Jamf Holding Corp. (JAMF) Earnings Call Transcript & Summary

All right. I think we're ready to get going. I'm DJ Hynes, I'm the senior research analyst here at Canaccord. Thanks, everyone, for tuning in. This is the 41st year we've done the Canaccord conference. We couldn't do it without the clients that tune in online. We couldn't do it without the corporates that hope make this event so special. So thank you to everyone. Thank you to Jamf for being here today. Delighted to have CEO, Dean Hager, our CFO, Jill Putman. These guys continue to do interesting stuff in the Apple ecosystem. I think the numbers speak for themselves. The business is seeing lots of momentum. So I'm looking forward to digging in on some of the details. We're going to try and make this interactive. There's a Q&A bar on your webinar screen. Please send in questions. I have a list we're going to go through and do it as a fireside chat. But I want to make sure we get a chance to integrate questions from the audience. It's for you guys, after all. So don't hesitate to send stuff in. With that Let's get into it. Dean, Jill, thank you. I think this is the first year you guys have done the conference, if I'm remembering correct, you guys priced the IPO right around this time, I think it was late July last year. So the story is still relatively new to public investors. Maybe just a level-set, can we do like the 2-, 3-minute elevator pitch on the business? What you guys are doing? The problems you're solving? Why it's interesting? And then we can dive in from there.

Yes, absolutely. First of all, DJ, thanks for having us and to everybody who's out there. Thanks for joining us. Welcome to by basement. By the way, what we do at Jamf, fundamental, is we empower people at work by making work simpler. Now our mission statement is to help organizations succeed with Apple. But frankly, a lot of people mix this up. That's a means to an end. Our end is to empower people with technology at work that allows them to be their absolute best. We have just found that we do that best by embracing Apple technologies along the way after all. I mean who makes technology simpler than Apple? And if we can do that at an enterprise level that we're making a really a significant mark. And there's really 3 categories of solutions that we have. One is connection that is connecting any individual person to all the resources that they need through their device, capturing the biometrics on the device and making sure that's enough to access to all the resources you need connection. Protection is protecting the device, protecting the individual, protecting the organization from malicious threats that could come in. And then there is management or what we refer to sometimes is making sure the devices always fit for use, configured loaded with the right apps, exactly in the right state that it needs to be in, in order for the user to be their most productive. So those 3 things leverage the Apple to ultimately accomplish enterprise simplicity on allowing people to be their best.

Yes. That's a really easy way to think about the business. Let's start just understanding like the benefits of focusing exclusively on the Apple ecosystem. Like what does that enable you to do that other competitors who focus on kind of various different operating systems can't do?

Right. And so great question. I get it all the time. For clarity, we're not -- our products don't want exclusively Apple, some do. But we will develop non-Apple solutions when it fits into our mission of helping an organization succeed with Apple. So for instance, within schools, we know the parents might have any kind of device out there. So our Jamf Parent solution runs on Android. Why? Because it helps the overall organization succeed with their Apple deployment throughout the school. But by focusing on Apple technology, remembering that technology is more than the device itself. It is all of the enablement technology that Apple provides that most providers in this space ignore because if it doesn't run cross-platform, it isn't something they want to embrace. Jamf doesn't put that limitation on ourselves. We say if it's awesome tech that will achieve our goal in the enterprise, we're going to embrace it. So for instance, we talk about our Zero Touch deployment technology that allows any employee within the company to get a drop ship shrink-wrap device, open it up and empower on automatically configure itself and load itself fit for use. Well, that is embracing a native Apple technology at a very, very deep level. The security extensions that only Apple provides to create a brand-new experience within the workplace that protects their privacy while protecting the organization from a security perspective. And BYOD capabilities that are only available on Apple that literally nobody else embraces because it doesn't run on other devices. And as a result, the way that BYOD is deployed out there is just broken. And Jamf can actually do this in the right way by leveraging native Apple tech. Now the final thing that I'll mention is we always talk about our same day tech. And on Apple, if you're not ready same day -- on Windows, it's okay if you're not ready same day, Apple, it's not. Everybody wants to upgrade, the daily tech is available. Well, people think that we're always the same day ready just because we work really hard at it. No, it's because we're architected for it. Our same day efforts are simply easier than everybody else. Because Apple will make sure that APIs are forward compatible. And if you leverage those native Apple technology, that same day effort is easier.

Yes. Yes. Yes, it makes a ton of sense. I want to try and think about the size of the market, right? I mean, in some ways, you're levered to the success at Apple is seeing. And obviously, that's a good market to be in, right? I mean their share gains in the enterprise and education continue to increase. So how do you size it? And then maybe you could talk about as part of that, some of the key themes that are driving adoption.

Jill?

