Silver Spring Networks Reports Solid Third Quarter Financial Results

Silver Spring Networks, Inc. (NYSE: SSNI) today announced preliminary unaudited financial results for its third quarter of 2014.

Q3 2014 Results

  • Non-GAAP revenue was $70.9 million.
  • GAAP revenue was $28.0 million.
  • Non-GAAP gross margin was 30.8%.
  • GAAP gross margin was 4.6%.
  • Non-GAAP net loss was $7.0 million.
  • GAAP net loss was $37.3 million.
  • Cash and investments of $110.5 million and no debt.

“I am pleased with our execution this quarter and the terrific progress we made to improve our ongoing performance,” said Scott Lang, Chairman, President, and Chief Executive Officer. “We had some important wins this quarter that expanded our addressable markets, drove record backlog and extended our position as a market leader.”

Business Highlights (through November 5, 2014)

  • 19.7 million cumulative network endpoints delivered through Q3’14, up 13% from a year ago.
  • New solution non-GAAP revenue (distribution automation, demand side management and street lights) of $9.6 million – up 18% year-over-year.
  • Recurring managed and SaaS non-GAAP revenue of $10.7 million – up 9% year-over year.
  • Consumers Energy to deploy the SilverLink platform for their consumer engagement and energy efficiency program to its 2.7 million customers.
  • City Utilities of Springfield to leverage multi-application network for smart electricity, gas and water system.
  • Florida Power and Light expands street light deployment with Streetlight.Vision software to manage their networked street lights.
  • Launched next-generation two-way water solution – provides customers near real-time understanding of their water usage.

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, 2014 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 November 19, 2014 and can be accessed at 877-660-6853 (domestic) or 201-612-7415 (international) passcode 13592950. 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 19.5 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. 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 per endpoint, cost of non-GAAP revenue, non-GAAP gross profit (loss), non-GAAP operating income (loss), non-GAAP net income (loss), non-GAAP earnings (loss) per share, and 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), 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 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 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 non-GAAP recurring revenue per cumulative endpoints deployed 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 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 and cost of non-GAAP revenue 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 income (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.

Total backlog represents future product and service billings that we expect to generate pursuant to contracts that we have entered into with our utility customers and meter manufacturers. Total backlog includes order backlog, which represents future billings for open purchase orders and other firm commitments.

Forward-Looking Statements

This press release contains forward-looking statements that involve risks and uncertainties. These forward-looking statements include statements regarding the momentum in Silver Spring Networks’ business, future growth, and 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 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; 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 5, 2014. 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.

SILVER SPRING NETWORKS
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
Three Months EndedNine Months Ended
September 30,September 30,
2014201320142013
Revenue:
Product revenue $ 16,321 $ 56,650 $ 69,299 $ 146,366
Service revenue 11,720 15,831 44,578 83,328
Net revenue28,04172,481113,877229,694
Cost of revenue:
Product cost of revenue 10,791 34,844 42,120 100,152
Service cost of revenue 15,947 14,411 45,598 47,932
Total cost of revenue26,73849,25587,718148,084
Gross profit1,30323,22626,15981,610
Operating expenses:

Restructuring and other

2,005 1,905
Research and development 16,986 16,980 52,053 60,851
Sales and marketing 10,131 7,424 28,208 26,514
General and administrative 9,601 10,937 33,256 35,952
Total operating expenses38,72335,341115,422123,317
Operating loss(37,420)(12,115)(89,263)(41,707)
Other income (expense)
Interest income (expense), net 7 (54 ) 55 (1,290 )
Conversion of promissory notes and remeasurement of warrants and derivatives (23,676 )
Other income (expense), net7(54)55(24,966)
Loss before provision for income taxes (37,413 ) (12,169 ) (89,208 ) (66,673 )
(Benefit) provision for income taxes (140 ) 100 463 492
Net loss(37,273)(12,269)(89,671)(67,165)
Deemed dividend to convertible preferred stockholders (105,000 )
Net loss attributable to common stockholders$(37,273)$(12,269)$(89,671)$(172,165)
Net loss per share
Basic net income (loss) per share attributable to common stockholders$(0.77)$(0.26)$(1.86)$(4.96)
Diluted net income (loss) per share attributable to common stockholders$(0.77)$(0.26)$(1.86)$(4.96)
Weighted average number of shares used in computation
Basic 48,551 46,729 48,189 34,733
Diluted 48,551 46,729 48,189 34,733
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 EndedNine Months Ended
September 30,September 30,
2014201320142013
Net loss$(37,273)$(12,269)$(89,671)$(67,165)
Change in deferred revenue, net of foreign currency translation 42,847 21,735 92,465 24,744
Change in deferred cost of revenue, net of foreign currency translation (25,244 ) (6,842 ) (62,302 ) (30,028 )
Amortization of intangibles in cost of revenue 299 48 395 144
Conversion of promissory notes and remeasurement of warrants and derivatives 23,676
Convertible notes accretion / interest 935
Stock-based compensation 10,476 6,990 31,470 44,503

