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 four 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 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 Super Duper.

What stood out to us about Super Duper 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.

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'm looking forward to showing you more of that momentum in the back half of the year. With that, I'll 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 U.S. dollars.

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 UK, Australia, 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 toward 65% to 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'd expected later in the year. Excluding that refund, hardware gross margin would have been closer to 7%, more representative of where we've been trending as we complete our retail exit.

We're 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. We expect a loss at the device gross profit level initially.

Given average pet lives of 10-plus years, we're building this customer relationship for the life of pets and beyond. The Silver Pet GPS bundle will be priced at $99 annually.

We don't 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've 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've brought on a level of fixed operating costs that don't 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're accelerating investment in it based on that early performance.

We expect this transition to build faster execution and meaningful operating leverage over time, with that benefit compounding from 2027 onward. GAAP net income was $5.1 million, including a $4 million tax benefit, with basic and diluted EPS at 6 cents.

Adjusted EBITDA was $31.1 million, up 53% at a 20% margin versus 18% a year ago. Compared to the 16% outlook we gave for the quarter, the timing of the tariff refund drove our actual result about three percentage points higher, and operating leverage added one percentage point.

Operating cash flow was $23.8 million, up 79%. We ended the quarter with $467.7 million in cash, cash equivalents, restricted cash, and short-term investments.

In May, our board authorized a multi-year repurchase program of up to $225 million, and we repurchased $13.2 million of stock in the quarter, leaving $212 million available. We'll continue to be strategic about the pace of repurchases, balancing capital return and offsetting dilution with continued investment in long-term growth.

On guidance, we're reiterating our full-year revenue outlook of $650 to $685 million. Within that, we're raising subscription revenue guidance to $475 to $480 million, up from $470 to $475 million, and lowering hardware revenue guidance to $35 to $45 million, down from $40 to $50 million, reflecting device pricing and volume shifts.

Advertising and other revenue guidance are unchanged at $98 to $150 million and $42 to $45 million, respectively. Our full-year adjusted EBITDA outlook of $130 to $140 million also remains unchanged, reflecting operating leverage flow-through offset by advertising mix shifts.

A couple of modeling points for the balance of the year. Even with some growth media moving from Q2 to Q3, we expect Q3 adjusted EBITDA margin of approximately 18%, showing continued sequential improvement from Q2 while excluding the tariff benefit.

We expect Q4 operating expenses as a percentage of revenue to be below Q4 2025, and we expect Q4 2026 adjusted EBITDA margin to exceed the 22% margin we delivered in Q4 2025. The financial set-up into the back half is strong: revenue acceleration, margin expansion, and Paying Circle and MAU growth are all pointed in the same direction.

We look forward to demonstrating that in the quarters ahead.

We will now open up the call to question-and-answers. As a reminder, please limit yourself to one question to start and re-queue.

Also a reminder, joining us today is James Selby to discuss questions related to advertising. With that, we'd like to open up the call to Lafitani Sotiriou from MST.

Can you please unmute your line?

Great. I am now.

Just had the option then. Congratulations on a great result, and good to see MAU is back on track with a clear record for second quarter Paying Circle additions.

Can I first clarify something Russell said, and then I've got a question for Lauren and James. Russell, did you say when the 25% increase to Silver package and 13% increase to Gold will be implemented from?

Has that already gone through, that price hike, or is that still to come through? My question for Lauren and James: so we're starting to see some big brands coming through that are being associated with Life360, like Disney, easyJet, you've got AT&T in Mexico, and you've got Apple Watch integration, some of that isn't strictly on the advertising side, but can you talk us through, are you looking at this more from a one-company approach?

Are you sort of starting softly like you did with Uber and then expanding? How should we consider the next sort of couple quarters in what we should expect to see on the advertising front with some big brands?

Thank you.

Laf, let me quickly cover the pricing question first. We're in the process of implementing that, you'll actually see that fairly soon.

Just to emphasize, it is on for new subscribers only.

Got it. Thanks.

Then

going into the brands, I think it's super exciting, the brands that are coming to us and want to work with us and the way that brands are responding to us when we approach them. We do start from a full company, what are the ways that we want to work together?

For Disney, for example, we put together a vision for how would we like to work with Disney? Often these partnerships, like you saw with Uber, will start with let's do something first and then build confidence and build that relationship as it goes.

