SAN JOSE, Calif.--(BUSINESS WIRE)--Silver Spring Networks, Inc. (NYSE: SSNI) today announced financial results for its third quarter ended September 30, 2016.
Third Quarter Results (all comparisons made are against the prior year period, unless otherwise stated):
GAAP Results:
- Revenue was $74.2 million, up 7%.
- Gross margin was 38.1%, versus 47.5%.
- Net loss was ($15.2) million versus a net loss of ($0.6) million.
- Net loss per diluted share was ($0.29) versus a ($0.01) net loss per share.
- $113.4 million in cash, cash equivalents and short-term investments at the end of the quarter, versus $121.9 million.
Non-GAAP Metrics:
- Billings1 of $76.1 million, up 2%.
- Gross margin on billings2 of 54.9%, versus 44.1%.
- Non-GAAP net income of $6.9 million versus $4.9 million.
- Non-GAAP income per fully-diluted share of $0.13, versus $0.10.
“We had another strong quarter, expanding our footprint by approximately 569,000 endpoints, commencing a large smart grid project, and winning additional awards since our last report,” said Mike Bell, President and CEO, Silver Spring Networks. “Our third quarter results, and our high-profile awards in 2016, demonstrate the strong position we have built in our smart grid and smart city markets. We see significant potential for continued innovation and growth in our core markets, and a great opportunity to extend Silver Spring’s platform and solutions into the broader Internet of Important Things™ opportunity.”
1Billings previously reported as non-GAAP revenue.
2Gross margin on billings previously reported as non-GAAP gross margin.
Business Highlights (through November 3, 2016, unless otherwise stated):
- Entered a new collaboration agreement with Singapore Power to expand its AMI deployment by an additional 200,000 electric customers, and to open the platform to other third-party IoT devices in support of Singapore’s “Smart Nation” initiative.
- Selected by CPFL Energia to significantly expand its Distribution Automation deployment across 100,000 square kilometers of its service territory over 350 cities in the state of São Paulo.
- Selected by Baltimore Gas and Electric for a Distribution Automation program, an extension of its existing smart grid investment, to further improve grid reliability and efficiency with connectivity solutions for BGE’s re-closers throughout their entire grid.
- Selected by the City of Stockholm to deploy Starfish™ Network-as-a-Service to upgrade aging lighting infrastructure with intelligent street light controls in the capital of Sweden.
- Named a Visionary in the Gartner Magic Quadrant1 for Managed Machine-to-Machine Services, Worldwide.
- Received prestigious industry awards, including Frost & Sullivan’s Asia Pacific Smart Grid Service Provider of the Year Award, and the CTIA Emerging Technology Award for Industrial IoT. Our customer CESC of India won the 2016 Smart Grid Project of the Year award at the Asian Power Awards for its program with Silver Spring Networks.
- Over 24.9 million cumulative network endpoints delivered from inception through September 30, 2016, up 12% from a year ago.
Conference Call
Silver Spring will host a conference call today at 2:00 pm PT (5:00 pm ET) to review its results for the third quarter ended September 30, 2016 and its outlook for the future. During the course of this call, Silver Spring may also disclose material developments affecting its business and/or financial performance. Listeners may access the conference call live at 877-407-0832 (U.S.) or 201-689-8433 (International) or via webcast at http://ir.ssni.com. A dial-in replay of the conference call will be available until December 15, 2016 and can be accessed at 877-660-6853 (domestic) or 201-612-7415 (international) passcode 13648481. An audio webcast replay of the conference call will be available for one year at http://ir.ssni.com.
About Silver Spring Networks
Silver Spring Networks enables the Internet of Important Things™ by reliably and securely connecting things that matter. Cities, utilities, and companies on five continents use the company’s cost-effective, high-performance IoT network and data platform to operate more efficiently, get greener, and enable innovative services that can improve the lives of millions of people. With more than 24.9 million devices delivered, Silver Spring provides a proven standards-based platform safeguarded with military grade security. Silver Spring Networks’ customers include Baltimore Gas & Electric, CitiPower & Powercor, ComEd, Consolidated Edison, CPS Energy, Florida Power & Light, Pacific Gas & Electric, Pepco Holdings, and Singapore Power. Silver Spring has also deployed networks in Smart Cities including Copenhagen, Glasgow, Paris, Providence, and Stockholm. To learn more, visit www.ssni.com.
Non-GAAP and Other Financial Metrics
Silver Spring supplements the results of operations presented in accordance with generally accepted accounting principles, or GAAP, with certain non-GAAP metrics. Silver Spring manages its business, makes planning decisions, evaluates its performance and allocates resources by assessing non-GAAP metrics such as billings, recurring billings, recurring billings per endpoint, cost of billings, gross profit (loss) on billings, gross margin on billings, non-GAAP operating expense, non-GAAP operating income (loss), non-GAAP operating margin, non-GAAP income tax provision (benefit), non-GAAP net income (loss), non-GAAP income (loss) per share, adjusted EBITDA, and total backlog. Silver Spring believes that these non-GAAP financial metrics, when taken together with the corresponding GAAP financial measures, offer valuable supplemental information regarding the performance of its business, and will help investors better understand the sales volumes, and gross margin and profitability trends, as well as the cash flow characteristics, of its business. The non-GAAP metrics should not be considered in isolation from, are not a substitute for, and do not purport to be an alternative to, revenue, cost of revenue, gross profit (loss), gross margin, operating expense, operating loss, net income (loss), net income (loss) per share or any other performance measure derived in accordance with GAAP. Silver Spring may consider whether other significant non-recurring items that arise in the future should also be excluded in calculating the non-GAAP financial measures it uses.
