The Life360 Inc. (ASX: 360) share price has been one of the worst hit over the last year or so. It's down around 60% since October 2025, as the chart below shows. An unwarranted decline could be a major opportunity.
Life360 describes itself as a family and safety company that helps people stay connected to the ones they love. It offers a mobile app and hardware-tracking devices. It offers services such as location sharing, safe driver reports and crash detection (with emergency dispatch).
During this era of increased digital use and device carrying, a service like Life360 can provide people with peace of mind.
But shareholders have not had much peace of mind in the last 12 months, with a massive decline. For a few reasons, it could be an opportunity to look at.
Increasing user numbers
There is certainly a risk of increasing competition from other businesses that could offer a similar sort of service. AI-related worries may be a key factor impacting investor confidence in the business right now.
The best way the company can show it's not being affected by AI/competition is by demonstrating continued user growth.
In August, the business reported its second-quarter update. Its global monthly active users (MAU) reached 102.4 million as at June 2026, up 5% quarter-over-quarter and up 16% year-over-year. Excitingly, international users grew even faster, with a total of 48.4 million (up 20% year-over-year).
Its paying circles grew even faster – global paying circles reached 3.2 million at June 2026, up 27% year-over-year. US paying circles rose 25% to 2.3 million and international paying circles increased 32% to 1 million.
We'd need a crystal ball to know what the future user growth will be, but the growth remains solid and I think that's what investors should focus on during this period of AI worries.
Strong revenue growth
Strong user-base growth is translating into strong revenue growth, driven by more paying members and advertising revenue from non-paying users. Advertising revenue grew by 315% to $22 million in the latest quarter.
As I mentioned, global paying circles grew to 3.2 million as of June 2026, a 6% quarter-over-quarter increase. It also noted that average revenue per paying circle (ARPPC) reached $142.6 at June 2026, up 5% year-over-year. That ARPPC growth currently comfortably outpaces the rate of inflation, which is a positive sign of the company's quality.
In that second quarter, it said that the annualised monthly revenue grew by 29% year-over-year to $537.2 million. How many ASX shares are growing revenue by strong double-digits yet are down 60%?
Compelling earnings growth outlook
A company that grows revenue by 10% per year is one to watch. If profit margins are increasing, then its bottom line can improve even faster than revenue.
In the three months to 30 June 2026, the company said that its subscription gross profit margin improved to 87%, up from 85% at June 2025. The business is becoming increasingly profitable.
I think it was a great sign that the business reported operating cash flow rose by 79% to $23.8 million. If its operating cash flow margin and other margins continue rising, the ASX share could be a great investment at this lower price.
I think the key to success will be ongoing growth of users (including paying circles). If it delivers that, the ASX share could be significantly undervalued. I rate the Life360 share price as an appealing buying opportunity.
Based on the earnings per share (EPS) projections on Commsec, I calculate it could grow earnings by 93% in FY27 and then a further 56% in FY28. After falling so hard in the past year, I think investors are being too negative on the company.
The post Is the Life360 share price a compelling buy after falling 61%? appeared first on The Motley Fool Australia.
Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Life360. The Motley Fool Australia has positions in and has recommended Life360. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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