What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-05-12 compared with 2024-11-12 · 120 added, 184 removed, 231 unchanged (57% of the section changed)

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In addition to historical financial information, the following discussion contains forward-looking statements that are based upon current plans, expectations and beliefs that involve risks and uncertainties.

Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under the section titled “Risk Factors” under Part II, Item 1A in this Quarterly Report and Part I, Item 1A in our Annual Report.

Our actual results could differ materially from those discussed in the forward-looking statements as a result of a variety of factors, including but not limited to those discussed in “Risk Factors” under Part II, Item 1A in this Quarterly Report and Part I, Item 1A in our Annual Report.

Life360 is a leading technology platform used to locate the people, pets and things that matter most to families.

Life360 is creating a new category at the intersection of family, technology, and safety to help keep families safe and connected.

Life360 is creating a new category at the intersection of family, technology, and safety to help keep families connected and safe.

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

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

We also generate revenue through Jiobit and Tile subscription services and hardware tracking devices.

We also generate revenue through hardware subscription services and the sale of hardware tracking devices.

By offering devices and integrated software to members, we have expanded our addressable market to provide members of all ages with a vertically integrated, cross-platform solution of scale.

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Key Components of Our Results of Operations

The following discussion describes certain line items in our condensed consolidated statements of operations and comprehensive income (loss).

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.

Subscription Revenue

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Hardware Revenue

We generate our hardware revenue from the sale of the Jiobit and Tile hardware tracking devices and related accessories.

We generate our hardware revenue from the sale of Jiobit and Tile hardware tracking devices and related accessories.

For hardware and accessories, revenue is recognized at the time products are delivered.

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Other Revenue

We also generate revenue through an arrangement with a key data partner that provides location-based analytics services to customers in the retail and real estate sectors, municipalities, and other private and public organizations.

Other revenue consists of data and partnership revenue, which includes advertising revenue.

We generate data revenue primarily through an arrangement with a key data partner that provides location-based analytics to customers in the retail and real estate sectors, municipalities, and other private and public organizations.

The agreement permits commercialization of certain aggregated and de-identified data and provides for fixed and variable monthly revenue amounts.

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

We generate partnership revenue through agreements with third parties which grant them access to anonymized data insights or advertising on the Company’s mobile platform, and through the recognition of revenue related to the Related Party Warrant.

Cost of Revenue and Gross Margin

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Gross Profit and Gross Profit Margin

Our gross profit has been, and may in the future be, influenced by several factors, including timing of capital expenditures and related depreciation expense, increases in infrastructure costs, component costs, contract manufacturing and supplier pricing, and foreign currency exchange rates.

Our gross profit has been, and may in the future be, influenced by several factors, including timing of capital expenditures and related depreciation expense, increases in infrastructure costs, component costs, tariffs, contract manufacturing and supplier pricing, and foreign currency exchange rates.

Gross profit and gross profit margin may fluctuate over time based on the factors described above.

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Sales and Marketing

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 third parties in connection with annual subscription sales of the Company’s mobile application on third-party 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.

Our sales and marketing expenses consist primarily of commissions to the Company’s third-party platforms (each a “Channel Partner”), personnel-related costs, brand marketing costs, lead generation costs, sales incentives, sponsorships and amortization of acquired intangibles, bad debt expense, and allocated overhead.

Commission payments to Channel Partners in connection with annual subscription sales of the Company’s mobile application on third-party 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.

We plan to continue to invest in sales and marketing to grow our member base and increase our brand awareness, including marketing efforts to continue to drive our business model.

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Our general and administrative expenses consist primarily of employee-related costs for our legal, finance, human resources, and other administrative teams, as well as certain executive officers.

In addition, general and administrative expenses include allocated overhead, outside legal, accounting and other professional fees, change in fair value of contingent consideration for business combinations, and non-income-based taxes.

In addition, general and administrative expenses include allocated overhead, outside legal, accounting and other professional fees, and non-income-based taxes.

We expect our general and administrative expenses will increase in absolute dollars as our business grows.

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Convertible Notes Fair Value Adjustment

The Company issued convertible notes to investors in July 2021 (the “July 2021 Convertible Notes”), and as part of the purchase consideration related to the Jiobit Acquisition in September 2021 (the “September 2021 Convertible Notes” and together with the July 2021 Convertible Notes, the “Convertible Notes”).

The September 2021 Convertible Notes were recorded at fair value and revalued at each reporting period.

The Company issued convertible notes to investors in July 2021 (the “July 2021 Convertible Notes”), and as part of the purchase consideration related to the acquisition of Jiobit in September 2021 (the “September 2021 Convertible Notes” and together with the July 2021 Convertible Notes, the “Convertible Notes”).

The September 2021 Convertible Notes were recorded at fair value and revalued at each reporting period prior to their conversion to common stock in April 2024.

Derivative Liability Fair Value Adjustment

Derivative liability fair value adjustment relates to the change in the fair value of the embedded conversion and redemption features associated with the July 2021 Convertible Notes.

Gain on Change in Fair Value of Investment

Gain on change in fair value of investment relates to the revaluation of warrants held to purchase shares of preferred stock of a data revenue partner in connection with an observable price change.

Other Income (Expense), net

Other income (expense), net consists of interest and dividend income earned on our cash and cash equivalents balances, foreign currency exchange gains/(losses) related to the remeasurement of certain assets and liabilities of our foreign subsidiaries that are denominated in currencies other than the functional currency of the subsidiary, foreign exchange transactions gains/(losses), interest expense primarily related to the Convertible Notes, and our U.S.

