If you have any questions, please reach out to your Morgan Stanley sales representative. With that, I'd like to welcome everyone and give hearty thanks to both Lauren Antonoff, CEO of Life360, and Russell Burke, CFO, for joining us today. Really do appreciate the time, guys.
Happy to be here.
Yeah, absolutely.
Perfect. Why don't we jump into something that's really got investors' attention over the last week, the fourth quarter results? I just thought we could unpack a few things that sort of really got people's attention over the last few days. Maybe starting with at the sort of top of the P&L or even above it, which is a core driver, MAU growth. You basically talked to some seasonality there towards the back half in terms of adding users. What gives you the confidence that you can sort of accelerate through the year and achieve the 20% that you've outlined?
We came up 2025 with really strong annual MAU growth. What we saw in 2025 is that quarter- to- quarter, especially comparing to a year ago, quarter- to- quarter, it looked uneven along the way. We see that same pattern emerging as we come into 2026. We have line of sight into really strong growth again, and I think in many ways even stronger, but we can see the shape of it. Part of that is that we understand the dynamics when customers come in, especially when we get a big cohort of users that come in. We really understand the shape of, you know, some percent of them turn off, some percent of them turn into passive users, and that gives us pretty good visibility into that baseline of what's gonna happen.
On top of that sort of normal flow, there's a number of initiatives that are new and exciting that we're leaning into. Our international focus is shifting from really just looking at users that have a propensity to pay, to really broadening our focus and saying, "How are we winning a broader base of users?" Especially in markets where we see green shoots. We see real good signs of product market fit. Examples are Mexico and Brazil, which are huge markets even, you know, compared to markets like the U.K. and Australia today. They offer a huge opportunity, and those are places where we are putting investment very deliberately to make sure that the product has the right set of localizations that we need to be successful there.
Working on lower-end devices, great localization, attention to modalities beyond driving, a whole set of things that are product-led work, and then complementing that with focused marketing efforts, both marketing and partnerships in those regions. That's one example. I'll take a break there. There's a whole set of things in product, in marketing, both in the U.S. and internationally that give us confidence.
Great. James, I'd love to give a little bit of context as well. I mean, we, because there's been some questions about growth, et cetera, we wanted to give the market, sort of, you know, an indication of our confidence in growth and, that's why we normally don't give guidance on MAU, but we decided to give guidance in terms of the 20% target. That's an annual target, and that's how we think about MAU, really managing it because of these variations from quarter- to- quarter, and we see that all the time.
And then when we came to the guidance, we also wanted to give a little bit more transparency in terms of Q1, so there's no surprises there. You know, in that context, MAU is, you know, performing in that way that we expect. That doesn't take away from our confidence in the annual target.
Perfect. Well, I'd like to circle back to some of those ideas a little later on maybe. Another sort of source of seasonality that you called out was on ad revenue. Can you maybe talk us through how you see the puts and takes there quarter-to-quarter, and why you've got confidence that that can deliver for you over the next 12 months?
Yeah. I let Russell take this, but just to anchor it. You know, we're bringing together what was a very exciting but very early ad business in Life360, and then Nativo, which is a mature business, but a business that was starting out with a lot of good advertiser relationships and publisher relationships, but no data of its own, no platform of its own. We bring these two together, and we see incredible synergies, and we're already starting to see the benefits of that very, very quickly. Integration does take some time and that, you know, in addition to advertising seasonality, that sort of beginning of the year investment to bring those companies together is part of the story.
Right. you know, as we think about advertising in 2026, it's definitely going to ramp up because we're moving through the integration and we'll see the benefits of that in the second half of the year. Because advertising is by nature something of a seasonal business, Q4 is definitely the key quarter in that respect. you know, again, few specifics. We probably expect the way it layers out is that roughly 15% of advertising revenue happens in Q1. That more than doubles by Q4, just to give you a sense of that ramp. Couple of other pieces just to help people put it together. We gave the information on Nativo's 2025 revenue-Pre-acquisition of about $60 million.
We expect, you know, roughly 85% of that to carry forward. That we're building that on the Life360 revenue that we were ramping up through the end of 2025. And then we'll build on that quite significantly during the course of 2026. I think we gave guidance of other revenues, sort of $140 million-$160 million in 2026. Roughly 70% of that is advertising in the 2026 year. Just to give the pieces that build that up.
