Life360 Inc

NASDAQ:LIF

Earnings Call Transcript 2021-Q2

[Jolanta Masojada, Head of Investor Relations]

Good morning and thank you for joining the Life360 June 2021 Quarterly Activities Report and Appendix 4C Conference Call. This is Jolanta Masojada and I head up Investor Relation for Life360. The call will begin with some prepared remarks from Co-Founder and CEO, Chris Hulls; and CFO, Russell Burke, followed by a Q&A session. This call is being conducted as a Zoom audio webinar. [Operator Instructions] I would now like to turn the call over to Chris.

[Chris Hulls, Co]

Good morning, everyone, and thanks for joining our June quarterly business update call. This was a milestone quarter for Life360 with growth accelerating as the benefits of the vaccine rollout were felt, particularly in the U.S. We exceeded 1 million Paying Circles and $100 million of annualized monthly revenue. Our confidence that a COVID recovery would drive a return to significant growth is being borne out in these results. Our members are even more attuned to safety and they're eager [ to get out ], so we're even more relevant than prior to the pandemic. We are becoming a trusted brand by all family members, including teens who have driven a viral surge in downloads through social media, primarily TikTok. We reached the #1 position in the App Store charts in more than 11 countries during May. And as a result, we delivered a record quarter of monthly active user additions, ending the quarter with 32.3 million MAU. We expect much of this surge to be transitory and for MAU numbers to temporarily decline as some of these lower-value users churn in coming months. However, in another very positive sign, Paying Circles additions have also reached a new quarterly record with more than 90,000 net new subscribers. Life360 is clearly returning to the center of family life with U.S. organic registrations returning to pre-COVID levels while we are still spending significantly less on marketing than prior to the pandemic. We're pleased to announce the signing of definitive agreements for the acquisition of Jiobit, provider of wearable location devices for young children, pets and seniors. I've spoken many times about the goal of our membership model to expand our product line to all life stages. Jiobit provides an exciting opportunity to expand Life360's relevance to younger families as well as seniors. We also see the opportunity to use Jiobit devices to encourage our existing members to upgrade to higher tier premium plans. The transaction is expected to close shortly. Jiobit is another milestone for Life360 as our largest acquisition to date. The acquisition of Jiobit marks a milestone, but not a completion of the strategic review previously announced in February 2021. Life360 is actively evaluating opportunities to accelerate progress towards a vision of being the dominant platform for a much broader suite of family services. This includes larger acquisitions that could be funded with vehicles that would simultaneously result in a dual listing on a U.S. exchange. During the quarter, we announced the creation of a Family Advisory Council, bringing together well-known celebrities influencers of Vanessa Bryant, wife of the late Kobe Bryant; professional skateboarder, Tony Hawk; Olympic swimmer, Michael Phelps and his wife, Nicole; well-known TikTok influencer, Billy Perry; NBA All-Star, Chris Paul and his wife, Jada; and television personalities, Chip and Joanna Gaines. The Family Advisory Council will help shape the company's products and marketing strategy. As part of the initiative, these celebrities participated in an investment round of $2.1 million, led by Bryant Stibel, a Los Angeles-based investment group. Turning now to details of the quarter. As of June 2021, Life360's global monthly active user base was 32.3 million, a record increase of 4.2 million for the quarter. U.S. MAU of 20.3 million increased 25% year-on-year from June 2020's COVID-depressed base. Impressively, U.S. MAU additions of 2.1 million were a new record, increasing 12% quarter-on-quarter. International MAU of 12.1 million increased 34% year-on-year. Net additions of 2.1 million were also a new record. In our listed home of Australia, the MAU base of 836,000 increased 48% year-on-year and 18% from March 2021. As mentioned previously, we expect much of this surge to be transitory in nature, with MAU numbers anticipated to temporarily decline in Q3. However, we're very encouraged that Paying Circles exceeded 1 million with new quarterly additions reaching a new record of 90,000, well ahead of the 20,000 net adds in the March quarter. Underlying revenue in the June quarter increased 28% year-on-year to $25 million. For the month of June, annualized monthly revenue was $105.9 million, a 36% year-on-year increase and 11% ahead of March AMR of $95.8 million. Direct revenue was the key driver of the result, benefiting from a 19% year-on-year increase in Paying Circles to 1 million and a 21% uplift in ARPPC. Momentum in our membership model has accelerated with cumulative 327,000 new and upsell subscribers now accounting for 40% of U.S. Paying Circles. While legacy subscribers are grandfathered on their previous plans, the new membership cohort is delivering ARPPC uplift of 37% versus the first half of 2020. Indirect revenue, which includes data revenue and lead generation partnership, delivered year-on-year growth. Data revenue was in line with the March 2021 quarter and increased year-on-year as the impact of iOS IDFA changes was lower than initially expected. Lead gen contributed revenue of $1.5 million, consistent with the March 2021 and June 2020 quarters. Paid user acquisition spend was in line with the March quarter. Total investment in paid user acquisition and TV channels of $2.5 million compared with $2.2 million in the March quarter. We are reactivating marketing spend in response to the improving environment and anticipate increases in spend in the second half of CY '21. Underlying EBITDA loss, excluding stock-based compensation and other nonrecurring adjustments of $3.3 million increased from $1.5 million in the March quarter, reflecting higher investment growth. Strong continued performance is expected, in particular in the U.S. as we enter our back-to-school season. However, we are seeing slowdowns in registrations in regions heavily impacted by the COVID Delta variant. Currently, this does not appear to be materially impacting U.S. consumer behavior. However, if the latest wave continues and results in either organic or mandated social distancing, we expect a slowdown in our rate of growth. Given the results we achieved going through prior waves, we are confident that any potential COVID slowdown will be transitory although growth metrics for the back half of the year could be impacted. I'll now turn it to Russell, who will share details on our cash flow performance for the quarter.

