Full Year 2023 Life360 Inc Earnings Call

February 29, 2024

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Operator 1: This call is being conducted as a Zoom audio webinar. All participants will be in a listen-only mode until the Q&A. When we come to the Q&A, please raise your hand by pressing the Raise Hand icon at the bottom center of your screen, and your line will be unmuted in turn. Participants who have joined by telephone will be in a listen-only mode throughout. Just a reminder that we'll be making forward-looking statements regarding future events and financial performance, which are subject to material risks and uncertainties. Some of these risks have been set forth in the risk factors in our filings with the ASX and SEC. These forward-looking statements are based on assumptions that we believe to be reasonable as of today, and we have no obligation to update these statements as a result of new information or future events.

Operator: This call is being conducted as a Zoom audio webinar. All participants will be in a listen-only mode until the Q&A. When we come to the Q&A, please raise your hand by pressing the Raise Hand icon at the bottom center of your screen, and your line will be unmuted in turn. Participants who have joined by telephone will be in a listen-only mode throughout. Just a reminder that we'll be making forward-looking statements regarding future events and financial performance, which are subject to material risks and uncertainties.

All participants will be in a listen only mode until the Q&A.

When we come to the Q&A. Please raise your hand by pricing the raise hand icon at the Boston Center of your screen and your line will be unused and 10.

Participants who are joined by telephone will be in a listen only mode throughout.

Just a reminder, that we will be making forward looking statements regarding future events and financial performance, which are subject to material risks and uncertainties.

Some of these risks have been set forth in the risk factors in our filings with the ASX and ACC.

Operator: Some of these risks have been set forth in the risk factors in our filings with the ASX and SEC. These forward-looking statements are based on assumptions that we believe to be reasonable as of today, and we have no obligation to update these statements as a result of new information or future events. Additionally, we will present both GAAP and non-GAAP financial measures on today's call.

These forward looking statements are based on assumptions that we believe to be reasonable as of today and we have no obligation to update these statements as a result of new information or future events.

Additionally, we will present, both GAAP and non-GAAP financial measures on today's calls.

Operator 1: Additionally, we will present both GAAP and non-GAAP financial measures on today's call. These non-GAAP measures are not intended to be considered in isolation from a substitute for, or superior to our GAAP results. The agenda for this morning's call will begin with a business overview by co-founder and CEO, Chris Hulls, and CFO, Russell Burke. This will be followed by a strategy overview by Chris and COO, Lauren Antonoff. Russell will then provide an outline of Life360's market opportunity, followed by detail on the CY '23 financials. Finally, Chris will provide some outlook comments, which will be followed by a Q&A session. I would now like to turn the call over to Chris.

These non-GAAP measures are not intended to be considered in isolation from a substitute for or superior to our GAAP results.

Operator: These non-GAAP measures are not intended to be considered in isolation from a substitute for, or superior to our GAAP results. The agenda for this morning's call will begin with a business overview by co-founder and CEO, Chris Hulls, and CFO, Russell Burke. This will be followed by a strategy overview by Chris and COO, Lauren Antonoff. Russell will then provide an outline of Life360's market opportunity, followed by detail on the CY '23 financials. Finally, Chris will provide some outlook comments, which will be followed by a Q&A session. I would now like to turn the call over to Chris.

The agenda for this morning's call will begin with a business overview by co founder and CEO, Chris House, and CFO Russell book.

This will be followed by a strategy overview by Chris and C O R. Laurence <unk> enough.

Speaker Change: Bill will then provide an uptime of last 360 <unk> market opportunity followed by a detail on the <unk> 23 financials.

Speaker Change: Finally, Chris will provide some outlook comments, which will be followed by a Q&A session.

Speaker Change: I would now like to turn the call over to Chris.

Chris: Good morning, everyone and thanks for joining our Seaway 23 full year results call.

Chris Hulls: Good morning, everyone, and thanks for joining our CY '23 full year results call. We are incredibly proud that more than 61 million monthly active users globally enjoy the peace of mind that comes with the location sharing and safety features of Life360. In CY '23, we made significant strides in our member experience, showing our users what their family members are up to, whether they're driving, walking, or biking. We put pets and other valuables on the map with Tile, all in the service of our mission to keep people close to the ones they love. At the same time, we made meaningful progress on our path to profitability as we significantly reduced our net loss and achieved a major milestone by delivering our first full year of positive adjusted EBITDA and operating cash flow.

Speaker Change: We are incredibly proud of the more than 61 million monthly active users globally enjoy the peace of mind that comes with the location sharing and safety features of <unk> hundred 60.

Speaker Change: In slide 23, we made significant strides in our member experience shown or users what they are family members or up to whether they're driving walking or biking.

Pets and other valuables on the map with tile all in the service of our mission to keep people close to the ones They love.

Chris Hulls: We put pets and other valuables on the map with Tile, all in the service of our mission to keep people close to the ones they love. At the same time, we made meaningful progress on our path to profitability as we significantly reduced our net loss and achieved a major milestone by delivering our first full year of positive adjusted EBITDA and operating cash flow.

Speaker Change: At the same time, we made meaningful progress on our path to profitability as we significantly reduced our net loss and achieved a major milestone by delivering our first full year of positive adjusted EBITDA and operating cash flow.

Speaker Change: We are excited to continue building on our leading global position in location sharing and the exciting opportunities in CDI 24, and beyond to broaden our reach and deepen engagement with our members.

Chris Hulls: We are excited to continue building on our leading global position in location sharing and see exciting opportunities in CY '24 and beyond to broaden our reach and deepen engagement with our members. We look forward to bringing the benefits of our subscriptions to more markets globally and creating new revenue streams that utilize the scale and quality of our member base. Before I turn to the summary of our results, I'll remind you of the scale at which we are connecting families and saving lives. During CY '23, we dispatched almost 39,000 ambulances and protected more than 300 billion miles with Life360 crash detection. The real-world impact of our digital services is reflected in the user testimonial you see on slide 5, one of many we receive on a daily basis.

Speaker Change: We look forward to bring the benefits of our subscriptions to more mercury, that's globally and creating new revenue streams that utilize the scale and quality of our member base.

Speaker Change: Before I turn to the summary of our results I'll remind you of the scale at which we are connecting families and saving lives.

Speaker Change: During <unk> 2003, we dispatched almost 39000 ambulances and protected more than 300 billion miles with <unk> hundred 60 crash detection.

Chris Hulls: During CY '23, we dispatched almost 39,000 ambulances and protected more than 300 billion miles with Life360 crash detection. The real-world impact of our digital services is reflected in the user testimonial you see on slide 5, one of many we receive on a daily basis. The strategy we outlined at the beginning of CY '23 has driven the achievements you see outlined on slide 6. Our strategy to grow our audience has delivered a 26% year-over-year uplift in MAU to more than 61 million. International growth was particularly strong, increasing 40% year-over-year with a record number of MAU additions.

Speaker Change: The real world impact of our digital services is reflected in the user testimonial youll see on slide five one of many we receive on a daily basis.

The strategy, we outlined at the beginning of C&I 23 has driven the achievements you see outlined on slide six.

Chris Hulls: The strategy we outlined at the beginning of CY '23 has driven the achievements you see outlined on slide 6. Our strategy to grow our audience has delivered a 26% year-over-year uplift in MAU to more than 61 million. International growth was particularly strong, increasing 40% year-over-year with a record number of MAU additions. Our goal to drive membership saw the delivery of 1.8 million global paying circles, a 21% increase year-over-year. This outcome is particularly impressive in the context of US price increases, which help push global ARPPC up 25% and reflects the loyalty and engagement of our membership base. Our strategy to expand internationally saw paying circles outside the US increase 43% year-over-year, with particularly good growth in predominantly English-speaking countries of Canada, the UK, and Australia.

Speaker Change: Our strategy to grow our audience has delivered a 26% year over year uplift in mou to more than $61 million.

International growth was particularly strong increasing 40% year over year with a record number of Mou additions.

Speaker Change: Our goal to drive membership saw the delivery of $1 8 million global paying circles, a 21% increase year over year.

Chris Hulls: Our goal to drive membership saw the delivery of 1.8 million global paying circles, a 21% increase year-over-year. This outcome is particularly impressive in the context of US price increases, which help push global ARPPC up 25% and reflects the loyalty and engagement of our membership base. Our strategy to expand internationally saw paying circles outside the US increase 43% year-over-year, with particularly good growth in predominantly English-speaking countries of Canada, the UK, and Australia.

Speaker Change: This outcome is particularly impressive in the context of U S price increases, which helped push global AAR PPC up 25% and reflects loyalty and engagement of our membership base.

Speaker Change: Our strategy to expand internationally saw paying circles outside the U S increased 43% year over year with particularly good growth in predominantly English speaking countries of Canada, the UK and Australia.

Speaker Change: We launched triple tiered membership in the U K in October 2023, with very encouraging early results.

Chris Hulls: We launched Triple Tier membership in the UK in October 2023, with very encouraging early results. Finally, our focus on maintaining financial discipline while continuing to invest for growth underpinned a 33% year-over-year increase in revenue and our first full year of positive adjusted EBITDA. Turning to the detail of our CY 2023 results, we met or exceeded all the guidance metrics we provided to the market. These results reflect our commitment to balancing financial discipline with prudent investment to position the business for long-term success. Highlighting a few key metrics on slide 7, we delivered year-over-year revenue growth of 33%, while GAAP operating expenses increased only 4% year-over-year. Life360 core subscription revenue increased 52% year-over-year, driving consolidated subscription revenue growth of 44%. Excluding variable commissions, GAAP expenses were actually down year-over-year by 1%, reflecting the cost measures we implemented in January 2023.

Finally, our focus on maintaining financial discipline, while continuing to invest for growth underpinned a 33% year over year increase in revenue in our first full year of positive adjusted EBITDA.

Speaker Change: Turning to the detail of our <unk> hundred 23 results, we met or exceeded all of the guidance metrics, we provided to the market.

Speaker Change: These results reflect our commitment to balancing financial discipline with prudent investments to position the business for long term success.

Chris Hulls: These results reflect our commitment to balancing financial discipline with prudent investment to position the business for long-term success. Highlighting a few key metrics on slide 7, we delivered year-over-year revenue growth of 33%, while GAAP operating expenses increased only 4% year-over-year. Life360 core subscription revenue increased 52% year-over-year, driving consolidated subscription revenue growth of 44%. Excluding variable commissions, GAAP expenses were actually down year-over-year by 1%, reflecting the cost measures we implemented in January 2023.

Speaker Change: Highlighting a few key metrics on slide seven we delivered year over year revenue growth of 33%, while GAAP operating expenses increased only 4% year over year.

Speaker Change: <unk> hundred 60 core subscription revenue increased 52% year over year, driving consolidated subscription revenue growth of 44%.

Excluding variable commissions GAAP expenses were actually down year over year by 1%, reflecting the cost measures we implemented in January 2023.

Speaker Change: Net loss EBITDA and adjusted EBITDA, all delivered a greater than $60 million year over year improvement.

Chris Hulls: Net loss, EBITDA, and adjusted EBITDA all delivered a greater than $60 million year-over-year improvement. A similar improvement in operating cash flow delivered the first full year of positive OCF. Since our IPO in May 2019, Life360's annualized monthly revenue has more than quadrupled to $274 million. The 22% growth in December 2023 is particularly impressive given the significant step up provided by price increases in December 2022. Life360's MAU growth momentum is illustrated on Slide 9, with US and international MAU up 19% and 40% respectively. Australia, the UK, and Canada were all strong, with UK delivering 41% growth year over year. Russell will now run through the details of our three revenue lines.

Speaker Change: A similar improvement in operating cash flow delivered the first full year of positive OCI.

Speaker Change: Since our IPO in May 2019, <unk> hundred <unk> annualized monthly revenue has more than quadrupled to $274 million.

Speaker Change: The 22% growth in December 2023 is particularly impressive given the significant step up provided by price increases in December 2022.

Chris Hulls: The 22% growth in December 2023 is particularly impressive given the significant step up provided by price increases in December 2022. Life360's MAU growth momentum is illustrated on Slide 9, with US and international MAU up 19% and 40% respectively. Australia, the UK, and Canada were all strong, with UK delivering 41% growth year over year. Russell will now run through the details of our three revenue lines.

Speaker Change: <unk> hundred 60, <unk> growth momentum as illustrated on slide nine with U S and international Miu up, 19% and 40%, respectively, Australia, The UK and Canada were all strong with U K, delivering 41% growth year over year.

Speaker Change: Russell will now run through the details of our three revenue lines.

Speaker Change: <unk> hundred 60, <unk> strong consolidated subscription revenue growth across U S and international increasing 44% year on year, including the contribution of hardware subscriptions.

Russell Burke: Life360 delivered strong consolidated subscription revenue growth across US and international, increasing 44% year on year, including the contribution of hardware subscriptions. Core Life360 subscription growth of 52% was ahead of guidance, benefiting from US price increases and the repricing of existing iOS and Android subscribers. Global paying circles increased 21% year on year, a very good outcome in the context of the price increases, while global ARPPC was 25% higher for the year. The continuing strong momentum in 2023 paying circle growth is illustrated on Slide 11. US paying circles increased 14% year on year despite the price increases, while international circles were 43% higher. Our current international Triple Tier markets of focus, Canada, the UK, and Australia, all delivered significant growth, with particular outperformance in the UK and Australia.

<unk> hundred 60 subscriptions subscription growth of 52% was ahead of guidance benefiting from U S price increases and the repricing of existing iOS and Android subscribers.

