Shares dropped 18% following a cautious outlook and lack of meaningful upside in Back-Up Care margins, which tempered enthusiasm despite solid revenue growth. Investors reacted negatively to signs of margin pressure and cautious commentary on long-term growth execution.

• Revenue grew 7% overall in Q1 2026, with Back-Up Care revenue rising 12.5% to $145 million, reflecting continued user expansion.
• Adjusted operating margins in Back-Up Care held at 18%, showing no margin expansion despite revenue growth, signaling margin compression risk.
• Management emphasized a long-term growth strategy focused on deepening client penetration and expanding services rather than near-term earnings acceleration.
• Penetration rates remain low (under 5% user penetration), indicating growth potential but also a need for significant execution to convert opportunities.
• The commentary highlighted ongoing investments in integration and technology platforms, suggesting near-term costs may constrain margin improvement.