What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2025-02-27 compared with 2024-02-29 · 404 added, 508 removed, 863 unchanged (51% of the section changed)

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San Francisco, CA ;

PCAOB ID # 34 and BDO USA, LLP.;

PCAOB ID # 34 and BDO USA, P.C.

San Francisco, CA ;

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Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheet of Life360, Inc.

(the “Company”) as of December 31, 2022, the related consolidated statements of operations and comprehensive loss, stockholders’ equity, and cash flows for each of the two years in the period ended December 31, 2022, and the related notes to the consolidated financial statements.

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2022, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2022, in conformity with accounting principles generally accepted in the United States of America.

We have audited the accompanying consolidated statements of operations and comprehensive loss, stockholders’ equity, and cash flows of Life360, Inc.

(the “Company”) for the year ended December 31, 2022, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the Company’s results of its operations and its cash flows for the year ended December 31, 2022, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits.

Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audit.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audit we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.

Accordingly, we express no such opinion.

Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that our audits provide a reasonable basis for our opinion.

/s/ BDO USA, LLP

Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that our audit provides a reasonable basis for our opinion.

/s/ BDO USA, P.C.

We served as the Company's auditor from 2018 to 2023.

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Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheet of Life360, Inc.

and subsidiaries (the "Company") as of December 31, 2023, the related consolidated statements of operations and comprehensive loss, stockholders' equity, and cash flows, for the year ended December 31, 2023 and the related notes (collectively referred to as the "financial statements").

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023, and the results of its operations and its cash flows for the year ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America.

We have audited the accompanying consolidated balance sheets of Life360, Inc.

and subsidiaries (the "Company") as of December 31, 2024 and 2023, the related consolidated statements of operations and comprehensive loss, stockholders' equity, and cash flows, for each of the two years in the period ended December 31, 2024, and the related notes (collectively referred to as the "financial statements").

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 27, 2025, expressed an unqualified opinion on the Company’s internal control over financial reporting.

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These financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company's financial statements based on our audit.

Our responsibility is to express an opinion on the Company’s financial statements based on our audits.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audit provides a reasonable basis for our opinion.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

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Cash and cash equivalents $ 159,238 $ 68,964

Restricted cash, current — 13,274

Accounts receivable, net 42,180 33,125

Accounts receivable, net (including related party receivables of $ 55 and $ 0 , respectively)

57,997 42,180

Inventory 8,057 4,099

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Accrued expenses and other current liabilities 32,015 27,538

Escrow liability — 13,274

Convertible notes, current ($ 3,449 and $ 3,513 measured at fair value, respectively)

Convertible notes, current — 3,449

Deferred revenue, current 39,860 33,932

Total current liabilities 77,338 70,815

Convertible notes, noncurrent ($ 0 and $ 3,425 measured at fair value, respectively)

Convertible notes, noncurrent — 1,056

Derivative liability, noncurrent — 217

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Common Stock, $ 0.001 par value;

100,000,000 shares authorized as of December 31, 2023 and December 31, 2022;

500,000,000 and 100,000,000 shares authorized as of December 31, 2024 and December 31, 2023, respectively;

75,404,996 and 68,155,830 issued and outstanding as of December 31, 2024 and December 31, 2023, respectively

Additional paid-in capital 648,124 532,128

Notes due from affiliates — ( 314 )

Accumulated deficit ( 289,698 ) ( 285,143 )

Accumulated other comprehensive income (loss) 9 ( 6 )

Accumulated other comprehensive income 44 9

Total stockholders’ equity 358,545 247,064

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Subscription revenue $ 277,845 $ 220,794 $ 153,287

Hardware revenue 58,178 47,884 952

Other revenue

Hardware revenue (including related party revenue of $ 55 , $ 0 , and $ 0 , respectively)

57,589 58,178 47,884

Other revenue 36,050 25,546 27,134

Total revenue 371,484 304,518 228,305

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Derivative liability fair value adjustment ( 1,707 ) ( 116 ) 1,295

Loss on settlement of convertible notes ( 440 ) — —

Gain on settlement of derivative liability 1,924 — —

Gain on change in fair value of investment 5,389 — —

Other income (expense), net ( 1,208 ) 3,228 13

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Net loss ( 4,555 ) ( 28,171 ) ( 91,629 )

Net loss per share, basic $ ( 0.42 ) $ ( 1.47 ) $ ( 0.65 )

Net loss per share, basic (Note 17) $ ( 0.06 ) $ ( 0.42 ) $ ( 1.47 )

Net loss per share, diluted (Note 17) $ ( 0.06 ) $ ( 0.42 ) $ ( 1.50 )

Weighted-average shares used in computing net loss per share, basic 66,748,542 62,209,545 51,656,195

Weighted-average shares used in computing net loss per share, basic (Note 17) 72,125,571 66,748,542 62,209,545

Weighted-average shares used in computing net loss per share, diluted (Note 17) 72,125,571 66,748,542 62,839,593

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Taxes paid related to net settlement of equity awards — — ( 4,077 ) — — — ( 4,077 )

Issuance of warrants with convertible note (Note 9) — — 844 — — — 844

Beneficial conversion feature associated with convertible note (Note 9) — — 603 — — — 603

Issuance of common stock in connection with an acquisition 763,183 1 15,408 — — — 15,409

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2,645,503 3 32,212 — — — 32,215

Vested option awards assumed in connection with an acquisition — — 533 — — — 533

Repayment of notes due from affiliate — — 648 648 — — 1,296

Issuance of common stock in settlement of contingent consideration 376,573 — 4,221 — — — 4,221

Stock-based compensation expense — — 34,680 — — — 34,680

Interest accrued relating to notes due from affiliates — — — ( 11 ) — — ( 11 )

Cancellation of revesting stock ( 75,920 ) — — — — — —

Net loss — — — — ( 91,629 ) — ( 91,629 )

Change in foreign currency translation adjustment — — — — — ( 6 ) ( 6 )

Balance at December 31, 2022 65,239,843 $ 67 $ 501,763 $ ( 314 ) $ ( 256,972 ) $ ( 6 ) $ 244,538

Exercise of stock options 935,007 $ 1 $ 5,810 $ — $ — $ — $ 5,811

Exercise of warrants 87,795 — 1 — — — 1

Vesting of restricted stock units 1,980,980 2 ( 2 ) — — — —

Taxes paid related to net settlement of equity awards — — ( 14,033 ) — — — ( 14,033 )

Issuance of common stock in connection with an acquisition 763,183 1 15,408 — — — 15,409

Issuance of common stock net of issuance costs of $ 1,050

2,645,503 3 32,212 — — — 32,215

Repayment of notes due from affiliate — — 78 274 — — 352

Issuance of common stock in settlement of contingent consideration 376,573 — 4,221 — — — 4,221

Stock-based compensation expense — — 38,512 — — — 38,512

Interest accrued relating to notes due from affiliates — — — 40 — — 40

Cancellation of revesting stock ( 75,920 ) — — — — — —

Net loss — — — — ( 91,629 ) — ( 91,629 )

Change in foreign currency translation adjustment — — — — — 15 15

Net loss — — — — ( 28,171 ) — ( 28,171 )

Balance at December 31, 2023 68,155,830 $ 70 $ 532,128 $ — $ ( 285,143 ) $ 9 $ 247,064

Exercise of stock options 758,101 — 5,780 — — — 5,780

Life360, Inc.

Exercise of warrants 129,897 — 1,149 — — — 1,149

Vesting of restricted stock units 2,315,587 2 ( 1 ) — — — 1

Taxes paid related to net settlement of equity awards — — ( 14,033 ) — — — ( 14,033 )

Repayment of notes due from affiliate — — 78 274 — — 352

Taxes paid related to the settlement of equity awards, net of settlement proceeds received — — ( 26,370 ) — — — ( 26,370 )

Stock-based compensation expense — — 42,983 — — — 42,983

Interest accrued relating to notes due from affiliates — — — 40 — — 40

Settlement of convertible notes 341,877 — 5,751 — — — 5,751

Issuance of common stock net of issuance costs of $ 13,293

3,703,704 3 86,704 — — — 86,707

Change in foreign currency translation adjustment — — — — — 35 35

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Net loss $ ( 4,555 ) $ ( 28,171 ) $ ( 91,629 )

Adjustments to reconcile net loss to net cash used in operating activities:

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:

Depreciation and amortization 9,778 9,141 9,199

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Amortization of operating lease right-of-use asset 331 842 —

Stock-based compensation expense 38,512 34,680 11,754

Stock-based compensation expense, net of amounts capitalized 42,269 38,512 34,680

Compensation expense in connection with revesting notes — 73 ( 87 )

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Derivative liability fair value adjustment 1,707 116 ( 1,295 )

Loss on settlement of convertible notes 440 — —

Gain on settlement of derivative liability ( 1,924 ) — —

(Gain)/loss on revaluation of contingent consideration — — ( 5,279 )

Gain on change in fair value of investment ( 5,389 ) — —

Provision for credit losses 300 — —

Non-cash revenue from investment ( 1,040 ) ( 1,608 ) ( 1,504 )

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Purchase of property and equipment ( 1,187 ) ( 506 ) —

Cash advance on convertible note receivable — — ( 4,000 )

Related Party SAFE ( 5,000 ) — —

Net cash used in investing activities ( 10,132 ) ( 2,221 ) ( 111,634 )

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Indemnity escrow payment in connection with an acquisition — ( 13,128 ) —

Proceeds from the exercise of options 5,811 2,394 3,543

Proceeds from the exercise of stock options and warrants, and restricted stock settlements 14,553 5,811 2,394

Taxes paid related to net settlement of equity awards ( 33,995 ) ( 14,033 ) ( 4,077 )

Proceeds from issuance of common stock in U.S.

initial public offering, net of underwriting discounts and commissions 93,000 — —

Payments of U.S.

initial public offering issuance costs ( 6,292 ) — —

Proceeds from repayment of notes due from affiliates — 314 648

Payments on borrowings — — ( 41 )

Proceeds from capital raise, net of $ 0 , $ 1,050 , and $ 5,757 of transaction costs, respectively

— 32,215 193,064

Repayment of convertible notes — ( 3,919 ) ( 3,471 )

Cash received in advance of the issuance of convertible notes — — 2,110

Life360, Inc.

Proceeds from capital raise, net of transaction costs — — 32,215

Net cash provided by (used in) financing activities 67,266 ( 24,955 ) 27,709

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Cash, Cash Equivalents and Restricted Cash at the Beginning of the Period 70,713 90,365 231,345

Life360, Inc.

Cash, Cash Equivalents, and Restricted Cash at the End of the Period $ 160,459 $ 70,713 $ 90,365

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Operating lease liability recognized in connection with lease modification — 1,054 —

Fair value of convertible debt issued in connection with an acquisition — — 11,597

Fair value of contingent consideration issued in connection with an acquisition — — 5,900

Fair value of vested options assumed in connection with an acquisition — — 533

Relative fair value of warrants issue with convertible debt — — 844

Forgiveness of convertible debt receivable in connection with an acquisition — — 4,023

Beneficial conversion feature related to convertible debt — — 603

Fair value of bifurcated derivative related to convertible debt — — 663

Total non-cash investing and financing activities:

$ 2,108 $ 25,104 $ 37,984

Conversion of September 2021 Convertible Notes to common stock 3,548 — —

Conversion of July 2021 Convertible Notes and accrued interest to common stock 2,203 — —

Property and equipment included within accrued expenses and other current liabilities 112 — —

Stock-based compensation included in internal use software 714 — —

Related Party Warrant 3,898 — —

The following table provides a table of cash, cash and cash equivalents, and restricted cash reported within the balance sheets totaling the same such amounts shown above:

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Restricted cash, noncurrent 1,221 1,749 1,647

Total cash, cash and cash equivalents, and restricted cash $ 70,713 $ 90,365 $ 231,345

Total cash and cash equivalents, and restricted cash $ 160,459 $ 70,713 $ 90,365

See accompanying notes to the consolidated financial statements.

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Life360, Inc.

is a leading technology platform used to locate the people, pets and things that matter most to families.

The Company was incorporated in the State of Delaware in 2007.

The Company’s core offering, the Life360 mobile application, includes features that range from communications to driving safety and location sharing.

The Company operates under a “freemium” model where its core offering is available to users at no charge, with three membership subscription options that are available but not required.

The Company also generates revenue through Jiobit and Tile subscription services and hardware tracking devices and monetization arrangements with certain commercial third parties (“Data Revenue Partners”) through Lead Generation and license agreements including aggregated insights into the data collected from the Company’s user base.

(the “Company”) is a leading technology platform connecting millions of people throughout the world to the people, pets and things they care about most.

The Company has created a new category at the intersection of family, technology, and safety to help keep families connected and safe.

The Company’s core offering, the Life360 mobile application, includes features like communications, driving safety, digital safety and location sharing.

Beyond the everyday, Life360 also provides much-needed protection and saves lives, which is crucial for families in emergency situations such as natural disasters, vehicle collisions, physical property theft, and digital identity theft.

The Life360 mobile application operates under a “freemium” model where its core offering is available to members at no charge, with additional membership subscription options that are available but not required.

In addition to the Life360 mobile application, the Company also offers hardware tracking devices through the sale of Tile, Inc.

(“Tile”) and Jio, Inc.

(“Jiobit”) products to keep members close to the people, pets and things they care about most.

The Company’s suite of product and service offerings, including the Life360 and Tile mobile applications, and related third-party services, is system and platform-agnostic, allowing its products and services to work seamlessly for its members, regardless of the devices they use.

Initial Public Offering (“U.S.

