Life360 Inc (ASX: 360) has been one of the standout ASX growth shares in recent years.
The company is still growing its user base, subscriptions, and advertising revenue at a strong rate.
With the shares trading around $18.72 on Monday, is Life360 still one of the best ASX growth shares to buy?
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The growth story still has plenty of room
What I like about Life360 is that it has already built a huge global audience, but I do not think the business is close to reaching its full potential.
The company finished the second quarter with around 102.4 million monthly active users (MAUs), showing just how large the platform has already become.
I still think there is plenty of room to add to that number globally. Just over half of its MAUs are from the US market, which demonstrates its significant global opportunity.
There is also an opportunity to make more from the users already on the platform. Despite increasing by 27% year on year to 3.2 million in the second quarter, Paying Circles still only represent 3.1% of its overall MAUs.
Advertising gives it another way to generate revenue from the much larger group of users who do not take out a subscription.
That is what I find interesting about the growth story. Life360 can keep adding users, convert more of them to paid memberships, and build advertising alongside that.
If it can keep making progress across those areas, I think the business could be considerably larger in a few years.
Life360 shares could become very cheap
This is probably the part of the investment case I find most interesting at the current Life360 share price.
Consensus forecasts point to earnings per share of 54.4 cents in FY26, rising to $1.16 in FY27 and $2.14 in FY28.
At $18.72, that puts the shares on a P/E ratio of roughly 34 times forecast FY26 earnings.
But the valuation falls quickly if Life360 delivers the earnings growth analysts are expecting.
The shares would be trading at around 16 times FY27 earnings and less than nine times FY28 earnings.
For a company that is still growing its user base, subscriptions, and advertising revenue at a strong rate, I think that would be dirt cheap.
Of course, those forecasts are far from guaranteed.
Life360 will need to keep growing revenue and translate more of that growth into profit. But if it gets anywhere close to the current expectations, I think today's share price could eventually look very inexpensive.
What could go wrong?
The biggest risk for me is that the earnings forecasts prove too optimistic.
A lot needs to go right for earnings per share to increase from 54.4 cents in FY26 to $2.14 in FY28.
Growth could slow, advertising may take longer to develop, or the company could decide to invest more heavily than expected.
That could leave the shares looking much less cheap than the current forecasts suggest.
Foolish takeaway
I think Life360 is one of the ASX growth shares I would want to own.
The business continues to grow strongly, and there are several ways for it to make more from its huge global audience.
If Life360 comes close to delivering the profits currently expected over the next few years, I think today's share price could prove to be a very good entry point.
