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

Everyone hear me? Good enough. All right. Welcome to the session today for Jamf. I'll start off by saying that my name is Matthew Stotler. I'm the analyst here that covers Jamf. For full disclosures and conflicts of interest, please visit our website at williamblair.com. More importantly, today, we have Dean Hager here, CEO of Jamf. Thanks for being here.

Thanks for having me, Matt, and thanks, everybody, for coming. Appreciate it.

[ I knew this person ] a little better than other...

I'm seeing you in 3 dimensions. It's just awesome.

So let's start off, and maybe just for those who are a little newer to the story, what is Jamf? What are the markets that you serve? And what's the problem you're trying to solve?

Sure. Our mission statement is to -- Jamf helps organizations succeed with Apple. And a lot of times, people think of us as the Apple Enterprise organization. But our purpose, the core reason that we exist is to simplify work. And for those of you who have home technology, I mean, you get it. I mean you love what you use at home, but people rarely -- unless they use their home technology at work, they rarely love their work technology. And our objective, what we want to do in life is to make work consumer simple. And if you were to choose one technology to major in when doing that, Apple is a pretty good start. And so the reason why we focus on Apple is we believe that it offers us the greatest opportunity to create just an awesome consumer simple experience. But work does have priorities criteria, for instance, things like security. And so we offer a set of management and security solutions at Jamf that allow every single Apple device to be a purpose-fit for the job right out of the shrink wrap package, but then at the same time, completely enterprise secure. So the way we try and phrase it is every IT organization has 2 questions that they should ask on how effectively they're doing their job. Number one is do all of the employees love the technology they use for work as much as they love their home technology? Number two, does the organization trust that every device and every user that's accessing their network resources is safe? And if you're doing those 2 things, you're doing a pretty good job. And that's what Jamf helps organizations do.

Right. And so I mean, how do you think about the size of that market opportunity, right? It's not just mobile device management. It's broader than that, and we'll get to that in a little bit. But as you think about Apple Enterprise Management, how do you size that opportunity?

Yes. Well, first of all, let me just acknowledge that I, like probably everybody in the room, never actually saw a TAM study that I believed, but we measure our total addressable market by the number of enterprise or organizationally employed Apple devices that exist. So if an Apple device is getting access to enterprise resources, they should be properly secured, they should be properly managed. And if you take that number of devices and you multiply it times what our average sales price would be per device, it creates a pretty simple opportunity, total addressable market of about $18 billion. Now we do have solutions that actually support Android devices and Windows devices. Well, we don't even include that in our TAM. It's more serving those devices, just knock down the barrier to implementation to achieve what our core objective is, which is to simplify work with Apple devices. But conservatively stated, estimated about $18 billion, which is I know the exact sentence that every single CEO ever says about their TAM, but I actually believe it.

And so as you think about, I mean, $18 billion, that's even taking that number is a pretty sizable opportunity. So when you think about the market landscape you operate in, the other companies that are trying to do this, what does that look like? And what's the differentiation Jamf provides that provides a sustainable advantage in that market?

Yes. Well, I mean, historically speaking, the whole market of managing and securing devices of -- there started to be this movement back in 2010, actually when the framework that's called mobile device management, that framework was invented in 2010. Now some have made the mistake over the years of thinking that MDM is a solution. It's not. It's a technology framework that is embraced, not a complete solution that an enterprise requires. But when the framework was invented, there became this notion that we're going to be able to have a single management and security solution that provides the exact same set of services to all devices across all manufacturers. And so that movement of what's called unified endpoint management started, and that was really where our original competitors in the space. And what has happened is exactly what we expected to have happened, and that is that notion of a unified management system is going to happen the moment that Google, Apple and Microsoft all decide that they're not going to compete with each other anymore. But as long as they're continuing to try and differentiate, they're doing things with the operating system, including Apple today at WWDC that are uniquely Apple that in order to embrace you have to focus uniquely on Apple. So while we compete against Unified Endpoint Management solutions, the kind of the momentum is going out of that movement. And what is growing now is organizations that are kind of adopting the same strategy that Jamf has of focusing in on an ecosystem. So competitively speaking, in that $18 billion market, we really have 2 forms of competitors. The very high-end UEM providers like VMware and then the low-end companies that are getting private rounds of investment like Kandji or Mosyle, who are trying to follow Jamf's strategy. So we will compete against those companies with a broader and a deeper solution, and we will compete against the higher-end companies by being able to create Apple workflows that you simply can't do unless you focus on Apple.

