Records Abound For Life360

This story features LIFE360 INC. For more info SHARE ANALYSIS: 360

Tracking technology company Life360 posted March quarter records across several metrics, putting almost literally a rocket under the share price.

-Life360’s March quarter earnings beat by 75%
-Acceleration in subs and active users
-Software outperforms, hardware underperforms
-Potential reduction in Apple fees offers upside

By Greg Peel

California-based Life360 Inc ((360)), which listed on the ASX in 2019, is an information technology company providing location-based services, including sharing and notifications, to consumers globally. Its main service is a location-based service designed primarily to enable friends and family members to share their location with each other.

The company generates earnings through subscription apps, wearable hardware and “other”, such as advertising to its growing database of non-paying contacts.

Life360’s March quarter results featured a record quarter for subscription revenue, annualised monthly revenue (AMR), Paying Circles (groups of selected members) and monthly active users (MAU). Against consensus, revenue beat by 3% and earnings by 75%.

Importantly, Morgan Stanley notes, MAU growth re-accelerated to 4.1m net adds from 2.8m in the December quarter, and Life360 added 137k net Paying Circles versus 54k a year ago. Growth in paid subscriptions came despite tweaks to pricing that yielded an 8% increase in average revenue per subscriber.

The performance from Hardware was soft (but 360 does not see the current uncertain tariff environment as having a “material” ongoing impact), while MAUs (up 26% year on year) disappointed the lofty expectations of some, suggests Ord Minnett.

Goldman Sachs expects Life360 to largely mitigate the impact from tariffs by re-directing hardware from the US to international markets while manufacturing capacity is shifted to relatively more tariff-favorable regions such as Malaysia or Vietnam. In Goldman’s view, this will not impact the timing of key releases (Pet tracker in the upcoming December quarter) but may impact the scale of the launch.

As always, this assessment is subject to change as tariff rates and targets continue to be altered.

Historically, Life360 subscription revenue guidance is conservative and reliable, notes Morgan Stanley. AMR again surprised to the upside. Transactional hardware (lower margin) has been more challenging. This trend has continued, with paying subs accelerating year on year and management lowering hardware sales estimates, though units shipped were flat year on year.

To that end, 2025 guidance was re-iterated for US$450-480m in revenue and earnings of US$65-75m, but included an increase to subscription revenue guidance of US$5m and a reduction in hardware revenue guidance of -US$5m.

Opportunity

Goldman Sach saw a strong performance, driven by subscriptions revenue growth (up 33% year on year) with International MAU growth accelerating (39%) and US MAU growth remaining robust (17%). International monetisation remains relatively low compared to the US, notes Goldman, (49% of MAUs and 15% of subscription revenue), highlighting the longer term growth opportunity that supports the broker’s investment thesis.

Hardware revenue was marginally down year on year driven by a reduction in bundled offerings and an increase in discounts. Indirect revenue of US$12.8m (up 99% year on year) was primarily driven by increases in partnership revenue (US$4.5m) and a renegotiated data agreement with Placer.ai.

Encouragingly for Ord Minnett, Life360 announced two new partnerships with Aura/MetLife and AccuWeather, continuing a recent string of such deals (Uber, Hubble, Arity, Placer.ai). With a global base of some 84m MAUs and growing, these high-margins partnerships continue to add an element of upside optionality to the Life360 thesis, Ord Minnett suggests.

One of the key discussion points from the company’s earnings call focused on the potential benefits to Life360 from possible changes in App Store policies from Apple, notes RBC Capital. While striking a cautious tone for the near term, management was notably more upbeat on the longer term.

At present, Life360 pays commissions of circa 20% on subscription revenue to its channel partners. Over the longer term, management expects this rate could reduce given increased regulatory scrutiny on the space. RBC forecasts a terminal commission rate of circa 16% but notes a reduction to high single digit commissions would have a material impact on earnings.

On RBC’s estimates, an 8% commission rate commencing in 2030 would result in US$700m of incremental earnings over the following seven years.

Positive Views

Bell Potter has increased the multiples it applies for Life360’s enterprise value to revenue and enterprise value to earnings valuations from 8.5x and 50x to 9x and 55x due to the strong March quarter result and potential for a guidance upgrade at the first half result in August.

The net result is an 11% increase in Bell Potter’s target to $31.25 and an unchanged Buy rating.

With long-term growth options incrementally improved with the added downward pressure on Apple fees, Goldman Sachs retains Buy with a $31.00 target, up from $27.00.

Morgan Stanley points to challenges including hardware, tariffs and June quarter margins, but nevertheless lifts its target to $32.00 from $28.60 and retains Overweight.

Ultimately, Ord Minnett views the March quarter producing another high-quality result from Life360 and maintains Buy, with a 9% increase in target to $27.10.

RBC Capital has lifted its target to $30.00 from $26.00 and retains Outperform.

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