8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 8-K

Current Report

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

February 16, 2016

Date of Report (Date of earliest event reported)

SILVER SPRING NETWORKS, INC.

(Exact name of Registrant as specified in its charter)

Delaware	001-35828	43-1966972
(State or other jurisdiction of incorporation)	(Commission file number)	(I.R.S. Employer Identification No.)

555 Broadway Street, Redwood City, CA	94063
(Address of principal executive offices)	(Zip Code)

(650) 839-4000

(Registrant’s telephone number, including area code)

Not Applicable

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligations of the registrant under any of the following provisions (see General Instruction A.2 below):

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02 Results of Operations and Financial Condition.

On February 16, 2016, Silver Spring Networks, Inc. issued a press release and supplemental commentary reporting financial results for the fourth quarter and year ended December 31, 2015. The press release and supplemental commentary are being furnished as Exhibit 99.1 and Exhibit 99.2, respectively, to this Current Report on Form 8-K.

The information in this Item 2.02, including Exhibit 99.1 and Exhibit 99.2 hereto, is being furnished pursuant to Item 2.02 of Form 8-K and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), nor shall the information contained in this Item 2.02 or in the accompanying Exhibit 99.1 or Exhibit 99.2 be deemed incorporated by reference in any filing with the Securities and Exchange Commission under the Exchange Act or the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference to this Item 2.02.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits.

Number	Description
99.1	Press release, dated February 16, 2016.
99.2	Supplemental Commentary, dated February 16, 2016.

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 hereunto duly authorized.

	SILVER SPRING NETWORKS, INC.
Date: February 16, 2016	By:	/s/ James P. Burns
		Name:	James P. Burns
		Title:	Executive Vice President and Chief Financial Officer

EXHIBIT INDEX

Number	Description
99.1	Press release, dated February 16, 2016.
99.2	Supplemental Commentary, dated February 16, 2016.

EX-99.1

Exhibit 99.1

Silver Spring Networks Reports Fourth Quarter Financial Results

$0.08 non-GAAP Earnings Per Share on $75 million Top-Line

47% non-GAAP Gross Margin

$6.3 Million in Cash Flow from Operations

Redwood City, CA – February 16, 2016 – Silver Spring Networks, Inc. (NYSE: SSNI) today announced financial results for its fourth quarter and year ended December 31, 2015.

Fourth Quarter Results (all comparisons made are against the prior year period, unless otherwise stated)

• Non-GAAP revenue $75.0 million, up 7%.

• GAAP revenue $199.2 million, up 157%.

• Non-GAAP gross margin 47.1%, versus 41.3%.

• GAAP gross margin 50.9%, versus 39.0%.

• Non-GAAP net income $4.1 million versus $1.5 million.

• GAAP net income $61.9 million versus $0.5 million.

• Non-GAAP income per share $0.08, versus $0.03 per share.

• GAAP income per share $1.19 versus $0.01 income per share.

• $124.4 million cash, cash equivalents and short-term investments balance, on $6.3 million in cash flow from operations.

“We completed 2015 on a high note as shown in our fourth quarter results. We had another great quarter, delivering solid revenue growth, record gross margins, and positive cash flow,” said Mike Bell, President and CEO. “Our 2015 results, and our award with Con Edison, demonstrate the strength of our business model and the leadership position we have built in the smart grid and smart city markets. We see significant potential for continued innovation and growth in our core markets, and with Starfish, look to leverage Silver Spring’s technology and platform into the broader Internet of Things opportunity.”

Business Highlights (through February 16, 2016, unless otherwise stated):

• Selected by Consolidated Edison, Inc. to deploy our fifth-generation network canopy and advanced metering infrastructure to 3.9 million electric and 1.3 million gas customers over its entire service territory.

• Delivered record 47% non-GAAP gross margin performance in the fourth quarter due to growth, favorable product mix and manufacturing efficiencies.

• Selected by CESC of India to deploy an advanced, multi-application smart energy and smart city network in the city of Kolkata. The initial phase anticipates connecting approximately 25,000 customers and automating the electricity distribution grid. CESC India also plans to leverage its network for broader Internet of Things (IoT) applications with Silver Spring’s Starfish program.

• Selected by an existing utility customer to connect approximately 250,000 street lights using its already deployed Silver Spring multi-application advanced metering infrastructure canopy, subject to regulatory approval.

• Launched Starfish Internet of Things services offering, Silver Spring’s international wireless IPv6 network service for the IoT. In addition to CESC in Kolkata, India, Silver Spring has announced initial availability in three North American cities, Chicago, San Antonio, and San Jose, and three European cities, Bristol, Copenhagen, and Glasgow.

• Introduced the IoT Edge Router to enable simple and secure integration of smart city devices and applications such as smart parking stations, intelligent transportation systems, bicycle rental kiosks, and electric vehicle charging stations for forward-looking utilities and cities.

• Named one of the Top 100 most innovative San Francisco Bay area companies in the Thompson Reuters Top 100 Global Innovators report.

• Over 22.9 million cumulative network endpoints delivered from inception through December 31, 2015, up 13% from a year ago.

Full Year 2015 Results (all comparisons made against the prior year):

• Non-GAAP revenue $281.9 million, up 2%.

• GAAP revenue $489.6 million, up 156%.

• Non-GAAP gross margin 43.5%, versus 33.6% a year ago.

• GAAP gross margin 46.1%, versus 29.5% a year ago.

• Non-GAAP net income $4.5 million versus a net loss of ($24.4) million.

• GAAP net income $80.0 million versus a net loss of ($89.2) million.

• Non-GAAP income per diluted share $0.09, versus ($0.50) loss per share.

• GAAP income per diluted share $1.55, versus ($1.84) loss per share.

• $124.4 million cash, cash equivalents and short-term investments balance, on $19.7 million in cash flow from operations.

• Total backlog of $770 million as of December 31, 2015.

Supplemental Information

Concurrent with this press release, Silver Spring Networks will post a supplemental commentary with financial information to its website at ir.silverspringnet.com.

Silver Spring Networks announced preliminary fourth quarter and full year 2015 results and hosted a conference call on February 8, 2016, during which Silver Spring provided

a review of its expected results for the fourth quarter and full year ending December 31, 2015, and its outlook for the future. A dial-in replay of the conference call will be available until April 1, 2016 and can be accessed at 877-660-6853 or 201-612-7415 Conference ID 13630388. An audio webcast replay of the conference call is available for one year at ir.silverspringnet.com.

About Silver Spring Networks

Silver Spring Networks is a leading networking platform and solutions provider for smart energy networks. Silver Spring’s pioneering IPv6 networking platform, with over 22.9 million Silver Spring enabled devices delivered, is connecting utilities to homes and business throughout the world with the goal of achieving greater energy efficiency for the planet. Silver Spring’s innovative solutions enable utilities to gain operational efficiencies, improve grid reliability, and empower consumers to monitor and manage energy consumption. Silver Spring Networks’ customers include major utilities around the globe such as Baltimore Gas & Electric, CitiPower & Powercor, Commonwealth Edison, Consolidated Edison, CPS Energy, Florida Power & Light, Jemena Electricity Networks Limited, Pacific Gas & Electric, Pepco Holdings, Progress Energy, and Singapore Power, among others. To learn more, please visit www.silverspringnet.com.

Non-GAAP and Other Financial Measures

Silver Spring believes that its results of operations under generally accepted accounting principles, or GAAP, when considered in isolation, may only provide limited insight into the performance of its business in any given period. As a result, Silver Spring manages its business, makes planning decisions, evaluates its performance and allocates resources by assessing non-GAAP measures such as non-GAAP revenue, recurring non-GAAP revenue, recurring non-GAAP revenue per endpoint, cost of non-GAAP revenue, non-GAAP gross profit (loss), non-GAAP gross margin, non-GAAP operating expense, non-GAAP operating income (loss), non-GAAP operating margin, non-GAAP income tax provision (benefit), non-GAAP net income (loss), non-GAAP income (loss) per share, adjusted EBITDA, and total backlog, in addition to other financial measures presented in accordance with GAAP. Silver Spring believes that these non-GAAP and other financial measures offer valuable supplemental information regarding the performance of its business, and will help investors better understand the sales volumes, and gross margin and profitability trends, as well as the cash flow characteristics, of its business. The non-GAAP measures should not be considered in isolation from, are not a substitute for, and do not purport to be an alternative to, revenue, cost of revenue, gross profit (loss), gross margin, operating expense, operating loss, net income (loss), net income (loss) per share or any other performance measure derived in accordance with GAAP. Silver Spring may consider whether other significant non-recurring items that arise in the future should also be excluded in calculating the non-GAAP financial measures it uses.

Non-GAAP revenue represents amounts invoiced for products for which ownership, typically evidenced by title and risk of loss, has transferred or services that have been provided to the customer, and for which payment is expected to be made in accordance with normal payment terms. Non-GAAP revenue excludes amounts for undelivered products, services to be performed in the future, and amounts paid or payable to customers. Non-GAAP revenue is initially recorded as deferred revenue and is then recognized as revenue when all revenue recognition criteria has been met under Silver Spring’s accounting policies as described in Silver Spring’s filings with the Securities and Exchange Commission. Silver Spring reconciles revenue to non-GAAP revenue by adding revenue to the change in deferred revenue in a given period.

Recurring non-GAAP revenue is non-GAAP revenue from Managed services and SaaS, as well as customer support and other service offerings. Recurring non-GAAP revenue is primarily recurring in nature and includes managed services, hosting and software maintenance, and support fees, as well as one-time Managed services and SaaS set up fees. Customer support and other services are provided to customers outside of Managed services and SaaS offerings, and are also recurring in nature. Silver Spring reconciles recurring GAAP revenue to recurring non-GAAP revenue by adding revenue to the change in deferred revenue in a given period.

Recurring non-GAAP revenue per endpoint represents a trailing twelve-month recurring non-GAAP revenue per cumulative endpoint shipped from inception to date.

Cost of non-GAAP revenue represents the cost associated with products and services that have been delivered to the customer, excluding stock-based compensation, amortization of intangibles and acquisition-related charges. Cost of product shipments for which revenue is not recognized in the period incurred is recorded as deferred cost of revenue. Deferred cost of revenue is expensed in the statement of operations as cost of revenue when the corresponding revenue is recognized. Costs related to services are expensed in the period incurred. Silver Spring reconciles cost of revenue to cost of non-GAAP revenue by adding cost of revenue and the change in deferred cost of revenue, less stock-based compensation, amortization of intangibles and acquisition-related charges, included in cost of revenue in a given period.

Non-GAAP gross profit (loss) is the difference between non-GAAP revenue and cost of non-GAAP revenue. Non-GAAP gross margin is non-GAAP gross profit (loss) as a percentage of non-GAAP revenue.

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

Non-GAAP operating income (loss) represents operating income (loss) adjusted for non-GAAP revenue and cost of non-GAAP revenue and excludes expenses related to the amortization of intangible assets, stock-based compensation, acquisition-related

charges, restructuring and legal settlements. Non-GAAP operating margin is non-GAAP operating income (loss) as a percentage of non-GAAP revenue.

Non-GAAP income tax provision (benefit) represents income tax provision (benefit) excluding income tax benefit related to acquisitions.

