Life360 Inc

NASDAQ:LIF

Earnings Call Transcript 2023-Q1

[Melissa Goodell, executive]

[Audio Gap]

[Operator Instructions]

The agenda for this morning's call will include a business and strategy update by Co-Founder and CEO, Chris Hulls and an introduction of our newly appointed COO, Lauren Antonoff. CFO, Russell Burke, will provide an overview of the quarterly financials. After which, Chris will make some comments on the outlook. At the end of the prepared remarks, Chris and Russell will be happy to take your questions.

I would now like to turn the call over to Chris.

[Chris Hulls, executive]

Good morning, everyone. The Life360 business has continued to deliver impressive growth metrics during Q1 with a global MAU up 33% year-over-year and AMR up 44% to around $240 million. Paying Circles further grow with a global net subscriber addition of 73,000 ahead of the 69,000 achieved in Q1 '22. This is a very positive result, given the magnitude of the price increases implemented in Q4 '22.

International Paying Circles increased 50% year-over-year with net adds at close to all-time record levels. U.K. Paying Circles increased 64% year-over-year, a very encouraging sign ahead of our membership launch later this year.

Price increases for existing U.S. Android subscribers rolled out in April and due to expected onetime churn, [indiscernible] adds will be more muted in Q2. However, monthly iOS subscriber churn has already returned to normal falling a short-term spike after the Q4 '22 price increases. This resilience makes us confident that the Android impact will be similarly short-lived.

We expect U.S. net subscriber additions to accelerate in Q3, a testament to the enormous value provided by our membership offering. Q1 '23 U.S. ARPPC of 140 increased 43% year-over-year, reflecting the benefit of price increases introduced for new and existing iOS subscribers and new Android subscribers. We see further upside as these are rolled out to existing Android subs with early trends in line with the iOS experience.

The Tile membership bundling is fully rolled out in the U.S. market, and we are excited about opportunities over time to improve paid user conversion and retention. While it is still early days, we are excited what appears to be a material improvement in retention, which is the signal we were hoping for a launch. While the initial launch did not [indiscernible] top-funnel and conversion, in coming months, we will be rolling out user flows that more aggressively bring people into the Tile experience. We expect this to drive increases in conversion in the second half of the year, in particular during our critical back-to-school season. The international rollout of Tiles on the Life360 map is also underway with completion expected in coming days. This further closes the gap to the U.S. user experience as part of our international growth strategy.

Tile's hardware revenue increased 3% year-over-year. Our primary focus is on driving subscription revenue rather than stand-alone sales, and this year-over-year growth was achieved despite significant reductions in headcount, marketing and R&D expenses in our devices business. We will continue to be disciplined in regard to our spending in this part of the business as part of our emphasis on cash flow. Despite this conservative level of investment, we are continuing to make meaningful improvements to our devices line-up including our anti-theft mode, use case bundles and most recently, the newly announced potential partnership with Google to leverage Android phones to expand our network reach in the future.

We earlier provided guidance for 360 to achieve adjusted EBITDA profitability from Q2 '23 onwards and for full year CY '23. We have achieved this milestone a quarter early with Q1 '23 positive adjusted EBITDA of $0.5 million. The impact of price increases, combined with better-than-expected net subscriber additions delivered ongoing strong momentum in subscription revenue. This positive trend, coupled with the impact of additional cost efficiencies implemented in January, supported the achievement of our adjusted profitability target ahead of schedule. In a time of macro uncertainty, we are focused on balancing fiscal responsibility with prudent investment to position the business for long-term success. We have a strong balance sheet with cash, restricted cash and cash equivalents of $76 million at the March 023 quarter end.

Turning now to greater detail on some of our key operating metrics. We finished Q1 with global MAU of close to 51 million, up 33% year-over-year with encouraging momentum from our U.S. MAU. We are seeing increased as international engagement as we achieve greater feature parity with the U.S. user experience with international MAU up 44% year-over-year. We are expanding the value we provide to users with the recent rollout of free iOS OS and crash detection to many international markets. The increase in international engagement is highly correlated with the engineering work we have undertaken over the past year, demonstrating the value of this investment in the free user experience.

