CARE.COM INC, 10-K filed on 3/27/2015
Annual Report
Document and Entity Information Document (USD $)
12 Months Ended
Dec. 27, 2014
Mar. 20, 2015
Jun. 28, 2014
Document and Entity Information [Abstract]
 
 
 
Document Type
10-K 
 
 
Amendment Flag
false 
 
 
Document Period End Date
Dec. 27, 2014 
 
 
Document Fiscal Year Focus
2014 
 
 
Document Fiscal Period Focus
FY 
 
 
Trading Symbol
CRCM 
 
 
Entity Registrant Name
Care.com Inc 
 
 
Entity Central Index Key
0001412270 
 
 
Current Fiscal Year End Date
--12-27 
 
 
Entity Filer Category
Non-accelerated Filer 
 
 
Entity Common Stock, Shares Outstanding
 
31,750,837 
 
Entity Well-known Seasoned Issuer
No 
 
 
Entity Voluntary Filers
No 
 
 
Entity Current Reporting Status
Yes 
 
 
Entity Public Float
 
 
$ 0 
CONSOLIDATED BALANCE SHEETS (USD $)
In Thousands, unless otherwise specified
Dec. 27, 2014
Dec. 28, 2013
Current assets:
 
 
Cash and cash equivalents
$ 71,881 
$ 29,959 
Restricted cash
85 
246 
Accounts receivable (net of allowance of $0 and $56, respectively)
2,592 
1,609 
Unbilled accounts receivable
3,541 
2,477 
Prepaid expenses and other current assets
7,961 
1,731 
Total current assets
86,060 
36,022 
Property and equipment, net
6,323 
1,553 
Intangible assets, net
8,965 
11,418 
Goodwill
68,685 
62,686 
Other non-current assets
3,071 
2,150 
Total assets
173,104 
113,829 
Current liabilities:
 
 
Accounts payable
5,463 
2,031 
Accrued expenses and other current liabilities
12,732 
7,023 
Current contingent acquisition consideration
10,685 
5,463 
Deferred revenue
13,346 
8,304 
Total current liabilities
42,226 
22,821 
Contingent acquisition consideration
7,267 
5,166 
Deferred tax liability
2,119 
1,112 
Other non-current liabilities
3,442 
785 
Total liabilities
55,054 
29,884 
Commitment and contingencies (see note 6)
   
   
Redeemable convertible preferred stock $0.01 par value; 22,632; 21,299 shares issued and outstanding; aggregate liquidation value of $161,666 as of December 28, 2013
0 
152,251 
Stockholders' equity (deficit)
 
 
Preferred stock, $0.001 par value; 5,000 shares authorized; no shares issued and outstanding
0 
0 
Common stock, $0.001 par value; 300,000 shares authorized; 31,615 and 3,197 shares issued and outstanding, respectively
32 
3 
Additional paid-in capital
277,583 
9,311 
Accumulated deficit
(159,859)
(79,563)
Accumulated other comprehensive income
294 
1,943 
Total stockholders' equity (deficit)
118,050 
(68,306)
Total liabilities, redeemable convertible preferred stock and stockholders' equity (deficit)
$ 173,104 
$ 113,829 
CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $)
Dec. 27, 2014
Dec. 28, 2013
Allowance for accounts receivables
$ 0 
$ 56,000 
Preferred stock, par value, dollars per share
$ 0.001 
$ 0.001 
Preferred stock, shares authorized
5,000,000 
5,000,000 
Preferred stock, shares issued
0 
0 
Preferred stock, shares outstanding
0 
0 
Common stock, par value, in dollars per share
$ 0.001 
$ 0.001 
Common stock, shares authorized
300,000,000 
300,000,000 
Common stock, shares issued
31,615,000 
31,615,000 
Common stock, shares outstanding
3,197,000 
3,197,000 
Redeemable convertible preferred stock
 
 
Redeemable convertible preferred stock, par value, dollars per share
$ 0.01 
$ 0.01 
Redeemable convertible preferred stock, shares authorized
0 
22,632,000 
Redeemable convertible preferred stock, shares issued
0 
21,299,000 
Redeemable convertible preferred stock, shares outstanding
0 
21,299,000 
Redeemable convertible preferred stock, liquidation preference
$ 0 
$ 161,666,000 
CONSOLIDATED STATEMENTS OF OPERATIONS (USD $)
In Thousands, except Per Share data, unless otherwise specified
12 Months Ended
Dec. 27, 2014
Dec. 28, 2013
Dec. 31, 2012
Income Statement [Abstract]
 
 
 
Revenue
$ 116,713 
$ 81,487 
$ 48,493 
Cost of revenue
30,345 
18,844 
10,210 
Operating expenses:
 
 
 
Selling and marketing
75,817 
55,250 
35,916 
Research and development
16,984 
11,816 
7,662 
General and administrative
30,088 
18,841 
13,671 
Depreciation and amortization
4,440 
4,387 
1,724 
Impairment of goodwill and intangible assets
36,227 
0 
0 
Total operating expenses
163,556 
90,294 
58,973 
Operating loss
(77,188)
(27,651)
(20,690)
Other expense, net
(3,856)
(291)
(47)
Loss before income taxes
(81,044)
(27,942)
(20,737)
Provision for income taxes
(752)
354 
(317)
Net loss
(80,292)
(28,296)
(20,420)
Accretion of preferred stock
(4)
(57)
(48)
Net loss attributable to common stockholders
$ (80,296)
$ (28,353)
$ (20,468)
Net loss per share attributable to common stockholders:
 
 
 
Basic and diluted (in dollars per share)
$ (2.77)
$ (9.45)
$ (7.97)
Weighted-average shares used to compute net loss per share attributable to common stockholders:
 
 
 
Basic and diluted (in shares)
28,941 
3,000 
2,568 
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Dec. 27, 2014
Dec. 28, 2013
Dec. 31, 2012
Statement of Comprehensive Income [Abstract]
 
 
 
Net loss
$ (80,292)
$ (28,296)
$ (20,420)
Other comprehensive income:
 
 
 
Foreign currency translation adjustments
(1,649)
806 
1,137 
Comprehensive loss
$ (81,941)
$ (27,490)
$ (19,283)
CONSOLIDATED STATEMENTS OF REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ (DEFICIT) EQUITY (USD $)
In Thousands, except Share data, unless otherwise specified
Total
Common Stock
Additional Paid-In Capital
Accumulated Deficit
Accumulated Other Comprehensive Income (Loss)
Redeemable convertible preferred stock
Preferred Stock
Beginning balance at Dec. 31, 2011
$ (29,238)
$ 2 
$ 1,502 
$ (30,742)
$ 0 
$ 61,078 
Common stock, shares outstanding, beginning balance at Dec. 31, 2011
 
2,236,000 
 
 
 
 
Preferred stock, shares outstanding, beginning balance at Dec. 31, 2011
 
 
 
 
 
13,962,000 
Increase (Decrease) in Stockholders' Equity
 
 
 
 
 
 
Preferred stock financing
 
 
 
 
 
49,904 
Preferred stock financing, shares
 
 
 
 
 
3,826,000 
Preferred and Common stock issued in connection with acquisitions, shares
 
494,000 
 
 
 
3,511,000 
Preferred stock issued in connection with acquisitions
0 
 
 
 
 
41,164 
Exercises of stock options
253 
 
253 
 
 
 
Exercises of stock options, shares
 
152,000 
 
 
 
 
Issuance of common stock in connection with acquisitions
2,922 
1 
2,921 
 
 
 
Accretion of issuance costs
(48)
 
 
(48)
 
48 
Stock-based compensation
1,952 
 
1,952 
 
 
 
Foreign currency translation adjustments
1,137 
 
 
 
1,137 
 
Issuance of preferred and common stock in connection with acquisitions
44,089 
 
 
 
 
 
Net loss
(20,420)
 
 
(20,420)
 
 
Ending balance at Dec. 31, 2012
(43,442)
3 
6,628 
(51,210)
1,137 
152,194 
Common stock, shares outstanding, ending balance at Dec. 31, 2012
 
2,882,000 
 
 
 
 
Preferred stock, shares outstanding, ending balance at Dec. 31, 2012
 
 
 
 
 
21,299,000 
Increase (Decrease) in Stockholders' Equity
 
 
 
 
 
 
Exercises of stock options
821 
 
821 
 
 
 
Exercises of stock options, shares
 
315,000 
 
 
 
 
Accretion of issuance costs
(57)
 
 
(57)
 
57 
Stock-based compensation
1,862 
 
1,862 
 
 
 
Foreign currency translation adjustments
806 
 
 
 
806 
 
Issuance of preferred and common stock in connection with acquisitions
0 
 
 
 
 
 
Net loss
(28,296)
 
 
(28,296)
 
 
Ending balance at Dec. 28, 2013
(68,306)
3 
9,311 
(79,563)
1,943 
152,251 
Common stock, shares outstanding, ending balance at Dec. 28, 2013
3,197,000 
3,197,000 
 
 
 
 
Preferred stock, shares outstanding, ending balance at Dec. 28, 2013
0 
 
 
 
 
21,299,000 
Increase (Decrease) in Stockholders' Equity
 
 
 
 
 
 
Preferred stock financing, shares
 
6,153,000 
 
 
 
 
Preferred and Common stock issued in connection with acquisitions, shares
 
478,000 
 
 
 
0 
Exercises of stock options
994 
 
994 
 
 
 
Exercises of stock options, shares
220,000 
220,000 
 
 
 
 
Exercises of warrants, shares
 
76,000 
 
 
 
 
Accretion of issuance costs
(4)
 
 
(4)
 
 
Contingent consideration payable in shares
4,878 
 
4,878 
 
 
 
Stock-based compensation
4,357 
 
4,357 
 
 
 
Foreign currency translation adjustments
(1,649)
 
 
 
(1,649)
 
Contingent consideration paid in preferred stock
 
 
 
 
 
2,626 
Contingent consideration paid in preferred stock, shares
 
 
 
 
 
192,000 
Conversion of preferred stock to common stock upon initial public offering
154,877 
22 
154,855 
 
 
(154,877)
Conversion of preferred stock to common stock upon initial public offering, shares
 
21,491,000 
 
 
 
(21,491,000)
Issuance of preferred and common stock in connection with acquisitions
5,969 
1 
5,968 
 
 
0 
Issuance of common stock in connection with initial public offering, net of offering costs
94,810 
6 
94,804 
 
 
 
Reclassification of warrant liability to additional paid-in capital
968 
 
968 
 
 
 
Acceleration of Citrus Lane restricted stock awards
1,448 
 
1,448 
 
 
 
Net loss
(80,292)
 
 
(80,292)
 
 
Ending balance at Dec. 27, 2014
$ 118,050 
$ 32 
$ 277,583 
$ (159,859)
$ 294 
$ 0 
Common stock, shares outstanding, ending balance at Dec. 27, 2014
3,197,000 
31,615,000 
 
 
 
 
Preferred stock, shares outstanding, ending balance at Dec. 27, 2014
0 
 
 
 
 
0 
CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Dec. 27, 2014
Dec. 28, 2013
Dec. 31, 2012
Cash flows from operating activities
 
 
 
Net loss
$ (80,292)
$ (28,296)
$ (20,420)
Adjustments to reconcile net loss to net cash used in operating activities:
 
 
 
Stock-based compensation
5,805 
1,862 
1,952 
Depreciation and amortization
5,401 
6,702 
2,440 
Deferred taxes
(893)
284 
(345)
Contingent consideration expense
900 
1,342 
239 
Change in fair value of contingent consideration payable in preferred stock
2,258 
0 
0 
Change in fair value of stock warrants
606 
115 
93 
Impairment of goodwill and intangible assets
36,227 
0 
0 
Other non-operating expenses
(89)
0 
0 
Changes in operating assets and liabilities, net of effects from acquisitions:
 
 
 
Restricted cash
4 
23 
89 
Accounts receivable
(892)
(46)
(473)
Unbilled accounts receivable
(1,066)
(458)
(1,060)
Prepaid expenses and other current assets
(432)
(462)
(584)
Other non-current assets
353 
(109)
(208)
Accounts payable
1,057 
706 
711 
Accrued expenses and other current liabilities
2,479 
2,870 
339 
Deferred revenue
3,422 
2,821 
1,907 
Other non-current liabilities
868 
(15)
165 
Net cash used in operating activities
(24,284)
(12,661)
(15,155)
Cash flows from investing activities
 
 
 
Purchases of property and equipment
(3,038)
(1,420)
(413)
Payments for acquisitions, net of cash acquired
(23,333)
(398)
(25,075)
Cash withheld for purchase consideration
(73)
0 
(230)
Payments for security deposits
(2,825)
0 
(142)
Net cash used in investing activities
(29,269)
(1,818)
(25,860)
Cash flows from financing activities
 
 
 
Net proceeds from issuance of common stock upon initial public offering
96,007 
0 
0 
Proceeds from the issuance of common stock
787 
821 
253 
Proceeds from the issuance of redeemable preferred stock
0 
0 
49,904 
Payments for deferred offering costs
0 
(1,074)
0 
Payments of contingent consideration previously established in purchase accounting
(2,209)
0 
0 
Net cash provided by financing activities
94,585 
(253)
50,157 
Effect of exchange rate changes on cash and cash equivalents
890 
(85)
(29)
Net increase (decrease) in cash and cash equivalents
41,922 
(14,817)
9,113 
Cash and cash equivalents, beginning of the period
29,959 
44,776 
35,663 
Cash and cash equivalents, end of the period
71,881 
29,959 
44,776 
Supplemental disclosure of cash flow activities
 
 
 
Cash paid for taxes
94 
26 
33 
Supplemental disclosure of non-cash investing and financing activities
 
 
 
Non-cash purchases of property and equipment
2,575 
0 
0 
Issuance of preferred and common stock in connection with acquisitions
5,969 
0 
44,089 
Contingent acquisition consideration
0 
0 
9,049 
Accretion of preferred stock to redemption value
4 
57 
48 
Conversion of preferred stock to common stock
154,855 
0 
0 
Reclassification of warrant liability to additional paid-in capital
968 
0 
0 
Reclassification of contingent consideration payable in common shares
4,878 
0 
0 
Unpaid deferred offering costs
$ 0 
$ 479 
$ 0 
Organization and Description of Business
Organization and Description of Business
Organization and Description of Business
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. We also operate a social e-commerce service selling curated products designed for families. This service generates revenue through the sale of subscriptions and other products to customers in the United States.
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 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; access to capital at acceptable terms; engagement and usage of our products; scaling and adaptation of existing technology and network infrastructure; competition in our market; management of our growth; acquisitions and investments; qualified employees and key personnel; protection of our brand and intellectual property; protection of customers’ information and privacy concerns; and security measures related to our website, among other things.
Summary of Significant Accounting Policies Summary of Significant Accounting Policies
Summary of Significant Accounting Policies
Summary of Significant Accounting Policies
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 generally accepted accounting principles in the United States of America (“U.S. GAAP”).
Fiscal Year-End
For periods prior to Fiscal 2013, we operated and reported on a calendar basis fiscal year. Beginning in the third quarter of Fiscal 2013, 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.
Use of Estimates
The preparation of our consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of income and expenses during the reporting period. On an ongoing basis, we evaluate our estimates, including those related to accounts receivable and revenue allowances, intangible asset valuations, expected future cash flows used to evaluate the recoverability of long-lived assets, the useful lives of long-lived assets including property and equipment and intangible assets, valuation of common and preferred stock and warrants to purchase preferred stock, fair value of stock-based awards, goodwill, income taxes, contingent consideration, and contingencies. We base our estimates of the carrying value of certain assets and liabilities on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, when these carrying values are not readily available from other sources. These estimates are based on information available as of the date of the consolidated financial statements; therefore, actual results could differ from the estimates.
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 on-going subscription fees. Revenue from subscription fees is recognized on a daily basis over the subscription term or on a pro-rata basis as the services are delivered. Revenue from background checks, lead generation and advertising is recognized in the period earned. For product sales, these criteria are deemed to have been met when the items are delivered to the end customer. Other service revenues are recognized as the services are performed. Shipping and handling charges are included in revenue on a gross basis. Taxes that are collected from customers and remitted to government authorities are presented on a net basis and are excluded from revenue.
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 a 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 (‘‘VSOE’’), if available; (2) third-party evidence (‘‘TPE’’), if VSOE is not available; and (3) best estimate of selling price (‘‘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 charge for similar offerings, sales volumes, geographies and other factors contemplated in negotiating multiple element transactions.
Concentrations of Credit Risk
Financial instruments, which potentially subject us to concentrations of credit risk, consist primarily of cash and cash equivalents and accounts receivable. We place our cash and cash equivalents with major financial institutions throughout the world that management assesses to be of high-credit quality in order to limit exposure of each investment. As of December 27, 2014 and December 28, 2013, substantially all of our cash had been invested in money market funds.
Credit risk with respect to accounts receivable is dispersed due to the large number of customers. During the year ended December 27, 2014, one customer accounted for 15% of total accounts receivable and no customer accounted for more than 10% of total revenue. During the year ended December 28, 2013 no single customer accounted for more than 10% of total accounts receivable or revenue. In addition, our credit risk is mitigated by a relatively short collection period. Collateral is not required for accounts receivable. We record our accounts receivable in our consolidated balance sheets at net realizable value. We perform on-going credit evaluations of our customers and maintain allowances for potential credit losses, based on management’s best estimates. Amounts determined to be uncollectible are written off against this reserve.
Foreign Currency Translation
We determine the functional currency for our foreign subsidiaries by reviewing the currencies in which their respective operating activities occur. Financial information is translated from the functional currency to the U.S. dollar, the reporting currency, for inclusion in our consolidated financial statements. Income, expenses, and cash flows are translated at average exchange rates prevailing during each month of the fiscal year, and assets and liabilities are translated at fiscal period end exchange rates. Foreign exchange transaction gains and losses are included in other expense, net in the accompanying consolidated statements of operations. The effects of foreign currency translation adjustments are included as a component of accumulated other comprehensive income in the accompanying consolidated balance sheets. For the years ended December 27, 2014, December 28, 2013 and December 31, 2012, we recorded foreign currency transaction losses of approximately $1.0 million, $0.1 million and $0.1 million, respectively, included in other expense, net in the accompanying consolidated statements of operations.
Cash Equivalents
We consider highly liquid investments purchased with an original maturity of 90 days or less at the time of purchase to be cash equivalents. As of December 27, 2014 and December 28, 2013, cash equivalents consisted of money market funds.
Restricted Cash
Restricted cash relates primarily to monies held in escrow to settle contractual obligations and funds received from families that are due to their clients’ respective providers or the taxing authorities, but have not yet been remitted. Amounts received from families that are held by us until disbursement to their providers and taxing authorities are restricted as to usage because we are obligated to forward such funds to the recipients on behalf of our paying families. As of December 27, 2014, restricted cash is classified within current assets in the accompanying consolidated balance sheets because such amounts are scheduled to be remitted within the twelve months following the balance sheet date.
Deferred Revenue
Deferred revenue primarily consists of payments received in advance of revenue recognition of the services described above, and is recognized as the revenue recognition criteria are met. Our customers pay for most services in advance on a monthly, quarterly or annual basis. Amounts expected to be recognized within the twelve months following the balance sheet date are classified within current liabilities in the accompanying consolidated balance sheets.
Unbilled Receivables
Unbilled receivables consist of amounts earned upon satisfying the revenue recognition criteria in advance of billing. Subscribers to our Care.com HomePay solution are billed quarterly in arrears at the beginning of the subsequent calendar quarter to which the services related.
Cost of Revenue
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 acquired as part of acquisitions and website intangible assets. In addition, we have product fulfillment costs, largely consisting of product, shipping and costs associated with our third party fulfillment providers.
Recurring Fair Value Measurement
Accounting Standards Codification (“ASC”) 820, Fair Value Measurements and Disclosures, establishes a three-level valuation hierarchy for disclosure of fair value measurements. The categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the measurement of fair value. The three levels of the hierarchy are defined as follows:
•
Level 1 inputs - Unadjusted quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date.
•
Level 2 inputs - Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These might include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (such as interest rates, volatilities, prepayment speeds, credit risks, etc.), or inputs that are derived principally from or corroborated by market data by correlation or other means.
•
Level 3 inputs - Unobservable inputs for determining the fair values of assets or liabilities that reflect an entity’s own assumptions about the assumptions that market participants would use in pricing the assets or liabilities.
Recurring Fair Value Measurements
Assets
Cash equivalents - Cash equivalents include money market mutual funds with original maturities of three months or less. The fair value measurement of these assets is based on quoted market prices in active markets for identical assets and, therefore, these assets are recorded at fair value on a recurring basis and classified as Level 1 in the fair value hierarchy.
Liabilities
Contingent Acquisition Consideration - Contingent acquisition consideration includes the fair value of contingent consideration paid by us in connection with corporate acquisitions based on the likelihood of issuing preferred and common stock and paying cash related to certain revenue and other milestones. We recorded our estimate of the fair value of this contingent consideration based on the evaluation of the likelihood of the achievement of the contractual conditions that would result in the payment of the contingent consideration and weighted probability assumptions of these outcomes. The fair value of the liability was estimated using a discounted cash flow technique with significant inputs that are not observable in the market and thus represents a Level 3 fair value measurement as defined in ASC 820, Fair Value Measurements and Disclosures.
For contingent consideration payable in preferred stock, we used a valuation of the company based on both an income and market approach to determine the fair value of the preferred stock as of the acquisition date and on an-ongoing basis. Upon the closing of our initial public offering (“IPO”) in January 2014, the contingent consideration payable in preferred stock was automatically converted to the right to receive common stock at the then-applicable conversion rate. Contingent consideration payable in preferred stock was written up to fair value as of the closing date of the IPO and was reclassified to permanent equity and will no longer be marked-to-market. There have been no changes in the probability of the earn-out payment through December 27, 2014.
The cash portion of the contingent consideration liability has been discounted to reflect the time value of money, and therefore, as the milestone date approaches, the fair value of this liability will increase. This increase in fair value was recorded in general and administrative expenses in the accompanying consolidated statements of operations. The preferred stock portion of the contingent consideration represented a liability in accordance with ASC 480-10, Distinguishing Liabilities from Equity, and was marked-to-market each reporting period with changes in market value recognized in other expense, net in the accompanying consolidated statements of operations.
During the year-ended December 28, 2013 we reassessed the probability of achievement on the Care Concierge, Inc. contingent acquisition cash payment based on the achievement of certain revenue milestones and the probability of reaching both the 2013 and 2014 milestones, which resulted in $0.6 million of incremental expense. No incremental expense was recorded in the year ended December 27, 2014. During the year ended December 27, 2014, in connection with our acquisition of Citrus Lane, Inc. (“Citrus Lane”), we recognized acquisition consideration payable in cash and shares totaling $17.5 million. The probability of achievement of this earn-out is assessed at 100%.
The significant inputs in the Level 3 measurement not supported by market activity included our probability assessments of expected future cash flows related to our acquisition of Breedlove & Associates, LLC, Care Concierge, Inc. and Citrus Lane during the applicable earn-out period, appropriately discounted considering the uncertainties associated with the applicable obligation, and calculated in accordance with the terms of the applicable transaction agreement. As such, the cash portion of the contingent consideration liability has been discounted to reflect the time value of money, and therefore, as the milestone date approaches, the fair value of this liability will increase.
Preferred Stock Warrants - Preferred stock warrants consist of warrants issued in connection with debt financings. The fair value of the warrants was determined using the Black-Scholes option-pricing model. In conjunction with the closing of the IPO, the warrant exercisable for shares of our Series A-1 Preferred Stock was automatically converted into a warrant exercisable for shares of our common stock, resulting in the reclassification of the related convertible preferred stock warrant liability to additional paid-in capital as the warrant met the criteria for equity classification upon its conversion to a warrant for the purchase of common stock. The warrant liability was re-measured to fair value prior to reclassification to additional paid-in capital. As of December 27, 2014, we had no outstanding warrant liability. Refer to Note 7 - Stockholders’ Equity (Deficit) for a discussion of the methodology used and changes in the fair value of our preferred stock warrants.
The following table presents information about our assets and liabilities measured at fair value on a recurring basis as of December 27, 2014 and December 28, 2013 and indicates the fair value hierarchy of the valuation techniques we utilized to determine such fair value (in thousands):
 
