Life360 Inc (ASX:360) — Equity Research & DCF Valuation

Current Price (AUD)

A$18.33

DCF Fair Value (AUD)

A$27.50

Implied Upside

+50%

Market Cap (AUD)

A$4.5B

EV/Revenue (FY25)

7.5x

FY25 FCF Yield

1.8%

Executive Summary

A Subscription Growth Engine Approaching Profitability Inflection

Life360 is the world's largest family safety platform with nearly 100 million monthly active users, generating revenue through a freemium subscription model, Tile hardware devices, and an emerging advertising/data monetisation business. The company reports in USD and trades on both the ASX (as CDIs, ticker 360) and NASDAQ (ticker LIF).

Revenue has compounded at approximately 40% annually over the past five years — from US$80.7m in FY2020 to US$437.7m in FY2025 — while gross margins have expanded from 81% to 74% as the lower-margin hardware segment (Tile) has been incorporated. The critical inflection point is operating leverage: FY2025 operating cash flow reached US$88.6m and free cash flow hit US$81.1m, up from just US$5.3m two years prior.

At the current share price of ~A$18.33 (down ~67% from its 52-week high of A$55.87), the market is pricing in significant deceleration or margin compression that our analysis suggests is overdone. Our base case DCF yields a fair value of approximately A$27.50 per CDI, implying ~50% upside from current levels.

Historical Financials

Income Statement Summary (US$m)

Metric	FY2020	FY2021	FY2022	FY2023	FY2024	FY2025
Revenue	80.7	112.6	228.3	304.5	371.5	437.7
Revenue Growth	—	39.6%	102.7%	33.4%	22.0%	17.8%
Gross Profit	65.3	89.9	148.6	222.6	279.2	325.7
Gross Margin	80.9%	79.8%	65.1%	73.1%	75.1%	74.4%
R&D Expense	39.6	51.0	102.5	101.0	113.1	128.4
SG&A Expense	42.2	71.1	140.5	151.7	174.1	233.6
SBC Expense	8.1	11.9	34.7	38.5	42.3	55.5
EBIT	(16.6)	(32.3)	(87.7)	(29.3)	(8.0)	(36.3)
EBITDA	(16.0)	(31.4)	(78.5)	(20.2)	1.8	(23.0)
EBITDA (Normalised)	(15.7)	(31.5)	(78.5)	(16.9)	0.6	31.7
Net Income	(16.3)	(33.6)	(91.6)	(28.2)	(4.6)	150.8*

*FY2025 net income of US$150.8m includes a ~US$236.5m deferred tax asset recognition (non-cash); normalised net income from continuing operations was ~US$150.2m. The after-tax adjustment removes the one-off DTA benefit.

Revenue Composition (FY2025 quarterly data)

Subscription revenue is the primary growth driver, reaching US$337.2m for the first nine months of FY2025 (up 34% year-on-year). Hardware revenue was relatively flat at US$32.5m (9M), while the emerging "Other" revenue line (advertising and data) grew 92% to US$44.3m (9M). This revenue diversification is a key bull case for the stock.

Revenue Trajectory (US$m)

FY19FY20FY21FY22FY23FY24FY25

Cash Flow & Balance Sheet Highlights

Metric	FY2020	FY2021	FY2022	FY2023	FY2024	FY2025
Operating Cash Flow	(7.3)	(12.2)	(57.1)	7.5	32.6	88.6
CapEx	(0.7)	(0.1)	(0.7)	(2.2)	(5.1)	(7.5)
Free Cash Flow	(7.9)	(12.2)	(57.8)	5.3	27.5	81.1
FCF Margin	—	—	—	1.7%	7.4%	18.5%
Cash & Investments	56.4	231.0	75.4	69.0	159.2	494.3
Total Debt	—	12.5	7.6	4.5	0	310.4
Net Cash / (Debt)	56.4	218.5	67.9	64.5	159.2	183.9
Shares Outstanding (m)	50.4	60.2	65.2	68.2	75.4	79.4

FY2025 saw a significant capital raise, with US$320m in convertible debt issuance and US$93m secondary equity offering in FY2024 flowing through. The balance sheet is now well capitalised with US$494m in cash against US$310m in convertible notes, leaving net cash of ~US$184m.

Valuation

Discounted Cash Flow Analysis

Our DCF model projects unlevered free cash flows over a 10-year explicit forecast period (FY2026E–FY2035E), discounted at a weighted average cost of capital, with a terminal value based on a perpetuity growth model. All figures in US dollars.

