Silver Spring Networks IPO expected on Wednesday

GreenNet 2011: Katie Fehrenbacher - Editor Earth2Tech, GigaOM; David Crane - CEO and President, NRG Energy; Eric Dresselhuys - EVP and CMO, Silver Spring Networks

Smart grid networking company Silver Spring Networks is expected to start trading as soon as Wednesday of this week on the New York Stock Exchange under the symbol SSNI, according to the Wall Street Journal, and other media reports. After first filing for an IPO back in the summer of 2011, the smart grid company now plans to sell 3.7 million shares at a price of between $16 and $18 per share, which at the midpoint would raise $63 million for the company.

That’s a pretty modest IPO for the decade-old company, and is less than half of the maximum that Silver Spring originally planned to raise a year and a half ago. If Silver Spring does go public Wednesday morning, expect it to price its shares late in the day on Tuesday. Along with the IPO, longtime investor Foundation Capital also plans to purchase $12 million worth of stock at the IPO price in a private placement.

Silver Spring sells wireless networks and smart meters to utilities that can be used to run power grids more efficiently and offer news types of grid services. The company is increasingly looking to sell software and services, and not just infrastructure, to help it boost its margins.

Silver Spring has a lot of business, and is one of the leaders when it comes to selling smart grid networks to utilities. However the business is inherently slow going (with long sales cycles), and pretty low margin. In 2012, Silver Spring generated $196.74 million in revenue, which was slightly down from its net revenue in 2011 of $237.05 million. The company generated a net loss in 2012 of $89.72 million, which was a smaller loss than its net loss in 2011 of $92.36 million.

Because its sales cycles are so long, its backlog of deals and billings (what it’s billed customers for but hasn’t converted to revenue yet) are more telling of how much momentum the company has. Silver Spring says it had $304.33 million worth of billings in 2012, which was a jump from its $236.13 million worth of billings in 2011. Silver Spring says it has $508.06 million worth of deferred revenue by the end of the 2012.

We’ll keep you updated on potential pricing and the debut of the IPO.

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