IPO transaction costs.

Derivative liability fair value adjustment relates to the change in the fair value of the embedded conversion and redemption features associated with the July 2021 Convertible Notes prior to their conversion to common stock in June 2024.

Other Income, net

Other income, net consists of interest income earned on our cash and cash equivalents balances, foreign currency exchange gains/(losses) related to the remeasurement of certain assets and liabilities of our foreign subsidiaries that are denominated in currencies other than the functional currency of the subsidiary and foreign exchange transactions gains/(losses), interest expense primarily related to the Convertible Notes.

Provision for (Benefit from) Income Taxes

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Results of Operations

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

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 % Change 2024 2023 % Change

The following tables set forth our condensed consolidated statements of operations and comprehensive income (loss) for the three months ended March 31, 2025 and 2024 (in thousands, except percentages).

Three Months Ended March 31,

2025 2024 % Change

Subscription revenue $ 81,874 $ 61,579 33 %

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Total operating expenses 81,360 66,392 23 %

Loss from operations (4,951) (6,507) 24 % (13,693) (25,642) 47 %

Income (loss) from operations 2,189 (6,379) 134 %

Other income (expense):

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Derivative liability fair value adjustment — (1,707) 100 %

Loss on settlement of convertible notes — — — % (440) — (100) %

Gain on settlement of derivative liability — — — % 1,924 — 100 %

Gain on change in fair value of investment 5,389 — 100 % 5,389 — 100 %

Other income (expense), net 2,524 337 649 % (1,772) 1,797 (199) %

Other income, net 1,975 311 535 %

Total other income (expense), net 1,975 (2,004) 199 %

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(1) Includes stock-based compensation expense as follows (in thousands, except percentages):

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 % Change 2024 2023 % Change

Three Months Ended March 31,

2025 2024 % Change

Cost of revenue

Subscription costs $ 193 $ 151 28 % $ 555 $ 429 29 %

Hardware costs 204 266 (23) % 612 715 (14) %

Other costs — 10 (100) % 4 32 (88) %

Cost of subscription revenue

$ 168 $ 159 6 %

Cost of hardware revenue

Cost of other revenue

Total cost of revenue 403 347

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The following table sets forth our results of operations as a percentage of total revenue:

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

Three Months Ended March 31,

Subscription revenue 79 % 79 %

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Total cost of revenue

25 % 26 % 24 % 25 %

Gross profit 81 % 77 %

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Total operating expenses 79 % 85 %

Loss from operations (5) % (8) % (5) % (12) %

Income (loss) from operations 2 % (8) %

Other income (expense):

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Derivative liability fair value adjustment — % (2) %

Loss on settlement of convertible notes — % — % — % — %

Gain on settlement of derivative liability — % — % 1 % — %

Gain on change in fair value of investment 6 % — % 2 % — %

Other income (expense), net 3 % — % (1) % 1 %

Other income, net 2 % — %

Total other income (expense), net 2 % (3) %

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Total comprehensive income (loss) 4 % (12) %

Three Months Ended September 30, Change Nine Months Ended September 30, Change

Three Months Ended March 31, Change

2025 2024 $ %

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Total revenue $ 103,624 $ 78,227 $ 25,397 32 %

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

Hardware revenue decreased $3.8 million, or 24%, during the three months ended September 30, 2024 as compared to the three months ended September 30, 2023.

The decrease was primarily driven by a delay in our new product launch, which was accompanied by increased discounts implemented to clear out existing inventory.

The combination of higher discounts and reduced sales volume led to a $3.5 million decrease in retail sales, while a $0.3 million increase in returns further impacted hardware revenue.

Other revenue increased $2.8 million, or 43%, during the three months ended September 30, 2024 as compared to the three months ended September 30, 2023, due to a $2.0 million increase in data revenue, which was primarily attributable to the Amended and Restated Data Services and License Agreement with Placer.ai we entered into in July 2024 (the “A&R Placer Agreement”), and a $0.8 million increase in partnership revenue.

Subscription revenue increased $38.1 million, or 24%, during the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023, primarily due to a 20% growth in total subscriptions and a 25% growth in Paying Circles.

Additionally, subscription revenue in the current period benefited from the impact of price increases for existing U.S.

Android Life360 subscriptions, which were fully implemented during the three months ended June 30, 2023.

Hardware revenue decreased $3.3 million, or 9%, during the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023.

The decrease was primarily due to a $4.8 million decrease in retail sales driven by a delay in our new product launch, which led to lower sales volume.

This decline was partially offset by a $1.5 million decrease in discounts and returns.

Other revenue increased $3.6 million, or 18%, during the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023, due to a $2.1 million increase in data revenue, which was primarily attributable to the A&R Placer Agreement, and a $1.5 million increase in partnership revenue.

Subscription revenue increased $20.3 million, or 33%, during the three months ended March 31, 2025 as compared to the three months ended March 31, 2024, primarily due to a 26% growth in Paying Circles (as defined below) and a 19% growth in total subscriptions.

Additionally, subscription revenue in the current period benefited from price increases for new and existing Life360 subscriptions implemented during the second half of 2024.

Hardware revenue decreased $1.3 million, or 13%, during the three months ended March 31, 2025 as compared to the three months ended March 31, 2024.

