Hello, everyone. I'm Andrew Boone. I cover internet here at Citizens. I'm very honored to welcome Russell Burke to the stage, the CFO of Life360.
Great. Great to be here, Andrew.
All right, we're gonna have a little conversation about Life360. We'll talk about the quarter, and then we'll talk about the overall business, and we'll have a good conversation. Let's go back to the last quarter. You guys reported yesterday. Let's clarify a few items and then we'll do some bigger picture stuff.
Yeah.
Talk to me about MAU growth, right? You guys talked about 20% for 2026, but Q1 is below that level.
Mm-hmm.
Explain that to me, then help me understand what was kind of like the volatility that you talked about in terms of MAU growth for the call?
Absolutely. You know, we've guided to 20% growth for the 2026 year. Again, we saw 20% growth in 2025 as well, with a big Q4. You know, as the numbers get bigger, that 20% target gets bigger volume-wise. We are very confident of that target. We have a history of in terms of guidance, delivering or over-delivering what we say we're going to. We're absolutely confident of that. We typically see variation in MAU. If I step back, there's a few strands to MAU for us.
There're the developed territories, the U.S. and the Anglo markets where we've rolled out triple-tier membership, so U.K., Australia, Canada. There're the other parts of international. For other international, we often see quite a bit of variance. We've referred to that occasionally as sort of lumpiness, because we might get a spike, for example, in the Philippines, where we have a kidnapping scare, and it'll spike in one period. Those users are not our typical users, so they tend not to retain as well. The next quarter or next period, we absolutely see some retracement there and that's what we're seeing in Q1. We're seeing some headwinds in the international other.
Again, to be clear, those territories in particular do not have any sort of short-term impact on revenue. you know, they will be important for our long-term growth, but in the short term, there is no revenue impact. There's really no impact on results. We often see this, and that's why we manage MAU on an annual basis, and we're very confident on that 20% target.
If I say it back to you guys had a pull forward of international. You guys are now coming off of that spike, and that we should expect basically growth to accelerate in the back half of the year as comps are more or less easier?
Yeah, I think that's right, and it's not necessarily comps. It's a lot of the things that we're doing that and, yes, that we're seeing in the flows. You know, if I should say that the U.S. looks very stable. It's continuing to grow, and, you know, within that 20% target, we typically see the U.S. in the sort of mid-teens and international in the mid-20s. It's a composite there. There's lots of things that we see that are happening over the course of the rest of the year that really helps us with that confidence on that 20% target.
For example, there's things in the product that will help with engagement, really help with active users rather than passive users. There's a go-to-market plan for international in our priority territories in 2026 of Brazil, Mexico, Germany. We know we're gonna have a lot of activity there. Plus with our general focus on international, we've brought in the head of international, we've brought in a VP who's gonna look after Latin America. There's just things within the onboarding flow itself where we continue to optimize. All of those things combined give us a lot of confidence in that target.
Okay. One of the other questions that I had coming up from yesterday was advertising the cadence for 2026. Understood the seasonality of advertising, just walk us through kind of what the expectation should be now that we have Nativo on the platform?
Yeah
... and the cadence as we think about advertising through the year.
Yeah. And if you don't mind, I'll step back and just.
Go
... say a couple of words on Nativo, because we're really excited about this acquisition. It completed in the early part of January. It's really going to enable us to get to that next level in really optimizing the incredibly valuable data and audience that we have. That first party, real-time family audience is something that we have that really no one else has. We wanna take advantage of that. What Nativo does is it gives us the infrastructure, it gives us the sales team that we really haven't had before. It gives us, and very importantly, the relationships with advertisers and publishers that we haven't had before.
It's a great structural base to really ramp up the Life360 advertising revenue stream. That's why we're so excited about it. As I said, the transaction closed in early January. We're in the process of integrating right now. What that does do is give us a little bit of a fixed cost base that we're bringing on that we'll have from day one in January, and we'll use to ramp up that revenue over the course of the year. When we look at that ramp, it's as we map out the quarters, it looks like about sort of 15% of that annual revenue will happen in Q1, and that will more than double by Q4.
