Silver Spring Networks Reports Second Quarter 2017 Financial Results

Silver Spring Networks, Inc. (NYSE: SSNI) today announced preliminary financial results for its second quarter ended June 30, 2017.

Second Quarter Financial Highlights (all comparisons made are against the prior year period, unless otherwise stated):

GAAP results:

  • Revenue was $261.6 million, up 114.5% year-over-year.
  • Cost of revenue was $205.0 million, or 78.4% of revenue, versus $57.4 million or 47.1% in the second quarter of 2016.
  • Operating expense was $38.3 million including a $1.2 million restructuring charge, versus $37.8 million in the second quarter of 2016.
  • Net income per diluted share was $0.34, versus $0.50 in the second quarter of last year.
  • Quarter-ending cash, cash equivalents, and short-term investments was $117.8 million versus $113.1 million in the second quarter of 2016.
  • Cash flow from operations was $3.0 million, versus $3.8 million in the second quarter of 2016.

Non-GAAP metrics:

  • Billings were $78.7 million, up 9.6% year-over-year.
  • Cost of billings was $43.4 million or 55.2% of billings, versus $38.8 million or 54.0% in the second quarter of 2016.
  • Non-GAAP operating expense was $31.8 million, versus $31.5 million in the second quarter of 2016.

“In the second quarter, we delivered solid revenue, $3.0 million in cash flow from operations, and 9.6% growth in billings,” said Mike Bell, President and Chief Executive Officer, Silver Spring Networks. “We are ramping our new customer programs, winning additional smart utility and smart city awards, and driving our technology into the broader Industrial Internet of Things opportunity.”

Business Highlights (through August 8, 2017, unless otherwise stated):

  • Silver Spring Networks has delivered more than 26.7 million cumulative network endpoints since inception through June 30, 2017, up 9% from a year ago.
  • Agreed to work with ESB Telecoms Ltd to develop a national Internet of Things (IoT) network, based on our Starfish™ standards-based Platform-as-a-Service solution, across Ireland.
  • Selected by Pepco Holdings, Inc. (PHI) for a Distribution Automation deployment, an extension of its existing smart grid investment, to further improve grid reliability and operational efficiency with connectivity solutions for intelligent grid devices throughout PHI’s service territory in Delaware, Maryland, and Washington D.C.
  • Expanded our Starfish Platform-as-a-Service award in London, for an additional 28,000 street lights to be connected to new areas including the City of London, and the Borough of Barking and Dagenham, through our reseller agreement with urbancontrol.
  • Progressing with the network canopy installation for Dubai Electric & Water Authority (DEWA), to cover the Emirate of Dubai with Silver Spring’s IPv6 IoT communications platform. Silver Spring’s Gen5 technology will be integrated into smart electric meter devices from Honeywell Elster, which will be used to connect the first DEWA electric customers to the canopy.
  • The City of Chicago and our reseller partner, Ameresco, have finalized the contract to connect more than 250,000 street lights in what is believed to be the largest city-led wireless street lighting project in the U.S.
  • Expanded our relationship with Jamaica Public Service Company (JPS) to connect up to 110,000 street lights on the island of Jamaica.
  • Selected by Grant County Public Utility District for an AMI deployment to connect approximately 47,000 homes and businesses in Central Washington and the Pacific Northwest.

Conference Call

Silver Spring Networks will host a conference call today at 2:00 pm PT (5:00 pm ET) to review its results for the second quarter ended June 30, 2017 and its outlook for the future. During the course of this call, Silver Spring Networks 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 September 26, 2017 and can be accessed at 877-660-6853 (domestic) or 201-612-7415 (international) passcode 13666523. 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 26.7 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 Networks supplements the results of operations presented in accordance with generally accepted accounting principles, or GAAP, with certain non-GAAP metrics. Silver Spring Networks manages its business, makes planning decisions, evaluates its performance and allocates resources by assessing non-GAAP and other financial metrics such as billings, cost of billings, non-GAAP operating expense, and total backlog. Silver Spring Networks believes that these non-GAAP and other 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 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, operating expense, or any other performance measure derived in accordance with GAAP. Silver Spring Networks 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 Networks’ accounting policies as described in Silver Spring Networks’ filings with the Securities and Exchange Commission. Silver Spring Networks reconciles revenue to billings by adding revenue to the change in deferred revenue in a given period.

