Jamf Holding Corp.JAMFNASDAQ
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Operator: Ladies and gentlemen, thank you for joining us, and welcome to Jamf's second quarter earnings call. [Operator Instructions] I will now hand the conference over to Jennifer Gaumond, Vice President, Investor Relations. Please go ahead.
Jennifer Gaumond: Good afternoon, and thank you for joining today's call to discuss Jamf's second quarter 2025 financial results. Joining me on today's call are John Strosahl, CEO; and David Rudow, CFO. Before we begin, a reminder that shortly after the market closed today, we issued a press release announcing our second quarter financial results. We also published our Q2 investor and earnings presentations, along with an Excel file containing quarterly financial statements to assist with modeling. You may access this information on the Investor Relations section of jamf.com. Today's discussion includes forward-looking statements, which involve risks and uncertainties that could cause actual results and trends to differ materially from our forecast. For more details, please refer to the risk factors and other information discussed in our most recent SEC reports, including our most recent annual report on Form 10-K. Jamf assumes no obligation to update forward-looking statements, which speak only as of the date they are made. We will also reference some non-GAAP measures related to Jamf's performance. Reconciliations to the nearest comparable GAAP measures are available in our earnings release. [Operator Instructions] Now I'll turn it over to John.
John R. Strosahl: Thanks, Jen. We saw very strong results in Q2 with year-over-year revenue growth of 15% and non-GAAP operating income margin of 19%, exceeding the high end of our outlook for both metrics. Total ARR grew 14% year-over-year to $710 million, driven by growth in Security ARR from the addition of identity automation and the launch of our platform solutions. For the first time, we achieved over $700 million in total ARR, over $500 million of commercial ARR and over $200 million of Security ARR. Our platform strategy removes the barriers to Apple adoption by providing customers with our suite of security and management solutions in a single SKU. Each offering is tailored to specific buyer personas, leveraging Jamf's strong and long-tenured IT admin relationships. This enables Jamf to deliver across our 4 key growth vectors: security, mobile, international and channel. First, Jamf for Mobile. By investing in mobility, organizations can fundamentally change how they do business by enabling transformational workflows throughout their operations. Jamf has a proven track record of helping organizations to invest in a mobile- first strategy for both desktop and deskless users in multiple industries. By going beyond the mobility framework and providing comprehensive solutions and an extensive partner ecosystem, Jamf enables organizations to fully realize their digital transformation initiatives other vendors simply cannot provide. Mobile devices are at higher risk with internal research data showing 1 in 10 users click on a malicious phishing link. With Jamf for Mobile, we help IT and security teams confidently protect users, devices, data and applications without impacting the end user experience. This helps risk-intolerant teams feel comfortable with introducing mobile into more workflows. Jamf for Mobile also makes it easy for mobility teams to plan, deploy and scale mobile-first strategies and workflows. Layered capabilities provide controls for users, devices and applications. With our vast partner ecosystem for vertical-specific use cases, organizations can implement a fully baked solution to make their digital transformation a reality. With Jamf for Mobile creating tailored experiences based on the employee's role, organizations can provide the exact resource employees need at the moment of need. For example, in retail, 40% of employees share or go without a mobile device. Insufficient IT infrastructure, complexity of integration and technical issues are all highly cited reasons for not providing devices. The same challenge is also present in manufacturing, health care, hard hat industries and transportation. In Q2, a Middle Eastern airline purchased Jamf for Mobile for 10,000 iPads to be used as crew devices and electronic flight bags. Jamf was chosen over the 2 largest UEM vendors for this 4-year deal due to a number of factors, including protecting a rapidly scaling mobile fleet worldwide with a layered defense of network threat defense; secure DNS; real-time OS health with instant remediation and quarantine; feeding the airline's security operations center with actionable telemetry via native SIM integration delivering rich mobile-specific events; providing a granular data usage and roaming governance policies that cap spend without hindering operations; and combining all electronic flight bag critical controls into a single SKU, which is far simpler than piecemeal licensing offered by the competition. Helping make Jamf for Mobile even more robust, we recently announced Android enrollment support, which was available starting July 1. Jamf has long delivered cross-platform mobile security. Android devices have already been protected by our mobile threat defense; web protections like phishing, content filtering; and Zero Trust access technologies. However, without Android enrollment support, many organizations had to rely on third-party unified endpoint management tools to meet cross-platform requirements. In those scenarios, Apple devices often ended up managed through platforms that weren't built with Apple in mind, leading to subpar experiences and limited access to native capabilities. With Android enrollment, Jamf for Mobile will enable organizations to manage their full mobile fleet through one solution while keeping Apple at the center of their mobile strategy. This addition is designed for organizations that want to select Apple as their strategic mobile platform, but operate in environments where a small subset of Android devices still need support. And historically, that meant additional vendors, extra complexity or compromises to the Apple experience. For Mac, endpoints have evolved and management alone is no longer enough. Customers need a solution that not only simplifies Mac at work, but also secures and protects it with built-in security, compliance, deep visibility and identity controls. This is where Jamf for