With the share price in Life360 (ASX: 360) having risen over eight-fold in the past five years, it’s easy to conclude that all the upside has already been priced into the dual ASX/Nasdaq listed technology stock.
However, given that the San Francisco-based company - which listed on the ASX in 2019 - has morphed well beyond its initial remit as a location-tracking app, the total addressable market for its emerging platform appears to be rapidly changing the table-stakes.
To the uninitiated, Life360’s main service is as a subscription-based, app-enabled, IT company with location- tracking services designed to ensure friends and family members share their location with each other.
Embedded within the company’s emerging platform appears to be authentic emotional resonance for this family safety app.
The company is clearly leveraging a rare level of trust among families to position itself as the guardian of family safety.
Competitive advantage at scale
It’s this differentiated positioning and operating system agnosticism that allows the company to serve as a guardian of family safety. This is something other platform giants would struggle to replicate.
Underscoring what appears to be an inflection point for the stock were its March quarter results which saw the share price move up another 18%.
While first quarter revenue and earnings margins were impressive enough - up by 32% and 15% respectively - it's the user numbers that investors should sit back and consider.
For example, global monthly active users at March end hit 83.7 million users, and global paid circles exceeded 2.4 million. Both were up 26% year on year.
Meanwhile, penetration in the U.S. has more than doubled from 6% to 15% in the past five years.
Long global runway
CEO Montgomery Investment Management, David Buckland sees significant upside for Life360 as the company evolves into a broader ecosystem offering services across family safety, pet tracking, item tracking, elderly care, and targeted advertising.
In the most recent earnings result, management told the market that Life360 is the 13th highest-ranked app in the U.S. based on daily active users.
However, in the social networking apps category, it ranks fourth behind the global social media leviathans.
Questions are now being asked whether this emerging technology powerhouse can compete with Facebook, WhatsApp and Instagram which have around 3 billion and 2 billion users respectively.
Buckland reminds investors not to underestimate the company’s powerful network effects, a long global runway, and a higher conversion percentage to global paid circles than global monthly active users.
“Despite having a long remaining runway in U.S. penetration, we see the non-U.S. paid circle, which currently accounts for 30% of the total, trending toward 40% over the medium term,” says Buckland.
“Life360 has now reached a pivotal inflection point, with positive operating cash flow and adjusted earnings before interest, taxes, depreciation, and amortisation (EBITDA) supported by scale, customer retention, and pricing gains.”
Several hundred million daily users
For calendar 2025, Life 360’s midpoint revenue forecast is $465 million* and adjusted earnings forecast is $70 million.
Included within that guidance is an increase in subscription revenue guidance of $5m and a reduction in hardware revenue guidance of - $5m.
Management’s aspirational goals include 150 million monthly active users and $1 billion in revenue, while more than doubling the adjusted earnings margin to 35%.
Meanwhile, CEO Chris Hull sees no reason why the platform couldn’t have several hundred million users daily.
“In a more cautious spending environment, our performance reflects both the resilience of our business model and the growing demand for our services that keep families safe, connected and provide peace of mind,” said Hull.
“As a trusted daily essential for millions, we are uniquely positioned to support families through uncertain times - and beyond.”
Tariff-related headwinds
By redirecting hardware from the U.S. to international markets - while manufacturing capacity is shifted to relatively more tariff-favourable regions such as Malaysia or Vietnam - Goldman Sachs expects Life360 to offset the impact of tariffs.
While tariffs may impact the scale of the launch, the broker doesn’t expect them to impact the timing of key releases - notably Pet Tracker in the upcoming December quarter.
Rival broker, Ord Minnett is equally encouraged by Life360’s two new partnerships with Aura/MetLife and AccuWeather - continuing a string of recent deals, including Uber, Hubble, Arity, Placer.ai).
With a global base of some 84 million monthly active users (MAUs) and growing, the broker believes these high-margin partnerships continue to add an element of upside optionality to the base case for Life360.
Incremental earnings
Meantime, while Life360 currently pays commissions of around 20% on subscription revenue to its channel partners, over the longer term, management expects this rate to reduce, especially given increased regulatory scrutiny in the space.
While RBC Capital forecasts a terminal commission rate of around 16%, the broker notes a reduction to higher single-digit commissions would have a material impact on earnings.
Based on RBC’s estimates, an 8% commission rate starting in 2030 could deliver up to $700 million in incremental earnings over the following seven years.
Meanwhile, due to the strong March quarter result and potential for a guidance upgrade in the first half result in August, Bell Potter has increased the multiples it applies to Life360’s enterprise value to revenue and enterprise value to earnings valuations from 8.5x and 50x to 9x and 55x respectively.
The net effect is an 11% increase in Bell Potter’s target to $31.25 and an unchanged Buy rating.
Life360 has a market cap of $5.5 billion; the share price is up 45% year-to-date.
The stock appears to be in a strong bullish trend confirmed by multiple indicators.
Consensus is Strong Buy.
*All financials are in US dollars. This article does not constitute financial or product advice. You should consider independent advice before making financial decisions.
