Care.com Inc - FORM 8-K - EX-99.1 - EXHIBIT 99.1 - April 28, 2016

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8-K - 8-K - Care.com Incq12016earningsrelease8-kca.htm
Exhibit 99.1


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, MA - April 28, 2016 - Care.com, Inc. (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
 
 
 
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 shares 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
 
 
 
 
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 (Basic):
 
 
 
Loss from continuing operations
$
(0.03
)
 
$
(0.31
)
Income (Loss) from discontinued operations
$
0.24

 
$
(0.07
)
Net income (loss) per share
$
0.21

 
$
(0.38
)
Net income (loss) per share (Diluted):
 
 
 
Loss from continuing operations
$
(0.03
)
 
$
(0.31
)
Income (Loss) from discontinued operations
$
0.23

 
$
(0.07
)
Net income (loss) per share
$
0.20

 
$
(0.38
)
Weighted-average shares outstanding:
 
 
 
Basic
32,229

 
31,763

Diluted
33,588

 
31,763




Care.com, Inc.
 
 
 
Consolidated Statement of Cash Flows
 
 
 
(in thousands)
 
 
 
 
Three Months Ended
 
March 26, 2016
 
March 28, 2015
Cash flows from operating activities
 
 
 
Net income (loss)
$
6,755

 
$
(12,012
)
Income (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 loss
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 provided by (used in) operating activities by discontinued operations
2,602

 
(2,499
)
Net cash provided by (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 financing activities
(13,931
)
 
(1,316
)
 
 
 
 
Effect of exchange rate changes on cash and cash equivalents
(29
)
 
(64
)
Net decrease 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








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