Right, right. And I guess one of the main questions that we get related to that, given the relationship with Apple is what are Apple's intentions in this market, right? And a couple of years ago, right, with IPO, they made a small acquisition there. They actually recently announced their end-of-lifing products. And so -- which seems to validate that idea that Apple will be a long-term partner here rather than a potential competitor over time. We'd love to just go over that relationship with Apple and all the different characteristics and how you think about that going forward and how you think about what they still do provide as being actually an incremental opportunity for Jamf.

Yes. To put a word to it, the week before we filed our public S-1, Apple acquired a company called Fleetsmith, and everybody was wondering, "Oh my goodness, does this mean Apple is really going to aggressively get into your space?" And we said at the time that we believed that, that was an acquihire to get some talent into Apple and that Fleetsmith would be end of life. And sure enough, it did get end of life. It was, if anything, beneficial to our business, not disruptive at all. Our partnership with Apple -- actually, this week, is Jamf's 20th birthday. So we've been partnering with Apple for 20 years. We've gone through every wave of computing and different movement that has happened within the enterprise, and we have a multidimensional partnership with Apple. One, we're each other's customers. So Jamf is obviously a huge Apple customer, but same is true vice versa. Apple has been using Jamf internally throughout the world in all their Apple devices since 2010. So even that has been a really long relationship, and that relationship continues to grow every year. Apple is also a reseller of Jamf in the education market. Wherever Apple sells to organizations directly, like education and through Apple retail to SMB, they resell Jamf, and they have for years. Apple doesn't sell to enterprises directly. They actually sell through resellers, SHI, CDW, those. Jamf also sells through resellers. So really, a lot of times, organizations just want to take the Apple hardware and Jamf on the same paper, and the enterprise, they'll do that through resellers. But our sales personnel and Apple sales personnel, they all know each other's names. So the first thing you do when you get assigned a territory, whether you're with Apple or whether you are with Jamf is find out who your counterpart is within that region. So it's a very strong go-to-market relationship, a very strong technology relationship. But we're headquartered in Minnesota. So we're Vikings fans, which means we live with a healthy sense of paranoia that like something awful is going to happen at all times. So we took the approach of we don't rely on any APIs that aren't public. We require no collaboration in order to build absolutely everything we build, and we require no collaboration in order to sell anything that is Jamf. We build up our own sales channel as well. So the partnership is great, but we're not dependent on it.

Right. Right. And so switching gears a little bit to the development roadmap and kind of what you've built. As you kind of touched on, you went from kind of mobile device management, specific to Apple and since especially in the last 5 years or so you have expanded that very broadly to provide a lot more value. Can you just walk us through that journey and go over what the full suite looks like today?

So a lot of times, people think the most unique thing about us is our focus on Apple and our focus on simplifying work. But actually, because of Jamf's success, a few more organizations have taken an Apple focus. The more unique thing about Jamf is the fact that we offer a full suite of management solutions and a full suite of security solutions. If you think about it, if you go through all the security providers that you can think of, almost none of them, if any of them have a management solution. Microsoft is maybe the only one. VMware, I guess, with their acquisition of Carbon Black would be another example, but they haven't really put that together yet. It's very rare to offer a full suite of security and management solutions. But yet, it makes total sense because you're going to detect vulnerabilities or detect exploits with your security solution, but all of the action you would take, like refreshing the software, blocking from network access, all of those types of things are done with management solutions. So we're able to offer them together and be able to detect and immediately without any human resources being involved, take action against those security threats. And we really got into the security side about 3 years ago. And in our most recent investor call or earnings call, we disclosed for the first time how much of our business is from our security solution. So we had announced -- just to put some numbers on it, over 62,000 customers Jamf running on over 27 million Apple devices around the world with an ARR of $436.5 million that was growing -- that grew 42% year-over-year. But a large part of that chunk of that growth, we did disclose that 2 years ago in Q1, our security business was just starting. Only $5 million of our ARR came from our security solutions. But just 2 years later in this last Q1, $75 million of our ARR came from those security solutions. So our security solutions are growing very, very rapidly, ending up being a very nice upsell to exist together with our management solutions.

