Afternoon, everyone. We might make a start. Pleased to be joined by Russell and Lauren, the CFO and CEO of Life360, respectively. Thank you so much for joining us this year. We'll start high level. How do you think about, I suppose, Life360? Like, what do you do? What's the problems you're solving for your customers going forward?
Yeah, so broadly speaking, Life360 is a family app that helps customers with things like location tracking, location sharing, item tracking, and safety services. Customers use us to stay safe, to keep their families safe and connected, and to take care of their people, pets, and things that they love. We play this really valuable role in helping families feel secure and have peace of mind. We are committed to becoming the number one brand that makes everyday family life better.
Amazing. If you think about being the number one brand, how do you think about the competitive market? How do you think about Apple? How do you think about some of the competitors out there and what they mean for Life360?
There are a lot of people who do point services that are things that we also do. We really stand alone. We're really unique in terms of our role at being very much focused on the family and delivering the set of things we do in the context of the family. There's alternatives for individual things. As a suite, as a set of services, we think we stand alone.
Amazing. When we think about the U.S. market, I think you were saying at the recent results, sort of 14% penetration of the U.S. phone users. How do I think about growth going forward? Is it you've reached a flywheel where things could accelerate from here? Is it, you know, you're just getting started where growth can improve from here?
Yeah, I would say we think we're early in our journey still. We definitely see different penetration curves where, when we hit a certain threshold, we see acceleration in markets, and we expect new markets to follow the kind of patterns that we've seen in the U.S. and other places. All in all, the kind of services we do are really broadly relevant to wide sets of people. We're doing the kind of innovations that make it even more relevant to families of different shapes and sizes. We think we have a long way to go before penetration is really an issue we have to contend with.
How do you think about the penetration across the U.S. states? Is it California, obviously where we are, is quite high, and there's room for growth elsewhere? Just talk to us about how you see the differences in the states in the U.S.
Yeah, we spend less time thinking about it than you all spend thinking about it. I think what we've seen is that, you know, where we take hold someplace, that place tends to accelerate as more and more people use it. Then, you know, it spreads to the next state over, and that sort of follows a similar curve. We think that there's still a lot of room in all of the states. We don't think we're done in some community. We do think if we think about a state like New York, where driving is not as relevant as it is to other places, we think that means that there are different things we need to do to really serve customers in New York. There are other countries that I think have different driving profiles.
Often where we're less penetrated, it's about the sort of time from where we've started to be known in that geography. In other cases, it's that we have yet to deliver the kind of capabilities that we can in order to really resonate with the kinds of needs that families have in those locations.
The other point of note, Kane, is that, you know, even in those highly penetrated states, we are still growing quickly. We're not seeing any sort of ceiling at this point. There's lots of growth, lots of runway left.
How do you think about in those highly penetrated states, as I suppose an example of where you can go, is it new markets where you're seeing customer penetration come through? Is it, I'm just trying to think about the ceiling of penetration for Life360?
Yeah, it's hard. It is hard for me to imagine that we have a ceiling or anywhere near where we are. I think it's a couple of things. You know, we're still growing awareness, so there's a lot of room there. We're still, our value proposition is evolving. You know, we are not in the business of one particular feature, even just location sharing. We are very much in the business of serving families and making family lives better. Even if we were to sort of get to a place where everybody who had a particular feature had it and was aware of it, we're working on the next set of features that expand the way that we address the needs that families have. That expansion, that development has many, many probably decades of runway in it. We're a long way from feeling like we're going to worry about saturation.
Interesting. Thinking about the international versus the U.S. growth, how do you think about markets like Australia and markets like Europe? Where is the saturation opportunity as you grow outside of the U.S.? I suppose, why is that not a bigger focus going forward?
International is an incredibly important focus for us. We think that there's a huge opportunity, especially in places where the kinds of concerns families have are more similar. Australia is an example of a market that has a lot of the same behavioral characteristics that we observe in the U.S. We're leaning in and fueling a lot of investment in those markets. We're looking at markets where the behavior might be different. There are particular markets in Europe where usage is high, but subscriptions might be lower. That leaves us to sort of wrestle with what are the things we need to do in those markets where the needs might be different. We need to figure out how to unlock those kind of values. That's some of what's driven our recent investments to roll out emergency response capabilities in a number of European countries and things like that.
That continual development and understanding customers' needs and expanding to address those needs will continue. I don't know if you want to add anything, Russell.
