Life360 Inc
For the period ended Jun 30, 2024. Filed Aug 8, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2024 · Filed Aug 8, 2024
LIF$47.37+1.1%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-31; filed 2024-05-10.
0001581760-24-000031
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-06-30; filed 2024-08-08.
0001581760-24-000080
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 115 previous paragraphs and 136 current paragraphs.
72 unchanged; 32 reworded; 29 added; 10 removed; 1 previous and 3 current paragraphs rearranged.
Tables are not compared: 10 previous and 10 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (29)
Current report
Subscription revenue increased $13.0 million, or 25%, during the three months ended June 30, 2024 as compared to the three months ended June 30, 2023, primarily due to a 20% growth in total subscriptions and a 25% growth in Paying Circles (as defined below).
Current report
Hardware revenue increased $0.3 million, or 3%, during the three months ended June 30, 2024 as compared to the three months ended June 30, 2023. The increase was primarily due to $2.3 million in fewer discounts offered which was partially offset by a $1.2 million increase in returns and a $0.8 million decrease in revenue from retail sales related to a shift in product mix. The $0.3 million increase in hardware revenue is in line with the slight increase in net average selling price and an overall flat number of net hardware units shipped.
Current report
Other revenue increased $0.8 million, or 12%, during the three months ended June 30, 2024 as compared to the three months ended June 30, 2023 due to a ramp-up of advertising revenue and incremental data revenue.
Current report
Hardware revenue increased $0.5 million, or 2%, during the six months ended June 30, 2024 as compared to the six months ended June 30, 2023. The increase was primarily due to $2.8 million in fewer discounts offered, which was partially offset by a $1.4 million decrease in revenue from retail sales related to a shift in product mix and a $0.9 million increase in returns.
Current report
Other revenue increased $0.8 million, or 6%, during the six months ended June 30, 2024 as compared to the six months ended June 30, 2023 due to a ramp-up of advertising revenue and incremental data revenue.
Current report
Cost of subscription revenue increased $4.0 million, or 63%, during the three months ended June 30, 2024 as compared to the three months ended June 30, 2023, primarily due to a $1.8 million benefit related to the discontinuation of certain battery related membership benefits recognized in the second quarter of 2023. The Company also saw increases of $1.0 million in technology expenses, $0.6 million in premium membership offering costs, and $0.6 million in personnel-related and stock-based compensation costs due to Company growth.
Current report
Subscription gross margin decreased to 84% during the three months ended June 30, 2024 from 88% during the three months ended June 30, 2023, primarily due to a decrease in membership offering costs related to the discontinuation of certain battery related membership benefits that had positively impacted the second quarter of 2023.
Current report
Cost of hardware revenue increased $1.2 million, or 14%, during the three months ended June 30, 2024 as compared to the three months ended June 30, 2023. The increase was primarily due to a $0.5 million increase in hardware product costs, a $0.5 million increase in other hardware costs related to a warehouse relocation adjustment that positively impacted the second quarter of 2023, and a $0.3 million increase in other inventory reserve. These increases were partially offset by a $0.1 million decrease related to the discontinuation of certain battery related membership benefits during the second quarter of 2023.
Current report
Hardware gross margin decreased to 17% during the three months ended June 30, 2024 from 25% during the three months ended June 30, 2023, primarily due to the discontinuation of certain battery-related membership benefits that favorably impacted the second quarter of 2023 and an increase in inventory reserve in the second quarter of 2024.
Current report
Cost of subscription revenue increased by $5.3 million, or 37%, during the six months ended June 30, 2024 as compared to the six months ended June 30, 2023, primarily due to a $1.8 million benefit related to the discontinuation of certain battery related membership benefits recognized in the second quarter of 2023. The Company also saw increases of $1.5 million in technology expenses, $1.1 million in premium membership offerings, a $0.9 million in personnel-related and stock-based compensation costs due to Company growth.
Current report
Subscription gross margin decreased to 85% during the six months ended June 30, 2024 from 86% during the six months ended June 30, 2023, primarily due to the discontinuation of certain battery-related membership benefits that had positively impacted the second quarter of 2023.
