February 2015 Investor Presentation
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, future growth and future financial results, including expected improvements in gross profit and our outlook for the first quarter and full year 2015. 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 document reflect Silver Spring s expectations as of February 9, 2015. 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. While Silver Spring believes these estimates are meaningful, they could differ from the actual amounts that Silver Spring ultimately reports in its Annual Report on Form 10-K for the year ended December 31, 2014. Silver Spring assumes no obligation and does not intend to update these estimates prior to filing its Form 10-K for the year ended December 31, 2014. 3 2014 Silver Spring Networks
Our Company 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 4
The Leader in Smart Infrastructure A decade of innovation and global success Volume leader with over 20MM homes and businesses networked Proven multi-application network for smart grid and smart city applications Strong value proposition for our customers Broad ecosystem with 100+ partners 137 granted and pending patents in the US Smart grid product of the year Gen4 Smart grid product of the year SilverLink American Tech award Streetlights 5
Device Choice and Applications Breadth Advanced Metering Distribution Automation Demand Side Management Customer Engagement Insights & Analytics Smart Infrastructure Electricity Fault Location, Isolation and Service Restoration Direct Load Control Customer IQ SilverLink Insights Service Street Lights Gas Voltage Optimization Price Response Marketing Services Traffic Control Water Network Monitoring Energy Efficiency Noise Sensors Non-Technical Loss PV & Renewable Integration Environment Sensors Prepay Silver Spring Network Environment SilverLink / Data Platform Network Control Software IPv6 Network 6
Significant Opportunity to Drive Value $60 $50 Net Benefits ($/endpoint/year) $40 $30 $20 $10 0 $1.3 $1.5 $3.0 $4.2 $7.6 $5.1 $16.0 $10.0 $47.6 ($10) ($15.0) $7.0 $6.9 ($20) Network Cost Meter Reading Remote Connect Billing Outage Demand Response Dynamic Pricing Energy Efficiency Theft Distribution Detection Automation CVR Net Benefits Source: Silver Spring Networks estimates. Net benefits calculated based on annualized benefits and costs. 7
Value Proposition for Customers Advanced Metering Infrastructure 61 million meter reads avoided per year at PG&E 1.4 million remote connects and disconnects to date at PG&E 99.9% remote meter reads at FPL Estimated bills reduced over 90% at PG&E Demand Response Avoid building 2 peaker plants (~$363M investment) at OG&E Shed 112MW of load at OG&E in 2013 Enrolled customers saved average of $150/household (98% of saved money) Deployed one of the world s largest networked DR programs Distribution Automation Resolution time of 42k customer-side outages cut from ~2 hours to ~2 minutes 500K outages avoided by ComEd 2.9% energy savings with voltage optimization at AEP 14% SAIFI improvement at AEP with DA circuit reconfiguration Smart City Infrastructure Improvement in public safety, energy usage and cost Saves over 50% of cities lighting energy costs Up to 10% crime reduction Sources: Smart Grid Collaborative; PG&E; AEP; FPL; OG&E Smart Study Together, March 2011; Municipal Solid State Lighting Consortium LED Workshop (April 2012); AEP Ohio gridsmart phase 2 filing; Smart Grid Consumer Collaborative Benefits Analysis 8
Detectent Analytics Platform Data Sources Applications CIS/MDM Systems Work Order Systems EE/DR Systems Utility Analysis Business Listings Premise Data Weather Data I N T E G R A T I O N S Customer Intelligence Platform A C C E S S Customer Programs Grid Operations Revenue Assurance GIS/SCADA Data Asset Mgmt 9
Use Of Our Network Platform Is Expanding Devices Billions Internet of Things 100s of Millions Smart City Infrastructure Networks 10s of Millions Smart Grid Networks Time Open, standards-based, secure, reliable network platform 10
Smart City Infrastructure Vision Smart Streets Intelligent Traffic Control More Control, Less Energy, More Security, Less Traffic, More Services, Less Pollution, More Decisions in Less Time EV Charging Infrastructure City Info Panels Advertising Panels City Communication Networks Public Lighting Cabinets Video Surveillance Sensors Pollution, Water Meters, Noise 11
Gen5: One Network Connecting Critical Infrastructure. Up to 4X the speed, 3x the range and 10X the power IoT value today: critical Infrastructure - 20+ Million connected devices - Transforming energy, transportation, and the environment for utilities and cities Unlocking value in 2015 and beyond - Increasing performance, bandwidth and range for mesh devices - Introducing Milli 5 for battery powered mesh networks Gen5 Communications Module Gen5 Milli Communications Module 12
Our Business Model Every Home & Business We Network Increases Our Value 2014 Results Endpoint Monetization Contracted Endpoints (M) $ +14% $2-$3/ Year (1) 26 8 28 8 +32% Products (2) : ~$80-100 Services: ~$15 18 20 (25%) Time 2013 2014 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. 13
Executing on our Business Model $Millions, Endpoints in Millions Network Footprint (Cuml. Endpoints) 20.3 18.2 +11% Non-GAAP New Solution Revenue $41.3 $31.2 +32% 2013 2014 2013 2014 Non-GAAP Managed/SaaS Revenue Non-GAAP Gross Margin $36.7 +14% $41.8 33.1% 33.6% +0.5 pts 2013 2014 2013 2014 14
Summary Strategically positioned as a market leader and trusted partner Platform for next generation networks smart grid, smart cities, IoT Leveraging core technology DA, DSM, Street lights and SilverLink Robust backlog and pipeline Attractive business model 15
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