On June 6, 2024, the Company completed its U.S.

IPO and began trading on the Nasdaq Global Select Market under the trading symbol “LIF”.

The Company issued and sold 3,703,704 shares of common stock and certain selling securityholders sold 2,908,796 shares of common stock (including 862,500 shares sold pursuant to the underwriters’ full exercise of their option to purchase additional shares) in each case at an offering price of $ 27.00 per share.

The Company received net proceeds of $ 93.0 million after deducting underwriting discounts and commissions of $ 7.0 million.

An additional $ 5.5 million of expenses were paid on behalf of selling securityholders.

Refer to Note 15, "Related-Party Transactions" for further details.

The Company did not receive any proceeds from the sale of shares of common stock by the selling securityholders.

In connection with the U.S.

IPO, the Company restated its certificate of incorporation to increase the authorized number of shares of its common stock from 100,000,000 shares to 500,000,000 shares.

Summary of Significant Accounting Policies

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The consolidated financial statements and accompanying notes have been prepared in accordance with generally accepted accounting principles in the United States, or (“GAAP”), are presented in U.S.

dollars unless otherwise stated, and include the accounts of Life360, Inc.

and subsidiaries, Jiobit, Tile, Tile Europe Ltd and Tile Network Canada ULC.

dollars unless otherwise stated, and include the accounts of the Company and its wholly owned subsidiaries.

All inter-company transactions and balances have been eliminated.

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The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amount of revenue and expenses during the reporting period.

Significant estimates made by management include, but are not limited to, the determination of revenue recognition, including the determination of selling prices for distinct performance obligations sold in multiple-performance obligation arrangements, the period over which revenue is recognized for certain arrangements, and estimated delivery dates for orders with title transfer upon delivery, allowance for credit losses, product returns, promotional and marketing allowances, inventory valuation, average useful customer life, stock-based compensation, legal contingencies, assessment of possible impairment of long-lived assets and goodwill, valuation of contingent consideration, convertible notes and embedded derivatives, useful lives of long lived assets and income taxes including valuation allowances on deferred tax assets.

Significant estimates made by management include, but are not limited to:

• revenue recognition, including the determination of selling prices for distinct performance obligations sold in multiple-performance obligation arrangements, the period over which revenue is recognized for certain arrangements, and estimated delivery dates for orders with title transfer upon delivery;

• allowance for credit losses, product returns;

• promotional and marketing allowances;

• inventory valuation;

• average useful customer life;

• valuation of stock-based awards;

Life360, Inc.

Notes to Consolidated Financial Statements

• achievement of performance-based restricted stock units (“PRSUs”);

• legal contingencies;

• impairment of long-lived assets and goodwill;

• valuation of non-cash consideration, contingent consideration, convertible notes and embedded derivatives;

• useful lives of long lived assets;

• income taxes including valuation allowances on deferred tax assets.

The Company bases its estimates and judgments on historical experience and on various assumptions that it believes are reasonable under the circumstances.

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Recently adopted accounting pronouncements

In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments .

ASU 2016-13 requires the use of the expected credit losses over the life impairment model of a broad scope of financial instruments including financial assets measured at amortized cost which includes loans, held-to-maturity debt securities and trade receivables, net investment in leases and certain off balance sheet credit exposures.

The guidance requires immediate recognition of estimated expected credit losses over the life of the financial instrument.

The Company adopted ASU 2016-13 in January 1, 2023.

The adoption of ASU 2016-13 did not have a material impact on its consolidated financial statements and related disclosures.

In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805), Accounting for Contract Assets and Contract Liabilities from Contracts with Customers , which requires contract assets and contract liabilities (i.e., deferred revenue) acquired in a business combination to be recognized and measured by the acquirer on the acquisition date in accordance with ASC 606, Revenue from Contracts with Customers .

The guidance should be applied prospectively to acquisitions occurring on or after the effective date.

The guidance is effective for the Company beginning January 1, 2024, and interim periods therein.

Early adoption is permitted, including in interim periods, for any financial statements that have not yet been issued.

The Company elected to early adopt ASU 2021-08 on September 1, 2021, and the Company has recorded the acquired deferred revenue based on historical carrying value rather than fair value in the consolidated financial statements and related disclosures.

Life360, Inc.

Notes to Consolidated Financial Statements

In August 2020, the FASB issued ASU No.

2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470-20):

Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (“ASU 2020-06”), which simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts in an entity’s own equity.

Among other changes, ASU 2020-06 removes from GAAP the liability and equity separation model for convertible instruments with a cash conversion feature, and as a result, after adoption, entities will no longer separately present in equity an embedded conversion feature for such debt.

Similarly, the embedded conversion feature will no longer be amortized into income as interest expense over the life of the instrument.

Instead, entities will account for a convertible debt instrument wholly as debt unless (1) a convertible instrument contains features that require bifurcation as a derivative under ASC Topic 815, Derivatives and Hedging , or (2) a convertible debt instrument was issued at a substantial premium.

Additionally, ASU 2020-06 requires the application of the if-converted method to calculate the impact of convertible instruments on diluted earnings per share, which will result in increased dilutive securities as the assumption of cash settlement of the notes will not be available for the purpose of calculating earnings per share.

The provisions of ASU 2020-06 are effective for reporting periods beginning after December 15, 2021, with early adoption permitted for reporting periods beginning after December 15, 2020 and can be adopted on either a fully retrospective or modified retrospective basis.

On January 1, 2022, the Company adopted ASU 2020-06, and the standard did not have a material impact on its consolidated financial statements and related disclosures.

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07 – Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures , which improves reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses.

ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and for interim periods within fiscal years beginning after December 15, 2024.

The adoption of this ASU did not change the way the Company evaluates its reportable segments and, as a result, did not have a material impact on the Company’s segment-related disclosures.

Refer to Note 3, "Segment and Geographic Revenue" for additional information.

Accounting pronouncements not yet adopted

In July 2023, the FASB issued ASU No.

2023-07 – Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures , to improve the disclosures about a public entity’s reportable segments and address requests from investors for additional, more detailed information about a reportable segment’s expenses.

The ASU 2023-07 introduces a new requirement to disclose significant segment expenses regularly provided to the chief operating decision maker (CODM) and extends certain annual disclosures to interim periods.

The ASU improve reportable segment disclosure requirement through enhanced disclosures about significant segment expenses.

The effective date for this amendment is for the fiscal year beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024.

Early adoption is permitted.

This guidance will be applied retrospectively and effective for the Company starting in its annual disclosures for 2024 and interim periods starting 2025.

The Company does not expect adoption of this ASU will have a material impact on its financial position or results of operations.

In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation (Subtopic 220-40):

Disaggregation of Income Statement Expenses.

The ASU requires the disclosure of additional information related to certain costs and expenses, including amounts of inventory purchases, employee compensation, and depreciation and amortization included in each income statement line item.

The ASU is effective for the Company beginning in fiscal year 2027 and interim periods beginning in fiscal year 2028, with early adoption permitted.

The Company is currently evaluating the impact of adopting this ASU on its consolidated financial statements and disclosures.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

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Revenue Recognition

The Company generates revenue from direct and indirect streams.

Direct revenue includes subscription and hardware revenue, while indirect revenue consists of all other revenue sources, such as data and partnership, which includes advertising.

The Company recognizes revenue upon transfer of control of promised goods or services to customers at transaction price, an amount that reflects the consideration the Company expects to receive in exchange for those goods or services.

Transaction price is calculated as selling price net of variable consideration which may include estimates for future returns and sales incentives related to current period revenue.

Transaction price is calculated as the net selling price of variable consideration, which may include estimates for future returns and sales incentives related to current period revenue.

The Company determines revenue recognition through the following steps:

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The Company only applies the five-step model to contracts when it is probable that the Company will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer.

Life360, Inc.

Notes to Consolidated Financial Statements

Subscription Revenue

The Company’s subscription revenue includes related support and is comprised of Life360 mobile application subscriptions as well as subscription service plans for hardware tracking devices.

The Company’s subscription revenue is comprised of Life360 mobile application subscriptions and premium subscription service plans for hardware tracking devices.

The Company’s subscription contracts with customers are established at the point of mobile application download and purchase as indicated through acceptance of the Company’s Terms of Use.

The Company’s subscription agreements generally have monthly or annual contractual terms and are billed and paid in advance.

Life360, Inc.

Notes to Consolidated Financial Statements

The cloud-based subscriptions are considered single combined performance obligations, consisting of multiple features that can be purchased separately, but which are bundled together and delivered to the customer as a combined output.

The Company provides its customers with technical support along with unspecified updates and upgrades to the platform on an if and when available basis.

The subscription service plan for hardware tracking device is a distinct and separate performance obligation from the hardware.

The premium subscription plan for hardware tracking devices is a distinct and separate performance obligation from the hardware.

Subscription fees are fixed and recognized on a straight-line basis over the non-cancellable contractual term of the agreement, generally beginning on the date that the Company’s service is made available to the customer.

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Hardware Revenue

The Company derives hardware revenue from sale of hardware tracking devices and related accessories.

For hardware and accessories, revenue is recognized when control is transferred to the customer.

The Company offers limited rights of return and estimates reserves based on historical experience and records the reserves as a reduction of revenue and an accrued liability.

The Company’s hardware revenue consists of hardware and accessories, embedded software, customer support and unspecified upgrades and updates on a when and if-available basis, and includes amounts generated from a partnership with a related party, as described in Note 15, "Related-Party Transactions".

The Company’s hardware and embedded operating system are considered one performance obligation as the embedded operation system is integral to the functionality of the hardware and only combined produce the essential functionality of the hardware.

Revenue for the hardware and embedded software performance obligation is recognized when control is transferred to the customer.

The allocated value of the unspecified updates and upgrades and customer support are recognized as hardware revenue ratably over the estimated economic life of the hardware.

The Company offers certain rights of return and estimates return reserves based on historical experience, and the reserves are recorded as a reduction of revenue and an accrued liability.

Amounts billed to customers for shipping and handling are classified as revenue, and the Company’s related shipping and handling costs incurred are classified as cost of revenue.

The customers are billed upon shipment of hardware tracking devices.

Sales taxes collected from customers and remitted to respective governmental authorities are recorded as liabilities and are not included in revenue.

The Company’s hardware and the embedded operating system are one distinct performance obligation and are separate and distinct from the subscription service plans for hardware tracking device.

The Company’s embedded operating system is a component of the hardware that is integral to the functionality of the hardware and only together produce the essential functionality of the hardware.

The customers are billed upon shipment of hardware tracking devices.

The premium subscription service plans available for hardware tracking devices are separate and distinct from hardware performance obligations and are included in subscription revenue.

Other Revenue

In January 2022, Life360 announced a new partnership agreement with a key Data Partner, a prominent provider of aggregated analytics for the retail ecosystem, in which executives of the Company have an immaterial ownership interest through a passive investment vehicle.

As part of this partnership, the Data Partner will provide data processing and analytics services to Life360 and will have the right to commercialize aggregated data related to place visits during the term of the agreement.

The partnership agreement includes fixed monthly revenue amounts for access to aggregated data for the duration of the three-year agreement.

The Company has a stand ready obligation to provide aggregated user data over the term of the partnership agreement and recognizes revenue ratably based on the fixed monthly amounts.

In connection with the agreement, the Data Partner issued the Company a warrant to purchase up to 5,100,167 shares of Series C Preferred Stock of the Data Partner at an exercise price of $ 4.90 per share (the “Investment”).

The Company estimates and includes variable consideration related to the Investment, in the transaction price at contract inception to the extent it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved.

The partnership agreement has standard payment terms that require payment within 30 days.

The grant of the warrant is considered non-cash consideration, which the Company measured at fair value on the date of issuance.

The warrant was valued using a Black-Scholes option pricing model, and the fair value of approximately $ 5.4 million has been included as variable consideration in the transaction price of the data partnership agreement, and was included in prepaid expenses and other assets, noncurrent on the Company’s consolidated balance sheets.

The warrant is amortized over the life of the agreement.

The Company’s other revenue consists of data and partnership revenue, which includes advertising revenue.

Life360, Inc.

Notes to Consolidated Financial Statements

The Company’s data revenue also includes Life360 data monetization arrangements with certain third parties established through Data Master Service Agreements (collectively, “Data MSAs”), which outline specific terms governing the access and use of data and related fees.

The Company determines a contract to exist upon the mutual execution of a Data MSA.

Those customers historically had the ability to access certain portions of the Company’s user data over the contract term, in which certain customers pay a fee based on average active monthly users.

In 2023, the Company has fully moved from Data MSAs to a single aggregated data sales model.

The Company recognized fees for legacy data MSAs over time based on the fee per average active monthly user as the customer simultaneously received and consumed the benefit of the services that the Company provided over the term of the agreement.

Data revenue is generated 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 (“Data Partner”).

In January 2022, Life360 announced a partnership agreement with a key Data Partner, a prominent provider of aggregated analytics for the retail ecosystem, in which executives of the Company have an immaterial ownership interest through a passive investment vehicle.

This agreement was amended and restated in August 2024, and the term was extended for a period of five years .

The partnership agreement includes fixed and variable monthly revenue amounts, as well as quarterly minimum guarantees, for access to aggregated data for the duration of the five-year agreement.

The Company has an obligation to provide aggregated user data over the term of the partnership agreement and recognizes revenue ratably over the performance period as data is delivered.

In connection with the original agreement, the Data Partner issued the Company a warrant to purchase up to 5,100,167 shares of Series C Preferred Stock of the Data Partner (the “Data Revenue Partner Warrant”) at an exercise price of $ 4.90 per share.

