Ssni investor presentation august 2015

© Silver Spring Networks, Inc. All rights reserved. Silver Spring Confidential.

Silver Spring Networks August 2015


Forward-Looking Statements This presentation contains forward-looking statements that involve risks and uncertainties. These forward-looking statements include statements regarding the momentum in Silver Spring Networks’ business, the performance, capabilities and benefits of our recently announced Gen5 networking platform and products, intended future analytics applications for the SilverLink Sensor Network, and future growth and future financial results. Statements including words such as "anticipate", "believe", "estimate" or "expect" and statements in the future tense or about future events are forward-looking statements. These forward-looking statements are preliminary estimates and expectations based on current information and are subject to business and economic risks and uncertainties that could cause actual events or actual future results to differ materially from the expectations set forth in the forward-looking statements. Important factors that could cause results to differ materially from the statements herein include: timing around customer decisions and deployment pace; dependence on a limited number of customers and key suppliers; general economic risks; specific economic risks in different geographies and among different industries; failure to maintain or increase renewals and increase business from existing customers; uncertainties around continued success in sales growth and market share gains; lengthy sales cycles with no assurances that a prospective customer will select Silver Spring’s products and services; amounts included in backlog may not result in billings or revenue; adverse publicity about, or consumer or political opposition to, the smart grid; security breaches involving smart grid products or services; the ability to integrate technology into third-party devices and Silver Spring’s relationship with third-party manufacturers; execution and customer adoption risks related to new product introductions and innovation, including our recently announced 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 presentation reflect Silver Spring’s expectations only as of the date hereof. Silver Spring undertakes no obligation, and expressly disclaims any obligation, to update any forward-looking statements in this presentation in light of new information or future events.


Our Company

3

We are the platform for the next generation smart grid networks,

smart cities and connected infrastructure

We are making the internet-of-things a reality for smart infrastructure


Long Term Market Vision

4

Time

Devices

10s of Millions

100s of Millions

Billions

Smart Grid Networks

Smart City Infrastructure Networks

Internet of Things

Open, standards-based, secure, reliable network platform


The Leader in Smart Infrastructure • A decade of innovation and global success • Volume leader with 21.5M homes and businesses networked • Proven multi-application network for smart grid and smart city applications • Broad ecosystem includes technology integrators, partners and resellers • 140+ granted and pending patents in the US • Named as a “2015 Smart Grid Company to Watch”

5

2015 IoT Evolution Product of the

Year Gen5 / Milli5

2014 Smart grid

product of the year

SilverLink

2014 American

Tech award Street lights


0

5

10

15

20

25

2007 2008 2009 2010 2011 2012 2013 2014 2015

Del

iver

ed E

ndpo

ints

(MM

) Proven Success at Leading Utilities

6

AMI

Street Light

City of Paris Street Light

Bristol

CPFL DA

http://www.guelphhydro.com/index.php


Silver Spring Networks Benefits in Action*

7

• 61 million annual meter reads avoided • Time-of-Use pricing for EV customers • 70K homes restored 24-hours after Napa

Quake

• $30 million operational cash savings for 2014 • Increased reliability by over 20% in past 5

years • North America’s largest street light project

• Record reliability in 1H15 – 879K outages avoided despite severe weather.

• Outage avoidance has saved customers an estimated $175 million

• Largest 2-way residential program with 100K in-home smart thermostats

• Ranked #1 in Customer Satisfaction in 2013 and 2014 by JD Power

• Piloting street light project

* Source: Florida Power & Light 5/25/15 PR, ComEd 4/22/15 PR and company reports, 5/5/15; PG& E Q1 2015 earnings call, OG&E company reports, SSNI internal data


