Life360 Aktie

For joining us today on the second day of the Bank of America Tech Conference. I am Nitin Bansal, part of the Internet team here covering Life360. And I'm delighted to have with me Russell Burke, CFO of the firm; and Raymond Jones from the IR team. Thank you, Russell. Thank you, Raymond, for joining us today.

So maybe to kick off things, I want to touch on one of your recent announcement. So you recently announced a share buyback of $225 million. So -- and you're also investing in your core business where the growth is like fundamentally good.

And like you're investing in the advertising business, new subscription initiatives like pets. So like help us understand like why do you think buyback is like the right use of capital today? And how are you weighing like repurchases against like the investment opportunities in the business?

And really good to be here with you. I appreciate the opportunity. So yes, look, when we think about capital management, the first thing is that we are still very much a growth company. We see -- we're very early, we think, in our stage of growth. We've got a huge number of opportunities ahead of us. And we will be investing to double down on that growth. There's no doubt about that.

When we look at our sort of immediate capital management strategy, we have plenty of cash on the balance sheet. We have almost $460 million at last quarter end. We have really strong cash flow that we've demonstrated consistently now. But we did get some -- we took into account feedback from our investors who like to see the -- an offset to SPC in terms of dilution. So that's exactly what we're doing. It won't take away from our ability to invest in growth and really take advantage of those opportunities.

Got it. Got it. And as you lean into repurchases, it also suggests that you see a disconnect between like the market price and the intrinsic value of the company. So can you help us like understand like where you think market would be underestimating your growth or like the profitability potential of the business on the line?

I think in broad terms, perhaps what is not necessarily appreciated is just the opportunity ahead of us. I mean we've been growing very, very strongly for the last few years in the region of sort of 30% plus growth. And we expect to continue that and double down on that as we go. But we've got multiple opportunities here, and I suspect we'll get into some of them, but our subscription growth is still very strong in the U.S. We have a huge opportunity internationally. We're just really starting to scratch the surface in terms of expanding internationally.

And we have an advertising revenue stream that is just starting to build, and we believe will be a major opportunity to grow that very strongly going forward. All of those sort of contribute to the ability to continue to scale very strongly. And that scale in itself, we've again demonstrated the last couple of years, we're able to use that scale to really maximize operating leverage and continue to improve the bottom line as well.

Got it. Got it. So moving gears here a bit. So on the 1Q call, you recently revised your user growth outlook from what appears to be like a temporary product-driven issue. So can you help us understand like what changes you have made since discovering the issue and fixing the issue on the product side and the operational side so that this kind of thing doesn't happen again? And what gives you confidence that user growth will return to like a normalized level by end of 2Q, early 3Q kind of thing?

Yes. And I want to start by putting it into context to you. We are approaching 100 million users MAU globally at this point. And we think of them in sort of 2 separate buckets. One that is a bucket that relates to higher-end devices in the more developed markets that we are monetizing and will monetize in the short term.

There's another bucket of perhaps lower-end devices in less developed territories globally that is we do consider important for the long term, but will not monetize in the short term. And when you look at the sort of slight slowdown in growth in Q1, it's in that second bucket. So I just want to emphasize real no impact on short-term sort of financials.

That said, we did have a slowdown in growth, and we identified a number of issues that caused that. There was an immediate one that we knew of related to a security vendor that they rolled out a new version, which unfortunately, it's designed to prevent bots from registering. It got a little enthusiastic and stopped real people from registering. We fixed that pretty quickly, but that identified some issues with Android, particularly those lower-end devices where there were a few issues that have now been addressed.

And we've also put in place sort of monitoring at the right places, so that if any issues happen again, they'll be addressed very quickly. So all of that means that we've fixed those major issues. We see the trend starting to come back this quarter gives us confidence in the targets that we've talked about of sort of 17% to 20% for this year.

Got it. So just touching back on the user growth target. So help us understand like when you set that internal target of 17% to 20%, what's the thought process behind that? How do you -- like the key assumptions behind that? And why that is like the right level of growth for the business today? Like if the opportunity exists there, why not invest more on the marketing side and go for a more aggressive growth? Why just 17% to 20%?

So I'll answer that in a couple of different ways because specifically talking about marketing, our marketing has become more sophisticated and more efficient in the last 18 months in particular. And we've been getting better and better at identifying people at the top of the funnel who have a greater likelihood of converting to paid.

And that, in addition to improvements and optimizations through the funnel result in that our record Paying Circle additions in Q1. We had the biggest improvement in Paying Circles in Q1 that we've ever had as a company. But coming back to the MAU side, it is important to get that MAU in at top of the funnel, and that will continue to be a priority for us.

Got it. So coming specifically to the U.S. MAUs. So in U.S., you have almost like more than 52 million MAUs at this point of stage, which is like a material scale compared to some of the consumer apps out there. And what we have seen is that after achieving a certain scale, the growth in the user growth typically slows down.

So when we think about like your user growth for the next 3 to 5 years, how should we think about like the realistic obtainable user opportunity in the U.S.? And like what are some of the key areas in the U.S. like white space opportunities on the user growth front where your penetration is still pretty low that you could go after for the next 3 to 5 years?

Yes. So a couple of aspects there. One, the U.S. is obviously our primary and most mature market. But even as the most mature market, when we look at penetration across the states, even the most highly penetrated states are not in what we think of as a mature level. And even those most highly penetrated states are still increasing that penetration at a very consistent rate. So we're seeing continued growth even at the top end of that curve, if you like. And we don't see any signals of that slowing down.

To your point, we do have an opportunity in some of the other states to catch up, and we are seeing a good level of catch-up growth there as well. We're often asked about the reason that there's differences between the states, and there's definitely elements in terms of the digital adoption in various places and things like driving distances that influence it.

But we're doing things that will enable those use cases to be expanded, which sort of brings me back to one of our overall strategies here is to really broaden out the use cases and broaden out lifestyle -- life stages for our users.

So when we think about penetration, even in our most mature market, we're building out a broader aspect. Our intention here is to be the super app platform for families to be the go-to digital platform to help make everyday family life easier. So in doing that, there will be more opportunities to give more people reasons to join Life360 beyond what they are at today.

Got it. Got it. So you talked about the super app platform, and you've also highlighted future potential growth opportunities in areas like elderly care, insurance, financial services.

So like help us understand like how are you prioritizing those areas in terms of like rollout investment? And how should investors think about like the potential rollout of these features in 2026 or 2027? Tell us a little bit more about them.

Yes. And it's a good question because we see multiple opportunities to do exactly what I said, sort of expand those use cases, expand those life stages. And we're identifying each of those and prioritizing them. So this year, we have a focus on pets, for example. And when we look at our free user base, I knew, that's 100 million users, there are a lot of circles, for example, that couples with no kids, but they typically have a pet. So if we can give that couple a reason to subscribe, then that will be a huge plus both on conversion and on retention.

So pets is where we're approaching in a couple of different ways. And just to sort of give an example of the opportunity, we created this free Pet Finder Network and enabled people to -- our members to sign up, essentially give details of their pet in case their pet was lost, in which case we can activate the Life360 members in their local area. We've had 7 million-plus people sign up for that.

Again, it's a free network, but what it does is give us an indication of what that opportunity is and also obviously gives us a large base to market to for things like the Pet GPS device and other things that we're looking at for pets to bring pets into that family circle, again, broadens out that use case.

So that's just sort of one example of what we're doing. We see many verticals that we've talked about from elder care, which would be our next one to the other things that you've mentioned, insurance, financial services, all of which we look to integrate into the platform and really build out a very robust ecosystem for the family.

Got it. Got it. So touching on the pet thing. So you launched out the pet tracker thing late last year. So tell us a little bit more about like you already shared some of the points on the traction. Like what does that traction tell you about the future demand in the rest of the year? And as you invest in scaling up the pet opportunity, how should investors think about like the incremental addressable market that opens up for you in terms of like paying conversions or monetization from the pet side?

Yes. On the last piece, we know, for example, that there's sort of 90-plus million households in the U.S. that have a pet. Now only a fraction of those will probably want a device to be able to track their pet, but it still gives an indication of what the potential opportunity is.

To your point, we launched the initial device last year. We've had -- we've done a lot of experimentation since then. We've also had to deal with some supply chain issues. As you know, we've shifted our contract manufacturing from China to Malaysia, partly as a result of the sort of tariff issues. So that caused a little bit of disruption to the supply chain, but that's now fully in place. We're building inventory to have a really strong launch in the second half.

But it's -- again, it's one plank in our strategy here. We don't necessarily expect to sell a huge amount of devices. But what it is -- the strategy here is to bring people into the Life360 subscription. So we're going to structure the go-to-market in a way that really helps to tackle that free user base plus bring new users into Life360.

Got it. And when you think about your paid conversion growth for the rest of the year and 2027, how meaningful do you think the pet tracker would be for the growth in that area?

I think it will over time become meaningful. I don't expect it to move the needle necessarily in the really short term just because we're getting so much traction from -- we added more than 200,000 paying circles in Q1. And that growth itself is definitely sort of structural, the way we see it at this point. So we would expect to see that pets plus our other initiatives will contribute to that over time.

Got it. You mentioned the 200,000 net adds in 1Q, that was a pretty strong growth. Help us understand like what's the durability of this growth, the structural factors behind this growth? And like as we look forward, like some of the puts and takes in sustaining this level of growth on the net adds?

Yes. So there's a few pieces to that. I talked before about our marketing and our optimization within the funnel. So we've seen conversion increase pretty consistently over time over the last 2 years in particular. So the net adds in Q1 were not an aberration. They were potentially seasonally high, but they weren't structurally an aberration because we've seen that conversion increase over time.

For example, we've just sort of seen the number of trials increase pretty substantially. We've seen day 7 retention improve. And it's all a result of small pieces of optimization throughout the funnel, really taking out some friction in those decisions for members to become paid subscribers.

And in fact, starting to access more of the total free user base as well. It's not just registrations that come in, it's activating people who've been free members for some period of time. So all of that points to it being a structural shift more than something that we wouldn't expect to reoccur.

Got it. Got it. And on the subscription side, if I were to think about like next 12 months, where do you see like the biggest opportunity to improve the paying conversion, whether it's like on the product side, user, like onboarding, like which initiatives do you think could make the most impact over the next 12 to 18 months kind of scenario?

Yes. And I'll pick up one piece from the previous question that I didn't mention, which is important, is the importance of our international opportunity. We're just scratching the surface of that rollout internationally. The triple tier territories, as we call them, U.K., Australia and Canada have really demonstrated that we can achieve strong growth internationally.

And that international opportunity is very significant for us, both subscription and ultimately advertising. To your specific question, there's a number of things that we're doing in our product road map. And we're -- this is a continuous focus for us. One of the key priorities for the company is always continually improving the member experience. And that's been a key tenet for us, and that's a large part of why we've gotten to that 100 million-plus users.

The -- within that, we're continuing to do small things, small tweaks, if you like, things like the icon that is used for members on the Life360 map, where you can see you're walking or driving. We're introducing more opportunities for things like trains or public transport. It's sort of small touches like that, that bring what we think of as the delight to our members and keep them coming back.

We already have people coming back 5 times a day on average to the app. But we want to continue to improve that engagement with the app. And then specifically, we've got a project now where we're looking at really enabling some of AI tools to help us think about the next stage of this, how we get more proactive with helping our members sort of plan their family activities.

Got it. So talking about on the AI front, can you help us like understand like how are you integrating AI in the core platform, especially on the subscription side? And what kind of new features are in pipeline that could drive like an upside on the user growth, conversion side?

Yes. We're pretty excited about AI because it will definitely be an accelerator for us. And there's sort of probably 2 aspects for the product side. A, is the sort of the basic engineering. We're starting to use it more and more. We're seeing greater speed there. So we can get through product updates and product revisions more quickly. So just essentially moving more quickly at doing all the things that we want to do to improve the Life360 experience.

And then secondly, on -- we're looking at sort of specific, as I said, sort of specific tools that we can build into the experience that will sort of double down on the benefit that our members already get help them with their family coordination and even help them with planning into the future, making sure that their family members are coordinated for activities next weekend, that type of thing that will essentially just continue to enhance the experience.

Got it. Got it. So moving gears here a bit, moving to another area that has been a growth focus for you and a focus area for investors, advertising. So on the advertising side, like help us understand like what makes Life360 platform and data unique for advertisers? Why do advertisers come to your platform? And like what advantage does that give you in terms of like higher pricing or like better targeting? Like tell us more about that.

Yes. We're in the early days of advertising. Prior to the Nativo acquisition, we've been building an advertising business from scratch essentially. What we learned very quickly is that the real-world, real-time data that we have for our members and the context within the family environment is something that advertisers really responded to. They saw that is incredibly valuable.

Where we had limitations prior to the acquisition was just being able to execute on delivering that at a broad scale for advertisers. So for example, we had some large advertisers come to us, and they were excited about it, but they just didn't see the scale of the inventory that we had.

What Nativo acquisition has done for us is it brought in a number of things that give us a step change in that business. So there's the advertising -- the ad tech tools and infrastructure. There's a whole sales team that are now the Life360 ad sales team.

And importantly, there's relationships with advertisers with agencies and publishers, which are a critical part of what Nativo did. So it's brought in this whole range of ad tech tools and infrastructure that we now have the ability to use. And where that's really exciting for us is that we were largely focused on on-app advertising. This has broadened out the possibilities with off-app advertising and really expanded our reach to the potential universe very, very significantly.

So that's -- we can now offer those large advertisers a scaled inventory for them to use, and we're starting to see that traction. But coming back to the start, the real value is the value of the audience, which we've proved.

Got it. Got it. So earlier this year, you also announced like the partnership with Uber. So can you help us understand like what are the rollout time lines for that partnership? How will the experience look inside the Life360 app and the Uber app? And more importantly, like for the investors, like what does that mean for your user growth or the paid conversion growth in the -- like whenever that partnership rolls out?

Yes. Uber is a great example of something that we've been able to expand and really use as a proof case for our strategy to build an ecosystem around Life360. It started with an advertising experiment and using a feature of the app that already existed where we notified our circle members when one of their circle landed at a major airport. We took that feature and we adapted it for Uber to deliver a message to that person, you've landed at SFO, would you like to book an Uber? Worked extremely well. Uber. We're very, very happy with the level of click-throughs that they were getting for that.

And that led to this sort of expanded partnership. And the expanded partnership is both an advertising partnership and an integration of membership between Life360 and Uber One. So what that -- the benefit that, that gives us from a Life360 point of view is a real seamless acquisition where family members, for example, parents can see their teams in an Uber without having to leave Life360. They get that double-down security benefit. So it's part of a broad, again, enhancing the member experience and broadening out those use cases that will continue to help us expand the potential universe and subscription.

Got it. And when we think about like the partnerships, is there also opportunity to like partner on the ad side to accelerate the growth of that business? Or do you want to remain focused on like fundamentally building that business in-house?

On the advertising side. The advantage -- one of the other advantages of the Nativo acquisition is that it does allow us to control that because one of the absolute key things for us is our member trust that's been built up over a long period of time.

And that's resulted in a high level of opt-in for things like advertising. But that's a critical asset for us and the ability to control what happens with the data and make sure that no personally identifiable data leaves out our network is a key piece. So in that respect, we want to control that part of it. We'll continue to partner with advertisers in forms that flow from that rather than let anything leave our network.

Got it. And when you talk about user trust, so help us understand more like as you ramp advertising for your free user base, -- how are you approaching like the ad formats, the overall ad strategy so that it's not like destructive to the core user experience and preserve that trust?

And again, that's been very important to us because of that member trust issue and the member experience. So right from the start, the member experience was the key priority here. So we initially rolled out fairly basic advertising within the app. But we looked very carefully at the metrics to making sure that wasn't interfering with the member experience.

And we've made specific decisions not to advertise to anyone out great team, some categories that we won't work with in advertising that are not necessarily family-friendly. So we've made -- we've been very intentional in that respect because that member trust, that member experience is the key to what we do.

Got it. So we are almost at time there, and that brings me to the last question today. So this is definitely an investment year for you. But like in a more normalized environment and as the ad business scales up, how should investors think about like the operating leverage in the business model and the incremental margin potential for this business?

For the advertising business?

No, no, for an overall business.

Overall business, you can see margins in the subscription business, which is the key growth engine for the business are very high in the sort of 86%, 87% range. The advertising business will also be a high-margin business and will continue to increase in margin as the business scales.

And then [ Brooks ], so they will be the 2 biggest top line drivers for the business. And as the business scales, we've demonstrated that already that we can really take operating leverage and drive that with scale. And it's pretty clear to us that as we continue to scale business, there's a level of fixed cost that will help us continue to drive that operating leverage. We have a very, very clear path to our stated goals for adjusted EBITDA margins, for example.

Got it. Got it. Thank you, Russell, for joining us today. Thank you very much for taking out the time.

Pleased to be with you.

Thank you, everybody.

Thank you.

[Audio Gap] in listen-only mode until the Q&A session. To ask a question, please raise your hand using the icon at the bottom of your screen. We will make forward-looking statements during this call, which are subject to risks and uncertainties. A summary of these risks can be found in the Risk Factors section of our Form 10-K filing with the SEC dated March 2, 2026. These statements are based on assumptions we believe reasonable as of today, May 11, 2026, and and we have no obligation to update them, except as required by law.

We will also present both GAAP and non-GAAP financial measures. Reconciliations are included in our earnings press release on our Investor Relations website. This is an audio-only call with no slides. Our updated investor deck is available as a reference on our IR website, along with our new quarterly shareholder letter from our CEO and CFO, the letter goes into additional detail beyond our prepared remarks on this call with the intent to open up more time for Q&A. We will begin with a business update from CEO, Lauren Antonoff, then CFO, Russell Burke, will review financials and outlook, followed by Q&A. Please limit questions to 1 per participant to start.

I will now turn the call over to Lauren.

Good afternoon to everyone in the U.S., and good morning to those joining from Australia. Thank you for the call. We're doing something a little different this quarter with shorter remarks so we can get to more Q&A. The letter we shared provided a lot of detail. So I want to take a couple of minutes to reinforce a few key points.

I want to talk about what's propelling our strong financial results and why I'm confident in our trajectory. I also want to spotlight our advertising business, which has long been a glimmer in our eye and is finally at a scale where it's becoming a significant part of our business. And I want to touch on our progress and learning on AI. First, our strong revenue growth is a clear reflection of what makes Life360 so special. Life360 is in a rare position. We've become a meaningful part of everyday family life for more than 97 million people who use Life360 to keep their families safe and connected. The trust family is placing us is a genuinely differentiated asset, one that grows and compounds day after day because of the real value we deliver around safety, coordination and connection. It's the foundation and fuel for every part of our business. the momentum we have in subscriptions, advertising and partnerships all flows from it.

Every quarter, we ask ourselves, are we increasing the value we deliver to families? And are we seeing that value compound in our results? The answer to both of those questions in Q1 is yes. This trust and value translated into outstanding Q1 revenue growth of 38% to $143 million. We delivered the most badly subscription net adds ever, bringing us to 3 million paying circles. ARPPC is at an all-time high. These aren't 1 quarter anomalies. They are the result of a flywheel that's continually getting stronger. Better product drives higher conversion and retention, those improved economics fund more investment and more investment makes the product better. The value we deliver to our members powers our monetization engine.

Now let me take a moment on monthly active users. Q1 mile growth came in at 17% year-over-year. That solid growth, but below where we plan to be due to a series of technical issues that temporarily suppress registration volume during the peak of Q1 marketing. After fixing a widespread issue that impacted new signups, we uncovered additional Android-specific problems disproportionately affecting lower end devices. The latter took longer to resolve, but was largely concentrated in populations that don't materially impact revenue today. We've implemented the major fixes, put systems in place to quickly catch problems in that part of the funnel should they ever arise again. And we're still finding opportunities for improvement.

Recovery won't happen in this good quarter, but even with pressure on registration, our monetization through the funnel has remained strong. What I really want to convey is that demand never faded and engagement continues to deepen. When we look at the underlying data, the story is clear. Google trend searches for Life360 were up over 40% during the effective period. Our most penetrated U.S. states continue to increase their penetration consistent with previous years. Our iOS segments, which drive the vast majority of our revenue recovered and are growing well. The U.K. is growing at 25%, Canada at 32%; and Australia and New Zealand at 24%. And all bolstered by strong and improving member retention. The signals we're seeing now give us confidence that the fixes are taking hold, and we expect to be back on our planned glide slope by Q3.

This impact delays but does not fundamentally change our malgrowth trajectory. This brings our expectation for malgrowth to between 17% and 20% for the year. Our top line growth remains strong, and we've raised outlook for revenue. Next, I want to highlight our newly scaled Life360 ads business. What makes our advertising business different isn't just real-time location data. It's not the same trust that families place in Life360 is exactly what advertisers are attracted to. And our real-world first-party family data is unique impossible to replace with the synthetic model and it's what turns relevant reach into measurable results.

With the completion of the [ Natibo ] acquisition, advertising revenue has reached critical scale and the promise we've seen for some time has become real. We broke out advertising revenue for the first time with nearly $20 million in Q1, and we expect a steep ramp over the next few quarters as we enter peak advertising season. Over the long term, we continue to expect advertising to rival the scale of our subscription business, powered by our unique audience and real-time real-world data. Now that we've integrated in [indiscernible], our location data activates not just inside Life360, but across over 20,000 publisher sites in Connected TV, extending our reach from under 20% of U.S. ad eligible adults to over 95%.

With world-class buy-side tools, sell-side infrastructure and data intelligence, we can reach relevant audiences in the moments that matter and allow advertisers to clearly see when a campaign drives real-world behavior from store visits to test drives, all while keeping the data private within our walled garden. What that means in practice is that brands like Starbucks can reach families in a real moment near a store on a Saturday morning and then close the loop to see whether that impression drove a visit. Uber likes our results enough to deepen their product integration with us and parents will soon be able to call an Uber for their teen and see the trip live all inside Life360.

Brands like these want to work with us because of the trust we built with the families they serve and because we can close the loop between ad targeting and customer behavior, and experiences like these enrich the value that we deliver our members and propel the flywheel that drives member value and monetization. That's where we see so much potential in our ads business. Finally, I want to touch on I want to address this directly because it doesn't yet show up in the financials, but it will shape how we operate and compete for years to come. We see AI as a critical opportunity to accelerate our path and deepen our [indiscernible] The vision for Life360 has always been bigger than location sharing. We're working to become the go-to app for everyday family life across every life stage.

AI empowers us to take insights based on real relationships, location history and behavioral patterns across our enormous membership base and make that vision a reality. Our real-time continuous data becomes even more valuable in an AI first world. In April, we restructured our R&D organization as a first step toward becoming an AI-native company, where AI handles more of the execution work and our people direct, decide and are accountable for outcomes. What we see clearly now is that AI doesn't just help work get done faster, it fundamentally changes how work gets done.

Becoming AI native demands deeper changes in how roles and organizations are defined and aligned. We believe that companies that go AI native will compound that advantage over time. We're still early in our AI journey, but strong adoption across our engineering organization has increased developer productivity by over 50% from last year. That velocity lets us do more and unlocks high-value features that would have previously required unrealistic levels of manual effort. As our AI implementation matures, Life360 becomes the easiest way to orchestrate everyday family life, compounding value for our members and our business. Those were the points that I wanted to highlight for Q1.

Looking forward, the setup into the back half of the year is strong. Revenue acceleration, margin expansion and malgrowth all point in the same direction. We've got some exciting updates and product innovations in store for H2, including an action-packed back-to-school and the next phase of our push into families and aging parents. We continue on the path to exceed $150 million, $1 billion in revenue and over 35% adjusted EBITDA margins. Q1 reinforced our confidence in that path. The [ MAL ] headwind slowed us a bit, but the trajectory remains unchanged.

With that, I'll ask Russell to share a bit more detail on our performance and outlook.

Thanks, Lauren. Q1 delivered strong financial results across our core business, and there are some important cost structure dynamics that are worth walking through. All figures are unaudited and in U.S. dollars. Total revenue grew 38% to a record $143.1 million. Subscription revenue grew 22% to $108.2 million with core subscription up 36%, driven by 27%. Paying Circle growth and 7% higher ARPPC.

U.S. subscription revenue grew 28% and and international grew 58%. Advertising revenue was $19.7 million, up 329%, boosted by the Native acquisition. And this revenue stream is now disclosed as a separate line. Hardware revenue was $4.5 million, down as expected given our strategic exit from brick-and-mortar retail for tile. Other revenue grew 30% to $10.7 million. March AMR reached a record $517.9 million, up 32% year-over-year. Growth margin was 77% versus 81% in Q1 last year. The difference reflects 3 distinct dynamics across our revenue lines. Subscription gross margin held at 87%, in line with last quarter. Advertising gross margin was 60%.

As the Life360 advertising business broadens following the Native acquisition, we're introducing a wider suite of products that carry higher cost than pure digital advertising. Advertising gross margin will improve as the platform scales and should normalize towards 70% as revenue scales in the higher-margin back half. Lastly, hardware margin was negative as we priced Pet GPS for adoption and absorb brick-and-mortar retail exit costs. Operating expenses were $18.6 million, up 46%. R&D grew 29%, reflecting [ Na TiVo ] head count and platform investments as well as AI investments that are already accelerating our delivery pace. Sales and marketing grew 62%, driven by the increasing growth media spend, higher app store commitments and personnel costs associated with our newly enlarged sales organization.

Our upper funnel investment, such as streaming Super Bowl and Winter Olympics commercials is oriented towards brand awareness, which offers longer-term payoffs. Even with these investments, we expect to resume our march to increasing operating leverage by Q4. The April organizational reshaping affected a small group of employees rather than backfilling certain roles, we're allocating that investment towards AI native capabilities and workflow redesign. The net financial impact should be neutral to 2026 and and is fully reflected in our guidance. We expect operating leverage from AI to then begin to impact and compound thereafter. GAAP net income was $2.8 million with basic and diluted EPS at $0.03.

Adjusted EBITDA was $17.1 million at a 12% margin, reflecting the front-loading of our investment cycle as discussed last quarter. Operating cash flow was $17.2 million, positive for the 12th consecutive quarter. We ended the quarter with $459 million in cash, cash equivalents, restricted cash and short-term investments and total assets exceeding $1 billion. On guidance, we're updating our full year financial outlook. We're raising total revenue guidance to $650 million to $685 million, up from $640 million to $680 million. This is driven by subscription revenue, which we now expect to be between $470 million and $475 million, up from $460 million to $470 million.

Full year guidance for the rest of the business is unchanged with advertising revenue now disclosed separately and expected to be $98 million to $115 million, hardware revenue of $40 million to $50 million and other revenue of $42 million to $45 million. Finally, we're raising adjusted EBITDA guidance to $130 million to $140 million. up from $128 million to $138 million, representing approximately 20% margin. A few modeling points worth noting for our 2026 outlook. Revenue and margin are back half weighted, driven by advertising seasonality concentrating in the second half, integration costs and brand investment front loaded in the first half and lower hardware revenue as we complete the retail exit.

Q1 advertising revenue accounts for approximately 18% of our expected full year total. With Q4 representing approximately double that of Q1. Operating costs for the advertising platform are largely fixed. Beginning in Q1, we took on incremental quarterly operating costs from adding nearly 125 personnel and new ad tech operations related to the acquisition, while revenue and profit contribution are back half weighted. This is the primary driver of first half to second half margin progression. And it's why Q4 2026 adjusted EBITDA margin is expected to exceed the 2% that we delivered in Q4 2025. The financial setup into the back half is strong, revenue acceleration, margin expansion and MAU trends are all pointed in the same direction. We look forward to demonstrating that in the quarters ahead.

Ajay, back to you for Q&A.

Thanks, Russell. [Operator Instructions]

So we'd like to open up first to Mark Mahaney. Could you unmute your line and ask a question.

