Why Silver Spring Networks, Inc. Stock Plunged Today
What happened
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.
So what
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.
IMAGE SOURCE: Silver Spring Networks, Inc.
Silver Spring Networks CEO Mike Bell elaborated:
Now what
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.
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