Non-GAAP net income (loss) represents net income (loss) adjusted for changes in deferred revenue and deferred cost of revenue, and excludes expenses related to the amortization of intangible assets, stock-based compensation, acquisition-related charges, income tax benefit related to acquisitions, restructuring and legal settlements.

Non-GAAP income (loss) per share represents non-GAAP net income (loss) divided by weighted average shares outstanding for the period.

Adjusted EBITDA is net income (loss) adjusted for changes in deferred revenue and deferred cost of revenue, other (income) expense, net, (benefit) provision for income taxes, depreciation and amortization, stock-based compensation, acquisition-related charges, restructuring, legal settlements and certain other items management believes affect the comparability of operating results.

Total backlog represents future product and service billings that Silver Spring expects to generate pursuant to contracts entered into with its utility customers and meter manufacturers. Total backlog includes order backlog, which represents future billings for open purchase orders and other firm commitments.

Forward-Looking Statements

This press release contains forward-looking statements that involve risks and uncertainties. These forward-looking statements include statements regarding the momentum in Silver Spring Networks’ business; future deployments; future innovation; future product availability; future growth; and future financial results. Statements including words such as “anticipate”, “believe”, “estimate” or “expect” and statements in the future tense are forward-looking statements. These forward-looking statements are preliminary estimates and expectations based on current information and are subject to business and economic risks and uncertainties that could cause actual events or actual future results to differ materially from the expectations set forth in the forward-looking statements. Important factors that could cause results to differ materially from the statements herein include: timing around customer decisions and deployment pace; receipt by our customers of required regulatory approvals; dependence on a limited number of customers and key suppliers; general economic risks; specific economic risks in different geographies and among different industries; failure to maintain or increase renewals and increase business from existing customers; uncertainties around continued success in sales growth and market share gains; the expansion of our target markets, including the IoT market; lengthy sales cycles with no assurances that a prospective customer will select Silver Spring’s products and services; amounts included in backlog may not result in billings or revenue; adverse publicity about, or consumer or political opposition to, the smart grid; security breaches involving smart

grid products or services; the ability to integrate technology into third-party devices and Silver Spring’s relationship with third-party manufacturers; execution and customer adoption risks related to new product introductions and innovation, including our new fifth generation networking platform and products; the ability to attract and retain personnel, including members of Silver Spring’s management team; changes in strategy; technological changes that make Silver Spring’s products and services less competitive; competition, particularly from larger companies with more resources than Silver Spring; international business uncertainties; the ability to acquire and integrate other businesses; and other risk factors set forth from time to time in Silver Spring’s filings with the SEC, copies of which are available free of charge at the SEC’s website at www.sec.gov. All forward-looking statements in this press release reflect Silver Spring’s expectations as of February 16, 2016. Silver Spring undertakes no obligation, and expressly disclaims any obligation, to update any forward-looking statements in this press release in light of new information or future events. In addition, the preliminary financial results set forth in this press release are estimates based on information currently available to Silver Spring.

For additional information, please contact:

Mark McKechnie

Investor Relations

650-839-4664

mmckechnie@silverspringnet.com

Noel Hartzell

Global Communications

650-839-4184

nhartzell@silverspringnet.com

SILVER SPRING NETWORKS, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

	Three Months Ended December 31,						Twelve Months Ended December 31,
	2015			2014			2015			2014
Revenue:
Product revenue	$	143,202		$	60,034		$	353,041		$	129,333
Service revenue		56,045			17,377			136,518			61,955
Net revenue		199,247			77,411			489,559			191,288
Cost of revenue:
Product cost of revenue		83,903			35,038			202,430			77,158
Service cost of revenue		13,999			12,195			61,386			57,793
Total cost of revenue		97,902			47,233			263,816			134,951
Gross profit		101,345			30,178			225,743			56,337
Operating expenses:
Research and development		13,714			12,718			61,295			64,771
Sales and marketing		7,343			8,063			33,452			36,388
General and administrative		14,483			8,104			46,372			41,260
Restructuring		60			(99	)		1,671			1,789
Total operating expenses		35,600			28,786			142,790			144,208
Operating income (loss)		65,745			1,392			82,953			(87,871	)
Other (expense) income, net		(159	)		68			104			123
Income (loss) before income taxes		65,586			1,460			83,057			(87,748	)
Provision for income taxes		(3,708	)		(959	)		(3,071	)		(1,422	)
Net income (loss)	$	61,878		$	501		$	79,986		$	(89,170	)
Net income (loss) per share:
Basic	$	1.23		$	0.01		$	1.60		$	(1.84	)
Diluted	$	1.19		$	0.01		$	1.55		$	(1.84	)
Weighted average shares used to compute net income (loss) per share:
Basic		50,481			48,929			49,963			48,377
Diluted		52,167			50,191			51,524			48,377

Reconciliation of GAAP to Non-GAAP results (in thousands, except per share data)

The following tables reconcile the Company’s net income (loss) and net income (loss) per share as presented in its unaudited Condensed Consolidated Statements of Operations and prepared in accordance with GAAP to its non-GAAP net income (loss) and non-GAAP net income (loss) per share.

	Three Months Ended December 31,						Twelve Months Ended December 31,
	2015			2014			2015			2014
Net income (loss)	$	61,878		$	501		$	79,986		$	(89,170	)
Change in deferred revenue, net of foreign currency translation		(124,259	)		(7,045	)		(207,635	)		85,420
Change in deferred cost of revenue, net of foreign currency translation		56,982			5,535			97,274			(56,767	)
Amortization of intangibles		422			219			1,674			614
Stock-based compensation		4,942			2,391			26,479			33,861
Acquisition-related charges		506			—			2,551			—
Income tax benefit related to Detectent acquisition		—			—			(1,128	)		—
Restructuring		60			(99	)		1,671			1,789
Legal settlements		3,595			—			3,595			(100	)
Non-GAAP net income (loss)	$	4,126		$	1,502		$	4,467		$	(24,353	)
Non-GAAP net income (loss) per share:
Basic	$	0.08		$	0.03		$	0.09		$	(0.50	)
Diluted	$	0.08		$	0.03		$	0.09		$	(0.50	)
Weighted average shares used to compute Non-GAAP net income (loss) per share:
Basic		50,481			48,929			49,963			48,377
Diluted		52,167			50,191			51,524			48,377

SILVER SPRING NETWORKS, INC.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)

	December 31,			December 31,
	2015			2014 (a)
ASSETS
Current assets:
Cash and cash equivalents	$	65,264		$	60,457
Short-term investments		59,181			60,339
Accounts receivable		47,813			54,740
Inventory		4,545			6,722
Deferred cost of revenue		196,868			29,585
Deferred tax assets		—			5,278
Prepaid expenses and other current assets		10,835			5,146
Total current assets		384,506			222,267
Property and equipment, net		14,106			12,860
Goodwill and intangible assets		14,390			8,221
Deferred cost of revenue, non-current		38,882			303,445
Deferred tax assets, non-current		1,069			354
Other long-term assets		4,772			1,047
Total assets	$	457,725		$	548,194
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities:
Accounts payable	$	30,623		$	27,530
Deferred revenue		305,471			91,688
Deferred tax liability		—			249
Accrued and other liabilities		41,913			24,421
Total current liabilities		378,007			143,888
Deferred revenue, non-current		96,342			517,905
Deferred tax liability, non-current		—			5,146
Other liabilities		17,241			15,074
Total liabilities		491,590			682,013
Total stockholders’ deficit		(33,865	)		(133,819	)
Total liabilities and stockholders’ deficit	$	457,725		$	548,194

(a) Derived from audited consolidated financial statements

SILVER SPRING NETWORKS, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW

(in thousands)

	Three Months Ended December 31,						Twelve Months Ended December 31,
	2015			2014			2015			2014
OPERATING ACTIVITIES
Net income (loss)	$	61,878		$	501		$	79,986		$	(89,170	)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Deferred taxes		(557	)		(1,245	)		(1,492	)		(328	)
Depreciation and amortization		1,930			1,763			7,822			6,467
Stock-based compensation		4,942			2,391			26,479			33,861
Other non-cash adjustments		412			(80	)		766			431
Changes in assets and liabilities:
Accounts receivable		(3,675	)		13,759			7,398			15,554
Inventory		(853	)		(2,110	)		2,190			(2,271	)
Prepaid expenses and other assets		(936	)		2,784			(5,128	)		194
Contingent consideration related to
Detectent acquisition held in escrow		—			—			(4,000	)		—
Deferred cost of revenue		56,978			5,603			97,286			(56,907	)
Accounts payable		3,232			(955	)		3,101			(4,120	)
Customer deposits		(599	)		288			(448	)		321
Deferred revenue		(124,115	)		(7,823	)		(208,305	)		84,590
Accrued and other liabilities		7,620			(1,355	)		14,032			2,510
Net cash provided by (used in) operating activities		6,257			13,521			19,687			(8,868	)
INVESTING ACTIVITIES
Payments for business acquisition, net of cash and cash equivalents acquired		—			24			(7,098	)		(8,726	)
Proceeds from sales of available-for-sale investments		4,204			10,991			15,690			53,450
Proceeds from maturities of available-for-sale investments		—			—			9,250			6,750
Purchases of available-for-sale investments		(5,270	)		(11,050	)		(24,180	)		(57,671	)
Purchases of property and equipment		(1,821	)		(1,851	)		(5,350	)		(6,073	)
Net cash used in investing activities		(2,887	)		(1,886	)		(11,688	)		(12,270	)
FINANCING ACTIVITIES
Payments on capital lease obligations		(169	)		(405	)		(1,163	)		(1,550	)
Proceeds from issuance of common stock, net of repurchases		139			174			3,794			7,020
Excess tax benefit from share-based payment awards		153			103			153			103
Taxes paid related to net share settlement of equity awards		(1,820	)		(1,043	)		(5,788	)		(6,453	)
Net cash used in financing activities		(1,697	)		(1,171	)		(3,004	)		(880	)
Effect of exchange rate changes on cash and cash equivalents		136			(121	)		(188	)		(121	)
Net increase (decrease) in cash and cash equivalents		1,809			10,343			4,807			(22,139	)
Cash and cash equivalents - beginning of period		63,455			50,114			60,457			82,596
Cash and cash equivalents - end of period	$	65,264		$	60,457		$	65,264		$	60,457

SILVER SPRING NETWORKS, INC.

