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

All right. Hey, everybody. My name is Koji Ikeda. I'm one of the Mid-Cap Software Analyst here at Bank of America. I am super, super, super thrilled here to have Ian Goodkind, CFO of Jamf. Thank you so much for doing this. We super, super appreciate it.

So Ian, just from a background perspective, for those on the webcast and in the room that are not familiar with Jamf, maybe just a very high level overview of what is Jamf, what you guys do, what is the opportunity that you're going after, and maybe a few minutes on yourself. You are relatively new as a CFO. I think you're over a year now, you're over a year.

I'm almost 2 actually.

Almost 2 years. So, a little bit about yourself would be great.

Yes, sure. And first, thanks for having us, Koji. I'm glad Bank of America could have us, but just to level set who we are because it's still a newer story. We're 4 years in being public. So, I think there's still some education there. But just stepping back, we help organizations simplify work. We do that by helping them succeed with Apple. Our SaaS product focuses on managing and securing devices within the Apple ecosystem. We went public back in 2020. At that time, our ARR was around $225 million. Just recently on our recent results, that's now over $600 million of ARR. In that same time line, we went from just a management provider to management and security. When we IPO-ed, our ARR was between $5 million and $7 million. Today, it's $138 million, growing 31% year-over-year. We started in education. Our roots are there. We've moved into the commercial side now as well. We did -- we have commercial MAX is where we started. We moved into the management security there and Mac and Mobile. So, we've had a tremendous journey in the last 4 years since we've been public. As for me, yes, I'm coming up on the role in 2 years now, which, boy, I've gotten a few grades during that time, but definitely has been a great opportunity. Before that, I've been at companies that were much larger. I was at a company that was $10 billion in revenue. So, I've seen the playbooks on how to be an international or global company and how to be a scalable company. And if you look at our kind of tenants and growth pillars going forward here, those are 2 areas we've talked about at great lengths about being more international and being more scalable.

I thought Jamf had pretty good results in the last quarter, and it's been an interesting software take, let's just say, for the past 6 months, both from a guidance perspective and a demand perspective. So, this is going to be the question on demand. How is Jamf seeing the demand today? How would you categorize that demand today versus, call it, January of this year? And then maybe 1 year ago today.

Yes. We get this question a lot, just overall, we get in the form of this way or in the macro what are you seeing. And first, just to level set with numbers and I'll back up to what we're seeing. What we did for our guidance in 2024 is we took the same thing as we saw in 2023, the muted macroeconomics and layered them in into 2024. So, we've derisked our guidance model for this year. It's interesting, a year ago, you would call into a customer and say, hey, what are some of the issues running into. They would describe the same ones, say, we're having this, we're having that, we'd say, hey, we can help with that. And there was this pause last year a lot of time saying, well, not sure, call me in a quarter or 2. And now what we're seeing this year, not ready to call bottom, but we're seeing a little bit signs of stabilization. And what I mean by that is, as we're calling those same customers that we called into a year ago, they were sharing the call now. Like, hey, maybe there is a discussion we had. But don't get me wrong, those sales processes are elongated. We continue to see that. We had one of our sales reps recently told us, hey, x customer that we've been working with for years, they used to have 4 approval levels, now they have 18 levels of approval. So, we're just seeing that out in the market. We're seeing that same conservatism across the board and with the same elongated cycles. But I think we're in a position to really be in a good place based on how we set our guidance and we're just starting to see those green shoots. So, we're just seeing signs of stability right now.

I got to ask you the question, the AI question. This is a technology conference. And so you sell products, your product platform is for the Apple ecosystem. And AI is kind of topical there and when the companies that you sell into AI, I'm sure, is very topical. And so how does your end market view the potential benefits, risk to AI, of AI, specifically and what does that mean for the demand for Jamf?

Yes. A couple of things there. So, we think of AI in a couple of different buckets, 3 different buckets. One, the utilization in our tools, which I'll talk about in a minute. Two, how can we help answer customer questions and 3, how do we build additional automation within our organization. So, starting on the -- in our product front, we already have some learned behavior within our security tools when there's different threats coming in and it looks like a certain profile, our tools look at that and learn from it and can identify other types of threats. What we are looking at in the future here, what will come over time is with those security tools and having management and security is what makes this work is that we would be able to go in, identify the threat and actually have it pump out with AI tools. Here's the way they remediate it and here's all the steps and here's all the support for it. Are you good with this and click a button and out and do it, right? And that's what we'll be looking at over the next couple of years as these AI tools build out and as ours builds out within our products. It's not revenue we're producing today, but over time, that will be built in our products. On the second front, as we have a community of the largest Apple users in the world, it's called a Jamf Nation. We are also looking at -- we have the most Apple data of anyone on the planet. We're looking at how do we use that data to answer customer tool. Oh, I've got my Jamf Pro in there. There's something called Smart Groups. It helps you set up groups based on, your finance role, here's the apps you get. I just push a button there it is. How do I set this type of smart group up. When you type that in, and it comes back with the full response here is all the steps you do it. Those are the things we're rolling out to help us on the customer success side, customer-facing side to make us more efficient there. And then just internally, we're looking at different efficiencies, whether it's low-end coding to how we write our scripts for our earnings to IT or legal efficiencies. Will you look at those and use those in-house to make us more efficient over time as well.