The Company estimates and includes variable consideration related to the Data Revenue Partner Warrant, in the transaction price at contract inception to the extent it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved.

The partnership agreement has standard payment terms that require payment within 30 days.

The grant of the Data Revenue Partner Warrant is considered non-cash consideration, which the Company measured at fair value on the date of issuance.

The warrant was valued using a Black-Scholes option pricing model, and the fair value at issuance of approximately $ 5.4 million has been included as variable consideration in the transaction price of the data partnership agreement, and is included in prepaid expenses and other assets, noncurrent and deferred revenue on the Company’s consolidated balance sheets.

The fair value of the warrant included within deferred revenue is amortized to other revenue over the life of the agreement.

Refer to the "Investments" section below for additional information regarding the Company's Data Revenue Partner Warrant.

Data revenue was $ 26.6 million, $ 21.6 million, and $ 23.2 million for the years ended December 31, 2024, 2023, and 2022, respectively.

Partnership revenue includes agreements with third parties to provide access to advertising on the Company’s mobile platform.

The Company receives a percentage of the advertising spend as a fee, which is recognized as revenue on a net basis.

The variable amounts earned under partnership revenue arrangements are allocable to the month in which the advertising is placed, which is reset on a monthly basis.

As such, the Company will recognize revenue monthly based on the advertising placed.

Partnership revenue includes lead generation offerings and agreements with third parties that allow access to anonymized data insights or advertising on the Company’s mobile platform.

Under these agreements, the Company may earn a percentage of the revenue generated from data insights or advertising spend.

Revenue is recorded on a gross basis if the Company acts as the principal in the transaction, or a net basis if the Company acts as the agent.

Generally, when the Company directly sells advertising on its mobile platform, revenue is recorded on a gross basis.

Variable amounts earned from partnership revenue arrangements are allocated to the month in which the partner’s related revenue is generated or advertising is delivered.

Partnership revenue also includes revenue related to the Company’s partnership with a related party.

In November and December 2024, the Company entered into a strategic partnership and series of transactions with a related party, including a partnership and revenue share agreement (the “Related Party Agreement”).

Refer to Note 15, "Related-Party Transactions" for additional information.

The Related Party Agreement includes revenue-share payments in which the related party will pay the Company a percentage of revenues earned from leveraging the new global location-tracking network service offering.

In connection with the Related Party Agreement, the related party issued the Company a warrant to purchase up to 6,147,574 shares of its common stock at an exercise price of $ 0.46 per share (the “Related Party Warrant”).

The Company estimates and includes variable consideration related to the Related party Warrant, in the transaction price at contract inception to the extent it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved.

The Related Party Agreement has standard payment terms that require payment within 30 days.

Life360, Inc.

Notes to Consolidated Financial Statements

The grant of the Related Warrant is considered non-cash consideration, which the Company measured at fair value on the date of issuance.

The warrant includes various performance-based vesting conditions based on revenue and operational milestones to be measured and assessed throughout the term of the agreement.

No tranche of the Related Party Warrant has vested as of December 31, 2024.

The warrant was valued using a Black Scholes option-pricing model, and the fair value of approximately $ 3.9 million has been included as consideration in the transaction price of the Related Party Agreement, and is also included in prepaid expenses and other assets, noncurrent and deferred revenue on the Company’s consolidated balance sheets.

The fair value of the warrant included within deferred revenue is amortized to other revenue over the life of the agreement.

Partnership revenue was $ 9.4 million, $ 3.9 million, and $ 3.9 million for the years ended December 31, 2024, 2023, and 2022, respectively.

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When such observable prices are not available, the Company determines SSP based on multiple factors including consumer behaviors, the Company’s internal pricing model, and relative costs incurred plus a normal margin.

The factors may vary depending upon the facts and circumstances related to each performance obligation.

Our hardware sales arrangements typically contain multiple performance obligations, consisting of the hardware sale, application usage, hardware support, and in some cases, subscriptions.

The factors may vary depending on the facts and circumstances related to each performance obligation.

Our hardware sales arrangements typically contain multiple performance obligations, consisting of the hardware sale, application usage, hardware support, and in some cases, premium subscriptions.

The Company provides warranties of up to twelve months for products with manufacturing defects or hardware failures.

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The Company recognizes hardware revenue at the net sales price, which includes certain estimates for variable consideration with its customers.

The Company’s variable consideration is primarily in the form of promotional agreements and marketing development fund agreements in relation to the hardware tracking devices.

The Company’s variable consideration is primarily in the form of promotional agreements and marketing development fund agreements related to the hardware tracking devices.

These agreements are designed to enhance the sale of the Company’s products and consist of incentives to the Company’s customers.

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The remaining portion of this liability is based on contractual amounts and does not require estimation.

Life360, Inc.

Notes to Consolidated Financial Statements

Remaining Performance Obligations

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Revenue allocated to remaining performance obligations was $ 213.9 million as of December 31, 2024, of which the Company expects 35 % to be recognized over the next twelve months .

Life360, Inc.

Notes to Consolidated Financial Statements

Cost of Revenue

Cost of subscription revenue includes all direct costs to deliver the Company’s subscription services.

These costs include personnel-related costs associated with the Company’s cloud-based infrastructure and the Company’s customer support organization, third-party hosting fees, software, and maintenance costs, outside services associated with the delivery of the Company’s subscription services, travel-related costs, amortization of acquired intangibles and allocated overhead, such as facilities, including rent, utilities, depreciation on equipment shared by all departments, credit card and transaction processing fees, and shared information technology costs.

Cost of subscription revenue primarily consists of expenses related to hosting the Company’s services and providing support to the Company’s free members and paying subscribers.

These expenses include personnel-related costs associated with the Company’s cloud-based infrastructure and the Company’s customer support organization, third-party hosting fees, software and maintenance costs, outside services associated with the delivery of subscription services, amortization of acquired intangibles and allocated overhead, such as facilities, including rent, utilities, depreciation on equipment shared by all departments, credit card and transaction processing fees, and shared information technology costs.

Personnel-related expenses include salaries, bonuses, benefits, and stock-based compensation for operations personnel.

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Personnel-related expenses include salaries, bonuses, benefits, and stock-based compensation for operations personnel.

Cost of other revenue consists of cloud-based hosting costs, as well as costs of product operations functions and personnel-related costs associated with the Company’s data platform.

Cost of other revenue consists of cloud-based hosting costs, as well as costs of product operations functions and personnel-related costs associated with the Company’s data and advertising platforms.

Personnel-related expenses include salaries, bonuses, benefits, and stock-based compensation for operations personnel.

Costs Capitalized to Obtain Contracts

Costs capitalized to obtain contracts comprise of revenue-share payments in connection with annual subscription sales of the Company’s mobile application on each respective third-party store platform as well as sales commissions paid to employees on hardware sales.

Costs that are incremental and directly related to new customer sales contracts are accrued and capitalized upon execution of a non-cancelable customer contract, and subsequently expensed over an estimated period of benefit, which is currently estimated to be two to three years depending on the subscription type.

Costs capitalized to obtain contracts comprise of commission payments in connection with annual subscription sales of the Company’s mobile application through a third-party store platform.

These costs that are incremental and directly related to new customer sales contracts are accrued and capitalized upon execution of a non-cancelable customer contract, and subsequently expensed over the estimated period of benefit, which is currently estimated to be two to three years .

The Company has elected the practical expedient under ASC 340-40 to expense incremental costs of obtaining a contract if the amortization periods is one year or less.

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Accounts receivable are recorded at the invoiced amount, net of allowance for credit losses.

The allowance for credit losses is based on the Company’s assessment of the collectibility of accounts by considering the age of each outstanding invoice, the collection history of each customer, and an evaluation of current expected risk of credit loss based on current economic conditions and reasonable and supportable forecasts of future economic conditions over the life of the receivable.

The allowance for credit losses is based on the Company’s assessment of the collectibility of accounts by considering the age of each outstanding invoice, the collection history of each customer, and an evaluation of the current expected risk of credit loss based on current economic conditions and reasonable and supportable forecasts of future economic conditions over the life of the receivable.

The Company assesses collectibility by reviewing accounts receivable on an aggregated basis where similar characteristics exist and on an individual basis when specific customers with collectibility issues are identified.

The allowance for credit losses as of December 31, 2023 and December 31, 2022 and total bad debt expense for the years ended December 31, 2023, 2022 and 2021 was immaterial.

As of December 31, 2024 and 2023, the allowance for credit losses was $ 0.4 million and $ 0.1 million, respectively.

For the year ended December 31, 2024 the provision for credit losses expense was $ 0.3 million, and for the years ended December 31, 2023 and 2022, was immaterial .

Inventory and Contract Manufacturing

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These important factors, among others, could cause actual results to differ materially from any future results.

Cash Deposits in Excess of Federally Insured Limits

The Company currently maintains its cash balances at multiple financial institutions that are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000.

As of December 31, 2023, the Company’s cash balances exceeded amounts insured by the FDIC.

As a result, the Company may be impacted by adverse developments within the financial services industry which have in the past and may in the future threaten our ability to access our existing cash and cash equivalents and could have a material adverse effect on our business and financial condition.

While the Company has not experienced any losses in such accounts, the recent failure of Silicon Valley Bank (“SVB”) exposed the Company to significant credit risk prior to the completion by the FDIC of the resolution of SVB in a manner that fully protected all depositors.

As of December 31, 2023, the Company has transferred the majority of its accounts to one or more alternate depository institutions, the financial position of which management believes does not expose the Company to significant credit risk.

Major Customers

The Company’s customers primarily consist of individual consumers, who subscribe to the Company’s product offerings through market exchanges operated by our third-party platform providers (“Channel Partners”), data revenue customers and retail partners, who purchase hardware tracking devices from the Company and resell them directly to individual consumers.

The Company’s customers primarily consist of individual consumers, who subscribe to the Company’s product offerings through our Channel Partners, data revenue customers and retail partners, who purchase hardware tracking devices from the Company and resell them directly to individual consumers.

Any changes in customer preferences and trends or changes in terms of use of Channel Partners’ platforms could have an adverse impact on its results of operations and financial condition.

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2024 2023 2022

Channel Partner A 53 % 49 % 57 %

Channel Partner B 16 % 15 % 18 %

Channel Partner (Apple) 53 % 53 % 49 %

Channel Partner (Google) 18 % 16 % 15 %

Retail Partner A * * 13 %

* Represents less than 10%

Life360, Inc.

Notes to Consolidated Financial Statements

Percentage of Gross Accounts Receivable

As of December 31,

Channel Partner A 50 % 33 %

Channel Partner (Apple) * 50 %

Channel Partner (Google) 49 % *

Data Partner A 11 % *

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* Represents less than 10%

Life360, Inc.

Notes to Consolidated Financial Statements

Supplier Concentration

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Our sales and marketing expenses consist primarily of personnel-related costs, brand marketing costs, lead generation costs, sales incentives, sponsorships and amortization of acquired intangibles.

Revenue-share payments to Channel Partners in connection with annual subscription sales of the Company’s mobile application on Channel Partner store platforms are considered to be incremental and recoverable costs of obtaining a contract with a customer and are deferred and typically amortized over an estimated period of benefit of two to three years depending on the subscription type.

Commissions to Channel Partners in connection with annual subscription sales of the Company’s mobile application on Channel Partner store platforms are considered to be incremental and recoverable costs of obtaining a contract with a customer and are deferred and typically amortized over an estimated period of benefit of two to three years depending on the subscription type.

Advertising Expense

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Restricted Cash

Deposits of $ 1.7 million and $ 14.9 million were restricted from withdrawal as of December 31, 2023 and December 31, 2022, respectively.

In April 2023, the Company released and paid $ 13.1 million of restricted cash which was previously held in indemnity escrow as part of the acquisition of Tile in January 2022 (the “Tile Acquisition”) for general representations and warranties, fifteen months after the acquisition date.

Refer to Note 8, "Balance Sheet Components" for further details.

The restricted cash, noncurrent balance of $ 1.2 million as of December 31, 2024 primarily relates to the letters of credit issued on behalf of the Company for indebtedness to trade creditors incurred in the ordinary course of business, and deposits for personnel contractors with the Company.

The restricted cash, noncurrent balance of $ 1.7 million as of December 31, 2023 relates to the letters of credit issued on behalf of the Company for indebtedness to trade creditors incurred in the ordinary course of business.

The restricted cash, noncurrent balance of $ 1.6 million as of December 31, 2022 relates to funds placed in an indemnity escrow fund after the acquisition of Jiobit, and facility lease agreements.

Life360, Inc.

Notes to Consolidated Financial Statements

Fair Value of Financial Instruments

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Level 3 – Valuations based on unobservable inputs to the valuation methodology and including data about assumptions market participants would use in pricing the asset or liability based on the best information available under the circumstances.

Life360, Inc.

Notes to Consolidated Financial Statements

The recorded carrying amounts of cash and cash equivalents, prepaid expenses, accounts payable, and accounts receivable as of December 31, 2024 and December 31, 2023, approximate fair value due to their short-term nature.

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Internal Use Software

For development costs related to internal use software projects, the Company capitalizes costs incurred during the application development stage.

For development costs related to internal use software projects, including costs incurred in connection with the development of new features added to the Life360 app, the Company capitalizes costs incurred during the application development stage, which begins after the completion of the preliminary project phase and when it is probable that the project will be completed and used as intended.

Capitalized costs include personnel and related expenses for employees and fees paid to third-party contractors and vendors directly involved in the development effort.

The capitalization of costs stops once the software is substantially complete and ready for its intended use.