The decline was primarily driven by a $0.9 million reduction in revenue related to bundled offerings as well as a $1.2 million increase in discounts.

These impacts were partially offset by a $0.7 million decrease in returns and a $0.1 million increase in gross revenue, which was driven by a higher average selling price.

Other revenue increased $6.4 million, or 99%, during the three months ended March 31, 2025 as compared to the three months ended March 31, 2024, due to a $4.5 million increase in partnership revenue, which includes advertising revenue, and a $1.9 million increase in data revenue, which was primarily attributable to the Amended and Restated Data Services and License Agreement with Placer.ai we entered into in July 2024.

Cost of Revenue, Gross Profit, and Gross Margin

Three Months Ended September 30, Change Nine Months Ended September 30, Change

Three Months Ended March 31, Change

2025 2024 $ %

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Other 90% 86%

Cost of subscription revenue increased $2.4 million, or 29%, during the three months ended September 30, 2024 as compared to the three months ended September 30, 2023, primarily due to a $1.5 million increase in technology expenses, a $0.5 million increase in personnel-related and stock-based compensation costs, and a $0.4 million increase in premium membership offerings and other costs, attributable to Company growth.

Subscription gross margin remained flat at 85% during the three months ended September 30, 2024 as compared to the three months ended September 30, 2023.

Cost of hardware revenue decreased $0.4 million, or 3%, during the three months ended September 30, 2024 as compared to the three months ended September 30, 2023.

The decrease was primarily due to a $1.2 million decrease in costs related to the reduced number of units sold, which was partially offset by a $0.6 million increase in freight costs related to a shift in channel mix and a $0.2 million increase in other fixed costs, attributable to Company growth.

Hardware gross margin decreased to 5% during the three months ended September 30, 2024 from 26% during the three months ended September 30, 2023, primarily due to increased discounts implemented to clear out existing inventory ahead of the new product launch.

Fewer units sold, combined with an increase in fixed hardware costs in line with Company growth, and an increase in freight costs associated with a shift in channel mix also impacted margin.

Cost of other revenue remained flat during the three months ended September 30, 2024 as compared to the three months ended September 30, 2023, as the Company maintained its single aggregated data arrangement.

Other gross margin increased to 89% due to the increase in data and partnership revenue, while costs remained relatively flat.

Cost of subscription revenue increased by $7.7 million, or 34%, during the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023, primarily due to a $2.8 million increase in technology expenses and a $1.8 million benefit related to the discontinuation of certain battery related membership benefits recognized in the second quarter of 2023.

The Company also saw increases of $1.5 million in costs associated with premium membership offerings, $1.4 million in personnel-related and stock-based compensation costs, and $0.2 million in other cost of subscription revenue expenses, attributable to Company growth.

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

Cost of hardware revenue decreased by $0.6 million, or 2%, during the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023.

The decrease was primarily due to a $1.1 million decrease in costs related to the reduced number of units sold as well as a $0.7 million decrease in costs related to the discontinuation of certain battery related membership benefits which took place during the second quarter of 2023.

The decreases were partially offset by increases of $0.7 million in hardware freight costs related to a shift in channel mix and $0.5 million in other fixed costs attributable to Company growth.

Hardware gross margin decreased to 14% during the nine months ended September 30, 2024 from 20% during the nine months ended September 30, 2023, primarily due to an increase in freight costs associated with the shift in channel mix, a decrease in units sold, and an increase in fixed hardware costs in line with Company growth.

Cost of other revenue remained flat during the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023, as the Company maintained its single aggregated data arrangement.

Other gross margin increased to 88% due to the increase in data and partnership revenue, while costs remained relatively flat.

Cost of subscription revenue increased $0.8 million, or 9%, during the three months ended March 31, 2025 as compared to the three months ended March 31, 2024, primarily due to a $0.8 million increase in technology and other expenses, attributable to Company growth.

Subscription gross margin increased to 88% during the three months ended March 31, 2025 from 85% during the three months ended March 31, 2024, primarily due to price increases for new and existing Life360 subscriptions implemented during the second half of 2024.

Cost of hardware revenue increased $0.6 million, or 7%, during the three months ended March 31, 2025 as compared to the three months ended March 31, 2024.

This was primarily driven by increases of $0.7 million in inventory reserves, $0.3 million in personnel-related and stock-based compensation costs associated with Company growth, and $0.3 million in freight costs due to a shift in channel mix.

These increases were partially offset by a $0.7 million decrease in hardware product costs resulting from a lower volume of units sold.

Hardware gross margin decreased to 3% during the three months ended March 31, 2025 from 21% during the three months ended March 31, 2024, primarily due to a $1.2 million increase in discounts, an increase in freight costs associated with the shift in channel mix, and an increase in fixed hardware costs in line with Company growth.

Cost of other revenue increased by $0.5 million, or 51%, during the three months ended March 31, 2025 as compared to the three months ended March 31, 2024, due to increases of $0.3 million in technology and other related expenses to support the existing customer base and $0.2 million in costs associated with the growth in partnership revenue, which includes advertising revenue.

Other gross margin increased to 90% during the three months ended March 31, 2025 from 86% during the three months ended March 31, 2024, primarily due to revenue outpacing the increase in costs.

