Life360, Inc. Common Stock 2026 Q2 Earnings Call

dated March 2, 2026. These statements are based on assumptions we believe reasonable as of today, August 10, 2026, 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 presentation is available as a reference on our IR website, along with our quarterly shareholder letter from our CEO and CFO. The letter goes into additional detail beyond our prepared remarks on this call. We will begin with a business update from our CEO, Lauren Antonoff, then CFO Russell Burke will review financial results and outlook, followed by Q&A. CRO James Selby will be joining the call to answer questions. Please limit questions to one per participant to start.

I will now turn the call over to Lauren.

Good morning and good afternoon. Thank you for joining the call. We hit a major milestone in Q2, crossing 100 million monthly active users. That's tens of millions of families who trust us every day to keep them connected and safe. Our Q2 results show our disciplined execution paying off. We added 4.6 million active members to reach over 102 million MAU, and we delivered our strongest Q2 paying circle growth on record with 185,000 net subscription adds. The signals we pointed to in Q1 delivered as expected, including strong demand, deepening penetration, and steady growth on higher-end devices. Importantly, we ended Q2 back on our MAU glide path. International MAU grew 20% year-over-year, with the U.S. growing 14%, driven by improved brand awareness, funnel efficiencies, and the value we bring to everyday family life.

We had tailwinds from unaided brand awareness, which rose an impressive 4 points in the U.S. during a quarter with lower marketing spend. We're also building momentum internationally. We launched new go-to-market initiatives in Brazil and Mexico and saw unaided brand awareness there increase from 9% to 14% in Brazil and from 10% to 16% in Mexico. Both countries are now around that 3% penetration mark where we've historically seen growth rates accelerate. We're reinforcing this momentum with new partnerships, including AT&T Mexico, who featured Life360 in their back-to-school campaign across television, radio, cinema, retail, and digital. In Germany, we launched our first local campaigns in Berlin and Cologne, and we're seeing a measurable lift in registration there. We've also been having some fun with global cultural moments. We tapped into the World Cup and brought Disney's Toy Story 5 into the app.

Members around the world sent 180 million quick notes tied to those touch points alone. We're proving that cultural relevance is a meaningful lever for member engagement and delight. Meanwhile, our subscription business continues humming along with 27% growth in paying circles. As we get ready to relaunch Pet GPS, we've updated our pricing for new subscribers, and we're shifting into a bundled Pet GPS offer that starts with Silver. This is a deliberate choice of subscription scale over near-term monetization as we build Pets into a long-term driver of subscription growth. Moving on to our advertising platform, we've largely completed the integration and are now shifting focus to commercializing what we've built. Advertising has become a substantial revenue stream, contributing $22 million this quarter, with revenue tied to the Life360 app growing the fastest. Most importantly, we're starting to prove the advantage that our platform and our audience deliver.

Our testing shows that campaigns using our audience data see call to action rates up to 47% higher than campaigns using third-party targeting. One example is a top grocery store chain that saw a lift of over 40% in store visits from a single campaign, with exceptional performance among the 21 to 24 year olds. These are compelling results. We're still early in the ads business, but our direction is clear, the momentum is building, and we have a long runway ahead. With so much opportunity in front of us, leveraging AI is essential. AI continues to accelerate both how we build Life360 and what we believe the platform can become. More than 100 million members use Life360 to navigate family life, creating real-world data that no competitor can replicate.

One of the earliest benefits we're seeing is from our proprietary AI-powered monetization engine, which continues to deliver exceptional performance by automating our use of first-party data to deliver the right message to the right member at the right time. We're now experimenting with the same approach applied to engagement and retention to support member growth. On the product side, we're leveraging AI as we start to build more dynamic experiences for different types of families, and we're expanding our family AI lab led by Executive Chair and Co-founder, Chris Hulls. We entered into an agreement to acquire the team and technology from SuperDuper. What stood out to us about SuperDuper is that they're using AI to understand the real complexities of everyday family life, the calendars, emails, schedules, and errands scattered across dozens of apps, and to connect those dots into a single, meaningful picture.