Speaker Change: Global paying circles increased 21% year on year.

Speaker Change: Good outcome in the context of the price increases while global PPC was 25% higher for the year.

Russell Burke: The continuing strong momentum in 2023 paying circle growth is illustrated on Slide 11. US paying circles increased 14% year on year despite the price increases, while international circles were 43% higher. Our current international Triple Tier markets of focus, Canada, the UK, and Australia, all delivered significant growth, with particular outperformance in the UK and Australia.

Speaker Change: The continuing strong momentum in 'twenty three paying circle growth is illustrated on slide 11.

Speaker Change: Paying cycles increased 14% year on year, despite the price increases while international circles with 43% higher.

Speaker Change: Our current international Triple tier markets, a focus Canada, the UK and Australia.

Speaker Change: Delivered significant growth with particular outperformance in the UK and Australia.

Speaker Change: The slightly lower growth rate in Canada reflects the impact of price increases, which accompanied the triple T launch there in <unk>.

Russell Burke: The slightly lower growth rate in Canada reflects the impact of price increases which accompanied the Triple Tier launch there, and which have lifted ARPPC very significantly since launch. Triple Tier launched in the UK in October and is planned for Q2 in Australia. We expect both markets to follow the Canadian experience of significant ARPPC increases, with some slowdown in the rate of paying circle growth. CY '23 global ARPPC increased 25% year on year, underpinned by the significant uplift in the US. International ARPPC was relatively stable, impacted by exchange rate fluctuations. Of our international Triple Tier markets of focus, only Canada has seen a meaningful price increase in the period which underpinned its 51% revenue increase for the year. The impressive growth rates in the UK and Australia were driven by paying circle growth.

Speaker Change: Which have lifted our PPC very significantly since launch.

Speaker Change: Triple T and launched in the U K in October and is planned for Q2 in Australia.

Speaker Change: We expect both markets to follow the Canadian experience of significant <unk> increases with some slowdown in the rate of paying cycle growth.

Russell Burke: CY '23 global ARPPC increased 25% year on year, underpinned by the significant uplift in the US. International ARPPC was relatively stable, impacted by exchange rate fluctuations. Of our international Triple Tier markets of focus, only Canada has seen a meaningful price increase in the period which underpinned its 51% revenue increase for the year. The impressive growth rates in the UK and Australia were driven by paying circle growth.

Speaker Change: C Y 23, global PPC increased 25% year on year underpinned by the significant uplift in the U S.

Speaker Change: Internationally, our PPC was relatively stable impacted by exchange rate fluctuations.

Speaker Change: Although our international Triple tier markets of focus only Canada has seen a meaningful price increase in the period, which underpinned its 51% revenue increase for the year.

Speaker Change: The impressive growth rates in the UK and Australia were driven by paying circle growth.

As the table on the slide illustrates UK triple tier pricing took effect for new subscribers from October.

Russell Burke: As the table on the side illustrates, UK Triple Tier pricing took effect for new subscribers from October, and existing subscribers have seen a price increase from January. We've already seen a significant uplift in ARPPC and revenue from the initial cohorts. GAAP hardware revenue increased 21% year-on-year, with the usual seasonal uplift in Q4. Key drivers were the 12% uplift in the hardware units sold, stable pricing, and benefits from bundling. Non-GAAP hardware revenue, which excludes bundling, increased 14% in line with guidance. Unit growth reflected higher sales and reduced returns. GAAP hardware margins improved significantly to 19% due to favorable returns adjustments and cost savings initiatives. As we outlined during the year, we've been prioritizing higher margin sales channels. Other revenue of $25.5 million delivered in line with guidance.

Speaker Change: And existing subscribers have seen a price increase from January.

Speaker Change: We've already seen a significant uplift in <unk> and revenue from the initial cohorts.

Speaker Change: GAAP hardware revenue increased 21% year on year with the usual seasonal uplift in Q4.

Speaker Change: Key drivers with a 12% uplift in the hardware units sold stable pricing and benefits from bundling.

Speaker Change: non-GAAP hardware revenue, which excludes bundling increased 14% in line with guidance.

Russell Burke: Non-GAAP hardware revenue, which excludes bundling, increased 14% in line with guidance. Unit growth reflected higher sales and reduced returns. GAAP hardware margins improved significantly to 19% due to favorable returns adjustments and cost savings initiatives. As we outlined during the year, we've been prioritizing higher margin sales channels. Other revenue of $25.5 million delivered in line with guidance.

Speaker Change: Unit growth reflected higher sales and reduced returns.

Speaker Change: GAAP hardware margins improved significantly to 19% due to favorable returns adjustments and cost savings initiatives.

Speaker Change: As we outlined during the year, we've been prioritizing higher margin sales channels.

Speaker Change: Other revenue of $25 5 million delivered in line with guns. The modest year on year decline reflects the transition to a single data partnership from January 22.

Russell Burke: The modest year-on-year decline reflects the transition to a single data partnership from January 2022. As Chris and Lauren will talk about shortly, we are very optimistic about the opportunities to add new revenue streams that utilize our enormous free user base.

As Chris and Lauren will talk about shortly we are very optimistic about the opportunities to add new revenue streams that utilize our enormous free user base.

Speaker Change: Now we're going to share more with you about our strategy Warren joined US nine months ago with the partner with me as we take the company to the next level of scale.

Chris Hulls: Now we're going to share more with you about our strategy. Lauren joined us nine months ago to partner with me as we take the company to the next level of scale. She will give you a glimpse into how our members are using Life360 and what we're doing to achieve our long-term goals. Everything we do begins with the mission and service of our users. Our strategy is anchored in our mission: to keep people close to the ones they love. In service of this mission, we serve families at all stages. Of course, this includes families with kids walking to school or those with teen drivers. When those kids head off to college, we continue to be an important connection back to the family. We also see more and more circles of only adults, which is important as the population ages.

Speaker Change: She will give you a glimpse into how our members are using <unk> hundred 60, and what we're doing to achieve our long term goals.

Speaker Change: Everything we do begins with emission in service of our users.

Speaker Change: Our strategy is anchored in our mission to keep people close to the ones. They love and service of this mission. We serve families. At all stages of course. This includes families kids walking to school or those of the teen drivers when those kids head off to college, we continue to be an important connection back to the family.

Chris Hulls: In service of this mission, we serve families at all stages. Of course, this includes families with kids walking to school or those with teen drivers. When those kids head off to college, we continue to be an important connection back to the family. We also see more and more circles of only adults, which is important as the population ages.

Speaker Change: We also see more and more circles, the only adults, which is important as the population ages and now with the addition of tile devices. We're also reaching enduring pet parents, they want to keep their eyes on their fairly level.

Chris Hulls: Now, with the addition of Tile devices, we're also reaching adoring pet parents that want to keep their eyes on their furry loved ones. I'm now going to pass to Lauren to give everyone a sense of the role Life360 plays in our members' lives.

Speaker Change: I am now going to pass the warrant to give everyone a sense of the roll life 360 plays and our members' lives.

Speaker Change: Thanks, Chris.

Chris: Most of you are familiar with our role protecting families.

Lauren Antonoff: Thanks, Chris. Most of you are familiar with our role protecting families. Parents get the peace of mind of being able to confirm that their kids are where they're supposed to be, and it makes kids feel more secure too, truly knowing that their parents have their back. Beyond location sharing, our crash detection protects hundreds of billions of miles each year, and I think it's incredible that we dispatch over 100 ambulances a day. Members often start with us for location and safety, but inevitably, they discover that Life360 makes family life work better in all sorts of ways they didn't expect. Our members say they get a real sense of connection and peace of mind from knowing where their people are. That is, the benefit goes beyond the practical safety value to give people a priceless feeling that comes from being connected to loved ones.

Parents get the peace of mind that being able to confirm that their kids are where they are supposed to be and it makes kids feel more secure to truly knowing that their parents have their back.

Chris: Beyond location sharing our crash detection protect hundreds of billions of miles miles each year.

Chris: And I think it's incredible that we dispatch over 100 ambulances a day.

Chris: Members, often start with ads per location and safety, but inevitably they discover that life 360 makes family life work better in all sorts of ways. They didn't expect.

Lauren Antonoff: Members often start with us for location and safety, but inevitably, they discover that Life360 makes family life work better in all sorts of ways they didn't expect. Our members say they get a real sense of connection and peace of mind from knowing where their people are. That is, the benefit goes beyond the practical safety value to give people a priceless feeling that comes from being connected to loved ones.

Chris: Our members say they get a real sense of connection and peace of mind from knowing whether people are that is the benefit goes beyond the practical safety value to give people a priceless feeling that comes from being connected to loved ones.

Chris: When youre watching your Kid drive off to college, it's not just about being worried about the dry it's about the feeling of having a hand on their shoulder while they are taking a huge life step.

Lauren Antonoff: When you're watching your kid drive off to college, it's not just about being worried about the drive. It's about the feeling of having a hand on their shoulder while they're taking a huge life step. It's the everyday sense of connection that drives the outstanding engagement we see. In the US, users are checking Life360 an average of five times a day. That's extraordinary engagement. Let me share another fun example. Traditionally, introducing someone to your family is a big step in a relationship. This member points out that in modern love, adding them to your family circle in Life360 is the natural next step. The reality is that relationships are fundamentally complex, and that's especially true with close relationships. Our role is not only for safety and peace of mind, but to help make relationships work better and easier.

Chris: It's the everyday sense of connection that drives the outstanding engagement, we see in the U S. Users are checking life 360, an average of five times a day.

Chris: Ordinary engagement, let me.

Speaker Change: Sure. Another Fine example, traditionally introducing some went to your family is a big step in our relationship.

Lauren Antonoff: Traditionally, introducing someone to your family is a big step in a relationship. This member points out that in modern love, adding them to your family circle in Life360 is the natural next step. The reality is that relationships are fundamentally complex, and that's especially true with close relationships. Our role is not only for safety and peace of mind, but to help make relationships work better and easier.

Speaker Change: Remember our points out that in modern love, adding them to your family Circle and by 360 is the natural next step.

The reality is that relationships are fundamentally complex and that's especially true with close relationships our roles not only for safety and peace of mind, but to help make relationships work better and easier our unique position in the relationships that matter. Most is one of the factors driving such strong growth with daily active users.

Lauren Antonoff: Our unique position in the relationships that matter most is one of the factors driving such strong growth, with daily active users jumping 31% year-over-year. We're super proud that over 61 million people actively use Life360 every month. Our product experiences and the peace of mind and delight they bring fuel engagement and drive subscriptions, especially for families with kids and teen drivers. We see significant untapped potential with additional segments like young couples that demonstrate product market fit with our free product, but have different priorities when it comes to reasons to pay. Whether they're free users or paying subscribers, Life360 is playing an increasingly valuable role in many aspects of our members' lives.

Speaker Change: Jumping 31% year over year.

Speaker Change: We're super proud that over 61 million people actively use life 360 every month.

Speaker Change: Our product experiences and the peace of mind and delight, they bring fuel engagement and drive subscriptions, especially for families with kids and teen drivers.

Speaker Change: We see significant untapped potential with additional segments like young couples that demonstrate product market debt with our free product, but have different priorities when it comes to reasons to pay.

Lauren Antonoff: We see significant untapped potential with additional segments like young couples that demonstrate product market fit with our free product, but have different priorities when it comes to reasons to pay. Whether they're free users or paying subscribers, Life360 is playing an increasingly valuable role in many aspects of our members' lives.

Speaker Change: Whether they are free users are paying subscribers life 360 is playing an increasingly valuable role in many aspects of our members' lives.

Speaker Change: Well the primary use of life 360, maybe to make sure our loved ones get to where they're supposed to be for my own life and I know I'm not alone in this one and equally compelling use cases, knowing when it's time to start cooking dinner.

Lauren Antonoff: While the primary use of Life360 may be to make sure loved ones get to where they're supposed to be, from my own life, and I know I'm not alone in this one, an equally compelling use case is knowing when it's time to start cooking dinner. This is what I mean about making relationships easier. My husband's happy 'cause he knows I'm on my way, and I'm happy that I don't have to field a bunch of texts as I'm wrapping up my day at work. Now, with the addition of Tile, location sharing extends beyond your phone to devices, dramatically expanding our impact on everyday life. Not only things like finding the remote or lost luggage, but making sure your pets are safe or finding them if they get lost.

Speaker Change: What I mean about making relationships easier my husband's happy because he knows I'm on my way and I am happy that I don't have to field, a bunch of Texas I'm wrapping up my day at work and.

Speaker Change: And now with the addition of pile location sharing extends beyond your phone to devices dramatically expanding our impact on everyday life.

Lauren Antonoff: Now, with the addition of Tile, location sharing extends beyond your phone to devices, dramatically expanding our impact on everyday life. Not only things like finding the remote or lost luggage, but making sure your pets are safe or finding them if they get lost. The practical use cases are endless, but I also want to call attention to the social post on the slide. It exemplifies that feeling of connection that Life360 brings to millions of people.

The only things by finding the remote or lost luggage, but making sure. Your pets are safe are finding them if they get lost.

The practical use cases are endless, but I also want to call attention to the social posts on this line.

Lauren Antonoff: The practical use cases are endless, but I also want to call attention to the social post on the slide. It exemplifies that feeling of connection that Life360 brings to millions of people. Whether it's catching your mom speeding or rolling your eyes 'cause your brother can't keep his phone charged, the ability to stay connected while your family goes about doing what they do is what feels good to our users and brings a lot of joy. That emotional resonance is a key reason why our experience, which focuses on the people you care about most, is super different from utility tracking platforms. Chris?