Billings represents amounts invoiced for products for which ownership, typically evidenced by title and risk of loss, has transferred or services that have been provided to the customer, and for which payment is expected to be made in accordance with normal payment terms. Billings excludes amounts for undelivered products, services to be performed in the future, and amounts paid or payable to customers. Billings are initially recorded as deferred revenue and are then recognized as revenue when all revenue recognition criteria has been met under Silver Spring’s accounting policies as described in Silver Spring’s filings with the Securities and Exchange Commission. Silver Spring reconciles revenue to billings by adding revenue to the change in deferred revenue in a given period.
Recurring billings are billings from Managed services and SaaS, as well as customer support and other service offerings. Recurring billings are primarily recurring in nature and include managed services, hosting and software maintenance, and support fees, as well as one-time Managed services and SaaS set up fees. Customer support and other services are provided to customers outside of Managed services and SaaS offerings, and are also recurring in nature. Silver Spring reconciles recurring revenue to recurring billings by adding revenue to the change in deferred revenue in a given period.
Recurring billings per endpoint represents a trailing twelve-month recurring billings revenue per cumulative endpoint shipped from inception to date.
Cost of billings represents the cost associated with products and services that have been delivered to the customer, excluding stock-based compensation, amortization of intangibles and acquisition-related charges. Cost of product shipments for which revenue is not recognized in the period incurred is recorded as deferred cost of revenue. Deferred cost of revenue is expensed in the statement of operations as cost of revenue when the corresponding revenue is recognized. Costs related to services are expensed in the period incurred. Silver Spring reconciles cost of revenue to cost of billings by adding cost of revenue and the change in deferred cost of revenue, less stock-based compensation, amortization of intangibles and acquisition-related charges, included in cost of revenue in a given period.
Gross profit (loss) on billings is the difference between billings and cost of billings.
Gross margin on billings is gross profit (loss) on billings as a percentage of billings.
Non-GAAP operating expense consists of research and development, sales and marketing, and general and administrative expenses, excluding amortization of intangible assets, stock-based compensation, acquisition-related charges, restructuring and legal settlements.
Non-GAAP operating income (loss) represents operating income (loss) adjusted for billings and cost of billings and excludes expenses related to the amortization of intangible assets, stock-based compensation, acquisition-related charges, restructuring and legal settlements.
Non-GAAP operating margin is non-GAAP operating income (loss) as a percentage of billings.
Non-GAAP income tax provision (benefit) represents income tax provision (benefit) excluding income tax benefit related to acquisitions.
Non-GAAP net income (loss) represents net income (loss) adjusted for changes in deferred revenue and deferred cost of revenue, and excludes expenses related to the amortization of intangible assets, stock-based compensation, acquisition-related charges, income tax benefit related to acquisitions, restructuring and legal settlements.
Non-GAAP income (loss) per share represents non-GAAP net income (loss) divided by weighted average shares outstanding for the period.
Adjusted EBITDA is net income (loss) adjusted for changes in deferred revenue and deferred cost of revenue, other (income) expense, net, (benefit) provision for income taxes, depreciation and amortization, stock-based compensation, acquisition-related charges, restructuring, legal settlements and certain other items management believes affect the comparability of operating results.
Total backlog represents future product and service billings that Silver Spring expects to generate pursuant to contracts entered into with its utility customers and meter manufacturers. Total backlog includes order backlog, which represents future billings for open purchase orders and other firm commitments.
Forward-Looking Statements
This press release contains forward-looking statements that involve risks and uncertainties. These forward-looking statements include statements regarding the momentum in Silver Spring Networks’ business; customer and industry activity; future deployments; expected benefits from our products; future innovation; future product availability; future growth and market opportunity; and future financial results. Statements including words such as "anticipate", "believe", "estimate" or "expect" and statements in the future tense are forward-looking statements. These forward-looking statements are preliminary estimates and expectations based on current information and are subject to business and economic risks and uncertainties that could cause actual events or actual future results to differ materially from the expectations set forth in the forward-looking statements. Important factors that could cause results to differ materially from the statements herein include: timing around customer decisions and deployment pace; receipt by our customers of required regulatory approvals; dependence on a limited number of customers and key suppliers; general economic risks; specific economic risks in different geographies and among different industries; failure to maintain or increase renewals and increase business from existing customers; uncertainties around continued success in sales growth and market share gains; the expansion of our target markets, including the IoT market; lengthy sales cycles with no assurances that a prospective customer will select Silver Spring’s products and services; amounts included in backlog may not result in billings or revenue; adverse publicity about, or consumer or political opposition to, the smart grid; security breaches involving smart grid products or services; the ability to integrate technology into third-party devices and Silver Spring’s relationship with third-party manufacturers; execution and customer adoption risks related to new product introductions and innovation, including our new fifth generation networking platform and products; the ability to attract and retain personnel, including members of Silver Spring’s management team; changes in strategy; technological changes that make Silver Spring’s products and services less competitive; competition, particularly from larger companies with more resources than Silver Spring; international business uncertainties; the ability to acquire and integrate other businesses; and other risk factors set forth from time to time in Silver Spring’s filings with the SEC, copies of which are available free of charge at the SEC’s website at www.sec.gov. All forward-looking statements in this press release reflect Silver Spring’s expectations as of November 3, 2016. Silver Spring undertakes no obligation, and expressly disclaims any obligation, to update any forward-looking statements in this press release in light of new information or future events. In addition, the preliminary financial results set forth in this press release are estimates based on information currently available to Silver Spring.