December 27, 2014
 
December 28, 2013
 
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 and certificates of deposit
$
15,656

 
$
—

 
$
—

 
$
15,656

 
$
15,085

 
$
—

 
$
—

 
$
15,085

Total assets
$
15,656

 
$
—

 
$
—

 
$
15,656

 
$
15,085

 
$
—

 
$
—

 
$
15,085

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Liabilities:


 


 


 


 


 


 


 


Contingent acquisition consideration
$
—

 
$
—

 
$
17,952

 
$
17,952

 
$
—

 
$
—

 
$
10,630

 
$
10,630

Preferred stock warrants
—

 
—

 
—

 
—

 
—

 
—

 
362

 
362

Total liabilities
$
—

 
$
—

 
$
17,952

 
$
17,952

 
$
—

 
$
—

 
$
10,992

 
$
10,992


The following table sets forth a summary of changes in the fair value of our contingent acquisition consideration and preferred stock warrants which represent recurring measurements that are classified within Level 3 of the fair value hierarchy wherein fair value is estimated using significant unobservable inputs (in thousands):
 
December 27, 2014
 
December 28, 2013
 
Contingent Acquisition
Consideration
 
Preferred Stock Warrants
 
Contingent Acquisition
Consideration
 
Preferred Stock Warrants
Beginning balance
$
10,630

 
$
362

 
$
9,288

 
$
247

Contingent consideration liability recorded in connection with Citrus Lane acquisition
14,510

 
—

 
—

 
—

Increase in fair value included in earnings
3,158

 
606

 
1,342

 
115

Reclassification to permanent equity
(4,878
)
 
(968
)
 
—

 
—

Contingent acquisition consideration payments
(5,468
)
 
—

 
—

 
—

Ending balance
$
17,952

 
$
—

 
$
10,630

 
$
362


Non-Recurring Fair Value Measurements
We remeasure 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. For fiscal year ended December 27, 2014, we recorded an intangible asset impairment charge of $2.4 million and a goodwill impairment charge of $33.8 million, each related to our Citrus Lane reporting unit. This adjustment falls within Level 3 of the fair value hierarchy due to the use of significant unobservable inputs to determine fair value. The fair value measurements were determined using a DCF analysis, and the amount and timing of future cash flows within the analysis were based on our most recent operational budgets, long-range strategic plans and other estimates at the time such re-measurements were made. No remeasurement of such assets occurred at December 28, 2013 or December 31, 2012. Other financial instruments not measured or recorded at fair value in the accompanying 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.
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. For fiscal year ended December 27, 2014, costs incurred during application development stage and capitalized totaled $0.9 million. During fiscal years ended December 28, 2013 and December 31, 2012, 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 were insignificant.
Equity Method Investment
During fiscal 2012, we made a 50% investment in Care International Exchange, Inc. (the “Venture”), a venture formed with Magsaysay People Resources Corporation (‘‘Magsaysay’’). The purpose of the Venture is to conduct activities related to a live-in care program with the goal of generating revenue from the placement of foreign-born providers with families, institutions or individuals seeking live-in home care throughout Canada. Our initial investment in the Venture was $50,000, and we and Magsaysay each have a commitment to provide an additional $0.4 million of funding over the next two years. We account for our investment in the Venture using the equity method of accounting based on our voting interest as we have significant influence over the Venture. Accordingly, our share of the income or loss of the Venture is recorded in other income or expense in the accompanying consolidated statements of operations. To date, the operations of the Venture have not been significant.
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.
In performing the test, we utilize the two-step approach prescribed under ASC 350. The first step requires a comparison of the reporting unit against its aggregate carrying value, including goodwill. If the carrying amount exceeds the reporting unit’s carrying value to its fair value. We consider a number of factors to determine the fair value of a reporting unit, including an independent valuation to conduct this test. The valuation is based upon expected future discounted operating cash flows of the reporting unit. We base the discount rate on the weighted average cost of capital, or WACC, of market participants. If the carrying value of a reporting unit exceeds its estimated fair value, we will perform the second step of the goodwill impairment test to measure the amount of impairment loss, if any. The second step of the goodwill impairment test compares the implied fair value of a reporting unit’s goodwill to its carrying value. The second step requires us to perform a hypothetical purchase allocation as of the measurement date and estimate the fair value of net tangible and intangible assets. The fair value of intangible assets is determined as described below and is subject to significant judgment.
Since the fair value of our reporting units was determined by use of the discounted cash flows, or DCF, and the key assumptions that drive the fair value in this model are the WACC, terminal values, growth rates, and the amount and timing of expected future cash flows, significant judgment is applied in determining fair value. If the current economic environment were to deteriorate, this would likely result in a higher WACC because market participants would require a higher rate of return. In the DCF as the WACC increases, the fair value decreases. The other significant factor in the DCF is our projected financial information (i.e., amount and timing of expected future cash flows and growth rates) and if these assumptions were to be adversely impacted, this could result in a reduction of the fair value of this reporting unit.
We conducted our fiscal 2014 annual impairment test as of September 28, 2014 (the first day of our fourth fiscal quarter). We utilized DCF and market approaches to estimate the fair value of our reporting units as of September 28, 2014 and ultimately used the fair value determined by the DCF in making our impairment test conclusions. We believe we used reasonable estimates and assumptions about future revenue, cost projections, cash flows, market multiples and discount rates as of the measurement date. Because Citrus Lane was recently acquired and was operating reasonably close to expectations, we performed a qualitative screen for impairment of that reporting unit as is allowed under ASC 350. As a result of completing Step 1, all of the reporting units had fair values exceeding their carrying values, and as such, Step 2 of impairment test was not required for those reporting units.
During the fourth quarter of fiscal 2014, primarily as a result of unexpected changes, both internal and external, we determined that indicators of impairment existed at our Citrus Lane Reporting Unit. The fair value of reporting unit was deemed to be below its carrying value and Step 2 of the goodwill impairment test was performed. Step 2 of the goodwill impairment test requires the completion of a hypothetical purchase price allocation to determine the fair value of the implied goodwill. Upon completion of the Step 2 analysis, we determined that the Citrus Lane goodwill was impaired and recorded a $33.8 million impairment expense.
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.
During the fourth quarter of fiscal 2014, in connection with our goodwill impairment analysis, we performed a Step 2 test of recoverability of finite lived intangibles in accordance with ASC 360, indicating that our undiscounted future cash flows would not recover the carrying value of the Citrus Lane proprietary software and trade name intangible assets. We then performed a Step 3 impairment analysis of finite lived intangible assets under ASC 360 and determined that the carrying value of the Citrus Lane proprietary software and trade name exceeded the fair value of those assets as of the end of the fourth quarter and recognized an intangible asset impairment of $2.4 million.
During the fourth quarter of fiscal 2012, we made the decision to replace the Care.com Europe proprietary software with a new, worldwide, international platform that was to be developed. As a result of this decision we tested the associated asset group for recoverability and concluded that an indicator of impairment did not exist. However, in connection with the decision to migrate the existing technology platform to the new worldwide platform, we concluded the useful life of the technology platform should be reassessed. We revised the useful life to be one year to coincide with our migration plan.
During the third quarter of fiscal 2013, we made the decision to migrate the PIAP trade name to Care Concierge. As a result of this decision we tested the associated asset group for recoverability and concluded that an indicator of impairment did not exist. However, in connection with the decision to migrate to the new trade name, we concluded the useful life of the PIAP trade name should be reassessed. We revised the useful life to be four months to coincide with our migration plan.
Property and Equipment
Property and equipment are stated at cost, and are depreciated using the straight-line method over the estimated useful life of the assets or, where applicable and if shorter, over the lease term. The following table presents the detail of property and equipment, net for the periods presented (in thousands):
 
December 27,
2014
 
December 28,
2013
Computer equipment
$
2,476

 
$
1,444

Furniture and fixtures
1,708

 
1,154

Software
1,066

 
199

Leasehold improvements
3,137

 
183

Total
8,387

 
2,980

Less accumulated depreciation
(2,064
)
 
(1,427
)
Property and equipment, net
$
6,323

 
$
1,553

Property and equipment are depreciated over the following estimated useful lives:
 
Estimated Useful Life
Computer equipment
3 years
Leasehold improvements
Lesser of asset life or lease term
Furniture and fixtures
3 years
Software
3 years

Depreciation expense for the years ended December 27, 2014, December 28, 2013 and December 31, 2012 was $0.9 million, $0.7 million and $0.3 million, respectively.
Expenditures for maintenance and repairs are charged to expense as incurred, whereas major betterments are capitalized as additions to property and equipment.
In accordance with ASC 360-10-35-15, Property, Plant and Equipment—Impairment or Disposal of Long-Lived Assets, we review the carrying value of long-lived assets whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future cash flows, then an impairment charge is recognized for the amount by which the carrying amount of the asset exceeds the fair value of the asset. Assets to be disposed of would be separately presented in the balance sheet and reported at the lower of the carrying amount or the fair value less costs to sell, and are not depreciated. Assets and liabilities that are part of a disposal group and classified as held for sale would be presented separately in the appropriate asset and liability sections of the balance sheet. We have not recognized any impairment losses during the years ended December 27, 2014, December 28, 2013 and December 31, 2012, with respect to property, plant and equipment.
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. At December 27, 2014 and December 28, 2013, we did not have any uncertain tax positions.
Presentation of Taxes in the Consolidated Statements of Operations
We present taxes that are collected from customers and remitted to government authorities on a net basis in the consolidated statements of operations.
Stock-Based Compensation
We account for all stock-based awards to employees and members of our board of directors, to the extent such awards were issued in connection with their services as directors, in accordance with ASC 718, Compensation-Stock Compensation. ASC 718 requires that all share-based payments, including grants of stock options, be recognized in the statement of operations as an operating expense based on their fair value. In accordance with ASC 718, we recognize the compensation cost of share-based awards on a straight-line basis over the vesting period of the award.
We use the Black-Scholes-Merton option-pricing model to determine the fair value for option awards. In valuing our option awards, we make assumptions about risk-free interest rates, dividend yields, volatility, and weighted-average expected lives, including estimated forfeiture rates. Risk-free interest rates are derived from U.S. Treasury securities as of the option award grant date. Expected dividend yield is based on our historical dividend payments, which have been zero to date. The expected volatility for our common stock is estimated 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 estimate the weighted-average expected life of the option awards as the average of the option vesting schedule and the term of the award, since we do not have sufficient historical exercise data to provide a reasonable basis upon which to estimate expected term due to the limited period of time share-based awards have been exercisable. The term of the award is estimated using the simplified method, as awards are plain vanilla option awards. Forfeiture rates are estimated using historical actual forfeiture trends as well as our judgment of future forfeitures. These rates are evaluated at least quarterly and any change in compensation expense is recognized in the period of the change. The estimation of option awards that will ultimately vest requires judgment, and to the extent actual results or updated estimates differ from our current estimates, such amounts will be recorded as a cumulative adjustment in the period the estimates are revised. Actual results, and future changes in estimates, may differ substantially from management’s current estimates.
Stock-based awards issued to non-employees, are accounted for using the fair value method in accordance with ASC 505-50, Equity-Based Payments to Non-Employees. These stock options are typically granted in exchange for consulting services to be rendered, and vest over periods of up to four years. In accordance with authoritative guidance, the fair value of non-employee stock-based awards is estimated on the date of grant, and subsequently revalued at each reporting period over their vesting period using the Black-Scholes option-pricing model.
Advertising Costs
We expense advertising costs as incurred when the advertisement is run. We incurred advertising expenses of $30.5 million, $22.3 million and $14.3 million for the years ended December 27, 2014, December 28, 2013 and December 31, 2012, respectively, which was included in the accompanying consolidated statements of operations as a component of selling and marketing expense.
Accumulated Other Comprehensive Income
As of December 27, 2014 and December 28, 2013, accumulated other comprehensive income was comprised solely of cumulative foreign currency translation adjustments.
Recently Issued and Adopted Accounting Pronouncements
In January 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2015-01, Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items ("ASU 2015-01”), which eliminates the requirement of Extraordinary Items to be separately classified on the income statement.  ASU 2015-01 is effective for annual periods ending after December 15, 2015 and for annual and interim periods thereafter.  Early application is permitted.  The adoption of ASU 2015-01 is not expected to have a material effect on our condensed consolidated financial statements or disclosures.
In August 2014, the FASB issued Accounting Standards Update No. 2014-15, Presentation of Financial Statements - Going Concern (“ASU 2014-15”), which requires management to evaluate, at each annual and interim reporting period, whether there are conditions or events that raise substantial doubt about the 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 interim periods thereafter.  Early application is permitted.  The adoption of ASU 2014-15 is not expected to have a material effect on our condensed consolidated financial statements or disclosures.
In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”), 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. The new standard is effective for us in our fiscal year 2018. Early application is not permitted. 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 retrospective or cumulative effect transition method. We have not yet selected a transition method nor have we determined the effect of the standard on our ongoing financial reporting.
In April 2014, the FASB issued ASU No. 2014-08, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity (“ASU 2014-08”), to reduce diversity in practice for reporting discontinued operations. Under the previous guidance, any component of an entity that was a reportable segment, an operating segment, a reporting unit, a subsidiary, or an asset group was eligible for discontinued operations presentation. The revised guidance only allows disposals of components of an entity that represent a strategic shift (e.g., disposal of a major geographical area, a major line of business, a major equity method investment, or other major parts of an entity) and that have a major effect on a reporting entity’s operations and financial results to be reported as discontinued operations. The revised guidance also requires expanded disclosure in the financial statements for discontinued operations as well as for disposals of significant components of an entity that do not qualify for discontinued operations presentation. The updated guidance is effective for periods beginning after December 15, 2014. We currently do not have operations that are reported as discontinued operations and do not expect the adoption of this guidance to have a material effect on our financial position, results of operations, or cash flows.
In July 2013, the FASB issued ASU No. 2013-11, Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carry forward, a Similar Tax Loss, or a Tax Credit Carry forward Exists (“ASU 2013-11”). ASU 2013-11 states that an unrecognized tax benefit, or a portion of an unrecognized tax benefit, should be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carry forward, a similar tax loss, or a tax credit carry forward, except in certain situations. ASU 2013-11 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2013. Early adoption and retrospective application are permitted. The amendments should be applied prospectively to all unrecognized tax benefits that exist at the effective date. The adoption of this amendment did not have a material impact on our condensed consolidated financial statements.
Business Acquisitions
Business Acquisitions
Business Acquisitions
Citrus Lane
On July 17, 2014, we acquired Citrus Lane, a social e-commerce service selling curated products designed for families for a total consideration of $22.9 million in cash and 0.4 million shares of common stock (valued at $3.8 million). In addition, up to $16.4 million in cash (valued at $14.5 million) and up to an additional 0.1 million shares of common stock (valued at $1.1 million) will be payable in the event Citrus Lane achieves certain milestones in 2015 and 2016.
As part of the transaction, we also exchanged both vested and unvested options to purchase Citrus Lane common stock for options to purchase Care.com common stock at an exchange ratio implied by the value of the merger consideration received by the holders of outstanding Citrus Lane shares (valued at $1.0 million). In connection with this acquisition, we incurred approximately $1.8 million in direct acquisition costs which were expensed as incurred and are included in general and administrative expense in our consolidated statements of operations. Of the initial consideration value, $5.0 million was placed in an escrow account to secure indemnification obligations contained in the purchase agreement.
We recorded our estimate of the fair value of this contingent consideration based on the evaluation of the likelihood of the achievement of the contractual conditions that would result in the payment of the contingent consideration and weighted probability assumptions of these outcomes. The fair value of the liability was estimated using a discounted cash flow technique with significant inputs that are not observable in the market and thus represents a Level 3 fair value measurement as defined in ASC 820, Fair Value Measurements and Disclosures. The significant inputs in the Level 3 measurement not supported by market activity included our probability assessments of expected future cash flows related to our acquisition of Citrus Lane during the earn-out period, appropriately discounted considering the uncertainties associated with the obligation, and calculated in accordance with the terms of the merger agreement. There have been no changes in the probability of the earn-out payment through December 27, 2014. The cash portion of the contingent consideration liability has been discounted to reflect the time value of money, and therefore, as the milestone dates approach, the fair value of this liability will increase. This increase in fair value was recorded in general and administrative expenses in the accompanying consolidated statements of operations. The results of operations for Citrus Lane have been included in our consolidated financial statements since the date of acquisition. For the period from the date of acquisition to December 27, 2014, revenue and net loss for Citrus Lane totaled $6.0 million and $42.9 million, respectively.
Identifiable Intangible Assets
As part of the preliminary purchase price allocation, we determined that Citrus Lane's primary separately identifiable intangible assets were its proprietary software and trade name. We used a hybrid approach to value the proprietary software. This approach incorporates elements of the income and cost approaches, specifically the lost profits and replacement cost methods. We used a relief from royalty method to value the trade name. This method assumes that a willing buyer would pay a royalty for the use of an asset, rather than incurring the costs associated with internally developing an asset of identical utility. The fair value is calculated by taking the present value of avoided after-tax cash flows discounted back to a present value. The baseline data for this analysis was the cash flow estimates used to price the transaction. Cash flows were forecasted for each intangible asset then discounted based on an appropriate discount rate. The 22.5% discount rate applied was benchmarked with reference to the implied rate of return from the transaction model, as well as an estimate of a market participant's weighted-average cost of capital based on the capital asset pricing model.
In estimating the useful life of the acquired assets, we considered ASC 350-30-35, Intangibles-Goodwill and Other, and reviewed the following: the expected use by the combined company of the assets acquired, the expected useful life of another asset (or group of assets) related to the acquired assets, legal, regulatory or other contractual provisions that may limit the useful life of an acquired asset or may enable the extension of the useful life of an acquired asset without substantial cost, the effects of obsolescence, demand, competition and other economic factors, and the level of maintenance expenditures required to obtain the expected future cash flows from the asset.
We amortize these intangible assets over their estimated useful lives using a method that is based on estimated future cash flows, as we believe this will approximate the pattern in which the economic benefits of the assets will be utilized, or where we have concluded that the cash flows were not reliably determinable, on a straight-line basis.
Preliminary Allocation of Purchase Price
The acquisition has been accounted for as a business combination under FASB ASC Topic 805, Business Combinations (“ASC 805”). The purchase price has been assigned to the assets acquired and liabilities assumed based on their estimated fair values. As of July 17, 2014, we recognized $41.8 million of goodwill. A summary of the preliminary purchase price allocation for the acquisition of Citrus Lane is as follows (in thousands):
Total purchase consideration
 
Cash
$
22,881

Fair value of common stock
3,844

Fair value of contingent acquisition consideration
15,600

Fair value of stock options exchanged
1,026

 
 
Total purchase price
$
43,351

 
 
Allocation of the purchase consideration
 
Tangible assets
$
2,865

Liabilities assumed
(4,098
)
Identifiable intangible assets
4,600

Deferred tax liabilities
(1,855
)
Goodwill
41,839

 
 
Total purchase price allocation
$
43,351


The fair value of the stock options exchanged and recorded as purchase price represents the fair value of the Citrus Lane options converted into options to purchase our common stock attributable to pre-combination services pursuant to ASC 805, Business Combinations. The remainder of the fair value of these options of $1.4 million will be recognized as stock-based compensation expense over the remaining vesting period, which is approximately 2.6 years. We estimated fair value of the stock options using a binomial valuation model with the following weighted average assumptions: risk free rate of 1.8%, expected volatility of 49.4%, expected life of 5.4 years and dividend of 0.0%. The weighted average fair value of stock options granted is $9.34 per share. We also recorded stock-based compensation expense of approximately $1.4 million related to the acceleration of vesting of certain equity awards assumed as part of the Citrus Lane acquisition.
The estimated fair values for specifically identifiable intangible assets acquired are as follows (in thousands):
 
 
 
Weighted-average amortization period
(in years)
Proprietary software
$
3,000

 
7
Trade-names
1,600

 
10
Total purchase price
$
4,600

 
 

The sellers are also entitled to additional contingent consideration (“Earn-Out”) based upon the performance of the business acquired during a two year period spanning from July 17, 2014 through July 17, 2016. This consideration is based on the ability to introduce new product offerings or product options to Citrus Lane customers. In the event the Earn-Out targets are achieved, we will make payments of $8.2 million in each of the periods ended September 26, 2015 and September 24, 2016, respectively. The estimated fair value of the contingent consideration was determined to be $15.2 million at the acquisition date and was initially recorded in current and non-current contingent acquisition consideration on our consolidated balance sheet. There is also a component of the contingent consideration payable in common stock, which is based on a fixed number of shares on each of the periods ended September 26, 2015 and September 24, 2016, and has been recorded as permanent equity in purchase accounting using the acquisition date stock price part of our purchase accounting. We determined the future estimated fair value for the contingent consideration by applying a present value calculation of probable earn-out payments using an appropriate discount rate for us. We recorded charges of $0.6 million due to the accretion of changes in the valuation of contingent consideration, reported in general and administrative expenses. In addition, certain former employees of Citrus Lane may receive two annual contingent payments (subject to adjustment) not to exceed $1.4 million (the “Employee Bonus Pool”). A portion of the Employee Bonus Pool, $0.3 million, is based on the achievement of the Earn-Out targets noted earlier as well as the individual remaining employed by Care.com. The remaining $1.1 million is based solely on the individuals remaining employed by Care.com. Each is payable after the first and second anniversaries, from the date of acquisition, provided the individuals remain employed by Care.com on such dates. In case of separation, the Employee Bonus Pool attributable to the terminated employee is reallocated to the remaining employees. Since these payments are contingent on future employment, they are being recognized as compensation expense ratably over the required service periods. We recorded compensation expense of $0.5 million for the year ended December 27, 2014.
The excess of the purchase price over the estimated fair value of the net tangible assets and intangible assets acquired was recorded as goodwill. The factors contributing to the recognition of the amount of goodwill are based on several strategic and synergistic benefits that are expected to be realized from the Citrus Lane acquisition. None of the goodwill is expected to be deductible for income tax purposes. Refer to Note 2 - Significant Accounting Policies.
Pro forma Information
The following unaudited pro forma financial information presents the combined results of operations of Care.com and Citrus Lane as if the acquisition had occurred on January 1, 2013, after giving effect to certain pro forma adjustments. The pro forma adjustments reflected herein include only those adjustments that are directly attributable to the Citrus Lane acquisition, factually supportable, and expected to have a continuing impact on us. Actual 2014 impairment charges were excluded from the pro forma results below. The pro forma financial information does not reflect any adjustments for anticipated synergies resulting from the acquisition and is not necessarily indicative of the operating results that would have actually occurred had the transaction been consummated on January 1, 2013.
 
