Life360, Inc. (360) Earnings Call Transcript & Summary

Good afternoon to our U.S. investors, and good morning to our Australian investors. Welcome to the Annual General Meeting of Life360, Inc. My name is John Philip Coghlan, and I am the Chairman of Life360. On behalf of the Board, it's my pleasure to address shareholders at Life360's 2021 AGM. Today, we are very pleased to welcome those of you participating online through our virtual meeting platform provided by Lumi in partnership with our share registrar Computershare. This allows shareholders, proxies and guests to attend the meeting virtually. All attendees can watch a live webcast of the meeting. In addition, shareholders and proxies have the ability to ask questions and submit votes. Due to the ongoing COVID-19 pandemic and the continued constraints that this has created, we thought it prudent to take steps to discourage a physical public gathering and encourage attendance online. We hope that holding a virtual meeting will allow participation and engagement amongst our shareholders. Questions can be submitted at any time. To ask a question, please press on the Q&A icon as indicated on the slide. This will open a new screen. At the bottom of that screen, there is a section for you to type your question. Once you have finished typing, please press the arrow symbol to send. Please note that while you can submit questions from now on, I will not address them until the relevant time in the meeting. Please also note that your questions may be moderated, or if we receive multiple questions on one topic, amalgamated together. Finally, due to time constraints, we may run out of time to answer all your questions. If this happens, we will answer them in due course via e-mail. We have endeavored to answer the questions that were supplied in advance of the meeting in our prepared remarks. All questions will go through to Jeremy Liegl, our General Counsel and Corporate Secretary. Jeremy will read out the question. I will either answer the question or pass it to the most appropriate person to answer. We reserve the right to rule out questions not relating to the AGM or which are out of order. Voting today will be conducted by way of a poll on all items of business. In order to provide you with enough time to vote, I will shortly open voting for all resolutions. At that time, if you are eligible to vote at this meeting, a new polling icon will appear. Selecting this icon will bring up a list of resolutions and present you with voting options. To cast your vote, simply select one of the options. There's no need to press or submit or enter button as the vote is automatically recorded. You do, however, have the ability to change your vote up until the time I declare voting closed. I now declare voting open on all items of business. The polling icon will soon appear. Please submit your votes at any time. I will provide advanced warning before I move to close the voting. It is now after 4:30 p.m. in San Francisco, California on April 29, and correspondingly, after 9:30 a.m. in Sydney, Australia on April 30. I have been advised that a quorum is present for the matters to be considered at this meeting. I therefore declare this AGM open and welcome each of you to the virtual platform. Before I proceed with the business of the meeting, I would like to introduce my fellow directors. In the U.S. are: Chris Hulls, our CEO and Co-Founder and an Executive Director; Alex Haro, a Co-Founder and Non-Executive Director; Brit Morin, Independent Non-Executive Director; Mark Goines, Independent Non-Executive Director and Chairman of the Remuneration and Nomination Committee; and Randi Zuckerberg, Independent Non-Executive Director. In Australia are: James Synge, Independent Non-Executive Director; and David Wiadrowski, Independent Non-Executive Director and Chairman of the Audit and Risk Committee. Also attending in the U.S. today are Russell Burke, our Chief Financial Officer; Jeremy Liegl, our General Counsel and Corporate Secretary; and our auditor, Dan Harris from BDO. The agenda for the meeting today will be as follows. Firstly, I will give a short address on Life360's performance for the year 2020 and an overview of the company's strategy. This will be followed by a presentation from our CEO, Chris Hulls. I will then outline the meeting procedures and continue to the formal items of business. 2020 was a uniquely challenging year for Life360 and the world. Despite the worsening impact of COVID-19 over the course of the year, the business exhibited remarkable resilience. The next important step of our strategy, the launch of our family safety membership model, was implemented without missing a beat. Membership significantly expands the value that Life360 provides to families at every life stage, and we are optimistic that these additional features will drive long-term growth in revenue. Our family service is keep loved one safe and secure. The value this provides to the community is demonstrated on this slide. Our premium services quite literally save lives. In 2020, we dispatched more than 14,000 ambulances to our subscribers. The testimonial is one of many we receive on a daily basis and illustrates how our word-of-mouth remains so strong. Despite the challenges of 2020, Life360 delivered statutory revenue of $80.7 million, up 37% year-on-year. Underlying revenue growth was 39% at the upper end of guidance we provided to the market. Annualized December 2020 monthly revenue reached $89.7 million. Underlying EBITDA loss of $7.0 million improved significantly with a 44% year-on-year reduction from $22.9 million in 2019. The flexibility of our discretionary expense model was particularly important in allowing us to navigate the significant change in the operating environment brought on by the pandemic. The increase in revenue and decrease in operating losses were achieved despite the impact on top-of-funnel acquisition brought about by COVID. Life360 finished 2020 with a strong balance sheet and a cash balance of $56.6 million. This provides the company with a strong foundation to fund future growth. These financial metrics results were supported by the delivery of improving operational metrics. Chris will outline these in his address together with an update on the accelerating momentum achieved in the first quarter of 2021. I want to provide an update on the strategic review announced to the market on 25th February. The Board determined to conduct a review of strategic alternatives, given current valuations in the U.S. for high-growth technology companies and inbound interest received. Earlier this week, we announced that we had entered into a nonbinding term sheet for the acquisition of Jiobit, provider of wearable location devices for young children, pets and seniors. Chris will provide more details in his address. While Jiobit marks the first step in our strategic review, it is not complete. We are continuing to look at additional assets that will accelerate our vision, including larger acquisitions that could be funded with vehicles that would simultaneously result in our dual listing on a U.S. exchange. We've specifically honed in our search on companies in the insurance vertical, which is a sector that is currently getting significant attention from investors in our home market of the U.S. There is no certainty that the review will result in any transaction or any changes to current listing arrangements. We remain committed to our existing strategic plan and will only consider complementary pathways that result in a significant increase in shareholder value. In closing, I'd like to thank my fellow Board members for the contribution they make to Life360. Shareholders greatly benefit from their expertise and wise counsel, particularly through turbulent times such as 2020. I'd like to welcome our newest director, Randi Zuckerberg, who joined the Board in January. Randi brings a depth of experience to the company, including her work scaling Facebook in its early days and creating Facebook Live. On behalf of the Board, I'd like to thank our talented colleagues for their dedication and hard work, particularly in the challenging circumstances brought about by COVID-19. I would like to acknowledge the astute leadership of Chris Hulls, who steered the company through uncharted territory, delivering the membership model on time and positioning Life360 for the growth opportunities ahead. And finally, I'd like to thank you, our shareholders, for your continued support. Life360 is well placed to deliver on our mission to bring families closer with smart features designed to protect and connect the people who matter the most. I'll now hand over to Chris Hulls, who will provide an update on the company's performance.

