UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q


[x]	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September 24, 2016~~July 1, 2017


[ ]	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______ to _______

Commission File Number: 000-24821




	Care.com, Inc.
(Exact name of registrant as specified in its charter)



Delaware	20-578-5879
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)
77 Fourth Avenue, Fifth Floor Waltham, MA	02451
(Address of principal executive offices)	(Zip Code)

(781) 642-5900

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:



Title of each class		Name of exchange on which registered
Common Stock, par value $0.001		The New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
	None

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [x] No [ ]

Indicate by check mark whether the Registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [x ] No [ ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated ~~filer”~~filer,” “smaller reporting company,” and ~~“smaller reporting~~“emerging growth company” in Rule 12b-2 of the Exchange Act.



Large accelerated filer	[ ]		Accelerated filer	[x]
Non-accelerated filer	[ ]	(Do not check if a smaller reporting company)	Smaller reporting company	[ ]
			Emerging growth company	[x]

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [x]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [x]

As of ~~October 26, 2016,~~August 4, 2017, there were ~~28,819,449~~29,769,091 shares of the registrant's common stock, $0.001 par value, outstanding.

CARE.COM, INC.

FORM 10-Q

TABLE OF CONTENTS



PART I - FINANCIAL INFORMATION		Page

Item 1.	Financial Statements (Unaudited)
	Condensed Consolidated Balance Sheets as of ~~September 24, 2016~~July 1, 2017 and December ~~26, 2015~~31, 2016	2
	Condensed Consolidated Statements of Operations for the Three and ~~Nine~~Six Months Ended ~~September 24,~~July 1, 2017 and June 25, 2016 ~~and September 26, 2015~~	4
	Condensed Consolidated Statements of Comprehensive Income (Loss) ~~Income~~ for the Three and ~~Nine~~Six Months Ended ~~September 24,~~July 1, 2017 and June 25, 2016 ~~and September 26, 2015~~	56
	Condensed Consolidated Statements of Cash Flows for the ~~Nine~~Six Months Ended ~~September 24,~~July 1, 2017 and June 25, 2016 ~~and September 26, 2015~~	67
	Notes to Condensed Consolidated Financial Statements	89
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2221
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3634
Item 4.	Controls and Procedures	3635

PART II - OTHER INFORMATION
Item 1.	Legal Proceedings	3836
Item 1A.	Risk Factors	38
~~Item 2.~~	~~Recent Sale of Unregistered Securities~~	3936
Item 6.	Exhibits	4036
Signatures		4137

PART I

ITEM 1. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

CARE.COM, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except par value)

(unaudited)


	September 24, 2016			December 26, 2015			July 1, 2017			December 31, 2016
Assets
Current assets:
Cash and cash equivalents	$	55,833		$	61,240		$	71,839		$	61,094
Short-term investments	15,000			—			15,000			15,000
Accounts receivable (net of allowance of $120 and $125, respectively) ⁽¹⁾	3,577			3,107
Accounts receivable (net of allowance of $175 and $163, respectively) ⁽¹⁾							4,264			2,789
Unbilled accounts receivable ⁽²⁾	4,231			3,595			5,734			5,541
Prepaid expenses and other current assets	4,169			2,599			5,224			3,787
Current assets of discontinued operations	212			439
Total current assets	83,022			70,980			102,061			88,211
Property and equipment, net	5,272			6,371			4,621			4,947
Intangible assets, net	1,967			3,389			1,267			1,708
Goodwill	59,056			58,631			59,380			57,910
Other non-current assets	2,548			3,098			2,466			2,448
Non-current assets of discontinued operations	—			9
Total assets	$	151,865		$	142,478		$	169,795		$	155,224

Liabilities and stockholders' equity
Liabilities, redeemable convertible preferred stock, and stockholders' equity
Current liabilities:
Accounts payable ⁽³⁾	$	2,987		$	3,189		$	3,379		$	2,483
Accrued expenses and other current liabilities ⁽⁴⁾	14,856			12,413			13,859			12,798
Deferred revenue ⁽⁵⁾	16,956			13,435			19,522			15,971
Current liabilities of discontinued operations	212			17,883
Total current liabilities	35,011			46,920			36,760			31,252
Deferred tax liability	4,003			3,166			4,472			4,276
Other non-current liabilities	4,898			4,140			5,338			5,087
Total liabilities	43,912			54,226			46,570			40,615
Contingencies (see Note 6)	—			—
Series A Redeemable Convertible Preferred Stock - 46 shares designated; 46 shares issued and outstanding at September 24, 2016; aggregate liquidation and redemption value of $46,966 at September 24, 2016	46,966			—
Contingencies (see Note 5)							—			—
Series A Redeemable Convertible Preferred Stock - 46 shares designated; 46 shares issued and outstanding at July 1, 2017 and December 31, 2016; at aggregate liquidation and redemption value at July 1, 2017 and December 31, 2016, respectively							48,922			47,660
Stockholders' equity
Preferred Stock: $0.001 par value - authorized 5,000 shares at September 24, 2016 and December 26, 2015, respectively	—			—
Common stock, $0.001 par value; 300,000 shares authorized; 28,770 and 32,276 shares issued and outstanding at September 24, 2016 and December 26, 2015 respectively	29			32
Preferred Stock: $0.001 par value - authorized 5,000 shares at July 1, 2017 and December 31, 2016, respectively							—			—
Common stock, $0.001 par value; 300,000 shares authorized; 29,737 and 28,984 shares issued and outstanding at July 1, 2017 and December 31, 2016 respectively							30			29
Additional paid-in capital	253,692			283,669			259,366			255,031
Accumulated deficit	(192,789		)	(194,854		)	(185,311		)	(187,808		)
Accumulated other comprehensive income (loss)	55			(595		)	218			(303		)
Total stockholders' equity	60,987			88,252			74,303			66,949
Total liabilities, redeemable convertible preferred stock and stockholders' equity	$	151,865		$	142,478		$	169,795		$	155,224

⁽¹⁾ Includes accounts receivable due from related party of ~~$175~~$196 and $150 at ~~September 24,~~July 1, 2017 and December 31, 2016, respectively (Note ~~14)~~13)

⁽²⁾ Includes unbilled accounts receivable due from related party of ~~$76~~$180 and $286 at ~~September 24,~~July 1, 2017 and December 31, 2016, respectively (Note ~~14)~~13)

⁽³⁾ Includes accounts payable due to related party of ~~$1,424~~$44 and $107 at ~~September 24,~~July 1, 2017 and December 31, 2016, respectively (Note ~~14)~~13)

⁽⁴⁾ Includes accrued expenses and other current liabilities due to related party of ~~$1,078~~$1,438 and $1,055 at ~~September 24,~~July 1, 2017 and December 31, 2016, respectively (Note ~~14)~~13)

⁽⁵⁾ Includes deferred revenue associated with related party of ~~$241 as of September 24,~~$80 and $151 at July 1, 2017 and December 31, 2016, respectively (Note ~~14)~~13)

CARE.COM, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

(unaudited)

Three Months Ended Nine Months Ended
September 24,
2016 September 26,
2015 September 24,
2016 September 26,
2015

Revenue ⁽¹⁾
$ 40,791
$ 36,179
$ 118,241
$ 101,131
Cost of revenue 8,396
6,894
23,257
19,796
Operating expenses:
Selling and marketing ⁽²⁾
20,075
21,343
58,103
59,796
Research and development 5,115
5,514
15,026
15,145
General and administrative 7,445
7,199
23,197
22,301
Depreciation and amortization 582
1,062
2,501
3,518
Restructuring charges —
—
714
—
Total operating expenses 33,217
35,118
99,541
100,760
Operating loss (822 ) (5,833 ) (4,557 ) (19,425 )
Other expense, net (67 ) (272 ) (210 ) (976 )
Loss from continuing operations before income taxes (889 ) (6,105 ) (4,767 ) (20,401 )
Provision for income taxes 332
259
952
1,164
Loss from continuing operations (1,221 ) (6,364 ) (5,719 ) (21,565 )
(Loss) income from discontinued operations, net of tax (see note 3) (49 ) (10,985 ) 7,785
(15,032 )
Net (loss) income (1,270 ) (17,349 ) 2,066
(36,597 )
Accretion of Series A Redeemable Convertible Preferred Stock dividends (616 ) —
(616 ) —
Net (loss) income attributable to common stockholders $ (1,886 ) $ (17,349 ) $ 1,450
$ (36,597 )

Net (loss) income per share attributable to common stockholders (Basic and diluted):
Loss from continuing operations attributable to common stockholders $ (0.06 ) $ (0.20 ) $ (0.20 ) $ (0.68 )
(Loss) income from discontinued operations attributable to common stockholders —
(0.34 ) 0.25
(0.47 )
Net (loss) income per share attributable to common stockholders $ (0.06 ) $ (0.54 ) $ 0.05
$ (1.15 )
Weighted-average shares used to compute net (loss) income per share attributable to common stockholders:
Basic and diluted 28,769
32,069
31,045
31,938



	Three Months Ended						Six Months Ended
	July 1, 2017			June 25, 2016			July 1, 2017			June 25, 2016

Revenue ⁽¹⁾	$	41,972		$	38,184		$	85,338		$	77,450
Cost of revenue	9,000			7,619			17,766			14,861
Operating expenses:
Selling and marketing ⁽²⁾	17,853			18,561			37,050			38,028
Research and development	6,666			5,036			12,655			9,911
General and administrative	8,433			7,933			16,688			15,752
Depreciation and amortization	423			947			847			1,919
Restructuring charges	—			714			—			714
Total operating expenses	33,375			33,191			67,240			66,324
Operating (loss) income	(403		)	(2,626		)	332			(3,735		)
Other income (expense), net	1,008			(129		)	1,309			(143		)
Income (loss) from continuing operations before income taxes	605			(2,755		)	1,641			(3,878		)
(Benefit) provision for income taxes	(1,068		)	620			(856		)	620
Income (loss) from continuing operations	1,673			(3,375		)	2,497			(4,498		)
Loss (income) from discontinued operations, net of tax (see note 3)	—			(44		)	—			7,834
Net income (loss)	1,673			(3,419		)	2,497			3,336
Accretion of Series A Redeemable Convertible Preferred Stock dividends	(660		)	—			(1,262		)	—
Net income attributable to Series A Redeemable Convertible Preferred Stock	(139		)	—			(169		)	—
Net income (loss) attributable to common stockholders	$	874		$	(3,419	)	$	1,066		$	3,336

Net income (loss) per share attributable to common stockholders (Basic):
Income (loss) from continuing operations attributable to common stockholders	$	0.03		$	(0.11	)	$	0.04		$	(0.14	)
Income from discontinued operations attributable to common stockholders	—			—			—			0.24
Net income (loss) per share attributable to common stockholders	$	0.03		$	(0.11	)	$	0.04		$	0.10

Net income (loss) per share attributable to common stockholders (Diluted):
Income (loss) from continuing operations attributable to common stockholders	$	0.03		$	(0.11	)	$	0.03		$	(0.13	)
Income from discontinued operations attributable to common stockholders	—			—			—			0.23
Net income (loss) per share attributable to common stockholders	$	0.03		$	(0.11	)	$	0.03		$	0.10



Weighted-average shares used to compute net income (loss) per share attributable to common stockholders:
Basic	29,556	32,136	29,352	32,183
Diluted	32,220	32,136	31,746	34,082

⁽¹⁾ Includes related party revenue of ~~$408~~$432 and ~~$965~~$825 for the three and ~~nine~~six months ended ~~September 24, 2016, respectively~~July 1, 2017 (Note ~~14)~~13)

⁽²⁾ Includes related party expenses of ~~$4,580~~$4,120 and ~~$11,608~~$7,820 for the three and ~~nine~~six months ended ~~September 24, 2016, respectively~~July 1, 2017 (Note ~~14)~~13)

CARE.COM, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) ~~INCOME~~

(in thousands)

(unaudited)


	Three Months Ended						Nine Months Ended					Three Months Ended					Six Months Ended
	September 24, 2016			September 26, 2015			September 24, 2016		September 26, 2015			July 1, 2017		June 25, 2016			July 1, 2017		June 25, 2016

Net (loss) income	$	(1,270	)	$	(17,349	)	$	2,066	$	(36,597	)
Net income (loss)												$	1,673	$	(3,419	)	$	2,497	$	3,336

Other comprehensive income (loss):
Foreign currency translation adjustments	277			150			650		(782		)	493		55			521		373
Comprehensive (loss) income	$	(993	)	$	(17,199	)	$	2,716	$	(37,379	)
Comprehensive income (loss)												$	2,166	$	(3,364	)	$	3,018	$	3,709

CARE.COM, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)


	Nine Months Ended						Six Months Ended
	September 24, 2016			September 26, 2015			July 1, 2017			June 25, 2016
Cash flows from operating activities
Net income (loss)	$	2,066		$	(36,597	)
Income (loss) from discontinued operations, net of tax	7,785			(15,032		)
Loss from continuing operations	(5,719		)	(21,565		)
Adjustments to reconcile net loss from continuing operations to net cash provided by (used in) operating activities:
Net income							$	2,497		$	3,336
Income from discontinued operations, net of tax							—			7,834
Income (loss) from continuing operations							2,497			(4,498		)
Adjustments to reconcile net income (loss) from continuing operations to net cash provided by operating activities:
Stock-based compensation	4,765			3,769			3,551			3,014
Depreciation and amortization	3,070			4,066			1,199			2,314
Deferred taxes	837			1,053			196			538
Foreign currency remeasurement loss	351			983
Foreign currency remeasurement gain							1,157			200
Other non-cash operating income	(120		)	(42		)	—			(78		)
Changes in operating assets and liabilities, net of effects from acquisitions:
Accounts receivable	(486		)	(928		)	(1,448		)	(68		)
Unbilled accounts receivable	(635		)	(339		)	(191		)	(449		)
Prepaid expenses and other current assets	(1,015		)	1,626			(1,358		)	(508		)
Other non-current assets	—			(13		)	—			(14		)
Accounts payable	(208		)	(2,335		)	879			514
Accrued expenses and other current liabilities	2,161			7,667			1,258			3,014
Deferred revenue	3,516			3,489			3,469			1,452
Other non-current liabilities	1,040			623			(69		)	610
Net cash provided by (used in) operating activities by continuing operations	7,557			(1,946		)
Net cash provided by (used in) operating activities by discontinued operations	2,441			(4,505		)
Net cash provided by (used in) operating activities	9,998			(6,451		)
Net cash provided by operating activities by continuing operations							11,140			6,041
Net cash provided by operating activities by discontinued operations							—			2,481
Net cash provided by operating activities							11,140			8,522

Cash flows from investing activities
Purchases of property and equipment	(152		)	(4,285		)	(387		)	(84		)
Payments for acquisitions, net of cash acquired	(420		)	—			—			(420		)
Cash withheld for purchase consideration	—			73
Purchase of short-term investment	(15,000		)	—			(15,000		)	—
Net cash used in investing activities by continuing operations	(15,572		)	(4,212		)
Net cash used in investing activities by discontinued operations	—			(2		)
Sale of short-term investment							15,000			—
Net cash used in investing activities	(15,572		)	(4,214		)	(387		)	(504		)

Cash flows from financing activities
Proceeds from issuance of Series A Redeemable Convertible Preferred Stock, net of issuance costs of $2,124	44,226			—
Proceeds from exercise of common stock options	1,113			630			2,037			925
Payments of contingent consideration previously established in purchase accounting	—			(1,840		)
Payment for repurchase of common stock	(30,525		)	—
Net cash provided by (used in) financing activities by continuing operations	14,814			(1,210		)
Net cash provided by financing activities by continuing operations							2,037			925
Net cash used in financing activities by discontinued operations							—			(14,510		)
Net cash provided by (used in) financing activities							2,037			(13,585		)

Effect of exchange rate changes on cash and cash equivalents							(2,045		)	(56		)
Net increase (decrease) in cash and cash equivalents							10,745			(5,623		)
Cash and cash equivalents, beginning of the period							61,094			61,240


Net cash used in financing activities by discontinued operations	(14,510		)	—
Net cash provided by (used in) financing activities	304			(1,210		)

Effect of exchange rate changes on cash and cash equivalents	(137		)	(270		)
Net decrease in cash and cash equivalents	(5,407		)	(12,145		)
Cash and cash equivalents, beginning of the period	61,240			71,881
Cash and cash equivalents, end of the period	$	55,833		$	59,736		$	71,839	$	55,617

Supplemental disclosure of cash flow activities
Cash paid for taxes	$	177		$	26		$	—	$	177

Supplemental disclosure of non-cash operating, investing and financing activities
Unpaid purchases of property and equipment	$	11		$	51		$	15	$	17
Series A Redeemable Convertible Preferred Stock dividend accretion	$	616		$	—		$	1,262	$	—
Issuance of common stock in connection with acquisitions	$	—		$	4,878
Unpaid deferred offering costs							$	—	$	329
Fair value of common shares received from legal settlement (Note 3)	$	2,593		$	—		$	—	$	2,593

See accompanying notes to the condensed consolidated financial statements

CARE.COM, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

THREE AND ~~NINE~~SIX MONTHS ENDED ~~SEPTEMBER 24, 2016~~JULY 1, 2017

(unaudited)

1. Description of Business and Summary of Significant Accounting Policies

Care.com, Inc. (the “Company”, “we”, “us”, and “our”), a Delaware corporation, was incorporated on October 27, 2006. We are the world’s largest online marketplace for finding and managing family care. Our consumer matching solutions enable families to connect to caregivers and caregiving services in a reliable and easy way, and our payment solutions enable families to pay caregivers electronically online or via their mobile device and to manage their household payroll and tax matters with Care.com HomePay. In addition, we serve employers by providing access to our platform to employer-sponsored families and we serve care-related businesses—such as day care centers, nanny agencies and home care agencies—~~who~~that wish to market their services to our care-seeking families and recruit our caregiver members.

Certain Significant Risks and Uncertainties

We operate in a dynamic industry and, accordingly, our business is affected by a variety of factors. For example, we believe that negative changes in any of the following areas could have a significant negative effect on our future financial position, results of operations or cash flows: rates of revenue growth; member engagement and usage of our existing and new products; protection of our brand; retention of qualified employees and key personnel; management of our growth; scaling and adaptation of existing technology and network infrastructure; competition in our market; performance of acquisitions and investments; protection of our intellectual property; protection of customers’ information and privacy concerns; security measures related to our website; and access to capital at acceptable terms, among other things.

Basis of Presentation

The accompanying condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) and applicable rules and regulations of the Securities and Exchange Commission regarding interim financial reporting. Certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. Therefore, these condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes included in our Annual Report on Form 10-K for the fiscal year ended December ~~26, 2015,~~31, 2016, filed on March ~~1, 2016.~~9, 2017.