UNAUDITED RECONCILIATION OF NET REVENUE BETWEEN GAAP AND NON-GAAP

(in thousands, except percentages)

	Q4 2014			Q1 2015			Q2 2015			Q3 2015			Q4 2015			YoY % Change
TYPE
GAAP net revenue:
Product net revenue	$	60,034		$	105,035		$	54,711		$	50,093		$	143,202			139	%
Service net revenue
Managed services and SaaS (a)		10,569			12,974			10,608			11,223			37,142			251	%
Professional services (a)		6,808			25,631			11,848			8,189			18,903			178	%
Total service net revenue		17,377			38,605			22,456			19,412			56,045			223	%
Total GAAP net revenue	$	77,411		$	143,640		$	77,167		$	69,505		$	199,247			157	%
% Product		78	%		73	%		71	%		72	%		72	%
% Service		22	%		27	%		29	%		28	%		28	%
Change in deferred net revenue:
Change in deferred product revenue	$	(9,991	)	$	(64,034	)	$	(10,015	)	$	1,785		$	(95,194	)
Change in deferred service revenue:
Managed services and SaaS		984			(419	)		2,387			1,397			(22,896	)
Professional services		1,962			(16,088	)		(399	)		2,010			(6,169	)
Total change in deferred service revenue		2,946			(16,507	)		1,988			3,407			(29,065	)
Total change in deferred revenue	$	(7,045	)	$	(80,541	)	$	(8,027	)	$	5,192		$	(124,259	)
Non-GAAP revenue:
Product net revenue		50,043			41,001			44,696			51,878			48,008			-4	%
Service net revenue:
Managed services and SaaS (a)		11,553			12,555			12,995			12,620			14,246			23	%
Professional services (a)		8,770			9,543			11,449			10,199			12,734			45	%
Total service net revenue		20,323			22,098			24,444			22,819			26,980			33	%
Total non-GAAP net revenue	$	70,366		$	63,099		$	69,140		$	74,697		$	74,988			7	%
% Product		71	%		65	%		65	%		69	%		64	%
% Service		29	%		35	%		35	%		31	%		36	%
RECURRING REVENUE PER ENDPOINT
Recurring GAAP revenue (TTM) (a)	$	35,220		$	39,673		$	41,697		$	45,374		$	71,947
Changes in deferred revenue, net of foreign currency translations		9,284			6,851			6,912			4,349			(19,531	)
Recurring non-GAAP revenue (TTM) (a)	$	44,504		$	46,524		$	48,609		$	49,723		$	52,416
Cumulative network endpoints delivered		20,266			20,814			21,506			22,321			22,954
Recurring GAAP revenue per endpoint delivered (a)	$	1.74		$	1.91		$	1.94		$	2.03		$	3.13			80	%
Recurring non-GAAP revenue per endpoint delivered (a)	$	2.20		$	2.24		$	2.26		$	2.23		$	2.28			4	%
SOLUTION
GAAP net revenue
Advanced metering infrastructure	$	72,456		$	112,865		$	66,907		$	60,149		$	181,892			151	%
New solutions		4,955			30,775			10,260			9,356			17,355			250	%
Total GAAP net revenue	$	77,411		$	143,640		$	77,167		$	69,505		$	199,247			157	%
% Advanced metering infrastructure		94	%		79	%		87	%		87	%		91	%
% New solutions		6	%		21	%		13	%		13	%		9	%
Change in deferred net revenue
Advanced metering infrastructure	$	(12,441	)	$	(64,828	)	$	(10,976	)	$	3,586		$	(123,525	)
New solutions		5,396			(15,713	)		2,949			1,606			(734	)
Total change in deferred net revenue	$	(7,045	)	$	(80,541	)	$	(8,027	)	$	5,192		$	(124,259	)
Non-GAAP net revenue
Advanced metering infrastructure	$	60,015		$	48,037		$	55,931		$	63,735		$	58,367			-3	%
New solutions		10,351			15,062			13,209			10,962			16,621			61	%
Total Non-GAAP net revenue	$	70,366		$	63,099		$	69,140		$	74,697		$	74,988			7	%
% Advanced metering infrastructure		85	%		76	%		81	%		85	%		78	%
% New solutions		15	%		24	%		19	%		15	%		22	%
GEOGRAPHY
GAAP net revenue
United States	$	30,017		$	122,582		$	72,360		$	53,113		$	177,896			493	%
International		47,394			21,058			4,807			16,392			21,351			-55	%
Total GAAP net revenue	$	77,411		$	143,640		$	77,167		$	69,505		$	199,247			157	%
% United States		39	%		85	%		94	%		76	%		89	%
% International		61	%		15	%		6	%		24	%		11	%
Change in deferred net revenue
United States	$	29,176		$	(66,533	)	$	(17,955	)	$	12,467		$	(116,859	)
International		(36,221	)		(14,008	)		9,928			(7,275	)		(7,400	)
Total change in deferred net revenue	$	(7,045	)	$	(80,541	)	$	(8,027	)	$	5,192		$	(124,259	)
Non-GAAP net revenue
United States	$	59,193		$	56,049		$	54,405		$	65,580		$	61,037			3	%
International		11,173			7,050			14,735			9,117			13,951			25	%
Total non-GAAP net revenue	$	70,366		$	63,099		$	69,140		$	74,697		$	74,988			7	%
% United States		84	%		89	%		79	%		88	%		81	%
% International		16	%		11	%		21	%		12	%		19	%

(a) Certain amounts have been reclassified in 2014 from Professional services to Managed services and SaaS related to product support which is recurring in nature to conform to current period presentation.

SILVER SPRING NETWORKS, INC.

UNAUDITED SUPPLEMENTAL FINANCIAL INFORMATION

(in thousands, except percentages and headcount)

	Q4 2014			Q1 2015			Q2 2015			Q3 2015			Q4 2015			YoY % Change
CASH FLOW DATA
Operating cash flow	$	13,521		$	(455	)	$	9,613		$	4,272		$	6,257			-54	%
Operating cash flow - TTM		(8,868	)		(5,960	)		7,048			27,054			19,687			322	%
BALANCE SHEET DATA
Cash, cash equivalents and short-term investments	$	120,796		$	111,215		$	118,555		$	121,915		$	124,445			3	%
Deferred net revenue
End of quarter		609,593			529,984			521,176			526,000			401,813
Less: Beginning of quarter		(617,416	)		(609,593	)		(529,984	)		(521,176	)		(526,000	)
Foreign currency translation adjustment and other		778			(932	)		781			368			(72	)
Change in deferred net revenue, net of foreign currency translation and other	$	(7,045	)	$	(80,541	)	$	(8,027	)	$	5,192		$	(124,259	)
Deferred cost of revenue
End of quarter	$	333,030		$	300,524		$	286,044		$	292,730		$	235,750
Less: Beginning of quarter		(338,633	)		(333,030	)		(300,524	)		(286,044	)		(292,730	)
Foreign currency translation adjustment		68			(10	)		(8	)		26			(2	)
Change in deferred cost of revenue, net of foreign currency translation	$	(5,535	)	$	(32,516	)	$	(14,488	)	$	6,712		$	(56,982	)
STOCK-BASED COMPENSATION
Cost of goods sold	$	218		$	1,723		$	2,209		$	1,197		$	1,006			361	%
Research and development		785			2,180			2,832			1,771			1,277			63	%
Sales and marketing		479			1,238			1,287			914			665			39	%
General and administrative		909			1,882			2,333			1,971			1,994			119	%
	$	2,391		$	7,023		$	8,661		$	5,853		$	4,942			107	%
EMPLOYEES		576			623			640			645			652			13	%
HOMES & BUSINESSES
Cumulative network endpoints delivered*		20,266			20,814			21,506			22,321			22,954			13	%

* Endpoints refer to communication modules in electric meters

SILVER SPRING NETWORKS, INC.

UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES

(in thousands, except per share data and percentages)

	Q4 2014			Q1 2015			Q2 2015			Q3 2015			Q4 2015			YOY % Change
QUARTERLY RECONCILIATION OF RESULTS
Net revenue
GAAP net revenue	$	77,411		$	143,640		$	77,167		$	69,505		$	199,247			157	%
Change in deferred revenue, net of foreign currency translation		(7,045	)		(80,541	)		(8,027	)		5,192			(124,259	)
Non-GAAP net revenue	$	70,366		$	63,099		$	69,140		$	74,697		$	74,988			7	%
Gross profit
GAAP gross profit	$	30,178		$	71,455		$	19,956		$	32,987		$	101,345			236	%
Change in deferred revenue, net of foreign currency translation		(7,045	)		(80,541	)		(8,027	)		5,192			(124,259	)
Change in deferred cost of revenue, net of foreign currency translation		5,535			32,516			14,488			(6,712	)		56,982
Amortization of intangible assets		140			262			260			260			259
Stock-based compensation		218			1,723			2,209			1,197			1,006
Acquisition-related charges (a)		—			11			60			14			15
Non-GAAP gross profit	$	29,026		$	25,426		$	28,946		$	32,938		$	35,348			22	%
GAAP gross margin % (as a % of GAAP net revenue)		39	%		50	%		26	%		47	%		51	%
Non-GAAP gross margin % (as a % of non-GAAP net revenue)		41	%		40	%		42	%		44	%		47	%
Operating expenses
GAAP operating expenses	$	28,786		$	37,314		$	36,495		$	33,381		$	35,600			24	%
Amortization of intangible assets		(79	)		(147	)		(162	)		(161	)		(163	)
Stock-based compensation		(2,173	)		(5,300	)		(6,452	)		(4,656	)		(3,936	)
Acquisition-related charges (a)		—			(724	)		(691	)		(545	)		(491	)
Restructuring		99			(194	)		(1,078	)		(339	)		(60	)
Legal settlements		—			—			—			—			(3,595	)
Non-GAAP operating expenses	$	26,633		$	30,949		$	28,112		$	27,680		$	27,355			3	%
GAAP operating expense % (as a % of GAAP net revenue)		37	%		26	%		47	%		48	%		18	%
Non-GAAP operating expense % (as a % of non-GAAP net revenue)		38	%		49	%		41	%		37	%		36	%
Operating income (loss)
GAAP operating income (loss)	$	1,392		$	34,141		$	(16,539	)	$	(394	)	$	65,745			4623	%
Change in deferred revenue, net of foreign currency translation		(7,045	)		(80,541	)		(8,027	)		5,192			(124,259	)
Change in deferred cost of revenue, net of foreign currency translation		5,535			32,516			14,488			(6,712	)		56,982
Amortization of intangible assets		219			409			422			421			422
Stock-based compensation		2,391			7,023			8,661			5,853			4,942
Acquisition-related charges (a)		—			735			751			559			506
Restructuring		(99	)		194			1,078			339			60
Legal settlements		—			—			—			—			3,595
Non-GAAP operating income (loss)	$	2,393		$	(5,523	)	$	834		$	5,258		$	7,993			234	%
GAAP operating margin % (as a % of GAAP net revenue)		2	%		24	%		-21	%		-1	%		33	%
Non-GAAP operating margin % (as a % of non-GAAP net revenue)		3	%		-9	%		1	%		7	%		11	%
Income tax provision (benefit)
GAAP income tax provision (benefit)	$	959		$	(476	)	$	(290	)	$	129		$	3,708			287	%
Income tax benefit related to Detectent acquisition		—			890			124			114			—
Non-GAAP income tax provision (benefit)	$	959		$	414		$	(166	)	$	243		$	3,708			287	%
GAAP income tax provision % (as a % of GAAP net revenue)		1	%		0	%		0	%		0	%		2	%
Non-GAAP income tax provision % (as a % of non-GAAP net revenue)		1	%		1	%		0	%		0	%		5	%
Adjusted EBITDA
GAAP net income (loss)	$	501		$	34,905		$	(16,175	)	$	(622	)	$	61,878			12251	%
Change in deferred revenue, net of foreign currency translation		(7,045	)		(80,541	)		(8,027	)		5,192			(124,259	)
Change in deferred cost of revenue, net of foreign currency translation		5,535			32,516			14,488			(6,712	)		56,982
Other (income) expense, net		(68	)		(288	)		(74	)		99			159
Provision (benefit) for income taxes		959			(476	)		(290	)		129			3,708
Depreciation and amortization		1,763			1,949			1,953			1,990			1,930
Stock-based compensation		2,391			7,023			8,661			5,853			4,942
Acquisition-related charges (a)		—			735			751			559			506
Restructuring		(99	)		194			1,078			339			60
Legal settlements		—			—			—			—			3,595
Adjusted EBITDA	$	3,937		$	(3,983	)	$	2,365		$	6,827		$	9,501			141	%
Net income (loss)
GAAP net income (loss)	$	501		$	34,905		$	(16,175	)	$	(622	)	$	61,878			12251	%
Change in deferred revenue, net of foreign currency translation		(7,045	)		(80,541	)		(8,027	)		5,192			(124,259	)
Change in deferred cost of revenue, net of foreign currency translation		5,535			32,516			14,488			(6,712	)		56,982
Amortization of intangible assets		219			409			422			421			422
Stock-based compensation		2,391			7,023			8,661			5,853			4,942
Acquisition-related charges (a)		—			735			751			559			506
Income tax benefit related to Detectent acquisition		—			(890	)		(124	)		(114	)		—
Restructuring		(99	)		194			1,078			339			60
Legal settlements		—			—			—			—			3,595
Non-GAAP net income (loss)	$	1,502		$	(5,649	)	$	1,074		$	4,916		$	4,126			175	%
GAAP net margin % (as a % of GAAP net revenue)		1	%		24	%		-21	%		-1	%		31	%
Non-GAAP net margin % (as a % of non-GAAP net revenue)		2	%		-9	%		2	%		7	%		6	%
GAAP net income (loss) per share
Basic	$	0.01		$	0.71		$	(0.32	)	$	(0.01	)	$	1.23
Diluted	$	0.01		$	0.69		$	(0.32	)	$	(0.01	)	$	1.19
Weighted average number of shares used in computation
Basic		48,929			49,306			49,862			50,188			50,481
Diluted		50,191			50,899			49,862			50,188			52,167
Non-GAAP net income (loss) per share
Basic	$	0.03		$	(0.11	)	$	0.02		$	0.10		$	0.08
Diluted	$	0.03		$	(0.11	)	$	0.02		$	0.10		$	0.08
Weighted average number of shares used in computation
Basic		48,929			49,306			49,862			50,188			50,481
Diluted		50,191			49,306			51,390			51,713			52,167

