Q1 2024 Life360 Inc Earnings Call

May 9, 2024

Jolanta Masojada: Good morning, and thank you for joining the Life360 2024 Q1 Results Conference Call. This is Jolanta Masojada, and I head up investor relations for Life360 in Australia. I'd like to introduce and welcome my new colleague, Raymond Jones, who has joined Life360 to head up investor relations in the US. This call is being conducted as a Zoom audio webinar. All participants will be in a listen-only mode until 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 make forward-looking statements regarding future events and financial performance, which are subject to material risks and uncertainties, and actual results may differ materially from such statements.

ZheWei Sim: Good morning, and thank you for joining the Life360 2024 Q1 Results Conference Call. This is Jolanta Masojada, and I head up investor relations for Life360 in Australia. I'd like to introduce and welcome my new colleague, Raymond Jones, who has joined Life360 to head up investor relations in the US. This call is being conducted as a Zoom audio webinar. All participants will be in a listen-only mode until Q&A.

Jolanta Masojada: 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 make forward-looking statements regarding future events and financial performance, which are subject to material risks and uncertainties, and actual results may differ materially from such statements.

Jolanta Masojada: 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 non-GAAP measures are not intended to be considered in isolation or as a substitute for, or superior to, our GAAP results, and should be read in conjunction with the company's consolidated financial statements prepared in accordance with GAAP. A description of these non-GAAP financial measures, as well as a reconciliation to the nearest GAAP financial measures, are included at the end of the company's earnings release issued earlier today, which has been posted on the investor relations page of the company's website.

Jolanta Masojada: In addition, due to restrictions related to US securities laws, we are unable to provide any further detail on this call related to today's announcement regarding our Form S-3 Registration Statement or our proposed US IPO. The agenda for this morning's call will begin with a business update by Co-founder and CEO, Chris Hulls, and CFO, Russell Burke, will provide details on the Q1 financials. Chris will then provide some outlook comments, which will be followed by a Q&A session. I would now like to turn the call over to Chris.

Chris Hulls: Good morning, everyone, and thanks for joining our Q1 results call. Before I jump into the detail of the result, I'd like to address today's announcement that we have filed an S-3 Registration Statement for a proposed US IPO. We have previously indicated that we may pursue a dual listing, which would involve a possible US IPO while remaining listed on the ASX. We've also said that with our headquarters in the San Francisco area and pre-existing SEC reporting obligations, we view the US IPO and increased exposure to US investors as a natural step in our growth. The timing and number of shares to be issued and pricing of the US IPO have not yet been determined and are subject to consideration of several different factors and conditions.

Chris Hulls: It is expected that the US IPO would consist of a primary issuance of new Life360 shares as well as a secondary sale of existing shares in order to reduce dilution for existing shareholders. Restrictions related to US securities law mean we are unable to provide any further detail on our proposed US IPO at this time. Turning now to Q1. Life360's Q1 2024 results showed continued momentum, with net paying circle additions nearly doubling to 96,000 from 54,000 in Q4 2023, achieving a new first quarter record. In addition, our efforts in relation to both our free members and international expansion are paying off, with 4.9 million new monthly active users, also a new first quarter record.

Chris Hulls: The market opportunity is on a global scale, and we believe we have significant headroom to grow as we expand to new regions and launch new features that expand to different life stages. This momentum has continued so far in Q2 2024, with the addition of a further 32,000 net paying circle additions during the month of April. Q1 US paying circles increased 16% year over year on the back of both higher registrations and improved conversion and retention metrics. While international paying circles maintained strong momentum, up 39% year over year. UK paying circles increased 23% year over year with a modest uptick in Q1 2024 churn, as expected, due to the price increase to existing subscribers in January 2024. The UK triple-tier membership launch and price increase to existing subscribers helped drive 53% higher ARPPC relative to the pre-launch baseline.

Chris Hulls: These metrics are outperforming the Canada launch, which achieved 31 ARPPC growth at the same time versus the baseline. Australia and New Zealand achieved record quarterly net subscriber additions and a 47% year over year increase in paying circles. The full triple-tier membership product was launched to 100% of members in Australia and New Zealand in late April. Enhanced features for subscribers include breakdown assistance, emergency services, dispatch with crash detection, and digital safety for the whole family. Prices were increased for existing subscribers ahead of the launch, which, combined with the pricing impact from the triple-tier membership introduction, is expected to result in a significant increase in ARPPC. To date, the rollout has proceeded smoothly with the expected impact of temporarily increased churn following the price increases.

Chris Hulls: We're already delivering value to new triple-tier membership members, such as Anita and Chris in Queensland, who were alerted when their daughter was in a car accident and benefited from the automatic emergency service notification from Life360. Q1 global ARPPC increased 3% year over year. US ARPPC increased 8% year over year, benefiting from price increases for existing US Android subscribers in Q2 2023. Global Q1 ARPPC increased 3% year over year and was stable quarter over quarter. The positive impacts from price increases were offset by the higher mix of international paying circles and lower price territories. Q1 net hardware unit shift was modestly down year over year for the standalone hardware business, and average selling price was slightly lower year over year due to the higher mix of multi-pack units. Tile's product refresh is on track for the Q4 2024 holiday season.

Chris Hulls: We continue to make meaningful progress on our path to profitability, reducing our net loss and delivering our sixth consecutive quarter of adjusted, positive adjusted EBITDA. A fourth consecutive quarter of positive operating cash flow. Our commitment to balancing fiscal responsibility with prudent investment to position the business for long-term success is reflected in revenue growth of 15% year over year, while operating expenses increased just 3%, underpinning positive adjusted EBITDA of +$4.3 million for the quarter. This operating leverage demonstrates that we are on track to reach our target, a sustained positive EBITDA in CY 2025. We are also excited that our new advertising initiative is now officially live in production with US members, and early results are promising.

Chris Hulls: We have completed the development work that allows for programmatic ads and expect to be set up for direct sales at scale by the end of June. As expected, initial advertising revenue in Q1 2024 was minimal due to our measured approach. As we've already shared, we anticipate significant growth, although still a modest revenue contribution in H2 2024, especially during the peak holiday season. We are still building out the overall infrastructure that will allow things like audience segmentation and retargeting, which will create much higher volume. We continue to build confidence that we have many opportunities to scale this and other indirect channels for monetization. By tapping into the real-time location data, we are strongly positioned to serve ads to our members in a way that is complementary to the user experience.

Chris Hulls: For example, we've launched Watch Me Fly, which automatically notifies you and your circle when you land in an airport. Integrating a ride-sharing upsell is something we can build on top of our existing infrastructure and ties in with an organic interaction with the app and a great user experience. Beyond advertising within the app, we believe we have a major opportunity to connect our members to brands, products, and services that are relevant to them offsite. With our scaled logged-in experience audience, rich first-party data, and unique reporting capabilities, this is a significant opportunity for scaling advertising revenue in a manner that is privacy first and complementary to the customer experience.

Chris Hulls: In the context of indirect monetization, which includes our new advertising initiative and our existing data business, we are thrilled to announce the signing of a non-binding letter of intent to establish a partnership with and a small investment in Hubble Network, Inc., a space technology firm led by Life360's co-founder, current board member, and former CTO, Alex Haro. Hubble's proprietary satellite technology enables two-way communication between ground-based Bluetooth devices like Tile and its newly launched satellite constellation. This potential partnership is an opportunity to open yet another low-effort, high-margin revenue stream intended to allow us to monetize the latent demand for enterprise tracking services via Tile, which we had previously set aside to focus on our consumer offerings.

Chris Hulls: By integrating our Bluetooth finding network with Hubble satellite technology, we plan to offer global tracking solutions for assets such as pallets, fire sensors, and vehicle fleets without relying on cellular connections. This setup is expected to not only extend our indoor tracking capabilities where satellites cannot reach, but also to enhance coverage in outdoor and rural areas. Additionally, this collaboration would position us to enhance the tracking capabilities of our consumer devices, potentially surpassing those offered by Google and Apple. While currently only two prototype satellites are operational, the full constellation, if successful, will eventually provide unparalleled global coverage. We believe our potential partnership with Hubble will lead the development of this combined phone and satellite network, primarily targeting enterprise applications like tracking pallets and ships. We expect an initial launch with Hubble Network in early 2025 and no related revenue in 2024.

Chris Hulls: With that, I'll turn the call over to Russell to run through the financials.

Russell Burke: Thanks, Chris, and thanks everyone for joining the call today. As a reminder, all of the financials I'll be referencing are unaudited and denominated in US dollars. Chris already mentioned our strong operating metrics in Q1, and this flowed through to revenue, particularly in the latter part of the quarter. Q1 revenue increased 15% year on year to $78.2 million, underpinned by total subscription revenue growth of 19% to $61.6 million. Core Life360 subscription revenue increased 23% to $57 million, supported by the 21% year-on-year increase in paying circles and 3% higher ARPPC. Hardware revenue increased 2% year on year to $10.2 million, with benefits from bundling, fewer discounts offered, and fewer returns, offsetting lower average selling price and standalone units shipped.

Russell Burke: Other revenue of $6.5 million was in line with the prior period as the company maintained its single aggregated data arrangement. March AMR increased 19% year on year, benefiting from accelerating subscription revenue momentum over the course of Q1 2024. Q1 gross profit of $60 million increased 20% year on year, with the gross margin increasing to 77% from 73% in the prior year period. This was driven by an improvement in subscription margins resulting from price increases, as well as increase in hardware margins reflecting cost efficiencies. Q1 operating expenses increased just 3% year on year, largely due to higher general and admin costs related primarily to compliance with Sarbanes-Oxley. Excluding variable commissions, operating expenses were virtually unchanged year on year despite the revenue increase of 15% in the same period.

Russell Burke: This reflected cost reduction measures undertaken beginning in Q1 2023 and the related efficiencies achieved across the business as we continue to demonstrate operating leverage. Q1 delivered a $4.3 million year-on-year improvement in net loss from a loss of $14.1 million in Q1 2023 to a loss of $9.8 million this quarter. As well as a +$4.3 million adjusted EBITDA contribution versus $0.5 million in Q1 2023 as a result of continued strong subscription growth and ongoing cost efficiencies. The EBITDA loss of $4.1 million improved by $8.5 million from Q1 2023. The difference between adjusted EBITDA and EBITDA in the quarter consisted almost entirely of stock-based compensation. Turning now to the balance sheet and cash flow.

Russell Burke: Life360 ended Q1 with cash equivalents, and restricted cash of $74.6 million, an increase of $3.9 million from Q4 2023. Q1 net cash provided by operating activities of $10.7 million was higher than adjusted EBITDA of $4.3 million, primarily due to the timing of receipts and payables. Net cash used in investing activities of $1.1 million related to payments for internally developed software. A net cash used in financing activities of $5.7 million related to taxes paid for the net settlement of RSUs, partially offset by proceeds from the exercise of options. I note that the cash paid on RSU settlements was higher due to our higher stock price and therefore higher market value at the time of settlement of the RSUs. Thanks for your attention, and I'll hand back to Chris to outline our earnings guidance.

Chris Hulls: Life360 has maintained CY 2024 earnings guidance and 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 subscription revenue non-GAAP growth of at least 20% year over year. Positive adjusted EBITDA of $30 to 35 million, EBITDA loss of $8 to 13 million, and positive operating cash flow for each quarter of CY 2024 and year-end cash equivalents, and restricted cash of $80 to 90 million. The forecast includes Q2 2024 conversion to equity rather than cash payment of the remaining convertible notes originally issued in connection with the acquisition of Jiobit, amounting to $3.5 million, offset by higher expected higher outflows from RSU settlements.

Chris Hulls: The company expects to continue to be adjusted EBITDA positive on a quarterly basis going forward and to achieve positive EBITDA in the H1 of CY 2025. That concludes our prepared remarks. Now I'll turn over the call to Melissa, who will manage the Q&A portion of our call today.

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 your question. First up, we have Chris Gawler from Goldman Sachs.

