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TMCNet:  Silver Spring Networks Reports Fourth Quarter and Full Year 2013 Financial Results

[February 10, 2014]

Silver Spring Networks Reports Fourth Quarter and Full Year 2013 Financial Results

REDWOOD CITY, Calif. --(Business Wire)--

Silver Spring Networks, Inc. (NYSE: SSNI) today announced financial results for its fourth quarter and full year ended December 31, 2013.

Full Year 2013 Results (all comparisons made are against the prior year period)

  • Non-GAAP revenue was $344.1 million, up 13%.
  • GAAP revenue was $326.9 million, up 66%.
  • Non-GAAP gross margin was 33.1%, as compared with 33.9% a year ago.
  • GAAP gross margin was 35.3% as compared to 16.1% a year ago.
  • Non-GAAP net loss was $3.1 million as compared with $5.7 million a year ago.
  • GAAP net loss was $66.8 million as compared with $89.7 million a year ago. GAAP net loss includes non-cash charges of $42.1 million in connection with Silver Spring's initial public offering.
  • Silver Spring generated breakeven operating cash flow and has $145.9 million in cash and investments and no debt.

"We made good progress during 2013. We grew top line by 13%, entered three new countries enlarging our global footprint, launched our innovative street light solution, and expanded our total backlog to a record $875 million," said Scott Lang, Chairman, President, and Chief Executive Officer. "I remain confident that our leading networking platform, proven value proposition, and large global market opportunity position us well for long-term growth."

Business Highlights (through February 10, 2014, unless otherwise stated)

  • 18.2 million cumulative network endpoints delivered from inception through December 31, 2013, up 15% from a year ago.
  • Record total backlog of $875 million as of December 31, 2013, up 17% year-over-year.
  • Working with clients that represent an incremental 26M+ homes and businesses that are piloting or deploying our technology in phases.
  • Won over 50% of the homes and businesses for networking and advanced metering awarded in the U.S. in 2013; expanded life-to-date estimated market share to approximately 33%. Entered three new countries expanding global footprint.
  • Hawaiian Electric Company to network homes and businesses in the initial phase of one of the country's most extensive smart grid programs, covering advanced metering infrastructure, Customer IQ portal, direct load control, volt-var optimization, prepayment, and distributed generation integration.
  • Announced SilverLink™ Sensor Network. New approach to organizing, programming, and using near real-time smart grid data from the network to fuel new applications at up to 10x the speed and 1/10th the cost of traditional utility IT infrastructure.
  • Launched Silver Spring App Store and expanded partner program. Software developers leveraging smart grid data from the SilverLink Sensor Network for innovative applications.
  • Appointed Peter Van Camp, Executive Chairman of Equinix, to Board of Directors.

Q4 Results (all comparisons made are against the prior year period)

  • Non-GAAP revenue for the fourth quarter was $89.6 million, up 5%.
  • GAAP revenue was $97.2 million, up 94%.
  • Non-GAAP gross margin was 30.0%, as compared with 33.5% a year ago.
  • GAAP gross margin was 34.7% as compared to 21.1% a year ago.
  • Non-GAAP net income was $0.1 million as compared with $0.6 million a year ago.
  • GAAP net income was $0.4 million as compared with a GAAP net loss of $21.0 million a year ago.

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 fourth quarter and full year ended December 31, 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. A dial-in replay of the conference call will be available until February 24, 2014 and can be accessed at 877-660-6853 (domestic) or 201-612-7415 (international) passcode 13575377. 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 18 million Silver Spring enabled devices delivered, is connecting utilities to homes and business throughout the world with the goal of achieving greater energy efficiency for the planet. Silver Spring's innovative solutions enable utilities to gain operational efficiencies, improve grid reliability, and empower consumers to monitor and manage energy consumption. Silver Spring Networks' customers include major utilities around the globe such as Baltimore Gas & Electric, CitiPower & Powercor, Commonwealth Edison, CPS Energy, Florida Power & Light, Jemena Electricity Networks Limited, Pacific Gas & Electric, Pepco Holdings, Progress Energy, and Singapore Power, among others. To learn more, please visit www.silverspringnet.com.

