CRCM Care com Inc

Care.com (NYSE:CRCM), the world's largest online destination for finding and managing family care, today is announcing financial results for the third quarter ended September 30, 2017.

“We continued to execute well in Q3, our eighth consecutive quarter of profitable growth,” said Sheila Lirio Marcelo, Founder, Chairwoman and CEO of Care.com. “In 2017, we expect to generate approximately $25 million in cash, and are raising our expectation for year-end cash and short-term investments to over $100 million. We’re also excited to raise our top and bottom line guidance for 2017. Looking ahead, we expect 2018 to be another year of profitable growth – with further progress toward our long-term EBITDA margin target of 20-25%. And we remain confident that we’re putting the building blocks in place to drive acceleration in top-line growth in 2019 and beyond.”

Financial Results

• Revenue for the third quarter of 2017 was $44.5 million, a 9% increase from $40.8 million in the third quarter of 2016.
  • Revenue attributable to the US Consumer offering totaled $35.4 million in the third quarter of 2017, an increase of 8% from $32.8 million in the third quarter of 2016.
  • Revenue attributable to the Care@Work and B2B Offerings, as well as our services in our international markets, totaled $9.1 million in the third quarter of 2017, an increase of 14% from $8.0 million in the third quarter of 2016.
• Net income in the third quarter of 2017 was $0.3 million compared to a net loss of $1.3 million in the third quarter of 2016, an improvement of $1.6 million or 3.7 percentage points of margin.
• Adjusted EBITDA was income of $6.1 million in the third quarter of 2017, compared to $1.8 million in the third quarter of 2016, an improvement of $4.3 million.
• GAAP EPS (Diluted) was a loss of $0.01 in the third quarter of 2017, compared to a loss of $0.14 in the third quarter of 2016. Q3 GAAP EPS (Diluted) was based on 32.5 million weighted average diluted shares outstanding versus 28.8 million in the third quarter of 2016.
• Non-GAAP EPS (Diluted) was $0.18 in the third quarter of 2017, compared to $0.02 in the third quarter of 2016. Note that Non-GAAP EPS excludes the impact of non-cash stock-based compensation, adjustments relating to preferred stock and other non-recurring items, such as M&A expenses and restructuring costs.
• The Company ended the quarter with $96.4 million in cash and cash equivalents and short-term investments.

Business Highlights

• Our total members grew 20% to 26.4 million at the end of the third quarter of 2017, compared to 22.0 million in the same period of 2016.
• Total families grew to 15.0 million at the end of the third quarter of 2017, an increase of 21% over the end of the third quarter of 2016, and total caregivers grew to 11.4 million at the end of the third quarter of 2017, an increase of 19% over the end of the third quarter of 2016.

Financial Expectations

  Q4 2017 Guidance   Full Year 2017 Guidance   Initial Full Year 2018 Outlook   Revenue $ 43.6 - $ 44.1 $ 173.5 - $ 174.0 ~ $ 190.0   Adjusted EBITDA $ 9.7 - $ 10.2 $ 21.5 - $ 22.0 ~ $ 30.0   Non-GAAP EPS $ 0.15 - $ 0.16 $ 0.51 - $ 0.52 ~ $ 0.65 Figures in millions except for Non-GAAP EPS Q4 Non-GAAP EPS based on approximately 38 million weighted average dilutive shares FY'17 full year Non-GAAP EPS based on approximately 38 million weighted average diluted shares FY'18 full year Non-GAAP EPS based on approximately 40 million weighted average diluted shares

Future GAAP Net Income (Loss) and GAAP EPS may be significantly affected by changes in ongoing assumptions and judgments, and may also be affected by non-recurring, unusual or unanticipated charges, expenses or gains, which we are not able to estimate and which therefore are excluded in the calculation of the Company’s non-GAAP EPS guidance as described in this press release. Due to the nature of any such items, we are not able to estimate their significance, and it is therefore currently not practical to reconcile adjusted EBITDA and non-GAAP EPS guidance to the most comparable GAAP measure.

