			12,701
Deferred cost of revenue, non-current		209,232			199,865
Deferred tax assets, non-current		8,075			8,265
Other long-term assets		2,275			11,254

TOTAL ASSETS	$	513,938		$	417,744

LIABILITIES, CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ DEFICIT
Current liabilities:
Accounts payable	$	26,323		$	28,104
Accrued liabilities		19,156			14,831
Deferred revenue		149,990			89,838
Current portion of capital lease obligations		1,760			1,647
Deferred tax liability		7,950			7,897

Total current liabilities		205,179			142,317

Deferred revenue, non-current		382,556			418,218
Preferred stock warrant liability		—			11,261
Convertible promissory notes and embedded derivatives		—			56,319
Other liabilities		15,138			18,412

Convertible preferred stock:
$0.001 par value; no shares authorized, issued and outstanding, and aggregate liquidation preference of $0 as of September 30, 2013; 26,072 shares authorized, 22,366 shares issued and outstanding, and aggregate liquidation preference of $381,338 as of December 31, 2012		—			270,725

Stockholders’ equity (deficit):
Preferred stock, $0.001 par value, 10,000 shares authorized and no shares issued or outstanding as of September 30, 2013; no shares authorized, issued or outstanding, as of December 31, 2012		—			—

Common stock, $0.001 par value; 1,000,000 shares authorized, 46,933 shares issued and outstanding as of September 30, 2013; 80,000 shares authorized and 3,764 shares issued and outstanding as of December 31, 2012		46			4

Additional paid-in capital		528,598			51,078
Accumulated other comprehensive income (loss)		40			(136	)
Accumulated deficit		(617,619	)		(550,454	)

Total stockholders’ deficit		(88,935	)		(499,508	)

TOTAL LIABILITIES, CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ DEFICIT	$	513,938		$	417,744

(a)	Derived from audited consolidated financial statements

SILVER SPRING NETWORKS

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW

(In thousands)


	Three Months Ended September 30,						Nine Months Ended September 30,
	2013			2012			2013			2012
OPERATING ACTIVITIES

Net income (loss)	$	(12,269	)	$	(26,868	)	$	(67,165	)	$	(68,707	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		1,624			1,815			4,990			5,459
Stock-based compensation		6,990			3,217			44,503			11,823
Conversion of promissory notes and remeasurement of warrants and derivatives		—			830			23,676			(3,570	)
Other non-cash adjustments		113			808			1,565			2,464
Changes in assets and liabilities:
Accounts receivable		10,057			(14,077	)		(3,126	)		(30,833	)
Inventory		5,541			(2,421	)		534			(5,676	)
Prepaid expenses and other current assets		939			823			(2,248	)		447
Deferred cost of revenue		(6,865	)		(23,858	)		(29,938	)		(20,867	)
Other long-term assets		1,484			(902	)		3,846			(2,356	)
Accounts payable		(9,119	)		4,120			(1,746	)		7,330
Accrued liabilities		2,917			(1,382	)		2,379			(3,053	)
Customer deposits		(1	)		(146	)		(247	)		(6,954	)
Deferred revenue		21,824			45,593			24,490			72,091
Other liabilities		(2,104	)		2,249			(3,343	)		4,122

Net cash provided by (used in) operating activities		21,131			(10,199	)		(1,830	)		(38,280	)

INVESTING ACTIVITIES

Decrease in restricted cash		—			—			—			140
Purchases of short-term investments		(61,451	)		—			(61,451	)		—
Purchases of property and equipment		(881	)		(1,116	)		(3,343	)		(4,249	)

Net cash used in investing activities		(62,332	)		(1,116	)		(64,794	)		(4,109	)

FINANCING ACTIVITIES

Payment upon termination of preferred stock warrants of a related party		—			—			(12,000	)		—
Proceeds from initial public offering, net of offering costs		(233	)		—			84,472			—
Proceeds from private placement of common stock with a related party		—			—			12,000			—
Payments on capital lease obligations		(541	)		(380	)		(1,485	)		(888	)
Proceeds from sale-leaseback transaction		—			—			—			1,676
Proceeds from issuance of convertible notes, net of paid issuance costs		—			—			—			28,993
Proceeds from issuance of common stock, net of repurchases		388			143			578			545
Taxes paid related to net share settlement of equity awards		(1,518	)		—			(7,722	)		—

Net cash provided by (used in) financing activities		(1,904	)		(237	)		75,843			30,326

Net increase (decrease) in cash and cash equivalents		(43,105	)		(11,552	)		9,219			(12,063	)
Cash and cash equivalents - beginning of period		124,970			71,176			72,646			71,687

Cash and cash equivalents - end of period	$	81,865		$	59,624		$	81,865		$	59,624

SILVER SPRING NETWORKS, INC.

