v3.10.0.1

Revenue | 9 Months Ended
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Sep. 29, 2018
Revenue from Contract with Customer [Abstract] |
Revenue | Revenue On December 31, 2017, we adopted Topic 606 using the modified retrospective method applied to those contracts that were not completed as of December 31, 2017. Results for reporting periods beginning after December 31, 2017 are presented under Topic 606, while prior period amounts are not adjusted and continue to be reported in accordance with our historic accounting under Topic 605. We recorded a net decrease to opening accumulated deficit of $0.1 million, net of tax, as of December 31, 2017 due to the cumulative impact of adopting Topic 606, with the impact primarily related to the capitalization of costs for commissions within our business-to-business solutions offering and a portion of revenue recognition for a specific performance obligation within our payment solutions offering. Below is a summary of the amount by which each financial statement line item was affected in the current reporting period by the adoption of Topic 606 as compared with the guidance that was in effect before the change (in thousands):
| ASC 605 |  | ASC 606 Adjustment |  | ASC 606
| September 29, 2018 |  |  |  | September 29, 2018
Assets |  |  |  |  |
Other non-current assets | 2,127 |  |  | 890 |  |  | 3,017 |
Total assets | $ | 217,537 |  |  | $ | 890 |  |  | $ | 218,427 |
Liabilities, redeemable convertible preferred stock, and stockholders' equity |  |  |  |  |
Current liabilities: |  |  |  |  |
Deferred revenue | 21,819 |  |  | 312 |  |  | 22,131 |
Total current liabilities | 48,036 |  |  | 312 |  |  | 48,348 |
Other non-current liabilities | 6,308 |  |  | 254 |  |  | 6,562 |
Total liabilities | 56,135 |  |  | 566 |  |  | 56,701 |
Stockholders' equity |  |  |  |  |
Accumulated deficit | (172,956 | ) |  | 324 |  |  | (172,632 | )
Total stockholders' equity | 109,080 |  |  | 324 |  |  | 109,404 |
Total liabilities, redeemable convertible preferred stock and stockholders' equity | $ | 217,537 |  |  | $ | 890 |  |  | $ | 218,427 |
| ASC 605 |  | ASC 606 Adjustment |  | ASC 606 |  | ASC 605 |  | ASC 606 Adjustment |  | ASC 606
| Three Months Ended |  |  |  | Three Months Ended |  | Nine Months Ended |  |  |  | Nine Months Ended
| September 29, 2018 |  |  |  | September 29, 2018 |  | September 29, 2018 |  |  |  | September 29, 2018
Revenue | $ | 49,304 |  |  | $ | 144 |  |  | $ | 49,160 |  |  | $ | 142,898 |  |  | $ | 447 |  |  | $ | 142,451 |
Operating expenses: |  |  |  |  |  |  |  |  |  |  |
Selling and marketing | 16,698 |  |  | 259 |  |  | 16,439 |  |  | 49,835 |  |  | 638 |  |  | 49,197 |
Total operating expenses | 37,050 |  |  | 259 |  |  | 36,791 |  |  | 110,335 |  |  | 638 |  |  | 109,697 |
Operating income | 722 |  |  | (115 | ) |  | 837 |  |  | 1,765 |  |  | (191 | ) |  | 1,956 |
Income before income taxes | 760 |  |  | (115 | ) |  | 875 |  |  | 1,597 |  |  | (191 | ) |  | 1,788 |
Net income | $ | 1,737 |  |  | $ | (115 | ) |  | $ | 1,852 |  |  | $ | 4,189 |  |  | $ | (191 | ) |  | $ | 4,380 |
Consumer Matching Solutions Nature of Service Our consumer matching solutions offering allows families to purchase a subscription to the Care.com platform to search for, connect with, qualify, vet and ultimately select caregivers. Additionally, families may purchase ancillary services through the Care.com platform that are delivered at a point-in-time. We also provide caregivers with solutions to create personal profiles and describe their unique skills and experience on the Care.com platform. Performance Obligations and Timing of Satisfaction We typically satisfy performance obligations as services are rendered over the subscription period. Additionally, for ancillary services with a specific performance obligation satisfied at a point-in-time, we typically satisfy performance obligations upon delivery to the customer. Timing of Payments and Satisfaction of Performance Obligations Customers typically pay up-front for our subscription services. Given this up-front payment, and given that the subscription service is provided to the customer over a period-of-time, we recognize a contract liability in the form of deferred revenue, which is then recognized to revenue ratably over the subscription term as the services are provided. In addition, payments for ancillary services are typically due upon delivery of the service to the customer, and revenue is recognized at a point-in-time. Transaction Price Typically, each service offered through our consumer matching solution has only a single performance obligation. In the instances where there is more than one performance obligation, the allocation of the transaction price does not materially affect our revenue recognition, as generally these performance obligations are satisfied over the same term of the subscription or qualify to be accounted for as a series of services that are substantially the same and that have the same pattern of transfer. This offering also includes a variable consideration component in the form of potential future refunds. As such, the transaction price is the subscription fee less the actual and estimated refunds, which accounts for the variability