Yes. I'll go ahead and take that one, DJ. Yes, being in the Apple ecosystem is not a bad place to be these days, right? When we think about the opportunity. We talk about our TAM. We've calculated it to be $18 billion now that we've layered in the incremental $6 billion that we get from the Wandera acquisition that we just added. So in our current ARR of $333 million at the end of the quarter, that implies we have a lot of runway for going out and capturing many, many unmanaged and unsecured Apple devices. And then essentially we think about the size of the market. And then as Apple continues to innovate, this is really driving the Apple adoption and the employee demand for Mac choice programs at work. And we just believe that Mac is going to increasingly become that device of choice for many of the people in the workplace. And then on the education front, a significant portion of our business, of course, while we've had a very strong foothold here. This past year, we believe, has really been an awakening to the importance of technology in education and the methods that teachers are using whether it's in the classroom or distance learning, right? It's not just going to be distance learning going forward. It's to bringing the technology into the classroom that we maybe hadn't seen in the past. And Jamf is really well positioned to help not only the organization but also the teachers and students easily adopt their technology and get the most use out of it in a safe, productive manner.

Yes. And then while we have going, Jill, maybe we could dive into some of the business mix, right? Because I think it's helpful for folks to understand like enterprise versus -- or I guess you guys call it commercial versus education is 1 part of it. And then iOS versus Mac is the other, right? Because there's different growth dynamics and different drivers of your business. So maybe just peel back the onion a bit on that and help folks understand the drivers.

Yes, for sure. So we think of our business, we've got our enterprise, our commercial and education. And when it comes to our revenue, about 65% of our revenue comes from commercial and 35% comes from education. However, when we think about our customer split, it's almost flip flopped, and that's because we started out in education. We have a strong foothold there. But our ARR on commercial grows faster, we actually sell it at a higher price point. And commercial also tends to be heavily weighted towards the Mac adoption, which carries a higher price point as well.

Yes. Yes. Perfect. And then, Dean, can we go a little bit in the competition? I want to say the Apple part of that conversation, maybe as a follow-up. But there's kind of 2 different competitive sets I think about, right? Like the horizontal device management tools, which are guys like the Microsofts and the VMwares of the world. And then the folks that are also focused kind of solely on the Apple ecosystem. Can you just talk about kind of what you see out there in the field? How much of this is greenfield versus replacement? Just those competitive dynamics as it pertains to the go-to-market motion?

Right. So competitively, you're right, you've nailed 2 of them. Those that I'll call them, the unified providers that wanted to do the exact same thing no matter who the device manufacturer is. And then you've got the smaller providers that have recently entered the market specifically around Apple. Frankly speaking, and this may sound a little bit of arrogant, I don't mean it that way, that, that market would not exist if it wasn't for Jamf. It was actually Jamf that ignited the Apple enterprise management market. And our IPO, you were right, it was July 22 of last year. Our IPO really -- there were a lot of organizations and investors that took note of the space and the approach and the story. And as a result, some of those start-ups got some nice investment. They're the ones that are actually implementing within the enterprise more according to our belief system. So I actually applaud them for seeing that. But of course, as a nimble, young organization, we have to beat them with our strengths, and we have to beat them with our innovation. A lot of times, people go want to use our size against them. And yes, we do. I want to use our innovation against them, even though they're smaller and one would think more nimble. We have to keep thinking like a start-up, and we have to continually innovate those organizations. When it comes to the large unified providers of security and management solutions, we simply have to do the job better by embracing those Apple technologies that allow workflows that nobody else has seen. I was on the phone just the other day with a CIO with a large organization out of the transportation industry. And they actually asked me, this person did, why don't we embrace Android more than how we embrace the Apple. And I said the workflow that we showed you that your line workers would actually use with the devices. Had you seen that workflow from any other provider of everybody you invited in? He said, no, you guys are heads and shoulders above what anybody else was able to show. And there is your answer. So ultimately, we have to compete differently against both of those groups. And I think we're just in a great position to do Apple better than anybody, and that actually helps us better with both of those goods.

Yes. Yes, it makes perfect sense. Let's talk about the relationship with Apple, too. Because I think that's an important part of the conversation, right? You guys are a partner, Apple is customer. And I think there's fear in the market that Apple could be a competitor at some point, right? So let's take the first two first and talk about partner and customer, and then we could talk about the latter.

