Annual
Report
2021
Calm
enough to
be cool
We’re on a mission to simplify safety so
families can live fully. Because when
loved ones are OK, the best parts of
life can begin. Life360 is the only family
safety membership designed for modern
life, trusted by more than 35 million users
worldwide — and counting.
Contents
Chairman’s Report
CEO’s Report
ESG report
Directors’ Report
Consolidated Financial Statements
Independent Auditor’s Report
Consolidated Balance Sheets
Consolidated Statements of Operations
and Comprehensive Loss
Consolidated Statements
of Stockholders’ Equity
Consolidated Statements
of Cash Flows
Notes to Consolidated
Financial Statements
Shareholder Information
1
3
7
11
30
31
33
34
35
36-37
38-65
67
Life360 is listed on the Australian Securities Exchange (ASX:360) and is a
constituent of the S&P/ASX 200 index. All references to $ are to US$.
Letter from the Chairman
John Philip Coghlan
2021 was a landmark
year for Life360, with the
delivery of accelerating
operational metrics, and two
transformational transactions
with the acquisitions of Tile
and Jiobit. Life360 has
taken a fundamental step
forward in our vision of being
the dominant platform for
a much broader suite of
family safety services. We are
strongly positioned to deliver
on our vision of bringing
people, pets and things
together in one unified app.
1
2021 Performance
Life360 achieved 2021 revenue
growth of 40% to $112.6 million,
finishing the year with Annualised
Monthly Revenue up 51%, a
strong leading indicator of the
growth opportunity ahead. The
underlying EBITDA loss (excluding
Stock Based Compensation and
non-recurring items of $(13.1)
million reflected investment to
grow the business. The Statutory
EBITDA loss was $(31.4) million
and Statutory Net loss was
$(33.6) million.
Life360 finished 2021 with a cash
balance of $231.3 million. Following
the close of the Tile acquisition in
the close of the Tile acquis
January 2022, the cash balance
January 2022, the cash ba
was approximately $94.0 million, a
was approximately $94.0
strong capital position sufficient to
strong capital position suf
fund future growth.
fund future growth.
This financial performance
This financial performanc
benefited from the delivery of
benefited from the deliver
very strong operational metrics.
very strong operational m
Monthly Active Users (MAU)
Monthly Active Users (MA
increased 34% year-on-year,
increased 34% year-on-ye
with a particularly impressive
with a particularly impres
performance in the US which
performance in the US wh
delivered a 39% uplift. Australia
delivered a 39% uplift. Au
continued to be a stand-out
continued to be a stand-o
performer for the year despite
performer for the year des
the impact of extended COVID-
the impact of extended CO
related lockdowns, with MAU of
related lockdowns, with M
969,000 up 47% year-on-year.
969,000 up 47% year-
Worldwide Paying Circles
Worldwide Payin
increased 39%, with
increased 3
the US up 41%,
the US up
benefiting from
benefiti
the increasing
the inc
value of our
value
Membership
Mem
offering.
offe
Strategy
2021 was a tremendous year of
progress against Life360’s strategic
objectives.
Our goal to build a large user
base delivered more than 35
million Monthly Active Users. This
achievement was supported by a
back-to-school brand campaign and
broader user acquisition channels,
in concert with a range of new
free user features including data
breach alerts and map updates.
Our goal to grow Membership
saw the achievement of more
than 1.2 million Paying Circles,
with three consecutive quarters of
record Paying Circle additions.
And we began the first stage of
the international expansion
of Membership with the
Canada launch.
And finally our goal to expand
reach and revenue saw the
acquisition of Jiobit and Tile,
marking a fundamental step
forward in our vision of being the
dominant platform for a much
broader suite of family safety
services. The acquisition of Tile
concluded the Board’s formal
strategic review which I outlined in
my 2020 report to shareholders.
Your Company
During the year Life360 progressed
our Environmental, Social and
Governance (ESG) initiatives,
including the development of
an ESG policy to reflect our
commitments to the communities
we serve. We advanced our
Life360 finished 2021 with a
cash balance of $231.3 million.
Following the close of the
Tile acquisition in January
2022, the cash balance was
approximately $94.0 million,
a strong capital position
sufficient to fund future growth.
Environmental commitments
with the achievement of carbon
neutrality across Scope 1, 2 and
3 emissions for 2020 and are
working to achieve this for 2021.
The ongoing development of our
Membership features makes a
significant contribution to the
community by simplifying family
safety, both physical and online.
Life360 quite literally saves lives,
dispatching almost 20,000
ambulances during the year.
I would like to thank my fellow
Board members for all they
contribute to Life360. Their
guidance, experience and
expertise benefit the Company
and shareholders. I would like to
welcome our newest Director,
CJ Prober, CEO of Tile, who joined
the Board in January 2022.
On behalf of the Board I would like
to thank our talented colleagues
for their commitment and hard
work. I acknowledge Chris Hulls
and his leadership team for their
exceptional efforts, and the
transformational progress they
delivered in 2021.
Finally I would like to thank you,
our shareholders, for your ongoing
support. Life360 is strongly
positioned to deliver on our mission
to simplify safety so families can
live fully.
John Philip Coghlan
Chairman
*Following close of Tile transaction in January 2022.
$112.6
million
+40% YoY
revenue
increase
35.5
million
+34% Monthly
Active Users
1.2
million
+39% Paying
Circles
~$94
million
Cash balance*
Annual Report 2021 2
Letter from the
CEO
Chris Hulls
Despite the continued
disruption from COVID-19 in
the US and other countries,
Life360 delivered accelerating
operational metrics across
the business in 2021, with
a particularly impressive
performance from our core
US Membership offering.
At the same time, we made
significant progress on our
strategic roadmap with
the acquisitions of Tile and
Jiobit. Tile brings with it the
opportunity to hypercharge
Membership growth by
dramatically expanding
our use case and our Total
Addressable Market.
Key Achievements
Life360’s core focus on family
safety and security is having a
major impact in the real world
as we connect families and save
lives. Our Membership model
is increasingly resonating with
consumers as we have expanded
beyond location and driving.
Our broader range of online
and physical safety features are
delivered at a substantially lower
cost than purchasing individual
subscriptions, a key benefit of our
mobile business economics.
Despite the continued disruption
from COVID-19, new global
registrations recovered, with a
particularly strong performance
in the key ‘back-to-school’ third
quarter. During the year we
experienced a viral surge in
registrations primarily driven by
memes on social media platform
TikTok. This supported a Number
1 position in app store charts in
more than eleven countries in
May. This surge was particularly
pronounced in Spanish, Portuguese
and Italian territories, and while
these subsequently reverted
to more normalised rates of
growth, MAU trends in high value
Anglosphere markets remained
consistently strong.
Global Monthly Active Users
increased 34% year-on-year, with
39% growth in the US and 24% in
international markets. Ongoing
investment to enhance the user
experience underpinned continued
improvement in retention and
engagement from our users,
with the proportion of Returning
Monthly Active Users reaching a
new record.
2021 Performance
Direct revenue increased 48%
year-on-year to $86.5 million,
a significant acceleration from
the previous year’s growth
rate. Life360 delivered three
consecutive quarters of record
subscriber additions, ending the
year with 1.2 million Paying Circles,
a year-on-year increase of 39%.
Subscriber growth benefited from
a recovery in US registrations to
pre-COVID levels, combined with
a significant uplift in conversion
metrics which doubled year on
year. It’s exciting to see the impact
of the work of our product teams
in driving the acceleration in
3
Life360 delivered three consecutive quarters of record subscriber
additions, ending the year with 1.2 million Paying Circles, a year-on-
year increase of 39%. Subscriber growth benefited from a recovery
in US registrations to pre-COVID levels, combined with a significant
uplift in conversion metrics which doubled year on year.
the year we scaled our spend in
performance marketing and into a
broader array of channels.
This investment was supported
by the improved unit economics
flowing from strong conversion
and improved subscription
retention. As we see the benefits
flow through from product
improvements, we can scale spend
profitably to accelerate growth.
The CY21 underlying EBITDA
loss of $13.1 million was better
than guidance of $14–18 million
reflecting the strong year-end
revenue performance.
net additions achieved in each
quarter of 2021. US Paying Circle
growth was particularly strong,
with new Membership subscribers
more than tripling year-on-year
to 564,000. Retention of our
grandfathered pre-Membership
subscribers improved, reflecting
the additional features of the
offering. Membership now makes
up 56% of US Paying Circles,
and is the key driver of the
continued uplift in our US
Average Revenue Per Paying
Circle (ARPPC). Overall US ARPPC
increased 20% in the second
half, while ARPPC for new cohort
subscribers was 38% ahead of
the first half of 2020, prior to the
Membership launch.
Indirect revenue increased 13%
year-on-year to $25.1 million.
Indirect includes Data revenue
and our Allstate lead generation
partnership. Data revenue
increased year-on-year, ahead
of expectations that had been
moderated in anticipation
of changes to iOS Identifier
for Advertisers (IDFA) usage
guidelines. The contribution from
lead gen was consistent with the
prior year. We recently announced
a new partnership with Placer.ai to
transition Life360 to sales of solely
aggregated data. We believe this
partnership will enable us to spend
less time navigating the rapidly
evolving regulatory and platform
environment, while preserving
revenue in line with CY21 results
for the duration of the three-year
agreement.
We completed the acquisition
of Jiobit in September, and we
see an exciting opportunity to
extend the market for our safety
services to young children, pets
and seniors. Jiobit’s performance
continued to bounce back strongly
after the COVID impact in the
first half of 2020. On a proforma
basis, year end subscriptions
increased 43%, and second half
subscription revenue lifted 62%,
with the benefit of higher price
plans. While the hardware business
still faces significant supply
constraints, our strategic goal of
adding low churn subscription is
already being achieved and will be
further enhanced as we integrate
cross-marketing for Life360
subscriptions.
CY21 consolidated revenue of
$112.6 million increased 40% and
was at the top end of guidance of
$109–113 million. For the month of
December, Annualised Monthly
Revenue (excluding Jiobit) was
$135.7 million, a year-on-year
increase of 51%, and above
guidance of $125-130 million.
Total expenses excluding
Stock Based Compensation
increased 49%, with our
ratio of expenses to
revenue remaining
broadly stable. This
reflected growth
investment, and
increased variable
costs resulting
from higher
revenue. Over
the course of
Annual Report 2021 4
By integrating Tile and Jiobit, our members will be able to find,
connect and protect everything that matters to them most including
people, pets and things. We expect the integration work to take
place in the first half of 2022, ready to take advantage of the
back-to-school peak seasonality launch.
Our strategy roadmap
The acquisitions of Tile and Jiobit
dramatically expand the Total
Addressable Market for Life360,
and bring with them the potential
to hypercharge our Membership
model. While both businesses
bring meaningful hardware
revenue, what really excites us
is our strengthened position in
the ecosystem, and the ability to
bundle something that people
can touch and feel as part of what
was previously a solely digital
experience. By integrating Tile
and Jiobit, our members will be
able to find, connect and protect
everything that matters to them
most including people, pets and
things. We expect the integration
work to take place in the first half
of 2022, ready to take advantage
of the back-to-school peak
seasonality launch.
We believe this integration will
drive an uplift in key Membership
metrics. We see the opportunity
for higher conversion to paid, and
increased ARPPC as customers are
more willing to pay for something
they can physically touch. Our new
bundled offering should enable
increased pricing as well as a
shift to higher Membership tiers.
In addition we expect reduced
churn and improved overall Long
Term Value as subscriptions tied
to physical devices have high
retention rates. Finally we see
the opportunity for broader
brand reach and expansion in
our markets as the joint offering
appeals to new demographics,
with long-term opportunities in
markets such as elder care.
Along with the integration of Tile
and Jiobit, we plan to continue
with our Membership 2.0 initiatives
including bringing the broader
Life360 feature set front and
centre and providing a physical
welcome kit with in-app branding
to reinforce value.
Given the success of our US
Membership model, our priority
for 2022 is to expand into new
geographies. We have established
a dedicated international team
which will focus on enhancing
the free user experience, and
accelerate the roll-out of
Membership internationally.
We plan to deliver feature parity
in key markets with free crash
detection, SOS and data breach
alerts. Our Canada launch in late
2021 has achieved strong metrics
with a greater than 100% ARPPC
uplift for new Membership signups.
Our plans for a UK launch build on
the strong MAU performance in
that market.
In my 2020 report I wrote about
our investment in the free user
experience and evolution from
a “where are you” to a “how are
you” approach to deliver a more
emotional connection. We added
some new features in 2021 and
will significantly increase our focus
on this initiative in 2022. We want
to make the app more fun and
engaging, and provide ways to
use Life360 that are less utilitarian,
and more about fostering a sense
of togetherness. We like to say
less “where are you” and more
“I love you”. We believe that
features such as these will grow
the size and engagement of our
user base and translate into more
paying customers.
5
+39%
Paying Circles
564,000
Subscribers on the
Membership tier
+20%
Increase in
ARPPC*
+38%
ARPPC**uplift
for new cohort
Membership
subscribers
Delivering our values
In the continued challenging
circumstances of 2021, Life360
has delivered impressive
operating and growth
metrics. The Life360 team
has embraced our core value
that “users come first”, and
I thank them for their hard
work and commitment to
deliver the competitive
differentiation that will drive
our long term success.
My thanks also to the Life360
Board, led by John Coghlan,
for its expertise and wise
counsel as we position the
Company for its exciting next
stage. Finally I would like to
express my appreciation to
our shareholders for their
ongoing support.
Life360 begins 2022 even
more strongly positioned to
be the platform of choice for
an ever-broadening suite
of family safety solutions,
delivering value at every
family life-stage. After a
strong CY21 performance,
we are confident in our ability
to drive continued growth, in
particular in our core Life360
subscription business.
Chris Hulls
Co-Founder and CEO
*Average Revenue Per Paying Circle for 2H CY21 YoY.
**Average Revenue Per Paying Circle versus 1H CY20,
prior to the Membership launch.
Annual Report 2021 6
Environmental Social & Governance
ESG Report
At Life360 we recognise investor,
customer and community
expectations that partners
deliver responsible business
practices, both financial and non-
financial, and that ESG issues and
opportunities impact the success
of organisations. Our core mission
is the social good of simplifying
safety for families, and pursuing
ESG responsibility is the natural
next step of our journey.
During 2021 Life360 developed a
formal ESG policy, and identified
four key areas of focus for our ESG
program: Our People, Environment,
Our Community and Governance.
Our People
Policies
At Life360 we believe that
different ideas, perspectives and
backgrounds create a stronger and
more creative work environment
that delivers better results.
Together, we continue to build an
inclusive culture that encourages,
supports, and celebrates the
diverse voices of our employees.
This fuels our innovation, and
connects us closer to our customers
and the communities we serve.
We strive to create a workplace
that reflects the community, and
where everyone feels empowered
to bring their authentic best selves
to work.
Our workplace culture is
supported by a range of policies.
Our Diversity and Inclusion
Policy reflects our commitment
to diversity, and providing a
workplace in which people can
excel regardless of race, religion,
age, disability, gender, sexual
preference or marital status. As
of 31st December 2021, 32% of
Life360 employees were female,
41% were people of colour and
13% were an underrepresentated
minority. Other policies adopted
to support our workplace culture
are Anti-Bribery and Corruption,
Whistleblowing and our Modern
Slavery Report.
Our Values
Life360’s Core values are designed
to create a culture that supports
our vision of an ambitious,
professionally driven organisation
that can deliver our mission of
simplifying safety so families can
live more fully.
Make Things
Happen
Think Long-term
We make strategic decisions
that pay off in the long run.
Take Ownership
We focus on outcomes over
output and look for high
agency people that make
things happen.
Deliver an
Exceptional
Experience
Users Come First
An amazing end-to-end
customer experience is the key
competitive differentiator that
will make us win over time.
Quality & Craftsmanship
We do things the right way
and with an extreme focus on
quality. Lives depend on it.
Be a High
Performing
Team
Communicate Directly
We resist the urge to avoid
discomfort and intentionally
lean into tough conversations.
Be a Good Person
Everyone at Life360 respects
each other and maintains a
high sense of integrity.
7
7
Environmental
Understanding and managing how
our organisation’s operations
impact, and are impacted by,
the environment in which we
operate.
Social
Identifying how our organisation
affects and is impacted by our
people, the community and
other stakeholder groups.
Governance
Managing responsible decision-
making, policymaking and the
rights and responsibilities of
different stakeholders including
the board of directors,
managers, shareholders,
and others.
Our People
• Safety and wellbeing
• Development & Training
• Grievances and impact
• Diversity
Governance
• Business ethics
• Anti-corruption
• IP protection
• ESG performance disclosure
Environment
• Product Sustainability
• Emissions (carbon neutral in 2020)
• Climate resilience
Our Community
• User safety and wellbeing
• Privacy and data security
• Protection and rights of minors
• Community participation
Learning and Development
• Competitive pay and benefits
We view the quality of our products
and services as our key long-term
strategic differentiator, and as such
we are committed to providing
ongoing learning and development
opportunities for our people.
• Peer training: our long-standing
Thursday “deep-dives” provide
training opportunities for our
employees to benefit from
the internal expertise of their
colleagues. In addition, full day
and full week courses in “best
practice” have been provided.
• LinkedIn Learning: provides access
to an extensive array of broad and
specialist business training
• Leadership Development Training:
provides leaders development on
topics such as coaching, providing
feedback and helping their team
with career development.
• Unconscious Bias Training: provides
managers with tools to help
combat bias in the interview and
performance review processes.