[Russell Burke, Chief Financial Officer]

Thank you, Chris, and thanks, everyone, for joining the call today. Please note that all the numbers I will be discussing are denominated in U.S. dollars, are in accordance with U.S. GAAP accounting standards and are unaudited. Life360 ended the June quarter with cash and cash equivalents of $50.8 million and a debt of $2.1 million related to the convertible notes issued as part of the Bryant Stibel investment around that Chris mentioned earlier. We remain in a strong capital position to invest for future growth. Cash used in operating activities was $1.9 million compared with $3 million in the March quarter. Revenue of $25 million increased 28% year-on-year on an underlying basis and was $2 million ahead of the March quarter. Subscription revenue growth accelerated reflecting the strong Paying Circles and ARPPC metrics. Indirect revenue was in line with the March quarter. Receipts from customers of $20.6 million increased from $15.8 million in the March quarter, reflecting the timing of subscription receipts. Payments in the quarter increased 20% versus the March quarter. Staff payments of $9.3 million were in line with the $9.5 million in the March quarter. Higher expenses from head count growth were offset by the timing of bonus payments. At the end of the quarter, our head count, including contractors, was 289. Advertising and marketing payments, which include paid user acquisition of $2.5 million reduced from $2.9 million in the March quarter due to prepayments in the March quarter for marketing and brand spend. Research and development payments of $3.8 million increased from $2.4 million in the March quarter as a result of higher payments to several R&D vendors. Cost of revenue of $3.3 million increased from $2.0 million in the March quarter due to higher technology payments. Administration and corporate payments of $3.0 million increased from $1.6 million in the March quarter due to the timing of insurance payments. Cash used in investing activities of $2.5 million reflects the cash advance to Jiobit in relation to the acquisition. And cash from financing activities of $1.7 million reflects cash received from the Bryant Stibel investment round, offset by the exercise of options and settlements of RSUs. With that, I'll hand it back to Chris.

[Chris Hulls, Co]

