Document and Entity Information

3 Months Ended

Mar. 26, 2016

Apr. 22, 2016

Document and Entity Information [Abstract]

Document Type

10-Q

Amendment Flag

false

Document Period End Date

Mar. 26, 2016

Document Fiscal Year Focus

2016

Document Fiscal Period Focus

Q1

Trading Symbol

CRCM

Entity Registrant Name

Care.com Inc

Entity Central Index Key

0001412270

Current Fiscal Year End Date

--12-31

Entity Filer Category

Non-accelerated Filer

Entity Common Stock, Shares Outstanding

32,573,006

Entity Well Known, Seasoned Issuer

No

Entity Voluntary Filers

No

Entity Current Reporting Status

Yes

CONDENSED CONSOLIDATED BALANCE SHEETS (USD $)

In Thousands, unless otherwise specified

Mar. 26, 2016

Dec. 26, 2015

Current assets:

Cash and cash equivalents

$ 52,292

$ 61,240

Accounts receivable (net of allowance of $161 and $125, respectively)

3,101

3,107

Unbilled accounts receivable

3,826

3,595

Prepaid expenses and other current assets

3,072

2,599

Current assets of discontinued operations

315

439

Total current assets

62,606

70,980

Property and equipment, net

5,982

6,371

Intangible assets, net

3,075

3,389

Goodwill

58,961

58,631

Other non-current assets

3,102

3,098

Non-current assets of discontinued operations

0

9

Total assets

133,726

142,478

Current liabilities:

Accounts payable

3,209

3,189

Accrued expenses and other current liabilities

13,158

12,413

Deferred revenue

14,884

13,435

Current liabilities of discontinued operations

386

17,883

Total current liabilities

31,637

46,920

Deferred tax liability

3,166

Other non-current liabilities

4,239

4,140

Total liabilities

39,042

54,226

Contingencies

0

Preferred Stock, $0.001 par value; 5,000 shares authorized, no shares issued

Common stock, $0.001 par value; 300,000 shares authorized; 32,070 and 32,276 shares issued and outstanding, respectively

32

Additional paid-in capital

283,028

283,669

Accumulated deficit

(188,099)

(194,854)

Accumulated other comprehensive loss

(277)

(595)

Treasury stock, at cost (478 shares at March 26, 2016)

0

Total stockholders' equity

94,684

88,252

Total liabilities and stockholders' equity

$ 133,726

$ 142,478

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $)

In Thousands, except Share data, unless otherwise specified

Mar. 26, 2016

Dec. 26, 2015

Statement of Financial Position [Abstract]

Common stock, par value, in dollars per share

$ 0.001

Common stock, shares authorized

300,000,000

Common stock, shares issued

32,070,000

32,276,000

Common stock, shares outstanding

32,070,000

32,276,000

Preferred stock, par value, in dollars per share

$ 0.001

Preferred stock, shares authorized

5,000,000

Preferred stock, shares issued

0

Preferred stock, shares outstanding

0

Allowance for accounts receivable

$ 161

$ 125

Treasury stock, shares

478,000

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (USD $)

In Thousands, except Share data, unless otherwise specified

3 Months Ended

Mar. 26, 2016

Mar. 28, 2015

Income Statement [Abstract]

Revenue

$ 39,266

$ 32,049

Cost of revenue

7,242

6,272

Operating expenses:

Selling and marketing

19,467

20,357

Research and development

4,875

4,609

General and administrative

7,819

7,625

Depreciation and amortization

972

1,231

Total operating expenses

33,133

33,822

Operating loss

(1,109)

(8,045)

Other expense, net

(14)

(1,191)

Loss from continuing operations before income taxes

(1,123)

(9,236)

Provision for income taxes

0

560

Loss from continuing operations

(1,123)

(9,796)

Income (Loss) from discontinued operations, net of tax

7,878

(2,216)

Net income (loss)

$ 6,755

$ (12,012)

Net income (loss) per share (Basic):

Income (loss) from continuing operations, basic (in dollars per share)

$ (0.03)

$ (0.31)

Income (loss) from discontinued operations, basic (in dollars per share)

$ 0.24

$ (0.07)

Net income (loss) per share, basic (in dollars per share)

