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Consolidated Statements of Operations and Comprehensive Loss(Dollars in U.S.$, in thousands, except share and per share data) Three Months EndedDecember 31, Year Ended December 31, 2024 2023 2024 2023 (unaudited) Subscription revenue$78,755 $59,796 $277,845 $220,794 Hardware revenue 23,756 21,068 57,589 58,178 Other revenue 13,018 6,099 36,050 25,546 Total revenue 115,529 86,963 371,484 304,518 Cost of subscription revenue 10,647 8,275 41,014 30,975 Cost of hardware revenue 18,078 17,652 47,225 47,384 Cost of other revenue 1,298 897 4,088 3,522 Total cost of revenue 30,023 26,824 92,327 81,881 Gross profit 85,506 60,139 279,157 222,637 Operating expenses: Research and development 29,788 26,018 113,071 100,965 Sales and marketing 33,532 25,668 113,350 99,072 General and administrative 16,469 12,795 60,712 52,583 Total operating expenses 79,789 64,481 287,133 252,620 Income (loss) from operations 5,717 (4,342) (7,976) (29,983)Other income (expense): Convertible notes fair value adjustment — 114 (608) (684)Derivative liability fair value adjustment — 62 (1,707) (116)Loss on settlement of convertible notes — — (440) — Gain on settlement of derivative liability — — 1,924 — Gain on change in fair value of investment — — 5,389 — Other income (expense), net 564 1,431 (1,208) 3,228 Total other income (expense), net 564 1,607 3,350 2,428 Income (loss) before income taxes 6,281 (2,735) (4,626) (27,555)Provision for (benefit from) income taxes (2,217) 411 (71) 616 Net income (loss) 8,498 (3,146) (4,555) (28,171)Net income (loss) per share, basic$0.11 (0.05) $(0.06) (0.42)Net income (loss) per share, diluted 0.10 (0.05) (0.06) (0.42)Weighted-average shares used in computing net loss per share, basic 74,920,574 66,748,542 72,125,571 66,748,542 Weighted-average shares used in computing net loss per share, diluted 83,212,947 66,748,542 72,125,571 66,748,542 Comprehensive income (loss) Net income (loss) 8,498 (3,146) (4,555) (28,171)Change in foreign currency translation adjustment 38 6 35 15 Total comprehensive income (loss)$8,536 $(3,140) $(4,520) $(28,156) Consolidated Balance Sheets(Dollars in U.S.$, in thousands) December 31,2024 December 31,2023Assets Current Assets: Cash and cash equivalents$159,238 $68,964 Accounts receivable, net 57,997 42,180 Inventory 8,057 4,099 Costs capitalized to obtain contracts, net 1,098 1,010 Prepaid expenses and other current assets 14,599 15,174 Total current assets 240,989 131,427 Restricted cash, noncurrent 1,221 1,749 Property and equipment, net 1,779 730 Costs capitalized to obtain contracts, noncurrent 1,049 834 Prepaid expenses and other assets, noncurrent 21,611 6,848 Operating lease right-of-use asset 683 1,014 Intangible assets, net 40,574 45,441 Goodwill 133,674 133,674 Total Assets$441,580 $321,717 Liabilities and Stockholders’ Equity Current Liabilities: Accounts payable 5,463 $5,896 Accrued expenses and other current liabilities 32,015 27,538 Convertible notes, current — 3,449 Deferred revenue, current 39,860 33,932 Total current liabilities 77,338 70,815 Convertible notes, noncurrent — 1,056 Derivative liability, noncurrent — 217 Deferred revenue, noncurrent 5,338 1,842 Other liabilities, noncurrent 359 723 Total Liabilities$83,035 $74,653 Commitments and Contingencies Stockholders’ Equity Common Stock 75 70 Additional paid-in capital 648,124 532,128 Accumulated deficit (289,698) (285,143)Accumulated other comprehensive income 44 9 Total stockholders’ equity 358,545 247,064 Total Liabilities and Stockholders’ Equity$441,580 $321,717 Consolidated Statements of Cash Flows(Dollars in U.S.$, in thousands) Year Ended December 31, 2024 2023 Cash Flows from Operating Activities: Net loss$(4,555) $(28,171)Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Depreciation and amortization 9,778 9,141 Amortization of costs capitalized to obtain contracts 1,268 2,125 Amortization of operating lease right-of-use asset 331 842 Stock-based compensation expense, net of amounts capitalized 42,269 38,512 Compensation expense in connection with revesting notes — 73 Non-cash interest expense, net 59 462 Convertible notes fair value adjustment 608 684 Derivative liability fair value adjustment 1,707 116 Loss on settlement of convertible notes 440 — Gain on settlement of derivative liability (1,924) — (Gain)/loss on revaluation of contingent consideration — — Gain on change in fair value of investment (5,389) — Non-cash revenue from investment (1,040) (1,608)Provision