(a) Acquisition-related charges in 2014 were not included.

SILVER SPRING NETWORKS, INC.

RECONCILIATION OF GAAP TO NON-GAAP MEASURES

(in thousands, except percentages)

	Three Months Ended December 31, 2015
	GAAP			Change in Deferred Revenue and Deferred Cost of Revenue (b)			Stock-based Compensation			Amortization of Intangible Assets			Acquisition- Related Costs			Non-GAAP
Product revenue	$	143,202		$	(95,194	)	$	—		$	—		$	—		$	48,008
Service revenue
Managed services and SaaS		37,142			(22,896	)		—			—			—			14,246
Professional services		18,903			(6,169	)		—			—			—			12,734
Total service net revenue	$	56,045		$	(29,065	)	$	—		$	—		$	—		$	26,980
Net revenue	$	199,247		$	(124,259	)	$	—		$	—		$	—		$	74,988
Product cost of revenue	$	83,903		$	(56,982	)	$	(250	)	$	(259	)	$	—		$	26,412
Service cost of revenue
Managed services and SaaS		7,592			—			(256	)		—			(15	)		7,321
Professional services		6,407			—			(500	)		—			—			5,907
Total service cost of revenue	$	13,999		$	—		$	(756	)	$	—		$	(15	)	$	13,228
Total cost of revenue	$	97,902		$	(56,982	)	$	(1,006	)	$	(259	)	$	(15	)	$	39,640
Gross profit	$	101,345		$	(67,277	)	$	1,006		$	259		$	15		$	35,348
Product gross margin %		41.4	%		2.5	%		0.5	%		0.5	%		—			45.0	%
Service gross margin %
Managed service and SaaS gross margin %		79.6	%		-32.9	%		1.8	%		—			0.1	%		48.6	%
Professional services gross margin %		66.1	%		-16.4	%		3.9	%		—			—			53.6	%
Total service gross margin %		75.0	%		-26.9	%		2.8	%		—			0.1	%		51.0	%
Total gross margin %		50.9	%		-5.4	%		1.3	%		0.3	%		0.0	%		47.1	%
	Three Months Ended December 31, 2014
	GAAP			Change in Deferred Revenue and Deferred Cost of Revenue (b)			Stock-based Compensation			Amortization of Intangible Assets			Acquisition- Related Costs			Non-GAAP
Product revenue	$	60,034		$	(9,991	)	$	—		$	—		$	—		$	50,043
Service revenue
Managed services and SaaS (a)		10,569			984			—			—			—			11,553
Professional services (a)		6,808			1,962			—			—			—			8,770
Total service net revenue	$	17,377		$	2,946		$	—		$	—		$	—		$	20,323
Net revenue	$	77,411		$	(7,045	)	$	—		$	—		$	—		$	70,366
Product cost of revenue	$	35,038		$	(5,535	)	$	77		$	(140	)	$	—		$	29,440
Service cost of revenue
Managed services and SaaS (a)		6,031			—			72			—			—			6,103
Professional services (a)		6,164			—			(367	)		—			—			5,797
Total service cost of revenue	$	12,195		$	—		$	(295	)	$	—		$	—		$	11,900
Total cost of revenue	$	47,233		$	(5,535	)	$	(218	)	$	(140	)	$	—		$	41,340
Gross profit	$	30,178		$	(1,510	)	$	218		$	140		$	—		$	29,026
Product gross margin %		41.6	%		-0.6	%		-0.2	%		0.2	%		—			41.1	%
Service gross margin %
Managed service and SaaS gross margin % (a)		42.9	%		4.9	%		-0.6	%		—			—			47.2	%
Professional services gross margin % (a)		9.5	%		20.3	%		4.2	%		—			—			33.9	%
Total service gross margin %		29.8	%		10.2	%		1.5	%		0.0	%		—			41.5	%
Total gross margin %		39.0	%		1.8	%		0.3	%		0.2	%		—			41.3	%

(a) Certain amounts have been reclassified in 2014 from Professional services to Managed services and SaaS related to product support which is recurring in nature to conform to current period presentation.

(b) Amounts presented net of foreign currency translation.

SILVER SPRING NETWORKS, INC.

RECONCILIATION OF GAAP TO NON-GAAP MEASURES

(in thousands, except percentages)

	Twelve Months Ended December 31, 2015
	GAAP			Change in Deferred Revenue and Deferred Cost of Revenue (b)			Stock-based Compensation			Amortization of Intangible Assets			Acquisition- Related Costs			Non-GAAP
Product revenue	$	353,041		$	(167,458	)	$	—		$	—		$	—		$	185,583
Service revenue
Managed services and SaaS		71,947			(19,531	)		—			—			—			52,416
Professional services		64,571			(20,646	)		—			—			—			43,925
Total service net revenue	$	136,518		$	(40,177	)	$	—		$	—		$	—		$	96,341
Net revenue	$	489,559		$	(207,635	)	$	—		$	—		$	—		$	281,924
Product cost of revenue	$	202,430		$	(97,274	)	$	(1,288	)	$	(1,041	)	$	—		$	102,827
Service cost of revenue
Managed services and SaaS		31,663			—			(1,937	)		—			(100	)		29,626
Professional services		29,723			—			(2,910	)		—			—			26,813
Total service cost of revenue	$	61,386		$	—		$	(4,847	)	$	—		$	(100	)	$	56,439
Total cost of revenue	$	263,816		$	(97,274	)	$	(6,135	)	$	(1,041	)	$	(100	)	$	159,266
Gross profit	$	225,743		$	(110,361	)	$	6,135		$	1,041		$	100		$	122,658
Product gross margin %		42.7	%		0.7	%		0.7	%		0.6	%		—			44.6	%
Service gross margin %
Managed service and SaaS gross margin %		56.0	%		-16.4	%		3.7	%		—			0.2	%		43.5	%
Professional services gross margin %		54.0	%		-21.6	%		6.6	%		—			—			39.0	%
Total service gross margin %		55.0	%		-18.8	%		5.0	%		—			0.1	%		41.4	%
Total gross margin %		46.1	%		-5.2	%		2.2	%		0.4	%		0.0	%		43.5	%
	Twelve Months Ended December 31, 2014
	GAAP			Change in Deferred Revenue and Deferred Cost of Revenue (b)			Stock-based Compensation			Amortization of Intangible Assets			Acquisition- Related Costs			Non-GAAP
Product revenue	$	129,333		$	64,691		$	—		$	—		$	—		$	194,024
Service revenue
Managed services and SaaS (a)		35,220			9,284			—			—			—			44,504
Professional services (a)		26,735			11,445												38,180
Total service net revenue	$	61,955		$	20,729		$	—		$	—		$	—		$	82,684
Net revenue	$	191,288		$	85,420		$	—		$	—		$	—		$	276,708
Product cost of revenue	$	77,158		$	56,767		$	(1,837	)	$	(417	)	$	—		$	131,671
Service cost of revenue
Managed services and SaaS (a)		25,800			—			(919	)		—			—			24,881
Professional services (a)		31,993			—			(4,853	)		—			—			27,140
Total service cost of revenue	$	57,793		$	—		$	(5,772	)	$	—		$	—		$	52,021
Total cost of revenue	$	134,951		$	56,767		$	(7,609	)	$	(417	)	$	—		$	183,692
Gross profit	$	56,337		$	28,653		$	7,609		$	417		$	—		$	93,016
Product gross margin %		40.3	%		-9.4	%		0.9	%		0.2	%		—			32.1	%
Service gross margin %
Managed service and SaaS gross margin % (a)		26.7	%		15.3	%		2.1	%		—			—			44.1	%
Professional services gross margin % (a)		-19.7	%		35.9	%		12.7	%		—			—			28.9	%
Total service gross margin %		6.7	%		23.4	%		7.0	%		—			—			37.1	%
Total gross margin %		29.5	%		1.3	%		2.7	%		0.2	%		—			33.6	%

(a) Certain amounts have been reclassified in 2014 from Professional services to Managed services and SaaS related to product support which is recurring in nature to conform to current period presentation.

(b) Amounts presented net of foreign currency translation.

EX-99.2

Exhibit 99.2

Fourth Quarter and Full Year 2015

Supplemental Commentary

February 16, 2016

Related Information

The following supplemental commentary is provided by management and should be referenced in conjunction with Silver Spring Networks’ fourth quarter and full year 2015 financial results press release and presentation slides available on its Investor Relations website at www.ir.silverspringnet.com. This commentary represents management’s view of the Company’s financial and operational performance and outlook as of February 16^th, 2016, and are provided to give investors and analysts further insight into its performance and expectations. Silver Spring undertakes no obligation, and expressly disclaims any obligation, to update any forward-looking statements in this supplemental commentary in light of new information or future events. In addition, the preliminary financial results set forth in this supplemental commentary are estimates based on information currently available to Silver Spring.

Throughout this commentary, Silver Spring provides both GAAP and non-GAAP financial measures. Unless otherwise stated, the financial measures provided are non-GAAP. Please refer to the tables at the end of this commentary for a reconciliation of our GAAP to non-GAAP financial measures. Silver Spring encourages investors to consider all measures before making an investment decision. All comparisons made in this commentary are against the same period in the prior year unless otherwise stated.

