Silver Spring Networks Reports Second Quarter 2013 Financial Results
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Silver Spring Networks Reports Second Quarter 2013 Financial Results
Q2 Non-GAAP Revenue Growth of 17%
Q2 Non-GAAP New Solution Revenue Growth of 58%
Silver Spring Networks, Inc. (NYSE: SSNI) today announced preliminary
unaudited financial results for its second quarter ended June 30, 2013.
Non-GAAP revenue (billings) for the second quarter was $86.5 million, up
17% year-over-year, driven by growth in service and product revenue.
GAAP revenue was $103.5 million as compared to $51.6 million a year ago.
Non-GAAP gross profit margin was 30.1%, up sequentially from 29.2% in Q1
and down as expected when compared to 33.6% a year ago due to changes in
non-GAAP revenue mix. GAAP gross profit margin was 46.6% as compared to
12.9% a year ago.
Non-GAAP net loss was $4.5 million as compared with a non-GAAP net loss
of $1.1 million a year ago. GAAP net income was $9.5 million as compared
with a GAAP net loss of $23.4 million a year ago.
Silver Spring ended the quarter with $125 million in cash.
“We had a strong second quarter with 17% growth year-over-year and
delivered innovative new products,” said Scott Lang, Chairman,
President, and Chief Executive Officer. “We continue to execute on our
technology roadmap delivering solutions to our customers that enable
them to unlock even greater value from our leading networking platform.”
Business Highlights (through August 1, 2013)
17 million cumulative network endpoints delivered from inception
through June 30, 2013 – up 22% from a year ago.
SmartCo agreement to deploy networking platform in New Zealand
benefits for lines companies, energy retailers and consumers in a
disaggregated energy market.
Snohomish County Public Utility District contract for distribution
automation solution.
Modesto Irrigation District selects advanced Conservation Voltage
Reduction solution from Silver Spring and DVI, a subsidiary of
Oklahoma Gas and Electric expands demand response program by adding
UtilityIQ Demand Optimizer application to the platform.
EVESA, first customer for new street light solution in the City of
Pacific Gas and Electric renews managed services agreement for five
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 second quarter ended June 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 800-768-6490 (U.S.) or 785-830-7987 (International), access code
8763127 or via webcast at .
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 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 .
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
Non GAAP gross profit (loss) is the difference between non-GAAP revenue
and cost of non-GAAP revenue.
Non-GAAP operating 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 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
specific economic risks in different geographies and
failure to maintain or increase renewals and
increase business fro uncertainties around
continued success in sales growth an lengthy sales
cycles with no assurances that a prospective customer will select Silver
Spring’s p amounts included in backlog may not
result in adverse publicity about, or consumer or
political opposition to, security breaches involving
smart grid
the ability to integrate technology
into third-party devices and Silver Spring’s relationship with
third- execution risks related to new product
introduc the ability to attract and retain
personnel, including members of Silver Spring’ changes
technological changes that make Silver Spring’s products
and servi dependence on a limited number of key
sup competition, particularly from larger companies
with more resources than Silver S risks related to retention of
international bu the ability to acquire
and integr 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 .
All forward-looking statements in this press release reflect Silver
Spring’s expectations as of August 1, 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 June 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 June 30, 2013.
SILVER SPRING NETWORKS
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
Three Months Ended
Six Months Ended
Product revenue
Service revenue
Net revenue
Cost of revenue:
Product cost of revenue
Service cost of revenue
Total cost of revenue
Gross profit
Operating expenses:
Research and development
Sales and marketing
General and administrative
Total operating expenses
Operating income (loss)
Other income (expense)
Interest expense
Conversion of promissory notes and remeasurement of warrants and
derivatives
Other income (expense), net
Income (loss) before provision for income taxes
Provision for income taxes
Net income (loss)
Deemed dividend to convertible preferred stockholders
Net income (loss) attributable to common stockholders
Net income (loss) per share
Basic net income (loss) per share attributable to common
stockholders
Diluted net income (loss) per share attributable to common
stockholders
Weighted average number of shares used in computation
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
Net income (loss)
Change in deferred revenue, net of foreign currency translation
Change in deferred cost of revenue, net of foreign currency
translation
Amortization of intangibles in cost of revenue
Conversion of promissory notes and remeasurement of warrants and
derivatives
Convertible notes accretion / interest
Stock-based compensation
Non-GAAP net income (loss)
Non-GAAP loss per share
Basic & diluted
Weighted average number of shares used in computation
Basic & diluted
SILVER SPRING NETWORKS, INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except par values)
December 31,
Current assets:
Cash and cash equivalents
Accounts receivable
Deferred cost of revenue
Prepaid expenses and other current assets
Total current assets
Property and equipment, net
Deferred cost of revenue, non-current
Deferred tax assets, non-current
Other long-term assets
TOTAL ASSETS
LIABILITIES, CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable
Accrued liabilities
Deferred revenue
Current portion of capital lease obligations
Deferred tax liability
Total current liabilities
Deferred revenue, non-current
Preferred stock warrant liability
Convertible promissory notes and embedded derivatives
Other liabilities
Convertible preferred stock:
$0.001 no shares authorized, issued and outstanding, and
aggregate liquidation preference of $0 as of June 30,
shares authorized, 22,366 shares issued and outstanding, and
aggregate liquidation preference of $381,338 as of December 31, 2012
Stockholders’ equity (deficit):
Preferred stock, $0.001 par value, 10,000 shares authorized and no
shares issued or outstanding as of June 30, 2013; no shares
authorized, issued or outstanding,as of December 31, 2012
Common stock, $0.001 1,000,000 shares authorized, 46,638
shares issued and outstanding as of June 30,
authorized and 3,764 shares issued and outstanding as of December
Additional paid-in capital
Accumulated other comprehensive income (loss)
Accumulated deficit
Total stockholders’ deficit
TOTAL LIABILITIES, CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS'
(a) Derived from audited consolidated financial statements
SILVER SPRING NETWORKS
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
(In thousands)
Three Months Ended
Six Months Ended
OPERATING ACTIVITIES
Net income (loss)
Adjustments to reconcile net loss to net cash used in operating
activities:
Depreciation and amortization
Stock-based compensation
Conversion of promissory notes and remeasurement of warrants and
derivatives
Other non-cash adjustments
Changes in assets and liabilities:
Accounts receivable
Prepaid expenses and other current assets
Deferred cost of revenue
Other assets
Accounts payable
Accrued liabilities
Customer deposits
Deferred revenue
Other liabilities
Net cash used in operating activities
INVESTING ACTIVITIES
Decrease in restricted cash
Purchases of property and equipment
Net cash used in investing activities
FINANCING ACTIVITIES
Payment upon termination of preferred stock warrants of a related
Proceeds from initial public offering, net of offering costs
Proceeds from private placement of common stock with a related party
Payments on capital lease obligations
Proceeds from sale-leaseback transaction
Proceeds from issuance of convertible notes, net of paid issuance
Proceeds from issuance of common stock, net of repurchases
Taxes paid related to net share settlement of equity awards
Net cash provided by financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents - beginning of period
Cash and cash equivalents - end of period
SILVER SPRING NETWORKS, INC.