Mac stands apart: enhancing security while integrating seamlessly with existing tools and ensuring onboarding is quick and easy. Jamf for Mac is designed to complement, not replace the security investment customers have already have in place, filling the gaps where Windows' first security tools miss and our Apple-first approach reduces risk. In Q2, a German car manufacturer purchased Jamf for Mac after a proof-of-concept period where we won a full migration away from a legacy competitor. The process also included satisfying dozens of security requirements and numerous certifications as testament to Jamf's commitment to security. Additionally, in Q2, a health care solutions provider recently converted to Jamf for Mac for its 5,000 Mac across a variety of users. This long-time Jamf customer was looking to expand their use of Mac and offering it as a choice to their employees. Part of this process included showing that total cost of ownership to support Mac was lower or within the range of what it costs to support their PCs. Key to this win was demonstrating how Jamf for Mac offers all the tools to support Mac at scale, including purpose-built security for Mac environments and providing additional automation through Jamf for Teams. Ultimately, the customer chose a 3-year agreement with growth built in for years 2 and 3, which will significantly increase the customer's Mac footprint over time. In education, technology goals have changed dramatically with a focus on meeting individual learner needs. This means that management, security and classroom support have also changed, bringing a need for empowerment into the classroom with technology to support learning in multiple ways. As schools use devices more often in classrooms with less IT-specific knowledge, the need for students to have the right apps at the right time in a secure and safe environment where learning takes place is essential. Non-IT specialist staff don't want to be concerned with IT issues arising in a lesson and want to know that students are only using the devices and Internet for subject-specific focused learning. As deployments grow, IT departments want to scale in an efficient and effective way. This includes making it simple and seamless to add additional devices, ensuring compliance with security policies and meeting various end user needs without increasing their workload through help desk ticket fatigue. Jamf K-12 (sic) [ Jamf for K-12 ] meets these goals by bringing a full solution that meets IT, learning and teaching needs with device management, security and classroom workflows. In Q2, a large school district in Kentucky switched from a UEM to Jamf for K-12 for both its student and faculty iPads. The district was struggling with their existing vendor's technical limitations, including the ability to track devices, remove pre-installed apps and lock security settings effectively. Key to this 4-year deal were Jamf's Zero Touch deployment, the Jamf Teacher and Parent app, blueprints for group device updates and activity logging for individual devices. With Jamf K-12 (sic) [ Jamf for K-12 ], the district has stronger device control, improved device visibility, enhanced support and increased value. This win also represents one of our first cross-sell wins with Identity Automation. We're delighted to have the Identity Automation team on board and are pleased with the team's performance in Q2. The team is focused on delivering the remainder of the education buying season. As we look to the future, our vision is for Jamf to deliver secure, seamless access for every user on any device or platform while unlocking deeper, more personalized experience on Apple. By extending the identity platform into the native Apple ecosystem, Jamf transforms authentication into a frictionless advantage. In order to accelerate the execution of our platform strategy, we recently announced a strategic reinvestment plan to support the continued success of our business. This plan includes strategic reallocation of resources to allow for investments in areas with the highest growth potential and drive additional operational leverage in the business. We're focused on 2 key areas. First, we made enhancements within go-to-market. We're taking steps to realign our go-to-market organization to allow for investments in areas that have the greatest opportunity for growth and align with our platform strategy. In enterprise, that means increasing investment and resources to support enterprise customers who deliver higher growth, stronger retention and greater return on investment. This includes investing in enterprise sales talent to expand our reach. In addition, SMB customers are an important part of our base, representing a significant portion of our customer count and ARR. In order to streamline our go-to-market efforts within this segment, we're simplifying our approach to these customers by scaling our reach through the channel. Additionally, we're developing a more automated customer solution and experience to deliver greater customer value and improve operational efficiency. The second area of focus is enhancing our artificial intelligence capabilities. We've experienced meaningful efficiencies over the last year from deploying AI within our operations, sales, product and customer success groups. For example, we've embedded AI across our sales forecasting, customer success and support functions, driving improved forecasting accuracy, earlier risk detection and scalable cost-efficient customer engagement. In our product organization, the team has deployed AI tools for maintenance code generation, bulk update processing and model context protocol server projects. We will continue to accelerate delivery of AI and automation-driven solutions across the entire organization and have established a governance process around it. Our strategic reinvestment plan will help expand our capabilities by accelerating investments in AI to further enhance the customer experience. We believe these initiatives will help drive long-term growth, improve operational efficiency and enhance shareholder value. Recent AI innovations, along with enhanced automation, compliance and identity management capabilities were showcased during our global customer event series, Jamf Nation Live, across 7 cities in Europe and the U.S. For AI, we featured new capabilities to enhance IT experiences, simplify operations and improve efficiency. Jamf AI Assistant empowers IT administrators with intelligent