Costs related to preliminary project activities and post implementation activities are expensed as incurred.

Internal use software is amortized on a straight-line basis over its estimated useful life of three years .

The Company capitalized $ 1.7 million and $ 0.7 million during the years ended December 31, 2023 and 2022, respectively.

Internal use software is amortized to cost of subscription revenue on a straight-line basis over its estimated useful life, which is generally three years .

The Company capitalized $ 4.7 million, $ 1.7 million and $ 0.7 million during the years ended December 31, 2024, 2023 and 2022, respectively.

Capitalized costs are included within intangible assets, net on the consolidated balance sheet.

Lease Obligations

Lease Obligation

Operating lease right-of-use assets and lease liabilities are recognized at the present value of the future lease payments at commencement date.

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The estimated incremental borrowing rate factors in a hypothetical interest rate on a collateralized basis with similar terms, payments, and economic environments.

Operating lease right-of-use assets also include any prepaid lease payments and lease incentives.

Certain operating lease agreements contain rent concession, rent escalation, and option to renew provisions.

Operating lease right-of-use (“ROU”) assets also include any prepaid lease payments and lease incentives.

ROU assets are assessed for impairment in accordance with ASC 360 whenever events or changes in circumstances indicate the carrying value may not be recoverable.

As of December 31, 2024, 2023, 2022, respectively, no impairment expense related to ROU assets have been recognized.

The operating lease agreement contains rent concession, rent escalation, and option to renew provisions.

Rent concession and rent escalation provisions are considered in determining the straight-line single lease cost to be recorded over the lease term.

Single lease cost is recognized on a straight-line basis over the lease term commencing on the date the Company has the right to use the leased property.

The lease terms may include options to extend or terminate the lease.

The lease term includes the option to extend or terminate the lease.

The Company generally uses the base, non-cancellable, lease term when recognizing the lease assets and liabilities, unless it is reasonably certain that the renewal option will be exercised.

Life360, Inc.

Notes to Consolidated Financial Statements

In addition, certain of the Company’s operating lease agreements contain tenant improvement allowances from its landlords.

In addition, the Company’s operating lease agreement contains tenant improvement allowances from its landlord.

These allowances are accounted for as lease incentives and decrease the Company’s right-of-use asset and reduce single lease cost over the lease term.

Refer to Note 7, "Balance Sheet Components" for additional lease disclosures.

Life360, Inc.

Notes to Consolidated Financial Statements

Restructuring and Other Charges

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These charges are reflected in the period when both the actions are probable, at the balance sheet date, and the amounts are reasonably estimable.

Right-of-use asset impairments are recognized on the date the premises have been vacated or the Company have ceased-use of the leased facilities.

On January 12, 2023, the Company announced a workforce restructure which resulted in a reduction of the Company’s workforce of approximately 14 %.

The Company incurred $ 4.0 million in non-recurring personnel and severance related expenses in connection with the restructuring during the year ended December 31, 2023.

The Company incurred $ 0.2 million and $ 4.0 million in non-recurring personnel and severance related expenses in connection with the restructuring during the years ended December 31, 2024 and 2023 respectively.

As of December 31, 2024, all expenses incurred had been paid.

The restructuring costs are recognized in the consolidated statements of operations for the year ended December 31, 2023 as follows (in thousands):

The restructuring costs are recognized in the consolidated statements of operations for the years ended December 31, 2024 and 2023 are as follows (in thousands):

Personnel and Severance Related Expenses

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There was no impairment of goodwill during the years ended December 31, 2024, 2023 and 2022.

Life360, Inc.

Notes to Consolidated Financial Statements

Intangible Assets, net

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There was no impairment of intangible assets recorded during the years ended December 31, 2024, 2023 and 2022.

Life360, Inc.

Notes to Consolidated Financial Statements

Impairment of Long-Lived Assets

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The Company primarily invoices its customers for its subscription services arrangements in advance.

Deferred revenue also includes balances related to future performance obligations for hardware and other revenue.

Amounts anticipated to be recognized within one year of the balance sheet date are recorded as deferred revenue, current;

the remaining portion is recorded as deferred revenue, noncurrent in the consolidated balance sheets.

Investment relates to non-marketable equity securities held in a privately held company without a readily determinable market value.

Non-marketable equity securities consist of warrants held to purchase shares of preferred stock of a Data Revenue Partner, refer to “Revenue Recognition ” section above for additional information regarding the Company’s Data Revenue Partner.

Investments relate to non-marketable equity securities held in privately held companies without readily determinable market values.

Investments in non-public businesses that do not have readily determinable pricing, and for which the Company does not have control or does not exert significant influence, are carried at cost less impairments, if any, plus or minus changes in observable prices for those investments.

Gains or losses resulting from changes in the carrying value of these investments are included as a non-operating expense to the Company’s consolidated statements of operations and comprehensive loss.

There have been no adjustments to the basis of the Company’s Investment to date.

The carrying value of the Company’s Investment is included in prepaid expenses and other assets, noncurrent in the consolidated balance sheets.

As of December 31, 2023 and 2022, the Company’s Investment was $ 5.5 million and $ 5.5 million, respectively.

Gains or losses resulting from changes in the carrying value of these investments are included as non-operating expenses on the Company’s consolidated statements of operations and comprehensive loss.

Data Revenue Partner Warrant

The Data Revenue Partner Warrant is a non-marketable equity security consisting of a warrant held to purchase shares of preferred stock of a Data Revenue Partner, refer to “Revenue Recognition ” section above for additional information regarding the Company’s Data Revenue Partner.

In September 2024, an observable price change related to our investment in the warrant held to purchase shares of preferred stock of a data revenue partner took place.

This resulted in a $ 5.4 million increase in the investment asset value and a corresponding gain on fair value adjustment recorded in other income (expense), net in the consolidated statements of operations and comprehensive income (loss).

The carrying value of the Company’s investment in the Data Revenue Partner Warrant is included in prepaid expenses and other assets, noncurrent in the consolidated balance sheets.

As of December 31, 2024 and 2023, the balance was $ 10.9 million and $ 5.5 million, respectively.

Related Party Simple Agreement for Future Equity (“SAFE”)

In December 2024, the Company entered into a SAFE with a related party and invested $ 5.0 million (“the Related Party SAFE”).

For additional information, refer to Note 15, "Related-Party Transactions" below.

Under the terms of the SAFE, the Company holds the right to receive equity at some later date and upon certain events.

The carrying value of the Related Party SAFE Investment is included in prepaid expenses and other assets, noncurrent in the consolidated balance sheets.

As of December 31, 2024, the balance was $ 5.0 million.

Life360, Inc.

Notes to Consolidated Financial Statements

Related Party Warrant

The Related Party Warrant is a non-marketable equity security consisting of a warrant held to purchase shares of common stock of a related party.

Refer to the “Revenue Recognition ” section above and Note 15, "Related-Party Transactions" for further details.

As of December 31, 2024, the carrying value of the Company’s investment in the Related Party Warrant is $ 3.9 million and is included in prepaid expenses and other assets, noncurrent on the consolidated balance sheet.

Common Stock Warrants

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The warrants are recorded as equity instruments at the grant date fair value using the Black-Scholes option pricing model and are not subject to revaluation at each balance sheet date.

In addition, the Company has issued warrants in connection with the convertible note agreements.

The warrants are recorded as equity instruments at the grant date fair value using the Black-Scholes option pricing model.

The fair value has been recorded as a debt discount that is being amortized to interest expense under the straight-line method over the term of respective convertible notes.

Life360, Inc.

Notes to Consolidated Financial Statements

Stock-Based Compensation

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Forfeitures are recorded as they occur.

In 2022 and 2021, the Company issued stock options and restricted stock that have performance-based vesting conditions.

The Company has stock options and restricted stock units with performance-based vesting conditions outstanding.

For awards that include a performance condition, if the performance condition is determined to be probable of being satisfied, the Company recognizes compensation expense related to such awards using the accelerated attribution method over the required performance period.

If a performance condition is not probable of being met, no compensation cost is recognized.

The Company did not issue any stock options or restricted stock that had performance based vesting conditions for the year ended December 31, 2023.

The Company issued performance-based restricted stock units with performance based vesting conditions during the year ended December 31, 2024.

Refer to Note 13, "Equity Incentive Plan" for further details.

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Translation adjustments arising from the use of a differing exchange rate from period to period are included in accumulated other comprehensive income (loss) within the consolidated statements of stockholders’ equity.

Foreign currency transaction gains and losses are included in interest and other, net in the consolidated statements of operations and were not material during the years ended December 31, 2023, 2022 or 2021.

Foreign currency transaction gains and losses are included in other income (expense), net in the consolidated statements of operations and were not material during the years ended December 31, 2024, 2023 or 2022.

All assets and liabilities denominated in a foreign currency are translated into U.S.

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Accordingly, realization of the Company’s deferred tax assets is dependent on future taxable income against which these deductions, losses and credits can be utilized.

Life360, Inc.

Notes to Consolidated Financial Statements

The Company must assess the likelihood that the Company’s deferred tax assets will be recovered from future taxable income, and to the extent the Company believes that recovery is not likely, the Company establishes a valuation allowance.

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Refer to Note 10, "Commitments and Contingencies" for more details.

Life360, Inc.

Notes to Consolidated Financial Statements

Net Loss Per Share

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Segment and Geographic Revenue

The Company operates as a single operating segment.

The Company’s chief operating decision maker is its chief executive officer, who reviews financial information presented on a consolidated basis for purposes of making operating decisions, assessing financial performance, and allocating resources.

The Company operates as one operating segment.

Operating segments are defined as components of an entity for which separate financial information is regularly evaluated by the chief operating decision maker (“CODM”), which is the Company’s Chief Executive Officer, in deciding how to allocate resources and assess performance.

The Company’s CODM evaluates financial information and resources and assesses the performance of these resources on a consolidated basis.

There is no expense or asset information that is supplemental to information disclosed within the consolidated financial statements, that is regularly provided to the CODM.

The allocation of resources and assessment of performance of the operating segment is based on consolidated net loss and functional expenses as reported on our consolidated statements of operations and comprehensive loss.

Because the Company operates as one operating segment, financial segment information, including expense and asset information, can be found in the consolidated financial statements.

All material long-lived assets are based in the United States.

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Total revenue $ 371,484 $ 304,518 $ 228,305

The Company’s revenues in the United States were $ 318.6 million, or 86 %, of total revenue for the year ended December 31, 2024, $ 258.5 million, or 85 %, of total revenue for the year ended December 31, 2023, and $ 205.2 million, or 90 % of total revenue for the year ended December 31, 2022.

Life360, Inc.

Notes to Consolidated Financial Statements

Deferred Revenue

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Deferred revenue, beginning of period $ 35,774 $ 32,762

Acquired deferred revenue — 10,203

Additions to deferred revenue 304,903 229,871

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During the year ended December 31, 2023, the Company recognized $ 30.1 million of revenue that was included in the deferred revenue balance as of December 31, 2022.

Life360, Inc.

Notes to Consolidated Financial Statements

Costs Capitalized to Obtain Contracts

The following table represents a roll forward of the Company’s costs capitalized to obtain contracts, net (in thousands):

Year Ended December 31,

Capitalized costs to obtain contracts, beginning of period $ 2,064 $ 1,649

Acquired costs capitalized to obtain contracts — 1,184

Additions to capitalized costs to obtain contracts 1,905 2,159

Amortization of capitalized costs to obtain contracts ( 2,125 ) ( 2,928 )

Capitalized costs to obtain contracts, end of period $ 1,844 $ 2,064

Fair Value Measurements

The Company measures and reports certain assets and liabilities at fair value on a recurring basis.

The fair value of these instruments as of December 31, 2024 and December 31, 2023 are classified as follows (in thousands):

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Total liabilities $ — $ — $ 3,666 $ 3,666

Life360, Inc.

Notes to Consolidated Financial Statements

The change in fair value of the Level 3 instruments were as follows (in thousands):

As of December 31, 2024

(Note 10) Convertible

Fair value, beginning of the year $ 217 $ 3,449

Vesting of revesting notes — 72

Changes in fair value 1,707 608

Forfeiture of convertible notes — ( 326 )

Repayment of convertible notes (Note 9) — ( 3,919 )

Settlement of September 2021 Convertible Notes upon conversion (Note 8)

Gain on settlement of September 2021 Convertible Notes (Note 8)

Gain on settlement of derivative liability (Note 9)

Fair value, end of period $ — $ —

Life360, Inc.

Notes to Consolidated Financial Statements

As of December 31, 2023

(Note 10) Convertible

(Note 9) Contingent

consideration

Fair value, beginning of the year $ 101 $ 6,938

Vesting of revesting notes — 72

Changes in fair value

Forfeiture of revesting notes

Repayment of convertible notes (Note 8)

Changes in fair value ( 1,295 ) ( 1,786 ) ( 5,279 )

Issuance of common stock in settlement of contingent consideration — — ( 4,221 )

Fair value, end of period $ 217 $ 3,449

For the year ended December 31, 2024, the Company recorded a loss associated with the change in fair value of the derivative liability of $ 1.7 million and a gain related to the settlement of the derivative liability upon conversion of the July 2021 Convertible Notes of $ 1.9 million .

For the year ended December 31, 2024, the Company recorded a loss associated with the change in fair value of the September 2021 Convertible Notes of $ 0.6 million and a gain related to the settlement of the September 2021 Convertible Notes upon conversion of $ 0.5 million .

Refer to Note 8, "Convertible Notes" for further details.

The amounts have been recorded in other income (expense), net in the consolidated statement of operations and comprehensive loss.