Research and Development

Three Months Ended September 30, Change Nine Months Ended September 30, Change

Three Months Ended March 31, Change

2025 2024 $ %

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Research and development $ 30,403 $ 27,258 $ 3,145 12 %

Research and development expenses increased $4.4 million, or 18%, during the three months ended September 30, 2024 as compared to the three months ended September 30, 2023.

This was primarily due to increases of $3.3 million in personnel-related and stock-based compensation costs, $1.2 million in technology and other expenses, $0.6 million in contractor spend, and $0.3 million in professional and outside services, attributable to Company growth.

The increases were partially offset by a $0.9 million increase in capitalized costs related to internal use software and a $0.1 million increase in capitalized construction in progress costs.

Research and development expenses increased by $8.3 million, or 11%, during the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023.

This was primarily due to increases of $8.2 million in personnel-related and stock-based compensation costs, $3.1 million in technology and other expenses, $1.6 million in contractor spend, and $0.5 million in professional and outside services, attributable to Company growth.

The increases were partially offset by a $3.5 million increase in capitalized costs related to internal use software, a $0.9 million increase related to a raw materials inventory write-off that negatively impacted the nine months ended September 30, 2023, and a $0.7 million increase in capitalized construction in progress costs.

Research and development expenses increased $3.1 million, or 12%, during the three months ended March 31, 2025 as compared to the three months ended March 31, 2024.

This was primarily due to increases of $2.6 million in personnel-related and stock-based compensation costs, $1.1 million in technology costs, $0.4 million in professional and outside services spend, and $0.2 million in contractor spend.

The increases were partially offset by a $0.9 million increase in capitalized construction in progress costs and a $0.3 million increase in capitalized internally developed software.

Sales and Marketing

Three Months Ended September 30, Change Nine Months Ended September 30, Change

Three Months Ended March 31, Change

2025 2024 $ %

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Sales and marketing $ 35,308 $ 24,733 $ 10,575 43 %

Sales and marketing expenses increased $5.0 million, or 19%, during the three months ended September 30, 2024 as compared to the three months ended September 30, 2023.

This was primarily due to increases of $3.2 million in commissions to the Company’s third-party platforms and distribution channels (each a “Channel Partner”), which was in line with the 20% growth in subscriptions, $2.1 million in other marketing spend, $0.7 million in personnel-related and stock-based compensation costs, $0.4 million in professional and outside services spend, and $0.2 million in technology expenses due to Company growth.

The increases were partially offset by a $1.6 million decrease in paid user acquisition costs due to planned shifts in the allocation of spend to other marketing.

Sales and marketing expenses increased $6.4 million, or 9%, during the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023.

This was primarily due to increases of $6.7 million in Channel Partner commissions, which was in line with the 20% growth in subscriptions, $3.3 million in other marketing spend, $0.4 million in technology expenses, and $0.4 million in professional and outside services, attributable to Company growth.

The increases were partially offset by a $4.4 million decrease in paid user acquisition costs due to planned shifts in the allocation of spend to other marketing.

Sales and marketing expenses increased $10.6 million, or 43%, during the three months ended March 31, 2025 as compared to the three months ended March 31, 2024.

This was primarily due to increases of $3.7 million in commissions to the Company’s third-party platforms and distribution channels (each a “Channel Partner”), which is in line with the increase in subscription revenue, and $3.3 million in growth media spend.

Additional increases included $1.9 million in personnel-related and stock-based compensation costs, $1.0 million in other marketing spend, $0.4 million in technology costs, and $0.3 million in professional and outside services spend, all attributable to Company growth.

General and Administrative

Three Months Ended September 30, Change Nine Months Ended September 30, Change

Three Months Ended March 31, Change

2025 2024 $ %

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General and administrative $ 15,649 $ 14,401 $ 1,248 9 %

General and administrative expenses increased $1.1 million, or 8%, during the three months ended September 30, 2024 as compared to the three months ended September 30, 2023.

This was primarily due to increases of $1.9 million in personnel-related and stock-based compensation costs and $0.3 million in technology expenses, attributable to Company growth.

The increases were partially offset by a decrease of $0.8 million in professional and outside services following the completion of our U.S.

IPO, and a $0.3 million increase in capitalized costs related to internal use software.

General and administrative expenses increased $4.5 million, or 11%, during the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023.

This was primarily due to a $2.5 million increase in professional and outside services driven by costs incurred in connection with the U.S.

IPO as well as ongoing public company compliance costs.

Additional increases included $1.5 million in personnel-related and stock-based compensation costs and $0.8 million in technology and other expenses attributable to company growth.

These were partially offset by a $0.3 million increase in capitalized costs related to internal use software.

General and administrative expenses increased $1.2 million, or 9%, during the three months ended March 31, 2025 as compared to the three months ended March 31, 2024.

This was primarily due to increases of $1.6 million in personnel-related and stock-based compensation costs and $0.8 million in technology and other expenses, attributable to Company growth.

The increases were partially offset by a decrease of $1.0 million in professional and outside services spend, primarily driven by lower Sarbanes-Oxley related compliance costs, and a $0.2 million increase in capitalized internally developed software.

Convertible Notes Fair Value Adjustment

In April and June 2024, the September 2021 Convertible Notes and the July 2021 Convertible Notes, respectively, were converted to common stock.

As a result, the Company recorded no gain or loss associated with the convertible notes fair value adjustment for the three months ended September 30, 2024.

A loss of $0.6 million associated with the convertible notes fair value adjustment was recorded for the three months ended September 30, 2023.

