LHC Capital: Life 360

Life360 provides family safety services delivered through an app to a large, highly engaged, and fast growing user base. 360 has done extraordinarily well to position itself as the global leader in a massive market despite historically having limited access to capital. The company has a wonderful and passionate management team and the company’s listing on ASX has given it financial resources to further accelerate its R&D and customer acquisition programs. 360 has formed a new product category and has dominant market share with ~30 million active users. Adoption has grown virally, and we believe the family safety category is supported by strong and durable secular trends.

The recent launch of membership will be a major tipping point in the history of the company. Membership will result in 360’s product offering being extended and additional value provided to a broader range of users. We expect this will result in a further increase in the company’s TAM, a reduction in churn rates whilst delivering a significant improvement in yield at very high incremental margins. The company’s product strategy is compelling and demonstrates that they are seeking to develop a value proposition that extends to all stages of a family’s life.

Whilst the company is experiencing fast growth and is appropriately funded to reach profitability, 360 is presently loss making and consuming cash. 360 is dependent on Apple and Google app stores for distribution and is required to pay away in accordance with app store fee schedules. Potential competitors may emerge to compete with 360 which could increase churn rates or impact the rate of user base growth.

This information has been prepared and provided by LHC Capital To the extent that includes any financial product advice, the advice is of a general nature only and does not take into account any individual’s objectives, financial situation or particular needs. Before making an investment decision an individual should assess whether it meets their own needs and consult a financial advisor. This stock pick was published on 15 October 2020 and is subject to change.