Life360 (NASDAQ:LIF) Q3 2026 Earnings Call

0:00 We will begin with a business update from CEO Lauren Antonoff. CFO Russell Burke will then provide detail on the Q3 financials and outlook, which will be followed by a Q&A session. We will make forward-looking statements during this call, which are subject to risks and uncertainties. A summary of these risks can be found in the risk factor section of our Form 10-K filing with the SEC dated March 2, 2026. These statements are based on assumptions we believe reasonable as of today, November 9th, 2026, and we have no obligation to update them except as required by law. We will also present both GAAP and non-GAAP financial measures. Reconciliations are included in the media release on our investor relations website.

0:49 This call has been conducted as a Zoom audio webinar with no slides. Our quarterly investor presentation is available as a reference on our along with the quarterly shareholder letter from Lauren and Russell. All participants will be in a listen-only mode until the Q&A. When we come to the Q&A, please raise your hand using the raise hand icon on the bottom of your Zoom screen. Once prompted, you may unmute your line to ask your question. Participants who have joined our telephone will be in a listen-only mode throughout. With that, I'll turn the call over to Lauren.

1:29 Good afternoon to everyone in the U.S. and good morning to those in Australia. Thank you for joining us today to discuss our Q3 results and outlook. We're pleased with how our third quarter landed. Total gap revenue grew 40%, driven by subscription revenue growth of 29% and a boost from our advertising acquisition in Q1. Operating leverage in our core subscription business is helping to fund investments in future growth. You can find more detail on these strong third quarter results in our shareholder letter and investor presentation on our IO website. Russell and I are going to touch on the highlights here. Starting with monthly active users, or MAL, Q3 continued to show healthy growth. We added 5.3 million MAL, reaching over 107 million globally, with international markets crossing the 50 million active user mark for the first time, and the U.S. rising to nearly 56 million. MAL is growing the fastest in our Anglo markets, where our retention and conversion to paid is among our highest.

2:25 We also drove strong momentum in paying circles, with 188,000 net ads, bringing the total to 3.4 million. This is an increase of 26%, fueled by strong growth in both the U.S. and international markets. Average revenue per paying circle rose 4%, with growth primarily from members shifting toward our higher price offerings as a result of our AI-driven optimization, which I'll come back to in a moment. This momentum is reassuring as we extend the price change to all members in Q4, That rollout's going smoothly with churn in line with our expectations. Our work to optimize onboarding and engagement in international markets was an important driver in the third quarter. We're doing more marketing with key local influencers, establishing distribution partnerships, driving increased media interest and coverage, and tuning performance for local app stores and devices.

3:16 One of our campaigns in Anglo Markets and Q3 drove a brand moment worth highlighting both for its specific impact on our results and for the broader cultural conversation that sparked in the U.K. We partnered with celebrity chef Jamie Oliver on a short-form miniseries that showcased the Life360 family connection in a fun and unexpected way. The campaign generated nearly 100 million social views, driving a lift in Life360-related searches and double-digit registration increases in the U.K. and Canada. The series drove conversations about the benefits of location sharing, and major outlets including Forbes, the BBC, Ad Age and many more. The U.S. and our major international markets continue to grow nicely. And in Q3, we made strides in understanding our newer international markets.

4:03 These learnings are informing our product and marketing strategy in Q4 and into 2027. For example, in Germany, we had success in both acquisition and retention and we're putting more marketing to work there. As we've spent more time with customers in Latin America, Q3 Gap Revenue was over $25 million. Making ads our second largest revenue line just two years after launch.

4:53 That's more than triple last year's third quarter as a result of the acquisition. With technical integration behind us, we've been tailoring our sales efforts and extending our capabilities both on and off the Life360 app. Getting the sales motion and the ad experience right took a bit longer than we expected, so revenue is on the lower end of our range. We're encouraged that big brands in auto, finance, retail, consumer goods, and more are investing with us and seeing good ROI. New high-value formats like video are showing promise as well, and while 2026 budgets are largely committed, early signals for 2027 look good. To set us up to scale advertising further, we're thrilled to welcome Donna Sharp to lead Life360 Ads. Donna is widely recognized in the ad industry.

5:39 and those like 360 Well, having been an advisor to us as we built out the ads business. She understands the deep value of the trust and connection that we've built with families and has the industry track record and vision to land that message with advertisers. Before I turn the call over to Russell, I'd like to highlight two areas that will make increasingly meaningful contributions over time. Pets and AI. Pets is our first market extension beyond our traditional core family audience. Thank you so much for joining us today. and the progress we're seeing reinforces our belief that pets will become a key element of our family ecosystem and a meaningful contributor to our business that helps extend our TAM and support long-term malgrowth and monetization.

