Up 61% since February, why this ASX 200 tech stock could 'continue to surprise to the upside'

Happy man and woman looking at the share price on a tablet.

S&P/ASX 200 Index (ASX: XJO) tech stock Life360 Inc (ASX: 360) has made shareholders very happy over the past year.

The United States-based company develops software that’s mainly used for location sharing. Its smartphone app has seen increasing demand with families looking to track their children’s locations or to help keeping older people and folks with special needs safe.

That strong demand has seen investors send the ASX 200 tech stock soaring 164% over the past 12 months. And the Life360 share price is up 61% since the closing bell sounded on February, currently trading for $13.14 a share.

Yet even with those strong gains already in the bag, Blackwattle Investment Partners sees more growth potential ahead.

ASX 200 tech stock with further growth potential

Life360 counts among the top five holdings of the Blackwattle Small Cap Long-Short Quality Fund.

Blackwattle notes that, “Life360 rallied 59% in March following guidance to higher long-term revenue targets and new plans to monetise users through advertising.”

Looking ahead, the fund manager said, “We see potential for Life360 to continue to surprise to the upside as it further penetrates the market, adds new verticals and lifts margins.”

Blackwattle isn’t alone in its bullish assessment of this soaring ASX 200 tech stock.

Goldman Sachs has a buy rating on Life360 with a $14.20 price target. That represents a potential 8% upside from current levels.

Following on the company’s 8 April trading update, Goldman’s analysts noted:

The company is run-rating well ahead of our 1H24 expectations, particularly for U.S. subscription net adds (most important driver of Life360’s revenue/earnings).

Operating metrics can be volatile quarter to quarter, and we note that this follows a relatively softer 4Q23, however in our view Life360 has started FY24 strongly and should be comfortably tracking to meeting revenue guidance and potentially exceeding EBITDA guidance.

What did Life360 report?

The ASX 200 tech stock has been growing revenues at a significant pace.

For its 2023 calendar year results, the company reported a 33% increase in revenue to US$305 million. Subscription revenue of US$200 million in 2023 increased by 52% from 2022.

At its quarterly update on 8 April, Life360 didn’t provide earnings or revenue results. Management will report those metrics when the complete quarterly results are released on 10 May.

But investors still sent the ASX 200 tech stock rocketing 16.8% on the day.

Investors’ enthusiasm was driven in part by the company’s report that it had achieved 66.4 million global Monthly Active Users (MAU) as at 31 March, having added 4.9 million MAU since 31 December.

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Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Life360. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.