Life360 - Earnings Call - Q2 2025

Executive Summary

• Revenue beat with raised FY outlook; Q2 revenue $115.4m vs $109.9m consensus*, up 36% YoY, driven by 35% subscription growth and a doubling of high‑margin “Other” revenue; Adjusted EBITDA rose to $20.3m (18% margin) and net income reached $7.0m. Revenue consensus from S&P Global: $109.95m* (9 ests). Values retrieved from S&P Global.
• Management raised FY25 guidance across all lines: consolidated revenue to $462–$482m (from $450–$480m), subscription to $363–$367m, other to $57–$65m, hardware to $42–$50m, and Adjusted EBITDA to $72–$82m.
• Key operational drivers: MAUs +25% YoY to ~88.0m and Paying Circles +25% to ~2.5m (Q2 net adds 136k record for Q2); ARPPC +8% YoY; June AMR +36% YoY to $416.1m.
• Strategic updates: launch of Place Ads and Uplift attribution; AccuWeather alerts with high engagement; Tile device activation now inside the Life360 app; pet tracker on track for holiday launch as a paid, subsidized product.
• Leadership transition announced: Lauren Antonoff named CEO; founder Chris Hulls becomes Executive Chairman; board changes disclosed; transition framed as succession to scale operations and product innovation.

What Went Well and What Went Wrong

What Went Well

• Strong top-line and profitability: Q2 revenue +36% YoY to $115.4m; Adjusted EBITDA $20.3m (+85% YoY) with margin up to 18%; net income of $7.0m.
• High-margin mix expanding: “Other” revenue (ads/data) doubled YoY to $14.5m; gross margin rose to 78% (from 75% LY), driven by mix shift; June AMR up 36% YoY to $416.1m.
• User and subscriber momentum: MAUs +4.3m QoQ to ~88.0m (+25% YoY), Paying Circles +136k in Q2 to ~2.5m (+25% YoY), ARPPC +8% YoY; international MAUs +34% YoY.
• Quote: “We launched Place Ads and Uplift…proof of concept campaigns with multiple quick serve restaurants and mass retailers”.

What Went Wrong

• Hardware headwinds/tariffs: Hardware revenue +3% YoY to $12.3m with promotions; tariffs affected revenue and costs despite partial exemptions; ASP down 7% YoY; hardware remains a lower-margin mix element.
• Operating expense timing: OpEx up 34% YoY due to front‑loaded marketing/personnel; management flagged typical Q3 EBITDA margin dip from seasonal spend (back-to-school).
• Estimates visibility: Street EPS consensus not available; S&P EBITDA consensus exists but isn’t directly comparable to the company’s Adjusted EBITDA (non‑GAAP), creating cross‑metric comparability issues*. Values retrieved from S&P Global.

Transcript

Speaker 9

Participants who have joined by telephone will be in a listen-only mode throughout. As a reminder, we will make forward-looking statements regarding future events and potential financial performance during this call, which are subject to material risks and uncertainties that can cause actual results to differ materially from such statements. A summary of these risks may be found in the Risk Factors section of our Form 10-K filing with the SEC dated February 27, 2025, our Form 10-Q filed with the SEC dated May 12, 2025, and our most recent Form 10-Q filed today. These forward-looking statements are based on assumptions that we believe to be reasonable as of today's date, August 11, 2025, and we have no obligation to update these statements as a result of new information or future events except when required by law. Additionally, we will present both GAAP and non-GAAP financial measures on today's call.

These non-GAAP measures are not intended to be considered in isolation from, a substitute for, or superior to our GAAP results and should be read in conjunction with the company's consolidated financial statements prepared in accordance with GAAP. A description of these non-GAAP financial measures, as well as a reconciliation to the nearest GAAP financial measures, are included at the end of the company's earnings media release issued earlier today, which has been posted on the Investor Relations page of the company's website. We have posted an updated investor presentation on the Investor Relations page, which includes additional complimentary graphics and data. Please note that it has been provided as an additional reference and that we will not be using the presentation as an exhibit during today's call.

We will begin with an overview of results from our Co-Founder and Executive Chairman, Chris Hulls, followed by a business update from our Chief Executive Officer, Lauren Antonoff. Then our Chief Financial Officer, Russell Burke, will walk through the Q2 2025 financials. Lauren will return with comments on our updated 2025 outlook before we open up the call for Q&A. We ask that participants please limit themselves to one question to ensure that we can hear from as many of you as possible. With that, I'll turn the call over to Chris.

Speaker 3

Good afternoon to everyone joining us from the U.S., and good morning to those tuning in from Australia. Thank you for joining our second quarter results call. Before we dive in, I hope you have all seen the press release we sent out earlier announcing that Lauren Antonoff is now our CEO and that I have stepped up into the Executive Chairman role. Going forward, Lauren will be kicking off these calls and will be the lead, and I'd like to thank everyone for their support for the last nearly 25 calls I led as CEO. You'll hear more about this transition later in the call, but I'd like to point everyone to a personal statement I made explaining more about this decision, which you can find on our blog.

