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TABLE OF CONTENTS
CARE.COM, INC. INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Table of Contents

As filed with the Securities and Exchange Commission on January 10, 2014

Registration No. 333-192791

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549



Amendment No. 2
to
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933



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

Delaware
(State or other jurisdiction of
incorporation or organization)
  7389
(Primary Standard Industrial
Classification Code Number)
  20-5785879
(I.R.S. Employer
Identification No.)

201 Jones Road, Suite 500
Waltham, MA 02451
(781) 642-5900
(Address, including zip code, and telephone number, including area code, of registrant's principal executive offices)



Sheila Lirio Marcelo
President
Care.com, Inc.
201 Jones Road, Suite 500
Waltham, MA 02451
(781) 642-5900
(Name, address, including zip code, and telephone number, including area code, of agent for service)



Copies to:

John H. Chory, Esq.
Susan L. Mazur, Esq.
Latham & Watkins LLP
1000 Winter Street, Suite 3700
Waltham, MA 02451
Telephone: (781) 434-6700
Facsimile: (781) 434-6601

 

Diane Musi, Esq.
General Counsel
Care.com, Inc.
201 Jones Road, Suite 500
Waltham, MA 02451
Telephone: (781) 642-5900
Facsimile: (781) 736-7975

 

Patrick O'Brien, Esq.
Thomas Holden, Esq.
Ropes & Gray LLP
Prudential Tower
800 Boylston Street
Boston, MA 02199
Telephone: (617) 951-7000
Facsimile: (617) 951-7050



Approximate date of commencement of proposed sale to the public:
As soon as practicable after this Registration Statement is declared effective.

          If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box.    o

          If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.    o            

          If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.    o            

          If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.    o            

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

Large accelerated filer o   Accelerated filer o   Non-accelerated filer ý
(Do not check if a
smaller reporting company)
  Smaller reporting company o



CALCULATION OF REGISTRATION FEE

               
 
Title of Each Class of Securities
To Be Registered

  Amount To Be Registered(1)
  Proposed Maximum
Offering Price
Per Share(2)

  Proposed Maximum
Aggregate Offering
Price(2)

  Amount of
Registration Fee(3)

 

Common Stock, $0.001 par value per share

  6,152,500   $16.00   $98,440,000   $12,680

 

(1)
Includes shares that the underwriters have the option to purchase to cover over-allotments, if any.

(2)
Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(a) under the Securities Act of 1933, as amended.

(3)
Registration fee of $10,304 was previously paid in connection with the initial filing of this Registration Statement. The amounts paid in connection with this filing for the aggregate registration fee of $12,680, which includes $10,304 previously paid and $2,376 for the additional amount of $18,440,000 of securities included in this amendment to the Registration Statement, is offset by the $10,304 previously paid.



          The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

   


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PROSPECTUS (Subject to Completion)
Issued January 10, 2014

The information in this preliminary prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and we are not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

5,350,000 Shares

LOGO

COMMON STOCK



Care.com is offering 5,350,000 shares of its common stock. This is our initial public offering and no public market exists for our shares. We anticipate that the initial public offering price will be between $14.00 and $16.00 per share.



We have applied to list our common stock on the New York Stock Exchange under the symbol "CRCM."



We are an emerging growth company as that term is used in the Jumpstart Our Business Startups Act of 2012 and, as such, have elected to comply with certain reduced public company reporting requirements for future filings.

Investing in our common stock involves risks. See "Risk Factors" beginning on page 10.



PRICE $       A SHARE



 
 
Price to
Public
 
Underwriting
Discounts and
Commissions
 
Proceeds to
Care.com(1)

Per Share

  $        $            $         

Total

  $                     $                     $                  


(1)
We have agreed to reimburse the underwriters for certain FINRA-related expenses. See "Underwriters."

We have granted the underwriters the right to purchase up to an additional 802,500 shares of common stock to cover over-allotments at the initial public offering price less the underwriting discount.

Neither the Securities and Exchange Commission nor any other regulatory body has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense.

The underwriters expect to deliver the shares of common stock to purchasers on                           , 2014.



MORGAN STANLEY   BofA MERRILL LYNCH   J.P. MORGAN

ALLEN & COMPANY LLC

 

 

 

STIFEL

   

                           , 2014.


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TABLE OF CONTENTS

 
  Page  

PROSPECTUS SUMMARY

    1  

THE OFFERING

    7  

SUMMARY CONSOLIDATED FINANCIAL DATA

    8  

RISK FACTORS

    10  

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

    32  

USE OF PROCEEDS

    33  

DIVIDEND POLICY

    33  

MARKET, INDUSTRY AND OTHER DATA

    33  

CAPITALIZATION

    34  

DILUTION

    36  

SELECTED CONSOLIDATED FINANCIAL DATA

    38  

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

    41  

BUSINESS

    68  

MANAGEMENT

    89  

EXECUTIVE AND DIRECTOR COMPENSATION

    96  

CERTAIN RELATIONSHIPS AND RELATED PERSON TRANSACTIONS

    108  

PRINCIPAL STOCKHOLDERS

    113  

DESCRIPTION OF CAPITAL STOCK

    116  

SHARES ELIGIBLE FOR FUTURE SALE

    119  

MATERIAL U.S. FEDERAL INCOME TAX CONSIDERATIONS FOR NON-U.S. HOLDERS OF COMMON STOCK

    122  

UNDERWRITERS

    126  

LEGAL MATTERS

    133  

EXPERTS

    133  

WHERE YOU CAN FIND MORE INFORMATION

    133  

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

    F-1  



        You should rely only on the information contained in this prospectus and in any free writing prospectus we may authorize to be delivered or made available to you. We have not authorized anyone to provide you with different information. We are offering to sell, and seeking offers to buy, shares of our common stock only in jurisdictions where offers and sales are permitted. The information in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or any sale of shares of our common stock.

        For investors outside the United States: We have not, and the underwriters have not, done anything that would permit this offering or possession or distribution of this prospectus in any jurisdiction where action for that purpose is required, other than in the United States. Persons outside the United States who come into possession of this prospectus must inform themselves about, and observe any restrictions relating to, the offering of the shares of common stock and the distribution of this prospectus outside the United States.


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PROSPECTUS SUMMARY

        This summary highlights information contained elsewhere in this prospectus and does not contain all of the information you should consider in making your investment decision. Before deciding to invest in shares of our common stock, you should read this summary together with the more detailed information, including our consolidated financial statements and the related notes, elsewhere in this prospectus. You should carefully consider, among other things, the matters discussed in "Risk Factors," our consolidated financial statements and related notes, and "Management's Discussion and Analysis of Financial Condition and Results of Operations," in each case included elsewhere in this prospectus.


CARE.COM, INC.

Our Mission

        Our mission is to improve the lives of families and caregivers by helping them connect in a reliable and easy way. Our solutions help families to make informed decisions in one of the most important and highly considered aspects of their family life—finding and managing quality care for their family—their children, parents, pets and other loved ones. In providing families a comprehensive marketplace for care, we are building the largest destination for quality caregivers to find fulfilling employment and career opportunities globally. We strive to help our members—families and caregivers—pursue their passions and fulfill the basic human need of caring for each other.

Our Company

        We are the world's largest online marketplace for finding and managing family care with more than 9.7 million members, including approximately 5.2 million families and 4.5 million caregivers, spanning 16 countries. In 2013, we had an average of over 6.3 million unique visitors to our platform each month, including approximately 2.2 million visitors per month from mobile devices. We help families address their particular lifecycle of care needs, which includes 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. In 2013, 60% of all job postings were for part-time care services, with the remaining 40% seeking full-time care. We believe the scale and breadth of our services, combined with our commitment to delivering the best possible member experience for families and caregivers, have made us the most trusted and leading brand for finding and managing family care.

        Our platform provides families with robust solutions. Our consumer matching solutions—our core offering—allow families to search for, qualify, vet, connect with and ultimately select caregivers in a low-cost, reliable and easy way. Based on an internal survey of the families who subscribe to our consumer matching solutions, on average four out of five of these families find their caregiver on Care.com. Our platform also provides 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 core 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. Through our consumer payments solutions, families can not only electronically pay a caregiver, they can also subscribe for tax preparation services through our Care.com HomePay product. This product offering deepens our relationship with our members and could dramatically enhance the lifetime value associated with each member.

        We have expanded our marketplace beyond families and caregivers. We also serve employers by providing access to our platform to over 600,000 employer-sponsored families. In addition, we serve care-related businesses—such as day care centers, nanny agencies and home care agencies—who wish to

 

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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 rapid growth in revenue and members. Our members grew from 1.9 million as of September 30, 2010 to more than 9.1 million as of September 28, 2013, representing a 70% compounded annual growth rate. Our revenue has grown from $12.9 million for the fiscal year ended December 31, 2010 to $48.5 million for the fiscal year ended December 31, 2012, representing a 94% compounded annual growth, primarily driven by our consumer matching solutions. Revenue for the nine months ended September 28, 2013 increased to $59.0 million, representing an 81% increase from the $32.6 million of revenue generated during the nine months ended September 30, 2012. We experienced net losses of $3.5 million in 2010, $12.2 million in 2011 and $20.4 million in 2012.

Our Market Opportunity

        The market for care is large and highly fragmented. We believe that our target market includes all households with income greater than $50,000 and 15% of households with income less than $50,000, in each case with either a child under the age of 18 or a senior over the age of 65. According to the U.S. Census Bureau, there were 42 million such households in the United States in 2010. The needs of families seeking care are diverse, taking many different forms depending on the circumstances and life stage of the family. According to IBIS research, in 2012, an aggregate of $243 billion was spent in the United States on care, including day care, in-home care providers, housekeepers, nursing care facilities, tutoring and pet care. In other industry marketplaces, such as online travel, vacation rentals, and general merchandise, companies that provide marketing and payment solutions receive between 3% and 15% of gross spend. We believe that in the marketplace for care, companies that provide marketing and payment solutions could receive a similar amount of the gross spend.

        We believe there are several key demographic trends contributing to the large and growing total addressable market for online care marketplaces, including a significant percentage of dual-income and single-parent households with children and an increasing aging population with a high preference for home care. We believe these factors are also driving employers to provide family-care related benefits to their employees in order to reduce costs associated with care-related absences and increase employee productivity, engagement and loyalty.

        Despite the size and growth of the care market, there has historically been no proven, efficient and cost-effective way for families to connect with quality caregivers and for caregivers or care-related businesses to target a large number of families. Traditional alternatives employed by families, including word-of-mouth, directories, job boards and placement agencies, generally suffer from one or more of the following limitations: limited reach, lack of a comprehensive solution to address diverse and evolving care needs, and high cost. These traditional alternatives also typically do not provide a convenient way for families to manage the financial relationship with their caregiver. In addition, caregivers and care-related businesses lack a cost-effective way to promote their services, to target families at scale and, in the case of care-related businesses, to recruit caregivers efficiently.

Our Solutions

        Our suite of products and services enables families to manage their diverse and evolving care needs, caregivers to find jobs and manage their careers and businesses to recruit employees and advertise their business profiles.

 

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Efficient, Reliable and Affordable Way for Families and Caregivers to Connect and Manage Their Care and Career Needs

        Our comprehensive and differentiated platform provides significant benefits to our members, including:

    Efficient and reliable way for families to find quality caregivers.  Our members have access to easy-to-use job posting tools, powerful search features, detailed caregiver profiles, an online safety center and background check services, all of which are designed to empower our members to make efficient and informed decisions about their caregivers.

    Efficient way for caregivers to target large, qualified audiences and professionalize their careers.  Caregivers can easily create detailed profiles to market themselves to a large qualified audience of families searching for care. In addition, we provide caregivers with access to services, educational resources and content to help professionalize and manage their careers.

    Easy-to-use and secure communication tools.  We provide a cross-platform suite of communication tools to enable easy and efficient communication between families and caregivers. These easy-to-use tools are built around a monitored messaging system that members access through the Care.com website and mobile apps.

    Comprehensive solutions.  Through our platform, families have access to a broad range of care solutions to address their diverse and evolving care needs, including childcare, tutoring, senior care options and housekeeping, as well as payment services to help manage the financial relationship with their caregivers. Likewise, caregivers can apply to jobs in any category of care posted by families or by care-related businesses.

    Cost-effective alternative.  Families are provided free access to search, post a job and preview detailed caregiver profiles. Families pay a subscription fee, ranging from approximately $37 for a monthly subscription to $147 for an annual subscription, to contact an unlimited number of caregivers through our platform during the term of the subscription, including nannies, babysitters, pet sitters and tutors. Our caregiver members can apply to jobs through our platform and target families and care-related businesses at no cost.

    Anytime, anywhere access.  Our services are available across multiple platforms and mobile devices to ensure that our members access Care.com easily and conveniently wherever they go. We provide our services through mobile apps on iOS and Android devices. We also make our website experience available on personal computers and mobile web browsers. Across these platforms, members are able to access our core features for finding care and jobs and for paying caregivers.

Easy-to-Use Payment Offerings

        Our tax and payments solutions are designed to make it easier for families to manage the financial relationship with their caregivers. We offer a payroll and tax product for families that employ a household worker and a convenience payments solution that enables families to make electronic payments to a caregiver from a computer or mobile device.

Comprehensive Care Solution for Employers

        We provide a comprehensive suite of care services for employers to offer to their employees, including our consumer matching solutions, payment offerings, back-up care services and care concierge services. In addition to helping employees better manage the balance between work and home life, these services are designed to benefit employers by promoting increased productivity, engagement and loyalty and reduced care-related absences.

 

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Efficient Marketing and Recruiting Channel for Care-Related Businesses

        We provide a highly targeted suite of marketing and recruiting solutions for care-related businesses to reach our large database of families and caregivers.

Our Competitive Strengths

Largest Global Marketplace Focused on Care

        We are the world's largest online marketplace for finding and managing family care with more than 9.7 million members, including approximately 5.2 million families and 4.5 million caregivers, spanning 16 countries. In the United States, our service is available nationwide, with our member families residing in 83% of all zip codes and our member caregivers residing in 81% of all zip codes. Additionally, in the 20 most populated metro areas in the United States, we have at least 5,000 caregivers within a 10 mile radius of 85% of the zip codes of such metro area and at least 1,000 caregivers within a 10 mile radius of 98% of the zip codes of such metro area, where the zip codes of a metro area include all zip codes within 30 miles of the relevant city center.

High Quality Match Rate

        Based on our high match rate of paying members with caregivers, we believe our breadth of selection and our matching algorithms enhance the effectiveness of our marketplace and the value we offer to both families and caregivers. In the United States, our member surveys indicate that approximately four out of five families that subscribe to our consumer matching solutions successfully find a caregiver. Furthermore, our surveys indicate that families who hire caregivers using our platform have a high degree of satisfaction with the caregivers they find: 85% of responding families indicate that they are satisfied with their caregiver, and almost 50% indicate that they are extremely satisfied with their caregiver, responding with a score of ten out of ten.

Growing and Engaged Membership

        Over the last five years, we have expanded from 500,000 members to more than 9.7 million members. In 2013, on average, a new job was posted on our platform more frequently than every 30 seconds, and a new job application was submitted more frequently than every two seconds. This highly engaged membership helps improve the effectiveness of our services and increases the lifetime value of our members.

Powerful Network Effects

        As more families use our services, we attract more caregivers seeking a large pool of families in need of their services. Similarly, the increasing number of caregivers using our services has attracted more families. This cycle has driven more and more people to use our services and has resulted in a significant percentage of our new members coming from unpaid sources. In 2012, a majority of our paying families originated from unpaid sources.

Trusted and Recognized Brand

        We have invested in building a differentiated member experience for finding care. This investment includes the ongoing prioritization of features and processes that we believe contribute to the quality of our marketplace. We believe our product investments, combined with our investments in national brand advertising and our domain name itself, have established the Care.com brand as a leading and trusted brand for finding care.

 

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Our Growth Strategy

Attract More Members to Our Platform

        We are still early in the penetration of our addressable market. In order to grow our membership, we intend to increase our investments in various marketing channels, including television, online search and community groups and forums, to increase brand awareness in the United States among families and caregivers. We also intend to increase our member base by selling our services to more employers who will offer our platform as a benefit to their employees.

Increase Revenue per Member

        As we improve our user experience and expand our product and service offerings, our revenue per member has increased. We intend to further increase revenue per member by introducing new products which are targeted at recurring uses, such as our recently introduced convenience payments and "date night" products and by increasing the cross-selling and merchandising of our existing products, such as HomePay and senior care services, within our existing membership base and via the employer channel. In addition, we intend to continue to engage our non-paying members with content and resources to drive higher conversion of members to paying members.

Expand and Increase Adoption of Our Payment Offerings

        We believe there is significant opportunity for us to grow our consumer solutions offerings by offering new payment solutions, such as our recently-launched convenience payments product, and increasing the percentage of Care.com members that use our HomePay product.

Grow Our International Business

        We are currently operating in 16 countries and in 7 languages. We intend to grow our international business by focusing on raising awareness of our services in these markets.

Attract More Care-Related Businesses to Our Platform

        Our recently-launched recruiting and marketing solutions for care-related businesses provide us with additional growth opportunities. We are still early in the penetration of the addressable client base for these services and believe there is a significant runway for future growth for both of these solutions.

Selectively Pursue Acquisitions and Strategic Relationships

        In 2012, we acquired Besser Betreut GmbH, or Betreut, Breedlove & Associates, L.L.C., or Breedlove, and Parents in a Pinch, Inc., and in 2013 we acquired the assets of the Big Tent public groups platform. These acquisitions further our strategy of growing our membership and increasing the value we offer. In the future, we may selectively pursue acquisitions that complement our existing business, enhance the user experience of our services, represent a strong cultural fit and are consistent with our overall growth strategy. In addition, we may enter into various strategic relationships to provide a more comprehensive offering to our members.

Selected Risk Factors

        Our business is subject to numerous risks and uncertainties. Please carefully read "Risk Factors" beginning on page 10 for a more complete explanation of the risks involved before investing in our common stock. For example, any of the following risks may negatively affect our business, competitiveness

 

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or growth strategy, which could cause the price of our common stock to decline, and result in a loss of a part or all of your investment:

    We may not maintain our current rate of revenue growth;

    We have a history of cumulative losses and expect to have operating losses as we continue to grow our business;

    We have a limited operating history in an evolving industry, which makes it difficult to evaluate our future prospects and may increase the risk that we will not be successful;

    If the revenue generated by new paying members differs significantly from our expectations, or if our membership acquisition costs increase, we may not be able to recover our membership acquisition costs or generate profits from these investments;

    Our business depends on the strength of our brand, which we have built by providing families and caregivers efficient, reliable and affordable services for finding quality caregivers and fulfilling jobs. If the services we provide fail to meet our members' expectations, the trust members have placed in our brand may be damaged, and we may be unable to maintain or expand our base of members and paying members; and

    Our revenue and operating results could vary significantly from period to period and be unpredictable, which could cause the market price of our common stock to decline.

Company Information

        We were incorporated in Delaware on October 27, 2006. Our executive offices are located at 201 Jones Road, Suite 500, Waltham, MA 02451 and our telephone number is 781-642-5900. Our website address is www.care.com. The information contained in, or accessible through, our website does not constitute part of this prospectus, and investors should not rely on any such information in deciding whether to purchase our common stock.

        We are an "emerging growth company," as defined in the Jumpstart Our Business Startups Act of 2012. We will remain an emerging growth company until the earlier of (1) the last day of the fiscal year (a) following the fifth anniversary of the completion of this offering, (b) in which we have total annual gross revenue of at least $1.0 billion, or (c) in which we become a large accelerated filer, which means that we have been public for at least 12 months, have filed at least one annual report and the market value of our common stock that is held by non-affiliates exceeds $700 million as of the last day of our then most recently completed second fiscal quarter, and (2) the date on which we have issued more than $1.0 billion in non-convertible debt during the prior three-year period. We refer to the Jumpstart Our Business Startups Act of 2012 herein as the "JOBS Act," and references herein to "emerging growth company" shall have the meaning associated with such term in the JOBS Act.

        For fiscal periods prior to fiscal 2013, we operated and reported on a calendar basis fiscal year. Beginning in fiscal 2013, we began to operate and report using a 52 or 53 week fiscal year ending on the Saturday closest 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.

        We use various trademarks, trade names and design marks in our business, including without limitation "Care.com" and "Betreut.de." This prospectus also contains trademarks and trade names of other businesses that are the property of their respective holders.

        Unless the context otherwise requires, we use the terms "Care.com," "our company," "we," "us" and "our" in this prospectus to refer to Care.com, Inc. and its subsidiaries.

 

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THE OFFERING

Issuer

  Care.com, Inc.

Common stock we are offering

 

5,350,000 shares

Common stock to be outstanding after the offering

 

29,746,202 shares

Over-allotment option

 

802,500 shares

Use of proceeds

 

We intend to use the net proceeds to us from this offering for working capital and other general corporate purposes, including potential acquisitions. See "Use of Proceeds" for more information.

Risk factors

 

See "Risk Factors" beginning on page 10 and other information included in this prospectus for a discussion of factors you should consider before deciding to invest in our common stock.

Proposed New York Stock Exchange symbol

 

"CRCM"



        The number of shares of our common stock to be outstanding after this offering is based on the number of shares of our common stock outstanding as of September 28, 2013 and excludes:

    3,553,291 shares of common stock issuable upon exercise of stock options outstanding as of September 28, 2013, at a weighted-average exercise price of $4.27 per share;

    80,697 shares of common stock issuable upon exercise of warrants outstanding as of September 28, 2013, at a weighted-average exercise price of $1.69 per share;

    178,410 shares of common stock reserved as of September 28, 2013 for future issuance under our 2006 Stock Incentive Plan;

    4,112,048 shares of our common stock reserved for future issuance under our 2014 Incentive Award Plan, which will become effective on the day prior to the public trading date of our common stock, as well as any automatic increases in the number of shares of our common stock reserved for future issuance under this plan; and

    191,278 shares of our Series E redeemable preferred stock (or an equivalent number of shares of our common stock in the event our Series E redeemable preferred stock has been converted into common stock) we expect to issue to certain of our stockholders in the first quarter of 2014 as a result of the achievement of specified performance milestones in connection with a 2012 acquisition.

        Unless otherwise indicated, this prospectus reflects and assumes the following:

    the conversion of all outstanding shares of our redeemable convertible preferred stock into 21,299,378 shares of our common stock, which will occur automatically immediately prior to the closing of this offering;

    the filing of our restated certificate of incorporation and the adoption of our amended and restated by-laws upon the closing of this offering; and

    no exercise by the underwriters of their over-allotment option.

 

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SUMMARY CONSOLIDATED FINANCIAL DATA

        The following tables set forth a summary of our historical financial data as of, and for the period ended on, the dates indicated. The statement of operations data for the years ended December 31, 2011 and 2012 are derived from our audited financial statements included elsewhere in this prospectus. The statement of operations data for the nine months ended September 28, 2013 and balance sheet data as of September 28, 2013 have been derived from our unaudited financial statements appearing elsewhere in this prospectus. You should read this data together with our audited financial statements and related notes appearing elsewhere in this prospectus and the information under the captions "Selected Consolidated Financial Data" and "Management's Discussion and Analysis of Financial Condition and Results of Operations." Our historical results are not necessarily indicative of our future results, and results for the nine months ended September 28, 2013 are not necessarily indicative of results to be expected for the full year ended December 28, 2013.

 
  Fiscal Year Ended   Nine Months Ended  
 
  December 31,
2011
  December 31,
2012
  September 30,
2012
  September 28,
2013
 
 
  (in thousands, except per share data)
 

Revenue

  $ 26,006   $ 48,493   $ 32,567   $ 58,976  

Cost of revenue

    6,225     10,210     7,224     13,992  

Operating expenses:

                         

Selling and marketing

    22,480     35,916     27,919     43,852  

Research and development          

    4,639     7,662     5,443     8,419  

General and administrative

    4,621     13,671     8,959     13,307  

Depreciation and amortization

    173     1,724     786     3,166  
                   

Total operating expenses

    31,913     58,973     43,107     68,744  
                   

Operating loss

    (12,132 )   (20,690 )   (17,764 )   (23,760 )

Other (expense) income, net

    (20 )   (47 )   (45 )   (318 )
                   

Loss before income taxes

    (12,152 )   (20,737 )   (17,809 )   (24,078 )

(Benefit from) provision for income taxes

        (317 )   70     587  
                   

Net loss

    (12,152 )   (20,420 )   (17,879 )   (24,665 )

Accretion of redeemable convertible preferred stock

    (41 )   (48 )   (34 )   (42 )
                   

Net loss attributable to common stockholders

  $ (12,193 ) $ (20,468 ) $ (17,913 ) $ (24,707 )
                   

Net loss per share attributable to common stockholders:

                         

Basic and diluted

  $ (5.57 ) $ (7.97 ) $ (7.28 ) $ (8.36 )

Weighted-average shares used to compute net loss per share attributable to common stockholders:

                         

Basic and diluted

    2,188     2,568     2,462     2,957  

Pro forma net loss per share attributable to common stockholders:

                         

Basic and diluted

        $ (1.03 )       $ (1.00 )

Pro forma weighted average shares used to compute pro forma net loss per share outstanding:

                         

Basic and diluted

          19,702           24,256  

 

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  As of September 28, 2013  
 
  Actual   Pro Forma(1)   Pro Forma As
Adjusted(2)
 
 
  (in thousands)
 

Consolidated Balance Sheet Data:

                   

Cash and cash equivalents

  $ 38,003   $ 38,003   $ 110,770  

Working capital

    15,522     18,194     91,582  

Total assets

    122,302     122,302     194,213  

Total deferred revenue

    8,135     8,135     8,135  

Total non-current liabilities

    7,078     4,078     4,078  

Redeemable convertible preferred stock

    152,236          

Total stockholders' (deficit) equity

    (66,146 )   91,762     164,294  

(1)
The pro forma balance sheet data give effect to the conversion of all outstanding shares of our redeemable convertible preferred stock into an aggregate of 21,299,378 shares of common stock upon the closing of this offering.

(2)
The pro forma as adjusted balance sheet data give effect to our issuance and sale of 5,350,000 shares of common stock in this offering at an assumed initial public offering price of $15.00 per share, the midpoint of the price range listed on the cover page of this prospectus, after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us.

        A $1.00 increase (decrease) in the assumed initial public offering price of $15.00 per share, which is the midpoint of the range listed on the cover page of this prospectus, would increase (decrease) the pro forma as adjusted amount of each of cash, cash equivalents and short-term investments, working capital, total assets and total stockholders' equity by approximately $5.0 million, assuming that the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us.

 

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RISK FACTORS

        An investment in our common stock involves a high degree of risk. You should carefully consider the risks and uncertainties described below before making a decision to invest in our common stock. Our business, operating results, financial condition or prospects could be materially and adversely affected by any of these risks and uncertainties. In that case, the trading price of our common stock could decline and you might lose all or part of your investment. In addition, the risks and uncertainties discussed below are not the only ones we face. Our business, operating results, financial performance or prospects could also be harmed by risks and uncertainties not currently known to us or that we currently do not believe are material. In assessing the risks and uncertainties described below, you should also refer to the other information contained in this prospectus before making a decision to invest in our common stock.

Risks Related to Our Business

We may not maintain our current rate of revenue growth.

        Our revenues have grown rapidly, increasing from $12.9 million in 2010 to $48.5 million in 2012, representing a compounded annual growth rate of 94%. Our continued revenue growth and the rate of our revenue growth depend largely on our ability to effectively and efficiently grow our membership, increase the number of members who pay for our products and services, increase the average revenue from our paying members and lengthen the time period existing and new members continue to pay for our products and services. We cannot assure you that we will be successful in continuing to expand our paying member base at the same rates, or at all. In addition, our revenue growth rate may decline if we are not successful in cross-selling new and existing products and services to our members, such as our consumer payments solutions, or in continuing to develop new products and services that members consider valuable.

        You should not rely on our historical rate of revenue growth as an indication of our future performance. If our growth rates were to decline significantly or become negative, it could adversely affect our financial condition and results of operations.

We have a history of cumulative losses and expect to have operating losses as we continue to grow our business.

        We experienced net losses of $3.5 million in 2010, $12.2 million in 2011 and $20.4 million in 2012. We expect our operating expenses to increase significantly over the next several years, which is likely to lead to additional losses. Therefore, we may not achieve profitability in the immediate future, if ever. In particular, we intend to continue to invest substantial resources in marketing to acquire new, paying members. We also intend to hire additional personnel in marketing, operations, sales and other areas of our business and to introduce new products, services and features, each of which will increase our expenses with no assurance that we will generate sufficient revenue to reduce our losses or achieve profitability. In addition, as we prepare to become a public company, and as a public company, we are incurring and will continue to incur additional significant legal, accounting and other expenses that we did not have as a private company.