6:44 We're already seeing early retention benefits from the pet GPS bundle. Turning to AI, we're seeing a fundamental shift in how work gets done and ultimately how consumers engage with technology. Our shareholder letter highlighted two examples where we see advertising delivering benefits both in the short term and the long term. First, there's a lot of excitement in the market around emerging personal assistants. Last week, we opened our family intelligence platform to third-party agents such as Muse that help our members manage daily life, giving families new insights for everyday decisions, like who's in the best position to pick up the kids when they have to go home early. An agent ordering dinner can time the order based on when everyone will arrive home, and soon an agent monitoring school emails will be able to surface an upcoming soccer game in the Life360 family map so everyone in the family can see where and when to show up and cheer.

7:38 We're excited about the connection we've built for AI assistance to work with Life360, but it's just the start of how AI will enhance our product experience. While the proliferation of agentic personal assistance promises to take up for all sorts of tasks, what will continue to differentiate Life360 is that our unique real-world, real-time data lets us craft experiences that keep members coming back to the app, not just because they're useful, but because it feels good to stay connected. Consumer adoption of AI is a meaningful opportunity for Life360 to increase the value we deliver. Separate from these product use cases, we've shared over many quarters that AI has been helping us lift productivity and focus our efforts on higher value opportunities.

8:24 We're seeing evidence that advertisers value what we offer. The pet business is promising, and we see many more opportunities to extend our reach over time. The trust families place in us gives us a durable place in everyday family life, and in an AI-driven world, the human connection we're built around only becomes more valuable.

9:10 Most importantly, the core of Life360 is strong. Our subscription engine is humming, our global user base is growing, and we still have a long runway ahead. Behind all the numbers is something quite simple. families want to stay connected and safe, and more than 100 million people around the world are trusting us to help them do that. That trust compounds and it underpins our confidence in our objectives of crossing 150 million now and 1 million in revenue on a path to 35% adjusted EBITDA margins. Thank you for your time, and now I'll turn the call over to Russell for more on our results and our four-year outlook.

9:47 Thanks, Lauren. During our Q2 call, I outlined our expectations for a strong financial setup in the back half of the year, and I'm pleased to report that this is reflected in our Q3 results. As Lauren highlighted, we delivered impressive operating metrics, with momentum in MAU and paying circles, and continuing strong growth in the core business. I will detail how this is translating into our financial performance. with all financials referenced here unaudited and denominated in US dollars. Total Q3 revenue was $174.1 million with growth accelerating to a 40% increase year over year.

10:35 As Lauren noted, subscription revenue was up 29% year on year to $124.2 million and core subscription grew even faster, up 32% year-on-year. This was largely driven by volume, with a 26% uplift in paying circles. ARPPC was 4% higher, which primarily reflected a shift in product mix to higher price offerings and the early impact of recent US price increases. U.S. subscription revenue increased 27% year-on-year, supported by pain circle growth, which benefited from improved conversion metrics.

11:21 International subscription revenue increased 40% year-on-year, with an outstanding performance from the core territories of the U.K., Australia, New Zealand and Canada. Hardware revenue decreased 20% year-on-year. to $9 million, primarily driven by lower hardware units shipped, with a larger-than-expected impact following our strategic exit from brick-and-mortar retail generals. Advertising revenue of $25.4 million more than tripled in size year over year, reflecting the acquisition of Nativo and the continuing ramp of the business.

12:07 While this was good momentum, it was lower than we anticipated, as we made adjustments to the sales motion and the ad experience for members. Our other revenue increased 61% year-on-year to $15.5 million, including partnership revenue recognised during the quarter. Annualised monthly revenue reached $578 million, An increase of 29% year-on-year, underpinned by continued subscriber growth and other recurring revenue. Third quarter gross margin was 77%, driven by the distinct margin profiles of our four revenue streams.

12:55 Subscription gross margin increased to 87% from 85% year-on-year, benefiting from the shift towards higher priced offerings. As expected, hardware gross margin declined to negative 19% from negative 3% year over year, reflecting the ramp in pet GPS, partially offset by lower tariff costs. As we've said before, we're using hardware as an acquisition tool for paid subscriptions, with further benefits from improved retention. Advertising gross margin of 55% was lower than the same quarter last year as we scaled the business and delivered incremental revenue that has higher direct costs.

13:48 These are mainly traffic acquisition and hosting costs associated with building a full-stack digital advertising platform following the Nativo acquisition. Other gross margin of 89% increased from 88% year-over-year due to higher margin partnership revenue. Operating expenses as a percentage of revenue decreased to 72% in the current quarter from 80% in Q2 as we continue to drive operating leverage. Operating expenses increased 38% year-over-year primarily reflecting higher personnel costs due to company growth, the acquisition of Nativo, higher App Store commissions, and growth media spend.

14:41 Lauren spoke earlier about the benefits of our emerging AI native operating model. We're encouraged to see this beginning to translate into improved financial metrics, with Q3 delivering an early revenue impact from increased conversion to our highest platinum tier. We're also starting to see our AI tools enable a managed flow of new subscribers into web-based billing. In addition, we're actively managing AI costs to support operating leverage through a combination of model selection, optimization of token usage, and the benefit of ongoing market-wide reductions in model pricing.

