Life360 (LIF) Q1 2026 Earnings Transcript

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DATE

Monday, May 11, 2026 at 6 p.m. ET

CALL PARTICIPANTS

- Chief Executive Officer — Lauren Antonoff

- Chief Financial Officer — Russell Burke

- Director of Investor Relations — Raymond Jones

Full Conference Call Transcript

Lauren Antonoff: Good afternoon to everyone in the U.S., and good morning to those joining from Australia. Thank you for joining the call. We're doing something a little different this quarter with shorter remarks so we can get to more Q&A. The letter we shared provided a lot of detail. So I want to take a couple of minutes to reinforce a few key points. I want to talk about what's propelling our strong financial results and why I'm confident in our trajectory. I also want to spotlight our Advertising business, which has long been a glimmer in our eye and is finally at a scale where it's becoming a significant part of our business.

And I want to touch on our progress and learning on AI. First, our strong revenue growth is a clear reflection of what makes Life360 so special. Life360 is in a rare position. We've become a meaningful part of everyday family life for more than 97 million people who use Life360 to keep their families safe and connected. The trust families are placing in us is a genuinely differentiated asset, one that grows and compounds day after day because of the real value we deliver around safety, coordination and connection. It's the foundation and fuel for every part of our business. The momentum we have in subscriptions, advertising and partnerships all flows from it.

Every quarter, we ask ourselves, are we increasing the value we deliver to families? And are we seeing that value compound in our results? The answer to both of those questions in Q1 is yes. This trust and value translated into outstanding Q1 revenue growth of 38% to $143 million. We delivered the most quarterly subscription net ads ever, bringing us to 3 million paying circles. ARPPC is at an all-time high. These aren't one quarter anomalies. They are the result of a flywheel that's continually getting stronger. Better product drives higher conversion and retention, those improved economics fund more investment and more investment makes the product better. The value we deliver to our members powers our monetization engine.

Now let me take a moment on monthly active users. Q1 mile growth came in at 17% year-over-year. That solid growth, but below where we plan to be due to a series of technical issues that temporarily suppress registration volume during the peak of Q1 marketing. After fixing a widespread issue that impacted new signups, we uncovered additional Android-specific problems disproportionately affecting lower end devices. The latter took longer to resolve, but was largely concentrated in populations that don't materially impact revenue today. We've implemented the major fixes, put systems in place to quickly catch problems in that part of the funnel should they ever arise again. And we're still finding opportunities for improvement.

Recovery won't happen in this good in quarter, but even with pressure on registration, our monetization through the funnel has remained strong. What I really want to convey is that demand never faded and engagement continues to deepen. When we look at the underlying data, the story is clear. Google trend searches for Life360 were up over 40% during the effective period. Our most penetrated U.S. states continue to increase their penetration consistent with previous years. Our iOS segments, which drive the vast majority of our revenue recovered and are growing well. The U.K. is growing at 25%, Canada at 32%, and Australia and New Zealand at 24%, all bolstered by strong and improving member retention.

The signals we're seeing now give us confidence that the fixes are taking hold, and we expect to be back on our planned glide slope by Q3. This impact delays but does not fundamentally change our MAU growth trajectory. This brings our expectation for MAU growth to between 17% and 20% for the year. Our topline growth remains strong, and we've raised outlook for revenue. Next, I want to highlight our newly scaled Life360 ads business. What makes our advertising business different isn't just real-time location data. It's not the same trust that families place in Life360 is exactly what advertisers are attracted to.

And our real-world first-party family data is unique, impossible to replace with the synthetic model and it's what turns relevant reach into measurable results. With the completion of the Nativo acquisition, advertising revenue has reached critical scale and the promise we've seen for some time has become real. We broke out advertising revenue for the first time with nearly $20 million in Q1, and we expect a steep ramp over the next few quarters as we enter peak advertising season. Over the long term, we continue to expect advertising to rival the scale of our subscription business, powered by our unique audience and real-time real-world data.

Now that we've integrated in Nativo, our location data activates not just inside Life360, but across over 20,000 publisher sites in Connected TV, extending our reach from under 20% of U.S. ad eligible adults to over 95%. With world-class buy-side tools, sell-side infrastructure and data intelligence, we can reach relevant audiences in the moments that matter and allow advertisers to clearly see when a campaign drives real-world behavior from store visits to test drives, all while keeping the data private within our walled garden.

What that means in practice is that brands like Starbucks can reach families in a real moment near a store on a Saturday morning and then close the loop to see whether that impression drove a visit. Uber likes our results enough to deepen their product integration with us and parents will soon be able to call an Uber for their teen and see the trip live all inside Life360.

Brands like these want to work with us because of the trust we built with the families they serve and because we can close the loop between ad targeting and customer behavior, and experiences like these enrich the value that we deliver our members and propel the flywheel that drives member value and monetization. That's where we see so much potential in our ads business. Finally, I want to touch on AI. I want to address this directly because it doesn't yet show up in the financials, but it will shape how we operate and compete for years to come. We see AI as a critical opportunity to accelerate our path and deepen our moat.

The vision for Life360 has always been bigger than location sharing. We're working to become the go-to app for everyday family life across every life stage. AI empowers us to take insights based on real relationships, location history and behavioral patterns across our enormous membership base and make that vision a reality. Our real-time continuous data becomes even more valuable in an AI-first world. In April, we restructured our R&D organization as a first step toward becoming an AI-native company, where AI handles more of the execution work and our people direct, decide and are accountable for outcomes. What we see clearly now is that AI doesn't just help work get done faster, it fundamentally changes how work gets done.

Becoming AI native demands deeper changes in how roles and organizations are defined and aligned. We believe that companies that go AI-native will compound that advantage over time. We're still early in our AI journey, but strong adoption across our engineering organization has increased developer productivity by over 50% from last year. That velocity lets us do more and unlocks high-value features that would have previously required unrealistic levels of manual effort. As our AI implementation matures, Life360 becomes the easiest way to orchestrate everyday family life, compounding value for our members and our business. Those were the points that I wanted to highlight for Q1. Looking forward, the setup into the back half of the year is strong.

Revenue acceleration, margin expansion and MAU growth all point in the same direction. We've got some exciting updates and product innovations in store for H2, including an action-packed back-to-school and the next phase of our push into families and aging parents. We continue on the path to exceed $150 million MAU, $1 billion in revenue and over 35% adjusted EBITDA margins. Q1 reinforced our confidence in that path. The MAU headwind slowed us a bit, but the trajectory remains unchanged. With that, I'll ask Russell to share a bit more detail on our performance and outlook.

Russell Burke: Thanks, Lauren. Q1 delivered strong financial results across our core business, and there are some important cost structure dynamics that are worth walking through. All figures are unaudited and in U.S. dollars. Total revenue grew 38% to a record $143.1 million. Subscription revenue grew 32% to $108.2 million with core subscription up 36%, driven by 27% Paying Circle growth and 7% higher ARPPC. U.S. Subscription revenue grew 28% and International grew 58%. Advertising revenue was $19.7 million, up 329%, boosted by the Nativo acquisition. And this revenue stream is now disclosed as a separate line. Hardware revenue was $4.5 million, down as expected given our strategic exit from brick-and-mortar retail for Tile. Other revenue grew 30% to $10.7 million.

March AMR reached a record $517.9 million, up 32% year-over-year. Gross margin was 77% versus 81% in Q1 last year. The difference reflects 3 distinct dynamics across our revenue lines. Subscription gross margin held at 87%, in line with last quarter. Advertising gross margin was 60%. As the Life360 advertising business broadens following the Nativo acquisition, we're introducing a wider suite of products that carry higher cost than pure digital advertising. Advertising gross margin will improve as the platform scales and should normalize towards 70% as revenue scales in the higher-margin back half. Lastly, hardware margin was negative as we priced Pet GPS for adoption and absorb brick-and-mortar retail exit costs. Operating expenses were $118.6 million, up 46%.

