Life360, Inc.

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 and our Annual Report on Form 10-K for the year ended December 31, 2025, filed with the SEC on March 2, 2026 (“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 could differ materially from those discussed in the forward-looking statements as a result of a variety of factors, including but not limited to those discussed in “Risk Factors” under 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, 2025, filed with the SEC on March 2, 2026 (“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 could differ materially from those discussed in the forward-looking statements as a result of a variety of factors, including but not limited to those discussed in Part II, Item 1A of this Quarterly Report, Part II, Item 1A in our previous Quarterly Report on Form 10-Q for the quarter ended June 30, 2026, and Part I, Item 1A in our Annual Report.

Previous wording

Other revenue consists of data and partnership revenue. We generate data revenue primarily through an arrangement with a key data partner that provides location-based analytics 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. We generate partnership revenue through agreements with third parties which grant them access to anonymized data insights or through the recognition of revenue related to a warrant to purchase common stock of a related party (“Related Party Warrant”).

Current wording

Other revenue consists of data and partnership revenue. We generate data revenue primarily through an arrangement with a key data partner that provides location-based analytics 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. We generate partnership revenue through agreements with third parties which grant them access to anonymized data insights, through revenue-share payments from a related party, and through the recognition of revenue related to a warrant to purchase common stock of a related party (“Related Party Warrant”). Refer to Note 14, "Related-Party Transactions" for more information on the related party transactions.

Previous wording

Our research and development expenses consist primarily of personnel-related costs for our engineering, product, and design teams, material costs of building and developing prototypes for new products, mobile app development, and allocated overhead. We believe that continued investment in our platform is important for our growth. We intend to continue to invest in research and development to bring new customer experiences and devices to market and expand our platform capabilities.

Current wording

Our research and development expenses consist primarily of personnel-related costs for our engineering, product, and design teams, usage-based fees for third-party artificial intelligence (“AI”) tools, material costs of building and developing prototypes for new products, mobile app development, and allocated overhead. We believe that continued investment in our platform is important for our growth. We intend to continue to invest in research and development to bring new customer experiences and devices to market and expand our platform capabilities.

Previous wording

The Company measures certain non-marketable equity securities and warrant investments at fair value on a nonrecurring basis in accordance with ASC 321, Investment - Equity Securities. In April 2025, the SAFE investment in a related party (the “Related Party SAFE”) converted into shares of preferred stock (the “Related Party Investment”), as a result of an observable price change. Additionally, the Company measures and reports certain assets at fair value each reporting period.

Current wording

The Company measures certain non-marketable equity securities, including the Company’s preferred stock investment in a related party (the “Related Party Investment”) and the Related Party Warrant, at fair value on a nonrecurring basis in accordance with ASC 321, Investments - Equity Securities. The Company also elected the fair value option under ASC 825, Financial Instruments, to measure its convertible note investment in Aura Consolidated Group, Inc. (“Convertible Note Investment”) at fair value each reporting period.

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 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.

Current wording

Other 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

Benefit from income taxes consists of U.S. federal and state income taxes and foreign income taxes in jurisdictions in which we conduct business. Deferred income taxes reflect the net tax effect of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.

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. Deferred income taxes reflect the net tax effect of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.

Previous 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).

Current wording

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

Previous 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”).

Current wording

Subscription revenue increased $27.9 million, or 29%, during the three months ended September 30, 2026 as compared to the three months ended September 30, 2025, primarily due to a 26% growth in Paying Circles and an 18% growth in total subscriptions. Additionally, subscription revenue in the current period benefited from a 4% uplift in ARPPC. Please refer to the “Key Performance Indicators” section for definitions of key performance indicators (“KPIs”).

Previous wording

Hardware revenue decreased $2.5 million, or 20%, during the three months ended June 30, 2026 as compared to the three months ended June 30, 2025. The decline was primarily driven by an 18% decrease in Net hardware units shipped.

Current wording

Hardware revenue decreased $2.3 million, or 20%, during the three months ended September 30, 2026 as compared to the three months ended September 30, 2025. The decline was primarily driven by a 32% decrease in Net hardware units shipped.

Previous 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.

Current wording

Advertising revenue increased $18.2 million, or 250%, during the three months ended September 30, 2026 as compared to the three months ended September 30, 2025. This was primarily driven by a $16.2 million increase in managed advertising, largely attributable to the acquisition of Nativo as well as an increase in spending from existing advertisers. Also attributable to Nativo were increases of $1.0 million in self-service advertising and $1.0 million in other advertising revenue. We expect advertising revenue to grow as we continue to expand advertiser relationships and increase advertising inventory across the Life360 platform.