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 Networks 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.

Non-GAAP operating expense consists of research and development, sales and marketing, and general and administrative expenses, excluding amortization and impairment of intangible assets, stock-based compensation, acquisition-related charges, restructuring and legal settlements.

Total backlog represents future product and service billings that Silver Spring Networks 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; future growth and market opportunity; the scope and timing of future deployments; expected benefits from our products; future investment; future innovation; customer and market activity; our expected project with ESB Telecoms Ltd; 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, deployment pace, and acceptances; changes in the type and mix of products and services sold; receipt by our customers and partners of required regulatory or other approvals; dependence on a limited number of customers, as well as our ability to achieve scale in our customers’ deployments; dependence on a limited number of key suppliers and our ability to obtain sufficient quantities of components from those suppliers; failure to realize cost savings and benefits of our restructuring plan; failure to manage our growth successfully or our operating expenses effectively; 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 Networks’ 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 Networks’ relationship with third-party manufacturers; execution and customer adoption risks related to new product introductions and innovation; the ability to attract and retain personnel, including members of Silver Spring Networks’ management team; changes in strategy; technological changes that make Silver Spring Networks’ 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; the successful negotiation and execution of definitive agreements related to our project with ESB Telecoms, Ltd; and other risk factors set forth from time to time in Silver Spring Networks’ 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 August 8, 2017. Silver Spring undertakes no obligation, and expressly disclaims any obligation, to update any forward-looking statements in this press release in light of new information or future events. In addition, the preliminary financial results set forth in this press release are estimates based on information currently available to Silver Spring.

 
SILVER SPRING NETWORKS, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
 
  Three Months Ended   Six Months Ended
June 30, June 30,
2017   2016 2017   2016
Revenue:
Product $ 214,713 $ 69,917 $ 241,241 $ 102,769
Services   46,859   52,035     70,594     67,803  
Total revenue 261,572 121,952 311,835 170,572
 
Cost of revenue:
Product 186,491 41,439 202,518 57,419
Services   18,543   15,970     35,866     31,613  
Total cost of revenue 205,034 57,409 238,384 89,032
Gross profit 56,538 64,543 73,451 81,540
 
Operating expenses:
Research and development 17,272 17,933 35,913 33,418
Sales and marketing 8,893 8,622 17,996 18,172
General and administrative 10,881 11,239 23,147 22,085
Restructuring   1,207       1,254     39  
Total operating expenses   38,253   37,794     78,310     73,714  
 
Operating income (loss) 18,285 26,749 (4,859 ) 7,826
Other income, net   9   333     552     774  
Income (loss) before income taxes 18,294 27,082 (4,307 ) 8,600
Benefit (provision) for income taxes   332   (961 )   (238 )   (993 )
Net income (loss) $ 18,626 $ 26,121   $ (4,545 ) $ 7,607  
Net income (loss) per share:
Basic $ 0.35 $ 0.51   $ (0.09 ) $ 0.15  
Diluted $ 0.34 $ 0.50   $ (0.09 ) $ 0.14  
Weighted average shares used to compute net income (loss) per share:
Basic   53,329   51,224     52,970     50,992  
Diluted   54,174   52,766     52,970     52,492  
 
SILVER SPRING NETWORKS, INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
 
  June 30,   December 31,
2017 2016 (a)
ASSETS
Current assets:
Cash and cash equivalents $ 51,133 $ 50,383
Short-term investments 66,712 67,876
Accounts receivable 51,719 44,770
Inventory 5,288 8,040
Deferred cost of revenue 32,846 194,769
Prepaid expenses and other current assets   11,361     12,536  
Total current assets 219,059 378,374
Property and equipment, net 25,978 28,986
Goodwill and intangible assets 10,620 11,005
Deferred cost of revenue, non-current 36,906 26,639
Deferred tax assets, non-current 496 481
Other long-term assets   2,575     1,643  
Total assets $ 295,634   $ 447,128  
 
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable $ 30,428 $ 26,785
Deferred revenue 96,916 292,260
Accrued and other liabilities   42,180     44,146  
Total current liabilities 169,524 363,191
Deferred revenue, non-current 123,063 93,149
Other liabilities   23,332     22,324  
Total liabilities   315,919     478,664  
Total stockholders’ deficit   (20,285 )   (31,536 )
Total liabilities and stockholders’ deficit $ 295,634   $ 447,128  
 
(a) Derived from audited consolidated financial statements.
 
