Life360, Inc.

Previous wording

We believe that our results of operations are affected by a number of factors, such as: the ability to remain a trusted brand; attracting, retaining, and converting members; maintaining efficient member acquisition; the ability to attract new and repeat purchasers of our hardware tracking devices; growth in Average Revenue per Paying Circle (“ARPPC”); expanding the offerings on our platform; attracting and retaining talent; seasonality; international expansion; and growth and monetization of advertising offerings. We discuss each of these factors in more detail under the heading “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Key Factors Affecting Our Performance” in our Annual Report. While we do not have control of all factors affecting our results from operations, we work diligently to influence and manage those factors which we can impact to enhance our results of operations.

Current wording

We believe that our results of operations are affected by a number of factors, such as: the ability to remain a trusted brand; attracting, retaining, and converting members; maintaining efficient member acquisition; the ability to attract new and repeat purchasers of our hardware tracking devices; growth in Average Revenue per Paying Circle (“ARPPC”); expanding the offerings on our platform; attracting and retaining talent; seasonality; international expansion; and growth and monetization of advertising offerings. We discuss each of these factors in more detail under the heading “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Key Factors Affecting Our Performance” in our Annual Report. While we do not have control of all factors affecting our results of operations, we work diligently to influence and manage those factors which we can impact to enhance our results of operations.

Previous wording

Loss on Change in Fair Value of Investment

Current wording

Gain (loss) on Change in Fair Value of Investments

Previous wording

In May 2025, we entered into a series of transactions with Aura Consolidated Group, Inc. (“Aura”), which included a convertible note investment into Aura (“Convertible Note Investment”). We elected to apply the fair value option in accordance with ASC 825, Financial Instrumentsand as a result, the Loss on change in fair value of investment relates to the change in fair value associated with the Convertible Note Investment.

Current wording

In May 2025, we entered into a series of transactions with Aura Consolidated Group, Inc. (“Aura”), which included a convertible note investment into Aura (“Convertible Note Investment”). We elected to apply the fair value option in accordance with ASC 825, Financial Instruments.

Previous wording

Interest income consists of interest earned on our cash and cash equivalents balances received from bank deposits, money market funds, and short-term investments.

Current wording

Interest income consists of interest earned on our cash and cash equivalents balances received from bank deposits, money market funds, and short-term investments, as well as the amortization of discounts on our short-term investments and cash equivalents.

Previous wording

Other income (expense), net consists of 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), and interest expense primarily related to convertible notes and the deferred purchase price liability related to the acquisition of Nativo, Inc. (“Nativo”).

Current wording

Other income (expense), net consists of 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 transaction gains/(losses), interest expense primarily related to convertible notes and the deferred purchase price liability related to the acquisition of Nativo, Inc. (“Nativo”), and a loss related to the monetization of tariff refund claims.

Previous wording

The following tables set forth our condensed consolidated statements of operations and comprehensive income for the three months ended March 31, 2026 and 2025 (in thousands, except percentages).

Current wording

The following tables set forth our condensed consolidated statements of operations and comprehensive income for the three and six months ended June 30, 2026 and 2025 (in thousands, except percentages).

Previous wording

Subscription revenue increased $26.3 million, or 32%, during the three months ended March 31, 2026 as compared to the three months ended March 31, 2025, primarily due to 27% growth in Paying Circles and 17% growth in total subscriptions. Additionally, subscription revenue in the current period benefited from a 7% uplift in ARPPC. Please refer to the “Key Performance Indicators” section for definitions of key performance indicators (“KPIs”).

Current wording

Subscription revenue increased $27.1 million, or 31%, during the three months ended June 30, 2026 as compared to the three months ended June 30, 2025, primarily due to a 27% growth in Paying Circles and an 18% growth in total subscriptions. Additionally, subscription revenue in the current period benefited from a 5% uplift in ARPPC. Please refer to the “Key Performance Indicators” section for definitions of key performance indicators (“KPIs”).

