0001581760-26-000078
SEC filingSubscription revenue grew 32% YoY, but operating loss of $8.1M driven by increased costs and advertising acquisition.
For Q1 2026, total revenue increased 38% to $143.1M. Subscription revenue grew 32% to $108.2M, supported by 27% growth in Paying Circles and 7% ARPPC improvement. Advertising revenue surged 329% to $19.7M, driven by the Nativo acquisition. Hardware revenue declined 49% to $4.5M due to the strategic exit from brick-and-mortar retail. Other revenue rose 30% to $10.7M on higher data volumes and partnership revenue.
Gross profit increased 32% to $110.6M, but gross margin contracted from 81% to 77%. Subscription margin eased from 88% to 87% on higher personnel costs. Hardware margin swung to -91% from +3%, impacted by discounts and returns from the retail exit. Advertising margin dropped from 94% to 60% as Nativo's cost structure (traffic acquisition, tech costs) outpaced revenue growth. Other margin slipped from 87% to 86%.
Operating income turned to a loss of $8.1M from a profit of $2.2M, as operating expenses grew 46%. Sales & marketing increased 62% due to growth media spend, channel partner commissions, and Nativo-related costs. G&A rose 43% from personnel and integration costs. R&D grew 29%. Net income fell 37% to $2.8M, including a $3.9M non-cash loss on the Aura convertible note investment.
Subscription remains the core profit driver with 87% gross margin and accelerating ARPPC. Advertising is a high-growth but lower-margin segment post-Nativo; managed advertising revenue contributed $12.6M of the increase. Hardware is being restructured to prioritize subscription attachment, accepting negative margins temporarily. Other revenue provides steady, high-margin income.
Management expects FY26 MAU growth of 17%-20%, below the original trajectory due to Android technical issues resolved in April 2026. Advertising revenue is expected to grow further as Nativo integration expands advertiser relationships and inventory. The company plans continued investment in R&D and sales/marketing to drive subscription growth, with operating expenses likely to remain elevated.
As of March 31, 2026, the company holds $106.1M in short-term marketable securities (U.S. Treasury securities) and has $310.9M in convertible notes (net of issuance costs). Inventory is $15.1M, up from $9.9M at year-end 2025. Remaining performance obligations (RPO) total $200.9M, with 52% expected to be recognized within 12 months. The deferred revenue balance is $51.9M ($48.2M current, $3.7M noncurrent).
Purchase commitments are $55.7M, exclusively with cloud platform and contract manufacturing partners. Of this, $29.7M is due in the remainder of 2026 and $26.0M in 2027. Notes disclose no other material contractual obligations.
No share buybacks or dividends were reported. The company capitalized $2.1M in internally developed software during Q1 2026 (1.5% of revenue). The $320M convertible notes (0.00% coupon, due 2030) remained unchanged, with $0.5M interest expense from amortization of issuance costs. The capped call transactions cost $33.7M (recorded in equity).
Life360 operates as a single operating segment. Geographic revenue for Q1 2026: North America $125.6M (85% of total), Europe/Middle East/Africa $9.9M, Other international $7.6M. No segment-level operating income or margin is disclosed.