action-oriented capabilities designed to enhance productivity and support better decision-making. We introduced 2 new capabilities within AI Assistant, search skill and explain skill now available in beta for testing. The search skill allows IT admins to perform quick natural language inventory queries, making it faster and easier to identify devices that meet specific criteria, accelerating tasks like troubleshooting, compliance auditing and fleet management. The explain skill simplifies the complexity of mobile device management by translating intricate configurations and policies into clear, easy-to-understand language, helping admins make informed decisions, streamline troubleshooting and manage policies with greater confidence. The platform remains read-only with opt-in activation, ensuring customer controls and security compliance. The Jamf Nation Live series will continue in the upcoming months with events in Asia Pacific. And there's more to come during our Jamf Nation User Conference, October 7 through 9 in Denver. We hope you'll all join us for 3 days of the best of Apple management and security. Jen will be reaching out to all of you with invitations shortly. Now I'll turn it over to David to review our Q2 results and provide our Q3 and full year 2025 outlook.
David M. Rudow: Thanks, John. As a reminder, all non-revenue metrics I'll be discussing will be on a non-GAAP basis. We achieved strong results in Q2, exceeding the high end of both our revenue and non-GAAP operating income outlook. Year-over- year total revenue growth was 15% to $176.5 million, exceeding the high end of our guidance range by $7 million. This performance was primarily due to the timing of certain revenues that were recognized in the second quarter and solid results from Identity Automation. As a reminder, we closed the acquisition on April 1, so Q2 reflects a full quarter of Identity Automation results, which were better than expected. Total ARR grew 14% year-over-year to $710 million. Security bookings were strong, driving 40% year-over-year growth in Security ARR to $203 million. This was driven by both the inclusion of Identity Automation into our results and the launch of our platform solutions. Additionally, net new commercial ARR saw year-over-year growth. After viewing the increasing level of local currency billings that are made possible due to our system update last year, we are moving to a quarterly FX adjustment to ARR from our previous annual timing. This change will allow for better comparability with our revenue, RPO and operating income and will also result in a more moderate quarterly impact than waiting until Q1 to post the annual adjustment. The adjustment in Q2 for the first half was a less than 1% impact to total ARR balance. Recurring revenue grew 16% and represented 98% of total revenues. We saw significant growth acceleration in RPO with total RPO growing over 20% and long-term RPO growing nearly 40%. Excluding Identity Automation, we saw total RPO growth of nearly 15% and long-term growth of approximately 28%, showing the increasing level of commitment from customers as they continue to expand both the size and length of their Jamf contracts. Trailing 12-month net retention rate remained relatively flat to Q1 at 103%, and gross retention rates remained consistent with historical levels. Non-GAAP operating income was $33.5 million or a 19% margin, a 360 basis point improvement over Q2 2024. Sales and marketing as a percent of total revenue improved approximately 300 basis points compared to the prior year period, and G&A improved approximately 150 basis points. We remain committed to improving efficiencies across our business. Q2 adjusted EBITDA grew 40% to $35.3 million, representing a 20% margin. Trailing 12-month unlevered free cash flow surpassed $100 million for the first time, growing 24% to $102.9 million. This represents a 15.4% margin compared to a 13.8% margin in the prior year. We made good progress on collections from billings that were delayed due to our comprehensive systems update last year and still expect DSOs to return to normal levels over the next few quarters. From a cash perspective, we ended Q2 with $482 million compared to $222 million at the end of Q1. This increase in cash was driven primarily by the $400 million term loan facility we entered into in May, partially offset by the $175 million payment associated with the close of the Identity Automation acquisition on April 1. This term loan facility was entered into under the same terms as our revolving credit facility. We intend to use the proceeds to finance the $40 million deferred payment for the Identity Automation acquisition, to repurchase a portion of our convertible senior notes due 2026 and for general corporate purposes. Turning to our outlook for the third quarter and full year 2025. We remain committed to being a profitable growth company and will continue improving efficiencies and strategically investing for growth. This outlook reflects our belief in creating achievable model and is reflective of the recently announced strategic reinvestment plan and the current market conditions. For the third quarter 2025, we expect total revenue of $176 million to $178 million, representing year-over-year growth of 11% at the midpoint. Non-GAAP operating income of $41.5 million to $42.5 million, representing a non-GAAP operating margin of 24% and growth of 52% at the midpoint. For the full year 2025, we're raising our outlook. We now expect total revenue of $701 million to $704 million, representing year- over-year growth of 12% at the midpoint and an increase of $9.5 million from our prior outlook. Non-GAAP operating income of $153.5 million to $155.5 million, representing a non-GAAP operating margin of 22% at the midpoint and approximately 600 basis point improvement over fiscal year 2024. This also reflects an $8.5 million increase from our prior outlook and year-over-year growth of 50%. Additionally, given our strong margin profile, we continue to expect to generate unlevered free cash flow growth of at least 75% for the year. In closing, we remain committed to growth while driving incremental operating margin improvement. Our objective is to exit fiscal 2026 at a Rule of 40 run rate as defined as the sum of the year-over-year revenue growth plus adjusted EBITDA margin. I want to thank all our hard-working and dedicated employees for their continued excellent execution. Now we will take your questions. Operator?