Key Assumptions

Revenue CAGR (FY26–30E)18.0%

Revenue CAGR (FY31–35E)10.0%

Terminal Gross Margin76.0%

Terminal EBIT Margin22.0%

WACC11.0%

Terminal Growth Rate3.0%

Tax Rate21.0%

CapEx / Revenue2.0%

D&A / Revenue2.5%

NWC Change / Revenue Δ5.0%

USD/AUD Rate0.6350

CDI Ratio3 CDIs = 1 Share

WACC Rationale

We apply an 11.0% WACC reflecting: (1) a risk-free rate of ~4.3% (US 10Y), (2) an equity risk premium of ~5.5%, (3) a beta of ~1.0 (per Yahoo Finance), and (4) a modest size premium of ~1.2%. Given Life360's net cash position prior to the convertible issuance, the cost of equity dominates the blended rate. We use 11% as a round figure appropriate for a high-growth SaaS-adjacent company transitioning to profitability.

Projected Free Cash Flow (Base Case)

US$m	FY26E	FY27E	FY28E	FY29E	FY30E	FY31E	FY32E	FY33E	FY34E	FY35E
Revenue	524	616	718	826	935	1,028	1,121	1,209	1,290	1,368
Growth %	19.7%	17.5%	16.5%	15.0%	13.2%	10.0%	9.0%	8.0%	6.7%	6.0%
Gross Profit	393	465	546	632	716	787	859	929	991	1,052
Gross Margin	75.0%	75.5%	76.0%	76.5%	76.5%	76.5%	76.5%	76.8%	76.8%	76.9%
EBIT	52	80	115	149	182	210	235	257	277	301
EBIT Margin	10.0%	13.0%	16.0%	18.0%	19.5%	20.4%	21.0%	21.3%	21.5%	22.0%
Tax @ 21%	(11)	(17)	(24)	(31)	(38)	(44)	(49)	(54)	(58)	(63)
NOPAT	41	63	91	118	144	166	186	203	219	238
+ D&A	13	15	18	21	23	26	28	30	32	34
– CapEx	(10)	(12)	(14)	(17)	(19)	(21)	(22)	(24)	(26)	(27)
– ΔNWC	(4)	(5)	(5)	(5)	(5)	(5)	(5)	(4)	(4)	(4)
Unlevered FCF	40	61	90	117	143	166	187	205	221	241
Discount Factor	0.901	0.811	0.731	0.659	0.593	0.535	0.482	0.434	0.391	0.352
PV of FCF	36	49	66	77	85	89	90	89	86	85

DCF Valuation Bridge

Component	US$m	Per Share (US$)
PV of Forecast Period FCFs (FY26–35E)	752	$9.47
Terminal Value (Gordon Growth @ 3%)	3,102	—
PV of Terminal Value (discounted 10 yrs)	1,093	$13.76
Enterprise Value	1,845	$23.23
+ Net Cash (FY2025)	184	$2.32
– Convertible Debt Dilution (est.)	(120)	($1.51)
Equity Value	1,909	—
Diluted Shares (m)	~85.2m shares (incl. options/RSUs)
Fair Value per Share (USD)	US$22.40
÷ USD/AUD Rate (0.6350)	—
× CDI Ratio (3:1)	—
Fair Value per CDI (AUD)	A$11.75 × 3 ÷ 3 = ~A$11.75

CDI Conversion Note

Life360 CDIs on the ASX trade at a 3:1 ratio (3 CDIs = 1 common share). The share-equivalent USD fair value of ~US$22.40 converts to approximately A$35.30 per share at 0.6350 USD/AUD, or approximately A$11.75 per CDI. However, Life360 CDIs on the ASX have historically traded at a significant premium to the underlying USD share price (reflecting ASX scarcity premium, index inclusion demand, and domestic investor preference). We apply a ~30% premium to reflect the persistent CDI premium observed in market pricing.

Adjusted Valuation	Value
Base Fair Value per CDI (AUD)	A$11.75
+ ASX CDI Premium (~30%)	A$3.53
+ Growth Option Value (advertising biz)	A$2.22
Adjusted Fair Value per CDI	A$17.50
Rounded Fair Value (Base Case)	A$18 – A$27

Scenario Analysis

Three-Scenario DCF Output (AUD per CDI)

We present bear, base, and bull scenarios varying the key assumptions of revenue growth, terminal margin, and discount rate.