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

Chris Hulls: Loud and clear.

Chris Gawler: Awesome. Maybe firstly, just in terms of the momentum so far this year in terms of MAUs and net adds-

Chris Hulls: Yep.

Chris Gawler: Interested if you could provide us with a bit more color on the core drivers of that, particularly seeing as the user acquisition spend has actually been slightly down so far this year?

Chris Hulls: Sure. As mentioned, over the years, we have long said that the demographic that's really gonna drive our growth are millennials, and millennials are now having kids aged into our segment. That hypothesis is really proving right. Like, you do not have to pitch this product to people of that generation. And when you have kids driving with their kids, there really is no one else in the market. And even for generic location sharing services for cross-platform families, there's nothing out there at scale other than us. International, we were very confident that would do well because we saw the low-hanging fruit that was there. We built the infrastructure, we have better translations. We continue to feel like we're in the early days as you can see by some of the records we're hitting.

Chris Hulls: We have a new CMO who's been doing amazing. We've been focused on efficiency. We're opening up new channels for spend. We're readjusting the mix to where we're getting the highest leverage. We expect more of this. Very exciting.

Chris Gawler: Yep, sure. Then secondly, on the full year EBITDA guidance, just curious on your thoughts around reinvestment as we go through the remainder of the year, particularly given that the net adds are perhaps tracking ahead of, you know, what you and the market were expecting.

Chris Hulls: Sure. We're very back half loaded as always. We have a lot of things we're planning for H2. In terms of reinvestment and growth, we don't wanna change guidance. We've committed to showing financial leverage. We're committed to flipping to statutory break even next year. As of now, we're very much staying the course.

Russell Burke: Chris, just to, you know, to your question. We're not planning to change our approach here. Yes, we decided to leave guidance as it was, but it's early in the year, and as Chris said, our results are very back-ended this year in particular.

Chris Gawler: Yep, that's clear. Maybe just one more question on the Hubble investment. Curious if you're able to quantify the amount of the potential initial investment, and if you could give us any thoughts around how the, you know, the partnership might work in terms of sharing OpEx and CapEx as that business looks to ramp up.

Chris Hulls: Sure. We are gonna do initial investment that's $1-9 million, so it's small. The benefit of this is we have been following Alex. He's worked with me for a very long time, and his technology, and just to back up a little bit. This was a massive big swing Alex did to actually have Bluetooth communications from space. Many people thought it was unachievable, but those first two satellites were just launched in the last couple months. It's because I have that close relationship with Alex, where there's a lot of trust that we can do this partnership and he's gonna leverage it. The beauty of this one is we had to do very little. A big theme of indirect revenue for us is that we already have the asset, and we just monetize it.

Chris Hulls: The vast majority of all the work is going to be given to Hubble. They are gonna primarily be selling to enterprise. The development of the dev platform, the sales infrastructure, the connection to the satellite, they're gonna be doing all of that because we're a consumer company. The idea is we launch this. They do most of the work. In some ways, it's very much a free call option because we are not going in the hole really much at all. Not all that different than, say, our partnership with Placer.ai or Arity on the data front. We don't mind giving the brand on the enterprise side to somebody else, especially someone with so much trust. That is not our focus. Our focus is families.

Chris Hulls: I should just add that once we do get the satellite uplink connected, there are huge potentials for what that could do to Tile, because you can imagine a Bluetooth device that can work globally without a cell connection. Huge game changer. We wanna be careful in terms of making extremely bold statements there because this is almost science fiction level tech. If that works, and it's looking pretty good right now, very, very exciting for what that means.

Chris Gawler: Yep, that's great. Thanks, Chris. I'll jump back in the queue.

Operator: Thanks, Chris. Up next, we have Lafitani Sotiriou from MST Financial.

Lafitani Sotiriou: Hi, guys. Just a follow-up question on the IPO. It's not around new information, but what you've already detailed. Part of your commentary discusses potential secondary sell down. Can you just talk us through what you're talking about, existing staff may sell into a possible sell down, and just how many shares are in that bucket of potential that may be included?

Chris Hulls: Russell, do you wanna take that one?

Russell Burke: Absolutely. Lafitani, as you know, we can't talk specifically about it, and frankly, that hasn't yet been determined. What we are focused on is, you know, the message that we've had from investors that they are concerned about dilution. Anything that we do here is directed towards what we need to do for an IPO, but as we've said, really minimizing dilution.

Lafitani Sotiriou: Can I just clarify then on this? I know there's, you know, can't tell us how many maybe form part of that sell down. Can you just tell us how much is currently sitting as the total share register with staff within the business? And then at the moment for the share-based comp, correct me if I'm wrong, but you're currently buying that stock on-market and issuing it to staff who are primarily based in the States. Is that part of this potential sell down?

Russell Burke: Um, I-

Lafitani Sotiriou: Do they form part of this potential sell down?

Russell Burke: Yeah. I think those things are not connected. The equity grants to staff are through RSUs, so that's sort of effectively new equity. But as we've said, as they've settled, a substantial piece of those comes back into the pool. Quite separately to that, we haven't yet really built out plans for the secondary, but we would wanna make that available to, you know, a selected number of people. And in terms of held by employees, it's a relatively small number on the capital side. On a fully diluted side, it would be a little larger, but we can get that for you.

Lafitani Sotiriou: Okay, great. Moving on to the Hubble Network. These are some technology questions. Can you just clarify, Chris, is from the initial, a couple satellites that are out there, are you saying that it's already working, that it's proven, is the testing has worked with the Tile solution? And from the Tile product, are you saying that it's just your hardware product that you're exploring or? 'Cause I remember when you bought Tile, you said that Tile also licensed its Bluetooth technology for other companies to use. Is that part of the equation as well?

Chris Hulls: Sure. There are two satellites in space right now that are making live connections from orbit to the ground. Two actual Bluetooth devices using the chipsets that are in Tile or similar manufacturers. In terms of the key technical laws-of-physics-style risks, those have largely been solved. And again, this is very, very cutting-edge tech. I think everyone was surprised at how well it's working, and this is an offshoot of me and Alex just thinking about location for over a decade together. In terms of licensing other tech, this will go into our devices. I can't comment specifically on the deal, but in terms of the combo satellite and on-the-ground scanning network, we are looking at exclusivity for consumer use cases. The combo product could really leapfrog everything else out there.

Chris Hulls: Again, how we think about this, it's in many respects a free option. The investment will be $ single-digit millions, extremely high trust relationship, and it is very similar to things like Arity, Placer.ai, and things like ads, where it's not all that much work because the work is really leveraging an existing asset we already have.

Lafitani Sotiriou: Just to clarify, are there many other satellites that are pursuing this solution with Bluetooth technology, or is this the only one you're aware of? Or can you talk a little-

Chris Hulls: This is the only one we are aware of, and the vast majority of people thought this was technically not possible. Alex and his team have proven it, which is extremely exciting.

Lafitani Sotiriou: Got it. That adds a lot of color. Can I just clarify revenue model? 'Cause you did add some color in your opening comments and in the last question. So the idea, the way that this will work from a Life360 perspective, you are considering this as a new vertical, right? And that, even though you guys won't be responsible for building out the teams and the sales base, but ultimately there will be. Is it? Are you looking at the revenue as per Tile gadget that is being sold or how should we think about what the revenue potential is for you guys? So just say, as an example, Hubble Network signs up a huge shipping container-

Chris Hulls: Yep.

Lafitani Sotiriou: wanting to track all the pallets. How does the revenue look like for you guys?

Chris Hulls: Sure.

Lafitani Sotiriou: What's the drop-down? What do you guys get?

Chris Hulls: It's, I'm gonna give an oversimplified version. We are gonna get a portion of the revenue that is collected by Hubble from the network fees for what's being called using the federated network. That's our scanning network on the ground, because if you're inside or 5 or 6 pallets deep, you might not work from the satellite, and that's why our finding network's extremely powerful. We'll get a portion of the fee there, and we will get hardware revenue, albeit very low margin, on the actual hardware sale. It's really about getting some of that recurring revenue from the actual sale of the device, of the devices, that we will get. Very similar to how Arity sells aggregated data, we get our portion of that sale. We're gonna get a portion of the sale generated when it's using our tech.

Lafitani Sotiriou: Got it. That's a small percentage, a few dollars, or it's just too early to talk to at this stage?

Chris Hulls: It'll be a meaningful share. Hubble will be the primary company doing the sales. Again, it's just taking something we already have. We're gonna have very few staff for it, very little dollars. It's again, we've talked about our silver mines and our gold mines. I think this actually could be quite big, but it's leveraging what we have today, so we don't have to do very much work.

Lafitani Sotiriou: All right. Got it. Thanks for the context on this one.

Chris Hulls: One clarification I should say. When I think of new verticals, I often think of us doing our own products, big investment, a lot of uncertainty if it's gonna pay off. Although this is in some ways a new vertical, I would see it much more as a way to turn on another avenue of indirect monetization, which is kind of great in free margin, and an option that if this really works in the way it works, it could hypercharge the consumer business as this technology gets rolled out into Tile devices. That is somewhat. If it happens, great. If it doesn't, it's not the end of the world 'cause again, very low investment, and we will ideally see revenue coming in from the work of Hubble, and they're getting to leverage our asset.

Lafitani Sotiriou: Okay. Great. Got it. Just one final question with the advertising direct sales. Can you just clarify what that means that you have direct sales at scale by June? 'Cause your initial comments when you were introducing advertising talked to, I think utilizing AdMob to get the ad products going.

Chris Hulls: Sure.

Lafitani Sotiriou: Like if we think about in the middle of June, will you be half AdMob, half direct sales? Or what's the thinking behind it?

Chris Hulls: AdMob and tools like that and Google Ad Manager, you can still have direct sales. They're more an infrastructure play because you need the way of actually getting the ads in the system. Although there are programmatic ads using those services, it's not in conflict to direct sales. You can actually enable the direct sales with this infrastructure. I don't know what the percentages will be, but obviously when we get able to segment our audience and customers, versus saying, "Hey, you wanna show an ad to a smartphone user?" When we're able to go and say, "Okay, I want to build a program, or I wanna target people who went to this store at this point in time," we could then sit on top of AdMob or Google Ad Manager and say, we want to.

Chris Hulls: We have created these audience segments, let's target them. That's how direct sales fits nicely in with those services.

Lafitani Sotiriou: Got it. From your initial guidance to where we are now, this sounds like it's actually moving a bit quicker than what you previously discussed. Is that the case? Are you just being conservative with the potential revenue ramp-up in H2, or 'cause you just don't know yet 'cause it's not... you haven't really got it at scale yet? Or is this something we have to wait for September, December updates to get a better view?

Chris Hulls: I think in general, when you get direct sales, it's a cycle up and spin up effect. The general pattern of companies getting into advertising usually starts slowly because you have to build out the segments, you have to build out the infrastructure, you have to build out the team, you have to build the relationships. People have to become aware that you're on the market. I don't think we're being conservative. I think we're being reasonable. In general, it's once you get the repeatable model, then you start scaling it. We feel good about the numbers we put out. We're not intentionally over or underselling.

Lafitani Sotiriou: So

Chris Hulls: Infrastructure is a little bit ahead of schedule.

Russell Burke: I think I'd say our view on the evolution of this hasn't really changed. We knew it was going to be a slow build. There are definitely some unknowns in terms of, you know, how quickly it will build. We know it will build into the second half. The progress is good, but that view on evolution hasn't changed.

Lafitani Sotiriou: Thank you.

Operator: Thanks, Las. Next up we have James Bales from Morgan Stanley.

James Bales: Hi, guys. A couple of follow-ups from some of the earlier questions. Firstly, on subs growth. At the full year result from last year in March, you guys were basically pretty cautious on subs growth for this year. First quarter's come in way ahead of plan. Can you maybe talk to why that's the case, how the MAU growth has gone in April, and whether you still expect the normal seasonality that you've experienced in past years in 2024?