Earnings Teleconference Information

The Company will host a conference call at 8:00 AM ET today to discuss these results. The conference call will be accessible at (877) 407-4018 or (201) 689-8471 (International). The call will also be broadcast simultaneously at http://investors.care.com. Following 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 (844) 512-2921 or (412) 317-6671 (International), conference ID# 13672048. The telephone replay will be available from 11:00 AM ET November 2 through 11:59 PM ET November 9, 2017. 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 15.0 million families and 11.4 million caregivers* across more than 20 countries, including the U.S., UK, Canada and parts of Western Europe, and approximately 1.3 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 Care.com Benefits, including the household payroll and tax services provided by Care.com HomePay and the Care Benefit Bucks program, a peer-to-peer pooled, portable benefits platform funded by household employer contributions which provides caregivers access to professional benefits. For enterprise clients, Care.com builds 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 and the San Francisco Bay area.

*As of September 2017

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 projected future EBITDA margins of the business, the expected results of product investments and innovations, and the Company’s financial guidance for the fourth quarter of 2017 and full year 2017 and the initial outlook for the full year 2018.

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 “plan,” "expect," "anticipate," "should," "believe," "hope," "target," "project," "goals," "estimate," "potential," "predict," "may," "will," "might," "could," "intend," “designed,” 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 as non-GAAP financial measures in this press release. We define adjusted EBITDA as income (loss) from continuing operations, which excludes the accretion of preferred stock dividends and issuance costs, plus: federal, state and franchise taxes, other expense, 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 and restructuring 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 as income (loss) from continuing operations, which excludes the accretion of preferred stock dividends, plus stock-based compensation, accretion of contingent consideration, merger and acquisition related costs, and other unusual or non-cash significant adjustments such as impairment and restructuring charges. We define non-GAAP EPS as non-GAAP net income divided by diluted weighted-average shares outstanding, using the treasury stock method.

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) September 30,

2017

December 31,

2016

Assets (unaudited) Current assets: Cash and cash equivalents $ 81,434 $ 61,094 Short-term investments 15,000 15,000 Accounts receivable (net of allowance of $130 and $163, respectively) (1) 4,120 2,789 Unbilled accounts receivable (2) 5,462 5,541 Prepaid expenses and other current assets   7,028     3,787   Total current assets 113,044 88,211 Property and equipment, net 4,001 4,947 Intangible assets, net 1,136 1,708 Goodwill 60,013 57,910 Other non-current assets   2,062     2,448   Total assets $ 180,256   $ 155,224     Liabilities, redeemable convertible preferred stock, and stockholders' equity Current liabilities: Accounts payable (3) $ 2,340 $ 2,483 Accrued expenses and other current liabilities (4) 20,592 12,798 Deferred revenue (5)   19,589     15,971   Total current liabilities 42,521 31,252 Deferred tax liability 4,467 4,276 Other non-current liabilities   5,993     5,087   Total liabilities 52,981 40,615  

Series A Redeemable Convertible Preferred Stock, $0.001 par value; 46 shares designated; 46 shares issued and outstanding at September 30, 2017 and December 31, 2016; at aggregate liquidation and redemption value at September 30, 2017 and December 31, 2016

49,601 47,660 Stockholders' equity

Preferred Stock: $0.001 par value - authorized 5,000 shares at September 30, 2017 and December 31, 2016, respectively

Common stock, $0.001 par value; 300,000 shares authorized; 29,999 and 28,984 shares issued and outstanding at September 30, 2017 and December 31, 2016 respectively 30 29

Additional paid-in capital

262,272 255,031

Accumulated deficit

(185,049 ) (187,808 )

Accumulated other comprehensive income (loss)

  421     (303 ) Total stockholders' equity   77,674     66,949   Total liabilities, redeemable convertible preferred stock and stockholders' equity $ 180,256   $ 155,224    

(1)

Includes accounts receivable due from related party of $221 and $150 at September 30, 2017 and December 31, 2016

(2)

Includes unbilled accounts receivable due from related party of $89 and $286 at September 30, 2017 and December 31, 2016

(3)

Includes accounts payable due to related party of $0 and $107 at September 30, 2017 and December 31, 2016

(4)

Includes accrued expenses and other current liabilities due to related party of $1,571 and $1,055 at September 30, 2017 and December 31, 2016

(5)

Includes deferred revenue associated with related party of $35 and $151 at September 30, 2017 and December 31, 2016 Care.com, Inc.         Consolidated Statement of Operations (in thousands, except per share data)     Three Months Ended   Nine Months Ended September 30,