SILVER SPRING NETWORKS, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
(in thousands)
 
  Three Months Ended   Six Months Ended
June 30, June 30,
  2017       2016     2017       2016  
OPERATING ACTIVITIES
Net income (loss) $ 18,626 $ 26,121 $ (4,545 ) $ 7,607

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Deferred taxes 9 111 (16 ) 111
Depreciation and amortization 2,232 2,104 4,477 4,236
Stock-based compensation 7,032 7,041 13,689 13,941
Other non-cash adjustments 106 53 187 113
Changes in assets and liabilities:
Accounts receivable (3,419 ) (3,117 ) (6,979 ) 859
Inventory 234 1,591 2,752 2,061
Prepaid expenses and other assets (3,162 ) (264 ) (3,642 ) 1,944
Landlord incentives related to lease 2,275 883 2,275
Deferred cost of revenue 159,618 17,040 151,617 8,236
Accounts payable 825 561 4,220 1,174
Customer deposits 68 (1 ) 132 (6 )
Deferred revenue (183,036 ) (50,042 ) (165,364 ) (29,988 )
Accrued and other liabilities   3,875     329     7,122     (5,031 )
Net cash provided by operating activities   3,008     3,802     4,533     7,532  
 
INVESTING ACTIVITIES
Proceeds from sales of available-for-sale investments 2,549 18,111 2,549 22,944
Proceeds from maturities of available-for-sale investments 4,200 1,250 5,200 2,250
Purchases of available-for-sale investments (6,212 ) (7,515 ) (6,712 ) (10,954 )
Purchases of property and equipment   (673 )   (12,759 )   (1,750 )   (17,244 )
Net cash used for investing activities   (136 )   (913 )   (713 )   (3,004 )
 
FINANCING ACTIVITIES
Payments on capital lease obligations (141 ) (285 )
Proceeds from issuance of common stock 265 340 2,811 2,228
Taxes paid related to net share settlement of equity awards   (1,402 )   (3,286 )   (5,948 )   (3,620 )
Net cash used for financing activities   (1,137 )   (3,087 )   (3,137 )   (1,677 )

Effect of exchange rate changes on cash and cash equivalents

123

(234

)

67

(136

)

 
Net increase (decrease) in cash and cash equivalents 1,858 (432 ) 750 2,715
Cash and cash equivalents - beginning of period   49,275     68,411     50,383     65,264  
Cash and cash equivalents - end of period $ 51,133   $ 67,979   $ 51,133   $ 67,979  
 
SILVER SPRING NETWORKS, INC.
UNAUDITED RECONCILIATION OF REVENUE BETWEEN GAAP AND NON-GAAP (QUARTERLY)
(in thousands, except percentages)
 
  Q2   Q3   Q4   Q1   Q2   YoY%

REVENUE AND BILLINGS BY TYPE

  2016     2016     2016     2017     2017   Change

Revenue:

Product $ 69,917 $ 50,463 $ 40,386 $ 26,528 $ 214,713 207 %
Services
Managed services and SaaS 24,570 14,090 15,581 14,101 27,350 11 %
Professional services   27,465     9,633     10,283     9,634     19,509   -29 %
Total services   52,035     23,723     25,864     23,735     46,859   -10 %
Total revenue $ 121,952   $ 74,186   $ 66,250   $ 50,263   $ 261,572   114 %
% Product 57 % 68 % 61 % 53 % 82 %
% Services 43 % 32 % 39 % 47 % 18 %
 

Change in deferred revenue:

Product $ (23,804 ) $ (568 ) $ 7,155 $ 16,102 $ (165,071 )
Services
Managed services and SaaS (9,650 ) 1,641 1,427 1,802 (11,298 )
Professional services   (16,652 )   885     2,867     (215 )   (6,454 )
Total services   (26,302 )   2,526     4,294     1,587     (17,752 )
Total change in deferred revenue $ (50,106 ) $ 1,958 $ 11,449 $ 17,689 $ (182,823 )
 