For the year ended December 31, 2023, the Company recorded a loss associated with the change in fair value of the derivative liability and convertible notes of $ 0.1 million and $ 0.7 million, respectively.

For the year ended December 31, 2022, the Company had recorded a gain associated with the change in fair value of the derivative liability and convertible notes of $ 1.3 million and $ 1.8 million, respectively.

The amounts have been recorded in other income (expense), net in the consolidated statement of operations and comprehensive loss.

For the year ended December 31, 2022, the Company had recorded a gain associated with the change in fair value of the contingent consideration of $ 5.3 million.

The amounts have been recorded in general and administrative expense in the consolidated statement of operations and comprehensive loss.

Business Combinations

On September 1, 2021, the Company completed the acquisition of Jiobit, a privately held consumer electronics company that specializes in the production of low powered sensors and wearables.

The company is based in Chicago, Illinois and was founded in 2015.

Jiobit has developed a small and long-lasting tracking solution.

The mobile app, which is run through a wireless subscription service, offers a comprehensive set of monitoring and notification features.

The addition of Jiobit is expected to strengthen and extend the Company’s market leadership position by leveraging Jiobit’s developed technology and customer relationships to accelerate the Company’s own product development and augment the Company with a critical mass of talent with strong tracking/wearables experience.

The aggregate purchase consideration was $ 43.2 million, of which $ 7.3 million was paid in cash, $ 5.9 of contingent consideration was payable upon reaching certain operational goals for 2021 and 2022, $ 11.6 million representing the fair value of the September 2021 Convertible Notes, $ 4.0 million representing forgiveness of Jiobit’s convertible debt held by the Company, $ 0.6 million comprised of 25,245 vested common stock options issued to Jiobit employees, and $ 13.8 million comprised of 674,516 shares of the Company’s common stock.

Of the consideration transferred, $ 0.2 million in cash was placed in an indemnity escrow fund to be held for eighteen months after the acquisition date for general representations and warranties.

The September 2021 Convertible Notes issued as part of the purchase consideration can be converted to common stock at any time subsequent to the acquisition at a fixed conversion price of $ 22.50 per share.

On each of the first three annual anniversaries of the issuance date of the September 2021 Convertible Notes, the Company will repay 1/3rd of the unconverted principal plus accrued interest to the holders of such notes.

Upon a change of control, the holder may elect to either convert at the fixed conversion price of $ 22.50 per share or be repaid in full.

The Company has elected the fair value option and will remeasure the September 2021 Convertible Notes at their fair value on each reporting date and reflect the changes in fair value in earnings.

The estimated fair value of the September 2021 Convertible Notes is determined using a combination of the present value of the cash flows and the Black-Scholes option pricing model using assumptions as follows:

Life360, Inc.

Notes to Consolidated Financial Statements

As of December 31, As of December 31, As of September 1,

2023 2022 2021

Principal $ 3,365 $ 6,730 $ 11,206

Interest rate 5.7 % 6.6 % 4.5 %

Common stock fair value per share 15.46 9.94 20.49

Conversion price per share 22.50 22.50 22.50

Risk-free interest rate 4.96 % 4.50 % 0.45 %

Time to exercise (in years) 0.7 1.7 3

Volatility 29 % 53 % 37 %

Annual dividend yield 0 % 0 % 0 %

A total of $ 6.2 million was excluded from purchase consideration which consists of $ 1.9 million comprised of 91,217 shares of the Company’s common stock (“Revesting Stock” – Note 14) and $ 1.6 million comprised of convertible notes (“Revesting Notes”) issued to key employees, retention bonuses of $ 1.0 million, and $ 0.5 million comprised of 43,083 unvested common stock options issued to Jiobit employees (“Unvested Replacement Awards” – Note 14).

The Company incurred transaction related expenses of $ 1.0 million, which were expensed as incurred and recorded under general and administrative expenses in the consolidated statements of operations and comprehensive loss.

The Revesting Stock and Revesting Notes are restricted and vest with continuous employment of certain key employees over a 3 -year period subsequent to the acquisition.

The Revesting Stock is recognized in general and administrative expense as the Revesting Stock vests.

In April 2022, one of the key employees exited the Company, and so the entirety of their Revesting Notes and Revesting Stock were forfeited.

The Company recorded $ 0.3 million credit to stock-based compensation included in general and administrative expense related to the forfeiture of their Revesting Stock and $ 0.3 million credit to compensation included in general and administrative expense related to the forfeiture of their Revesting Notes.

In January 2023, the other key employee exited the Company.

As part of such employee’s separation agreement, the Company recorded $ 0.2 million to compensation included in general and administrative expense related to their Revesting Stock.

Additionally, in accordance with their separation agreement, their Revesting Notes are due in their entirety at the maturity date and the Company recorded $ 0.1 million of compensation expense included in general and administrative expense.

The Company recorded $ 0.2 million, $ 0.2 million and $ 0.2 million as stock-based compensation included in general and administrative expense related to the vesting of the Revesting Stock for the years ended December 31, 2023, 2022 and 2021, respectively.

The Company records the Revesting Notes at fair value and will remeasure the Revesting Notes at fair value on each reporting date.

The Revesting Notes are recognized in general and administrative expense.

As the Revesting Notes vest, the changes in fair value are recorded as general and administrative expense with a corresponding entry to convertible notes.

The estimated fair value of the Revesting Notes is determined using a combination of the present value of the Revesting Notes cash flows and the Black-Scholes option pricing model.

The terms of the Revesting Notes are consistent with the terms of the September 2021 Convertible Notes.

The Company recorded $ 0.1 million, $ 0.2 million and $ 0.2 million as general and administrative and expense related to the changes in fair value of Revesting Notes during the years ended December 31, 2023, 2022 and 2021, respectively.

The retention bonuses are recognized in prepaid expenses and other assets, noncurrent in the consolidated balance sheet and vest monthly over a period of 24 months and require continuous employment.

The expense associated with the Unvested Replacement Awards is recognized as stock-based compensation ratably over the remaining service period.

As of December 31, 2023, all retention bonuses have been recognized and none remain outstanding on the consolidated balance sheets.

Life360, Inc.

Notes to Consolidated Financial Statements

The 2021 and 2022 contingent consideration is based on the achievement of a Qualifying Units Sold Target for the period January 1, 2021 through December 31, 2021 (“2021 Contingent Consideration”) and for the period January 1, 2022 through December 31, 2022 (“2022 Contingent Consideration,” collectively, “Contingent Consideration”).

The Contingent Consideration consists of 301,261 and 451,891 shares for 2021 and 2022, respectively, with the amount paid equal to the attainment relative to target in each year and settled in shares of the Company’s common stock.

The Contingent Consideration shares payable is determined based on the percentage achievement relative to the target in each period, respectively, with greater than 100 % attainment resulting in 100 % payment, 90 % to 100 % attainment resulting in the number of shares equal to the percentage attainment, and less than 90 % attainment equal to no consideration.

The Contingent Consideration is held at fair value with changes in fair value recognized in general and administrative expense.

The estimated fair value of the Contingent Consideration is determined by using a Monte Carlo simulation scenario-based analysis that estimates the fair value of the Contingent Consideration based on the probability-weighted present value of the expected future cash flows, considering possible outcomes based on actual and forecasted results.

The estimated fair value of the 2021 and 2022 Contingent Consideration upon issuance was $ 0.1 million and $ 5.8 million, respectively.

The estimated fair value of the 2021 and 2022 Contingent Consideration as of December 31, 2021 was $ 6.3 million and $ 3.1 million, respectively.

The Company recorded a $ 5.3 million gain and $ 3.6 million loss within general and administrative expense related to the change in the fair value of the Contingent Consideration during the years ended December 31, 2022 and 2021, respectively.

The 2021 and 2022 Contingent Consideration was settled during the year ended December 31, 2022.

In April 2022, the Board of Directors and previous Jiobit shareholders approved an amendment to the 2021 Contingent Consideration.

The 2021 Contingent Consideration was amended to 50 % of the total potential amount of which 376,573 shares of the Company’s common stock were issued to shareholders.

The fair value of the common stock of $ 4.2 million was recorded to additional paid-in capital and the contingent consideration liability was reversed.

As of December 31, 2022, the Contingent Consideration was zero as it was fully settled in April 2022.

The acquisition was accounted for as a business combination.

The total purchase price of $ 43.2 million was allocated to the net tangible and intangible assets and liabilities based on their estimated fair values on the acquisition date and the excess was recorded to goodwill.

The assets acquired and liabilities assumed in connection with the acquisition were recorded at their fair value on the date of acquisition as follows (in thousands):

Net tangible assets $ 5,986

Intangible assets 8,400

Goodwill 30,363

Liabilities assumed ( 1,551 )

Total acquisition consideration $ 43,198

The following table sets forth the components of identifiable intangible assets acquired (in thousands) and their estimated useful lives as of the date of acquisition:

Fair Value Estimated Useful

Developed technology $ 4,030 5

Trade name 3,380 10

Customer relationships 990 10

Total identified intangible assets $ 8,400

Goodwill represents the future economic benefits arising from other assets that could not be individually identified and separately recognized, such as the acquired assembled workforce of Jiobit.

In addition, goodwill represents the future benefits as a result of the acquisition that will enhance the Company’s product available to both new and existing customers and increase the Company’s competitive position.

The goodwill is not deductible for tax purposes.

Life360, Inc.

Notes to Consolidated Financial Statements

In 2022, the Company estimated and recorded a net deferred tax liability of $ 0.1 million after offsetting the acquired available tax attributes with the intangible assets shown in the table above.

Refer to Note 15 “Income Taxes” for discussion of the partial release of the Company’s valuation allowance relating to the deferred tax liability.

The results of operations of Jiobit are included in the accompanying consolidated statements of operations and comprehensive loss from the date of acquisition.

Pro Forma Financial Information (Unaudited)

The following table presents unaudited supplemental pro forma financial information as if the acquisition of Jio, Inc.

had occurred on January 1, 2021.

The unaudited pro forma results set forth below are for informational purposes only and are based on estimates and assumptions that have been made solely for purposes of developing such pro forma results, including:

(i) amortization associated with acquired intangible assets and (ii) the inclusion of acquisition costs as of the period presented.

The unaudited pro forma results set forth below are not necessarily indicative of what results would have been had the acquisition been consummated on January 1, 2021.

Year Ended December 31,

(unaudited, in thousands)

Revenues $ 116,330

Net loss $ ( 37,356 )

Life360, Inc.

Notes to Consolidated Financial Statements

On January 5, 2022, the Company completed the acquisition of Tile, Inc., a privately held consumer electronics company.

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Of the consideration transferred, $ 14.1 million in cash and 84,524 common shares were placed in an indemnity escrow fund to be held for fifteen months after the acquisition date for general representations and warranties.

Life360, Inc.

Notes to Consolidated Financial Statements

A total of $ 35.0 million was excluded from purchase consideration which consists of retention compensation of 1,499,349 shares of retention restricted stock units valued at $ 29.6 million, $ 0.4 million related to 38,730 vested common stock options issued to Tile employees as stock-based compensation on the acquisition date and change in control bonuses of $ 3.0 million which were recognized as compensation expense on the consolidated statements of operations on the acquisition date.

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The measurement period adjustment was made to reflect facts and circumstances that existed as of the acquisition date and is reflected in the table below.

Life360, Inc.

Notes to Consolidated Financial Statements

The assets acquired and liabilities assumed in connection with the acquisition were recorded at their fair value on the date of acquisition, inclusive of the measurement period adjustments, as follows (in thousands):

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Total acquisition consideration $ 173,483

Life360, Inc.

Notes to Consolidated Financial Statements

The following table sets forth the components of identifiable intangible assets acquired and their estimated useful lives as of the date of acquisition:

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The goodwill is not deductible for tax purposes.

The results of operations of Tile are included in the accompanying consolidated statements of operations and comprehensive loss from the date of acquisition.

Life360, Inc.

Notes to Consolidated Financial Statements

Pro Forma Financial Information (Unaudited)

The following table presents unaudited supplemental pro forma financial information as if the acquisition of Tile, Inc.

had occurred on January 1, 2021.

(i) amortization associated with acquired intangible assets;

(ii) to adjust for amortization expense recorded by Tile, Inc.

associated with deferred costs of revenue which were not acquired by the Company;

(iii) recognition of post-combination stock-based compensation expense;

(iv) the inclusion of acquisition costs as of the period presented;

and (v) the associated tax impact of the acquisition and the unaudited pro forma adjustments.

The unaudited pro forma results do not give effect to management adjustments, including the potential impact of current financial conditions or any anticipated revenue enhancements, cost savings or operating synergies that may have resulted from the transaction and are not necessarily indicative of what results would have been had the acquisition been consummated on January 1, 2021.

Given the acquisition of Tile, Inc.

took place on January 5, 2022, substantially all of the financial results of Tile, Inc.

have been incorporated into the consolidated financial results for the year ended December 31, 2022.

The difference between actual financial results and pro forma results is immaterial for the year ended December 31, 2022.

The results are consolidated for December 31, 2023, hence there is no difference between pro forma and actual results.

Year Ended December 31,

(unaudited, in thousands)

Revenues $ 228,305 $ 218,236

Net loss $ ( 91,629 ) $ ( 78,448 )

The results of Tile's operations are included in the accompanying consolidated statements of operations and comprehensive loss from the acquisition date.

Balance Sheet Components

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Allowance for credit losses ( 394 ) ( 94 )

Accounts receivable, net $ 42,180 $ 33,125

Total accounts receivable, net $ 57,997 $ 42,180

Accounts receivable, net is presented net of the allowance for credit losses, which represents management’s estimate of expected credit losses based on historical trends, current economic conditions, and other relevant factors as of December 31, 2024 and 2023, respectively.