We Connect and Empower a Multi-Application Network Platform

8

ISV Utility SSN

Silver Spring Network Environment

IPv6 Network

Network Control Software

SilverLink / Data Platform

Applications App Store

Bridge

Distributed Intelligence Communication modules and Access points

http://www.abb.com/cawp/seitp202/d6094b71048821f9c125799d002f7f7c.aspx


Extending the Menu to New Solutions

9

Fault Location, Isolation and

Service Restoration

Voltage Optimization

Network Monitoring

PV & Renewable Integration

Direct Load Control

Price Response

Energy Efficiency

Electricity

Water

Non-Technical Loss

Prepay

Gas

SilverLink Insights Service

Customer IQ

Marketing Services

Street Lights

Traffic Control

Noise Sensors

Environment Sensors

Advanced Metering

Distribution Automation

Demand Side Management

Insights & Analytics

Customer Engagement

Smart Infrastructure

AMI New Solutions


Significant Opportunity to Drive Value

10

$47.6

$10.0

$16.0

$5.1

$7.6

($15.0) $7.0

$6.9

$1.3 $1.5

$3.0

$4.2

$60

$50

$40

$30

$20

$10

0

($10)

($20)

Net

Ben

efits

($/e

ndpo

int/y

ear)

Network Cost

Meter Reading

Remote Connect Billing Outage

Demand Response

Dynamic Pricing

Energy Efficiency

Theft Detection

Distribution Automation CVR Net

Benefits

Source: Silver Spring Networks estimates. Net benefits calculated based on annualized benefits and costs.


Gen5: Designed for Internet of Things Outdoor machine to machine communications

11

• Up to 50 mile range for remote rural areas • Battery powered at 1/7 the size to enable new use cases

- Water, gas, environmental sensors, parking - Up to 20 year life on AA Lithium Ion batteries

• Low latency for mission critical apps - Grid Reliability

• Up to 10X computing performance over Gen4

Gen5 Communications Module Gen5 Milli Communications Module


SilverLink Platform & Ecosystem Analytics Solutions from Silver Spring and Partners

12

Customer Engagement

Demand-Side Management

Customer Case and Outreach

Network Analytics

Network Analytics

CustomerIQ App Suite Operational Apps


Detectent Analytics Platform

13

CIS/MDM Systems

Work Order Systems

EE/DR Systems

Utility Analysis

Business Listings

Premise Data

Weather Data

GIS/SCADA Data

Asset Mgmt

Data Sources

INTEGRATIONS

ACCESS

Customer Intelligence Platform

Applications

Customer Programs

Grid Operations

Revenue Assurance


Smart City Infrastructure Vision

14

More Control, Less Energy, More Security, Less Traffic, More Services, Less Pollution, More Decisions in Less Time

Camera

LED Electrical Car Chargers

Traffic Light

Sensors

Speed Radar

Low Voltage Electrical Cabinets

Information Panels

Bus Stops

Bike Stations

Network Routers

Intelligent Traffic Control

Public Lighting Cabinets

EV Charging Infrastructure

Smart Streets

Video Surveillance

Sensors Pollution,

Water Meters, Noise

City Communication Networks

City Info Panels Advertising Panels


Diversifying the Business Non-GAAP Revenue – % of Total

15

2009A

By Type:

Product 91%

Managed Services & SaaS 4%

Professional Services 5%

By Solution:

Network / AMI 100%

New Solutions 0%

By Geography:

U.S. 94%

International 6%

1H15

65%

19%

16%

79%

21%

83%

17%


Our Business Model Every Home & Business We Network Increases Our Value

16

Time

$

+19%

+32%

(9%)

2014 Results

Endpoint Monetization

$2-$3/ Year(1)

Products(2): ~$65 - 75

Services: ~$15

18 20

8 8

26 28

2013 2014

Cumulative Endpoints (M)

Endpoint is a connected home or business. 1. Based on the current model and delivered cumulative endpoints. 2. Based on the current model and new endpoints delivered within the year.

Deployed

Contracted


Recurring Revenue Grows with Footprint

17

21.5M Delivered Endpoints

8M Endpoints in Backlog*

Expanded Menu into a Growing

Footprint

Building Higher Visibility

Recurring Revenue Base

Cumulative Endpoints (M) Non-GAAP Managed Services & SaaS** ($M)

* Backlog as of Dec. 31, 2014. ** Non-GAAP revenue financial measures.