$ 0.21

$ (0.38)

Net income (loss) per share (Diluted):

Income (loss) from continuing operations, diluted (in dollars per share)

$ (0.03)

$ (0.31)

Income (loss) from discontinued operations, diluted (in dollars per share)

$ 0.23

$ (0.07)

Net income (loss) per share, diluted (in dollars per share)

$ 0.20

$ (0.38)

Weighted-average shares outstanding:

Weighted average number of shares outstanding, basic

32,229,000

31,763,000

Weighted average number of shares outstanding, diluted

33,588,000

31,763,000

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (USD $)

In Thousands, unless otherwise specified

3 Months Ended

Mar. 26, 2016

Mar. 28, 2015

Statement of Comprehensive Income [Abstract]

Net income (loss)

$ 6,755

$ (12,012)

Other comprehensive income (loss):

Foreign currency translation adjustments

318

(1,004)

Comprehensive income (loss)

$ 7,073

$ (13,016)

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $)

In Thousands, unless otherwise specified

3 Months Ended

Mar. 26, 2016

Mar. 28, 2015

Cash flows from operating activities

Net income (loss)

$ 6,755

$ (12,012)

Income (Loss) from discontinued operations, net of tax

7,878

(2,216)

Loss from continuing operations

(1,123)

(9,796)

Adjustments to reconcile net loss from continuing operations to net cash provided by (used in) operating activities:

Stock-based compensation

1,368

826

Depreciation and amortization

1,169

1,424

Deferred taxes

0

498

Foreign currency remeasurement loss

24

1,171

Other non-cash operating expenses

(56)

Changes in operating assets and liabilities, net of effects from acquisitions:

Accounts receivable

2

(256)

Unbilled accounts receivable

(231)

(336)

Prepaid expenses and other current assets

(465)

(518)

Other non-current assets

0

14

Accounts payable

19

3,167

Accrued expenses and other current liabilities

558

(669)

Deferred revenue

1,437

2,286

Other non-current liabilities

154

187

Net cash provided by (used in) operating activities by continuing operations

2,856

(2,058)

Net cash provided by (used in) operating activities

2,602

(2,499)

Net cash provided by (used in) operating activities by continuing operations

5,458

(4,557)

Cash flows from investing activities

Purchases of property and equipment

(26)

(3,272)

Payments for acquisitions, net of cash acquired

(420)

0

Changes in restricted cash balance

0

73

Net cash used in investing activities

(446)

(3,199)

Cash flows from financing activities

Proceeds from exercise of common stock options

579

524

Payments of contingent consideration previously established in purchase accounting

0

(1,840)

Net cash provided by (used in) financing activities by continuing operations

579

(1,316)

Net cash used in financing activities by discontinued operations

(14,510)

0

Net cash used in financing activities

(13,931)

(1,316)

Effect of exchange rate changes on cash and cash equivalents

(29)

(64)

Net decrease in cash and cash equivalents

(8,948)

(9,136)

Cash and cash equivalents, beginning of the period

61,240

71,881

Cash and cash equivalents, end of the period

52,292

62,745

Supplemental disclosure of cash flow activities

Cash paid for taxes

68

3

Supplemental disclosure of non-cash operating, investing and financing activities

Unpaid purchases of property and equipment

9

301

Issuance of preferred and common stock in connection with acquisitions

0

4,878

Fair value of common shares received from legal settlement (Note 3)

$ 2,593

$ 0

Description of Business and Summary of Significant Accounting Policies

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

Certain Significant Risks and Uncertainties

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

Basis of Presentation

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

There have been no material changes in our significant accounting policies for the three months ended March 26, 2016 as compared to the significant accounting policies described in our Annual Report on Form 10-K for the fiscal year ended December 26, 2015.

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

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

Principles of Consolidation

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

Fiscal Year-End

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

Subsequent Events Consideration

We consider events or transactions that occur after the balance sheet date but prior to the issuance of the financial statements to provide additional evidence for certain estimates or to identify matters that require additional disclosure. Subsequent events have been evaluated as required. There were no material recognized subsequent events recorded in the condensed consolidated financial statements as of and for the three months ended March 26, 2016.