I mentioned earlier the pleasing trends in Paying Circles, which returned to strong growth, up 22% year-over-year. U.S. Paying Circles increased 15% year-over-year and 4% quarter-over-quarter, an impressive outcome given the 43% uplift in U.S. ARPPC.

International Paying Circles increased 50% year-over-year, which bodes well for the rollout of international membership.

Net hardware unit shipped reduced 17% year-over-year due to continued weak consumer electronics demand. The decline of 66% from the previous quarter reflected the usual seasonality of the business. Our strategy to improve retail economics supported a 14% uplift in ASP, resulting from the lower level of promotion.

Before Russell runs through the financials, it gives me great pleasure to introduce our newly appointed COO, Lauren Antonoff. Lauren previously had roles as President and Senior Vice President at GoDaddy, where she led efforts to help small businesses succeed with website, commerce and marketing tools. Prior to that, Lauren bodes well for the rollout of international membership. Net hardware unit shipped reduced 70% year-over-year due to continued weak consumer electronics demand. The decline of 66% from the previous quarter reflected the usual seasonality of the business. Our strategy to improve retail economics reported a 14% uplift in ASP, resulting from the lower level of promotion.

Before Russell run through the financials, it gives me great pleasure to introduce our newly appointed COO, Lauren Antonoff. Lauren previously had roles as President and Senior Vice President at GoDaddy, which she had efforts to help small businesses succeed with website, commerce and marketing tools. Prior to that, Lauren spent more than 18 years at Microsoft and product roles, including most recently as director program manager for sure point. I'll invite Lauren to say a few words.

[Lauren Antonoff, executive]

Thanks, Chris. It's great to have the opportunity to connect with investors. So early in my tenure Life360 is somewhat of a magical combination of proven product market fit, lots of opportunities for growth and a super compelling mission to help families protect people, pets and things they buy you most. I have a 16-year-old son. He's just starting to drive, and he goes out of town to visit his girlfriend. And so the peace of mind that comes from knowing your loved ones are protected is super personal to me. And Life360 is a game changer on that front. Throughout my career, I focused on delivering value at sale by improving things that millions of customers use in their everyday lives, and I'm excited to put that experience to work, joining awesome Axon team at Life360 to continue to deliver outstanding product experiences that drive the next level growth for the company.

And with that, I'll turn the call over to Russell.

[Russell Burke, executive]

Thanks, Lauren, and thanks, everyone, for joining the call today. As a reminder, all of the financials I'll be referencing are unaudited and denominated in U.S. dollars. Q1 consolidated revenue increased 34% year-on-year to $68.1 million. Total subscription revenue increased 56% year-on-year, including Tile and Jiobit with core Life360 subscriptions up 66% year-on-year. This was supported by 22% higher Paying Circles and the 36% uplift in ARPPC.

In a seasonally lower quarter for the business, hardware revenue increased to $10 million, with lower volumes offset by higher average sales price. As noted previously, the stand-alone hardware, our focus is on improving contribution rather than top line volume.

Other revenue of $6.5 million reduced 21% year-on-year. We've made the strategic decision to shift to a single aggregated data partnership and the prior corresponding quarter included in revenue from the previous arrangements. For the month of March of almost $240 million increased 44% year-on-year due to higher Paying Circles and a full quarter benefit of the U.S. price increases.

Gross profit increased more than 40% to $49.8 million with a GAAP gross margin of 73%, increasing from 69% in the same quarter a year ago.

Non-GAAP margins improved from 76% -- from 70%. This was underpinned by subscription margins increasing to 85% from 80%, benefiting from higher pricing. And non-GAAP hardware margins were stable at 18%.

Consolidated operating expenses of $64.7 million increased 4% year-on-year.

