0001581760-26-000078
SEC filingRevenue grew 38% YoY driven by subscription and advertising gains, though operating loss widened on Nativo acquisition costs.
For the three months ended March 31, 2026, Life360 reported total revenue of $143.1 million, a 38% increase from $103.6 million in the prior-year period. The growth was primarily driven by a 329% surge in advertising revenue to $19.7 million, largely attributable to the acquisition of Nativo, and a 32% increase in subscription revenue to $108.2 million. Subscription growth was supported by a 27% increase in Paying Circles and a 7% uplift in Average Revenue per Paying Circle (ARPPC) to $143.03. Hardware revenue declined 49% to $4.5 million due to a 25% decrease in net units shipped and the strategic exit from brick-and-mortar retail, which also led to increased discounts and returns.
Gross profit rose 32% to $110.6 million, but gross margin contracted to 77% from 81% in the prior year. The decline was driven by a sharp drop in advertising gross margin to 60% (from 94%) due to higher traffic acquisition and technology costs from Nativo, and a negative hardware gross margin of (91)% (from 3%) due to discounts and product mix shifts. Subscription gross margin remained relatively stable at 87% (down from 88%).
Operating expenses increased 46% to $118.6 million, outpacing revenue growth, resulting in an operating loss of $8.1 million compared to operating income of $2.2 million in the prior year. Sales and marketing expenses rose 62% to $57.0 million, driven by growth media spend and Channel Partner commissions. Research and development expenses increased 29% to $39.3 million, and general and administrative expenses rose 43% to $22.3 million, both reflecting higher personnel costs and Nativo integration costs.
Net income decreased 37% to $2.8 million from $4.4 million, impacted by a $3.9 million loss on the change in fair value of the Aura convertible note investment. Interest income increased 114% to $3.8 million due to higher cash and investment balances. The company recorded an $11.7 million income tax benefit, including $9.0 million in discrete benefits from stock-based compensation.
Subscription revenue remains the dominant segment at 76% of total revenue, with strong growth driven by member conversion and retention. Advertising revenue grew to 14% of total revenue (from 4%), reflecting the transformative impact of the Nativo acquisition, though at a lower margin profile. Hardware revenue shrank to 3% of total revenue (from 9%) as the company pivots away from standalone hardware sales toward subscription attachment. Other revenue, including data and partnership income, contributed 7% of total revenue.
Management revised its full-year 2026 MAU growth expectation to approximately 17% to 20%, down from prior plans due to Android technical issues that suppressed new user registrations in Q1 2026. These issues were resolved by April 2026, and the company expects to return to its planned growth trajectory by Q3 2026. The company expects advertising revenue to continue growing as it integrates Nativo's platform and expands advertiser relationships. Management plans to continue investing in sales and marketing, research and development, and platform capabilities to drive long-term growth, while prioritizing hardware as a driver of subscription growth over standalone margin.
As of March 31, 2026, Life360 held $351.2 million in cash and equivalents plus $106.1 million in short-term U.S. Treasury securities (short-term investments), totaling $457.3 million in liquid assets. Total debt comprised $310.9 million (net) of 0.00% convertible senior notes due 2030. Shareholders' equity was $597.6 million. Inventory increased to $15.1 million from $9.9 million at year-end 2025, driven by finished goods. Accounts receivable, net rose to $95.0 million, with unbilled receivables of $18.3 million.
The company disclosed non-cancellable purchase commitments of $55.7 million, with $29.7 million due within one year and $26.0 million in 2027, primarily for cloud platform services and contract manufacturer obligations. Additionally, remaining performance obligations (contracted future revenue not yet recognized) were $200.9 million, with 52% expected to be recognized within 12 months. Deferred revenue stood at $51.9 million ($48.2M current, $3.7M noncurrent).
No share buybacks or dividends were reported. The company's capital allocation focused on the Nativo acquisition (cash consideration $59.6M plus $28.0M in stock) and internal software development ($1.6M capitalized in Q1). Capital expenditures on property and equipment were nil. The convertible notes remained outstanding with no conversions triggered; interest expense was $0.5 million. The company also entered into a $2.3 million monetization of tariff refund claims, recorded as a liability.
Life360 operates as a single operating segment. Geographic revenue: North America $125.6M (88%), Europe/Middle East/Africa $9.9M (7%), Other $7.6M (5%). U.S. revenue was $121.3M, or 85% of total. The company derived 52% of revenue from Apple (Channel Partner) and 20% from Google.
Life360's CFO of $17.2M for Q1 2026 is robust relative to net income of $2.8M, with significant addbacks from stock-based compensation ($16.3M) and depreciation & amortization ($5.4M). Operating cash flow grew 42% from $12.1M in the prior-year period, driven by improved accounts receivable collections and a large deferred tax benefit ($11.9M).
Capital expenditures were minimal at $(1.6)M (largely internally developed software). The company did not provide a free cash flow figure, but CFO minus disclosed capex would imply positive FCF of about $15.6M.
Investing outflows were massive at $(163.6)M, dominated by $(106.4)M in short-term investment purchases and $(55.6)M for acquisitions (net of cash acquired). This suggests a strategic buildup of investment securities and M&A, not a reflection of ongoing operational spend.
Financing activities provided $3.4M, primarily from stock option exercises ($12.2M) offset by tax withholding payments ($10.3M). No share repurchases or dividends were paid.