2017

September 24,

2016

September 30,

2017

September 24,

2016

(unaudited)   Revenue (1) $ 44,536 $ 40,791 $ 129,874 $ 118,241 Cost of revenue 9,345 8,396 27,111 23,257 Operating expenses: Selling and marketing (2) 17,749 20,075 54,799 58,103 Research and development 6,202 5,115 18,857 15,026 General and administrative 8,840 7,445 25,528 23,197 Depreciation and amortization 419 582 1,266 2,501 Restructuring charges   2,978     -     2,978     714   Total operating expenses   36,188     33,217     103,428     99,541   Operating loss (997 ) (822 ) (665 ) (4,557 ) Other income (expense), net   612     (67 )   1,921     (210 ) (Loss) Income from continuing operations before income taxes (385 ) (889 ) 1,256 (4,767 ) (Benefit from) provision for income taxes   (647 )   332     (1,503 )   952   Income (loss) from continuing operations 262 (1,221 ) 2,759 (5,719 ) (Loss) income from discontinued operations, net of tax   -     (49 )   -     7,785   Net income (loss) 262 (1,270 ) 2,759 2,066 Accretion of Series A Preferred Stock dividends (680 ) (616 ) (1,942 ) (616 ) Accretion of Series A Preferred Stock issuance costs - (2,124 ) - (2,124 ) Net income attributable to Series A Redeemable Convertible Preferred Stock   -     -     (113 )   -   Net (loss) income attributable to common stockholders $ (418 ) $ (4,010 ) $ 704   $ (674 )   Net (loss) income per share attributable to common stockholders (Basic): (Loss) income from continuing operations attributable to common stockholders $ (0.01 ) $ (0.14 ) $ 0.02 $ (0.27 ) Income from discontinued operations attributable to common stockholders   -     -     -     0.25   Net (loss) income per share attributable to common stockholders $ (0.01 ) $ (0.14 ) $ 0.02 $ (0.02 )   Net (loss) income per share attributable to common stockholders (Diluted): (Loss) income from continuing operations attributable to common stockholders $ (0.01 ) $ (0.14 ) $ 0.02 $ (0.27 ) Income from discontinued operations attributable to common stockholders   -     -     -     0.25   Net (loss) income per share attributable to common stockholders $ (0.01 ) $ (0.14 ) $ 0.02 $ (0.02 )   Weighted-average shares used to compute net (loss) income per share attributable to common stockholders: Basic 29,825 28,769 29,510 31,045 Diluted 32,521 28,769 32,085 31,045 (1)   Includes related party revenue of $457 and $408 for the three months ended September 30, 2017 and September 24, 2016, respectively. Includes related party revenue of $1,281 and $965 for the nine months ended September 30, 2017 and September 24, 2016, respectively. (2) Includes related party expenses of $3,655 and $4,580 for the three months ended September 30, 2017 and September 24, 2016, respectively. Includes related party expenses of $11,475 and $11,608 for the nine months ended September 30, 2017 and September 24, 2016, respectively. Care.com, Inc.     Consolidated Statement of Cash Flows (in thousands)       Nine Months Ended September 30,

2017

September 24,

2016

(unaudited) Cash flows from operating activities Net income $ 2,759 $ 2,066 Income from discontinued operations, net of tax   -     7,785   Income (loss) from continuing operations 2,759 (5,719 ) Adjustments to reconcile net income (loss) from continuing operations to net cash provided by operating activities: Stock-based compensation 6,586 4,765 Depreciation and amortization 1,701 3,070 Deferred taxes (1,593 ) 837 Foreign currency remeasurement gain 1,671 351

Other non-cash operating (income) expense

489 (120 ) Changes in operating assets and liabilities, net of effects from acquisitions: Accounts receivable (1,290 ) (486 ) Unbilled accounts receivable 83 (635 ) Prepaid expenses and other current assets (1,362 ) (1,015 ) Other non-current assets 444 - Accounts payable (181 ) (208 ) Accrued expenses and other current liabilities 7,313 2,161 Deferred revenue 3,492 3,516 Other non-current liabilities   1,166     1,040   Net cash provided by operating activities by continuing operations 21,278 7,557 Net cash provided by operating activities by discontinued operations   -     2,441   Net cash provided by operating activities   21,278     9,998     Cash flows from investing activities Purchases of property and equipment (566 ) (152 ) Payments for acquisitions, net of cash acquired - (420 ) Purchases of short-term investment (15,000 ) (15,000 )