 
 
 
 
Pro Forma for the Years Ended
 
December 27, 2014
 
December 28, 2013
(in millions)
 
 
 
Revenue
$
121.7

 
$
87.2

Net loss
$
(45.8
)
 
$
(35.0
)

Consmr
On March 3, 2014, we entered into an agreement with Consmr, Inc. (“Consmr”), the developer of a mobile application for ratings and reviews of consumer products, pursuant to which we acquired the right to hire all employees of Consmr for total consideration of $0.6 million. Approximately $0.1 million of the purchase price was held back and is payable in one year subject to the continuing employment of the employees. Such amount is being recognized as compensation expense over the required employment period. The transaction is presented as an acquisition of a business and the consideration transferred, except for the amount held back, was recorded as goodwill.
As a result of this transaction, on March 4, 2014 all former employees of Consmr became employees of Care.com. Pro forma information related to Consmr is not presented as the impact of the acquisition on our consolidated results of operations is not significant.
BigTent
In June 2013 we acquired certain assets and liabilities of BigTent, a provider of an online forum for groups to share information, which we determined to be an acquisition of a business. The results of operations of this acquisition have been included in our consolidated results from their respective acquisition dates. The total consideration for this acquisition was $0.7 million, paid in cash. In allocating the total purchase consideration for this acquisition based on estimated fair values, we recorded $0.5 million of identifiable intangible assets. Intangible assets acquired included primarily proprietary software and customer relationships with weighted average useful lives of 6.6 years.Transaction costs related to this business combination were not material and are included in general and administrative expenses in the accompanying consolidated statements of operations. We concluded that this acquisition did not represent a material business combination and therefore, no proforma financial information has been provided herein.
Breedlove
On August 3, 2012, we acquired all of the outstanding capital stock of Breedlove & Associates, L.L.C. (Breedlove), a provider of household employer payroll, tax and compliance services. The aggregate consideration payable to the former stockholders of Breedlove was $53.9 million. This consideration consisted of: $23.1 million that was paid in cash; the issuance of 1.7 million shares of our Series E preferred stock, valued at $21.9 million; and, if certain revenue-based milestones were achieved through 2014, up to an additional $5.0 million in cash (valued at $3.9 million) and 0.4 million additional shares of Series E preferred stock (gross value of $5.0 million). In connection with the acquisition, we incurred $0.1 million of merger related transaction costs, which we recorded as general and administrative expense in the accompanying statement of operations for the year ended December 31, 2012.
We recorded our estimate of the fair value of this contingent consideration based on the evaluation of the likelihood of the achievement of the contractual conditions that would result in the payment of the contingent consideration and weighted probability assumptions of these outcomes. The fair value of the liability was estimated using a discounted cash flow technique with significant inputs that are not observable in the market and thus represents a Level 3 fair value measurement as defined in ASC 820, Fair Value Measurements and Disclosures. The significant inputs in the Level 3 measurement not supported by market activity included our probability assessments of expected future cash flows related to our acquisition of Breedlove during the earn-out period, appropriately discounted considering the uncertainties associated with the obligation, and calculated in accordance with the terms of the equity purchase agreement. The cash portion of the contingent consideration liability has been discounted to reflect the time value of money, and therefore, as the milestone date approaches, the fair value of this liability will increase. This increase in fair value was recorded in general and administrative expenses in the accompanying consolidated statements of operations. The preferred stock portion of the contingent consideration represents a liability in accordance with ASC 480-10, Distinguishing Liabilities from Equity, and is marked to market each reporting period with changes in market value recognized in other expense, net in the accompanying consolidated statements of operations. The results of operations for Breedlove have been included in our consolidated financial statements since the date of acquisition. The 2013 earn-out payment was remitted in the first quarter of fiscal 2014 in full. There have been no changes in the probability of the earn-out payment related to the 2014 earnout through December 27, 2014. For the period from the date of acquisition to December 31, 2012, revenue and net loss for Breedlove totaled $3.1 million and $0.1 million, respectively.
During the years ended December 27, 2014 and December 28, 2013 we recognized $2.3 million and $0.2 million of expense related to the increase in fair value of the redeemable preferred stock.
Identifiable Intangible Assets
As part of the purchase price allocation, we determined that Breedlove’s primary separately identifiable intangible assets were its customer relationships, proprietary software and trade name. We used the multi-period excess earnings method to value the customer relationships. This method estimates the fair value of an asset by isolating the future projected earnings or cash flows attributable to that specific asset and then by discounting this economic benefit stream back to present value at the required rate of return. We used a hybrid approach to value the proprietary software. This approach incorporates elements of the income and cost approaches, specifically the lost profits and replacement cost methods. We used a royalty for the use of an asset, rather than incurring the costs associated with internally developing an asset of identical utility. The fair value is calculated by taking the present value of avoided after-tax cash flows discounted back to a present value. The baseline data for this analysis was the cash flow estimates used to price the transaction. Cash flows were forecasted for each intangible asset then discounted based on an appropriate discount rate. The discount rates applied, which ranged between 12.9% and 13.0%, were benchmarked with reference to the implied rate of return from the transaction model, as well as an estimate of a market participant’s weighted-average cost of capital based on the capital asset pricing model.
In estimating the useful life of the acquired assets, we considered ASC 350-30-35, Intangibles-Goodwill and Other, and reviewed the following: the expected use by the combined company of the assets acquired, the expected useful life of another asset (or group of assets) related to the acquired assets, legal, regulatory or other contractual provisions that may limit the useful life of an acquired asset or may enable the extension of the useful life of an acquired asset without substantial cost, the effects of obsolescence, demand, competition and other economic factors, and the level of maintenance expenditures required to obtain the expected future cash flows from the asset.
We amortized these intangible assets over their estimated useful lives using a method that is based on estimated future cash flows, as we believe this will approximate the pattern in which the economic benefits of the assets will be utilized, or where we have concluded that the cash flows were not reliably determinable, on a straight-line basis.
The acquisition of Breedlove was deemed to be an asset purchase for income tax purposes. Accordingly, no deferred taxes were established relating to the fair value of the acquired intangible assets. The factors contributing to the recognition of goodwill were based upon several strategic and synergistic benefits that are expected to be realized from the combination. Substantially all of the goodwill is expected to be deductible for tax purposes.
Betreut
On July 5, 2012, we acquired all of the outstanding capital stock of Besser Betreut GmbH (‘‘Betreut’’), a provider of online matching services in Germany to connect care seekers with care providers. The aggregate consideration payable to the former stockholders of Betreut was $23.3 million. This consideration consisted of: the issuance of 1.8 million shares of our Series D-1 preferred stock valued at $19.3 million; the issuance of 0.5 million shares of our common stock valued at $2.9 million; and $1.1 million in cash. In connection with the acquisition, we incurred $0.4 million of merger-related transaction costs, which we recorded as general and administrative expense in the accompanying statement of operations for the year ended December 31, 2012.
The results of operations for Betreut have been included in our consolidated financial statements since the date of acquisition. For the period from the date of acquisition to December 31, 2012, revenue and net loss for Betreut totaled $2.9 million and $1.8 million, respectively.
Identifiable Intangible Assets
As part of the purchase price allocation, we determined that Betreut’s primary separately identifiable intangible assets were its customer relationships, proprietary software, trade name and caregiver relationships. We used the multi-period excess earnings method to value the customer relationships. This method estimates the fair value of an asset by isolating the future projected earnings or cash flows attributable to that specific asset and then by discounting this economic benefit stream back to present value at the required rate of return. We used a hybrid approach to value the proprietary software and caregiver relationships. This approach incorporates elements of the income and cost approaches, specifically the lost profits and replacement cost methods. We used a relief from royalty method to value the trade name. This method assumes that a willing buyer would pay a royalty for the use of an asset, rather than incurring the costs associated with internally developing an asset of identical utility. The fair value is calculated by taking the present value of avoided after-tax cash flows discounted back to a present value. The baseline data for this analysis was the cash flow estimates used to price the transaction. Cash flows were forecasted for each intangible asset then discounted based on an appropriate discount rate. The discount rates applied, which ranged between 16.5% and 17.3%, were benchmarked with reference to the implied rate of return from the transaction model as well as an estimate of a market participant’s weighted-average cost of capital based on the capital asset pricing model.
In estimating the useful life of the acquired assets, we considered ASC 350-30-35, and reviewed the following: the expected use by the combined company of the assets acquired, the expected useful life of another asset (or group of assets) related to the acquired assets, legal, regulatory or other contractual provisions that may limit the useful life of an acquired asset or may enable the extension of the useful life of an acquired asset without substantial cost, the effects of obsolescence, demand, competition and other economic factors, and the level of maintenance expenditures required to obtain the expected future cash flows from the asset.
We amortize these intangible assets over their estimated useful lives using a method that is based on estimated future cash flows, as we believe this will approximate the pattern in which the economic benefits of the assets will be utilized, or where we have concluded that the cash flows were not reliably determinable, on a straight-line basis. The factors contributing to the recognition of goodwill were based upon our determination that several strategic and synergistic benefits are expected to be realized from the combination. None of the goodwill is expected to be currently deductible for tax purposes.
Parents in a Pinch
On December 31, 2012, we acquired all of the outstanding capital stock of Parents in a Pinch, Inc. (‘‘PIAP’’), a Boston-based provider of in-home backup childcare and elder care services for working families. The aggregate consideration payable to the former stockholders of PIAP was $1.6 million. This consideration consisted of: $1.4 million in cash; $0.2 million of cash withheld as security for the indemnification obligations of the PIAP stockholders; and up to an additional $0.7 million of revenue-based earn-outs through 2014, valued at $0.1 million which are payable in cash. In connection with the acquisition, we incurred less than $0.1 million of merger related transaction costs, which we recorded as general and administrative expense in the accompanying statement of operations for the year ended December 31, 2012. We recorded an estimate of the fair value of the earn-out (contingent consideration) based on the evaluation of the likelihood of the achievement of the contractual conditions that would result in the payment of the contingent consideration and weighted probability assumptions of these outcomes. The fair value of the liability was estimated using a discounted cash flow technique with significant inputs that are not observable in the market and thus represents a Level 3 fair value measurement as defined in ASC 820, Fair Value Measurements and Disclosures. The significant inputs in the Level 3 measurement not supported by market activity included our probability assessments of expected future cash flows related to our acquisition of PIAP during the earn-out period, appropriately discounted considering the uncertainties associated with the obligation, and calculated in accordance with the terms of the stock purchase agreement. This liability has been discounted to reflect the time value of money, and therefore, as the milestone date approaches, the fair value of this liability may increase. The results of operations for PIAP have been included in our consolidated financial statements since the date of acquisition. As the acquisition occurred on the last day of the fiscal year, no results of PIAP were included within our year ended December 31, 2012 consolidated statement of operations.
Identifiable Intangible Assets
As part of the purchase price allocation, we determined that PIAP’s primary separately identifiable intangible assets were its customer relationships, proprietary software and trade name. We used the multi-period excess earnings method to value the customer relationships. This method estimates the fair value of an asset by isolating the future projected earnings or cash flows attributable to that specific asset and then by discounting this economic benefit stream back to present value at the required rate of return. We used a hybrid approach to value the proprietary software. This approach incorporates elements of the income and cost approaches, specifically the lost profits and replacement cost methods. We used a relief from royalty method to value the trade name. This method assumes that a willing buyer would pay a royalty for the use of an asset, rather than incurring the costs associated with internally developing an asset of identical utility. The fair value is calculated by taking the present value of avoided after-tax cash flows discounted back to a present value. The baseline data for this analysis was the cash flow estimates used to price the transaction. Cash flows were forecasted for each intangible asset then discounted based on an appropriate discount rate. The discount rates applied, which ranged between 17.2% and 17.9%, were benchmarked with reference to the implied rate of return from the transaction model, as well as an estimate of a market participant’s weighted-average cost of capital based on the capital asset pricing model.
In estimating the useful life of the acquired assets, we considered ASC 350-30-35, and reviewed the following: the expected use by the combined company of the assets acquired, the expected useful life of another asset (or group of assets) related to the acquired assets, legal, regulatory or other contractual provisions that may limit the useful life of an acquired asset or may enable the extension of the useful life of an acquired asset without substantial cost, the effects of obsolescence, demand, competition and other economic factors, and the level of maintenance expenditures required to obtain the expected future cash flows from the asset.
We amortize these intangible assets over their estimated useful lives using a method that is based on estimated future cash flows, as we believe this will approximate the pattern in which the economic benefits of the assets will be utilized, or where we have concluded that the cash flows were not reliably determinable, on a straight-line basis.
The acquisition of PIAP was deemed to be an asset purchase for income tax purposes. Accordingly, no deferred taxes were established relating to the fair value of the acquired intangible assets. The factors contributing to the recognition of goodwill were based upon several strategic and synergistic benefits that are expected to be realized from the combination. Substantially all of the goodwill is expected to be deductible for tax purposes.
Purchase Price Allocation
We accounted for our 2012 acquisitions as business combinations and, in accordance with ASC 805, Business Combinations, we have recorded the assets acquired and liabilities assumed at their respective fair values as of the acquisition date. The following table summarizes the components of the purchase price and purchase price allocation for the 2012 acquisitions (in thousands):
 
 
Breedlove
 
Betreut
 
PIAP
Total purchase consideration:
 
 
 
 
 
Cash
$
23,076

 
$
1,099

 
$
1,419

Fair value of preferred and common stock issued
21,912

 
22,174

 
—

Fair value of contingent consideration
8,911

 
—

 
138

Total purchase consideration
$
53,899

 
$
23,273

 
$
1,557

Allocation of purchase consideration:
 
 
 
 
 
Cash
$
—

 
$
310

 
$
(21
)
Unbilled receivables
597

 
—

 
347

Accounts receivable
—

 
250

 
8

Other assets
273

 
178

 
35

Deferred tax liabilities
—

 
(1,139
)
 
—

Other current liabilities
(187
)
 
(476
)
 
(770
)
Identifiable intangible assets (a)
13,640

 
3,720

 
1,210

Goodwill
39,576

 
20,430

 
748

Purchase price
$
53,899

 
$
23,273

 
$
1,557

(a) The following are the identifiable intangible assets acquired and their respective weighted average useful lives (in thousands):

 
Breedlove
 
Betreut
 
PIAP
 
Amount
 
Weighted- Average Life (Years)
 
Amount
 
Weighted- Average Life (Years)
 
Amount
 
Weighted- Average Life (Years)
Trademarks and trade names
$
3,610

 
3
 
$
650

 
7
 
$
240

 
5
Proprietary software
2,610

 
5
 
1,950

 
5
 
190

 
5
Website
40

 
4
 
—

 
—
 
10

 
2
Training materials
—

 
—
 
—

 
—
 
30

 
3
Non-compete agreements
60

 
5
 
80

 
3
 
—

 
—
Leasehold interests
170

 
6
 
—

 
—
 
—

 
—
Caregiver relationships
—

 
—
 
270

 
3
 
50

 
3
Customer relationships
7,150

 
4
 
770

 
4
 
690

 
10
Total
$
13,640

 
4
 
$
3,720

 
5
 
$
1,210

 
8

Details related to the valuation techniques utilized for estimating fair value of the intangible assets acquired are shown below:
The fair value of the Series D-1 and Series E redeemable convertible preferred stock issued as consideration in the Breedlove and Betreut acquisition was derived based on third-party valuations of the Series D and Series E redeemable convertible preferred stock, respectively. These fair value measurements were based on significant inputs not observable in the market and thus represent Level 3 measurements under the fair value hierarchy.
Goodwill and Intangible Assets
Goodwill and Intangible Assets
Goodwill and Intangible Assets
The following table presents the change in goodwill for the periods presented (in thousands):
Balance as of December 28, 2013
$
62,686

Citrus Lane acquisition
41,839

Consmr acquisition
488

Impairment of goodwill
(33,788
)
Effect of currency translation
(2,540
)
Balance as of December 27, 2014
$
68,685


A roll forward of accumulated goodwill impairment losses for the year ended December 27, 2014 is as follows:
Balance as of December 28, 2013
$
—

Citrus Lane impairment
33,788

Balance as of December 27, 2014
$
33,788


During the fourth quarter of fiscal 2014, primarily as a result of unexpected changes, both internal and external, we determined that indicators of impairment existed in our Citrus Lane Reporting Unit. As a result, the fair value of this reporting unit was deemed to be below its carrying value and Step 2 of the goodwill impairment test was performed. Step 2 of the goodwill impairment test requires the completion of a hypothetical purchase price allocation to determine the fair value of the implied goodwill. Upon completion of the Step 2 analysis we determined that the Citrus Lane Goodwill was impaired and recorded a $33.8 million impairment charge.
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)
December 27, 2014
 
 
 
 
 
 
 
Indefinite lived intangibles
$
242

 
$
—

 
$
242

 
N/A
Trademarks and trade names
5,281

 
(3,377
)
 
1,904

 
5.2
Proprietary software
4,942

 
(3,351
)
 
1,591

 
2.5
Website
1,150

 
(34
)
 
1,116

 
6.5
Training materials
30

 
(20
)
 
10

 
1.0
Non-compete agreements
137

 
(94
)
 
43

 
2.0
Leasehold interests
170

 
(61
)
 
109

 
4.4
Caregiver relationships
312

 
(252
)
 
60

 
0.7
Customer relationships
8,857

 
(4,967
)
 
3,890

 
2.9
Total
$
21,121

 
$
(12,156
)
 
$
8,965

 

 
 
 
 
 
 
 
 
December 28, 2013:
 
 
 
 
 
 
 
Indefinite lived intangibles
$
242

 
$
—

 
$
242

 
N/A
Trademarks and trade names
4,561

 
(2,096
)
 
2,465

 
2.5
Proprietary software
5,184

 
(2,952
)
 
2,232

 
3.5
Website
50

 
(19
)
 
31

 
2.3
Training materials
30

 
(10
)
 
20

 
2.0
Non-compete agreements
148

 
(61
)
 
87

 
2.6
Leasehold interests
170

 
(36
)
 
134

 
5.4
Caregiver relationships
346

 
(164
)
 
182

 
1.6
Customer relationships
8,953

 
(2,928
)
 
6,025

 
3.5
Total
$
19,684

 
$
(8,266
)
 
$
11,418

 
 

Amortization expense was $4.5 million and $6.0 million for the year ended December 27, 2014 and December 28, 2013, respectively. Of these amounts $3.5 million and $3.7 million was classified as a component of depreciation and amortization, and $1.0 million and $2.3 million was classified as a component of cost of revenue in the consolidated statements of operations for the year ended December 27, 2014 and December 28, 2013, respectively.
As of December 27, 2014, the estimated future amortization expense related to current intangible assets for future fiscal years was as follows (in thousands):
2015
$
3,886

2016
2,222

2017
806

2018
461

2019
400

Thereafter
948

Total
$
8,723


During the fourth quarter of fiscal 2014, in connection with our goodwill impairment analysis, we performed a Step 2 test of recoverability of finite lived intangibles in accordance with ASC 360, indicating that our undiscounted future cash flows would not recover the carrying value of the Citrus Lane proprietary software and trade name intangible assets. We then performed a Step 3 impairment analysis of finite lived intangible assets under ASC 360 and determined that the carrying value of the Citrus Lane proprietary software and trade name exceeded the fair value of those assets as of the end of the fourth quarter and recognized and intangible asset impairment charge of $2.4 million.
Accrued Expenses and Other Current Liabilities
Accrued Expenses and Other Current Liabilities
Accrued Expenses and Other Current Liabilities
The following table presents the detail of accrued expenses and other current liabilities for the periods presented (in thousands):
 
December 27,
2014
 
December 28,
2013
Payroll and compensation
$
1,722

 
$
3,134

Tax-related expense
1,609

 
372

Marketing expenses
3,385

 
1,028

Other accrued expenses
6,016

 
2,489

Total accrued expenses and other current liabilities
$
12,732

 
$
7,023

Commitments and Contingencies
Commitments and Contingencies
Commitments and Contingencies
Leases
We have entered into various operating lease agreements, primarily covering certain of our offices throughout the world, with original lease periods expiring between 2014 and 2025. Facilities rent expense under these operating leases was $3.7 million and $2.5 million for the years ended December 27, 2014 and December 28, 2013, respectively. We are responsible for paying our share of the actual operating expenses and real estate taxes under certain of these lease agreements.
Certain of these arrangements have renewal or expansion options, as well as adjustments for market provisions, such as free or escalating base monthly rental payments. We recognize rent expense under such arrangements on a straight-line basis over the initial term of the lease. The difference between the straight-line expense and the cash paid for rent has been recorded as deferred rent in the consolidated balance sheets.
At December 27, 2014, minimum future lease commitments under all non-cancelable operating leases (including rent escalation clauses) were as follows (in millions):
 
Payments Due by Period
 
Total
Less Than 1 Year
1-3 Years
4-5 Years
Thereafter
 
 
 
 
 
 
Operating lease obligations
$
47.3

$
4.2

$
8.7

$
9.6

$
24.8


In July 2014, we entered into a lease agreement pursuant to which we agreed to lease office space to be used for our new headquarters (the “Prime Lease”). The Prime Lease is initially for 36,174 square feet of office space, comprising of the entire sixth floor of the building located at 77 Fourth Avenue, Waltham, Massachusetts, or the Building. The leased premises under the Prime Lease will increase by an additional 36,395 square feet, comprising of the entire fourth floor of the Building, on March 1, 2019 and by an additional 36,174 square feet, comprising of the entire fifth floor of the Building, on April 1, 2019. The term of the Prime Lease commences on August 4, 2014 and expires 120 months from the date base rent payments first become due, which date is the earlier of January 1, 2015 and the date we commence operations in the space. We recorded deferred rent on the consolidated balance sheet. We recognize rent expense on a straight-line basis over the expected lease term. The total cash obligation for the base rent over the term of the Prime Lease will be $34.5 million, and is included in the table above.
Also in July 2014, we entered into two sublease agreements pursuant to which we agreed to lease the entire fourth and fifth floors of the Building. The term of the fourth floor sublease commenced on December 22, 2014 and expires on February 15, 2019, after which the space will be leased by us pursuant to the Prime Lease. The total cash obligation for the base rent over the term of this sublease will be $4.3 million, and is included in the table above. The term of the fifth floor sublease commence on January 1, 2015 and expires on March 30, 2019, after which the space will be leased by us pursuant to the Prime Lease. The lease commencement date for accounting purposes was determined to be August 4, 2014, which represents the date we received access to the fourth and fifth floors. The total cash obligation for the base rent over the term of this sublease will be $4.1 million, and is included in the table above. We have the right to extend the term of the lease agreement for one 10-year period.
We received $2.3 million as tenant improvements allowance under the terms of our new operating lease, which we recorded as deferred rent are amortizing on a straight-line basis over the term of the lease as an offset to rent expense.
In connection with the Prime Leases, we paid $2.8 million in security deposits recorded within other non-current assets on our consolidated balance sheet as of December 27, 2014.
In connection with the execution of the Prime Lease, we entered into an amendment to our lease agreement for our current headquarters pursuant to which that agreement will terminate without penalty on the earlier of (i) ten days after the date we commenced operations under the Prime Lease and (ii) December 31, 2014.
We recognized total rent expense related to the current and new headquarters of approximately $2.7 million, $1.6 million and $1.5 million for the years ended December 27, 2014, December 28, 2013 and December 31, 2012, respectively.
Capital Expenditure and Other Commitments:
As of December 27, 2014, we expect to incur approximately $0.4 million in future capital expenditures related to the relocation of our headquarters and approximately $1.1 million of inventory purchase commitments.
During fiscal 2012, we made a 50% investment in the Venture with Magsaysay in which we and Magsaysay each have a commitment to provide an additional $0.4 million of funding over the next two years based on our voting interest. To date, the operations of the Venture have not been significant.
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 (Deficit)
Stockholders' Equity (Deficit)
Stockholders’ Equity (Deficit)
Initial Public Offering (IPO)
On January 29, 2014, we closed our IPO in which we sold and issued 6,152,500 shares of common stock, including 802,500 shares of common stock pursuant to the exercise of the underwriters’ option to purchase additional shares, which were sold to the public at a price of $17.00 per share. We received net proceeds of approximately $94.8 million from the IPO, including the exercise of the underwriters’ over-allotment option, net of underwriters’ discounts and commissions, and after deducting offering expenses of approximately $2.4 million.
Upon the closing of the IPO, all shares of our outstanding redeemable convertible preferred stock automatically converted into 21,490,656 shares of common stock and our outstanding warrant to purchase redeemable convertible preferred stock automatically converted into a warrant to purchase 40,697 shares of common stock at $1.72 per share.
Common Stock
As of December 27, 2014, we had reserved the following shares of common stock for future issuance in connection with the following (in thousands):
 