Sure. As a partner -- well, first of all, customer is easy. We're a customer of Apple. They're a customer of ours. If you take a look at Apple, all of their corporate devices are run with Jamf. Their retail devices are run with Jamf. So we treat them as we would any large customer and just serve them well, and that has been a really healthy relationship over the years. As a partner, where Apple sells directly, which is in education and through the retail channel, they resell Jamf. Where they don't sell directly, which is in the enterprise channel -- by the way, they have enterprise reps, but they take it on reseller paper, like the CDWs. And so there, they're not officially a reseller base, they don't take it on an Apple paper. But very frequently, Apple and Jamf are put together on the reseller paper and sold that way. So those co-selling and reselling partnerships very, very healthy as well. And then, of course, we're part of their developer relations program and just have a lot of informal relationships throughout the company as well. I mean, Jamf has got hundreds of people at Jamf that used to work at Apple. So we just got a lot of good relationship development that has occurred over the years. So that's the partnership and the customer side. The competitor side, DJ, I mean, you know -- I've chatted with you, but you know how I feel about this. I kind of feel -- I laugh at it a little bit, and I understand it's a serious question. But I'll typically respond to somebody and say, name all of the enterprise solutions Apple has launched in the last 50 years. And it isn't like they can't get by 1 or 2, but there isn't any. Apple doesn't offer enterprise solutions. That's never been what they're interested in. They offer frameworks on which others build enterprise solutions, like the MDM is not a product, MDM is a framework that allows us to do things with their devices in an efficient way. That's what Apple's game is. And specifically, Apple Business Manager is never intended to be a solution for customers. It's a framework on which others, ourselves, VMware, Microsoft, the smaller providers that we talked about, that we all build on that framework in order to provide solutions to customers. But the cross-platform providers, they don't leverage everything that's in the framework. They only leverage the things that are in the framework that run on other devices -- other manufacturing devices as well. We embrace it completely. So from Apple's perspective, we're nothing but good in their world because we embrace their full framework, their customers get the full Apple experience as a result.

Yes, yes. It makes sense. I want to talk about the go-to-market motion. But part -- like before we get there, maybe let's talk about the user community, right? I feel like that's one of the underappreciated aspects of the Jamf story. If you do any sort of as an IT rep, if you do any sort of searching about how to manage Apple in the enterprise. Like you're going to come up on Jamf content, right? And I think that's a great lead gen tool for you guys. So maybe just talk about Jamf Nation and like how you nurture that community and what it means for the business?

Yes. More specifically, if you search on anything Apple in the enterprise, you'll probably find Jamf Nation content. You might find Jamf content, but Jamf Nation is how we refer to our community of users of customers. And when you become a customer, you become a member of Jamf Nation you as an individual, the IT admin. And we have well over 100,000 members of Jamf Nation that use our Jamf Nation website, which we just launched a refresh of in Q2, by the way. And they're just out there crowdsourcing help for one another. I refer to it as the tightest community in all of high tech. I mean, and it's really almost unlike any -- and I've been doing this for over 30 years. It's almost unlike anything that I've ever seen with the helpfulness that they have for one another. And that does a couple of things. One is it just makes our solutions easier to use because they have such a support system in doing it. Two, is it allows us to scale our resources nonlinearly whether our customers are scaling because with every added customer, we have them efficient. So we don't have to scale our support desk at the same rate as our customers are scaling. And then the other thing it does is it gives us ownership of the vehicle that all of our customers use to communicate with one another. So we know what they're thinking. We know what their requirements are. We know where we need to develop, and they can use it for feature requests and uploading as well. It creates a great coexistence or relationship that we have with our customers.

Yes, Yes, it's probably an underappreciated aspect of the business.

Totally, right.

Jill, just in terms of the go-to-market, can you unpack kind of like the direct mix versus the self-serve versus the channel? And then kind of if there are different growth dynamics between those, help us understand that.

Yes, absolutely. Well, so first of all, all routes to market are key for us. And really the goal there is to make the buying process as frictionless as possible for our customers. Outside the U.S., we do rely heavily -- about 75% of our business comes to us through the channels. And that really allows -- that route really allows us to scale quickly in new geographies we go into. So that's working really well for us. And then in the U.S., it's about 50% that's going through the channel and then the rest going through direct. We do have a self-serve and a much smaller scale, but our direct sales team is incredibly strong and efficient. We've actually been paying quite a bit of attention to building out the right formula here, which we've had in place for the last several years at this point. And that continues to be one of our main areas that we invest in to support the top line revenue growth. And then in addition to that, and something we're pretty excited about coming out of the Wandera acquisition is that really -- it really opens the doors for us to the carrier relationships that they've already had in place that we were just starting to crack into and hadn't quite gotten there yet. So they've cracked into that, and that's really -- we're looking forward to those benefits as well and those additional routes to market.

Yes. Yes, I know it's something you guys talked about on the earnings call, and it seems like there's more good news to come there. Dean, maybe just -- last thing to go to market and then we can dive in some of the products. Just your relationship with Microsoft, right? Because I think this whole conversation has been Apple, Apple, Apple. But Microsoft is a key partner as well. So just help us understand the nuances of that relationship a bit, right? Because we mentioned them as a competitor. Now we're talking about them as a partner.