It exemplifies that feeling of connection that life 360 brings to millions of people, whether it's catching your mom's speeding or rolling your eyes catch your brother can't keep his phone charged the ability to stay connected while your family goes about doing what they do is what feels good to our users and brings a lot of joy and that emotional resin.

Lauren Antonoff: Whether it's catching your mom speeding or rolling your eyes 'cause your brother can't keep his phone charged, the ability to stay connected while your family goes about doing what they do is what feels good to our users and brings a lot of joy. That emotional resonance is a key reason why our experience, which focuses on the people you care about most, is super different from utility tracking platforms. Chris?

Speaker Change: <unk> is a key reason why our experience which focuses on the people you care about most is super different from utility tracking platforms.

Great.

Speaker Change: Given our user base and the role our product plays in our members' lives.

Chris Hulls: Given our user base and the role our product plays in our members' lives, we're being intentional about where we're headed for the future, and we wanted to give you a glimpse into our aspirational goals. We're already the most beloved app for parents to keep track of their kids' safety, but we believe we have a broader role to play as we aim to be the number one brand to make everyday life better for families of all stages. As our relevance grows in this way, we see opportunities for significant incremental top-line growth and plotting our course to our first $1 billion of revenue by continuing to innovate in both our experiences and our business and progress on our pathway to significant EBITDA margins. Along the way, we expect to surpass 100 million monthly active users.

We're being intentional about where we're headed for the future and we wanted to give you a glimpse into our aspirational goals.

Speaker Change: We're already the most beloved app for parents to keep track of their kids' safety, but we believe we have a broader role to play as we aim to be the number one brand to make everyday life better for families of all stages.

Speaker Change: As irrelevance grows in this way, we see opportunities for significant incremental top line growth and flooding our course at our first $1 billion of revenue by continuing to innovate innovate and both our experiences in our business and progress on our pathway to significant EBITDA margins along the way, we expect to surpass 100 million monthly active use.

Chris Hulls: As our relevance grows in this way, we see opportunities for significant incremental top-line growth and plotting our course to our first $1 billion of revenue by continuing to innovate in both our experiences and our business and progress on our pathway to significant EBITDA margins. Along the way, we expect to surpass 100 million monthly active users. That's actually a goal we set last fall, but that one is getting closed quickly, so we're now upping that to $150 million. Lauren will share our strategy to achieve these goals.

Speaker Change: <unk>.

Speaker Change: That's actually a goal we set last fall, but that one is getting close quickly. So we're now upping that to $150 million.

Chris Hulls: That's actually a goal we set last fall, but that one is getting closed quickly, so we're now upping that to $150 million. Lauren will share our strategy to achieve these goals.

Speaker Change: Warren will share our strategy to achieve these goals.

Warren: We're focused on four key initiatives for 2024 first growing our audience is about doubling down to continue to grow our huge base of existing monthly active users.

Lauren Antonoff: We're focused on four key initiatives for 2024. First, growing our audience is about doubling down to continue to grow our huge base of existing monthly active users. Next, we're focused on how to scale our paid offerings, including both subscriptions and the number of devices in use. Third, we're creating new revenue streams that go beyond our current offerings. Finally, as we do all this to drive our top line, we're being intentional about doing it in a way that delivers on our commitment to expand profitability. Let's double-click on the first objective, growing our audience. We think about four key levers to grow the number of active users. Let's start with viral experiences. Life360's growth to date has been primarily fueled by organic word of mouth. We're looking to amplify this using product experience, experiences that encourage members to tell other people about Life360.

Warren: Next we're focused on how to scale, our paid offerings, including both subscriptions and the number of devices in use.

Warren: Third, we're creating new revenue streams that go beyond our current offerings and finally as we do all of this to drive our top line, we're being intentional about doing it in a way that delivers on our commitment to expand profitability.

Lauren Antonoff: Finally, as we do all this to drive our top line, we're being intentional about doing it in a way that delivers on our commitment to expand profitability. Let's double-click on the first objective, growing our audience. We think about four key levers to grow the number of active users. Let's start with viral experiences. Life360's growth to date has been primarily fueled by organic word of mouth. We're looking to amplify this using product experience, experiences that encourage members to tell other people about Life360.

Warren: So, let's double click on the first objective growing our audience.

Warren: We think about four key levers to grow the number of active users, let's start with viral experiences.

<unk> hundred 60, <unk> growth to date has been primarily fueled by organic word of mouth.

We're looking to amplify this using product experience.

Speaker Change: He says that encourage members could tell other people about like <unk> for example, making it convenient for members to use the app to meet up with friends or family outside their circle, who may not be like 360 users yet.

Lauren Antonoff: For example, making it convenient for members to use the app to meet up with friends or families outside their circle who may not be Life360 users yet. Experiences like this expose Life360 to new people, giving us an opportunity to win them over to becoming daily users. Next, we see the value in our free product experience as our not-so-secret sauce. We're investing in new features that give members more reasons to keep coming back. For example, we're in the process of introducing a fun and handy feature called Watch Me Fly, where your circle gets notified when you landed in an airport, saving the hassle of back-and-forth texting. The vast amount of data we have opens up endless opportunities to engage our customers with insights that make family life easier or just more fun.

Speaker Change: Experiences like this exposed to life through 62, new people, giving us an opportunity to win them over to becoming daily users.

Speaker Change: Next we see the value in our three product experience is our not so secret sauce.

Speaker Change: We're investing in new features that give members more reasons to keep coming back for example, we're in the process of introducing a fun and handy feature called Watch me fly where Youre circle gets notified when you landed at an airport saving the hassle of back and forth texting.

Lauren Antonoff: For example, we're in the process of introducing a fun and handy feature called Watch Me Fly, where your circle gets notified when you landed in an airport, saving the hassle of back-and-forth texting. The vast amount of data we have opens up endless opportunities to engage our customers with insights that make family life easier or just more fun.

Speaker Change: The vast amount of data we have opened up endless opportunities to engage our customers with insights that make family life easier or just more fun.

At the same time as we're continuing to lean into product led growth. We're also upping our marketing game.

Lauren Antonoff: At the same time as we're continuing to lean into product-led growth, we're also upping our marketing game. We recently hired Mike Zeman as our Chief Marketing Officer. Mike has over 20 years of experience in digital marketing, subscriptions, brand building, and international expansion. We're super excited to have Mike on board, and we look to his leadership to help us hone our marketing strategy and establish Life360 as the recognized brand leader in everyday family life. Finally, international expansion continues to be core to our growth strategy, and we're committed to ensuring that our product delights members around the world.

Speaker Change: We recently hired Mike <unk> as our Chief Marketing Officer, Mike has over 20 years of experience in digital marketing subscriptions brand building and international expansion. So we're super excited to have Mike on board and we look to his leadership to help us hone our marketing strategy and establish life 360 S be recognized brand leader in every.

Speaker Change: <unk> family life.

Speaker Change: And finally international expansion continues to be core to our growth strategy and we're committed to ensuring that our product to life members around the world.

Lauren Antonoff: Finally, international expansion continues to be core to our growth strategy, and we're committed to ensuring that our product delights members around the world. While our free base is a key component of our success, we're also investing to drive revenue growth. Our paid offers include both our app subscriptions and our devices, but increasingly, we see those as two sides of a connected experience that address the needs of our members at all life stages.

Speaker Change: While our free base is a key component of our success. We're also investing to drive revenue growth.

Lauren Antonoff: While our free base is a key component of our success, we're also investing to drive revenue growth. Our paid offers include both our app subscriptions and our devices, but increasingly, we see those as two sides of a connected experience that address the needs of our members at all life stages. What I mean is that some members come to the app for location and safety and discover ways that our range of devices make family life easier. Other people may pick up a Tile at a retail store, and that might be their very first introduction to Life360. However people find us, we think about scaling our paid offers through four efforts. The first is creating new value for Life360 memberships. Near term, we're working on new features that appeal to a broad audience.

Speaker Change: Our paid offerings include both our app subscriptions and our devices, but increasingly we see those as two sides of a connected experience that address the needs of our members that all life stages. What I mean is that some members come to the app for location and safety and discover ways that a range of devices make family life easier.

Lauren Antonoff: What I mean is that some members come to the app for location and safety and discover ways that our range of devices make family life easier. Other people may pick up a Tile at a retail store, and that might be their very first introduction to Life360. However people find us, we think about scaling our paid offers through four efforts. The first is creating new value for Life360 memberships. Near term, we're working on new features that appeal to a broad audience.

Speaker Change: But other people may pick up a tile at a retail store and that might be their very first introduction to like 360.

Speaker Change: However people find us we think about scaling our paid offers through <unk> efforts.

Speaker Change: The first is creating new value for <unk> hundred 60 memberships.

Speaker Change: Near term, we're working on new features that appeal to a broad audience, but longer term. We actually believe there is tremendous upside in addressing the unique needs that customers have that specific stages. For example, adult children, who are worried about aging parents and looking for solutions to keep them safe.

Lauren Antonoff: Longer term, we actually believe there's tremendous upside in addressing the unique needs that customers have at specific stages. For example, adult children who are worried about aging parents and looking for solutions to keep them safe. Second, we're continuing to drive subscription growth and device sales around the globe. We introduced Triple Tier offering in the UK in October, and we'll be expanding that offering to Australia and New Zealand in Q2 of this year. We're increasing our efforts to ensure that we meet the unique needs of customers in individual markets. Third, we continue to be super excited about the ways that devices expand our use cases and let us deliver more value to members. The reality is that when you put devices on the map, it changes their utility.

Speaker Change: Second we're continuing to drive subscription growth in device sales around the globe.

Speaker Change: We introduced triple tier offering in the U K in October and will be expanding that offering to Australia and New Zealand in Q2. This year and we are increasing our efforts to ensure that we meet the unique needs of customers in individual markets.

Lauren Antonoff: We're increasing our efforts to ensure that we meet the unique needs of customers in individual markets. Third, we continue to be super excited about the ways that devices expand our use cases and let us deliver more value to members. The reality is that when you put devices on the map, it changes their utility.

Speaker Change: Third we continue to be Super excited about the ways that devices expand our use cases, and let us deliver more value to members.

Speaker Change: The reality is that when you put devices on the map it changes their utility.

Speaker Change: Standalone tracking apps are okay. When you know something's loss, but when you're already checking like 360 like our U S. Members do an average of five times a day you can discover that you let the stuff at home before you get to the gym.

Lauren Antonoff: Standalone tracking apps are okay when you know something's lost, but when you're already checking Life360, like our US members do an average of five times a day, you can discover that you left your stuff at home before you get to the gym. In 2024, we'll introduce our first release of Tile since the acquisition, and we're reimagining the Tile value prop from the perspective of your Life360 circle to deliver a native experience that's designed for the whole family. Finally, a key part of our monetization strategy is to drive continuous improvement through every detail of our user funnel using a test-and-learn approach. We're super bullish about the growth opportunity in our paid offerings, but we also recognize the opportunity that lies in our enormous free user base with around 24 million daily active users who rely on us to stay connected with the people they love.

Speaker Change: In 2024 will introduce our first release of tile since the acquisition and we're re imagining the tile value prop from the perspective of your life 360 circle to deliver a native experience that's designed for the whole family.

Speaker Change: Finally, a key part of our monetization strategy is to drive continuous improvement through every detail of our user funnel using a test and learn approach.

Lauren Antonoff: Finally, a key part of our monetization strategy is to drive continuous improvement through every detail of our user funnel using a test-and-learn approach. We're super bullish about the growth opportunity in our paid offerings, but we also recognize the opportunity that lies in our enormous free user base with around 24 million daily active users who rely on us to stay connected with the people they love.

Speaker Change: We're super bullish about the growth opportunity in our paid offerings, but.

Speaker Change: But we also recognize the opportunity that lies in our enormous free user base with around 24 million daily active users who rely on us to stay connected with the people they love.

Speaker Change: In 2024, we're starting the journey to introduce advertising into our free experience.

Lauren Antonoff: In 2024, we're starting the journey to introduce advertising into our free experience. Life360 offers advertisers a unique opportunity to reach a broad, highly engaged audience with unparalleled relevance across a wide range of categories. We're taking a measured approach as we enter the space because the quality of our free experience is a pillar of our company's success, and we're committed to continuing to delight our members and protect their privacy. Still, it's clear to us that we have amazing potential to grow an ads revenue stream, and we love that this business model aligns the investment we've made in our free experience with the value we deliver to partners and shareholders. We see further opportunities to pursue a wide range of partnerships and adjacencies from insurance to security products.

Speaker Change: Library 60 offers advertisers a unique opportunity to reach a broad highly engaged audience with unparalleled relevance across a wide range of categories.

Speaker Change: We're taking a measured approach as we enter the space because the quality of our free experience is a pillar of our company's success and we're committed to continuing to delight, our members and protect their privacy. So it's clear to us that we have amazing potential to grow and ads revenue stream and we loved that this business model aligns the investment we've made in our free experience.

Lauren Antonoff: Still, it's clear to us that we have amazing potential to grow an ads revenue stream, and we love that this business model aligns the investment we've made in our free experience with the value we deliver to partners and shareholders. We see further opportunities to pursue a wide range of partnerships and adjacencies from insurance to security products.

With the value, we deliver to partners and shareholders.

We see further opportunities to pursue a wide range of partnerships and adjacencies from insurance to security products, but for now we're keeping the focus of our new revenue efforts on ads because the opportunity is so compelling.