Employee benefits
As our employees are core to our
success, we put them first. We strive
to provide work-life balance, and so
all our team members have access to
the following perks and benefits:
• No-meetings on Wednesday
afternoons
• Home office stipend
• Remote-first work environment
• In-person collaboration
opportunities
• Health, dental and vision insurance
• 401(k) program with company
match
Our Environment
Life360 recognises that climate
change will have an increasingly
significant impact on all aspects
of society.
In 2021 we committed to quantifying
the environmental footprint of our
business operations by measuring
our Scope 1,2 & 3 emissions. By
quantifying our impact, we will
be able to implement an emission
reduction plan that targets the
greatest contributors to our
carbon footprint.
We achieved a carbon neutral
status for the 2020 calendar year
by purchasing EcoAustralia credits
that blend InfraVest Guanyin Wind
carbon credits with Mount Sandy
Conservation biodiversity protection
units. By purchasing EcoAustralia
credits, we neutralise our emissions
and promote conservation
partnerships between Traditional
landowners and non-indigenous
Australians.
During 2021, Life360’s Scope 1 and 2
emissions increased due to growth
in headcount. Scope 3 emissions
increased as a result of the increased
costs of professional services
associated with the acquisitions.
In 2021, the emissions per FTE
have decreased from 25.60 in
2020 to 21.61.
Annual Report 2021 8
Annual Report 2021 8
Photo by JACK REDGATE from Pexels
Greenhouse Gas Emissions (t CO2e)
YE December
Scope 1
Scope 2
Scope 3
Total Emissions
Top 3 emission
sources
2020
0.02
32.48
2,418.64
2,451.13
2021*
0.34
60.71
3,915.77
3,976.82
Professional Services,
Cloud Computing Services
and Working from Home
Professional Services, ICT
Services and Equipment and
Cloud Computing Services
*Note: 2021 does not include the acquisition of Jiobit. Reporting including Jiobit will be available on our
Sustainability website later in CY2022.
Our Community
Wine to Water
Wine to Water
Our products and services
Life360’s mission is to simplify
safety so families can live
fully. Our products and services
deliver peace of mind and
safety in the online and physical
worlds where we quite literally
save lives.
Community outreach
Wine to Water implements clean
water projects around the world
with the goal of helping the nearly
one billion people worldwide who
lack access to clean water. The
projects financed include digging
and repairing wells, supplying
areas with filtration systems and
storage systems, and educating
local communities on how to
maintain fresh water supplies.
Life360 Season of Giving
Life360 Season of Giving
ASPCA
ASPCA
In recognition of the negative
impact of COVID-19 on many
communities, Life360 provided
support, and matched employee
contributions for a total of more
than $27,000 to three non-profit
organisations committed to
supporting families.
The American Society for the
Prevention of Cruelty to Animals®
(ASPCA®) was the first humane
society to be established in North
America and is, today, one of
the largest in the world. The
organisation was founded on the
belief that animals are entitled to
kind and respectful treatment at
the hands of humans and must be
protected under the law.
Ronald McDonald House
Ronald McDonald House
There are 368 Ronald McDonald
Houses in 64 countries
accommodating families with
children who are being treated
at nearby hospitals and medical
facilities. Ronald McDonald’s
Houses provide over 7,200 bedrooms
to families around the world each
night, with an estimated value of
$700 million in lieu of hotel costs.
Volunteering
Volunteering
During the year Life360 worked in
partnership with WeHero to hold
events for our employees working
together to create care packages
for Wine to Water and Educational
Access for the Kids in Need
Foundation. During the Educational
Access event, Life360 gave an
estimated 49.5 volunteer hours and
was able to support 99 students,
supplying them with school supplies
and notes of inspiration to the Kids
in Need Foundation. During the
Wine to Water event, Life360 gave
an estimated 46.5 volunteer hours
and was able to build 31 water
filters providing clean water to
families for 10 years.
9
I just want to let someone at Life
360 know how grateful my family
is to have access to this app. Today,
my 69 year old mother-in-law was
involved in a pretty serious single car
accident. Life 360 alerted her family
circle and they were able to get to
her at the same time the paramedics
got there. This app is so amazing!! I
have a new teen driver in my house
and I am so thankful for this app.
It really is an amazing resource to
have and all families shouldn’t think
twice about buying it. It gives me
such peace of mind. Especially after
today knowing that the family circle
today knowing that the family circle
and emergency contacts are alerted
and emergency contacts are alerted
in real time... Highly recommend this
in real time... Highly recommend this
app to anyone. It saved
app to anyone. It saved
my mother-in-
my mother-in-
law’s life today!!
law’s life today!!
– Thank you!
– Thank you!
2,577,143
Help alerts sent
151,647,395,851
Miles driven with
Life360 Crash Detection
19,953
Ambulances
dispatched
17,558,144,800
Safe arrival
notifications
17,969,328
Jiobit safe arrival
notifications
Life360 Key Features:
• Real-time location sharing
• Smart notifications
• Roadside assistance
• Crash detection
• Ambulance dispatch
• SOS alerts
• ID theft protection
• Family safety assist
Annual Report 2021 10
Governance
Financial sustainability
Life360 is committed to robust
governance frameworks and
responsible business practices
to ensure the financial
sustainability of the company
for all stakeholders -
shareholders, employees,
customers and suppliers.
The company has established
a disciplined process to identify,
assess and analyse risk,
and ensure appropriate risk
monitoring and reporting. The
Company does not consider that
it has any material exposure to
economic, environmental and
social sustainability risks.
Data and Privacy
Life360’s user centric approach
underpins our focus on security,
privacy, quality, reliability and
usability in our products and
services. We are committed
to achieving a high level of
digital trust with our users,
and consistent with our
long-standing principles of
transparency and choice,
our Privacy Centre provides
users control over how their
data is used. We have internal
and external expertise
vacy
continually evaluating privacy
and security practices,
opment
supporting product development
actices
and aligning company practices
ection
with applicable data protection
legislation, including the
General Data Protection
Regulation (GDPR) and
cy
California Consumer Privacy
cy
Act (CCPA). Life360’s Privacy
Policy can be found at
https://www.life360.com/
privacy_policy/
As Life360’s business is
subject to various laws,
regulations and industry
compliance requirements,
including in relation to the
privacy, data protection,
marketing and servicing of
consumer products and
services, Life360 receives
queries from regulators about
its practices from time to time.
Life360 has received requests
for information about its
data protection practices
from US regulators, including
following the publication of
an article by a media outlet
called The Markup in relation
to Life360’s data business
in 4Q21, which Life360 is
responding to in due course.
Life360’s Sustainability website: https://investors.life360.com/Sustainability/
Directors’
Report
11
Directors’ Report
The directors present their report, together with the audited consolidated financial statements, on Life360, Inc
(referred to hereafter as “the Company” or “Life360”) for the financial year ended December 31, 2021.
All amounts are stated in United States Dollars, unless otherwise stated.
Directors
The following persons were directors of Life360 during the whole of the financial year and up to the date of this
report, unless otherwise stated:
John Philip Coghlan – Chairman
Chris Hulls
Alex Haro
Brit Morin
Mark Goines
James Synge
David Wiadrowski
Randi Zuckerberg (appointed on January 19, 2021)
Charles (“CJ”) Prober (appointed on January 18, 2022)
Principal activities
During the year, the principal continuing activities of Life360 consisted of operating a platform for today’s busy
families bringing them closer together by helping them better know, communicate with and protect the people they
care about most. In September 2021, the Company acquired all of Jio, Inc (“Jiobit”) provider of wearable location
devices for young children, pets and seniors.
Otherwise, no significant changes in the nature of these activities occurred during the financial year.
Review of operations and financial results
Revenue for the financial year ended December 31, 2021 increased 40% to $112.6 million as a result of growth in
paying accounts, referred to as Paying Circles and growth in Data Revenue that had a lower than initially expected
impact from the iOS Identifier for Advertisers (IDFA) changes. The Company’s net loss for the year ended December
31, 2021 increased 105% to $33.6 million.
Total operating expenses for the year increased by 49% to $122.1 million. The increase is due to higher commissions
to channel partners, brand and TV spend, legal spend, and headcount and COGS/R&D expenses as the Company
scales.
Year ended
December 31, 2021
December 31, 2020
$
(33,557) $
(16,334)
Net loss
Convertible notes fair value adjustment
Derivative liability fair value adjustment
Income taxes
Depreciation and amortization
Other (income)/expense
EBITDA
Stock based compensation
Non-recurring adjustment to reflect the deferral of a portion
of monthly subscription sales through a channel partner
Transaction costs incurred for acquisitions
Loss on revaluation of contingent consideration
Underlying EBITDA
511
733
(127)
876
178
(31,386)
11,938
-
2,744
3,600
(13,104)
-
-
-
657
(317)
(15,994)
8,091
862
-
-
(7,041)
(7,381)
Underlying Loss from ordinary activities after tax
$
(15,275) $
A review of operations of Life360 is set out in a market release lodged with the Australian Securities Exchange (ASX)
on February 24, 2022.
Annual Report 2021 12
Directors’ Report
Significant changes in the state of affairs
On January 30, 2020, the World Health Organization (WHO) announced a global health emergency because of a
new strain of coronavirus originating in Wuhan, China (the COVID-19 outbreak) and the risks to the international
community as the virus spread globally beyond its point of origin. In 2021, as the administration of the vaccine
program increased and cases declined, the Company continued to evaluate and refine our strategy. Despite the
uncertainty of the impact of the COVID-19 pandemic on our operational and financial performance, the Company
has experienced positive performance as conditions improved.
The Company resumed paid user acquisition spend which was deliberately scaled back in response to COVID-19
in prior period and expanded into new channels such as streaming TV. The Company considered the impact of
COVID-19 on the assumptions and estimates used and determined there were no material adverse impacts on
the consolidated financial statements for the year ended December 31, 2021. As events continue to evolve and
additional information becomes available, the Company’s assumptions and estimates may change materially in
future periods.
In September 2021, the Company acquired Jiobit, provider of wearable location devices for young children, pets and
seniors. Refer to Note 8, “Business Combinations” for further details.
In November 2021, the Company entered into a term sheet to acquire Tile, Inc (“Tile”), provider of Bluetooth enabled
devices that allow its customers to locate Tiled objects. For further information, see Note 21, “Subsequent Events”.
In December 2021, the Company undertook a fully underwritten capital raising of 7,779,014 shares which is
equivalent to $198.7 million.
Other than the above matters, there were no significant changes in the state of affairs during year ended December
31, 2021.
Dividends
No dividends were paid during the year ended December 31, 2021.
Presentation currency
The functional and presentation currency of Life360 is United States Dollar (US Dollars). The financial report is
presented in US Dollars with all references to dollars, cents or $ in these consolidated financial statements presented
in US currency, unless otherwise stated.
Rounding of amounts
Unless otherwise stated, amounts in this report have been rounded to the nearest thousand United States Dollars.
Jurisdiction of incorporation
The Company is incorporated in the State of Delaware, United States of America and is a registered foreign entity in
Australia. As a foreign Company registered in Australia, the Company is subject to different reporting and regulatory
regimes than Australian companies.
Delaware Law, Certificate of Incorporation and Bylaws
As a foreign Company registered in Australia, the Company is not subject to Chapters 6, 6A, 6B and 6C of the
Corporations Act dealing with the acquisition of shares (including substantial shareholdings and takeovers).
Under the provisions of Delaware General Corporation Law (“DGCL”), shares are freely transferable and subject to
restrictions imposed by US federal or state securities laws, by the Company’s certificate of incorporation or bylaws,
or by an agreement signed with the holders of the shares at issuance. The Company’s amended and restated
certificate of incorporation and bylaws do not impose any specific restrictions on transfer. However, provisions of the
DGCL, the Company’s Certificate of Incorporation and the Company’s Bylaws could make it more difficult to acquire
the Company by means of a tender offer (takeover), a proxy contest or otherwise, or to remove incumbent officers
and Directors of the Company. These provisions could discourage certain types of coercive takeover practices and
takeover bids that the Board may consider inadequate and encourage persons seeking to acquire control of the
Company to first negotiate with the Board.
13
The Company believes that the benefits of increased protection of its ability to negotiate with the proponent
of an unfriendly or unsolicited proposal to acquire or restructure the Company outweigh the disadvantages of
discouraging takeover or acquisition proposals because, among other things, negotiation of these proposals could
result in an improvement of their terms.
The Chess Depositary Interests (“CDIs”) are issued in reliance on the exemption from registration contained in
Regulation S of the U.S. Securities Act of 1933 (Securities Act) for offers of securities which are made outside the U.S.
Accordingly, the CDIs have not been, and will not be, registered under the Securities Act or the laws of any state or
other jurisdiction in the U.S. As a result of relying on the Regulation S exemption, the CDIs are ‘restricted securities’
under Rule 144 of the Securities Act. This means that the CDIs cannot be sold into the U.S. or to a U.S. person who is
not a Qualified Institutional Buyer (as defined under Rule 144A under the Securities Act, a ‘QIB’) for the foreseeable
future except in very limited circumstances until after the end of the restricted period, unless the re-sale of the CDIs
is registered under the Securities Act or an exemption is available. To enforce the transfer restrictions, all CDIs issued
bear a FOR Financial Product designation on the ASX. This designation restricts any CDIs from being sold on the ASX
to U.S persons excluding QIBs. CDIs may be transferred on ASX to any person other than a U.S. person who is not a
QIB. Hedging transactions with regard to the CDIs may only be conducted in accordance with the Securities Act.
Matters subsequent to the end of the financial year
In January 2022, the Company acquired Tile for a total consideration of up to $205 million. Refer to Note 21,
“Subsequent Events” for further details.
No other matter or circumstance has arisen since December 31, 2021 that has significantly affected, or may
significantly affect Life360 operations, the results of those operations, or Life360 state of affairs in future financial
years.
Likely developments and expected results of operations
Information on likely developments in the operations of the Company and the expected results of operations have
not been included in this report because the Directors believe it would be likely to result in unreasonable prejudice to
the Company.
Corporate governance
The Company, as a US incorporated corporation, seeks to achieve substantive compliance with the governance
recommendations set out in the ‘Corporate Governance Principles and Recommendations 4th Edition’, published
by the ASX Corporate Governance Council (the ASX Principles). The Company’s Corporate Governance Statement
can be viewed at https://investors.life360.com/investor-relations/?page=corporate-governance. The Corporate
Governance Statement sets out the extent to which Life360 has followed the ASX Corporate Governance Council’s
Recommendations during the year ended December 31, 2021.
Risk management
Risk management has always been critical to the Company’s ability to execute strategic and operational priorities.
For the year ended December 31, 2021, the Board and the Audit and Risk Management Committee has been closely
monitoring the Company’s risk management activities.
The Company has a risk management framework that is managed by the Chief Financial Officer and overseen
by the Audit and Risk Management Committee. During the year ended December 31, 2021, the Audit and Risk
Committee reviewed the Company’s overall risk management framework for the year ended December 31, 2021 and
considered that it is sound.
A key component of the Company’s risk management framework is the regular review of key risks and opportunities
by the Company’s leadership team. An assessment of areas of potential risks to the business, estimated likelihoods
and mitigation strategies are performed and the identified risks are included in a risk register according to the key
risk categories which include cyber security, brand, business continuity, talent and financial risks.
During the year ended December 31, 2021, the annual risk register was reviewed with each member of the
Company’s leadership team and the Audit and Risk Management Committee to ensure oversight of status and key
changes.
Annual Report 2021 14
Directors’ Report
Information on Directors
John Philip Coghlan
Independent
Non-executive Chair
John is the Independent
Non-executive Chair of Life360,
having joined the Board in 2009.
John is the Founder and a
board member at Rivet School
(a non-profit start-up focused
on providing debt-free college
degree attainment) and
previously, a board member at
GLIDE (a non-profit organisation
that aids the homeless).
John was previously the board
Chair at KIPP Bay Area Schools,
served as President and Chief
Executive Officer of Visa USA, and
as Vice Chairman of the Charles
Schwab Corporation.
John holds a Bachelor of Arts
in Psychology from Stanford,
a Master of Arts in Economics
and Public Policy from Princeton
University and a Master of
Business Administration from
Harvard Business School.
Special responsibilities:
Chairman of the Board,
Member of the Audit and Risk
Management Committee,
Member of the Remuneration and
Nomination Committee
Other public company
directorships:
None
15
Chris Hulls
Executive director, Co-founder
and Chief Executive Officer
Alex Haro
Non-executive director,
Co-founder and Ex-President1
Chris is a Co-founder and the
Chief Executive Officer of Life360.
Alex is a Co-founder and the
Ex-President of Life360.
Chris was previously an angel
investor in, or an advisor to, a
number of technology companies
including Tile, Credible, Ring,
Automatic, Honk and Zendrive.
He is also an Air Force veteran
and served in Afghanistan.
Chris holds a Bachelor of Science
in Business Administration
with Highest Honors from the
University of California, Berkeley.
Special responsibilities:
None
Other public company
directorships:
None
Alex previously worked on
Orbited, a popular open source
project that allows real-time
communication in the browser.
Alex studied Computer Science at
Pomona College/Harvey Mudd.
Alex was honored as one of the
2015 Forbes 30 Under 30 in the
Consumer Technology category.
Special responsibilities:
None
Other public company
directorships:
None
1 On January 1, 2021, Alex Haro transitioned from
his executive responsibilities as President of the
Company to a non-executive director.
Brit Morin
Independent
Non-executive director
James Synge
Independent
Non-executive director
Mark Goines
Independent
Non-executive director
Brit joined the Board in 2018.
James joined the Board in 2019.
Mark joined the Board in 2019.
Brit is the Founder and Chief
Executive Officer of Brit + Co,
a digital media and commerce
brand, and a board member to the
Girl Scouts. Brit has been awarded
various accolades including Ad
Age’s 40 under 40, Forbes 30
Under 30 and Fortune’s Most
Promising Entrepreneurs.
