| Summary of Accounting Policies | Summary of 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. Fiscal 2016 had 53 weeks. Accordingly, our fiscal quarters end on the Saturday that falls closest to the last day of the third month of each quarter. Discontinued Operations To be reported within discontinued operations, we must dispose of a component or a group of components that represents a strategic shift which will have a major effect on our operations and financial results. We aggregate the results of operations for discontinued operations within a single line item on the income statement. General corporate overhead is not allocated to discontinued operations. We disclose any gain or loss that is recognized upon the disposition of a discontinued operation. During the fourth quarter of fiscal 2015, we made the decision to shut down the Citrus Lane business and had substantially completed our plans for ceasing the operation of the business. We completed the plans to cease operation of the business in the fourth quarter of 2016. This represented a strategic shift that will have a major effect on our operations and financial results. As such, financial results of Citrus Lane have been presented as net income (loss) from discontinued operations on the consolidated statements of operations for the years ended December 30, 2017 , December 31, 2016 and December 26, 2015 . As of December 30, 2017 and December 31, 2016 , we did not have any assets or liabilities from discontinued operations (see Note 3, “Discontinued Operations”). 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, fair value of stock-based awards, goodwill, income taxes, restructuring liabilities, 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. Other service revenues are recognized as the services are performed. Taxes that are collected from customers and remitted to government authorities are presented on a net basis and are excluded from revenue. We recognize revenue net of a reserve for refunds based on our actual refund history. During fiscal 2017 , fiscal 2016 , and fiscal 2015 , we recorded $7.0 million , $6.1 million , and $5.6 million in refunds to customers. As it relates to our Citrus Lane business, which is presented within discontinued operations, for product sales, these criteria are deemed to have been met when the items are delivered to the end customer. Shipping and handling charges are included in revenue on a gross basis. 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 the 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. While we have multiple elements in these arrangements, the recognition of the majority of these elements follows a consistent ratable recognition given the pattern over which services are provided. 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. Accounts Receivable and Allowance for Doubtful Account Accounts receivable primarily represent the net cash due from the Company’s payment processors for cleared transactions and amounts owed from corporate customers. Accounts receivable are carried at the original invoiced amount less an allowance for doubtful accounts based on the probability of future collection. When management becomes aware of circumstances that may decrease the likelihood of collection, it records a specific allowance against amounts due. The allowance is recorded through a charge to bad-debt expense which is recognized within general and administrative expense in the consolidated statements of operations. The amounts charged also include expenses for uncollected credit card receivables (or “chargebacks”). The following is a roll forward of the Company’s allowance for doubtful accounts (in thousands): Balance Beginning of Period Charged to Statement of Operations Deductions (1) Balance at End of Period Allowance for Doubtful Accounts Year ended December 30, 2017 $ 163 $ 1,001 $ (1,062 ) $ 102 Year ended December 31, 2016 $ 125 $ 1,387 $ (1,349 ) $ 163 Year ended December 26, 2015 $ — $ 991 $ (866 ) $ 125 (1) Deductions include actual accounts written-off, net of recoveries. 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. Additionally, there are instances in which we have met revenue recognition criteria in advance of billing schedules for our Care Work employer solutions customers. 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, the cost of background checks run on both families and caregivers, and back-up care costs related to our Care Work contracts. 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. As it relates to our Citrus Lane business, which is presented within discontinued operations, we have product fulfillment costs, largely consisting of product, shipping and costs associated with our third-party fulfillment providers. Concentrations of Credit Risk Financial instruments, which potentially subject us to concentrations of credit risk, consist primarily of cash and cash equivalents, short-term investments, and accounts receivable. We place our cash and cash equivalents and short-term investments 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 30, 2017 and December 31, 2016 , substantially all of our cash, cash equivalents, and short-term investments had been invested in money market funds and certificates of deposit. Credit risk with respect to accounts receivable is dispersed due to the large number of customers. During the year ended December 30, 2017 , one customer accounted for more than 15% of total accounts receivable and no customer accounted for more than 10% of revenue or unbilled accounts receivable. During the year ended December 31, 2016 , one customer accounted for more than 14% of total unbilled accounts receivable and no customer accounted for more than 10% of revenue or accounts receivable. 