Often, we will consider whether advertising is part of that, whether it's early or late. I don't know, James, if you want to add anything to that.

I think the only thing I would add is that the brand partnerships really give this fantastic halo effect, making the Life360 brand better known, and that helps us push out into, yeah, bigger partners and new partners.

Can I just clarify, you've talked to the platform being in place, Nativo's now all set. How should we look at the ramp-up from here in advertising?

Or maybe you can even just talk to the seasonality, how much is typically in the fourth quarter in terms of the overall revenue for the advertising part of the business? Thank you.

I'm going to let James answer this, but I couldn't help but chime in, because the thing that's really exciting for me is not only are we getting some of these great brand relationships, but we're starting to be able to demonstrate the value that we can deliver based on our unique real-world data. James will answer some of those details, though.

As we noted, the first half has really been about the tech integration, and now it's really about scaling that integration and taking that to market. We had a really fantastic Cannes festival where we had great setup there.

We've been doing many regional marketing events that have been going pretty well, and a lot of the campaigns have started to show real-world proof points, much like what Lauren spoke about earlier with one of those grocery chains. We're getting great proof points and that motion in the market is really taking steam.

Just on the financial aspects of that, Laf, our guidance is really unchanged from what we've said before. We do look to sort of Q4 as being this sort of seasonally high period in the advertising business, and we've said before that we expect Q4 revenue to be approximately sort of double that of Q1.

I should also just a further clarification on the price increases that they are for U.S. subs only at this point.

Great. Thanks, Laf.

I'd like to open it up now to Mark Mahaney from Evercore.

All right. Two questions, please.

First, just go through, Russell, or Lauren, why the increase in subscription revenue expected results or guidance for the full year? Just go through those factors.

That sounded positive. Then, want to make sure I understand this recovery to growth in MAUs.

Is there something in the linearity of the quarter that proves that to you? That 16% is kind of a deceleration from last quarter.

What convinces you that your MAU growth is back on track and potentially back to that 20% goal that had been set at the beginning of the year? Thank you.

We might have to bounce around a little because there is a lot in there. I'll start with the motivation on price increase and then let Russell talk about the implications of that, and then we'll come back to the MAU question.

From the price perspective, we've made our priority really growing the number of subs rather than the price per sub. As we were learning about and testing how to get the most scale out of the Pet GPS, what we learned is that bundling it in and bundling it in at the lower tier was the way we were going to get the biggest reach.

That caused us to look at pricing. That's a lot of value for that tier, and we decided to make a modest increase, it's a $2 increase on the monthly, it's a equivalent increase on the annual, and then we made adjustments to match that in Gold, basically.

Russell, do you want to talk about what that means?

Yeah. No, from a pure technical point of view, Mark, it's sort of similar to what we've seen before with price increases.

It's a relatively small impact over a period of time for increases to new subs, especially where we're testing that out and perhaps have a holdback group. The larger potential down the road somewhere is across the existing user base.

To your question on MAU, I think it's really a factor of that growth that you referred to is over the whole quarter period, whereas as we've talked about, that trajectory was really building up over the quarter. The exit rate is a bit higher than the average for the quarter.

I'll just add to that. Not only did we end the quarter with just really good pace, but we've got a lot of stuff in store in the back half of the year.

Q3 is when we do back-to-school, we have a lot of exciting things in pets, we have the momentum we built up in Q2 that really drove the good result there, coupled with a number of initiatives in the back half of the year.

Thank you, Russell. Thank you, Lauren.

Thanks, Mark. Next we'd like to open it up to James Bales with Morgan Stanley, please.

Hi, guys. I'd like to firstly cover off on MAU.

Can you maybe help us understand about what you're seeing on back-to-school performance and what gives you the confidence in a reacceleration into quarters 3 and 4?

It's early on back-to-school, but so far we're seeing really great results not only from the beginning of back-to-school, but we're actually still getting benefit from the advertising that we did in Q1. One of the factors that is helping to drive some of the good numbers we're seeing is just an increase in brand awareness both in the U.S.

and in those newer international markets, and that makes customers more receptive to those things. I don't know, Russell, if there's more detail that you want to add.

No. I actually don't think there's a lot more to say on that, let's leave it at that.

Cool.

Thanks, James. Next we'd like to open it up to Andrew Boone from Citizens.

Thanks so much for taking the question. I wanted to go to Pet and just understand your progress with Pet in the quarter.