No, I don't think so. I think the other thing as we think about international broadly is we've got a huge opportunity still left. There are many, many parts of the world where our penetration is still very low and therefore a lot of runway. It's going to be an interesting mix as we look forward to it. It might be a mix of premium subscriptions in some places that's dominant and supported, you know, free users in other areas.
Yeah.
How do you think about the, I suppose, the competitive dynamics internationally where you talk about premium in international markets? Is there markets where like Find My phone, Apple is more of a problem for you going internationally than the United States?
It's interesting. I think a lot of people expect that we're probably more popular where people aren't using Apple phones, but the reality is the majority of our customer base does use iOS.
Yeah.
Many customers use Life360 for their family and use iOS for their devices or for their extended community. We don't think that adoption of things like iOS is an inhibitor to our success. I think our success comes from meeting the unique needs of families and really speaking to the things that give them peace of mind. I've never heard a customer say that Find My gives them peace of mind. We are in a different business, and I think that really resonates with our customers. We get a kind of enthusiasm that few brands get.
If we think about internationally from a pricing perspective, how do we think about the leads of growth going forward where, you know, I think you had some very positive signs pricing-wise internationally? Is that a growth driver going forward, or is it more about customer growth, subscriber growth going forward?
Yeah, I think we're still getting pricing right internationally. International is still new enough for it that we've had an opportunity to take some price to get things sort of in a better spot. Ultimately, for me, my priority is getting more paying customers, growing first our usage profile across the world, across the globe, and then getting more of those users to become subscribers. There's a pricing opportunity, but the pricing opportunity gets more compelling the bigger your subscriber base is. That's our first order of business in my mind.
Interesting. When we think about demand and supply, you've spoken in the past around demand exceeding expectations for Life360. How do we think about that evolving over time? How do you think about pricing curves for Life360 going forward?
I think it's going to be that sort of mix. I mean, when you think about it, family safety and security and connectivity within the families are pretty much a universal need. Our base case is translatable everywhere. Then, as Lauren said, I think as we move forward with international expansion and become a little more sophisticated in that respect, we can look at more and more localization. What do we need to, on the edges of Life360, what do we need to do to meet those local needs? It'll be a more finely tuned product to those local needs. At the same time, we'll be able to optimize pricing there.
Interesting. When we think about the advertising business, it's obviously small but growing very quickly. How do we think about the advertising model washing its face, making money for the business going forward? How do you think about being at a target more specifically for users going forward?
Yeah, I mean, we're very lucky because we know so much about our customers. We've earned their trust, and that makes us very attractive to brands that want to get in front of families. They want to work with trusted brands like us. Our job is to sort of balance that appetite to get in front of our customers with doing it in a way that actually is appealing with customers. I love Uber as the example of this because a lot of people will get the flight notification that says that you've landed and, you know, do you need an Uber? They think of that as a feature, and they don't even know it's advertising. The result of that is that the click-through rate on that is much higher than a typical ad.
When we're able to put advertising in front of customers that customers see as a value, it's a win for the customer, it's a win for the brand, and it's a win for our business. We're going to look for more and more of those types of opportunities. That means we're not necessarily going as fast as possible. There are some other brands that have used advertising as a way to annoy users so that they can pay to turn ads off. I thought of that as pretty appealing because my brother is not yet a subscriber, and I think annoying him might turn him into a subscriber. We decided to make a different strategic choice and really focus on creating user value.
Even when we think about advertising, thinking about working with those advertising brands to figure out how we can deliver user value, that helps the brands actually get the kind of performance that is unusual and differentiated from other advertising platforms.
From a financial point of view, we're also lucky that it's high margin, high margin revenue. It'll provide the opportunity to do what we need to do, particularly in the next 12 months, and make some investments in the infrastructure, the team that we need to do without having a sort of an incremental hit on the bottom line.
Interesting. When we think about your brother's example, how do I think about growth going forward where, you know, there's obviously a lot of markets, a lot of customers to play for, where you could be pushing advertising more aggressively versus wanting to make sure you get the product right before you start looking after the advertising side of things?
One thing that I think all of us on the leadership team share is a view that this company has a long road ahead and a lot of upside. The most important thing for us is protecting the brand and the love that customers have for us and that growth of the core usage base. When you have that large, engaged, positive base, it really fuels everything else. It's what gives us the—it fuels the subscription business. It gives us license for the advertising business and will ultimately let us layer other business models on top of that. We are willing to take a measured approach at making sure that we're building value for customers at every level and not shortcutting our long-term opportunity.
