Life360 Q3 2024 Earnings Call Highlights

Life360 (ASX: 360) reported another strong quarter of revenue and monthly active user growth. But after a 210% year-to-date rally, the share price has pulled back sharply on Wednesday, down 3.7% in afternoon trade.

Q3 2024 Earnings Summary

• Total quarterly revenue up 18% to $92.9 million

• Annualised monthly revenue up 30% to $336.2 million

• Positive adjusted EBITDA of $9.0 million vs. a loss of $5.5 million in the prior period

• EBITDA loss of $2.6 million vs. loss of $4.2 million in the prior period

• Positive operating cash flow up 55% to $6.3 million

• Quarter-end cash position of $160.2 milion

• Global monthly active user net adds of 6.3 million, up 32% year-on-year to 76.9 million

Earnings Call Highlights

The below topics have been answered by CEO Chris Hulls and CFO Russell Burke.

Net Adds in Q3: “Our member base grew significantly expanding by 6.3 million new monthly active users this quarter to reach a total of 76.9 million, a 32% increase year over year and an acceleration over last quarter.”

US and International Market Performance: “This growth includes strong momentum in our paid offerings with a quarterly net increase of 159,000 paying circles…with a new record for quarterly net adds in the US at 111,000 … International expansion also played a major role … international MAUs up 51% year over year and international Paying Circles increasing by 37%.”

Q4 Subscription Trends: “We are raising our outlook for both adjusted EBITDA and EBITDA for 2024 … with positive EBITDA contribution expected in Q4 … We expect to be consistently EBITDA positive on a quarterly basis in 2025.”

New Tile Hardware Integration: “This quarter we launched our updated Tile device lineup…the first designed entirely in-house by Life360…featuring an SOS capability that turns every tile into a safety device … direct-to-consumer sales more than doubled in the six weeks following the launch compared to the same period last year.”

New Products (Pet Tracking and Elder Care): “We plan to begin with a pet tracking device potentially in late 2025, followed by an elder care product anticipated in 2026 … both products require subscription and target high-growth verticals.”

Advertising Revenue and Partnerships: “Our objective is to deliver contextually relevant ads that enhance the experience for our members … A key milestone this quarter was our partnership with Uber … users arriving at an airport receive a targeted Uber ride offer.”

M&A Strategy: “With a strong pipeline of partners seeking to tap into our unparalleled first-party location platform, we see immense potential to expand our market versus competitors.”

Forward Themes (New Market Penetration): “Realizing the full potential of this advertising vision will take time … but the early results strengthen our confidence that advertising could eventually become a revenue stream on par with our subscription business.”

Investor-Focused Factors: “Positive adjusted EBITDA of $39 million to $42 million … EBITDA loss of $7 million to $10 million … The company continues to expect to be adjusted EBITDA and EBITDA positive consistently on a quarterly basis in 2025.”

Analyst Q&A Highlights

Fourth quarter subscription outlook, seasonality, and international rollout impacts: "Record net adds, it's arguably our best back-to-school ever in our company's history, and international is driving that growth ... We also are seeing some impact from the fairly substantial price increases that we put through internationally ... looking at pretty significant revenue uplifts from that."

Subscription attach rates to new hardware versus previous models; advertising business progress with recent partnerships: "The attach rate of premium accounts actually linking Tile is going up significantly ... We only need a relatively small portion of people to have that awareness that we are differentiated."

Launch plans for pet and elderly care subscription packages; pricing considerations and insurance: "Our plan for pet tracking now ... we think we have the opportunity to have the lowest cost with the best battery life, and it's going to be bundled into Life360 subscription tiers ... In elder care, ...millennials in particular ... are beginning to have aging parents themselves. So ... I really need this product myself now."

Advertising outlook and revenue guidance for 2025: "Advertising and data ... blur more and more with our data line because advertising and data in many ways is part and parcel of the same thing."

Core product strength, factors driving MAU ads, and potential penetration levels: "Organic is doing extremely well, as evidenced by Back to School; international is doing really well...we now are showing those penetration stats."

Ad ARPU opportunity and if it aligns more with social platforms like Pinterest and Snap: “We are incredibly excited about the opportunity because of the quality of the audience and the initial reaction from advertisers and agencies. We definitely see the opportunity in the longer term, at the higher end of that range.”

What’s the next step in ad revenue growth? Is it product development or go-to-market motions: “It’s both. We are definitely getting real revenue now. We have multiple chess pieces to push down the board. A lot of what we’ll be doing is around profiling customers to make them readily accessible. We’re trying to be conservative in forecasts, as the ramp-up can take time.”

Given the recent international growth, is this trend sustainable as we enter 2025: “I believe location sharing will be widely adopted, and few people stop using it once they start. Internationally, we don’t face the same Apple competition. We’re hitting these tipping points, and if we continue product improvements, I think it’s ours to lose."