UNAUDITED RECONCILIATION OF NET REVENUE BETWEEN GAAP AND NON-GAAP

(in thousands, except percentages)


	Q3			Q4			Q1			Q2			Q3			*YoY%*
	CY12			CY12			CY13			CY13			CY13			*Change*
TYPE
GAAP net revenue
Product net revenue	$	30,394		$	40,332		$	41,720		$	47,996		$	56,650			86	%
Service net revenue
Managed services and SaaS		4,756			4,018			4,559			37,508			9,835			107	%
Professional		4,478			5,721			7,424			18,006			5,996			34	%

Total service net revenue	$	9,234		$	9,739		$	11,983		$	55,514		$	15,831			71	%

Total GAAP net revenue	$	39,628		$	50,071		$	53,703		$	103,510		$	72,481			83	%

% Product		77	%		81	%		78	%		46	%		78	%
% Service		23	%		19	%		22	%		54	%		22	%

Change in deferred net revenue
Change in deferred product revenue	$	37,545		$	25,793		$	14,702		$	17,905		$	16,017
Change in deferred service revenue
Managed services and SaaS		3,555			6,441			3,825			(28,245	)		16
Professional		4,493			3,271			1,541			(6,719	)		5,702

Total change in deferred service revenue		8,048			9,712			5,366			(34,964	)		5,718

Total change in deferred revenue	$	45,593		$	35,505		$	20,068		$	(17,059	)	$	21,735

Non-GAAP revenue
Product net revenue	$	67,939		$	66,125		$	56,422		$	65,901		$	72,667			7	%
Service net revenue
Managed services and SaaS		8,311			10,459			8,384			9,263			9,851			19	%
Professional		8,971			8,992			8,965			11,287			11,698			30	%

Total service net revenue	$	17,282		$	19,451		$	17,349		$	20,550		$	21,549			25	%

Total non-GAAP net revenue	$	85,221		$	85,576		$	73,771		$	86,451		$	94,216			11	%

% Product		80	%		77	%		76	%		76	%		77	%
% Service		20	%		23	%		24	%		24	%		23	%

SOLUTION
GAAP net revenue
Advanced metering infrastructure	$	34,086		$	46,250		$	45,149		$	97,598		$	66,774			96	%
Distribution automation and demand side management		5,542			3,821			8,554			5,912			5,707			3	%

Total GAAP net revenue	$	39,628		$	50,071		$	53,703		$	103,510		$	72,481			83	%

% Advanced metering infrastructure		86	%		92	%		84	%		94	%		92	%
% Distribution automation and demand side management		14	%		8	%		16	%		6	%		8	%

Change in deferred net revenue
Advanced metering infrastructure	$	44,880		$	32,208		$	23,219		$	(21,380	)	$	19,244
Distribution automation and demand side management		713			3,297			(3,151	)		4,321			2,491

Total change in deferred net revenue	$	45,593		$	35,505		$	20,068		$	(17,059	)	$	21,735

Non-GAAP net revenue
Advanced metering infrastructure	$	78,966		$	78,458		$	68,368		$	76,218		$	86,018			9	%
Distribution automation and demand side management		6,255			7,118			5,403			10,233			8,198			31	%

Total Non-GAAP net revenue	$	85,221		$	85,576		$	73,771		$	86,451		$	94,216			11	%

% Advanced metering infrastructure		93	%		92	%		93	%		88	%		91	%
% Distribution automation and demand side management		7	%		8	%		7	%		12	%		9	%

GEOGRAPHY
GAAP net revenue
United States	$	35,110		$	46,421		$	50,747		$	94,516		$	68,562			95	%
International		4,518			3,650			2,956			8,994			3,919			-13	%

