Life360 share price rises as revenue more than doubles

Life360 lands solid subscriber growth, but at what cost?

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Key points

  • The Life360 share price is climbing 3% higher after the company released its first-half results for CY22
  • Total revenue surged year on year, but expenses grew more rapidly
  • The company is guiding for between US$245 million and US$260 million of revenue for the calendar year

The Life360 Inc (ASX: 360) share price is bouncing around this morning following the release of the company's first-half results today.

Shares in the family-focused safety platform provider slumped to $5 soon after the open — a fall of 9% from Monday's closing price. However, at the time of writing, they have rebounded and are now up 3.27% at $5.68.

For comparison, the S&P/ASX 200 Index (ASX: XJO) is currently up 0.52%.

Life360 share price drops amid higher costs

  • Total revenue up 108% to $99.8 million year on year (YoY)
  • Annualised monthly revenue up 65% YoY to $174.4 million
  • Adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) loss of $32.3 million, worsening from a $4.8 million loss YoY
  • Adjusted net loss of $30.2 million, worsening from a $5 million loss YoY
  • Monthly active users up 29% YoY to 42 million
  • Paying Circles up 41% to 1.42 million

The above results are the first half-year results to include the company's Tile acquisition.

What else happened in the half?

It was a period of heavy investment for Life360. While observing softness in consumer electronics, the company achieved a standout result for subscriptions.

According to the report, the second quarter represented the second highest ever quarterly growth for net subscribers. Positively, the company managed to add 111,000 net subscribers in the latest quarter. Consequently, subscription revenue in the first half improved drastically, rising 90% from the prior corresponding period to $36 million.

However, the bottom line did not improve year on year, as expenses enlarged by 132%. This was due in part to costs associated with integrating the Tile and Jiobit acquisitions made last year.

Although, the company believes future increases in average revenue per Paying Circle will eventuate thanks to bundling with these physical products.

What did management say?

Providing further insights into the result, Life360 CEO Chris Hulls said:

We are seeing resilience from our subscribers and users in the face of more challenging global macroeconomic circumstances, with our usual 'back-to-school' seasonal uplift underway. While we continue to monitor global macroeconomic conditions, in fact we continue to see strong growth in our user and subscriber performance, and maintain confidence in a very promising outlook.

Hulls added:

With the increasing value of our membership offering, we are currently market testing higher price points. Although early, the results demonstrate the value of our services and significant pricing power. We are exploring price increases as part of our overall strategy of expanding membership with hardware devices.

What's next?

Fortunately for shareholders, management expects solid results for the half ahead. Importantly, the company is expected to have a considerably reduced cash burn, flowing through to a smaller adjusted EBITDA loss.

Furthermore, Life360 subscription revenue is slated to deliver above 55% growth for the calendar year. As a result, management is guiding for consolidated revenue between US$245 million and US$260 million.

Life360 share price snapshot

The Life360 share price has experienced a treacherous 2022. Since the beginning of the year, shares in the company have fallen 40% in value. This is inclusive of the phenomenal 140% rebound since 23 June.

It's no secret that ASX tech shares have been battered and bruised amid a shift away from loss-making companies. Though, the Life360 share price has even substantially underperformed the S&P/ASX All Technology Index (ASX: XTX) this year, which is down 23% year-to-date.

Motley Fool contributor Mitchell Lawler has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Life360, Inc. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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