Thanks, John. I'm very pleased to be able to speak to shareholders to provide a brief business update. A global pandemic was certainly not anything we planned for in 2020. While the operating environment was challenging, we're extremely proud of the results we achieved. We maintained growth, proved our ability to generate positive cash flow and delivered on a road map. We believe we are well positioned to accelerate our performance in the back half of the year when the world returns to normalcy. John spoke earlier of the impressive financial performance of the company despite the challenges brought about by COVID. I wanted to provide a deeper dive into the operational metrics that have driven this performance. While our global monthly active user base in 2020 was impacted by COVID, we continued to deliver solid growth in U.S. monthly active users. Our Paying Circles, our subscribers, performed strongly, reflecting the resilience of our business model and the benefits of the rollout of our membership plans. And as you can see on this slide, all of our metrics have delivered accelerating growth going into the March quarter. At last year's AGM, I spoke to you about the launch of our membership model and the one-stop shop it represents for a whole host of family safety features. As a reminder, customers need to spend around $256 each month for a family of 4 and subscribe to 8 different providers to match what Life360 can offer for 1/10 the cost. The strength of our word-of-mouth and our mobile economics mean we can use existing infrastructure to launch new services at a fraction of the cost of legacy providers. We're excited by the opportunities that membership provides to benefit Life360's key financial drivers. John talked earlier about the expansion in the addressable market for our products from families with teenagers to every life stage. Other benefits we see from the model are increased premium conversion, higher average revenue per paying circle and decreased churn. All of these items add up to significantly higher user lifetime value. The early results of the membership launch are very promising. While legacy subscribers are grandfathered on their previous plans, we now have 30% of our Paying Circles on the membership plan, up from 21% in December. And we're seeing a 36% uplift in average revenue per Paying Circle compared with the first half of 2020 prior to the launch. The ultimate opportunity for Life360 is so much larger than our current product range and encompasses any business that gives peace of mind to families. As John mentioned, we have taken the step of expanding into hardware devices with the proposed acquisition of Jiobit. We're excited about Jiobit for a number of reasons. A key pillar of membership has been to expand our product line to all life stages, and Jiobit very naturally fills that need. Jiobit's primary customers are parents with young kids who will age into our core demographic as their families mature. It should be noted that these new parents are largely digitally native millennials who we see as our ultimate core audience. While Jiobit is primarily focused on younger kids today, they are already having success with pets, which is also a natural fit with our user base. The shift to seniors is something in the works and a great addition to keep our members engaged at the other end of the age spectrum. Turning now to Life360's recent performance. We're very encouraged by the trends we have seen in the first quarter of the year. Whereas COVID was a real headwind for 2020, we are seeing early signs of a COVID tailwind in 2021. Australia was one of the earliest markets to deliver a meaningful recovery in MAU, reflecting the strong management of COVID in the country. We're excited to see these trends being replicated in our largest market. The U.S. vaccine rollout is being accompanied by a corresponding positive impact on growth rates for U.S. MAU and Paying Circles. Finally, I wanted to provide an outlook for 2021. We're encouraged by the recovery in top-of-funnel MAU and Paying Circles as COVID conditions improve, particularly in the U.S. These trends reinforce our confidence in Life360's ability to take full advantage of the key back-to-school period in the U.S. from August and to achieve the guidance we provided to the market in February. We continue to expect that by December 2021, Life360 will be delivering annualized monthly revenue in the range of $110 million to $120 million, a 23% to 34% year-over-year growth rate. Based on the planned investment in growth, in CY '21, we expect an underlying EBITDA loss, excluding stock-based compensation, of no greater than $15 million. This guidance excludes any impact from the proposed acquisition of Jiobit. With that, I'll hand it back to John.