3 Gartner, Magic Quadrant for Managed M2M Services, Worldwide, 17 October 2016
Gartner does not endorse any vendor, product or service depicted in its research publications, and does not advise technology users to select only those vendors with the highest ratings or other designation. Gartner research publications consist of the opinions of Gartner's research organization and should not be construed as statements of fact. Gartner disclaims all warranties, expressed or implied, with respect to this research, including any warranties of merchantability or fitness for a particular purpose.
| SILVER SPRING NETWORKS, INC. | ||||||||||||||||
| UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||||||
| (in thousands, except per share data) | ||||||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2016 | 2015 | 2016 | 2015 | |||||||||||||
| Revenue: | ||||||||||||||||
| Product | $ | 50,463 | $ | 50,093 | $ | 153,232 | $ | 209,839 | ||||||||
| Services | 23,723 | 19,412 | 91,526 | 80,473 | ||||||||||||
| Net revenue | 74,186 | 69,505 | 244,758 | 290,312 | ||||||||||||
| Cost of revenue: | ||||||||||||||||
| Product | 29,249 | 21,377 | 86,668 | 118,527 | ||||||||||||
| Services | 16,695 | 15,141 | 48,308 | 47,387 | ||||||||||||
| Total cost of revenue | 45,944 | 36,518 | 134,976 | 165,914 | ||||||||||||
| Gross profit | 28,242 | 32,987 | 109,782 | 124,398 | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Research and development | 18,165 | 15,837 | 51,583 | 47,581 | ||||||||||||
| Sales and marketing | 10,425 | 7,900 | 28,597 | 26,109 | ||||||||||||
| General and administrative | 11,667 | 9,305 | 33,752 | 31,889 | ||||||||||||
|
Impairment of intangible assets |
2,204 | — | 2,204 | — | ||||||||||||
| Restructuring | — | 339 | 39 | 1,611 | ||||||||||||
| Total operating expenses | 42,461 | 33,381 | 116,175 | 107,190 | ||||||||||||
| Operating (loss) income | (14,219 | ) | (394 | ) | (6,393 | ) | 17,208 | |||||||||
| Other income (loss), net | 113 | (99 | ) | 887 | 263 | |||||||||||
| (Loss) income before income taxes | (14,106 | ) | (493 | ) | (5,506 | ) | 17,471 | |||||||||
| (Provision) benefit for income taxes | (1,143 | ) | (129 | ) | (2,136 | ) | 637 | |||||||||
| Net (loss) income | $ | (15,249 | ) | $ | (622 | ) | $ | (7,642 | ) | $ | 18,108 | |||||
| Net (loss) income per share: | ||||||||||||||||
| Basic | $ | (0.29 | ) | $ | (0.01 | ) | $ | (0.15 | ) | $ | 0.36 | |||||
| Diluted | $ | (0.29 | ) | $ | (0.01 | ) | $ | (0.15 | ) | $ | 0.35 | |||||
| Weighted average shares used to compute net (loss) income per share: | ||||||||||||||||
| Basic | 51,743 | 50,188 | 51,244 | 49,789 | ||||||||||||
| Diluted | 51,743 | 50,188 | 51,244 | 51,257 | ||||||||||||
| Reconciliation of GAAP to non-GAAP results (in thousands, except per share data) | ||||||||||||||||
| The following tables reconcile the Company's net (loss) income and net (loss) income per share as presented in its unaudited Condensed Consolidated Statements of Operations and prepared in accordance with GAAP to its non-GAAP net income and non-GAAP net income per share. | ||||||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2016 | 2015 | 2016 | 2015 | |||||||||||||
| Net (loss) income | $ | (15,249 | ) | $ | (622 | ) | $ | (7,642 | ) | $ | 18,108 | |||||
| Change in deferred revenue, net of foreign currency translation | 1,958 | 5,192 | (27,854 | ) | (83,376 | ) | ||||||||||
| Change in deferred cost of revenue, net of foreign currency translation | 9,404 | (6,712 | ) | 17,728 | 40,292 | |||||||||||
| Amortization of intangibles | 193 | 421 | 989 | 1,252 | ||||||||||||
| Stock-based compensation | 7,898 | 5,853 | 21,839 | 21,537 | ||||||||||||
| Acquisition-related charges | 508 | 559 | 1,534 | 2,045 | ||||||||||||
| Income tax benefit related to Detectent acquisition | — | (114 | ) | — | (1,128 | ) | ||||||||||
| Restructuring | — | 339 | 39 | 1,611 | ||||||||||||
|
Impairment of intangible assets |
2,204 | — | 2,204 | — | ||||||||||||
| Non-GAAP net income | $ | 6,916 | $ | 4,916 | $ | 8,837 | $ | 341 | ||||||||
| Non-GAAP net income per share: | ||||||||||||||||
| Basic | $ | 0.13 | $ | 0.10 | $ | 0.17 | $ | 0.01 | ||||||||
| Diluted | $ | 0.13 | $ | 0.10 | $ | 0.17 | $ | 0.01 | ||||||||
| Weighted average shares used to compute non-GAAP net income (loss) per share: | ||||||||||||||||
| Basic | 51,743 | 50,188 | 51,244 | 49,789 | ||||||||||||
| Diluted | 53,896 | 51,713 | 53,500 | 51,257 | ||||||||||||
| SILVER SPRING NETWORKS, INC. | ||||||||
| UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||
| (in thousands) | ||||||||