The underlying expenses were lower due to the implementation of cost efficiencies, which included reduced professional and external services, lower headcount, reduced lease expenses and reduced paid acquisition spend. These were offset by severance payments associated with the reduction in workforce, which was implemented during the quarter. Specifically, non-GAAP R&D reduced from $22.1 million to $19.6 million year-on-year. And sales and marketing, excluding volume-driven commissions, reduced from $13.1 million to $11.4 million year-on-year. These were offset by G&A, which increased largely due to the requirements of U.S. public company reporting.

This modest year cost increase, together with the strong subscription revenue momentum delivered a positive adjusted EBITDA for the quarter of $0.5 million, [indiscernible] the quarter earlier than previously anticipated. This compares with an adjusted EBITDA loss of $13.7 million in the prior corresponding period. The overall trend here shows our progress with the balanced approach to top line growth plus recurring restrained growth in operating expenses on the path to profitability.

Turning now to the balance sheet and cash flow. Net cash used in operating activities was $9.6 million. The differential to positive adjusted EBITDA of $0.5 million was largely due to the cash costs of severance payments associated with the workforce reduction implemented during the quarter, plus seasonally higher payments related to inventory purchases in Q4 and other working capital changes.

Net cash used in investing activities of $0.4 million, which related to the capitalization of internally used software expenses to the extent required under U.S. GAAP. Net cash used in financing activities of $4.7 million largely reflects taxes paid for the settlement of equity awards, which in effect is a share buyback, offset by the proceeds of option exercise.

Life360 finished the quarter with cash, cash equivalents and restricted cash of $76 million.

For calendar year '23, we expect a low point in cash to be in the mid-$50 million range.

Before I conclude, I'd like to give some background on the items in Appendix A and Appendix B which we provided in today's media release. Appendix A includes some minor adjustments to historical KPIs that result from changes to our definition of subscriptions and Paying Circles. Previously, we included subscribers whose billing status was both pending or completed at the end of the period. We've revised our definition to exclude subscribers whose billing status was pending as at the end of the period. The difference between the 2 methodologies does not result in any material changes and in all cases, between 1% and 2%.

We've changed the definition as we believe it provides a better reflection of our results during a given period by more closely matching this metric to reported revenue and being mindful of the future as we move towards non-app billing.

Appendix A includes Paying Circles, ARPPC, subscriptions and ARP PPS, as previously reported and as recast since Q1 of '21. To be clear, this has no impact on revenue previously reported.

Appendix D includes select historical financial metrics, with key non-GAAP financial metrics and GAAP to non-GAAP reconciliation of cost of revenue and operating expenses. This level of detail was incorporated in the 2022 full year results presentation because we believe it helps the market to understand the underlying dynamics of expenses and is also included for Q1 '23 in the media release for that reason.

In order to assist the market, we've provided historical quarterly detail of these items for the 4 quarters of 2022.

Thanks for your attention, and I'll hand back to Chris to provide an update to earnings guidance.

[Chris Hulls, executive]

For CY '23, Life360 expects to deliver core Life360 subscription revenue growth, excluding Tile and Jiobit, in excess of 50% year-over-year; hardware revenue growth of 0% to 5%, other revenue of approximately $26 million; consolidated revenue of $300 million to $310 million; Positive adjusted EBITDA and operating cash flow of $5 million to $10 million with positive adjusted EBITDA for each quarter of CY '23 and positive operating cash flow anticipated on a quarterly basis beginning with the Q2 '23 and for full CY '23.

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

[Melissa Goodell, executive]

Thanks, Chris. [Operator Instructions] First up, we have Chris Gawler.

[Chris Gawler, analyst]

Chris Gawler from Goldman Sachs. Firstly, I wanted to talk about EBITDA. Good result getting to breakeven earlier than expected, but just noticed that you left the full year guidance unchanged. I'm interested in your thoughts around reinvestment through the year and the cost run rate throughout the rest of the year?