Previous wording

Advertising revenue increased $15.1 million, or 329%, during the three months ended March 31, 2026 as compared to the three months ended March 31, 2025. This was primarily driven by a $12.6 million increase in managed advertising revenue and a $2.5 million increase in other advertising revenue, both primarily attributable to the acquisition of Nativo. We expect advertising revenue to grow as we continue to integrate Nativo's platform, expand advertiser relationships, and increase advertising inventory across the Life360 platform.

Current wording

Advertising revenue increased $16.7 million, or 315%, during the three months ended June 30, 2026 as compared to the three months ended June 30, 2025. This was primarily driven by a $14.1 million increase in managed advertising, a $1.3 million increase in self-service advertising, a $0.7 million increase in programmatic advertising, and a $0.6 million increase in other advertising revenue, primarily attributable to the acquisition of Nativo. We expect advertising revenue to grow as we continue to integrate Nativo's platform, expand advertiser relationships, and increase advertising inventory across the Life360 platform.

Previous wording

Other revenue increased $2.5 million, or 30%, during the three months ended March 31, 2026 as compared to the three months ended March 31, 2025. This was due to a $2.0 million increase in data revenue, which was primarily attributable to increased data volumes resulting from user growth, and a $0.5 million increase in partnership revenue, primarily driven by higher revenue share from an existing partner.

Current wording

Other revenue increased $2.3 million, or 25%, during the three months ended June 30, 2026 as compared to the three months ended June 30, 2025. This was due to a $1.6 million increase in data revenue, which was primarily attributable to increased data volumes resulting from user growth, and a $0.7 million increase in partnership revenue, primarily driven by higher revenue share from an existing partner.

Previous wording

Hardware revenue decreased $4.4 million, or 49%, during the three months ended March 31, 2026 as compared to the three months ended March 31, 2025. The decline was primarily driven by a 25% decrease in Net hardware units shipped, contributing to a $1.2 million decrease in hardware revenue. This decrease was also impacted by a $1.9 million increase in discounts and a $0.9 million increase in returns, of which $1.0 million and $0.5 million, respectively, were directly attributable to the strategic exit of the brick-and-mortar retail channel, and a $0.4 million reduction in revenue related to bundled offerings.

Current wording

Hardware revenue decreased $6.8 million, or 32%, during the six months ended June 30, 2026 as compared to the six months ended June 30, 2025. The decline was primarily driven by a 21% decrease in Net hardware units shipped, contributing to a $3.8 million decrease in hardware revenue. This decrease was also impacted by a $2.5 million increase in discounts, of which $1.0 million was directly attributable to the strategic exit of the brick-and-mortar retail channel, and a $0.5 million reduction in revenue related to bundled offerings.

Previous wording

Hardware gross margin decreased to (91)% during the three months ended March 31, 2026 from 3% during the three months ended March 31, 2025, primarily due to an increase in discounts and returns largely attributable to the Company's strategic exit from brick-and-mortar retail channel, as well as changes in product mix. We continue to prioritize hardware as a driver of subscription growth by optimizing pricing and bundling to increase subscription attachment over standalone hardware margin.

Current wording

Hardware gross margin increased to 43% during the three months ended June 30, 2026 from 17% during the three months ended June 30, 2025, primarily due to the benefit from the receipt of tariff refund claims and reduced tariff costs. We continue to prioritize hardware as a driver of subscription growth by optimizing pricing and bundling to increase subscription attachment over standalone hardware margin.

Previous wording

Cost of advertising revenue increased $7.7 million, or 2,929%, during the three months ended March 31, 2026 as compared to the three months ended March 31, 2025. The increase was primarily driven by increases of $2.6 million in traffic acquisition costs, $2.5 million in technology and hosting costs, $1.4 million in personnel-related and stock-based compensation costs, $0.7 million in third-party data and content licensing costs, and $0.5 million in amortization of acquired technology, all attributable to the acquisition of Nativo.

Current wording

Cost of advertising revenue increased $9.0 million, or 1,744%, during the three months ended June 30, 2026 as compared to the three months ended June 30, 2025. The increase was primarily due to increases of $3.6 million in traffic acquisition costs, $2.6 million in technology and hosting costs, $1.5 million in personnel-related and stock-based compensation costs, $0.9 million in third-party data and content licensing costs, and $0.4 million in amortization of acquired technology, attributable to the acquisition of Nativo.