Lauren Antonoff: For now, we're keeping the focus of our new revenue efforts on ads because the opportunity is so compelling. To give you a sense of the opportunity, we've spent a lot of time reaching out to other companies that have been through a similar journey to incorporate advertising into their business. The range of outcomes is significant from those that added meaningful revenue without giving advertising a major focus to others that chose to lean in and create billion-dollar extensions to their core business. For us, 2024 is about getting started and understanding an opportunity that we ultimately believe can achieve similar scale to our subscription business, given our extensive reach, high engagement, and the special role we play in our members' lives.

Speaker Change: To give you a sense of the opportunity. We have spent a lot of time, reaching out to other companies that have been through a similar journey to incorporate advertising into their business.

Speaker Change: The range of outcomes is significant from those that added meaningful revenue without giving advertising a major focus to others that chose to lean in and create $1 billion extensions to their core business for US 2024 is about getting started in understanding and opportunity that we ultimately believe can achieve similar scale.

Lauren Antonoff: For us, 2024 is about getting started and understanding an opportunity that we ultimately believe can achieve similar scale to our subscription business, given our extensive reach, high engagement, and the special role we play in our members' lives.

Speaker Change: Two our subscription business given our extensive reach high engagement and the special role we play in our members lives. So I hope. This gives you the strategy overview and gives you a sense of the priorities moving forward as we work to grow our audience scale, our paid offerings and introduce new revenue streams now I'm going to turn it over to Russell to talk you through the final element of our strata.

Lauren Antonoff: I hope this gives the strategy overview and gives you a sense of the priorities moving forward as we work to grow our audience, scale our paid offerings, and introduce new revenue streams. Now I'm gonna turn it over to Russell to talk you through the final element of our strategy, which is our commitment to expanding profitability. Russell?

Russell Book: G, which is our commitment to expanding profitability Russell.

Russell Book: Thanks Lauren.

On a conference call a year ago, we outlined <unk> hundred 60 was it at a pivotal point to leverage scale and the cost base and deliver a pathway to profitability.

Russell Burke: Thanks, Lauren. On our conference call a year ago, we outlined how Life360 was at a pivotal point to leverage scale in the cost base and deliver a pathway to profitability. Our disciplined approach to cost, combined with strong revenue momentum, has underpinned our first full year of adjusted EBITDA breakeven and our expectation of a trajectory to positive EBITDA in calendar year 2025, and ultimately strong EBITDA margins. During CY '23, operating costs as a percentage of revenue declined to 68% from 85% in the prior year. The reorganization we undertook at the beginning of the year to deliver more than $15 million in annualized savings saw personnel costs as a percentage of revenue decline from 37% to 27%, and further proportionate reductions as we optimized marketing investments and other costs.

Russell Book: Our disciplined approach to cost combined with strong revenue momentum is underpinned our first full year of adjusted EBITDA breakeven and our expectation of a trajectory to positive EBITDA in calendar year, 'twenty, five and ultimately strong EBITDA margins.

Russell Book: During C Y 23 operating costs as a percentage of revenue declined from 68%.

Russell Burke: During CY '23, operating costs as a percentage of revenue declined to 68% from 85% in the prior year. The reorganization we undertook at the beginning of the year to deliver more than $15 million in annualized savings saw personnel costs as a percentage of revenue decline from 37% to 27%, and further proportionate reductions as we optimized marketing investments and other costs.

Russell Book: Declined to 68% from 85% in the prior year.

Russell Book: The reorganization, we undertook at the beginning of the year to deliver more than $15 million in annualized savings. So personnel cost as a percentage of revenue declined from 37% to 27%.

Russell Book: And further proportionate reductions as we optimized marketing investments and other costs.

Russell Book: At the same time, we've maintained strong revenue momentum with prudent investment to underpin future growth.

Russell Burke: At the same time, we've maintained strong revenue momentum with prudent investment to underpin future growth. Following on from Chris and Lauren's overview of the key elements of our growth strategy, I'd like to touch briefly on how we're thinking about the value creation opportunity that's available to us, and the scale of our addressable markets. Our growth and valuation opportunity is anchored in the market position that we've already established and the powerful foundation that that provides. We believe that our international brand as a trusted leader in family location sharing and safety, together with a highly engaged member base and differentiated user experience, makes us unique in the marketplace. We knew that families weren't being served by the incumbent players, and we've created a competitive moat based on household dominance, which makes us strongly positioned to keep scaling. Location sharing is a commodity.

Speaker Change: Following on from Chris and Laurens overview of the key elements of our growth strategy I'd like to touch briefly on how we're thinking about the value creation opportunity that's available to us and the scale of our addressable markets.

Speaker Change: Now growth in valuation opportunity is anchored in the market position that we've already established and the powerful foundation that that provides.

Speaker Change: Okay.

Speaker Change: We believe that our international brand as a trusted leader in family location sharing and safety together with our highly engaged member base and differentiated user experience makes us unique in the marketplace.

Russell Burke: We believe that our international brand as a trusted leader in family location sharing and safety, together with a highly engaged member base and differentiated user experience, makes us unique in the marketplace. We knew that families weren't being served by the incumbent players, and we've created a competitive moat based on household dominance, which makes us strongly positioned to keep scaling. Location sharing is a commodity.

We knew that families when being served by the incumbent players and we've created a competitive moat based on household dominance, which makes us strongly positioned to keep scaling.

Speaker Change: Location sharing is a commodity.

Speaker Change: Focusing on family.

Speaker Change: And safety is our unique unlock riding demographic tailwind as millennials are just starting to have families and their parents age.

Russell Burke: Focusing on family safety is our unique unlock. Riding demographic tailwinds as millennials are just starting to have families and their parents age. We know that the modern family and friends also want to share their locations. Our significant scale underpins a durable value creation model that enables multiple growth levers. The strength of our subscription growth and the size of our subscriber base means that the nominal cost to add features is low. We've now reached a pivot point with scale, where we can truly leverage costs even as we continue to bolster growth. Finally, we are a founder-led organization with a seasoned executive team focused on creating ever greater value and utility for our member base. Our significant addressable market opportunity can be viewed through a number of different lenses.

Speaker Change: We know that the months of family and friends also want to share their locations.

Speaker Change: Our significant scale underpins a durable value creation model that enables multiple growth levers.

Speaker Change: The strength of our subscription growth and the size of our subscriber base means that the nominal cost to add features is low.

Speaker Change: We've now reached the pivot point with scale, where we can truly leverage costs, even as we continue to bolster growth.

Russell Burke: We've now reached a pivot point with scale, where we can truly leverage costs even as we continue to bolster growth. Finally, we are a founder-led organization with a seasoned executive team focused on creating ever greater value and utility for our member base. Our significant addressable market opportunity can be viewed through a number of different lenses.

Speaker Change: And finally, we are a founder led organization with a seasoned executive team focused on creating evergreen to value and utility for our member base.

Speaker Change: Now a significant addressable market opportunity can be viewed through a number of different lenses.

Speaker Change: Our core market has a $60 billion global services serviceable addressable market, which includes the markets. We currently servicing.

Russell Burke: Our core market has a $60 billion global serviceable addressable market, which includes the markets we're currently servicing. We've already proven that we're bigger than location sharing as a trusted platform that's expanded into other market segments, including crash and roadside assistance, identity theft protection, and more. Looking forward, we believe we've got the ability to disrupt legacy players, as we've already done in markets such as driver safety. Our near and midterm growth opportunities include adjacent addressable markets in industries such as auto insurance and eldercare, expanding our serviceable addressable market from $60 billion to a total addressable market of $190 billion. Beyond that, we see potential adjacent markets which can deliver on our vision of building a family safety and security platform and ecosystem.

Speaker Change: We've already proven that were bigger than location sharing as a trusted platform that's expanded into other market segments, including crash and roadside assistance identity theft protection and more.

Speaker Change: Looking forward, we believe we've got the ability to disrupt legacy players as we've already done in markets such as driver safety now.

Speaker Change: Our near and midterm growth opportunities include adjacent addressable markets in <unk>.

Russell Burke: Our near and midterm growth opportunities include adjacent addressable markets in industries such as auto insurance and eldercare, expanding our serviceable addressable market from $60 billion to a total addressable market of $190 billion. Beyond that, we see potential adjacent markets which can deliver on our vision of building a family safety and security platform and ecosystem.

Speaker Change: Industries, such as auto insurance and elder care.

Speaker Change: Expanding our service so serviceable addressable market from 60 billion.

Speaker Change: Two a total addressable market of 190 billion.

Speaker Change: And then beyond that we see potential adjacent markets, which can deliver on our vision of building a family's safety and security platform and ecosystem.

Speaker Change: We want to be the go to place for digitally native families with the ability to service additional verticals, such as life home and travel insurance and family financial services.

Russell Burke: We wanna be the go-to place for digitally native families with the ability to service additional verticals such as life, home, and travel insurance, and family financial services. At the same time, our subscription business still has a very long runway. As an example, in the US, which is clearly our most highly penetrated territory, we're still seeing accelerating growth rates in our most highly penetrated states. This gives us great confidence that there's still significant headroom for future growth in the US before we even get to international expansion. The appendix to this presentation also contains some additional slides on our membership model, positioning, and competitive differentiation as these factors enable our growth flywheel. Turning now to the detailed financial overview. Please note that the numbers I'll be discussing are denominated in US dollars and where noted are in accordance with US GAAP accounting standards.

Speaker Change: At the same time, our subscription business tool has a very long runway.

Speaker Change: As an example in the U S, which is clearly element is highly penetrated territory, we're still seeing accelerating growth rates in our most highly penetrated states.

Speaker Change: This gives us great confidence that there's still significant headroom for future growth in the U S. Before we even get to international expansion.

Russell Burke: This gives us great confidence that there's still significant headroom for future growth in the US before we even get to international expansion. The appendix to this presentation also contains some additional slides on our membership model, positioning, and competitive differentiation as these factors enable our growth flywheel. Turning now to the detailed financial overview. Please note that the numbers I'll be discussing are denominated in US dollars and where noted are in accordance with US GAAP accounting standards.

Speaker Change: The appendix to this presentation also contains some additional slides on our membership model positioning and competitive differentiation as these factors enable lal growth bought flywheel.

Speaker Change: Turning now to the detailed financial overview.

Speaker Change: Please note that the numbers I'll be discussing are denominated in U S dollars and win noted in accordance with U S GAAP accounting standards.

Speaker Change: Our market leading retention.

Russell Burke: Our market-leading retention metrics are outlined on this slide. Starting with the charts at the top, US organic user retention has remained stable even as we've significantly lifted new registration volumes. Net subscription revenue retention by half year period measures revenue retention of subscribers who signed up at the end of the previous period. Revenue retention has remained at approximately 100%, even as the number of gross subscriber additions has continued to accelerate. The charts at the bottom of the slide show revenue by registration cohort for US and international subscribers. They highlight the longevity of our subscriber relationships with ongoing contributions from cohorts that signed up prior to 2016. The US chart illustrates the impact of our price increases, with a major step up in the monthly contribution from all of our cohorts.

Speaker Change: Metrics are outlined on this slide starting with the chart at the top U.

Speaker Change: U S organic user retention has remained stable even as we have significantly lifted new registration volumes.

Speaker Change: Net subscription revenue retention by half year period measures revenue retention of subscribers, who signed up at the end of the previous period.

Speaker Change: Revenue retention has remained at approximately 100% even as the number of gross subscriber additions has continued to accelerate.

Russell Burke: Revenue retention has remained at approximately 100%, even as the number of gross subscriber additions has continued to accelerate. The charts at the bottom of the slide show revenue by registration cohort for US and international subscribers. They highlight the longevity of our subscriber relationships with ongoing contributions from cohorts that signed up prior to 2016. The US chart illustrates the impact of our price increases, with a major step up in the monthly contribution from all of our cohorts.

Speaker Change: The chart at the bottom of the slide show revenue by retention cohort by registration cohort for U S and international subscribers.

Speaker Change: They highlight the longevity of our subscriber relationships with ongoing contributions from cohorts that signed up prior to 2016.

Speaker Change: The U S chart illustrates the impact of our price increases with a major step up in the monthly contribution from all of our cohorts.

Speaker Change: The international business is yet to see the benefit of any meaningful price increases. However revenue continues to grow strongly from a small base due to the strong performance of paying circle additions.

Russell Burke: The international business is yet to see the benefit of any meaningful price increases. However, revenue continues to grow strongly from a small base due to the strong performance of paying Circle additions. The cumulative revenue of our quarterly cohorts over time is shown on this slide. The time series begins in Q1 of 2018, with the length of the lines again showing the extended period over which we've been able to retain and monetize users. Every year, apart from 2020, has seen the gradient of the line steepen as we've benefited from higher pricing, higher registration volumes, and improved user retention. The GAAP income statement is on this slide, and the reconciliation of the non-GAAP to GAAP items can be found in appendix 3. A summary of our key CY '23 financial metrics is outlined on slide 37.

Speaker Change: The accumulative revenue of the quarterly cohorts over time as shown on this slide.

Speaker Change: The time series begins in Q1 of 2019 with the length of the lines again, showing in the extended period over which we've been able to retain and monetize users.

Speaker Change: Every year apart from 2020 as seen the gradient of the line steepen as we've benefited from higher pricing higher registration volumes and improve user retention.

Russell Burke: Every year, apart from 2020, has seen the gradient of the line steepen as we've benefited from higher pricing, higher registration volumes, and improved user retention. The GAAP income statement is on this slide, and the reconciliation of the non-GAAP to GAAP items can be found in appendix 3. A summary of our key CY '23 financial metrics is outlined on slide 37.

