Forget Life360: Online safety group Qoria is backed as the ASX's next big winner

Life360 is today's winner, but you've got to find tomorrow's winners to make massive returns and Qoria's results last week created a stir.
Tom Richardson

Livewire Markets

Fund managers and retail punters are piling into Life360 (ASX: 360) shares as the online-safety app grows users and sales at prodigious rates. 

The Life360 mania sent the stock to a record $39.33 on Monday, having surged 10-fold in less than five years, but smart investors are now honing in on another online safety business as a multi-bagger growth prospect. 

Monitoring the internet use of children is turning into a profitable and fast-growing business for Qoria. 
Monitoring the internet use of children is turning into a profitable and fast-growing business for Qoria. 

On July 22, cyber safety group Qoria (ASX: QOR) guided for revenue to grow 20% to more than $140 million in FY26 and EBITDA profit margins to increase from 13% to 20%. 

The guidance for sales and margin growth was music to the ears of investors and brokers, as shares surged 25% last week and all six analysts covering the stock reiterated buy ratings and raised valuations to an average of 64 cents per share. 

About Qoria

Qoria is the company formerly known as Family Zone, which sells internet usage monitoring software known as K12 to schools in Australia, the UK and the US.

It also sells consumer-facing parental control software known as Qustodio.

The K12 software from 'kindergarten to 12th grade' helps schools monitor and restrict pupils' internet use. While the Qustodio product allows parents to monitor and control their kids' online time, with demand rising given the many ways to access the internet these days. 

As at June 30, Qoria said it has 32,000 schools signed up globally, covering 27 million students, with eight million parents subscribing to Qustodio. 

The US is its fastest-growing market, and the schools business accounts for around 80% of annualised recurring revenue (ARR) of $145 million. 

It's also investing in product updates for its Qustodio software, where it expects already strong sales growth to accelerate in the years ahead. 

Professional investors that have appeared on its register include Regal Partners, Perennial Partners, Seneca Funds Management, and TAMIM Asset Management. 

Valuation

After last week's share price surge, Qoria's market value is $739 million based on a 56-cent share price on Monday and 1.32 billion shares on issue. 

The company forecasts a free cashflow profit in FY 2026 and trades on 5x annualised recurring revenue of $145 million at 56 cents. 

Ben Richards, an Co-Portfolio Manager at Seneca's Australian Small Companies Fund, says fast-growing software companies tipping into profitability will typically trade on an average of 7x enterprise value to sales, suggesting Qoria is still good value. 

"Retrospectively, the best time to buy Life360 was in 2023, when its profitability began to accompany strong growth and the market re-rated it from 2x EV/Sales to 10x. We see Qoria following a similar path, having kicked off its own upgrade cycle at the end of 2023, with the multiple already expanding from 2x to 4.6x," Richards told Livewire. 

Life360's latest surge means investors are now paying 14 times annualised March quarter revenue of $412 million on a $5.9 billion market cap on a back-of-the-envelope calculation. 

While Life360's adjusted EBITDA margin in the March quarter was 15% which means it's slightly higher than the 13% delivered by Qoria. However, Qoria forecasts that margin to climb to 20% in FY 2026, which is another big driver of the latest share price move. 

"Analysts are starting to lift their price targets, and while the stock has traded sideways awaiting confirmation, history suggests the biggest returns come over the next 12–24 months - just as they did with Life360," says Richards. 

Net debt is $36.8 million, and given the business is now free cashflow positive, this looks manageable as it has around $15 million in cash on hand. 

Risks

However, it's worth noting that online-safety software is a competitive space, where the likes of Qoria must invest heavily in product development, sales, and marketing to grow.  

This is why it has posted historical losses and partly why the market has been reluctant to consistently bid shares higher since they fetched 38 cents five years ago in July 2020. 

As such, Qoria remains a risk-on bet, as its $739 million valuation means investors expect it to grow profits and sales at a decent rate into the future. 

Churn - as a measure of customers quitting - is around 5% and this is another metric to watch as investors are likely to dump the stock pronto on evidence churn is worsening.

Still, the frenzy around Life360 shows these types of businesses can shoot far higher than expected if they continue to grow strongly. 

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Please note Tom Richardson has no financial interest in any security mentioned in this wire. Livewire gives readers access to information and educational content provided by financial services professionals and companies ("Livewire Contributors"). Livewire does not operate under an Australian financial services licence and relies on the exemption available under section 911A(2)(eb) of the Corporations Act 2001 (Cth) in respect of any advice given. Any advice on this site is general in nature and does not take into consideration your objectives, financial situation or needs. Before making a decision please consider these and any relevant Product Disclosure Statement. Livewire has commercial relationships with some Livewire Contributors.

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Tom Richardson
Journalist, senior editor
Livewire Markets

Tom covered markets as a Markets Reporter & Commentator at the Australian Financial Review for nearly five years. Prior to that he was the Managing Editor of The Motley Fool Australia leading a team of around 20 investment writers during a...

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