Previous wording

Advertising gross margin decreased to 60% during the three months ended March 31, 2026 from 94% during the three months ended March 31, 2025, primarily due to higher costs associated with the acquisition of Nativo, which outpaced the growth in total advertising revenue. The acquisition of Nativo has expanded the Company's advertising capabilities, resulting in a shift in margin mix relative to our existing advertising offerings.

Current wording

Advertising gross margin decreased to 57% during the three months ended June 30, 2026 from 90% during the three months ended June 30, 2025, primarily due to higher costs associated with our expanded advertising platform following the acquisition of Nativo, resulting in a shift in margin mix relative to our existing advertising offerings.

Previous wording

Cost of other revenue increased $0.4 million, or 39%, during the three months ended March 31, 2026 as compared to the three months ended March 31, 2025, due to an increase of $0.4 million in technology and other related expenses to support the existing customer base.

Current wording

Cost of other revenue increased $0.6 million, or 55%, during the three months ended June 30, 2026 as compared to the three months ended June 30, 2025, due to an increase of $0.6 million in technology and other related expenses to support the existing customer base.

Previous wording

Subscription gross margin decreased to 87% during the three months ended March 31, 2026 from 88% during the three months ended March 31, 2025, primarily due to higher personnel costs attributable to Company growth.

Current wording

Other gross margin decreased to 85% during the three months ended June 30, 2026 from 88% during the three months ended June 30, 2025, primarily due to higher technology costs supporting growth in our data business.

Previous wording

Cost of subscription revenue increased $4.4 million, or 43%, during the three months ended March 31, 2026 as compared to the three months ended March 31, 2025, primarily due to increases of $1.9 million in technology expenses, $1.3 million in personnel-related and stock-based compensation costs, and $0.2 million in amortization of internally developed software related to the release of new features and significant updates on our platform, all attributable to Company growth. In addition, costs associated with premium membership offerings increased $1.0 million.

Current wording

Cost of subscription revenue increased $6.6 million, or 28%, during the six months ended June 30, 2026 as compared to the six months ended June 30, 2025, primarily due to increases of $3.4 million in technology expenses, $0.8 million in personnel-related and stock-based compensation costs, and $0.5 million in amortization of internally developed software related to the release of new features and significant updates on our platform, all attributable to Company growth. In addition, costs associated with premium membership offerings increased $1.9 million.

Previous wording

Other gross margin decreased to 86% during the three months ended March 31, 2026 from 87% during the three months ended March 31, 2025, primarily due to costs outpacing revenue growth.

Current wording

Other gross margin decreased to 85% during the six months ended June 30, 2026 from 87% during the six months ended June 30, 2025, primarily due to higher technology costs supporting growth in our data business.

Previous wording

Research and development expenses increased $8.9 million, or 29%, during the three months ended March 31, 2026 as compared to the three months ended March 31, 2025, primarily due to increases of $6.4 million in personnel-related and stock-based compensation costs, including those related to the acquisition of Nativo, $1.3 million in technology and other expenses, and $0.9 million in professional and outside services. Additionally, a $0.8 million decrease in capitalized construction in progress costs, in line with our product development roadmap, contributed to the increase. These increases were partially offset by $0.5 million of higher capitalized internally developed software costs related to the development of new features and significant updates to our platform.

Current wording

Research and development expenses increased $15.1 million, or 47%, during the three months ended June 30, 2026 as compared to the three months ended June 30, 2025, primarily due to a $6.5 million increase in personnel-related and stock-based compensation costs, including those related to the acquisition of Nativo, and a $4.5 million increase in technology and other expenses due to Company growth. Also contributing were $1.7 million in workplace restructuring costs associated with the Company’s transition to an AI-Native organization, $1.0 million of lower capitalized internally developed software costs, a $0.6 million increase in professional and outside services, a $0.5 million decrease in capitalized construction in progress costs, in line with the Company’s product development roadmap, and $0.3 million of Nativo integration costs.

