ASX 200 tech stock sees red as investors punish Q3 results

Investors continue digesting the numbers.

| More on:
Unsure man analysing data on laptop.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

ASX 200 tech stock Life360 Inc (ASX: 360) is in the red in early trade on Wednesday after the company posted its Q3 2024 earnings.

At the time of writing, shares in the family-tracking app company are trading at $24.44 apiece, more than 1% higher. But at one point, they were more than 5% lower on the day, as investors responded to the numbers.

This ASX 200 tech stock has seen significant growth in revenue and user numbers, yet the market appears cautious about the recent quarterly performance.

ASX 200 tech stock down on mixed quarterly

Life360 reported solid revenue growth for Q3 2024, but not all growth is created equal. Here are the quarterly highlights (Note: All dollar figures are in USD unless otherwise stated):

  • Total Q3 revenue of $92.9 million, up 18% year over year
  • Subscription revenue grew 27% to $71.8 million
  • Monthly Active Users (MAU) reached a record 76.9 million, with 6.3 million new users added in the quarter, up 32% year over year
  • Added 159,000 new Paying Circles globally, a 35% growth
  • Net profit of $7.7 million for the quarter, up by nearly $5 million from this time last year

What else happened in Q3 2024?

The ASX 200 tech stock achieved several milestones this quarter. These included a partnership with ride sharing company Uber for location-based advertising.

Paying circles (PCs) grew 25% year over year and hit 2.2 million after the company added a record number of PCs during the quarter.

Average revenue per PC was also up 6%, driven by strength in the US business.

While the growth percentages down the profit and loss statement are well noted, stock prices change based on expectations.

Analysts covering Life360's US listing expected the company to sell US$97.8 million in Q3, meaning it missed estimates by about US$5 million.

This could explain the sharp sell-off earlier in the session today and may or may not impact the ASX 200 tech stock moving forward.

What did management say?

CEO Chris Hulls highlighted the company's growth and upcoming plans in the quarterly announcement:

We reached a key milestone in building our advertising business, with our Uber partnership showcasing the power of contextual relevance over generic banners. Additionally, we launched a new lineup of Tile devices, garnering widespread press coverage with hundreds of articles, most of which highlighted our distinctive SOS feature.

Our partnership with Hubble is officially signed, and international expansion—a critical pillar for future growth—accelerated significantly as we have started to reach tipping points in multiple countries.

What's next for Life360?

Management forecasts revenue between US$368 million and $374 million, with upgraded adjusted pre-tax earnings of US$39 million to US$42 million.

Management anticipates these strategic steps will drive further growth and solidify Life360's position as a whole.

It expects to leave the year well capitalised, with more than $150 million in cash on hand.

Year-end cash, cash equivalents and restricted cash of $150 million – $160 million. The forecast includes expected significantly higher outflows from RSU settlements, the investment in Hubble, IPO proceeds and related transaction costs, and timing variations in working capital in Q4'24 related to hardware inventory and the new product launch.

ASX 200 tech stock snapshot

The Life360 share price has been volatile in early trading this morning after its Q3 results. Investors may have been expecting more from the company and are still digesting results.

In the last 12 months, the stock is up more than 188%.

Motley Fool contributor Zach Bristow has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Life360. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Earnings Results

A woman looks up at a plane flying in the sky with arms outstretched as the Flight Centre share price surges
Earnings Results

Web Travel share price rockets 13% on market leading full-year growth

Investors are sending Web Travel shares soaring today. Here’s why.

Read more »

Happy shopper at a clothes shop.
Earnings Results

Why did Myer shares just rocket 9%?

Investors are piling into Myer shares on Friday. But why?

Read more »

A woman looks up at a plane flying in the sky with arms outstretched as the Flight Centre share price surges
Earnings Results

Up 78% since April, why is the Webjet share price taking off again today?

Webjet shares have soared 78% since 4 April and are lifting off again today. But why?

Read more »

a woman holds her hands to her temples as she sits in front of a computer screen with a concerned look on her face.
Industrials Shares

Guess which ASX 200 stock is crashing 24% on results day

Investors were not impressed with this result. But why?

Read more »

A man in full American NFL playing kit crouches over with his arms across his chest in a defensive stance against a dark background.
Technology Shares

ASX 300 tech stock charges 7% higher to record high on stellar results

This tech stock delivered another impressive result this morning.

Read more »

a group of people sit around a computer in an office environment.
Earnings Results

Guess which ASX 200 tech stock is rocketing 12% on record results

Another half, another record result from this high-quality company.

Read more »

A young man sitting at an outside table uses a card to pay for his online shopping.
Consumer Staples & Discretionary Shares

Why is the Kogan share price crashing 12%?

Profits are down at this ecommerce company during the second half.

Read more »

Frustrated stock trader screaming while looking at mobile phone, symbolising a falling share price.
Resources Shares

Guess which ASX 200 mining stock is sinking 7% following its quarterly update

Let's see how this miner performed during the third quarter.

Read more »