Why Silver Spring Networks, Inc. Stock Plunged Today
Shares of Silver Spring Networks Inc. (NYSE: SSNI) were down 14.3% as of 11:30 a.m. Wednesday after the smart-grid products specialist announced strong fourth-quarter 2016 results, but followed with underwhelming guidance.
Quarterly revenue fell 66.7% year over year, to $66.3 million, including a 71.8% decline in product revenue, to $40.4 million, and a 53.9% drop in services revenue, to $25.9 million. Billings for the quarter climbed 4%, to $77.7 million. And on the bottom line, that translated to a GAAP net loss of just under $14 million, or $0.27 per diluted share, compared to net income of $61.9 million, or $1.19 per diluted share in the same year-ago period. On a non-GAAP basis, which adjusts for one-time gains and expenses, Silver Spring Networks generated earnings of $0.05 per share.
By comparison, analysts' consensus estimates called for lower adjusted earnings of $0.02 per share, and lower billings of $76 million.
Silver Spring Networks CEO Mike Bell elaborated:
We enter 2017 in a strong position, with solid fourth quarter results and several new international awards. In 2016, we achieved record bookings, with major awards from Con Edison, Entergy and Pacific Power, generated over $20.7 million in operating cash flow for the year, and finished the year with more than 25.5 million cumulative network endpoints delivered. We are focused on ramping production of our Gen5 platform for our major upcoming deployments, driving international growth, and expanding our platform to additional smart utility applications and new vertical markets within the broader Internet of Important Things opportunity.
For the current quarter, Silver Spring expects revenue of $45 million to $50 million, with billings of $67 million to $71 million. The latter range, however, was well below the $75.3 million in billings Wall Street was anticipating.
For the full year of 2017, Silver Spring expects revenue in the range of $400 million to $420 million, as the company continues focusing on reducing its deferred revenue. Full-year 2017 billings are expected to be in the range of $300 million to $320 million, again below analysts' consensus estimates for $375.5 million.
In short, while Silver Spring is rightly pleased with its fourth-quarter performance and momentum headed into 2017, it's obvious the market was even more optimistic regarding billings going forward. So with the caveat that Silver Spring might well be under-promising with the intention of over-delivering, it's no surprise to see shares trading lower today.
10 stocks we like better than Silver Spring Networks
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor , has tripled the market.*
David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now... and Silver Spring Networks wasn't one of them! That's right -- they think these 10 stocks are even better buys.
Click here to learn about these picks!
*Stock Advisor returns as of February 6, 2017
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.