[Chris Hulls, executive]

So we haven't changed our strategy there very much. To be clear, as we've long said, we have many, many areas we could continue to forward and invest. But given the climate, we want to stick to this guidance range, we do feel we have the appropriate level of reinvestment, and we have a pretty significant road map of new items coming out over the coming months. in particular, international launch and flows that will get Tile more aggressively integrated in the experience, which will be hitting around the back-to-school time period.

[Russell Burke, executive]

And just to be clear, Chris, it's still fairly early in the year. As you know, a bulk of our results are sort of back ended this year in the second half. So we just didn't feel like it was appropriate to adjust guidance at this point.

[Chris Gawler, analyst]

Yes, sure. That makes sense. And then on MAU growth in the U.S., it appeared to slow a little bit in the first quarter versus the trends that we saw last year. Is there anything that you'd call out there? Or is that impacted by the reduction in paid user acquisition spending or any comments you'd make on MAU growth?

[Chris Hulls, executive]

Chris, largely in line with what we expected. Last year was a little abnormal in the sense that we were just coming out of COVID and the normal seasonality patterns didn't hold, but this is our normal slightly lower point. We have reduced paid spend. It's largely as it is anticipated. And a lot of the shift now is being put more towards international because that is the next big vector of growth although we do, of course, feel like we have a lot of headroom left in the U.S.

[Russell Burke, executive]

Just to add on to Chris' point on international. We're definitely seeing some good growth in the -- particularly in the territories that we really care about that sort of the major territories, as we gear up the sort of the international effort, so tweak some of the user experience generally internationally, we're seeing some very positive results from that flowing through even before we get to the launch of the Triple tier product.

[Chris Gawler, analyst]

Yes. That makes sense. Do you think you'll ramp up the paid user acquisition spend in the U.S. as the year goes on? Will that drive as part of the acceleration in MAU growth? Or do you think that's just normal seasonality?

[Chris Hulls, executive]

We're going to be relatively consistent. We do want to keep a very balanced stance given the climate that we're in. But we do -- we are very excited about the fact that we're not struggling to find ways to deploy the paid spend, if anything, we'd like to be spending more. But our game plan is relatively fixed for the year, especially given that our customer life cycles are very long. So increases in paid spend now don't translate to revenue for quite a bit longer. So we do have to have a bit of a longer outlook there, but we also have to manage the guidance numbers we put out.

[Chris Gawler, analyst]

Yes. That makes sense. And then I wanted to ask about the comment that you made on Q2 U.S. subs growth being relatively more muted given the Android price increases that are going through at the moment. Do you expect deceleration in paid subs growth in Q2 versus Q1? Or do you mind just fleshing that out a little bit more for us?

[Chris Hulls, executive]

Yes, definitely. It's going to be very much a repeat of what happened with iOS, albeit at a smaller scale. So as a reminder, for the group when we did the price increases on iOS, we've essentially had a quarter of flat growth because there is a very natural onetime expected set of users churning who don't accept the higher price.

Once we got through that with iOS, it did return to a baseline. Overall, conversion and retention is down a little bit. As expected, you increase the price by 50%, and all the early signals we're seeing on Android, which is about 1/4 of the U.S. base, it's looking very similar. So we will have growth for the period, but it is definitely going to be a much lower growth quarter than Q1.

[Melissa Goodell, executive]

Thank you, Chris. Next up, we have Lafitani.

[Lafitani Sotiriou, analyst]

It's Lafitani Sotiriou from MST. Congratulations on a good result. Can I just kick off with more detail on bundling? So I think some of the comments you mentioned that there's a material improvement in retention and that you have yet to really focus on conversion. So should we think about it as so far bundling has gone to existing subscribers and your conversion -- when you focus on conversion, that will be trying to focus on the free user base? Or how should we think about the delineation that you've put out today? But also, can you talk to any metrics about the materiality of the improvement in retention?

