Strategic Performance and Operational Context

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• Achieved a 100 million monthly active user (MAU) milestone, driven by a return to the historical 'glide path' following Q1 execution challenges.

• Strongest Q2 Paying Circle growth on record (185,000 net adds) attributed to deepening penetration on high-end devices and improved brand awareness.

• International expansion is accelerating in Brazil and Mexico, reaching the 3% penetration threshold where management historically observes growth rates begin to compound.

• Strategic shift in the Pet GPS business prioritizes long-term subscription scale over immediate hardware margins by bundling devices into the Silver tier.

• Transitioning to an AI-native operating model by reallocating R&D roles toward AI capabilities to automate monetization and enhance member engagement.

• Advertising platform integration is largely complete, with internal data showing call-to-action rates up to 47% higher than third-party targeting benchmarks.

• Acquisition of SuperDuper team and technology aims to evolve the app from a location tracker into a comprehensive family coordinator using AI to synthesize calendars and emails.

Outlook and Strategic Assumptions

• Reiterated full-year revenue guidance of $650 million to $685 million, with an upward revision to subscription targets offset by lower hardware volume expectations.

• Advertising gross margins are projected to normalize toward 65% to 70% by Q4 2026 as the managed service operation scales and gains operating leverage.

• Management expects Q4 2026 adjusted EBITDA margin to exceed the 22% achieved in the prior year, supported by seasonal advertising strength.

• The Pet GPS relaunch and back-to-school marketing initiatives are expected to drive significant momentum in the second half of the year.

• Future product roadmap includes expanding into the 'aging parents' demographic to increase essentiality across all family life stages.

Structural Dynamics and Risk Factors

• Hardware gross margin of 43% included a one-time $3.6 million tariff refund; excluding this, margins were approximately 7% due to the strategic retail exit.

• Operating expenses increased 43% year-over-year, reflecting fixed costs for scaling and the integration of the Nativo sales organization.

• Stock-based compensation peaked in Q2 due to the backdating of performance equity grants approved at the May AGM; normalization is expected in H2.

• Hardware revenue guidance was lowered to $35 million to $45 million, reflecting deliberate device pricing strategies to drive subscription adoption.