Weekly Update August 4-8
Life360, 3 Earnings Updates, FDA Trial, and an Amazing Hire
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Let’s get right into it!
Free
Life360 is a safety app. Through its freemium model, parents can keep an eye on their children. For iPhone users, that can be done through Find My Friends but Life360 is more sophisticated and it is also across Android. For example, it has a history of locations rather than only real-time updates. It can automatically alert 911 if someone gets in a car crash. And it can provide driving reports so you can see how well your child is driving. Basically, it’s a great way to spy on them haha. Revenue is growing 30% with 80% gross margins and they are about breakeven on a GAAP and cash flow basis ex-SBC.
The company checks off a lot of boxes – high degree of recurring revenue, optionality (they are adding pet tracking and local advertising), founder CEO, fast growth, good unit economics, network effects, etc. That’s why the stock is expensive at 10x forward sales but being a low cost subscription for keeping track of what’s most important to you is an interesting thesis. They did an acquisition that is similar to Tile so you can track valuables as well. Once you have your kids, your pets, and your valuables added to the network, it becomes quite sticky. Further, based on the real-time location data is an advertiser's dream. There are definitely some big privacy question marks here and they need to make sure there’s always an opt-out function for granular advertising but I think Life360 is a pretty quality name to check out. It, along with a few other companies like Sezzle, went public in Australia to raise money quickly but they are actually based in the US. These can be very interesting situations because they go under the radar. Unfortunately, the Aussies tend to pay even higher prices than US investors!