December 27, 2014
 
Contingent consideration payable in common stock
297

 
Options issued and outstanding
4,270

 
Options available for grant under stock option plans
3,062

 
Total
7,629

 

Preferred Stock Warrants
In connection with a debt financing in 2007, we issued Lighthouse Capital Partners a warrant to purchase 40,697 shares of our Series A-1 convertible preferred stock at an exercise price of $1.72 per share, expiring October 2014, which were fully exercisable upon issuance. In conjunction with the closing of our IPO in January 2014, the warrant was automatically converted into a warrant exercisable for 40,697 shares of common stock at a purchase price of $1.72 per share, which resulted in the reclassification of the related convertible preferred stock warrant liability to additional paid-in capital as the warrant met the criteria for equity classification upon conversion to a warrant to purchase common stock. In accordance with ASC 480-10, Distinguishing Liabilities from Equity, the freestanding warrant for our preferred stock was recognized as a liability and recorded at fair value in all periods prior to its conversion into a warrant to purchase common stock. The warrant liability was re-measured to fair value prior to reclassification to additional paid-in capital. The warrant was exercised during the year ended December 27, 2014 using a net exercise method which resulted in the issuance of 38,142 shares of common stock. There were no proceeds received by us related to this transaction.
Common Stock Warrants
In connection with a 2010 Loan and Security Agreement, we issued a warrant to purchase a maximum of 40,000 shares of our common stock at an exercise price of $1.65 per share. The warrant was exercised during the year ended December 27, 2014 using a net exercise method which resulted in the issuance of 37,591 shares of common stock. There were no proceeds received by us related to this transaction.
Stock Option Plans and Stock-Based Compensation
Stock Option Plans and Stock-Based Compensation
Stock Option Plans and Stock-Based Compensation
Stock Option Plans
On November 15, 2006, we adopted our 2006 Stock Incentive Plan (‘‘the 2006 Plan’’), which provides for the issuance of incentive and non-qualified stock options, restricted stock and other stock-based awards to employees and non-employees of the Company. We reserved 4,567,500 shares of common stock for issuance under the 2006 Plan. Options generally vest over four years, with 25% vesting upon the one-year anniversary of the date of hire, and the remaining 75% vesting quarterly over the next three years. Options granted to consultants or other non-employees generally vest over the expected service period to the Company. The options expire ten years from the date of grant. We issue new shares to satisfy stock option exercises. Only stock options have been issued under the 2006 Plan. No grants have been made under the 2006 Plan since our IPO, and no further awards will be granted under the 2006 Plan. However, the 2006 Plan will continue to govern outstanding awards granted under the 2006 Plan.
During 2010, we granted our Chief Executive Officer (“CEO”) a performance-based option to purchase 150,000 shares, which vests in tranches if defined corporate goals are achieved during fiscal years 2011 through 2014. We recorded a share-based compensation expense related to this award of $0.2 million during the year ended December 28, 2013. No stock-based compensation expense related to this award was recorded in the year ended December 27, 2014, as it is currently not probable of vesting.
On January 23, 2014, we adopted our 2014 Incentive Award Plan (‘‘the 2014 Plan’’), which provides for the issuance of incentive and non-qualified stock options, restricted stock and other stock-based awards to employees, directors and non-employees of the Company and our subsidiaries. We initially reserved 4,112,048 shares of common stock for issuance under the 2014 Plan. The number of shares initially available for issuance will be increased by (i) the number of shares represented by awards outstanding under the 2006 Plan that are forfeited, lapse unexercised or are settled in cash and which following the effective date of the 2014 Plan are not issued under the 2006 Plan and (ii) an annual increase on January 1 of each calendar year beginning in 2015 and ending in 2019, equal to the lesser of (A) 4% of the shares of common stock outstanding (on an as-converted basis) on the final day of the immediately preceding calendar year and (B) an amount as determined by our board of directors. No more than 5,002,935 shares of common stock may be issued upon the exercise of incentive stock options. Options generally vest over four years, with 25% vesting upon the one-year anniversary of the date of hire, and the remaining 75% vesting quarterly over the next three years. Options granted to consultants or other non-employees generally vest over the expected service period to the Company. The options expire ten years from the date of grant. To date only stock options have been issued under the 2014 Plan.
We assumed certain other plans in connection with the Citrus Lane acquisition and no shares are available for future grant under these plans.
Stock-Based Compensation
A summary of stock option activity for the year ended December 27, 2014 was as follows (in thousands for shares and intrinsic value):
 
Number of Shares
 
Weighted-Average Remaining Contractual Term (Years)
 
Weighted-Average Exercise Price
 
Aggregate Intrinsic Value
 
 
 
 
 
 
 
 
Outstanding as of December 28, 2013
3,439

 
7.98
 
$
4.28

 
$
27,148

Granted
1,554

 
 
 
11.15

 
 
Canceled and forfeited
(503
)
 
 
 
8.16

 
 
Exercised
(220
)
 
 
 
4.51

 
 
Outstanding as of December 27, 2014
4,270

 
7.17
 
6.47

 
14,373

Options vested and exercisable as of December 27, 2014
2,381

 
6.25
 
4.04

 
11,194

Options vested and expected to vest as of December 27, 2014 (1)
4,194

 
7.15
 
$
6.39

 
$
14,283

(1) Options 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 December 27, 2014 was $8.33. The total intrinsic value of options exercised was approximately $1.6 million for the fiscal year ended December 27, 2014. The weighted-average grant-date fair value of options granted was $7.83 for the year ended December 27, 2014. The aggregate fair value of the options that vested during the fiscal year ended December 27, 2014 was $3.7 million respectively.
As of December 27, 2014, total unrecognized compensation cost, adjusted for estimated forfeitures, related to non-vested stock options was approximately $9.1 million, which is expected to be recognized over the next 2.5 years. As of December 27, 2014, we had 3,061,898, shares available for grant under the 2014 Plan.
The following table presents the assumptions used to estimate the fair value of options granted during the periods presented:
 
Fiscal Year Ended
 
December 27,
2014
 
December 28,
2013
Risk-free interest rate
1.81 - 1.95%
 
1.23 - 2.00%
Expected term (years)
6.25
 
6.25
Volatility
47.1 - 56.3%
 
44.6%
Expected dividend yield
—
 
—

The following table summarizes stock-based compensation in our accompanying consolidated statements of operations (in thousands):
 
Fiscal Year Ended
 
December 27,
2014
 
December 28,
2013
 
December 31,
2012
 
Cost of revenue
$
183

 
$
161

 
$
159

 
Selling and marketing
763

 
348

 
369

 
Research and development
624

 
356

 
213

 
General and administrative
4,235

 
997

 
1,211

 
   Total stock-based compensation
$
5,805

 
$
1,862

 
$
1,952

 

Included in stock-based compensation expense is approximately $1.4 million related to the acceleration of vesting of certain equity awards assumed as part of the Citrus Lane acquisition.
Net Loss Per Share
Net Loss Per Share
Net Loss Per Share
Basic net loss per share is computed by dividing net loss attributable to common shareholders by the weighted-average number of common shares outstanding during the period. The holders of our Series A, A-1, B, C, D, D-1 and E redeemable convertible preferred stock did not have contractual obligations to share in or fund our losses. Diluted net loss per share attributable to common shareholders is computed by dividing net 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 and in 2013 and 2012 also included common stock issuable upon conversion of our redeemable convertible preferred stock and warrants to purchase our redeemable convertible preferred stock.
The following table presents the calculation of basic and diluted net loss per share (in thousands, except per share data):
 
Fiscal Year Ended
 
December 27,
2014
 
December 28,
2013
 
December 31,
2012
Net Loss
$
(80,292
)
 
$
(28,296
)
 
$
(20,420
)
Accretion of preferred stock
(4
)
 
(57
)
 
(48
)
Net loss attributable to common stockholders
$
(80,296
)
 
$
(28,353
)
 
$
(20,468
)
Net loss per share attributable to common stockholders:
 
 
 
 
 
Basic and diluted
$
(2.77
)
 
$
(9.45
)
 
$
(7.97
)
Weighted-average shares used to compute net loss per share attributable to common stockholders:
 
 
 
 
 
Basic and diluted
28,941

 
3,000

 
2,568


The following equity shares were excluded from the calculation of diluted net loss per share attributable to common stockholders because their effect would have been anti-dilutive for the periods presented (in thousands):
 
Fiscal Year Ended
 
December 27,
2014
 
December 28,
2013
 
December 31,
2012
Redeemable convertible preferred stock
—

 
21,299

 
21,299

Stock options
4,270

 
3,439

 
2,706

Preferred stock warrants
—

 
41

 
41

Common stock warrants
—

 
40

 
40

Income Taxes
Income Taxes
Income Taxes
We account for income taxes in accordance with authoritative guidance, which requires the use of the asset and liability method. Under this method, deferred income tax assets and liabilities are determined based upon the difference between the consolidated financial statement carrying amounts and the tax basis of assets and liabilities and are measured using the enacted tax rate expected to apply to taxable income in the years in which the differences are expected to be reversed.
The following table presents domestic and foreign components of loss before income taxes for the periods presented (in thousands):
 
Fiscal Year Ended
 
December 27,
2014
 
December 28,
2013
 
December 31,
2012
United States
(75,463
)
 
(22,182
)
 
(16,656
)
Foreign
(5,581
)
 
(5,760
)
 
(4,081
)
Total loss before income taxes
(81,044
)
 
(27,942
)
 
(20,737
)

The following table presents the components of the (benefit from) provision for income taxes for the periods presented (in thousands):
 
Fiscal Year Ended
 
December 27,
2014
 
December 28,
2013
 
December 31, 2012
Current:
 
 
 
 
 
Federal
$
—

 
$
—

 
$
—

State
108

 
70

 
28

Foreign
33

 
—

 
—

Total current provision for income taxes
141

 
70

 
28

Deferred:
 
 
 
 
 
Federal
(757
)
 
626

 
374

State
(136
)
 
49

 
63

Foreign
—

 
(391
)
 
(782
)
Total deferred tax (benefit) provision
(893
)
 
284

 
(345
)
Total (benefit from) provision for income taxes
$
(752
)
 
$
354

 
$
(317
)

The following table presents a reconciliation of the statutory federal rate, and our effective tax rate, for the periods presented:
 
Fiscal Year Ended
 
December 27,
2014
 
December 28,
2013
 
December 31,
2012
U.S. federal taxes at statutory rate
34
 %
 
34
 %
 
34
 %
State income taxes, net of federal benefit
—

 
2

 
3

Permanent differences
(2
)
 
(3
)
 
(4
)
Impairment of goodwill and intangible assets
(14
)
 
—

 
—

Foreign rate differential
—

 
(1
)
 
(1
)
Change in valuation allowance - U.S.
(15
)
 
(28
)
 
(31
)
Change in valuation allowance - foreign
(2
)
 
(5
)
 
(2
)
Rate change
—

 
—

 
3

Total
1
 %
 
(1
)%
 
2
 %

The increase in the income tax benefit for fiscal 2014 compared to fiscal 2013, is primarily due to the income tax benefit related to a non-recurring income tax benefit of $1.9 million related to the reversal of our valuation allowance against the Citrus Lane deferred tax liabilities recorded in purchase accounting, partially offset by the income tax expense related to the amortization of 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. The goodwill amortization results in a deferred tax liability, the reversal of which cannot be forecasted, and therefore, cannot be used as a source of income to support the realizability of our U.S. deferred tax assets.
The tax benefit recorded in the year ended December 27, 2014, is primarily due to the income tax benefit related to the reversal of our valuation allowance against the Citrus Lane deferred tax liabilities recorded in purchase accounting, partially offset by the income tax expense related to the amortization of 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.
The tax provision recorded in the year ended December 28, 2013 is primarily related to the amortization of 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 carryforwards, partially offset by foreign deferred tax benefits, related to the expected future realization of German deferred tax assets expected to offset future reversal of deferred tax liabilities of definite lived intangibles established in purchase accounting.
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The following table presents the significant components of our deferred tax assets and liabilities for the periods presented (in thousands):
 
Fiscal Year Ended
 
December 27,
2014
 
December 28,
2013
Deferred tax assets
 
 
 
Net operating loss carryforwards
$
40,790

 
$
25,307

Fixed assets
—

 
76

Accrued expenses
1,696

 
28

Stock-based compensation
1,618

 
140

U.S. definite lived intangibles
3,538

 
1,609

Other temporary differences
33

 
475

Total deferred tax assets
47,675

 
27,635

Valuation allowance
(46,619
)
 
(27,215
)
Net deferred tax assets
1,056

 
420

Deferred tax liabilities
 
 
 
Foreign intangibles
(224
)
 
(386
)
U.S. goodwill
(2,072
)
 
(1,112
)
Fixed assets
(832
)
 
—

Other
—

 
(34
)
Total deferred tax liabilities
(3,128
)
 
(1,532
)
Net deferred tax liabilities
$
(2,072
)
 
$
(1,112
)

As of December 27, 2014, we had federal net operating loss carryforwards of $98.0 million and state net operating loss carryforwards of $76.8 million, which may be available to reduce future taxable income. The net operating loss (‘‘NOL’’) will expire at various dates through 2034. Included in the federal and state net operating losses are deductions attributable to excess tax benefits from the exercises of stock compensation of $0.6 million and $0.5 million, respectively. The tax benefits attributable to these deductions are credited directly to additional paid-in capital upon utilization of these deferred tax assets to reduce taxes payable. As of December 27, 2014, we had foreign net operating losses primarily related to our German operations of $8.2 million, our U.K. operations of $3.5 million, and our Australia operations of $0.3 million that have an unlimited carryforward period under German, U.K. and Australia tax law. We also had foreign net operating losses in our Canadian operation of $1.1 million that have a twenty year carryforward.
The NOLs are subject to review and possible adjustment by the Internal Revenue Service and state tax authorities. NOL carryforwards may become subject to an annual limitation in the event of certain cumulative changes in the ownership interest of significant shareholders over a three-year period in excess of 50%, as defined under Sections 382 and 383 of the Internal Revenue Code, respectively, as well as similar state provisions. This could limit the amount of tax attributes that can be utilized annually to offset future taxable income or tax liabilities. The amount of the annual limitation is determined based on the value of the company immediately prior to the ownership change. Subsequent ownership changes may further affect the limitation in future years. We have not, as yet, conducted a study to determine if any such changes have occurred that could limit our ability to use the net operating losses and tax credit carryforwards.
ASC 740 requires a valuation allowance to reduce the deferred tax assets if, based on the weight of available evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized. After consideration of all the evidence, both positive and negative, we have recorded a valuation allowance of $46.6 million and $27.2 million at December 27, 2014 and December 28, 2013, respectively, because our management has determined that is it more likely than not that these assets will not be fully realized. The increase of $19.4 million in the overall valuation allowance relates primarily to U.S. and certain foreign operating losses for which we currently provide no tax benefit.
As of December 27, 2014 and December 28, 2013, the Company had no recorded liabilities for uncertain tax positions. Interest and penalty charges, if any, related to uncertain tax positions would be classified as income tax expense in the accompanying consolidated statements of operations. As of December 27, 2014, December 28, 2013 and December 31, 2012, the Company had no accrued interest or penalties related to uncertain tax positions.
We file U.S. federal income tax returns and returns in various state, local, and foreign jurisdictions. Generally, the statute of limitations remains open for all tax years. Currently, we are not under examination relating to tax returns that have been previously filed.
Our current intentions are to indefinitely reinvest the earnings of our foreign subsidiaries, if any, or to repatriate only when tax-effective. Accordingly, we have not provided for U.S. taxes on the unremitted earnings of our international subsidiaries, which are not significant as of December 27, 2014, and it would not be practicable to determine the amount of related unrecognized deferred income tax liability.
Segment and Geographical Information
Segment and Geographical Information
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. Accordingly, we have determined that we have a single operating and reportable segment comprised of the following product lines (dollars in thousands):
 
Fiscal Year Ended
 
December 27,
2014
 
December 28,
2013
 
December 31,
2012
Consumer matching
$
82,031

 
$
61,645

 
$
41,409

Consumer payments
14,493

 
10,770

 
3,133

Merchandise
6,001

 
—

 
—

Other
14,188

 
9,072

 
3,951

Total revenue
$
116,713

 
$
81,487

 
$
48,493


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):
 
Fiscal Year Ended
 
December 27,
2014
 
December 28,
2013
 
December 31,
2012
United States
$
108,048

 
$
74,800

 
$
45,514

International
8,665

 
6,687

 
2,979

Total revenue
$
116,713

 
$
81,487

 
$
48,493

 
Fiscal Year Ended
 
December 27,
2014
 
December 28,
2013
 
December 31,
2012
 
(As a percentage of revenue)
United States
93
%
 
92
%
 
94
%
International
7
%
 
8
%
 
6
%
Total revenue
100
%
 
100
%
 
100
%

Our long-lived assets are primarily located in the United States and not allocated to any specific region. Therefore, geographic information is presented only for total revenue.
Related Party Transactions
Related Party Transactions
Related Party Transactions
We entered into a master services agreement in February 2011 with the United Services Automobile Association, who later in 2011 participated as the lead investor in the Series D redeemable convertible preferred stock financing. We have not recognized any significant revenue under the master service agreement in each of the years ended December 27, 2014, December 28, 2013 and December 31, 2012. The terms of this agreement have been superseded in their entirety by the terms of the alliance agreement referenced in the next paragraph.
In December 2013, we entered into an alliance agreement with USAA Alliance Services, LLC, or USAA Alliance, an affiliate of USAA, pursuant to which USAA Alliance has agreed to promote our services to USAA members and we have agreed to offer our services to their members at specified discounts, which vary based on the nature of the services purchased. Under the terms of the alliance agreement, we have agreed to pay USAA Alliance specified commissions in connection with the services that are purchased by USAA members under the alliance agreement. Commissions vary based on the nature of the services purchased. Under the alliance agreement, we made payments totaling less than $100,000 in 2014.
Employee Benefit Plans
Employee Benefit Plans
Employee Benefit Plans
We have established a 401(k) tax-deferred savings plan covering all employees who satisfy certain eligibility requirements. The 401(k) plan allows each participant to defer a percentage of their eligible compensation subject to applicable annual limits pursuant to the limits established by the Internal Revenue Service. We may, at our discretion, make contributions in the form of matching contributions or profit sharing contributions. To date, we have not made any matching or profit-sharing contributions.
Other Expense, Net
Other Expense, Net
Other Expense, Net
Other expense, net consisted of the following (in thousands):
 
Fiscal Year Ended
 
December 27,
2014
 
December 28,
2013
 
December 31,
2012
Interest income
$
86

 
$
47

 
$
48

Interest expense
(43
)
 
(17
)
 
(3
)
Other expense, net
(3,899
)
 
(321
)
 
(92
)
Total other expense, net
$
(3,856
)
 
$
(291
)
 
$
(47
)
Subsequent Events
Subsequent Events
Subsequent Events
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 consolidated financial statements as of and for the year ended December 27, 2014.
Quarterly Financial Information (Unaudited)
Quarterly Financial Information (Unaudited)
Quarterly Financial Information (Unaudited)

The table below sets forth unaudited selected quarterly financial data for each of the last two fiscal years (dollars in thousands, except per share data).
 