Brit previously worked in product
and marketing roles at Google
and Apple.
Brit holds a Bachelor of Science
from the University of Texas Austin.
Special responsibilities:
Member of the Remuneration
and Nomination Committee
Other public company
directorships:
None
James is a Partner at Carthona
Capital, a leading Australian
venture capital firm which
specialises in technology
companies.
James is a very early investor in
the Company having invested
more than 10 years ago and has
been instrumental in bringing the
Company to the Australian market
for capital raising.
Prior to the establishment of
Carthona Capital, James held
senior positions at Bankers
Trust Australia, Deutsche Bank
(Frankfurt) and UBS (Zurich).
James holds a Master of Tax
from the University of Sydney and
Bachelor of Business from the
University of Technology (Sydney).
Special responsibilities:
Member of the Audit and Risk
Management Committee
Other public company
directorships:
None
Mark is the Vice Chairman of
Personal Capital, an online
financial advisor and personal
wealth management Company.
Mark currently also sits on the
boards of BillFloat, Odeka and
Credit Interlink.
Mark holds a Bachelor of
Science and a Master of Business
Administration from University of
California, Berkeley.
Special responsibilities:
Chairman of the Remuneration and
Nomination Committee
Other public company
directorships:
None
Annual Report 2021 16
Directors’ Report
Information on Directors
David Wiadrowski
Independent
Non-executive Director
Randi Zuckerberg
Independent
Non-executive Director
David joined the Board in 2019.
Randi joined the Board in 2021.
David is an experienced Non-
executive director and currently
is on the board of three ASX
listed entities.
David was a senior
Assurance partner at
PricewaterhouseCoopers (PwC)
for more than 25 years.
David led the National
Technology, Media and Telco
practice at PwC for 8 years and
was also the Chief Operating
Officer of the PwC Assurance
business for 5 years.
David holds a Bachelor of
Commerce from the University of
NSW, is a Fellow of the Chartered
Accountants of Australia and New
Zealand and is a Graduate of the
Australian Institute of Company
Directors.
Special responsibilities:
Chairman of the Audit and Risk
Management Committee
Other public company
directorships:
carsales.com Limited and
oOh Media Limited
Randi currently works with more
than 20 early and mid-stage
companies as an investor and
advisor and is on the board of
The Motley Fool.
Randi is passionate about helping
families navigate our digital
world. Through her Company,
Zuckerberg Media, she has
created award-winning content
and experiences around digital
literacy and safety.
Randi has been recognized with
an Emmy nomination, two Tony
awards, a Drama Desk Award,
and a Kidscreen Award.
Prior to founding her own
Company, Randi was an early
employee at Facebook, where
she is best known for creating
Facebook Live, now used by more
than two billion people around
the globe.
Randi holds a Bachelor of Arts
in Psychology from Harvard
University.
Special responsibilities:
Member of the Audit and Risk
Management Committee
Other public company
directorships:
None
CJ Prober
Executive Director,
Chief Executive Officer of Tile
CJ joined the Board in 2022
through the acquisition of Tile
where he is CEO.
Prior to joining Tile, CJ held
executive leadership roles at
GoPro and Electronics Arts (where
he joined via the acquisition of
BioWare/Pandemic).
Prior to his executive leadership
roles, CJ was a consultant with
McKinsey & Company and a
corporate attorney with Wilson
Sonsini Goodrich & Rosati.
CJ also sits on the Board of
Alloy.AI.
CJ holds a Bachelor of Commerce
in Business Management at the
University of Manitoba and a Law
degree from McGill University.
Special responsibilities:
N/A
Other public company
directorships:
None
17
Life360 Board Skills Matrix
Experience
Number of Directors with the experience
Executive Management, Leadership & Strategy
Experience at a Board or executive level, with an ability to evaluate
the performance of the CEO and senior executive managers and oversee
strategic organisational and human resources initiatives.
Governance/Risk Management
Ability to identify, assess and monitor key risks in the
company in a wide range of areas.
ASX Experience
Experience on the Board or as a senior executive for an ASX Listed
company, resulting in familiarity with the ASX rules, including the
requirement for continuous disclosure.
Listed Company Experience
Experience on the Board or as a senior executive for a Listed company
other than on the ASX, resulting in familiarity with the Listing rules,
including the requirement for continuous disclosure.
Finance/Accounting
Qualification/experience in accounting and/or finance and the ability to analyse
and critically assess financial statements, viability and performance; contribute to
strategic financial planning and oversee budgets and funding arrangements.
Legal
Qualification/experience in law and the ability to contribute to the
assessment of the legal risk profile of the company.
Marketing
Knowledge and experience in the strategic use of marketing and its
inter-relationship with sales and product.
IT/Product
Knowledge and experience in the strategic use of information
technology and design of product, particularly in relation to
online businesses.
Business Development/M & A
Knowledge and experience in identifying and assessing business
development opportunities, in particular experience in negotiating,
assessing commercial terms and completing mergers/acquisitions.
Industry: Emerging Technology
Knowledge, experience and networks in the emerging technology industry,
either through direct involvement or through the provision of services to the
businesses in early stage development.
Industry: Online
Knowledge, experience and networks in the online industry, with a
keen understanding of current trends and the ability to think forward
to upcoming developments.
International Experience
Knowledge and experience in markets outside of the U.S., with a preference for
experience in the geographical areas in which the company has active users.
People & Culture
Experience in managing people, including the ability to evaluate the CEO
and senior executive performance, oversee strategic human resource
management, workplace culture and the promotion of diversity and inclusion.
Remuneration
Experience in developing, setting and assessing remuneration arrangements
for the CEO and senior executives resulting in a high performance culture.
Extensive Experience
Moderate Experience
No Experience
Annual Report 2021 18
Directors’ Report
Remuneration Report
The Directors of Life360 present the Remuneration Report (the Report) for the Company for the year ended
December 31, 2021. Life360 was listed on the Australian Securities Exchange (‘ASX’) on May 10, 2019. Life360 is a US
domiciled Company that is listed on the ASX and as such it is subject to remuneration disclosure requirements that
are suitable for reporting in both Australia and the United States.
This Report forms part of the Directors’ Report and has been prepared using the requirements of section 300A
of the Australian Corporations Act 2001 as a proxy to determine the contents that we have chosen to report. The
Report details the remuneration arrangements for Life360’s key management personnel (“KMP”). KMPs are those
persons who, directly or indirectly, have authority and responsibility for planning, directing and controlling the major
activities of the Company. KMP’s including the following:
• Non-executive directors (NEDs)
• Executive directors and certain senior executives (collectively “the Executives”).
Remuneration governance
This section describes the role of the Board and Remuneration and Nomination Committee when making
remuneration decisions and sets out an overview of the principles and policies that underpin the Company’s
remuneration framework.
Role of Board and Remuneration and Nomination Committee
The Board is responsible for ensuring that the Company’s remuneration structures are equitable, will attract
and retain skilled executives and are aligned with the long-term interests of the Company and its shareholders.
Consistent with this responsibility, the Board has established a Remuneration and Nomination Committee, whose
role is to:
• Establish, amend, review and approve the compensation and equity incentive plans with respect to senior
management and employees of the Company including determining individual elements of total compensation
of the Chief Executive Officer and other members of senior management.
• Review the performance of the Company’s executives with respect to these elements of compensation.
• Establish, amend, review and approve the compensation and equity incentive plans with respect to Non-
executive directors of the Company.
• Ensure that Non-executive directors and senior management remuneration are competitive within the
marketplace and appropriate to attract and retain talented and effective Non-executive directors, and senior
management so as to encourage enhanced performance of the Company and to create value for shareholders.
The Remuneration and Nomination Committee comprises three Non-executive directors:
• Mark Goines, Chair
•
John Philip Coghlan
• Brit Morin
The Remuneration and Nomination Committee has a formal charter, which sets out its roles and responsibilities,
composition structure and membership requirements. A copy of this charter can be viewed on Life360’s website
https://investors.life360.com/investor-relations/?page=corporate-governance. Further information regarding
the Remuneration and Nomination Committee’s role, responsibilities and membership is set out in the Company’s
Corporate Governance Statement.
19
tion
Key management personnel compensation
This section discusses the principles underlying our policies and decisions with respect to the compensation of our
KMPs, and all material factors relevant to an analysis of these policies and decisions. Our KMPs for the year ended
December 31, 2021 were all non-executive directors and the following executives:
Chris Hulls
Russell Burke
David Rice
Executive director, Co-founder and Chief Executive Officer
Chief Financial Officer
Chief Operating Officer
Components of executive compensation
The principal components of our executive compensation are base salary, cash bonuses and long-term incentives.
Our Remuneration and Nomination Committee considers that each component of executive compensation must be
evaluated and determined with reference to competitive market data, individual and corporate performance, our
recruiting and retention goals and other information we deem relevant.
The terms of each KMP’s compensation are derived from the employment agreements the Company has entered
into with them.
Annual Report 2021 20
Directors’ Report
The components of the executive compensation packages for our KMPs for the year ended December 31, 2021 are as
follows:
Chris Hulls
Executive director, Co-founder and Chief Executive Officer
Base Salary:
US$400,000 per annum
Benefits:
Certain other benefits are available and payable to Mr Hulls such as health insurance, business
travel expenses and other expenses consistent with the Company’s expense policy.
Termination:
Mr Hulls’ employment may be terminated (i) at any time upon mutual written agreement of the
parties; (ii) by the Company immediately and without prior notice, for cause; (iii) immediately
upon Mr Hulls’ death or disability; (iv) by the Company other than for cause with advance written
notice of at least six months; or (v) by Mr Hulls other than due to Mr Hulls’ death or disability with
advance written notice of at least six months.
Mr Hulls entered into a retention agreement with the Company in 2016 (Retention Agreement).
Under the Retention Agreement the Company will pay a cash bonus to Mr Hulls of US$304,000 if:
Incentives:
• Mr Hulls remains employed by the Company until December 31, 2022; or
• Mr Hulls’ employment is terminated without cause before December 31, 2022; or
• A change in control of the Company occurs before December 31, 2022.
Payment of the cash bonus upon termination is subject to satisfaction of certain conditions,
including Mr Hulls’ execution of a full and complete general release of all claims against the
Company and its affiliates.
Mr Hulls is eligible to participate in the Company’s 2011 Stock Incentive Plan and Stock Bonus
Program and has been granted 1,808,373 currently outstanding Options (Existing Options) as
of December 31, 2021. If a change of control of the Company occurs and Mr Hulls’ service to the
Company is involuntarily terminated by the Company or its successor in connection with or within
36 months following a change of control, all of the unvested Existing Options then held by Mr Hulls
will vest.
Mr Hulls is eligible to participate in the Cash Bonus Plan, and is eligible to receive a target cash
bonus of US$175,000 for the year ended December 31, 2021.
The performance milestones for the year ended December 31, 2021 are:
• Business performance – objectives related to business performance including MAU growth,
Paying Circle growth, revenue, and the Company’s net promoter score (NPS); and
• Individual management – objectives related to competencies and capabilities specific to Mr
Hulls that the Board has identified as critical to Mr Hulls’ development. The business performance
objectives and the individual management objectives are weighted equally.
Other:
On 26 February 2016, the Company provided a loan of US$253,004 to Mr Hulls for the exercise of
options to purchase Shares, which is partially secured by 1,405,575 Shares owned by Mr Hulls. The
loan remains outstanding and the key terms of the loan are:
• An interest rate of 2.61% per annum compounding annually, with a maturity date of seven years
from the loan date (25 February 2023).
• The loan is a partial recourse loan, secured by 1,405,575 Shares.
• If, after the maturity date, Mr Hulls fails to repay the loan, the Company can collect the collateral
(the pledged Shares).
The maturity date of the loan automatically accelerates upon certain events, including the
termination by the Company of Mr Hulls’ employment.
21
Russell Burke
Chief Financial Officer, Treasurer
Base Salary:
US$300,000 per annum
Benefits:
Certain other benefits are available and payable to Mr Burke such as health insurance, business
travel expenses and other expenses consistent with the Company’s expense policy.
Termination:
Mr Burke’s employment may be terminated (i) at any time upon mutual written agreement of
the parties; (ii) by the Company immediately and without prior notice, for cause; (iii) immediately
upon Mr Burke’s death or disability; (iv) by the Company other than for cause with advance written
notice of at least six months; or (v) by Mr Burke other than due to Mr Burke’s death or disability
with advance written notice of at least six months.
Incentives:
Mr Burke is eligible to participate in the Company’s 2011 Stock Incentive Plan and Stock Bonus
Program and has been granted 530,514 currently outstanding Options (Existing Options) as of
December 31, 2021.
Mr Burke is eligible to participate in the Cash Bonus Plan, and is eligible to receive a target cash
bonus of up to US$100,000 for the year ended December 31, 2021.
The performance milestones for the year ended December 31, 2021 are:
• Business performance – objectives related to business performance including MAU growth,
Paying Circle growth, revenue, and the Company’s net promoter score (NPS); and
• Individual management – objectives related to competencies and capabilities specific to
Mr Burke
The business performance objectives and the individual management objectives are
weighted equally.
Annual Report 2021 22
Directors’ Report
David Rice
Chief Operating Officer
Base Salary:
US$365,000 per annum
Benefits:
Certain other benefits are available and payable to Mr Rice such as health insurance, business
travel expenses and other expenses consistent with the Company’s expense policy.
Termination:
Mr Rice’s employment may be terminated (i) at any time upon mutual written agreement of the
parties; (ii) by the Company immediately and without prior notice, for cause; (iii) immediately upon
Mr Rice’s death or disability; (iv) by the Company other than for cause with advance written notice
of at least six months; or (v) by Mr Rice other than due to Mr Rice’s death or disability with advance
written notice of at least six months.
Mr Rice entered into a retention agreement with the Company in 2016 (Retention Agreement).
Under the Retention Agreement the Company will pay a cash bonus to Mr Rice of US$100,000 if:
• Mr Rice remains employed by the Company until December 31, 2022; or
• Mr Rice’s employment is terminated without cause before December 31, 2022; or
• A change in control of the Company occurs before December 31, 2022.
Payment of the cash bonus upon termination is subject to satisfaction of certain conditions,
including Mr Rice’s execution of a full and complete general release of all claims against the
Company and its affiliates.
Incentives:
Mr Rice is eligible to participate in the Company’s 2011 Stock Incentive Plan and Stock Bonus
Program and has been granted 438,902 currently outstanding Options (Existing Options) as of
December 31, 2021.
Mr Rice is eligible to participate in the Cash Bonus Plan, and is eligible to receive a target cash
bonus of US$135,000 for the year ended December 31, 2021.
The performance milestones for the year ended December 31, 2021 are:
• Business performance – objectives related to business performance including MAU growth,
Paying Circle growth, revenue, and the Company’s net promoter score (NPS); and
• Individual management – objectives related to competencies and capabilities specific to Mr Rice
The business performance objectives and the individual management objectives are
weighted equally.
Other:
On 26 February 2016, the Company provided a loan of US$83,023 to Mr Rice for the exercise of
options to purchase Shares, which is partially secured by 461,238 Shares owned by Mr Rice. This
loan remains outstanding and the key terms of the loan are:
• An interest rate of 2.61% per annum and compounding annually, with a maturity date of seven
years from the loan date (25 February 2023).
• The loan is a partial recourse loan, secured by 461,238 Shares.
• If, after the maturity date, Mr Rice fails to repay the loan, the Company can collect the collateral
(the pledged Shares).
The maturity date of the loan automatically accelerates upon certain events, including the
termination by the Company of Mr Rice’s employment.
23
Non-Executive Director compensation
The Remuneration and Nomination Committee is responsible for determining and reviewing compensation
arrangements for each Non-executive director. The Non-executive directors for the year ended December 31, 2021
were as follows:
John Philip Coghlan
Alex Haro
Brit Morin
Mark Goines
James Synge
David Wiadrowski
Randi Zuckerberg
The Directors’ fees currently agreed to be paid by the Company for the year ended December 31, 2021 are as set out
below:
Director
Annual cash Director’s fees
RSUs granted over shares1
Options granted over shares1
John Philip Coghlan
Alex Haro
Brit Morin
James Synge
Mark Goines
David Wiadrowski
Randi Zuckerberg
US$40,000
US$30,000
US$30,000
US$30,000
US$30,000
US$30,000
US$30,000
US$31,110 in RSUs
US$32,867 in RSUs
US$72,590 in options
US$76,689 in options
US$24,000 in RSUs
US$56,000 in options
US$25,110 in RSUs
US$24,900 in RSUs
US$28,500 in RSUs
US$33,131 in RSUs
US$58,590 in options
US$58,100 in options
US$66,500 in options
US$77,306 in options
1 The number of RSUs and options to be issued will be calculated based on the U.S. Dollar value amount set forth in the table above divided by the product of the US$
equivalent of the Fair Market Value on the 2021 Annual General Meeting date. The RSU and option grants will vest quarterly over the year following their grant provided that
the Director remains a Director of the Company as at the applicable vesting date. RSUs are automatically settled in Shares for nil consideration. Unvested RSUs and options
automatically lapse upon a termination of service unless otherwise determined by the Board. The RSUs and options will be granted under the 2011 Stock Incentive Plan.