Previous wording

Other revenue increased $4.8 million, or 27%, during the six months ended June 30, 2026 as compared to the six months ended June 30, 2025, due to a $3.6 million increase in data revenue, which was primarily attributable to increased data volumes resulting from user growth, and a $1.2 million increase in partnership revenue, primarily driven by higher revenue share from an existing partner.

Current wording

Other revenue increased $5.9 million, or 61%, during the three months ended September 30, 2026 as compared to the three months ended September 30, 2025. This was due to a $4.3 million increase in partnership revenue, primarily driven by $3.7 million of revenue-share payments, which reflects the revised terms under the September 2026 amendments (the “2026 Related Party Amendments”). Refer to Note 14, "Related-Party Transactions" for more information. Data revenue also increased $1.6 million, primarily attributable to increased data volumes resulting from user growth.

Previous wording

Subscription revenue increased $53.4 million, or 31%, during the six months ended June 30, 2026 as compared to the six months ended June 30, 2025, primarily driven by a 27% growth in Paying Circles and 18% growth in total subscriptions. Additionally, subscription revenue in the current period benefited from a 6% uplift in ARPPC.

Current wording

Subscription revenue increased $81.3 million, or 30%, during the nine months ended September 30, 2026 as compared to the nine months ended September 30, 2025, primarily driven by a 26% growth in Paying Circles and 18% growth in total subscriptions. Additionally, subscription revenue in the current period benefited from a 6% uplift in ARPPC.

Previous 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.

Current wording

Hardware revenue decreased $9.2 million, or 28%, during the nine months ended September 30, 2026 as compared to the nine months ended September 30, 2025. The decline was primarily driven by a 25% decrease in Net hardware units shipped, primarily attributable to the strategic exit of the brick-and-mortar retail channel, and a $0.6 million reduction in revenue related to bundled offerings.

Previous wording

Advertising revenue increased $31.8 million, or 322%, during the six months ended June 30, 2026 as compared to the six months ended June 30, 2025. This was primarily driven by a $26.7 million increase in managed advertising, primarily attributable to the acquisition of Nativo as well as an increase in spending from existing advertisers. Also attributable to the acquisition of Nativo, there was a $2.2 million increase in self-service advertising, a $2.2 million increase in other advertising revenue, and a $0.7 million increase in programmatic advertising. 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 $49.9 million, or 291%, during the nine months ended September 30, 2026 as compared to the nine months ended September 30, 2025. This was primarily driven by a $42.9 million increase in managed advertising, largely attributable to the acquisition of Nativo as well as an increase in spending from existing advertisers. Also attributable to the acquisition of Nativo, were increases of $3.2 million in self-service advertising, $3.1 million in other advertising revenue, and $0.7 million in programmatic advertising. We expect advertising revenue to grow as we continue to expand advertiser relationships and increase advertising inventory across the Life360 platform.

Previous 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.

Current wording

Other revenue increased $10.7 million, or 39%, during the nine months ended September 30, 2026 as compared to the nine months ended September 30, 2025. This was due to a $5.5 million increase in partnership revenue, primarily driven by revenue-share payments under the 2026 Related Party Amendments. Data revenue also increased $5.2 million, primarily attributable to increased data volumes resulting from user growth.

Previous wording

Cost of subscription revenue increased $2.2 million, or 17%, during the three months ended June 30, 2026 as compared to the three months ended June 30, 2025, primarily due to increases of $1.4 million in technology expenses and $0.3 million in amortization of internally developed software related to the release of new features and significant updates on our platform, both attributable to Company growth. In addition, costs associated with premium membership offerings increased $0.9 million. These increases were partially offset by a $0.4 million decrease in personnel-related and stock-based compensation costs.

Current wording

Cost of subscription revenue increased $2.3 million, or 16%, during the three months ended September 30, 2026 as compared to the three months ended September 30, 2025, primarily due to increases of $1.1 million in technology expenses and $0.4 million in hosting costs, attributable to higher revenue and Company growth. In addition, costs associated with premium membership offerings increased $0.8 million.

Previous wording

Subscription gross margin increased to 87% during the three months ended June 30, 2026 from 85% during the three months ended June 30, 2025, primarily due to a shift in product mix toward higher-priced offerings and price increases across select international markets throughout the second half of 2025.

