Xero vs Life360: Which ASX tech share has more upside?

Xero vs Life360 shares: Which ASX tech stock has more upside?

If you’re looking at ASX technology shares, chances are both Xero Ltd (ASX: XRO) and Life360 Inc (ASX: 360) are on your radar. They’re standout names in Australian tech, but both have hit rough patches lately. So, which has the stronger investment case and might offer more upside from here? Let’s take a closer look at Xero vs Life360 shares.

The case for Xero

Xero is a New Zealand-born technology company, now with a global reach, that provides cloud-based accounting software to small and medium businesses. Its product helps businesses manage financials, payroll, invoicing, and compliance, all via an easy-to-use, subscription-based platform.

A few key things jump out from Xero’s current numbers:

• A sizeable market cap of $10.25 billion, which signals strong market presence and brand trust.
• The P/E ratio sits at 49.87, suggesting that the company may be priced with future growth in mind, although such a high multiple could also mean the market is demanding a lot out of it.
• Xero is not currently paying a dividend (dividend yield 0.00%), instead, the company seems to be retaining capital, likely to focus on reinvestment and growth.
• Year to date, its return is -44.9%, which certainly isn’t pretty for anyone who bought in the past twelve months.

It’s also worth noting that Xero’s most recent earnings per share is reported as -0.158, which is negative. That calls out some near-term profit challenges, worth keeping in mind.

According to its most recent public description, Xero is considered a leader in cloud accounting for small and medium-sized businesses and works off a recurring revenue, subscription-based model.

The case for Life360

Life360 is a US-based software company best-known for its popular family safety app. This app allows families and friend groups to share their locations, connect, and access helpful safety features like driver monitoring, medical and roadside assistance, and theft alerts. It’s widely used by families worldwide and, per its company profile, boasts more than 104 million monthly active users globally.

Several fundamentals stand out for Life360 right now:

• Market cap is $4.56 billion—substantial, but less than half that of Xero, so this is a more mid-cap opportunity.
• Life360’s P/E ratio is 23.51, meaning investors are paying roughly half as much per dollar of earnings compared to Xero. That’s appealing if you’re looking for value in the tech sector.
• The company has positive earnings per share of 0.573—a big contrast with Xero’s negative result—implying improved profitability.
• Like Xero, Life360 pays no dividend.
• Year to date, its share price is down 43.3%, only a hair less painful than Xero.

Valuation comparison

Here’s how some core valuation numbers stack up:

Note: Xero’s reported P/E ratio is positive despite a negative EPS. This likely means the P/E is calculated on a different earnings measure (such as underlying or forward earnings) rather than the reported statutory EPS, which is why the two figures may not neatly align.

Neither company pays a dividend, so dividend hunters may want to look elsewhere for income. Life360 looks notably cheaper on a P/E basis and is actually reporting positive earnings per share, whereas Xero is not.

Recent share price performance

Both companies have had a rough ride lately. Comparing 24 Aug – 21 Sep 2026:

• Xero shares fell from $86.73 on 24 August to $60.08 on 21 September 2026, a sharp drop over this period, in line with its -44.9% year to date return.
• Life360 shares dipped from $20.78 on 24 August to $18.68 on 21 September 2026, which works out as a slide of about 10% for the month, and mirrors its -43.3% YTD return figure.

Both have lost a lot of ground lately, with neither showing clear momentum over the past month per the numbers supplied.

Which is the better buy?

Both Xero and Life360 are quality businesses shaking up their respective fields, but neither is in market favour right now, judging by their steep share price declines this year. If I’m picking based on the fundamentals provided, I’d lean toward Life360 at this moment. While it’s smaller, Life360 boasts positive earnings per share and trades at a P/E ratio less than half Xero’s. That could suggest a more appealing balance between growth potential and value, especially with Life360 expanding into new revenue streams like advertising.

Xero’s negative EPS and much higher valuation multiple are red flags for me, especially when the company is also coming off a big share price fall. That’s not to say Xero couldn’t bounce back—its subscription model and global reach are real strengths—but on the raw numbers in front of me, Life360 looks the nimbler, less expensive, and more profitable tech play of the two.

Neither stock pays a dividend, so near-term income isn’t on the cards from either name. Ultimately, with Life360 priced lower, earning positive profits, and exploring new business avenues, my pick would be Life360 for greater potential right now.

The post Xero vs Life360: Which ASX tech share has more upside? appeared first on The Motley Fool Australia.

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Motley Fool contributor Laura Stewart 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 and Xero. The Motley Fool Australia has positions in and has recommended Life360 and Xero. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips. This article was prepared with the assistance of Large Language Model (LLM) tools for the initial draft. Any content assisted by AI is subject to our robust human-in-the-loop quality control framework, involving thorough review, substantial editing, and fact-checking by our experienced writers and editors holding appropriate credentials. The Motley Fool Australia stands behind the work of our editorial team and takes ultimate responsibility for the content published by The Motley Fool Australia.