I'll leave it at that. Thank you.

This is something I'm super excited about. We're really gearing up for a lot of exciting things later this month.

Even though we moved our manufacturing, we had inventory come down for a while and we've got that back going again, we've made some improvements there as well. One of the biggest changes, I think, is a new go-to-market.

Before, we sold the devices as standalone, now we're going to be selling it bundled. We think that's both a better customer experience and it's good for the business, it's a win-win there.

Then one of the most exciting things is that when we released the Pet GPS, we also introduced the Pet Finder Network. This was a way to bring the value of pets to every member and also help us understand who had pets.

We have now over 8 million pets registered. The adoption there has really exceeded our expectations, and it's made us realize that there's a real opportunity to serve pet parents throughout our base, whether or not they get the tracker.

We're going to be doing more things that are good for pet parents on the free tier, and then those things get even better when you have the paid tier.

Thank you.

Thanks, Andrew. Next we'd like to open it up to Julian Mulcahy.

Just a couple of questions for me. Firstly, Russell, with the tariff benefit you've got, you've said that you got it earlier than you expected.

Was that the magnitude you were expecting in the full year and is that why guidance hasn't changed on EBITDA? Secondly, maybe for Lauren, the conversion rate of free to paying has been edging up for nearly 2 years now.

Is there anything you're doing differently now that you weren't previously and how far do you see that conversion rate lifting from the current levels? Thank you.

Thanks, Julian, and welcome back.

I'm

going to cover the first part of your question and a little more detail about guidance. You asked specifically about the tariff refund, and you're absolutely correct.

We had expected that in the second half, and that was sort of built into our guidance as such. There's a timing difference there that came into Q2, and that's why we gave the sort of specific details of the impact on adjusted EBITDA in Q2 so you could sort of lay that out.

You're talking about guidance generally, in addition to that, in the second half where we are seeing a little bit of a bump in subscription revenue, which is why we increased guidance there, but there's also some other shifts. For marketing, we laid off marketing a little in Q2 and made an intentional decision to push that into Q3.

That's our regular sort of back-to-school period. The small incremental margin on higher subscription revenue, we're essentially investing into marketing in Q2 to support growth, and particularly in international territories as we start to push harder there.

Then while advertising is building as we expected, we do recognize that there's really elevated seasonality as we've talked about for advertising, and that does create a little bit of higher risk, and that's why we're leaving revenue and adjusted EBITDA guidance unchanged, even though we raised in Q1.

I'll take the question on the conversion rate. I really should let James do it because his team has done the work here, but I'll take it anyway.

The thing that drives conversion is customers understanding the value that you have in your product. It's partially what we build, but it's just as much customers figuring out that that stuff is in there.

We have some great benefits like roadside assistance and things like that that even many of our paying members don't know about. This is one of the places where we've leveraged AI.

What we've done is create an engine that takes the member profile, that looks at their behaviors, looks at their families, and it creates a model and runs all of these tests to get the right message about our capabilities in front of the right member at the right time. That's one of the big drivers that's improving conversion.

Of course, we continue to improve the features. We have things like Pet GPS, but I would say that the bigger jump right now is our ability to get that information in front of customers at the right time.

How much further does it go, do you think?

It's hard to say. There's definitely more gas in the tank.

Right now we're asking the team to broaden the technology platform so that we can use it not just for revenue, but those same sort of discoverability challenges are important for engagement. How do we get free members to use more of our capabilities so that they are more likely to create a new circle and bring in more friends, or more likely to stick around with us?

I think it's got a lot of runway ahead of us, but I couldn't give you an exact target.

Thanks, Lauren. Thanks, Russell.

Thanks, Julian. Next we'd like to open it up to Rob Sanderson from Loop.

Thank you. Two questions for me, please.

Just question on the pricing update, just the rationale behind sort of new users only. Seems like you're delivering a lot of value to the existing base as well.

Why not raise the price across the board? Is it just sort of wanted to go slow and test the market at the reaction at the higher prices?

Anything you can maybe share on the decision to just limit that to new users? Then question, Russell, advertising gross margin, you went through a lot of detail on how the mix implications and everything we should be considering as we're modeling.

It seems like you're kind of landing right where I was modeling to start with. I just am curious did something change with that or you're just trying to provide incremental color to sort of get consensus into a sort of more reflective of what you expect with mixed dynamics?

