The ASX tech stock Life360 Inc (ASX: 360) has had a very volatile life since it listed a few years ago, as we can see on the chart below. The 2023 calendar year has been a very good period for the business, up by 77% to date.
But, it could be a mistake to think that this is as far as the business is going to go, as it's displaying plenty of attributes that suggest it could keep growing. Before getting into that, let's take a quick look at what the business actually does.
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Life360's core offering
The idea is that the Life360 app is "designed to keep families, partners, and friends connected and safe. It can be used to locate someone travelling, receive notifications when a loved one requires your assistance, and detect car crashes on impact."
People can build a 'circle' with family members, friends or anyone else that they want to "stay connected" with. Once someone is in your 'circle', the subscriber can get access to tracking and safety features.
There are both free and paid versions of the app. Life360 markets the paid version as having extras such as "free towing, unlimited place alerts, stolen phone protection, stolen funds reimbursement and so much more."
How strongly is the ASX tech stock growing?
The recent result released by the company was for the six months to June 2023 and demonstrated strong growth.
It reported that second-quarter revenue was $70.8 million, which was a year-over-year increase of 45%, with core Life360 subscription revenue increasing by 57% year over year to $47.6 million. Life360 core global monthly active users (MAU) rose 29% to 54 million, with US MAU increasing 24% to 33.6 million.
Annualised monthly revenue (AMR) has reached $248.7 million, an increase of 43% year over year.
While the company made a net loss of $4.4 million, the other profitability metrics were positive.
It made positive adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) of $5.7 million, which was the second consecutive quarter of positive adjusted EBITDA. The company also achieved positive operating cash flow of $3.7 million.
Paying 'circles' increased by 17% year over year, with net quarterly additions of 62,000 despite the impact of Android price increases rolled out in April 2023. The ASX tech stock also said that the US average revenue per paying circle rose 42% year over year to $140.78 thanks to the higher pricing.
Strong guidance by the ASX tech stock
Life360 re-iterated its guidance that it's expecting at least 50% growth year over year for its core Life360 subscription revenue, while consolidated revenue is predicted to be between $300 million to $310 million and it's expecting to hit positive operating cash flow of between $5 million to $10 million.
The 2023 guidance is that adjusted EBITDA will increase to between $9 million to $14 million, up from the previous guidance of $5 million to $10 million.
Is the Life360 share price still an opportunity?
Investment specialist Chris Robinson from fund manager Firetrail certainly thinks so. He said in an article suggesting that ASX small-cap shares have an exciting future:
Life360 is the 16th most popular app in the US by daily active users. Life360 is rapidly growing its paying users despite pushing through subscription price increases of up to 50% in the past 12 months. Importantly, the company hit cashflow profitability in the first half of 2023. Life360 shares still trade very cheaply on a 1.8x EV/sales multiple. This is half the multiple of its global "freemium" app peers despite the same growth outlook.
