Life360 has lifted its FY2026 revenue guidance after quarterly revenue surged 40% to US$174.1 million, powered by subscriptions and the Nativo-enhanced advertising business. The company also reported record third-quarter Paying Circle additions, while hardware volumes and gross margin remained under pressure.
- Q3 revenue rose 40% to US$174.1 million
- Paying Circles increased 26% to 3.4 million
- Advertising revenue jumped 250% after the Nativo acquisition
- FY2026 revenue guidance lifted to US$665 million-US$681 million
- US$44.4 million spent on share buybacks by September 30
Revenue guidance lifted after a 40% quarter
Life360, Inc. (ASX:360; Nasdaq:LIF) has raised its FY2026 revenue outlook after delivering a sharp acceleration in the September quarter, with revenue climbing 40% year on year to US$174.1 million. The company now expects full-year revenue of US$665 million to US$681 million, up from US$650 million to US$685 million previously, although the narrower range leaves the upper end modestly lower.
The upgrade rests mainly on the subscription engine. Quarterly subscription revenue rose 29% to US$124.2 million, helped by a 26% increase in Paying Circles to 3.4 million and a 4% lift in average revenue per Paying Circle. The company added a record 188,000 Paying Circles for a third quarter, while monthly active users increased 17% to 107.7 million. The result builds on the 102 million user milestone reported in the June quarter.
Nativo turns advertising into a larger growth stream
Advertising revenue was the eye-catching line item, rising 250% to US$25.4 million. Life360 attributed most of the increase to managed advertising following its acquisition of Nativo, with higher self-service and other advertising revenue also linked to the acquired platform. Advertising revenue guidance has been narrowed to US$98 million-US$102 million from US$98 million-US$115 million.
That growth comes with a less flattering margin profile. Advertising gross margin fell to 55% from 93% a year earlier as the expanded platform brought higher traffic acquisition, hosting, personnel, data licensing and amortisation costs. Group gross margin slipped one percentage point to 77%, despite subscription gross margin improving to 87% as customers shifted towards higher-priced offerings.
Profitability improves, but reported earnings include investment gains
Adjusted EBITDA rose 41% to US$34.6 million, maintaining a 20% margin as operating expenses grew 38% to US$126.0 million. Management said operating expenses represented 72% of revenue, down from 73% a year earlier. FY2026 Adjusted EBITDA guidance has been narrowed to US$132 million-US$138 million from US$130 million-US$140 million.
GAAP net income more than doubled to US$22.5 million, but the figure includes a US$17.5 million net gain from changes in the fair value of investments, including a US$17.8 million gain on Life360’s related-party investment. Operating income was US$8.0 million for the quarter and a slight US$164,000 loss for the first nine months, making the adjusted measure an important part of the company’s presentation of underlying performance.
Buybacks continue as hardware retreats
Life360 spent US$31.2 million repurchasing 666,336 shares during the quarter, taking total buybacks for the first nine months to US$44.4 million. The US$225 million buyback program had US$180.6 million remaining at September 30. The company ended the quarter with US$465.0 million in cash, restricted cash and short-term investments, and generated US$27.2 million of operating cash flow.
Hardware remains the awkward counterpoint to the subscription story. Units shipped fell 32% to about 600,000, reflecting Life360’s exit from brick-and-mortar retail and weaker online sales, while hardware revenue declined 20% to US$9.0 million. Hardware guidance has been narrowed to US$35 million-US$40 million from US$35 million-US$45 million, and the quarterly hardware gross margin was negative 19%.
Legal and execution risks remain visible
The filing also identifies a potentially material dispute over approximately 8,600 advertising-related arbitration claims. JAMS has issued an invoice of about US$17.0 million for initial filing fees, but the invoice is being held in abeyance while Life360 challenges the forum; a hearing on the remaining claimants is scheduled for February 2027. The company says any loss relating to the underlying claims is neither probable nor reasonably estimable and has recorded no damages provision.
The immediate test is whether the stronger subscription trend and the Nativo advertising contribution can translate into the operating leverage management expects in the final quarter. The answer will depend less on headline user growth than on price acceptance, advertising costs and whether shrinking hardware volumes remain a deliberate acquisition strategy rather than a drag on the broader platform.
Bottom Line?
Life360 has raised its revenue outlook, but the next quarter must show that Nativo-led advertising growth can scale without eroding margins and that subscription pricing can hold conversion.
Questions in the middle?
- Can the Nativo advertising platform sustain rapid growth while recovering from its lower gross margin profile?
- Will recent US price increases continue to lift revenue per Paying Circle without slowing paid conversion?
- How much of the remaining buyback authorisation will Life360 deploy while it still carries US$320 million of convertible notes?