Life360 Inc (ASX: 360) shares are sinking on Tuesday morning.
At the time of writing, the family safety and location technology company's shares are down 8% to $18.53.
This follows the release of its first-quarter results before the market open, which appears to have been overshadowed by another tech selloff.
The S&P/ASX All Technology Index is down 3.5% in early trade.
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Life360 shares sink on results day
Not even the release of another record quarterly result and upgraded full-year guidance has stopped its shares from falling today.
Life360 reported total revenue of US$143.1 million for the quarter, up 38% on the prior corresponding period. This was driven primarily by a 32% increase in subscription revenue to US$108.2 million, with core subscription revenue rising 36% to US$103.5 million.
Global monthly active users (MAUs) increased 17% year on year to approximately 97.8 million, with first-quarter net additions of 1.9 million.
Life360 recorded 201,000 net additions to its paying circles, bringing the total to approximately 3 million. This is up 27% year on year thanks to U.S. and international performance.
Advertising was another standout. The company disclosed advertising revenue separately for the first time, with this segment generating US$19.7 million in the quarter, up 329% year on year. Hardware revenue was weaker, falling 49% to US$4.5 million. This was due to lower units shipped and discounts linked to the company's exit from its brick-and-mortar retail channel.
Gross profit increased to US$110.6 million from US$83.5 million, although gross margin eased to 77% from 81%. Operating expenses rose 46% to US$118.6 million, reflecting higher personnel costs, the Nativo acquisition, and increased growth media spend.
Life360 reported net income of US$2.8 million, compared with US$4.4 million a year earlier. Adjusted EBITDA increased 7% to US$17.1 million, supported by subscription and advertising revenue growth. Operating cash flow was positive at US$17.2 million, up 42% year on year.
Management commentary
Life360's chief financial officer, Russell Burke, highlighted the strength of revenue growth and the emergence of advertising as a material contributor. He said:
Life360 delivered strong growth and financial performance in Q1'26. Quarterly revenue grew 38% year-over-year to $143.1 million, and our Annualized Monthly Revenue of $517.9 million was up 32% year-over-year. We are disclosing our Advertising Revenue separately for the first time this quarter, which reached $19.7 million in the quarter and was up 329% year-over-year, as the Life360 Advertising Platform took flight following the closing of the Nativo acquisition.
We ended Q1'26 with $459.0 million in cash, cash equivalents, restricted cash, and short-term investments, a significant increase from $170.4 million a year ago at this time, primarily driven by the net proceeds from our June 2025 convertible notes offering and operating cash flows generated over the last twelve months. In Q1'26 alone, we generated operating cash flows of $17.2 million, up 42% year-over-year.
Outlook
Life360 has upgraded its FY 2026 guidance. It now expects consolidated revenue of US$650 million to US$685 million, which is up from its previous range of US$640 million to US$680 million. This implies year-on-year growth of 33% to 40%.
It also lifted adjusted EBITDA guidance to US$130 million to US$140 million, from US$128 million to US$138 million previously, representing an expected margin of around 20%.
Management expects revenue growth to accelerate in the second half of 2026, supported by subscriptions and the seasonal strength of its advertising platform.
Commenting on its outlook, Burke said:
Looking ahead, we expect revenue growth acceleration into the back half of 2026 driven by both our core subscription business and our advertising platform entering its strongest seasonal window. We will continue to invest in strategic initiatives including international expansion, advertising platform scaling, and product innovation, while remaining committed to balancing growth investment with margin expansion.