Current report
Cost of hardware revenue decreased by $0.2 million, or 1%, during the six months ended June 30, 2024 as compared to the six months ended June 30, 2023, primarily due to the discontinuation of certain battery related membership benefits during the second quarter of 2023, which resulted in a $0.8 million decrease in battery related product costs. The decrease in cost of hardware revenue was partially offset by an increase of $0.6 million in reserves of additional inventory and additional hardware freight and other costs.
Current report
Research and development expenses increased $3.8 million, or 17%, during the three months ended June 30, 2024 as compared to the three months ended June 30, 2023. The increase was primarily attributable to increases of $3.9 million in personnel-related and stock-based compensation costs, $1.3 million in technology and other expenses, and $1.2 million in contractor and professional and outside services spend due to Company growth. This was partially offset by $1.5 million of capitalized costs related to internal use software and $1.1 million of capitalized construction in progress costs.
Current report
Research and development expenses increased by $3.9 million, or 8%, during the six months ended June 30, 2024 as compared to the six months ended June 30, 2023. The increase was primarily attributable to increases of $4.9 million in personnel-related and stock-based compensation costs, $2.4 million in technology expenses, $1.0 million in contractor spend, and $0.3 million in other expenses due to Company growth. The increases were partially offset by $2.7 million of capitalized costs related to internal use software, $1.1 million of capitalized construction in progress costs, and $0.9 million related to a raw materials inventory write-off that negatively impacted the six months ended June 30, 2023.
Current report
Sales and marketing expenses increased $1.0 million, or 4%, during the three months ended June 30, 2024 as compared to the three months ended June 30, 2023. The increases were primarily attributable to a $2.1 million increase in commissions to the Company’s third-party platforms and distribution channels (each a “Channel Partner”), which was in line with the 20% increase in subscriptions, a $0.8 million increase in other marketing spend, and a $0.5 million increase in personnel-related and stock-based compensation cost due to Company growth. The increases were partially offset by a $2.4 million decrease in paid user acquisition costs due to planned shifts in the timing of spend.
Current report
General and administrative expenses increased $2.1 million, or 17%, during the three months ended June 30, 2024 as compared to the three months ended June 30, 2023. The increase was primarily due to an additional $1.6 million in professional and outside services driven by ongoing public company compliance costs, a $0.4 million increase in personnel-related and stock-based compensation costs attributable to an increase in headcount, and a $0.1 million increase in technology related expenses.
Current report
Loss on Settlement of Convertible Notes
Current report
For each of the three and six months ended June 30, 2024, the Company recorded a loss of $0.4 million related to the settlement of the July 2021 Convertible Notes and the September 2021 Convertible Notes, which were converted to common stock during the three months ended June 30, 2024. There were no such transactions during the three and six months ended June 30, 2023.
Current report
Gain on Settlement of Derivative Liability
Current report
For each of the three and six months ended June 30, 2024, the Company recorded a gain of $1.9 million related to the settlement of the derivative liability upon conversion of the July 2021 Convertible Notes in connection with our U.S. IPO. There were no such transactions during the three and six months ended June 30, 2023.
Current report
Other income (expense), net includes transaction costs, interest income, dividend income, foreign exchange losses, and interest expense associated with the July 2021 Convertible Notes. For the three months ended June 30, 2024, other income (expense), net consists of $1.3 million in other income and $5.9 million in other expense, and for the three months ended June 30, 2023, consists of $0.8 million in other income and $0.2 million in other expense. For the six months ended June 30, 2024, other income (expense), net consists of $2.1 million in other income and $6.4 million in other expense, and for the six months ended June 30, 2023, consists of $1.7 million in other income and $0.2 million in other expense.
Current report
Other income (expense), net decreased $5.2 million, or 847%, during the three months ended June 30, 2024 as compared to the three months ended June 30, 2023. The decrease was primarily driven by a $5.6 million increase in transaction costs incurred in connection with our U.S. IPO, partially offset by a $0.4 million increase in dividend income resulting from higher average gross yield primarily due to increased cash and cash equivalents balance.