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

The changes in fair value are primarily driven by the share price volatility and reduction in time to convert.

As a result, the Company recorded no gain or loss associated with the convertible notes fair value adjustment for the three months ended March 31, 2025.

A loss of $0.6 million associated with the convertible notes fair value adjustment was recorded for the three months ended March 31, 2024.

Derivative Liability Fair Value Adjustment

In June 2024, the holders of the July 2021 Convertible Notes converted their notes and accrued interest to common stock and the embedded derivative liability was settled as a result of the conversion.

As such, the Company recorded no gain or loss associated with the derivative liability fair value adjustment for the three months ended September 30, 2024.

A gain of $0.1 million associated with the derivative liability fair value adjustment was recorded for the three months ended September 30, 2023.

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

The changes are due to the revaluation of the derivative liability at each reporting period and the increase in stock price related to embedded redemption features bifurcated from the July 2021 Convertible Notes issued to investors.

Loss on Settlement of Convertible Notes

In April and June 2024, the September 2021 Convertible Notes and the July 2021 Convertible Notes, respectively, were converted to common stock.

As a result, the Company recorded no gain or loss related to the settlement of the September 2021 Convertible Notes and July 2021 Convertible Notes for three months ended September 30, 2024.

A loss of $0.4 million associated with the settlement of the Convertible Notes was recorded for the nine months ended September 30, 2024.

There were no such transactions during the three and nine months ended September 30, 2023.

Gain on Settlement of Derivative Liability

In June 2024, the holders of the July 2021 Convertible Notes converted their notes and accrued interest to common stock and the derivative liability was settled as a result of the conversion.

As a result, the Company recorded no gain or loss related to the settlement of the derivative liability upon conversion of the July 2021 Convertible Notes for three months ended September 30, 2024.

A gain of $1.9 million associated with the settlement of the derivative liability was recorded for the nine months ended September 30, 2024.

There were no such transactions during the three and nine months ended September 30, 2023.

Gain on Change in Fair Value of Investment

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

The observable price change resulted in a fair value adjustment and gain of $5.4 million recorded for the three and nine months ended September 30, 2024.

No such gains were recorded for the three and nine months ended September 30, 2023.

Other Income (Expense), Net

Other income (expense), net includes transaction costs, interest income, dividend income, foreign exchange losses, and interest expense associated with the July 2021 Convertible Notes.

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

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

Other income (expense), net increased $2.2 million, or 649%, during the three months ended September 30, 2024 as compared to the three months ended September 30, 2023.

As such, the Company recorded no gain or loss associated with the derivative liability fair value adjustment for the three months ended March 31, 2025.

A loss of $1.7 million was recorded for the three months ended March 31, 2024.

Other Income, Net

Other income, net includes interest income, dividend income, foreign exchange losses, and interest expense associated with the July 2021 Convertible Notes.

For the three months ended March 31, 2025, other income, net consists of $2.0 million in other income and for the three months ended March 31, 2024, consists of $0.9 million in other income and $0.6 million in other expense.

Other income, net increased $1.7 million, or 535%, during the three months ended March 31, 2025 as compared to the three months ended March 31, 2024.

This was primarily driven by a $0.9 million increase in dividend and interest income resulting from higher average gross yields primarily due to an increased cash and cash equivalents balance.

In addition, a $0.4 million favorable change in the impact of currency revaluation and a $0.4 million reduction in interest expense and other costs contributed to the increase.

Other income (expense), net decreased $3.6 million, or 199%, during the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023.

The decrease was primarily driven by a $5.6 million increase in transaction costs incurred in connection with our U.S.

IPO, which were partially offset by a $2.0 million increase in dividend and interest income resulting from higher average gross yields primarily due to an increased cash and cash equivalents balance.

Provision for (benefit from) Income Taxes

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

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

Benefit from income taxes increased $1.6 million during the three months ended March 31, 2025 as compared to the three months ended March 31, 2024.

The changes are due to the estimated growth in the Company’s annual estimated effective tax rate in the U.S.

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We believe these key performance indicators are useful to investors because they allow for greater transparency with respect to key metrics used by management in its financial and operational decision-making, and they may be used by investors to help analyze the health of our business.

Key operating metrics are presented in millions, except ARPPC, Average Revenue per Paying Subscription (“ARPPS”) and Average Selling Price (“ASP”), however percentage changes are calculated based on actual results.

Key operating metrics are presented in millions, except ARPPC, Average Revenue per Paying Subscription (“ARPPS”) and Average Sales Price (“ASP”), however percentage changes are calculated based on actual results.

As a result, percentage changes may not recalculate based on figures presented due to rounding.

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Key Operating Metrics

As of and for the Three Months Ended September 30, As of and for the Nine Months Ended September 30,

2024 2023 % Change 2024 2023 % Change

As of and for the Three Months Ended

2025 2024 % Change

(in millions, except ARPPC, ARPPS and ASP)

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$ 16.99 $ 16.50 3 %

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

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

Excludes revenue related to bundled Life360 subscription and hardware offerings of $(0.4) million for the three months ended March 31, 2025, and $(1.2) million for the three months ended March 31, 2024.

Excludes revenue related to bundled Life360 subscription and hardware offerings of $0.4 million for the three months ended March 31, 2025, and $1.2 million for the three months ended March 31, 2024.

Annualized Monthly Revenue

We use Annualized Monthly Revenue (“AMR”) to identify the annualized monthly value of active customer agreements at the end of a reporting period.

