Care.com Announces First Quarter 2016 Financial Results

Beats on Q1 2016 Revenue and EBITDA and Raises Full-Year Guidance

Achieves Adjusted EBITDA Profitability Ahead of Schedule

Expects Sustained Profitable Growth

WALTHAM, Mass.–(BUSINESS WIRE)–Care.com (NYSE: CRCM), the world’s largest online destination for
finding and managing family care, today announced financial results for
the first quarter ended March 26, 2016.

“I’m proud to say we’re off to a strong start in 2016,” said Sheila
Lirio Marcelo, Founder, Chairwoman, and CEO of Care.com. “We have
achieved our targets for profitable growth on an Adjusted EBITDA basis
earlier than provided for in our outlook, driven primarily by continued
leverage in sales and marketing. For five consecutive quarters, we’ve
grown revenue while continuing to leverage sales and marketing spend. We
expect sustained profitability as we continue to drive towards our
long-term EBITDA margin goals of 20-25%.”

Financial Results

  • Revenue for the first quarter of 2016 was $39.3 million, a 23%
    increase from $32.0 million in the first quarter of 2015.

    • Revenue attributable to the US Consumer Business totaled $32.1
      million in the first quarter of 2016, a 21% increase from $26.6
      million in the first quarter of 2015.
    • Revenue attributable to the Care@Work (formally WPS),
      International and B2B businesses totaled $7.2 million in the first
      quarter of 2016, an increase of 32% from $5.4 million in the first
      quarter of 2015, or 33% on a constant currency basis.
  • Loss from continuing operations in the first quarter of 2016 was $1.1
    million compared to a loss of $9.8 million in 2015, an improvement of
    $8.7 million or 28 percentage points of margin.
  • Discontinued operations contributed income of $7.9 million in the
    first quarter of 2016, as compared to a loss of $2.2 million in 2015,
    primarily attributed to $8.0 million of gain recognized from the
    settlement we reached with Citrus Lane’s former investors.
  • Adjusted EBITDA was income of $1.6 million in the first quarter of
    2016, compared to an adjusted EBITDA loss of $5.6 million in the first
    quarter of 2015, an improvement of $7.6 million or 22 percentage
    points of margin.
  • GAAP EPS, which includes income from discontinued operations was $0.20
    in the first quarter of 2016, compared to a $(0.38) loss in the first
    quarter of 2015. Q1 GAAP EPS was based on 33.6 million weighted
    average diluted shares outstanding versus 31.8 million shares
    outstanding in the first quarter of 2015.
  • Non-GAAP EPS, which excludes discontinued operations was $0.01 in the
    first quarter of 2016, compared to a $(0.28) loss in the first quarter
    of 2015. Non-GAAP EPS excludes the impact of non-cash stock-based
    compensation and non-recurring items, such as M&A expenses.
  • The Company ended the quarter with $52.3 million in cash and cash
    equivalents.

Business Highlights

  • Our total members grew 31% to 19.5 million at the end of the first
    quarter of 2016, compared to 14.9 million at the end of the first
    quarter 2015.

    • Total families grew to 11.0 million at the end of the first
      quarter of 2016, an increase of 32% over the first quarter of
      2015, and total caregivers grew to 8.6 million at the end of the
      first quarter of 2016, an increase of 30% over the first quarter
      of 2015.

Financial Expectations

 
Q2 2016 Full Year 2016
 
Revenue $ 37.5 $ 38.0 $ 158.0 $ 162.0
 
Adjusted EBITDA $ 0.25 $ 0.75 $ 8.0 $ 12.0
 
Non-GAAP EPS $ (0.04 ) $ (0.02 ) $

0.09

$

0.19

 
Figures in millions except for Non-GAAP EPS
Full year guidance includes the impact of a 53rd week; we operate on
a 4-4-5 accounting calendar
Q2 Non-GAAP EPS based on 32.2 million weighted average shares
Full year Non-GAAP EPS based on 34.5 million weighted average shares
 

Earnings Teleconference Information

The Company will discuss its first quarter 2016 financial results during
a teleconference today, April 28, 2016, at 8:00 AM ET. The conference
call can be accessed at (877) 407-4018 or (201) 689-8471
(international), conference ID# 13633646. The call will also be
broadcast simultaneously at http://investors.care.com.
Following the completion of the call, a recorded replay of the webcast
will be available on Care.com’s website. To listen to the telephone
replay, call toll-free (877) 870-5176 or (858) 384-5517 (international),
conference ID# 13633646. The telephone replay will be available from
11:00 AM ET April 28 through 11:59 PM ET May 5, 2016. Additional
investor information can be accessed at http://www.care.com.

