All right. Good afternoon, everyone. My name is Chris Kuntarich. I'm part of the UBS U.S. Internet team. Today, I have Russell Burke here today with me, the CFO of Life360. Russell, thank you very much for joining us.
Pleased to be here, Chris. Thank you.
Well, I think we're going to start off with a 10-15 minute presentation, and then I have some questions, and we'll open it up to the audience as well. But without further ado, take it away.
Thanks a lot, Chris. I've got, as Chris said, a short presentation here. We'll run through a basic overview of our strategy, you know, where we've come from, where we're going to. A bit of an overview of financials and then we're happy to dig into any questions. So Life360 is on a mission to keep people close to the ones that they love. We would like to stand for family, like Facebook does for friends or LinkedIn does for business professionals. There are legacy incumbents in safety, but we've found that digitally native families have not really been served by those safety players today. And we saw this as a huge underserved population, and we have and will continue to be a huge disruptor in unlocking safety and security for an increasingly digitally savvy base.
We do have the potential for a huge long-term TAM, a large critical mass of users, from home security to insurance, with numerous use cases for consumers across their lives. This slide covers the sort of basic investment thesis for Life360. You know, in terms of the stats at the bottom of the slide here, we are already a top five social networking app. We've accumulated more than 58 million global users. We're already present within 10% of families in the U.S. And the last couple of years, we've grown the core subscription business by more than 50% each year, with a result that we'll get to more than $300 million of revenue this year.
Our unique positioning as an internationally trusted brand with a highly engaged user base and a differentiated user experience, does make us somewhat unique in the marketplace. As I said before, we knew that families weren't being served by the incumbent players, and we've created a real competitive moat, establishing household dominance, which makes us somewhat uniquely positioned to scale. We are very focused on family safety and security, and that's our unique unlock, riding demographic tailwinds as millennials start to have families. And from a value creation standpoint, we have a durable model where the nominal cost to add features is very low, and we've now reached a pivot point with scale, where we can truly leverage costs, even as we continue to grow very strongly. We've got a continuous focus on user economics and have now reached Adjusted EBITDA profitability from Q1 of this year.
But importantly, we're not just an app. People interact with us every day as a premium safety service. In so many words and stories, our product connects with families and save lives. I won't go through the numbers on this page, but I wanted to call out the ambulance stat, which is just for 2023 to date. These aren't just app features, but they're real tangible life interventions. And, you know, unlike others, we'll call you when you get into an accident. If we can't get hold of you, we'll call your family. If we can't get hold of your family, we'll dispatch an ambulance. We started with location sharing, but it's the safety that we provide that makes the difference. And in that respect, we serve a daily need at this point.
We have so many testimonials, such as the one in the middle here, where Life360 was the only reason that the child was able to be found, and we helped by dispatching an ambulance after the crash. In terms of our presence, we've had over 180 billion miles driven with Life360 so far this year, and that's around 10% of miles driven in the United States. Just to look at it slightly differently, I'm showing you here data from a third-party data source. This is from data.ai, which used to be known as App Annie, showing app rankings. We have become a very big app when you look at engagement. One of the top 20 apps in the U.S. by daily active users. This shows not only our size, but our relevance in the lives of families.
In fact, if you strip out companies over $100 billion, there are only five companies ahead of us here. We've got a large runway ahead of us, and the sheer value of the real estate is massive, showing the potential for us to monetize over a big audience. This slide lays out some of the milestones that we've achieved since the company was founded. I'm not going to go through it in detail, but I do want to anchor on the significant investment that we've made in R&D. And this has created an industry-leading product, which also helps us provide a significant moat against competition. This slide lays out our market opportunity, looking at it several different ways. Our very core market is $55 billion global SAM, which, yeah, really provides much more runway.
We've already proven that we're bigger than location sharing, and that we're a trusted platform that can expand into adjacent markets. We've expanded from a location sharing to crash and roadside assistance, identity theft protection, and more. We've got the ability to disrupt the legacy players, and we've already done that in markets such as driver safety. Our near- and medium-term growth opportunities include industries such as auto insurance, all the way to digital safety and monitoring, taking our potential TAM to $190 billion. And then beyond that, our vision here is really to create that family safety and security platform and ecosystem to be the go-to place for digitally native families. And once we get to that, we'll be able to add other verticals to the platform, such as life insurance, home insurance, home security, travel, and family financial products.