Right. And so obviously, a lot of, I guess, important things that you can do or very value-add things that you can do in having those 2 components together, as you think about -- and we'll dive a little bit further in the security piece in a second. But as you think about the roadmap, and what the most natural adjacencies are looking forward, how do you think about that pipeline for new products? And where are you seeing the most demand pull from your customers in terms of other capabilities?

So today, again, the management solutions, we can pretty much do anything. Any action with the device, whether it be blocking, whether it be updating software, whether it be adjusting settings or changing configurations or installing new software, we've got all of that covered. We have got on device security ability to constantly be hunting for threats on the device. We've got identity connection where the accounts on the device completely mirror the account that you would have as your cloud identity provider. And we also have network threat prevention where we can stop anti-phishing, anti-malicious download and have a next-gen VPN or any communication that needs to occur with the server is going to be done in a secure way. Going forward, it's going to be to use all of those assets to continue to build out workflows that lessen the need for human intervention in almost any circumstance. And that's what we're really excited about. Like an example would be, if we were to determine that gentleman sitting in the front row here if it was a Jamf-managed secure device, if we were to determine that you just clicked on a site that is a known phishing site where you're maybe going to get a malicious download, and maybe we blocked it or maybe that one in particular, we didn't, and so therefore, we're worried about the safety of that device. We could immediately lock that device where you can't do anything more on it or we could let you on your device, but block you from having network access so that you can't harm the network anymore or we have partnerships with both Google and Microsoft where they'll actually ping us to see whether a device is safe, and they'll block from the network. So we have many levels to protect the organization automatically, including large-scale partnerships with Microsoft and Google. And then we have deep links back into our software to remediate those. But we're only just getting started. I mean there's so much more that we can do in terms of just automating those workflows. So right now, our primary focus is on just continuing to simplify that for both IT and for the infosec team, while to the user, just making it look like a consumer simple device.

Right. And there's a number of software application providers out there that do a number of different things with cybersecurity and device security at Okta, for example. How does -- can you just talk a little bit about how -- what you do, interact with those solutions or coexist with those solutions?

Okta is a great partner. As a matter of fact, we're a customer -- once again, both customers of each other, which is not an unusual thing for Jamf. Most of the security companies you can think of, the identity companies, the security companies, almost all of them are Jamf customers as well. We work well with them. But like if I were to just point out one workflow that we worked out along with Okta is if you were to go buy a brand new Mac or a brand-new iPhone, a new unwrapped from its shrink wrap. Nobody has ever touched this. And you power it up, but yet that -- let's say, that device was actually purchased by your employer for you. And the first time you're powering it up, we can actually adjust it to where it powers automatically to the Okta sign-on screen. So like the very -- before you would ever see a Mac account creation. The first screen you would see would be the Okta sign-on screen. And you would just enter in your work credentials, the work credentials that they gave you. And we will automatically create your Mac account for you to be completely synced with that Okta identity. And then we will actually manage access on the Mac itself according to whatever your access rights are within Okta identity. So Okta and Azure and Google, they all become really important partners of ours to make sure that the cloud identity is the core identity to be used for not only cloud access, but access to everything on your device itself that you don't need any other form of authentication. And then, of course, on the device, since you capture biometrics on the device, and that's the best way to capture your real identity, so I don't know how many times people in the room are logging on to systems every day, but that's just sort of all kind of goes away. And every time you put your finger on the sensor on the Mac, you're just instantly into the next application that you need to be on.

Right. Yes. And so you've -- obviously, as we've been talking about, expanding that portfolio of security products over time. Now you have Connect, Protect, Private Access, Threat Defense, Data Policy, some of which came from the recent acquisition of Wandera. Can you talk a little bit about that acquisition, which I think it was very complementary to kind of what you had, but we'd love to kind of dig it out a little bit?