Non-GAAP and Other Financial Measures

Silver Spring believes that its results of operations under generally accepted accounting principles, or GAAP, when considered in isolation, may only provide limited insight into the performance of its business in any given period. As a result, Silver Spring manages its business, makes planning decisions, evaluates its performance and allocates resources by assessing non-GAAP measures such as non-GAAP revenue (billings), cost of non-GAAP revenue (billings), 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 (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 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, the performance and benefits of recently announced new product introductions and innovations, 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, including our new SilverLink Sensor Network; 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; 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 February 10, 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 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 Ended

Twelve Months Ended

December 31, December 31,
  2013     2012     2013     2012  
Revenue:
Product revenue $ 77,944 $ 40,331 $ 224,310 $ 162,623
Service revenue   19,220     9,740     102,548     34,114  
Net revenue 97,164 50,071 326,858 196,737
 
Cost of revenue:
Product cost of revenue 50,163 26,967 150,315 115,325
Service cost of revenue   13,257     12,556     61,189     49,693  
Total cost of revenue 63,420 39,523 211,504 165,018
 
Gross profit 33,744 10,548 115,354 31,719
 
Operating expenses:
Research and development 16,167 15,126 77,018 61,998
Sales and marketing 8,417 7,372 34,931 29,104
General and administrative   9,208     8,237     45,160     29,261  
Total operating expenses

33,792

30,735

157,109

120,363

 
Operating income (loss) (48 ) (20,187 ) (41,755 ) (88,644 )
 
Other income (expense)
Interest income (expense), net 138 (1,210 ) (1,152 ) (4,561 )
Conversion of promissory notes and remeasurement of warrants and derivatives   -     308     (23,676 )   3,878  
Other income (expense), net

138

(902

)

(24,828

)

(683

)

 
Income (loss) before provision for income taxes 90 (21,089 ) (66,583 ) (89,327 )
 
Provision (benefit) for income taxes   (268 )   (79 )   224     390  
Net income (loss) $ 358 $ (21,010 ) $ (66,807 ) $ (89,717 )
Deemed dividend to convertible preferred stockholders   -     -     (105,000 )   -  
Net income (loss) attributable to common stockholders $ 358 $ (21,010 ) $ (171,807 ) $ (89,717 )
 
Net income (loss) per share
Basic net income (loss) per share attributable to common stockholders $ 0.01 $ (5.65 ) $ (4.54 ) $ (24.45 )
Diluted net income (loss) per share attributable to common stockholders $ 0.01 $ (5.65 ) $ (4.54 ) $ (24.45 )
 

Weighted average number of shares used in computation

Basic 47,198 3,720 37,877 3,670
Diluted 49,603 3,720 37,877 3,670
 

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 Twelve Months Ended
December 31, December 31,
  2013     2012     2013     2012  
Net income (loss) $ 358 $ (21,010 ) $ (66,807 ) $ (89,717 )
Change in deferred revenue, net of foreign currency translation (7,516 ) 35,505 17,228 107,596
Change in deferred cost of revenue, net of foreign currency translation (1,011 ) (17,993 ) (31,039 ) (38,860 )
Amortization of intangibles in cost of revenue 48 48 192 192
Conversion of promissory notes and remeasurement of warrants and derivatives - (308 ) 23,676 (3,878 )
Convertible notes accretion / interest - 1,081 935 3,868
Stock-based compensation 8,001 3,269 52,504 15,092
Legal settlements 250 - 250 -

 

       
 
Non-GAAP net income (loss) $ 130 $ 592 $ (3,061 ) $ (5,707 )
 
Non-GAAP income (loss) per share
Basic $ 0.00 $ 0.16 $ (0.08 ) $ (1.56 )
Diluted $ 0.00 $ 0.02 $ (0.08 ) $ (1.56 )
 
Weighted average number of shares used in computation
Basic 47,198 3,720 37,877 3,670
Diluted 49,603 29,394 37,877 3,670
 
   
SILVER SPRING NETWORKS, INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except par values)
 
 
December 31, December 31,
2013

2012 (a)

ASSETS
Current assets:
Cash and cash equivalents $ 82,596 $ 72,646
Short-term investments 63,256 -
Accounts receivable 69,724 56,528
Inventory 4,350 7,731
Deferred cost of revenue 37,460 45,298
Prepaid expenses and other current assets   4,758     3,456  

