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