We always see some seasonality in advertising, particularly in Q4, but in this case, we're both ramping up and seeing that seasonality. It does shift our revenue profile and, you know, along with that, the bottom- line profile more towards the back end of the year, even while we're investing in the early part of the year.
You talked about $63 million for 2025 for Nativo. Now that that's gonna be the Life360 ad platform, I think we talked about a step down, that all of it would carry over. Help us understand that, and maybe what's the difference between Nativo versus the Life360-
Mm-hmm
demand that you guys are bringing forward?
Yep. I've said that we'll carry over the majority of that revenue, and I'm sort of thinking about it in terms of, maybe 10%-15% drops off, that's for categories that Life360 as a family advertiser doesn't wanna get into alcohol, tobacco, pharmaceuticals. But that's a small piece of it. Still gives us a great base to build on when combined with the existing Life360 business. The exciting thing for us is that we go from being able to really play in this sort of on-app space for advertising to expanding to both on-app and off-app.
We've already seen it, that that just gives us much better traction with advertisers who wanna do a big campaign and are attracted by our very valuable audience, but they previously, it just wasn't the numbers they're interested in. Now we can participate in those campaigns.
Right. Now last one in terms of financials. Q1 EBITDA guidance, we talked about low- double digits.
Yep
... Q1. Just help us understand that in terms of what's going on there?
As I said, we're doing a lot of things in Q1. So, we've brought on that Nativo cost base, which we'll be leveraging later in the year. We're also doing a few things in devices. We've decided to exit the brick-and-mortar retail business. And we're doing a lot of testing for the new Pet GPS product that we're very excited about. But we're doing a lot of price testing in particular. We've always seen that as an acquisition vehicle for subscription, so the pricing is not as important as the long-term subscriber retention. So we're definitely looking to optimize that. But that will have, accounting-wise, at least some negative impact on margin, hardware margins in Q1.
In addition to that, we've done some brand advertising that we normally don't do in Q1, with the Super Bowl and the Winter Olympics. All of those, to some extent compress our margins in Q1, but very intentional, very much things that we wanted to do to help build that growth in the latter part of the year.
If I think about the trajectory through the year, right? Margins build. You guys are gonna exit 2026 at what is a fairly healthy margin.
We are. Yeah, those margins will definitely build. Q1 is definitely the lowest point there. Q2 and Q3 will be more of a normal sort of quarter in terms of the way you've seen our Adjusted EBITDA grow during the course of the year. We are effectively pushing more into Q4. We just delivered 22% Adjusted EBITDA margin in Q4 2025. Q4 2026 will be considerably higher than that.
Okay.
We'll end the year with a very healthy, Adjusted EBITDA margin.
Okay. 10 minutes later, let's talk about the business. U.S. has always been one of those questions where you guys have done very well in terms of the U.S. population. Talk to me about where you are in terms of continuing to drive U.S. growth, right? Like Texas and Mississippi has always been two of the states that have been called out on the map that you guys provide.
Yep.
How do we think about U.S. growth like are you guys saturated, I guess is really the question?
Yeah, no, we are a long way from any sort of ceiling or saturation. In fact, we did a little bit of a deeper analysis and related it to your traditional growth S-curve. Even when you look at the highest penetrated states in the U.S., which as you say tend to be the Midwest and Southern states, they're still really only partway up that growth S-curve. You know, as evidence of that, we look at the growth in those states, it's still, those states are sort of still growing strongly. Besides that, we have a lot of opportunity in the other states that are more lowly penetrated.
And we're seeing those grow a little bit faster, but the growth across the curve is still very strong.
Okay. You guys had a pretty successful U.S . advertising campaign last year, right? I Think of You Dying.
Yep.
Very catchy. I think it caught a lot of attention. How do we think about advertising for 2026 and lapping the growth of that campaign?
Yeah. You're absolutely right. We've entered into the next stage of maturity in terms of the creativity for our advertising, and variously described as edgy.
Yeah
But it's designed to get people's attention, which I think it definitely has. Yeah, I Think of You Dying was the summer sort of back-to-school campaign. If anyone saw the Super Bowl ad on Peacock, it was also very edgy and designed to get attention, but reinforced the, you know, the tagline is sort of family proof your family. Really designed to reinforce that family message that Life360 is all about.
