Life360 Inc (ASX: 360) shares are having a rough day, plunging 15% to $25.20 in early afternoon trade despite the ASX tech company delivering another quarter of rapid growth.
The sell-off leaves Life360 shares down 22% in 2026, while the S&P/ASX 200 Index (ASX: XJO) has gained around 6%. Over 12 months, the stock is down a painful 33%.
So, is the market finally losing patience with this growth story?
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Growth is still firing
On the surface, Life360's second-quarter numbers look impressive. Revenue jumped 38% year over year to $159 million, while subscription revenue increased 31% to $115.6 million.
Advertising was the standout for Life360 shares, with revenue exploding 315% to $22 million.
The company also crossed the 100 million monthly active user milestone, reaching approximately 102.4 million users, up 16% year over year.
US monthly active users climbed 14% to 54 million, while UK, Australia, New Zealand, and Canada users surged 224% to 13.2 million. For an ASX tech stock, that's hardly sluggish growth.
Paying customers are piling in
Life360 added 185,000 paying circles during the quarter, taking the total to 3.2 million, an increase of 27% year over year. US paying circles rose 25% to 2.3 million, while the UK, Australia, New Zealand, and Canada jumped 34% to 400,000.
Other international markets also delivered strong growth, with paying circles increasing 31% to 600,000.
Average revenue per paying circle increased 5%, helped by a shift towards higher-priced products in certain international markets.
But there's a catch.
The numbers aren't perfect
Life360's costs are rising alongside its growth. Operating expenses as a percentage of revenue increased from 77% to 80%, partly due to growth investments and the Nativo acquisition.
Net profit fell 28% to $5 million, with stock-based compensation jumping to $22.8 million from $15.2 million a year earlier. Higher depreciation, amortisation, and restructuring costs also weighed on earnings.
That's an important wrinkle for investors in Life360 shares. The tech business is growing rapidly, but it's not yet delivering the same growth in its bottom line.
What did management say?
Life360 CEO Lauren Antonoff said:
This quarter, Life360 crossed 100 million monthly active users—proof of the trust millions of families place in us to stay connected, coordinated, and safe. Disciplined execution drove strong Paying Circle growth and put MAU back on the growth trajectory we outlined last quarter.
Management also pointed to continued growth among younger adults and its expanding role in everyday family life.
What's next for the troubled tech stock?
Life360 expects revenue growth to accelerate during the second half of 2026. The company is forecasting FY26 revenue between US$650 million and US$685 million, with adjusted EBITDA between US$130 million and US$140 million.
It plans to keep investing in product innovation, artificial intelligence, and advertising while expanding internationally.
The bull case for Life360 shares is obvious: the company has enormous user growth, rising paying customers, and a rapidly expanding advertising business. The bear case is equally simple: the company needs to turn that growth into stronger profits.
After a 33% decline over 12 months, today's sell-off suggests investors are becoming less willing to overlook the costs of that growth.