Current report
Other income (expense), net decreased $5.8 million, or 394%, during the six months ended June 30, 2024 as compared to the six months ended June 30, 2023. The decrease was primarily driven by a $5.6 million increase in transaction costs incurred in connection with our U.S. IPO and a $0.8 million decrease due unfavorable currency revaluation impacts, which were partially offset by a $0.6 million increase in dividend income resulting from higher average gross yield primarily due to increased cash and cash equivalents balance.
Current report
Excludes revenue related to bundled Life360 subscription and hardware offerings of $(1.3) million and $(2.6) million for the three and six months ended June 30, 2024 respectively, and $(0.7) million for the three and six months ended June 30, 2023.
Current report
Excludes revenue related to bundled Life360 subscription and hardware offerings of $1.3 million and $2.5 million for the three and six months ended June 30, 2024, respectively, and $1.1 million for the three and six months ended June 30, 2023.
Current report
For the three months ended June 30, 2024 and 2023, our ARPPC was $125.96 and $119.25, respectively, representing a 6% increase year-over year. For the six months ended June 30, 2024 and 2023, our ARPPC was $124.41 and $120.18, respectively, representing a 4% increase year-over-year.
Current report
ARPPS for the three months ended June 30, 2024 and 2023 was $104.00 and $97.83, respectively, representing an increase of 6% year over year. ARPPS for the six months ended June 30, 2024 and 2023 was $102.60 and $98.01, respectively, representing an increase of 5% year over year.
Current report
Net Average Selling Price (ASP)
Current report
For the six months ended June 30, 2024, net cash provided by financing activities was $79.7 million, which primarily related to net proceeds of $93.0 million after deducting underwriting discounts and commissions from our U.S. IPO and $4.5 million of proceeds from the exercise of options and warrants, offset by $15.9 million of taxes paid for net settlement of equity awards, and $1.8 million payment of U.S. IPO costs. As of June 30, 2024, $4.5 million of the incurred U.S. IPO costs were unpaid.
Removed paragraphs (10)
Previous report
Hardware revenue increased $0.2 million, or 2%, during the three months ended March 31, 2024 as compared to the three months ended March 31, 2023 due to the rollout of bundled Life360 subscription and hardware offerings, $0.5 million in fewer discounts offered, and $0.2 million in fewer returns recorded. The increases were offset by $0.5 million in product costs in line with a decrease in standalone hardware units sold and average selling price per unit.
Previous report
Cost of subscription revenue increased $1.3 million, or 16%, during the three months ended March 31, 2024 as compared to the three months ended March 31, 2023, primarily due to an increase of $0.6 million in premium membership offering costs, a 21% increase in Paying Circles, an increase of $0.3 million in technology expenses, and an increase of $0.4 million in personnel-related and stock-based compensation costs in line with Company growth.
Previous report
Subscription gross margin increased to 85% during the three months ended March 31, 2024 from 84% during the three months ended March 31, 2023, primarily due to ongoing technology efficiency initiatives implemented by the Company.
Previous report
Cost of hardware revenue decreased $1.4 million, or 15%, during the three months ended March 31, 2024 as compared to the three months ended March 31, 2023, primarily due to a savings of $0.7 million in the current period related to the discontinuation of certain battery related membership benefits which took place during the quarter ended June 30, 2023. The Company also saw a $0.5 million decrease in product and other hardware expenses due to the decrease in units sold and a decrease of $0.2 million in technology and other expenses related to efficiencies achieved within the Company.
Previous report
Research and development expenses remained flat during the three months ended March 31, 2024 as compared to the three months ended March 31, 2023. Research and development expenses were primarily impacted by an increase of $0.7 million in personnel-related costs in line with increased headcount and $0.5 million in stock-based compensation expense due to an increase in volume of stock grants awarded to employees. The increases were offset by $1.1 million of costs incurred related to internal use software which were capitalized within intangible assets, net on the condensed consolidated balance sheet.
