Life360 share price zooms 18% higher on Q2 update and guidance upgrade

This tech stock is catching the eye of investors on Tuesday.

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The Life360 Inc (ASX: 360) share price is having a stunning day on Tuesday following the release of the company's quarterly update.

At one stage, the location technology company's shares were up 18% to a 52-week high of $9.48.

Its shares have since pulled back a touch but remain up 14% to $9.15 currently.

Life360 share price jumps on quarterly update

  • Second quarter revenue up 45% to US$70.8 million
  • Subscription revenue up 57% to US$47.6 million
  • Annualised monthly revenue (AMR) up 43% to US$248.7 million
  • Positive adjusted EBITDA of US$5.7 million
  • Quarterly net loss of US$4.4 million
  • Cash of US$64.2 million

What happened during the quarter?

For the three months, Life360 delivered a 45% increase in revenue to US$70.8 million. This was driven by a 29% increase in monthly active users to 54 million, a 17% lift in paying circles to 1.63 million, and a 31% jump in average revenue per paying circle to US$119.25. The latter was supported by price increases.

Life360 revealed that its strategy of balancing fiscal responsibility with prudent investment has underpinned significant progress in managing its cost base.

The company's second-quarter operating expenses came in at US$48.6 million, which was down 2% year on year and 5% quarter on quarter. This led to Life360 recording its second consecutive quarter of positive adjusted EBITDA.

Adjusted EBITDA came in at US$5.7 million, which is a massive US$24.4 million turnaround since this time last year.

The good news is that management believes this trend can continue. So much so, it has upgraded its guidance to positive adjusted EBITDA of US$9 million to US$14 million for calendar year 2023. This is up from US$5 million to US$10 million previously.

Life360 shares are smashing the market

This latest gain extends the strong returns the Life360 share price has made over the last 12 months. As a result, it is now up 66% since this time last year.

Management commentary

Life360's co-founder and CEO, Chris Hulls, was pleased with the quarter. He said:

The Life360 business has maintained growth momentum through Q2, with Global MAUs up 29% YoY and AMR up 43% to $248.7 million. We saw good growth in Paying Circles despite the price increase for existing U.S. Android subscribers implemented in April. We added 62 thousand global net subscribers during Q2'23 compared with 73 thousand in Q1'23. The 17% year-on-year uplift in Paying Circles was supported by international Paying Circles increasing 44% YoY, with international net adds remaining at close to all-time record levels.

We are seeing particularly encouraging results from predominantly English speaking countries (Canada, U.K., Australia) which saw Paying Circles increase 54% YoY. The launch of triple tier Membership in the U.K. is on track for early Q4'23. Our investment in the international user experience is paying off with significant gains in MAUs, Paying Circles and Revenue, and retention metrics which are closing the gap to U.S. levels. "The April price increase for existing U.S. Android subscribers supported further gains in global ARPPC which increased 31% YoY. Android churn was largely in line with our expectations and is returning to baseline levels.

Motley Fool contributor James Mickleboro has positions in Life360. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Life360. 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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