We have a limited operating history in an evolving industry, which makes it difficult to evaluate our future prospects and may increase the risk that we will not be successful.

        We have a limited operating history, and because the market for accessing care online is rapidly evolving and has not yet reached widespread adoption, it is difficult for us to predict our future operating results. In addition, much of our growth has occurred over the last two years, which makes it difficult for us to predict the expected length of paid memberships, revenue per member, member acquisition costs and other key performance indicators for our business. You should consider our business and prospects in light of the risks and difficulties we may encounter in this rapidly evolving market. These risks and difficulties include those described in this prospectus and our ability to, among other things:

    attract and retain members and maintain an appropriate family to caregiver ratio of active members;

    encourage paying members to stay longer and return as paying members sooner after their paid membership lapses;

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    cross-sell our products and services to our new and existing members and continue to develop and diversify our product offerings for members;

    sell our services to employers and care-related businesses;

    provide our members with superior user experiences;

    motivate members to contribute additional, timely and accurate content to our marketplace;

    anticipate and react to changes in technology and challenges from existing and new competitors;

    maintain the strength and increase awareness of our brand; and

    manage and grow our international operations in existing markets.

        Failure to adequately address these risks and difficulties could harm our business and cause our operating losses to grow. In addition, if the demand for online care does not develop as we expect, or if we fail to address the needs of this demand, our business will be harmed.

If the revenue generated by paying members differs significantly from our expectations, or if our membership acquisition costs increase, we may not be able to recover our membership acquisition costs or generate profits from these investments.

        We had $35.9 million in sales and marketing expenses in 2012 and $43.9 million in sales and marketing expenses during the nine months ended September 28, 2013. We expect to continue to make significant investments to acquire additional members, including advertising through television, online, local radio, direct mail, social media and other advertising campaigns. Our decisions regarding these investments are based on our anticipated marketing cost to acquire each additional paying member and our analysis of the revenue we believe we can generate per paying member over the expected lifetime of such membership. Currently, most of our paid memberships are monthly memberships, and the average paid membership length for our consumer matching solutions is approximately seven months. As a result, we must regularly replace paying members who allow their membership to lapse with new paying members either by converting existing non-paying members or by attracting new members to our service. Our anticipated member acquisition costs and our analysis of the revenue that we expect new paying members to generate over the life of the membership depends upon several estimates and assumptions, including lengthening paid memberships and increasing renewal rates, including conversion rates of existing members to paying members, future membership fees and our success in cross-selling existing and new products and services to members.

        If our estimates and assumptions regarding either our cost to acquire paying memberships or the revenue we can generate from those memberships over their lifetime prove incorrect, we may be unable to recover our member acquisition costs and our operating losses may increase. Similarly, if our member acquisition costs increase, the return on our investment may be lower than we anticipate irrespective of the revenue generated by new members. If we cannot generate profits from this investment, we may need to alter our growth strategy, and our growth rate and results of operations may be adversely affected.

Our business depends on the strength of our brand, which we have built by providing families and caregivers efficient, reliable and affordable services for finding quality caregivers and fulfilling jobs. If the services we provide fail to meet our members' expectations, the trust members have placed in our brand may be damaged, and we may be unable to maintain or expand our base of members and paying members.

        Trust in our brand is essential to the strength of our business. Member awareness, and the perceived value, of our brand depends largely on the success of our marketing efforts and our ability to provide a consistent, high-quality member experience. As a result, we must ensure that our new and existing members are satisfied with all of our products and services. Complaints or negative views of our products or services, caregivers or families, irrespective of their validity, could diminish members' confidence in and the use of our platform and adversely impact our brand.

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        In addition, our member experience extends beyond the products and services that we offer through our website and to the point of service. As a result, actions taken by caregivers and families, which are outside of our control, could have a significant impact on our brand, and any illegal or otherwise harmful acts, even if only by one or a small number of our members, may have a significant negative impact on our brand. If our efforts to promote and maintain our brand are not successful or if our member experience is not otherwise positive, our operating results and our ability to attract and retain members may be adversely affected.

        Furthermore, an adverse, public event resulting from the actions of a caregiver on a competitor's platform could adversely affect us—even if the caregiver has no relationship with our platform—and reduce consumer confidence in seeking caregivers through an online platform.

If we fail to manage our growth effectively, our business, operating and financial results may suffer.

        We have recently experienced, and expect to continue to experience, significant growth, which has placed, and will continue to place, significant demands on our management and our operational and financial infrastructure. We expect that our growth strategy will require us to commit substantial financial, operational and technical resources, and we expect that our marketing cost per paying member will increase in the near term. Continued growth also could strain our ability to maintain reliable service levels for our members, to enhance our product offerings, to develop and improve our operational, financial and management controls, to continue to strengthen our reporting systems and procedures and to recruit, train and retain highly skilled personnel. As our operations grow in size, scope and complexity, we will need to scale our systems and infrastructure accordingly and may determine we need to open additional offices, add more network capacity and make other capital investments, which will require significant expenditures and allocation of valuable management resources. If we fail to maintain the necessary level of discipline and efficiency, or if we fail to allocate limited resources effectively in our organization as it grows, our business, operating results and financial condition may suffer.

Our revenue and operating results could vary significantly from period to period and be unpredictable, which could cause the market price of our common stock to decline.

        Our operating results have fluctuated in the past, and may continue to fluctuate in the future, as a result of a variety of factors, many of which are outside of our control. As a result, comparing our revenue and operating results on a period-to-period basis may not be meaningful, and you should not rely on our past results as an indication of our future performance.

        In addition, we generally experience some seasonality fluctuations in our financial results due to heightened demand for caregivers from families at the beginning of the school year and at the beginning of the calendar year. Accordingly, purchases of subscriptions for our consumer matching solutions generally increase in the first and third quarters compared to the second and fourth quarters. Although historically our revenue has increased in each quarter as we have added members, in the future this seasonality may cause fluctuations in our financial results. In addition, other seasonality trends may develop, and the existing seasonality and consumer behavior that we experience may change.

        We have based our current and projected future expense levels on our operating plans and sales forecasts, and our operating costs are relatively fixed in the short term. As a result, we may not be able to reduce our costs sufficiently to compensate for an unexpected shortfall in revenue, and even a small shortfall in revenue could disproportionately and adversely affect our financial results for a given quarter.

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        It is possible that our operating results in some periods may be below market expectations. This would likely cause the market price of our common stock to decline. In addition to the other risk factors listed in this section, our operating results may be affected by a number of factors, including:

    fluctuations in demand for our products and services;

    fluctuations in sales cycles for our products and services;

    general economic conditions in our domestic and international markets;

    our ability to develop and introduce new products and product enhancements that are attractive to our members;

    the mix of monthly memberships and annual memberships, as the amount of revenue recognized per month on an annual membership is less than a monthly membership;

    member acceptance of new product introductions;

    our ability to sell our services to employers and care-related businesses;

    any significant changes in the competitive dynamics of our markets, including new entrants or substantial discounting of products;

    any decision to increase or decrease operating expenses in response to changes in the marketplace or perceived marketplace opportunities;

    our ability to derive benefits from our investments in sales, marketing, engineering or other activities;

    volatility in our stock price, which may lead to higher stock compensation expenses; and

    unpredictable fluctuations in our effective tax rate due to disqualifying dispositions of stock from our stock incentive plan, changes in the valuation of our deferred tax assets or liabilities, changes in actual results versus our estimates or changes in tax laws, regulations, accounting principles or interpretations thereof.

We depend on highly skilled personnel to grow and operate our business, particularly our chief executive officer, and if we are unable to hire, retain and motivate our personnel, we may not be able to grow effectively.

        Our future success will depend upon our continued ability to identify, hire, develop, motivate and retain highly-skilled personnel. Our ability to execute efficiently depends upon contributions from all of our employees, in particular our senior management team. Key institutional knowledge remains with a small group of long-term employees and directors whom we may not be able to retain. We do not have employment agreements other than offer letters with any key employee, including our chief executive officer, and we do not maintain key person life insurance for any employee other than our chief executive officer. In addition, from time to time, there may be changes in our senior management team that may be disruptive to our business. If our senior management team, including any new hires that we may make, fails to work together effectively and to execute our plans and strategies on a timely basis, our business could be harmed. Our growth strategy also depends on our ability to expand and retain our talent pool. Identifying, recruiting, training and integrating qualified individuals requires significant time, expense and attention. In addition to hiring new employees, we must continue to focus on retaining our best talent. Competition for these resources in the Boston area, where our headquarters is located, is intense. If we are not able to effectively increase and retain our talent, our ability to achieve our strategic objectives will be adversely impacted, and our business will be harmed.

        We believe that our culture has the potential to be a key contributor to our success. As we grow, if we do not continue to develop our corporate culture it could harm our ability to foster the innovation, creativity and teamwork we believe we need to support our growth.

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        Finally, we utilize off-shore resources through third parties over whom we have limited control to assist us in developing certain products and features. If any of these third parties terminates their relationship with us or fails to provide adequate services, it could cause delays in our release of new product offerings and/or features and harm our business.

The number of our registered members is significantly higher than the number of our paying members and substantially all of our revenue is derived from our paying members.

        The number of registered members in our marketplace is significantly higher than the number of paying members because some members choose to register, but not become paying members, and others become paying members, but choose not to renew their paid memberships. If we are not able to attract new registered members, convert registered members to paying members or retain our paying members for a longer period of time our business may not grow as fast as we expect, which will harm our operating and financial results and may cause our stock price to decline. Therefore, we must provide features and products that demonstrate the value of our marketplace to our members and motivate them to become paying members. If we fail to successfully motivate our members to do so, our business and operating results could be adversely affected.

Our international operations are subject to increased challenges and risks.

        In 2012, we launched our platform in the United Kingdom and Canada, and we acquired Besser Betreut GmbH, or Betreut, in Germany. While we intend to focus most of our international efforts on growing our existing international markets, we also may expand our international operations in the future. We have an even more limited operating history as a company outside the United States, and our ability to manage our business and conduct our operations internationally requires considerable management attention and resources and is subject to the particular challenges of supporting a rapidly growing business in an environment of multiple languages, cultures, customs, legal systems, regulatory systems and commercial infrastructures. This international expansion has required us, and will continue to require us, to invest significant funds and other resources. International expansion also subjects us to risks that we have not previously faced, including risks associated with:

    recruiting and retaining talented and capable employees in foreign countries;

    providing products and services across a significant distance, in different languages and among different cultures, including potentially modifying our solutions and features to ensure that they are culturally relevant in different countries;

    compliance with applicable foreign laws and regulations, which, in certain areas such as privacy and data protection, may be more restrictive than U.S. laws and regulations;

    compliance with anti-bribery laws, including without limitation compliance with the Foreign Corrupt Practices Act and the United Kingdom Bribery Act;

    currency exchange rate fluctuations; and

    higher costs of doing business internationally.

        If our revenue from our international operations does not exceed the expense of establishing and maintaining these operations, our business and operating results will suffer.

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Many individuals are using devices other than personal computers to access the Internet. If users of these devices do not widely adopt solutions we develop for these devices, our business could be adversely affected.

        The number of people who access the Internet through devices other than personal computers, including personal digital assistants, smart phones and handheld tablets, has increased dramatically in the past few years and is projected to continue to increase. If we are unable to develop mobile solutions to meet the needs of our users, our business may not grow as fast as we expect, which will harm our operating and financial results and may cause our stock price to decline. Additionally, as new devices and new platforms are continually being released, it is difficult to predict the problems we may encounter in developing versions of our solutions for use on these alternative devices, and we may need to devote significant resources to the creation, support and maintenance of such devices. In the future, we may encounter difficulties integrating our mobile app into mobile devices or we may experience problems in our relationships with providers of mobile operating systems or mobile application download stores, such as those of Apple or Google. It is also possible that our applications could receive unfavorable treatment compared to the promotion and placement of competing applications, such as the order in which our products are listed in the Apple App Store. Any of these events could adversely affect our growth and our results of operations.

We depend on search engines and job board sites to attract a significant percentage of our members, and if those businesses change their ranking or listings practices, algorithms or increase their pricing, it could impact our ability to attract new members.

        Many of our members locate our websites through search engines, such as Google, Yahoo! and Bing. Search engines typically provide two types of search results, algorithmic and purchased listings, and we rely on both types. Algorithmic listings cannot be purchased and are determined and displayed by a set of formulas designed by the search engine. Search engines revise their algorithms from time to time in an attempt to optimize search result listings. If the search engines on which we rely for algorithmic listings modify their algorithms in a manner that reduces the prominence of our listing, fewer potential members may find and click through to our websites. Additionally, our competitors' search engine optimization efforts may result in their websites receiving greater prominence in search result listings than ours, which could also reduce the number of potential members that visit our websites. We have experienced fluctuations in the prominence of our search result listings in the past and we anticipate fluctuations in the future. In addition, costs for purchased listings on search engines have increased in the past and may continue to increase in the future. Price increases could reduce the number of potential members that visit our websites and increase our costs. Any reduction in the number of users directed to our websites from search engines would harm our business and operating results.

        Job board sites are also an important source of our caregiver acquisition efforts. We derive much of that volume from organic search listings within those job boards. Should those job board aggregators deny our listings within their organic search listings, we would have to find alternative paid sources to acquire caregivers, which would increase our acquisition costs.

Our business may be harmed if users view our marketplace as primarily limited to finding full-time caregivers for children.

        Our membership growth and engagement rates could be adversely affected if consumers perceive the utility of our marketplace to be limited to finding full-time caregivers for children. Despite the breadth of care needs that can be met through our platform, including after school care, occasional babysitting, senior care, pet care, tutoring and housekeeping, approximately 35% of job postings in 2013 were for full-time child caregivers. In addition, our convenience payments product, which may be useful to families who employ any type of caregiver part-time or full-time, child care or senior care, is still in the early stages of adoption among our membership base and we cannot be certain what the rate of adoption will be or if enough of our users will find it sufficiently useful for us to continue to support. If families and caregivers

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fail to utilize the breadth of the family care and other services available through our marketplace, our membership growth and engagement rates could be negatively impacted, and our business will be harmed.

If we fail to expand and increase adoption of our consumer payments solutions, our results of operations and competitive position will suffer.

        As part of our growth strategy, we intend to grow our consumer payments solutions. Since our acquisition of Breedlove & Associates, L.L.C., or Breedlove, in August 2012, we have offered Care.com HomePay, a household employer payroll and tax product. Although an increasing percentage of our members are using HomePay, our growth and results of operations will be adversely affected if this trend does not continue. We also recently introduced a convenience payments product that allows families to make electronic payments to their caregivers using our mobile or desktop applications, and we intend to develop other payment and financial solutions to offer to our members as we expand our offerings and services. When we develop a new product, we typically incur expenses and expend resources upfront to market, promote and sell the new offering. Therefore, these new products must achieve high levels of market acceptance in order to justify the amount of our investment in developing and bringing them to market. If we fail to increase adoption of HomePay, or our convenience payments product or any other payments solutions we may offer do not achieve adequate acceptance in the market, our competitive position will be impaired, and our revenues could decline.

Our independent registered public accounting firm has advised us that it has identified a material weakness in our internal control over financial reporting. If our internal control over financial reporting or our disclosure controls and procedures are not effective, we may not be able to accurately report our financial results, prevent fraud or file our periodic reports in a timely manner, which may cause investors to lose confidence in our reported financial information and may lead to a decline in our stock price.

        Our independent registered public accounting firm has not conducted an audit of our internal control over financial reporting. However, in connection with the preparation of the registration statement of which this prospectus forms a part, our independent registered public accounting firm discovered errors in our financial statements related to the accounting for intangible assets. Specifically, we erroneously recognized impairment charges related to certain acquired intangible assets that should not have been impaired and determined periodic amortization using inappropriate economic useful lives. The effect of these errors was material to our financial statements. As a result of these items, we concluded that a material weakness in our internal control over financial reporting existed as of December 31, 2012. A "material weakness" is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. The material weakness that was identified related to our lack of resources within our finance function required to analyze and account for complex non-routine transactions in a timely manner.

        Since January 1, 2013, we have taken steps to build a more experienced accounting and finance organization, including hiring a new chief financial officer, senior vice president of finance, assistant controller and senior accountant, and designing and implementing improved processes and controls. While we believe we have remediated the material weakness identified for fiscal 2012, we may identify additional related or unrelated material weaknesses or significant deficiencies in the future. If our internal control over financial reporting or our disclosure controls and procedures are not effective, we may not be able to accurately report our financial results, prevent fraud or file our periodic reports in a timely manner, which may cause investors to lose confidence in our reported financial information and may lead to a decline in our stock price.

        In addition, implementing any appropriate changes to our internal controls may distract our officers and employees, entail substantial costs to implement new processes and modify our existing processes and take significant time to complete. Moreover, any such changes do not guarantee that we will be effective in maintaining the adequacy of our internal controls, and any failure to maintain that adequacy, or

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consequent inability to produce accurate financial statements on a timely basis, could increase our operating costs and harm our business. Furthermore, investors' perceptions that our internal controls are inadequate or that we are unable to produce accurate financial statements on a timely basis may harm our stock price and make it more difficult for us to effectively market and sell our products and services to new and existing customers, particularly our payroll, tax and compliance products and services.

Data security and integrity are critically important to our business, and breaches of security, unauthorized disclosure of information about our members, denial of service attacks or the perception that member information is not secure could result in a material loss of business, substantial legal liability or significant harm to our reputation.

        We collect, process and store a large amount of consumer information, including financial information and sensitive personal information. This data is often accessed through transmissions over public and private networks, including the Internet. Despite our physical security measures, implementation of technical controls and contractual precautions designed to identify, detect and prevent the unauthorized access, alteration, use or disclosure of our data, there is no guarantee that these measures or any other measures can provide absolute security. Systems that access or control access to our services and databases may be compromised, as a result of criminal activity, negligence or otherwise. Threats may derive from human error, fraud or malice on the part of employees or third parties, or may result from accidental technological failure. Several recent, highly publicized data security breaches and denial of service attacks at other companies have heightened consumer awareness of this issue and may embolden individuals or groups to target our systems. Unauthorized disclosure or use, or loss or corruption, of our data or inability of our members to access our systems could disrupt our operations, subject us to substantial legal liability, result in a material loss of business, and significantly harm our reputation.

        We are subject to diverse laws and regulations in the United States and foreign countries mandating notification to affected individuals in the event that personal data (as defined in the various governing laws) is accessed or acquired by unauthorized persons. In the United States, federal and state laws provide for more than 40 diverse notification regimes, all of which we are subject to. Germany also has breach notification laws, and the new laws being debated in Europe propose introducing a general mandatory breach notification requirement with which we would have to comply. Complying with such numerous and complex regulations in the event of unauthorized access would be expensive and difficult, and failure to comply with these regulations could subject us to regulatory scrutiny and additional liability.

We may continue to make acquisitions, which could require significant management attention, disrupt our business, result in dilution to our stockholders, and adversely affect our financial results.

        As part of our business strategy, we have made, and may in the future make, acquisitions to add specialized employees, complementary companies, products or technologies. For example, in the last 18 months, we acquired Betreut, Breedlove and Parents in a Pinch, Inc. (now known as Care Concierge, Inc.), or PIAP. The identification of suitable acquisition candidates can be difficult, time-consuming and costly, and we may not be able to successfully complete identified acquisitions. Acquisitions may also involve the entry into geographic or business markets in which we have little or no prior experience. Moreover, the anticipated benefits of any acquisition, investment or business relationship may not be realized or we may be exposed to unknown liabilities. For any such transaction, we may:

    issue additional equity securities that would dilute our stockholders;

    use cash that we may need in the future to operate our business;

    incur debt on terms unfavorable to us or that we are unable to repay;

    incur large charges or expenses or assume substantial liabilities;

    become subject to new laws and regulations about which we have limited prior experience or knowledge;

    encounter difficulties retaining key employees of the acquired companies; and

    become subject to adverse tax consequences, substantial depreciation or deferred compensation charges.

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        Any of these risks could harm our business and operating results. In addition, for legal, technical or business reasons, we may not be able to successfully assimilate and integrate the business, technologies, solutions, personnel or operations of any company we acquire as quickly or fully as we would like. The integration of any acquired company may require, among other things, coordination of administrative, sales and marketing, accounting and finance functions, harmonization of legal terms and privacy policies and expansion of information and management systems.

We may not timely and effectively scale and adapt our existing technology and network infrastructure to ensure that our platform is accessible, and our business is subject to risks of events outside of our control.

        Our members access information through our websites and mobile apps. Our reputation and ability to acquire, retain and serve our members depend upon the reliable performance of our websites and mobile apps and the underlying network infrastructure. We have previously experienced, and may experience in the future, service disruptions, outages and other performance problems due to a variety of factors, including infrastructure changes, human or software errors, computer viruses or physical or electronic break-ins, denial of service attacks, capacity constraints and fraud or security violations. In some instances, we may not be able to identify the cause or causes of these performance problems within an acceptable period of time. It may become increasingly difficult to maintain and improve the availability of our platform, especially during peak usage times and as our solutions become more complex and if our user traffic increases. If our platform is unavailable when users attempt to access it or it does not load as quickly as they expect, users may use other services and may not return to our platform as often in the future, or at all. This would negatively impact our ability to attract users and increase engagement on our website and mobile apps. We expect to continue to make significant investments to maintain and improve the availability of our platform and to enable rapid releases of new features and products. To the extent that we do not effectively address capacity constraints, upgrade our systems as needed and continually develop our infrastructure to accommodate actual and anticipated changes in our business and in our technology, our business and operating results may be harmed.

        Substantially all of our communications, network and computer hardware used to operate our website at www.care.com are co-located in a single facility in Ashburn, Virginia. We do not own or control the operation of this facility. Our systems and operations are also vulnerable to damage or interruption from tornadoes, floods, fires, power losses, telecommunications failures or acts of war. For example, a significant natural disaster, such as a major snowstorm or flood, could have a material adverse impact on our business, operating results and financial condition, and our insurance coverage may be insufficient to compensate us for such losses that may occur. In addition, acts of terrorism could cause disruptions in our business or the economy as a whole.

        We have implemented disaster recovery procedures that allow us to move our platform to a back-up data center in the event of a catastrophe. However, these procedures do not yet provide a real time back-up data center. Therefore, if our primary data center shuts down, there will be a period of time that our platform will remain unavailable while the transition to a back-up data center takes place.

Interruptions or delays in service arising from our third-party vendors could impair the delivery of our service and harm our business.

        We rely in part upon third-party vendors to provide our convenience payments product and other services upon which we rely, including data center and Internet infrastructure services, credit card and payment processing services, background checking services, email management and delivery services, customer relationship management services and other services critical to our business. The operation of our product and service offerings could be impaired if the availability of these services is interrupted or limited in any way. We have contractual relationships with these parties but do not have physical control over their daily operations, which increases our vulnerability to problems with the services they provide. If any of these third-party service providers terminates their relationship with us, or does not provide an

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adequate level of service to our members, it would be disruptive to our business as we seek to replace the service provider or remedy the inadequate level of service.

        In addition, these service providers are vulnerable to damage or interruption from tornadoes, floods, fires, power loss, telecommunications failures and similar events. They also are subject to break-ins, sabotage, acts of vandalism, the failure of physical, administrative, and technical security measures, terrorist acts, human error, financial insolvency and other unanticipated problems or events. The occurrence of any of these events could result in interruptions in our service and unauthorized access to, or alteration of, the content and data contained on our systems and the content and data that these third-party vendors store and deliver on our behalf.

        We have experienced, and expect to continue to experience, interruptions and delays in service and availability for such elements. Any errors, failures, interruptions or delays experienced in connection with these third-party technologies and information services could negatively impact our relationship with our members, our brand and reputation and our ability to attract, retain and serve our members.

If we or our service providers fail to process payment transactions effectively and accurately or fail to protect against potential fraudulent activities relating to payment transactions, we may incur expenses and suffer reputational harm.

        We offer household employer payroll and tax services through our subsidiary Breedlove. We also recently introduced an electronic payments solution through a third-party payments processor that allows families to make electronic payments to their caregivers through our website and mobile apps. It is possible that we or our service provider may make errors in processing payments or that funds may be misappropriated due to fraud. We may also make errors in calculating and remitting taxes to the Internal Revenue Service. In addition, the online tax preparation, payroll administration and online payments industries have increasingly been subject to fraudulent activities by third parties.

        In addition to any direct damages and potential fines we may incur as a result of payment processing errors or fraud relating to our payments products, negative publicity or a loss of confidence regarding these services could harm our business and damage our brand.

We may not be able to compete successfully against current and future competitors.

        We are and will continue to be faced with many competitive challenges, any of which could adversely affect our prospects, results of operations and financial condition.

        With respect to our consumer matching solutions, we compete for families, caregivers, employers and care-related businesses with traditional offline consumer resources, online job boards and other, online care marketplaces. We also compete for a share of care-related businesses' overall recruiting and advertising budgets with traditional, offline media companies and other Internet marketing providers. Our principal competitors are Craigslist, a "free to consumer" website, and Sittercity, Inc., an online care specific marketplace. In the consumer payments market, our convenience payments product competes with other payment solutions such as PayPal and Google Payments, and HomePay competes with similar products offered by 4nannytaxes.com and GTM Payroll Services. In addition, we may in the future be subject to competition from companies that operate other online marketplaces and that decide to expand into the online care market or other established companies that decide to expand into the consumer payments market. These potential competitors may be larger and have more resources than we do, may enjoy substantial competitive advantages, such as greater name recognition, longer operating histories and larger marketing budgets, as well as substantially greater financial, technical and other resources. As a result, these potential competitors may be able to respond more quickly and effectively than we can to new or changing opportunities or technologies.

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        To compete effectively for members, we must continue to invest significant resources in marketing and in the development of our products and services to enhance their value. To compete effectively for revenue from employers and care-related businesses, we must continue to invest in marketing and in growing our membership. Failure to compete effectively against our current or future competitors could result in loss of current or potential members, which could adversely affect our margins, and prevent us from achieving or maintaining profitability. We cannot assure you that we will be able to compete effectively for members in the future against existing or new competitors, and the failure to do so could result in loss of existing or potential members, reduced membership revenue, increased marketing or selling expenses or diminished brand strength, any of which could harm our business.

We may incur liability or other expenses if members do not meet the expectations of other members they connect with through our platform, if caregivers or other users of our services engage in inappropriate, harmful or illegal conduct, or if we do not notify our members of alleged inappropriate or illegal conduct.

        Even though U.S. courts have held that online services companies are not responsible for the actions of their website users in many circumstances, and our terms of use state that any screening we perform on families and caregivers is limited, there is a low tolerance for failure when seeking care for a loved one. Therefore, families and caregivers may seek damages from us if a caregiver or family does not meet their expectations or causes them harm. These claims also may be brought under foreign laws, which often do not provide the same protections for online services companies as in the United States. Even if these claims do not result in liability to us, they may result in significant investigation or defense costs, as well as negative publicity. In addition, because there is a particularly low tolerance for failure when seeking care for a loved one, any such claims, events or publicity could have a significant adverse effect on our reputation and brand. Any of these results, particularly damages to our brand and reputation, could adversely affect our financial condition, business and operating results.

        Our subsidiary PIAP provides back-up child and elder care to families by directly assigning caregivers, some of whom are PIAP employees, to families in need of temporary care. The caregivers and families involved in these transactions are not required to be members of our consumer matching solutions. To the extent that a caregiver provided through our back-up services does not meet the expectations of a family or causes harm, we may be subject to claims from that family or from the employer that subscribed to this service and offered it as an employee benefit to the family.

        From time to time, we become aware of information relating to our members through complaints from other members, publicly available sources or otherwise, which results in our removal of the member from our marketplace. Because of the complex legal and regulatory environment in which our business operates, we generally do not advise other members when we decide to remove a particular member and, when we do advise members that we have removed a member, we generally do not tell them the reason for removal. As a result, a member who hires a caregiver through our platform may not be aware that the caregiver has subsequently been removed from our marketplace or the reason the caregiver was removed, and may seek to make a legal claim against us for failure to notify them of the removal or the reason for the removal. Any such claims, whether or not meritorious, or any claim by a caregiver that he or she should not have been so removed, may be a distraction to management, result in our incurring costs to defend the claim or otherwise harm our business and reputation.

Adverse economic conditions may adversely impact our business.