in the transaction price. This estimate is based on the expected value method, which uses our historical refunds to estimate reserves for refunds. Amounts related to chargebacks are recorded to bad debt expense for the portion of the service that has been rendered. Payment Solutions Nature of Service Our payment solutions offering provides families several options to manage their financial relationships with their caregivers, primarily through a subscription to payroll processing and tax preparation services for nannies, housekeepers, or other household employees. Performance Obligations and Timing of Satisfaction We typically satisfy performance obligations ratably over-time, as quarterly payroll and subsequent tax filing services are rendered. Additionally, we satisfy performance obligations related to the year-end tax filing services at a point-in-time when the service is fulfilled. Timing of Payments and Satisfaction of Performance Obligations Subscribers are billed quarterly in arrears at the beginning of the subsequent calendar quarter to which the quarterly payroll and subsequent tax filing services related, resulting in an unbilled receivable being recorded. For year-end tax filing services, subscribers are billed at the beginning of the following calendar year to which the year-end tax filing service related. Revenue is recognized ratably as the quarterly payroll services are rendered, or when the year-end tax filing services are fulfilled, which is at a point-in-time. Transaction Price The transaction price for this revenue stream is the stated contract price for the service purchased. For the majority of these contracts, there is one performance obligation with no variable consideration, and as such, there is no need to allocate the transaction price or estimate a transaction price. The amounts charged for registration and reactivation are non-refundable upfront fees, which were determined to be a material right towards future services renewal discounts, and as such, revenue associated with this is recognized over the expected benefit period, which is the estimated customer life of 2.5 years. Business-to-Business Nature of Service Our business-to-business solutions includes two primary offerings. First, our Care@Work offering provides a comprehensive suite of services that employers can offer their employees as an employee benefit. Key examples include the following:
• | Consumer matching solutions (i.e., access to the Care.com platform)
• | On-demand back-up care services for employees needing alternative care arrangements for their child or senior;
• | Senior care planning services; and,
• | Consumer payment solution services.
Second, our recruiting and marketing solutions offering, which serves care-related businesses - such as day care centers, nanny agencies and home care agencies - that wish to market their services to Care.com’s care-seeking families and recruit Care.com’s caregiver members. Performance Obligations and Timing of Satisfaction For the Care@Work offering, we typically use a straight-line approach to recognize revenue because we provide a stand-ready service that enables access to our platform over the contract term. Additionally, for contracts with a specific point-in-time performance obligation, we typically satisfy the performance obligation upon delivery to the customer. For our recruiting and marketing solutions offering, we typically use a straight-line approach to recognize revenue because we typically satisfy performance obligations as services are rendered over the contract term. Additionally, for contracts with a specific point-time performance obligation, we typically satisfy the performance obligation upon delivery to the customer. Timing of Payments and Satisfaction of Performance Obligations Payments are due in accordance with the contractual terms of the contract. For the majority of contracts, payment is typically received in advance of services being rendered, resulting in deferred revenue. Deferred revenue is typically recognized ratably over the contract term, or in the instances that the performance obligation is completed at a specific point-in-time, we typically recognize revenue when the performance obligation is delivered to the customer. Additionally, there are instances in which we have met revenue recognition criteria in advance of billing schedules, which results in an unbilled receivable. Transaction Price For our Care@Work offering, typically there is more than one performance obligation. In the majority of instances where there is more than one performance obligation, the allocation of the transaction price does not materially affect our revenue recognition, as generally these performance obligations are satisfied over the same term of the subscription or qualify to be accounted for as a series of services that are substantially the same and that have the same pattern of transfer. For on-demand back-up care services, including the employee co-pay portion of the service, there is variable consideration associated with customer overages of back-up care usage. We have determined that this variable consideration is constrained, meaning that we cannot estimate the total consideration that we will