Company Interview / Life360's path to profitability

Key points:

Improved quarterly results of Life360 (ASX: 360), with increases in both subscription revenue and monthly active usersLife360 (ASX: 360) looks to achieve 150 million monthly active users and $1 billion in revenue, while eyeing a positive EBITDA by Q4Importance of data privacy and integration of AI in the company's customer service operations and member experience

Russell Burke, CFO of Life360 (ASX: 360) highlights the growth trajectory of the company, following its U.S. IPO. Russell takes pride in the record net ads, novel metrics that measure additional paid subscribers which contributes to the overall results. On their road to profitability, he outlines that Life360 (ASX: 360) expects to deliver positive EBITDA in Q4 of this year, which will continue to be consistent in the following quarters. Notably, the cost of going public contributed to a net loss, which Russell says is simply part of doing business.

The company has seen increases in both subscription revenue and monthly active users, now reaching nearly 71 million. Looking ahead, Life360 (ASX: 360) has an aspirational goal of achieving 150 million monthly active users and $1 billion in revenue, as part of their four to five-year plan. The push for global expansion as they intensify their focus on international markets has been largely successful, with parts of the full U.S. product being initially launched in the UK and subsequently in Australia and New Zealand.

Concerning the deployment of the $162 million cash position, Russell says there are no short term plans for significant deployment. However, they note the commitment to data privacy and the increasing use of AI in enhancing customer service and member experience. While Russell avoids engaging in daily stock price discussions, he expresses a commitment to delivering value for investors and shareholders through business execution and leveraging operating costs.

Full unedited transcript below:

0:00

Live 360 has upgraded its full year guidance after reporting a 20% increase in second quarter revenue to 84.9 million USD. To get the story behind the numbers, I spoke earlier with life 360 CFO Russell Burke. Well, it's it's always good to have a record quarter. So, um, you know, this is this has been our first quarter after our US IPO and we're now a dual listed. And, uh, it's great to start with, uh, with a record quarter. So we had record uh, net ads, uh, which is one of our key metrics. It's um, it's how we measure the, the additional paid subscribers that we've added in the quarter and that flows through to, to the rest of our results. Um, we're we're looking at, uh, delivering a $11 million adjusted EBITDA, which was also a record for us. Um, and we're really strongly on our path to profitability and that path to profitability

0:59

expected in full year 25.

1:03

Uh, yeah. We in fact, may accelerate be ahead of that. So, uh, we're looking at, uh, getting to positive EBITDA in Q4 of this year and will be consistently positive EBITDA each quarter after that. So you mentioned the dual listing listing on the Nasdaq in June. Just tell us about the cost of that IPO because that did contribute to a net loss.

1:28

Um, it did we we definitely had some, some expenses. Um, and uh, that, that uh, 5.8 million of uh, of that net loss were related to IPO transaction costs. Uh, in fact, we would have been, uh, uh, EBITDA positive this quarter if not for that. But, uh, but that's, that's part of the part of the cost of doing business. And, uh, we definitely see the benefits of, of, uh, being listed on Nasdaq, uh, as a part of our overall strategy.

2:00

So you've seen an increase in subscription revenue and also monthly active users hitting that near 71 million mark. What's the target for live 360?

2:11

Uh, you know, our immediate aspirational goal is about 150 million, um, MRU as sort of monthly active users. Uh, but that's that's part of our sort of 4 to 5 year plan. Um, and we're, we aggressively moving towards that. And, you know, the other parts of that, uh, plan are get to $1 billion of revenue, uh, and 25% EBITDA margins. And that, of course, through goes into rather the global expansion. Where are you at with those plans?

2:46

Um, you're relatively early days. Um, you know, historically, our business has been focused in the US. Uh, it's really just in the last 12 to 18 months that we've had a had a more intensive, uh, focus on international and that that I have to say has been very successful. Um, over that period, we've definitely, uh, focused a lot on improving the international member experience. And that's delivered some great results for us. As well as that, we've started to launch the full US style triple tier product, uh, initially in the UK and the latter part of last year, and in Australia and New Zealand in April this year.

3:29

What's your advertising strategy and I guess how are you trying to reach more users?