I just want to ask then, I'll start off on advertising. So you laid out some numbers for the full year. Talk a little bit more about the go-to-market strategy and also give us a little bit of color on that Q1 ad revenue number how much of that was from [indiscernible] so trying to figure out what the organic growth rate was but a little bit more on how you build up to those numbers that you talked about by the end of the year, approximately $100 million.

The first thing that's important to understand is that we've fully integrated our [indiscernible] team into the Life360 ads team function as 1 team and 1 business. We are pounding the pavement in the ad circuit attending the key conferences and continuing to reach out to both the customer base that Nativo and Life360 and cultivated over time. And we're seeing a lot of enthusiasm for the combined offering. So we're off to a good start.

And Mark, I think -- I know you're looking for an organic number. It is difficult because we have combined the businesses from day 1, but I think if you look at it broadly for that $20 million of revenue in Q1, roughly half of that was organic. .

Thanks, Mark. Next, we'd like to open it up to Eric Choi. Eric, can you unmute your line and ask a question? .

Yes. Thanks very much, Ajay. My 1 question would be just on the MAUs. Given you did 1.9 million MAU additions in the first quarter, to get to your 17% to 20% range for the full year it still implies that $1.9 million needs to live to say, $5 billion-ish on average per quarter for the remainder of the year. So my question is I'm just trying to get investors and myself more comfort that you can do that. So -- maybe could you give us an estimate of what that $1.9 million would have been in the first quarter if you didn't have the technical issues or alternatively you're kind of halfway through second quarter now. So maybe if you can give us a feel if that MAU number has actually already meaningfully accelerated? .

Okay. So let me unpack this a little. In Q1, we saw the suppression of the funnel that really impacted certain segments more than others. And that is the Android heavy markets and in general, the lower-end devices, and so when we sort of pull apart and look at the performance of our premium devices and -- sorry, iOS devices and high-end Android devices, we're already seeing really strong momentum.

As we look into Q2 and we see a lot of the problems that we saw in Q1 start to recover, although that's still ongoing through some of we see a return to similar levels of adds that we've had in previous Q2. So we have improved growth of that premium segment. And I would say, overall, that balances out with a suppressed funnel to give us a similar quantum to previous quarters. And then we expect, as that funnel is fixed and we go into Q3 in the later half of the year, that, that trajectory helps us build further momentum across the full user base.

Super helpful, Lauren. I'm sorry, I'm being annoying. For avoid interval or doubt, if I look at second Q '25, you did 4.3 million MAUs. So you're sort of saying second Q 26 is already tracking kind of in line with that number and given there's potential for second half acceleration on 2Q, that's what gives you the confidence in that full year number. Sorry. Is that the right way to think about it? .

Yes. And I'll add a couple of things. Even as this has been ongoing, we're seeing increased demand we're seeing increased use of retention. So we're seeing a lot of great signals in the fundamentals. And so the problem that we've been contending with is pretty narrow, and we put fixes in place and new monitoring, and we feel good about getting back on that lane by Q3.

And just to emphasize again, Eric, this doesn't have an impact on revenues or financial results. in the short term. Certainly, this year, you can see how well the business is performing. So it is very separate from the MAU brand. .

. SP1 Thanks, Eric. Next, we'd like to open up to Maria Ripps. Maria, can you meet your line and ask a question.

Great. I just wanted to follow up on the MAU sort of technical issue this [indiscernible] . Can you maybe help us understand sort of the time line of the recovery there? I think you said it will take a couple of quarters -- are there any sort of certain fixes that still need to be implemented? And I guess, how are you recalibrating your marketing spend over the next couple of quarters as this is happening?

So the issue that we've seen are sort of a cluster of issues. So that first issue that we detected was a broader impact that affected traffic coming into Life360 as a whole. When we repaired that issue, it's when we sort of uncovered that there was remaining issues, particularly in Android in particularly lower-end devices. There were a few very specific issues that we have fixes in place for, and those fixes went in between late Q1 and Q2. And those are already seeing good progress. The thing that this work has really helped us understand is that very much not all now is created equal. And there is an opportunity to look at those lower-end devices and continually improve performance among those cohorts.

And that will help really, the business over the long term as we get into markets that are Android heavy and that have a higher propensity of lower in devices. Russell called out that what we're seeing in now is a little bit disconnected or very disconnected with what we're seeing in subscriptions. And that's because the premium devices are the things that really drive the lion's share of our momentum.

Today, but we believe that Android cohorts and these broader cohorts are important to our long-term health. And so we're making sure to make those investments and those will continue for a longer period of time.

Next, we'd like to open up to Lafitani Sotiriou.

Thank you for the options your question. So can I just quickly follow-up on a previous answer that Russell provided and then asked my question. So Russ, did you say that -- was it $10 million of the new $20 million advertising revenue disclosure was organic growth. So given roughly $4.6 million PCP. Does that imply [indiscernible] was around $6 million PC on a like-for-like. So that $10 million is organic? Or if you can just clarify your answer around the $10 million, and my question is in relation to Starbucks and the Uber partnership and the partnerships more broadly in advertising. Starbucks know you signed them up as a new advertising partner? Or it just seemed to discuss them and not clarify. And with Uber's expanding partnership, are you -- is that leading to higher revenue? Is it double the revenue? What's involved with that expanding partnership.

Okay. So let me take the partnership 1 first, and then Russell will get back to you on his earlier comment. One of the interesting things about the ads business is and this is something we learned as we started getting in, is that customers want to start small and then grow, and that was a real challenge for us before [indiscernible] because we just didn't have the capacity or frankly, the platform to be able to do these initial tests and get to know partners and sort of prove what our platform can do with them.

So now with [indiscernible], we're able to engage in partnerships and we are starting on that journey with Starbucks and many other partners. And that is helping us get going, and those accounts will build over time. Uber is really a great example of how partnerships grow and blossom over time. That is a bigger deal. We're not disclosing specific numbers, but that relationship is growing both in terms of the value that it provides our members and the economics that it [indiscernible] the business.

And what I'd say about the organic growth question is, as I said in my previous answer, the -- because we've combined the businesses really from day 1, it's not technically possible to extract a pure organic number. All I'm doing is sort of looking at past history for both businesses and saying roughly half of that first quarter result was organic. .

Now, in terms of progression, we've also said that what we expect to happen this year is that the revenue will double between Q1 and Q4. So the Q4 level of revenue is likely to be roughly double what we saw in Q1. And that reflects sort of history of both businesses. .

Thanks, Russell. But just to be clear, so that means the [indiscernible] was roughly $6 million PCP. So the $10 million is an organic growth on both the existing Life360, advertising and [indiscernible]

That's a broad enough assumption, yes. .

Next, we'd like to open it up to Mark Kelly.

Great. I was hoping -- I'd love to get just maybe a better understanding of the technical issues that you identified that impacted MAU. I know a lot of nontechnical people on this call, including myself, but maybe just a little bit more color about what caused the issue and how to make sure that those issues don't pop up again in the future would be really helpful.

Yes. I can give you some examples, the first that I mentioned is a technology that we use to make sure that there isn't fraud and traffic coming into Life360. It's very helpful to prevent fraud, but there was a technical change made by the partner that we provide, and it started to catch more legitimate traffic as well as fraudulent traffic. So that was sort of like the first problem that we resolved in fixed. When we did that fix, we saw strong improvement in iOS, and we didn't see the same recovery in Android, and that was really the signal that there was a unique set of problems impacting Android. These particular problems are things that cause problems with people just getting started and onboarding into the app.

So it's before they're really using the app, which is why we didn't have as much visibility into the problem early on because they're not fully in the app. They're not sort of daily use customers already. What we've done is put a much, much more robust monitoring on that part of the funnel to make sure we catch those problems. I'll just add 1 other side effect. When those problems were happening, it's something that Google is able to detect. And when they saw those problems, they actually decreased our ranking in search results in the App Store. And I think that was 1 of the most significant impacts that we saw because it meant that people who were looking for us didn't necessarily align us.

Right. Really helpful. So it sounds like a big part of this was not your code, it was a third-party code that kind of made it hard for you to identify and the ranking stuff for Google, that make sense.

Thanks, Mark. Next, we'd like to open it up to Chris Savage. Chris, could you make your line and ask a question?

Lauren, this is probably more for you. But to use your term, the monetization through the funnel was obviously very good in Q1. Can you talk us through what particularly drove that? And was it in any way shape or form pet GPS?

It's a lot of things. I would say it's a combination of new value, including pet GPS although pet GPS is still small, and we had limited inventory. So it's not a huge part of it. But that's an example of the kind of new value that we've been adding. I think more importantly, there's a lot of value in our subscriptions that people don't understand. I can't tell you how many paying subscribers today don't even know that they're entitled to roadside assistance. And so we've been using AI to help get the right messages to the right customers at the right time. And that is just helping to uncover the value that's there and drive a lot of our subscription growth.

Next, we'd like to open it up to Nitin from Bank of America in are you on the line? And could you unmute and ask the question?

So on the U.S. user growth side, can you help us understand like which regions or demographic cohorts contributed most meaningfully to the user additions in 1Q. And as we look ahead for the remainder of the year, where do you still see like the largest white space opportunities for growth within the U.S. And what do you believe are the key levers that could drive deeper penetration in those underpenetrated markets? .

So growth in Q1 is pretty broad within the U.S. It's not necessarily 1 segment. But the key thing that we're seeing is that the premium devices are growing much more strongly than the Android devices that were impacted by the technical problems that we had. In terms of opportunities, we see 2 things. Historically, we've had stronger growth in regions where cars are really important. Our car value props resonate really well. One of the things we've been doing, 1 of the enhancements that's come out and been increasing in the app over the last couple of quarters is our awareness of other modalities. So riding bikes, walking and student trains. And that is helping us appeal to demographics where we haven't been as popular.

So I'm hopeful that we'll see New York come up at some point. We -- when we look at growth within our most [indiscernible] states, the states that are doing well, we do see a real continuation of the momentum that we have there. So this is layering on to strong growth in our best regions the ability to go after regions where the driving value props aren't as strong. The other opportunity, of course, are the less premium devices, states where Android is more popular where there's a higher propensity of lower-end devices. And we expect, as we improve those things, not only international markets will benefit, but it will also benefit the U.S.

Thank you. Next like to open it up to James Bales, James, could you meet your line and ask a question .

I just wanted to come back to the guidance revisions that you've given for the year, it seems to be focused on the subscription part of the business. And you talked about the conversion from [indiscernible] paying circle as having better conversion performance. I guess, could you help us understand how that's changed and how much that's changed? And also, has there been any improvement in terms of the take-up of paid subs from smaller cohorts.

So James, I think what we said is conversion has improved fairly dramatically. And we've been talking for a while about the the impact of our marketing efforts and how they've been very successful in really getting to people with a greater propensity to convert to subscription, that's part of it. The member experience that Lauren referred to earlier is definitely part of it. And so that is all building in terms of conversion, and when we look at the MAU growth sort of to connect it to.

Our growth has not slowed down at all in those higher premium devices that are the ones that are more likely to convert. So all of that is sort of driving a higher conversion and all the way through to the Paying Circle growth that we're seeing.

Yes, that's actually worth double clicking on. Not only has growth in those premium cohorts not slow down. We're actually seeing the improvement that we expected to see in those cohorts that are not impacted by the technical program.

Okay. And so I guess the question I had was basically, are you seeing improvement on the new customers added, and that's the big driver, that when they're signing up for the first time, you're getting an uplift in the percentage to convert to paid? Or are you also seeing it in the existing base? .

We're seeing a little bit of both. We're definitely seeing new customers with a higher propensity to come in.

Yes. I'd say it's the new customer stream that's driving it primarily, but we're certainly not seeing any falloff in previous cohorts. .

Next, we'd like to open up to Stephen Ju from UPS -- UBS, Stephen, can you meet your line and ask a question?

Yes, sir. So wondering if you can update us on the state of the elderly segment product development. And secondarily, whether there's anything you can share about the type of advertisers who are showing up to your platform, whether they are performance advertisers or more the upper funnel brand advertisers?

Stephen, can you pick one, which 1 would you prefer...

I want to talk about aging parents.

Aging parents, there we go. We're going to move that 1 to the later in the queue.

Okay. So on aging parents, I'm incredibly excited about the opportunity that we have to expand to serve more families at more live states, and we're meaning those foundations with aging parents today, and we're starting to make changes in the core product that make it a better fit for those parents. And we have more work lined up both in the back half of the year and years to come. The key thing here is that as we expand into things like pets and aging parents, it's really important that we're disciplined and that we're doing it well and that we're seeing it through.

And so you'll see us double down on pets later this year, not just improving pet GPS, but really looking at the whole ecosystem from our free customer to our subscriber customers and partnerships. And so we're making sure that we're following through with that so we can scale a really healthy part of our business and not just move on too quickly. So we are laying the foundation with aging parents, and you will see more this year, but that will build over the next few years.

Thank you. Next, we'd like to open it up to Annabel[indiscernible], could you unmute your line and ask a question?

Maybe just obviously get a little bit more detail on how pets are going, maybe just how you guys are trying to get some more stock to have to sell the amount you guys are selling out, great to see demand. And maybe if you could also comment on the types of customers who are buying the PET GPS at the moment in terms of new users coming to Life360 platform free user conversion and sort of like current gold members buying.

Yes. Great. We're really excited about the momentum that we're seeing in pets. First, on the free side, we're seeing something like 120,000 new customers or new pet profiles created every week. So really great momentum there. And of course, you know that we've sold out at least the U.S., we've sold out of our pet trackers pretty quickly. We're now -- we've moved that manufacturing to a new location, and we are retooling and getting ready to build up or getting the inventory ready to relaunch in the summer. So we're excited about that progress there.

In terms of what we're seeing, 1 thing that's interesting is that a lot of the customers that are pet customers are pre teenage families. So there a lot of them are earlier in their life cycle than the typical Life360 family. And that's helping us think about how we want to shape those offers. One of the things that we've been doing in Q1 is a lot of price testing. I know a lot of you have observed a lot of different prices and different mechanisms by which we're selling this. But that insight that a lot of these customers are early in the journey. It means some of the things in the current lineup are more or less appealing to them at different layers of tiering and that's informing how we're going to go to market in Q3.

Next, we'd like to open it up to Andrew Boone. Andrew, could you mute your line and ask a question?

I wanted to ask about marketing campaigns. You guys were lapping a very successful campaign in 2025. And yet it sounds like you're seeing pretty good success in terms of what you're doing in '26. Can you just unpack that? Help us understand what the changes are? How do we think about the lapping of last year's strong campaign? And what's changed this year? .

So it's hard for me to compare exactly 1 campaign to another. I would say we continue to see really good performance of our advertising we're very much focused on demand creation on building what we talk about as building an iconic brand and getting -- making it so that more people understand our brand. So when they encounter us, they're more likely to join and eventually convert. We're really happy with the overall progress in that, and we are teeing up new campaigns.

I will say, we are more likely to lean into that after we've sort of gotten through this little wave of the technical suppression on our registration I feel like it was frustrating to me that during the height of our Q1 marketing, we were facing these technical issues and so as come out of that [indiscernible] back in to our marketing. .

Andrew, we've also talked about -- this year, our plan is to spend more in international territories. And again, where we've talked about our sort of focused territories, particularly Brazil and Mexico and Germany. And we're really sort of laying out their campaigns and going to support the go-to-market in those territories. .

Thanks, Andrew. Next, we'd like to open it up to Andrew Gillis. Andrew, can you meet your line and ask a question. Andrew, Mr. Come back to it. Yes. We'll come back to you, Andrew Rob Sanderson. Rob, are you available? Please meet your line and ask a question. .

Yes. I wanted to talk a little bit about go-to-market on your ads business. So as we talk to agencies and brands, there's obviously -- there's a high degree of interest in real-time location but a very low availability of supply. And difficult to scale and not really worth putting a lot of energy into it, but clearly, high interest. So obviously, [indiscernible] publisher network brings a lot on the supply side. So that's, I think, really good unlock there. But the question is really on scaling the demand side. We're watching Open AI come to market and they're partnering to get its advertising business off the ground. Just why would a similar strategy that includes demand-side partners, maybe not make sense for Life360 today? And is that something you might consider more in the future? .

Yes. We're definitely looking both at supply and demand. [indiscernible] gives us that capacity to be able to work both sides. It's 1 of the reasons that [indiscernible] is such a great fit for us.

And then on the demand side in terms of partnerships?

I'm not sure I understood exactly what the question is. We certainly are building our demand and pursuing new partners on that.

Right. So the question, Laurence or I'll be specific, is engaging with third-party partnerships on the demand side instead of just going on a first-party basis .

Yes, we do look at that. And so we will continue to invest in that. We should probably follow up and get some of our specialists to talk with you about that. .

Thanks, Rob. Next, I'd like to open it up to Siraj Amit. Sara, can you meet your line and ask question. Unfortunately, looks like you are not there. We'll try Roger Samuel. Roger, can you meet your line and ask a question. .

Yes. I've got a question on your stock-based compensation, which has grown substantially up 64% versus PCP. And I get it is because of [indiscernible], but I think at the full year results, you were guiding to stock-based compensation to increase by 40%, and I'm just wondering if -- yes, yes, things will normalize in the next quarters. .

Yes. I think it will normalize to some extent. SBC isn't necessarily something that lays out evenly over the quarters. And to your point, we took on 125 heads with [indiscernible] from the first day of Q1, plus we've had some additional growth ourselves. So there's a few factors that go into that, and it will tend to normalize over the course of the year.

Thanks, Roger. Next, we'd like to open it up to Chris Smith. Chris, can you ask your question? .

Look, just 1 for me. Just interested in your thoughts around the capital allocation framework and what's holding you back from initiating a buyback? Like we've clearly seen the balance sheet strengthen the business is now generating consistent free cash flow. The conversion rate of paying circles in that first quarter, nearly 3x on the previous quarter. You're talking to MAU sort of incrementally doubling in the second quarter. So what's not giving you the confidence or why not initiate a buyback just to sort of give that confidence that you've clearly gotten the business to the market?

So Chris, I'd have to say I agree with all of the points that you made in terms of the strength of the business. That's absolutely true, and we are hearing that from investors and hearing the suggestions from buyback. We absolutely will consider it. And it's part of a -- you're looking at a balanced capital management strategy. We also view ourselves still very much as a growth company, with there are multiple opportunities for us to invest in growth in the future. And we want to balance those things out. But it is definitely something that we will look at closely. .

Because I think if you just look at that first quarter conversion rate of Paying Circles from MRUs, it's nearly 10%. And I know you can't look at that in terms of the number of members per Paying Circle or circle, but that strength and that must give you extreme confidence about the outlook. .

It really does. The subscription side of the business, the core business is growing incredibly well. the strength of that business is evident in all of those metrics. So yes, I can only agree with you. .

Thanks, Chris. Right. We'd like to go back to Siraj Ahmed. Suraj, can you unmute your line and ask your question. Seems to be working now. Can you hear me okay?

All right, great. Lauren, just actually maybe a quick clarification on the whole fraud thing that you mentioned. So have those customers actually come back? Because you said they're in the funnel, but didn't really register. And secondly, just in terms of paying circles, pretty strong conversion, but you're flagging with AI benefits. Was that through the course of the quarter? Just wondering whether we can see that continue to improve into the second quarter? And how does this whole family AI initiative link up with paying circle conversion? .

Okay. So the first question was Remind me I think it's about fraud. Okay. I'll take that 1 first. So -- what happens here is when traffic is coming in, we were not getting some of those customers. So those particular customers that may have come in and been turned away. We don't magically get them back. What we do is we repair that -- and this part has already been fixed. We sort of prepare that problem so that as new traffic is coming in, and hopefully, some of those same people return again. But as new traffic is coming in that, that part of the funnel performs healthy again. The would be the question from ...

For family's AI initiative. That was the question, I believe.

Just Paying Circle conversion and how that's actually how we should think that plays through the whole family, AI initiative.

I'll separate those 2 things. Just in general, the paying circle conversions, we expect to continue to hold strong and improve over time. The way that AI is really impacting Paying Circle conversion today is more about future discovery than about those new capabilities. That's the way it's driving Paying Circle conversion and growth today.

What we're doing now with AI is starting to weave it into features so that we have -- we use more intelligence about what people are doing to make new features that help orchestrate family life. I would like to give the example of car pool, which is 1 of those crazy times in every parent's life. And what are the things we can do if we know who is nearby and what people's schedules are to inform those kind of things. So those kind of AI capabilities will play out over a long time horizon, but the kinds of ways that we're using AI today to get the right message to the right people are already having a positive impact in the business. There were a lot of questions there, so I hope I answered them.

We'd like to go to Andrew [indiscernible]. Andrew, if you could meet your line and ask a question.

Guys, can you hear me? Perfect. Just a quick question on [indiscernible] and the relationships you've got there. Obviously, that's very core to the business and the growth story. How has the retention dynamics been? Are there any opportunities there and effectively just a bit of an update would be great.

Overall, the [indiscernible] business or what was the [indiscernible] business is holding strong, and a lot of people who have long been customers there are looking to do more with us now that we have a broader offering and more capabilities, especially on the measurement side. So we see a real opportunity to increase performance there. There were maybe 1 or 2 customers who were with [indiscernible] that aren't necessarily a great fit, 1 customer in particular that sees us as competitive. But for the most part, customers have decided to double down and are looking for new ways they can expand their relationship now that we're 1 company.

Thanks, Andrew. Next, we'd like to go to Wink Jen, we win, can you meet your line and ask a question. .

Just a question on the AI initiative or kind of the start-up that Chris is leading within 360. I guess the nature of start-ups as they generally burn a bunch of cash initially, while the product being developed and then, I guess, a viable product even then isn't necessarily guaranteed. Can you maybe speak to the level of resourcing that's going to be available to the start-up? And then also maybe given Chris is the exact Chair of 360. I guess what are the governance structures as they relate to this startup? And are these costs factored into guidance? .

Yes. So Chris is building a small team within the company. It's not a huge number of headcount. Of course, they're fortified with AI. So they'll punch above their weight. The nice thing about being a startup within a broader company is that we can start to harness some of the benefits of the work that they're doing sooner, even if some of the work that they're doing takes longer to play out. And they also benefit from learning and progress that we're making in the rest of the company. So it's not the same as being a fully on your own isolated start-up. Chris and I have a pretty good relationship around this, where they're really free to push the limits and do whatever it is, I think, is really going to get us to that next level of meeting families' needs. And then we have sort of a way that we evaluate that to decide what goes into production from that based on a couple of gates that we set up. So it's pretty exciting.

And way that small resource that's being allocated there is absolutely considered within our guidance for the year. .

Thanks, all. We've gone through the first question, so we're going to open it up to the last part of the queue. I'd like to go to Chris Savage. Chris, can you meet your line and ask your question. Chris, do you have a follow-up question?

No, I'm fine.

That's good. Okay. Thanks, Chris. Next, we'd like to open it back up to Mark Kelly. Mark, can you unmute and ask the question?

I just wanted to ask you about paying circle size over time. Like have you seen the number of mile within Paying Circles change at all over the last year or so? And I guess, do you have any expectations going forward?

So in general, as circles age, they tend to get bigger. And so as our population ages, the number creeps up a little bit, but that's more about sort of mix shift over time. One of the interesting things about expanding the more life stages and pets in particular, the families that were more likely to become paying circles are a little bit larger than our average circle size, but families with pets are often these smaller 1- and 2-person circles. And so that's figuring into our -- the go-to-market strategy that we're developing for the back half of the year.

Okay. And maybe a quick follow-up would be, like if we're going to look at average paying circle size just for modeling purposes, just to get to like a better penetration rate. Has that been pretty consistent over time?

It has. It's been fairly consistent around the 3.3% level. .

Thanks, Mark. I have 1 final question. Anabelle, can you unmet your line and ask your question.

Just a quick modeling question around hardware as a commentary in the note that respect to similar gross profit coming to the second quarter. Maybe just a sort of bit of comment on what's sort of driving that. Should we think about with the pricing initiatives, maybe like a more of a loss leading from pets and sort of how is the tile exit going? And how should we think about mulling that out for the rest of the year as well?

Yes. No problem. I think we will look to have hardware margins sort of normalize to some extent. But it will remain negative during the course of this year because we're going to support the pet GPS launch and sort of getting that in the hands of people. I think Q1 was a very high level of negative margin primarily because that on top of the PET GPS testing that we were doing, we also had the brick-and-mortar exit and the exit costs related to that. .

So it will come back substantially in Q2 and over the balance of the year, but I would sort of still expect call it, high teen negative margins in hardware. And as we've always noted, hardware revenue as a proportion of our total revenue continues to get smaller and smaller.

Awesome. Thanks, Annabel. We had Eric Choi requeue. Eric, can you meet your line and ask a question. .

Thanks, Ajay. I wonder if I could do 2 if I'm the last one. I had a follow-up on the subscription revenue and then I follow up on the buyback -- just on the subscription revenues, sorry, if I stuff up the math, Russell. Just for the full year, nominally, you're guiding to about $104 million of subscription revenue growth which is like in the first quarter, you did about $26 million of normal subscription revenue growth.

So if you just annualize that first quarter, you get the full year being, you had hardware disruptions in the first quarter and PC growth. Typically, that's lower in the first quarter. So the obvious question is, is that conservative? And then the second question, just a follow-on on Chris. I know you said you're considering a buyback, but just like what are the natural consideration points? Like I know you just finished the to and you've deployed the cash for that, but are you waiting on any other sort of by key milestones before you make a decision on whether to do it or buyback or something else?

So in terms of the progression of subscription revenue over the course of the year, we do expect sort of similar levels of growth when you look at it on a period-by-period comparison, as we maintain that sort of percentage revenue growth we're really getting more and more volume there. So I think it's a fair assumption that we maintain that growth over the year. In terms of the capital management side, there's a few things that we need to consider. We -- as you point out, we're effectively finalizing the integration of the [indiscernible] acquisition. We're looking at our strategic planning over the next few years. And you're factoring in the -- our very significant growth aspirations there. So all of those will be factored in as well as the market conditions at the time.

Thanks, Russell. Thanks, Eric. All right. That concludes our questions. Lauren, I'll turn it over to you to sign off.

Okay. Well, we're pretty excited with the momentum that we're seeing in the core business and excited for what's to come. We've got a lot of great end-user value and good GTM stuff planned for the back half of the year. So we're excited to talk about that next time we meet with you.

Okay. Welcome, everyone, and thanks for joining this session with Life360. We might start with some disclosures. For important disclosures, please see the Morgan Stanley research disclosure website at www.morganstanley.researchdisclosures (sic) [ www.morganstanley.com/researchdisclosures ]. If you have any questions, please reach out to your Morgan Stanley sales representative.

And 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. We really do appreciate the time, guys.

Happy to be here.

Yes. Absolutely.

Perfect. Well, 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 off 2025 with really strong annual MAU growth. But 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. And 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 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 going to 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. And examples are Mexico and Brazil, which are huge markets. Even 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. So, that's one example. I'll take a break there, but there's a whole set of things in product and marketing, both in the U.S. and internationally that give us confidence.

And James, I'd like to give a little bit of context as well. I mean, we -- because there were -- there's been some questions about growth, et cetera, we wanted to give the market sort of 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. But 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. But in that context, MAU is in that -- performing in that way that we expect, and 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. And then 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?

Yes. I'll let Russell take this, but just to anchor it, 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. And we bring these 2 together, and we see incredible synergies and we're already starting to see the benefits of that very, very quickly. But integration does take some time. And that -- in addition to advertising seasonality, that sort of beginning of the year investment to bring those companies together is part of the story.

Russell?

Right. And as we think about advertising in '26, it's definitely going to ramp up both for -- because we're moving through the integration, and we'll see the benefits of that in the second half of the year and because advertising is, by nature, something of a seasonal business. Q4 is definitely the key quarter in that respect. So, again, a few specifics. We probably expect the way it layers out is that roughly 15% of advertising happens -- revenue happens in Q1. That more than doubles by Q4, just to give you a sense of that ramp.