You just mentioned Jamf Nation. I know that's a big conference for you guys. You have it every year. When is it this year? I know I think it's coming up in a couple of months. And tell me a little bit is there some sort of early, early preview that we get of what you guys are thinking about with Jamf Nation this year?

Yes. I'll say first, it's early October. It's in Nashville. I can't give you too much there, but what I will talk about is the spring event. We just had the spring event where we have 2 events a year. One is just kind of an online event, it's our spring event. And then we have JNUC is what we call, the Jamf Nation User Conference and that's where we have our bigger releases. But we did just have a release with our spring event where we released a few things. Most of it was focused on what I would call compliance. And we actually released compliance within all our tool sets, whether it's our management tool, which is Jamf Pro and Jamf Connect, we had some compliance released as well, which is think of that as identity and network security and then at our endpoint protection, a product, we had some compliance release. Looking at different benchmarks, are you compliant that sort of thing within -- across the tools. Interesting enough, one thing on the commercial side, and these are commercial-focused comments. Other things we release is what we would call Jamf for teens and that's an interesting one. I just want to spend a minute on where we released a tool, it's an automation of and it communicates with your collaboration tools. So, what that means is, let's say, me, Ian Goodkind, I haven't shut off my device and updated a few apps in a very long time. It automatically creates workflow say, Ian, hasn't done this and sends automated message to Slack or Teams, says, hey, this hasn't been done. Do you want to just tell the user they need to do it. Admin, just goes yes and he's done with his work. And that's the automation of that workflow. That's just one example of them. We have 5 or 6 of them that have been automated. We'll continue to add to that over time, but that's just a really neat functionality that our customers have been asking for and that's actually only available in our bundles, which so we're putting more and more value into those bundles. And I think that's an area that will continue to grow for Jamf. Year-over-year, our bundles have grown 63%.

63%. Wow, that's amazing. So, I wanted to ask you a question kind of on your vertical exposure. You mentioned earlier that you started in education. So, could you maybe give an update on what is your vertical mix, tech education, maybe anything else to call out?

Yes. So, where we have the highest concentration are in those areas or industries that lean into Apple first. So, that would be our information and communication, which includes our tech and then also K-12. Those 2 industries for us represent about 45% of our total ARR. And then when we look at our next 3 industries; professional services, financial services and wholesale and retail, those represent about 25% of our total ARR. And those are actually growing at faster rates than we see in the top 2 industries. And what interests us quite a bit is those are not always considered leaning tech industries. In fact, they're non-leaning tech industries and they're starting to lean more into tech and more into Apple. And that's what gets us excited. In fact, those are growing at faster rates than normal growth rate.

Okay. So, you just recently had an Investor Day. You have some 3-year targets out there, accelerating growth, very, very attractive if you're able to achieve it. But what I'm also hearing out there is kind of big exposure to tech in education, 45%. So, let's take tech for instance, what are kind of the upside and downside risks for tech, specifically from here?