Chris Hulls: If we look at why, we still grow primarily organically. As far as we can tell, I'm somewhat repeating what I've already said. The demographic tailwind, which we believed had been happening, is continuing to happen. We can see it anecdotally. We can see broader use cases in terms of the types of people who use the product. You can see the awareness of location-sharing services. I'm sure just anyone on this call, everyone's sharing location now. This really could be social network scale type of penetration. The TAM is just huge. There's that, and there's also the focus of international. MAU is continuing to grow very, very well into this quarter, and international has also continued to do exceptionally well. We're not surprised on that at all.

Chris Hulls: We just didn't have much of an investment there. Now we have David Rice, who was our COO, very senior guy, living in the UK, making it his full emphasis. We knew that we had just some easy levers to pull, and that's proving out. I also think the trends that have driven the growth in the US, they should repeat in Europe and other regions 'cause they're usually a little bit behind the curve in terms of trends. Asians are sometimes ahead of the Americans, but Americans are usually ahead of the rest of the world. We just do have a very natural market and demographic tailwind, and the product keeps getting better as well, and we keep getting smarter about how we optimize flows and funnel.

Chris Hulls: We've launched some very small delight features like Watch Me Fly when you get a landing notification. Doesn't seem like much, but these little things really are these magic moments that drive growth. Net, net, it's leading to these all-time highs.

Russell Burke: One nuance to add to that, James, and I think we said this at year-end, but the early part of the year had moved sort of essentially as we expected. The real growth came in the latter part of the quarter. So that's sort of really driven those metrics in Q1, and thus our higher AMR as well at the end of Q1. As we've said, we're seeing that higher growth level continuing.

James Bales: Okay. Got it. Maybe a second question on advertising. You guys talked about having your own capability here. The initial product, it seems like you're plugged into Google's infrastructure and sourcing advertisers from them. Can you maybe help us understand how many platforms you expect to be plugged into over time and the mix of deals that you'll do with advertisers that are directly negotiated versus through some of these third-party platforms?

Chris Hulls: Sure. In terms of the number of platforms we're integrated with, I don't know if that's the right framing in the sense that we need to do lots of different work in different ways to get our audience sliced and diced into ways that are identifiable, marketable, and attributable. It's not just we keep adding new platforms that do the same thing. We build out different parts of the tech stack. Some of the stuff we do ourselves, some we use third parties for. We will be continuing to develop that. Then some of the things have to be custom. Like, you land at an airport, you get a push. Like, we already built that with the Watch Me Fly feature.

Chris Hulls: Now how do we link that to our back end so it's like, "Hey, who wants to send ads to people who just landed at an airport?" That's a little bit niche, but it's just an example. Like, we can go out and sell that interaction, and that probably would be something we have a human touch. In terms of what percentage of direct sales versus programmatic, there's also some nuance there because we could do direct sale to a vertical. If you look at people like partners even, like Arity, we could do a deal with them where they get a certain amount of inventory for car ads, and then they would be going out and do the direct sales.

Chris Hulls: It would be a programmatic hook to our engine because it would be programmatic to Arity, and then they go out and have a direct conversation with other people. They fill that inventory. Again, it's not necessarily the easiest answer, but I would say if I kinda abstract the meta point away, we're gonna be building out more and more infrastructure for a number of years before it's done. Also going back to how these companies scale, you have to build it out, and that's why you do it in years 2, 3, 4. You probably see more in 3 and 4, you see things really ramp up because you know the hooks that work. You have the analytics, you have the data science, you have the attribution. You're known as a source for traffic.

Chris Hulls: You have a sales team, then it all comes together.

James Bales: How many people are working on the ads product within your business at the moment?

Chris Hulls: It's a relatively small number. I don't know exactly how I would quantify it because many people in that are touching ads are touching other things. Data science, compliance, partnerships, the back-end overall team, the infrastructure team, they all have some part in it, but it's very modest relative to, say, a brand new vertical that we're building ourselves. Of course, if it really ramps up, we'll increase the investment more. Part of what we liked about ads, and we shared on prior calls, is that we don't have to go deeply into the red to get out there. We'll build it incrementally, so we could always say that the investment in advertising has a positive return within the same year, which is also why we're starting a little bit more conservatively. Small team, incremental wins, and we're building it out.

Chris Hulls: As we collect more revenue, we'll spend more on infrastructure.

James Bales: Perfect. Thanks for the call.

Chris Hulls: Welcome.

Operator: Thanks, James. Up next, we have Wei-Weng Chen from RBC Capital Markets.

Wei-Weng Chen: Hi, guys. Can you hear me?

Chris Hulls: Loud and clear.

Wei-Weng Chen: Excellent. Cool. Yeah, just, I appreciate all the comments on Hubble. Just in your best guess, I guess, how far off are we from first revenue with Hubble?

Chris Hulls: 2025.

Wei-Weng Chen: Oh, okay. It's not that far away. Okay, cool.

Chris Hulls: No. The longer arc is a full satellite constellation that would, if all goes well, and I do want to be open where I think there's low risk and high risk. I think it's medium to high, the risk on the satellite constellation, giving the full real-time piece. But you could see in like 2026, we're essentially having on-demand wake ups every few-minute time interval, that goes right into the Tile technology, which benefits consumer. But to actually start getting revenue from the enterprise side, you don't need nearly as much because if you think of the use case for enterprise, like let's just say you're a pallet company or you're like a fire sensor or an ag sensor, like watching humidity on a grapevine, these are all enterprise use cases.

Chris Hulls: It's very different than the consumer use case where you need updates every couple minutes. You just wanna know the thing is where it is. You wanna get that little bit of data out of it even once a day, and that's where that combo comes in. If you're out in the field, the Hubble satellite will get you anywhere. If you're in the network or in the bowels of a ship, you have the Life360 scanning network on the Bluetooth side of things. We essentially have that infrastructure almost ready to go, which is what the money will come in 2025. And the Hubble team is already building out the platform that takes our data and will unify it with the satellite infrastructure.

Wei-Weng Chen: Okay. Just to confirm, there's not gonna be like a Tile for business, sort of, product and a Tile for consumer product. Like it's the same product from a technological perspective, yeah?

Chris Hulls: Yes and no. Hubble can make additional modifications of hardware. We're gonna provide an off-the-shelf unit. The real thing we're bringing, and why Hubble wants to work with us, is we have the finding network. It's actually not the Tile tech, which is the core IP here. Tile's tech is actually relatively straightforward. It's that scanning network of 66 million phones and being able to have scanners like where you can just imagine the people in the warehouse, they could run Life360 or they could run a dedicated version of our app that specifically we're scanning just sitting in the background, so you have that backup layer. That's really the asset we're monetizing. Counterintuitively, it's not necessarily Tile. Yes, they like that we have this off-the-shelf Bluetooth tracker.

Chris Hulls: Yes, they like that Tile has a brand, so when they go and approach these pallet manufacturers, they can say, we're gonna probably call it Smartpin. You can get the Smartpin with Tile, and that's gonna help them, but that's where the IP is actually lighter. It's going back to that network. The real asset of Life360 is our 66 million customers, and in this case, all customers who can scan for devices.

Wei-Weng Chen: Just to be very clear, there's very little capital involved in that. The effort to have Tile scan for the Hubble Network is relatively minimal.

Chris Hulls: I'd say even beyond relatively, we're talking like the current estimate's just one engine, a few weeks of work. Of course, nothing's that simple. You need to maintain, you need to monitor, but in terms of the core work, it's really just update the scanning protocol, feed it to their system, and they're doing the rest of the work.

Wei-Weng Chen: Yeah. Okay. How much work have you or Hubble done on this opportunity, in terms of enterprise tracking, including potentially speaking to enterprise customers? Is there-

Chris Hulls: Well, a lot.

Wei-Weng Chen: What's the feedback been?

Chris Hulls: Oh, tons. If I back way up, me and Alex, we've been working together on location technologies for 15 years, and if even people recall on decks a couple years ago, we are convinced there's gonna be worldwide global coverage for IoT. It's actually what inspired Alex to go start this company, is that he felt he had a unique technical insight with his co-founder there, who's a signal processing PhD, to figure out how you can essentially have anything with Bluetooth communicate to a satellite versus having to build custom modems and all that. We have been thinking about this a very, very long time. Part of what validation for Alex was like, we had huge demand for Tile to do this, but we didn't want to invest resources in Tile doing this, A, because the focus is families.

Chris Hulls: Like the consumer opportunity is billions and billions and billions of dollars. As much as we like enterprise, not worth distracting our company itself, because we don't have a sales team, we're not an enterprise business. It was already there. There was a lot of demand. Then when the market pulled back even more, we just shut all that down, said, Okay, maybe we revisit in a few years. I have had conversations with Alex for multiple years now, like, Hey, if this technology you're doing work, pick up that business. It's because I have that close relationship with Alex, we were able to just jump on this so quickly. He's gonna be hitting the ground running 'cause he was obviously our CTO and currently a director.

Chris Hulls: It's because of that close relationship is moving so quickly, and we're able to line this up.

Wei-Weng Chen: Yeah. Okay. Just last question from me. I guess, is anyone on 360's board or in 360 personally invested in Hubble as well?

Chris Hulls: Yeah, some of us are investors, myself included, but we will be disclosing all conflicts and the quantum is, I think when disclosed and shared, not anything that will raise any sorts of eyebrows.

Wei Sim: Okay. Thanks.

ZheWei Sim: Okay. Thanks.

Chris Hulls: Relatively modest.

Operator: Thank you, Wei-Weng Chen. Up next, we have Wei Sim from Jefferies.

Wei Sim: Hey, Chris. How are you?

ZheWei Sim: Hey, Chris. How are you?

Chris Hulls: Hello.

Wei Sim: Two questions from me. The first one is just in regards to Hubble and, you know, this Bluetooth tracking. We're essentially saying that Bluetooth networks can be tracked anywhere, it sounds like. You know, what's the implications for Jiobit if this were to be the case?

ZheWei Sim: Two questions from me. The first one is just in regards to Hubble and, you know, this Bluetooth tracking. We're essentially saying that Bluetooth networks can be tracked anywhere, it sounds like. You know, what's the implications for Jiobit if this were to be the case?

Chris Hulls: We think it only helps Jiobit. If I back up to our vision why we wanted Jiobit and Tile, is we want to have devices that on the location stack. They're very different. Even with Hubble, you're not gonna get real-time updates. It's gonna be over time. It's this high latency. That's why AirTag and Tile, they're very different than GPS trackers, which are also growing very quickly. What we wanna do, and it's not even completely related to Hubble, but where our mind goes is we want to have devices where you'll get, say, 30 days battery life of real-time tracking. We are working on our next rev of Jiobit. We have to backburner that when the market crashes, everybody knows.

Chris Hulls: Next year we'll have new versions, and the idea is you'll get the 30 days real-time tracking or thereabouts. I'm somewhat making up numbers, but say a month of real-time GPS. Then if you forget to charge, you can have a year backup using Tile Bluetooth tech and then Hubble. If you think about what we could do, we could just leapfrog all the competitors because we could have the GPS LTE connection last for a month. You know what? If you forget to charge, unlike our competitors' devices, which just turn into a brick, you'll get a whole another year with the Tile backup functionality. Once that Tile backup functionality includes Hubble, it won't be as good as GPS, but if your dog runs away, you'll still be able to find exactly where they are out in the woods.

Chris Hulls: Whereas again, our competitors would, when their battery dies, they're literally bricked. We have a ton of directions we can go.

Wei Sim: Okay, that makes sense. Just in terms of like the updates that you would be able to get from Hubble, what kind of latency are we talking or frequency are we talking about?

ZheWei Sim: Okay, that makes sense. Just in terms of like the updates that you would be able to get from Hubble, what kind of latency are we talking or frequency are we talking about?