This work is bringing us closer to making family life easier, more coordinated, and a little more fun. As we cross the 100 million monthly active users, our disciplined execution has brought our once ambitious targets of 150 million MAU and a billion dollars in revenue within sight, alongside continued margin expansion. We're tailoring our product experiences for more members in more geographies and more life stages with new capabilities like Morning Check-In, Live Progress, and our Apple Watch app. We're building new lines of business that didn't exist a few years ago, including advertising, pets, and next, aging parents. Each takes time to nurture, and all are significant growth opportunities built on our established platform and the trust families have placed in us. And each makes Life360 more essential to everyday family life.

A strong Q2, momentum heading into back to school, and our upcoming Pets launch set us up for a strong second half across products, subscriptions, advertising, and international. I am looking forward to showing you more of that momentum in the back half of the year. With that, I will turn it over to Russell to share more detail about our performance and outlook.

Thanks, Lauren. Q2 delivered strong financial results across our core business, and our transition to an AI-native operating model is introducing some new revenue and cost dynamics worth walking through. All figures are unaudited and in USD. Total revenue grew 38% to a record $159 million. Subscription revenue grew 31% to $115.6 million, with core subscription up 34%, driven by 27% paying circle growth and 5% higher ARPPC. U.S. subscription revenue grew 28%, and international grew 45%, with particular strength in the U.K., Australia and New Zealand, and Canada. Advertising revenue was $22 million, growing sequentially and up substantially year-over-year, reflecting the build-out of our managed service offerings, both on and off app, and contribution from programmatic advertising.

Hardware revenue was $9.8 million, down 20%, reflecting our strategic exit for Tile from brick and mortar retail and some Pet GPS inventory constraints as we completed a production line move. Other revenue grew 25% to $11.6 million, and annualized monthly revenue reached a record $537.2 million, up 29% year-over-year. Gross margin was 80%, up from 78% in Q2 last year. There are three distinct dynamics across our revenue lines. Subscription gross margin increased to 87% from 85%, reflecting continued cost optimization. Advertising gross margin was 57%. This is down from last year and largely reflects the fact that we are scaling the advertising business by building out a managed service operation, which under GAAP brings costs that impact gross margin. These include traffic acquisition costs, technology and hosting, personnel costs, and data and content licensing.

Due to changes in revenue mix, we now expect advertising gross margin to normalize towards 65%-70% on a GAAP basis in Q4 as we exit 2026. Hardware gross margin was 43%, up from 17% a year ago, but that increase was largely a one-time item, primarily a $3.6 million tariff refund that we had expected later in the year. Excluding that refund, hardware gross margin would have been closer to 7%, more representative of where we have been trending as we complete our retail exit. We are pricing the Pet GPS device itself relative to competing devices to drive adoption, consistent with our strategy of using devices to complement the member experience rather than drive revenue or margin on their own, and we expect a loss at the device gross profit level initially.

Given the average pet lives of 10 plus years, we are building this customer relationship for the life of pets and beyond. The Silver Pet GPS bundle will be priced at $99 annually. We do not expect Pet GPS to be a material revenue contributor this year as the category continues to build. Operating expenses were $127 million, up 43%. As we have previously discussed, our operating expense profile has changed slightly this year, partly due to deliberate investment decisions, but also due to the fact that we have brought on a level of fixed operating costs that do not exactly match the timing of revenues due to seasonality. Importantly, they do not impact our overall growing operating leverage. R&D grew 47% to $47.4 million, flowing from advertising engineering headcount, expanded platform infrastructure, and continued product investment.

Sales and marketing grew 35% to $52.3 million, reflecting higher variable platform commissions on subscription growth and the addition of Nativo's sales organization, partly offset by growth media that we intentionally shifted into Q3. General and administrative expenses grew 57% to $27.2 million, primarily personnel and technology costs from scaling the business, along with our hardware warehouse relocation and final Nativo integration costs. in Q2, we reshaped our technology organization to accelerate our transition to an AI-native operating model, reallocating investment from certain roles toward AI-native capabilities and workflow redesign rather than backfilling them. That reallocation is already producing results by enabling us to move faster. Taking one example, our personalization engine, built on this same foundation, is generating real revenue impact, and we are accelerating investment in it based on that early performance.