I'll take the new user questions, then I'll let Russell answer the second half. The key thing for the reason we decided to adjust price in the first place was about scaling the pet business, and that is about literally getting new subscribers.

The problem we were trying to solve is new subscriber problem rather than a dollar maximization problem. We want to be really careful when we consider raising prices on the base, because we want many, many more subscribers as opposed to sort of the optimal revenue change.

We believe that we're going to learn a lot from the new members, and then we'll decide how to take those learnings and consider what we want to do with the base. The initial decision is really motivated around getting more new subscribers, more new, sticky subscribers.

Russell. Rob, in

as far as the margin detail go, yes, that's exactly the intention was just to provide some more detail to help with modeling. We're really excited about the potential with the acquisition that gives us that full-stack advertising range.

Coming with that is the highly valuable sort of managed services piece, which we think is a real opportunity, but does have slightly lower margins than some of the other parts of the business. We just wanted to lay that out.

The other aspect, obviously, as we've talked about, is that as we scale the business, there are some fixed costs inherent there which we'll be able to gain leverage on and therefore grow margins as the business scales.

If I could, a follow-up to that, Russell, just so it's clear.

Your

exit rate on Q4, that's pretty obviously a really heavy seasonal quarter, we should expect some seasonality again on the margins as we build through 2027 just as we're building our models? Yeah.

Yes, I would build seasonality into it. Over time, we will be able to increase generally as a result of leverage, but there's definitely going to be seasonality impacts.

Okay. Thank you both.

Thanks, Rob. Next we'd like to open it up to Andrew Gillies from Macquarie.

Thanks, guys. Can you hear me?

Yep.

Perfect. Just glad that question was asked around the 4Q EBITDA margin.

Just a quick clarification on that: does that apply to the whole business? There are a couple of other things going on at the group level.

Are there any sort of underlying things on the margin side from the 4Q that we should be thinking about sort of dragging into '27? Then I've got a follow-up as well.

What I would say is the subscription revenue margins are very stable. In fact, we've managed to push them up a couple of points in the last couple of quarters, and they are very stable and not really subject to seasonality.

The pieces that are subject to seasonality is obviously the advertising business that we've talked about, and also the hardware business, and that will be particularly affected this period by what we've talked about with the Pet GPS device, which will impact margins, but gives us a considerable benefit in the longer run on subscription revenue.

Perfect. Thank you very much.

Then just a quick follow-up, maybe for Lauren. We've spoken quite a lot about pets and some other things, but just curious as to what you're seeing on the Apple Watch launch, and really the rationale for how that improves potentially subscription dynamics, particularly in the U.S., but elsewhere as well.

Great. Apple Watch has not yet launched.

It is in beta, you guys noticed it before we were ready to sort of bring it out to the world. We want to make sure that it's a really great experience, and it's intended to be part of our free tier.

It is not intended to be a subscription driver. The idea is that we want the families that join us, both free and paid, to be able to bring their whole families onto the map.

We know that families that are more engaged, that have more people, have a higher tendency to stay, they get more value, and they have a higher tendency to get subscribers. We're not planning to monetize it directly, but we get that indirect benefit of appealing to more families at earlier life stages, providing more value, and hopefully when the right time to serve them the subscription value.

Thank you very much.

Thanks, Andrew. Next we'd like to open it up to Nitin Bansal from Bank of America.

Thank you for taking my question. In 2Q, there was a step-up in both R&D expenses and SBC.

Can you help us understand what drove the increase? Is it majorly growing investments in AI?

How should we think about the run rate of these expenses going forward, and the potential implications for AI investments on your 2027 margin? Thank you.

Yeah.

Yes, Nitin. Thanks for the question.

In terms of R&D, the step-up there was sort of from two pieces. One is the headcount increase, which is a combination of normal headcount and the additional heads that came with the Nativo acquisition, and some increases in sort of tech costs on the cloud operations side.

To your specific question on AI, yes, we have seen those costs increase, particularly as we adopt that sort of very aggressively and encourage our employees to make use of it. We have been able to really manage those costs in relation to overall headcount for R&D.

We're managing that on essentially a net basis, which is we've been very effective at containing the overall cost base that way.

On the SBC, any guidance on that?

I'm sorry, I didn't quite catch that, Nitin.

On the stock-based compensation, what drove the increase?