        Our business depends on the overall demand for care. Our prospective members' employment and income impact their demand for care. Increased unemployment or a reduction in labor force participation could reduce the number of dual-income families—a key component of our target market—and therefore the number of families seeking care. In addition, if consumer spending is reduced due to a weak economy, families may decrease spending on care services they believe to be non-essential, such as housekeeping and tutoring, or reduce or eliminate certain activities that typically require the services of our caregivers, such

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as date nights that require babysitters and vacations that may require pet sitters. As a result, weakened macroeconomic conditions could decrease the traffic on our platform, reduce sales of our products and services and delay adoption of new offerings.

If we require additional funds from outside sources in the future, those funds may not be available on acceptable terms, or at all.

        We may require additional funds from outside sources in the future, and we may not be able to obtain those funds on acceptable terms, or at all. If we raise additional funds by issuing equity securities, our stockholders may experience dilution. Debt financing, if available, may involve covenants restricting our operations or our ability to incur additional debt. Any debt or additional equity financing that we raise may contain terms that are not favorable to us or our stockholders.

        If we do not have, or are not able to obtain, sufficient outside funds, we may have to delay development of new product offerings. If we are unable to raise adequate funds, we may have to liquidate some or all of our assets, or delay, reduce the scope of or eliminate some or all of our development programs. We also may have to reduce marketing or other resources devoted to our products or cease operations. Any of these actions could harm our operating results.

We use, store and, in some instances, share information collected from or about our members and site visitors and their devices, which may subject us to governmental and industry regulation and other legal obligations related to privacy, and our actual or perceived failure to comply with such obligations could harm our business.

        We receive, store and process information from and about our members and website visitors and their devices, as well as information about HomePay and back-up care users, including name, contact information, and in some cases sensitive personal information, such as credit card numbers, tax return information, bank account numbers, social security numbers and other personal information such as criminal background information. In addition, our service enables our members to direct us to share information, including personal and background information, with other members and with third parties.

        Diverse legal and industry requirements in the regions where our members and site visitors reside may apply to our collection, use, storage and sharing information about such individuals, including to the extent that our members choose to share data about themselves or family members in connection with potential employment in the home setting. The scope of these privacy and data protection obligations are changing in substantial and unpredictable ways, subject to differing interpretations, and may be inconsistent between different regions or conflict with other rules.

        Some industry requirements subject us to payment card association operating rules, certification requirements and rules, including the Payment Card Industry Data Security Standard, or PCI DSS, a security standard with which companies that collect, store or transmit certain data regarding credit and debit cards, credit and debit card holders, and credit and debit card transactions are required to comply. Our failure to comply fully with the PCI DSS may violate payment card association operating rules, federal and state laws and regulations, and the terms of our contracts with payment processors and merchant banks. Such failure to comply fully may also subject us to fines, penalties, damages and civil liability, and may result in the loss of our ability to accept credit and debit card payments. In addition, there is no guarantee that PCI DSS compliance will prevent illegal or improper use of our services or the theft, loss or misuse of data pertaining to credit and debit cards, credit and debit card holders and credit and debit card transactions.

        We strive to comply with all applicable laws, policies, legal obligations and industry requirements relating to privacy and data protection, to the extent reasonably possible. However, it is possible that these obligations may be interpreted and applied in a manner that is inconsistent from one jurisdiction to another and may conflict with other rules or our practices. Any failure or perceived failure by us to comply with our posted privacy policies, our privacy-related obligations to users or other third parties, or any other

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privacy-related legal obligations, may result in governmental enforcement actions, litigation or public statements against us by consumer advocacy groups or others and could cause our members and customers to lose trust in us, which could have an adverse effect on our business. Additionally, if third parties we work with, such as customers, vendors or developers, violate applicable laws, their contractual obligations to us or our policies, such violations may also put our members' information at risk and could in turn have an adverse effect on our business.

        Complying with existing and proposed laws, regulations and industry standards applicable to the collection, use, storage and sharing of data about our members and site visitors can be costly and can delay or impede the development of new products, result in negative publicity and reputational harm, increase our operating costs, require significant management time and attention, increase our risk of non-compliance and subject us to claims or other remedies, including fines or demands that we modify or cease existing business practices.

Our business is subject to a variety of U.S. and foreign laws, some of which are unsettled and still developing and which could subject us to claims or otherwise harm our business.

        Federal, state, municipal and/or foreign governments and agencies have adopted and could in the future adopt, modify, apply or enforce laws, policies and regulations covering user privacy, data security, unfair and deceptive practices, payment processing, tax preparation and/or the collection, use, maintenance, processing, transfer, storage and/or disclosure of data associated with a unique individual, including in connection with potential employment and other activities. The regulatory environment for many of these laws is very unsettled in the United States and internationally, especially as it applies to the products and services we offer and to the operation of our business generally.

        Our operations are subject to numerous laws that regulate privacy, data security and the use of consumer background information. Certain of these laws provide for civil and criminal penalties for the unauthorized release of, or access to, this protected information or for not adopting processes or procedures for handling reported inaccuracies in this protected information. For example, in the United States we acquire information about our members from consumer credit reporting agencies and other third-party sellers of public data about unique individuals. We use this information in an effort to verify the accuracy of the information members provide about themselves and to further our business objective to maintain a trusted online community for our members. We also facilitate the sharing of third-party consumer reports and criminal background checks between members at the direction of the individual who is the subject of the report. The Fair Credit Reporting Act, or the FCRA, applies to consumer credit reporting agencies as well as data furnishers and users of consumer reports, as those terms are defined in the FCRA. The FCRA promotes the accuracy, fairness and privacy of information in the files of consumer reporting agencies that engage in the practice of assembling or evaluating information relating to consumers for certain specified purposes, including for employment. The FCRA limits the distribution and use of consumer reports and establishes consumer rights to access and dispute their own credit files, among other rights and obligations. Members who access consumer reports about job applicants via our service expressly agree to follow the FCRA requirements for employers. Violation of the FCRA can result in civil and criminal penalties. The U.S. Federal Trade Commission, the Consumer Financial Protection Bureau, and the State Attorneys' General, acting alone or in cooperation with one another, actively enforce the FCRA as do private litigants. Many states have enacted laws with requirements similar to the FCRA. Some of these laws impose additional, or more stringent, requirements than the FCRA.

        In addition, the payment processing and tax preparation industries are receiving heightened attention from federal and state governments. New legislation, regulation, public policy considerations, litigation by the government or private entities or new interpretations of existing laws may subject us to additional legal or regulatory oversight or obligations, restrict the types of products and services that we can offer or the prices we can charge, or otherwise cause us to change the way we operate our payment processing and tax preparation businesses or offer our payment processing and tax products and services. This in turn may

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increase our cost of doing business and limit our revenue opportunities. In addition, if our practices are not consistent with current or new interpretations of existing laws, we may become subject to lawsuits, penalties and other liabilities.

        If we are not able to comply with existing or new laws or regulations or if we become liable under these laws or regulations, we could be directly harmed, and we may be forced to implement new measures to reduce our exposure to this liability. This may require us to expend substantial resources or to discontinue certain solutions, which would negatively affect our business, financial condition and results of operations. In addition, the increased attention focused upon liability issues as a result of lawsuits and legislative proposals could harm our reputation or otherwise impact the growth of our business. Any costs incurred as a result of this potential liability could harm our business and operating results.

As we develop and sell new products, services and features, we may be subject to additional and unexpected regulations, which could increase our costs or otherwise harm our business.

        As we develop and sell new products, services and features to our members, we may become subject to additional laws and regulations, which could create unexpected liabilities for us, cause us to incur additional costs or restrict our operations. For example, we offer our convenience payments product to our members through a third party. If, in the future, we provide this product directly to our members, we would be subject to complex financial regulations. We may also become subject to financial regulations as we develop additional payment and financial solutions for our members. In addition, if we expand our offerings to include more personalized services, we may become subject to various laws and regulations relating to the protection of children, seniors and/or prospective employees.

        Our failure to accurately anticipate the application of laws and regulations that governmental organizations or others may claim are applicable to new products and services we may offer, or other failure to comply, could create liability for us, result in adverse publicity or cause us to alter our business practices, which could cause our revenue to decrease, our costs to increase or our business otherwise to be harmed.

We could face liability or other expenses for information on or accessible through our online marketplace.

        A significant portion of the information available through our online marketplace, including job postings, caregiver profiles and photographs, is submitted by families, caregivers and third parties. We also allow care-related businesses and other third parties to advertise their products and services on our websites and include links to third-party websites. We could be exposed to liability with respect to this information. Members could assert that information concerning them on our website contains errors or omissions and/or seek damages from us for losses incurred if they rely upon incorrect information provided by our members, care-related businesses or others. We could also be subject to claims that the persons posting information on our websites do not have the right to post such information or are infringing the rights of third parties, such as copyrights in photographs and privacy and publicity rights. Among other things, we might be subject to claims that by directly or indirectly providing links to websites operated by third parties, we are liable for wrongful actions by the third parties operating those websites. These claims also may be brought under foreign laws that often do not provide the same protections for online services companies as in the United States. We could incur significant costs in investigating and defending against these claims even if they do not result in liability to us.

        We also allow families to submit reviews of caregivers. Our terms of use prohibit members from providing inaccurate, misleading, defamatory or false information to us or to any other user of our website and that all opinions expressed must be genuinely held. However, we do not have a regular practice of verifying the accuracy of all member content. There is a risk that a review or other content posted by a member may be considered defamatory or otherwise offensive, objectionable or illegal under applicable law. Therefore, there is a risk that publication on our website of our ratings and reviews may result in a suit against us for defamation, civil rights infringement, negligence, copyright or trademark infringement, invasion of privacy, personal injury, discrimination, or other legal claims. Even if these claims do not result in liability to us, they may result in costly and time-consuming litigation and/or injury to our reputation.

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If we are unable to protect our intellectual property rights, our competitive position could be harmed or we could be required to incur significant expenses to enforce our rights.

        We rely on a combination of intellectual property rights, including trade secrets, copyrights and trademarks, as well as contractual restrictions, to safeguard our intellectual property. We do not have any patents or pending patent applications. Despite our efforts to protect our proprietary rights, unauthorized parties may attempt to copy our digital content, aspects of our solutions for members, our technology, software, branding and functionality, or obtain and use information that we consider proprietary. Moreover, policing our proprietary rights is difficult and may not always be effective. As we expand internationally, we may need to enforce our rights under the laws of countries that do not protect proprietary rights to as great an extent as do the laws of the United States.

        Our digital content is not protected by any registered copyrights or other registered intellectual property. Rather, our digital content is protected by statutory and common law rights, user agreements that limit access to and use of our data and by technological measures. Compliance with use restrictions is difficult to monitor, and our proprietary rights in our digital content databases may be more difficult to enforce than other forms of intellectual property rights.

        As of December 31, 2013, we had three registered trademarks in the United States, including "Care.com", which is registered on the supplemental register, four registered trademarks in the EU and one registered trademark in each of Germany and Canada. Some of our trade names may not be eligible to receive trademark protection. Trademark protection may also not be available, or sought by us, in every country in which our service may become available. Competitors may adopt service names similar to ours, or purchase our trademarks and confusingly similar terms as keywords in Internet search engine advertising programs, thereby impeding our ability to build brand identity and possibly confusing consumers and caregivers.

        We currently hold the "Care.com", "Betreut.de", and "Breedlove.com" Internet domain names and various other related domain names. Domain names generally are regulated by Internet regulatory bodies. If we lose the ability to use a domain name in the United States or any other country, we would be forced to incur significant additional expense to market our solutions, including the development of a new brand and the creation of new promotional materials, which could substantially harm our business and operating results. The regulation of domain names in the United States and in foreign countries is subject to change. Regulatory bodies could establish additional top-level domains, appoint additional domain name registrars or modify the requirements for holding domain names. As a result, we may not be able to acquire or maintain the domain names that utilize the "Care" name or other names we utilize in all of the countries in which we currently intend to conduct business.

        In order to protect our trade secrets and other confidential information, we rely in part on confidentiality agreements with our personnel, consultants and third parties with whom we have relationships. These agreements may not effectively prevent disclosure of trade secrets and other confidential information, and may not provide an adequate remedy in the event of misappropriation of trade secrets or any unauthorized disclosure of trade secrets and other confidential information. In addition, others may independently discover trade secrets and confidential information and, in such cases, we could not assert any trade secret rights against such parties. Costly and time-consuming litigation could be necessary to enforce and determine the scope of our trade secret rights and related confidentiality and nondisclosure provisions, and failure to obtain or maintain trade secret protection, or our competitors being able to obtain our trade secrets or to independently develop technology similar to ours or competing technologies, could adversely affect our competitive business position.

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Assertions by third parties of infringement or other violation by us of their intellectual property rights could result in significant costs and substantially harm our business and operating results.

        Internet, technology and social media companies are frequently subject to litigation based on allegations of infringement, misappropriation or other violations of intellectual property rights. Some own large numbers of patents, copyrights, trademarks and trade secrets, which they may use to assert claims against us. We have received in the past and may in the future receive notices asserting that we have infringed, misappropriated or otherwise violated a third party's intellectual property rights, and as we face increasing competition, the possibility of intellectual property rights claims against us grows. We cannot assure you that we are not infringing or violating any third-party intellectual property rights.

        We cannot predict whether assertions of third-party intellectual property rights or any infringement or misappropriation claims arising from such assertions will substantially harm our business and operating results. If we are forced to defend against any infringement or misappropriation claims, whether they are with or without merit, are settled out of court or are determined in our favor, we may be required to expend significant time and financial resources on the defense of such claims. Furthermore, an adverse outcome of a dispute may require us to: pay damages, potentially including treble damages and attorneys' fees, if we are found to have willfully infringed a party's patent or copyright rights; cease making, licensing or using solutions that are alleged to infringe or misappropriate the intellectual property of others; expend additional development resources to redesign our solutions; enter into potentially unfavorable royalty or license agreements in order to obtain the right to use necessary technologies, content or materials; and to indemnify our partners and other third parties. Royalty or licensing agreements, if required or desirable, may be unavailable on terms acceptable to us, or at all, and may require significant royalty payments and other expenditures. Any of these events could seriously harm our business, operating results and financial condition. In addition, any lawsuits regarding intellectual property rights, regardless of their success, could be expensive to resolve and would divert the time and attention of our management and technical personnel.

Our revenue may be negatively affected if we are required to charge sales tax or other transaction taxes on all or a portion of our past and future sales in jurisdictions where we are currently not collecting and reporting tax.

        We currently only charge and collect sales or other transaction taxes in certain of the jurisdictions where our members reside. A successful assertion by any state, local jurisdiction or country in which we do not charge and collect such taxes that we should be collecting sales or other transaction taxes on the sale of our products or services, or the imposition of new laws requiring the collection of sales or other transaction taxes on the sale of our products or services, could result in substantial tax liabilities related to past sales, create increased administrative burdens or costs, reduce demand for our products or services, decrease our ability to compete if competitors lower their fees to offset the tax but we do not or otherwise substantially harm our business and results of operations.

Changes in our provision for income taxes or adverse outcomes resulting from examination of our income tax returns could adversely affect our results.

        Our provision for income taxes is subject to volatility and could be adversely affected by the following:

    changes in the valuation of our deferred tax assets;

    foreign or domestic income tax assessments and any related tax interest or penalties;

    expiration of, or lapses in, the research and development tax credit laws;

    tax effects of nondeductible compensation;

    adjustments to the pricing of intercompany transactions and transfers of intellectual property or other assets;

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    changes in accounting principles; or

    changes in tax laws and regulations, including changes in taxation of the services provided by our foreign subsidiaries.

        Significant judgment is required to determine the recognition and measurement attributes prescribed in the accounting guidance for uncertainty in income taxes. The accounting guidance for uncertainty in income taxes applies to all income tax positions, including the potential recovery of previously paid taxes, that if settled unfavorably could adversely impact our provision for income taxes or additional paid-in capital. In addition, we are subject to the examination of our income tax returns by the U.S. Internal Revenue Service and other tax authorities. We regularly assess the likelihood of adverse outcomes resulting from these examinations to determine the adequacy of our provision for income taxes. The outcomes from these examinations might have a material and adverse effect on our operating results and financial condition.

Our ability to use our net operating loss carryforwards and certain other tax attributes may be limited.

        As of December 31, 2012, we had federal net operating loss carryforwards of $42.8 million and state net operating loss carryforwards of $40.2 million. Under Sections 382 and 383 of the Internal Revenue Code of 1986, as amended, or the Code, if a corporation undergoes an "ownership change," the corporation's ability to use its pre-change net operating loss carryforwards and other pre-change tax attributes, such as research tax credits, to offset its post-change income and taxes may be limited. In general, an "ownership change" generally occurs if there is a cumulative change in our ownership by "5-percent shareholders" that exceeds 50 percentage points over a rolling three-year period. Similar rules may apply under state tax laws. We may have experienced an ownership change in the past and may experience ownership changes in the future as a result of this issuance or future transactions in our stock, some of which may be outside our control. As a result, if we earn net taxable income, our ability to use our pre-change net operating loss carryforwards, or other pre-change tax attributes, to offset U.S. federal and state taxable income and taxes may be subject to significant limitations.

Our international operations subject us to potentially adverse tax consequences.

        We generally conduct our international operations through wholly owned subsidiaries and report our taxable income in various jurisdictions worldwide based upon our business operations in those jurisdictions. Our intercompany relationships are subject to transfer pricing regulations administered by taxing authorities in various jurisdictions. The relevant taxing authorities may disagree with our determinations as to the income and expenses attributable to specific jurisdictions. If such a disagreement were to occur, and our position were not sustained, we could be required to pay additional taxes, interest and penalties, which could result in one-time tax charges, higher effective tax rates, reduced cash flows and lower overall profitability of our operations.

We may not be able to successfully prevent others, including copycat websites and mobile apps, from misappropriating our content in the future.

        From time to time, third parties have attempted to misappropriate our content through website scraping, search robots or other means. We have deployed several technologies designed to detect and prevent such efforts. However, we may not be able to successfully detect and prevent all such efforts in a timely manner or assure that no misuse of our content occurs.

        In addition, third parties operating "copycat" websites have attempted to imitate our brand or the functionality of our service. When we have become aware of such efforts by other companies, we have employed technological or legal measures in an attempt to halt their operations. However, we may not be able to detect all such efforts in a timely manner, or at all, and even if we could, the technological and legal measures available to us may be insufficient to stop their operations. In some cases, particularly in the case

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of companies operating outside of the United States, our available remedies may not be adequate to protect us against the damage to our business caused by such websites or mobile apps. Regardless of whether we can successfully enforce our rights against the operation of these third parties, any measures that we may take could require us to expend significant financial or other resources and have a significantly adverse effect on our brand.

Some of our solutions contain open source software, which may pose particular risks to our proprietary software and solutions.

        We use open source software in our solutions and will use open source software in the future. From time to time, we may face claims from third parties claiming ownership of, or demanding release of, the open source software and/or derivative works that we developed using such software (which could include our proprietary source code), or otherwise seeking to enforce the terms of the applicable open source license. These claims could result in litigation and could require us to purchase a costly license or cease offering the implicated solutions unless and until we can re-engineer them to avoid infringement. This re-engineering process could require significant additional research and development resources. In addition to risks related to license requirements, use of certain open source software can lead to greater risks than use of third-party commercial software, as open source licensors generally do not provide warranties or controls on the origin of software. Any of these risks could be difficult to eliminate or manage and, if not addressed, could have a negative effect on our business and operating results.

We are an "emerging growth company," and the reduced disclosure requirements applicable to emerging growth companies may make our common stock less attractive to investors.

        We are an "emerging growth company," as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act, and may remain an emerging growth company for up to five years. For so long as we remain an emerging growth company, we are permitted and intend to rely on exemptions from certain disclosure requirements that are applicable to other public companies that are not emerging growth companies. These exemptions include not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, or Section 404, not being required to 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, reduced disclosure obligations regarding executive compensation and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. In this prospectus, we have not included all of the executive compensation-related information that would be required if we were not an emerging growth company. We cannot predict whether investors will find our common stock less attractive if we rely on these exemptions. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock price may be more volatile.

        In addition, the JOBS Act provides that an emerging growth company can take advantage of an extended transition period for complying with new or revised accounting standards. This allows an emerging growth company to delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have irrevocably elected not to avail ourselves of this exemption from new or revised accounting standards and, therefore, we will be subject to the same new or revised accounting standards as other public companies that are not emerging growth companies. We will incur increased costs as a result of operating as a public company, and our management will be required to devote substantial time to new compliance initiatives and corporate governance practices.

        As a public company, and particularly after we are no longer an emerging growth company, we will incur significant legal, accounting and other expenses that we did not incur as a private company. The Sarbanes-Oxley Act of 2002, the Dodd-Frank Wall Street Reform and Consumer Protection Act, the listing

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requirements of The New York Stock Exchange and other applicable securities rules and regulations impose various requirements on public companies, including establishment and maintenance of effective disclosure and financial controls and corporate governance practices. Our management and other personnel will need to devote a substantial amount of time to these compliance initiatives. Moreover, these rules and regulations will increase our legal and financial compliance costs and will make some activities more time-consuming and costly. For example, we expect that these rules and regulations may make it more difficult and more expensive for us to obtain director and officer liability insurance, which could make it more difficult for us to attract and retain qualified members of our board of directors.

        We are currently evaluating these rules and regulations and cannot predict or estimate the amount of additional costs we may incur or the timing of such costs. These rules and regulations are often subject to varying interpretations, in many cases due to their lack of specificity, and, as a result, their application in practice may evolve over time as new guidance is provided by regulatory and governing bodies. This could result in continuing uncertainty regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure and governance practices.

        Pursuant to Section 404, we will be required to furnish a report by our management on our internal control over financial reporting beginning with our second filing of an Annual Report on Form 10-K with the Securities and Exchange Commission after we become a public company. However, while we remain an emerging growth company, we will not be required to include an attestation report on internal control over financial reporting issued by our independent registered public accounting firm. To achieve compliance with Section 404 within the prescribed period, we will be engaged in a process to document and evaluate our internal control over financial reporting, which is both costly and challenging. In this regard, we will need to continue to dedicate internal resources, potentially engage outside consultants and adopt a detailed work plan to assess and document the adequacy of internal control over financial reporting, continue steps to improve control processes as appropriate, validate through testing that controls are functioning as documented and implement a continuous reporting and improvement process for internal control over financial reporting. Despite our efforts, there is a risk that we will not be able to conclude, within the prescribed timeframe or at all, that our internal control over financial reporting is effective as required by Section 404. If we identify one or more material weaknesses, it could result in an adverse reaction in the financial markets due to a loss of confidence in the reliability of our financial statements.

Risks Related to this Offering and Ownership of Our Common Stock

Our stock price may be volatile, and the value of an investment in our common stock may decline.

        Prior to this offering, there has been no public market for shares of our common stock. An active trading market for our common stock may not develop or be sustained, which could depress the market price of our common stock and could affect your ability to sell your shares. The initial public offering price will be determined through negotiations between us and the representatives of the underwriters and may bear no relationship to the price at which our common stock will trade following the completion of this offering. The trading price of our common stock following this offering is likely to be highly volatile and could be subject to wide fluctuations in response to various factors, some of which are beyond our control. In addition to the factors discussed in this "Risk Factors" section and elsewhere in this prospectus, these factors include:

    our operating performance and the operating performance of similar companies;

    the overall performance of the equity markets;

    the number of shares of our common stock publicly owned and available for trading;

    threatened or actual litigation;

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    changes in laws or regulations relating to our solutions;

    any major change in our board of directors or management;

    publication of research reports about us or our industry or changes in recommendations or withdrawal of research coverage by securities analysts;

    large volumes of sales of shares of our common stock by existing stockholders; and

    general political and economic conditions.

        In addition, the stock market in general, and the market for technology companies in particular, has experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of listed companies. Broad market and industry factors may seriously affect the market price of companies' stock, including ours, regardless of actual operating performance. These fluctuations may be even more pronounced in the trading market for our stock shortly following this offering. Securities class action litigation has often been instituted against companies following periods of volatility in the overall market and in the market price of a company's securities. This litigation, if instituted against us, could result in very substantial costs, divert our management's attention and resources and harm our business, operating results and financial condition.

Sales of substantial amounts of our common stock in the public markets, or the perception that such sales might occur, could reduce the price that our common stock might otherwise attain.

        Based upon the number of shares outstanding as of September 28, 2013, after the completion of the offering, we will have 29,746,202 outstanding shares of common stock (30,548,702 shares of common stock if the underwriters exercise in full their option to purchase additional shares). The shares of our common stock that we are selling in this offering may be resold immediately in the public market. We and all of our directors and officers and substantially all of our stockholders and option holders have agreed not to offer, sell or agree to sell, directly or indirectly, any shares of our common stock without the permission of the underwriters for a period of 180 days from the date of this prospectus. When the lock-up period expires, we and our locked-up security holders will be able to sell our shares in the public market. In addition, the underwriters may, in their sole discretion, release all or some portion of the shares subject to lock-up agreements prior to expiration of the lock-up period. See "Shares Eligible for Future Sale" elsewhere in this prospectus. Sales of a substantial number of such shares upon expiration (or the perception that such sales may occur), or early release, of the lock-up could cause our share price to fall or make it more difficult for you to sell your common stock at a time and price that you deem appropriate.

If securities or industry analysts publish inaccurate or unfavorable research about our business, cease coverage of our company or make projections that exceed our actual results, our stock price and trading volume could decline.

        The trading market for our common stock will be influenced by the research and reports that securities or industry analysts publish about us or our business. If one or more of the analysts who cover us downgrades our stock or publishes inaccurate or unfavorable research about our business, our stock price would likely decline. If one or more of these analysts ceases coverage of our company or fails to publish reports on us regularly, demand for our stock could decrease, which might cause our stock price and trading volume to decline.

        Furthermore, such analysts publish their own projections regarding our actual results. These projections may vary widely from one another and may not accurately predict the results we actually achieve. Our stock price may decline if we fail to meet securities and industry analysts' projections.

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Our management will have broad discretion over the use of the proceeds we receive in this offering and might not apply the proceeds in ways that increase the value of your investment.

        Our management generally will have broad discretion to use the net proceeds to us from this offering, and you will be relying on the judgment of our management regarding the application of these proceeds. Our management might not apply the net proceeds from this offering in ways that increase the value of your investment. We expect that we will use the net proceeds of this offering to fund increased advertising to achieve membership growth, development of our products and services and for general corporate purposes, including working capital, selling and marketing activities, general and administrative matters and capital expenditures. We may also use a portion of the net proceeds for the acquisition of businesses and assets that we believe are complementary to our own; however, we do not have any agreements or commitments for any specific acquisitions at this time. We have not otherwise allocated the net proceeds from this offering for any specific purposes. Until we use the net proceeds to us from this offering, we plan to invest them, and these investments may not yield a favorable rate of return. If we do not invest or apply the net proceeds from this offering in ways that enhance stockholder value, we may fail to achieve expected financial results, which could cause our stock price to decline.

Concentration of ownership among our officers, directors, large stockholders and their affiliates may prevent new investors, including purchasers in this offering, from influencing corporate decisions.

        Our officers, directors and their affiliated funds and certain of our pre-IPO stockholders beneficially own or control, directly or indirectly, a majority of the outstanding shares of our common stock, assuming no exercise of the underwriters' option to purchase additional shares. As a result, if some of these persons or entities act together, they will have significant influence over the outcome of matters submitted to our stockholders for approval, including the election of directors and approval of significant corporate transactions, such as a merger or other sale of our company or its assets. This concentration of ownership could limit the ability of other stockholders to influence corporate matters and may have the effect of delaying or preventing an acquisition or cause the market price of our stock to decline. Some of these persons or entities may have interests different from yours. For example, because many of these stockholders purchased their shares at prices substantially below the price at which shares are being sold in this offering and have held their shares for a relatively longer period, they may be more interested in selling the company to an acquiror than other investors or may want us to pursue strategies that are different from the wishes of other investors.

We do not intend to pay dividends for the foreseeable future.

        We never have declared or paid any cash dividends on our capital stock and do not intend to pay any cash dividends in the foreseeable future. We anticipate that we will retain any future earnings for use in the development of our business and for general corporate purposes. Any determination to pay dividends in the future will be at the discretion of our board of directors. Accordingly, investors must rely on sales of their shares of our common stock after price appreciation, which may never occur, as the only way to realize any future gains on their investments.

Anti-takeover provisions contained in our certificate of incorporation and by-laws, as well as provisions of Delaware law, could impair a takeover attempt.