I hope everyone will be as excited as I am and will recognize the amount of work we all did to make this a smooth succession, which we hope will go down as a model of leadership for other CEO founders in my position. On to our results. Q2 2025 was another record quarter for Life360. We reached all-time highs in both monthly active users and paying circles, while continuing to deliver on our vision of becoming the go-to platform for everyday family life. These results reflect the strength of our model, the depth of our product-market fit, and the trust we've earned with the millions of families who rely on us every day. We added 4.3 million new MAUs this quarter, bringing our total to 88 million, up 25% year over year. Paying circles also grew 25%, with a Q2 record net add of 136,000.

Engagement, retention, and conversion remain strong, and we're seeing meaningful traction across both free and premium tiers. International expansion continues to be a major growth driver. MAUs outside the U.S. grew 34%, and paying circles were up 28%. We're seeing early success with localized pricing and value-based tiering, especially in the UK and Australia, and we're scaling that playbook across other markets. This quarter wasn't just about operational performance. It reflected cultural momentum. Today, peace of mind isn't a luxury; it's essential. Families are budgeting for it just like Wi-Fi or electricity, and that shift is fueling durable, values-driven growth. As we scale, we're not just adding users; we're deepening engagement, expanding into new verticals, and building a platform families can count on for years to come. Before I turn it over, as many of you have seen, today marks an important milestone.

Lauren is now the CEO of Life360, and I've stepped into the role of Executive Chairman, where I'll continue working closely with her full-time to pursue our strategic goals, which are reaching 150 million MAUs, exceeding $1 billion in revenue, achieving 35% adjusted EBITDA margin, and becoming the number one brand for everyday family life. I'll focus on helping shape Life360's long-term vision, championing our free user experience, and supporting key initiatives. This transition has been part of a long-term succession plan, and with the alignment, momentum, and results we're seeing this quarter, the timing is right. Over the past two years, Lauren has led with clarity, heart, and execution, launching new revenue streams, scaling operations, and deepening the value we deliver to families around the world. She's the right leader for this next chapter, and I couldn't be more confident in where she'll take the company.

With that, I'm pleased to hand it over to Lauren.

Speaker 6

Thanks, Chris, and thank you for your trust and partnership. It's an incredible honor to step into the CEO role at Life360, and I couldn't be more excited for what's ahead. We're in a great position because of the foundation you've built over nearly two decades. I'm especially energized by the opportunity to lead our next wave of growth as we expand our ecosystem and evolve into the Family Super App. You can be confident that we'll stay true to our mission, driving innovation in our product that creates value for members and shareholders. I'm grateful for your continued partnership, and I look forward to working with you in your new role as Executive Chairman. Now, let's talk about Q2.

Our Q2 results further reinforce the strength and resilience of our growth engine, powered by the enduring value we deliver by helping families stay connected to the people, pets, and things they love. Our growth is largely fueled organically through word-of-mouth referrals and increasingly the brand power we're building around the world. Even in our most mature U.S. markets, we're seeing continued momentum with engagement, retention, and conversion. Internationally, we're especially encouraged by the progress we're seeing in subscription performance. We're outpacing targets in many regions and seeing meaningful uplift in revenue per paying circle, driven by localized pricing strategies, premium tier adoption, and expanding feature engagement. This momentum was bolstered by our rollout of emergency dispatch to six additional European countries earlier this year. Combined with localization efforts and targeted experimentation, the enhancements we're making are strengthening our value proposition and accelerating monetization outside the U.S.

Of course, our premium model continues to be our key driver of growth, winning families by delivering everyday utility and guiding them toward premium features that deliver even more peace of mind. While MAU growth varies across markets, we're seeing consistent conversion gains. We feel privileged to have a model where investing in our members leads to durable recurring revenue and compounding subscriber growth. One thing we're increasingly seeing is a broader shift in what families consider essential. In what we've called the anxiety economy, our latest research shows that nearly eight in ten Americans are more likely to invest in safety during times of uncertainty, and that 40% of parents consider safety and emergency alert apps non-negotiable. Life360 is now up there as one of the top apps alongside brands like Netflix that consumers are reluctant to give up even when budgets are tight.

This reflects how families are reassessing priorities and why Life360 sits at the center of this new landscape, providing both security and connection in an unpredictable world. Back to school is always a high-impact moment for us, and this year that's not just true in the U.S., but also in the U.K., Canada, and across Europe. The season's just getting underway, and we've launched one of our largest ever multinational campaigns focused on features that make everyday life during the school year easier. Everything from place alerts to let you know that your student arrived safely, and Tiles to keep track of lunch boxes, instruments, or sports gear. We've got some new things in the hopper to launch as the season unfolds. The campaign is running across YouTube, linear and streaming TV, paid social, and influencer channels.

This effort is supported by broader brand storytelling, including the hero spot we introduced last quarter, "I Think of You Dying." That creative went viral in Q2 with over 20 million organic impressions, sparking cultural conversation and helping nearly double our unaided brand awareness quarter over quarter. That's an extraordinary shift for a metric that rarely moves, so we'll see if it holds. While we're measured in our optimism, the early signal is clear: the campaign has widened our funnel and increased our visibility in key markets. Personally, I love how we show up in culture in unexpected ways. One of the most talked about trends this quarter was fan bushing, a viral term that refers to teens using Life360 to drop in on their parents when they least expect it.

