Contact: Scott Denne
Care.com expands into commerce with the $31m pickup of Citrus Lane, a gambit that’s meant to decrease the company’s reliance on a subscription service that’s increasingly expensive to fill with new members. Care.com’s service – a website that matches families with babysitters and other caregivers – has grown substantially in terms of memberships and revenue (up 40% YoY last quarter), but the amount of money the company spends on marketing to sustain that momentum is expanding faster.
In its last quarter, Care.com spent $20.5m on sales and marketing, or 81% of revenue, up from 71% a year ago, while the average paid membership lasts seven months. Adding a parenting-focused commerce company to its platform could leverage that marketing spending through new kinds of revenue from people who visit the website. Also, Citrus Lane sells monthly subscriptions for parenting gift boxes – adding that to its own subscription service could entice parents to stick with Care.com longer than seven months.
The deal resembles Care.com’s previous acquisition, the $45m reach for Breedlove & Associates, which added a payment-processing service to its platform. We expect Care.com to continue looking for businesses that it can stitch into its matching service. A parenting content play would be a powerful combination, as it would not only add revenue via advertising and lead-generation services, but could also help defray the expense of getting parents to the website in the first place.
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