Previous report
Sales and Marketing
Previous report
Other income (expense), net decreased $0.5 million, or 63%, during the three months ended March 31, 2024 as compared to the three months ended March 31, 2023. The decrease was driven by unfavorable currency revaluation impacts in the current period compared to the same period in the prior year. Other income (expense), net includes interest income, dividend income, foreign exchange losses, and interest expense associated with the July 2021 Convertible Notes.
Previous report
For the three months ended March 31, 2024 and 2023, our ARPPC was $123.97 and $120.70, respectively, representing a 3% increase year-over year.
Previous report
ARPPS for the three months ended March 31, 2024 and 2023 was $102.02 and $97.98, respectively, representing an increase of 4% year over year.
Previous report
Net Average Selling Price
Reworded paragraphs (32)
Previous wording
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 on Form 10-Q and our 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 may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under the section titled “Risk Factors” under Part II, Item 1A in this Quarterly Report on Form 10-Q and Part I, Item 1A in our Annual Report.
Current wording
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, 2023, filed with the SEC on February 29, 2024 (“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 may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under the section titled “Risk Factors” under Part II, Item 1A in this Quarterly Report and Part I, Item 1A in our Annual Report.
Previous wording
We also generate revenue through an arrangement with a key data partner that provides location-based analytics services 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. Other revenue also includes advertising and partnership revenue, which represents agreements with third parties to provide access to advertising on the Company’s mobile platform. Advertising revenue for the three months ended March 31, 2024 was immaterial, however, we anticipate meaningful growth in the second half of the year.
Current wording
We also generate revenue through an arrangement with a key data partner that provides location-based analytics services 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. Other revenue also includes advertising and partnership revenue, which represents agreements with third parties to provide access to advertising on the Company’s mobile platform.
Previous wording
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 executives. In addition, general and administrative expenses include allocated overhead, outside legal, accounting and other professional fees, change in fair value of contingent consideration for business combinations, and non-income-based taxes. We expect our general and administrative expenses will increase in absolute dollars as our business grows.
Current wording
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, change in fair value of contingent consideration for business combinations, and non-income-based taxes. We expect our general and administrative expenses will increase in absolute dollars as our business grows.
Previous wording
Other income (expense), net consists of interest income earned on our cash and cash equivalents balances, foreign currency exchange (losses)/gains 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) and interest expense primarily related to the Convertible Notes.
Current wording
Other income (expense), net consists of interest and dividend income earned on our cash and cash equivalents balances, foreign currency exchange (losses)/gains 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, foreign exchange transactions gains/(losses), interest expense primarily related to the Convertible Notes, and our U.S. IPO transaction costs.
Previous wording
The following tables set forth our condensed consolidated statements of operations and comprehensive loss for the three months ended March 31, 2024 and 2023 (in thousands, except percentages).
Current wording
The following tables set forth our condensed consolidated statements of operations and comprehensive loss for the three and six months ended June 30, 2024 and 2023 (in thousands, except percentages).
Previous wording
Subscription revenue increased $9.9 million, or 19%, during the three months ended March 31, 2024 as compared to the three months ended March 31, 2023, primarily due to a 17% growth in total paid subscriptions and a 21% growth in Paying Circles (as defined below). Additionally, subscription revenue in the current period benefited from price increases for existing U.S. Android Life360 subscriptions which were fully implemented during the three months ended June 30, 2023.
Current wording
Subscription revenue increased $22.9 million, or 22%, during the six months ended June 30, 2024 as compared to the six months ended June 30, 2023, primarily due to a 20% growth in total subscriptions and a 25% growth in Paying Circles. Additionally, subscription revenue in the current period benefited from a full six-month impact of price increases for existing U.S. Android Life360 subscriptions, which were fully implemented during the three months ended June 30, 2023.
Previous wording
Hardware gross margin increased to 21% during the three months ended March 31, 2024 from 6% during the three months ended March 31, 2023, primarily due to savings in the current period related to the discontinuation of certain battery related membership benefits which took place during the quarter ended June 30, 2023 and decreased offerings of discounts.