19.1 19.7 20.3 20.8 21.5

Q214 Q314 Q414 Q115 Q215

$10.9 $11.5 $11.6 $12.6 $13.0

Q214 Q314 Q414 Q115 Q215


Q215 Financial Results

18


• Solid Q2 results

• Cash Flow from Operations of $10 million

• Strongest deployment quarter in 2 years

• International sales up triple-digits

• Gross profit up 41% on double-digit growth for SSN technology

• Increased deal activity in every region we operate

State of Business

19


$64$69

Q214 Q215

Q215 Financial Results

Non-GAAP Revenue Non-GAAP Revenue by Type

Non-GAAP Services Revenue Network Footprint (Cumulative Endpoints)

$Millions, Endpoints in Millions

$42 $45

$21 $24

Q214 Q215

Services

Product

Note: Some figures may not add due to rounding * Excludes 3rd-Party

19.121.5

Q214 Q215

+13%

+6%

+14%

$11 $11

$11 $13

Q214 Q215

Managed/SaaS

Prof. Services

+19%

+9%

+9%

Double Digit Growth

3rd-Party

SSN Content*

20


32.4%

41.9%

Q214 Q215

$2.18 $2.26

Q214 Q215

$57 $54

$7 $15

Q214 Q215

Q215 Financial Results (continued)

21

$Millions, except Recurring Revenue per Cuml. Endpoint

Recurring Revenue per Cuml. Endpoint Non-GAAP New Solutions Revenue

Non-GAAP Revenue by Region Non-GAAP Gross Margin +10 pts

Note: Some figures may not add due to rounding * TTM refers to the trailing twelve month period

TTM*

$12 $13

$52 $56

Q214 Q215

AMI

New Solutions

+125%

US

International

+8%

+11%


Q215 Non-GAAP Gross Profit Margin

22

$Millions

Q214 Q215

Product 29.5% 43.6% Managed / SaaS 43.1% 43.2%

Professional Service 32.5% 33.7%

Service 37.9% 38.8% Total 32.4% 41.9%

Services$8

Services$9

Product$12

Product$19

$21

$29

Q214 Q215

41%

Note: Some figures may not add due to rounding


Q215 Financial Results (continued)

Non-GAAP Operating Expenses Non-GAAP EPS

Non-GAAP Net Income Cash & Equivalents

$Millions, except EPS

$15 $13

$7 $7

$9 $7

$31 $28

Q214 Q215

$(0.20)

$0.02

Q214 Q215

$(10)

$1

Q214 Q215

$111 $119

Q115 Q215

+$0.23

+$11M

Note: Some figures may not add due to rounding

G&A

S&M

R&D

-8%

23


Supplemental

24


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 income (loss), non-GAAP net income (loss), non-GAAP earnings (loss) per share, and adjusted EBITDA, and total backlog, in addition to other financial measures presented in accordance with GAAP. Silver Spring believes that these non-GAAP and other financial measures offer valuable supplemental information regarding the performance of its business, and will help investors better understand the sales volumes, and gross margin and profitability trends, as well as the cash flow characteristics, of its business. The non-GAAP measures should not be considered in isolation from, are not a substitute for, and do not purport to be an alternative to, revenue, cost of revenue, gross profit (loss), gross margin, operating income (loss), net income (loss), earnings (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 recognized as revenue when all revenue recognition criteria have been met under Silver Spring’s accounting policies as described in Silver Spring’s filings with the Securities and Exchange Commission. Silver Spring reconciles revenue to 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 and SaaS offerings, and are also recurring in nature.

Recurring non-GAAP revenue per endpoint represents a trailing twelve month non-GAAP revenue per cumulative endpoints deployed 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 income (loss) represents operating 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 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.

Non-GAAP and Other Financial Measures

25


Q215 GAAP to Non-GAAP Reconciliation

26

Note: Some figures may not add due to rounding * Net of Foreign Currency Translation

$Thousands,except per share amounts GAAP Financial

Statements

Change in Deferred Revenue and Deferred

Cost of Revenue *Stock-based

CompensationAmortization of

IntangiblesRestructuring &

Litigation Acquisition

Related Costs

Non-GAAP Financial

Information

Product revenue 54,711$ (10,015)$ -$ -$ -$ -$ 44,696$ Service revenue 22,456 1,988 - - - - 24,444

Net revenue 77,167 (8,027) - - - - 69,140

Product cost of revenue 40,533 (14,488) (560) (260) - - 25,225 Service cost of revenue 16,678 - (1,649) - - (60) 14,969