| September 30, | December 31, | |||||||
| 2016 | 2015 (a) | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 48,048 | $ | 65,264 | ||||
| Short-term investments | 65,310 | 59,181 | ||||||
| Accounts receivable | 45,031 | 47,813 | ||||||
| Inventory | 5,297 | 4,545 | ||||||
| Deferred cost of revenue | 196,301 | 196,868 | ||||||
| Prepaid expenses and other current assets | 11,552 | 10,835 | ||||||
| Total current assets | 371,539 | 384,506 | ||||||
| Property and equipment, net | 29,800 | 14,106 | ||||||
| Goodwill and intangible assets | 11,197 | 14,390 | ||||||
| Deferred cost of revenue, non-current | 21,909 | 38,882 | ||||||
| Deferred tax assets, non-current | 993 | 1,069 | ||||||
| Other long-term assets | 2,004 | 4,772 | ||||||
| Total assets | $ | 437,442 | $ | 457,725 | ||||
| LIABILITIES AND STOCKHOLDERS' DEFICIT | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 22,430 | $ | 30,623 | ||||
| Deferred revenue | 290,696 | 305,471 | ||||||
| Accrued and other liabilities | 39,211 | 42,751 | ||||||
| Total current liabilities | 352,337 | 378,845 | ||||||
| Deferred revenue, non-current | 83,200 | 96,342 | ||||||
| Other liabilities, non-current | 23,202 | 16,403 | ||||||
| Total liabilities | 458,739 | 491,590 | ||||||
| Total stockholders’ deficit | (21,297 | ) | (33,865 | ) | ||||
| Total liabilities and stockholders’ deficit | $ | 437,442 | $ | 457,725 | ||||
| (a) Derived from audited consolidated financial statements. | ||||||||
| SILVER SPRING NETWORKS, INC. | ||||||||||||||||
| UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW | ||||||||||||||||
| (in thousands) | ||||||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2016 | 2015 | 2016 | 2015 | |||||||||||||
| OPERATING ACTIVITIES | ||||||||||||||||
| Net (loss) income | $ | (15,249 | ) | $ | (622 | ) | $ | (7,642 | ) | $ | 18,108 | |||||
|
Adjustments to reconcile net (loss) income to net cash provided by operating activities: |
||||||||||||||||
| Deferred taxes | (17 | ) | 172 | 94 | (935 | ) | ||||||||||
|
Impairment of intangible assets |
2,204 | — | 2,204 | — | ||||||||||||
| Depreciation and amortization | 2,096 | 1,990 | 6,332 | 5,892 | ||||||||||||
| Stock-based compensation | 7,898 | 5,853 | 21,839 | 21,537 | ||||||||||||
| Other non-cash adjustments | 659 | 230 | 772 | 354 | ||||||||||||
| Changes in assets and liabilities: | ||||||||||||||||
| Accounts receivable | 1,967 | (2,568 | ) | 2,826 | 11,073 | |||||||||||
| Inventory | (2,811 | ) | 810 | (750 | ) | 3,043 | ||||||||||
| Prepaid expenses and other assets | 1,013 | (1,396 | ) | 2,957 | (4,192 | ) | ||||||||||
| Landlord incentives related to lease | 4,513 | — | 6,788 | — | ||||||||||||
|
Contingent consideration related to Detectent acquisition held in escrow |
— | — | — | (4,000 | ) | |||||||||||
| Deferred cost of revenue | 9,359 | (6,686 | ) | 17,595 | 40,308 | |||||||||||
| Accounts payable | (10,082 | ) | 2,239 | (8,908 | ) | (131 | ) | |||||||||
| Customer deposits | 1,037 | (1,307 | ) | 1,031 | 151 | |||||||||||
| Deferred revenue | 1,927 | 4,841 | (28,061 | ) | (84,190 | ) | ||||||||||
| Accrued and other liabilities | 631 | 716 | (4,400 | ) | 6,412 | |||||||||||
| Net cash provided by operating activities | 5,145 | 4,272 | 12,677 | 13,430 | ||||||||||||
| INVESTING ACTIVITIES | ||||||||||||||||
|
Payments for business acquisition, net of cash and cash equivalents acquired |
— | — | — | (7,098 | ) | |||||||||||
| Proceeds from sales of available-for-sale investments | 16,273 | 4,086 | 39,217 | 11,486 | ||||||||||||
| Proceeds from maturities of available-for-sale investments | 8,720 | 1,500 | 10,970 | 9,250 | ||||||||||||
| Purchases of available-for-sale investments | (45,401 | ) | (7,287 | ) | (56,355 | ) | (18,910 | ) | ||||||||
| Purchases of property and equipment | (6,125 | ) | (1,617 | ) | (23,369 | ) | (3,529 | ) | ||||||||
| Net cash (used in) investing activities | (26,533 | ) | (3,318 | ) | (29,537 | ) | (8,801 | ) | ||||||||
| FINANCING ACTIVITIES | ||||||||||||||||
| Payments on capital lease obligations | — | (238 | ) | (285 | ) | (994 | ) | |||||||||
| Proceeds from issuance of common stock | 2,010 | 1,619 | 4,238 | 3,655 | ||||||||||||
| Taxes paid related to net share settlement of equity awards | (549 | ) | (456 | ) | (4,169 | ) | (3,968 | ) | ||||||||
| Net cash provided by (used in) financing activities | 1,461 | 925 | (216 | ) | (1,307 | ) | ||||||||||
| Effect of exchange rate changes on cash and cash equivalents | (4 | ) | (184 | ) | (140 | ) | (324 | ) | ||||||||
| Net (decrease) increase in cash and cash equivalents | (19,931 | ) | 1,695 | (17,216 | ) | 2,998 | ||||||||||
