Care.com Announces Fourth Quarter and Full Year 2015 Financial Results

Achieves Record Fourth Quarter Profitability

WALTHAM, Mass.–(BUSINESS WIRE)–Care.com, Inc. (NYSE: CRCM), the world’s largest online destination for
finding and managing family care, today announced financial results for
the fourth quarter and full year ended December 26, 2015.

“In Q4, we achieved GAAP net income for the first time in the company’s
history,” said Sheila Lirio Marcelo, Founder, Chairwoman, and CEO of
Care.com. “On an Adjusted EBITDA basis, we achieved a 10 percentage
point improvement as a percent of revenue versus Q4 2014, driven
primarily by a seven percentage point improvement in sales and
marketing. For the year, we achieved a 14 percentage point improvement
in sales and marketing spend as a percent of revenue. At the same time,
we grew revenue by 25% in 2015 and continued to invest in R&D, including
developing our transactional consumer mobile platform and our enterprise
on-demand, back-up care app now being used at one of the largest
technology companies in the world. We’re excited about our mobile
product investments. While we anticipate that it will take time for us
to realize meaningful revenue from these investments, we expect they
will position us well to capture a larger portion of our market
opportunity for both our consumer and enterprise services in the future.”

Financial Results

  • Fourth quarter revenue increased 25% compared to the fourth quarter of
    2014 to $37.6 million, excluding $3.0 million from discontinued
    operations. Full year revenue increased 25% compared to 2014 to $138.7
    million, excluding $11.5 million from discontinued operations.

    • Revenue attributable to the US Consumer Business totaled $31.1
      million in the fourth quarter of 2015, a 25% increase from $25.0
      million in the fourth quarter of 2014. For the year, revenue
      attributable to the US Consumer Business totaled $115.0 million, a
      25% increase from $92.0 million in 2014.
    • Revenue attributable to the Care@Work (formally WPS),
      International and B2B businesses totaled $6.5 million in the
      fourth quarter of 2015, an increase of 28% from the fourth quarter
      of 2014, or 35% on a constant currency basis. For the year,
      revenue attributable to the Care@Work, International and B2B
      businesses totaled $23.7 million, an increase of 27% from 2014, or
      36% on a constant currency basis.
  • Income from continuing operations in the fourth quarter of 2015 was
    $3.7 million compared to a loss of $1.5 million in 2014, an
    improvement of $5.2 million. On a full year basis, loss from
    continuing operations in 2015 was $17.9 million compared to a loss of
    $37.6 million in 2014, an improvement of $19.7 million.
  • Loss from discontinued operations in the fourth quarter of 2015 was
    $2.1 million compared to $38.9 million in 2014. On a full year basis,
    loss from discontinued operations in 2015 was $17.1 million compared
    to a loss of $42.7 million in 2014.
  • GAAP EPS was $0.05 in the fourth quarter of 2015, based on 32.2
    million weighted average basic shares outstanding. GAAP EPS was
    $(1.09) for the full year 2015, based on 32.0 million weighted average
    basic shares outstanding.
  • Adjusted EBITDA was income of $6.3 million in the fourth quarter of
    2015 compared to $2.1 million in 2014, an improvement of $4.2 million.
    Full year 2015 adjusted EBITDA was a loss of $5.0 million compared to
    a loss of $21.1 million in 2014, an improvement of $16.1 million.
  • Non-GAAP EPS was $0.15 in the fourth quarter of 2015, excluding the
    impact of $(0.01) from discontinued operations, based on 32.2 million
    weighted average basic shares outstanding. For the full year, non-GAAP
    EPS was $(0.40) in 2015, excluding the impact of $(0.12) from
    discontinued operations, based on 32.0 million weighted average basic
    shares outstanding. Non-GAAP EPS excludes the impact of non-cash
    stock-based compensation, discontinued operations and non-recurring
    items, such as M&A expenses.
  • The Company ended the year with $61.2 million in cash and cash
    equivalents.

Business Highlights

  • Our total members grew 33% to 18.4 million at year-end 2015, compared
    to 13.8 million at year-end 2014.

    • Total families grew to 10.3 million at year-end 2015, an increase
      of 35% over last year, and total caregivers grew to 8.1 million at
      year-end 2015, an increase of 31% over last year.
    • End of year 2015 US Consumer Business end-of-period paying members
      grew to over 266,000, a 21% increase over last year.