        Our certificate of incorporation, by-laws and Delaware law contain provisions that could have the effect of rendering more difficult or discouraging an acquisition deemed undesirable by our board of directors. Our corporate governance documents include provisions:

    authorizing blank check preferred stock, which could be issued with voting, liquidation, dividend and other rights superior to our common stock;

    limiting the liability of, and providing indemnification to, our directors and officers;

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    limiting the ability of our stockholders to call and bring business before special meetings and to take action by written consent in lieu of a meeting;

    requiring advance notice of stockholder proposals for business to be conducted at meetings of our stockholders and for nominations of candidates for election to our board of directors;

    controlling the procedures for the conduct and scheduling of board of directors and stockholder meetings;

    providing our board of directors with the express power to postpone previously scheduled annual meetings and to cancel previously scheduled special meetings;

    establishing a classified board of directors so that not all members of our board are elected at one time;

    limiting the determination of the number of directors on our board of directors and the filling of vacancies or newly created seats on the board to our board of directors then in office; and

    providing that directors may be removed by stockholders only for cause.

        These provisions, alone or together, could delay hostile takeovers and changes in control of our company or changes in our management.

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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

        This prospectus contains forward-looking statements. All statements other than statements of historical facts contained in this prospectus, including statements regarding our future results of operations and financial position, business strategy and plans and objectives of management for future operations, are forward-looking statements. These statements involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements.

        In some cases, you can identify forward-looking statements by terms such as "may," "will," "should," "expects," "plans," "anticipates," "could," "intends," "target," "projects," "contemplates," "believes," "estimates," "predicts," "potential" or "continue" or the negative of these terms or other similar expressions. The forward-looking statements in this prospectus are only predictions. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition and results of operations. These forward-looking statements speak only as of the date of this prospectus and are subject to a number of risks, uncertainties and assumptions described in the "Risk Factors" section and elsewhere in this prospectus. Because forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified, you should not rely on these forward-looking statements as predictions of future events. The events and circumstances reflected in our forward-looking statements may not be achieved or occur and actual results could differ materially from those projected in the forward-looking statements. Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained herein, whether as a result of any new information, future events or otherwise.

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USE OF PROCEEDS

        We estimate that the net proceeds to us of the sale of the common stock that we are offering will be approximately $72.5 million, assuming an initial public offering price of $15.00 per share, which is the midpoint of the range listed on the cover page of this prospectus, and after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us. A $1.00 increase (decrease) in the assumed initial public offering price of $15.00 per share would increase (decrease) the net proceeds to us from this offering by approximately $5.0 million, assuming the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us. If the underwriters exercise their over-allotment option in full, we estimate that our net proceeds will be approximately $83.7 million.

        We intend to use the net proceeds to us from this offering for working capital and other general corporate purposes, including potential acquisitions.

        Pending use of the proceeds as described above, we intend to invest the proceeds in short-term, interest-bearing, investment-grade securities.


DIVIDEND POLICY

        We have not declared or paid any cash dividends on our capital stock since our inception. We intend to retain future earnings, if any, to finance the operation and expansion of our business and do not anticipate paying any cash dividends in the foreseeable future.


MARKET, INDUSTRY AND OTHER DATA

        We obtained the industry, market and competitive position data in this prospectus from our own internal estimates and research as well as from industry and general publications and research, surveys and studies conducted by third parties. Industry publications, studies and surveys generally state that they have been obtained from sources believed to be reliable, although they do not guarantee the accuracy or completeness of such information. While we believe that each of these studies and publications is reliable, we have not independently verified market and industry data from third-party sources. While we believe our internal company research is reliable and the market definitions are appropriate, neither such research nor these definitions have been verified by any independent source.

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CAPITALIZATION

        The following table sets forth our cash and cash equivalents and capitalization as of September 28, 2013, as follows:

    on an actual basis;

    on a pro forma basis to reflect (1) the automatic conversion of all outstanding shares of our redeemable convertible preferred stock into 21,299,378 shares of common stock upon the closing of this offering, (2) the conversion of all of our warrants for redeemable convertible preferred stock into warrants for common stock immediately prior to the closing of this offering, and the related reclassification of contingent acquisition consideration liability that is currently payable in redeemable convertible preferred stock and the redeemable convertible preferred stock warrant liability to additional paid-in capital; and (3) the filing and effectiveness of our restated certificate of incorporation immediately prior to the closing of this offering; and

    on a pro forma as adjusted basis to give further effect to our issuance and sale of 5,350,000 shares of common stock in this offering at an assumed initial public offering price of $15.00 per share, the midpoint of the range listed on the cover page of this prospectus, after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us.

        You should read this information in conjunction with our consolidated financial statements and the related notes appearing at the end of this prospectus and the "Management's Discussion and Analysis of Financial Condition and Results of Operations" section and other financial information contained in this prospectus.

 
  As of September 28, 2013  
 
  Actual   Pro Forma   Pro Forma As
Adjusted
 
 
  (in thousands)
 

Cash and cash equivalents

  $ 38,003   $ 38,003   $ 110,770  

Redeemable convertible preferred stock warrants

    328          

Contingent acquisition consideration payable in redeemable convertible preferred stock

    5,344          

Redeemable convertible preferred stock, $0.01 par value; 22,632 shares authorized; 21,299 shares issued and outstanding as of September 28, 2013 actual; no shares authorized, no shares issued or outstanding, pro forma and pro forma as adjusted as of September 28, 2013

    152,236          

Stockholders' (deficit) equity:

                   

Common stock, $0.001 par value; 32,000 shares authorized, 3,097 shares issued and outstanding as of September 28, 2013 actual; 300,000 shares authorized, 24,396 shares issued and outstanding pro forma; and 300,000 shares authorized, 29,746 shares issued and outstanding pro forma as adjusted                   

    3     24     29  

Additional paid-in capital

    8,279     165,931     238,458  

Accumulated deficit

    (75,917 )   (75,682 )   (75,682 )

Accumulated other comprehensive income

    1,489     1,489     1,489  
               

Total stockholders' (deficit) equity

    (66,146 )   91,762     164,294  
               

Total cash and cash equivalents and capitalization

  $ 129,765   $ 129,765   $ 275,064  
               

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        A $1.00 increase (decrease) in the assumed initial public offering price of $15.00 per share, which is the midpoint of the range listed on the cover page of this prospectus, would increase (decrease) the pro forma as adjusted amount of each of cash and cash equivalents, additional paid-in capital, total stockholders' equity and total capitalization by approximately $5.0 million, assuming that the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us.

        The table above does not include:

    3,553,291 shares of our common stock issuable upon exercise of stock options outstanding as of September 28, 2013, at a weighted-average exercise price of $4.27 per share;

    80,697 shares of our common stock issuable upon exercise of warrants outstanding as of September 28, 2013, at a weighted-average exercise price of $1.69 per share;

    178,410 shares of our common stock reserved as of September 28, 2013 for future issuance under our 2006 Stock Incentive Plan;

    4,112,048 shares of our common stock reserved for future issuance under our 2014 Incentive Award Plan, which will become effective on the day prior to the public trading date of our common stock, as well as any automatic increases in the number of shares of our common stock reserved for future issuance under this plan; and

    191,278 shares of our Series E redeemable preferred stock (or an equivalent number of shares of our common stock in the event our Series E redeemable preferred stock has been converted into common stock) we expect to issue to certain of our stockholders in the first quarter of 2014 as a result of the achievement of specified performance milestones in connection with a 2012 acquisition.

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DILUTION

        If you invest in our common stock in this offering, your ownership interest will be immediately diluted to the extent of the difference between the initial public offering price per share and the net tangible book value per share of our common stock after this offering. Our pro forma net tangible book value as of September 28, 2013 was $16.7 million, or $0.69 per share of our common stock. Pro forma net tangible book value per share represents our total tangible assets reduced by the amount of our total liabilities excluding redeemable convertible preferred stock warrants and contingent consideration payable in redeemable convertible preferred stock, divided by the total number of shares of our common stock outstanding after giving effect to the automatic conversion of all outstanding shares of our redeemable convertible preferred stock upon the closing of this offering.

        After giving effect to the sale of 5,350,000 shares of common stock that we are offering at an assumed initial public offering price of $15.00 per share, which is the midpoint of the range listed on the cover page of this prospectus, and after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us, our pro forma as adjusted net tangible book value as of September 28, 2013 would have been approximately $89.3 million, or approximately $3.00 per share. This amount represents an immediate increase in pro forma net tangible book value of $2.31 per share to our existing stockholders and an immediate dilution in pro forma net tangible book value of approximately $12.00 per share to new investors purchasing shares of common stock in this offering. We determine dilution by subtracting the pro forma as adjusted net tangible book value per share after this offering from the amount of cash that a new investor paid for a share of common stock. The following table illustrates this dilution:

Assumed initial public offering price per share

        $ 15.00  

Pro forma net tangible book value per share as of September 28, 2013

  $ 0.69        

Increase per share attributable to this offering

  $ 2.31        
             

Pro forma as adjusted net tangible book value per share after this offering

        $ 3.00  
             

Dilution per share to new investors

        $ 12.00  
             

        A $1.00 increase (decrease) in the assumed initial public offering price of $15.00 per share, which is the midpoint of the range listed on the cover page of this prospectus, would increase (decrease) the pro forma as adjusted net tangible book value per share after this offering by approximately $0.17, and dilution in pro forma net tangible book value per share to new investors by approximately $0.83, assuming that the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us.

        If the underwriters exercise their option to purchase additional shares of our common stock in full in this offering, the pro forma as adjusted net tangible book value after the offering would be $3.29 per share, the increase in pro forma net tangible book value per share to existing stockholders would be $2.60 and the dilution per share to new investors would be $11.71 per share, in each case assuming an initial public offering price of $15.00 per share, which is the midpoint of the range listed on the cover page of this prospectus.

        The following table summarizes, as of September 28, 2013, the differences between the number of shares purchased from us, the total consideration paid to us in cash and the average price per share that existing stockholders and new investors paid. The calculation below is based on an assumed initial public offering price of $15.00 per share, which is the midpoint of the range listed on the cover page of this

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prospectus, before deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us.

 
  Shares Purchased   Total
Consideration
   
 
 
  Number   Percent   Amount   Percent   Average Price
Per Share
 

Existing stockholders

    24,396,202     82.0 % $ 156,332,034     66.1 % $ 6.41  

New investors

    5,350,000     18.0     80,250,000     33.9     15.00  
                         

Total

    29,746,202     100 % $ 236,582,034     100 % $ 9.11  
                         

        The foregoing tables and calculations are based on the number of shares of our common stock outstanding as of September 28, 2013 after giving effect to the automatic conversion of all outstanding shares of our redeemable convertible preferred stock upon the closing of this offering, and excludes:

    3,553,291 shares of our common stock issuable upon exercise of stock options outstanding as of September 28, 2013, at a weighted-average exercise price of $4.27 per share;

    80,697 shares of our common stock issuable upon exercise of warrants outstanding as of September 28, 2013, at a weighted-average exercise price of $1.69 per share;

    178,410 shares of our common stock reserved as of September 28, 2013 for future issuance under our 2006 Stock Incentive Plan;

    4,112,048 shares of our common stock reserved for future issuance under our 2014 Incentive Award Plan, which will become effective on the day prior to the public trading date of our common stock, as well as any automatic increases in the number of shares of our common stock reserved for future issuance under this plan; and

    191,278 shares of our Series E redeemable preferred stock (or an equivalent number of shares of our common stock in the event our Series E redeemable preferred stock has been converted into common stock) we expect to issue to certain of our stockholders in the first quarter of 2014 as a result of the achievement of specified performance milestones in connection with a 2012 acquisition.

        To the extent any of these outstanding options or warrants is exercised, there will be further dilution to new investors. To the extent all of such outstanding options and warrants had been exercised as of September 28, 2013, the pro forma as adjusted net tangible book value per share after this offering would be $3.13, and total dilution per share to new investors would be $11.87.

        If the underwriters exercise their over-allotment option in full:

    the percentage of shares of our common stock held by existing stockholders will decrease to approximately 79.9% of the total number of shares of our common stock outstanding after this offering; and

    the number of shares of our common stock held by new investors will increase to 6,152,500, or approximately 20.1% of the total number of shares of our common stock outstanding after this offering.

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SELECTED CONSOLIDATED FINANCIAL DATA

        You should read the following selected historical consolidated financial data below in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the consolidated financial statements, related notes and other financial information included in this prospectus. The selected consolidated financial data in this section are not intended to replace the consolidated financial statements and are qualified in their entirety by the consolidated financial statements and related notes included in this prospectus.

        The consolidated statements of operations and balance sheets data for the years ended and as of December 31, 2011 and 2012 are derived from our audited consolidated financial statements included in this prospectus. The consolidated statements of operations and balance sheet data for the year ended and as of December 31, 2010 are derived from our audited consolidated financial statements not included in this prospectus. The unaudited consolidated statements of operations data for the nine months ended September 30, 2012 and September 28, 2013, and the unaudited consolidated balance sheet data as of September 28, 2013, are derived from our unaudited consolidated financial statements that are included elsewhere in the prospectus. We have included, in our opinion, all adjustments, consisting only of normal recurring adjustments, which we consider necessary for a fair presentation of the financial information set forth in those statements. Our historical results are not necessarily indicative of the results to be expected in the future, and our interim results are not necessarily indicative of the results to be expected for the full fiscal year.

 
  Fiscal Year Ended
December 31,
  Nine Months Ended  
 
  September 30,
2012
  September 28,
2013
 
 
  2010   2011   2012(1)  
 
  (in thousands, except per share data, revenue per paying family and revenue per paying caregiver)
 

Revenue

  $ 12,856   $ 26,006   $ 48,493   $ 32,567   $ 58,976  

Cost of revenue

    2,932     6,225     10,210     7,224     13,992  

Operating expenses:

                               

Selling and marketing

    7,658     22,480     35,916     27,919     43,852  

Research and development

    2,620     4,639     7,662     5,443     8,419  

General and administrative

    2,975     4,621     13,671     8,959     13,307  

Depreciation and amortization

    55     173     1,724     786     3,166  
                       

Total operating expenses

    13,308     31,913     58,973     43,107     68,744  
                       

Operating loss

    (3,384 )   (12,132 )   (20,690 )   (17,764 )   (23,760 )

Other (expense) income, net

    (117 )   (20 )   (47 )   (45 )   (318 )
                       

Loss before income taxes

    (3,501 )   (12,152 )   (20,737 )   (17,809 )   (24,078 )

Provision for (benefit from) income taxes

            (317 )   70     587  
                       

Net loss

    (3,501 )   (12,152 )   (20,420 )   (17,879 )   (24,665 )

Accretion of preferred stock

    (34 )   (41 )   (48 )   (34 )   (42 )
                       

Net loss attributable to common stockholders

  $ (3,535 ) $ (12,193 ) $ (20,468 ) $ (17,913 ) $ (24,707 )
                       

Net loss per share attributable to common stockholders:

                               

Basic and diluted

  $ (1.84 ) $ (5.57 ) $ (7.97 ) $ (7.28 ) $ (8.36 )

Weighted-average shares used to compute net loss per share attributable to common stockholders:

                               

Basic and diluted

    1,921     2,188     2,568     2,462     2,957  

Pro forma net loss per share attributable to common stockholders:

                               

Basic and diluted

              $ (1.03 )       $ (1.00 )

Pro forma weighted average shares used to compute pro forma net loss per share outstanding:

                               

Basic and diluted

                19,702           24,256  

Other Financial and Operational Data:

                               

Adjusted EBITDA(2)

  $ (2,860 ) $ (11,431 ) $ (15,511 ) $ (14,355 ) $ (16,136 )

Total members

    2,057     3,635     6,678     6,169     9,178  

Total families

    916     1,706     3,509     3,213     4,932  

Total caregivers

    1,141     1,929     3,169     2,956     4,246  

Total paying families

    136     241     407     348     453  

Total revenue per paying family

  $ 94   $ 108   $ 119   $ 94   $ 130  

Total paying caregivers

    14     29     62     51     74  

Total revenue per paying caregiver

  $ 45   $ 49   $ 66   $ 59   $ 59  

(1)
The results of operations for Besser Betreut GmbH, or Betreut, have been included in our consolidated financial statements since the date of acquisition on July 5, 2012. The results of operations for Breedlove & Associates, L.L.C., or Breedlove, have been included in our consolidated financial statements since the date of acquisition on August 3, 2012. The results of operations for Parents in a Pinch, Inc., or PIAP, have been included in our consolidated financial statements since the date of acquisition on December 31, 2012.

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(2)
We define adjusted EBITDA as net loss, plus: provision for (benefit from) income taxes, other (expense) income, net, depreciation and amortization, stock-based compensation, accretion of contingent consideration, merger and acquisition related costs and other unusual or non-cash significant adjustments. Please see "Adjusted EBITDA" below for more information and for a reconciliation of adjusted EBITDA to net loss, the most directly comparable financial measure calculated and presented in accordance with U.S. generally accepted accounting principles, or GAAP.

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

 
  Fiscal Year Ended
December 31,
  Nine Months Ended  
 
  September 30,
2012
  September 28,
2013
 
 
  2010   2011   2012  

Cost of revenue

  $ 29   $ 20   $ 159   $ 84   $ 132  

Selling and marketing

    72     264     369     427     265  

Research and development

    51     70     213     167     195  

General and administrative

    317     174     1,211     1,043     604  
                       

Total stock-based compensation

  $ 469   $ 528   $ 1,952   $ 1,721   $ 1,196  
                       

 

 
  As of December 31,    
 
 
  As of
September 28,
2013
 
 
  2010   2011   2012  

Consolidated Balance Sheet Data:

                         

Cash and cash equivalents

  $ 20,718   $ 35,663   $ 44,776   $ 38,003  

Working capital

    18,304     31,445     39,688     15,522  

Total assets

    22,054     37,444     129,402     122,302  

Total deferred revenue

    2,207     2,408     5,102     8,135  

Total non-current liabilities

    109     414     11,020     7,078  

Redeemable convertible preferred stock

    36,079     61,078     152,194     152,236  

Total stockholders' deficit

    (17,642 )   (29,238 )   (43,442 )   (66,146 )

Adjusted EBITDA

        To provide investors with additional information regarding our financial results, we have disclosed in the table above and within this prospectus adjusted EBITDA, a non-GAAP financial measure. We have provided a reconciliation below of adjusted EBITDA to net loss, the most directly comparable GAAP financial measure.

        We have included adjusted EBITDA in this prospectus because it is a key measure used by our management and board of directors to understand and evaluate our core 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 changes in, or cash requirements for, our working capital needs;

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

    adjusted EBITDA does not reflect tax payments that may represent a reduction in cash available to us; 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 other financial performance measures, including various cash flow metrics, net loss, and our other GAAP results. The following table presents a reconciliation of adjusted EBITDA for each of the periods indicated (in thousands):

 
  Fiscal Year Ended
December 31,
  Nine Months Ended  
 
  September 30,
2012
  September 28,
2013
 
 
  2010   2011   2012(1)  

Reconciliation of adjusted EBITDA:

                               

Net loss

  $ (3,501 ) $ (12,152 ) $ (20,420 ) $ (17,879 ) $ (24,665 )

(Benefit from) provision for income taxes

            (317 )   70     587  

Other expense, net

    117     20     47     45     318  

Depreciation and amortization

    55     173     2,440     1,060     5,167  

Stock-based compensation

    469     528     1,952     1,721     1,196  

Accretion of contingent consideration

            239     108     423  

Merger and acquisition related costs

            548     520      

IPO related costs

                    838  
                       

Adjusted EBITDA

  $ (2,860 ) $ (11,431 ) $ (15,511 ) $ (14,355 ) $ (16,136 )
                       

(1)
The results of operations for Betreut have been included in our consolidated financial statements since the date of acquisition on July 5, 2012. The results of operations for Breedlove have been included in our consolidated financial statements since the date of acquisition on August 3, 2012. The results of operations for PIAP have been included in our consolidated financial statements since the date of acquisition on December 31, 2012.

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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 consolidated financial statements and the related notes and other financial information included elsewhere in this prospectus. Some of the information contained in this discussion and analysis or set forth elsewhere in this prospectus, including information with respect to our plans and strategy for our business, includes forward-looking statements that involve risks and uncertainties. These statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from the information expressed or implied by these forward-looking statements. You should review the "Special Note Regarding Forward-Looking Statements" and "Risk Factors" section of this prospectus for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.

Overview

        We are the world's largest online marketplace for finding and managing family care with more than 9.7 million members, including approximately 5.2 million families and 4.5 million caregivers, spanning 16 countries. In 2013, we had an average of over 6.3 million unique visitors to our platform each month, including approximately 2.2 million visitors per month from mobile devices. We help families address their particular lifecycle of care needs, which includes 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. We believe the scale and breadth of our services, combined with our commitment to delivering the best possible member experience for families and caregivers, have made us the most trusted and leading brand for finding and managing family care.

        Our platform provides families with robust solutions. Our consumer matching solutions—our core offering—allow families to search for, qualify, vet, connect with and ultimately select caregivers in a low-cost, reliable and easy way. Our platform also provides 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 core 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. Through our consumer payments solutions, families can not only electronically pay a caregiver, they can also subscribe for tax preparation services through our Care.com HomePay product. This product offering deepens our relationship with our members and could dramatically enhance the lifetime value associated with each member.

        We have expanded our marketplace beyond families and caregivers. We also serve employers by providing access to our platform to over 600,000 employer-sponsored families. In addition, we serve care-related businesses—such as day care centers, nanny agencies and home care agencies—who 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.

        Since our founding in October 2006, we have continually introduced innovative product offerings and solutions to assist families in addressing their particular lifecycle of care needs, including the following:

    In May 2007, we launched our website, which included service offerings for child care, senior care, pet care and tutoring;

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    During 2008, we expanded our service offerings to include care for special needs children and adults, as well as housekeeping;

    In July 2010, we launched our first television marketing campaign;

    In September 2010, we launched our solution for employers, which allows employers to offer our service as an employee benefit;

    In April 2011, we expanded our service offerings to include care for the unique needs of military families;

    In May 2011, we launched our marketing solutions offering, which provides care-related businesses an efficient and cost-effective way to target qualified families looking for care services;

    In April 2012, we launched our website in the United Kingdom. This was our first non-U.S. location and marked the start of international growth;

    In July 2012, we acquired Besser Betreut GmbH, or Betreut, a Berlin-based provider of online care matching solutions in Western Europe. Betreut also offers a solution for employers, which allows employers to offer their service as an employee benefit. This acquisition allowed us to establish a business presence in the Western European market and made us the largest online care destination in the world;

    In August 2012, we acquired Breedlove & Associates, L.L.C., or Breedlove, an Austin-based provider of household employer payroll, tax and compliance services;

    In November 2012, we launched our recruiting solutions offering, which allows care-related businesses to recruit caregivers for full-time and part-time employment;

    In December 2012, we acquired Parents in a Pinch, Inc., or PIAP, a Boston-based provider of in-home backup childcare and eldercare services for working families. This acquisition expanded our product offering for members needing alternative care arrangements for their child or senior due to events such as school closure or the illness of their child or regular caregiver;

    In June 2013, we acquired the assets of the Big Tent public groups platform, which hosts a wide range of public and private groups, including over 1,600 parent-oriented groups with over 200,000 members; and

    In July 2013, we launched our convenience payments product, which enables families to make electronic payments to their caregivers using our website or mobile apps.

        We have experienced rapid growth in revenue and members. Our members grew from 1.9 million as of September 30, 2010 to more than 9.1 million as of September 28, 2013, representing a 70% compounded annual growth rate. Our revenue has grown from $12.9 million for the fiscal year ended December 31, 2010 to $48.5 million for the fiscal year ended December 31, 2012, representing a 94% compounded annual growth rate, primarily driven by our consumer matching solutions. Revenue for the nine months ended September 28, 2013 increased to $59.0 million, representing an 81% increase from the $32.6 million of revenue generated during the nine months ended September 30, 2012. We experienced net losses of $3.5 million in 2010, $12.2 million in 2011 and $20.4 million 2012.

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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 revenue per paying family and revenue per paying caregiver):

 
  Fiscal Year Ended
December 31,
  Nine Months Ended  
 
  2010   2011   2012   September 30,
2012
  September 28,
2013
 

Total members

    2,057     3,635     6,678     6,169     9,178  

Total families

    916     1,706     3,509     3,213     4,932  

Total caregivers

    1,141     1,929     3,169     2,956     4,246  

Total paying families

    136     241     407     348     453  

Total revenue per paying family

  $ 94   $ 108   $ 119   $ 94   $ 130  

Total paying caregivers

    14     29     62     51     74  

Total revenue per paying caregiver

  $ 45   $ 49   $ 66   $ 59   $ 59  

        Total Members.    We define total members as the number of paying and non-paying families, including those who have registered through employer programs, and caregivers who have registered through our websites since the launch of our marketplace in 2007, as well as subscribers of our HomePay product. Our total members increased 84% during the twelve months ended December 31, 2012 and 49% during the nine months ended September 28, 2013, compared to the same periods in the prior year.

        Total Families.    We define total families as the number of paying and non-paying families who have registered through our websites, including those who have registered through employer programs, since the launch of our marketplace in 2007, as well as subscribers of our HomePay product. Our total families increased 106% during the twelve months ended December 31, 2012 and 54% during the nine months ended September 28, 2013, compared to the same periods in the prior year.

        Total Caregivers.    We define total caregivers as the number of paying and non-paying caregivers who have registered through our websites since the launch of our marketplace in 2007. Our total caregivers increased 64% during the twelve months ended December 31, 2012 and 44% during the nine months ended September 28, 2013, compared to the same periods in the prior year.

        Total Paying Families.    We define total paying families as the number of families that have made a subscription payment to us during the relevant fiscal period. Our total paying families have increased 69% during the twelve months ended December 31, 2012 and 30% during the nine months ended September 28, 2013, compared to the same periods in the prior year. We expect our total paying families to continue to expand if we are able to continue to increase the conversion rate of families to paying families and introduce new products and services that attract new families to our platform.

        Total Revenue per Paying Family.    We calculate total revenue per paying family as total revenue in the relevant fiscal period divided by total paying families in the relevant fiscal period. Our total revenue per paying family increased 10% during the twelve months ended December 31, 2012 and 38% during the nine months ended September 28, 2013, compared to the same periods in the prior year. The three acquisitions we completed during the second half of fiscal 2012 contributed to the increase during the nine-month period ended September 28, 2013. We expect our total revenue per paying family to continue to grow as we further expand our offerings and services, as well as seek to increase the percentage of families that are using our HomePay product.

        Total Paying Caregivers.    We define total paying caregivers as the number of caregivers that have made a subscription payment to us during the relevant fiscal period. Our total paying caregivers increased

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118% during the twelve months ended December 31, 2012 and 47% during the nine months ended September 28, 2013, compared to the same periods in the prior year.

        Total Revenue per Paying Caregiver.    We calculate total revenue per paying caregiver as revenue derived from caregivers in the relevant fiscal period divided by total paying caregivers in the relevant fiscal period. Our total revenue per paying caregiver increased 36% during the twelve months ended December 31, 2012 and remained consistent during the nine months ended September 28, 2013, compared to the same periods in the prior year. We do not expect revenue derived from caregivers to be a material component of our total revenue in the foreseeable future.

Factors and Trends of Our Business

        We believe that our performance and future success depend upon a number of factors, including our ability to continue to expand our member base, convert basic members to paying members, introduce innovative new products and enhance existing offerings and our infrastructure. Each of these areas presents significant opportunities for us, but also poses significant risks and challenges that we must successfully address. See the section titled "Risk Factors" for a further discussion on these and other risks to our business.

        Lifetime Revenue.    Our revenue is impacted by a number of factors, including the pricing and mix of our monthly, quarterly and annual subscriptions, our ability to cross-sell our suite of products and services and the total length of time a member subscribes to our consumer matching solutions, including renewals, which we define as subscriptions by the same subscriber after, but not necessarily consecutively with, the initial subscription. During fiscal 2012, our U.S. consumer matching paying member spent an average of $34 per month to subscribe to our consumer matching solutions. Based on our historical data, the expected number of paid months of these paying members for the three-year period beginning with their initial subscription is seven months: six months in the first year and one month in the next two years. Over time, we expect to generate higher monthly revenue per member and more paid months per member if we are successful in cross-selling our other products and services. In particular, we have started to successfully cross-sell our HomePay product, where users on average pay $1,000 per year over 3.5 years. As we cross-sell HomePay and other products and services, we expect to see a significant increase in the lifetime revenue of our members.