The strength of MAU and Paying Circles growth in the June 2021 quarter reinforces our confidence in an improving performance in the second half of CY '21, although there remain risks flowing from the COVID variant surges that are currently being experienced in many countries. As the variant surge in the U.S. is contained at current levels, we expect annualized monthly revenue by December 2021 to exceed our previous guidance of $110 million to $120 million for Life360's core business. If, however, the surge continues to grow, we still expect revenue at the higher end of this previously forecasted range given the current wave of demand the business is demonstrating. Life360's current momentum provides confidence to accelerate investment in growth initiatives a greater level than previously anticipated. Growth plans, we expect to undertake joint branding and other promotional activities as we bring Jiobit onboard. Depending on continued momentum and therefore, their ultimate scale, these investments are likely to increase CY '21 underlying EBITDA loss, excluding stock-based compensation from the previous guidance range of no greater than $15 million for the core business. As previously advised, Jiobit's annualized monthly revenue for the December 2021 is anticipated to be in the range of $11 million to $12 million with a $4 million revenue contribution in CY '21 post-acquisition. The underlying CY '21 EBITDA loss contribution from Jiobit from the time of acquisition is expected to be less than $4 million. That concludes our prepared remarks. And I'll now turn the call over to Melissa, who will manage the question-and-answer portion of our call today.

[Melissa Goodell, Executive Assistant]

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

[Lafitani Sotiriou, Emerging Companies Analyst]

So it's Laf from MST. My first question is in relation to the customer growth, 4.2 million in the quarter is very strong. I understand that a portion of this has come through via the TikTok campaign, can you give us an idea as to what the rough split would be if you do a best guess as to what would -- what you consider to be underlying growth and what would you consider to be in relation to the TikTok? So is that roughly half-half of that 4.2 million? Or if you can give us an idea.

[Chris Hulls, Co]

It's honestly really impossible to say that the bigger macro point is that, a, yes, there were some teens that were just having fun, they're probably going to churn off. But we did see a very big surge in parent downloaders as well, who are showing all the behaviors of high-quality users. And what we get excited about with the surge is more that we have essentially come back to where we were and the broader cultural conversation now that we're coming out of COVID, at least for the moment. So given this is all organic, we just really don't know, and some of this could be the surge we would naturally be having coming into back-to-school. But again, while some of these users are lower quality, we can see that a number of parents were also part of this big wave, so there is some real underlying value versus just the spike.

[Lafitani Sotiriou, Emerging Companies Analyst]

Just to sort of put it another way then. So what gives you confidence that the MAU will drift in this current quarter? Are you seeing evidence of that already in July?

[Chris Hulls, Co]

Sure. So it's two things. Whenever we do have a big spike and then something comes back down to baseline, even if the users are high quality, you will get some natural churn because as you guys have seen in our cohorts, we do lose about half the people. So if you have a huge, huge, huge month, even if they're normal quality users, you will have some sort of roll back. So we expect that. And then we are actually seeing pretty good retention for the users overall. So some of this is just the natural algebra. And then on top of that, we are seeing the COVID surges in a lot of regions. So think of Australia, I don't have to explain to you what's going on. It's obviously challenging for download numbers whenever one's isolated, we don't have the word of mouth growth, which is essentially the vast majority of how new users find us.

[Lafitani Sotiriou, Emerging Companies Analyst]

Just moving on to Jiobit, you've flagged additional investment. What's giving you the confidence to put some money on the table? What's developed since you last flagged the acquisition of Jiobit in terms of your strategy and putting money behind it?

[Chris Hulls, Co]

So they're showing some very good results. We haven't disclosed those yet. We'll have more to come there. So we're feeling very good about the acquisition. As I mentioned when we first announced the deal, some of their COVID patterns were very similar to ours because it's a very similar use case. We're also very excited about spinning up more brand advertising as a whole that will let us reach younger families. So most of the spend we're talking about is increasing the brand footprint, of which they're now part of the story. And as we also demonstrated last year, the spend is very flexible. So there's no risk of us doing spend that we can't very quickly scale back if we need to.

[Russell Burke, Chief Financial Officer]

It will be on the same basis as we always use for marketing in terms of being quite precise on the return that we're looking for.

[Lafitani Sotiriou, Emerging Companies Analyst]

Okay. And just last question in relation to the strategic review. Can you give us a little bit more color around how many opportunities you're looking at, at the moment? And is it primarily just in relation to an insurance vertical? Or is there -- are there other ones that you're actively considering?

[Chris Hulls, Co]

I can't give too much detail on that, but we are looking at a range of opportunities. If you look at the insurance space, if you look at the, if you can see public market comps for neo insurers, it has not been a good quarter for them in terms of price. So as of now, we have not seen that translate down into the private markets. So we are very focused on making sure that any deal we do is one that drives good value. And so right now, we're paying very close attention to what happens to those costs because we want to be disciplined in anything we do. And we are continuing to just monitor the stock market and the IPO market out here in the U.S., but I can't comment on any specificity as of now.

