Life360 tumbles as analysts call shares ‘overvalued’
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More news: Life360 shares had tumbled 5.5% to $22.84 by 2:23pm AEDT following its third-quarter results.
The technology company posted an 18% year-on-year rise in its Q3 revenue to US$92.9 million ($142.3 million).
Morningstar raised its fair value estimate by 3% to $18 per share on its results but said its shares were “materially overvalued as the market appears to be overly optimistic about the potential of the company’s nascent advertising business”.
What they said: The research house’s analyst Roy Van Keueln said: "We agree that opening the Life360 app to advertising can provide a significant uplift to the company’s financials".
"... we are less optimistic about the revenue potential from more targeted means of advertising. Specifically, we believe the number of use cases for targeted location-based advertising is small and not very valuable."
Life360 posts Q3 earnings growth, tweaks FY24 guidance
The news: ASX-listed technology company Life360 revised its full-year guidance after boosting revenue and narrowing its earnings loss in the third quarter.
The numbers: Total third-quarter revenue rose 18% year on year to USD92.9 million ($142.3 million). Total subscription revenue was was up 27% to USD71.8 million, while core subscription revenue grew 34% to USD66.2 million.
Life360 narrowed its EBITDA loss from USD4.2 million to USD2.6 million year on year. Adjusted EBITDA of USD9 million compared to adjusted EBITDA of USD5.5 million a year earlier.
The company's member base grew by 32% year over year, with 6.3 million new monthly active users added in the September quarter, bringing the total to 76.9 million.
Life360 upgraded its adjusted EBITDA guidance range to between USD39 million and USD42 million, from a range of USD36 million and USD41 million.
The company now expects full-year EBITDA loss of between USD7 million and USD10 million, compared to the USD8 million and USD13 million range previously guided.
However, it revised down its consolidated revenue guidance, from between USD370 million and USD378 million, to USD368 million and USD374 million, reflecting lower hardware revenue due to issues with its new range of Tile products. Net hardware units ships slid 25% in the third quarter compared to the previous corresponding period.
The context: The US company, which announced the USD205 million acquisition of Apple's Airtags rival Tile in 2021, said that the launch of its new line-up of Tile products has been hit by logistical delays, including certification, labelling and supply chain problems.
This led to lower-than-expected device sales and reduced margins in the third quarter, as there were period when the new products were unavailable due to planned inventory shifts to the new product line.
Life360 said that while those issues have now been resolved, it will take time for the transition to fully reflect in brick-and-mortar retail sales.
The sources: ASX announcement, Morningstar research