While my kids haven't fan bushed us, they have caught my husband and I sneaking out to eat without them. The fan bushing buzz started on TikTok and was picked up by the New York Post and other major media outlets. While it's playful, it highlights just how embedded Life360 has become in modern family dynamics and how our relevance truly spans generations. Q2 also marked an important milestone on our journey to expand Life360's impact beyond the phone. I'm happy to say that Tile devices can now be activated directly within the Life360 app, eliminating the need for a separate Tile app. This streamlines onboarding, improves engagement, and lays the foundation for a more unified member journey. Meanwhile, we remain on track to launch our GPS-enabled pet tracker later this year. Our go-to-market approach focuses on activating our highly engaged free members in select markets.

From day one, the device will be fully integrated into the Life360 app and require a paid membership, offering families a seamless way to track people, pets, and things in one place. Our integrated experience plays a critical role in keeping people close to the ones they love and serving as an entry point to bring new members into our ecosystem. More broadly, we're seeing continued growth in the number of members linking a device to their Life360 account, a key metric that tells us that hardware is driving real value across our base. Devices continue to be a strategic lever for subscriber acquisition, retention, and long-term engagement. While pets are our next category, they won't be the last.

We see clear opportunities to expand this model into additional use cases where connected hardware and software provide lasting peace of mind and expand our role in the lives of families everywhere. Q2 was also a pivotal quarter for our advertising platform. We launched Place Ads and Uplift by Life360. These products help brands reach families in real-world moments and measure offline impact of their campaigns in Life360 and beyond. Place Ads deliver location-based push notifications triggered by behaviors like visiting a store or sports field, while Uplift provides privacy-safe first-party foot traffic measurement. Early traffic is encouraging. We've lined up proof of concept campaigns with multiple quick-serve restaurants and mass retailers, and we're in late-stage conversations with new measurement partners. While we're still early in the revenue ramp, we're building a high-margin business with strong alignment to our member experience.

Our partner relationships are also helping us drive member value and engagement. We launched our integration with AccuWeather, so we now deliver severe weather alerts that keep our members safe and drive exceptionally high click-through rates. Our partnership with Aura is helping families stay safer online. We're already live with in-app ads, and new campaigns powered by our audiences are running across Meta and Google. Finally, we launched a milestone gifting campaign with Nift, where we provide members curated offers at key membership touchpoints. This is a great example of ads delivering member value with over 70% of participants rating the experience positively. We also made meaningful improvements behind the scenes. Upgrades to audience targeting and data signals led to a significant increase in reach through three major programmatic demand partners.

These capabilities are designed to drive stronger performance and incremental revenue while extending the value of our platform beyond the Life360 app. While ads remain a long-term build, the foundation's in place, and we're proud of the early traction we're seeing. Beyond advertising, our broader data ecosystem is thriving. Our longstanding partnership with Placer.ai continues to yield more value. Hubble Network, which activated the world's first Bluetooth low-energy satellite network, launched its first enterprise application. Smart Pin is a commercial-grade asset tracker powered by the combined Hubble and Life360 infrastructure. It enables global location visibility on top of cellular coverage, opening up a wide variety of enterprise use cases. While still early, it's the first stage of realizing the long-term opportunity that comes from working with Hubble to deliver enterprise-grade tracking and location intelligence.

Overall, Q2 was a strong quarter, and now we're hard at work driving growth and finding new ways to help millions of families around the world keep the people, pets, and things they love safe and connected. I'm more excited than ever about what's ahead and the opportunity to lead the Family Super App that makes everyday family life better. With that, I'll hand it over to Russell to walk through the financials and our continued focus on increasing profitability. Russell.

Speaker 4

Thanks, Lauren, and thank you all for joining us today. As a reminder, the Q2 financials I'll be referencing are unaudited and denominated in U.S. dollars. We are very pleased to report record-breaking Q2 results, driven by continued strength in our subscription business and growing contributions from our other revenue streams, along with continued margin expansion. Q2 revenue increased 36% year over year to $115.4 million, reflecting strong momentum in both subscription and other recurring revenue. Subscription revenue grew 35% year over year, while core Life360 subscription, which excludes standalone hardware subscriptions, increased 38%, accelerating from Q1, driven by 25% global paying circle growth and 8% higher ARPPC. This performance reflects improved conversion in the U.S., supported by targeted marketing and deeper product engagement. Hardware revenue increased 3% year over year to $12.3 million, with high unit volumes offset by promotional pricing.

Online and physical retail unit sales increased year over year. Gross margin for hardware remains stable year over year, despite the impact of tariffs. While we are receiving partial tariff exemptions at the moment, we are seeing effects on both revenue and costs in the near term. We remain prepared to adjust further as conditions evolve. Most importantly, though, hardware continues to serve as a strategic funnel into our subscription ecosystem, supporting long-term value creation, even as short-term demand fluctuates and lower margin standalone revenue continues to become a smaller part of our revenue mix. High margin other revenue doubled year over year to $14.5 million, driven by strong contributions from advertising and data partnerships. Both performed in line with expectations and continue to scale as planned. June annualized monthly revenue reached $416.1 million, up 36% year over year, underscoring the strength and durability of our high-quality recurring revenue streams.

