Life360, Inc. (LIF) Cash Flow Statement

The OCF/NI ratio of 3.92 in 2026Q2, up from 0.28 in 2025Q4, indicates that cash conversion has improved dramatically as non-cash charges like SBC ($22.8M) and D&A ($5.7M) dominate the gap between net income and operating cash flow. This suggests that reported earnings understate the company's true cash-generating ability, though the 2025Q4 spike in net income ($129.7M) was clearly non-operating and not reflected in cash flow. Investors should monitor whether this conversion ratio normalizes as SBC growth slows.

FCF has grown from $2.0M in 2024Q2 to $21.4M in 2026Q2, with the FCF margin expanding from 2.4% to 13.5% over that period. This improvement appears driven by operating leverage as subscription revenue scales, while capex remains minimal at roughly 1% of revenue. The trajectory suggests the company is transitioning from a cash-burning growth phase to a self-funding model, though the 2025Q4 FCF margin of 24.1% was inflated by a one-time net income boost and should not be extrapolated.

Capex ranged from -$1.6M to $1.6M across the ten quarters, with negative values indicating asset disposals or refunds, which is unusual but consistent with a cloud-based platform that outsources infrastructure. The low capital intensity (0.6% of revenue) contrasts sharply with hardware peers like Garmin, suggesting that Life360's growth is not constrained by physical capacity. This implies that nearly all operating cash flow is available for reinvestment or shareholder returns, though the company has yet to initiate dividends or buybacks.

The working capital line has oscillated between -$11.3M and +$7.5M over the past ten quarters, with the most negative readings in 2024Q4 and 2025Q2. This volatility likely stems from the Tile hardware business, where inventory builds ahead of holiday sales and receivables fluctuate with channel timing. The negative working capital changes in recent quarters suggest cash is being absorbed into inventory or receivables, which may pressure near-term FCF despite strong operating income growth.

The cumulative OCF/NI ratio of approximately 1.03 over the ten-quarter period suggests that, despite quarterly volatility, the company's accrual earnings are not inflated by aggressive revenue recognition or non-cash items. However, the 2025Q4 net income of $129.7M, which was not matched by operating cash flow of $36.8M, highlights that a single non-operating gain can distort the cumulative picture. Excluding that quarter, cumulative OCF would be roughly 3.5 times cumulative net income, reinforcing the view that core operations are highly cash-generative.