SSNI Silver Spring Networks, Inc. (delisted)

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

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

GAAP results:

• Revenue was $47.6 million, down 35.9% year-over-year.
• Cost of revenue was $33.8 million, or 71.0% of revenue, versus $45.9 million or 61.9% in the third quarter of 2016.
• Operating expense was $40.6 million, versus $42.5 million in the third quarter of 2016.
• Net loss per diluted share was ($0.47), versus ($0.29) in the third quarter of last year.
• Quarter-ending cash, cash equivalents, and short-term investments was $126.2 million versus $113.4 million in the third quarter of 2016.
• Cash flow from operations was $7.5 million, versus $5.1 million in the third quarter of 2016.

Non-GAAP metrics:

• Billings were $82.8 million, up 8.7% year-over-year.
• Cost of billings was $43.1 million or 52.1% of billings, versus $34.4 million or 45.1% in the third quarter of 2016.
• Non-GAAP operating expense was $34.9 million, which included approximately $3.3 million of transaction expenses related to the proposed acquisition of Silver Spring Networks by Itron, Inc. This compares to non-GAAP operating expense of $33.8 million in the third quarter of 2016.

“We delivered solid billings growth, underlying profitability, and significant cash flow from operations,” said Mike Bell, President and Chief Executive Officer, Silver Spring Networks. “New customer deployments continue for both domestic and international projects as we ramp deliveries of our Gen5 platform.”

Silver Spring Networks will not conduct an earnings conference call due to the proposed acquisition of Silver Spring Networks by Itron, Inc.

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

• Silver Spring Networks has delivered more than 27.3 million cumulative network endpoints since inception through September 30, 2017, up 9% from a year ago.
• Announced agreement with new technology and channel partner Acuity Brands, in which Acuity Brands’ field sales organization will deliver Silver Spring’s technology for smart street lights and smart city services as part of its turn-key offering for large-scale utility and city customers.
• Expanded smart metering ecosystem through an agreement with Genus Power Systems, in which Genus will integrate Silver Spring’s standards-based IPv6 network infrastructure cards into its meters for smart grid deployments across Asia including with CESC and Singapore Power.
• Named a Visionary in the Gartner ‘Magic Quadrant for Managed M2M Services, Worldwide1,’ for the second consecutive year.
• Received Frost & Sullivan’s Asia Pacific Smart Utility Platform Provider of the Year, for its smart grid initiatives in the region, for the second consecutive year.

1Gartner, Inc., Magic Quadrant for Managed M2M Services, Worldwide, Eric Goodness, Leif-Olof Wallin, Aapo Markkanen, Godfrey Chua, 23 October 2017. 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.

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 27.3 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 Agreement and Plan of Merger dated September 17, 2017 with Itron, Inc. and Ivory Merger Sub, Inc., a wholly owned subsidiary of Itron, Inc., pursuant to which Silver Spring Networks would become a wholly-owned subsidiary of Itron, Inc. (the “Merger”), 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; 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 of the Merger; Silver Spring Networks’ ability to solicit a sufficient number of proxies to approve the Merger; other conditions to the completion of the Merger; 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; 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 November 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.

  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, 2017 2016 2017 2016 Revenue: Product $ 26,612 $ 50,463 $ 267,853 $ 153,232 Services   20,956     23,723     91,550     91,526  