Thank you, Chris. If shareholders have any questions on the updates, which Chris and I have presented, please ask them now, and we will address them in turn at the end of the meeting. The Notice of Meeting was distributed on April 6, 2021, and I propose to take the Notice of Meeting as read. Before moving on to the various resolutions to be considered today, I will now briefly outline the meeting and voting procedures for today's meeting. As set out in the Notice of Meeting, each of the resolutions will be conducted by a poll. The results of the poll will be released on the ASX and will be available on the company's website as soon as possible after the meeting. As Chairman of the meeting, I will vote all directed proxies in accordance with the directions provided by shareholders. I'm also holding undirected proxies in my capacity as Chairman of this meeting, and I intend to vote all such proxies in favor of all resolutions. As shareholders, you can cast your vote using the electronic voting card that you received when you registered via the online virtual platform. You are able to vote between the commencement of the meeting and the closure of voting as announced during the meeting. If you are a CDI holder attending the online meeting, you will not be able to vote using the online voting system and must have submitted your CDI voting form ahead of the meeting in accordance with the procedures in the Notice of Meeting. Voting today will be conducted by way of a poll on all items of business. If you have any questions about casting your vote online, please refer to the online meeting guide that was issued with the Notice of Meeting. We will display the number of proxy votes received for each resolution as well as the terms of each proposed resolution ahead of voting on each resolution. I will now move on to the business of the meeting. The proxy materials accompanying the Notice of Meeting included detailed information, explanations and rationale around each of the items of business. For this reason, when I come to introduce each resolution, I do not propose to summarize any of the information, explanations or rationale for the resolutions, which were included in the proxy materials. That brings me to the resolutions. The first resolution of the meeting is the reelection of James Synge as a Director of the company. Information relevant to James' proposed reelection is set out in the information that accompanied the Notice of Meeting. The Board, with James Synge abstaining, unanimously recommends shareholders vote for this resolution. I now invite James to address the meeting in relation to his reelection.