Recently Issued and Adopted Accounting Pronouncements

In March 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-09, Compensation- Stock Compensation (Topic 718). The guidance changes how companies account for certain aspects of share-based payments to employees. Entities will be required to recognize income tax effects of awards in the income statement when the awards vest or are settled. The guidance also allows an employer to repurchase more of an employee's shares than it can today for tax withholding purposes providing for withholding at the employee's maximum rate as opposed to the minimum rate without triggering liability accounting and to make a policy election to account for forfeitures as they occur. The updated guidance is effective for annual periods beginning after December 15, 2017, and is applicable to the Company in fiscal 2018. Early adoption is permitted. We are currently evaluating the impact of the adoption of ASU 2016-09 on our consolidated financial position and results of operations.

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

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

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

In April 2015, the FASB issued ASU No. 2015-05, Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement, which amends ASC 350. The amendments provide guidance as to whether a cloud computing arrangement (e.g., software as a service, platform as a service, infrastructure as a service, and other similar arrangements) includes a software license, and based on that determination, how to account for such arrangements. ASU 2015-05 is effective for fiscal years, and interim periods therein, beginning after December 15, 2015 and may be applied on either a prospective or retrospective basis. Early adoption is not permitted. We adopted this standard in the first quarter on a prospective basis. The adoption of this standard has no effect on our statements of operations and cash flows in the quarter ended March 26, 2016.

In February 2015, the FASB issued ASU No. 2015-02, Consolidation (Topic 810)-Amendments to the Consolidation Analysis, which amends the criteria for determining which entities are considered variable interest entities, or VIEs, amends the criteria for determining if a service provider possesses a variable interest in a VIE and ends the deferral granted to investment companies for application of the VIE consolidation model. ASU 2015-02 is effective for annual periods, and interim periods therein, beginning after December 15, 2015. The adoption of this standard has no effect on our consolidated statements of operations and cash flows.

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

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers, which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. ASU 2014-09 will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. In August 2015, the FASB issued ASU No. 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date, which deferred the effective date of ASU 2014-09 by one year to December 15, 2017 for interim and annual reporting periods beginning after that date. Early adoption is permitted but not before the original effective date of December 15, 2016. We are evaluating the effect that ASU 2014-09 will have on our consolidated financial statements and related disclosures. The standard permits the use of either the full retrospective or modified retrospective approach. We have not yet selected a transition method nor have we determined the effect of the standard on our ongoing financial reporting.

Fair Value Measurements

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



	March 26, 2016								December 26, 2015
	Fair Value Measurements Using Input Types								Fair Value Measurements Using Input Types
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total

Assets:
Money market mutual funds	$	20,441	$	—	$	—	$	20,441	$	25,420	$	—	$	—	$	25,420
Total assets	$	20,441	$	—	$	—	$	20,441	$	25,420	$	—	$	—	$	25,420

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

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



	March 26, 2016
	Contingent Acquisition Consideration

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

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

Non-Recurring Fair Value Measurements

We re-measure the fair value of certain assets and liabilities upon the occurrence of certain events. Such assets are comprised of long-lived assets, including property and equipment, intangible assets and goodwill. In the three months ended March 26, 2016 and March 28, 2015, no significant remeasurements were necessary. Other financial instruments not measured or recorded at fair value in the accompanying condensed consolidated balance sheets principally consist of accounts receivable, accounts payable, and accrued liabilities. The estimated fair values of these instruments approximate their carrying values due to their short-term nature.

Discontinued Operations

During the third quarter of fiscal 2015 we made the decision to exit the Citrus Lane business through either a sale or wind-down as it was no longer a strategic priority. In the fourth quarter of fiscal 2015, we made the decision to shut down the business and had substantially completed our plans for exiting the business. As such, financial results of Citrus Lane have been presented within income (loss) from discontinued operations, net of tax on the consolidated statements of operations for the three months ended March 26, 2016 and March 28, 2015. Assets and liabilities of Citrus Lane to be disposed of are presented as assets from discontinued operations and liabilities from discontinued operations on the consolidated balance sheets as of March 26, 2016 and December 26, 2015.

