The world is not the same safe place it once was based on rising demand for location-aware safety solutions which security tech company Life360 (ASX: 360) is taking one step further through the USD $37 million acquisition of wearables company Jiobit to extend their family-tracking suite.
The acquisition is part of a strategic review which Life360 commenced earlier in the year to broaden their market reach beyond the Life360 app which families can use to monitor the locations of children and seniors in real-time through their smartphones.
With the acquisition, Life360 will extend this tech into wearable devices where Jiobit’s primary product is pocket-sized tokens, the smallest on the market, that can be tracked via GPS. At present, these can be easily attached to pets which presents a new market opportunity for Life360 while improving their existing product.
According to the Company, the pet supplies and services, and elder care markets are multi-billion dollar markets which they can tap into through this acquisition.
Upfront consideration for the acquisition is USD $37 million which comprises $21.6 million in Life360 shares, approximately $14.4 million in convertible notes, and $1.0 million in retention consideration. There is also the possibility for total consideration to increase up to $54.5 million if performance criteria are met within 2 years.
The effective issue price for new shares represents an 84% premium to Life360’s closing price adjusted for foreign exchange as at 26 April 2021 but is still subject to Jiobit shareholder approval.
Jiobit projects that its total annualised revenue run rate for the month of December 2021 will be US$11.7m. This would consist of $5.7m of subscriptions and $6.0m from other sources, primarily device sales.
If the acquisition proceeds, the purchase price represents a range of 3.2x to 4.7x Jiobit’s projected December 2021 forward looking revenue run rate.
While Life360 considers this proposed acquisition as a milestone in its corporate history, the Company is not done with its strategic review which may lead to further acquisitions and a dual-listing in the United States where it is headquartered. Beyond the fact the US market is significantly more lucrative than Australia, Life360 is looking at its position in the insurance vertical where location-awareness produces valuable data for insurance companies.
For the calendar year ended 31 December, 2020, Life360 delivered statutory revenue of USD $80.7 million, a 37% year-on-year increase. Although it resulted in a $7.3m net loss, the Company had a healthy cash balance of $56.6m and no debt.