Billings

Product $ 46,113 $ 49,895 $ 47,541 $ 42,630 $ 49,642 8 %
Services
Managed services and SaaS 14,920 15,731 17,008 15,903 16,052 8 %
Professional services   10,813     10,518     13,150     9,419     13,055   21 %
Total services   25,733     26,249     30,158     25,322     29,107   13 %
Total Billings $ 71,846   $ 76,144   $ 77,699   $ 67,952   $ 78,749   10 %
% Product 64 % 66 % 61 % 63 % 63 %
% Services 36 % 34 % 39 % 37 % 37 %
 

REVENUE AND BILLINGS BY SOLUTION

Revenue:

Advanced metering infrastructure $ 105,181 $ 66,203 $ 57,148 $ 41,072 $ 254,433 142 %
New solutions   16,771     7,983     9,102     9,191     7,139   -57 %
Total revenue $ 121,952   $ 74,186   $ 66,250   $ 50,263   $ 261,572   114 %
% Advanced metering infrastructure 86 % 89 % 86 % 82 % 97 %
% New solutions 14 % 11 % 14 % 18 % 3 %
 

Change in deferred revenue

Advanced metering infrastructure $ (45,184 ) $ (2,078 ) $ 2,531 $ 12,607 $ (188,584 )
New solutions   (4,922 )   4,036     8,918     5,082     5,761  
Total change in deferred revenue $ (50,106 ) $ 1,958 $ 11,449 $ 17,689 $ (182,823 )
 

Billings

Advanced metering infrastructure $ 59,997 $ 64,125 $ 59,679 $ 53,679 $ 65,849 10 %
New solutions   11,849     12,019     18,020       14,273       12,900   9 %
Total Billings $ 71,846   $ 76,144   $ 77,699   $ 67,952   $ 78,749   10 %
% Advanced metering infrastructure 84 % 84 % 77 % 79 % 84 %
% New solutions 16 % 16 % 23 % 21 % 16 %
 

REVENUE AND BILLINGS BY GEOGRAPHY

Revenue:

United States $ 118,539 $ 43,381 $ 53,087 $ 46,331 $ 257,957 118 %
International   3,413     30,805     13,163     3,932     3,615   6 %
Total revenue $ 121,952   $ 74,186   $ 66,250   $ 50,263   $ 261,572   114 %
% United States 97 % 58 % 80 % 92 % 99 %
% International 3 % 42 % 20 % 8 % 1 %
 

Change in deferred revenue

United States $ (57,666 ) $ 21,085 $ 8,880 $ 11,621 $ (189,243 )
International   7,560     (19,127 )   2,569     6,068     6,420  
Total change in deferred revenue $ (50,106 ) $ 1,958 $ 11,449 $ 17,689 $ (182,823 )
 

Billings

United States $ 60,873 $ 64,466 $ 61,967 $ 57,952 $ 68,714 13 %
International   10,973     11,678     15,732     10,000     10,035   -9 %
Total Billings $ 71,846   $ 76,144   $ 77,699   $ 67,952   $ 78,749   10 %
% United States 85 % 85 % 80 % 85 % 87 %
% International 15 % 15 % 20 % 15 % 13 %
 
SILVER SPRING NETWORKS, INC.
UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP MEASURES (QUARTERLY)
(in thousands)
 
 
  Three Months Ended June 30, 2017
Cost of Revenue  

Change in Deferred
Cost of Revenue (a)

 

Stock-based
Compensation

 

Amortization of
Intangible Assets

 

Acquisition-
Related Costs

  Cost of Billings
Cost of Revenue / Cost of Billings:
Product $ 186,491 $ (159,588 ) $ (461 ) $ (80 ) $ - $ 26,362
Services
Managed services and SaaS 9,619 - (668 ) - - 8,951
Professional services   8,924   -     (792 )   -     1     8,133
Total services $ 18,543 $ -   $ (1,460 ) $ -   $ 1   $ 17,084
Total Cost of Revenue / Cost of Billings $ 205,034

$

(159,588

)