15:30 We expect these efforts to deliver meaningful benefits from 2027 onwards. Gap net income was $22.5 million, which includes a $17.8 million gain from the increase in value of our investment in Hubble. Basic EPS was $0.28, and Diluted EPS was $0.26. Adjusted EBITDA of $34.6 million increased 41% from $24.5 million in Q3-25, driven by continued strong higher margin revenue growth and the scaling of the business.

16:17 The Q3 adjusted EBITDA margin of 20% outperformed our guide of 18%, reflecting the earlier than expected contribution of high margin partnership revenue. We ended Q3 26 with $465 million in cash and short-term investments, and we generated operating cash flows of $27.2 million, up 3% year-on-year. Following the announcement of our share repurchase program in May 2026, we've repurchased shares of common stock for an aggregate purchase consideration of $44.4 million through the end of Q3.

17:06 This leaves approximately $180.6 million available for further repurchases under the program. Our repurchase activity is in line with our commitment to return value to our shareholders and reflects the disciplined approach that we outlined when the Board authorised the program. We plan to offset dilution measured by stock-based compensation expense on a rolling 12-month basis from the launch of the program and we've exceeded that target through the end of Q3. We will remain opportunistic and retain the flexibility to adjust the pace and timing to market conditions.

17:56 Our four-year guidance reflects our long-term commitment to balance investment to drive future growth with sustainable profitability underpinned by expanding margins. We've lifted our four-year revenue outlook to a range of $665 and many more. Within that overall guidance, we're raising subscription revenue to $483-488 million. We've lowered the high end of the range for both hardware and advertising revenue. We now expect hardware revenue in the range of $35-40 million. and advertising revenue in the range of 98 to 102 million versus 98 to 115 million previously.

18:55 Our other revenue outlook has increased from 249 to 51 million. Our full year adjusted EBITDA outlook has narrowed to 132 to 138 million compared with 130 Our full-year guidance implies a significant uplift in Q4 revenue and adjusted EBITDA, consistent with the trends that we're seeing in the business. Following our strong performance in Q3, subscription revenue growth is expected to accelerate due to the momentum in paying circle additions through Q3.

19:40 The shift to higher-priced tiers and the recent U.S. price increases across the existing subscriber base. We expect those price increases to soften the rate of U.S. paying circle additions in Q4 26, with churn to date in line with our estimates. Advertising revenue is expected to reflect a seasonal uplift in Q4, although somewhat less than previously forecast. We expect Q4 adjusted EBITDA margin to lift as Q4 operating expenses as a percentage of revenue decline versus Q4-25, consistent with our prior guidance.

20:26 We expect this margin expansion to be underpinned by revenue scale, cost efficiencies, and investment in new growth initiatives undertaken in the first half of the year. Looking forward, Our operating leverage allows us to invest in future growth while continuing to expand our margins over time. Thanks for your attention and I'll hand over to Jolanta to manage the Q&A. Thanks Russell. As a reminder, if you'd like to ask a question, please raise your hand using the raise hand icon on the bottom of your Zoom screen. Once prompted, you may unmute your line to ask a question. Please mute your line again once you have completed your questions and limit yourself to one question initially. We'll provide another opportunity if we have time.

21:17 So first up, Mark Mahaney from Evercore. Mark, please go ahead and unmute yourself.

21:23 Okay, thank you. I'm sorry, two questions, please. This MAU outlook, I think you just reiterated it for the year. You showed a little bit of acceleration. Do you feel like you've fully resolved the technical issues that kind of marred MAU growth earlier this year. And any thoughts on the sustainability of MAU growth beyond just the fourth quarter? And then just talk briefly about the U.S. price increase. Did that go largely as expected in terms of impact on churn, customer satisfaction, et cetera? Thank you very much.

21:57 Great. Starting with Malgrove. We feel really good about the health of the funnel. It's in good shape. We're seeing that benefit us in Q3, and we expect that to continue. Q4 is always generally a little bit lower than Q3, so we won't expect quite the same numbers, but the overall trajectory is really strong as we continue to expand into new markets. So all good there. On the price increase, it's going according to our plans. We felt really good about the initial delivery that we did with new users. and as we expand into the existing base, we're seeing everything in line with our expectations. So good to go there.

22:38 And what I would add to that, Mark, is... Specifically on churn, as we think about Q4, it has gone very much to our expectations. But when you look at that, our U.S. net paying circle additions in Q4 are likely to be around about half of what we would have expected otherwise. And that's largely the one-time churn event with returning to sort of and what we think of as normal growth in Q1 next year. Thank you, Lauren. Thank you, Russell. Thanks, Mark. Next up, we have Laffatani Satyaru from MSC. Laff, please unmute yourself and go ahead.

