Life360 Inc

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.

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 partnership revenue, which represents agreements with third parties to provide access to advertising on the Company’s mobile platform.

Previous 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.

Current wording

Other income (expense), net consists of interest and dividend 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, foreign exchange transactions gains/(losses), interest expense primarily related to the Convertible Notes, and our U.S. IPO transaction costs.

Previous wording

Provision for 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.

Current wording

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.

Previous 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).

Current wording

The following tables set forth our condensed consolidated statements of operations and comprehensive loss for the three and nine months ended September 30, 2024 and 2023 (in thousands, except percentages).

Previous wording

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 wording

Subscription revenue increased $15.2 million, or 27%, during the three months ended September 30, 2024 as compared to the three months ended September 30, 2023, primarily due to a 20% growth in total subscriptions and a 25% growth in Paying Circles (as defined below).

Previous 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.

Current wording

Subscription revenue increased $38.1 million, or 24%, during the nine months ended September 30, 2024 as compared to the nine months ended September 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 the 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

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 wording

Cost of other revenue remained flat during the three months ended September 30, 2024 as compared to the three months ended September 30, 2023, as the Company maintained its single aggregated data arrangement. Other gross margin increased to 89% due to the increase in data and partnership revenue, while costs remained relatively flat.

Previous wording

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 wording

Cost of subscription revenue increased by $7.7 million, or 34%, during the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023, primarily due to a $2.8 million increase in technology expenses and 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 costs associated with premium membership offerings, $1.4 million in personnel-related and stock-based compensation costs, and $0.2 million in other cost of subscription revenue expenses, attributable to Company growth.

Previous wording

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 wording

Subscription gross margin decreased slightly to 85% during the nine months ended September 30, 2024 from 86% during the nine months ended September 30, 2023, primarily due to the discontinuation of certain battery-related membership benefits that positively impacted the second quarter of 2023.

Previous 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.

Current wording

Cost of other revenue remained flat during the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023, as the Company maintained its single aggregated data arrangement. Other gross margin increased to 88% due to the increase in data and partnership revenue, while costs remained relatively flat.

Previous wording

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 wording

Research and development expenses increased $4.4 million, or 18%, during the three months ended September 30, 2024 as compared to the three months ended September 30, 2023. This was primarily due to increases of $3.3 million in personnel-related and stock-based compensation costs, $1.2 million in technology and other expenses, $0.6 million in contractor spend, and $0.3 million in professional and outside services, attributable to Company growth. The increases were partially offset by a $0.9 million increase in capitalized costs related to internal use software and a $0.1 million increase in capitalized construction in progress costs.

Previous wording

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 wording

Research and development expenses increased by $8.3 million, or 11%, during the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023. This was primarily due to increases of $8.2 million in personnel-related and stock-based compensation costs, $3.1 million in technology and other expenses, $1.6 million in contractor spend, and $0.5 million in professional and outside services, attributable to Company growth. The increases were partially offset by a $3.5 million increase in capitalized costs related to internal use software, a $0.9 million increase related to a raw materials inventory write-off that negatively impacted the nine months ended September 30, 2023, and a $0.7 million increase in capitalized construction in progress costs.

Previous wording

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 wording

Sales and marketing expenses increased $5.0 million, or 19%, during the three months ended September 30, 2024 as compared to the three months ended September 30, 2023. This was primarily due to increases of $3.2 million in commissions to the Company’s third-party platforms and distribution channels (each a “Channel Partner”), which was in line with the 20% growth in subscriptions, $2.1 million in other marketing spend, $0.7 million in personnel-related and stock-based compensation costs, $0.4 million in professional and outside services spend, and $0.2 million in technology expenses due to Company growth. The increases were partially offset by a $1.6 million decrease in paid user acquisition costs due to planned shifts in the allocation of spend to other marketing.

Previous 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.

Current wording

Sales and marketing expenses increased $6.4 million, or 9%, during the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023. This was primarily due to increases of $6.7 million in Channel Partner commissions, which was in line with the 20% growth in subscriptions, $3.3 million in other marketing spend, $0.4 million in technology expenses, and $0.4 million in professional and outside services, attributable to Company growth. The increases were partially offset by a $4.4 million decrease in paid user acquisition costs due to planned shifts in the allocation of spend to other marketing.

Previous wording

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 wording

General and administrative expenses increased $4.5 million, or 11%, during the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023. This was primarily due to a $2.5 million increase in professional and outside services driven by costs incurred in connection with the U.S. IPO as well as ongoing public company compliance costs. Additional increases included $1.5 million in personnel-related and stock-based compensation costs and $0.8 million in technology and other expenses attributable to company growth. These were partially offset by a $0.3 million increase in capitalized costs related to internal use software.

Previous wording

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 wording

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 September 30, 2024. A loss of $0.6 million associated with the convertible notes fair value adjustment was recorded for the three months ended September 30, 2023. For the nine months ended September 30, 2024 and 2023, the Company recorded a loss associated with the Convertible Notes fair value adjustment of $0.6 million and $0.8 million, respectively. 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 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.

Current wording

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 September 30, 2024. A gain of $0.1 million associated with the derivative liability fair value adjustment was recorded for the three months ended September 30, 2023. For the nine months ended September 30, 2024 and 2023, the Company recorded a loss associated with the derivative liability fair value adjustment of $1.7 million and $0.2 million, 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.

Previous wording

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 wording

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 related to the settlement of the September 2021 Convertible Notes and July 2021 Convertible Notes for three months ended September 30, 2024. A loss of $0.4 million associated with the settlement of the Convertible Notes was recorded for the nine months ended September 30, 2024. There were no such transactions during the three and nine months ended September 30, 2023.