Interesting. If I think about some of the other partnerships you have going on with Hubble, with the other businesses, can you talk about where they stand, what types of use cases you're looking for with Hubble that the leadership team is looking to accelerate?
Hubble is a great example of a partnership because it's got, you know, two very different facets. On the one hand, over time, as Hubble gets all their satellites in the air, they'll help us extend the value we give our members by allowing them to find their people, pets, and things even when cell service isn't around. That's an amazing customer value proposition, an amazing consumer value proposition. At the same time, Hubble is a partner for us that's an outlet for the enterprise capabilities that our technology provides, but that's outside of the focus of our core business. When you hear us talk about our business, we are incredibly focused on family. It's what differentiates us. We think preserving that focus is paramount.
Tile is super useful to attach to a pallet of cargo and then make sure that you know where all of your assets are. A lot of businesses want to make use of that. If we start to get into that and try to serve those customer needs, it would be a distraction. Hubble comes in as a partner for us. They're taking our technology, and they're building application solutions, a sales force that speaks to those enterprise needs. We get some of the benefits of that business. We get a revenue share of that business. It's an example of a partnership that has multiple positive dimensions and a lot of long-term upside. They're very early. They've deployed another eight satellites.
I think so, yeah.
You know, just starting to sign some big enterprise contracts. They're also early in their journey, but it speaks to this really setting ourselves up for a place where we can get the benefits of some of the enterprise business and some of the capabilities that we have without losing our focus.
Yeah, that makes sense. If I think about some of those use cases, can you talk to me a little bit more in detail around some of those partnerships, what Hubble brings to Life360 going forward.
Yeah, like I said, Hubble, with satellites, if you are on a hike and you lose your pack or your poles or something like that, it falls down a mountain and you want to track it. In theory, your Tile that's in your bag will allow you to do that. The problem is that if there's not a cell phone close to it, you might not be able to find it. What Hubble does is have satellite technology that would allow you to find that. That's great if you live in a rural place where you don't have good cell phone coverage or things like that. That's super helpful. I think we think about all of our partnerships like that. When we look at our Arity partnership, they help us with crash detection.
When we look at Aura, we look at them largely as a new distribution opportunity, helping us bring Life360 to customers who, through their employee benefits programs, might not otherwise hear about or consider Life360. Every partnership is really an opportunity to expand our business while making use of the precious resources that we have internally. I think in general, partnerships is something over the next two to three years that you'll really see us leaning into and building more core capabilities that allow us to do more partnerships at scale.
Makes sense. When we think about, just coming back to the group's financials, I think you, as you put the brass rattlers through recently, you took a little bit of a hit on conversion rates. How do we think about pricing going forward, what that might mean for the business, how it impacts your ability to have notifications, sorry, and your ability to just take price going forward?
You want to take this one?
Yeah, I mean, I think the way we think about pricing generally is it's sort of a, you know, it's a multi-pronged tool. In terms of subscription, you know, it's really about, we're focused about putting sort of more value into the subscription for our members and, you know, making the, generally making the member experience better. The more we get along with that, the more scope that we'll have for pricing increases. I think in the U.S., as you said, we put it through a pretty substantial price increase, close to 50% about a year and a half ago. We definitely raised the bar at that point. We don't feel the need for short-term price increases in the U.S.
Internationally, as we said, we're going to take much more of a, if you like, a granular approach in terms of looking at it by a region-by-region, country-by-country basis, optimizing the member experience, and at the same time, optimizing the pricing. From an ARPPC point of view, I think we'll continue to see both the U.S. and international sort of tick up. International will start to close the gap a little bit between it and the U.S. Also, stepping back more broadly, that's not the only tool we have because with advertising, you know, we have a completely separate high-margin revenue stream coming in. We'll start to look more and more at ARPU generally and look to build that in total.
Yeah. I appreciate it's not, it's obviously not the key driver, but just a comment around infrequent price rises versus doing it every year.
How do you think about your customer base wanting certainty that like each year we have a CPI price rise versus, you know?
It's a trade-off to some extent. There are some disadvantages in doing a price increase within the current mechanism for the platform. That's a trade-off between that disadvantage and perhaps having more consistent regular price increases. We'll look at that. We'll only do price increases where we feel like the members are truly seeing that value.