If I was gonna add just something in terms of why this, why this works so well. Take for example, Life360. Before we had big companies approach us, they wanted to work with us, but we had limited inventory, and that meant we couldn't necessarily sort of meet the targets that they were looking to, and we might be just too small for them to deploy their advertising revenue. Nativo, on the other hand, you know, for them it was harder to break into the room to get new business because they're not well-known, they're a smaller company. You put the two together, for us, all of a sudden, we now have really extensive inventory through Nativo's base of publishers. For them, they have this great door opener. They drop our name, and people wanna talk with them.
Those two things come together, and now we have a Life360 ads business that's ready to scale. It's pretty exciting.
Yeah, it is. I wanna come back to that as well. I guess one other thing that you called out briefly that I'd like a little more color on, if possible, is some of the one-off costs that you'll incur in Q1 that are non-recurring that sort of wash out, including advertising and exit of retail.
No, absolutely. Again, we wanted to be sort of transparent because we're doing a lot of things in Q1 that are very intentional. Most of them are really sort of directed towards investing that will help drive that growth in the latter part of the year. They include things like, you know, the Nativo acquisition concluded in the very early part of January. We're now bringing that team on. To some extent, I think about it as a sort of a fixed cost that will help us really drive that advertising business. You know, there's roughly $6 million of operating expense that we're bringing in Q1.
just to be clear, Nativo is a negative EBITDA contribution in Q1?
Well, they were essentially a break-even business. They didn't have the scale. That's the interesting thing. You know, with the combined companies, we will have the scale to really drive a bottom line contribution there, as well as really strong gross profit margins. That's the beauty of bringing them on, combining the two businesses and we see very much beyond just the combination of the businesses with the synergies that we can get both on revenue and to some extent on cost. There are, again, that's a scale benefit. Even considering that core Nativo business, it'll go from break even to a positive contribution.
In terms of the other things that are happening in Q1, there's a few things happening on the devices business where very excited about sort of experimenting with pet GPS and really collecting a whole lot of learnings there. Part of that is experimenting with low price for the device which will drive some negative margins for that hardware accounting piece in Q1. We're also exiting brick-and-mortar. It's an intentional decision to be able to focus on direct-to-consumer and on other digital channels like Amazon. As the business matures and as our marketing matures, we did a couple of things in Q1 that we haven't done before.
We took an ad in a Super Bowl streaming mode and some ads in the Winter Olympics. That was about another $3 million of commitment. That may or may not be a one-off, but it was something that we haven't done in Q1 before, just to give that context of what we're doing in Q1 that will benefit the rest of the year. It doesn't change our overall guidance for the year for adjusted EBITDA. It just changes that profile a little between the quarters.
Yeah. That's a meaningful amount of money for a quarter.
It is, especially for the, essentially the lowest revenue quarter in the year.
Totally. Okay. I think we've sort of covered off some of the building blocks of the result. Why don't we take a step back? I'd be keen if... I'm not sure of the sort of knowledge levels of the business in the room, but just, you guys are family safety and connectivity app with close to 100 million users.
Yeah.
Can you maybe help us understand the value that the app brings in terms of relying some of the most sort of compelling, you know, a really compelling user experience that sort of underscores the value that you bring?
Yeah. I'll share a couple of experiences. You know, the classic kind of safety features are often around just finding out if somebody's in an emergency. One example that I heard recently was somebody who had found out that their father was actually... It was an adult who found out that their aging father had been in a car accident, found out about it through the app, and was able to go and give care and make sure things were okay. Those kind of reports we get all the time. The thing that's exciting is that we're starting to grow out from that and really impact people's lives in quite a diverse number of ways. My personal most common use case, my husband's in charge of feeding us.
He's the one who takes care of us and our family, and I like to check the app to find out when I'm getting fed. Those kind of everyday use cases are also important. And the thing that really distinguishes Life360 from a lot of other platforms is that we are emotionally resonant. You know, people get a dopamine hit when they check Life360. You know, they're doing it not just to make sure things are okay, not just as defense, not just as safety, but because they love that. They love the people, pets, and things that they share in the app. This is one of the reasons why bringing pets in is so compelling, and it's one of the things that we're leaning into as we reimagine the application experience and build in other capabilities like capabilities to address aging parents.
Got it. there's an element of protection against the worst case, but also some, like, a real sort of.
Every day.