Total current assets

262,144 185,659
 
Property and equipment, net 12,364 12,701
Deferred cost of revenue, non-current 238,663 199,865
Deferred tax assets, non-current 1,613 8,265
Other long-term assets 1,567 11,254
   
TOTAL ASSETS $ 516,351   $ 417,744  
 
LIABILITIES, CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable $ 31,317 $ 28,104
Accrued liabilities 21,282 14,831
Deferred revenue 111,293 89,838
Current portion of capital lease obligations 1,615 1,647
Deferred tax liability   1,176     7,897  
 
Total current liabilities 166,683 142,317
 
Deferred revenue, non-current 413,360 418,218
Preferred stock warrant liability - 11,261
Convertible promissory notes and embedded derivatives - 56,319
Other liabilities 14,426 18,412
 
Convertible preferred stock:
$0.001 par value; no shares authorized, issued and outstanding, and aggregate liquidation preference of $0 as of December 31, 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 December 31, 2013; no shares authorized, issued or outstanding,as of December 31, 2012 - -
 
Common stock, $0.001 par value; 1,000,000 shares authorized, 47,384 shares issued and outstanding as of December 31, 2013; 80,000 shares authorized and 3,764 shares issued and outstanding as of December 31, 2012 46 4
 
Additional paid-in capital 538,967 51,078
Accumulated other comprehensive income (loss) 130 (136 )
Accumulated deficit   (617,261 )   (550,454 )
 
Total stockholders' deficit (78,118 ) (499,508 )
   
TOTAL LIABILITIES, CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS' DEFICIT $ 516,351   $ 417,744  
 
(a) Derived from audited consolidated financial statements
 
       
SILVER SPRING NETWORKS
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
(In thousands)
 
Three Months Ended Twelve Months Ended
December 31, December 31,
  2013     2012     2013     2012  
 
OPERATING ACTIVITIES
 
Net income (loss) $ 358 $ (21,010 ) $ (66,807 ) $ (89,717 )
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization 1,656 1,796 6,646 7,255
Stock-based compensation 8,001 3,269 52,504 15,092
Conversion of promissory notes and remeasurement of warrants and derivatives - (308 ) 23,676 (3,878 )
Provision for inventory obsolescence 230 272 430 1,202
Non-cash interest expense on convertible notes - 422 935 1,461
Other non-cash adjustments (367 ) (137 ) 63 358
Changes in assets and liabilities:
Accounts receivable (10,119 ) 7,656 (13,245 ) (23,177 )
Inventory 2,417 (772 ) 2,951 (6,448 )
Prepaid expenses and other current assets 1,095 662 (1,153 ) 1,109
Deferred cost of revenue (1,022 ) (17,993 ) (30,960 ) (38,860 )
Other long-term assets 658 (1,090 ) 4,504 (3,446 )
Accounts payable 4,594 3,553 2,848 10,883
Accrued liabilities 2,349 (138 ) 4,728 (3,191 )
Customer deposits 186 (92 ) (61 ) (7,046 )
Deferred revenue (7,893 ) 35,505 16,597 107,596
Other liabilities   (299 )   2,407     (3,642 )   6,529  
Net cash provided by (used in) operating activities   1,844     14,002     14     (24,278 )
 
INVESTING ACTIVITIES
 
Decrease in restricted cash - - - 140
Proceeds from sales and maturity of short-term investments 9,122 - 9,122 -
Purchase of short-term investments (10,888 ) - (72,339 ) -
Purchases of property and equipment   (607 )   (605 )   (3,950 )   (4,854 )
Net cash used in investing activities   (2,373 )   (605 )   (67,167 )   (4,714 )
 
FINANCING ACTIVITIES
 
Payment upon termination of preferred stock warrants of a related party - - (12,000 ) -
Proceeds from initial public offering, net of offering costs (225 ) - 84,247 -
Proceeds from private placement of common stock with a related party - - 12,000 -
Payments on capital lease obligations (549 ) (424 ) (2,034 ) (1,312 )
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 2,331 49 2,909 594
Taxes paid related to net share settlement of equity awards   (297 )   -     (8,019 )   -  
Net cash provided by (used in) financing activities   1,260     (375 )   77,103     29,951  
 
Net increase in cash and cash equivalents 731 13,022 9,950 959
Cash and cash equivalents - beginning of period   81,865     59,624     72,646     71,687  
Cash and cash equivalents - end of period $ 82,596   $ 72,646   $ 82,596   $ 72,646  
 