Okay. We just talked about international and kind of, I think it was, what? Brazil, Mexico, Germany as two kind of, like, growth areas if we think about 2026. Connect that to the goal of 150 million users.
Mm-hmm
right? Like, what has to happen for you guys to get there?
We have to just continue on the path that we're on. Definitely international is a big piece of that because we have so much runway there. Yeah, we talked about the U.S., where our average penetration is 16%. In the triple-tier territories, it's catching up quickly. I think in Australia it's something between 12%-14%. In the rest of the world, it's definitely in the low single digits, and incredible amount of runway there. We're gonna intentionally sort of focus on the areas that will give us the best return. Interestingly enough, a couple of years ago, I wouldn't have thought that Brazil and Mexico were in that range.
There's definitely segments of the population there that have been very attracted to the Life360 product. We're gonna optimize that. We're looking at sort of Central and Northern Europe as a rich field as well. And then we'll continue to tackle the rest of the world. The, you know, the great thing about, you know, adding advertising to our revenue suite is that we can think about territories where we thought may be very long in the cycle where we can monetize via advertising as well.
Let's transition a little bit. Let's talk about Pet GPS, right? You guys talked about the 90% of pets are in Free Circles. Talk to me about how you guys' plan on taking advantage of that opportunity?
Yeah. It's interesting. Pet GPS, like all of our devices, is really seen as a subscription driver. That's where we wanna position it. Pet GPS, because it's a cellular device and requires a subscription, essentially, is perfect for that.
Where you mentioned, we'd launched the sort of Pet Finder Network, which was a free to sign up for, and we got 5 million signups in the course of last year, of which 90% are in the free user group, and that free user group is the sweet spot for us with Pet GPS because if we can get a bulk of those free users to convert to subscription, as part of taking Pet GPS, then the return on that is immediate. It gives us that real driver to subscription. We're pretty excited about it. We're doing, as I said, a lot of experimentation with pricing at the moment.
We'd really wanna optimize pricing, you know, as essentially as an acquisition cost. The difference between what we sell it to our members and the cost is really an acquisition cost, which pays back pretty quickly.
Talk about this a little bit more broadly, though, right? You guys, it's less than 20% of users in the U.S. are on the platform in terms of paying. As you guys think about pushing email, push notifications-
Yep
... just making consumers more aware of Pet GPS more broadly and pushing that device cycle, how are you thinking about that today and the opportunity for 2026?
Well, our penetration rate does continue to increase, and by penetration, I mean the proportion of paying Circles to...
Yeah
... the whole base. That does continue to improve, and that's a result of a couple of things, just our marketing becoming more efficient, identifying people at the top of the funnel. And then our onboarding optimization, just really moving people to subscription more efficiently. It does continue to improve, and that's why we're seeing accelerating paying Circle numbers, which flows straight into revenue. That's one aspect. Yeah, we'll use that to. Yeah, we're still very much in growth mode. Yeah, we wanna continue growing the overall base. We see that as giving us a lot of optionality in the long term.
I think about 4 Q specifically, right, U.S. paying users grew, I think it was 5 points faster than what is now growth.
Mm-hmm.
If I think about the growth of paying Circles that outperformance, is that Pet GPS yet? Or are you guys...
It is really not yet Pet GPS. It's more the couple things that I spoke about, really optimizing our experience. We're not. To be clear, we're because we're still in growth mode, we're a long way from being in harvest mode, if you like. We could, I think, you know, Chris has often said we could move the paywalls and sort of increase revenue significantly overnight. We're not in that mode because it's not to the long-term benefit of the company and the shareholders.
All right. Let's transition to advertising. On-platform has been really healthy. Like 2025 was a great year for advertising. Strong growth throughout the year. Understood the Life360 platform now expanded significantly. Talk to me about the advertising opportunity, right? You guys had the Uber announcement. What's next as I think about Life360's-On platform capabilities?
Yeah. You know, there's sort of so many exciting things, as we combine advertising with partnerships like the Uber partnership, like the AccuWeather partnership, there's a lot of crossovers in those fields as well. You know, I talked about the ability to advertise both on-app and off-app, and that will then sort of expand our capabilities quite a lot. There're many things that we can do that are quite unique, that may not even be seen as advertising for by most people.
