Investors weren't in much of a mood to find next-generation location services company Life360 (LIF 7.45%) lately. Much of this was due to the company's latest earnings release, which disappointed the market. As of mid-morning Friday, according to data compiled by S&P Global Market Intelligence, Life360's shares were down by more than 13%.
Operational and financial metrics on the rise
Life360's fourth quarter saw revenue rise 26% year over year to $146 million. That was on the back of a 30% increase in subscription revenue to $102.5 million, and a 20% increase in its monthly active user (MAU) count to 95.8 million.
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Net income under generally accepted accounting principles (GAAP) ballooned to $129.7 million ($1.51 per share) from the year-ago profit of $8.5 million. However, this was skewed by a one-time, non-cash income tax benefit of nearly $118 million.
On average, pundits tracking the stock were modeling $144 million in revenue and $0.33 per share in profitability (though they likely didn't anticipate such a sizable tax benefit).
In its earnings release, Life360 attributed its double-digit growth in key fundamentals and operational metrics to several factors. These include new product rollouts, higher user adoption, and the positive effects of increased artificial intelligence (AI) capabilities across the company.
NASDAQ: LIF
Key Data Points
Worries about growth
Life360 also published full-year 2026 guidance. It believes revenue for the year will total $640 million to $680 million, representing growth of 31% to 39% over 2025. Non-GAAP (adjusted) earnings before interest, taxes, depreciation, and amortization (EBITDA) should come in at $128 million to $138 million, well up from the previous year's $93 million. MAUs are forecast to rise by 20%.
I can't find much to dislike in this earnings report -- it's clear that Life360 is expanding its business rather effectively, and its products are resonating with users. However, investors are kind of picky these days, particularly with tech stocks, so they might be concerned that MAU growth rates will stagnate or even reverse. I'd have no such fears, and I'd consider buying the stock.