Interesting.
Just in terms of where the team is focused, it really is about finding ways to get more customers into our paying ranks, to sort of earn the right to their dollars versus a focus on just optimizing and getting the most dollars to the paying circle.
That's helpful. When we think about pricing, when we think about incremental revenue going forward, how much of that drops as a bottom line? How do you think about in this world of AI, in the world of investing in agentic AI, is there a need to invest going forward to stay relevant with your customers?
I think there's a need for us to invest in the member experience generally. Whether that's sort of AI-aided or other tools to make the member experience more delightful, really directed towards improving engagement just generally, that is a key sort of focus for us. There will be needs to invest in the business as we scale. There will be opportunities for us to accelerate growth, whether that's marketing or something else. Overall, we are completely committed to the targets that we set out. We have the ability to do both.
We have the ability to accelerate top-line growth and continue to move along the pathway for the bottom line to get to those adjusted EBITDA margins that we've set out as targets and beyond there.
Yeah.
You think about those targets you've set out. If advertising is super successful, if things go very much in your favor, is there upside risk to those targets that we should think about?
In that sort of hypothetical situation, we would be happy to move along the path a little more quickly. It will also give us the opportunity to reinvest, to maintain continuous growth.
I like the term upside risk. Another thing that I worry about a lot is the upside risk. Russell's right. We want to have that optionality. We really think that this business has a lot of growth ahead of it. We imagine this company many years from now, many, many fold the scale that we are. There's a lot of investment to do. If we are successful in a way that allows us to grow and invest faster, I think that's a good thing. We feel like the discipline from the commitments we've made to the market around profitability is good. It forces us to be thoughtful and make choices and spend shareholder money wisely. There's a balance there.
Makes sense. As you think about coming into the role, Lauren, where do you think about the risks, opportunities that Life360 has made to the market? Is there things that you think we should be more aggressively approaching? Is there things where you're very comfortable sitting back at night?
I'm excited about the growth that we have ahead of us. We've laid out a roadmap, and Chris and I have been working very closely over the last couple of years. I'm lucky to not be coming into this business cold. The plans that we've laid out, the roadmaps that we've laid out around things like pets or aging parents are all very compelling. I feel more excited than worried about the risk. I'm eager to get going.
Exciting times to be. If we think about AI and almost from a cost perspective, is that more internal efficiencies? Is there like better things you can do internally to drive AI? How do you think about the AI cost-benefit analysis?
Yeah. We think about AI basically in three ways. One is there's potential efficiencies. We are working, Russell's team in particular, is really getting savvy on AI and going all in and finding all sorts of ways to get efficiencies in how we do what we do. Engineering is also embracing that. If we can have a developer, one developer, be able to deliver what they used to do, but deliver it on both platforms for the same amount of effort, that would be an amazing efficiency that would help us go a lot faster. One of the things is efficiency. The next thing is innovation. There are a lot of things that just weren't possible in the world without AI and agentic AI and other types of new technology that's unlocking. We're excited to harness that to deliver more value for our members.
The third thing is the fact that there are real paradigm changes that will come in the wake of AI. Many families spend all their time at the dinner table, everybody's looking at their screen and scrolling their screens. A lot of things that are happening with generative AI is just the ability to converse and talk and interact with devices in a different way. I expect we are an app today. I expect that phone usage patterns will change as a result of AI and things like that. Really big technology shifts are at play that you can only kind of see glimmers of right now. Our job is to remember that we are not just an app. We are a business that is serving families and helping families stay safe and connected.
As technology changes and there are new and different ways of doing that, we have to be at the forefront of unlocking those new paradigms and those new ways of doing it. Maybe 10 years from now, you won't be checking your map. Instead, you'll be hearing a chime in your ear that tells you that your kid got to school on time. Or you'll be asking your voice assistant where your lost remote is or things like that. The interaction may be different, but the fundamentals of our business are the same. It's our job to sort of stay ahead of those technology curves.
Yeah, it's an interesting world we look forward to.
Yeah.
Just broadly, I think about pet, I think about elderly care. Are there other markets you could expand to in over time outside of obviously what's a very exciting opportunity?
