Australia | 10:30 AM
Despite exceeding consensus expectations on most third-quarter metrics Life360’s shares tumble on easing monthly active users.
-Life360’s 3Q results largely met or exceeded consensus
-Share price weakened on slowing growth in monthly active users
-The issue of 'slowing' divides views and opinions in the aftermath
-Nativo acquisition may also have weighed
-Management is focused on improving monetisation metrics
By Mark Woodruff
On Wednesday morning last week, shareholders in family safety and location-sharing company Life360 ((360)) would have awoken discomfited by news of a -22% fall in the company’s share price overnight on the Nasdaq exchange in the US.
Only a keen eye would have discerned the cause buried in the details of third quarter results, which included upgraded guidance for most metrics.
Revenue, earnings, paying circles (families subscribed to paid plans), average monthly revenue (AMR), and average revenue per paying circle (ARPPC) were all broadly in line with or slightly ahead of consensus expectations.
Revenue of $124m was up 34% year-on-year while adjusted earnings (EBITDA) increased by 15% to US$24.5m. FY25 revenue guidance was raised by approximately 2% at the midpoint, driven by sustained momentum in Subscription and Other revenue streams.
Canaccord Genuity notes the FY25 adjusted earnings outlook has been raised by about 12% to a midpoint of US$86m, reflecting improved operating leverage and continued efficiency gains.
A deceleration in monthly active users (MAU) appeared to be the main market concern, with International and US growth of 24% and 15%, respectively, compared to 34% and 15% MAU growth in the prior quarter.
Global MAU reached 91.6m compared to the 94m forecast by consensus. Shares in Australia have continued to weaken; they closed at $37.12 on Friday, down from $45-plus prior to the quarterly update. The share price had peaked below $55 in early October.
Life360 is best known for its mobile app allowing family members to keep connected and secure.
Real-time location sharing on a private family map is available, along with features like geofenced alerts (i.e. notifications when someone arrives or leaves a place), check-ins, and an SOS emergency button.
The app also offers driving behaviour reports and crash detection with automatic emergency dispatch, which are especially useful for families with teen drivers. These services provide peace of mind by helping parents and caregivers stay informed about their loved ones’ whereabouts and safety.
The business model blends recurring subscription fees with device sales and ad-based monetisation.
The Life360 app is free with basic features, attracting a significant user base. Revenue comes from upgrading a fraction of users to paid subscriptions.
Paid membership tiers unlock advanced features, for example, longer location history, unlimited alerts, roadside assistance, and professional emergency help.
Top-tier plans bundle additional benefits like travel support or identity theft protection, extending Life360’s scope beyond location tracking.
By offering multiple plans, at monthly rates from $5 up to $25, Life360 monetises those families who need comprehensive protection while keeping the core app accessible for free users.
Canaccord suggests the announced acquisition of the Nativo Inc advertising business may have also contributed to the share price softness, though the analysts view this and the relative MAU softness as temporary.
This broker feels Life360’s expanding ecosystem, deepening monetisation, and improving unit economics will underpin a durable long-term growth trajectory.
Ord Minnett considers company guidance for 2025 and 2026 revenue and earnings to be conservative, along with broader market expectations.
For the December quarter, guidance implies subscription revenue of US$100m, or 4% quarter-on-quarter growth.
Even if paying circles remain flat, a 1% lift in average revenue per paying circle, versus 1.5% achieved in recent quarters, would be sufficient to meet guidance, Ord Minnett points out.
MAU and subscriptions
Net additions of 1.2m MAU in the third quarter marks the smallest quarterly gain since the first quarter of 2023, highlights UBS.
While partly reflecting timing effects from marketing initiatives such as the late-second quarter back-to-school campaign, this broker suggests the slowdown may raise investor concerns about potential market saturation.