Operator: Your first question comes from the line of Raimo Lenschow with Barclays.
Raimo Lenschow: Perfect. Can you hear me okay?
Jennifer Gaumond: Yes, we can.
Raimo Lenschow: Perfect. The -- quick question. So the decision to support the broader ecosystem now is obviously very interesting. How quickly do you think that will drive results now that you do Android in terms of opening up like new sales -- new momentum around sales pitches, et cetera?
John R. Strosahl: Yes. Raimo, it's John here. I'll take the question. Really, we developed this because at the behest of our customers, like we do with most things like security and others. And it's really -- there have been mobile installments where a portion of that has been on the Android side and the majority of it has been on the iOS side. And they've asked us, hey, we want to use your security products. So is there a way that we can enroll these Android devices so we can roll that out. And that's really the reason behind this. And so not only because -- because they've been requesting it, we've had some pretty good traction on that so far as we've gone back to those same customers and said, okay, now we can do this as of July 1. And so we've had a lot of interest in it and some really good uptake.
Raimo Lenschow: Yes. Okay. Okay. Perfect. And then one question for David. Like Identity Automation, you said it's going better. Like how much of revenue are we talking about now like that you think Q2 and as it's now part of the bigger group, like how should we think about the contribution here for the rest of the year?
David M. Rudow: Yes. So we've integrated that into the education business. And actually, the CEO of Identity Automation is actually now running the entire education group. So all the salespeople within education now have Identity Automation in their bag to sell, which is great. So we've seen good traction with that. We've had a couple of cross-sells, which is really good, and the pipeline is building around that. We talked about the upside in the quarter. Half of that was generated from Identity Automation, partially because we built a conservative model. It's a new acquisition. We had to get a good understanding of the business. And they also did outperform our expectations in the quarter. The other half is Jamf related, improved performance out of Jamf. And then we also had some partner-related business that was signed in Q1, but we recognized revenues in Q2, and that was the other reason for that upside in the quarter.
Operator: Your next question comes from the line of Samik Chatterjee with JPMorgan.
Samik Chatterjee: Maybe just starting with the strategic sort of action plan that you took related to resource allocation. I know it's sort of moving resources around to better align for growth. But since you're sort of reiterating your plan to exit the -- exit 2026 with the Rule of 40, just curious if sort of as you've taken a closer look at your cost profile, has your view changed in terms of how to meet the Rule of 40 by -- when you exit 2026 more in relation to sort of your 25% operating margin target that you have for that time period? And I have a follow-up.
David M. Rudow: Yes. So our strategic reinvestment plan that we put in place was really around kind of moving around resources to further support areas of growth of the business. What we found through our new data that we can review and analyze from the system update is that I think there's ways that we can further improve efficiencies in the small business side, still a very important channel for us. We're going to make investments in the channel. We will also invest in automation and AI. And then, in turn, we will also expand our enterprise sales and support team as well. And the channel will see investments around the world, too, because we've seen very good traction. We're still targeting a Rule of 40 exiting 2026, there's no change there. There will be some cost savings, but really, the efforts around this was to strategically realign the business to accelerate growth.