Total cost of revenue 57,211 (14,488) (2,209) (260) - (60) 40,194

Gross profit 19,956 6,461 2,209 260 - 60 28,946 Product Margin 25.9% 43.6%Service Margin 25.7% 38.8%Total Margin 25.9% 41.9%

Operating Expenses Research and development 16,050 - (2,832) - - (27) 13,191 Sales and marketing 8,912 - (1,287) (153) - - 7,472 General and administrative 10,455 - (2,333) (9) - (664) 7,449 Restructuring 1,078 - - - (1,078) - -

Total operating expenses 36,495 - (6,452) (162) (1,078) (691) 28,112

Operating Loss (16,539) 6,461 8,661 422 1,078 751 834 Operating Margin -21.4% 1.2%

Other income (expense), net 74 - - - - - 74 (Benefit) Provision for income taxes (290) - - - - 124 (166)

Net loss (16,175)$ 6,461$ 8,661$ 422$ 1,078$ 627$ 1,074$ Income (Loss) per shareBasic (0.32)$ 0.02$ Diluted (0.32)$ 0.02$ Number of shares used in computationBasic 49,862 49,862 Diluted 49,862 51,390


Q214 GAAP to Non-GAAP Reconciliation

27

Note: Some figures may not add due to rounding * Net of Foreign Currency Translation

$Thousands,except per share amounts GAAP Financial

Statements

Change in Deferred Revenue and Deferred

Cost of Revenue *Stock-based

Compensation

Amortization of Intangibles in

Cost of RevenueLitigation and Restructuring

Acquisition Related Costs

Non-GAAP Financial

Information

Product revenue 24,751$ 17,438$ -$ -$ -$ -$ 42,189$ Service revenue 16,856 4,559 - - - - 21,415

Net revenue 41,607 21,997 - - - - 63,604

Product cost of revenue 13,414 16,801 (442) (48) - - 29,725 Service cost of revenue 14,781 - (1,488) - - - 13,293

Total cost of revenue 28,195 16,801 (1,930) (48) - - 43,018

Gross profit 13,412 5,196 1,930 48 - - 20,586 Product Margin 45.8% 29.5%Service Margin 12.3% 37.9%Total Margin 32.2% 32.4%

Operating Expenses Research and development 17,342 - (2,695) - - - 14,647 Sales and marketing 8,854 - (1,754) - - - 7,100 General and administrative 11,888 - (3,183) - 100 - 8,805

Total operating expenses 38,084 - (7,632) - 100 - 30,552

Operating Loss (24,672) 5,196 9,562 48 (100) - (9,966) Operating Margin -59.3% -15.7%

Interest income, net 85 - - - - - 85 Provision for income taxes 4 - - - - - 4

Net loss (24,591)$ 5,196$ 9,562$ 48$ (100)$ -$ (9,885)$

Loss per share, basic and diluted(0.51)$ (0.20)$

Number of shares used in computation, basic and diluted

48,315 48,315


UNAUDITED RECONCILIATION OF NET REVENUE BETWEEN GAAP AND NON-GAAP

28

YoY%TYPE ChangeGAAP net revenue:Product net revenue $ 24,751 $ 16,321 $ 60,034 $ 105,035 $ 54,711 121%Service net revenue

Managed services and SaaS (a) 8,584 7,546 10,569 12,974 10,608 24%Professional services 8,272 4,174 6,808 25,631 11,848 43%

Total service net revenue 16,856 11,720 17,377 38,605 22,456 33%Total GAAP net revenue $ 41,607 $ 28,041 $ 77,411 $ 143,640 $ 77,167 85%% Product 59% 58% 78% 73% 71%% Service 41% 42% 22% 27% 29%Change in deferred net revenue:Change in deferred product revenue $ 17,438 $ 33,238 $ (9,991) $ (64,034) $ (10,015) Change in deferred service revenue:

Managed services and SaaS 2,326 3,960 984 (419) 2,387 Professional services 2,233 5,649 1,962 (16,088) (399)

Total change in deferred service revenue 4,559 9,609 2,946 (16,507) 1,988 Total change in deferred revenue $ 21,997 $ 42,847 $ (7,045) $ (80,541) $ (8,027) Non-GAAP revenue:Product net revenue 42,189 49,559 50,043 41,001 44,696 6%Service net revenue:

Managed services and SaaS (a) 10,910 11,506 11,553 12,555 12,995 19%Professional services 10,505 9,823 8,770 9,543 11,449 9%

Total service net revenue 21,415 21,329 20,323 22,098 24,444 14%Total non-GAAP net revenue $ 63,604 $ 70,888 $ 70,366 $ 63,099 $ 69,140 9%% Product 66% 70% 71% 65% 65%% Service 34% 30% 29% 35% 35%

2015Q4 Q2

2014 20142014 2015Q2 Q3 Q1


UNAUDITED RECONCILIATION OF NET REVENUE BETWEEN GAAP AND NON-GAAP (continued)

29

YoY%RECURRING REVENUE PER ENDPOINT ChangeRecurring GAAP revenue (TTM) (a) 35,391 32,987 35,220 39,673 41,697 Changes in deferred revenue, net of foreign currency translations 6,179 9,688 9,284 6,851 6,912 Recurring non-GAAP revenue (TTM) (a) $ 41,570 $ 42,675 $ 44,504 $ 46,524 $ 48,609 Cumulative network endpoints delivered 19,081 19,714 20,266 20,814 21,506 Recurring GAAP revenue per endpoint delivered (a) $ 1.85 $ 1.67 $ 1.74 $ 1.91 $ 1.94 5%Recurring non-GAAP revenue per endpoint delivered (a) $ 2.18 $ 2.16 $ 2.20 $ 2.24 $ 2.26 4%

SOLUTIONGAAP net revenue

Advanced metering infrastructure $ 33,610 $ 21,417 $ 72,456 $ 112,865 $ 66,907 99%New solutions 7,997 6,624 4,955 30,775 10,260 28%

Total GAAP net revenue $ 41,607 $ 28,041 $ 77,411 $ 143,640 $ 77,167 85%% Advanced metering infrastructure 81% 76% 94% 79% 87%% New solutions 19% 24% 6% 21% 13%Change in deferred net revenue

Advanced metering infrastructure $ 18,113 $ 39,828 $ (12,441) $ (64,828) $ (10,976) New solutions 3,884 3,019 5,396 (15,713) 2,949

Total change in deferred net revenue $ 21,997 $ 42,847 $ (7,045) $ (80,541) $ (8,027) Non-GAAP net revenue

Advanced metering infrastructure $ 51,723 $ 61,245 $ 60,015 $ 48,037 $ 55,931 8%New solutions 11,881 9,643 10,351 15,062 13,209 11%

Total Non-GAAP net revenue $ 63,604 $ 70,888 $ 70,366 $ 63,099 $ 69,140 9%% Advanced metering infrastructure 81% 86% 85% 76% 81%% New solutions 19% 14% 15% 24% 19%

Q2 Q3 Q4 Q1 Q22014 2014 2014 2015 2015


UNAUDITED RECONCILIATION OF NET REVENUE BETWEEN GAAP AND NON-GAAP (continued)

30

YoY%GEOGRAPHY ChangeGAAP net revenue

United States $ 34,251 $ 15,700 $ 30,017 $ 122,582 $ 72,360 111%International 7,356 12,341 47,394 21,058 4,807 -35%

Total GAAP net revenue $ 41,607 $ 28,041 $ 77,411 $ 143,640 $ 77,167 85%% United States 82% 56% 39% 85% 94%% International 18% 44% 61% 15% 6%Change in deferred net revenue

United States $ 22,799 $ 48,248 $ 29,176 $ (66,533) $ (17,955) International (802) (5,401) (36,221) (14,008) 9,928

Total change in deferred net revenue $ 21,997 $ 42,847 $ (7,045) $ (80,541) $ (8,027) Non-GAAP net revenue

United States $ 57,050 $ 63,948 $ 59,193 $ 56,049 $ 54,405 -5%International 6,554 6,940 11,173 7,050 14,735 125%

Total non-GAAP net revenue $ 63,604 $ 70,888 $ 70,366 $ 63,099 $ 69,140 9%% United States 90% 90% 84% 89% 79%% International 10% 10% 16% 11% 21%(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.

Q2 Q3 Q4 Q1 Q22014 2014 2014 2015 2015

Investor Relations

Ssni investor presentation august 2015