Life360 Shares Sink 25% as US Listing Plan Scrapped

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Shares of family safety platform Life360 Inc [ASX:360] fell 25% today as the firm announced in its March quarterly that it would scrap plans to dual list in the US.

Currently, 360 is up 4.05% in its sector but has plunged 23.75% below the ASX 200 today.

Today’s steep decline means Life360 now trades 70% lower than its all-time high of $13.94 reached in November 2021.

360’s March results come at a bad time for tech stocks, with central banks globally set to raise interest rates to combat inflation.

Overnight, the tech-heavy US Nasdaq Index fell 3.95% — its lowest close since late 2020.

asx:360 stock price chart

Source: Tradingview.com

Life360 scraps US dual listing

Life360’s hopes to list in the US are dashed.

The company announced today that its plans for a US dual-listing process via an IPO have ‘ceased due to the change in market conditions since the process commenced in Q4 2021.

360 did not elaborate further.

The firm did, however, file a Form 10 with the US Securities and Exchange Commission yesterday.

The Form 10, though, won’t be used to conduct a US IPO and won’t raise any additional capital for Life360.

The Form 10 was required due to Life360’s holder thresholds related to its Tile and Jiobit acquisitions.

Life360’s March quarter results

CEO Chris Hulls summarised Life360’s highlights below:

Life360 continued its significant business momentum, delivering strong results across key operational metrics in the March 2022 quarter. We added 71,000 net new subscribers, an increase of more than 160% from the March 2021 quarter.

Monthly Active Users (MAU) also showed a significant increase, with an 8% quarter-on-quarter gain to 38.3 million, translating to 36% year-on-year growth.

We’re also on schedule integrating Tile and Jiobit into our offering, with early trials showing exceptionally strong results. For example, we ran a test where we bundled Tiles with an upsell offer, and achieved a 35% uplift in subscriptions versus the control group…

Given these strong early indications, and the fact that available inventory may be constrained by continuing supply chain issues, our guidance reflects our decision to prioritise inventory allocation for the benefit of high margin bundled subscription offers over retail sales.’

Consolidated revenue increased 129% with assistance of Annualised Monthly Revenue increasing by US$166.1 million.

Core Life360’s revenue saw a 51% increase year-on-year and Tile upselling saw a 35% rise in subscription services.

Cash and equivalents reached US$98.2 million for the quarter, a 73% year-on-year increase.

However, EBITDA losses totalled US$12.6 million, not including Stock Based Compensation and non-recurring adjustments.

Furthermore, Life360 sustained a net cash operating loss of US$37.8 million for the quarter.

Life360 said it would focus on cash flow strategies subject to market conditions, combining Jiobit and Tile into Life360 to form a streamlined business unit.

360 share price outlook

As Life360 mentioned in its Form 10, its revenue is ‘primarily generated from the sale of subscriptions to access our services across our three brands — Life360, Tile and Jiobit.

As a subscription-based revenue model, retention is important.

A high subscription churn will offset any growth in the overall customer count.

Regarding retention, Life360 said in the Form 10:

Our net subscriber revenue retention on the Life360 Platform is over 100% based on the average monthly revenue for the six months ended December 31, 2021 as compared to the member cohort who registered before or in June 2021.

That sounds great, but it’s not translating into profits.

Life360 burned through US$37.8 million in operating cash losses for the March quarter despite receiving US$50.3 million from customers.

So if subscriber retention is not the issue, what is?

Does Life360 require more total subscribers to tip into profitability? And how will it achieve that growth?

The company already spent US$14 million on marketing during the quarter, accounting for nearly 30% of customer receipts for the quarter.

On the question of profitability, Life360 commented:

We anticipate Life360 to move towards consistently positive Operating cash flow by late CY23, such that we record positive operating cashflow for CY24.

Life360 expects its core subscription revenue to grow 50% (excluding Tile and Jiobit) in CY22.

CY22 consolidated revenue is expected to reach US$245–275 million, with an expected underlying EBITDA loss of US$32–38 million.

Now, while Life360 has struggled of late, it doesn’t mean the ASX lacks other opportunities.

After all, the ASX is not a stock market but a market of stocks.

So what are some stocks primed for potential success in 2022 and beyond?

Plenty of stocks are out there that you may not know about, embedded in industries with technological and innovative ideas that could bring in millions.

If you’re interested in finding out what some of these are, then check out this free research report on seven stocks to watch like a hawk.

Regards,

Kiryll Prakapenka,
For Money Morning

 

About Kiryll Prakapenka

Kiryll Prakapenka is a research analyst focusing on investigating the biggest trends in investments. Kiryll brings sound analytical skills to his work, courtesy of his Philosophy degree from the University of Melbourne. A student of legendary investors and their strategies, Kiryll likes to synthesise macroeconomic narratives with a keen understanding…

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