In addition, the following annual fees are payable to Directors for membership of Board committees:
Committee
Audit and Risk Management
Committee
Remuneration and
Nomination Committee
Chair
Cash
Equity granted
over shares
Members
Cash
RSUs granted
over shares
US$5,000 US$15,000 in equity
US$1,300
US$3,700 in RSUs
US$2,000 US$3,000 in equity
US$1,500
Nil
Annual Report 2021 24
Directors’ Report
Remuneration table
Remuneration earned by directors and KMPs during the year is summarized as follows:
2021
Directors
John Philip Coghlan
Chris Hulls
Alex Haro
Brit Morin
Mark Goines
James Synge
David Wiadrowski
Randi Zuckerberg
KMPs
Russell Burke
David Rice
2020
Directors
John Philip Coghlan
Chris Hulls
Alex Haro
Brit Morin
Mark Goines
James Synge
David Wiadrowski
KMPs
Wendell Laidley
Russell Burke
David Rice
Salary and fees
US$
Cash bonus
US$
Stock based compensation
US$
Total
US$
42,800
400,000
30,000
31,500
32,000
31,300
35,000
31,300
-
175,000
-
-
-
-
-
-
300,000
365,000
100,000
135,000
158,608
1,072,061
80,046
83,957
75,335
76,710
88,059
79,567
102,803
244,360
Salary and fees
US$
Cash bonus
US$
Stock based compensation
US$
31,250
360,000
43,141
20,000
21,000
21,250
25,000
122,212
193,182
350,000
-
97,500
-
-
-
-
-
-
58,333
90,000
160,463
815,918
153,518
88,150
60,125
62,581
73,620
79,875
64,176
76,532
201,408
1,647,061
110,046
115,457
107,335
108,010
123,059
110,867
502,803
744,360
Total
US$
191,713
1,273,418
196,659
108,150
81,125
83,831
98,620
202,087
315,691
516,532
25
Securities held by Directors and KMP
The directors and KMPs of the Company are shown together with their holdings of common stock, options and RSUs,
held directly or indirectly:
2021
Directors
Direct
Indirect
Common Stock
Options
RSUs
Common Stock
Options
RSUs
John Philip Coghlan
45,572
255,229
Chris Hulls
Alex Haro
Brit Morin
Mark Goines
James Synge
David Wiadrowski
Randi Zuckerberg
KMPs
Russell Burke
David Rice
2,914,419
1,808,373
2,158,459
12,230
47,530
496,293
26,978
1,541
386,938
105,610
12,101
12,203
13,850
16,101
1,165
57,112
899
899
933
941
1,068
941
-
326,132
530,514
438,902
-
40,626
34,8931
29,9602
30,3652
-
187,5894
134,9522,3
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1 34,893 Shares are held by John Phillip Coghlan as trustee for the John Phillip Coghlan Living Trust.
2 Chris Hulls, Alex Haro, and Carthona Capital FS Pty Ltd. (an affiliate of James Synge) are members of ICCA Labs, LLC, an entity that holds 133,408 Shares. The number of
Shares attributable to Chris Hulls by reason of his membership interest in ICCA Labs, LLC is 29,960. The number of Shares attributable to Alex Haro by reason of his membership
interest in ICCA Labs, LLC is 30,635. The number of Shares attributable to Carthona Capital FS Pty Ltd. (an affiliate of James Synge) by reason of this membership interest in
ICCA Labs, LLC is 64,379.
3 70,573 Shares are held by James Synge through Stynge Pty Ltd ATF Sandy Bay Trust.
4 187,589 Shares are held by Mark Goines as trustee for the Goines Wong Living Trust.
2020
Direct
Indirect
Common Stock
Options
RSUs
Common Stock
Options
RSUs
Directors
John Philip Coghlan
Chris Hulls
Alex Haro
Brit Morin
Mark Goines
James Synge
David Wiadrowski
KMPs
Wendell Laidley
Russell Burke
David Rice
40,029
2,897,424
1,784,054
7,210
10,211
490,975
19,171
240,110
1,708,373
370,966
93,947
32,000
-
-
-
-
417,570
124,708
530,514
345,402
4,378
32,971
-
4,121
4,207
4,378
5,151
-
-
-
40,1311
29,9602
403,4772,3
-
187,589
98,2862
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1 34,893 Shares are held by John Phillip Coghlan as trustee for the John Phillip Coghlan Living Trust and 5,238 are held through Seraph Partners Fund III and co-investments
with Seraph.
2 Chris Hulls, Alex Haro, and Carthona Capital FS Pty Ltd. (an affiliate of James Synge) are members of ICCA Labs, LLC, an entity that holds 133,408 Shares. The number of
Shares attributable to Chris Hulls by reason of his membership interest in ICCA Labs, LLC is 29,960. The number of Shares attributable to Alex Haro by reason of his membership
interest in ICCA Labs, LLC is 30,635. The number of Shares attributable to Carthona Capital FS Pty Ltd. (an affiliate of James Synge) by reason of this membership interest in
ICCA Labs, LLC is 64,379.
3Alex Haro is a member of AJS Life360 Holdings 2 LLC, an entity that holds 686,930 Shares of Life360. The number of Shares attributable to Alex Haro by reason of his
membership interest in AJS Life360 Holdings 2 LLC is 372,842.
4 33,907 Shares are held by James Synge through Stynge Pty Ltd ATF Sandy Bay Trust.
Annual Report 2021 26
Directors’ Report
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Annual Report 2021 28
Directors’ Report
Meetings attended by Board
The number of meetings of directors (including meetings of committees of directors) held during the year and the
number of meetings attended by each director was as follows:
John Philip Coghlan
Chris Hulls
Alex Haro
Brit Morin
Mark Goines
James Synge
David Wiadrowski
Randi Zuckerberg
Board
of Directors
Audit & Risk
Management Committee
Remuneration &
Nomination Committee
Eligible Attendance
Eligible
Attendance
Eligible Attendance
11
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11
11
11
11
11
11
11
10
11
10
10
10
14
14
-
-
-
14
14
14
14
14
-
-
-
14
14
14
4
4
-
4
4
-
-
-
4
4
-
4
4
-
-
-
Indemnity and insurance of Directors and Officers
The Company has indemnified directors and executives of the Company for costs incurred in their capacity as a
director or officer, for which they may be held personally liable, except where there is a lack of good faith.
Indemnity and insurance of Auditor
The Company has not, during or since the end of the financial year, indemnified or agreed to indemnify the auditor
of the Company or any related entity against a liability incurred by the auditor.
During the financial year, the Company has not paid a premium in respect of a contract to insure the auditor of the
Company or any related entity.
Proceedings on behalf of the Company
No proceedings have been brought or intervened in on behalf of the Company.
This report is made in accordance with a resolution of the directors.
On behalf of the directors
John Philip Coghlan
March 30, 2022
San Francisco, USA
29
Consolidated
Financial
Statements
As of and for the Years Ended
December 31, 2021 and 2020
Annual Report 2021 30
Independent Auditor’s Report
31
/s/ BDO USA, LLP
Annual Report 2021 32
Consolidated Balance Sheets
(Dollars in U.S. $, in thousands, except share and per share data)
Assets
Current Assets:
Cash and cash equivalents
Accounts receivable
Costs capitalized to obtain revenue contracts, net
Inventory
Notes due from affiliates
Prepaid expenses and other current assets
Total current assets
Restricted cash
Property and equipment, net
Costs capitalized to obtain revenue contracts, net of current portion
Prepaid expenses and other assets, noncurrent
Right of use asset
Intangible assets, net
Goodwill
Notes due from affiliates
Total Assets
Liabilities and Stockholders Equity
Current Liabilities:
Accounts payable
Accrued expenses and other liabilities
Contingent consideration
Convertible notes, current
Deferred revenue
Total current liabilities
Convertible notes, noncurrent
Derivative liability, noncurrent
Other noncurrent liabilities
Total Liabilities
Commitments and Contingencies (Note 12)
Stockholders' Equity
Common Stock, $0.001 par value; 100,000,000 shares authorized
as of December 31, 2021 and December 31, 2020; 60,221,799 and
50,035,408 issued and outstanding as at December 31, 2021 and
December 31, 2020, respectively
Additional paid-in capital
Notes due from affiliates
Accumulated deficit
Total stockholders' equity
December 31, 2021
December 31, 2020
$
230,990 $
11,772
1,319
2,009
330
10,590
257,010
355
580
330
3,691
1,627
7,986
31,127
-
56,413
9,042
3,381
-
-
10,017
78,853
198
801
569
2,184
2,638
-
764
306
$
302,706 $
86,313
3,248
10,547
9,500
4,222
13,929
41,446
8,284
1,396
1,205
$
52,331 $
2,420
5,235
-
-
11,855
19,510
-
-
2,308
21,818
61
50
416,278
(621)
(165,343)
250,375
196,852
(621)
(131,786)
64,495
86,313
Total Liabilities and Stockholders' Equity
$
302,706 $
The accompanying notes are an integral part of these audited consolidated financial statements.
33
Consolidated Statements of
Operations and Comprehensive Loss
(Dollars in U.S. $, in thousands, except share and per share data)
Subscription revenue
Data and other revenue (including related party revenue
of $0 and $195, respectively)
December 31, 2021
December 31, 2020
$
86,551
26,092
58,472
22,183
Total revenue
112,643 $
80,655
Cost of subscription revenue
Cost of data and other revenue
Total cost of revenue
Gross Profit
Operating expenses:
Research and development
Sales and marketing
General and administrative
Total operating expenses
Loss from operations
Other (Income)/ Expense:
Convertible notes fair value adjustment
Derivative liability fair value adjustment
Other (income)/expense, net
Total Other (Income)/Expense
Loss before Benefit from for income taxes
Benefit from income taxes
Net Loss and Comprehensive Loss
Net loss per share attributable to common shareholders,
basic and diluted
17,807
4,961
22,768
89,875
50,994
47,473
23,670
122,137
13,582
1,813
15,395
65,260
39,643
30,190
12,078
81,911
(32,262)
(16,651)
511
733
178
1,422
(33,684)
127
(33,557) $
-
-
(317)
(317)
(16,334)
-
(16,334)
(0.65) $
(0.33)
$
$
Weighted-average shares used in computing net loss per share
attributable to common shareholders, basic and diluted
51,656,195
49,346,050
The accompanying notes are an integral part of these audited consolidated financial statements.
Annual Report 2021 34
Consolidated Statements of Stockholders’ Equity
(Dollars in U.S. $, in thousands, except share data)
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T
Consolidated Statements of Cash Flows
(Dollars in U.S. $, in thousands)
Cash Flows from Operating Activities:
Net loss
Adjustments to reconcile net loss to net cash used in operating
activities:
Depreciation and amortization
Amortization of costs capitalized to obtain contracts
Stock-based compensation expense
Compensation expense in connection with revesting notes (Note 8)
Interest expense related to the amortization of debt discount
Interest income
Convertible notes fair value adjustment
Derivative liability fair value adjustment
Loss on revaluation of contingent consideration
Changes in operating assets and liabilities:
Accounts receivable
Prepaid expenses and other current assets
Inventory
Costs capitalized to obtain contracts, net
Other noncurrent assets
Accounts payable
Accrued expenses
Deferred revenue
Noncurrent liabilities
Net cash used in operating activities
Cash Flows from Investing Activities:
Purchases of capital assets
Cash paid for acquisition, net of cash acquired
Cash advance on convertible note receivable in connection
with an acquisition
Net cash used in investing activities
Cash Flows from Financing Activities:
Proceeds from the exercise of options and grant of stock awards,
net of repurchase
Taxes paid related to net settlement of equity awards
Proceeds from borrowings
Payments on borrowings
Proceeds from capital raise in connection with an acquisition,
net of $5,757 of transaction costs
Cash received in connection with issuance of convertible notes
Net cash provided by financing activities
Net Increase/(Decrease) in Cash, Cash Equivalents,
and Restricted Cash
Cash, Cash Equivalents and Restricted Cash at the
Beginning of the Period
Year Ended
December 31, 2021
December 31, 2020
$
(33,557) $
(16,334)
876
4,014
11,754
184
213
(47)
511
733
3,600
(2,689)
(340)
(859)
(1,713)
(603)
559
4,720
1,671
(1,180)
(12,153)
(81)
(2,983)
(4,000)
(7,064)
3,543
(4,725)
-
(41)
193,064
2,110
193,951
174,734
56,611
656
7,021
8,091
-
-
(23)
-
-
-
(1,149)
(4,717)
-
(5,240)
2,498
1,925
438
770
(1,186)
(7,250)
(653)
-
-
(653)
1,594
(1,149)
3,115
(3,115)
-
-
445
(7,458)
64,069
Cash, Cash Equivalents, and Restricted Cash at the End of the Period
$
231,345 $
56,611
Annual Report 2021 36
Consolidated Statements of Cash Flows
(Dollars in U.S. $, in thousands)
Year Ended
December 31, 2021
December 31, 2020
Supplemental disclosure:
Cash paid during the period for interest
Cash paid during the period for taxes
$
(24) $
(33)
Non-cash investing and financing activities:
Fair value of stock issued in connection with an acquisition
Fair value of convertible debt issued in connection with an acquisition
Fair value of contingent consideration issued in connection with an
acquisition
Fair value of vested options assumed in connection with an acquisition
Forgiveness of convertible note receivable in connection an acquisition
Relative fair value of warrants issued with convertible debt
Beneficial conversion feature related to convertible debt
Fair value of bifurcated derivative related to convertible debt
Total non-cash investing and financing activities:
13,821
11,597
5,900
533
4,023
844
603
663
37,984
-
-
-
-
-
-
-
-
-
-
-
The following table provides a table of cash, cash equivalents, and restricted cash reported within the balance
sheets totaling the same such amounts shown above:
Cash and cash equivalents
Restricted cash
Total cash, cash equivalents, and restricted cash
December 31, 2021
December 31, 2020
$
$
$
230,990
$
355
231,345
$
56,413
198
56,611
The accompanying notes are an integral part of these audited consolidated financial statements.
37
Notes to Consolidated Financial Statements
1. Nature of Business
Life360, Inc. (the “Company”) is a platform for today’s busy families, bringing them closer together by helping them
better know, communicate with, and protect the people they care about most. The Company was incorporated in
the State of Delaware in April 2007. The Company’s core offering, the Life360 mobile application, is now a market
leading mobile application for families, with features that range from communications to driving safety and location
sharing. The Company operates under a “freemium” model where its core offering is available to users at no charge,
with three membership subscription options that are available but not required. The Company also generates
revenue through data monetization arrangements with certain third parties (“Data Revenue Customers”) through
data acquisition and license agreements and anonymized insights into the data collected from the Company’s user
base in partnership with third parties. On September 1, 2021, the Company acquired all the ownership interests of
Jio, Inc (“Jiobit”). Jiobit is a provider of wearable location devices for young children, pets, and seniors.
2. Summary of Significant Accounting Policies
Basis of Presentation
The consolidated financial statements and accompanying notes have been prepared in accordance with generally
accepted accounting principles in the United States, or (“GAAP”) and are presented in US dollars, unless otherwise
stated.
Use of Estimates
The preparation of consolidated financial statements in conformity with GAAP requires management to make
estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the consolidated financial statements and the reported amount of revenue and
expenses during the reporting period. Significant estimates made by management include, but are not limited
to, the determination of revenue recognition, accounts receivable allowance, average useful customer life, stock-
based compensation, legal contingencies, assessment of possible impairment of long-lived assets and goodwill,
valuation of contingent consideration, convertible notes and embedded derivatives, useful lives of long lived
assets and income taxes including valuation allowances on deferred tax assets. The Company bases its estimates
and judgments on historical experience and on various assumptions that it believes are reasonable under the
circumstances. Actual results could differ significantly from those estimates.
Recently adopted accounting pronouncements
In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805), Accounting for Contract Assets
and Contract Liabilities from Contracts with Customers, which requires contract assets and contract liabilities
(i.e., deferred revenue) acquired in a business combination to be recognized and measured by the acquirer on
the acquisition date in accordance with ASC 606, Revenue from Contracts with Customers. The guidance should
be applied prospectively to acquisitions occurring on or after the effective date. The guidance is effective for the
Company beginning January 1, 2024, and interim periods therein. Early adoption is permitted, including in interim
periods, for any financial statements that have not yet been issued. The Company elected to early adopt ASU 2021-
08 on September 1, 2021, and the adoption had no material impact on the consolidated financial statements and
related disclosures.
In December 2019, the FASB issued ASU No. 2019-12, Simplifying the Accounting for Income Taxes (“ASU 2019-12”), as
part of its initiative to reduce complexity in accounting standards. ASU 2019-12 removes the following exceptions:
exception to the incremental approach for intraperiod tax allocation; exception to accounting for basis differences
when there are ownership changes in foreign investments; and exception to interim period tax accounting for
year-to-date losses that exceed anticipated losses. ASU 2019-12 also improves financial reporting for franchise
taxes that are partially based on income; transactions with a government that result in a step up in the tax basis
of goodwill; separate financial statements of legal entities that are not subject to tax; and enacted changes in tax
laws in interim periods. ASU 2019-12 is effective for public business entities in fiscal years beginning after December
15, 2020, including interim periods within those fiscal years. For all other entities, the standard is effective in fiscal
years beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022.
Early adoption of the standard is permitted, including adoption in interim or annual periods for which financial
statements have not yet been issued. On January 1, 2021, Life360 adopted ASU 2019-12 and the standard did not
have a material impact on its consolidated financial statements and related disclosures.
Annual Report 2021 38
Notes to Consolidated Financial Statements
Accounting pronouncements not yet adopted
In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses: Measurement of Credit Losses
on Financial Instruments, which changes the existing incurred loss impairment model for financial assets held at
amortized cost. The new model uses a forward-looking expected loss method to calculate credit loss estimates.
These changes will result in earlier recognition of credit losses. This guidance is effective for the Company on
January 1, 2023 with early adoption permitted. The Company is currently evaluating the impact of the adoption
of this standard on its consolidated financial statements and related disclosures and does not expect a material
impact.