        Customer Acquisition Costs.    We expect to continue to make significant investments to grow our member and enterprise customer bases. Our average cost of acquisition per member and the number of new members we generate depends on a number of factors, including the effectiveness of our marketing campaigns, changes in cost of media, the mix of our media expenditures between television and search advertising, the competitive environment in our markets and publicity about our company. In addition, an increasing percentage of our paying members have come from unpaid sources, including word-of-mouth referrals, search engine optimization and returning users, which lowers our total customer acquisition cost. In 2012, a majority of our paying families originated from unpaid sources. Currently, a majority of our marketing expenditures are spent on acquiring new U.S. members for our consumer matching solutions. In fiscal 2012, we spent $67 per new paying U.S. consumer matching solutions member, which includes television advertising, search advertising and all direct marketing expenses.

        Impact of Seasonal Demands.    We generally experience some seasonality fluctuations in our financial results due to a heightened demand for caregivers at the beginning of a school year and at the beginning of a calendar year. Accordingly, purchases of subscriptions for our consumer matching solutions generally increase in the first and third quarters compared to the second and fourth quarters. Revenue recognition associated with these subscriptions is recognized on a ratable basis over the subscription term, which could result in cash collection and revenue recognition occurring in different fiscal quarters.

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        Acquisitions.    As part of our ongoing growth strategy, we have completed a number of acquisitions since July 2012. Our growth since this time has been significantly affected by these acquisitions. In general, we pursue acquisitions for several reasons, such as acquiring additional products which enhance the user experience of our services and complement our existing business.

Financial Operations Overview

Revenue

        We generate revenue primarily through 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. Additionally, we generate revenue through annual contracts with corporate employers to provide access to our suite of products and services as an employee benefit and through contractual obligations with businesses 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.

        Consumer Matching Solutions.    Our consumer matching solutions provide families access to job postings, search features, caregiver profiles and content. 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 background checks. Paying caregiver members pay a subscription fee for priority notification of jobs, messaging services and to perform limited third-party background checks on themselves. Subscription payments are received from all paying members at the time of signup 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" for a description of the revenue recognition criteria).

        Additionally, we generate revenue through contracts that provide corporate employers access to a comprehensive suite of products and services that can be offered as an employee benefit. 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.

        Consumer Payments Solutions.    Our consumer payments solutions provide families several options to manage their financial relationship with their caregiver through the use of household employer payroll and tax services, as well as electronic convenience payments. Revenue related to these product offerings are primarily generated through quarterly subscriptions and recognized on a daily ratable basis over the period the services are provided. Revenue generated through electronic convenience payments are typically recognized in the period earned.

        Other Revenue.    Other revenue includes revenue generated 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 our recruiting solutions offering, which allows care-related businesses to recruit caregivers for full-time and part-time employment, as well as revenue generated from international markets. Revenue related to these product offerings is typically recognized in the period earned or, in the case of revenue generated from international markets, on a daily ratable basis over the subscription term.

Cost of Revenue and Operating Expenses

        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 and the cost of background checks run on both families and caregivers. Additionally, cost of revenue includes website hosting fees and amortization expense related to caregiver relationships, proprietary software

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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 customer base.

        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 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 heavily in sales and marketing to expand our global footprint, grow our current customer base and continue building brand awareness. In the near term, we expect sales and marketing expenses to increase on an absolute basis and to be our largest expense both on an absolute basis and as a percentage of revenue.

        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.

        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; and facilities and other supporting overhead costs not allocated to other departments. 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 and incur additional expenses 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.

        Depreciation and Amortization.    Depreciation and amortization expenses primarily consist of depreciation of computer equipment, software and leasehold improvements and amortization of acquired intangibles. We expect that depreciation and amortization expenses will increase on an absolute basis as we continue to expand our technology infrastructure.

        Other Expense, Net.    Other expense, net consists primarily of the interest income earned on our cash and cash equivalents, changes in the fair value of redeemable convertible preferred stock warrants and foreign exchange gains and losses.

        (Benefit from) Provision for Income taxes.    (Benefit from) provision for income taxes consists of federal and state income taxes in the United States and income taxes in certain foreign jurisdictions.

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Results of Operations

        The following table sets forth our consolidated results of operations for the periods presented. The period-to-period comparison of financial results is not necessarily indicative of future results.

 
  Fiscal Year Ended   Nine Months Ended  
 
  December 31,
2011
  December 31,
2012
  September 30,
2012
  September 28,
2013
 
 
  (in thousands, except per share data)
 

Revenue

  $ 26,006   $ 48,493   $ 32,567   $ 58,976  

Cost of revenue

    6,225     10,210     7,224     13,992  

Operating expenses:

                         

Selling and marketing

    22,480     35,916     27,919     43,852  

Research and development

    4,639     7,662     5,443     8,419  

General and administrative

    4,621     13,671     8,959     13,307  

Depreciation and amortization

    173     1,724     786     3,166  
                   

Total operating expenses

    31,913     58,973     43,107     68,744  
                   

Operating loss

    (12,132 )   (20,690 )   (17,764 )   (23,760 )

Other expense, net

    (20 )   (47 )   (45 )   (318 )
                   

Loss before income taxes

    (12,152 )   (20,737 )   (17,809 )   (24,078 )

(Benefit from) provision for income taxes

        (317 )   70     587  
                   

Net loss

    (12,152 )   (20,420 )   (17,879 )   (24,665 )

Accretion of preferred stock

    (41 )   (48 )   (34 )   (42 )
                   

Net loss attributable to common stockholders

  $ (12,193 ) $ (20,468 ) $ (17,913 ) $ (24,707 )
                   

Net loss per share attributable to common stockholders:

                         

Basic and diluted

  $ (5.57 ) $ (7.97 ) $ (7.28 ) $ (8.36 )

Weighted-average shares used to compute net loss per share attributable to common stockholders:

                         

Basic and diluted

    2,188     2,568     2,462     2,957  

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

 
  Fiscal Year Ended
December 31,
  Nine Months Ended  
 
  2011   2012   September 30,
2012
  September 28,
2013
 

Cost of revenue

  $ 20   $ 159   $ 84   $ 132  

Selling and marketing

    264     369     427     265  

Research and development

    70     213     167     195  

General and administrative

    174     1,211     1,043     604  
                   

Total stock-based compensation

  $ 528   $ 1,952   $ 1,721   $ 1,196  
                   

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

 
  Fiscal Year Ended   Nine Months Ended  
 
  December 31,
2011
  December 31,
2012
  September 30,
2012
  September 28,
2013
 

Revenue

    100 %   100 %   100 %   100 %

Cost of revenue

    24     21     22     24  

Operating expenses:

                         

Selling and marketing

    86     74     86     74  

Research and development

    18     16     17     14  

General and administrative

    18     28     28     23  

Depreciation and amortization

    1     4     2     5  
                   

Total operating expenses

    123     122     132     117  
                   

Operating loss

    (47 )   (43 )   (55 )   (40 )

Other expense, net

                (1 )
                   

Loss before income taxes

    (47 )   (43 )   (55 )   (41 )

(Benefit from) provision for income taxes

        (1 )       1  
                   

Net loss

    (47 )%   (42 )%   (55 )%   (42 )%
                   

Nine Months Ended September 30, 2012 and September 28, 2013

Revenue

 
  Nine Months Ended    
   
 
 
  September 30,
2012
  September 28,
2013
  Dollar
Change
  Percent
Change
 
 
  (in thousands, except percentages)
 

Revenue

  $ 32,567   $ 58,976   $ 26,409     81 %

        The increase in revenue was primarily driven by an increase in the number of paying families, mainly due to a greater emphasis on television advertising, and an increase in revenue per paying family resulting from increased subscription fees, longer subscription terms and background check revenue. Additionally, the acquisitions of Breedlove, Betreut and PIAP completed during the second half of fiscal 2012 contributed $11.5 million to this increase. Furthermore, there was an increase in caregiver related revenue of $1.4 million, primarily related to increased subscription fees and background check revenue.

Cost of Revenue

 
  Nine Months Ended    
   
 
 
  September 30,
2012
  September 28,
2013
  Dollar
Change
  Percent
Change
 
 
  (in thousands, except percentages)
 

Cost of revenue

  $ 7,224   $ 13,992   $ 6,768     94 %

Percentage of revenue

    22 %   24 %            

        The increase in cost of revenue was related to higher compensation and related expenses of $3.0 million due to an expanded headcount as a result of the acquisitions completed during the second half of fiscal 2012 and, to a lesser extent, to meet the demand associated with our larger network of families and expanded product offerings. Additionally, we incurred higher costs related to the amortization of certain acquired intangible assets of $1.8 million, as well as increased expenditures for credit card processing fees and background checks of $0.4 million and $0.3 million, respectively. Overall, cost of

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revenue as a percentage of revenue was flat due to the increase in revenue and our realization of economies of scale, partially offset by the increased expenses noted above.

Selling and Marketing

 
  Nine Months Ended    
   
 
 
  September 30,
2012
  September 28,
2013
  Dollar
Change
  Percent
Change
 
 
  (in thousands, except percentages)
 

Selling and marketing

  $ 27,919   $ 43,852   $ 15,933     57 %

Percentage of revenue

    86 %   74 %            

        The increase in selling and marketing expense was primarily attributed to increased spending on customer acquisition marketing of $11.6 million, of which $7.1 million was related to increased spending on television advertising. Additionally, there was an increase of $2.5 million in compensation and related expenses, largely due to the Breedlove and Betreut acquisitions completed in the second half of fiscal 2012. Furthermore, there was a $0.6 million increase in spending related to the recruitment of caregivers. Overall, selling and marketing expenses as a percentage of revenue decreased. This decrease was primarily the result of both the Breedlove and Betreut acquisitions. During the first nine months of fiscal 2013, both companies contributed revenue; however, our television advertising expenditures related to these companies were low. If we were to remove the revenue associated with Breedlove and Betreut, selling and marketing expense as a percentage of revenue would have been 95% for the nine months ended September 28, 2013.

Research and Development

 
  Nine Months Ended    
   
 
 
  September 30,
2012
  September 28,
2013
  Dollar
Change
  Percent
Change
 
 
  (in thousands, except percentages)
 

Research and development

  $ 5,443   $ 8,419   $ 2,976     55 %

Percentage of revenue

    17 %   14 %            

        The increase in research and development expense was primarily related to higher compensation and related expenses of $1.6 million, largely due to an increase in headcount. Additionally, there was increased spending on third-party resources of $1.0 million. The increase in both headcount and third-party resources was related to the continued investment in the development of our platform, principally related to work on new platform features, including work on our mobile applications, convenience payments product and our international platform, to encourage membership growth and enhance the user experience.

General and Administrative

 
  Nine Months Ended    
   
 
 
  September 30,
2012
  September 28,
2013
  Dollar
Change
  Percent
Change
 
 
  (in thousands, except percentages)
 

General and administrative

  $ 8,959   $ 13,307   $ 4,348     49 %

Percentage of revenue

    28 %   23 %            

        The increase in general and administrative expense was primarily related to higher compensation and related expenses of $1.3 million as we expanded our headcount to support our overall growth. Additionally, there was increased spending on audit and related expenses of $0.8 million and third-party resources of $0.7 million. The increases were primarily attributable to increased costs associated with our growth and

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preparation to be a public company. Furthermore, we experienced an increase in facilities-related costs of $0.6 million.

Depreciation and Amortization

 
  Nine Months Ended    
   
 
 
  September 30,
2012
  September 28,
2013
  Dollar
Change
  Percent
Change
 
 
  (in thousands, except percentages)
 

Depreciation and amortization

  $ 786   $ 3,166   $ 2,380     303 %

Percentage of revenue

    2 %   5 %            

        The increase in depreciation and amortization expense was primarily related to the amortization of certain intangible assets acquired as part of the Breedlove, Betreut and PIAP acquisitions completed during the second half of fiscal 2012. Over the next five years, we expect to incur total amortization expense associated with the three acquisitions of $12.1 million.

Other Income (Expense), net

 
  Nine Months Ended    
   
 
 
  September 30,
2012
  September 28,
2013
  Dollar
Change
  Percent
Change
 
 
  (in thousands, except percentages)
 

Other income (expense), net

  $ (45 ) $ (318 ) $ (273 )   607 %

Percentage of revenue

    0 %   1 %            

        The decrease in other income (expense), net was primarily driven by net unrealized transaction gains on foreign currency exchange, coupled with a mark-to-market adjustment of a redeemable convertible preferred stock warrant recorded.

Provision for Income Taxes

 
  Nine Months Ended    
   
 
 
  September 30,
2012
  September 28,
2013
  Dollar
Change
  Percent
Change
 
 
  (in thousands, except percentages)
 

Provision for income taxes

  $ 70   $ 587   $ 517     739 %

Percentage of revenue

    0 %   1 %            

        The increase in provision for income taxes was primarily driven by deferred tax liabilities related to goodwill associated with the acquisition of Breedlove.

Years Ended December 31, 2011 and 2012

Revenue

 
  Fiscal Year    
   
 
 
  December 31,
2011
  December 31,
2012
  Dollar
Change
  Percent
Change
 
 
  (in thousands, except percentages)
 

Revenue

  $ 26,006   $ 48,493   $ 22,487     86 %

        The increase in revenue was primarily driven by an increase in the number of paying families, mainly due to a greater emphasis on television advertising, and an increase in revenue per paying family resulting from increased subscription fees and longer subscription terms. Additionally, the acquisitions of Breedlove and Betreut completed during the second half of fiscal 2012 contributed $6.0 million to the increase. Furthermore, there was an increase in caregiver related revenue of $2.8 million, primarily related to increased subscription fees and background check revenue.

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Cost of Revenue

 
  Fiscal Year    
   
 
 
  December 31,
2011
  December 31,
2012
  Dollar
Change
  Percent
Change
 
 
  (in thousands, except percentages)
 

Cost of revenue

  $ 6,225   $ 10,210   $ 3,985     64 %

Percentage of revenue

    24 %   21 %            

        The increase in cost of revenue was primarily related to higher compensation and related expenses of $0.8 million due to an expanded headcount as a result of the acquisitions completed during fiscal 2012 and, to a lesser extent, to meet the demand associated with our larger network of members and expanding product offerings. Additionally, we incurred higher costs related to the amortization of certain acquired intangible assets of $0.7 million, as well as increased expenditures for background checks, credit card processing fees and website hosting costs of $0.5 million, $0.5 million and $0.3 million, respectively. Overall, cost of revenue as a percentage of revenue has decreased due to the increase in revenue and our realization of economies of scale, partially offset by the increased expenses noted above.

Selling and Marketing

 
  Fiscal Year    
   
 
 
  December 31,
2011
  December 31,
2012
  Dollar
Change
  Percent
Change
 
 
  (in thousands, except percentages)
 

Selling and marketing

  $ 22,480   $ 35,916   $ 13,436     60 %

Percentage of revenue

    86 %   74 %            

        The increase in selling and marketing expense was primarily attributable to a larger spend on acquisition marketing of $9.7 million, of which $7.2 million related to increased spending on television advertising. Additionally, there was an increase of $2.1 million in compensation and related expenses largely due to the Breedlove and Betreut acquisitions completed in the second half of fiscal 2012, as well as other headcount increases as we have continued to invest more in brand awareness. Furthermore, there was a $0.8 million increase in spending related to the recruitment of caregivers, and a $0.4 million increase in facility-related costs, principally related to the relocation of our corporate headquarters. Overall, selling and marketing expenses as a percentage of revenue decreased. This decrease was primarily the result of both the Breedlove and Betreut acquisitions. During 2012, both companies contributed revenue; however, our television advertising expenditures related to these companies were low. If we were to remove the revenue associated with Breedlove and Betreut, selling and marketing expense as a percentage of revenue would have been 85%.

Research and Development

 
  Fiscal Year    
   
 
 
  December 31,
2011
  December 31,
2012
  Dollar
Change
  Percent
Change
 
 
  (in thousands, except percentages)
 

Research and development

  $ 4,639   $ 7,662   $ 3,023     65 %

Percentage of revenue

    18 %   16 %            

        The increase in research and development expense was primarily related to higher compensation and related expenses of $1.7 million largely due to an increase in headcount. Additionally, there was increased spending on third-party resources of $1.1 million. The increase in both headcount and third-party resources was related to the continued investment in the development of our platform, principally related to work on new platform features, including work on our mobile applications, convenience payments

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product and our international platform, to encourage membership growth and enhance the user experience.

General and Administrative

 
  Fiscal Year    
   
 
 
  December 31,
2011
  December 31,
2012
  Dollar
Change
  Percent
Change
 
 
  (in thousands, except percentages)
 

General and administrative

  $ 4,621   $ 13,671   $ 9,050     196 %

Percentage of revenue

    18 %   28 %            

        The increase in general and administrative expense was primarily related to higher compensation and related expenses of $5.8 million as we expanded our headcount to support our overall growth and, to a lesser extent, an increase in stock-based compensation expense. Additionally, we experienced an increase in acquisition-related transaction costs of $0.5 million, an increase in legal costs of $0.4 million (excluding those incurred as part of the acquisitions), an increase in audit and related expenses of $0.2 million, and an increase in accretion expense of contingent payments as a result of the three acquisitions that occurred during the second half of fiscal 2012.

Depreciation and Amortization

 
  Fiscal Year    
   
 
 
  December 31,
2011
  December 31,
2012
  Dollar
Change
  Percent
Change
 
 
  (in thousands, except percentages)
 

Depreciation and amortization

  $ 173   $ 1,724   $ 1,551     897 %

Percentage of revenue

    1 %   4 %            

        The increase in depreciation and amortization expense was primarily related to the amortization of certain intangible assets acquired as part of the Breedlove and Betreut acquisitions completed during the second half of fiscal 2012.

Other Expense, Net

 
  Fiscal Year    
   
 
 
  December 31,
2011
  December 31,
2012
  Dollar
Change
  Percent
Change
 
 
  (in thousands, except percentages)
 

Other expense, net

  $ (20 ) $ (47 ) $ (27 )   135 %

Percentage of revenue

    0 %   0 %            

        The decrease in other expense, net was primarily driven by net unrealized transaction gains on foreign currency exchange, coupled with a mark-to-market adjustment of a redeemable convertible preferred stock warrant recorded.

Benefit From Income Taxes

 
  Fiscal Year    
   
 
 
  December 31,
2011
  December 31,
2012
  Dollar
Change
  Percent
Change
 
 
  (in thousands, except percentages)
 

Benefit from income taxes

  $   $ (317 ) $ (317 )   (100 )%

Percentage of revenue

    0 %   (1 )%            

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        The benefit from income taxes was primarily related to a foreign deferred tax benefit related to the operating losses incurred subsequent to the acquisition of Betreut, partially offset by deferred tax liabilities related to goodwill associated with the acquisition of Breedlove.

Quarterly Results of Operations Data

        The following tables set forth our unaudited quarterly consolidated statements of operations data and our unaudited consolidated statements of operations data as a percentage of revenue for each of the seven quarters presented (certain items may not foot due to rounding). We have prepared the quarterly data on a consistent basis with the audited consolidated financial statements included in this prospectus. In the opinion of management, the financial information reflects all necessary adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of this data. This information should be read in conjunction with the audited consolidated financial statements and related notes included elsewhere in this prospectus. The results of historical periods are not necessarily indicative of the results of operations for a full year or any future period.

 
  For the Three Months Ended  
 
  March 31,
2012
  June 30,
2012
  September 30,
2012
  December 31,
2012
  March 31,
2013
  June 30,
2013
  September 28,
2013
 
 
  (in thousands, except per share data)
 

Revenue

  $ 8,557   $ 9,802   $ 14,208   $ 15,926   $ 18,162   $ 19,133   $ 21,681  

Cost of revenue

    2,171     2,291     2,762     2,986     4,227     4,607     5,158  

Operating expenses:

                                           

Selling and marketing

    8,543     6,579     12,797     7,997     12,933     12,329     18,590  

Research and development

    1,547     1,745     2,151     2,219     2,667     2,890     2,862  

General and administrative

    1,820     2,448     4,691     4,712     3,701     4,156     5,450  

Depreciation and amortization

    54     63     669     938     1,019     1,057     1,090  
                               

Total operating expenses

    11,964     10,835     20,308     15,866     20,320     20,432     27,992  
                               

Operating loss

    (5,578 )   (3,324 )   (8,862 )   (2,926 )   (6,385 )   (5,906 )   (11,469 )

Other income (expense), net

    22     3     (70 )   (2 )   (127 )   10     (201 )
                               

Loss before income taxes

    (5,556 )   (3,321 )   (8,932 )   (2,928 )   (6,512 )   (5,896 )   (11,670 )

Provision for (benefit from) income taxes

    5     16     49     (387 )   307     218     62  
                               

Net loss

    (5,561 )   (3,337 )   (8,981 )   (2,541 )   (6,819 )   (6,114 )   (11,732 )

Accretion of preferred stock

    (10 )   (10 )   (13 )   (15 )   (14 )   (14 )   (14 )
                               

Net loss attributable to common stockholders

  $ (5,571 ) $ (3,347 ) $ (8,994 ) $ (2,556 ) $ (6,833 ) $ (6,128 ) $ (11,746 )
                               

Net loss per common share:

                                           

Basic and diluted

  $ (2.46 ) $ (1.46 ) $ (2.67 ) $ (0.88 ) $ (2.35 ) $ (2.08 ) $ (3.86 )

Weighted average shares outstanding:

                                           

Basic and diluted

    2,263     2,287     3,366     2,881     2,901     2,941     3,042  

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

 
  For the Three Months Ended  
 
  March 31,
2012
  June 30,
2012
  September 30,
2012
  December 31,
2012
  March 31,
2013
  June 30,
2013
  September 28,
2013
 

Revenue

    100 %   100 %   100 %   100 %   100 %   100 %   100 %

Cost of revenue

    25     23     19     19     23     24     24  

Operating expenses:

                                           

Selling and marketing

    100     67     90     50     71     64     86  

Research and development

    18     18     15     14     15     15     13  

General and administrative

    21     25     33     30     20     22     25  

Depreciation and amortization

    1     1     5     6     6     6     5  
                               

Total operating expenses

    140     111     143     100     112     107     129  
                               

Operating loss

    (65 )   (34 )   (62 )   (18 )   (35 )   (31 )   (53 )

Other income (expense), net

                    (1 )        
                               

Loss before income taxes

    (65 )   (34 )   (63 )   (18 )   (36 )   (31 )   (53 )

Provision for (benefit from) income taxes

                (2 )   2     1      
                               

Net loss

    (65 )%   (34 )%   (63 )%   (16 )%   (38 )%   (32 )%   (53 )%
                               

 

 
  For the Three Months Ended  
 
  March 31,
2012
  June 30,
2012
  September 30,
2012
  December 31,
2012
  March 31,
2013
  June 30,
2013
  September 28,
2013
 
 
  (in thousands, except revenue per paying family and revenue per paying caregiver)
 

Other Financial and Operational Data:

                                           

Adjusted EBITDA(1)

  $ (5,335 ) $ (2,555 ) $ (6,465 ) $ (1,156 ) $ (4,287 ) $ (3,645 ) $ (8,204 )

Total members

    4,784     5,386     6,169     6,678     7,453     8,211     9,178  

Total families

    2,384     2,706     3,213     3,509     3,948     4,354     4,932  

Total caregivers

    2,401     2,680     2,956     3,169     3,505     3,857     4,246  

Total paying families

    175     190     247     242     261     273     318  

Total revenue per paying family

  $ 49   $ 52   $ 58   $ 66   $ 70   $ 70   $ 68  

Total paying caregivers

    19     27     32     30     32     41     45  

Total revenue per paying caregiver

  $ 42   $ 40   $ 36   $ 36   $ 39   $ 37   $ 36  

(1)
We define adjusted EBITDA as net loss, plus: provision for (benefit from) income taxes, other (expense) income, net, depreciation and amortization, stock-based compensation, accretion of contingent consideration, merger and acquisition related costs and other unusual non-recurring or non-cash significant adjustments. Please see "Adjusted EBITDA" in the section titled "Selected Consolidated Financial Data" for more information.

 
  For the Three Months Ended  
 
  March 31,
2012
  June 30,
2012
  September 30,
2012
  December 31,
2012
  March 31,
2013
  June 30,
2013
  September 28,
2013
 
 
  (in thousands)
 

Reconciliation of adjusted EBITDA:

                                           

Net loss

  $ (5,561 ) $ (3,337 ) $ (8,981 ) $ (2,541 ) $ (6,819 ) $ (6,114 ) $ (11,732 )

Provision for (benefit from) income taxes

    5     16     49     (387 )   307     218     62  

Other (income) expense, net

    (22 )   (3 )   70     2     127     (10 )   201  

Depreciation and amortization

    54     63     943     1,380     1,666     1,700     1,801  

Stock-based compensation

    178     197     1,346     231     297     421     478  

Accretion of contingent consideration

            108     131     135     140     148  

IPO related costs

                            838  

Merger and acquisition related costs

    11     509         28              
                               

Adjusted EBITDA

  $ (5,335 ) $ (2,555 ) $ (6,465 ) $ (1,156 ) $ (4,287 ) $ (3,645 ) $ (8,204 )
                               

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        Our revenue has increased in all periods presented, primarily as a result of the growth in the number of paying members and revenue associated with the Breedlove, Betreut and PIAP acquisitions completed during the second half of fiscal 2012. The increase in our customer base was primarily attributed to increased spending on acquisition marketing as we began to place a greater emphasis on television advertising. Consumer needs for care typically decrease during the summer months. As a result, new member signups are typically higher during the third quarter of our fiscal year, contributing to a larger portion of revenue recognized during the second half of our fiscal year.

        Our cost of revenue has increased sequentially in absolute dollars consistent with the growth in our revenue. Additionally, there was an increase beginning in the third quarter of fiscal 2012 related to the amortization expense of certain acquired intangible assets.

        Our selling and marketing expenses have increased primarily due to planned increases in advertising expense. We generally increase our advertising expenditures in the first and third quarters of the calendar year to attract families. We generally decrease advertising expenditures during the last quarter of the calendar year as consumers' needs for our services shifts as winter holidays approach. Additionally, we have experienced increases in compensation and related costs largely due to the Breedlove and Betreut acquisitions completed in the second half of fiscal 2012, as well as other headcount increases as we have continued to invest more in brand awareness.

        Our research and development expenses increased sequentially as we continued to invest in hiring employees and utilizing third-party resources to improve our current platform and develop new features such as mobile applications, convenience payments and our international platform.

        Our general and administrative expenses increased sequentially in absolute dollars as we invested in our infrastructure to support our growth in operations by hiring employees and utilizing third-party resources on project initiatives and to, a lesser extent, an increase in stock-based compensation expense.

        Our depreciation and amortization expense increased sequentially primarily as a result of amortization expense on certain intangible assets acquired as part of the three acquisitions consummated in fiscal 2012.

Liquidity and Capital Resources

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

 
  Nine Months Ended   Fiscal Year Ended  
 
  September 30,
2012
  September 28,
2013
  December 31,
2011
  December 31,
2012
 

Cash flow (used in) provided by:

                         

Operating activities

  $ (11,966 ) $ (5,374 ) $ (9,594 ) $ (15,155 )

Investing activities

    (24,246 )   (1,467 )   (488 )   (25,860 )

Financing activities

    50,164     220     25,027     50,157  

Effect of exchange rates on cash balances

    (17 )   (152 )       (29 )
                   

Decrease (increase) in cash and cash equivalents

  $ 13,935   $ (6,773 ) $ 14,945   $ 9,113  
                   

        As of September 28, 2013, we had cash and cash equivalents of $38.0 million.

        Since inception, we have financed our operations and capital expenditures primarily through private sales of redeemable convertible preferred stock. Specifically, since inception we received an aggregate of $111.3 million in gross proceeds from the issuance of redeemable convertible preferred stock. 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.

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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 months ended September 28, 2013

        Cash from operating activities used $5.4 million during the first nine months of fiscal 2013. This amount resulted from a net loss of $24.7 million, adjusted for non-cash items of $7.6 million, and a net $11.7 million source of cash due to increases in operating liabilities, partially offset by increases in operating assets.

        Non-cash expenses within net loss consisted primarily of $5.2 million for depreciation and amortization expense, $1.2 million of stock-based compensation expense and $0.7 million for deferred income taxes.

        An increase in operating liabilities and a decrease in operating assets contributed $11.7 million to net cash used in operating activities. The cash generated from this change consisted of an increase in accrued expenses and other current liabilities of $7.5 million and increase in deferred revenue of $3.2 million and an increase in accounts payable of $2.8 million, partially offset by an increase in unbilled accounts receivable of $0.6 million, an increase in prepaid expenses and other assets of $0.5 million and an increase in accounts receivable of $0.4 million.

    Nine months ended September 30, 2012

        Cash from operating activities used $12.0 million during the first nine months of fiscal 2012. This amount resulted from a net loss of $17.9 million, adjusted for non-cash items of $3.0 million, and a net $2.8 million source of cash due to increases in operating liabilities, partially offset by increases in operating assets.