There have been no material changes in our significant accounting policies for the three and ~~nine~~six months ended ~~September 24, 2016~~July 1, 2017 as compared to the significant accounting policies described in our Annual Report on Form 10-K for the fiscal year ended December ~~26, 2015~~31, 2016, with the exception of investments, net (loss) income per share attributable to common stockholders and preferred stock. Please refer to Notes 8 and 9 for our updated accounting policies related to net (loss) income per share attributable to common stockholders and preferred stock, respectively. Our investment policy is as follows:

~~Investments~~ ~~- Investments consist of certificates of deposit (“CDs”). CDs having remaining maturities of more than three months at~~ the ~~date of purchase and less than one year from the date~~adoption of the balance sheet are classified as short-term. We classify our CDs with readily determinable market values as available-for-sale. The CDs are classified as short-term investments on the consolidated balance sheets and are carried at fair market value, with unrealized gains and losses considered to be temporary in nature reported as accumulated other comprehensive loss, a separate component of stockholders’ equity. We review all investments for reductions in fair value that are other-than-temporary. When such reductions occur, the cost of the investment is adjusted to fair value through recording a loss on investmentsFinancial Accounting Standards Board’s Accounting Standard Update 2016-09 in the ~~consolidated statements~~first quarter of ~~operations. Gains~~fiscal 2017. Refer below to “Recently Issued and ~~losses on investments are calculated on the basis of specific identification.~~ Adopted Accounting Pronouncements” for further information.

The condensed consolidated balance sheet as of December ~~26, 2015,~~31, 2016, included herein was derived from the audited financial statements as of that date, but does not include all disclosures including notes required by GAAP on an annual reporting basis.

In the opinion of management, the accompanying condensed consolidated financial statements reflect all normal recurring adjustments necessary to present fairly the financial position, results of operations, and cash flows for the interim periods, and are not necessarily indicative of the results of operations to be anticipated for fiscal ~~2016~~2017 or any future period.

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of the Company and our wholly owned subsidiaries, after elimination of all intercompany balances and transactions. We have prepared the accompanying financial statements in conformity with GAAP.

~~CARE.COM, INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~THREE AND NINE MONTHS ENDED SEPTEMBER 24, 2016~~

~~(unaudited)~~

Fiscal Year-End

We operate and report using a 52 or 53 week fiscal year ending on the Saturday in December closest and prior to December 31. Accordingly, our fiscal quarters end on the Saturday that falls closest to the last day of the third month of each quarter.

Subsequent Events Consideration

We consider events or transactions that occur after the balance sheet date but prior to the issuance of the financial statements to provide additional evidence for certain estimates or to identify matters that require additional disclosure. Subsequent events have been evaluated as required. ~~There were no material recognized subsequent events recorded~~

CARE.COM, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

THREE AND SIX MONTHS ENDED JULY 1, 2017

(unaudited)

In the third quarter of 2017, we concluded that we would exit 25,812 square feet of the Company’s headquarters facility located in Waltham, Massachusetts. We expect to record lease obligation charges ranging from approximately $4.0 million to $6.0 million in the ~~condensed consolidated financial statements~~third quarter of 2017, as we plan to meet the cease-use date requirements for that portion of the facility. We will finalize the lease obligation charge in the third quarter of 2017 following the cease-use date. In order to estimate the lease obligation charges, we have made certain assumptions, including the time period it will take to obtain a subtenant and ~~for~~certain sub-lease rates. These estimates may vary from the ~~three and nine months ended September 24, 2016.~~sub-lease agreements ultimately executed, if at all, resulting in an adjustment to the charges.

Recently Issued and Adopted Accounting Pronouncements

As an ‘‘emerging growth company’’ under the Jumpstart Our Business Startups Act of 2012, or the JOBS Act, we are electing to not take advantage of the extended transition period afforded by the JOBS Act for the implementation of new or revised accounting standards and, as a result, we will comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for non-emerging growth companies. Section 107 of the JOBS Act provides that our decision to not take advantage of the extended transition period for complying with new or revised accounting standards is irrevocable.

In ~~August 2016,~~May 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. ~~2016-15,~~ ~~Statement~~2017-09, “Compensation – Stock Compensation (Topic 718) Scope of Modification Accounting.” The amendments in ASU 2017-09 provide guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. The adoption of ASU 2017-09, which will become effective for annual periods beginning after December 15, 2017 and for interim periods within those annual periods, is not expected to have a significant impact on our financial statement presentation or disclosures.

In January 2017, the FASB issued ASU No. 2017-04, “Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment.” To simplify the subsequent measurement of goodwill, the FASB eliminated Step 2 from the goodwill impairment test. An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. The FASB also eliminated the requirements for any reporting unit with a zero or negative carrying amount to perform a qualitative assessment and, if it fails that qualitative test, to perform Step 2 of the goodwill impairment test. Therefore, the same impairment assessment applies to all reporting units. An entity is required to disclose the amount of goodwill allocated to each reporting unit with a zero or negative carrying amount of net assets. The guidance is effective for us in our annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. Early adoption is permitted. ASU 2017-04 must be applied prospectively. We expect that the future adoption of this update will simplify our measurement of goodwill impairment, if any of our reporting units have a zero or negative carrying value, or would fail Step 1 of the impairment test following the date of adoption.

In November, 2016, the FASB issued ASU No. 2016-18, “Statement of Cash Flows (Topic 230): Restricted Cash.” ASU 2016-18 requires that a statement of cash flows explain the change during the period in the total cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning and ending balances shown on the statement of cash flows. The guidance is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. ASU 2016-18 must be applied retrospectively to all periods presented. We do not anticipate that the adoption of this update will have a material impact on our consolidated statement of cash flows.

In August 2016, FASB issued ASU No. 2016-15, “Statement of Cash Flows (Topic 230).” ASU 2016-15 amends ASC 230 to add or clarify guidance on the classification of certain cash receipts and payments in the statement of cash flows. The guidance is effective for annual periods beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted. The updated guidance requires a retrospective transition method to each period presented. We ~~are currently evaluating the impact of~~do not anticipate that the adoption of ~~ASU 2016-15~~this update will have a material impact on our ~~statements~~consolidated statement of ~~consolidated operations and~~ cash flows.

In March 2016, the FASB issued ASU No. 2016-09, ~~Compensation-~~“Compensation- Stock Compensation (Topic 718).” The guidance changes how companies account for certain aspects of share-based payments to employees. Entities will be required to recognize income tax effects of awards in the income statement when the awards vest or are settled. The guidance also allows an employer to repurchase more of an employee's shares than it can today for tax withholding purposes providing for withholding at the employee's maximum rate as opposed to the minimum rate without triggering liability accounting and to make a policy election to account for forfeitures as they occur. ~~The updated guidance is effective~~We adopted this standard in the first quarter of fiscal 2017 using a modified retrospective approach. We elected to account for ~~annual periods beginning after December 15,~~forfeitures when they occur, rather than to estimate forfeitures when determining the amount of stock-based compensation costs to be recognized in each period.

CARE.COM, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

THREE AND SIX MONTHS ENDED JULY 1, 2017 ~~and is applicable~~

(unaudited)

Refer to ~~the Company in fiscal 2018. Early adoption is permitted. We are currently evaluating the impact of the~~Note 9 for our accounting policy elections related to income taxes. The adoption of ~~ASU 2016-09~~this standard did not have a material impact on our ~~consolidated~~ financial position, ~~and~~ results of ~~operations.~~operations, or statement of cash flows.

In February 2016, the FASB issued ASU No. 2016-02, ~~Leases~~“Leases (Topic 842).” The guidance requires an entity to recognize a right-of-use asset and a lease liability for virtually all of its leases with terms of more than 12 months. Recognition, measurement and presentation of expenses will depend on classification as a finance or operating lease. The amendments also require certain quantitative and qualitative disclosures about leasing arrangements. The guidance is effective for annual periods beginning after December 15, 2018. Early adoption is permitted. The updated guidance requires a modified retrospective adoption. We are currently evaluating the impact of the adoption of ASU 2016-02 on our consolidated financial position and results of operations.

~~In November 2015, the FASB issued ASU No. 2015-17,~~ ~~Balance Sheet Classification of Deferred Taxes~~. ASU 2015-17 simplifies the presentation of deferred income taxes by eliminating the requirement for entities to separate deferred income tax liabilities and assets into current and non-current amounts in the balance sheet. Rather, it requires that deferred tax assets and liabilities are classified as non-current in the balance sheet. We adopted this standard prospectively for the year-ended December 26, 2015. The adoption of this standard has no effect on our consolidated statements of operations and cash flows.

~~In September 2015, the FASB released ASU No. 2015-16,~~ ~~Business Combinations (Topic 805): Simplifying the Accounting for Measurement-Period Adjustments~~. ASU 2015-16 eliminates the requirement that an acquirer in a business combination account for measurement-period adjustments retrospectively. Instead, an acquirer will recognize a measurement-period adjustment during the period in which it determines the amount of the adjustment. The guidance is effective for public business entities for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. There were no measurement period adjustments for which this guidance would apply.

~~In April 2015, the FASB issued ASU No. 2015-05,~~ ~~Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement, which amends ASC 350~~. The amendments provide guidance as to whether a cloud computing arrangement (e.g., software as a service, platform as a service, infrastructure as a service, and other similar arrangements) includes a software license, and based on that determination, how to account for such arrangements. ASU 2015-05 is effective for fiscal years, and interim periods therein, beginning after December 15, 2015 and may be applied on either a prospective or retrospective basis. Early adoption is not permitted. We adopted this standard in the first quarter on a prospective basis. The adoption of this standard has no effect on our consolidated statements of operations and cash flows.

~~In February 2015, the FASB issued ASU No. 2015-02,~~ ~~Consolidation (Topic 810)-Amendments to the Consolidation Analysis,~~ ~~which amends the criteria for determining which entities are considered variable interest entities, or VIEs,~~

~~CARE.COM, INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~THREE AND NINE MONTHS ENDED SEPTEMBER 24, 2016~~

~~(unaudited)~~

amends the criteria for determining if a service provider possesses a variable interest in a VIE and ends the deferral granted to investment companies for application of the VIE consolidation model. ASU 2015-02 is effective for annual periods, and interim periods therein, beginning after December 15, 2015. The adoption of this standard has no effect on our consolidated statements of operations and cash flows.

~~In August 2014, the FASB issued ASU No. 2014-15,~~ ~~Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern.~~ ASU 2014-15 requires management to evaluate, at each annual or interim reporting period, whether there are conditions or events that exist that raise substantial doubt about an entity's ability to continue as a going concern within one year after the date the financial statements are issued and provide related disclosures. ASU 2014-15 is effective for annual periods ending after December 15, 2016 and earlier application is permitted. We are currently evaluating the effect of the adoption of ASU 2014-15, but the adoption is not expected to have a material effect on our consolidated financial statements or disclosures.

In May 2014, the FASB issued ASU No. 2014-09, ~~Revenue~~“Revenue from Contracts with Customers,,” which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. ASU 2014-09 will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. In August 2015, the FASB issued ASU No. 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date,, which deferred the effective date of ASU 2014-09 by one year to December 15, 2017 for interim and annual reporting periods beginning after that date. Early adoption is permitted but not before the original effective date of December 15, 2016. ~~We are evaluating the effect that~~Since ASU 2014-09 ~~will~~was issued, several additional ASUs have been issued and incorporated within ASC 606 to clarify various elements of the guidance.

As of the date of these condensed consolidated financial statements, we have substantially completed the diagnostic assessment phase of our ASU 2014-09 adoption, including preliminary assessment and project planning, revenue stream scoping, and analysis of the impact the new revenue standard has on our various revenue streams. As part of the Company’s ongoing evaluation of ASU 2014-09, the following revenue streams were identified: U.S. matching solutions, Care@Work solution, payments solutions, and marketing solutions. Each of these revenue streams will continue to be further evaluated in detail based on the criteria established under ASU 2014-09 and will serve as the basis for the accounting analysis and documentation as it relates to the impact of the standard.

We currently anticipate adopting ASU 2014-09 effective January 1, 2018 utilizing the modified retrospective method of adoption. Accordingly, upon adoption, we currently anticipate recognizing the cumulative effect, if any, of adopting this guidance as an adjustment to the opening balance of the accumulated deficit within the consolidated balance sheet for the period of adoption, and prior periods will not be retrospectively adjusted. While we have completed a preliminary assessment of the key provisions of ASU 2014-09, the evaluation of the full impact of the standard on the consolidated financial statements and related ~~disclosures. The standard permits the use of either the full retrospective or modified retrospective approach. We have~~disclosures is ongoing, and we are therefore not yet ~~selected a transition method nor have we determined~~able to reasonably estimate the ~~effect~~financial statement impact of ASU 2014-09 upon adoption. We are continuing to assess all potential impacts of the standard, ~~on our ongoing financial reporting.~~including the impact to the capitalization of costs for commissions. Additionally, we continue to actively monitor outstanding issues currently being addressed by the FASB’s Transition Resource Group as conclusions reached by this group may impact the Company’s application of ASU 2014-09.

2. Fair Value Measurements

The following table presents information about our assets ~~and liabilities~~ measured at fair value on a recurring basis as of ~~September 24, 2016~~July 1, 2017 and December ~~26, 2015~~31, 2016 and indicates the fair value hierarchy of the valuation techniques we utilized to determine such fair value (in thousands):


	September 24, 2016								December 26, 2015								July 1, 2017								December 31, 2016
	Fair Value Measurements Using Input Types								Fair Value Measurements Using Input Types								Fair Value Measurements Using Input Types								Fair Value Measurements Using Input Types
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total

Assets:
Money market mutual funds	$	20,465	$	—	$	—	$	20,465	$	25,420	$	—	$	—	$	25,420	$	20,084	$	—	$	—	$	20,084	$	20,014	$	—	$	—	$	20,014
Certificates of deposit	$	15,000	$	—	$	—	$	15,000	$	—	$	—	$	—	$	—	$	15,000	$	—	$	—	$	15,000	$	15,000	$	—	$	—	$	15,000
Total assets	$	35,465	$	—	$	—	$	35,465	$	25,420	$	—	$	—	$	25,420	$	35,084	$	—	$	—	$	35,084	$	35,014	$	—	$	—	$	35,014

Liabilities:
Contingent acquisition consideration (included in current liabilities of discontinued operations)	$	—	$	—	$	—	$	—	$	8,163	$	—	$	7,878	$	16,041
Total liabilities	$	—	$	—	$	—	$	—	$	8,163	$	—	$	7,878	$	16,041

The following table sets forth a summary of changes in the fair value of our contingent acquisition consideration which represents recurring measurements that are classified within Level 3 of the fair value hierarchy wherein fair value is estimated using significant unobservable inputs (in thousands):

CARE.COM, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

THREE AND ~~NINE~~SIX MONTHS ENDED ~~SEPTEMBER 24, 2016~~JULY 1, 2017

(unaudited)

September 24, 2016
Contingent Acquisition
Consideration

Beginning balance (December 26, 2015) $ 7,878
Decrease in fair value included in earnings (441 )
Contingent acquisition consideration payments (7,437 )
Ending balance $ —

During the first quarter of fiscal 2016, we entered into a settlement agreement with the previous shareholders of Citrus Lane. The settlement agreement relates to our acquisition of Citrus Lane and the merger agreement pursuant to which the acquisition was consummated. Under the terms of the settlement agreement, we paid the previous shareholders of Citrus Lane $15.6 million of contingent consideration payments that were valued at $16.0 million as of December 26, 2015 ($16.4 million was the undiscounted value at the time of the acquisition) that was otherwise payable to them in the event Citrus Lane achieved certain milestones in 2015 and 2016. Refer to Note 3 for further discussion on the impact of the settlement in the first quarter of 2016.

Non-Recurring Fair Value Measurements

We re-measure the fair value of certain assets and liabilities upon the occurrence of certain events. Such assets are comprised of long-lived assets, including property and equipment, intangible assets and goodwill. In the three and ~~nine~~six months ended ~~September 24,~~July 1, 2017 and June 25, 2016, ~~and September 26, 2015,~~ no significant remeasurements were necessary. Other financial instruments not measured or recorded at fair value in the accompanying condensed consolidated balance sheets principally consist of accounts receivable, accounts payable, and accrued liabilities. The estimated fair values of these instruments approximate their carrying values due to their short-term nature.

3. Discontinued Operations

During the third quarter of fiscal 2015 we made the decision to exit the Citrus Lane business through either a sale or wind-down, as it was no longer a strategic priority. In the fourth quarter of fiscal 2015, we made the decision to shut down the business and ~~had substantially~~ completed our plans for exiting the ~~business.~~business in the fourth quarter of 2016. As such, financial results of Citrus Lane have been presented within income (loss) from discontinued operations, net of tax, on the consolidated statements of operations for the three and ~~nine~~six months ended ~~September 24,~~July 1, 2017 and June 25, 2016. As of July 1, 2017 and December 31, 2016 ~~and September 26, 2015. Assets and~~there were no recorded assets or liabilities of the Citrus Lane ~~to be disposed of are presented as assets from discontinued operations and liabilities from discontinued operations on the consolidated balance sheets as of September 24, 2016 and December 26, 2015.~~business.

In February 2016, we entered into a settlement agreement with the previous shareholders of Citrus Lane. The settlement agreement related to our acquisition of Citrus Lane and the merger agreement pursuant to which the acquisition was consummated. Under the terms of the settlement agreement, we paid the previous shareholders of Citrus Lane $15.6 million in contingent consideration payments that were valued at $16.0 million as of December 26, 2015 ($16.4 million was the undiscounted value at the time of the acquisition) that was otherwise payable to them in the event Citrus Lane achieved certain milestones in 2015 and 2016. In exchange, the former shareholders forfeited the $5.0 million in original cash consideration that was being held in an escrow account, as well as the 0.4 million shares of common stock issued at closing (valued at $2.0 million as of the February 2016 settlement date and $3.9 million as of the original closing date) and 0.1 million shares of common stock which was subject to the achievement of certain milestones in 2015 and 2016 (valued at $0.6 million as of the February 2016 settlement date and $1.1 million as of the original closing date) offered as part of the deal consideration. We retired these shares of common stock as of ~~September 24,~~the third quarter of fiscal 2016. As a result of this settlement, and based on our assessment that there was not a clear and direct link to the original consideration transferred at the acquisition date, we have recognized a gain within income ~~(loss)~~ from discontinued operations on the consolidated statements of operations for the ~~nine~~six months ended ~~September 24,~~March 26, 2016 of $8.0 million.

The following table presents financial results of the Citrus Lane business included in income ~~(loss)~~ from discontinued operations, net of tax, for the ~~nine~~three and six months ended ~~September 24,~~June 25, 2016 ~~and September 26, 2015~~ (in thousands):. There were no financial results of the Citrus Lane business included in income from discontinued operations, net of tax, for the three and six months ended July 1, 2017.