Restructuring and other

1,905 1,905
Legal settlements (17 ) (117 )
Non-GAAP net income (loss)$(7,007)$9,662$(25,855)$(3,191)
Non-GAAP income (loss) per share
Basic$(0.14)$0.21$(0.54)$(0.09)
Diluted$(0.14)$0.19$(0.54)$(0.09)
Weighted average number of shares used in computation
Basic 48,551 46,729 48,189 34,733
Diluted 48,551 49,620 48,189 34,733
SILVER SPRING NETWORKS, INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except par values)
September 30,December 31,
20142013 (a)
ASSETS
Current assets:
Cash and cash equivalents $ 50,114 $ 82,596
Short-term investments 60,352 63,256
Accounts receivable 67,929 69,724
Inventory 4,511 4,350
Deferred cost of revenue 25,700 37,460
Prepaid expenses and other current assets 7,372 4,758
Total current assets 215,978 262,144
Property and equipment, net 12,381 12,364
Deferred cost of revenue, non-current 312,933 238,663
Deferred tax assets, non-current 1,232 1,613
Other long-term assets 10,403 1,567
TOTAL ASSETS$552,927$516,351
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable $ 28,412 $ 31,317
Accrued liabilities 27,829 21,282
Deferred revenue 74,380 111,293
Current portion of capital lease obligations 1,399 1,615
Deferred tax liability 1,206 1,176
Total current liabilities 133,226 166,683
Deferred revenue, non-current 543,036 413,360
Other liabilities 15,709 14,426
Stockholders’ deficit:
Preferred stock, $0.001 par value, 10,000 shares authorized and no shares issued or outstanding as of September 30, 2014 and December 31, 2013
Common stock and additional paid-in capital, $0.001 par value; 1,000,000 shares authorized, 48,734 and 47,384 shares issued and outstanding as of September 30, 2014 and December 31, 2013 567,824 539,013
Accumulated other comprehensive income (loss) 64 130
Accumulated deficit (706,932 ) (617,261 )
Total stockholders’ deficit(139,044)(78,118)
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT$552,927$516,351

(a) Derived from audited consolidated financial statements

SILVER SPRING NETWORKS
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
(In thousands)
Three Months EndedNine Months Ended
September 30,September 30,
2014201320142013
OPERATING ACTIVITIES
Net loss$(37,273)$(12,269)$(89,671)$(67,165)
Adjustments to reconcile net loss to net cash provided (used) in operating activities:
Restructuring and other 1,072 1,072
Depreciation and amortization 1,771 1,624 4,704 4,990
Stock-based compensation 10,476 6,990 31,470 44,503
Conversion of promissory notes and remeasurement of warrants and derivatives 23,676
Other non-cash adjustments 236 113 1,262 1,565
Changes in assets and liabilities:
Accounts receivable (9,791 ) 10,057 1,795 (3,126 )
Inventory (12 ) 5,541 (779 ) 534
Prepaid expenses and other current assets 504 939 (2,775 ) (2,248 )
Deferred cost of revenue (25,175 ) (6,865 ) (62,510 ) (29,938 )
Other long-term assets 420 1,484 185 3,846
Accounts payable 237 (9,119 ) (3,165 ) (1,746 )
Accrued liabilities 963 2,917 1,333 2,379
Customer deposits (71 ) (1 ) 33 (247 )
Deferred revenue 42,310 21,824 92,413 24,490
Other liabilities (1,401 ) (2,104 ) 2,244 (3,343 )
Net cash provided (used) in operating activities(15,734)21,131(22,389)(1,830)
INVESTING ACTIVITIES
Acquisition of business, net of cash received, and purchase of intangible assets