[Melissa Goodell, Executive Assistant]

Thank you. Next up, we have Quinn.

[Quinn McComas Pierson, Co]

Chris, can you hear me okay?

[Chris Hulls, Co]

I can. Thank you.

[Quinn McComas Pierson, Co]

Great. Maybe just firstly, just on the Jiobit investment and the step-up overall. Can you maybe just unpack that a little bit? Is this more about selling Jiobit? Or is this, I guess, to what degree can we kind of write-off the bat, leverage this into trying to cross-sell into 360 memberships? Or is that cross-sell kind of come in down the road?

[Chris Hulls, Co]

That will be more down the road, and that's actually limited more by inventory constraints. Even in a normal supply chain environment, it's hard to ramp up inventory unless you have almost a year of lead time. So most of the Jiobit contribution will be coming in 2022. We are going to be doing some things that we think will definitively prove that Jiobit will be a great way of unlocking more people into our membership tiers, which are obviously higher priced than Jiobit, in particular, Platinum. So the co-marketing we're doing, a lot of it is more on the brand side, and talking about modern parenting and bringing Jiobit into that conversation about how they can contribute to the overall ecosystem, now we serve younger families, but most of the contribution, I'd say, 95-plus percent of the contribution, if not more, is going to be in the out years given the ramp-up needs of inventory.

[Quinn McComas Pierson, Co]

Understood. And just to be clear, the added investment increasing the EBITDA loss, is that all related to Jiobit go-to-market? Or are there other areas in the business you're also adding investment to?

[Chris Hulls, Co]

No. It's more broadly happening. And so money is obviously fungible, so it's tough to say what is that exact initiative that moves it up, but the things we're looking at are: increased brand spending around back-to-school and trying to extend the wave of that back-to-school surge, which we normally experience; increasing paid acquisition as we see these new channels opening up and started to perform well; and then using Jiobit as a way to expand the footprint of the Life360 branded membership within all those various campaigns; and then some level of increased R&D as we have a bigger appetite than our stomachs and being able to increase head count and have the capacity to get more done is something we like leaning into.

[Quinn McComas Pierson, Co]

Helpful. Maybe just secondly, just you commented on some of the regional variances in terms of subscriber additions. Can you talk us through how big the Deltas are like in particular, COVID-impacted states? I mean, I guess, is it an order of magnitude different than the less COVID-impacted states? I'm just trying to understand how sensitive your subscriber additions are to COVID trends.

[Chris Hulls, Co]

Yes. So it's all over the place is the honest answer. But one thing I can say is, especially for the quarter, in most regions, it was very strong. We disclosed Australia numbers, for example, but we definitely do feel the impacts when there is very strong social distancing, either because people are just nervous or there are government-mandated lockdowns. But to put people at ease, it's nothing like what we experienced a year ago where we had real extreme declines. It's just more of a slowdown as of now. But clearly, if things get worse, like what happened in India earlier in the quarter, that will impact the numbers. So that is why we're still confident in saying that the guidance range even if Delta continues, we feel very confident. We're still going to end up in a really good spot. But if Delta is contained in particularly in the U.S., that's where we think we could actually exceed our numbers.

[Quinn McComas Pierson, Co]

Helpful. And just lastly for me, a bit of housekeeping. Just on the data revenue, that was a decent kind of sequential headwind in the March quarter. It looks like it was flat quarter-on-quarter in June. Is the data revenue -- has that now stabilized and hit a base? Are we feeling pretty confident that's no longer a kind of quarter-on-quarter headwind?

[Chris Hulls, Co]

It certainly seems that way. We are very loath to make any predictions about Apple or such a charged industry, but as of now, we do feel like we've navigated successfully and have been able to work with our partners to continue the business in a way that meets all the various legislative and App Store requirements.

[Melissa Goodell, Executive Assistant]

Next, we have Craig. [Operator Instructions]

[Chris Hulls, Co]

Craig, we don't hear you quite yet if you're speaking.

[Melissa Goodell, Executive Assistant]

Reminder that you have to unmute yourself. There we go. Craig, are you there?