In August 2020, the FASB issued ASU No. 2020-06, Debt- Debt with Conversion and Other Options (Subtopic 470-
20) which simplifies the accounting for certain financial instruments with characteristics of liabilities and equity,
including convertible instruments and contracts in an entity’s own equity. Among other changes, ASU 2020-06
removes from U.S. GAAP the liability and equity separation model for convertible instruments with a cash conversion
feature, and as a result, after adoption, entities will no longer separately present in equity an embedded conversion
feature for such debt. Similarly, the embedded conversion feature will no longer be amortized into income as interest
expense over the life of the instrument. Instead, entities will account for a convertible debt instrument wholly as debt
unless (1) a convertible instrument contains features that require bifurcation as a derivative under ASC Topic 815,
Derivatives and Hedging, or (2) a convertible debt instrument was issued at a substantial premium. Additionally,
ASU 2020-06 requires the application of the if-converted method to calculate the impact of convertible instruments
on diluted earnings per share, which will result in increased dilutive securities as the assumption of cash settlement
of the notes will not be available for the purpose of calculating earnings per share. The provisions of ASU 2020-06
are effective for reporting periods beginning after December 15, 2023, with early adoption permitted for reporting
periods beginning after December 15, 2020, and can be adopted on either a fully retrospective or modified
retrospective basis. The Company is currently evaluating the timing, method of adoption, and overall impact of this
standard on its consolidated financial statements.
Revenue Recognition
The Company recognizes revenue upon transfer of control of promised goods or services to customers at transaction
price, an amount that reflects the consideration the Company expects to receive in exchange for those goods or
services. Transaction price is calculated as selling price net of variable consideration which may include estimates for
future returns and sales incentives related to current period revenue. The Company determines revenue recognition
through the following steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in
the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in
the contract; and (v) recognize revenue when (or as) the Company satisfies a performance obligation. The Company
only applies the five-step model to contracts when it is probable that Company will collect the consideration it is
entitled to in exchange for the goods or services it transfers to the customer.
Contracts with Multiple Performance Obligations
Some of the Company’s contracts with customers contain multiple performance obligations, primarily hardware
and subscription services for the Jio tracker. For these contracts, the Company accounts for individual performance
obligations separately if they are distinct. The transaction price is allocated to the separate performance obligations
on a relative stand-alone selling price (“SSP”) basis with the amounts allocated to ongoing services deferred and
recognized over a period of time. The Company determines SSP based on observable, if available, prices for those
related services when sold separately. When such observable prices are not available, the Company determines
SSP based on overarching pricing objectives and strategies, taking into consideration market conditions and other
factors, including customer size, volume purchased, market and industry conditions, product-specific factors and
historical sales of the deliverables.
Cost of Revenue
Cost of revenue includes all direct costs to deliver the Company’s product including third-party hosting fees related
to the Company’s cloud services, product costs associated with Jiobit tracking devices and accessories, salaries,
benefits, share-based compensation, IT and allocated overhead. The Company recognizes these expenses as they
are incurred.
39
Costs Capitalized to Obtain Contracts
Costs capitalized to obtain contracts comprise of revenue-share payments to the Company’s Channel Partners
in connection with annual subscription sales of the Company’s mobile application on each respective mobile
application store platform. Costs that are incremental and directly related to new customer sales contracts in
which revenue is deferred are accrued and capitalized upon execution of a non-cancelable customer contract, and
subsequently expensed over the average life of the customer relationship, which is currently estimated to be two
years. The Company has elected the practical expedient under ASC 340-4 to expense incremental costs of obtaining
a contract if the amortization periods is one year or less.
Allowance for Doubtful Accounts
The Company makes judgments as to its ability to collect outstanding accounts receivable and provide allowances
for accounts receivable when and if collection becomes doubtful. To date, the Company has not recorded any
significant credit losses on customer accounts and it had no allowance for doubtful accounts as of December 31,
2021 and 2020.
Inventory
Inventory is comprised of raw materials and finished goods such as Jiobit tracking devices and accessories.
Inventory is stated using actual costing on a first-in, first-out basis. The Company assesses the valuation of inventory
and periodically writes down the value for estimated excess and obsolete inventory based upon estimates of
future demand and market conditions. The Company’s inventory is held at third party warehouses and contract
manufacturer premises.
Significant Risks and Uncertainties
The Company is subject to certain risks and uncertainties that could have a material and adverse effect on its future
financial position or results of operations. The Company’s customers are primarily individuals with smart phones,
who subscribe to the Company’s product offerings through market exchanges operated by channel partners and
Data Revenue Customers. Any changes in customer preferences and trends or changes in terms of use of channel
partners’ platforms could have an adverse impact on its results of operations and financial condition.
Financial instruments that potentially subject the Company to significant concentrations of credit risk consist
principally of cash, cash equivalents and accounts receivable. The Company limits its exposure to credit loss by
placing cash and cash equivalents with a financial institution of high credit standing. Deposits of cash and cash
equivalents may exceed the amount of insurance provided by the Federal Deposit Insurance Corporation (“FDIC”) on
these deposits.
The Company depends on the constant real-time performance, reliability and availability of our technology system
and access to our partner’s networks. The Company relies on a single technology partner for its cloud platform and
a single contract manufacturer to assemble components of the Jiobit hardware device. Any adverse impacts to the
platform and the contract manufacturer could negatively impact our relationships with our partners or Users and
may adversely impact our business, financial performance and reputation.
The Company derives its accounts receivable from revenue earned from customers located in the United States
and internationally. The Company does not perform ongoing credit evaluations of its customers’ financial condition
and does not require collateral from its customers. Historically, credit losses have been insignificant. Channel
partners account for the majority of the Company’s revenue and accounts receivable for all periods presented.
Accounts receivable contains $1.9 million and $1.4 million of unbilled receivables as at December 31, 2021 and 2020,
respectively.
Annual Report 2021 40
Notes to Consolidated Financial Statements
The following table sets forth the information about our channel partners and customers who represented greater
than 10% of our revenue or accounts receivable, respectively:
Percentage of Revenue
Percentage of Gross Accounts Receivable
Year Ended December 31,
As of December 31,
2021
57%
18%
*
2020
54%
18%
*
2021
48%
14%
*
2020
37%
11%
17%
Channel Partner A
Channel Partner B
Data Revenue Customer B
* Represents less than 10%
Research and Development Costs
The Company charges costs related to research, design and development of products to research and development
expense as incurred. These costs consist of payroll related expenses, contractor fees, outside third party vendors,
and allocated facilities costs.
Advertising Expense
Advertising expense was $7.1 million and $6.7 million for the years ended December 31, 2021 and 2020, respectively.
Advertising expenses are recorded in the period in which cost is incurred.
Cash and Cash Equivalents
The Company considers all highly liquid investment securities with remaining maturities at the date of purchase of
three months or less to be cash equivalents. Cash and cash equivalents include deposit and money market funds.
Restricted Cash
Deposits of $0.4 million and $0.2 million, were restricted from withdrawal as of December 31, 2021 and 2020,
respectively. The restriction is related to securing the Company’s facility leases which expire in 2022 and 2024 in
accordance with the operating lease agreements, as amended. The restrictions on these balances will be released
in accordance with the operating lease agreements, as amended. These balances are included in Restricted Cash on
the accompanying consolidated Balance Sheets.
Fair Value of Financial Instruments
The Company uses fair value measurements to record fair value adjustments to certain financial and non-financial
assets and liabilities to determine fair value disclosures. The accounting standards define fair value, establish a
framework for measuring fair value, and require disclosures about fair value measurements. Fair value is defined as
the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between
market participants at the measurement date. When determining the fair value measurements for assets and
liabilities required to be recorded at fair value, the principal or most advantageous market in which the Company
would transact are considered along with assumptions that market participants would use when pricing the asset
or liability, such as inherent risk, transfer restrictions, and risk of nonperformance. The accounting standard for
fair value establishes a fair value hierarchy based on three levels of inputs, the first two of which are considered
observable and the last unobservable, that requires an entity to maximize the use of observable inputs and
minimize the use of unobservable inputs when measuring fair value. A financial instrument’s categorization within
the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement.
41
The three levels of Inputs that may be used to measure fair value are as follows:
Level 1 – Observable inputs, such as quoted prices in active markets for identical assets or liabilities.
Level 2 – Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities, or other
inputs that are observable or can be corroborated by observable market data for substantially the full term of the
assets or liabilities.
Level 3 – Valuations based on unobservable inputs to the valuation methodology and including data about
assumptions market participants would use in pricing the asset or liability based on the best information available
under the circumstances.
For the years ended December 31, 2021 and 2020, the recorded carrying amounts of cash and cash equivalents,
prepaid expenses, accounts payable, and accounts receivable approximates fair value due to their short-term
nature. Refer to Note 7 “Fair Value Measurements” for further details.
Property and Equipment, Net
Property and equipment are stated at cost less accumulated depreciation and amortization. Depreciation is
computed using the straight-line method over the estimated useful lives of the respective assets. Equipment,
computer software, furniture, and product manufacturing equipment have estimated useful lives ranging from three
to ten years. Leasehold improvements are amortized on a straight-line basis over the lesser of the estimated useful
life or the term of the lease with expected renewals.
Costs of maintenance and repairs that do not improve or extend the lives of the respective assets are expensed
as incurred. When assets are retired or otherwise disposed of, the cost and related accumulated depreciation are
removed from the balance sheet and the resulting gain or loss is reported in cost and expenses, net in the period
realized.
Software Development Costs
For development costs related to internal use software projects, the Company capitalizes costs incurred during the
application development stage. Costs related to preliminary project activities and post implementation activities are
expensed as incurred. Internal-use software is amortized on a straight-line basis over its estimated useful life. The
Company did not capitalize internal use software costs during the years ended December 31, 2021 and 2020 as the
capitalizable costs were not material.
Lease Obligations
Operating lease right-of-use assets and lease liabilities are recognized at the present value of the future lease
payments at commencement date. The interest rate implicit in the Company’s operating leases is not readily
determinable, and therefore an incremental borrowing rate is estimated to determine the present value of future
payments. The estimated incremental borrowing rate factors in a hypothetical interest rate on a collateralized basis
with similar terms, payments, and economic environments. Operating lease right-of-use assets also include any
prepaid lease payments and lease incentives.
Certain of the operating lease agreements contain rent concession, rent escalation, and option to renew provisions.
Rent concession and rent escalation provisions are considered in determining the straight-line single lease cost to be
recorded over the lease term. Single lease cost is recognized on a straight-line basis over the lease term commencing
on the date the Company has the right to use the leased property. The lease terms may include options to extend or
terminate the lease. The Company generally uses the base, non-cancellable, lease term when recognizing the lease
assets and liabilities, unless it is reasonably certain that the renewal option will be exercised.
In addition, certain of the Company’s operating lease agreements contain tenant improvement allowances from its
landlords. These allowances are accounted for as lease incentives and decrease the Company’s right-of-use asset
and reduce single lease cost over the lease term. Refer to Note 9 for Leases disclosure.
Annual Report 2021 42
Notes to Consolidated Financial Statements
Business Combinations
The Company uses best estimates and assumptions to assign a fair value to the tangible and intangible assets
acquired and liabilities assumed in business combinations as of the acquisition date. These estimates are inherently
uncertain and subject to refinement. During the measurement period, which may be up to one year from the
acquisition date, adjustments to the fair value of these tangible and intangible assets acquired and liabilities
assumed may be recorded, with the corresponding offset to goodwill. Upon the conclusion of the measurement
period or final determination of the fair value of assets acquired or liabilities assumed, whichever comes first, any
subsequent adjustments are recorded to the Company’s consolidated statements of operations and comprehensive
loss.
Goodwill
Goodwill represents the excess of the purchase price in a business combination over the fair value of net tangible
and intangible assets acquired. Goodwill amounts are not amortized but tested for impairment on an annual basis.
There was no impairment of goodwill as of December 31, 2021.
Intangible Assets, net
Intangible assets, including acquired patents, trademarks, customer relationships, and acquired developed
technology, are carried at cost and amortized on a straight-line basis over their estimated useful lives, with the
exception of customer relationships which is amortized on an accelerated basis. The Company determines the
appropriate useful life of the Company’s intangible assets by measuring the expected cash flows of acquired assets.
Impairment of Long-Lived Assets
The Company assesses the impairment of long-lived assets, such as property and equipment subject to depreciation
and acquired intangibles subject to amortization, when events or changes in circumstances indicate that their
carrying amount may not be recoverable. Recoverability of assets to be held and used is measured by a comparison
of the carrying amount of an asset to the estimated undiscounted future cash flows expected to be generated
by the asset. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is
recognized in the amount by which the carrying amount of the asset exceeds the fair value of the asset.
The Company reviews goodwill for impairment at least annually, or more frequently if events or changes in
circumstances would more likely than not reduce the fair value of its single reporting unit below its carrying value.
Deferred Revenue
Deferred revenue consists primarily of payments received and accounts receivable recorded in advance of revenue
recognition under the Company’s subscription arrangements. The Company primarily invoices its customers for
its subscription services arrangements in advance. Amounts anticipated to be recognized within one year of the
balance sheet date are recorded as deferred revenue, current; the remaining portion is recorded as deferred
revenue, noncurrent in the consolidated balance sheets.
Common Stock Warrants
The Company has issued freestanding warrants to purchase shares of common stock in connection with certain debt
financing transactions. The warrants are recorded as equity instruments at the grant date fair value using the Black-
Scholes option pricing model and are not subject to revaluation at each balance sheet date.
In addition, the Company has issued warrants in connection with the convertible note agreements. The warrants
are recorded as equity instruments at the grant date fair value using the Black-Scholes option pricing model. The
fair value has been recorded as a debt discount that is being amortized to interest expense under the straight-line
method over the term of respective convertible notes.
43
Stock-Based Compensation
The Company has an equity incentive plan under which various types of equity-based awards including, but not
limited to, incentive stock options, non-qualified stock options, restricted stock units, and restricted stock awards,
may be granted to employees, nonemployee directors, and nonemployee consultants.
For all equity awards granted to employees, nonemployees and directors, the Company recognizes compensation
expense based on the grant-date estimated fair values. The fair value of stock options is determined using the
Black-Scholes option pricing model. For restricted stock units and restricted stock awards, the fair value is based on
the grant date fair value of the award. The Company recognizes compensation expense for stock option awards,
restricted stock units, and restricted stock awards on a straight-line basis over the requisite service period of the
award, generally three to four years. Forfeitures are recorded as they occur.
In 2020, the Company granted a market performance award to an executive that is subject to time-based vesting
requirements in which vesting is contingent upon the Company’s achievement of certain market performance goals.
The fair value of such performance awards was determined using a Monte Carlo simulation and is recognized under
the accelerated attribution method over a four year period.
In 2021, the Company issued stock options and restricted stock that have performance-based vesting conditions.
For awards that include a performance condition, if the performance condition is determined to be probable of
being satisfied, the Company recognizes compensation expense related to such awards using the accelerated
attribution method over the required performance period. If a performance condition is not probable of being met,
no compensation cost is recognized. Refer to Note 15, “Equity Incentive Plan” for further details.
Income Taxes
The Company accounts for income taxes under the asset and liability method. The Company estimates actual
current tax exposure together with assessing temporary differences resulting from differences in accounting for
reporting purposes and tax purposes for certain items, such as accruals and allowances not currently deductible
for tax purposes. These temporary differences result in deferred tax assets and liabilities, which are included in
the Company’s balance sheets. In general, deferred tax assets represent future tax benefits to be received when
certain expenses previously recognized in the Company’s statements of operations and comprehensive loss become
deductible expenses under applicable income tax laws or when net operating loss or credit carryforwards are
utilized. Accordingly, realization of the Company’s deferred tax assets is dependent on future taxable income against
which these deductions, losses and credits can be utilized.
The Company must assess the likelihood that the Company’s deferred tax assets will be recovered from future
taxable income, and to the extent the Company believes that recovery is not likely, the Company establishes a
valuation allowance. The assessment of whether or not a valuation allowance is required often requires significant
judgment including current and historical operating results, the forecast of future taxable income and on-going
prudent and feasible tax planning initiatives.
The Company recognizes interest and penalties related to uncertain tax positions in income tax expense. During the
years ended December 31, 2021 and 2020, the Company did not accrue any interest or penalties related to income
tax positions.
Contingencies
From time to time, the Company may have certain contingent liabilities that arise in the ordinary course of business.
The Company evaluates the likelihood of an unfavorable outcome in legal or regulatory proceedings to which it is a
party and records a loss contingency on an undiscounted basis when it is probable that a liability has been incurred
and the amount of the loss can be reasonably estimated. These judgments are subjective and based on the status of
such legal proceedings, the merits of the Company’s defenses, and consultation with legal counsel. Actual outcomes
of these legal proceedings may differ materially from the Company’s estimates. The Company estimates accruals
for legal expenses when incurred as of each balance sheet date based on the facts and circumstances known to the
Company at that time.
Annual Report 2021 44
Notes to Consolidated Financial Statements
Segment Information
Operating segments are defined as components of an enterprise about which separate financial information is
available that is evaluated regularly by the enterprise’s chief operating decision maker (“CODM”), or decision-
making Company, in deciding how to allocate resources and in assessing performance. The Company’s Chief
Executive Officer is the CODM. The Company has concluded that it has two operating segments and one reportable
segment because the quantitative threshold test was met.
Net Loss per Share
The Company computes basic and diluted net loss per share attributable to common stockholders in conformity with
ASC 260, “Earnings per Share.” Basic net loss per share attributable to common stockholders is calculated by dividing
the net loss attributable to common stockholders by the weighted-average number of shares of common stock
outstanding during the period without consideration for potentially dilutive securities as they do not share in losses.
The diluted net loss per share attributable to common stockholders is computed giving effect to all potential dilutive
common stock equivalents outstanding for the period. For purposes of this calculation, options to purchase common
stock, common stock warrants, common stock convertible notes, and unvested restricted stock units are considered
common stock equivalents but have been excluded from the calculation of diluted net loss per share attributable to
common stockholders as the effect is antidilutive.