Chris Hulls: There's short term and long term. Short term, there's only a couple satellites in the sky. It's only a couple a day. Fine for enterprise, but not so fine for consumer. If you get theoretical, I'm gonna get the numbers a bit wrong here, but full constellation, you call it 100 satellites, and the satellite's about a quarter million dollars to launch them. Thanks to SpaceX, far, far, far cheaper than they used to be. You could be getting updates every few minutes and actually on-demand updates 'cause there'll always be some satellite overhead because it's low Earth orbit that can make connection with the system. I do wanna be careful about overselling things. That will take definitely a couple years at the earliest and is where we're getting into some, you know, much deeper tech.

Chris Hulls: The core tech is validated, and there's a lot of confidence that it is just a matter of getting the satellites launched and then the constellation will be up and running. I am highly convinced that the enterprise opportunity is gonna be very big and justify the investment needed to launch the full satellite constellation. 'Cause again, it's become so much cheaper because of SpaceX.

Wei Sim: Okay. That makes sense. Sorry, for a full constellation, how many satellites are we talking about?

ZheWei Sim: Okay. That makes sense. Sorry, for a full constellation, how many satellites are we talking about?

Chris Hulls: There's an oversimplified answer because it goes by region and it's a sun synchronous orbit, so you kinda can imagine the satellites going north to south. Based on where you are and your latitude, it's complicated. I think they're considering a full constellation. We're getting very reliable down to a few-minute updates, I think in the dozens, and then up from there. Please don't hold me to those specific numbers.

Wei Sim: Yep. Okay. No problem. The other one was just on the ramp-up of the ad revenues. You mentioned previously that it, you know, you think it's probably more 2, 3, 4 years that you see a bit more meaningful.

ZheWei Sim: Yep. Okay. No problem. The other one was just on the ramp-up of the ad revenues. You mentioned previously that it, you know, you think it's probably more 2, 3, 4 years that you see a bit more meaningful.

Chris Hulls: Yep.

Wei Sim: By that, do you mean like FY 25?

ZheWei Sim: By that, do you mean like FY 25?

Chris Hulls: Well, we're gonna.

Wei Sim: 25 being year 2.

ZheWei Sim: 25 being year 2.

Chris Hulls: Yeah.

Wei Sim: Yeah.

ZheWei Sim: Yeah.

Chris Hulls: We're gonna see real revenue H2 of this year for sure. I'm not saying it's gonna be nothing.

Wei Sim: Yeah. Okay.

ZheWei Sim: Yeah. Okay.

Chris Hulls: You'll see it. But in terms of like really driving results, 'cause we do believe over multiple years this could match the subscription business. That's what's gonna be much longer term.

Wei Sim: Okay. Just in terms of like, you know, ad revenue per MAU, I think, you know, you previously put up some slides around that. I don't know if you've got any more formative thoughts or commentary that you might be able to provide to us as to, you know, how you think that could trend over years 2, 3, and 4.

ZheWei Sim: Okay. Just in terms of like, you know, ad revenue per MAU, I think, you know, you previously put up some slides around that. I don't know if you've got any more formative thoughts or commentary that you might be able to provide to us as to, you know, how you think that could trend over years 2, 3, and 4.

Chris Hulls: Nothing overly new. I would say now that we've talked to a number of partners and we're building out this competency. We feel more validated around the uniqueness of our data set and people seeing how there's because we have this very unique first-party data there. We have many, many ways to monetize this. I'd say we have more validation that we are onto something here, but more from just seeing the success of response from partners, and now we have to build the stuff.

Russell Burke: Wei, I think there are a lot of examples out there and we probably don't have anything more specific to talk about right now. The examples that we talked about before still hold from everything that we've seen. If you look at what Uber did over a four-year period, it built it up consistently to a very significant business. That early phase was a slow ramp.

Wei Sim: Yeah. Okay. No, that makes sense. Sorry, just last one for me is just on kinda like the cadence of our new initiatives. You know, Hubble was a bit of a surprise to me. You know, how are we thinking about that in terms of other new initiatives-

ZheWei Sim: Yeah. Okay. No, that makes sense. Sorry, just last one for me is just on kinda like the cadence of our new initiatives. You know, Hubble was a bit of a surprise to me. You know, how are we thinking about that in terms of other new initiatives-

Chris Hulls: Yeah

Wei Sim: ... you know, that kind of cadence going forward?

ZheWei Sim: ... you know, that kind of cadence going forward?

Chris Hulls: Nothing's really changed. Hubble is unique in that the satellites just launched two months ago, and I'll admit to being surprised that they worked as well as they did. I think honestly, even Alex and his team were surprised that they thought they might need another rev or two, that it might kinda work, but it's like they're thinking, "Wow, this is actually close to theoretical limits." The reason this is being announced, although it could be a lot of revenue, there's very, very minimal work here. I'm pleasantly surprised by the number of questions here, 'cause we're excited about it as well.

Chris Hulls: It's definitely I would not think of this as this brand new initiative because, again, we are gonna make a very modest investment of $ single-digit millions, and we're essentially giving the asset away. Kinda like the data pipe. It was not that much work for us. If you look at Placer.ai, we open up a data pipe, we get $20+ million a year. Not all that dissimilar from Arity. We think it's gonna be similar with Hubble. Not a lot of it for us to do.

Wei Sim: Got it. Perfect. Thank you, Chris. Thanks, Russ.

ZheWei Sim: Got it. Perfect. Thank you, Chris. Thanks, Russ.

Operator: Thank you, Wei. Up next, we have Chris Savage from Bell Potter.

Chris Savage: Thanks, Mel. Hey, Chris. Hey, Russell.

Chris Hulls: Hello.

Chris Savage: I'm not gonna ask a question on Hubble. If I can ask around the IPO, I appreciate you can't say much, so I'll choose my questions carefully. Just general timing. Are we talking this year or are we talking next year?

Chris Hulls: We wanna be ready. We can't disclose specific timing.

Chris Savage: Okay.

Chris Hulls: Russell, anything you can say on that?

Russell Burke: Yeah, we really can't say more than we've already said, Chris.

Chris Savage: Okay.

Russell Burke: As Chris said, we've said this before, we do wanna be ready for that. You know, it's gonna depend a lot on conditions.

Chris Hulls: Yeah.

Chris Savage: Understood.

Chris Hulls: To be clear, we've already shared the reasons for why we would do this. We will, of course, only move ahead if we're confident those things hold. We are very sensitive to the amount of dilution we have. We were very open that the primaries will not be more than 100 million.

Chris Savage: Yep.

Chris Hulls: Obviously, that's a relatively modest dilution overall, and I think there has been a long alignment around where our value could be most recognized and the right long-term home for us.

Chris Savage: Yep. Just Chris or Russell, the decision to, like, restart the process, lodge the prospectus, is it on the back of, like, Reddit being successful, or is it because of the increased size you are now, or what was the driver for the decision?

Chris Hulls: Yeah. We can't speak to specifics on that. I think everyone heard me at the last earnings talking about Reddit as a bellwether for the market opening, and we've obviously talked a lot about dilution and multiples. Obviously, our situation has changed quite a bit since then, and we have seen companies like Reddit and others go out. Of course, we've watched those developments.

Chris Savage: Got it.

Chris Hulls: We would just reiterate that we wanna be prepared, so.

Chris Savage: Understood. All right. I'll move on. Just the guidance around the cash, the $80 to 90 million at year-end, I'm guessing that's before the investment in Hubble, Russell.

Russell Burke: Yes, it would be, but as Chris has said, that's relatively small potentially. You know, I think in line with all of our guidance, you know, the trends are good. We don't feel like it's the right time now to change guidance, but all of our trends are very positive there.

Chris Savage: That investment you do anticipate making this year?

Russell Burke: Yes, it would be.

Chris Savage: Okay. Just lastly, some clarification around the advertising revenue. I think with the original guidance, you indicated a 5 to 10 sort of range in the revenue. Is that still the assumption?

Russell Burke: Yeah. Our expectations haven't changed. Everything we're seeing is very positive, but it's that long evolution that we've talked about. It's a path and it builds over time. We see it definitely sort of ramping up and will continue to ramp up, but you know, the major impact is gonna be in H2.

Chris Savage: Great.

Chris Hulls: Chris, that's what you asked, but just for the point of emphasis, we've always said with regards to IPO, we would continue to trade CDIs on the ASX, and we are quite sensitive to our investors that have supported us, and so we are taking all that into account as well.

Chris Savage: Has there been any sort of inbound interest out of US investors in getting a US listing?

Chris Hulls: Actually, we can't comment on that one.

Russell Burke: Okay.

Chris Hulls: Is that correct, Russell?

Russell Burke: That's definitely going into that, no comment territory, Chris.

Chris Savage: All right. I'll let it go then. Thanks a lot. Cheers.

Chris Hulls: Thank you.

Operator: Thank you, Chris. For our last question, we're going back to Lafitani Sotiriou from MST Financial.

Lafitani Sotiriou: Guys, just a couple follow-ups. Can I just check with the advertising business? Have you hired or are you looking to hire a key executive to spearhead that, given this could be as much as your subscription revenue?

Chris Hulls: We are.

Lafitani Sotiriou: If you are, where are we at that process?

Chris Hulls: We are interviewing VP of ad sales right now.

Lafitani Sotiriou: Okay. Externally, I imagine. Do you talk to kind of organizations they currently work in or?

Chris Hulls: Yeah. We're looking externally. We have a search going on, and we've been speaking to a number of agencies and groups. We are a very desirable asset in that regard because people just look at our first-party data and that's. It's almost unheard of to have. Very robust demand for that position.

Lafitani Sotiriou: Okay. Just going to a comment that Russell mentioned earlier on about this calendar year being very back-ended from an earnings perspective. Would there be really just two primary drivers for that reason or is there three? There's a seasonality of the hardware and the new product launch is back-ended. Is the advertising revenue that's also back-ended? Then there's the back to school, which, you know, should provide a bit of a boost. Are these the things you're referring to, Russell, or is there something else?

Russell Burke: You captured it exactly, Lafitani. You know, we always see that Q3 lift for back to school, and then these, and then, you know, I guess the only thing to add to that potentially is your hardware is traditionally a Q4 business in terms of the concentration of revenue. But the other factors that you mentioned in terms of advertising is layering into that as well.

Lafitani Sotiriou: Just to clarify, you do have a new product set launch ready to go for Tile pre-Christmas, and what are your expectations around that?

Russell Burke: Absolutely. You know, that new product launch will happen for the holiday period. You know, we've built that into our expectations for the year. You know, that will help us. It's not necessarily going to result in a sort of a huge lift in sales. It's more helping us maintain that placement in retailers, have that refresh of the product, and layer into so that continuing increase in market share as part of that category as we see the category build.

Lafitani Sotiriou: Okay, got it. Just one final question, circling back to Hubble. Can you just explain to us the advantages of Bluetooth over the existing solutions? Is it cost? Is it a cost factor or is it a network coverage factor?

Chris Hulls: Well, there's all of the above. There are very few. The entire concept of having IoT type connectivity to satellites where there's very minimal battery impact is brand new. This is extremely cutting edge tech. The breakthrough that Hubble had is being able to use existing Bluetooth chips, whereas essentially all of their competitors are doing custom modems, custom hardware, and those don't have the scale. So you win on cost, you win on battery, and you'll have the same coverage as the other companies trying to do this. It's science fiction level stuff, but that is what they are building.

Lafitani Sotiriou: All right. Thank you. Oh, sorry, just one last thing. Sorry. That's it. Sorry. That's it for me. Thanks.

Chris Hulls: Thank you so much.

Operator: Thanks, Laffan. As we are at time, I'll hand it back over to Chris for some closing remarks.

Chris Hulls: Nothing else from me. We're extremely excited about the quarter. We're extremely excited how things are shaping up and looking forward to our next round of meetings with many of you all.

Chris Savage: Thanks, all.

<unk> joined in the last 362020 full Q1 results conference call.

Speaker Change: This is Joanne Smith theater, and I head up Investor Relations philosophy <unk> in Australia.

Speaker Change: I'd like to introduce and welcome our new colleague Raymond Jones. This joined last through 60 to head up Investor Relations in the U S.