Yes, yes. Sure. So, one thing before I get into that. So, if I roll back the clock, let's call it 2 quarters ago, we had a 47% ARR that related to tech and K-12. Now, it's on to 45%. Meaning, those other -- those next 3 industries are growing faster because of the non-leaning piece. And what we talked about at Investor Day is we expect those to continue as those non-leaning tech industries lean into tech. So, I think our exposure balances out more and more. But with tech itself, what we've seen there is we've seen -- and everyone else has seen this, so you can go out to websites and look this up, there has been a significant [ amount of late ] and tech spending has really reduced. And you get CFOs out there like myself that say, I don't know if I want to put a choice program today because I don't want to spend money or they've reduced head count. So, that impacts us from a device expansion standpoint. But what we did in 2024, starting with that, we layered in the same economics as '23. So, we're not reliant on some return within tech. But in '25 and '26, if you look at that, there just has to be an incremental increase in the device expansion. In fact, if you look at it from an NRR perspective, the contribution to NRR from device expansion was 13% in 2023. In 2026, we're modeling that same 13%. So, we're not trying to be reliant on the things we can control like the economy. We are focused on those things we can control, such as cross-sell and cross-sell for us comes in 3 forms. It comes in the form of commercial security, education, security and mobile. Because a lot of times, again, we started on the Mac front. Now, we're cross-selling into the iOS devices. So, that is how we are getting more and more comfortable. And I think we could all look around the room, we look around the conference. Tech companies are going to hire again. It probably isn't going to be at the same rate we saw before, but it doesn't have to be much. And when we did the sensitivity, which we also showed at our Investor Day, just a 1% increase in that assumption alone in '25 and '26 was a meaningful impact. It's about $14 million of additional ARR. So, what that means is that we can ramp up very quickly and our trajectory could change quickly if the macro improves. And that is what we rolled out is a baseline plan.

And then on the education side, just a little brief upside-downside drivers to that?

Yes. I mean, there, what we saw is from COVID, there was this rush to buy devices for students when they went home, right, during COVID. That happened in 2020. So, those devices are getting a little older and it's about time to refresh those. What we see or what we hear, we read the same articles everyone else does, is that other devices and iPads maybe aren't as durable and have shorter lives and they actually have a finite life. And they're just not -- they're not producing the way that some schools have rushed and bought. So, we see the potential for additional shifts from those other type of devices to iPads upon the refresh cycle. And that's why we get excited about that. I think what also supports a stronger growth rate as we go forward. Not only that, I'll call it choice program, but also the fact that we have now security within education. We have a Jamf Safe Internet tool that we now are on, I'll call it, Version 2 that has the functionality that people are really excited about. That should bode well for us. And then lastly, outside the U.S., they actually didn't go to a 1:1 with children. They went to maybe a 6:1 or 4:1. But you know that doesn't work forever. So they are -- a lot of those countries are trying to move more to 1:1 and that actually will support additional growth outside the U.S. in our education markets.

Just one follow-up on the education side. I cover some ed tech companies out there. And what's very topical with them is ESSER funding.

The budget.

Right, right. And so when I hear education verticals spending money on tech, I think maybe some of those budgets or technology purchases were helped by ESSER and that is coming to an end. And so how do you think about ESSER with your opportunity?

Yes, there's a couple of different funding mechanisms, right? There's the ESSER, there's other federal funding and then there's state funding. And first, when you look at that ESSER, actually requires to have security on the device. So knowing that, we know there's still an opportunity for that. We also know that once you give a student, I have a seventh grader and a fifth grader, boy, if I tried to take away the iPad, they would be a heck of pay for that. And they're not letting go those devices. We've opened a genie. It's out of the bottle. That's not going back in. So, there are going to be ways that the school will have to -- with the government, will have to figure out how to fund those devices. And the way to make them scalable is to have the management tool. And so we don't see that trend changing based on that budget. But what excites us about them, like I said, is the fact that some securities required to them and the type of security is what we do.

Is there any -- and this is just maybe an off-the-wall question, But I was just thinking about it. Does Jamf help extend the life of devices somehow with better management, better security? Is that...

It doesn't do that, but what it does and think about it this way. So, it makes it much more scalable. We have -- I'll just use an enterprise, no names here. But we have several enterprise customers that come to us and they say, look, we wish we had more Apple devices because our PC -- the people who manage the PCs have more tickets, there's more maintenance costs, the devices have to come in. With Jamf, you don't have to do any of that. And we just -- everything is automated with your management tool and we can truly manage the life cycle of the device, sending a device home to an employee and no one from IT ever touching it, and they can be up and running to ending that device and by pushing a button. And that's how it makes it easier and less tickets. It wouldn't extend the life, but what it does is it makes it much more efficient and scalable.

I did have a question on contract structure. And let's take it from a very simplistic one device approach. How does that work? Is the contract applied to the device? Or is it applied to the person attached to the device?

Yes. So, let's just -- we -- the way we price our products and the way our products work, it's based on device. So, like if you look at Jamf Pro, our management tool, that's priced on a device. So, is Connect and so is Protect. Again, Connect is our identity and network, Protect is our endpoint. However, our bundles, one is our business plan. That is based on user. So, it can be multiple devices under it.

Is there any sort of average device per bundle metric that you guys have?

Yes. So, we've looked at that. We do have, call it, 1.5 devices under the bundles when they are on that.

Okay. Okay. Security.

