Strong Revenue Growth and Operating Leverage
Drive Fourth Quarter Profitability
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 fiscal year ended on
December 27, 2014.
“We are very pleased with our progress in 2014, our first year
as a public company. We continued to show robust growth through our
investments in our products, while continuing to optimize our
marketing channels across the Care.com platform,” said Sheila Lirio
Marcelo, Founder, Chairwoman, and CEO of Care.com. “We became
profitable on an adjusted EBITDA basis in the fourth quarter, as
expected, as we continued to leverage our investments in sales and
marketing, with increased efficiencies in both paid and unpaid
channels. As we continue to drive operating leverage, and given the
seasonality of our business, we anticipate reaching consistent
quarterly adjusted EBITDA profitability by mid-2016.”
Highlights
- Fourth quarter consolidated revenue was
$33.6 million, an increase of 49% over the fourth quarter of 2013.
Organic revenue, which excludes revenue from Citrus Lane, a company
that we acquired in July 2014, was $30.0 million in the fourth
quarter, an increase of 33% over the same period in 2013. Full year
2014 consolidated revenue was $116.7 million, an increase of 43%
over 2013. Organic revenue was $110.7 million for the full year
2014, an increase of 36% over 2013.
- Revenue growth and sales and marketing
leverage drove profitability improvements, due largely to gains in
unpaid marketing, optimizing paid marketing channels, and
continuing to drive increases in member engagement and reuse of the
service. Fourth quarter organic sales and marketing investments
totaled $13.3 million, an increase of just 17% over the fourth
quarter of 2013, as compared to 33% organic revenue growth over the
fourth quarter of 2013. Full year sales and marketing investments
totaled $73.8 million on an organic basis, an increase of 34% over
2013, as compared to 36% organic revenue growth over 2013.
- Fourth quarter net loss was $40.4
million, including $36.2 million in non-cash impairment charges
related to reduced expectations for Citrus Lane. Fourth quarter
consolidated adjusted EBITDA was a profit of $0.5 million, and a
profit of $2.2 million on an organic basis, compared to an adjusted
EBITDA loss of $1.1 million in the same period of 2013. Full year
2014 net loss was $80.3 million, including $36.2 million in
non-cash impairment charges related to reduced expectations for
Citrus Lane. Full year 2014 consolidated adjusted EBITDA was a loss
of $24.3 million, and a loss of $21.1 million on an organic basis,
compared to an adjusted EBITDA loss of $17.2 million in 2013,
representing 200 basis point improvement on a percentage of revenue
basis.
- The Company recorded non-cash
impairment charges of $36.2 million related to reduced expectations
for Citrus Lane. This was driven by lower than expected new
subscribers during the integration period, as a result of
transitioning marketing strategies and tactics to align with the
broader Care.com platform.
Financial Results
- Revenue for the fourth quarter was
$33.6 million on a consolidated basis, and $30.0 million on an
organic basis. Organic revenue grew 33% over $22.5 million in the
fourth quarter of 2013. Full year revenue was $116.7 million on a
consolidated basis, and $110.7 million on an organic basis. Organic
revenue grew 36% over $81.5 million in 2013.
- US Matching revenue totaled $22.7
million in the fourth quarter, a 31% increase from $17.3 million in
the fourth quarter 2013. Full year US Matching revenue totaled
$82.0 million, an increase of 33% from $61.6 million in 2013.
- Payments revenue totaled $3.5 million
in the fourth quarter, a 33% increase from $2.6 million in the
fourth quarter of 2013. Full year Payments revenue totaled $14.5
million, a 35% increase over $10.8 million in 2013.
- Other revenue totaled $7.4 million in
the fourth quarter, including $3.6 million from Citrus Lane. Other
revenue excluding Citrus Lane totaled $3.8 million, a 49% increase
from $2.6 million in the fourth quarter of 2013. Full year Other
revenue totaled $20.2 million, including $6.0 million from Citrus
Lane. Full year Other revenue excluding revenue from Citrus Lane
totaled $14.2 million, a 56% increase from $9.1 million in
2013.