3. Impact of the COVID-19 Pandemic
On January 30, 2020, the World Health Organization (WHO) announced a global health emergency because of a
new strain of coronavirus originating in Wuhan, China (the COVID-19 outbreak) and the risks to the international
community as the virus spread globally beyond its point of origin. In 2021, as the administration of the vaccine
program increased and cases declined, the Company continued to evaluate and refine our strategy to respond to
the pandemic. Despite the uncertainty of the impact of the COVID-19 pandemic on our operational and financial
performance, the Company experienced positive performance as conditions improved.
The Company resumed paid user acquisition spend which was deliberately scaled back in response to COVID-19
in prior period and has expanded into new channels such as streaming TV. The Company considered the impact
of COVID-19 on the assumptions and estimates used and determined that there were no material adverse impacts
on the consolidated financial statements for the year ended December 31, 2021. As events continue to evolve and
additional information becomes available, the Company’s assumptions and estimates may change materially in
future periods.
Paycheck Protection Program
The Company determined that the original eligibility requirements per the guidelines established by the U.S. federal
government as part of the CARES Act for the Paycheck Protection Program (the “PPP”) were met. As such, in April
2020, the Company received $3.1 million in loans from the PPP. Because the U.S. government subsequently changed
its position and guidelines related to the PPP and publicly traded companies, the Company repaid the loans in May
2020.
4. Revenue
Revenue by geography is generally based on the address of the customer as defined in the Company’s agreement.
The following table sets forth revenue by geographic area (in thousands):
United States
International*
Total Revenue
*Represents less than 10%.
45
Year Ended December 31,
$
$
2021
100,857 $
11,786
112,643 $
2020
69,776
10,879
80,655
Subscription Revenue
The Company’s subscription revenue includes related support and is comprised of Life360 mobile application
subscription as well as subscription service plans for the Jiobit hardware tracking device. The Company’s subscription
contracts with customers are established at the point of mobile application download and purchase as indicated
through acceptance of the Company’s Standard Service Terms.
The cloud-based subscriptions are considered single combined performance obligations, consisting of multiple
features that can be purchased separately, but which are bundled together and delivered to the customer as a
combined output. The Company provides its customers with technical support along with unspecified updates and
upgrades to the platform on an if and when available basis.
The subscription service plan for the Jiobit hardware tracking device is a distinct and separate performance
obligation from the hardware. Subscription fees are fixed and recognized on a straight-line basis over the non-
cancellable contractual term of the agreement, generally beginning on the date that the Company’s service is made
available to the customer.
Subscription revenue for the years ended December 31, 2021 and 2020 was $86.6 million and $58.5 million,
respectively.
Data and Other Revenue
Data Revenue
The Company’s data revenue is comprised of Life360 data monetization arrangements with certain third parties
established through Data Master Service Agreements (collectively, “Data MSAs”), which outline specific terms
governing the access and use of data and related fees. The Company determines a contract to exist upon the
mutual execution of a Data MSA.
Data revenue is recognized based on the Company’s estimate of the total amount of variable consideration
estimated without constraint using the expected value method. The Company relies primarily on the review of
historical fees collected in developing an estimate of fees to be collected at contract inception and updates its
estimates at each reporting date. Data revenue for the years ended December 31, 2021 and 2020 was $18.7 million
and $16.0 million, respectively.
Partnership Revenue
Partnership revenue includes agreements with third parties to provide access to advertising on the Company’s
mobile platform. The Company receives a percentage of the advertising spend as a fee, which is recognized as
revenue on a net basis. The variable amounts earned under partnership revenue arrangements are allocable to
the month in which the advertising is placed, which is reset on a monthly basis. As such, the Company will recognize
revenue monthly based on the advertising placed. Partnership revenue for the years ended December 31, 2021 and
2020 was $6.4 million and $6.0 million, respectively.
Hardware Revenue
The Company derives hardware revenue from sale of the Jiobit hardware tracking devices and related accessories.
For hardware and accessories, revenue is recognized at the time products are delivered. The Company offers limited
rights of return and estimates reserves based on historical experience and records the reserves as a reduction of
revenue and an accrued liability. Amounts billed to customers for shipping and handling are classified as revenue,
and the Company’s related shipping and handling costs incurred are classified as cost of revenue. Sales taxes
collected from customers and remitted to respective governmental authorities are recorded as liabilities and are not
included in revenue.
The Company’s hardware and the embedded operating system/platform are one distinct performance obligation
and separate from the subscription service plans for the Jiobit hardware tracking device. The Company’s embedded
operating system/platform is a component of the hardware that is integral to the functionality of the hardware and
only together produce the essential functionality of the hardware.
Annual Report 2021 46
Notes to Consolidated Financial Statements
The Company offers extended warranties and hardware protection plans that are recognized over the contractual
service period (typically 1 to 2 years).
Hardware revenue for the year ended December 31, 2021 was $1.0 million.
5. Deferred Revenue
Deferred revenue, which is a contract liability, consists primarily of payments received and accounts receivable
recorded in advance of revenue recognition under the Company’s contracts with customers and is recognized as the
revenue recognition criteria are met.
Deferred revenue consists of the following (in thousands):
As of December 31, 2021
Beginning Balance
Additions to deferred revenue
Recognized revenue in the period
Ending Balance
As of December 31, 2020
Beginning Balance
Additions to deferred revenue
Recognized revenue in the period
Ending Balance
$
$
$
$
Subscription revenue
Data and other revenue
11,686 $
169 $
88,729
(86,551)
13,864 $
11,043
$
59,115
(58,472)
11,686 $
2,815
(2,919)
65 $
42 $
420
(293)
169 $
Total
11,855
91,544
(89,470)
13,929
11,085
59,535
(58,765)
11,855
6. Costs Capitalized to Obtain Contracts
The Company recognizes as an asset the incremental costs of obtaining a contract with a customer if the entity
expects to recover those costs. The Company determined that its costs to obtain contracts were both direct and
incremental. These costs are attributable to the Company’s largest channel partners.
Renewal contracts are considered non-commensurate with new contracts as the Company pays a different
commission rate for renewals. Accordingly, the guidance requires that specifically anticipated renewal periods
should be taken into consideration in determining the required amortization period. Specifically, under the guidance
of ASC 340-40, the Company is required to estimate the specifically anticipated renewals after the initial contract
to which the initial commission asset relates. The total amortization period is then equal to the initial contractual
term plus all specifically anticipated renewals that relate to the initial commission asset. Based upon its assessment
of historical data and other factors, the Company concluded that its average customer life was approximately two
years, which is used as the amortization period for all capitalized contract acquisition costs.
The following table represents a rollforward of the Company’s Costs Capitalized to Obtain Contracts,
net (in thousands):
Beginning Balance
Additions to deferred commissions
Amortization of deferred commissions
Ending Balance
Costs Capitalized to Obtain Contracts, current
Costs Capitalized to Obtain Contracts, net of current
Total Costs Capitalized to Obtain Contracts
December 31, 2021
December 31, 2020
$
$
$
3,950 $
1,713
(4,014)
1,649 $
1,319
330
1,649 $
5,731
3,210
(4,991)
3,950
3,381
569
3,950
47
7. Fair Value Measurements
The Company measures and reports certain financial instruments as assets and liabilities at fair value on a recurring
basis. These liabilities, consisting of convertible notes to purchase shares of the Company’s common stock and
contingent consideration, are considered Level 3 instruments.
The fair value of these instruments as of December 31, 2021 is classified as follows (in thousands):
Liabilities
Derivative liability
Convertible notes (Note 8)
Contingent consideration
Total
As of December 31, 2021
Level 1
Level 2
Level 3
$
$
- $
-
-
- $
- $
-
-
- $
1,396
12,293
9,500
23,189
The Company had no instruments classified at fair value as of December 31, 2020.
The change in fair value of the convertible notes and contingent liability were as follows (in thousands):
Derivative liability
Convertible notes (Note 8)
Contingent consideration
As of December 31, 2021
Fair value, beginning of the year
$
Issuance of derivative liability
Issaunces of convertible notes
Issuance of revesting notes
Issuance of contingent consideration
Changes in fair value
Fair value, end of year
$
- $
663
-
-
-
733
1,396 $
- $
-
11,597
186
-
510
12,293 $
-
-
-
-
5,900
3,600
9,500
The Company has recorded a loss associated with the change in fair value of the derivative liability and convertible
notes of $0.7 million and $0.5 million, respectively which has been recorded in other (income)/expense in the
consolidated statement of operations and comprehensive loss.
The Company has recorded a loss associated with the change in fair value of the contingent consideration of $3.6
million in general and administrative expense in the consolidated statement of operations and comprehensive loss.
Annual Report 2021 48
Notes to Consolidated Financial Statements
8. Business Combination
On September 1, 2021, the Company completed the acquisition of Jiobit, a privately held consumer electronics
company that specializes in the production of low powered sensors and wearables. The company is based in
Chicago, Illinois with an additional development center in Silicon Valley, California and was founded in 2015.
Jiobit has developed a small and long-lasting tracking solution. The mobile app, which is run through a wireless
subscription service, offers a comprehensive set of monitoring and notification features. The addition of Jiobit is
expected to strengthen and extend the Company’s market leadership position by leveraging Jiobit’s developed
technology and customer relationships to accelerate the Company’s own product development and augment
the Company with a critical mass of talent with strong tracking/wearables experience. The aggregate purchase
consideration was $43.2 million, of which $7.3 million was paid in cash, $5.9 million of contingent consideration
was payable upon reaching certain operational goals for 2021 and 2022, $11.6 million representing the fair value
of convertible notes (the “September 2021 Convertible Notes”), $4.0 million representing forgiveness of Jiobit’s
convertible debt held by the Company, $0.6 million comprised of 25,245 vested common stock options issued to
Jiobit employees (“replacement awards”), and $13.8 million comprised of 674,516 shares of the Company’s common
stock. Of the consideration transferred, $0.2 million in cash was placed in an indemnity escrow fund to be held for
18 months after the acquisition date for general representations and warranties.
The September 2021 Convertible Notes issued as part of the purchase consideration can be converted to common
stock at any time subsequent to the acquisition at a fixed conversion price of $22.50 per share. On each of the first
three annual anniversaries of the issuance date of the September 2021 Convertible Notes, the Company will repay
1/3rd of the unconverted principal plus accrued interest to the holders of such notes. Upon a change of control, the
holder may elect to either convert at the fixed conversion price of $22.50 per share or be repaid in full. The Company
has elected the fair value option and will remeasure the September 2021 Convertible Notes at their fair value on
each reporting date and reflect the changes in fair value in earnings. The estimated fair value of the September 2021
Convertible Notes is determined using a combination of the present value of the cash flows and the Black-Scholes
option pricing model using assumptions as follows:
September 1, 2021
December 31, 2021
Principal
Interest rate
Common stock fair value per share
Conversion price per share
Risk-free interest rate
Time to exercise (in years)
Volatility
Annual dividend yield
$
11,206 $
4.5%
20.49
22.50
0.45%
3
37%
0%
11,206
4.5%
21.16
22.50
0.88%
2.7
43%
0%
The estimated fair value of the September 2021 Convertible Notes upon issuance was $11.6 million. The Company
recorded $1,876 as general and administrative expense related to the change in the fair value of September 2021
Convertible Notes during the year ended December 31, 2021.
A total of $6.2 million was excluded from purchase consideration which consists of $1.9 million comprised of 91,217
shares of the Company’s common stock (“Revesting Stock” – Note 15) and $1.6 million comprised of convertible
notes (“Revesting Notes”) issued to key employees, retention bonuses of $1.0 million, and $0.5 million comprised
of 43,083 unvested common stock options issued to Jiobit employees (“Unvested Replacement Awards – Note 15).
The Company incurred transaction related expenses of $1.0 million, which were expensed as incurred and recorded
under general and administrative expenses in the consolidated statements of operations and comprehensive loss.
The Revesting Stock and Revesting Notes are restricted and vest with continuous employment of certain key
employees over a 3-year period subsequent to the acquisition. The Revesting Stock is recognized in general
and administrative as the Revesting Stock vests. The Company recorded $0.2 million as stock-based
compensation included in general and administrative expense related to the vesting of the Revesting Stock
for the year ended December 31, 2021.
49
The Company records the Revesting Notes at fair value and will remeasure the Revesting Notes at fair value on each
reporting date. The Revesting Notes are recognized in general and administrative expense. As the Revesting Notes
vest, the changes in fair value are recorded as general and administrative expense with a corresponding entry to
convertible notes. The estimated fair value of the Revesting Notes is determined using a combination of the present
value of the Revesting Notes cash flows and the Black-Scholes option pricing model. The terms of the Revesting
Notes are consistent with the terms of the September 2021 Convertible Notes. The Company recorded $0.2 million
as general and administrative and a corresponding entry to convertible notes as a result of Revesting Notes vesting
and $1,876 as general and administrative expense related to the changes in fair value of Revesting Notes during the
year ended December 31, 2021.
The retention bonuses are recognized in the consolidated balance sheet and vest monthly over a period of 24
months and require continuous employment. The expense associated with the Unvested Replacement Awards is
recognized as stock-based compensation ratably over the remaining service period.
The 2021 and 2022 contingent consideration is based on the achievement of a Qualifying Units Sold Target for the
period January 1, 2021 through December 31, 2021 (“2021 Contingent Consideration”) and for the period January 1,
2022 through December 31, 2022 (“2022 Contingent Consideration”, collectively, “Contingent Consideration”). The
Contingent Consideration consists of 301,261 and 451,891 shares for 2021 and 2022, respectively, with the amount
paid equal to the attainment relative to target in each year and settled in shares of the Company’s common
stock. The Contingent Consideration shares payable is determined based on the percentage achievement relative
to the target in each period, respectively, with greater than 100% attainment resulting in 100% payment, 90%
to 100% attainment resulting in the number of shares equal to the percentage attainment, and less than 90%
attainment equal to no consideration. The Contingent Consideration is held at fair value with changes in fair
value recognized in general and administrative expense. The estimated fair value of the Contingent Consideration
is determined by using a Monte Carlo Simulation scenario-based analysis that estimates the fair value of the
Contingent Consideration based on the probability-weighted present value of the expected future cash flows,
considering possible outcomes based on actual and forecasted results. The estimated fair value of the 2021 and
2022 Contingent Consideration upon issuance was $0.1 million and $5.8 million, respectively. The Company recorded
$3.6 million as general and administrative expense related to the change in the fair value of the Contingent
Consideration during the year ended December 31, 2021.
The acquisition was accounted for as a business combination and the total purchase consideration was allocated
to the net tangible and intangible assets and liabilities based on their fair values on the acquisition date and the
excess was recorded to goodwill. The values assigned to the assets acquired and liabilities assumed are based
on preliminary estimates of fair value available as of the date of these financial statements and may be adjusted
during the measurement period of up to 12 months from the date of acquisition as further information becomes
available. Any changes in the fair values of the assets acquired and liabilities assumed during the measurement
period may result in adjustments to goodwill.
The assets acquired and liabilities assumed in connection with the acquisition were recorded at their fair value on
the date of acquisition as follows (in thousands):
Net tangible assets
Intangible assets
Goodwill
Liabilities assumed
Total acquisition consideration
$
$
September 1, 2021
5,986
8,400
30,363
(1,551)
43,198
Annual Report 2021 50
Notes to Consolidated Financial Statements
The following table sets forth the components of identifiable intangible assets acquired and their estimated useful
lives as of the date of acquisition:
Developed technology
Trade name
Customer relationship
Intangible assets
September 1, 2021
To Total
Useful life ( in years)
$
$
4,030
3,380
990
8,400
5
10
10
Goodwill represents the future economic benefits arising from other assets that could not be individually identified
and separately recognized, such as the acquired assembled workforce of Jiobit. In addition, goodwill represents the
future benefits as a result of the acquisition that will enhance the Company’s product available to both new and
existing customers and increase the Company’s competitive position. The goodwill is not deductible for tax purposes.
The Company estimated and recorded a net deferred tax liability of $0.1 million after offsetting the acquired
available tax attributes with the intangible assets shown in the table above. Refer to Note 16 “Income Taxes” for
discussion of the partial release of the Company’s valuation allowance relating to the deferred tax liability.
The results of operations of Jiobit are included in the accompanying consolidated statements of operations and
consolidated loss from the date of acquisition.
9. Balance Sheet Components
Inventory
Inventory consists of the following (in thousands):
Raw materials
Finished goods
Total
December 31, 2021
December 31, 2020
$
$
1,298 $
711
2,009 $
-
-
-
Prepaid Expenses and Other Current Assets
Prepaid expenses and other current assets consist of the following (in thousands):
Prepaid expenses
Other receivables
Total
December 31, 2021
December 31, 2020
$
$
9,798 $
792
10,590 $
9,997
20
10,017
Prepaid expenses primarily consist of certain cloud platform and customer service program costs.
51
Property and Equipment, net
Property and equipment, net consists of the following (in thousands):
Computer equipment
Leasehold improvements
Production manufacturing equipment
Furniture and fixtures
Total Property and equipment
Less accumulated depreciation
Property and equipment, net
$
$
December 31, 2021
December 31, 2020
479 $
923
378
422
2,202
(1,622)
580 $
461
921
-
423
1,805
(1,004)
801
Depreciation expense was $0.5 million and $0.5 million for the years ended December 31, 2021 and 2020,
respectively.
Prepaid Expenses and Other Assets, noncurrent
Prepaid expenses and other assets, noncurrent consist of the following (in thousands):
Prepaid expenses
Other assets
Total
December 31, 2021
December 31, 2020
$
$
3,324 $
367
3,691 $
2,154
30
2,184
Prepaid expenses primarily consist of cloud platform costs.