| Cash and cash equivalents - beginning of period | 67,979 | 61,760 | 65,264 | 60,457 | ||||||||||||
| Cash and cash equivalents - end of period | $ | 48,048 | $ | 63,455 | $ | 48,048 | $ | 63,455 | ||||||||
| SILVER SPRING NETWORKS, INC. | |||||||||||||||||||||||
| UNAUDITED RECONCILIATION OF NET REVENUE BETWEEN GAAP AND NON-GAAP | |||||||||||||||||||||||
| (in thousands, except percentages) | |||||||||||||||||||||||
| Q3 | Q4 | Q1 | Q2 | Q3 | YoY% | ||||||||||||||||||
|
TYPE |
2015 | 2015 | 2016 | 2016 | 2016 | Change | |||||||||||||||||
| Net revenue: | |||||||||||||||||||||||
| Product | $ | 50,093 | $ | 143,202 | $ | 32,852 | $ | 69,917 | $ | 50,463 | 1 | % | |||||||||||
| Services | |||||||||||||||||||||||
| Managed services and SaaS | 11,223 | 37,142 | 11,068 | 24,570 | 14,090 | 26 | % | ||||||||||||||||
| Professional services | 8,189 | 18,903 | 4,700 | 27,465 | 9,633 | 18 | % | ||||||||||||||||
| Total services | 19,412 | 56,045 | 15,768 | 52,035 | 23,723 | 22 | % | ||||||||||||||||
| Total net revenue | $ | 69,505 | $ | 199,247 | $ | 48,620 | $ | 121,952 | $ | 74,186 | 7 | % | |||||||||||
| % Product | 72 | % | 72 | % | 68 | % | 57 | % | 68 | % | |||||||||||||
| % Services | 28 | % | 28 | % | 32 | % | 43 | % | 32 | % | |||||||||||||
| Change in deferred net revenue: | |||||||||||||||||||||||
| Change in deferred product revenue | $ | 1,785 | $ | (95,194 | ) | $ | 12,883 | $ | (23,804 | ) | $ | (568 | ) | ||||||||||
| Change in deferred services revenue: | |||||||||||||||||||||||
| Managed services and SaaS | 1,397 | (22,896 | ) | 1,820 | (9,650 | ) | 1,641 | ||||||||||||||||
| Professional services | 2,010 | (6,169 | ) | 5,591 | (16,652 | ) | 885 | ||||||||||||||||
| Total change in deferred services revenue | 3,407 | (29,065 | ) | 7,411 | (26,302 | ) | 2,526 | ||||||||||||||||
| Total change in deferred revenue | $ | 5,192 | $ | (124,259 | ) | $ | 20,294 | $ | (50,106 | ) | $ | 1,958 | |||||||||||
| Billings(1) | |||||||||||||||||||||||
| Product | $ | 51,878 | $ | 48,008 | $ | 45,735 | $ | 46,113 | $ | 49,895 | -4 | % | |||||||||||
| Services | |||||||||||||||||||||||
| Managed services and SaaS | 12,620 | 14,246 | 12,888 | 14,920 | 15,731 | 25 | % | ||||||||||||||||
| Professional services | 10,199 | 12,734 | 10,291 | 10,813 | 10,518 | 3 | % | ||||||||||||||||
| Total services | 22,819 | 26,980 | 23,179 | 25,733 | 26,249 | 15 | % | ||||||||||||||||
| Total Billings(1) | $ | 74,697 | $ | 74,988 | $ | 68,914 | $ | 71,846 | $ | 76,144 | 2 | % | |||||||||||
| % Product | 69 | % | 64 | % | 66 | % | 64 | % | 66 | % | |||||||||||||
| % Services | 31 | % | 36 | % | 34 | % | 36 | % | 34 | % | |||||||||||||
|
RECURRING REVENUE PER ENDPOINT |
|||||||||||||||||||||||
| Recurring revenue (TTM) | $ | 45,374 | $ | 71,947 | $ | 70,041 | $ | 84,003 | $ | 86,870 | |||||||||||||
|
Change in deferred revenue, net of foreign currency translations |
4,349 | (19,531 | ) | (17,292 | ) | (29,329 | ) | (29,085 | ) | ||||||||||||||
| Recurring Billings (TTM)(1) | $ | 49,723 | $ | 52,416 | $ | 52,749 | $ | 54,674 | $ | 57,785 | |||||||||||||
| Cumulative network endpoints delivered | 22,321 | 22,954 | 23,652 | 24,399 | 24,968 | ||||||||||||||||||
| Recurring revenue per endpoint delivered | $ | 2.03 | $ | 3.13 | $ | 2.96 | $ | 3.44 | $ | 3.48 | 71 | % | |||||||||||
| Recurring billings per endpoint delivered(1) | $ | 2.23 | $ | 2.28 | $ | 2.23 | $ | 2.24 | $ | 2.31 | 4 | % | |||||||||||
|
SOLUTION |
|||||||||||||||||||||||
| Net revenue | |||||||||||||||||||||||
| Advanced metering infrastructure | $ | 60,149 | $ | 181,892 | $ | 40,514 | $ | 105,181 | $ | 66,203 | 10 | % | |||||||||||
| New solutions | 9,356 | 17,355 | 8,106 | 16,771 | 7,983 | -15 | % | ||||||||||||||||
| Total net revenue | $ | 69,505 | $ | 199,247 | $ | 48,620 | $ | 121,952 | $ | 74,186 | 7 | % | |||||||||||
| % Advanced metering infrastructure | 87 | % | 91 | % | 83 | % | 86 | % | 89 | % | |||||||||||||
| % New solutions | 13 | % | 9 | % | 17 | % | 14 | % | 11 | % | |||||||||||||
| Change in deferred net revenue | |||||||||||||||||||||||
| Advanced metering infrastructure | $ | 3,586 | $ | (123,525 | ) | $ | 16,957 | $ | (45,184 | ) | $ | (2,078 | ) | ||||||||||
| New solutions | 1,606 | (734 | ) | 3,337 | (4,922 | ) | 4,036 | ||||||||||||||||
| Total change in deferred net revenue | $ | 5,192 | $ | (124,259 | ) | $ | 20,294 | $ | (50,106 | ) | $ | 1,958 | |||||||||||
| Billings(1) | |||||||||||||||||||||||
| Advanced metering infrastructure | $ | 63,735 | $ | 58,367 | $ | 57,471 | $ | 59,997 | $ | 64,125 | 1 | % | |||||||||||