Gross profit grew 42% year over year to $90.5 million, with gross margin expanding to 78%, up from 75% in the prior year, driven by the favorable revenue mix. Operating expenses increased 34% year over year. That said, this was largely driven by timing, not a change in our cost structure or operating discipline. As we've previously flagged, we made the decision to pull marketing and personnel costs into Q2 from Q1 and Q3 to support global growth and to capitalize on key seasonal campaigns. These were planned, front-loaded investments, especially around our largest ever demand creation campaign and back-to-school positioning. As a result, the trend in our operating leverage improvements has temporarily flattened, and we expect it to return to trend by the end of the year as expenses normalize and revenues continue to grow.

Breaking it down by P&L line, R&D increased 19%, reflecting continued investment in people, product development, and third-party tools. Sales and marketing rose 60%, including commissions, driven by global brand campaigns and customer acquisition efforts. Commissions grew in line with subscription revenue. The overall increase came off a low baseline last year when we strategically reduced spend. G&A rose 19%, aligned with overall company growth and organizational scale. On a related note, we also launched our first iOS-approved test of web-based billing in June, following recent court rulings around App Store payments. It's still early, and permissions in this area continue to develop, but it is encouraging. We see strong potential over time to improve unit economics and build more direct relationships with our members as this capability expands. We continue to deliver significant progress on profitability.

Net income was $7.0 million, a sharp improvement from the $11 million loss in Q2 of last year. Adjusted EBITDA rose to $20.3 million, up from $11 million in Q2 2024, and representing our 11th consecutive quarter of positive adjusted EBITDA, driven by the growth in high margin subscription and other revenue and discipline cost management. Turning to the balance sheet and cash flow, we ended Q2 with $434.2 million in cash, cash equivalents, and restricted cash, up $272 million from a year ago. To support our long-term roadmap, we successfully raised over $275 million in Q2 through a zero-coupon convertible note. The offering was well received and structured to provide significant capital flexibility without near-term dilution. It puts us in a strong position to move quickly on the right strategic opportunities as they emerge.

Operating cash flow was positive for the ninth consecutive quarter, coming in at $13.3 million, below adjusted EBITDA due to the timing of receipts and payables. Investing outflows totaled $27.8 million, including a $25 million investment into convertible notes issued by Aura. Financing inflows of $278.3 million primarily reflect proceeds from the June convertible note offering. Thanks for your attention, and I'll now hand it back to Lauren to walk through our updated earnings guidance.

Speaker 6

Thanks, Russell. As we look ahead, we remain confident in our ability to deliver consistent results through disciplined execution and, most importantly, our continued commitment to making everyday family life better and bringing peace of mind to tens of millions of families around the world. Our subscription growth is strong, and our offering is exceptionally well positioned to navigate the anxiety economy. We continue to invest for the long term with a focus on expanding internationally, scaling ads, and deepening engagement across our platform. With that foundation and the strength of our subscription model, we are raising our full year 2025 guidance as follows. We are increasing our consolidated revenue guidance from the previous range of $450 million to $480 million to a new range of $462 million to $482 million.

We are raising subscription revenue guidance from the previous range of $355 million to $365 million to the new range of $363 million to $367 million. We are also raising the range of hardware revenue guidance from $40 million to $50 million to $42 million to $50 million. We are raising the range of other revenue guidance, which includes advertising and partnerships, from the previous range of $55 million to $65 million to a new range of $57 million to $65 million. We are raising guidance for adjusted EBITDA from the previous range of $65 million to $75 million to a new range of $72 million to $82 million. For modeling purposes, we expect our Q3 adjusted EBITDA margin to follow our typical quarterly pattern and be slightly lower than in Q2, driven by the timing of our growth investments in marketing and R&D.

That concludes our prepared remarks, and I'll now turn the call over to RJ, who will manage the Q&A portion of our call today.

Speaker 9

Thanks, Lauren. To participate in the Q&A, please raise your hand by pressing the raise hand icon at the bottom of your screen within the Zoom app. You will need to unmute yourself to ask a question. As a reminder, please limit your initial query to one question so that we may get to as many participants as possible. With the first question, I'd like to go to James Bales with Morgan Stanley. Can you unmute your line?

Hi everyone, thanks for taking my question. I'd like to understand a bit more about how you're going with pet tracking. Can you maybe give us an update on when you expect to launch? Which countries? Is this going to be online only or retailers? Can you give us a sense of pricing? Is there out-of-pocket upfront pricing for the hardware? I guess there's been no issues in terms of rearranging production around tariffs as well.

Lauren, there you go. Go ahead, sorry Lauren.

Speaker 6

We're very excited about the upcoming launch. We continue to be on track for the holiday season. We're going to hold the details about exactly where and when, so that we have a great launch, but it should be fun and you'll be seeing more as we approach the holidays.

Speaker 9

Thanks, James. We're going to move to Mark Mahaney, but I think David might be stepping in. David, if you could unmute. David, are you there for Mark? If not, we can move to the next. All right, let's move to Lafitani Sutriyatouf.

Hi everyone, and congratulations Lauren on your well-deserved promotion. Chris, you must be proud to see where the business is today, and it is also great to hear that you'll still be involved as Executive Chair. I wanted to unpack a little bit on the advertising side, the term Place Ads and Uplift. Just to educate us better what this means from a revenue perspective, margin perspective, a user experience, how is it different from say Banner Ads? How is this a step up? If you could just sort of explain it better to us what it is and also when did it start? Thank you.