           
SILVER SPRING NETWORKS, INC.
UNAUDITED RECONCILIATION OF NET REVENUE BETWEEN GAAP AND NON-GAAP
(in thousands, except percentages)
 
Q4 Q1 Q2 Q3 Q4 YoY%

TYPE

CY12   CY13   CY13   CY13   CY13   Change
GAAP net revenue
Product net revenue $ 40,332 $ 41,720 $ 47,996 $ 56,650 $ 77,944 93 %
Service net revenue
Managed services and SaaS 4,018 4,559 37,508 9,835 8,159 103 %
Professional   5,721     7,424     18,006     5,996     11,061   93 %
Total service net revenue $ 9,739 $ 11,983 $ 55,514 $ 15,831 $ 19,220 97 %
         
Total GAAP net revenue $ 50,071   $ 53,703   $ 103,510   $ 72,481   $ 97,164   94 %
 
% Product 81 % 78 % 46 % 78 % 80 %
% Service 19 % 22 % 54 % 22 % 20 %
 
Change in deferred net revenue
Change in deferred product revenue $ 25,793 $ 14,702 $ 17,905 $ 16,017 $ (7,054 )
Change in deferred service revenue
Managed services and SaaS 6,441 3,825 (28,245 ) 16 1,000
Professional   3,271     1,541     (6,719 )   5,702     (1,462 )
Total change in deferred service revenue 9,712 5,366 (34,964 ) 5,718 (462 )
         
Total change in deferred revenue $ 35,505 $ 20,068 $ (17,059 ) $ 21,735 $ (7,516 )
 
Non-GAAP revenue
Product net revenue $ 66,125 $ 56,422 $ 65,901 $ 72,667 $ 70,890 7 %
Service net revenue
Managed services and SaaS 10,459 8,384 9,263 9,851 9,159 -12 %
Professional   8,992     8,965     11,287     11,698     9,599   7 %
Total service net revenue $ 19,451 $ 17,349 $ 20,550 $ 21,549 $ 18,758 -4 %
         
Total non-GAAP net revenue $ 85,576   $ 73,771   $ 86,451   $ 94,216   $ 89,648   5 %
 
% Product 77 % 76 % 76 % 77 % 79 %
% Service 23 % 24 % 24 % 23 % 21 %
 
 

SOLUTION

GAAP net revenue
Advanced metering infrastructure $ 46,250 $ 45,149 $ 97,598 $ 66,774 $ 91,842 99 %
Distribution automation and demand side management 3,821 8,554 5,912 5,707 5,322 39 %
         
Total GAAP net revenue $ 50,071   $ 53,703   $ 103,510   $ 72,481   $ 97,164   94 %
 
% Advanced metering infrastructure 92 % 84 % 94 % 92 % 95 %
% Distribution automation and demand side management 8 % 16 % 6 % 8 % 5 %
 
Change in deferred net revenue
Advanced metering infrastructure $ 32,208 $ 23,219 $ (21,380 ) $ 19,244 $ (9,532 )
Distribution automation and demand side management 3,297 (3,151 ) 4,321 2,491 2,016
         
Total change in deferred net revenue $ 35,505 $ 20,068 $ (17,059 ) $ 21,735 $ (7,516 )
 
Non-GAAP net revenue
Advanced metering infrastructure $ 78,458 $ 68,368 $ 76,218 $ 86,018 $ 82,310 5 %
Distribution automation and demand side management 7,118 5,403 10,233 8,198 7,338 3 %
         
Total Non-GAAP net revenue $ 85,576   $ 73,771   $ 86,451   $ 94,216   $ 89,648   5 %
 
% Advanced metering infrastructure 92 % 93 % 88 % 91 % 92 %
% Distribution automation and demand side management 8 % 7 % 12 % 9 % 8 %
 
 

GEOGRAPHY

GAAP net revenue
United States $ 46,421 $ 50,747 $ 94,516 $ 68,562 $ 71,602 54 %
International 3,650 2,956 8,994 3,919 25,562 600 %
         
Total GAAP net revenue $ 50,071   $ 53,703   $ 103,510   $ 72,481   $ 97,164   94 %
 