For the Quarter Ended
 
December 27, 2014
 
September 27, 2014
 
June 28, 2014
 
March 29, 2014
 

 

 

 

Total revenue
$
33,552

 
$
32,054

 
$
25,836

 
$
25,271

Cost of revenue
9,729

 
9,132

 
5,713

 
5,771

Operating loss
(40,255
)
 
(14,987
)
 
(9,633
)
 
(12,313
)
Net loss
(40,420
)
 
(14,453
)
 
(9,875
)
 
(15,544
)
Net loss attributable to common stockholders
(40,420
)
 
(14,453
)
 
(9,875
)
 
(15,548
)
Net loss per common share—basic and diluted
$
(1.28
)
 
$
(0.46
)
 
$
(0.32
)
 
$
(0.71
)
 
 
 
For the Quarter Ended
 
December 28, 2013
 
September 28, 2013
 
June 30, 2013
 
March 31, 2013
 

 

 

 

Total revenue
$
22,511

 
$
21,681

 
$
19,133

 
$
18,162

Cost of revenue
4,852

 
5,158

 
4,607

 
4,227

Operating loss
(3,891
)
 
(11,469
)
 
(5,906
)
 
(6,385
)
Net loss
(3,631
)
 
(11,732
)
 
(6,114
)
 
(6,819
)
Net loss attributable to common stockholders
(3,646
)
 
(11,746
)
 
(6,128
)
 
(6,833
)
Net loss per common share—basic and diluted
$
(1.16
)
 
$
(3.86
)
 
$
(2.08
)
 
$
(2.35
)

Information in any one quarterly period should not be considered indicative of annual results due to the effects of seasonality on our business.
Summary of Significant Accounting Policies (Policies)
Principles of Consolidation 
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 generally accepted accounting principles in the United States of America (“U.S. GAAP”).
Fiscal Year-End 
Fiscal Year-End
For periods prior to Fiscal 2013, we operated and reported on a calendar basis fiscal year. Beginning in the third quarter of Fiscal 2013, 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.
Use of Estimates 
Use of Estimates
The preparation of our consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of income and expenses during the reporting period. On an ongoing basis, we evaluate our estimates, including those related to accounts receivable and revenue allowances, intangible asset valuations, expected future cash flows used to evaluate the recoverability of long-lived assets, the useful lives of long-lived assets including property and equipment and intangible assets, valuation of common and preferred stock and warrants to purchase preferred stock, fair value of stock-based awards, goodwill, income taxes, contingent consideration, and contingencies. We base our estimates of the carrying value of certain assets and liabilities on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, when these carrying values are not readily available from other sources. These estimates are based on information available as of the date of the consolidated financial statements; therefore, actual results could differ from the estimates.
Revenue Recognition 
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 on-going subscription fees. Revenue from subscription fees is recognized on a daily basis over the subscription term or on a pro-rata basis as the services are delivered. Revenue from background checks, lead generation and advertising is recognized in the period earned. For product sales, these criteria are deemed to have been met when the items are delivered to the end customer. Other service revenues are recognized as the services are performed. Shipping and handling charges are included in revenue on a gross basis. Taxes that are collected from customers and remitted to government authorities are presented on a net basis and are excluded from revenue.
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 a 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 (‘‘VSOE’’), if available; (2) third-party evidence (‘‘TPE’’), if VSOE is not available; and (3) best estimate of selling price (‘‘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 charge for similar offerings, sales volumes, geographies and other factors contemplated in negotiating multiple element transactions.
Concentrations of Credit Risk 
Concentrations of Credit Risk
Financial instruments, which potentially subject us to concentrations of credit risk, consist primarily of cash and cash equivalents and accounts receivable. We place our cash and cash equivalents with major financial institutions throughout the world that management assesses to be of high-credit quality in order to limit exposure of each investment. As of December 27, 2014 and December 28, 2013, substantially all of our cash had been invested in money market funds.
Credit risk with respect to accounts receivable is dispersed due to the large number of customers. During the year ended December 27, 2014, one customer accounted for 15% of total accounts receivable and no customer accounted for more than 10% of total revenue. During the year ended December 28, 2013 no single customer accounted for more than 10% of total accounts receivable or revenue. In addition, our credit risk is mitigated by a relatively short collection period. Collateral is not required for accounts receivable. We record our accounts receivable in our consolidated balance sheets at net realizable value. We perform on-going credit evaluations of our customers and maintain allowances for potential credit losses, based on management’s best estimates. Amounts determined to be uncollectible are written off against this reserve.
Foreign Currency Translation 
Foreign Currency Translation
We determine the functional currency for our foreign subsidiaries by reviewing the currencies in which their respective operating activities occur. Financial information is translated from the functional currency to the U.S. dollar, the reporting currency, for inclusion in our consolidated financial statements. Income, expenses, and cash flows are translated at average exchange rates prevailing during each month of the fiscal year, and assets and liabilities are translated at fiscal period end exchange rates. Foreign exchange transaction gains and losses are included in other expense, net in the accompanying consolidated statements of operations. The effects of foreign currency translation adjustments are included as a component of accumulated other comprehensive income in the accompanying consolidated balance sheets.
Cash Equivalents 
Cash Equivalents
We consider highly liquid investments purchased with an original maturity of 90 days or less at the time of purchase to be cash equivalents.
Restricted Cash 
Restricted Cash
Restricted cash relates primarily to monies held in escrow to settle contractual obligations and funds received from families that are due to their clients’ respective providers or the taxing authorities, but have not yet been remitted. Amounts received from families that are held by us until disbursement to their providers and taxing authorities are restricted as to usage because we are obligated to forward such funds to the recipients on behalf of our paying families. As of December 27, 2014, restricted cash is classified within current assets in the accompanying consolidated balance sheets because such amounts are scheduled to be remitted within the twelve months following the balance sheet date.
Deferred Revenue 
Deferred Revenue
Deferred revenue primarily consists of payments received in advance of revenue recognition of the services described above, and is recognized as the revenue recognition criteria are met. Our customers pay for most services in advance on a monthly, quarterly or annual basis. Amounts expected to be recognized within the twelve months following the balance sheet date are classified within current liabilities in the accompanying consolidated balance sheets.
Unbilled Receivables 
Unbilled Receivables
Unbilled receivables consist of amounts earned upon satisfying the revenue recognition criteria in advance of billing. Subscribers to our Care.com HomePay solution are billed quarterly in arrears at the beginning of the subsequent calendar quarter to which the services related.
Cost of Revenue 
Cost of Revenue
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 acquired as part of acquisitions and website intangible assets. In addition, we have product fulfillment costs, largely consisting of product, shipping and costs associated with our third party fulfillment providers.
Fair Value Measurement 
Recurring Fair Value Measurement
Accounting Standards Codification (“ASC”) 820, Fair Value Measurements and Disclosures, establishes a three-level valuation hierarchy for disclosure of fair value measurements. The categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the measurement of fair value. The three levels of the hierarchy are defined as follows:
•
Level 1 inputs - Unadjusted quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date.
•
Level 2 inputs - Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These might include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (such as interest rates, volatilities, prepayment speeds, credit risks, etc.), or inputs that are derived principally from or corroborated by market data by correlation or other means.
•
Level 3 inputs - Unobservable inputs for determining the fair values of assets or liabilities that reflect an entity’s own assumptions about the assumptions that market participants would use in pricing the assets or liabilities.
Recurring Fair Value Measurements
Assets
Cash equivalents - Cash equivalents include money market mutual funds with original maturities of three months or less. The fair value measurement of these assets is based on quoted market prices in active markets for identical assets and, therefore, these assets are recorded at fair value on a recurring basis and classified as Level 1 in the fair value hierarchy.
Liabilities
Contingent Acquisition Consideration - Contingent acquisition consideration includes the fair value of contingent consideration paid by us in connection with corporate acquisitions based on the likelihood of issuing preferred and common stock and paying cash related to certain revenue and other milestones. We recorded our estimate of the fair value of this contingent consideration based on the evaluation of the likelihood of the achievement of the contractual conditions that would result in the payment of the contingent consideration and weighted probability assumptions of these outcomes. The fair value of the liability was estimated using a discounted cash flow technique with significant inputs that are not observable in the market and thus represents a Level 3 fair value measurement as defined in ASC 820, Fair Value Measurements and Disclosures.
For contingent consideration payable in preferred stock, we used a valuation of the company based on both an income and market approach to determine the fair value of the preferred stock as of the acquisition date and on an-ongoing basis. Upon the closing of our initial public offering (“IPO”) in January 2014, the contingent consideration payable in preferred stock was automatically converted to the right to receive common stock at the then-applicable conversion rate. Contingent consideration payable in preferred stock was written up to fair value as of the closing date of the IPO and was reclassified to permanent equity and will no longer be marked-to-market. There have been no changes in the probability of the earn-out payment through December 27, 2014.
The cash portion of the contingent consideration liability has been discounted to reflect the time value of money, and therefore, as the milestone date approaches, the fair value of this liability will increase. This increase in fair value was recorded in general and administrative expenses in the accompanying consolidated statements of operations. The preferred stock portion of the contingent consideration represented a liability in accordance with ASC 480-10, Distinguishing Liabilities from Equity, and was marked-to-market each reporting period with changes in market value recognized in other expense, net in the accompanying consolidated statements of operations.
During the year-ended December 28, 2013 we reassessed the probability of achievement on the Care Concierge, Inc. contingent acquisition cash payment based on the achievement of certain revenue milestones and the probability of reaching both the 2013 and 2014 milestones, which resulted in $0.6 million of incremental expense. No incremental expense was recorded in the year ended December 27, 2014. During the year ended December 27, 2014, in connection with our acquisition of Citrus Lane, Inc. (“Citrus Lane”), we recognized acquisition consideration payable in cash and shares totaling $17.5 million. The probability of achievement of this earn-out is assessed at 100%.
The significant inputs in the Level 3 measurement not supported by market activity included our probability assessments of expected future cash flows related to our acquisition of Breedlove & Associates, LLC, Care Concierge, Inc. and Citrus Lane during the applicable earn-out period, appropriately discounted considering the uncertainties associated with the applicable obligation, and calculated in accordance with the terms of the applicable transaction agreement. As such, the cash portion of the contingent consideration liability has been discounted to reflect the time value of money, and therefore, as the milestone date approaches, the fair value of this liability will increase.
Preferred Stock Warrants - Preferred stock warrants consist of warrants issued in connection with debt financings. The fair value of the warrants was determined using the Black-Scholes option-pricing model. In conjunction with the closing of the IPO, the warrant exercisable for shares of our Series A-1 Preferred Stock was automatically converted into a warrant exercisable for shares of our common stock, resulting in the reclassification of the related convertible preferred stock warrant liability to additional paid-in capital as the warrant met the criteria for equity classification upon its conversion to a warrant for the purchase of common stock. The warrant liability was re-measured to fair value prior to reclassification to additional paid-in capital. As of December 27, 2014, we had no outstanding warrant liability. Refer to Note 7 - Stockholders’ Equity (Deficit) for a discussion of the methodology used and changes in the fair value of our preferred stock warrants.
Non-Recurring Fair Value Measurements
We remeasure 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. For fiscal year ended December 27, 2014, we recorded an intangible asset impairment charge of $2.4 million and a goodwill impairment charge of $33.8 million, each related to our Citrus Lane reporting unit. This adjustment falls within Level 3 of the fair value hierarchy due to the use of significant unobservable inputs to determine fair value. The fair value measurements were determined using a DCF analysis, and the amount and timing of future cash flows within the analysis were based on our most recent operational budgets, long-range strategic plans and other estimates at the time such re-measurements were made. No remeasurement of such assets occurred at December 28, 2013 or December 31, 2012. Other financial instruments not measured or recorded at fair value in the accompanying 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.
Business Combinations 
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 
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. For fiscal year ended December 27, 2014, costs incurred during application development stage and capitalized totaled $0.9 million. During fiscal years ended December 28, 2013 and December 31, 2012, 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 were insignificant.
Equity Method Investments 
Equity Method Investment
During fiscal 2012, we made a 50% investment in Care International Exchange, Inc. (the “Venture”), a venture formed with Magsaysay People Resources Corporation (‘‘Magsaysay’’). The purpose of the Venture is to conduct activities related to a live-in care program with the goal of generating revenue from the placement of foreign-born providers with families, institutions or individuals seeking live-in home care throughout Canada. Our initial investment in the Venture was $50,000, and we and Magsaysay each have a commitment to provide an additional $0.4 million of funding over the next two years. We account for our investment in the Venture using the equity method of accounting based on our voting interest as we have significant influence over the Venture. Accordingly, our share of the income or loss of the Venture is recorded in other income or expense in the accompanying consolidated statements of operations. To date, the operations of the Venture have not been significant.
Goodwill 
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.
In performing the test, we utilize the two-step approach prescribed under ASC 350. The first step requires a comparison of the reporting unit against its aggregate carrying value, including goodwill. If the carrying amount exceeds the reporting unit’s carrying value to its fair value. We consider a number of factors to determine the fair value of a reporting unit, including an independent valuation to conduct this test. The valuation is based upon expected future discounted operating cash flows of the reporting unit. We base the discount rate on the weighted average cost of capital, or WACC, of market participants. If the carrying value of a reporting unit exceeds its estimated fair value, we will perform the second step of the goodwill impairment test to measure the amount of impairment loss, if any. The second step of the goodwill impairment test compares the implied fair value of a reporting unit’s goodwill to its carrying value. The second step requires us to perform a hypothetical purchase allocation as of the measurement date and estimate the fair value of net tangible and intangible assets. The fair value of intangible assets is determined as described below and is subject to significant judgment.
Since the fair value of our reporting units was determined by use of the discounted cash flows, or DCF, and the key assumptions that drive the fair value in this model are the WACC, terminal values, growth rates, and the amount and timing of expected future cash flows, significant judgment is applied in determining fair value. If the current economic environment were to deteriorate, this would likely result in a higher WACC because market participants would require a higher rate of return. In the DCF as the WACC increases, the fair value decreases. The other significant factor in the DCF is our projected financial information (i.e., amount and timing of expected future cash flows and growth rates) and if these assumptions were to be adversely impacted, this could result in a reduction of the fair value of this reporting unit.
We conducted our fiscal 2014 annual impairment test as of September 28, 2014 (the first day of our fourth fiscal quarter). We utilized DCF and market approaches to estimate the fair value of our reporting units as of September 28, 2014 and ultimately used the fair value determined by the DCF in making our impairment test conclusions. We believe we used reasonable estimates and assumptions about future revenue, cost projections, cash flows, market multiples and discount rates as of the measurement date. Because Citrus Lane was recently acquired and was operating reasonably close to expectations, we performed a qualitative screen for impairment of that reporting unit as is allowed under ASC 350. As a result of completing Step 1, all of the reporting units had fair values exceeding their carrying values, and as such, Step 2 of impairment test was not required for those reporting units.
During the fourth quarter of fiscal 2014, primarily as a result of unexpected changes, both internal and external, we determined that indicators of impairment existed at our Citrus Lane Reporting Unit. The fair value of reporting unit was deemed to be below its carrying value and Step 2 of the goodwill impairment test was performed. Step 2 of the goodwill impairment test requires the completion of a hypothetical purchase price allocation to determine the fair value of the implied goodwill.
Amortization and Impairment of Intangible Assets 
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.
During the fourth quarter of fiscal 2014, in connection with our goodwill impairment analysis, we performed a Step 2 test of recoverability of finite lived intangibles in accordance with ASC 360, indicating that our undiscounted future cash flows would not recover the carrying value of the Citrus Lane proprietary software and trade name intangible assets. We then performed a Step 3 impairment analysis of finite lived intangible assets under ASC 360 and determined that the carrying value of the Citrus Lane proprietary software and trade name exceeded the fair value of those assets as of the end of the fourth quarter and recognized an intangible asset impairment of $2.4 million.
During the fourth quarter of fiscal 2012, we made the decision to replace the Care.com Europe proprietary software with a new, worldwide, international platform that was to be developed. As a result of this decision we tested the associated asset group for recoverability and concluded that an indicator of impairment did not exist. However, in connection with the decision to migrate the existing technology platform to the new worldwide platform, we concluded the useful life of the technology platform should be reassessed. We revised the useful life to be one year to coincide with our migration plan.
During the third quarter of fiscal 2013, we made the decision to migrate the PIAP trade name to Care Concierge. As a result of this decision we tested the associated asset group for recoverability and concluded that an indicator of impairment did not exist. However, in connection with the decision to migrate to the new trade name, we concluded the useful life of the PIAP trade name should be reassessed. We revised the useful life to be four months to coincide with our migration plan.
Property and Equipment 
Property and Equipment
Property and equipment are stated at cost, and are depreciated using the straight-line method over the estimated useful life of the assets or, where applicable and if shorter, over the lease term.
Expenditures for maintenance and repairs are charged to expense as incurred, whereas major betterments are capitalized as additions to property and equipment.
Property, Plant and Equipment, Impairment or Disposal of Long-Lived Assets 
In accordance with ASC 360-10-35-15, Property, Plant and Equipment—Impairment or Disposal of Long-Lived Assets, we review the carrying value of long-lived assets whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future cash flows, then an impairment charge is recognized for the amount by which the carrying amount of the asset exceeds the fair value of the asset. Assets to be disposed of would be separately presented in the balance sheet and reported at the lower of the carrying amount or the fair value less costs to sell, and are not depreciated. Assets and liabilities that are part of a disposal group and classified as held for sale would be presented separately in the appropriate asset and liability sections of the balance sheet.
Income Taxes 
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. At December 27, 2014 and December 28, 2013, we did not have any uncertain tax positions.
Presentation of Taxes in the Consolidated Statements of Operations
We present taxes that are collected from customers and remitted to government authorities on a net basis in the consolidated statements of operations.
Stock-Based Compensation 
Stock-Based Compensation
We account for all stock-based awards to employees and members of our board of directors, to the extent such awards were issued in connection with their services as directors, in accordance with ASC 718, Compensation-Stock Compensation. ASC 718 requires that all share-based payments, including grants of stock options, be recognized in the statement of operations as an operating expense based on their fair value. In accordance with ASC 718, we recognize the compensation cost of share-based awards on a straight-line basis over the vesting period of the award.
We use the Black-Scholes-Merton option-pricing model to determine the fair value for option awards. In valuing our option awards, we make assumptions about risk-free interest rates, dividend yields, volatility, and weighted-average expected lives, including estimated forfeiture rates. Risk-free interest rates are derived from U.S. Treasury securities as of the option award grant date. Expected dividend yield is based on our historical dividend payments, which have been zero to date. The expected volatility for our common stock is estimated 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 estimate the weighted-average expected life of the option awards as the average of the option vesting schedule and the term of the award, since we do not have sufficient historical exercise data to provide a reasonable basis upon which to estimate expected term due to the limited period of time share-based awards have been exercisable. The term of the award is estimated using the simplified method, as awards are plain vanilla option awards. Forfeiture rates are estimated using historical actual forfeiture trends as well as our judgment of future forfeitures. These rates are evaluated at least quarterly and any change in compensation expense is recognized in the period of the change. The estimation of option awards that will ultimately vest requires judgment, and to the extent actual results or updated estimates differ from our current estimates, such amounts will be recorded as a cumulative adjustment in the period the estimates are revised. Actual results, and future changes in estimates, may differ substantially from management’s current estimates.
Stock-based awards issued to non-employees, are accounted for using the fair value method in accordance with ASC 505-50, Equity-Based Payments to Non-Employees. These stock options are typically granted in exchange for consulting services to be rendered, and vest over periods of up to four years. In accordance with authoritative guidance, the fair value of non-employee stock-based awards is estimated on the date of grant, and subsequently revalued at each reporting period over their vesting period using the Black-Scholes option-pricing model.
Advertising Costs 
Advertising Costs
We expense advertising costs as incurred when the advertisement is run.
Accumulated Other Comprehensive Income 
Accumulated Other Comprehensive Income
As of December 27, 2014 and December 28, 2013, accumulated other comprehensive income was comprised solely of cumulative foreign currency translation adjustments.
Recently Issued and Adopted Accounting Pronouncements 
Recently Issued and Adopted Accounting Pronouncements
In January 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2015-01, Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items ("ASU 2015-01”), which eliminates the requirement of Extraordinary Items to be separately classified on the income statement.  ASU 2015-01 is effective for annual periods ending after December 15, 2015 and for annual and interim periods thereafter.  Early application is permitted.  The adoption of ASU 2015-01 is not expected to have a material effect on our condensed consolidated financial statements or disclosures.
In August 2014, the FASB issued Accounting Standards Update No. 2014-15, Presentation of Financial Statements - Going Concern (“ASU 2014-15”), which requires management to evaluate, at each annual and interim reporting period, whether there are conditions or events that raise substantial doubt about the 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 interim periods thereafter.  Early application is permitted.  The adoption of ASU 2014-15 is not expected to have a material effect on our condensed consolidated financial statements or disclosures.
In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”), 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. The new standard is effective for us in our fiscal year 2018. Early application is not permitted. 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 retrospective or cumulative effect transition method. We have not yet selected a transition method nor have we determined the effect of the standard on our ongoing financial reporting.
In April 2014, the FASB issued ASU No. 2014-08, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity (“ASU 2014-08”), to reduce diversity in practice for reporting discontinued operations. Under the previous guidance, any component of an entity that was a reportable segment, an operating segment, a reporting unit, a subsidiary, or an asset group was eligible for discontinued operations presentation. The revised guidance only allows disposals of components of an entity that represent a strategic shift (e.g., disposal of a major geographical area, a major line of business, a major equity method investment, or other major parts of an entity) and that have a major effect on a reporting entity’s operations and financial results to be reported as discontinued operations. The revised guidance also requires expanded disclosure in the financial statements for discontinued operations as well as for disposals of significant components of an entity that do not qualify for discontinued operations presentation. The updated guidance is effective for periods beginning after December 15, 2014. We currently do not have operations that are reported as discontinued operations and do not expect the adoption of this guidance to have a material effect on our financial position, results of operations, or cash flows.
In July 2013, the FASB issued ASU No. 2013-11, Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carry forward, a Similar Tax Loss, or a Tax Credit Carry forward Exists (“ASU 2013-11”). ASU 2013-11 states that an unrecognized tax benefit, or a portion of an unrecognized tax benefit, should be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carry forward, a similar tax loss, or a tax credit carry forward, except in certain situations. ASU 2013-11 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2013. Early adoption and retrospective application are permitted. The amendments should be applied prospectively to all unrecognized tax benefits that exist at the effective date. The adoption of this amendment did not have a material impact on our condensed consolidated financial statements.
Summary of Significant Accounting Policies (Tables)
Schedule of Assets and Liabilities Measured at Fair Value on a Recurring Basis 
The following table presents information about our assets and liabilities measured at fair value on a recurring basis as of December 27, 2014 and December 28, 2013 and indicates the fair value hierarchy of the valuation techniques we utilized to determine such fair value (in thousands):
 
December 27, 2014
 
December 28, 2013
 
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 and certificates of deposit
$
15,656

 
$
—

 
$
—

 
$
15,656

 
$
15,085

 
$
—

 
$
—

 
$
15,085

Total assets
$
15,656

 
$
—

 
$
—

 
$
15,656

 
$
15,085

 
$
—

 
$
—

 
$
15,085

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Liabilities:


 


 


 


 


 


 


 


Contingent acquisition consideration
$
—

 
$
—

 
$
17,952

 
$
17,952

 
$
—

 
$
—

 
$
10,630

 
$
10,630

Preferred stock warrants
—

 
—

 
—

 
—

 
—

 
—

 
362

 
362

Total liabilities
$
—

 
$
—

 
$
17,952

 
$
17,952

 
$
—

 
$
—

 
$
10,992

 
$
10,992

Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation 
The following table sets forth a summary of changes in the fair value of our contingent acquisition consideration and preferred stock warrants which represent recurring measurements that are classified within Level 3 of the fair value hierarchy wherein fair value is estimated using significant unobservable inputs (in thousands):
 
December 27, 2014
 
December 28, 2013
 
Contingent Acquisition
Consideration
 
Preferred Stock Warrants
 
Contingent Acquisition
Consideration
 
Preferred Stock Warrants
Beginning balance
$
10,630

 
$
362

 
$
9,288

 
$
247

Contingent consideration liability recorded in connection with Citrus Lane acquisition
14,510

 
—

 
—

 
—

Increase in fair value included in earnings
3,158

 
606

 
1,342

 
115

Reclassification to permanent equity
(4,878
)
 
(968
)
 
—

 
—

Contingent acquisition consideration payments
(5,468
)
 
—

 
—

 
—

Ending balance
$
17,952

 
$
—

 
$
10,630

 
$
362

Property, Plant and Equipment 
The following table presents the detail of property and equipment, net for the periods presented (in thousands):
 
December 27,
2014
 
December 28,
2013
Computer equipment
$
2,476

 
$
1,444

Furniture and fixtures
1,708

 
1,154

Software
1,066

 
199

Leasehold improvements
3,137

 
183

Total
8,387

 
2,980

Less accumulated depreciation
(2,064
)
 
(1,427
)
Property and equipment, net
$
6,323

 
$
1,553

Property and equipment are depreciated over the following estimated useful lives:
 
Estimated Useful Life
Computer equipment
3 years
Leasehold improvements
Lesser of asset life or lease term
Furniture and fixtures
3 years
Software
3 years
Business Acquisitions (Tables)
Recognized Identified Assets Acquired 
A summary of the preliminary purchase price allocation for the acquisition of Citrus Lane is as follows (in thousands):
Total purchase consideration
 
Cash
$
22,881

Fair value of common stock
3,844

Fair value of contingent acquisition consideration
15,600

Fair value of stock options exchanged
1,026

 
 
Total purchase price
$
43,351

 
 
Allocation of the purchase consideration
 
Tangible assets
$
2,865

Liabilities assumed
(4,098
)
Identifiable intangible assets
4,600

Deferred tax liabilities
(1,855
)
Goodwill
41,839

 
 
Total purchase price allocation
$
43,351

The following table summarizes the components of the purchase price and purchase price allocation for the 2012 acquisitions (in thousands):
 
 
Breedlove
 
Betreut
 
PIAP
Total purchase consideration:
 
 
 
 
 
Cash
$
23,076

 
$
1,099

 
$
1,419

Fair value of preferred and common stock issued
21,912

 
22,174

 
—

Fair value of contingent consideration
8,911

 
—

 
138

Total purchase consideration
$
53,899

 
$
23,273

 
$
1,557

Allocation of purchase consideration:
 
 
 
 
 
Cash
$
—

 
$
310

 
$
(21
)
Unbilled receivables
597

 
—

 
347

Accounts receivable
—

 
250

 
8

Other assets
273

 
178

 
35

Deferred tax liabilities
—

 
(1,139
)
 
—

Other current liabilities
(187
)
 
(476
)
 
(770
)
Identifiable intangible assets (a)
13,640

 
3,720

 
1,210

Goodwill
39,576

 
20,430

 
748

Purchase price
$
53,899

 
$
23,273

 
$
1,557

(a) The following are the identifiable intangible assets acquired and their respective weighted average useful lives (in thousands):
Schedule of Finite-Lived Intangible Assets Acquired 
The estimated fair values for specifically identifiable intangible assets acquired are as follows (in thousands):
 
 
 
Weighted-average amortization period
(in years)
Proprietary software
$
3,000

 
7
Trade-names
1,600

 
10
Total purchase price
$
4,600

 
 
 
Breedlove
 
Betreut
 
PIAP
 
Amount
 
Weighted- Average Life (Years)
 
Amount
 
Weighted- Average Life (Years)
 
Amount
 
Weighted- Average Life (Years)
Trademarks and trade names
$
3,610

 
3
 
$
650

 
7
 
$
240

 
5
Proprietary software
2,610

 
5
 
1,950

 
5
 
190

 
5
Website
40

 
4
 
—

 
—
 
10

 
2
Training materials
—

 
—
 
—

 
—
 
30

 
3
Non-compete agreements
60

 
5
 
80

 
3
 
—

 
—
Leasehold interests
170

 
6
 
—

 
—
 
—

 
—
Caregiver relationships
—

 
—
 
270

 
3
 
50

 
3
Customer relationships
7,150

 
4
 
770

 
4
 
690

 
10
Total
$
13,640

 
4
 
$
3,720

 
5
 
$
1,210

 
8
Pro Forma Information 
The pro forma financial information does not reflect any adjustments for anticipated synergies resulting from the acquisition and is not necessarily indicative of the operating results that would have actually occurred had the transaction been consummated on January 1, 2013.
 