$ (1,921 ) $ (80 ) $ 1   $ 43,446
                     

Operating
Expenses

Stock-based
Compensation

Amortization of
Intangible Assets

Restructuring &
Litigation

Acquisition-
Related Costs

Non-GAAP
Operating
Expenses

Operating Expenses / Non-GAAP Operating Expenses:
Research and development $ 17,272 $ (2,134 ) $ - $ - $ 1 $ 15,139
Sales and marketing 8,893 (657 ) (104 ) - (2 ) 8,130
General and administrative 10,881 (2,320 ) (8 ) - - 8,553
Restructuring   1,207   -     -     (1,207 )   -     -
Total Operating Expenses / Non-GAAP Operating Expenses $ 38,253 $ (5,111 ) $ (112 ) $ (1,207 ) $ (1 ) $ 31,822
 
 
Three Months Ended June 30, 2016
Cost of Revenue

Change in Deferred
Cost of Revenue (a)

Stock-based
Compensation

Amortization of
Intangible Assets

Acquisition-
Related Costs

Cost of Billings
Cost of Revenue / Cost of Billings:
Product $ 41,439 $ (16,992 ) $ (415 ) $ (195 ) $ - $ 23,837
Services
Managed services and SaaS 8,900 - (606 ) - - 8,294
Professional services   7,070   -     (368 )   -     (16 )   6,686
Total services $ 15,970 $ -   $ (974 ) $ -   $ (16 ) $ 14,980
Total Cost of Revenue / Cost of Billings $ 57,409 $ (16,992 ) $ (1,389 ) $ (195 ) $ (16 ) $ 38,817
                     

Operating
Expenses

Stock-based
Compensation

Amortization of
Intangible Assets

Restructuring &
Litigation

Acquisition-
Related Costs

Non-GAAP
Operating
Expenses

Operating Expenses / Non-GAAP Operating Expenses:
Research and development $ 17,933 $ (2,241 ) $ - $ - $ (310 ) $ 15,382
Sales and marketing 8,622 (726 ) (172 ) - (66 ) 7,658
General and administrative 11,239 (2,685 ) (8 ) - (118 ) 8,428
Restructuring   -   -     -     -     -     -
Total Operating Expenses / Non-GAAP Operating Expenses $ 37,794 $ (5,652 ) $ (180 ) $ -   $ (494 ) $ 31,468
 
 

(a) Amounts presented net of foreign currency translation.

 

SILVER SPRING NETWORKS, INC.

UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP MEASURES (YEAR TO DATE)

(in thousands)

 
 
  Six Months Ended June 30, 2017
Cost of Revenue  

Change in Deferred
Cost of Revenue (a)

 

Stock-based
Compensation

 

Amortization of
Intangible Assets

 

Acquisition-
Related Costs

  Cost of Billings
Cost of Revenue / Cost of Billings:
Product $ 202,518 $ (151,630 ) $ (901 ) $ (159 ) $ - $ 49,828
Services
Managed services and SaaS 19,460 - (1,358 ) - 12 18,114
Professional services   16,406   -     (1,468 )   -     (3 )   14,935
Total services $ 35,866 $ -   $ (2,826 ) $ -   $ 9   $ 33,049
Total Cost of Revenue / Cost of Billings $ 238,384 $ (151,630 ) $ (3,727 ) $ (159 ) $ 9   $ 82,877
                     

Operating
Expenses

Stock-based
Compensation

Amortization of
Intangible Assets

Restructuring &
Litigation

Acquisition-
Related Costs

Non-GAAP
Operating
Expenses

Operating Expenses / Non-GAAP Operating Expenses:
Research and development $ 35,913 $ (4,192 ) $ - $ - $ (45 ) $ 31,676
Sales and marketing 17,996 (1,163 ) (210 ) - (11 ) 16,612
General and administrative 23,147 (4,607 ) (16 ) - (19 ) 18,505
Restructuring   1,254   -     -     (1,254 )   -     -
Total Operating Expenses / Non-GAAP Operating Expenses $ 78,310 $ (9,962 ) $ (226 ) $ (1,254 ) $ (75 ) $ 66,793
 
 
Six Months Ended June 30, 2016
Cost of Revenue

Change in Deferred
Cost of Revenue (a)

Stock-based
Compensation

Amortization of
Intangible Assets

Acquisition-
Related Costs

Cost of Billings
Cost of Revenue / Cost of Billings:
Product $ 57,419 $ (8,324 ) $ (767 ) $ (364 ) $ - $ 47,964
Services
Managed services and SaaS 17,532 - (1,001 ) - - 16,531
Professional services   14,081   -     (949 )   -     (31 )   13,101
Total services $ 31,613 $ -   $ (1,950 ) $ -   $ (31 ) $ 29,632
Total Cost of Revenue / Cost of Billings $ 89,032 $ (8,324 ) $ (2,717 ) $ (364 ) $ (31 ) $ 77,596
                     