Speaker 6

We've launched both these products in Q2, so they're new products. We don't have specific revenue guidance, but in terms of what they do as a product, Place Ads are really very much an in-app experience. They allow us to send an in-app message when somebody is in a particular location, so that's very experiential. Measurement is very much behind the scenes, and that gives advertisers, gives brands a way to understand whether the people who are seeing ads, whether it's on our platform or off platform, are actually coming to the places that are advertising. It's a closed loop measurement system.

Can I clarify? In terms of a cost per click or an ad, does it differentiate by much? If you could just go into a little bit more from a, are they paying more for those sort of Place Ads? On the other side, how should we think about the other component, like the data tracking piece, the Uplift component?

Yeah. Let me jump in there, Laf. These are obviously designed to be high-value advertising units, and that's always been part of our plan. As you know, we're very focused on delivering value to the member as well as the advertiser here. These are part of the evolution of our advertising product. They're very much a part of our roadmap and were part of the configuration as we ramp up the advertising revenue stream. They're relatively small at the beginning, but we really see the huge opportunity for this in the longer term.

Got it. Thank you.

Speaker 9

Great. Let's go back to Mark Mahaney's line and unmute to see if David's there.

Hey guys, David's on. Can you hear me?

Yep.

Thanks, RJ. Hi Lauren, congratulations. We look forward to working with you. Looking forward in your new role as CEO, what do you believe are your top two or three priorities over the next 12 months? Just a quick follow-up on penetration. Can you comment on any quarter-over-quarter penetration trends that you're seeing in the U.S. and international? Thank you.

Speaker 6

Maybe I'll start with penetration first, and I'll just say that we see consistent progress as we, both in the U.S. and other markets. There's no big changes there. I think in terms of my priority and focus, it's much the same story. The priorities we've set out for the company continue to be true, focusing on engaging users, growing our ads business, driving international growth, and really earning our place as the Family Super App that's delivering value to everyday family life.

Speaker 9

Great. Thanks, David. We're going to move to Maria from Kennecourt.

Great. Thanks so much for taking my question. Lauren and Chris, congrats to both of you. Chris, I appreciate the blog post and your sharing that with us. With you shifting more of your focus to product innovation and strategy, how should investors think about the pace of new launches? Are there any changes to your longer-term view of adjacent opportunities for the company versus what you've outlined previously? Thank you.

Sure. We have essentially already been running the playbook that we're going to be running in the future for the last year. Because this was well planned, I mean, I could go way back when Lauren joined the company. There was no promise of her becoming CEO, but we were hiring specifically to say, hey, this is a real possibility. This has been a discussion that I've had with Lauren since literally before she joined. I don't know if we've ever publicly shared this, but we were able to get Lauren to take a COO offer instead of a CEO offer because of the huge opportunity. I think Lauren has accurately predicted that this was a great move for her. I just share that backstory that there's honestly not a lot that's going to change.

I've worked with a lot of execs, and where Lauren and I are really one-to-one aligned is that we win by serving our customers. My role really will not be all that different than it's been the last year. The vision is not changing. In terms of pace, Lauren already has really, I think, done a better job on just picking up the ability to move more quickly at scale. My heart is in the earlier stages. I really see Lauren as a great partner and not too many changes. Lauren, anything to add?

Speaker 6

No, that sounds exactly right.

Speaker 9

Great. Thanks, Maria. Next, we're going to open it up to Suraj from Citi.

Thanks, RJ. Lauren, just on looking at some of the user metrics, interesting that paying circles has now picked up a bit. It also looks like the DAU to MAU ratio has also picked up. It seems like engagement and conversion is improving. Can you just touch on those trends and whether that's just U.S. and what you're seeing internationally as well? Whether there's any changes in your thought process with the pet tracker launch as well, in terms of where these sort of mix, etc., trends? Thanks.

Speaker 6

Yeah. We continue to put a lot of focus on member engagement. I'd say coupled with experimentation and really trying to make sure that people are discovering the value that we have and able to access it and really loving it, we are seeing gains both in the U.S. and in international markets. Pets is sort of an opportunity to have a step change. There will be a smaller number of users who have pets, but for those members, we expect to see those kind of core metrics go up. It has been a continued focus and a continued push, and we're really proud of the progress we're seeing there.

Lauren, can I just follow up on that second point around pets? One of the concerns some investors are asking us is whether there's a cost headwind because you give these pet trackers free to existing members, right? I know you don't want to go into details, but if you could just give us your thought process on how you think you're bundling this, right? My understanding is it's going to be free potentially at the start, but yeah, is there a big drag in terms of giving pet trackers for free to the existing user base? Thanks.

It is not a free product. We haven't released pricing yet, but it will be a paid product. We sort of talk about it as a subsidized paid product. We think of it a little bit like we would invest in marketing and customer acquisition, so we're offsetting some of those costs. Overall, it's a good value proposition, and we make our return on it relatively quickly.

Thanks.

Speaker 9

Thanks, Suraj. Next, we'd like to open it up to Mark Kelly at Stifel.

Hey, great. Thanks very much, and congrats to both Lauren and Chris. Appreciate you taking my questions. I wanted to ask about just another question about penetration. I feel like every time we see a new map of the U.S., penetration continues to tick higher, even in places like Texas, which I think is kind of the poster child for your subscription business. Where do you think that ultimately tops out over time? That's my first question. Have you seen any churn as a result of the ads business, or is it kind of in line with what you're expecting? Thank you.