23:25 Thank you for the opportunity to ask a question. I've just got three parts to it. So first, I wouldn't mind... Better understanding what the monetization strategy is for opening up Live360 to personal agents. Are you looking to only allow it for certain tiers or is it every tier or how are you thinking about Live360 making money if it becomes more popular and prevalent? A follow-up question on the US repricing. Can you just give us... some idea or colour around the quantum in new revenue you anticipate to flow through on an annualised basis. I'm understanding really starting in the fourth quarter but if we were to, Russell, best guess like is it an extra $10 million over the next year or what does that number look like? And can you just clarify finally in other revenue there's a noticeable jump from second quarter to third quarter and I'm having trouble finding out what the reasoning is for it. In the shareholder letter there's some discussion around New Data Contracts, all the like, if you could also clarify that.

24:35 Thank you.

24:37 Okay, I'll take the first one, and then Russell will take the next two. So AI, working with AI systems is really new for the world and for us, and we're starting up by really understanding how customers use it. So the way that it will start at first is that people adopt agents like Meta's Muse or other agents as they become more popular, and those agents can connect to our platform and ask questions about your circle. So if you choose to connect it, you'll be able to answer questions like, you know, where's the best place for us all to meet up or things like that. And in that case, the agent is doing the work. So Meta's Muse would be bearing those inference costs and doing the work. In the beginning, we're learning about this. We have control over that gateway. We can decide if we want to make it more limited over time. But while adoption is early, it's wide open and it's helpful for us to learn.

25:27 Our expectation is that we'll bring those kind of agentic experiences into the app proper so that it's more discoverable and we can create more sort of rich bespoke experiences within the app. But we'll learn about that behavior using the apps that are out there and getting popularity today. As we bring those in, I think that's where we have a more significant opportunity for monetization, but it's really too early to sort of predict that now. So right now, it's really about engagement, creating value, and learning about what's valuable to customers, and we'll see about monetization from there.

26:05 In terms of the price increases, the best way I can characterize that is to look at our gold tier, which is the largest proportion of our paid members. We had a $2 increase to the monthly price, which is about 13%. In terms of timing, that started to be noticed in October, starts to come in in late November. So we'll see some impact of that in Q4 and then the full impact next year as that flows through. For other revenues, very specifically, we had a a $3.7 million inflow in Q3, which to some extent was a catch-up for the three quarters.

27:01 So if you look at that as a $5 million run rate going forward is the best way to characterise that.

27:13 Thank you. Thanks, Beth. Next up we have Andrew Boone from Citizens. Andrew, please unmute yourself and go ahead.

27:22 Thanks so much for taking the question. I'd love to talk about advertising. Can you just help us understand what happened in the quarter, any response to kind of new leadership changes, and then how does that change your trajectory for expectations for advertising in the medium term? Thank you.

27:40 We're really excited about the trajectory that we're on. Advertising has become our second biggest – our second business – second largest revenue line two years after we started it. So we're on a good path, but it has taken us a little longer to get there than we expected. We are – the things that we've done are on app. We've taken a very cautious approach. to make sure that we don't interfere with the customer experience. So during Q3, we actually paused programmatic for a little while while we worked on ad quality to make sure that our members were maintaining a really high-quality experience, and we were cautious about introducing things like video. We now have all that stuff in place. We've got high ad quality.

28:25 We've got monitoring built in to make sure that it stays high. We've got those new formats in place. So that sets us up well for going forward. Similarly, our go-to-market efforts, you know, when we brought the companies together, there was a lot of excitement about focusing on selling an app, but that was a little bit ahead of where we had those capabilities and we were ready to scale on app. And that took some distraction on our off-app selling motion. So over the course of Q3, we've brought those together and we've now got a really strong sales motion in place that looks at on-app and off-app together. But by the time we got that going, we were a little late to secure 2026 budgets. What we did, though, is we have attracted a lot of brands that are looking at the results that we're getting, and it's what helped us close on bringing Donna Sharp in. You know, she can see the potential that we have and was eager to get involved, and she's somebody who is well-recognized in the ad industry, and I would say she's You know, being able to up-level our leadership in that way is a sign of the potential we have and the credibility that we're building in the market.

29:34 So that's being well-received and part of why we have such confidence in our trajectory going forward. Thank you. Great. Thanks, Andrew. And next up we have Eric Troye from Barranjoey. Eric, please unmute yourself and go

29:51 ahead. Thank you so much, Jolanta. I might only do two really quick ones, sorry. The first one, just on ARTPCs, again, Russell, can I please confirm your new subscription revenue guidance is implying sort of mid-single percentage increases in the fourth quarter versus third quarter? And then if that's the case, like you said, there's a $13 in the fourth quarter, do we assume most of the benefit comes in 4Q26 and then 1Q27, i.e. two quarters, i.e. very similar to the 2022 example where you also had two quarters? And sorry, just one quick follow-up on advertising. I think, Russell, you said before that we shouldn't take Nativo 60 million bucks of revenues because you've exited some division. So if we assume like Nativo revenues were in the 50s and you're guiding to 100 of advertising this year and last year was 31, it sort of implies your organic advertising growth is 15 million or you're guiding to about 15 million in and FY26.