Current wording

Subscription gross margin increased to 87% during the three months ended September 30, 2026 from 85% during the three months ended September 30, 2025, primarily due to a shift in product mix toward higher-priced offerings.

Previous wording

Cost of hardware revenue decreased by $4.6 million, or 25%, during the six months ended June 30, 2026 as compared to the six months ended June 30, 2025, primarily due to a $3.6 million benefit from the receipt of tariff refund claims and a $0.3 million decrease in tariff costs from reduced tariff rates. Also contributing were decreases of $0.4 million in hardware product and freight costs, related to the reduced number of units sold, and $0.3 million in personnel-related and stock-based compensation costs due to lower headcount.

Current wording

Cost of hardware revenue decreased $1.0 million, or 9%, during the three months ended September 30, 2026 as compared to the three months ended September 30, 2025, primarily attributable to decreases of $1.1 million in tariff costs from reduced tariff rates, $0.4 million in hardware product costs related to the reduced number of Net hardware units shipped, and $0.3 million in personnel-related and stock-based compensation costs due to lower headcount associated with the Company’s transition to an AI-native organization. These were partially offset by a $0.8 million increase in other cost of hardware revenue related expenses.

Previous 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.

Current wording

Hardware gross margin decreased to (19)% during the three months ended September 30, 2026 from (3)% during the three months ended September 30, 2025, primarily due to a shift in product mix, which was partially offset by lower 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 $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.

Current wording

Cost of advertising revenue increased $11.0 million, or 2,031%, during the three months ended September 30, 2026 as compared to the three months ended September 30, 2025. The increase was primarily due to increases of $5.1 million in traffic acquisition costs, which is in line with the managed advertising revenue, $2.8 million in hosting costs, $1.7 million in personnel-related and stock-based compensation costs, $1.0 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 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.

Current wording

Advertising gross margin decreased to 55% during the three months ended September 30, 2026 from 93% during the three months ended September 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 $0.6 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.

Current wording

Cost of other revenue increased $0.5 million, or 49%, during the three months ended September 30, 2026 as compared to the three months ended September 30, 2025, due to an increase of $0.5 million in hosting costs to support growth in our data business.

Previous 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.

Current wording

Cost of subscription revenue increased $8.9 million, or 24%, during the nine months ended September 30, 2026 as compared to the nine months ended September 30, 2025, primarily due to increases of $3.1 million in technology expenses, $1.8 million in hosting costs,$0.7 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 $2.8 million.

Previous wording

Subscription gross margin increased to 87% during the six months ended June 30, 2026 from 86% during the six months ended June 30, 2025, primarily due to a shift in product mix toward higher-priced offerings and price increases across select international markets throughout the second half of 2025.

Current wording

Subscription gross margin increased to 87% during the nine months ended September 30, 2026 from 86% during the nine months ended September 30, 2025, primarily due to a shift in product mix toward higher-priced offerings.

Previous wording

Cost of hardware revenue decreased $4.6 million, or 45%, during the three months ended June 30, 2026 as compared to the three months ended June 30, 2025, primarily due to a $3.6 million benefit from the receipt of tariff refund claims and a $0.5 million decrease in tariff costs from reduced tariff rates. Also contributing were decreases of $0.4 million, in personnel-related and stock-based compensation costs due to lower headcount, and $0.4 million in hardware product costs related to the reduced number of units sold. These were partially offset by a $0.3 million increase in other cost of hardware revenue related expenses.

Current wording

Cost of hardware revenue decreased by $5.6 million, or 18%, during the nine months ended September 30, 2026 as compared to the nine months ended September 30, 2025, primarily due to a $3.6 million benefit from the receipt of tariff refund claims and a $1.4 million decrease in tariff costs from reduced tariff rates. Also contributing were decreases of $0.7 million in personnel-related and stock-based compensation costs due to lower headcount associated with the Company’s transition to an AI-native organization, and $0.3 million in hardware product and freight costs, related to the reduced number of Net hardware units shipped. These decreases were partially offset by a $0.4 million increase in other cost of hardware revenue related expenses.

Previous wording

Cost of advertising revenue increased $16.7 million, or 2,143%, during the six months ended June 30, 2026 as compared to the six months ended June 30, 2025. The increase was primarily due to increases of $6.2 million in traffic acquisition costs, $5.3 million in technology and hosting costs, $3.1 million in personnel-related and stock-based compensation costs, $1.3 million in third-party data and content licensing costs, and $0.8 million in amortization of acquired technology, all attributable to the acquisition of Nativo.