 
 
 
 
Pro Forma for the Years Ended
 
December 27, 2014
 
December 28, 2013
(in millions)
 
 
 
Revenue
$
121.7

 
$
87.2

Net loss
$
(45.8
)
 
$
(35.0
)
Goodwill and Intangible Assets (Tables)
Schedule of Goodwill 
The following table presents the change in goodwill for the periods presented (in thousands):
Balance as of December 28, 2013
$
62,686

Citrus Lane acquisition
41,839

Consmr acquisition
488

Impairment of goodwill
(33,788
)
Effect of currency translation
(2,540
)
Balance as of December 27, 2014
$
68,685

Schedule of Goodwill Impairment Loss 
roll forward of accumulated goodwill impairment losses for the year ended December 27, 2014 is as follows:
Balance as of December 28, 2013
$
—

Citrus Lane impairment
33,788

Balance as of December 27, 2014
$
33,788

Schedule of Finite-Lived Intangible Assets 
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)
December 27, 2014
 
 
 
 
 
 
 
Indefinite lived intangibles
$
242

 
$
—

 
$
242

 
N/A
Trademarks and trade names
5,281

 
(3,377
)
 
1,904

 
5.2
Proprietary software
4,942

 
(3,351
)
 
1,591

 
2.5
Website
1,150

 
(34
)
 
1,116

 
6.5
Training materials
30

 
(20
)
 
10

 
1.0
Non-compete agreements
137

 
(94
)
 
43

 
2.0
Leasehold interests
170

 
(61
)
 
109

 
4.4
Caregiver relationships
312

 
(252
)
 
60

 
0.7
Customer relationships
8,857

 
(4,967
)
 
3,890

 
2.9
Total
$
21,121

 
$
(12,156
)
 
$
8,965

 

 
 
 
 
 
 
 
 
December 28, 2013:
 
 
 
 
 
 
 
Indefinite lived intangibles
$
242

 
$
—

 
$
242

 
N/A
Trademarks and trade names
4,561

 
(2,096
)
 
2,465

 
2.5
Proprietary software
5,184

 
(2,952
)
 
2,232

 
3.5
Website
50

 
(19
)
 
31

 
2.3
Training materials
30

 
(10
)
 
20

 
2.0
Non-compete agreements
148

 
(61
)
 
87

 
2.6
Leasehold interests
170

 
(36
)
 
134

 
5.4
Caregiver relationships
346

 
(164
)
 
182

 
1.6
Customer relationships
8,953

 
(2,928
)
 
6,025

 
3.5
Total
$
19,684

 
$
(8,266
)
 
$
11,418

 
 
Schedule of Indefinite-Lived Intangible Assets 
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)
December 27, 2014
 
 
 
 
 
 
 
Indefinite lived intangibles
$
242

 
$
—

 
$
242

 
N/A
Trademarks and trade names
5,281

 
(3,377
)
 
1,904

 
5.2
Proprietary software
4,942

 
(3,351
)
 
1,591

 
2.5
Website
1,150

 
(34
)
 
1,116

 
6.5
Training materials
30

 
(20
)
 
10

 
1.0
Non-compete agreements
137

 
(94
)
 
43

 
2.0
Leasehold interests
170

 
(61
)
 
109

 
4.4
Caregiver relationships
312

 
(252
)
 
60

 
0.7
Customer relationships
8,857

 
(4,967
)
 
3,890

 
2.9
Total
$
21,121

 
$
(12,156
)
 
$
8,965

 

 
 
 
 
 
 
 
 
December 28, 2013:
 
 
 
 
 
 
 
Indefinite lived intangibles
$
242

 
$
—

 
$
242

 
N/A
Trademarks and trade names
4,561

 
(2,096
)
 
2,465

 
2.5
Proprietary software
5,184

 
(2,952
)
 
2,232

 
3.5
Website
50

 
(19
)
 
31

 
2.3
Training materials
30

 
(10
)
 
20

 
2.0
Non-compete agreements
148

 
(61
)
 
87

 
2.6
Leasehold interests
170

 
(36
)
 
134

 
5.4
Caregiver relationships
346

 
(164
)
 
182

 
1.6
Customer relationships
8,953

 
(2,928
)
 
6,025

 
3.5
Total
$
19,684

 
$
(8,266
)
 
$
11,418

 
 
Schedule of Finite-Lived Intangible Assets, Future Amortization Expense 
As of December 27, 2014, the estimated future amortization expense related to current intangible assets for future fiscal years was as follows (in thousands):
2015
$
3,886

2016
2,222

2017
806

2018
461

2019
400

Thereafter
948

Total
$
8,723

Accrued Expenses and Other Current Liabilities (Tables)
Schedule of Accrued Liabilities
The following table presents the detail of accrued expenses and other current liabilities for the periods presented (in thousands):
 
December 27,
2014
 
December 28,
2013
Payroll and compensation
$
1,722

 
$
3,134

Tax-related expense
1,609

 
372

Marketing expenses
3,385

 
1,028

Other accrued expenses
6,016

 
2,489

Total accrued expenses and other current liabilities
$
12,732

 
$
7,023

Commitments and Contingencies (Tables)
Schedule of Future Minimum Lease Commitments for Operating Leases
At December 27, 2014, minimum future lease commitments under all non-cancelable operating leases (including rent escalation clauses) were as follows (in millions):
 
Payments Due by Period
 
Total
Less Than 1 Year
1-3 Years
4-5 Years
Thereafter
 
 
 
 
 
 
Operating lease obligations
$
47.3

$
4.2

$
8.7

$
9.6

$
24.8

Stockholders' Equity (Deficit) (Tables)
Schedule of Stock by Class
As of December 27, 2014, we had reserved the following shares of common stock for future issuance in connection with the following (in thousands):
 
December 27, 2014
 
Contingent consideration payable in common stock
297

 
Options issued and outstanding
4,270

 
Options available for grant under stock option plans
3,062

 
Total
7,629

 
Stock Option Plans and Stock-Based Compensation (Tables)
Summary of Stock Option Activity 
A summary of stock option activity for the year ended December 27, 2014 was as follows (in thousands for shares and intrinsic value):
 
Number of Shares
 
Weighted-Average Remaining Contractual Term (Years)
 
Weighted-Average Exercise Price
 
Aggregate Intrinsic Value
 
 
 
 
 
 
 
 
Outstanding as of December 28, 2013
3,439

 
7.98
 
$
4.28

 
$
27,148

Granted
1,554

 
 
 
11.15

 
 
Canceled and forfeited
(503
)
 
 
 
8.16

 
 
Exercised
(220
)
 
 
 
4.51

 
 
Outstanding as of December 27, 2014
4,270

 
7.17
 
6.47

 
14,373

Options vested and exercisable as of December 27, 2014
2,381

 
6.25
 
4.04

 
11,194

Options vested and expected to vest as of December 27, 2014 (1)
4,194

 
7.15
 
$
6.39

 
$
14,283

(1) Options expected to vest reflect an estimated forfeiture rate
 
 
 
 
 
 
 
Assumptions Used to Estimate Fair Value of Options Granted 
The following table presents the assumptions used to estimate the fair value of options granted during the periods presented:
 
Fiscal Year Ended
 
December 27,
2014
 
December 28,
2013
Risk-free interest rate
1.81 - 1.95%
 
1.23 - 2.00%
Expected term (years)
6.25
 
6.25
Volatility
47.1 - 56.3%
 
44.6%
Expected dividend yield
—
 
—
Summary of Stock-based Compensation in Accompanying Consolidated Statements of Operations 
The following table summarizes stock-based compensation in our accompanying consolidated statements of operations (in thousands):
 
Fiscal Year Ended
 
December 27,
2014
 
December 28,
2013
 
December 31,
2012
 
Cost of revenue
$
183

 
$
161

 
$
159

 
Selling and marketing
763

 
348

 
369

 
Research and development
624

 
356

 
213

 
General and administrative
4,235

 
997

 
1,211

 
   Total stock-based compensation
$
5,805

 
$
1,862

 
$
1,952

 
Net Loss Per Share (Tables)
Schedule of Earnings Per Share, Basic and Diluted 
The following table presents the calculation of basic and diluted net loss per share (in thousands, except per share data):
 
Fiscal Year Ended
 
December 27,
2014
 
December 28,
2013
 
December 31,
2012
Net Loss
$
(80,292
)
 
$
(28,296
)
 
$
(20,420
)
Accretion of preferred stock
(4
)
 
(57
)
 
(48
)
Net loss attributable to common stockholders
$
(80,296
)
 
$
(28,353
)
 
$
(20,468
)
Net loss per share attributable to common stockholders:
 
 
 
 
 
Basic and diluted
$
(2.77
)
 
$
(9.45
)
 
$
(7.97
)
Weighted-average shares used to compute net loss per share attributable to common stockholders:
 
 
 
 
 
Basic and diluted
28,941

 
3,000

 
2,568

Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share 
The following equity shares were excluded from the calculation of diluted net loss per share attributable to common stockholders because their effect would have been anti-dilutive for the periods presented (in thousands):
 
Fiscal Year Ended
 
December 27,
2014
 
December 28,
2013
 
December 31,
2012
Redeemable convertible preferred stock
—

 
21,299

 
21,299

Stock options
4,270

 
3,439

 
2,706

Preferred stock warrants
—

 
41

 
41

Common stock warrants
—

 
40

 
40

Income Taxes (Tables)
Schedule of Income before Income Tax, Domestic and Foreign 
The following table presents domestic and foreign components of loss before income taxes for the periods presented (in thousands):
 
Fiscal Year Ended
 
December 27,
2014
 
December 28,
2013
 
December 31,
2012
United States
(75,463
)
 
(22,182
)
 
(16,656
)
Foreign
(5,581
)
 
(5,760
)
 
(4,081
)
Total loss before income taxes
(81,044
)
 
(27,942
)
 
(20,737
)
Components of Income Tax Expense (Benefit) 
The following table presents the components of the (benefit from) provision for income taxes for the periods presented (in thousands):
 
Fiscal Year Ended
 
December 27,
2014
 
December 28,
2013
 
December 31, 2012
Current:
 
 
 
 
 
Federal
$
—

 
$
—

 
$
—

State
108

 
70

 
28

Foreign
33

 
—

 
—

Total current provision for income taxes
141

 
70

 
28

Deferred:
 
 
 
 
 
Federal
(757
)
 
626

 
374

State
(136
)
 
49

 
63

Foreign
—

 
(391
)
 
(782
)
Total deferred tax (benefit) provision
(893
)
 
284

 
(345
)
Total (benefit from) provision for income taxes
$
(752
)
 
$
354

 
$
(317
)
Reconciliation of the Statutory Federal Rate and Effective Tax Rate 
The following table presents a reconciliation of the statutory federal rate, and our effective tax rate, for the periods presented:
 
Fiscal Year Ended
 
December 27,
2014
 
December 28,
2013
 
December 31,
2012
U.S. federal taxes at statutory rate
34
 %
 
34
 %
 
34
 %
State income taxes, net of federal benefit
—

 
2

 
3

Permanent differences
(2
)
 
(3
)
 
(4
)
Impairment of goodwill and intangible assets
(14
)
 
—

 
—

Foreign rate differential
—

 
(1
)
 
(1
)
Change in valuation allowance - U.S.
(15
)
 
(28
)
 
(31
)
Change in valuation allowance - foreign
(2
)
 
(5
)
 
(2
)
Rate change
—

 
—

 
3

Total
1
 %
 
(1
)%
 
2
 %
Significant Components of Deferred Tax Assets and Liabilities 
The following table presents the significant components of our deferred tax assets and liabilities for the periods presented (in thousands):
 
Fiscal Year Ended
 
December 27,
2014
 
December 28,
2013
Deferred tax assets
 
 
 
Net operating loss carryforwards
$
40,790

 
$
25,307

Fixed assets
—

 
76

Accrued expenses
1,696

 
28

Stock-based compensation
1,618

 
140

U.S. definite lived intangibles
3,538

 
1,609

Other temporary differences
33

 
475

Total deferred tax assets
47,675

 
27,635

Valuation allowance
(46,619
)
 
(27,215
)
Net deferred tax assets
1,056

 
420

Deferred tax liabilities
 
 
 
Foreign intangibles
(224
)
 
(386
)
U.S. goodwill
(2,072
)
 
(1,112
)
Fixed assets
(832
)
 
—

Other
—

 
(34
)
Total deferred tax liabilities
(3,128
)
 
(1,532
)
Net deferred tax liabilities
$
(2,072
)
 
$
(1,112
)
Segment and Geographical Information (Tables)
Revenue from External Customers by Product Lines 
we have determined that we have a single operating and reportable segment comprised of the following product lines (dollars in thousands):
 
Fiscal Year Ended
 
December 27,
2014
 
December 28,
2013
 
December 31,
2012
Consumer matching
$
82,031

 
$
61,645

 
$
41,409

Consumer payments
14,493

 
10,770

 
3,133

Merchandise
6,001

 
—

 
—

Other
14,188

 
9,072

 
3,951

Total revenue
$
116,713

 
$
81,487

 
$
48,493

Schedule of Revenue by Geographic Location 
The following table summarizes total revenue generated by our geographic locations (dollars in thousands):
 
Fiscal Year Ended
 
December 27,
2014
 
December 28,
2013
 
December 31,
2012
United States
$
108,048

 
$
74,800

 
$
45,514

International
8,665

 
6,687

 
2,979

Total revenue
$
116,713

 
$
81,487

 
$
48,493

 
Fiscal Year Ended
 
December 27,
2014
 
December 28,
2013
 
December 31,
2012
 
(As a percentage of revenue)
United States
93
%
 
92
%
 
94
%
International
7
%
 
8
%
 
6
%
Total revenue
100
%
 
100
%
 
100
%
Other Expense, Net (Tables)
Schedule of Other Expense, Net
Other expense, net consisted of the following (in thousands):
 
Fiscal Year Ended
 
December 27,
2014
 
December 28,
2013
 
December 31,
2012
Interest income
$
86

 
$
47

 
$
48

Interest expense
(43
)
 
(17
)
 
(3
)
Other expense, net
(3,899
)
 
(321
)
 
(92
)
Total other expense, net
$
(3,856
)
 
$
(291
)
 
$
(47
)
Quarterly Financial Information (Unaudited) (Tables)
Schedule of Quarterly Financial Information [Table Text Block]
The table below sets forth unaudited selected quarterly financial data for each of the last two fiscal years (dollars in thousands, except per share data).
 
For the Quarter Ended
 
December 27, 2014
 
September 27, 2014
 
June 28, 2014
 
March 29, 2014
 

 

 

 

Total revenue
$
33,552

 
$
32,054

 
$
25,836

 
$
25,271

Cost of revenue
9,729

 
9,132

 
5,713

 
5,771

Operating loss
(40,255
)
 
(14,987
)
 
(9,633
)
 
(12,313
)
Net loss
(40,420
)
 
(14,453
)
 
(9,875
)
 
(15,544
)
Net loss attributable to common stockholders
(40,420
)
 
(14,453
)
 
(9,875
)
 
(15,548
)
Net loss per common share—basic and diluted
$
(1.28
)
 
$
(0.46
)
 
$
(0.32
)
 
$
(0.71
)
 
 
 
For the Quarter Ended
 
December 28, 2013
 
September 28, 2013
 
June 30, 2013
 
March 31, 2013
 

 

 

 

Total revenue
$
22,511

 
$
21,681

 
$
19,133

 
$
18,162

Cost of revenue
4,852

 
5,158

 
4,607

 
4,227

Operating loss
(3,891
)
 
(11,469
)
 
(5,906
)
 
(6,385
)
Net loss
(3,631
)
 
(11,732
)
 
(6,114
)
 
(6,819
)
Net loss attributable to common stockholders
(3,646
)
 
(11,746
)
 
(6,128
)
 
(6,833
)
Net loss per common share—basic and diluted
$
(1.16
)
 
$
(3.86
)
 
$
(2.08
)
 
$
(2.35
)
Summary of Significant Accounting Policies - Fair Value, Assets and Liabilities Measured on Recurring Basis (Details) (USD $)
In Thousands, unless otherwise specified
Dec. 27, 2014
Dec. 28, 2013
Assets:
 
 
Total assets
$ 15,656 
$ 15,085 
Liabilities:
 
 
Total liabilities
17,952 
10,992 
Money Market Funds
 
 
Assets:
 
 
Money market mutual funds and certificates of deposit
15,656 
15,085 
Level 1
 
 
Assets:
 
 
Total assets
15,656 
15,085 
Liabilities:
 
 
Total liabilities
0 
0 
Level 1 |
Money Market Funds
 
 
Assets:
 
 
Money market mutual funds and certificates of deposit
15,656 
15,085 
Level 2
 
 
Assets:
 
 
Total assets
0 
0 
Liabilities:
 
 
Total liabilities
0 
0 
Level 2 |
Money Market Funds
 
 
Assets:
 
 
Money market mutual funds and certificates of deposit
0 
0 
Level 3
 
 
Assets:
 
 
Total assets
0 
0 
Liabilities:
 
 
Total liabilities
17,952 
10,992 
Level 3 |
Money Market Funds
 
 
Assets:
 
 
Money market mutual funds and certificates of deposit
0 
0 
Contingent acquisition consideration
 
 
Liabilities:
 
 
Contingent acquisition consideration
17,952 
10,630 
Contingent acquisition consideration |
Level 1
 
 
Liabilities:
 
 
Contingent acquisition consideration
0 
0 
Contingent acquisition consideration |
Level 2
 
 
Liabilities:
 
 
Contingent acquisition consideration
0 
0 
Contingent acquisition consideration |
Level 3
 
 
Liabilities:
 
 
Contingent acquisition consideration
17,952 
10,630 
Preferred stock warrants
 
 
Liabilities:
 
 
Preferred stock warrants
0 
362 
Preferred stock warrants |
Level 1
 
 
Liabilities:
 
 
Preferred stock warrants
0 
0 
Preferred stock warrants |
Level 2
 
 
Liabilities:
 
 
Preferred stock warrants
0 
0 
Preferred stock warrants |
Level 3
 
 
Liabilities:
 
 
Preferred stock warrants
$ 0 
$ 362 
Summary of Significant Accounting Policies - Fair Value of Contingent Consideration and Preferred Stock Warrants - Recurring Measurements Classified as Level 3 (Details) (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Dec. 27, 2014
Dec. 28, 2013
Contingent Acquisition Consideration
 
 
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation
 
 
Beginning balance
$ 10,630 
$ 9,288 
Contingent consideration liability recorded in connection with Citrus Lane acquisition
14,510 
 
Increase in fair value included in earnings
3,158 
1,342 
Reclassification to permanent equity
(4,878)
0 
Contingent acquisition consideration payments
(5,468)
 
Ending balance
17,952 
10,630 
Preferred Stock Warrants
 
 
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation
 
 
Beginning balance
362 
247 
Contingent consideration liability recorded in connection with Citrus Lane acquisition
0 
 
Increase in fair value included in earnings
606 
115 
Reclassification to permanent equity
(968)
0 
Ending balance
$ 0 
$ 362 
Summary of Significant Accounting Policies - Property and Equipment (Details) (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Dec. 27, 2014
Dec. 28, 2013
Property, Plant and Equipment [Line Items]
 
 
Property, plant and equipment, gross
$ 8,387 
$ 2,980 
Less accumulated depreciation
(2,064)
(1,427)
Property and equipment, net
6,323 
1,553 
Computer equipment
 
 
Property, Plant and Equipment [Line Items]
 
 
Property, plant and equipment, gross
2,476 
1,444 
Estimated Useful Life
3 years 
 
Furniture and fixtures
 
 
Property, Plant and Equipment [Line Items]
 
 
Property, plant and equipment, gross
1,708 
1,154 
Estimated Useful Life
3 years 
 
Software
 
 
Property, Plant and Equipment [Line Items]
 
 
Property, plant and equipment, gross
1,066 
199 
Estimated Useful Life
3 years 
 
Leasehold improvements
 
 
Property, Plant and Equipment [Line Items]
 
 
Property, plant and equipment, gross
$ 3,137 
$ 183 
Summary of Significant Accounting Policies - Additional Information (Details) (USD $)
12 Months Ended 3 Months Ended 0 Months Ended 12 Months Ended
Dec. 27, 2014
Dec. 28, 2013
Dec. 31, 2012
Dec. 27, 2014
Minimum
Dec. 27, 2014
Maximum
Dec. 31, 2012
Care International Exchange, Inc.
Dec. 27, 2014
PIAP
Dec. 28, 2013
PIAP
Sep. 28, 2013
PIAP
Trade Names
Jul. 17, 2014
Citrus Lane Inc
Dec. 27, 2014
Citrus Lane Inc
Dec. 31, 2012
Betreut
Proprietary Software
Dec. 27, 2014
Credit Concentration Risk
Customer
Dec. 28, 2013
Credit Concentration Risk
Customer
Dec. 27, 2014
Customer Concentration Risk
Customer
Dec. 28, 2013
Customer Concentration Risk
Customer
Entity Information [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fiscal period duration
 
 
 
364 days 
371 days 
 
 
 
 
 
 
 
 
 
 
 