CARE.COM, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

THREE AND ~~NINE~~SIX MONTHS ENDED ~~SEPTEMBER 24, 2016~~JULY 1, 2017

(unaudited)

Three Months Ended Nine Months Ended
September 24,
2016 September 26,
2015 September 24,
2016 September 26,
2015

Revenue $ —
$ 2,714
$ 101
$ 8,535
Cost of revenue 4
3,432
101
9,302
Operating expenses:
Selling and marketing —
785
54
2,096
Research and development —
295
11
1,084
General and administrative 45
396
(7,858 ) 2,224
Depreciation and amortization —
25
8
95
Impairment of goodwill and intangible assets —
8,766
—
8,766
Operating (loss) income (49 ) (10,985 ) 7,785
(15,032 )
Other expense, net —
—
—
—
(Loss) income from discontinued operations before income taxes (49 ) (10,985 ) 7,785
(15,032 )
Provision for income tax —
—
—
—
Net (loss) income from discontinued operations $ (49 ) $ (10,985 ) $ 7,785
$ (15,032 )

~~The major components of current assets and current liabilities of the Citrus Lane business were as follows (in thousands):~~

September 24, 2016 December 26, 2015
Assets
Accounts receivable $ 152
$ 92
Prepaid expenses and other current assets 60
28
Inventory —
319
Total current assets 212
439
Property and equipment, net —
9
Total assets $ 212
$ 448

Liabilities
Accounts payable $ —
$ 435
Accrued expenses and other liabilities 212
1,325
Deferred revenue —
82
Current contingent acquisition consideration —
16,041
Total liabilities $ 212
$ 17,883

~~CARE.COM, INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~THREE AND NINE MONTHS ENDED SEPTEMBER 24, 2016~~

~~(unaudited)~~

~~4. Supplemental Balance Sheet Information~~

~~The following table presents the detail of property and equipment, net for the periods presented (in thousands):~~

September 24,
2016 December 26,
2015

Computer equipment $ 2,349
$ 2,236
Furniture and fixtures 1,572
1,611
Software 1,375
1,374
Leasehold improvements 3,857
3,847
Total 9,153
9,068
Less accumulated depreciation (3,881 ) (2,697 )
Property and equipment, net $ 5,272
$ 6,371

Depreciation expense for the three months ended September 24, 2016 and September 26, 2015 was $0.4 million and $0.4 million, respectively, and for the nine months ended September 24, 2016 and September 26, 2015 was $1.2 million and $1.2 million, respectively.

~~The following table presents the detail of accrued expenses and other current liabilities for the periods presented (in thousands):~~

September 24,
2016 December 26,
2015

Payroll and compensation $ 4,262
$ 5,167
Marketing expenses 5,913
3,451
Other accrued expenses 4,681
3,795
Total accrued expenses and other current liabilities $ 14,856
$ 12,413



	Three Months Ended			Six Months Ended
	June 25, 2016			June 25, 2016

Revenue	$	19		$	101
Cost of revenue	3			97
Operating expenses:
Selling and marketing	13			54
Research and development	—			11
General and administrative	47			(7,903		)
Depreciation and amortization	—			8
Operating (loss) income	(44		)	7,834
Other expense, net	—			—
(Loss) income from discontinued operations before income taxes	(44		)	7,834
Provision for income tax	—			—
Net (loss) income from discontinued operations	$	(44	)	$	7,834

5.4. Goodwill and Intangible Assets

The following table presents the change in goodwill for the periods presented (in thousands):

Balance as of December 26, 2015 $ 58,631
Effect of currency translation 425
Balance as of September 24, 2016 $ 59,056

~~CARE.COM, INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~THREE AND NINE MONTHS ENDED SEPTEMBER 24, 2016~~

~~(unaudited)~~



Balance as of December 31, 2016	$	57,910
Effect of currency translation	1,470
Balance as of July 1, 2017	$	59,380

The following table presents the detail of intangible assets for the periods presented (dollars in thousands):


	Gross Carrying Value		Accumulated Amortization			Net Carrying Value		Weighted-Average Remaining Life (Years)	Gross Carrying Value		Accumulated Amortization			Net Carrying Value		Weighted-Average Remaining Life (Years)

September 24, 2016
July 1, 2017
Indefinite lived intangibles	$	242	$	—		$	242	N/A	$	242	$	—		$	242	N/A
Trademarks and trade names	4,431		(4,201		)	230		2.8	4,441		(4,272		)	169		2.0
Proprietary software	5,211		(4,408		)	803		1.4	5,242		(4,974		)	268		1.2
Website	50		(50		)	—		0.0
Training materials	30		(30		)	—		0.0
Non-compete agreements	131		(121		)	10		0.9	133		(132		)	1		0.1
Leasehold interests	170		(105		)	65		2.6	170		(124		)	46		1.9
Caregiver relationships	291		(291		)	—		0.0
Customer relationships	8,798		(8,181		)	617		6.4	8,810		(8,269		)	541		5.7
Total	$	19,354	$	(17,387	)	$	1,967		$	19,038	$	(17,771	)	$	1,267

December 26, 2015
December 31, 2016
Indefinite lived intangibles	$	242	$	—		$	242	N/A	$	242	$	—		$	242	N/A
Trademarks and trade names	4,417		(4,133		)	284		3.5	4,394		(4,200		)	194		2.5
Proprietary software	4,751		(3,802		)	949		1.6	5,102		(4,485		)	617		1.3
Website	50		(44		)	6		0.6
Training materials	30		(30		)	—		0.0
Non-compete agreements	130		(111		)	19		1.6	127		(120		)	7		0.6
Leasehold interests	170		(86		)	84		3.4	170		(111		)	59		2.3
Caregiver relationships	285		(285		)	—		0.0
Customer relationships	8,782		(6,977		)	1,805		3.1	8,754		(8,165		)	589		6.1
Total	$	18,857	$	(15,468	)	$	3,389		$	18,789	$	(17,081	)	$	1,708

CARE.COM, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

THREE AND SIX MONTHS ENDED JULY 1, 2017

(unaudited)

Amortization expense was ~~$1.9~~$0.5 million and ~~$2.9~~$1.5 million for the ~~nine~~six months ended ~~September 24,~~July 1, 2017 and June 25, 2016, ~~and September 26, 2015,~~ respectively. Of these amounts, ~~$1.3~~$0.1 million and ~~$2.4~~$1.1 million was classified as a component of depreciation and amortization, and ~~$0.6~~$0.4 million and ~~$0.5~~$0.4 million was classified as a component of cost of revenue in the condensed consolidated statements of operations for the ~~nine~~six months ended ~~September 24,~~July 1, 2017 and June 25, 2016, ~~and September 26, 2015,~~ respectively.

As of ~~September 24, 2016,~~July 1, 2017, the estimated future amortization expense related to intangible assets for future fiscal years was as follows (in thousands):


2016 remaining	241
2017	689
2017 remaining			233
2018	344		345
2019	146		146
2020	96		96
2021			96
Thereafter	209		109
Total	$	1,725	$	1,025

5. Contingencies

Legal matters

From time to time we are involved in legal proceedings and other regulatory matters arising in the ordinary course of our business. Each reporting period, we evaluate whether or not a loss contingency related to such matters is probable and reasonably estimable under the provisions of the authoritative guidance that addresses accounting for contingencies. If a loss is probable and the potential estimate of the loss is a range, we evaluate if there is a point within the range that appears at the time to be a better estimate than any other point in the range, and if so, that amount is accrued. If we conclude that no amount in the range appears to be a better estimate than any other, we accrue the minimum amount in the range. We monitor developments in legal matters that could affect estimates we have previously accrued and update our estimates as appropriate based on subsequent developments.

In the first quarter of fiscal 2017, we received a demand for payments totaling approximately $1.5 million relating to a government inquiry which commenced in 2016. The Company determined that it is probable that it will incur a loss in connection with this matter and accrued an amount as of December 31, 2016 based on its reasonable estimate of this loss. The Company has accrued an additional amount as of the first half of fiscal 2017, based on its updated estimate of this loss. The total amount accrued was not material to our financial statements for the periods ended July 1, 2017 and December 31, 2016.

CARE.COM, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

THREE AND ~~NINE~~SIX MONTHS ENDED ~~SEPTEMBER 24, 2016~~JULY 1, 2017

(unaudited)

6. ~~Contingencies~~

~~Legal matters~~

From time to time, we have or may become party to litigation incident to the ordinary course of business. We assess the likelihood of any adverse judgments or outcomes with respect to these matters and determine loss contingency assessments on a gross basis after assessing the probability of incurrence of a loss and whether a loss is reasonably estimable. In addition, we consider other relevant factors that could impact our ability to reasonably estimate a loss. A determination of the amount of reserves required, if any, for these contingencies is made after analyzing each matter. Our reserve may change in the future due to new developments or changes in strategy in handling these matters. Although the results of litigation and claims cannot be predicted with certainty, we currently believe that the final outcome of all pending matters will not have a material adverse effect on our business, consolidated financial position, results of operations, or cash flows. Regardless of the outcome, litigation can adversely impact us due to defense and settlement costs, diversion of management resources, and other factors.

7. Stockholders’ Equity

Stock-Based Compensation

The following table summarizes stock-based compensation in our accompanying condensed consolidated statements of operations (in thousands):


	Three Months Ended				Nine Months Ended				Three Months Ended				Six Months Ended
	September 24, 2016		September 26, 2015		September 24, 2016		September 26, 2015		July 1, 2017		June 25, 2016		July 1, 2017		June 25, 2016

Cost of revenue	$	79	$	75	$	233	$	171	$	105	$	79	$	197	$	154
Selling and marketing	232		250		646		662		295		229		541		414
Research and development	284		260		793		575		370		279		651		509
General and administrative	1,156		890		3,093		2,361		1,178		1,059		2,162		1,937
(Loss) income from discontinued operations	—		109		8		410
Loss (income) from discontinued operations									—		3		—		8
Total stock-based compensation	$	1,751	$	1,584	$	4,773	$	4,179	$	1,948	$	1,649	$	3,551	$	3,022

Pursuant to our 2014 Incentive Award Plan (the “2014 Plan”), during the ~~nine~~six months ended ~~September 24, 2016,~~July 1, 2017, we granted ~~0.7~~0.4 million time-based restricted stock units (RSUs) to certain employees, advisors and directors, ~~and consultants and 0.5~~0.4 million ~~performance based~~performance-based RSUs (“PSUs”) to certain members of management, and 0.2 million market-based RSUs (“MSUs”) to senior management. ~~Each recipient~~

In the first quarter of ~~performance based RSUs is~~fiscal 2017, we issued 0.4 million PSUs. The number of PSUs that become eligible to ~~receive up to 100%~~vest for each recipient will be determined in the first quarter of 2018 based upon the ~~shares granted on the~~Company’s level of achievement of certain financial targets for fiscal ~~2016. If those targets are reached,~~2017. To the ~~award~~extent any PSUs become eligible to vest, they generally will vest over a ~~four-year~~three-year period retroactive to March ~~2016~~2017 as continued services are performed. ~~During~~Management is recognizing expense straight-line over the ~~nine months ended September 24, 2016,~~required service period based on its estimate of the number of PSUs that will vest. If there is a change in the estimate of the number of PSUs that are probable of vesting, we ~~determined~~will cumulatively adjust compensation expense in the period that the change in estimate is made.

In the second quarter of fiscal 2017, we issued 0.2 million MSUs to senior management. The MSUs awarded will vest at any point during a five-year performance period, from 2017 through 2022, based ~~RSUs~~on achievement of specified 120-day volume-weighted average closing share price targets, which is a market condition, or a change-in-control event, and if vested, will be issued in the form of common stock. The MSUs were ~~improbable of vesting, and as such all expense previously taken on~~valued at $9.31 - $5.78 per share using the ~~performance based RSUs was cumulatively reversed.~~Monte Carlo simulation model for the specified price targets.

RSUs are not included in issued and outstanding common stock until the shares are vested and released. ~~The~~With the exception of MSUs, the fair value of ~~the RSUs~~an RSU and PSU is measured based on the market price of the underlying common stock as of the date of grant, reduced by the purchase price of $0.001 per share. The weighted-average grant-date fair value per vested RSU share and the total fair value of vested shares from RSU grants was ~~$7.30~~$7.46 and ~~$2.8~~$2.1 million, respectively, for the ~~nine~~six months ended ~~September 24, 2016~~July 1, 2017. During the nine months ended September 26, 2015, 1.6 million RSUs were granted to employees, directors and consultants, and 0.2 million performance based RSUs were granted to certain members of senior management.

During the ~~nine~~six months ended ~~September 24,~~July 1, 2017, we granted 0.9 million stock options to certain employees and directors with a weighted average exercise price per share of $12.62. During the six months ended June 25, 2016, we granted 1.4 million stock options to certain employees and directors atwith a weighted average ~~grant-date fair value~~exercise price per share of ~~$6.88. During the nine months ended September 26, 2015, no stock options were granted to employees.~~

~~CARE.COM, INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~THREE AND NINE MONTHS ENDED SEPTEMBER 24, 2016~~

~~(unaudited)~~

$6.68.

The following table presents the assumptions used to estimate the fair value of options granted during the periods presented:

~~Nine Months Ended~~

~~September 24,~~



	Six Months Ended
	July 1, 2017	June 25, 2016
Risk-free interest rate	1.86% - 2.18%	1.3 - 1.6 %
Expected term (years)	6.25	6.25
Volatility	32.89% - 33.37%	38.23%
Expected dividend yield	—	—

CARE.COM, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

THREE AND SIX MONTHS ENDED JULY 1, 2017

(unaudited)

~~2016~~

~~September 26,~~
~~2015~~

~~Risk-free interest rate~~

~~1.19 - 1.63%~~

~~N/A~~

~~Expected term (years)~~

~~6.25~~

~~N/A~~

~~Volatility~~

~~33.8 - 38.2%~~

~~N/A~~

~~Expected dividend yield~~

—

~~N/A~~

A summary of stock option and RSU activity for the ~~nine~~six months ended ~~September 24, 2016~~July 1, 2017 was as follows (in thousands for shares and intrinsic value):


								Restricted Stock Units											Restricted Stock Units
	Shares		Weighted-Average Remaining Contractual Term (Years)	Weighted-Average Exercise Price		Aggregate Intrinsic Value		Shares		Weighted-Average Grant Date Fair Value		Shares		Weighted-Average Remaining Contractual Term (Years)	Weighted-Average Exercise Price		Aggregate Intrinsic Value		Shares		Weighted-Average Grant Date Fair Value

Outstanding as of December 26, 2015	3,482		5.93	$	6.52	$	8,891	1,306		$	7.42
Outstanding as of December 31, 2016												4,312		6.45	$	6.64	$	13,042	1,780		$	7.08
Granted⁽¹⁾	1,410			$	6.88			1,127		6.75		873			$	12.62			925		$	12.86
Settled (RSUs)	—			—				(385	)	7.30		—			—				(288	)	$	7.46
Exercised	(278	)		$	4.01			—		—		(458	)		$	4.48			—		—
Canceled and forfeited	(170	)		$	11.38			(108	)	6.89		(142	)		$	11.85			(510	)	$	6.89
Outstanding as of September 24, 2016	4,444		6.77	$	6.60	$	21,034	1,940		$	7.08
Vested and exercisable as of September 24, 2016	2,869		5.54	$	5.72	$	15,995	N/A		N/A
Vested and expected to vest as of September 24, 2016⁽²⁾	4,205		6.62	$	6.54	$	20,230	1,252		$	7.21
Outstanding as of July 1, 2017												4,585		6.84	$	7.83	$	35,047	1,907		$	9.88
Vested and exercisable as of July 1, 2017												2,766		5.35	$	6.41	$	25,417	N/A		N/A

____________________________

(1) For RSUs, includes both time-based, performance-based, and ~~performance-based~~market-based restricted stock units

~~(2) Options and RSUs expected to vest reflect an estimated forfeiture rate~~

Aggregate intrinsic value represents the difference between the closing stock price of our common stock and the exercise price of outstanding, in-the-money options. Our closing stock price as reported on the New York Stock Exchange as of ~~September 23, 2016,~~June 30, 2017, the final trading day of the ~~nine~~six months ended ~~September 24, 2016,~~July 1, 2017, was ~~$10.46.~~$15.10. The total intrinsic value of options exercised and RSUs vested was approximately ~~$4.3~~$7.2 million for the ~~nine~~six months ended ~~September 24, 2016.~~July 1, 2017. The aggregate fair value of the options that vested during the ~~nine~~six months ended ~~September 24, 2016~~July 1, 2017 was ~~$1.7~~$1.2 million.

As of ~~September 24, 2016,~~July 1, 2017, total unrecognized compensation cost ~~adjusted for estimated forfeitures,~~ related to non-vested stock options and RSUs was approximately ~~$4.4~~$6.8 million and ~~$8.7~~$14.5 million, respectively, which is expected to be recognized over a weighted-average period of ~~2.9~~3.0 years and ~~2.9~~2.5 years, respectively, to the extent they are probable of vesting. As of ~~September 24, 2016,~~July 1, 2017, we had ~~2.4~~2.6 million shares available for grant under the 2014 Plan.

~~CARE.COM, INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~THREE AND NINE MONTHS ENDED SEPTEMBER 24, 2016~~

~~(unaudited)~~

Common Stock

As of ~~September 24, 2016,~~July 1, 2017, we had reserved the following shares of common stock for future issuance in connection with the following (in thousands):



	~~September 24, 2016~~July 1, 2017
Options issued and outstanding	~~4,444~~4,585
Restricted stock units issued and outstanding	~~1,940~~1,907
Common stock available for stock-based award grants under incentive award plans	~~2,370~~2,647
Common stock available for conversion of Series A Redeemable Convertible Preferred Stock	~~4,473~~4,659
Total	~~13,227~~13,798

On June 27, 2016, we entered into a Stock Repurchase Agreement (the “Stock Repurchase Agreement”) to repurchase an aggregate of 3.7 million shares of common stock at a price of $8.25 per share (the “Stock Repurchase”) from Matrix Partners VII, L.P. and Weston & Co. VII LLC, as Nominee (together, the “Sellers”). The Stock Repurchase closed on June 29, 2016. Pursuant to the Stock Repurchase Agreement, the Sellers are subject to a 90-day lock-up provision related to the remaining shares of common stock they hold following the closing of the Stock Repurchase. The shares were subsequently retired by the board of directors during the third quarter of 2016.