% United States 93 % 94 % 91 % 95 % 74 %
% International 7 % 6 % 9 % 5 % 26 %
 
Change in deferred net revenue
United States $ 21,927 $ 8,839 $ (21,032 ) $ 15,289 $ 1,369
International 13,578 11,229 3,973 6,446 (8,885 )
         
Total change in deferred net revenue $ 35,505 $ 20,068 $ (17,059 ) $ 21,735 $ (7,516 )
 
Non-GAAP net revenue
United States $ 68,348 $ 59,586 $ 73,484 $ 83,851 $ 72,971 7 %
International 17,228 14,185 12,967 10,365 16,677 -3 %
         
Total non-GAAP net revenue $ 85,576   $ 73,771   $ 86,451   $ 94,216   $ 89,648   5 %
 
% United States 80 % 81 % 85 % 89 % 81 %
% International 20 % 19 % 15 % 11 % 19 %
 
           
SILVER SPRING NETWORKS, INC.
UNAUDITED SUPPLEMENTAL FINANCIAL INFORMATION
(in thousands, except percentages and headcount)
 
Q4 Q1 Q2 Q3 Q4 YoY%
CY12   CY13   CY13   CY13   CY13   Change
 
CASH FLOW DATA
Operating cash flow $ 14,002 $ (8,913 ) $ (14,048 ) $ 21,131 $ 1,844 -87 %
Operating cash flow - TTM (24,278 ) (19,847 ) (19,158 ) 12,172 14 100 %
 
BALANCE SHEET DATA
Cash, cash equivalents and short-term investments $ 72,646 $ 142,354 $ 124,970 $ 143,431 $ 145,852 101 %
Deferred net revenue
End of quarter 508,056 528,176 510,722 532,546 524,653
Less: Beginning of quarter (472,551 ) (508,056 ) (528,176 ) (510,722 ) (532,546 )
Foreign currency translation adjustment   -     (52 )   395     (89 )   377  
Change in deferred net revenue, net of foreign currency translation $ 35,505   $ 20,068   $ (17,059 ) $ 21,735   $ (7,516 )
Deferred cost of revenue
End of quarter 245,163 260,572 268,236 275,101 276,123
Less: Beginning of quarter (227,170 ) (245,163 ) (260,572 ) (268,236 ) (275,101 )
Foreign currency translation adjustment   -     14     99     (23 )   (11 )
Change in deferred cost of revenue, net of foreign currency translation $ 17,993   $ 15,423   $ 7,763   $ 6,842   $ 1,011  
 
 
STOCK-BASED COMPENSATION
Cost of goods sold $ 560 $ 6,724 $ 2,531 $ 1,376 $ 1,644 194 %
Research and development 934 9,544 3,607 1,905 2,277 144 %
Sales and marketing 550 3,346 1,526 950 1,238 125 %
General and administrative   1,225     7,054     3,181     2,759     2,842   132 %
Total $ 3,269   $ 26,668   $ 10,845   $ 6,990   $ 8,001   145 %
 
EMPLOYEES 566 572 589 608 602 6 %
 
HOMES & BUSINESSES
Cumulative network endpoints delivered* 15,781 16,507 17,008 17,509 18,184 15 %
*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)
 
 
Q4 Q1 Q2 Q3 Q4 YOY %
CY12   CY13   CY13   CY13   CY13   Change
QUARTERLY RECONCILIATION OF RESULTS
 
Net revenue
GAAP net revenue $ 50,071 $ 53,703 $ 103,510 $ 72,481 $ 97,164 94 %
Change in deferred revenue, net of foreign currency translation   35,505     20,068     (17,059 )   21,735     (7,516 )
Non-GAAP net revenue $ 85,576   $ 73,771   $ 86,451   $ 94,216   $ 89,648   5 %
 
Gross profit
GAAP gross profit $ 10,548 $ 10,134 $ 48,250 $ 23,226 $ 33,744 220 %
Change in deferred revenue, net of foreign currency translation 35,505 20,068 (17,059 ) 21,735 (7,516 )
Change in deferred cost of revenue, net of foreign currency translation (17,993 ) (15,423 ) (7,763 ) (6,842 ) (1,011 )
Amortization of intangibles in cost of revenue 48 48 48 48 48
Stock-based compensation   560     6,724     2,531     1,376     1,644  
Non-GAAP gross profit $ 28,668   $ 21,551   $ 26,007   $ 39,543   $ 26,909   -6 %
GAAP gross margin % (as a % of GAAP net revenue) 21 % 19 % 47 % 32 % 35 %
Non-GAAP gross margin % (as a % of non-GAAP net revenue) 34 % 29 % 30 % 42 % 30 %
 