In February 2016, we entered into a settlement agreement with the previous shareholders of Citrus Lane. The settlement agreement relates to our acquisition of Citrus Lane and the merger agreement pursuant to which the acquisition was consummated. Under the terms of the settlement agreement, we paid the previous shareholders of Citrus Lane $15.6 million in contingent consideration payments that were valued at $16.0 million as of December 26, 2015 ($16.4 million was the undiscounted value at the time of the acquisition) that was otherwise payable to them in the event Citrus Lane achieved certain milestones in 2015 and 2016. In exchange, the former shareholders have forfeited the $5.0 million in original cash consideration that was being held in an escrow account, as well as the 0.4 million shares of common stock issued at closing (valued at $2.0 million as of the February 2016 settlement date and $3.9 million as of the original closing date) and 0.1 million shares of common stock which was subject to the achievement of certain milestones in 2015 and 2016 (valued at $0.6 million as of the February 2016 settlement date and $1.1 million as of the original closing date) offered as part of the deal consideration. The Company has recorded the receipt of these shares a Treasury Stock with a cost of $0 on the condensed consolidated balance sheet as of March 26, 2016. As a result of this settlement, and based on our assessment that there was not a clear and direct link to the original consideration transferred at the acquisition date, we have recognized a gain within income (loss) from discontinued operations on the consolidated statements of operations for the three months ended March 26, 2016 of $8.0 million.

The following table presents financial results of the Citrus Lane business included in income (loss) from discontinued operations, net of tax for the three months ended March 26, 2016 and March 28, 2015 (in thousands):



	Fiscal Year Ended
	March 26, 2016			March 28, 2015

Revenue	$	82		$	3,071
Cost of revenue	94			3,276
Operating expenses:
Selling and marketing	41			685
Research and development	11			406
General and administrative	(7,942		)	876
Depreciation and amortization	—			44
Operating income (loss)	7,878			(2,216		)
Other expense, net	—			—
Loss from discontinued operations before income taxes	7,878			(2,216		)
Loss on disposal of assets before income taxes	—			—
Provision for income tax	—			—
Income (Loss) from discontinued operations	$	7,878		$	(2,216	)

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



	March 26, 2016		December 26, 2015
Assets
Accounts receivable	$	158	$	92
Prepaid expenses and other current assets	87		28
Inventory	70		319
Total current assets	315		439
Property and equipment, net	—		9
Total assets	$	315	$	448

Liabilities
Accounts payable	$	—	$	435
Accrued expenses and other liabilities	386		1,325
Deferred revenue	—		82
Current contingent acquisition consideration	—		16,041
Total liabilities	$	386	$	17,883

Supplemental Balance Sheet Information

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



	March 26, 2016			December 26, 2015

Computer equipment	$	2,277		$	2,236
Furniture and fixtures	1,616			1,611
Software	1,374			1,374
Leasehold improvements	3,849			3,847
Total	9,116			9,068
Less accumulated depreciation	(3,134		)	(2,697		)
Property and equipment, net	$	5,982		$	6,371

Depreciation expense for the three months ended March 26, 2016 and March 28, 2015 was $0.4 million and $0.4 million, respectively.

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



	March 26, 2016		December 26, 2015

Payroll and compensation	$	2,706	$	5,167
Tax-related expense	803		801
Marketing expenses	6,530		3,451
Other accrued expenses	3,119		2,994
Total accrued expenses and other current liabilities	$	13,158	$	12,413

Goodwill and Intangible Assets

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



Balance as of December 26, 2015	$	58,631
Effect of currency translation	330
Balance as of March 26, 2016	$	58,961

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



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

March 26, 2016
Indefinite lived intangibles	$	242	$	—		$	242	N/A
Trademarks and trade names	4,427		(4,158		)	269		3.3
Proprietary software	5,202		(4,026		)	1,176		1.8
Website	50		(47		)	3		0.4
Training materials	30		(30		)	—		0.0
Non-compete agreements	131		(115		)	16		1.4
Leasehold interests	170		(92		)	78		3.1
Caregiver relationships	290		(290		)	—		0.0
Customer relationships	8,794		(7,503		)	1,291		3.7
Total	$	19,336	$	(16,261	)	$	3,075