8.7. Net Income (Loss) ~~Income~~ per Share Attributable to Common Stockholders

CARE.COM, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

THREE AND SIX MONTHS ENDED JULY 1, 2017

(unaudited)

Basic net income (loss) ~~income~~ per share is computed by dividing net income (loss) ~~income~~ attributable to common shareholders by the weighted-average number of common shares outstanding during the period. ~~We apply~~For the three and six months ended July 1, 2017, we applied the two-class method to calculate basic and diluted net ~~(loss)~~ income per share of common stock, as our Series A Redeemable Convertible Preferred Stock (Series A Preferred Stock) is a participating security. The two-class method is an earnings allocated formula that treats a participating security as having rights to earnings that otherwise would have been available to common stockholders. For the three and nine months ended September 24, 2016 and the three and nine months ended September 26, 2015, we were in a loss position from continuing operations for each of these periods, and the Series A Preferred Stockholders do not contractually participate in losses, as such, we added the Series A Preferred Stock dividends to the loss from continuing operations to calculate the loss attributable to common stockholders in order to calculate the numerator used in the net (loss) income per share. We compute diluted net income (loss) ~~income~~ per common share using income ~~(loss)~~ from continuing operations as the “control number” in determining whether potential common shares are dilutive, after giving consideration to all potentially dilutive common shares, including stock options, unvested restricted stock outstanding during the period and potential issuance of stock upon the conversion of the our Series A Preferred Stock, including accrued dividends, outstanding during the period, except where the effect of such securities would be antidilutive. For the three and nine months ended September 24, 2016 and September 26, 2015, we incurred a loss from continuing operations, and as such, there are no potential common shares with a dilutive impact.

The calculations of basic and diluted net income (loss) ~~income~~ per share and basic and dilutive weighted-average shares outstanding for the three and ~~nine~~six months ended ~~September 24,~~July 1, 2017 and June 25, 2016 ~~and September 26, 2015~~ were as follows (in thousands, except per share data):

CARE.COM, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

THREE AND SIX MONTHS ENDED JULY 1, 2017

(unaudited)



	Three Months Ended					Six Months Ended
	July 1, 2017		June 25, 2016			July 1, 2017		June 25, 2016
Numerator:
Net income (loss) attributable to common stockholders - basic	$	874	$	(3,419	)	$	1,066	$	3,336
Net income attributable to common stockholders - diluted	$	885	$	—		$	1,077	$	—

Denominator:
Weighted-average shares outstanding - basic	29,556		32,136			29,352		32,183

Dilutive impact from:
Options outstanding	1,962		—			1,786		1,052
Restricted stock units	702		—			608		847
Weighted-average shares outstanding - dilutive	32,220		32,136			31,746		34,082

Net income (loss) per share attributable to common stockholders (Basic):
Income (loss) from continuing operations attributable to common stockholders	$	0.03	$	(0.11	)	$	0.04	$	(0.14	)
Income from discontinued operations attributable to common stockholders	—		—			—		0.24
Net income (loss) per share attributable to common stockholders	$	0.03	$	(0.11	)	$	0.04	$	0.10

Net income (loss) per share attributable to common stockholders (Diluted):
Income (loss) from continuing operations attributable to common stockholders	$	0.03	$	(0.11	)	$	0.03	$	(0.13	)
Income from discontinued operations attributable to common stockholders	—		—			—		0.23
Net income (loss) per share attributable to common stockholders	$	0.03	$	(0.11	)	$	0.03	$	0.10

The following equity shares were excluded from the calculation of diluted net income per share from continuing operations and discontinued operations because their effect would have been antidilutive for the periods presented (in thousands):



	Three Months Ended		Six Months Ended
	July 1, 2017	June 25, 2016	July 1, 2017	June 25, 2016
Stock options	1,398	4,452	1,292	617
Restricted stock units	24	2,064	14	1,217
Series A Redeemable Convertible Preferred Stock (as converted to common stock)	4,659	—	4,659	—

The Series A Preferred Stock is considered antidilutive due to the fact that the two-class method was more dilutive when calculating dilutive net income per share attributable to common stockholders.

CARE.COM, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

THREE AND ~~NINE~~SIX MONTHS ENDED ~~SEPTEMBER 24, 2016~~JULY 1, 2017

(unaudited)

Three Months Ended Nine Months Ended
September 24, 2016 September 26, 2015 September 24, 2016 September 26, 2015
Numerators:
Loss from continuing operations $ (1,221 ) $ (6,364 ) $ (5,719 ) $ (21,565 )
Accretion of Series A Redeemable Convertible Preferred Stock dividends (616 ) —
(616 ) —
Net loss from continuing operations attributable to common stockholders - basic and diluted (1,837 ) (6,364 ) (6,335 ) (21,565 )
(Loss) income from discontinued operations attributable to common stockholders - basic and diluted (49 ) (10,985 ) 7,785
(15,032 )
Net (loss) income attributable to common stockholders $ (1,886 ) $ (17,349 ) $ 1,450
$ (36,597 )

Denominator:
Weighted-average shares outstanding - basic and diluted 28,769
32,069
31,045
31,938

Net (loss) income per share attributable to common stockholders (Basic and diluted):
Loss from continuing operations attributable to common stockholders $ (0.06 ) $ (0.20 ) $ (0.20 ) $ (0.68 )
(Loss) income from discontinued operations attributable to common stockholders —
(0.34 ) 0.25
(0.47 )
Net (loss) income per share attributable to common stockholders $ (0.06 ) $ (0.54 ) $ 0.05
$ (1.15 )

The following equity shares were excluded from the calculation of diluted net loss per share from continuing operations and discontinued operations because their effect would have been anti-dilutive for the periods presented (in thousands):

Three Months Ended Nine Months Ended
September 24,
2016 September 26,
2015 September 24,
2016 September 26,
2015
Stock options 4,444
3,804
4,444
3,804
Restricted stock units 1,940
1,667
1,940
1,667
Contingent consideration —
106
—
106
Series A Redeemable Convertible Preferred Stock (as converted to common stock) 4,473
—
4,473
—

9.8. Preferred Stock

Preferred Stock consists of the following at ~~September 24,~~July 1, 2017 and December 31, 2016 (in thousands, except shares):

Preferred Stock Authorized Issuance Date Issued and Outstanding Liquidation Preference (as of June 29, 2023) Carrying Value Common Stock Issuable Upon Conversion (as of June 29, 2023)
Series A 46,350
June 29, 2016 46,350
$67,763 $46,966 6,453,660

~~CARE.COM, INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~THREE AND NINE MONTHS ENDED SEPTEMBER 24, 2016~~

~~(unaudited)~~

~~There was no Preferred Stock outstanding at December 26, 2015.~~



	Preferred Stock Authorized	Issuance Date	Issued and Outstanding	Liquidation Preference (as of June 29, 2023)		Carrying Value		Common Stock Issuable Upon Conversion (as of June 29, 2023)
July 1, 2017
Series A	46,350	June 29, 2016	46,350	$	67,424	$	48,922	6,421,369
December 31, 2016
Series A	46,350	June 29, 2016	46,350	$	67,424	$	47,660	6,421,369

Please refer to ~~the Certificate of Designations filed as Exhibit 3.1 to our Current Report on~~ Form ~~8-K,~~10-K filed on ~~June 29, 2016,~~March 9, 2017 for ~~definitions of all capitalized terms not otherwise defined below.~~

further detail on the Series A Redeemable Convertible Preferred ~~Stock (Series A Preferred Stock)~~

On June 29, 2016 (the “Closing Date”), we announced the entry into an Investment Agreement, dated as of June 29, 2016 with Google Capital relating to the issuance and sale to Google Capital of 46.4 thousand shares of our Series A Redeemable Convertible Preferred Stock, par value $0.001 per share (“Series A Preferred Stock”), for an aggregate purchase price of $46.4 million, or $1,000 per share. We incurred issuance costs of $2.1 million. We elected to accrete all issuance costs that were netted against the proceeds upon issuance of the Series A Preferred Stock.

~~The Series A Preferred Stock has the following rights and preferences:~~

~~Voting~~

The holders of Series A Preferred Stock have full voting rights and powers equal to the rights and powers of holders of shares of Common Stock, with respect to any matters upon which holders of shares of Common Stock have the right to vote. Holders of Series A Preferred Stock are entitled to the number of votes equal to the number of whole shares of Common Stock into which such share of Series A Preferred Stock could be converted at the record date for determination of the stockholders entitled to vote on such matters.

Additionally, at any time when at least 50% of the shares of the Series A Preferred Stock purchased from the Company pursuant to the Investment Agreement are outstanding, the Company cannot, without the written consent or affirmative vote of the holders of a majority of the then outstanding shares of preferred stock, (a) amend the Certificate of Incorporation in a manner that adversely affects the preferences or rights of the preferred stock; (b) authorize or issue capital stock unless it ranks equal to or junior to the preferred stock, or increase the authorized number of shares of preferred stock; or (c) reclassify or amend any existing security of the Company that is equal to or junior to the preferred stock to render such security senior to the Series A Preferred Stock.

~~Dividends~~

The Series A Preferred Stock ranks senior to the shares of our Common Stock with respect to dividend rights and rights on the distribution of assets on any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Company. Holders of the Series A Preferred Stock are entitled to a cumulative dividend at a rate of 5.50% per annum during the period from the Closing Date to the seventh anniversary of the Closing Date, payable semi-annually in arrears. Dividends are paid in additional Liquidation Preference per share of Series A Preferred Stock.

~~Liquidation Preference~~

~~The Series A Preferred Stock has a Liquidation Preference of $1,000 per share plusall Accrued and Unpaid Dividends. The Series A Preferred Stock ranks senior to the Common Stock with respect to rights upon liquidation, winding-up and dissolution.~~

~~Conversion~~

The Series A Preferred Stock is convertible at the option of the holders at any time into shares of Common Stock at an initial Conversion Price of $10.50 per share, which rate is subject to adjustment upon the occurrence of certain events. At any time after the seventh anniversary of the Closing Date, and if between the fifth anniversary and the seventh anniversary of the Closing Date, the consolidated closing price of the Common Stock equals or exceeds 150% of the then prevailing Conversion Price for at least 20 trading days in any period of 30 consecutive trading days, including the last trading day of such 30-day period, then following such time, all or some of the Series A Preferred Stock may be converted, at our election, into the relevant number of shares of Common Stock.

~~Redemption~~

At our option, at any time after the seventh anniversary of the Closing Date, all of the Series A Preferred Stock may be redeemed by us at the then current Liquidation Preference plus Accrued and Unpaid Dividends after giving the holders of Series A Preferred Stock the ability to convert their shares into Common Stock. At any point after the seventh anniversary of the Closing Date, each holder of the Series A Preferred Stock may cause us to redeem all of such holder’s Series A Preferred Stock

~~CARE.COM, INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~THREE AND NINE MONTHS ENDED SEPTEMBER 24, 2016~~

~~(unaudited)~~

at the then current Liquidation Preference plus Accrued and Unpaid Dividends. We elected to accrete all issuance costs that were netted against the proceeds upon issuance of the Series A Preferred Stock. We will accrete the carrying value of the Series A Preferred Stock to the redemption value through June 29, 2023, which is the seventh anniversary of the Closing Date, at a rate of 5.50% per annum, which represents the cumulative dividends owed on the Series A Preferred Stock, using the interest rate method.

~~Change in Control Events~~

Upon certain change of control events involving the Company, holders of Series A Preferred Stock can elect to either (1) convert the Series A Preferred Stock to Common Stock at the then current Conversion Price or (2) require us to redeem the Series A Preferred Stock for 150% of the then current Liquidation Preference plus Accrued and Unpaid Dividends, provided that in the case of a change of control event in which the Common Stock is converted into or canceled for cash or publicly traded securities, such conversion or redemption will be mandatory, with the selection deemed to be in favor of the alternative that would result in holders of Series A Preferred Stock receiving the greatest consideration.

~~Board of Directors Seat~~

Pursuant to the Investment Agreement and the Certificate of Designations, we have agreed that, so long as Google Capital or its affiliates beneficially own at least 50% of the shares of Series A Preferred Stock purchased in the transaction, the holders of Series A Preferred Stock shall have the right to elect one member of the board of directors, and Google Capital has the right to designate the nominee for such position.

~~Standstill Restrictions~~

Pursuant to the Investment Agreement, Google Capital is subject to certain standstill restrictions, including, among other things, that Google Capital is restricted from acquiring additional securities of the Company until the later of (a) the 18 month anniversary of the Closing Date and (b) the date that no Google Capital designee serves on the Company’s board of directors. Subject to certain customary exceptions, Google Capital is restricted from transferring the Series A Preferred Stock or, if converted, any shares of Common Stock underlying the Series A Preferred Stock until the earlier of the 18 month anniversary of the Closing Date or immediately prior to a change of control of the Company.

~~10.~~9. Income Taxes

We recorded income tax (benefit) expense of ~~$0.3~~$(1.1) million and ~~$0.3~~$0.6 million for the three months ended ~~September 24, 2016~~July 1, 2017 and ~~September 26, 2015~~June 25, 2016, respectively, and ~~$1.0~~$(0.9) million and ~~$1.2~~$0.6 million for the ~~nine~~six months ended ~~September 24, 2016~~July 1, 2017 and ~~September 26, 2015, respectively.~~June 25, 2016. The tax ~~provision~~benefit recorded for the three and ~~nine~~six months ended ~~September 24, 2016~~July 1, 2017 primarily related to the excess tax benefits from the taxable compensation on share-based awards, partially offset by tax expense pertaining to amortization of goodwill associated with the acquisition of Care.com HomePay for tax purposes, for which there is no corresponding book deduction, and certain state taxes based on operating income that are payable without regard to tax loss carryforwards. ~~Our~~

Prior to January 1, 2017, we recognized the excess tax benefits of stock-based compensation expense as additional paid-in capital (“APIC”), and tax deficiencies of stock-based compensation expense in the income tax provision ~~for~~or as APIC to the ~~three and nine months ended September 26, 2015~~extent that there were sufficient recognized excess tax benefits previously recognized. As a result of the prior guidance that excess tax benefits reduce taxes payable prior to being recognized as an increase in paid in capital, we had not recognized certain deferred tax assets (all tax attributes such as loss or credit carryforwards) that could be attributed to tax deductions related to equity compensation in excess of compensation recognized for financial reporting. As of January 1, 2017, we had generated federal and state net operating loss carryforwards due to excess tax benefits of $2.2 million and $1.9 million, respectively.

Effective as of January 1, 2017, we adopted a change in accounting policy in accordance with ASU 2016-09 to account for excess tax benefits and tax deficiencies as income tax expense or benefit, treated as discrete items in the ~~amortization~~reporting period in which they occur, and to recognize previously unrecognized deferred tax assets that arose directly from (or the use of ~~Care.com HomePay goodwill~~which was postponed by) tax deductions related to equity compensation in excess of compensation recognized for financial reporting. No cumulative transition adjustments were recorded to accumulated deficit as a result of this change in the accounting policy, as we had previously maintained a valuation allowance against our deferred tax ~~purposes~~assets that could be attributed to equity compensation in excess of compensation recognized for ~~which there is no corresponding book deduction, and certain state taxes based on operating income that are payable without regard to our tax loss carry forwards.~~financial reporting.

~~11.~~10. Segment and Geographical Information

We consider operating segments to be components of the Company in which separate financial information is available that is evaluated regularly by our chief operating decision maker in deciding how to allocate resources and in assessing performance. Our chief operating decision maker is the CEO. The CEO reviews financial information presented on a consolidated basis for purposes of allocating resources and evaluating financial performance. ~~Prior to our decision to exit~~For the Citrus Lane business in fiscal 2015, we had determined that we had two operating and reporting segments, CRCM Businesses, Excluding Citrus Lane, and Citrus Lane. Subsequent to our decision to exit the Citrus Lane business,periods presented we have concluded that we have a single operating and reportable segment.

No country outside of the United States provided greater than 10% of our total revenue. Revenue is classified by the major geographic areas in which our customers are located. The following table summarizes total revenue generated by our geographic locations (dollars in thousands):

CARE.COM, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

THREE AND ~~NINE~~SIX MONTHS ENDED ~~SEPTEMBER 24, 2016~~JULY 1, 2017

(unaudited)


	Three Months Ended				Nine Months Ended				Three Months Ended				Six Months Ended
	September 24, 2016		September 26, 2015		September 24, 2016		September 26, 2015		July 1, 2017		June 25, 2016		July 1, 2017		June 25, 2016
United States	$	37,293	$	33,340	$	107,993	$	92,835	$	38,336	$	34,789	$	78,178	$	70,700
International	3,498		2,839		10,248		8,296		3,636		3,395		7,160		6,750
Total revenue	$	40,791	$	36,179	$	118,241	$	101,131	$	41,972	$	38,184	$	85,338	$	77,450


	Three Months Ended				Nine Months Ended				Three Months Ended				Six Months Ended
	September 24, 2016		September 26, 2015		September 24, 2016		September 26, 2015		July 1, 2017		June 25, 2016		July 1, 2017		June 25, 2016
	(As a percentage of revenue)								(As a percentage of revenue)
United States	91	%	92	%	91	%	92	%	91	%	91	%	92	%	91	%
International	9	%	8	%	9	%	8	%	9	%	9	%	8	%	9	%
Total revenue	100	%	100	%	100	%	100	%	100	%	100	%	100	%	100	%

Our long-lived assets are primarily located in the United States and are not allocated to any specific region. Therefore, geographic information is presented only for total revenue.

~~12.~~11. Restructuring Charges

On April 14, 2016, we entered into a sublease agreement to lease approximately 10,362 square feet of our 108,743 square foot headquarters facility located in Waltham, Massachusetts.