Total revenue

47,568 74,186 359,403 244,758   Cost of revenue: Product 15,885 29,249 218,403 86,668 Services   17,878     16,695     53,744     48,308   Total cost of revenue 33,763 45,944 272,147 134,976 Gross profit 13,805 28,242 87,256 109,782   Operating expenses: Research and development 15,971 18,165 51,884 51,583 Sales and marketing 8,752 10,425 26,748 28,597 General and administrative 15,828 11,667 38,975 33,752 Impairment of intangible assets — 2,204 — 2,204 Restructuring   35     —     1,289     39   Total operating expenses   40,586     42,461     118,896     116,175     Operating loss (26,781 ) (14,219 ) (31,640 ) (6,393 ) Other income, net   761     113     1,313     887   Loss before income taxes (26,020 ) (14,106 ) (30,327 ) (5,506 ) Benefit (provision) for income taxes   793     (1,143 )   555     (2,136 ) Net loss $ (25,227 ) $ (15,249 ) $ (29,772 ) $ (7,642 ) Net loss per share: Basic $ (0.47 ) $ (0.29 ) $ (0.56 ) $ (0.15 ) Diluted $ (0.47 ) $ (0.29 ) $ (0.56 ) $ (0.15 ) Weighted average shares used to compute net loss per share: Basic   53,829     51,743     53,260     51,244   Diluted   53,829     51,743     53,260     51,244     SILVER SPRING NETWORKS, INC. UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands)       September 30, December 31, 2017 2016 (a) ASSETS Current assets: Cash and cash equivalents $ 58,865 $ 50,383 Short-term investments 67,349 67,876 Accounts receivable 49,988 44,770 Inventory 6,064 8,040 Deferred cost of revenue 72,459 194,769 Prepaid expenses and other current assets   12,984     12,536   Total current assets 267,709 378,374 Property and equipment, net 26,395 28,986 Goodwill and intangible assets 10,428 11,005 Deferred cost of revenue, non-current 8,980 26,639 Deferred tax assets, non-current 525 481 Other long-term assets   2,483     1,643   Total assets $ 316,520   $ 447,128     LIABILITIES AND STOCKHOLDERS' DEFICIT Current liabilities: Accounts payable $ 36,960 $ 26,785 Deferred revenue 208,060 292,260 Accrued and other liabilities   37,598     44,146   Total current liabilities 282,618 363,191 Deferred revenue, non-current 47,451 93,149 Other liabilities   25,406     22,324   Total liabilities   355,475     478,664   Total stockholders’ deficit   (38,955 )   (31,536 ) Total liabilities and stockholders’ deficit $ 316,520   $ 447,128     (a) Derived from audited consolidated financial statements.   SILVER SPRING NETWORKS, INC. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands)         Three Months Ended Nine Months Ended September 30, September 30, 2017 2016 2017 2016 OPERATING ACTIVITIES Net loss $ (25,227 ) $ (15,249 ) $ (29,772 ) $ (7,642 )

Adjustments to reconcile net loss to net cash provided by operating activities:

Deferred taxes (29 ) (17 ) (45 ) 94 Impairment of intangible assets — 2,204 — 2,204 Depreciation and amortization 2,189 2,096 6,666 6,332 Stock-based compensation 7,569 7,898 21,258 21,839 Other non-cash adjustments 82 659 269 772 Changes in assets and liabilities: Accounts receivable 1,738 1,967 (5,241 ) 2,826 Inventory (772 ) (2,811 ) 1,980 (750 ) Prepaid expenses and other assets (1,519 ) 1,013 (5,161 ) 2,957 Landlord incentives related to lease — 4,513 883 6,788 Deferred cost of revenue (11,495 ) 9,359 140,122 17,595 Accounts payable 5,799 (10,082 ) 10,019 (8,908 ) Customer deposits (90 ) 1,037 42 1,031 Deferred revenue 35,197 1,927 (130,167 ) (28,061 ) Accrued and other liabilities   (5,935 )   631     1,187     (4,400 ) Net cash provided by operating activities   7,507     5,145     12,040     12,677     INVESTING ACTIVITIES Proceeds from sales of available-for-sale investments 3,999 16,273 6,548 39,217 Proceeds from maturities of available-for-sale investments — 8,720 5,200 10,970 Purchases of available-for-sale investments (4,670 ) (45,401 ) (11,382 ) (56,355 ) Purchases of property and equipment   (741 )   (6,125 )   (2,491 )   (23,369 ) Net cash used for investing activities   (1,412 )   (26,533 )   (2,125 )   (29,537 )   FINANCING ACTIVITIES Payments on capital lease obligations — — — (285 ) Proceeds from issuance of common stock 2,673 2,010 5,484 4,238 Taxes paid related to net share settlement of equity awards   (1,092 )   (549 )   (7,040 )   (4,169 ) Net cash provided by (used for) financing activities   1,581     1,461     (1,556 )   (216 ) Effect of exchange rate changes on cash and cash equivalents 56 (4 ) 123 (140 )   Net increase (decrease) in cash and cash equivalents 7,732 (19,931 ) 8,482 (17,216 ) Cash and cash equivalents - beginning of period   51,133     67,979     50,383     65,264   Cash and cash equivalents - end of period $ 58,865   $ 48,048   $ 58,865   $ 48,048     SILVER SPRING NETWORKS, INC. UNAUDITED RECONCILIATION OF REVENUE BETWEEN GAAP AND NON-GAAP (QUARTERLY) (in thousands, except percentages)             Q3 Q4 Q1 Q2 Q3 YoY%

REVENUE AND BILLINGS BY TYPE

2016 2016 2017 2017 2017 Change

Revenue:

Product $ 50,463 $ 40,386 $ 26,528 $ 214,713 $ 26,612 -47 % Services Managed services and SaaS 14,090 15,581 14,101 27,350 14,053 0 % Professional services   9,633     10,283     9,634     19,509     6,903   -28 % Total services   23,723     25,864     23,735     46,859     20,956   -12 % Total revenue $ 74,186   $ 66,250   $ 50,263   $ 261,572   $ 47,568   -36 % % Product 68 % 61 % 53 % 82 % 56 % % Services 32 % 39 % 47 % 18 % 44 %  

Change in deferred revenue:

Product $ (568 ) $ 7,155 $ 16,102 $ (165,071 ) $ 22,062 Services Managed services and SaaS 1,641 1,427 1,802 (11,298 ) 3,266 Professional services   885     2,867     (215 )   (6,454 )   9,898   Total services   2,526     4,294     1,587     (17,752 )   13,164   Total change in deferred revenue $ 1,958 $ 11,449 $ 17,689 $ (182,823 ) $ 35,226  

Billings

Product $ 49,895 $ 47,541 $ 42,630 $ 49,642 $ 48,674 -2 % Services Managed services and SaaS 15,731 17,008 15,903 16,052 17,319 10 % Professional services   10,518     13,150     9,419     13,055     16,801   60 % Total services   26,249     30,158     25,322     29,107     34,120   30 % Total Billings $ 76,144   $ 77,699   $ 67,952   $ 78,749   $ 82,794   9 % % Product 66 % 61 % 63 % 63 % 59 % % Services 34 % 39 % 37 % 37 % 41 %  

REVENUE AND BILLINGS BY SOLUTION

Revenue:

Advanced metering infrastructure $ 66,203 $ 57,148 $ 41,072 $ 254,433 $ 39,907 -40 % New solutions   7,983     9,102     9,191     7,139     7,661   -4 % Total revenue $ 74,186   $ 66,250   $ 50,263   $ 261,572   $ 47,568   -36 % % Advanced metering infrastructure 89 % 86 % 82 % 97 % 84 % % New solutions 11 % 14 % 18 % 3 % 16 %  

Change in deferred revenue

Advanced metering infrastructure $ (2,078 ) $ 2,531 $ 12,607 $ (188,584 ) $ 29,623 New solutions   4,036     8,918     5,082     5,761     5,603   Total change in deferred revenue $ 1,958 $ 11,449 $ 17,689 $ (182,823 ) $ 35,226  

Billings

Advanced metering infrastructure $ 64,125 $ 59,679 $ 53,679 $ 65,849 $ 69,530 8 % New solutions   12,019       18,020       14,273       12,900       13,264   10 % Total Billings $ 76,144   $ 77,699   $ 67,952   $ 78,749   $ 82,794   9 % % Advanced metering infrastructure 84 % 77 % 79 % 84 % 84 % % New solutions 16 % 23 % 21 % 16 % 16 %  

REVENUE AND BILLINGS BY GEOGRAPHY

Revenue:

United States $ 43,381 $ 53,087 $ 46,331 $ 257,957 $ 42,767 -1 % International   30,805     13,163     3,932     3,615     4,801   -84 % Total revenue $ 74,186   $ 66,250   $ 50,263   $ 261,572   $ 47,568   -36 % % United States 58 % 80 % 92 % 99 % 90 % % International 42 % 20 % 8 % 1 % 10 %  

Change in deferred revenue

United States $ 21,085 $ 8,880 $ 11,621 $ (189,243 ) $ 15,691 International   (19,127 )   2,569     6,068     6,420     19,535   Total change in deferred revenue $ 1,958 $ 11,449 $ 17,689 $ (182,823 ) $ 35,226  

Billings

United States $ 64,466 $ 61,967 $ 57,952 $ 68,714 $ 58,458 -9 % International   11,678     15,732     10,000     10,035     24,336   108 % Total Billings $ 76,144   $ 77,699   $ 67,952   $ 78,749   $ 82,794   9 % % United States 85 % 80 % 85 % 87 % 71 % % International 15 % 20 % 15 % 13 % 29 %   SILVER SPRING NETWORKS, INC. UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP MEASURES (QUARTERLY) (in thousands)               Three Months Ended September 30, 2017 Cost of Revenue

Change in DeferredCost of Revenue (a)