        Non-cash expenses within net loss consisted primarily of $1.7 million of stock-based compensation expense and $1.1 million for depreciation and amortization expense.

        An increase in operating liabilities and a decrease in operating assets contributed $2.8 million to net cash used in operating activities. The cash generated from this change consisted of an increase in accounts payable of $2.5 million, an increase in deferred revenue of $2.0 million and an increase in accrued expenses and other current liabilities of $0.8 million, partially offset by an increase in unbilled accounts receivable of $1.0 million, an increase in accounts receivable of $0.8 million and an increase in prepaid expenses and other assets of $0.5 million.

    Fiscal 2012

        Cash from operating activities used $15.2 million during fiscal 2012. This amount resulted from a net loss of $20.4 million, adjusted for non-cash items of $4.4 million, and a net $0.8 million source of cash due to increases in operating assets, partially offset by increases in operating liabilities.

        Non-cash expenses within net loss consisted primarily of $2.4 million for depreciation and amortization expense and $2.0 million of stock-based compensation expense.

        An increase in both operating assets and liabilities contributed $0.9 million to net cash used in operating activities. The cash generated from this change consisted of an increase in deferred revenue of $1.9 million, an increase in accounts payable of $0.7 million and an increase in accrued expenses and other current liabilities of $0.3 million, partially offset by an increase in unbilled receivables of $1.1 million, an increase in prepaid expenses and other assets of $0.6 million and an increase in accounts receivables of $0.5 million.

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    Fiscal 2011

        Cash from operating activities used $9.6 million during fiscal 2011. This amount resulted from a net loss of $12.2 million, adjusted for non-cash items of $0.8 million, and a net $1.8 million source of cash due to increases in operating liabilities, partially offset by increases in operating assets.

        Non-cash expenses within net loss consisted primarily of $0.5 million of stock-based compensation expense and $0.2 million for depreciation and amortization expense.

        An increase in operating liabilities and a decrease in operating assets contributed $1.8 million to net cash used in operating activities. The cash generated from this change consisted of an increase in accrued expenses of $1.8 million, a decrease in prepaid expenses and other assets of $0.4 million and an increase in other non-current liabilities of $0.3 million, partially offset by a decrease in accounts payable of $0.3 million, an increase in other non-current assets of $0.3 million and an increase in accounts receivable of $0.2 million.

Investing Activities

    Nine months ended September 28, 2013

        During the first nine months of fiscal 2013, we used $1.5 million of cash for investing activities. This was related to capital expenditures of $1.1 million, principally related to furniture and fixtures expenditures and $0.4 million used in the acquisition of the assets of the Big Tent public groups platform.

    Nine months ended September 30, 2012

        During the first nine months of fiscal 2012, we used $24.2 million of cash for investing activities. The cash used consisted primarily of $23.9 million related to the cash portion of the acquisitions of Breedlove and Betreut, and $0.4 million related to computer hardware and software expenditures.

    Fiscal 2012

        During fiscal 2012, we used $25.9 million of cash for investing activities. The cash used consisted primarily of $25.1 million related to the cash portion of the acquisitions of Breedlove, Betreut and PIAP, and $0.4 million related to computer hardware and software expenditures. We are not currently a party to any material purchase contracts related to future purchases of property, plant and equipment.

    Fiscal 2011

        During fiscal 2011, we used $0.5 million of cash for investing activities, primarily related to computer hardware and software expenditures.

Financing Activities

    Nine months ended September 28, 2013

        During the first nine months of fiscal 2013, we received $0.2 million of cash for financing activities. The cash generated consisted of $0.5 million from the exercise of employee stock options, partially offset by payments for deferred offering costs of $0.2 million.

    Nine months ended September 30, 2012

        During the first nine months of fiscal 2012, we received $50.2 million of cash for financing activities. The cash generated consisted primarily of $49.9 million from the issuance of Series E redeemable convertible preferred stock.

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    Fiscal 2012

        During fiscal 2012, we received $50.2 million of cash for financing activities. The cash generated consisted primarily of $49.9 million from the issuance of Series E redeemable convertible preferred stock.

    Fiscal 2011

        During fiscal 2011, we received $25.0 million of cash for financing activities. The cash generated consisted of $25.0 million from the issuance of Series D redeemable convertible preferred stock.

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 fiscal 2012 or 2011 or in the nine months ended September 28, 2013.

Contractual Obligations

        We lease our facility in Waltham, Massachusetts under an operating lease that expires in 2016. We lease other facilities in Austin, Texas and Berlin, Germany, the longest lease of which expires in 2020. We do not have any debt or capital lease obligations.

        As of December 31, 2012, our contractual obligations were as follows:

 
  Payments Due by Period  
 
  Total   Less than
1 Year
  1-3 Years   3-5 Years   More Than
5 Years
 
 
  (in thousands)
 

Operating lease obligations

  $ 12,150   $ 2,419   $ 5,290   $ 2,881   $ 1,560  

        In addition to the commitments discussed above, we have commitments to make potential future milestone payments as part of the Breedlove acquisition—up to $5.0 million in cash and 382,555 shares of redeemable convertible preferred stock—and the PIAP acquisition of $0.7 million in cash, in each case if certain revenue and bookings targets are achieved. See Note 3, "Business Acquisitions," in the accompanying notes to consolidated financial statements for additional information.

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." 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. In addition, we are in the process of evaluating the benefits of relying on the other exemptions and reduced reporting requirements provided by the JOBS Act.

        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 PCAOB 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

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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 initial public offering or until we no longer meet the requirements of being an emerging growth company, whichever is earlier.

Critical Accounting Policies and Estimates

        Our consolidated financial statements are prepared in accordance with U.S. GAAP. The preparation of our 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 consolidated financial statements:

    Revenue recognition;

    Business combinations;

    Software development costs;

    Goodwill;

    Amortization of intangible assets;

    Income taxes; and

    Stock-based compensation.

        For further information on our significant accounting policies, see Note 2 to our consolidated financial statements.

Revenue Recognition

        In general, we recognize revenue when (i) persuasive evidence of an arrangement exists, (ii) delivery has occurred or services have been rendered to the customer, (iii) the fee is fixed or determinable, and (iv) collectability is reasonably assured. We derive our revenue primarily from ongoing subscription fees. Revenue from subscription fees is recognized on a daily basis over the subscription term as the services are delivered. Revenue from background checks, lead generation and advertising is recognized in the period earned. Other service revenues are recognized as the services are performed.

        Certain of our arrangements provide companies the opportunity to purchase Care.com services on behalf of their employees. These arrangements typically include a subscription to our consumer matching solutions for their employees. These arrangements are accounted for as multiple element arrangements. We have concluded that each element in the arrangement has stand-alone value as the individual services can be sold separately. In addition, there is no right of refund once service has been delivered. Therefore, we have concluded each element of the arrangement is a separate unit of accounting. In accordance with authoritative guidance on revenue recognition, we allocate consideration at the inception of an arrangement to each unit of accounting based on the relative selling price method in accordance with the selling price hierarchy. The objective of the hierarchy is to determine the price at which we would transact a sale if the service were sold on a stand-alone basis, and requires the use of: (1) vendor-specific objective evidence, or VSOE, if available; (2) third-party evidence, or TPE, if VSOE is not available; and (3) best estimate of selling price, or BESP, if neither VSOE nor TPE is available. Since VSOE or TPE are not typically available, BESP is generally used to allocate the selling price to each unit of accounting. We determine BESP for units of account by considering multiple factors, including but not limited to prices we

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charges for similar offerings, sales volumes, geographies and other factors contemplated in negotiating multiple element transactions.

Business Combinations

        We determine and allocate the purchase price of an acquired company to the tangible and intangible assets acquired and liabilities assumed based on their fair values as of the business combination date, including identifiable intangible assets, which either arise from a contractual or legal right or are separable from goodwill. We base the fair value of identifiable intangible assets acquired in a business combination on detailed valuations that use information and assumptions provided by management, which consider management's best estimates of inputs and assumptions that a market participant would use. We allocate any excess purchase price over the fair value of the net tangible and identifiable intangible assets acquired to goodwill. The use of alternative valuation assumptions, including estimated revenue projections, growth rates, cash flows, discount rates, estimated useful lives and probabilities surrounding the achievement of revenue-based milestones, could result in different purchase price allocations and amortization expense in current and future periods. Transaction costs associated with these acquisitions are expensed as incurred through general and administrative costs.

        In those circumstances where an acquisition involves a contingent consideration arrangement, we recognize a liability equal to the fair value of the contingent payments we expect to make as of the acquisition date. We re-measure this liability at each reporting period and record changes in the fair value as a component of operating expenses. Increases or decreases in the fair value of the contingent consideration liability can result from changes in discount periods and rates, as well as changes in the timing and amount of revenue estimates or in the timing or likelihood of achieving revenue-based milestones.

        Results of operations and cash flows of acquired companies are included in our operating results from the date of acquisition.

Software Development Costs

        Internal and external software development costs associated with the development of software for internal use are expensed to research and development during the preliminary project stage and capitalized during the application development stage. To date, costs incurred during application development stage have been insignificant. During the years ended December 31, 2011 and 2012 and the nine months ended September 28, 2013, we believe the substantial majority of our development efforts were either in the preliminary stage of development or were for maintenance of, and minor upgrades and enhancements to, internal-use software and, accordingly, application development costs have been insignificant.

Goodwill

        Goodwill is recorded as the difference, if any, between the aggregate consideration paid for an acquisition and the fair value of the net tangible and intangible assets acquired. We evaluate goodwill and indefinite lived intangible assets for impairment at the reporting unit level (operating segment or one level below an operating segment) annually or more frequently if we believe indicators of impairment exist. In accordance with the guidance, we are permitted to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If we conclude that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, then a two-step goodwill impairment test is performed.

        The first step of the impairment test involves comparing the fair value of our reporting unit against its aggregate carrying value, including goodwill. If the carrying amount exceeds the reporting unit's fair value, we perform the second step of the impairment test to determine the amount of impairment loss. The second step of the goodwill impairment test involves comparing the implied fair value of goodwill with the carrying value of that goodwill. We have selected October 1 as the date we will perform our annual impairment test.

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Amortization and Impairment of Intangible Assets

        We amortize our intangible assets that have finite lives over their estimated useful lives. We use a straight-line method of amortization, unless a method that better reflects the pattern in which the economic benefits of the intangible asset are consumed or otherwise used up can be reliably determined. Amortization is recorded over the estimated useful lives ranging from one to ten years. We review our intangible assets subject to amortization to determine if any adverse conditions exist, or a change in circumstances has occurred that would indicate impairment or a change in the remaining useful life. If the carrying value of an asset exceeds its undiscounted cash flows, we will write-down the carrying value of the intangible asset, or asset group, to its fair value in the period identified. In assessing fair value, we must make assumptions regarding estimated future cash flows and discount rates. If these estimates or related assumptions change in the future, we may be required to record impairment charges. We generally calculate fair value as the present value of estimated future cash flows to be generated by the asset using a risk-adjusted discount rate. If the estimate of an intangible asset's remaining useful life is changed, we will amortize the remaining carrying value of the intangible asset prospectively over the revised remaining useful life.

Income Taxes

        We account for income taxes in accordance with ASC 740, Income Taxes. ASC 740 is an asset and liability approach that requires recognition of deferred tax assets and liabilities for the expected future tax consequences attributable to differences between the carrying amounts of assets and liabilities for financial reporting purposes and their respective tax basis, and for operating loss and tax credit carryforwards. ASC 740 requires a valuation allowance against net deferred tax assets if, based upon the available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized.

        We recognize the tax benefit from an uncertain tax position only if it is more likely than not the tax position will be sustained on examination by the tax authorities, based on the technical merits of the position. The tax benefits recognized in the consolidated financial statements from such position are then measured based on the largest benefit that has a greater than 50% likelihood of being realized upon settlement.

Stock-Based Compensation

        We account for all stock-based compensation payments issued to employees, consultants and directors using an option pricing model for estimating fair value. Accordingly, stock-based compensation expense is measured based on the estimated fair value of the awards on the date of grant, net of forfeitures. Compensation expense is recognized for the portion that is ultimately expected to vest over the period during which the recipient renders the required services to us using the straight-line single option method. In accordance with authoritative guidance, the fair value of non-employee stock-based awards is re-measured as the awards vest, and the resulting value, if any, is recognized as expense during the period the related services are rendered.

        We use the Black-Scholes option-pricing model, or the Black Scholes model, to determine the fair value of stock-based awards requiring the input of subjective assumptions, including (a) the fair value of our common stock, (b) the expected term of the award, (c) our expected stock price volatility over the expected term of the award, (d) the risk-free interest rate and (e) expected dividends. A summary of these historical assumptions and estimates are as follows:

    Fair Value of Our Common Stock.  Because our stock has not been publicly traded, the fair value of our common stock has been determined by our board of directors on each grant date, as discussed in "Common Stock Valuations" below.

    Expected Term.  The expected term was estimated using the "simplified" method allowed under Securities and Exchange Commission guidance, whereby the expected life equals the arithmetic average of the vesting term and the original contractual term of the option.

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    Volatility.  As we did not have any trading history for our common stock, the expected stock price volatility for our common stock was estimated by taking the average historic price volatility for a group of similarly situated publicly traded companies based on daily price observations over a period equivalent to the expected term of the stock option grants. These publicly traded companies were selected based on comparable characteristics to us and consist of several companies in the technology industry that are similar in enterprise value, stage of life cycle, risk profile, financial leverage and with historical share price information sufficient to meet the expected life of our stock-based awards. We did not rely on implied volatilities of traded options in our industry peers' common stock because the volume of activity was relatively low. We intend to continue to consistently apply this process using the same or similar public companies until a sufficient amount of historical information regarding the volatility of our own common stock share price becomes available, or unless circumstances change such that the identified companies are no longer similar to us, in which case more suitable companies whose share prices are publicly available would be utilized in the calculation.

    Risk-free Rate.  The risk-free interest rate is based on the yields of U.S. Treasury securities with maturities similar to the expected term of the options during the period the options were granted.

    Dividend Yield.  We have never declared or paid any cash dividends and we do not presently plan to pay cash dividends in the foreseeable future. Consequently, we used an expected dividend yield of zero.

        If any of the assumptions used in the Black-Scholes model changes significantly, stock-based compensation for future awards may differ materially compared with the awards granted previously. The following table presents the weighted-average assumptions used to estimate the fair value of options granted during the periods presented:

 
  Fiscal Year Ended   Nine Months Ended  
 
  December 31,
2011
  December 31,
2012
  September 30,
2012
  September 28,
2013
 

Risk-free interest rate

    1.41 - 3.31 %   1.15 - 1.41 %   1.41 %   1.23 - 1.98 %

Expected term (years)

    6.25     6.25     6.25     6.25  

Volatility

    56.5 %   56.5 %   56.5 %   44.6 %

Expected dividend yield

                 

        We are also required to estimate forfeitures at the time of grant and revise those estimates in subsequent periods if actual forfeitures differ from our estimates. We use historical data to estimate pre-vesting option forfeitures and record stock-based compensation expense only for those awards that are expected to vest. To the extent that actual forfeitures differ from our estimates, the difference is recorded as a cumulative adjustment in the period the estimates were revised. For the years ended December 31, 2011 and 2012, and the nine months ended September 30, 2012 and September 28, 2013, we applied a forfeiture rate that was determined based on historical forfeitures.

        Total stock-based compensation expense for the years ended December 31, 2011 and 2012 and for the nine months ended September 30, 2012 and September 28, 2013 was as follows (in thousands):

 
  Fiscal Year Ended   Nine Months Ended  
 
  December 31,
2011
  December 31,
2012
  September 30,
2012
  September 28,
2013
 
 
   
   
  (unaudited)
 

Cost of revenue

  $ 20   $ 159   $ 84   $ 132  

Selling and marketing

    264     369     427     265  

Research and development

    70     213     167     195  

General and administrative

    174     1,211     1,043     604  
                   

Total stock-based compensation expense

  $ 528   $ 1,952   $ 1,721   $ 1,196  
                   

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        As of September 28, 2013, there was $4.3 million of unrecognized compensation cost related to unvested employee stock option agreements, which is expected to be recognized over a weighted-average period of approximately 3.0 years.

        The table below shows the intrinsic value of our outstanding vested and unvested options as of September 28, 2013 based upon an assumed initial public offering price of $15.00 per share, which is the midpoint of the range listed on the cover page of this prospectus.

 
  Number of shares
underlying options
  Intrinsic Value  

Total vested options outstanding

    1,410,408   $ 16,801,358  

Total unvested options outstanding

    2,142,883   $ 21,330,425  

Total options outstanding

    3,553,291   $ 38,131,784  

Common Stock Valuations

        We are required to estimate the fair value of the common stock underlying our stock-based awards when performing the fair value calculations with the Black-Scholes model. The fair value of the common stock underlying our stock-based awards was determined by our board of directors or the compensation committee of our board of directors (referred to in this "Stock-Based Compensation" section collectively as our board of directors), which intended all options to purchase shares of our common stock to be granted at an exercise price per share not less than the per share fair value of our common stock underlying those options on the date of grant. In the absence of a public trading market for our common stock, on each grant date, we developed an estimate of the fair value of our common stock in order to determine an exercise price for the option grants based in part on input from an independent third-party valuation. The estimates of our common stock fair value were determined in accordance with methodologies and assumptions consistent with the guidelines outlined in the American Institute of Certified Public Accountants Practice Aid, Valuation of Privately-Held-Company Equity Securities Issued as Compensation. The assumptions we used in the valuation model were based on future expectations combined with management judgment. Our board of directors, with input from management, exercised significant judgment and considered numerous objective and subjective factors to determine the fair value of our common stock as of the date of each option grant, including the following factors:

    the prices of our redeemable convertible preferred stock sold to outside investors in arms-length transactions;

    the rights, preferences and privileges of our redeemable convertible preferred stock relative to our common stock;

    our operating and financial performance;

    our stage of development and current business conditions and projections affecting our business, including the introduction of new products and services;

    the hiring of key personnel;

    the likelihood of achieving a liquidity event for the shares of common stock underlying these stock options, such as an initial public offering or sale of our company, in light of prevailing market conditions;

    any adjustment necessary to recognize a lack of a liquid trading market for our common stock;

    the market performance of comparable publicly traded companies; and

    the overall U.S. and global economic and capital market conditions.

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        We granted stock options with the following exercise prices between September 1, 2012 and the date of this prospectus:

Option Grant Dates
  Number of
Shares
Underlying
Options
  Exercise Price
Per Share
 

10/16/2012

    292,450   $ 5.92  

12/13/2012

    126,000     5.92  

3/1/2013

    842,000     6.02  

3/31/2013

    304,912     6.02  

7/29/2013

    155,000     6.28  

        To assist our board of directors with the determination of the exercise price of our stock options and the estimated fair value of the common stock underlying the options, we obtained third-party valuations of our common stock as of August 3, 2012, December 31, 2012 and April 30, 2013.

        In determining the estimated per share fair value of our common stock, we utilized the option pricing method, or OPM, at each valuation date. The OPM treats common stock and redeemable convertible preferred stock as call options on the enterprise value of the company, with exercise prices based on the liquidation preference of the redeemable convertible preferred stock. Therefore, the common stock has value only if the funds available for distribution to the stockholders exceed the value of the liquidation preference at the time of a liquidity event such as a merger, sale or initial public offering, or IPO, assuming the enterprise has funds available to make a liquidation preference meaningful and collectible by the stockholders. The common stock is modeled to be a call option with a claim on the enterprise at an exercise price equal to the remaining value immediately after the redeemable convertible preferred stock is liquidated. The OPM uses the Black-Scholes model to price the call option. Each of the assumption underlying the inputs to the OPM at each value date and the specific facts and circumstances considered by our board of directors on the valuation and grant dates are discussed below.

Stock Option Grants October 1, 2012 through December 31, 2012

        Our board of directors granted stock options on October 16, 2012 and December 13, 2012, with each having an exercise price of $5.92 per share. The exercise price per share was supported by the independent third-party valuation as of August 3, 2012. The specific facts and circumstances considered by our board of directors for the August 3, 2012 valuation included the following:

    In July 2012, we completed the acquisition of Betreut for aggregate consideration of approximately $23.3 million.

    On August 3, 2012, we completed a $50.0 million financing issuing shares of our Series E redeemable convertible preferred stock at a purchase price of $13.07 per share.

    On August 3, 2012, and in conjunction with our Series E redeemable convertible preferred stock financing, we completed our acquisition of Breedlove for aggregate consideration of approximately $53.9 million and the issuance of 1,676,500 shares of our Series E redeemable convertible preferred stock as partial consideration in the acquisition.

        Given the Series E financing occurred on the valuation date, we relied on the valuation ascribed to our company by our investors in this arms-length transaction to determine the equity value of the company under the OPM using a back-solve approach. Importantly, the valuation ascribed by our investors in the Series E financing priced in the acquisition of Breedlove and payment of the cash and stock consideration in the acquisition transaction. The back-solve approach resulted in a valuation reflecting both the growth in our core business and the value of the acquisition. After deriving this equity value, the value of the call options were derived under the OPM using the Black-Scholes model utilizing the assumptions described above for the expected term of the award, expected stock price volatility, risk-free interest rate and expected dividends. After applying a discount for lack of marketability of 20%, the resulting estimated per

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share value of our common stock was $5.92 as of September 30, 2012. At each grant date, our board of directors considered whether any events occurred that would trigger any material changes to the business or would require adjustment to the estimated fair value. At October 16, 2012 and December 13, 2012, our board of directors did not identify any such events that would require adjustment to the estimated fair value from August 3, 2012.

Stock Option Grants January 1, 2013 through March 31, 2013

        Our board of directors granted stock options on March 1, 2013 and March 31, 2013, with each having an exercise price of $6.02 per share. The exercise price per share was supported by the independent third-party valuation as of December 31, 2012, which indicated a fair value of our common stock of $5.95 per share. Although our board of directors did not determine that any material events for the company occurred between August 3, 2012 and each of the grant dates in this period, as a result of a requirement to revalue the contingent consideration associated with our acquisition of Breedlove, the board secured an independent third-party valuation as of December 31, 2012 to support this revaluation. For purposes of the December 31, 2012 valuation, we utilized two methodologies, each weighted equally to derive the equity value of the company—a market-based approach and an income-based approach. Under the market based approach, we selected public companies that we considered to be comparable to us based on industry, size and market. Utilizing these comparable companies, we derived a mean revenue multiple associated with their market value and then derived an equity value of our company applying these mean revenue market multiples. Under the income-based approach, we utilized a discounted cash flow method to derive an equity value of the company. After we applied a discount for lack of marketability of 20% to the blended equity value, we derived an fair estimated per share value of our common stock of $5.95 as of December 31, 2012. At March 1, 2013 and March 31, 2013, our board of directors did not identify any such material events or require adjustment to the estimated fair value from December 31, 2012.

Stock Option Grants on July 29, 2013

        Our board of directors granted stock options on July 29, 2013, with an exercise price of $6.28 per share, which was determined to be the fair market value at that time. The exercise price per share was supported by the independent third-party valuation as of April 30, 2013.

        For purposes of the April 30, 2013 valuation, we utilized a methodology consistent with the December 31, 2012 valuation, whereby we estimated the equity value of the company weighting equally the equity value derived under a market-based approach and an income-based approach or discounted cash flow model. Utilizing this methodology, we derived an increased overall equity value of the company reflective of an increase in our equity value under the market-based approach. We then applied a discount for lack of marketability of 15% resulting in an estimated per share value of our common stock of $6.28 as of April 30, 2013. The decrease in the discount for lack of marketability from the December 31, 2012 valuation reflected a shorter time to liquidity based on discussion with management in regards to a potential initial public offering, as well as an overall strengthening in the U.S. equity capital markets for IPO issuers. At July 29, 2013, our board of directors did not identify any such material events or require adjustment to the estimated fair value from April 30, 2013.

        In connection with the preparation of our financial statements for the nine months ended September 28, 2013, we undertook a retrospective reassessment of the fair market value of our common stock on July 29, 2013 for financial reporting purposes. In connection with that reassessment, we determined $10.23 per share to be the fair market value of our common stock on July 29, 2013. This value was supported by an independent third-party valuation of our common stock as of July 31, 2013 received on October 23, 2013. For purposes of this valuation, we utilized a methodology consistent with the April 30, 2013 valuation, whereby we estimated the equity value of the company weighting equally the equity value derived under a market-based approach and an income-based approach or discounted cash flow model. Utilizing this methodology, we derived an increased overall equity value of the company reflective of an increase in our equity value under the market-based approach. We then applied a

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weighted-average discount for lack of marketability of 13.7% resulting in an estimated per share value of our common stock of $10.23 as of July 31, 2013. The decrease in the discount for lack of marketability from the April 30, 2013 valuation reflected a potentially shorter time to liquidity.

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. 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 December 31, 2012 or as of September 28, 2013.

        Under our current investment policy, we invest our excess cash in money market funds. 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.

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.

Internal Control Over Financial Reporting

        Our independent registered public accounting firm has not conducted an audit of our internal control over financial reporting. However, in connection with the preparation of the registration statement of which this prospectus forms a part, our independent registered public accounting firm discovered errors in our financial statements related to the accounting for intangible assets. Specifically, we erroneously recognized impairment charges related to certain acquired intangible assets that should not have been impaired and determined periodic amortization using inappropriate economic useful lives. The effect of these errors was material to our financial statements. As a result of these items, we concluded that a material weakness in our internal control over financial reporting existed as of December 31, 2012.

        A "material weakness" is a deficiency, or a combination of deficiencies, in our control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim

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financial statements will not be prevented, detected and corrected on a timely basis. The cause of the material weakness was related to our lack of resources within our finance function required to analyze and account for such non-routine transactions stated above in a timely manner.

        Since January 1, 2013, we have taken steps to build a more experienced accounting and finance organization, including hiring a new chief financial officer, senior vice president of finance, assistant controller and senior accountant, and designing and implementing improved processes and controls, and we believe we have remediated this material weakness during fiscal 2013. However, our efforts to remedy this material weakness may not prevent future material weaknesses or significant deficiencies in our internal control over financial reporting. See also "Risk Factors" for additional information on this matter.

Recently Issued and Adopted Accounting Pronouncements

        In July 2013, the Financial Accounting Standards Board, or the FASB, issued ASU 2013-11 regarding accounting standards update, or ASU, Topic 740 "Income Tax." This ASU clarifies the guidance on the presentation of an unrecognized tax benefit, or a portion of an unrecognized tax benefit, in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss or a tax credit carryforward. This ASU will be effective for our fiscal year beginning December 29, 2013. Early adoption is permitted. At this time, we expect that the adoption of this ASU will impact the presentation of tax assets and liabilities on the statement of financial position, but will not impact our consolidated financial position, results of operations or cash flows.

        In February 2013, the FASB issued updated authoritative guidance requiring entities to report the effect of significant reclassifications out of accumulated other comprehensive income on the respective line items in net income if the amount being reclassified is required under GAAP to be reclassified in its entirety to net income. For other amounts that are not required under GAAP to be reclassified in their entirety from accumulated other comprehensive income to net income in the same reporting period, an entity is required to cross-reference other disclosures required under GAAP that provide additional detail about those amounts. We adopted this guidance in our interim period ended March 31, 2013. The adoption of this guidance did not impact our financial statements, as the guidance is related to disclosure only, and we have not had significant reclassifications out of accumulated other comprehensive income.

        In December 2011, the FASB issued ASU 2011-11, Disclosures about Offsetting Assets and Liabilities. This ASU requires an entity to disclose both gross and net information about instruments and transactions eligible for offset in the statements of financial position as well as instruments and transactions executed under a master netting or similar arrangement and was issued to enable users of financial statements to understand the effects or potential effects of those arrangements on their financial position. This ASU is required to be applied retrospectively and is effective for fiscal years, and interim periods within those years, beginning on or after January 1, 2013. In January 2013, the FASB issued ASU 2013-01, Balance Sheet (Topic 210): Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities. The amendments clarify that the scope of ASU 2011-11 applies to derivatives accounted for in accordance with ASC 815, Derivatives and Hedging, including bifurcated embedded derivatives, repurchase agreements and reverse repurchase agreements, and securities borrowing and securities lending transactions that are either offset in accordance with ASC 210-20-45 or ASC 815-10-45 or subject to an enforceable master netting arrangement or similar agreement. The effective date is the same as the effective date of ASU 2011-11. The adoption of this ASU did not have a material impact on our consolidated financial statements.