On stock-based compensation, there's a couple of pieces, and I'll talk more broadly than R&D. I'll sort of talk to that generally.

We did see a bit of a step-up in Q2, and there's two main drivers for that. One is simply the headcount increase overall that we typically see, and again, that's partly driven by the Nativo acquisition.

The other aspect, which is not quite as obvious, is that there were some performance equity grants that were approved at our AGM in May that once approved essentially get backdated to the beginning of the year. Those performance grants, the way U.S.

GAAP accounting works, is that they're actually expensed a little faster than normal grants. They still vest over the agreed period, but they do get expensed faster.

That means that Q2 for SBC will be the highest quarter for us for SBC costs for this year, and that will start to normalize in Q3 and Q4.

Thank you.

Thanks, Nitin. I'd like to open it up to Siraj Ahmed from Citi.

Thanks. Maybe just first one for Lauren.

Lauren, in terms of MAU guidance, right, pretty strong 2Q, a good improvement. Just given you've left the guidance range unchanged, just keen to understand how you're thinking about 3Q and 4Q, because we had this discussion before where you'd like to have record quarters in the third quarter and fourth quarter, right?

Just how are you thinking about it, and do you actually think 20% is achievable?

I don't want to jinx things, but we left a wide range on purpose because we got a slow start to the year. We feel really good about our pace coming out of that.

We feel like we're on track to get in that range, and what can I say? It's good momentum.

Yeah.

Got it. Any reason why you have now formally given passive users in the appendix?

I think it's 19 million. Any reason for that?

Do you reckon that comes into MAU? There's initiatives to put that in?

We sometimes look at passive users and try to activate them, but I think it's more to give a more complete picture of what our user base really looks like. We are a little bit unusual in how we look at users, and we have a very, very narrow definition of who counts as an active user.

You have to open the app, even though people are literally giving us their location all day every day, they're getting notifications, but they don't count. I think we wanted to be transparent about that, because there's a lot of these things that affect both our overall business growth and in particular revenue growth that just didn't have optics previously.

Got it. Quick one for Russell.

Russell, just thinking about your guidance, 3Q at 18% EBITDA margin and then leaving full year unchanged, to get to your midpoint of EBITDA guidance, you sort of need to get 30% EBITDA margin in 4Q, right? Is that fair, or do you reckon you're trending towards the lower end just given advertising and hardware gross margin?

Also, wouldn't 4Q be having the highest sort of negative drag from pet tracker gross margin given that's the holiday period? Just keen to understand how to think about that in the 4Q into next year.

Thanks.

Yeah. Yes, there's a few parts to that, but what I would say is that we've specifically said that Q4 adjusted EBITDA margin will be considerably higher than what we delivered in Q4 last year.

I'm not saying that we would get to that 30% number that you were discussing, and I don't think we need to get quite to that to deliver the guidance that we've talked about. In terms of the impact of the Pet GPS device, I think hardware revenues as a whole have become a sort of smaller piece of the pie, even as subscription is growing very, very strongly.

Essentially the impact of that will be felt, but based on what we see at the moment, that will be more than offset by the subscription side of the business. We're keeping our margin guidance intact.

Thank you.

Thanks, Siraj. I'd like to open the call up to Stephen Ju from UBS.

All

right. Great.

While we have you on this call, James, I just wanted to ask you, I think you touched on onboarding spend from brand advertisers, but given the location data, it seems like there's an underlying opportunity to drive more performance ad budgets on the platform as well. Wondering where that sits from a product development point of view in terms of the list of your priorities, and right now what ad verticals are working particularly well?

I guess, Lauren, looking very much big picture, you're seeing other subscription-driven companies roll out advertising as a supplementary, I guess, stream of revenue, but the other thing that's happening in the background is that might help the entry point from a subscription fee standpoint. This might be something that you might want to contemplate maybe a couple of years down the line, but I'm just wondering if having an ad-sponsored subscription model for Life360 is something that we should be thinking about longer term.

Thanks.

Maybe I'll take that one first and then let James go from there. When we contemplated bringing ads into the app, we were very clear that our first priority was to ensure that we continue to deliver member delight and that our app is a place where people really trust us with their family and with their data.

We decided not to follow some of our peers who use ads sort of to annoy people into becoming subscribers. That is not our intent.

