SEC Form 10-Q filed by Life360 Inc.
$LIF
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
For the quarterly period ended | |||||
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
For the transition period from __________ to __________ | |||||
Commission File Number 001-42120
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | ||||
(Address of principal executive offices) | (Zip Code) | ||||
Tel: (415 ) 484-5244
(Registrant's telephone number, including area code)
Not Applicable.
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
x | Accelerated filer | o | ||||||||||||
| Non-accelerated filer | o | Smaller reporting company | ||||||||||||
| Emerging growth company | ||||||||||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x
As of May 6, 2025, the registrant had 76,528,724 shares of common stock, par value $0.001 per share, including shares underlying all issued and outstanding Chess Depositary Interests (“CDIs”), outstanding.
Life360, Inc.
Form 10-Q for the Quarter Ended March 31, 2025
Table of Contents
| Page | ||||||||
In this report, unless otherwise stated or the context otherwise indicates, the terms “Life360,” “the Company,” “we,” “us,” “our” and similar references refer to Life360, Inc. and its consolidated subsidiaries. The Life360 logo, and other trademarks, trade names or service marks of Life360, Inc. appearing in this Quarterly Report on Form 10-Q are the property of Life360, Inc. All other trademarks, trade names and service marks appearing in this Quarterly Report on Form 10-Q are the property of their respective owners. Solely for convenience, the trademarks and trade names in this report may be referred to without the ® and ™ symbols, but such references should not be construed as any indicator that their respective owners will not assert their rights thereto.
FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q (this “Quarterly Report”) contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that are based on our management’s beliefs and assumptions and on information currently available to our management. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).. These forward-looking statements include statements regarding, among other things, (a) our expectations regarding our results of operations and key performance indicators, (b) key factors affecting our performance (c) our growth strategy, (d) our future financing plans, and (e) our anticipated needs for, and use of, working capital. They are generally identifiable by use of the words: “may,” “might,” “will,” “could,” “would,” “should,” “expect,” “plan,” “anticipate,” “intend,” “seek,” “believe,” “estimate,” “predict,” “potential,” “continue,” “contemplate,” “possible” or the negative of these terms or other comparable terminology, although not all forward-looking statements contain these words. We caution you the foregoing list may not contain all of the forward-looking statements made in this Quarterly Report. These forward-looking statements are subject to risks and uncertainties, many of which are outside of our control, including risks related to our business, market risks, our need for additional capital, and the risk that our products and services may not perform as expected, as described in “Risk Factors” under Part II, Item 1A in this Quarterly Report and Part I, Item 1A of the Company’s Form 10-K for the year ended December 31, 2024, filed with the Securities and Exchange Commission (the “SEC”) on February 27, 2025 (“Annual Report”), as well as in other sections of this report, as such risks may be updated in subsequent filings with the SEC or the Australian Securities Exchange (“ASX”). In light of these risks and uncertainties, there can be no assurance that the forward-looking statements contained in this filing will in fact occur. You should not place undue reliance on these forward-looking statements.
The forward-looking statements are not historical facts, but rather are based on current expectations, estimates, assumptions and projections about our industry, business and future financial results. The forward-looking statements speak only as of the date on which they are made, and, except to the extent required by federal securities laws, we undertake no obligation to update any forward-looking statements to reflect events or circumstances after the date on which the statements are made or to reflect the occurrence of unanticipated events. Our actual results could differ materially from the results contemplated by these forward-looking statements due to a number of factors, including, but not limited to, those discussed in “Risk Factors” under Part II, Item 1A in this Quarterly Report and Part I, Item 1A in our Annual Report, and other sections in this Quarterly Report.
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited)
1
Life360, Inc.
Condensed Consolidated Balance Sheets
(Dollars in U.S. $, in thousands, except share and per share data)
(unaudited)
| March 31, 2025 | December 31, 2024 | ||||||||||
| Assets | |||||||||||
| Current Assets: | |||||||||||
| Cash and cash equivalents | $ | $ | |||||||||
Accounts receivable, net (including related party receivables of $ | |||||||||||
| Inventory | |||||||||||
| Costs capitalized to obtain contracts, net | |||||||||||
| Prepaid expenses and other current assets | |||||||||||
| Total current assets | |||||||||||
| Restricted cash, noncurrent | |||||||||||
| Property and equipment, net | |||||||||||
| Costs capitalized to obtain contracts, noncurrent | |||||||||||
| Prepaid expenses and other assets, noncurrent | |||||||||||
| Operating lease right-of-use asset | |||||||||||
| Intangible assets, net | |||||||||||
| Goodwill | |||||||||||
| Total Assets | $ | $ | |||||||||
| Liabilities and Stockholders’ Equity | |||||||||||
| Current Liabilities: | |||||||||||
| Accounts payable | $ | $ | |||||||||
| Accrued expenses and other current liabilities | |||||||||||
| Deferred revenue, current | |||||||||||
| Total current liabilities | |||||||||||
| Deferred revenue, noncurrent | |||||||||||
| Other liabilities, noncurrent | |||||||||||
| Total Liabilities | $ | $ | |||||||||
Commitments and Contingencies (Note 8) | |||||||||||
| Stockholders’ Equity | |||||||||||
Common Stock, $ | |||||||||||
| Additional paid-in capital | |||||||||||
| Accumulated deficit | ( | ( | |||||||||
Accumulated other comprehensive income | |||||||||||
| Total stockholders’ equity | |||||||||||
| Total Liabilities and Stockholders’ Equity | $ | $ | |||||||||
See accompanying notes to the condensed consolidated financial statements (unaudited).
2
Life360, Inc.
Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)
(Dollars in U.S. $, in thousands, except share and per share data)
(unaudited)
| Three Months Ended March 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Subscription revenue | $ | $ | |||||||||
| Hardware revenue | |||||||||||
Other revenue (including related party revenue of $ | |||||||||||
| Total revenue | |||||||||||
| Cost of subscription revenue | |||||||||||
| Cost of hardware revenue | |||||||||||
| Cost of other revenue | |||||||||||
| Total cost of revenue | |||||||||||
| Gross profit | |||||||||||
| Operating expenses: | |||||||||||
| Research and development | |||||||||||
| Sales and marketing | |||||||||||
| General and administrative | |||||||||||
| Total operating expenses | |||||||||||
| Income (loss) from operations | ( | ||||||||||
| Other income (expense): | |||||||||||
| Convertible notes fair value adjustment | ( | ||||||||||
| Derivative liability fair value adjustment | ( | ||||||||||
| Other income, net | |||||||||||
| Total other income (expense), net | ( | ||||||||||
| Income (loss) before income taxes | ( | ||||||||||
| Provision for (benefit from) income taxes | ( | ||||||||||
| Net income (loss) | $ | $ | ( | ||||||||
| Net income (loss) per share, basic (Note 14) | $ | $ | ( | ||||||||
| Net income (loss) per share, diluted (Note 14) | $ | $ | ( | ||||||||
| Weighted-average shares used in computing net income (loss) per share, basic (Note 14) | |||||||||||
| Weighted-average shares used in computing net income (loss) per share, diluted (Note 14) | |||||||||||
| Comprehensive income (loss) | |||||||||||
| Net income (loss) | $ | $ | ( | ||||||||
| Change in foreign currency translation adjustment | |||||||||||
| Total comprehensive income (loss) | $ | $ | ( | ||||||||
See accompanying notes to the condensed consolidated financial statements (unaudited).
3
Life360, Inc.
Condensed Consolidated Statements of Stockholders’ Equity
(Dollars in U.S. $, in thousands, except share and per share data)
(unaudited)
| Common Stock | Additional Paid-In Capital | Accumulated Deficit | Accumulated Other Comprehensive Income | Total Stockholders’ Equity | |||||||||||||||||||||||||||||||
| Shares | Amount | ||||||||||||||||||||||||||||||||||
| Balance at December 31, 2024 | $ | $ | $ | ( | $ | $ | |||||||||||||||||||||||||||||
| Exercise of stock options | — | — | — | ||||||||||||||||||||||||||||||||
| Vesting of restricted stock units | ( | — | — | ||||||||||||||||||||||||||||||||
| Taxes paid related to the settlement of equity awards, net of settlement proceeds received | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||
| Stock-based compensation expense | — | — | — | — | |||||||||||||||||||||||||||||||
| Shares issued in connection with an acquisition | — | — | — | ||||||||||||||||||||||||||||||||
| Change in foreign currency translation adjustment | — | — | — | — | |||||||||||||||||||||||||||||||
| Net income | — | — | — | — | |||||||||||||||||||||||||||||||
| Balance at March 31, 2025 | ( | ||||||||||||||||||||||||||||||||||
| Common Stock | Additional Paid-In Capital | Accumulated Deficit | Accumulated Other Comprehensive Income | Total Stockholders’ Equity | |||||||||||||||||||||||||||||||
| Shares | Amount | ||||||||||||||||||||||||||||||||||
| Balance at December 31, 2023 | $ | $ | $ | ( | $ | $ | |||||||||||||||||||||||||||||
| Exercise of stock options | — | — | — | ||||||||||||||||||||||||||||||||
| Exercise of warrants | — | — | — | ||||||||||||||||||||||||||||||||
| Vesting of restricted stock units | ( | — | — | ||||||||||||||||||||||||||||||||
| Taxes paid related to net settlement of equity awards | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||
| Stock-based compensation expense | — | — | — | — | |||||||||||||||||||||||||||||||
| Change in foreign currency translation adjustment | — | — | — | — | |||||||||||||||||||||||||||||||
| Net loss | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||
| Balance at March 31, 2024 | $ | $ | $ | ( | $ | $ | |||||||||||||||||||||||||||||
See accompanying notes to the condensed consolidated financial statements (unaudited).
4
Life360, Inc.