[Chris Hulls, Co]

No. Why don't we move to the next question if there is anyone else.

[Melissa Goodell, Executive Assistant]

So next up, we have Harry.

[Harry Dudley, Investment Analyst]

Chris, Harry Dudley from Watermark. Just to clarify taken from last point, are you seeing a taper off in downloads already? Or are you just saying, we've had a huge month several quarter, and we don't reckon we can top that, and therefore, the arithmetic tells you that there should be a decline given the churn? Or are you starting to see a taper off in downloads?

[Chris Hulls, Co]

Yes. So we already did see the taper from the peak. Because when we were at the peak, we were literally the #1 app in 11 countries. We were ahead of Facebook. We were ahead of WhatsApp. We were ahead of all the giants. So clearly, that was not sustainable because we had become the single biggest app in the world, maybe 1 day, but not quite yet. So that has already happened, and we have come down to what seems in the U.S. a new baseline where it steadied. So that does give us confidence in our forecasting that this wasn't just a surge that didn't help our new baseline is higher, but we will have natural churn from that overall peak. And then the second factor is, we just can't fully parse out is how much is the Delta variant impacting things even in the U.S.? Right now, the numbers are still quite strong here, but perhaps it would have been even higher if it weren't for this new surge. And then we have regions such as Australia, where we can, especially in recent weeks or days -- last week, in particular, we definitely do see some of those lockdown behaviors getting more stringent impacting our numbers.

[Harry Dudley, Investment Analyst]

Sure. And do you expect this to feed through to global Paying Circles and maybe a decline there next quarter? Or do you think just kind of a delay into Paying Circles you might sort of...

[Chris Hulls, Co]

No. I'm very confident in Paying Circles. So much of what we had on the road map this year were initiatives to bring the membership more front and center. And I think we're still early in our journey there. So I continue to feel very bullish on our ability to drive that forward.

[Russell Burke, Chief Financial Officer]

The other interesting thing, Harry, is as those numbers have varied, we've tended to retain much better in the more developed territories, which are more critical to our revenue internationally as well.

[Harry Dudley, Investment Analyst]

Sure. And then maybe just my last question. Is there a kind of a scheduled time line on dual listing? Or does it kind of depend on acquisition opportunities to play out?

[Chris Hulls, Co]

There's no explicit time line. I'd say the bigger point now is that we are feeling like we're getting more momentum in our stock that makes everyone more interested around the world. It also makes us of a scale that's more enticing for U.S. public market investors. The irony though is now that we have some momentum in Australia, the urgency for us to do something actually goes down because we feel like our value is being more recognized. We still think by almost any U.S. comp, if you compare us that there would be some benefits to being dual listed, but there is no explicit time line. And clearly, some of the options we're looking at could accelerate that, and we are continuing to decide what the right plan is. But as we've been clear about since the IPO, the long-term plan always has been to come back to the U.S. with a very long period of being dual listed first.

[Melissa Goodell, Executive Assistant]

Thanks, Harry. Up next, we have James. [Operator Instructions]

[James Bales, Equity Analyst]

Yes. This is James. This is James Bales from Morgan Stanley. Can you hear me okay?

[Chris Hulls, Co]

We can, James.

[Russell Burke, Chief Financial Officer]

We can, James.

[James Bales, Equity Analyst]

Very well. I've just got a couple of questions. Firstly, the expansion into Canada, can you maybe firstly talk to whether any of that is included in your outlook commentary and the targets for the year? And secondly, any progress on the timing there?

[Chris Hulls, Co]

So to the first part of your question, theoretically, yes, it's included, but we expect very modest impact on that launch. If you just look at the size of Canada and how the subscription builds over time, it's not going to be a hugely material part of 2021 numbers. It will be bigger in 2022, but the bigger theme of Canada is creating that playbook for how do we expand more broadly to other regions, what does it look like to increase spend in new territories as we open up membership to everybody, how quickly do we get results that are similar to the U.S. So while the numbers are baked in, again, it's very relatively de minimis numbers in terms of the bottom line. And timing still is definitely this year, but more towards the back half -- towards the end of the back half, I should say.