2

Q4 2015 Overview

We’re pleased with our Q4 results, ending 2015 on a strong note with solid revenue growth, record gross margins, and earnings at the upper end of the range provided in November. Our non-GAAP income of $0.08 per fully-diluted share for the quarter ended December 31, 2015 includes a $0.06 headwind from higher taxes as a result of better than expected GAAP results.

We had a strong quarter of footprint growth, delivering another 633,000 network endpoints, up 15% from last year, to end the year with over 22.9 million cumulative endpoints delivered since inception.

We grew our New Solutions by 61%, led by significant growth in smart cities. We view New Solutions growth as a strong indicator of the success of our business model of unlocking the value of our multi-application network by delivering additional applications beyond our AMI deployments.

The combination of our growing footprint and expanding New Solutions drove 23% growth in our primarily recurring Managed services and SaaS business.

We grew our international business by 25% in the quarter, to 19% of our total revenue mix, fueled in part by a rapid ramp to our newest customer in Australia, Ausnet Services.

Our fourth quarter results also demonstrated strong margins, a testament to the ongoing value we provide to our customers, with record gross margin of 47.1 % and operating margin of 10.7%.

We generated $6.3 million in cash flow from operations.

Detailed Q4 Results

Revenue

• Revenue was $75 million, up 7%.

• Primary growth drivers included services and international.

• Stronger than expected available capital spending budgets at year-end for some of our customers contributed to our Q4 results.

By Type:

• Product revenue was $48 million, down 4%.

• 633,000 endpoints were delivered in the quarter, versus 552,000 in the prior year period.

3

• Services revenue of $27 million, up 33%.

• Professional services revenue was $13 million, up 45%.

• Managed services and SaaS revenue was $14 million, up 23%.

• Recurring revenue per cumulative network endpoint on a trailing twelve-month basis was $2.28, up from $2.20 a year ago.

By Solution:

• Advanced Metering Infrastructure revenue was $58 million, down 3% year-over-year as expected due to lower third-party content.

• New Solutions revenue was $17 million, up 61%, led by smart cities.

Gross Margin

• Gross margin was 47.1%, up almost 6 points on favorable product mix, manufacturing efficiencies, and strong services margins.

• Total gross profit grew solidly, up 22%.

By reporting segment:

• Product gross margin was 45.0%, up approximately 4 points.

• Services gross margin was 51.0%, up approximately 9 points.

• Professional services gross margin was 53.6%, up approximately 20 points, and

• Managed services & SaaS gross margin was 48.6%, up approximately 1 point.

Several milestone payments and seasonally lower costs contributed to strong services revenue and gross margin during the quarter. We expect overall services gross margin in the mid-to-upper 30’s in Q1.

Operating Expense, Taxes, Net Income

• Operating expense was $27.4 million, up 3%.

• We ended the year with headcount of 652 employees.

• Tax expense was $3.7 million, versus $959,000 last year.

• Net income was $4.1 million, versus $1.5 million last year.

• Net income per fully diluted share was $0.08 versus $0.03 in Q4 2014.

Cash Flow

• Q4 2015 cash flow from operations was $6.3 million.

• Positive cash flow was driven by solid earnings and continued working capital discipline.

4

Capital expenditure for the quarter was $1.8 million.

Full Year 2015 Overview

2015 was a great year for Silver Spring, marked by growth, operating leverage, cash flow and innovation.

We grew our top-line to $282 million for the year, fueled by international, New Solutions and Managed services and SaaS.

We shipped 2.69 million endpoints in the year, up 29% from 2014, to close the year with over 22.9 million endpoints delivered. We believe this represents market share growth in the regions in which we participate. Including our win with Con Edison, we estimate our market share of endpoints awarded to date in the U.S. at 34%, a full 12 percentage points ahead of our nearest competitor.

This large and growing base of endpoints, with a typical system life of 15 years or more, provides the opportunity to deliver additional value for years.

We believe our customers are realizing great benefits from our multi-application network platform as they deploy additional solutions beyond AMI, demonstrated by 35% growth in our New Solutions business.

The combination of our growing footprint and expanding New Solutions drove 18% growth in our primarily recurring Managed services and SaaS business, which closed the year at $52.4 million in sales and represented just under 19% of our total revenue mix for the year. We expect double digit growth for this business in 2016.

Favorable mix, due in part to better growth of our own content including software, improved manufacturing efficiencies, and strong services, contributed to an approximately 10 percentage point improvement in gross margin to 43.5%, for 32% growth in gross profits for the year.

Our non-GAAP net income improved by $28.8 million in 2015, due to strong gross profits and disciplined spending.

We closed the year with a solid balance sheet of $124.4 million of cash, and no debt, up approximately $4 million from a year ago, including cash used for the acquisition of Detectent. Positive earnings for the year and improvements in our working capital contributed to $19.7 million in cash flow from operations for the year.

Our successful deployments at leading customers serve as strong references for our deal pipeline, which was quite active in 2015. We announced last week a significant deal with Con Edison, and we are optimistic that other deals are progressing well. We have robust pilot activity with customers that serve around 25 million homes and businesses.

5

On the innovation front, we continue to invest in our product roadmap, with our Gen5 and Milli products, new software launches including CustomerIQ, SensorIQ, Operations Optimizer, and SLV6, which we believe will extend our leadership position in our core smart grid and smart city markets.

In closing, we see significant opportunity to grow Silver Spring’s customer footprint and to deliver additional value to our core markets, and with Starfish, we have begun executing on our plan to leverage our platform to the broader IoT space.

Detailed 2015 Results

2015 Revenue

• Revenue was $282 million, up 2%.

• Primary growth drivers include international, New Solutions, and Managed services & SaaS.

By Type:

• Product revenue was $186 million, down 4%.

• 2.69 million endpoints delivered in 2015, up 29% versus 2.08 million in 2014.

• Services revenue was $96 million, up 17%.

• Professional services revenue was $44 million, up 15%.

• Managed services and SaaS revenue was $52 million, up 18%.

• Recurring revenue per cumulative network endpoint on a trailing twelve-month basis $2.28, up from $2.20 a year ago.

By Solution:

• Advanced Metering Infrastructure revenue was $226 million, down 4% versus 2014 as expected due to lower third-party content.

• New Solutions revenue was $56 million, up 35%.

• Growth led by smart city, analytics and distribution automation.

By Region:

• International revenue was $45 million, up 34% for the year, and represented 16% of sales for the full year.

6

2015 Gross Margin

• Gross margin was 43.5%, up 10 points from last year on favorable product mix, manufacturing efficiencies, and strong services margins.

• Total gross profit grew solidly, up 32%.

By reporting segment:

• Product gross margin was 44.6%, up approximately 12.5 points.

• Services gross margin was 41.4%, up approximately 4 points.

• Professional services gross margin was 39.0%, up approximately 10 points, and

• Managed services & SaaS gross margin was 43.5%, down about a half point.

2015 Operating Expense, Taxes, Net Income

• Operating expense was $114 million, down 2%.

• Tax expense was $4.2 million, versus $1.4 million in 2014.

• Net income was $4.5 million, versus a net loss of ($24.4) million in 2014.

• Net income per fully diluted share was $0.09 versus a net loss per share of ($0.50) in 2014.

2015 Cash Flow and Balance Sheet

• 2015 cash flow from operations was $19.7 million.

• Positive cash flow was driven by solid earnings and continued working capital discipline.

• Capital expenditure for the year was $5.4 million.

• We ended the year with $124.4 million of cash, cash equivalents and investments and no debt.

2015 GAAP Results

For 2015, we reported revenue of $489.6 million and fully-diluted income per share of $1.55, versus revenue of $191.3 million and a loss per share of ($1.84) per share in 2014, and considerably better than expected.

During our Q1 2015 earnings call, we announced a change in accounting estimate for GAAP revenue recognition, which we began to apply on January 1, 2015. This change in accounting estimate, and other factors including timing of customer acceptances, contributed to the higher GAAP revenue for Q4 and full-year 2015.

7

We view this as positive outcome, as it strengthened our balance sheet by reducing deferred revenue and improving retained earnings, and better aligns our GAAP financials to how we manage and assess the performance of our business.

As a result of the higher than expected GAAP net income, we recognized $3.7 million of non-GAAP tax expense in Q4, $3 million higher than expected.

Non-GAAP Q1 and Full Year 2016 Outlook

For the first quarter ending March 31, 2016, we expect the following:

• Revenue of approximately $63 million to $68 million;

• Gross margin of approximately 42% to 44%;

• Operating expense of approximately $30 million to $31 million. The sequential increase is due primarily to commissions on deals expected to close in Q1 and payroll seasonality;

• Tax and other expense of approximately $700K;

• Loss per share of approximately three cents to eight cents; and

• Share count of approximately 51 million shares.

For the full year ending December 31, 2016, we expect the following:

• Revenue of approximately $290 million to $310 million. The range represents approximately 3% to 10% growth versus 2015, which includes an estimated 3-4% headwind from the continued reduction of third-party New Solutions revenue from our top-line;

• Gross margin of approximately 42% to 45%;

• Operating expense of approximately $120 million to $125 million;

• Approximately $3 million in taxes and other expenses

• Fully-diluted earnings per share of a nickel to twenty cents;

• Full-year share count of approximately 52 million to 54 million shares;

• Beyond Q1, we expect expansion each quarter with deployments weighted slightly more to the second half of the year; and

• Positive cash flow from operations for 2016.

• We expect approximately $15 million to $20 million of capital expenditures for 2016 versus $5.4 million in 2015, primarily weighted towards the first half of the year, with the increase due to spend on our new San Jose headquarters.

8

In summary, we have good visibility into 2016, supported by our backlog. Had we closed the Con Edison award in 2015, our backlog would have been over $1 billion and approximately 10 million endpoints, versus our reported level of $770 million as of December 31, 2015.

Non-GAAP and Other Financial Measures

Silver Spring believes that its results of operations under generally accepted accounting principles, or GAAP, when considered in isolation, may only provide limited insight into the performance of its business in any given period. As a result, Silver Spring manages its business, makes planning decisions, evaluates its performance and allocates resources by assessing non-GAAP measures such as non-GAAP revenue, recurring non-GAAP revenue, recurring non-GAAP revenue per endpoint, cost of non-GAAP revenue, non-GAAP gross profit (loss), non-GAAP gross margin, non-GAAP operating expense, non-GAAP operating income (loss), non-GAAP operating margin, non-GAAP income tax provision (benefit), non-GAAP net income (loss), non-GAAP income (loss) per share, adjusted EBITDA, and total backlog, in addition to other financial measures presented in accordance with GAAP. Silver Spring believes that these non-GAAP and other financial measures offer valuable supplemental information regarding the performance of its business, and will help investors better understand the sales volumes, and gross margin and profitability trends, as well as the cash flow characteristics, of its business. The non-GAAP measures should not be considered in isolation from, are not a substitute for, and do not purport to be an alternative to, revenue, cost of revenue, gross profit (loss), gross margin, operating expense, operating income (loss), net income (loss), net income (loss) per share or any other performance measure derived in accordance with GAAP. Silver Spring may consider whether other significant non-recurring items that arise in the future should also be excluded in calculating the non-GAAP financial measures it uses.