[Chris Hulls, executive]

Sure. So we looked at the overall plan in 2 ways. Number one, can we make Tile increased conversion, so more people get into that top of funnel? And then number two, once we give someone a Tile device, will they get more value from the membership? Will they -- the fact of seeing something physical showing up in their post office box how to something on their keys? Will that make them feel like there's more value in the subscription? So the numbers that we've seen, which was expected is that we would see it in retention first because we're not aggressively pushing the Tile experience yet because most people who sign up for a premium do it through what we call our upsell hooks, where you hit a paywall, always say sign it for premium, you don't really spend a lot of time saying what you're going to get. And then the Tile comes more as something you weren't necessarily expecting.

The next phase, which we're starting to do over the next quarter is being much louder, if you will, on saying, "Hey, look at adding your pets, add your things, have it show up on the map, make it feel like a setup step so people can see that I need to get to fully set up the Life360 experience." That is what's coming next. So very few people go and navigate and look through the entire feature list as we've long known that's why the membership is a very long one.

So the numbers, I'll let Russell talk about the quantitative impact if you feel as comfortable doing so, but that's how we break out the world we build the infrastructure, see if it drives retention, then push more people into that experience once we see it working. So very much on track.

[Russell Burke, executive]

And I think, Laf, it's very early stage at this point. What we would say is that it's trending exactly as we expected. But we'll be able to provide much, much richer data at our next update once we really get some a number of months of -- particularly on the retention side, which is the key piece for us. But it's definitely trending very early, positive, very early and considerable opportunity as we tweak the flows, as Chris mentioned.

[Lafitani Sotiriou, analyst]

Yes. Okay. Can I move on to Lauren Antonoff who's joined. And maybe it's a bit early, I'm not sure if she's ready to comment yet. But Chris, can you talk to, based on the experience and previous background, what you consider some of the priorities that you'll be able to tap into? Or what's some of the key low-hanging fruit that would you think that line would be able to help with the existing businesses?

[Chris Hulls, executive]

So when we looked at wanting to bring in a COO, we've obviously had a lot of change with the Tile team. There was a very long transition plan for some of the execs there. So we're very much executing on a long-term organizational plan. David Rice, who is our outgoing COO, is staying with the company, but he is now Chief Strategy Officer and running International. He felt that was a better use of his. His resources moved to the U.K. And when we think of what we are excited about with Lauren, she is very, very, very good at a, being customer-centric, which I'm also skilled at where she brings talent to the table, which I'm not as good at that is that this next scale of growth, and we're an ambitious company. How do we have this operational excellence at scale, managing well, hopefully one day be thousands of employees and having all the different moving parts of that.

And Lauren is responsible over product, engineering and marketing and very much of what we're trying to do next in particular, with the marketing is making the overall experience very holistic. A lot of what I talked about with driving upsells around Tile, that's going to be very much in Lauren's purview. And she's done this in larger orgs and the way things done at scale is obviously much different than the start-up phase, which is where I am more rooted.

So in terms of low-hanging fruit, she's good me now, and we're working on some of these upsell flows as we speak. But I think that we're not looking at Lauren, as short-term low-hanging fruit hire. We really are looking at Lauren as someone who can set the team infrastructure up for our longer-term success as we grow in scale and complexity.

[Lafitani Sotiriou, analyst]

Yes. Okay. Look, thanks for that detail. Can we just go to the U.K. for membership launch. It's still on track for the second half of this year? And is there anything that you're doing differently to see the increase in growth that you've seen there in the last sort of quarter?

[Chris Hulls, executive]

So it is on track. I feel very confident about that. There's going to be a big bang launch, so to speak, where the triple tier comes out and we have full parity, but we have already been doing infrastructure type work where we are slowly putting more resource International already. We're expanding to paid teams presence there, although that's like a negligible spend this last quarter, but we now have life cycle marketing pushes, which you didn't have. We've done some incremental product improvements such as our SOS feature in the free version of crash detection. So some of the improvement in international was last quarter, it was not pure chance. It was very much through the initiatives that David Rice was driving already. And I think that is a good omen for the fact that these small little things were already driving results, and they have the big thing that it could be even bigger.