Current wording
Hardware gross margin increased to 19% during the six months ended June 30, 2024 from 16% during the six months ended June 30, 2023, primarily due to the discontinuation of certain battery related membership benefits in the second quarter of 2023 that continued to benefit the current period.
Previous wording
Other revenue remained flat during the three months ended March 31, 2024 as compared to the three months ended March 31, 2023, as the Company maintained its single aggregated data arrangement.
Current wording
Cost of other revenue and other gross margin remained flat during the six months ended June 30, 2024 as compared to the six months ended June 30, 2023, as the Company maintained its single aggregated data arrangement.
Previous wording
Sales and marketing expenses increased $0.4 million, or 2%, during the three months ended March 31, 2024 as compared to the three months ended March 31, 2023. The increase was primarily due to a $1.3 million increase in marketing expenses consisting of increases of $1.6 million in Channel Partner commission charges and $0.1 million in other marketing spend, partially offset by a $0.4 million decrease in paid member acquisition spend. The increase in marketing expenses was partially offset by decreases of $0.4 million in professional and outside services spend and $0.5 million in personnel-related and stock-based compensation costs primarily due to severance payments attributable to the Company’s reduction in workforce which took place during the three months ended March 31, 2023.
Current wording
Sales and marketing expenses increased $1.4 million, or 3%, during the six months ended June 30, 2024 as compared to the six months ended June 30, 2023. The increase was primarily due to a $3.7 million increase in Channel Partner commissions, in line with the growth in subscriptions, and a $0.9 million increase in other marketing spend, attributable to Company growth. The increases were partially offset by a $2.8 million decrease in paid user acquisition spend due to planned shifts in the timing of spend, and a $0.4 million decrease in personnel-related and stock-based compensation costs due to severance payments associated with the Company’s reduction in workforce which took place during the three months ended March 31, 2023.
Previous wording
General and administrative expenses increased $1.2 million, or 9%, during the three months ended March 31, 2024 as compared to the three months ended March 31, 2023. The increase was primarily due to an increase of $1.7 million in professional services and contractor spend related to compliance with the Sarbanes-Oxley Act, partially offset by a $0.7 million decrease in personnel-related and stock-based compensation costs due to the exit of a key employee. The remaining increase of $0.2 million is attributable to technology and other general and administrative expenses in line with Company growth.
Current wording
General and administrative expenses increased $3.3 million, or 13%, during the six months ended June 30, 2024 as compared to the six months ended June 30, 2023. The increase was primarily due to an increase of $3.3 million in professional and outside services, driven by ongoing public company compliance costs, as well as a $0.4 million increase in technology and other expenses. These increases were partially offset by a $0.4 million decrease in personnel and stock-based compensation expense due to the exit of a key employee.
Previous wording
For the three months ended March 31, 2024 and 2023, the Company recorded a loss associated with the convertible notes fair value adjustment of $0.6 million and a gain of $0.1 million, respectively. The changes in fair value are primarily driven by the share price volatility and reduction in time to convert.
Current wording
For the six months ended June 30, 2024 and 2023, the Company recorded a loss of $0.6 million and a gain of $0.2 million, respectively, associated with the convertible notes fair value adjustment. The changes in fair value are primarily driven by the share price volatility and reduction in time to convert.
Previous wording
For the three months ended March 31, 2024 and 2023, the Company recorded a loss associated with the derivative liability fair value adjustment of $1.7 million and a gain of $14 thousand, respectively. The changes are due to the revaluation of the derivative liability at each reporting period and the increase in stock price related to embedded redemption features bifurcated from the July 2021 Convertible Notes issued to investors.
Current wording
For the three months ended June 30, 2024 and 2023, the Company recorded no gain or loss and a loss of $0.3 million, respectively, associated with the derivative liability fair value adjustment. The changes are due to the revaluation of the derivative liability at each reporting period and the increase in stock price related to embedded redemption features bifurcated from the July 2021 Convertible Notes issued to investors.
Previous wording
Provision for income taxes increased $1.3 million, or 1,191%, during the three months ended March 31, 2024 as compared to the three months ended March 31, 2023. Provision for income taxes consists of U.S. federal and state 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.