December 26, 2015
Indefinite lived intangibles	$	242	—			$	242	N/A
Trademarks and trade names	4,417		(4,133		)	284		3.5
Proprietary software	4,751		(3,802		)	949		1.6
Website	50		(44		)	6		0.6
Training materials	30		(30		)	—		0.0
Non-compete agreements	130		(111		)	19		1.6
Leasehold interests	170		(86		)	84		3.4
Caregiver relationships	285		(285		)	—		0.0
Customer relationships	8,782		(6,977		)	1,805		3.1
Total	$	18,857	$	(15,468	)	$	3,389

Amortization expense was $0.7 million and $1.0 million for the three months ended March 26, 2016 and March 28, 2015, respectively. Of these amounts, $0.5 million and $0.8 million was classified as a component of depreciation and amortization, and $0.2 million and $0.2 million was classified as a component of cost of revenue in the condensed consolidated statements of operations for the three months ended March 26, 2016 and March 28, 2015, respectively.

As of March 26, 2016, the estimated future amortization expense related to intangible assets for future fiscal years was as follows (in thousands):



2016 remaining	$	1,351
2017	689
2018	343
2019	145
2020	96
Thereafter	209
Total	$	2,833

Contingencies

Legal matters

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

Stockholders’ Equity

Stock-Based Compensation

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



	Three Months Ended
	March 26, 2016		March 28, 2015

Cost of revenue	$	75	$	36
Selling and marketing	185		143
Research and development	230		73
General and administrative	878		574
Loss from discontinued operations	5		112
Total stock-based compensation	$	1,373	$	938

Pursuant to our 2014 Incentive Award Plan (the “2014 Plan”), during the three months ended March 26, 2016, we granted 0.6 million restricted stock units (RSUs) to certain employees and directors and 0.5 million performance based RSUs to certain members of senior management. Each recipient of performance based RSUs is eligible to receive up to 100% of the shares granted on the achievement of certain financial targets for fiscal 2016. If those targets are reached, the award will vest over a four-year period retroactive to March 2016 as continued services are performed. Management is recognizing expense straight-line over the required service period based on its estimate of number of shares that will vest. If there is a change in the estimate of the number of shares that are probable of vesting, we will cumulatively adjust compensation expense in the period that the change in estimate is made.

RSUs are not included in issued and outstanding common stock until the shares are vested and released. The fair value of the RSUs is measured based on the market price of the underlying common stock as of the date of grant, reduced by the purchase price of $0.001 per share. The weighted average grant-date fair value per share and the total fair value of vested shares from RSU grants was $7.70 and $0.8 million, respectively, for the three months ended March 26, 2016. During the three months ended March 28, 2015, no RSUs were granted to employees.

During the three months ended March 26, 2016, we granted 1.3 million stock options to certain employees and directors at a weighted average grant-date fair value per share of $2.68. During the three months ended March 28, 2015, no stock options were granted to employees.

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



	Three Months Ended
	March 26, 2016	March 28, 2015
Risk-free interest rate	1.63%	1.85 - 1.95%
Expected term (years)	6.25	6.25
Volatility	38.24%	47.1 - 47.3%
Expected dividend yield	—	—

A summary of stock option and RSU activity for the three months ended March 26, 2016 was as follows (in thousands for shares and intrinsic value):



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

Outstanding as of December 26, 2015	3,482		5.93	$	6.52	$	8,891	1,306		$	7.42
Granted⁽¹⁾	1,295			$	6.70			1,074		6.66
Settled (RSUs)	—			—				(101	)	7.70
Exercised	(172	)		$	3.39			—		—
Canceled and forfeited	(98	)		$	11.57			(48	)	6.86
Outstanding as of March 26, 2016	4,507		7.18	$	6.58	$	4,784	2,231		$	7.11
Vested and exercisable as of March 26, 2016	2,644		5.73	$	5.40	$	4,771	N/A		N/A
Vested and expected to vest as of March 26, 2016⁽²⁾	4,211		7.01	$	6.50	$	4,783	1,581		$	7.13

____________________________

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

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

Aggregate intrinsic value represents the difference between the closing stock price of our common stock and the exercise price of outstanding, in-the-money options. Our closing stock price as reported on the New York Stock Exchange as of March 24, 2016, the final trading day of the three months ended March 26, 2016, was $5.89. The total intrinsic value of options exercised and RSUs vested was approximately $1.2 million for the three months ended March 26, 2016. The aggregate fair value of the options that vested during the three months ended March 26, 2016 was $1.4 million.