Sale of short-term investment

15,000 - Payments for security deposits   (33 )   -   Net cash used in investing activities by continuing operations (599 ) (15,572 )   Cash flows from financing activities Proceeds from issuance of Series A Preferred Stock, net of issuance costs of $2,124 - 44,226 Proceeds from exercise of common stock options 2,600 1,113 Payments for the repurchases of common stock   -     (30,525 ) Net cash provided by financing activities by continuing operations 2,600 14,814 Net cash used in financing activities by discontinued operations   -     (14,510 ) Net cash provided by financing activities   2,600     304     Effect of exchange rate changes on cash and cash equivalents   (2,939 )   (137 ) Net increase (decrease) in cash and cash equivalents 20,340 (5,407 ) Cash and cash equivalents, beginning of the period   61,094     61,240   Cash and cash equivalents, end of the period $ 81,434   $ 55,833   Care.com, Inc.         Reconciliation of Adjusted EBITDA & Non-GAAP Net Income (Loss) (in thousands, except per share data)   Three Months Ended   Nine Months Ended September 30,

2017

September 24,

2016

September 30,

2017

September 24,

2016

(unaudited)   Income (loss) from continuing operations $ 262 $ (1,221 ) $ 2,759 $ (5,719 )   Federal, state and franchise taxes (589 ) 395 (1,299 ) 1,211 Other (income) expense, net (612 ) 67 (1,921 ) 210 Depreciation and amortization   502     756     1,701     3,070   EBITDA (437 ) (3 ) 1,240 (1,228 )   Stock-based compensation 3,035 1,751 6,586 4,765 Merger and acquisition related costs 141 26 236 100 Restructuring related costs 2,978 - 2,978 714 Litigation related costs - - 75 - Software implementation costs 229 - 457 - Severance related costs   200     -     321     -   Adjusted EBITDA $ 6,146   $ 1,774   $ 11,893   $ 4,351    

Add back for Non-GAAP Net Income (Loss)

  Federal, state and franchise taxes 589 (395 ) 1,299 (1,211 ) Other income (expense), net 612 (67 ) 1,921 (210 ) Depreciation and amortization   (502 )   (756 )   (1,701 )   (3,070 ) Non-GAAP net income (loss) $ 6,845   $ 556   $ 13,412   $ (140 )   Non-GAAP net income (loss) per share: Basic $ 0.23 $ 0.02 $ 0.45 $ - Diluted $ 0.18 $ 0.02 $ 0.36 $ -   Weighted-average shares used to compute non-GAAP net income (loss) per share : Basic 29,825 28,769 29,510 31,045 Diluted 37,245 36,487 36,809 31,045 Care.com, Inc.       Reconciliation of Non-GAAP EPS (in thousands, except per share data)   Three Months Ended Nine Months Ended September 30,

2017

September 24,

2016

September 30,

2017

September 24,

2016

(unaudited) Weighted-average shares used to compute net income (loss) per share: Diluted 37,245 36,487 36,809 31,045   Net income (loss) per share (Diluted): Net (loss) income per share attributable to common stockholders $ (0.01 ) $ (0.11 ) $ 0.02 $ (0.02 ) Impact on net income (loss) per share of Series A related costs   0.02     0.08     0.06   0.09   Adjusted net income (loss) per share $ 0.01 $ (0.03 ) $ 0.07 $ 0.07   Income from discontinued operations, net of tax - 0.00 - (0.25 ) Stock-based compensation 0.08 0.05 0.18 0.15 Merger and acquisition related costs 0.00 0.00 0.01 0.00 Restructuring related costs 0.08 - 0.08 0.02 Litigation related costs - - 0.00 - Software implementation costs 0.01 - 0.01 - Severance related costs   0.01     -     0.01   -   Non-GAAP net income (loss) per share - diluted $ 0.18   $ 0.02   $ 0.36 $ (0.00 ) Care.com, Inc.     Supplemental Data (in thousands, except monthly average revenue per member)   Period Ended September 30,

2017

September 24,

2016

Total members* 26,393 21,968 Total families* 14,967 12,383 Total caregivers* 11,427 9,585   Paying families - US Consumer Business 320 291   * data is cumulative as of the end of the respective period and excludes families from discontinued operations   Period Ended September 30,

2017

September 24,

2016

Monthly Average Revenue per Paying Family

US Consumer Business $ 38 $ 39

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Investor Relations:ICR, Inc.Seth Potter, (781) 795-7244investors@care.com