Operating
Expenses

Stock-based
Compensation

Amortization of
Intangible Assets

Restructuring &
Litigation

Acquisition-
Related Costs

Non-GAAP
Operating
Expenses

Operating Expenses / Non-GAAP Operating Expenses:
Research and development $ 33,418 $ (4,267 ) $ - $ - $ (621 ) $ 28,530
Sales and marketing 18,172 (1,557 ) (415 ) - (131 ) 16,069
General and administrative 22,085 (5,400 ) (17 ) - (243 ) 16,425
Restructuring   39   -     -     (39 )   -     -
Total Operating Expenses / Non-GAAP Operating Expenses $ 73,714 $ (11,224 ) $ (432 ) $ (39 ) $ (995 ) $ 61,024
 
 

(a) Amounts presented net of foreign currency translation.

 
SILVER SPRING NETWORKS, INC.
UNAUDITED SUPPLEMENTAL FINANCIAL DATA AND OTHER INFORMATION
(in thousands, except percentages and headcount)
 
  Q2   Q3   Q4   Q1   Q2   YoY%
SUPPLEMENTAL FINANCIAL DATA 2016 2016 2016 2017 2017 Change
 
STOCK-BASED COMPENSATION
Cost of goods sold $ 1,389 $ 2,082 $ 1,945 $ 1,806 $ 1,921 38 %
Research and development 2,241 2,593 2,450 2,058 2,134 -5 %
Sales and marketing 726 943 1,152 506 657 -10 %
General and administrative   2,685   2,280   2,423   2,287   2,320 -14 %
TOTAL STOCK-BASED COMPENSATION $ 7,041 $ 7,898 $ 7,970 $ 6,657 $ 7,032 0 %
 
CASH FLOW DATA
Operating cash flow $ 3,802 $ 5,145 $ 8,085 $ 1,525 $ 3,008 -21 %
Operating cash flow - trailing twelve months 18,061 18,934 20,762 18,557 17,763 -2 %
 
BALANCE SHEET DATA
Cash, cash equivalents and short-term investments $ 113,064 $ 113,358 $ 118,259 $ 116,620 $ 117,845 4 %
 
 
OTHER INFORMATION
 
HOMES & BUSINESSES
Network endpoints delivered during quarter* 747 569 564 511 670 -10 %
Cumulative network endpoints delivered* 24,399 24,968 25,532 26,043 26,713 9 %
*Endpoints refer to communication modules in electric meters
 
EMPLOYEES 708 709 702 704 646 -9 %
 
SILVER SPRING NETWORKS, INC.
UNAUDITED SUPPLEMENTAL TRENDED GAAP FINANCIAL DATA
(in thousands)
 
  Q2   Q3   Q4   Q1   Q2
  2016     2016     2016     2017     2017  
 
Gross profit $ 64,543 $ 28,242 $ 28,417 $ 16,913 $ 56,538
 

Other GAAP financial data related to gross profit:

Change in deferred revenue, net of foreign currency translation (50,106 ) 1,958 11,449 17,689 (182,823 )
Change in deferred cost of revenue, net of foreign currency translation 16,992 9,404 (3,177 ) (7,958 ) 159,588
Amortization of intangible assets 195 79 79 79 80
Stock-based compensation 1,389 2,082 1,945 1,806 1,921
Acquisition-related charges 16 15 15 (8 ) (1 )
 
Operating expenses $ 37,794 $ 42,461 $ 41,948 $ 40,057 $ 38,253
 

Other GAAP financial data included in operating expenses:

Amortization of intangible assets 180 114 113 114 112
Stock-based compensation 5,652 5,816 6,025 4,851 5,111
Acquisition-related charges 494 493 494 74 1
Impairment of intangible assets 2,204
Restructuring 47 1,207
 
Other statement of operations line items
Other income, net $ 333 $ 113 $ (217 ) $ 543 $ 9
(Provision) benefit for income taxes (961 ) (1,143 ) (239 ) (570 ) 332