Number of customers
 
 
 
 
 
 
 
 
 
 
 
 
1 
0 
0 
0 
Percentage of total accounts receivables
 
 
 
 
 
 
 
 
 
 
 
 
15.00% 
 
 
 
Foreign currency transaction losses
$ 1,000,000 
$ 100,000 
$ 100,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
Contingent consideration expense
900,000 
1,342,000 
239,000 
 
 
 
0 
600,000 
 
600,000 
17,500,000 
 
 
 
 
 
Potential earn out payment, percentage
 
 
 
 
 
 
 
 
 
 
100.00% 
 
 
 
 
 
Intangible asset impairment charge
 
 
 
 
 
 
 
 
 
 
2,400,000 
 
 
 
 
 
Goodwill impairment charge
33,788,000 
 
 
 
 
 
 
 
 
 
33,800,000 
 
 
 
 
 
Capitalized software development costs
900,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Ownership percentage
 
 
 
 
 
50.00% 
 
 
 
 
 
 
 
 
 
 
Equity method investments, initial investment
 
 
 
 
 
50,000 
 
 
 
 
 
 
 
 
 
 
Commitment for additional funding
 
 
 
 
 
400,000 
 
 
 
 
 
 
 
 
 
 
Commitment for additional funding, term
 
 
 
 
 
2 years 
 
 
 
 
 
 
 
 
 
 
Estimated useful lives, intangible assets
 
 
 
1 year 
10 years 
 
 
 
 
 
 
 
 
 
 
 
Estimated useful life
 
 
 
 
 
 
 
 
4 months 
 
 
1 year 
 
 
 
 
Depreciation
900,000 
700,000 
300,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
Advertising expense
$ 30,500,000 
$ 22,300,000 
$ 14,300,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
Business Acquisitions - Additional Information (Details) (USD $)
Share data in Millions, except Per Share data, unless otherwise specified
3 Months Ended 12 Months Ended 0 Months Ended 6 Months Ended 12 Months Ended 0 Months Ended 0 Months Ended 1 Months Ended 0 Months Ended 5 Months Ended 12 Months Ended 0 Months Ended 6 Months Ended 12 Months Ended 0 Months Ended 12 Months Ended 0 Months Ended 0 Months Ended 0 Months Ended 0 Months Ended
Dec. 27, 2014
Sep. 27, 2014
Jun. 28, 2014
Mar. 29, 2014
Dec. 28, 2013
Sep. 28, 2013
Jun. 30, 2013
Mar. 31, 2013
Dec. 27, 2014
Dec. 28, 2013
Dec. 31, 2012
Jul. 17, 2014
Citrus Lane Inc
Dec. 27, 2014
Citrus Lane Inc
Dec. 27, 2014
Citrus Lane Inc
Jul. 17, 2014
Citrus Lane Inc
Jul. 17, 2014
Citrus Lane Inc
Earn Out Payment
Jul. 17, 2014
Citrus Lane Inc
Earn Out Payment
Jul. 17, 2014
Citrus Lane Inc
Based Solely on Individual
Mar. 3, 2014
Consumr
Jun. 30, 2013
BigTent
Aug. 3, 2012
Breedlove
Dec. 31, 2012
Breedlove
Dec. 31, 2012
Breedlove
Aug. 3, 2012
Breedlove
Jul. 5, 2012
Betreut
Dec. 31, 2012
Betreut
Dec. 31, 2012
Betreut
Jul. 5, 2012
Betreut
Dec. 31, 2012
PIAP
Dec. 27, 2014
PIAP
Dec. 28, 2013
PIAP
Dec. 31, 2012
PIAP
Dec. 21, 2012
PIAP
Dec. 31, 2012
PIAP
Earn Out Payment
Aug. 3, 2012
Minimum
Breedlove
Jul. 5, 2012
Minimum
Betreut
Dec. 31, 2012
Minimum
PIAP
Aug. 3, 2012
Maximum
Breedlove
Jul. 5, 2012
Maximum
Betreut
Dec. 31, 2012
Maximum
PIAP
Aug. 3, 2012
Series E Preferred Stock
Breedlove
Aug. 3, 2012
Series E Preferred Stock
Breedlove
Jul. 5, 2012
Series D-1 Preferred Stock
Betreut
Jul. 5, 2012
Series D-1 Preferred Stock
Betreut
Jul. 5, 2012
Common Stock
Betreut
Jul. 5, 2012
Common Stock
Betreut
Jul. 17, 2014
Employee Stock Option
Citrus Lane Inc
Business Acquisition [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash consideration
 
 
 
 
 
 
 
 
 
 
 
$ 22,881,000 
 
 
 
 
 
 
 
$ 700,000 
$ 23,076,000 
 
 
 
$ 1,099,000 
 
 
 
$ 1,419,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Equity consideration, shares
 
 
 
 
 
 
 
 
 
 
 
0.4 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1.7 
 
1.8 
 
0.5 
 
 
Equity consideration, value
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3,800,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
21,900,000 
 
19,300,000 
 
2,900,000 
 
Cash consideration, contingent amount
 
 
 
 
 
 
 
 
 
 
 
16,400,000 
 
 
 
 
 
 
 
 
5,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash consideration, contingent amount, fair value
 
 
 
 
 
 
 
 
 
 
 
 
 
 
14,500,000 
 
 
 
 
 
 
 
 
3,900,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Equity consideration, contingent amount, shares
 
 
 
 
 
 
 
 
 
 
 
0.1 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
0.4 
 
 
 
 
 
 
Equity consideration, contingent amount, value
 
 
 
 
 
 
 
 
 
 
 
1,100,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
5,000,000 
 
 
 
 
 
 
Fair value of common stock or stock options exchanged
 
 
 
 
 
 
 
 
 
 
 
1,000,000 
 
 
 
 
 
 
 
 
21,912,000 
 
 
 
22,174,000 
 
 
 
0 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1,026,000 
Acquisition costs
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1,800,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Escrow deposit
 
 
 
 
 
 
 
 
 
 
 
 
 
 
5,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue
33,552,000 
32,054,000 
25,836,000 
25,271,000 
22,511,000 
21,681,000 
19,133,000 
18,162,000 
116,713,000 
81,487,000 
48,493,000 
 
6,000,000 
 
 
 
 
 
 
 
 
3,100,000 
 
 
 
2,900,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net loss
40,420,000 
14,453,000 
9,875,000 
15,544,000 
3,631,000 
11,732,000 
6,114,000 
6,819,000 
80,292,000 
28,296,000 
20,420,000 
 
42,900,000 
 
 
 
 
 
 
 
 
100,000 
 
 
 
1,800,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Intangible asset cash flow forecast, discount rate
 
 
 
 
 
 
 
 
 
 
 
 
 
22.50% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
12.90% 
16.50% 
17.20% 
13.00% 
17.30% 
17.90% 
 
 
 
 
 
 
 
Goodwill
68,685,000 
 
 
 
62,686,000 
 
 
 
68,685,000 
62,686,000 
 
 
 
 
41,839,000 
 
 
 
 
 
 
 
 
39,576,000 
 
 
 
20,430,000 
 
 
 
748,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fair value of options
 
 
 
 
 
 
 
 
 
 
 
1,400,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Period for recognition
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1 year 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2 years 7 months 6 days 
Risk-free interest rate
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1.80% 
Volatility
 
 
 
 
 
 
 
 
 
44.60% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
49.40% 
Expected term (years)
 
 
 
 
 
 
 
 
6 years 90 days 
6 years 90 days 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
5 years 4 months 24 days 
Expected dividend yield
 
 
 
 
 
 
 
 
0.00% 
0.00% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
0.00% 
Weighted average grant date fair value
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$ 9.34 
Share-based compensation expense, acceleration of vesting
 
 
 
 
 
 
 
 
 
 
 
 
 
1,400,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Potential periodic earn out payments
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
8,200,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
700,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
Contingent acquisition consideration
 
 
 
 
 
 
 
 
 
 
 
 
 
 
15,200,000 
 
 
 
 
 
 
 
 
8,911,000 
 
 
 
0 
 
 
 
 
138,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Contingent consideration expense
 
 
 
 
 
 
 
 
900,000 
1,342,000 
239,000 
600,000 
 
17,500,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
0 
600,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Employee bonus pool
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1,400,000 
 
300,000 
1,100,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Compensation
 
 
 
 
 
 
 
 
 
 
 
 
 
500,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consideration transferred
 
 
 
 
 
 
 
 
 
 
 
15,600,000 
 
 
 
 
 
 
600,000 
 
53,899,000 
 
 
 
23,273,000 
 
 
 
1,557,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Purchase Price held back
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
100,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Identifiable intangible assets
 
 
 
 
 
 
 
 
 
 
 
 
 
 
4,600,000 
 
 
 
 
500,000 
 
 
 
13,640,000 
 
 
 
3,720,000 
 
 
 
1,210,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted-average amortization period (in years)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
6 years 7 months 6 days 
4 years 
 
 
 
5 years 
 
 
 
8 years 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Merger related transaction costs
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
100,000 
 
 
 
400,000 
 
 
 
 
100,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Increase in fair value of redeemable preferred stock
 
 
 
 
 
 
 
 
2,300,000 
200,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Deferred taxes related to fair value of the acquired intangible assets
224,000 
 
 
 
386,000 
 
 
 
224,000 
386,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
0 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash withheld as security for indemnification obligations
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
200,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Value of revenue-based earn-outs payable
$ 7,267,000 
 
 
 
$ 5,166,000 
 
 
 
$ 7,267,000 
$ 5,166,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$ 100,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Business Acquisitions - Purchase Price Allocation - Citrus Lane (Details) (USD $)
In Thousands, unless otherwise specified
0 Months Ended 0 Months Ended
Dec. 27, 2014
Dec. 28, 2013
Jul. 17, 2014
Citrus Lane Inc
Jul. 17, 2014
Citrus Lane Inc
Jul. 17, 2014
Citrus Lane Inc
Common Stock
Jul. 17, 2014
Stock options
Citrus Lane Inc
Business Acquisition [Line Items]
 
 
 
 
 
 
Cash
 
 
$ 22,881 
 
 
 
Fair value of common stock or stock options exchanged
 
 
1,000 
 
3,844 
1,026 
Fair value of contingent acquisition consideration
 
 
15,600 
 
 
 
Purchase price
 
 
 
43,351 
 
 
Tangible assets
 
 
 
2,865 
 
 
Liabilities assumed
 
 
 
(4,098)
 
 
Identifiable intangible assets
 
 
 
4,600 
 
 
Deferred tax liabilities
 
 
 
(1,855)
 
 
Goodwill
$ 68,685 
$ 62,686 
 
$ 41,839 
 
 
Business Acquisitions - Identifiable Intangible Assets Acquired - Citrus Lane (Details) (Citrus Lane Inc, USD $)
In Thousands, unless otherwise specified
0 Months Ended
Jul. 17, 2014
Jul. 17, 2014
Business Acquisition [Line Items]
 
 
Identifiable intangible assets acquired
$ 4,600 
$ 4,600 
Proprietary Software
 
 
Business Acquisition [Line Items]
 
 
Identifiable intangible assets acquired
 
3,000 
Weighted-average amortization period (in years)
7 years 
 
Trade Names
 
 
Business Acquisition [Line Items]
 
 
Identifiable intangible assets acquired
 
$ 1,600 
Weighted-average amortization period (in years)
10 years 
 
Business Acquisitions - Pro Forma Financial Information - Citrus Lane (Details) (Citrus Lane Inc, USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 27, 2014
Dec. 28, 2013
Citrus Lane Inc
 
 
Business Acquisition [Line Items]
 
 
Revenue
$ 121.7 
$ 87.2 
Net loss
$ (45.8)
$ (35.0)
Business Acquisitions - Purchase Price Allocation for 2012 Business Acquisitions (Details) (USD $)
In Thousands, unless otherwise specified
0 Months Ended 0 Months Ended 0 Months Ended
Dec. 27, 2014
Dec. 28, 2013
Aug. 3, 2012
Breedlove
Aug. 3, 2012
Breedlove
Jul. 5, 2012
Betreut
Jul. 5, 2012
Betreut
Dec. 31, 2012
PIAP
Dec. 31, 2012
PIAP
Dec. 21, 2012
PIAP
Business Acquisition [Line Items]
 
 
 
 
 
 
 
 
 
Cash
 
 
$ 23,076 
 
$ 1,099 
 
$ 1,419 
 
 
Fair value of preferred and common stock issued
 
 
21,912 
 
22,174 
 
0 
 
 
Fair value of contingent consideration
 
 
 
8,911 
 
0 
 
 
138 
Consideration transferred
 
 
53,899 
 
23,273 
 
1,557 
 
 
Cash
 
 
 
0 
 
310 
 
(21)
 
Unbilled receivables
 
 
 
597 
 
0 
 
347 
 
Accounts receivable
 
 
 
0 
 
250 
 
8 
 
Other assets
 
 
 
273 
 
178 
 
35 
 
Deferred tax liabilities
 
 
 
0 
 
(1,139)
 
0 
 
Other current liabilities
 
 
 
(187)
 
(476)
 
(770)
 
Identifiable intangible assets
 
 
 
13,640 
 
3,720 
 
1,210 
 
Goodwill
68,685 
62,686 
 
39,576 
 
20,430 
 
748 
 
Purchase price
 
 
 
$ 53,899 
 
$ 23,273 
 
$ 1,557 
 
Business Acquisitions - Identifiable Intangible Assets Acquired for 2012 Business Acquisitions (Details) (USD $)
In Thousands, unless otherwise specified
0 Months Ended 0 Months Ended 0 Months Ended 0 Months Ended 0 Months Ended 0 Months Ended 0 Months Ended 0 Months Ended 0 Months Ended 0 Months Ended 0 Months Ended 0 Months Ended 0 Months Ended 0 Months Ended 0 Months Ended 0 Months Ended 0 Months Ended 0 Months Ended 0 Months Ended 0 Months Ended
Aug. 3, 2012
Breedlove
Aug. 3, 2012
Breedlove
Jul. 5, 2012
Betreut
Jul. 5, 2012
Betreut
Dec. 31, 2012
PIAP
Dec. 31, 2012
PIAP
Aug. 3, 2012
Trademarks and trade names
Breedlove
Aug. 3, 2012
Trademarks and trade names
Breedlove
Jul. 5, 2012
Trademarks and trade names
Betreut
Jul. 5, 2012
Trademarks and trade names
Betreut
Dec. 31, 2012
Trademarks and trade names
PIAP
Dec. 31, 2012
Trademarks and trade names
PIAP
Aug. 3, 2012
Proprietary software
Breedlove
Aug. 3, 2012
Proprietary software
Breedlove
Jul. 5, 2012
Proprietary software
Betreut
Jul. 5, 2012
Proprietary software
Betreut
Dec. 31, 2012
Proprietary software
PIAP
Dec. 31, 2012
Proprietary software
PIAP
Aug. 3, 2012
Website
Breedlove
Aug. 3, 2012
Website
Breedlove
Jul. 5, 2012
Website
Betreut
Dec. 31, 2012
Website
PIAP
Dec. 31, 2012
Website
PIAP
Aug. 3, 2012
Training materials
Breedlove
Jul. 5, 2012
Training materials
Betreut
Dec. 31, 2012
Training materials
PIAP
Dec. 31, 2012
Training materials
PIAP
Aug. 3, 2012
Non-compete agreements
Breedlove
Aug. 3, 2012
Non-compete agreements
Breedlove
Jul. 5, 2012
Non-compete agreements
Betreut
Jul. 5, 2012
Non-compete agreements
Betreut
Dec. 31, 2012
Non-compete agreements
PIAP
Aug. 3, 2012
Leasehold interests
Breedlove
Aug. 3, 2012
Leasehold interests
Breedlove
Jul. 5, 2012
Leasehold interests
Betreut
Dec. 31, 2012
Leasehold interests
PIAP
Aug. 3, 2012
Caregiver relationships
Breedlove
Jul. 5, 2012
Caregiver relationships
Betreut
Jul. 5, 2012
Caregiver relationships
Betreut
Dec. 31, 2012
Caregiver relationships
PIAP
Dec. 31, 2012
Caregiver relationships
PIAP
Aug. 3, 2012
Customer relationships
Breedlove
Aug. 3, 2012
Customer relationships
Breedlove
Jul. 5, 2012
Customer relationships
Betreut
Jul. 5, 2012
Customer relationships
Betreut
Dec. 31, 2012
Customer relationships
PIAP
Dec. 31, 2012
Customer relationships
PIAP
Business Acquisition [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Identifiable intangible assets acquired
 
$ 13,640 
 
$ 3,720 
 
$ 1,210 
 
$ 3,610 
 
$ 650 
 
$ 240 
 
$ 2,610 
 
$ 1,950 
 
$ 190 
 
$ 40 
$ 0 
 
$ 10 
$ 0 
$ 0 
 
$ 30 
 
$ 60 
 
$ 80 
$ 0 
 
$ 170 
$ 0 
$ 0 
$ 0 
 
$ 270 
 
$ 50 
 
$ 7,150 
 
$ 770 
 
$ 690 
Weighted- Average Life (Years)
4 years 
 
5 years 
 
8 years 
 
3 years 
 
7 years 
 
5 years 
 
5 years 
 
5 years 
 
5 years 
 
4 years 
 
 
2 years 
 
 
 
3 years 
 
5 years 
 
3 years 
 
 
6 years 
 
 
 
 
3 years 
 
3 years 
 
4 years 
 
4 years 
 
10 years 
 
Goodwill and Intangible Assets - Change in Goodwill (Details) (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Dec. 27, 2014
Jul. 17, 2014
Goodwill
 
 
Balance as of December 28, 2013
$ 62,686 
 
Impairment of goodwill
(33,788)
 
Effect of currency translation
(2,540)
 
December 27, 2014
68,685 
 
Citrus Lane Inc
 
 
Goodwill
 
 
Balance as of December 28, 2013
 
41,839 
Consmr acquisition
41,839 
 
Impairment of goodwill
(33,800)
 
December 27, 2014
 
41,839 
Consumr
 
 
Goodwill
 
 
Consmr acquisition
$ 488 
 
Goodwill and Intangible Assets - Accumulated Goodwill Impairment Losses (Details) (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Dec. 27, 2014
Goodwill Impairment Loss
 
Accumulated goodwill impairment losses, beginning balance
$ 0 
Goodwill impairment charge
33,788 
Accumulated goodwill impairment losses, ending balance
$ 33,788 
Goodwill and Intangible Assets - Intangible Assets (Details) (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Dec. 27, 2014
Dec. 28, 2013
Goodwill and Intangible Assets Disclosure [Abstract]
 
 
Indefinite lived intangibles
$ 242 
$ 242 
Finite-Lived Intangible Assets [Line Items]
 
 
Accumulated Amortization
(12,156)
(8,266)
Net Carrying Value
8,723 
 
Total Gross Carrying Value
21,121 
19,684 
Total Accumulated Amortization
(12,156)
(8,266)
Total Net Carrying Value
8,965 
11,418 
Trademarks and trade names
 
 
Finite-Lived Intangible Assets [Line Items]
 
 
Gross Carrying Value
5,281 
4,561 
Accumulated Amortization
(3,377)
(2,096)
Net Carrying Value
1,904 
2,465 
Total Accumulated Amortization
(3,377)
(2,096)
Weighted-Average Remaining Life
5 years 2 months 12 days 
2 years 6 months 
Proprietary software
 
 
Finite-Lived Intangible Assets [Line Items]
 
 
Gross Carrying Value
4,942 
5,184 
Accumulated Amortization
(3,351)
(2,952)
Net Carrying Value
1,591 
2,232 
Total Accumulated Amortization
(3,351)
(2,952)
Weighted-Average Remaining Life
2 years 6 months 
3 years 6 months 
Website
 
 
Finite-Lived Intangible Assets [Line Items]
 
 
Gross Carrying Value
1,150 
50 
Accumulated Amortization
(34)
(19)
Net Carrying Value
1,116 
31 
Total Accumulated Amortization
(34)
(19)
Weighted-Average Remaining Life
6 years 6 months 
2 years 3 months 18 days 
Training materials
 
 
Finite-Lived Intangible Assets [Line Items]
 
 
Gross Carrying Value
30 
30 
Accumulated Amortization
(20)
(10)
Net Carrying Value
10 
20 
Total Accumulated Amortization
(20)
(10)
Weighted-Average Remaining Life
1 year 
2 years 0 months 6 days 
Non-compete agreements
 
 
Finite-Lived Intangible Assets [Line Items]
 
 
Gross Carrying Value
137 
148 
Accumulated Amortization
(94)
(61)
Net Carrying Value
43 
87 
Total Accumulated Amortization
(94)
(61)
Weighted-Average Remaining Life
2 years 0 months 6 days 
2 years 7 months 6 days 
Leasehold interests
 
 
Finite-Lived Intangible Assets [Line Items]
 
 
Gross Carrying Value
170 
170 
Accumulated Amortization
(61)
(36)
Net Carrying Value
109 
134 
Total Accumulated Amortization
(61)
(36)
Weighted-Average Remaining Life
4 years 5 months 6 days 
5 years 4 months 24 days 
Caregiver relationships
 
 
Finite-Lived Intangible Assets [Line Items]
 
 
Gross Carrying Value
312 
346 
Accumulated Amortization
(252)
(164)
Net Carrying Value
60 
182 
Total Accumulated Amortization
(252)
(164)
Weighted-Average Remaining Life
8 months 24 days 
1 year 7 months 6 days 
Customer relationships
 
 
Finite-Lived Intangible Assets [Line Items]
 
 
Gross Carrying Value
8,857 
8,953 
Accumulated Amortization
(4,967)
(2,928)
Net Carrying Value
3,890 
6,025 
Total Accumulated Amortization
$ (4,967)
$ (2,928)
Weighted-Average Remaining Life
2 years 10 months 9 days 
3 years 6 months 
Goodwill and Intangible Assets - Intangible Assets - Future Amortization (Details) (USD $)
In Thousands, unless otherwise specified
Dec. 27, 2014
Goodwill and Intangible Assets Disclosure [Abstract]
 
2015
$ 3,886 
2016
2,222 
2017
806 
2018
461 
2019
400 
Thereafter
948 
Net Carrying Value
$ 8,723 
Goodwill and Intangible Assets - Additional Information (Details) (USD $)
12 Months Ended
Dec. 27, 2014
Dec. 28, 2013
Finite-Lived Intangible Assets [Line Items]
 
 
Goodwill impairment charge
$ 33,788,000 
 
Amortization of intangible assets
4,500,000 
6,000,000 
Depreciation and Amortization
 
 
Finite-Lived Intangible Assets [Line Items]
 
 
Amortization of intangible assets
3,500,000 
3,700,000 
Cost of revenue
 
 
Finite-Lived Intangible Assets [Line Items]
 
 
Amortization of intangible assets
1,000,000 
2,300,000 
Citrus Lane Inc
 
 
Finite-Lived Intangible Assets [Line Items]
 
 
Intangible asset impairment charge
2,400,000 
 
Goodwill impairment charge
$ 33,800,000 
 
Accrued Expenses and Other Current Liabilities - Additional Information (Details) (USD $)
In Thousands, unless otherwise specified
Dec. 27, 2014
Dec. 28, 2013
Payables and Accruals [Abstract]
 
 
Payroll and compensation
$ 1,722 
$ 3,134 
Tax-related expense
1,609 
372 
Marketing expenses
3,385 
1,028 
Other accrued expenses
6,016 
2,489 
Accrued expenses and other current liabilities
$ 12,732 
$ 7,023 
Commitments and Contingencies - Additional Information (Details) (USD $)
In Millions, unless otherwise specified
0 Months Ended 12 Months Ended
Jul. 31, 2014
extension
sublease_agreement
Dec. 27, 2014
Dec. 28, 2013
Dec. 31, 2012
Jul. 31, 2014
sublease_agreement
Capital Leased Assets [Line Items]
 
 
 
 
 
Facilities rent expense under operating leases
 
$ 3.7 
$ 2.5 
 
 
Number of sublease agreements
 
 
 
 
2 
Number of optional lease extensions
1 
 
 
 
 
Term of optional lease extension
10 years 
 
 
 
 
Rent expense
 
2.7 
1.6 
1.5 
 
Capital expenditures commitment
 
0.4 
 
 
 
Inventories
 
 
 
 
 
Capital Leased Assets [Line Items]
 
 
 
 
 
Inventory purchase commitments
 
1.1 
 
 
 
Care International Exchange, Inc.
 