During the quarter ended June 25, 2016, we recorded a $0.5 million sublease loss liability and related expenses of $0.2 million for the expected loss on the sublease, in accordance with ASC 840-20, Leases, because the monthly payments we expect to receive under the sublease are less than the amounts that we will owe the lessor for the sublease space. The sublease term is less than the remaining term under the original lease, and thus we do not believe we have met a cease use date as we may re-enter the space following the sublease. The fair value of the liability was determined using the estimated future net cash flows, consisting of the minimum lease payments to the lessor for the sublease space and payments we will receive under the sublease. The sublease loss was recorded as part of restructuring expense in the consolidated statement of operations. The following table presents the change in restructuring liability from December ~~26, 2015~~31, 2016 to ~~September 24, 2016~~July 1, 2017 (in thousands):

September 24, 2016
Restructuring Liability
Balance as of December 26, 2015 $ —
Restructuring charges 714
Payments (258 )
Changes in estimate (10 )
Accretion of sublease liability (51 )
Balance as of September 24, 2016 $ 395



	July 1, 2017
	Restructuring Liability
Balance as of December 31, 2016	$	356
Accretion of sublease liability	(50		)
Balance as of July 1, 2017	$	306

CARE.COM, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

THREE AND ~~NINE~~SIX MONTHS ENDED ~~SEPTEMBER 24, 2016~~JULY 1, 2017

(unaudited)

~~13.~~12. Other ~~Expense, Net~~Income (Expense)

Other ~~expense, net~~income (expense) consisted of the following (in thousands):

Three Months Ended Nine Months Ended
September 24,
2016 September 26,
2015 September 24,
2016 September 26,
2015
Interest income $ 80
$ —
$ 151
$ 86
Interest expense (1 ) 19
(3 ) (63 )
Gain (loss) on exchange (147 ) (287 ) (358 ) (992 )
Other income (expense), net 1
(4 ) —
(7 )
Total expense, net $ (67 ) $ (272 ) $ (210 ) $ (976 )



	Three Months Ended						Six Months Ended
	July 1, 2017			June 25, 2016			July 1, 2017			June 25, 2016
Interest income	$	93		$	55		$	159		$	71
Interest expense	(1		)	(1		)	(2		)	(2		)
Gain (loss) on foreign exchange	916			(183		)	1,152			(212		)
Total income (expense)	$	1,008		$	(129	)	$	1,309		$	(143	)

~~14.~~13. Related Party Transactions

We had the following transactions with related parties during the ~~period:~~three months ended July 1, 2017:

~~Series A Preferred Stock Issuance to Google Capital 2016, L.P.~~CapitalG LP

On June 29, 2016, we issued Series A Preferred Stock to ~~Google Capital 2016, L.P.,~~CapitalG LP, as described in Note 9.8. As a result of this transaction, Alphabet Inc., the ultimate parent of ~~Google Capital 2016, L.P.~~CapitalG LP (“CapitalG”), and all related affiliates of Alphabet Inc. are considered to be related parties. During the ~~nine~~three and six months ended ~~September 24, 2016,~~July 1, 2017, we had recorded ~~$1.0~~$0.4 million and $0.8 million of revenue from Care@Work arrangements with Alphabet Inc. and its ~~affiliates.~~affiliates, respectively. During the ~~nine~~three and six months ended ~~September 24, 2016,~~July 1, 2017, we incurred ~~$11.6~~$3.5 million and $6.6 million of selling and marketing expenses for internet based marketing services with Alphabet Inc. and its ~~affiliates.~~affiliates, respectively. As of ~~September 24, 2016,~~July 1, 2017, we had $0.2 million and ~~$0.1~~$0.2 million of accounts receivable and unbilled accounts receivable, respectively, recorded with Alphabet Inc. and its affiliates. As of ~~September 24,~~December 31, 2016, we had $0.1 million and $0.3 million of accounts receivable and unbilled accounts receivable, respectively, recorded with Alphabet Inc. and its affiliates. As of July 1, 2017, we had $0.1 million and $1.2 million of deferred revenue and accrued expenses and other current liabilities, respectively, recorded with Alphabet Inc. and its affiliates. As of December 31, 2016, we had $0.2 million, ~~$1.4~~$0.1 million, and $1.1 million of deferred revenue, accounts payable, and accrued expenses and other current liabilities, respectively, recorded with Alphabet Inc. and its affiliates.

~~Repurchase~~West of ~~Common Stock from Matrix Partners VII, L.P. and Weston & Co. VII~~Everything, the successor of West Studios, LLC

~~On June 27,~~In fiscal 2016, we entered into a ~~Stock Repurchase Agreement (the “Stock Repurchase Agreement”~~professional services agreement with West of Everything, the successor of West Studios, LLC (“West”). We consider West to ~~repurchase~~be a related party because one of our board members is acting as a Managing Director of the entity. Under the terms of the agreement, we incurred an aggregate of ~~3.7~~$1.4 million ~~shares~~in service fees between the fourth quarter of ~~common stock at a price~~fiscal 2016 and the second quarter of ~~$8.25 per share (the “Stock Repurchase”) from Matrix Partners VII, L.P.~~fiscal 2017, prior to terminating the agreement in the second quarter of fiscal 2017. During three and Weston & Co. VII LLC, as Nominee (together, the “Sellers”). The Stock Repurchase closed on June 29, 2016. Pursuant to the Stock Repurchase Agreement, the Sellers were subject to a 90-day lock-up provisionsix months ended July 1, 2017, we incurred $0.6 million and $1.2 million of selling and marketing expenses related to ~~the remaining shares~~our West relationship. As of ~~common stock they held following the closing~~July 1, 2017, we had $0.3 million of ~~the Stock Repurchase.~~

accrued expense and other current liabilities recorded with West.


ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read the following discussion and analysis of our financial condition and results of operations together with our unaudited condensed consolidated financial statements and the related notes thereto included in this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K for the fiscal year ended December ~~26, 2015,~~31, 2016, filed on March ~~1, 2016.~~9, 2017. In addition to historical information, this discussion contains forward-looking statements that involve risks and uncertainties. You should review the “Risk Factors” section of this Quarterly Report on Form 10-Q for a discussion of important factors that could cause our actual results to differ materially from our expectations.

Overview

We are the world’s largest online marketplace for finding and managing family care. We have more than ~~22.0~~25.2 million members, including ~~12.4~~14.2 million families and ~~9.6~~11.0 million caregivers, spanning 19over 20 countries. We help families address their particular lifecycle of care needs, which ~~includes~~may include child care, senior care, special needs care and other non-medical family care needs such as pet care, tutoring and housekeeping. In the process, we also help caregivers find rewarding full-time and part-time employment opportunities.

Our consumer matching solutions allow families to search for, qualify, vet, connect with and ultimately select caregivers in a low-cost, reliable and easy way. We also provide caregivers with solutions to create personal profiles, describe their unique skills and experience, and otherwise differentiate and market themselves in a highly fragmented marketplace.

In addition to our consumer matching solutions, we offer our members innovative products and services to facilitate their interaction with caregivers. We provide solutions intended to improve both the ease and reliability of the care relationship in the home. One product area we are particularly focused on is consumer payments solutions. Through Care.com HomePay, families can subscribe to payroll and tax preparation services for domestic employees. This offering deepens our relationship with our members and could enhance the lifetime value associated with each member.

We also serve employers through our Care@Work offering by providing access to certain of our products and services, including back-up care for children and seniors, to employer-sponsored families. In addition, we serve care-related businesses—such as day care centers, nanny agencies and home care ~~agencies—who~~agencies — that wish to market their services to our care-seeking families and recruit our caregiver members. These businesses improve our member experience by providing additional caregiving choices for families and employment opportunities for caregivers.

We have experienced steady growth in revenue and members. Our members increased to ~~22.0~~25.2 million as of ~~September 24, 2016~~July 1, 2017 from ~~17.8~~20.7 million as of ~~September 26, 2015,~~June 25, 2016, representing a ~~23%~~22% annual growth rate. Our revenue has increased to ~~$118.2~~$85.3 million for the ~~nine~~six months ended ~~September 24, 2016~~July 1, 2017 from ~~$101.1~~$77.5 million for the ~~nine~~six months ended ~~September 26, 2015.~~June 25, 2016. We experienced net income from continuing operations of $2.5 million and net losses from continuing operations of ~~$4.8 million and $20.4~~$4.5 million in the ~~nine~~six months ended ~~September 24,~~July 1, 2017 and June 25, 2016, respectively. We completed the closure of the Citrus Lane business in the fourth quarter of fiscal 2016, and ~~September 26, 2015, respectively. We experienced~~we had no income or losses from discontinued operations for the six months ended July 1, 2017. In comparison, we had net income from discontinued operations of $7.8 million in the ~~nine~~six months ended ~~September 24,~~June 25, 2016 ~~and net losses from discontinued operations of $15.0 million~~due to a settlement agreement completed in the ~~nine months ended September 26, 2015.~~first quarter of fiscal 2016. Refer to Note 3.

Key Business Metrics

In addition to traditional financial and operational metrics, we use the following business metrics to monitor and evaluate results (in thousands, except monthly average revenue per member - U.S. Consumer Business):


	As of				As of
	September 24, 2016		September 26, 2015		July 1, 2017		June 25, 2016
Total members	21,968		17,827		25,199		20,698
Total families	12,383		10,112		14,239		11,588
Total caregivers	9,585		7,715		10,959		9,110
Paying families - U.S. Consumer Business	291		296		294		252
Monthly average revenue per paying family - U.S. Consumer Business	$	39	$	37	$	38	$	38

Total Members. We define total members as the sum of paying families, non-paying families, and caregivers worldwide who have registered through our websites and mobile apps since the launch of our marketplace in 2007. Total members also includes subscribers of our Care.com HomePay service. We believe this metric is significant to our business because it represents the universe of families and caregivers who are more likely than the general population to drive revenue because our members are more familiar with our brand and the services we offer and are interested enough in them to have registered. Our total members increased ~~23%~~22% as of ~~September 24, 2016,~~July 1, 2017, compared to the corresponding period in the prior fiscal year.

Total Families. We define total families as the number of paying families and non-paying families who have registered through our websites and mobile apps since the launch of our marketplace in 2007. Total families also includes subscribers of our Care.com HomePay service. Our total families increased ~~22%~~23% as of ~~September 24, 2016,~~July 1, 2017, compared to the corresponding period in the prior fiscal year.

Total Caregivers. We define total caregivers as the number of caregivers who have registered through our websites and mobile apps since the launch of our marketplace in 2007. Our total caregivers increased ~~24%~~20% as of ~~September 24, 2016,~~July 1, 2017, compared to the corresponding period in the prior fiscal year.

Paying Families - U.S. Consumer Business. We define paying families - U.S. Consumer Business as the number of families located in the United States who have registered through our U.S.-based websites and mobile apps and who are paying

subscribers of our U.S.-based matching services or our Care.com HomePay services as of the end of the fiscal period. The number of paying families in our U.S. Consumer Business ~~decreased 2%~~increased 17% as of ~~September 24, 2016,~~July 1, 2017, compared to the corresponding period in the prior fiscal year.

Monthly Average Revenue per Paying Family - U.S. Consumer Business. We define monthly average revenue per paying family, or ARPPF, for our U.S. Consumer Business as total U.S. Consumer Business revenue, including revenue from subscriptions and products, divided by the average number of paying families of our U.S.-based matching services and Care.com HomePay services in a given fiscal period, expressed on a monthly basis. We believe ARPPF is significant to our business because it represents how successful we have been at monetizing the subset of members who we have converted into paying families. The numerator of this metric includes revenue that comes from caregivers in addition to revenue that comes from families - while the denominator includes only paying families. We believe this is the most meaningful presentation because we do not consider the caregiver component of our business to be separate and distinct; rather, we believe revenue generated from caregivers is a byproduct of the families that have registered on our site. Our U.S. Consumer Business ARPPF as of ~~September 24, 2016 increased 5%~~July 1, 2017 remained consistent compared to the corresponding period in the prior fiscal year.

Adjusted EBITDA

To provide investors with additional information regarding our financial results, we have disclosed in the table below and within this Quarterly Report on Form 10-Q adjusted EBITDA, a non-GAAP financial measure. The table below represents a reconciliation of adjusted EBITDA to net loss, the most directly comparable GAAP financial measure.

We have included adjusted EBITDA in this Quarterly Report on Form 10-Q because it is a key measure used by our management and board of directors to understand and evaluate our consolidated operating performance and trends, to prepare and approve our annual budget and to develop short- and long-term operational plans. In particular, the exclusion of certain expenses in calculating adjusted EBITDA can provide a useful measure for period-to-period comparisons of our business.

Accordingly, we believe that adjusted EBITDA provides useful information to investors and others in understanding and evaluating our operating results in the same manner as our management and board of directors.

Our use of adjusted EBITDA has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our results as reported under GAAP. Some of these limitations are:

• although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future, and adjusted EBITDA does not reflect cash capital expenditure requirements for such replacements or for new capital expenditure requirements;

• adjusted EBITDA does not reflect discontinued operations;

• adjusted EBITDA does not reflect changes in, or cash requirements for, our working capital needs;

• adjusted EBITDA does not consider the potentially dilutive impact of equity-based compensation;

adjusted EBITDA does not include accretion of Series A Redeemable Convertible Preferred Stock ~~dividends;~~dividends or issuance costs;

• adjusted EBITDA does not reflect tax payments that may represent a reduction in cash available to us;

• adjusted EBITDA does not reflect one time unusual or non-cash significant adjustments; and

• other companies, including companies in our industry, may calculate adjusted EBITDA differently, which reduces its usefulness as a comparative measure.

Because of these limitations, you should consider adjusted EBITDA alongside our GAAP financial results. The following table presents a reconciliation of adjusted EBITDA for each of the periods indicated (in thousands):


	Three Months Ended						Nine Months Ended						Three Months Ended						Six Months Ended
	September 24, 2016			September 26, 2015			September 24, 2016			September 26, 2015			July 1, 2017			June 25, 2016			July 1, 2017			June 25, 2016
Loss from continuing operations	$	(1,221	)	$	(6,364	)	$	(5,719	)	$	(21,565	)
Income (loss) from continuing operations													$	1,673		$	(3,375	)	$	2,497		$	(4,498	)

Federal, state and franchise taxes	395			310			1,211			1,302			(1,004		)	727			(710		)	816
Other expense, net	67			272			210			976
Other (income) expense, net													(1,008		)	129			(1,309		)	143
Depreciation and amortization	756			1,229			3,070			4,066			598			1,145			1,199			2,314
EBITDA	(3		)	(4,553		)	(1,228		)	(15,221		)	259			(1,374		)	1,677			(1,225		)

Stock-based compensation	1,751			1,475			4,765			3,769			1,948			1,646			3,551			3,014
Merger and acquisition related costs	26			32			100			135			95			16			95			74
Restructuring related costs	—			—			714			—			—			714			—			714
Litigation related costs													—			—			75			—
Software implementation costs													216			—			216			—
Severance related costs													90			—			121			—
Adjusted EBITDA	$	1,774		$	(3,046	)	$	4,351		$	(11,317	)	$	2,608		$	1,002		$	5,735		$	2,577

Critical Accounting Policies and Estimates

Our condensed consolidated financial statements are prepared in accordance with U.S. GAAP. The preparation of our condensed consolidated financial statements requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue, expenses and related disclosures. We base our estimates on historical experience and various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. We believe that the assumptions and estimates associated with the following critical accounting policies have the greatest potential impact on our condensed consolidated financial statements:

• Revenue recognition;

• ~~Business combinations;~~Redeemable convertible preferred stock;

• Goodwill;

• Amortization and impairment of intangible assets;

• Income taxes; and

• Stock-based compensation.

There have been no material changes to our critical accounting policies and estimates as compared to the critical accounting policies and estimates described in our Annual Report on Form 10-K for the fiscal year ended December ~~26, 2015~~31, 2016 filed on March ~~1, 2016 with the exception of investments, net (loss) income per share attributable to common stockholders and preferred stock.~~9, 2017. Please refer to Note 1 for further detail.

Recently Issued and Adopted Accounting Pronouncements

For information on recent accounting pronouncements, see Recently Issued and Adopted Accounting Standards in the notes to the condensed consolidated financial statements appearing elsewhere in this Quarterly Report on Form 10-Q.

Results of Operations

The following table sets forth our condensed consolidated results of operations for the periods presented. The period-to-period comparison of financial results is not necessarily indicative of future results (in thousands, except per share data):

Three Months Ended Nine Months Ended
September 24,
2016 September 26,
2015 September 24,
2016 September 26,
2015

Revenue $ 40,791
$ 36,179
$ 118,241
$ 101,131
Cost of revenue 8,396
6,894
23,257
19,796
Operating expenses:
Selling and marketing 20,075
21,343
58,103
59,796
Research and development 5,115
5,514
15,026
15,145
General and administrative 7,445
7,199
23,197
22,301
Depreciation and amortization 582
1,062
2,501
3,518
Restructuring charges —
—
714
—
Total operating expenses 33,217
35,118
99,541
100,760
Operating loss (822 ) (5,833 ) (4,557 ) (19,425 )
Other expense, net (67 ) (272 ) (210 ) (976 )
Loss from continuing operations before income taxes (889 ) (6,105 ) (4,767 ) (20,401 )
Provision for income taxes 332
259
952
1,164
Loss from continuing operations (1,221 ) (6,364 ) (5,719 ) (21,565 )
(Loss) income from discontinued operations, net of tax (49 ) (10,985 ) 7,785
(15,032 )
Net (loss) income (1,270 ) (17,349 ) 2,066
(36,597 )
Accretion of Series A Redeemable Convertible Preferred Stock dividends (616 ) —
(616 ) —
Net (loss) income attributable to common stockholders $ (1,886 ) $ (17,349 ) $ 1,450
$ (36,597 )
Net (loss) income per share attributable to common stockholders (Basic and diluted):
Loss from continuing operations attributable to common stockholders $ (0.06 ) $ (0.20 ) $ (0.20 ) $ (0.68 )
(Loss) income from discontinued operations attributable to common stockholders —
(0.34 ) 0.25
(0.47 )
Net (loss) income per share attributable to common stockholders $ (0.06 ) $ (0.54 ) $ 0.05
$ (1.15 )
Weighted-average shares used to compute net (loss) income per share attributable to common stockholders:
Basic and diluted 28,769
32,069
31,045
31,938



	Three Months Ended						Six Months Ended
	July 1, 2017			June 25, 2016			July 1, 2017			June 25, 2016

Revenue	$	41,972		$	38,184		$	85,338		$	77,450
Cost of revenue	9,000			7,619			17,766			14,861
Operating expenses:
Selling and marketing	17,853			18,561			37,050			38,028
Research and development	6,666			5,036			12,655			9,911
General and administrative	8,433			7,933			16,688			15,752
Depreciation and amortization	423			947			847			1,919
Restructuring charges	—			714			—			714
Total operating expenses	33,375			33,191			67,240			66,324
Operating (loss) income	(403		)	(2,626		)	332			(3,735		)
Other income (expense), net	1,008			(129		)	1,309			(143		)
Income (loss) from continuing operations before income taxes	605			(2,755		)	1,641			(3,878		)
(Benefit) provision for income taxes	(1,068		)	620			(856		)	620
Income (loss) from continuing operations	1,673			(3,375		)	2,497			(4,498		)
Loss (income) from discontinued operations, net of tax	—			(44		)	—			7,834
Net income (loss)	1,673			(3,419		)	2,497			3,336
Accretion of Series A Redeemable Convertible Preferred Stock dividends	(660		)	—			(1,262		)	—
Net income attributable to Series A Redeemable Convertible Preferred Stock	(139		)	—			(169		)	—
Net income (loss) attributable to common stockholders	$	874		$	(3,419	)	$	1,066		$	3,336

Net income (loss) per share attributable to common stockholders (Basic):
Income (loss) from continuing operations attributable to common stockholders	$	0.03		$	(0.11	)	$	0.04		$	(0.14	)
Income from discontinued operations attributable to common stockholders	—			—			—			0.24
Net income (loss) per share attributable to common stockholders	$	0.03		$	(0.11	)	$	0.04		$	0.10

Net income (loss) per share attributable to common stockholders (Diluted):
Income (loss) from continuing operations attributable to common stockholders	$	0.03		$	(0.11	)	$	0.03		$	(0.13	)
Income from discontinued operations attributable to common stockholders	—			—			—			0.23
Net income (loss) per share attributable to common stockholders	$	0.03		$	(0.11	)	$	0.03		$	0.10

Weighted-average shares used to compute net income (loss) per share attributable to common stockholders:
Basic	29,556			32,136			29,352			32,183
Diluted	32,220			32,136			31,746			34,082

Stock-based compensation included in the results of operations data above was as follows (in thousands):


	Three Months Ended				Nine Months Ended				Three Months Ended				Six Months Ended
	September 24, 2016		September 26, 2015		September 24, 2016		September 26, 2015		July 1, 2017		June 25, 2016		July 1, 2017		June 25, 2016

Cost of revenue	$	79	$	75	$	233	$	171	$	105	$	79	$	197	$	154
Selling and marketing	232		250		646		662		295		229		541		414
Research and development	284		260		793		575		370		279		651		509
General and administrative	1,156		890		3,093		2,361		1,178		1,059		2,162		1,937
(Loss) income from discontinued operations	—		109		8		410
Loss (income) from discontinued operations									—		3		—		8
Total stock-based compensation	$	1,751	$	1,584	$	4,773	$	4,179	$	1,948	$	1,649	$	3,551	$	3,022

The following tables set forth our condensed consolidated results of operations for the periods presented as a percentage of revenue for those periods (certain items may not foot due to rounding).