The GAAP income statement is on this slide and the reconciliation of the non-GAAP to GAAP items can be found in appendix three.

Speaker Change: A summary of L. P C Y 23 financial metrics as outlined on slide 37.

For cash flow and balance sheet are included in the appendices to the presentation along with the reconciliation of GAAP to non-GAAP metrics.

Russell Burke: A full cash flow and balance sheet are included in the appendices to the presentation, along with reconciliation of GAAP to non-GAAP metrics. Non-GAAP revenue increased 33%, underpinned by the key drivers outlined earlier, particularly the 46% year-on-year increase in overall non-GAAP subscription revenue. Non-GAAP gross profit of $226.8 million increased 48%, with overall margins increasing from 67% to 75%, and non-GAAP subscription margins increasing from 81% to 84%. Higher pricing contributed to subscription margins, with hardware benefiting from increased margin improvement initiatives, higher volume of units shipped, and lower returns. Our focus on operating cost leverage is evident from the fact that the non-GAAP operating expenses increased only 6% year-on-year, benefiting from efficiency gains and the workforce reductions undertaken earlier in the year. Excluding the variable cost impact of commissions, total non-GAAP expenses increased just 1%.

Speaker Change: non-GAAP revenue increased 33% underpinned by the key drivers outlined earlier, particularly the 46% year on increase in overall non-GAAP subscription revenue.

Speaker Change: non-GAAP gross profit of $226 8 million increased 48%.

Speaker Change: With overall margins, increasing from 67% to 75% and non-GAAP subscription margins, increasing from 81% to 84%.

Speaker Change: Higher pricing contributed to subscription margins with hardware benefiting from increased margin improvement initiatives higher volume of units shipped and lower returns.

Russell Burke: Higher pricing contributed to subscription margins, with hardware benefiting from increased margin improvement initiatives, higher volume of units shipped, and lower returns. Our focus on operating cost leverage is evident from the fact that the non-GAAP operating expenses increased only 6% year-on-year, benefiting from efficiency gains and the workforce reductions undertaken earlier in the year. Excluding the variable cost impact of commissions, total non-GAAP expenses increased just 1%.

Speaker Change: I'll focus on operating cost leverage is evident from the fact that the non-GAAP operating expenses increased only 6% year on year benefiting from efficiency gains and the workforce reductions undertaken earlier in the year.

Speaker Change: Excluding the variable cost impact of commissions total non-GAAP expenses increased just 1%.

Research and development expenses of $76 1 million or 8% lower as a result of the reduced head count.

Russell Burke: Research and development expenses of $76.1 million were 8% lower as a result of the reduced headcount. User acquisition costs and TV costs of $28.9 million increased 9%, while other sales and marketing expenses of $19.4 million reduced 26%, largely due to lower brand and PR spend. Commissions of $42.7 million increased 36% year-on-year, reflecting the higher subscription revenue. For the year, commissions were 19% of subscription revenue, down from 20% in CY 2022, largely due to mix shift, including a higher proportion of one-year-plus subscribers. General and administrative expenses of $39.7 million increased 39% year-on-year, primarily due to increased accounting costs related to Sarbanes-Oxley compliance and higher legal expenses.

Speaker Change: User acquisition costs, and TV costs of $28 9 million increased 9%, while other sales and marketing expenses of $19 4 million reduced 26% largely due to lower brand and PR spend.

Speaker Change: Commissions of $32 7 million increased 36% year on year, reflecting the higher subscription revenue.

Speaker Change: For the year commissions with 19% of subscription revenue down from 20% in <unk> 'twenty two.

Russell Burke: For the year, commissions were 19% of subscription revenue, down from 20% in CY 2022, largely due to mix shift, including a higher proportion of one-year-plus subscribers. General and administrative expenses of $39.7 million increased 39% year-on-year, primarily due to increased accounting costs related to Sarbanes-Oxley compliance and higher legal expenses.

Speaker Change: Largely due to mix shift, including a higher proportion of one year plus subscribers.

Speaker Change: General and administrative expenses of $39 7 million increased 39% year on year, primarily due to increased accounting costs related to Sarbanes Oxley compliance and higher legal expenses.

Speaker Change: The positive adjusted EBITDA of $20 6 million represented a $67 million turnaround from the adjusted EBITDA loss of $40 1 million and see why 'twenty two.

Russell Burke: The +$20.6 million adjusted EBITDA represented a $60.7 million turnaround from the adjusted EBITDA loss of $40.1 million in CY 2022, benefiting from stable operating costs combined with strong revenue growth. Stock-based compensation of $38.5 million increased from $34.7 million due to the increased award volumes and transition equity. The EBITDA loss of $20.8 million and the net loss of $28.2 million, with both experiencing a significant improvement from the prior year. Other non-GAAP adjustments reflect costs associated with acquisitions in the Form 10-K filing in the prior period, workplace restructuring, and non-recurring adjustments relating to raw materials write-off, offset by a positive adjustment related to membership benefits, which was taken out of adjusted EBITDA earlier in the year. Turning to the key measures of cash flow.

Speaker Change: Benefiting from stable operating costs combined with strong revenue growth.

Stock based compensation of $38 $5 million increase from $34 7 million due to the increased award volumes and transition equity.

Speaker Change: The EBITDA loss of $20 8 million and the net loss of $28 2 million.

Speaker Change: With both experiencing a significant improvement from the prior year.

Speaker Change: Other non-GAAP adjustments reflect costs associated with acquisitions in the form 10 filing in the prior period workplace restructuring and nonrecurring adjustments relating to raw materials write off offset by a positive adjustment related to membership benefits, which was taken out of adjusted EBITDA earlier in the year.

Russell Burke: Other non-GAAP adjustments reflect costs associated with acquisitions in the Form 10-K filing in the prior period, workplace restructuring, and non-recurring adjustments relating to raw materials write-off, offset by a positive adjustment related to membership benefits, which was taken out of adjusted EBITDA earlier in the year. Turning to the key measures of cash flow.

Speaker Change: Sure.

Speaker Change: Turning to the key measures of cash flow operating cash flow of $7 $5 million improved by around $65 million year on year, reflecting the adjusted EBITDA performance working capital efficiency following the integration of the acquisitions.

Russell Burke: Operating cash flow of $7.5 million improved by around $65 million year-on-year, reflecting the adjusted EBITDA performance, working capital efficiency following the integration of the acquisitions. Q4 2023 operating cash flow of $9 million was largely in line with adjusted EBITDA of $8.9 million. For the full year, operating cash flow saw a differential to adjusted EBITDA due to timing of receipts, manufacturing payments, and Q1 restructuring costs. Investing cash flows of $2.2 million primarily relate to payments for internally developed software. Financing cash outflows of $25 million relate to the final payments associated with the Tile acquisition. US GAAP rules dictate that we show this as financing, even though it's part of the acquisition cost, which was shown in investing in the prior period.

Speaker Change: Q4, 23 operating cash flow of $9 million was largely in line with adjusted EBITDA of $8 9 million for.

Speaker Change: For the full year operating cash flows or differential to adjusted EBITDA due to timing of receipts manufacturing payments in Q1 restructuring costs.

Speaker Change: Investing cash flows of $2 2 million, primarily related to payments for internally developed software and.

Russell Burke: Investing cash flows of $2.2 million primarily relate to payments for internally developed software. Financing cash outflows of $25 million relate to the final payments associated with the Tile acquisition. US GAAP rules dictate that we show this as financing, even though it's part of the acquisition cost, which was shown in investing in the prior period.

Speaker Change: In financing cash outflows of 25 billion relate to the final payments associated with the Tyler acquisition.

Speaker Change: U S. GAAP rules dictate that we showed this as financing even though it's part of the acquisition cost which was shown in investing in the prior period.

Speaker Change: Also included in financing of taxes paid for net settlement.

Russell Burke: Also included in financing are taxes paid for net settlement of equity awards, offset by the proceeds from the exercise of options. At December 2023, cash equivalents, and restricted cash was $70.7 million, up from $63.7 million at the end of Q3. Thanks for your attention. I'll now hand back to Chris, who will provide an outlook for 2024.

Speaker Change: Of equity awards offset by the proceeds from the exercise of options.

Speaker Change: At December 23, cash cash equivalents and restricted cash was $70 7 million up from $63 7 million at the end of Q3.

Speaker Change: Thanks for your attention I'll now hand back to Chris who will provide an outlook for 'twenty four.

Speaker Change: For Cys 24 life 360 expects to deliver the following metrics, which include both the early revenue and setup costs for the new advertising business.

Chris Hulls: For CY 2024, Life360 expects to deliver the following metrics, which include both the early revenue and setup costs for the new advertising business. Consolidated revenue of $365 to 375 million, with core Life360 subscription revenue growth of at least 20% year over year. Positive adjusted EBITDA of +$30 to 35 million. EBITDA loss of -$8 to 13 million. Positive operating cash flow for each quarter of CY 2024, with usual seasonal low point in Q1. Year-end cash equivalents, and restricted cash of $80 to 90 million. The company expects to continue to be adjusted EBITDA positive on a quarterly basis going forward, and to achieve positive EBITDA in H1 of CY 2025. I'll now hand over to Melissa, who will run the Q&A portion of today's call.

Speaker Change: Consolidated revenue of $365 million to $375 million with core life 360 subscription revenue growth of at least 20% year over year.

Speaker Change: Positive adjusted EBITDA of $30 million to $35 million.

Speaker Change: EBIT loss of $8 million to $13 million.

Speaker Change: Positive operating cash flow for each quarter of <unk> 24, with the usual seasonal low point in Q1.

Speaker Change: Year end cash cash equivalents and restricted cash of $80 to $90 million.

Chris Hulls: Year-end cash equivalents, and restricted cash of $80 to 90 million. The company expects to continue to be adjusted EBITDA positive on a quarterly basis going forward, and to achieve positive EBITDA in H1 of CY 2025. I'll now hand over to Melissa, who will run the Q&A portion of today's call.

Speaker Change: The company expects to continue to be adjusted EBITDA positive on a quarterly basis going forward and to achieve positive EBITDA in the first half of <unk> 25.

Speaker Change: I'll now hand over to Melissa who will run the Q&A portion of today's call.

Speaker Change: Thanks, Chris as a reminder to participate in the Q&A. Please raise your hand pressing.

Operator 2: Thanks, Chris. As a reminder, to participate in the Q&A, please raise your hand by pressing the Raise Hand icon at the bottom of your screen within the Zoom app. You'll need to unmute yourself to ask a question. Also, once unmuted, please tell us your full name and what company you're calling from. First up, we have Chris Gawler.

Operator: Thanks, Chris. As a reminder, to participate in the Q&A, please raise your hand by pressing the Raise Hand icon at the bottom of your screen within the Zoom app. You'll need to unmute yourself to ask a question. Also, once unmuted, please tell us your full name and what company you're calling from. First up, we have Chris Gawler.

Speaker Change: Pressing the raise hand icon at the bottom of your screen within the zoom App.

Speaker Change: You need to unseat yourself to ask a question also once on muted. Please tell us your full name and my company and you're calling from.

Speaker Change: First off we have Chris Collier.

Speaker Change: Good morning, Chris Gola from Goldman Sachs can you hear me okay.

Chris Gawler: Good morning. Chris Gawler from Goldman Sachs. Can you hear me okay?

Sure Chris.

Speaker Change: Perfect.

Chris Hulls: Sure can, Chris.

First question just on the revenue guidance was just hoping you could give us a bit of a sense for the split between core subscription revenue growth versus hardware versus other revenue sources in 2024.

Chris Gawler: Perfect. First question, just on the revenue guidance, was just hoping you could give us a bit of a sense for the split between core subscription revenue growth versus hardware versus other revenue sources in 2024.

Speaker Change: Yes, I think we generally characterize it as well.

Russell Burke: Yeah, I think we generally characterize it as, you know, we've said core subscription growth of more than 20% in 2024. Hardware growth on a sort of similar trajectory. We're adding in a small amount for advertising. The other revenue, as was the case this year, would be fairly stable.

We've said.

Speaker Change: Call core subscription growth of more than more than 20% in 'twenty for hardware.

Speaker Change: Hardware hubway growth on a sort of a similar trajectory and then we're adding in a small amount for a for advertising the other other revenue as.

Speaker Change: As was the taste this year would be would be fairly stable.

Speaker Change: Yes, that's very clear secondly.

Speaker Change: Secondly, just on the incremental margin your guidance implies it that's a.

Chris Gawler: Yep, that's very clear. Secondly, just on the incremental margin, your guidance implies that that's a little bit lower in FY 2024 versus FY 2023. Just interested in where you see the greatest areas of cost reinvestment in 2024, and just interested to get a sense for how material that advertising investment could be versus the revenue in 2024.

Speaker Change: Little bit lower in FY 'twenty versus FY 'twenty, sorry, just interested in where you say to Christ areas of cost reinvestment in 2024, and just interested to get a sense for how material that advertising investment could days versus the revenue in 2024.

Speaker Change: Yeah.

Speaker Change: So taking the last part first.

Russell Burke: Taking the last part first, our investment will be less than the revenue that we expect to obtain and the margin effectively that we expect to obtain in 2024. Although all of those will be sort of relatively modest, and we expect to see the larger impact of advertising in the H2. You know, otherwise, we expect to be consistent with margins across the business, if not slightly improving. If that answers your question, Chris.

Speaker Change: Our investment will be less than the revenue that we expect to.

Speaker Change: To obtain in the margin effectively that we expect to obtain.

Speaker Change: In 24, although all of those will be relatively modest and we expect to see.

Speaker Change: The larger impact of advertising in the second half.

Speaker Change: Otherwise, we really don't we expect to be consistent with margins across the business if not slightly improving.

Speaker Change:

Speaker Change: So.

Speaker Change: If that goes to you to answer if that answers your question Chris.

Speaker Change: Sure and then following up on advertising just interested ticket thoughts around how material you think that opportunity could be over the next couple of years like can you give us a bit of a sense for maybe the contribution to the group for how quickly you think that business could go.

Chris Gawler: Sure. Following up on advertising, just interested to get your thoughts around how material you think that opportunity could be over the next couple of years. Like, can you give us a bit of a sense for maybe the contribution to the group or how quickly you think that business could scale?

Over the long run we think the monetization of our free users could equal subscription revenue, we don't have an exact timeline for that but one thing.

Chris Hulls: Over the long run, we think the monetization of our free users could equal subscription revenue. We don't have an exact timeline for that, but one thing that it has been a trend: companies have the engagement and data that we have, they've really been skyrocketing in terms of what they've been able to achieve. We were always looking at this category, as I think everybody knows, but we had been more focused on new verticals for actual products for customers. When we were looking at strategy for the year, we've done some early testing on advertising that went better than planned and seeing the success in the market.

It has been a trend companies have the engagement and data that we have they really been skyrocketing in terms of that they've been able to achieve.

Speaker Change: We were always looking at this category as I think everybody knows but we had been more focused on new verticals for four actual products for our customers.

Speaker Change: But when we're looking at strategy for the year. He doesn't early testing on advertising went better than planned and seeing the success in the market, who said hey, here's an opportunity to do something that has a much quicker payback than longer best with new verticals with much lower risk.

Chris Hulls: When we were looking at strategy for the year, we've done some early testing on advertising that went better than planned and seeing the success in the market. We said, "Hey, here's an opportunity to do something that has a much quicker payback than longer bets with new verticals with much lower risk." One thing many people have heard us talk about before is when we go to new verticals is usually one year to build it, second year we start breaking even on it, third year we really harvest.

Chris Hulls: We said, "Hey, here's an opportunity to do something that has a much quicker payback than longer bets with new verticals with much lower risk." One thing many people have heard us talk about before is when we go to new verticals is usually one year to build it, second year we start breaking even on it, third year we really harvest. That's been a pattern on the things that hit, and not everything hits. Advertising is a bit different, where relatively small investment, much lower risk. I think it's unlikely to be a flop. It's more like how big can it get and then how quickly can it happen.

Speaker Change: So one thing many people have heard us talk about before is when we go to new verticals as usually.

Speaker Change: One year to build it second year, we start breaking even on a third year, we really harvest that's been our pattern on the things that hit and not everything hits advertising is a bit different were relatively small investment much lower risk.

Chris Hulls: That's been a pattern on the things that hit, and not everything hits. Advertising is a bit different, where relatively small investment, much lower risk. I think it's unlikely to be a flop. It's more like how big can it get and then how quickly can it happen.

Speaker Change: I think it's unlikely to be a swap it's more like how big can it get and then how quickly can happen, but we are highly confident that this year, it's going to show some meaningful contributions with extremely high margins and it won't be one of these things where you have to do a very long period of order investments show. The ROI and then long term genuinely if you look at the monetization of <unk> users.

Chris Hulls: We are highly confident that this year it's gonna show some meaningful contributions with extremely high margins, and it won't be one of these things where we have to do a very long period to forward investment to show the ROI. Then long term, genuinely, if you look at the monetization of free users, over time, I think it will rival subscriptions, but that's a much longer term, expectation.

Speaker Change: Overtime, I think it will rival subscriptions, but that's a much longer term expectation.

Speaker Change: Thanks, I'll jump back in the queue.

Chris Gawler: Thanks. I'll jump back in the queue.

Speaker Change: Thanks, Chris next up we have lots of time.

Operator 2: Thanks, Chris. Next up, we have Lafitani Sotiriou.

Operator: Thanks, Chris. Next up, we have Lafitani Sotiriou.

Speaker Change: Hi, guys and congratulations on a good result, I just wanted to unpack the advertising opportunity a little bit more so.

Lafitani Sotiriou: Hi, guys, and congratulations on a good result. I just wanted to unpack the advertising opportunity a little bit more. You currently have some lead generation and you're also selling some of the data, which then kind of overlaps a little bit. Can you just talk us through the advertising opportunity? Are you looking to use a partner? Is it starting off in the US or are you gonna do international at the same time? Based on the margins you get for lead gen and the like, you know, would expect EBITDA margins north of 50%. Is that consistent or could you just add some color around that?

You currently have some lead generation and you're also selling some of the data, which then carnival overlaps a little bit. So can you just talk us through the <unk>.

Speaker Change: Tossing opportunity or are you looking to use a partner.

Speaker Change: Is it starting off in the U S are you going to do internationally at the same time and based on the margins you get for lead Gen and the like would expect EBITDA margins north of 50% is that consistent or could you just add some color on that.

Speaker Change: I'll answer qualitatively and Russell can.

Chris Hulls: I'll answer qualitatively and Russell can talk to the margins. I'm not sure what's considered GAAP or not in that, so I wanna make sure I answer that appropriately. Qualitatively, though, it's extremely high margin for us, especially if you look at the net revenue received after working with a partner. We're doing a lot, and you are right, it does overlap with lead gen, it does overlap with our data business. The world has changed a lot as we've moved around how we use our customers' data. Things like Apple opt-ins with IDFA. We now know which of our customers allow us to target them with ads both inside and outside Life360.

Speaker Change: And talk to the margins I'm not sure what's considered gap or not in that so I want to make sure I answer that appropriately qualitatively those extremely high margin for us.

Especially if you look at the net revenue receive after working with our partner, but we are doing a lot and you.

Speaker Change: All right. It does overlap with lead Gen does overlap with our data business. The world has changed a lot as we've moved around how we use our customers' data things like Apple opt ins with IBSA, we now know which of our customers allow us to target them with ads, both inside and outside light through 60.

Chris Hulls: The world has changed a lot as we've moved around how we use our customers' data. Things like Apple opt-ins with IDFA. We now know which of our customers allow us to target them with ads both inside and outside Life360. We actually did our first test internationally just to get a sense of user behavior, and we were very pleasantly surprised there was no negative user impact at all showing up in the numbers. We're already running a couple of bespoke tests with some specific partners.

Speaker Change: So we're starting we issued our first tests internationally just to.

Chris Hulls: We actually did our first test internationally just to get a sense of user behavior, and we were very pleasantly surprised there was no negative user impact at all showing up in the numbers. We're already running a couple of bespoke tests with some specific partners. I can't talk about them on this call, but we'll be talking more about that soon. We are gonna be doing some testing with the various networks, and we are also exploring new ways to monetize our data in different ways that both will extend the agreement we have, hopefully with Placer.ai, and also do things with advertising around using the data we collect and the opt-in users for cross-app tracking, things like that. More to come on that in the future.

Speaker Change: Get a sense of user behavior, and we were very pleasantly surprised there was no negative user impact that all showing up in the numbers.

Speaker Change: We're already running a couple of bespoke tests with some specific partners I can't talk about them on this call, but we'll be talking more about that soon we are going to be doing some testing with the various networks and we are also exploring new ways to <unk>.

Chris Hulls: I can't talk about them on this call, but we'll be talking more about that soon. We are gonna be doing some testing with the various networks, and we are also exploring new ways to monetize our data in different ways that both will extend the agreement we have, hopefully with Placer.ai, and also do things with advertising around using the data we collect and the opt-in users for cross-app tracking, things like that. More to come on that in the future.

Speaker Change: Monetize Mardi.

Speaker Change: Our data in different ways that.

Speaker Change: Both will extend the agreement we have hopefully with Pacer and also do things with advertising, our and using the data we collect and the opposite end users for cross App tracking things like that but more to come on that.

Speaker Change: Future.

And just to add in on the margin aspect left.

Russell Burke: Just to add in on the margin aspects, Laf, you this business is typically quite high margin, as you referred to. I think once we get past the initial period where we're investing in some setup costs, once we get past that period, the flow through margins are likely to be very strong. What we've heard quite often in terms of sort of setting up the business is it does take a little while to tune in. That's why we're expecting the impact really to start from H2.

Speaker Change: This business is typically quite high margin as you referred to.

Speaker Change: And I think once we get past the initial period, where we have we're investing in some setup costs.

Speaker Change: Once once we get past that period, the the flow through margins are likely to be low.

Speaker Change: Likely to be very strong.

Speaker Change: What we've what we've heard.

Speaker Change: Quite often in terms of sort of setting up the business is it does take a little while to tune in and that's why we're expecting the impact really to stop from from the second half.

Speaker Change: Okay.

Speaker Change: Got that and so I'm, probably assuming that it is starting to maybe U S and international markets selectively being rolled out and will be across advertising would be across a range of products, but also including it sounds like some local ability to create alarm for local businesses to target people in the area.

Lafitani Sotiriou: Got that. I'm broadly assuming that it is going to be the US and international markets selectively being rolled out, and advertising will be across a range of products, but also including, it sounds like some local ability to be for local businesses to target people in the area. Will it be that sophisticated or?

Speaker Change: Will it be that sophisticated at all.

It will be that sophisticated in the longer term.

Chris Hulls: It will be that sophisticated in the longer term. Certainly we're gonna take it step by step. Kicking off in the US, you're very attuned to both the member experience and the type of advertising that we put through the app. We will take it step at a time. The US tends to have much higher CPMs for this sort of business as well. That's where our initial focus will be.

Russell Burke: It will be that sophisticated in the longer term. Certainly we're gonna take it step by step. Kicking off in the US, you're very attuned to both the member experience and the type of advertising that we put through the app. We will take it step at a time. The US tends to have much higher CPMs for this sort of business as well. That's where our initial focus will be.

Speaker Change: Certainly we're going to take it step by step so kicking off in the U S.

Speaker Change: You are very attuned to both the member experience and the and the type of advertising.

Speaker Change: We put through the put through the App.

Speaker Change: So we will take a step at a time.

Speaker Change: The U S tends to have much higher CPM is for this sort of business as well, so that's where our initial focus will be.

Speaker Change: Got it and just one final question on some of the international market, you've given us some of the paying circles. It looks like revenue for Canada U K, Australia, great to get this level of color a little bit surprised to see Canada is only a.

Lafitani Sotiriou: Got it. Just one final question on some of the international market. You've given us some of the paying circles. It looks like revenue for Canada, UK, Australia. Great to get this level of color. A little bit surprised to see Canada is only a portion of what Australia and UK is generating. Can you add a little bit more color? Are we, when we look at the international market from a revenue perspective, do we consider, you know, UK number one, Australia number two, and then, we're going to some of the other markets? Or if it's not the case, could you just add a bit of color about who the top five international markets should be from a revenue perspective?

Speaker Change: A portion of what Australia, and UK is generating and can you add a little bit more color.

Speaker Change: When we look at the international market from a revenue perspective.

Lafitani Sotiriou: Are we, when we look at the international market from a revenue perspective, do we consider, you know, UK number one, Australia number two, and then, we're going to some of the other markets? Or if it's not the case, could you just add a bit of color about who the top five international markets should be from a revenue perspective?

Speaker Change: We consider.

Speaker Change: Number one Australia number two then.

Speaker Change: We're going through some of the other markets or if it is not the case could you could you just add a bit of color about the top five.

Speaker Change: International markets should be from a revenue perspective.

Speaker Change: Yes, I think I think we've often said that.

Chris Hulls: Yeah, I think we've often said that our focus is on territories that are sort of culturally similar, have a similar sort of driving mentality, et cetera. In that respect, I think just sort of volume-wise, we would think about the UK as being the lead market internationally, and Australia sort of very strong. Obviously we are in Canada at the moment. As we've said before, we launched without putting a great deal of marketing emphasis there. That's something that we'll come back to at some point. Our focus is on these launches at the moment. Then we'll roll out to the next identified territories.

Speaker Change: Our focus is on.

Speaker Change: Territories that are sort of culturally similar similar have a similar sort of driving mentality et cetera. So in that respect I think just sort of volume wise, we would think about the UK as being being the lead market internationally.

Speaker Change: In Australia very strong.

Speaker Change: Obviously, where we are in Canada at the moment.

Speaker Change: As we've said before we launched without putting a great deal of marketing emphasis there. So that's something that will come back to at some point al L focuses on these launches at the moment and then we'll roll out.

Chris Hulls: As we've said before, we launched without putting a great deal of marketing emphasis there. That's something that we'll come back to at some point. Our focus is on these launches at the moment. Then we'll roll out to the next identified territories. We're also looking, continue to look at the overall international experience and the product, the standardized product internationally.

Speaker Change: <unk>.

Speaker Change: Two the next identified territories, but we're also looking continue to look at the overall international experience and in the product the standardized product internationally.

Chris Hulls: We're also looking, continue to look at the overall international experience and the product, the standardized product internationally.

Got it thank you.

Lafitani Sotiriou: Got it. Thank you.

Speaker Change: Thanks, Matt.

Speaker Change: Next up we have Julian.

Lauren Antonoff: Thanks, Mark. Next up, we have Julian.

Operator: Thanks, Mark. Next up, we have Julian.

Julian: Just a few familiar guys al just firstly on the conversion right of <unk>.