Leases
The Company currently leases real estate space under non-cancelable operating lease agreements for its corporate
headquarters in San Francisco and San Diego, California and Chicago, Illinois. The operating leases have remaining
lease terms ranging from 1 to 4 years, some of which include the option to extend the lease.
The Company has recognized operating ROU assets, short term and long term lease liabilities of $1.6 million, $1.6
million and $0.3 million in “Prepaid expenses and other assets, noncurrent”, “Accrued expenses and other liabilities”
and “other noncurrent liabilities”, respectively, on the Company’s consolidated balance sheet as of December 31,
2021. As of December 31, 2021, the Company did not have any finance leases.
Operating lease costs were as follows (in thousands):
Operating lease cost(1)
$
(1) Amounts include short-term leases, which are immaterial.
Year Ended December 31,
2021
1,470 $
2020
1,422
As of December 31, 2021, the weighted-average remaining term of the Company’s operating leases was 1.3 years
and the weighted-average discount rate used to measure the present value of the operating lease liabilities was
4.75% as of adoption date of January 1, 2020.
Annual Report 2021 52
Notes to Consolidated Financial Statements
Maturities of the Company’s operating lease liabilities, which do not include short-term leases, as of December 31,
2021 were as follows (in thousands):
2022
2023
2024
Total future minimum lease payments
Less imputed interest
Total liability
$
$
Operating leases
1,628
237
61
1,926
(63)
1,863
Payments for operating leases included in cash from operating activities was $1.6 million for the year ended
December 31, 2021.
Intangible Assets, net
Intangibles, net consists of the following (in thousands):
Intellectual property
Licenses
Developed technologies
Trade name
Technology
Customer relationships
Total Intangible assets
Less accumulated amortization
Intangible assets, net
December 31, 2021
December 31, 2020
$
$
225 $
237
255
3,380
4,030
990
9,117
(1,131)
7,986 $
225
237
255
-
-
-
717
(717)
-
Amortization expense was $0.4 million and $0.2 million for the years ended December 31, 2021 and 2020,
respectively.
As of December 31, 2021, estimated remaining amortization expense for intangible assets by fiscal year is as follows
(in thousands):
2022
2023
2024
2025 and beyond
Total
$
$
Amount
1,243
1,243
1,243
4,257
7,986
53
The detail of intangible assets, net is as follows (in thousands):
Intellectual
property
Licenses
Developed
technologies
Trade name
Technology
Customer
relationships
As of December 31, 2021
Total intangible assets
Less accumulated amortization
Intangible assets, net
$
$
225 $
237 $
255 $
3,380 $
4,030 $
(225)
(237)
(255)
(113)
(268)
- $
- $
- $
3,267 $
3,762 $
990
(33)
957
Intellectual
property
Licenses
Developed
technologies
As of December 31, 2020
Total intangible assets
Less accumulated amortization
Intangible assets, net
$
$
225 $
237 $
(225)
(237)
- $
- $
255
(255)
-
Goodwill
Goodwill consists of the following (in thousands):
Beginning balance
Acquisitions
Ending balance
December 31, 2021
December 31, 2020
$
$
764 $
30,363
31,127 $
764
-
764
Accruals and Other Current Liabilities
Accruals and other current liabilities consist of the following (in thousands):
Accrued vendor expenses
Accrued compensation
Other current liabilities
Lease liability
Total
December 31, 2021
December 31, 2020
$
$
7,478 $
1,324
171
1,574
10,547 $
1,950
1,825
-
1,460
5,235
Other Non-Current Liabilities
Other non-current liabilities consist of the following (in thousands):
Other deposit liabilities
Lease liability
Total
$
$
December 31, 2021
December 31, 2020
916 $
289
1,205 $
701
1,607
2,308
Annual Report 2021 54
Notes to Consolidated Financial Statements
10. Convertible Notes
In July 2021, the Company issued convertible notes (“July 2021 Convertible Notes”) to investors with an underlying
principal amount of $2.1 million. The July 2021 Convertible Notes accrue simple interest at an annual rate of 4%,
and mature on July 1, 2026. The July 2021 Convertible Notes may be settled under the following scenarios at the
option of the holder: (i) at any time into common shares equal to the conversion amount of outstanding principal
and any accrued but unpaid interest divided by the conversion price of $11.96; (ii) at the option of the holder upon
a liquidation event a) paid in cash equal to the outstanding principal and any accrued but unpaid interest or b)
into common shares equal to the conversion amount of outstanding principal and any accrued but unpaid interest
divided by the conversion price of $11.96; or (iii) upon maturity, settlement in cash at the outstanding accrued interest
and principal amount.
Certain conversion and redemption features of the July 2021 Convertible Notes were determined to not be clearly
and closely associated with the risk of the debt-type host instrument and were required to be separately accounted
for as derivative financial instruments. The Company bifurcated these embedded conversion and redemption
(“embedded derivatives”) features and classified these as liabilities measured at fair value. The fair value of the
derivative liability of $0.7 million was recorded separate from the July 2021 Convertible Notes with an offsetting
amount recorded as a debt discount. The debt discount is amortized over the estimated life of the debt using the
straight-line method, as the value attributable to the July 2021 Convertible Notes was zero upon issuance.
As of December 31, 2021 the unamortized amount and net carrying value of the July 2021 Convertible Notes is $1.9
million and $0.2 million, respectively. The amount by which July 2021 Convertible Notes if-converted value exceeds
its principal is $1.6 million as of December 31, 2021.
In connection with the July 2021 Convertible Notes, the Company issued warrants to purchase 88,213 shares of
the Company’s common stock with an exercise price of $0.01 per share and a term of one year (Warrant Tranche
1), 44,106 shares of the Company’s common stock with an exercise price of $11.96 per share and a term of 5 years
(Warrant Trance 2), and 44,106 shares of the Company’s common stock which is exercisable starting twelve months
from the issuance date with an exercise price of $11.96 per share and a term of 5 years (Warrant Tranche 3).
The fair value of the warrants was determined using the Black-Scholes option-pricing method, with the following
assumptions:
Fair market value of common stock
Expected dividend yield
Risk-free interest rate
Expected volatility
Expected term (in years)
Warrants Tranche 1 Warrants Tranche 2 Warrants Tranche 3
$15.36
-%
0.09%
52.0%
1
$15.36
-%
0.89%
47.4%
5
$15.36
-%
0.89%
47.4%
5
The warrants were recorded to additional paid-in capital during the year ended December 31, 2021. The relative fair
value of the warrants issued in connection with the July 2021 Convertible Notes was $0.8 million, and was recorded
as a debt discount that is being amortized to interest expense under the straight-line method over the term of
respective convertible notes.
As a result of the beneficial conversion feature associated with the July 2021 Convertible Notes, $0.6 million was
added to additional paid-in capital during the year ended December 31, 2021. The beneficial conversion feature was
recorded as a debt discount and is being amortized to interest expense under the straight-line method over the term
of the respective notes.
The Company recognized a total of $0.2 million in non-cash interest expense related to the July 2021 Convertible
Notes during the year ended December 31, 2021.
The Company has also issued convertible notes, September 2021 Convertible Notes, in connection with an
acquisition. Refer to Note 8 “Business Combinations” for further details.
55
Convertible notes, current and noncurrent consist of the following (in thousands):
December 31, 2021
December 31, 2020
Convertible notes, current:
September 2021 Convertible Notes
Revesting Notes
Convertible notes, noncurrent:
July 2021 Convertible Notes
September 2021 Convertible Notes
Revesting Notes
Total
$
$
4,160 $
62
213
7,947
124
12,506 $
-
-
-
-
-
-
11. Derivative Liability
The Company’s derivative liability represents embedded share-settled redemption features bifurcated from its
July 2021 Convertible Notes and is carried at fair value. The changes in the fair value of the derivative liability are
recorded in other (income)/expense of the Company’s consolidated statements of operations and comprehensive
loss.
Estimating fair values of derivative financial instruments requires the development of significant and subjective
estimates that may, and are likely to, change over the duration of the instrument with related changes in internal
and external market factors. Since derivative financial instruments are initially and subsequently carried at fair
value, the Company’s income will reflect the volatility in these estimate and assumption changes.
The features embedded in the July 2021 Convertible Notes are combined into one compound embedded derivative.
The fair value of the embedded derivative was estimated based on the present value of the redemption discount
applied to the principal amount of the July 2021 Convertible Notes adjusted to reflect the weighted probability of
exercise. The discount rate was based on the risk-free interest rate.
Upon the issuance of the convertible notes, the Company recorded a derivative liability of $0.7 million at fair value
using inputs classified as Level 3 in the fair value hierarchy. Refer to Note 7 for further details.
Annual Report 2021 56
Notes to Consolidated Financial Statements
12. Commitments and Contingencies
Purchase Commitments
The Company has certain commitments from outstanding purchase orders primarily related to technology support,
facilities, marketing and branding and professional services. These agreements, which total $11.0 million and $21.0
million for the years ended December 2021 and 2020, respectively, are cancellable at any time with the Company
required to pay all costs incurred through the cancellation date.
Contingencies
From time to time, the Company may have certain contingent liabilities that arise in the ordinary course of business
activities. The Company accrues a liability for such matters when it is probable that future expenditures will be
made, and such expenditures can be reasonably estimated. The Company is not subject to any current pending
legal matters or claims that would have a material adverse effect on its financial position, results of operations or
cash flows.
Indemnification
The Company enters into standard indemnification agreements in the ordinary course of business. Pursuant to
these arrangements, the Company indemnifies, holds harmless, and agrees to reimburse the indemnified parties
for losses suffered or incurred by the indemnified party, in connection with any trade secret, copyright, patent or
other intellectual property infringement claim by any third party with respect to its technology. The term of these
indemnification agreements is generally perpetual after the execution of the agreement. The maximum potential
amount of future payments the Company could be required to make under these agreements is not determinable
because it involves claims that may be made against the Company in the future but have not yet been made. The
Company has not incurred costs to defend lawsuits or settle claims related to these indemnification agreements.
The Company has entered into indemnification agreements with its directors and officers that may require the
Company to indemnify its directors and officers against liabilities that may arise by reason of their status or service
as directors or officers, other than liabilities arising from willful misconduct of the individual. No amounts associated
with such indemnifications have been recorded to date.
13. Common Stock
As of December 31, 2021 and 2020, the Company was authorized to issue up to 100,000,000 shares of par value
$0.001 per share common stock.
As of December 31, 2021 and 2020, the Company had 108,592 shares of common stock subject to the Company’s
right to repurchase.
The Company has also issued shares of common stock as a result of stock option exercises throughout its existence.
Common stockholders are entitled to dividends when and if declared by the Board of Directors subject to the prior
rights of the preferred stockholders. The holder of each share of common stock is entitled to one vote. The common
stockholders voting as a class are entitled to elect three members to the Company’s Board of Directors. No dividends
have been declared in the Company’s existence.
In December 2021, the Company issued a total of 7,779,014 common shares raising proceeds before issuance costs of
$198.7 million.
57
The Company had reserved shares of common stock, on an as if converted basis, for issuance as follows:
Issuances under stock incentive plan
Issuances upon exercise of common stock warrants
Issuances upon vesting of restricted stock units
Issuances of convertible notes
Shares reserved for shares available to be granted but
not granted yet
As of December 31,
2021
6,972,376
272,001
2,523,122
686,926
4,071,403
14,525,828
2020
7,794,313
140,576
2,299,417
-
2,507,307
12,741,613
14. Warrants
As of December 31, 2021 and 2020, the Company had outstanding warrants to purchase 272,001 shares and 140,576
of Company common stock, respectively with exercise prices ranging from $0.01 to $11.96 and expiry dates ranging
from 2022 to 2028. Refer to Note 10 “Convertible Notes” for further details.
15. Equity Incentive Plan
2011 Equity Incentive Plan
The Company’s 2011 Stock Plan was originally adopted by our Board of Directors on July 27, 2011 and our
stockholders on October 11, 2011, and most recently amended by our Board on September 7, 2018 and our
stockholders (as restated, the “Plan”). The Plan allows us to grant restricted stock units, restricted stock and stock
options to employees and consultants of the Company and any of the Company’s parent, subsidiaries or affiliates,
and to the members of our Board of Directors. Options granted under the Plan may be either incentive stock options
or nonqualified stock options. Incentive stock options, or ISOs, may be granted only to employees of the Company or
any of the Company’s parent or subsidiaries (including officers and directors who are also employees). Nonqualified
stock options, or NSOs, may be granted to any person eligible for grants under our Plan.
Under the Plan, the Board of Directors determines the per share exercise price of each stock option, which for ISOs
shall not be less than 100% of the fair market value of a share on the date of grant; provided that the exercise price
of an ISO granted to a stockholder who at the time of grant owns stock representing more than 10% of the voting
power of all classes of stock (a “10% stockholder”) shall not be less than 110% of the fair market value of a share on
the date of grant.
The Board of Directors determines the period over which options vest and become exercisable. Options granted
to new employees generally vest over a 4-year period: 25% of the shares vest on the first anniversary from the
vesting commencement date of the option and an additional 1/48th of the shares vest on each monthly anniversary
thereafter, subject to the employee’s continuous service through each vesting date. Options granted to continuing
employees generally vest monthly over a 4-year period.
The Board of Directors also determines the term of options, provided the maximum term for ISOs granted to a 10%
stockholder must be no longer than 5 years from date of grant and the maximum term for all other options must be
no longer than 10 years from date of grant. If an option holder’s service terminates, options generally terminate 3
months from the date of termination except under certain circumstances such as death or disability.
Annual Report 2021 58
Notes to Consolidated Financial Statements
The following summary of stock option activity for the periods presented is as follows:
Number
of Shares
Underlying
Outstanding
Options
Weighted
Average Exercise
Price per Share
Weighted
Average
Remaining
Contractual Life
(in Years)
Aggregate
Intrinsic Value
Balance as of December 2019
8,580,697 $
Options granted
Options exercised
Options cancelled/forfeited
Balance as of December 31 , 2020
Options granted
Options exercised
Options cancelled/forfeited
Balance as of December 31, 2021
2,119,428
(889,321)
(2,016,491)
7,794,313
1,416,329
(1,056,352)
(1,181,914)
6,972,376
Exercisable as of December 31, 2021
4,738,526 $
4.06
5.52
1.66
5.71
4.30
13.05
3.19
7.85
5.61
4.15
8.38 $
24,576
4,772
8.00
34,869
6.71
6.74 $
108,426
80,608
As of December 31, 2021 and 2020, the Company had 24,283,359 and 21,781,589 shares authorized for issuance
under the Plan. As of December 31, 2021 and 2020, the Company had 4,071,403 shares and 2,507,307 shares
available for issuance under the Plan. Stock options granted during the twelve months ended December 31, 2021
and 2020 had a weighted average grant date fair value of $12.65 and $4.91 per share, respectively.
The intrinsic values of outstanding, vested and exercisable options were determined by multiplying the number of
shares by the difference in exercise price of the options and the fair value of the common stock as of December 31,
2021 and 2020 of $21.16 and $8.77 per share, respectively. The intrinsic value of the options exercised represents the
difference between the exercise price and the fair market value on the date of exercise.
The following summary of Restricted Stock Units (RSU) activity for the periods presented is as follows:
Balance as of December 31, 2019
RSU granted
RSU vested and settled
RSU cancelled/forfeited
Balance as of December 31, 2020
RSU granted
RSU vested and settled
RSU cancelled/forfeited
Number of Shares
618,115
$
2,398,274
(440,883)
(276,089)
2,299,417
1,678,982
(819,295)
(635,982)
Balance as of December 31, 2021
2,523,122
$
Weighted average
grant date fair value
7.20
6.31
7.67
6.24
6.52
14.86
17.04
7.97
11.53
The number of RSU vested and settled includes shares of common stock that the Company withheld on behalf of
employees to satisfy the minimum statutory tax withholding requirements.
59
Stock Options Granted to Employees
The fair value of the employee stock options granted is estimated using the Black-Scholes option-pricing model.
The following weighted-average assumptions were used during the years ended December 31, 2021, and 2020:
Expected terms (in years)
Expected volatility
Risk-free interest rate
Expected dividend rate
2021
4.24
49%
0.68%
0%
2020
5.68
43%
0.60%
0%
Fair Value of Common Stock: As the Company’s stock is traded on the public market, the fair value on the date of
the grant is used.
Expected Term: The expected term for employees is based on the simplified method, as the Company’s stock options
have the following characteristics: (i) granted at-the-money; (ii) exercisability is conditional upon service through
the vesting date; (iii) termination of service prior to vesting results in forfeiture; (iv) limited exercise period following
termination of service; and (v) options are non-transferable and non-hedgeable, or “plain vanilla” options, and
the Company has limited history of exercise data. The expected term for non-employees is based on the remaining
contractual term.
Expected Volatility: As the Company has limited historical trading data regarding the volatility of its common stock,
the expected volatility is based on volatility of a Company of similar entities and the Company’s trading data
since IPO. In evaluating similarity, the Company considered factors such as industry, stage of life cycle and size.
The Company will continue to analyze the historical stock price volatility and expected term assumptions as more
historical data for the Company’s common stock becomes available.
Risk-Free Interest Rate: The risk-free interest rate is based on U.S. Treasury constant maturity rates with remaining
terms similar to the expected term of the options.
Expected Dividend Rate: The Company has never paid any dividends and does not plan to pay dividends in the
foreseeable future, and, therefore, an expected dividend rate of zero is used in the valuation model.
Forfeitures: The Company accounts for forfeitures as they occur.