30:55 And is that the right map? And if so, based on all Lauren's comments just then, do you expect a better result than that into FY27?

31:04 Thank you. Yeah, thanks, Eric. So to take those one at a time, in Q4, our guidance is a combination of the momentum that's been driven by the strong pain circle growth throughout the year, really. and the price increase. As I mentioned earlier, the price increase will start to see the impact in the latter part of the quarter. So what we're projecting in our guidance for subscription revenue is a combination of those two pieces and just reflects the continuing strong growth in that business. In terms of advertising, I think broadly the way you characterize it is correct.

31:55 If you look at organic growth, you're structured that way. It's likely in the early 20% range in terms of growth. And as we've said, what we're seeing in the business now is really starting to build more. As Lauren just sort of went through, there's a number of elements that are really starting to come into play there. We would definitely expect that to go a bit more strongly next year. Thank you so much, Russell. Thanks, Eric. Next up, we have Riley Rodosevich from Canaccord. And please go ahead, Riley.

32:45 Hi, this is Riley. I'm from Maria Rips. Thank you for taking our question. Broadly speaking, as you look to capture a greater share of advertising budgets in 2027 and beyond, what are some of the longer-term product and investment priorities as you continue to build out the advertising platform? And as you think about areas like measurement, attribution, and self-service capabilities, where do you see the biggest opportunities to unlock incremental advertiser spend?

33:10 So in terms of where we expect growth in advertising, both on-app and off-app, we see a tremendous opportunity. OnApp, it really is about creating the formats and the placements to engage in the app. And we've been doing a lot of work to evolve our core experience to create more space for advertisers to show up. You know, an example is with our driving reports. That's something that's very attractive to people in the auto industry, and they're looking for ways to have content and experiences within the app that they can engage with. If you think about extensions that we're doing into pets and things like that, that's a major area where we see an opportunity to grow on app. Off app, it really is about building our sales motion and some of the tools that we've developed, some of the technologies we've developed over the last year that allows us to get higher match rates and deliver more scaled results as we reach out to audiences across the markets that we're operating in.

34:13 and just to add on to that, just as an example, part of the reason for this really contributing to our uplift in Q4 is a slight change in mix towards both on-app and those special services, including things like measurement. So that's starting to come into play and we expect that to be a continuing feature. Thank you very much. Thanks, Riley. Next up we have Lindsay Bessiel from Goldman Sachs. Lindsay, please unmute yourself and go ahead.

34:52 Thanks, Jolanta, and hi, everybody. Question on your male growth. If I just look at how your team entered it, you have 1.8 million ads in the US, 1 million added in your triple-tier regions, but then you have a really strong other international MAU period. I'm presuming that and many more.

35:41 really distributed across multiple places. I think across all of them, we're seeing benefit from optimization in our funnel. So things that we've done like social sign-in, Google sign-in, that makes it more likely that somebody who tries to sign up with us actually gets through and becomes an active user. Those things are benefiting all regions. Great. Thanks. Thanks, Lindsay. Next up, we have Rob Sanderson from Loop. Rob, please unmute yourself and go ahead.

36:12 Yes, excuse me. So good evening, good afternoon, good morning. I have a couple of questions on user growth as well. You're reiterating the 17% to 20% guide. The question is really, like, what could get you to the higher end of the range? You've got a lot of things going on internationally. It sounds like LATAM, you're doing a little bit of retooling here on localization, and fourth quarter is not usually your strongest. And I think Lauren suggested you're likely to see fewer additions in the fourth quarter. I just want to make sure I got all that correct, and I'm curious to look at the potential for 20%. Why is that still on the table? Commentary suggests that it may not be. I just want to make sure I understand that. The second question also on users, as you look in regions beyond Germany, Brazil, Mexico, what are other larger regions you've got your eye on that are kind of coming close to that 3% tipping point that seems to be an inflection on adoption?

37:06 Thank you.

37:08 You understand it very well. And I think really from where we started to see those technical issues and had to focus attention on that, we continued to sort of trend toward that lower end of the range. We've kept the range as is because of the unpredictability of events that have often driven spikes in the past. And, you know, we don't really want to focus on what we guide to. We want to look at the overall trajectory of where we're going. In terms of the second part of the question was,

37:38 Next regions that are maybe at that specific point I've been close.

37:41 Yeah. So the real insight that we've had this quarter is that, you know, we've really thought about going into regions as monolithic. We go into a region and we look at product and marketing. And that made a lot of sense when we were going into the Anglo markets, which looked a lot like the U.S. And we already had really strong market fit. And so when we were looking at product and marketing there together, it made sense. What has been interesting this year as we've been doing work in Germany, Brazil, and Mexico is that we're seeing differences in those markets where we go in. And so Germany has that stronger retention and having product and marketing focused together makes sense. But in places like Mexico and Brazil, the learning is that we actually want to pull back on some of the marketing efforts, some of the acquisition efforts, and laser focus on getting the product right so that when we acquire people, We're keeping them at higher rates. So moving forward, you're going to see us do, I think, a lot deeper focus on Latin America while we get that strong.