[Analyst 1]: Just a few for me, guys. Just firstly on the conversion rate of subscribers to monthly active users. It's been sort of falling over the last couple of years, but it seems to have stabilized now. When do you think that's gonna start moving up and the sort of benefits of sort of Tile and Jiobit start to sort of feed through?

[Shareholder]: Just a few for me, guys. Just firstly on the conversion rate of subscribers to monthly active users. It's been sort of falling over the last couple of years, but it seems to have stabilized now. When do you think that's gonna start moving up and the sort of benefits of sort of Tile and Jiobit start to sort of feed through?

Julian: Scribe is to monthly active users, it's been sort of falling over the last couple of years, but it seems to have stabilized now when do you think that's going to start moving up in the sort of benefits of sort of tall, and JV itself sort of fade through well.

We're already seeing those benefits remember we did a very significant price increase that we expected decrease conversion. So the fact that that largely held flat.

Chris Hulls: Well, I think we're already seeing those benefits. Remember, it is a very significant price increase, so we expected decreased conversion. The fact that that largely held flat with modest decreases despite that is because of that. On the topic of Tile, we already are seeing benefits. Benefits are gonna continue to be integrated into the product and services. You heard from Lauren. Jiobit, we put on ice when the market corrected, and we're now reinvesting there. That is one of our longer term bets. We will be doing new things with Jiobit later this year. 2025 is when I think you'll start seeing a whole bunch of new stuff on the hardware front. As of now, we're looking at things as a consolidated service.

Julian: Modest decreases despite that is because of that.

Julian: On the topic of tile we already are seeing benefits are going to be continued to be integrated into the product and service as you heard from Warren <unk>, we put on ice when the market corrected and we're now reinvesting there and that is one of our longer term bets, we will be doing new things with <unk>. Later. This year 2025 is when I think.

Chris Hulls: That is one of our longer term bets. We will be doing new things with Jiobit later this year. 2025 is when I think you'll start seeing a whole bunch of new stuff on the hardware front. As of now, we're looking at things as a consolidated service.

Julian: Youll start seeing a whole bunch of new stuff on the hardware front, but as of now we're looking at things as a consolidated servicing.

Julian: I do think in the U S. We have gotten through most of these changes and I could see things increasing U K will obviously go the opposite direction because we adjusted the price increase so we will see that.

Chris Hulls: I do think in the US, we have gotten through most of these changes, and I could see things increasing. UK will obviously go the opposite direction because we adjusted the price increase. We will see that the similar trends hold through. We'll see lower net adds in Europe, but it'll be a good thing because LTV is so much higher. We've gone through that in the US, and I hope we start seeing that relative penetration increase.

Julian: The simpler trends hold through so we will see lower net add in Europe, but it will be a good thing because ltvs are much higher we've gone through that in the U S and I hope, we start seeing that relative penetration increase.

So we would it would we start to see sort of pick up in the U S from here on in.

[Analyst 1]: Would we start to see it sort of tick up in the US from here on in? Or do you need another year of consolidation?

[Shareholder]: Would we start to see it sort of tick up in the US from here on in? Or do you need another year of consolidation?

Speaker Change: Who do you see.

Speaker Change: A year of consolidation.

Speaker Change: It'll start slowly ticking up from now, but it won't be a huge change.

Chris Hulls: Yeah. It'll start slowly ticking up from now, but it won't be a huge change.

Speaker Change: Okay and then.

Speaker Change: The existing set of hold has been.

[Analyst 1]: Right. Okay. Have the existing sort of holders been given free tiles yet, or that's just a wait and see whether to do that?

[Shareholder]: Right. Okay. Have the existing sort of holders been given free tiles yet, or that's just a wait and see whether to do that?

Speaker Change: Even free trials, yet or that's just to widen and say we need to do that we need to do it.

Chris Hulls: Yeah, wait and see whether we need to do it. We've given a lot of the emphasis on demonstrating leverage, which we've obviously shown this quarter is something we can do. We've been focusing on things that can bring in some of those numbers a little bit earlier. If we were to be giving away free Tiles, that would be a significant cash cost, and we think that we get a lot from it. Given some of the other areas we wanna invest, we thought putting dollars into things like advertising where we get a much quicker ROI is the right, you know, balance between showing long-term growth, forward investing, and behaving in a way that is attuned to the current market environments.

Speaker Change: Given a lot of the emphasis on demonstrating leverage.

Speaker Change: Which we've obviously showing this quarter is something we can do we've been focusing on things that.

Speaker Change: Can bring in some of those numbers a little bit earlier than if we were to be giving away free titles that would be a significant cash cost and we think that we get a lot from it but given some of the other areas want to invest without putting dollars in things like advertising or again is much quicker ROI.

Chris Hulls: Given some of the other areas we wanna invest, we thought putting dollars into things like advertising where we get a much quicker ROI is the right, you know, balance between showing long-term growth, forward investing, and behaving in a way that is attuned to the current market environments.

Speaker Change: Is the right balance between showing long term growth and forward investing in.

Speaker Change: Behaving in a way that is.

Speaker Change: Attuned to the current market environment.

Speaker Change: And we said look the edge strategy.

[Analyst 1]: Right. We've seen a lot of the ad strategy, and it's a bit of a change from what kind of talking about a couple of years ago. I know you said, you know, people you know who've opted in, opted out, that sort of thing, so they're happy to be targeted. But is it kinda gonna be a little bit creepy in that, you know, you're gonna be targeting ads because it's based on where they're moving, like they go past McDonald's, get an ad served up? Is that not gonna have any impact, do you think?

[Shareholder]: Right. We've seen a lot of the ad strategy, and it's a bit of a change from what kind of talking about a couple of years ago. I know you said, you know, people you know who've opted in, opted out, that sort of thing, so they're happy to be targeted. But is it kinda gonna be a little bit creepy in that, you know, you're gonna be targeting ads because it's based on where they're moving, like they go past McDonald's, get an ad served up? Is that not gonna have any impact, do you think?

Speaker Change: I mean, it's bit of a change from what kind of talking about couple of years ago. So if it's I know you said you know people who has opted in Napa. That's perfect. So there have to be targeted but is it kind of going to be a little bit creepy and that you're going to be targeting ads because it's based on where they are moving a lot to get passed Mcdonald's can Ned served up is that.

Speaker Change: Can I have an impact do you think.

Speaker Change: You can look at what places like Uber have done and part of what so first off we've done testing. So we've been multi months of test data.

Chris Hulls: No. You can look at what places like Uber have done. First off, we've done testing. We have multiple months of test data that have given us a ton of comfort. We moved in it slowly, and part of why we have it accelerated is the data was better than expected. We do have these market comps, which are doing highly targeted, highly personalized ads, and they're being very successful. What we have seen, this is going back to some of the conversations you had around the use of data in general. It is a very small sliver of press and regulators who give the very wrong impression about how most people feel about targeted ads. The average person likes targeted ads because it's relevant to them.

Speaker Change: That have given us a ton of comfort we moved into it slowly and part of why we have accelerated the data was better than expected.

Speaker Change: And we do have these market comps, which are doing highly highly targeted highly personalized ads.

Speaker Change: And they're being very successful.

Speaker Change: What we have seen this going back to some of the conversations that around the use of data in general It is a very small sliver of press and regulators who.

Chris Hulls: What we have seen, this is going back to some of the conversations you had around the use of data in general. It is a very small sliver of press and regulators who give the very wrong impression about how most people feel about targeted ads. The average person likes targeted ads because it's relevant to them. This is not a bad thing, this is a good thing. My joke is only half a joke 'cause I like targeted ads, and I know when my wife has been using my computer 'cause I get too many yoga pants sent my way. Outside of stuff like that, I don't think anyone does. It's creepy.

Speaker Change: Give the very wrong impression about how most people.

Speaker Change: Feel about target that the average person likes targeted ads because it's relevant to them. So this is not a bad thing. This is a good thing my joke is only half of jokes I like targeted ads and I know when my wife has been using my computer because I get too many yoga pants sent my way, but outside of that I don't think anyone.

Chris Hulls: This is not a bad thing, this is a good thing. My joke is only half a joke 'cause I like targeted ads, and I know when my wife has been using my computer 'cause I get too many yoga pants sent my way. Outside of stuff like that, I don't think anyone does. It's creepy.

Speaker Change: Okay.

And I notice that there's an other income number of $3 2 million in the profit what was that related to.

[Analyst 1]: I noticed that there's an other income number of $3.2 million in the profit. What was that related to?

[Shareholder]: I noticed that there's an other income number of $3.2 million in the profit. What was that related to?

Speaker Change: That relates to a combination of.

Russell Burke: That relates to a combination of adjustments on valuation of convertible note, and a couple of other things. Julian, we can give you the sort of full details of that, but that's the primary piece of it.

Speaker Change: Adjustments on valuation of convertible note and a couple of other things Julian we can we can give you the full details of that but thats the prime primary base of it.

Speaker Change: That's included in your EBITDAR of 20.

[Analyst 1]: That's included in the EBITDA of $20?

[Shareholder]: That's included in the EBITDA of $20?

Speaker Change: It's not it's not included in the EBITDA now.

Russell Burke: It's not included in the EBITDA, no.

Speaker Change: Okay Cool and then some.

[Analyst 1]: Right. Okay, cool. Just finally, has there been much change in the mix of people paying yearly or monthly subscriptions?

[Shareholder]: Right. Okay, cool. Just finally, has there been much change in the mix of people paying yearly or monthly subscriptions?

Finally, as they've been much change in the mix of payroll paying geely or monthly subscriptions.

Speaker Change: No that's been pretty consistent we haven't seen much change in that and frankly, we haven't yet been intentionally changing that either in terms of.

Russell Burke: No, that's been pretty consistent. We haven't seen much change in that. Frankly, we haven't yet been intentionally changing that either in terms of where we direct people.

Speaker Change: We direct people.

Speaker Change: Cool thanks, guys.

[Analyst 1]: Cool. Thanks, guys.

[Shareholder]: Cool. Thanks, guys.

Thanks Julien.

Speaker Change: We have Chris tonnage.

Operator 2: Thanks, Julian. Next up we have Chris Savage.

Operator: Thanks, Julian. Next up we have Chris Savage.

Speaker Change: Hey, Chris we can't hear you if you're talking.

Chris Hulls: Hey, Chris, we can't hear you if you're talking.

Speaker Change: Apologies Preservice Bell Potter.

Chris Savage: Apologies. Chris Savage, Bell Potter.

Speaker Change: Good morning, Chris Good morning.

Chris Hulls: Morning, Chris.

Chris Savage: Good morning. You gave us some quantitative type figures on the UK and the tiered membership launch. Chris, can you just give us some qualitative comments on how you've seen the launch so far?

Speaker Change: Just you gave us some quantitative figures on the UK and the tiered membership launch Chris can you just give us some qualitative comments on how you've seen the launch so far.

Speaker Change: Essentially going exactly as expected no big surprises.

Chris Hulls: That's been essentially going exactly as expected. No big surprises, either overwhelmingly good or bad. In some ways, that shows the predictability of the business. We got actually a lot of press, which was pleasantly surprising, just in terms of just, like, how much there was interest in a big US app expanding more broadly. We have seen the expected churn and reduced conversion in new customers. We have a one-time spike of churn because we increased the price for legacy customers. We're working through that. The shapes of the curves are very, very much like the US, so it gives a lot of confidence that we'll see similar overall results.

Speaker Change: Either overwhelmingly good or bad.

And in some ways that shows a predictability of the business.

Speaker Change: We've got actually a lot of press, which was pleasantly surprising just in terms of like how much there was interest in a big U S. App.

Speaker Change: Spanning more broadly we have seen the.

Speaker Change: The expected churn and reduce conversion and new customers. We have a one time spike in churn because we increased the price for legacy customers, we're working through that and the shape of the curves are very very much like the U S. So it gives us a lot of confidence that.

Chris Hulls: We're working through that. The shapes of the curves are very, very much like the US, so it gives a lot of confidence that we'll see similar overall results. It validates the international strategy, where this is one of those things where it's relatively low risk, takes some time to build, but does contribute to the bottom line.

We'll see similar overall results.

Speaker Change: Validates the international strategy, where this is one of those things, where it's relatively low risk take some time to build but does contribute to the bottom line.

Chris Hulls: It validates the international strategy, where this is one of those things where it's relatively low risk, takes some time to build, but does contribute to the bottom line.

And.

He correctly with Lauren's comments that theres going to be paid membership launch in Australia, and New Zealand in Q2.

Chris Savage: Do I hear correctly with Lauren's comments that there's gonna be tiered membership launch in Australia and New Zealand in Q2, was it?

Speaker Change: That's right.

Chris Hulls: That's right.

Is that.

Chris Hulls: That's right.

Speaker Change: Quicker than you anticipated.

Chris Savage: Is that quicker than you anticipated?

Speaker Change:

Speaker Change: It would be fair to say that the.

Russell Burke: You know, I think it would be fair to say that the agreements that we've been working on have sort of come together fairly quickly and without any issues. In that respect, it is. You know, the team's been sort of very focused on that Australia launch and putting in the pieces of that. It's all come together well and we're now confident we can be ready to launch in Q2.

Speaker Change: The agreements that we've been working on a sort of come together.

Speaker Change: Really fairly.

Speaker Change: Quickly and without any any issues. So in that respect it is but where the team has been sort of very focused on that on that Australia, launching and putting in the the pieces of that so it's all come together, well and where we're now confident we can.

Speaker Change: We'll be ready to launch in Q2.