	Three Months Ended				Nine Months Ended				Three Months Ended				Six Months Ended
	September 24, 2016		September 26, 2015		September 24, 2016		September 26, 2015		July 1, 2017		June 25, 2016		July 1, 2017		June 25, 2016
Revenue	100	%	100	%	100	%	100	%	100	%	100	%	100	%	100	%
Cost of revenue	21	%	19	%	20	%	20	%	21	%	20	%	21	%	19	%
Operating expenses:
Selling and marketing	49	%	59	%	49	%	59	%	43	%	49	%	43	%	49	%
Research and development	13	%	15	%	13	%	15	%	16	%	13	%	15	%	13	%
General and administrative	18	%	20	%	20	%	22	%	20	%	21	%	20	%	20	%
Depreciation and amortization	1	%	3	%	2	%	3	%	1	%	2	%	1	%	2	%
Restructuring charges	—	%	—	%	1	%	—	%	—	%	2	%	—	%	1	%
Total operating expenses	81	%	97	%	84	%	100	%	80	%	87	%	79	%	86	%
Operating loss	(2	)%	(16	)%	(4	)%	(19	)%
Other expense, net	—	%	(1	)%	—	%	(1	)%
Loss from continuing operations before income taxes	(2	)%	(17	)%	(4	)%	(20	)%
Provision for income taxes	1	%	1	%	1	%	1	%
Loss from continuing operations	(3	)%	(18	)%	(5	)%	(21	)%
(Loss) income from discontinued operations, net of tax	—	%	(30	)%	7	%	(15	)%
Net (loss) income	(3	)%	(48	)%	2	%	(36	)%
Operating (loss) income									(1	)%	(7	)%	—	%	(5	)%
Other income (expense), net									2	%	—	%	2	%	—	%
Income (loss) from continuing operations before income taxes									1	%	(7	)%	2	%	(5	)%
(Benefit) provision for income taxes									(3	)%	2	%	(1	)%	1	%
Income (loss) from continuing operations									4	%	(9	)%	3	%	(6	)%
Loss (income) from discontinued operations, net of tax									—	%	—	%	—	%	10	%
Net income (loss)									4	%	(9	)%	3	%	4	%
Accretion of Series A Redeemable Convertible Preferred Stock dividends	(2	)%	—	%	(1	)%	—	%	(2	)%	—	%	(1	)%	—	%
Net (loss) income attributable to common stockholders	(5	)%	(48	)%	1	%	(36	)%
Net income attributable to Series A Redeemable Convertible Preferred Stock									—	%	—	%	—	%	—	%
Net income (loss) attributable to common stockholders									2	%	(9	)%	1	%	4	%

Revenue

We generate revenue primarily through (a) subscription fees to our suite of products and services, which enable families to manage their diverse and evolving care needs, and caregivers to describe their unique skills and experience and otherwise differentiate and market themselves in a highly fragmented marketplace; and (b) annual contracts with corporate employers, both to- ~~providing~~provide access to our suite of products and services as an employee benefit, and ~~through contractual obligations with~~to allow businesses ~~through which the business can~~to recruit employees and advertise their business profiles. Substantially all of our revenue earned is recognized on a ratable basis over the period the service is provided, with the exception of revenue from individually purchased background checks, which is recognized when the services are delivered to the end customer.

The following are our sources of revenue:

U.S. Consumer Business

Our U.S. Consumer Business consists of our U.S. matching solutions and our payments solutions.

Our U.S. matching solutions provide families access to job posting features, search features, caregiver profiles and content and are offered directly to consumers. Access to this platform is free of charge for basic members. Paying family members pay a monthly, quarterly or annual subscription fee to connect directly with caregivers and to utilize enhanced tools such as third-party background checks. Paying caregiver members pay a subscription fee for priority notification of jobs, messaging services and to perform third-party background checks on themselves. Subscription payments are received from all paying members at the time of sign-up and are recognized on a daily basis over the subscription term as the services are delivered once the revenue recognition criteria are met (see ‘‘Critical Accounting Policies and Estimates’’ in our Annual Report on Form 10-K for the fiscal year ended December ~~26, 2015,~~31, 2016, filed on March ~~1, 2016~~9, 2017 for a description of the revenue recognition criteria).

Our payments solutions provide families several options to manage their financial relationship with their caregiver through the use of household employer payroll and tax services. Revenue related to Care.com HomePay, our household payroll and tax service, is primarily generated through quarterly subscriptions and recognized on a daily ratable basis over the period the services are provided.

Other Revenue

Other revenue includes revenue generated ~~from international markets. This revenue is typically recognized on a daily basis over the term of a member’s subscription. Other revenue also includes revenue generated~~ through contracts that provide corporate employers access to certain of our products and services, ~~as well as,~~including on-demand back-up care, through our Care@Work solution. This product offering is typically sold through the use of an annual contract with an automatic renewal clause. Revenue related to this offering is recognized on a daily basis over the subscription term. Additionally, weother revenue includes revenue generated from international markets. This revenue is typically recognized on a daily basis over the term of a member’s subscription. We also generate revenue through our marketing solutions offering, which is designed to provide care-related businesses an efficient and cost-effective way to target qualified families seeking care services, and through our recruiting solutions offering, which allows care-related businesses to recruit caregivers for full-time and part-time employment. Revenue related to these product offerings is typically recognized in the period earned.

Three Months Ended Period-to-Period Change Nine Months Ended Period-to-Period Change
September 24,
2016 September 26,
2015 $ Change % Change September 24,
2016 September 26,
2015 $ Change % Change
(in thousands, except percentages)
Revenue $ 40,791
$ 36,179
$ 4,612
13 % $ 118,241
$ 101,131
$ 17,110
17 %



	Three Months Ended				Period-to-Period Change				Six Months Ended				Period-to-Period Change
	July 1, 2017		June 25, 2016		$ Change		% Change		July 1, 2017		June 25, 2016		$ Change		% Change
	(in thousands, except percentages)
Revenue	$	41,972	$	38,184	$	3,788	10	%	$	85,338	$	77,450	$	7,888	10	%

Comparison of the Three Months Ended ~~September 24,~~July 1, 2017 and June 25, 2016 ~~and September 26, 2015~~

The change was primarily attributed to an increase of ~~$2.1~~$1.7 million in our consumer matching solutions business, principally attributable to a higher number of paying families and caregivers. Additionally, there was a $0.9 million increase in our consumer payment solutions business, a $0.9 million increase in Care@Work, and a $0.5 million increase in background check offerings.

Comparison of the Six Months Ended July 1, 2017 and June 25, 2016

The change was primarily attributed to an increase of $3.0 million in our consumer matching solutions business, principally related to a higher number of paying families and ~~caregivers and higher average revenue per paying family.~~caregivers. Additionally, there ~~were increases~~was an increase of $2.1 million in ~~Care@Work,~~our consumer payment solutions ~~and marketing and recruiting solutions offerings of $1.0 million, $0.8 million, and $0.4 million, respectively.~~

~~Comparison of the Nine Months Ended September 24, 2016 and September 26, 2015~~

~~The change was primarily attributed to~~business, an increase of ~~$10.4~~$1.8 million in ~~our consumer matching business, principally~~Care@Work, and an increase of $1.0 million related to ~~a higher number of paying families and caregivers and higher average revenue per paying family. Additionally, there were increases in consumer payment solutions, Care@Work, and~~ background ~~checks of $2.7 million, $2.3 million, and $0.9 million, respectively.~~check offerings.

Cost of Revenue

Our cost of revenue primarily consists of expenses that are directly related, or closely correlated, to revenue generation, including matching and payments member variable servicing costs such as personnel costs for customer support, transaction fees related to credit card payments, the cost of background checks run on both families and caregivers and costs associated with back-up care. Additionally, cost of revenue includes website hosting fees and amortization expense related to caregiver relationships, proprietary software acquired as part of acquisitions and website intangible assets. We currently expect cost of revenue to increase on an absolute basis in the near term as we continue to expand our related customer base.


	Three Months Ended						Period-to-Period Change				Nine Months Ended						Period-to-Period Change				Three Months Ended						Period-to-Period Change				Six Months Ended						Period-to-Period Change
	September 24, 2016			September 26, 2015			$ Change		% Change		September 24, 2016			September 26, 2015			$ Change		% Change		July 1, 2017			June 25, 2016			$ Change		% Change		July 1, 2017			June 25, 2016			$ Change		% Change
	(in thousands, except percentages)																				(in thousands, except percentages)
Cost of revenue	$	8,396		$	6,894		$	1,502	22	%	$	23,257		$	19,796		$	3,461	17	%	$	9,000		$	7,619		$	1,381	18	%	$	17,766		$	14,861		$	2,905	20	%
Percentage of revenue	21		%	19		%					20		%	20		%					21		%	20		%					21		%	19		%

Comparison of the Three Months Ended ~~September 24,~~July 1, 2017 and June 25, 2016 ~~and September 26, 2015~~

The change was primarily related to increased costs in member servicing and background checks of ~~$1.1~~$0.8 million, credit card fees of ~~$0.5~~$0.4 million, and compensation and related costs of ~~$0.3~~$0.4 million. These were partially off-set by ~~a decrease~~$0.3 million in hosting ~~fees of $0.3 million.~~related costs.

Comparison of the ~~Nine~~Six Months Ended ~~September 24,~~July 1, 2017 and June 25, 2016 ~~and September 26, 2015~~

The change was primarily related to increased costs in member servicing and background checks of ~~$1.9~~$1.5 million, ~~higher compensation and related costs of $1.2 million, and~~ credit card fees of ~~$0.7~~$0.9 million, compensation related costs of $0.6 million, and sales tax expense of $0.3 million. These were partially off-set by ~~decreases~~a decrease of $0.3 million in hosting ~~expenses of $0.3 million.~~related costs.

Selling and Marketing

Our selling and marketing expenses primarily consist of customer acquisition marketing, including television advertising, branding, other advertising and public relations costs, as well as third-party resources for consulting and allocated facilities and other supporting overhead costs. In addition, sales and marketing expenses include salaries, benefits, stock-based compensation, travel expense and incentive compensation for our sales and marketing employees. We plan to continue to invest in sales and marketing to grow our current customer base, continue building brand awareness, and expand our global footprint. In the near term, we expect sales and marketing expenses to increase, ~~and~~ to be our largest expense on an absolute dollar basis and to be consistent as a percentage of revenue.


	Three Months Ended						Period-to-Period Change					Nine Months Ended						Period-to-Period Change					Three Months Ended						Period-to-Period Change					Six Months Ended						Period-to-Period Change
	September 24, 2016			September 26, 2015			$ Change			% Change		September 24, 2016			September 26, 2015			$ Change			% Change		July 1, 2017			June 25, 2016			$ Change			% Change		July 1, 2017			June 25, 2016			$ Change			% Change
	(in thousands, except percentages)																						(in thousands, except percentages)
Selling and marketing	$	20,075		$	21,343		$	(1,268	)	(6	)%	$	58,103		$	59,796		$	(1,693	)	(3	)%	$	17,853		$	18,561		$	(708	)	(4	)%	$	37,050		$	38,028		$	(978	)	(3	)%
Percentage of revenue	49		%	59		%						49		%	59		%						43		%	49		%						43		%	49		%

Comparison of the Three Months Ended ~~September 24,~~July 1, 2017 and June 25, 2016 ~~and September 26, 2015~~

The change principally related to a reduction in spending on acquisition marketing of $1.7 million, as we continue to focus on unpaid channels, and ~~marketing programs~~a decrease in occupancy expense of ~~$1.2 millionand$0.4 million~~, ~~respectively.~~$0.1 million. These were partially off-set by increases in third-party resources for consulting expenses and compensation costs of ~~$0.3 million.~~$0.9 million and $0.2 million, respectively.

Comparison of the ~~Nine~~Six Months Ended ~~September 24,~~July 1, 2017 and June 25, 2016 ~~and September 26, 2015~~

The change ~~principally~~was primarily related to a reduction in spending on ~~marketing programs and~~ acquisition marketing of ~~$1.7~~$3.4 million, ~~and $0.8 million, respectively. These were~~as we continue to focus on unpaid channels. This was partially off-set by increases in third-party resources for consulting expense and compensation costs ~~and consulting expenses~~ of ~~$0.6~~$1.8 million and ~~$0.3~~$0.7 million, respectively.

Research and Development

Our research and development expenses primarily consist of salaries, benefits and stock-based compensation for our engineers, product managers and developers. In addition, product development expenses include third-party resources, as well as allocated facilities and other supporting overhead costs. We believe that continued investment in features, software development tools and code modification is important to attaining our strategic objectives and, as a result, we expect product development expense to increase on an absolute basis in the near term.


	Three Months Ended						Period-to-Period Change					Nine Months Ended						Period-to-Period Change					Three Months Ended						Period-to-Period Change				Six Months Ended						Period-to-Period Change
	September 24, 2016			September 26, 2015			$ Change			% Change		September 24, 2016			September 26, 2015			$ Change			% Change		July 1, 2017			June 25, 2016			$ Change		% Change		July 1, 2017			June 25, 2016			$ Change		% Change
	(in thousands, except percentages)																						(in thousands, except percentages)
Research and development	$	5,115		$	5,514		$	(399	)	(7	)%	$	15,026		$	15,145		$	(119	)	(1	)%	$	6,666		$	5,036		$	1,630	32	%	$	12,655		$	9,911		$	2,744	28	%
Percentage of revenue	13		%	15		%						13		%	15		%						16		%	13		%					15		%	13		%

Comparison of the Three Months Ended ~~September 24,~~July 1, 2017 and June 25, 2016 ~~and September 26, 2015~~

The change was primarily related to ~~decreases~~increases in ~~compensation~~third-party resources for consulting expense and ~~occupancy expenses~~compensation-related costs of ~~$0.3~~$1.2 million and ~~$0.1~~$0.5 million, respectively.

Comparison of the ~~Nine~~Six Months Ended ~~September 24,~~July 1, 2017 and June 25, 2016 ~~and September 26, 2015~~

The change was primarily related to ~~decreases~~increases in ~~compensation expenses~~third-party resources for consulting expense and ~~occupancy expenses~~compensation-related costs of ~~$0.3~~$1.8 million and ~~$0.1~~$1.0 million, respectively. ~~This was partially off-set by increases in expenses related to consulting of $0.3 million.~~

General and Administrative

Our general and administrative expenses primarily consist of salaries, benefits and stock-based compensation for our executive, finance, legal, information technology, human resources and other administrative employees. In addition, general and administrative expenses include: third-party resources; legal and accounting services; acquisition-related costs; insurance premiums; and facilities. We expect that our general and administrative expenses will increase on an absolute basis in the near term as we continue to expand our business to support our operations as a publicly traded company, including expenses related to audit, legal, regulatory and tax-related services associated with maintaining compliance with exchange listing and Securities and Exchange Commission requirements, director and officer insurance premiums and investor relations costs.


	Three Months Ended						Period-to-Period Change				Nine Months Ended						Period-to-Period Change				Three Months Ended						Period-to-Period Change				Six Months Ended						Period-to-Period Change
	September 24, 2016			September 26, 2015			$ Change		% Change		September 24, 2016			September 26, 2015			$ Change		% Change		July 1, 2017			June 25, 2016			$ Change		% Change		July 1, 2017			June 25, 2016			$ Change		% Change
	(in thousands, except percentages)																				(in thousands, except percentages)
General and administrative	$	7,445		$	7,199		$	246	3	%	$	23,197		$	22,301		$	896	4	%	$	8,433		$	7,933		$	500	6	%	$	16,688		$	15,752		$	936	6	%
Percentage of revenue	18		%	20		%					20		%	22		%					20		%	21		%					20		%	20		%

Comparison of the Three Months Ended ~~September 24,~~July 1, 2017 and June 25, 2016

The change was primarily related to higher third-party resources for consulting expense, higher compensation related expenses, and ~~September 26, 2015~~higher occupancy expense of $0.2 million, $0.2 million, and $0.2 million, respectively.

Comparison of the Six Months Ended July 1, 2017 and June 25, 2016

The change was primarily related to higher compensation related ~~expenses of $0.5 million primarily due to stock-based compensation, and an increase in hosted applications~~ expense of ~~$0.3 million.~~$0.6 million, and increases in third-party resources for consulting expense, recruiting expense, and IT operations expense of $0.4 million, $0.2 million, and $0.1 million, respectively. These were partially off-set by decreases in ~~consulting~~other professional fees and bad debt expense of ~~$0.4 million, respectively.~~

~~Comparison of the Nine Months Ended September 24, 2016 and September 26, 2015~~

The change was primarily related to higher compensation related expenses of $1.4 million primarily due to stock-based compensation, as well as increases in bad debt, hosted applications, and IT operations expenses of $0.4 million, $0.3$0.2 million and $0.2 ~~million, respectively. These were partially off-set by reductions in consulting, and recruiting of $0.9 million and $0.4~~ million, respectively.

Depreciation and Amortization

Depreciation and amortization expenses primarily consist of depreciation of computer equipment and software and amortization of leasehold improvements and acquired intangibles. We expect that depreciation and amortization expenses will ~~increase~~decrease as ~~we continue to expand~~ our ~~technology infrastructure.~~business is not capital intensive.