(8,750 )

Proceeds from sales and maturity of short-term investments 7,151 49,209
Purchase of short-term investments (7,120 ) (61,451 ) (46,621 ) (61,451 )
Purchases of property and equipment (524 ) (881 ) (4,222 ) (3,343 )
Net cash used in investing activities(493)(62,332)(10,384)(64,794)
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 (397 ) (541 ) (1,145 ) (1,485 )
Proceeds from issuance of common stock, net of repurchases 1,988 388 6,735 578
Taxes paid related to net share settlement of equity awards (36 ) (1,518 ) (5,299 ) (7,722 )
Net cash provided by (used in) financing activities1,555(1,904)29175,843
Net increase in cash and cash equivalents (14,672 ) (43,105 ) (32,482 ) 9,219
Cash and cash equivalents - beginning of period 64,786 124,970 82,596 72,646
Cash and cash equivalents - end of period$50,114$81,865$50,114$81,865
SILVER SPRING NETWORKS, INC.
UNAUDITED RECONCILIATION OF NET REVENUE BETWEEN GAAP AND NON-GAAP
(in thousands, except percentages)
Q3Q4Q1Q2Q3YoY%

TYPE

CY13CY13CY14CY14CY14Change
GAAP net revenue
Product net revenue $ 56,650 $ 77,944 $ 28,227 $ 24,751 $ 16,321 -71

%

Service net revenue
Managed services and SaaS 9,835 8,159 7,797 8,301 7,272 -26%
Professional services 5,996 11,061 8,205 8,555 4,448 -26%
Total service net revenue 15,831 19,220 16,002 16,856 11,720 -26%
Total GAAP net revenue $ 72,481 $ 97,164 $ 44,229 $ 41,607 $ 28,041-61%
% Product 78 % 80 % 64 % 59 % 58 %
% Service 22 % 20 % 36 % 41 % 42 %
Change in deferred net revenue
Change in deferred product revenue $ 16,017 $ (7,054 ) $ 24,006 $ 17,438 $ 33,238
Change in deferred service revenue
Managed services and SaaS 16 1,000 2,219 2,079 3,418
Professional services 5,702 (1,462 ) 1,396 2,480 6,191
Total change in deferred service revenue 5,718 (462 ) 3,615 4,559 9,609
Total change in deferred revenue $ 21,735 $ (7,516 ) $ 27,621 $ 21,997 $ 42,847
Non-GAAP revenue
Product net revenue $ 72,667 $ 70,890 $ 52,233

$

42,189

$

49,559

-32%
Service net revenue
Managed services and SaaS 9,851 9,159 10,016 10,380 10,690 9%
Professional services 11,698 9,599 9,601 11,035 10,639 -9%
Total service net revenue 21,549 18,758 19,617 21,415 21,329 -1%
Total non-GAAP net revenue$94,216$89,648$71,850$63,604$70,888-25%
% Product 77 % 79 % 73 % 66 % 70 %
% Service 23 % 21 % 27 % 34 % 30 %

SOLUTION

GAAP net revenue
Advanced metering infrastructure $ 66,774 $ 91,842 $ 40,023 $ 33,729 $ 21,710 -67%
New solutions 5,707 5,322 4,206 7,878 6,331 11%
Total GAAP net revenue$72,481$97,164$44,229$41,607$28,041-61%
% Advanced metering infrastructure 92 % 95 % 90 % 81 % 77 %
% New solutions 8 % 5 % 10 % 19 % 23 %
Change in deferred net revenue
Advanced metering infrastructure $ 19,244 $ (9,532 ) $ 22,422 $ 17,994 $ 39,535
New solutions 2,491 2,016 5,199 4,003 3,312
Total change in deferred net revenue $ 21,735 $ (7,516 ) $ 27,621 $ 21,997 $ 42,847
Non-GAAP net revenue
Advanced metering infrastructure $ 86,018 $ 82,310 $ 62,445 $ 51,723 $ 61,245 -29%
New solutions 8,198 7,338 9,405 11,881 9,643 18%
Total Non-GAAP net revenue$94,216$89,648$71,850$63,604$70,888-25%
% Advanced metering infrastructure 91 % 92 % 87 % 81 % 86 %
% New solutions 9 % 8 % 13 % 19 % 14 %