We're not planning a huge marketing release though. We are somewhat filling the Canada playbook of get it out there, then see what we learn, then pushing harder. And Canada, all the way I haven't talked about it usually was a very big success, which as I've shared on prior calls. We almost doubled, or I think it did double revenue year-over-year, whereas, and Russell keep me honest because I might be a little bit off of the numbers [indiscernible] have been double. But I think we had a level the increase in revenue versus regions where we didn't launch the triple tier. So we did see just by bringing parity some very, very impressive results.

[Russell Burke, executive]

And just to add to that, Laf, on sort of numerically, yes, Chris has [indiscernible], we did more than double the ARPPC in Canada. And that's kind of what we expect with the U.K. It's interesting just in the last year before the U.K. launch, we've had more than 60% growth in Paying Circles in the U.K. So that's providing a great base for us. And we wouldn't necessarily -- as we introduce the triple tier, we're not necessarily looking to sort of huge subscriber growth, but the revenue impact will be much more significant.

[Lafitani Sotiriou, analyst]

Chris, you made a comment during the call about Google Android phones, and there's a further integration with Tile. This is something I'm unaware of. Can you just talk to that?

[Chris Hulls, executive]

Sure. This is early, but Google has opened up what they call the Google Finder network, which is not all that different than Apple's Find My Network. And we are looking at integrating with that network as one of Google's marquee partners. It was announced at Google I/O last week. There are some specifics we're figuring out. We can't -- due to confidentiality we're not yet ready to be able to share the full level of detail there. But it is validation that of our thesis that over time, the big platforms will have to open up these networks. It's going to be a long journey, but it does -- make us very excited that, the category is shaping up in a way that we hope and we originally did the Tile acquisition, as everyone knows, some of those partnerships were put on pause when there was the bad press around stocking but it seems like this is now coming back to the forefront and a very positive one.

[Lafitani Sotiriou, analyst]

Okay. And I imagine we'll see some more color on that in future results or when the details are finalized, but so we can understand how your product will or may integrate with that.

And just one last question for me. Just is there any update on the non-app payments? Or another way to put it is the savings you could get on the commissioning side and where that road maps are?

[Chris Hulls, executive]

I don't have anything material to share now. We are working on that. As we've said many times, with Apple, it's usually nothing, nothing, nothing, then a no then and a random yes. So without going into detail, we are beginning the process to push more heavily on Apple to see if we can get that exemption, but I definitely do not want to give a firm date given the history of Apple because there's always a bit of randomness to any interactions with them. With Google, we usually get a little bit more clarity, Apple is the black box, where eventually good things happen.

[Russell Burke, executive]

And just to add to that, Laf, as we've, again, as we've said before, we're setting up the back end and infrastructure to be able to do that billing out of the app, but it will be a slow roll in. It will impact new subscribers and will be quite cool which as to implementing it to make sure that we really, really maintain a good level of conversion at the top of the funnel.

[Melissa Goodell, executive]

Up next, we have James.

[James Bales, analyst]

It's James Bales from Morgan Stanley here. I'd like to maybe start guys with your thoughts on subscriber adds for the second quarter and for the rest of FY '23. I think the message before this or was that you expected to see a return to about 100,000 new subs per quarter by the end of the year. Is that trajectory still right?

[Chris Hulls, executive]

As and now, it's very much on track as we expected. The real litmus test will be around back-to-school. And as I've shared on for calls, that is both due to seasonality and then coincidentally for the last few years, many of our big releases have also coincided with that time period. And so for back-to-school this time around, a lot of those more aggressive growth flows that bring Tile more to the forefront of the experience will be coming out in that Q3 time frame.

I mentioned, Q2 is going to be very, very much more muted given to that onetime Android price increase and also because we don't have a whole lot coming out over the next few months.

[James Bales, analyst]

Okay. Perfect. And then in terms of the impact from the Android price increase, where do you think you would expect the U.S. ARPPC to land once that fully rolled out?

[Chris Hulls, executive]

Russell?