for credit losses 300 — Inventory write-off — 916 Adjustment in connection with membership benefit — (2,172)Changes in operating assets and liabilities, net of acquisitions: Accounts receivable, net (16,117) (9,055)Prepaid expenses and other assets 135 (6,667)Inventory (3,958) 5,811 Costs capitalized to obtain contracts, net (1,571) (1,905)Accounts payable (433) (7,895)Accrued expenses and other current liabilities 4,504 2,193 Deferred revenue 6,564 4,620 Other liabilities, noncurrent (364) (498)Net cash provided by (used in) operating activities 32,612 7,524 Cash Flows from Investing Activities: Internal use software (3,945) (1,715)Purchase of property and equipment (1,187) (506)Related Party SAFE (5,000) — Net cash used in investing activities (10,132) (2,221)Cash Flows from Financing Activities: Indemnity escrow payment in connection with an acquisition — (13,128)Proceeds from the exercise of stock options and warrants, and restricted stock settlements 14,553 5,811 Taxes paid related to net settlement of equity awards (33,995) (14,033)Proceeds from issuance of common stock in U.S.initial public offering, net of underwriting discounts and commissions 93,000 — Payments of U.S.initial public offering issuance costs (6,292) — Proceeds from repayment of notes due from affiliates — 314 Repayment of convertible notes — (3,919)Net cash provided by (used in) financing activities 67,266 (24,955)Net Increase (Decrease) in Cash, Cash Equivalents, and Restricted Cash 89,746 (19,652) Cash, Cash Equivalents and Restricted Cash at the Beginning of the Period 70,713 90,365 Cash, Cash Equivalents, and Restricted Cash at the End of the Period$160,459 $70,713 Supplementary and Non-GAAP Financial Information We report our financial results in accordance with GAAP, however, management believes that certain non-GAAP financial measures, such as EBITDA, Adjusted EBITDA, and the other measures presented in the tables below provide useful information to investors and others in understanding and evaluating our results of operations, as well as providing useful measures for period-to-period comparisons of our business performance.
The following table presents a reconciliation of Net income (loss), the most directly comparable GAAP measure, to EBITDA and Adjusted EBITDA: Three Months Ended December 31, Year Ended December 31, 2024 2023 2024 2023 ($ thousands, except percentages) Net income (loss)$8,498 $(3,146) $(4,555) $(28,171)Net income (loss) margin 7% (4)% (1)% (9)%Add (deduct): Convertible notes fair value adjustment16 — (114) 608 684 Derivative liability fair value adjustment16 — (62) 1,707 116 Loss on settlement of convertible notes — — 440 — Gain on settlement of derivative liability — — (1,924) — Gain on change in fair value of investment17 — — (5,389) — Provision for (benefit from) income taxes (2,217) 411 (71) 616 Depreciation and amortization18 2,720 2,297 9,778 9,141 Other income, net (563) (1,431) (4,362) (3,228)EBITDA$8,438 $(2,045) $(3,768) $(20,842)Stock-based compensation 11,762 10,834 42,269 38,512 IPO-related transaction costs, including secondary offering costs 1,046 — 6,830 — Workplace restructuring costs19 — 54 153 4,024 Write-off of obsolete inventory20 — — — 916 Adjustment in connection with membership benefit21 — — — (2,172)Warehouse relocation costs22 — 44 — 121 Adjusted EBITDA$21,246 $8,887 $45,484 $20,559 Adjusted EBITDA margin 18% 10% 12% 7% 16To reflect the change in fair value of the September 2021 Convertible Notes and derivative liability associated with the July 2021 Convertible Notes. 17To reflect the change in fair value of an investment in non-marketable equity securities carried at cost less impairments, if any, plus or minus changes in observable prices. 18Includes depreciation on fixed assets and amortization of intangible assets. 19Relates to non-recurring personnel and severance related expenses. 20Relates to the write-off of raw materials that have no alternative use to the Company following the decision to halt development. 21Relates to an adjustment recorded to reduce product costs recorded to cost of revenue in connection with the discontinuation of certain battery related membership benefits. 22Relates to non-recurring warehouse relocation costs in relation to the Company's transition to a new logistics partner. Q4’24 delivered a positive Adjusted EBITDA contribution of $21.2 million versus $8.9 million in Q4’23 as a result of continued strong subscription revenue growth and improved operating leverage.