AMR includes the annualized monthly value of Life360 subscription, data and partnership agreements.

AMR includes the annualized monthly value of subscription, data and partnership agreements.

All components of these agreements that are not expected to recur are excluded.

This does not represent revenue under GAAP on an annualized basis, as the operating metric can be impacted by start and end dates and renewal rates.

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

AMR as of March 31, 2025, and 2024 was $393.0 million and $284.7 million, respectively, representing an increase of 38% year-over-year, which is largely attributable to continued subscriber growth.

Monthly Active Users

We have a large and growing global user base as of September 30, 2024.

We have a large and growing global member base as of March 31, 2025.

A Life360 monthly active user (“MAU”) is defined as a unique member who engages with our Life360 branded services each month, which includes both paying and non-paying members, and excludes certain members who have a delayed account setup.

As of September 30, 2024 and 2023, we had approximately 76.9 million and approximately 58.4 million MAUs on the Life360 Platform, respectively, representing an increase of 32% year over year.

As of March 31, 2025 and 2024, we had approximately 83.7 million and approximately 66.4 million MAUs on the Life360 Platform, respectively, representing an increase of 26% year-over-year.

We believe this has been driven by continued strong new member growth and retention.

Paying Circles

We define a Paying Circle as a group of Life360 members with a paying subscription that has been billed as of the end of a period.

We define a Paying Circle as a group of Life360 members with a paying subscription who have been billed as of the end of period.

Each subscription covers all members in the payor’s Circle so everyone in the Circle can utilize the benefits of a Life360 Membership, including access to premium location, driving, digital and emergency safety insights and services.

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

As of March 31, 2025 and 2024, we had approximately 2.4 million and 1.9 million paid subscribers to services under our Life360 brand, respectively, representing an increase of 26% year-over-year.

We grow the number of Paying Circles by increasing our free member base, converting free members to subscribers, and retaining them over time with the provision of high-quality family connectivity and safety services.

Average Revenue per Paying Circle

We define Average Revenue per Paying Circle as annualized subscription revenue recognized and derived from the Life360 mobile application, excluding revenue related to bundled Life360 subscription and hardware offerings, for the reported period, divided by the Average Paying Circles during the same period.

We define Average Revenue per Paying Circle (“ARPPC”) as annualized subscription revenue recognized and derived from the Life360 mobile application, excluding revenue related to bundled Life360 subscription and hardware offerings, for the reported period, divided by the Average Paying Circles during the same period.

Average Paying Circles are calculated by adding the number of Paying Circles as of the beginning of the period to the number of Paying Circles as of the end of the period, and then dividing by two.

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

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

For the three months ended March 31, 2025 and 2024, our ARPPC was $133.42 and $123.97, respectively, representing an 8% increase year-over-year.

ARPPC is a key indicator utilized by Life360 to determine our effectiveness at monetizing Paying Circles through tiered product offerings.

ARPPC has benefited from a shift in product mix towards higher priced products.

In addition, price increases for existing subscribers began in January 2024 in the United Kingdom (“UK”) and March 2024 in Australia and New Zealand (“ANZ”), while the Triple Tier memberships launched in October 2023 and April 2024, respectively.

ARPPC has benefited from price increases for new and existing subscribers implemented in September 2024 and October 2024, respectively, as well as a shift in product mix towards higher priced products.

International ARPPC also benefited from price increases for legacy subscribers, as well as the launch of dual and triple tier memberships across certain international markets throughout 2024.

The positive impacts seen from the price increases were partially offset by an increase in international subscribers, which overall, have lower priced subscriptions.

Subscriptions

We define Subscriptions as the number of paying subscribers associated with the Life360, Jiobit and Tile brands who have been billed as of the end of the period.

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

We grow the number of Subscriptions by selling hardware units and increasing our free member base, converting free members to subscribers, and retaining them over time with the provision of item tracking and high-quality family and safety services.

We define Subscriptions as the number of paying subscribers associated with the Life360, Tile and Jiobit brands who have been billed as of the end of the period.

As of March 31, 2025 and 2024, we had approximately 3.0 million and 2.5 million paid subscribers, respectively, to services under the Life360, Tile, and Jiobit brands, representing an increase of 19% year-over-year.

We grow the number of Subscriptions by selling hardware units and increasing our free member base, converting free members to subscribers, and retaining them over time with the provision of location tracking and high-quality family and safety services.

Average Revenue per Paying Subscription

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Paying subscribers represent subscribers who have been billed as of the end of the period.

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

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

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

In addition, price increases for existing subscribers began in January 2024 in the UK and March 2024 in ANZ, while the Triple Tier memberships launched in October 2023 and April 2024, respectively.

The positive impacts seen from the price increases were partially offset by an increase in international subscribers, which overall, have subscriptions priced at lower prices.

ARPPS for the three months ended March 31, 2025 and 2024 was $112.98 and $102.02, respectively, representing an increase of 11% year-over-year.

ARPPS has increased year over year as a result of price increases for new and existing subscribers implemented in September 2024 and October 2024, respectively, as well as a shift in product mix towards higher priced products.

International ARPPC also benefited from price increases for legacy subscribers, as well as the launch of dual and triple tier memberships across certain international markets throughout 2024.

The positive impacts seen from the price increases were partially offset by an increase in international subscribers, which overall, have lower priced subscriptions.