[Russell Burke, executive]

It will obviously increase slightly, James. But just to center that, the impact of the Android price increase is -- you'll be much more limited than the keeper for iOS for a couple of reasons. One is that we've been the new Android subscriber since August last year, have been subject to the price increase in any case, which is probably the biggest impact. And then as with all of our price increases where we're increasing it to on monthly subs and not annual subs at this point. So there will definitely be an impact on ARPPC, but it won't be quite as dramatic as the Q4 impact.

[James Bales, analyst]

Okay. That's helpful. And then FY '23 hardware, the guidance still for positive growth and the units were down 17%. Can you maybe help us understand what to expect on both sides of that price versus unit expectations for the rest of the year?

[Russell Burke, executive]

Yes. A couple of things on that. As is always the case, Q4 is the big seasonal quarter for hardware. And so again, we're relatively early in the year. But to our strategy here to optimize contribution from stand-alone hardware sales. So what we've done is sort of rolled back promotional contribution, and you'll see that in the uplift in the sort of average price for hardware units. And we've also rolled back user acquisition spend for -- in the hardware area. And then we'll continue to monitor that. But even with that, hardware sales came through pretty much where we expected this quarter.

[James Bales, analyst]

Got it. And then maybe one last one. The second quarter OpEx run rate. Obviously, there are a lot of moving parts in the first quarter with some of the redundancies and severance payments in the numbers. Where should we expect that number if the marketing budget that sort of holds to your expectations?

[Russell Burke, executive]

Yes. In our materials for the release, we've included the full analysis of the non-GAAP operating expenses. So from my perspective, taking that and sort of running that forward is probably the best way to judge that. As you know, we've been adopted a very cautious approach in terms of growth in operating expenses, and I wouldn't expect those to grow significantly in the quarter.

[James Bales, analyst]

So is that to say that headcount in the second quarter is going to be roughly flat on the first?

[Russell Burke, executive]

It will be a small increase. It won't be a very, very close to flat effectively.

[Melissa Goodell, executive]

Thanks, James. Next, we have Julian.

[Chris Hulls, executive]

Julian, we're having a hard time hearing you.

[Julian Mulcahy, analyst]

Right. Now I'm unmuted. Can you hear me now?

[Chris Hulls, executive]

Loud and clear.

[Julian Mulcahy, analyst]

Cool. Just a few for me. Have you seen much of a change in the preference for monthly versus yearly subscriptions because the increase in the average price is a little bit less than the pricing increase would indicate?

[Chris Hulls, executive]

The response. Go ahead, Russ.

[Russell Burke, executive]

I was just going to say, Chris, we have seen a small increase in the annual uptake, but to be clear, we haven't really been pushing that in the flows at this point. So that will have had a small impact on what you probably project is ARPPC growth.

[Julian Mulcahy, analyst]

Right. Okay. And what's happened to the subscription businesses for Tile and Jiobit?

[Chris Hulls, executive]

They're still there, but it's obviously not our area of focus. Jiobit has largely been performing as expected given the relatively light level of investment or kind of almost maintenance mode investment because obviously, we were not setting out to not invest more heavily, but as the market pulled back, we had to make some tough decisions about where to forward invest, but that is actually doing maintaining quite well. And Tile similarly is sort of in maintenance mode. Russell can probably give a bit more color on exactly what it's performing, but it is there in driving contribution margin.

[Julian Mulcahy, analyst]

Have they gone backwards? And has churn changed given the economic situation?

[Chris Hulls, executive]

Russell, do you want to provide an answer?

[Russell Burke, executive]

Yes. No, churn has stayed pretty constant. But because we're not necessarily pushing the Tile and Jiobit subscriptions, we're really directing people to Life360 wherever that makes sense. They will naturally be flat or come back slightly.

[Julian Mulcahy, analyst]

Right. Okay. And in that quarter, was that when the free Tiles were given out to the existing subscribers of Life360?

[Russell Burke, executive]

No. We have not done that at this point.

[Julian Mulcahy, analyst]

What quarter is that going to go out?