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 income (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 30, 2017 , we recorded foreign currency transaction gains of approximately $1.8 million , and losses of $1.3 million and $1.3 million in the years ended December 31, 2016 and December 26, 2015 , respectively, which is 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 30, 2017 and December 31, 2016 , cash equivalents consisted of money market funds. Investments Investments consist of certificates of deposit (“CDs”). CDs having remaining maturities of more than three months at the date of purchase and less than one year from the date of the balance sheet are classified as short-term. We classify our CDs with readily determinable market values as available-for-sale. The CDs are classified as short-term investments on the consolidated balance sheets and are carried at fair market value, with unrealized gains and losses considered to be temporary in nature reported as accumulated other comprehensive income (loss), a separate component of stockholders’ equity. We review all investments for reductions in fair value that are other-than-temporary. When such reductions occur, the cost of the investment is adjusted to fair value through recording a loss on investments in the consolidated statements of operations. Gains and losses on investments are calculated on the basis of specific identification. Recurring Fair Value Measurements 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. Short-term Investments - Short-term investments include certificates of deposit with original maturities of six 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. The following table presents information about our assets and liabilities, measured at fair value on a recurring basis as of December 30, 2017 and December 31, 2016 and indicates the fair value hierarchy of the valuation techniques we utilized to determine such fair value (in thousands): December 30, 2017 December 31, 2016 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 $ 17,810 $ — $ — $ 17,810 $ 17,637 $ — $ — $ 17,637 Certificates of deposit 17,282 — — 17,282 17,377 — — 17,377 Total assets $ 35,092 $ — $ — $ 35,092 $ 35,014 $ — $ — $ 35,014 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, restructuring liabilities, intangible assets and goodwill. No remeasurement of long-lived assets occurred as of December 30, 2017 or December 31, 2016 . 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. In the quarter ended September 30, 2017, we ceased use of 25,812 square feet of the Company’s headquarters facility and recorded a restructuring liability. Refer to Note 14. The restructuring liability charge of $2.6 million includes an estimate of the lease obligation charges associated with restructuring liabilities and deferred rent balances previously accrued. The estimate includes assumptions for the time period it will take to obtain a subtenant, construction costs, and certain sublease rates. These estimates may vary from the sublease agreements ultimately executed, if at all, and could result in an adjustment to the restructuring liability. The fair value of the restructuring liability was estimated by discounting future cash flows that were estimated using inputs for the assumptions listed above. The recorded restructuring accrual associated with this event is classified within Level 3 of the fair value hierarchy wherein fair value is estimated using significant unobservable inputs. The cash flows estimate of the restructuring liability has been discounted to reflect the time value of money, and therefore, these estimates may vary from the sublease agreements ultimately executed, if at all, and could result in changes to the estimated restructuring liability. The restructuring liability and any future changes in the estimate will be recorded in restructuring charges in the accompanying consolidated statements of operations. 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. We refer to this as the “Qualitative Screen.” 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 2016 we performed quantitative Step 1 tests for each reporting unit, and all reporting units passed the Step 1 test. None of the reporting units were identified as having a higher risk of impairment in 2016, and none would have failed the Step 1 test had the fair value of the reporting unit decreased by 10%. As a result of this fact, and combined with other positive developments in our business during 2017, the performance of each reporting unit against the forecasts used in the 2016 impairment test, and the increase in our stock price and market capitalization, we determined it would be appropriate to perform the Qualitative Screen for each of our reporting units in 2017 as a starting point for assessing whether an impairment of our goodwill exists. If after performing a Qualitative Screen impairment indicators are present, or we identify factors that cause us to believe it is appropriate to perform a more precise calculation of fair value, we would move beyond the Qualitative Screen to perform a quantitative impairment test. For any reporting unit for which we move beyond the Qualitative Screen, we utilize the two-step approach prescribed under Accounting Standards Codification, or ASC, 350, Intangibles - Goodwill and Other . 