GEOGRAPHY

GAAP net revenue
United States $ 68,562 $ 71,602 $ 21,843 $ 34,251 $ 15,700 -77%
International 3,919 25,562 22,386 7,356 12,341 215%
Total GAAP net revenue$72,481$97,164$44,229$41,607$28,041-61%
% United States95%74%49%82%56%
% International5%26%51%18%44%
Change in deferred net revenue
United States $ 15,289 $ 1,369 $ 41,256 $ 22,799 $ 48,248
International 6,446 (8,885 ) (13,635 ) (802 ) (5,401 )
Total change in deferred net revenue $ 21,735 $ (7,516 ) $ 27,621 $ 21,997 $ 42,847
Non-GAAP net revenue
United States $ 83,851 $ 72,971 $ 63,099 $ 57,050 $ 63,948 -24%
International 10,365 16,677 8,751 6,554 6,940 -33%
Total non-GAAP net revenue$94,216$89,648$71,850$63,604$70,888-25%
% United States89%81%88%90%90%
% International11%19%12%10%10%
SILVER SPRING NETWORKS, INC.
UNAUDITED SUPPLEMENTAL FINANCIAL INFORMATION
(in thousands, except percentages and headcount)
Q3Q4Q1Q2Q3YoY%
CASH FLOW DATACY13CY13CY14CY14CY14Change
Operating cash flow $ 21,131 $ 1,844 $ (3,260 ) $ (3,395 ) $ (15,734 ) -174%
Operating cash flow - TTM 12,172 14 5,667 16,320 (20,545 ) -269%
BALANCE SHEET DATA
Cash, cash equivalents and short-term investments $ 143,431 $ 145,852 $ 140,495 $ 125,321 $ 110,466 -23%
Deferred net revenue
End of quarter 532,546 524,653 552,328 575,106 617,416
Less: Beginning of quarter (510,722 ) (532,546 ) (524,653 ) (552,328 ) (575,106 )
Foreign currency translation adjustment and other (89 ) 377 (54 ) (781 ) 537
Change in deferred net revenue, net of foreign currency translation $ 21,735 $ (7,516 ) $ 27,621 $ 21,997 $ 42,847
Deferred cost of revenue
End of quarter 275,101 276,123 $ 296,489 $ 313,458 $ 338,633
Less: Beginning of quarter (268,236 ) (275,101 ) (276,123 ) (296,489 ) (313,458 )
Foreign currency translation adjustment (23 ) (11 ) (109 ) (168 ) 69
Change in deferred cost of revenue, net of foreign currency translation $ 6,842 $ 1,011 $ 20,257 $ 16,801 $ 25,244
STOCK-BASED COMPENSATION
Cost of goods sold $ 1,376 $ 1,644 $ 2,692 $ 1,930 $ 2,770 101%
Research and development 1,905 2,277 3,155 2,695 3,042 60%
Sales and marketing 950 1,238 2,045 1,754 1,783 88%
General and administrative 2,759 2,842 3,540 3,183 2,881 4%
$ 6,990 $ 8,001 $ 11,432 $ 9,562 $ 10,476 50%
EMPLOYEES 608 602 617 639 589 -3%
HOMES & BUSINESSES
Cumulative network endpoints delivered* 17,509 18,184 18,710 19,081 19,714 13%
*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)
Q3Q4Q1Q2Q3YOY %
QUARTERLY RECONCILIATION OF RESULTSCY13CY13CY14CY14CY14Change
Net revenue
GAAP net revenue$72,481$97,164$44,229$41,607$28,041-61%
Change in deferred revenue, net of foreign currency translation 21,735 (7,516 ) 27,621 21,997 42,847
Non-GAAP net revenue$94,216$89,648$71,850$63,604$70,888-25%
Gross profit
GAAP gross profit$23,226$33,744$11,444$13,412$1,303-94%
Change in deferred revenue, net of foreign currency translation 21,735 (7,516 ) 27,621 21,997 42,847
Change in deferred cost of revenue, net of foreign currency translation (6,842 ) (1,011 ) (20,257 ) (16,801 ) (25,244 )
Amortization of intangibles in cost of revenue 48 48 48 48 182
Stock-based compensation 1,376 1,644 2,692 1,930 2,770
Non-GAAP gross profit$39,543$26,909$21,548$20,586$21,858-45%
GAAP gross margin % (as a % of GAAP net revenue)32%35%26%32%5%
Non-GAAP gross margin % (as a % of non-GAAP net revenue)42%30%30%32%31%
Operating income (loss)
GAAP operating loss$(12,115)$(48)$(27,171)$(24,672)$(37,420)-209%
Change in deferred revenue, net of foreign currency translation 21,735 (7,516 ) 27,621 21,997 42,847
Change in deferred cost of revenue, net of foreign currency translation (6,842 ) (1,011 ) (20,257 ) (16,801 ) (25,244 )
Amortization of intangibles in cost of revenue 48 48 48 48 299
Stock-based compensation 6,990 8,001 11,432 9,562 10,476