Inventory consists of the following (in thousands):

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Notes to Consolidated Financial Statements

There were no inventory write-offs recorded for the year ended December 31, 2024.

The Company recorded a raw materials inventory write-off of $ 0.9 million for the year ended December 31, 2023.

The write-off resulted from a decision made during the three months ended March 31, 2023 to discontinue a product line in the Company’s product roadmap.

The raw materials have no alternative use and have been fully written off for the year ended December 31, 2023.

There were no additional inventory write-offs for the year ended December 31, 2023, and there were no inventory write-offs recorded for the year ended December 31, 2022.

The write-off resulted from a decision made to discontinue a product line in the Company’s product roadmap where the raw materials had no alternative use.

There were no inventory write-offs recorded for the year ended December 31, 2022.

Prepaid Expenses and Other Current Assets

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Total prepaid expenses and other current assets $ 14,599 $ 15,174

Prepaid expenses primarily consist of certain cloud platform and customer service program costs.

Other receivables primarily consist of refunds owed to the Company and other amounts which the Company may receive in future months.

Prepaid expenses primarily consist of certain cloud platforms, customer service program costs, prepaid insurance and inventory.

Other receivables primarily consist of income tax benefits, refunds owed to the Company, and other amounts which the Company is expected to receive in less than twelve months.

Property and Equipment, net

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Total property and equipment, net $ 1,779 $ 730

Construction in progress relates to certain costs incurred with production manufacturing equipment.

Depreciation expense was $ 0.3 million, $ 0.1 million, and $ 0.5 million for the years ended December 31, 2024, 2023, and 2022, respectively.

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Prepaid expenses, noncurrent $ 1,849 $ 1,374

Investment 5,474 5,474

Other assets 21 136

Investments 19,762 5,474

Total prepaid expenses and other assets, noncurrent $ 21,611 $ 6,848

Prepaid expenses, noncurrent primarily consist of cloud platform costs.

Investment relates to warrants to purchase shares of preferred stock of a current Data Revenue Partner.

Investments relate to the Data Revenue Partner Warrant, the Related Party Warrant, and the Related Party SAFE.

Refer to Note 2, "Summary of Significant Accounting Policies" for additional information.

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Notes to Consolidated Financial Statements

The Company leases office space under a non-cancelable operating lease with a remaining lease term of up to 2.9 years, includes the option to extend the lease.

In May 2023, the Company amended its lease agreement for its headquarter office space located in San Mateo, California.

The amendment extended the lease term to November 2026, reduced the Company’s leased office space and reduced the monthly lease payments.

As a result, the associated right-of-use asset and lease liability were remeasured and the right-of-use asset and lease liability increased by $ 1.1 million and $ 1.1 million, respectively, upon the remeasurement date.

The Company has recognized an operating lease right-of-use (ROU) asset and short term lease liabilities of $ 1.0 million and $ 0.3 million in “Operating lease right-of-use asset” and “Accrued expenses and other current liabilities,” respectively, on the Company’s consolidated balance sheet as of December 31, 2023.

The Company has recognized a long-term lease liability of $ 0.7 million in “Other liabilities, noncurrent” on the Company’s consolidated balance sheet as of December 31, 2023.

The Company has recognized an operating lease ROU asset, and short term lease liabilities of $ 0.8 million and $ 0.8 million in “Operating lease right-of-use asset” and “Accrued expenses and other current liabilities , ” respectively, on the Company’s consolidated balance sheet as of December 31, 2022.

No long-term lease liabilities were recorded within “Other liabilities, noncurrent,” on the Company’s consolidated balance sheet as of December 31, 2022.

The Company leases office space under a non-cancelable operating lease with a remaining lease term of up to 1.9 years, which includes the option to extend the lease.

The Company did not have any finance leases as of December 31, 2024 or December 31, 2023

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Weighted-average remaining term for operating lease (in years) 1.9 2.9

The weighted-average discount rate used to measure the present value of the operating lease liabilities was 5.0 %, respectively.

Life360, Inc.

Notes to Consolidated Financial Statements

The weighted-average discount rate used to measure the present value of the operating lease liabilities was 5.0 %.

Maturities of the Company’s operating lease liabilities as of December 31, 2024, were as follows (in thousands):

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Total operating lease liability $ 723

Life360, Inc.

Notes to Consolidated Financial Statements

Intangible Assets, net

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Total $ 63,516 $ ( 18,075 ) $ 45,441

Amortization expense was $ 9.0 million, $ 8.7 million, and $ 0.4 million for the years ended December 31, 2023, 2022, and 2021, respectively.

For the years ended December 31, 2024 and 2023 the Company capitalized $ 4.7 million and $ 1.7 million, respectively, in internal use software.

For the years ended December 31, 2024, 2023, and 2022 amortization expense was $ 9.5 million, $ 9.0 million, and $ 8.7 million, respectively.

As of December 31, 2024, estimated remaining amortization expense for intangible assets by fiscal year is as follows (in thousands):

2025 $ 10,670

Thereafter 4,779

Total future amortization expense

Life360, Inc.

Notes to Consolidated Financial Statements

Internal use software not yet in service 937

Total future amortization expense $ 40,574

The weighted-average remaining useful lives of the Company’s acquired intangible assets are as follows:

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Internal use software 2.6 years 3.6 years

Life360, Inc.

Notes to Consolidated Financial Statements

As of December 31, 2024, the Company had $ 0.9 million of capitalized internal use software projects that were not yet in service.

These projects have been excluded from the weighted-average remaining useful life calculation for internal use software in the table above.

Accrued Expenses and Other Current Liabilities

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Customer related promotions and discounts 9,761 9,049

Operating lease liability 335 813

Sales return reserves 2,817 3,285

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Total accrued expenses and other current liabilities $ 32,015 $ 27,538

Other current liabilities primarily relate to warranty liabilities related to the Company’s hardware tracking devices, inventory received not yet billed, and sales tax payable.

Escrow Liability

The escrow liability as of December 31, 2022 relates to restricted cash associated with the Tile Acquisition, $ 13.1 million, and Jiobit Acquisition, $ 0.2 million, placed in an indemnity escrow fund to be held for fifteen months and eighteen months , respectively, after the acquisition date for general representations and warranties.

The initial balances were included within total consideration transferred.

As of December 31, 2023, all escrow liabilities had been released and paid as scheduled.

Other Liabilities, noncurrent

Other noncurrent liabilities consist of the following (in thousands):

As of December 31,

Deposit liabilities $ — $ 78

Other liabilities, noncurrent — 498

Operating lease liability 723 —

Total other liabilities, noncurrent $ 723 $ 576

Life360, Inc.

Notes to Consolidated Financial Statements

As of December 31, 2024, other current liabilities primarily relate to the Company’s operating lease liability and sales tax payable.

As of December 31, 2023, other current liabilities primarily relate to the operating lease liability, warranty liabilities related to the Company’s hardware tracking devices, and inventory received not yet billed.

Convertible Notes

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In July 2021, the Company issued the July 2021 Convertible Notes to investors with an underlying principal amount of $ 2.1 million.

The July 2021 Convertible Notes accrue simple interest at an annual rate of 4 % and mature on July 1, 2026.

The July 2021 Convertible Notes may be settled under the following scenarios at the option of the holder:

(i) at any time into common shares equal to the conversion amount of outstanding principal and any accrued but unpaid interest divided by the conversion price of $ 11.96 ;

(ii) at the option of the holder upon a liquidation event a) paid in cash equal to the outstanding principal and any accrued but unpaid interest or b) into common shares equal to the conversion amount of outstanding principal and any accrued but unpaid interest divided by the conversion price of $ 11.96 ;

or (iii) upon maturity, settlement in cash at the outstanding accrued interest and principal amount.

Certain conversion and redemption features of the July 2021 Convertible Notes were determined to not be clearly and closely associated with the risk of the debt-type host instrument and were required to be separately accounted for as derivative financial instruments.

The Company bifurcated these embedded conversion and redemption (“Embedded Derivatives”) features and classified these as liabilities measured at fair value.

The fair value of the derivative liability of $ 0.7 million was recorded separate from the July 2021 Convertible Notes with an offsetting amount recorded as a debt discount.

The debt discount is amortized over the estimated life of the debt using the straight-line method, as the value attributable to the July 2021 Convertible Notes was zero upon issuance.

As of December 31, 2023 the unamortized amount and net carrying value of the July 2021 Convertible Notes is $ 1.1 million and $ 1.1 million, respectively.

The amount by which July 2021 Convertible Notes if-converted value exceeds its principal is $ 0.6 million as of December 31, 2023.

As of December 31, 2022 the unamortized amount and net carrying value of the July 2021 Convertible Notes was $ 1.5 million and $ 0.6 million, respectively.

The amount by which July 2021 Convertible Notes if-converted value exceeds its principal was $ 0.4 million as of December 31, 2022.

In connection with the July 2021 Convertible Notes, the Company issued warrants to purchase 88,213 shares of the Company’s common stock with an exercise price of $ 0.01 per share and a term of one year (Warrant Tranche 1), 44,106 shares of the Company’s common stock with an exercise price of $ 11.96 per share and a term of five years (Warrant Tranche 2), and 44,106 shares of the Company’s common stock which is exercisable starting twelve months from the issuance date with an exercise price of $ 11.96 per share and a term of five years (Warrant Tranche 3).

The fair value of the warrants was determined using the Black-Scholes option-pricing method, with the following assumptions:

Tranche 1 Warrants

Tranche 2 Warrants

Fair market value of common stock $ 15.36 $ 15.36 $ 15.36

Expected dividend yield 0 % 0 % 0 %

Risk-free interest rate 0.09 % 0.89 % 0.89 %

Expected volatility 52.00 % 47.40 % 47.40 %

Expected term (in years) 1 5 5

The warrants were recorded to additional paid-in capital during the year ended December 31, 2021.

The relative fair value of the warrants issued in connection with the July 2021 Convertible Notes was $ 0.8 million and was recorded as a debt discount that is being amortized to interest expense under the straight-line method over the term of respective convertible notes.

As a result of the beneficial conversion feature associated with the July 2021 Convertible Notes, $ 0.6 million was added to additional paid-in capital during the year ended December 31, 2021.

The beneficial conversion feature was recorded as a debt discount and is being amortized to interest expense under the straight-line method over the term of the respective notes.

In June 2024, the July 2021 Convertible Notes were converted to common stock based on a fixed conversion price of $ 11.96 per share.

At the time of conversion, the July 2021 Convertible Notes had an outstanding principal and accrued interest balance of $ 2.2 million.

As a result of the conversion, 184,192 shares of common stock were issued to the holders in redemption of the outstanding July 2021 Convertible Notes.

In June 2024, the fair value of the issued common stock was recorded within additional paid-in capital on the Company’s consolidated balance sheet and a $ 0.9 million loss on the settlement of the July 2021 Convertible Notes was recorded in other income (expense), net on the consolidated statements of operations and comprehensive loss.

As of December 31, 2024, the balance of the July 2021 Convertible Notes is zero on the Company’s consolidated balance sheet.

The Company recognized a total of $ 0.1 million, $ 0.4 million, and $ 0.4 million in non-cash interest expense related to the July 2021 Convertible Notes for the years ended December 31, 2024, 2023, and 2022, respectively.

September 2021 Convertible Notes

In September 2021, the Company, in connection with the acquisition of Jiobit, issued $ 11.6 million representing the fair value of convertible notes (the “September 2021 Convertible Notes”) and $ 1.6 million of revesting convertible notes that vested over time.

In April 2024, the holders of the September 2021 Convertible Notes elected to convert their notes and accrued interest to common stock based on a fixed conversion price of $ 22.50 per share.

At the time of conversion, the September 2021 Convertible Notes had an outstanding principal and accrued interest balance of $ 3.5 million.

As a result of the conversion, 157,685 shares of common stock with a fair value of $ 3.5 million were issued to the holders in redemption of the outstanding September 2021 Convertible Notes.

In April 2024, the fair value of the issued common stock was recorded within additional paid-in capital on the Company’s consolidated balance sheet and a $ 0.5 million gain on settlement of the September 2021 Convertible Notes was recorded in other income (expense), net on the consolidated statements of operations and comprehensive loss.

As of December 31, 2024, the balance of the September 2021 Convertible Notes is zero on the Company’s consolidated balance sheet.

Life360, Inc.

Notes to Consolidated Financial Statements

The Company recognized a total of $ 0.4 million, $ 0.4 million, and $ 0.2 million in non-cash interest expense related to the July 2021 Convertible Notes for the years ended December 31, 2023, 2022, and 2021, respectively.

The Company has also issued convertible notes, September 2021 Convertible Notes, in connection with an acquisition.

Refer to Note 7, "Business Combinations" for further details.

Convertible notes, current and noncurrent consist of the following (in thousands):

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September 2021 Convertible Notes $ — $ 3,449

Revesting Notes — 58

Convertible notes, noncurrent:

July 2021 Convertible Notes — 1,056

September 2021 Convertible Notes — 3,396

Revesting Notes — 29

Total convertible notes $ — $ 4,505

The contractual future principal payments for all convertible notes as of December 31, 2023 were as follows (in thousands):

Total principal outstanding 5,475

Fair value adjustment ( 970 )

Total convertible notes $ 4,505

Derivative Liability

The Company’s derivative liability represents embedded share-settled redemption features bifurcated from its July 2021 Convertible Notes and is carried at fair value.