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BUSINESS

Our Mission

        Our mission is to improve the lives of families and caregivers by helping them connect in a reliable and easy way. Our solutions help families make informed decisions in one of the most important and highly considered aspects of their family life—finding and managing quality care for their family—their children, parents, pets and other loved ones. In providing families a comprehensive marketplace for care, we are building the largest destination for quality caregivers to find fulfilling employment and career opportunities globally. We strive to help our members—families and caregivers—pursue their passions and fulfill the basic human need of caring for each other.

Overview

        We are the world's largest online marketplace for finding and managing family care with more than 9.7 million members, including approximately 5.2 million families and 4.5 million caregivers, spanning 16 countries. In 2013, we had an average of over 6.3 million unique visitors to our platform each month, including approximately 2.2 million visitors per month from mobile devices. We help families address their particular lifecycle of care needs, which includes 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. In 2013, 60% of all job postings were for part-time care services, with the remaining 40% seeking full-time care. Examples of the various types of care services families find in our marketplace, depending on their diverse and evolving needs, include:

    An experienced nanny to care for a new-born child and help with laundry;

    A daycare professional seeking to earn additional income by babysitting on occasional "date nights";

    A college student helping to pay tuition by watching a 7-and 10-year old and assisting with after-school pick-ups, driving to activities, homework and meal preparation;

    A retired nurse to drive an aging parent to routine medical appointments and assist with personal hygiene; and

    A pet lover to take the family dog for her daily walk and care for her during family vacations.

        We believe the scale and breadth of our services, combined with our commitment to delivering the best possible member experience for families and caregivers, have made us the most trusted and leading brand for finding and managing family care.

        Our platform provides families with robust solutions. Our consumer matching solutions—our core offering—allow families to search for, qualify, vet, connect with and ultimately select caregivers in a low-cost, reliable and easy way. Based on an internal survey of the families who subscribe to our consumer matching solutions, on average four out of five of these families find their caregiver on Care.com. Our platform also provides 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 core 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. Through our consumer payments solutions, families can not only electronically pay a caregiver, they can also subscribe for tax preparation services through our Care.com HomePay product. This product offering deepens our relationship with our members and could dramatically enhance the lifetime value associated with each member.

        The overall market for care and care-related services is large. According to IBIS research, in 2012 an aggregate of $243 billion was spent in the United States on care, including day care, in-home care

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providers, housekeepers, nursing care facilities, tutoring and pet care. In other industry marketplaces, such as online travel, vacation rentals, and general merchandise, companies that provide marketing and payment solutions receive between 3% and 15% of gross spend. We believe that in the marketplace for care, companies that provide marketing and payment solutions could receive a similar amount of the gross spend.

        We believe this large market is driven primarily by the significant percentage of dual-income and single-parent households and an aging population. According to a report from Child Care Aware of America, the cost of full-time center-based care in 2012 for families with two children in the United States was the highest single household expense in the average budget of families in the Northeast, Midwest and South—exceeding the cost of housing, transportation, food, utilities and health care—and was surpassed for families in the West only by the cost of housing. These macro trends have driven consumers and care professionals to seek a more comprehensive, easy-to-use and efficient solution like ours to find and manage their care and career needs.

        Our primary target market is women, who typically take the responsibility of making care decisions for their family—either as mothers or adult daughters—and are a majority of caregivers. Women represent 95% of our caregivers and 85% of our care-seeking members. As a result of the shared characteristics of both sides of our marketplace, we are able to leverage our marketing investments targeted at families to also attract caregivers.

        We have expanded our marketplace beyond families and caregivers. We also serve employers by providing access to our platform to over 600,000 employer-sponsored families. In addition, we serve care-related businesses—such as day care centers, nanny agencies and home care agencies—who 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 rapid growth in revenue and members. Our members grew from 1.9 million as of September 30, 2010 to more than 9.1 million as of September 28, 2013, representing a 70% compounded annual growth rate. Our revenue has grown from $12.9 million for the fiscal year ended December 31, 2010 to $48.5 million for the fiscal year ended December 31, 2012, representing a 94% compounded annual growth, primarily driven by our consumer matching solutions. Revenue for the nine months ended September 28, 2013 increased to $59.0 million, representing an 81% increase from the $32.6 million of revenue generated during the nine months ended September 30, 2012. We experienced net losses of $3.5 million in 2010, $12.2 million in 2011 and $20.4 million in 2012.

Our Market Opportunity

        The market for care is large and highly fragmented. We believe that our target market includes all households with income greater than $50,000 and 15% of households with income less than $50,000, in each case with either a child under the age of 18 or a senior over the age of 65. According to the U.S. Census Bureau, there were 42 million such households in the United States in 2010. The needs of families seeking care are diverse, taking many different forms depending on the circumstances and life stage of the family. These needs include childcare, such as nannies and babysitters, in-home senior care, such as assistance with personal hygiene, meal preparation and transportation, and other family care needs, such as pet care, tutoring and housekeeping.

        We believe that the following key trends contribute to the large and growing total addressable market for online care marketplaces:

        Significant Percentage of Dual-Income and Single-Parent Households with Children.    In 2012, according to the Bureau of Labor Statistics, 63% of U.S. households had either two working parents or a working parent that is single with children under the age of 18. In addition, according to the Pew Research Center, mothers are now the sole or primary income provider in 40% of households with children, four times the rate from 1960.

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        Aging Population with High Preference for In-Home Care.    According to Business Monitor International, the percentage of people ages 65 and over living in the United States is expected to increase approximately 30% between 2012 and 2020 to 56 million. In addition, according the the AARP Public Policy Institute, 89% of Americans ages 50 and over indicate that they want to remain in their homes as long as possible.

        Growth of Employer-Sponsored Care Services.    As a majority of households are headed by either two working parents or a working parent that is single, we believe employers are experiencing an increasing need to provide family care-related benefits to their employees. In addition, employers are finding employees challenged by senior and other adult care needs—according to a 2009 study conducted for the National Alliance for Caregiving, nearly 60% of individuals with caregiving responsibilities for an aging parent or a disabled family member were actively employed either full-time or part-time.

        Consumers Increasingly Using the Internet and Mobile Devices for Important and Highly Personal Decisions and Transactions.    Growth in the number of Internet users is transforming the way consumers access information, connect with each other and transact. According to IDC, there were 2.5 billion Internet users globally in 2012, 45% of whom accessed the Internet on their mobile device, representing a 12% CAGR in Internet users and a 37% CAGR in mobile Internet users since 2009. We believe consumers have come to expect that they can manage their home needs through the Internet—and importantly through mobile devices—and that they are increasingly comfortable using mobile devices to interact. We also believe this tendency will enhance our core utility, and thus our relationship with our members, over time.

        Despite the size and growth of the care market, there has historically been no proven, efficient and cost-effective way for families to connect with quality caregivers and for caregivers or care-related businesses to target a large number of families. Traditional alternatives suffer from the following limitations:

Challenges for Families:

    Traditional ways of finding quality care can be inefficient, unreliable and expensive.  Traditional search methods, including word-of-mouth, directories and job boards suffer from limited reach or limited information, making quality matches difficult and time-consuming to obtain. In many cases, they also lack references, reviews or other resources—such as background checking services—to help families make more informed decisions. While placement agencies, such as nanny agencies, often provide comprehensive matching services, they can be expensive for many families, charging a family up to 15% of a caregiver's annual salary (which can equal up to $4,000 for a full-time caregiver), rendering this option unaffordable for certain segments of the population.

    Lack of single, comprehensive solution for addressing multiple, diverse and evolving care needs.  A family's care needs continually evolve, as children are born and grow, parents age and family circumstances change. In addition, families often have multiple care needs at once—for example, an afternoon babysitter for the third grader, a tutor for the seventh grader, back-up care when a child is ill and a housekeeper for the parents. Care needs often change quickly and unexpectedly, such as when an elderly parent suddenly becomes ill, a job change requires relocation or a caregiver goes back to college or decides to switch jobs. Finding one solution to address multiple care needs at once and/or evolving needs over time is challenging due to the multiple fragmented sources for finding care today.

    Traditional approach for managing the financial relationship of household employees can be time consuming and inconvenient.  To date, the predominant form of payment for household employees has been cash or check, which can be inconvenient for a family. In addition, families often struggle to understand and comply with the tax and reporting obligations required of household employers.

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Challenges for Caregivers:

    Caregivers lack effective ways to promote their services and target families at scale.  Caregivers have historically relied on the same methods to find care jobs as families have to find caregivers: word-of-mouth, directories, job boards and placement agencies. These methods typically suffer from limited reach or are not care specific, making it difficult for caregivers to differentiate themselves. As a result, they are frequently an ineffective way for caregivers to target a large and diverse audience of families actively seeking care.

    Caregivers lack a platform from which to professionalize and manage their careers.  Caregivers lack a care-specific resource to build and manage their professional identity with detailed profiles that include work history, credentials, references, background check results, information about the specific care services they provide and the payment forms they will accept. Caregivers also lack resources to help them understand and access household employee benefits.

Challenges for Employers and Care-Related Businesses:

    Employers lack a single comprehensive solution to help their employees address their particular care needs.  Each employee's family care needs are different and continually evolving. To help compete for top talent, reduce family care-related absenteeism and increase employee productivity and loyalty, we believe more employers are looking for a single, comprehensive solution to help their employees manage their diverse and evolving family care responsibilities.

    Care-related businesses lack cost-effective ways to target families and recruit caregivers.  Historically, care-related businesses have relied on general job board sites, newspaper web sites and print marketing to target families seeking care and recruit caregivers as employees. Because these channels are not typically care specific, they make it more difficult for care-related businesses to target a large and qualified audience of families actively seeking care. In addition, because they do not generally support detailed profiles or have robust search capabilities, they are less efficient as recruiting tools.

Our Solutions

        Our suite of products and services enables families to manage their diverse and evolving care needs, caregivers to find jobs and manage their careers and businesses to recruit employees and advertise their business profiles.

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Efficient, Reliable and Affordable Way for Families and Caregivers to Connect and Manage Their Care and Career Needs

        Our comprehensive and differentiated platform provides significant benefits to our members, including:

    Efficient and reliable way for families to find quality caregivers.  Our members have access to easy-to-use job posting tools, powerful search features and detailed caregiver profiles that are designed to allow them to efficiently navigate our vast database of individual caregivers and assess which caregivers best suit their needs. We also provide families with a comprehensive suite of tools and resources to help them make more informed decisions throughout the search and hiring process, including rate calculators, reviews, articles, an online safety center and access to a range of background checking services.

    Efficient way for caregivers to target large, qualified audiences and professionalize their careers.  Caregivers can easily create detailed profiles that include work history, education, credentials, references, third-party background check results and information about the specific care services they provide. In addition, we provide caregivers with services, educational resources and content to professionalize and manage their careers, as well as the opportunity to establish their professional reputation and enhance their profile through the reviews and ratings they receive from families.

    Easy-to-use and secure communication tools.  We provide a cross-platform suite of communication tools to enable easy and efficient communication between families and caregivers. These easy-to-use tools are built around a monitored messaging system that members access through the Care.com website and mobile apps. Families may communicate with caregivers individually or send a broadcast message to a list of "favorite" caregivers. When members receive new messages they can be notified by email, SMS text messages and alert notifications on their mobile devices. For greater security, members can respond to email notifications through our monitored messaging system without exposing their email address to other members. Additionally, if a caregiver shares a phone number, families may contact caregivers by phone or SMS text messages.

    Comprehensive solutions.  Through our platform, families have access to a broad range of care solutions to address their diverse and evolving care needs, including childcare, tutoring, senior care options and housekeeping. In addition, families can use our solutions for back-up care when primary care arrangements fall through. Families also have access to a range of payment services to help manage the financial relationship with their caregivers. Similarly, caregivers can apply to jobs in any category of care posted by families or by care-related businesses.

    Cost-effective alternative.  Families are provided free access to search, post a job and preview detailed caregiver profiles. After an initial review of profiles, families have the option of selecting a paid subscription plan to contact caregivers and access background checks. Our consumer matching subscription pricing for families ranges from approximately $37 for a monthly subscription to $147 for an annual subscription. This subscription allows families to contact an unlimited number of caregivers through our platform during the term of the subscription, including nannies, babysitters, pet sitters and tutors. At no additional cost, paying members can also request an unlimited number of preliminary background checks on caregivers. Our caregiver members can apply to jobs through our platform and target families and care-related businesses at no cost. Caregivers have the option to pay for additional features such as priority notification of newly posted jobs.

    Anytime, anywhere access.  Our services are available across multiple platforms and mobile devices to ensure that our members access Care.com easily and conveniently wherever they go. We provide our services through mobile apps on iOS and Android devices. We also make our website experience available on personal computers and mobile web browsers. Across these platforms, members are able to access our core features for finding care and jobs and for paying caregivers.

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Easy-to-Use Payment Offerings

        We provide HomePay, a payroll and tax product for families that employ a household worker. HomePay is not only designed to facilitate the management of a family's financial relationship with a caregiver but also to enable a caregiver to establish the compliance framework to qualify for important household employee benefits. We also provide a convenience payments product that enables families to make electronic payments to a caregiver from a computer or mobile device.

Comprehensive Care Solution for Employers

        We provide a comprehensive suite of care services for employers to offer to their employees, including our consumer matching solutions, payment offerings, back-up care services and care concierge services. In addition to helping employees better manage the balance between work and home life, these services are designed to benefit employers by promoting increased productivity, engagement and loyalty and reduced care-related absences.

Efficient Marketing and Recruiting Channel for Care-Related Businesses

        We provide a highly targeted suite of marketing and recruiting solutions for care-related businesses. These solutions enable care-related businesses to advertise their business profiles to millions of families seeking care and to post care jobs and search our database of caregivers seeking employment.

Our Competitive Strengths

Largest Global Marketplace Focused on Care

        We are the world's largest online marketplace for finding and managing family care with more than 9.7 million members, including approximately 5.2 million families and 4.5 million caregivers, spanning 16 countries. Since the launch of our marketplace in 2007, we estimate, based on internal member surveys, that over half a million families have found caregivers and over half a million caregivers have found care jobs through our service in the areas of childcare, senior care, special needs care, tutoring, pet care and housekeeping. Our service is available nationwide, with our member families residing in 83% of all U.S. zip codes and our member caregivers residing in 81% of all U.S. zip codes. Additionally, in the 20 most populated metro areas in the United States, we have at least 5,000 caregivers within a 10 mile radius of 85% of the zip codes of such metro area and at least 1,000 caregivers within a 10 mile radius of 98% of the zip codes of such metro area, where the zip codes of a metro area include all zip codes within 30 miles of the relevant city center.

High Quality Match Rate

        Based on our high match rate of paying members with caregivers, we believe our breadth of selection and our matching algorithms enhance the effectiveness of our marketplace and the value we offer to both families and caregivers. In the United States, our member surveys indicate that approximately four out of five families that subscribe to our consumer matching solutions successfully find a caregiver. Furthermore, our surveys indicate that families who hire caregivers using our consumer matching solutions have a high degree of satisfaction with the caregivers they find: 85% of responding families indicate that they are satisfied with their caregiver, and almost 50% indicate that they are extremely satisfied with their caregiver, responding with a score of ten out of ten.

Growing and Engaged Membership

        Over the last five years, we have expanded from 500,000 members to more than 9.7 million members. In 2013, on average, a new job was posted on our platform more frequently than every 30 seconds. During the same period, a new job application was submitted more frequently than every two seconds, and families

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and caregivers exchanged over 120,000 messages a day on our platform. Sixty percent of these applications were for part-time care services, with the remaining 40% seeking full-time care. As we grow our membership, improve the member experience and offer additional tools and features, more members are using our services for longer periods of time and coming back sooner after their initial use. This highly engaged membership helps improve the effectiveness of our services and increases the lifetime value of our members.

Powerful Network Effects

        We benefit from significant network effects as the market leader in the highly fragmented and growing care market. As more families use our services, we attract more caregivers seeking a large pool of families in need of their services. Similarly, the increasing number of caregivers using our services has attracted more families. This cycle has driven more and more people to use our services and has resulted in a significant percentage of our new members coming from unpaid sources. For example, between 2009 and 2012, referrals of paying families from family members and friends grew at a compound annual growth rate of over 70%. In addition, a majority of our paying families in 2012 originated from unpaid sources.

Trusted and Recognized Brand

        We have invested in building a differentiated member experience for finding care. This investment includes the ongoing prioritization of features and processes that we believe contribute to the quality of our marketplace. Examples of these investments include the manual review of all job and profile postings for suspicious or inappropriate content, tools for members to review and report other members, a monitored messaging system that allows members to communicate without sharing their personal email, the proactive screening of certain member information against various databases and other sources for criminal or other inappropriate activity and the use of technology to identify and prevent inappropriate activity through our platform. We believe these product investments, combined with our investments in national brand advertising and our domain name itself, have established the Care.com brand as a leading and trusted brand for finding care.

Our Growth Strategy

Attract More Members to Our Platform

        In order to grow our membership, we intend to increase our investments in various marketing channels, including television, online search and community groups and forums, to increase brand awareness in the United States among families and caregivers. For example, in June 2013 we acquired the assets of the Big Tent public groups platform. This platform hosts a wide range of public and private groups, including over 1,600 parent-oriented groups with over 200,000 members. We believe a majority of these members are prospective members of our consumer matching solutions.

        In addition to direct marketing channels, we are also investing in efficient channels of membership growth. We have a strategic relationship with United Services Automobile Association, or USAA—an investor in Care.com. We are currently working with USAA and certain of its affiliates to develop offerings to help address the family care needs of USAA's approximately nine million members of the U.S. military and their families.

        We also intend to increase our member base by selling our services to more employers who will offer our platform as a benefit to their employees. We intend to do this by continuing to promote a comprehensive suite of services to the growing number of employers who are providing care-related benefits to their employees.

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Increase Revenue per Member

        As we improve our user experience and expand our product and service offerings, we have seen an increase in revenue per member. We intend to further increase revenue per member by introducing new products which are targeted at recurring uses, such as our recently introduced convenience payments and "date night" products and by increasing the cross-selling and merchandising of our existing products, such as HomePay and senior care services, within our existing membership base and via the employer channel. In addition, we intend to continue to engage our non-paying members with content and resources such as our weekly newsletters and online forums even when they are not actively looking for care so that we remain top of mind when they are. We believe increasing engagement among our members will drive higher conversion of members to paying members.

Expand and Increase Adoption of Our Payment Offerings

        We believe there is significant opportunity for us to grow our consumer payments solutions. Our recently introduced convenience payments product allows families to make secure electronic payments to their caregivers using our mobile or desktop applications. Since our acquisition of Breedlove & Associates, L.L.C., or Breedlove (now rebranded as Care.com HomePay), in August 2012, an increasing percentage of Care.com members are using our household employer payroll and tax product. We expect this trend to continue. We also plan to offer other payment and financial solutions to our members as we expand our offerings and services, including a lower cost payroll and tax product.

Grow Our International Business

        We believe the global secular trends of a significant number of dual-income households with children and an aging population provide significant growth opportunities outside the United States. The majority of our international business today occurs in Western Europe—the market served by Berlin-based Besser Betreut GmbH, or Betreut, which we acquired in 2012. This acquisition allowed us to establish a Western European footprint from which to grow not only our consumer matching base but also our employer base. We are currently operating in 16 countries and in 7 languages. We intend to grow our international business by focusing on raising awareness of our services in these markets.

Attract More Care-Related Businesses to Our Platform

        We recently launched our marketing solutions offering, which provides care-related businesses an efficient and cost-effective way to target qualified families looking for care services, and our recruiting solutions offering, which allows care-related businesses to recruit caregivers for full-time and part-time employment. These solutions provide us with additional monetization opportunities. We are still early in the penetration of the addressable client base for these services and believe there is a significant runway for future growth for both of these solutions.

Selectively Pursue Acquisitions and Strategic Relationships

        In 2012, we acquired Betreut, Breedlove and Parents in a Pinch, Inc., and in 2013 we acquired the assets of the Big Tent public groups platform. These acquisitions further our strategy of growing our membership and increasing the value we offer. The integration of these companies enables us to offer our members a more comprehensive caregiving platform. In the future, we may selectively pursue acquisitions that complement our existing business, enhance the user experience of our services, represent a strong cultural fit and are consistent with our overall growth strategy. In addition, we may enter into various strategic relationships to provide a more comprehensive offering to our members.

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Our Products and Services

        Our consumer products and services are designed to make it easier for families to find and manage quality caregivers and for caregivers to find satisfying jobs and manage their careers. We also offer services to employers and care-related businesses that are designed to benefit those organizations as well as our family and caregiver members.

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Consumer Matching Solutions

        Matching the right caregiver with the right family can create tremendous value for our members. Our innovative consumer matching solutions and large member base facilitate quality matches for the diverse and evolving needs of our members. Our members may use most of the tools and features of our consumer matching solutions for free, and may purchase additional features by upgrading to a paid subscription membership and/or paying separate à la carte fees. Many of our tools and features are also accessible on a tablet or mobile device.

    Free Tools and Features for Families

    Job Posting.  Families quickly and easily post a detailed job description specifying their care need (e.g., nanny, babysitter, senior care support, tutor, housekeeper, pet sitter, etc.), the frequency, hourly rate, responsibilities and other requirements for the job and any other relevant information they choose to provide. Families receive, on average, approximately 20 caregiver applications for each job they post, which are sorted by our matching algorithm based on their suitability.

    Search.  Families search for potential caregivers based on specific search criteria such as type of care provided, location, hourly rate, whether the caregiver has their own transportation or smokes, comfort with pets and willingness to accept non-cash payments and/or have taxes withheld. The initial search results are based on an algorithm we designed to highlight the most relevant caregivers, but a family can also sort the search results by additional criteria, such as distance from the family, experience, availability, membership length or age.

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    Detailed Caregiver Profiles.  Families review detailed information about the caregivers who apply to their jobs or appear in their search results. This detailed information includes a bio, work history and references, the type of care they provide, any additional services they provide (such as laundry, grocery shopping and errands), their experience, certifications and qualifications (such as college degree and CPR certification or other languages spoken), their availability and hourly rate, the types of payments they accept, whether they are willing to have taxes withheld, caregiver reviews from other members, a caregiver's verifications, any connections the caregiver has to other members, and any other relevant information the caregiver chooses to provide.

    Paid Tools and Features for Families

        Families may pay a subscription fee to access additional features. This fee ranges from approximately $37 per month for a monthly subscription to approximately $147 per year for an annual subscription.

    Messaging.  Paying members may use our messaging system to contact caregivers who have applied to their jobs or appeared in their search results. Unless a caregiver has made a phone number available to paying family members in their profile, this is the only way a family can initiate communication with a caregiver. Because this messaging system is internal to Care.com, members do not have to disclose personal contact or other information to communicate through this system. When a family sends a message to a caregiver through our messaging system, we also send an email to the caregiver's personal email and an alert to their mobile device (if they have installed our mobile app) to notify them that a family has sent them a message.

    Background Check Services.  To help narrow their search, paying members can request free unlimited preliminary background checks on potential caregivers. We currently offer three levels of enhanced background checks from consumer credit reporting agencies: preferred ($59), preferred plus ($79) and premier ($300). These fees are in addition to the consumer matching subscription fees. Enhanced background checks include everything covered by the preliminary background check plus in-person or online searches of federal and state or county courthouse records and other searches depending on the background check purchased. Caregivers must approve background checks requested by a family before they are performed.

    Free Tools and Features for Caregivers

    Profile.  Caregivers create and post detailed profiles that include their bio, work history and references, the type of care they provide, any additional services they provide (such as laundry, grocery shopping and errands), their experience, certifications and qualifications (such as college degree and CPR certification or other languages spoken), their availability and hourly rate, the types of payments they accept, whether they are willing to have taxes withheld and any other relevant information they choose to provide. To build their credibility with families, caregivers may elect to verify their phone number and email addresses with us and connect to other members.

    Search.  Caregivers search for specific jobs posted by families, as well as for families based on specific search criteria such as type of care needed, location, hourly rate and number and age of children.

    Apply.  Caregivers can review and apply to jobs that interest them. When a caregiver applies to a job, the family is notified of the new applicant by email, SMS text message or a mobile alert.

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    Paid Tools and Features for Caregivers

        Caregivers may pay a subscription fee to access additional features. This fee ranges from approximately $20 per month for a monthly subscription to approximately $60 per six-month period for a six-month subscription.

    Priority Status.  Paying caregivers receive priority job notifications and appear higher on search results than nonpaying caregivers of the same relevance.

    Messaging.  Paying caregivers may contact families directly through our messaging system regardless of whether the family has subscribed.

    Background Check Services.  Paying caregivers may elect to have a free preliminary background check run on themselves. These caregivers may also purchase preferred ($59) or preferred plus ($79) background checks on themselves. Caregivers who do not subscribe to our consumer matching services may elect to purchase preliminary ($9) background checks.

    Additional Free Tools and Features for Families and Caregivers

    Email Notifications.  Families receive weekly emails highlighting new caregivers near them, and caregivers receive daily emails notifying them of new jobs in their area. We send families and caregivers additional email communications to help them maximize their use of our consumer matching solutions and to inform them of additional products or services that may be appropriate for them.

    Safety Center.  Our website features a safety center that provides resources and information designed to help families and caregivers make safer and more informed hiring and job selection decisions, including recommendations to families for screening, interviewing and ongoing monitoring of caregivers and recommendations to caregivers for avoiding scams. Members may also contact our member care department directly by phone or email if they have concerns about other members. We also offer an online tool that allows families and caregivers to report other members through our website.

    Mobile Apps.  Families and caregivers can download our free mobile apps for iOS and Android. These apps provide families and caregivers the same job posting, profile creation, search and messaging features described above.

Consumer Payments Solutions

        Our consumer payments solutions provide families several options to manage their financial relationship with their caregiver. These products also help caregivers professionalize and manage their careers.

    Convenience Payments.  This offering enables families to make electronic payments to their caregivers using our website or mobile apps. This solution is particularly applicable for families who pay their caregivers at irregular intervals, such as "date night" babysitters, after-school caregivers or tutors, or in varying amounts each time services are performed. We recently launched this offering and are currently evaluating various pricing models. In the future, we intend to offer additional financial products that make it easier for families to track and manage caregiver expenses.

    Household Employer Payroll and Tax Services.  HomePay is our payroll and tax product for families that employ nannies, housekeepers or other domestic employees. HomePay is a technology-based, turnkey service that includes automated payroll processing and household employer-related tax filings at the federal, state and local levels. In addition, caregivers who are paid through HomePay may qualify for important benefits such as unemployment insurance and social security. Families who use this service pay approximately $1,000 per year. This product is available to anyone, not just

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      paying members of our consumer matching solutions. In the future, we intend to offer additional payroll and tax products at tiered feature and pricing levels to address a range of market needs.

Solutions for Employers

        We provide a comprehensive suite of services that employers can offer their employees as an employee benefit. Currently, employers can choose to offer one or more of the following services to their employees:

    Our consumer matching solutions;

    Our payment solutions;

    Back-up care services for employees needing alternative care arrangements for their child or senior due to events such as school closure or the illness of their child or regular caregiver; and

    Care concierge services, which include senior care planning services to assist employees struggling to understand their options for an aging family member as well as hands-on assistance with the caregiver search process.

        Employers generally pay for these services on a per employee basis and have access to features that allow them to manage employee access and track aggregate usage. Depending on the service and the employer's preference, the employer may subsidize all, a portion or none of the service cost for the employee.

Solutions for Care-Related Businesses

        We offer care-related businesses a recruiting solution to help them more effectively recruit caregivers and a marketing solution to help them target families at scale. These solutions also provide additional caregiving choices for families and employment opportunities for caregivers.

    Recruiting Solutions.  Through this offering, businesses can either post jobs or search for candidates directly from our base of caregivers. Businesses pay us either a per job listing fee for each job posted each month or a subscription fee that ranges from an average of $125 for a monthly subscription to an average of $900 for an annual subscription.

    Marketing Solutions.  Through this offering, businesses can list their services on our website, receive referrals and apply to jobs posted by families. Businesses typically pay us either a referral fee for each lead generated through our site or a subscription fee that generally ranges from an average of $140 for a 3-month subscription to an average of $420 for an annual subscription.

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        The screen below illustrates a listing of babysitters in the Boston area. Families can browse a listing or interact with a map view. In addition, they can use our babysitter rate calculator to find the average rate in their neighborhood.

GRAPHIC

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        The screen below illustrates the summary view of a profile for a caregiver providing childcare services.

GRAPHIC

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Key Features   Messaging


GRAPHIC

 


GRAPHIC

The screen above illustrates how easily families access features on our mobile app, including job posting and recently-viewed caregivers.