38:42 And then, you know, from there, we'll use that playbook to expand to more regions. Thanks, Lauren. Thanks, Wendy. Next up, we have Siraj Ahmed from the Citi Group. Siraj, please unmute yourself and go ahead.

39:01 Thanks. Maybe last two as well. Russell, just as a sort of implied career guide or the fourth cube guide in the guidance, I'm a bit surprised that EBITDA and Bitcoin have been kept the same when you've actually increased higher margin subscription and other revenues also coming higher. So is there something else that's offsetting it? I mean, typically OPEX is lower in the fourth quarter from a marketing standpoint. So could you help in those building blocks? and secondly, Lauren, in terms of advertising, good color as to what's happened. So given now you have a combined business that's close to 100 million in revenue, do you think, Russell sort of mentioned that, you know, you should expect organic growth picking up on the 20% this year. Is that a combined business of 100 million that you think growth can be more than 20%? Would really appreciate some color on that as well.

39:48 Thanks. So to the first question, There's a few elements there. Yes, we have raised subscription revenue guidance given the really strong momentum there. The advertising revenue that's coming down does have a – the incremental revenue has a high margin. So it's largely sort of focused in the on-app area, which we've, as we talked about earlier. So that flows through at a high margin. So when you look at the overall guidance here, we've definitely raised subscription revenue. You need to take into account the sort of commission element of that in operating expenses.

40:40 That flows through. and we've brought down advertising revenue and hardware revenue, as I said, with the advertising revenue at a high margin. Then there's a couple of other elements in operating expenses, relatively small impact, but we've talked about our investment in pets in Q4 as well.

41:02 And looking at the overall advertising growth, we do expect stronger growth going into next year, both on-app and off-app.

41:10 And Lauren, just to follow up on this, so in terms of, and to Russell's mention about in-app being lower, right, did you sort of see, because like you said, you're focusing on member experience, did you sort of see sort of some disengagement or something from members or from users because of the ads that were there? I mean, interestingly, you were saying quality of ads was the key focus for you.

41:32 We didn't. We didn't. It's good that you sort of called this out. We have our sort of own internal sense of what is the bar for member experience? And we hold a very high bar out ahead of where members may be. And so we didn't want to jeopardize trust and wait until we saw potential signals. We saw some ads getting through that we weren't comfortable with and decided to really put another layer of control in place to make sure that ads that didn't feel like they were appropriate or ideal for our audience weren't getting through. So that was just a self-imposed Thank you. Thanks, Raj. Next up we have Steven Zhu from UBS. Steven, please unmute yourself and go ahead.

42:21 All right. Thank you. So, Lauren, Russell, Yeah, I think you talked about auto, finance, retail, and CPG. And for some of these categories like auto and CPG, you seem to be bucking the headwinds that we have heard about for the sector. So can you talk about the relative winds here? and the steps you will be taking with Donna now in the building to become a larger line item with brands and agencies because there is definitely a much larger ad market out there beyond these verticals that you cited. Thank you.

43:01 So, you know, because we're new in the market, our scale is still building. We're sort of on the smaller side, so we're not necessarily subject to some of the broader trends that are impacting advertisers that are already at scale. So for us, the engagements we're seeing are new and growing, and we're building up evidence really in all of those categories with great proof points. I think that sets Donna and her team up well to shape that strategy, but she's been at the company just a few weeks, so we're going to give her a little bit of time to build that strategy before I start announcing whatever that is to the world.

43:37 Fair enough. Thank you. and Stephen. Next up we have James Bales from Morgan Stanley. James, please unmute yourself and go ahead.

43:47 Yeah, thank you. Another question on advertising. If you're aiming for 20% plus growth in FY27, can you maybe talk to the limiting constraints that you see? Is it the number of active advertisers or publishers? Is it the ability to expand inventory or to manage user experience? And then secondly, you called out AI having the potential to drive greater direct billing long term. Can you maybe talk to where you think you might be able to take that?

44:24 Okay, let me start and then I'm going to turn it over to Russell to add some color. But, you know, with advertising, I think the two things that are our biggest limiting factors as we are driving growth are building out the right in-app experiences, which we've made huge progress on this year, and then building awareness of the brand as a B2B brand. You know, Life360 is well-known and well-established as a consumer brand, but we're very new as an advertising brand, so we're early in that journey. I know, Russell, you wanted to add some color there.

44:56 Yeah, yeah. You know, when we talked about it before, it was 20% plus, so, you know, I think we should take that in mind. and then you asked about AI and as it's impacting billing for us and that's something we're really excited about where these AI tools are giving us the ability within the funnel to make almost instantaneous decisions of whether there would be friction created by taking someone off to web billing. So, yeah, we're starting to see some real success there. That's starting to build, and I think that'll be an opportunity for us going forward.

