Revenue downgrade as new Tile delay hits tracking tech company Life360

Australian tracking technology business Life360 has downgraded its level of expected revenue after supplier issues delayed the launch of a new product and suppressed sales.

Life 360 chief executive Chris Hulls.

Life360 has downgraded its revenue guidance for the full year after a six-week supplier delay cut into its ability to move and sell new devices.

A seasonal decline in its fourth quarter threatens to further shift that guidance, which was adjusted to $US368-$US374m ($564m-$573m) on Wednesday, down from previous guidance of $US370m-$US378m.

The dual-listed Australian tracking company saw a 24 per cent year-on-year drop in hardware revenue in the three months to September 30, due to supplier delays and longer than expected approval times on its new tracking products.

But the company sees this as a once-off and believes its latest Tiles will be able to make up for the losses over time, chief financial officer Russell Burke said.

“It was a combination of certification and supply chain issues that sort of just put us back but the way we look at it is that it was a one-time issue in Q3,” he said.

Life360 chief financial officer Russel Burke

Life360 added a record number of users over the quarter, with 6.3 million new monthly active users bringing its total to 76.9 million. Of those, 2.5 million are from Australia and New Zealand, where it added 100,000 users over the quarter. Over the same period it added 159,000 paying subscribers, nearing 2.2 million in total, which saw the company record a jump in quarterly revenue, up 18 per cent at $US92.9m.

Chief executive Chris Hull flagged the company’s shift into aged care and pets as two of its next biggest categories.

Mr Hull, who’s mother suffers from Alzheimer’s, said he believed tracking devices for the elderly were set to boom and value the tracking market at more than $US100bn.

“The elder care space is something we’ve long, long talked about, but we were also aware that the market hadn’t quite gotten there yet,” he said.

There was a multi-billion dollar opportunity in the elder care market and most of the products were “horrible”.

“There are like billions of revenue in these elder care products and they’re horrible, and I can say that both as a businessman running Life360 and someone shopping around for my own mother,” he said.

The company adjusted its earnings before interest, taxes, depreciation and amortisation on the growth, expecting $US39m to $US42m for the full year.

Despite the growth, Life360 has recorded a EBITDA loss of $US2.6m but it had upgraded its EBITDA guidance for the full year to a loss of between $US7m to $US10m including $US5.8m related to transaction costs from its initial public offering in June. It had previously guided for an EBITDA loss of $US8-$US13m.

Mr Burke told shareholders that Q4 was “typically a seasonal low” for Life360 and that the company was “seeing some impact from the fairly substantial price increases that we put through internationally”.

“We’re looking at a pretty significant revenue uplift from that but it will have a slight impact on subscription growth internationally.”

Life360 also announced plans to build out its advertising business which had partnered with Uber in the US, pinging Life360 users when they fly into an airport with an offer for a discounted Uber trip.

Mr Hull said that had been successful for both Uber and Life360 and was far more effective than banner ads. “The early results (of that trial) strengthen our confidence that advertising could eventually become a revenue stream on par with our subscription business,” he said.

Life360 would begin to profile its customers combining real and synthetic data to “make them readily accessible” to advertisers, Mr Hull said.

“What we could be doing is actually making money without even serving an ad,” he said. “We could open this up for other people because we do have industry-leading opt-in rates to IDFA tracking which is the ability to attract people using the ID for advertisers on iPhone and Google.”

Originally published as Revenue downgrade as new Tile delay hits tracking tech company Life360