Non-GAAP revenue represents amounts invoiced for products for which ownership, typically evidenced by title and risk of loss, has transferred or services that have been provided to the customer, and for which payment is expected to be made in accordance with normal payment terms. Non-GAAP revenue excludes amounts for undelivered products, services to be performed in the future, and amounts paid or payable to customers. Non-GAAP revenue is initially recorded as deferred revenue and is then recognized as revenue when all revenue recognition criteria has been met under Silver Spring’s accounting policies as described in Silver Spring’s filings with the Securities and Exchange Commission. Silver Spring reconciles revenue to non-GAAP revenue by adding revenue to the change in deferred revenue in a given period.

Recurring non-GAAP revenue is non-GAAP revenue from Managed services and SaaS, as well as customer support and other service offerings. Recurring non-GAAP revenue is primarily recurring in nature and includes managed services, hosting and software maintenance, and support fees, as well as one-time Managed services and SaaS set up fees. Customer support and other services are provided to customers outside of Managed services and SaaS offerings, and are also recurring in nature. Silver Spring reconciles recurring GAAP revenue to recurring non-GAAP revenue by adding revenue to the change in deferred revenue in a given period.

9

Recurring non-GAAP revenue per endpoint represents a trailing twelve-month recurring non-GAAP revenue per cumulative endpoint shipped from inception to date.

Cost of non-GAAP revenue represents the cost associated with products and services that have been delivered to the customer, excluding stock-based compensation, amortization of intangibles and acquisition-related charges. Cost of product shipments for which revenue is not recognized in the period incurred is recorded as deferred cost of revenue. Deferred cost of revenue is expensed in the statement of operations as cost of revenue when the corresponding revenue is recognized. Costs related to services are expensed in the period incurred. Silver Spring reconciles cost of revenue to cost of non-GAAP revenue by adding cost of revenue and the change in deferred cost of revenue, less stock-based compensation, amortization of intangibles and acquisition-related charges, included in cost of revenue in a given period.

Non-GAAP gross profit (loss) is the difference between non-GAAP revenue and cost of non-GAAP revenue. Non-GAAP gross margin is non-GAAP gross profit (loss) as a percentage of non-GAAP revenue.

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

Non-GAAP operating income (loss) represents operating income (loss) adjusted for non-GAAP revenue and cost of non-GAAP revenue and excludes expenses related to the amortization of intangible assets, stock-based compensation, acquisition-related charges, restructuring and legal settlements. Non-GAAP operating margin is non-GAAP operating income (loss) as a percentage of non-GAAP revenue.

Non-GAAP income tax provision (benefit) represents income tax provision (benefit) excluding income tax benefit related to acquisitions.

Non-GAAP net income (loss) represents net income (loss) adjusted for changes in deferred revenue and deferred cost of revenue, and excludes expenses related to the amortization of intangible assets, stock-based compensation, acquisition-related charges, income tax benefit related to acquisitions, restructuring and legal settlements.

Non-GAAP income (loss) per share represents non-GAAP net income (loss) divided by weighted average shares outstanding for the period.

Adjusted EBITDA is net income (loss) adjusted for changes in deferred revenue and deferred cost of revenue, other (income) expense, net, (benefit) provision for income taxes, depreciation and amortization, stock-based compensation, acquisition-related charges, restructuring, legal settlements and certain other items management believes affect the comparability of operating results.

10

Total backlog represents future product and service billings that Silver Spring expects to generate pursuant to contracts entered into with its utility customers and meter manufacturers. Total backlog includes order backlog, which represents future billings for open purchase orders and other firm commitments.

Forward-Looking Statements

This document contains forward-looking statements that involve risks and uncertainties. These forward-looking statements include statements regarding the momentum in Silver Spring Networks’ business; customer and industry activity; future deployments; future innovation; future product availability; future growth and market opportunity; and future financial results, including outlook for the first quarter and full year 2016. Statements including words such as “anticipate”, “believe”, “estimate” or “expect” and statements in the future tense are forward-looking statements. These forward-looking statements are preliminary estimates and expectations based on current information and are subject to business and economic risks and uncertainties that could cause actual events or actual future results to differ materially from the expectations set forth in the forward-looking statements. Important factors that could cause results to differ materially from the statements herein include: timing around customer decisions and deployment pace; receipt by our customers of required regulatory approvals; dependence on a limited number of customers and key suppliers; general economic risks; specific economic risks in different geographies and among different industries; failure to maintain or increase renewals and increase business from existing customers; uncertainties around continued success in sales growth and market share gains; the expansion of our target markets, including the IoT market; lengthy sales cycles with no assurances that a prospective customer will select Silver Spring’s products and services; amounts included in backlog may not result in billings or revenue; adverse publicity about, or consumer or political opposition to, the smart grid; security breaches involving smart grid products or services; the ability to integrate technology into third-party devices and Silver Spring’s relationship with third-party manufacturers; execution and customer adoption risks related to new product introductions and innovation, including our new fifth generation networking platform and products; the ability to attract and retain personnel, including members of Silver Spring’s management team; changes in strategy; technological changes that make Silver Spring’s products and services less competitive; competition, particularly from larger companies with more resources than Silver Spring; international business uncertainties; the ability to acquire and integrate other businesses; and other risk factors set forth from time to time in Silver Spring’s filings with the SEC, copies of which are available free of charge at the SEC’s website at www.sec.gov. All forward-looking statements in this document reflect Silver Spring’s expectations as of February 16, 2016. Silver Spring undertakes no obligation, and expressly disclaims any obligation, to update any forward-looking statements in this document in light of new information or future events. In addition, the preliminary financial results set forth in this document are estimates based on information currently available to Silver Spring.

11

SILVER SPRING NETWORKS, INC.

UNAUDITED RECONCILIATION OF NET REVENUE BETWEEN GAAP AND NON-GAAP

(in thousands, except percentages)

	Q4 2014			Q1 2015			Q2 2015			Q3 2015			Q4 2015			YoY% Change			FY 2014			FY 2015			YoY% Change
TYPE
GAAP net revenue:
Product net revenue	$	60,034		$	105,035		$	54,711		$	50,093		$	143,202			139	%	$	129,333		$	353,041			173	%
Service net revenue
Managed services and SaaS (a)		10,569			12,974			10,608			11,223			37,142			251	%		35,220			71,947			104	%
Professional services (a)		6,808			25,631			11,848			8,189			18,903			178	%		26,735			64,571			142	%
Total service net revenue		17,377			38,605			22,456			19,412			56,045			223	%		61,955			136,518			120	%
Total GAAP net revenue	$	77,411		$	143,640		$	77,167		$	69,505		$	199,247			157	%	$	191,288		$	489,559			156	%
% Product		78	%		73	%		71	%		72	%		72	%					68	%		72	%
% Service		22	%		27	%		29	%		28	%		28	%					32	%		28	%
Change in deferred net revenue:
Change in deferred product revenue	$	(9,991	)	$	(64,034	)	$	(10,015	)	$	1,785		$	(95,194	)				$	64,691		$	(167,458	)
Change in deferred service revenue:
Managed services and SaaS		984			(419	)		2,387			1,397			(22,896	)					9,284			(19,531	)
Professional services		1,962			(16,088	)		(399	)		2,010			(6,169	)					11,445			(20,646	)
Total change in deferred service revenue		2,946			(16,507	)		1,988			3,407			(29,065	)					20,729			(40,177	)
Total change in deferred revenue	$	(7,045	)	$	(80,541	)	$	(8,027	)	$	5,192		$	(124,259	)				$	85,420		$	(207,635	)
Non-GAAP revenue:
Product net revenue		50,043			41,001			44,696			51,878			48,008			-4	%		194,024			185,583			-4	%
Service net revenue:
Managed services and SaaS (a)		11,553			12,555			12,995			12,620			14,246			23	%		44,504			52,416			18	%
Professional services (a)		8,770			9,543			11,449			10,199			12,734			45	%		38,180			43,925			15	%
Total service net revenue		20,323			22,098			24,444			22,819			26,980			33	%		82,684			96,341			17	%
Total non-GAAP net revenue	$	70,366		$	63,099		$	69,140		$	74,697		$	74,988			7	%	$	276,708		$	281,924			2	%
% Product		71	%		65	%		65	%		69	%		64	%					70	%		66	%
% Service		29	%		35	%		35	%		31	%		36	%					30	%		34	%
RECURRING REVENUE PER ENDPOINT
Recurring GAAP revenue (TTM) (a)	$	35,220		$	39,673		$	41,697		$	45,374		$	71,947					$	35,220		$	71,947
Changes in deferred revenue, net of foreign currency translations		9,284			6,851			6,912			4,349			(19,531	)					9,284			(19,531	)
Recurring non-GAAP revenue (TTM) (a)	$	44,504		$	46,524		$	48,609		$	49,723		$	52,416					$	44,504		$	52,416
Cumulative network endpoints delivered		20,266			20,814			21,506			22,321			22,954						20,266			22,954
Recurring GAAP revenue per endpoint delivered (a)	$	1.74		$	1.91		$	1.94		$	2.03		$	3.13			80	%	$	1.74		$	3.13			80	%
Recurring non-GAAP revenue per endpoint delivered (a)	$	2.20		$	2.24		$	2.26		$	2.23		$	2.28			4	%	$	2.20		$	2.28			4	%
SOLUTION
GAAP net revenue
Advanced metering infrastructure	$	72,456		$	112,865		$	66,907		$	60,149		$	181,892			151	%	$	167,506		$	421,813			152	%
New solutions		4,955			30,775			10,260			9,356			17,355			250	%		23,782			67,746			185	%
Total GAAP net revenue	$	77,411		$	143,640		$	77,167		$	69,505		$	199,247			157	%	$	191,288		$	489,559			156	%
% Advanced metering infrastructure		94	%		79	%		87	%		87	%		91	%					88	%		86	%
% New solutions		6	%		21	%		13	%		13	%		9	%					12	%		14	%
Change in deferred net revenue
Advanced metering infrastructure	$	(12,441	)	$	(64,828	)	$	(10,976	)	$	3,586		$	(123,525	)				$	67,922		$	(195,743	)
New solutions		5,396			(15,713	)		2,949			1,606			(734	)					17,498			(11,892	)
Total change in deferred net revenue	$	(7,045	)	$	(80,541	)	$	(8,027	)	$	5,192		$	(124,259	)				$	85,420		$	(207,635	)
Non-GAAP net revenue
Advanced metering infrastructure	$	60,015		$	48,037		$	55,931		$	63,735		$	58,367			-3	%	$	235,428		$	226,070			-4	%
New solutions		10,351			15,062			13,209			10,962			16,621			61	%		41,280			55,854			35	%
Total Non-GAAP net revenue	$	70,366		$	63,099		$	69,140		$	74,697		$	74,988			7	%	$	276,708		$	281,924			2	%
% Advanced metering infrastructure		85	%		76	%		81	%		85	%		78	%					85	%		80	%
% New solutions		15	%		24	%		19	%		15	%		22	%					15	%		20	%
GEOGRAPHY
GAAP net revenue
United States	$	30,017		$	122,582		$	72,360		$	53,113		$	177,896			493	%	$	101,811		$	425,951			318	%
International		47,394			21,058			4,807			16,392			21,351			-55	%		89,477			63,608			-29	%
Total GAAP net revenue	$	77,411		$	143,640		$	77,167		$	69,505		$	199,247			157	%	$	191,288		$	489,559			156	%
% United States		39	%		85	%		94	%		76	%		89	%					53	%		87	%
% International		61	%		15	%		6	%		24	%		11	%					47	%		13	%
Change in deferred net revenue
United States	$	29,176		$	(66,533	)	$	(17,955	)	$	12,467		$	(116,859	)				$	141,479		$	(188,880	)
International		(36,221	)		(14,008	)		9,928			(7,275	)		(7,400	)					(56,059	)		(18,755	)
Total change in deferred net revenue	$	(7,045	)	$	(80,541	)	$	(8,027	)	$	5,192		$	(124,259	)				$	85,420		$	(207,635	)
Non-GAAP net revenue
United States	$	59,193		$	56,049		$	54,405		$	65,580		$	61,037			3	%	$	243,290		$	237,071			-3	%
International		11,173			7,050			14,735			9,117			13,951			25	%		33,418			44,853			34	%
Total non-GAAP net revenue	$	70,366		$	63,099		$	69,140		$	74,697		$	74,988			7	%	$	276,708		$	281,924			2	%
% United States		84	%		89	%		79	%		88	%		81	%					88	%		84	%
% International		16	%		11	%		21	%		12	%		19	%					12	%		16	%

(a) Certain amounts have been reclassified in 2014 from Professional services to Managed services and SaaS related to product support which is recurring in nature to conform to current period presentation.