| New solutions | 10,962 | 16,621 | 11,443 | 11,849 | 12,019 | 10 | % | ||||||||||||||||
| Total Billings(1) | $ | 74,697 | $ | 74,988 | $ | 68,914 | $ | 71,846 | $ | 76,144 | 2 | % | |||||||||||
| % Advanced metering infrastructure | 85 | % | 78 | % | 83 | % | 84 | % | 84 | % | |||||||||||||
| % New solutions | 15 | % | 22 | % | 17 | % | 16 | % | 16 | % | |||||||||||||
|
GEOGRAPHY |
|||||||||||||||||||||||
| Net revenue | |||||||||||||||||||||||
| United States | $ | 53,113 | $ | 177,896 | $ | 45,222 | $ | 118,539 | $ | 43,381 | -18 | % | |||||||||||
| International | 16,392 | 21,351 | 3,398 | 3,413 | 30,805 | 88 | % | ||||||||||||||||
| Total net revenue | $ | 69,505 | $ | 199,247 | $ | 48,620 | $ | 121,952 | $ | 74,186 | 7 | % | |||||||||||
| % United States | 76 | % | 89 | % | 93 | % | 97 | % | 58 | % | |||||||||||||
| % International | 24 | % | 11 | % | 7 | % | 3 | % | 42 | % | |||||||||||||
| Change in deferred net revenue | |||||||||||||||||||||||
| United States | $ | 12,467 | $ | (116,859 | ) | $ | 8,468 | $ | (57,666 | ) | $ | 21,085 | |||||||||||
| International | (7,275 | ) | (7,400 | ) | 11,826 | 7,560 | (19,127 | ) | |||||||||||||||
| Total change in deferred net revenue | $ | 5,192 | $ | (124,259 | ) | $ | 20,294 | $ | (50,106 | ) | $ | 1,958 | |||||||||||
| Billings(1) | |||||||||||||||||||||||
| United States | $ | 65,580 | $ | 61,037 | $ | 53,690 | $ | 60,873 | $ | 64,466 | -2 | % | |||||||||||
| International | 9,117 | 13,951 | 15,224 | 10,973 | 11,678 | 28 | % | ||||||||||||||||
| Total Billings(1) | $ | 74,697 | $ | 74,988 | $ | 68,914 | $ | 71,846 | $ | 76,144 | 2 | % | |||||||||||
| % United States | 88 | % | 81 | % | 78 | % | 85 | % | 85 | % | |||||||||||||
| % International | 12 | % | 19 | % | 22 | % | 15 | % | 15 | % | |||||||||||||
| (1) We have revised the presentation of several of our non-GAAP financial measures previously reported. | |||||||||||||||||||||||
| SILVER SPRING NETWORKS, INC. | ||||||||||||||||||||||||
| UNAUDITED SUPPLEMENTAL FINANCIAL INFORMATION | ||||||||||||||||||||||||
| (in thousands, except percentages and headcount) | ||||||||||||||||||||||||
| Q3 | Q4 | Q1 | Q2 | Q3 | YoY% | |||||||||||||||||||
| CASH FLOW DATA | 2015 | 2015 | 2016 | 2016 | 2016 | Change | ||||||||||||||||||
| Operating cash flow | $ | 4,272 | $ | 6,257 | $ | 3,730 | $ | 3,802 |
(a) |
$ | 5,145 | 20 | % | |||||||||||
| Operating cash flow - TTM | 27,054 | 19,687 | 23,872 | 18,061 |
(a) |
18,934 | -30 | % | ||||||||||||||||
| BALANCE SHEET DATA | ||||||||||||||||||||||||
| Cash, cash equivalents and short-term investments | $ | 121,915 | $ | 124,445 | $ | 125,369 | $ | 113,064 | $ | 113,358 | -7 | % | ||||||||||||
| Deferred net revenue | ||||||||||||||||||||||||
| Beginning of quarter | $ | 521,176 | $ | 526,000 | $ | 401,813 | $ | 421,987 | $ | 371,934 | ||||||||||||||
| Add: billings during the quarter | 74,697 | 74,988 | 68,914 | 71,846 | 76,144 | |||||||||||||||||||
| Less: revenue recognized during the quarter | (69,505 | ) | (199,247 | ) | (48,620 | ) | (121,952 | ) | (74,186 | ) | ||||||||||||||
| Foreign currency translation adjustment and other | (368 | ) | 72 | (120 | ) | 53 | 4 | |||||||||||||||||
| End of quarter | $ | 526,000 | $ | 401,813 | $ | 421,987 | $ | 371,934 | $ | 373,896 | ||||||||||||||
| Deferred cost of revenue | ||||||||||||||||||||||||
| Beginning of quarter | $ | 286,044 | $ | 292,730 | $ | 235,750 | $ | 244,486 | $ | 227,559 | ||||||||||||||
| Add: cost of billings during the quarter | 41,759 | 39,640 | 38,779 | 38,817 | 34,364 | |||||||||||||||||||
| Add: stock-based compensation, amortization of intangible assets, and acquisition related charges deferred during the quarter | 1,471 | 1,280 | 1,512 | 1,600 | 2,176 | |||||||||||||||||||
| Less: cost of revenue during the quarter | (36,518 | ) | (97,902 | ) | (31,623 | ) | (57,409 | ) | (45,944 | ) | ||||||||||||||
| Foreign currency translation adjustment and other | (26 | ) | 2 | 68 | 65 | 55 | ||||||||||||||||||
| End of quarter | $ | 292,730 | $ | 235,750 | $ | 244,486 | $ | 227,559 | $ | 218,210 | ||||||||||||||
| STOCK-BASED COMPENSATION | ||||||||||||||||||||||||
| Cost of goods sold | $ | 1,197 | $ | 1,006 | $ | 1,328 | $ | 1,389 | $ | 2,082 | 74 | % | ||||||||||||
| Research and development | 1,771 | 1,277 | 2,025 | 2,241 | 2,593 | 46 | % | |||||||||||||||||
| Sales and marketing | 914 | 665 | 831 | 726 | 943 | 3 | % | |||||||||||||||||
| General and administrative | 1,971 | 1,994 | 2,716 | 2,685 | 2,280 | 16 | % | |||||||||||||||||
| $ | 5,853 | $ | 4,942 | $ | 6,900 | $ | 7,041 | $ | 7,898 | 35 | % | |||||||||||||