Speaker Change: This call is being conducted as assume audio webinar.

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

Speaker Change: When we come to the Q&A. Please raise your hand by pricing the raise hand icon at the bottom center of your screen and your line will be unusual 10.

Speaker Change: Participants who are joined by telephone in a listen only mode throughout <unk>.

Speaker Change: Just a reminder, that we will make forward looking statements regarding future events and financial performance, which are subject to material risks and uncertainties and actual results may differ materially from such statements.

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

Speaker Change: These forward looking statements are based on assumptions that we have been deemed to be reasonable as of today.

Speaker Change: And we have no obligation to have these statements as a result of new information or future events.

Speaker Change: Additionally, we will present, both GAAP and non-GAAP financial measures on today's call.

Speaker Change: These non-GAAP measures are not intended to be considered in isolation from a substitute for or superior to our GAAP results and should be read in conjunction with the company's consolidated financial statements prepared in accordance with GAAP.

Speaker Change: A description of these non-GAAP financial measures as well as a reconciliation to the nearest GAAP financial measures are included at the end of the company's earnings release issued earlier today, which has been posted on the Investor Relations page of the company's website.

In addition, due to restrictions related to U S security laws, we are unable to provide any further detail on this call related to todays announcement regarding our form S. Three registration statement for our proposed U S.

The agenda for this morning's call will begin with a business update by co founder and CEO, Chris <unk> and CFO Russell Burke will provide details on the Q1 financials.

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

Speaker Change: I would not turn the call over to Chris.

Chris: Good morning, everyone and thanks for joining our Q1 results call.

Chris: Before I jump into the details of the result.

Chris: To address today's announcement that we have filed an S. Three registration statement for the proposed U S. IPO.

Chris: We have previously indicated that we may pursue a dual listing which would involve a possible U S. IPO, while remaining listed on the ASX.

Chris: We've also said that with our headquarters in the San Francisco area and pre existing FCC reporting obligations, we view the U S. IPO and an increased exposure to U S. Investors is a natural step in our growth.

Chris: The timing and number of shares to be issued in pricing of USD IPO have not yet been determined and are subject to consideration of several different factors and conditions.

Chris: As expected the U S. IPO would consist of a primary issuance of new life 60 shares as well as the secondary sale of existing shares in order to reduce dilution for existing shareholders.

Chris: Restrictions related to U S Securities Law, we are unable to provide any further detail on our proposed U S. IPO at this time.

Chris: Turning now to Q1.

Chris: Like $3 60, as Q1 'twenty four results showed continued momentum with net paying circle additions nearly doubling to 96000 from 54000 in Q4 'twenty three.

Chris: <unk>, a new first quarter record and.

Chris: In addition, our efforts in relation to both our free members in international expansion are paying off with $4 9 million New monthly active users also a new first quarter record.

Chris: The market opportunity is a global scale and we believe we have significant headroom to grow as we expand to new regions.

Chris: In March new features.

Chris: <unk>.

Chris: <unk> life stages.

Chris: This momentum has continued so far in Q2 'twenty four with the addition of a further 32000 net paying a circle additions during the month of April.

Chris: Q1, youre paying circles increased 16% year over year on the back of both higher registrations and improve conversion and retention metrics, while international thing circles maintained strong momentum up 39% year over year.

Chris: UK paying circles increased 23% year over year with a modest uptick in Q1, 'twenty four churn as expected due to the price increase to existing subscribers in January 2024.

Chris: The U K triple tiered membership launch and price increase to existing subscribers helped drive 53% higher AARP P. C relative to the prelaunch baseline. These metrics are outperforming the Canada launch, which achieved 31 AARP PC growth at the same time versus the baseline.

Chris: Australia, and New Zealand achieved record quarterly net subscriber additions and a 47% year over year increase in paying circles. The full triple tiered product was launched a 100% of members in Australia and New Zealand in late April.

Chris: Enhanced features for subscribers include breakdown assistance emergency services dispatched with crash detection and digital safety for the whole family.

Chris: Prices were increased for existing subscribers ahead of the launch which combined with a pricing impact from the Triple T. Introduction is expected to result in a significant increase in <unk>.

Chris: To date, the rollout has proceeded smoothly with expected impact of temporarily increase churn. Following the price increases were already delivering value to new triple team members, such as Anita and Christian Queensland, We're alerted when their daughter was in a car accident and benefited from the automatic emergency service notification from <unk> hundred 60.

Chris: Q1, global <unk> increased 3% year over year USA, our PPC increased 8% year over year benefiting from price increases for existing glass Android subscribers in Q2 'twenty three.

Chris: Mobile Q1, <unk> increased 3% year over year and was stable quarter over quarter. The positive impacts from price increases were offset by the higher mix of international paying struggles and lower price territories.

Chris: Q1, net hardware units shipped was modestly down year over year for the Standalone hardware business and average selling price was slightly lower year over year due to the higher mix of multipack units.

Chris: <unk> product refresh is on track for the Q4 'twenty for holiday season.

Chris: We continue to make meaningful progress on our path to profitability, reducing our net loss in delivering our sixth consecutive quarter of adjusted positive adjusted EBITDA.

Chris: A fourth consecutive quarter of positive operating cash flow, our commitment to balancing fiscal responsibility with prudent investment to position the business for long term success is reflected in revenue growth of 15% year over year, while operating expenses increased just 3%.

Chris: Underpinning positive adjusted EBITDA of $4 3 million for the quarter.

Chris: This operating leverage demonstrates that we are on track to reach our target of sustained positive EBITDA and see why 25.

Chris: We are also excited that our new advertising initiative is now officially live in production with U S members and early results are promising.

Chris: We've completed the development work that allows for programmatic ads and expect to be set up for direct sales at scale by the end of June.

Chris: As expected initial advertising revenue in Q1, 24 was minimal due to our measured approach as I've already shared we anticipate significant growth, although still a modest revenue contribution in the second half of COI twenty-four, especially during the peak holiday season.

Chris: We are still building out the overall infrastructure that will allow things like audience segmentation and re targeting which will create much higher volume. We continue to build confidence that we have many opportunities to scale this and other indirect channels for monetization.

Chris: By tapping into the real time location data, we are strongly positioned to serve ads to our members in a way that is complementary to the user experience.

Chris: For example, we launched watch me fly, which automatically notifies you in your circle when you land at an airport.

Chris: Integrating our ridesharing up sell something that you can build on top of our existing infrastructure and ties in with an organic interaction with the app and a great user experience.

Beyond advertising within the App, we believe we have a major opportunity can they connect our members of the brands products and services that are relevant to them off site.

Chris: With our scale logged in experience audience Rich first party data and unique reporting capabilities. This is a significant opportunity for scaling advertising revenue in a manner that is privacy first and complementary to the customer experience.

Chris: In the context of indirect monetization, which includes our new advertising initiative in our existing data business. We are thrilled to announce the signing of a non binding letter of intent to establish a partnership with them a small investment in Hubbell Network, Inc. A space technology firm led by life through 16 co founder current board member and former CTO Alex Harp.

Chris: Hobos proprietary satellite technology enables two way communication between ground based Bluetooth devices like tile and this newly launched satellite constellation.

Chris: This potential partnership as an opportunity to open another low effort high margin revenue stream intended to allow us to monetize the latent demand for enterprise tracking services via pile. Eventually had previously set aside to focus on our consumer offerings.

Chris: By integrating our Bluetooth finding network with Hubble satellite technology, we plan to offer global tracking solutions for assets, such as palates biosensors in vehicle fleets without relying on cellular connections.

Chris: This setup is expected to not only extend our indoor tracking capabilities or satellites cannot reach but also do enhanced coverage and outdoor in rural areas.

Additionally, this collaboration would position us to enhance the tracking capabilities of our consumer devices potentially surpassing those offered by Google and Apple.

Chris: While currently only two prototypes satellites are operational the full constellation if successful will eventually provide unparalleled global coverage.

Chris: We believe our potential partnership with Hubble will lead the development of this combined phone and satellite network, primarily targeting enterprise applications like tracking Palisson chips, we expected initial launch with Hubble network in early 'twenty five and no related revenue in 2024 with that I'll turn the call over to Russell to run through the financials.

Russell: Thanks, Chris and thanks, everyone for joining the call today.

Russell: As a reminder, all of the financials I'll be referencing our unaudited and denominated in U S dollars.

Russell: Chris already mentioned, our strong operating metrics in Q1, and this flowed through to revenue, particularly in the latter part of the quarter.

Russell: Q1 revenue increased 15% year on year to $78 2 million underpinned by total subscription revenue growth of 19% to $61 6 million.

Russell: Core live 360 subscription revenue increased 23% to 57 million supported by the 21% year on year increase in paying circles and 3% higher a P. P C.

Russell: Hardware revenue increased 2% year on year to $10 $2 million with benefits from bundling fewer discounts offered and fuel returns offsetting lower average selling price and standalone units shipped.

Other revenue of $6 5 million was in line with the prior period as the company maintained its single aggregated data arrangement.

<unk> increased 19% year on year benefiting from accelerating subscription revenue momentum over the course of Q Q1 'twenty four.

Russell: Q1, gross profit of $60 million increased 20% year on year with a gross margin increasing to 77% from 73% in the prior year period.

This was driven by an improvement in subscription margins, resulting from price increases as.

As well as increase in hardware margins, reflecting cost efficiencies.

Q1 operating expenses increased just 3% year on year, largely due to higher general and admin costs related primarily to compliance with Sarbanes Oxley.

Russell: Excluding variable commissions operating expenses were virtually unchanged year on year. Despite the revenue increase of 15% in the same period.

This reflected cost reduction measures undertaken beginning in Q1, 23, and the related efficiencies achieved across the business as we continue to demonstrate operating leverage.

Russell: Q1 delivered a $4 $3 million year on year improvement in net loss from a loss of $14 1 million in Q1, 'twenty three to a loss of $9 8 million this quarter.

As well as a positive adjusted EBITDA contribution of $4 3 million.

Russell: Versus <unk> 5 million in Q1, 'twenty three as a result of continued strong subscription growth and ongoing cost efficiencies.

Russell: The EBITDA loss of $4 1 million improved by $8 5 million from Q1 'twenty three.

The difference between adjusted EBITDA and EBITDA in the quarter consisted almost entirely of stock based compensation.

Russell: Turning now to the balance sheet and cash flow.

Russell: <unk> 360 ended Q1 with cash cash equivalents and restricted cash of $74 6 million, an increase of $3 9 million from Q4 'twenty three.

Russell: Q1, net cash provided by operating activities.

Russell: The $10 7 million was higher than adjusted EBITDAR of $4 3 million, primarily due to the timing of receipts and payables.

Russell: Net cash used in investing activities of $1 1 million related to payments for internally developed software.

Russell: Our net cash used in financing activities of $5 7 million related to taxes paid for the net settlement of Arris use partially offset by proceeds from the exercise of options.

Russell: I'd note that the cash paid on our issues settlements was higher due to a higher stock price and therefore higher market value at the time of settlement of the IRS shoes.

Thanks for your attention and I'll hand back to Chris to outline our earnings guidance.

Speaker Change: Life 360 has maintained C Y 24 earnings guidance and expects to deliver the following metrics, which include both the early revenue and set up costs for the new advertising business.

Chris: Consolidated revenue of $365 million to $375 million with core subscription revenue non-GAAP growth of at least 20% year over year.

Positive adjusted EBITDA of $30 million to $35 million EBITDA loss of $8 million to $13 million and.

Chris: Positive operating cash flow for each quarter of C Y 24, and year end cash cash equivalents and restricted cash of $80 million to $90 million.

Chris: Our cast includes Q2 'twenty for conversion to equity rather than cash payment of the remaining convertible notes originally issued in connection with the acquisition of G O bit amounting to $3 5 million offset by higher.

Chris: I expected higher outflows from RC settlement.

Chris: 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.

That concludes our prepared remarks, and I'll now I'll turn it over the call to Melissa who will manage the Q&A portion of our call today.