12

SILVER SPRING NETWORKS, INC.

UNAUDITED SUPPLEMENTAL FINANCIAL INFORMATION

(in thousands, except percentages and headcount)

	Q4 2014			Q1 2015			Q2 2015			Q3 2015			Q4 2015			YoY% Change
CASH FLOW DATA
Operating cash flow	$	13,521		$	(455	)	$	9,613		$	4,272		$	6,257			-54	%
Operating cash flow - TTM		(8,868	)		(5,960	)		7,048			27,054			19,687			322	%
BALANCE SHEET DATA
Cash, cash equivalents and short-term investments	$	120,796		$	111,215		$	118,555		$	121,915		$	124,445			3	%
Deferred net revenue
End of quarter		609,593			529,984			521,176			526,000			401,813
Less: Beginning of quarter		(617,416	)		(609,593	)		(529,984	)		(521,176	)		(526,000	)
Foreign currency translation adjustment and other		778			(932	)		781			368			(72	)
Change in deferred net revenue, net of foreign currency translation and other	$	(7,045	)	$	(80,541	)	$	(8,027	)	$	5,192		$	(124,259	)
Deferred cost of revenue
End of quarter	$	333,030		$	300,524		$	286,044		$	292,730		$	235,750
Less: Beginning of quarter		(338,633	)		(333,030	)		(300,524	)		(286,044	)		(292,730	)
Foreign currency translation adjustment		68			(10	)		(8	)		26			(2	)
Change in deferred cost of revenue, net of foreign currency translation	$	(5,535	)	$	(32,516	)	$	(14,488	)	$	6,712		$	(56,982	)
STOCK-BASED COMPENSATION
Cost of goods sold	$	218		$	1,723		$	2,209		$	1,197		$	1,006			361	%
Research and development		785			2,180			2,832			1,771			1,277			63	%
Sales and marketing		479			1,238			1,287			914			665			39	%
General and administrative		909			1,882			2,333			1,971			1,994			119	%
	$	2,391		$	7,023		$	8,661		$	5,853		$	4,942			107	%
EMPLOYEES		576			623			640			645			652			13	%
HOMES & BUSINESSES
Cumulative network endpoints delivered*		20,266			20,814			21,506			22,321			22,954			13	%

* Endpoints refer to communication modules in electric meters

13

SILVER SPRING NETWORKS, INC.

UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES

(in thousands, except per share data and percentages)

	Q4 2014			Q1 2015			Q2 2015			Q3 2015			Q4 2015			YOY % Change			FY 2014			FY 2015			YOY % Change
QUARTERLY RECONCILIATION OF RESULTS
Net revenue
GAAP net revenue	$	77,411		$	143,640		$	77,167		$	69,505		$	199,247			157	%	$	191,288		$	489,559			156	%
Change in deferred revenue, net of foreign currency translation		(7,045	)		(80,541	)		(8,027	)		5,192			(124,259	)					85,420			(207,635	)
Non-GAAP net revenue	$	70,366		$	63,099		$	69,140		$	74,697		$	74,988			7	%	$	276,708		$	281,924			2	%
Gross profit
GAAP gross profit	$	30,178		$	71,455		$	19,956		$	32,987		$	101,345			236	%	$	56,337		$	225,743			301	%
Change in deferred revenue, net of foreign currency translation		(7,045	)		(80,541	)		(8,027	)		5,192			(124,259	)					85,420			(207,635	)
Change in deferred cost of revenue, net of foreign currency translation		5,535			32,516			14,488			(6,712	)		56,982						(56,767	)		97,274
Amortization of intangible assets		140			262			260			260			259						417			1,041
Stock-based compensation		218			1,723			2,209			1,197			1,006						7,609			6,135
Acquisition-related charges (a)		—			11			60			14			15						—			100
Non-GAAP gross profit	$	29,026		$	25,426		$	28,946		$	32,938		$	35,348			22	%	$	93,016		$	122,658			32	%
GAAP gross margin % (as a % of GAAP net revenue)		39	%		50	%		26	%		47	%		51	%					29	%		46	%
Non-GAAP gross margin % (as a % of non-GAAP net revenue)		41	%		40	%		42	%		44	%		47	%					34	%		44	%
Operating expenses
GAAP operating expenses	$	28,786		$	37,314		$	36,495		$	33,381		$	35,600			24	%	$	144,208		$	142,790			1	%
Amortization of intangible assets		(79	)		(147	)		(162	)		(161	)		(163	)					(197	)		(633	)
Stock-based compensation		(2,173	)		(5,300	)		(6,452	)		(4,656	)		(3,936	)					(26,252	)		(20,344	)
Acquisition-related charges (a)		—			(724	)		(691	)		(545	)		(491	)					—			(2,451	)
Restructuring		99			(194	)		(1,078	)		(339	)		(60	)					(1,789	)		(1,671	)
Legal settlements		—			—			—			—			(3,595	)					100			(3,595	)
Non-GAAP operating expenses	$	26,633		$	30,949		$	28,112		$	27,680		$	27,355			3	%	$	116,070		$	114,096			-2	%
GAAP operating expense % (as a % of GAAP net revenue)		37	%		26	%		47	%		48	%		18	%					75	%		29	%
Non-GAAP operating expense % (as a % of non-GAAP net revenue)		38	%		49	%		41	%		37	%		36	%					42	%		40	%
Operating income (loss)
GAAP operating income (loss)	$	1,392		$	34,141		$	(16,539	)	$	(394	)	$	65,745			4623	%	$	(87,871	)	$	82,953			194	%
Change in deferred revenue, net of foreign currency translation		(7,045	)		(80,541	)		(8,027	)		5,192			(124,259	)					85,420			(207,635	)
Change in deferred cost of revenue, net of foreign currency translation		5,535			32,516			14,488			(6,712	)		56,982						(56,767	)		97,274
Amortization of intangible assets		219			409			422			421			422						614			1,674
Stock-based compensation		2,391			7,023			8,661			5,853			4,942						33,861			26,479
Acquisition-related charges (a)		—			735			751			559			506						—			2,551
Restructuring		(99	)		194			1,078			339			60						1,789			1,671
Legal settlements		—			—			—			—			3,595						(100	)		3,595
Non-GAAP operating income (loss)	$	2,393		$	(5,523	)	$	834		$	5,258		$	7,993			234	%	$	(23,054	)	$	8,562			137	%
GAAP operating margin % (as a % of GAAP net revenue)		2	%		24	%		-21	%		-1	%		33	%					-46	%		17	%
Non-GAAP operating margin % (as a % of non-GAAP net revenue)		3	%		-9	%		1	%		7	%		11	%					-8	%		3	%
Income tax provision (benefit)
GAAP income tax provision (benefit)	$	959		$	(476	)	$	(290	)	$	129		$	3,708			287	%	$	1,422		$	3,071			116	%
Income tax benefit related to Detectent acquisition		—			890			124			114			—						—			1,128
Non-GAAP income tax provision (benefit)	$	959		$	414		$	(166	)	$	243		$	3,708			287	%	$	1,422		$	4,199			195	%
GAAP income tax provision % (as a % of GAAP net revenue)		1	%		0	%		0	%		0	%		2	%					1	%		1	%
Non-GAAP income tax provision % (as a % of non-GAAP net revenue)		1	%		1	%		0	%		0	%		5	%					1	%		1	%
Adjusted EBITDA
GAAP net income (loss)	$	501		$	34,905		$	(16,175	)	$	(622	)	$	61,878			12251	%	$	(89,170	)	$	79,986			190	%
Change in deferred revenue, net of foreign currency translation		(7,045	)		(80,541	)		(8,027	)		5,192			(124,259	)					85,420			(207,635	)
Change in deferred cost of revenue, net of foreign currency translation		5,535			32,516			14,488			(6,712	)		56,982						(56,767	)		97,274
Other (income) expense, net		(68	)		(288	)		(74	)		99			159						(123	)		(104	)
Provision (benefit) for income taxes		959			(476	)		(290	)		129			3,708						1,422			3,071
Depreciation and amortization		1,763			1,949			1,953			1,990			1,930						6,467			7,822
Stock-based compensation		2,391			7,023			8,661			5,853			4,942						33,861			26,479
Acquisition-related charges (a)		—			735			751			559			506						—			2,551
Restructuring		(99	)		194			1,078			339			60						1,789			1,671
Legal settlements		—			—			—			—			3,595						(100	)		3,595
Adjusted EBITDA	$	3,937		$	(3,983	)	$	2,365		$	6,827		$	9,501			141	%	$	(17,201	)	$	14,710			186	%
Net income (loss)
GAAP net income (loss)	$	501		$	34,905		$	(16,175	)	$	(622	)	$	61,878			12251	%	$	(89,170	)	$	79,986			190	%
Change in deferred revenue, net of foreign currency translation		(7,045	)		(80,541	)		(8,027	)		5,192			(124,259	)					85,420			(207,635	)
Change in deferred cost of revenue, net of foreign currency translation		5,535			32,516			14,488			(6,712	)		56,982						(56,767	)		97,274
Amortization of intangible assets		219			409			422			421			422						614			1,674
Stock-based compensation		2,391			7,023			8,661			5,853			4,942						33,861			26,479
Acquisition-related charges (a)		—			735			751			559			506						—			2,551
Income tax benefit related to Detectent acquisition		—			(890	)		(124	)		(114	)		—						—			(1,128	)
Restructuring		(99	)		194			1,078			339			60						1,789			1,671
Legal settlements		—			—			—			—			3,595						(100	)		3,595
Non-GAAP net income (loss)	$	1,502		$	(5,649	)	$	1,074		$	4,916		$	4,126			175	%	$	(24,353	)	$	4,467			118	%
GAAP net margin % (as a % of GAAP net revenue)		1	%		24	%		-21	%		-1	%		31	%					-47	%		16	%
Non-GAAP net margin % (as a % of non-GAAP net revenue)		2	%		-9	%		2	%		7	%		6	%					-9	%		2	%
GAAP net income (loss) per share
Basic	$	0.01		$	0.71		$	(0.32	)	$	(0.01	)	$	1.23					$	(1.84	)	$	1.60
Diluted	$	0.01		$	0.69		$	(0.32	)	$	(0.01	)	$	1.19					$	(1.84	)	$	1.55
Weighted average number of shares used in computation
Basic		48,929			49,306			49,862			50,188			50,481						48,377			49,963
Diluted		50,191			50,899			49,862			50,188			52,167						48,377			51,524
Non-GAAP net income (loss) per share
Basic	$	0.03		$	(0.11	)	$	0.02		$	0.10		$	0.08					$	(0.50	)	$	0.09
Diluted	$	0.03		$	(0.11	)	$	0.02		$	0.10		$	0.08					$	(0.50	)	$	0.09
Weighted average number of shares used in computation
Basic		48,929			49,306			49,862			50,188			50,481						48,377			49,963
Diluted		50,191			49,306			51,390			51,713			52,167						48,377			51,524

(a) Acquisition-related charges in 2014 were not included.