Total GAAP net revenue	$	39,628		$	50,071		$	53,703		$	103,510		$	72,481			83	%

% United States		89	%		93	%		94	%		91	%		95	%
% International		11	%		7	%		6	%		9	%		5	%

Change in deferred net revenue
United States	$	38,325		$	21,927		$	8,839		$	(21,032	)	$	15,289
International		7,268			13,578			11,229			3,973			6,446

Total change in deferred net revenue	$	45,593		$	35,505		$	20,068		$	(17,059	)	$	21,735

Non-GAAP net revenue
United States	$	73,435		$	68,348		$	59,586		$	73,484		$	83,851			14	%
International		11,786			17,228			14,185			12,967			10,365			-12	%

Total non-GAAP net revenue	$	85,221		$	85,576		$	73,771		$	86,451		$	94,216			11	%

% United States		86	%		80	%		81	%		85	%		89	%
% International		14	%		20	%		19	%		15	%		11	%

SILVER SPRING NETWORKS, INC.

UNAUDITED SUPPLEMENTAL FINANCIAL INFORMATION

(in thousands, except percentages and headcount)


	Q3			Q4			Q1			Q2			Q3			*YoY%*
	CY12			CY12			CY13			CY13			CY13			*Change*
CASH FLOW DATA
Operating cash flow	$	(10,199	)	$	14,002		$	(8,913	)	$	(14,048	)	$	21,131			307	%
Operating cash flow - TTM		(43,330	)		(24,278	)		(19,847	)		(19,158	)		12,172			128	%

BALANCE SHEET DATA
Cash, cash equivalents and short-term investments	$	59,624		$	72,646		$	142,354		$	124,970		$	143,431			141	%
Deferred net revenue
End of quarter		472,551			508,056			528,176			510,722			532,546
Less: Beginning of quarter		(426,958	)		(472,551	)		(508,056	)		(528,176	)		(510,722	)
Foreign currency translation adjustment		—			—			(52	)		395			(89	)

Change in deferred net revenue, net of foreign currency translation	$	45,593		$	35,505		$	20,068		$	(17,059	)	$	21,735

Deferred cost of revenue
End of quarter		227,170			245,163			260,572			268,236			275,101
Less: Beginning of quarter		(203,312	)		(227,170	)		(245,163	)		(260,572	)		(268,236	)
Foreign currency translation adjustment		—			—			14			99			(23	)

Change in deferred cost of revenue, net of foreign currency translation	$	23,858		$	17,993		$	15,423		$	7,763		$	6,842

STOCK-BASED COMPENSATION
Cost of goods sold	$	521		$	560		$	6,724		$	2,531		$	1,376			164	%
Research and development		876			934			9,544			3,607			1,905			117	%
Sales and marketing		632			550			3,346			1,526			950			50	%
General and administrative		1,188			1,225			7,054			3,181			2,759			132	%

Total	$	3,217		$	3,269		$	26,668		$	10,845		$	6,990			117	%

EMPLOYEES		570			566			572			589			608			7	%

HOMES & BUSINESSES
Cumulative network endpoints delivered*		14,967			15,781			16,507			17,008			17,509			17	%

*	Endpoints refer to communication modules in electric meters

SILVER SPRING NETWORKS

UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES

(In thousands, except per share data and percentages)


	Q3			Q4			Q1			Q2			Q3			YOY %
	CY12			CY12			CY13			CY13			CY13			Change
QUARTERLY RECONCILIATION OF RESULTS

Net revenue
GAAP net revenue	$	39,628		$	50,071		$	53,703		$	103,510		$	72,481			83	%
Change in deferred revenue, net of foreign currency translation		45,593			35,505			20,068			(17,059	)		21,735

Non-GAAP net revenue	$	85,221		$	85,576		$	73,771		$	86,451		$	94,216			11	%

Gross profit
GAAP gross profit	$	4,434		$	10,548		$	10,134		$	48,250		$	23,226			424	%
Change in deferred revenue, net of foreign currency translation		45,593			35,505			20,068			(17,059	)		21,735
Change in deferred cost of revenue, net of foreign currency translation		(23,858	)		(17,993	)		(15,423	)		(7,763	)		(6,842	)
Amortization of intangibles in cost of revenue		48			48			48			48			48
Stock-based compensation		521			560			6,724			2,531			1,376