Previous wording

Sales and marketing expenses increased $21.7 million, or 62%, during the three months ended March 31, 2026 as compared to the three months ended March 31, 2025. This was primarily due to increases of $7.8 million in growth media and other marketing spend to support strategic initiatives, and $5.1 million in commissions to the Company’s Channel Partners, in line with the increase in subscription revenue. The increase was also driven by $5.1 million in personnel-related and stock-based compensation costs and $1.8 million in amortization of acquired intangible assets, each primarily attributable to the acquisition of Nativo. Additional increases include $0.9 million in technology and other expenses attributable to Company growth, $0.6 million in Nativo integration costs, and $0.4 million in severance costs related to the strategic exit of the brick-and-mortar retail channel.

Current wording

Sales and marketing expenses increased $35.2 million, or 47%, during the six months ended June 30, 2026 as compared to the six months ended June 30, 2025. This was primarily due to increases of $11.1 million in personnel-related and stock-based compensation costs and $3.5 million in amortization of acquired intangible assets, each primarily attributable to the acquisition of Nativo. Additional increases include $9.9 million in commissions to the Company’s Channel Partners, in line with the increase in subscription revenue, $7.5 million in growth media and other marketing spend to support strategic initiatives, $2.2 million in technology and other expenses attributable to Company growth, $0.6 million in Nativo integration costs, and $0.4 million in severance costs related to the strategic exit of the brick-and-mortar retail channel.

Previous wording

General and administrative expenses increased $6.7 million, or 43%, during the three months ended March 31, 2026 as compared to the three months ended March 31, 2025. This was primarily due to increases of $5.8 million in personnel-related and stock-based compensation costs and $0.7 million in technology and other expenses, both attributable to Company growth. Additional increases include $0.6 million in warehouse relocation costs related to the move of certain hardware manufacturing operations and $0.5 million in Nativo integration costs. These increases were partially offset by a $0.9 million decrease in professional and outside services.

Current wording

General and administrative expenses increased $9.9 million, or 57%, during the three months ended June 30, 2026 as compared to the three months ended June 30, 2025. This was primarily due to increases of $7.5 million in personnel-related and stock-based compensation costs and $1.1 million in technology and other expenses, both attributable to Company growth. Additional increases include $0.6 million in warehouse relocation costs related to the move of certain hardware manufacturing operations, $0.5 million in professional and outside services, and $0.2 million in Nativo integration costs.

Previous wording

In May 2025, the Company entered into a series of transactions with Aura, which included the $25.0 million Convertible Note Investment. The Company elected to apply the fair value option in accordance with ASC 825, Financial Instruments. As a result, a $3.9 million loss related to the revaluation of the Convertible Note Investment was recognized during the three months ended March 31, 2026.

Current wording

In May 2025, the Company entered into a series of transactions with Aura, which included the $25.0 million Convertible Note Investment. The Company elected to apply the fair value option in accordance with ASC 825, Financial Instruments. As a result, a loss related to the revaluation of the Convertible Note Investment of $0.9 million and $4.7 million was recognized during the three and six months ended June 30, 2026, respectively, compared to a gain of $0.4 million for both the three and six months ended June 30, 2025.

Previous wording

Interest income increased $2.0 million, or 114%, during the three months ended March 31, 2026 as compared to the three months ended March 31, 2025, resulting from higher average gross yields attributable to increased cash and cash equivalents and short-term investment balances.

Current wording

Interest income increased $1.6 million, or 64%, during the three months ended June 30, 2026 as compared to the three months ended June 30, 2025, resulting from higher average gross yields and higher amortization of discounts on increased cash and cash equivalents and short-term investment balances.

Previous wording

Other income (expense), net decreased $1.0 million, or 515%, during the three months ended March 31, 2026 as compared to the three months ended March 31, 2025. This was primarily driven by a $0.5 million increase in interest expense related to the June 2025 Convertible Notes, a $0.3 million increase in foreign exchange losses, and a $0.2 million increase in interest expense related to the deferred purchase price liability from the acquisition of Nativo. Refer to Note 7, "Business Combinations" and Note 8, "Balance Sheet Components" for additional information on the acquisition of Nativo and the related deferred purchase price liability.