Current wording

Cost of advertising revenue increased $27.6 million, or 2,097%, during the nine months ended September 30, 2026 as compared to the nine months ended September 30, 2025. The increase was primarily due to increases of $11.4 million in traffic acquisition costs, $8.0 million in hosting costs, $4.7 million in personnel-related and stock-based compensation costs, $2.3 million in third-party data and content licensing costs, and $1.2 million in amortization of acquired technology, all attributable to the acquisition of Nativo.

Previous wording

Advertising gross margin decreased to 58% during the six months ended June 30, 2026 from 92% during the six 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.

Current wording

Advertising gross margin decreased to 57% during the nine months ended September 30, 2026 from 92% during the nine months ended September 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

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.

Current wording

Other gross margin decreased to 87% during the nine months ended September 30, 2026 from 88% during the nine months ended September 30, 2025, primarily due to higher hosting costs to support growth in our data business.

Previous wording

Research and development expenses increased $24.0 million, or 38%, during the six months ended June 30, 2026 as compared to the six months ended June 30, 2025, primarily due to increases of $12.9 million in personnel-related and stock-based compensation costs, including those related to the acquisition of Nativo, and a $5.8 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, a $1.6 million increase in professional and outside services, a $1.3 million decrease in capitalized construction in progress costs, in line with the Company’s product development roadmap, $0.4 million of lower capitalized internally developed software costs, and $0.3 million of Nativo integration costs.

Current wording

Research and development expenses increased $8.2 million, or 25%, during the three months ended September 30, 2026 as compared to the three months ended September 30, 2025, primarily due to a $3.7 million increase in personnel-related and stock-based compensation costs, including those related to the acquisition of Nativo, a $2.1 million increase in technology and other expenses due to Company growth, and a $1.6 million increase in usage-based fees for third-party AI tools. Also contributing were 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

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.

Current wording

Research and development expenses increased $32.2 million, or 34%, during the nine months ended September 30, 2026 as compared to the nine months ended September 30, 2025, primarily due to increases of $16.2 million in personnel-related and stock-based compensation costs, including those related to the acquisition of Nativo, a $6.7 million increase in technology and other costs due to Company growth, and a $3.0 million increase in usage-based fees for third-party AI tools. Also contributing were a $1.9 million decrease in capitalized construction in progress costs, in line with the Company’s product development roadmap, a $1.7 million increase in workplace restructuring costs associated with the Company’s transition to an AI-native organization, a $1.6 million increase in professional and outside services, $0.6 million of Nativo integration costs, and $0.5 million of lower capitalized internally developed software costs.

Previous wording

Sales and marketing expenses increased $13.4 million, or 35%, 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 $6.3 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 $5.0 million in commissions to the Company’s Channel Partners, in line with the increase in subscription revenue, and $1.2 million in technology and other expenses, attributable to Company growth. These increases were partially offset by a $0.9 million decrease in growth media and other marketing costs due to the planned timing of spend.

Current wording

Sales and marketing expenses increased $20.3 million, or 52%, during the three months ended September 30, 2026 as compared to the three months ended September 30, 2025. This was primarily due to increases of $8.8 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 $5.0 million in commissions to the Company’s Channel Partners, in line with the increase in subscription revenue, $4.1 million in growth media and other marketing costs due to the planned timing of spend to support strategic initiatives, and $0.6 million in technology and other expenses, attributable to Company growth.

Previous 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.

Current wording

Sales and marketing expenses increased $55.5 million, or 49%, during the nine months ended September 30, 2026 as compared to the nine months ended September 30, 2025. This was primarily due to increases of $19.8 million in personnel-related and stock-based compensation costs and $5.3 million in amortization of acquired intangible assets, each primarily attributable to the acquisition of Nativo. Additional increases include $15.0 million in commissions to the Company’s Channel Partners, in line with the increase in subscription revenue, $11.8 million in growth media and other marketing costs to support strategic initiatives, $2.6 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 $16.6 million, or 50%, 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 $12.9 million in personnel-related and stock-based compensation costs and $1.8 million in technology and other expenses, both attributable to Company growth. Additional increases include $1.2 million in warehouse relocation costs related to the move of certain hardware manufacturing operations, and $0.7 million in Nativo integration costs.