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 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 2017 annual impairment test as of October 1, 2017 (the first day of our fourth fiscal quarter). As a result of the Qualitative Screen, we did not identify any indicators of impairment in any of our reporting units; however, for one of our reporting units we performed a quantitative Step 1 test given that in the prior year the excess of the fair value of the reporting unit was less than the other reporting units. For this reporting unit we utilized DCF approach to estimate fair value for 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. There was no impairment of goodwill as a result of the annual impairment tests completed during the fourth quarters of 2017 and 2016. Based on our impairment review in the fourth quarter of 2017, we do not consider any of our reporting units to be at risk of impairment. During the second half of fiscal 2015 we made the decision to exit the Citrus Lane business through either a sale or wind-down. As a result of this decision, we determined that indicators of impairment existed in our Citrus Lane business. The fair value of the business 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. As a result of this analysis and our decision during the second half of 2015 to exit the business, we recorded a goodwill impairment loss of $8.0 million within discontinued operations. Including the impairment loss recognized in 2015, we have recognized accumulated goodwill impairment losses to date with respect to the Citrus Lane business of $41.8 million . 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 year ended December 26, 2015, we recorded an impairment charge associated with certain capitalized software development costs of $0.1 million . We did not recognized any impairment losses during the year ended December 31, 2016 with respect to capitalized software. During the third quarter of fiscal 2015, we determined that we should consider the advisability of a sale or wind down of the Citrus Lane business. As a result of this determination, we concluded that indicators of impairment existed in the Citrus Lane business and began an analysis of whether any material impairment charges would be required. We completed step one of our goodwill impairment testing with the assistance of an independent valuation firm and determined that the fair value of this business was lower than its carrying value. As a result of this analysis and our decision during the fourth quarter of 2015 to exit the business, we recorded an intangible asset impairment of $1.7 million within loss from discontinued operations. Software Development Costs Internal and external software development costs associated with the development of software for internal use, including website development costs, are expensed to research and development during the preliminary project stage and capitalized during the application development stage. Costs incurred during the application development stage and capitalized totaled $0.4 million for the fiscal year ended December 26, 2015 . There were no such costs capitalized in the fiscal years ended December 30, 2017 and December 31, 2016 , as 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. 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 30, 2017 December 31, 2016 Computer equipment $ 2,926 $ 2,365 Furniture and fixtures 1,680 1,574 Software 1,241 1,373 Leasehold improvements 3,334 3,889 Total 9,181 9,201 Less accumulated depreciation (5,530 ) (4,254 ) Property and equipment, net $ 3,651 $ 4,947 Property and equipment are depreciated over the following estimated useful lives: Estimated Useful Life Computer equipment 3 - 5 years Leasehold improvements Lesser of asset life or lease term Furniture and fixtures 3 - 5 years Software 3 - 6 years Depreciation expense for the years ended December 30, 2017 , December 31, 2016 , and December 26, 2015 was $1.6 million , $1.6 million and $1.6 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. During the year ended December 30, 2017, we wrote-off $0.5 million of lease-hold improvements associated with the restructuring charge for our headquarters facility located in Waltham, Massachusetts. Please refer to Note 14 for further detail. We did not recognize any impairment losses during the year ended December 30, 2017 , December 31, 2016 , and December 26, 2015 with respect to property and equipment. Redeemable Convertible Preferred Stock We classify redeemable convertible preferred stock as temporary equity in the consolidated balance sheet due to certain contingent redemption clauses that are at the election of the holder. We will accrete the carrying value of the redeemable convertible preferred stock to the redemption value through June 20, 2023, which is the seventh anniversary of the Closing Date (June 29, 2016), at a rate of 5.50% per annum, which represents the cumulative dividends owed on the convertible preferred stock, using the interest rate method. We elected to accrete the carrying value of the redeemable convertible preferred stock on the issuance date to the redemption value as it relates to the issuance costs that were netted against the proceeds of issuance of the redeemable convertible preferred stock. Income (Loss) per Share Basic net income (loss) per share is computed by dividing net income (loss) attributable to common shareholders by the number of common shares outstanding during the period, including issued and outstanding participating securities on an as-converted basis. We apply the two-class method to calculate basic and diluted net income (loss) per share of common stock, as our Series A Redeemable Convertible Preferred Stock (Series A Preferred Stock) is a participating security. The two-class method is an earnings allocated formula that treats a participating security as having rights to earnings that otherwise would have been available to common stockholders. We compute diluted net income (loss) per common share using income (loss) from continuing operations as the “control number” in determining whether potential common shares are dilutive, after giving consideration to all potentially dilutive common shares, including stock options, unvested restricted stock outstanding during the period and potential issuance of stock upon the conversion of the our Series A Redeemable Convertible Preferred Stock issued and outstanding during the period, except where the effect of such securities would be antidilutive. Please refer to Note 8 for further detail. 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 lia |
