Life360 (ASX: 360): revisiting the valuation view 12 months on

On 9 October 2025, Cashu Research initiated coverage on Life360 (ASX: 360), using a share-price reference of A$53.63. Twelve months on, the A$19.53 closing price for 8 October 2026 puts the shares roughly 64% below the initiation price. The share-price outcome aligned with the original view, but not entirely for the reasons originally given. Life360's operating results have mostly beaten forecasts. The central conclusion of this retrospective is that the change in what investors would pay for that growth mattered more than a deterioration in the business. It separates the valuation argument that held up from the operating risks that were overstated.

The original report's headline argument was simple: Life360 was a good business on a stretched valuation. The stock had risen more than 250% over the preceding twelve months and traded at a substantial premium to the peer set used in the report. The valuation blended a five-year discounted cash-flow model, using a 7.3% WACC and 3% terminal growth, with an 8x EV/sales approach, weighted 50/50. The selected peers traded at a median 4.1x forward EV/sales, while the Australian software comparison set had a median of 8.3x. A 7–9x range was judged appropriate for Life360 at the time. The report also identified three operating risks: competition from free alternatives such as Apple's Find My; dependence on subscription growth and free-to-paid conversion; and an advertising opportunity that was still unproven and exposed to privacy and reputational risk. The report treated faster premium-tier uptake, international growth and stronger advertising monetisation as factors that could challenge the thesis.

The share-price outcome should not be mistaken for an operating collapse. Life360 continued to expand its customer base, grow revenue and develop its advertising business. In FY25, revenue increased 32% to US$489.5 million, while adjusted EBITDA reached US$93.2 million. Global monthly active users reached 95.8 million, and the company added a record 576,000 Paying Circles during the year. In January 2026, Life360 completed the approximately US$120 million Nativo acquisition, expanding its advertising platform. In Q2 2026, revenue grew 38% year on year to US$159.0 million. Monthly active users reached approximately 102.4 million, and Paying Circles increased 27% to approximately 3.2 million. Advertising revenue reached US$22.0 million in Q2, up 315% year on year. However, much of that growth was attributed to new offerings following the Nativo acquisition, so it should not be read as purely organic growth. At the Q2 result, FY26 consolidated revenue guidance was US$650–685 million, with adjusted EBITDA guidance of US$130–140 million. Those results support the central distinction in this review: a company can execute well and still deliver a poor share-price outcome if its starting valuation assumes too much.

The original forecasts proved conservative. FY25 revenue was forecast at US$468.0 million against US$489.5 million actual, while FY25 adjusted EBITDA was forecast at US$81.9 million against US$93.2 million actual. For FY26, the original revenue forecast was US$572.9 million compared with company guidance of US$650–685 million; the original adjusted EBITDA forecast was US$128.9 million compared with guidance of US$130–140 million. FY26 figures are company guidance, not completed full-year results. Adjusted EBITDA is a non-GAAP measure, so readers should consider the company's definitions and reconciliations alongside statutory earnings. The share price fell anyway. That reinforces the valuation argument rather than a claim that the operating business disappointed.

Valuation was the part of the analysis that mattered. The shares were priced for near-perfect execution on a premium multiple. Life360 has largely executed, yet the shares have fallen below the original valuation reference. The de-rating did more of the work than the operating concerns. Competition had a weaker immediate impact than expected. Continued growth in Paying Circles and the move beyond 100 million monthly active users do not support a thesis that free alternatives would quickly derail the platform. They do not eliminate competitive risk, but they require an acknowledgement of Life360's resilience. Subscription reliance remains relevant, but it has not produced a broken business. Subscriptions generated US$115.6 million of Q2 revenue, approximately 73% of the total. Global monthly-active-user growth was 16% year on year in Q2, compared with 20% at the end of FY25. Conversion, retention and revenue per Paying Circle remain important, even as advertising diversifies revenue. Advertising was the area where the original assessment was too sceptical about near-term contribution. The US$22.0 million quarterly revenue figure is a meaningful business contribution. Nativo has changed the scale and scope of the opportunity, although integration, margins and responsible use of data remain risks to monitor.

The valuation picture has changed. Using the approximate US$3.3 billion market-capitalisation reference in this review and FY26 revenue guidance of US$650–685 million gives roughly 5x forward revenue. That is a rough market-capitalisation-to-sales comparison, not the EV/sales methodology used in the original valuation. A fresh assessment needs to account for cash, debt, acquisitions, dilution and exchange rates. The next quarterly result will test whether Life360 can keep expanding subscriptions and advertising while converting revenue growth into sustainable earnings and cash flow. The Q2 release maintained an approximately 20% full-year adjusted EBITDA margin outlook and highlighted continuing investment in international expansion, advertising and AI initiatives. Guidance is not a guarantee. The de-rating anticipated in the original analysis has occurred. That is a reason to revisit the model rather than treat the old analysis as current without fresh work. Any change to the assessment will be published as a formal coverage update rather than implied by this article. The original report was authored by Tim Halliday. This article is a retrospective, not a new coverage update. Share-price and approximate market-capitalisation references are dated snapshots from this review, not live quotes. This information is general in nature and does not constitute personal advice.