Bell Potter, however, remains unconcerned by the slower-than-expected MAU growth, viewing it as a result of a deliberate shift in marketing spend and noting it coincided with a meaningful rise in conversion rates, indicating improved monetisation efficiency rather than weakening demand.
While the latter broker has reduced its fourth-quarter MAU growth forecast, this is offset by a higher expected conversion rate, leaving an unchanged projected growth in paying circles.
Post results, CEO Lauren Antonoff stated there had been “an intentional shift in our marketing to focus paid media on users who are more likely to retain and convert”.
Ord Minnett believes offshore investors are more focused on headline subscriber growth rather than the company’s improving monetisation metrics.
Fourth quarter Subscription Revenue guidance of $366-368m (previously $363-367m) also reflects a quarter-on-quarter slowing versus last year.
The implied $100.2m guidance at the midpoint ‘missed’ the consensus forecast by -1.3%, suggesting to UBS quarter-on-quarter growth is around -5.8 percentage points slower than the corresponding quarter in 2024.
One plank of the UBS upside thesis, advanced after second quarter results, involved durable US user growth, making the current slowdown in the core subscription business notable, in this broker’s view.
On the other hand, Ord Minnett expects subscription revenue growth will accelerate in 2026, supported by improving late-2025 momentum and increasing contributions from the pet-tracking business.
Advertising revenue is also seen as providing a greater contribution to group revenue growth.
Canaccord highlights subscription revenue growth decelerated by only -70 basis points quarter-on-quarter despite a significantly tougher comparison period, supported by stronger conversion in the US. Ongoing expansion of higher-priced membership tiers in markets outside the Triple Tier structure also assisted.
In the A&NZ region, Canada, and in the UK, the company has fully deployed its premium “Silver/Gold/Platinum” subscription structure and commands both higher pricing power and stronger monetisation dynamics.
Hardware, advertising, pets & valuables
Beyond the primary revenue source of subscriptions, management has added hardware and advertising streams to the business.
Through acquisitions, the company now sells Tile Bluetooth trackers and Jiobit GPS wearables, integrating these devices so users can track not just people but also pets and valuables in the Life360 app.
Hardware guidance was raised by management at third quarter results to US$46-50m from US$42-50m. Hardware sales and related services provide additional income and deepen user engagement.
In 2024, Life360 also began to generate advertising revenue by carefully introducing in-app ads and partnering with brands.
The company leverages its large user data (in privacy-protected ways) to offer relevant, family-oriented ads such as promotions from insurance or transportation services. One early partner, Uber, offered ride-hailing promotions to Life360 families through the app at timely moments.
Management also raised guidance for Other revenue, which includes advertising, to US$62-67m from US$57-65m.
The company does not specifically disclose advertising revenue, but Bell Potter estimates it grew to US$8m from US$6m in the second quarter; its forecast is for around US$12m in the current quarter.
UBS believes Life360 is experiencing stronger advertiser adoption driven by programmatic partnerships and the rollout of new ad formats.
As mentioned previously, management also announced an agreement to acquire Nativo, Inc for about -$120m to strengthen Life360’s advertising capabilities and accelerate growth in ad revenue.
The analysts at UBS suggest Nativo could potentially accelerate the scaling of Life360’s advertising business by an estimated 12 to 18 months.
Additionally, the company licenses aggregated location data insights (e.g. traffic patterns, retail foot traffic) to partners.
In May this year, management extended its reach into online safety (helping acquire additional users) by forming a partnership with Aura, an identity theft protection firm. Life360’s services are now bundled with Aura’s digital security offerings.
In the September quarter management launched its Pet Tracker service, extending Life360’s hardware lineup to pet safety.
Early sales of the Pet GPS Tracker device exceeded expectations held by UBS, with units selling out across key launch markets including the US, UK, Canada, Australia, and New Zealand.
Management noted strong engagement from existing members and encouraging early conversion from free to paid users, reinforcing Life360’s strategy to expand its addressable market to the roughly two-thirds of US households that own pets.
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