Stock-Based Compensation
Stock-based compensation expense was allocated as follows during the years ended December 31, 2021 and 2020
(in thousands):
Cost of revenue
Research and development
General and administrative
Sales and marketing
Total stock based compensation expense
$
$
2021
522 $
7,457
3,207
752
11,938 $
2020
371
5,504
1,792
424
8,091
As of December 31, 2021, there was total unrecognized compensation cost for outstanding stock options of $7.0
million to be recognized over a period of approximately 2.6 years. As of December 31, 2020, there was total
unrecognized compensation cost for outstanding stock options of $10.2 million to be recognized over a period of
approximately 2.3 years.
As of December 31, 2021, there was unrecognized compensation cost for outstanding restricted stock units of $26.6
million to be recognized over a period of approximately 3.2 years. As of December 31, 2020, there was unrecognized
compensation cost for outstanding restricted stock units of $16.2 million to be recognized over a period of
approximately 3.2 years.
Annual Report 2021 60
Notes to Consolidated Financial Statements
There were no capitalized stock-based compensation costs or recognized stock-based compensation tax benefits
during the years ended December 31, 2021 and 2020.
Equity Awards Issued in Connection with Business Combination
In connection with the Jiobit transaction in September 2021, the Company issued 91,217 shares of restricted common
stock with an aggregate fair value of $1.9 million to be recognized as post combination stock-based compensation
ratably with continuous employment of certain employees over a 3-year period.
As of December 31, 2021, there was $1.7 million of unrecognized compensation expense related to this restricted
common stock which is expected to be recognized over the remaining weighted average life of 2.7 years.
Additionally, the Company granted 43,083 service-based stock options under the Plan to certain Jiobit employees
with an aggregate fair value of $0.5 million which vests ratably over the requisite service period. As of December
31, 2021, there was $0.5 million of unrecognized compensation expense related to unvested assumed stock options,
which is expected to be recognized over the remaining weighted average life of 2.0 years.
16. Income Taxes
The Company has incurred net operating losses only in the United States since its inception.
An income tax benefit of $0.1 million was recorded for the year ended December 31, 2021, and no provision or benefit
for income taxes was recorded for the year ended December 31, 2020. In accordance with ASC 805, a change in the
acquirer’s valuation allowance that stems from a business combination should be recognized as an element of the
acquirer’s income tax expense or benefit in the period of the acquisition. Accordingly, for the year ended December
31, 2021, the Company recorded a $0.1 million partial release of its valuation allowance and a corresponding income
tax benefit stemming from the Jiobit acquisition.
The reconciliation of our effective tax rate to the U.S. statutory federal income tax rate was as follows:
Year Ended December 31,
Statutory federal income tax rate
Research and development tax credits
Stock-based compensation
Fair value adjustment
Permanent differences
Change in valuation allowance
Effective tax rate
2021
(%)
21
2
6
(3)
(1)
(25)
-
2020
(%)
21
4
3
-
-
(28)
-
61
The significant components of net deferred income tax assets were as follows (in thousands):
Year Ended December 31,
$
Deferred tax assets:
Reserves and allowances
Lease liability
Depreciable assets
Net operating loss carryforward
Stock-based compensation
Credits carryforward
Total deferred tax assets
Deferred tax liabilities:
Right-of-use asset
Acquired intangibles
Total deferred tax liabilities
Less: Valuation allowance and other reserves
2021
314 $
432
157
36,826
2,561
8,017
48,307
(378)
(1,018)
(1,396)
(46,911)
Net deferred tax asset
$
- $
2020
309
721
147
25,589
1,805
6,035
34,606
(620)
-
(620)
(33,986)
-
The Company has provided a full valuation allowance on the net deferred tax assets. The valuation allowance
increased by $12.9 million during 2021 and $6.5 million during 2020.
At December 31, 2021, the Company had approximately $158.2 million and $53.8 million of federal and state net
operating loss carryforwards, respectively, available to offset future taxable income. Such carryforwards expire
in varying amounts beginning in 2031. The federal net operating loss carryforwards of $97.0 million arising after
December 31, 2017 do not expire.
The Company also had federal and state research and development credit carryforwards of $7.4 million and $6.0
million, respectively. The federal tax credits expire in varying amounts beginning in 2034. The state tax credits do
not expire.
The Tax Reform Act of 1986 limits the use of net operating loss carryforwards in certain situations where changes
occur in the stock ownership of a Company. The annual limitation may result in the expiration of net operating
losses and credits before utilization. The Company performed a Section 382 analysis through December 31, 2021.
We do not expect any previous ownership changes (as defined under Sections 382 and 383 of the Internal Revenue
Code of 1986, as amended) to result in a limitation that will materially reduce the total amount of net operating
loss carryforwards and credits that can be utilized. Subsequent ownership changes may affect the limitation in
future years.
The Company files income tax returns in the U.S. federal jurisdiction and various state jurisdictions. In the normal
course of business, the Company is subject to examination by taxing authorities throughout the nation. The
Company is not currently under audit by the Internal Revenue Service or other similar state and local authorities.
All tax years remain open to examination by major taxing jurisdictions to which the Company is subject.
As of December 31, 2021 and 2020, the Company had $4.6 million and $3.6 million, respectively of gross
unrecognized tax benefits related to federal and state research credits. As of December 31, 2021 all unrecognized
tax benefits, if recognized, will not affect the Company’s effective tax rate. The Company does not anticipate any
unrecognized tax benefits in the next 12 months that would result in a material change to our financial position.
The aggregate changes in the balance of gross unrecognized tax benefits were as follows (in thousands):
Balance as of December 31, 2019
Additions based on tax positions related to 2020
Balance as of December 31, 2020
Additions based on tax positions related to 2021
Balance as of December 31, 2021
$
$
$
2,456
1,128
3,584
1,004
4,588
Annual Report 2021 62
Notes to Consolidated Financial Statements
17. Related-Party Transactions
The Company has entered into secondary financing transactions and other transactions with certain executive
officers and Board members of the Company. A summary of the transactions is detailed below:
Notes Due From Affiliates (Asset-Classified)
The Company accounted for secured partial recourse promissory notes in 2017 as related party notes and included
the principal amounts due from such notes under Notes Due From Affiliates on the Balance Sheets.
As of December 31, 2021 and 2020, the Company had options to repurchase 24,444 shares of common stock.
The Company determined the fair value of such options for each period using a lattice option-pricing model
using expected volatility ranging from 67.2% to 76.1%, risk-free interest rates ranging from 1.4% to 2.6% and an
expected dividend rate of 0%. The options had an estimated fair value as of December 31, 2021 and 2020 of $0.03
million and $0.03 million, respectively, and are included within Other Assets on the Balance Sheets.
Notes Due From Affiliates (Contra Equity)
In February 2016, the Company issued an aggregate of $0.6 million in secured partial recourse promissory notes
(“partially secured loan”) to the Chief Executive Officer, Non-Executive Director (Previously President), Chief
Operating Officer and an officer of the Company.
The Company accounted for the 2016 partially secured loan as consideration received for the exercise of the related
equity award, because even after the original options are exercised or the shares are purchased, an employee
could decide not to repay the loan if the value of the shares declines below the outstanding loan amount and could
instead choose to return the shares in satisfaction of the loan. The result would be similar to an employee electing
not to exercise an option whose exercise price exceeds the current share price. When shares are exchanged for a
partially secured loan, the principal and interest are viewed as part of the exercise price of the “option” and no
interest income is recognized. Additionally, compensation cost is recognized over any requisite service period, with
an offsetting credit to additional paid-in capital. Periodic principal and interest payments, if any, are treated as
deposit liabilities until the note is paid off, at which time, the note balance is settled and the deposit liability balance
is transferred to additional paid-in capital. As of December 31, 2021 and 2020, the Company had deposit liability
balances of $0.9 million, in connection with the 2016 partially secured loan and other early exercises of equity
awards. Principal amounts due under the 2016 partially secured loan, or $0.6 million, are included in Notes Due From
Affiliates as a reduction in stockholders’ equity on the balance sheets.
Related Party Revenue
On July 11, 2017, the Company and ADT LLC (“ADT”) which was a related party pursuant to ADT’s ownership of shares
of the Company’s common stock, entered into the Master Services and Licensing Agreement under which ADT would
receive a license to the Company’s technology through an integrated mobile application offered by ADT to its end
customers. Pursuant to the agreement, the Company and ADT would contribute their proprietary mobile application
technology to develop ADT Anywhere Basic and ADT Anywhere Premium. The Company was entitled to receive fees
based on the number of active users on each mobile application platform.
The following table represents revenue and accounts receivable received from ADT (in thousands):
Revenue
Year Ended December 31,
Accounts Receivable
As of December 31,
ADT
$
2021
- $
2020
195 $
2021
- $
2020
1
63
Other Related Party Transactions
Non-executive director, James Synge, is a Principal and Partner of Carthona Capital. During the years ended
December 31, 2021 and 2020 cash payments of $31,000 and $30,063, respectively were paid to Carthona Capital
for the directors’ fees for a non-executive director. During the year ended December 31, 2021, the Company entered
into a consultancy agreement with Carthona Capital. Under this agreement, Carthona Capital agreed to provide
consultancy services to the Company in relation to capital raising matters. For the year ended December 31, 2021,
Carthona Capital has received consideration of $100,000.
During the year ended December 31, 2021, a cash payment of $61,343 was paid to Pathzero primarily for the
purchase of carbon offsets and carbon emissions reporting.
Annika Hulls is the spouse of the CEO and Executive Director, Chris Hulls. During the year ended December 31, 2021,
a cash payment of $20,150 was paid to Annika Hulls for services relating to a marketing campaign.
18. Defined Contribution Plan
The Company sponsors a defined contribution plan under Section 401(k) of the Internal Revenue Code covering
substantially all employees over the age of 21 years. Contributions made by the Company are voluntary and are
determined annually by the Board of Directors on an individual basis subject to the maximum allowable amount
under federal tax regulations. The Company has made no contributions to the plan since its inception.
19. Net Loss Per Share Attributable to Common Shareholders
The following table sets forth the computation of basic and diluted net loss per share attributable to common
stockholders as of December 31, 2021 and 2020 (in thousands):
Net loss attributable to common shareholders
Weighted-average shares used in computing net loss per share
attributable to common shareholders, basic and diluted
Net loss per share attributable to common
shareholders, basic and diluted
$
$
As of December 31,
2021
(33,557) $
51,656
2020
(16,334)
49,346
(0.65) $
(0.33)
The potential shares of common stock that were excluded from the computation of diluted net loss per share
attributable to common stockholders for the periods presented because including them would have been
antidilutive as of December 31, 2021 and 2020 are as follows:
Issuances under stock incentive plan
Issuances upon exercise of common stock warrants
Issuances upon vesting of restricted stock units
Issuances of convertible notes
Shares reserved for shares available to be granted but not granted yet
As of December 31,
2021
6,972,376
272,001
2,523,122
686,926
4,071,403
14,525,828
2020
7,794,313
140,576
2,299,417
-
2,507,307
12,741,613
Annual Report 2021 64
Notes to Consolidated Financial Statements
20. Remuneration of Auditors
During the year, the following amounts were paid or payable for services provided by the auditor of the Company
(in thousands):
Year Ended December 31,
2021
285 $
42
327 $
2020
249
50
299
$
$
Audit and review of financial statements
Other assurance services
Total remuneration of auditors
21. Subsequent Events
The Company evaluated subsequent events through March 30, 2022.
Tile Acquisition
On January 5, 2022, the Company acquired all the ownership interests of Tile, Inc (“Tile”) for a total consideration
of up to $205.0 million. Tile is the provider of Bluetooth enabled devices that enable its customers to locate Tiled
objects. The total consideration of up to $205.0 million is comprised of i) $132.4 million of cash, subject to customary
adjustments ii) up to $37.6 million of new shares issued to the shareholders of Tile, conditional, in part, on Tile
achieving certain financial hurdles and iii) up to $35.0 million in retention awards for Tile employees, subject to
performance requirements.
Placer.ai Agreement
In January 2022, the Company executed a new partnership agreement with Placer.ai (“Placer”), a prominent
provider of anonymized aggregated analytics for the retail ecosystem. As part of this partnership, Placer will have
the right to commercialize aggregated data related to place visits during the term of the agreement. The Company
has begun terminating existing relationships with certain Data Partners. This agreement includes a minimum
revenue guarantee based on the size of the Life360’s active user base for the duration of the three-year agreement.
65
Shareholder
Information
Annual Report 2021 66
Additional Shareholder Information
Shareholder information as at 28 February 2022
Additional Shareholder Information required by the Australian Securities Exchange Limited (ASX) Listing Rules is set
out below.
In accordance with the 4th edition ASX Corporate Governance Council’s Principles and Recommendations, the 2021
Corporate Governance Statement, as approved by the Board, is available on the Company’s website at: https://
investors.life360.com/investor-relations/?page=corporate-governance. The Corporate Governance Statement sets
out the extent to which Life360 has followed the ASX Corporate Governance Council’s Recommendations during the
2021 financial year.
The Company has issued a total of 54,914,470 fully paid shares of common stock (Shares). In accordance with
the Company’s Prospectus dated 29 April 2019, where 3 CDIs represent 1 Share, this equates to 164,743,410 Chess
Depository Receipts (CDIs).
However, not all Shares have been converted to CDIs. As at 28 February 2022, 164,743,410 CDIs are on issue and held
by 6,566 CDI holders (which represents 54,914,470 Shares). 6,231,449 Shares are held by 303 shareholders who have
not elected to hold Company securities in the form of CDIs.
1. Substantial shareholders
The number of securities held by substantial shareholders and their associates as notified to the Company are set
out below:
Name
Regal Funds Management
Paradice Investment Management
Notification Date
Number of CDIs
20/12/2021
25/1/2022
11,552,418
9,825,851
%
6.30%
5.36%
Christopher Hulls no longer has a substantial holding in the Company as his relevant interest was diluted from 6.08% to
4.77% when CDIs were issued under the equity raising in December 2021 and the acquisition of Tile in January 2022.
2. Number of security holders and securities on issue
Life360 has issued the following securities:
(a) 164,743,410 CDIs held by 6,566 CDI holders;
(b) 6,231,449 Shares held by 303 shareholders;
(c) 7,356,107 unlisted options held by 215 option holders;
(d) 4,219,181 Restricted Stock Units held by 387 holders; and
(e) 219,743 Warrants over shares held by 9 holders
Details of the Top 20 holders of quoted CDIs are set out in section 5 below.
3. Voting rights
Ordinary shares
At a meeting of the Company’s stockholders, every stockholder present, in person or by proxy is entitled to one vote
for each share held on the record date for the meeting on all matters submitted to a vote of stockholders.
CDIs
CDI holders are entitled to one vote for every three CDIs they hold.
Options
Option holders do not have any voting rights on the options held by them.
Restricted Stock Units
Restricted Stock Units holders do not have any voting rights on the Restricted Stock Units held by them.
Warrants
Warrant holders do not have any voting rights on the warrants held by them.
67
Distribution of security holders
Category
1-1,000
1,001-5000
5,001-10,000
10,001-100,000
100,000 and over
Total
Category
1-1,000
1,001-5000
5,001-10,000
10,001-100,000
100,000 and over
Total
Category
1-1,000
1,001-5000
5,001-10,000
10,001-100,000
100,000 and over
Total
CDIs
Total Shareholders
Number of CDIs
4,030
1,506,957
1,848
4,222,390
343
269
76
6,566
2,511,284
7,216,825
149,285,954
164,743,410
Shares
Total Shareholders
Number of Shares
60
17,256
129
339,342
50 356,954
56
1,331,849
8
4,186,048
%
0.9%
2.6%
1.5%
4.4%
90.6%
100.0%
%
0.3%
5.4%
5.7%
21.4%
67.2%
303
6,231,449
100.0%
Unquoted Stock Options
Total Holders Number of Options
102
30
13
54
16
21,956
82,951
105,159
1,604,771
5,541,270
%
0.3%
1.1%
1.4%
21.8%
75.3%
215
7,356,107
100.0%
Note that the Unquoted Options as stated above have various exercise prices and expiry dates.
Category
1-1,000
1,001-5000
5,001-10,000
10,001-100,000
100,000 and over
Total
Category
1-1,000
1,001-5000
5,001-10,000
10,001-100,000
100,000 and over
Total
Restricted Stock Units (RSUs)
Total Holders
Number of RSUs
30
146
82
128
20,141
387,989
599,464
2,784,014
1
427,573
%
0.5%
9.2%
14.2%
66.0%
10.1%
387
4,219,181
100.0%
Warrants over Shares
Total Holders Number of Warrants
1
2
1
5
-
9
836
8,362
7,761
202,784
-
219,743
%
0.4%
3.8%
3.5%
92.3%
0.0%
100.0%
Annual Report 2021 68
Additional Shareholder Information
Shareholder information as at 28 February 2022
4. Unmarketable parcel of shares
The number of CDI Holders holding less than a marketable parcel of CDIs (being A$500) is 643 based on the
Company’s closing CDI price of A$5.20 on 28 February 2022.
5. Twenty largest shareholders of quoted equity securities
Details of the 20 largest CDI Holders by registered CDI holding are as follows.
Name
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
CITICORP NOMINEES PTY LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
NATIONAL NOMINEES LIMITED
CS THIRD NOMINEES PTY LIMITED
CHRISTOPHER HULLS
UBS NOMINEES PTY LTD
VERIZON VENTURES LLC\C
BNP PARIBAS NOMINEES PTY LTD
1
2
3
4
5
6
7
8
9
10 MERRILL LYNCH (AUSTRALIA) NOMINEES PTY LIMITED
11
12
13
14
15
16
17
KENNETT CAPITAL INC\C
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
BNP PARIBAS NOMINEES PTY LTD
BRISPOT NOMINEES PTY LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED