10-Q

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2013

or

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                     

Commission file number: 001-35828

Silver Spring Networks, Inc.

(Exact name of registrant as specified in its charter)

Delaware	43-1966972
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)

555 Broadway Street

Redwood City, California 94063

(Address of principal executive offices) (Zip Code)

(650) 839-4000

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	¨	Accelerated filer	¨
Non-accelerated filer	x  (Do not check if a smaller reporting company)	Smaller reporting company	¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  x

As of November 1, 2013, there were approximately 47,129,761 shares of the Registrant’s Common Stock outstanding.

SILVER SPRING NETWORKS, INC.

TABLE OF CONTENTS

		Page No.
Note About Forward-Looking Statements			3
PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements
	Condensed Consolidated Balance Sheets		4
	Condensed Consolidated Statements of Operations		5
	Condensed Consolidated Statements of Comprehensive Income (Loss)		6
	Condensed Consolidated Statements of Cash Flows		7
	Notes to Condensed Consolidated Financial Statements		8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		24
Item 3.	Quantitative and Qualitative Disclosures about Market Risk		42
Item 4.	Controls and Procedures		42
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings		43
Item 1A.	Risk Factors		44
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		65
Item 3.	Defaults upon Senior Securities		65
Item 4.	Mine Safety Disclosures		65
Item 5.	Other Information		65
Item 6.	Exhibits		66
Signatures			67

2

NOTE ABOUT FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements contained in this Quarterly Report on Form 10-Q other than statements of historical fact, including statements regarding our future results of operations and financial position, our business strategy and plans, and our objectives for future operations, are forward-looking statements. The words “believe,” “may,” “could,” “should,” “will,” “plan,” “estimate,” “continue,” “anticipate,” “intend,” “expect,” “potential,” “predict,” “project,” and similar expressions are intended to identify forward-looking statements. We have based these forward-looking statements largely on our current expectations and projections about future events and trends that we believe may affect our financial condition, results of operations, business strategy, short-term and long-term business operations and objectives, and financial needs as of the date of this Quarterly Report on Form 10-Q. These forward-looking statements are subject to a number of risks, uncertainties and assumptions, including those described in Part II, Item 1A. (“Risk Factors”) in this Quarterly Report on Form 10-Q. Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, the future events and trends discussed in this Quarterly Report on Form 10-Q may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements.

We undertake no obligation to revise or publicly release the results of any revision to these forward-looking statements, except as required by law. Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements.

Unless expressly indicated or the context requires otherwise, the terms “Silver Spring Networks,” “company,” “we,” “us,” and “our” in this document refer to Silver Spring Networks, Inc., a Delaware corporation, and, where appropriate, its wholly owned subsidiaries.

3

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

SILVER SPRING NETWORKS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except for par value)

	September 30, 2013			December 31, 2012
	(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	81,865		$	72,646
Short-term investments		61,566			—
Accounts receivable		59,587			56,528
Inventory		6,997			7,731
Deferred cost of revenue		65,869			45,298
Prepaid expenses and other current assets		5,615			3,456
Total current assets		281,499			185,659
Property and equipment, net		12,857			12,701
Deferred cost of revenue, non-current		209,232			199,865
Deferred tax assets, non-current		8,075			8,265
Other long-term assets		2,275			11,254
Total assets	$	513,938		$	417,744
Liabilities, convertible preferred stock and stockholders’ deficit
Current liabilities:
Accounts payable	$	26,323		$	28,104
Accrued liabilities		19,156			14,831
Deferred revenue		149,990			89,838
Current portion of capital lease obligations		1,760			1,647
Deferred tax liability		7,950			7,897
Total current liabilities		205,179			142,317
Deferred revenue, non-current		382,556			418,218
Preferred stock warrant liability		—			11,261
Convertible promissory notes and embedded derivatives		—			56,319
Other liabilities		15,138			18,412
Commitments and contingencies (Note 5)
Convertible preferred stock:
$0.001 par value; no shares authorized, issued and outstanding, and aggregate liquidation preference of $0 as of September 30, 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’ deficit:
Preferred stock, $0.001 par value, 10,000 shares authorized and no shares issued or outstanding as of September 30, 2013; no shares authorized, issued or outstanding, as of December 31, 2012		—			—
Common stock, $0.001 par value; 1,000,000 shares authorized and 46,933 shares issued and outstanding as of September 30, 2013; 80,000 shares authorized and 3,764 shares issued and outstanding as of December 31, 2012		46			4
Additional paid-in capital		528,598			51,078
Accumulated other comprehensive income (loss)		40			(136	)
Accumulated deficit		(617,619	)		(550,454	)
Total stockholders’ deficit		(88,935	)		(499,508	)
Total liabilities, convertible preferred stock and stockholders’ deficit	$	513,938		$	417,744

See accompanying Notes to Condensed Consolidated Financial Statements.

4

SILVER SPRING NETWORKS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)

(Unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2013			2012			2013			2012
Revenue:
Product revenue	$	56,650		$	30,394		$	146,366		$	122,292
Service revenue		15,831			9,234			83,328			24,374
Total revenue, net		72,481			39,628			229,694			146,666
Cost of revenue:
Product cost of revenue		34,844			22,846			100,152			88,358
Service cost of revenue		14,411			12,348			47,932			37,137
Total cost of revenue		49,255			35,194			148,084			125,495
Gross profit		23,226			4,434			81,610			21,171
Operating expenses:
Research and development		16,980			15,480			60,851			46,872
Sales and marketing		7,424			6,822			26,514			21,732
General and administrative		10,937			6,599			35,952			21,024
Total operating expenses		35,341			28,901			123,317			89,628
Operating income (loss)		(12,115	)		(24,467	)		(41,707	)		(68,457	)
Other income (expense), net:
Interest expense		(54	)		(1,198	)		(1,290	)		(3,351	)
Conversion of promissory notes and remeasurement of warrants and derivatives		—			(830	)		(23,676	)		3,570
Other income (expense), net		(54	)		(2,028	)		(24,966	)		219
Income (loss) before income taxes		(12,169	)		(26,495	)		(66,673	)		(68,238	)
Provision for income taxes		100			373			492			469
Net income (loss)	$	(12,269	)	$	(26,868	)	$	(67,165	)	$	(68,707	)
Deemed dividend to convertible preferred stockholders		—			—			(105,000	)		—
Net income (loss) attributable to common stockholders	$	(12,269	)	$	(26,868	)	$	(172,165	)	$	(68,707	)
Net income (loss) per share attributable to common stockholders:
Basic	$	(0.26	)	$	(7.30	)	$	(4.96	)	$	(18.75	)
Diluted	$	(0.26	)	$	(7.30	)	$	(4.96	)	$	(18.75	)
Weighted average shares used to compute net income (loss) per share attributable to common stockholders:
Basic		46,729			3,682			34,733			3,664
Diluted		46,729			3,682			34,733			3,664

See accompanying Notes to Condensed Consolidated Financial Statements

5

SILVER SPRING NETWORKS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(In thousands)

(Unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2013			2012			2013			2012
Net loss	$	(12,269	)	$	(26,868	)	$	(67,165	)	$	(68,707	)
Other comprehensive income (loss):
Unrealized gain (loss) on foreign currency exchange		(62	)		13			45			(44	)
Unrealized holding gain on short-term investments		131			—			131			—
Other comprehensive income (loss)		69			13			176			(44	)
Comprehensive loss	$	(12,200	)	$	(26,855	)	$	(66,989	)	$	(68,751	)

See accompanying Notes to Condensed Consolidated Financial Statements

6

SILVER SPRING NETWORKS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

	Nine Months Ended September 30,
	2013			2012
Cash flows provided by (used in) operating activities:
Net loss	$	(67,165	)	$	(68,707	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization		4,990			5,459
Stock-based compensation		44,503			11,823
Conversion of promissory notes and remeasurement of warrants and derivatives		23,676			(3,570	)
Other non-cash adjustments		1,565			2,464
Changes in operating assets and liabilities:
Accounts receivable		(3,126	)		(30,833	)
Inventory		534			(5,676	)
Prepaid expenses and other current assets		(2,248	)		447
Deferred cost of revenue		(29,938	)		(20,867	)
Other long-term assets		3,846			(2,356	)
Accounts payable		(1,746	)		7,330
Accrued liabilities		2,379			(3,053	)
Customer deposits		(247	)		(6,954	)
Deferred revenue		24,490			72,091
Other liabilities		(3,343	)		4,122
Net cash used in operating activities		(1,830	)		(38,280	)
Cash flows provided by (used in) investing activities:
Decrease in restricted cash		—			140
Purchases of short-term investments		(61,451	)		—
Purchases of property and equipment		(3,343	)		(4,249	)
Net cash used in investing activities		(64,794	)		(4,109	)
Cash flows provided by (used in) financing activities:
Payment upon termination of preferred stock warrants of a related party		(12,000	)		—
Proceeds from initial public offering, net of offering costs		84,472			—
Proceeds from private placement of common stock with a related party		12,000			—
Payments on capital lease obligations		(1,485	)		(888	)
Proceeds from sale-leaseback of property and equipment		—			1,676
Proceeds from issuance of convertible promissory note		—			28,993
Proceeds from issuance of common stock, net of repurchases		578			545
Taxes paid related to net share settlement of equity awards		(7,722	)		—
Net cash provided by financing activities		75,843			30,326
Net increase (decrease) in cash and cash equivalents		9,219			(12,063	)
Cash and cash equivalents—beginning of period		72,646			71,687
Cash and cash equivalents—end of period	$	81,865		$	59,624
Supplemental cash flow information—cash paid for taxes	$	186		$	316
Supplemental cash flow information—cash paid for interest	$	212		$	290
Non-cash investing and financing activities:
Conversion of convertible preferred stock into common stock	$	270,725		$	—
Fair value of common stock issued on conversion of convertible promissory notes	$	79,441		$	—
Deferred offering costs not yet paid	$	245		$	—
Property and equipment acquired under capital lease	$	1,768		$	1,676

See accompanying Notes to Condensed Consolidated Financial Statements

7

SILVER SPRING NETWORKS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. Description of Business and Summary of Significant Accounting Policies

We provide a networking platform and solutions that enable utilities to transform the power grid infrastructure into the smart grid. The foundation of our technology is a standards-based and secure Internet Protocol, or IP, network. Our networking platform provides two-way communications between the utility back office and devices on the power grid. In addition to our networking platform, we offer a suite of solutions that run on top of our network and complementary services, all of which we collectively refer to as our Smart Energy Platform. Our solutions include advanced metering, distribution automation and demand-side management. Our service offerings include professional services to implement our products, managed services and software as a service, or SaaS, to assist utilities with managing the network and solutions, and ongoing customer support. Silver Spring Networks, Inc., headquartered in Redwood City, California, was founded in July 2002 and was incorporated in the State of Delaware on July 3, 2002 as Real Time Techcomm, Inc. On August 6, 2002, we changed our name to Silver Spring Networks, Inc.

Accounting Principles and Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. As such, the information included in this Quarterly Report on Form 10-Q should be read in conjunction with the consolidated financial statements and accompanying notes included in our prospectus filed with the SEC pursuant to Rule 424(b) under the Securities Act of 1933, as amended, on March 13, 2013 (“Prospectus”).

The condensed consolidated balance sheet as of December 31, 2012, included herein was derived from the audited financial statements as of that date, but does not include all disclosures including notes required by GAAP.

The condensed consolidated financial statements include the accounts of Silver Spring Networks, Inc. and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated.

The accompanying unaudited condensed consolidated financial statements reflect all normal recurring adjustments necessary to present fairly the financial position, results of operations, comprehensive income (loss), and cash flows for the interim periods, but are not necessarily indicative of the results of operations to be anticipated for the full year ending December 31, 2013.

There have been no changes to our significant accounting policies described in the Prospectus that have had a material impact on our condensed consolidated financial statements and related notes.

Initial Public Offering

In March 2013, we completed our initial public offering (“IPO”) in which we issued and sold 5,462,500 shares of common stock at a public offering price of $17.00 per share. We received net proceeds of $84.5 million after deducting underwriting discounts and commissions of $6.5 million and paid offering costs in the nine months ended September 30, 2013 of $1.9 million, but before deducting previously paid offering expenses of approximately $4.5 million. Concurrently with our IPO, we issued and sold in a private placement 705,881 shares of common stock at the public offering price of $17.00 per share, which resulted in net proceeds of $12.0 million. In addition, in connection with our IPO:

• All of our outstanding convertible preferred stock converted into 32,406,995 shares of common stock.

• Our $24.0 million and $30.0 million convertible notes together with contractual accrued interest of $2.3 million converted into 3,764,954 shares of common stock. In connection with the conversion, we recorded a loss on debt extinguishments of $22.9 million. Please see Note 4 (Borrowings—Subordinated Convertible Notes) for further discussion on the conversion features of the convertible notes, the calculation of the number of shares into which the notes were converted and the accounting for debt extinguishment.

• We reduced our preferred stock warrant liability by $11.2 million and recorded a loss of $0.8 million in the nine months ended September 30, 2013 resulting from our payment of $12.0 million as consideration for the termination of certain warrants to purchase shares of Series A preferred stock and all warrants to purchase shares of Series C preferred stock, which occurred immediately prior to the effectiveness of our IPO. Please see Note 6 (Convertible Preferred Stock and Preferred Stock Warrants).

8

SILVER SPRING NETWORKS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

• We reclassified the preferred stock warrant liability for the surviving warrant to purchase shares of Series A preferred stock and all warrants to purchase shares of Series E preferred stock to additional paid-in capital, as these warrants converted to warrants to purchase shares of common stock. Please see Note 6 (Convertible Preferred Stock and Preferred Stock Warrants).

• We recognized stock-based compensation expense of $4.4 million in the nine months ended September 30, 2013 upon the issuance of 87,507 shares of common stock following the vesting upon the effectiveness of the Registration Statement on Form S-1 of 87,507 restricted stock units previously granted in connection with our incentive bonus plans. Please see Note 8 (Stock-Based Compensation) for further discussion of this stock-based compensation expense.

• We recognized stock-based compensation expense of $10.2 million in the nine months ended September 30, 2013 upon the issuance of 602,274 shares of common stock following the granting upon the effectiveness of the Registration Statement on Form S-1 of 602,274 fully vested restricted stock units in connection with our incentive bonus plans. Please see Note 8 (Stock-Based Compensation) for further discussion of this stock-based compensation expense.

• We recognized stock-based compensation expense of approximately $4.3 million in the nine months ended September 30, 2013 related to the modification of stock options held by current employees. Please see Note 8 (Stock-Based Compensation) for further discussion of this stock-based compensation expense.

• We reclassified $6.4 million of deferred issuance costs previously recorded in other long-term assets as an off-set to the equity proceeds in connection with our IPO.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, contingent assets and liabilities, and revenue and expenses during the reporting period. Estimates are used for revenue and cost recognition, inventory valuation, warranty obligations, preferred stock warrants and embedded derivatives valuations, stock-based compensation, classification of current and non-current deferred revenue and deferred cost of revenue, income taxes and deferred income tax assets and associated valuation allowances. These estimates generally involve complex issues and require judgments, involve the analysis of historical and prediction of future trends, can require extended periods of time to resolve and are subject to change from period to period. Actual results may differ materially from management’s estimates.

Inventory

Inventory is stated at the lower of cost or market. Inventory consisted of the following (in thousands):

	September 30, 2013		December 31, 2012
Component parts	$	47	$	299
Finished goods		6,950		7,432
Inventory	$	6,997	$	7,731

Finished goods inventory included consigned inventory totaling $4.3 million and $3.5 million as of September 30, 2013 and December 31, 2012, respectively.

Product Warranty

We provide warranties for substantially all of our products. Our standard warranty period extends from one to five years. We accrue for costs of standard warranty at the time of product shipment, and record changes in estimates to warranty accruals when it is probable a liability has been incurred and the amount of loss can be reasonably estimated.

9

SILVER SPRING NETWORKS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Product warranty obligation is presented as follows on the condensed consolidated balance sheets (in thousands):

	September 30, 2013		December 31, 2012
Warranty obligation—classified in accrued liabilities	$	3,328	$	3,109
Warranty obligation—classified in other liabilities		2,985		3,207
	$	6,313	$	6,316

Product warranty activity was as follows (in thousands):

	Nine Months Ended September 30,
	2013			2012
Warranty obligation—beginning of period	$	6,316		$	9,631
Warranty expense for new warranties issued		1,107			1,081
Utilization of warranty obligation		(1,288	)		(1,931	)
Changes in estimates for pre-existing warranties		178			(1,717	)
Warranty obligation—end of period	$	6,313		$	7,064

During the nine months ended September 30, 2013 and 2012, we revised our estimated warranty liability to reflect updated product field reliability experience and recorded an increase (reduction) of product warranty liability and product cost of revenue by $0.2 million and $(1.7) million, respectively.

At the time of product shipment, we estimate and accrue for the amount of standard warranty cost and record the amount as a cost of revenue. Determining the amount of warranty costs requires management to make estimates and judgments based on historical claims experience, industry benchmarks, test data and various other assumptions including estimated field failure rates that are believed to be reasonable under the circumstances. The amount of warranty costs accrued are net of warranty obligations to be fulfilled by our suppliers. The results of these judgments formed the basis for our estimate of the total charge to cover anticipated customer warranty, repair, return and replacement and other associated costs. Should actual product failure rates, claim levels, material usage or supplier warranties on parts used in our products differ from our original estimates, revisions to the estimated warranty liability could result in adjustments to our cost of revenue in future periods.

Certain of our standard product warranty obligations require us to reimburse a customer for installation and other related costs in the event that field reliability rates fall below contractually specified thresholds. We consider the probability that we will have to pay such incremental warranty costs based on the expected performance of a delivered product when we record new warranty obligations issued in a period as well as when we determine if any changes are required to our original estimates for pre-existing warranty obligations.

Our warranty obligations are affected by product failure rates, claims levels, material usage and supplier warranties on parts included in our products. Because our products are relatively new and we do not have the benefit of long-term experience observing the products’ performance in the field, it is possible that the estimates of a product’s lifespan and incidence of claims could vary from period to period.

In certain customer arrangements, we have provided extended warranties for periods of up to 15 years following the initial standard warranty period. We recognize revenue associated with extended warranties over the extended warranty period when the extended warranty period commences. Costs associated with providing extended warranties are expensed as incurred during the extended warranty period. As of September 30, 2013 and December 31, 2012, we had deferred revenue associated with extended warranty arrangements of $0.4 million and $0.4 million, respectively, included in other current liabilities, and $6.8 million and $5.5 million, respectively, included in other long-term liabilities on our condensed consolidated balance sheets.

10

SILVER SPRING NETWORKS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

2. Net income (loss) per share

In connection with our IPO in March 2013, all of our outstanding convertible preferred stock converted into common stock. In addition, we recognized a deemed dividend of $105.0 million to common stockholders on the date of conversion, as discussed further in Note 6 (Convertible Preferred Stock and Preferred Stock Warrants). Basic net income (loss) per share applicable to common stockholders is computed by dividing the net income (loss) applicable to common stockholders by the weighted-average number of shares of common stock outstanding during the period. Diluted net income (loss) per share applicable to common stockholders is computed by giving effect to all potential shares of common stock, including convertible debt, stock options, warrants and convertible preferred stock, to the extent dilutive.

The following table sets forth the computation of basic and diluted net income (loss) per share applicable to common stockholders (in thousands, except per share data):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2013			2012			2013			2012
Net income (loss)	$	(12,269	)	$	(26,868	)	$	(67,165	)	$	(68,707	)
Deemed dividend to convertible preferred stockholders		—			—			(105,000	)		—
Net income (loss) available to common stockholders	$	(12,269	)	$	(26,868	)	$	(172,165	)	$	(68,707	)
Weighted average common shares outstanding—basic and diluted		46,729			3,682			34,733			3,664
Basic and diluted earnings per common share	$	(0.26	)	$	(7.30	)	$	(4.96	)	$	(18.75	)

The following potential common shares outstanding were excluded from the computation of diluted net income (loss) per share because including them would have been anti-dilutive (in thousands):

	September 30,
	2013		2012
Employee equity incentive plans		6,749		5,098
Warrants to purchase convertible preferred stock		—		386
Warrants to purchase common stock		—		50
Convertible preferred stock		—		22,366
Total common stock equivalents		6,749		27,900

3. Financial Instruments

Cash, Cash Equivalents and Short-Term Investments

Cash equivalents consist of highly liquid investments with insignificant interest rate risk and original or remaining maturities at the time of purchase of three months or less, and consist primarily of money market funds and U.S. Government securities. Short-term investments consist of high investment grade securities with original or remaining maturities at the time of purchase of greater than three months, and are available for use in current operations. We classify all of our cash equivalents and short-term investments as available-for-sale and record at fair value. Unrealized gains and losses are included in accumulated other comprehensive income (loss), which is reflected as a separate component of stockholders’ deficit. Realized gains and losses are included in other income and expense, net. Determining whether a decline in fair value is other-than-temporary requires management judgment based on the specific facts and circumstances of each security. We evaluate our short-term investments for impairment each reporting period. Amounts are reclassified out of accumulated other comprehensive income (loss) into earnings using the specific identification method.

11

SILVER SPRING NETWORKS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Cash, cash equivalents and short-term investments consisted of the following as of September 30, 2013 (in thousands):

	Amortized Cost		Unrealized Gains		Unrealized Losses			Estimated Fair Value
Current assets:
Cash	$	61,465	$	—	$	—		$	61,465
Cash equivalents:
Money market mutual funds		20,150		—		—			20,150
U.S. government obligations		250		—		—			250
Total cash equivalents		20,400		—		—			20,400
Short-term fixed income securities:
U.S. government and agency obligations		42,333		109		(1	)		42,441
U.S. and foreign corporate debt securities		14,565		34		(2	)		14,597
Foreign governments and multi-national agency obligations		4,537		—		(9	)		4,528
Total short-term investments		61,435		143		(12	)		61,566
Total cash, cash equivalents and short-term investments	$	143,300	$	143	$	(12	)	$	143,431

We held no cash equivalents or short-term investments as of December 31, 2012.

Contractual Maturities

The contractual maturities of cash equivalents and short-term investments held at September 30, 2013 consisted of the following (in thousands):

	Amortized Cost Basis		Aggregate Fair Value
Due within one year	$	38,040	$	38,033
Due after 1 year through 3 years		43,795		43,933
Total cash equivalents & short-term investments	$	81,835	$	81,966

Fair Value Measurements

We measure certain financial assets and liabilities at fair value on a recurring basis.

The measurements of fair value were established based on a fair value hierarchy that prioritizes the inputs. This hierarchy requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The fair value framework requires the categorization of assets and liabilities into three levels based upon the assumptions (inputs) used to price the assets or liabilities. The guidance for fair value measurements requires that assets and liabilities carried at fair value be classified and disclosed in one of the following categories:

Level 1—Quoted (unadjusted) prices in active markets for identical assets or liabilities.

12

SILVER SPRING NETWORKS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Level 2—Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the asset or liability.

Level 3—Unobservable inputs in which there is little or no market data, which requires us to develop our own assumptions.

Level 1 measurements are obtained from real-time quotes for transactions in active exchange markets involving identical assets. Level 2 measurements are obtained from readily available pricing sources for comparable instruments, identical instruments in less active markets, or models using market observable inputs. We did not have any transfers of financial instruments between valuation levels during the first nine months of 2013.

As of September 30, 2013, the fair value of these financial assets recorded at fair value on a recurring basis was determined using the following inputs (in thousands):

	Fair Value Measurement Using
	Quoted Prices in Active Markets for Identical Instruments (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Cash equivalents:
Money-market funds	$	20,150	$	—	$	—	$	20,150
U.S. Government obligations		—		250		—		250
Total cash equivalents		20,150		250		—		20,400
Short-term investments:
U.S. Government and agency obligations		—		42,441		—		42,441
U.S. and foreign corporate debt securities		—		14,597		—		14,597
Foreign governments and multi-national agency obligations		—		4,528		—		4,528
Total short-term investments		—		61,566		—		61,566
Total assets measured at fair value	$	20,150	$	61,816	$	—	$	81,966

As of September 30, 2013, there were no financial liabilities recorded at fair value on a recurring basis.

As of December 31, 2012, the fair value of financial liabilities recorded at fair value on a recurring basis was determined using the following inputs (in thousands):

	Fair Value Measurement Using
	Quoted Prices in Active Markets for Identical Instruments (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Liabilities:
Preferred stock warrants	$	—	$	—	$	11,261	$	11,261
Embedded derivatives		—		—		3,519		3,519
Total liabilities measured at fair value	$	—	$	—	$	14,780	$	14,780

As of December 31, 2012, there were no financial assets recorded at fair value on a recurring basis.

13

SILVER SPRING NETWORKS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Convertible Promissory Notes and Compound Embedded Derivatives

As of December 31, 2012, we had outstanding a $24.0 million convertible note (the “December 2011 Note”) and a $30.0 million convertible note (the “February 2012 Note”), each of which contained certain features that were accounted for as compound bifurcated derivative instruments. The compound bifurcated derivative instruments were recorded on the balance sheet at fair value at issuance and at each balance sheet date as discussed further in Note 4 (Borrowings).

At issuance on December 6, 2011, we estimated the fair value of the December 2011 Note, including the compound embedded derivative, at $24.0 million, which approximated the original transaction value with an unrelated third party, and which approximated the fair value at December 31, 2011. At issuance on February 21, 2012, we estimated the fair value of the February 2012 Note, including the compound embedded derivative, at $30.0 million, which approximated the original transaction value with an unrelated third party. At issuance of the December 2011 Note and February 2012 Note, we determined that the fair values of the respective compound embedded derivatives were $1.5 million and $3.6 million, by utilizing a Monte Carlo simulation model using Level 3 inputs. The Monte Carlo simulation model measured the fair value of the compound embedded derivative utilizing a probability weighted discounted cash flow model in a risk-neutral framework for probability of the occurrence of certain of the conversion features as discussed in Note 4 (Borrowings). As of December 31, 2012, the fair values of the compound embedded derivatives related to the December 2011 Note and February 2012 Note were $1.8 million and $1.7 million, respectively.

The compound embedded derivatives were marked to market each period and the changes in the fair value were included as a non-cash item in other income (expense), net on our condensed consolidated statements of operations. In connection with our IPO in March 2013, the December 2011 Note and February 2012 Note, together with accrued interest, were converted into shares of common stock and accounted for as debt extinguishment, as discussed further in Note 4 (Borrowings).

As of December 31, 2012, the carrying amount and estimated fair value of the convertible promissory notes and compound embedded derivatives using Level 3 measurements were as follows (in thousands):

	Carrying Amount		Estimated Fair Value
Convertible promissory notes	$	52,800	$	54,846
Compound embedded derivatives		3,519		3,519

Fair Value Remeasurement of Preferred Stock Warrants

We recorded the warrants as liabilities at their initial grant date fair value and thereafter recorded gains and losses arising from the change in fair value as a component of other income, net, in the condensed consolidated statements of operations. We recorded an unrealized gain of $2.3 million for the nine months ended September 30, 2012. As of September 30, 2013, there were no longer any preferred stock warrants outstanding, as discussed further in Note 6 (Convertible Preferred Stock and Preferred Stock Warrants).

The fair value of the warrant liability was estimated using a probability weighted expected return model, which determines the present value of future distributions that equity classes may realize based on the probability of occurrence of certain sale or IPO exit events.

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SILVER SPRING NETWORKS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

The following table provides a roll-forward of the fair value of the convertible preferred stock warrants and compound embedded derivative categorized with Level 3 inputs (in thousands):

	Three Months Ended September 30,					Nine Months Ended September 30,
	2013		2012			2013			2012
Beginning of period	$	—	$	14,258		$	14,780		$	15,018
Remeasurement and termination of convertible preferred stock warrants		—		2,483			(11,261	)		(2,260	)
Issuance of compound embedded derivatives		—		—			—			3,640
Remeasurement and extinguishment of compound embedded derivatives		—		(1,653	)		(3,519	)		(1,310	)
End of period	$	—	$	15,088		$	—		$	15,088

4. Borrowings

Credit Facility

We have available a line of credit with a bank, which originally provided for advances and the issuance of letters of credit of up to $40 million. On May 8, 2013, we amended our credit agreement to increase the available capacity from $40 million to $50 million. As of September 30, 2013, there were no borrowings outstanding under the credit agreement; however, $10.5 million of letters of credit were outstanding, leaving $39.5 million of available capacity for cash borrowings or additional letters of credit, subject to compliance with financial covenants and other customary conditions to borrowings. As of September 30, 2013 we were in compliance with the financial covenants in the credit agreement.

The credit agreement is guaranteed by certain of our accounts receivable, inventory and cash. Loans under the credit agreement bear interest at the bank’s prime rate plus a margin. The credit agreement will terminate and all amounts owing thereunder will be due and payable on May 17, 2015, unless (a) the commitments are terminated earlier, either at our request or, if an event of default occurs, by the bank (or automatically in the case of certain bankruptcy-related events of default), or (b) the maturity date is extended upon our request, subject to the agreement of the bank. The credit agreement contains customary representations, warranties, affirmative and negative covenants, including financial covenants, events of default and indemnification provisions in favor of the bank. The negative covenants include restrictions regarding the incurrence of liens, subject to certain exceptions. The financial covenants require us to meet monthly financial tests with respect to liquidity ratio and unrestricted cash.

Subordinated Convertible Promissory Notes

In December 2011, we issued the December 2011 Note for an aggregate principal amount of $24.0 million, with a maturity date of December 6, 2014. Interest accrued for the first six months at a rate of 3.0% per year and increased by 1.0% every six months to a maximum of 6.0% per year.

The unpaid principal amount of the December 2011 Note, together with any interest accrued but unpaid thereon, were convertible (a) automatically into shares of a new series of convertible preferred stock at a price per share equal to 85% of the per share selling price of the new preferred stock upon completion of a financing, (b) automatically into shares of common stock immediately prior to the closing of an initial public offering of our common stock at a conversion price equal to 88% of the price to the public in such offering, or (c) at any time upon the election of the investor into shares of Series E preferred stock at a conversion price equal to $50.00 per share. If the December 2011 Note had not automatically converted immediately prior to the closing of our IPO, the outstanding amount of the December 2011 Note would have been due prior to a change of control. We also could have elected to repay the outstanding balance prior to maturity subject to a 7% prepayment penalty with 10 days’ written notice.

15

SILVER SPRING NETWORKS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

In February 2012, we issued the February 2012 Note for an aggregate principal amount of $30.0 million, with a maturity date of February 21, 2015. Interest accrued for the first six months at a rate of 3.0% per year and increased by 1.0% every six months to a maximum of 6.0% per year.

The unpaid principal amount of the February 2012 Note, together with any interest accrued but unpaid thereon, were convertible (a) upon the election of the investor into shares of a new series of convertible preferred stock at a price per share equal to 88% of the per share selling price of the new preferred stock upon completion of a financing, or (b) automatically into shares of common stock immediately prior to the closing of an initial public offering of our common stock at a conversion price equal to 88% of the price to the public in such offering. If the February 2012 Note had not automatically converted immediately prior to the closing of our IPO, the outstanding amount of the February 2012 Note would have been due prior to a change of control. We also could have elected to repay the outstanding balance prior to maturity subject to a 7% prepayment penalty with 10 days’ written notice.

We concluded that the conversion and repayment features of both the December 2011 Note and the February 2012 Note were accounted for as embedded derivative instruments, and accordingly were bundled as a compound embedded derivative pursuant to the guidance of ASC 815, Derivatives and Hedging. These features were not considered clearly and closely related to either the December 2011 Note or the February 2012 Note and did not qualify for any exceptions from derivative accounting. Therefore, they were bifurcated as a compound embedded derivative that were recorded on the balance sheet at fair value at issuance and at each balance sheet date the notes remained outstanding.

16

SILVER SPRING NETWORKS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

We concluded that the fair values of the December 2011 Note and February 2012 Note, including the compound embedded derivative, were $24.0 million and $30.0 million, respectively, which approximated the original transaction value with an unrelated third party. The fair values of the compound embedded derivative at the date of issuance for the December 2011 Note and the February 2012 Note were $1.5 million and $3.6 million, respectively, which created an issuance discount for each convertible note that was amortized over the term using the effective interest rate method. We determined the fair value of each compound embedded derivative using a Monte Carlo simulation model which measured the probability weighted discounted cash flows in a risk-neutral framework for the occurrence of each of the conversion features in which the outstanding amount of the convertible note would be converted into shares of our stock or would be repaid to the lenders in cash.

In connection with our IPO in March 2013, the December 2011 Note and February 2012 Note together with contractual accrued interest of $2.3 million thereon through March 18, 2013, the closing date of our IPO, converted into 3,764,954 shares of common stock based on the outstanding principal and accrued interest at a conversion price equal to 88% of the IPO price of $17.00 per share. The conversion of the convertible notes and issuance of common stock were accounted for as debt extinguishments and accordingly, the convertible notes, unamortized debt issuance costs and bifurcated compound embedded derivatives were removed at their respective carrying amounts and the shares of common stock issued were measured at fair value based on the closing price on the date our IPO closed. As a result, we recorded a loss on debt extinguishments of $22.9 million in the nine months ended September 30, 2013.

The following table provides a roll-forward of the carrying value of the convertible promissory notes and compound embedded derivatives (in thousands):

	Convertible Promissory Notes			Compound Embedded Derivatives			Total
Balances at December 31, 2012	$	52,800		$	3,519		$	56,319
Accrued interest on convertible promissory notes		558			—			558
Accretion of discount on convertible promissory notes		377			—			377
Conversion of convertible promissory notes and embedded derivatives		(53,735	)		(3,519	)		(57,254	)
Balances at September 30, 2013	$	—		$	—		$	—

5. Commitments and contingencies

Operating and Capital Leases

As of September 30, 2013, we had an aggregate of $18.3 million of financial commitments related to office space under noncancelable operating leases and equipment under capital leases. The aggregate of $18.3 million of future minimum commitments consisted of $1.5 million due for the remainder of fiscal 2013, $5.9 million due in fiscal 2014, $5.4 million due in fiscal 2015, $4.0 million due in fiscal 2016, $0.2 million due in fiscal 2017, $0.2 due in fiscal 2018, and $1.1 million due thereafter.

Legal Contingencies

We were named in a lawsuit filed on September 9, 2010 in the Superior Court of the State of California, San Mateo County (Edwards v. Silver Spring Networks). The lawsuit claims to be a “class action” on behalf of California consumers, and alleges that smart meters are defective and generate incorrect bills. We have filed a motion to dismiss this case and, on September 1, 2011, the San Mateo Superior Court granted our motion without leave to amend as to two of the plaintiffs’ causes of action and with leave to amend as to a third claim. On February 25, 2012 the plaintiffs filed an amended complaint. On May 30, 2012, we filed an answer to the amended complaint denying the plaintiffs’ allegations. On August 3, 2012, the plaintiffs filed a second amended complaint, and on September 18, 2012, we filed a demurrer to one of the two claims asserted in the second amended complaint. The court has overruled our demurrer. On November 9, 2012, the plaintiffs filed a motion for class certification. A hearing on the class certification motion was held on January 25, 2013. On April 11, 2013, the court denied the class certification motion without prejudice. The court allowed the plaintiffs to file a revised class certification motion, which the plaintiffs filed on June 28, 2013. A hearing on the revised class certification motion was held on September 6, 2013. We intend to continue vigorously defending against the action. The amount of any potential exposure to us is not estimable at this time.

17

SILVER SPRING NETWORKS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

On June 17, 2011, EON Corp. IP Holdings, LLC, a non-producing entity, filed suit in United States District Court for the Eastern District of Texas, Tyler Division against a number of smart grid providers, including Landis+Gyr, which was since acquired by Toshiba, Aclara Power-Line Systems Inc., Elster Solutions, LLC, Itron, Inc., Trilliant Networks Inc. and us. The lawsuit alleges infringement of United States Patent Nos. 5,388,101, 5,481,546, and 5,592,491 by certain networking technology and services that we and the other defendants provide. We filed amended answers, affirmative defenses and counterclaims on August 21, 2012, September 24, 2012, October 31, 2012 and November 16, 2012 denying the plaintiff’s allegations and asserting that we do not infringe plaintiff’s patents and that plaintiff’s patents are invalid. The trial has been scheduled for April 2014. We believe that we have meritorious defenses to EON’s allegations and intend to vigorously defend ourselves. The amount of any potential exposure to us is not estimable at this time.

On September 16, 2011 TransData, Inc. filed suit in United States District Court for the Western District of Oklahoma, against our customer, Oklahoma Gas & Electric Company, alleging infringement of United States Patent Nos. 6,181,294, 6,462,713, and 6,903,699 by certain wireless communication-enabled meters. Together with the meter manufacturer, General Electric Company, we have agreed to indemnify and defend Oklahoma Gas & Electric Company in connection with the TransData suit. An early claim construction hearing was held for one claim term on February 5, 2013, and the court provided an order on that term on June 25, 2013. A hearing for the full claim construction was held on September 25, 2013. The court issued the claim construction order on October 1, 2013. We believe that we have meritorious defenses to TransData’s allegations, and together with General Electric Company intend to vigorously defend our customer. The amount of any potential exposure to us is not estimable at this time.

On March 21, 2013, Linex Technologies, Inc., a non-producing entity, filed suit against us in United States District Court for the Southern District of Florida. The complaint alleges infringement of United States Patent Nos. 6,493,377 and 7,167,503 by certain networking technology that we provide. We filed an answer on May 20, 2013. The trial is currently scheduled for May 2014. We believe that we have meritorious defenses to Linex’s allegations and intend to vigorously defend ourselves. The amount of any potential exposure to us is not estimable at this time.

We are directly involved with various unresolved legal actions and claims, and indirectly are involved with proceedings by administrative bodies such as public utility commissions, arising in the ordinary course of business. We do not believe that any liability from any reasonably foreseeable disposition of such legal actions and claims, individually or in the aggregate, would have a material effect on our condensed consolidated financial statements. There are many uncertainties associated with any litigation or claim, and we cannot be certain that these actions or other third-party claims will be resolved without costly litigation, fines and/or substantial settlement payments. If that occurs, our business, financial condition and results of operations could be materially and adversely affected. If information becomes available that causes us to determine that a loss in any of our pending litigation matters, claims or settlements is probable, and a reasonable estimate of the loss associated with such events can be made, we will record the estimated loss at that time.

Customer Performance and Other Commitments

Certain customer agreements require us to obtain letters of credit or surety bonds in support of our obligations under such arrangements. These letters of credit or surety bonds typically provide a guarantee to the customer for future performance, which usually covers the deployment phase of a contract and may on occasion cover the operations and maintenance phase of service contracts.

As of September 30, 2013 and December 31, 2012, we had a total of $10.5 million and $16.5 million, respectively, of standby letters of credit issued under the credit facility with a financial institution, of which $0.6 million (A$0.6 million) and $5.9 million (A$5.1 million), respectively, were denominated in Australian dollars. As of September 30, 2013, we had a $15.0 million unsecured surety bond. The surety bond provides a financial guarantee to support performance obligations under certain customer agreements. As of December 31, 2012, there was no surety bond outstanding. In the event any such letters of credit or surety bonds are called, we would be obligated to reimburse the issuer of the letter of credit or surety bond. We do not believe there will be any claims against currently outstanding letters of credit or surety bonds.

Our contracts with utility customers and meter manufacturers typically contain provisions that could result in payments or other liabilities related to late or improper delivery of products, services, installations or operations or failure to meet product or performance specifications or other product defects. Any payments made to utility customers pursuant to the terms of these provisions are recorded as reductions of deferred revenue.

18

SILVER SPRING NETWORKS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Indemnification Commitments

Directors, Officers and Employees. In accordance with our bylaws and/or pursuant to indemnification agreements we have entered into with directors, officers and certain employees, we have indemnification obligations to our directors, officers and certain employees for claims brought against these persons arising out of certain events or occurrences while they are serving at our request in such a capacity. We maintain director and officer liability insurance coverage to reduce our exposure to such obligations, and payments made under indemnification agreements. To date, there have been no indemnification claims by these directors, officers and employees.

Utility Customers and Meter Manufacturers. Our contracts with utility customers and meter manufacturers typically provide indemnification for claims filed by third parties alleging that our products and services sold to the customer or manufacturer infringe or misappropriate any patent, copyright, trademark or other intellectual property right. Refer to the discussion above under the heading “Legal Contingencies” for a description of certain matters involving our indemnification obligations.

In our utility customer contracts, we also typically provide an indemnification for third-party claims resulting from death, personal injury or property damage caused by the negligence or willful misconduct of our employees and agents in connection with the performance of certain contracts.

Under our utility customer and meter manufacturer indemnities, we typically agree to defend the utility customer or meter manufacturer, as the case may be, from such claims, and pay any resulting costs, damages and attorneys’ fees awarded against the indemnified party with respect to such claims, provided that (a) the indemnified party promptly notifies us in writing of the claim, (b) the indemnified party provides reasonable assistance to us at our expense, and (c) we have sole control of the defense and all related settlement negotiations.

Insurance. We maintain various insurance coverages, subject to policy limits and certain conditions, that enable us to recover a portion of amounts paid by us in connection with our obligation to indemnify our utility customers and meter manufacturers. However, because our maximum liability associated with such indemnification obligations generally is not stated explicitly in the related agreements, and further because many states prohibit limitations of liability for such indemnified claims, the maximum potential amount of future payments we could be required to make under these indemnification provisions could significantly exceed insurance policy limits.

Historically, payments made by us under these indemnification provisions have not had a material effect on our results of operations, financial position or cash flows.

6. Convertible Preferred Stock and Preferred Stock Warrants

Convertible Preferred Stock

In connection with our IPO in March 2013, our previously authorized and outstanding convertible preferred stock was converted into 32,406,995 shares of common stock. Included in this amount were incremental shares issued to Series D and Series E preferred stockholders in accordance with their contractual conversion rights which stated that if the IPO conversion price for Series D and Series E preferred stockholders was below $38.927 and $50.00 per share, respectively, then we would issue to the eligible holders additional shares of common stock for no additional consideration pursuant to an automatic adjustment in our certificate of incorporation. The additional shares resulted in a beneficial conversion feature for Series E preferred stock and we recognized a $105.0 million deemed dividend to Series E preferred stockholders at the conversion date. This non-cash charge impacts net loss applicable to our common stockholders and basic and diluted net loss per share applicable to common stockholders.

Warrant Termination and Concurrent Private Placement with a Related Party

Prior to our IPO, entities affiliated with Foundation Capital (together, “Foundation Capital”) beneficially owned 32.7% of our common stock. Foundation Capital is considered a related party. Foundation Capital held warrants to purchase 41,993 shares of our Series A Preferred Stock and 333,333 shares of our Series C Preferred Stock prior to our IPO. All such warrants terminated immediately prior to the effectiveness of our IPO in exchange for the aggregate payment by us of $12.0 million to these entities. In connection with the transaction, we reduced our preferred stock warrant liability by $11.2 million and recorded a loss of $0.8 million in the nine months ended September 30, 2013.

19

SILVER SPRING NETWORKS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

We also entered into a private placement purchase agreement whereby Foundation Capital purchased an aggregate of $12.0 million of shares of our common stock at the same price as the price offered to the public, or 705,881 shares based on the IPO price of $17.00 per share. This private placement purchase was consummated on the same day that our IPO closed.

Conversion of Convertible Preferred Stock Warrants to Common Stock Warrants

In connection with our IPO, the remaining outstanding warrants to purchase shares of Series A and Series E preferred stock converted into warrants to purchase 20,768 shares of our common stock, and we reclassified the related preferred stock warrant liability to additional paid-in capital.

20

SILVER SPRING NETWORKS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

7. Common Stock

Reverse Stock Split

Prior to our IPO, our Board of Directors and holders of the requisite number of outstanding shares of our capital stock approved an amendment to our restated certificate of incorporation to effect a 5-for-1 reverse stock split of our outstanding capital stock. The reverse stock split was effected on February 11, 2013. The reverse stock split did not result in an adjustment to par value. In the amendment to our restated certificate of incorporation filed to effect the reverse stock split, we changed the number of authorized shares of common and convertible preferred stock to 80,000,000 shares and 26,071,540 shares, respectively. The reverse stock split is reflected in the accompanying condensed consolidated financial statements and related notes on a retroactive basis for all periods presented.

Restated Certificate of Incorporation and Amended and Restated Bylaws

Our restated certificate of incorporation and amended and restated bylaws became effective upon the closing date of our IPO. Our restated certificate of incorporation: (a) eliminated the references to the terms of our existing series of preferred stock, which converted to common stock in connection with the IPO; (b) increased the authorized number of shares of common stock to 1,000,000,000 shares; (c) authorized 10,000,000 shares of undesignated preferred stock; (d) provided that holders of common stock will not be entitled to vote on amendments to the restated certificate that relate solely to the terms of any preferred stock designated by our Board of Directors if the holders of such preferred stock are entitled to vote on such amendment; (e) provided that our Board of Directors are classified into three classes of directors; (f) provided that at least two-thirds of the voting power of all of the then-outstanding shares of our capital stock is required to amend the bylaws; (g) provided that stockholders cannot call a special meeting of stockholders, act by written consent without a meeting, fill vacancies in the Board of Directors, remove a director other than for cause, or change the authorized number of directors; and (h) included certain other provisions customary for public companies.

Common Stock Warrants

In March 2011, we granted a warrant to purchase 50,000 shares of common stock at $0.005 per share. The warrant was immediately exercisable and non-forfeitable, and expires on the earlier of a change in control or March 31, 2016. The fair value of the warrant was determined to be $2.5 million based on the Black-Scholes-Merton option pricing model. We accounted for the warrant as an equity instrument and recorded the fair value as a general and administrative expense during the year ended December 31, 2011.

In connection with our IPO in March 2013, warrants to purchase shares of our preferred stock converted into warrants to purchase 20,768 shares of our common stock, at a weighted average exercise price of $13.91 per share.

As of September 30, 2013, we issued 57,370 shares of common stock pursuant to the net exercise of all of our common stock warrants.

8. Stock-Based Compensation

We recorded stock-based compensation expense as follows (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2013		2012		2013		2012
Cost of revenue	$	1,376	$	521	$	10,631	$	1,993
Research and development		1,905		876		15,056		3,295
Sales and marketing		950		632		5,822		2,272
General and administrative		2,759		1,188		12,994		4,263
Stock-based compensation expense	$	6,990	$	3,217	$	44,503	$	11,823

Our Board of Directors adopted the 2012 Equity Incentive Plan (the “2012 Plan”), which became effective on March 12, 2013 and serves as the successor to our 2003 Stock Option Plan (the “2003 Plan”). Pursuant to the 2012 Plan, 3,400,000 shares of our common stock were initially reserved for grant, plus (1) any shares that were reserved and available for issuance under the 2003 Plan at the time the 2012 Plan became effective, and (2) any shares that become available upon forfeiture or repurchase by us under the 2003 Plan and 2007 Greenbox Plan, will be reserved for issuance. Under the 2012 Plan, we may grant both incentive and non-statutory stock options, restricted stock and restricted stock units to employees, directors and service providers.

21

SILVER SPRING NETWORKS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

The following table summarizes our shares available to grant under the 2012 Plan (in thousands):

	Shares Available to Grant
Balance at December 31, 2012		2,996
Additional shares authorized		3,400
Options granted		(784	)
Options cancelled or expired		396
Restricted stock units granted		(2,558	)
Restricted stock units cancelled		91
Balance at September 30, 2013		3,541

The following table summarizes our stock option activity and related information for the nine months ended September 30, 2013 (in thousands, except per share data):

	Options Outstanding
	Number of Shares			Weighted Average Exercise Price per Share		Weighted Average Remaining Contractual Term (years)		Aggregate Intrinsic Value
Balance at December 31, 2012		4,616		$	21.73
Options granted		784			17.42
Options exercised		(207	)		3.48
Options cancelled or expired		(396	)		28.28
Balance at September 30, 2013		4,797		$	10.67		6.14	$	32,953
As of September 30, 2013:
Options vested and expected to vest		4,750		$	10.60		6.11	$	32,936
Options exercisable		3,696		$	8.70		5.37	$	32,398

The following table summarizes our restricted stock unit activity and related information for the nine months ended September 30, 2013 (in thousands, except per share data):

	Restricted Stock Units Outstanding
	Number of Shares			Weighted Average Grant Date Fair Value per Share
Balance at December 31, 2012		231		$	49.51
Restricted stock units granted		2,558			17.49
Restricted stock units vested		(976	)		22.94
Restricted stock units cancelled		(91	)		20.30
Balance at September 30, 2013		1,722		$	18.57

In March 2013, as approved by our Board of Directors, we modified certain stock options held by employees and directors to purchase 1,752,895 shares of our common stock with an exercise price of $34.90 per share or greater to reduce the exercise price equal to $17.00 per share, the IPO price. There were no changes to vesting terms or conditions. We incurred an incremental charge to stock-based compensation expense of $4.3 million for the nine months ended September 30, 2013, and expect to incur $1.7 million of incremental stock-based compensation expense related to the modification over a weighted average period of 1.4 years.

As of September 30, 2013, there was $37.8 million of total unrecognized compensation cost related to non-vested stock-based compensation arrangements, which is expected to be recognized over a weighted-average period of 1.9 years.

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SILVER SPRING NETWORKS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Employee Stock Purchase Plan

Our Board of Directors adopted the 2012 Employee Stock Purchase Plan (“ESPP”), which became effective on March 12, 2013, pursuant to which 400,000 shares of our common stock have been reserved for future issuance. Eligible employees can enroll and elect to contribute up to 15% of their compensation through payroll withholdings in each offering period, subject to certain limitations. Each offering period is six months in duration, with the exception of the initial offering period which commenced in March 2013 upon the date our IPO was declared effective and ends on February 14, 2014. The purchase price of the stock is the lower of 85% of the fair market value on (a) the first day of the offering period or (b) the purchase date.

9. Income Taxes

Our provision for income taxes for the three and nine month period ended September 30, 2013 reflects an effective tax rate of (0.8)% and (0.7)%, respectively, and primarily consists of foreign income and withholding taxes. Our provision for income taxes for the three and nine month period ended September 30, 2012 reflected an effective tax rate of (1.4)% and (0.7)%, respectively, and primarily consisted of foreign income taxes.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our condensed consolidated financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q and with our audited consolidated financial statements included in our prospectus filed on March 13, 2013, pursuant to Rule 424(b) under the Securities Act of 1933, as amended (“Securities Act”) with the SEC. In addition, the following discussion contains forward-looking statements that are based on our management’s beliefs and assumptions and on information currently available to our management. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Factors that could cause or contribute to these differences include those factors discussed below and elsewhere in this Quarterly Report on Form 10-Q, particularly the section entitled “Risk Factors.”

Overview

We provide a leading networking platform and solutions that enable utilities to transform the power grid infrastructure into the smart grid. The smart grid intelligently connects millions of devices that generate, control, monitor and consume power, providing timely information and control to both utilities and consumers. We believe that the application of networking technology to the power grid has the potential to transform the energy industry through better communication just as the application of networking technology to the computing industry enabled the Internet.

We believe the power grid is one of the most significant elements of contemporary industrial infrastructure that has yet to be extensively networked with modern technology. We were founded in 2002 to address this challenge, pioneering a fundamentally new approach to connect utilities with millions of devices on the power grid. We believe our technology will yield significant benefits to utilities, consumers and the environment, both in the near term and the future. These benefits include more efficient management of energy, improved grid reliability, capital and operational savings, the ability to pursue new initiatives, consumer empowerment, and assistance in complying with evolving regulatory mandates through reduced carbon emissions. We believe networking the power grid will fundamentally transform the world’s relationship with energy.

The foundation of our technology is a standards-based and secure IP network. Our networking platform provides two-way communications between the utility back office and devices on the power grid. In addition to our networking platform, we offer a suite of solutions that run on top of our network and complementary services, all of which we collectively refer to as our Smart Energy Platform. Our solutions include advanced metering, which allows utilities to automate a number of manual processes and improve operational efficiencies, offer flexible pricing programs to consumers, and improve customer service with faster outage detection and restoration; distribution automation, which provides utilities with real-time visibility into the health of the grid, enabling better management and control of power distribution assets to improve grid reliability; and demand-side management, which enables utilities to offer consumers a variety of programs and incentives to use energy more efficiently and reduce usage at times of peak demand. Our service offerings include professional services to implement our products, managed services and SaaS, to assist utilities with managing the network and solutions, and ongoing customer support. Our Smart Energy Platform comprises hardware, software and services and combines with devices manufactured by third-party partners to form end-to-end smart grid offerings. We have architected our networking platform to support multiple current and future smart grid solutions. As a result, we believe utilities can increase the value of their network investment as they deploy additional solutions on this network. Over the long term, we believe our networking platform has the potential to be extensible to areas beyond energy, including smart homes, smart buildings, and smart cities, thereby enabling the “internet of things.” The “internet of things” refers to an architecture where physical devices gain the capacity to communicate with each other through the application of networking technology.

We market our Smart Energy Platform directly to utilities around the world. Leading utilities have selected our networking platform to be the foundation of the smart grid. Since inception through December 31, 2012, we were awarded contracts to network more than 22 million Silver Spring-enabled devices that connect homes and businesses. Our utility customers, as of September 30, 2013, include: Atlantic City Electric Company, a subsidiary of Pepco Holdings Inc., or PHI; Baltimore Gas and Electric Company, or BG&E, a subsidiary of Exelon Corporation; CitiPower Pty and Powercor Australia Ltd., or CHED, subsidiaries of CHEDHA Holdings Pty Limited; Commonwealth Edison Company, a subsidiary of Exelon Corporation; CPFL Energia; CPS Energy; Delmarva Power and Light Company, a subsidiary of PHI; Florida Power & Light Company, or FPL, a subsidiary of NextEra Energy, Inc.; Guelph Hydro Electric Systems, Inc.; Jemena Electricity Networks (Vic) Ltd; Modesto Irrigation District, or MID; Oklahoma Gas and Electric Company, or OG&E, a subsidiary of OGE Energy Corp.; Pacific Gas and Electric Company, or PG&E, a subsidiary of PG&E Corporation; Potomac Electric Power Company, a subsidiary of PHI; Progress Energy Carolinas, Inc. and Progress Energy Florida, Inc., subsidiaries of Progress Energy, Inc.; Sacramento Municipal Utility District, or SMUD; SP PowerAssets Limited, or Singapore Power; and Virginia Electric and Power Company. As of September 30, 2013, we had delivered 17.5 million Silver Spring-enabled devices that connect homes and businesses.

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Financial Overview

Revenue

We derive revenue from sales of products and services that enable utility customers to deploy our Smart Energy Platform.

Our product revenue is derived from sales of hardware such as communications modules, access points, relays and bridges, and software. We sell our communications modules primarily to meter manufacturers, however when requested by our utility customers, we sell third-party devices such as meters integrated with our communications modules directly to our utility customers. In addition, we sell our other hardware and software products directly to our utility customers.

Our service revenue includes fees for professional services, managed services and SaaS, and ongoing customer support.

To date, a substantial majority of our revenue is attributable to a limited number of utility customer deployments of our advanced metering solution.

Our revenue includes amounts related to the utility customers’ deployments that were billed directly to our meter manufacturers, as well as direct revenue from our utility customers. We expect that a limited number of utility customers will continue to account for a substantial portion of our revenue in future periods although these utility customers have varied and are likely to vary from period to period.

Substantially all of our customer arrangements include acceptance provisions that require testing of the network against specific performance criteria. Once we complete the required network testing and receive acceptance of the initial phase of deployment, we receive customer acceptances for follow-on phases of deployment on a routine basis, which leads to additional revenue until the completion of the specific customer deployment.

Cost of Revenue and Gross Profit (Loss)

Product cost of revenue consists of contract manufacturing costs, including raw materials, component parts and associated freight, and normal yield loss in the period in which we recognize the related revenue. In addition, product cost of revenue includes compensation, benefits and stock-based compensation provided to our supply chain management personnel, and overhead and other direct costs, which are recognized in the period in which we recognize the related revenue. Further, we recognize certain costs, including logistics costs, manufacturing ramp-up costs, expenses for inventory obsolescence, warranty obligations, lower of cost or market adjustments to inventory, and amortization of intangibles, in the period in which they are incurred or can be reasonably estimated. We record a lower of cost or market adjustment in instances where the selling price of the products delivered or expected to be delivered is less than cost. We also include the cost of third-party devices in cost of revenue in instances when our utility customers contract with us directly for such devices. In accordance with our accounting policies, we recognize product cost of revenue in the periods we recognize the related revenue.

Service cost of revenue includes compensation and related costs for our service delivery, customer operations and customer support personnel, facilities and infrastructure cost and depreciation, and data center costs. In accordance with our accounting policies, we recognize service cost of revenue in the period in which it is incurred even though the associated service revenue may be required to be deferred.

Our gross profit (loss) varies from period to period based on the volume, average selling prices, and mix of products and services recognized as revenue, as well as product and service costs, expense for warranty obligations, and inventory write-downs. The timing of revenue recognition and related costs, which depends primarily on customer acceptance, can fluctuate significantly from period to period and have a material impact on our gross profit and gross margin results.

Operating Expenses

Operating expenses consist of research and development, sales and marketing, and general and administrative expenses, as well as amortization of acquired intangibles. Personnel-related expense represents a significant component of our operating expenses. Our regular full-time employee headcount grew from 566 employees as of December 31, 2012 to 608 as of September 30, 2013.

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Research and Development

Research and development expense represents the largest component of our operating expenses and consists primarily of:

• compensation, benefits and stock-based compensation provided to our hardware and software engineering personnel, as well as facility costs and other related overhead;

• cost of prototypes and test equipment relating to the development of new products and the enhancement of existing products; and

• fees for design, testing, consulting, legal and other related services.

We expense our research and development costs as they are incurred.

Sales and Marketing

Sales and marketing expense consists primarily of:

• compensation, benefits, sales commissions and stock-based compensation provided to our sales, marketing and business development personnel, as well as facility costs and other related overhead;

• marketing programs, including expenses associated with industry events, trade shows, and travel costs.

General and Administrative

General and administrative expense consists primarily of:

• compensation, benefits and stock-based compensation provided to our executive, finance, legal, human resource and administrative personnel, as well as facility costs and other related overhead; and

• fees paid for professional services, including legal, tax and accounting services.

Key Non-GAAP Financial Measures

We believe that our results of operations under GAAP, when considered in isolation, may only provide limited insight into the performance of our business in any given period. As a result, we manage our business, make planning decisions, evaluate our performance and allocate resources by assessing non-GAAP measures such as non-GAAP revenue (billings), cost of non-GAAP revenue (billings), gross profit (loss) on non-GAAP revenue (billings), and adjusted EBITDA, in addition to other financial measures presented in accordance with GAAP. We believe that these non-GAAP measures offer valuable supplemental information regarding the performance of our business, and will help investors better understand the sales volumes, and gross margin and profitability trends, as well as the cash flow characteristics, of our business. These non-GAAP measures should not be considered in isolation from, are not a substitute for, and do not purport to be an alternative to, revenue, cost of revenue, gross profit (loss), net loss or any other performance measure derived in accordance with GAAP.

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 (billings) excludes amounts for undelivered products, services to be performed in the future, and amounts paid or payable to customers. Non-GAAP revenue (billings) is initially recorded as deferred revenue and is recognized as revenue when all revenue recognition criteria have been met under our accounting policies as described in our Prospectus. We reconcile revenue to non-GAAP revenue (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. We reconcile cost of revenue to cost of non-GAAP revenue (billings) 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.

Gross profit (loss) on non-GAAP revenue (billings) is the difference between non-GAAP revenue (billings) and cost of non-GAAP revenue (billings).

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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.

The non-GAAP financial measures set forth below for the three and nine months ended September 30, 2013 and 2012 have been derived from our condensed consolidated financial statements. Reconciliations to the comparable GAAP measures are contained in the notes below.

	Three Months Ended September 30,						Nine Months Ended September 30,
	2013			2012			2013			2012
	(unaudited, in thousands, except for percentages)						(unaudited, in thousands, except for percentages)
Non-GAAP revenue (billings)(1)	$	94,216		$	85,221		$	254,438		$	218,757
Cost of non-GAAP revenue (billings)(2)		54,673			58,483			167,337			144,225
Gross profit (loss) on non-GAAP revenue (billings)(3)	$	39,543		$	26,738		$	87,101		$	74,532
Gross margin on non-GAAP revenue (billings)		42	%		31	%		34	%		34	%
Adjusted EBITDA(4)	$	11,392		$	2,300		$	2,502		$	49

(1) The following table reconciles revenue to non-GAAP revenue (billings):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2013		2012		2013		2012
	(unaudited, in thousands)				(unaudited, in thousands)
Revenue, net	$	72,481	$	39,628	$	229,694	$	146,666
Change in deferred revenue, net of foreign currency translation		21,735		45,593		24,744		72,091
Non-GAAP revenue (billings)	$	94,216	$	85,221	$	254,438	$	218,757

(2) The following table reconciles cost of revenue to cost of non-GAAP revenue (billings):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2013			2012			2013			2012
	(unaudited, in thousands)						(unaudited, in thousands)
Cost of revenue	$	49,255		$	35,194		$	148,084		$	125,495
Change in deferred cost of revenue, net of foreign currency translation		6,842			23,858			30,028			20,867
Less: Stock-based compensation included in cost of revenue		(1,376	)		(521	)		(10,631	)		(1,993	)
Less: Amortization of intangibles included in cost of revenue		(48	)		(48	)		(144	)		(144	)
Cost of non-GAAP revenue (billings)	$	54,673		$	58,483		$	167,337		$	144,225

(footnotes continued on the next page)

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(3) The following table reconciles gross profit (loss) to gross profit on non-GAAP revenue (billings):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2013			2012			2013			2012
	(unaudited, in thousands, except for percentages)						(unaudited, in thousands, except for percentages)
Gross profit	$	23,226		$	4,434		$	81,610		$	21,171
Change in deferred revenue, net of foreign currency translation		21,735			45,593			24,744			72,091
Change in deferred cost of revenue, net of foreign currency translation		(6,842	)		(23,858	)		(30,028	)		(20,867	)
Stock-based compensation included in cost of revenue		1,376			521			10,631			1,993
Amortization of intangibles included in cost of revenue		48			48			144			144
Gross profit on non-GAAP revenue (billings)	$	39,543		$	26,738		$	87,101		$	74,532

(4) The following table reconciles net income (loss) to adjusted EBITDA:

	Three Months ended September 30,						Nine Months ended September 30,
	2013			2012			2013			2012
	(unaudited, in thousands)						(unaudited, in thousands)
Net income (loss)	$	(12,269	)	$	(26,868	)	$	(67,165	)	$	(68,707	)
Change in deferred revenue, net of foreign currency translation		21,735			45,593			24,744			72,091
Change in deferred cost of revenue, net of foreign currency translation		(6,842	)		(23,858	)		(30,028	)		(20,867	)
Other (income) expense, net		54			2,028			24,966			(219	)
Provision for income taxes		100			373			492			469
Depreciation and amortization		1,624			1,815			4,990			5,459
Stock-based compensation		6,990			3,217			44,503			11,823
Adjusted EBITDA	$	11,392		$	2,300		$	2,502		$	49

Non-GAAP measures have limitations and should not be considered in isolation or as a substitute for analysis of our results as reported under GAAP. The most significant of these limitations include:

• our non-GAAP measures do not reflect the effect of customer acceptance provisions as required under GAAP;

• our non-GAAP measures do not reflect the effect of contingent revenue recognition limits due to potential refunds and penalty provisions related to future delivery or performance as required under GAAP;

• our non-GAAP measures are based on contractual invoiced amounts and therefore do not reflect the effect of relative selling price allocations between separate units of accounting as required under GAAP;

• our non-GAAP measures do not reflect the impact of issuing equity-based compensation to our management team and employees or in connection with acquisitions;

• our non-GAAP measures do not reflect the impact of the amortization of acquired intangibles arising from acquisitions;

• our non-GAAP measures do not reflect other (income) expense primarily related to gains and losses from the remeasurement of embedded derivative and preferred stock warrant liabilities, and interest expense or loss on conversion from our promissory notes;

• our non-GAAP measures do not reflect income tax expense or legal settlement costs;

• although depreciation and amortization are non-cash expenses, the assets being depreciated and amortized may have to be replaced in the future, and adjusted EBITDA does not reflect cash capital expenditure requirements for such replacements or for new capital expenditures;

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• our non-GAAP measures do not reflect changes in, or cash requirements for, our working capital needs; and

• other companies, including companies in our industry, may not use such measures, may calculate non-GAAP measures differently or may use other financial measures to evaluate their performance, all of which reduce the usefulness of our non-GAAP measures as comparative measures.

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Results of Operations and Other Financial Measures

The following table sets forth our condensed consolidated results of operations for the periods shown:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2013			2012			2013			2012
	(unaudited, in thousands)						(unaudited, in thousands)
Condensed Consolidated Statements of Operations Data:
Revenue, net	$	72,481		$	39,628		$	229,694		$	146,666
Cost of revenue		49,255			35,194			148,084			125,495
Gross profit		23,226			4,434			81,610			21,171
Operating expenses:
Research and development		16,980			15,480			60,851			46,872
Sales and marketing		7,424			6,822			26,514			21,732
General and administrative		10,937			6,599			35,952			21,024
Total operating expenses		35,341			28,901			123,317			89,628
Operating income (loss)		(12,115	)		(24,467	)		(41,707	)		(68,457	)
Other income (expense), net		(54	)		(2,028	)		(24,966	)		219
Income (loss) before income taxes		(12,169	)		(26,495	)		(66,673	)		(68,238	)
Provision for income taxes		100			373			492			469
Net income (loss)	$	(12,269	)	$	(26,868	)	$	(67,165	)	$	(68,707	)

Revenue

The following table sets forth our revenue for the periods shown:

	Three Months Ended September 30,						Nine Months Ended June 30,
	2013		2012		Change		2013		2012		Change
	(unaudited, in thousands)						(unaudited, in thousands)
Product revenue	$	56,650	$	30,394	$	26,256	$	146,366	$	122,292	$	24,074
Service revenue		15,831		9,234		6,597		83,328		24,374		58,954
Revenue, net	$	72,481	$	39,628	$	32,853	$	229,694	$	146,666	$	83,028

Of the $72.5 million total revenue recognized in the three months ended September 30, 2013, 88%, or $64.0 million, was due to the receipt of customer acceptances and the performance of related services for follow-on phases of deployment of our networking platform and solutions from utility customers for which acceptance of initial phases of deployment was achieved prior to 2013, and 12%, or $8.5 million, was due to the receipt of customer acceptances of initial phases of deployment of our networking platform and solutions during 2013. Revenue from our advanced metering solution and demand-side management and distribution automation solutions represented 92% and 8%, respectively, of total revenue for the three months ended September 30, 2013.

Of the $39.6 million total revenue recognized in the three months ended September 30, 2012, 96%, or $38.1 million, was due to the receipt of customer acceptances and the performance of related services for follow-on phases of deployment of our networking platform and solutions from utility customers for which acceptance of initial phases of deployment was achieved prior to 2012, and 4%, or $1.5 million, was due to the receipt of customer acceptances of initial phases of deployment of our networking platform and solutions during 2012. Revenue from our advanced metering solution and demand-side management and distribution automation solutions represented 86% and 14%, respectively, of total revenue for the three months ended September 30, 2012.

Of the $229.7 million total revenue recognized in the nine months ended September 30, 2013, 92%, or $210.2 million, was due to the receipt of customer acceptances and the performance of related services for follow-on phases of deployment of our networking platform and solutions from utility customers for which acceptance of initial phases of deployment was achieved prior to 2013, and 8%, or $19.5 million, was due to the receipt of customer acceptances of initial phases of deployment of our networking platform and solutions during 2013. Revenue from our advanced metering solution and demand-side management and distribution automation solutions represented 91% and 9%, respectively, of total revenue for the nine months ended September 30, 2013.

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Of the $146.7 million total revenue recognized in the nine months ended September 30, 2012, 94%, or $138.4 million, was due to the receipt of customer acceptances and the performance of related services for follow-on phases of deployment of our networking platform and solutions from utility customers for which acceptance of initial phases of deployment was achieved prior to 2012, and 6%, or $8.3 million, was due to the receipt of a customer acceptance of initial phase of deployment of our networking platform and solutions during 2012. Revenue from our advanced metering solution and demand-side management and distribution automation solutions represented 88% and 12%, respectively, of total revenue for the nine months ended September 30, 2012.

The increase in revenue for follow-on phases of deployment for the nine months ended September 30, 2013 as compared to the nine months ended September 30, 2012 was primarily due to the recognition of revenue of approximately $48.5 million that was previously deferred in accordance with our revenue recognition policy in connection with contingency provisions in an agreement with a customer that is nearing completion of its network optimization.

Product Revenue. The $26.3 million increase in product revenue for the three months ended September 30, 2013 as compared to the three months ended September 30, 2012 was due to an increase of $20.7 million resulting from changes in product mix and an increase of $5.6 million due to higher acceptance volumes.

The $24.1 million increase in product revenue for the nine months ended September 30, 2013 as compared to the nine months ended September 30, 2012 was primarily due to an increase of $24.7 million resulting from changes in product mix and an increase of $6.8 million resulting from the recognition of product revenue that was previously deferred subject to contingency provisions for a customer, partially offset by a decrease of $7.4 million due to lower acceptance volumes.

Service Revenue. The $6.6 million increase in service revenue for the three months ended September 30, 2013 as compared to the three months ended September 30, 2012 was primarily due to an increase of $4.1 million for services associated with the receipt of customer acceptances for initial phases of deployment of our networking platform and solutions and $1.9 million resulting from the recognition of services revenue for a customer that was previously subject to revenue deferral in the three months ended September 30, 2012 due to contingency provisions. Revenue from managed services and SaaS, and professional services represented 14% and 8%, respectively, of total revenue for the three months ended September 30, 2013, and 12% and 11%, respectively, of total revenue for the three months ended September 30, 2012.

The $59.0 million increase in service revenue for the nine months ended September 30, 2013 as compared to the nine months ended September 30, 2012 was primarily due to an increase of $43.5 million from the recognition of services revenue for a customer that was previously subject to revenue deferral in the nine months ended September 30, 2012, of which $41.6 million recognized was previously deferred, an increase of $9.5 million for services associated with the receipt of customer acceptances for initial phases of deployment of our advanced metering solution and distribution automation solution, and an increase of $6.0 million for the performance of related services for follow-on phases of deployment. Revenue from managed services and SaaS, and professional services represented 23% and 14%, respectively, of total revenue for the nine months ended September 30, 2013, and 8% and 8%, respectively, of total revenue for the nine months ended September 30, 2012.

Non-GAAP Revenue (billings)

The following table sets forth our non-GAAP revenue (billings) for the periods shown:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2013		2012		Change		2013		2012		Change
	(unaudited, in thousands)						(unaudited, in thousands)
Non-GAAP revenue (billings)	$	94,216	$	85,221	$	8,995	$	254,438	$	218,757	$	35,681

The $9.0 million increase in non-GAAP revenue (billings) for the three months ended September 30, 2013 as compared to the three months ended September 30, 2012 was due to increases of $4.7 million from changes in product mix primarily driven by new deployments partially offset by lower volumes, and an increase of $4.3 million in services.

Non-GAAP revenue (billings) from our advance metering solution and demand-side management and distribution automation solutions represented 91% and 9%, respectively, of total non-GAAP revenue (billings) for the three months ended September 30, 2013, and 93% and 7%, respectively, of total non-GAAP revenue (billings) for the three months ended September 30, 2012.

Non-GAAP revenue (billings) from product, managed services and SaaS, and professional services represented 77%, 11% and 12%, respectively, of total non-GAAP revenue (billings) for the three months ended September 30, 2013, and 80%, 10% and 10%, respectively, of total non-GAAP revenue (billings) for the three months ended September 30, 2012.

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The $35.7 million increase in non-GAAP revenue (billings) for the nine months ended September 30, 2013 as compared to the nine months ended September 30, 2012 was due to increases of $24.0 million from changes in product mix primarily driven by new deployments partially offset by lower volumes, and an increase of $11.7 million in services.

Non-GAAP revenue (billings) from our advance metering solution and demand-side management and distribution automation solutions represented 91% and 9%, respectively, of total non-GAAP revenue (billings) for the nine months ended September 30, 2013, and 92% and 8%, respectively, of total non-GAAP revenue (billings) for the nine months ended September 30, 2012.

Non-GAAP revenue (billings) from product, managed services and SaaS, and professional services represented 77%,11% and 12%, respectively, of total non-GAAP revenue (billings) for the nine months ended September 30, 2013, and 78%, 11% and 11%, respectively, of total non-GAAP revenue (billings) for the nine months ended September 30, 2012.

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Cost of Revenue and Gross Profit

The following table sets forth our cost of revenue and gross profit (loss) for the periods shown:

	Three Months Ended September 30,							Nine Months Ended September 30,
	2013		2012			Change		2013		2012			Change
	(unaudited, in thousands)							(unaudited, in thousands)
Product cost of revenue	$	34,844	$	22,846		$	11,998	$	100,152	$	88,358		$	11,794
Service cost of revenue		14,411		12,348			2,063		47,932		37,137			10,795
Cost of revenue	$	49,255	$	35,194		$	14,061	$	148,084	$	125,495		$	22,589
Product gross profit (loss)	$	21,806	$	7,548		$	14,258	$	46,214	$	33,934		$	12,280
Service gross profit (loss)		1,420		(3,114	)		4,534		35,396		(12,763	)		48,159
Gross profit	$	23,226	$	4,434		$	18,792	$	81,610	$	21,171		$	60,439

In the three and nine months ended September 30, 2013, we recognized $1.4 million and $10.6 million, respectively, of stock-based compensation expense in cost of revenue, as compared to $0.5 million and $2.0 million of stock-based compensation expense for the three and nine months ended September 30, 2012, respectively. The increases are due to restricted stock units that vested in connection with our IPO, the modification of stock options held by employees as of the date of our IPO, expenses related to our 2013 corporate bonus program, equity awards granted at IPO that were previously communicated to employees but not granted during the period from February 2012 to the date of our IPO, and the implementation of our Employee Stock Purchase Plan that became effective at our IPO.

Product Cost of Revenue. The $12.0 million increase in product cost of revenue for the three months ended September 30, 2013 as compared to the three months ended September 30, 2012 was primarily due to an increase of $8.6 million from changes in product mix and an increase of $3.3 million due to higher acceptance volumes.

The $11.8 million increase in product cost of revenue for the nine months ended September 30, 2013 as compared to the nine months ended September 30, 2012 was primarily due to an increase of $12.5 million resulting from changes in product mix, an increase of $2.1 million in stock-based compensation, partially offset by a decrease of $4.4 million from lower acceptance volumes and, during the nine months ended September 30, 2012, product cost of revenue was lower due to a benefit of $1.7 million resulting from changes in estimates related to warranties.

Service Cost of Revenue. The $2.1 million increase in service cost of revenue for the three months ended September 30, 2013 as compared to the three months ended September 30, 2012 was due to an increase of $1.4 million in higher service costs and $0.7 million in stock-based compensation.

The $10.8 million increase in service cost of revenue for the nine months ended September 30, 2013 as compared to the nine months ended September 30, 2012 was due to an increase of $6.6 million in stock based compensation and $4.2 million in higher service costs.

We anticipate that cost of revenue will increase sequentially, and year over year for the three and twelve months ended December 31, 2013. Changes in our service cost of revenue are disproportionate to changes in our service revenue because we recognize service cost of revenue in the period in which it is incurred even though the associated service revenue may be required to be deferred, as described under “Financial Overview—Cost of Revenue and Gross Profit (Loss).” In addition, we may incur gross losses primarily due to the timing of when we expect to meet the completion and acceptance criteria in our customer arrangements.

Cost of Non-GAAP Revenue (billings) and Gross Profit on Non-GAAP Revenue (billings)

The following table sets forth our cost of non-GAAP revenue (billings) for the periods shown:

	Three Months Ended September 30,							Nine Months Ended September 30,
	2013		2012		Change			2013		2012		Change
	(unaudited, in thousands)							(unaudited, in thousands)
Cost of Non-GAAP revenue (billings)	$	54,673	$	58,483	$	(3,810	)	$	167,337	$	144,225	$	23,112

Cost of non-GAAP revenue (billings) decreased by $3.8 million during the three months ended September 30, 2013 as compared to the three months ended September 30, 2012 due to a decrease of $5.2 million in product cost of non-GAAP revenue primarily due to lower volumes offset by changes in product mix. This decrease was partially offset by $1.4 million in higher services costs.

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Cost of non-GAAP revenue (billings) increased by $23.1 million during the nine months ended September 30, 2013 as compared to the nine months ended September 30, 2012 due to an increase of $18.9 million in product cost of non-GAAP revenue (billings) primarily due to changes in product mix partially offset by lower volumes and $4.2 million in higher service costs.

We anticipate that cost of non-gaap revenue (billings) will increase sequentially, and year over year for the three and twelve months ended December 31, 2013.

The following table sets forth our gross profit (loss) on non-GAAP revenue (billings) for the periods shown:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2013		2012		Change		2013		2012		Change
	(unaudited, in thousands except percentages)						(unaudited, in thousands except percentages)
Gross profit on non-GAAP revenue (billings)	$	39,543	$	26,738	$	12,805	$	87,101	$	74,532	$	12,569
Gross margin on non-GAAP revenue (billings)		42%		31%				34%		34%

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Gross profit on non-GAAP revenue (billings) increased by $12.8 million during the three months ended September 30, 2013 as compared to the three months ended September 30, 2012 due to an increase in gross profit of $9.9 million from product primarily driven by a higher mix of higher margin revenue partially offset by lower volumes, and an increase of $2.9 million from services.

For the three months ended September 30, 2013, gross margin on non-GAAP revenue (billings) was 42% as compared with 31% for the comparable period in 2012. The gross margin increase was driven primarily driven by a higher mix of higher margin revenue and an increase in gross profit from services.

Gross profit on non-GAAP revenue (billings) increased by $12.6 million during the nine months ended September 30, 2013 as compared to the nine months ended September 30, 2012 due to an increase in gross profit of $7.5 million from services and $5.1 million from product primarily driven by a higher mix of higher margin revenue partially offset by lower volumes.

For the nine months ended September 30, 2013 and 2012, gross margin on non-GAAP revenue (billings) was 34%.

We expect gross margin on non-GAAP revenue (billings) to decrease sequentially for the three months ended December 31, 2013.

Operating Expenses

The following table sets forth our operating expenses for the periods shown:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2013		2012		Change		2013		2012		Change
	(unaudited, in thousands)						(unaudited, in thousands)
Research and development	$	16,980	$	15,480	$	1,500	$	60,851	$	46,872	$	13,979
Sales and marketing		7,424		6,822		602		26,514		21,732		4,782
General and administrative		10,937		6,599		4,338		35,952		21,024		14,928
Operating expenses	$	35,341	$	28,901	$	6,440	$	123,317	$	89,628	$	33,689

Personnel-related expenses represent the most significant component of our operating expenses and increased from period to period. We intend to continue to manage our operating expenses in line with our existing cash and available financial resources and anticipate continued spending in future periods in order to execute our long-term business plan. In addition, the timing of additional hires could materially affect our operating expenses, both in absolute dollars and as a percentage of revenue.

In the three and nine months ended September 30, 2013, we recognized $5.6 million and $33.9 million respectively of stock-based compensation expense in operating expenses, as compared to $2.7 million and $9.8 million for the three and nine months ended September 30, 2012 respectively. The increases are due to restricted stock units that vested in connection with our IPO, the modification of stock options held by employees as of the date of our IPO, expenses related to our 2013 corporate bonus program, equity awards granted at IPO that were previously communicated to employees but not granted during the period from February 2012 to the date of our IPO, and the implementation of our Employee Stock Purchase Plan that became effective at our IPO.

Research and Development. The $1.5 million increase in research and development expense for the three months ended September 30, 2013 was primarily due to an increase of $1.0 million in stock-based compensation and $0.2 million in personnel-related expenses.

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The $14.0 million increase in research and development expense for the nine months ended September 30, 2013 was primarily due to an increase of $11.8 million in stock-based compensation and an increase of $1.8 million in personnel-related expenses.

We intend to continue to invest significantly in our research and development efforts, which we believe are essential to enhancing our competitive position and developing new products. Accordingly, we expect research and development expense to increase in future periods and remain the largest component of our operating expenses.

Sales and Marketing. The $0.6 million increase in sales and marketing expense for the three months ended September 30, 2013 was primarily due to an increase of $0.3 million in stock based compensation and $0.2 million in personnel-related expenses.

The $4.8 million increase in sales and marketing expense for the nine months ended September 30, 2013 was primarily due to an increase of $3.6 million in total stock-based compensation, $0.7 million in travel expenses and $0.6 million in personnel-related expenses.

We expect sales and marketing expense to increase in future periods as we hire new personnel and increase our global marketing and sales activities.

General and Administrative. The $4.3 million increase in general and administrative expense for the three months ended September 30, 2013 was primarily due to an increase of $1.9 million in professional services due to increased legal expenses, $1.6 million in stock-based compensation, $0.4 in facilities expenses and $0.3 million in personnel-related expenses.

The $14.9 million increase in general and administrative expense for the nine months ended September 30, 2013 was primarily due to an increase of $8.7 million in total stock-based compensation, an increase of $3.5 million in professional services due to increased legal expenses, $1.2 million in facilities expenses and $0.9 million in personnel-related expenses.

We expect general and administrative expense to increase as we incur additional costs related to operating as a publicly-traded company including increased audit, legal, regulatory and other related fees.

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Operating Income (Loss)

The following table sets forth our operating income (loss) for the periods shown:

	Three Months Ended September 30,								Nine Months Ended September 30,
	2013			2012			Change		2013			2012			Change
	(unaudited, in thousands)								(unaudited, in thousands)
Operating income (loss)	$	(12,115	)	$	(24,467	)	$	12,352	$	(41,707	)	$	(68,457	)	$	26,750

Operating income (loss) consists of gross profit less operating expenses. The $12.4 million decrease in operating loss for the three months ended September 30, 2013 was due to an increase of $18.8 million in gross profit, partially offset by an increase in operating expenses of $6.4 million.

The $26.8 million decrease in operating loss for the nine months ended September 30, 2013 was primarily due to an increase of $60.4 million in gross profit, partially offset by an increase in operating expenses of $33.7 million.

We expect to continue to incur operating losses in future periods as we continue to invest in our growth.

Other Income (Expense), Net

The following table sets forth our other income (expense), net, for the periods shown:

	Three Months Ended September 30,								Nine Months Ended September 30,
	2013			2012			Change		2013			2012			Change
	(unaudited, in thousands)								(unaudited, in thousands)
Interest expense	$	(54	)	$	(1,198	)	$	1,144	$	(1,290	)	$	(3,351	)	$	2,061
Conversion of promissory notes and remeasurement of warrants and derivatives		—			(830	)		830		(23,676	)		3,570			(27,246	)
Other income (expense), net	$	(54	)	$	(2,028	)	$	1,974	$	(24,966	)	$	219		$	(25,185	)

Other income (expense), net, for the three months ended September 30, 2013 consists of interest expense on our capital leases. For the three months ended September 30, 2012, other income (expense), net also consisted of interest expense from our convertible promissory notes of $1.1 million and, to a lesser extent, changes in the fair value of preferred stock warrants and embedded derivatives.

Other income (expense), net, for the nine months ended September 30, 2013 consists primarily of a $22.9 million loss on conversion of convertible promissory notes, $0.8 million loss on termination of warrants, and $1.1 million of interest expense on our convertible promissory notes and capital leases. For the nine months ended September 30, 2012, other income (expense), net also consisted of changes in the fair value of our preferred stock warrants and embedded derivatives and interest expense on our convertible notes payable, both of which converted upon IPO (see Note 1 in the notes to condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for additional information). We have historically invested our cash in money market accounts and U.S. Treasury bills. We anticipate continuing to invest in short-term and long-term marketable securities in the near term.

Provision for Income Taxes

Since inception, we have incurred net losses and have not recorded provisions for U.S. federal and state income taxes, except state minimum taxes. We have not reported a benefit for federal and state income taxes in the condensed consolidated financial statements as the deferred tax asset arising from our net operating losses has been offset by a valuation allowance because it was more likely than not that the tax benefit of the net operating losses may not be realized. We have recorded a provision for foreign taxes associated with our foreign subsidiaries.

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Net Income (Loss)

The following table sets forth our net income (loss) for the periods shown:

	Three Months Ended September 30,								Nine Months Ended September 30,
	2013			2012			Change		2013			2012			Change
	(unaudited, in thousands)								(unaudited, in thousands)
Net income (loss)	$	(12,269	)	$	(26,868	)	$	14,599	$	(67,165	)	$	(68,707	)	$	1,542

Net income (loss) consists of operating income (loss) plus other income (expense), net, less provision for income taxes. The $14.6 million decrease in net loss for the three months ended September 30, 2013 was primarily due to the $12.4 million decrease in operating loss. The $1.5 million decrease in net loss for the nine months ended September 30, 2013 was primarily due to a $26.8 million decrease in operating loss, offset by the $25.2 million increase in other income (expense), net, which primarily consisted of a $23.7 million loss on conversion of convertible notes and termination of warrants.

For the nine months ended September 30, 2013, we recorded a non-cash deemed dividend of $105.0 million related to anti-dilution provisions of certain shares of preferred stock that were triggered by the IPO. (See Note 6 in the notes to condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for additional information).

We expect to continue to incur net losses in future periods as we continue to invest in our growth.

Liquidity and Capital Resources

As of September 30, 2013 we had $81.9 million in cash and cash equivalents and $61.6 million in short-term investments. Our investment portfolio consisted of money market funds and fixed income securities. Our fixed income securities were denominated in U.S. dollars and consisted of highly liquid debt instruments of the U.S. government and its agencies, foreign government and agency securities, and U.S. and foreign corporate debt securities. We limit the amount of our domestic and international investments with any single issuer and any single financial institution, and also monitor the diversity of the portfolio, thereby diversifying the credit risk. Within our portfolio, we held $4.5 million of foreign government and agencies securities as of September 30, 2013. These sovereign debt securities had an average credit rating of AAA and were predominantly from Canada. None of the securities deemed sovereign debt were from Greece, Ireland, Italy, Portugal or Spain.

We expect that operating expenses will constitute a material use of our cash balances. In the near term, we intend to continue to manage our operating expenses in line with our existing cash and available financial resources and anticipate increased spending in future periods in order to execute our long-term business plan. In addition, we may use cash to fund acquisitions or invest in other businesses, technologies or product lines. We have incurred net losses and negative cash flows from operating activities since our inception, and we expect we will continue to incur operating and net losses and cash flows to fluctuate from period to period in 2013 and beyond. We believe that our available cash balances and credit facilities will be sufficient to meet our presently anticipated working capital, capital expenditure and business expansion requirements for at least the next 12 months. Our future capital requirements will depend on many factors, including our rate of customer wins and related billings and the expansion of our production capacity, as well as sales and marketing activities, timing and extent of spending on research and development efforts and the continuing market acceptance of our networking platform and solutions.

Prior to fiscal 2013, we funded our operations primarily through private sales of equity securities and debt financing and, more recently, cash generated from our IPO. In March 2013, we completed our IPO in which we issued and sold 5,462,500 shares of common stock at a public offering price of $17.00 per share. We received net proceeds of $84.5 million after deducting underwriting discounts and commissions of $6.5 million and paid offering costs in the nine months ended September 30, 2013 of $1.9 million, but before deducting previously paid and unpaid offering expenses of approximately $4.5 million. Concurrently with our IPO, we issued and sold in a private placement 705,881 shares of common stock at the IPO price of $17.00 per share. We received net proceeds of $12.0 million.

In addition, in connection with our IPO, our December 2011 Note and February 2012 Note together with accrued interest converted into 3,764,954 shares of common stock (see Note 4 (Borrowings), to our condensed consolidated financial statements, included in Part 1, Item 1 of this Quarterly Report on Form 10-Q), and we paid $12.0 million in consideration for the termination of certain Series A and all Series C preferred stock warrants.

We have available a line of credit with a bank, which originally provided for advances and the issuance of letters of credit of up to $40 million. In May 2013, we amended our credit agreement to increase the available capacity from $40 million to $50 million. As of September 30, 2013, there were no borrowings outstanding under the credit agreement; however, $10.5 million of

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letters of credit were outstanding, leaving $39.5 million of available capacity for cash borrowings or additional letters of credit, subject to compliance with financial covenants and other customary conditions to borrowings. As of September 30, 2013 we were in compliance with the financial covenants in the credit agreement.

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We are occasionally required to provide performance bonds to secure our performance under customer contracts. Our ability to obtain such bonds primarily depends upon our capitalization, working capital, past performance, management expertise and reputation and external factors beyond our control, including the overall capacity of the surety market. Surety companies consider those factors in relation to the amount of our tangible net worth and other underwriting standards that may change from time to time. Surety companies may require that we collateralize a percentage of the bond with our cash or other form of credit enhancement. Events that affect surety markets generally may result in bonding becoming more difficult to obtain in the future, or being available only at a significantly greater cost. In addition, some of our utility customers also require collateral in the form of letters of credit to secure performance or to fund possible damages as the result of an event of default under our contracts with them. If we enter into significant long-term agreements that require the issuance of letters of credit, our liquidity could be negatively impacted. Our inability to obtain adequate bonding or letters of credit to meet bid requirements or enter into significant long-term agreements could have a material adverse effect on our future revenues and business prospects.

Cash Flows

The following table sets forth the major sources and uses of cash for each of the periods set forth below:

	Nine Months Ended September 30,						Change
	2013			2012
	(unaudited, in thousands)
Cash used in operating activities	$	(1,830	)	$	(38,280	)	$	36,450
Cash used in investing activities		(64,794	)		(4,109	)		(60,685	)
Cash provided by financing activities		75,843			30,326			45,517

Cash Flows from Operating Activities

Operating activities used $1.8 million of cash during the nine months ended September 30, 2013, primarily as a result of a net loss of $67.2 million, which was partially offset by non-cash stock-based compensation expense of $44.5 million, non-cash loss on conversion of convertible promissory notes and termination of warrants of $23.7 million, the change in our operating assets and liabilities of $9.4 million, and depreciation and amortization of $5.0 million.

Operating activities used $38.3 million of cash during the nine months ended September 30, 2012, primarily as a result of a net loss of $68.7 million and an adjustment for the non-cash gain associated with the remeasurement of preferred stock warrants and embedded derivatives of $3.6 million, which was partially offset by non-cash stock-based compensation expense of $11.8 million, the change in our operating assets and liabilities of $14.3 million, and depreciation and amortization of $5.5 million.

Cash Flows from Investing Activities

Cash flows used in investing activities relate to purchases of short-term investments and cash used for capital expenditures to support our growth. Cash used in investing activities for the nine months ended September 30, 2013 consisted of $61.5 million and $3.3 million to purchase short-term investments and property and equipment, respectively. Cash used in investing activities for the nine months ended September 30, 2012 totaled $4.1 million primarily to purchase property and equipment.

Cash Flows from Financing Activities

Cash provided by financing activities totaled $75.8 million during the nine months ended September 30, 2013, and consisted primarily of $84.5 million in net proceeds from the sale of 5,462,500 shares of common stock in our IPO, $12.0 million proceeds from the sale of 705,881 shares of common stock in a private placement, partially offset by the payment of $12.0 million payment for the termination of certain Series A and Series C preferred stock warrants, and $7.7 million for taxes paid related to the net share settlement of equity awards.

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Cash provided by financing activities totaled $30.3 million during the nine months ended September 30, 2012, and consisted primarily of $29.0 million in net proceeds from the issuance of a convertible note.

Concentration of Credit Risk

We typically extend credit to our utility customers and meter manufacturers and do not require collateral or other security in support of accounts receivable. We attempt to mitigate the credit risk in our trade receivables through our credit evaluation process and payment terms. We analyze the need to reserve for potential credit losses and record allowances for doubtful accounts when necessary. As of September 30, 2013, BG&E, CPS Energy, and Commonwealth Edison Company accounted for 25%, 13%, and 11%, respectively, of our accounts receivable. As of December 31, 2012, BG&E, Secure Meters, subsidiaries of Progress Energy and General Electric Company accounted for 26%, 16%, 15%, and 10%, respectively, of our accounts receivable.

To date, we have not had any significant write-offs of uncollectable accounts receivable, and there was no material allowance for doubtful accounts as of September 30, 2013 and December 31, 2012.

Off-Balance Sheet Arrangements

We do not have any relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities, that would have been established for the purpose of facilitating off-balance sheet arrangements (as that term is defined in Item 303(a)(4)(ii) of Regulation S-K) or other contractually narrow or limited purposes.

During the ordinary course of business, we provide standby letters of credit or other guarantee instruments to third parties as required for certain transactions initiated either by us or our subsidiaries. As of September 30, 2013, our financial guarantees that were not recorded on our balance sheet consisted of $10.5 million of standby letters of credit and $15.0 million of surety bonds related to performance guarantees, facility leases, workers compensation insurance, and a contract bid bond.

Contractual Obligations

There were no material changes in our commitments under contractual obligations, as disclosed in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained in our Prospectus.

Critical Accounting Policies and Estimates

Our discussion and analysis of our financial condition and results of operations are based upon our financial statements, which have been prepared in accordance with GAAP. GAAP requires us to make certain estimates and judgments that affect the amounts reported in our financial statements. We base our estimates on historical experience, anticipated future trends and other assumptions we believe to be reasonable under the circumstances. Because these accounting policies require significant judgment, our actual results may differ materially from our estimates.

There have been no material changes in our critical accounting policies and estimates during the three months ended September 30, 2013 as compared to the critical accounting policies and estimates disclosed in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained in our Prospectus.

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Item 3. Quantitative and Qualitative Disclosures about Market Risk.

Interest Rate Risk

Fixed Income Securities

Our fixed income investment portfolio is denominated in U.S. dollars and consists of various holdings, types, and maturities. Our primary objective for holding fixed income securities is to achieve an appropriate investment return consistent with preserving principal and managing risk. At any time, a sharp rise in interest rates or credit spreads could have a material adverse impact on the fair value of our fixed income investment portfolio. A sensitivity analysis was performed on our investment portfolio as of September 30, 2013. The analysis is based on an estimate of the hypothetical changes in market value of the portfolio that would result from an immediate parallel shift in the yield curve of various magnitudes; however, interest rates do not always move in such a manner and actual results may differ materially. A shift in the yield curve of 100 basis points would have resulted in a change of approximately 1% of the fair value of our fixed income securities.

We monitor our interest rate and credit risk, including our credit exposures to specific rating categories and to individual issuers. There were no impairment charges on our cash equivalents and fixed income securities during the quarter. These instruments are not leveraged and we do not enter into speculative securities for trading purposes.

Interest rate risk also reflects our exposure to movements in interest rates associated with our credit facility. The interest bearing credit facility is denominated in U.S. dollars and the interest expense is based on the bank’s prime interest rate plus an additional margin. As of September 30, 2013, we had not drawn on this credit facility. Our capital leases do not change based on changes in market interest rates.

Foreign Currency Exchange Risk

Our sales contracts are denominated primarily in U.S. dollars and, to a lesser extent, Australian dollars and Brazilian real. Consequently, our customer billings denominated in foreign currency are subject to foreign currency exchange risk. A portion of our operating expenses are incurred outside the United States and are denominated in foreign currencies, which are also subject to fluctuations due to changes in foreign currency exchange rates, particularly changes in the Australian dollar and Brazilian real. Additionally, fluctuations in foreign currency exchange rates may cause us to recognize transaction gains and losses in our statement of operations. To date, we have not entered into derivatives or hedging strategies as our exposure to foreign currency exchange rates has not been material to our historical operating results, but we may do so in the future if our exposure to foreign currency should become more significant. There were no significant foreign exchange gains or losses in the nine months ended September 30, 2013 and 2012.

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and our Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of September 30, 2013. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, or the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. Based on the evaluation of our disclosure controls and procedures as of September 30, 2013, our Chief Executive Officer and Chief Financial Officer concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level.

Limitations on the Effectiveness of Controls

Control systems, no matter how well conceived and operated, are designed to provide a reasonable, but not an absolute, level of assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. Because of the inherent limitations in any control system, misstatements due to error or fraud may occur and not be detected.

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings.

From time to time, we may be subject to legal proceedings and claims in the ordinary course of business. We have received, and may in the future continue to receive, claims from third parties asserting infringement of their intellectual property rights. Future litigation may be necessary to defend ourselves and our customers by determining the scope, enforceability and validity of third party proprietary rights or to establish our proprietary rights. There can be no assurance with respect to the outcome of any current or future litigation brought against us or pursuant to which we have indemnification obligations and the outcome could have a material adverse impact on our business, operating results and financial condition.

We were named in a lawsuit filed on September 9, 2010 in the Superior Court of the State of California, San Mateo County (Edwards v. Silver Spring Networks). The lawsuit claims to be a “class action” on behalf of California consumers, and alleges that smart meters are defective and generate incorrect bills. We have filed a motion to dismiss this case and, on September 1, 2011, the San Mateo Superior Court granted our motion without leave to amend as to two of the plaintiffs’ causes of action and with leave to amend as to a third claim. On February 25, 2012, the plaintiffs filed an amended complaint. On May 30, 2012, we filed an answer to the amended complaint denying the plaintiffs’ allegations. On August 3, 2012, the plaintiffs filed a second amended complaint, and on September 18, 2012, we filed a demurrer to one of the two claims asserted in the second amended complaint. The court has overruled our demurrer. On November 9, 2012, the plaintiffs filed a motion for class certification. A hearing on the class certification motion was held on January 25, 2013. On April 11, 2013, the court denied the class certification motion without prejudice. The court allowed the plaintiffs to file a revised class certification motion, which the plaintiffs filed on June 28, 2013. A hearing on the revised class certification motion was held on September 6, 2013. We intend to continue vigorously defending against the action.

On June 17, 2011, EON Corp. IP Holdings, LLC, a non-producing entity, filed suit in United States District Court for the Eastern District of Texas, Tyler Division against a number of smart grid providers, including Landis+Gyr, which was since acquired by Toshiba, Aclara Power-Line Systems Inc., Elster Solutions, LLC, Itron, Inc., Trilliant Networks Inc. and Silver Spring Networks, Inc. The lawsuit alleges infringement of United States Patent Nos. 5,388,101, 5,481,546, and 5,592,491 by certain networking technology and services that we and the other defendants provide. We filed amended answers, affirmative defenses and counterclaims on August 21, 2012, September 24, 2012, October 31, 2012 and November 16, 2012 denying the plaintiff’s allegations and asserting that we do not infringe plaintiff’s patents and that plaintiff’s patents are invalid. The trial has been scheduled for April 2014. We believe that we have meritorious defenses to EON’s allegations and intend to vigorously defend ourselves.

On September 16, 2011 TransData, Inc. filed suit in United States District Court for the Western District of Oklahoma, against our customer, Oklahoma Gas & Electric Company, alleging infringement of United States Patent Nos. 6,181,294, 6,462,713, and 6,903,699 by certain wireless communication-enabled meters. Together with the meter manufacturer, General Electric Company, we have agreed to indemnify and defend Oklahoma Gas & Electric Company in connection with the TransData suit. An early claim construction hearing was held for one claim term on February 5, 2013, and the court provided an order on that term on June 25, 2013. A hearing for the full claim construction was held on September 25, 2013. The court issued the claim construction order on October 1, 2013. We believe that we have meritorious defenses to TransData’s allegations, and together with General Electric Company intend to vigorously defend our customer.

On March 21, 2013, Linex Technologies, Inc., a non-producing entity, filed suit against us in United States District Court for the Southern District of Florida. The complaint alleges infringement of United States Patent Nos. 6,493,377 and 7,167,503 by certain networking technology that we provide. We filed an answer on May 20, 2013. The trial is currently scheduled for May 2014. We believe that we have meritorious defenses to Linex’s allegations and intend to vigorously defend ourselves.

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Item 1A. Risk Factors.

Our business is subject to many risks and uncertainties, which may affect our future financial performance. If any of the events or circumstances described below occurs, our business and financial performance could be harmed, our actual results could differ materially from our expectations and the market value of our stock could decline. The risks and uncertainties discussed below are not the only ones we face. There may be additional risks and uncertainties not currently known to us or that we currently do not believe are material that may harm our business and financial performance.

We have a history of losses and anticipate continued losses and may incur negative operating cash flow in future periods, and we may not achieve or sustain profitability on a quarterly or annual basis.

We have incurred significant losses to date, with an accumulated deficit of $617.6 million as of September 30, 2013. For the years ended December 31, 2010, 2011 and 2012, and for the nine months ended September 30, 2013, we incurred net loss of $(148.4) million, $(92.4) million, $(89.7) million and $(67.2) million, respectively. We expect these losses to continue. We may incur negative operating cash flow in future periods, as we expect to incur significant operating expenses in connection with the continued development and expansion of our business. Our expenses include research and development expenses, general and administrative expenses, selling and marketing expenses and customer service and support expenses. Many of these expenses relate to prospective utility customers that may never place any orders and products that may not be introduced or generate revenue until later periods, if at all. There can be no assurance that we will ever achieve or sustain profitability on a quarterly or annual basis.

Our quarterly results are inherently unpredictable and subject to substantial fluctuations, and, as a result, we may fail to meet the expectations of securities analysts and investors, which could adversely affect the trading price of our common stock.

Our revenue, non-GAAP revenue (billings) and other operating results may vary significantly from quarter to quarter due to a number of factors, many of which are outside of our control. While our revenue and non-GAAP revenue (billings) have increased in recent periods, there can be no assurances that our revenue and non-GAAP revenue (billings) will continue to increase or will not decrease on a quarterly or annual basis. For example, we had lower revenue for the three months ended March 31, 2013 compared to the three months ended March 31, 2012. We expect revenue, non-GAAP revenue (billings), gross margin on non-GAAP revenue (billings) and adjusted EBITDA to fluctuate from period to period throughout the remainder of 2013 and beyond. We also expect operating losses in certain future periods. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Key Non-GAAP Financial Measures” above.

The factors that may affect the unpredictability of our quarterly results and cause our stock price to fluctuate include, but are not limited to:

• long, and sometimes unpredictable, sales and customer deployment cycles;

• changes in the mix of products and services sold;

• our dependence on a limited number of utility customers;

• the timing of acceptance of our products and services by our utility customers, which can have a material impact on when we recognize related revenue under our revenue recognition policies;

• changing market conditions;

• competition;

• failures of our products, components that we use in our products or third-party devices containing our products that delay deployments, harm our reputation or result in high warranty costs, contractual penalties or terminations;

• product or project failures by third-party vendors, utility customers or competitors that result in the cancellation, slowing down or deferring of projects;

• liquidated damages provisions in our contracts, which could result in significant financial penalties if triggered or, even if not triggered, could affect our ability to recognize revenue in a given period;

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• the ability of our suppliers and manufacturers to deliver supplies and products to us on a timely basis;

• delays associated with government funding programs for smart grid projects;

• delays in regulatory approvals for our utility customers and utility customer deployments;

• political and consumer sentiment and the related impact on the scope and timing of smart grid deployment; and

• economic, regulatory and political conditions in the markets where we operate or anticipate operating.

As a result, we believe that quarter to quarter comparisons of operating results are not necessarily a good indication of what our future performance will be. It is likely that in some future quarters our operating results may be below the expectations of securities analysts or investors, in which case the price of our common stock may decline.

Sales cycles to utility customers can be lengthy and unpredictable and require significant employee time and financial resources with no assurances that a prospective customer will select our products and services.

Sales cycles with utilities, our potential customers, tend to be long and unpredictable. Utilities generally have extensive budgeting, procurement, competitive bidding, technical and performance review, and regulatory approval processes that can take up to several years to complete. Utilities may choose, and many historically have often chosen, to follow industry trends rather than be early adopters of new products or services, which can extend the lead time for or prevent acceptance of more recently introduced products or services such as ours. In addition, in many instances, a utility may require one or more pilot programs to test our new products and services before committing to a larger deployment. These pilot programs may be quite lengthy and further delay the sales cycle with no assurance that they will lead to a larger deployment or future sales. Furthermore, to the extent our products are required to be deployed with the products of others, such as meters, delays related to such third-party products will further lengthen the sales cycle.

This extended sales process requires us to dedicate significant time by our senior management, and sales and marketing and customer services personnel, and to use significant financial resources without any assurance of success or recovery of our related expenses. Similarly, we are likely to incur these significant operating expenses well ahead of recognizing the related revenue because our ability to recognize revenue is typically dependent on meeting contractual customer acceptance and other requirements.

The lengthy sales cycles of our products and services also make it difficult to forecast new customer deployments, as well as the volume and timing of orders, which, in turn makes forecasting our future results of operations challenging. In the event that we publicly disclose any forecasts of our future results of operations or other performance metrics and those forecasts ultimately turn out to be inaccurate, the value of our common stock could significantly decline.

In addition, our agreement with our primary contract manufacturer provides for tiered volume-based pricing. To the extent our volumes decrease below specific thresholds, our gross profit and gross margins will be negatively impacted, which has occurred previously. Alternatively, in order to take advantage of the tiered volume-based pricing in any one quarter, we may purchase, and have previously purchased, additional inventory exposing us to the risk that we may incur costs for excess and obsolete inventory.

Our revenue is not predictable and recognition of a significant portion of it will be deferred into future periods.

Once a utility decides to move forward with a large-scale deployment of our products and services, the timing of and our ability to recognize related revenue will depend on several factors, some of which may not be under our control. These factors include shipment schedules that may be delayed or subject to modification, the rate at which our utility customers choose to deploy our Smart Energy Platform, customer acceptance of all or any part of our products and services, our contractual commitments to provide new or enhanced functionality at some point in the future, other contractual provisions such as liquidated damages, our manufacturers’ ability to provide an adequate supply of components, the requirement to obtain regulatory approval, and our ability to deliver quality products according to expected schedules. In light of these factors, the application of complex revenue recognition rules to our products and services has required us to defer, and in the future will likely continue to require us to defer, a significant amount of revenue until undetermined future periods. As of September 30, 2013, we had $532.5 million in deferred revenue. It may be difficult to predict the amount of revenue that we will recognize in any given period, and amounts recognized may fluctuate significantly from one period to the next.

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Amounts included in our total backlog and order backlog may not result in actual non-GAAP revenue (billings) or revenue or translate into profits.

Our total backlog disclosed in the prospectus filed with the SEC pursuant to Rule 424(b) under the Securities Act on March 13, 2013 (the “Prospectus”), represents future product and service non-GAAP revenue (billings) that we expect to generate pursuant to contracts that we have entered into with our utility customers and meter manufacturers. Our total backlog includes our order backlog, also disclosed in the Prospectus, which represents future non-GAAP revenue (billings) for open purchase orders and other firm commitments. We anticipate that our total backlog and order backlog will fluctuate from period to period throughout 2013 and beyond.

We cannot guarantee that our total backlog or order backlog will result in actual non-GAAP revenue (billings) in the originally anticipated period or at all. In addition, the contracts reflected in our total backlog and order backlog may not generate margins equal to or better than our historical operating results. We only recently began to track total backlog and order backlog on a consistent basis as performance measures and as a result, we do not have significant experience in determining the level of realization that we will actually achieve on our total backlog and order backlog. Our customer contracts are typically structured as master purchase and service agreements, or MSAs, under which the customer may place purchase orders over the course of a deployment. These deployments can extend for a number of years. Because our MSAs do not typically require a customer or meter partner to purchase a minimum amount of product or services, total backlog is an estimate based upon contractual terms, existing purchase orders and other available information regarding the amount and timing of expected future purchase orders to be placed by our utility customers and meter manufacturers, including non-binding forecasts. No assurance can be made that firm purchase orders will be placed under these MSAs in the amounts we estimate, within the time period we expect, or at all. Total backlog is subject to adjustments due to the long-term nature of our customer deployments. Adjustments can result from a variety of factors, including changes in the nature or scope of customer deployments, the impact of contingency provisions related to future delivery or performance, customer cancellations, market conditions, delayed regulatory approvals and customer defaults. Delays due to external market factors or delays in deployments and required regulatory approvals have in the past and may in the future cause us to extend the deployment schedule or make modifications under customer contracts. For example, ongoing regulatory uncertainties previously delayed the timing of the planned deployment schedule of Commonwealth Edison Company, or ComEd. In addition, under our MSAs, our utility customers generally have the right to terminate the MSA for any reason, including for their sole convenience, a material breach or insolvency on our part or their inability to obtain required regulatory approval. The occurrence of such adjustments or terminations could materially reduce the amount of, or delay the fulfillment of, our total and order backlog. If our total backlog or order backlog fails to materialize as expected, we could experience a material reduction in future non-GAAP revenue (billings), revenue, operating results or cash flow.

We are dependent on the utility industry, which has experienced volatility in capital spending. This volatility could cause our results of operations to vary significantly from period to period.

Similar to other industries, the utility industry has been affected by recent economic factors, including continued global economic uncertainty, concerns over the downgrade of U.S. sovereign debt and continued sovereign debt, monetary and financial uncertainties in European and other foreign countries. We derive substantially all of our revenue from sales of products and services directly and indirectly to utilities. Purchases of our products and services may be reduced or deferred as a result of many factors including economic downturns and uncertainty, slowdowns in new residential and commercial construction, a utility’s access to capital on acceptable terms, the timing and availability of government grants or incentives, utility specific financial circumstances, mergers and acquisitions, regulatory decisions, weather conditions, consumer opposition and fluctuating interest rates. Even with economic recovery, it may take time for our utility customers to establish new budgets and return to normal purchasing patterns. We cannot predict the reoccurrence of any economic slowdown or the strength or sustainability of the economic recovery, worldwide, in the United States or in our industry. We have experienced, and may in the future experience, variability in operating results on an annual and a quarterly basis as a result of these factors. Because a significant portion of our expenses is fixed in the short term or is incurred in advance of anticipated sales, we may not be able to decrease our expenses in a timely manner to offset any shortfall of sales. This could materially and adversely affect our operating results, financial condition and cash flows.

Substantially all of our current products depend on the availability and are subject to the regulation of radio spectrum in the United States and abroad.

Substantially all of our current hardware products are designed to communicate wirelessly via radio frequencies and therefore depend on the availability of adequate radio spectrum in order to operate. While these products could be designed to operate in a variety of different frequencies or by using other technologies such as cellular, in the United States they are primarily designed to form a wireless RF mesh using the unlicensed 902-928 megahertz, or MHz, band. The 902-928 MHz band is available for a wide variety of uses and requires us to manage interference by other users who operate in accordance with the Federal Communications Commission, or FCC, rules. The unlicensed frequencies are also often the subject of proposals to the FCC requesting a change in the rules under which such frequencies may be used. In the past, the FCC has re-allocated spectrum for new or additional uses, and has adopted

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changes to the requirements for equipment using radio spectrum. It is possible that the FCC or the U.S. Congress could adopt additional changes, which may be incompatible with our current or future product offerings, as well as products currently installed in the field, or require them to be modified at significant, or even prohibitive, cost. If the unlicensed frequencies become unacceptably crowded, restrictive or subject to changed laws, regulations or rules governing their use, our business, financial condition and results of operations could be materially and adversely affected.

Our international growth and future success also depend on the availability of radio spectrum that is compatible with our products or on our ability to develop products that use alternative communications technology, such as Gen4, our next-generation networking technology, which is available to utility customers in some products today and will support cellular communications, with more products coming to market as we continue to integrate it with products from additional device partners. In Australia, we primarily use unlicensed spectrum in the 915-928 MHz band with relatively minimal modifications needed to our products. In many other countries, however, there may not be spectrum available or we may be required to obtain a license to operate in any frequency band that is compatible with our products, including, but not limited to, the 902-928 MHz band. Licenses to appropriate spectrum in these countries may be unavailable or only available at unreasonably high prices. Similarly, in the event that we were only able to obtain a license outside of the 902-928 MHz band, the cost of modifying or redesigning our products to make them compatible with available spectrum could be significant or even cost-prohibitive. Alternatively, if we are not able to obtain available spectrum on financially advantageous terms, we may not be able to compete without investing in alternative communication technology. If limitations on the availability of spectrum or the cost of making necessary modifications or investments in new technology preclude us from selling our products in markets outside of the United States, our growth, prospects, financial condition and results of operations could be materially and adversely affected.

A limited number of our utility customers are responsible for a significant portion of our non-GAAP revenue ( billings), revenue and cash flow. A decrease in sales to these utility customers or delays in customer deployments could have a material adverse effect on our operating results and financial condition.

A substantial majority of our revenue, non-GAAP revenue (billings) and cash flow depends on relatively large sales to a limited number of utility customers. The combination of lengthy sales cycles and relatively large sales to a small number of utility customers increases the risk of quarterly fluctuations in our non-GAAP revenue (billings), revenue and operating results. Please see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Financial Overview” above for further information regarding customer concentration. Our master purchase and service agreements, or MSAs, do not impose purchase obligations on our utility customers until we have received a purchase order or agreed to a statement of work. Further, the MSAs are typically subject to termination for any reason, including for convenience following a specified notice period. We expect that a limited number of utility customers will continue to account for a substantial portion of our revenue in future periods. Changes in the business requirements, vendor selection, or purchasing behavior of our utility customers could significantly decrease our sales. In addition, our MSAs are complex, often requiring close coordination with our customers over extended preparation and deployment periods and involving large-scale delivery of our products and services. From time to time we have experienced and may in the future experience challenges in satisfying our customers throughout these preparation and deployment periods regarding all aspects of our performance. Additionally, we have, in the past, received correspondence from customers claiming that there have been deficiencies in our timeliness and coordination regarding hardware, software and services for deployment, and requesting that we remedy the deficiencies noted. If we are unable to address customers’ concerns, we could be required to pay penalties, liquidated damages or other expenses, the customer could terminate our MSA and our reputation could be damaged. Additionally, delays in customer deployments can affect our results of operations. For example, ongoing regulatory uncertainties previously delayed the timing of ComEd’s planned deployment schedule. Any of these factors could materially and adversely affect our business, financial condition, and results of operations.

Our marketing efforts depend significantly on our ability to receive positive references from our existing utility customers.

Our marketing efforts depend significantly on our ability to call on our current utility customers to provide positive references to new, potential utility customers. Given our limited number of utility customers, the loss or dissatisfaction of any customer could substantially harm our brand and reputation, inhibit the market acceptance of our products and services, and impair our ability to attract new utility customers and maintain existing utility customers. Any of these consequences could have a material adverse effect on our business, financial condition and results of operations.

The market for our products and services, and smart grid technology generally, is still developing. If the market develops less extensively or more slowly than we expect, our business could be harmed.

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The market for our products and services, and smart grid technology generally, is still developing, and it is uncertain whether our products and services will achieve and sustain high levels of demand and market acceptance. Our near-term and long-term success will depend to a substantial extent on the willingness and ability of utilities to implement smart grid technology. Many utilities lack the financial resources and/or technical expertise required to evaluate, deploy and operate smart grid technology. Utilities’ activities are governed by regulatory agencies, including public utility commissions, which may not create a regulatory environment that is conducive to the implementation of smart grid technologies in a particular jurisdiction. Furthermore, some utilities may be reluctant or unwilling to adopt smart grid technology because they do not perceive the benefits or are unable to develop a business case to justify the up-front and ongoing expenditures. If utilities do not implement smart grid technology or do so in fewer numbers or more slowly than we expect, our business and operating results would be adversely affected. For example, in 2010, the rate of smart grid adoption slowed due to uncertainty surrounding the timing and tax treatment of U.S. government stimulus funding, negative publicity and consumer opposition, and regulatory investigations. These uncertainties caused many potential utility customers that had been considering smart grid programs in the United States to further evaluate their smart grid initiatives and delay their procurement processes or extend their deployment schedules. Smart grid adoption in international markets has trailed adoption in the United States as international markets continue to explore the technology and define the benefits and regulatory requirements for the smart grid.

Similarly, our success depends on our ability to expand beyond advanced metering sales and sell additional products and services, such as distribution automation and demand-side management solutions, to our existing utility customers. There can be no assurance that these products and services will be accepted by utilities or consumers. Other competing products and services may emerge and may be more successful.

Adverse publicity about, or consumer or political opposition to, the smart grid could inhibit the growth of the overall market.

The safety and security of the power grid, the accuracy and protection of the data collected by meters and transmitted via the smart grid, and concerns about the safety and perceived health risks of using radio frequency communications have been the focus of recent adverse publicity. For example, in Northern California, PG&E’s full-scale deployment of our networking platform and advanced metering solution has been subject to continued scrutiny following allegations of inaccurate bills generated by newly-installed “smart meters” and safety concerns about the levels of radio frequency electromagnetic fields emitted by the wireless communications technology used by the meters. As a result, the California State Senate created a special committee and the California Public Utilities Commission, or CPUC, hired an independent investigator to review the installation and use of advanced metering products. Negative publicity and consumer opposition in California, Maine and elsewhere have caused other utilities or their regulators to respond by delaying or modifying planned smart grid initiatives, mandating that utilities allow their customers to opt out of smart metering programs, or calling for investigations and/or implementation of unfavorable regulations and legislation. For example, in January 2012, the CPUC ruled that PG&E must let its customers retain or receive an analog meter, for nominal initial and monthly fees, if they, for any reason, opt out of PG&E’s deployment of PG&E’s smart meters. Similarly, outside the United States, public concern over smart grid projects in places such as Victoria, Australia has resulted in increased government scrutiny. Additionally, testing commissioned by the CPUC and other organizations could, in the future, contain negative information regarding the accuracy and safety of smart grid solutions. Finally, smart grid projects by other companies may be, or could be viewed by the public as, unsuccessful. Any of the foregoing factors could directly impact our current or future deployments, as well as inhibit the growth of the overall smart grid market, either of which could cause our business to suffer.

Security breaches involving our smart grid products or services, publicized breaches in smart grid products and services offered by others, or the public perception of security risks or vulnerability created by the deployment of the smart grid in general, whether or not valid, could harm our business.

The security technologies we have integrated into our networking platform and solutions that are designed to detect unauthorized activity and prevent or minimize security breaches may not function as expected and there can be no assurance that our products and services, those of other companies with whose products our products and services are integrated or interact, or even the products of other smart grid solutions providers will not be subject to significant real or perceived security breaches.

Our networking platform allows utilities to collect, monitor, store, compile and analyze sensitive information related to consumers’ energy usage, as well as the performance of different parts of the power grid. As part of our data transfer and managed services and SaaS, we may store and/or come into contact with sensitive consumer information and data when we perform operational, installation or maintenance functions for our utility customers. If, in handling this information, we, our partners or our utility customers fail to comply with privacy or security laws, we could face significant legal and financial exposure to claims of government agencies, utility customers and consumers whose privacy is compromised. Even the perception that we, our partners or our utility customers have improperly handled sensitive, confidential information could have a negative effect on our business. In addition, third parties may attempt to breach our security measures or inappropriately use or access our network services or the network hardware and software we have in the field through computer viruses, physical or electronic break-ins, and other means. If a breach is successful, sensitive information may be improperly obtained, manipulated or corrupted, and we may face legal and financial exposure. In addition, a breach could lead to a loss of confidence in our products and services and our business could suffer.

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Our current and anticipated future products and services allow authorized personnel to remotely control equipment at residential and commercial locations, as well as at various points on the power grid. For example, our software allows a utility to remotely connect and disconnect electricity at specific customer locations. If an unauthorized third party were to breach our security measures and disrupt, gain access to or take control of any of our products or services, our business and reputation could be severely harmed.

Our products and services may also be integrated or interface with products and services sold by third parties, and rely on the security of those products and their secure transmission of proprietary data over the Internet and cellular networks. Because we do not have control over the security measures implemented by third parties in their products or in the transmission of data over the Internet and cellular networks, we cannot ensure the complete integrity or security of such third-party products and transmissions.

Concerns about security or customer privacy may result in the adoption of state or federal legislation that restricts the implementation of smart grid technology or requires us to make modifications to our products, which could significantly limit the deployment of our technologies or result in significant expense to modify our products.

Any real or perceived security breach could seriously harm our reputation and result in significant legal and financial exposure, including increased remediation costs and security protection costs, inhibit market acceptance of our products and services, halt or delay the deployment by utilities of our products and services, cause us to lose customers, harm our reputation, trigger unfavorable legislation and regulatory action, and inhibit the growth of the overall market for smart grid products and services. Any of these risks could have a material adverse effect on our business, financial condition and results of operations.

If our products contain defects or otherwise fail to perform as expected, we could be liable for damages and incur unanticipated warranty, recall and other related expenses, our reputation could be damaged, we could lose market share and, as a result, our financial condition or results of operations could suffer.

Our products are complex and may contain defects or experience failures due to any number of issues in design, materials, deployment and/or use. If any of our products contain a defect, compatibility or interoperability issue or other error, we may have to devote significant time and resources to find and correct the issue. Such efforts could divert the attention of our management team and other relevant personnel from other important tasks. A product recall or a significant number of product returns could: be expensive; damage our reputation and relationships with utilities, meter vendors and other third-party vendors; result in the loss of business to competitors; and result in litigation against us. Costs associated with field replacement labor, hardware replacement, re-integration with third-party products, handling charges, correcting defects, errors and bugs, or other issues could be significant and could materially harm our financial results. For example, in March 2010, we discovered that a faulty capacitor from a third-party supplier was used in a discrete number of our communications modules. We recorded costs associated with this faulty capacitor of $6.3 million for the year ended December 31, 2009, which represented the write-off of deferred costs associated with returned products of $2.4 million and $3.9 million related to estimated future product warranty claims. In the first quarter of 2010, we recorded product warranty costs associated with this faulty capacitor of $12.5 million, which represented $8.2 million in costs associated with returned product and $4.3 million related to the estimated future product warranty claims. In addition, due to a product repair program we implemented for one of our customers, in the second quarter of 2011, we recorded a $2.5 million charge against billings for estimated amounts payable to a customer in connection with the product repair program and a $1.0 million increase to cost of product revenue and warranty liability.

Estimated future product warranty claims are based on the expected number of field failures over the warranty commitment period, the term of the product warranty period, and the costs for repair, replacement and other associated costs. Our warranty obligations are affected by product failure rates, claims levels, material usage and product re-integration and handling costs. Because our products are relatively new and we do not yet have the benefit of long-term experience observing the products’ performance in the field, our estimates of a product’s lifespan and incidence of claims may be inaccurate. Should actual product failure rates, claims levels, material usage, product re-integration and handling costs, defects, errors, bugs or other issues differ from the original estimates, we could end up incurring materially higher warranty or recall expenses than we anticipate.

Our utility customer contracts typically contain provisions that could cause us to incur penalties, be liable for damages, and/or incur unanticipated expenses with respect to the functionality, deployment, operation and availability of our products and services, and that provide the customer with the right to terminate the contract for any reason.

In addition to the risk of unanticipated warranty or recall expenses, our utility customer contracts typically contain provisions that could cause us to incur penalties, be liable for damages, including liquidated damages, or incur other expenses, if we experience

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difficulties with respect to the functionality, deployment, operation and availability of our products and services. In the event of late deliveries, late or improper installations or operations, failure to meet product or performance specifications or other product defects, interruptions or delays in our managed service offerings, our customer contracts may expose us to penalties, significant damages and other liabilities. For example, we have in the past agreed to reimburse utility customers for their costs and incurred liquidated damages by failing to timely meet contractual milestones or other contractual requirements. In addition, our utility customer contracts are typically subject to termination for any reason, including for convenience following a specified notice period, our material breach or insolvency, or the failure to obtain required regulatory approval. If a customer terminates its customer contract for any reason, our estimates of total backlog and order backlog will be reduced. Reductions in total backlog and order backlog may have a negative effect on future revenue, non-GAAP revenue (billings), profitability and liquidity. In the event we were to incur contractual penalties, such as liquidated damages or other related costs that exceed our expectations, or our utility customers terminate their contracts with us, our business, financial condition and operating results could be materially and adversely affected.

Our success depends in part on our ability to integrate our technology into meters and our relationship with meter manufacturers.

Our business depends on our ability to integrate our communications modules with electricity meters that are manufactured by third parties such as General Electric Company, Landis+Gyr AG, which was acquired by Toshiba Corporation, and Secure Meters Limited, or Secure Meters. In a typical smart grid deployment, our utility customer purchases our communications modules from one or more meter manufacturers after integration into the meters. Accordingly, even if demand for our products is strong, we have in the past and may in the future be constrained by the production capacity and priorities of the meter manufacturers. In addition, several of these meter manufacturers offer competing smart grid products, partner with other smart grid providers or may otherwise choose not to integrate our communications modules with their meters. If for technical or any other reason we were to lose the ability to integrate our communications modules with meters manufactured by third parties, or if our relationships with meter manufacturers were to be terminated or renegotiated on unfavorable terms, our business, financial condition, and operating results could suffer. Further, there have been instances where meters with which our technology had been integrated experienced defects or had other problems that were unrelated to our technology. If this occurs in the future and the defects or problems are more significant or occur more frequently, our reputation could suffer and our business could be harmed.

From time to time, we have worked and expect to continue to work with third parties to pursue smart grid market opportunities. If we were unable to establish and maintain these relationships, or if our initiatives with these third parties are unsuccessful, our business may suffer.

For some of our existing and anticipated future products and services, we expect to maintain and may seek to establish relationships with third parties in order to take advantage of smart grid market opportunities. For example, we have designed our products to interface with electric vehicle charging stations, in-home devices and data analytics products, and will need to work with third parties to successfully deploy these products. Before a utility is willing to move forward with a deployment of our products, they may require that we partner with third-party vendors and/or obtain a certification from these vendors that our products will function as intended when integrated with their products. In addition, third-party vendors may offer competing products, partner with other networking providers or otherwise choose not to partner with us. In the event that we are unable to establish or maintain new relationships on favorable terms, or at all, our ability to successfully sell our existing and anticipated future products and services could be jeopardized.

We may not be able to identify adequate strategic relationship opportunities, or form strategic relationships, in the future.

Strategic business relationships may be an important factor in the growth and success of our business. For example, we entered into a memorandum of understanding and, following negotiation, entered into a master collaboration agreement with Hitachi based on such memorandum of understanding. However, there are no assurances that we will be able to identify or secure suitable business relationship opportunities in the future and our competitors may capitalize on such opportunities before we do. Concurrently with the execution of the memorandums of understanding, Hitachi made significant investments in us pursuant to convertible notes that converted into shares of our common stock in connection with our IPO. We may not be able to offer similar benefits to other companies, which could impair our ability to establish such relationships. Moreover, identifying such opportunities could demand substantial management time and resources and involves significant costs and uncertainties. If we are unable to successfully source and execute on strategic relationship opportunities in the future, our business and results of operations could be significantly harmed.

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Our technology, products and services have only been developed in the last several years and we have had only limited opportunities to deploy and assess their performance in the field at full scale.

The current generation of our networking platform and solutions has only been developed in the last several years and is continuing to evolve. Deploying and operating our technology is a complex endeavor and, until recently, had been done primarily in small pilot programs. As the size, complexity and scope of our deployments have expanded, we have been able to test product performance at a greater scale and in a variety of new geographic settings and environmental conditions. These larger deployments have presented a number of unforeseen operational and technical challenges, which in some cases have caused delays and required us to commit significant resources to address these challenges. As the number, size and complexity of our deployments grow, we may continue to encounter unforeseen operational, technical and other challenges, some of which could cause significant delays, trigger contractual penalties, result in unanticipated expenses, and/or damage to our reputation, each of which could materially and adversely affect our business, financial condition and results of operations.

If we fail to respond to evolving technological changes, our products and services could become obsolete or less competitive.

Our industry is highly competitive and characterized by new and rapidly evolving technologies, standards, regulations, customer requirements, and frequent product introductions. Accordingly, our operating results depend upon, among other things, our ability to develop and introduce new products and services, as well as our ability to reduce production costs of our existing products. For example, in January 2012, we announced Gen4, our next-generation networking technology, which is available in some products today, with more products coming to market as we continue to integrate it with products from additional device partners. The process of developing new technologies and products is complex, and if we are unable to develop enhancements to, and new features for, our existing products or acceptable new products that keep pace with technological developments or industry standards, our products may become obsolete, less marketable and less competitive and our business could be significantly harmed.

We depend on our ability to develop new products and to enhance and sustain the quality of existing products.

Most of our current non-GAAP revenue (billings) and revenue are derived from our networking platform and advanced metering solution, but our growth and future success will depend, in part, on our ability to continue to design and manufacture new competitive products and to enhance and sustain the quality and marketability of our existing products. As such, we have made, and expect to continue to make, substantial investments in technology development. For example, in January 2012, we announced Gen4, our next-generation networking technology, which is available in some products today, with more products coming to market as we continue to integrate it with products from additional device partners. In the future, we may not have the necessary capital, or access to capital on acceptable terms, to fund necessary levels of research and development. Even with adequate capital resources, we may nonetheless experience unforeseen problems in the development or performance of our technologies or products. The market for smart grid technology products is still in its early stages, and we cannot assure you that we will be successful in developing or selling new products in this market. In addition, we may not meet our product development schedules and, even if we do, we may not develop new products fast enough to provide sufficient differentiation from our competitors’ products, which may be more successful.

We and our utility customers operate in a highly regulated business environment and changes in regulation could impose costs on us or make our products less economical.

Our products and our utility customers are subject to federal, state, local and foreign laws and regulations. Laws and regulations applicable to us and our products govern, among other things, the manner in which our products communicate, and the environmental impact and electrical reliability of our products. Additionally, our utility customers are often regulated by national, state and/or local bodies, including public utility commissions, the Department of Energy, the Federal Energy Regulatory Commission and other bodies. Prospective utility customers may be required to gain approval from any or all of these organizations prior to implementing our products and services, including specific permissions related to the cost recovery of these systems. Regulatory agencies may impose special requirements for implementation and operation of our products. We may incur material costs or liabilities in complying with government regulations applicable to us or our utility customers. In addition, potentially significant expenditures could be required in order to comply with evolving regulations and requirements that may be adopted or imposed on us or our utility customers in the future. Such costs could make our products less economical and could impact our utility customers’ willingness to adopt our products, which could materially and adversely affect our revenue, results of operations and financial condition.

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Furthermore, changes in the underlying regulatory conditions that affect utilities could have a potentially adverse effect on a utility’s interest or ability to implement smart grid technologies. For example, ongoing regulatory uncertainties previously delayed the timing of ComEd’s planned deployment schedule. Many regulatory jurisdictions have implemented rules that provide financial incentives for the implementation of energy efficiency and demand response technologies, often by providing rebates or through the restructuring of utility rates. If these programs were to cease, or if they were restructured in a manner inconsistent with the capabilities enabled by our products and services, our business, financial condition and results of operations could be significantly harmed.

The adoption of industry standards applicable to our products or services could limit our ability to compete in the marketplace.

Standards bodies, which are formal and informal associations that seek to establish voluntary, non-governmental product and technology standards, are influential in the United States and abroad. We participate in voluntary standards organizations in order to both help promote non-proprietary, open standards for interoperability with our products and prevent the adoption of exclusionary standards. However, we are not able to control the content of adopted voluntary standards and do not have the resources to participate in all voluntary standards processes that may affect our markets. Some of the standards bodies and alliances in which we participate may require that we license to other participants including competitors certain of our patent claims that are necessary or essential to practice a particular standard, who elect to produce products compliant with that standard. These obligations to license our necessary patent claims may allow our competitors to use our patents to develop and sell products that compete with our products without spending the time and expense that we incurred to develop the technology covered by the patents, thereby potentially reducing any time to market advantage we might have as a result of these patents. These obligations could also substantially restrict and may eliminate our ability to use our patents as a barrier to entry or as a significant source of revenue. Moreover, because the specifications for these industry standards are generally available to members of the applicable standards bodies and alliances for little or no cost, competitors might be able to more easily create products that compete with our products.

The adoption, or expected adoption, of voluntary standards that are incompatible with our products or technology or that favor our competitors’ products or technology could limit the market opportunity for our products and services or render them obsolete, any of which could materially and adversely affect our revenue, results of operations, and financial condition.

Some of our customers and potential customers have applied for government grants and may also seek to participate in other government incentive programs, and if those grants or other incentives are not received or are significantly delayed, our results of operations could suffer.

Many utilities, including some of our customers and potential customers, apply for grants and may seek to participate in other government incentive programs, designed to stimulate the economy and support environmental initiatives, including smart grid technologies. Our customers and potential customers who apply for these government grants or incentives may delay or condition the purchase of our products and services upon receipt of such funds or upon their confidence in the future disbursement of those funds. If our customers and potential customers do not receive these funds or if receipt is significantly delayed, our results of operations could suffer. Similarly, the receipt of government funds or incentives may be conditioned upon utilities meeting milestones and other requirements, some of which may not be known until a future point in time. In addition, if our products and services do not meet the requirements necessary for receipt of government funds or other incentives, or if third parties fail to meet their obligations, our customers and potential customers may delay or condition the purchase of our products and services until they meet these requirements and our results of operations could suffer. Furthermore, there can be no assurance of government funds or incentives for utilities in future periods, either in the United States or in other countries where we may pursue business. As a result, our customers and potential customers may not have the resources or incentives to purchase our products and services.

If our products do not interoperate with our utility customers’ other systems, the purchase or deployment of our products and services may be delayed or cancelled.

Our products are designed to interface with our utility customers’ back office billing and other systems, each of which may have different specifications and utilize multiple protocol standards and products from other vendors. Our products will be required to interoperate with many or all of these products as well as future products in order to meet our utility customers’ requirements. If we find errors in the existing software or defects in the hardware used in our utility customers’ systems, we may need to modify our products or services to fix or overcome these errors so that our products will interoperate with the existing software and hardware, which could be costly and negatively affect our business, financial condition, and results of operations. In addition, if our products and services do not interoperate with our utility customers’ systems, utility customers may seek to hold us liable, demand for our products could be adversely affected or orders for our products could be delayed or cancelled. This could hurt our operating results, damage our reputation, and seriously harm our business and prospects.

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Interruptions or delays in service from our third-party data center facilities, or problems with the third-party hardware or software that we employ, could impair the delivery of our service and harm our business.

We currently offer managed services and SaaS, including disaster recovery services, utilizing two data center facilities operated by separate third parties in California and Nevada. These facilities may be vulnerable to damage or interruption from, among other things, fire, natural disaster, power loss, telecommunications failure, war, acts of terrorism, unauthorized entry, human error, and computer viruses or other defects. They may also be subject to break-ins, sabotage, intentional acts of vandalism and similar misconduct. We rely on software and hardware technology provided by third parties to enable us to provide these services. Any damage to, or failure of, these third-party data centers or the third-party hardware and software we employ, could result in significant and lengthy interruptions in the services we provide to our utility customers. Such interruptions could reduce our revenue and non-GAAP revenue (billings), cause us to issue credits or pay penalties, cause customers to terminate their service, harm our reputation and adversely affect our ability to attract new utility customers.

We do not control certain critical aspects of the manufacture of our products and depend on a limited number of contract manufacturers.

Our future success will depend significantly on our ability to manufacture our products timely and cost-effectively, in sufficient volumes, and in accordance with quality standards. Our primary manufacturing relationship is with Plexus Corp., who provides us with a wide range of operational and manufacturing services, including material procurement, final assembly, test quality control, warranty repair, and shipment to our utility customers and third-party vendors.

Our reliance on our contract manufacturers reduces our control over the manufacturing process, exposing us to risks, including reduced control over quality assurance, product costs and product supply. Any manufacturing disruption by our contract manufacturers could impair our ability to fulfill orders. We may be unable to manage our relationships with contract manufacturers effectively as they may experience delays, disruptions, capacity constraints or quality control problems in their manufacturing operations or otherwise fail to meet our future requirements for timely delivery. Similarly, to the extent that our contract manufacturers procure materials on our behalf, we may not benefit from any warranties received by the contract manufacturers from the suppliers or otherwise have recourse against the original supplier of the materials or even the contract manufacturer. In such circumstances, if the original supplier were to provide us or our contract manufacturers with faulty materials, we might not be able to recover the costs of such materials or be compensated for any damages that arise as a result of the inclusion of the faulty components in our products. For example, in March 2010, we discovered that a faulty capacitor from a third-party supplier was used in a discrete number of our communications modules.

One or more of our contract manufacturers may suffer an interruption in its business, or experience delays, disruptions or quality control problems in its manufacturing operations, or seek to terminate its relationship with us, or we may choose to change or add additional contract manufacturers for other reasons. Additionally, we do not have long-term supply agreements with our contract manufacturers. As a result, we may be unable to renew or extend our agreement on terms favorable to us, if at all. Although the contract manufacturing services required to manufacture and assemble our products may be readily available from a number of established manufacturers, it is risky, time consuming and costly to qualify and implement contract manufacturer relationships.

Any of these risks could have a material adverse effect on our business, financial condition and results of operations.

We depend on a limited number of key suppliers and if such suppliers fail to provide us with sufficient quantities of components at acceptable levels of quality and at anticipated costs, our revenue and operating results could be materially and adversely affected.

Several of the components used in our products come from sole, limited source or geographically concentrated suppliers, such as Analog Devices and Renesas Electronics America Inc. Additionally, our suppliers are not typically contractually obligated to supply us with components in minimum quantities or at predetermined prices over the long term. Accordingly, we may be vulnerable to price increases, component quality issues, financial, natural disasters, or other difficulties faced by our suppliers, causing shortages or interruptions in supply of components and materials, including components that have been or will be discontinued, which could cause us to delay shipments to our utility customers. For example, some of our key suppliers are located in Japan and their ability to timely provide us with the necessary components used in our products was compromised as a result of the catastrophic earthquake and tsunami in March 2011. To help address these issues, we may purchase quantities of these items that are in excess of our estimated requirements. As a result, we could be forced to record excess and obsolete inventory charges to provide for these excess quantities and we may also be subject to pricing risk or carrying charges, which could harm our operating results.

If we experience any shortages due to reliance on a limited number of suppliers, commodity supply constraints, capacity constraints, natural disasters or price fluctuations related to the raw materials used, or if we are not able to procure components from

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alternate sources at acceptable prices and within a reasonable period of time, our reputation could suffer and our business, financial condition and results of operations could be materially and adversely effected. In addition, we may also be subject to contractual penalties if we fail to deliver our products and services on time.

Further, our utility customers may reschedule or cancel orders on relatively short notice. If our utility customers cancel orders after we have ordered the corresponding product from our suppliers, we may be forced to incur cancellation fees or to purchase products that we may not be able to resell, which could have a material adverse effect on our business, financial condition and results of operations.

Our business could be severely harmed by natural disasters or other catastrophes.

A significant catastrophic event such as war, acts of terrorism, natural disasters, such as earthquakes, or global threats, including, but not limited to, the outbreak of epidemic disease, could disrupt our operations and impair deployment of our Smart Energy Platform by our utility customers, interrupt critical functions, cause our suppliers to be unable to meet our demand for parts and equipment, reduce demand for our products, prevent our utility customers from honoring their contractual obligations to us or otherwise affect our business negatively. To the extent that such disruptions or uncertainties result in delays or cancellations of customer orders or the deployment of our products, or the manufacture or shipment of our products, our business, operating results and financial condition could be materially and adversely affected.

We operate in a highly competitive industry and we compete against many companies with substantially greater financial and other resources, and our market share and results of operations may be reduced if we are unable to respond to our competitors effectively.

Competition in our market is intense and involves rapidly changing technologies, evolving industry standards, frequent new product introductions, and changes in customer requirements. To maintain and improve our competitive position, we must keep pace with the evolving needs of our utility customers and continue to develop and introduce new products, features and services in a timely and efficient manner. Our competitors range from small companies to very large and established companies. These competitors offer a variety of products and services related to the smart grid, and come from a number of industries, including traditional meter manufacturers, application developers, telecommunications and other service providers. We compete with traditional meter manufacturers that incorporate various communications technologies that provide some level of connectivity to the utility’s back office. Our key competitors currently include Echelon Corporation, Elster Group SE, Itron Inc., Landis+Gyr AG, which was acquired by Toshiba Corporation, Sensus Metering Systems Inc. and Trilliant Holdings, Inc. Similarly, we compete with traditional providers of distribution automation equipment, such as S&C Electric Company and Schweitzer Engineering Laboratories, Inc. We also face competition from newer entrants that are providing specific narrowly focused products for the smart grid, including Coulomb Technologies Inc., Grid Net Inc., OPOWER Inc. and Tendril Networks Inc. Furthermore, other large companies such as Alcatel-Lucent, AT&T Inc., Cisco Systems, Inc., Enel SpA, Électricité Réseau Distribution France, Fujitsu Limited, General Electric Company, International Business Machines Corporation, Mitsubishi Corporation, Motorola Solutions, Inc., Siemens AG, Sprint Nextel Corporation and Verizon Communications Inc. have announced plans to pursue business opportunities related to the smart grid. As we look to expand into new international markets, we expect to face additional competitors that may be more established in specific geographies. We anticipate that in the future, additional competitors will emerge that offer a broad range of competing products and services related to the smart grid.

Several of our competitors enjoy substantial competitive advantages such as:

• greater name recognition and longer operating histories;

• larger sales and marketing budgets and resources;

• greater ability to integrate their products with existing systems;

• broader distribution channels;

• established relationships with existing and potential partners and utility customers;

• lower labor and development costs; and

• significantly greater financial, technical, customer support and other resources.

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Some of these larger competitors have substantially broader product offerings and may be able to leverage the existing relationships they have with utilities. In some cases, our larger competitors are also currently vendors of ours, and they could decide in the future to develop their own products instead of working with us. Any inability to effectively manage these relationships could have a material adverse effect on our business, operating results, and financial condition, and accordingly affect our chances of success. In addition, some of our competitors may have larger patent portfolios than we have, which may provide them with a competitive advantage and may require us to engage in costly litigation to protect and defend our freedom to operate and/or intellectual property rights.

Conditions in our market could change rapidly and significantly as a result of technological advancements or market consolidation. The development and market acceptance of alternative technologies could decrease the demand for our products or render them obsolete. Our competitors may introduce products and services that are less costly, provide superior performance or achieve greater market acceptance than our products and services. In order to remain competitive, we may need to lower prices or attempt to add incremental features and functionality, which could negatively impact our revenue, non-GAAP revenue (billings), gross margin and financial condition. In addition, our larger competitors often have broader product lines and are in a better position to withstand any significant reduction in capital spending by utilities, and will therefore not be as susceptible to downturns in a particular market. If we are unable to compete successfully in the future, our business may be harmed.

We have experienced rapid growth in recent periods. If we fail to manage our growth effectively, our financial performance may suffer.

We have substantially expanded our overall business, customer base, employee headcount and operations in recent periods both domestically and internationally. We increased our total number of regular full-time employee headcount from 394 employees as of December 31, 2009 to 608 as of September 30, 2013. Our expansion has placed, and our expected future growth will continue to place, a significant strain on our managerial, customer operations, research and development, sales and marketing, manufacturing, administrative, financial and other resources. If we are unable to manage our growth successfully, our operating results will suffer.

We rely on our management team and need additional personnel to grow our business, and the loss of one or more key employees or our inability to attract and retain qualified personnel could harm our business.

Our success and future growth depend on the skills, working relationships and continued services of our management team and other key personnel. The loss of any member of our senior management team, and in particular our Chief Executive Officer, could adversely affect our business. In addition, our current senior management team has worked together for a relatively short period of time.

Our future success will also depend on our ability to attract, retain and motivate highly skilled management, product development, operations, sales, technical and other personnel in the United States and abroad. Even in today’s economic climate, competition for these types of personnel is intense, particularly in the Silicon Valley, where our headquarters are located. All of our employees in the United States work for us on an at-will basis. Given the lengthy sales cycles with utilities and deployment periods of our networking platform and solutions, the loss of key personnel could adversely affect our business.

Volatility or lack of performance in our stock price may also affect our ability to attract and retain our senior management and key personnel. Many of our longest-tenured employees, including members of our senior management and key personnel with deep institutional knowledge, hold significant vested stock options and shares of our common stock. Employees may be more likely to leave us if the shares they own or the shares underlying their vested stock options have significantly appreciated in value relative to the original purchase prices of the shares or the exercise prices of the options, or if the exercise prices of the options that they hold are significantly above the market price of our common stock. As a result of these factors, we may be unable to attract or retain qualified personnel. Our inability to attract and retain the necessary personnel could adversely affect our business.

Our ability to provide bid bonds, performance bonds or letters of credit is limited and could negatively affect our ability to bid on or enter into significant long-term agreements.

We have in the past been, and may in the future be, required to provide bid bonds or performance bonds to secure our performance under customer contracts or, in some cases, as a pre-requisite to submit a bid on a potential project. Our ability to obtain such bonds primarily depends upon our capitalization, working capital, past performance, management expertise and reputation and external factors beyond our control, including the overall capacity of the surety market. Surety companies consider those factors in relation to the amount of our tangible net worth and other underwriting standards that may change from time to time. Surety companies may require that we collateralize a percentage of the bond with our cash or other form of credit enhancement. Events that

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affect surety markets generally may result in bonding becoming more difficult to obtain in the future, or being available only at a significantly greater cost. In addition, some of our utility customers also require collateral guarantees in the form of letters of credit to secure performance or to fund possible damages as the result of an event of default under our contracts with them. If we enter into significant long-term agreements that require the issuance of letters of credit, our liquidity could be negatively impacted. Our inability to obtain adequate bonding or letters of credit to meet bid requirements or enter into significant long-term agreements could have a material adverse effect on our future revenues and business prospects.

We are subject to international business uncertainties.

Our ability to grow our business and our future success will depend to a significant extent on our ability to expand our operations and customer base worldwide. Operating in international markets requires significant resources and management attention, and other than our operations in Australia and Brazil, we have limited experience entering new geographic markets. There can be no assurance that our international efforts will be successful. International sales and operations may be subject to risks such as:

• technology compatibility;

• the imposition of government controls;

• government expropriation of facilities;

• lack of a well-established system of laws and enforcement of those laws;

• lack of a legal system free of undue influence or corruption;

• exposure to a business culture in which improper sales practices may be prevalent;

• political instability;

• terrorist activities;

• restrictions on the import or export of critical technology;

• currency exchange rate fluctuations;

• adverse tax burdens;

• lack of availability of qualified third-party financing;

• generally longer receivable collection periods than in the United States;

• trade restrictions;

• changes in tariffs;

• labor disruptions;

• difficulties in staffing and managing foreign operations;

• preference for local vendors;

• burdens of complying with different permitting standards; and

• a wide variety of foreign laws and obstacles to the repatriation of earnings and cash.

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Fluctuations in the value of the U.S. dollar may impact our ability to compete in international markets. International expansion and market acceptance depend on our ability to modify our business approach and technology to take into account such factors as differing customer business models, product requirements and needs, the applicable regulatory and business environment, labor costs and other economic conditions. In addition, the laws of certain countries do not protect our intellectual property to the same extent as do the laws of the United States. There can be no assurance that these factors will not have a material adverse effect on our future international sales and, consequently, on our business, financial condition and results of operations.

Developments in data protection laws and regulations may affect technology relating to smart grid products and solutions, which could adversely affect the demand for our products and solutions.

Our products and services may be subject to data protection laws and regulations that impose a general framework for the collection, processing and use of personal data. Our networking platform and solutions rely on the transfer of data relating to individual energy use and may be affected by these laws and regulations. It is unclear how the regulations governing the transfer of personal data in connection with privacy requirements will further develop in the United States and internationally, and to what extent this may affect technology relating to smart grid products and solutions. This could have a material adverse effect on our business, financial condition and results of operations.

Adverse changes in general economic or political conditions in any of the major countries in which we do business could adversely affect our operating results.

Our business can be affected by a number of factors that are beyond our control, such as general geopolitical, economic, and business conditions. The continued global economic uncertainty, concerns over the downgrade of U.S. sovereign debt and continued monetary, financial and sovereign debt uncertainties in European and other foreign countries continue to have a negative effect on our business. Further, the recent worldwide financial and credit crisis has reduced the availability of liquidity and credit to fund the continuation and expansion of business operations worldwide. Even with economic recovery, it may take time for our utility customers or potential utility customers to establish new budgets and return to normal purchasing patterns. We cannot predict the reoccurrence of any economic slowdown or the strength or sustainability of the economic recovery, worldwide, in the United States or in our industry. These and other economic factors could adversely affect the demand for our products and services and, consequently, on our business, financial condition and results of operations.

There can be no assurance that a deterioration in financial markets will not impair our ability or our utility customers’ ability to obtain financing in the future, including, but not limited to, our or our utility customers’ ability to incur indebtedness if that became necessary. In addition, there could be a number of follow-on effects from the credit crisis on our business, including insolvency of certain of our key utility customers or suppliers, which could result in the inability of our utility customers to obtain credit to finance purchases of our products.

Our inability to acquire and integrate other businesses, products or technologies could seriously harm our competitive position.

In order to remain competitive, obtain key competencies or accelerate our time to market, we may seek to acquire additional businesses, products or technologies. To date, we have completed only one small acquisition, and we therefore have limited experience in successfully acquiring and integrating additional businesses, products or technologies. If we identify an appropriate acquisition candidate, we may not be successful in negotiating the terms of the acquisition, financing the acquisition, or effectively integrating the acquired business, product or technology into our existing business and operations. We may have difficulty integrating acquired technologies or products with our existing products and services. Our due diligence may fail to identify all of the problems, liabilities or other shortcomings or challenges of an acquired business, product or technology, including issues related to intellectual property, product quality or product architecture, regulatory compliance practices, revenue recognition or other accounting practices or employee or customer issues. If we finance acquisitions by issuing convertible debt or equity securities, our existing stockholders may be diluted, which could affect the market price of our stock. In addition, any acquisitions we are able to complete may not result in the synergies or any other benefits we had expected to achieve, which could result in substantial write-offs. Further, contemplating or completing an acquisition and integrating an acquired business, product or technology will significantly divert management and employee time and resources.

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Our business may suffer if it is alleged or found that our products infringe the intellectual property rights of others.

Our industry is characterized by the existence of a large number of patents and by litigation based on allegations of infringement or other violations of intellectual property rights. Moreover, in recent years, individuals and groups have purchased patents and other intellectual property assets for the purpose of making claims of infringement in order to extract settlements from companies like ours. From time to time, third parties have claimed and may continue to claim that we are infringing upon their patents or other intellectual property rights. For example, we are currently engaged in litigation as further described in “Legal Proceedings.” In addition, we may be contractually obligated to indemnify our utility customers or other third parties that use or resell our products in the event our products are alleged to infringe a third party’s intellectual property rights. Responding to such claims, regardless of their merit, can be time consuming, costly to defend in litigation, divert management’s attention and resources, damage our reputation and brand, and cause us to incur significant expenses. Even if we are indemnified against such costs, the indemnifying party may be unable to uphold its contractual obligations. Further, claims of intellectual property infringement might require us to redesign affected products, delay affected product offerings, enter into costly settlement or license agreements or pay costly damage awards or face a temporary or permanent injunction prohibiting us from marketing, selling or distributing the affected products. If we cannot or do not license the alleged infringed technology on reasonable terms or at all, or substitute similar technology from another source, our revenue and earnings could be adversely impacted. Additionally, our utility customers may not purchase our products if they are concerned that our products infringe third-party intellectual property rights. This could reduce the market opportunity for the sale of our products and services. The occurrence of any of these events may have a material adverse effect on our business, financial condition and results of operations.

The success of our business depends on our ability to protect and enforce our intellectual property rights.

We rely on a combination of patent, trademark, trade dress, copyright, unfair competition and trade secret laws, as well as confidentiality procedures and contractual restrictions, to establish and protect our proprietary rights. These laws, procedures and restrictions provide only limited protection and any of our intellectual property rights may be challenged, invalidated, circumvented, infringed or misappropriated. Further, the laws of certain countries do not protect proprietary rights to the same extent as the laws of the United States and, therefore, in certain jurisdictions, we may be unable to protect our proprietary technology adequately against unauthorized third-party copying, infringement or use, which could adversely affect our competitive position.

As of September 30, 2013, we had 57 patents issued and 87 patent applications pending in the United States and, in foreign jurisdictions, we had 70 patents granted and 143 patent applications pending, which are collectively based on 57 U.S. patent applications. Our patents expire at various times between 2015 and 2031. We cannot ensure that any of our pending applications will be granted or that any of our issued patents will adequately protect our intellectual property. In addition, third parties have in the past and could in the future bring infringement, invalidity, co-inventorship, re-examination, or similar claims with respect to any of our currently issued patents or any patents that may be issued to us in the future. Any such claims, whether or not successful, could be extremely costly to defend, divert management’s attention and resources, damage our reputation and brand, and substantially harm our business and results of operations.

In order to protect or enforce our patent rights, protect our trade secrets or know-how, or determine the enforceability, scope and validity of the proprietary rights of others, we may initiate patent litigation or other proceedings against third parties, such as infringement suits or interference proceedings. Any lawsuits or proceedings that we initiate could be expensive, take significant time and divert management’s attention from other business concerns. Litigation and other proceedings also put our patents at risk of being invalidated or interpreted narrowly and our patent applications at risk of not issuing. Additionally, we may provoke third parties to assert claims against us. We may not prevail in any lawsuits or other proceedings that we initiate and the damages or other remedies awarded, if any, may not be commercially valuable. The occurrence of any of these events may have a material adverse effect on our business, financial condition and results of operations.

Some of our products rely on technologies developed or licensed by third parties. We may seek to license technology from third parties for future products and services. We may not be able to obtain or continue to obtain licenses and technologies from these third parties on commercially reasonable terms or at all. Our inability to retain our current third-party licenses or obtain third-party licenses required to develop new products or product enhancements could require us to obtain alternate technology that may be of lower quality or performance standards or at greater cost, or could require that we change our product and design plans, any of which could limit or delay our ability to manufacture and sell our products.

If we are unable to protect the confidentiality of our proprietary information, the value of our technology and products could be adversely affected.

In addition to patented technology, we rely on our unpatented technology and trade secrets. We generally seek to protect this information by confidentiality, non-disclosure and assignment of invention agreements with our employees and contractors and with parties with which we do business. These agreements may be breached and we may not have adequate remedies for any such breach. We cannot be certain that the steps we have taken will prevent unauthorized use or reverse engineering of our technology. Moreover, our trade secrets may be disclosed to or otherwise become known or be independently developed by competitors. To the extent that

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our employees, contractors, or other third parties with whom we do business use intellectual property owned by others in their work for us, disputes may arise as to the rights in related or resulting know-how and inventions. If, for any of the above reasons, our intellectual property is disclosed or misappropriated, it would harm our ability to protect our rights and have a material adverse effect on our business, financial condition, and results of operations.

We use open source software in our products and services that may subject our products and services to general release or require us to re-engineer our products and services, which may cause harm to our business.

We use open source software in connection with our products and services. From time to time, companies that incorporate open source software into their products have faced claims challenging the ownership of open source software and/or compliance with open source license terms. Therefore, we could be subject to suits by parties claiming ownership of what we believe to be open source software or noncompliance with open source licensing terms. Some open source software licenses require users who distribute open source software as part of their software to publicly disclose all or part of the source code to such software and/or make available any derivative works of the open source code on unfavorable terms or at no cost. While we monitor the use of open source software in our products and services and try to ensure that none is used in a manner that would require us to disclose the source code to the related product or that would otherwise breach the terms of an open source agreement, such use could inadvertently occur and we may be required to release our proprietary source code, pay damages for breach of contract, re-engineer our products, discontinue the sale of our products in the event re-engineering cannot be accomplished on a timely basis or take other remedial action that may divert resources away from our development efforts, any of which could adversely affect our business, operating results and financial condition.

We are an “emerging growth company,” and any decision on our part to comply with certain reduced disclosure requirements applicable to emerging growth companies could make our common stock less attractive to investors.

We are an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act enacted in April 2012, and, for as long as we continue to be an emerging growth company, we may choose to take advantage of exemptions from various reporting requirements applicable to other public companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. We could be an emerging growth company for up to five years, although, if the market value of our common stock that is held by non-affiliates exceeds $700 million as of June 30 of any year before the end of that five-year period, we would cease to be an “emerging growth company” as of December 31 of that year. We cannot predict if investors will find our common stock less attractive if we choose to rely on these exemptions. If some investors find our common stock less attractive as a result of any choices to reduce future disclosure, there may be a less active trading market for our common stock and our stock price may decline or be more volatile.

Under Section 107(b) of the Jumpstart Our Business Startups Act, emerging growth companies can delay adopting new or revised accounting standards until such time as those standards apply to private companies. We have irrevocably elected not to avail our company of this exemption from new or revised accounting standards and, therefore, we will be subject to the same new or revised accounting standards as other public companies that are not emerging growth companies.

Our business is subject to changing regulations regarding corporate governance and public disclosure that will increase both our costs and the risk of noncompliance.

As a public company, we will be subject to the reporting requirements of the Securities Exchange Act of 1934, as amended, or the Exchange Act, the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act, and the rules and regulations of the New York Stock Exchange. Achieving and maintaining compliance with these rules and regulations, particularly after we cease to be an emerging growth company, will increase our legal, accounting and financial compliance costs, will make some activities more difficult, time-consuming and costly and may also place undue strain on our personnel, systems and resources.

The Sarbanes-Oxley Act requires, among other things, that we maintain effective disclosure controls and procedures and, in the future, internal control over financial reporting. Any failure to develop or maintain effective controls, or any difficulties encountered in their implementation or improvement, could harm our operating results or cause us to fail to meet our reporting obligations and may result in a restatement of our prior period financial statements. Any failure to implement and maintain effective internal controls also could adversely affect the results of periodic management evaluations regarding the effectiveness of our internal control over financial reporting that we will be required to include in our periodic reports filed with the SEC, beginning for the year ending December 31, 2014 under Section 404(a) of the Sarbanes-Oxley Act or the annual auditor attestation reports regarding effectiveness of our internal controls over financial reporting that we will be required to include in our annual reports filed with the SEC, beginning for the year ending December 31, 2018, unless, under the Jumpstart Our Business Startups Act, we meet certain

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criteria that would require such reports to be included prior to then, under Section 404(b) of the Sarbanes-Oxley Act. Ineffective disclosure controls and procedures and internal control over financial reporting could also cause investors to lose confidence in our reported financial and other information, which would likely have a negative effect on the trading price of our common stock.

In order to maintain the effectiveness of our disclosure controls and procedures and internal control over financial reporting, we will need to expend significant resources and provide significant management oversight. We have a substantial effort ahead of us to implement appropriate processes, document our system of internal control over relevant processes, assess their design, remediate any deficiencies identified and test their operation. As a result, management’s attention may be diverted from other business concerns, which could harm our business, operating results and financial condition. These efforts will also involve substantial accounting-related costs. In addition, if we are unable to continue to meet these requirements, we may not be able to remain listed on the New York Stock Exchange.

Implementing any appropriate changes to our internal controls may require specific compliance training of our directors, officers and employees, entail substantial costs in order to modify our existing accounting systems, and take a significant period of time to complete. Such changes may not, however, be effective in maintaining the adequacy of our internal controls, and any failure to maintain that adequacy, or consequent inability to produce accurate financial statements on a timely basis, could increase our operating costs and could materially impair our ability to operate our business. In the event that we are not able to demonstrate compliance with Section 404 of the Sarbanes-Oxley Act in a timely manner, that our internal controls are perceived as inadequate or that we are unable to produce timely or accurate financial statements, investors may lose confidence in our operating results and our stock price could decline.

The Sarbanes-Oxley Act and the rules and regulations of the New York Stock Exchange will make it more difficult and more expensive for us to maintain directors’ and officers’ liability insurance, and we may be required to accept reduced coverage or incur substantially higher costs to maintain or increase coverage. If we are unable to maintain adequate directors’ and officers’ insurance, our ability to recruit and retain qualified directors, especially those directors who may be considered independent for purposes of the New York Stock Exchange rules, and officers may be curtailed.

We may not be able to secure additional financing on favorable terms, or at all, to meet our future capital needs.

In the future, we may require additional capital to respond to business opportunities, challenges, acquisitions or unforeseen circumstances and may determine to engage in equity or debt financings or enter into credit facilities for other reasons. For example, in December 2011, we issued a convertible note with an aggregate principal amount of $24.0 million and in February 2012, we issued a convertible note with an aggregate principal amount of $30.0 million, both of which converted into shares of our common stock at the closing of our IPO. In the future, we may not be able to timely secure additional debt or equity financing on favorable terms, or at all. Any debt financing obtained by us in the future could involve restrictive covenants relating to our capital raising activities and other financial and operational matters, which may make it more difficult for us to obtain additional capital and to pursue business opportunities, including potential acquisitions. If we raise additional funds through further issuances of equity, convertible debt securities or other securities convertible into equity, our existing stockholders could suffer significant dilution in their percentage ownership of our company, and any new equity securities we issue could have rights, preferences and privileges senior to those of holders of our common stock. If we are unable to obtain adequate financing or financing on terms satisfactory to us, when we require it, our ability to continue to grow or support our business and to respond to business challenges could be significantly limited.

Our investment portfolio may become impaired by deterioration of the capital markets.

Our cash equivalent and short-term investment portfolio as of September 30, 2013 consisted of $82.0 million of money market mutual funds, highly liquid debt instruments of the U.S. government and its agencies, foreign government and agency securities, and U.S. and foreign corporate debt securities.

Should financial market conditions worsen in the future, investments in some financial instruments may pose risks arising from market liquidity and credit concerns. In addition, any deterioration of the capital markets could cause our other income and expense to vary from expectations. As of September 30, 2013, we had no impairment charges associated with our short-term investment portfolio, and although we believe our current investment portfolio has little risk of material impairment, we cannot predict future market conditions or market liquidity, or credit availability, and can provide no assurance that our investment portfolio will remain materially unimpaired.

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We may not be able to utilize a significant portion of our net operating loss or research tax credit carryforwards, which could adversely affect our operating results.

As of December 31, 2012, we had federal and state net operating loss carryforwards due to prior period losses, which if not utilized will begin to expire in 2027 and 2016 for federal and state purposes, respectively. We also have federal research tax credit carryforwards that will begin to expire in 2024. Realization of these net operating loss and research tax credit carryforwards is dependent upon future income, and there is a risk that our existing carryforwards could expire unused and be unavailable to offset future income tax liabilities, which could adversely affect our operating results.

In addition, under Section 382 of the Internal Revenue Code of 1986, as amended, or the Code, our ability to utilize net operating loss carryforwards or other tax attributes, such as research tax credits, in any taxable year may be limited if we experience an “ownership change.” A Section 382 “ownership change” generally occurs if one or more stockholders or groups of stockholders who own at least 5% of our stock increase their ownership by more than 50 percentage points over their lowest ownership percentage within a rolling three-year period. Similar rules may apply under state tax laws. It is possible that an ownership change, or any future ownership change, could have a material effect on the use of our net operating loss carryforwards or other tax attributes, which could adversely affect our operating results.

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Our business and financial performance could be negatively impacted by changes in tax laws or regulations.

New income, sales, use or other tax laws, statutes, rules, regulations or ordinances could be enacted at any time. Those enactments could adversely affect our domestic and international business operations, and our business and financial performance. Further, existing tax laws, statutes, rules, regulations or ordinances could be interpreted, changed, modified or applied adversely to us. These events could require us or our utility customers to pay additional tax amounts on a prospective or retroactive basis, as well as require us or our utility customers to pay fines and/or penalties and interest for past amounts deemed to be due. If we raise our prices to offset the costs of these changes, existing and potential future utility customers may elect not to continue or purchase our products and services in the future. Additionally, new, changed, modified or newly interpreted or applied tax laws could increase our utility customers’ and our compliance, operating and other costs, as well as the costs of our products. Further, these events could decrease the capital we have available to operate our business. Any or all of these events could adversely impact our business and financial performance.

Our stock price has been and may continue to be volatile and may decline regardless of our operating performance.

Prior to our IPO in March 2013, there had not been a public market for our common stock. If you purchase shares of our common stock, you may not be able to resell those shares at or above your purchase price. An active or liquid market in our common stock may not be sustainable. The trading prices of the securities of technology companies have been highly volatile and the trading price of our common stock has been and may continue to be volatile. The market price of our common stock may fluctuate significantly in response to numerous factors, many of which are beyond our control, including:

• actual or anticipated fluctuations in our non-GAAP revenue (billings), revenue and other operating results or our backlog;

• the financial projections we may provide to the public, any changes in these projections or our failure to meet these projections;

• delays in regulatory approvals for our utility customers and utility customer deployments;

• failure of securities analysts to initiate or maintain coverage of us, changes in financial estimates by any securities analysts who follow our company, or our failure to meet these estimates or the expectations of investors;

• ratings changes by any securities analysts who follow our company;

• announcements by us or our competitors of significant customer wins, technical innovations, acquisitions, strategic partnerships, joint ventures or capital commitments;

• changes in operating performance and stock market valuations of utilities, technology companies generally, or those in our industry in particular;

• political and consumer sentiment, including concerns over accuracy of advanced metering technology, economic impact on consumers, privacy, security, consumer choice and the safety, health and environmental aspects of smart grid technology;

• price and volume fluctuations in the overall stock market, including as a result of trends in the economy as a whole;

• lawsuits threatened or filed against us; and

• other events or factors, including those resulting from war, incidents of terrorism or responses to these events.

In addition, the stock markets, and in particular the New York Stock Exchange on which our common stock is listed, have experienced extreme price and volume fluctuations that have affected and continue to affect the market prices of equity securities of many technology companies. Stock prices of many technology companies have fluctuated in a manner unrelated or disproportionate to the operating performance of those companies. During the three months ended September 30, 2013, the closing price of our common stock on the New York Stock Exchange ranged from $15.26 to $32.99 per share. In the past, stockholders have instituted securities class action litigation following

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periods of market volatility. If we were to become involved in securities litigation, it could subject us to substantial costs, divert resources and the attention of management from our business and adversely affect our business, operating results and financial condition.

If there are substantial sales of shares of our common stock, the price of our common stock could decline.

Sales of a substantial number of shares of our common stock in the public market, or the perception that these sales might occur could depress the market price of our common stock and may make it more difficult for you to sell your common stock at a time and price that you deem appropriate. We are unable to predict the effect that sales may have on the prevailing market price of our common stock. In addition, the holders of an aggregate of 32,973,595 shares of our common stock have rights, subject to some conditions, to require us to file registration statements covering their shares or to include their shares in registration statements that we may file for ourselves or our stockholders. Registration of the resale of these shares under the Securities Act would generally result in the shares becoming freely tradable without restriction. Any sales of securities by existing stockholders could adversely effect the trading price of our common stock.

We have broad discretion in the use of the net proceeds from our IPO and may not use them effectively.

We cannot specify with any certainty the particular uses of the net proceeds that we received from our IPO. Our management has broad discretion in the application of the net proceeds, including working capital, possible acquisitions and other general corporate purposes, and we may spend or invest these proceeds in a way with which our stockholders disagree. The failure by our management to apply these funds effectively could harm our business and financial condition. Pending their use, we may invest the net proceeds from our IPO in a manner that does not produce income or that loses value. These investments may not yield a favorable return to our investors.

If securities or industry analysts do not publish research or publish inaccurate or unfavorable research about our business, our stock price and trading volume could decline.

The trading market for our common stock depends in part on the research and reports that securities or industry analysts publish about us or our business. Industry analysts that currently cover us may cease to do so. If industry analysts cease coverage of our company, or if one or more of the analysts who cover us downgrade our stock or publish inaccurate or unfavorable research about our business, our stock price would likely decline. If one or more of these analysts cease coverage of our company or fail to publish reports on us regularly, demand for our stock could decrease, which might cause our stock price and trading volume to decline.

Our directors, executive officers and their respective affiliates have substantial control over us and could delay or prevent a change in corporate control.

As of September 30, 2013 our directors, executive officers and their respective affiliates beneficially owned in the aggregate 30.0% of our outstanding common stock. As a result, these stockholders, acting together, would have the ability to control the outcome of matters submitted to our stockholders for approval, including the election of directors and any merger, consolidation or sale of all or substantially all of our assets. In addition, these stockholders, acting together, would have the ability to control the management and affairs of our company. Accordingly, this concentration of ownership might harm the market price of our common stock by:

• delaying, deferring or preventing a change in control of us;

• impeding a merger, consolidation, takeover or other business combination involving us; or

• discouraging a potential acquiror from making a tender offer or otherwise attempting to obtain control of us.

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We do not intend to pay dividends for the foreseeable future.

We have never declared or paid cash dividends on our capital stock. We currently intend to retain any future earnings to finance the operation and expansion of our business, and we do not expect to declare or pay any dividends in the foreseeable future. In addition, the terms of our credit facility with Silicon Valley Bank currently restricts our ability to pay dividends. As a result, you may only receive a return on your investment in our common stock if the market price of our common stock increases.

Delaware law and provisions in our amended and restated certificate of incorporation and bylaws could make a merger, tender offer or proxy contest difficult, thereby depressing the trading price of our common stock.

We are a Delaware corporation and the anti-takeover provisions of the Delaware General Corporation Law may discourage, delay or prevent a change in control by prohibiting us from engaging in a business combination with an interested stockholder for a period of three years after the person becomes an interested stockholder, even if a change of control would be beneficial to our existing stockholders. In addition, our restated certificate of incorporation and restated bylaws contain provisions that may make the acquisition of our company more difficult without the approval of our Board of Directors, including the following:

• our Board of Directors is classified into three classes of directors with staggered three-year terms;

• only our chairman of the board, our lead independent director, our chief executive officer, our president or a majority of our Board of Directors is authorized to call a special meeting of stockholders;

• our stockholders are only able to take action at a meeting of stockholders and not by written consent;

• vacancies on our Board of Directors are able to be filled only by our Board of Directors and not by stockholders;

• directors may be removed from office only for cause;

• our restated certificate of incorporation authorizes undesignated preferred stock, the terms of which may be established, and shares of which may be issued, without stockholder approval; and

• advance notice procedures apply for stockholders to nominate candidates for election as directors or to bring matters before an annual meeting of stockholders.

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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

(a) Sales of Unregistered Securities

Not applicable.

(b) Use of Proceeds

On March 18, 2013, we closed our IPO in which we sold 5,462,500 shares of our common stock at an offering price per share of $17.00 pursuant to a registration statement on Form S-1 (File No. 333-175393), which was declared effective by the Securities and Exchange Commission on March 12, 2013. The offering commenced on March 12, 2013 and did not terminate before all of the securities registered in the registration statement were sold. Goldman, Sachs & Co. and Credit Suisse Securities (USA) LLC acted as joint book-running managers for the offering and Stifel, Nicolaus & Company, Incorporated, Piper Jaffray & Co., Canaccord Genuity Inc., Evercore Group L.L.C., Pacific Crest Securities LLC and Robert W. Baird & Co. acted as co-managers. We received net proceeds of $84.5 million after deducting underwriting discounts and commissions of $6.5 million and paid offering costs in the nine months ended September 30, 2013 of $1.9 million, but before deducting previously paid offering expenses of approximately $4.5 million. No payments were made by us to directors, officers or persons owning ten percent or more of our common stock or to their associates, or to our affiliates. As of September 30, 2013, the funds from the offering were held in cash, cash equivalents and short-term investments. There has been no material change in the planned use of proceeds from our IPO as described in our prospectus filed with the SEC pursuant to Rule 424(b) under the Securities Act on March 13, 2013.

(c) Issuer Purchases of Equity Securities

Not applicable.

Item 3. Defaults Upon Senior Securities

Not applicable.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

Not applicable.

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Item 6. Exhibits.

		Incorporated by Reference			Filed Herewith
Number	Exhibit Title	Form	File No.	Filing Date
10.2	2003 Stock Option Plan, as amended to date				X
10.3	2012 Equity Incentive Plan, as amended to date				X
10.16	Offer Letter Employment Agreement, dated September 4, 2013, between the Company and James P. Burns				X
31.1	Certification of Chief Executive Officer pursuant to Rule 13a-14(a) of the Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.				X
31.2	Certification of Chief Financial Officer pursuant to Rule 13a-14(a) of the Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.				X
32.1**	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.				X
32.2**	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.				X
101.INS†	XBRL Instance Document.				X
101.SCH†	XBRL Taxonomy Extension Schema Document.				X
101.CAL†	XBRL Taxonomy Extension Calculation Linkbase Document.				X
101.DEF†	XBRL Taxonomy Extension Definition Linkbase Document.				X
101.LAB†	XBRL Taxonomy Extension Label Linkbase Document.				X
101.PRE†	XBRL Taxonomy Extension Presentation Linkbase Document.				X

** The certifications attached as Exhibit 32 hereto are deemed not “filed” for purposes of section 18 of the Exchange Act or otherwise subject to the liability of that section, nor shall they be deemed incorporated by reference into any filing under the Securities Act or the Exchange Act.

† Pursuant to Rule 406T of Regulation S-T, the Interactive Data Files on Exhibit 101 hereto are deemed not “filed” for purposes of section 18 of the Exchange Act or otherwise subject to the liability of that section, nor shall they be deemed incorporated by reference into any filing under the Securities Act or the Exchange Act.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Redwood City, State of California, on November 7, 2013.

SILVER SPRING NETWORKS, INC.
By:	/s/ Scott A. Lang
	Scott A. Lang Chairman of the Board of Directors, President and Chief Executive Officer (Principal Executive Officer)
By:	/s/ James P. Burns
	James P. Burns Executive Vice President and Chief Financial Officer (Principal Financial Officer)

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EX-10.2

Exhibit 10.2

SILVER SPRING NETWORKS, INC.

AMENDED AND RESTATED

2003 STOCK OPTION PLAN

adopted by the Board and Stockholders on November 24, 2003

(amended on December 31, 2003, June 17, 2004, February 11, 2005, May 19, 2005, December 28, 2005, June 1, 2007, December 5, 2007, September 29, 2008, December 16, 2008, March 18, 2009, August 21, 2009, October 9, 2009, February 6, 2010, November 12, 2010, March 30, 2011, March 2, 2012, December 14, 2012 and August 21, 2013)

1. Purpose and Types of Awards. This 2003 Stock Option Plan (the “Plan”) is intended to increase the incentives of, and encourage stock ownership by, officers, directors, employees, consultants and other independent contractors (including members of the Company’s Board of Directors who are not employees of the Company) providing services to Silver Spring Networks, Inc., a Delaware corporation (the “Company”), or to corporations which are or become parent corporations or subsidiary corporations of the Company. As used in this Plan, the terms “Parent corporation” and “Subsidiary corporation” shall have the meanings set forth in Sections 424(e) and (f), respectively, of the Internal Revenue Code of 1986, as amended (“Internal Revenue Code”). The Plan is intended to provide such officers, directors, employees and consultants and other independent contractors with a proprietary interest (or to increase their proprietary interest) in the Company, and to encourage them to continue their employment or engagement by the Company or any parent or subsidiary of the Company. Awards granted pursuant to the Plan, at the discretion of the Company’s Board of Directors (“Board”), may be either options or restricted stock units (“RSUs”). Options granted pursuant to the Plan, at the discretion of the Board, may be either incentive stock options within the meaning of Section 422 of the Internal Revenue Code, or options that do not so qualify as incentive stock options and which are referenced herein as non-statutory stock options. This Plan is intended to be a written compensatory benefit plan within the meaning of Rule 701 of the Securities Act of 1933, as amended (“Securities Act”).

2. Stock. The capital stock subject to the Plan shall be shares of the Company’s authorized but unissued Common Stock (“Common Stock”). Subject to adjustments pursuant to Section 9 hereof, the maximum aggregate number of shares of Common Stock which may be issued under the Plan is 46,084,943¹, or such lesser number of shares of Common Stock as permitted under Section 260.140.45 of Title 10 of the California Code of Regulations. In the event that any outstanding award under the Plan shall expire by its terms or is otherwise terminated for any reason (or if shares of Common Stock of the Company which are issued upon exercise of an option granted hereunder are subsequently reacquired by the Company pursuant to contractual rights of the Company under the particular award agreement), the shares of the Common Stock allocated to the unexercised portion of such option (or the shares so reacquired by the Company pursuant to the terms of the stock option agreement) or to the

¹  The initial number of shares of Common Stock reserved for issuance under the Plan is 4,229,100 shares, approved by the Board and Stockholders on November 24, 2003, which was subsequently increased to 4,600,000 shares by the Board and Stockholders on December 31, 2003, followed by a decrease to 2,245,000 shares by the Board on June 17, 2004. Thereafter, the Board and Stockholders approved an increase of the Plan to 2,595,000 shares on February 11, 2005; an increase of the Plan to 5,595,000 shares on May 19, 2005; an increase of the Plan to 7,395,000 shares on December 28, 2005; an increase of the Plan to 9,895,000 shares on June 1, 2007; an increase of the Plan to 15,395,000 shares on December 5, 2007; an increase of the Plan to 21,820,581 shares on September 29, 2008; a decrease of the Plan to 19,341,331 shares on December 16, 2008; an increase of the Plan to 22,341,331 shares on March 18, 2009; an increase of the Plan to 24,291,331 shares on August 21, 2009; an increase of the Plan to 27,891,331 shares on October 9, 2009; an increase to the Plan to 31,891,331 shares on February 6, 2009; an increase to the Plan to 34,391,331 shares on November 12, 2010; an increase to the Plan to 35,391,331 shares on March 30, 2011; an increase to the Plan to 41,384,943 shares on March 2, 2012; and an increase to the Plan to 46,084,943 shares on December 14, 2012.

2003 Stock Option Plan

Page 2

unvested portion of such RSU shall again become available to be made subject to awards granted under the Plan. Notwithstanding any other provision of this Plan, the aggregate number of shares of Common Stock subject to outstanding awards granted under this Plan at any given time, plus the aggregate number of shares which have been issued upon either exercise of all options or settlement of RSUs granted under this Plan and which remain outstanding, shall never be permitted to exceed the maximum number of shares specified above in this Section 2 (subject to adjustments under Section 9).

3. Administration. The Plan shall be administered by the Board. The interpretation and construction by the Board of any provision of this Plan, or of any award granted pursuant hereto, shall be final, binding and conclusive. No member of the Board shall be liable to the Company or to any Subsidiary or Parent corporation, or to the holder of any award granted hereunder, for any action, inaction, determination or interpretation made in good faith with respect to the Plan or any transaction hereunder. Notwithstanding the foregoing, the Board shall have the authority to delegate some or all of its duties to administer this Plan and to exercise its powers hereunder to a committee (“Committee”) appointed by the Board. For purposes of this Plan, all references herein to “Board” shall be deemed to also refer to any such Committee. Any Committee charged with administration of the Plan shall have all the powers and protections provided to the Board under this Plan until the Board shall revoke or restrict such powers or protections. More specifically, the Board, subject to compliance with the remaining provisions of this Plan, shall have the following powers and authority (which listing is provided by way of example and is not intended to be comprehensive or limiting to the extent of powers not included):

3.1 Selection of Award Recipients. To determine the persons providing services to the Company to whom, and the time or times at which, options to purchase Common Stock of the Company and/or RSUs to acquire Common Stock of the Company shall be granted;

3.2 Number of Award Shares. To determine the number of shares of Common Stock to be subject to awards granted to each such person;

3.3 Exercise Price. To determine the price to be paid for the shares of Common Stock upon the exercise of each option;

3.4 Term and Exercise Schedule. To determine the term, vesting and exercise schedule of each award;

3.5 Other Terms of Awards. To determine the terms and conditions of each stock option agreement or RSU agreement(which need not be identical) entered into between the Company and any person to whom the Board determines to grant an award;

3.6 Interpretation of Plan. To interpret the Plan and to prescribe, amend and rescind rules and regulations relating to the Plan;

3.7 Amendment of Awards. With the consent of the holder thereof, to modify or amend any award granted under the Plan; and

3.8 General Authority. To take such actions and make such determinations deemed necessary or advisable by the Board for the administration of the Plan, subject to complying with the Plan and with applicable legal requirements.

2003 Stock Option Plan

Page 3

4. Eligibility and Issuance of Awards.

4.1 Authority to Grant and Eligibility. The Board shall have full and final authority, in its discretion and at any time and from time to time during the term of this Plan, to grant or authorize the granting of awards to such officers, directors and employees of, and consultants and other independent contractors retained by, the Company or its Parent or Subsidiary corporations as it may select, and to determine the number of shares of Common Stock to be subject to each award. Any individual who is eligible to receive an award under this Plan shall be eligible to hold more than one award at any given time, in the discretion of the Board. The Board shall have full and final authority in its discretion to determine, in the case of employees (including employees that are officers or directors), whether such options shall be incentive stock options or non-statutory stock options; however, no incentive stock option may be granted to any person who is not a bona fide employee of the Company or of a Parent or Subsidiary corporation of the Company. Persons selected by the Board who are prospective employees of, or consultants or other independent contractors to be retained by, the Company or its Parent or Subsidiary corporations, including members of the Board, shall be eligible to receive non-statutory stock options or RSUs; provided, however, that in the case of such prospective employment or other engagement, the exercisability of such options or the settlement of such RSUs shall be subject in each case to such person in fact becoming an employee or consultant or other independent contractor, as applicable, of the Company or its Parent or Subsidiary corporations.

4.2 Certain Restrictions Applicable to Incentive Stock Options. No incentive stock option shall be granted to any person who, at the time such incentive stock option is granted, owns stock possessing more than ten percent (10%) of the total combined voting power of all classes of outstanding capital stock of the Company, or of any Parent corporation or Subsidiary corporation of the Company (a “ten percent holder”), unless the exercise price (as provided in Section 5.1 hereof) is not less than one hundred ten percent (110%) of the fair market value of the Common Stock on the date the stock option is granted and the period within which the incentive stock option may be exercised (as provided in Section 5.2 hereof) does not exceed five (5) years from the date the incentive stock option is granted. In determining stock ownership for purposes of this Section 4.2, the provisions of Section 422(b)(6) of the Internal Revenue Code shall control. An employee shall be considered as owning the voting capital stock owned, directly or indirectly, by or for his or her brothers and sisters, spouse, ancestors and lineal descendants. Voting capital stock owned, directly or indirectly, by or for a corporation, partnership, estate or trust shall be considered as being owned proportionately by or for its stockholders, partners or beneficiaries, as applicable. Additionally, for purposes of this Section 4.2, outstanding capital stock shall include all capital stock actually issued and outstanding immediately after the grant of the option to the employee. Outstanding capital stock shall not include capital stock authorized for issue under outstanding options or RSUs held by the employee or by any other person. Additionally, the aggregate fair market value (determined as of the date an option is granted) of the Common Stock with respect to which incentive stock options granted are exercisable for the first time by an employee during any one calendar year (under this Plan and under all other incentive stock option plans of the Company and of any Parent or Subsidiary corporation) shall not exceed One Hundred Thousand Dollars ($100,000). If the aggregate fair market value (determined as of the date an option is granted) of the Common Stock with respect to which incentive stock options granted are exercisable for the first time by an employee during any calendar year exceeds One Hundred Thousand Dollars ($100,000), the options for the first One Hundred Thousand Dollars ($100,000) worth of shares of Common Stock to become exercisable in such calendar year shall be incentive stock options and the options for the amount in excess of One Hundred Thousand Dollars ($100,000) that become exercisable

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in that calendar year shall be non-statutory stock options. In the event that the Internal Revenue Code or the regulations promulgated thereunder are amended after the effective date of the Plan to provide for a different limit on the fair market value of shares of Common Stock permitted to be subject to incentive stock options, such different limit shall be automatically incorporated herein and shall apply to options granted after the effective date of such amendment. In no event shall the total number of shares of Common Stock issued (counting each reissuance of a share that was previously issued and then forfeited or repurchased by the Company as a separate issuance) under the Plan upon exercise of incentive stock options exceed One Hundred Fifty-Three Million Nine Hundred Fifty Thousand (153,950,000) shares (adjusted in proportion to any adjustments under Section 2 hereof) over the term of the Plan.

4.3 Date of Grant. The date on which an award shall be granted shall be stated in each option agreement or RSU agreement and shall be the date of the Board’s authorization of such grant or such later date as may be set by the Board at the time such grant is authorized.

5. Terms and Provisions of Option Agreements. Each option granted under the Plan shall be evidenced by a stock option agreement between the person to whom the option is granted and the Company. Each such agreement shall be subject to the following terms and conditions, and to such other terms and conditions not inconsistent herewith as the Board may deem appropriate in each case:

5.1 Exercise Price. The price to be paid for each share of Common Stock upon the exercise of an option shall be determined by the Board at the time the option is granted; provided however that no option shall have an exercise price less than one hundred percent (100%) of the fair market value of the Common Stock on the date the option is granted unless expressly approved otherwise by the Board; and any incentive stock option granted to a ten percent (10%) stockholder shall have the exercise price set as provided in Section 4.2 hereof. For all purposes of this Plan, the fair market value of the Common Stock on any particular date shall be determined as follows:

5.1.1 If such Common Stock is publicly traded and is then listed on a national securities exchange, its last reported sale price on the national securities exchange on which the Common Stock is then listed on the trading day next preceding that date or, if no such reported sale takes place on the trading day next preceding such date, the average of its closing bid and asked prices on the national securities exchange on which the Common Stock is then listed on the trading day next preceding such date; or

5.1.2 If none of the foregoing is applicable, by the Board in good faith, with such determination being based upon past arms’-length sales by the Company of its equity securities and other factors considered relevant in determining the Company’s fair value.

5.1.3 Notwithstanding anything to the contrary in this Section 5.1, any Option Agreement may provide for alternative means of valuation for the purpose of repurchase at fair market value of shares acquired.

5.2 Term of Options. The period or periods within which an option may be exercised shall be determined by the Board at the time the option is granted, but no exercise period shall exceed ten (10) years from the date the option is granted (or five (5) years in the case of any incentive stock option granted to a ten percent (10%) stockholder as described in Section 4.2 hereof). An option granted to an employee who is a non-exempt employee for purposes of overtime pay under the Fair Labor Standards Act of 1938, shall not be exercisable earlier than six (6) months after its date of grant except for death, disability or a change in control of the Company under Section 9.2

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5.3 Non-Assignability. No stock option granted under the Plan shall be assignable or transferable by an optionee except by will or the laws of descent and distribution and shall be exercisable only by the optionee during his or her lifetime. For the avoidance of doubt, the prohibition against assignment and transfer applies to a stock option and, prior to exercise, the shares to be issued on exercise of a stock option, and pursuant to the foregoing sentence shall be understood to include, without limitation, a prohibition against any pledge, hypothecation, or other transfer, including any short position, any “put equivalent position” or any “call equivalent position” (in each case, as defined in Rule 16a-1 promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)).

5.4 Exercisability. Stock options granted under this Plan shall be exercisable at such future time or times (or may be fully exercisable upon grant), whether or not in installments, as shall be determined by the Board and provided in the form of stock option agreement. Notwithstanding any other provisions of this Plan, no option may be exercised after the expiration of ten (10) years from the date of grant.

5.5 Method of Payment for Common Stock Upon Exercise. Except as otherwise provided in the applicable stock option agreement (subject to the limitations of this Plan), the exercise price for each share of Common Stock purchased under an option shall be paid in full in cash at the time of purchase (or by check acceptable to the Board). At the discretion of the Board, the stock option agreement may provide for (or the Board may permit) the exercise price to be paid by one or more of the following additional alternative methods: (i) the surrender of shares of the Company’s Common Stock, in proper form for transfer, owned by the person exercising the option and having a fair market value on the date of exercise equal to the exercise price, provided that such shares (A) have been outstanding for more than six (6) months and have been paid for within the meaning of Rule 144 under the Securities Act (and, if such shares were purchased from the Company by use of a promissory note, such note has been fully paid with respect to such shares) or (B) were obtained by the optionee in the public market, (ii) to the extent permitted under the applicable provisions of applicable state law, the delivery by the person exercising the option of a full recourse promissory note executed by such person, bearing interest at a per annum rate which is not less than the “test rate” as set by the regulations promulgated under Sections 483 or 1274, as applicable, of the Internal Revenue Code and as in effect on the date of exercise, or (iii) any combination of cash, shares of Common Stock or promissory notes, so long as the sum of the cash so paid, plus the fair market value of the shares of Common Stock so surrendered and the principal amounts of the promissory notes so delivered, is equal to the aggregate exercise price. Without limiting the generality of the foregoing, the form of option agreement may provide (or the Board may permit) that the option be exercised through a “net issue” exercise procedure (cash-less exercise), whereby the optionee may elect to receive shares of the Company’s Common Stock having an aggregate fair market value at the date of exercise equal to the net value of the portion of the option so exercised as of the exercise date. For purposes of the foregoing, the net value of any option (or portion thereof) as of such exercise date shall be equal to the aggregate fair market value of the shares subject to the option (or portion thereof being exercised) less the aggregate exercise price of the option (or portion thereof). In such event the Company shall issue to the optionee a number of shares of the Company’s Common Stock having a fair market value as of the date of exercise equal to the net value of the option (or portion thereof being exercised). No share of Common Stock shall be issued under any option until full payment therefor has been made in accordance with the terms of the stock option agreement (and in

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compliance with the Plan). Any promissory note accepted upon the exercise of an option from a person who is a consultant or other independent contractor retained by the Company or any Parent or Subsidiary corporation shall be adequately secured by collateral other than the shares of the Common Stock acquired upon such exercise in accordance with Section 409 of the California Corporations Code. Notwithstanding the foregoing, an option may not be exercised by surrender to the Company of shares of the Company’s Common Stock to the extent such surrender of stock would constitute a violation of the provisions of any law, regulation and/or agreement restricting the redemption of the Company’s Common Stock. Additionally, if permitted by the form of stock option agreement, or at the Board’s discretion, any such promissory note may permit the payment of principal and interest accruing thereunder by surrender of shares of the Company’s Common Stock, in proper form for transfer, and having a fair market value on the date of payment and surrender equal to the dollar amount to be applied to principal and accrued interest thereunder. No promissory note shall be permitted if the exercise of an option using a promissory note will be in violation of any law.

5.6 Termination of Employment Provisions Applicable to Incentive Stock Options. Each stock option agreement granted by the Board as an incentive stock option shall comply with the following provisions relating to early termination of the option based upon termination of the optionee’s service to the Company:

5.6.1 Death. If the optionee’s service with the Company is terminated because of the death of optionee, any stock option which such optionee holds may be exercised, to the extent it was exercisable at the date of death, within such period after the date of death as the Board shall prescribe in the stock option agreement (but not less than six (6) months nor more than twelve (12) months after death), by the optionee’s representative or by the person entitled thereto under the optionee’s will or the laws of intestacy. If the option is not so exercised in accordance with the foregoing, it shall terminate upon the expiration of such prescribed period.

5.6.2 Disability. If the optionee’s employment with the Company is terminated because of the disability of the optionee, any stock option which the optionee holds may be exercised by the optionee or the optionee’s estate within such period after the date of termination of employment resulting from such disability (but not less than six (6) months nor more than twelve (12) months after termination by reason of disability) as the Board shall prescribe in the stock option agreement, to the extent such option would otherwise be exercisable on the date of such termination. If the option is not so exercised in accordance with the foregoing, it shall terminate upon the expiration of such prescribed period, unless the optionee dies prior thereto, in which event the optionee shall be treated as though his or her death occurred on the date of termination resulting from such disability and the provisions of Section 5.6.1 hereof shall apply.

5.6.3 Cause. If the optionee’s employment is terminated for “cause” as defined by the terms of the Plan, the option agreement, a contract of employment or other service contract, or applicable law, any option held by the optionee shall expire on the optionee’s termination date or at such later time and on such conditions as determined by the Board, in its sole discretion. In the absence of any other provisions in the option agreement, the term “cause” shall be defined as the willful breach or habitual neglect of the duties which the optionee is required to perform under his or her employment or other service agreement with the Company, or any act of dishonesty, fraud, misrepresentation or other acts of moral turpitude as would prevent the effective performance of the optionee’s duties.

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5.6.4 Transfer to Related Corporation. In the event that an optionee leaves the service of the Company to enter the service of any Parent or Subsidiary corporation of the Company, or if the optionee leaves the service of any such Parent or Subsidiary corporation to enter the service of the Company or of another Parent or Subsidiary corporation, such optionee shall be deemed to continue in service of the Company for all purposes of this Plan, and any reference to service with the Company shall also be deemed to refer to service with any Parent or Subsidiary of the Company.

5.6.5 Other Severance. In the event an optionee of the Company leaves the services of the Company for any reason other than as set forth above in this Section 5.6, any stock option which such optionee holds must be exercised, to the extent it was exercisable at the date such employee left the services of the Company, not later than three (3) months after the date on which the employee’s employment terminates (or such shorter or longer period as may be prescribed in the option agreement, the minimum specified period being thirty (30) days) unless the optionee dies prior to the end of such three (3) month period, in which event the optionee shall be treated as though the optionee had died on the date of termination and the provisions of Section 5.6.1 hereof shall apply. The stock option shall terminate upon the expiration of such prescribed period.

5.6.6 Extension if Exercise Prevented by Law. Notwithstanding the foregoing, if the exercise of an option within the applicable time periods set forth above is prevented because the issuance of shares upon such exercise would constitute a violation of any applicable federal, state or foreign securities law or other law or regulation, the option shall remain exercisable until three (3) months after the date the optionee is notified by the Company that the option is exercisable, but in any event no later than the expiration of ten (10) years from the date of grant.

5.6.7 Extension if Optionee Subject to Section 16(b). Notwithstanding the foregoing, if a sale within the applicable time periods set forth in this Section 5.6 of shares acquired upon the exercise of the option would subject the optionee to liability under Section 16(b) of the Exchange Act, the option shall remain exercisable until the earliest to occur of (i) the tenth (10th) day following the date on which a sale of such shares by the optionee would no longer be subject to such liability, (ii) the one hundred and ninetieth (190th) day after the optionee’s termination of service, or (iii) the option expiration date.

5.7 Termination of Service Provisions Applicable to Non-Statutory Stock Options. Subject to the requirements of all applicable laws, rules or regulations, each stock option agreement granted by the Board as a non-statutory stock option agreement shall contain such provisions relating to early termination of the option based upon termination of the optionee’s service to the Company as determined by the Board in connection with the grant of such non-statutory stock option. In addition, such non-statutory stock option shall be subject to the provisions of Sections 5.6.7 and 5.6.8 of this Plan.

5.8 All Options Subject to Terms of this Plan. In addition to the provisions contained in any option agreement granted under this Plan, each such stock option agreement shall provide that the same is subject to the terms and conditions of this Plan and each optionee shall be given a copy of this Plan. Further, any terms or conditions contained in any such stock option agreement granted hereunder which are inconsistent in any respect with the provisions of this Plan shall be disregarded and void, or shall be deemed amended to the extent necessary to comply with the provisions of this Plan and the intent of the Board.

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5.9 Other Provisions. Option agreements under the Plan shall contain such other provisions, including, without limitation: (i) restrictions and conditions upon the exercise of the option, (ii) rights of first refusal in favor of the Company (or its assignees) applicable to shares of Common Stock acquired upon exercise of an option which are subsequently proposed to be transferred by the optionee, (iii) lock-up agreements (applicable in the event of the public offering of the Common Stock of the Company) restricting an optionee from any sales or other transfers of option stock for a designated period of time following the effective date of a registration statement under the Securities Act, (iv) other restrictions on the transferability or right to retain shares of the Common Stock received upon the exercise of the option including repurchase rights at original cost based on a vesting schedule, (v) any commitments to pay cash bonuses, make loans or transfer other property to an optionee upon exercise of any option, and (vi) restrictions required by federal and applicable state securities laws, all as the Board shall deem necessary or advisable; provided that no such additional provision shall be inconsistent with any other term or condition of this Plan or applicable state law and no such additional provision shall cause any incentive stock option granted pursuant to this Plan to fail to qualify as an incentive stock option under Section 422 of the Internal Revenue Code. Without limiting the generality of the foregoing, the Board may provide in the form of stock option agreement that, (A) in lieu of an exercise schedule, the option may immediately be exercisable in full and provide a “vesting schedule” with respect to the stock so purchased, giving the Company (or its assignees) the right to repurchase the shares of Common Stock at cost (or some other specified amount) to the extent such shares have not become vested upon any termination of the optionee’s employment or other engagement with the Company, which vesting may depend upon or be restated to the attainment of the time periods, or continued service to the Company pursuant to which the obligation to resell such shares to the Company shall lapse; (B) optionee’s service or employment with the Company shall not be deemed to have terminated merely because of a change in the capacity in which the optionee renders service provided there is no interruption or termination of the optionee’s service; or (C) an exercise or vesting schedule shall be accelerated upon the consummation of a “change in control” or similar event or any other event determined advisable by the Board.

5.10 Information to Optionees. If the Company is relying on the exemption from registration under Section 12(g) of the Exchange Act pursuant to Rule 12h-1(f)(1) promulgated under the Exchange Act, then the Company shall provide the Required Information (as defined below) in the manner required by Rule 12h-1(f)(1) to all optionees every six months until the Company becomes subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act or is no longer relying on the exemption pursuant to Rule 12h-1(f)(1); provided, that, prior to receiving access to the Required Information the optionee must agree to keep the Required Information confidential pursuant to a written agreement in the form provided by the Company. For purposes of this Section 5.10, “Required Information” means the information described in Rules 701(e)(3), (4) and (5) under the Securities Act, with the financial statements being not more than 180 days old.

6. Terms and Provisions of Restricted Stock Units. An RSU is an award to an eligible person covering a number of shares of Common Stock that may be settled in cash, or by issuance of those shares of Common Stock (which may consist of restricted stock) for services to be rendered or for past services already rendered to the Company or any Parent corporation or Subsidiary corporation.

6.1 Awards of Restricted Stock Unit Agreements. All RSUs shall be made pursuant to a RSU agreement, which shall be in substantially a form (which need not be the same for each RSU recipient) that the Board has from time to time approved, and will comply with and be subject to the terms and conditions of the Plan.

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6.2 Terms of RSUs. The Board will determine the terms of a RSU including, without limitation: (a) the number of shares of common stock deemed subject to the RSU; (b) the time or times during which the RSU may be exercised; (c) the consideration to be distributed on settlement, and the effect on each RSU of the RSU recipient’s termination of employment. A RSU may be awarded upon satisfaction of such performance goals based on performance factors during any performance period as are set out in advance in the RSU recipient’s individual RSU agreement. If the RSU is being earned upon satisfaction of performance goals, then the Board will: (x) determine the nature, length and starting date of any performance period for the RSU; (y) select from among the performance factors to be used to measure the performance, if any; and (z) determine the number of shares of Common Stock deemed subject to the RSU.

6.3 Form and Timing of Settlement. The portion of a RSU being settled shall be paid within ninety (90) days of vesting. Payment may be made in the form of cash or whole shares of Common Stock or a combination thereof.

6.4 No Transfer. For the avoidance of doubt, the prohibition against transfer set forth in each RSU applies to the RSU and, prior to settlement, the shares to be issued on settlement of the RSU, and pursuant to the foregoing sentence shall be understood to include, without limitation, a prohibition against any pledge, hypothecation, or other transfer, including any short position, any “put equivalent position” or any “call equivalent position” (in each case, as defined in Rule 16a-1 promulgated under the Exchange Act).

6.5 Information to Holders of RSUs. If the Company is relying on the exemption from registration under Section 12(g) of the Exchange Act pursuant to Rule 12h-1 promulgated under the Exchange Act, then the Company shall provide the Required Information (as defined in Section 5.10) by a method allowed under Rule 12h-1 to all holders of RSUs every six months until the Company becomes subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act or is no longer relying on the exemption pursuant to Rule 12h-1; provided, that, prior to receiving access to the Required Information the holder of the RSU must agree to keep the Required Information confidential pursuant to a written agreement in the form provided by the Company.

7. Securities Law and Other Regulatory Requirements. This Plan is intended to comply with Section 25102(o) of the California Corporations Code. Any provision of this Plan which is inconsistent with Section 25102(o) shall, without further act or amendment by the Company or the Board, be reformed to comply with the requirements of Section 25102(o). The Board shall require any potential award recipient, as a condition of the exercise of an option or the settlement of an RSU, to represent and establish to the satisfaction of the Board that all shares of Common Stock to be acquired upon the exercise of such option or the settlement of such RSU will be acquired for investment and not for resale. No shares of Common Stock shall be issued upon either the exercise of any option or the settlement of an RSU unless and until: (i) the Company and the award recipient have satisfied all applicable requirements under the Securities Act and the Exchange Act, (ii) any applicable listing requirement of any stock exchange on which the Company’s Common Stock is listed has been satisfied, and (iii) all other applicable provisions of state and federal law have been satisfied. The Board shall cause such legends to be placed on certificates evidencing shares of Common Stock issued upon exercise of an option or settlement of an RSU as, in the opinion of the Company’s counsel, may be required by federal and applicable state securities laws.

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8. Withholding Taxes. The exercise of any option or the vesting and settlement of any RSU granted under this Plan shall be conditioned upon the award recipient’s payment to the Company of all amounts (in addition to the exercise price) required to meet federal, state, local or foreign taxes of any kind required by law to be withheld with respect to shares to be issued on exercise of such option or settlement of such RSU. The Board, in its discretion, may (i) declare cash bonuses to an award recipient to satisfy any such withholding requirements, (ii) incorporate provisions in the form of stock option agreement or RSU agreement allowing (or after grant of the option or RSU may permit, in its discretion) an award recipient to satisfy any such withholding obligations, in whole or in part, by delivery of shares of the Company’s Common Stock already owned by the award recipient and which are not subject to repurchase, forfeiture, vesting or other similar requirements or restrictions, (iii) determine that at the election of the Board and without further consent from the award recipient, upon the vesting of any option or RSU, the Company will either (a) retain and cancel or (b) sell pursuant to a “sell to cover” mandatory sale arranged by the Company (on behalf of the award recipient), that number of shares of the Company’s Common Stock having an aggregate fair market value equal to the minimum amount the Company is required to withhold for income and employment tax purposes with respect to the option or RSU. The fair market value of any such shares used to satisfy such withholding obligations shall be determined as of the date the amount of taxes are required to be withheld and such shares will be valued based on the value of the actual trade or, if there is none, the fair market value of the shares as of the current trading day in the case of the exercise of an option and the fair market value of the shares as of the previous trading day in the case of the settlement of an RSU. The Company shall have the right at any time to deduct from payments of any kind otherwise due to the award recipient (whether shares of Common Stock issuable upon exercise of an option or settlement of an RSU, regular salary, commissions, or otherwise) any federal, state or local taxes of any kind required by law to be withheld with respect to any shares issued upon exercise of options or settlement of RSUs granted under the Plan.

9. Adjustments Upon Changes in Capitalization or Merger.

9.1 Stock Splits and Similar Events; Reclassifications. The number of shares of Common Stock covered by outstanding awards granted under this Plan and the exercise price of an option shall be proportionately adjusted for any increase or decrease in the number of issued and outstanding shares of Common Stock resulting from a subdivision or combination of such shares or the payment of a stock dividend (but only on the Common Stock) or a recapitalization or any other increase or decrease in the number of such outstanding shares of Common Stock effected without the receipt of consideration by the Company; provided, however, that the conversion of any convertible securities of the Company shall not be deemed to have been “effected without receipt of consideration.” In the event that the shares of Common Stock covered by outstanding awards granted under this Plan are reclassified by the Company, other than pursuant to a transaction described in Section 9.2, then such awards shall apply to the appropriate number of shares of newly classified Common Stock designated by the Board.

9.2 Mergers and Acquisitions. If the Company shall be a constituent corporation in any merger or consolidation which results in the holders of the outstanding voting securities of the Company (determined immediately prior to such merger or consolidation) owning, directly or indirectly, at least a majority of the beneficial interest in the outstanding voting securities of the surviving corporation or its Parent corporation (determined immediately after such merger or consolidation), the

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awards granted under the Plan shall pertain and apply to the securities or other property to which a holder of the number of shares subject to the unexercised portion of such option or unsettled portion of such RSU would have been entitled. Any of (i) a dissolution or liquidation of the Company; (ii) a sale of substantially all of the Company’s business and assets; (iii) the direct or indirect sale or exchange in a single or series of related transactions by the stockholders of the Company of more than fifty percent (50%) of the voting stock of the Company which results in the holders of the outstanding voting securities of the Company (determined immediately prior to such sale or exchange) owning, directly or indirectly, less than a majority of the beneficial interest in the outstanding voting securities of the Company; or (iv) a merger or consolidation (in which the Company is a constituent corporation) which results in the holders of the outstanding voting securities of the Company (determined immediately prior to such merger or consolidation) owning, directly or indirectly, less than a majority of the beneficial interest in the outstanding voting securities of the surviving corporation or its Parent corporation (determined immediately after such merger or consolidation) will cause awards granted under the Plan to terminate as of the date such transaction is consummated, unless the agreement of such sale, exchange, merger, consolidation or other transaction otherwise provides.

9.3 Board’s Determination Final and Binding Upon Award Recipients. The foregoing determinations and adjustments in this Section 9 relating to stock or securities of the Company shall be made by the Board, whose determination in that respect shall be final, binding and conclusive. The Company shall give notice of any such adjustment or action to each award recipient; provided, however, that any such adjustment or action shall be effective and binding for all purposes, whether or not such notice is given or received.

9.4 No Fractions of Shares. Fractions of shares shall not be issued by the Company. Instead, such fractions of shares shall either be paid in cash at fair market value or shall be rounded down to the nearest share, as determined by the Board.

9.5 No Rights Except as Expressly Stated. Except as hereinabove expressly provided in this Section 9, no additional rights shall accrue to any award recipient by reason of any subdivision or combination of shares of the capital stock of any class or the payment of any stock dividend or any other increase or decrease in the number of shares of any class or by reason of any dissolution, liquidation, merger or consolidation or spin-off of assets or of stock of another corporation, and any issue by the Company of shares of stock of any class or of securities convertible into shares of stock of any class shall not affect, and no adjustment by reason thereof shall be made with respect to, the number or exercise price of shares subject to awards granted hereunder.

9.6 No Limitations on Company’s Discretion. The grant of awards under this Plan shall not affect in any way the right or power of the Company to make adjustments, reclassifications, reorganizations or changes of its capital or business structure or to merge or consolidate or to dissolve, liquidate, sell or transfer all or any part of its business or assets.

10. No Additional Employment Related Rights or Benefits.

10.1 No Special Employment Rights. Nothing contained in this Plan or in any award granted hereunder shall confer upon any award recipient any right with respect to the continuation of his or her employment or other engagement by the Company or interfere in any way with the right of the Company, subject to the terms of any separate employment or consulting agreement to the contrary, at

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any time to terminate such employment or consulting or other relationship or to increase or decrease the compensation of any award recipient. Whether an authorized leave of absence, or absence in military or government service, shall constitute termination of an award recipient’s employment or other engagement shall be determined by the Board.

10.2 Other Employee Benefits. The amount of any compensation deemed to be received by any award recipient as a result of either the exercise of an option or the settlement of an RSU, or the sale of shares received upon such exercise or settlement, will not constitute compensation with respect to which any other employment (or other engagement) related benefits of such award recipient are determined, including, without limitation, benefits under any bonus, pension, profit-sharing, life insurance or salary continuation plan, except as otherwise specifically determined by the Board or as expressly provided for in the option agreement or RSU agreement. The granting of an option shall impose no obligation upon the optionee to exercise such option.

11. Rights as a Stockholder and Access to Information. No award recipient or and no person claiming under or through any such award recipient shall be, or have any of the rights or privileges of, a stockholder of the Company in respect of any of the shares issuable upon either the exercise of any option or settlement of any RSU granted under this Plan, unless and until the either option is properly and lawfully exercised or the RSU is properly and legally settled and a certificate representing the shares so purchased or settled is duly issued to the award recipient or to his or her estate. No adjustment shall be made for dividends or any other rights if the record date relating to such dividend or other right is before the date the award recipient became a stockholder.

12. Modification, Extension and Renewal of Awards. Subject to the limitations of this Plan, the Board may modify, extend or renew outstanding awards granted under the Plan. Furthermore, the Board may, subject to the other provisions of this Plan, upon the cancellation of previously granted options having higher per share exercise prices, regrant options at a lower price; provided, however, that no such modification or cancellation and regrant of an option shall, without the written consent of the optionee, alter or impair any rights of the optionee under any option previously granted under the Plan.

13. Use of Proceeds. The proceeds received from the sale of shares of the Common Stock upon exercise of options granted under the Plan shall be used for general corporate purposes.

14. Reservation of Shares. The Company, during the term of this Plan, will at all times reserve and keep available such number of shares of its Common Stock as shall be sufficient to satisfy the requirements of the Plan and all awards issued hereunder.

15. Term of Plan.

15.1 Effective Dates. The Plan became effective when adopted by the Board, but no award granted under the Plan shall become exercisable or eligible for settlement unless and until the Plan shall have been approved by the Company’s stockholders by the vote of the holders of a majority of the outstanding shares of the Company present and entitled to vote at a duly held meeting of the Company’s stockholders (or by written consent of the holders of the outstanding shares of the Company entitled to vote) in accordance with the requirements of the Company’s Bylaws and the relevant state law. If such stockholder approval is not obtained within twelve (12) months after the date of the Board’s adoption of the Plan, any incentive stock options previously granted under the Plan shall become non-statutory options and no further incentive stock options shall be granted. In addition, for purposes of

2003 Stock Option Plan

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compliance with the Rules of the California Commissioner of Corporations, Section 260.140.41(i), any stock options, whether incentive stock options or non-statutory stock options, which are exercised before stockholder approval is obtained, must be rescinded if stockholder approval is not obtained within twelve (12) months before or after the Plan is adopted and such shares shall not be counted in determining whether such approval is obtained. Subject to the foregoing limitation, awards may be granted under the Plan at any time after the effective date and before the date fixed for termination of the Plan.

15.2 Termination. Unless sooner terminated in accordance with Section 16, the Plan shall terminate upon the earlier of: (i) the close of business on the last business day preceding the tenth (10th) anniversary of the earlier of (a) the date of the Plan’s adoption by the Board occurs, or (b) the date of the Plan’s approval by the Company’s stockholders, or (ii) the date on which all shares available for issuance under the Plan shall have been issued pursuant to awards granted under the Plan and none of such shares shall remain subject to contractual repurchase rights of the Company pursuant to “vesting” or other similar provisions. If the date of termination is determined under clause (i) above, then any awards outstanding on such date shall continue to have force and effect in accordance with the provisions of the award agreements evidencing such awards.

16. Early Termination and Amendment of the Plan. The Board may from time to time suspend or terminate the Plan or revise or amend it; provided, however, that, without the approval of the Company’s stockholders at a duly held meeting of the Company’s stockholders by the vote of a majority of the shares present and entitled to vote (or by written consent of the holders of the outstanding shares of the Company entitled to vote) in compliance with the requirements of the Company’s Bylaws and the California Corporations Code, no such action of the Board shall:

16.1 Increases in Number of Shares Subject to the Plan. Increase the aggregate number of shares of the Common Stock which may be issued upon exercise of options and settlement of RSUs granted under the Plan (except for adjustments made pursuant to Section 9 hereof);

16.2 Changes in Eligibility. Change the designation of employees eligible to receive incentive stock options under the Plan;

16.3 Plan Duration. Extend the termination date beyond that provided in Section 15.2;

16.4 Changes not Approved by Legal Counsel. Otherwise amend or modify the Plan (or outstanding awards) under circumstances where stockholder approval is considered necessary in the opinion of legal counsel to the Company; or

16.5 Changes to this Section. Amend this Section 16 to defeat its purposes. In any event, no termination or amendment of the Plan may adversely affect any then outstanding award or any unexercised or unsettled portion thereof, without the consent of the award recipient, unless such termination or amendment is required to enable an option designated as an incentive stock option to qualify as an incentive stock option or is necessary to comply with any applicable law, regulation or rule.

EX-10.3

Exhibit 10.3

SILVER SPRING NETWORKS, INC.

2012 EQUITY INCENTIVE PLAN

(share numbers adjusted for reverse stock split effected February 11, 2013)

(as amended August 21, 2013)

1. PURPOSE. The purpose of this Plan is to provide incentives to attract, retain and motivate eligible persons whose present and potential contributions are important to the success of the Company by offering them an opportunity to participate in the Company’s future performance through the grant of Awards. Capitalized terms not defined elsewhere in the text are defined in Section 27.

2. SHARES SUBJECT TO THE PLAN.

2.1 Number of Shares Available. Subject to Sections 2.6 and 21 and any other applicable provisions hereof, the total number of Shares reserved and available for grant and issuance pursuant to this Plan as of the date of adoption of the Plan by the Board, is 3,400,000 Shares plus (i) any reserved shares not issued or subject to outstanding grants under the Company’s 2003 Stock Option Plan (the “Prior Plan”) on the Effective Date (as defined below), (ii) shares that are subject to stock options granted under the Prior Plan that cease to be subject to such stock options after the Effective Date and (iii) shares issued under the Prior Plan before or after the Effective Date pursuant to the exercise of stock options that are, after the Effective Date, forfeited and (iv) shares issued under the Prior Plan that are repurchased by the Company at the original issue price.

2.2 Lapsed, Returned Awards. Shares subject to Awards, and Shares issued under the Plan under any Award, will again be available for grant and issuance in connection with subsequent Awards under this Plan to the extent such Shares: (a) are subject to issuance upon exercise of an Option or SAR granted under this Plan but which cease to be subject to the Option or SAR for any reason other than exercise of the Option or SAR; (b) are subject to Awards granted under this Plan that are forfeited or are repurchased by the Company at the original issue price; (c) are subject to Awards granted under this Plan that otherwise terminate without such Shares being issued; or (d) are surrendered pursuant to an Exchange Program. To the extent an Award under the Plan is paid out in cash rather than Shares, such cash payment will not result in reducing the number of Shares available for issuance under the Plan. Shares used to pay the exercise price of an Award or to satisfy the tax withholding obligations related to an Award will become available for future grant or sale under the Plan. For the avoidance of doubt, Shares that otherwise become available for grant and issuance because of the provisions of this Section 2.2 shall not include Shares subject to Awards that initially became available because of the substitution clause in Section 21.2 hereof.

2.3 Minimum Share Reserve. At all times the Company shall reserve and keep available a sufficient number of Shares as shall be required to satisfy the requirements of all outstanding Awards granted under this Plan.

2.4 Automatic Share Reserve Increase. The number of Shares available for grant and issuance under the Plan shall be increased on January 1, of each of the calendar years during the term of the Plan by the lesser of (i) four percent (4%) of the number of Shares issued and outstanding on each December 31 immediately prior to the date of increase or (ii) such number of Shares determined by the Board.

2.5 Limitations. No more than 3,400,000 Shares shall be issued pursuant to the exercise of ISOs.

2.6 Adjustment of Shares. If the number of outstanding Shares is changed by a stock dividend, recapitalization, stock split, reverse stock split, subdivision, combination, reclassification or similar change in the capital structure of the Company, without consideration, then (a) the number of Shares reserved for issuance and future grant under the Plan set forth in Section 2.1, (b) the Exercise Prices of and number of Shares subject to outstanding Options and SARs, (c) the number of Shares subject to other outstanding Awards, (d) the maximum number of shares that may be issued as ISOs set forth in Section 2.5, (e) the maximum number of Shares that may be issued to an individual or to a new Employee in any one calendar year set forth in Section 3 and (f) the number of Shares that are granted as Awards to Non-Employee Directors as set forth in Section 12, shall be proportionately adjusted, subject to any required action by the Board or the stockholders of the Company and in compliance with applicable securities laws; provided that fractions of a Share will not be issued.

3. ELIGIBILITY. ISOs may be granted only to Employees. All other Awards may be granted to Employees, Consultants, Directors and Non-Employee Directors of the Company or any Parent or Subsidiary of the Company; provided such Consultants, Directors and Non-Employee Directors render bona fide services not in connection with the offer and sale of securities in a capital-raising transaction. No Participant will be eligible to receive more than 600,000 Shares in any calendar year under this Plan pursuant to the grant of Awards except that new Employees of the Company or a Parent or Subsidiary of the Company (including new Employees who are also officers and directors of the Company or any Parent or Subsidiary of the Company) are eligible to receive up to a maximum of 1,200,000 Shares in the calendar year in which they commence their employment.

4. ADMINISTRATION.

4.1 Committee Composition; Authority. This Plan will be administered by the Committee or by the Board acting as the Committee. Subject to the general purposes, terms and conditions of this Plan, and to the direction of the Board, the Committee will have full power to implement and carry out this Plan, except, however, the Board shall establish the terms for the grant of an Award to Non-Employee Directors. The Committee will have the authority to:

(a) construe and interpret this Plan, any Award Agreement and any other agreement or document executed pursuant to this Plan;

(b) prescribe, amend and rescind rules and regulations relating to this Plan or any Award;

(c) select persons to receive Awards;

(d) determine the form and terms and conditions, not inconsistent with the terms of the Plan, of any Award granted hereunder. Such terms and conditions include, but are not limited to, the exercise price, the time or times when Awards may vest and be exercised (which may be based on performance criteria), any vesting acceleration or waiver of forfeiture restrictions, and any restriction or limitation regarding any Award or the Shares relating thereto, based in each case on such factors as the Committee will determine;

(e) determine the number of Shares or other consideration subject to Awards;

(f) determine the Fair Market Value in good faith, if necessary;

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(g) determine whether Awards will be granted singly, in combination with, in tandem with, in replacement of, or as alternatives to, other Awards under this Plan or any other incentive or compensation plan of the Company or any Parent or Subsidiary of the Company;

(h) grant waivers of Plan or Award conditions;

(i) determine the vesting, exercisability and payment of Awards;

(j) correct any defect, supply any omission or reconcile any inconsistency in this Plan, any Award or any Award Agreement;

(k) determine whether an Award has been earned;

(l) determine the terms and conditions of any, and to institute any Exchange Program;

(m) reduce or waive any criteria with respect to Performance Factors;

(n) adjust Performance Factors to take into account changes in law and accounting or tax rules as the Committee deems necessary or appropriate to reflect the impact of extraordinary or unusual items, events or circumstances to avoid windfalls or hardships provided that such adjustments are consistent with the regulations promulgated under Section 162(m) of the Code with respect to persons whose compensation is subject to Section 162(m) of the Code; and

(o) make all other determinations necessary or advisable for the administration of this Plan.

4.2 Committee Interpretation and Discretion. Any determination made by the Committee with respect to any Award shall be made in its sole discretion at the time of grant of the Award or, unless in contravention of any express term of the Plan or Award, at any later time, and such determination shall be final and binding on the Company and all persons having an interest in any Award under the Plan. Any dispute regarding the interpretation of the Plan or any Award Agreement shall be submitted by the Participant or Company to the Committee for review. The resolution of such a dispute by the Committee shall be final and binding on the Company and the Participant. The Committee may delegate to one or more executive officers the authority to review and resolve disputes with respect to Awards held by Participants who are not Insiders, and such resolution shall be final and binding on the Company and the Participant.

4.3 Section 162(m) of the Code and Section 16 of the Exchange Act. When necessary or desirable for an Award to qualify as “performance-based compensation” under Section 162(m) of the Code the Committee shall include at least two persons who are “outside directors” (as defined under Section 162(m) of the Code) and at least two (or a majority if more than two then serve on the Committee) such “outside directors” shall approve the grant of such Award and timely determine (as applicable) the Performance Period and any Performance Factors upon which vesting or settlement of any portion of such Award is to be subject. When required by Section 162(m) of the Code, prior to settlement of any such Award at least two (or a majority if more than two then serve on the Committee) such “outside directors” then serving on the Committee shall determine and certify in writing the extent to which such Performance Factors have been timely achieved and the extent to which the Shares subject to such Award have thereby been earned. Awards granted to Participants who are subject to Section 16 of the Exchange Act must be approved by two or more “non-employee directors” (as defined in the regulations promulgated under Section 16 of the Exchange Act). With respect to Participants whose

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compensation is subject to Section 162(m) of the Code, and provided that such adjustments are consistent with the regulations promulgated under Section 162(m) of the Code, the Committee may adjust the performance goals to account for changes in law and accounting and to make such adjustments as the Committee deems necessary or appropriate to reflect the impact of extraordinary or unusual items, events or circumstances to avoid windfalls or hardships, including without limitation (i) restructurings, discontinued operations, extraordinary items, and other unusual or non-recurring charges, (ii) an event either not directly related to the operations of the Company or not within the reasonable control of the Company’s management, or (iii) a change in accounting standards required by generally accepted accounting principles.

4.4 Documentation. The Award Agreement for a given Award, the Plan and any other documents may be delivered to, and accepted by, a Participant or any other person in any manner (including electronic distribution or posting) that meets applicable legal requirements.

5. OPTIONS. The Committee may grant Options to Participants and will determine whether such Options will be Incentive Stock Options within the meaning of the Code (“ISOs”) or Nonqualified Stock Options (“NQSOs”), the number of Shares subject to the Option, the Exercise Price of the Option, the period during which the Option may vest and be exercised, and all other terms and conditions of the Option, subject to the following:

5.1 Option Grant. Each Option granted under this Plan will identify the Option as an ISO or an NQSO. An Option may be, but need not be, awarded upon satisfaction of such Performance Factors during any Performance Period as are set out in advance in the Participant’s individual Award Agreement. If the Option is being earned upon the satisfaction of Performance Factors, then the Committee will: (x) determine the nature, length and starting date of any Performance Period for each Option; and (y) select from among the Performance Factors to be used to measure the performance, if any. Performance Periods may overlap and Participants may participate simultaneously with respect to Options that are subject to different performance goals and other criteria.

5.2 Date of Grant. The date of grant of an Option will be the date on which the Committee makes the determination to grant such Option, or a specified future date. The Award Agreement and a copy of this Plan will be delivered to the Participant within a reasonable time after the granting of the Option.

5.3 Exercise Period. Options may be vested and exercisable within the times or upon the conditions as set forth in the Award Agreement governing such Option; provided, however, that no Option will be exercisable after the expiration of ten (10) years from the date the Option is granted; and provided further that no ISO granted to a person who, at the time the ISO is granted, directly or by attribution owns more than ten percent (10%) of the total combined voting power of all classes of stock of the Company or of any Parent or Subsidiary of the Company (“Ten Percent Stockholder”) will be exercisable after the expiration of five (5) years from the date the ISO is granted. The Committee also may provide for Options to become exercisable at one time or from time to time, periodically or otherwise, in such number of Shares or percentage of Shares as the Committee determines.

5.4 Exercise Price. The Exercise Price of an Option will be determined by the Committee when the Option is granted; provided that: (i) the Exercise Price of an ISO will be not less than one hundred percent (100%) of the Fair Market Value of the Shares on the date of grant and (ii) the Exercise Price of any ISO granted to a Ten Percent Stockholder will not be less than one hundred ten percent (110%) of the Fair Market Value of the Shares on the date of grant. Payment for the Shares purchased may be made in accordance with Section 11 and the Award Agreement and in accordance with any procedures established by the Company. The Exercise Price of a NQSO may not be less than one hundred percent (100%) of the Fair Market Value per Share on the date of grant.

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5.5 Method of Exercise. Any Option granted hereunder will be vested and exercisable according to the terms of the Plan and at such times and under such conditions as determined by the Committee and set forth in the Award Agreement. An Option may not be exercised for a fraction of a Share. An Option will be deemed exercised when the Company receives: (i) notice of exercise (in such form as the Committee may specify from time to time) from the person entitled to exercise the Option, and (ii) full payment for the Shares with respect to which the Option is exercised (together with applicable withholding taxes). Full payment may consist of any consideration and method of payment authorized by the Committee and permitted by the Award Agreement and the Plan. Shares issued upon exercise of an Option will be issued in the name of the Participant. Until the Shares are issued (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company), no right to vote or receive dividends or any other rights as a stockholder will exist with respect to the Shares, notwithstanding the exercise of the Option. The Company will issue (or cause to be issued) such Shares promptly after the Option is exercised. No adjustment will be made for a dividend or other right for which the record date is prior to the date the Shares are issued, except as provided in Section 2.6 of the Plan. Exercising an Option in any manner will decrease the number of Shares thereafter available, both for purposes of the Plan and for sale under the Option, by the number of Shares as to which the Option is exercised.

5.6 Termination. The exercise of an Option will be subject to the following (except as may be otherwise provided in an Award Agreement):

(a) If the Participant is Terminated for any reason except for Cause or the Participant’s death or Disability, then the Participant may exercise such Participant’s Options only to the extent that such Options would have been exercisable by the Participant on the Termination Date no later than three (3) months after the Termination Date (or such shorter time period or longer time period not exceeding five (5) years as may be determined by the Committee, with any exercise beyond three (3) months after the Termination Date deemed to be the exercise of an NQSO), but in any event no later than the expiration date of the Options.

(b) If the Participant is Terminated because of the Participant’s death (or the Participant dies within three (3) months after a Termination other than for Cause or because of the Participant’s Disability), then the Participant’s Options may be exercised only to the extent that such Options would have been exercisable by the Participant on the Termination Date and must be exercised by the Participant’s legal representative, or authorized assignee, no later than twelve (12) months after the Termination Date (or such shorter time period not less than six (6) months or longer time period not exceeding five (5) years as may be determined by the Committee), but in any event no later than the expiration date of the Options.

(c) If the Participant is Terminated because of the Participant’s Disability, then the Participant’s Options may be exercised only to the extent that such Options would have been exercisable by the Participant on the Termination Date and must be exercised by the Participant (or the Participant’s legal representative or authorized assignee) no later than twelve (12) months after the Termination Date (with any exercise beyond (a) three (3) months after the Termination Date when the Termination is for a Disability that is not a “permanent and total disability” as defined in Section 22(e)(3) of the Code, or (b) twelve (12) months after the Termination Date when the Termination is for a Disability that is a “permanent and total disability” as defined in Section 22(e)(3) of the Code, deemed to be exercise of an NQSO), but in any event no later than the expiration date of the Options.

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(d) If the Participant is terminated for Cause, then Participant’s Options shall expire on such Participant’s Termination Date, or at such later time and on such conditions as are determined by the Committee, but in any no event later than the expiration date of the Options. Unless otherwise provided in the Award Agreement, Cause will have the meaning as set forth in the Plan.

5.7 Limitations on Exercise. The Committee may specify a minimum number of Shares that may be purchased on any exercise of an Option, provided that such minimum number will not prevent any Participant from exercising the Option for the full number of Shares for which it is then exercisable.

5.8 Limitations on ISOs. With respect to Awards granted as ISOs, to the extent that the aggregate Fair Market Value of the Shares with respect to which such ISOs are exercisable for the first time by the Participant during any calendar year (under all plans of the Company and any Parent or Subsidiary) exceeds one hundred thousand dollars ($100,000), such Options will be treated as NQSOs. For purposes of this Section 5.8, ISOs will be taken into account in the order in which they were granted. The Fair Market Value of the Shares will be determined as of the time the Option with respect to such Shares is granted. In the event that the Code or the regulations promulgated thereunder are amended after the Effective Date to provide for a different limit on the Fair Market Value of Shares permitted to be subject to ISOs, such different limit will be automatically incorporated herein and will apply to any Options granted after the effective date of such amendment.

5.9 Modification, Extension or Renewal. The Committee may modify, extend or renew outstanding Options and authorize the grant of new Options in substitution therefor, provided that any such action may not, without the written consent of a Participant, materially impair any of such Participant’s rights under any Option previously granted. Any outstanding ISO that is modified, extended, renewed or otherwise altered will be treated in accordance with Section 424(h) of the Code. Subject to Section 18 of this Plan, by written notice to affected Participants, the Committee may reduce the Exercise Price of outstanding Options without the consent of such Participants; provided, however, that the Exercise Price may not be reduced below the Fair Market Value on the date the action is taken to reduce the Exercise Price.

5.10 No Disqualification. Notwithstanding any other provision in this Plan, no term of this Plan relating to ISOs will be interpreted, amended or altered, nor will any discretion or authority granted under this Plan be exercised, so as to disqualify this Plan under Section 422 of the Code or, without the consent of the Participant affected, to disqualify any ISO under Section 422 of the Code.

6. RESTRICTED STOCK AWARDS.

6.1 Awards of Restricted Stock. A Restricted Stock Award is an offer by the Company to sell to a Participant Shares that are subject to restrictions (“Restricted Stock”). The Committee will determine to whom an offer will be made, the number of Shares the Participant may purchase, the Purchase Price, the restrictions under which the Shares will be subject and all other terms and conditions of the Restricted Stock Award, subject to the Plan.

6.2 Restricted Stock Purchase Agreement. All purchases under a Restricted Stock Award will be evidenced by an Award Agreement. Except as may otherwise be provided in an Award Agreement, a Participant accepts a Restricted Stock Award by signing and delivering to the Company an Award Agreement with full payment of the Purchase Price, within thirty (30) days from the date the Award Agreement was delivered to the Participant. If the Participant does not accept such Award within thirty (30) days, then the offer of such Restricted Stock Award will terminate, unless the Committee determines otherwise.

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6.3 Purchase Price. The Purchase Price for a Restricted Stock Award will be determined by the Committee and may be less than Fair Market Value on the date the Restricted Stock Award is granted. Payment of the Purchase Price must be made in accordance with Section 11 of the Plan, and the Award Agreement and in accordance with any procedures established by the Company.

6.4 Terms of Restricted Stock Awards. Restricted Stock Awards will be subject to such restrictions as the Committee may impose or are required by law. These restrictions may be based on completion of a specified number of years of service with the Company or upon completion of Performance Factors, if any, during any Performance Period as set out in advance in the Participant’s Award Agreement. Prior to the grant of a Restricted Stock Award, the Committee shall: (a) determine the nature, length and starting date of any Performance Period for the Restricted Stock Award; (b) select from among the Performance Factors to be used to measure performance goals, if any; and (c) determine the number of Shares that may be awarded to the Participant. Performance Periods may overlap and a Participant may participate simultaneously with respect to Restricted Stock Awards that are subject to different Performance Periods and having different performance goals and other criteria.

6.5 Termination of Participant. Except as may be set forth in the Participant’s Award Agreement, vesting ceases on such Participant’s Termination Date (unless determined otherwise by the Committee).

7. STOCK BONUS AWARDS.

7.1 Awards of Stock Bonuses. A Stock Bonus Award is an award to an eligible person of Shares for services to be rendered or for past services already rendered to the Company or any Parent or Subsidiary. All Stock Bonus Awards shall be made pursuant to an Award Agreement. No payment from the Participant will be required for Shares awarded pursuant to a Stock Bonus Award.

7.2 Terms of Stock Bonus Awards. The Committee will determine the number of Shares to be awarded to the Participant under a Stock Bonus Award and any restrictions thereon. These restrictions may be based upon completion of a specified number of years of service with the Company or upon satisfaction of performance goals based on Performance Factors during any Performance Period as set out in advance in the Participant’s Stock Bonus Agreement. Prior to the grant of any Stock Bonus Award the Committee shall: (a) determine the nature, length and starting date of any Performance Period for the Stock Bonus Award; (b) select from among the Performance Factors to be used to measure performance goals; and (c) determine the number of Shares that may be awarded to the Participant. Performance Periods may overlap and a Participant may participate simultaneously with respect to Stock Bonus Awards that are subject to different Performance Periods and different performance goals and other criteria.

7.3 Form of Payment to Participant. Payment may be made in the form of cash, whole Shares, or a combination thereof, based on the Fair Market Value of the Shares earned under a Stock Bonus Award on the date of payment, as determined in the sole discretion of the Committee.

7.4 Termination of Participation. Except as may be set forth in the Participant’s Award Agreement, vesting ceases on such Participant’s Termination Date (unless determined otherwise by the Committee).

8. STOCK APPRECIATION RIGHTS.

8.1 Awards of SARs. A Stock Appreciation Right (“SAR”) is an award to a Participant that may be settled in cash, or Shares (which may consist of Restricted Stock), having a value

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equal to (a) the difference between the Fair Market Value on the date of exercise over the Exercise Price multiplied by (b) the number of Shares with respect to which the SAR is being settled (subject to any maximum number of Shares that may be issuable as specified in an Award Agreement). All SARs shall be made pursuant to an Award Agreement.

8.2 Terms of SARs. The Committee will determine the terms of each SAR including, without limitation: (a) the number of Shares subject to the SAR; (b) the Exercise Price and the time or times during which the SAR may be settled; (c) the consideration to be distributed on settlement of the SAR; and (d) the effect of the Participant’s Termination on each SAR. The Exercise Price of the SAR will be determined by the Committee when the SAR is granted, and may not be less than Fair Market Value. A SAR may be awarded upon satisfaction of Performance Factors, if any, during any Performance Period as are set out in advance in the Participant’s individual Award Agreement. If the SAR is being earned upon the satisfaction of Performance Factors, then the Committee will: (x) determine the nature, length and starting date of any Performance Period for each SAR; and (y) select from among the Performance Factors to be used to measure the performance, if any. Performance Periods may overlap and Participants may participate simultaneously with respect to SARs that are subject to different Performance Factors and other criteria.

8.3 Exercise Period and Expiration Date. A SAR will be exercisable within the times or upon the occurrence of events determined by the Committee and set forth in the Award Agreement governing such SAR. The SAR Agreement shall set forth the expiration date; provided that no SAR will be exercisable after the expiration of ten (10) years from the date the SAR is granted. The Committee may also provide for SARs to become exercisable at one time or from time to time, periodically or otherwise (including, without limitation, upon the attainment during a Performance Period of performance goals based on Performance Factors), in such number of Shares or percentage of the Shares subject to the SAR as the Committee determines. Except as may be set forth in the Participant’s Award Agreement, vesting ceases on such Participant’s Termination Date (unless determined otherwise by the Committee). Notwithstanding the foregoing, the rules of Section 5.6 also will apply to SARs.

8.4 Form of Settlement. Upon exercise of a SAR, a Participant will be entitled to receive payment from the Company in an amount determined by multiplying (i) the difference between the Fair Market Value of a Share on the date of exercise over the Exercise Price; times (ii) the number of Shares with respect to which the SAR is exercised. At the discretion of the Committee, the payment from the Company for the SAR exercise may be in cash, in Shares of equivalent value, or in some combination thereof. The portion of a SAR being settled may be paid currently or on a deferred basis with such interest or dividend equivalent, if any, as the Committee determines, provided that the terms of the SAR and any deferral satisfy the requirements of Section 409A of the Code.

8.5 Termination of Participation. Except as may be set forth in the Participant’s Award Agreement, vesting ceases on such Participant’s Termination Date (unless determined otherwise by the Committee).

9. RESTRICTED STOCK UNITS.

9.1 Awards of Restricted Stock Units. A Restricted Stock Unit (“RSU”) is an award to a Participant covering a number of Shares that may be settled in cash, or by issuance of those Shares (which may consist of Restricted Stock). All RSUs shall be made pursuant to an Award Agreement.

9.2 Terms of RSUs. The Committee will determine the terms of an RSU including, without limitation: (a) the number of Shares subject to the RSU; (b) the time or times during which the RSU may be settled; (c) the consideration to be distributed on settlement; and (d) the effect of the

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Participant’s Termination on each RSU. An RSU may be awarded upon satisfaction of such performance goals based on Performance Factors during any Performance Period as are set out in advance in the Participant’s Award Agreement. If the RSU is being earned upon satisfaction of Performance Factors, then the Committee will: (x) determine the nature, length and starting date of any Performance Period for the RSU; (y) select from among the Performance Factors to be used to measure the performance, if any; and (z) determine the number of Shares deemed subject to the RSU. Performance Periods may overlap and participants may participate simultaneously with respect to RSUs that are subject to different Performance Periods and different performance goals and other criteria.

