Life360 Inc (ASX: 360) is one ASX 200 tech stock that's been turning heads in 2024. It is up more than 125% this year, outpacing the broader market by a wide margin.
Shares are currently swapping hands at $17.05 apiece, having retreated 5% over the past month.
Despite the short-term slip, analysts and fund managers continue to praise the ASX 200 tech stock. Here are 5 key reasons why experts think Life360 is still a compelling buy.
ASX 200 tech stock on a tear
Brokers and fundies alike are bullish on Life360.
Fund managers Surrey Asset Management and Firetrail Investments own the ASX 200 tech stock in two of their various investment funds.
These are the common factors that could drive the company higher, according to all three groups.
1. Revenue growth
One hallmark of ASX 200 tech stocks is the consistent revenue growth associated with their products.
Life360 notched up impressive growth numbers In its recent second-quarter update, booking a 23% increase in annualised monthly revenue (AMR) to US$304.8 million.
This growth is backed by its expanding user base of over 70 million active users for its family tracking app. Parents, carers, and now even pet owners use the technology to keep track of their loved ones.
Bell Potter is bullish on the company, maintaining a buy rating with a price target of $20.50 in a recent update.
This suggests a potential upside of 21% from current levels.
It noted the company's discussions on the "ample runway for subscription business in the US", along with a plan for 25% pre-tax margins.
2. Rapidly growing user base
The Life360 app now boasts over 70 million active users globally, and this number keeps climbing. The Surrey Australian Equities Fund sees this as a key advantage.
The fund returned 1% in August net of fees and recognised a 15% gain on its Life360 position. It said:
Our key attraction to Life360 includes features such as a rapidly growing global Monthly Active User (MAU) [and a] Very large Total Addressable Market…
Under a subscription model, the users generate recurring revenue. The more subscribers, the more recurring revenue.
3. Diversification into advertising
Life360 has branched out into advertising to leverage its extensive user network. The Firetrail Australian Small Companies Fund commented on the significance of this move in its August fund report.
…Life360 also announced the extension and enhancement of its partnership agreements with Placer.ai and Arity.
These strengthened collaborations highlight the increasing demand for Life360's real-time data and advertising initiatives.
The company is actively engaging with multiple prospective advertisers and potential partners. These strengthened collaborations highlight the increasing demand for Life360's real-time data and advertising initiatives.
The fund returned 0.3% net of fees last month, and has the ASX 200 tech stock in its top 3 holdings.
4. ASX 200 tech stock financials in check
Both Firetrail and Surrey commented on the company's Q2 numbers. The fund managers suggest it has the financial muscle to pursue growth opportunities and withstand market fluctuations.
Surrey Australian Equities Fund noted it is also attracted to the ASX 200 tech stock's "potential for profitable third-party advertising streams", alongside its "healthy balance sheet."
Meanwhile, Firetrail said the company "upgraded [its] full-year adjusted EBITDA guidance by 18% at the midpoint".
This is likely one reason it has exposure to "globally exposed growth companies such as Life360".
5. Analyst confidence
Life360 has garnered a wave of optimism from analysts. Aside from Bell Potter, Ord Minnett also rates the ASX 200 tech stock a buy.
Ord Minnett turned to the company's performance in various tech-related metrics in its Q2 2024 earnings results.
It said that Life360's "platform continues to strengthen amid improving unit economics", according to The Bull.
Meanwhile, according to CommSec, consensus rates it a buy as well. This is made up of 12 buys and two holds.
ASX 200 tech share final thoughts
Analysts and fund managers alike are bullish on this ASX 200 tech stock's outlook for the future.
Life360 stock is up 84% in the past year, resulting in a more than 72% advantage over the broad market.
