Life360 (NASDAQ: LIF) is now a 100-million-user company. Its Q2 revenue beat estimates, but heavy spending on an AI transformation and platform integration meant the bottom line lagged.
Revenue climbed 38% year-over-year to $159.0 million, ahead of the $156.7 million consensus. Subscription revenue added 31% to reach $115.6 million. Advertising, fueled by the Nativo acquisition, hit a record $22.0 million—a 315% surge from $5.3 million a year prior. Adjusted EBITDA jumped 53% to $31.1 million, pushing the margin to 20% from 18%.
GAAP diluted EPS, however, was $0.06, missing the $0.08 consensus and down from $0.08 a year ago. This is the quarter’s core tension: operating momentum diverging from reported profitability.
Operating expenses grew 43% to $127.0 million, outpacing revenue. Research and development costs rose 47% to $47.4 million. Management blamed higher personnel costs, Nativo-related tech spending, and restructuring tied to its shift to an AI-native organization. Sales and marketing increased 35% to $52.3 million, driven by higher app store commissions and Nativo’s sales team, though lower growth media spend provided some offset. General and administrative expenses jumped 57% to $27.2 million, reflecting personnel costs and a warehouse relocation for hardware manufacturing.
The guidance update tells a more nuanced story. Life360 lifted its full-year subscription revenue outlook to $475 million–$480 million from $470 million–$475 million, a $5 million bump at the midpoint. Hardware revenue guidance was cut to $35 million–$45 million from $40 million–$50 million, reflecting a strategic exit from brick-and-mortar retail and a manufacturing relocation. Consolidated revenue guidance of $650 million–$685 million and Adjusted EBITDA guidance of $130 million–$140 million were left unchanged.
That subscription raise is modest. Q2 revenue came in $2.3 million above the prior guide’s implied Q2 midpoint. By holding the full-year consolidated and EBITDA ranges steady, management is signaling caution, not confidence. This conservative posture suggests the back-half weighting of advertising revenue and the drag from Pet GPS hardware losses are significant enough to restrain the forecast.
Advertising is the swing factor. At $22.0 million, Q2 already represents 22% of the full-year guidance range of $98 million–$115 million. The company expects Q4 advertising to roughly double Q1’s contribution, a significant ramp. But advertising gross margin fell to 57% from effectively 100% a year ago as managed services scaled. Management expects it to normalize at 65%–70% by year-end. The trajectory through Q3 will test whether the Nativo integration is complete or still consuming margin.
The hardware business is being deliberately de-emphasized. Hardware gross margin swung to 43% from 17% a year ago, but that figure included a $3.6 million one-time tariff refund. Excluding it, hardware margin would have been about 7%. Management expects hardware gross margin to turn negative, in the mid-40% range, during the second half. Pet GPS devices are now priced to drive subscription attachment, not device profit. The Silver Pet GPS bundle at $99 annually is a deliberate trade-off: near-term hardware losses for long-term subscription growth.
Capital allocation is shifting. The company repurchased 314,762 shares for $13.2 million in Q2 under a new $225 million multi-year program, leaving $211.8 million available. The buyback is small against a $5.2 billion market cap, but it signals management’s view that the stock is undervalued relative to its subscription and advertising growth. Operating cash flow of $23.8 million, up 79% year-over-year, funds both investment and capital returns.
Looking ahead, execution is key on three fronts. Can MAU growth sustain its 17%–20% full-year pace after getting back on glidepath in Q2? Can advertising revenue double sequentially into Q4 without further margin compression? And will the AI-native restructuring costs that pressured Q2 GAAP earnings deliver the operating leverage management expects from 2027 onward? The reiterated EBITDA guide implies confidence in the margin trajectory, yet the GAAP EPS miss and conservative full-year posture suggest the margin expansion story is still a work in progress.