Silver Spring Networks helps utility companies plug into the 21st century. Its Smart Energy Platform modernizes a utility's existing power grid infrastructure into the "smart" grid, i.e. one that is connected to a digital network and more energy efficient. The Smart Energy Platform is a secure, Internet-based network made up of hardware, such as access points, communications modules, bridges, and relays; its UtilOS-brand network operating system; and software. It also offers managed services to maintain and regulate the network. Silver Spring sells its platform to electric, gas, and water utilities -- FPL, PG&E, and OG&E account for almost 80% of service revenue. The company went public in 2013.
Silver Spring is counting on its smart grid technology being essential to meet current demand for electricity, to prevent blackouts and accommodate new sources of energy, such as electric vehicles. Its devices are compatible with meters made by more than 50 different manufacturers, including ABB, GE, Itron, Landis+Gyr, and Secure Meter, but many of these companies also offer their own smart grid technology. It does not manufacture its own hardware, but relies on two contract manufacturers, mainly Jabil Circuit and Plexus.
Product sales account for 68% of the company's revenue with service revenue bringing in the rest.
Sales and Marketing
Silver Spring sells either its communications modules to meter manufacturers and its other hardware and software products directly to utilities, or third-party devices, such as meters integrated with its communications modules, directly to utility customers. It has connected almost 20 million networking platform devices and has 35 pilot projects in progress in Australia, Europe, New Zealand, South America, and the US.
In 2014, Ched Service and Progress Energy Service Company LLC (which was acquired by Duke Energy Corporation) accounted for 21% and 13% of Silver Spring's revenue, respectively.
Silver Spring's annual revenue is a year-to-year roller coast ride: up one year and down the next, a pattern that continued in 2014. Revenue plunged 41% to $191 million in 2014 from $327 million (the company's highest) in 2013. Hardware and software revenue were down on the product side and service revenue also was lower. In the US, sales fell 64% and, although they account for less revenue, sales were up in Australia and other international markets. The company's net loss for 2014 was about $90 million, compared to a loss of about $67 million in 2013. While the company spent less on most operating functions in 2014, it wasn't enough to offset the drop in revenue.
Silver Spring's concentration inenergy is its intended first step in smart grid and the Internet of Things technologies. The company is branching out to municipalities with a smart city focus to connect traffic signals, street lights, and other city electronics. Its acquisitions in 2014 and 2015 reflect that strategy.
Mergers and Acquisitions
The company acquired Detectent Inc. in 2015 to broaden its application offerings for advanced metering and grid operations, non-technical loss, revenue assurance, and customer engagement. Silver Spring plans to continue the expansion of its apps and sensors and increase managed services, which bring recurring revenue, and its Software-as-a-Service business.
In 2014, Silver Spring bought Streetlight.Vision, a Paris-based developer of control and management software for smart street light networks. Streetlight.Vision has projects in cities around the world.
Silver Spring was founded in 2002 and received the majority of its start-up funding from fellow Silicon Valley-based venture capital firm Foundation Capital. The firm owns more than a quarter of Silver Spring's stock.