 
 
 
 
Capital Leased Assets [Line Items]
 
 
 
 
 
Ownership percentage
 
 
 
50.00% 
 
Commitment for additional funding
 
 
 
0.4 
 
Prime Lease
 
 
 
 
 
Capital Leased Assets [Line Items]
 
 
 
 
 
Capital lease obligations
 
 
 
 
34.5 
Tenant reimbursement allowance
2.3 
 
 
 
 
Payments for deposits
 
2.8 
 
 
 
Prime Lease, Sixth Floor
 
 
 
 
 
Capital Leased Assets [Line Items]
 
 
 
 
 
Area of real estate property
36,174 
 
 
 
36,174 
Prime Lease, Fourth Floor
 
 
 
 
 
Capital Leased Assets [Line Items]
 
 
 
 
 
Area of real estate property
36,395 
 
 
 
36,395 
Capital lease obligations
4.3 
 
 
 
4.3 
Prime Lease, Fifth Floor
 
 
 
 
 
Capital Leased Assets [Line Items]
 
 
 
 
 
Area of real estate property
36,174 
 
 
 
36,174 
Capital lease obligations
$ 4.1 
 
 
 
$ 4.1 
Commitments and Contingencies - Operating Lease Obligations (Details) (USD $)
In Millions, unless otherwise specified
Dec. 27, 2014
Commitments and Contingencies Disclosure [Abstract]
 
Total
$ 47.3 
Less Than 1 Year
4.2 
1-3 Years
8.7 
4-5 Years
9.6 
Thereafter
$ 24.8 
Stockholders' Equity (Deficit) - Additional Information (Details) (USD $)
In Thousands, except Share data, unless otherwise specified
0 Months Ended 12 Months Ended
Jan. 29, 2014
Dec. 27, 2014
Dec. 28, 2013
Dec. 31, 2012
Class of Stock [Line Items]
 
 
 
 
Share Price
 
$ 8.33 
 
 
Net proceeds from issuance of common stock upon initial public offering
 
$ (94,810)
 
 
Offering Expenses
2,400 
0 
1,074 
0 
Common Stock
 
 
 
 
Class of Stock [Line Items]
 
 
 
 
Shares of common stock
6,152,500 
 
 
 
Shares of common stock sold, underwriters Issued
802,500 
 
 
 
Share Price
$ 17.00 
 
 
 
Preferred Stock
 
 
 
 
Class of Stock [Line Items]
 
 
 
 
Convertible preferred stock warrants
21,490,656 
 
 
 
Common Stock
 
 
 
 
Class of Stock [Line Items]
 
 
 
 
Series A-1 Convertible preferred stock
40,697 
 
 
 
Exercise price
$ 1.72 
 
 
 
Lighthouse Capital Partners |
Convertible Preferred stock series A-1
 
 
 
 
Class of Stock [Line Items]
 
 
 
 
Series A-1 Convertible preferred stock
 
40,697 
 
 
Exercise price
 
$ 1.72 
 
 
Stock issued, warrant exercises
 
38,142 
 
 
Loan and Security Agreement, 2010 |
Common Stock
 
 
 
 
Class of Stock [Line Items]
 
 
 
 
Series A-1 Convertible preferred stock
 
40,000 
 
 
Exercise price
 
$ 1.65 
 
 
Stock issued, warrant exercises
 
37,591 
 
 
Additional Paid-In Capital
 
 
 
 
Class of Stock [Line Items]
 
 
 
 
Net proceeds from issuance of common stock upon initial public offering
$ 94,800 
$ (94,804)
 
 
Stockholders' Equity (Deficit) - Shares Reserved for Issuance (Details)
In Thousands, unless otherwise specified
Dec. 27, 2014
Class of Stock [Line Items]
 
Total shares of common stock reserved for future issuance
7,629 
Stock options
 
Class of Stock [Line Items]
 
Total shares of common stock reserved for future issuance
4,270 
Employee Stock Options, Available for Issuance
 
Class of Stock [Line Items]
 
Total shares of common stock reserved for future issuance
3,062 
Contingent acquisition consideration |
Convertible Common Stock, Series E
 
Class of Stock [Line Items]
 
Total shares of common stock reserved for future issuance
297 
Stock Option Plans and Stock-Based Compensation - Summary of Stock Option Activity (Details) (USD $)
In Thousands, except Per Share data, unless otherwise specified
12 Months Ended
Dec. 27, 2014
Dec. 28, 2013
Number of Shares
 
 
Options outstanding, beginning balance
3,439 
 
Granted
1,554 
 
Canceled and forfeited
(503)
 
Exercised
(220)
 
Options outstanding, ending balance
4,270 
3,439 
Options vested and exercisable at end of period
2,381 
 
Options vested and expected to vest at end of period
4,194 
 
Weighted-Average Exercise Price (usd per share)
 
 
Options, outstanding, weighted average exercise price, beginning of period
$ 4.28 
 
Granted
$ 11.15 
 
Canceled and forfeited
$ 8.16 
 
Exercised
$ 4.51 
 
Options, outstanding, weighted average exercise price, end of period
$ 6.47 
$ 4.28 
Options vested and exercisable, weighted average exercise price (usd per share)
$ 4.04 
 
Options vested and expected to vest, weighted average exercise price (usd per share)
$ 6.39 
 
Stock Options, Additional Disclosures
 
 
Options outstanding, weighted average remaining contractual term, beginning of period
7 years 2 months 
7 years 11 months 23 days 
Options outstanding, weighted average remaining contractual term, end of period
7 years 2 months 
7 years 11 months 23 days 
Options, outstanding, aggregate intrinsic value, beginning of period
$ 27,148 
 
Options, outstanding, aggregate intrinsic value, end of period
14,373 
27,148 
Options vested and exercisable at end of period, Weighted Average Remaining Contractual Term
6 years 90 days 
 
Options vested and expected to vest at end of period, Weighted Average Remaining Contractual Term
7 years 55 days 
 
Options vested and exercisable at end of period, Aggregate Intrinsic Value
11,194 
 
Options vested and expected to vest at end of period, Aggregate Intrinsic Value
$ 14,283 
 
Stock Option Plans and Stock-Based Compensation - Stock Options, Valuation Assumptions (Details)
12 Months Ended
Dec. 27, 2014
Dec. 28, 2013
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
 
 
Risk-free interest rate, minimum
1.81% 
1.23% 
Expected term (years)
6 years 90 days 
6 years 90 days 
Risk-free interest rate, maximum
1.95% 
2.00% 
Volatility, minimum
47.10% 
 
Volatility, maximum
56.30% 
 
Volatility
 
44.60% 
Expected dividend yield
0.00% 
0.00% 
Stock Option Plans and Stock-Based Compensation - Summary of Stock-based Compensation in Accompanying Consolidated Statements (Details) (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Dec. 27, 2014
Dec. 28, 2013
Dec. 31, 2012
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
 
 
 
Stock-based compensation
$ 5,805 
$ 1,862 
$ 1,952 
Cost of revenue
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
 
 
 
Stock-based compensation
183 
161 
159 
Selling and marketing
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
 
 
 
Stock-based compensation
763 
348 
369 
Research and development
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
 
 
 
Stock-based compensation
624 
356 
213 
General and administrative
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
 
 
 
Stock-based compensation
$ 4,235 
$ 997 
$ 1,211 
Stock Option Plans and Stock-Based Compensation - Additional Information (Details) (USD $)
12 Months Ended 0 Months Ended 0 Months Ended 0 Months Ended 12 Months Ended
Dec. 27, 2014
Dec. 27, 2014
Citrus Lane Inc
Dec. 27, 2014
Employee Stock Option
Nov. 15, 2006
2006 plan
Employee Stock Option
Nov. 15, 2006
2006 plan
Employee Stock Option
Share-based Compensation Award, Tranche One
Nov. 15, 2006
2006 plan
Employee Stock Option
Share-based Compensation Award, Tranche Two
Dec. 27, 2014
2014 Plan
Jan. 23, 2014
2014 Plan
Jan. 23, 2014
2014 Plan
Employee Stock Option
Dec. 27, 2014
2014 Plan
Employee Stock Option
Maximum
Jan. 23, 2014
2014 Plan
Employee Stock Option
Share-based Compensation Award, Tranche One
Jan. 23, 2014
2014 Plan
Employee Stock Option
Share-based Compensation Award, Tranche Two
Jan. 29, 2014
Chief Executive Officer
2006 plan
Employee Stock Option
Dec. 27, 2014
Chief Executive Officer
2006 plan
Employee Stock Option
Dec. 28, 2013
Chief Executive Officer
2006 plan
Employee Stock Option
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Common stock issued under Plan
 
 
 
4,567,500 
 
 
 
4,112,048 
 
5,002,935 
 
 
 
 
 
Award vesting period
 
 
 
4 years 
 
 
 
 
4 years 
 
1 year 
3 years 
 
 
 
Award vesting rights, percentage
 
 
 
 
25.00% 
75.00% 
 
 
 
 
25.00% 
75.00% 
 
 
 
Award requisite service period
 
 
 
 
1 year 
3 years 
 
 
 
 
 
 
 
 
 
Payment Award, Expiration Period
 
 
 
10 years 
 
 
 
 
10 years 
 
 
 
 
 
 
Granted
1,554,000 
 
 
 
 
 
 
 
 
 
 
 
150,000 
 
 
Share-based Compensation
 
 
 
 
 
 
 
 
 
 
 
 
 
$ 0 
$ 200,000 
Common stock outstanding, converted basis, percentage
 
 
 
 
 
 
 
 
4.00% 
 
 
 
 
 
 
Share Price
$ 8.33 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Intrinsic value of options exercised
1,600,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted-average grant-date fair value weighted average grant date fair value
$ 7.83 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The aggregate fair value of the options vested
3,700,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Unrecognized compensation cost
 
 
9,100,000 
 
 
 
 
 
 
 
 
 
 
 
 
Unrecognized compensation cost, period for recognition
 
 
2 years 6 months 0 days 
 
 
 
 
 
 
 
 
 
 
 
 
Shares available for grant
 
 
 
 
 
 
3,061,898 
 
 
 
 
 
 
 
 
Share-based compensation expense, acceleration of vesting
 
$ 1,400,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Loss Per Share - Calculation of Basic and Diluted Net Loss Per Share (Details) (USD $)
In Thousands, except Per Share data, unless otherwise specified
3 Months Ended 12 Months Ended
Dec. 27, 2014
Sep. 27, 2014
Jun. 28, 2014
Mar. 29, 2014
Dec. 28, 2013
Sep. 28, 2013
Jun. 30, 2013
Mar. 31, 2013
Dec. 27, 2014
Dec. 28, 2013
Dec. 31, 2012
Earnings Per Share [Abstract]
 
 
 
 
 
 
 
 
 
 
 
Net loss
$ (40,420)
$ (14,453)
$ (9,875)
$ (15,544)
$ (3,631)
$ (11,732)
$ (6,114)
$ (6,819)
$ (80,292)
$ (28,296)
$ (20,420)
Accretion of preferred stock
 
 
 
 
 
 
 
 
(4)
(57)
(48)
Net loss attributable to common stockholders
$ (40,420)
$ (14,453)
$ (9,875)
$ (15,548)
$ (3,646)
$ (11,746)
$ (6,128)
$ (6,833)
$ (80,296)
$ (28,353)
$ (20,468)
Net loss per share attributable to common stockholders:
 
 
 
 
 
 
 
 
 
 
 
Basic and diluted (in dollars per share)
$ (1.28)
$ (0.46)
$ (0.32)
$ (0.71)
$ (1.16)
$ (3.86)
$ (2.08)
$ (2.35)
$ (2.77)
$ (9.45)
$ (7.97)
Weighted-average shares used to compute net loss per share attributable to common stockholders:
 
 
 
 
 
 
 
 
 
 
 
Basic and diluted (in shares)
 
 
 
 
 
 
 
 
28,941 
3,000 
2,568 
Net Loss Per Share - Antidilutive Securities (Details)
In Thousands, unless otherwise specified
12 Months Ended
Dec. 27, 2014
Dec. 28, 2013
Dec. 31, 2012
Redeemable convertible preferred stock
 
 
 
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
 
 
 
Antidilutive securities (shares)
0 
21,299 
21,299 
Stock options
 
 
 
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
 
 
 
Antidilutive securities (shares)
4,270 
3,439 
2,706 
Preferred stock warrants |
Preferred Stock
 
 
 
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
 
 
 
Antidilutive securities (shares)
0 
41 
41 
Preferred stock warrants |
Common Stock
 
 
 
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
 
 
 
Antidilutive securities (shares)
0 
40 
40 
Income Taxes - Additional Information (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 27, 2014
Dec. 28, 2013
Operating Loss Carryforwards [Line Items]
 
 
Valuation allowance
$ 46.6 
$ 27.2 
Increase in overall valuation allowance
19.4 
 
Federal
 
 
Operating Loss Carryforwards [Line Items]
 
 
Operating loss carryforwards
98.0 
 
Excess tax benefits from the exercises of stock compensation
0.6 
 
State
 
 
Operating Loss Carryforwards [Line Items]
 
 
Operating loss carryforwards
76.8 
 
Excess tax benefits from the exercises of stock compensation
0.5 
 
GERMANY
 
 
Operating Loss Carryforwards [Line Items]
 
 
Operating loss carryforwards
8.2 
 
UNITED KINGDOM
 
 
Operating Loss Carryforwards [Line Items]
 
 
Operating loss carryforwards
3.5 
 
AUSTRALIA
 
 
Operating Loss Carryforwards [Line Items]
 
 
Operating loss carryforwards
0.3 
 
CANADA
 
 
Operating Loss Carryforwards [Line Items]
 
 
Operating loss carryforwards
1.1 
 
Citrus Lane Inc
 
 
Operating Loss Carryforwards [Line Items]
 
 
Increase in income tax benefit
$ 1.9 
 
Income Taxes - Schedule of Income before Income Tax, Domestic and Foreign (Details) (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Dec. 27, 2014
Dec. 28, 2013
Dec. 31, 2012
Income (Loss) from Continuing Operations before Equity Method Investments, Income Taxes, Extraordinary Items, Noncontrolling Interest [Abstract]
 
 
 
United States
$ (75,463)
$ (22,182)
$ (16,656)
Foreign
(5,581)
(5,760)
(4,081)
Loss before income taxes
$ (81,044)
$ (27,942)
$ (20,737)
Income Taxes - Components of Income Tax Expense (Benefit) (Details) (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Dec. 27, 2014
Dec. 28, 2013
Dec. 31, 2012
Current:
 
 
 
Federal
$ 0 
$ 0 
$ 0 
State
108 
70 
28 
Foreign
33 
0 
0 
Total current provision for income taxes
141 
70 
28 
Deferred:
 
 
 
Federal
(757)
626 
374 
State
(136)
49 
63 
Foreign
0 
(391)
(782)
Total deferred tax (benefit) provision
(893)
284 
(345)
Total (benefit from) provision for income taxes
$ (752)
$ 354 
$ (317)
Income Taxes - Reconciliation of the Statutory Federal Rate and Effective Tax Rate (Details)
12 Months Ended
Dec. 27, 2014
Dec. 28, 2013
Dec. 31, 2012
Income Tax Disclosure [Abstract]
 
 
 
U.S. federal taxes at statutory rate
34.00% 
34.00% 
34.00% 
State income taxes, net of federal benefit
0.00% 
2.00% 
3.00% 
Permanent differences
(2.00%)
(3.00%)
(4.00%)
Impairment of goodwill and intangible assets
(14.00%)
0.00% 
0.00% 
Foreign rate differential
0.00% 
(1.00%)
(1.00%)
Change in valuation allowance - U.S.
(15.00%)
(28.00%)
(31.00%)
Change in valuation allowance - foreign
(2.00%)
(5.00%)
(2.00%)
Rate change
0.00% 
0.00% 
3.00% 
Total
1.00% 
(1.00%)
2.00% 
Income Taxes - Significant Components of Deferred Tax Assets and Liabilities (Details) (USD $)
In Thousands, unless otherwise specified
Dec. 27, 2014
Dec. 28, 2013
Deferred tax assets
 
 
Net operating loss carryforwards
$ 40,790 
$ 25,307 
Fixed assets
0 
76 
Accrued expenses
1,696 
28 
Stock-based compensation
1,618 
140 
U.S. definite lived intangibles
3,538 
1,609 
Other temporary differences
33 
475 
Total deferred tax assets
47,675 
27,635 
Valuation allowance
(46,619)
(27,215)
Net deferred tax assets
1,056 
420 
Deferred tax liabilities
 
 
Foreign intangibles
(224)
(386)
U.S. goodwill
(2,072)
(1,112)
Fixed assets
(832)
0 
Other
0 
(34)
Total deferred tax liabilities
(3,128)
(1,532)
Net deferred tax liabilities
$ (2,072)
$ (1,112)
Segment and Geographical Information - Revenue by Product Lines (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 12 Months Ended
Dec. 27, 2014
Sep. 27, 2014
Jun. 28, 2014
Mar. 29, 2014
Dec. 28, 2013
Sep. 28, 2013
Jun. 30, 2013
Mar. 31, 2013
Dec. 27, 2014
Dec. 28, 2013
Dec. 31, 2012
Revenue from External Customer [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Total revenue
$ 33,552 
$ 32,054 
$ 25,836 
$ 25,271 
$ 22,511 
$ 21,681 
$ 19,133 
$ 18,162 
$ 116,713 
$ 81,487 
$ 48,493 
Consumer matching
 
 
 
 
 
 
 
 
 
 
 
Revenue from External Customer [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Total revenue
 
 
 
 
 
 
 
 
82,031 
61,645 
41,409 
Consumer payments
 
 
 
 
 
 
 
 
 
 
 
Revenue from External Customer [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Total revenue
 
 
 
 
 
 
 
 
14,493 
10,770 
3,133 
Merchandise
 
 
 
 
 
 
 
 
 
 
 
Revenue from External Customer [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Total revenue
 
 
 
 
 
 
 
 
6,001 
0 
0 
Other
 
 
 
 
 
 
 
 
 
 
 
Revenue from External Customer [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Total revenue
 
 
 
 
 
 
 
 
$ 14,188 
$ 9,072 
$ 3,951 
Segment and Geographical Information - Revenue by Geographic Location (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 12 Months Ended
Dec. 27, 2014
Sep. 27, 2014
Jun. 28, 2014
Mar. 29, 2014
Dec. 28, 2013
Sep. 28, 2013
Jun. 30, 2013
Mar. 31, 2013
Dec. 27, 2014
Dec. 28, 2013
Dec. 31, 2012
Segment Reporting Information [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Total revenue
$ 33,552 
$ 32,054 
$ 25,836 
$ 25,271 
$ 22,511 
$ 21,681 
$ 19,133 
$ 18,162 
$ 116,713 
$ 81,487 
$ 48,493 
Geographic Concentration |
Revenue
 
 
 
 
 
 
 
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Percentage of total revenue
 
 
 
 
 
 
 
 
100.00% 
100.00% 
100.00% 
United States
 
 
 
 
 
 
 
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Total revenue
 
 
 
 
 
 
 
 
108,048 
74,800 
45,514 
United States |
Geographic Concentration |
Revenue
 
 
 
 
 
 
 
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Percentage of total revenue
 
 
 
 
 
 
 
 
93.00% 
92.00% 
94.00% 
International
 
 
 
 
 
 
 
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Total revenue
 
 
 
 
 
 
 
 
$ 8,665 
$ 6,687 
$ 2,979 
International |
Geographic Concentration |
Revenue
 
 
 
 
 
 
 
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Percentage of total revenue
 
 
 
 
 
 
 
 
7.00% 
8.00% 
6.00% 
Segment and Geographical Information - Additional Information (Details)
12 Months Ended
Dec. 27, 2014
Segment
Dec. 28, 2013
Segment
Dec. 31, 2012
Segment
Segment Reporting [Abstract]
 
 
 
Number of operating segments
1 
1 
1 
Number of reportable segments
1 
1 
1 
Related Party Transactions (Details) (USAA Alliance, USD $)
12 Months Ended
Dec. 27, 2014
USAA Alliance
 
Related Party Transaction [Line Items]
 
Commissions paid (less than)
$ 100,000 
Other Expense, Net (Details) (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Dec. 27, 2014
Dec. 28, 2013
Dec. 31, 2012
Other Income and Expenses [Abstract]
 
 
 
Interest income
$ 86 
$ 47 
$ 48 
Interest expense
(43)
(17)
(3)
Other expense, net
(3,899)
(321)
(92)
Total other expense, net
$ (3,856)
$ (291)
$ (47)
Quarterly Financial Information (Unaudited) - Additional Information (Details) (USD $)
In Thousands, except Per Share data, unless otherwise specified
3 Months Ended 12 Months Ended
Dec. 27, 2014
Sep. 27, 2014
Jun. 28, 2014
Mar. 29, 2014
Dec. 28, 2013
Sep. 28, 2013
Jun. 30, 2013
Mar. 31, 2013
Dec. 27, 2014
Dec. 28, 2013
Dec. 31, 2012
Quarterly Financial Information Disclosure [Abstract]
 
 
 
 
 
 
 
 
 
 
 
Total revenue
$ 33,552 
$ 32,054 
$ 25,836 
$ 25,271 
$ 22,511 
$ 21,681 
$ 19,133 
$ 18,162 
$ 116,713 
$ 81,487 
$ 48,493 
Cost of revenue
9,729 
9,132 
5,713 
5,771 
4,852 
5,158 
4,607 
4,227 
30,345 
18,844 
10,210 
Operating loss
(40,255)
(14,987)
(9,633)
(12,313)
(3,891)
(11,469)
(5,906)
(6,385)
(77,188)
(27,651)
(20,690)
Net loss
(40,420)
(14,453)
(9,875)
(15,544)
(3,631)
(11,732)
(6,114)
(6,819)
(80,292)
(28,296)
(20,420)
Net loss attributable to common stockholders
$ (40,420)
$ (14,453)
$ (9,875)
$ (15,548)
$ (3,646)
$ (11,746)
$ (6,128)
$ (6,833)
$ (80,296)
$ (28,353)
$ (20,468)
Basic and diluted (in dollars per share)
$ (1.28)
$ (0.46)
$ (0.32)
$ (0.71)
$ (1.16)
$ (3.86)
$ (2.08)
$ (2.35)
$ (2.77)
$ (9.45)
$ (7.97)