Net Hardware Units Shipped

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Selling units contributes to hardware revenue and ultimately increases the number of members eligible for a Tile or Jiobit subscription.

For the three months ended September 30, 2024 and 2023, we sold approximately 0.8 million units and 1.1 million units, respectively, representing a decrease of 24% year over year.

For the nine months ended September 30, 2024 and 2023, we sold approximately 2.0 million units and 2.3 million units, respectively, representing a decrease of 12% year over year.

The decrease in net hardware units shipped for both periods was primarily driven by a delay in our new product launch.

Net Average Selling Price (ASP)

For the three months ended March 31, 2025 and 2024, we sold approximately 0.50 million units and 0.54 million units, respectively, representing a decrease of 8% year-over-year.

The decrease in net hardware units shipped was primarily due to a decrease in enterprise channel sales.

Net Average Sales Price (ASP)

To determine the net ASP of a unit, we divide hardware revenue recognized, excluding revenue related to bundled Life360 subscription and hardware offerings, for the reported period by the number of net hardware units shipped during the same period.

ASP is largely driven by the price we charge customers, including the price we charge our retail partners, net of customer allowances, and directly to consumers.

For the three months ended September 30, 2024 and 2023, the net ASP per unit was $12.69 and $13.24, respectively, representing a decrease of 4% year over year.

For the nine months ended September 30, 2024 and 2023, the net ASP per unit was $14.78 and $14.96, respectively, representing a decrease of 1% year over year.

The decreases in net ASP for both periods were primarily due to increased discounts implemented to clear out existing inventory prior to the new product launch.

For the three months ended March 31, 2025 and 2024, the net ASP per unit was $16.99 and $16.50, respectively, representing an increase of 3% year-over-year.

The increase in net ASP was primarily due to a shift in channel mix and fewer returns.

Liquidity and Capital Resources

On June 6, 2024, we completed our U.S.

IPO, selling a total of 3,703,704 shares of common stock and raising net proceeds of $93.0 million after deducting underwriting discounts and commissions.

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

As of September 30, 2024, we had cash and cash equivalents of $159.0 million and restricted cash of $1.2 million.

As of March 31, 2025, we had cash and cash equivalents of $168.9 million and restricted cash of $1.5 million.

As of December 31, 2024, we had cash and cash equivalents of $159.2 million and restricted cash of $1.2 million.

We believe our existing cash and cash equivalents and cash provided by sales of our subscriptions and hardware devices will be sufficient to support working capital and capital expenditure requirements for at least the next 12 months.

Our future capital requirements will depend on many factors and as a result, we may be required to seek additional capital.

We may from time to time seek to raise additional capital based on a variety of factors, including our capital requirements and the relative favorability of conditions in the capital markets.

If we are unable to raise additional capital on terms acceptable to us or generate cash flows necessary to expand our operations and invest in continued innovation, we may not be able to compete successfully, which would harm our business, financial condition and results of operations.

Our cash flow activities were as follows for the periods presented:

Nine Months Ended September 30,

Three Months Ended March 31,

(in thousands)

Net cash provided by (used in) operating activities $ 20,289 $ (1,434)

Net cash provided by operating activities $ 12,060 $ 10,688

Net cash used in investing activities (4,347) (1,089)

Net cash provided by (used in) financing activities 2,183 (5,709)

Net Increase (Decrease) in Cash, Cash Equivalents, and Restricted Cash $ 89,472 $ (26,708)

Net Increase in Cash, Cash Equivalents, and Restricted Cash $ 9,896 $ 3,890

Operating Activities

Our largest sources of operating cash are cash collections from our paying members for subscriptions to our platform and hardware device sales.

Our primary uses of cash for operating activities are for employee-related expenditures, costs to acquire inventory, infrastructure-related costs, commissions paid to Channel Partners and other marketing expenses.

Our primary uses of cash from operating activities are for employee-related expenditures, costs to acquire inventory, infrastructure-related costs, commissions paid to Channel Partners and other marketing expenses.

A number of our members pay in advance for annual subscriptions, while a majority pay in advance for monthly subscriptions.

Deferred revenue consists of the unearned portion of customer billings, which is recognized as revenue in accordance with our revenue recognition policy.

As of September 30, 2024 and December 31, 2023, we had deferred revenue of $39.9 million and $35.8 million, respectively, of which $37.9 million and $33.9 million is expected to be recorded as revenue in the next 12 months, provided all other revenue recognition criteria have been met.

For the nine months ended September 30, 2024, net cash provided by operating activities was $20.3 million.

The primary factors affecting our operating cash flows during this period were our net loss of $13.1 million, impacted by $33.3 million of non-cash adjustments, and $20 thousand of cash used by changes in our operating assets and liabilities, which was partially offset by a payment of $5.5 million for expenses paid on behalf of the selling stockholders in connection with the secondary offering completed during the second quarter of 2024.

The non-cash adjustments primarily consisted of stock-based compensation, depreciation and amortization, fair value adjustments for our convertible notes, derivative liability, and investment, non-cash interest expense, gain on settlement of derivative liability, and loss on settlement of convertible notes.

The cash provided by changes in our operating assets and liabilities was primarily due to decreases in prepaid expenses and other assets as well as increases in accounts payable and accrued expenses and other current liabilities, and deferred revenue, which was offset by increases in accounts receivable, net, inventory, and costs capitalized to obtain contracts, net.

For the nine months ended September 30, 2023, net cash used in operating activities was $1.4 million.