A couple of other pieces just to help people put it together. We gave the information on Nativo's '25 revenue pre-acquisition of about $60 million. And we expect roughly 85% of that to carry forward. So, we're building that on the Life360 revenue that we were ramping up through the end of '25. And then we'll build on that quite significantly during the course of '26. We gave -- I think we gave guidance about other revenue sort of $140 million to $160 million in '26. Roughly 70% of that is advertising in the '26 year, just to give the pieces that build that up.

If I was going to add just something in terms of why this works so well, take, for example, Life360, before we had big companies approach us, they wanted to work with us, but we have 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, 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. And you put the 2 together, for us, all of a sudden, we now have really extensive inventory through Nativo's base of publishers. And for them, they have this great door opener. They drop our name and people want to talk with them. And so those 2 things come together. And now we have a Life360 ad business that's ready to scale. So it's pretty exciting.

Yes, it is. And I want to 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 retail?

No, absolutely. And 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. So, they include things like the Nativo acquisition concluded in the very early part of January. So, we're now bringing that team on. To some extent, I think about it as sort of a fixed cost that will help us really drive that advertising business. So, there's roughly $6 million of operating expense that we're bringing in Q1.

So to be clear, Nativo is a negative EBITDA contribution in Q1?

Well, they were essentially a breakeven business on a -- they didn't have the scale. That's the interesting thing. 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. So, that's the beauty of bringing them on, combining there the 2 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 costs. I mean, there -- again, that's a scale benefit. So, even considering that core Nativo business, it will go from breakeven 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. We're very excited about sort of experimenting with Pet GPS and really collecting a whole lot of learnings there. But 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 or on other digital channels like Amazon. And then we -- as the business matures and as our marketing matures, we did a couple of things in Q1 that we haven't done before.

So, we took an ad in a Super Bowl streaming mode and some ads in the Winter Olympics. So, that was about another $3 million of commitment. But I wouldn't -- 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. And it's not -- it doesn't change our overall guidance for the year for adjusted EBITDA. It just changes that profile a little between the quarters.

Yes. But that's a meaningful amount of money for a quarter for us.

It is, especially for the -- essentially the lowest revenue quarter in the year.

Totally. Okay. So, I think we've sort of covered off some of the building blocks of the result. Why don't we take a step back? And I'd be keen -- I'm not sure 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.

Yes.

Can you maybe help us understand the value that the app brings in terms of relying on some of the most sort of compelling -- a really compelling user experience that sort of underscores the value that you bring?

Yes. I'll share a couple of experiences. The classic kind of safety features are often around just finding out if somebody is in an emergency. And one example that I heard recently was somebody who had found out that their father was actually -- 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 is 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.

People get a dopamine hit when they check Life360. 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. So, there's an element of protection against the worst case, but also some -- like a real sort of, what would you call it, just peace of mind every day.

Yes. Yes. One of the capabilities we introduced last year was these no-show alerts. And so this is -- we observed that we have a number of customers who will repeatedly check the app until somebody arrives at a location. And 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 in -- it's a scenario where we thought we could do better. And so now they can set an alert and many, 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, then I don't have to worry. And 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. I'm going to -- we're going to 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.

Yes. 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. What -- 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 what's at the top of the list for each of those categories?

Yes. First of all, 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 and 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 do the next experiment.

Now, we have AI coming up with hypothesis 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. So, 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 going to be very focused on opportunity. On the product side, classically, people sort of check the app. They look at it briefly. They leave. And 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. 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.

So, I expect that over the next year, 2 years, 3 years, we'll see significant evolutions in the way that people interact with the app. And 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 going to spend a lot less time on their cell phones. And so 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. And if we just depend on 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.

And so 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 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.

And just to reinforce a couple of pieces, James. I mean, Life360 deals with real families moving through the real world with nearly 100 million users globally. So 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. So, that we actually see as an opportunity.

And then to the question that you didn't ask, but has come up quite often, 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 going to use that extra efficiency to do more with what we have now. We're a relatively small headcount in terms of the evolution as a company. So, 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?

Yes. I think we've got a long runway. The balance between conversion rates and penetration into the base, it's a little -- the way I think about it is that we're going to continue to create new value in the app, which will drive more and more people to convert over time. And we're going to do that by layering in new scenarios and new ways to drive values like pets, for example, we'll follow that with aging parents. And 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, and we can use technology to go solve those problems.

Your question does bring to light 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. But that's something that's really helping us drive that 30-plus percent subscription growth each year.

And maybe an initiative that's quite linked to that is pet hardware. And 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 5 million who've registered their pets who aren't paying subs?

Yes. 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've just -- we're just -- so what duration does this play out in? There's a lot more that we can do with pets. And so 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.

Yes. Perfect. I'd like to switch tack and circle back to advertising. So, 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. And that enables you to leverage your first-party data and serve a lot more ads outside of the app off-site, maybe at lower rates, but it's an order of magnitude potentially or maybe too higher than the ads that you can serve in the app.

In terms of volume.

In terms of volume. And that creates a much sort of more sustainable and longer-term growth profile.

I think you said it really well. Yes, yes. I think you said it really well. We had a vision for how Life360 ads could meet -- help brands connect to families. But execution on that, there were a lot of pieces that we needed to build. And frankly, we needed more inventory to be able to meet the kind of scale that large advertisers wanted. And so we're bringing together an advertising platform, a scaled sales team and established relationships with our first-party data and app experience that people are excited, brands are excited to associate themselves with and it's helping us get near-term momentum and long-term scale.

And 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. And secondly, it helps with the economics because we're not sharing pieces of that with various middlemen in the process.

Right. And the user experience presumably is protected because most of the advertising is associated in the consumer's mind at least with Life360.

Yes. It's certainly not cluttering up our experience. 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. But the experiences that we have in the app, if you use the app today, we had a panel recently and we asked how do you experience ads in Life360. We had some people say, "Oh, I don't think it has ads." And somebody say, well, what about the Uber landing notifications? And they said, that's not an ad. And 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.

So 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, that's actually not necessarily an ad, that can be a benefit, especially if you have control and you can decide whether or not you want that experience. And so 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?

So, things like ridesharing 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 display ads at scale?

I think there are things that will align to other areas that we're working on. So, for example, you can 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 being sufficiently active. Well, that lends itself to the question of like, well, what else can I do to help my pet's health? And you imagine that there are many brands out there that are oriented around pet health, whether it's pet insurance, whether it's veterinary care services that are interested in your pet's health. And when we pair the services that we have around your pet's activity level with things that are related to it, 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 see your pet on the map, but explore your pets' activity. The scenario that I'm really excited about that we will eventually bring to market is one where you can know who in the family is really walking the dog. This is the age-old debate. Who actually takes care of the dog? And so 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.

That introducing responsibility, that might impact user growth.

Yes. Yes.

Now, I also wanted to touch -- make sure we touched on international. You basically called out 3 countries that you're prioritizing that was incremental to what you sort of outlined previously. Can you maybe help us understand why those 3 countries and the pathway to really scaling it and making it a success? And maybe how similar it might look in much lower-income countries than where you've started the international expansion?

Yes. I'll start this and maybe Russell will follow up. Those 3 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. When we look at going into a country, we want to see, is there a resonance? They're different, though. Germany is interesting because it looks more like the United States and some of the ways that it's used in 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, and so that makes it even more attractive to look at those places. But 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. And so in each of these regions, we're really looking to say, what does the product need to do to be locally relevant? How do we need to evolve the product. And 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. And then looking in those markets at, are there partnerships or advertising vehicles that are different than what we've used in other places that really makes sense to galvanize that early-stage growth in those countries.

Yes. And as we understand more, I think we're getting more sophisticated in our approach. And Lauren mentioned Brazil and Mexico. It's sort of an interesting case study because we wouldn't necessarily be expected those to be the next cab on the rank, if you like, in terms of subscription. But it's now clear that there's a portion of the population that is absolutely willing and keen to subscribe. In other lower-income countries generally, yes, that may be the case there. There will be a substantial piece of the population that is likely to remain as free users that we can monetize through advertising. So, it will be a dual approach in that respect.

Yes. Interesting. It will be fascinating to see how that goes. I guess one of the other questions that I get asked a lot is that you -- 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?

So, 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. But our focus right now is very much on growth. That's growth in MAU and that's growth of our subscription base. 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. And so I want to get that number to be much, much larger before we really shift our focus on getting the maximum value for each individual circle. And so our attention right now is on that growth.

Yes. Got it. Okay. And then the metrics that you've outlined for the long term, you've basically talked to 150 million.

Long term?

Well, yes, 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?

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. And 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 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. And by Q4 this year, our run rate will be significantly higher than the 22% margin that we delivered in Q4 '25. So, you can see that we are very, very clearly on that pathway.

Perfect. We're out of time, but thank you both so much for your time.

Thank you.

We really appreciate it.

Thanks, James.

Thank you.

Thank you all.

Greetings everyone, and welcome to our Fourth Quarter and Fiscal Year 2025 Earnings Conference Call. This call is being conducted as a Zoom audio webinar. [Operator Instructions]

We will make forward-looking statements during this call which are subject to risks and uncertainties. A summary of these risks can be found in the risk factors section of our Form 10-K filed with the SEC today, March 2, 2026. These statements are based on assumptions we believe reasonable as of today, and we have no obligation to update them except as required by law.

We will also present both GAAP and non-GAAP financial measures. Reconciliations are included in our earnings press release on our Investor Relations website. This is an audio-only call with no slides. Our updated investor deck is available as a reference on our Investor Relations website.

We'll begin with a business update by CEO, Lauren Antonoff, then CFO Russell Burke will review financials, followed by Lauren's 2026 outlook, and then Q&A. Please limit questions to one per participant.

I'll now turn the call over to Lauren.

Good afternoon to everyone from the U.S., and good morning to those tuning in from Australia. Thank you for joining our fourth quarter and full year results call. We've got a lot of material today because there is a lot going on that deserves deeper discussion.

2025 was a landmark year for Life360. For the first time in company history, we achieved annual net income of over $32 million, even excluding a one-time non-cash tax benefit, reflecting both the fundamental strength of our freemium model and the operating discipline we've built over the past several years.

Full year revenue grew 32% to nearly $490 million, adjusted EBITDA more than doubled to over $93 million and we exited the year with more than 95 million monthly active users and 2.8 million Paying Circles.

Beyond the numbers, we made significant progress building our family super app platform. We introduced Pet GPS, our first fully in-house created device, which we launched simultaneously across five global markets. We acquired Fantix, enabling Place Ads and Uplift. And we completed the Nativo acquisition in January 2026, creating a full-stack advertising platform with Fortune 500 relationships and thousands of publishers.

These platform investments position us well for the next major shift reshaping our world, AI. We see AI as an opportunity to accelerate our path and deepen our moat. We are well into the transition to an AI-first world, and I want to share why we're so confident in our position.

First, our core use case is durable because it's anchored in real people moving through the physical world. While AI will reshape our product experience, it does not replace your child, your spouse or your pet. As for the market concern that AI will eliminate the need for software products, code is only a part of what we do. Family relationships and physical world services like crash detection, emergency response and roadside assistance go well beyond what software alone can provide and they are essential to the peace of mind that families rely on us to deliver.

Second, AI makes our data more valuable. For many products, data doesn't need to be fresh. A year-old forum thread is nearly as useful as a new one, and once absorbed in a model, you may not need the source at all. But our data is fundamentally different because by its nature it's real-time, continuous and perishable. Where your child is right now can't be learned from a training set. We keep this dataset within our walled garden, and the market is already placing a premium on access to it, validating both its scarcity and its strategic value.

Third, AI enhances our ability to delight customers. Today, members engage with Life360 by briefly checking the map or reading notifications. With AI, we can start to play a more active role in our members' lives, telling you that there's a soccer game at 3 or making sure you know you're the one getting the kids and that you have directions to the field, and reminding you that you need to leave in 30 minutes so you won't be late.

AI connects the dots, so you can focus on real life. Where earlier apps have failed because they put the burden on parents to plan ahead, our location intelligence powered by AI can simplify organization for busy parents, deepening the value we offer families.

Fourth, AI is improving our execution. The trajectory is promising as organization-wide AI adoption has grown from about 25% to almost 95% in the past year. This is already increasing the pace at which we're delivering product capabilities and experiences that drive growth, further bolstering our confidence in achieving our 20% MAU target for 2026. Over time, it will accelerate our path to creating significant operating leverage.

Finally, we understand the power of platform shifts because we were born from one. Life360 was founded on the early recognition that mobile would reshape how families stay connected, and we look forward to leading the charge to help families navigate this transformational shift.

At the same time as AI is transforming how we work and what we do, we enter 2026 on track to achieve our multi-year strategic goals, surpassing 150 million MAU and $1 billion in annual revenue, delivering continuous adjusted EBITDA margin expansion on our path to 35% plus, and becoming the #1 brand that makes everyday family life better. To achieve these goals, we continue to grow our user base, scale our paid offerings, expand our revenue streams and enhance our profitability. We'll touch on each of these briefly.

Let's start with user growth, which is the engine that fuels both subscription and advertising revenue. In 2026, we expect 20% MAU growth for the full year, with significant quarterly variation in net adds and growth weighted toward H2.

Our MAU growth engine operates through 2 complementary mechanisms: product improvements and marketing which supplements organic adoption. Both fluctuate due to the varied timing of product improvements and marketing investments, along with unpredictable acquisition spikes, especially in emerging markets.

While user growth remains a bit volatile quarter-to-quarter, we expect to continue steady annual MAU growth. Remember that after strong acquisition quarters, a meaningful share of new users shift from active to passive. Think about a parent who checks the app regularly, while their spouse relies on notifications. Both are still getting value, but in this scenario, only one is counted in MAU after the first month.

Product-led growth benefits from specific improvements and new features like driver reports, no-show alerts and device integration as well as network effects from happy members, and both of these compound over time. Across communities, word of mouth drives penetration as trust builds through social proof.

At the platform level, our growing base of nearly 100 million users attracts partners like Uber and AccuWeather, and those partnerships in turn create new reasons for families to use and stay on Life360. Features like our Pet Finder Network and Pet GPS extend that flywheel further, broadening our relevance and fueling our progress toward super app status.

Turning from product-led growth to marketing-led growth, our marketing now spans the full customer journey. At the top of the funnel, we focus on awareness with evocative video ads you may find on YouTube or premium placements like the Olympics. Mid-funnel, we work with influencers and podcasters to enhance consideration and reinforce our family positioning.

At the bottom of the funnel, we deploy sophisticated performance marketing to drive installs and registration. We've validated our hypothesis that by investing more in the upper funnel, we improve efficiency of our lower funnel marketing, so we're putting more dollars behind our brand.

To that end, during the Super Bowl, we launched the third chapter of our Family Proof Your Family brand campaign, which had prominent placements across NBC's streaming and broadcast networks during the Olympics. These campaigns represent a significant step forward in building Life360's reputation as the trusted family brand at scale. And we followed up with targeted campaigns leveraging the Life360 Advertising Platform further down the funnel.

Our biggest growth opportunities are in international markets, where penetration averages low-single-digits compared to 16% in the US. In more developed markets like the U.K. and Australia, we're focused on deepening penetration and monetization. In emerging markets like Mexico and Brazil, we're in the earliest stages of penetration and we're focused on growing awareness and adoption, and we expect continued variability in growth rates.

Our second key focus is on scaling our paid offerings. Paying Circles grew 26% in 2025 reflecting the increasing value we deliver for families and the impact of continuous funnel optimization, which is driving record conversion rates.

As we expand the platform with capabilities like Pet GPS and eventually aging parents, families see more value and discover more reasons to move into premium tiers. At the same time, International ARPPC remains 40% to 50% below U.S. levels, representing a multi-year runway of natural monetization upside as those markets mature.

Our near-term priorities are growth of our membership and subscriber base, but our wide remit addressing the needs of everyday family life opens limitless opportunities to create member value, presenting a pricing opportunity with significant headroom.

Tile and Pet GPS extend Life360 into the physical world, giving families new reasons to join and deepening engagement with existing members. Devices serve as a subscription growth mechanism, not a standalone hardware business. For Tile specifically, we've decided to exit brick and mortar retail and focus distribution on direct and online channels where we can better control the full customer journey from purchase to subscription activation.

Pet GPS launched exclusively through direct and online channels from day 1. To give you a perspective on the Pet GPS opportunity, in the few short months since we introduced our Pet Finder Network, we now have almost 5 million pets registered and nearly 90% of those are in free circles. That's a large, growing, identifiable audience we can convert to paid over time.

Multi-year subscription revenue from converted users far exceeds the device investment, so we're prioritizing adoption over device margins and getting the model right over near-term device volumes. Initial response has validated our Pet GPS thesis, and now we're optimizing unit economics, pricing and supply chain to maximize subscription growth. This disciplined approach reflects our long-term focus.

Our third area is expanding our revenue streams, with advertising as a transformational opportunity to build a high-margin business that complements subscriptions. With Fantix, which we acquired in early 2025, we built the intelligence and measurement layer that let us launch Place Ads and Uplift. With the acquisition of Nativo that closed in January 2026, we now have the pieces in place to operate a full-stack advertising technology platform.

The logic of this combination is straightforward. We have nearly 100 million users and the richest first-party family location dataset in the market, but we were early in building the ad tech platform and off-site reach needed to scale. Nativo had hundreds of advertisers and thousands of publisher relationships, along with a mature ad-tech stack and salesforce built over more than a decade, but no first-party data or audience of its own.

Let me explain what this combination means in practice. Before Nativo, we were effectively limited to showing ads inside the Life360 app, reaching approximately 40 million ad-eligible U.S. users. Now, we benefit from direct integrations with thousands of publishers, including news sites, lifestyle content and connected TV.

We can take our first-party data, the fact that we know that this is a household with 2 kids, a dog, and a parent who drives to soccer practice every Saturday, and use it to serve ads not just inside Life360, but across that entire publisher network. When that parent is reading an article or streaming content, our data is powering the ad they see. And because we have real-world location data, we can close the loop and tell the advertiser whether the ad actually generated store visits.

Importantly, this includes our passive users, members who rely on notifications rather than actively opening the app. Place Ads reach these users at the moment they're moving through the physical world, meaning that even members who are not counted in MAU represent monetizable audience inventory. And throughout all of this, the data never leaves our ecosystem.

What our offsite platform enables is that every new publisher relationship becomes another canvas for our ads. That's what takes us from 16% reach to over 95% of ad-eligible adults in the U.S., and even more as we expand internationally.

The U.S. digital advertising market is massive, over $400 billion and growing. The majority flows to 3 platforms, but more than $100 billion is spent across the open web, connected TV and premium publishers, where advertisers are actively seeking better data, better targeting and real-world measurement. That's exactly what our platform delivers and we're uniquely positioned to win in this market.

Over the long term, we believe that advertising revenue can rival the scale of subscriptions and ensure that every family can access Life360 in the way that works best to them, whether that's a free ad-supported experience or a premium subscription. The result is a truly multi-engine platform with diverse high-margin revenue streams.

Now, I'll hand it over to Russell to review the financials and discuss how we're enhancing profitability through operating leverage.

Thanks Lauren, and thanks everyone for joining the call today. As a reminder, the financials I'll be referencing are unaudited for Q4, audited for full year 2025 and denominated in U.S. dollars.

Let's start with the fourth quarter. Q4 revenue increased 26% year-on-year to $146. million, reflecting strong performance across our business. Overall, subscription revenue increased 30% year-over-year to $102.5 million. Core Life360 Subscription, which excludes hardware subscriptions, increased 33% year-over-year to $97.3 million, driven by the 26% increase in global Paying Circles and 6% higher ARPPC.

Total Paying Circles growth was supported by improved conversion globally, with Q4 quarterly subscriber net additions achieving a new record. Other revenue in Q4 increased 86% to $24.2 million, driven by continued scaling of our advertising platform and growth in data partnerships.

The significant year-over-year increase reflects the ramping of our advertising capabilities and increasing advertiser demand. December annualized monthly revenue reached $478 million and increased 30% year-over-year, reflecting the strong performance of subscription and other recurring revenue.

Hardware revenue for the quarter was $19.3 million. While hardware revenue declined 19% year-over-year due to promotional pricing and product mix, device unit shipments increased 3%, as we integrate hardware more deeply into the Life360 subscription experience.

As we've stated previously, our strategic focus with hardware remains on expanding the member experience and ultimately our subscriber base rather than near-term hardware margins. In 2026, we've made the strategic decision to exit physical retail and focus exclusively on direct-to-consumer and online channels like Amazon.

Unit volumes are expected to decline year-over-year as we eliminate retail margin pressure and optimize pricing in our digital channels where we control the full customer experience. Q4 gross profit of $109.7 million increased 28% year-over-year with gross margins of 75%, higher than the prior year. The stability in gross margin reflects the balance of high-margin subscription and other revenue with strategic investments in hardware.

At the device level, Pet GPS margins were negative as we priced for market penetration rather than near-term profitability. We expect this approach to continue in 2026, with device margins fluctuating quarterly between breakeven and negative.

In Q1 we expect negative device margins as we conduct extensive price testing with Pet GPS and absorb the impact of our exit from brick and mortar retail. However, our consolidated gross margins remain strong in the 75% to 78% range, driven by high margin subscription and other revenue which continue to become a larger part of the mix.

Q4 total operating expenses remained flat as a percentage of revenue year-over-year at 69%. Q4 operating expenses excluding commissions increased 26% year-over-year versus subscription revenue growth of 30%. This demonstrates our continued operating discipline even as we made strategic investments in Pet GPS launch and international expansion.

R&D costs increased 12% year-over-year to support our expanding product suite. And importantly, our AI investments are embedded within this existing cost structure and will help us build faster and work more efficiently. Sales and marketing costs increased 25% year-over-year, driven by higher commissions and planned Pet GPS and seasonal marketing.

Q4 G&A increased 55% year-over-year, supporting company growth and our expanding advertising platform and importantly including transaction costs related to the Nativo acquisition. We expect G&A costs to normalize in 2026, inclusive of AI investments.

We continue to make substantial progress in expanding profitability. First, we recorded positive net income of $129.7 million in Q4, up from $8.5 million in the prior year. And I note that it includes a one-time, non-cash tax benefit of $118.4 million.

Next, adjusted EBITDA increased 53% to $32.4 million in Q4 from $21.2 million in the prior year, with adjusted EBITDA margin expanding to 22%, our highest quarterly margin to date. This performance demonstrates the significant operating leverage inherent in our business model as we scale.

That operating leverage carries into 2026 as we expand high margin subscription and other revenues, even as we make growth-oriented investments and integrate Nativo in the first half. Advertising in particular creates high incremental margins as it scales in the second half, partly related to seasonality, but also importantly leveraging our existing infrastructure and user base.

Looking briefly at the full year results for 2025, which exceeded guidance across the board. Total revenue increased 32% year-over-year to $489.5 million. Gross margin expanded to 78%, 3 percentage points higher than 2024. Total operating expenses grew 26% year-over-year, but declined as a percent of revenue, driving strong operating leverage.

Net income for the year was $150.8 million compared to a $4.6 million loss in 2024. This marks our first fully profitable year in company history, even excluding the one-time non-cash tax benefit. Adjusted EBITDA increased $47.7 million year-over-year to reach $93.2 million, exceeding our outlook range with margin expanding from 12% in '24 to 19% in 2025.

Turning now to the balance sheet and cash flow. Life360 ended 2025 with cash, cash equivalents and restricted cash of $495.8 million, a significant increase from $160.5 million at year end 2024. This increase was primarily driven by operating cash flow and the net proceeds from our June 2025 convertible notes offering, which provided $275.4 million in net proceeds, partially offset by the $25 million investment in Aura convertible notes. The result is a substantially stronger balance sheet with significant financial flexibility to invest in our highest return growth opportunities, while maintaining disciplined capital allocation.

Operating cash flow was positive again in Q4. Net cash provided by operating activities of $36.8 million during the quarter increased nearly 200% from $12.3 million in the prior year, reflecting our strong and accelerating cash generation. For the full year, operating cash flow reached $88.6 million, up $56 million from 2024.

Thanks for your attention, and I'll hand back to Lauren to discuss our 2026 guidance.

In 2026, we're doing 3 things simultaneously; investing in our highest return opportunities, accelerating revenue growth and expanding margin. That combination is reflected in our full year outlook as follows.

Annual MAU growth of 20%; consolidated revenue of $640 million to $680 million; subscription revenue of $460 million to $470 million; other revenue of $140 million to $160 million, driven by the rapid scaling of our Life360 advertising platform following the Nativo acquisition; hardware revenue of $40 million to $50 million, as we narrow distribution to focus on channels that drive stronger subscription attachment; and adjusted EBITDA of $128 million to $138 million.

Stock-based compensation is anticipated to be 40% higher than last year largely due to increased headcount from Nativo. This range represents approximately a 20% adjusted EBITDA margin, another step in our multi-year path of continuous annual expansion toward our strategic target of over 35%.

Given a few factors unique to 2026, we want to provide some additional color on quarterly modeling. Russell is going to walk through those points before we conclude.

Thanks Lauren. We have strong conviction in our full year guidance, and we take pride in delivering what we say. With that, there are a few quarterly dynamics worth walking through so that models reflect what we expect throughout 2026.

Our strategic investments are concentrated in the first half of the year. At the same time, our revenue profile has shifted. Advertising in particular follows a seasonal pattern where growth concentrates in the second half. Our investments are front-loaded, our revenue acceleration back-loaded. That combination creates quarterly variability in MAU, revenue and margins that normalize as the year progresses, and that dynamic is fully reflected in our full year guidance.

Let me walk through 3 Q1 factors specifically. First, adjusted EBITDA margin percentage in Q1 is expected to be in the low-double-digits, driven by Life360 advertising platform margin contribution timing, the Pet GPS promotional pricing, which is designed to maximize subscriber adoption and front-loaded advertising and marketing. These are all intentional investments concentrated early in the year to fuel growth as we scale.

Second, device revenue in Q1 is expected to be approximately 50% lower than Q1 last year due to our brick and mortar retail exit. Hardware gross margin will also be negative in Q1. This impact is reflected in our full year guidance range.

And third, on MAU, Q1 year-over-year growth will come in below our full year rate of approximately 20%. As Lauren discussed, quarterly MAU growth after a strong quarter tends to retrace. We expect MAU growth to be more back-half weighted, due to product-led growth investments and scaled marketing in new geographies building through the year.

As our growth investments normalize during the year, we expect Q4 2026 margin to exceed the 22% that we just delivered in Q4 '25, reflecting continued build of operating leverage with subscription momentum, and the Life360 advertising platform delivering meaningful contributions in the second half.

Additionally, for context on Nativo's contribution to our 2026 outlook: Nativo's unaudited 2025 revenue was approximately $63 million at effectively breakeven adjusted EBITDA. We expect a majority of that revenue base to carry forward into 2026 in the Life360 advertising platform, with incremental growth at significantly higher adjusted EBITDA margins in the second half, as integration completes and cross-platform campaigns ramp through the year.

That concludes our prepared remarks. I'll now turn over the call over to RJ to manage Q&A.

[Operator Instructions] First, we'd like to open it up to Mark Mahaney to ask a question.

Okay. 2 questions. The international growth, Lauren, that you talked about and wanting to lean into that, do you view that as needing to be run more by -- is that more driven by product or by marketing? Which of those 2 kind of gets that international penetration up even ballpark close to the U.S. level?

And then you talked about these record net new adds in the December quarter. Just what's the source of those new adds? Anything interesting there in terms of different markets, I don't know, different demographics, different verticals? Any new color on where those net adds came from?

Thanks, Mark. I'm going to focus on the international question because I think it's really important. There's often this question about is it product or is it marketing? And it really is the interplay between both. We're investing to make sure that the product works great for users outside of the U.S. And that means improvement in things like the Android platform, our localization and features really tailored towards those markets. But that only works if users in those markets know about our product. And so product improvements and marketing really go together and complement each other as we grow.

Great. Thanks, Mark. Next, we're going to open it up to...