Stock-basedCompensation

Amortization ofIntangible Assets

Acquisition-Related Costs

Cost of Billings Cost of Revenue / Cost of Billings: Product $ 15,885 $ 11,473 $ (508 ) $ (78 ) $ - $ 26,772 Services Managed services and SaaS 9,439 - (679 ) - - 8,760 Professional services   8,439   -     (847 )   -     -     7,592 Total services $ 17,878 $ -   $ (1,526 ) $ -   $ -   $ 16,352 Total Cost of Revenue / Cost of Billings $ 33,763 $ 11,473   $ (2,034 ) $ (78 ) $ -   $ 43,124   Operating Expenses

Stock-basedCompensation

Amortization andImpairment ofIntangible Assets

Restructuring &Litigation

Acquisition-Related Costs

Non-GAAPOperatingExpenses

Operating Expenses / Non-GAAP Operating Expenses: Research and development $ 15,971 $ (2,344 ) $ - $ - $ - $ 13,627 Sales and marketing 8,752 (703 ) (105 ) - - 7,944 General and administrative 15,828 (2,488 ) (9 ) - - 13,331 Impairment of intangible assets - - - - - - Restructuring   35   -     -     (35 )   -     - Total Operating Expenses / Non-GAAP Operating Expenses $ 40,586 $ (5,535 ) $ (114 ) $ (35 ) $ -   $ 34,902       Three Months Ended September 30, 2016 Cost of Revenue

Change in DeferredCost of Revenue (a)

Stock-basedCompensation

Amortization ofIntangible Assets

Acquisition-Related Costs

Cost of Billings

Cost of Revenue / Cost of Billings: Product $ 29,249 $ (9,404 ) $ (515 ) $ (79 ) $ - $ 19,251 Services Managed services and SaaS 9,478 - (719 ) - (15 ) 8,744 Professional services   7,217   -     (848 )   -     -     6,369 Total services $ 16,695 $ -   $ (1,567 ) $ -   $ (15 ) $ 15,113 Total Cost of Revenue / Cost of Billings $ 45,944 $ (9,404 ) $ (2,082 ) $ (79 ) $ (15 ) $ 34,364  

OperatingExpenses

Stock-basedCompensation

Amortization andImpairment ofIntangible Assets

Restructuring &Litigation

Acquisition-Related Costs

Non-GAAPOperatingExpenses

Operating Expenses / Non-GAAP Operating Expenses: Research and development $ 18,165 $ (2,592 ) $ - $ - $ (311 ) $ 15,262 Sales and marketing 10,425 (943 ) (106 ) - (65 ) 9,311 General and administrative 11,667 (2,281 ) (8 ) - (117 ) 9,261 Impairment of intangible assets 2,204 - (2,204 ) - - - Restructuring   -   -     -     -     -     - Total Operating Expenses / Non-GAAP Operating Expenses $ 42,461 $ (5,816 ) $ (2,318 ) $ -   $ (493 ) $ 33,834     (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)               Nine Months Ended September 30, 2017 Cost of Revenue

Change in DeferredCost of Revenue (a)

Stock-basedCompensation

Amortization ofIntangible Assets

Acquisition-Related Costs

Cost of Billings Cost of Revenue / Cost of Billings: Product $ 218,403 $ (140,157 ) $ (1,409 ) $ (237 ) $ - $ 76,600 Services Managed services and SaaS 28,899 - (2,037 ) - 12 26,874 Professional services   24,845   -     (2,315 )   -     (3 )   22,527 Total services $ 53,744 $ -   $ (4,352 ) $ -   $ 9   $ 49,401 Total Cost of Revenue / Cost of Billings $ 272,147 $ (140,157 ) $ (5,761 ) $ (237 ) $ 9   $ 126,001   Operating Expenses

Stock-basedCompensation

Amortization ofIntangible Assets

Restructuring &Litigation

Acquisition-Related Costs

Non-GAAPOperatingExpenses

Operating Expenses / Non-GAAP Operating Expenses: Research and development $ 51,884 $ (6,536 ) $ - $ - $ (45 ) $ 45,303 Sales and marketing 26,748 (1,866 ) (315 ) - (11 ) 24,556 General and administrative 38,975 (7,095 ) (25 ) - (19 ) 31,836 Impairment of intangible assets - - - - - - Restructuring   1,289   -     -     (1,289 )   -     - Total Operating Expenses / Non-GAAP Operating Expenses $ 118,896 $ (15,497 ) $ (340 ) $ (1,289 ) $ (75 ) $ 101,695       Nine Months Ended September 30, 2016 Cost of Revenue

Change in DeferredCost of Revenue (a)

