Down 40% this 12 months, do you have to pounce on this ASX tech share now earlier than it turns into worthwhile?

The Life360 Inc (ASX: 360) share value swung like a pendulum on Tuesday as buyers digested the corporate’s first-half results.

After tumbling greater than 8% in early morning commerce, the Life360 share value made a surprising restoration to complete the day greater than 5% larger.

Regardless of yesterday’s rise, the Life360 share value remains to be languishing round 40% decrease this 12 months. 

Might the dip current a shopping for alternative for this up-and-coming ASX tech share?

Setting the scene

Life360 is a US-based firm that made a reputation for itself by designing a household security app for smartphones.

The corporate presents a freemium mannequin the place a fundamental subscription permits households (also called ‘circles’) to see the whereabouts of different members of their group on a map in real-time. It’s just like Apple Inc’s (NASDAQ: AAPL) Discover My function on its units.

However Life360 differentiates itself via the comprehensiveness of options on supply. Households can entry a variety of options via the corporate’s paid subscriptions, together with crash detection, driver studies, roadside help, and ID theft safety.

Whereas this stays Life360’s core providing, the corporate has turned to acquisitions to construct out its ecosystem.

In September 2021, it accomplished the acquisition of Jiobit, a supplier of wearable location units for younger kids, pets, and seniors.

Not lengthy after, Life360 made headlines when it introduced the US$170 million acquisition of Tile, a number one supplier of location trackers that may be connected to precious gadgets.

With these acquisitions beneath its belt, Life360 has accomplished its ‘360’ imaginative and prescient of defending folks, pets, and issues.

The corporate believes these offers have expanded its addressable market. And built-in collectively, it expects its new bundled providing to result in larger conversion charges to paid subscriptions, elevated common income per paying circle, and improved retention charges.

Profitability ahoy

As a consumer-focused software-as-a-service (SaaS) enterprise, Life360 studies loads of metrics for buyers to watch.

However past these metrics and financials, what possible caught the eye of the market yesterday was the corporate’s commentary round profitability.

The flavour of February’s reporting season earlier this 12 months was prices and, in flip, income. ASX growth shares, specifically, had been swiftly and brutally offered down on indicators of accelerating working bills and/or no line of sight to profitability.

So maybe studying from this, Life360 has made its give attention to the underside line clear. 

In welcome information for buyers, the corporate expects to ship constructive cash flow within the fourth quarter of CY22. And in response to administration, its present trajectory ought to see Life360 turning into earnings before interest, tax, depreciation and amortisation (EBITDA) constructive by late CY23.

This path to profitability is underpinned by a leaner price base, organisational price efficiencies, lowering commissions, new bundled memberships, and bettering subscriber metrics.

What’s extra, the corporate is presently market testing larger value factors for its subscriptions. If Life360 does certainly have latent pricing energy and decides to flex it, these value will increase might add additional upside.

Life360 share value snapshot

The Life360 share value went on a tear in 2021, rocketing greater than 150% to be on the radar of many ASX development buyers.

2022 hasn’t been so type, with Life360 shares tumbling roughly 40% within the 12 months up to now.

The corporate expects to ship income between US$245 million and US$260 million in CY22. The midpoint of this vary represents 124% development in comparison with CY21, predominantly pushed by the addition of Tile.

Taking the midpoint of CY22 income steering, Life360 shares are buying and selling on a ahead price-to-sales ratio of roughly 3x.

With a rapidly-growing person base, sturdy optionality, bettering economics, and a founder on the helm, Life360 is an ASX tech share firmly on my watchlist.