Life360 Inc (ASX: 360) shares are rocketing on Friday morning.
At the time of writing, the location technology company's shares are up 20% to a record high of $17.85.
This follows the release of the company's record second quarter update.
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Life360 shares rise on record results
- Revenue up 20% year on year to US$84.9 million
- Annualised monthly revenue (AMR) up 23% to US$304.8 million
- Positive adjusted EBITDA of US$11 million
- Net loss of US$11 million
What happened during the quarter?
For the three months ended 30 June, Life360 reported a 20% increase in revenue to US$84.9 million.
This comprises a 25% lift in total subscription revenue to US$65.7 million, a modest 2.6% increase in hardware revenue to US$11.9 million, and a 12.3% lift in other revenue to US$7.3 million. The latter reflects a combination of a ramp-up of advertising revenue and incremental data revenue.
Driving Life360's subscription revenue growth were further impressive increases in its monthly active users (MAU) and paying circles.
The company revealed that global MAU increased 31% to approximately 70.6 million, with second quarter net additions of 4.3 million.
U.S. MAU increased 20%, with second quarter net adds of 1.7 million. Whereas International MAU increased 48%, with net adds of 2.6 million, and ANZ MAU increased 35% to 2.4 million.
In respect to Paying Circles, Life360 delivered a new quarterly record with net additions of 132,000. This follows strong performances in both U.S. and international markets.
Another metric heading in the right direction was its average revenue per paying circle (ARPPC). It increased 6% despite the company reporting strong growth in international regions that have lower pricing relative to the U.S. market.
And while the company posted an US$11 million net loss, this includes IPO-related transaction costs of US$5.8 million and a provision for income tax that was US$5.2 million higher than the prior corresponding period.
Management commentary
Life360's co-founder and CEO, Chris Hulls, was pleased with the quarter. He said:
Q2'24 was excellent for Life360, as we set new records in business and financial performance, and completed our U.S. IPO. Our positive results in Q2'24 continued across our strategic growth priorities. First, we grew our free members base by 4.3 million MAUs and reached 70.6 million overall.
Next, we increased net Paying Circles by 132 thousand in Q2'24 compared to the 96 thousand increase in Q1'24, a new quarterly record for global net additions.
Our focus on international growth also contributed significantly to our performance, as we grew our international MAUs by 48% YoY and our international Paying Circles by 42% YoY.
We believe that we are very early on in penetrating our global market opportunity, and that we have significant headroom to grow as we expand to new regions, and launch new safety, connection, and location features that make everyday family life better throughout all life stages.
Outlook
Also giving Life360's shares a lift today is news that management has lifted its guidance for FY 2024.
It now expects consolidated revenue of US$370 million to US$378 million (upgraded from US$365 million to US$370 million), with Core subscription revenue growth of 25%+ year on year (upgraded from 20%+).
It has also upgraded its positive adjusted EBITDA guidance to US$36 million to US$41 million (from US$30 million to US$35 million).
Broker response
Goldman Sachs was impressed with the update and correctly called out that the market would respond positively to it. It said:
We expect investors to respond positively to 360's 2Q result, with a material upgrade to Adj. EBITDA driven by continued operating leverage as well as an upgrade to core subscription revenue growth.