Ours is really to deliver value to members. Ultimately, our vision is to be able to have ads that are so good, kind of like Uber, where people don't even think of them as ads, where they're just value add.

We'll see how close we can get to that. We're on a good start with some of the partners that we're with, but that is not our plan.

James?

Maybe I'll start on verticals, because then it will lead nicely to our focus on performance. On verticals, where we're finding the most success is really verticals that are in real world, in real life, so that might be automotive, QSR, travel, and retail.

Where we are able to provide something really unique in the market is with our Uplift product, this measurement product that we have, which helps us determine if I drove past a billboard, did I influence someone's behavior into going into that gas station or that specific coffee shop or whatever it is. We're finding a lot of success with that.

It's a really unique product in that it uses deterministic data, and that's our focus on the performance side, is working out where can we offer a unique performance which is driving real-world behavior.

Thank you.

Thanks, Stephen. Next we'd like to open up to Eric Choi from Barrenjoey.

Thanks, RJ. I'm sorry, I just had one question on the second half outlook, but had two parts to it, just on the implied MAUs and implied ARPPC growth that you've got in your second half outlook.

Sorry to keep harping on the MAUs, but you've previously mentioned April was still experiencing some of the issues you saw in the first quarter, if we kind of assume April doing a bit under a million, it kind of implies May and June must have been doing close to 2 million MAUs a month, maybe a touch under. The other point is you've also got July data now.

I was just wondering if you could confirm if we'd say took May to July, that kind of adjusted quarter, is that tracking on pace with, say, the high 5 to 6 million MAU pace you need to hit guidance? Then just on ARPPCs, to get to your subscription revenue guidance, I think you need subscription revenues to grow, say, 7.5% quarter-on-quarter in the last two quarters, and subs are growing about 6% quarter-on-quarter pretty consistently.

I think that means your implied ARPPC growth goes back to, say, 1% to 2% a quarter for the last two quarters. Then, sorry, it's a mouthful, but I just wanted to check that 1% to 2% is basically entirely driven by those U.S.

front-book price changes. Thanks, guys.

I'll start us out here and then turn it over to Russell. When we set out and planned the year, we had a glide slope that we believed that we were going to deliver MAU on, and what happened early in the year is that got delayed due to the problems that we talked about in Q1.

What we saw, as we got through the quarters, we got back on that glide slope. I wouldn't say this is sort of like a major outperformance.

It's performing now according to plan, which sets us up well for the back half of the year. I'll let Russell take it from here.

Eric, I'll start with a question you didn't ask, but which was why did the U.S. ARPPC decline slightly in the quarter, and that's purely sort of mathematical.

It's the fact that there's 91 days in the quarter versus 90. If it was normalized, it would have actually increased slightly.

To your question in terms of guidance, you're basically right. We would expect that tick-up in ARPPC in both the U.S.

and international to come back to that sort of small sort of lower single-digit level, and that takes into account the impact of the price increase for new users in the U.S.

Got it. Thanks, Russell.

Thanks, Lauren.

Thanks, Eric. Next we'd like to open the call up to Chris Savage from Bell Potter.

Thanks, RJ. Thanks for taking my question.

It's a good follow-up to Eric's, because I guess I'm trying to find the negative why the market in the U.S. sold it off so aggressively, and the only numbers that missed mine and the market's were ARPPC and AMR.

Russell, ARPPC's been going up consistently 1% to 2% per quarter, was it just the 91 days that caused it to fall slightly, or was it also some currency or volatility or seasonality or change in the mix, or what was it?

There's a few pieces to that, Chris. One, for international, we are sort of cycling through some of the benefit of the triple-tier territory, we would expect that to grow a little slower going forward.

In the U.S., we've also been cycling through some of the benefit that we had from dated sort of legacy holders. That's pretty small impacts in both respect, and amplified by the 91 days versus the 90 days, but we would expect that to normalize going forward.

You also asked about ARR, and I guess the thing to point out there is that it doesn't include advertising. It's becoming perhaps a less sort of critical measure of our business, but we still got 29% growth year-on-year on that measure, it does reflect the strength of the core subscription business.

Right. Thank you.

Thanks, Chris. I'd like to open up the call to Annabel Khun from E&P.

Hey, guys. Can you hear me?

We can.

Great. Thanks for taking the question.

