Silver Spring Networks is a leading advanced metering infrastructure (AMI) networking company focused on providing two-way real-time communication between the end-user’s smart meter and the utility’s control and management systems, through an Internet Protocol (IP)-based platform. The company’s solutions are used by many North American utilities, including successful deployments with PG&E, AEP and FPL, which together serve 20% of the nation’s consumers. Silver Spring Networks also serves utilities in Australia and Brazil. Silver Spring partners with a large number of the most prominent smart grid market operators, including Cisco, ABB, GE and Landis+Gyr, which allows the company to offer solutions within most smart grid submarkets. Recently, Silver Spring made the long-awaited announcement to go public, saying it will offer up to $150 million in shares to be traded on the New York Stock Exchange under the symbol SSNI. No initial trading date or opening share price was provided.
Silver Spring’s solutions include the hardware, software and services that connect every device on the smart grid, creating a secure and flexible network infrastructure through its unified IP-based Smart Energy Platform. The platform opens up the possibility for a number of smart grid applications to be deployed by utilities, such as smart metering, demand response, distribution automation and distributed storage. For these applications, the company provides the UtilityIQ application suite and the CustomerIQ web portal software. Silver Spring’s network infrastructure has the possibility of including millions of endpoints, operating in a 900MHz self-configurating RF mesh network. Data from endpoints are forwarded across a utility’s backhaul or WAN infrastructure to the back office, through Silver Spring’s Access Points (APs) and Relays.
Staying out in front of the smart grid market, Silver Spring has been active with EV deployments around the globe. Since 2010, Silver Spring has worked with ClipperCreek to enable the EV company’s charging stations to connect to the smart grid. It also moved into the home energy management space with the acquisition of Greenbox Technology in May 2010. Further, Silver Spring recently launched one of the first global educational programs to inform the public about the smart grid and its benefits, starting in high schools in California and Ohio.
Primary competitors: Cisco, Landis+Gyr, Itron, SmartSynch, Elster, Aclara
Analyst Note: Silver Spring Networks has to be considered the most successful pure-play company in the smart grid market to date. The company has had great success in winning utility-scale deals, as well as in demonstrating the value of their offerings. Even competitors speak highly of the company’s technology and recent successes. Silver Spring’s recent S-1 filing with the SEC revealed that revenues shot up from $58,000 in 2008 to $3.3 million in 2009 to $70.2 million in 2010 (with $115.5 million reported for the first half of 2011) -- impressive growth, to be sure.
However, the financials also revealed an accumulated deficit of $401.8 million, and at the moment, the conversation surrounding Silver Spring is primarily asking whether the company will go through with its planned IPO. Wall Street has not treated companies in the red very favorably in recent months (cf. Comverge and EnerNOC’s stock prices). As such, it seems that Silver Spring must make a compelling case that the road to profitability will be both clear and speedy. (Further, it is likely that the company will need to make the case that beyond communications infrastructure, its add-on revenues from future applications and services via the UtilityIQ applications business will support growing into a platform player). Potentially bolstering the company’s case is the fact that Silver Spring is now showing deferred revenue (for contracts signed but not yet fully performed) of $412.7 million, which could arguably cancel out the deficit concerns. Further, the company currently has more than 25 pilots in place in the U.S., Europe, Asia, and South America.
In light of Toshiba’s recent acquisition of Landis+Gyr, speculation that Silver Spring Network may look to be acquired has been commonplace among many industry observers. If Silver Spring does go forward with its IPO plans, the company will be listed on the NYSE under the ticker 'SSNI.'
In December 2011, Silver Spring Networks went back to its investors for an additional $30 million in debt and options financing, of which it claimed $24 million of the round, according to public filings.
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