Speaker 6

This is Chris, and I have very much a shared view that we don't know exactly where things top out, but we think the end is nowhere in sight. The reality is that most people have a family that they care about, and it's not just teenagers. We have a potential to really have much, much deeper penetration over time. The second part was on whether we've seen any sort of trade-off for MAU as we've introduced ads. This was something we were very, very cautious about as we rolled out advertising. We're very committed to making sure that we're serving members first and optimizing for revenue second. So far, so good. We have seen no significant drop-off.

Great. Thank you, Lauren.

Speaker 9

Thanks, Mark. Next, we'd like to open it up to Weiwing Chen at RBC.

Speaker 4

Hi guys, congratulations on the results and the new roles. I guess for me, given ads are still very new to you guys and you're still continuing to roll out features and the product itself, how's your thinking changed in the past quarter about the advertising opportunity?

Speaker 6

Ads is a fun space because we're always learning more. I don't think it's changed so much as I feel like we get more and more educated as we go. It's been really exciting to build a relationship with partners. We are starting more proof of concepts, and we're learning from each of them. No big change in perspective, I think just more learning.

Speaker 4

What I'd add to that, Wai, is that those learnings are filling in the details of how we build out the roadmap. The overall roadmap, the details may be different within itself, but it's laying out pretty much as we expected. As we've said before, it's going to be a slowish build, but we absolutely see the opportunity in the longer term.

Speaker 9

Thanks. Thanks, Weiwing. I'd like to go to Chris Kuntarich at UBS next, please.

Great. Thanks for taking the question. Congrats, Chris, Lauren, to everyone, really. I wanted to touch on the branding campaign or the back-to-school campaign, and can you help us understand kind of what sort of benefit you're factoring into the second half subscription revenue growth at this point?

Speaker 6

That sounds like a Russell question.

Speaker 4

Chris, I'd have to say in revenue dollars, it's relatively limited just because the way our model works is that those marketing investments have a return over a period of time. What I would say is that as we monitor the marketing campaigns that we've put in place, we're really seeing good returns. It gives us the confidence to continue to further invest in marketing while it's giving us those strong returns.

That's helpful. Maybe just one follow-up. It sounds just from Russell, your response here and just kind of talking about linear then CTV and then moving into some of the other digital channels. This is still going to be very brand-heavy spend. Could you just give us an update on your use of performance marketing at this point and how you kind of think that evolves as we potentially see changes to where your customers are paying and potentially if they're using the web-based payments more often? Thanks.

Yeah, no, that's an interesting question, Chris. Performance marketing will definitely be part of our suite of tools going forward. You're right that we've definitely introduced more brand marketing, and we're seeing the sort of immediate measurement impact of that, and we expect that to flow through to subscription growth in the longer term. Performance marketing is still part of the toolset, and to your point, as we look at web onboarding, that'll be a key piece of that. It's again now a smaller piece of that overall toolset.

Understood. Thank you.

Speaker 6

Maybe I'll add that.

Go ahead, Lauren.

Maybe I'll add that our CMO is really focused on the blend of different advertising strategies, and you know this kind of demand creation may not be as directly tied to performance as traditional paid marketing, but it very much does drive demand over the long run.

Got it. Thanks, Lauren.

Speaker 9

Chris, thank you. Next, we'd like to open up to Wei Sim at Jefferies.

Hi team, can you hear me?

Go ahead.

Great, thank you. I put out a deep dive report on the marketing a couple of weeks ago, and I've been having a lot of conversations. It's really surprised me how many people are using Life360 now, even within the financial community. Lauren, your example on banned bullshitting, I think, was a great one. As we've seen the proliferation and more people use Life360, I found that more people are using it as a social networking app increasingly, rather than just using it as a safety utility. My question is, how do you think about positioning Life360 over the medium term to pivot more specifically as a social networking app rather than a family safety tool? Thanks.

Speaker 6

Our differentiation and what makes us great is that we are very much focused on family. It helps us really pay attention to giving peace of mind rather than entertainment. It turns out your family is fairly entertaining, but I don't know if you've ever used some of the social apps that you're paying attention to your friends. It's not quite as interesting as where your family is. We are going to stay focused on family and creating that safety and connection and really offering peace of mind. We know that many of our younger members do use it a little bit on the edge to connect with their friends, and we think that's great, but our focus is going to stay on family.

All right, thank you.

Speaker 9

Thanks, Wei. Next, we'd like to open up to Andrew Boone at Citizens J&P.

Thanks so much for taking the questions and congratulations, Lauren. I'd love to talk about international and the localization that you guys mentioned in the prepared comments. Lauren, can you speak to the broader trends of where you guys are in the process of creating really strong product-market fit, or where may the holes be in international markets that you guys are now filling out? Anything to help us better understand that trend would be helpful. Thanks so much.

Speaker 6

Great. It's something that we're looking at a lot as we get deeper into markets. We'd love to see our general adoption and penetration get as great as it is in markets around the world as it is in the U.S. To that end, one of the things that we're investing in is making sure that our location works in places that don't necessarily rely on cars as much as we do in the U.S. First of all, it's making sure that our core services really work the way that families need them to work wherever they are. Another facet is just understanding what's different about different environments and what kind of safety features we need to offer to speak to people in different countries. That's newer research and newer investigations for us, but something that we'll continue to look at over time.