Operating income (loss)
GAAP operating income (loss) $ (20,187 ) $ (39,574 ) $ 9,982 $ (12,115 ) $ (48 ) 100 %
Change in deferred revenue, net of foreign currency translation 35,505 20,068 (17,059 ) 21,735 (7,516 )
Change in deferred cost of revenue, net of foreign currency translation (17,993 ) (15,423 ) (7,763 ) (6,842 ) (1,011 )
Amortization of intangibles in cost of revenue 48 48 48 48 48
Stock-based compensation 3,269 26,668 10,845 6,990 8,001
Legal settlements   -     -     -     -     250  
Non-GAAP operating income (loss) $ 642   $ (8,213 ) $ (3,947 ) $ 9,816   $ (276 ) -143 %
GAAP operating margin % (as a % of GAAP revenue) -40 % -74 % 10 % -17 % 0 %
Non-GAAP operating margin % (as a % of non-GAAP net revenue) 1 % -11 % -5 % 10 % 0 %
 
Adjusted EBITDA
GAAP net income (loss) $ (21,010 ) $ (64,366 ) $ 9,470 $ (12,269 ) $ 358 102 %
Change in deferred revenue, net of foreign currency translation 35,505 20,068 (17,059 ) 21,735 (7,516 )
Change in deferred cost of revenue, net of foreign currency translation (17,993 ) (15,423 ) (7,763 ) (6,842 ) (1,011 )
Other (income) expense, net 902 24,728 184 54 (138 )
Provision for income taxes (79 ) 64 328 100 (268 )
Depreciation and amortization 1,796 1,677 1,689 1,624 1,656
Stock-based compensation 3,269 26,668 10,845 6,990 8,001
Legal settlements   -     -     -     -     250  
Adjusted EBITDA $ 2,390   $ (6,584 ) $ (2,306 ) $ 11,392   $ 1,332   -44 %
 
Net income (loss)
GAAP net income (loss) $ (21,010 ) $ (64,366 ) $ 9,470 $ (12,269 ) $ 358 102 %
Change in deferred revenue, net of foreign currency translation 35,505 20,068 (17,059 ) 21,735 (7,516 )
Change in deferred cost of revenue, net of foreign currency translation (17,993 ) (15,423 ) (7,763 ) (6,842 ) (1,011 )
Amortization of intangibles in cost of revenue 48 48 48 48 48
Convertible notes accretion / interest 1,081 935 - - -
Conversion of promissory notes and remeasurement of warrants and derivatives (308 ) 23,676 - - -
Stock-based compensation 3,269 26,668 10,845 6,990 8,001
Legal settlements   -     -     -     -     250  
Non-GAAP net income (loss) $ 592   $ (8,394 ) $ (4,459 ) $ 9,662   $ 130   -78 %
GAAP net margin % (as a % of GAAP revenue) -42 % -120 % 9 % -17 % 0 %
Non-GAAP net margin % (as a % of non-GAAP net revenue) 1 % -11 % -5 % 10 % 0 %
 
GAAP income (loss) per share
Basic $ (5.65 ) $ (16.18 ) * $ 0.20 $ (0.26 ) $ 0.01
Diluted $ (5.65 ) $ (16.18 ) * $ 0.19 $ (0.26 ) $ 0.01
 
Weighted average number of shares used in computation
Basic 3,720 10,469 46,599 46,729 47,198
Diluted 3,720 10,469 48,995 46,729 49,603

* GAAP income (loss) per share is based on net loss attributable to common stockholders

 
Non-GAAP income (loss) per share
Basic $ 0.16 $ (0.80 ) $ (0.10 ) $ 0.21 $ 0.00
Diluted $ 0.02 $ (0.80 ) $ (0.10 ) $ 0.19 $ 0.00
 
Weighted average number of shares used in computation
Basic 3,720 10,469 46,599 46,729 47,198
Diluted 29,394 10,469 46,599 49,620 49,603
 


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