Yeah, I really think the opportunities are unlimited. I mean, if you think about the things that matter to families, you know, and I'm reluctant to start naming them lest we have conversations about what month is, you know, the next thing going to get done. It's easy, you know, if we had fully addressed aging parents, you know, there's younger kids. There's the different things that families need, from education to finances to insurance. It's not limited. It's an unbounded space. When you have a mission like ours and you have the love and trust of customers, there's no opportunities. I was lucky enough to be at Microsoft back in the days when everybody had bought, I was in Office, and everybody had bought Office. Everybody liked Office, but nobody needed to buy Office because they were done. We could have said, OK, Office is over.
Let's move on to the next thing. We didn't. We said, how do we have to, how do we reimagine things so that we're widening our view of the job that we're in? That's actually what led me to SharePoint. I think Life360 is on a very similar trajectory. That is, our job is serving the family. It's not delivering just this one capability or just this one feature. As long as we stay focused on our customers and the problem, we have an unlimited opportunity to grow this company.
Amazing. Just like that build by partner process, how does that evolve in an AI world? Do you think you need to be leading edge? Do you think you need to have the product first? Can you still be a fast follower in an AI world?
I'm a big believer in build, buy, partner. I'm a big believer in all of them and that we really have to have a portfolio of all of those different things. I grew up really building and loving to build and being distrustful about buying, partnerships where it felt safer. As I have grown in my career to sort of get the step function changes in businesses, you often need new cultural elements, new ways of thinking. I think that will be the same for us. I don't know exactly how AI changes the game. I'll say we don't think of ourselves as an AI platform player. That is, we don't have to invent AI capabilities. Our job is really to make sure that we use them and that we navigate the changes in the industry and in daily life that is going to come as a result of that.
We don't have to necessarily compete with the people that Facebook and Meta are competing for, the talent that's sort of building out the underlying AI platforms. It's sufficient for us to be able to use those platforms to the benefit of our members.
That's helpful. As we think about, I suppose, the macro environment, is there any observations you want to make? Any comments you can make about how, you know, the macro is impacting Life360 at the moment?
We published a really interesting article, or we worked with some publications on it, around the anxiety economy, the notion that when people are worried about their finances or economy or other things, they often pull back on spending. There are certain classes of spend that people hold on to or invest in more when they are anxious. Family safety and security is definitely one of those things. We think that we're great because when customers have extra spend, we're something to spend on. When people are pulling back on spend and only want to spend on what's important, we're also in those sites. We feel pretty good about navigating both the ups and downs of the macro economy.
That's helpful. I suppose we've got, what, three minutes left for our presentation. How do you think, as a new CEO of Life360, what does success look like five years out, 10 years out? What are you trying to achieve for the company?
Yeah, I really do think of us as just scaling up. We talk a lot, and we've said publicly, we want to be the number one brand that makes everyday family life better. We have a great reputation with our customers. Our customers love us. If you talk to a customer, they say great things. If you talk to a non-customer, they say who? Raising our brand profile and raising that sort of general awareness so that we are a household brand that is just broadly known is important. How many times can we double our membership base and our subscriber base and take the ad business from a new business that's growing quickly to a mature business that is still growing?
Russell, like your point before about building the awareness, is that we should turn up tomorrow and double our marketing spend? How do you think about investing in brand?
Yeah, we have invested in brand, and we will continue to invest in brand. I think it is important as we try to reach those scale points. Our CMO talks about the mythology between performance marketing and brand marketing and thinking about those as discrete. He's like, it's not quite a science in the way that some people imagine. We believe that our brand spend does also drive performance. It doesn't drive it in a way that's as easy to measure, but Russell is a great partner on this.
Yeah, I mean, our CMO describes it as demand generation, which I think is a great term because even though it's brand marketing, it goes to the basic themes that are important to our members and our potential members and reinforces that as part of the process. We have to measure it in different ways. Clearly, it has been successful. The bottom line is the acceleration in growth that we've seen over the last 12 months.
How do you think balancing it, like in the Americas versus offshore? How does the team allocate spending or ROI versus, you know, should I really drive aggressively in Australia versus?
In America?
It's an excellent question that we debate quite often because there's a clear return in the U.S. It's probably a little longer pathway in some international areas. We've developed, and full credit to our CMO, has developed a methodology for that. Particularly, we talk about the sort of the tipping point for countries and sort of leaning into the acceleration on the S-curve in those countries. There's definitely an allocation of resources. We think about both the short term and the mid term in that respect.
Amazing. Lauren, Russell, thank you so much for joining us today. We're approaching time. It's super insightful.
Thank you.