Thank you.

Speaker 9

Thanks, Andrew. Next, I'd like to open it up to Chris Savage at Bell Potter.

Oh no, oh no, oh no.

Can you hear me?

Yes.

Thank you.

Perhaps a question more for Russell. Russell, at the Q1 result you flagged, you thought Q2 EBITDA would be lower than Q1, yet it didn't turn out that way. You did flag that would be driven by a hike in sales and marketing investment, which did come through. Was the hike just not as much as you thought, or the operating leverage was greater in the business than perhaps thought?

Speaker 4

Yeah, I think it's more of the latter, Chris. We did, as you say, specifically flag that we would have some higher operating expenses for marketing and personnel costs in Q2, which did happen. As we worked through the quarter, what we also saw was that the subscription strength growth was very strong. The mix of revenues gave us a very good sort of gross margin, very strong gross margin for the quarter. We did see some savings in other areas of operating expenses. Both of those contributed to the adjusted EBITDA result for the quarter.

Thank you.

Speaker 9

Thanks, Chris. Next, we'd like to open up to Rob Sanderson at Loop.

Hold on. Now, can you hear me?

Yes.

Okay, great. Thank you. I've got three on the advertising business, just with the new products launching. I wanted to understand a little bit more about the value proposition here. Place Ads sounds very location-specific, and you know, local location ads, like that's been a pretty difficult area to scale. Even Google Maps has taken a long time to get scale of revenue here. Can we talk a little bit about go-to-market? Should investors expect to see more Uber-like partnerships? You mentioned QSR. Anything you can help us to understand on the go-to-market around Place Ads. Then on Uplift, this seems to be a product for attribution measurement. Is this something that can be integrated into MMPs or other attribution providers? Any comment on how the model works? Is it like impression-based or percent of ad spend? Anything in terms of how to understand that product.

The script you mentioned, campaigns, integration with Meta and Google. From a high level, can you kind of tell us how that type of integration would work? Is that the platforms themselves leveraging your data, or is that something integrated by some intermediary? Thank you.

Speaker 6

We have been pretty consistent about this being sort of a longer ramp as we get these products into market and drive adoption. We're seeing some pretty exciting proof of concepts. I'm looking forward to the point where we're ready to scale those and we get to share more. Right now, we're pretty happy with the momentum that's going on. In terms of the measurement product, that's part of our efforts to use our data both on our platform and in other platforms to be able to deliver measurement, to allow people to measure foot traffic, to know whether consumers are showing up at the places that they're advertising for. The different ways that we monetize that are still developing, and I think we'll share more as that product line matures.

Speaker 9

One thing, Rob, can you clarify your question on the Google Meta part?

Yeah, just going back to the comment in the script, I think there was some mention of just inclusion in some campaigns that are being run on Meta and Google. I just wanted, from the high level, how does that type of integration work or come to market?

Speaker 6

I can take that. That's part of our offline advertising platform. We're working with partners like the Trade Desk and other platforms that allow us to deliver ads through other ad platforms.

Right. Your data would be sort of accessed by third party, you know, in that case, DSP with Trade Desk or whatnot, just to bolster, I guess, the targetability of the ads delivered through that platform. Is that generally the structure or the concept?

We build audiences in privacy-safe ways. They're obfuscated so that we're not giving away specific user data, but it allows third parties to use those other platforms to target our customers on platforms like Meta and Google.

Oh, excellent. Thanks, Lauren.

Speaker 9

Awesome. Thanks, Lauren. Awesome. Thanks, Rob. That concludes initial queries. If there are other follow-ups, you can go ahead and raise your hand while we still have time. We have one follow-up from Suraj.

Thanks, RJ. I mean, I might approve if that's okay. The question just on following up on that data and on ads, right? Russell, can you just confirm, I mean, there's an improvement quarter on quarter. Was that really, I'm guessing that is ad-driven and whether that was, you know, Aura, AccuWeather. Lauren, you've been consistent that it takes a couple of sort of quarters for the measurement and targeting to mature, right? Do you reckon you're ahead on plan on that, or is it in line with what you're expecting? Thanks.

Speaker 4

I'll take the first part of it, and Lauren can take the second. In terms of sort of quarter over quarter, yes, we're seeing good expected growth in advertising revenue, and that would represent the larger part of the growth in the other income line. That said, we're seeing continued good growth in the overall data revenue.

Speaker 6

Yeah, in terms of our expectations, you know, one of the things that we learned pretty early on is that advertising is not quite like subscriptions. It's a lot more variable. I'd say overall, it's in line with our expectations. We're feeling good about things, but we know that this is a long build.

Just got one more as well. Russell, is there a big step up in OpEx in the second half that we've been thinking about? I mean, it's a bit confusing because you said there'll be operating leverage at the end of 4Q or back to trends, but 3Q is down. Is there a big step up that we should be thinking about? Thanks.

Speaker 4

Outside of sales and marketing, there is not a big step up. We do tend to build quarter on quarter as we're growing the business. Typically, Q3, we do invest more in sales and marketing as that's where we really capitalize on the sort of back-to-school period and invest more in campaigns to really support that. This quarter will be no different from our regular approach. As I said, generally, we're seeing really good returns on our marketing investment. We're definitely not shying away from investing in Q3.