- GAAP net loss for the fourth quarter
2014 was $40.4 million, including $36.2 million in non-cash
impairment charges related to Citrus Lane. Net loss excluding the
impact of Citrus Lane’s operations and impairment charges was $1.5
million, compared to a net loss of $3.6 million in the fourth
quarter of 2013. Full year 2014 net loss was $80.3 million,
including $36.2 million in non-cash impairment charges related to
Citrus Lane. Net loss excluding the impact of Citrus Lane’s
operations and impairment charges was $37.3 million, compared to
$28.4 million in 2013.
- Adjusted EBITDA was $0.5 million in the
fourth quarter 2014. Adjusted EBITDA excluding the results of
Citrus Lane was $2.2 million, compared to an adjusted EBITDA loss
of $1.1 million in the fourth quarter of 2013. Full year 2014
adjusted EBITDA was a loss of $24.3 million, including a loss of
$3.2 million from Citrus Lane. Full year adjusted EBITDA excluding
the impact of Citrus Lane was a loss of $21.1 million, compared to
an adjusted EBITDA loss of $17.2 million in 2013.
- GAAP EPS was $(1.28) in the fourth
quarter, including $(1.23) impact related to Citrus Lane’s
operations and impairment charges. Q4 GAAP EPS was based on 31.5
million weighted average basic shares outstanding. GAAP EPS was
$(2.77) for the full year 2014, including $(1.49) impact from
Citrus Lane’s operations and impairment charges, based on 28.9
million weighted average basic shares outstanding.
- Non-GAAP EPS was $(0.04) in the fourth
quarter. For the full year, non-GAAP EPS was $(1.05). Non-GAAP EPS
excludes the impact of non-cash stock based compensation and
non-recurring items, such as M&A and the Citrus Lane impairment
charges.
- The Company ended the year with $71.9
million in cash and cash equivalents.
Business Highlights
- Our total members grew 45% to 14.1
million at year end 2014, including approximately 300,000 added via
our acquisition of Citrus Lane, compared to 9.7 million at year end
2013.
- Total families grew to 7.9 million at
year end 2014, a 50% increase over last year, and total caregivers
grew to 6.2 million at year end 2014, an increase of 38% over last
year.
- End of year 2014 US Matching paying
members increased 28% over 2013 to 208,000.
- End of year 2014 Payment members grew
to 13,900, a 28% increase over last year.
- We delivered strong organic revenue
growth of 33% in Q4 while increasing sales and marketing expenses
just 17%, excluding the impact of Citrus Lane. Direct marketing for
core US matching and payments businesses increased just 10% in the
fourth quarter, and TV spend declined 4%. We leveraged organic
sales and marketing as a percentage of revenue by 600 basis points
over the fourth quarter of 2013.
- Cross sell between our US Matching and
high-ROI Payments businesses was robust, with 42% of new Payments
members in 2014 coming from Care.com, as compared to 33% in
2013.
- Average US monthly unique visitors grew
to 6.2 million in Q4, a 28% increase over Q4 2013, with 62% of
visitors via mobile device.
- Unpaid SEO traffic continued strong
growth, resulting in a 61% increase over the fourth quarter of
2013, and a 66% increase for the year 2014.