Previous wording

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 wording

In June 2024, the holders of the July 2021 Convertible Notes converted their notes and accrued interest to common stock and the derivative liability was settled as a result of the conversion. As a result, the Company recorded no gain or loss related to the settlement of the derivative liability upon conversion of the July 2021 Convertible Notes for three months ended September 30, 2024. A gain of $1.9 million associated with the settlement of the derivative liability was recorded for the nine months ended September 30, 2024. There were no such transactions during the three and nine months ended September 30, 2023.

Previous wording

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 wording

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 September 30, 2024, other income (expense), net consists of $2.5 million in other income and for the three months ended September 30, 2023, consists of $0.8 million in other income and $0.5 million in other expense. For the nine months ended September 30, 2024, other income (expense), net consists of $4.2 million in other income and $6.0 million in other expense, and for the nine months ended September 30, 2023, consists of $2.3 million in other income and $0.5 million in other expense.

Previous wording

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 wording

Other income (expense), net decreased $3.6 million, or 199%, during the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023. The decrease was primarily driven by a $5.6 million increase in transaction costs incurred in connection with our U.S. IPO, which were partially offset by a $2.0 million increase in dividend and interest income resulting from higher average gross yields primarily due to an increased cash and cash equivalents balance.

Previous 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.

Current wording

Benefit from income taxes increased $4.6 million during the three months ended September 30, 2024 as compared to the three months ended September 30, 2023. Provision for income taxes increased $1.9 million during the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023. 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.

Previous wording

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 wording

Excludes revenue related to bundled Life360 subscription and hardware offerings of $(1.4) million and $(4.0) million for the three and nine months ended September 30, 2024 respectively, and $(1.2) million and $(1.9) million for the three and nine months ended September 30, 2023, respectively.

Previous wording

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 wording

Excludes revenue related to bundled Life360 subscription and hardware offerings of $1.4 million and $3.9 million for the three and nine months ended September 30, 2024, respectively, and $1.4 million and $2.5 million for the three and nine months ended September 30, 2023, respectively.

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 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.

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 September 30, 2024, and 2023 was $336.2 million and $259.1 million, respectively, representing an increase of 30% year over year, which is largely attributable to continued subscriber growth.

Previous 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.

Current wording

We have a large and growing global user base as of September 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 September 30, 2024 and 2023, we had approximately 76.9 million and approximately 58.4 million MAUs on the Life360 Platform, respectively, representing an increase of 32% year over year. We believe this has been driven by continued strong new member growth and retention.

Previous 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.

Current wording

As of September 30, 2024 and 2023, we had approximately 2.2 million and 1.7 million paid subscribers to services under our Life360 brand, respectively, representing an increase of 25% year over year.

Previous wording

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 wording

For the three months ended September 30, 2024 and 2023, our ARPPC was $127.57 and $119.97, respectively, representing a 6% increase year over year. For the nine months ended September 30, 2024 and 2023, our ARPPC was $124.63 and $118.85, respectively, representing a 5% increase year over year.

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. 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.

Current wording

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 a shift in product mix towards higher priced products. In addition, price increases for existing subscribers began in January 2024 in the United Kingdom (“UK”) and March 2024 in Australia and New Zealand (“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 by an increase in international subscribers, which overall, have lower priced subscriptions.

Previous 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.

Current wording

As of September 30, 2024 and 2023, we had approximately 2.8 million and 2.3 million paid subscribers, respectively, to services under the Life360, Tile, and Jiobit brands, representing an increase of 20% year over year.

Previous wording

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 wording

ARPPS for the three months ended September 30, 2024 and 2023 was $106.27 and $101.33, respectively, representing an increase of 5% year over year. ARPPS for the nine months ended September 30, 2024 and 2023 was $103.28 and $98.31, respectively, representing an increase of 5% year over year.

Previous 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.

Current wording

ARPPS has increased year over year as a result of the growth in subscriptions and a shift in product mix towards higher priced products in the U.S. 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 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 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.

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.

Previous 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.

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.

Previous 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.

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.

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 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.

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 September 30, 2024 and December 31, 2023, we had deferred revenue of $39.9 million and $35.8 million, respectively, of which $37.9 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 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.

Current wording

For the nine months ended September 30, 2024, net cash provided by operating activities was $20.3 million. The primary factors affecting our operating cash flows during this period were our net loss of $13.1 million, impacted by $33.3 million of non-cash adjustments, and $20 thousand of cash used 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 completed during the second quarter of 2024. The non-cash adjustments primarily consisted of stock-based compensation, depreciation and amortization, fair value adjustments for our convertible notes, derivative liability, and investment, 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 prepaid expenses and other assets as well as increases in accounts payable and accrued expenses and other current liabilities, and deferred revenue, which was offset by increases in accounts receivable, net, inventory, and costs capitalized to obtain contracts, net.

Previous 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.

Current wording

For the nine months ended September 30, 2023, net cash used in operating activities was $1.4 million. The primary factors affecting our operating cash flows during this period were our net loss of $25.0 million, impacted by $35.6 million of non-cash adjustments and $12.0 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 increases in accounts receivable, net, prepaid expenses and other assets, costs capitalized to obtain contracts, net, inventory, and accrued expenses and other liabilities offset by increases in deferred revenue and other liabilities, noncurrent.

Previous 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.

Current wording

For the nine months ended September 30, 2024, net cash used in investing activities was $3.3 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 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.

Current wording

For the nine months ended September 30, 2023, net cash used in investing activities was $1.3 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.