There are plenty of ASX tech shares that have taken a beating in 2022. But within the carnage, there could be a few names that are too good to ignore. One of those opportunities could be the Life360 Inc (ASX: 360) share price.
Firstly, some readers may be wondering what this business, with a $1 billion market capitalisation, actually does.
In the company's own words, it operates a platform for families. Its core offering, the Life360 mobile app, is a market leader according to the company. The app has a number of features including "driving safety and location sharing".
Life360 had 42 million monthly active users in June 2022, spread across 150 countries.
What's going on with the Life360 share price?
Life360 shares have taken a beating amid the changing economic environment where inflation is elevated and interest rates are rising.
In theory, higher interest rates are meant to hurt asset prices. Lower interest rates, like we saw during the COVID years of 2020 and 2021, pushed up asset prices. That change from ultra-low rates to higher rates is really disrupting financial markets.
Plenty of other ASX tech shares have been punished. For example, the Xero Limited (ASX: XRO) share price is down around 50% in 2022.
However, it's not as though the business has stopped growing.
When Life360 announced its 2022 second quarter and half-year update, it said that monthly active users had increased by 29%. Half-year subscription revenue was up 90%, with 60% growth for core Life360 subscriptions.
The company said that it's seeing resilience from its subscribers and users despite the challenging macroeconomic circumstances. This could be supportive of the Life360 share price.
Management said that a platform had been established for a bundled hardware launch, with an initial rollout matching "very encouraging" earlier test results. There was a 35% uplift in subscriptions compared to the control group.
There is a continued expectation for sustainable positive cash flow in late 2023, with the first full year of positive cash flow in 2024. The company said that the 2022 first-half adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) and its cash burn were on track.
The average revenue per subscription increased by 13% year over year to $75.45.
Expert view on the ASX tech share
On a Livewire webinar, Chris Prunty and Josh Clark from QVG Capital talked about some of the positions in the portfolio. They like to focus on small and medium businesses.
When asked about the ASX tech share, Prunty suggested that the Life360 share price could soar over the long term:
It's rapidly moving to free cash flow break even and positive, it's a business that's growing rapidly with recurring earnings, we think it has enormous latent pricing power and a significant addressable market.
Of all the companies we own, if we look back in five to ten years' time and it's gone up five to ten times, that's the one where I'd be least surprised. We are super bulls on Life360.