The primary factors affecting our operating cash flows during this period were our net loss of $25.0 million, impacted by $35.6 million of non-cash adjustments and $12.0 million of cash used by changes in our operating assets and liabilities.

The non-cash adjustments primarily consisted of stock-based compensation, depreciation and amortization, and an adjustment to our battery reserve related to a change in membership benefit offerings.

The cash used by changes in our operating assets and liabilities was primarily due to increases in accounts receivable, net, prepaid expenses and other assets, costs capitalized to obtain contracts, net, inventory, and accrued expenses and other liabilities offset by increases in deferred revenue and other liabilities, noncurrent.

As of March 31, 2025 and December 31, 2024, we had deferred revenue of $46.6 million and $45.2 million, respectively, of which $41.8 million and $39.9 million is expected to be recorded as revenue in the next 12 months, respectively, provided all other revenue recognition criteria have been met.

For the three months ended March 31, 2025, net cash provided by operating activities was $12.1 million.

The primary factors affecting our operating cash flows during this period were our net income of $4.4 million, impacted by $13.1 million of non-cash adjustments, and $5.4 million of cash used by changes in our operating assets and liabilities.

The non-cash adjustments primarily consisted of stock-based compensation, depreciation and amortization.

The cash used by changes in our operating assets and liabilities was primarily due to decreases in accrued expenses and other current liabilities and increases in inventory and prepaid expenses and other assets, which was offset by decreases in accounts receivable, net, and deferred revenue.

For the three months ended March 31, 2024, net cash provided by operating activities was $10.7 million.

The primary factors affecting our operating cash flows during this period were our net loss of $9.8 million, impacted by $13.0 million of non-cash adjustments and $7.5 million of cash provided by changes in our operating assets and liabilities.

The non-cash adjustments primarily consisted of stock-based compensation, depreciation and amortization, and fair value adjustments for our convertible notes and derivative liability.

The cash provided by changes in our operating assets and liabilities was primarily due to decreases in accounts receivable, net, and prepaid expenses and other assets, increases in accounts payable and deferred revenue, offset by a decrease in accrued expenses and other current liabilities and increases in inventory.

Investing Activities

For the nine months ended September 30, 2024, net cash used in investing activities was $3.3 million, which primarily related to the capitalization of internal use software costs in accordance with ASC 350-40, Intangibles - Goodwill and Other, Internal-Use Software.

For the nine months ended September 30, 2023, net cash used in investing activities was $1.3 million, which primarily related to the capitalization of internal use software costs in accordance with ASC 350-40, Intangibles — Goodwill and Other, Internal-Use Software.

For the three months ended March 31, 2025, net cash used in investing activities was $4.3 million, which primarily related to cash paid for acquisitions.

Refer to Note 6, "Business Combinations" for additional information.

Net cash used in investing activities also included capitalization of internally developed software costs in accordance with ASC 350-40, Intangibles - Goodwill and Other, Internal-Use Software.

For the three months ended March 31, 2024, net cash used in investing activities was $1.1 million, which primarily related to the capitalization of internally developed software costs in accordance with ASC 350-40, Intangibles — Goodwill and Other, Internal-Use Software.

Financing Activities

For the nine months ended September 30, 2024, net cash provided by financing activities was $72.5 million, which primarily related to net proceeds of $93.0 million after deducting underwriting discounts and commissions from our U.S.

IPO and $5.6 million of proceeds from the exercise of options and warrants, offset by $23.4 million of taxes paid for net settlement of equity awards, and $2.7 million in payments related to the U.S.

As of September 30, 2024, $3.6 million of the incurred U.S.

IPO costs were unpaid.

For the nine months ended September 30, 2023, net cash used in financing activities was $24.0 million, which primarily related to $13.1 million release of funds placed in an indemnity escrow fund for general representations and warranties related to the Tile Acquisition, $11.4 million of taxes paid for the net settlement of equity awards, and $3.9 million in convertible notes repayments, offset by $4.1 million of proceeds from the exercise of options.

For the three months ended March 31, 2025, net cash provided by financing activities was $2.2 million, which primarily related to $10.6 million of taxes paid for the net settlement of equity awards, offset by $12.8 million of proceeds related to tax withholdings on restricted stock settlements and the exercise of stock options and warrants.

For the three months ended March 31, 2024, net cash used in financing activities was $5.7 million, which primarily related to $8.1 million, of taxes paid for the net settlement of equity awards, offset by $2.4 million of proceeds from the exercise of options.

Obligations and Other Commitments

Our principal commitments consist of obligations under our operating leases for office space, and other purchase commitments.

Information regarding our non-cancellable lease and other purchase commitments as of September 30, 2024, can be found in Note 7, "Balance Sheet Components" and Note 10, "Commitments and Contingencies" to our condensed consolidated financial statements.

Information regarding our non-cancellable lease and other purchase commitments as of March 31, 2025, can be found in Note 7, "Balance Sheet Components" and Note 8, "Commitments and Contingencies" to our condensed consolidated financial statements.

Critical Accounting Policies and Significant Management Estimates

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Our significant accounting policies are discussed in Note 2, "Summary of Significant Accounting Policies" in our Annual Report.

There were no significant changes to these policies during the nine months ended September 30, 2024.

There were no significant changes to these policies during the three months ended March 31, 2025.

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-Q

Item 2. Management’s Discussion and Analysis