My second question?

I'm sorry, Mark?

My second question about the...

Q4 MAU growth.

Mark, I would say that there's not any one thing that stands out there. We got good contribution both from the U.S. across the board and from international, particularly the lead countries that we're really active in.

Next, I'd like to open it up to James Bales with Morgan Stanley.

I guess, I'd like to understand a bit about what has driven the conversion improvement to paid and whether you have any thoughts on the relative growth that we should be expecting between subs and MAU growth in 2026?

So the 2 things that drive improvement in conversion is the value that we create in the product and then optimizations we make in the funnel along the way. And these 2 things really go together. We've added new value, things like improvements we've made in our drive reports or things like Pet GPS, but we also do a lot of testing and experimentation in our funnel to find ways to help customers understand the value that we have in the product and suggest to them at those right moments.

Perfect. And your thoughts about the sustainability of that improvement?

There's a lot of room. There's certainly a lot of room in creating value. And we're actually seeing a lot of -- we're going a lot faster using AI to speed up that kind of optimization. So it seems like we have a lot of headroom left.

Perfect. Maybe just one other question. You talked about the margin profile for Nativo. Could you maybe help us understand the gross margins that you expect to achieve in the first half on a run rate basis for the advertising business? And post integration, what those gross margins can get to?

Yes. James, I think what I would say is that really off the bat, we are going to get really good gross margins from the Life360 advertising platform. The thing to understand about Nativo is that it's really given us all of these extra tools. It's given us the infrastructure, the sales team, the relationships that will really help drive that growth, particularly in the second half. And there is an element of fixed cost that comes along with that. But the gross margins themselves are very strong.

[Operator Instructions] Next, we'd like to open it up to Lafitani Sotiriou from MST.

Congratulations on the strong result. And I appreciate the extra color on AI. Can I dive a little more into this? So you both said you want to build faster and work more efficiently. Can you just talk us through in terms of the build faster? I know that Nativo is new, but we previously had on the road map the seniors offering. I can see now that you've also got partner ecosystems listed. Can you talk us through what does that mean by running faster? So what's scheduled for this year?

And then on the same time, if you are going to be able to work more efficiently, what's that mean from a cost perspective? Does that mean that you're pretty happy with the number of staff you've got now that you'll be able to sort of keep it pretty steady into the future?

So I'll start by saying that we think of our company as very early in our growth trajectory, which means there's a lot of value for us to create. We have a lot of work to do, and we're excited to put more resources against those things. AI helps us do that more efficiently.

I'll just give you one example. There's a certain period of time that when you have an idea for a new feature, it takes you to bring that feature to market. And there's all sorts of steps you go through from early ideation to writing the code to testing the code. And we're applying AI in every stage of that. It is helping us ideate and prototype faster. It's helping us get that code written very, very quickly. And it's helping us test and iterate on those features. So that helps us take these ideas, these ways that we can create value and deliver them faster.

I am not going to preview and tell you all the features that we haven't yet released, but it's helping us accelerate our road map. One of those areas that we're invested in is partner ecosystem, and that's sort of the example of working with the AccuWeathers and the Ubers to bring third-party capabilities forward to our members through our experience.

Next, we'd like to open it up...

On the cost side? We didn't -- sorry, the part on the cost side efficiencies wasn't answered.

What I would say, Laf, is that we are continuing to see efficiency gains there. We want to play those gains into growth in '26, and there's a lot on our road map, as Lauren referred to, to do that. So we don't necessarily expect sort of gross cost claw backs in '26.

Next, we'd like to open it up to Maria Ripps from Canaccord to ask a question.

I think you mentioned nearly 5 million registered pets with nearly 90% of them in free circles. It sounds like your near-term goal is to sort of grow penetration here. But can you maybe help us think about sort of deepening monetization among the circles with -- these free circles with pets? And would that approach be different from sort of how you're thinking about sort of monetizing free circles more broadly?

So it's really heartening for us to understand more about our members. And when we understand them better, we can serve them both through our subscriptions and through our advertising business. It sort of opens up both capabilities. So this is why experiences like our Pet Finder Network are useful. They create substantial value to families and another way to make sure that every pet is safe and protected, not just those for subscribers. And doing that also gives us insight that's certainly attractive to people advertising in the pet market.

Was there another point in your question that you were interested in? It's a little hard to hear you. So if you can speak up, I can answer more.

I was just trying to understand how that would be different from monetizing sort of free circles in general, but I think you sort of answered that.

Next, we'd like to open it up to Bob Chen from JPMorgan.

Just a quick one for me around the partner ecosystem piece. I mean we saw that announcement with the partnership with Uber. Like how does that flow through into your financials? Does it come through as additional advertising type revenues? And is that what we're looking for in the partner ecosystem?

It will come through in a few different ways, definitely advertising, but there's also, as we get deeper into that relationship, both the subscription benefit on our side and also for Uber. So it will come through in a couple of different ways.

And I'll add that you'll also see it come through in our product experiences and the value that we deliver for our members.

We'd like to open it up to Mark Kelly or Brennan Robinson, if they're on the line. It looks like they might be on the dial. Not sure if they're there. Okay. We'll go back to them. Next, we'd like to open it up to Siraj from Citigroup.

Lauren, just keen to double-click on your comment or just in terms of the guidance for MAU, the first quarter being lower than the 20% and then stronger in the second half. Maybe because you have the big advertising campaign with the Super Bowl, etc., in the first quarter, has that -- how has that tracked? It does seem like the guidance does -- as you said, the product improvement. Just keen to understand how you -- the confidence levels in the 20% growth given it could move around, right? So just keen to understand the confidence and what -- how much comfort do you have in that sort of 20% range?

Our confidence is good, and we're coming off a lot of momentum in 2025 and setting a big goal for 2026, but we see that trajectory very clearly. The advertising campaigns that we do, especially brand-building campaigns like that are really designed to drive demand over a longer term horizon. And so they're letting more people know about us, and then we follow through and convert those people to registrations over time. And so it's not necessarily -- we don't necessarily see the impact in quarter. And the signals that we're seeing in terms of that awareness look really good to us.

Next, we'd like to open up to Wei-Weng Chen from RBC.

Just a question from me on AI efficiency gains. I guess there have been a few corporates such as Block and WiseTech here locally that have cited AI efficiencies as the rationale for large scale reductions in workforces. Is this something that could be a potential reality for 360? And maybe more philosophically, can you give us your thoughts on these sorts of dramatic actions?

Maybe I'll start this one, Russell, and then you take over. But we have been really intentional about how we grow and making sure that we are being efficient with our resources. The other thing that's really, really different is that we are much earlier in our growth prospects. We have a lot of room to go.

And so for us, this helps us sort of punch above our weight and grow faster to achieve that sort of next wave of growth for us. It's different than more mature companies who have over-hired and need to slash back. And so I think you will expect to see something very different from us. But Russell, you take it from there.

I'd probably just reiterate several of the same things. We are so early. Our employee headcount is relatively low. We look at things like revenue per headcount, and we're very well positioned there. It's just not something that we're in that -- at that stage as some of these companies that did over-hire in COVID, for example, it's just not necessary, and it would disrupt our growth.

Next, we'd like to open it up to Stephen Ju from UBS.

Great. So it might be a little bit early to ask this question, but I wanted to see if you guys can shed any light on the type of advertisers that are on Nativo. Just kind of eyeballing the list of folks there. It seems like they're more awareness and brand oriented. But I guess, given the location data that you have, it seems like there's probably all kinds of opportunities to run performance advertising. So I'm just wondering what -- who are on there now and what the outreach effort is going to be to onboard some of the performance budgets?

I'll say that the advertising base is quite diverse. And one of the things that being able to run offsite ads and different publishers lets us do is deliver different types of platforms, different types of advertising experiences for different advertisers with different needs.

I don't have a long list of specific names, but a funny anecdote as we were preparing for this. There's at least some companies who said, like, we don't want you to use our name because we don't want you to tell everybody that we can see such positive outcomes that we're seeing.

So I don't know, Russell, if you want to add anything more to that, but...

I guess the only other aspect is because we are now able to utilize both on-app and off-app, as Lauren said earlier, the range of people that we can access is very much more attractive to big corporate advertisers. And because of that, we're able to access sort of campaigns that we just weren't able to do before.

Next, we'd like to open up to John Marrin. John, you can unmute.

Unmuted. I'll try and ask one question. Maybe there'll be a few answers to the one question. I think I just wanted to tease out a little more about the Nativo acquisition. And I know it's a bit early, but maybe if you could just speak to their readiness to execute on the data opportunity that you basically handed them. Just maybe if you could talk about traction you've seen there to date and what your deterministic data might provide in terms of pricing uplift relative to the business they were doing previously. Maybe just a little more color around that and maybe the type of investments you have to make on that team in the first half of this year to help them win bigger engagements.

Yes. I've actually been really impressed with the alignment we have between the teams. I've been through a lot of M&A. And this one, the puzzle pieces fit together better than typically. So we're seeing good traction. It is early on, but we feel great about where we're going.

In terms of things like pricing, we actually -- we think we have a lot of efficiencies that come from things like having our own built-in audience, having the data set that we have. It really sort of optimizes the cost -- the margin profile quite a bit. We haven't focused as much on pricing yet. I think that's something we'll look at later on.

And the other thing I'd say is it's not -- we're excited about bringing that team on board. That team is excited about having the extra capabilities that Life360's first-party deterministic data provides to what they're out there selling. So, so far, it is just looking like a great combination.

And I'll I just -- one thing that I'll add is that in bringing them together, it really helps us create a walled garden where we can reach those 95% of U.S. adults while keeping the data in the walled garden and providing the sort of privacy and family-safe experience that both our customers and advertisers want.

Next, we'd like to open it up to Chris Smith. Chris, can you unmute?

Look, just really interesting, Lauren, in the point you made around pet and the opportunity there. Now clearly, you're cycling a very difficult comp in terms of MAU growth in first half -- first quarter '25, apologies. But if you look at the 5 million pets or 90% you said are in free MAUs, like that's the potential for you to take the Paying Circles up 50% if you convert them all. Could you maybe just help us think through, I guess, how we should think about that conversion opportunity through this year as you are investing in the pets through the first half?

Yes. I'm super excited about that opportunity. And everything we've seen so far tells us that long term, this should make a significant step in that -- in our subscription penetration. The key thing is that we're early in introducing pets and Pet GPS to our audience. And we want to make sure that people understand it, that we know who they are, that we educate them that we're in the pet business and that we help them understand the value of the types of devices that we have.

Right now, the notion of putting a GPS on your pet is still new to most people. And so it's going to take us some time to build that. And we're more focused on sort of a multi-year horizon than trying to rush to get the maximum sales in the short term.

Next, I could open up to Rob Sanderson with Loop.

Can we talk about investment priorities a little bit? Obviously, your margin guide -- EBITDA margin guide shows some nice operating leverage again in '26. But what areas do you expect to be spending relatively more? You're probably going to get some savings, not supporting Tile at brick and mortar, but any other areas you expect to maybe spend relatively less in '26?

And Russell, I heard you comment on the Nativo margin being quite strong. But just compared to the nearly 90% gross profit margin you've been seeing in other revenue, can you give us kind of some sense of range we should be thinking about as you layer in revenue share to your publishing partners with the acquisition?

Russell, do you want to take this one?

So I'll answer the first part of your -- the later part of your question first, Rob. In terms of margins, yes, we were -- had very strong margins in the early part of the Life360 advertising business because we were only delving in one part of that advertising ad tech stack. And it was a digital piece that really had very little sort of flow-through costs.

But even when we bring in a broad range of addressing all of that stack, the margins will still be very strong, call it, in the sort of mid-70s range in terms of gross margins. So that is -- definitely continues to be a high-margin business for us.

Great. And more of a sales investment this year, tech investment, both or anything you could call out in areas you'd like to spend more and invest more?

Yes. Look, I mean, I think in terms of investments, it is the range of things. We have a lot of initiatives on the product road map that we'll be investing in. We've talked about Pet GPS. We're very much in testing mode for that. We want to roll that out aggressively. That is an acquisition vehicle for subscription. So that has a cost upfront that we really return over a period of time with subscription. And investing in international is going to be important for us in 2026.

Next, I'd like to open up to Eric Choi from Barrenjoey.

I just had a quick question on FY '26 revenue guidance, probably for Russell. Just a couple of components I was just struggling with, and I've probably done it wrong. But just on the subscription revenues, nominally, you're guiding to $96 million of growth in FY '26, and you did $91 million already in FY '25. And you've also called out you're entering 2026 with accelerating PC growth. So just wondering on that piece, what I'm missing?

And then on the other revenue, very helpful, Russell. You told us Nativo is worth $63 million. So if you back that out of your implicit FY '26 guidance, like that other revenue bucket did $32 million of growth in '25 and you're guiding for that to do $20 million or less in '26. I'm just wondering on those 2 pieces. Is it just conservatism or am I missing something?

Let me try and address both of those quickly, Eric. We are definitely seeing acceleration in PC growth in '26. That's a flow-through, the momentum that we're getting from '25 as we continue to really optimize that channel. So we do expect to see volume increases.

We're not assuming that there's much in the way of price increases specifically in '26 because we want to deliver that value first. And when you look at that sort of straight dollar comparison from year-to-year, what I would say is that '24 benefited from fairly significant price increases flowing through. So it's not quite apples-to-apples to compare the dollar sort of increases year-to-year, but we are expecting 30% revenue growth in '26.

And then in terms of the other revenue piece, what I would note is as I said, the majority of that $63 million will carry over. There's definitely pieces that we will decide not to do as Life360. So I wouldn't strip out the whole of that. When you look at our guidance for other revenue, including Nativo, I guess it's something like 120% increase. But even using that sort of $63 million, we're in the range of 30% increase as a base case, but it will be more than that because, as I say, not all of that $60 million will carry through.

Next, I'd like to open it up for Lindsay Bettiol from Goldman Sachs.

Yes. I was just going to continue on from Eric's question actually just on this other revenue guidance. So if I take the -- I mean it's $140 million to $160 million range, if I take the bottom end of that range, take away Nativo, which is circa $60-ish million, let's say, take away $30 million for data, you end up with like the implied kind of advertising contribution is somewhere between $45 million and $65 million is kind of my math. You've just exited doing $16 million in Q4. So I know you're going to probably tell me some of that is seasonality. So I guess my question is like how much of Q4's $16 million should we attribute to seasonality? And like I said, just continuing kind of Eric's question is like it does feel a little bit conservative that you're exiting $16 million a quarter and guiding to something like $40 million for the full year. So just help us understand that, please.

Russell, you take this one.

Russell, I think you're on mute.

Typical Zoom problem. Lindsay, I would end up sort of saying something of the same thing. I wouldn't back out the whole 63 because there are pieces of that, that won't carry over. And it's sort of very much a base case from our perspective. There's a lot of work to do in the integration in the first half, and we definitely sort of see that growing and ramping quite quickly in the second half. But yes, it is, as we said, very much a seasonal business at this point. So even Q4 for last year had a good element of seasonality there.

Sorry, just continuing the question. Is there a way to put a finer point on that? Like the $16 million in Q4. Could you give us like what percentage or what proportion of that is seasonality? Is it that easy to break out?

It's really not that easy, but it's going to be more than sort of 30% of that number.

Next, I'd like to open up to Chris Savage.

Lauren, probably more one for you. Have you completed the relocation of manufacturing for Pet GPS? And is there any update on the launch of an elderly tracking device, please?

Right. It has taken us a little bit longer than we expected. We got stuck on some customs back and forth, but we are largely through that and we're almost done with moving Pet GPS. We haven't yet moved Tile. We're a little bit in wait and see as tariff policy is moving around.

And then -- sorry, what was the second part?

Chris always spoke about potentially a launch of an elderly tracking product.

Got it. That's something that's going to take a little bit longer. So we're starting our way in elderly -- in aging parents really focused on bringing them into our ecosystem, and we're working on devices for the future, but we don't expect to launch those this year.

And this will be our last question. So we're running up on time from [ Annabel Kuhn ].

One final one on advertising. Yes, you saw that quite significant acceleration in Q4. Obviously, part of that is seasonality. A part of that is with the new advertising products that you have released just with the Life360 platform. Maybe could we actually sort of dive into like particular advertising products you have in market right now with the platform? And then maybe could you give some like more granular examples of the advertising products you're going to have with the Nativo platform integrated in the second half?

I think that's a long question. It may need an Investor Day. So just at a high level, I think one of the things that you saw hit in Q4 is the relationship that we have with some of our direct deals. And so that isn't necessarily a branded product like Uplift or something like that.

We did introduce a couple of new products last year. And I expect with -- now that Nativo is with us, we'll sort of formulate how we describe that as a product, but it's probably a longer discussion than we have now.

And with that, we're going to conclude our Q&A, and I'm going to turn it over to Lauren for closing remarks.

Well, I am really proud of what the team has built and super excited for what we're going to deliver in 2026. So thank you all for joining us, and we'll see you next time.

[Audio Gap] uncertainties that could cause actual results to differ materially. Key risks include the timing and successful completion of the Na tivo acquisition, which remains subject to customary closing conditions, our ability to successfully integrate a TiVo's operations, technology and personnel, our ability to realize anticipated revenue and cost synergies, changes in the advertising market and competitive landscape, our ability to maintain user trust and privacy standards while scaling our advertising business and general economic and market conditions.

For a more complete discussion of risks that could impact our business and financial results, please refer to our most recent Form 10-K and subsequent filings with the SEC. All forward-looking statements are made as of today's date, and we undertake no obligation to update them, except as required by law.

With that, let me turn to today's agenda. James Selby, our Chief Revenue Officer, will be answering questions submitted in advance by sell-side analysts, which will be read in turn by Jolanta Masojada, our Head of Investor Relations in Australia; and myself, RJ Jones, Vice President of Investor Relations. We've received tremendous interest and thoughtful questions about our advertising business and the TiVo acquisition. Today's goal is to give you a clear understanding of the industrial logic and strategic transformation this acquisition represents for Life360 as a platform company.

Let me start by providing a quick financial context by recapping what we shared on our recent Q3 earnings call. And please note that we will not be addressing questions of a financial nature during today's call. As stated previously, we've entered into an agreement to acquire Ativo for approximately $120 million in cash and stock. Adivo currently generates roughly twice the level of advertising revenue we expect to deliver this year. with a different margin profile that reflects its position across the full ad tech value chain, spanning demand side, supply side, measurement and creative capabilities. While some of these activities typically carry lower gross margins than pure digital advertising, we don't anticipate a significant impact on overall Light 360 margins.

The acquisition will be accretive to adjusted EBITDA from day 1. We expect both revenue and cost synergies to begin ramping during 2026 with full realization by year-end. Because the transaction is expected to close in early 2026, we don't anticipate any financial impact in 2025. And we'll provide relevant guidance as part of our 2026 outlook when we report 2025 year-end results. Today, we're focusing on the strategic rationale, platform capabilities and competitive positioning. We've organized this into 3 sections. Ad Tech 101, the Life360 advertising transformation and our strategic positioning. While we will not be using a slide presentation during the call, the advertising update section of our Q3 investor presentation, which is available on our website, has exhibits in Slides 26 to 30, which complement today's discussion. Jolanta and I will olfalate reading questions in context James will walk through the answers. Let me turn it over to Jolanta for our first topic.

Thanks, RJ. So to start off with the term full stack is used frequently in ad tech. -- means different things to different people. So what we want to do is establish a clear, simple definition. So James, what do you mean by full stack advertising platform? And what are the main components, and this question came from James Bales of Morgan Stanley, Rob Sanderson LelobCapital and Annabel KunpEvens& Partners. So James, over to you.

Yes. So I think at the highest level, if you take a brand or an agency trying to run a campaign. They will first work with demand-side platforms. otherwise known as DSPs. And the demand type platforms, they enable advertisers to buy digital ad inventory in an automated and efficient way. they'll also use data platforms to find audiences that they want to target. So -- and as example, James -- sorry, Coca-Cola was the target James with the campaign. They will work with the data platform to find James and other people like James to target. They then work with measurement platforms to understand the effectiveness and efficiency of that campaign.

And lastly, they'll work with supply side platforms, otherwise known as SSPs. Supplier platforms allow publishers to manage optimize and sell their own ad inventory. And so you can think of Life360 as a customer to a supply side platform. Each 1 of these different steps and different capabilities, they will charge a fee, and they will just take a percentage of the campaign that's starting at the brand all of the agency. So full stack means that LI 360 controls that entire layer has capabilities across demand-side platform audiences, measurement, supply-side platform and measurement -- sorry, and publishers like itself 360 as well as others like Wall Street Jono, CNN and others. Owning all of that and having capabilities across us enables us to capture the full economics of a campaign that, in this example, Coca-Cola is looking to push life.

Right. So looking to our earlier acquisition, where do you see Santi fitting into that stack? .

[indiscernible] is a really critical layer, very specifically focused on data -- so if you think about Life360 pre-acquisition, pre Notiva and pre-Fentics acquisition, we have incredible first-party data that we are capturing from audiences who are opting in -- and what we needed to do then is enable that data to be used for advertising purposes. -- whether that's for a unique measurement product or to create unique audiences that can be targeted. that was Frantic's DNA. It was really being able to understand how to organize data and coordinate that data in a way that can be leveraged by -- for advertising campaigns.

So Nativo is think about it as on the platform side, the it's the parts of the supply side platform that owns lots of measurement. Fanticsis what's enabling all the Life360 first party data to be activated across that full stack.

Great. So if we look at Life360 plus Notiva plus Pantex, do you see missing pieces still in the stack?

We've got all the core capabilities that are in place post this acquisition. Obviously, you never -- you never finished with any of this work. We're going to be continuously looking to add on to those core capabilities, but the core foundational capabilities are definitely in place. So if you think of those as first-party data, full stock distribution, sales and go-to-market team that's ready to hit the ground selling and measurement platform. Those are all now in place.

Great. Thanks, James. Moving to our second topic. Many investors assume Life360's advertising opportunity is driven by the number of ad placements we can show in our app. This possibly misunderstands where the scale opportunity actually is and what constraint we're removing. The real growth happens offsite across the open web and TiVo unlocks this entirely. So the key question for you, James, is what's the difference between on app inventory and off-site inventory? And why does offsite illuminate budget constraints. This question came from Andrew Boone at Citizens, James Bales of Morgan Stanley and Annabel Kount, Evans of Partners, Mark Kelly at Stifel and Jennifer Hugh at Jefferies. James?

So fundamentally, on app inventories really, what is another word to say is owned and operated. What is the inventory that Life360 owns and operates. So in this case, it's within our app, and off-site inventory is everyone else's inventory what they won. When you focus on just on app inventory. You've got a natural headwind to just how you can scale some of the campaigns that are being serviced within the platform. So if you take Coke as an example, if they wanted to spend, say, $10 million a month on a campaign within Life360, we would struggle to service that in the old world pre-acquisition. Why? Because if you keep on seeing the same message to buy coke, that's going to become less and less and less effective. .

What you really want to be able to do is target somebody multiple tons with multiple different formats and multiple different ways. And so that's where offsite becomes really, really valuable and really enabling to scale those campaigns. What Native does is it gives us scale off-site inventory that is all connected and all attached to our first-party data and our first-party capabilities. This really means that we have the best of both worlds. We have our premium inventory, which is in-app on-site, and then we are able to scale our campaigns with inventory offsite. So post acquisition, we're really not constrained by what's just within the app, but we can capture the full brand budget without adding extra banners or cutting our experience within the app.

One thing that's come up is will we increase in ad density over time?

So we currently have a very high editor standard to the types of that ads that show up in the app. And we're going to continue that very high editorial standards. We're never going to want ads to get in the way of the core experience. We're never going to want ads to be a reason for people not to use the app. And so it's always going to be with a focus on having ads that are contextually relevant, that are beneficial to the experience and are effective for campaigns. So we are going to look at new formats, I think, place ads is a good example of one of those formats, which is really contextually relevant, doesn't get it in the way of the core experience, but it's a really effective format for advertisers to use. That's the first of many, and we're going to continue to build those out, but we are not going to be -- we're going to be very, very constrained with the -- how those new inventory pieces get in the way of the app experience. And so we're always going to maintain that high editorial standard.

What percentage of advertising activity then will be offsite versus on-site over time?

It's really hard to predict. And ultimately, we're going to move with market demand. But where possible, we're going to try and bundle as much together as possible. So taking the Coca-Cola example, what we will really try and push for is have those ads or that campaign show up within on-site driving pretty high margin, really incredible inventory types. that are exciting for Coca-Cola and then that will scale that campaign from an off-site reach. And so whilst that's going to be our kind of focus and how do we bundle as much of this inventory together, we are obviously going to meet the market where it is and move with its demands.

But to put it in context, the off-site piece that Notiva delivers is about 30x the amount of inventory that we have within the app. So if every one impression we drive within the app, we could drive 30 of them off app, and that is where it kind of talks to the opportunity to bundle where you have really high premium stuff in app, but also the opportunity to scale with that reach that Nativo brings.

Great. Thanks, James. So our third AdTech 101 topic addresses data differentiation. And there's been external commentary that's compared Life360 to legacy location data vendors. and questions about differentiation. So what we would want to do is to clearly explain why our data set is categorically different, more valuable and deterministic rather than probabilistic. So a key question for you, James. How is Life360's location and Family Graph data unique versus what's available in the market today? And what does deterministic versus probabilistic actually mean? And we've had this question from Lindsay Beta, Goldman Sachs, Bob Chen at JPMorgan and Anabel KunasE&P. So over to you, James.

Yes. So this is one of the pieces that we're most excited about as part of the Life360 ad platform, wherein our unique selling point is the scale of our audiences, mixed with the precision and the uniqueness of the data. So when I talk of precision, if you think about Life360's DNA and expertise is all around precise location. We are -- we have an incredible product that's all based on the promise of accurate with our location data. We also have unique insights into the family graph just as a result of the product experience. So that precision and combined with that uniqueness, and the scale that we have at that is really unique within the market.

Legacy vendors really rely on multiple third-party data providers to -- that kind of give them space and use were probabilistic, I'll explain that more further. But probabilistic location signals, they require a lot of data science work modeling, inference and so on to make that effective as an ad product. We don't. We own our data, we own it at scale, and we have the family insights that are not available anywhere else. Probabilistic for deterministic. really is if you have a smooth sample set of 10 people and you're trying to reach 100, you're using probabilistic models to work it out. Life360, if you're trying to target 100 people, will have 100 people. And so it's less about the inference of did this person likely go here? Do they likely see this ad? And do they likely purchase something as a result. That's all probabilistic. Life360 is going to be more on the deterministic side, which is for by really key and exciting unique selling points that we have available.

Great. So turning now to real-time location targeting. Is it actually possible at scale? .

Yes. And this goes to the the DNA of the company being focused on accurate location -- accurate and precise location data. So if you look at us today, we have scaled campaigns that leverage real-time location targeting. One of the ones that we talk about a lot is Uber. Another example is Accuweather. We have other examples in the market wherein when somebody walks into a store, they send a push notification, offering them an information about a special that, that store has in them. So we're doing this already today, and it's really based off and enabled by the backbone of the company, which is being able to have incredibly precise location data available in real time. So we're excited to scale that capability not just to campaigns going up there, they put also into measurement products that we can talk about in a bit as well.

So talking about measurement, what about attribution and measurement? Doesn't that have a troubled history when it comes to location data?

Yes, a lot of kind of the legacy way of doing this, as I said, was really around piecing together lots of third-party data sets, throwing those into a kind of black box model with a lot of data sets put into that and coming out with a probabilistic result. Life360, we have this product called UpLift. An Uplift is based on James see a for example, a Starbucks campaign on a billboard on the side of the road, if yes, walk into Starbucks after that. And that's a scaled attribution product that we have today. It's all based on opt-in data sets. So in this case, James, it's option to have this data be leveraged for this. And we are able to leverage real dwell time as in how much time did James spend in the store. We're able to leverage our data on did James drive path, the billboard in the right direction. And we're able to then kind of piece that to the effort that he saw.