R&D grew 29%, reflecting Nativo headcount and platform investments as well as AI investments that are already accelerating our delivery pace. Sales and marketing grew 62%, driven by the increasing growth media spend, higher app store commissions and personnel costs associated with our newly enlarged sales organization. Our upper funnel investment, such as streaming Super Bowl and Winter Olympics commercials is oriented towards brand awareness, which offers longer-term payoffs. Even with these investments, we expect to resume our March to increasing operating leverage by Q4. The April organizational reshaping affected a small group of employees rather than backfilling certain roles, we're allocating that investment towards AI-native capabilities and workflow redesign.

The net financial impact should be neutral to 2026 and is fully reflected in our guidance. We expect operating leverage from AI to then begin to impact and compound thereafter. GAAP net income was $2.8 million with basic and diluted EPS at $0.03. Adjusted EBITDA was $17.1 million at a 12% margin, reflecting the front-loading of our investment cycle as discussed last quarter. Operating cash flow was $17.2 million, positive for the 12th consecutive quarter. We ended the quarter with $459 million in cash, cash equivalents, restricted cash and short-term investments and total assets exceeding $1 billion. On guidance, we're updating our full year financial outlook.

We're raising total revenue guidance to $650 million to $685 million, up from $640 million to $680 million. This is driven by subscription revenue, which we now expect to be between $470 million and $475 million, up from $460 million to $470 million. Full year guidance for the rest of the business is unchanged with advertising revenue now disclosed separately and expected to be $98 million to $115 million, hardware revenue of $40 million to $50 million and other revenue of $42 million to $45 million. Finally, we're raising adjusted EBITDA guidance to $130 million to $140 million, up from $128 million to $138 million, representing approximately 20% margin. A few modeling points worth noting for our 2026 outlook.

Revenue and margin are back half weighted, driven by advertising seasonality concentrating in the second half, integration costs and brand investment front loaded in the first half and lower hardware revenue as we complete the retail exit. Q1 advertising revenue accounts for approximately 18% of our expected full year total. With Q4 representing approximately double that of Q1. Operating costs for the advertising platform are largely fixed. Beginning in Q1, we took on incremental quarterly operating costs from adding nearly 125 personnel and new ad tech operations related to the acquisition, while revenue and profit contribution are back half weighted. This is the primary driver of first half to second half margin progression.

And it's why Q4 2026 adjusted EBITDA margin is expected to exceed the 22% that we delivered in Q4 2025. The financial setup into the back half is strong, revenue acceleration, margin expansion and MAU trends are all pointed in the same direction. We look forward to demonstrating that in the quarters ahead. RJ, back to you for Q&A.

Raymond Jones: Thanks, Russell. [Operator Instructions] So we'd like to open up first to Mark Mahaney. Could you unmute your line and ask a question.

Mark Stephen Mahaney: I just want to ask then, I'll start off on advertising. So you laid out some numbers for the full year. Talk a little bit more about the go-to-market strategy and also give us a little bit of color on that Q1 ad revenue number how much of that was from Nativo so trying to figure out what the organic growth rate was, but a little bit more on how you build up to those numbers that you talked about by the end of the year, approximately $100 million.

Lauren Antonoff: The first thing that's important to understand is that we've fully integrated our Nativo team into the Life360 ads team function as one team and one business. We are pounding the pavement in the ad circuit attending the key conferences and continuing to reach out to both the customer base that Nativo and Life360 had cultivated over time. And we're seeing a lot of enthusiasm for the combined offering. So we're off to a good start.

Russell Burke: And Mark, I think -- I know you're looking for an organic number. It is difficult because we have combined the businesses from day one, but I think if you look at it broadly for that $20 million of revenue in Q1, roughly half of that was organic.

Raymond Jones: Next, we'd like to open it up to Eric Choi.

Eric Choi: My one question would be just on the MAUs. Given you did 1.9 million MAU additions in the first quarter,