| EMPLOYEES | 645 | 652 | 673 | 708 | 709 | 10 | % | |||||||||||||||||
| HOMES & BUSINESSES | ||||||||||||||||||||||||
| Cumulative network endpoints delivered* | 22,321 | 22,954 | 23,652 | 24,399 | 24,968 | 12 | % | |||||||||||||||||
| *Endpoints refer to communication modules in electric meters | ||||||||||||||||||||||||
| (a) |
After the release of earnings disclosing the results of the three and six months ended June 30, 2016, we identified an adjustment in which cash provided by operating activities and cash used in investing activities were overstated by $0.3 million. This adjustment was reflected in the condensed consolidated statements of cash flows for the six months ended June 30, 2016, included in our Form 10-Q filed on August 9, 2016. The amounts for Q2’16 in the table above have been revised as such to reflect this adjustment. |
|
| SILVER SPRING NETWORKS, INC. | |||||||||||||||||||||||
| UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES | |||||||||||||||||||||||
| (in thousands, except per share data and percentages) | |||||||||||||||||||||||
| Q3 | Q4 | Q1 | Q2 | Q3 | YOY % | ||||||||||||||||||
| QUARTERLY RECONCILIATION OF RESULTS | 2015 | 2015 | 2016 | 2016 | 2016 | Change | |||||||||||||||||
| Gross profit | $ | 32,987 | $ | 101,345 | $ | 16,997 | $ | 64,543 | $ | 28,242 | -14 | % | |||||||||||
| Change in deferred revenue, net of foreign currency translation | 5,192 | (124,259 | ) | 20,294 | (50,106 | ) | 1,958 | ||||||||||||||||
| Change in deferred cost of revenue, net of foreign currency translation | (6,712 | ) | 56,982 | (8,668 | ) | 16,992 | 9,404 | ||||||||||||||||
| Amortization of intangible assets | 260 | 259 | 169 | 195 | 79 | ||||||||||||||||||
| Stock-based compensation | 1,197 | 1,006 | 1,328 | 1,389 | 2,082 | ||||||||||||||||||
| Acquisition-related charges | 14 | 15 | 15 | 16 | 15 | ||||||||||||||||||
| Gross profit on billings(1) | $ | 32,938 | $ | 35,348 | $ | 30,135 | $ | 33,029 | $ | 41,780 | 27 | % | |||||||||||
| Gross margin % (as a % of net revenue) | 47 | % | 51 | % | 35 | % | 53 | % | 38 | % | |||||||||||||
| Gross margin on billings(1) | 44 | % | 47 | % | 44 | % | 46 | % | 55 | % | |||||||||||||
| Operating expenses | $ | 33,381 | $ | 35,600 | $ | 35,920 | $ | 37,794 | $ | 42,461 | 27 | % | |||||||||||
| Amortization of intangible assets | (161 | ) | (163 | ) | (252 | ) | (180 | ) | (114 | ) | |||||||||||||
| Stock-based compensation | (4,656 | ) | (3,936 | ) | (5,572 | ) | (5,652 | ) | (5,816 | ) | |||||||||||||
| Acquisition-related charges | (545 | ) | (491 | ) | (501 | ) | (494 | ) | (493 | ) | |||||||||||||
|
Impairment of intangible assets |
— | — | — | — | (2,204 | ) | |||||||||||||||||
| Restructuring | (339 | ) | (60 | ) | (39 | ) | — | — | |||||||||||||||
| Legal settlements | — | (3,595 | ) | — | — | — | |||||||||||||||||
| Non-GAAP operating expenses | $ | 27,680 | $ | 27,355 | $ | 29,556 | $ | 31,468 | $ | 33,834 | 22 | % | |||||||||||
| Operating (loss) income | $ | (394 | ) | $ | 65,745 | $ | (18,923 | ) | $ | 26,749 | $ | (14,219 | ) | -3509 | % | ||||||||
| Change in deferred revenue, net of foreign currency translation | 5,192 | (124,259 | ) | 20,294 | (50,106 | ) | 1,958 | ||||||||||||||||
| Change in deferred cost of revenue, net of foreign currency translation | (6,712 | ) | 56,982 | (8,668 | ) | 16,992 | 9,404 | ||||||||||||||||
| Amortization of intangible assets | 421 | 422 | 421 | 375 | 193 | ||||||||||||||||||
| Stock-based compensation | 5,853 | 4,942 | 6,900 | 7,041 | 7,898 | ||||||||||||||||||
| Acquisition-related charges | 559 | 506 | 516 | 510 | 508 | ||||||||||||||||||
|
Impairment of intangible assets |
— | — | — | — | 2,204 | ||||||||||||||||||
| Restructuring | 339 | 60 | 39 | — | — | ||||||||||||||||||
| Legal settlements | — | 3,595 | — | — | — | ||||||||||||||||||
| Non-GAAP operating income | $ | 5,258 | $ | 7,993 | $ | 579 | $ | 1,561 | $ | 7,946 | 51 | % | |||||||||||
| Income tax provision | $ | 129 | $ | 3,708 | $ | 32 | $ | 961 | $ | 1,143 | 786 | % | |||||||||||
| Income tax benefit related to Detectent acquisition | 114 | — | — | — | — | ||||||||||||||||||
| Non-GAAP income tax provision | $ | 243 | $ | 3,708 | $ | 32 | $ | 961 | $ | 1,143 | 370 | % | |||||||||||
| Net (loss) income | $ | (622 | ) | $ | 61,878 | $ | (18,514 | ) | $ | 26,121 | $ | (15,249 | ) | -2352 | % | ||||||||
| Change in deferred revenue, net of foreign currency translation | 5,192 | (124,259 | ) | 20,294 | (50,106 | ) | 1,958 | ||||||||||||||||
| Change in deferred cost of revenue, net of foreign currency translation | (6,712 | ) | 56,982 | (8,668 | ) | 16,992 | 9,404 | ||||||||||||||||