What would you call it? Just, peace of mind every day.
Yeah. One of the capabilities we introduced last year was these No Show Alerts. This is, you know, we observed that we have a number of customers who will repeatedly check the app until somebody arrives at a location. While that is a lot of engagement, it's not necessarily like the best engagement because they're feeling worried, and the app is sort of scratching an itch, but it's sort of a scenario where we thought we could do better. Now they can set an alert, and many people are adopting this. They can set an alert and just tell me if the person doesn't arrive. If they arrive on time, I don't have to worry.
That's an example of how we're using our focus on family not just to give the information that someone's arrived, but to really understand what's happening for that member of the family and how do we help make their life better, in this case, reduce anxiety. We're working on a lot of new capabilities. We're gonna stop pre-telling the world about those before we ship them, but we're working on a lot of capabilities that we'll see coming out through the year that address other family-specific scenarios in a really differentiated way that are powered by the magic of location, but they're not just telling you where somebody is.
Got it. Okay. Now, I just can't let you go without asking the question that's been so dominant throughout this conference about AI. When you think about the risks, the points of your business model that offer the most resilience, and about the opportunities that you see in front of you with AI, could you maybe just help investors understand, you know, what's at the top of the list for each of those categories?
Yeah. First of all, you know, it should be clear to all of us that AI is fundamentally changing the world. It's changing how we work, and it's changing family life. We don't know all the way that those changes will surface, but there are things that we understand really well. We're already seeing significant changes in the way our teams work that are allowing us to scale more efficiently. For example, it used to be that to experiment in optimizing our funnel, our teams would have to think of a hypothesis. They'd have to do a bunch of work to test that hypothesis, then they'd wait and measure it, and then they'd do the next experiment.
Now we have AI coming up with hypotheses and running those tests in ways that are helping us drive some of those conversion improvements that you already see coming through in the acceleration of revenue growth. A lot of really great progress already, and that's sort of in the how we work side of things, and I think that's a huge opportunity. On the product side, and I'm gonna be very focused on opportunity. On the product side, classically, people sort of check the app, they look at it briefly, they leave. It's mostly about telling you where someone is.
What we can do now with AI is start to understand more about the dynamics of what's happening in families and serve more as an orchestration layer for family life. You know, we can understand more about where you're going, and we can give more guidance, potentially in natural language, to help you get through your day and juggle all of the kids and all of the complexities of family life. I expect that over the next year, two years, three years, we'll see significant evolutions in the way that people interact with the app. Maybe that brings me a little bit to the risk side of things, although I don't think it's a risk. I imagine that over time, people are gonna spend a lot less time on their cell phones.
You know, we're talking about, hey, we want people to engage with the app, but apps won't exist in the world the way they exist today. If we just depend on, you know, people visiting the app in the way they do today, I think we'll miss out on the real opportunities, where people are starting to interact with devices in more ambient ways. They're starting to interact through voice interactions. The thing that we're starting to look at already is how do we make sure that we're ahead of the curve on those evolutions as people are starting to adopt different devices and more, more voice ways of interacting for things?
How do we make sure that our services are addressing the family needs, in whatever modalities that people need and not really bound to the, necessarily the platform, the profile that they interact with us today?
Just to reinforce a couple of pieces, James. I mean, Life360 deals with real families moving through the real world.
With, you know, nearly 100 million users globally. It's much harder to. That's not something that's immediately disturbed by AI. It will be enhanced by AI is the way we look at it. That we actually see as an opportunity. To the question that you didn't ask but has come up quite often, you know, we've seen quite strong adoption through the company for AI. We've still got a ways to go there, but we're definitely right across the company doing things more efficiently, doing things faster. We're gonna use that extra efficiency to do more with what we have now. We're relatively small headcount in terms of the evolution as a company.
We can take those efficiency gains and really help us move faster and quicker.
I'd like to draw a couple of those points together. You talked about just the ability to really accelerate your product initiatives. You've talked about conversion from free to paid also improving because of the value that you're creating. Should we then infer that there's real durability to that trend of conversion rates going up to paid?
Yeah. I think we've got a long runway. You know, the balance between conversion rates and penetration into the base, it's a little. The way I think about it is that we're gonna continue to create new value in the app, which will drive more and more people to convert over time. We're gonna do that by layering in new scenarios and new ways to drive values like pets, for example. We'll follow that with aging parents. Those are just a couple of point examples of the areas where we know that people face challenges in their families. There's complexity in family life. We can use technology to go solve those problems.