About Care.com

Since launching in 2007, Care.com (NYSE: CRCM) has been committed to
solving the complex care challenges that impact families, caregivers,
employers, and care service companies. Today, Care.com is the world’s
largest online destination for finding and managing family care, with
11.0 million families and 8.6 million caregivers* across 16 countries,
including the U.S., UK, Canada and parts of Western Europe, and
approximately 800,000 employees of corporate clients having access to
our services. Spanning child care to senior care, pet care, housekeeping
and more, Care.com provides a sweeping array of services for families
and caregivers to find, manage and pay for care or find employment.
These include: a comprehensive suite of safety tools and resources
members may use to help make more informed hiring decisions – such as
third-party background check services, monitored messaging, and tips on
hiring best practices; easy ways for caregivers to be paid online or via
mobile app; and household payroll and tax services provided by Care.com
HomePay. Care.com builds employers customized benefits packages covering
child care, back up care and senior care consulting services through its
Care@Work business, and serves care businesses with marketing and
recruiting support. To connect families further, Care.com acquired
community platforms Big Tent and Kinsights in 2013 and 2015,
respectively. Headquartered in Waltham, Massachusetts, Care.com has
offices in Berlin, Austin, New York City and the San Francisco Bay area.

*As of March 2016

Cautionary Language Concerning Forward-Looking Statements:

This press release contains “forward-looking statements” within the
meaning of the “safe harbor” provisions of the Private Securities
Litigation Reform Act of 1995, including but not limited to, statements
regarding the anticipated profitability of our business going forward on
an adjusted EBITDA basis and the Company’s financial guidance for the
second quarter of 2016 and full year 2016.

These forward-looking statements are made as of the date they were first
issued and were based on current expectations, estimates, forecasts and
projections as well as the beliefs and assumptions of management. Words
such as “expect,” “anticipate,” “should,” “believe,” “hope,” “target,”
“project,” “goals,” “estimate,” “potential,” “predict,” “may,” “will,”
“might,” “could,” “intend,” variations of these terms or the negative of
these terms and similar expressions are intended to identify these
forward-looking statements. Forward-looking statements are subject to a
number of risks and uncertainties, many of which involve factors or
circumstances that are beyond the Company’s control. The Company’s
actual results could differ materially from those stated or implied in
forward-looking statements due to a number of factors, including but not
limited to: our ability to grow our membership while leveraging our
investment in sales and marketing, our success in converting non-paying
members to paying members, our ability to cross-sell new and existing
products and services to our members and to develop new products and
services that members consider valuable, our ability to protect our
brand and maintain our reputation among our members, and other risks
detailed in the Company’s other publicly available filings with the
Securities and Exchange Commission. Past performance is not necessarily
indicative of future results. The forward-looking statements included in
this press release represent the Company’s views as of the date of this
press release. The Company anticipates that subsequent events and
developments will cause its views to change. The Company undertakes no
intention or obligation to update or revise any forward-looking
statements, whether as a result of new information, future events or
otherwise. These forward-looking statements should not be relied upon as
representing the Company’s views as of any date subsequent to the date
of this press release.

Use of Non-GAAP Financial Measures

To supplement the financial measures presented in the Company’s press
release and related conference call or webcast in accordance with
accounting principles generally accepted in the United States (“GAAP”),
we also present the following non-GAAP measures of financial
performance: adjusted EBITDA, non-GAAP net income (loss) from continuing
operations and non-GAAP earnings per share from continuing operations
(“EPS”).

A “non-GAAP financial measure” refers to a numerical measure of the
Company’s historical or future financial performance, financial
position, or cash flows that excludes (or includes) amounts that are
included in (or excluded from) the most directly comparable measure
calculated and presented in accordance with GAAP in the Company’s
financial statements. The Company provides certain non-GAAP measures as
additional information relating to its operating results as a complement
to results provided in accordance with GAAP. The non-GAAP financial
information presented here should be considered in conjunction with, and
not as a substitute for or superior to, the financial information
presented in accordance with GAAP and should not be considered a measure
of the Company’s liquidity. There are significant limitations associated
with the use of non-GAAP financial measures. Further, these measures may
differ from the non-GAAP information, even where similarly titled, used
by other companies and therefore should not be used to compare the
Company’s performance to that of other companies.