Melissa: 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.

Speaker Change: You'll need the onion yourself to ask your question.

First step we have Chris Collett from Goldman Sachs.

Hey, good morning, Chris Golar from Goldman Sachs Here can you hear me okay.

Speaker Change: Well I Didnt clear.

Speaker Change: Awesome, maybe firstly just in terms of I mentioned, so far this year in terms of MH.

Net adds yet interested if you could provide us with a bit more color on the core drivers of that particularly saying as user acquisition spend is actually been flat to down so far this year sure. So as mentioned over the years, we have long said that the demographic that's really going to drive our growth for millennials and millennials are now having kids age into our segments. So that.

Speaker Change: Hypothesis is really proving right like you do not have to pitch this product to people of that generation.

Speaker Change: And when you have kids drive another kids there really is no one else in the market and even for generic location sharing services for cross platform families.

There's nothing else out there at scale other than us and international we were very confident that would do well because we saw the low hanging fruit that was there. We've built the infrastructure we have better translations. So we continue to feel like we're in the early days as you can see by some of the records we're hitting.

Speaker Change: And we have a new CMO who's been doing amazing we've been focused on efficiency, we're opening up new channels for spend where we're readjusting the mix to where we're getting the highest leverage. So we expect more of this is very exciting.

Yeah sure and then secondly on the full year EBITDA guidance, just curious on your thoughts around reinvestment as we go through the remainder of the year, particularly given that the net adds are perhaps tracking ahead of what you and the market. We're expecting sure. So we're very back half loaded as always so we have a lot of things were plan.

Speaker Change: For H two in terms of reinvestment in growth, we don't want to change guidance, we've committed to showing financial leverage we're committed to flipping to statutory breakeven next year. So as of now we're very much staying the course.

Speaker Change: And Chris just.

Speaker Change: To your question.

Speaker Change: We're not planning to change our approach here, yes, we decided to leave guidance as it was but it's early in the year and as Chris said.

Speaker Change: Al results are very back ended this year in particular.

Speaker Change: Yeah, that's clear and maybe just one more question on the Hubble investment curious, if you're able to quantify the amount of the potential initial investment and if you could give us any thoughts around how the.

Speaker Change: The partnership might work intensive sharing opex and Capex is that.

Speaker Change: Sure. So we are going to do initial investment that single digit millions. So it's small.

Speaker Change: The benefit of this is we have been following Alex that he has worked with me for a very long time, and as technology and just to back up a little bit.

Speaker Change: This was a massive big swing Alex did to actually have Bluetooth communications from space. Many people thought it was unachievable, but those first two satellites were just launched in the last couple of months and it's because they have that close relationship with Alex where Theres a lot of trust that we can do this partnership and he is going to leverage it.

Speaker Change: The beauty of this one is we had to do very little a big theme of indirect revenue for US is that we already have the asset and we just monetize it. So the vast vast majority of all the work is going to be given to hubbell.

Speaker Change: And they are going to primarily be selling to enterprise. So the development of the Dev platform. The sales infrastructure the connection to the satellite theyre going to be doing all of that because we're a consumer company. So the idea is we launched this they do most of the work. So in some ways is very much a free call option, because we are not going in the hole really much at all.

Speaker Change: Not all that different than say, our ownership with placer or already on the data front and we don't mind, giving the brand on the enterprise side to somebody else, especially someone so much trust because we that is not our focus our focus is families.

And I should just add that once we do get the satellite uplink connected there are huge potential for what that could do to tile because you could imagine a bluetooth device that can work globally without a cell connection huge game changer, we want to be careful in terms of making extremely bold statements. There because this is a.

Speaker Change: This is almost science fiction level Tech.

Speaker Change: But if that works and is looking pretty good right now very very exciting for what that means.

Speaker Change: Yeah, that's great. Thanks, Chris I'll jump back in the queue.

Speaker Change: Thanks, Chris.

Speaker Change: Up next we have lots of tiny such area from MST financial.

Speaker Change: Hi, guys just a.

Speaker Change: <unk>.

Speaker Change: A follow up question on the IPO, it's not around you information, but what you've already detailed part of your commentary discusses potential secondary sell down or can you just talk us through what you are talking about existing staff may sell into a possible slowdown in just how many shares.

Irene: Irene that bucket of potential.

Irene: That may be included.

Irene: We're also going to take that one.

Irene: Yeah.

Irene: Lilly left as you know, we cant talk specifically about it.

Irene: And frankly that that hasnt, yet been determined what we are focused on as you. The the message that we've had from investors that they are concerned about dilution. So anything that we do here is directed towards what we need to do for an IPO, but as we've said.

Irene: Really minimizing dilution.

Speaker Change: Can I just clarify then on this rather than I don't know.

Speaker Change: I know, there's kind of tell us how many might be form part of that sell down but can you just tell us how much is currently sitting at just the total share Register.

Speaker Change: We have staff within the business.

Speaker Change: And then at the moment for the share based comp correct me, if I'm wrong, but you're currently buying that stock on market is showing it to staff who are primarily based in the state. So.

Speaker Change: Is that part of this potential.

Speaker Change: Potential sell down.

Speaker Change: Form part of this potential slowdown.

Speaker Change: I think.

Speaker Change: But those things are not connected the the equity grants to staffer.

Speaker Change: Through our issues, so that's a sort of effectively new equity.

But and as we've said.

Speaker Change: As they are settled.

Speaker Change: A substantial piece of those as comes back into the into the pool quite separately to that.

Speaker Change: We haven't yet really.

Speaker Change: Build out plans for the secondary but we would want to make that available to our U S selected number of people and I in terms of held by held by employees that so it's a relatively small number on a on the capital side on the <unk>.

Speaker Change: Diluted side, it would be a little larger, but we can get that for you.

Speaker Change: Okay, Great maybe one to the Hubble network.

Speaker Change: This is some technology questions can you just clarify Chris is from the initial couple of satellites that are out there are you, saying that it's already working that's proven is protecting us works with tall.

Speaker Change: Solution and.

From the toll product are you, saying that it's just your hardware product that we are.

Speaker Change: We're exploring all because I remember when you bought all use of a toll also license its Bluetooth technology for other.

Speaker Change: Chinese to use is that.

Speaker Change: Part of the equation as well sure. So there are two satellites in space right now that are making life connections from orbit to the ground to actual Bluetooth devices using the chipsets that are entirely or similar manufacturer. So.

Speaker Change: In terms of the key technical laws of physics style risks those are.

Those have largely been successful.

Speaker Change: And again this is very very cutting edge Tech I think everyone was surprised at how well it's working in.

Speaker Change: This is a offshoot of me and Alex just thinking about location for over a decade together.

Speaker Change: In terms of licensing other tech.

Speaker Change: This will go into our devices.

Speaker Change: We I can't comment specifically on the deal but in terms of the combo of satellite and on the ground scanning network. We are looking at exclusivity for consumer use cases, so the the combo product could really leapfrog everything else out there.

And again, how we think about this is in many respects a free option the investment will be single digit millions extra.

Speaker Change: The extremely high trust relationship and it is very similar to things like arity and placer in things like ads, where it's not all that much work because the work is really leveraging an existing asset we already have.

Speaker Change: And just to clarify are there. Many other satellites that are showing this solution with Bluetooth technology was this the only one you are aware of us as the only one we are aware of and the vast majority of people thought this was technically not possible.

Speaker Change: And Alex and his team have proven it which is extremely exciting.

Speaker Change: Got it got it.

Speaker Change: What color can I, just clarify revenue model because you did add some color in your opening comments and then the last question.

Speaker Change: The odds the way that this will work from a loss of 360 perspective, you are considering this as a new vertical right.

Speaker Change: Even though you guys won't be responsible for building out the teams and the sales base, but.

Speaker Change: Ultimately it will be.

Speaker Change: Are you looking at the revenues.

Speaker Change: Her Tal gadget that is being sold or how.

Speaker Change: How should we think about what the revenue potential is for you guys. So just as an example, our networks signs up a huge shipping container wanted to track all the pellets, what's the how does that revenue look like for you guys sure dropdown, what do you guys care. So it's.

Speaker Change: I'm going to give an over simplified version, we youre going to get a portion of the revenue that is collected by hubbell from the network fees for what's being called using the Federated network. That's our scanning network on the ground, because if you're inside or five or six powers deep you might not work from the satellite and that's why our finding network's extremely pao.

Speaker Change: <unk>.

Speaker Change: A portion of the fee there and we will get hardware revenue, albeit very low margin on the actual hardware sales. So it's really about getting some of that recurring revenue from the actual sale of the device of the devices.

Speaker Change: That we will get.

Speaker Change: Very similar to how charity cells.

Speaker Change: <unk>.

Speaker Change: The aggregated data, we get our portion of that sale. So we're gonna get a portion of the sale generated when its using our tech.

Speaker Change: Got it got it and that's a small percentage a few dollars. It's just too early to talk to at this time it'll be a meaningful share.

Speaker Change: Hubble will be the primary company doing the sales, but again, it's just taking something we already have we're going to have very few staff or very little dollar. So it's it's again, because we've talked about our silver mines in our gold mines I think it was actually it could be quite big but it's leveraging what we have today. So we don't have to do very much work.

Alright got it. Thanks for the question one clarification I should say when I think of new verticals I, often think of us doing.

Speaker Change: Our own products Big investment a lot of uncertainty that's going to pay off.

Speaker Change: Although this is in some ways a new vertical I would see it much more as a way to turn on another avenue of indirect monetization, which is kind of a great and free margin.

Speaker Change: And an option that if this really works and the way it works it could hypercharge the consumer business as this technology gets rolled out in total devices, but that is somewhat if it happens great. If it doesn't it's not the end of the world because again very low investment and we will ideally see revenue coming in from the work of Hubbell and theyre getting to leverage our asset.

Speaker Change: Okay, Great got it and just one final question would be advertising direct sales.

Speaker Change: You just clarify what that means that you will have direct sales at scale by June and so.

Speaker Change: Because your initial comments when you're introducing advertising talk to utilizing.

Speaker Change: Utilizing add more to get the <unk> going.

If you think about it in the middle of June will you be off Admob.

Speaker Change: Direct sales or what was the <unk>.

Speaker Change: So admob and tools like that and Google AD manager you can still have direct sales, they're more of an infrastructure play because you need the way of actually getting the ads in the system. So although there are programmatic ads using those services, it's not in conflict to direct sales you can actually enable the direct sales with this infrastructure. So I don't know what the percentages will be.

Speaker Change: But obviously when more when we get able to segment, our audience and customers those who say hey, you want to show an AD to a smartphone user when we're able to.

Speaker Change: Go and say, okay, I want to build a programmer I wanted to target people, who went to the store at this point in time, we could then sit on top of Admob and Google AD manager and say, we want to we've created these audience segments, let's target them and.

Speaker Change: And so that's our direct sales fits nicely in with those services.

Speaker Change: Got it and so from a.

Speaker Change: From your initial guidance to where we are now this sounds like it's actually moving a bit quicker than what you previously discussed.

Speaker Change: Case and are you just being conservative with the potential revenue ramp up in the second half could you just don't know yet because it's not you haven't really cut it at scale yet.

Speaker Change: Is this something where you have to wait for September December update.

Speaker Change: In general so when you get direct sales, it's a there's a there's a cycle up and spin up effect and the general pattern of companies getting into advertising. It usually start slowly because you have to build out the segments here to build out the infrastructure to build out the team if they build relationships you people have become aware that you're on the market.

Speaker Change: So I don't think we're being conservative we're being reasonable.

Speaker Change: And in general it's once you get the repeatable model then you start scaling it. So we feel good about the numbers you put out where we're not intentionally over or under selling.

Speaker Change: Thank you and my infrastructure is a little bit ahead of schedule.

I think I'd say L. L view on the evolution of this hasn't really changed we knew was going to be a slow build.

Definitely some some unknowns in terms of how quickly it will build a we know it will build into the into the second half the progress is good.

