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Life360 expects to be cashflow positive by Q2

Family social networking platform Life360 has access to its money at Silicon Valley Bank and expects to start growing its funds next quarter.

March 18, 2023
By Derek Rose
18 March 2023

After a tumultuous few days, ASX-listed family social networking platform Life360 has gained access to the millions of dollars it had with Silicon Valley Bank.

It’s next order of business will be starting to grow that cash balance, as soon as next quarter, rather than seeing it shrink like so many other unprofitable tech companies.

The company expected to be operating cashflow break-even by next quarter, CEO Chris Hull told AAP on Friday in a Zoom call following the release of its full-year financial results.

“That is obviously a pretty big milestone because cash balances will be going up, not down. I think there was some level of investor scepticism that we’d be able to do that and still maintain the numbers. But we knew we could, we did it it during COVID.

“I think we need another quarter or two for investors to believe it. I heard murmurs that we’re doing tricks with capitalising R&D. We’re not, we expense everything.

“So that is something we’re looking forward to truly proving is permanent,” Mr Hull said, adding it would be nice to see a re-rating of the company.

Life360 was in the news after it was forced to make alternative arrangements to make Wednesday’s mid-month payroll, as most of its funds – $US81.5 million ($A122 million) in cash and cash equivalents – were held by Silicon Valley Bank, which failed a week ago. 

It regained access to those funds on Monday following the US government’s bailout. 

“It was more of a short-term thing,” Mr Hull said. “I wouldn’t say we laughed about it but it was more like, well, life, one of those things.”

Most of Life360’s funds – some $US75.4m worth – were in Treasury bills that were in SVB’s custody, but not considered at risk.

“We never had any real concern that we were not going to get those Treasuries back,” Mr Hull said.

The maximum loss for Life360 was the $US6 million it held in cash at Silicon Valley Bank, he said.

“We wouldn’t have wanted to lose that … but we did not see it as an existential risk to the business.”

On Friday, Life360 announced it had incurred a full-year net loss of $91.6 million, on revenue of $228.3 million, up 103 per cent from the year before.

It said it had 48.6 million active users at the end of 2022, up 37 per cent year-on-year, and that a number that has since exceeded 50 million, Mr Hull said. 

International users grew faster than in the US, “which bodes well for our international aspirations”, Mr Hull said.

Monthly active users in Australia grew 40.5 per cent to 1.4 million, Life360 said. 

Paying users grew to 1.5 million, generating an average of $US103.89 in annual revenue.

The Life360 app is designed to help families with daily co-ordination, offering location sharing, driving summaries, individual driver reports and help alerts.

Mr Hull said that Life360’s app is the 19th most actively used in the United States, and it was on almost 15 per cent of all iPhones. 

It has been to dispatch 34,461 ambulances and  2.1 million help alerts, and 223 billion miles (359 billion kilometres) have driven with Life360 crash detection, the company says.

“Our scale is very significant. We feel very confident that we’re in the early days,” Mr Hull said.

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