The effective tax rate in any quarter may be subject to fluctuations during the year as new information is obtained, which may positively or negatively affect the assumptions used to estimate the annual effective tax rate, including factors such as valuation allowances against deferred tax assets, the recognition or de-recognition of tax benefits related to uncertain tax position, if any, and changes in or the interpretation of tax laws in jurisdictions where the Company conducts business. Key Performance Indicators (in millions, except ARPPC, ARPPS, ASP, and percentages)Q42024 Q42023 % YoY Core4 Monthly Active Users (MAU) - Global5 79.6 61.4 30%U.S. 43.7 36.8 19%International 36.0 24.6 46%ANZ 2.7 2.0 35%Paying Circles - Global6 2.3 1.8 25%U.S. 1.6 1.3 23%International 0.6 0.5 33%Average Revenue per Paying Circle (ARPPC)7,8$131.76 $124.17 6% Life360 Consolidated Subscriptions9 2.9 2.4 19%Average Revenue per Paying Subscription (ARPPS)8,10$110.43 $102.17 8%Net hardware units shipped11 1.9 1.7 8%Average Selling Price (ASP)12,13$12.56 $11.50 9%Annualized Monthly Revenue (AMR)$367.6 $274.1 34% FY2024 FY2023 % YoY Core4 Average Revenue per Paying Circle (ARPPC)7,8$128.00 $121.09 6% Life360 Consolidated Average Revenue per Paying Subscription (ARPPS)8,10$106.16 $99.53 7%Net hardware units shipped11 3.9 4.0 (4)%Average Selling Price (ASP)12,13$13.72 $13.48 2% 4Core metrics relate solely to the Life360 mobile application. 5A monthly active user ("MAU”) is defined as a unique member who engages with our Life360 branded services each month, which includes both paying and non-paying members, and excludes certain members who have a delayed account setup. 6A Paying Circle is defined as a group of Life360 members with a paying subscription that has been billed as of the end of a period. 7ARPPC is defined as annualized subscription revenue recognized and derived from the Life360 mobile application, excluding certain revenue adjustments related to bundled Life360 subscription and hardware offerings, for the reported period divided by the Average Paying Circles during the same period. 8Excludes revenue related to bundled Life360 subscription and hardware offerings of $(0.6) million and $(4.6) million for the three months and year ended December 31, 2024, respectively, and $(1.2) million and $(3.1) million for the three months and year ended December 31, 2023, respectively. 9Subscriptions are defined as the number of paying subscribers associated with the Life360, Jiobit and Tile brands who have been billed as of the end of the period. 10ARPPS is defined as annualized total subscription revenue recognized and derived from Life360, Tile and Jiobit subscriptions, excluding certain revenue adjustments related to bundled Life360 subscription and hardware offerings, for the reported period divided by the average number of paying subscribers during the same period. 11Net hardware units shipped represent the number of tracking devices sold during the period, excluding hardware units related to bundled Life360 subscription and hardware offerings, net of returns by our retail partners and directly to consumers. 12Excludes revenue related to bundled Life360 subscription and hardware offerings of $0.4 million and $4.3 million for the three months and year ended December 31, 2024, respectively, and $1.2 million and $3.7 million for the three months and year ended December 31, 2023, respectively. 13To determine the net ASP of a unit, we divide hardware revenue recognized, excluding revenue related to bundled Life360 subscription and hardware offerings, for the reported period by the number of net hardware units shipped during the same period. Global MAU increased 30% YoY to approximately 79.6 million, with Q4’24 net additions of 2.8 million.U.S.