The, you know, the Uber notification is a great example of that, where, you know, we send a notification to someone when they land at an airport and offer them an Uber ride, and that's worked exceedingly well. That's, you know, a big part of the reason why our partnership with Uber has expanded. But doing things like that is seen as a benefit by the member and also hugely beneficial to the advertiser because you're catching people right at that point of decision making.
Let's talk about what Nativo brings in terms of the capabilities? We talked about this a little bit up front.
Yeah.
What's the broader opportunity of, say, an advertiser that used to come to you that now you guys have unlocked?
Right. You know, a lot of it is scale. You know, as I said, we had, we definitely had advertisers interested because of the uniqueness of our audience, and has definitely participated, but now we're able to offer, you know, not just the inventory on our own app, but a much-enlarged inventory and a much-enlarged reach offsite. That enables the larger advertisers in particular to come to us and feel confident about really allocating a part of their campaign to Life360.
We're definitely already seeing that, you know, sort of Fortune 50 companies that are coming and really wanting to advertise with us.
I'm gonna say it back to you and then you clarify what I just said. Advertisers used to come to you. You guys weren't scaled enough to be considered because they couldn't allocate enough that it moved the needle for them. Now that you guys have Nativo integrated, you guys are unlocking those budgets. Is that the right way to think about it?
I think that's right. That they'd always seen the value in the audience, but now they have the scale, that really makes sense for them.
Okay. All right. Let's connect a couple things, right? We've talked about $1 billion of revenue in terms of kind of an outpost of a target. Talk to me about the building blocks of that, right?
Mm-hmm.
Like, we continue to talk about advertising and subscription. How do we think about those two components building to that target?
First thing I'd say is we have, we're getting closer, much closer, and we have very clear line of sight to those goals at this point. Frankly, there's to get to that stage, and we'll get to that stage and then set more ambitious goals, but to get to that stage, there's not a whole lot different that we need to do. This year we will make a very big step in that direction. Really, not only the growth in advertising, which is, you know, a scale factor, but subscription is still growing at 30%+. With the opportunity with international, we will maintain that growth.
Those, those pieces and building on the, the use cases for Life360 with things like Pet GPS, with things like a focus on elder care, all of those will contribute to that step up to $1 billion of revenue very quickly.
We haven't talked about the transition off of the App Store and checkout in a couple quarters. Give us an update in terms of where you are in terms of testing HTML checkout...
Yep
...and kind of how that's going in terms of...
Yep
... potentially lowering some of the App Store tax?
We do see that as a potential real opportunity in the longer term or even closer than that, because commissions do represent roughly 19% of subscription revenue. With Pet GPS, for example, we're onboarding people directly via the web. We're definitely doing that already. We're experimenting with regular subscribers. We did have a little bit of a setback in as much as Apple got a favorable decision of treating them as prominently in the onboarding process. We had to restart the experimentation process.
We're looking to find that balance between the member experience and not creating too much friction and the clear economic benefit of onboarding and paying mechanisms via the web.
Okay. Final question. Let's talk about the path to 35% long-term target margins.
Yeah.
What do we have to get there? What do we have to do to get there?
Again, it's more of what we're doing. You know, we've been on a very consistent growth phase in that respect. You know, we delivered the sort of 20%, 22% Adjusted EBITDA margin in Q4. We will build on that this year. It's not going to be a direct straight line, but we will step up each period. As I said, we have very clear line of sight to that 35%. A lot of it at this point is just gonna be delivered by scale as we continue to increase leverage in the operating expenses.
Is the way to think about this is 2026 is an investment year almost with Nativo coming on at breakeven...
Yeah
...devices now with negative gross profit margins with Pet GPS. 2027 we think about the exit rate of 4 Q 2026 into 2027?
I think-
that's.
...I think that's right. Even this year with all of that investment, we will still step up our Adjusted EBITDA margin. To your point, by the time we get to Q4, we'll be at a run rate, which is considerably higher and much closer to 35%.
Yeah. Okay. Great. Russell, thank you so much for doing this. I appreciate it.
I appreciate the time. Thanks, Andrew.
Thank you.
Thank you.