Your question does bring to light, you know, the metric that is more indicative of short-term revenue driving, which is Paying Circles, which have been accelerating. The growth in Paying Circles has been accelerating, and that's a result of multiple things that we're doing through the process, from more efficient marketing to really optimizing the experience through the funnel. That's something that's really helping us drive that, you know, 30 %+ subscription growth each year.
Maybe an initiative that's quite linked to that is pet hardware. You've talked to really investing hard in subsidizing that, getting adoption, and every device is associated with a subscription. Can you maybe help us understand, has that started playing out? Is that in your internal metrics for the next 12 months? What's the duration to really sort of engage pet owners who you sort of talked about five million who've registered their pets who aren't paying subs?
Yeah. Certainly that is ramping up in this year. Right now, we're in a phase where we're really doing a lot of price testing, we're doing a lot of messaging testing, understanding the best way to ramp. We're just wrapping our movement out of China into Malaysia and ramping up manufacturing there. You'll see this ramping over the year. You say, you know, what duration does this play out in? There's a lot more that we can do with pets. I would say we're just getting started. You'll see ramp during this year, and you'll see us continue to invest and improve and enrich those services and capabilities, probably over multiple years.
Yeah. Perfect. I'd like to switch tack and circle back to advertising. We touched on that briefly, but can you maybe correct my narrative here. You launched ads, it was a little more complex and harder than you thought. You found what you think is a really great fit with Nativo, that enables you to leverage your first-party data and serve a lot more ads outside of the app offsite, maybe at lower rates, but it's an order of magnitude potentially or maybe two higher than the ads that you can serve in the app.
In terms of volume, yeah.
In terms of volume.
Yeah.
That creates a much sort of more sustainable and longer-term growth profile.
Yeah.
Can you maybe nuance that for me?
I think you said it really well.
This is me.
Yeah, yeah. I think you said it really well. you know, we had a vision for how Life360 ads could meet, help brands connect to families. Execution on that, there were a lot of pieces that we needed to build. Frankly, we needed more inventory to be able to meet the kind of scale that large advertisers wanted. So we're bringing together an advertising platform, a scaled sales team, and established relationships with our first-party data, an app experience that brands are excited to associate themselves with. It's helping us get near-term momentum and long-term scale.
Because Nativo has a full-stack ad tech system, and we have access to that now for the first time, there's a couple of other benefits. One, it allows us to keep control completely of the data, which is important from a privacy point of view. Secondly, it helps with the economics 'cause we're not sharing pieces of that with various middlemen in the process.
Right. The user experience presumably is protected because most of the advertising isn't associated, in the consumer's mind at least, with Life360?
Yeah. It's certainly not cluttering up our experience. You know, we are very transparent with how we use data. We're actually investing to be even more transparent and make it easier for people to understand how we use their data to have control over that.
The experiences that we have in the app, you know, if you use the app today, we had a panel recently, we asked, you know, you know, "How do you experience ads in Life360?" We had some people say, "Oh, I don't think it has ads." You know, somebody said, "Well, what about the Uber landing notifications?" They said, "Oh, that's not an ad." I think that notion of being able to deliver experiences that are valuable, that people don't experience as ads, that people experience as a benefit. If you're going into a store and you get a notification that says like, "Hey, there's a discount available," or something like that's actually, you know, not necessarily an ad.
That can be a benefit, especially if you have control and you can decide whether or not you want, you want that experience. When we think about introducing new ads into the product, we think about what is that user experience? Is it earning its right to be there? Is it earning, is it delivering value for our members so that they see it as a sufficient amount of benefit that it's worth that experience?
things like ride-sharing when there's a real need, you've landed in an airport. Things like QSR promotions based on location have been touted. Can you help us imagine what other potential partnerships would be sort of really prioritized versus just, you know, display ads?
Yeah.
at scale?
I think they are things that will align to other areas that we're working on. For example, you could imagine with Pet GPS that over time we'll do things like talk to you about your pet's activity level and if your pet is, you know, being sufficiently active. That lends itself to the question of, like, well, what else can I do to help my pet's health? You imagine that there are many brands out there that are oriented around pet health, whether it's pet insurance, whether it's, you know, veterinary care services that are interested in your pet's health. When we pair the services that we have around your pet's activity level with things that are related to it's actually useful. Like, what are the resources available to me as a pet owner?