Thanks, John. I'm very pleased to have the opportunity to speak to shareholders today and to offer myself for reelection to the Life360 Board. My company, Tarpon Capital, is a venture capital fund that invests in early-stage businesses and helps them scale to achieve their full potential. I have a long-term history with the Life360, having been one of the earliest outside investors in the company more than 10 years ago. I played a large role in bringing the company to the Australian market for its initial public offering, and I served on the board since that time. My significant shareholding demonstrates the extent to which my interests are aligned with yours. I believe that my deep understanding of Life360, together with my broader experience of scaling businesses, will be valuable in supporting the company in its next phase of growth. I'm even more convinced about the potential for Life360 than I was 10 years ago, and I'm fully committed to helping deliver that potential. I look forward to your continued support.

Thank you. The resolution is set out on the slide. I will now address any questions regarding James' reelection as a director. Jeremy, do we have any questions on the matter?

Chairman, we do not have any questions.

Thank you. I put to the meeting Resolution 1. The proxies received are on the screen. On your electronic voting card, through the voting icon, please now select for or abstain next to Resolution 1. [Voting]

The second resolution of the meeting is the reelection of David Wiadrowski as a Director of the company. Information relevant to David's proposed reelection is set out in the information that accompanied the Notice of Meeting. The Board, with David Wiadrowski abstaining, unanimously recommends shareholders vote for this resolution. I now invite David to address the meeting in relation to his reelection.

Thanks, John, and good morning and good afternoon to my fellow shareholders. I'm delighted and excited to offer myself for reelection as a Director on the Life360 Board. I now have 2 years of experience and knowledge of the Life360 business, having been on the Board since the company listed on the ASX in May 2019. I feel very confident that the strategy of the business is aligned to the interests of our shareholders. I sit on 3 other ASX-listed Boards and serve as the Audit Committee Chair on each of them. With this portfolio, I believe I bring significant hands-on Board's experience that is relevant and valuable to my role on the Life360 Board. I bring significant relevant experience, having been an audit partner at one of the Big 4 accounting firms with a particular focus on telecommunications and technology. I was also the COO of the largest business within that firm. So I also have detailed hands-on experience of running a large complex business. I've also mentored a number of early-stage start-up businesses. So have a good appreciation of the opportunities and the challenges that founded-led businesses face. I'm very confident at the time and the passion to continue to serve the Life360 Board and look forward to your continuing support. Thank you.

Thank you, David. The resolution is set out on the slide. I will now address any questions regarding David's reelection as a Director. Jeremy, are there any such questions?

Mr. Chairman, there are no questions.

Thank you, Jeremy. I put to the meeting Resolution 2. The proxies received are on the screen. On your electronic voting card, through the voting icon, please now select for or abstain next to Resolution 2. [Voting]

The third resolution of the meeting is the reelection of Brit Morin as a Director of the company. Information relevant to Brit's proposed reelection is set out in the information that accompanied the Notice of Meeting. The Board, with Brit Morin abstaining, unanimously recommends shareholders vote for this resolution. I now invite Brit to address the meeting in relation to her reelection.

Hi, everyone. I'm excited to offer myself for reelection to the Life360 Board of Directors. I've been on the Board for over 3 years since January of 2018 and have helped oversee many growth initiatives as well as the move from private to public. I've also served on the Remuneration Committee on behalf of the Board. My early professional roots were at Google and Apple. And in 2011, I started what is now a 10-plus-year track record of my own entrepreneurial work through my company, Brit + Co., which is both venture-backed and profitable. We reach over 100 million women per month globally across networks. And I'm the primary face of the brand across digital, television, audio books and more. I'm also a venture capitalist, having recently started my own fund called Offline Ventures, an early-stage technology seed fund with over 20 initial investments. Prior to Offline, I've angel invested in dozens of technology companies. Finally, I'm also on the Board of Directors of the Girl Scouts of the U.S.A., which is a $1 billion membership organization. I lead the technology committee there. My relevant skills include marketing and community building, design and product thinking, business model and financial strategy, understanding the female psyche and a network that is unparalleled in Silicon Valley, Los Angeles, New York and beyond. I look forward to another term on the Life360 Board with your continued support.