So this is really exciting. It's an example of Life360 being differentiated in the market with attribution and measurement product that, first and foremost, is based on opt-in from customers and is working today as part of uplift.

Thanks, James. We'd like to transition into the Life360 ad platform transformation, starting with where we were. Many investors might have assumed that Life360 already had a fully built advertising platform. When in reality, we were primarily an in-app publisher with a unique audience, limited commercial infrastructure. We always intended to be full stack. To dramatically accelerates this vision. A key question for you, James, is what was Life360's role in the advertising value chain before the Notiva acquisition? And what was your original plan? This came from Inder Boon at Citizens, James Bales at Morgan Stanley and Maria Ripa at Canaccord.

Yes. So before Nativo as you said, Life360 was essentially a publisher monetizing smaller scale in-app inventory with limited direct sales capability and a heavy reliance on external partners. It's easy to forget that we're still relatively early in our journey with the launch only about 18 months ago. We -- prior to launching Life360 ads, we always have the same vision, which was to build this full stack capability leveraging our data and our brand and our capabilities, but scaling that both off-site as well as on-site.

Fantics was our first acquisition that really accelerated that part of the road map, the data piece. Now Notiva accelerates the full road map dramatically and brings established relationships, we really can replicate quickly. So if I maybe take a minute to really go in depth here. Pre-Notiva, we had a limited number of banner ads, banner placements that we could show to use as procession inside the Life360 app. Our direct sales team was small and scaling and we realized largely on programmatic demand from platform side, Google, Meta and others.

Going back to the -- and then our strategic content was we always plan to build this full set capabilities. We wanted to scale sales team that we're not limited to the inventory available in the app. Fantechs is a great example. They brought expertise on how to leverage the data, how to build intelligence from that data and how to build a smart product that was really unique leveraging our data. Notivo accelerates the technology by, I'd say, conservatively 12 to 18 months, maybe even more. They bring a lot of established advertising relationships. They bring a lot of established publisher relationships, a fantastic sales organization that's taken years to build and a technology stack that's very, very hard to replicate, and we'll take a great deal of time to replicate.

So it's very in line with our original vision, which was leverage our data and the brand and scale advertising, both on-site and off-site. And both Fantechs and Ativa have been excellent accelerators to that road map.

Just looking back at the road map real quick. Were we already building something similar to Notivo internally across the ad tech value chain?

We're building individual pieces. We had a small but growing team internally that was focused on building those and we were prioritizing the biggest bang for the buck a part of that road map. A lot of our focus was on data and measurement as a foundation, and that's why Fantech was such a fantastic addition to the team. But we had a long way to go, a long road map ahead of us. We weren't yet started on the full marketplace a DSP, an ad server we had a much -- a very small sales team comparative to the Notivo got of the market team. And we were just establishing some of the relationships we had with major brands and agencies.

So the -- our road map looks relatively similar, but where we were in terms of that building process was very early on.

Thanks, James. So let's now talk about the transformation itself. And some investors don't fully understand how different Life360 becomes after this acquisition. and how we are completing our vision to become a full stack advertising platform. So a key question for you. What does Native actually give Life360? And how does it complete our platform vision? And this question came from James Bales at Morgan Stanley, Rob Sanderson at Loop Capital, Chris Savage Bell Potter and Wang Chen at RBC.

So Notivo transforms Life360, it takes it from being a limited publisher with its own in-app inventory into a complete full stack advertising platform, meaning Post Native, we can now deliver. We can measure and we can monetize the entire advertising campaign end-to-end across the digital ecosystem. Specifically, if you break down what I was saying earlier about the full stack, so demand side platform, Notivo has a demand-side platform. a native ad platform that's scalable, that's focused on native ads is what Notiva brings. a published marketplace. So direct relationships with hundreds of premium publishers, including Wall Street Journal, Yahoo!, CNN and hundreds more.

Proprietary measurement tools, we have uplift that is Life360's own measurement platform that is based off its own data. And this sales organization, which is fully scaled with deep relationships across Fortune 500 advertisers and the largest agencies in the industry. So -- and then combining all of this is a unified workflow. And what does that mean? It means for really the ability for brands and agencies and salespeople to execute planning, buying and optimizing across the full platform. All of this is not in day from where the Life360 was before.

Right. So how quickly can you integrate Native and start seeing incremental contributions?

It's going to be -- we're going to get started straight away, but it's going to be a long journey. So there's some very quick and easy wins to capture both in revenue and cost synergies. A great example would be the Notivo sales team now have a consumer brand and a brand that's been advertised on TV that buyers are watching and seeing that. So they're going to get a lot of tailwinds into being able to open more doors and be able to close more deals. That's a relatively simplistic revenue synergy, which we can get on very, very quickly.

But the the full integration, which is going to be detailed and complex is going to be -- we're going to approach it very thoughtfully, making sure that we don't drop the ball that we have to deliver campaigns for our existing partners, but also doesn't miss the medium-term opportunity of making this 1 unified platform as quickly as possible. There's many of these opportunities that we'll process first and foremost. I'm very excited for the Notivo team to be able to start upselling their existing partners into Life360 formats. Similarly, the Life360 sales team being able to introduce the -- their partners with the full wider Nativo publisher platform. but there's a lot of work that will need to be done. So we're going to be running very quickly at it, and we expect to have really full realization by year-end.

Great. Thanks, James. I want to go back to a topic you discussed before addresses how our previous -- our 2 acquisitions work together. Several analysts have asked how Pantex and Ativo interact and why both were necessary. This is about showing the elegant architecture of the complete platform. So the key question for you is how do Fantics and Nativo work together to create Ligh36's full stack advertising platform, what synergies exist between them. This question came from James Bell at Morgan Stanley, Rob Sanderson at Loop Capital and Mark Kelly at Stifel.

So fintechs and Native are highly complementary, and they really create this elegant architecture. wherein Life360 provides the first part of data, Fanatec powers the intelligence and the ability to leverage that data for things like it's a measurement layer and Ativa provides the distribution and the commercial infrastructure to -- that's able to leverage that data. So it all closes the loop with this deterministic attribution. So maybe I'll go through in a bit more detail how these pieces fit together.

So layer 1, data foundation. So we have 90 million-plus monthly active users, providing continuous first-party consented location and family graph data. This is a unique assetm no one else has. And this is what's really the engine of the Life360 ads platform. On top of that, the second layer is you have intelligence and measurement. This is what Fantech really is bringing into it. They've taken that road data and they're creating actionable advertising products, place ads, the advertisers target specific venues in context, uplift attribution that provides deterministic measurement of campaign effectiveness.

I could say that somebody actually see the ad, do they walk into the store, how long were they in the stores and so on. And then sophisticated audience segmentation that creates this really high-value cohorts in a privacy safe way. The layer on top of that is distribution and sales. This is really where the Nativo comes in. They have -- Nativo is able to take this Fantics-powere segments and distribute them at massive scale across its publisher network. Their DSP allows agencies to buy campaigns and the native platform delivers us in a brand safe and a contextually relevant way that both complements the publisher experience as well as the ad effectiveness. That sales force has established relationships that to bring all of the prior layers to the Fortune 500 budgets.

On top of that, closed-loop measurement. So this is where Life360, Fantics and Nativo are really kind of humping together to provide this. So now we can show a family ad in app, we can follow that campaign off-site using the Nativo network. And then we can use uplift to prove the ads work with deterministic foot traffic data. The advertiser sees the campaign, the reach, the engagement and the real-world outcome. So it's really a complete closed-loop attribution that we believe no one else can provide at our scale. So there's many synergies here. Fantex makes the TV platform more powerful by adding unique data and measurement. Tateami Fantech products more valuable by giving them distribution at scale. And together, they create something neither could achieve a loan, a differentiated full-stack platform with proprietary data from Life360, deterministic measurement and massive reach.

In Fantech capabilities be applied to NatiVo's existing publisher partners?

Yes, absolutely. And this is one of those really exciting near-term opportunities. So the Teva's publishers get in access to Life360 unique audiences, exclusive access to unique audiences and the Life360 inventory types take place ads advertisers running campaigns across the Tvis network can leverage the uplift measurement product. And so combine these all immediate value adds that differentiate Nativo supply from generic programmatic inventory. So it really should be this fantastic tailwind for Nativo success.

James, how does this architecture compared to what competitors have?

We believe that no one else has this combination. Google, Meta obviously have scale but they are very different household level location data. Legacy location vendors have data. There are pieces of data, but they have to work to connect to those data points together. And they need a distribution platform, so they need to generally give up some of the economics as part of that. Other location-based companies like Uber, they have fantastic data sets and fantastic platforms, but they have single-use case data. You during a ride, you ordering this food and so on, but they don't have that persistent family pattern across data life. So the architecture we are building, which is this first-party family data plus interior plus the full stack distribution plus atomistic measurement and scale, I believe is genuinely unique in the market.

Great. Thanks, James. So let's turn now to address the strategic rationale for ownership. And multiple investors have asked why we are acquiring rather than partnering with existing large ad tech platforms. And this is obviously a critical ownership isn't just about economics. It's about data control and privacy. So a key question for you. Why is it better for Life360 to own the full stack versus partnering with existing platforms? And this question came from Maria Ripps at Canaccord. Chris Savage Belote, Eric cheat Barrenjoey and Wang Chen at RBC.

So owning the full stack gives us the ability to capture economics across the entire value chain. And critically, it ensures that we maintain complete privacy control over our first-party data. So partners would require data access as table stakes. Ownership means we keep all high priority data in-house. So let's kind of walk through ownership, why ownership is more strategically superior across multiple dimensions.

So first on the economic piece. When you own the full stack, you capture economics across every layer, every jump that I was talking about before between the brand to the publisher. so the DSP layer, the SSP and the native layer, the measurement layer and the creative player. As we mentioned earlier, different parts of the value chain have different margin profiles. But by owning all of those pieces, we maximize our ability and opportunity to capture as much of that advertising spend as possible.

In the partner model, which is very much the model we're in prior to the acquisition, you're capturing just pieces of the economics, which is a fraction of the total value. Next is privacy and data. This is very critical for us. Any partner would require data access as a fundamental condition of partnership. That's just kind of how the ad tech ecosystem works. The full stack ownerships mean ownership means we have all the -- we keep all that high-value data and that base within the Life360 environment. So we control what gets shared, when and with whom. We're also able to maintain that we have full security on that data and never reliant on lots of other parties to capture it.

Control of brand safety. So we control the entire advertising experience end-to-end, ensuring everything on the Life360 ad platform is family saved is brand safe. So if you think about the -- our brand promise, this really becomes extremely, extremely important. Scale and relevance. Given kind of my example previously with Coca-Cola, if we can now participate, we can service really scaled large full funnel campaigns because we have distribution and we have unique targeting and ways to measure it. So the distribution is across our app, on-site ads across thousands of premium publishers offsite. It also enables us to have a lot of -- to build in a lot of platform differentiation. So we're less reliant on other partners to build interesting products or interesting ways to services campaigns. We can instead build them our own and really have control over our own road map.

So with all of that, does that mean that you won't partner with anyone in the ad tech ecosystem?

We'll continue partnering across value chain, where it's strategically advantageous. -- some -- a good example is I keep using Coca-Cola, which is completely fictitious, but if you think of them, they've got their own measurement tools that they've gotten used to using, they'll continue wanting to use those, and we'll absolutely be open to that and partner with those measurement tools as the client wishes. So it doesn't mean, having full stack doesn't mean you're isolated and you're kind of the door is shut, it just also means that you have control and you have optionality. So we can decide when a partnership makes sense versus being forced into it because we lack the capabilities to service the campaign. That's really the power of ownership.

Great. Thanks, James. Let's look at the combination from the other direction. Several investors have asked not just what Nativo brings to Life360, but what Life360 contributes to the Nativo business and competitive positioning in a post-cookie world. A key question for you is what does Life360 bring to Nativo and why does this combination create something unique in the market? This came from Lindsay Becle Goldman Sachs, Rob Sanderson at Loop Capital and Mark Kelly at Stifel.

Yes. So Life360 brings Nativo first-party family graph and deterministic location data set that makes it, essentially the only full stack platform with a combination of our audience quality, our data precision and our privacy controls. So it's going to be an extremely differentiated going forward. Breaking it down a little bit. So first of all is the audiences. So Nativo will gain exclusive access to the unique audiences that Life360 can create. That means that sales force has something really differentiated with the market that they can go and talk to brands and agencies about -- they will have first-party data in this privacy-first world. So as really new rules and ways of working with the data are constantly changing, constantly moving. 99% of that, almost all of it is based on third-party data, meaning that Nativo's competitors are really having to work with other people's data that says out of their control.

What Nativo have is first-party data. And so their ability to take that data to market is going to be one future proof, but also differentiated against the competitors. The closed-loop measurement. So this is a terministicaleasurement that we've been talking about, again, is a unique thing that the Nativo sales team go to the market team can take to the market where -- and they're helping brands and agencies realize if the campaign was successful, if it was efficient, if it was effective, driving real-world actions like store visits or any other specific behaviors. And then I think the other piece of it is the strategic market positioning. Together, Life360 and Nativo have this really unique offering in the market. They have premium native ad formats, which is within the Life360 ad experience. They have this brand safe environment within Life360. They have this high-quality household insight and data set. And they have the full stack control to be able to scale those campaigns.

So they have this incredibly unique offering that they can tick to the market as well as the Life360 brand, which is going to be this great tailwind for their sales team.

James, I'm wondering how this combination compares to other existing location-based advertising platforms.

I think the real difference here is household and family context and the persistence of the data set. So you can take a lots of fantastic companies out there who are scaling amazing businesses, but they generally see individuals for one moment and time. So maybe as an example, overseas of people when they're taken a ride. Yelp sees people want to searching for restaurants. These are really valuable and really great, great data sets to have. But Life360 is differentiated and that we see continuous patterns across daily life, home work, school runs, shopping, dining, travel, et cetera. And we can take all that richness combined with our full stack capabilities in this privacy safe way to really set ourselves apart.

Can Life360 reach a scale of major subscriber plus advertising platforms like Spotify, Snap or Uber?

We believe the answer is yes, but it will take time. We have the foundational elements, the audience -- the scaled audience of 90-plus million active users. Again, the data, which is first-party deterministic. We now have the full stack platform, hundreds of publish relationships that -- and the commercial engine that goes with that a prudent sales force and go-to-market motion that's really successful. So these core foundational pieces are in place, but it's going to take disciplined execution over time, and we're going to have to continuously to prove ourselves to be the next major advertising platform that's available to brands and agencies.

Thanks, James. So let's turn now to privacy and safety standards. And from an investor perspective, they clearly want confidence that Life360 is maintaining trust and privacy standards whilst we're scaling an advertising business. So there are also specific questions about targeting manners and data controls, which is clearly a critical differentiator for us as a family platform. So a key question for you. How do you protect user privacy, especially for families and manners while monetizing advertising and location data? And how does full stack ownership strengthen rather than weakened privacy? And this question came from Bob Chen at JP Morgan, Rob Sanderson at GoupCapital, Jennifer Zoo at Jefferies, Anabel KonatE&P; and Eric Choi at Barrenjoey.

Yes. Owning this full start really strengthens privacy because it means we can keep all of our data inside our own ecosystem. Within that ecosystem, though, we work with aggregated anonymized cohorts, so we don't use or identifies and we implement strict self-imposed controls around how we use the Dabir and what's populations that are kind of not eligible for advertising. A lot of those are controlled around sensitive populations and absolutely for miners.

Privacy, family safety, brand safety. Those are all nonnegotiable standards that we can really control within our own platform. So probably -- it probably takes -- makes sense to take a moment and dig a little deeper. So we don't sell user data to advertisers or third-party platforms. That's a principle. We work with aggregated animized cohorts, which are really based on behavior and context. So as an example, advertisers can access segments like a frequent grocery shopper or people looking to buy a new Toyota car, those are big segments. They're not individual user profiles or identifiable or use identifiable information.

The full stack ownership really means that we have much fewer external companies that we have to work with, which ensures that the data is not exposed to other providers, which is obviously a security risk. And so owning it really helps us govern and end what gets shared, when and with whom and can turn off the pipes as quickly as we wish. We've self-imposed many additional protections of [indiscernible] miners. So we've implemented very conservative policies that reflect our brand promise and our mission with strict controls on what data can be used, how it's anonymized, what types of advertising can be shown to whom. And these are all nonnegotiable.

We obviously have brand safety and family safety as core requirements for that entire company to every ad, every former every campaign, it runs through filters ensuring it's appropriate for our family audience. And this is built into our platform. And then for certain use cases, we use clean room style technical approaches that allow matching and measurement without exposing any underlying individual data. So the fundamental principle is pretty simple that Life360's trust relationship with families is imperative. It's a nonnegotiable, and we're not going to compromise it for advertising revenue.

So looking to moving advertising offside, does this increase privacy risk?

No. If anything, it lowers risk because we can run the campaigns with our controlled stock and our own stack, rather than pushing data to multiple outside vendors. When we deliver an ad on the Wall Street Journal as an example, using Nativo's infrastructure using a Life360 cohort, that entire process stays within our platform. Novoa360Daler is leaving the environment, and that's one of the main advantages of ownership.

Thanks, James. Moving now into our final topic, which covers business model and how investors could track progress. There are questions about whether Life360 will stay subscription-led or shifting more to advertising led and what metrics might best indicate whether the advertising strategy is working? I'd like to be clear about our platform strategy. So the key question is Life360 is still a subscription-led company? How should investors think about advertising as a long-term pillar and what our key proof points to track? This came from waiving tenant RBC, Andrew Boon at Citizens, James Bales at Morgan Stanley and Eric Choi at Bar & Joy.

So Life360 is a platform company. We're building a family super app with multiple revenue pillars that work together. Subscriptions remain our core engine, it's durable as recurring revenue, strong unit economics, high customer satisfaction and a really clear value proposition that the customers like. None of that's changing. Subscriptions are continuing to be our primary focus and our largest revenue driver. Advertising, it really complements subscriptions by monetizing the tens of millions of free users who love the product, but don't want to convert to paid, and we really want to respect that the paid product is for some people, but not all. So that it really creates meaningful incremental upside without changing our mission, without changing the user experience or the core value proposition.

This combination helps us become more resilient as a platform, multiple revenue streams, high margins across both pillars, gives us strong operating leverage as we scale.

Real quick. Just thinking about how do advertisers interact with the Life360 platform?

Sorry. Sorry about that. I got a bit cut. Can you repeat the question, please?

Following up on how advertisers can actually interact with the Life360 platform?

There's 2 primary ways. Really, the first is through the managed service. The -- which is Nativo product, where a brand on agency, they can come to us with an objective the -- and we can build a custom campaign using 360deg Native's distribution. We handle execution, we handle optimization, and we handle reporting. Second is through platform access. So sophisticated advertisers can use our DSP and tools to build and manage their their own campaigns. The sales motion depends really on the sophistication of the buyer and the scale of the campaign, but both models work and both will continue to grow.

Then what about international expansion for advertising?

International is a significant opportunity. I think what sets us apart, again, is our first-party data. That first-party data is not specific to one country, but it's really global. Our initial focus is going to be in North America, where both [indiscernible] have established presence and where really the advertising market is the most mature. But the platform architecture we're building is built with a kind of global readiness from day 0. And obviously, our data is being captured globally as well.

As we prove the model and achieve strong unit economics in the U.S., we'll thoughtfully expand to other geographies where Life360 has meaningful user bases and where advertising markets really justify that investment.

Great. Thanks, James. That concludes the bulk of the question topics that we collected. I was hoping that you could make a few parting remarks before we sign off.

Yes. I appreciate that. So let me wrap up with a few summary thoughts. Life360 is really a platform company building the family SuperAppat makes everyday life better. We're evolving from a single app publisher into the first full stack family advertising platform powered by our first-party family graph, scaled through Nativo's technology and publisher network and governed by privacy principles that align with our Michigan. We remain a subscription-led company. That's not changing, but advertising is becoming a powerful second pillar, one that improves our margins, monetizes the reach we spent years building and created a more resilient durable platform business model.

I think the key points to take away from this are one, full stack ownership means we control the buying, delivering and the measuring of ads end-to-end. And this enables us to capture the full economics and maintain complete data control. Offsite inventory eliminates our budget constraints. Before we are really limited to only work with a fraction of an advertiser's family focused budget. But now post Nativo, we can service the entire spend through our platform. Our data is deterministic, not probabilistic, where we provide precision, we provide persistence and we provide household contacts that no one else has at its scale.

[indiscernible] create an elegant architecture. Life360 data, Fenics intelligence, Nativo distribution, closed-loop measurement. It's really this complete stack that we're all working together on. And I think privacy and control improve with this full stack ownership. We keep high-value data in-house instead of sharing it with partners who would require access to as table stakes to work with that data. We're already seeing proof points to the market. The reception to uplift has been fantastic. The reception to place out has been fantastic. We've got great partners like Uber, like RT, like Dutch Bros and Costco and many others that we're working with, and we're really excited to expand those products to the Nativo relationships that have been built out.

This acquisition positions us to compete at a completely different level. With our data, the technology, the distribution and the go-to-market and commercial engine helps us -- enables us to really participate in advertising budgets that were previously out of reach. So we're excited about what this means for Life360 is a platform company, and we're committed to executing the integration thoughtfully and successfully.

Thanks, James, and thank you all for the time today and for the thoughtful questions you submitted. We'll continue to keep you updated as we move through the integration process in 2026. As we said at the start, we'll provide a detailed 2026 guidance when we report our 2025 results. In the meantime, if you have any follow-up questions, please don't hesitate to reach out to Jolanta or myself. Thank you very much again for joining.

Greetings everyone and welcome to our third quarter 2025 earnings conference call. This call is being conducted as audio. [Operator Instructions]

As a reminder, we will make forward-looking statements regarding future events and potential financial performance during this call, which are subject to material risks and uncertainties that can cause actual results to differ materially from such statements. A summary of these risks may be found in the Risk Factors section in our Form 10-K filing with the SEC dated February 27, 2025, and our Form 10-Qs filed with the SEC dated May 12, 2025, August 11, 2025, and November 10, 2025. These forward-looking statements are based on assumptions that we believe to be reasonable as of today's date, November 10, 2025, and we have no obligation to update these statements as a result of new information or future events, except when required by law.

Additionally, we will present both GAAP and non-GAAP financial measures on today's call. These non-GAAP measures are not intended to be considered in isolation from, a substitute for or superior to our GAAP results and should be read in conjunction with the company's consolidated financial statements prepared in accordance with GAAP. A description of these non-GAAP financial measures as well as a reconciliation to the nearest GAAP financial measures are included at the end of the company's earnings media release issued earlier today, which has been posted on the Investor Relations page of the company's website.

We have posted an updated investor presentation on the Investor Relations page, which includes additional complementary graphics and data. Please note that it has been provided as an additional reference and that we will not be using the presentation as an exhibit during today's call.

We will begin with an overview of results and a business update from our Chief Executive Officer, Lauren Antonoff, with a comment from our Co-Founder and Executive Chairman, Chris Hulls; then our Chief Financial Officer, Russell Burke, will walk through the Q3 2025 financials. Lauren will return with comments on our updated 2025 outlook before we open up the call for Q&A. We ask that participants please limit themselves to one question to ensure that we can hear from as many of you as poss. With that, I'll turn the call over to Lauren.

Good afternoon to everyone joining from the U.S., and good morning to those of you tuning in from Australia. Thank you for joining our third quarter results call.

Q3 2025 was another record quarter for Life360. We reached all-time highs in Paying Circles and global net subscription adds while continuing to advance our vision of becoming the go-to platform for everyday family life. These results reflect our outstanding product market fit, the strength of our premium model and most importantly, the trust we built with millions of families who depend on Life360 every day to keep their families safe and manage the day-to-day chaos of family life.

Our growth engine is fueled by the peace of mind that Life360 provides families who use our platform to stay connected to the people, pets and things they love. Our premium model continues to drive delight and encourage upgrades to premium features such as unlimited place alerts that give families a heads up where mom leaves work or dad stops by their favorite sandwich shop. Our free offering is now even more valuable to families with the introduction of our new Pet Finder Network, which I'll come back to in a moment.

Because of our outstanding value, the majority of our growth remains organic, driven by word of mouth and increasing brand awareness. This quarter, we continued to deliver innovative experiences like no-show alerts. We spotted a pattern where nervous parents continually check to see if their kid arrived, we decided to create a feature to reduce anxiety by flipping this experience on its head. Now we can alert parents when a loved one doesn't arrive on time at a designated location. No need to keep checking. It's one more way we're giving families peace of mind and making everyday family life better. We delivered no-show alerts just as kids were heading back to school, and we've seen outstanding engagement with over 1 million alerts configured to make sure that people arrive safely as expected.

We also deepened our partnership with AccuWather, the world's most accurate and widely used source of weather forecasts and warnings. Last quarter, this partnership delivered severe weather alerts to our members. In Q3, we took it a step further by extending these alerts to the entire circle, so every family member is notified when weather threatens someone they care about. This integration, as with our work with Uber, highlights how major brands are recognizing Life360 as a true platform, not just another location sharing app.

We're creating monetizable experiences that drive far higher engagement than traditional ads and genuinely add value to our members' daily lives. Unlike banner ads that users simply tolerate, our AccuWeather experience shows why people choose Life360. It makes the platform more useful, relevant and uniquely positioned at the center of family life.

We're also engaging members in creative ways like our Life360 Pays For campaign, which was designed to reinforce our mission of making everyday family life better and build brand affinity by helping families manage real-life costs from rent to gas to data plans.

Our combination of product innovation and creative marketing with millions of views across the media spectrum continues to strengthen engagement across our platform. As a result, we added 3.7 million monthly active users in the third quarter, growing 19% year-over-year, bringing our total active users to nearly 92 million.

Our total Paying Circles grew 23% year-over-year to 2.7 million, achieving a record 170,000 net new additions, boosted by focus in our marketing efforts and optimization in our funnel, resulting in better conversion from free to paid in the U.S. and international markets, especially within that first critical 30 days of use.

While MAU growth is lower than the same period last year, it was led by our highest value user segments, reflecting an intentional shift in our marketing to focus paid media on users who are more likely to retain and convert. The strategy is working. Our 35- to 50-year-olds, which drive the majority of our monetization, reached record highs this quarter. The results speak for themselves with record growth in Paying Circles and strong brand awareness.

At the same time, we continue to benefit from Life360's cultural relevance, which extends well beyond our core target audience. In recent weeks, we've been trending on TikTok because we created a product experience that hopped on the 67 meme. If you don't have teens, you might not know what that means, but millions of our younger members do.

While we don't rely on Gen Z as primary converters, their enthusiasm fuels a powerful halo effect that keeps Life360 part of the broader cultural conversation. Just this week, one of our TikTok posts went viral with an astounding 2.2 million views. This visibility strengthens our brands with parents and families alike, proving that our position at the center of the digital zeitgeist is a real competitive advantage.

Internationally, momentum remains strong. Paying Circles outside the U.S. grew 29% year-over-year with an 8% year-over-year ARPPC uplift driven by local pricing strategies and the continued success of premium tiers across the U.K., Canada, Australia and New Zealand. If these markets continue on the same trajectory as the U.S. and current trends suggest they will, there remains significant headroom for accelerated growth ahead.

While we continue to experiment with our marketing levers, the results we've seen give us confidence that edgy creative, disciplined marketing investment and most importantly, a product that delights customers will continue to drive durable growth for many years to come.

On top of growing our membership base, we're deeply committed to increasing the value we deliver to our members, including extending Life360's impact beyond the phone. Our connected devices play a critical role in expanding our reach and deepening engagement, giving families more ways to stay connected. We took a big step forward on this front as we launched Life360 Pet GPS, which brings to life our vision to connect families with the people, pets and things they love on one map and extends the peace of mind we're known for to free family members. This is our first product designed specifically for pets, and it's now available in the United States, Canada, the U.K., Australia and New Zealand.