[James Bales, Equity Analyst]

Got it. And so the increase in EBITDA losses isn't specifically linked to Canada. That's more of a -- you're seeing the returns in domestic U.S. and they're spending harder there. Is that the right way to interpret it?

[Chris Hulls, Co]

Yes. And beyond just the returns, we're seeing this wave of growth, which we think we want to sustain and can maintain. So some of what we're looking at is more aggressive brand advertising, which is less directly measurable. But now that we have the celebrities involved, we're seeing that we're part of this conversation. We see the world's opening back up and we are front and center. We think it's a moment to capitalize on because we're seeing the strong growth. We feel very enabled and empowered to lean more into pushing harder.

[James Bales, Equity Analyst]

Great. And then secondly, you've sort of -- you're telling us not to extrapolate the incredible surge in the second quarter. But previously, you have spoken to the back-to-school and third quarter being seasonally strong this year. I'd just like to try to reconcile those two ideas and maybe have you explained how we should be thinking about these sort of peaks and troughs.

[Chris Hulls, Co]

Yes. So the TikTok wave was just so high that it invariably is going to have to come down to earth and already has. So if you just look at our App Store ranking, again, we were #1 in 11 countries. The company, it would be worth tens or probably hundreds of billions if we were able to sustain that. So it is coming back down to a much more sustained baseline, but we had this 1 month, which was our, I think, our biggest month ever. We're going to naturally lose some of those users. So that is this natural trend that's going to happen. But with this new baseline coming, we still feel in a very good spot after we work through that first period of churn, in particular, in the U.S., assuming Delta doesn't continue to spread, we will have very strong continued growth overall. And when we have had a normal operating environment, back-to-school has always been a very strong period for us. And there's no reason for us to think that it won't be as strong or stronger this year assuming schools remain open, which as of now, they're all scheduled to.

[Russell Burke, Chief Financial Officer]

And I guess another part of that is the timing of the surges as well, James. The English-speaking surge, if you like, was the first part of this wave. And the most recent one is it's the Portuguese-speaking one. So we've had time for the English and Spanish territories to sort of work themselves through a little more. So that will play itself out as we move along.

[Melissa Goodell, Executive Assistant]

Thanks, James. Up next, we have [ Joey ]. [Operator Instructions]

[Unknown Analyst]

[ Joey Brookhart ] at Semper Capital. Just wanted to understand the works going on with Paying Circles funnel this quarter, was it something with the characteristics of these cohorts? Or it was something in-app change that really drove conversion? Maybe if you can extend that into Q3 to back-to-school season.

[Chris Hulls, Co]

Sure. So when we launched membership last year, we were very clear that this was very much a minimum viable product state, where we built all the features, but they're sitting very orthogonal to the main user experience. And for many of the features you would have to really dig to try to even see them. So that was part of what underpinned our strong confidence that this year would be a great year for continued increases in conversion. So in our minds, it was very much low-hanging fruit just to bring those features more front and center and make them more discoverable in the in-app experience which we've done. We think there are a number of things we can continue to do just purely by doing better product marketing and continuing to let people know about what you get for membership, what it means. So yes, I'm very confident to say that, that was not a transitory surge. That's going to continue. And as COVID truly goes away, I don't know if it's going to be now with the COVID surges, but once we get back to normal life, that's another tailwind. So that is going to continue. Beyond that, we have probably our biggest launch of the year coming up within a month where we're launching the next version of our Identity Theft Protection product, which makes it actually a freemium experience. So free users are going to get the benefit of our data breach alert service. That's very -- it's very much a brand-new user-facing product. I'm very bullish on how it's going to do. I can't predict exactly how well it's going to perform, but we are, again, very confident that this is the beginning of the March not the end. And the rest of the year, well, it's very hard for me to comment on what happens with registrations due to COVID, especially internationally on a per user basis. I'm definitely willing to put my name on the line and say that the subscription business is going to continue to do very well.

[Unknown Analyst]

Awesome. And then two on the direct-to-consumer general. So I guess you started that during the quarter. I know that you needed similar or top advertising as well and started some Facebook marketing earlier this year. Have you seen anything there? Is it just too early?

[Chris Hulls, Co]

It's definitely picking back up. So a higher portion of our users -- well, we'll have a little more deal at the full year results, but we are seeing the ability to now deploy more marketing spend and get a good ROI on it, although the vast, vast, vast majority of our users remain organic in word of mouth, which we obviously think is a very powerful and good thing.