So we have protection systems -- sometimes the way I describe it is, if you were protecting your house, prior to the Wandera acquisition, we offered protection that would be sort of similar to hiring a bodyguard to come into your house and just walk from room to room and constantly be making sure everything in the house is okay. And they're not just going to react if they see somebody like -- which would be a malware in my analogy, but they're going to react if they see a tipped-over chair because that looks suspicious. So what Jamf Protect does is it's sitting on the device, constantly looking for suspicious activity on the device. But what we weren't able to do prior to the Wandera acquisition is we didn't have somebody posted in the yard that was going to stop somebody from throwing something from the woods at your house, which would be phishing, malicious downloads, those types of things, the best type of security is going to stop those suspicious things from ever getting to your device. So that offers a depth of defense. You do it at the network layer, you also do it on the device itself. So we got all of that network protection from Wandera. And so therefore, it was just added wonderfully. In addition, we got a zero-trust next-generation VPN. So therefore, if you should have access to the network, we can provide a secure, encrypted way of doing that. And the way those solutions work together, if my BYO-phone is sitting right over there. But if I had it, I'll give you a little show and tell that would walk through on the phone where I can run a personal app, and it's entirely personal. In fact, it's using Apple's private relay that even hides the IP address from whatever website I'm hitting. But if I'm using a work app, the VPN light will automatically come on because it knows it's a work app, and it configures it automatically to use Jamf's new VPN that we got from Wandera. So the user doesn't know what's secure and not secure. The device is just smart enough to know when it should use work security versus when it's something personal that you're doing.

Right. And maybe we can do that demo on the breakout.

Happy to do that.

If anyone's interested. So maybe just one more on the product side. You mentioned a lot around trying to automate workflows or make them more seamless. One that you guys have done and that you were able to really add a lot of value during COVID is you've created a lot of very vertical-specific workforce. So health care, hospitality, different things. Can you talk about those solutions a little bit, maybe the pipeline for what you're looking at going forward there?

One of the things that we do when we say our mission is to help organizations succeed with Apple, we don't limit ourselves to whatever the management and security of the device. We actually think of ourselves as workflow enablers. So for instance, when we went out to education to schools, we didn't say, "Well, how do you need to secure your devices?" The question is how do you need to teach in the classroom. And if you ever want to completely lose control of a classroom, stick about 25 brand-new devices in front of the 25 kids and say, "Okay, let's start working on it." And you're going to lose that classroom unless the teacher has their own iPad and pushes a button and instantly all their screens freeze and you go, "Okay, eyes front, and pay attention to me. And if you pay attention to me, I'll unlock your device." And then when you do unlock the device, what do the kids find, but the only app that's on the device is their math app because they're in a math class now. So you give the teacher that kind of interactive control of a classroom, and now you actually have deployed technology in a way that is conducive to learning, not distractive to learning. Similarly within health care, we went out and said, "Okay, what are the workflows that you're having trouble with," and clinical communications was an example. They wanted to be able to use iPhones for clinical communication, but you can't use your personal iPhone because of HIPAA compliance. So you have to use an iPhone that you're going to hand off, say, to the next nurse when their round starts. But yet, you have to sign off of every single application you're using on the phone and have the next person that's starting their shift sign on to theirs, and they really want to use it for personal reasons, well, that's just a nightmare. So we just work with hospitals and said, how about we just make that, they tap out, they tap in, and you're using the device not only as if it's your own device, but as if it's a shared device. We just automated that workflow. The other workflow that we automated within health care is the patient bedside iPad. And sometimes it's better to be lucky even and I hate to even say that this is lucky, but we launched, for instance, within health care a patient-bedside iPad months before the pandemic broke out, and we were able to use those patient-bedside iPads to immediately create a new virtual visits workflow that allow doctors just to simply go down their list of rooms and click on each room and instantly be on the iPad right next to the patient's bedside and keep them safe and make them more efficient in making their rounds. Just one more example would be we went out to the airline industry and said, "We see you starting to deploy electronic flight bags as opposed to the big old flight bag for pilots." And then they shared with us all the nightmares of doing that. So we created a workflow where a pilot could easily take an iPad and say, "I'm in cockpit. I'm out of cockpit." And there's a different set of rules that apply around that iPad once they indicate whether they're in cockpit or out of cockpit. And for some airlines, said, well, let's actually use another device in the cockpit to where they never have to say whether they're in or out of it because we'll sense it and we know that they're in cockpit now. So we'll go out into industry after industry, and we will work with them on their workflows so that they can get more out of their devices than anybody that would just be focused, say, on security, we'll ever deliver them.

Right, right. And so taking a step back, the topic of COVID, obviously, there's been a lot more than that going on in the past couple of years. But I would love to just get an overview of, I guess, where the -- where COVID was maybe an opportunity, where it was a headwind. And as we get into a kind of reopening environment, what the trends look like and how you expect those to kind of play out, I think, to get the normal?