We took a measured approach to our initial launch. And while it's too soon to provide forecast, early demand exceeded our initial expectations, selling it out in most regions within days. 1 in 3 pets becomes lost at some point during their lifetime, and family with pets represent a significant opportunity, covering nearly 70% of U.S. households.

Young families tend to get their first pet before they have kids and certainly before the age that kids get their own phone. And pets don't head off to college, meaning that our Pet GPS makes subscriptions more valuable to families through all life stages.

Our goal with pets goes far beyond selling devices. We have an opportunity to raise the bar for what it means to be a responsible pet parent. We're committed to driving awareness and education about how to keep pets safe. Pet owners have been led to believe that a microchip or Bluetooth tracker will help with their pet escapes. And I know from personal experiences that these solutions are outdated and woefully unsuited to the job. To make use of a microchip, someone needs to capture your pet and take it to a vet or a shelter. Not only does that count on extraordinary effort, but trying to catch a lost dog and put both the dog and the person in danger.

Bluetooth trackers work great when your dog is at home on the couch, but they're ill suited for a dog on the run. The best way to get a dog home safely is to equip them with a GPS tracker that tracks your pet in real time, so you can close the distance quickly and bring them home safely.

While Pet GPS is the best way to keep a pet safe, at Life360, we want to keep every pet safe, even those without a tracker. Our community-powered Pet Finder Network draws on our nearly 92 million members to help reunite lost pets with their families by sending a lost pet alert to members nearby. Pet GPS and our Pet Finder Network expand our relevance to even more households and reinforce our position as the go-to platform for everyday family safety. Families already trust Life360 to keep their loved ones connected and safe, and that trust gives us a strong foundation to lead in this growing category.

Beyond subscriptions and hardware, we continue to advance our strategy to build high-margin complementary revenue streams. Q3 other revenue grew 82% year-over-year to $16.9 million with strong performance in advertising. We're still early in our advertising road map, but we're making progress building the full operating stack that will power long-term growth. Our place ads and uplift products are live and gaining traction, enabling brands to reach families in relevant real-world moments and measure the impact of their ad campaigns.

At the same time, we're enhancing our programmatic partnerships and data integrations to improve targeting, delivery and performance. This phase is about building the right foundation, bringing together the people, technology and relationships that will allow us to efficiently and effectively scale.

The momentum we're seeing fuels our confidence that advertising is on track to become a durable high-margin growth engine for Life360. To accelerate our vision, we've entered into an agreement to acquire Nativo, a best-in-class advertising technology company. Nativo brings full stack ad technology, a seasoned team and hundreds of advertiser and publisher relationships that will allow us to scale our ads business faster and more efficiently while maintaining the high editorial and privacy standards that define the Life360 promise.

We expect this combination to accelerate our advertising road map, expand our offsite reach and position Life360 to deliver a unified ad platform that seamlessly connects our audience with broader publisher networks. It's a major step forward in creating a differentiated full funnel solution for brands and agencies. And importantly, it advances our mission to grow advertising in a way that's consistent with our commitment to families. We look forward to welcoming the Nativo team to Life360 once the transaction closes. Before I conclude, I've asked Chris to share a few thoughts from his new role. So Chris, over to you.

Thanks, Lauren. I'll keep it brief. The transition has gone incredibly smoothly, and it's great to see how well the company has executed while continuing to advance our long-term vision. If I had to sum up this quarter on one theme is that we're proving Life360 is not just an app, it's a platform that's always been at the heart of the 360 in our name. With the launch of our new device, people, pets and things are now fully integrated into the Life360 map. And we're the only player in the space with a complete family-focused hardware and software ecosystem, and it shows how far ahead we are of any direct competitor.

The Nativo acquisition is another major milestone. We've long said that indirect revenue could one day rival subscriptions, and this deal accelerates that vision. Nativo isn't just about adding more ads. It's about enabling third parties to use our location intelligence in privacy-safe ways that improve their performance while preserving the experience of our free users who remain the foundation of our platform.

And finally, it's great to see Life360 jumping in the 67 trend and going viral on TikTok again. this time organically from the team, which means in a very genuine way, I'm very happy I do not have to reprise my role as an influencer. I'm excited to continue supporting the team as Executive Chairman, and back to you, Lauren.

Thanks, Chris. I'm incredibly proud of the team for delivering another outstanding quarter of balanced growth and disciplined execution. We continue to scale our core subscription business, expand our high-margin revenue streams and invest in new innovations that make everyday family life better. With momentum in our core business, the successful launch of Pet GPS and continued expansion in advertising with the addition of Nativo, we're confident in our trajectory as we enter the holiday season and head into 2026.

So with that, I'll hand it over to Russell to walk through the financials and our continued progress on profitability.

Thanks, Lauren, and thank you all for joining the call today. As a reminder, the Q3 financials I'll be referencing are unaudited and denominated in U.S. dollars.

We are very pleased to report another record quarter, reflecting continued strength in our core subscription business, accelerating momentum in advertising and data revenue and disciplined expense management.

Q3 total revenue grew 34% year-on-year to $124.5 million with continued strong momentum. Subscription revenue increased 34% to $96.3 million, while core Life360 subscription revenue, which excludes stand-alone hardware subscriptions, rose 37%. The increase was driven by sustained global Paying Circle growth and ongoing improvements in conversion across both U.S. and international markets. Other revenue grew 82% year-on-year to $16.9 million, fueled by strong performance from our expanding advertising platform and partnerships.

We continue to see advertiser demand scaling as expected, supported by new formats and higher engagement. Stand-alone hardware decreased 4% year-on-year to $11.3 million. Unit sales increased 15% year-on-year, driven by strength in online channels. Stand-alone hardware gross profit and margin were impacted by tariff-related costs. Absent those tariffs, both would have been positive.

We view the tariff impact as manageable long term, and we took steps earlier in the year to largely mitigate it. Our focus remains on driving adoption, not short-term stand-alone hardware margin as devices continue to be an important funnel into our subscription ecosystem.

Looking ahead, our Q4 outlook includes the impact of promotional launch pricing for Life360 Pets GPS across all markets. This pricing was strategic and time limited, focused on driving adoption and engagement within Paying Circles. Pets GPS operates exclusively with a Paid Gold or Platinum membership, which delivers the near real-time GPS visibility and integrated safety experience families expect from Life360.

We've structured device pricing to minimize friction and expand the pool of paying members, which aligns with our long-term strategy. This approach is fully reflected in our Q4 guidance and supports our goal of growing high-value subscribers rather than focusing on near-term device margins. We are still in the early stage of the Pets GPS launch, and we'll share more detail at year-end.

Turning back to Q3 results. Annualized monthly revenue reached $446.7 million, up 33% year-on-year, underscoring the durability of our high-quality recurring revenue model. Gross profit increased 39% year-on-year to $97.1 million. Gross margin was 78% compared with 75% a year ago, reflecting mix shifts in the quarter.

Operating expenses, excluding commissions, grew 20%, well below our revenue growth rate, demonstrating continued operating leverage. Year-over-year, you'll see a visible shift in marketing spend as we ramp campaigns ahead of our Pets GPS launch and key holiday promotions. These were planned investments that support long-term subscriber growth and product adoption.

Breaking it down by expense line, R&D rose 12%, reflecting ongoing product innovation and scaling of our data and ad tech capabilities. Sales and marketing increased 27%, primarily driven by seasonal campaigns and commissions in line with subscription growth. G&A grew 31%, consistent with the overall pace of company expansion. We also continue to test purchase path variations to enhance conversion efficiency across platforms.

Profitability continues to strengthen. Net income for the quarter was $9.8 million compared to $7 million in Q2 and $7.7 million in Q3 last year.

Adjusted EBITDA rose 174% year-on-year to $24.5 million, representing a 20% margin, our 12th consecutive quarter of positive adjusted EBITDA and further progress towards our target of 35% plus.

Turning to the balance sheet. We ended the quarter with $457.2 million in cash, cash equivalents and restricted cash. We remain in a strong position with strategic flexibility to pursue investment opportunities.

Operating cash flow was positive for the 10th consecutive quarter at $26.4 million, up 319% year-over-year.

In summary, Q3 demonstrated that Life360's growth engine remains strong and efficient with record revenue, expanding high-margin businesses, disciplined cost control and clear line of sight to increasing profitability.

Before we move to guidance, I'd like to share some additional context on the exciting step forward for our advertising business. As Lauren mentioned, we entered into an agreement to acquire Nativo, a leading native advertising technology company for approximately $120 million in the combination of cash and stock and subject to customary closing conditions.

This acquisition positions Life360 to compete at scale with a unified end-to-end advertising platform that expands our reach and will unlock meaningful revenue potential. The acquisition will be accretive to adjusted EBITDA from day 1 and reinforces our commitment to growing adjusted EBITDA margins through high-quality complementary revenue streams that deliver long-term shareholder value.

Because the transaction is expected to close in early 2026, we do not anticipate any financial impact in 2025. Nativo currently generates roughly twice the level of advertising revenue that we expect to deliver this year with a different margin profile that reflects its position across the full ad tech value chain, spanning the demand side, customer data, measurement and supply side platforms, all of which carry -- typically carry lower gross margins than pure digital advertising.

The company has approximately 125 employees or about 1/4 of Life360's current headcount and brings full stack technology, sales and operations capabilities that will accelerate our advertising road map significantly. We expect both revenue and cost synergies to begin ramping in 2026 with full realization by year-end. Importantly, the acquisition further supports our longer-term goal of achieving 35% adjusted EBITDA margins.

With that, I'll hand it back to Lauren to review our updated outlook for the remainder of 2025.

Thanks, Russell. As we look ahead, we remain confident in our ability to deliver consistent results through disciplined execution and our continued commitment to making everyday family life better for millions of families worldwide. With the launch of our new Pet GPS across key markets and continued momentum in our advertising business, we're extending our reach and deepening our engagement across the platform.

With that foundation and the strength of our subscription model, we're focusing on finishing the year strong, and we're raising full year 2025 guidance as follows: We're increasing our consolidated revenue guidance from the previous range of $462 million to $482 million to a new range of $474 million to $485 million. We're raising subscription revenue guidance from the previous range of $363 million to $367 million to the new range of $366 million to $368 million. We're also raising the range of hardware revenue guidance from $42 million to $50 million to the new range of $46 million to $50 million. We expect full year gross margin on hardware to be negative single digits due to the impact of tariffs and the launch of Pet GPS. We're also raising the range of our other revenue guidance, which includes advertising and partnerships from the previous range of $57 million to $65 million to a new range of $62 million to $67 million. And finally, we're raising our guidance for adjusted EBITDA from the previous range of $72 million to $82 million to a new range of $82 million to $88 million.

This concludes our prepared remarks, and now I'll turn the call over to RJ, who will manage the question-and-answer portion of our call.

Thanks, -- with that, we'd like to open it up to Maria Ripps from Canaccord.

I appreciate all the color on the Nativo acquisition. I guess do you expect the platform to maintain its existing advertiser base? And sort of how do you see the operating model evolving here sort of over time once you integrate the acquisition?

So we definitely see the Nativo acquisition as additive. We continue to work on the base of both features and momentum that we have in Life360, and we expect that to accelerate with this technology that Nativo is bringing in, in addition to bringing the momentum in their business.

Thanks, Maria. Next, we'd like to open it up to Lafitani Sotiriou with MST.

Two quick questions or clarifications for me. I know it's only one question, but can I just clarify with the Nativo acquisition, Russell, you're sort of talking code a little bit around the revenue run rate. Can you just tell us roughly what the revenue run rate is of Nativo and roughly the cost base broadly for FY '25, so we've got a base to sort of include it going forward? And with the Pet GPS, can you talk to -- I know it's only early days, but can you talk to the conversion of the -- or the engagement of free users adopting the Pet GPS versus existing subscribers?

So taking those one at a time, Laf, we're not going to give a huge amount more detail. But I think we clearly said you've got a good sense of our advertising revenue for '25. Nativo is on a roughly twice that run rate. At the same time, they would have expected a -- without this acquisition to be in a small adjusted EBITDA positive situation next year, which once we add in the combination with Life360, we absolutely expect that to be, as I said, positive adjusted EBITDA accretive from day 1. So that would give you enough to come back to both the revenue run rate and the cost base.

In terms of Pets GPS, the early phase was really focused on our existing members. So from the initial launch, it largely went to existing members and then has moved really targeted towards free members. So it's very early stages in terms of adoption at this point. And I think we'll be able to give you a lot more color at year-end.

Can I clarify, are you talking about advertising, including all buckets in other revenue? Or are you calling out advertising as a component, excluding data income?

For the comparison piece, it's the advertising, excluding data. And I think as you know, that's approaching sort of 50% of other revenue at this point.

Next, we'd like to open up the line of Mark Mahaney from Evercore. Mark, are you on by chance?

Okay. Now, I am. Russell, you talked about margins long term getting -- moving from that 20% level to the 35% plus. What would be the biggest factors that would cause that margin to grow more quickly or more slowly? Is it -- should the rate -- or let me ask it this way, the rate of margin expansion that we've seen over the last year or 2, is that the way loosely to think about margin expansion going forward?

And then, Lauren, could I ask you, when you think about the product development road map from here, like what are your top priorities just in terms of new products that you want to offer to existing customers?

So Mark, on the first part, I think there's 2 major factors in terms of margin expansion. One is purely scale as we've demonstrated over the last couple of years, in particular. As we increase scale, we're really able to leverage operating costs quite effectively. So even just with that, we see a sort of a clear path to those adjusted EBITDA margins. On top of that, we are increasing the mix of higher-margin revenue within our total revenue base. So that contributes to that as well.

That advertising is the higher-margin businesses?

That's the biggest factor, yes.

So speaking a little bit about our road map. The thing that we want to make sure that we do is not to dilute our focus too much. So we've introduced a lot of new experiences with things like our advertising business and now Pets GPS, and we want to make sure that we're taking the time to really nurture those add capabilities, incorporate customer feedback. And we think there's a lot of opportunity on a lot of the new things we've started already.

In addition, the thing that powers this business is our core app experience. And as we pointed out with our new Map experience, we're continually investing in enriching and uplifting that core experience. And so while we have a lot of extensions to the business that we plan to do over time, our focus isn't primarily adding new products right now. It's making the things we have better.

I'll say the one thing that we are starting to work on is specifically making our app a much better place to attract aging parents. And so we are starting to work on that. That's something we planned for a long time. And then in 2026, we'll get a lot of our focus.

Lauren, would you expect the pet customers to be -- what percentage of those do you think would be your existing customers over the next couple of years and versus those that are just completely new to the platform that just have different needs, like people who have pets and don't have kids?

Yes. Our focus certainly is on our members. I think that's where we have the most differentiated offering. And so that's where our focus is initially.

My hope is that as we convince the world that every pet needs this kind of protection that, that starts to balance out. And over, I think, a much longer time horizon, we'll start to get more people from the outside, but it's not our focus right now.

Thanks, Mark. I'd like to open up the line next to Eric Choi from Barrenjoey.

Just one quick follow-up on pets. You guys mentioned it's outperforming, and I just wanted to drill into that a little bit. Noticed you've taken off the discounts for some trackers. So I was just wondering, does that mean the average profitability per sub could be better than what you're expecting? We've also been kind of signing up various members of the team to pet trackers at different times and just comparing order numbers. And we've noticed that the rate of sales hasn't really slowed as well. So I just wonder, has the continued momentum being better than what you expected and it's not just a short-term truly hit?

And then just as part of the outperformance question, you've answered to everyone else. It seems like the majority of new pet tracker sales has been existing customers. Is that right? Or has that new -- I appreciate that new component might be small, but how has that performed versus your expectations as well?

Okay. There's a few questions in there, Eric. So we'll try and cover all of those. I think generally, as we've said, the Pets GPS launch performed much better than we expected at launch point. And the embrace by our existing members was very, very strong. And as we move forward, we -- that's sort of balancing between paid and existing members. And then we -- as Lauren said, we look to bring completely new people into the ecosystem as well.

So I think the -- as we are also experimenting a little bit with pricing in a couple of territories, but we've largely taken the promotional price point away. So that's -- the pricing now in most territories is largely as we had planned it to be. It is still, as we've said in the past, a subsidization effectively on the actual hardware cost because the strategy here is to drive people into subscription. So that we trust will work effectively. We'll have a lot more color on that at year-end.

Next, we'd like to open the call to Mark Kelly from Stifel.

I just want to go back to Nativo. I just want to understand, I guess, since it's a full stack offering, that business is already serving publishers on the SSP side, and then it looks like there's a self-serve platform kind of DSP business.

So I guess, should we expect that advertising revenue for other publishers and also ads that the current buyer base is buying off of Life360, will that become part of your revenue? I'm just trying to understand -- I know you obviously probably bought for the technology, but just trying to understand better the mechanics of the revenue that it generates today? And then maybe kind of a quick follow-up. Is that revenue booked gross or net of the value of the ads?

Right. So Mark, the -- you're absolutely right. The exciting part of the acquisition for us is the fact that this is a full stack broad spectrum advertising platform that we'll be able to use to really accelerate our advertising road map. So that is the strategy behind the acquisition. You're absolutely correct. They have a solid existing business with a good range of publishers and a good range of advertising context and sales staff, all of which will help us really move our advertising business forward. So yes, we expect to continue that business. We expect to use that to enhance the Life360 business and enlarge it and accelerate it as we move forward.

Thanks, Mark. Next, we'd like to open up to James Bales with Morgan Stanley.

I had a question on MAU growth. So in the past, I think Chris has described it as sort of North Star Third quarter is typically the seasonally strongest part of the year. And this year, you had an ad campaign that you guys were really excited about. I guess I'd like to understand why it have slowed so significantly year-on-year and explain maybe those comments earlier about targeting consumers that are more likely to convert.

So I'll start with that, James, and Lauren might want to add a bit more color. I think there's a few pieces to that. In the past, we've also said that MAU growth can vary significantly from period to period, and we see that often. And in that respect, the comps from last year to this year are unusually difficult, if you like, because we had an exceptionally high MAU growth across international, in particular, last year across multiple territories.

This year, it's still very strong, but it's -- we wouldn't expect that sort of exceptional growth to occur again. As well as that, you referred to the advertising campaign. We are very -- we were and are very excited about the moves that we're making in marketing. And there's two aspects to that. One is the fact that the creative is exciting, but also directed towards demand generation so that as you mentioned, we're really targeting users at the top of the funnel that are more likely to convert. So the quality of people coming through the funnel and our conversion rates are very strong, as you can see with the record net paying circle ads.

The other minor aspect for advertising is that we did launch a major campaign in Q2, which sort of really accelerated things for Q2 and possibly had a little bit of pull-forward impact from Q3.

Next question we'd like to hear from is from Chris Kuntarich from UBS. Chris from UBS. Hopefully, you're there. Okay. We'll come back to Chris. Next, I'd like to open it up to Siraj Ahmed from Citi.

Can you hear me okay? Just following up on that question from James on the MAUs, right? Lauren, you sort of mentioned you're focusing on higher intent members. But if I look at the stats that you've given on Slide 15, I think with circles with families and teams has actually decreased a bit, and it looks like members are Paying Circles also come down from 3.3 to 3.2. Just keen to understand what dynamics playing there if you're actually saying you're getting some of the higher intent MAUs in.

And maybe just a quick one for Russell. Just in terms of the other revenue strength this quarter, can you just confirm that's actually been driven by ads and not your Placer partnership? And within ads, I think you had a partnership with Aura. Has that kicked in as well in this quarter?

Well, I'll start with the end piece of your question, and then Lauren can come back to the earlier piece. We -- in terms of -- sorry, what was the last part of your question again, Siraj?

Was that -- so 2 things. On the -- on the other revenue, was that really driven by advertisements or the partnerships? And within ads, you had the Aura partnership that was meant to kick in from an ad perspective, right? Has that kicked in?

Yes, it has, although the major part of the Aura advertising revenue will flow through in Q4. And to the other part of your question, yes, the major growth in Q3 relates to advertising. There's a small element related to data and other revenue and partnerships, but it's primarily driven by advertising.

And stepping back to this question of how we're focusing our advertisement, a lot of the focus this quarter was on that optimization, targeting those people who convert. And that's where we've seen this really great uplift in those people who convert in the first 30 days. That's what's helping to drive our outstanding conversions. But we're always playing around with those optimizations.

And Lauren, just clarifying, so that member is going down to 3.2, just is that just a function of you're getting younger couples -- younger families or something like that?

I mean it's a relatively small variance from 3.3% to 3.2%. I think there's a number of factors that drive that, but it's more of the -- just the growth in the base that can drive those sort of minor variations.

Yes. A lot of our circles start smaller and grow over time. And so when we have more new circles, those are smaller circles than bigger circles. So don't read too much into that, I would say.

Next, we'd like to open it up to Rob Sanderson.

A couple -- I guess a couple of questions. First, just subscription guidance. You had a very strong Q3, a notable upside to consensus, but your midpoint for Q4 a little bit below. So just anything unusual about seasonality, Pets GPS, other factors like maybe Street is just sort of mismodeling, I'm not sure, but anything you could say about the subscription guidance?

And I had a follow-up on Nativo as well. Just talk about the importance of the differentiation of just in-feed native content compared to other display networks. And I understand it's more of a technology buy, but also want to understand how you can leverage the existing business and the reach. You said the hundreds of publishing partners. Lauren also mentioned connecting to publisher networks. So are these direct deals or publisher networks? And is it relatively easy to scale up the supply side here, if you can generate.

I'm not going to remember all these questions.

Rob, let me take the first part of your question and then Lauren can provide a bit more color on the Nativo platform. There's nothing unusual in subscription. I think Q3 is typically our sort of metric-wise, our strongest seasonal period. So coming into Q4, we're seeing the same levels of strength. There's nothing particularly unusual in terms of subscription in Q4. I suspect it's probably just a modeling aspect of the mix of revenue.

Okay. And I'll repeat that, Lauren, on Nativo, differentiation of in-feed versus display, like why that's important to understand in terms of its positioning? And how can you leverage the existing business? You said hundreds of publisher partners, but also mentioned networks. So I'm curious whether it's direct deals or publishing networks. And then finally, like is it relatively easy to scale the supply side of this if you can bring the demand?

So one of the things that was really exciting to us about Nativo is they focus on making ads that are relevant to consumers, and that helps brands and that also is good for the people who are seeing the ads and in particular, we're interested in families and what the impact is on Life360 families. So that was a real differentiator for us. Their business is pretty multifaceted. They have both direct and programmatic deals.

We're interested in both sides of those and plan to continue to invest in those. And the scale of their publisher relationships is quite extensive and allows us to take a lot of the good information and information about our members and use that to deliver experiences across a wide range of publishers.

[Operator Instructions] Next, we'd like to open it up to Bob Chen from JPMorgan.

A quick one for me. And I think you touched on it earlier, Lauren. You mentioned one of the key product areas of focus for next year is making the app more user-friendly for elderly. Any comments on sort of time line on when we might see an elderly product come to market as well?

Yes. So it depends what you mean by product. I think the first thing that we think about is today, many aging parents are using Life360, but not nearly as many as it could be if all the families in Life360 brought in their parents.

And what we're looking at is what are those inhibitors, why do people not come as often as they might? How do people come to think of Life360 as a way to keep their pares safe just like it's a way to keep their kids safe. And what do we need to do differently to make this a great solution for those people. And so the work in that will continue, I think, in an ongoing basis throughout the year, and I would expect that you would be seeing some of that stuff by midyear and continuing to see that potentially even sooner and continuing to see that throughout the year.

In terms of bringing sort of a stand-alone product offering with something like a hardware, we don't yet have a time line on that. But we are continuing to use all the resources that we have to solve family problems in a multifaceted way.

Next, we'd like to open up the line to Chris Kuntarich from UBS. One more time for Chris at UBS. Okay. We'll come back to Chris again. Next, we'd like to open up to Andrew Boone from Citizens.

I wanted to go back and just hit on the Nativo again, just like everyone else. We talked about the opportunity of the subscription business being as big as kind of other at large. Laura, can you just paint the 5-year picture for us of what does that kind of look like? What are you guys building on the advertising side? Like what's the opportunity in a multiyear context of what you guys can put together here and what that looks like?

Yes. So what we envision for our advertising business is one where we can take all of the value and insights that we have about our members and use that to connect brands with a wide range of publishers on many platforms, so not just within the Life360 app, but in a multitude of apps in ways that are really relevant and with that, be able to deliver better performance on those ads that we also can measure through our measurement products like Uplift.

And so that we have sort of this end-to-end solution where we have those insights, we help people target the right audiences. We deliver app experiences, both inside our app and outside our app that are more compelling and more relevant. And then we can measure the results of those for brands. So I hope that's helpful.

Next, we'd like to open up the line to Wei-Weng Chen from RBC.

Yes, more Nativo questions from me as well. I guess, can you help quantify how much faster this acquisition allows you to move? Like how many years of development and how much cost has 360 avoided by making this acquisition? And then I guess you mentioned Nativo is about 2x your revenue. 360 has kind of built this revenue base over 12 months that Nativo has been around since 2010. So can you maybe speak to the growth rate of Nativo and how we should think about a forward blended growth rate for the advertising business?

So taking the last part of your question first, Wei, the 2x revenue is just to give you a sort of a concept of scale so that as we look at the combined businesses going forward. You're right, Nativo has been around since 2010. They built this business from scratch basically. So they were very much a pure start-up. So they've created the business that they're doing and created that quite successfully over a period of time.

Again, the attraction for us here is the platform that they've built, the ad tech, the publisher relationships, the sales staff, the infrastructure that they've put together on creating this sort of full stack ad tech platform. So that's the piece that's exciting for us. We could debate in terms of how long it would have taken us to build and what that would have cost. But clearly, from our point of view, this accelerates our road map probably in the range of sort of 12 to 18 months.

I'd like to open up the line to Lindsay Bettiol from Goldman Sachs.

Yes. Okay. So I'm going to have a crack at the question that's been asked a couple of ways, just on the other revenue front. It advertising looks like advertising accelerated like pretty meaningfully Q-on-Q. So I've got something like 60% growth. You've called out existing arrangements and an increased number of partners. Could you maybe like just delineate those 2 and talk to us a bit about whether it's an existing partner paying a lot more or it's like you've seen kind of meaningful growth in the new number of partners using advertising?

So I mean in terms of advertising, it's largely a ramp-up of the various things that we are doing. We've talked about the various products that we've launched in the last couple of quarters. There's probably no one significant piece that would accelerate that. And that's going to be sort of somewhat uneven.

We also talked about the Aura partnership. And as I said earlier, the larger part of that advertising piece at least will flow through in Q4. So there's those pieces. And again, just to give you a sense of where that's at, as I said before, as we look at the full year, we expect advertising revenue to be coming up towards half of other revenue in total.

Next, we'd like to open up the line to Jennifer Xu from Jefferies.

I just have one question related to pet. So for pet, when you comment that it is currently focusing on existing members. Can I understand that pet product is now expected to bring more conversion from free users to paid users rather than increasing MAU? And how long the conversion usually take and will be that period change shorter due to the launch of the pet?

Yes. So our focus is certainly giving our existing free member base a reason to convert. One of the blessings and challenges of Life360 is that customers love us a lot and don't always feel like they need to pay for it. And so this is a great reason for people who love the product to have a real concrete visible reason to pay.

It's really too early for us to extrapolate the timing and when in someone's life cycle are they going to discover that. But we certainly think it will apply to more members more often and earlier in their journey than in the past.

Next, we'd like to open up the line to Chris Smith from Hospital.

Look, really pleasing to see the 20% growth in Paying Circles and even more so to see the pet trackers obviously sell out across your key regions. Obviously, not trying to get a timing question here. But can you please talk to how you're using -- you're going to use it as a conversion tool. Obviously, you've got 26 million nonpaying circles on the platform. So you could 10x the business just from the current levels if you actually just turn them to Paying Circles.