We're seeing accelerating growth rates even in our most highly penetrated states in the U.S., and this underpins our confidence in the size of the total addressable market, and really supports our understanding that we've got a long runway to go, even in our home market of the U.S., even before we get to international expansion. Life360 is different from others out there in the market. At this point, we see location sharing as a commodity and something most players can do. But we are different in the service that we provide. So just to look at a couple of the other platforms.
In terms of Apple, we're often asked about Find My, and it's a great product, but it's a commodity product at this point, trying to be all things to all people with no specific audience, and it's largely a single use case, and it works great for that. It's obviously iOS only. Google obviously have some similar features, often multiple clicks deep, and with no real dedicated product to the family. And then you look at Snap, and they do really well on locations, but nothing beyond. They're built for fun and social purposes. Aside from that, we've seen a lot of small startups come and go during the process, but frankly, our 58 million MAU gives us a really big moat there.
It would be very, very difficult to get to our scale at this point, and the expense would be well beyond any startup. Overall, we've got a really highly differentiated offering. We're built for a specific audience, we focus on family safety and security, and we're differentiated in the core as well. We're not just a dot on a mobile map, but we provide a full suite of services going far beyond location, with features that really enable family coordination, messaging, and safety. And we've got an integrated membership platform that delivers a best-in-class user experience and allows families to access a robust set of offerings all into one place. And then beyond all of that, we are somewhat unique and we're cross-platform as well.
Just to take you briefly through our membership model, we use a tiered membership model with roughly 80% of our Paying Circles in the mid-tier Premium Gold. You can see here the tiers expand the scope of the members beyond their sort of favorite applications and really leveraging that. Things such as Place Alerts. Then add sort of the highly valued additional safety and security products, such as roadside assistance, Crash Detection, and emergency response into the premium layers as we progress. We've also got the data to really understand our members' daily lives, and we're just scratching the surface in terms of messaging those moments that translate into propensity for upsell.
Historically, we haven't put a huge amount of focus on monetization, but our highly engaged and loyal user base have seen the value in the premium offerings, and that's why we've gotten to where we are today. We're really excited about the additional levers we can pull and the features that we can add over time to bring more people into our Paying Circles. T he freemium model, combined with very long retention for our user base, means that we've got the ability to really convert that base, that free base, to premium with a very low acquisition cost and monetize them over a very long period of time. All of this results in a pretty robust flywheel. Our high brand awareness and freemium model creates that, where an established market leader with significant engaged consumer base that enables further monetization.
And then this provides a significant competitive moat, making it difficult to try to replicate our offerings. We've built this off a market-leading position to accelerate our growth, and we're reinvesting in selective and high return areas. Turning briefly to our key initiatives and growth opportunities. Investing in the core is an absolute core principle for us. It's all about the member experience, and historically, our growth has largely been word of mouth. We have lots of room to grow to make the app experience even more delightful and expand outside the nuclear family as well. We'll continue to invest in our core offering as our member experience does drive that premium acquisition as well as retention.
Then looking at driving membership, we've just recently introduced the Tile bundle as part of the subscription, and the early results on retention are very promising. Dialing this in as we go forward and adding new membership features give us huge potential for both the top and bottom of the funnel. We've really just started expanding internationally, and we have a two-tiered strategy there. Firstly, to improve the international member experience, and we've seen great results as a result of that this year. And then to roll out the U.S. style triple-tier product internationally. We've just started that in October with the U.K. and planning to roll it out to Australia in the first half of next year, followed by a number of European territories. And then finally, we are absolutely in the mode of maintaining financial discipline.
Earlier this year, we trimmed operating expenses, which really enabled us to get to that true pivot point, where our scale can leverage operational efficiencies. We demonstrated this clearly in Q3, where revenue grew by 20% and OpEx only grew by 2%. We'll continue to leverage this to expand our adjusted EBITDA margins with a clear path to positive EBITDA in 2025. Just briefly on the financial model. We've sort of given you the strategy, and this is how it really translates into the financial model on a business perspective. We are seeing an acceleration of revenue growth, while at the same time rapidly increasing profitability. This is very much driven by our core metrics momentum, coupled with the ability to leverage costs as we scale the business. Looking ahead, we see a real opportunities for additional growth.
