The location-tracking company’s second-quarter result, released on 10 August, showed revenue up 38% to US$159 million, adjusted EBITDA up 53% to US$31.1 million. Importantly, monthly active users crossed a huge milestone, with about 102.4 million now using the app after adding 4.6 million in the quarter. Life360’s ‘Paying Circles’ customers rose 27% to 3.2 million, advertising revenue more than quadrupled to a record US$22 million, and the company guided to full-year revenue of US$650 million to US$685 million.
The ASX-listed shares closed at $29.48 the day the result landed in the US. In the first session after it, they fell to $23.75 on more than four times their average volume. The company’s US shares fell 12% following the result, too.
Speaking to Peter Switzer on this week’s Switzer Show, Lauren Antonoff, Life360’s CEO, made the case for the quarter she reported rather than the one the market reacted to.
“This quarter we crossed 100 million monthly active users. We saw excellent growth in the quarter. And we really ended the quarter at the kind of pacing that we want to be able to deliver those guidance that we have for the rest of the year,” she said.
“We will see how the market goes, but over time we expect it to catch up.”
Antonoff runs the company she is defending, so the case that follows is the CEO’s own. But how?
The moat
The market has grouped Life360 with the software companies AI might disrupt. Antonoff’s answer is that its core asset cannot be scraped, because it only exists live.
“I think we’re uniquely positioned for AI to be much more of an opportunity than a threat. What AI needs to be successful is data and meaningful data, and especially data at scale… When we’re talking about people’s family, you don’t really care what your family did a month ago. The question is, where are they now? How do you get a tow truck to them when they need it, or how do you notify them about a current weather alert? Those are the kinds of things that you can’t infer. Those are real things in the real world. So we’re uniquely tied to the real world, and we’ve built up trust at scale.”
On the threat of a tech giant simply copying the product, she answered from experience: “I used to work at Microsoft. I grew up there. I know the power that those companies have, but the reality is that we’re all good at different things.”
The runway argument
The second argument is arithmetic. “We’re about 1% penetrated internationally versus 17% in the US. So there’s a huge opportunity and we’re starting to see momentum in new places,” she said. Product expansion continues into new life stages, with what she called “some exciting pet moments coming up later this quarter.”
She also pushed back on the category label that has followed the company since its kids-on-a-map days: “It’s not at all a monitoring app,” she said, pointing out that location sharing is consent-based in both directions.
One professional investor on the same episode has already taken a side. Julia Lee of Shaw and Partners, whose portfolios hold the stock, named Life360 her pick of reporting season: “We think that the market has overreacted on the downside. So we’ve added to our position there.”
The market’s next scheduled chance to re-mark the story is the Q3 result. Antonoff’s line stands until then: “over time we expect it to catch up.”
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