3:36

Um, yeah. No, it's a, it's a, it's a it's a great point where we're really just started, uh, embarking on advertising, uh, to our free user base. Uh, we've just started to build the infrastructure. We're putting together various partnerships, but it's relatively early days for us. But we see a huge opportunity there. Uh, and particularly as, as you think about international, we, we have free users in, uh, right across the globe. But in some territories where we're not likely to launch the full triple tier product in the near future. So that gives us the opportunity to really start monetizing those users. How much does seasonality affect your business, too, with, say, the return to school momentum?

4:24

Um, yeah. The the historically, the US back to school period has been a really strong period for us in the third calendar quarter of each year. Um, and that's that's where we've really been hit Seasonal highs in terms of adding more use, adding adding paid subscribers. Um, and that's sort of continuing where we're definitely see that, see that trend continuing this year. Um, and we're putting a little more marketing spend into that. Uh, but we also see that trend, uh, in the northern hemisphere territories that we've launched in. So we're, we're seeing that in the UK and in Canada as well. You say that your lifeblood is your core free user base. Is there any point that like 360 could become pay only?

5:12

I think we're a long way from that. The the freemium user model has been very, very successful for us. Um, so we've spent a long time and invested quite a lot in building that 70 million free user base globally. And that's important to us because it really provides the, the, the feeder for paid subscriptions. And, uh, as, as we move into advertising, that'll give us that, that really huge base, uh, of, of of users to, to monetize. And you're with our users. We have a very unique sort of data set, um, and a very valuable, uh, advertising base.

5:56

You've got a quarter end cash position of $162 million. What's the plan? So how what are the plans looking like to deploy some of that?

6:04

Um, you know, we're we've got no, uh, short term plans to deploy significantly. Um, uh, you know, we we did build that as a something of a war chest just to make sure our balance sheet was was very strong. Uh, we talked about, um, a small investment in, uh, an entity called Hubble, which is a technology company, uh, with, with satellite tracking for, for devices. Um, but that's a relatively small sort of $5 million investment that we're looking at. Uh, we'll be opportunistic. Uh, we've done some small acquisitions along the way and and will continue to look at that. How do you address some concerns though, I guess, about, um, privacy, particularly if people might have fallen out with somebody who did follow them on, say, circles, and then they're getting concerned about the technology, potentially tracking them.

6:59

Um, yeah. The, the the data privacy is is is absolutely key to our member experience. So that's a huge focus for us. And we provide lots of tools for, uh, turning off uh, access to, to, to that sort of tracking. So uh, we have really rarely seen any issues there. How much are you using AI in some of your new technology as well?

7:27

It's it's interesting. We're just starting to, to do that. Um, and there's, there's a few aspects where we can use AI, uh, where we've already implemented it within our customer service operations just to, just to make that more efficient and, uh, and make it a more delightful experience for our members. Um, as we think about product, um, where, uh, we implementing it across the engineering side, um, and to to support the teams generally. Um, and then as we think about the, the future and the and the member experience where we're, we're starting to look at how to deploy, uh, deploy AI to, to just improve that experience. As a chief financial officer and somebody who looks at the numbers, you no doubt look at the market, the market has very much enjoyed your results today here in Australia. And something like a 98% jump. Year to date. I know you can't control the market, but you must be pleased with that. And I guess where do you

8:26

see further growth for shareholders?

8:30

Um, we we basically just we're focused on executing, um, we believe we have a, uh, as I indicated with those, those aspirational numbers, we we have a huge opportunity continue to grow aggressively. Um, and as, as we move along our path of profitability, where we're at that scale, where we can really start to leverage operating costs and, and deliver, uh, you know, much more meaningful bottom line results. Um, so that gives us the opportunity to, to continue to provide a real, real value for, for investors and shareholders. And we see a long way to go there. Uh, that that said, you know, we focus on executing and and try and try not to, uh, focus too much on the on the stock price from day to day. And just, I guess, a quick word about how you're going in the US to in terms of on the market, as we mentioned, you

9:30

launched earlier this year.

9:32

Yeah. No, it's uh, it's it's been interesting, uh, very much as as expected. Um, uh, you know, we're in the early days of our, of our Nasdaq listing, um, and it, uh, it typically sort of follows the, the ASX market as well. Um, so uh, uh, but but we were able to achieve what was a, a long term goal for us is to bring a number of sort of quality US investors onto our register as well.