Based in San Francisco, Life360, Inc. (ASX:360) operates in the digital consumer subscription services market. The company recently completed its initial public offering by raising a total of A$145.4 million. Further, the company’s securities were also admitted to the official list of the ASX.
How does Life360 generate its income?
The company’s business model is dependent on building a large critical mass of Users and monetizing them Directly through subscription-based products. Till now, the company has primarily relied upon word of mouth recommendations and the flywheel effect to achieve its strong growth. The company is now planning to invest in building brand recognition via various marketing channels including Paid Social (Facebook and Instagram), Apple Search Ads and Google Search Ads.
The company measure its success in terms of average revenue per User (ARPU) and the size of itsUser base. Both of these measures have demonstrated strong growth across its operating regions, the U.S. and International markets.
Since 31 December 2018, the company has added over 2 million monthly active users (MAU) since 31 December 2018 and as at 31 March 2019, the company had 20.6 million MAU on its platform.
What are the Company’s Key Strengths?
One of the key strengths of the company is its ability to disrupt legacy incumbents through a low-cost mobile App offering. The company’s goal is to disrupt incumbent businesses in the safety, security and insurance industries which operate legacy business models with inefficiencies including expensive hardware, large human-intensive sales and support teams, limited ability to scale and products which are not used on a regular basis.
Another key strength of the company is its self-reinforcing leadership position over direct competitors which creates a flywheel effect that is driving the company’s rapid growth and further entrenches its leadership position in this space.
The company’s other key highlights include - large total addressable market, proprietary location technology, deep focus on the family, highly entrenched user base, mobile-first team with experienced executive and board.
What is the key financial information of the company?
For CY2019, the company is expecting to earn a total revenue of US$ 58.6 million. Further, the company is expecting its Pro Forma forecast net loss to be around US$ 29.7 million.
Summary of Pro Forma Historical and Forecast Financial Information (Source: Company Reports)
As per the company’s Pro Forma Statement of Financial Position as at 31 December 2018, the company had cash of US$100.6 million, Net tangible assets of US$94.1 million and Net assets of US$95.1 million.
Summary of the company’s Pro Forma Statement of Financial Position (Source: Company Reports)
The company is planning to reinvest all cash flow into the business in order to maximise its growth. Accordingly, no dividends are expected to be paid in the near-term.
On 14th May 2019, 360’s Stock closed the market trading at $5.000 down by 1.961% with a market capitalization of $733.84 million.
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