Stock-basedCompensation

Amortization ofIntangible Assets

Acquisition-Related Costs

Cost of Billings

Cost of Revenue / Cost of Billings: Product $ 86,668 $ (17,728 ) $ (1,282 ) $ (443 ) $ - $ 67,215 Services Managed services and SaaS 27,010 - (1,689 ) - (46 ) 25,275 Professional services   21,298   -     (1,828 )   -     -     19,470 Total services $ 48,308 $ -   $ (3,517 ) $ -   $ (46 ) $ 44,745 Total Cost of Revenue / Cost of Billings $ 134,976 $ (17,728 ) $ (4,799 ) $ (443 ) $ (46 ) $ 111,960  

OperatingExpenses

Stock-basedCompensation

Amortization andImpairment ofIntangible Assets

Restructuring &Litigation

Acquisition-Related Costs

Non-GAAPOperatingExpenses

Operating Expenses / Non-GAAP Operating Expenses: Research and development $ 51,583 $ (6,859 ) $ - $ - $ (932 ) $ 43,792 Sales and marketing 28,597 (2,500 ) (521 ) - (196 ) 25,380 General and administrative 33,752 (7,681 ) (25 ) - (360 ) 25,686 Impairment of intangible assets 2,204 - (2,204 ) - - - Restructuring   39   -     -     (39 )   -     - Total Operating Expenses / Non-GAAP Operating Expenses $ 116,175 $ (17,040 ) $ (2,750 ) $ (39 ) $ (1,488 ) $ 94,858   (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)               Q3 Q4 Q1 Q2 Q3 YoY% SUPPLEMENTAL FINANCIAL DATA 2016 2016 2017 2017 2017 Change   STOCK-BASED COMPENSATION Cost of goods sold $ 2,082 $ 1,945 $ 1,806 $ 1,921 $ 2,034 -2 % Research and development 2,593 2,450 2,058 2,134 2,344 -10 % Sales and marketing 943 1,152 506 657 703 -25 % General and administrative   2,280   2,423   2,287   2,320     2,488 9 % TOTAL STOCK-BASED COMPENSATION $ 7,898 $ 7,970 $ 6,657 $ 7,032   $ 7,569 -4 %   CASH FLOW DATA Operating cash flow $ 5,145 $ 8,085 $ 1,525 $ 3,008 $ 7,507 46 %

Operating cash flow - trailing twelve months

18,934

20,762 18,557 17,763 20,125 6 %   BALANCE SHEET DATA Cash, cash equivalents and short-term investments $ 113,358 $ 118,259 $ 116,620 $ 117,845 $ 126,214 11 %     OTHER INFORMATION   HOMES & BUSINESSES

Network endpoints delivered during quarter*

569

564 511 670 604 6 %

Cumulative network endpoints delivered*

24,968

25,532 26,043 26,713 27,317 9 % *Endpoints refer to communication modules in electric meters   EMPLOYEES 709 702 704 646 647 -9 %   SILVER SPRING NETWORKS, INC. UNAUDITED SUPPLEMENTAL TRENDED GAAP FINANCIAL DATA (in thousands)           Q3 Q4 Q1 Q2 Q3   2016     2016     2017     2017     2017     Gross profit $ 28,242 $ 28,417 $ 16,913 $ 56,538 $ 13,805  

Other GAAP financial data related to gross profit:

Change in deferred revenue, net of foreign currency translation 1,958 11,449 17,689 (182,823 ) 35,226 Change in deferred cost of revenue, net of foreign currency translation 9,404 (3,177 ) (7,958 ) 159,588 (11,473 ) Amortization of intangible assets 79 79 79 80 78 Stock-based compensation 2,082 1,945 1,806 1,921 2,034 Acquisition-related charges 15 15 (8 ) (1 ) —   Operating expenses $ 42,461 $ 41,948 $ 40,057 $ 38,253 $ 40,586  

Other GAAP financial data included in operating expenses:

Amortization of intangible assets 114 113 114 112 114 Stock-based compensation 5,816 6,025 4,851 5,111 5,535 Acquisition-related charges 493 494 74 1 — Impairment of intangible assets 2,204 — — — — Restructuring — — 47 1,207 35   Other statement of operations line items Other income (expense), net $ 113 $ (217 ) $ 543 $ 9 $ 761 (Provision) benefit for income taxes (1,143 ) (239 ) (570 ) 332 793

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Silver Spring Networks, Inc.Mark McKechnie, 669-770-4664Investor Relationsmarkm@ssni.comorAmy Nunnemacher, 669-770-4183Global Communicationspr@ssni.com