9.3 Form and Timing of Settlement. Payment of earned RSUs shall be made as soon as practicable after the date(s) determined by the Committee and set forth in the Award Agreement. The Committee, in its sole discretion, may settle earned RSUs in cash, Shares, or a combination of both. The Committee may also permit a Participant to defer payment under a RSU to a date or dates after the RSU is earned provided that the terms of the RSU and any deferral satisfy the requirements of Section 409A of the Code.

9.4 Termination of Participant. Except as may be set forth in the Participant’s Award Agreement, vesting ceases on such Participant’s Termination Date (unless determined otherwise by the Committee).

10. PERFORMANCE AWARDS.

10.1 Performance Awards. A Performance Award is an award to a Participant of a cash bonus or a Performance Share bonus. Grants of Performance Awards shall be made pursuant to an Award Agreement.

10.2 Terms of Performance Awards. The Committee will determine, and each Award Agreement shall set forth, the terms of each award of Performance Award including, without limitation: (a) the amount of any cash bonus; (b) the number of Shares deemed subject to a Performance Share bonus; (c) the Performance Factors and Performance Period that shall determine the time and extent to which each Performance Award shall be settled; (d) the consideration to be distributed on settlement; and (e) the effect of the Participant’s Termination on each Performance Award. In establishing Performance Factors and the Performance Period the Committee will: (x) determine the nature, length and starting date of any Performance Period; and (y) select from among the Performance Factors to be used. Prior to settlement the Committee shall determine the extent to which Performance Awards have been earned. Performance Periods may overlap and Participants may participate simultaneously with respect to Performance Awards that are subject to different Performance Periods and different performance goals and other criteria. No Participant will be eligible to receive more than $10,000,000 in Performance Awards in any calendar year under this Plan.

10.3 Value, Earning and Timing of Performance Shares. Any Performance Share bonus will have an initial value equal to the Fair Market Value of a Share on the date of grant. After the applicable Performance Period has ended, the holder of a Performance Share bonus will be entitled to receive a payout of the number of Shares earned by the Participant over the Performance Period, to be determined as a function of the extent to which the corresponding Performance Factors or other vesting provisions have been achieved. The Committee, in its sole discretion, may pay an earned Performance Share bonus in the form of cash, in Shares (which have an aggregate Fair Market Value equal to the value of the earned Performance Shares at the close of the applicable Performance Period) or in a combination thereof. Performance Share bonuses may also be settled in Restricted Stock.

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10.4 Termination of Participant. Except as may be set forth in the Participant’s Award Agreement, vesting ceases on such Participant’s Termination Date (unless determined otherwise by the Committee).

11. PAYMENT FOR SHARE PURCHASES.

Payment from a Participant for Shares purchased pursuant to this Plan may be made in cash or by check or, where expressly approved for the Participant by the Committee and where permitted by law (and to the extent not otherwise set forth in the applicable Award Agreement):

(a) by cancellation of indebtedness of the Company to the Participant;

(b) by surrender of shares of the Company held by the Participant that have a Fair Market Value on the date of surrender equal to the aggregate exercise price of the Shares as to which said Award will be exercised or settled;

(c) by waiver of compensation due or accrued to the Participant for services rendered or to be rendered to the Company or a Parent or Subsidiary of the Company;

(d) by consideration received by the Company pursuant to a broker-assisted or other form of cashless exercise program implemented by the Company in connection with the Plan;

(e) by any combination of the foregoing; or

(f) by any other method of payment as is permitted by applicable law.

12. GRANTS TO NON-EMPLOYEE DIRECTORS.

12.1 Types of Awards. Non-Employee Directors are eligible to receive any type of Award offered under this Plan except ISOs. Awards pursuant to this Section 12 may be automatically made pursuant to policy adopted by the Board, or made from time to time as determined in the discretion of the Board.

12.2 Eligibility. Awards pursuant to this Section 12 shall be granted only to Non-Employee Directors. A Non-Employee Director who is elected or re-elected as a member of the Board will be eligible to receive an Award under this Section 12.

12.3 Vesting, Exercisability and Settlement. Except as set forth in Section 21, Awards shall vest, become exercisable and be settled as determined by the Board. With respect to Options and SARs, the exercise price granted to Non-Employee Directors shall not be less than the Fair Market Value of the Shares at the time that such Option or SAR is granted.

13. WITHHOLDING TAXES.

13.1 Withholding Generally. Whenever Shares are to be issued in satisfaction of Awards granted under this Plan, the Company may require the Participant to remit to the Company, or to the Parent or Subsidiary employing the Participant, an amount sufficient to satisfy applicable U.S. federal, state, local and international withholding tax requirements or any other tax liability legally due from the Participant prior to the delivery of Shares pursuant to exercise or settlement of any Award. Whenever payments in satisfaction of Awards granted under this Plan are to be made in cash, such payment will be net of an amount sufficient to satisfy applicable U.S. federal, state, local and international withholding tax

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requirements or any other tax liability legally due from the Participant. The Fair Market Value of the Shares will be determined as of the date that the taxes are required to be withheld and such Shares will be valued based on the value of the actual trade or, if there is none, the Fair Market Value of the Shares as of the previous trading day in the case of the settlement of an RSU and for all other awards, the Fair Market Value of the Shares as of the current trading day.

13.2 Stock Withholding. At the election of the Committee and without further consent from Participant, upon the vesting of any Award, the Company will either (1) retain and cancel or (2) sell pursuant to a “sell to cover” mandatory sale arranged by the Company (on Participant’s behalf), that number of Shares having an aggregate Fair Market Value equal to the minimum amount the Company is required to withhold for income and employment tax purposes with respect to the Award. The Fair Market Value of the Shares to be withheld or delivered will be determined as of the date that the taxes are required to be withheld.

14. TRANSFERABILITY.

14.1 Transfer Generally. Unless determined otherwise by the Committee, an Award may not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner other than by will or by the laws of descent or distribution. If the Committee makes an Award transferable, including, without limitation, by instrument to an inter vivos or testamentary trust in which the Awards are to be passed to beneficiaries upon the death of the trustor (settlor) or by gift to a Permitted Transferee, such Award will contain such additional terms and conditions as the Administrator deems appropriate.

14.2 Award Transfer Program. Notwithstanding any contrary provision of the Plan, the Committee shall have all discretion and authority to determine and implement the terms and conditions of any Award Transfer Program instituted pursuant to this Section 14.2 and shall have the authority to amend the terms of any Award participating, or otherwise eligible to participate in, the Award Transfer Program, including (but not limited to) the authority to (i) amend (including to extend) the expiration date, post-termination exercise period and/or forfeiture conditions of any such Award, (ii) amend or remove any provisions of the Award relating to the Award holder’s continued service to the Company or its Parent or Subsidiary, (iii) amend the permissible payment methods with respect to the exercise or purchase of any such Award, (iv) amend the adjustments to be implemented in the event of changes in the capitalization and other similar events with respect to such Award, and (v) make such other changes to the terms of such Award as the Committee deems necessary or appropriate in its sole discretion.

15. PRIVILEGES OF STOCK OWNERSHIP; RESTRICTIONS ON SHARES.

15.1 Voting and Dividends. No Participant will have any of the rights of a stockholder with respect to any Shares until the Shares are issued to the Participant. After Shares are issued to the Participant, the Participant will be a stockholder and have all the rights of a stockholder with respect to such Shares, including the right to vote and receive all dividends or other distributions made or paid with respect to such Shares; provided, that if such Shares are Restricted Stock, then any new, additional or different securities the Participant may become entitled to receive with respect to such Shares by virtue of a stock dividend, stock split or any other change in the corporate or capital structure of the Company will be subject to the same restrictions as the Restricted Stock; provided, further, that the Participant will have no right to retain such stock dividends or stock distributions with respect to Shares that are repurchased at the Participant’s Purchase Price or Exercise Price, as the case may be, pursuant to Section 15.2.

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15.2 Restrictions on Shares. At the discretion of the Committee, the Company may reserve to itself and/or its assignee(s) a right to repurchase (a “Right of Repurchase”) a portion of any or all Unvested Shares held by a Participant following such Participant’s Termination at any time within ninety (90) days after the later of the Participant’s Termination Date and the date the Participant purchases Shares under this Plan, for cash and/or cancellation of purchase money indebtedness, at the Participant’s Purchase Price or Exercise Price, as the case may be.

16. CERTIFICATES. All certificates for Shares or other securities delivered under this Plan will be subject to such stock transfer orders, legends and other restrictions as the Committee may deem necessary or advisable, including restrictions under any applicable U.S. federal, state or foreign securities law, or any rules, regulations and other requirements of the SEC or any stock exchange or automated quotation system upon which the Shares may be listed or quoted and any non-U.S. exchange controls or securities law restrictions to which the Shares are subject.

17. ESCROW; PLEDGE OF SHARES. To enforce any restrictions on a Participant’s Shares, the Committee may require the Participant to deposit all certificates representing Shares, together with stock powers or other instruments of transfer approved by the Committee, appropriately endorsed in blank, with the Company or an agent designated by the Company to hold in escrow until such restrictions have lapsed or terminated, and the Committee may cause a legend or legends referencing such restrictions to be placed on the certificates. Any Participant who is permitted to execute a promissory note as partial or full consideration for the purchase of Shares under this Plan will be required to pledge and deposit with the Company all or part of the Shares so purchased as collateral to secure the payment of the Participant’s obligation to the Company under the promissory note; provided, however, that the Committee may require or accept other or additional forms of collateral to secure the payment of such obligation and, in any event, the Company will have full recourse against the Participant under the promissory note notwithstanding any pledge of the Participant’s Shares or other collateral. In connection with any pledge of the Shares, the Participant will be required to execute and deliver a written pledge agreement in such form as the Committee will from time to time approve. The Shares purchased with the promissory note may be released from the pledge on a pro rata basis as the promissory note is paid.

18. REPRICING; EXCHANGE AND BUYOUT OF AWARDS. Without prior stockholder approval the Committee may (i) reprice Options or SARS (and where such repricing is a reduction in the Exercise Price of outstanding Options or SARS, the consent of the affected Participants is not required provided written notice is provided to them, notwithstanding any adverse tax consequences to them arising from the repricing), and (ii) with the consent of the respective Participants (unless not required pursuant to Section 5.9 of the Plan), pay cash or issue new Awards in exchange for the surrender and cancellation of any, or all, outstanding Awards.

19. SECURITIES LAW AND OTHER REGULATORY COMPLIANCE. An Award will not be effective unless such Award is in compliance with all applicable U.S. federal and state securities laws, rules and regulations of any governmental body, and the requirements of any stock exchange or automated quotation system upon which the Shares may then be listed or quoted, as they are in effect on the date of grant of the Award and also on the date of exercise or other issuance. Notwithstanding any other provision in this Plan, the Company will have no obligation to issue or deliver certificates for Shares under this Plan prior to: (a) obtaining any approvals from governmental agencies that the Company determines are necessary or advisable; and/or (b) completion of any registration or other qualification of such Shares under any state or federal or foreign law or ruling of any governmental body that the Company determines to be necessary or advisable. The Company will be under no obligation to register the Shares with the SEC or to effect compliance with the registration, qualification or listing requirements of any state securities laws, stock exchange or automated quotation system, and the Company will have no liability for any inability or failure to do so.

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20. NO OBLIGATION TO EMPLOY. Nothing in this Plan or any Award granted under this Plan will confer or be deemed to confer on any Participant any right to continue in the employ of, or to continue any other relationship with, the Company or any Parent or Subsidiary of the Company or limit in any way the right of the Company or any Parent or Subsidiary of the Company to terminate Participant’s employment or other relationship at any time.

21. CORPORATE TRANSACTIONS.

21.1 Assumption or Replacement of Awards by Successor. In the event of a Corporate Transaction any or all outstanding Awards may be assumed or replaced by the successor corporation, which assumption or replacement shall be binding on all Participants. In the alternative, the successor corporation may substitute equivalent Awards or provide substantially similar consideration to Participants as was provided to stockholders (after taking into account the existing provisions of the Awards). The successor corporation may also issue, in place of outstanding Shares of the Company held by the Participant, substantially similar shares or other property subject to repurchase restrictions no less favorable to the Participant. In the event such successor or acquiring corporation (if any) refuses to assume, convert, replace or substitute Awards, as provided above, pursuant to a Corporate Transaction, then notwithstanding any other provision in this Plan to the contrary, such Awards shall have their vesting accelerate as to all shares subject to such Award (and any applicable right of repurchase fully lapse) immediately prior to the Corporate Transaction. In addition, in the event such successor or acquiring corporation (if any) refuses to assume, convert, replace or substitute Awards, as provided above, pursuant to a Corporate Transaction, the Committee will notify the Participant in writing or electronically that such Award will be exercisable for a period of time determined by the Committee in its sole discretion, and such Award will terminate upon the expiration of such period. Awards need not be treated similarly in a Corporate Transaction.

21.2 Assumption of Awards by the Company. The Company, from time to time, also may substitute or assume outstanding awards granted by another company, whether in connection with an acquisition of such other company or otherwise, by either; (a) granting an Award under this Plan in substitution of such other company’s award; or (b) assuming such award as if it had been granted under this Plan if the terms of such assumed award could be applied to an Award granted under this Plan. Such substitution or assumption will be permissible if the holder of the substituted or assumed award would have been eligible to be granted an Award under this Plan if the other company had applied the rules of this Plan to such grant. In the event the Company assumes an award granted by another company, the terms and conditions of such award will remain unchanged (except that the Purchase Price or the Exercise Price, as the case may be, and the number and nature of Shares issuable upon exercise or settlement of any such Award will be adjusted appropriately pursuant to Section 424(a) of the Code). In the event the Company elects to grant a new Option in substitution rather than assuming an existing option, such new Option may be granted with a similarly adjusted Exercise Price. Substitute Awards shall not reduce the number of Shares authorized for grant under the Plan or authorized for grant to a Participant in any calendar year.

21.3 Non-Employee Directors’ Awards. Notwithstanding any provision to the contrary herein, in the event of a Corporate Transaction, the vesting of all Awards granted to Non-Employee Directors shall accelerate and such Awards shall become exercisable (as applicable) in full prior to the consummation of such event at such times and on such conditions as the Committee determines.

22. ADOPTION AND STOCKHOLDER APPROVAL. This Plan shall be submitted for the approval of the Company’s stockholders, consistent with applicable laws, within twelve (12) months before or after the date this Plan is adopted by the Board.

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23. TERM OF PLAN/GOVERNING LAW. Unless earlier terminated as provided herein, this Plan will become effective on the day prior to the Effective Date and will terminate ten (10) years from the date this Plan is adopted by the Board. This Plan and all Awards granted hereunder shall be governed by and construed in accordance with the laws of the State of Delaware (excluding its conflict of law rules).

24. AMENDMENT OR TERMINATION OF PLAN. The Board may at any time terminate or amend this Plan in any respect, including, without limitation, amendment of any form of Award Agreement or instrument to be executed pursuant to this Plan; provided, however, that the Board will not, without the approval of the stockholders of the Company, amend this Plan in any manner that requires such stockholder approval.

25. NONEXCLUSIVITY OF THE PLAN. Neither the adoption of this Plan by the Board, the submission of this Plan to the stockholders of the Company for approval, nor any provision of this Plan will be construed as creating any limitations on the power of the Board to adopt such additional compensation arrangements as it may deem desirable, including, without limitation, the granting of stock awards and bonuses otherwise than under this Plan, and such arrangements may be either generally applicable or applicable only in specific cases.

26. INSIDER TRADING POLICY. Each Participant who receives an Award shall comply with any policy adopted by the Company from time to time covering transactions in the Company’s securities by Employees, officers and/or directors of the Company.

27. DEFINITIONS. As used in this Plan, and except as elsewhere defined herein, the following terms will have the following meanings:

“Award” means any award under the Plan, including any Option, Restricted Stock, Stock Bonus, Stock Appreciation Right, Restricted Stock Unit or award of Performance Shares.

“Award Agreement” means, with respect to each Award, the written or electronic agreement between the Company and the Participant setting forth the terms and conditions of the Award, which shall be in substantially a form (which need not be the same for each Participant) that the Committee has from time to time approved, and will comply with and be subject to the terms and conditions of this Plan.

“Award Transfer Program” means any program instituted by the Committee which would permit Participants the opportunity to transfer any outstanding Awards to a financial institution or other person or entity approved by the Committee.

“Board” means the Board of Directors of the Company.

“Cause” means (a) the commission of an act of theft, embezzlement, fraud, dishonesty, (b) a breach of fiduciary duty to the Company or a Parent or Subsidiary, or (c) a failure to materially perform the customary duties of Employee’s employment.

“Code” means the United States Internal Revenue Code of 1986, as amended, and the regulations promulgated thereunder.

“Committee” means the Compensation Committee of the Board or those persons to whom administration of the Plan, or part of the Plan, has been delegated as permitted by law.

“Common Stock” means the common stock of the Company.

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“Company” means Silver Spring Networks, Inc., or any successor corporation.

“Consultant” means any person, including an advisor or independent contractor, engaged by the Company or a Parent or Subsidiary to render services to such entity.

“Corporate Transaction” means the occurrence of any of the following events: (i) any “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) becomes the “beneficial owner” (as defined in Rule 13d-3 of the Exchange Act), directly or indirectly, of securities of the Company representing fifty percent (50%) or more of the total voting power represented by the Company’s then-outstanding voting securities; (ii) the consummation of the sale or disposition by the Company of all or substantially all of the Company’s assets; (iii) the consummation of a merger or consolidation of the Company with any other corporation, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or its parent) at least fifty percent (50%) of the total voting power represented by the voting securities of the Company or such surviving entity or its parent outstanding immediately after such merger or consolidation or (iv) any other transaction which qualifies as a “corporate transaction” under Section 424(a) of the Code wherein the stockholders of the Company give up all of their equity interest in the Company (except for the acquisition, sale or transfer of all or substantially all of the outstanding shares of the Company).

“Director” means a member of the Board.

“Disability” means in the case of incentive stock options, total and permanent disability as defined in Section 22(e)(3) of the Code and in the case of other Awards, that the Participant is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months.

“Effective Date” means the date of the underwritten initial public offering of the Company’s Common Stock pursuant to a registration statement that is declared effective by the SEC.

“Employee” means any person, including Officers and Directors, employed by the Company or any Parent or Subsidiary of the Company. Neither service as a Director nor payment of a director’s fee by the Company will be sufficient to constitute “employment” by the Company.

“Exchange Act” means the United States Securities Exchange Act of 1934, as amended.

“Exchange Program” means a program pursuant to which outstanding Awards are surrendered, cancelled or exchanged for cash, the same type of Award or a different Award (or combination thereof).

“Exercise Price” means, with respect to an Option, the price at which a holder may purchase the Shares issuable upon exercise of an Option and with respect to a SAR, the price at which the SAR is granted to the holder thereof.

“Fair Market Value” means, as of any date, the value of a share of the Company’s Common Stock determined as follows:

(a) if such Common Stock is publicly traded and is then listed on a national securities exchange, its closing price on the date of determination on the principal national securities exchange on which the Common Stock is listed or admitted to trading as reported in The Wall Street Journal;

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(b) if such Common Stock is publicly traded but is neither listed nor admitted to trading on a national securities exchange, the average of the closing bid and asked prices on the date of determination as reported in The Wall Street Journal;

(c) in the case of an Option or SAR grant made on the Effective Date, the price per share at which shares of the Company’s Common Stock are initially offered for sale to the public by the Company’s underwriters in the initial public offering of the Company’s Common Stock pursuant to a registration statement filed with the SEC under the Securities Act; or

(d) if none of the foregoing is applicable, by the Board or the Committee in good faith.

“Insider” means an officer or director of the Company or any other person whose transactions in the Company’s Common Stock are subject to Section 16 of the Exchange Act.

“Non-Employee Director” means a Director who is not an Employee of the Company or any Parent or Subsidiary.

“Option” means an award of an option to purchase Shares pursuant to Section 5.

“Parent” means any corporation (other than the Company) in an unbroken chain of corporations ending with the Company if each of such corporations other than the Company owns stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.

“Participant” means a person who holds an Award under this Plan.

“Performance Award” means cash or stock granted pursuant to Section 10 or Section 12 of the Plan.

“Performance Factors” means any of the factors selected by the Committee and specified in an Award Agreement, from among the following objective measures, either individually, alternatively or in any combination, applied to the Company as a whole or any business unit or Subsidiary, either individually, alternatively, or in any combination, on a GAAP or non-GAAP basis, and measured, to the extent applicable on an absolute basis or relative to a pre-established target, to determine whether the performance goals established by the Committee with respect to applicable Awards have been satisfied:

(a) Profit Before Tax;

(b) Billings;

(c) Revenue;

(d) Net revenue;

(e) Earnings (which may include earnings before interest and taxes, earnings before taxes, and net earnings);

(f) Operating income;

(g) Operating margin;

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(h) Operating profit;

(i) Controllable operating profit, or net operating profit;

(j) Net Profit;

(k) Gross margin;

(l) Operating expenses or operating expenses as a percentage of revenue;

(m) Net income;

(n) Earnings per share;

(o) Total stockholder return;

(p) Market share;

(q) Return on assets or net assets;

(r) The Company’s stock price;

(s) Growth in stockholder value relative to a pre-determined index;

(t) Return on equity;

(u) Return on invested capital;

(v) Cash Flow (including free cash flow or operating cash flows)

(w) Cash conversion cycle;

(x) Economic value added;

(y) Individual confidential business objectives;

(z) Contract awards or backlog;

(aa) Overhead or other expense reduction;

(bb) Credit rating;

(cc) Strategic plan development and implementation;

(dd) Succession plan development and implementation;

(ee) Improvement in workforce diversity;

(ff) Customer indicators;

(gg) New product invention or innovation;

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(hh) Attainment of research and development milestones;

(ii) Improvements in productivity;

(jj) Bookings; and

(kk) Attainment of objective operating goals and employee metrics.

The Committee may, in recognition of unusual or non-recurring items such as acquisition-related activities or changes in applicable accounting rules, provide for one or more equitable adjustments (based on objective standards) to the Performance Factors to preserve the Committee’s original intent regarding the Performance Factors at the time of the initial award grant. It is within the sole discretion of the Committee to make or not make any such equitable adjustments.

“Performance Period” means the period of service determined by the Committee, not to exceed five (5) years, during which years of service or performance is to be measured for the Award.

“Performance Share” means a performance share bonus granted as a Performance Award.

“Permitted Transferee” means any child, stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law (including adoptive relationships) of the Employee, any person sharing the Employee’s household (other than a tenant or employee), a trust in which these persons (or the Employee) have more than 50% of the beneficial interest, a foundation in which these persons (or the Employee) control the management of assets, and any other entity in which these persons (or the Employee) own more than 50% of the voting interests

“Plan” means this Silver Spring Networks, Inc. 2012 Equity Incentive Plan.

“Purchase Price” means the price to be paid for Shares acquired under the Plan, other than Shares acquired upon exercise of an Option or SAR.

“Restricted Stock Award” means an award of Shares pursuant to Section 6 or Section 12 of the Plan, or issued pursuant to the early exercise of an Option.

“Restricted Stock Unit” means an Award granted pursuant to Section 9 or Section 12 of the Plan.

“SEC” means the United States Securities and Exchange Commission.

“Securities Act” means the United States Securities Act of 1933, as amended.

“Shares” means shares of the Company’s Common Stock and the common stock of any successor security.

“Stock Appreciation Right” means an Award granted pursuant to Section 8 or Section 12 of the Plan.

“Stock Bonus” means an Award granted pursuant to Section 7 or Section 12 of the Plan.

“Subsidiary” means any corporation (other than the Company) in an unbroken chain of corporations beginning with the Company if each of the corporations other than the last corporation in the unbroken chain owns stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.

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“Termination” or “Terminated” means, for purposes of this Plan with respect to a Participant, that the Participant has for any reason ceased to provide services as an employee, officer, director, consultant, independent contractor or advisor to the Company or a Parent or Subsidiary of the Company. An employee will not be deemed to have ceased to provide services in the case of (i) sick leave, (ii) military leave, or (iii) any other leave of absence approved by the Committee; provided, that such leave is for a period of not more than 90 days, unless reemployment upon the expiration of such leave is guaranteed by contract or statute or unless provided otherwise pursuant to formal policy adopted from time to time by the Company and issued and promulgated to employees in writing. In the case of any employee on an approved leave of absence, the Committee may make such provisions respecting suspension of vesting of the Award while on leave from the employ of the Company or a Parent or Subsidiary of the Company as it may deem appropriate, except that in no event may an Award be exercised after the expiration of the term set forth in the applicable Award Agreement. An employee shall have terminated employment as of the date he or she ceases to be employed (regardless of whether the termination is in breach of local laws or is later found to be invalid) and employment shall not be extended by any notice period or garden leave mandated by local law. The Committee will have sole discretion to determine whether a Participant has ceased to provide services for purposes of the Plan and the effective date on which the Participant ceased to provide services (the “Termination Date”).

“Unvested Shares” means Shares that have not yet vested or are subject to a right of repurchase in favor of the Company (or any successor thereto).

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EX-10.16

Exhibit 10.16

September 4, 2013

James P. Burns

Via email

Dear Jim:

On behalf of Silver Spring Networks, Inc. (the “Company”), I am pleased to offer you the position of Executive Vice-President, Chief Financial Officer, located in Redwood City, California.

The terms of your new position with the Company are as set forth below:

1. Position. You will be employed as the Executive Vice-President, Chief Financial Officer and will report to Scott Lang the Company’s Chairman, President and CEO. You will begin this new position with the Company on September 5, 2013 (your “Start Date”).

2. Proof of Right to Work. For purposes of federal immigration law, you will be required to provide to the Company documentary evidence of your identity and eligibility for employment in the United States. Such documentation must be provided to us within three (3) business days of your date of hire, or our employment relationship with you may be terminated.

3. Compensation.

a) Base Salary. Your starting salary will be $400,000 per year (your “Base Salary”), subject to applicable withholding taxes and paid pursuant to the Company’s regular payroll schedule.

b) Bonus. You will be entitled to participate in the Silver Spring Networks’ Bonus Plan. Your bonus target is 50 % of base salary for the applicable bonus period and subject to the terms and conditions of the applicable bonus plan. The Company’s Human Resources Department will inform you of the details of the plan. The Company reserves the right to vary or terminate (with or without replacement by a further plan) any bonus plan in place at any time.

c) Annual Review. Following your first year of employment, your base salary will be reviewed at the end of each calendar year as part of the Company’s normal salary review process.

4. Stock Options. In connection with the commencement of your employment, the Company will recommend to its Board of Directors that it grant you an option (the “Option”) to purchase 148,000 shares of Common Stock (the “Shares”) with an exercise price equal to the fair market value of the Common Stock on the date of grant. This Option stock will vest and become exercisable, subject to your continued employment with the Company or one of its subsidiaries on each applicable vesting date, as to 25% of the Shares upon completion of your first year of employment and as to 1/48^th of the Shares each month thereafter. The Option will be granted under and subject to the terms and conditions of the Company’s equity incentive plan and will be contingent on your execution of the Company’s standard Stock Option Agreement. A copy of the Company’s equity incentive plan and the Stock Option Agreement will be provided to you as soon as practicable after the grant date. You agree to sign and return any Stock Option Agreement provided to you by the Company in connection with this grant. You also agree to sign any other agreements or documents provided by the Company that may be required under applicable laws to receive the Option or any shares of common stock upon exercise of the Option.

Initials		Page 1
	555 Broadway Street, Redwood City, CA 94063

Restricted Stock Units. In connection with the commencement of your employment, the Company will recommend to its Board of Directors that it grant you an award of 74,000 restricted stock units (“RSUs”), which vest into shares of the Company’s common stock. The RSUs will be granted under and subject to the terms and conditions of the Company’s equity incentive plan and will be contingent on your execution of the Company’s standard RSU Agreement. The RSUs will vest, subject to your continued employment with the Company or one of its subsidiaries on each applicable vesting date, as follows: (a) 25% of the RSUs shall vest on the first anniversary of the tenth day of the month in which the grant date occurs (the “initial vest date”); and (b) the remaining RSUs shall vest in twelve equal quarterly installments following the initial vest date until the RSUs have become fully vested four years from the grant date. A copy of the Company’s equity incentive plan and the RSU agreement will be provided to you as soon as practicable after the grant date. You agree to sign and return any RSU agreement provided to you by the Company in connection with this grant. You also agree to sign any other agreements or documents provided by the Company that may be required under applicable laws to receive the RSUs and any shares of common stock upon settlement of the RSUs.

5. Benefits.

a) Employee Benefits. You are eligible to participate in any medical insurance plans, 401(k) plans, deferred compensation plans, life insurance plans, retirement or other employee benefit plans or fringe benefit plans or perquisites established by the Company for its employees which may become effective from time to time during your employment with the Company.

b) Vacation. You are eligible to participate in the Company’s Exempt Employees’ Vacation Program. There is no prescribed annual vacation allotment for exempt employees, meaning you will not accrue vacation. Vacation requests are subject to approval by your manager in accordance with the terms of the vacation program.

c) Sick Leave. You are eligible for paid sick leave in accordance with the terms of the Company’s sick leave policy. You may take up to ten (10) paid sick days per calendar year, pro-rated for the remainder of this year.

6. Background & Reference Checks. This offer is contingent upon successful completion of background investigation and reference checks.

7. Termination of Employment and Severance Benefits. We are pleased to provide you with certain benefits in the event of your termination without “cause” or “constructive termination” from the Company as specifically set forth in Attachment A.

8. Confidential Information and Invention Assignment Agreement. Your acceptance of this offer and commencement of employment with the Company is contingent upon your execution, and delivery to an officer of the Company, of the Company’s Employee Confidential Information and Invention Assignment Agreement, a copy of which is enclosed for your review and execution (the “Confidentiality Agreement”) as Attachment B, prior to or on your Start Date.

9. At-Will Employment. You understand that your employment with the Company is not for any specified term and will at all times be on an “at will” basis, meaning that either you or the Company may terminate your employment at any time for any reason or no reason, without further obligation or liability (except as set forth on Attachment B).

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10. No Conflicts. You represent to the Company that your performance of all the terms of this letter agreement will not breach any other agreement to which you are a party and that you have not, and will not during the term of your employment with the Company, enter into any oral or written agreement in conflict with any of the provisions of this agreement. In addition, as we have advised you, you are not to bring with you to the Company, or use or disclose to any person associated with the Company, any confidential or proprietary information belonging to any former employer or other person or entity with respect to which you owe an obligation of confidentiality under any agreement or otherwise. The Company does not need and will not use such information and we will assist you in any way possible to preserve and protect the confidentiality of proprietary information belonging to third parties.

We are all delighted to be able to extend you this offer and look forward to working with you. To indicate your acceptance of the Company’s offer, please sign and date this letter agreement in the space provided below no later than September 4, 2013. Additionally, as part of your acceptance of the Company’s offer, please return a signed and dated copy of Attachment A (Termination of Employment and Severance Benefits) and Attachment B (Confidentiality Agreement). This offer letter, together with Attachment A and Attachment B, set forth the terms of your employment with the Company and supersede any prior representations or agreements, whether written or oral. Neither this letter agreement nor Attachment A and Attachment B may be modified or amended except by a written agreement, signed by the Company’s Chief Executive Officer and by you.

Very truly yours,

Silver Spring Networks, Inc.

/s/ Scott Lang

Scott Lang

Chairman, President, Chief Executive Officer

ACCEPTED AND AGREED:

NAME

/s/ James P. Burns

Signature

9/4/13

Date

Attachments:

1. Attachment A — Termination of Employment and Severance Benefits

2. Attachment B — Employee Confidential Information and Invention Assignment Agreement

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Attachment A

TERMINATION OF EMPLOYMENT AND SEVERANCE BENEFITS

1. Termination of Employment.

a) At-Will Employment. Your employment with the Company is at-will, meaning either you or the Company can terminate your employment at any time, with or without cause, and with or without notice. Neither you nor the Company can change the “at-will” nature of your employment, unless the Chief Executive Officer of the Company and you sign a written contract that explicitly changes your status as an “at-will” employee.

b) Payment & Benefits Upon Termination. Your entitlement to payment and benefits upon termination is as follows:

(i) Termination Without “Cause” or “Constructive Termination”. If your employment is terminated involuntarily without Cause (as defined in Section 3(a), below) or in the event of your “Constructive Termination” (as defined in Section 3(c) below):

(A) you will receive payment for any earned and unpaid salary, and bonus and commissions, as of the date of your termination of employment; and,

(B) in the event you execute and do not revoke a separation agreement, including a release of claims (“Release”), substantially in the form as attached as Exhibit A, to be drafted by the Company based upon its standard forms, you will be offered the Separation Compensation (as defined in Section 2, below). You will not be entitled to or offered any form of additional severance pay or benefits other than the Separation Compensation (e.g., you will not be entitled to pay or benefits under any employee severance plan that is generally applicable to employees).

(ii) Voluntary Termination. If you voluntarily terminate your employment, or give notice that you will voluntarily terminate your employment at a future date (and whether or not the Company accelerates the effective date of your resignation date that you provide to an earlier termination date), you will receive payment(s) for all earned and unpaid salary, and bonus and commissions, as of the date of termination. You will not be entitled to the Separation Compensation, or any other form of severance pay or benefits.

(iii) Termination for Cause. If your employment is terminated for Cause, you will receive payment(s) for all earned and unpaid salary, and bonus and commissions as of the date of your termination of employment. You will not be entitled to the Separation Compensation, or any other form of severance pay or benefits.

2. Separation Compensation. If you are entitled to Separation Compensation under Section 1 above, your “Separation Compensation” will include each of the following:

a. Salary Continuance. You will be offered pay equal to twelve (12) months of your regular base salary and a pro-rated bonus (if any), subject to applicable payroll deductions and withholdings (“Salary Continuance”); provided, however, that should your Termination without Cause or your Constructive Termination occur within the period beginning two months prior to and ending twelve months following a Change of Control, you may be required by the successor entity (at its sole discretion) to continue your employment for up to three (3) months from the date of a Change of Control in order to be eligible to receive the Salary Continuance. The first salary continuance payment equal to three (3) months of your regular base salary, and payment of the prorated target bonus based upon the number of days worked during the bonus period, (if any), shall be made on the thirtieth (30th) day following your termination of employment (unless a longer period is required by law to make the Release effective, in which case the first salary continuance payment shall be made on the sixtieth (60th) day following your termination of employment) provided the Release is effective at such time, and the remainder shall be paid in monthly installments beginning on the 1st day of the fourth month following your termination of employment, and on the 1st day of each month thereafter, until the total payment obligation is fulfilled.

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b. Acceleration of Vesting. The vesting applicable to any equity grants made by the Company to you shall accelerate (or the Company’s repurchase right with respect to such shares underlying such equity grants shall lapse) as to either:

(i) that number of shares underlying such equity grant or grants that would have vested on the first anniversary of the date your employment terminates, such acceleration effective immediately prior to such termination; or

(ii) in the event that your termination without Cause or Constructive Termination occurs within the period beginning two (2) months prior to a Change of Control and ending twelve (12) months following a Change of Control, and provided that you (if requested by the successor entity in its sole discretion) have continued your employment for the three-month period (or such shorter period as may be requested by the successor entity) beginning on the date of a Change of Control, one hundred percent (100%) of the unvested shares underlying such equity grant or grants at the time of termination, such acceleration effective immediately prior to such termination.

c. Other Benefits. The Company will reimburse you for your expenses in continuing medical insurance benefits for you and your family (meaning medical, dental, optical, and mental health, but not life, insurance) under the Company’s benefit plans (or otherwise in obtaining coverage substantially comparable to the coverage provided to you prior to the termination) over the period beginning on the date your employment terminates and ending on the earlier of (a) twelve (12) months following such date, or (b) the date you commence employment with another entity; provided, however, that should your termination without Cause or your Constructive Termination occur within the period beginning two months prior to and ending twelve months following a Change of Control, you may be required by the successor entity (at its sole discretion) to continue your employment for up to three (3) months from the date of a Change of Control in order to be eligible to receive such other benefits.

3. Definitions.

a) Cause. For the purposes of this letter agreement, “Cause” for termination of your employment will exist if you are terminated for any of the following reasons following written notice by the Company of the events or circumstances constituting Cause: (i) your material failure to perform your duties and responsibilities to the Company, including but not limited to a failure to cooperate with the Company in any investigation or formal proceeding; (ii) your commission of any act of fraud, embezzlement, dishonesty or any other intentional misconduct that results in material injury to the Company; (iii) the unauthorized use or disclosure by you of any proprietary information or trade secrets of the Company or any other party to whom you owe an obligation of nondisclosure as a result of your relationship with the Company; (iv) you are convicted of, or enter a no contest plea to, a felony; or (v) your willful, wrongful and uncured breach of any of your obligations under any Company policy that has been made available to you, written agreement or covenant with the Company (including this letter agreement). The determination as to whether you are being terminated for Cause shall be made in good faith by the Board of Directors of the Company. The foregoing definition does not in any way limit the Company’s ability to terminate your employment at any time as provided in Section 1 above.

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b) Change of Control. For purposes of this letter agreement, “Change of Control” of the Company is defined as: (i) the date any “person” (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended) becomes, subsequent to the date hereof, the “beneficial owner” (as defined in Rule 13d-3 under said Act), directly or indirectly, of securities of the Company representing 50% or more of the total voting power represented by the Company’s then outstanding voting securities, other than pursuant to a sale by the Company of its securities in a transaction or series of related transactions the primary purpose of which is to raise capital for the Company; (ii) the date of the consummation of a merger or consolidation of the Company with any other corporation that has been approved by the stockholders of the Company, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than fifty percent (50%) of the total voting power represented by the voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation; (iii) the date of the consummation of the sale or disposition by the Company of all or substantially all the Company’s assets; or (iv) the date of a change in the composition of the Company’s Board of Directors such that a majority of the members of the Board immediately following such change in composition are no longer “Incumbent Directors.” For purposes of the foregoing clause (iv), “Incumbent Directors” means (a) members of the Company’s Board of Directors as of the date of this letter agreement, or (b) members of the Company’s Board of Directors elected or appointed to the Board following the date of this letter agreement other than in connection with an actual or threatened proxy contest.

c) Constructive Termination. For the purposes of this letter agreement, “Constructive Termination” means the termination of your employment by you following: : (A) a material reduction in your job duties and responsibilities; provided, however, that following a Change of Control, a reassignment to a position that is substantially similar to your position prior to the Change of Control shall not constitute a material reduction in your job duties or responsibilities; (B) without your prior written approval, the Company requires you to relocate to a facility or location more than thirty-five (35) miles from the location from the primary location at which you were working for the Company immediately before the required change of location; (C) except as otherwise agreed by you, any reduction of your base salary in effect immediately prior to such reduction (other than as part of an across-the-board, proportional reduction); or (D) following a Change of Control, the failure of a successor entity to assume this letter agreement. Notwithstanding anything else contained herein, in the event of the occurrence of a condition listed above you must provide notice to the Company within ninety (90) days of the occurrence of a condition listed above and allow the Company thirty (30) day in which to cure such condition. Additionally, in the event the Company fails to cure the condition within the cure period provided, you must terminate employment with the Company within thirty (30) days of the end of the cure period.

4. Code Section 409A. For purposes of this letter agreement, a termination of employment will be determined consistent with the rules relating to a “separation from service” as defined in Section 409A of the Code and the regulations thereunder (“Section 409A”). Notwithstanding anything else provided herein, to the extent any payments provided under this Agreement in connection with your termination of employment constitute deferred compensation subject to Section 409A, and you are deemed at the time of such termination of employment to be a “specified employee” under Section 409A, then such payment shall not be made or commence until the earlier of (i) the expiration of the 6-month period measured from your separation from service from the Company or (ii) the date of your death following such a separation from service; provided, however, that such deferral shall only be effected to the extent required to avoid adverse tax treatment to you including, without limitation, the additional tax for which you would otherwise be liable under Section 409A(a)(1)(B) in the absence of such a deferral. The first payment thereof will include a catch-up payment covering the amount that would have otherwise been paid during the period between your termination of employment and the first payment date but for the application of this provision, and the balance of the installments (if any) will be payable in accordance with their original schedule. To the extent that any provision of this letter agreement is ambiguous as to its compliance with Section 409A, the provision will be read in such a manner so that all payments hereunder comply with Section 409A. To the extent any payment under this letter agreement may be classified as a “short-term deferral” within the meaning of Section 409A, such payment shall be deemed a short-term deferral, even if it may also qualify for an exemption from Section 409A under another provision of Section 409A. Payments pursuant to this section are intended to constitute separate payments for purposes of Section 1.409A-2(b)(2) of the Treasury Regulations.

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5. Code Section 280G. In the event that the severance and other benefits provided for in this letter agreement or otherwise payable to you (i) constitute “parachute payments” within the meaning of Section 280G of the Code, and (ii) would be subject to the excise tax imposed by Section 4999 of the Code (the “Excise Tax”), then your benefits under this letter agreement shall be either:

a) delivered in full; or

b) delivered as to such lesser extent that would result in no portion of such benefits being subject to the Excise Tax, (with first a pro rata reduction of (i) cash payments subject to Section 409A of the Code as deferred compensation and (ii) cash payments not subject to Section 409A of the Code, and then a pro rata cancellation of (i) equity-based compensation subject to Section 409A of the Code as deferred compensation and (ii) equity-based compensation not subject to Section 409A of the Code),

whichever of the foregoing amounts, taking into account the applicable federal, state and local income taxes and the Excise Tax, results in your receipt on an after-tax basis, of the greatest amount of benefits, notwithstanding that all or some portion of such benefits may be taxable under Section 4999 of the Code.

Unless you and the Company otherwise agree in writing, the determination of your excise tax liability and the amount required to be paid under this Section shall be made in writing by an accounting firm to be selected by reasonable agreement between you and the Company, whose determination shall be conclusive and binding upon you and the Company for all purposes. For purposes (the “Accountants”) of making the calculations required by this Section, the Accountants may make reasonable assumptions and approximations concerning applicable taxes and may rely on reasonable, good faith interpretations concerning the application of Section 280G and Section 4999 of the Code. You and the Company shall furnish to the Accountants such information and documents as the Accountants may reasonably request in order to make a determination under this Section. The Company shall bear all costs the Accountants may reasonably incur in connection with any calculations contemplated by this Section.

6. Other Agreements. This Attachment A sets forth the terms of the benefits you are eligible to receive in the event your employment with the Company is terminated in the manner described herein and supersedes any prior representations or agreements, whether written or oral. In the event of a conflict between the terms of this Attachment A and any other agreement you have entered into with the Company (including, without limitation, the cover letter to this Attachment A), the terms of this Attachment A shall apply. The definitions, terms and conditions contained herein may not be modified or amended except by a written agreement, signed by the Chief Executive Officer of the Company and by you.

* * *

ACCEPTED AND AGREED:

NAME

/s/ James P. Burns

Signature

9/4/13

Date

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EX-31.1

Exhibit 31.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER PURSUANT TO RULE 13A-14(A)/15D-14(A)

OF THE SECURITIES EXCHANGE ACT AND SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Scott A. Lang, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Silver Spring Networks, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including any consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and; and

c. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 7, 2013	By:	/s/ Scott A. Lang
		Scott A. Lang
		Chairman of the Board of Directors, President and Chief Executive Officer
		(Principal Executive Officer)

EX-31.2

Exhibit 31.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER PURSUANT TO RULE 13A-14(A)/15D-14(A) OF THE

SECURITIES EXCHANGE ACT AND SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, James P. Burns, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Silver Spring Networks, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including any consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and; and

c. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 7, 2013	By:	/s/ James P. Burns
		James P. Burns
		Executive Vice President and Chief Financial Officer
		(Principal Financial Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

PURSUANT TO

18 U.S.C. SECTION 1350

The undersigned, Scott A. Lang, the Chairman of the Board of Directors, President and Chief Executive Officer of Silver Spring Networks, Inc. (the “Company”), pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, hereby certifies that:

(i) the Quarterly Report on Form 10-Q for the quarter ended September 30, 2013 of the Company (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(ii) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company for the periods presented therein.

Date: November 7, 2013	By:	/s/ Scott A. Lang
		Scott A. Lang
		Chairman of the Board of Directors, President and Chief Executive Officer
		(Principal Executive Officer)

EX-32.2

Exhibit 32.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

PURSUANT TO

18 U.S.C. SECTION 1350

The undersigned, James P. Burns, Chief Financial Officer of Silver Spring Networks, Inc. (the “Company”), pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, hereby certifies that:

(i) the Quarterly Report on Form 10-Q for the quarter ended September 30, 2013 of the Company (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(ii) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company for the periods presented therein.

Date: November 7, 2013	By:	/s/ James P. Burns
		James P. Burns
		Executive Vice President and Chief Financial Officer
		(Principal Financial Officer)

XML

Description of Business and Summary of Significant Accounting Policies (Tables)

9 Months Ended

Sep. 30, 2013

Accounting Policies [Abstract]

Composition of Inventory

Inventory is stated at the lower of cost or market. Inventory consisted of the following (in thousands):

	September 30, 2013		December 31, 2012
Component parts	$	47	$	299
Finished goods		6,950		7,432
Inventory	$	6,997	$	7,731

Schedule of Product Warranty Obligation as Presented in Condensed Consolidated Balance Sheets

Product warranty obligation is presented as follows on the condensed consolidated balance sheets (in thousands):

	September 30, 2013		December 31, 2012
Warranty obligation—classified in accrued liabilities	$	3,328	$	3,109
Warranty obligation—classified in other liabilities		2,985		3,207
	$	6,313	$	6,316

Schedule of Product Warranty Activity

Product warranty activity was as follows (in thousands):

	Nine Months Ended September 30,
	2013			2012
Warranty obligation—beginning of period	$	6,316		$	9,631
Warranty expense for new warranties issued		1,107			1,081
Utilization of warranty obligation		(1,288	)		(1,931	)
Changes in estimates for pre-existing warranties		178			(1,717	)
Warranty obligation—end of period	$	6,313		$	7,064

XML

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Revenue:
Product revenue	$ 56,650	$ 30,394	$ 146,366	$ 122,292
Service revenue	15,831	9,234	83,328	24,374
Total revenue, net	72,481	39,628	229,694	146,666
Cost of revenue:
Product cost of revenue	34,844	22,846	100,152	88,358
Service cost of revenue	14,411	12,348	47,932	37,137
Total cost of revenue	49,255	35,194	148,084	125,495
Gross profit	23,226	4,434	81,610	21,171
Operating expenses:
Research and development	16,980	15,480	60,851	46,872
Sales and marketing	7,424	6,822	26,514	21,732
General and administrative	10,937	6,599	35,952	21,024
Total operating expenses	35,341	28,901	123,317	89,628
Operating income (loss)	(12,115)	(24,467)	(41,707)	(68,457)
Other income (expense), net:
Interest expense	(54)	(1,198)	(1,290)	(3,351)
Conversion of promissory notes and remeasurement of warrants and derivatives		(830)	(23,676)	3,570
Other income (expense), net	(54)	(2,028)	(24,966)	219
Income (loss) before income taxes	(12,169)	(26,495)	(66,673)	(68,238)
Provision for income taxes	100	373	492	469
Net income (loss)	(12,269)	(26,868)	(67,165)	(68,707)
Deemed dividend to convertible preferred stockholders			(105,000)
Net income (loss) attributable to common stockholders	$ (12,269)	$ (26,868)	$ (172,165)	$ (68,707)
Net income (loss) per share attributable to common stockholders:
Basic	$ (0.26)	$ (7.30)	$ (4.96)	$ (18.75)
Diluted	$ (0.26)	$ (7.30)	$ (4.96)	$ (18.75)
Weighted average shares used to compute net income (loss) per share attributable to common stockholders:
Basic	46,729	3,682	34,733	3,664
Diluted	46,729	3,682	34,733	3,664

XML

Borrowings

9 Months Ended

Sep. 30, 2013

Debt Disclosure [Abstract]

Borrowings

4. Borrowings

Credit Facility

We have available a line of credit with a bank, which originally provided for advances and the issuance of letters of credit of up to $40 million. On May 8, 2013, we amended our credit agreement to increase the available capacity from $40 million to $50 million. As of September 30, 2013, there were no borrowings outstanding under the credit agreement; however, $10.5 million of letters of credit were outstanding, leaving $39.5 million of available capacity for cash borrowings or additional letters of credit, subject to compliance with financial covenants and other customary conditions to borrowings. As of September 30, 2013 we were in compliance with the financial covenants in the credit agreement.