Thank you, Brit. The resolution is set out on the slide. I will now address any questions regarding Brit's reelection as a Director. Jeremy, are there any such questions?

There are no such questions.

Thank you, Jeremy. I put to the meeting Resolution 3. The proxies received are on the screen. On your electronic voting card, through the voting icon, please now select for or abstain next to Resolution 3. [Voting]

Resolution 4 relates to the reelection of Randi Zuckerberg as a Director of the company. Information relevant to Randi's proposed reelection is set out in the information that accompanied the Notice of Meeting. The Board, with Randi Zuckerberg abstaining, unanimously recommends shareholders vote for this resolution. I now invite Randi to address the meeting in relation to her reelection.

Thank you, John, and greetings to all shareholders. I'm excited to offer myself for reelection to the Life360 Board. While I have only served on the Board for a few months now since January 2021, my time with the company has made me increasingly excited about our mission and the opportunity ahead. I look forward to serving the company and our shareholders and bringing my experience on the front lines of social media and as a mother of 3 to helping Life360 grow. I recently joined the Audit and Risk Committee, and I also look forward to serving the company in that capacity. While I'm new to the Life360 Board, I have Board experience with companies that have successfully launched subscription models and family-centric content and communications. And I look forward to bringing that experience to Life360. Not only will I bring technology, product and marketing expertise to the table, I am also our target consumer. As a mother of 3 children, I'm a passionate customer of Life360, and it continues to be a pleasure to serve a company whose product I've loved long before I joined the Board of Directors. Thank you for your time, your support of me during my first few months serving Life360. And I look very forward to the opportunities ahead for all of us.

Thank you, Randi. The Board, with Randi Zuckerberg abstaining, unanimously recommends shareholders vote for this resolution. The resolution is set out on the slide. I will now address any questions regarding Randi's reelection as a Director. Jeremy, are there any such questions?

Mr. Chairman, there are no such questions.

Thank you, Jeremy. I put to the meeting Resolution 4. The proxies received are on the screen. On your electronic voting card, through the voting icon, please now select for or abstain next to Resolution 4. [Voting]

As announced to the market on the 23rd of April, Resolution 5 has been withdrawn as the Board decided that the existing fee pool is adequate for the coming year. Resolution 6 relates to the issue of restricted stock units and options to Chris Hulls under the company's amended and restated 2011 Stock Plan. The Board, with Chris Hulls abstaining, unanimously recommends shareholders vote for this resolution. The resolution is set out on the slide. I will now address any questions regarding the issue of restricted stock units and options to Chris. Jeremy, are there such questions?

Mr. Chairman, there are no such questions.

Thank you, Jeremy. I put to the meeting Resolution 6. The proxies received are on the screen. On your electronic voting card, through the voting icon, please now select for, against or abstain next to Resolution 6. [Voting]

As the next resolution relates to an issue of restricted stock units and options to myself, I propose to hand the Chair to David Wiadrowski for this item.

Thank you, John. Resolution 7 relates to the approval of the issue of restricted stock units and options to John Philip Coghlan under the amended and restated company's 2011 Stock Plan. The Board, with John Philip Coghlan abstaining, unanimously recommends shareholders vote for this resolution. The resolution is set out on the slide on your screen. I will now address any questions regarding the issue of restricted stock units and options to John. Jeremy, are there any questions?

There are no such questions.

Thank you. I put to the meeting resolution 7. The proxies received are on the screen. On your electronic voting card through the voting icon, please now select for, against or abstain next to Resolution 7. [Voting]

I will now pass the Chair back to John.

Thank you, David. Resolution 8 relates to the approval of the issue of restricted stock units and options to Brit Morin under the company's amended and restated 2011 Stock Plan. The Board with Brit Morin abstaining, unanimously recommends shareholders vote for this resolution. The resolution is set out on the slide. I will now address any questions regarding the issue of restricted stock units and options to Brit. Jeremy, are there any such questions?

Mr. Chairman, there are no such questions.