Samik Chatterjee: Okay. Okay. Got it. And then maybe just turning back to sort of the near-term drivers here. In relation to the fiscal 3Q guide here, you did mention this is sort of a less than normal seasonality from 2Q that you're guiding to from what I can see from -- relative to the last couple of years. And I think some of this is probably what you mentioned in terms of timing of revenue recognition in Q2. But maybe if you can just talk and help us sort of think through why this might be more -- closer to normal seasonality or what the magnitude of those timing impacts on Q2 were? Or are you seeing anything different from normal seasonality in relation to your Q3 guide?
David M. Rudow: Yes. No, I think if you remove those onetime revenue numbers from Q2, it would be more -- it would be kind of a more seasonal ramp into Q3. We have -- Identity Automation, it is a heavy season for them on education side in Q3. And so we will see -- we expect to see a little bit better improvement there, Identity Automation. And then Q4 on Identity Automation, they will have a little bit lighter, sequentially down revenue number for Q4 as well.
Operator: Next question comes from the line of Jake Roberge with William Blair.
Jacob Zerbib: Hello, could you hear me?
Jennifer Gaumond: Yes, we can hear you.
Jacob Zerbib: This is Jacob Zerbib on for Jake Roberge. You talked a little bit about how you're increasing go-to-market efficiency. I just wanted to touch on your partner network. Can you talk a little bit about how progress with partners in the U.S. is going? And do you think this channel could eventually drive similar revenues to your international channel?
John R. Strosahl: Yes, Jake, I'll take the question here. It's John. We've really been leaning into the channel, specifically domestically. And we have a majority of our business, as you mentioned, outside the U.S. already goes through the channel because we started with channel first. And in the U.S. here, really leaning into the channel. And part of this technical upgrade or systems upgrade that we've been working on not only gave us visibility into the company to show us where we can invest and where our growth is and things where we can really accelerate that growth, but it's also on the channel capability side. And we -- with now the fact that we have a channel partner portal that they can come in and register their own deals and create their own quotes without involving a salesperson at Jamf, a lot of the efficiencies that they get in addition to the new partner program that we've rolled out that gives higher incentives for deal registration and really helping us build the top of the funnel being channel first. Now over 2/3 of our business coming from the channel globally. Again, 80% of that coming from outside the U.S. and increasing pretty rapidly inside the U.S. So to answer your question, yes, we believe we can get to those levels worldwide that we have internationally, and we're continuing to do that to help leverage the growth, especially as it relates to some of our smaller customers or mid-market customers.
Jacob Zerbib: Got it. And then I just wanted to ask about Security. You've done a really good job with management and also in the education sector in the international market. Can you talk a little bit about demand for your security solutions there?
John R. Strosahl: Yes, I can take that question as well. This is John. And as I mentioned earlier in Raimo's question, again, this was something that we had done at the behest of our customers. And so we continue to see increased demand for our security products. You can't have a secure device without having management and security together on that. And we've seen it in the results that we've had this quarter as well with substantial growth in Security. We continue to see our customers leaning into that, especially as it relates to mobile, and that's been one of our fastest-growing types of business. And we see that across our retail customers, across our transportation customers, professional services, even into manufacturing, all of those areas where the security -- those businesses that are working that deskless workflow understand that those endpoints need to be both managed and secured, and that's where we're getting a lot of good traction there as well.
Operator: Your next question comes from the line of Patrick Walravens with Citizens Bank.
Unidentified Analyst: This is [ Kincade ] on for Pat. Super excited to hear about this go-to-market shift, but I was wondering if you could highlight any specific changes in rep quotas or what you're trying to push people to sell through that?
John R. Strosahl: Yes, I can take that, [ Kincade ]. This is John. As we look at what we're pushing the reps to sell, I guess, is the platform solutions that we have, which really blends management and security, whether it's a different persona, a customer buying for the Mac or a customer buying for the mobile. And those solutions really oriented toward that persona have done really well. And as we look at focusing our go-to-market efforts, as David mentioned, the small- to medium-sized customer base is significant for us, and we're going to continue to support that in a way that those customers want to be supported and also to lean more into the enterprise. And so as we invest in some of our sales resources and go-to-market resources on the enterprise side, really, we see a lot of growth there and very low churn. Our LTV to CAC is very good in that area, and we're going to continue to lean into it to exercise that muscle and generate accelerated growth.
Operator: Okay. There are no further questions at this time. I will turn the call back over to John Strosahl for closing remarks.
John R. Strosahl: Well, thank you, everyone, for your time today. And we hope to see some of you at the upcoming conferences and our annual user conference, JNUC, which is early October. Have a great evening.
Operator: Thank you. This concludes today's call. Thank you for attending. You may now disconnect.