Why is the Life360 share price sinking 9% today?

This high-flying tech stock has handed in its report card. How did it do?

| More on:
A man holds his head in his hands, despairing at the bad result he's reading on his computer.

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

The Life360 Inc (ASX: 360) share price is on the slide on Friday morning.

In early trade, the ASX 200 tech stock is down 9% to $14.15.

Why is the Life360 share price sinking?

Investors have been selling the location technology company's shares today following the release of its quarterly update.

While some of the numbers were pre-released last month in a trading update, the ones that arguably matter most are now public knowledge and investors are responding negatively.

According to the release, Life360 delivered a 15% year on year increase in revenue to US$78.2 million during the first quarter. This was driven largely by a 23% lift in core subscription revenue to US$57 million.

At the end of the quarter, Life360's annualised monthly revenue (AMR) stood at US$284.7 million, which is up 19% year on year.

This led to the company achieving positive adjusted EBITDA of US$4.3 million for the three months (up from US$0.5 million) and a reported EBITDA loss of US$4.1 million.

What were the drivers of this result?

A record quarter of subscription growth underpinned this solid result.

Life360's global monthly active users (MAU) increased by 4.9 million during the three months to 66.4 million. This represents a 31% increase year on year. Management also notes that this was achieved with significant momentum, particularly in a seasonally lower period for MAU growth.

Also increasing strongly was its global Paying Circle metric. It posted net additions of 96,000 for the quarter, which was a record. This was up 21% year on year and brings the total to 1.9 million. Management advised that this was supported by improved conversion and retention.

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

Life360's Q1'24 results showed continued momentum, with net Paying Circles additions nearly doubling to 96 thousand from 54 thousand in Q4'23, achieving a new first quarter record. In addition, our efforts in relation to both our free members and international expansion are paying off, with 4.9 million new Monthly Active Users (also a new first quarter record.

Hulls doesn't believe the ASX 200 tech stock's growth is anywhere near over given its massive global market opportunity. He adds:

The market opportunity is on a global scale, and we believe we have significant headroom to grow as we expand to new regions, and launch new features that expand our relevance to different life stages.


Pleasingly, Hulls revealed that the second quarter has started strongly for Life360. He said:

This momentum has continued so far in Q2'24 with the achievement of 32 thousand net Paying Circle additions during the month of April.

Looking further ahead, the ASX 200 tech stock has maintained its guidance for FY 2024. It continues to expect to report consolidated revenue of US$365 million to US$375 million, adjusted EBITDA of US$30 million to US$35 million, and an EBITDA loss of US$8 million to US$13 million.

It is likely to be this guidance that has put pressure on the Life360 share price today. Given its exceptionally strong start to the year, the market appears to have been expecting management to lift its guidance with this result. With no guidance upgrade coming, investors have been quick to hit the sell button.

But that doesn't take away the fact that this is a high quality company growing at a rapid rate.

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.

More on Technology Shares

Sports fans looking at smart phone representing surging pointsbet share price
Share Gainers

Guess which ASX All Ords share just rocketed 25% on an earnings upgrade

Investors are bidding up the ASX All Ords share following an improved FY 2024 earnings outlook.

Read more »

A man looking at his laptop and thinking.
Technology Shares

ASX 300 fallen star down 62% in a year hits new 52-week low: Time to buy?

Here's my take on Weebit Nano shares today.

Read more »

A man and woman watch their device screens, making investing decisions at home.
Technology Shares

Own Xero shares? Here's what to expect from next week's results

Strong earnings growth is expected from this market darling next week.

Read more »

A young man talks tech on his phone while looking at a laptop. A financial graph is superimposed across the image.
Technology Shares

Brokers name 2 rapidly growing ASX 200 tech stocks to buy

These tech stocks could be quality options for growth investors. Let's see why.

Read more »

a man weraing a suit sits nervously at his laptop computer biting into his clenched hand with nerves, and perhaps fear.
Technology Shares

What are 3 of the safest ASX 200 tech shares in Australia right now?

Here's how these tech companies stand out in a turbulent market.

Read more »

A young man pointing up looking amazed, indicating a surging share price movement for an ASX company
Technology Shares

Buy this ASX 200 tech stock now before it's too late: Goldman Sachs

The broker sees potential for some big returns from this tech leader.

Read more »

Smiling man working on his laptop.
Technology Shares

ASX tech stock up 54% on positive trading update

Integrated Research had some impressive news for its shareholders today.

Read more »

Two happy excited friends in euphoria mood after winning in a bet with a smartphone in hand.
Technology Shares

Brainchip share price rockets 14% on patent news

Investors are happy with today's news. Let's see what patent has been granted.

Read more »