Family safety app Life360 Inc (ASX: 360) share price is popping today after the business provided a third-quarter update.
Unlike most Australian public companies, Life360 operates on a calendar year basis from January 1 to December 31.
Currently, the Life360 share price is up 5.85% to $10.49.
US growth leads to guidance upgrade
Third-quarter highlights include:
- Underlying revenue growth of 45% year-on-year (YoY) to US$29.3 million
- Cash from operating activities of US$4.4 million, compared to an outflow of $1.9 million last quarter
- Global monthly active users (MAU) up 31% YoY to 33.8 million
- Underlying earnings before interest, tax, depreciation and amortisation (EBITDA explained) loss of US$3.7 million
Users in the US increased 9% compared to the prior quarter. Conversely, international users marginally decreased as churn increased from the prior TikTok surge.
Paying customers – known as circles – increased 10% for the quarter and 26% for the year.
“Monthly Active Users continued to increase from the second quarter despite the expected roll-off of lower quality users from the viral surge in downloads we experienced that quarter from TikTok”.
Life360 is approaching profitability, with its quarterly net outflow reduced to just $0.4 million.
As a result of the strong quarterly performance, annual monthly revenue (AMR) is now US$120.1 million.
In Life360’s half-year update, management upgraded AMR forecasts to US$120-US$125 million after previously aiming for US$100 million.
This guidance has been upgraded for the second time to US$125 – US$130 million for 2021.
Management also noted its EBITDA loss would not exceed $15 million for the year due to increased revenue.
Life360 eyes dual listing
The business remains active with potential acquisition targets. Life360 noted the transaction could result in a dual listing in the United States.
Independent of a transaction, the business has engaged advisors to begin the process of a US exchange listing in 2022.
Life360’s last acquisition, Jiobit, has been impacted by short-term supply chain issues. Subsequently, the business has sold out its wearables in all key sales channels.
The company is in the process of restocking to be ready for the holiday shopping season.
App store commissions set to fall
Fee reductions from the Google Andriod store are set to be positive for Life360.
Life360 is a mobile app, therefore it pays commissions to Apple and Google each time a circle transacts on the platform.
“The changes from Google are expected to take effect from 1 January 2022. On an annual basis, this would reduce commissions by around US$2 million based on the current run rate. Any similar change by Apple would result in a far greater impact…”
My take
Awesome quarter by Life360 with its second guidance upgrade in as many updates.
The US listing is a notable development, albeit had been flagged previously.
If the business can keep executing on growing users, the Life360 share price should follow a similar trajectory.