One of the things we've been doing, you've heard me in the past talk about the redesign that we're doing in the app. We're trying to create space so that we can introduce rich experiences, not just, you know, see your pet on the map, but, you know, explore your pet's activity. The scenario that I'm really excited about that we will eventually bring to market, is one where you would know who in the family is really walking the dog. This is the age-old debate, who actually takes care of the dog? When we do those kind of things, that creates space and opportunity for us to bring in partners that work in those spaces, whether it's pets or aging parents or other parts of family life, that's relevant to people and that people find valuable.
Introducing responsibility, that might impact user growth.
Yeah. Yeah.
I also wanted to make sure we touched on international. You basically called out three countries that you're prioritizing that was incremental to what you'd sort of outlined previously. Can you maybe help us understand why those three countries and the pathway to really scaling it and making it a success and maybe how similar it might look in, you know, much lower income countries than where you've started the international expansion?
Yeah. I'll start this and maybe Russell will follow up. Those three countries you're referring to are Germany, Mexico, and Brazil. These are all countries where we have some green shoots, where we have organic adoption. You know, when we look at going into a country, we wanna see, you know, is there resonance? They're different, though. Germany is interesting because it looks more like the United States in some of the ways that it's used and some of the economics. Brazil and Mexico are more different. I think we've been a little bit surprised at how well they're monetizing organically. That makes it even more attractive to look at those places. Some of the use cases there are more different. Some of the sensitivities are more different. Some of the safety concerns that people have are different.
In each of these regions, we're really looking to say, you know, what does the product need to do to be locally relevant? How do we need to evolve the product? We're making changes, everything from, making sure that we work great on lower-end Android devices and that we start to get smarter about modalities beyond driving, for example, those kinds of things. Looking in those markets at, you know, are there, partnerships or advertising vehicles that are different than what we've used in other places that really make sense to galvanize that early-stage growth in those countries.
Yeah. As we understand more, I think we're getting more sophisticated in our approach. Lauren mentioned Brazil and Mexico. It's sort of an interesting case study 'cause we wouldn't necessarily have expected those to be the next cab on the rank, if you like, in terms of subscription. It's now clear that there's a portion of the population that is absolutely willing and keen to subscribe. In other, you know, lower income countries generally, that may be the case. There will be a substantial piece of the population that is likely to remain as free users that we can monetize through advertising. It'll be a dual approach in that respect.
Interesting. It'll be fascinating to see how that goes. I guess one of the other questions that I get asked a lot is that a few years ago, now you refreshed the whole sort of pricing model. There's been no price rises over the last couple of years. Is that something that you feel is on the horizon, or do you still have to see some of these initiatives flow through into the value proposition before you pull that lever?
A couple of things. Well, first, internationally, we have taken price in the last couple of years, so it's not totally true that we haven't taken price. Our focus right now is very much on growth. That's growth in MAU, and that's growth of our subscription base. You know, if you look at... We're very proud of having 2.8 million Paying Circles, but it's also a much smaller number than I'd love to be working with. I wanna get that number to be much, much larger before we really shift our focus on getting them the maximum value for each individual Circle. Our attention right now is on that growth.
Yeah, got it. Okay. Then the metrics that you've outlined for the long term, you've basically talked to 150 million-
Long term?
Well, yeah, you're getting pretty close there on some of them already. I guess the margin profile, in particular, looks really aggressive in terms of how much has to drop through by the time you get to $1 billion in revenue translating to 35% margins. Do you see those metrics going hand in hand, or are these things that might not necessarily correlate?
Yeah.
They'll definitely happen at different times, but it doesn't mean that they're not very clear goals, that we see a very clear pathway to for each of them. To specifically address the adjusted EBITDA margins, we do have a very clear path, and I've talked about even this year, we continue to step up. We continue to, you know, make use of operating leverage as we scale, and that's a big factor. The more we scale, the more we're able to take advantage of that. By Q4 this year, our run rate will be significantly higher than the 22% margin that we delivered in Q4 2025. You can see that we're very clearly on that pathway.
Perfect. We're out of time, but thank you both so much for your time.
Thank you.
Yeah. Really appreciate it.
Thank you.
Thanks, James.
Thank you.
Thank you all.