Financial Expectations
Q1 2015 Full Year 2015 Revenue
Organic (ex. Citrus Lane) $31.3 - $31.9 $133.0 -
$141.0 Citrus Lane $2.6 $12.0 -
$14.0 Total $33.9 - $34.5 $145.0 - $155.0 Adjusted
EBITDA Organic (ex. Citrus Lane) ($6.6) - ($6.0) ($11.0) - ($7.0)
Citrus Lane ($1.6) ($4.0) -
($2.0) Total ($8.2) ($7.6) ($15.0) - ($9.0) Non GAAP
EPS ($0.33) - ($0.31) ($0.72) - ($0.53) Weighted average
basic shares 31.8 - 31.8 32.1 - 32.1 Figures in millions
except for Non-GAAP EPS Non-GAAP EPS based on weighted average
diluted shares
Earnings Teleconference Information
The Company will discuss its fourth quarter and full year 2014
financial results during a teleconference today, March 19, 2015, at
8:00 AM ET. The conference call can be accessed at (877) 407-4018
or (201) 689-8471 (international), conference ID# 13600443. 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 #
13600443. The telephone replay will be available from 11:00 AM ET
March 19 through 11:59 PM ET March 26, 2015. 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 14.1 million member consumers* across 16
countries, including the US, UK, Canada and parts of Western
Europe, and approximately half a million 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 Global Workplace Solutions, and
serves care businesses with marketing and recruiting support. To
further connect families, Care.com has expanded its consumer
service with its 2014 acquisition of Citrus Lane, the leading
social commerce site for moms, and its 2013 acquisition of Big
Tent, a community platform with more than 1 million active members.
Headquartered in Waltham, Massachusetts, Care.com has offices in
Berlin, Austin, New York City and Silicon Valley.
*As of December 2014
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 projected membership growth and platform
monetization opportunities, the anticipated profitability of our
business in 2016 on an adjusted EBITDA basis, and the Company’s
financial guidance for the first quarter of 2015 and full year
2015.
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, , and 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: organic revenue and revenue growth; adjusted
EBITDA, organic marketing investments; non-GAAP net loss and
non-GAAP earnings per share (“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: organic revenue and revenue growth,
adjusted EBITDA, organic marketing investments, non-GAAP net loss
and non-GAAP EPS as non-GAAP financial measures in this press
release. We define organic revenue as total revenue excluding
Citrus Lane revenue. We define organic revenue growth as revenue
growth excluding Citrus Lane. We define adjusted EBITDA as net
loss, 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. 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 organic marketing investment as
marketing investment excluding Citrus Lane. We define non-GAAP net
loss as net loss, 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 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 27, 2014
December 28,2013
Assets (unaudited) Current assets: Cash and cash
equivalents $ 71,881 $ 29,959 Restricted cash 85 246 Accounts
receivable (net of allowance of $0 and $56, respectively) 2,592
1,609 Unbilled accounts receivable 3,541 2,477 Prepaid expenses and
other current assets 7,961 1,731 Total
current assets 86,060 36,022 Property and equipment, net 6,323
1,553 Intangible assets, net 8,965 11,418 Goodwill 68,685 62,686
Other non-current assets 3,071 2,150
Total assets $ 173,104 $ 113,829
Liabilities, redeemable convertible preferred stock and
stockholders' equity (deficit) Current liabilities: Accounts
payable $ 5,463 $ 2,031 Accrued expenses and other current
liabilities 12,732 7,023 Current contingent acquisition
consideration 10,685 5,463 Deferred revenue 13,346
8,304 Total current liabilities 42,226 22,821
Contingent acquisition consideration 7,267 5,166 Deferred tax
liability 2,119 1,112 Other non-current liabilities 3,442
785 Total liabilities 55,054 29,884
Redeemable convertible preferred stock - 152,251