Condensed Consolidated Statements of Cash Flows
(Dollars in U.S. $, in thousands)
(unaudited)
| Three Months Ended March 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Cash Flows from Operating Activities: | |||||||||||
| Net income (loss) | $ | $ | ( | ||||||||
| Adjustments to reconcile net income (loss) to net cash provided by operating activities: | |||||||||||
| Depreciation and amortization | |||||||||||
| Amortization of costs capitalized to obtain contracts | |||||||||||
| Amortization of operating lease right-of-use asset | |||||||||||
| Stock-based compensation expense, net of amounts capitalized | |||||||||||
| Non-cash interest expense, net | |||||||||||
| Convertible notes fair value adjustment | |||||||||||
| Derivative liability fair value adjustment | |||||||||||
| Non-cash revenue from investments | ( | ( | |||||||||
| Provision for credit losses | |||||||||||
| Changes in operating assets and liabilities, net of acquisition: | |||||||||||
| Accounts receivable, net | |||||||||||
| Prepaid expenses and other assets | ( | ||||||||||
| Inventory | ( | ( | |||||||||
| Costs capitalized to obtain contracts, net | ( | ( | |||||||||
| Accounts payable | ( | ||||||||||
| Accrued expenses and other current liabilities | ( | ( | |||||||||
| Deferred revenue | |||||||||||
| Other liabilities, noncurrent | ( | ( | |||||||||
| Net cash provided by operating activities | |||||||||||
| Cash Flows from Investing Activities: | |||||||||||
| Cash paid for acquisition | ( | ||||||||||
| Internally developed software | ( | ( | |||||||||
| Purchase of property and equipment | ( | ||||||||||
| Net cash used in investing activities | ( | ( | |||||||||
| Cash Flows from Financing Activities: | |||||||||||
| Proceeds related to tax withholdings on restricted stock settlements and the exercise of stock options and warrants | |||||||||||
| Taxes paid related to net settlement of equity awards | ( | ( | |||||||||
| Net cash provided by (used in) financing activities | ( | ||||||||||
| Net Increase in Cash, Cash Equivalents, and Restricted Cash | |||||||||||
| Cash, Cash Equivalents and Restricted Cash at the Beginning of the Period | |||||||||||
| Cash, Cash Equivalents, and Restricted Cash at the End of the Period | $ | $ | |||||||||
| Supplemental disclosure: | |||||||||||
| Cash paid during the period for taxes | $ | $ | |||||||||
| Cash paid during the period for interest | |||||||||||
Cash payments included in the measurement of operating lease liabilities | |||||||||||
| Non-cash investing and financing activities: | |||||||||||
| Fair value of stock issued in connection with acquisition | |||||||||||
| Property and equipment included within accrued expenses and other current liabilities | |||||||||||
| Stock-based compensation included in internally developed software | |||||||||||
5
Life360, Inc.
The following table presents the cash, cash equivalents, and restricted cash reported within the condensed consolidated statements of cash flows shown above:
| March 31, 2025 | March 31, 2024 | ||||||||||
| Cash and cash equivalents | $ | $ | |||||||||
| Restricted cash, noncurrent | |||||||||||
| Total cash and cash equivalents, and restricted cash | $ | $ | |||||||||
See accompanying notes to the condensed consolidated financial statements (unaudited).
6
1. Nature of Business
Life360, Inc. (the “Company”) is a leading technology platform connecting millions of people throughout the world to the people, pets and things they care about most. The Company has created a new category at the intersection of family, technology, and safety to help keep families connected and safe. The Company’s core offering, the Life360 mobile application, includes features like communications, driving safety, digital safety and location sharing. Beyond the everyday, Life360 also provides much-needed protection and saves lives, which is crucial for families in emergency situations such as natural disasters, vehicle collisions, physical property theft, and digital identity theft. The Life360 mobile application operates under a “freemium” model where its core offering is available to members at no charge, with additional membership subscription options that are available but not required.
In addition to the Life360 mobile application, the Company also offers hardware tracking devices through the sale of Tile, Inc. (“Tile”) and Jio, Inc. (“Jiobit”) products to keep members close to the people, pets and things they care about most.
The Company’s suite of product and service offerings, including the Life360 and Tile mobile applications, and related third-party services, is system and platform-agnostic, allowing its products and services to work seamlessly for its members, regardless of the devices they use.
U.S. Initial Public Offering (“U.S. IPO”)
On June 6, 2024, the Company completed its U.S. IPO and began trading on the Nasdaq Global Select Market under the trading symbol “LIF”. The Company issued and sold 3,703,704 shares of common stock and certain selling securityholders sold 2,908,796 shares of common stock (including 862,500 shares sold pursuant to the underwriters’ full exercise of their option to purchase additional shares) in each case at an offering price of $27.00 per share. The Company received net proceeds of $93.0 million after deducting underwriting discounts and commissions of $7.0 million. An additional $5.5 million of expenses were paid on behalf of selling securityholders. The Company did not receive any proceeds from the sale of shares of common stock by the selling securityholders.
In connection with the U.S. IPO, the Company restated its certificate of incorporation to increase the authorized number of shares of its common stock from 100,000,000 shares to 500,000,000 shares.
2. Summary of Significant Accounting Policies
Included below are select significant accounting policies. Refer to Note 2, "Summary of Significant Accounting Policies" in the Company’s Annual Report for a full list of the Company’s significant accounting policies.
Basis of Presentation and Consolidation
The condensed consolidated balance sheet as of December 31, 2024, included herein, was derived from the audited financial statements as of that date. In the opinion of the Company’s management, the condensed consolidated financial statements reflect all normal recurring adjustments necessary to provide a fair presentation of the Company’s financial position, results of operations, stockholders’ equity, and cash flows for the interim periods presented. Operating results for these interim periods are not necessarily indicative of the Company’s future results of operations.
The condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report.
7
Use of Estimates
The preparation of the Company’s condensed consolidated financial statements in conformity with GAAP requires management to make certain estimates, judgments, and assumptions that affect the reported amounts of assets, liabilities, net revenue, and expenses. Significant items subject to such estimates, judgments, and assumptions include:
•revenue recognition, including the determination of selling prices for distinct performance obligations sold in multiple performance obligation arrangements, the period over which revenue is recognized for certain arrangements, and estimated delivery dates for orders with title transfer upon delivery;
•allowance for credit losses and product returns;
•promotional and marketing allowances;
•inventory valuation;
•average useful customer life;
•valuation of stock-based awards;
•achievement of performance-based restricted stock units (“PRSUs”);
•legal contingencies;
•impairment of long-lived assets and goodwill;
•valuation of non-cash consideration, contingent consideration, convertible notes and embedded derivatives;
•useful lives of long-lived assets; and
•income taxes including valuation allowances on deferred tax assets.
The Company bases its estimates and judgments on historical experience and on various assumptions that it believes are reasonable under the circumstances. Actual results could differ significantly from those estimates.
Accounting pronouncements not yet adopted
In November 2024, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation (Subtopic 220-40): Disaggregation of Income Statement Expenses. The ASU requires the disclosure of additional information related to certain costs and expenses, including amounts of inventory purchases, employee compensation, and depreciation and amortization included in each income statement line item. The ASU is effective for the Company beginning in fiscal year 2027 and interim periods beginning in fiscal year 2028, with early adoption permitted. The Company is currently evaluating the impact of adopting this ASU on its consolidated financial statements and disclosures.
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. ASU 2023-09 requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as information on income taxes paid. The updates in this ASU are effective for annual periods beginning after December 15, 2024. Early adoption is permitted. The Company does not expect adoption of this ASU will have a material impact on its financial position or results of operations.
Concentrations of Risk and Significant Customers
Major Customers
The Company’s customers primarily consist of individual consumers, who subscribe to the Company’s product offerings through its third-party platforms (each a “Channel Partner”), data revenue customers, and retail partners, who purchase hardware tracking devices from the Company and resell them directly to individual consumers. Any changes in customer preferences and trends or changes in terms of use of Channel Partners’ platforms could have an adverse impact on the Company’s results of operations and financial condition.
The Company derives its accounts receivable from revenue earned from customers located in the United States and internationally. Channel and retail partners account for the majority of the Company’s revenue and accounts receivable for all periods presented.
8
The following tables set forth the information about the Company’s Channel Partners that processed the Company’s overall revenue transactions and retail partners who represented greater than 10% of the Company’s revenue or accounts receivable, respectively:
| Percentage of Revenue | |||||||||||
| Three Months Ended March 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Channel Partner (Apple) | % | % | |||||||||
| Channel Partner (Google) | % | % | |||||||||
| Percentage of Gross Accounts Receivable | |||||||||||
| As of March 31, | As of December 31, | ||||||||||
| 2025 | 2024 | ||||||||||
| Channel Partner (Apple) | % | * | |||||||||
| Channel Partner (Google) | % | % | |||||||||
| Data Partner A | % | % | |||||||||
| Retail Partner A | % | % | |||||||||
Supplier Concentration
The Company currently outsources the manufacturing of its hardware devices to a sole contract manufacturer. Although there are a limited number of manufacturers, management believes that other suppliers could provide similar manufacturing services on comparable terms.
Cash and Cash Equivalents
The Company considers all highly liquid investment securities with remaining maturities at the date of purchase of three months or less to be cash equivalents. Cash and cash equivalents include deposit and money market funds. Money market mutual funds are valued using quoted market prices and therefore are classified within Level 1 of the fair value hierarchy.
Restricted Cash
The restricted cash, noncurrent balance of $1.5 million and $1.2 million as of March 31, 2025 and December 31, 2024, respectively, relates to cash deposits restricted under letters of credit issued on behalf of the Company in support of indebtedness to trade creditors incurred in the ordinary course of business.
3. Segment and Geographic Revenue
The Company operates as one operating segment. Operating segments are defined as components of an entity for which separate financial information is regularly evaluated by the chief operating decision maker (“CODM”), which is the Company’s Chief Executive Officer, in deciding how to allocate resources and assess performance. The Company’s CODM evaluates financial information and resources and assesses the performance of these resources on a consolidated basis. There is no expense or asset information that is supplemental to information disclosed within the condensed consolidated financial statements, that is regularly provided to the CODM. The allocation of resources and assessment of performance of the operating segment is based on consolidated net income (loss) and functional expenses as reported on our condensed consolidated statements of operations and comprehensive income (loss). Because the Company operates as one operating segment, financial segment information, including expense and asset information, can be found in the condensed consolidated financial statements. All material long-lived assets are based in the United States.
9
Revenue by geography is generally based on the address of the customer as defined in the contract with the customer. The following table sets forth revenue by geographic region for the periods presented (in thousands):
| Three Months Ended March 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| North America | $ | $ | |||||||||
| Europe, Middle East and Africa | |||||||||||
| Other international regions | |||||||||||
| Total revenue | $ | $ | |||||||||
The Company’s revenues in the United States were $89.3 million, or 86 %, of total revenue for the three months ended March 31, 2025 and $68.9 million, or 88 %, of total revenue for the three months ended March 31, 2024.
4. Deferred Revenue
Deferred revenue consists primarily of payments received and accounts receivable recorded in advance of revenue recognition under the Company’s subscription service arrangements and is recognized as the revenue recognition criteria is met. The Company primarily invoices its customers for its subscription services arrangements in advance. Amounts anticipated to be recognized within one year of the balance sheet date are recorded as deferred revenue, current and the remaining portion is recorded as deferred revenue, noncurrent on the condensed consolidated balance sheets.
During the three months ended March 31, 2025, the Company recognized revenue of $23.0 million that was included in the deferred revenue balance at December 31, 2024. During the three months ended March 31, 2024, the Company recognized revenue of $18.4 million that was included in the deferred revenue balance at December 31, 2023.
Remaining performance obligations represent the amount of contracted future revenue not yet recognized as the amounts relate to undelivered performance obligations, including both deferred revenue and non-cancelable contracted amounts that will be invoiced and recognized as revenue in future periods. Revenue expected to be recognized in connection with remaining performance obligations was $215.0 million as of March 31, 2025, of which the Company expects 39 % to be recognized over the next twelve months .
5. Fair Value Measurements
The Company measures its financial assets at fair value each reporting period using a fair value hierarchy that prioritizes the use of observable inputs and minimizes the use of unobservable inputs when measuring fair value. A financial instrument’s classification within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement.
The three levels of inputs which may be used to measure fair value are as follows:
Level 1 - Observable inputs, such as quoted prices in active markets for identical assets or liabilities.
Level 2 - Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
Level 3 - Valuations based on unobservable inputs to the valuation methodology and including data about assumptions market participants would use in pricing the asset or liability based on the best information available under the circumstances.
The carrying amounts of certain financial instruments, including cash and cash equivalents, prepaid expenses, accounts receivable, and accounts payable approximate fair value due to their short-term maturities.
10
The Company measures and reports certain assets and liabilities at fair value on a recurring basis. The fair value of these assets and liabilities as of March 31, 2025 and December 31, 2024 are classified as follows (in thousands):
| As of March 31, 2025 | |||||||||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||
| Assets: | |||||||||||||||||||||||
| Money market funds | $ | $ | $ | $ | |||||||||||||||||||
| Total assets | $ | $ | $ | $ | |||||||||||||||||||
| As of December 31, 2024 | |||||||||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||
| Assets: | |||||||||||||||||||||||
| Money market funds | $ | $ | $ | $ | |||||||||||||||||||
| Total assets | $ | $ | $ | $ | |||||||||||||||||||
The change in fair value of the Level 3 instruments were as follows (in thousands):
| As of December 31, 2024 | |||||||||||
| Derivative liability | Convertible notes | ||||||||||
| Fair value, beginning of the year | $ | $ | |||||||||
| Changes in fair value | |||||||||||
| Settlement of September 2021 Convertible Notes upon conversion | — | ( | |||||||||
| Gain on settlement of September 2021 Convertible Notes | — | ( | |||||||||
| Gain on settlement of derivative liability | $ | ( | $ | — | |||||||
| Fair value, end of period | $ | $ | |||||||||
For the three months ended March 31, 2025, the Company recorded no 1.7 million and $0.6 million, respectively. The amounts have been recorded in other income (expense), net in the condensed consolidated statements of operations and comprehensive income (loss).
6. Business Combinations
On February 27, 2025, the Company entered into an Asset Purchase Agreement with Fantix, Inc., to purchase certain assets of Fantix, Inc. for total consideration of $4.5 million, consisting of $3.5 million in cash and $1.0 million in common stock. Of the $3.5 million in cash consideration, $2.8 million was paid at closing and $0.7 million, which is payable one year from the closing date, has been recorded in accrued expenses and other current liabilities on the Company’s condensed consolidated balance sheet. The transaction has been accounted for as a business combination.
The Company also recorded $3.6 million to intangible assets, net and $0.9 million to goodwill. Goodwill represents the excess of the purchase price over the fair value of net assets acquired and reflects benefits from assets not individually identifiable, including anticipated synergies and growth opportunities. The goodwill is not deductible for tax purposes.
The Company has not presented the pro forma results of operations for the acquisition as the impact is not material to the Company’s condensed consolidated results of operations.
11
7. Balance Sheet Components
Accounts receivable, net
Accounts receivable, net consists of the following (in thousands):
| As of March 31, | As of December 31, | ||||||||||
| 2025 | 2024 | ||||||||||
| Accounts receivable | $ | $ | |||||||||
| Allowance for credit losses | ( | ( | |||||||||
| Total accounts receivable, net | $ | $ | |||||||||
Accounts receivable, net is presented net of the allowance for credit losses, which represents management’s estimate of expected credit losses based on historical trends, current economic conditions, and other relevant factors as of March 31, 2025 and December 31, 2024, respectively.
Inventory
Inventory consists of the following (in thousands):
| As of March 31, | As of December 31, | ||||||||||
| 2025 | 2024 | ||||||||||
| Raw materials | $ | $ | |||||||||
| Finished goods | |||||||||||
| Total inventory | $ | $ | |||||||||
Prepaid Expenses and Other Current Assets
Prepaid expenses and other current assets consist of the following (in thousands):
| As of March 31, | As of December 31, | ||||||||||
| 2025 | 2024 | ||||||||||
| Prepaid expenses | $ | $ | |||||||||
| Other receivables | |||||||||||
| Total prepaid expenses and other current assets | $ | $ | |||||||||
Prepaid expenses primarily consist of certain cloud platform costs, customer service program costs and prepaid advertising. Other receivables primarily consist of freight, refunds owed to the Company and other amounts which the Company is expected to receive in less than twelve months.
12
Property and Equipment, net
Property and equipment, net consists of the following (in thousands):
| As of March 31, | As of December 31, | ||||||||||
| 2025 | 2024 | ||||||||||
| Computer equipment | $ | $ | |||||||||
| Leasehold improvements | |||||||||||
| Production manufacturing equipment | |||||||||||
| Construction in progress | |||||||||||
| Furniture and fixtures | |||||||||||
| Total property and equipment, gross | |||||||||||
| Less: accumulated depreciation | ( | ( | |||||||||
| Total property and equipment, net | $ | $ | |||||||||
Construction in progress relates to certain costs incurred with production manufacturing equipment.
Depreciation expense was $95 thousand and $46 thousand for the three months ended March 31, 2025 and 2024, respectively.
There was no
Prepaid Expenses and Other Assets, noncurrent
Prepaid expenses and other assets, noncurrent consist of the following (in thousands):
| As of March 31, | As of December 31, | ||||||||||
| 2025 | 2024 | ||||||||||
| Prepaid expenses, noncurrent | $ | $ | |||||||||
Investments | |||||||||||
| Total prepaid expenses and other assets, noncurrent | $ | $ | |||||||||
Prepaid expenses, noncurrent primarily consist of cloud platform costs as of March 31, 2025 and December 31, 2024. Investments relate to a warrant to purchase shares of preferred stock of a current Data Revenue Partner, a warrant to purchase shares of common stock of a current Related Party (the “Related Party Warrant”), and a Simple Agreement for Future Equity with a related party (the “Related Party SAFE”) as of March 31, 2025 and December 31, 2024. Refer to Note 13, "Related-Party Transactions" for additional information.
Leases
The Company leases office space under a non-cancelable operating lease with a remaining lease term of 1.7 years, which includes the option to extend the lease.
The Company did not have any finance leases as of March 31, 2025 or December 31, 2024.
The components of lease expense are as follows (in thousands):
| Three Months Ended March 31, | |||||||||||
| 2025 | 2024 | ||||||||||
Operating lease cost (1) | $ | $ | |||||||||
(1) Amounts include short-term leases, which are immaterial.
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Supplemental balance sheet information related to leases is as follows (in thousands, except lease term):
| As of March 31, | As of December 31, | ||||||||||
| 2025 | 2024 | ||||||||||
| Operating lease right-of-use asset | $ | $ | |||||||||
| Weighted-average remaining term for operating lease (in years) | |||||||||||
The weighted-average discount rate used to measure the present value of the operating lease liabilities was 5.0
Maturities of the Company’s operating lease liability, which does not include short-term leases, as of March 31, 2025 were as follows (in thousands):
| Operating leases | |||||
| Remainder of 2025 | $ | ||||
| 2026 | |||||
| Total future minimum lease payments | |||||
| Less imputed interest | ( | ||||
| Total operating lease liability | $ | ||||
Goodwill and Intangible Assets, net
Intangible assets, net consists of the following (in thousands):
| As of March 31, 2025 | |||||||||||||||||
| Gross | Accumulated Amortization | Net | |||||||||||||||
| Trade name | $ | $ | ( | $ | |||||||||||||
| Technology | ( | ||||||||||||||||
| Customer relationships | ( | ||||||||||||||||
Internally developed software | ( | ||||||||||||||||
| Total | $ | $ | ( | $ | |||||||||||||
| As of December 31, 2024 | |||||||||||||||||
| Gross | Accumulated Amortization | Net | |||||||||||||||
| Trade name | $ | $ | ( | $ | |||||||||||||
| Technology | ( | ||||||||||||||||
| Customer relationships | ( | ||||||||||||||||
Internally developed software | ( | ||||||||||||||||
| Total | $ | $ | ( | $ | |||||||||||||
For the three months ended March 31, 2025 and 2024, the Company capitalized $1.7 million and $1.1 million, respectively, in internally developed software.
For the three months ended March 31, 2025 and 2024, amortization expense was $2.8 million and $2.2 million, respectively.
During the three months ended March 31, 2025 and 2024, there was no
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As of March 31, 2025, the estimated remaining amortization expense for intangible assets by fiscal year is as follows (in thousands):
| Amount | |||||
| Remainder of 2025 | $ | ||||
| 2026 | |||||
| 2027 | |||||
| 2028 | |||||
| 2029 | |||||
| Thereafter | |||||
| Total future amortization expense | |||||
| Internally developed software not yet in service | |||||
| Total | $ | ||||
The weighted-average remaining useful lives of the Company’s acquired intangible assets, excluding internally developed software projects that were not yet in service, are as follows:
| Weighted-Average Remaining Useful Life | |||||||||||
| As of March 31, | As of December 31, | ||||||||||
| 2025 | 2024 | ||||||||||
| Trade name | |||||||||||
| Technology | |||||||||||
| Customer relationships | |||||||||||
| Internally developed software | |||||||||||
As of March 31, 2025 and December 31, 2024, goodwill was $134.6 million and $133.7 million, respectively. Goodwill increased $0.9 million in connection with the Fantix, Inc. acquisition. Refer to Note 6, "Business Combinations" for additional information. No
Accrued Expenses and Other Current Liabilities
Accrued expenses and other current liabilities consist of the following (in thousands):
| As of March 31, | As of December 31, | ||||||||||
| 2025 | 2024 | ||||||||||
| Accrued vendor expenses | $ | $ | |||||||||
| Accrued compensation | |||||||||||
| Customer related promotions and discounts | |||||||||||
| Sales return reserves | |||||||||||
| Other current liabilities | |||||||||||
| Total accrued expenses and other current liabilities | $ | $ | |||||||||
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8. Commitments and Contingencies
Purchase Commitments
The Company has contractual commitments with our cloud platform provider and contract manufacturer that are non-cancellable. As of March 31, 2025, future non-cancellable commitments under these arrangements were as follows (in thousands):
Amount | |||||
| Remainder of 2025 | $ | ||||
| 2026 | |||||
| 2027 | |||||
| Total purchase commitments | $ | ||||
Contingencies
From time to time, the Company may have certain contingent liabilities that arise in the ordinary course of business activities. The Company accrues a liability for such matters when it is probable that future expenditures will be made, and such expenditures can be reasonably estimated. The Company is not subject to any current pending legal matters or claims that the Company believes could have a material adverse effect on its financial position, results of operations or cash flows.
Indemnification
To date, the Company has not incurred significant costs and has not accrued any material liabilities in the accompanying condensed consolidated financial statements as a result of its indemnification obligations.
Litigation
Occasionally, the Company is involved in various legal proceedings, claims and government investigations in the ordinary course of business. The outcome of litigation and other legal matters is inherently uncertain, though the Company intends to vigorously defend any such matters. In making a determination regarding accruals, using available information, the Company evaluates the likelihood of an unfavorable outcome in legal or regulatory proceedings to which the Company is a party and records a loss contingency when it is probable a liability has been incurred and the amount of the loss can be reasonably estimated. When the Company determines an unfavorable outcome is not probable or reasonably estimable the Company does not accrue for any potential litigation loss. Actual outcomes of these legal and regulatory proceedings may materially differ from the Company’s estimates.
On March 12, 2019, a former alleged competitor of Tile, Cellwitch, Inc, filed a patent infringement claim against Tile in the U.S. District Court, Northern District of California, seeking permanent injunction and damages. On December 18, 2019, Tile filed an inter partes review petition with the Patent Trial and Appeal Board (“PTAB”) challenging the validity of the patent. On May 13, 2021, the PTAB issued a Final Written Decision on Tile’s inter partes review petition (the “Final Written Decision”), finding a majority of the claims invalid. The Final Written Decision was affirmed by the U.S. Court of Appeals for the Federal Circuit on May 13, 2022. The case is currently in trial court. The claim construction hearing took place on January 18, 2024, and on April 23, 2024, the court released its order which found 10 of the claims invalid, leaving only 2 active claims remaining. At this time, a loss is reasonably possible but not estimable, and as a result, no litigation reserve has been recorded on our condensed consolidated balance sheet as of March 31, 2025.
On August 14, 2023, plaintiffs Stephanie Ireland-Gordy and Shannon Ireland-Gordy filed a putative class action lawsuit against Tile, Life360, and Amazon.com, Inc. in the U.S. District Court for the Northern District of California. An amended complaint was filed on April 26, 2024, adding named plaintiffs Melissa Broad and Jane Doe. Plaintiffs allege that Tile trackers were used by third parties to monitor their movements without their consent, and assert product liability and other claims. At this time, a loss is not probable nor estimable, and as a result, no legal accrual has been recorded on our consolidated balance sheets as of March 31, 2025.
No litigation reserve was recorded on our condensed consolidated balance sheets as of March 31, 2025 and December 31, 2024, respectively.
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9. Common Stock
The Company has the following potentially outstanding common stock reserved for issuance:
| As of March 31, | As of December 31, | ||||||||||
| 2025 | 2024 | ||||||||||
| Issuances under stock incentive plan, stock options | |||||||||||
| Issuances upon exercise of common stock warrants | |||||||||||
| Issuances upon vesting of restricted stock units | |||||||||||
| Shares reserved for shares available to be granted but not granted yet | |||||||||||
10. Warrants
As of March 31, 2025 and December 31, 2024, the Company had outstanding warrants entitling the holder thereof to purchase 7,761 6.44
11. Equity Incentive Plan
2011 Equity Incentive Plan
The Company’s equity incentive plan allows the Company to grant restricted stock units (“RSUs”, which includes PRSUs), restricted stock, and stock options to employees and consultants of the Company and any of the Company’s parent, subsidiaries, or affiliates, and to the members of the Board of Directors.
The following summary of stock option activity for the periods presented is as follows (in thousands, except share and per share data):
| Number of Shares Underlying Outstanding Options | Weighted Average Exercise Price per Share | Weighted Average Remaining Contractual Life (in Years) | Aggregate Intrinsic Value | ||||||||||||||||||||
| Balance as of December 31, 2024 | $ | $ | |||||||||||||||||||||
| Options granted | |||||||||||||||||||||||
| Options exercised | ( | ||||||||||||||||||||||
| Options cancelled/forfeited | ( | ||||||||||||||||||||||
| Balance as of March 31, 2025 | |||||||||||||||||||||||
| Exercisable as of March 31, 2025 | $ | $ | |||||||||||||||||||||
As of March 31, 2025, there was total unrecognized compensation cost for outstanding stock options of $1.6 million to be recognized over a period of approximately 0.8 years.
Restricted Stock Units
The Company did no t grant any new PRSUs during the three months ended March 31, 2025.
17
RSU activity for the periods presented is as follows:
| Number of Shares | Weighted average grant date fair value | ||||||||||
| Balance as of December 31, 2024 | $ | ||||||||||
| RSUs granted | |||||||||||
| RSUs vested and settled | ( | ||||||||||
| RSUs cancelled/forfeited | ( | ||||||||||
| Balance as of March 31, 2025 | $ | ||||||||||
As of March 31, 2025, there was unrecognized compensation cost for outstanding RSUs of $81.7 million to be recognized over a period of approximately 2.7 years.
The number of RSUs vested and settled includes shares of common stock that the Company withheld on behalf of employees to satisfy the minimum statutory tax withholding requirements.
Stock-based Compensation
Stock-based compensation expense was allocated as follows (in thousands):
| Three Months Ended March 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Cost of revenue | |||||||||||
Cost of subscription revenue | $ | $ | |||||||||
Cost of hardware revenue | |||||||||||
Cost of other revenue | |||||||||||
| Total cost of revenue | |||||||||||
| Research and development | |||||||||||
| Sales and marketing | |||||||||||
| General and administrative | |||||||||||
| Total stock-based compensation, net of amounts capitalized | $ | $ | |||||||||
There was $0.3 million and an immaterial amount of capitalized stock-based compensation costs recognized during the three months ended March 31, 2025 and 2024, respectively.
12. Income Taxes
The provision for income taxes for interim quarterly reporting periods is based on the Company's estimates of the effective tax rates for the full fiscal year, in accordance with ASC 740-270, Income Taxes, Interim Reporting. ASC 740-270-25-2 requires that an annual effective tax rate be determined and such annual effective rate be applied to year to date income/loss in interim periods. The effective tax rate in any quarter may be subject to fluctuations during the year as new information is obtained, which may positively or negatively affect the assumptions used to estimate the annual effective tax rate, including factors such as valuation allowances against deferred tax assets, the recognition or de-recognition of tax benefits related to uncertain tax position, if any, and changes in or the interpretation of tax laws in jurisdictions where the Company conducts business. In accordance with the Tax Cuts and Jobs Act of 2017, research and experimental (“R&E”) expenses under Internal Revenue Code Section 174 are required to be capitalized beginning in 2022. R&E expenses are required to be amortized over a period of five years for domestic expenses and fifteen years for foreign expenses. The Company has capitalized R&E expenditures in its income tax provision. This is a driver for the annual estimated income tax rate used to calculate the provision for income taxes.
For the three months ended March 31, 2025 and 2024, the Company recorded a benefit from income taxes of $0.2 million and a provision for income taxes of $1.4 million, respectively.
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13. Related-Party Transactions
Hubble Transactions
In November and December 2024, the Company entered into a strategic partnership and series of transactions with Hubble Network, Inc. (“Hubble”), including (i) a technology exclusivity and revenue share agreement (“Hubble Agreement”), (ii) the Related Party SAFE; and (iii) Hubble’s issuance of the Related Party Warrant. The Hubble Agreement has an initial term of 5 years beginning on November 12, 2024.
As part of this partnership, the Company will leverage Hubble’s global satellite infrastructure to introduce a new global location-tracking network service offering. The partnership agreement includes revenue-share payments in which Hubble will pay the Company a percentage of revenue earned from leveraging the new global location-tracking network service offering. The partnership also allows Hubble to purchase Tile hardware devices at a price equal to the Company’s burdened cost of goods sold plus 12.5 %.
The grant of the Related Party Warrant was considered non-cash consideration, which the Company measured at fair value on the date of issuance. The Related Party Warrant includes various performance-based vesting conditions based on revenue and operational milestones to be measured and assessed throughout the term of the agreement. The first tranche, consisting of 2,049,191 shares, of the Related Party Warrant vested as of March 31, 2025. The warrant was valued using a Black Scholes option-pricing model, and the fair value of approximately $3.9 million is also included in prepaid expenses and other assets, noncurrent and deferred revenue on the Company’s consolidated balance sheets. The fair value of the warrant included within deferred revenue is amortized to other revenue over the life of the agreement. The Company recognized $0.3 million in other revenue on the condensed consolidated statements of operation and comprehensive income (loss) in connection with the Related Party Warrant during the three months ended March 31, 2025.
Alex Haro, the founder, and Chief Executive Officer of Hubble is a co-founder, former executive, and existing member of the Company’s Board of Directors. In addition, as part of the agreement, the Company obtained an observer right to Hubble’s board of directors. As a result, all transactions with Hubble entered into in connection with the strategic partnership are considered related party transactions.
14. Net Income (Loss) Per Share
Basic net income (loss) per share is calculated by dividing net income (loss) available to common stockholders by the weighted-average number of shares of common stock outstanding for the period. Diluted net income (loss) per share reflects the potential dilution that could occur if options, RSUs, PRSUs, warrants, or other securities with features that could result in the issuance of common stock were exercised or converted to common stock using the treasury-stock method.
19
The following table presents the calculation of basic and diluted net income (loss) per share (in thousands, except share and per share information):
| Three Months Ended March 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Net income (loss) | $ | $ | ( | ||||||||
| Weighted-average shares outstanding: | |||||||||||
| Basic | |||||||||||
Dilutive effect of outstanding options, RSUs and warrants | |||||||||||
| Diluted | |||||||||||
Net income (loss) per share: | |||||||||||
Basic | $ | $ | ( | ||||||||
| Diluted | $ | $ | ( | ||||||||
Certain potential shares of common stock were excluded from the diluted net income (loss) per share calculation as their inclusion would have been antidilutive. Excluded shares are as follows:
| Three Months Ended March 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Issuances under stock incentive plan, stock options | |||||||||||
| Issuances upon exercise of common stock warrants | |||||||||||
| Issuances upon vesting of restricted stock units | |||||||||||
| Issuances upon conversion of convertible notes | |||||||||||
| Total | |||||||||||
15. Subsequent Events
On May 12, 2025, the Company entered into a series of transactions with Aura Consolidated Group, Inc (“Aura”) including (i) a 3 year advertising partnership and revenue sharing agreement intended to expand the Company's other revenue channels and subscription membership offerings, and (ii) a $25 million convertible note investment by the Company into Aura.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our condensed consolidated financial statements and related notes appearing elsewhere in this Quarterly Report and our Annual Report on Form 10-K for the year ended December 31, 2024, filed with the SEC on February 27, 2025 (“Annual Report”). In addition to historical financial information, the following discussion contains forward-looking statements that are based upon current plans, expectations and beliefs that involve risks and uncertainties. Our actual results could differ materially from those discussed in the forward-looking statements as a result of a variety of factors, including but not limited to those discussed in “Risk Factors” under Part II, Item 1A in this Quarterly Report and Part I, Item 1A in our Annual Report.
Overview
Life360 is a leading technology platform used to locate the people, pets and things that matter most to families. Life360 is creating a new category at the intersection of family, technology, and safety to help keep families connected and safe. Our core offering, the Life360 mobile application, includes features that range from communications to driving safety and location sharing. The Life360 mobile application operates under a “freemium” model where its core offering is available to members at no charge, with three membership subscription options that are available but not required. We also generate revenue through hardware subscription services and the sale of hardware tracking devices. By offering devices and integrated software to members, we have expanded our addressable market to provide members of all ages with a vertically integrated, cross-platform solution of scale.
Key Factors Affecting Our Performance
We believe that our results of operations are affected by a number of factors, such as: the ability to remain a trusted brand; attracting, retaining, and converting members; maintaining efficient member acquisition; the ability to attract new and repeat purchasers of our hardware tracking devices; growth in Average Revenue per Paying Circle (“ARPPC”); expanding offerings on our platform; attracting and retaining talent; seasonality; and international expansion. We discuss each of these factors in more detail under the heading “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Key Factors Affecting Our Performance” in our Annual Report. While we do not have control of all factors affecting our results from operations, we work diligently to influence and manage those factors which we can impact to enhance our results of operations.
Key Components of Our Results of Operations
The following discussion describes certain line items in our condensed consolidated statements of operations and comprehensive income (loss).
Revenue
The Company generates revenue from direct and indirect streams. Direct revenue includes subscription and hardware revenue, while indirect revenue consists of all other revenue sources, such as data and partnership, which includes advertising.
Subscription Revenue
We generate revenue primarily from sales of subscriptions on our platform, including Life360, Jiobit and Tile. Revenue is recognized ratably over the related contractual term generally beginning on the date that our platform is made available to a customer. Our subscription agreements typically have monthly or annual contractual terms. Our agreements are generally non-cancellable during the contract term. We typically bill in advance for monthly and annual contracts. Amounts that have been billed are initially recorded as deferred revenue until the revenue is recognized.
Hardware Revenue
We generate our hardware revenue from the sale of Jiobit and Tile hardware tracking devices and related accessories. For hardware and accessories, revenue is recognized at the time products are delivered. We sell hardware tracking devices and accessories through a number of channels including our websites, brick and mortar retail and online retail.
21
Other Revenue
Other revenue consists of data and partnership revenue, which includes advertising revenue. We generate data revenue primarily through an arrangement with a key data partner that provides location-based analytics to customers in the retail and real estate sectors, municipalities, and other private and public organizations. The agreement permits commercialization of certain aggregated and de-identified data and provides for fixed and variable monthly revenue amounts. We generate partnership revenue through agreements with third parties which grant them access to anonymized data insights or advertising on the Company’s mobile platform, and through the recognition of revenue related to the Related Party Warrant.
Cost of Revenue and Gross Margin
Cost of Subscription Revenue
Cost of subscription revenue primarily consists of expenses related to hosting our services and providing support to our free and paying subscribers. These expenses include personnel-related costs associated with our cloud-based infrastructure and our customer support organization, third-party hosting fees, software, and maintenance costs, outside services associated with the delivery of our subscription services, amortization of acquired intangibles and allocated overhead, such as facilities, including rent, utilities, depreciation on equipment shared by all departments, credit card and transaction processing fees, and shared information technology costs. Personnel-related expenses include salaries, bonuses, benefits, and stock-based compensation for operations personnel.
We plan to continue increasing the capacity and enhancing the capability and reliability of our infrastructure to support member growth and increased use of our platform. We expect that cost of revenue will increase in absolute dollars in future periods.
Cost of Hardware Revenue
Cost of hardware revenue consists of product costs, including hardware production, contract manufacturers for production, shipping and handling, packaging, fulfillment, personnel-related expenses, manufacturing and equipment depreciation, warehousing, tariff costs, customer support costs, credit card and transaction processing fees, warranty replacement, and write-downs of excess and obsolete inventory. Personnel-related expenses include salaries, bonuses, benefits, and stock-based compensation for operations personnel.
Cost of Other Revenue
Cost of other revenue includes cloud-based hosting costs, as well as costs of product operations functions and personnel-related costs associated with our data and advertising platforms. Personnel-related expenses include salaries, bonuses, benefits, and stock-based compensation for operations personnel.
Gross Profit and Gross Profit Margin
Our gross profit has been, and may in the future be, influenced by several factors, including timing of capital expenditures and related depreciation expense, increases in infrastructure costs, component costs, tariffs, contract manufacturing and supplier pricing, and foreign currency exchange rates. Gross profit and gross profit margin may fluctuate over time based on the factors described above.
Operating Expenses
Our operating expenses consist of research and development, selling and marketing, and general and administrative expenses.
Research and Development
Our research and development expenses consist primarily of personnel-related costs for our engineering, product, and design teams, material costs of building and developing prototypes for new products, mobile app development and allocated overhead. We believe that continued investment in our platform is important for our growth. We intend to continue to invest in research and development to bring new customer experiences and devices to market and expand our platform capabilities.
22
Sales and Marketing
Our sales and marketing expenses consist primarily of commissions to the Company’s third-party platforms (each a “Channel Partner”), personnel-related costs, brand marketing costs, lead generation costs, sales incentives, sponsorships and amortization of acquired intangibles, bad debt expense, and allocated overhead. Commission payments to Channel Partners in connection with annual subscription sales of the Company’s mobile application on third-party store platforms are considered to be incremental and recoverable costs of obtaining a contract with a customer and are deferred and typically amortized over an estimated period of benefit of two to three years depending on the subscription type.
We plan to continue to invest in sales and marketing to grow our member base and increase our brand awareness, including marketing efforts to continue to drive our business model. We expect that sales and marketing expenses will increase in absolute dollars in future periods and will fluctuate as a percentage of revenue. The trend and timing of sales and marketing expenses will depend in part on the timing of marketing campaigns.
General and Administrative
Our general and administrative expenses consist primarily of employee-related costs for our legal, finance, human resources, and other administrative teams, as well as certain executive officers. In addition, general and administrative expenses include allocated overhead, outside legal, accounting and other professional fees, and non-income-based taxes. We expect our general and administrative expenses will increase in absolute dollars as our business grows.
Other Income (Expense)
Convertible Notes Fair Value Adjustment
The Company issued convertible notes to investors in July 2021 (the “July 2021 Convertible Notes”), and as part of the purchase consideration related to the acquisition of Jiobit in September 2021 (the “September 2021 Convertible Notes” and together with the July 2021 Convertible Notes, the “Convertible Notes”). The September 2021 Convertible Notes were recorded at fair value and revalued at each reporting period prior to their conversion to common stock in April 2024.
Derivative Liability Fair Value Adjustment
Derivative liability fair value adjustment relates to the change in the fair value of the embedded conversion and redemption features associated with the July 2021 Convertible Notes prior to their conversion to common stock in June 2024.
Other Income, net
Other income, net consists of interest income earned on our cash and cash equivalents balances, foreign currency exchange gains/(losses) related to the remeasurement of certain assets and liabilities of our foreign subsidiaries that are denominated in currencies other than the functional currency of the subsidiary and foreign exchange transactions gains/(losses), interest expense primarily related to the Convertible Notes.
Provision for (Benefit from) Income Taxes
Provision for (benefit from) income taxes consists of U.S. federal and state income taxes and foreign income taxes in jurisdictions in which we conduct business. We maintain a full valuation allowance on our federal and state deferred tax assets as we have concluded that it is not more likely than not that the deferred tax assets will be realized.
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Results of Operations
The following tables set forth our condensed consolidated statements of operations and comprehensive income (loss) for the three months ended March 31, 2025 and 2024 (in thousands, except percentages).
| Three Months Ended March 31, | |||||||||||||||||
| 2025 | 2024 | % Change | |||||||||||||||
| Subscription revenue | $ | 81,874 | $ | 61,579 | 33 | % | |||||||||||
| Hardware revenue | 8,907 | 10,188 | (13) | % | |||||||||||||
| Other revenue | 12,843 | 6,460 | 99 | % | |||||||||||||
| Total revenue | 103,624 | 78,227 | 32 | % | |||||||||||||
Cost of subscription revenue(1) | 10,141 | 9,315 | 9 | % | |||||||||||||
Cost of hardware revenue(1) | 8,597 | 8,012 | 7 | % | |||||||||||||
Cost of other revenue(1) | 1,337 | 887 | 51 | % | |||||||||||||
Total cost of revenue(1) | 20,075 | 18,214 | 10 | % | |||||||||||||
| Gross profit | 83,549 | 60,013 | 39 | % | |||||||||||||
Operating expenses(1): | |||||||||||||||||
| Research and development | 30,403 | 27,258 | 12 | % | |||||||||||||
| Sales and marketing | 35,308 | 24,733 | 43 | % | |||||||||||||
| General and administrative | 15,649 | 14,401 | 9 | % | |||||||||||||
| Total operating expenses | 81,360 | 66,392 | 23 | % | |||||||||||||
| Income (loss) from operations | 2,189 | (6,379) | 134 | % | |||||||||||||
| Other income (expense): | |||||||||||||||||
| Convertible notes fair value adjustment | — | (608) | 100 | % | |||||||||||||
| Derivative liability fair value adjustment | — | (1,707) | 100 | % | |||||||||||||
| Other income, net | 1,975 | 311 | 535 | % | |||||||||||||
| Total other income (expense), net | 1,975 | (2,004) | 199 | % | |||||||||||||
| Income (loss) before income taxes | 4,164 | (8,383) | 150 | % | |||||||||||||
| Provision for (benefit from) income taxes | (214) | 1,394 | (115) | % | |||||||||||||
| Net income (loss) | $ | 4,378 | $ | (9,777) | 145 | % | |||||||||||
| Change in foreign currency translation adjustment | 1 | 1 | — | % | |||||||||||||
| Total comprehensive income (loss) | $ | 4,379 | $ | (9,776) | 145 | % | |||||||||||
(1)Includes stock-based compensation expense as follows (in thousands, except percentages):
| Three Months Ended March 31, | |||||||||||||||||
| 2025 | 2024 | % Change | |||||||||||||||
| Cost of revenue | |||||||||||||||||
Cost of subscription revenue | $ | 168 | $ | 159 | 6 | % | |||||||||||
Cost of hardware revenue | 235 | 184 | 28 | % | |||||||||||||
Cost of other revenue | — | 4 | (100) | % | |||||||||||||
| Total cost of revenue | 403 | 347 | |||||||||||||||
| Research and development | 5,709 | 5,325 | 7 | % | |||||||||||||
| Sales and marketing | 1,326 | 632 | 110 | % | |||||||||||||
| General and administrative | 2,451 | 1,957 | 25 | % | |||||||||||||
| Total stock-based compensation, net of amounts capitalized | $ | 9,889 | $ | 8,261 | |||||||||||||
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The following table sets forth our results of operations as a percentage of total revenue:
| Three Months Ended March 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Subscription revenue | 79 | % | 79 | % | |||||||
| Hardware revenue | 9 | % | 13 | % | |||||||
| Other revenue | 12 | % | 8 | % | |||||||
| Total revenue | 100 | % | 100 | % | |||||||
| Cost of subscription revenue | 10 | % | 12 | % | |||||||
| Cost of hardware revenue | 8 | % | 10 | % | |||||||
| Cost of other revenue | 1 | % | 1 | % | |||||||
Total cost of revenue | 19 | % | 23 | % | |||||||
| Gross profit | 81 | % | 77 | % | |||||||
Operating expenses: | |||||||||||
| Research and development | 29 | % | 35 | % | |||||||
| Sales and marketing | 34 | % | 32 | % | |||||||
| General and administrative | 15 | % | 18 | % | |||||||
| Total operating expenses | 79 | % | 85 | % | |||||||
| Income (loss) from operations | 2 | % | (8) | % | |||||||
| Other income (expense): | |||||||||||
| Convertible notes fair value adjustment | — | % | (1) | % | |||||||
| Derivative liability fair value adjustment | — | % | (2) | % | |||||||
| Other income, net | 2 | % | — | % | |||||||
| Total other income (expense), net | 2 | % | (3) | % | |||||||
| Income (loss) before income taxes | 4 | % | (11) | % | |||||||
| Provision for (benefit from) income taxes | — | % | 2 | % | |||||||
| Net income (loss) | 4 | % | (12) | % | |||||||
| Change in foreign currency translation adjustment | — | % | — | % | |||||||
| Total comprehensive income (loss) | 4 | % | (12) | % | |||||||
Revenue
| Three Months Ended March 31, | Change | ||||||||||||||||||||||
| 2025 | 2024 | $ | % | ||||||||||||||||||||
| (in thousands, except percentages) | |||||||||||||||||||||||
| Subscription revenue | $ | 81,874 | $ | 61,579 | $ | 20,295 | 33 | % | |||||||||||||||
| Hardware revenue | 8,907 | 10,188 | (1,281) | (13) | % | ||||||||||||||||||
| Other revenue | 12,843 | 6,460 | 6,383 | 99 | % | ||||||||||||||||||
| Total revenue | $ | 103,624 | $ | 78,227 | $ | 25,397 | 32 | % | |||||||||||||||
Subscription revenue increased $20.3 million, or 33%, during the three months ended March 31, 2025 as compared to the three months ended March 31, 2024, primarily due to a 26% growth in Paying Circles (as defined below) and a 19% growth in total subscriptions. Additionally, subscription revenue in the current period benefited from price increases for new and existing Life360 subscriptions implemented during the second half of 2024.
Hardware revenue decreased $1.3 million, or 13%, during the three months ended March 31, 2025 as compared to the three months ended March 31, 2024. The decline was primarily driven by a $0.9 million reduction in revenue related to bundled offerings as well as a $1.2 million increase in discounts. These impacts were partially offset by a $0.7 million decrease in returns and a $0.1 million increase in gross revenue, which was driven by a higher average selling price.
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Other revenue increased $6.4 million, or 99%, during the three months ended March 31, 2025 as compared to the three months ended March 31, 2024, due to a $4.5 million increase in partnership revenue, which includes advertising revenue, and a $1.9 million increase in data revenue, which was primarily attributable to the Amended and Restated Data Services and License Agreement with Placer.ai we entered into in July 2024.
Cost of Revenue, Gross Profit, and Gross Margin
| Three Months Ended March 31, | Change | ||||||||||||||||||||||
| 2025 | 2024 | $ | % | ||||||||||||||||||||
| (in thousands, except percentages) | |||||||||||||||||||||||
| Cost of subscription revenue | $ | 10,141 | $ | 9,315 | $ | 826 | 9% | ||||||||||||||||
| Cost of hardware revenue | 8,597 | 8,012 | 585 | 7% | |||||||||||||||||||
| Cost of other revenue | 1,337 | 887 | 450 | 51% | |||||||||||||||||||
| Total cost of revenue | 20,075 | 18,214 | 1,861 | ||||||||||||||||||||
| Gross profit | $ | 83,549 | $ | 60,013 | $ | 23,536 | |||||||||||||||||
| Gross margin: | |||||||||||||||||||||||
| Subscription | 88% | 85% | |||||||||||||||||||||
| Hardware | 3% | 21% | |||||||||||||||||||||
| Other | 90% | 86% | |||||||||||||||||||||
Cost of subscription revenue increased $0.8 million, or 9%, during the three months ended March 31, 2025 as compared to the three months ended March 31, 2024, primarily due to a $0.8 million increase in technology and other expenses, attributable to Company growth.
Subscription gross margin increased to 88% during the three months ended March 31, 2025 from 85% during the three months ended March 31, 2024, primarily due to price increases for new and existing Life360 subscriptions implemented during the second half of 2024.
Cost of hardware revenue increased $0.6 million, or 7%, during the three months ended March 31, 2025 as compared to the three months ended March 31, 2024. This was primarily driven by increases of $0.7 million in inventory reserves, $0.3 million in personnel-related and stock-based compensation costs associated with Company growth, and $0.3 million in freight costs due to a shift in channel mix. These increases were partially offset by a $0.7 million decrease in hardware product costs resulting from a lower volume of units sold.
Hardware gross margin decreased to 3% during the three months ended March 31, 2025 from 21% during the three months ended March 31, 2024, primarily due to a $1.2 million increase in discounts, an increase in freight costs associated with the shift in channel mix, and an increase in fixed hardware costs in line with Company growth.
Cost of other revenue increased by $0.5 million, or 51%, during the three months ended March 31, 2025 as compared to the three months ended March 31, 2024, due to increases of $0.3 million in technology and other related expenses to support the existing customer base and $0.2 million in costs associated with the growth in partnership revenue, which includes advertising revenue.
Other gross margin increased to 90% during the three months ended March 31, 2025 from 86% during the three months ended March 31, 2024, primarily due to revenue outpacing the increase in costs.
Research and Development
| Three Months Ended March 31, | Change | ||||||||||||||||||||||
| 2025 | 2024 | $ | % | ||||||||||||||||||||
| (in thousands, except percentages) | |||||||||||||||||||||||
| Research and development | $ | 30,403 | $ | 27,258 | $ | 3,145 | 12 | % | |||||||||||||||
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Research and development expenses increased $3.1 million, or 12%, during the three months ended March 31, 2025 as compared to the three months ended March 31, 2024. This was primarily due to increases of $2.6 million in personnel-related and stock-based compensation costs, $1.1 million in technology costs, $0.4 million in professional and outside services spend, and $0.2 million in contractor spend. The increases were partially offset by a $0.9 million increase in capitalized construction in progress costs and a $0.3 million increase in capitalized internally developed software.
Sales and Marketing
| Three Months Ended March 31, | Change | ||||||||||||||||||||||
| 2025 | 2024 | $ | % | ||||||||||||||||||||
| (in thousands, except percentages) | |||||||||||||||||||||||
| Sales and marketing | $ | 35,308 | $ | 24,733 | $ | 10,575 | 43 | % | |||||||||||||||
Sales and marketing expenses increased $10.6 million, or 43%, during the three months ended March 31, 2025 as compared to the three months ended March 31, 2024. This was primarily due to increases of $3.7 million in commissions to the Company’s third-party platforms and distribution channels (each a “Channel Partner”), which is in line with the increase in subscription revenue, and $3.3 million in growth media spend. Additional increases included $1.9 million in personnel-related and stock-based compensation costs, $1.0 million in other marketing spend, $0.4 million in technology costs, and $0.3 million in professional and outside services spend, all attributable to Company growth.
General and Administrative
| Three Months Ended March 31, | Change | ||||||||||||||||||||||
| 2025 | 2024 | $ | % | ||||||||||||||||||||
| (in thousands, except percentages) | |||||||||||||||||||||||
| General and administrative | $ | 15,649 | $ | 14,401 | $ | 1,248 | 9 | % | |||||||||||||||
General and administrative expenses increased $1.2 million, or 9%, during the three months ended March 31, 2025 as compared to the three months ended March 31, 2024. This was primarily due to increases of $1.6 million in personnel-related and stock-based compensation costs and $0.8 million in technology and other expenses, attributable to Company growth. The increases were partially offset by a decrease of $1.0 million in professional and outside services spend, primarily driven by lower Sarbanes-Oxley related compliance costs, and a $0.2 million increase in capitalized internally developed software.
Convertible Notes Fair Value Adjustment
In April and June 2024, the September 2021 Convertible Notes and the July 2021 Convertible Notes, respectively, were converted to common stock. As a result, the Company recorded no gain or loss associated with the convertible notes fair value adjustment for the three months ended March 31, 2025. A loss of $0.6 million associated with the convertible notes fair value adjustment was recorded for the three months ended March 31, 2024.
Derivative Liability Fair Value Adjustment
In June 2024, the holders of the July 2021 Convertible Notes converted their notes and accrued interest to common stock and the embedded derivative liability was settled as a result of the conversion. As such, the Company recorded no gain or loss associated with the derivative liability fair value adjustment for the three months ended March 31, 2025. A loss of $1.7 million was recorded for the three months ended March 31, 2024.
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Other Income, Net
Other income, net includes interest income, dividend income, foreign exchange losses, and interest expense associated with the July 2021 Convertible Notes. For the three months ended March 31, 2025, other income, net consists of $2.0 million in other income and for the three months ended March 31, 2024, consists of $0.9 million in other income and $0.6 million in other expense.
Other income, net increased $1.7 million, or 535%, during the three months ended March 31, 2025 as compared to the three months ended March 31, 2024. This was primarily driven by a $0.9 million increase in dividend and interest income resulting from higher average gross yields primarily due to an increased cash and cash equivalents balance. In addition, a $0.4 million favorable change in the impact of currency revaluation and a $0.4 million reduction in interest expense and other costs contributed to the increase.
Provision for (benefit from) Income Taxes
Benefit from income taxes increased $1.6 million during the three months ended March 31, 2025 as compared to the three months ended March 31, 2024. The changes are due to the estimated growth in the Company’s annual estimated effective tax rate in the U.S. Provision for income taxes which consists of U.S. federal and state income taxes in jurisdictions in which we conduct business. The annual estimated effective tax rate in any quarter may be subject to fluctuations during the year as new information is obtained, which may positively or negatively affect the assumptions used to estimate the annual effective tax rate. We maintain a full valuation allowance on our federal and state deferred tax assets as we have concluded that it is not more likely than not that the deferred tax assets will be realized.
Key Performance Indicators
We review several operating metrics, including the following key performance indicators, to evaluate our business, measure our performance, identify trends affecting our business, develop financial forecasts, and make strategic decisions. We believe these key performance indicators are useful to investors because they allow for greater transparency with respect to key metrics used by management in its financial and operational decision-making, and they may be used by investors to help analyze the health of our business. Key operating metrics are presented in millions, except ARPPC, Average Revenue per Paying Subscription (“ARPPS”) and Average Sales Price (“ASP”), however percentage changes are calculated based on actual results. As a result, percentage changes may not recalculate based on figures presented due to rounding. Please refer to “Results of Operations” for additional metrics management reviews in conjunction with the condensed consolidated financial statements.
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Key Operating Metrics
| As of and for the Three Months Ended March 31, | |||||||||||||||||
| 2025 | 2024 | % Change | |||||||||||||||
| (in millions, except ARPPC, ARPPS and ASP) | |||||||||||||||||
| AMR | $ | 393.0 | $ | 284.7 | 38 | % | |||||||||||
| MAUs | 83.7 | 66.4 | 26 | % | |||||||||||||
| Paying Circles | 2.4 | 1.9 | 26 | % | |||||||||||||
ARPPC1 | $ | 133.42 | $ | 123.97 | 8 | % | |||||||||||
| Subscriptions | 3.0 | 2.5 | 19 | % | |||||||||||||
ARPPS1 | $ | 112.98 | $ | 102.02 | 11 | % | |||||||||||
| Net hardware units shipped | 0.5 | 0.5 | (8) | % | |||||||||||||
ASP2 | $ | 16.99 | $ | 16.50 | 3 | % | |||||||||||
1.Excludes revenue related to bundled Life360 subscription and hardware offerings of $(0.4) million for the three months ended March 31, 2025, and $(1.2) million for the three months ended March 31, 2024.
2.Excludes revenue related to bundled Life360 subscription and hardware offerings of $0.4 million for the three months ended March 31, 2025, and $1.2 million for the three months ended March 31, 2024.
Annualized Monthly Revenue
We use Annualized Monthly Revenue (“AMR”) to identify the annualized monthly value of active customer agreements at the end of a reporting period. AMR includes the annualized monthly value of subscription, data and partnership agreements. All components of these agreements that are not expected to recur are excluded. This does not represent revenue under GAAP on an annualized basis, as the operating metric can be impacted by start and end dates and renewal rates. AMR as of March 31, 2025, and 2024 was $393.0 million and $284.7 million, respectively, representing an increase of 38% year-over-year, which is largely attributable to continued subscriber growth.
Monthly Active Users
We have a large and growing global member base as of March 31, 2025. A Life360 monthly active user (“MAU”) is defined as a unique member who engages with our Life360 branded services each month, which includes both paying and non-paying members, and excludes certain members who have a delayed account setup. As of March 31, 2025 and 2024, we had approximately 83.7 million and approximately 66.4 million MAUs on the Life360 Platform, respectively, representing an increase of 26% year-over-year. We believe this has been driven by continued strong new member growth and retention.
Paying Circles
We define a Paying Circle as a group of Life360 members with a paying subscription who have been billed as of the end of period. Each subscription covers all members in the payor’s Circle so everyone in the Circle can utilize the benefits of a Life360 Membership, including access to premium location, driving, digital and emergency safety insights and services.
As of March 31, 2025 and 2024, we had approximately 2.4 million and 1.9 million paid subscribers to services under our Life360 brand, respectively, representing an increase of 26% year-over-year. We grow the number of Paying Circles by increasing our free member base, converting free members to subscribers, and retaining them over time with the provision of high-quality family connectivity and safety services.
Average Revenue per Paying Circle
We define Average Revenue per Paying Circle (“ARPPC”) as annualized subscription revenue recognized and derived from the Life360 mobile application, excluding revenue related to bundled Life360 subscription and hardware offerings, for the reported period, divided by the Average Paying Circles during the same period. Average Paying Circles are calculated by adding the number of Paying Circles as of the beginning of the period to the number of Paying Circles as of the end of the period, and then dividing by two.
For the three months ended March 31, 2025 and 2024, our ARPPC was $133.42 and $123.97, respectively, representing an 8% increase year-over-year.
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ARPPC is a key indicator utilized by Life360 to determine our effectiveness at monetizing Paying Circles through tiered product offerings. U.S. ARPPC has benefited from price increases for new and existing subscribers implemented in September 2024 and October 2024, respectively, as well as a shift in product mix towards higher priced products. International ARPPC also benefited from price increases for legacy subscribers, as well as the launch of dual and triple tier memberships across certain international markets throughout 2024. The positive impacts seen from the price increases were partially offset by an increase in international subscribers, which overall, have lower priced subscriptions.
Subscriptions
We define Subscriptions as the number of paying subscribers associated with the Life360, Tile and Jiobit brands who have been billed as of the end of the period.
As of March 31, 2025 and 2024, we had approximately 3.0 million and 2.5 million paid subscribers, respectively, to services under the Life360, Tile, and Jiobit brands, representing an increase of 19% year-over-year.
We grow the number of Subscriptions by selling hardware units and increasing our free member base, converting free members to subscribers, and retaining them over time with the provision of location tracking and high-quality family and safety services.
Average Revenue per Paying Subscription
We define ARPPS as annualized total subscription revenue recognized and derived from Life360, Tile and Jiobit subscriptions, excluding revenue related to bundled Life360 subscription and hardware offerings, for the reported period divided by the average number of paying subscribers during the same period. The average number of paying subscribers is calculated by adding the number of paying subscribers as of the beginning of the period to the number of paying subscribers as of the end of the period, and then dividing by two. Paying subscribers represent subscribers who have been billed as of the end of the period.
ARPPS for the three months ended March 31, 2025 and 2024 was $112.98 and $102.02, respectively, representing an increase of 11% year-over-year.
ARPPS has increased year over year as a result of price increases for new and existing subscribers implemented in September 2024 and October 2024, respectively, as well as a shift in product mix towards higher priced products. International ARPPC also benefited from price increases for legacy subscribers, as well as the launch of dual and triple tier memberships across certain international markets throughout 2024. The positive impacts seen from the price increases were partially offset by an increase in international subscribers, which overall, have lower priced subscriptions.
Net Hardware Units Shipped
Net hardware units shipped represents the number of tracking devices sold during a period, excluding certain hardware units related to bundled Life360 subscription and hardware offerings, net of returns by our retail partners and directly to consumers. Selling units contributes to hardware revenue and ultimately increases the number of members eligible for a Tile or Jiobit subscription.
For the three months ended March 31, 2025 and 2024, we sold approximately 0.50 million units and 0.54 million units, respectively, representing a decrease of 8% year-over-year. The decrease in net hardware units shipped was primarily due to a decrease in enterprise channel sales.
Net Average Sales Price (ASP)
To determine the net ASP of a unit, we divide hardware revenue recognized, excluding revenue related to bundled Life360 subscription and hardware offerings, for the reported period by the number of net hardware units shipped during the same period. ASP is largely driven by the price we charge customers, including the price we charge our retail partners, net of customer allowances, and directly to consumers.
For the three months ended March 31, 2025 and 2024, the net ASP per unit was $16.99 and $16.50, respectively, representing an increase of 3% year-over-year. The increase in net ASP was primarily due to a shift in channel mix and fewer returns.
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Liquidity and Capital Resources
As of March 31, 2025, we had cash and cash equivalents of $168.9 million and restricted cash of $1.5 million. As of December 31, 2024, we had cash and cash equivalents of $159.2 million and restricted cash of $1.2 million.
We believe our existing cash and cash equivalents and cash provided by sales of our subscriptions and hardware devices will be sufficient to support working capital and capital expenditure requirements for at least the next 12 months. We may from time to time seek to raise additional capital based on a variety of factors, including our capital requirements and the relative favorability of conditions in the capital markets. If we are unable to raise additional capital on terms acceptable to us or generate cash flows necessary to expand our operations and invest in continued innovation, we may not be able to compete successfully, which would harm our business, financial condition and results of operations.
Cash Flows
Our cash flow activities were as follows for the periods presented:
| Three Months Ended March 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| (in thousands) | |||||||||||
| Net cash provided by operating activities | $ | 12,060 | $ | 10,688 | |||||||
| Net cash used in investing activities | (4,347) | (1,089) | |||||||||
| Net cash provided by (used in) financing activities | 2,183 | (5,709) | |||||||||
| Net Increase in Cash, Cash Equivalents, and Restricted Cash | $ | 9,896 | $ | 3,890 | |||||||
Operating Activities
Our largest sources of operating cash are cash collections from our paying members for subscriptions to our platform and hardware device sales. Our primary uses of cash from operating activities are for employee-related expenditures, costs to acquire inventory, infrastructure-related costs, commissions paid to Channel Partners and other marketing expenses.
A number of our members pay in advance for annual subscriptions, while a majority pay in advance for monthly subscriptions. Deferred revenue consists of the unearned portion of customer billings, which is recognized as revenue in accordance with our revenue recognition policy. As of March 31, 2025 and December 31, 2024, we had deferred revenue of $46.6 million and $45.2 million, respectively, of which $41.8 million and $39.9 million is expected to be recorded as revenue in the next 12 months, respectively, provided all other revenue recognition criteria have been met.
For the three months ended March 31, 2025, net cash provided by operating activities was $12.1 million. The primary factors affecting our operating cash flows during this period were our net income of $4.4 million, impacted by $13.1 million of non-cash adjustments, and $5.4 million of cash used by changes in our operating assets and liabilities. The non-cash adjustments primarily consisted of stock-based compensation, depreciation and amortization. The cash used by changes in our operating assets and liabilities was primarily due to decreases in accrued expenses and other current liabilities and increases in inventory and prepaid expenses and other assets, which was offset by decreases in accounts receivable, net, and deferred revenue.
For the three months ended March 31, 2024, net cash provided by operating activities was $10.7 million. The primary factors affecting our operating cash flows during this period were our net loss of $9.8 million, impacted by $13.0 million of non-cash adjustments and $7.5 million of cash provided by changes in our operating assets and liabilities. The non-cash adjustments primarily consisted of stock-based compensation, depreciation and amortization, and fair value adjustments for our convertible notes and derivative liability. The cash provided by changes in our operating assets and liabilities was primarily due to decreases in accounts receivable, net, and prepaid expenses and other assets, increases in accounts payable and deferred revenue, offset by a decrease in accrued expenses and other current liabilities and increases in inventory.
Investing Activities
For the three months ended March 31, 2025, net cash used in investing activities was $4.3 million, which primarily related to cash paid for acquisitions. Refer to Note 6, "Business Combinations" for additional information. Net cash used in investing activities also included capitalization of internally developed software costs in accordance with ASC 350-40, Intangibles - Goodwill and Other, Internal-Use Software.
31
For the three months ended March 31, 2024, net cash used in investing activities was $1.1 million, which primarily related to the capitalization of internally developed software costs in accordance with ASC 350-40, Intangibles — Goodwill and Other, Internal-Use Software.
Financing Activities
For the three months ended March 31, 2025, net cash provided by financing activities was $2.2 million, which primarily related to $10.6 million of taxes paid for the net settlement of equity awards, offset by $12.8 million of proceeds related to tax withholdings on restricted stock settlements and the exercise of stock options and warrants.
For the three months ended March 31, 2024, net cash used in financing activities was $5.7 million, which primarily related to $8.1 million, of taxes paid for the net settlement of equity awards, offset by $2.4 million of proceeds from the exercise of options.
Obligations and Other Commitments
Our principal commitments consist of obligations under our operating leases for office space, and other purchase commitments. Information regarding our non-cancellable lease and other purchase commitments as of March 31, 2025, can be found in Note 7, "Balance Sheet Components" and Note 8, "Commitments and Contingencies" to our condensed consolidated financial statements.
Critical Accounting Policies and Significant Management Estimates
Our condensed consolidated financial statements are prepared in accordance with GAAP. The preparation of condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses and related disclosures. We base our estimates on historical experiences and on various other assumptions we believe to be reasonable under the circumstances. Actual results could differ materially from the estimates made by our management. Our significant accounting policies are discussed in Note 2, "Summary of Significant Accounting Policies" in our Annual Report. There were no significant changes to these policies during the three months ended March 31, 2025.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
We are exposed to market risk in the ordinary course of our business. Market risk represents the risk of loss that may impact our financial position due to adverse changes in financial market prices and rates. Our market risk exposure is primarily the result of fluctuations in interest rates and foreign currency exchange rates.