Current wording

Other income (expense), net decreased $3.0 million, or 368%, during the three months ended June 30, 2026 as compared to the three months ended June 30, 2025. This was primarily driven by a $1.3 million loss related to the monetization of tariff refunds, a $1.1 million increase in foreign exchange losses, a $0.4 million increase in interest expense related to the June 2025 Convertible Notes, and a $0.2 million increase in interest expense related to the deferred purchase price liability from the acquisition of Nativo. Refer to Note 7, "Business Combinations" and Note 8, "Balance Sheet Components" for additional information on the acquisition of Nativo and the related deferred purchase price liability.

Previous wording

Benefit from income taxes increased $11.5 million during the three months ended March 31, 2026 as compared to the three months ended March 31, 2025, primarily due to changes in the Company’s annual estimated effective tax rate and discrete tax benefits. For the three months ended March 31, 2026, we recorded a total income tax benefit of $11.7 million, consisting of a $2.7 million benefit based on the annual estimated effective tax rate, primarily due to the loss before income tax for the period, and $9.0 million of discrete tax benefits, primarily related to stock-based compensation.

Current wording

Benefit from income taxes increased $3.6 million during the three months ended June 30, 2026, as compared to the three months ended June 30, 2025, primarily due to changes in the Company's annual estimated effective tax rate because the Company no longer maintains a full valuation allowance on its U.S. deferred tax assets and discrete tax benefits. For the three months ended June 30, 2026, we recorded a total income tax benefit of $4.0 million, consisting of a $1.3 million benefit based on the annual estimated effective tax rate, primarily reflecting the loss before income taxes for the period, and $2.7 million of discrete tax benefits, primarily related to stock-based compensation.

Previous wording

(1) Excludes revenue related to bundled Life360 subscription and hardware offerings, which was immaterial for the three months ended March 31, 2026, and $(0.4) million for the three months ended March 31, 2025.

Current wording

(1) Excludes revenue related to bundled Life360 subscription and hardware offerings, which was immaterial for the three and six months ended June 30, 2026, and $(0.3) million and $(0.7) million for the three and six months ended June 30, 2025, respectively.

Previous wording

(2) Excludes revenue related to bundled Life360 subscription and hardware offerings, which was immaterial for the three months ended March 31, 2026, and $0.4 million for the three months ended March 31, 2025.

Current wording

(2) Excludes revenue related to bundled Life360 subscription and hardware offerings, which was $0.1 million for the three and six months ended June 30, 2026, and $0.3 million and $0.6 million for the three and six months ended June 30, 2025, 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 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, 2026, and 2025 was $517.9 million and $393.0 million, respectively, representing an increase of 32% year-over-year, which is largely attributable to continued subscriber growth and an increase in other recurring revenue.

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 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, 2026, and 2025 was $537.2 million and $416.1 million, respectively, representing an increase of 29% year-over-year, which is largely attributable to continued subscriber growth and an increase in other recurring revenue.

Previous wording

We have a large and growing global member base as of March 31, 2026. 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 March 31, 2026 and 2025, we had approximately 97.8 million and approximately 83.7 million MAUs on the Life360 platform, respectively, representing an increase of 17% 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 member base as of June 30, 2026. 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, 2026 and 2025, we had approximately 102.4 million and approximately 88.0 million MAUs on the Life360 platform, respectively, representing an increase of 16% year-over-year. We believe this has been driven by continued new member growth and retention.

Previous wording

As of March 31, 2026 and 2025, we had approximately 3.0 million and 2.4 million paid subscribers to services under our Life360 brand, respectively, representing an increase of 27% year-over-year. We grow the number of Paying Circles by increasing our free member base, converting free members to subscribers, and retaining them over time with the provision of high-quality family connectivity and safety services.

Current wording

As of June 30, 2026 and 2025, we had approximately 3.2 million and 2.5 million paid subscribers to services under our Life360 brand, respectively, representing an increase of 27% year-over-year. We grow the number of Paying Circles by increasing our free member base, converting free members to subscribers, and retaining them over time with the provision of high-quality family connectivity and safety services.

Previous wording

ARPPC is a key indicator utilized by the Company to determine our effectiveness at monetizing Paying Circles through tiered product offerings. The year-over-year growth in ARPPC primarily reflects a shift in product mix toward higher-priced offerings and price increases across select international markets throughout 2025.