Maybe sort of a two-parter. Would love just to talk a little bit more about the shape of the marketing investment, in terms of the margin guidance coming to Q3, how much of that is just sort of draw forward from where you guys sort of pulled back a little bit in Q2, and how we should think about in Q4 in terms of sort of does that marketing investment peak in Q3 versus it's more of just like a larger investment in marketing that we sort of need to drag forward into Q4?

Then in terms of marketing as well, you guys have been doing a lot of work promoting Life360 ads in conferences and going out there to market. Maybe could you just still give a little bit more detail how that marketing is going, and where you're seeing that flow-through in terms of interest in products across Uplift versus Place Ads versus your on-site/off-site?

Thanks.

I'll take the first part of that, and then Lauren and James can cover the second. What I would say, Annabel, is that there will be a step-up in Q3.

Q3 is typically our larger marketing period as we really support the sort of back-to-school in the Northern Hemisphere. What is also happening this year is that there is a little bit of a timing swap from Q2 to Q3 for the U.S.

We did lay off a little in Q2 and have pushed that into Q3. Also in Q3, we wanted to support our international side as we really expand the territories that we're focusing on and wanted to really invest in the growth in those territories.

That will mean that Q3 will be sort of a little more elevated in terms of marketing spend. That will come back to a more sort of typical spend in Q4.

I can touch on marketing around ads. A lot of the focus there is getting the Life360 Ads brand name known.

A lot of people know Nativo, a lot of people know Life360 as a consumer app, we're really focused on just awareness of us as an ad solution. A lot of that focus is on our differentiated products, our differentiated capabilities.

We're getting great reception when people understand the types of ways we can target users, the different customer signals that we are able to capture, and our unique formats and experiences that we can deliver. Ultimately all of that generates pipeline for back-to-school, for the holiday period, and so on.

We're seeing really good reception and momentum there in pipeline creation.

Thanks, Annabel. We have time for another question from Siraj Ahmed from Citi.

Thanks. Just a question for James.

James, in terms of the ad tech stack, one of the things that we had heard is the acquisition of Nativo, even with that, Nativo did not have an ID spine. Just keen to understand how do you now have the capability of an ID spine to take it from the first-party data that you have right now and actually offering it to publishers?

Just keen to understand if that's been built, because that was flagged as a gap in some of our work that we did.

The device graph, it was a key component of this, being able to capture or address I think we're at close to 100% of the U.S. addressable ad market now across the platform, so that's using Life360 proprietary data to be able to target users on the Nativo platform.

That work is complete and actually in market right now.

Second thing, there seems to be some restrictions in the U.S. coming in terms of how much location data you can use, for instance, it has to be 100 ft away or something, I don't know the exact restrictions from a particular point.

I'm just wondering if that gives you an advantage being a closed full-tech stack here end-to-end, or can you not use the data for advertising in some of these states that are proposing this legislation? Thanks.

Absolutely. You're absolutely right, this is an advantage for us, wherein the legislation is really focused on those who buy other people's data for targeting.

Ours is all first-party, consented, consumers can opt out at any moment they would like, and so we're insulated from any of those risks, and it gives us an advantage as others are unable to use other people's solutions, and they're coming to our door instead.

Great. Thanks.

We have time for a final question from Lafitani Sotiriou, and after this we'll conclude the call.

Thank you for the final question. I just wanted to follow up on the Apple Watch beta and Apple's in the press yesterday, there's reports of it talking about Apple looking to completely relaunch some of its watches and its approach to its watch offering.

What are some of the things that your collaboration or working with Apple may entail? Are you pursuing this because of, say, kids watch or is it part of a broader senior offering?

Is it possible that we can see that Disney is working with Apple as well, has collaborations in place as well. Is it a far fetch to see something like an Apple Disney watch on Life360?

Our intent with Apple Watch is really about that mission that we have to serve more members at more life stages. Apple Watch, both for kids and for people who are aging, it provides more options.

We see the world evolving to be less phone-centric and to be able to serve people in different ways. I would say this is a first step for us for being able to be present on different kinds of services.

I would expect to see us in the future working with more device manufacturers in more ways.

To the Disney, Apple possibility more specifically?

I certainly don't have anything to share.

Okay. Thank you.

That concludes the call. I'll turn it over to Lauren to sign off.

Thank you all for joining us. This was an exciting quarter, lots of great momentum, and even more exciting stuff coming for Q3.

I look forward to talking with you all again then, and probably before then.