14

SILVER SPRING NETWORKS, INC.

RECONCILIATION OF GAAP TO NON-GAAP MEASURES

(in thousands, except percentages)

	Three Months Ended December 31, 2015
	GAAP			Change in Deferred Revenue and Deferred Cost of Revenue (b)			Stock-based Compensation			Amortization of Intangible Assets			Acquisition- Related Costs			Non-GAAP
Product revenue	$	143,202		$	(95,194	)	$	—		$	—		$	—		$	48,008
Service revenue
Managed services and SaaS		37,142			(22,896	)		—			—			—			14,246
Professional services		18,903			(6,169	)		—			—			—			12,734
Total service net revenue	$	56,045		$	(29,065	)	$	—		$	—		$	—		$	26,980
Net revenue	$	199,247		$	(124,259	)	$	—		$	—		$	—		$	74,988
Product cost of revenue	$	83,903		$	(56,982	)	$	(250	)	$	(259	)	$	—		$	26,412
Service cost of revenue
Managed services and SaaS		7,592			—			(256	)		—			(15	)		7,321
Professional services		6,407			—			(500	)		—			—			5,907
Total service cost of revenue	$	13,999		$	—		$	(756	)	$	—		$	(15	)	$	13,228
Total cost of revenue	$	97,902		$	(56,982	)	$	(1,006	)	$	(259	)	$	(15	)	$	39,640
Gross profit	$	101,345		$	(67,277	)	$	1,006		$	259		$	15		$	35,348
Product gross margin %		41.4	%		2.5	%		0.5	%		0.5	%		—			45.0	%
Service gross margin %
Managed service and SaaS gross margin %		79.6	%		-32.9	%		1.8	%		—			0.1	%		48.6	%
Professional services gross margin %		66.1	%		-16.4	%		3.9	%		—			—			53.6	%
Total service gross margin %		75.0	%		-26.9	%		2.8	%		—			0.1	%		51.0	%
Total gross margin %		50.9	%		-5.4	%		1.3	%		0.3	%		0.0	%		47.1	%
	Three Months Ended December 31, 2014
	GAAP			Change in Deferred Revenue and Deferred Cost of Revenue (b)			Stock-based Compensation			Amortization of Intangible Assets			Acquisition- Related Costs			Non-GAAP
Product revenue	$	60,034		$	(9,991	)	$	—		$	—		$	—		$	50,043
Service revenue
Managed services and SaaS (a)		10,569			984			—			—			—			11,553
Professional services (a)		6,808			1,962			—			—			—			8,770
Total service net revenue	$	17,377		$	2,946		$	—		$	—		$	—		$	20,323
Net revenue	$	77,411		$	(7,045	)	$	—		$	—		$	—		$	70,366
Product cost of revenue	$	35,038		$	(5,535	)	$	77		$	(140	)	$	—		$	29,440
Service cost of revenue
Managed services and SaaS (a)		6,031			—			72			—			—			6,103
Professional services (a)		6,164			—			(367	)		—			—			5,797
Total service cost of revenue	$	12,195		$	—		$	(295	)	$	—		$	—		$	11,900
Total cost of revenue	$	47,233		$	(5,535	)	$	(218	)	$	(140	)	$	—		$	41,340
Gross profit	$	30,178		$	(1,510	)	$	218		$	140		$	—		$	29,026
Product gross margin %		41.6	%		-0.6	%		-0.2	%		0.2	%		—			41.1	%
Service gross margin %
Managed service and SaaS gross margin % (a)		42.9	%		4.9	%		-0.6	%		—			—			47.2	%
Professional services gross margin % (a)		9.5	%		20.3	%		4.2	%		—			—			33.9	%
Total service gross margin %		29.8	%		10.2	%		1.5	%		0.0	%		—			41.5	%
Total gross margin %		39.0	%		1.8	%		0.3	%		0.2	%		—			41.3	%

(a) Certain amounts have been reclassified in 2014 from Professional services to Managed services and SaaS related to product support which is recurring in nature to conform to current period presentation.

(b) Amounts presented net of foreign currency translation.

15

SILVER SPRING NETWORKS, INC.

RECONCILIATION OF GAAP TO NON-GAAP MEASURES

(in thousands, except percentages)

	Twelve Months Ended December 31, 2015
	GAAP			Change in Deferred Revenue and Deferred Cost of Revenue (b)			Stock-based Compensation			Amortization of Intangible Assets			Acquisition- Related Costs			Non-GAAP
Product revenue	$	353,041		$	(167,458	)	$	—		$	—		$	—		$	185,583
Service revenue
Managed services and SaaS		71,947			(19,531	)		—			—			—			52,416
Professional services		64,571			(20,646	)		—			—			—			43,925
Total service net revenue	$	136,518		$	(40,177	)	$	—		$	—		$	—		$	96,341
Net revenue	$	489,559		$	(207,635	)	$	—		$	—		$	—		$	281,924
Product cost of revenue	$	202,430		$	(97,274	)	$	(1,288	)	$	(1,041	)	$	—		$	102,827
Service cost of revenue
Managed services and SaaS		31,663			—			(1,937	)		—			(100	)		29,626
Professional services		29,723			—			(2,910	)		—			—			26,813
Total service cost of revenue	$	61,386		$	—		$	(4,847	)	$	—		$	(100	)	$	56,439
Total cost of revenue	$	263,816		$	(97,274	)	$	(6,135	)	$	(1,041	)	$	(100	)	$	159,266
Gross profit	$	225,743		$	(110,361	)	$	6,135		$	1,041		$	100		$	122,658
Product gross margin %		42.7	%		0.7	%		0.7	%		0.6	%		—			44.6	%
Service gross margin %
Managed service and SaaS gross margin %		56.0	%		-16.4	%		3.7	%		—			0.2	%		43.5	%
Professional services gross margin %		54.0	%		-21.6	%		6.6	%		—			—			39.0	%
Total service gross margin %		55.0	%		-18.8	%		5.0	%		—			0.1	%		41.4	%
Total gross margin %		46.1	%		-5.2	%		2.2	%		0.4	%		0.0	%		43.5	%
	Twelve Months Ended December 31, 2014
	GAAP			Change in Deferred Revenue and Deferred Cost of Revenue (b)			Stock-based Compensation			Amortization of Intangible Assets			Acquisition- Related Costs			Non-GAAP
Product revenue	$	129,333		$	64,691		$	—		$	—		$	—		$	194,024
Service revenue
Managed services and SaaS (a)		35,220			9,284			—			—			—			44,504
Professional services (a)		26,735			11,445												38,180
Total service net revenue	$	61,955		$	20,729		$	—		$	—		$	—		$	82,684
Net revenue	$	191,288		$	85,420		$	—		$	—		$	—		$	276,708
Product cost of revenue	$	77,158		$	56,767		$	(1,837	)	$	(417	)	$	—		$	131,671
Service cost of revenue
Managed services and SaaS (a)		25,800			—			(919	)		—			—			24,881
Professional services (a)		31,993			—			(4,853	)		—			—			27,140
Total service cost of revenue	$	57,793		$	—		$	(5,772	)	$	—		$	—		$	52,021
Total cost of revenue	$	134,951		$	56,767		$	(7,609	)	$	(417	)	$	—		$	183,692
Gross profit	$	56,337		$	28,653		$	7,609		$	417		$	—		$	93,016
Product gross margin %		40.3	%		-9.4	%		0.9	%		0.2	%		—			32.1	%
Service gross margin %
Managed service and SaaS gross margin % (a)		26.7	%		15.3	%		2.1	%		—			—			44.1	%
Professional services gross margin % (a)		-19.7	%		35.9	%		12.7	%		—			—			28.9	%
Total service gross margin %		6.7	%		23.4	%		7.0	%		—			—			37.1	%
Total gross margin %		29.5	%		1.3	%		2.7	%		0.2	%		—			33.6	%

(a) Certain amounts have been reclassified in 2014 from Professional services to Managed services and SaaS related to product support which is recurring in nature to conform to current period presentation.

(b) Amounts presented net of foreign currency translation.

16

SILVER SPRING NETWORKS, INC.

RECONCILIATION OF GAAP TO NON-GAAP OUTLOOK

(in millions, except per share data)

	Q116 Guidance						2016 Guidance
	Low			High			Low			High
Net revenue
GAAP net revenue	$	52		$	60		$	370		$	450
Change in deferred revenue, net of foreign currency translation		11			8			(80	)		(140	)
Non-GAAP net revenue	$	63		$	68		$	290		$	310
Gross profit
GAAP gross profit	$	14		$	18		$	67		$	118
Change in deferred revenue, net of foreign currency translation		11			8			(80	)		(140	)
Change in deferred cost of revenue, net of foreign currency translation		(1	)		1			127			153
Amortization of intangibles in cost of revenue		—			—			—			—
Stock-based compensation and other charges		3			3			9			9
Non-GAAP gross profit	$	26		$	30		$	122		$	140
GAAP gross margin % (as a % of GAAP net revenue)		26	%		30	%		18	%		26	%
Non-GAAP gross margin % (as a % of non-GAAP net revenue)		42	%		44	%		42	%		45	%
Operating Expenses
GAAP Operating Expenses	$	36		$	37		$	146		$	151
Stock-based compensation		(5	)		(5	)		(21	)		(21	)
Restructuring and other charges*		(1	)		(1	)		(4	)		(4	)
Non-GAAP Operating Expenses	$	30		$	31		$	120		$	125
Net income (loss)
GAAP net income (loss)	$	(23	)	$	(20	)	$	(82	)	$	(36	)
Change in deferred revenue, net of foreign currency translation		11			8			(80	)		(140	)
Change in deferred cost of revenue, net of foreign currency translation		(0	)		1			130			151
Amortization of intangibles		0			0			1			1
Stock-based compensation		8			8			30			31
Restructuring and other charges*		1			1			2			4
Non-GAAP net income (loss)	$	(4	)	$	(2	)	$	3		$	11
Net income (loss) per share
GAAP net income (loss) per share	$	(0.45	)	$	(0.40	)	$	(1.60	)	$	(0.70	)
Non-GAAP net income (loss) per share	$	(0.08	)	$	(0.03	)	$	0.05		$	0.20
Basic Share Count		51			51			52			52
Diluted Share Count		51			51			54			54

* Restructuring and other charges includes Restructuring, Acquisition-Related charges, Legal Settlements, and other charges

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