	Three Months Ended						Period-to-Period Change					Nine Months Ended						Period-to-Period Change					Three Months Ended						Period-to-Period Change					Six Months Ended						Period-to-Period Change
	September 24, 2016			September 26, 2015			$ Change			% Change		September 24, 2016			September 26, 2015			$ Change			% Change		July 1, 2017			June 25, 2016			$ Change			% Change		July 1, 2017			June 25, 2016			$ Change			% Change
	(in thousands, except percentages)																						(in thousands, except percentages)
Depreciation and amortization	$	582		$	1,062		$	(480	)	(45	)%	$	2,501		$	3,518		$	(1,017	)	(29	)%	$	423		$	947		$	(524	)	(55	)%	$	847		$	1,919		$	(1,072	)	(56	)%
Percentage of revenue	1		%	3		%						2		%	3		%						1		%	2		%						1		%	2		%

Comparison of the Three and ~~Nine~~Six Months Ended ~~September 24,~~July 1, 2017 and June 25, 2016 ~~and September 26, 2015~~

The change was primarily attributed ~~with~~to certain intangible assets reaching the end of their useful lives during ~~fiscal 2015 and 2016.~~the prior year. Over the next five years, we expect to incur total annual amortization expense associated with previous acquisitions of ~~$1.6~~$1.0 million.

Restructuring Charges

~~Restructuring charges consists primarily of costs associated with the sub-lease of certain portions of our facilities.~~


	Three Months Ended						Period-to-Period Change				Nine Months Ended						Period-to-Period Change				Three Months Ended						Period-to-Period Change					Six Months Ended						Period-to-Period Change
	September 24, 2016			September 26, 2015			$ Change		% Change		September 24, 2016			September 26, 2015			$ Change		% Change		July 1, 2017			June 25, 2016			$ Change			% Change		July 1, 2017			June 25, 2016			$ Change			% Change
	(in thousands, except percentages)																				(in thousands, except percentages)
Restructuring charges	$	—		$	—		$	—	100	%	$	714		$	—		$	714	100	%	$	—		$	714		$	(714	)	(100	)%	$	—		$	714		$	(714	)	(100	)%
Percentage of revenue	—		%	—		%					1		%	—		%					—		%	2		%						—		%	1		%

Comparison of ~~the Nine~~Three and Six Months Ended ~~September 24,~~July 1, 2017 and June 25, 2016

During the quarter ended June 25, 2016, we recorded a $0.5 million sublease loss liability and ~~September 26, 2015~~

~~The change was attributed~~related expenses of $0.2 million for the ~~sublet of a portion of our Waltham headquarters during~~expected loss on the ~~nine months ended September 24, 2016.~~sublease, in accordance with ASC 840-20 Leases, because the monthly payments we expect to receive under the sublease are less than the amounts that we will owe the lessor for the sublease space.

Other ~~Expense, net~~Income (Expense)

Other ~~expense, net~~income (expense) consists primarily of foreign exchange gains and losses, net of the interest income earned on our cash and cash equivalents and investments.


	Three Months Ended						Period-to-Period Change				Nine Months Ended						Period-to-Period Change				Three Months Ended						Period-to-Period Change				Six Months Ended						Period-to-Period Change
	September 24, 2016			September 26, 2015			$ Change		% Change		September 24, 2016			September 26, 2015			$ Change		% Change		July 1, 2017			June 25, 2016			$ Change		% Change		July 1, 2017			June 25, 2016			$ Change		% Change
	(in thousands, except percentages)																				(in thousands, except percentages)
Other expense, net	$	(67	)	$	(272	)	$	205	(75	)%	$	(210	)	$	(976	)	$	766	(78	)%
Other income (expense), net																					$	1,008		$	(129	)	$	1,137	(881	)%	$	1,309		$	(143	)	$	1,452	(1,015	)%
Percentage of revenue	—		%	(1		)%					—		%	(1		)%					2		%	—		%					2		%	—		%

Comparison of the Three Months ~~September 24,~~and Six Months Ended July 1, 2017 and June 25, 2016 ~~and September 26, 2015~~

The change was primarily driven by the favorable movement of foreign exchange rates, primarily due to the ~~strengthening~~weakening of the US dollar against the Euro and British Pound Sterling during the three and six months ended ~~September 24, 2016~~July 1, 2017 compared to the three and six months ended ~~September 26, 2015.~~

~~Comparison of the Nine Months Ended September 24, 2016 and September 26, 2015~~

The change was primarily driven by the favorable movement of foreign exchange rates, primarily due to the strengthening of the US dollar against the British Pound Sterling during the nine months ended September 24, 2016 compared to the nine months ended September 26, 2015.June 25, 2016.

Provision for Income Taxes

Provision for income taxes consists of federal and state income taxes in the United States and income taxes in certain foreign jurisdictions.


	Three Months Ended						Period-to-Period Change				Nine Months Ended						Period-to-Period Change					Three Months Ended						Period-to-Period Change					Six Months Ended						Period-to-Period Change
	September 24, 2016			September 26, 2015			$ Change		% Change		September 24, 2016			September 26, 2015			$ Change			% Change		July 1, 2017			June 25, 2016			$ Change			% Change		July 1, 2017			June 25, 2016			$ Change			% Change
	(in thousands, except percentages)																					(in thousands, except percentages)
Provision for income taxes	$	332		$	259		$	73	28	%	$	952		$	1,164		$	(212	)	(18	)%
(Benefit) provision for income taxes																						$	(1,068	)	$	620		$	(1,688	)	(272	)%	$	(856	)	$	620		$	(1,476	)	(238	)%
Percentage of revenue	1		%	1		%					1		%	1		%						(3		)%	2		%						(1		)%	1		%

Comparison of the Three and ~~Nine~~Six Months Ended ~~September 24,~~July 1, 2017 and June 25, 2016 ~~and September 26, 2015~~

The change was primarily due to the ~~income~~excess tax benefits from the taxable compensation on share-based awards. This was partially offset by tax expense ~~related~~pertaining to ~~the~~ amortization of goodwill associated with the acquisition of Care.com HomePay for tax purposes, for which there is no corresponding book deduction, and certain state taxes based on operating income that are payable without regard to tax loss carryforwards.

(Loss) Income from Discontinued Operations, Net of Taxes


	Three Months Ended						Period-to-Period Change				Nine Months Ended						Period-to-Period Change				Three Months Ended						Period-to-Period Change				Six Months Ended						Period-to-Period Change
	September 24, 2016			September 26, 2015			$ Change		% Change		September 24, 2016			September 26, 2015			$ Change		% Change		July 1, 2017			June 25, 2016			$ Change		% Change		July 1, 2017			June 25, 2016			$ Change			% Change
	(in thousands, except percentages)																				(in thousands, except percentages)
(Loss) income from discontinued operations, net of tax	$	(49	)	$	(10,985	)	$	10,936	(100	)%	$	7,785		$	(15,032	)	$	22,817	(152	)%
Loss (income) from discontinued operations, net of tax																					$	—		$	(44	)	$	44	(100	)%	$	—		$	7,834		$	(7,834	)	(100	)%
Percentage of revenue	—		%	(30		)%					7		%	(15		)%					—		%	—		%					—		%	10		%

Comparison of the Three and ~~Nine~~Six Months Ended ~~September 24,~~July 1, 2017 and June 25, 2016 ~~and September 26, 2015~~

The ~~increase~~decrease was related to a settlement agreement with the previous shareholders of Citrus Lane. The settlement agreement related to our acquisition of Citrus Lane and the merger agreement pursuant to which the acquisition was consummated. Under the terms of the settlement agreement, we paid the previous shareholders of Citrus Lane $15.6 million for contingent consideration payments that were fair valued at $16.0 million as of December 26, 2015 that was otherwise payable to them in the event Citrus Lane achieved certain milestones in 2015 and 2016. In connection with the settlement, the former shareholders forfeited the $5.0 million in original cash consideration that was being held in an escrow account, as well as the 0.4 million shares of common stock issued at closing (valued at $2.0 million as of the settlement date and $3.9 million as of the original closing date) and 0.1 million shares of common stock which was subject to the achievement of certain milestones in 2015 and 2016 (valued at $0.6 million as of the settlement date and $1.1 million as of the original closing date) offered as part of the deal consideration. As a result of this settlement, we recognized a gain within income ~~(loss)~~ from discontinued operations on the consolidated statements of operations for the ~~nine~~three months ended ~~September 24,~~March 26, 2016 of $8.0 million. We completed the closure of the Citrus Lane business in the fourth quarter of fiscal 2016.

Liquidity and Capital Resources

The following table summarizes our cash flow activities for the periods indicated (in thousands)


	Nine Months Ended						Six Months Ended
	September 24, 2016			September 26, 2015			July 1, 2017			June 25, 2016
Cash flow provided by (used in):
Operating activities - continuing operations	$	7,557		$	(1,946	)	$	11,140		$	6,041
Operating activities - discontinued operations	2,441			(4,505		)	—			2,481
Investing activities - continuing operations	(15,572		)	(4,212		)	(387		)	(504		)
Investing activities - discontinued operations	—			(2		)
Financing activities - continuing operations	14,814			(1,210		)	2,037			925
Financing activities - discontinued operations	(14,510		)	—			—			(14,510		)
Effect of exchange rates on cash balances	(137		)	(270		)	(2,045		)	(56		)
Decrease in cash and cash equivalents	$	(5,407	)	$	(12,145	)
Increase (decrease) in cash and cash equivalents							$	10,745		$	(5,623	)

As of ~~September 24, 2016~~July 1, 2017, we had cash and cash equivalents and short-term investments of ~~$70.8~~$86.8 million, which consisted of ~~$55.8~~$71.8 million in cash and cash equivalents and $15.0 million in short-term investments. Cash and cash equivalents and short-term investments consist of cash, certificates of deposit, and money market funds. Cash held internationally as of ~~September 24, 2016~~July 1, 2017 was ~~$4.5~~$5.9 million. During the three months ended September 24, 2016, we purchased $15.0 million of short term investments, which is an outflow from investing activities and excluded from cash and cash equivalents in the table above. This reclassification was reflected as an investment activity outflow of cash from continuing operations in our consolidated statement of cash flows. We did not have any long-term investments. Additionally, we do not have any outstanding bank loans or credit facilities in place. To date, we have been able to finance our operations through proceeds from the public and private sales of equity, including our IPO in January 2014. We believe that our existing cash and cash equivalents balance will be sufficient to meet our working capital expenditure requirements for at least the next 12 months. From time to time, we may explore additional financing sources to develop or enhance our services, to fund expansion, to respond to competitive pressures, to acquire or to invest in complementary products, businesses or technologies, or to lower our cost of capital, which could include equity, equity-linked and debt financing. We cannot assure you that any additional financing will be available to us on acceptable terms, if at all.

Operating Activities

Our primary source of cash from operations was from ongoing subscription fees to our consumer matching solutions. We believe that cash inflows from these fees will grow from our continued penetration into the market for care.

~~Nine~~Six Months Ended ~~September 24, 2016~~July 1, 2017

Cash from operating activities by continuing operations provided ~~$7.6~~$11.1 million during the ~~nine~~six months ended ~~September 24, 2016.~~July 1, 2017. This amount resulted from a net ~~loss~~income from continuing operations of ~~$5.7~~$2.5 million, adjusted for non-cash items of ~~$8.9~~$6.1 million, and a net ~~$4.4~~$2.5 million source of cash due to changes in working capital.

Non-cash expenses within net income consisted primarily of ~~$4.8~~$3.6 million for stock-based compensation, ~~and $3.1~~$1.2 million of depreciation and amortization ~~expense.~~expense, and $1.2 million of foreign currency remeasurement gain.

Increases in operating liabilities and ~~decreases~~ operating assets resulted in a net source of ~~$4.4~~$2.5 million of cash within operating activities. The increase in working capital was primarily due to increases in deferred revenue, accrued expenses and other current liabilities, and accounts payable of $3.5 million, $1.3 million, and $0.9 million, respectively. These were partially off-set by increases in accounts receivable, prepaid expense and other current assets, and unbilled receivables of $1.4 million, $1.4 million, and $0.2 million, respectively.

Six Months Ended June 25, 2016

Cash from operating activities by continuing operations provided $6.0 million during the six months ended June 25, 2016. This amount resulted from a net income of $3.3 million, adjusted for non-cash items of $6.0 million, and a net $4.6 million source of cash due to changes in working capital.

Non-cash expenses within net income consisted primarily of $3.0 million for stock-based compensation and $2.3 million of depreciation and amortization expense.

An increase in operating liabilities and a decrease in operating assets resulted in a net source of $4.6 million of cash within operating activities. The increase in working capital was primarily due to an increase in ~~deferred revenue,~~ accrued expenses and other current liabilities, ~~and~~deferred revenue, other non-current liabilities, and accounts payable of ~~$3.5~~$3.0 million, ~~$2.2~~$1.5 million, $0.6 million, and ~~$1.0~~$0.5 million, respectively. These were partially offset by ~~decreases~~a decrease in both prepaid ~~expenses~~expense and other current assets and unbilled accounts receivable ~~accounts receivable~~ of ~~$1.0 million, $0.6~~$0.5 million and ~~$0.5~~$0.4 million, respectively.

Cash provided by discontinued operations totaled ~~$2.4~~$2.5 million. This amount resulted from a net income from discontinued operations of $7.8 million, partially offset by a net ~~$5.4~~$5.3 million use of cash from changes in working capital and non-cash related adjustments.

~~Nine Months Ended September 26, 2015~~

Cash from operating activities for continuing operations used $1.9 million during the nine months ended September 26, 2015. This amount resulted from a net loss of $21.6 million, adjusted for non-cash items of $9.8 million, and a net $9.9 million source of cash due to changes in working capital.

~~Non-cash expenses within net loss consisted primarily of $4.1 million for depreciation and amortization, $3.8 million of stock-based compensation expense and $1.1 million in deferred taxes.~~

An increase in operating liabilities and a decrease in operating assets contributed $9.9 million to net cash provided by operating activities. The primary sources of cash were derived from an increases in accrued expenses and other liabilities of $7.7 million, deferred revenue of $3.5 million, and other non-current liabilities of $0.6 million, respectively. Furthermore, a decrease in prepaid expenses and other current assets of $1.6 million provided a source of cash. These were partially offset by a decrease in accounts payable of $2.3 million, and decreases in accounts receivable and unbilled accounts receivable of $0.9 million and $0.3 million, respectively.

Cash used in discontinued operations totaled $4.5 million. This amount resulted from a net loss from discontinued operations of $15.0 million, adjusted for non-cash items of $11.1 million, and off-set by a net $0.6 million use of cash due to changes in working capital.

Investing Activities

~~Nine~~Six Months Ended ~~September 24, 2016~~July 1, 2017

Cash used in investing activities totaled ~~$15.6~~$0.4 million, ~~primarily~~which was related to the ~~purchase of short-term investments of $15.0 million, the purchase of Kinsights Inc., the developer and operator of an online community platform and service, for $0.4 million and~~ purchases of property and ~~equipment of $0.2 million.~~equipment. We are not currently a party to any material purchase contracts related to future purchases of property and equipment. During the three months ended September 24, 2016, we purchased $15.0 million of short term investments. These matured in the first half of 2017, and the $15.0 million was reinvested.

~~Nine~~Six Months Ended ~~September 26, 2015~~June 25, 2016

Cash used in investing activities totaled ~~$4.2~~$0.5 million, primarily related to ~~property~~the purchase of Kinsights Inc., the developer and ~~equipment purchases related to our new corporate headquarters.~~operator of an online community platform and service. We are not currently a party to any material purchase contracts related to future purchases of property and equipment.

Financing Activities

~~Nine~~Six Months Ended ~~September 24, 2016~~July 1, 2017

Cash provided by financing activities for continued operations totaled ~~$14.8~~$2.0 million, ~~primarily related~~which was attributed to ~~the net cash proceeds received from the issuance of the Series A Preferred Stock of $44.2 million and~~ the exercise of common stock ~~options of $1.1 million. This was off-set~~options.

Six Months Ended June 25, 2016

Cash provided by financing activities for continued operations totaled $0.9 million associated with proceeds from the ~~repurchase~~exercise of common stock ~~for $30.5 million.~~

options. Cash from financing activities for discontinued operations used $14.5 million related to the payment associated with the Citrus Lane settlement.

~~Nine Months Ended September 26, 2015~~

Cash used in financing activities for continued operations totaled $1.2 million. This was attributed to $1.8 million related to payments of contingent consideration previously established in purchase accounting, partially offset by $0.6 million in proceeds from the exercise of common stock options.

~~Investment Agreement between Care.com and Google Capital 2016, L.P.~~

On June 29, 2016, we announced our entry into an Investment Agreement with Google Capital 2016, L.P. (“Google Capital”) relating to the issuance and sale (the “Transaction”) to Google Capital of 46.4 thousand shares of the Company’s Series A Preferred Stock, par value $0.001 per share, for an aggregate purchase price of $46.35 million, or $1,000 per share. The Transaction closed on June 29, 2016. We utilized a portion of the proceeds from the Transaction to repurchase an aggregate of 3.7 million shares of common stock at a price of $8.25 per share from Matrix Partners VII, L.P. and Weston & Co. VII LLC. This repurchase also closed on June 29, 2016.

The Series A Preferred Stock ranks senior to our common stock with respect to dividend rights and rights on the distribution of assets on any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Company. The Series A Preferred Stock has a liquidation preference of $1,000 per share (equal to the original issuance price) plus all Accrued and Unpaid Dividends. Holders of the Series A Preferred Stock are entitled to a cumulative dividend at a rate of 5.50% per annum during the period from the date of the issuance of the Series A Preferred Stock (the “Closing Date”) to the seventh anniversary of the Closing Date, payable semi-annually in arrears. Dividends shall be paid in additional Liquidation Preference (as defined in the Certificate of Designations) per share of Series A Preferred Stock.

The Series A Preferred Stock is convertible at the option of the holders at any time into shares of Common Stock at an initial conversion price of $10.50 per share, which rate will be subject to adjustment upon the occurrence of certain events. At any time

after the seventh anniversary of the Closing Date, and if between the fifth anniversary and the seventh anniversary of the Closing Date, the consolidated closing price of the Common Stock equals or exceeds 150% of the then prevailing Conversion Price (as defined in the Certificate of Designations) for at least 20 trading days in any period of 30 consecutive trading days, including the last trading day of such 30-day period, then following such time, all or some of the Series A Preferred Stock may be converted, at the election of the Company, into the relevant number of shares of Common Stock. At our option, at any time after the seventh anniversary of the Closing Date, all of the Series A Preferred Stock may be redeemed by us at the then current Liquidation Preference plus Accrued and Unpaid Dividends after giving the holders of Series A Preferred Stock the ability to convert their shares into Common Stock at the then current Conversion Price. At any point after the seventh anniversary of the Closing Date, each holder of the Series A Preferred Stock may cause the Company to redeem all of such holder’s Series A Preferred Stock at the then current Liquidation Preference plus Accrued and Unpaid Dividends.