Restructuring and other

1,905
Legal settlements 250 (100 ) (17 )
Non-GAAP operating income (loss)$9,816$(276)$(8,327)$(9,966) # $(7,154)-173%
GAAP operating margin % (as a % of GAAP revenue)-17%0%-61%-59%-133%
Non-GAAP operating margin % (as a % of non-GAAP net revenue)10%0%-12%-16%-10%
Adjusted EBITDA
GAAP net income (loss)$(12,269)$358$(27,807)$(24,591)$(37,273)-204%
Change in deferred revenue, net of foreign currency translation 21,735 (7,516 ) 27,621 21,997 42,847
Change in deferred cost of revenue, net of foreign currency translation (6,842 ) (1,011 ) (20,257 ) (16,801 ) (25,244 )
Other (income) expense, net 54 (138 ) 37 (85 ) (7 )
Provision (benefit) for income taxes 100 (268 ) 599 4 (140 )
Depreciation and amortization 1,624 1,656 1,466 1,467 1,771
Stock-based compensation 6,990 8,001 11,432 9,562 10,476

Restructuring and other

1,905
Legal settlements 250 (100 ) (17 )
Adjusted EBITDA$11,392$1,332$(6,909)$(8,547)$(5,682)-150%
Net income (loss)
GAAP net income (loss)$(12,269)$358$(27,807)$(24,591)$(37,273)-204%
Change in deferred revenue, net of foreign currency translation 21,735 (7,516 ) 27,621 21,997 42,847
Change in deferred cost of revenue, net of foreign currency translation (6,842 ) (1,011 ) (20,257 ) (16,801 ) (25,244 )
Amortization of intangibles in cost of revenue 48 48 48 48 299
Stock-based compensation 6,990 8,001 11,432 9,562 10,476

Restructuring and other

1,905
Legal settlements 250 (100 ) (17 )
Non-GAAP net income (loss)$9,662$130$(8,963)$(9,885)$(7,007)-173%
GAAP net margin % (as a % of GAAP revenue) -17 % 0 % -63 % -59 % -133 %
Non-GAAP net margin % (as a % of non-GAAP net revenue) 10 % 0 % -12 % -16 % -10 %
GAAP income (loss) per share
Basic$(0.26)$0.01$(0.58)$(0.51)$(0.77)
Diluted$(0.26)$0.01$(0.58)$(0.51)$(0.77)
Weighted average number of shares used in computation
Basic 46,729 47,198 47,693 48,315 48,551
Diluted 46,729 49,603 47,693 48,315 48,551
Non-GAAP income (loss) per share
Basic$0.21$0.00$(0.19)$(0.20)$(0.14)
Diluted$0.19$0.00$(0.19)$(0.20)$(0.14)
Weighted average number of shares used in computation
Basic 46,729 47,198 47,693 48,315 48,551
Diluted 49,620 49,603 47,693 48,315 48,551

Contacts:

Silver Spring Networks, Inc.
Bonnie Hyun, 650-839-4664
Investor Relations
bhyun@silverspringnet.com
Noel Hartzell, 650-839-4184
Global Communications
nhartzell@silverspringnet.com

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