Current wording
Provision for income taxes increased $5.2 million during the three months ended June 30, 2024 as compared to the three months ended June 30, 2023. Provision for income taxes increased $6.5 million during the six months ended June 30, 2024 as compared to the six months ended June 30, 2023. The increase was due to the estimated growth in the Company’s earnings in the U.S. Provision for income taxes consists of U.S. federal and state 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.
Previous wording
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 Life360 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, 2024, and 2023 was $284.7 million and $239.5 million, respectively, representing an increase of 19% year-over-year.
Current wording
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 Life360 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 June 30, 2024, and 2023 was $304.8 million and $248.7 million, respectively, representing an increase of 23% year-over-year, which is largely attributable to continued subscriber growth.
Previous wording
We have a large and growing global user base as of March 31, 2024. 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. As of March 31, 2024 and 2023, we had approximately 66.4 million and approximately 50.8 million MAUs on the Life360 Platform, respectively, representing an increase of 31% year-over-year. We believe this has been driven by continued strong new member growth and retention.
Current wording
We have a large and growing global user base as of June 30, 2024. 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 June 30, 2024 and 2023, we had approximately 70.6 million and approximately 54.0 million MAUs on the Life360 Platform, respectively, representing an increase of 31% year-over-year. We believe this has been driven by continued strong new member growth and retention.
Previous wording
As of March 31, 2024 and 2023, we had approximately 1.9 million and 1.6 million paid subscribers to services under our Life360 brand, respectively, representing an increase of 21% year-over-year.
Current wording
As of June 30, 2024 and 2023, we had approximately 2.0 million and 1.6 million paid subscribers to services under our Life360 brand, respectively, representing an increase of 25% year-over-year.
Previous wording
We define Average Revenue per Paying Circle as annualized subscription revenue recognized and derived from the Life360 mobile application, excluding certain revenue adjustments 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.
Current wording
We define Average Revenue per Paying Circle 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.
Previous wording
ARPPC is a key indicator utilized by Life360 to determine our effectiveness at monetizing Paying Circles through tiered product offerings. The price increases for existing U.S. Android Life360 subscriptions that took effect during the three months ended June 30, 2023 has led to subscribers signing up for higher price products over time, increasing ARPPC. The positive impacts seen from the price increases were partially offset in the current quarter by an increase in international subscribers, which have subscriptions priced at lower prices.
Current wording
ARPPC is a key indicator utilized by Life360 to determine our effectiveness at monetizing Paying Circles through tiered product offerings. The price increases for existing U.S. Android Life360 subscriptions that took effect during the three months ended June 30, 2023 has led to subscribers signing up for higher price products over time. In addition, price increases for existing subscribers began in January 2024 in the UK and March 2024 in ANZ, while the Triple Tier memberships launched in October 2023 and April 2024, respectively. The positive impacts seen from the price increases were partially offset in the second quarter of 2024 by an increase in international subscribers, which overall, have subscriptions priced at lower prices.
Previous wording
As of March 31, 2024 and 2023, we had approximately 2.5 million and 2.1 million paid subscribers to services under the Life360, Tile, and Jiobit brands, respectively, representing an increase of 17% year-over-year.
Current wording
As of June 30, 2024 and 2023, we had approximately 2.7 million and 2.2 million paid subscribers to services under the Life360, Tile, and Jiobit brands, respectively, representing an increase of 20% year-over-year.
Previous wording
We define ARPPS as annualized total subscription revenue recognized and derived from Life360, Tile and Jiobit subscriptions, excluding certain revenue adjustments 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.
Current wording
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.
Previous wording
ARPPS has increased year over year as a result of the growth in subscriptions and subscription price increases implemented by the Company for existing U.S. Android Life360 subscriptions during the three months ended June 30, 2023.The positive impacts seen from the price increases were partially offset in the current quarter by an increase in international subscribers, which have subscriptions priced at lower prices.