 

The screen above illustrates a conversation between a family and a caregiver related to a job posted by the family.

Payment Solutions

 

Job Details


GRAPHIC

 


GRAPHIC

The screen above illustrates how a family might pay a caregiver through Care.com using our mobile convenience payments product.

 

The screen above illustrates what a caregiver would see when reviewing and applying for a caregiving job through our mobile app.

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Our Technology

        Our technology platform is designed to provide an efficient marketplace experience across our website and mobile apps. Our platform is based on stable and mature technology frameworks that allow us to rapidly scale our platform as our business grows.

        Key elements of our technology platform include:

    Powerful Search and Ranking.  Our search platform has been designed to handle rapid and continuous growth in search queries and members. Our real-time platform enables families and caregivers to run faceted and free-form search queries and receive results ranked by relevance using our sorting algorithm. Members can run searches based on parameters, including location, type of care, hours of availability and hourly rate.

    Targeting and Recommendations.  We employ statistical models and algorithms to ensure that we are managing the efficiency of our marketplace and optimizing the experience for both families and caregivers. These models are used to improve our customer acquisition efforts as well as our product experience and leverage our rich and growing data set. For example, we prioritize the order in which caregivers are presented to a family to give more prominence to caregivers we believe are more appropriate for the family based on their profile or job postings. Similarly, we present caregivers with job opportunities that we feel are best suited to their qualifications and interests. We also employ targeting technology to personalize the content that we display for members as they use our website and mobile apps. We refine the techniques we use for targeting and recommendations on an ongoing basis.

    Mobile Solutions.  We offer mobile apps designed specifically for the iOS and Android operating systems. These apps are built on an interface layer that exposes the core features of our service in a generic manner. We use the same interface layer for our iOS and Android apps and believe this architecture will allow us to easily expand our services to new devices and mobile platforms in the future.

    Testing and Optimization.  We have developed a platform for testing and optimizing the user experience and member engagement on our websites and in our email communications. This platform allows us to run multiple variations of a website feature or email tactic simultaneously and is supported by robust data collection and reporting. Based on our analysis of the user response to a given test, we are able to dynamically send more users to the experience that produces a better result.

    Background Checking.  As part of our effort to provide our members with the information they need to make informed hiring decisions, we have built a sophisticated platform to facilitate access to background checking services. This platform includes a suite of tools to handle the requesting, processing and reviewing of various types of third-party background checks.

    Infrastructure Management.  We have developed a proprietary suite of tools for managing, administering and monitoring our production website and mobile app platforms. These tools are used to streamline the deployment of releases and to help ensure high availability of our consumer-facing service.

Our Customers

        Our customers are our family and caregiver members, employers who offer our services as an employee benefit and care-related businesses who subscribe to our marketing and/or our recruiting solutions offerings.

        The typical care seeker for our consumer matching solutions is female (85%), has an average household income of $75,000, and has at least one child under 18 in the house (78%). Our typical caregiver is also female (95%) and well educated (64% indicating they have at least some college education).

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Currently, we have more than 9.7 million members split almost evenly between families and caregivers. We have families in approximately 83% of U.S. zip codes and caregivers in approximately 81% of U.S. zip codes. Our members are in every state, and the geographic distribution of our members by state is roughly equal to the overall population distribution by state.

        In addition, we have a diverse range of employers who offer our services as a benefit to their employees, including technology companies, educational institutions, professional services firms and Fortune 500 companies. As of December 31, 2013, these employers employed over 600,000 employees who have full access to some or all of our services.

        Additionally, we have a diverse set of local, regional and national day care, senior care and other care centers that use our business services to help either find people who need the care they provide or find caregivers to work at their organization.

Case Studies

        The following are just a few of the many stories shared by Care.com families that illustrate how Care.com is used to meet diverse family care needs every day.

Consumer Matching Solutions

Nikki H., Member Since August 2009
Wife of Active Duty Marine Found Childcare

    "I don't know what I would do without your service. ... My daycare was closing and I was in a bind to find childcare. Care.com not only gave me the flexibility to find a caregiver whose schedule fit mine, but also the convenience of having the sitter come to me. ... Care.com is a single source tool with everything I need to find the right sitter for our family."

        Nikki and her husband, an active duty Marine, have three children. Her husband is deployed much of the time and she uses Care.com to find care for her children.

Lawrence F., Member Since January 2013
Found Senior Care for His Wife

    "I found the service provided by Care.com to be exceptional in every way. Each person who responded to my request ... provided the kind of information I needed. The woman I selected is well qualified ... and my wife of 62 years is pleased with the help provided."

        Lawrence, a retired clinical psychologist, found a caregiver for his wife on Care.com.

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Carolyn D., Member Since April 2012
Found Senior Care for Her 100-Year Old Mother

    "I am very grateful for access to such competent caregivers. So flexible, and yet with manageable costs."

        Carolyn was looking for a solution that would allow her 100-year old mother to remain in her home—and keep caregiving costs manageable. She turned to Care.com where she has found multiple caregivers for her mother.

Kim S., Member Since February 2009
Found a Nanny for Her Twins

    "We worked with a nanny placement agency and also Care.com. The quality of the candidates was much higher on Care.com and the process of identifying candidates was more efficient."

        Kim used Care.com to find childcare. Care.com is provided as a benefit through her employer.

Consumer Payments Solutions

Elizabeth L.
Managed payroll for her nanny with HomePay

    "You made managing the payroll for my nanny so easy. The online tool was simple to use and helped keep me organized. Also the staff was so helpful with answering questions and providing very personalized support. I will recommend this service to my friends who have household staff."

Chris and Allison T.
Managed payroll for their caregivers with HomePay

    "We were extremely satisfied with the level of service and support provided during our tenure (6 years). Would highly recommend them to anyone requiring professional services in their area of expertise. A truly exceptional organization that was a pleasure to do business with."

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Solutions for Employers

TripAdvisor
Customer Since 2012

    TripAdvisor offers our back-up care and senior care planning services to their employees in the United States, the United Kingdom, Germany and France. They introduced Care.com as an employee benefit to more effectively compete for talent in a competitive job market and to ensure their employees are focused and productive while at work. With Care.com, TripAdvisor has been able to reduce employee absenteeism. Additionally, 70% of employees that have used the Care.com benefit and responded to our survey report that it has increased their productivity, and 76% say that it contributes to their job satisfaction. 100% of those employees say they would use it again.

Prominent Mid-Western University
Customer Since 2010

    "The work-life issues facing this vast population are complex and diverse. Life happens, good and bad, and Care.com helps us solve the work-life puzzle. Childcare is the number one issue for students, faculty and other employees. What if someone has to work late, or a student has a group study project on Wednesday night? That's where Care.com comes in. We can't build 25 day care centers, but we can give students and employees the tools they need to hire at home and do so on their own terms. If you are at the university but your elderly mom needs help in Chicago, you can use Care.com to find caregivers that live near her. If you are a professor with a conference in Atlanta but you have a still-nursing baby, you can find someone to watch your baby in the conference hotel while you give your presentation. This kind of benefit is a way to hire and retain the 'best and the brightest'."

        This prominent mid-western university offers our consumer matching solutions as a benefit to their students, faculty and staff.

Our Competition

        With respect to our consumer matching solutions, we compete for members with traditional offline consumer resources, online job boards and other online care marketplaces. We also compete for a share of the overall recruiting and advertising budgets of care-related businesses with traditional, offline media companies and other Internet marketing providers. The principal competitive factors in this market include:

    network size and quality of caregivers and families;

    product reliability, features, effectiveness and efficiency;

    the quality and completeness of family job postings and caregiver profiles;

    product line breadth and applicability;

    affordability and value of the products provided;

    reliability of safety and security measures;

    the performance and reliability of a mobile solution;

    international footprint; and

    brand awareness and reputation.

        Our principal competitors in this market are online classifieds, such as Craigslist, and other online care marketplaces, such as Sittercity.

        In the consumer payments market, our convenience payments product competes with other payment solutions such as PayPal and Google Payments, and HomePay competes with similar products offered by 4nannytaxes.com and GTM Payroll Services.

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        We believe we generally compete favorably with our competitors on the basis of our scale, trusted brand and member experience.

Marketing and Sales

        Our marketing strategy is focused on attracting families and caregivers to our marketplace. Our marketing efforts are designed to increase brand awareness, maximize reach and penetration and grow our member base. Marketing activities include demand generation, advertising, conferences, press relations and customer awareness.

        Our target market is primarily women on both sides of the marketplace. Women are typically the primary care decision makers for their family—either as mothers or adult daughters—and represent 95% of our caregivers and 85% of our families. As a result of the shared characteristics of both sides of our marketplace, we are able to leverage our marketing investments targeted at families to also attract caregivers, resulting in lower acquisition costs for caregivers.

        We acquire consumers through a diverse mix of free and paid acquisition channels. As a result of our strong focus on our member experience and engagement to ensure a successful match for families and caregivers, the majority of our new subscribers come from unpaid channels, including word-of-mouth referrals, SEO, online communities and forums and repeat users.

        Our paid direct marketing efforts for both families and caregivers comprise both offline channels such as network cable TV, local radio and direct mail and online channels such as SEM, display ads, affiliates and select paid job board sites. We spent $35.9 million in sales and marketing in 2012, of which $14.3 million was spent on TV marketing, and $43.9 million in the first nine months of 2013, of which $19.2 million was spent on TV marketing. Our marketing spend is weighted towards our high seasons in the first and third quarters based on demand from families seeking care.

        Our sales organization is responsible for attracting and retaining employers and care-related businesses to grow adoption of our services and offerings to those organizations. We expect to continue to grow our sales headcount to grow these channels.

Government Regulation

        We are subject to a number of U.S. federal, state and foreign laws, regulations and industry standards some of which are unsettled or still developing and could be interpreted in ways that could harm our business. For example, we are subject to laws, regulations and industry standards relating to privacy, data security and the use of consumer background information.

        There are numerous federal, state and foreign laws regarding privacy and the protection of member data. The regulatory environment in this area for online businesses is very unsettled in the United States and internationally and new legislation is frequently being proposed and enacted. For example, California recently amended the California Online Privacy Protection Act to require online services to include additional disclosures in their privacy policies. If we are not able to comply with existing or new privacy laws or regulations or if we become liable under these laws or regulations, we could be directly harmed, and we may be forced to implement new measures to reduce our exposure to this liability.

        In the area of information security and data protection, many states have passed laws requiring notification to users when there is a security breach for personal data, such as the Massachusetts Data Breach Notification Law, or requiring the adoption of minimum information security standards that are often vaguely defined and difficult to practically implement. The costs of compliance with these laws may increase in the future as a result of changes in interpretation. In addition, our operations subject us to certain payment card association operating rules, certification requirements and rules, including the Payment Card Industry Data Security Standard, or PCI DSS, a security standard with which companies that collect, store or transmit certain data regarding credit and debit cards, credit and debit card holders, and credit and debit card transactions are required to comply. Our failure to comply fully with the PCI DSS may violate payment card association operating rules, federal and state laws and regulations, and the terms of our contracts with payment processors and merchant banks.

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        In addition, in the United States we acquire consumer background information about our members from consumer credit reporting agencies, which subjects us to the Fair Credit Reporting Act, or the FCRA. Among other things, the FCRA limits the distribution and use of consumer reports and establishes consumer rights to access and dispute their own credit files, among other rights and obligations. Violation of the FCRA can result in civil and criminal penalties. Many states have enacted laws with requirements similar to the FCRA. Some of these laws impose additional, or more stringent, requirements than the FCRA.

        Because our services are accessible worldwide, we are also subject to a number of other laws and regulations in foreign jurisdictions. In some cases, a foreign jurisdiction may claim that we are required to comply with its laws even if we have no local entity, employees or infrastructure in that jurisdiction.

Intellectual Property

        Our success depends in part upon our ability to protect our core technology and intellectual property. To accomplish this, we rely on a combination of intellectual property rights, including trade secrets, copyrights and trademarks, as well as contractual restrictions. We enter into confidentiality and assignment of invention agreements with our employees and certain consultants and confidentiality agreements with other third parties. We do not have any patents or pending patent applications.

        We pursue the registration of our domain names, trademarks and service marks in the United States and in certain locations outside the United States. Our registered trademarks in the United States include "Care.com", which is registered on the supplemental register, and our registered trademarks in the European Union and Canada include the Care.com design mark. We have also registered "Betreut.de" in Germany. We have filed other trademark applications in the United States and certain other countries.

        The efforts we have taken to protect our proprietary rights may not be sufficient or effective. Any significant impairment of our intellectual property rights could harm our business or our ability to compete. In addition, Internet, technology and social media companies are frequently subject to litigation based on allegations of infringement, misappropriation or other violations of intellectual property rights. We have received in the past and may in the future receive notices asserting that we have infringed, misappropriated or otherwise violated a third party's intellectual property rights, and as we face increasing competition, the possibility of intellectual property rights claims against us grows.

Employees

        We believe we have assembled an extremely talented group of employees and strive to hire the best employees. As of December 31, 2013, we had 357 full-time employees and 186 part-time employees, not including approximately 250 PIAP part-time caregiver employees who provide back-up care from time to time. None of our employees is represented by a labor organization or is a party to any collective bargaining arrangement. We have never had a work stoppage, and we consider our relationship with our employees to be good.

Facilities

        We lease approximately 54,000 square feet of space in our headquarters in Waltham, Massachusetts under a lease that expires in June 2016. We also lease approximately 20,000 square feet of space in Austin, Texas, approximately 19,000 square feet of space in Berlin, Germany and have insignificant rental spaces in various other locations in the United States and Europe. We believe our current and planned office facilities are generally suitable to meet our needs for the foreseeable future. However, we will seek additional space as needed to satisfy our growth.

Litigation

        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.

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MANAGEMENT

Executive Officers and Directors

        The following table sets forth the name, age and position of each of our executive officers and directors as of December 31, 2013.

Name
  Age   Position(s)

Sheila Lirio Marcelo

    43   Founder, President, Chief Executive Officer and Director

David Krupinski

    47   Co-Founder and Chief Technology Officer

John Leahy

    55   Executive Vice President and Chief Financial Officer

Diane Musi

    45   General Counsel and Corporate Secretary

Steven Cakebread(1)

    62   Director

Tony Florence(1)(2)

    45   Director

Amanda Ginsberg

    44   Director

J. Sanford Miller(1)(3)

    64   Director

Patricia Nakache(2)(5)

    48   Director

Antonio Rodriguez(2)(3)

    39   Director

Brian Swette(2)(4)

    59   Director

(1)
Member of our audit committee.

(2)
Member of our compensation committee.

(3)
Member of our nominating and corporate governance committee.

(4)
Lead independent director.

(5)
Ms. Nakache has submitted a conditional resignation from our board of directors, effective immediately prior to and contingent upon the effectiveness of the registration statement of which this prospectus forms a part. Ms. Nakache's resignation is not the result of any disagreement with the company.

        Sheila Lirio Marcelo is our founder and has served as our Chief Executive Officer and a director since October 2006. Ms. Marcelo has served as the chairman of our board of directors since October 2011. Prior to founding Care.com in 2006, Ms. Marcelo was an Entrepreneur-in-Residence at Matrix Partners, a venture capital firm, for six months. From 2005 to the beginning of 2006, Ms. Marcelo served as Vice President and General Manager of TheLadders.com, an online job matching service. Before joining TheLadders.com, Ms. Marcelo spent five years at Upromise, Inc., an online service that helps families save for college, where she held various executive positions, including Vice President, Product Management and Marketing. Earlier in her career, Ms. Marcelo was a consultant for Monitor Group and Pyramid Research, and she began her career as an analyst at Putnam, Hayes & Bartlett. Ms. Marcelo graduated from Mount Holyoke College with a degree in economics and received her M.B.A. and J.D. from Harvard University. We believe Ms. Marcelo is qualified to serve on our board of directors due to the perspective, leadership and operational experience she brings as our Chief Executive Officer, as well as the vision and continuity she brings as our founder.

        David Krupinski is our co-founder and has served as our Chief Technology Officer since February 2012. Mr. Krupinski previously served as our Senior Vice President of Product and Technology from February 2010 to January 2012, as our Vice President of Product and Technology from February 2008 to January 2010 and as our VP of Product from November 2006 to January 2008. Prior to co-founding Care.com, Mr. Krupinski held senior product management roles at Upromise, including Director of Product Management from 2003 to 2006. Prior to Upromise, Mr. Krupinski held senior management positions at several start-up companies, including Direct Hit (acquired by Ask Jeeves) and Stylus Innovation (acquired by Artisoft). Mr. Krupinski began his career as a Software Engineer at Thomson Financial in 1988. He holds a B.A. and an M.S. from Boston College and received an M.B.A. for Executives from INSEAD in Fontainebleau, France.

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        John Leahy has served as our Executive Vice President and Chief Financial Officer since March 2013. From June 2008 to March 2013, Mr. Leahy served as Executive Vice President, Chief Financial Officer and Treasurer of iRobot Corporation, a designer and marketer of robots. Mr. Leahy's responsibilities included advising the company on matters related to financial planning and analysis, corporate strategy, mergers and acquisitions, accounting, investor relations, information technology, tax and treasury. Earlier in his career, Mr. Leahy spent eight years at Keane, Inc., a provider of business consulting and outsourcing services to Fortune 1000 companies, as the company's Executive Vice President and Chief Financial Officer. Prior to this, Mr. Leahy served in a number of domestic and international financial positions for PepsiCo, Inc., a global food and beverage company. Mr. Leahy received a B.S. in Finance from Merrimack College and an M.B.A. from Boston College.

        Diane Musi has served as our General Counsel and Corporate Secretary since June 2011. From 2000 to June 2011, Ms. Musi served in a number of roles at Upromise, including General Counsel from February 2007 to June 2011. At Upromise, Ms. Musi's responsibilities included advising the company on matters related to legal and regulatory analysis and strategy, mergers and acquisitions, financings, dispute resolution and the negotiation of business critical agreements. Ms. Musi was also responsible for managing the company's in-house and outside legal counsel. Before Upromise, Ms. Musi was a corporate associate at Goodwin Procter LLP. Ms. Musi is a member of the Massachusetts Bar and holds an A.B. in Government from Dartmouth College and a J.D. from the University of Virginia School of Law.

        Our executive officers are elected by, and serve at the discretion of, our board of directors. There are no familial relationships among our directors and officers.

        Steven Cakebread has served as a member of our board of directors since December 2013. Mr. Cakebread currently serves, since March 2013, as Senior Vice President, Chief Accounting Officer and Chief Financial Officer of D-Wave Systems Inc., a quantum computer manufacturer. From March 2010 to December 2012, Mr. Cakebread served as Executive Vice President and Chief Financial Officer of Pandora Media, Inc., a provider of Internet radio. From February 2009 to August 2009, Mr. Cakebread served as Senior Vice President and Chief Accounting Officer of Xactly Corporation, a provider of on-demand sales performance management software. From February 2008 to January 2009, Mr. Cakebread served as President and Chief Strategy Officer of Salesforce.com, Inc., a customer relationship management service provider, and as Executive Vice President and Chief Financial Officer of Salesforce.com from May 2002 to February 2008. Mr. Cakebread currently serves on the boards of directors of SolarWinds, Inc. and ServiceSource International LLC, as well as several private companies. Mr. Cakebread also previously served on the board of directors of eHealth, Inc. from June 2006 to June 2012. Mr. Cakebread holds a B.S. in Business from the University of California at Berkeley and an M.B.A. from Indiana University. We believe Mr. Cakebread is qualified to serve on our board of directors due to his extensive financial, operational and senior management experience with both public and private companies.

        Tony Florence has served as a member of our board of directors since October 2010. Mr. Florence is a General Partner of New Enterprise Associates, or NEA, a venture capital firm, where he co-leads the firm's consumer Internet investment practice and venture growth equity efforts. Mr. Florence currently serves as a director of Cvent, Inc., a provider of online software for event management, web surveys and email marketing. In addition to Care.com, Mr. Florence also currently serves on the boards of several other private companies. Prior to joining NEA in 2008, Mr. Florence spent 14 years at Morgan Stanley, most recently as a Managing Director and Head of Technology Banking in New York. Mr. Florence holds an M.B.A. and an A.B. in Economics from Dartmouth College. We believe Mr. Florence is qualified to serve on our board of directors due to his broad investment experience in the consumer Internet industry.

        Amanda Ginsberg has served as a member of our board of directors since February 2012. Ms. Ginsberg currently serves as Chief Executive Officer of Tutor.com, a provider of on-demand instructional solutions for students and professionals. Prior joining Tutor.com, from January 2012 until May 2013 Ms. Ginsberg served as Chief Executive Officer of Match.com, an online dating website, and as President of Match.com

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North America from 2006 to 2012. Ms. Ginsberg also served as Vice President and General Manager for Match.com's sister site, Chemistry.com, from 2006 to 2008. Ms. Ginsberg holds an undergraduate degree from the University of California at Berkeley and an M.B.A. from The Wharton School of Business at the University of Pennsylvania. We believe Ms. Ginsberg is qualified to serve on our board of directors due to her extensive operational and senior management experience with consumer Internet companies.

        J. Sanford (Sandy) Miller has served as a member of our board of directors since August 2012. Since 2006, Mr. Miller has been a General Partner of Institutional Venture Partners, or IVP, a venture capital firm, where he focuses on later-stage venture and growth equity investments in technology, Internet and digital media companies. Mr. Miller served as a director of Vonage, a provider of broadband phone services, from 2004 to May 2011 and as a director of FleetMatics, a provider of GPS tracking applications for commercial fleets, from November 2010 to August 2013. Mr. Miller currently serves as a director of several private companies. Prior to joining IVP in 2006, Mr. Miller was a Senior Partner with 3i, a venture capital firm, from 2001 to 2006. Earlier in his career, Mr. Miller was a technology investment banker, management consultant and corporate lawyer. Mr. Miller holds a B.A. from the University of Virginia and an M.B.A. and a J.D. from Stanford University. We believe Mr. Miller is qualified to serve on our board of directors due to his extensive background in the private equity industry and his service on the boards of directors of public and private companies.

        Patricia Nakache has served as a member of our board of directors since February 2008. Ms. Nakache is a General Partner of Trinity Ventures, a venture capital firm, where she focuses on funding companies launching innovative online consumer and business services. In addition to Care.com, Ms. Nakache currently serves as a director of several other private companies. Prior to joining Trinity Ventures in 1999, Ms. Nakache worked at McKinsey & Company advising enterprises in technology, retailing and financial services on strategic and operational matters. Ms. Nakache is a graduate of Harvard University where she majored in Physics and Chemistry and holds an M.B.A. from the Stanford Graduate School of Business. We believe Ms. Nakache has been qualified to serve on our board of directors due to her broad experience in the venture capital industry advising online consumer and business services companies.

        Antonio Rodriguez has served as a member of our board of directors since December 2012. Mr. Rodriguez is a General Partner at Matrix Partners, a venture capital firm, where he focuses on consumer Internet, mobile, software and Internet infrastructure companies. Mr. Rodriguez currently serves as a director of several other private companies. Prior to joining Matrix in 2010, Mr. Rodriguez was Chief Technology Officer of the Consumer Imaging and Printing Division at HP, a global technology company, from 2007 to 2010. Prior to that, Mr. Rodriguez was the Founder and Chief Executive Officer of Tabblo, a high-end photo site, from 2005 until its acquisition by HP in 2007. Mr. Rodriguez holds an A.B. from Harvard University and an M.B.A. from the Stanford Graduate School of Business. We believe Mr. Rodriguez is qualified to serve on our board of directors due to his extensive operational, senior management and board experience with consumer Internet, mobile and software companies.

        Brian Swette has served as a member of our board of directors since May 2007 and as our lead independent director since December 2013. Mr. Swette has served as Chairman of Sweet Earth Natural Foods, a natural foods company, since September 2011 and as its President since September 2012. Mr. Swette currently serves as a director of Jamba, Inc., owner and franchisor of Jamba Juice beverage and food offerings, and Shutterfly, a retailer of personalized products and services. Mr. Swette previously served on the board of directors of Schiff Nutrition International, a nutritional supplement company, from November 2011 until its acquisition by Reckitt Benckiser Group in October 2012. Mr. Swette also previously served on the board of directors of Burger King Holdings, Inc. from 2002 to 2010. From 1998 to 2002, Mr. Swette served as eBay's Chief Operating Officer where he oversaw the company's international expansion, marketing and customer support. Prior to joining eBay, Mr. Swette spent 17 years at PepsiCo, including four years as Executive Vice President and Chief Marketing Officer from 1994 to 1998 where he was responsible for the worldwide marketing and advertising efforts for all Pepsi-Cola brands. Mr. Swette holds a bachelor's degree in economics from Arizona State University. We believe Mr. Swette is qualified to serve on our board of directors due to his extensive operational, senior management and board experience with public and private consumer products and Internet companies.

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Composition of our Board of Directors

        Our board of directors currently consists of eight members. The members of our board of directors were elected in compliance with the provisions of our voting agreement. Upon the closing of this offering, our voting agreement will terminate and there will be no further contractual obligations regarding the election of our directors. Our directors hold office until their successors have been elected and qualified or until the earlier of their resignation or removal.

        In accordance with the terms of our certificate of incorporation and by-laws that will become effective upon the closing of this offering, our board of directors will be divided into three classes, each of whose members will serve for staggered three-year terms. Upon the closing of this offering, the members of the classes will be divided as follows:

    the class I directors will be Sheila Lirio Marcelo and Steven Cakebread, and their term will expire at the first annual meeting of our stockholders held after the closing of this offering;

    the class II directors will be Tony Florence, J. Sanford Miller and Antonio Rodriguez, and their term will expire at the second annual meeting of our stockholders held after the closing of this offering; and

    the class III directors will be Brian Swette and Amanda Ginsberg, and their term will expire at the third annual meeting of our stockholders held after the closing of this offering.

        Our certificate of incorporation that will become effective upon the closing of this offering provides that the authorized number of directors may be changed only by resolution of the board of directors. Any additional directorships resulting from an increase in the number of directors will be distributed among the three classes so that, as nearly as possible, each class will consist of one-third of the directors. This classification of the board of directors may have the effect of delaying or preventing changes in our control or management.

        Our certificate of incorporation and by-laws that will become effective upon the closing of this offering also provide that our directors may be removed only for cause by the affirmative vote of the holders of at least two-thirds of the votes that all our stockholders would be entitled to cast in an annual election of directors. Upon the expiration of the term of a class of directors, directors in that class will be eligible to be elected for a new three-year term at the annual meeting of stockholders in the year in which their term expires. An election of our directors by our stockholders will be determined by a plurality of the votes cast by the stockholders entitled to vote on the election.

Role of Board in Risk Oversight Process

        Risk assessment and oversight are an integral part of our governance and management processes. Our board of directors encourages management to promote a culture that incorporates risk management into our corporate strategy and day-to-day business operations. Management discusses strategic and operational risks at regular management meetings, and conducts specific strategic planning and review sessions during the year that include a focused discussion and analysis of the risks facing us. Throughout the year, senior management reviews these risks with the board of directors at regular board meetings as part of management presentations that focus on particular business functions, operations or strategies, and presents the steps taken by management to mitigate or eliminate such risks. Our board of directors does not have a standing risk management committee, but rather administers this oversight function directly through our board of directors as a whole, as well as through various standing committees of our board of directors that address risks inherent in their respective areas of oversight. In particular, our board of directors is responsible for monitoring and assessing strategic risk exposure and our audit committee is responsible for overseeing our major financial risk exposures and the steps our management has taken to monitor and control these exposures. The audit committee also monitors compliance with legal and regulatory requirements and considers and approves or disapproves any related person transactions. Our compensation committee assesses and monitors whether any of our compensation policies and programs has the potential to encourage excessive risk-taking. Following completion of this offering, our nominating and governance committee will monitor the effectiveness of our corporate governance guidelines.

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Leadership Structure of the Board

        Our board of directors is currently chaired by Sheila Lirio Marcelo, our President and Chief Executive Officer. In December 2013, our board established the position of lead independent director and elected Mr. Swette as lead independent director. Our amended and restated by-laws and corporate governance guidelines, which will become effective immediately prior to the completion of this offering, will provide our board of directors with flexibility to combine or separate the positions of Chairman of the board and Chief Executive Officer and/or utilize a lead director in accordance with its determination that one or the other structure would be in the best interests of our company. Our board of directors has concluded that our current leadership structure is appropriate at this time. However, our board of directors will continue to periodically review our leadership structure and may make such changes in the future as it deems appropriate.

Director Independence

        Our board of directors has determined that all directors we expect to be serving on the board at the time of listing, other than Ms. Marcelo, qualify as