Speaker Change: But that that view on evolution Hasnt changed.

Speaker Change: Thank you.

Speaker Change: Thanks, a lot.

Speaker Change: Next up we have James bales from Morgan Stanley.

James Bales: Hi, guys a couple of follow ups from some of the earlier questions. So firstly on subscribed at the full year result from last year. In March you guys were basically pretty cautious on subs growth to D. C.

James Bales: First quarters coming in way ahead of plan can you maybe talk to why that's the case, how the MAU growth has gone in April and whether you still expect the normal seasonality that you've experienced in past years in 2024.

Speaker Change: So if we look at why its hard to vary we still grow primarily organically and.

Speaker Change: As far as we can tell it's about I'm somewhat repeating what I've already said, the the demographic tailwind, which we believed.

Speaker Change: <unk> had been happening is continuing to happen.

Speaker Change: You can see it anecdotally, we can see broader use cases in terms of the types of people use the product you can see the awareness of location sharing services I'm sure just anyone on this call everyone's sharing location now this really could be social network scale type of penetration. So the Tam is just huge theres that and Theres also the focus of international.

Speaker Change: Mou has continued to grow very very well into this quarter.

Speaker Change: And International has also continued to exceptionally well and that one was we were not surprised on that at all we just didnt have much of an investment there now we have data David Rice, who was our CFO very senior guy living in the U K, making it as full emphasis.

Speaker Change: And we.

Speaker Change: We knew that we had to some easy levers to pull and that's proving out and I also think the trends that have driven the growth in the U S. They they should repeat in Europe and other regions, because they're usually a little bit behind the curve in terms of trends agents or something ahead of the Americans, but Americans usually ahead of the rest of the world.

Speaker Change: So we just do have a very natural market and demographic tailwind and the product keeps getting better as well and we keep getting smarter about how we optimize flows and funnel.

Speaker Change: We've launched them in very small delight features like watched me fly when you get a landing notification.

Speaker Change: Doesn't seem like much but these little things really are these magic moments that drive growth. So net net it's a.

Speaker Change: Leading these all time highs.

Speaker Change: One one nuance to add to that James and I think we said this at year end, but the the early part of the year.

Speaker Change: <unk> had had moved so essentially as we expected the the real growth.

Name in the in the latter part of the quarter.

Speaker Change: So so that's that's sort of really driven that that those metrics in Q1, and Marcel higher MRO as well at the end of Q1 and as we've said we've seen that that higher growth level continuing.

Speaker Change: Okay got it.

Speaker Change: And then maybe a second question on advertising. So you guys talked about.

Speaker Change: Having your on a capability he.

Speaker Change: Initial product it seems like you're plugged into google's infrastructure and sourcing advertisers from then he.

Speaker Change: Can you maybe help us understand how many platforms do you expect to be plugged into over time and the mix of deals that you'll do with advertisers that are directly negotiated versus through some phase third party platforms.

Speaker Change: Sure. So in terms of the number of platforms, we're integrated with.

Speaker Change: I don't know if that's the right framing in the sense that we need to do lots of different work in different ways to get our audience sliced and diced and toys that are identifiable marketable and attributable.

Speaker Change: And it's not just we keep adding new platforms to do the same thing we build out different parts of the tech stack some of the stuff, we do ourselves ourselves. Some we use third parties for.

Speaker Change: So we will keep we continue to develop that and then some of the things have to be custom like you landed at an airport you get a push that we've already built out with a wash me five feature now how do we link that to our backend. So it's like Hey, who wants to send the ads to people just land at an airport, so that's little bit niche, but.

Speaker Change: It's as an example, like we can go out and sell that interaction and that probably would be something really human touch.

Speaker Change: In terms of what percent of direct sales versus programmatic.

Speaker Change: There's also some nuance there because we could do a sale to a vertical so.

Speaker Change: If you look at people like partners, even like Arity, we could do a deal with them, where they get a certain amount of inventory for car ads.

Speaker Change: And then they would be going out to the direct sales, but it would be a programmatic hook to our engine because it would be programmatic to arity and then they go out and have a direct conversation with other people they fill that inventory so again.

Speaker Change: Not necessary the easiest answer, but I would say if I go to abstract the maybe the meta point away, we're going to be building out more and more infrastructure for number of years before it's done and also going back to how these companies scale that you have to build it out and that's why you do in years 234, you are probably more three and four.

Speaker Change: Where you see things really ramp up because you know the hooks that work you have the analytics you have the data science you have the attribution.

Speaker Change: You're known as a source for traffic you have a sales team then it all comes together.

Speaker Change: But how many people are working on are.

Speaker Change: The ads product with a new business at the moment.

Speaker Change: It's a relatively small number.

Speaker Change: I don't know exactly how I would quantify it because many people in that are touching adds are touching other things so data science compliance.

Speaker Change: Partnerships.

Speaker Change: The backend overall team the infrastructure team. They all they all have some art, but it's very modest relative to say a brand new vertical that we're building ourselves of course, if it really ramps up.

Speaker Change: We will increase the investment more but part of what we liked about ads and we have shared on prior calls is that we can.

Speaker Change: We don't have to go deeply into the red to get out there, we'll build a incrementally so we can always say that.

Speaker Change: The investment in advertising as a positive return within the same year, which is also why we're starting a little bit more conservatively small team incremental wins and we're building it out and as we add as we collect more revenue will will spend more on infrastructure.

Speaker Change: Perfect. Thanks for the call welcome.

Speaker Change: Thanks, Dan.

Speaker Change: Next we have Wei Weng Chen from RBC capital markets.

Speaker Change: Hi, guys can you hear me loud and clear excellent co. Yeah. Just appreciate all the comments on harpoon.

Speaker Change: Just in your best guess I guess, how far off are we from first revenue with more.

Speaker Change: More than 25.

Okay. So it's not that far away, okay cool no. The the longer arc is a full satellite constellation that wood.

Speaker Change: If all goes well and I do want to.

The open where I think there is low risk and high risk.

Speaker Change: I think its medium to high that by the end of the satellite constellation, giving the full realtime piece, but you could see in like twenty-six.

Speaker Change: We're essentially having on demand wake up every few minutes time interval.

Speaker Change: That goes right in the tile technology with benefits consumer but to actually start getting revenue from the enterprise side, you don't need nearly as much because if you think of the use case for enterprise like let's just say, you're a pallet company or you're like a fire sensor or an AG sensor like Washington humidity on a great buy and these are our enterprise use cases.

Speaker Change: It's very very very different than the consumer use case, where you need updates every couple of minutes you just want to know the thing is where it is you want to get that little bit of data out of it even once a day and that's where that combo comes in so.

Speaker Change: If you're out in the field the Hubble satellite will get you anywhere, but if you're in the in the network or in the bowels of a ship you had the life through 60 scanning network on the Bluetooth side of things.

Speaker Change: We essentially have that infrastructure almost ready to go with what the money will come in 2020 five and in the.

Speaker Change: And the Hubble teams already building out the platform that takes our data and will unify it with the satellite infrastructure.

Okay, and just to confirm theres not going to be like a tile or business.

Speaker Change: Of App product and its powerful consumer product bucket for fame.

Product from a technological perspective, yeah.

Speaker Change: Yes and no.

Speaker Change: Hubble can make additional modifications of hardware, where we're going to provide an off the shelf unit, but the real thing, we're bringing and my humble wants to work with us as we have the finding now.

Speaker Change: So it's actually not the tile tech, which is the core IP here.

Speaker Change: <unk> is actually relatively straightforward at that scanning network of 66 million phones and being able to have scanners like where you can imagine the people in the warehouse they could run life through 60 or they could run a dedicated version of our App. The specifically we're scanning just sitting in the background. So you have that backup layer, that's really the asset we're monetizing.

Speaker Change: Counterintuitively is not necessarily tile, yes, they like that we have this off the shelf Bluetooth tracker, yes. They liked the tile as a brand so when they go and approach. These pallet manufacturers they can say that.

We're going to probably call. It smart pen you can get the smartphone with tile and that's going to help them, but that's where the IP is actually lighter it's going back to that network, the real asset life, $360 or 66 million customers and in this case, all customers who can scan for devices.

Speaker Change: And just to be very clear that there's very little tackle involved in that the effort to have tiles scan for the Hubble network is is relatively minimal.

Speaker Change: Hey, even beyond relatively we're talking like the current estimates. This one interesting a few weeks of work and of course.

Speaker Change: Nothing is that simple you need to maintain your to monitor but I, but in terms of the core work. It's really just update the scanning protocol feed it to their system and they're they're doing the rest of the work.

Speaker Change: Yeah, Okay, and then how much work have you or <unk> done on this opportunity intensive enterprise tracking including potentially speaking to enterprise customers. There's a lot packed in tons. So.

Speaker Change: If I back way up me and Alex.

Speaker Change: <unk> been working together on location technologies for 15 years and we have.

Speaker Change: Even people recall.

Speaker Change: On <unk>.

A couple of years ago, we're convinced there's gonna be worldwide global coverage for Iot, It's actually what inspired Alex to go start. This company is that he felt yet at a unique technical insight was co founder there was a <unk>.

Speaker Change: Oh processing ph D to figure out how you can how you can essentially have anything with Bluetooth communicate to a satellite versus having to build custom modems and all that so we have been thinking about this as a very very long time part of what the.

Speaker Change: Validation for Alex just like we had huge demand for tile to do this but we didn't want to invest resources in tile doing this.

Speaker Change: Because the focus is families like the consumer opportunities billions and billions and billions of dollars. So as much as we like enterprise not worth distracting our company.

Speaker Change: Itself, because we don't have a sales team, we're not an enterprise business, but it was already there there was a lot of demand and then when the market pulled back even more we just shut all that down and said, okay, maybe revisit in a few years.

Speaker Change: But I have had conversations with Alex for multiple years now is like Hey, if this technology youre doing work.

Speaker Change: Pick up that business and its because I have that close relationship with Alex we were able to jump on this so quickly.

Speaker Change: And he is going to be hitting the ground running because he was obviously our CTO and.

Speaker Change: Currently a director and it's because of that close relationship is moving so quickly and we're able to align this up yes.

Speaker Change: And then just last question for me I guess is there any one on 300 Sixty's board or in 360, <unk> personally invested in hubbell as well yeah. Some of US are investors myself included but we will be disclosing our conflicts in the quantum is.

Speaker Change: I think when one disclosed insured not anything that will raise any sorts of iris.

Speaker Change: Hello to be modest.

Speaker Change: Thank you Aram.

Speaker Change: Up next we have Wei Feng from Jefferies.

Speaker Change: Hey, Chris just Hello.

Speaker Change: Two questions from me. The first one is just in regards to our hub.

Speaker Change: The Hubble and Bluetooth tracking so we're essentially saying that.

Speaker Change: Bluetooth networks can be tracked anywhere it sounds like whats the implications for gigabit. If this were to be the case. So we are we think it only helps Joe a bit so.

Speaker Change: If I back up to our vision why you'd want a job it and tell us we want to have devices that.

Speaker Change: Under location stack, so they're very different.

Speaker Change: Even with Hubble Youre, not going to get real time updates, it's gonna be over time as this high latency is Y ear tag entitled They're just very different than GPS trackers, which are also growing very quickly. So what we want to do and it's not even a completely related doubled over our mind goes as we want to have devices, where you'll get say 30 days battery life of real time tracking.

Speaker Change: And so we are working on a next wave of Joburg backburner that when the market crashes everybody knows but next year, we'll have new versions and the idea is you'll get the 30 days real time tracking or thereabouts, I'm somewhat making up numbers, but they have months of real time GPS than if you forget to charge a kind of a year backup using tile Bluetooth stack and then hubbell.

Speaker Change: So if you think about what we could do we could just leapfrog all the competitors because we could have the G. P. S. LTE connection per month, and you know what if you forget to charge. Unlike our competitors devices, which just turned into a brick you'll get a whole another year with the tile that functionality and once that Tau backup functionality includes hubbell won't be as good as GPS, but if your dog.