The changes in the fair value of the derivative liability are recorded in other income (expense), net of the Company’s consolidated statements of operations and comprehensive loss.

Estimating fair values of derivative financial instruments requires the development of significant and subjective estimates that may, and are likely to, change over the duration of the instrument with related changes in internal and external market factors.

Since derivative financial instruments are initially and subsequently carried at fair value, the Company’s income will reflect the volatility in these estimate and assumption changes.

The features embedded in the July 2021 Convertible Notes are combined into one compound Embedded Derivative.

The fair value of the Embedded Derivative was estimated based on the present value of the redemption discount applied to the principal amount of the July 2021 Convertible Notes adjusted to reflect the weighted probability of exercise.

The discount rate was based on the risk-free interest rate.

Upon the issuance of the convertible notes, the Company recorded a derivative liability of $ 0.7 million at fair value using inputs classified as Level 3 in the fair value hierarchy.

As of December 31, 2023 and 2022, the fair value of the derivative liability was $ 0.2 million and $ 0.1 million, respectively.

Refer to Note 6, "Fair Value Measurements" for further details.

Life360, Inc.

Notes to Consolidated Financial Statements

The Company’s derivative liability, which represented embedded share-settled redemption features bifurcated from its July 2021 Convertible Notes, was settled in June 2024 upon the conversion of the July 2021 Convertible Notes to common stock based on a fixed conversion price of $ 11.96 per share.

A $ 1.9 million gain was recorded at the time of conversion within other income (expense), net on the consolidated statements of operations and comprehensive loss for the year ended December 31, 2024.

As of December 31, 2024, the fair value of the derivative liability was zero on the Company’s consolidated balance sheet.

As of December 31, 2023, the fair value of the derivative liability was $ 0.2 million.

Refer to Note 5, "Fair Value Measurements" and Note 8, "Convertible Notes" for further details.

Commitments and Contingencies

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As of December 31, 2024, future non-cancellable commitments under these arrangements were as follows (in thousands):

2024 $ 29,727

Total purchase commitments $ 81,394

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The Company has not incurred costs to defend lawsuits or settle claims related to these indemnification agreements.

Life360, Inc.

Notes to Consolidated Financial Statements

The Company has entered into indemnification agreements with its directors and officers that may require the Company to indemnify its directors and officers against liabilities that may arise by reason of their status or service as directors or officers, other than liabilities arising from willful misconduct of the individual.

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The outcome of litigation and other legal matters is inherently uncertain, though the Company intends to vigorously defend the matters.

In making a determination regarding accruals, using available information, the Company evaluates the likelihood of an unfavorable outcome in legal or regulatory proceedings to which the Company is a party and records a loss contingency when it is probable a liability has been incurred and the amount of the loss can be reasonable estimated.

When the Company determines an unfavorable outcome is not probable or reasonably estimable the Company does not accrue for any potential litigation loss.

Actual outcomes of these legal and regulatory proceedings may materially differ from the Company’s estimates.

Life360, Inc.

Notes to Consolidated Financial Statements

On March 12, 2019, a former alleged competitor of Tile, Cellwitch, Inc, filed a patent infringement claim against Tile in the U.S.

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Court of Appeals for the Federal Circuit on May 13, 2022.

The case is currently in trial court.

The claim construction hearing took place on January 18, 2024, and the parties currently await the court's order from that hearing.

At this time, a loss is not probable nor estimable, so no legal accrual has been recorded on our consolidated balance sheets as of December 31, 2023.

A purported class action (E.S.

Life360, Inc.) alleging a single cause of action for unjust enrichment was filed against Life360 on January 12, 2023 seeking equitable relief purportedly arising out of Life360’s historic data sales.

Plaintiff dismissed these claims on November 3, 2023 and we settled the matter for an immaterial amount.

No additional litigation reserve was recorded on our consolidated balance sheets as of December 31, 2023.

No litigation reserve was recorded on our consolidated balance sheets as of December 31, 2022.

As of December 31, 2023 and December 31, 2022, the Company had 108,592 shares of common stock subject to the Company’s right to repurchase.

In November 2022, the Company issued a total of 2,645,503 common shares raising proceeds before issuance costs of $ 33.3 million.

The case is currently in trial court, with trial scheduled to begin on July 14, 2025.

At this time, a loss is reasonably possible but not estimable, and as a result no legal accrual has been recorded on our consolidated balance sheets as of December 31, 2024.

On August 14, 2023, plaintiffs Stephanie Ireland-Gordy and Shannon Ireland-Gordy filed a putative class action lawsuit against Tile, Life360, and Amazon.com, Inc.

District Court for the Northern District of California.

An amended complaint was filed on April 26, 2024, adding named plaintiffs Melissa Broad and Jane Doe.

Plaintiffs allege that Tile trackers were used by third parties to monitor their movements without their consent, and assert product liability and other claims.

At this time, a loss is not probable nor estimable, and as a result, no legal accrual has been recorded on our consolidated balance sheets as of December 31, 2024.

No litigation reserve was recorded on our consolidated balance sheets as of December 31, 2024 or December 31, 2023.

In June 2024, in connection with its U.S.

IPO, the Company issued a total of 3,703,704 shares of common stock.

The Company has reserved shares of common stock, on an as if converted basis, for issuance as follows:

As of December 31,

Issuances under stock incentive plan 6,625,812 8,180,840

Issuances under stock incentive plan, stock options 5,673,947 6,625,812

Issuances upon exercise of common stock warrants 7,761 137,658

Issuances upon vesting of restricted stock units 5,091,601 6,182,543

Issuances of convertible notes 325,981 516,758

Issuances upon conversion of convertible notes — 325,981

Shares reserved for shares available to be granted but not granted yet 12,815,029 16,882,215

23,588,338 30,154,209

As of December 31, 2023 and December 31, 2022, the Company had outstanding warrants to purchase 137,658 and 137,658 shares of Company common stock, respectively with exercise prices ranging from $ 2.28 to $ 11.96 and expiry dates ranging from 2024 to 2026.

Refer to Note 9 “Convertible Notes” for further details.

Life360, Inc.

Notes to Consolidated Financial Statements

As of December 31, 2024 , the Company had 7,761 outstanding warrants, entitling the holder thereof to purchase shares of the Company’s common stock with an exercise price of $ 6.44 and expiry date in 2025.

As of December 31, 2023, the Company had 137,658 outstanding warrants, entitling the holder thereof to purchase shares of Company common stock with exercise prices ranging from $ 2.28 to $ 11.96 and expiry dates ranging from 2024 to 2026.

Equity Incentive Plan

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The Company’s 2011 Stock Plan was originally adopted by the Company’s Board of Directors on July 27, 2011 and the Company’s stockholders on October 11, 2011, and most recently amended and restated, and adopted by the Board of Directors on March 10, 2020 and the Company’s stockholders on July 21, 2020 (as restated, the “Plan”).

The Plan allows the Company to grant restricted stock units, restricted stock and stock options to employees and consultants of the Company and any of the Company’s parent, subsidiaries, or affiliates, and to the members of the Board of Directors.

The Plan allows the Company to grant restricted stock units (“RSUs”), performance-based restricted stock units (“PRSUs”), restricted stock and stock options to employees and consultants of the Company and any of the Company’s parent, subsidiaries, or affiliates, and to the members of the Board of Directors.

Options granted under the Plan may be either incentive stock options or nonqualified stock options.

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Nonqualified stock options (“NSOs”), may be granted to any person eligible for grants under the Plan.

Life360, Inc.

Notes to Consolidated Financial Statements

The Board of Directors determines the period over which options vest and become exercisable.

The Board of Directors or the Compensation Committee of the Board of Directors determines the period over which options vest and become exercisable.

Options issued under the Plan generally are exercisable for periods not to exceed ten years and generally vest over a 4 -year period with 25 % vesting after one year and the remainder vesting monthly thereafter in equal installments.

The Board of Directors also determines the term of options, provided the maximum term for ISOs granted to a 10% stockholder must be no longer than 5 years from date of grant and the maximum term for all other options must be no longer than 10 years from date of grant.

The Board of Directors or the Compensation Committee of the Board of Directors also determines the term of options, provided the maximum term for ISOs granted to a 10% stockholder must be no longer than 5 years from date of grant and the maximum term for all other options must be no longer than 10 years from date of grant.

If an option holder’s service terminates, options generally terminate 3 months from the date of termination except under certain circumstances such as death or disability.

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As of December 31, 2024, the Company had 23,588,338 shares reserved for issuance and 12,815,029 shares available for issuance under the Plan.

There were no stock options granted during the year ended December 31, 2023.

Stock options granted during the years ended December 31, 2022 and 2021 had a weighted average grant date fair value of $ 8.33 , and $ 12.65 per share, respectively.

There were no stock options granted during the years ended December 31, 2024 and 2023.

Stock options granted during the year ended December 31, 2022 had a weighted average grant date fair value of $ 8.33 .

Life360, Inc.

Notes to Consolidated Financial Statements

The intrinsic values of outstanding, vested, and exercisable options were determined by multiplying the number of shares by the difference in exercise price of the options and the fair value of the common stock as of December 31, 2024, 2023, and 2022 of $ 41.27 , $ 15.46 , and $ 9.94 per share, respectively.

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The total intrinsic value of the options exercised during the years ended December 31, 2024, 2023, and 2022 was $ 18.2 million, $ 7.7 million, and $ 4.1 million, respectively.

The total intrinsic value of the vested options based on the market value of the common stock as of December 31, 2023, 2022, and 2021 was $ 5.8 million, $ 29.3 million, and $ 80.6 million, respectively.

The following summary of Restricted Stock Units (“RSU”) activity for the periods presented is as follows:

Performance-based Restricted Stock Units

The Company granted 115,403 PRSUs (“the Target Grant”) to certain executive officers during the year ended December 31, 2024.

No PRSUs were granted to executive officers during the year ended December 31, 2023 or 2022.

The number of PRSUs that may vest depends on the extent to which the performance goals for the award are achieved over a one-year performance period, as determined by the Compensation Committee of the Board, up to a maximum of 200 % of the Target Grant.

The performance goals for the PRSUs consist of the following two metrics, each with a weighting of 50 %:

(1) a revenue metric for the year ended December 31, 2024;

and (2) an Adjusted EBITDA metric for the year ended December 31, 2024.

Each of the metrics are within the Company’s published revenue and Adjusted EBITDA guidance described in the Company’s press release furnished within Exhibit 99.1 of the Company’s Current Report on Form 8-K filed with the SEC on February 29, 2024.

The PRSU awards vest over a four-year period with 1/4th of the shares vesting after the first year and 1/16th of the shares vesting each quarter thereafter, subject to continuous service with the Company.

The Company uses the grant date fair value of the common stock to measure compensation expense for PRSU awards.

Compensation expense is recognized over the vesting period of the PRSU award using the graded-vesting attribution method and shares attained over target upon vesting will be recognized as awards granted in the period.

As of December 31, 2024, the performance goals for the PRSU awards have been achieved at 135 % and only the service conditions remain.

No PRSU shares have vested as of December 31, 2024, in accordance with the vesting schedule of the awards.

RSU, including PRSU, activity for the periods presented is as follows:

Number of Shares Weighted

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Balance as of December 31, 2023 6,182,543 $ 12.67

RSU granted 3,779,399 13.15

RSU vested and settled ( 3,123,054 ) 12.54

RSU cancelled/forfeited ( 1,253,694 ) 11.89

RSUs & PRSUs granted 2,572,091 27.36

RSUs vested and settled ( 3,195,162 ) 31.61

RSUs cancelled/forfeited ( 467,871 ) 14.37

Balance as of December 31, 2024 5,091,601 $ 19.22

As of December 31, 2023, there was unrecognized compensation cost for outstanding restricted stock units of $ 61.3 million to be recognized over a period of approximately 2.8 years.

Life360, Inc.

Notes to Consolidated Financial Statements

As of December 31, 2024, there was unrecognized compensation cost for outstanding restricted stock awards, including PRSUs, of $ 86.6 million to be recognized over a period of approximately 2.8 years.

The number of RSUs vested and settled includes shares of common stock that the Company withheld on behalf of employees to satisfy the minimum statutory tax withholding requirements.

RSUs granted during the years ended December 31, 2023, 2022, and 2021 had a weighted average grant date fair value of $ 13.15 , $ 12.13 , and $ 14.86 per share, respectively.

RSUs and PRSUs granted during the years ended December 31, 2024, 2023, and 2022 had a weighted average grant date fair value of $ 27.36 , $ 13.15 , and $ 12.13 per share, respectively.

The total fair value of shares vested during the years ended December 31, 2024, 2023, and 2022 was $ 101.0 million, $ 39.2 million, and $ 12.0 million, respectively.

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The fair value of the employee stock options granted is estimated using the Black-Scholes option-pricing model, based on the following assumptions:

Life360, Inc.

Notes to Consolidated Financial Statements

Year Ended December 31,

2024 2023 2022

Expected terms (in years) N/A 3.87 4.24

Expected volatility N/A 65 % 49 %

Risk-free interest rate N/A 2.22 % 0.68 %

Expected dividend rate N/A 0 % 0 %

Expected terms (in years) N/A N/A 3.87

Expected volatility N/A N/A 65 %

Risk-free interest rate N/A N/A 2.22 %

Expected dividend rate N/A N/A 0 %

Fair Value of Common Stock :

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Expected Volatility :

Since we have limited trading history of CDIs, interests in our common stock, the expected volatility is determined based on the historical stock volatilities of our comparable companies, and the Company’s trading data since listing on the ASX.

