The Life360 Inc (ASX: 360) share price is on course to end the week on a very positive note.
In morning trade, the location technology company's shares are up 7% to $5.19.
This follows the release of the company's full-year results.
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Life360 share price higher on results
- Total revenue up 103% to US$228.3 million
- Monthly active users up 36.9% to 48.6 million
- Gross profit up 65.3% to US$148.6 million
- Operating expenses up 100% to US$243 million
- Adjusted EBITDA loss of US$40.1 million
- Cash of US$90.4 million
- Outlook: Positive adjusted EBITDA from Q2 of FY 2023
What happened in FY 2023?
For the 12 months ended 31 December, Life360 reported the doubling of its revenue to US$228.3 million. This was driven by a 77% jump in subscription revenue to US$153.3 million, a material contribution from hardware revenue of US$47.9 million, and a modest lift in other revenue to US$27.1 million.
Management also highlights that its revenue growth was supported by an increase in paying circles and 19% higher average revenue per paying circle (ARPPC). At the end of the period, the company had 48.6 million monthly active users and 1.5 million paying circles. This was an increase of 36.9% and 23%, respectively.
And while its gross profit grew slightly slower than revenue at 65.3% to US$148.6 million, this is still a growth rate that the majority of ASX listed companies would be envious of.
Management advised that this reflects its strong revenue growth, offset by lower gross margins on its hardware sales. Positively, subscription margins increased in FY 2022 by 60 basis points to 80%.
Outlook
Looking ahead, management is guiding to further strong growth in FY 2023.
It is forecasting core Life360 subscription revenue growth (excluding Tile and Jiobit) in excess of 50% and modest hardware revenue growth of 0% to 5%. The latter reflects the continuing current challenges in the category. Whereas the former will be supported by price increases, which have already boosted its ARPPC materially in January.
This is expected to lead to consolidated revenue of US$300 million to US$310 million, which represents total growth of 31.4% to 35.8%.
Importantly, the cash burn will soon be coming to an end. Management expects positive adjusted EBITDA and operating cash flow on a quarterly basis beginning with second quarter and for the full year.
Broker reaction
Goldman Sachs has been looking over the result and was pleased with what it saw. It commented:
The result was broadly in line with expectations, as pre guided in January. FY23 guidance came in line with our expectations with the key highlights (1) >50% core Life360 subscription revenue growth (vs +54% GSe); and (2) quantification of full-year EBITDA guidance, expected to be US$5-10mn (vs US$9mn GSe/consensus).
We believe investors will respond positively to Life360's strong subscription growth outlook (the key long-term value driver), supported by tangible metrics including US ARPPC (Jan-23 US$138, +42% y/y), subscriber growth returning to the US in Jan-Feb (helping ease concerns on payer conversion), and pushing price rises through the Android back-book in 2Q23.