Thank you, Jeremy. I put to the meeting Resolution 8. The proxies received are on the screen. On your electronic voting card, through the voting icon. Please now select for, against or abstain next to Resolution 8. [Voting]

Resolution 9 relates to the approval of the issue of restricted stock units to James Synge under the company's amended and restated 2011 Stock Plan. The Board, with James Synge abstaining, unanimously recommends shareholders vote for this resolution. The resolution is set out on the slide. I will now address any questions regarding the issue of restricted stock units and options to James. Jeremy, are there any such questions?

Mr. Chairman, there no such questions.

Thank you, Jeremy. I put to the meeting Resolution 9. The proxies received are on the screen. On the -- your electronic voting card, through the voting icon, please now select for, against or abstain next to Resolution 9. [Voting]

Resolution 10 relates to the approval of the issue of restricted stock units and options to Mark Goines under the company's amended and restated 2011 stock plan. The Board, with Mark Goines abstaining, unanimously recommends shareholders vote for this resolution. The resolution is set out on the slide. I will now address any questions regarding the issue of restricted stock units and options to Mark. Jeremy, are there any such questions?

Mr. Chairman, there are no such questions.

Thank you, Jeremy. I put to the meeting Resolution 10. The proxies received are on the screen. On your electronic voting card, through the voting icon, please now select for, against or abstain next to Resolution 10. [Voting]

Resolution 11 relates to the approval of the use -- of the issue of restricted stock units and options to David Wiadrowski under the company's amended and restated 2011 Stock Plan. The Board, with David Wiadrowski abstaining, unanimously recommends shareholders vote for this resolution. The resolution is set out on the slide. I will now address any questions regarding the issue of restricted stock units and options to David. Jeremy, are there any such questions?

Mr. Chairman, there are no such questions.

Thank you, Jeremy. I put to the meeting Resolution 11. The proxies received are on the screen. On your electronic voting card, through the voting icon, please now select for, against or abstain next to Resolution 11. [Voting]

Resolution 12 relates to the approval of the issue of restricted stock units and options to Randi Zuckerberg under the company's amended and restated 2011 Stock Plan. The Board, with Randi Zuckerberg abstaining, unanimously recommends shareholders vote for this resolution. The resolution is set out on the slide. I will now address any questions regarding the issue of restricted stock units and options to Randi. Jeremy, are there any such questions?

Mr. Chairman, there are no such questions.

Thank you, Jeremy. I put to the meeting Resolution 12, the proxies received are on the screen. On your electronic voting card, through the voting icon, please now select for, against or abstain next to Resolution 12. [Voting]

Resolution 13 relates to the approval of the issue of restricted stock units and options to Alex Haro under the company's amended and restated 2011 Stock Plan. The Board, with Alex Haro abstaining, unanimously recommends shareholders vote for this resolution. The resolution is set out on the slide. I will now address any questions regarding the issue of restricted stock units and options to Alex. Jeremy, are there any such questions?

Mr. Chairman, there are no such questions.

Thank you, Jeremy. I put to the meeting Resolution 13. The proxies received are on the screen. On your electronic voting card, through the voting icon, please now select for, against or abstain next to Resolution 13. [Voting]

Resolution 14 relates to the amendment of the Audit and Risk Committee Charter. The Board unanimously recommends shareholders vote for this resolution. The resolution is set out on the slide. I will now address any questions regarding the amendment of the Audit and Risk Committee Charter. Jeremy, are there any such questions?

Mr. Chairman, there are no such questions.

Thank you, Jeremy. I put to the meeting Resolution 14. The proxies received are on the screen. On your electronic voting card, through the voting icon, please now select for, against or abstain next to Resolution 14. [Voting]

Ladies and gentlemen, that concludes our discussion on the items of business. I will shortly close the voting system. Please ensure that you have cast your vote on all resolutions. I will now pause to allow you time to finalize those votes. [Voting]

Voting is now closed. Thank you. As I mentioned earlier, the results of this meeting will be announced to the ASX as soon as the votes have been counted and verified. That completes the formal business of the meeting. I will now answer any questions received on the 2020 annual report and any general questions that we have received. Jeremy, are there any such questions?

Mr. Chairman, there are no such questions.

Thank you very much. If there are further queries, I encourage you to send them to our Investor Relations e-mail address, which is available on the company's website. That concludes the business of the meeting, and I now declare this annual meeting closed. Thank you for your time, your questions and your continued engagement and support.