Yes. I don't know when normal will ever be achieved again because everything is constantly changing. So next year will be something different. But if there's one thing that Jamf has kind of just benefited from is the resilience of being relevant, consistently relevant no matter what the market dynamics are. One of the things that we say is that we are not market limited. So if we get asked questions about how much we're going to grow. I actually always encourage people to ask, will you be able to grow your headcount to take advantage of the market opportunity? Because the market opportunity is there, and it's been consistently there, and we don't believe that we're market limited in that opportunity. With that said, at various stages in the market, there might be greater opportunities in certain industries or geographies than at other times. So prior to the pandemic, we had -- saw that our growth in commercial industry was growing significantly, and education was kind of just a steady growth. The pandemic hit and schools were scrambling to try to get solutions in place for distant learning. So we just pivoted a little bit to put a little bit more energy in the education side when we are in the heart of COVID, and it just boomed. And for those months, it was more consistent between the commercial growth and the education growth. And then as we started to come through it here, actually in the first quarter of this year, sort of went back to the normal rhythm. So what we find is every market condition brings with it a certain set of dynamics, and we just lean to wherever those conditions are attractive. But overall, I would have never labeled us a COVID beneficiary, actually never cared for that term, nor do I think we benefit or have it detracted the fact that we're sort of coming into a more normal world. Even as we enter into an economic environment where people are worried about potential recession in the future, well, that would be a headwind, but the tailwind is what's happening in Europe and the concerns that we have around cybersecurity attacks right now. And all of a sudden, there's just a little bit of a shift in focus. So when you're not market limited, you just lean to where the greatest opportunities are in any given year. And we've been public now for 8 quarters, and we've beat and raised every quarter, and our growth rate has been wildly consistent on a quarter-over-quarter basis, yes.

Right. So we've got a couple of minutes here. I think maybe one question kind of leading off of what you just said that's important to go over is this idea and this question that we've gotten about, how much is your growth tied to growth in Apple device?

That's a good question.

Right. So we'd love to just get your thoughts on the correlation there and how you grow in an environment where maybe we do go into recession or there's something in the device level, it's fluctuating?

Well, one of the things that we always say is that don't tie Jamf's growth to any quarter of Apple's growth. And by the way, we say that whether Apple had a bad quarter or a good quarter. We don't think our quarter and because there really isn't. The ecosystem of devices out there is so big and there are so many devices that are still unmanaged and secured that there is plenty of market opportunity if Apple didn't sell anything this quarter. However, over a multiyear perspective, the greater the Apple popularity, the greater that is for our business. And fortunately, that has been something that's just been building for the last 20 years. The iPhone is the most popular phone used in the enterprise today. The iPad is the most popular tablet used in the enterprise today. And if anybody paid attention to Apple's Worldwide Developer Conference today, you will see that it is going to be more so in the future. And then the Mac, while it's not the #1 computer, it is the fastest growing consistently. And I personally believe, and I'm on record saying that within 10 years in the U.S., I actually believe the Mac will outnumber Windows endpoints within the enterprise. And if you look at the trajectory, it feels like a bold prediction. But if you look at the trajectory of the last 10 years, it actually is just a logical projection because, one, Apple has the fastest and best price performance machine on the market today with the new M1 chip and today, the M2 chip that was announced. You've got iPod babies now entering the workforce. Those that were actually born around the time of the iPod that are entering the workforce, they never knew a world of Microsoft dominance, and they just think they're going to be able to use Apple at work. And then you've got the consumerization of IT that has been driving Apple into the workforce. And what do you think the last 2 years of the greatest work from remote movement in world history has done to the consumerization of IT? Those 3 things combined are going to continue to propel the Mac and the ecosystem around the iPhone, iPad and Mac. I think it's going to make Apple the #1 enterprise endpoint in the world.

With Jamf enabling that?

With Jamf enabling it. We're kind of the ones that are there to make it all possible, fueling their growth. So -- and without it, frankly, a huge competition in solidifying that position because 95% of the security market is 95% focused on Windows.

Right. Well, thanks again for being here. It's been a pleasure.

Appreciate it, Matt.

Thank you, guys, for coming.

Thank you so much everybody.