I've been waiting.

Big growth driver for you guys. I love to ask about security questions for you guys because you've been very successful with it. Now, it's 23% of ARR, growing very, very fast. It definitely feels like it's one of the core tenets of your growth algorithm going forward. And so what exactly is your security product? Maybe really kind of sum it up in a very easy to -- what's the pitch on security? And how are you selling it, right, to get to these customers running it?

Yes. So, I'm going to start about why we got into it and then touch on what each of the products do and then what that sales motion looks like. So, why we got into it is we did a survey and I want to say it was 2018 where we went out and asked customers, how many Apple devices do you have in your fleet? Or what are your employees using today? And what do they want to use? And there was a huge difference between what they were using and what they wanted to use, and they wanted to use more Apple devices. And when you say, well, what helps bridge that gap? And what every IT person in [ CCSL ] said to us is, we're not sure how to trust those devices. So, can you help us figure out how to trust MacBook because our tools give us lot of positives, they degrade the machine, how do we reach trust those devices. So, we took it up on ourselves to meet our customer needs. And by the way, we have over 75,000 customers that run on 32.8 million devices. So, we listen to what they say, right? And we got in the security. And what we decided to do is make it, we build between what Apple builds and what the enterprise needs. What did that mean? Well, they need better endpoint security. They need better security to log into the networks. And so we went out and started this journey on security. So, we started out with Jamf Connect, which is kind of our longest runway product. We started there with, I'll call it, identity more. When you look at Apple, they have password sync issues and so we helped with that issue and bridge that gap. There was network. Well, how do I know this Apple device is really supposed to connect the network? It used to be the old VPN, now it's Zero-Touch Network security, that's what we provide. And then we've gotten the endpoint, whether it's content filtering, phishing, malware, you name it, we have those abilities. And so we delivered what our customers wanted and we've helped them decide these are secure devices and that's why we've seen such uptick because our customers asked for it. Now they're deploying it. They're buying it and saying, yes, we're good with this. Now, we can deploy these. And we're just as confident in these Apple devices as a PC device. Now, what I'll say on this front, we get this question a lot where people ask us, well, our company is all Apple devices only or they mixed environment? The answer is yes. They're mixed environments. We are the only one at scale that can do the management and security seamlessly on the Apple side, there are others who can do it on the PC side. And that's why we've seen the success because we can run alongside others or individually on those devices. And so we consolidate vertically versus horizontally and we're trying to provide the best experience to the user and making sure the user or the CCSL can trust that device. So, that's really what's resonated well. And our teams from a go-to-market standpoint, see that, understand it. And we've been ramping them up over time. We had a security overlay team to teach our reps how to sell security. And you're seeing the successes. We're at $138 million, growing 31%. We're seeing the success.

This is embarrassing. I think I should know this answer, but I don't. When I look at the guidance for the 3-year guidance that you put out, what is the contribution of security from that growth stack? Meaning, is it half of it? Is it 1/3? Is it 2/3?

Yes, it's good question. So, what we rolled out at our Investor Day, there's an NRR calculation that shows the contribution of cross-sell today versus what it will be in the future. And it -- because of the size of it and the scale that becomes a bigger part of that NRR. And there's a slide in there on our commercial security that showed since Wandera, our CAGR on security was 39%. What we're projecting forward is a 28% CAGR. So, we're actually doing less and we're not having to be at the same levels and that's what gives us a lot of confidence around that. And by the way, that's just the commercial security piece that's supporting that cross-sell right now. We also believe there's an opportunity for education to support that additionally and on the mobile side. We also showed at our Investor Day that we have about 5 million iOS devices under management and there is 104 million corporate devices out there. So, we have a tremendous opportunity. And again, that's not where we started. That's where we're moving. That's part of our tenet of our strategy and we're moving into that. We're seeing great success there, especially in the replacement market.

So, there's lots of vendors out there that do what you do for the Windows. Why is it difficult for them to enter your ecosystem?

Well, 23 years would tell me why. But part of it -- there's only one player at scale on the Windows side that does management and security. The others only do a component of that. Maybe you have a security company just focused on endpoint. You have a security company just on the network side. We have a management tool separate. And trying to stitch those together that can cause some disruption. And you've got to write different interfaces. And every time one of those are updated, guess what, you got to write new interfaces. No one else is doing on the Apple side. And part of that is where have enterprises been. They were mostly on the PC. There is a shift. There's still more devices on the PC side. So, I think that's where people are playing and using a -- I'm a Minnesotan using a Minnesota analogy, we're skating where the puck is going to be. And we're watching Apple continue to build in the enterprise and we're continuing to see the benefits of that. So -- and we've been doing it for 23 years and we have the largest Mac community out there. Jamf Nation is 100,000 users out there. So, it is a big community and we hear them and we listen to them and just ask one of those providers to keep up with the pace of Apple. I mean, Apple is an innovative machine, and we're focused on that. And I think all those things are what differentiate us from others and why I think it's tougher. There's a barrier for others to jump into what we do.