Non-GAAP gross profit	$	26,738		$	28,668		$	21,551		$	26,007		$	39,543			48	%

GAAP gross margin % (as a % of GAAP net revenue)		11	%		21	%		19	%		47	%		32	%
Non-GAAP gross margin % (as a % of non-GAAP net revenue)		31	%		34	%		29	%		30	%		42	%

Operating income (loss)
GAAP operating income (loss)	$	(24,467	)	$	(20,187	)	$	(39,574	)	$	9,982		$	(12,115	)		50	%
Change in deferred revenue, net of foreign currency translation		45,593			35,505			20,068			(17,059	)		21,735
Change in deferred cost of revenue, net of foreign currency translation		(23,858	)		(17,993	)		(15,423	)		(7,763	)		(6,842	)
Amortization of intangibles in cost of revenue		48			48			48			48			48
Stock-based compensation		3,217			3,269			26,668			10,845			6,990

Non-GAAP operating income (loss)	$	533		$	642		$	(8,213	)	$	(3,947	)	$	9,816			1742	%

GAAP operating margin % (as a % of GAAP revenue)		-62	%		-40	%		-74	%		10	%		-17	%
Non-GAAP operating margin % (as a % of non-GAAP net revenue)		1	%		1	%		-11	%		-5	%		10	%

Adjusted EBITDA
GAAP net income (loss)	$	(26,868	)	$	(21,010	)	$	(64,366	)	$	9,470		$	(12,269	)		54	%
Change in deferred revenue, net of foreign currency translation		45,593			35,505			20,068			(17,059	)		21,735
Change in deferred cost of revenue, net of foreign currency translation		(23,858	)		(17,993	)		(15,423	)		(7,763	)		(6,842	)
Other (income) expense, net		2,028			902			24,728			184			54
Provision for income taxes		373			(79	)		64			328			100
Depreciation and amortization		1,815			1,796			1,677			1,689			1,624
Stock-based compensation		3,217			3,269			26,668			10,845			6,990

Adjusted EBITDA	$	2,300		$	2,390		$	(6,584	)	$	(2,306	)	$	11,392			395	%

Net income (loss)
GAAP net income (loss)	$	(26,868	)	$	(21,010	)	$	(64,366	)	$	9,470		$	(12,269	)		54	%
Change in deferred revenue, net of foreign currency translation		45,593			35,505			20,068			(17,059	)		21,735
Change in deferred cost of revenue, net of foreign currency translation		(23,858	)		(17,993	)		(15,423	)		(7,763	)		(6,842	)
Amortization of intangibles in cost of revenue		48			48			48			48			48
Convertible notes accretion / interest		1,069			1,081			935			—			—
Conversion of promissory notes and remeasurement of warrants and derivatives		830			(308	)		23,676			—			—
Stock-based compensation		3,217			3,269			26,668			10,845			6,990

Non-GAAP net income (loss)	$	31		$	592		$	(8,394	)	$	(4,459	)	$	9,662			31068	%

GAAP net margin % (as a % of GAAP revenue)		-68	%		-42	%		-120	%		9	%		-17	%
Non-GAAP net margin % (as a % of non-GAAP net revenue)		0	%		1	%		-11	%		-5	%		10	%
GAAP income (loss) per share
Basic	$	(7.30	)	$	(5.65	)	$	(16.18	)*	$	0.20		$	(0.26	)
Diluted	$	(7.30	)	$	(5.65	)	$	(16.18	)*	$	0.19		$	(0.26	)

Weighted average number of shares used in computation
Basic		3,682			3,720			10,469			46,599			46,729
Diluted		3,682			3,720			10,469			48,995			46,729
* GAAP income (loss) per share is based on net loss attributable to common stockholders

Non-GAAP income (loss) per share
Basic	$	0.01		$	0.16		$	(0.80	)	$	(0.10	)	$	0.21
Diluted	$	0.00		$	0.02		$	(0.80	)	$	(0.10	)	$	0.19
Weighted average number of shares used in computation
Basic		3,682			3,720			10,469			46,599			46,729
Diluted		29,556			29,394			10,469			46,599			49,620

SILVER SPRING NETWORKS INC - FORM 8-K - EX-99.1 - October 30, 2013

Attached files

SILVER SPRING NETWORKS INC Reports