Current wording

General and administrative expenses increased $22.6 million, or 43%, during the nine months ended September 30, 2026 as compared to the nine months ended September 30, 2025. This was primarily due to increases of $16.6 million in personnel-related and stock-based compensation costs, $2.4 million in travel and entertainment costs for the Company’s annual event, and $1.7 million in technology and other expenses, all attributable to Company growth. Additional increases include $1.2 million in warehouse relocation costs related to the move of certain hardware manufacturing operations and $0.7 million in Nativo integration costs.

Previous wording

In April 2025, an observable price change related to the conversion of the Related Party SAFE into the Related Party Investment took place. As a result, a $0.9 million gain related to the observable price change was recognized during the three and six months ended June 30, 2025. No such transaction occurred during the three and six months ended June 30, 2026.

Current wording

In April 2025, an observable price change related to the conversion of the Related Party SAFE into the Related Party Investment took place. As a result, a $0.9 million gain related to the observable price change was recognized during the nine months ended September 30, 2025. In August 2026, an observable price change in the Related Party Investment occurred, resulting in a $17.8 million gain during the three and nine months ended September 30, 2026. Refer to Note 14, "Related-Party Transactions" for more information.

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 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.

Current wording

In May 2025, the Company entered into the $25.0 million Convertible Note Investment and 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 $0.4 million and $5.1 million was recognized during the three and nine months ended September 30, 2026, respectively, compared to a gain of $0.8 million and $1.2 million for the three and nine months ended September 30, 2025, respectively.

Previous 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.

Current wording

Interest income increased $3.1 million, or 34%, during the nine months ended September 30, 2026 as compared to the nine months ended September 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 $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.

Current wording

Other expense, net increased $0.1 million, or 10%, during the three months ended September 30, 2026 as compared to the three months ended September 30, 2025. This was primarily driven by a $0.3 million increase in interest expense related to the deferred purchase price liability from the acquisition of Nativo. The increase was partially offset by a $0.2 million decrease in foreign exchange losses. 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

Other income (expense), net decreased $4.0 million, or 396%, during the six months ended June 30, 2026 as compared to the six months ended June 30, 2025. This was primarily driven by a $1.5 million increase in foreign exchange losses, a $1.3 million loss related to the monetization of tariff refunds, a $0.9 million increase in interest expense related to the June 2025 Convertible Notes, and a $0.3 million increase in interest expense related to the deferred purchase price liability from the acquisition of Nativo.

Current wording

Other expense, net increased $4.1 million, or 135,367%, during the nine months ended September 30, 2026 as compared to the nine months ended September 30, 2025. This was primarily driven by a $1.4 million increase in foreign exchange losses, a $1.3 million loss related to the monetization of tariff refunds, a $0.9 million increase in interest expense related to the June 2025 Convertible Notes, and a $0.5 million increase in interest expense related to the deferred purchase price liability from the acquisition of Nativo.

Previous 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.

Current wording

Provision for income taxes increased $5.5 million during the three months ended September 30, 2026, as compared to the three months ended September 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, partially offset by discrete tax benefits. For the three months ended September 30, 2026, we recorded a total income tax provision of $6.0 million, consisting of a $12.0 million expense based on the annual estimated effective tax rate, primarily reflecting income before income taxes for the period, offset by $6.0 million of discrete tax benefits, primarily related to stock-based compensation.

Previous wording

Benefit from income taxes increased $15.1 million during the six months ended June 30, 2026, as compared to the six months ended June 30, 2025, primarily because the Company no longer maintains a full valuation allowance on its U.S. deferred tax assets. For the six months ended June 30, 2026, we recorded a total income tax benefit of $15.7 million, consisting of a $4.0 million benefit based on the annual estimated effective tax rate, primarily due to the loss before income tax for the period, and $11.7 million of discrete tax benefits, primarily related to stock-based compensation.

Current wording

Benefit from income taxes increased $9.5 million during the nine months ended September 30, 2026, as compared to the nine months ended September 30, 2025, primarily because the Company no longer maintains a full valuation allowance on its U.S. deferred tax assets and to discrete tax benefits. For the nine months ended September 30, 2026, we recorded a total income tax benefit of $9.7 million, consisting of an $8.1 million expense based on the annual estimated effective tax rate, primarily reflecting income before income taxes for the period, more than offset by $17.8 million of discrete tax benefits, primarily related to stock-based compensation.