Yes. On the go-to-market side, I would say it's actually just more of an influencer-type relationship, where we actually influence business towards each other because since we are Apple specific as we go out and go to market, we will frequently say, "Hey, what are your most common devices that are going to be Windows or Apple", which means really all you need is Microsoft and Jamf in order to run that efficiently. So it's more of an influencer relationship in market. But behind the scenes is a huge co-development ongoing relationship, where it's gotten, well, I can't just rattle off of all of our integration points. A couple 2, 3 years ago, I could do 1 on one hand with all the integration points we are. But we're wanting something new almost quarterly with them now because our philosophy there is, if we can take that coexistence load along with Microsoft off of our customers' responsibility, that will just make their world easier. So I don't know if everybody realizes it, but if it shows up in Jamf inventory, it can also show up in Microsoft Endpoint Management inventory. And then Microsoft is actually able to use that inventory to govern access to Azure with their conditional access zero trust security systems. So all of the things that Apple can make -- or Microsoft can make work with a Microsoft-only world, they can also through Jamf.

Yes. Yes. That was one of the -- I don't know if pushback is the right word, that we got there in IPO process is like, well, what if this market goes like, you demand a single pain. It's like you can get a single pain with best-of-breed experiences because of that alignment that you guys have. I want to discuss some of the add-ons in cross-sells. We've talked about the core product, but Protect and Connect, I think, are significant parts of the growth story that are helping drive that net dollar retention. Just maybe talk a little bit about penetration of those products, where it could go? What that does to ASPs as they're added on? And then I want to dig in a little bit on security and Wandera.

Yes. So we can lead with any of our products. However, we found the most efficient way of leading is to lead with our management solution as we've been doing that the longest time. Those have the shortest sales cycles, we're able to get in, win a new customer with that. And that's just part of a land and expand. I mean the key to land and expand is be able to land quickly and be able to expand greatly, right? And so we were adding expand products like Jamf Connect and Jamf Protect, again, even though they can be a land product, it's smarter strategically to land with our management and expand to those. If we were to sell Pro and add Protect, that would double the ARR for that customer. If we were to land Pro and then come in with Connect, it would add 50% on to -- Protect would be 100%, Connect would be 50%. And then now one of the core reasons for acquiring Wandera is we get 3 more expansion products with private access, threat defense and data policy enforcement. And each of those are material enough add-ons that it would significantly grow ARR as well.

Yes, yes. That makes sense. And then maybe that's a good segue just to talk about Wandera, like what attracted you to the asset? What's the vision in terms of addressing kind of a broader security stance as it relates to Apple and the mobile ecosystem even more broadly?

Yes. If you think about it, so in commercial markets, we had Jamf Pro, Connect and Protect for Macs. But we only have Jamf Pro for iOS. We didn't have a Connection or a Protection offer for iOS. Wandera brings those offers. So the #1 gap we have for commercial, Wandera filled. On the education side, we fully managed the deployment of technology but we did not have any student protection system to protect students from the harms of the Internet, specifically through filtering technology. It was our #1 gap. Well Wandera's data enforcement policy actually fills that gap. So what attracted us was our #1 commercial need, and our #1 education need got filled by Wandera. And of course, the irony is that our -- product that we're most excited about was not either of those products. It was their private access product, which is really going to be a big part of replacing VPNs in the coming years, which nobody likes with a proper Zero Trust network access tools.

Yes, Yes. It's super exciting. It seems like not only -- I mean, you said it filled some holes, but it also kind of dramatically expanded the scope of other problems you can solve. I'm going to end with kind of an open-ended question, which is just like what do you think investors might not yet fully understand or fully appreciate about the Jamf story?

I'll say balance that everybody is always looking -- investors are always looking for the weeks points. What is going to be that 1 thing that's going to happen? And as Jill and I have said many times, all of our top 10 industries grew by more than 30%. All of our products grew by more than 25%. All of our geographies grew by more than 30%. No customer represents 1% of our ARR. Like it's hard to -- we've added 3,000 new logos, but yet, our net retention grew from 117% to 119%. So where in there is the soft spot. And the truth of the matter is, well, I can't guarantee it forever. Right now, Jamf is executing incredibly well balanced across all of our initiatives.

Yes. Yes. That's great to hear. I know you won't say it, but I can. I mean, look, these guys just put up 38% growth, north of 20% free cash flow margins. It's close to Rule of 60 execution. The stock, at least at the time of earnings, was trading at just around 9x revs. It's up a little bit since then. I said in my report post-quarter, like those types of numbers get you 15 to 20x in other areas of software. So we think this is a really interesting story. These guys are doing good work, and I expect that consistent execution will continue. So Dean, Jill, thank you guys for being here. I always enjoy these conversations.

Thank you, DJ. Appreciate it.

Thank you, DJ.