UNAUDITED RECONCILIATION OF NET REVENUE BETWEEN GAAP AND NON-GAAP
(in thousands, except percentages)
GAAP net revenue
Product net revenue
Service net revenue
Managed services and SaaS
Professional
Total service net revenue
Total GAAP net revenue
Change in deferred net revenue
Change in deferred product revenue
Change in deferred service revenue
Managed services and SaaS
Professional
Total change in deferred service revenue
Total change in deferred revenue
Non-GAAP revenue
Product net revenue
Service net revenue
Managed services and SaaS
Professional
Total service net revenue
Total non-GAAP net revenue
GAAP net revenue
Advanced metering infrastructure
Distribution automation and demand side management
Total GAAP net revenue
% Advanced metering infrastructure
% Distribution automation and demand side management
Change in deferred net revenue
Advanced metering infrastructure
Distribution automation and demand side management
Total change in deferred net revenue
Non-GAAP net revenue
Advanced metering infrastructure
Distribution automation and demand side management
Total Non-GAAP net revenue
% Advanced metering infrastructure
% Distribution automation and demand side management
GAAP net revenue
United States
International
Total GAAP net revenue
% United States
% International
Change in deferred net revenue
United States
International
Total change in deferred net revenue
Non-GAAP net revenue
United States
International
Total non-GAAP net revenue
% United States
% International
SILVER SPRING NETWORKS, INC.
UNAUDITED SUPPLEMENTAL FINANCIAL INFORMATION
(in thousands, except percentages and headcount)
CASH FLOW DATA
Operating cash flow
Operating cash flow - TTM
BALANCE SHEET DATA
Cash, cash equivalents and short-term investments
Deferred net revenue
End of quarter
Less: Beginning of quarter
Foreign currency translation adjustment
Change in deferred net revenue, net of foreign currency translation
Deferred cost of revenue
End of quarter
Less: Beginning of quarter
Foreign currency translation adjustment
Change in deferred cost of revenue, net of foreign currency
translation
STOCK-BASED COMPENSATION
Cost of goods sold
Research and development
Sales and marketing
General and administrative
HOMES & BUSINESSES
Cumulative network endpoints delivered*
*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)
QUARTERLY RECONCILIATION OF RESULTS
Net revenue
GAAP net revenue
Change in deferred revenue, net of foreign currency translation
Non-GAAP net revenue
Gross profit
GAAP gross profit
Change in deferred revenue, net of foreign currency translation
Change in deferred cost of revenue, net of foreign currency
translation
Amortization of intangibles in cost of revenue
Stock-based compensation
Non-GAAP gross profit
GAAP gross margin % (as a % of GAAP net revenue)
Non-GAAP gross margin % (as a % of non-GAAP net revenue)
Operating income (loss)
GAAP operating income (loss)
Change in deferred revenue, net of foreign currency translation
Change in deferred cost of revenue, net of foreign currency
translation
Amortization of intangibles in cost of revenue
Stock-based compensation
Non-GAAP operating income (loss)
GAAP operating margin % (as a % of GAAP revenue)
Non-GAAP operating margin % (as a % of non-GAAP net revenue)
Adjusted EBITDA
GAAP net income (loss)
Change in deferred revenue, net of foreign currency translation
Change in deferred cost of revenue, net of foreign currency
translation
Other (income) expense, net
Provision for income taxes
Depreciation and amortization
Stock-based compensation
Adjusted EBITDA
Net income (loss)
GAAP net income (loss)
Change in deferred revenue, net of foreign currency translation
Change in deferred cost of revenue, net of foreign currency
translation
Amortization of intangibles in cost of revenue
Convertible notes accretion / interest
Conversion of promissory notes and remeasurement of warrants and
derivatives
Stock-based compensation
Non-GAAP net income (loss)
GAAP net margin % (as a % of GAAP revenue)
Non-GAAP net margin % (as a % of non-GAAP net revenue)
GAAP income (loss) per share
Weighted average number of shares used in computation
* GAAP income (loss) per share is based on net loss
attributable to common stockholders
Non-GAAP income (loss) per share
Weighted average number of shares used in computation
Silver Spring Networks, Inc.Tricia Gugler, 650-839-4504Investor
RelationsNoel
Hartzell, 650-839-4184Global Communications
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