Financial Expectations

    Q1 2016       Full Year 2016
       
Revenue $ 37.5 $ 38.5 $ 155.0 $ 161.0
 

Adjusted EBITDA

$ (1.0 ) $ $ 6.5 $ 10.5
 
Non-GAAP EPS $ (0.07 ) $ (0.04 ) $ 0.05 $ 0.15
 
Figures in millions except for Non-GAAP EPS
Full year guidance includes the impact of a 53rd week
Q1 Non-GAAP EPS based on 33.1 million weighted average shares
Full year Non-GAAP EPS based 35.0 million on weighted average shares

Earnings Teleconference Information

The Company will discuss its fourth quarter and full year 2015 financial
results during a teleconference today, February 23, 2016, at 4:30 PM ET.
The conference call can be accessed at (877) 407-4018 or (201) 689-8471
(international), conference ID# 13629311. 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 #13629311. The telephone replay will be available from
7:30 PM ET February 23 through 11:59 PM ET March 1, 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
10.3 million families and 8.1 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 December 2015

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 in 2016 on an
adjusted EBITDA basis and the Company’s financial guidance for the first
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 loss from
continuing operations and non-GAAP EPS 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)

December 26,
2015

December 27,
2014

Assets (unaudited)
Current assets:
Cash and cash equivalents $ 61,240 $ 71,881
Accounts receivable (net of allowance of $0.1 million for 2015) 3,107 2,530
Unbilled accounts receivable 3,595 3,541
Prepaid expenses and other current assets 2,599 4,936
Current assets of discontinued operations   439     3,172  
Total current assets 70,980 86,060
Property and equipment, net 6,371 6,290
Intangible assets, net 3,389 7,065
Goodwill 58,631 60,635
Other non-current assets 3,098 3,072
Non-current assets of discontinued operations   9     9,982  
Total assets $ 142,478   $ 173,104  
 
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable $ 3,189 $ 4,323
Accrued expenses and other current liabilities 12,413 11,667
Current contingent acquisition consideration 2,845
Deferred revenue 13,435 11,472
Current liabilities of discontinued operations   17,883     11,919  
Total current liabilities 46,920 42,226
Deferred tax liability 3,166 2,119
Other non-current liabilities 4,140 3,442
Non-current liabilities of discontinued operations       7,267  
Total liabilities 54,226 55,054
 
Stockholders’ equity
Common stock, $0.001 par value; 300,000 shares authorized; 32,276
and 31,615 shares issued and outstanding, respectively
32 32
Additional paid-in capital 283,669 277,583
Accumulated deficit (194,854 ) (159,859 )
Accumulated other comprehensive (loss) income   (595 )   294  
Total stockholders’ equity   88,252     118,050  
Total liabilities and stockholders’ equity $ 142,478   $ 173,104  
                       
Care.com, Inc.
Consolidated Statement of Operations
(in thousands, except per share data)
Three Months Ended Year Ended

December 26,
2015

December 27,
2014

December 26,
2015

December 27,
2014

(unaudited)
 
Revenue $ 37,550 $ 29,999 $ 138,681 $ 110,712
Cost of revenue 6,321 5,869 26,117 23,464
Operating expenses:
Selling and marketing 13,726 13,311 73,521 73,799
Research and development 4,656 3,993 19,801 16,216
General and administrative 7,857 7,069 30,158 27,325
Depreciation and amortization   986     1,127     4,503     4,363  
Total operating expenses   27,225     25,500     127,983     121,703  
Operating loss 4,004 (1,370 ) (15,419 ) (34,455 )
Other expense, net   (263 )   (529 )   (1,239 )   (3,856 )
Income (Loss) from continuing operations before income taxes 3,741 (1,899 ) (16,658 ) (38,311 )
Provision for (benefit from) income taxes   58     (369 )   1,221     (752 )
Income (Loss) from continuing operations 3,683 (1,530 ) (17,879 ) (37,559 )
Loss from discontinued operations, net of tax   (2,084 )   (38,890 )   (17,116 )   (42,733 )
Net income (loss) 1,599 (40,420 ) (34,995 ) (80,292 )
Accretion of preferred stock               (4 )
Net income (loss) attributable to common stockholders $ 1,599   $ (40,420 ) $ (34,995 ) $ (80,296 )
 
Net income (loss) per share attributable to common stockholders
(Basic):
Income (Loss) from continuing operations $ 0.11 $ (0.05 ) $ (0.56 ) $ (1.30 )
Loss from discontinued operations   (0.06 )   (1.23 )   (0.53 )   (1.47 )
Net income (loss) $ 0.05 $ (1.28 ) $ (1.09 ) $ (2.77 )
 
Net income (loss) per share attributable to common stockholders
(Diluted):
Income (Loss) from continuing operations $ 0.11 $ (0.05 ) $ (0.56 ) $ (1.30 )
Loss from discontinued operations   (0.06 )   (1.23 )   (0.53 )   (1.47 )
Net income (loss) $ 0.05 $ (1.28 ) $ (1.09 ) $ (2.77 )
Weighted-average shares used to compute net loss per share
attributable to common stockholders:
Basic 32,191 31,507 32,001 28,941
Diluted 33,273 31,507 32,001 28,941
         
Care.com, Inc.
Consolidated Statement of Cash Flows Year Ended

(in thousands)

December 26,
2015

 