The credit agreement is guaranteed by certain of our accounts receivable, inventory and cash. Loans under the credit agreement bear interest at the bank’s prime rate plus a margin. The credit agreement will terminate and all amounts owing thereunder will be due and payable on May 17, 2015, unless (a) the commitments are terminated earlier, either at our request or, if an event of default occurs, by the bank (or automatically in the case of certain bankruptcy-related events of default), or (b) the maturity date is extended upon our request, subject to the agreement of the bank. The credit agreement contains customary representations, warranties, affirmative and negative covenants, including financial covenants, events of default and indemnification provisions in favor of the bank. The negative covenants include restrictions regarding the incurrence of liens, subject to certain exceptions. The financial covenants require us to meet monthly financial tests with respect to liquidity ratio and unrestricted cash.

Subordinated Convertible Promissory Notes

In December 2011, we issued the December 2011 Note for an aggregate principal amount of $24.0 million, with a maturity date of December 6, 2014. Interest accrued for the first six months at a rate of 3.0% per year and increased by 1.0% every six months to a maximum of 6.0% per year.

The unpaid principal amount of the December 2011 Note, together with any interest accrued but unpaid thereon, were convertible (a) automatically into shares of a new series of convertible preferred stock at a price per share equal to 85% of the per share selling price of the new preferred stock upon completion of a financing, (b) automatically into shares of common stock immediately prior to the closing of an initial public offering of our common stock at a conversion price equal to 88% of the price to the public in such offering, or (c) at any time upon the election of the investor into shares of Series E preferred stock at a conversion price equal to $50.00 per share. If the December 2011 Note had not automatically converted immediately prior to the closing of our IPO, the outstanding amount of the December 2011 Note would have been due prior to a change of control. We also could have elected to repay the outstanding balance prior to maturity subject to a 7% prepayment penalty with 10 days’ written notice.

In February 2012, we issued the February 2012 Note for an aggregate principal amount of $30.0 million, with a maturity date of February 21, 2015. Interest accrued for the first six months at a rate of 3.0% per year and increased by 1.0% every six months to a maximum of 6.0% per year.

The unpaid principal amount of the February 2012 Note, together with any interest accrued but unpaid thereon, were convertible (a) upon the election of the investor into shares of a new series of convertible preferred stock at a price per share equal to 88% of the per share selling price of the new preferred stock upon completion of a financing, or (b) automatically into shares of common stock immediately prior to the closing of an initial public offering of our common stock at a conversion price equal to 88% of the price to the public in such offering. If the February 2012 Note had not automatically converted immediately prior to the closing of our IPO, the outstanding amount of the February 2012 Note would have been due prior to a change of control. We also could have elected to repay the outstanding balance prior to maturity subject to a 7% prepayment penalty with 10 days’ written notice.

We concluded that the conversion and repayment features of both the December 2011 Note and the February 2012 Note were accounted for as embedded derivative instruments, and accordingly were bundled as a compound embedded derivative pursuant to the guidance of ASC 815, Derivatives and Hedging. These features were not considered clearly and closely related to either the December 2011 Note or the February 2012 Note and did not qualify for any exceptions from derivative accounting. Therefore, they were bifurcated as a compound embedded derivative that were recorded on the balance sheet at fair value at issuance and at each balance sheet date the notes remained outstanding.

We concluded that the fair values of the December 2011 Note and February 2012 Note, including the compound embedded derivative, were $24.0 million and $30.0 million, respectively, which approximated the original transaction value with an unrelated third party. The fair values of the compound embedded derivative at the date of issuance for the December 2011 Note and the February 2012 Note were $1.5 million and $3.6 million, respectively, which created an issuance discount for each convertible note that was amortized over the term using the effective interest rate method. We determined the fair value of each compound embedded derivative using a Monte Carlo simulation model which measured the probability weighted discounted cash flows in a risk-neutral framework for the occurrence of each of the conversion features in which the outstanding amount of the convertible note would be converted into shares of our stock or would be repaid to the lenders in cash.

In connection with our IPO in March 2013, the December 2011 Note and February 2012 Note together with contractual accrued interest of $2.3 million thereon through March 18, 2013, the closing date of our IPO, converted into 3,764,954 shares of common stock based on the outstanding principal and accrued interest at a conversion price equal to 88% of the IPO price of $17.00 per share. The conversion of the convertible notes and issuance of common stock were accounted for as debt extinguishments and accordingly, the convertible notes, unamortized debt issuance costs and bifurcated compound embedded derivatives were removed at their respective carrying amounts and the shares of common stock issued were measured at fair value based on the closing price on the date our IPO closed. As a result, we recorded a loss on debt extinguishments of $22.9 million in the nine months ended September 30, 2013.

The following table provides a roll-forward of the carrying value of the convertible promissory notes and compound embedded derivatives (in thousands):

	Convertible Promissory Notes			Compound Embedded Derivatives			Total
Balances at December 31, 2012	$	52,800		$	3,519		$	56,319
Accrued interest on convertible promissory notes		558			—			558
Accretion of discount on convertible promissory notes		377			—			377
Conversion of convertible promissory notes and embedded derivatives		(53,735	)		(3,519	)		(57,254	)
Balances at September 30, 2013	$	—		$	—		$	—

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Description of Business and Summary of Significant Accounting Policies - Schedule of Product Warranty Obligation as Presented in Condensed Consolidated Balance Sheets (Detail) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012	Sep. 30, 2012	Dec. 31, 2011
Guarantor Obligations [Line Items]
Warranty obligation	$ 6,313	$ 6,316	$ 7,064	$ 9,631
Accrued liabilities [Member]
Guarantor Obligations [Line Items]
Warranty obligation	3,328	3,109
Other liabilities [Member]
Guarantor Obligations [Line Items]
Warranty obligation	$ 2,985	$ 3,207

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Net Income (Loss) Per Share (Tables)

9 Months Ended

Sep. 30, 2013

Earnings Per Share [Abstract]

Computation of Basic and Diluted Net Income (Loss) Per Share

The following table sets forth the computation of basic and diluted net income (loss) per share applicable to common stockholders (in thousands, except per share data):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2013			2012			2013			2012
Net income (loss)	$	(12,269	)	$	(26,868	)	$	(67,165	)	$	(68,707	)
Deemed dividend to convertible preferred stockholders		—			—			(105,000	)		—
Net income (loss) available to common stockholders	$	(12,269	)	$	(26,868	)	$	(172,165	)	$	(68,707	)
Weighted average common shares outstanding—basic and diluted		46,729			3,682			34,733			3,664
Basic and diluted earnings per common share	$	(0.26	)	$	(7.30	)	$	(4.96	)	$	(18.75	)

Common Shares Outstanding were Excluded from Computation of Diluted Net Income (Loss) Per Share

The following potential common shares outstanding were excluded from the computation of diluted net income (loss) per share because including them would have been anti-dilutive (in thousands):

	September 30,
	2013		2012
Employee equity incentive plans		6,749		5,098
Warrants to purchase convertible preferred stock		—		386
Warrants to purchase common stock		—		50
Convertible preferred stock		—		22,366
Total common stock equivalents		6,749		27,900

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Commitments and Contingencies - Additional Information (Detail) In Millions, unless otherwise specified	9 Months Ended
	Sep. 30, 2013 USD ($) Plaintiff Claim	Sep. 30, 2013 Noncancelable financial commitments [Member] USD ($)	Sep. 30, 2013 Standby letters of credit [Member] USD ($)	Dec. 31, 2012 Standby letters of credit [Member] USD ($)	Sep. 30, 2013 Standby letters of credit [Member] Australian dollars [Member] USD ($)	Sep. 30, 2013 Standby letters of credit [Member] Australian dollars [Member] AUD	Dec. 31, 2012 Standby letters of credit [Member] Australian dollars [Member] USD ($)	Dec. 31, 2012 Standby letters of credit [Member] Australian dollars [Member] AUD
Recorded Unconditional Purchase Obligation [Line Items]
Aggregate of future minimum commitments due, Total		$ 18.3
Aggregate of future minimum commitments due in fiscal year 2013		1.5
Aggregate of future minimum commitments due in fiscal year 2014		5.9
Aggregate of future minimum commitments due in fiscal year 2015		5.4
Aggregate of future minimum commitments due in fiscal year 2016		4.0
Aggregate of future minimum commitments due in fiscal year 2017		0.2
Aggregate of future minimum commitments due in fiscal year 2018		0.2
Aggregate of future minimum commitments due thereafter		1.1
Number of plaintiffs amended complaint	2
Number of claims filed by plaintiffs	2
Credit facility with financial institution			10.5	16.5	0.6	0.6	5.9	5.1
Unsecured surety bond	$ 15.0

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Net Income (Loss) Per Share - Computation of Basic and Diluted Net Income (Loss) Per Share (Detail) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Earnings Per Share [Abstract]
Net income (loss)	$ (12,269)	$ (26,868)	$ (67,165)	$ (68,707)
Deemed dividend to convertible preferred stockholders			(105,000)
Net income (loss) available to common stockholders	$ (12,269)	$ (26,868)	$ (172,165)	$ (68,707)
Weighted average common shares outstanding-basic and diluted	46,729	3,682	34,733	3,664
Basic and diluted earnings per common share	$ (0.26)	$ (7.30)	$ (4.96)	$ (18.75)

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Net Income (Loss) Per Share - Additional Information (Detail) (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2013
Earnings Per Share [Abstract]
Deemed dividend resulting from beneficial conversion feature	$ 105,000

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Income Taxes - Additional Information (Detail)	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Income Tax Disclosure [Abstract]
Effective tax rate related to foreign income and withholding taxes	(0.80%)	(1.40%)	(0.70%)	(0.70%)

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Financial Instruments - Carrying Amount and Estimated Fair Value of Convertible Promissory Notes and Compound Embedded Derivatives (Detail) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Compound embedded derivatives	$ 3,519
Carrying Amount [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Convertible promissory notes	52,800
Compound embedded derivatives	3,519
Estimated Fair Value [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Convertible promissory notes	54,846
Compound embedded derivatives	$ 3,519

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Common Stock - Additional Information (Detail) (USD $) In Millions, except Share data, unless otherwise specified	3 Months Ended			9 Months Ended
	Mar. 31, 2011	Sep. 30, 2013	Dec. 31, 2012	Sep. 30, 2013 Restated certificate of incorporation [Member]	Sep. 30, 2013 Reverse stock split [Member]	Sep. 30, 2013 Undesignated preferred stock [Member] Restated certificate of incorporation [Member]	Sep. 30, 2013 Common stock warrants [Member]
Common And Preferred Stock [Line Items]
Outstanding capital stock					5-for-1 reverse stock split
Reverse stock split effective date					Feb. 11, 2013
Common stock, shares authorized		1,000,000,000	80,000,000		80,000,000
Convertible preferred stock, shares authorized		10,000,000	0		26,071,540	10,000,000
Increased number of authorized shares of common stock				1,000,000,000
Voting power description				Provided that at least two-thirds of the voting power of all of the then-outstanding shares of our capital stock is required to amend the bylaws
Purchase of common stock by granted warrant	50,000
Exercise price of common stock warrant	$ 0.005
Warrant expires on exercisable and non-forfeitable	Mar. 31, 2016
Fair value of the warrant	$ 2.5
Preferred stock converted in to warrants to purchase common stock		20,768					20,768
Weighted average exercise price							13.91
Common stock issued		46,933,000	3,764,000				57,370

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Financial Instruments - Contractual Maturities of Cash Equivalents and Short-Term Investments (Detail) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013
Fair Value Disclosures [Abstract]
Due within one year, Amortized Cost Basis	$ 38,040
Due after 1 year through 3 years, Amortized Cost Basis	43,795
Total cash equivalents & short-term investments,Amortized Cost Basis	81,835
Due within one year, Aggregate Fair Value	38,033
Due after 1 year through 3 years, Aggregate Fair Value	43,933
Total cash equivalents & short-term investments, Aggregate Fair Value	$ 81,966

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Stock-Based Compensation - Shares Available to Grant Under Stock Option Plan (Detail) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2013
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Beginning balance	4,616
Options granted	(784)
Options cancelled or expired	396
Ending balance	4,797
2012 Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Beginning balance	2,996
Additional shares authorized	3,400
Options granted	(784)
Options cancelled or expired	396
Restricted stock units granted	(2,558)
Restricted stock units cancelled	91
Ending balance	3,541

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Description of Business and Summary of Significant Accounting Policies - Schedule of Product Warranty Activity (Detail) (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012
Guarantees [Abstract]
Warranty obligation-beginning of period	$ 6,316	$ 9,631
Warranty expense for new warranties issued	1,107	1,081
Utilization of warranty obligation	(1,288)	(1,931)
Changes in estimates for pre-existing warranties	178	(1,717)
Warranty obligation-end of period	$ 6,313	$ 7,064

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012
Cash flows provided by (used in) operating activities:
Net loss	$ (67,165)	$ (68,707)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization	4,990	5,459
Stock-based compensation	44,503	11,823
Conversion of promissory notes and remeasurement of warrants and derivatives	23,676	(3,570)
Other non-cash adjustments	1,565	2,464
Changes in operating assets and liabilities:
Accounts receivable	(3,126)	(30,833)
Inventory	534	(5,676)
Prepaid expenses and other current assets	(2,248)	447
Deferred cost of revenue	(29,938)	(20,867)
Other long-term assets	3,846	(2,356)
Accounts payable	(1,746)	7,330
Accrued liabilities	2,379	(3,053)
Customer deposits	(247)	(6,954)
Deferred revenue	24,490	72,091
Other liabilities	(3,343)	4,122
Net cash used in operating activities	(1,830)	(38,280)
Cash flows provided by (used in) investing activities:
Decrease in restricted cash		140
Purchases of short-term investments	(61,451)
Purchases of property and equipment	(3,343)	(4,249)
Net cash used in investing activities	(64,794)	(4,109)
Cash flows provided by (used in) financing activities:
Payment upon termination of preferred stock warrants of a related party	(12,000)
Proceeds from initial public offering, net of offering costs	84,472
Proceeds from private placement of common stock with a related party	12,000
Payments on capital lease obligations	(1,485)	(888)
Proceeds from sale-leaseback of property and equipment		1,676
Proceeds from issuance of convertible promissory note		28,993
Proceeds from issuance of common stock, net of repurchases	578	545
Taxes paid related to net share settlement of equity awards	(7,722)
Net cash provided by financing activities	75,843	30,326
Net increase (decrease) in cash and cash equivalents	9,219	(12,063)
Cash and cash equivalents-beginning of period	72,646	71,687
Cash and cash equivalents-end of period	81,865	59,624
Supplemental cash flow information-cash paid for taxes	186	316
Supplemental cash flow information-cash paid for interest	212	290
Non-cash investing and financing activities:
Conversion of convertible preferred stock into common stock	270,725
Fair value of common stock issued on conversion of convertible promissory notes	79,441
Deferred offering costs not yet paid	245
Property and equipment acquired under capital lease	$ 1,768	$ 1,676

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Net Income (Loss) Per Share

9 Months Ended

Sep. 30, 2013

Earnings Per Share [Abstract]

Net Income (Loss) Per Share

2. Net income (loss) per share

In connection with our IPO in March 2013, all of our outstanding convertible preferred stock converted into common stock. In addition, we recognized a deemed dividend of $105.0 million to common stockholders on the date of conversion, as discussed further in Note 6 (Convertible Preferred Stock and Preferred Stock Warrants). Basic net income (loss) per share applicable to common stockholders is computed by dividing the net income (loss) applicable to common stockholders by the weighted-average number of shares of common stock outstanding during the period. Diluted net income (loss) per share applicable to common stockholders is computed by giving effect to all potential shares of common stock, including convertible debt, stock options, warrants and convertible preferred stock, to the extent dilutive.

The following table sets forth the computation of basic and diluted net income (loss) per share applicable to common stockholders (in thousands, except per share data):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2013			2012			2013			2012
Net income (loss)	$	(12,269	)	$	(26,868	)	$	(67,165	)	$	(68,707	)
Deemed dividend to convertible preferred stockholders		—			—			(105,000	)		—
Net income (loss) available to common stockholders	$	(12,269	)	$	(26,868	)	$	(172,165	)	$	(68,707	)
Weighted average common shares outstanding—basic and diluted		46,729			3,682			34,733			3,664
Basic and diluted earnings per common share	$	(0.26	)	$	(7.30	)	$	(4.96	)	$	(18.75	)

The following potential common shares outstanding were excluded from the computation of diluted net income (loss) per share because including them would have been anti-dilutive (in thousands):

	September 30,
	2013		2012
Employee equity incentive plans		6,749		5,098
Warrants to purchase convertible preferred stock		—		386
Warrants to purchase common stock		—		50
Convertible preferred stock		—		22,366
Total common stock equivalents		6,749		27,900

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Commitments and Contingencies

9 Months Ended

Sep. 30, 2013

Commitments And Contingencies Disclosure [Abstract]

Commitments and Contingencies

5. Commitments and contingencies

Operating and Capital Leases

As of September 30, 2013, we had an aggregate of $18.3 million of financial commitments related to office space under noncancelable operating leases and equipment under capital leases. The aggregate of $18.3 million of future minimum commitments consisted of $1.5 million due for the remainder of fiscal 2013, $5.9 million due in fiscal 2014, $5.4 million due in fiscal 2015, $4.0 million due in fiscal 2016, $0.2 million due in fiscal 2017, $0.2 due in fiscal 2018, and $1.1 million due thereafter.

Legal Contingencies

We were named in a lawsuit filed on September 9, 2010 in the Superior Court of the State of California, San Mateo County (Edwards v. Silver Spring Networks). The lawsuit claims to be a “class action” on behalf of California consumers, and alleges that smart meters are defective and generate incorrect bills. We have filed a motion to dismiss this case and, on September 1, 2011, the San Mateo Superior Court granted our motion without leave to amend as to two of the plaintiffs’ causes of action and with leave to amend as to a third claim. On February 25, 2012 the plaintiffs filed an amended complaint. On May 30, 2012, we filed an answer to the amended complaint denying the plaintiffs’ allegations. On August 3, 2012, the plaintiffs filed a second amended complaint, and on September 18, 2012, we filed a demurrer to one of the two claims asserted in the second amended complaint. The court has overruled our demurrer. On November 9, 2012, the plaintiffs filed a motion for class certification. A hearing on the class certification motion was held on January 25, 2013. On April 11, 2013, the court denied the class certification motion without prejudice. The court allowed the plaintiffs to file a revised class certification motion, which the plaintiffs filed on June 28, 2013. A hearing on the revised class certification motion was held on September 6, 2013. We intend to continue vigorously defending against the action. The amount of any potential exposure to us is not estimable at this time.

On June 17, 2011, EON Corp. IP Holdings, LLC, a non-producing entity, filed suit in United States District Court for the Eastern District of Texas, Tyler Division against a number of smart grid providers, including Landis+Gyr, which was since acquired by Toshiba, Aclara Power-Line Systems Inc., Elster Solutions, LLC, Itron, Inc., Trilliant Networks Inc. and us. The lawsuit alleges infringement of United States Patent Nos. 5,388,101, 5,481,546, and 5,592,491 by certain networking technology and services that we and the other defendants provide. We filed amended answers, affirmative defenses and counterclaims on August 21, 2012, September 24, 2012, October 31, 2012 and November 16, 2012 denying the plaintiff’s allegations and asserting that we do not infringe plaintiff’s patents and that plaintiff’s patents are invalid. The trial has been scheduled for April 2014. We believe that we have meritorious defenses to EON’s allegations and intend to vigorously defend ourselves. The amount of any potential exposure to us is not estimable at this time.

On September 16, 2011 TransData, Inc. filed suit in United States District Court for the Western District of Oklahoma, against our customer, Oklahoma Gas & Electric Company, alleging infringement of United States Patent Nos. 6,181,294, 6,462,713, and 6,903,699 by certain wireless communication-enabled meters. Together with the meter manufacturer, General Electric Company, we have agreed to indemnify and defend Oklahoma Gas & Electric Company in connection with the TransData suit. An early claim construction hearing was held for one claim term on February 5, 2013, and the court provided an order on that term on June 25, 2013. A hearing for the full claim construction was held on September 25, 2013. The court issued the claim construction order on October 1, 2013. We believe that we have meritorious defenses to TransData’s allegations, and together with General Electric Company intend to vigorously defend our customer. The amount of any potential exposure to us is not estimable at this time.

On March 21, 2013, Linex Technologies, Inc., a non-producing entity, filed suit against us in United States District Court for the Southern District of Florida. The complaint alleges infringement of United States Patent Nos. 6,493,377 and 7,167,503 by certain networking technology that we provide. We filed an answer on May 20, 2013. The trial is currently scheduled for May 2014. We believe that we have meritorious defenses to Linex’s allegations and intend to vigorously defend ourselves. The amount of any potential exposure to us is not estimable at this time.

We are directly involved with various unresolved legal actions and claims, and indirectly are involved with proceedings by administrative bodies such as public utility commissions, arising in the ordinary course of business. We do not believe that any liability from any reasonably foreseeable disposition of such legal actions and claims, individually or in the aggregate, would have a material effect on our condensed consolidated financial statements. There are many uncertainties associated with any litigation or claim, and we cannot be certain that these actions or other third-party claims will be resolved without costly litigation, fines and/or substantial settlement payments. If that occurs, our business, financial condition and results of operations could be materially and adversely affected. If information becomes available that causes us to determine that a loss in any of our pending litigation matters, claims or settlements is probable, and a reasonable estimate of the loss associated with such events can be made, we will record the estimated loss at that time.

Customer Performance and Other Commitments

Certain customer agreements require us to obtain letters of credit or surety bonds in support of our obligations under such arrangements. These letters of credit or surety bonds typically provide a guarantee to the customer for future performance, which usually covers the deployment phase of a contract and may on occasion cover the operations and maintenance phase of service contracts.

As of September 30, 2013 and December 31, 2012, we had a total of $10.5 million and $16.5 million, respectively, of standby letters of credit issued under the credit facility with a financial institution, of which $0.6 million (A$0.6 million) and $5.9 million (A$5.1 million), respectively, were denominated in Australian dollars. As of September 30, 2013, we had a $15.0 million unsecured surety bond. The surety bond provides a financial guarantee to support performance obligations under certain customer agreements. As of December 31, 2012, there was no surety bond outstanding. In the event any such letters of credit or surety bonds are called, we would be obligated to reimburse the issuer of the letter of credit or surety bond. We do not believe there will be any claims against currently outstanding letters of credit or surety bonds.

Our contracts with utility customers and meter manufacturers typically contain provisions that could result in payments or other liabilities related to late or improper delivery of products, services, installations or operations or failure to meet product or performance specifications or other product defects. Any payments made to utility customers pursuant to the terms of these provisions are recorded as reductions of deferred revenue.

Indemnification Commitments

Directors, Officers and Employees. In accordance with our bylaws and/or pursuant to indemnification agreements we have entered into with directors, officers and certain employees, we have indemnification obligations to our directors, officers and certain employees for claims brought against these persons arising out of certain events or occurrences while they are serving at our request in such a capacity. We maintain director and officer liability insurance coverage to reduce our exposure to such obligations, and payments made under indemnification agreements. To date, there have been no indemnification claims by these directors, officers and employees.

Utility Customers and Meter Manufacturers. Our contracts with utility customers and meter manufacturers typically provide indemnification for claims filed by third parties alleging that our products and services sold to the customer or manufacturer infringe or misappropriate any patent, copyright, trademark or other intellectual property right. Refer to the discussion above under the heading “Legal Contingencies” for a description of certain matters involving our indemnification obligations.

In our utility customer contracts, we also typically provide an indemnification for third-party claims resulting from death, personal injury or property damage caused by the negligence or willful misconduct of our employees and agents in connection with the performance of certain contracts.

Under our utility customer and meter manufacturer indemnities, we typically agree to defend the utility customer or meter manufacturer, as the case may be, from such claims, and pay any resulting costs, damages and attorneys’ fees awarded against the indemnified party with respect to such claims, provided that (a) the indemnified party promptly notifies us in writing of the claim, (b) the indemnified party provides reasonable assistance to us at our expense, and (c) we have sole control of the defense and all related settlement negotiations.

Insurance. We maintain various insurance coverages, subject to policy limits and certain conditions, that enable us to recover a portion of amounts paid by us in connection with our obligation to indemnify our utility customers and meter manufacturers. However, because our maximum liability associated with such indemnification obligations generally is not stated explicitly in the related agreements, and further because many states prohibit limitations of liability for such indemnified claims, the maximum potential amount of future payments we could be required to make under these indemnification provisions could significantly exceed insurance policy limits.

Historically, payments made by us under these indemnification provisions have not had a material effect on our results of operations, financial position or cash flows.

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Financial Instruments

9 Months Ended

Sep. 30, 2013

Fair Value Disclosures [Abstract]

Financial Instruments

3. Financial Instruments

Cash, Cash Equivalents and Short-Term Investments

Cash equivalents consist of highly liquid investments with insignificant interest rate risk and original or remaining maturities at the time of purchase of three months or less, and consist primarily of money market funds and U.S. Government securities. Short-term investments consist of high investment grade securities with original or remaining maturities at the time of purchase of greater than three months, and are available for use in current operations. We classify all of our cash equivalents and short-term investments as available-for-sale and record at fair value. Unrealized gains and losses are included in accumulated other comprehensive income (loss), which is reflected as a separate component of stockholders’ deficit. Realized gains and losses are included in other income and expense, net. Determining whether a decline in fair value is other-than-temporary requires management judgment based on the specific facts and circumstances of each security. We evaluate our short-term investments for impairment each reporting period. Amounts are reclassified out of accumulated other comprehensive income (loss) into earnings using the specific identification method.

Cash, cash equivalents and short-term investments consisted of the following as of September 30, 2013 (in thousands):

	Amortized Cost		Unrealized Gains		Unrealized Losses			Estimated Fair Value
Current assets:
Cash	$	61,465	$	—	$	—		$	61,465
Cash equivalents:
Money market mutual funds		20,150		—		—			20,150
U.S. government obligations		250		—		—			250
Total cash equivalents		20,400		—		—			20,400
Short-term fixed income securities:
U.S. government and agency obligations		42,333		109		(1	)		42,441
U.S. and foreign corporate debt securities		14,565		34		(2	)		14,597
Foreign governments and multi-national agency obligations		4,537		—		(9	)		4,528
Total short-term investments		61,435		143		(12	)		61,566
Total cash, cash equivalents and short-term investments	$	143,300	$	143	$	(12	)	$	143,431

We held no cash equivalents or short-term investments as of December 31, 2012.

Contractual Maturities

The contractual maturities of cash equivalents and short-term investments held at September 30, 2013 consisted of the following (in thousands):

	Amortized Cost Basis		Aggregate Fair Value
Due within one year	$	38,040	$	38,033
Due after 1 year through 3 years		43,795		43,933
Total cash equivalents & short-term investments	$	81,835	$	81,966

Fair Value Measurements

We measure certain financial assets and liabilities at fair value on a recurring basis.

The measurements of fair value were established based on a fair value hierarchy that prioritizes the inputs. This hierarchy requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The fair value framework requires the categorization of assets and liabilities into three levels based upon the assumptions (inputs) used to price the assets or liabilities. The guidance for fair value measurements requires that assets and liabilities carried at fair value be classified and disclosed in one of the following categories:

Level 1—Quoted (unadjusted) prices in active markets for identical assets or liabilities.

Level 2—Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the asset or liability.

Level 3—Unobservable inputs in which there is little or no market data, which requires us to develop our own assumptions.

Level 1 measurements are obtained from real-time quotes for transactions in active exchange markets involving identical assets. Level 2 measurements are obtained from readily available pricing sources for comparable instruments, identical instruments in less active markets, or models using market observable inputs. We did not have any transfers of financial instruments between valuation levels during the first nine months of 2013.

As of September 30, 2013, the fair value of these financial assets recorded at fair value on a recurring basis was determined using the following inputs (in thousands):

	Fair Value Measurement Using
	Quoted Prices in Active Markets for Identical Instruments (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Cash equivalents:
Money-market funds	$	20,150	$	—	$	—	$	20,150
U.S. Government obligations		—		250		—		250
Total cash equivalents		20,150		250		—		20,400
Short-term investments:
U.S. Government and agency obligations		—		42,441		—		42,441
U.S. and foreign corporate debt securities		—		14,597		—		14,597
Foreign governments and multi-national agency obligations		—		4,528		—		4,528
Total short-term investments		—		61,566		—		61,566
Total assets measured at fair value	$	20,150	$	61,816	$	—	$	81,966

As of September 30, 2013, there were no financial liabilities recorded at fair value on a recurring basis.

As of December 31, 2012, the fair value of financial liabilities recorded at fair value on a recurring basis was determined using the following inputs (in thousands):

	Fair Value Measurement Using
	Quoted Prices in Active Markets for Identical Instruments (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Liabilities:
Preferred stock warrants	$	—	$	—	$	11,261	$	11,261
Embedded derivatives		—		—		3,519		3,519
Total liabilities measured at fair value	$	—	$	—	$	14,780	$	14,780

As of December 31, 2012, there were no financial assets recorded at fair value on a recurring basis.

Convertible Promissory Notes and Compound Embedded Derivatives

As of December 31, 2012, we had outstanding a $24.0 million convertible note (the “December 2011 Note”) and a $30.0 million convertible note (the “February 2012 Note”), each of which contained certain features that were accounted for as compound bifurcated derivative instruments. The compound bifurcated derivative instruments were recorded on the balance sheet at fair value at issuance and at each balance sheet date as discussed further in Note 4 (Borrowings).

At issuance on December 6, 2011, we estimated the fair value of the December 2011 Note, including the compound embedded derivative, at $24.0 million, which approximated the original transaction value with an unrelated third party, and which approximated the fair value at December 31, 2011. At issuance on February 21, 2012, we estimated the fair value of the February 2012 Note, including the compound embedded derivative, at $30.0 million, which approximated the original transaction value with an unrelated third party. At issuance of the December 2011 Note and February 2012 Note, we determined that the fair values of the respective compound embedded derivatives were $1.5 million and $3.6 million, by utilizing a Monte Carlo simulation model using Level 3 inputs. The Monte Carlo simulation model measured the fair value of the compound embedded derivative utilizing a probability weighted discounted cash flow model in a risk-neutral framework for probability of the occurrence of certain of the conversion features as discussed in Note 4 (Borrowings). As of December 31, 2012, the fair values of the compound embedded derivatives related to the December 2011 Note and February 2012 Note were $1.8 million and $1.7 million, respectively.

The compound embedded derivatives were marked to market each period and the changes in the fair value were included as a non-cash item in other income (expense), net on our condensed consolidated statements of operations. In connection with our IPO in March 2013, the December 2011 Note and February 2012 Note, together with accrued interest, were converted into shares of common stock and accounted for as debt extinguishment, as discussed further in Note 4 (Borrowings).

As of December 31, 2012, the carrying amount and estimated fair value of the convertible promissory notes and compound embedded derivatives using Level 3 measurements were as follows (in thousands):

	Carrying Amount		Estimated Fair Value
Convertible promissory notes	$	52,800	$	54,846
Compound embedded derivatives		3,519		3,519

Fair Value Remeasurement of Preferred Stock Warrants

We recorded the warrants as liabilities at their initial grant date fair value and thereafter recorded gains and losses arising from the change in fair value as a component of other income, net, in the condensed consolidated statements of operations. We recorded an unrealized gain of $2.3 million for the nine months ended September 30, 2012. As of September 30, 2013, there were no longer any preferred stock warrants outstanding, as discussed further in Note 6 (Convertible Preferred Stock and Preferred Stock Warrants).

The fair value of the warrant liability was estimated using a probability weighted expected return model, which determines the present value of future distributions that equity classes may realize based on the probability of occurrence of certain sale or IPO exit events.

The following table provides a roll-forward of the fair value of the convertible preferred stock warrants and compound embedded derivative categorized with Level 3 inputs (in thousands):

	Three Months Ended September 30,					Nine Months Ended September 30,
	2013		2012			2013			2012
Beginning of period	$	—	$	14,258		$	14,780		$	15,018
Remeasurement and termination of convertible preferred stock warrants		—		2,483			(11,261	)		(2,260	)
Issuance of compound embedded derivatives		—		—			—			3,640
Remeasurement and extinguishment of compound embedded derivatives		—		(1,653	)		(3,519	)		(1,310	)
End of period	$	—	$	15,088		$	—		$	15,088

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Stock-Based Compensation - Stock-Based Compensation Expense (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Stock-based compensation expense	$ 6,990	$ 3,217	$ 44,503	$ 11,823
Cost of revenue [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Stock-based compensation expense	1,376	521	10,631	1,993
Research and development [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Stock-based compensation expense	1,905	876	15,056	3,295
Selling and marketing [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Stock-based compensation expense	950	632	5,822	2,272
General and administrative [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Stock-based compensation expense	$ 2,759	$ 1,188	$ 12,994	$ 4,263

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Net Income (Loss) Per Share - Common Shares Outstanding were Excluded from Computation of Diluted Net Income (Loss) Per Share (Detail) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total common stock equivalents	6,749	27,900
Employee equity incentive plans [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total common stock equivalents	6,749	5,098
Warrants to purchase convertible preferred stock [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total common stock equivalents		386
Warrants to purchase common stock [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total common stock equivalents		50
Convertible preferred stock [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total common stock equivalents		22,366

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Financial Instruments - Fair Value of Financial Assets Recorded on Recurring Basis (Detail) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013
Fair Value Of Assets And Liabilities Measured On Non Recurring Basis [Line Items]
Fair value of financial assets	$ 81,966
Quoted Prices in Active Markets for Identical Instruments (Level 1) [Member]
Fair Value Of Assets And Liabilities Measured On Non Recurring Basis [Line Items]
Fair value of financial assets	20,150
Significant Other Observable Inputs (Level 2) [Member]
Fair Value Of Assets And Liabilities Measured On Non Recurring Basis [Line Items]
Fair value of financial assets	61,816
Significant Unobservable Inputs (Level 3) [Member]
Fair Value Of Assets And Liabilities Measured On Non Recurring Basis [Line Items]
Fair value of financial assets
Cash equivalents [Member]
Fair Value Of Assets And Liabilities Measured On Non Recurring Basis [Line Items]
Fair value of financial assets	20,400
Cash equivalents [Member] | Money-market funds [Member]
Fair Value Of Assets And Liabilities Measured On Non Recurring Basis [Line Items]
Fair value of financial assets	20,150
Cash equivalents [Member] | U.S. government obligations [Member]
Fair Value Of Assets And Liabilities Measured On Non Recurring Basis [Line Items]
Fair value of financial assets	250
Cash equivalents [Member] | Quoted Prices in Active Markets for Identical Instruments (Level 1) [Member]
Fair Value Of Assets And Liabilities Measured On Non Recurring Basis [Line Items]
Fair value of financial assets	20,150
Cash equivalents [Member] | Quoted Prices in Active Markets for Identical Instruments (Level 1) [Member] | Money-market funds [Member]
Fair Value Of Assets And Liabilities Measured On Non Recurring Basis [Line Items]
Fair value of financial assets	20,150
Cash equivalents [Member] | Quoted Prices in Active Markets for Identical Instruments (Level 1) [Member] | U.S. government obligations [Member]
Fair Value Of Assets And Liabilities Measured On Non Recurring Basis [Line Items]
Fair value of financial assets
Cash equivalents [Member] | Significant Other Observable Inputs (Level 2) [Member]
Fair Value Of Assets And Liabilities Measured On Non Recurring Basis [Line Items]
Fair value of financial assets	250
Cash equivalents [Member] | Significant Other Observable Inputs (Level 2) [Member] | Money-market funds [Member]
Fair Value Of Assets And Liabilities Measured On Non Recurring Basis [Line Items]
Fair value of financial assets
Cash equivalents [Member] | Significant Other Observable Inputs (Level 2) [Member] | U.S. government obligations [Member]
Fair Value Of Assets And Liabilities Measured On Non Recurring Basis [Line Items]
Fair value of financial assets	250
Cash equivalents [Member] | Significant Unobservable Inputs (Level 3) [Member]
Fair Value Of Assets And Liabilities Measured On Non Recurring Basis [Line Items]
Fair value of financial assets
Cash equivalents [Member] | Significant Unobservable Inputs (Level 3) [Member] | Money-market funds [Member]
Fair Value Of Assets And Liabilities Measured On Non Recurring Basis [Line Items]
Fair value of financial assets
Cash equivalents [Member] | Significant Unobservable Inputs (Level 3) [Member] | U.S. government obligations [Member]
Fair Value Of Assets And Liabilities Measured On Non Recurring Basis [Line Items]
Fair value of financial assets
Short-term investments [Member]
Fair Value Of Assets And Liabilities Measured On Non Recurring Basis [Line Items]
Fair value of financial assets	61,566
Short-term investments [Member] | U.S. Government and agency obligations [Member]
Fair Value Of Assets And Liabilities Measured On Non Recurring Basis [Line Items]
Fair value of financial assets	42,441
Short-term investments [Member] | U.S. and foreign corporate debt securities [Member]
Fair Value Of Assets And Liabilities Measured On Non Recurring Basis [Line Items]
Fair value of financial assets	14,597
Short-term investments [Member] | Foreign governments and multi-national agency obligations [Member]
Fair Value Of Assets And Liabilities Measured On Non Recurring Basis [Line Items]
Fair value of financial assets	4,528
Short-term investments [Member] | Quoted Prices in Active Markets for Identical Instruments (Level 1) [Member]
Fair Value Of Assets And Liabilities Measured On Non Recurring Basis [Line Items]
Fair value of financial assets
Short-term investments [Member] | Quoted Prices in Active Markets for Identical Instruments (Level 1) [Member] | U.S. Government and agency obligations [Member]
Fair Value Of Assets And Liabilities Measured On Non Recurring Basis [Line Items]
Fair value of financial assets
Short-term investments [Member] | Quoted Prices in Active Markets for Identical Instruments (Level 1) [Member] | U.S. and foreign corporate debt securities [Member]
Fair Value Of Assets And Liabilities Measured On Non Recurring Basis [Line Items]
Fair value of financial assets
Short-term investments [Member] | Quoted Prices in Active Markets for Identical Instruments (Level 1) [Member] | Foreign governments and multi-national agency obligations [Member]
Fair Value Of Assets And Liabilities Measured On Non Recurring Basis [Line Items]
Fair value of financial assets
Short-term investments [Member] | Significant Other Observable Inputs (Level 2) [Member]
Fair Value Of Assets And Liabilities Measured On Non Recurring Basis [Line Items]
Fair value of financial assets	61,566
Short-term investments [Member] | Significant Other Observable Inputs (Level 2) [Member] | U.S. Government and agency obligations [Member]
Fair Value Of Assets And Liabilities Measured On Non Recurring Basis [Line Items]
Fair value of financial assets	42,441
Short-term investments [Member] | Significant Other Observable Inputs (Level 2) [Member] | U.S. and foreign corporate debt securities [Member]
Fair Value Of Assets And Liabilities Measured On Non Recurring Basis [Line Items]
Fair value of financial assets	14,597
Short-term investments [Member] | Significant Other Observable Inputs (Level 2) [Member] | Foreign governments and multi-national agency obligations [Member]
Fair Value Of Assets And Liabilities Measured On Non Recurring Basis [Line Items]
Fair value of financial assets	4,528
Short-term investments [Member] | Significant Unobservable Inputs (Level 3) [Member]
Fair Value Of Assets And Liabilities Measured On Non Recurring Basis [Line Items]
Fair value of financial assets
Short-term investments [Member] | Significant Unobservable Inputs (Level 3) [Member] | U.S. Government and agency obligations [Member]
Fair Value Of Assets And Liabilities Measured On Non Recurring Basis [Line Items]
Fair value of financial assets
Short-term investments [Member] | Significant Unobservable Inputs (Level 3) [Member] | U.S. and foreign corporate debt securities [Member]
Fair Value Of Assets And Liabilities Measured On Non Recurring Basis [Line Items]
Fair value of financial assets
Short-term investments [Member] | Significant Unobservable Inputs (Level 3) [Member] | Foreign governments and multi-national agency obligations [Member]
Fair Value Of Assets And Liabilities Measured On Non Recurring Basis [Line Items]
Fair value of financial assets

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Borrowings - Carrying Value of Convertible Promissory Notes and Compound Embedded Derivatives (Detail) (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2013
Debt Disclosure [Line Items]
Beginning Balance	$ 56,319
Accrued interest on convertible promissory notes	558
Accretion of discount on convertible promissory notes	377
Conversion of convertible promissory notes and embedded derivatives	(57,254)
Ending Balance
Convertible promissory notes [Member]
Debt Disclosure [Line Items]
Beginning Balance	52,800
Accrued interest on convertible promissory notes	558
Accretion of discount on convertible promissory notes	377
Conversion of convertible promissory notes and embedded derivatives	(53,735)
Ending Balance
Compound Embedded Derivatives [Member]
Debt Disclosure [Line Items]
Beginning Balance	3,519
Accrued interest on convertible promissory notes
Accretion of discount on convertible promissory notes
Conversion of convertible promissory notes and embedded derivatives	(3,519)
Ending Balance

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Stock-Based Compensation - Summary of Restricted Stock Unit Activity (Detail) (Restricted stock units [Member], USD $)	9 Months Ended
	Sep. 30, 2013
Restricted stock units [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Beginning balance, Number of Shares	231,000
Restricted stock units granted, Number of Shares	2,558,000
Restricted stock units vested, Number of Shares	(976,000)
Restricted stock units cancelled, Number of Shares	(91,000)
Ending balance, Number of Shares	1,722,000
Beginning balance, Weighted Average Grant Date Fair Value per Share	$ 49.51
Restricted stock units granted, Weighted Average Grant Date Fair Value per Share	$ 17.49
Restricted stock units vested, Weighted Average Grant Date Fair Value per Share	$ 22.94
Restricted stock units cancelled, Weighted Average Grant Date Fair Value per Share	$ 20.30
Ending balance, Weighted Average Grant Date Fair Value per Share	$ 18.57

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CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) In Thousands, except Share data, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012
Preferred stock, par value	$ 0.001	$ 0.001
Preferred stock, shares authorized	10,000,000	0
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value	$ 0.001	$ 0.001
Common stock, shares authorized	1,000,000,000	80,000,000
Common stock, shares issued	46,933,000	3,764,000
Common stock, shares outstanding	46,933,000	3,764,000
Convertible preferred stock [Member]
Preferred stock, par value	$ 0.001	$ 0.001
Preferred stock, shares authorized	0	26,072,000
Preferred stock, shares issued	0	22,366,000
Preferred stock, shares outstanding	0	22,366,000
Preferred stock, aggregate liquidation preference	$ 0	$ 381,338

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Stock-Based Compensation

9 Months Ended

Sep. 30, 2013

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Stock-Based Compensation

8. Stock-Based Compensation

We recorded stock-based compensation expense as follows (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2013		2012		2013		2012
Cost of revenue	$	1,376	$	521	$	10,631	$	1,993
Research and development		1,905		876		15,056		3,295
Sales and marketing		950		632		5,822		2,272
General and administrative		2,759		1,188		12,994		4,263
Stock-based compensation expense	$	6,990	$	3,217	$	44,503	$	11,823

Our Board of Directors adopted the 2012 Equity Incentive Plan (the “2012 Plan”), which became effective on March 12, 2013 and serves as the successor to our 2003 Stock Option Plan (the “2003 Plan”). Pursuant to the 2012 Plan, 3,400,000 shares of our common stock were initially reserved for grant, plus (1) any shares that were reserved and available for issuance under the 2003 Plan at the time the 2012 Plan became effective, and (2) any shares that become available upon forfeiture or repurchase by us under the 2003 Plan and 2007 Greenbox Plan, will be reserved for issuance. Under the 2012 Plan, we may grant both incentive and non-statutory stock options, restricted stock and restricted stock units to employees, directors and service providers.

The following table summarizes our shares available to grant under the 2012 Plan (in thousands):

	Shares Available to Grant
Balance at December 31, 2012		2,996
Additional shares authorized		3,400
Options granted		(784	)
Options cancelled or expired		396
Restricted stock units granted		(2,558	)
Restricted stock units cancelled		91
Balance at September 30, 2013		3,541

The following table summarizes our stock option activity and related information for the nine months ended September 30, 2013 (in thousands, except per share data):

	Options Outstanding
	Number of Shares			Weighted Average Exercise Price per Share		Weighted Average Remaining Contractual Term (years)		Aggregate Intrinsic Value
Balance at December 31, 2012		4,616		$	21.73
Options granted		784			17.42
Options exercised		(207	)		3.48
Options cancelled or expired		(396	)		28.28
Balance at September 30, 2013		4,797		$	10.67		6.14	$	32,953
As of September 30, 2013:
Options vested and expected to vest		4,750		$	10.60		6.11	$	32,936
Options exercisable		3,696		$	8.70		5.37	$	32,398

The following table summarizes our restricted stock unit activity and related information for the nine months ended September 30, 2013 (in thousands, except per share data):

	Restricted Stock Units Outstanding
	Number of Shares			Weighted Average Grant Date Fair Value per Share
Balance at December 31, 2012		231		$	49.51
Restricted stock units granted		2,558			17.49
Restricted stock units vested		(976	)		22.94
Restricted stock units cancelled		(91	)		20.30
Balance at September 30, 2013		1,722		$	18.57

In March 2013, as approved by our Board of Directors, we modified certain stock options held by employees and directors to purchase 1,752,895 shares of our common stock with an exercise price of $34.90 per share or greater to reduce the exercise price equal to $17.00 per share, the IPO price. There were no changes to vesting terms or conditions. We incurred an incremental charge to stock-based compensation expense of $4.3 million for the nine months ended September 30, 2013, and expect to incur $1.7 million of incremental stock-based compensation expense related to the modification over a weighted average period of 1.4 years.