Current wording

ARPPC is a key indicator utilized by the Company to determine our effectiveness at monetizing Paying Circles through tiered product offerings. The year-over-year growth in ARPPC primarily reflects a shift in product mix toward higher-priced offerings and price increases across select international markets throughout the second half of 2025.

Previous wording

As of March 31, 2026 and 2025, we had approximately 3.5 million and 3.0 million paid subscribers, respectively, to services under the Life360 and Tile brands, representing an increase of 17% year-over-year.

Current wording

As of June 30, 2026 and 2025, we had approximately 3.7 million and 3.1 million paid subscribers, respectively, to services under the Life360 and Tile brands, representing an increase of 18% year-over-year.

Previous wording

ARPPS has increased year-over-year as a result of a shift in product mix towards higher-priced offerings and price increases across select international markets throughout 2025.

Current wording

ARPPS has increased year-over-year as a result of a shift in product mix towards higher-priced offerings and price increases across select international markets throughout the second half of 2025.

Previous wording

For the three months ended March 31, 2026 and 2025, Life360 sold approximately 0.4 million units and 0.5 million units, respectively, representing a decrease of 25% year-over-year. The decrease in Net hardware units shipped was primarily due to a decrease in online retail sales and the strategic exit of the brick-and-mortar retail channel.

Current wording

The decrease in Net hardware units shipped was primarily due to the strategic exit of the brick-and-mortar retail channel and a decrease in online retail sales.

Previous wording

For the three months ended March 31, 2026 and 2025, the Net ASP per unit was $11.88 and $16.99, respectively, representing a decrease of 30% year-over-year. The decrease in Net ASP was primarily due to an increase in discounts, which were primarily driven by the strategic exit of the brick-and-mortar retail channel.

Current wording

For the three months ended June 30, 2026 and 2025, the Net ASP per unit was $14.70 and $14.81, respectively, representing a decrease of 1% year-over-year. For the six months ended June 30, 2026 and 2025, the Net ASP per unit was $13.68 and $15.64, respectively, representing a decrease of 13% year-over-year. The decrease in Net ASP was primarily due to increased discounts related to the strategic exit of the brick-and-mortar retail channel.

Previous wording

We believe our existing cash and cash equivalents and short-term investments, together with cash generated from subscriptions, hardware tracking devices, advertising activities, and partnerships, including the sale of aggregated, non-personally identifiable data for data insight purposes, will be sufficient to support working capital and capital expenditure requirements for at least the next 12 months. We may from time to time seek to raise additional capital based on a variety of factors, including our capital requirements and the relative favorability of conditions in the capital markets. If we are unable to raise additional capital on terms acceptable to us or generate cash flows necessary to expand our operations and invest in continued innovation, we may not be able to compete successfully, which would harm our business, financial condition and results of operations.

Current wording

We believe our existing cash and cash equivalents and short-term investments, together with cash generated from subscriptions, hardware tracking devices, advertising activities, and partnerships, including the sale of aggregated, non-personally identifiable data for data insight purposes, will be sufficient to support working capital and capital expenditure requirements in line with our capital deployment strategy for the next 12 months. We may from time to time seek to raise additional capital based on a variety of factors, including our capital requirements and the relative favorability of conditions in the capital markets. If we are unable to raise additional capital on terms acceptable to us or generate cash flows necessary to expand our operations and invest in continued innovation, we may not be able to compete successfully, which would harm our business, financial condition and results of operations.

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, 2026 and December 31, 2025, we had deferred revenue of $51.9 million and $50.7 million, respectively, of which $48.2 million and $46.4 million is expected to be recorded as revenue in the next 12 months, respectively, 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, 2026 and December 31, 2025, we had deferred revenue of $51.5 million and $50.7 million, respectively, of which $48.2 million and $46.4 million is expected to be recorded as revenue in the next 12 months, respectively, provided all other revenue recognition criteria have been met.

