Life360, Growth Deferred Or Denied?

Australia | 10:00 AM

Life360's share price has been unceremoniously shellacked on a multi-factor set of circumstances, not helped by updated 2026 guidance.

• 2025 results beat expectations, but MAU guidance tests the market's confidence
• Pet Tracker, international expansion and partnerships target new user growth
• First quarter earnings in May likely to surprise on the downside
• Advertising growth and AI-driven marketing emerging as new revenue levers

By Danielle Ecuyer

Life360 ((360)) shareholders, or those left standing, have been subjected to a multi-factored challenge for the US-headquartered SaaS company.

Like other once market darlings in the software-as-a-service sector, the rapid evolution of artificial intelligence and the extrapolation of perceived existential disruption or destruction risks may have collided with what might be early signs of a growth hiccup.

At the very least, management's latest guidance for 2026 has some analysts questioning the growth proposition and investors (traders) shooting first and asking questions later.

2025 was a good year, it's now all about the future

In the rear view, 2025 results painted an upbeat picture. Earnings (EBITDA) rose 105% on the prior year, beating consensus expectations by 6%.

The result also topped the indicated guidance offered in January, attributed to higher ‘other’ revenue, with advertising the most likely culprit.

Management’s aim is to strategically grow both users and income generated from an expansion in advertising content to its base.

These results indicated other revenue for the last quarter of 2025 lifted 86% on the prior year, circa 20% ahead of Citi’s forecasts, supporting the conclusion the advertising segment is kicking some goals.

Bell Potter points to the better adjusted earnings (EBITDA), a 4% beat, which could be attributed to non-recurring adjustments of US$5.6m.

For RBC Capital, the solid 2025 results delivered a similar ‘beat’ trend to the previous fiscal year when the company topped management’s revenue and adjusted earnings (EBITDA) guidance by 5.4% and 33%, respectively.

This suggests, at the very least, management might have opted for a more cautious tone in guidance (possibly with the aim of beating it when financial results are released).

This is a point RBC stresses when it comes to management’s 2026 guidance, mustering only a “FY26 guidance looks ok”.

Looking for answers around growth drivers in 2026

In the current environment, when investors are less than satisfied with an “ok” interpretation of the outlook statement, it doesn’t take much imagination to see why the market sent the shares down over -17% on the day of the announcement, making Life360 the worst performing ASX300 stock on the day.

While such punishment seems outrageous, the share market has become a whole lot more volatile over the past 15 months, in particular around result releases.

Taking a deeper look into the key takeaways for 2026, Citi highlights management’s comment that Life360 has a history of “over delivering” and then sets about articulating the growth drivers required to achieve 20% growth in global monthly average users (MAU).

Applying a multi-pronged strategy, executive hires have been made for dedicated VPs for Brazil and Mexico to drive localised app growth and regional-specific marketing and activation.

Over 1Q2026, MAU growth was softening, mainly in Other International, while an improving Android app is also flagged by management as a driver to support growth.

Citi’s analyst also points to improvements across various transport modes, where personal experience in Melbourne shows the app indicating the user is driving when he is actually on the train.

More scope for growth is indicated through awareness building around the Pet Tracker value features versus an AirTag, with testing planned to understand price elasticity.

Pet Tracker brings forth a dedicated GPS pet-tracking system integrated with the app and network, while an AirTag is a short-range Bluetooth tracker for objects that depends on the proximity of Apple devices to locate it.

Canaccord Genuity indicates early trends from Life360’s pet GPS tracker are encouraging, with nearly 5m pets registered since the October launch, around 90% within free circles.

The response is seen as supporting management’s strategy, with the focus now shifting to improving unit economics, pricing and supply chain efficiency.

The company is exiting physical retail and concentrating on direct-to-consumer and online channels such as Amazon, which is expected to result in a year-on-year decline in unit volumes in 2026.

More and “deeper” engagements with partnerships such as Uber are expected to play a greater role in boosting engagement and subscriptions.

Regarding AI, management is looking to enhance marketing to better target consumers who will convert to paying circles.

The intention is also to re-engage or re-activate 20m inactive MAUs currently on the platform.

A dose of reality bites

Ord Minnett highlights market skepticism around guidance of circa 115m MAUs in 2026, given management pointed out year-on-year growth for MAUs in the March quarter (1Q2026) would come in lower than the 20% growth rate needed to achieve the full year target.

The current MAU guidance for the quarter stands at around 1.5-3.5m, which equates to annual growth of 16-19%.

To achieve the 20% growth target in MAUs, growth in the remaining three quarters will need to advance at a 5-6m rate per quarter, against MAU net additions in 2025 of 3.6-4.3m.

Management stated MAU growth would “be more back half weighted due to product-led growth investments and scaled marketing in new geographies”, which suggests a significant increase in member engagement. Ord Minnett and Morgan Stanley query the lack of details provided at the time of the update.

Importantly for investors, Ord Minnett stresses Wall Street usually concentrates on MAUs as a key performance indicator for SaaS companies.

More traditional financial metrics, such as revenue and earnings, are often considered less consequential, which helps explain why the market gave the thumbs down to the 2025 results. The earnings beat carried less weight than MAUs and the outlook for that metric.

“Due to timing of investments in initiatives to support our growth, we anticipate adjusted EBITDA to be lightly weighted in the first half of 2026, and heavily weighted in the second half of 2026,” Life360 stated.

Bell Potter interprets management’s statement as implying a larger 2H earnings skew than traditionally and estimates the split in 2026 around 30%/70%, versus 66% in 2H2024 and 61% in 2H2025.

Guidance was also offered around 1Q2026, with adjusted earnings (EBITDA) margin expected to be low double digit, hardware revenue around -50% lower than 1Q2025, hardware gross margin negative, alongside sub-20% MAU growth.

While the update implies a weak quarter, the Bell Potter analyst points to higher advertising costs for the US Superbowl and the Winter Olympics, as well as closure or exit costs from bricks and mortar for Tile, including inventory clearing.

Both are estimated at around -US$3m each and are being accounted for as normal operating expenses rather than one-off items or adjustments. The closure costs for Tile could arguably be considered the latter.

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