Got it. Thanks.

Speaker 9

Thanks, Suraj. I'd like to open it up for a follow-up from Wei Sim.

Thanks, RJ. This question is just in regards to, I guess, the transition. I appreciate you've put it out in the blog, but I think it's just one of the comments that you have made in the past, Chris, is kind of like looking for other growth opportunities outside of Life360 over the medium term and saying that you might kind of like leave the company as the growth slows. Just, you know, some concern from other investors with you stepping down as the CEO and transitioning over to Lauren, whether this is a sign that you think that growth is slowing. Thank you.

That is completely unrelated. I can say that very genuinely. I think I've made the comment in the past that just even from a broader company standpoint, if we were more in harvest mode, that would be not the right place for me. My passion is truly the free user experience, and it's just what energizes me and motivates me. My role will be very, very focused on that. A lot of the things that I love doing the most, I'm going to continue and double down on doing. Completely unrelated, and I think the numbers in this quarter speak for themselves. We really did want to make sure that we had the right time to make this move, and we could look everybody in the eye and say everything's going gangbusters. No, we are a long way away from feeling capped out.

If you look at some of the stats even in U.S. MAU, it's not just international picking up for U.S. slowing down. U.S. is really outperforming. If anything, we've taken another step up in the cultural zeitgeist. You have the whole fan bushing thing, and I don't think we shared it on the call, but there's some public stats out there about our brand recognition with Gen Z. We are one of the most popular brands with Gen Z, which is somewhat surprising. I thought they would always be neutral on us, but some of the old stuff with TikTok, we are loved by the up-and-coming generation. Early days in terms of growth. In terms of my role as Executive Chairman, I would make the same statement for my current plans. I'm very excited to stay on full time.

If we do go to harvest mode, I would probably be less needed as an Executive Chairman. For now, I definitely plan to be here.

Great. Thank you, Chris. Thanks for the clarification.

You're welcome. We'd like to open up the call to a question from Tom Browns from Barrenjoey.

Yeah, can you hear me? Yep. First of all, congrats on a great result. Just on the upgrade to guidance, I was just wondering if that was more on confidence you're seeing into the second half, or was that just because second quarter might have come in better than you expected? Thanks.

Speaker 4

I think it's a little bit of both. Obviously, Q2 was a really strong quarter. We're continuing to see that really strong growth in subscription, so that gives us a great deal of confidence. That said, our second half is somewhat weighted towards the second half and particularly the fourth quarter, as we've talked about. Everything that we're seeing gives us that level of confidence that we're able to lift guidance.

Thank you.

Speaker 9

Thanks, Tom. I'd like to open it back up to Weiwing Chen at RBC.

Hi. Yeah, thanks for taking my second question. This one's maybe for Chris. I'd love your view on the ways that you think Lauren will be a better CEO than you.

That is honestly pretty straightforward. I'll do a little bit of it. I love talking to you guys as an individual, but press and IR and all that, it's not what brings joy to my heart. Even though genuinely, I've built great relationships with many of you, I am someone who works in bursts of creativity. As a public company, you need consistency. I have pretty severe ADHD. That's a pretty common founder trait. It takes a lot out of me to be an operationally consistent leader where you repeat the same message day in and day out and remove nuance to have scaled communications in ways that don't necessarily feel natural. Lauren loves the user and we're very similar on product, but she also really enjoys the systems and scaling processes that I, quite frankly, don't like as much and am not naturally as gifted at.

To make it just even a little bit tangible, one of the things that we had struggled with in the past was the constant swing between, I'd say, the startup scrappy way of doing things, where you just kind of jump off the cliff, build the plan on the way down. That works, but it's massively chaotic. On the other extreme, you have kind of the archetype of someone who conflates output and outcomes and just follows the process and does things just because they're told to do so. I think Lauren's done an extremely good job of threading those needles. The way in which Lauren has done it has been not just her own skill setting these up herself, but also hiring. We genuinely have the best execs we've ever had. I joke, but it's actually true.

My first hire on a new senior exec often gets wrong the first time because I haven't been there, done that. We are at a stage where Lauren is a little bit more been there, done that. I'm still here to kind of stir things up. I can turn it on and off, the crazy. I'm extremely good at that. I think part of why I made the duration was I am one of those founders who was able to realize we needed to do the more scaling things, but it's not necessarily what my natural inclination is, nor what gave me joy. The last thing I'll say about Lauren is I think Lauren genuinely just loves the work all the time in every way, shape, or form.

Whereas for me, I can do it, but it's more through discipline and powering through the stuff that I can just do day in and day out. It's more on the creative side. For all those reasons, that is where Lauren is genuinely better than me. I think the company is going to get most of the gifts I had, but with Lauren at the helm in a way that I think is good for all involved. For me, as a very large shareholder with the majority of my net worth in the company, even more so with the share price going up, I am very self-interested in this transition.

Okay, thanks so much for that thoughtful answer.

Welcome. Thanks for weighing in with that. We've come up on time, and I'm going to turn over to Lauren to sign off.

Speaker 6

Thanks, everyone, for joining, and have a great day.