Current wording
ARPPS has increased year over year as a result of the growth in subscriptions and price increases for existing U.S. Android Life360 subscriptions that took effect during the three months ended June 30, 2023, which lead to subscribers signing up for higher price products over time. In addition, price increases for existing subscribers began in January 2024 in the UK and March 2024 in ANZ, while the Triple Tier memberships launched in October 2023 and April 2024, respectively. The positive impacts seen from the price increases were partially offset in the second quarter of 2024 by an increase in international subscribers, which overall, have subscriptions priced at lower prices.
Previous wording
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, 2024, Life360 sold approximately 0.5 million units, down approximately 6% as compared to the 0.6 million units sold during the three months ended March 31, 2023, primarily due to a decrease in enterprise channel sales.
Current wording
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 June 30, 2024, Life360 sold approximately 0.7 million units, which remained relatively flat compared to the 0.7 million units sold during the three months ended June 30, 2023. For the six months ended June 30, 2024, we sold approximately 1.2 million units, which also remained relatively flat as compared to the 1.2 million units sold during the six months ended June 30, 2023.
Previous wording
To determine the net average selling price (“ASP”) of a unit, we divide hardware revenue recognized, excluding certain revenue adjustments 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, 2024, the net ASP of a unit was $16.50, a decrease of 4% compared to $17.22 during the three months ended March 31, 2023 primarily due to a change in mix of products sold and increased sales of multi-unit bundles of Tile devices.
Current wording
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 June 30, 2024, the net ASP of a unit was $15.92, an increase of 1% compared to $15.76 during the three months ended June 30, 2023, largely due to fewer discounts and other promotions offered in the period. For the six months ended June 30, 2024, the net ASP of a unit was $16.18, a decrease of 2% compared to $16.44 during the six months ended June 30, 2023 primarily due to a change in mix of products sold.
Previous wording
As of March 31, 2024, we had cash and cash equivalents of $73.4 million and restricted cash of $1.2 million. As of December 31, 2023, we had cash and cash equivalents of $69.0 million and restricted cash of $1.7 million.
Current wording
On June 6, 2024, we completed our U.S. IPO, selling a total of 3,703,704 shares of common stock and raising net proceeds of $93.0 million after deducting underwriting discounts and commissions. An additional $5.5 million of expenses were paid on behalf of selling securityholders. As of June 30, 2024, we had cash and cash equivalents of $160.8 million and restricted cash of $1.2 million. As of December 31, 2023, we had cash and cash equivalents of $69.0 million and restricted cash of $1.7 million.
Previous wording
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, 2024 and December 31, 2023, we had deferred revenue of $36.7 million and $35.8 million, respectively, of which $35.5 million and $33.9 million is expected to be recorded as revenue in the next 12 months, provided all other revenue recognition criteria have been met.
Current wording
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 June 30, 2024 and December 31, 2023, we had deferred revenue of $36.4 million and $35.8 million, respectively, of which $35.5 million and $33.9 million is expected to be recorded as revenue in the next 12 months, provided all other revenue recognition criteria have been met.
Previous wording
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.
Current wording
For the six months ended June 30, 2024, net cash provided by operating activities was $13.9 million. The primary factors affecting our operating cash flows during this period were our net loss of $20.7 million, impacted by $24.5 million of non-cash adjustments, and $10.1 million of cash provided by changes in our operating assets and liabilities, which was partially offset by a payment of $5.5 million for expenses paid on behalf of the selling stockholders in connection with the secondary offering. The non-cash adjustments primarily consisted of stock-based compensation, depreciation and amortization, fair value adjustments for our convertible notes and derivative liability, non-cash interest expense, gain on settlement of derivative liability, and loss on settlement of convertible notes. 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 costs capitalized to obtain contracts, net and inventory.
Previous wording
For the three months ended March 31, 2023, net cash used in operating activities was $9.2 million. The primary factors affecting our operating cash flows during this period were our net loss of $14.1 million, impacted by $12.2 million of non-cash adjustments and $7.3 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, amortization of costs capitalized to obtain contracts, gain in convertible notes fair value adjustment, and non-cash revenue from an affiliate. The cash used by changes in our operating assets and liabilities was primarily due to an increase in prepaid expenses, related to certain cloud platform and customer service program costs, and other assets and a decrease in accounts payable and accrued expenses and other liabilities offset by a decrease in accounts receivable and inventory.