Yes. No, that makes sense. Skating to where the puck is. Hockey is live, right in Minnesota.

Hockey is live.

I'm from Southern California. I don't even know. Okay. So, let's talk about go-to-market, sales force. How do you think about it? What is your sales capacity today? How do you think about investing for sales capacity? I guess the real question here is, how do you make sure you're not under-investing today for the opportunity in the future?

Yes, it's a good question. We took -- recently, we took an action in January of this year, where it was primarily focused on sales and marketing. It was primarily focused on our quota-bearing reps, QBRs. And what we saw -- so rewinding the clock, we bought Wandera, we integrated it. We taught people how to market it. We taught people how to sell. We brought in a security overlay. We taught sales people to do it. So, we've looked at the last 5 quarters of data to say, hey, now we've got some data around this and who has really made the turn and who is not. And for the ones we let go. We saw that there was -- they weren't hitting their quotas and we could tell that they hadn't learned to sell Trusted Access. And so we made that decision to adjust, give the reps who understands selling management and security together, bigger territories. And we already saw improvements in that. We saw a double-digit percentage improvement in rep productivity in Q1. And so we -- and we know -- we look back at 2022, as our kind of base year was half a really good year and half a tough macro. As they're base year to say what would an average year look like from a rep productivity. And we're still not at that level this year. And that's what we're targeting in 2026 to be back to. So we adjusted, we know there's more capacity with under those reps. So, if something turns, we still have more capacity under those reps, existing reps to go now if we saw go faster, yes, we would contemplate adjusting and adding more. But we think we did it in a really good spot. The last comment I make here is we do have certain automation going in the second half of the year. Today, there's manual processes for the customer journey. Just getting a quote is a little bit manual. Also from a partner perspective, we don't have a partner portal. These are things we're adjusting, there's some technologies that go in later this year. That make it to our reps now like, oh, I got to get this quota, it's taking me forever versus just automation. So, it helps their -- reduce the time they're spending on some of those things. So, the automation should help there. That goes in play later this year and we should see benefits in 2025.

I actually wanted to ask you that exact question. You are the CFO, you allocate budgets, how to think about capacity but also utilization and technology usage. So, as the CFO, how do you think about going after the end market with sales people versus automation tools to drive better utilization? Is there a lot more you can do with technology? Is there -- or do you just -- are you there and you just throw people at?

No, we can do a lot more with automation. And something I was remiss to talk about is the channel too. So, we've been working on standardizing global channel partner program. We're done with that step. We're working on [indiscernible], we work with a lot of MSPs. We work with the big global channel partners that you all know. We work with all sorts of carriers, you name it. And we are getting laser-focused with them and getting them up in the right areas to drive that value. So, I think there's the automation on our side, which I think we were lagging there and we're getting kind of up the par there. And then there's a fact we're becoming more scalable and leaning more in the channel. So, we are always looking at ways. And lastly, these set up the foundation for someday in the future to have in-product purchasing. We only have that in Jamf Now and Jamf School, but having bigger actual products will be a great win to it.

Ian, we're almost out of time. I do want to ask you one more question and thank you so much for doing this. Jamf has been acquisitive in the past. You've been very successful with one that you did 3 years ago. Right, 3 years ago. And so how do you think about the M&A strategy from here?

Yes. We always step back. If you ever want to figure out our strategy around that go to our JNUC, you hear our customers say, this is one other problem I'm having, can we solve this together. And so we look for us -- we don't build it and hope they would come. We listen to our customers, they tell us what's needed within our solutions. That's where we focus. Then we look at tech and talent and of course, it's got to be built Apple first. When you combine all those things, typically, what you'll see us do is a lot of tuck-ins. You don't see a lot of Apple scale players. If there was one out there, don't get me wrong, we would look at it. And if they had the right tech and talent and met a customer need, it makes sense. But we don't see a lot of those, but we are definitely inclusive. We are definitely looking at areas that can help us accelerate our road map.

Ian, we're out of time. Thank you so much for doing this. Super appreciate it. Good luck.

Thank you.

Thank you.

Thanks for having us.

Of course. Thank you.