There's lots, lots of levers left to drive funnel conversion, monetization, and improve retention over time. We still have lots of dry powder with U.S. product opportunities and the rollout of international markets to power that growth. Beyond that, there are multiple opportunities with new and complementary verticals. I mentioned before, things like auto and home insurance. We're also seeing meaningful margin expansion over time as lower commission rates flow through and the business continues to scale. The result of all of that is that it's an exciting time for our business as we move to free cash flow generation, which in turn covers potential new investments or future strategic projects. This slide provides a summary of our year-to-date core KPI and financial performance. I'm obviously not going to go through this level of detail, but I'll touch on a couple of things.
Our global MAU growth and paying circles growth year-on-year of 24% and 17% respectively are really driving the business. This resulted in year-to-date revenue of $218 million, which increased 39% over the previous year. At the same time, AMR increased by 41%, given these subscription trends. Operating expenses were stable year-on-year, due to the cost measures that we implemented in January and the leverage I've already talked about. All of that resulted in a positive EBIT, adjusted EBITDA year-to-date of $11.7 million, and that's a $50 million turnaround from the previous year. We're looking to full-year positive adjusted EBITDA in our guidance of $12 million to $16 million.
And just touching briefly on that path to profitability, I've already really talked about the multiple levers that are fueling both our top-line growth and the bottom-line margin expansion. So we're building that into, you know, what we're doing now and executing strongly on that. This is the outlook that we've provided to the public markets this year. I won't go over this. You can see this here, and I've already touched on most of the key numbers. So with that, I'll finish there, and happy to take any questions.
Great. Russell, very helpful. Maybe just starting on the funnel really, and just maybe help us think about some of the ways we're driving conversion. You said DAUs, you guys are one of the largest apps in the App Store right now. You're over 60 million MAUs. Help us think about some of the hooks that are driving from MAU to DAU to pay a paid customer.
Yeah. Look, the biggest driver in that is our free user base. That's important. That drives word of mouth. It gives us a huge base to draw on for really low-cost premium acquisition. And that's the biggest feature. We're really just starting to dial up the things like hooks within the free user experience that introduces those free members to the potential for the premium experience. So that's the biggest driver, and that's why probably 70% of our user acquisition is organic. It's word-of-mouth driven. And our opportunity here is to keep improving that user experience, and that's a core part of our strategy, including the free user experience.
We've just this year, we've rolled out Free SOS to our entire global user base, and we see that as a long-term investment in maintaining the user experience, making it more and more delightful, and being able to message that push through to premium.
Got it. Makes sense. And just rough, I was doing the quick calculation, at about 3% payer penetration you guys are at right now, as a percentage of your MAUs. As you think about some of, and I don't know if this is necessarily how you think about it, but some of the app peers here in the U.S. high single digits, some of the dating names being in kind of the mid-teens. Is that a number you're really managing to? And yeah, or help us think about where you think that number can be going over time.
Yeah. It's an important sort of raw measure of our penetration. And I should say, because we have somewhat unique model here, we have roughly 3.5 members in a paying circle. So if you factor that into the paying circle versus MAU comparison, it ends up around sort of 11%-12%. And you're absolutely right, the range of companies that we look to, the gold standard could be up towards sort of 30%, and that's definitely our aspiration. We absolutely see the ability to continue to improve that penetration, and there's certainly no reason that we shouldn't be able to double that in the next few years.
Got it. And, just the other number that jumped off the screen for me there on the one slide was the 50% subscription revenue growth there, almost 50% subscription revenue growth. I think you'd taken price in the U.S., something, something to the neighborhood of 50% on Apple subscribers. How should we think about the impact from subscriber growth versus pricing increases? What were the implications for churn here?
Yeah, that revenue growth has definitely been helped by that price increase over the last couple of years. In a perverse way, if you like, although it's contained our volume growth in as much as you o bviously, if you do a 50% price increase, there is an impact on conversion. So we did see our conversion come back a little bit. It's now starting to tick back up. So, yeah, we would expect pure growth in the region of sort of 25% to 30%, and see that continuing for the next few years.
Okay. And maybe just touching on the churn point a little bit more, help us think about churn at a high level, specific around the price increase as well. And then maybe the other part of the prior question would be, just was there anything unique about the price increase that you did to the Apple customers? Was there a in-kind price increase that you saw on the Android user base? Anything to call out there?