Current wording
For the six months ended June 30, 2023, net cash used in operating activities was $5.5 million. The primary factors affecting our operating cash flows during this period were our net loss of $18.5 million, impacted by $22.7 million of non-cash adjustments and $9.8 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, and an adjustment to our battery reserve related to a change in membership benefit offerings. The cash used by changes in our operating assets and liabilities was primarily due to decreases in accounts payable and accrued expenses and other liabilities.
Previous wording
For the three months ended March 31, 2023, net cash used in investing activities was $0.4 million, which primarily related to the capitalization of internal use software costs in accordance with ASC 350-40, Intangibles — Goodwill and Other, Internal-Use Software.
Current wording
For the six months ended June 30, 2024, net cash used in investing activities was $2.3 million, which primarily related to the capitalization of internal use software costs in accordance with ASC 350-40, Intangibles - Goodwill and Other, Internal-Use Software.
Previous wording
For the three months ended March 31, 2024, net cash used in investing activities was $1.1 million, related to the capitalization of internal use software costs in accordance with ASC 350-40, Intangibles - Goodwill and Other, Internal-Use Software.
Current wording
For the six months ended June 30, 2023, net cash used in investing activities was $0.9 million, which primarily related to the capitalization of internal use software costs in accordance with ASC 350-40, Intangibles — Goodwill and Other, Internal-Use Software.
Previous wording
For the three months ended March 31, 2023, net cash used in financing activities was $4.7 million, primarily related to $5.7 million of taxes paid related to net settlement of equity awards offset by $0.7 million of proceeds from the exercise of options and $0.3 million of proceeds from the repayment of notes due from affiliates.
Current wording
For the six months ended June 30, 2023, net cash used in financing activities was $19.8 million, which primarily related to $13.1 million release of funds placed in an indemnity escrow fund for general representations and warranties related to the Tile Acquisition and $8.6 million of taxes paid for the net settlement of equity awards offset by $1.6 million of proceeds from the exercise of options and $0.3 million of proceeds from the repayment of notes due from affiliates.
Previous wording
Our principal commitments consist of obligations under our convertible notes, operating leases for office space, and other purchase commitments. Our obligations under our convertible notes are described in Note 6, "Fair Value Measurements" and Note 8, "Convertible Notes" to our condensed consolidated financial statements. Information regarding our non-cancellable lease and other purchase commitments as of March 31, 2024, can be found in Note 7, "Balance Sheet Components" and Note 10, "Commitments and Contingencies" to our condensed consolidated financial statements.
Current wording
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 June 30, 2024, can be found in Note 7, "Balance Sheet Components" and Note 10, "Commitments and Contingencies" to our condensed consolidated financial statements.
Previous wording
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, 2024.
Current wording
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 six months ended June 30, 2024.
Rearranged current paragraphs (3)
Current report — wording carried from elsewhere
Cost of other revenue remained flat during the three months ended June 30, 2024 as compared to the three months ended June 30, 2023, as the Company maintained its single aggregated data arrangement. Other gross margin increased to 87% due to the introduction of advertising revenue in 2024.
Current report — wording carried from elsewhere
For the three months ended June 30, 2024 and 2023, the Company recorded no gain or loss and a gain of $0.3 million, respectively, associated with the convertible notes fair value adjustment. The changes in fair value were primarily driven by the share price volatility and reduction in time to convert.
Current report — wording carried from elsewhere
For the six months ended June 30, 2024 and 2023, the Company recorded a loss of $1.7 million and $0.2 million, respectively, associated with the derivative liability fair value adjustment. The changes are due to the revaluation of the derivative liability at each reporting period and the increase in stock price related to embedded redemption features bifurcated from the July 2021 Convertible Notes issued to investors.
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
For the three months ended March 31, 2024, net cash used in financing activities was $5.7 million, primarily related to $8.1 million of taxes paid for net settlement of equity awards, offset by $2.4 million of proceeds from the exercise of options.