ASX 200 tech stock Life360 Inc (ASX: 360) is in the red in early trade on Wednesday after the company posted its Q3 2024 earnings.
At the time of writing, shares in the family-tracking app company are trading at $24.44 apiece, more than 1% higher. But at one point, they were more than 5% lower on the day, as investors responded to the numbers.
This ASX 200 tech stock has seen significant growth in revenue and user numbers, yet the market appears cautious about the recent quarterly performance.
ASX 200 tech stock down on mixed quarterly
Life360 reported solid revenue growth for Q3 2024, but not all growth is created equal. Here are the quarterly highlights (Note: All dollar figures are in USD unless otherwise stated):
- Total Q3 revenue of $92.9 million, up 18% year over year
- Subscription revenue grew 27% to $71.8 million
- Monthly Active Users (MAU) reached a record 76.9 million, with 6.3 million new users added in the quarter, up 32% year over year
- Added 159,000 new Paying Circles globally, a 35% growth
- Net profit of $7.7 million for the quarter, up by nearly $5 million from this time last year
What else happened in Q3 2024?
The ASX 200 tech stock achieved several milestones this quarter. These included a partnership with ride sharing company Uber for location-based advertising.
Paying circles (PCs) grew 25% year over year and hit 2.2 million after the company added a record number of PCs during the quarter.
Average revenue per PC was also up 6%, driven by strength in the US business.
While the growth percentages down the profit and loss statement are well noted, stock prices change based on expectations.
Analysts covering Life360's US listing expected the company to sell US$97.8 million in Q3, meaning it missed estimates by about US$5 million.
This could explain the sharp sell-off earlier in the session today and may or may not impact the ASX 200 tech stock moving forward.
What did management say?
CEO Chris Hulls highlighted the company's growth and upcoming plans in the quarterly announcement:
We reached a key milestone in building our advertising business, with our Uber partnership showcasing the power of contextual relevance over generic banners. Additionally, we launched a new lineup of Tile devices, garnering widespread press coverage with hundreds of articles, most of which highlighted our distinctive SOS feature.
Our partnership with Hubble is officially signed, and international expansion—a critical pillar for future growth—accelerated significantly as we have started to reach tipping points in multiple countries.
What's next for Life360?
Management forecasts revenue between US$368 million and $374 million, with upgraded adjusted pre-tax earnings of US$39 million to US$42 million.
Management anticipates these strategic steps will drive further growth and solidify Life360's position as a whole.
It expects to leave the year well capitalised, with more than $150 million in cash on hand.
Year-end cash, cash equivalents and restricted cash of $150 million – $160 million. The forecast includes expected significantly higher outflows from RSU settlements, the investment in Hubble, IPO proceeds and related transaction costs, and timing variations in working capital in Q4'24 related to hardware inventory and the new product launch.
ASX 200 tech stock snapshot
The Life360 share price has been volatile in early trading this morning after its Q3 results. Investors may have been expecting more from the company and are still digesting results.
In the last 12 months, the stock is up more than 188%.