Interest Rate Risk
As of March 31, 2025 and December 31, 2024, we had $135.4 million and $134.0 million, respectively, of cash equivalents invested in money market funds. Our cash and cash equivalents are held for working capital purposes. As of March 31, 2025 and December 31, 2024, a hypothetical 10% relative change in interest rates would not have a material impact on our condensed consolidated financial statements.
Foreign Currency Exchange Risk
Our reporting currency and functional currency is the U.S. dollar. The majority of our sales are denominated in U.S. dollars, and therefore our revenue is not currently subject to significant foreign currency risk. Our operating expenses are denominated in the currencies of the countries in which our operations are located, which is primarily in the United States. Our condensed consolidated results of operations and cash flows are, therefore, subject to fluctuations due to changes in foreign currency exchange rates and may be adversely affected in the future due to changes in foreign exchange rates. To date, we have not entered into any active hedging arrangements with respect to foreign currency risk or other derivative financial instruments, although we may choose to do so in the future. We do not believe that a hypothetical 1,000 basis-point increase or decrease in the relative value of the U.S. dollar to other currencies would have a material effect on our operating results.
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Inflation Risk
We do not believe that inflation has had a material effect on our business, results of operations, or financial condition. Nonetheless, if our costs were to become subject to significant inflationary pressures, we may not be able to fully offset such higher costs. Our inability or failure to do so could harm our business, results of operations, or financial condition.
Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of March 31, 2025 pursuant to Rule 13a‑15 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The term “disclosure controls and procedures” means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the Company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. Based on such evaluation, our management concluded that our disclosure controls and procedures were effective as of March 31, 2025.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting identified in connection with the evaluation required by Rule 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the three months ended March 31, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Limitations on the Effectiveness of Controls and Procedures
Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and procedures or internal control over financial reporting will prevent all errors and all fraud. A control system, no matter how well designed and implemented, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. Further, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues within a company are detected. The inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple errors or mistakes. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and may not be detected.
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PART II - OTHER INFORMATION
Item 1. Legal Proceedings
From time to time, we may be involved in legal proceedings, claims and government investigations in the ordinary course of business. We have received, and may in the future continue to receive, inquiries from regulators regarding our compliance with law and regulations, including those related to data protection and consumer rights, and due to the nature of our business and the rapidly evolving landscape of laws relating to data privacy, cybersecurity, consumer protection and data use, we expect to continue to be the subject of regulatory investigations and inquiries in the future. We have received, and may in the future continue to receive, claims from third parties relating to information or content that is published or made available on our platform, among other types of claims including those relating to, among other things, regulatory matters, commercial matters, intellectual property, competition, tax, employment, pricing, discrimination, and consumer rights. Future litigation may be necessary to defend ourselves, our partners, and our customers by determining the scope, enforceability, and validity of these claims. The results of any current or future regulatory inquiry or litigation cannot be predicted with certainty, and regardless of the outcome, such investigations and litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources, the potential for enforcement orders or settlements to impose operational restrictions or obligations on our business practices and other factors.
The information set forth under Note 8, "Commitments and Contingencies" in the notes to the condensed consolidated financial statements under the caption “Litigation” is incorporated herein by reference.
Item 1A. Risk Factors
There have been no material changes from the risk factors set forth under the heading “Risk Factors” in Part I, Item 1A in our Annual Report, except for the following risk factors which supplement the risk factors previously disclosed and should be considered in conjunction with the risk factors set forth in our Annual Report. An investment in shares of our common stock involves a high degree of risk. You should carefully consider the risks and uncertainties described in our Annual Report, together with all of the other information in the Annual Report, and the following information about risks, together with the other information appearing elsewhere in this Quarterly Report, including our unaudited condensed consolidated financial statements and related notes hereto, and any other documents that we file with the SEC before deciding to invest in our common stock. The occurrence of any of the following risks or of those described in our Annual Report could have a material adverse effect on our business, financial condition, results of operations and future growth prospects or cause our actual results to differ materially from those contained in forward-looking statements we have made in this report and those we may make from time to time. In these circumstances, the market price of our common stock could decline; and you may lose all or part of your investment. We cannot assure you that any of the events discussed below or in our Annual Report will not occur.
If additional tariffs on Chinese-origin goods are imposed, related countermeasures are taken by the People’s Republic of China (the “PRC”), or we experience supply chain transformation setbacks, it could have an adverse impact on our business, financial condition and results of operations.
Tile’s products are manufactured in the PRC, making the pricing and availability of our products susceptible to international trade risks. In 2018, the United States imposed additional duties under Section 301 of the U.S. Trade Act of 1974, ranging from 10% to 25%, on a variety of goods imported from the PRC. While these tariffs initially did not affect our products, in May 2019, the United States proposed to place tariffs on essentially all remaining Chinese-origin imports. Subsequently, the Trump Administration announced that 15% tariffs would be imposed on a subset of these goods, including wearable devices, which went into effect September 1, 2019. These tariffs were reduced to 7.5% on February 14, 2020. More recently, the United States’ imposed an additional 145% tariff on products of the PRC under the International Emergency Economic Powers Act. These tariffs affect our products, and they apply in addition to the preexisting tariffs the United States has imposed on products of the PRC. There may be further changes in the United States’ and other governments’ trade regulations, including increased or new tariffs.
These elevated tariffs have resulted in higher costs for Tile. There is uncertainty as to when the tariffs will ease. However, if additional tariffs are imposed, related countermeasures are taken by the PRC, or we experience setbacks in our supply chain transformation efforts, our revenue, gross margins, financial condition and results of operations may be adversely affected.
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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Unregistered Sales of Equity Securities
On February 27, 2025, pursuant to the Asset Purchase Agreement with Fantix, Inc., the Company acquired certain assets for a total consideration of $4.5 million, consisting of $3.5 million in cash and $1.0 million in common stock, and issued 22,252 shares of common stock (the “Fantix Shares”) to Fantix, Inc. The issuance of the Fantix Shares was not registered under the Securities Act of 1933, as amended (the Securities Act), because the shares were offered and sold in a transaction by the issuer not involving any public offering exempt from registration under Section 4(a)(2) of the Securities Act.
Use of Proceeds
On June 6, 2024, we completed our U.S. IPO, in which we issued and sold 3,703,704 shares of common stock and certain selling securityholders sold 2,908,796 shares of common stock (including 862,500 shares sold pursuant to the underwriters’ full exercise of their option to purchase additional shares) at an offering price of $27.00 per share. We received net proceeds of $79.9 million after deducting underwriting discounts and commissions of $7.0 million and total other offering related expenses payable by us of approximately $13.1 million. Other offering related expenses of $6.8 million included on the consolidated statement of operations and comprehensive income (loss) for the twelve months ended December 31, 2024, includes a $5.5 million payment to selling securityholders for certain of their expenses in connection with the offering, including all underwriting discounts and commissions applicable to the sale of shares of common stock by the selling securityholders, including to certain executive officers, members of the board of directors, non-executive employees, and other related parties. We did not receive any proceeds from the sale of shares by the selling securityholders. All shares sold were registered pursuant to an automatically effective registration statement on Form S-3 (File No. 333-279271) filed with the SEC on May 9, 2024 (the “Registration Statement”).
There has been no material change in the expected use of the net proceeds from our U.S. IPO as described in our final prospectus supplement filed as part of the Registration Statement.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not Applicable.
Item 5. Other Information
(a) None
(b) None
(c) Rule 10b5-1 Trading Plans
Our officers, as defined in Rule 16a-1(f) of the Exchange Act (“Section 16 Officers”), may from time to time enter into plans for the purchase or sale of our common stock that are intended to satisfy the affirmative defense in Rule 10b5-1(c) of the Exchange Act. During the three months ended March 31, 2025, the following Section 16 Officers adopted a “Rule 10b5-1 trading arrangement” as defined in Item 408 of Regulation S-K of the Exchange Act:
Name | Title | Action | Adoption Date | Expiration Date | Total number of securities to be sold | ||||||||||||
Up to | |||||||||||||||||
Up to | |||||||||||||||||
No other Section 16 Officers or directors adopted and/or terminated
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Departure of Named Executive Officer
On May 9, 2025, the Company and Susan Stick, the Company’s General Counsel and Corporate Secretary, mutually determined that, effective as of June 2, 2025, Ms. Stick would no longer serve in her roles as the Company’s General Counsel and Corporate Secretary. In connection with her separation and subject to Ms. Stick’s execution and non-revocation of a release of claims in favor of the Company, Ms. Stick will receive (i) severance payments equal to $187,500, representing six (6) months of her base salary, and $84,375, representing an amount equal to six-months of her 2025 target annual bonus, and (ii) up to six-months of reimbursements for continued coverage under the Company’s health plans. In addition, in order to facilitate an orderly transition of her duties, Ms. Stick will serve as a consultant to the Company through June 2, 2026, with her outstanding restricted stock units to continue to vest during the term of Ms. Stick’s service as a consultant.
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Item 6. Exhibits
| Incorporated by Reference | ||||||||||||||||||||||||||||||||||||||
Exhibit No. | Description | Filed Herewith | Form | File No. | Filing Date | Exhibit No. | ||||||||||||||||||||||||||||||||
3.1 | 8-K | 000-56424 | June 3, 2024 | 3.1 | ||||||||||||||||||||||||||||||||||
| 3.2 | 8-K | 000-56424 | June 3, 2024 | 3.2 | ||||||||||||||||||||||||||||||||||
| 31.1 | X | |||||||||||||||||||||||||||||||||||||
| 31.2 | X | |||||||||||||||||||||||||||||||||||||
| 32.1* | X | |||||||||||||||||||||||||||||||||||||
| 32.2* | X | |||||||||||||||||||||||||||||||||||||
| 101.INS | Inline XBRL Instance Document | X | ||||||||||||||||||||||||||||||||||||
| 101.SCH | Inline XBRL Taxonomy Extension Schema With Embedded Linkbase Documents | X | ||||||||||||||||||||||||||||||||||||
| 104 | Cover Page Interactive Data (formatted as Inline XBRL and contained in Exhibit 101) | X | ||||||||||||||||||||||||||||||||||||
_____________________
* This certification is being furnished solely to accompany this Quarterly Report on Form 10-Q pursuant to 18 U.S.C. Section 1350, and is not being filed for purposes of Section 18 of the Exchange Act or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference into any filing of the registrant under the Securities Act or the Exchange Act, whether made before or after the date hereof, regardless of any general incorporation language in such filing.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| LIFE360, INC. | |||||||||||
| Dated: | May 12, 2025 | By: | /s/ Chris Hulls | ||||||||
| Chris Hulls | |||||||||||
| Chief Executive Officer | |||||||||||
| (Principal Executive Officer) | |||||||||||
| Dated: | May 12, 2025 | By: | /s/ Russell Burke | ||||||||
| Russell Burke | |||||||||||
| Chief Financial Officer | |||||||||||
| (Principal Financial Officer) | |||||||||||
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