Stockholders' equity (deficit) Preferred stock, $0.001 par value;
5,000 shares authorized; no shares issued and outstanding Common
stock, $0.001 par value; 300,000 shares authorized; 31,614 and
3,197 shares issued and outstanding as of December 27, 2014 and
December 28, 2013, respectively 32 3 Additional paid-in capital
277,583 9,311 Accumulated deficit (159,859 ) (79,563 ) Accumulated
other comprehensive income 294 1,943
Total stockholders' equity (deficit) 118,050
(68,306 ) Total liabilities, redeemable convertible preferred stock
and stockholders' equity (deficit) $ 173,104 $ 113,829
Care.com, Inc. Consolidated Statement of Operations (in thousands,
except per share data)
Three Months Ended Year Ended
December 27,2014
December 28, 2013
December 27,2014
December 28, 2013
(unaudited) (unaudited) Revenue $ 33,552 $
22,511 $ 116,713 $ 81,487 Cost of revenue 9,729 4,852 30,345 18,844
Operating expenses: Selling and marketing 14,446 11,398 75,817
55,250 Research and development 4,425 3,397 16,984 11,816 General
and administrative 7,789 5,534 30,088 18,841 Depreciation and
amortization 1,191 1,221 4,440 4,387 Impairment of goodwill and
intangible assets 36,227 -
36,227 - Total operating expenses
64,078 21,550 163,556
90,294 Operating loss (40,255 ) (3,891 ) (77,188 ) (27,651 )
Other (expense) income, net (533 ) 27
(3,856 ) (291 ) Loss before income taxes (40,788 ) (3,864 )
(81,044 ) (27,942 ) (Benefit from) provision for income taxes
(368 ) (233 ) (752 ) 354 Net
loss $ (40,420 ) $ (3,631 ) $ (80,292 ) $ (28,296 ) Accretion of
preferred stock - (15 ) (4 ) (57
) Net loss attributable to common stockholders $ (40,420 ) $ (3,646
) $ (80,296 ) $ (28,353 ) Net loss per share attributable to
common stockholders: Basic and diluted $ (1.28 ) $ (1.16 ) $ (2.77
) $ (9.45 ) Weighted-average shares used to compute net loss per
share attributable to common stockholders: Basic and diluted 31,507
3,130 28,941 3,000
Care.com, Inc.
Consolidated Statement of Cash Flows
Year Ended (in
thousands)
December 27, 2014
December 28,2013
(unaudited) Cash flows from operating activities Net
loss $ (80,292 ) $ (28,296 ) Adjustments to reconcile net loss to
net cash used in operating activities: Stock-based compensation
5,805 1,862 Depreciation and amortization 5,401 6,702 Deferred
taxes (893 ) 284 Contingent consideration expense 900 1,342 Change
in fair value of contingent consideration payable in preferred
stock 2,258 - Change in fair value of stock warrants 606 115
Impairment of goodwill and intangible assets 36,227 - Other
non-operating expenses (89 ) - Changes in operating assets and
liabilities, net of effects from acquisitions: Restricted cash 4 23
Accounts receivable (892 ) (46 ) Unbilled accounts receivable
(1,066 ) (458 ) Prepaid expenses and other current assets (432 )
(462 ) Other non-current assets 353 (109 ) Accounts payable 1,057
706 Accrued expenses and other current liabilities 2,479 2,870
Deferred revenue 3,422 2,821 Other non-current liabilities
868 (15 ) Net cash used in operating activities
(24,284 ) (12,661 )
Cash flows from investing
activities Purchases of property and equipment (3,038 ) (1,420
) Payments for acquisitions, net of cash acquired (23,333 ) (398 )
Cash withheld for purchase consideration (73 ) - Payments for
security deposits (2,825 ) - Net cash used in
investing activities (29,269 ) (1,818 )
Cash flows from
financing activities Proceeds from initial public offering net
of offering costs 96,007 - Proceeds from exercise of common stock
options 787 821 Payments for deferred offering costs - (1,074 )
Payments of contingent consideration previously established in
purchase accounting (2,209 ) - Net cash
provided by (used in) financing activities 94,585 (253 )
Effect of exchange rate changes on cash and cash equivalents
890 (85 ) Net increase (decrease) in cash and cash
equivalents 41,922 (14,817 ) Cash and cash equivalents, beginning
of the period 29,959 44,776 Cash and
cash equivalents, end of the period $ 71,881 $ 29,959
Care.com, Inc.