[Unknown Analyst]

Awesome. And then, two, are you having any success or maybe this is still something you're testing? And have there been any success sending users to your website to sign up for Paying Circles rather than an app? Or is that still early?

[Chris Hulls, Co]

Yes. That's still early, but it is one of the channels where we've made progress and it's definitely moving along. It's still not a major driver, but we think over time, that's going to continue to grow, and there will be a slow build.

[Melissa Goodell, Executive Assistant]

Next up, we have Julian. [Operator Instructions]

[Julian Mulcahy, Executive Director of Small Caps]

Julian Mulcahy from E&P. Chris, I just want to just ask about lead generation revenue. It's been steady for the last 2 quarters. Do you think that's going to blip up? Or is it -- will acquisitions be key to sort of get that really moving?

[Chris Hulls, Co]

Yes. So we have really been looking at an acquisition to jump that to the next phase. Given how well premium has been doing, we have put most of our focus on that because it's been doing so well and we can just see the immediate ROI. I don't want to overly sugarcoat it. If there is one area where it's fair to say it's been a bit of a miss or something that hasn't been as big of a contributor as we hope, by now, it would be that. But there is the element where when we see things working, we know we can deploy capital to the initiatives that are really paying off big time. We're doing that. So there has been somewhat of a conscious prioritization of the premium business. And as we have discussed, a lot of the strategic review did kick off with looking at how do we bring agency on the insurance side in-house. And well, that's still ongoing. That has been something we're thinking, okay, if we really want to bring the user experience to where we want, that's a great way of going about it. So hopefully, more to come there. But for now, that will be relatively steady.

[Julian Mulcahy, Executive Director of Small Caps]

And with the celebrities, what's the sort of marketing plan? Is it television? Is it then just posting on social media? What are you going to do with that?

[Chris Hulls, Co]

So it's still very early. A lot of what we are trying to do though is more genuinely build a conversation with them and have them as more organic advocates versus paid sponsors. From what we have seen, especially on things like TikTok, where as a company, we've done extremely well is that the new wave of social media, just doing paid sponsorships really doesn't work. And that having authentic conversations is what really drives actual behavioral change. So the celebrities we're working with are all Life360 users. They're genuine fans of the product. Chip and Joanna Gaines as an example, we found them because they were talking about Life360 on Oprah, completely free, organic, mentions of the product, and it was a very easy conversation to bring them into the fold. And we also want to bring their kids into the fold and work with them to figure out how can we give value to the whole family. So the hope is that more organically, they talk about us versus just being paid spokespeople, which is something that's much less effective. So the first step is more to engage them, help them feel like contributors to the product. They are now real investors in the company so they have skin in the game, so to speak. And even though, some of these are the wealthiest people out there and the relative investment is small, there is something different when you feel like an owner. And so that is what we're doing next. How do we make them feel like owners, how do we get them to contribute to the apps that they use and love and bring their kids into it and talk about it that way. And will that then result in some sort of paid sponsorships or deals on top of what we hope is the more organic conversation? Absolutely, a possibility, but that's the second phase and a little less specific as of now how that will play out.

[Julian Mulcahy, Executive Director of Small Caps]

Okay. Cool. And just finally, on Jiobit. So initially, the plan was to do a kind of a light integration and then do a more intensive 1 layer down the track. Is that now being brought forward because of your increased confidence in it?

[Chris Hulls, Co]

That timing is still relatively the same. A lot of it is because we just physically don't have the capacity to massively ramp up their units until next year. And we have so much that we're focused on now specifically on our premium product. So the first phase is just doing the more lighter weight stuff, letting people know that we're -- that they're part of our family now, figuring out how we use them as a way to get people to upgrade to Platinum. And then the second phase, still on the time line we plan is that integration where you can buy the Jiobit in the app and link it in the app. So while you still have the Jiobit app, if you want, you can stay completely within the Life360 app experience.

[Melissa Goodell, Executive Assistant]

As there are no more questions, I will hand it over back over to Chris for some closing remarks.

[Chris Hulls, Co]

Thanks again, everyone, for joining. Have a great day. Those are all my closing remarks.