The Company has presented: adjusted EBITDA, non-GAAP net income (loss)
from continuing operations and non-GAAP EPS from continuing operations
as non-GAAP financial measures in this press release. We define adjusted
EBITDA as net loss from continuing operations, plus: federal, state and
franchise taxes, other expense (income), net, depreciation and
amortization, stock-based compensation, accretion of contingent
consideration, merger and acquisition related costs and other unusual or
non-cash significant adjustments, such as impairment charges. Adjusted
EBITDA eliminates the effects of financing, income taxes and the
accounting effects of capital spending, which is based on the Company’s
estimate of the useful life of tangible and intangible assets. We define
non-GAAP net income (loss) as net loss from continuing operations, plus
stock-based compensation, accretion of contingent consideration, merger
and acquisition related costs and other unusual or non-cash significant
adjustments. We define non-GAAP EPS as non-GAAP net income (loss)
divided by weighted basic shares outstanding.

The Company believes the use of non-GAAP financial measures, as a
supplement to GAAP measures, is useful to investors in that they
eliminate items that are either not part of the Company’s core
operations or do not require a cash outlay, such as stock-based
compensation. Care.com’s management uses these non-GAAP financial
measures when evaluating the Company’s operating performance and for
internal planning and forecasting purposes. The Company believes that
these non-GAAP financial measures help indicate underlying trends in the
Company’s business, are important in comparing current results with
prior period results, and are useful to investors and financial analysts
in assessing the Company’s operating performance.

 
Care.com, Inc.
Consolidated Balance Sheets
(in thousands)
   

March 26,
2016

 

December 26,
2015

Assets (unaudited)
Current assets:
Cash and cash equivalents $ 52,292 $ 61,240

Accounts receivable (net of allowance of $161 and $125,
respectively)

3,101 3,107
Unbilled accounts receivable 3,826 3,595
Prepaid expenses and other current assets 3,072 2,599
Current assets of discontinued operations   315     439  
Total current assets 62,606 70,980
Property and equipment, net 5,982 6,371
Intangible assets, net 3,075 3,389
Goodwill 58,961 58,631
Other non-current assets 3,102 3,098
Non-current assets of discontinued operations       9  
Total assets $ 133,726   $ 142,478  
 
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable $ 3,209 $ 3,189
Accrued expenses and other current liabilities 13,158 12,413
Deferred revenue 14,884 13,435
Current liabilities of discontinued operations   386     17,883  
Total current liabilities 31,637 46,920
Deferred tax liability 3,166 3,166
Other non-current liabilities   4,239     4,140  

Total liabilities

39,042 54,226
 
Stockholders’ equity
Preferred Stock, $0.001 par value; 5,000 shares authorized, no share
issued

Common stock, $0.001 par value; 300,000 shares authorized; 32,070
and
32,276 shares issued and outstanding, respectively

32 32
Additional paid-in capital 283,028 283,669
Accumulated deficit (188,099 ) (194,854 )

Accumulated other comprehensive loss

(277 ) (595 )
Treasury stock, at cost (478 shares at March 26, 2016)        
Total stockholders’ equity   94,684     88,252  
Total liabilities and stockholders’ equity $ 133,726   $ 142,478  
 
 
Care.com, Inc.
Consolidated Statement of Operations
(in thousands, except per share data)
  Three Months Ended

March 26,
2016

 

March 28,
2015

(unaudited)
 
Revenue $ 39,266 $ 32,049
Cost of revenue 7,242 6,272
Operating expenses:
Selling and marketing 19,467 20,357
Research and development 4,875 4,609
General and administrative 7,819 7,625
Depreciation and amortization   972     1,231  
Total operating expenses   33,133     33,822  
Operating loss (1,109 ) (8,045 )
Other expense, net   (14 )   (1,191 )
Loss from continuing operations before income taxes (1,123 ) (9,236 )
Provision for income taxes       560  
Loss from continuing operations (1,123 ) (9,796 )
Income (Loss) from discontinued operations, net of tax   7,878     (2,216 )
Net income (loss) $ 6,755   $ (12,012 )
 
Net income (loss) per share attributable to common stockholders
(Basic):
Loss from continuing operations $ (0.03 ) $ (0.31 )
Income (Loss) from discontinued operations   0.24     (0.07 )
Net income (loss) $ 0.21 $ (0.38 )
 