45:46 All right. Thanks, guys. Thanks, Dan. Next up, we have Julian Mulcahy from RBC. Julian, please unmute yourself and go ahead.

45:55 Thank you, Jolanta. Just a couple for me. Firstly, with the sales and marketing spend was up quite a bit last year and also on the previous quarter. So would you say that it's actually delivering the MAUs you expected for those campaigns or is it just getting a little bit harder to bring in new MAUs? And secondly, on the advertising thing, how far down the track are you getting the brands to actually value the location data and the profile you have on your users?

46:27 So just starting in terms of how to think about the advertising that we do, you know, our focus really is on building awareness so that when people encounter Life360, they're more likely to ask. So it's not quite the same as performance marketing where we expect immediate ROI, and we're seeing good progress on that. The second question was about – can you take the second question?

46:51 Yeah, do you think that the brands, anywhere near valuing the information you actually have on your users in terms of profile and directions, where they go, that sort of thing.

47:02 Yeah, absolutely. We're getting a lot of attention for this and we're starting to build the proof points that actually show that we're able to physically move people who are seeing ads to show up in stores and things like that. So there's a lot of interest in it and increasingly there's a lot of proof points that show what we can do and what's special about having that location-based targeting.

47:24 Right. Back on the first one, so the number of MOUs you added, is that what you expected for such a spin on sales and marketing in that quarter?

47:35 I would say that the momentum that we see in now is from a lot of things. It's not primarily driven by our marketing spend. I think marketing spend supports it. So we're happy with our ROI, but it's not the main thing that's driving malresults in quarter.

47:52 Okay. Thanks, Lauren. Thanks, Julian. Next up, we have Andrew Gillies from La Prairie. Andrew, please unmute yourself and go ahead.

48:01 Morning guys, thanks for the opportunity.

48:04 Just the first one, you mentioned some of the early retention benefits that you're seeing from the PEDS bundle. What are those retention benefits? Can you put some numbers around it?

48:14 And then just the second one maybe for Russell, just on cash conversion, is this still sort of a seasonal quarter? Are there any differences in operating cycle or working capital requirements we should expect based on the changing revenue mix that you've given in the guidance? Thanks.

48:32 Yeah, thanks, Andrew. In terms of pets and retention, we're still in early days, I would say. There's a logical extrapolation here where someone that has a device, that's using it, that's engaged, is going to retain better. That said, we've seen very early results that indicate that retention is improving. But it'll be a little bit of a long-term view because we're, as part of the bundle, we're getting people to sign up for annual silver subscriptions. In terms of the cash question, yes, it has changed a little bit. You're going into this time of year in particular. There will be sort of an element of sort of working capital as we build up receivables going into the into the holiday period.

49:37 I think that's probably the biggest impact, but then clearly we'll see that reverse in Q1 next year.

49:46 Okay, so it's mostly timing-driven.

49:47 It's not sort of changing revenue mix. It's sort of the working capital trends that you've played historically. Exactly. It's mainly timing-based. Perfect. Thank you. Thanks Andrew. Next up we have Benjamin Jones from JP Morgan. So Ben, please unmute yourself and go ahead.

50:08 Thanks. To answer the question, guys, I just want to unpack some of the product localization efforts that you're making in your international markets. Just curious about what exactly you've identified that you need to add to that platform. And I guess you've called out You mentioned you may be slowing some of the marketing investment in the near term. How do we think about the impact on, say, a 27-hour growth if you're pulling back on some of the marketing investment, pushing further on the product localization?

50:39 Two very good questions. First, on localization, I'll just use the example because Mexico is one of the places where we've been really engaged. We actually took some of the leadership team to meet with other businesses on the ground and customers on the ground in Mexico And it was really interesting talking to customers because the themes around safety and connection were exactly thematically what you'd hear in the U.S., except for all of the examples talk about safety without mentioning driving. In the U.S., when people talk about safety, they pretty much mean driving. Like all the examples are about what happens if they get in a car accident. And so the themes are the same, but the specific experiences are different. When you think about what that means for the app experience, When we are doing things that are talking about, you know, driving when you're getting a lot of messaging around that and driving isn't what you're concerned about, it's a bit of a turnoff.

51:32 And so it's not necessarily a bunch of new features and capabilities. It's really tuning the experiences so that the way that we're talking to customers about the value props we deliver on match their expectations. It may also include some new capabilities we've talked about previously. The Watch Over Me capability we introduced this year, that is much more on personal safety. If people move from one place to the other, having somebody else sort of watch you while you're in transit, that's an example of a product enhancement. But it really is that end-to-end journey and what are the messages we give and sort of where we put importance in the experiences and interactions that people get.