earn for back-up care overage. The decision to constrain the variability associated with customer overages of back-up care day usage is based on two considerations: (1) our history of back-up care overages is of limited predictive value for future overages given that customers do not historically have the same trends in their usage of back-up care days, and; (2) the variability is not within our control. The constraint is resolved when the back-up care overage occurs. For the majority of our recruiting and marking solutions contracts, there is one performance obligation. This offering also includes a variable consideration component in the form of potential future refunds. As such, the transaction price for these contracts is the subscription fee less the actual and estimated refunds, which accounts for the variability in the transaction price. This is based on the expected value method, which uses our historical refunds to estimate reserves for refunds. Amounts related to chargebacks are recorded to bad debt expense for the portion of the service that has been rendered. Revenue Recognition Revenue is recognized when control of the promised service is transferred to the customer, in an amount that reflects the consideration we expect to be entitled to in exchange for the service. For all presentations below sales and usage-based taxes are excluded from revenue. The following table presents our revenue disaggregated by major service lines for the three and nine months ended September 29, 2018 (in thousands):
| Three Months Ended |  |  | Nine Months Ended
| September 29, 2018 |  | September 29, 2018
Business-to-Consumer |  |  |
Matching Solutions | $ | 36,814 |  |  | $ | 103,965 |
Payment Solutions | 6,058 |  |  | 20,488 |
Business-to-Business |  |  |
Care@Work Solutions | 4,367 |  |  | 12,468 |
Recruiting and Marketing Solutions and other | 1,921 |  |  | 5,530 |
Total revenue | $ | 49,160 |  |  | $ | 142,451 |
The following table presents our revenue disaggregated by timing of transfer of services for the three and nine months ended September 29, 2018 (in thousands):
| Three Months Ended |  |  | Nine Months Ended
| September 29, 2018 |  | September 29, 2018
Over-time | 44,955 |  |  | 129,137 |
Point-in-time | 4,205 |  |  | 13,314 |
Total revenue | $ | 49,160 |  |  | $ | 142,451 |
Contract Balances The increase in the deferred revenue balance for the nine months ended September 29, 2018 was primary driven by cash payments received for our obligation to perform future services during fiscal 2018, offset by $17.6 million of revenue recognized that was included in the deferred revenue balance as of December 30, 2017. Transaction Price Allocated to the Remaining Performance Obligations For performance obligations that are part of contracts that have an original expected duration of greater than one year, we expect to recognize $0.3 million and $0.3 million of revenue related to our Care@Work offering in the remainder of fiscals 2018 and 2019, related to performance obligations that are currently unsatisfied (or partially satisfied) as of September 29, 2018. This disclosure does not include revenue related to performance obligations that are part of a contract whose original expected duration is one year or less. Our matching solutions offering consists of subscription terms whose duration is one year or less, and the service period for our payment solutions revenue is one year or less. Additionally, most of our business-to-business contracts are for durations of one year or less. Furthermore, this disclosure does not include expected consideration related to performance obligations for which we elect to recognize revenue in the amount we have a right to invoice (e.g., usage-based pricing terms). Contract Costs We capitalize sales commissions for new customer contracts in our business-to-business solutions offerings. Capitalized commission are amortized over the period of expected benefit, which is the customer life and is estimated to be approximately 5-years. As of September 29, 2018, capitalized commissions are $0.9 million. For the three and nine months ended September 29, 2018, amortized commission expense was $22.0 thousand and $61.0 thousand, respectively. For renewal commissions with a renewal term of one-year of less, we applied the practical expedient and expense commission when incurred because the amortization period would have been one-year or less. These costs are recorded within sales and marketing expense.

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- Definition The entire disclosure of revenue from contract with customer to transfer good or service and to transfer nonfinancial asset. Includes, but is not limited to, disaggregation of revenue, credit loss recognized from contract with customer, judgment and change in judgment related to contract with customer, and asset recognized from cost incurred to obtain or fulfill contract with customer. Excludes insurance and lease contracts. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -URI http://asc.fasb.org/topic&trid=49130388 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -URI http://asc.fasb.org/topic&trid=2122369 + Details
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