Since we have limited trading history of CDIs in 2022, interests in our common stock, the expected volatility is determined based on the historical stock volatilities of our comparable companies, and the Company’s trading data since listing on the ASX.

Comparable companies consist of public companies in our industry, which are similar in size, stage of life cycle and financial leverage.

The Company will continue to analyze the historical stock price volatility and expected term assumptions as more historical data for the Company’s common stock becomes available.

As of 2024, expected term assumptions are all historical data for the Company’s common stock.

Risk-Free Interest Rate:

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Equity Awards Issued in Connection with Business Combinations

In connection with the Jiobit Acquisition in September 2021, the Company issued 91,217 shares of restricted common stock with an aggregate fair value of $ 1.9 million to be recognized as post combination stock-based compensation ratably with continuous employment of certain employees over a 3 -year period.

As of December 31, 2023, there was zero unrecognized compensation expense related to the restricted common stock, as a result of the termination of certain employees.

As of December 31, 2022, there was $ 0.2 million of unrecognized compensation expense related to this restricted common stock which is expected to be recognized over the remaining weighted average life of 1.7 years.

Life360, Inc.

Notes to Consolidated Financial Statements

Additionally, the Company granted 43,083 service-based stock options under the Plan to certain Jiobit employees with an aggregate fair value of $ 0.5 million which vests ratably over the requisite service period.

As of December 31, 2023, there was $ 0.1 million of unrecognized compensation expense related to unvested assumed stock options, which is expected to be recognized over the remaining weighted average life of 1 year.

As of December 31, 2022, there was $ 0.2 million of unrecognized compensation expense related to unvested assumed stock options, which is expected to be recognized over the remaining weighted average life of 1.8 years.

In connection with the Tile Acquisition in January 2022, the Company issued 1,499,349 shares of retention restricted stock units with an aggregate fair value of $ 29.6 million.

In connection with the Tile Acquisition in January 2022, the Company issued 1,499,349 shares of retention RSUs with an aggregate fair value of $ 29.6 million.

Of the 1,499,349 shares of retention restricted stock units, 787,446 shares valued at $ 15.6 million contained performance vesting criteria based on the achievement of certain company milestones during the three months ended March 31, 2022, and vest over a two year period.

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The remaining 711,903 retention restricted stock units vest over a two to four year period.

As of December 31, 2023, there was $ 0.7 million of unrecognized compensation expense related to the retention restricted stock units which is expected to be recognized over the remaining weighted average life of 1.9 years.

As of December 31, 2024, there was $ 0.3 million of unrecognized compensation expense related to the retention restricted stock units which is expected to be recognized over the remaining weighted average life of 1.0 year.

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As of December 31, 2024 and 2023, there was an immaterial amount of unrecognized compensation expense related to unvested restricted stock units which is expected to be recognized over the remaining 0 years and 0.5 years, respectively.

Life360, Inc.

Notes to Consolidated Financial Statements

A total of 84,524 shares of common stock were issued as part of consideration transferred and were placed in an indemnity escrow fund to be held for fifteen months after the acquisition date for general representations and warranties.

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Total stock-based compensation expense $ 42,269 $ 38,512 $ 34,680

Life360, Inc.

Notes to Consolidated Financial Statements

There was $ 0.7 million of capitalized stock-based compensation costs during the year ended December 31, 2024.

There was an immaterial amount of capitalized stock-based compensation costs during the years ended December 31, 2023 and 2022.

The Company has historically incurred net operating losses only in the United States since its inception.

During the year ended December 31, 2023, the Company incurred $ 27.1 million of net operating losses in the United States and $ 0.3 million of net operating income internationally.

An income tax provision of $ 0.6 million and $ 0.1 million and an income tax benefit of $ 0.1 million were recorded for the years ended December 31, 2023, 2022 and 2021, respectively.

The Company has historically incurred pre-tax net operating losses only in the United States since its inception.

During the year ended December 31, 2024, the Company incurred $ 5.5 million of pre-tax net operating losses in the United States and $ 0.9 million of pre-tax net operating income internationally.

An income tax provision (benefit) of $( 0.1 ) million, $ 0.6 million and $ 0.1 million was recorded for the years ended December 31, 2024, 2023 and 2022, respectively.

In accordance with ASC 805, a change in the acquirer’s valuation allowance that stems from a business combination should be recognized as an element of the acquirer’s income tax expense or benefit in the period of the acquisition.

Accordingly, for the years ended December 31, 2022 and 2021, the Company recorded a $ 27.4 thousand partial release of its valuation allowance stemming from the Tile Acquisition and $ 0.1 million partial release of its valuation allowance stemming from the Jiobit Acquisition.

The reconciliation of the Company’s effective tax rate to the U.S.

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Change in valuation allowance ( 303 ) % ( 14 ) % ( 19 ) %

Stock issuance

( 25 ) % — % — %

Effective tax rate 2 % ( 2 ) % — %

Life360, Inc.

Notes to Consolidated Financial Statements

The significant components of net deferred income tax assets were as follows (in thousands):

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Operating lease right-of-use asset ( 165 ) ( 250 )

Depreciable assets

Acquired intangibles ( 9,178 ) ( 10,073 )

Data Revenue Partner Warrant

Total deferred tax liabilities ( 11,770 ) ( 10,323 )

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The valuation allowance increased by $ 12.9 million during 2024 and $ 4.5 million during 2023.

Life360, Inc.

Notes to Consolidated Financial Statements

At December 31, 2024 the Company had approximately $ 219.5 million and $ 121.5 million of federal and state net operating loss carryforwards, respectively, available to offset future taxable income.

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The Company does not anticipate any unrecognized tax benefits in the next 12 months that would result in a material change to its financial position.

Life360, Inc.

Notes to Consolidated Financial Statements

The aggregate changes in the balance of gross unrecognized tax benefits were as follows (in thousands):

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Additions based on tax positions related to 2024 2,050

Additions for tax positions of prior years —

Reductions for tax positions of prior years

Balance as of December 31, 2024 $ 12,032

Related-Party Transactions

The Company has entered into secondary financing transactions and other transactions with certain executive officers and Board members of the Company.

A summary of the transactions is detailed below:

Notes Due From Affiliates (Contra Equity)

In February 2016, the Company issued an aggregate of $ 0.6 million in secured partial recourse promissory notes (“Partially Secured Loan”) to the Chief Executive Officer, Non-Executive Director (Previously President), Chief Operating Officer and another executive of the Company.

Hubble Transactions

In November and December 2024, the Company entered into a strategic partnership and series of transactions with Hubble Network, Inc.

(“Hubble”), including (i) a technology exclusivity and revenue share agreement (“Hubble Agreement”), (ii) a Hubble SAFE investment (“Related Party SAFE”);

and (iii) Hubble’s issuance of a warrant to purchase common stock (“Related Party Warrant”).

The Hubble Agreement has an initial term of 5 years beginning on November 12, 2024.

As part of this partnership, the Company will leverage Hubble’s global satellite infrastructure to introduce a new global location-tracking network service offering.

The partnership agreement includes revenue-share payments in which Hubble will pay the Company a percentage of revenue earned from leveraging the new global location-tracking network service offering.

Refer to Note 2, "Summary of Significant Accounting Policies" for additional information.

As of December 31, 2024, the Company earned no net revenue from the revenue share arrangement.

The partnership also allows Hubble to purchase Tile hardware devices at a price equal to the Company’s burdened cost of goods sold plus 12.5 %.

During the year ended December 31, 2024, the Company recognized $ 0.1 million in hardware revenue from sales to Hubble, which is also included in accounts receivable, net, as of year-end on the Company’s consolidated balance sheet.

Alex Haro, the founder, and Chief Executive Officer of Hubble is a co-founder, former executive, and existing member of the Company’s Board of Directors.

In addition, as part of the agreement, the Company obtained an observer right to Hubble’s Board of Directors.

As a result, all transactions with Hubble entered into in connection with the strategic partnership are considered related party transactions.

Payments made on behalf of Related Parties in connection with the U.S.

On June 6, 2024, in connection with its U.S.

IPO, the Company issued and sold 3,703,704 shares of common stock and certain selling securityholders including members of the Company’s board of directors, executive officers, non-executive employees, and other stockholders of the Company, sold 2,908,796 shares of common stock (including 862,500 shares sold pursuant to the underwriters’ full exercise of their option to purchase additional shares) in each case at an offering price of $ 27.00 per share.

The Company received net proceeds of $ 93.0 million after deducting underwriting discounts and commissions of $ 7.0 million.

The Company did not receive any proceeds from the sale of shares of common stock by the selling securityholders.

The Company paid the underwriting discounts and commissions in connection with the sale of shares of common stock by the selling securityholders.

A summary of the expenses paid on behalf of the selling securityholders is detailed below (in millions):

Life360, Inc.

Notes to Consolidated Financial Statements

The Company accounted for the Partially Secured Loan as consideration received for the exercise of the related equity award, because even after the original options are exercised or the shares are purchased, an employee could decide not to repay the loan if the value of the shares declines below the outstanding loan amount and could instead choose to return the shares in satisfaction of the loan.

The result would be similar to an employee electing not to exercise an option whose exercise price exceeds the current share price.

When shares are exchanged for a Partially Secured Loan, the principal and interest are viewed as part of the exercise price of the “option” and no interest income is recognized.

Additionally, compensation cost is recognized over any requisite service period, with an offsetting credit to additional paid-in capital.

Periodic principal and interest payments, if any, are treated as deposit liabilities until the note is paid off, at which time, the note balance is settled and the deposit liability balance is transferred to additional paid-in capital.

During the year ended December 31, 2022, the Company received proceeds from the repayment of the Partially Secured Loans of $ 0.6 million.

During the year ended December 31, 2023, the Company received proceeds from the repayment of the partially secured loan that remained outstanding of $ 0.3 million.

As of December 31, 2023 and 2022, the Company had deposit liability balances of zero and $ 0.3 million, respectively, in connection with the Partially Secured Loan and other early exercises of equity awards.

Principal amounts due under the Partially Secured Loan are included in Notes Due From Affiliates as a reduction in stockholders’ equity on the consolidated balance sheets.

Year Ended December 31, 2024

Executive Officers (1)

Board of Directors 3.9

Non-Executive Employees 0.1

(1) Includes $ 0.7 million in expenses paid on behalf of a securityholder who is both an executive officer and member of the board of directors.

The $ 5.5 million in total fees paid have been recorded within Other income (expense), net on the consolidated statement of operations and comprehensive loss for the year ended December 31, 2024.

For additional details regarding this transaction, refer to the prospectus supplement filed with the SEC on June 6, 2024 as well as the registration statement on Form S-3 (File No.

333-279271) filed with the SEC on May 9, 2024, of which the prospectus supplement forms a part.

Other Related Party Transactions

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During the year ended December 31, 2022, Carthona Capital received consideration of $ 0.1 million for consultancy services to the Company in relation to capital raising matters.

Annika Hulls is the spouse of the CEO and Executive Director, Chris Hulls.

During the year ended December 31, 2022, a

cash payment of $ 6.5 thousand was paid to Annika Hulls for services relating to a marketing campaign.

No similar payments were made for the years ended December 31, 2024 or 2023.

Defined Contribution Plan

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Contributions made by the Company are voluntary and are determined annually by the Board of Directors on an individual basis subject to the maximum allowable amount under federal tax regulations.

Employer contributions to the plan were $ 1.1 million for the year ended December 31, 2023.

There were immaterial employer contributions to the plan for the years ended December 31, 2022 and 2021.

Employer contributions to the plan were $ 1.2 million and $ 1.1 million for the years ended December 31, 2024 and December 31, 2023, respectively.

There were immaterial employer contributions to the plan for the year ended December 31, 2022

Net Loss Per Share

Basic net loss per share is computed by dividing net loss by the weighted-average number of common shares outstanding for the fiscal period.

Diluted net loss per share is computed by giving effect to potential convertible securities.

The dilutive effect of the outstanding September 2021 Convertible Notes and July 2021 Convertible Notes are reflected in diluted net loss per share by application of the if-converted method.

Basic net loss per share is computed by dividing net loss available to common stockholders by the weighted-average number of common shares outstanding for the fiscal period.

Diluted net loss per share reflects the potential dilution that could occur if options, RSUs, PRSUs, warrants, or other securities that could result in the issuance of common stock were exercised or converted to common stock using the treasury-stock method.

The dilutive effect of the outstanding September 2021 Convertible Notes and July 2021 Convertible Notes are reflected in diluted net loss per share by application of the if-converted method for the years ended December 31, 2023 and 2022.

Life360, Inc.

Notes to Consolidated Financial Statements

A reconciliation of the numerator and denominator used in the calculation of basic and diluted net loss per share (in thousands, except share and per share data):

The following table presents the calculation of basic and diluted net loss per share (in thousands, except share and per share data):

Year Ended December 31,

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2024 2023 2022

Issuances under stock incentive plan 6,625,812 8,180,840 6,972,376

Issuances under stock incentive plan, stock options 5,673,947 6,625,812 8,180,840

Issuances upon exercise of common stock warrants 7,761 137,658 137,658

Issuances upon vesting of restricted stock units 5,091,601 6,182,543 6,779,892

Issuances of convertible notes 325,981 — 686,926

Issuances upon conversion of convertible notes — 325,981 —

10,773,309 13,271,994 15,098,390

Life360, Inc.

Notes to Consolidated Financial Statements

Subsequent Events

On February 27, 2025, the Company entered into an Asset Purchase Agreement with Fantix, Inc., to purchase certain assets of Fantix, Inc., for a total consideration of $ 4.5 million.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data