Yeah, no, we started with our new subscribers in terms of price increases and then moved to the monthly iOS subscribers. And then the last piece of that was the existing Android monthly subscribers. So we've now basically pushed through price increases to our entire existing monthly user base. We haven't yet looked at annual pricing, and that's an opportunity in the future. It really did prove the pricing power of Life360, because what we saw in terms of churn was very much what we expected. We saw a spike in that churn in the first month or two, and then very quickly came back to really normalized historical levels.
So, the overall benefit of doing that was very, very significant. We saw a big leap in our ARPPC, which is the way we measure average pricing. And we saw a big leap in revenue as a result. So, you're going forward, it's really helped us with that pivot to be profitable and increase the scale of the revenue base.
Makes sense. Maybe transitioning to the international side a bit. You talked about some of the markets you're going to be rolling out here. Just help us think about some of the indicators that you're looking at and w hy these specific markets? Why are these the ones you're going after? And kind of where do we go from here after that?
Yeah. It's a really exciting opportunity for us. Up until this year, we hadn't had a lot of focus on international. We were really focused on executing well within our home market in the U.S. What we did initially was an experiment with Canada, and that really proved a lot of our hypothesis in terms of an international rollout. We've now done the U.K. very successfully from an operational point of view. What we expect to see from that, because it's a significant price increase as we roll out the full triple-tier product versus the existing international product, which is more similar to sort of the Silver tier for the U.S. So it's effectively a price increase.
We expect to see a big lift in ARPPC as those new subscribers run through, and therefore, a big lift in revenue as well. What we've learned from that as well is that we have considerable leverage as we roll out internationally. We're really able to leverage that existing investment in R&D because the international product is very, very similar to the U.S. product. So there's a very small lift, R&D wise, in terms of creating that product in each country. And really a pretty small lift on the marketing side as well. We can leverage a lot of the marketing infrastructure. So overall, the international rollout will really help us as part of our leveraging costs for operational efficiencies globally.
Got it. That makes sense. Just, you'd made the acquisition, I believe you acquired Tile back in 2021. Could you just give us an overview of the strategic rationale there? Yeah, and really kind of how has that integration been coming along?
Yeah. The overall strategy is really tied into our overall company strategy of broadening out the demographic of our user base. We've historically been highly attractive to younger families as their kids start moving around independently, and particularly once they start driving. We have an overall strategy to broaden out that, and Tile was part of that. The primary strategy here was to bundle the location awareness device with the Life360 subscription, both. And that has multiple benefits. It increases the value of the digital subscription by associating a physical product with it. And we're also expecting to see benefits, top of funnel and bottom of the funnel. And we've already seen the retention benefits very strongly.
Even in these early days, comparing the group that has redeemed a Tile versus the group that doesn't, we saw a 10% improvement, relative improvement in retention in month one, and that increases to 15% improvement by month five. So as we dial in those benefits, we do expect to see really, really significant changes.
Got it. And if you're going to bring up retention, I got to think about LTV to CAC here. So, maybe one there. Just help us think about how that has been a part of your profitability journey and, yeah, just a re there any kind of key differences that we should be thinking about versus some of the other app players and how you approach it?
The real difference is in retention. You know, we are an app, so typically, there's not a lot of friction. You'll see a decent amount of churn in month one, month two, but after that, our retention curves are very, very flat. And that really goes to the structuring of the model in the first place. Because that gives us that benefit to, you know, for free users to really access the conversion to premium over a long period of time. And obviously, for premium users, the benefit of having that loyalty and that low, low churn over a long period of time as well.
Got it. Makes sense. I think we're coming down to the last couple of seconds here. Just one question I've been asking everybody is just, we're sitting on the stage here in 2024. What are we going to be talking about? What are you most excited about today? Yeah, looking out a little bit longer term, how should we be thinking about Life360?
Yeah, look, we're on a path to creating that true family safety and security ecosystem. We're getting there. We clearly see a path to, you know, improving to a $1 billion revenue company within a short space of time. Once we have that platform in place, the potential for adding verticals and creating that go-to ecosystem for families is huge. You know, the opportunities are very, very significant.
I think we'll leave it there. Russ, thank you very much.
Appreciate it. Thanks very much.