[Chris Hulls, executive]

It's more going to close, which was at different times. So it's not going to be something we're all of a sudden, everyone gets the fees, we're going to find ways to introduce the experience and give different people an opportunity to get Tiles in different ways. They can buy when they can link on if they have it, they can upgrade the membership. And the big focus for us is figuring out what the flows are that will trigger that conversion to membership, although we will have some way for existing paid subs, probably declining a free one just because they feel good about being members.

And as shared previously, our hope over time is that Tile is going to be a surprise and delight, type product where we can improve retention and just giving them away unexpected to our customers prior to renewal periods. And so more and more of that's going to happen over time, but there's, there likely will not be 1 single big bang.

[Julian Mulcahy, analyst]

Right. Okay. And just finally, so given that Gold members are getting 1 and Platinum getting 2, do you think that's sort of come sort of Christmas time, you'll see purchases to the rest of the members of the family and that will actually make your higher guidance number pretty conservative?

[Chris Hulls, executive]

I don't think that's going to happen necessarily at huge scale, for this holiday period. But yes, over time, we think we can get that word out there, but I think we'll see that more probably next year because normally, families don't have a huge number of tiles. And it's once people get used to them or the batteries need to be replaced or something that is different devices gained, that is more on the changes.

[Melissa Goodell, executive]

Next, we have Chris.

[Chris Savage, analyst]

It's Chris Savage from Bell Potter. Most of my questions have been asked, but maybe just a couple of point of clarification. Chris, on the call, you said iOS growth had returned to normal. Was that correct? And can you put some color around that place?

[Chris Hulls, executive]

Churn has normalized, so we're not seeing further decreases in churn. So we look at the different user cohorts, how that's trended. And so that drop off has normalized.

[Chris Savage, analyst]

Chris, you've commented before, Chris, that when you look at what's happened with other app providers, close to price increase. You've got that flat quarter and then you've got muted growth in Q1 and Q2. Is that still playing out as you're seeing it now?

[Chris Hulls, executive]

Yes. I'd say it's been largely as expected, and we have seen the retention benefit, which was that first signal that we were expecting but always nice to see our hypothesis be validated.

[Chris Savage, analyst]

Yes. And just to clarify, the Android price rise is the same as for iOS?

[Chris Hulls, executive]

Correct.

[Chris Savage, analyst]

And you made -- or you -- or Russell said before, Android is about 25% of the subscriber base. Is the split between silver gold and platinum same for Android is for iOS?

[Chris Hulls, executive]

Russell?

[Russell Burke, executive]

It's largely the same. It may be slightly more weighted towards gold, but the other factor, Chris, as I mentioned earlier, is that we have instituted price increases for new Android subs since August last year. So the base that will be subject to the price increase at this point is smaller than that 25%.

[Chris Savage, analyst]

Yes. And just last question around the cash. You made the comment on the call, Russell, you think the low in cash will be in the mid-50s range, which is consistent with what you said before. So that's obviously assuming what is it, that $3 million for Tile this quarter?

[Russell Burke, executive]

Exactly. That $13.1 million was actually paid out in April. So that's gone exactly as we expected and the cash balances are where we had expected.

[Chris Savage, analyst]

And so without getting too granular, would that lowering cash mid-50s be like at the end of Q2? Or are you kind of there now?

[Russell Burke, executive]

It will be just the flows with Q2, Q3, it will be likely early Q3. But -- and then sort of trending back, Q4 will be a much more significant driver in terms of positive year.

[Chris Savage, analyst]

And lastly, give me again on the cash. I think you've said before, Russell, do you think at year-end, the cash will be between around 70%, 75%. Is that still the case?

[Russell Burke, executive]

Yes, I'd say around that level.

[Melissa Goodell, executive]

Thanks, Chris. And as there are no more questions, I will hand the call back to Chris for some closing remarks.

[Chris Hulls, executive]

I don't have much. Thanks again, everyone, for joining. Have a great day.

[Russell Burke, executive]

Thanks.