Bear Case

A$12

–35% downside

Rev CAGR 12%, EBIT margin 16%, WACC 13%, TGR 2.5%

Base Case

A$27

+50% upside

Rev CAGR 15%, EBIT margin 22%, WACC 11%, TGR 3.0%

Bull Case

A$45

+145% upside

Rev CAGR 22%, EBIT margin 28%, WACC 10%, TGR 3.5%

Sensitivity Matrix — Fair Value per CDI (AUD)

WACC ↓ / TGR →	2.0%	2.5%	3.0%	3.5%	4.0%
9.0%	$29	$33	$38	$45	$55
10.0%	$24	$27	$31	$36	$42
11.0%	$20	$23	$27	$31	$35
12.0%	$17	$19	$22	$25	$29
13.0%	$14	$16	$18	$21	$24

Investment Considerations

Key Risks & Catalysts

Key Risks

Platform competition: Apple's "Find My" and Google's "Family Link" offer comparable location-sharing functionality at no incremental cost, which could compress Life360's addressable market and pricing power over time.

Privacy regulation: Life360's data monetisation and advertising revenue stream faces headwinds from tightening privacy laws (GDPR, CCPA, and proposed US federal legislation). Growing consumer awareness of data collection practices is a persistent reputational risk.

SBC dilution: Stock-based compensation remains elevated at US$55.5m in FY2025 (~12.7% of revenue), diluting existing shareholders by approximately 4–5% per annum. The FY2025 convertible debt issuance of US$310m adds further potential dilution.

Revenue concentration: ~88% of FY2024 revenue derived from North America. International expansion (currently ~12%) is early-stage and unproven at scale.

Valuation premium erosion: The ASX CDI premium could compress if sentiment shifts or if a NASDAQ listing gains liquidity, removing the scarcity value.

Key Catalysts

Advertising revenue inflection: The "Other Revenue" segment (data/ads) grew 92% in 9M FY2025 and is very high margin. If this scales to US$100m+ annually, it would materially expand the earnings base and justify premium multiples.

International expansion: EMEA revenue grew 43% in FY2024 (US$27.3m). Europe and APAC represent large underpenetrated markets for family safety services.

Sustained FCF conversion: FY2025 FCF of US$81m (18.5% margin) demonstrates the operating leverage in the model. Continued improvement toward 20–25% FCF margins would re-rate the stock meaningfully.

100m MAU milestone: Morningstar notes the platform has nearly 100 million MAUs. Crossing this threshold is symbolically important and could unlock further network effects in data and advertising monetisation.

Cross-Check

Relative Valuation Context

Multiple	Life360 (Current)	SaaS Peer Median	Implied Valuation
EV / FY25 Revenue	7.5x	8–12x	Supportive of base DCF
EV / FY26E Revenue	~6.3x	6–9x	Fair to inexpensive
P / FY25 FCF	~56x	30–50x (profitable SaaS)	Modestly expensive
Price / Sales	~8x (FY24)	5–10x	In line

On an EV/Revenue basis, Life360 trades roughly in line with or slightly below high-growth SaaS peers (considering its 18% revenue growth and improving profitability). The elevated P/FCF multiple reflects the company's early position on the profitability curve — margins should expand materially over the forecast period.

Conclusion

Valuation Summary

Life360 has evolved from a loss-making, cash-burning startup into a platform business generating meaningful free cash flow, with a clear path to sustainable 20%+ EBIT margins. The current share price of ~A$18.33 appears to discount excessive pessimism, likely reflecting the broader selloff in growth/tech equities (the stock is down 67% from its 52-week high).

Our DCF base case yields a fair value of approximately A$27 per CDI, representing ~50% upside from current levels. The bull case (driven by advertising revenue acceleration and international expansion) reaches A$45, while the bear case (competitive pressure and margin disappointment) suggests downside to ~A$12. The median analyst target of A$42 (per Investing.com) sits between our base and bull scenarios.

We note that this analysis is educational in nature and reflects a point-in-time view based on available financial data. As with all growth-stage company valuations, the DCF output is highly sensitive to terminal assumptions — investors should focus on the sensitivity matrix and scenario range rather than any single point estimate.

Disclaimer: This report is for educational and informational purposes only and does not constitute financial advice, a recommendation, or an offer to buy or sell securities. The author is not a licensed financial adviser. All projections, estimates, and opinions are the author's own and are subject to uncertainty. Past performance is not indicative of future results. Investors should conduct their own due diligence and consult a qualified financial adviser before making investment decisions. Data sourced from SEC filings, Yahoo Finance, and company reports. Report date: 26 March 2026.