~~Holders of Series A Preferred Stock are entitled to vote with the holders of the Common Stock on an as-converted basis.~~

Upon certain change of control events involving the Company, holders of Series A Preferred Stock can elect to either (1) convert the Series A Preferred Stock into Common Stock at the then current Conversion Price or (2) require us to redeem the Series A Preferred Stock for 150% of the then current Liquidation Preference plus Accrued and Unpaid Dividends, provided that in the case of a change of control event in which the Common Stock is converted into or canceled for cash or publicly traded securities, such conversion or redemption will be mandatory, with the selection deemed to be in favor of the alternative that would result in holders of Series A Preferred Stock receiving the greatest consideration.

Additionally, at any time when at least 50% of the shares of Series A Preferred Stock purchased from us pursuant to the Investment Agreement are outstanding, we cannot, without the written consent or affirmative vote of the holders of a majority of the then outstanding shares of preferred stock, (a) amend the Certificate of Incorporation in a manner that adversely affects the preferences or rights of the preferred stock; (b) authorize or issue capital stock unless it ranks equal to or junior to the preferred stock, or increase the authorized number of shares of preferred stock; or (c) reclassify or amend any existing security of the Company that is equal to or junior to the preferred stock to render such security senior to the Series A Preferred Stock.

Pursuant to the Investment Agreement and the Certificate of Designations, for so long as Google Capital or its affiliates beneficially own at least 50% of the shares of Series A Preferred Stock purchased from us pursuant to the Investment Agreement, the holders of Series A Preferred Stock shall have the right to elect one director to our Board, with Google Capital having the right to designate nominees for such position.

Inflation Risk

We do not believe that inflation has had a material effect on our business, financial condition or results of operations. If our costs were to become subject to significant inflationary pressures, we may not be able to fully offset such higher costs through price increases. Our inability or failure to do so could harm our business, financial condition and results of operations.

Off-Balance Sheet Arrangements

We did not have any off-balance sheet arrangements, as defined in Item 303(a)(4)(ii) of Regulation S-K of the Securities and Exchange Commission, in the ~~nine~~six months ended ~~September 24, 2016~~July 1, 2017 and ~~September 26, 2015.~~June 25, 2016.

Contractual Obligations

Our contractual obligations relate primarily to non-cancelable operating leases. There have been no significant changes in our contractual obligations from those disclosed in our Annual Report on Form 10-K for the year ended December ~~26, 2015, except as set forth below.~~

~~In March 2016, we entered into a 5-year property lease. The lease commenced on April 1, 2016 and we will pay an aggregate of approximately $0.8 million over the 5-year lease period.~~

~~The Jumpstart Our Business Startups Act~~

On April 5, 2012, the Jumpstart Our Business Startups Act of 2012, or the JOBS Act, was signed into law. The JOBS Act contains provisions that, among other things, reduce certain reporting requirements for an ‘‘emerging growth company.’’ Subject to certain conditions set forth in the JOBS Act, if as an ‘‘emerging growth company’’ we choose to rely on such exemptions, we may not be required to, among other things, (i) provide an auditor’s attestation report on our system of internal control over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act, (ii) provide all of the compensation disclosure that may be required of non-emerging growth public companies under the Dodd-Frank Wall Street Reform and Consumer Protection Act, (iii) comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements (auditor discussion and analysis), or (iv) disclose certain executive compensation-related items such as the correlation between executive compensation and performance and comparisons of our chief executive officer’s compensation to median employee compensation. These exemptions will apply for a period of five years following the completion of our IPO or until we no longer meet the requirements of being an ‘‘emerging growth company,’’ whichever is earlier.

As an ‘‘emerging growth company,’’ we are electing to not take advantage of the extended transition period afforded by the JOBS Act for the implementation of new or revised accounting standards and, as a result, we will comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for non-emerging growth companies. Section 107 of the JOBS Act provides that our decision to not take advantage of the extended transition period for complying with new or revised accounting standards is irrevocable.31, 2016.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We have operations both within the United States and internationally, and we are exposed to market risks in the ordinary course of our business.

Foreign Currency Exchange Risk

We have foreign currency risks related to our revenue and operating expenses denominated in currencies other than the U.S. dollar, principally the Euro, the British pound sterling, the Canadian dollar and the Swiss franc. The volatility of exchange rates depends on many factors that we cannot forecast with reliable accuracy. We have experienced and will continue to experience fluctuations in our net loss as a result of transaction gains (losses) related to revaluing certain cash balances, trade accounts receivable balances and accounts payable balances that are denominated in currencies other than the U.S. dollar. In the event our foreign currency denominated cash, accounts receivable, accounts payable, sales or expenses increase, our operating results may be more greatly affected by fluctuations in the exchange rates of the currencies in which we do business. A hypothetical change of 10% in appreciation or depreciation in foreign currency exchange rates from the quoted foreign currency exchange rates at ~~September 24, 2016~~July 1, 2017 would not have a material impact on our revenue, operating results or cash flows in the coming year.

At this time we do not, but we may in the future, enter into derivatives or other financial instruments in an attempt to hedge our foreign currency exchange risk. It is difficult to predict the impact hedging activities would have on our results of operations.

Interest Risk

We did not have any long-term borrowings as of ~~September 24, 2016~~July 1, 2017 or ~~September 26, 2015~~June 25, 2016. Under our current investment policy, we invest our excess cash in money market funds and certificates of deposit. Our current investment policy seeks first to preserve principal, second to provide liquidity for our operating and capital needs and third to maximize yield without putting our principal at risk. Our investments are exposed to market risk due to the fluctuation of prevailing interest rates that may reduce the yield on our investments or their fair value. As our investment portfolio is short-term in nature, we do not believe an immediate 10% increase in interest rates would have a material effect on the fair market value of our portfolio, and therefore we do not expect our results of operations or cash flows to be materially affected to any degree by a sudden change in market interest rates.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and our Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this Quarterly Report on Form 10-Q. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of

1934, as amended, or the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commissions’ rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the Company’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of such date, our disclosure controls and procedures were effective.

Changes in Internal Control over Financial Reporting

In addition, there were no changes in our internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f)) during the ~~third~~second fiscal quarter of ~~2016~~2017 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

From time to time we are involved in legal proceedings arising in the ordinary course of our business. Although the results of litigation and claims cannot be predicted with certainty, we currently believe that there is no litigation pending that is likely to have a material adverse effect on our business. Regardless of the outcome, legal proceedings can have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors.

Information pertaining to legal proceedings can be found in “Item 1. Financial Statements and Supplementary Data” and “Note 6,5, Contingencies” of this Quarterly Report on Form 10-Q, and is incorporated by reference herein.

ITEM 1A. RISK FACTORS

~~The following~~There have not been any material changes to the risk factors ~~should be carefully considered in addition to these~~affecting our business, financial condition or future results from those set forth in Part I, Item 1A (Risk Factors) in our Annual Report on Form 10-K for the year ended December ~~26, 2015,~~31, 2016, filed on March ~~1, 2016. You~~9, 2017. However, you should carefully consider the factors discussed ~~below and~~ in our Annual Report on Form 10-K, which could materially affect our business, financial condition or future results. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.

~~Risk Related to the Referendum of the United Kingdom’s Membership of the European Union~~

~~The results of the United Kingdom’s referendum on withdrawal from the European Union may have a negative effect on global economic conditions, financial markets and our business.~~

On June 23, 2016, the United Kingdom (the “U.K.”) held a referendum in which voters approved an exit from the European Union (the “E.U.”), commonly referred to as “Brexit.” As a result of the referendum, it is expected that the British government will begin negotiating the terms of the U.K.’s withdrawal from the E.U. A withdrawal could, among other outcomes, disrupt the free movement of goods, services and people between the U.K. and the E.U., undermine bilateral cooperation in key policy areas and significantly disrupt trade between the U.K. and the E.U. In addition, Brexit could lead to legal uncertainty and potentially divergent national laws and regulations as the U.K. determines which E.U. laws to replace or replicate. Given the lack of comparable precedent, it is unclear what financial, trade and legal implications the withdrawal of the U.K. from the E.U. would have and how such withdrawal would affect us.

The announcement of Brexit caused significant volatility in global stock markets and currency exchange rate fluctuations that resulted in the strengthening of the U.S. dollar against foreign currencies in which we conduct business. The strengthening of the U.S. dollar relative to other currencies may adversely affect our operating results. The announcement of Brexit and the withdrawal of the U.K. from the E.U. have had and may continue to have a material adverse effect on global economic conditions and the stability of global financial markets, and may significantly reduce global market liquidity and restrict the ability of key market participants to operate in certain financial markets. Such global economic uncertainty may cause our customers to closely monitor their costs and reduce their spending budgets. Any of these effects of Brexit, among others, could adversely affect our business, financial condition, operating results and cash flows.

~~Risks Related to Our Series A Preferred Stock~~

The issuance of shares of our Series A Preferred Stock to Google Capital reduces the relative voting power of holders of our common stock, dilutes the ownership of such holders, may adversely affect the market price of our common stock and could discourage a change in control of our company.

On June 29, 2016, we completed the sale of shares of our Series A Preferred Stock to Google Capital 2016, L.P. (“Google Capital”) for an aggregate purchase price of $46.35 million pursuant to an Investment Agreement, dated June 29, 2016, between us and Google Capital (the “Investment Agreement”). As of June 29, 2016, these shares represented approximately 13.7% of our outstanding common stock, on an as-converted basis. Holders of Series A Preferred Stock are entitled to a cumulative dividend at the rate of 5.5% per annum, payable semi-annually in arrears. The dividends are to be paid in-kind over a seven-year period.

As holders of our Series A Preferred Stock are entitled to vote on an as-converted basis together with holders of our common stock on all matters submitted to a vote of the holders of our common stock, the issuance of the Series A Preferred Stock to Google Capital, and the subsequent payment of in-kind dividends, effectively reduces the relative voting power of the holders of our common stock, though the impact of the share issuance and subsequent dividends is mitigated by the Company’s repurchase of 3.7 million shares of common stock held by Matrix Partners immediately after the closing of the Google Capital transaction.

In addition, the conversion of the Series A Preferred Stock to common stock would dilute the ownership interest of existing holders of our common stock, and any sales in the public market of the common stock issuable upon conversion of the Series A Preferred Stock after December 29, 2017 (the expiration date of the lock-up period during which Google Capital has agreed not to sell any Series A Preferred Stock or common stock issued upon conversion of the Series A Preferred Stock) could adversely affect prevailing market prices of our common stock. We granted Google Capital customary registration rights in respect of any shares of common stock issued upon conversion of the Series A Preferred Stock. These registration rights would facilitate the resale of such securities into the public market, and any such resale would increase the number of shares of our common stock available for public trading. Sales by Google Capital, or transferees of our Series A Preferred Stock, of a substantial number of shares of our common stock in the public market, or the perception that such sales might occur, could have a material adverse effect on the price of our common stock.

~~Google Capital is owned by~~ Alphabet Inc., a multinational conglomerate whose portfolio encompasses several industries and includes numerous companies including Google Inc. It is possible that Google Capital’s affiliation with companies such as Google Inc. may deter other companies from exploring acquisition opportunities of the company, particularly if those potential acquirers view Google Inc. or other companies affiliated with Google Capital as competitors.

Google Capital may exercise influence over us, including through their ability to designate and the ability of the Series A Preferred Stock holders to elect a member of our Board of Directors, and their interests may not always be aligned with the holders of our common stock.

As of September 24, 2016, the outstanding shares of our Series A Preferred Stock represented approximately 15.5% of our outstanding common stock, on an as-converted basis, making Google Capital our largest stockholder. Moreover, the ongoing payment of in-kind dividends to Google Capital is expected to increase the company’s ownership interest in our company. Google Capital is in the business of making investments in companies, including businesses that may directly or indirectly compete with certain portions of our business, and they may have interests that diverge from, or even conflict with, those of our other stockholders.

In addition, pursuant to the terms of the Investment Agreement and the Series A Preferred Stock, for so long as Google Capital or its affiliates beneficially own at least 50% of the shares of Series A Preferred Stock purchased from us pursuant to the Investment Agreement, the holders of Series A Preferred Stock shall have the right to elect one director to our board, with Google Capital having the right to designate the nominee for such position. Notwithstanding the fact that all directors will be subject to fiduciary duties to us and to applicable law, the interests of the director designated by Google Capital may differ from the interests of our stockholders as a whole or of our other directors.

Our Series A Preferred Stock has rights, preferences and privileges that are not held by, and are preferential to, the rights of our common stockholders, which could adversely affect our liquidity and financial condition, and may result in the interests of Google Capital or other holders of Series A Preferred Stock differing from those of our common stockholders.

The holders of our Series A Preferred Stock also have certain redemption rights or put rights, including the right to require us to repurchase the Series A Preferred Stock on any date after June 29, 2023, at 100% of the Liquidation Preference thereof plus all Accrued but Unpaid Dividends, and the right to require us to repurchase the Series A Preferred Stock upon certain change of control events at 150% of the then current Liquidation Preference plus all Accrued but Unpaid Dividends.

These preferential rights could result in divergent interests between Google Capital or other holders of our Series A Preferred Stock and holders of our common stock. Moreover, the repurchase obligations could impact our liquidity and reduce the amount of cash flows available for working capital, capital expenditures, growth opportunities, acquisitions, and other general corporate purposes. Our obligations to the holders of Series A Preferred Stock could also limit our ability to obtain additional financing or increase our borrowing costs, which could have an adverse effect on our financial condition.

~~ITEM 2: RECENT SALE OF UNREGISTERED SECURITIES AND USE OF PROCEEDS~~

~~Issuer’s Purchases of Equity Securities~~

Total Number of Shares Purchased (1) Average Price Paid Per Share Total Number of Shares Purchased As Part of Publicly Announced Plans or Programs Maximum Number (or Approximate Dollar Value) of Shares That May Yet Be Purchased Under the Plans or Programs
Period of Repurchase
June 26, 2016 - July 23, 2016 3,700,000
$ 8.25
—
—
July 24, 2016 - August 20, 2016 —
$ —
—
—
August 21, 2016 - September 24, 2016 —
$ —
—
—
Total 3,700,000
—
—

(1) On June 27, 2016, we entered into a Stock Repurchase Agreement (the “Stock Repurchase Agreement”) to repurchase an aggregate of 3.7 million shares of common stock at a price of $8.25 per share (the “Stock Repurchase”) from Matrix Partners VII, L.P. and Weston & Co. VII LLC, as Nominee (together, the “Sellers”). The Stock Repurchase closed on June 29, 2016. Please refer to Note 14 for further detail.

ITEM 6. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

See the Exhibit Index immediately following the signature page of this Quarterly Report on Form 10-Q.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.



			CARE.COM, INC.

Dated: ~~November 1, 2016~~August 10, 2017			By: /s/ SHEILA LIRIO MARCELO
			Sheila Lirio Marcelo
			President and Chief Executive Officer and Director
			(Principal Executive Officer)

Dated: ~~November 1, 2016~~August 10, 2017			By: /s/ MICHAEL ECHENBERG
			Michael Echenberg
			Executive Vice President and Chief Financial Officer
			(Principal Financial and Accounting Officer)

EXHIBIT INDEX

Incorporated by Reference
Exhibit Number Exhibit Description Filed with this Form 10-Q Form
Filing Date
with SEC
Exhibit Number
3.1 Convertible Preferred Stock Series A Certificate of Designations, dated as of June 29, 2016 8-K 6/29/2016 3.1
10.1 Investment Agreement, dated as of June 29, 2016, by and between Care.com, Inc. and Google Capital 2016, L.P. 8-K 6/29/2016 10.1
10.2 Stock Repurchase Agreement, dated as of June 27, 2016, by and among Care.com, Inc., Matrix Partners VII, L.P. and Weston & Co. VII LLC, as Nominee 8-K 6/29/2016 10.2
31.1 Certification of Principal Executive Officer Required Under Rule 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934, as amended. X
31.2 Certification of Principal Financial Officer Required Under Rule 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934, as amended. X
32.1 Certification of Principal Executive Officer and Principal Financial Officer Required Under Rule 13a-14(b) of the Securities Exchange Act of 1934, as amended, and 18 U.S.C. §1350. X
101.INS XBRL Instance Document X
101.SCH XBRL Taxonomy Schema Linkbase Document X
101.CAL XBRL Taxonomy Calculation Linkbase Document X
101.DEF XBRL Taxonomy Definition Linkbase Document X
101.LAB XBRL Taxonomy Labels Linkbase Document X
101.PRE XBRL Taxonomy Presentation Linkbase Document X



			Incorporated by Reference
Exhibit Number	Exhibit Description	Filed with this Form 10-Q	Form	Filing Date with SEC	Exhibit Number
31.1	Certification of Principal Executive Officer Required Under Rule 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934, as amended.	X
31.2	Certification of Principal Financial Officer Required Under Rule 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934, as amended.	X
32.1	Certification of Principal Executive Officer and Principal Financial Officer Required Under Rule 13a-14(b) of the Securities Exchange Act of 1934, as amended, and 18 U.S.C. §1350.	X
101.INS	XBRL Instance Document	X
101.SCH	XBRL Taxonomy Schema Linkbase Document	X
101.CAL	XBRL Taxonomy Calculation Linkbase Document	X
101.DEF	XBRL Taxonomy Definition Linkbase Document	X
101.LAB	XBRL Taxonomy Labels Linkbase Document	X
101.PRE	XBRL Taxonomy Presentation Linkbase Document	X

4238



	September 24, 2016
	Contingent Acquisition Consideration

Beginning balance (December 26, 2015)	$	7,878
Decrease in fair value included in earnings	(441		)
Contingent acquisition consideration payments	(7,437		)
Ending balance	$	—



	September 24, 2016			December 26, 2015

Computer equipment	$	2,349		$	2,236
Furniture and fixtures	1,572			1,611
Software	1,375			1,374
Leasehold improvements	3,857			3,847
Total	9,153			9,068
Less accumulated depreciation	(3,881		)	(2,697		)
Property and equipment, net	$	5,272		$	6,371



	September 24, 2016		December 26, 2015

Payroll and compensation	$	4,262	$	5,167
Marketing expenses	5,913		3,451
Other accrued expenses	4,681		3,795
Total accrued expenses and other current liabilities	$	14,856	$	12,413



Balance as of December 26, 2015	$	58,631
Effect of currency translation	425
Balance as of September 24, 2016	$	59,056



	Total Number of Shares Purchased (1)	Average Price Paid Per Share		Total Number of Shares Purchased As Part of Publicly Announced Plans or Programs	Maximum Number (or Approximate Dollar Value) of Shares That May Yet Be Purchased Under the Plans or Programs
Period of Repurchase
June 26, 2016 - July 23, 2016	3,700,000	$	8.25	—	—
July 24, 2016 - August 20, 2016	—	$	—	—	—
August 21, 2016 - September 24, 2016	—	$	—	—	—
Total	3,700,000			—	—