Previous wording

For the three months ended March 31, 2026, net cash provided by operating activities was $17.2 million. The primary factors affecting our operating cash flows during this period were our net income of $2.8 million, impacted by $14.6 million of non-cash adjustments, and $0.2 million of cash used by changes in our operating assets and liabilities. The non-cash adjustments primarily consist of stock-based compensation, deferred income taxes, depreciation and amortization, and a loss on the change in fair value of investment. The cash used by changes in our operating assets and liabilities was primarily due to decreases in accrued expenses and other current liabilities and accounts payable, as well as increases in inventory and costs capitalized to obtain contracts. This was partially offset by decreases in accounts receivable and prepaid expenses and other current assets and an increase in deferred revenue.

Current wording

For the six months ended June 30, 2026, net cash provided by operating activities was $41.0 million. The primary factors affecting our operating cash flows during this period were our net income of $7.8 million, impacted by $40.5 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 consist of stock-based compensation, deferred income taxes, depreciation and amortization, and a loss on the change in fair value of investment. The cash used by changes in our operating assets and liabilities was primarily due to decreases in accrued expenses and other current liabilities and accounts payable, as well as increases in inventory and costs capitalized to obtain contracts. This was partially offset by decreases in accounts receivable and prepaid expenses and other current assets and an increase in deferred revenue.

Previous wording

For the three months ended March 31, 2025, net cash provided by operating activities was $12.1 million. The primary factors affecting our operating cash flows during this period were our net income of $4.4 million, impacted by $13.1 million of non-cash adjustments, and $5.4 million of cash used by changes in our operating assets and liabilities. The non-cash adjustments primarily consisted of stock-based compensation and depreciation and amortization. The cash used by changes in our operating assets and liabilities was primarily due to decreases in accrued expenses and other current liabilities and increases in inventory and prepaid expenses and other assets, which was offset by decreases in accounts receivable, net, and deferred revenue.

Current wording

For the six months ended June 30, 2025, net cash provided by operating activities was $25.4 million. The primary factors affecting our operating cash flows during this period were our net income of $11.4 million, impacted by $30.4 million of non-cash adjustments, and $16.4 million of cash used by changes in our operating assets and liabilities. The non-cash adjustments primarily consist of stock-based compensation, depreciation and amortization. The cash used by changes in our operating assets and liabilities was primarily due to decreases in accounts payable and accrued expenses and other current liabilities, as well as increases in inventory and prepaid expenses and other assets. These cash outflows were offset by an increase in deferred revenue.

Previous wording

For the three months ended March 31, 2026, net cash used in investing activities was $163.6 million, which is primarily related to the $106.4 million purchase of short-term investments and $55.6 million cash paid for the acquisition of Nativo, net of cash acquired. Refer to Note 7, "Business Combinations" for additional information on the acquisition of Nativo. Net cash used in investing activities also included capitalization of internally developed software costs in accordance with ASC 350-40, Intangibles - Goodwill and Other, Internal-Use Software.

Current wording

For the six months ended June 30, 2026, net cash used in investing activities was $256.3 million, which was primarily related to the $214.1 million purchase of short-term investments, $55.6 million cash paid for the acquisition of Nativo, net of cash acquired, and $1.0 million cash paid for other investments, partially offset by $16.9 million proceeds from maturities of short-term investment. Refer to Note 7, "Business Combinations" for additional information on the acquisition of Nativo. Net cash used in investing activities also included capitalization of internally developed software costs in accordance with ASC 350-40, Intangibles - Goodwill and Other, Internal-Use Software.

Previous wording

For the three months ended March 31, 2025, net cash used in investing activities was $4.3 million, which is primarily related to cash paid for the acquisition of Fantix, Inc. (“Fantix”). Refer to Note 6, "Business Combinations" in our Annual Report for additional information. Net cash used in investing activities also included capitalization of internally developed software costs in accordance with ASC 350-40, Intangibles - Goodwill and Other, Internal-Use Software.

Current wording

For the six months ended June 30, 2025, net cash used in investing activities was $32.1 million, which primarily related to the $25.0 million Convertible Note Investment. Net cash used in investing activities also included capitalization of internally developed software costs in accordance with ASC 350-40, Intangibles - Goodwill and Other, Internal-Use Software, and cash paid for an acquisition.