Speaker Change: And do you think Youll still just do one international launch this evening, Australia and New Zealand.

Chris Savage: Do you think you'll still just do one international launch this year, being Australia and New Zealand?

Speaker Change: At this stage that's the plan.

Russell Burke: At this stage, that's the plan.

Okay.

And just last question on that aspirational.

Chris Savage: Okay. Just last question on that aspirational billion-dollar target. You didn't obviously put a timeline on it, but can we assume that's around a 2030 type target, like 5 years, several years away?

Speaker Change: Target.

You Didnt, obviously put a timeline on it but can we assume that around a 2030 top target like five years several years away.

Speaker Change: I think thinking about it in terms of as a five year plan is the way to view it.

Russell Burke: I think, thinking about it in terms of as a five-year plan is the way to view it.

Speaker Change: And then even more conceptual one thing we talk a lot about internally is just how big.

Chris Hulls: Yeah. Even more conceptually, one thing we talk a lot about internally is just how big the company can get. In some ways, we have an even internal aspirations that go far bigger. We are now the 15th biggest app in the US by DAU. We can see the cross-border demand. The idea was, like, what is something that just shows that it is achievable, but not easy, but also not the complete upside? 'Cause I think there is still a chance that it's significantly bigger, and we were very intentional about saying this is our first billion. This is by no means the terminal aspiration.

Speaker Change: The company can get and in some ways, we haven't even internal aspirations that go far bigger we are now the 15th biggest app in the U S. By <unk>, we can see the cross border demand. So the idea was like what is something that shows that is achievable, but not.

Speaker Change: Not easy, but also not the complete upsides I think there is still a chance that it's significantly bigger than we were very intentional about things as are our first $1 billion. So this is by no means the terminal aspiration.

Speaker Change: And then just to clarify one of your earlier comments, Chris I think did he say he can see advertising revenue matching subscription revenue at some stage.

Chris Savage: Sure. Just to clarify one of your earlier comments, Chris, I think, did I hear you say you think you can see advertising revenue matching subscription revenue at some stage?

Speaker Change: Some said yes.

Speaker Change: Great. Thanks very much.

Chris Hulls: At some stage, yes.

Chris Savage: Okay. Great. Thanks very much.

Speaker Change: Thanks, Chris next up we have whaling.

Operator 2: Thanks, Chris. Next up we have Wei-Weng Chen.

Operator: Thanks, Chris. Next up we have Wei-Weng Chen.

Speaker Change: Hi, guys.

Congrats on a good result, just another question for me on advertising strategy.

Wei-Weng Chen: Hey, guys. Congrats on a good result. Just another question from me on advertising strategy. So I guess you guys list a number of comps and their average monetization of MAU in your presentation. Can you, one, maybe just speak to why you think there's so much differential between the companies? And then two, I guess, you know, given your engagement levels and MAU targets, where do you think you could land on a sort of a dollar per MAU basis? Are we closer to Uber or are we thinking closer to Duolingo?

Speaker Change: I guess you guys list a number of comps and the average monetization of Miu in your presentation can.

Speaker Change: Can you maybe just speak to why you think that's very much differential between the companies and then two I guess given your engagement levels in MA you targets, where do you think you could land on a sort of a dollar.

Speaker Change: Basis are we closer to favor or are we thinking closer to drilling.

I think we laid laid out the the range there just to give you a sense of what that potential opportunity is in and we're very early days at this point so.

Russell Burke: I think we laid out the range there just to give you a sense of what that potential opportunity is. You know, look, we're very early days at this point, so while we are very excited about the opportunity, we've got a bit of work to do to understand the full realization of it. The range there goes from, to your point, everything from Duolingo, where they haven't really focused on advertising. Advertising is more of a side issue for them, all the way through to some of the other companies that have invested heavily and put a major focus on it. As I said, we're early days.

Speaker Change: While we are very excited about the opportunity we've got a bit of work to do to understand the full realization of it.

Speaker Change: And the range there goes from to your point.

Speaker Change: Everything from Duolingo, where they haven't really focused on advertising advertising is more of a I saw at issue for them all the way through to some of the other companies that have invested heavily and put a put a major focus on it.

Russell Burke: Advertising is more of a side issue for them, all the way through to some of the other companies that have invested heavily and put a major focus on it. As I said, we're early days. We see it as a really significant opportunity, but we want to understand it more as we move along.

Speaker Change: So.

Speaker Change: As I said, we're early days, we see it as a as a really significant opportunity.

Russell Burke: We see it as a really significant opportunity, but we want to understand it more as we move along.

Speaker Change: We want to understand it more as we as we move along.

Yeah cool. Thanks, and then the comment that advertising is expecting to expect it to contribute in the second half I'm just wanted to clarify whether that is within the guidance revenue guidance or is that kind of baked in yes.

Wei-Weng Chen: Yeah. Cool. Thanks. The comment that advertising is expected to contribute in H2, just wanted to clarify whether that is within guidance, revenue guidance, or is that kind of not baked in?

Speaker Change: Yes.

Speaker Change: We have included in our revenue gone some a small element of advertising.

Russell Burke: Yeah. We've included in our revenue guidance a small element for advertising.

Speaker Change: We have had to pull back on other product initiatives. There. There is no free lunch on this one so we think this is going to show that leverage very quickly as mentioned, but we are.

Chris Hulls: We have had to pull back on other product initiatives. There is no free lunch on this one. We think this is gonna show that leverage very quickly, as mentioned, but we are trying to find that fine balance between demonstrating operating leverage and opening up the new initiatives that will get us that billion-dollar mark.

Trying to find that fine balance between demonstrating operating leverage and opening of the new initiatives that will get us that $1 billion Mark.

Speaker Change: Yeah, and sorry, if I missed this one earlier, but just on the set up cost of the advertising strategy.

Wei-Weng Chen: Sorry if I missed this one earlier, but just on the setup costs of the advertising strategy, is that gonna be capitalized? Is that gonna be CapEx? Did you guys say how much that might be?

Speaker Change: Is that going to be capitalized and is that so is that going to be capex and did you guys say how much that might be.

Speaker Change: No we havent specified at this point.

Russell Burke: No, we haven't specified it at this point. We're not looking at capitalized costs. This would be essentially technology and sort of people costs to set it up so that they would be expensed and, again, part of our guidance.

Speaker Change: We're not looking at it capitalized costs.

Speaker Change: This would be.

Speaker Change: Essentially technology and so the people cost to set it up so that they would be expense then again part of our part of our guns.

Okay. Thanks, Thanks, so much.

Wei-Weng Chen: Okay. Thanks. Thanks so much.

Thank you next definitely have games.

Lauren Antonoff: Thank you. Next up, we have James.

Operator: Thank you. Next up, we have James.

Speaker Change: Hi, guys. So.

[Analyst 2]: Oh, hi, guys. A couple of things that I just wanted to run through. Can you maybe with the monetization of your user base, obviously you've got a deal in place with Placer.ai. Can you just remind me of the terms there in terms of expiry and what the intention is in terms of renegotiating another deal, which you alluded to on the call?

James Bales: Oh, hi, guys. A couple of things that I just wanted to run through. Can you maybe with the monetization of your user base, obviously you've got a deal in place with Placer.ai. Can you just remind me of the terms there in terms of expiry and what the intention is in terms of renegotiating another deal, which you alluded to on the call?

Speaker Change: A couple of things so I just wanted to run through it can you maybe with the monetization of your user base, obviously, you've got a deal in place with <unk> can you just reminds me of the terms there in terms of expiring and what the intention is in terms of re negotiating another deal, which you alluded to on the call.

Speaker Change: I can't go into too much detail on that but I am very confident that we will extend that deal I think formerly expires I'm not even sure next year or 220 plus 25.

Chris Hulls: I can't go into too much detail on that, but I am very confident that we will extend that deal. I think it formally expires, I'm not even sure, in the next year or two.

Russell Burke: Twenty-plus.

Speaker Change: But if anything I see that relationship building closer.

Chris Hulls: 25. If anything, I see that relationship getting closer. The value of our data has only increased over time. That's obviously a hot topic now with everything going on with AI, just how valuable rich proprietary datasets are, and ours is one of them. It does dovetail nicely into advertising because it's really about how do you get insights into your customers, and the more you can get insights, the better. I think the world has normalized, even from a press and regulatory standpoint, where the Wild West of raw data, I don't think there's necessarily ever an issue with that. Everyone's moved beyond that to now ways that are considered more privacy safe to get insights into data and monetize it.

Speaker Change: And the value of our data has only increased over time and that's obviously a hot topic now with everything going on with AI, just how valuable rich proprietary datasets are and ours is ours is one of them and it does dovetail nicely into advertising because it's really about how do you get insights into your customers and the more you can get insights to better and I think the world has normalize even from.

Chris Hulls: I think the world has normalized, even from a press and regulatory standpoint, where the Wild West of raw data, I don't think there's necessarily ever an issue with that. Everyone's moved beyond that to now ways that are considered more privacy safe to get insights into data and monetize it. I think we're very well positioned to have that grow over time.

Our press and regulatory standpoint, where the.

Speaker Change: The wild west of raw data, but I don't think theres necessarily ever an issue with that and Thats kind of everyone's move beyond that in alloys that are considered more privacy safe to get insights into the data in and monetize it. So I think we're very well positioned to have that grow over time.

Chris Hulls: I think we're very well positioned to have that grow over time.

Okay got it now.

[Analyst 2]: Okay. Got it. Now, on advertising, another question there. Obviously, if you've got an advertising model that immediately monetizes your active users rather than having to convert them to paying subs, you get a much faster payback on that. Can you help us understand what you're factoring in to sales and marketing if you get that much quicker feedback loop and stronger unit economics?

James Bales: Okay. Got it. Now, on advertising, another question there. Obviously, if you've got an advertising model that immediately monetizes your active users rather than having to convert them to paying subs, you get a much faster payback on that. Can you help us understand what you're factoring in to sales and marketing if you get that much quicker feedback loop and stronger unit economics?

Speaker Change: On advertising and other questionnaire. So obviously, if you've got an advertising model that immediately monetize as your active users rather than having to convert them to paying subs you get a much faster payback on that so can you help us understand what you're factoring in 2000.

Speaker Change: Marketing, if you get that much quicker feedback loop and stronger unit economics.

Speaker Change: Sure. So in the short term, we're we're not really doing much because you're one is not going to be massive.

Chris Hulls: Sure. In the short term, we're not really doing much because year one is not gonna be massive. Over time, of course, that factors into the ALTV model, and we calculate return on ad spend across channel, and this will factor into that. It's a nice linear straight line thing with MAU. As we see the faster payback, we'll increase marketing costs because we'll see the return. Obviously, in this climate, we have to be prudent about that. We could be investing way further out into that curve, and if the market expectations change, we'd be ready to do that. That said, we should be able to increase per dollar effectiveness because we're getting that cash recovery quicker, as you're highlighting.

Speaker Change: But over time of course that factors in to the LTV model and we calculate return on AD spend across channel and this will factor into that.

Speaker Change: And it's a nice linear straight line thing with Mou So.

Speaker Change: As we see the faster payback, we will increase marketing costs, because we will we will see the return.

Speaker Change: Obviously in this climate, we have to be.

Speaker Change: Prudent about that we could be investing wafer they're out into that curve and a third.

Chris Hulls: We could be investing way further out into that curve, and if the market expectations change, we'd be ready to do that. That said, we should be able to increase per dollar effectiveness because we're getting that cash recovery quicker, as you're highlighting. I think 2025 is when I hope we would see much higher leverage because we have relatively modest contribution from advertising and percent of revenue this year, but going up thereafter.

Speaker Change: Market expectations change, we'd be ready to do that but that that said, we should be able to increase per dollar of effectiveness, because we're getting that cash recovery quickly as.

As you are highlighting I think 'twenty fives, where I hope, we would see much higher level, because we have relatively modest contribution from advertising and percent of revenue this year, but going up thereafter.

Chris Hulls: I think 2025 is when I hope we would see much higher leverage because we have relatively modest contribution from advertising and percent of revenue this year, but going up thereafter.

Speaker Change: And is that scalable if you put more dollars to work can you acquire more users at the same or similar process.

[Analyst 2]: Is that scalable? Like, if you put more dollars to work, can you acquire more users at the same or similar prices?

James Bales: Is that scalable? Like, if you put more dollars to work, can you acquire more users at the same or similar prices?

Speaker Change: This usually goes in step functions, where you'd start with low hanging fruit channels they need to build out the brand as well you have brand things that are less measure bullish then increase the effects of a performance based things search it's.

Chris Hulls: This usually goes in step functions, where you'd start with the low-hanging fruit channels, then you need to build out the brand as well. You have brand things that are less measurable, which then increase the effect of the performance-based things. It changes over time. Part of why we hired Mike was that he has bought a number of companies through these transitions. He's done international, and so our hope is, yes, we will start seeing that improvement across channels. Of course, things do get more expensive, at the same time.

Speaker Change: It changes over time.

Speaker Change: Why we hired Mike was that he has brought a number of companies do these transitions you've done international and so our hope is yes, we will start seeing that.

Speaker Change: That.

That improvement across channels, but of course things do get more expensive at the same time and to your point James It feeds into the same flywheel essentially.

Russell Burke: To your point, James, it feeds into the same flywheel, essentially. High margin returns, you're able to invest more, build the audience more. It feeds into that flywheel.

Speaker Change: Hi high margin returns, you're able to invest more build build the audience more.

And it it feeds into that flywheel.

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