Weekly Reports | 10:00 AM
In this week's In Brief, Life360’s advertising opportunity is gaining traction, Audinate is benefiting from renewed Dante growth and operating leverage, while Hansen faces a more challenging transition under new leadership.
- Life360: Digital engagement strengthens as paying circles climb 27%
- Audinate: Software monetisation opens a larger opportunity beyond core Dante
- Hansen Technologies: AI investment and consumption pricing shape the next chapter
By Danielle Ecuyer
This week’s quote comes from Phil Orlando at Federated Hermes:
"The stock markets generally like a politically divided government. That situation creates checks and balances, particularly with fiscal policy.
"While President Trump is a Republican, if the GOP loses the House but retains the Senate, the S&P500 may follow its historical trend over the past 93 years of rallying to nearly 14% annual returns on average.
"But if Democrats run the table in November, the combination of a consolidated Democratic Congress with a Republican president has been the least productive combination for stocks, with the S&P returning a historical average of less than 5% annually."
Beyond first impressions
While the market gave a thumbs down to Life360’s ((260)) 2Q results, Canaccord Genuity pointed to growth in monthly active users (MAU) returning to management’s planned pathways post technical issues in the prior quarter.
Total MAUs rose by 4.6M q/q to 102.4m and total paying circles added 185k q/q to around 3.2m, a rise of 27% y/y, well exceeding the analyst’s expectations.
Total revenue advanced 38% y/y, also beating consensus by circa 1.5%, and core subscription rose 34% y/y.
Hardware revenue slipped -20% y/y on the Tile retail exit.
Advertising revenue advanced more than four-fold from the prior year. EBITDA margin of 19.6% was also better than anticipated, including a circa 3%-point boost from a tariff refund.
In reference to the advertising platform, Canaccord comments the results are starting to show the value of the integrated offering.
Life360 is starting to produce evidence that its proprietary first party location data makes its advertising product more effective than standard third party targeting.
If those results are repeatable, it strengthens the case for advertisers to spend more with Life360. The focus in 2H26 is on travel, automotive and everyday retail, followed by expansion internationally.
Life360 maintained FY26 revenue guidance of US$650m-US$685m and MAU growth of 17%-20%, while upgrading subscription revenue guidance to US$475m-US$480m from US$470m-US$475m, offset by lower expectations for hardware sales.
Advertising revenue guidance remains US$98m-US$115m, with 4Q26 revenue expected to roughly double the 1Q26 contribution as commercialisation of the advertising platform accelerates.
Adjusted EBITDA guidance of US$130m-US$140m was also maintained, implying a 20.2% margin at the midpoint, although 3Q26 margins are expected to be around 18%.
The broker retains a $72 target, based on around 8x forecast 2027 revenue and supported by its DCF valuation.
Back to sustainable growth?
Long suffering Audinate Group ((AD8)) shareholders received some good news with this week’s FY26 result release.
Shaw and Partners highlighted a better-than-expected FY26 result and FY27 outlook. Positively, core Dante growth and emerging operating leverage have materially de-risked the earnings outlook for Audinate after the post-covid travails.
FY26 revenue rose 15% y/y, broadly in line with forecasts, while gross profit increased 15% to US$37.7m and the gross margin remained stable at 82%.
The EBITDA loss of -$3.6m was better than expected, helped by lower operating costs, while free cash flow of -$14m (negative) also beat forecasts.
Net cash on hand at the end of FY26 was $65m, seen as offering sufficient funding as the business progresses towards FCF breakeven, anticipated during FY28.
The broker emphasises the key change in FY27 is expected to be operating leverage kicking in.
Management is guiding to around 15% gross profit growth and a stable gross margin of around 82%, while operating costs are expected to remain flat following completion of the FY26 restructuring.
This combination is expected to achieve a meaningful improvement in operating profit and cash flow, as a greater proportion of incremental gross profit falls through to earnings.
Importantly, the broker notes FY27 growth is predominantly being driven by the core Dante business rather than relying on newer products. Dante recorded 137 design wins and a record 555 new product launches, while 229 OEMs are currently developing products.
Given design wins typically translate into revenue over the following 12-24 months, these indicators support the view Dante can sustain mid-teens growth.
Longer term, Audinate is looking to monetise its installed base of more than 8m Dante devices through software, services and control products including Dante Director and Iris.
The broker reiterates Buy with an unchanged $4.90 target, noting Audinate trades on 1.9x FY27 EV/revenue versus 4.9x implied by its target.
Shaw envisages significant upside if Audinate can increase recurring revenue per installation, although this opportunity remains early stage and Iris is not expected to become cash flow positive in FY27.
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