Life360 (ASX:360) share price plunges 26% after bleeding money in 2021

The software firm is leaking cash, and a market already freaked out by rising interest rates is absolutely punishing its shares.

| More on:
A woman sits with her hands covering her eyes while lifting her spectacles sitting at a computer on a desk in an office setting.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Key points

  • Investors are fleeing Life360 after it reported heavy losses for the 2021 calendar year
  • The share price is tanking in early trade on Thursday
  • Company is focusing on positive revenue and subscriber growth

Life360 Inc (ASX: 360) investors are abandoning the US software provider after it revealed heavy losses in its results for the 2021 calendar year.

After the first 20 minutes of trade on Thursday, the Life360 share price had plunged a whopping 26% to $4.99. It closed Wednesday at $6.57.

The company's financial year ends on 31 December each year.

What did the company report?

  • Statutory net loss for the full-year ending on 31 December was US$33.6 million, more than double the US$16.3 million in 2021
  • Underlying EBITDA loss was US$13.1 million, almost doubled from US$7 million in 2021
  • US$12.2 million of cash was used in operating activities, compared to US$7.3 million one year prior 
  • Revenue was up 40%, hitting US$112.6 million

What else happened in the financial year?

Life360 started as a mobile app that allows parents to track their teeangers' whereabouts. During 2021, the company made two acquisitions — Tile and Jibit — to broaden out its offering as a "family services" software suite.

COVID-19 continued to disrupt mobility for Americans with the Delta and Omicron variants keeping young and old folks at home.

There was also increasing privacy and stalking concerns about Apple Inc (NASDAQ: AAPL)'s AirTag products, which Life360 chief Chris Hulls admitted was a drag on the whole tracking tech category.

What did management say?

Understandably Hulls was focusing on subscriber and revenue growth, rather than the profitability of the business.

"We achieved accelerating operational metrics across the business, with 3 consecutive quarters of record subscriber additions," he said.

"We finished the year with annualised monthly revenue of US$135.7 million, a year-on-year increase of 51% and a strong leading indicator of the growth opportunity ahead."

According to Hulls, Life360 is in a "very strong financial position", currently holding US$94 million of cash and cash equivalents.

"Global monthly active users increased 34% year-on-year, with the US delivering growth of 39%," he said.

"Retention and engagement from our users continue to grow, with the proportion of returning monthly active users (RMAU) reaching a new record. Our membership model benefited from improving conversion to paid, with a 97% year-on-year increase in conversion rates, reflecting the investment we have undertaken in the user experience."

What's next?

Citing US securities regulations, Life360 declined to provide any guidance for 2022.

"After a strong CY21 performance, we are confident in our ability to drive continued growth, in particular in our core Life360 subscription business," the company stated.

"We anticipate that we will return to providing guidance as soon as we can do so in ways that do not potentially raise US securities law implications."

Life360 share price snapshot

Life360 shares were a darling of growth and tech fans for much of 2021, but it has lost half of its value this year so far.

The stock has lost 65% since mid-November. It had gained 248% in just 11 months prior to that.

Motley Fool contributor Tony Yoo owns Life360, Inc. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns and has recommended Apple and Life360, Inc. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has recommended the following options: long March 2023 $120 calls on Apple and short March 2023 $130 calls on Apple. The Motley Fool Australia has recommended Apple. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Earnings Results

Two happy excited friends in euphoria mood after winning in a bet with a smartphone in hand.
Earnings Results

ASX 200 stock jumps 10% on strong FY24 results

How did this KFC restaurant operator perform in FY 2024?

Read more »

A male investor wearing a white shirt and blue suit jacket sits at his desk looking at his laptop with his hands to his chin, waiting in anticipation.
Consumer Staples & Discretionary Shares

Guess which ASX 200 stock just slashed its final dividend by 23%

This retailer had a tough time during the 12 months. Here's how it performed.

Read more »

Man jumps for joy in front of a background of a rising stocks graphic.
Earnings Results

Catapult shines: 20% sales growth propels ASX tech stock to new 52-week high

A strong annual result from this tech player has caught investor attention.

Read more »

A man in his 30s holds his laptop and operates it with his other hand as he has a look of pleasant surprise on his face as though he is learning something new or finding hidden value in something on the screen.
Earnings Results

Xero share price leaps 8% on staggering earnings upheaval

A major turnaround in profitability is sending investors into a frenzy over Xero shares today.

Read more »

a construction worker sits pensively at his desk with his arm propping up his chin as he looks at his laptop computer while wearing a hard hat and visibility vest in a bunker style construction shed.
Materials Shares

Which ASX 200 stock just plunged 12% despite record full-year earnings?

It looks like an impressive report card but UBS doesn't like the FY25 guidance.

Read more »

A man sits thoughtfully on the couch with a laptop on his lap.
Earnings Results

ASX 200 tech stock lifts off on another record-setting half-year profit

Investors are bidding up the ASX 200 tech company following its half-year results.

Read more »

increasing rural asx share price represented by happy looking sheep
Earnings Results

Why is this ASX All Ords stock staying strong as profits crash 76%

How is this company's share price marching higher after mowing down more than three-quarters of its profits compared to a…

Read more »

Two men sit side by side on a couch with video game controls in their hands and expressive looks on their faces as they react to the action in front of them in a home setting.
Earnings Results

Guess which ASX 200 stock is surging 11% on an 'outstanding' result

This ASX gaming giant just posted a 17% jump in profits, and its shareholders are basking in the glory.

Read more »