| Other expense (income), net | 99 | 159 | (441 | ) | (333 | ) | (113 | ) | |||||||||||||||
| Provision for income taxes | 129 | 3,708 | 32 | 961 | 1,143 | ||||||||||||||||||
| Depreciation and amortization | 1,990 | 1,930 | 2,132 | 2,104 | 2,096 | ||||||||||||||||||
| Stock-based compensation | 5,853 | 4,942 | 6,900 | 7,041 | 7,898 | ||||||||||||||||||
| Acquisition-related charges | 559 | 506 | 516 | 510 | 508 | ||||||||||||||||||
|
Impairment of intangible assets |
— | — | — | — | 2,204 | ||||||||||||||||||
| Restructuring | 339 | 60 | 39 | — | — | ||||||||||||||||||
| Legal settlements | — | 3,595 | — | — | — | ||||||||||||||||||
| Adjusted EBITDA | $ | 6,827 | $ | 9,501 | $ | 2,290 | $ | 3,290 | $ | 9,849 | 44 | % | |||||||||||
| (1) We have revised the presentation of several of our non-GAAP financial measures previously reported. | |||||||||||||||||||||||
|
SILVER SPRING NETWORKS, INC. |
|||||||||||||||||||||||||
|
RECONCILIATION OF GAAP TO NON-GAAP MEASURES |
|||||||||||||||||||||||||
| (in thousands, except percentages) | |||||||||||||||||||||||||
| Three Months Ended September 30, 2016 | |||||||||||||||||||||||||
| Gross Profit | Gross Margin |
Change in |
Stock-based |
Amortization of |
Acquisition- |
Gross Profit on |
Gross Margin on |
||||||||||||||||||
| Product | $ | 21,214 | 42.0 | % | $ | 8,836 | $ | 515 | $ | 79 | $ | - | $ | 30,644 | 61.4 | % | |||||||||
| Services | |||||||||||||||||||||||||
| Managed services and SaaS | 4,612 | 32.7 | % | 1,641 | 719 | - | 15 | 6,987 | 44.4 | % | |||||||||||||||
| Professional services | 2,416 | 25.1 | % | 885 | 848 | - | - | 4,149 | 39.4 | % | |||||||||||||||
| Total services | 7,028 | 29.6 | % | 2,526 | 1,567 | - | 15 | 11,136 | 42.4 | % | |||||||||||||||
| Total gross profit | $ | 28,242 | 38.1 | % | $ | 11,362 | $ | 2,082 | $ | 79 | $ | 15 | $ | 41,780 | 54.9 | % | |||||||||
| Three Months Ended September 30, 2015 | |||||||||||||||||||||||||
| Gross Profit | Gross Margin |
Change in |
Stock-based |
Amortization of |
Acquisition- |
Gross Profit on |
Gross Margin on |
||||||||||||||||||
| Product | $ | 28,716 | 57.3 | % | $ | (4,927 | ) | $ | 252 | $ | 260 | $ | - | $ | 24,301 | 46.8 | % | ||||||||
| Services | |||||||||||||||||||||||||
| Managed services and SaaS | 3,137 | 28.0 | % | 1,397 | 438 | - | 14 | 4,986 | 39.5 | % | |||||||||||||||
| Professional services | 1,134 | 13.8 | % | 2,010 | 507 | - | - | 3,651 | 35.8 | % | |||||||||||||||
| Total services | 4,271 | 22.0 | % | 3,407 | 945 | - | 14 | 8,637 | 37.9 | % | |||||||||||||||
| Total gross profit | $ | 32,987 | 47.5 | % | $ | (1,520 | ) | $ | 1,197 | $ | 260 | $ | 14 | $ | 32,938 | 44.1 | % | ||||||||
| Nine Months Ended September 30, 2016 | |||||||||||||||||||||||||
| Gross Profit | Gross Margin |
Change in |
Stock-based |
Amortization of |
Acquisition- |
Gross Profit on |
Gross Margin on |
||||||||||||||||||
| Product | $ | 66,564 | 43.4 | % | $ | 6,239 | $ | 1,282 | $ | 443 | $ | - | $ | 74,528 | 52.6 | % | |||||||||
| Services | |||||||||||||||||||||||||
| Managed services and SaaS | 22,718 | 45.7 | % | (6,189 | ) | 1,689 | - | 46 | 18,264 | 41.9 | % | ||||||||||||||
| Professional services | 20,500 | 49.0 | % | (10,176 | ) | 1,828 | - | - | 12,152 | 38.4 | % | ||||||||||||||
| Total services | 43,218 | 47.2 | % | (16,365 | ) | 3,517 | - | 46 | 30,416 | 40.5 | % | ||||||||||||||
| Total gross profit | $ | 109,782 | 44.9 | % | $ | (10,126 | ) | $ | 4,799 | $ | 443 | $ | 46 | $ | 104,944 | 48.4 | % | ||||||||
| Nine Months Ended September 30, 2015 | |||||||||||||||||||||||||
| Gross Profit | Gross Margin |
Change in |
Stock-based |
Amortization of |
Acquisition- |
Gross Profit on |
Gross Margin on |
||||||||||||||||||
| Product | $ | 91,312 | 43.5 | % | $ | (31,972 | ) | $ | 1,039 | $ | 782 | $ | - | $ | 61,161 | 44.5 | % | ||||||||
| Services | |||||||||||||||||||||||||
| Managed services and SaaS | 10,734 | 30.8 | % | 3,365 | 1,680 | - | 85 | 15,864 | 41.6 | % | |||||||||||||||
| Professional services | 22,352 | 48.9 | % | (14,477 | ) | 2,410 | - | - | 10,285 | 33.0 | % | ||||||||||||||
| Total services | 33,086 | 41.1 | % | (11,112 | ) | 4,090 | - | 85 | 26,149 | 37.7 | % | ||||||||||||||
| Total gross profit | $ | 124,398 | 42.8 | % | $ | (43,084 | ) | $ | 5,129 | $ | 782 | $ | 85 | $ | 87,310 | 42.2 | % | ||||||||
| (a) | Amounts presented net of foreign currency translation. | ||||||||||||||||||||||||
| (b) | We have revised the presentation of several of our non-GAAP financial measures previously reported. | ||||||||||||||||||||||||