As of March 26, 2016, total unrecognized compensation cost, adjusted for estimated forfeitures, related to non-vested stock options and RSUs was approximately $5.5 million and $11.2 million, respectively, which is expected to be recognized over a weighted-average period of 2.6 years and 3.4 years, respectively, to the extent they are probable of vesting. As of March 26, 2016, we had 2,406,323 shares available for grant under the 2014 Plan.

Common Stock

As of March 26, 2016, we had reserved the following shares of common stock for future issuance in connection with the following (in thousands):



	March 26, 2016
Options issued and outstanding	4,506,981
Restricted stock units issued and outstanding	2,231,239
Common stock available for stock-based award grants under incentive award plans	2,406,323
Total	9,144,543

Net Income (Loss) Per Share

Net Loss Per Share

Net Income (Loss) Per Share

Basic net income (loss) per share is computed by dividing net income (loss) by the weighted-average number of common shares outstanding during the period. Diluted net income (loss) per share is computed by dividing net income (loss) by the weighted-average number of common shares outstanding during the period and potentially dilutive common stock equivalents, except in cases where the effect of common stock equivalent would be anti-dilutive. Potential common stock equivalents consist of common stock issuable upon exercise of stock options as well as shares issuable under outstanding contingent consideration arrangements.

The calculations of basic and diluted net income per share and basic and dilutive weighted average shares outstanding for the three months ended March 26, 2016 and March 28, 2015 were as follows:



	Three Months Ended
	March 26, 2016		March 28, 2015
Net income (loss)	$	6,755	$	(12,012	)

Weighted average shares outstanding	32,229		31,763

Dilutive impact from:
Options outstanding	861		—
Restricted stock units	498		—
Dilutive weighted average shares outstanding	33,588		31,763

Income (Loss) per share
Basic	$	0.21	$	(0.38	)
Dilutive	$	0.20	$	(0.38	)

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



	Three Months Ended
	March 26, 2016	March 28, 2015
Stock options	1,794	3,966
Restricted stock units	1,733	—

Income Taxes

We recorded income tax expense of $0.0 million and $0.6 million for the three months ended March 26, 2016 and March 28, 2015, respectively. We project to record a tax provision of $1.2 million for the year ended December 31, 2016 related to the amortization of goodwill associated with the acquisition of HomePay for tax purposes, for which there is no corresponding book deduction, and certain state taxes based on operating income that are payable without regard to tax loss carryforwards. Our tax provision for the three months ended March 28, 2015 related to the amortization of HomePay goodwill for tax purposes for which there is no corresponding book deduction, and certain state taxes based on operating income that are payable without regard to our tax loss carry forwards.

Segment and Geographical Information

We consider operating segments to be components of the Company in which separate financial information is available that is evaluated regularly by our chief operating decision maker in deciding how to allocate resources and in assessing performance. Our chief operating decision maker is the CEO. The CEO reviews financial information presented on a consolidated basis for purposes of allocating resources and evaluating financial performance. Prior to our decision to exit the Citrus Lane business in fiscal 2015, we had determined that we had two operating and reporting segments, CRCM Businesses, Excluding Citrus Lane and Citrus Lane. Subsequent to our decision to exit the Citrus Lane business, we have concluded that we have a single operating and reportable segment. Segment information for the three months ended March 26, 2016 and March 28, 2015 was as follows (in thousands):



	Three Months Ended
	March 26, 2016		March 28, 2015
U.S. Consumer Business	$	32,096	$	26,632
Other	7,170		5,417
Total revenue	$	39,266	$	32,049

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



	Three Months Ended
	March 26, 2016		March 28, 2015
United States	$	35,911	$	29,451
International	3,355		2,598
Total revenue	$	39,266	$	32,049

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

Other Expense, Net

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



	Three Months Ended
	March 26, 2016			March 28, 2015
Interest income	$	16		$	34
Interest expense	(1		)	(28		)
Other expense, net	(29		)	(1,197		)
Total other expense, net	$	(14	)	$	(1,191	)

Description of Business and Summary of Significant Accounting Policies (Policies)