Net income (loss) per share attributable to common stockholders
(Diluted):
Loss from continuing operations $ (0.03 ) $ (0.31 )
Income (Loss) from discontinued operations   0.23     (0.07 )

Net income (loss)

$ 0.20 $ (0.38 )

Weighted-average shares used to compute net loss
per share
attributable to common stockholders:

Basic 32,229 31,763
Diluted 33,588 31,763
 
     
Care.com, Inc.
Consolidated Statement of Cash Flows Three Month Ended
(in thousands)

March 26,
2016

March 28,
2015

(unaudited)
Cash flows from operating activities
Net loss $ 6,755 $ (12,012 )
Loss from discontinued operations, net of tax   7,878     (2,216 )
Loss from continuing operations (1,123 ) (9,796 )

Adjustments to reconcile net loss from continuing operations to
net cash provided by (used in) operating activities:

Stock-based compensation 1,368 826
Depreciation and amortization 1,169 1,424
Deferred taxes 498
Foreign currency remeasurement gain 24 1,171
Other non-cash operating expenses (56 ) (56 )
Changes in operating assets and liabilities, net of effects from
acquisitions:
Accounts receivable 2 (256 )
Unbilled accounts receivable (231 ) (336 )
Prepaid expenses and other current assets (465 ) (518 )
Other non-current assets 14
Accounts payable 19 3,167
Accrued expenses and other current liabilities 558 (669 )
Deferred revenue 1,437 2,286
Other non-current liabilities   154     187  
Net cash provided by (used in) operating activities by continuing
operations
2,856 (2,058 )
Net cash used in operating activities by discontinued operations   2,602     (2,499 )
Net cash used in operating activities   5,458     (4,557 )
 
Cash flows from investing activities
Purchases of property and equipment (26 ) (3,272 )
Payments for acquisitions, net of cash acquired (420 )
Changes in restricted cash balance       73  
Net cash used in investing activities   (446 )   (3,199 )
 
Cash flows from financing activities
Proceeds from exercise of common stock options 579 524
Payments of contingent consideration previously established in
purchase accounting
      (1,840 )
Net cash provided by (used in) financing activities by continuing
operations
579 (1,316 )
Net cash used in financing activities by discontinued operations   (14,510 )    
Net cash (used in) provided by financing activities   (13,931 )   (1,316 )
 
Effect of exchange rate changes on cash and cash equivalents   (29 )   (64 )
Net (decrease) increase in cash and cash equivalents (8,948 ) (9,136 )
Cash and cash equivalents, beginning of the period   61,240     71,881  
Cash and cash equivalents, end of the period $ 52,292   $ 62,745  
 
 
Care.com, Inc.
Reconciliation of Adjusted EBITDA & Non-GAAP Income (Loss)
(in thousands, except per share data)
     
Three Months Ended

March 26,
2016

March 28,
2015

(unaudited)
 
Net loss from continuing operations $ (1,123 ) $ (9,796 )
 
Federal, state and franchise taxes 89 689
Other expense, net 14 1,191
Depreciation and amortization   1,169     1,424  
EBITDA 149 (6,492 )
 
Stock-based compensation 1,368 826
Merger and acquisition related costs   58     66  
Adjusted EBITDA $ 1,575   $ (5,600 )
 
Add back for Non-GAAP Net Income (Loss)
 
Federal, state and franchise taxes (89 ) (689 )
Other expense, net (14 ) (1,191 )
Depreciation and amortization   (1,169 )   (1,424 )
Non-GAAP net Income (Loss) $ 303   $ (8,904 )
 
Non-GAAP net income (loss) per share:
Basic $ 0.01 $ (0.28 )
Diluted $ 0.01 $ (0.28 )
 

Weighted-average shares used to compute
non-GAAP net income
(loss) per share :

Basic 32,229 31,763
Diluted 33,588 31,763
 
 
Care.com, Inc.
Supplemental Data
(in thousands)
      Period Ended

March 26,
2016

 

March 28,
2015

Total members* 19,540 14,896
Total families* 10,954 8,291
Total caregivers* 8,586 6,605
 
Paying members – US Consumer Business 272 230
 

* data is cumulative as of the end of the respective period and
excludes families from discontinued operations

 
Period Ended

March 26,
2016

March 28,
2015

Monthly Average Revenue per Member

US Consumer Business $ 40 $ 38
 

Contacts

Investor Relations:
ICR, Inc.
Denise Garcia, 781-795-7244
investors@care.com