December 27,
2014

  (unaudited)
Cash flows from operating activities
Net loss $ (34,995 ) $ (80,292 )
Loss from discontinued operations, net of tax   (17,116 )   (42,733 )
Loss from continuing operations (17,879 ) (37,559 )
Adjustments to reconcile net loss to net cash provided by (used in)
operating activities:
Stock-based compensation 4,926 3,879
Depreciation and amortization 5,218 5,128
Deferred taxes 1,094 (893 )
Contingent consideration expense 302
Change in fair value of contingent consideration payable in
preferred stock
2,258
Change in fair value of stock warrants 606
Foreign currency remeasurement gain 1,275
Other non-operating expenses (98 ) (89 )
Changes in operating assets and liabilities, net of effects from
acquisitions:
Accounts receivable (604 ) (946 )
Unbilled accounts receivable (291 ) (1,066 )
Prepaid expenses and other current assets 2,076 (116 )
Other non-current assets (22 ) 353
Accounts payable (588 ) 1,757
Accrued expenses and other current liabilities 1,864 2,087
Deferred revenue 2,280 3,242
Other non-current liabilities   909     880  
Net cash provided by (used in) operating activities by continuing
operations
160 (20,177 )
Net cash used in operating activities by discontinued operations   (5,124 )   (4,107 )
Net cash used in operating activities   (4,964 )   (24,284 )
 
Cash flows from investing activities
Purchases of property and equipment (4,396 ) (3,038 )
Payments for acquisitions, net of cash acquired (489 )
Cash withheld for purchase consideration 73 (73 )
Net increase in other assets       (2,825 )
Net cash used in investing activities by continuing operations (4,323 ) (6,425 )
Net cash used in investing activities by discontinued operations   (2 )   (22,844 )
Net cash used in investing activities   (4,325 )   (29,269 )
 
Cash flows from financing activities
Proceeds from initial public offering net of offering costs 96,007
Proceeds from exercise of common stock options 777 787
Payments of contingent consideration previously established in
purchase accounting
  (1,840 )   (2,209 )
Net cash (used in) provided by financing activities   (1,063 )   94,585  
 
Effect of exchange rate changes on cash and cash equivalents   (289 )   890  
Net (decrease) increase in cash and cash equivalents (10,641 ) 41,922
Cash and cash equivalents, beginning of the period   71,881     29,959  
Cash and cash equivalents, end of the period $ 61,240   $ 71,881  
                     
Care.com, Inc.
Reconciliation of Adjusted EBITDA
(in thousands)
Three Months Ended Year Ended

December 26,
2015

December 27,
2014

December 26,
2015

December 27,
2014

(unaudited)
 
Net income (loss) from continuing operations $ 3,683 $ (1,530 ) $ (17,879 ) $ (37,559 )
 
Federal, state and franchise taxes 109 (311 ) 1,411 (468 )
Other expense, net 263 529 1,239 3,856
Depreciation and amortization   1,152     1,318     5,218     5,128  
 
EBITDA 5,207 6 (10,011 ) (29,043 )
 
Stock-based compensation 1,204 826 4,926 3,879
Accretion of contingent consideration 302
Non-cash rent expense 550 948
Merger and acquisition related costs (82 ) 709 53 2,644
IPO related costs               164  
 
Adjusted EBITDA $ 6,329   $ 2,091   $ (5,032 ) $ (21,106 )
                       
Care.com, Inc.
Reconciliation of Non-GAAP Net Income (Loss)
Three Months Ended Year Ended
(in thousands, except per share data)

December 26,
2015

December 27,
2014

December 26,
2015

December 27,
2014

(unaudited)
 
Net income (loss) from continuing operations $ 3,683 $ (1,530 ) $ (17,879 ) $ (37,559 )
 
Stock-based compensation 1,204 826 4,926 3,879
Accretion of contingent consideration 302
Non-cash rent expense 550 948
Merger and acquisition related costs (82 ) 709 53 2,644
IPO related costs 164
Preferred stock and warrant valuation adjustments               2,864  
Non-GAAP net income (loss) $ 4,805   $ 555   $ (12,900 ) $ (26,758 )
 
Non-GAAP net income (loss) per share:
Basic $ 0.15 $ 0.02 $ (0.40 ) $ (0.92 )
Diluted $ 0.14 $ 0.02 $ (0.40 ) $ (0.92 )
 

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

Basic 32,191 31,507 32,001 28,941
Diluted 33,273 32,290 32,001 28,941
           
Care.com, Inc.
Supplemental Data
(in thousands)
Year Ended

December 26,
2015

December 27,
2014

Total members* 18,377 13,788
Total families* 10,265 7,612
Total caregivers* 8,112 6,176
 
Paying members – US Consumer Business 266 222
 
* data is cumulative as of the end of the respective period
 
Year Ended

December 26,
2015

December 27,
2014

Monthly Average Revenue per Member

US Consumer Business $ 39 $ 39

Contacts

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