52:10 and I would just add to that that on the growth element, these are the things that will help us drive that long-term growth. As we think about short-term growth, it's not likely to have an impact. Lauren mentioned earlier that many of the product changes and improvements that we've been flowing through globally have resulted in a pretty broad-based, strong MAU growth. So

52:40 And I'll just clarify one more thing. We're not really pulling back on international advertising. We're really shifting where we're putting that attention. So marketing is going to double down on those markets that already have the higher retention rates, markets like Germany, for example, instead of going into the markets where we need the localization first. So there's a little bifurcation for us in terms of where marketing is focused and where we're doing that product work. and then as we see that product market fit or get to that right point, then we'll bring marketing back in. So it's not how much marketing or the results we see, it's really where it's coming from that's going to shift a little bit. Thanks, Ben. So next up we have Paul Graham from Ordmanet. Paul, please unmute yourself and go ahead.

53:34 Looks like Paul's no longer with us. So next up we have Annabelle Kuhn from EMP. So Annabelle, please unmute yourself and go ahead.

53:44 Hey guys, thanks for taking the question. If I could just squeeze in two, that'd be great. Maybe the first on pets, just wondering if you have any early feedback on pet tags and maybe some commentary around sort of the ongoing pet strategy with the paid device and sort of these initiatives more around not sort of locking people into the device and expectations around like paying staff for contribution from pets. And then on advertising, I know there's been a lot of questions on this, but just around the nature of the advertisers you're bringing onto the platform, is it more around them doing brand marketing and maybe sort of looking at like longer-term spend through the Life 360 platform or is it more shorter-term campaigns around performance marketing? Thanks. Thanks.

54:26 So starting with pets, the interest in tags has been good. We had to work through some issues with our initial release where the sign-up flow had some glitches. So we're seeing the reviews for that come up as we've improved that onboarding flow. The real opportunity that we're seeing is that the interest in families with pets is really, really high. and so we're looking for ways to bring that experience into the app so that every family with pets is likely to engage with us on pets, not just those with devices or a tag. And so those experiences you'll see showing up quarter after quarter. Really starting now, we've already introduced some care coordination, the ability to track who's walked the dog or things like that, even if you don't have a tracker on the dog. What I'm excited about in this are the things that people tend to forget like remembering that it's flea and pig season and you have to put the right kind of repellers on your animal. Those kind of things are important for pet owners and hard to keep track of in a place that we can really help out.

55:31 So we're doing that investment, and we're super excited about what that means for expanding the relevance in terms of MAL and the likely engagement in the app. And then that, of course, creates multiple new revenue channels. The second question was an ad question. Can you repeat that?

55:53 Yeah, sure. Just around the nature of the ad spend you guys have been able to attract so far, has that been more like the brand style marketing spend where you might see like advertising partners sort of stay around longer term on the platform or is it more of that like shorter duration like performance marketing spend that you're seeing come onto like your ads?

56:13 We're seeing a mix. With early advertising on the Life360 platform, it was definitely more towards that brand awareness, not so much conversion-oriented. Now we've gotten a little bit farther, and now we have a good mix with sort of examples like the Forex ROAS that we're able to return for a CPG brand. That's much more clearly a performance marketing campaign. So I'd say we have a good mix now. Thanks, guys. Thanks. Thanks Annabel. And next up we have Roger Samuel. Roger, please unmute yourself and go ahead.

56:44 Hello, Annabel. Thanks for taking my question. I've got a question on family intelligence.

56:52 I'm just curious that you open up the platform to Muse. Are you not concerned that Muse may seep into your user base and offer something similar to Luxor 60 or perhaps the things that you do to protect Your moat without running the risk of being disrupted.

57:10 And second part of that question, just on family intelligence as well, on slide 28 you mentioned that this family intelligence has resulted in doubling the share of new subs to platinum.

57:24 Can you explain more on that? Thanks.

57:27 Okay, I'll take the first question and then I'll ask Russell to take the second. So the interesting thing to remember is that the majority of our users are on iOS that have Find My Today. If people just want to answer the question, where is somebody, there's a lot of alternatives that have not disrupted our business. And so we think of the onset of agents like that. It is something that is potentially complementary to Thank you so much for having me. for example, if you're on a trip with a bunch of people, where's a good meeting point for us all? That's not a substitute for opening the app and seeing that everybody's where they should be or just that feeling that you get from seeing your family. It's a different complimentary experience that makes it more valuable that you use Life360 in the first place.

58:33 So our expectation is that as the usage of agents goes up, it makes the platform itself more valuable and because having that information makes everything else in your life easier.

58:46 And, Roger, the second part of your question was about moving people into Platinum. and this is just another element of what we're so excited about in terms of the AI tools that we're deploying within the funnel. Probably relatively small by itself, not likely to move the needle, but we're definitely seeing twice the sort of flow into platinum and that's specifically directed. So you can see in this quarter that the share of platinum has sort of moved up to 5%. Yeah, all of these things are cumulative and we're excited about the potential for them going forward. Great. Thanks, Roger. That's all we have time for today.

59:35 So thanks so much for joining our call and if you have any follow-up questions, please reach out to Investor Relations. Have a great day.