But within that, could you maybe help us just understand, obviously, from a discount perspective, if you give away the hardware, you're losing the App store commission, it's gross margin dilutive, but it's EBITDA accretive at the bottom line. And how you're thinking about from that conversion perspective, the gating of that product release to then target those 26 million circles that aren't currently Paying Circles, of which, what, 13 million must have pets?

Yes. So this is exactly the point is providing value to members that is inherently linked to subscriptions. The Pets GPS requires that LTE connection in order to be able to give your pets real-time location. People understand that reason and understand that as a reason to pay.

As we learn more about the price sensitivity and as we have more volume of units in stock, we're certainly willing to lean in and deliver units at a lower cost if we find that, that helps us convert people faster. I think we're doing a lot of experiments to understand the price sensitivity and what allows us to scale the business and convince members to buy.

And Chris, as I think we've said before, that's -- there's a timing aspect to that. While it might be dilutive to stand-alone hardware margins, obviously, the intent here is to get people into high-margin subscription. And our intent and our expectation is that we'll be able to do that. It's just a matter of the timing of when that occurs and what that payback period becomes.

And personal and look like it's probably 3 or 4 weeks and more pleased with mine.

Very happy to hear that.

We'll open up the line to one more time for our final question. It's been answered. Thank you. That concludes our call.

Okay. Thank you, everybody, for joining us today. We appreciate it.

[Audio Gap] future events, potential financial performance during this call. which are subject to material risks and uncertainties that can cause actual results to differ materially from such statements.

A summary of these risks may be found in the Risk Factors section of our Form 10-K filing with the SEC dated February 27, 2025, our Form 10-Q filed with the SEC dated May 12, 2025 and our most recent Form 10-Q filed today. These forward-looking statements are based on assumptions that we believe to be reasonable as of today's date, August 11, 2025, and we have no obligation to update these statements as a result of new information or future events, except when required by law.

Additionally, we will present both GAAP and non-GAAP financial measures on today's call. These non-GAAP measures are not intended to be considered in isolation from, a substitute for or superior to our GAAP results, and should be read in conjunction with the company's consolidated financial statements compared in accordance with GAAP.

A description of these non-GAAP financial measures as well as a reconciliation to the nearest GAAP financial measures are included at the end of the company's earnings media release issued earlier today, which has been posted on the Investor Relations page of the company's website. We have posted an updated investor presentation on the Investor Relations page, which includes additional complementary graphics and data. Please note that it has been provided as an additional reference and that we will not be using the presentation as an exhibit during today's call.

We will begin with an overview of results from our Co-Founder and Executive Chairman, Chris Hulls, followed by a business update from our Chief Executive Officer, Lauren Antonoff, then our Chief Financial Officer, Russell Burke, will walk through the Q2 2025 financials.

Lauren will return with comments on our updated 2025 outlook before we open up the call for Q&A. We ask that participants please limit themselves to 1 question to ensure that we can hear from as many of you as possible.

With that, I'll turn the call over to Chris.

Good afternoon to everyone joining us from the U.S. and good morning to those tuning in from Australia. Thank you for joining our second quarter results call. Before we dive in, I hope you've all seen the press release you sent on earlier, announcing that Lauren Antonoff is now our CEO and that I have stepped up into the Executive Chairman role. Going forward, Lauren will be kicking off these calls and will be the lead and I'd like to thank everyone for their support for the last nearly 25 calls, I led as CEO. You'll hear more about this transition later in the call, but I'd like to point everyone to a personal statement I made explaining more about this decision, which you can find on our blog.

I hope everyone will be as excited as I am and will recognize the amount of work we all did to make this a smooth succession which we hope will go down as a model of leadership for other CEO founders in my position. On to our results. Q2 2025 was another record quarter for Life360. We reached all-time highs in both monthly active users in paying circles while continuing to deliver on our vision of becoming the go-to platform for everyday Family Life.

These results reflect the strength of our model the depth of our product market fit and the trust we've earned with the millions of families who rely on us every day. We added 4.3 million new MAUs this quarter, bringing our total to $88 million, up 25% year-over-year. Paying Circles also grew 25% with a Q2 record net add of 136,000. Engagement, retention and conversion remains strong, and we're seeing meaningful traction across both free and premium tiers. International expansion continues to be a major growth driver. MAUs outside the U.S. grew 34% and paying circles were up 28%.

We're seeing early success with localized pricing in value-based tiering, especially in the U.K. and Australia, and we're scaling that playbook across other markets. But this quarter wasn't just about operational performance. It reflected cultural momentum. Today, peace of mind isn't a luxury, it's essential. Families are budgeting for it just like WiFi or electricity, and that shift is fueling durable value-driven growth. As you scale, we're not just adding users, we're deepening engagement, expanding into new verticals and building a platform families can count on for years to come.

Before I turn it over, as many of you have seen today marks an important milestone. Lauren is now the CEO of Life360, and I have stepped into the role of Executive Chairman, where I'll continue working closely with her full time to pursue our strategic goals, which are reaching 150 million MAUs, exceeding $1 billion in revenue, achieving a 35% adjusted EBITDA margin and becoming the #1 brand for everyday family life.

I'll focus on helping shape Life360's long-term vision championing our free user experience and supporting key initiatives. This transition has been part of a long-term succession plan. And with the alignment, momentum and results we're seeing this quarter, the timing is right. Over the past 2 years, Lauren has led with clarity, heart and execution, launching new revenue streams, scaling operations and deepening the value we deliver to families around the world. She is the right leader for this next chapter, and I couldn't be more confident in where she'll take the company.

With that, I'm pleased to hand it over to Lauren.

Thanks, Chris, and thank you for your trust and partnership. It's an incredible honor to step into the CEO role at Life360, and I couldn't be more excited for what's ahead. We're in a great position because of the foundation you've built over nearly 2 decades. I'm especially energized by the opportunity to lead our next wave of growth as we expand our ecosystem and evolve into the family Super App. You can be confident that we'll stay true to our mission driving innovation in our product that creates value for members and shareholders. I'm grateful for your continued partnership, and I look forward to working with you in your new role as Executive Chairman.

Now let's talk about Q2. Our Q2 results further reinforce the strength and resilience of our growth engine powered by the enduring value we deliver by helping families stay connected to the people, pets and things they love. Our growth is largely fueled organically through word-of-mouth, referrals and increasingly, the brown power we're building around the world. Even our most mature U.S. markets, we're seeing continued momentum with engagement, retention and conversion.

Internationally, we're especially encouraged by the progress we're seeing in subscription performance. We're outpacing targets in many regions and seeing meaningful uplift in revenue per paying circle driven by local pricing strategies, premium tier adoption and expanding feature engagement. This momentum was bolstered by our rollout of emergency dispatch to 6 additional European countries earlier this year. Combined with localization efforts and targeted experimentation, the enhancements we're making are strengthening our value proposition and accelerating [indiscernible] outside the U.S.

Of course, our premium model continues to be our key driver of growth, winning families by delivering everyday utility and guiding them toward premium features that deliver even more peace of mind. While mal growth varies across markets, we're seeing consistent conversion gains. We feel privileged to have a model where investing in our members leads to durable recurring revenue and compounding subscriber growth. One thing we're increasingly seeing is a broader shift in what families consider essential in what we've called the anxiety economy, our latest research shows that nearly 8 in 10 Americans are more likely to invest in safety during times of uncertainty. And that 40% of parents consider safety and emergency alert apps nonnegotiable.

Life360 is now up there as one of the top apps alongside brands like Netflix that consumers are reluctant to give up even when budgets are tight. This reflects how families are reassessing priorities and why Life360 sits at the center of this new landscape, providing both security and connection in an unpredictable world. Back-to-school is always a high-impact moment for us. And this year, that's not just true in the U.S., but also in the U.K., Canada and across Europe. The season is just getting underway, and we've launched one of our largest ever multinational campaigns focused on features that make everyday life during the school year, easier.

Everything from place alerts to let your student -- to let you know that your student arrives safely, and tiles to keep track of lunch boxes, instruments or sports gear. And we've got some new things in the hopper to launch as the season unfolds. The campaign is running across YouTube, linear and streaming TV, paid social and influencer channels. This effort is supported by broader brand storytelling, including the Hero spot we introduced last quarter, I think of you dying. That created went viral Q2 with over 20 million organic impressions sparking cultural conversation and helping nearly double our unaided brand awareness quarter-over-quarter.

That's an extraordinary shift for a metric that rarely moves. So we'll see if it holds. While we're measured in our optimism, the early signal is clear. The campaign has widened our funnel and increase our visibility in key markets. Personally, I love how we show up in culture in unexpected ways. One of the most talked about trends this quarter was famblishing. Viral term that refers to teens using Life360 to drop it on their parents when at least expected. While my kids haven't [indiscernible] us, they have caught my husband and I sneaking out to eat without them.

The fan bushing buzz started on TikTok and was picked up by the New York Post and other major media elements. While it's playful, it highlights just how embedded Life360 has become in modern family dynamics and how our relevance truly spans generations. Q2 also marked an important milestone on our journey to expand Life360's impact beyond the phone. I'm happy to say that tile devices can now be activated directly within the Life360 app, eliminating the need for a separate tile app. This streamlines onboarding, improves engagement and lays the foundation for a more unified member journey.

Meanwhile, we remain on track to launch our GPS-enabled pet tracker later this year. Our go-to-market approach focuses on activating our highly engaged free members in select markets. From day 1, the device will be fully integrated into the Life360 app and require a paid membership, offering families a seamless way to track people, pets and things in one place. Our integrated experience plays a critical role in keeping people close to the ones they love and serving as an entry point to bring new members into our ecosystem.

More broadly, we're seeing continued growth in the number of members linking a device to their Life360 account, a key metric that tells us that hardware is driving real value across our base. Devices continue to be a strategic lever for subscriber acquisition retention and long-term engagement. And while pets are our next category, they won't be the last. We see clear opportunities to expand this model into additional use cases where connected hardware and software provide a lasting piece of mind and expand our role in the lives of families everywhere.

Q2 was also a pivotal quarter for our advertising platform. We launched place ads and uplift by Life360. These products help brands reach families in real-world moments and measure offline impact of their campaigns in Life360 and beyond. Place ads deliver location-based push notifications triggered by behaviors like visiting a store, sports field, while UpLift provides privacy saved first-party foot traffic measurement. Early traffic is encouraging. We've lined up proof of concept campaigns with multiple quick-serve restaurants and mass retailers, and we're in late-stage conversations with new measurement partners. While we're still early in the revenue ramp, we're building a high-margin business with strong alignment to our member experience.

Our partner relationships are also helping us drive member value and engagement. We launched our integration with AccuWeather, so we now deliver severe weather alerts that keep our members safe and drive exceptionally high click-through rates. Our partnership with [indiscernible] is helping families stay safer online. We're already live with in-app ads and new campaigns powered by our audiences are running across Meta and Google.

And finally, we launched a milestone gifting campaign with [indiscernible], where we provide members curated offers at key membership touch points. This is a great example of ads delivering member value with over 70% of participants rating the experience positively.

We also made meaningful improvements behind the scenes. Upgrades to audience targeting and data signals led to a significant increase in reach through 3 major programmatic demand partners. These capabilities are designed to drive stronger performance and incremental revenue while extending the value of our platform beyond the Life360 app. While ads remain a long-term build the foundations in place, and we're proud of the early traction we're seeing. Beyond advertising, our broader data ecosystem is thriving. Our long-standing partnership with Placer.ai, continues to yield more value.

Hubbell Network, which activated the world's first Bluetooth low-energy satellite network, launched its first enterprise application. Smart Pen is a commercial-grade asset tracker powered by the combined Hubbell and Life360 infrastructure. It enables global location visibility on top of cellular coverage, opening up a wide variety of enterprise use cases. While still early, it's the first stage of realizing the long-term opportunity that comes from working with Hubbell to deliver enterprise-grade tracking and location intelligence.

Overall, Q2 was a strong quarter. And now we're hard at work driving growth and finding new ways to help millions of families around the world, keep the people, pets and things they love, safe and connected. I'm more excited than ever about what's ahead and the opportunity to lead the Family Super app that makes everyday family life better.

With that, I'll hand it over to Russell to walk through the financials and our continued focus on increasing profitability. Russell?

Thanks, Lauren, and thank you all for joining us today. As a reminder, the Q2 financials I'll be referencing are unaudited and denominated in U.S. dollars. We are very pleased to report record-breaking Q2 results driven by continued strength in our subscription business and growing contributions from our other revenue streams, along with continued margin expansion. Q2 revenue increased 36% year-over-year to $115.4 million reflecting strong momentum in both subscription and other recurring revenue.

Subscription revenue grew 35% year-over-year, while core Life360 subscription which excludes stand-alone hardware subscriptions, increased 38%, accelerating from Q1 driven by 25% global paying circle growth and 8% higher ARPPC. This performance reflects improved conversion in the U.S., supported by targeted marketing and deeper product engagement. Hardware revenue increased 3% year-over-year to $12.3 million, with higher unit volumes offset by promotional pricing. Online and physical retail unit sales increased year-over-year.

Gross margin for hardware remained stable year-over-year despite the impact of tariffs. While we are receiving partial tariff exemptions at the moment, we are seeing effects on both revenue and costs in the near term. We remain prepared to adjust further as conditions evolve. Most importantly, though, hardware continues to serve as a strategic funnel into our subscription ecosystem, supporting long-term value creation, even as short-term demand fluctuates and lower margin stand-alone revenue continues to become a smaller part of our revenue mix.

High-margin other revenue doubled year-over-year to $14.5 million driven by strong contributions from advertising and data partnerships, both performed in line with expectations and continue to scale as planned. June annualized monthly revenue reached $416.1 million, up 36% year-over-year, underscoring the strength and durability of our high-quality recurring revenue streams. Gross profit grew 42% year-over-year to $90.5 million with gross margin expanding to 78% and up from 75% in the prior year, driven by the favorable revenue mix.

Operating expenses increased 34% year-over-year. That said, this was largely driven by timing, not a change in our cost structure or operating discipline. As we have previously flagged, we made the decision to pull marketing and personnel costs into Q2 from Q1 and Q3 to support global growth and to capitalize on key seasonal campaigns. These were planned front-loaded investments, especially around our largest ever demand creation campaign and back-to-school positioning. As a result, the trend in our operating leverage improvements has temporarily flattened, and we expect it to return to trend by the end of the year as expenses normalize and revenues continue to grow.

Breaking it down by P&L line, R&D increased 19%, reflecting continued investment in people, product development and third-party tools. Sales and marketing rose 60%, including commissions, driven by global brand campaigns and customer acquisition efforts. Commissions grew in line with subscription revenue. The overall increase came off a low baseline last year when we strategically reduced spend.

G&A rose 19% aligned with overall company growth and organizational scale. On a related note, we also launched our first iOS approved test of web-based billing in June following recent court rulings around up store payments. It's still early and permissions in this area continue to develop, but it is encouraging. We see strong potential over time to improve unit economics and build more direct relationships with our members as this capability expands.

We continue to deliver significant progress on profitability. Net income was $7.0 million, a sharp improvement from the $11 million loss in Q2 of last year. Adjusted EBITDA rose to $20.3 million, up from $11 million in Q2 '24 and representing our 11th consecutive quarter of [indiscernible] adjusted EBITDA, driven by the growth in high-margin subscription and other revenue and disciplined cost management.

Turning to the balance sheet and cash flow. We ended Q2 with $434.2 million in cash, cash equivalents and restricted cash, up $272 million from a year ago. To support our long-term road map, we successfully raised over $275 million in Q2 through a 0 coupon convertible note. The offering was well received and structured to provide significant capital flexibility without near-term dilution. It puts us in a strong position to move quickly on the right strategic opportunities as they emerge.

Operating cash flow was positive for the ninth consecutive quarter, coming in at $13.3 million, below adjusted EBITDA due to the timing of receipts and payables. Investing outflows totaled $27.8 million, including a $25 million investment into convertible notes issued by Aura. Financing inflows of $278.3 million primarily reflect proceeds from the June convertible note offering. Thanks for your attention, and I'll now hand it back to Lauren to walk through our updated earnings guidance.

Thanks, Russell. As we look ahead, we remain confident in our ability to deliver consistent results through disciplined execution and most importantly, our continued commitment to making everyday family life better and bringing peace of mind to tens of millions of families around the world. Our subscription growth is strong, and our offering is exceptionally well positioned to navigate the anxiety economy. We continue to invest for the long term with a focus on expanding internationally scaling ads and deepening engagement across our platform.

With that foundation and the strength of our subscription model, we are raising our full year 2025 guidance as follows: we are increasing our consolidated revenue guidance from the previous range of $450 million to $480 million to a new range of $462 million to $482 million. We are raising subscription revenue guidance from the previous range of $355 million to $365 million to the new range of $363 million to $367 million.

We are also raising the range of hardware revenue guidance from $40 million to $50 million to $42 million to $50 million. We are raising the range of other revenue guidance, which includes advertising and partnerships from the previous range of $55 million to $65 million to a new range of $57 million to $65 million, and we are raising guidance for adjusted EBITDA from the previous range of $65 million to $75 million to a new range of $72 million to $82 million.

For modeling purposes, we expect our Q3 adjusted EBITDA margin to follow our typical quarterly pattern and be slightly lower than in Q2, driven by the timing of our growth investments in marketing and R&D.

That concludes our prepared remarks, and I'll now turn the call over to RJ who will manage the Q&A portion of our call today.

[Operator Instructions] So with the first question, I'd like to go to James Bales with Morgan Stanley.

I'd like to understand a bit more about how you're going with pet tracking. Can you maybe give us an update on when you expect to launch, which countries is this going to be online-only, retailers? Can you give us a sense of pricing the out-of-pocket upfront pricing for the hardware? And confirm that, I guess, there's been no issues in terms of rearranging production around tariffs as well. .

We're very excited about the upcoming launch. We continue to be on track for the holiday season. We're going to hold the details about exactly where and when, so that we have a great launch, but it should be fun and you'll be seeing more as we approach the holidays.

We're going to move to Mark Mahaney, but I think David might be stepping in. David, if you could unmute.

David, are you there for Mark. If not, we can move to the next. All right. Let's go to Lafitani Sotiriou.

Congratulations, Lauren, on your well-deserved promotion. And Chris, you must be proud to see where the business is today, and it is a also great to hear that you'll still be involved as an Executive Chair. I wanted to unpack a little bit on the advertising side, the term place ads and uplift. And so just to educate us better what this means from a revenue perspective, margin perspective, a user experience, how is it different from say Benoit, -- how is this a step-up and if you could just sort of explain it better to us what it is? And also, when did it start? .

So we've launched both these products this -- in Q2, so they're new products, where we don't have specific revenue guidance, but in terms of what they do as a product. place ads are really very much an in-app experience. They allow us to send an in-app message when somebody is in a particular location. So that's very experiential. Measurement is very much behind the scenes and that gives advertisers gives brands a way to understand whether the people who are seeing ads, whether it's on our platform or off platform are actually coming to the places that are advertising. So it's a closed-loop measurement system.

Can you clarify, so in terms of like cost per click or an ad, does it differentiate by much. So if you could just go into a little bit more from a -- are they paying more for those sort of place ads? And on the other side, how should we think about the other components like the data tracking piece, the uplift part.

Yes. So let me jump in there, Laf. These are obviously sort of designed to be sort of high-value advertising units. But that was -- and that's always been part of our plan. As you know, we've -- we're very focused on delivering value to the member as well as the advertiser here. So -- these are part of the sort of evolution of our advertising product. They're very much a part of our road map. And we're part of the configuration as we ramp up the advertising revenue stream. They're relatively small at the beginning, but we really see the huge opportunity for this in the longer term. .

Let's go back to Mark Mahaney's line and unmute and see if David is here.

Lauren, congratulations. We look forward to working with you. Looking forward in your new role as CEO, what do you believe are your top 2 or 3 priorities over the next 12 months? And then just a quick follow-up on penetration. Can you just comment on any quarter-over-quarter penetration trends that you're seeing in the U.S. and international?

Maybe I'll start with penetration first, and I'll just say that we see consistent progress as we -- both in the U.S. and other markets. So there's no big changes there. And I think in terms of my priority and focus, it's much the same story the priorities we've set out for the company continue to be true, focusing on engaging users, growing our ads business, driving international growth. and really earning our place as the super app that's delivering value to everyday family life.

We're going to move to Maria from Canaccord.

Lauren and Chris, congrats to both of you. Chris, appreciate the block post and sort of you're sharing that with us. So with you shifting more of your focus to product innovation and strategy. How should investors think about sort of the pace of new launches? And are there any sort of changes to your longer-term view of adjacent opportunities for the company versus what you've outlined previously?

So we have essentially already been running the playbook that we're going to be running in the future for the last year because this was well planned. I mean I could go way back when Lauren joined the company, there was no promise of her becoming CEO, but we were hiring specifically to say, "Hey, this is a real possibility. So this has been a discussion that I've had with Lauren since literally before she joined. I don't know if you've ever publicly shared this, but we were able to get Lauren to take a COO offer instead of a CEO offer because of the huge opportunity. And I think Lauren has accurately predicted that this was a great move for her.

So I just showed that back story. There's honestly not a lot is going to change. I've worked with a lot of execs and where Lauren and I are really one-to-one aligned is that we win by serving our customers. And my role really will not be all that different than it's been the last year. The vision is not changing. So in terms of pace, I mean, Lauren already has really, I think, done a better job on just picking up the ability to move more quickly at scale. My heart is in the earlier stages. So I really see Lauren is a great partner, and not too many changes. Lauren, anything to add?

No, that sounds exactly right.

Next, we're going to open it up to Siraj from Citi.

Lauren, just on looking at some of the user metrics, interesting that gold paying circles is now has picked up a bit -- it also looks like the DA to MEA ratio has also picked up. So it seems like engagement and conversion to is improving. Can you just touch on those trends and whether that's just U.S. and what you're seeing internationally as well? And whether there's any changes in your thought process with the pet tracker launch as well, right, in terms of where these sort of mix, et cetera, trends.

Yes. We continue to put a lot of focus on member engagement. And I'd say, coupled with experimentation and really trying to make sure that people are discovering the value that we have and able to access it and really loving it. We are seeing gains both in the U.S. and in international markets. Pets is sort of an opportunity to have a step change. There'll be a smaller number of users who have pets. But for those members, we expect to see those kind of core metrics go up. So it's been a continued focus, and I continue to push and we're really proud of the progress we're seeing there.

Lauren, can I just follow up on that second point around pets. So because 1 of the concerns some investors asking us is whether there's a cost headwind because you give these pet trackers free to existing members, right? So maybe I know you don't want to go into details, but if you can just give us your thought process of how you think you're bundling this, right? My understanding is going to be potentially at the start. But is there a big drag in terms of giving pet trackers for free to the existing user base?

So it's not a free product. We haven't released pricing yet, but it will be a paid product. We sort of talk about it as a subsidized paid product. We think of it a little bit like we would invest in marketing and customer acquisition. So we're offsetting some of those costs. But overall, it's a good value proposition, and we make our return on it relatively quickly. .

Next, I'd like to open it up to Mark Kelly at Stifel.

Congrats to both, Lauren and Chris. I wanted to ask about -- just another question about penetration. I feel like every time we see a new map of the U.S. penetration continues to tick higher even in places like Texas, which I think is kind of the poster child for your subscription business. Where do you think that ultimately tops out over time? That's my first question. And then have you seen any churn as a result of the ads business? Or is it kind of in line with what you're expecting?

So this is -- Chris and I have very much a shared view that we don't know exactly where things pop up, but we think the end is nowhere in sight. The reality is that most people have a family that they hear about. And it's not just teenagers and we have a potential to really have much, much deeper penetration over time.

The second part was on whether we've seen any sort of trade-off for Mal as we've introduced ads. And this was something we were very, very cautious about as we rolled out advertising, and we're very committed to making sure that we're serving members first and optimizing for revenue second. And so far, so good, we have seen no significant drop off.

Next, we'd like to open it up to Wei-Weng Chen at RBC.

Congratulations on the results and the new roles. So I guess for me, given ads are still very new to you guys and you're still continuing to roll out beaches and the product itself. I guess how has your thinking changed in the past quarter about the advertising opportunity?

So ads is a fund space because we're always learning more. I don't think it's changed so much as I feel like we get more and more educated as we go. It's been really exciting to build a relationship with partners. We are starting more proof of concepts and so we're learning from each of them. So no big change in perspective, I think just more learning.

And I guess what I'd add to that way is that those learnings are sort of filling in the details of how we build out the road map. But the overall road map and the details may be different within itself, but it's laying out pretty much as we expected. And as we've said before, it's going to be a slowish build, but we absolutely see the opportunity in the longer term. .

I'd like to go to Chris Kuntarich at UBS.

Congrats, Chris, Lauren, to everyone, really. Just -- I wanted to touch on the branding campaign or the back-to-school campaign and just -- can you help us understand kind of what sort of benefit you're factoring into the second half subscription revenue growth at this point?

That sounds like a Russell question.

Chris, I'd have to say in revenue dollars, it's relatively limited just because the way our model works is that those marketing investments have a return over every period of time. But what I would say is that we've -- as we monitor the marketing campaigns that we've put in place are really seeing good returns. It gives us the confidence to continue to further invest in marketing while it's giving us those strong returns.

Got it. That's helpful. Maybe just one follow-up. It sounds just from Russell, your response here and just kind of talking about linear than and then moving into some of the other digital channels. This is still going to be very brand-heavy spend. So could you just give us an update on your use of performance marketing at this point? And how you kind of think that evolves as we potentially see changes to where your customers are paying and potentially if they're using the web-based payments more often?

Yes. No, it's an interesting question, Chris. And performance marketing will definitely be part of our suite of tools going forward. We're definitely -- you're right that we've definitely introduced more brand marketing -- and we're seeing the sort of immediate sort of measurement impact of that, and we expect that to flow through to subscription growth in the longer term.

But performance marketing is still part of the tool set and to your point, as we look at sort of web onboarding, that will be a key piece of that. But it's, again, now a smaller piece of that overall tool set.

Maybe I'll add that our CMO is really focused on the blend of different advertising strategies. And this kind of demand creation -- it may not be as directly tied to performance as traditional paid marketing, but it very much does drive demand over the long run.

Next, we'd like to open up to Wei Sim at Jefferies.

So I put out a deep dive report on the marketing a couple of weeks ago and been having a lot of conversations. It's really surprised me how many people are using Life360 now even within the financial community. And Lauren your example of bad bushing, I think, was a great one. As we've seen the proliferation and more people use Life360, I found that more people are using it as a social networking app increasingly rather than just using it as a safety utility. So my question is how do you think about positioning Life360 over the medium term to pivot more specifically as a social networking app rather than a family safety tool.

Our differentiation and what makes us great is that we are very much focused on family. It helps us really pay attention to giving peace of mind rather than entertainment. It turns out your family is fairly entertaining. But I don't know if you've ever used some of the social apps that you're paying attention to your friends -- it's not quite as interesting as where your family is. And so we're going to stay focused on family and creating that safety in connection and really offering peace of mind.

We know that many of our younger members do use it a little bit on the edge of -- to connect with their friends, and we think that's great. But our focus is going to stay on family.

Next, we'd like to open up to Andrew Boone at Citizens JMP.

Congratulations Lauren. I'd love to talk about international and the localization you guys mentioned in the prepared comments. Lauren, can you speak to the broader trends of where you guys are in the process of creating really strong product market fit or where may the holes be in international markets that you guys are now filling out? Anything to help us better understand that trend would be helpful.

Great. It's something that we're looking at a lot as we get deeper into markets. We'd love to see our general adoption and penetration get as great as it is in markets around the world as it is in the U.S. To that end, one of the things that we're investing in is making sure that our location works in places that don't necessarily rely on cars as much as we do in the U.S.