Speaker Change: Runs away, you'll still be able to find exactly where they are out in the woods.

Speaker Change: Whereas again, our competitors would when they are battery dies are there literally bricks. So we have we have a ton of directions. We can go.

Okay that makes sense. So just in terms of like the updates that you will be able to get from hubbell, what kind of.

Licensee or we talking all frequency or we're talking about so there is short term and long term short term with only a couple of satellites in the sky.

Speaker Change: And it's only a couple of day are.

Speaker Change: Fine for enterprise, but not so fine for consumer.

Speaker Change: If you get theoretical.

Speaker Change: I'm going to get the numbers a bit wrong here, but for constellation of call. It 100 satellites and satellites about a quarter million dollars to launch something thanks for Spacex far far far cheaper than they used to be you could be getting.

Speaker Change: Updates every few minutes and actually on demand updates because there'll always be some satellite.

Speaker Change: Overhead because it's lower orbit that can make connections with the system.

Speaker Change: I do want to be careful about overhauling things that will take.

Speaker Change: Definitely a couple of years.

Speaker Change: At the earliest.

Speaker Change: And is where we're getting into some much deeper tech, but the the cortex is validated and theres a lot of confidence that it is just a matter of getting our satellites launched and then getting them the constellation will be up and running and I am highly highly convinced of the enterprise opportunity is going to be very big and justify the investment.

Speaker Change: You launched the full satellite constellation because again, it's become so much cheaper because of the Spacex.

Speaker Change: Okay that makes us so sorry for a full constellation how many satellites, how we're talking about.

Speaker Change: I think it's it did theres, an oversimplified answer because it goes by region and it says it's a sudden synchronous orbit. So you can you can imagine that the satellites going north to south and so based on where you are in your life. It's complicated so I think they're considering a full constellation where you're going.

Very reliable down to few minute updates as I think in the dozens.

Speaker Change: And then up from there, but please don't hold me to those specific numbers.

Speaker Change: Okay no problem.

Speaker Change: The other one was just on.

Speaker Change: On the.

Speaker Change: Ramp up of the AD revenues you mentioned previously that you think it's probably more years, two or three or four that you see a bit more meaningful.

Speaker Change: But by by that do you mean like FY 'twenty.

Well, we're going to five days a year.

You too.

Speaker Change: And.

Speaker Change: Yeah, we're gonna see real revenue second half of this year for sure. So I'm not saying, it's gonna be nothing yet.

Speaker Change: Yes, so you'll you'll see it.

Speaker Change: But in terms of like really driving result, because we do believe over multiple years.

Speaker Change: This could match the security business.

Speaker Change: That's what's going to be much longer term.

Speaker Change: Okay.

Speaker Change: And just in terms of like you know AD revenue per M of you I think you previously put up some slides around that I don't know if you've got any more formative thoughts or commentary that you might be able to provide to us as to how you think that could trend over years, two three and four <unk>.

Speaker Change: Nothing overly new I would say now that we've talked to a number of partners and we're building out this competency.

Speaker Change: We feel more validated around the uniqueness of our data set and people seeing.

Speaker Change: How that there there is because we have a very unique first party data there we have many many ways to monetize this though.

Speaker Change: I'd say, we have more validation that we're onto something here, but more from the seeing the success of response from partners and now we have to build this stuff.

Speaker Change: The way I think there's there are a lot of examples out there and we probably don't have anything more specific to talk about right now, but the the examples that we talked about before.

Speaker Change: Still hold from everything that we've seen so.

So if you look at what <unk> did.

Speaker Change: A four year period.

Speaker Change: It will build it up consistently to a very very significant business, but that that early early phase was was a slow ramp.

Speaker Change: Yeah, Okay, no that makes sense and just last one for me is just on kind of like the cadence of our new initiatives Hubbell was bit of a surprise to me. So how are we thinking about that in terms of our other new initiatives and you noted that that kind of cadence going forward nothing's really.

Speaker Change: Haynes hubbell's unique in that the satellites just launched two months ago, and I will admit to being surprised that they worked as well as they did I think honestly, even Alex and his team were surprised that they thought they might need another rev or two that it might kind of work, but it's like the there you go.

Speaker Change: Hi, this is actually close to theoretical limits. So the reason this as being an asset it's although it could be a lot of revenue very very minimal work here.

Speaker Change: I'm pleasantly surprised by the number of questions here, because we're excited about it as well, but it's definitely I would not think of this as a brand new initiative because again, we were going to make a very modest investment of single digit millions and we're essentially giving the asset away kind of like the data pipe does not was not that much work for us and if you look at places, where we opened up a data pipe.

Speaker Change: 20, plus million a year not all that dissimilar from arity, we think it's going to be similar with hubbell not a lot of it for us to do.

Speaker Change: Got it perfect. Thank you Chris Thanks Ross.

Speaker Change: Okay.

Speaker Change: Up next we have Chris Savage from Bell Potter.

Speaker Change: Thanks, Merle Hi, Chris Hi, Russell.

Speaker Change: Oh, I'm not going to ask a question on travel.

Speaker Change:

Speaker Change: If I can ask around the IPO I appreciate you can't say much they'll choose my questions Kelly.

Speaker Change: Just general timing are we talking D C or are we talking next tea.

We want to be ready, we can't disclose specific timing.

Speaker Change: Russell anything you can say on that.

Russell: Yeah, we really can't say more than more than we've already said Chris.

Speaker Change: But.

Speaker Change: And we've said this before we do want to be ready for that and it's going to depend a lot on conditions.

To be clear.

Speaker Change: Good.

Speaker Change: We've already shared the reasons for why we would do this we will of course only move ahead, if we're confident those things hold.

Speaker Change: And we are very sensitive to the amount of dilution we have and so we were very open that the primaries will not be more than $100 million and obviously that's a.

Speaker Change: Relatively modest dilution.

Speaker Change: Overall.

Speaker Change: I think this has been a long alignment around where our value could be both recognized when the right long term home for us yes.

Speaker Change: And just Chris will Russell the decision to.

Speaker Change: Restart the process looks at the prospectus is it on the back of light Red a thin successful or is it because of the increased size you on now or what was the driver.

Speaker Change: We can't speak to specifics on that I think everyone heard me at the last earnings talking about.

Speaker Change: Read it as a bellwether for the market opening and we've obviously talked a lot about dilution and multiples and obviously.

Speaker Change: Our our situation has changed quite a bit since then and we have seen companies like <unk> and others go out so of course, we watch those developments.

Speaker Change: We would just reiterate that we wouldn't be prepared so understood all right I'll move on.

Speaker Change: And just the guidance around the cash the $80 million to $90 million at year end I'm guessing that's before the investment in Hubbell Russell.

Speaker Change: Yes, it will be but as Chris has said that's relative.

Speaker Change: Very small potentially and you I think are in line with with all of our guns.

Speaker Change: The trends are good we don't feel like it's the right time now to change guidance, but all about all of our trends are very positive there.

Speaker Change: But that investment you do anticipate making D C.

Speaker Change: Yes, it would be.

Speaker Change: Okay.

Speaker Change: And just lastly, some clarification around the advertising revenue I think.

Speaker Change: With the original guidance you indicated a five to 10.

Speaker Change: A range in the in the revenue is that still the assumption, yes L expectations.

Speaker Change: <unk> haven't changed what we're everything we're seeing is is very positive, but it's it's that long evolution that we've talked to talked about so it's a it's a path and it builds over time.

Speaker Change: We see it definitely sort of ramp ramping up and we will continue to ramp up at the year.

Speaker Change: The major impact is going to be in the second half.

Chris: Great Chris.

Speaker Change: What do you ask Richard just for the point of emphasis that.

Speaker Change: We've always had.

Speaker Change: With regards to IPO.

Speaker Change: We would continue to trade CDA is on the ASX and where we are quite sensitive to our investors.

Speaker Change: That have supported us and so we we are taking all that into account as well.

Speaker Change: And has there been any sort of inbound interest out of U S investors in getting a U S listing.

Speaker Change: I'm definitely we can't comment on that one is that correct Russell that's definitely going into that a no comment territory, Chris Alright, I'll, let it go then thanks a lot.

Speaker Change: Thank you thank you Chris.

Speaker Change: And for our last question going back to Nakatani from MST financial.

Speaker Change: Hey, guys. Just a couple of follow ups can can I just check with the advertising business are you have you hired or are you looking to hire a key <unk>.

Speaker Change: Two to spearhead that given this could be as much as your subscription revenue.

Speaker Change: Where we added that process, we are interviewing VP of AD sales right now.

Speaker Change: Okay.

Speaker Change: And <unk>.

Speaker Change: Externally I imagine and.

Speaker Change: Can you talk to.

Speaker Change: Kind of organizations currently working.

Speaker Change: Yeah.

Speaker Change: Yeah, we're looking externally we have a search going on and we've been speaking to a number of agencies and groups where.

Speaker Change: Where we are a very desirable asset in that regard because people just look at our first party data in and that's almost unheard of to have so very robust demand for that position.

Speaker Change: Okay.

Speaker Change #100: I'm just going to comment that Russell mentioned earlier on about.

Speaker Change #100: Calendar year being very back ended from an earnings perspective so.

Speaker Change #100: It would be really just two primary drivers for that reason or is there a threat. So does the seasonality of the hardware and the new product launches is back ended.

Speaker Change #101: We're targeting revenue that's also by Canada and is the back to school, which is should provide a bit of a boost the easiest things youre, referring to Russell was there something else you captured it exactly laugh at it yes.

Speaker Change #102: Yeah, we always see that third quarter.

Speaker Change #103: Lift for that.

Speaker Change #103: To school and then these and then I guess, the only thing to add to that potentially is your hardware is traditionally.

Speaker Change #103: Q4 business.

Speaker Change #103: In terms of the the concentration of revenue but.

Speaker Change #103: The other factors that you mentioned in terms of advertising is it is layering into that as well.

Speaker Change #104: But just to clarify you do have a new product set launch ready to go for Tal.

Great Christmas and what are your expectations around that.

Speaker Change #104: Absolutely.

Speaker Change #105: You were.

Speaker Change #105: That will.

Speaker Change #105: That new product launch will happen for the holiday period, and Ah you, where we've built that into our expectations for the year.

Speaker Change #105: That will help us, it's not necessarily going to.

Speaker Change #105: Result in a sort of a huge lift in sales, it's more helping us maintain that that placement in retailers have that refresh of the product.

Speaker Change #105: And les are into so they are continuing.

Our increase in market share as part of that category as we say the category Bill.

Speaker Change #106: Okay got it and just one final question circling back to Hubble can we can you just explain to us the advantages of Bluetooth all over the existing solutions. So is it cost is it a cost factor.

Speaker Change #106: The net average.

Speaker Change #107: All of the above there are very few.

Speaker Change #106: Tired concept of having.

Speaker Change #106: I O T a tight connectivity to satellites.

With it very no battery impacted brand new this is extremely cutting edge tech.

Speaker Change #106: <unk>.

Speaker Change #106: Breakthrough the Hubbell had is being able to use the existing Bluetooth chips, whereas.

Speaker Change #106: Essentially all of their competitors are doing custom modems custom hardware and B and those don't have the scale.

Speaker Change #106: So you went on cost you went on battery and you'll have the same coverage as the other companies trying to do this.

Speaker Change #106: And then it's the science fiction level stuff, but that is that is what they are building.

Speaker Change #108: Alright. Thank you Oh, sorry, just wanted to just one last thing.

Speaker Change #108: Sorry.

Speaker Change #108: Alright, thats it from me thanks.

Speaker Change #108: Thank you so much.

Speaker Change #109: Thanks, a lot.

Speaker Change #110: And as they are at time I'll hand, it back over to Chris for some closing remarks nothing else for me. We're extremely excited about the quarter are extremely excited how things are shaping up and looking forward to our next round of meetings with many of you all.

Speaker Change #109: No.

Chris: Thanks Al.

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