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

And thank you for joining this Life360 conference call. This is Jolanta Masojada, and I head up Investor Relations for Life360. This call is being conducted as a Zoom audio webinar. [Operator Instructions] Just a reminder that we'll make forward-looking statements regarding future events, which are subject to material risks and uncertainties. Some of these risks have been set forth in the risk factors in our filings with the ASX and SEC. These forward-looking statements are based on assumptions that we believe to be reasonable as of today, and we have no obligation to update these statements as a result of new information or future events. We'll begin today's call with some brief opening remarks from Co-Founder and CEO, Chris Hulls, after which we will open up for Q&A. I would now like to turn the call over to Chris.

Hello, all. I'm going to start with reading from the script, given this is a more official release, and then I will have a Q&A. As Jolanta mentioned, where I can be just a bit more informal. I'm going to start by largely repeating what was in the announcement. Good morning, everyone, and thanks for joining this call at short notice. You'll have seen our announcement to the ASX this morning that I have sold a small percentage of my Life360 shares with a value of approximately $4 million. I'd like to provide some background on this decision and provide the opportunity for any questions you may have. This sale has been undertaken to cover personal tax obligations that are related to my previously disclosed share-backed loans and this transaction. The taxes are due beginning in January 2024, and therefore, this is the last trading window for me to sell to fund these obligations. The overwhelming majority of my assets are in shares of Life360 and therefore, this is my primary means of covering the tax liability. While I do not have any other major liabilities coming due, I plan to slowly diversify my holdings over the next 5 years in line with U.S. market norms where founders with a significant concentration in their companies regularly implement conservative diversification plans. After this 5-year period, I still expect the majority of my net worth will remain in Life360 shares. I'm discussing a process with the company to provide market visibility into any future transactions while also complying with ASX and SEC regulations. In coming weeks, I will also be transferring additional shares into trusts for family members, which will appear as a change in my holdings, however, will not result in any additional tax liabilities or share sales. That concludes my prepared remarks. And I'll now turn the call over to Melissa, who will manage the Q&A portion of our call.

Thanks, Chris. [Operator Instructions] Looking through the list now, I don't see any raised hands. Here we go. Adding Chris, Chris Gawler.

Beautiful. Yes. So I'm sorry, this is Chris Gawler from Goldman Sachs here. Yes. I mean, it's pretty straightforward. I just had a couple of sort of follow-up questions. I just wanted to get a sense for over this potential 5-year transition period where you might be selling down some more shares. Are you able to give us a sense at this stage for the amount that you plan to sell down?

I don't have firm plans. In general, I've tried to build a reputation in the market of being as transparent as possible and avoiding surprises. And we knew with this an obvious question would be, what's coming next? So this is a meta point. I'll get a little bit of a personal territory. I turned 40 this year. This is my 16th year at the company. Even longer if you kind of look at when I first had the idea in school. I had a number of family members getting -- later in life getting sick and a few people passing away. And so it is such a natural time for me to say, hey, I do have -- this is not scientific or legalistic answer, but about 85% of my net worth in Life360 and 95% of my liquid net worth where simple prudence would say that is very strong exposure. And so -- but when I hit 45, it's about 5 years from now, I'll have over 20 years in this, I would like to feel diversified. There's no immediate plan. I would probably not have sold anything this time around at this share price if it were not for this tax liability, which I have coming up in literally just a few weeks. But I just did want to be open that over that much longer period of time, I would like some diversification, but I don't have further plans. I did make a note that my expectation, obviously, things change over many, many years is that the -- even after 5 years, the majority of my net worth, I still expect to be in Life360 Holdings.

Yes, sure. Got you. And I suppose the next question is sort of follows on from that commentary, Chris, that people are probably thinking was just around your plans in general. As you know, obviously, Founder and CEO of the company, is there sort of any implications for that going forward?

No. This is literally, IRS says I owe the money. And at least in America, we have the cliche of nothing more certain than death and taxes. I actually thought it a few more months to pay this thing, but my accountants told me that the state portion is due January 15. So it is as simple as time lines and tax realities.

Sure. And then I guess just one final question. Does this sort of change your thinking of the company is thinking around like your comp going forward and the split between cash and shares?

Again, on this one, it was -- this is purely -- this -- largely, procedural thing around taxes. We have been trying to think -- unrelated to me more fully and more about how we're hiring over future years is how do we come up with an equity plan that the market is excited about. Market norms are different between the U.S. and Australia. I'm -- we are discussing how we do new plans there. I'm a bit reticent to kind of give any specifics without Russell on the line. But suffice to say that we really are listening to the market and trying to figure out how to incentivize people over the long term and give clarity and certainty to everyone in the investor community. And of course, as everybody knows, we continue to reiterate our plan for statutory EBITDA breakeven in 2025. And we are going to have a call tomorrow, which is more about just a bit of that reiteration and strategy and being able to answer some follow-up questions that came post earnings.

And as of right now, I don't see any additional raised hands. So as there are no more questions, I will hand it back over to Chris.

Well, I do not have too much beyond this. As I just mentioned, there is another call tomorrow. I think that I will be able to talk a little bit more about the strategy. We'll have Russell on that. But thank you, everyone, for your time.