Life360's Comeback: Why Fund Managers Bought the Dip and Watched the Bar Rise

A brutal tech selloff gave way to a sharp rally, but August showed even record results now need to clear a higher bar.

6 Oct 2026 · 5 min read

Life360 has gone from one of the ASX's most talked about washouts to one of its most convicted comeback stories in the space of a few months, and fund managers are now testing how far that comeback can run. The family safety app fell more than 60 percent from its 2025 peak as investors fled software names caught up in what several managers called the ‘SaaSpocalypse’, fears that AI would disrupt subscription businesses broadly. A strong turnaround in results since March has driven the stock up sharply, though an August pullback was a reminder that the bar for what counts as a good enough result keeps rising.

From market darling to washout

Ausbil Investment Management's Condoleon described a stock caught up in a broad tech selloff despite commanding a large and growing user base, noting Life360 had 17 percent market penetration in the United States, with roughly one in six US smartphones using the app daily, and remained the most popular lifestyle app in the US App Store. He pointed to a target of 14 million paid subscribers, which would take subscription revenue to around $1.4 billion, roughly double current levels, and argued the company's net cash position gave it room to execute. Cadence Capital, which had previously avoided the stock on valuation grounds, said the temporary headwinds behind the correction did not change its view that Life360 remained a good business capable of turning around, and initiated a position as the share price trend began to reverse.

A results turnaround investors bought into

The turn came with a strong first-quarter result. LHC Capital detailed record paying circles, global net additions, subscription revenue and advertising revenue, alongside a new multi-year on-market buyback of up to US$225 million aimed largely at offsetting dilution from stock-based compensation. Subscription revenue rose 32 percent on a 7 percent increase in average revenue per subscription and net subscriber additions of more than 200,000 for the quarter, strong enough that management raised full-year guidance to revenue of US$650 million to US$685 million and adjusted EBITDA of US$130 million to US$140 million. Advertising revenue, still a small part of the business, increased more than fourfold to almost US$20 million following the acquisition of Nativo, which LHC said meaningfully increases the economic value of Life360's large free-user base by monetising users who had previously served mainly as a funnel into paid subscriptions.

Paradice Investment Management, which had used the prior two quarters of weakness to add to its position, said that decision was rewarded as the stock became its largest positive contributor, rallying 42.2 percent as fears around agentic AI disruption eased. The fund pointed to first-quarter revenue up 38 percent year on year to US$143.1 million and monthly active users approaching 98 million, and said the position, now sitting entirely outside the benchmark, remains one of its highest-conviction holdings.

Despite the rally, the stock remains well below its highs and in our view, consensus continues to understate the earnings leverage and margin potential of the platform as international markets scale, ARPU rises and the new pet and aged care verticals roll out.

— Paradice Investment Management, Quarterly Report, June 2026

Bulls betting on the next leg

Several managers framed the setup as still early. Market Partners argued the market's concerns about the pace of Life360's growth were overblown given the premium subscription tier is growing well and a new advertising business, still small today, is set to add to earnings over coming years, with the fund pointing to potential earnings growth of 20 percent through to FY28 against a price to earnings ratio of around 20 times. Ten Cap made an even more pointed case on the advertising ramp, arguing the company is close to moving from almost no advertising revenue to more than US$100 million within twelve months.

This company is going to move from the almost zero advertising dollar to over 100 million dollars just in 12 months. Imagine what they would do next year.

— Ten Cap, Article, June 2026

First Sentier Investors pointed to durability as much as growth, highlighting Life360's expansion into pet tracking and elderly parent tracking as reasons users keep the app well beyond its original family location-sharing use case, alongside a global user base set to pass 100 million monthly active users. Ausbil's Condoleon called Life360 his standout growth pick, noting there was no other stock in the market that had fallen more than 50 percent over the prior twelve months while carrying more than 50 percent expected earnings growth over the following year, a combination he argued was too cheap to ignore given the company's global expansion was only beginning.

August's pullback raises the bar again

The rally continued into July, with Airlie Funds Management adding a new position as part of a broader move into tech and healthcare names caught up in the sell-off, and shares reaching the high $20s. August brought a check on the enthusiasm. Pendal Group's newsletter described a second-quarter result that looked solid on the surface, with record revenue, subscription additions and monthly active users surpassing 100 million for the first time, but noted that once a one-off tariff refund benefit embedded in hardware margins was stripped out, underlying earnings were broadly in line with expectations rather than a clear beat. Shares fell 17.6 percent on the update, a sign that after the scale of the prior re-rating, investors are now pricing in continued upside surprises rather than simply steady execution.

That sets up a narrower path from here. Fund managers who remain bullish, including Blackwattle Investment Partners and Solaris Investment Management, continue to point to the network effect, monetisation optionality through subscriptions and advertising, and a core growth thesis they added to on weakness. What they and more cautious observers alike are watching next is whether the advertising business can keep scaling toward the run rate bulls like Ten Cap are pencilling in, whether management delivers on the raised FY26 guidance, and whether new verticals such as pet tracking, elderly parent monitoring and international expansion translate into the reaccelerating user growth several managers say is the key remaining overhang on the stock.