Reconciliation of Adjusted EBITDA (in thousands)
Three Months
Ended Year Ended
December 27,2014
December 28,2013
December 27,2014
December 28, 2013
(unaudited) (unaudited) Net Loss $ (40,420 ) $
(3,631 ) $ (80,292 ) $ (28,296 ) Federal, state and
franchise taxes (311 ) (266 ) (468 ) 376 Other expense (income),
net 533 (27 ) 3,856 291 Depreciation and amortization 1,487
1,535 5,401 6,702
EBITDA (38,711 ) (2,389 ) (71,503 ) (20,927 )
Stock-based compensation 976 666 5,805 1,862 Accretion of
contingent consideration 496 138 900 561 Non-cash rent expense 550
- 948 - Merger and acquisition related costs 1,005 - 3,114 -
Impairment of goodwill and intangible assets 36,227 - 36,227 - IPO
related costs - 467 164
1,305 Adjusted EBITDA $ 543 $ (1,118 )
$ (24,345 ) $ (17,199 )
Care.com, Inc. Reconciliation of Non-GAAP Net Loss
Three Months
Ended Year Ended (in thousands, except per share data)
December 27, 2014
December 28, 2013
December 27, 2014
December 28, 2013
(unaudited) (unaudited) Net loss $ (40,420 ) $
(3,631 ) $ (80,292 ) $ (28,296 ) Stock-based compensation
976 666 5,805 1,862 Accretion of contingent consideration 496 138
900 561 Non-cash rent expense 550 - 948 - Merger and acquisition
related costs 1,005 - 3,114 - Impairment of goodwill and intangible
assets 36,227 - 36,227 - IPO related costs - 467 164 1,305
Preferred stock and warrant valuation adjustments -
87 2,864 115
Non-GAAP net loss $ (1,166 ) $ (2,273 ) $ (30,270 ) $ (24,453 )
Non-GAAP net loss per share attributable to common
stockholders: Basic and diluted $ (0.04 ) $ (0.73 ) $ (1.05 ) $
(8.15 ) Weighted-average shares used to compute non-GAAP net loss
per share attributable to common stockholders: Basic and diluted
31,507 3,130 28,941 3,000
Care.com, Inc. Reconciliation of Non-GAAP Organic Revenue
Three
Months Ended Year Ended (in thousands)
December 27, 2014
December 28, 2013
December 27, 2014
December 28, 2013
(unaudited) (unaudited) Revenue $ 33,552 $
22,511 $ 116,713 $ 81,487 Citrus Lane revenue 3,551
- 6,001 -
Organic revenue $ 30,001 $ 22,511 $ 110,712 $ 81,487
Reconciliation of Non-GAAP Organic Sales and
Marketing
Three Months Ended Year Ended (in
thousands)
December 27, 2014
December 28, 2013
December 27, 2014
December 28, 2013
(unaudited) (unaudited) Selling and marketing
$ 14,446 $ 11,398 $ 75,817 $ 55,250 Citrus Lane selling and
marketing 1,133 - 2,017
- Organic selling and marketing $ 13,313 $
11,398 $ 73,800 $ 55,250 Reconciliation
of Organic Adjusted EBITDA
Three Months Ended Year
Ended (in thousands)
December 27, 2014
December 28, 2013
December 27, 2014
December 28, 2013
(unaudited) (unaudited) Adjusted EBITDA $ 543
$ (1,118 ) $ (24,345 ) $ (17,199 ) Citrus Lane adjusted
EBITDA (1,628 ) - (3,236 ) -
Organic adjusted EBITDA $ 2,171 $ (1,118 ) $ (21,109
) $ (17,199 )
Care.com, Inc. Supplemental Data (in thousands)
December 27, 2014
December 28,2013
Total members** 14,118 9,744 Total families** 7,942 5,281 Total
caregivers* 6,176 4,463 Paying members - US Matching 208 163
Paying members - Payments 14 11 ** data is cumulative
as of the end of the respective period and includes approximately
300k members via our acquisition of Citrus Lane * data is
cumulative as of the end of the respective period
Year Ended
December 27, 2014
December 28,2013
Monthly Average
Revenue per Member
US Matching $
37
$ 36 Payments $
97
$ 93
Investor Relations:ICR, Inc.Denise Garcia,
781-795-7244investors@care.com
Care com (NYSE:CRCM)
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