So First of all, it's making sure that our core services really work the way that families need them to work wherever they are. Another facet is just understanding what's different about different environments and what kind of safety features we need to offer to speak to people in different countries. And that's newer research and newer investigations for us, but something that we'll continue to look at over time.

Next, I'd like you to open it up to Chris Savage at Bell Potter.

Perhaps a question more for Russell. Russell, the Q1 result you flagged, you thought Q2 EBITDA would be lower than Q1, yet it didn't turn out that way. And you did flag -- that would be driven by a hike in sales and marketing investment, which did come through. So was the hike just not as much as you thought or the operating leverage was greater in the business than perhaps thought?

Yes. I think it's more of the latter, Chris. We did, as you say, specifically flagged that we would be we would have some higher operating expenses for marketing and personnel costs in Q2, which did happen. But as we work through the quarter, what we also saw was that the subscription strength growth was very strong. So the mix of revenues gave us a very good sort of gross margin, very strong gross margin for the quarter. And we did see some savings in other areas of operating expenses. So both of those contributed to the adjusted EBITDA result for the quarter.

Next, we'd like to open up to Rob Sanderson at Loop.

I've got 3 on the advertising business, just with the new products launching, I wanted to understand a little bit more about the value proposition here. [indiscernible] sounds very location-specific. And local location adds like that's been a pretty difficult area to scale. Like even Google Maps has taken a long time to get scale of revenue here. So -- can we talk a little bit about go-to-market. Should investors expect to see more Uber-like partnerships? You mentioned QSR. So anything you can help us to understand on the go-to-market around place ads. Then on uplift, this seems to be a product for attribution measurement. Is this something that can be integrated into MMPs or other attribution providers? Any comment on how the model works? Is it like impression-based or percent of ad spend? And anything -- just anything in terms of how to understand that product.

And then the script, you mentioned campaigns, integration with Meda and Google. From a high level, can you kind of tell us like how that type of integration would work? Is that the platforms themselves leveraging your data? Or is that something integrated by some intermediary. Thank you.

So we have been pretty consistent about this being sort of a longer ramp as we get these products into market and drive adoption. We're seeing some pretty exciting proof of concept. So I'm looking forward to the point where we're ready to scale those and we get to share more. But right now, we're pretty happy with the momentum that's going on.

In terms of the measurement product, that's part of our efforts to use our data to both on our platform and in other platforms to be able to deliver measurement started to allow people to measure foot traffic to know whether consumers are showing up at the places that they're advertising for. The ways -- the different ways that we monetize that are still developing, and I think we'll share more as that product line matures.

One thing, Rob, can you clarify your question on the Google, Meta part.

Yes. Just going back to the comment in the script, just that the -- I think some mention of just inclusion in some campaigns that are being run on meta and Google. And -- just wondering from a high level, like how does that type of integration work or come to market?

Sure. I can take that. So that's part of our off-line advertising platform. And so we're working with partners like the Trade Desk and other platforms that allow us to deliver ads through other ad platforms. .

Right. So your data would be sort of accessed by third party in that case, DSP with Trade Desk or whatnot? Just bolster, I guess, the targetability of the ads delivered through that platform. Is that generally the structure of the concept?

Yes, we build audiences in privacy ways. So they're often to that we're not giving away specific user data, but it allows third parties to use those other platforms to target our customers on platforms like Meta and Google.

That concludes initial queries. And so if there are other follow-ups, you can go ahead and raise your hand while we still have time. We have one follow-up from Siraj.

[indiscernible] that's okay. The first one, just on following up on that date and on ads, right? But Ross, can you just confirm? I mean, there's improvement quarter-on-quarter. Was that really -- I'm guessing that is driven -- that is ad driven. And whether that is or weather. And Lauren, you've been consistent that it takes a couple of sort of quarters for the measurement and targeting to mature, right? You reckon you're ahead on plan on that? Or is it in line with what you're expecting?

So I'll -- Yes, I'll take the first part of it, and Loren can take the second. But in terms of sort of quarter-over-quarter, yes, we're seeing good expected growth in advertising revenue, and that would represent the larger part of the growth in in the other income line. That said, we're seeing continued good growth in the overall data revenue. .

Yes. And in terms of our expectations, one of the things that we learned pretty early on is that advertising is not quite like subscriptions, it's a lot more variable. And so I'd say, overall, it's in line with our expectations. We're feeling good about things, but we know that this is a long build.

Just got one more as well. Russell, is there a big step-up in OpEx in the second half that we'll be thinking about? Or I mean, it's a bit benefit because you said there will be operating leverage at the end of 4Q or back to trends. but [indiscernible] down. is there a big step up that we should be thinking about.

Outside of sales and marketing, there is not a big step up. We do tend to build quarter-on-quarter as we're growing the business. Typically, Q3, we do invest more in sales and marketing as that's where we really capitalize on the sort of back-to-school period. and invest more in campaigns to really support that. And this -- this quarter will be no different from our regular approach. As I said, generally, we're seeing really good returns on our marketing investment. So we're definitely not shying away from investing in Q3. .

I'd like to open it up for a follow-up from Wei Sim.

So this question is just in regards to, I guess, the transition. And I appreciate you've put it out in the block, but I think it's just one of the comments that you have made in the past, Chris, is kind of like looking for other growth opportunities outside of Life360 over the medium term and saying that you might like leave the company as the growth slows. So just some concern from other investors, just with you stepping down as the CEO and transitioning over to Lauren, whether this is a sign that do you think that growth is slowing?

That is completely unrelated. I can say that very genuinely. I think I've made the comment in the past that just even from a broader company standpoint, if we are more in a harvest mode, that would be not the right place for me. My passion is truly the free user experience and it's just what energizes me and motivates me. My role will be very, very focused on that. And a lot of the things that I love doing the most. I'm going to continue and double down on doing. So completely unrelated. And I think the numbers in this quarter speak for themselves. We really did want to make sure that we had the right time to make this move, and we could look everybody in the eye and say everything is going gangbusters. And so no, we are a long way away from feeling capped out. And if you look at some of the stats even in U.S. MAU it's not just international picking up for U.S. slowing down. U.S. is really outperforming.

And if anything, we've taken another step up in the cultural [indiscernible], you have the whole fan bushing thing, and I don't think we shared it on the call, but there's some public stats out there about our brand recognition with Gen Z. Like we are one of the most popular brands with Gen Z, which is somewhat surprising. I thought they would always be neutral on us, but some of the old stuff with TikTok. We are loved by the up-and-coming generations. So early days in terms of growth. And in terms of my role as Exec Chair, I would make the same statement from my current plans. I'm very excited to stay on full time. And if we do go to harvest mode, I would probably be less needed as an Executive Chairman. But for now, I am definitely plan to be here.

We'd like to open up the call to a question from Tom Browns from [indiscernible].

First of all, congrats on the good result. Just on the upgrade to guidance. I was just wondering if that was more on confidence you're seeing into the second half? Or is that just because second quarter might have come in better than you expected?

I think it's a little bit of both. Obviously, Q2 was a really strong quarter. We're continuing to see that really strong growth in subscription. So that's -- that gives us a great deal of confidence. And that said, our second half is somewhat weighted towards the the second half and particularly the fourth quarter, as we've talked about. So -- but everything that we're seeing gives us that level of confidence that we are able to lift guidance. .

I'd like to open it back up to Wei-Weng Chen at RBC.

This one is maybe for Chris. I'd love your view on the ways that you think Lauren will be a better CEO than you.

That is honestly pretty straightforward. I'll do a little bit of it. I love talking to you guys as individual, but press and IR and all that. It's not what brings joy to my heart, even though genuine have built great relationships with many of you. I am someone who works in burst of creativity. But as a public company, you need consistency. And I have pretty severe ADHD that's a pretty common founder trait. And it takes a lot out of me to be an operationally consistent leader where you repeat the same message day in and day out and remove nuance to have scaled communications in ways that don't necessarily feel natural. Lauren loves the user and has -- we're very similar on product, but she also really enjoys the systems and scaling processes that I quite frankly don't like as much and not naturally as a gift to that to make it just even a little bit tangible.

One of the things that we had struggled with in the past was the constant swing between I'd say the start-up scrappy way of doing things. Are you just kind of jump off the cliff, build the plan in the way down. That works, but it's massively chaotic. On the other extreme, you have kind of the archetype of someone who conflates output and outcomes and just follows the process and does things just because they're told to do so. And I think Lauren has done an extremely good job of threading those needles. And the way in which Lauren has done it has been not just her own skill setting these up herself, but also hiring. We genuinely have the best execs we've ever had. I joke, but it's actually true. My first hire on a new senior exec often gets wrong the first time because I haven't been there, done that. So we are at a stage where Lauren is a little bit more been there, done that. And I'm still here to kind of stir things up. I can turn it on and off the crazy. I'm extremely good at that. I think part of why I made the duration was I am one of those founders who was able to realize we need to do the more scaling things, but it's not necessarily what my natural inclination is nor what gave me joy.

And then the last thing I'll say about Lauren is I think Lauren genuinely just loves the work all the time in every way, shape or form. Whereas for me, I can do it, but it's more through discipline [indiscernible] and then powering through the stuff that I can just do Dan and day out is more on the creative side. So for all those reasons, that is where Lauren is genuinely better than me, and I think the company is going to get most of the gifts I had but with Lauren at the helm in a way that I think is good for all involved.

And for me, as a very large shareholder with the majority of my net worth in the company, even more so with the share price going up, I am very self-interested in this transition.

And with that, we've come up on time, and I'm going to turn it over to Lauren to sign off.

Thanks, everyone, for joining, and have a great day.

Good day, everyone, and welcome to Life360's Investor Briefing. Today's call is being conducted as a Zoom audio webinar [Operator Instructions ]. The purpose of this call is to provide investors with an opportunity to hear directly from management regarding Life360's recently completed offering of convertible senior notes. Please note that we will not be commenting on or addressing questions related to the company's financial outlook during this session.

The call is scheduled to run for approximately 30 minutes. To make the most efficient use of time, we'll begin by addressing questions submitted in advance by the sell-side analysts joining us today. If time permits, and additional questions arise, analysts on the line may use the raise hand feature at the bottom center of your Zooms green and we'll unmute lines in the order received.

Before we begin, please note that any forward-looking statements made during today's call, including those regarding future events or potential financial performance are subject to significant risks and uncertainties that could cause actual results to differ materially. These risks are described in detail in the Risk Factors section of our annual report on Form 10-K filed with the SEC on February 27, 2025, and our most recent quarterly report on Form 10-Q. Any forward-looking statements made today reflect our views and assumptions as of June 5, 2025. We undertake no obligation to update these statements, except as required by law.

With that, I'll begin with the first question for Chris. Chris, why raise capital and why now?

So this is a proactive raise. The market has obviously been doing very well while we also have some pretty severe volatility. I think everyone probably saw the drama from today in our political system and without taking any sort of side, we felt this is a moment that fortifies our balance sheet. It gives us strong optionality whichever way the markets go.

And we have a lot of growth opportunities, both organic and strategic that we can keep out -- that are now available to us. And we will remain capital efficient. We should be clear there's no change -- no plan change to our operating plan as of now.

This next question is from a group of analysts, James Bales, Rob Sanderson, Maria Ripps, Andrew Boone and Lafitani Sotiriou, are there firm plans for the funds? Is this for M&A or organic growth? Chris.

No firm plans as mentioned before, this really is looking at the market conditions and making sure we're well positioned, whichever way things go, up or down in the market. It's great to have a good balance sheet. M&A is something we are excited about. There's nothing imminent. We look at deals very regularly, but this gives us strategic optionality.

Great. Next question is from Lafitani Sotiriou for Chris. How many M&A targets are typically under consideration?

I think to say under consideration is -- let me answer that more indirectly, 0 in terms of typically under consideration, multiple in terms of ongoing dialogues. I think I've made the joke on a few earnings calls that had a long-standing thing with the tile founders, right, who's going to buy who, and obviously, 8 years later after we started that we bought them. So I know leaders of many, many companies who are interested in working with us.

One thing that has shifted lately is people are recognizing our position as an ecosystem and platform. We have hired a VP of Corp Dev, Dennis, who I hope many of you will meet in coming months, specifically because we are -- our recognition as a company is way, way up. And so we are now building a more concerted program to maintain these relationships and stay -- have a pulse of what's out there.

Next question from Wei-Weng Chen, Lafitani Sotiriou and Mark Kelly for Chris. What kind of M&A targets are in focus, product or capability, pet or aged care?

I'd say all of the above. We will -- if we do M&A, especially anything larger, it would be very pointed. And when we've done it in the past, we have had competing work streams that look very different from each other and so much of what we have to do is allocate resources and make a bet. So we are looking at things, and I'm saying this generically versus tenting anything imminent. What is going to expand on each different life stages. What is going to accelerate things like the ads business, how would we accelerate internationally?

So there's no one size fits all there. And I'm specifically saying that in the context of larger acquisitions, we do small bolt-ons all the time, like the Fantix deal, but we did not need to do a raise for that. And I'm specifically again talking about if we were to do more transformational size M&A.

Great. This next question is for Russell from Wei Sim and Wei-Weng Chen. Could you have used script for M&A, why raise cash instead?

We could use equity. Of course, that would be partially dilutive, but we could use it where appropriate. This raise, however, gives us a lot of balance sheet flexibility. It's not a replacement one way or the other. The structure that we have now allows us to move quickly if the right opportunity emerges.

Next question from Lafitani Sotiriou also for Russell. Does this raise preclude using term or bank debt in the future?

The short answer is no. We've retained that flexibility. We could layer in traditional debt if we needed it for a specific purpose or a specific transaction.

Next question again from Lafitani Sotiriou. This is also for Russell. Can Life360 fund organic growth without this raise?

Yes. As you know, our underlying business is generating a healthy free cash flow at this point. So this raise really just enhances our strategic flexibility, definitely not a requirement for ongoing operations.

Next, we're going to group 2 questions together from Mark Mahaney, Wei Sim and Lafitani Sotiriou, why convertible notes versus equity or traditional debt and why issue $320 million before fees and the cap call, that's from James Bales, this is for Russell.

So a couple of questions there, obviously. The 0 coupon convertible note is essentially the lowest available form of capital today. So we looked at it. We just saw -- so it was very, very attractive at this point in time. The cap call -- in addition to that, the cap call structure protects shareholders by really effectively eliminating dilution up to that $122.2 per share, 100% premium. And the number I'm talking there is obviously the U.S. dollar and NASDAQ listed number. And that's what we'll be talking to in any of our answers here. The size of the raise was calibrated to give us flexibility without overcapitalizing. At this point, after the raise, we're really sort of matching a very similar structure to most of our U.S. peers.

Next question also for Russell from Apoorv Sehgal and Jennifer [indiscernible]. What's the actual conversion price and how is it set?

So I'll talk to this question to the conversion price on the base convertible note itself. And within that base, we were able to obtain -- again, we were able to obtain in really good terms, the 0% coupon and a 32.5% premium on the conversion price. So given that that's based on the closing price on June 2, that equates to $80.97 per share.

Another question from Jennifer [indiscernible] for Russell. Can the $80.97 conversion price change over time?

It could change in fairly limited circumstances. The conversion price is subject to standard anti-dilution adjustments, including for stock splits, dividends or tender offers or certain other corporate events. And really unless any of those are triggered that the price remains fixed through 2030.

Next question from Apoorv Sehgal and Jennifer [indiscernible]. Does the 130% conversion price mean 130% of $80.97 and for how long was the stock trade at that level?

And the 130% that they're referencing here is really the trigger that allows us -- gives us the ability to call after a 3-year period. So yes, the 130% threshold refers to 130% of the conversion price of $80.97, which equates to $105.26 per share. To qualify for that redemption, the stock must exceed that threshold for 20 trading days out of 30 consecutive trading days ending on or including the day before the redemption notice is issued. So it's -- there's a formula for it, but it's basically trading above that rate.

Next question from Apoorv Sehgal and Jennifer [indiscernible]. This is also for Russell. What triggers redemption or conversion before maturity?

There's a whole lot of complicated potential relatively unlikely scenarios that -- under which that would happen. I won't go into a huge amount of detail, but just to cover those, stock price trigger if the -- if our stock trades above the 130% as we just talked about, that the first possible time of that is in Q1 '26. If the notes themselves, and there is a trading mechanism, private trading mechanism essentially for the notes, if they traded below a certain level, for the notes that would, again, relatively unlikely scenario, but that's part of the triggers here. Certain corporate events and distributions if we call the notes for redemption, and that again is after June 5, '28 at that $105.26 trigger point. And basically going into maturity anytime from March 1, 2030, onward.

Next question from James Bales. This is also for Russell. How does the cap call hedge work above $122.22. What is the dilution impact?

I mean the really attractive feature of the cap call is that it protects shareholders from any dilution up to that $122.22 point. So that cap call essentially protects us up to that point. Beyond that point, any value above the cap would result in some incremental dilution or additional cash settlement depending on the election. Without that cap call, dilution would have started at the $80.97. So that's the benefit of us putting in the cap call is to really drive up that effective conversion price.

Next question is from James Bales and Chris Savage with the hint of disbelief. What is the interest rates and the cost of the cap call?

The notes carry 0 coupon. So no interest and no accretion, meaning that there is no ongoing direct interest burden related to the notes themselves. We -- as you've seen in the press releases, we've allocated $33.7 million of the proceeds for the cap call cost which mitigates dilution and protects that shareholder value up to that point.

Next question is from James Bales. This is also for Russell. Does this appear as debt on the balance sheet?

Yes. The notes will appear as debt really at their face value on the balance sheet. But as we've said, there's no cash interest and the 5-year maturity. So the impact on cash flows and our income statement is relatively minimal. In terms of cash flows, it's basically sort of nothing being sort of going forward. In terms of income statement, it's just the sort of effective interest cost related to the capitalized portions. So -- but -- what I would point out is at the moment, that's significantly lower than the interest that we can obtain on those funds.

Next question from Chris Savage is a housekeeping question related to, are there any existing convertible notes? Is this purely a new raise?

Sorry. Yes, this is entirely new issuance. We have had no prior convertible notes outstanding other than the very small ones related to the Jiobit acquisition some time ago, which have been extinguished.

Next question from James Bales for Russell, relates to the green shoe, what's the purpose of the additional $45 million? And has it been completely exercised?

The green shoe acts in a similar fashion is the green shoe for an IPO sort of gives the banks the opportunity to buy additional bonds as part of the stabilization effort. But that -- given the strong demand for the bonds and the initial trading, the green shoe has -- that option has been exercised and the green shoe has been filled. So that's all in the press release, which is out today. And this is just a very standard feature to support that flexibility on execution.

Next question is from Wei-Weng Chen. Who are the investors? And were there any related parties involved?

The offering was made to qualified U.S. institutional buyers under Rule 144A. There were no related parties involved. Final allocations were managed by the book runners and reflect sort of typical market participation for this type of instrument.

Next question is from Wei Sim. This is for Russell. Are you thinking about capital management going forward?

Yes. Really, our capital management framework is unchanged. We're looking at efficient reinvestment. We -- an important feature is sort of shareholder value and flexibility, and this helps us with all of those. Really, it sort of just strengthens our ability to pursue growth while preserving optionality and very much keeping in mind shareholder dilution.

Next question is from Wei Sim. How are noteholders hedging their exposure, if you have any insight there?

It is a very standard process, and that's already happened effectively. The noteholders and their counterparties hedge using cap call related derivatives. It's part of a standard process in the U.S. for the -- as part of the issuance of convertible notes. The transactions themselves are structured to minimize the potential market impact and that's factored into the raise and in particular, the way we structured it, including the cap call. So you've effectively seen the impact on our stock price in the last couple of days.

Next question is for Chris from Maria Ripps and Mark Kelley relating to the business. Has there been any progress on the Apple Pay front checkout or App Store rule changes?

Yes. So we're still in the early days. For those of you who have followed the journey for a number of years, we've been pretty consistent in our very strong belief that over time, Apple will lose its script on App Store payments. Similarly, though, it's going to be very noisy and lots of 2 steps forward, 1 step back. Clearly, the ruling was a big win for us. The recent stay, which I think just came out yesterday was another big win. Apple is doing everything to push back.

We have a whole bunch of tests that are going to be coming out soon. I would need to get very technical to explain all of them. And it's unclear what Apple is going to be forced to allow us to do, namely around using Apple Pay in the app or within an iFrame. The very quick thing is if someone has to enter credit card manually, you get a big conversion drop, which negates the impact of lower commissions. But if you can use something like Apple Pay, in particular, within the app or an iFrame if you can't do that, then everything changes in a very big way. It's unclear if Apple is going to allow or is it going to be forced to allow people to use Apple Pay.

So I would repeat and somewhat summarize by saying, this is a good validation that our belief that the pressure on Apple will only increase in the long run is good for us. We will, of course, be very open with the market when we have hard data we want to make sure people don't get ahead of themselves while everything is still in limbo, though, because I do think there's still a lot of unknown, but net-net, this is obviously a good news for us.

That concludes the pre-submitted questions. So we're going to shift now to -- we have a few minutes left, so we'll go to the queue. Wei-Weng Chen with the hand raised, and we can open up the line to you to ask a question.

So just wanted to ask what, I guess, the lessons learned from the Tile acquisition were? And I guess, how will you kind of do things differently in a new sort of potentially larger acquisition?

Yes. There are -- I'd answer that in a number of ways. Number one is don't do a deal right before a big market crash and you have to get cash flow breakeven. I say that happen just, but we are in a very different position because we're already generating cash. So it's -- I don't think there's a similar issue where we would have to move into loss-making mode. So we're not looking at anything that would really change our overall burn profile.

There's a lot we learned just in terms of general integrations. Some of the -- one thing I learned just from a founder standpoint is a company can look similar in terms of how it operates, you can have very similar sounding values, but how you operate when you kind of peel back the onion a few layers is very different. And so I'm older and wiser, and we also have a much more experienced management team. So I think market crash is notwithstanding and I think we're much more educated there, and Lauren has a huge amount of experience doing M&A, and I've been learning a ton from her -- with her, there's been a partner in crime now.

But each acquisition is so different. And when I look at different companies, we're looking at, some are more speculative and high risk. And Tile is a very long game bet. I think we're now kind of have proven that it was a good idea, but it took a while. Certain things which are more capability expansion, they show a benefit right away, even if the upside can be a little bit more contained. So I don't feel like I'm giving you the most satisfactory answer there other than that we're -- we will be very intentional and thoughtful. We are looking at deals that would be accretive.

We don't have any plans to do anything. Well, first off, we don't have any firm plans anyway, but we're being very intentional given how much we've grown as a company. We don't get -- we're not going to get back to a position of being a loss-making company, which does insulate us from the gyrations of the market. And not exactly about integration per se, but what we liked a lot about doing this convert right now is it lets us have dry powder regardless of which direction the market goes and a lot of cash to do things in ways that give us a little bit more flexibility around not having to [ issue ] as many shares and things like that.

Next Wei Sim, we're going to open up your line to ask questions.

Okay. So first one, maybe just for Russ. You were mentioning before that the structure that we're using right now and not needing to, I guess, do kind of like an equity raise to have the hedging coming through is a pretty standard practice. And I guess, what you're doing right now is standard practice within U.S. companies. I'm less familiar with the space. So can you give us a few examples of other companies who have done something similar in the past, just so that we can have a look at that and better understand how this has played out.

Yes, absolutely. I mean [ Xero ] did one a while ago, although that was not a U.S.-based transaction. The -- if you look in the [ inner one ].

Sorry, for the Xero one, I think there were also like equity raises associated to [indiscernible]. I guess, that's where I'm getting a bit more, yes, confused.

If you look at in the very recent past, just in the -- about a week ago, DoorDash did a convertible note raise, which they actually upsized to about $2.5 billion. In a similar fashion, Hims & Hers did one about a month ago, which was probably closer to a similar size, although ended up much bigger than ours in a similar fashion where very similar structure basically with favorable terms on the actual convertible note and then added on the cap call structure that effectively took the conversion price up significantly to, I think it was a little more than 100% in that case.

But the structure is very similar. What has emerged in the recent past is just very, very favorable terms. Being able to get a 0% interest rate and a very high conversion price at the same time is a unique opportunity that we wanted to take advantage of. And that enables us to do that raise, put the cash on our balance sheet and really protect shareholders against dilution all at the same time.

Okay. And then just the second question is, if we are already kind of like cash flow generating, why do we need all this dry powder?

Yes. It's, as we've said, it just gives us complete strategic flexibility. We could -- we've always said that we look at potential M&A, not that there's anything imminent, but it would give us the opportunity to move quickly in that case. But even with the amount of cash that we've now raised, if you look at our U.S. peers in the same area. This is not an unusual amount of cash to have on your balance sheet really to provide that not only the strategic flexibility, but just the financial stability as well.

Okay. And so just to understand it, like now that I guess it's -- just with this amount that we've got, what kind of size of potential acquisition or investment could we look at doing with this type of balance sheet?

Yes. Look, there's so many potential alternatives that it's a little hard to very specifically answer that question. As Chris mentioned, we will look at everything from the very small tuck-in type acquisitions similar to the Fantix asset acquisition to larger ones that could potentially involve a combination of cash and equity. But it just gives us that optionality to act on something across that range of things. So it's a great ability for us at the moment.

So if it was at the large end, how large would you be comfortable going with post this raise?

Yes. I don't think it's appropriate for me to speculate on at this point. You can really draw conclusions based on our cash and overall capitalization. I think we'd evaluate that very much on a case-by-case basis.

We're coming to the end of our time. So we're going to open up the line to Laf for one final question, and then we will close out.

Just one question around some of the structures. So is there a preference for equity stakes? Or are you considering -- or is there a preference to make a full acquisition and integrate it fully into your business? Because if you look in the last few years, you've kind of been doing both, but there's probably been a move more towards taking equity stakes. If you could just add some color, that would be great.

I can take that one. I don't think there's necessarily a pattern. Each thing is very specific and it depends on the company size and what we're trying to achieve. When you look at what we now have on the balance sheet, in general, that is more looking at being able to do M&A. But again, each thing is coming up independently. If you take Aura as the most recent one, that was more trying to establish a relationship where by investing, they could invest more aggressively in our partnership, more clearly that will then tie into some revenue. That won't be the case for everything.

And I'd say there is maybe some level of rubric for how we decide if there's something that really we need to own, it needs to be fully part of our system, then M&A would make a lot of sense. So if I go back to something like Hubble, we definitely would not buy something like Hubble because their core is the enterprise business. And so we don't want to be in the enterprise business because it's really splitting what we do. So something has to be very in line with us for to be fully in-house. There are things on the ad side. We are trying to be a full-service ads platform because that is something where we could do M&A even though it's not traditional B2C, but we also don't want to distract ourselves and have incongruent business units.

And just sorry, one sort of add on to that is in targeting acquisitions, M&A is it as important to get the teams and capabilities of those teams to help accelerate your offering? Or is it -- are you looking to fill gaps more so.

Again, there's no one size fits all. This is a people business we're in. That's the upside and downside of software and getting people who are the best at what they do bring in DNA that we don't have. That's something it's very hard to build an organic competency for something that's more orthogonal. That's why we have been looking at the ad space more. It's just we have all -- 2 sales people in the entire company now. Our DNA is premium software. So people are very important. There could be certain things or bolt-ons are different, but for the most part, the team is always going to be a very important aspect.

Great. That concludes the Q&A. Chris, I'll turn it over to you to sign off.

Very excited to continue this march forward. We will obviously keep everybody updated in terms of the Apple situation and net-net, very good news. And a lot of the timing is already mentioned, this was opportunistic in the sense that we do not have to do anything imminently with this money. I think Russell even undersold the interest rate. And in fact, we're paid to just sit on this money because we can get a yield on it and there's no dilution until we hit that cap call number. So it's -- this is really a great moment in time, that I also think will drive a good return for investors who have been more downside focused in a volatile market. So it truly does feel like there's been a win-win with this transaction and looking forward to connecting with everyone in coming weeks and months.

That concludes our call. Thank you so much.

Thanks.