As of September 30, 2013, there was $37.8 million of total unrecognized compensation cost related to non-vested stock-based compensation arrangements, which is expected to be recognized over a weighted-average period of 1.9 years.

Employee Stock Purchase Plan

Our Board of Directors adopted the 2012 Employee Stock Purchase Plan (“ESPP”), which became effective on March 12, 2013, pursuant to which 400,000 shares of our common stock have been reserved for future issuance. Eligible employees can enroll and elect to contribute up to 15% of their compensation through payroll withholdings in each offering period, subject to certain limitations. Each offering period is six months in duration, with the exception of the initial offering period which commenced in March 2013 upon the date our IPO was declared effective and ends on February 14, 2014. The purchase price of the stock is the lower of 85% of the fair market value on (a) the first day of the offering period or (b) the purchase date.

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CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Statement Of Income And Comprehensive Income [Abstract]
Net loss	$ (12,269)	$ (26,868)	$ (67,165)	$ (68,707)
Other comprehensive income (loss):
Unrealized gain (loss) on foreign currency exchange	(62)	13	45	(44)
Unrealized holding gain on short-term investments	131		131
Other comprehensive income (loss)	69	13	176	(44)
Comprehensive loss	$ (12,200)	$ (26,855)	$ (66,989)	$ (68,751)

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CONDENSED CONSOLIDATED BALANCE SHEETS (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012
Current assets:
Cash and cash equivalents	$ 81,865	$ 72,646
Short-term investments	61,566
Accounts receivable	59,587	56,528
Inventory	6,997	7,731
Deferred cost of revenue	65,869	45,298
Prepaid expenses and other current assets	5,615	3,456
Total current assets	281,499	185,659
Property and equipment, net	12,857	12,701
Deferred cost of revenue, non-current	209,232	199,865
Deferred tax assets, non-current	8,075	8,265
Other long-term assets	2,275	11,254
Total assets	513,938	417,744
Current liabilities:
Accounts payable	26,323	28,104
Accrued liabilities	19,156	14,831
Deferred revenue	149,990	89,838
Current portion of capital lease obligations	1,760	1,647
Deferred tax liability	7,950	7,897
Total current liabilities	205,179	142,317
Deferred revenue, non-current	382,556	418,218
Preferred stock warrant liability		11,261
Convertible promissory notes and embedded derivatives		56,319
Other liabilities	15,138	18,412
Commitments and contingencies (Note 5)
Convertible preferred stock: $0.001 par value; no shares authorized, issued and outstanding, and aggregate liquidation preference of $0 as of September 30, 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' deficit:
Preferred stock, $0.001 par value, 10,000 shares authorized and no shares issued or outstanding as of September 30, 2013; no shares authorized, issued or outstanding, as of December 31, 2012
Common stock, $0.001 par value; 1,000,000 shares authorized and 46,933 shares issued and outstanding as of September 30, 2013; 80,000 shares authorized and 3,764 shares issued and outstanding as of December 31, 2012	46	4
Additional paid-in capital	528,598	51,078
Accumulated other comprehensive income (loss)	40	(136)
Accumulated deficit	(617,619)	(550,454)
Total stockholders' deficit	(88,935)	(499,508)
Total liabilities, convertible preferred stock and stockholders' deficit	$ 513,938	$ 417,744

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Financial Instruments - Additional Information (Detail) (USD $)	3 Months Ended		9 Months Ended			9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012	Dec. 31, 2012	Sep. 30, 2012 Preferred stock warrants [Member]	Dec. 06, 2011 December 2011 Note [Member]	Dec. 06, 2011 December 2011 Note [Member] Monte Carlo simulation model [Member]	Feb. 21, 2012 February 2012 Note [Member] Monte Carlo simulation model [Member]	Dec. 31, 2012 Convertible promissory notes [Member] December 2011 Note [Member]	Dec. 31, 2012 Convertible promissory notes [Member] February 2012 Note [Member]	Feb. 21, 2012 Convertible promissory notes [Member] February 2012 Note [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash equivalents original or remaining maturities, maximum			3 months
Short-term investments original or remaining maturities, minimum			3 years
Financial liabilities recorded at fair value on recurring basis	$ 0		$ 0
Financial assets recorded at fair value on recurring basis					0
Convertible promissory note										24,000,000	30,000,000
Fair value of convertible notes							24,000,000					30,000,000
Fair values of compound embedded derivatives					3,519,000			1,500,000	3,600,000	1,800,000	1,700,000
Remeasurement and termination of convertible preferred stock warrants		$ 2,483,000	$ (11,261,000)	$ (2,260,000)		$ 2,300,000

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Description of Business and Summary of Significant Accounting Policies - Composition of Inventory (Detail) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012
Inventory Disclosure [Abstract]
Component parts	$ 47	$ 299
Finished goods	6,950	7,432
Inventory	$ 6,997	$ 7,731

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Stock-Based Compensation - Summary of Stock Option Activity (Detail) (USD $) In Thousands, except Per Share data, unless otherwise specified	9 Months Ended
	Sep. 30, 2013
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]
Beginning balance	4,616
Number of Shares, Options granted	784
Number of Shares, Options exercised	(207)
Number of Shares, Options cancelled or expired	(396)
Ending balance	4,797
Number of Shares, Options vested and expected to vest	4,750
Number of Shares, Options exercisable	3,696
Weighted Average Exercise Price Per Share, Beginning balance	$ 21.73
Weighted Average Exercise Price Per Share, Options granted	$ 17.42
Weighted Average Exercise Price Per Share, Options exercised	$ 3.48
Weighted Average Exercise Price Per Share, Options cancelled or expired	$ 28.28
Weighted Average Exercise Price Per Share, Ending balance	$ 10.67
Weighted Average Exercise Price Per Share, Options vested and expected to vest	$ 10.60
Weighted Average Exercise Price Per Share, Options exercisable	$ 8.70
Weighted Average Remaining Contractual Term, Ending Balance	6 years 1 month 21 days
Weighted Average Remaining Contractual Term, Options Vested and Expected to Vest	6 years 1 month 10 days
Weighted Average Remaining Contractual Term, Options Exercisable	5 years 4 months 13 days
Aggregate Intrinsic Value, Ending Balance	$ 32,953
Aggregate Intrinsic Value Options Vested and Expected to Vest, Ending Balance	32,936
Aggregate Intrinsic Value Option Exercisable, Ending Balance	$ 32,398

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Convertible Preferred Stock and Preferred Stock Warrants - Additional Information (Detail) (USD $)	9 Months Ended				9 Months Ended	0 Months Ended		9 Months Ended
	Sep. 30, 2013	Mar. 11, 2013	Dec. 31, 2012	Sep. 30, 2013 Series D preferred stock [Member]	Sep. 30, 2013 Series E convertible preferred stock [Member]	Mar. 11, 2013 Series A preferred stock [Member]	Mar. 11, 2013 Series C preferred stock [Member]	Sep. 30, 2013 Private placement [Member]
Convertible Preferred Stock [Line Items]
Outstanding convertible securities converted into common stock	32,406,995
Conversion price for preferred stockholders, per share				$ 38.927	$ 50.00
Deemed dividend					$ 105,000,000
Affiliates ownership on common stock		32.70%
Issuance of warrants to purchase preferred stock						41,993	333,333
Payments for termination of preferred stock warrants	12,000,000
Reduction in preferred stock warrant liability	11,200,000
Loss due to reduction of preferred stock warrant liability	800,000
Proceeds from private placement	$ 12,000,000							$ 12,000,000
Common stock shares issued	46,933,000		3,764,000					705,881
Price per share issued under private placement								$ 17.00
Preferred stock converted in to warrants to purchase common stock	20,768

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Financial Instruments - Summary of Roll-Forward of Fair Value of Convertible Preferred Stock Warrants and Compound Embedded Derivative (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Fair Value Disclosures [Abstract]
Beginning of period		$ 14,258	$ 14,780	$ 15,018
Remeasurement and termination of convertible preferred stock warrants		2,483	(11,261)	(2,260)
Issuance of compound embedded derivatives				3,640
Remeasurement and extinguishment of compound embedded derivatives		(1,653)	(3,519)	(1,310)
End of period		$ 15,088		$ 15,088

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Borrowings - Additional Information (Detail) (USD $)	9 Months Ended						1 Months Ended	12 Months Ended	1 Months Ended	12 Months Ended	1 Months Ended	12 Months Ended				9 Months Ended
	Sep. 30, 2013	Dec. 31, 2012	Sep. 30, 2013 Credit facility [Member]	May 08, 2013 Credit facility [Member]	Apr. 30, 2013 Credit facility [Member]	Mar. 31, 2013 Initial public offering [Member]	Feb. 28, 2012 Subordinated convertible promissory notes [Member]	Dec. 31, 2011 Subordinated convertible promissory notes [Member]	Feb. 28, 2012 Subordinated convertible promissory notes [Member] Minimum [Member]	Dec. 31, 2011 Subordinated convertible promissory notes [Member] Minimum [Member]	Feb. 28, 2012 Subordinated convertible promissory notes [Member] Maximum [Member]	Dec. 31, 2011 Subordinated convertible promissory notes [Member] Maximum [Member]	Feb. 28, 2012 Subordinated convertible promissory notes [Member] Convertible preferred stock [Member]	Dec. 31, 2011 Subordinated convertible promissory notes [Member] Convertible preferred stock [Member]	Dec. 31, 2011 Subordinated convertible promissory notes [Member] Series E convertible preferred stock [Member]	Sep. 30, 2013 Subordinated convertible promissory notes [Member] Initial public offering [Member]	Feb. 28, 2012 Subordinated convertible promissory notes [Member] Initial public offering [Member] Convertible common stock [Member]	Dec. 31, 2011 Subordinated convertible promissory notes [Member] Initial public offering [Member] Convertible common stock [Member]
Debt Disclosure [Line Items]
Line of credit facility maximum borrowing capacity				$ 50,000,000	$ 40,000,000
Outstanding letters of credit			10,500,000
Additional letters of credit			39,500,000
Credit agreement termination, date	May 17, 2015
Debt instrument, face amount							30,000,000	24,000,000
Maturity date							Feb. 21, 2015	Dec. 06, 2014
Description of debt instrument interest							Interest accrued for the first six months at a rate of 3.0% per year and increased by 1.0% every six months to a maximum of 6.0% per year.	Interest accrued for the first six months at a rate of 3.0% per year and increased by 1.0% every six months to a maximum of 6.0% per year.
Percentage of accrued interest							3.00%	3.00%			6.00%	6.00%
Percentage of increase in accrued interest									1.00%	1.00%
Percentage of convertible stock													88.00%	85.00%		88.00%	88.00%	88.00%
Convertible Series E preferred stock per share															$ 50.00
Percentage of prepayment penalty							7.00%	7.00%
Written notice required to repay the convertible note							10 days	10 days
Fair value of note including compound embedded derivative at issuance							30,000,000	24,000,000
Fair value of compound embedded derivative		3,519,000					3,600,000	1,500,000
Accrued interest on convertible notes																2,300,000
Outstanding convertible securities converted into common stock	32,406,995															3,764,954
Price per share issued under IPO						$ 17.00										$ 17.00
Loss on debt extinguishments	$ 22,900,000															$ 22,900,000

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Common Stock

9 Months Ended

Sep. 30, 2013

Equity [Abstract]

Common Stock

7. Common Stock

Reverse Stock Split

Prior to our IPO, our Board of Directors and holders of the requisite number of outstanding shares of our capital stock approved an amendment to our restated certificate of incorporation to effect a 5-for-1 reverse stock split of our outstanding capital stock. The reverse stock split was effected on February 11, 2013. The reverse stock split did not result in an adjustment to par value. In the amendment to our restated certificate of incorporation filed to effect the reverse stock split, we changed the number of authorized shares of common and convertible preferred stock to 80,000,000 shares and 26,071,540 shares, respectively. The reverse stock split is reflected in the accompanying condensed consolidated financial statements and related notes on a retroactive basis for all periods presented.

Restated Certificate of Incorporation and Amended and Restated Bylaws

Our restated certificate of incorporation and amended and restated bylaws became effective upon the closing date of our IPO. Our restated certificate of incorporation: (a) eliminated the references to the terms of our existing series of preferred stock, which converted to common stock in connection with the IPO; (b) increased the authorized number of shares of common stock to 1,000,000,000 shares; (c) authorized 10,000,000 shares of undesignated preferred stock; (d) provided that holders of common stock will not be entitled to vote on amendments to the restated certificate that relate solely to the terms of any preferred stock designated by our Board of Directors if the holders of such preferred stock are entitled to vote on such amendment; (e) provided that our Board of Directors are classified into three classes of directors; (f) provided that at least two-thirds of the voting power of all of the then-outstanding shares of our capital stock is required to amend the bylaws; (g) provided that stockholders cannot call a special meeting of stockholders, act by written consent without a meeting, fill vacancies in the Board of Directors, remove a director other than for cause, or change the authorized number of directors; and (h) included certain other provisions customary for public companies.

Common Stock Warrants

In March 2011, we granted a warrant to purchase 50,000 shares of common stock at $0.005 per share. The warrant was immediately exercisable and non-forfeitable, and expires on the earlier of a change in control or March 31, 2016. The fair value of the warrant was determined to be $2.5 million based on the Black-Scholes-Merton option pricing model. We accounted for the warrant as an equity instrument and recorded the fair value as a general and administrative expense during the year ended December 31, 2011.

In connection with our IPO in March 2013, warrants to purchase shares of our preferred stock converted into warrants to purchase 20,768 shares of our common stock, at a weighted average exercise price of $13.91 per share.

As of September 30, 2013, we issued 57,370 shares of common stock pursuant to the net exercise of all of our common stock warrants.

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Financial Instruments - Cash, Cash Equivalents and Short-Term Investments (Detail) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013
Fair Value Of Assets And Liabilities Measured On Non Recurring Basis [Line Items]
Amortized Cost	$ 143,300
Unrealized Gains	143
Unrealized Losses	(12)
Estimated Fair Value	143,431
U.S. Government and agency obligations [Member]
Fair Value Of Assets And Liabilities Measured On Non Recurring Basis [Line Items]
Amortized Cost	42,333
Unrealized Gains	109
Unrealized Losses	(1)
Estimated Fair Value	42,441
U.S. and foreign corporate debt securities [Member]
Fair Value Of Assets And Liabilities Measured On Non Recurring Basis [Line Items]
Amortized Cost	14,565
Unrealized Gains	34
Unrealized Losses	(2)
Estimated Fair Value	14,597
Foreign governments and multi-national agency obligations [Member]
Fair Value Of Assets And Liabilities Measured On Non Recurring Basis [Line Items]
Amortized Cost	4,537
Unrealized Gains
Unrealized Losses	(9)
Estimated Fair Value	4,528
Short-term investments [Member]
Fair Value Of Assets And Liabilities Measured On Non Recurring Basis [Line Items]
Amortized Cost	61,435
Unrealized Gains	143
Unrealized Losses	(12)
Estimated Fair Value	61,566
Cash [Member]
Fair Value Of Assets And Liabilities Measured On Non Recurring Basis [Line Items]
Amortized Cost	61,465
Unrealized Gains
Unrealized Losses
Estimated Fair Value	61,465
Cash equivalents [Member]
Fair Value Of Assets And Liabilities Measured On Non Recurring Basis [Line Items]
Amortized Cost	20,400
Unrealized Gains
Unrealized Losses
Estimated Fair Value	20,400
Cash equivalents [Member] | Money market mutual funds [Member]
Fair Value Of Assets And Liabilities Measured On Non Recurring Basis [Line Items]
Amortized Cost	20,150
Unrealized Gains
Unrealized Losses
Estimated Fair Value	20,150
Cash equivalents [Member] | U.S. government obligations [Member]
Fair Value Of Assets And Liabilities Measured On Non Recurring Basis [Line Items]
Amortized Cost	250
Unrealized Gains
Unrealized Losses
Estimated Fair Value	$ 250

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Stock-Based Compensation - Additional Information (Detail) (USD $) In Millions, except Share data, unless otherwise specified	9 Months Ended	1 Months Ended			9 Months Ended
	Sep. 30, 2013	Sep. 30, 2013 2012 Equity Incentive Plan [Member]	Mar. 31, 2013 2012 Equity Incentive Plan [Member]	Sep. 30, 2013 2012 Equity Incentive Plan [Member] Expected compensation expense [Member]	Sep. 30, 2013 Employee Stock Purchase Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Common stock shares reserved for issuance		3,400,000			400,000
Incremental stock-based compensation expense	$ 4.3			$ 1.7
Common stock shares purchased			1,752,895
Common stock exercise price per share			$ 34.90
Common stock price per share			$ 17.00
Weighted-average period of recognized stock-based compensation expenses	1 year 10 months 24 days	1 year 4 months 24 days
Unrecognized compensation cost related to non-vested stock-based compensation	$ 37.8
Maximum employees contribution					15.00%
Purchase price of common stock					The purchase price of the stock is the lower of 85% of the fair market value on (a) the first day of the offering period or (b) the purchase date.
Purchase price of the stock as a percent of price of common stock					85.00%

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Description of Business and Summary of Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2013

Accounting Policies [Abstract]

Accounting Principles and Basis of Presentation

Accounting Principles and Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. As such, the information included in this Quarterly Report on Form 10-Q should be read in conjunction with the consolidated financial statements and accompanying notes included in our prospectus filed with the SEC pursuant to Rule 424(b) under the Securities Act of 1933, as amended, on March 13, 2013 (“Prospectus”).

The condensed consolidated balance sheet as of December 31, 2012, included herein was derived from the audited financial statements as of that date, but does not include all disclosures including notes required by GAAP.

The condensed consolidated financial statements include the accounts of Silver Spring Networks, Inc. and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated.

The accompanying unaudited condensed consolidated financial statements reflect all normal recurring adjustments necessary to present fairly the financial position, results of operations, comprehensive income (loss), and cash flows for the interim periods, but are not necessarily indicative of the results of operations to be anticipated for the full year ending December 31, 2013.

There have been no changes to our significant accounting policies described in the Prospectus that have had a material impact on our condensed consolidated financial statements and related notes.

Initial Public Offering

Initial Public Offering

In March 2013, we completed our initial public offering (“IPO”) in which we issued and sold 5,462,500 shares of common stock at a public offering price of $17.00 per share. We received net proceeds of $84.5 million after deducting underwriting discounts and commissions of $6.5 million and paid offering costs in the nine months ended September 30, 2013 of $1.9 million, but before deducting previously paid offering expenses of approximately $4.5 million. Concurrently with our IPO, we issued and sold in a private placement 705,881 shares of common stock at the public offering price of $17.00 per share, which resulted in net proceeds of $12.0 million. In addition, in connection with our IPO:

• All of our outstanding convertible preferred stock converted into 32,406,995 shares of common stock.

• Our $24.0 million and $30.0 million convertible notes together with contractual accrued interest of $2.3 million converted into 3,764,954 shares of common stock. In connection with the conversion, we recorded a loss on debt extinguishments of $22.9 million. Please see Note 4 (Borrowings—Subordinated Convertible Notes) for further discussion on the conversion features of the convertible notes, the calculation of the number of shares into which the notes were converted and the accounting for debt extinguishment.

• We reduced our preferred stock warrant liability by $11.2 million and recorded a loss of $0.8 million in the nine months ended September 30, 2013 resulting from our payment of $12.0 million as consideration for the termination of certain warrants to purchase shares of Series A preferred stock and all warrants to purchase shares of Series C preferred stock, which occurred immediately prior to the effectiveness of our IPO. Please see Note 6 (Convertible Preferred Stock and Preferred Stock Warrants).

• We reclassified the preferred stock warrant liability for the surviving warrant to purchase shares of Series A preferred stock and all warrants to purchase shares of Series E preferred stock to additional paid-in capital, as these warrants converted to warrants to purchase shares of common stock. Please see Note 6 (Convertible Preferred Stock and Preferred Stock Warrants).

• We recognized stock-based compensation expense of $4.4 million in the nine months ended September 30, 2013 upon the issuance of 87,507 shares of common stock following the vesting upon the effectiveness of the Registration Statement on Form S-1 of 87,507 restricted stock units previously granted in connection with our incentive bonus plans. Please see Note 8 (Stock-Based Compensation) for further discussion of this stock-based compensation expense.

• We recognized stock-based compensation expense of $10.2 million in the nine months ended September 30, 2013 upon the issuance of 602,274 shares of common stock following the granting upon the effectiveness of the Registration Statement on Form S-1 of 602,274 fully vested restricted stock units in connection with our incentive bonus plans. Please see Note 8 (Stock-Based Compensation) for further discussion of this stock-based compensation expense.

• We recognized stock-based compensation expense of approximately $4.3 million in the nine months ended September 30, 2013 related to the modification of stock options held by current employees. Please see Note 8 (Stock-Based Compensation) for further discussion of this stock-based compensation expense.

• We reclassified $6.4 million of deferred issuance costs previously recorded in other long-term assets as an off-set to the equity proceeds in connection with our IPO.

Use of Estimates

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, contingent assets and liabilities, and revenue and expenses during the reporting period. Estimates are used for revenue and cost recognition, inventory valuation, warranty obligations, preferred stock warrants and embedded derivatives valuations, stock-based compensation, classification of current and non-current deferred revenue and deferred cost of revenue, income taxes and deferred income tax assets and associated valuation allowances. These estimates generally involve complex issues and require judgments, involve the analysis of historical and prediction of future trends, can require extended periods of time to resolve and are subject to change from period to period. Actual results may differ materially from management’s estimates.

Inventory

Inventory

Inventory is stated at the lower of cost or market. Inventory consisted of the following (in thousands):

	September 30, 2013		December 31, 2012
Component parts	$	47	$	299
Finished goods		6,950		7,432
Inventory	$	6,997	$	7,731

Finished goods inventory included consigned inventory totaling $4.3 million and $3.5 million as of September 30, 2013 and December 31, 2012, respectively.

Product Warranty

Product Warranty

We provide warranties for substantially all of our products. Our standard warranty period extends from one to five years. We accrue for costs of standard warranty at the time of product shipment, and record changes in estimates to warranty accruals when it is probable a liability has been incurred and the amount of loss can be reasonably estimated.

Product warranty obligation is presented as follows on the condensed consolidated balance sheets (in thousands):

	September 30, 2013		December 31, 2012
Warranty obligation—classified in accrued liabilities	$	3,328	$	3,109
Warranty obligation—classified in other liabilities		2,985		3,207
	$	6,313	$	6,316

Product warranty activity was as follows (in thousands):

	Nine Months Ended September 30,
	2013			2012
Warranty obligation—beginning of period	$	6,316		$	9,631
Warranty expense for new warranties issued		1,107			1,081
Utilization of warranty obligation		(1,288	)		(1,931	)
Changes in estimates for pre-existing warranties		178			(1,717	)
Warranty obligation—end of period	$	6,313		$	7,064

During the nine months ended September 30, 2013 and 2012, we revised our estimated warranty liability to reflect updated product field reliability experience and recorded an increase (reduction) of product warranty liability and product cost of revenue by $0.2 million and $(1.7) million, respectively.

At the time of product shipment, we estimate and accrue for the amount of standard warranty cost and record the amount as a cost of revenue. Determining the amount of warranty costs requires management to make estimates and judgments based on historical claims experience, industry benchmarks, test data and various other assumptions including estimated field failure rates that are believed to be reasonable under the circumstances. The amount of warranty costs accrued are net of warranty obligations to be fulfilled by our suppliers. The results of these judgments formed the basis for our estimate of the total charge to cover anticipated customer warranty, repair, return and replacement and other associated costs. Should actual product failure rates, claim levels, material usage or supplier warranties on parts used in our products differ from our original estimates, revisions to the estimated warranty liability could result in adjustments to our cost of revenue in future periods.

Certain of our standard product warranty obligations require us to reimburse a customer for installation and other related costs in the event that field reliability rates fall below contractually specified thresholds. We consider the probability that we will have to pay such incremental warranty costs based on the expected performance of a delivered product when we record new warranty obligations issued in a period as well as when we determine if any changes are required to our original estimates for pre-existing warranty obligations.

Our warranty obligations are affected by product failure rates, claims levels, material usage and supplier warranties on parts included in our products. Because our products are relatively new and we do not have the benefit of long-term experience observing the products’ performance in the field, it is possible that the estimates of a product’s lifespan and incidence of claims could vary from period to period.

In certain customer arrangements, we have provided extended warranties for periods of up to 15 years following the initial standard warranty period. We recognize revenue associated with extended warranties over the extended warranty period when the extended warranty period commences. Costs associated with providing extended warranties are expensed as incurred during the extended warranty period. As of September 30, 2013 and December 31, 2012, we had deferred revenue associated with extended warranty arrangements of $0.4 million and $0.4 million, respectively, included in other current liabilities, and $6.8 million and $5.5 million, respectively, included in other long-term liabilities on our condensed consolidated balance sheets.

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Convertible Preferred Stock and Preferred Stock Warrants

9 Months Ended

Sep. 30, 2013

Equity [Abstract]

Convertible Preferred Stock and Preferred Stock Warrants

6. Convertible Preferred Stock and Preferred Stock Warrants

Convertible Preferred Stock

In connection with our IPO in March 2013, our previously authorized and outstanding convertible preferred stock was converted into 32,406,995 shares of common stock. Included in this amount were incremental shares issued to Series D and Series E preferred stockholders in accordance with their contractual conversion rights which stated that if the IPO conversion price for Series D and Series E preferred stockholders was below $38.927 and $50.00 per share, respectively, then we would issue to the eligible holders additional shares of common stock for no additional consideration pursuant to an automatic adjustment in our certificate of incorporation. The additional shares resulted in a beneficial conversion feature for Series E preferred stock and we recognized a $105.0 million deemed dividend to Series E preferred stockholders at the conversion date. This non-cash charge impacts net loss applicable to our common stockholders and basic and diluted net loss per share applicable to common stockholders.

Warrant Termination and Concurrent Private Placement with a Related Party

Prior to our IPO, entities affiliated with Foundation Capital (together, “Foundation Capital”) beneficially owned 32.7% of our common stock. Foundation Capital is considered a related party. Foundation Capital held warrants to purchase 41,993 shares of our Series A Preferred Stock and 333,333 shares of our Series C Preferred Stock prior to our IPO. All such warrants terminated immediately prior to the effectiveness of our IPO in exchange for the aggregate payment by us of $12.0 million to these entities. In connection with the transaction, we reduced our preferred stock warrant liability by $11.2 million and recorded a loss of $0.8 million in the nine months ended September 30, 2013.

We also entered into a private placement purchase agreement whereby Foundation Capital purchased an aggregate of $12.0 million of shares of our common stock at the same price as the price offered to the public, or 705,881 shares based on the IPO price of $17.00 per share. This private placement purchase was consummated on the same day that our IPO closed.

Conversion of Convertible Preferred Stock Warrants to Common Stock Warrants

In connection with our IPO, the remaining outstanding warrants to purchase shares of Series A and Series E preferred stock converted into warrants to purchase 20,768 shares of our common stock, and we reclassified the related preferred stock warrant liability to additional paid-in capital.

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Description of Business and Summary of Significant Accounting Policies

9 Months Ended

Sep. 30, 2013

Accounting Policies [Abstract]

Description of Business and Summary of Significant Accounting Policies

1. Description of Business and Summary of Significant Accounting Policies

We provide a networking platform and solutions that enable utilities to transform the power grid infrastructure into the smart grid. The foundation of our technology is a standards-based and secure Internet Protocol, or IP, network. Our networking platform provides two-way communications between the utility back office and devices on the power grid. In addition to our networking platform, we offer a suite of solutions that run on top of our network and complementary services, all of which we collectively refer to as our Smart Energy Platform. Our solutions include advanced metering, distribution automation and demand-side management. Our service offerings include professional services to implement our products, managed services and software as a service, or SaaS, to assist utilities with managing the network and solutions, and ongoing customer support. Silver Spring Networks, Inc., headquartered in Redwood City, California, was founded in July 2002 and was incorporated in the State of Delaware on July 3, 2002 as Real Time Techcomm, Inc. On August 6, 2002, we changed our name to Silver Spring Networks, Inc.

Accounting Principles and Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. As such, the information included in this Quarterly Report on Form 10-Q should be read in conjunction with the consolidated financial statements and accompanying notes included in our prospectus filed with the SEC pursuant to Rule 424(b) under the Securities Act of 1933, as amended, on March 13, 2013 (“Prospectus”).

The condensed consolidated balance sheet as of December 31, 2012, included herein was derived from the audited financial statements as of that date, but does not include all disclosures including notes required by GAAP.

The condensed consolidated financial statements include the accounts of Silver Spring Networks, Inc. and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated.

The accompanying unaudited condensed consolidated financial statements reflect all normal recurring adjustments necessary to present fairly the financial position, results of operations, comprehensive income (loss), and cash flows for the interim periods, but are not necessarily indicative of the results of operations to be anticipated for the full year ending December 31, 2013.

There have been no changes to our significant accounting policies described in the Prospectus that have had a material impact on our condensed consolidated financial statements and related notes.

Initial Public Offering

In March 2013, we completed our initial public offering (“IPO”) in which we issued and sold 5,462,500 shares of common stock at a public offering price of $17.00 per share. We received net proceeds of $84.5 million after deducting underwriting discounts and commissions of $6.5 million and paid offering costs in the nine months ended September 30, 2013 of $1.9 million, but before deducting previously paid offering expenses of approximately $4.5 million. Concurrently with our IPO, we issued and sold in a private placement 705,881 shares of common stock at the public offering price of $17.00 per share, which resulted in net proceeds of $12.0 million. In addition, in connection with our IPO:

• All of our outstanding convertible preferred stock converted into 32,406,995 shares of common stock.

• Our $24.0 million and $30.0 million convertible notes together with contractual accrued interest of $2.3 million converted into 3,764,954 shares of common stock. In connection with the conversion, we recorded a loss on debt extinguishments of $22.9 million. Please see Note 4 (Borrowings—Subordinated Convertible Notes) for further discussion on the conversion features of the convertible notes, the calculation of the number of shares into which the notes were converted and the accounting for debt extinguishment.

• We reduced our preferred stock warrant liability by $11.2 million and recorded a loss of $0.8 million in the nine months ended September 30, 2013 resulting from our payment of $12.0 million as consideration for the termination of certain warrants to purchase shares of Series A preferred stock and all warrants to purchase shares of Series C preferred stock, which occurred immediately prior to the effectiveness of our IPO. Please see Note 6 (Convertible Preferred Stock and Preferred Stock Warrants).

• We reclassified the preferred stock warrant liability for the surviving warrant to purchase shares of Series A preferred stock and all warrants to purchase shares of Series E preferred stock to additional paid-in capital, as these warrants converted to warrants to purchase shares of common stock. Please see Note 6 (Convertible Preferred Stock and Preferred Stock Warrants).

• We recognized stock-based compensation expense of $4.4 million in the nine months ended September 30, 2013 upon the issuance of 87,507 shares of common stock following the vesting upon the effectiveness of the Registration Statement on Form S-1 of 87,507 restricted stock units previously granted in connection with our incentive bonus plans. Please see Note 8 (Stock-Based Compensation) for further discussion of this stock-based compensation expense.

• We recognized stock-based compensation expense of $10.2 million in the nine months ended September 30, 2013 upon the issuance of 602,274 shares of common stock following the granting upon the effectiveness of the Registration Statement on Form S-1 of 602,274 fully vested restricted stock units in connection with our incentive bonus plans. Please see Note 8 (Stock-Based Compensation) for further discussion of this stock-based compensation expense.

• We recognized stock-based compensation expense of approximately $4.3 million in the nine months ended September 30, 2013 related to the modification of stock options held by current employees. Please see Note 8 (Stock-Based Compensation) for further discussion of this stock-based compensation expense.

• We reclassified $6.4 million of deferred issuance costs previously recorded in other long-term assets as an off-set to the equity proceeds in connection with our IPO.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, contingent assets and liabilities, and revenue and expenses during the reporting period. Estimates are used for revenue and cost recognition, inventory valuation, warranty obligations, preferred stock warrants and embedded derivatives valuations, stock-based compensation, classification of current and non-current deferred revenue and deferred cost of revenue, income taxes and deferred income tax assets and associated valuation allowances. These estimates generally involve complex issues and require judgments, involve the analysis of historical and prediction of future trends, can require extended periods of time to resolve and are subject to change from period to period. Actual results may differ materially from management’s estimates.

Inventory

Inventory is stated at the lower of cost or market. Inventory consisted of the following (in thousands):

	September 30, 2013		December 31, 2012
Component parts	$	47	$	299
Finished goods		6,950		7,432
Inventory	$	6,997	$	7,731

Finished goods inventory included consigned inventory totaling $4.3 million and $3.5 million as of September 30, 2013 and December 31, 2012, respectively.

Product Warranty

We provide warranties for substantially all of our products. Our standard warranty period extends from one to five years. We accrue for costs of standard warranty at the time of product shipment, and record changes in estimates to warranty accruals when it is probable a liability has been incurred and the amount of loss can be reasonably estimated.

Product warranty obligation is presented as follows on the condensed consolidated balance sheets (in thousands):

	September 30, 2013		December 31, 2012
Warranty obligation—classified in accrued liabilities	$	3,328	$	3,109
Warranty obligation—classified in other liabilities		2,985		3,207
	$	6,313	$	6,316

Product warranty activity was as follows (in thousands):

	Nine Months Ended September 30,
	2013			2012
Warranty obligation—beginning of period	$	6,316		$	9,631
Warranty expense for new warranties issued		1,107			1,081
Utilization of warranty obligation		(1,288	)		(1,931	)
Changes in estimates for pre-existing warranties		178			(1,717	)
Warranty obligation—end of period	$	6,313		$	7,064

During the nine months ended September 30, 2013 and 2012, we revised our estimated warranty liability to reflect updated product field reliability experience and recorded an increase (reduction) of product warranty liability and product cost of revenue by $0.2 million and $(1.7) million, respectively.

At the time of product shipment, we estimate and accrue for the amount of standard warranty cost and record the amount as a cost of revenue. Determining the amount of warranty costs requires management to make estimates and judgments based on historical claims experience, industry benchmarks, test data and various other assumptions including estimated field failure rates that are believed to be reasonable under the circumstances. The amount of warranty costs accrued are net of warranty obligations to be fulfilled by our suppliers. The results of these judgments formed the basis for our estimate of the total charge to cover anticipated customer warranty, repair, return and replacement and other associated costs. Should actual product failure rates, claim levels, material usage or supplier warranties on parts used in our products differ from our original estimates, revisions to the estimated warranty liability could result in adjustments to our cost of revenue in future periods.

Certain of our standard product warranty obligations require us to reimburse a customer for installation and other related costs in the event that field reliability rates fall below contractually specified thresholds. We consider the probability that we will have to pay such incremental warranty costs based on the expected performance of a delivered product when we record new warranty obligations issued in a period as well as when we determine if any changes are required to our original estimates for pre-existing warranty obligations.

Our warranty obligations are affected by product failure rates, claims levels, material usage and supplier warranties on parts included in our products. Because our products are relatively new and we do not have the benefit of long-term experience observing the products’ performance in the field, it is possible that the estimates of a product’s lifespan and incidence of claims could vary from period to period.

In certain customer arrangements, we have provided extended warranties for periods of up to 15 years following the initial standard warranty period. We recognize revenue associated with extended warranties over the extended warranty period when the extended warranty period commences. Costs associated with providing extended warranties are expensed as incurred during the extended warranty period. As of September 30, 2013 and December 31, 2012, we had deferred revenue associated with extended warranty arrangements of $0.4 million and $0.4 million, respectively, included in other current liabilities, and $6.8 million and $5.5 million, respectively, included in other long-term liabilities on our condensed consolidated balance sheets.

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Financial Instruments - Fair Value of Financial Liabilities Recorded on Recurring Basis (Detail) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Preferred stock warrants	$ 11,261
Embedded derivatives	3,519
Total liabilities measured at fair value	14,780
Quoted Prices in Active Markets for Identical Instruments (Level 1) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Preferred stock warrants
Embedded derivatives
Total liabilities measured at fair value
Significant Other Observable Inputs (Level 2) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Preferred stock warrants
Embedded derivatives
Total liabilities measured at fair value
Significant Unobservable Inputs (Level 3) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Preferred stock warrants	11,261
Embedded derivatives	3,519
Total liabilities measured at fair value	$ 14,780

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Financial Instruments (Tables)

9 Months Ended

Sep. 30, 2013

Fair Value Disclosures [Abstract]

Cash, Cash Equivalents and Short-Term Investments

Cash, cash equivalents and short-term investments consisted of the following as of September 30, 2013 (in thousands):

	Amortized Cost		Unrealized Gains		Unrealized Losses			Estimated Fair Value
Current assets:
Cash	$	61,465	$	—	$	—		$	61,465
Cash equivalents:
Money market mutual funds		20,150		—		—			20,150
U.S. government obligations		250		—		—			250
Total cash equivalents		20,400		—		—			20,400
Short-term fixed income securities:
U.S. government and agency obligations		42,333		109		(1	)		42,441
U.S. and foreign corporate debt securities		14,565		34		(2	)		14,597
Foreign governments and multi-national agency obligations		4,537		—		(9	)		4,528
Total short-term investments		61,435		143		(12	)		61,566
Total cash, cash equivalents and short-term investments	$	143,300	$	143	$	(12	)	$	143,431

Contractual Maturities of Cash Equivalents and Short-Term Investments

The contractual maturities of cash equivalents and short-term investments held at September 30, 2013 consisted of the following (in thousands):

	Amortized Cost Basis		Aggregate Fair Value
Due within one year	$	38,040	$	38,033
Due after 1 year through 3 years		43,795		43,933
Total cash equivalents & short-term investments	$	81,835	$	81,966

Fair Value of Financial Assets Recorded on Recurring Basis

As of September 30, 2013, the fair value of these financial assets recorded at fair value on a recurring basis was determined using the following inputs (in thousands):

	Fair Value Measurement Using
	Quoted Prices in Active Markets for Identical Instruments (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Cash equivalents:
Money-market funds	$	20,150	$	—	$	—	$	20,150
U.S. Government obligations		—		250		—		250
Total cash equivalents		20,150		250		—		20,400
Short-term investments:
U.S. Government and agency obligations		—		42,441		—		42,441
U.S. and foreign corporate debt securities		—		14,597		—		14,597
Foreign governments and multi-national agency obligations		—		4,528		—		4,528
Total short-term investments		—		61,566		—		61,566
Total assets measured at fair value	$	20,150	$	61,816	$	—	$	81,966

Fair Value of Financial Liabilities Recorded on Recurring Basis

As of December 31, 2012, the fair value of financial liabilities recorded at fair value on a recurring basis was determined using the following inputs (in thousands):

	Fair Value Measurement Using
	Quoted Prices in Active Markets for Identical Instruments (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Liabilities:
Preferred stock warrants	$	—	$	—	$	11,261	$	11,261
Embedded derivatives		—		—		3,519		3,519
Total liabilities measured at fair value	$	—	$	—	$	14,780	$	14,780

Carrying Amount and Estimated Fair Value of Convertible Promissory Notes and Compound Embedded Derivatives

As of December 31, 2012, the carrying amount and estimated fair value of the convertible promissory notes and compound embedded derivatives using Level 3 measurements were as follows (in thousands):

	Carrying Amount		Estimated Fair Value
Convertible promissory notes	$	52,800	$	54,846
Compound embedded derivatives		3,519		3,519

Summary of Roll-Forward of Fair Value of Convertible Preferred Stock Warrants and Compound Embedded Derivative

The following table provides a roll-forward of the fair value of the convertible preferred stock warrants and compound embedded derivative categorized with Level 3 inputs (in thousands):

	Three Months Ended September 30,					Nine Months Ended September 30,
	2013		2012			2013			2012
Beginning of period	$	—	$	14,258		$	14,780		$	15,018
Remeasurement and termination of convertible preferred stock warrants		—		2,483			(11,261	)		(2,260	)
Issuance of compound embedded derivatives		—		—			—			3,640
Remeasurement and extinguishment of compound embedded derivatives		—		(1,653	)		(3,519	)		(1,310	)
End of period	$	—	$	15,088		$	—		$	15,088

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Income Taxes

9 Months Ended

Sep. 30, 2013

Income Tax Disclosure [Abstract]

Income Taxes

9. Income Taxes

Our provision for income taxes for the three and nine month period ended September 30, 2013 reflects an effective tax rate of (0.8)% and (0.7)%, respectively, and primarily consists of foreign income and withholding taxes. Our provision for income taxes for the three and nine month period ended September 30, 2012 reflected an effective tax rate of (1.4)% and (0.7)%, respectively, and primarily consisted of foreign income taxes.

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Description of Business and Summary of Significant Accounting Policies - Additional Information (Detail) (USD $)	3 Months Ended		9 Months Ended			9 Months Ended		9 Months Ended						9 Months Ended								9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012	Dec. 31, 2012	Sep. 30, 2013 Initial public offering [Member]	Mar. 31, 2013 Initial public offering [Member]	Sep. 30, 2013 Private placement [Member]	Sep. 30, 2013 Restricted stock units [Member]	Sep. 30, 2013 Stock options [Member]	Sep. 30, 2013 Convertible promissory notes [Member]	Sep. 30, 2013 Convertible promissory notes [Member] December 2011 Note [Member]	Sep. 30, 2013 Convertible promissory notes [Member] February 2012 Note [Member]	Sep. 30, 2013 2010 corporate bonus incentive plan and 2011 corporate bonus incentive plan [Member]	Sep. 30, 2013 2010 corporate bonus incentive plan and 2011 corporate bonus incentive plan [Member] Restricted stock units [Member]	Sep. 30, 2013 2011 corporate bonus incentive plan and 2012 corporate bonus incentive plan [Member]	Sep. 30, 2013 2011 corporate bonus incentive plan and 2012 corporate bonus incentive plan [Member] Restricted stock units [Member]	Sep. 30, 2013 Other current liabilities [Member] Extended warranty [Member]	Dec. 31, 2012 Other current liabilities [Member] Extended warranty [Member]	Sep. 30, 2013 Other long-term liabilities [Member] Extended warranty [Member]	Dec. 31, 2012 Other long-term liabilities [Member] Extended warranty [Member]	Sep. 30, 2013 Minimum [Member]	Sep. 30, 2013 Maximum [Member]
Description Of Business And Summary Of Significant Accounting Policies [Line Items]
Common stock shares issued	46,933,000		46,933,000		3,764,000		5,462,500	705,881						87,507		602,274
Price per share issued under IPO							$ 17.00	$ 17.00
Proceeds from IPO			$ 84,472,000			$ 84,500,000
Underwriting discounts and commissions						6,500,000
Payment of offering costs during the period						1,900,000
Offering expenses						4,500,000
Proceeds from private placement			12,000,000					12,000,000
Outstanding convertible securities converted into common stock			32,406,995								3,764,954
Convertible notes, principal amount												24,000,000	30,000,000
Accrued interest on convertible notes											2,300,000
Loss on debt extinguishments			22,900,000
Reduction in preferred stock warranty liability			11,200,000
Loss due to termination of Series A and all Series C preferred stock warrants			800,000
Payment for termination of warrants			12,000,000
Stock-based compensation expense	6,990,000	3,217,000	44,503,000	11,823,000						4,300,000				4,400,000		10,200,000
Restricted stock units vested in period									976,000						87,507		602,274
Deferred issuance costs	6,400,000		6,400,000
Amount of finished goods inventory included in consigned inventory	4,300,000		4,300,000		3,500,000
Standard warranty period																						1 year	5 years
Changes in estimates for pre-existing warranties			178,000	(1,717,000)
Extended warranties for period			15 years
Deferred revenue	149,990,000		149,990,000		89,838,000													400,000	400,000
Deferred revenue, non-current	$ 382,556,000		$ 382,556,000		$ 418,218,000															$ 6,800,000	$ 5,500,000

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Borrowings (Tables)

9 Months Ended

Sep. 30, 2013

Debt Disclosure [Abstract]

Carrying Value of Convertible Promissory Notes and Compound Embedded Derivatives

The following table provides a roll-forward of the carrying value of the convertible promissory notes and compound embedded derivatives (in thousands):

	Convertible Promissory Notes			Compound Embedded Derivatives			Total
Balances at December 31, 2012	$	52,800		$	3,519		$	56,319
Accrued interest on convertible promissory notes		558			—			558
Accretion of discount on convertible promissory notes		377			—			377
Conversion of convertible promissory notes and embedded derivatives		(53,735	)		(3,519	)		(57,254	)
Balances at September 30, 2013	$	—		$	—		$	—

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Document and Entity Information	9 Months Ended
	Sep. 30, 2013	Nov. 01, 2013
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Sep. 30, 2013
Document Fiscal Year Focus	2013
Document Fiscal Period Focus	Q3
Trading Symbol	SSNI
Entity Registrant Name	SILVER SPRING NETWORKS INC
Entity Central Index Key	0001180079
Current Fiscal Year End Date	--12-31
Entity Filer Category	Non-accelerated Filer
Entity Common Stock, Shares Outstanding		47,129,761

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Stock-Based Compensation (Tables)

9 Months Ended

Sep. 30, 2013

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Stock-Based Compensation Expense

We recorded stock-based compensation expense as follows (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2013		2012		2013		2012
Cost of revenue	$	1,376	$	521	$	10,631	$	1,993
Research and development		1,905		876		15,056		3,295
Sales and marketing		950		632		5,822		2,272
General and administrative		2,759		1,188		12,994		4,263
Stock-based compensation expense	$	6,990	$	3,217	$	44,503	$	11,823

Shares Available to Grant Under Stock Option Plan

The following table summarizes our shares available to grant under the 2012 Plan (in thousands):

	Shares Available to Grant
Balance at December 31, 2012		2,996
Additional shares authorized		3,400
Options granted		(784	)
Options cancelled or expired		396
Restricted stock units granted		(2,558	)
Restricted stock units cancelled		91
Balance at September 30, 2013		3,541

Summary of Stock Option Activity

The following table summarizes our stock option activity and related information for the nine months ended September 30, 2013 (in thousands, except per share data):

	Options Outstanding
	Number of Shares			Weighted Average Exercise Price per Share		Weighted Average Remaining Contractual Term (years)		Aggregate Intrinsic Value
Balance at December 31, 2012		4,616		$	21.73
Options granted		784			17.42
Options exercised		(207	)		3.48
Options cancelled or expired		(396	)		28.28
Balance at September 30, 2013		4,797		$	10.67		6.14	$	32,953
As of September 30, 2013:
Options vested and expected to vest		4,750		$	10.60		6.11	$	32,936
Options exercisable		3,696		$	8.70		5.37	$	32,398

Summary of Restricted Stock Unit Activity

The following table summarizes our restricted stock unit activity and related information for the nine months ended September 30, 2013 (in thousands, except per share data):

	Restricted Stock Units Outstanding
	Number of Shares			Weighted Average Grant Date Fair Value per Share
Balance at December 31, 2012		231		$	49.51
Restricted stock units granted		2,558			17.49
Restricted stock units vested		(976	)		22.94
Restricted stock units cancelled		(91	)		20.30
Balance at September 30, 2013		1,722		$	18.57