Release Date: August 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Q2 revenue and non-GAAP operating income exceeded the high end of the outlook.
- Year-over-year revenue growth was 13%, with non-GAAP operating income margin improving by over 1,000 basis points from Q2 2023.
- Security ARR grew 27% to $145 million, representing 23% of Jamf's total ARR.
- Strong traction in industries with historically low technology adoption, leveraging unique workflows for purpose-based devices.
- Positive impact from Apple's innovations, including privacy and security enhancements, which Jamf is well-positioned to support.
Negative Points
- Softness in the Tech and K-12 industries related to device expansion.
- Net retention rate decreased slightly to 106% in Q2 compared to Q1.
- Less strategic revenue sources like license, services, and on-premise revenues continue to experience year-over-year declines.
- Continued expectation of softness in device upsell through the remainder of 2024.
- General and administrative expenses and sales and marketing expenses as a percentage of total revenue, while improving, still represent significant costs.
Q & A Highlights
Q: Would like to drill down into some of the verticals like K-12 and Tech that remain challenging and just what you're seeing on that front, any signs of stabilization or potential green shoots at growth?
A: When we think about the education market, we are still awaiting a refresh cycle. We are working with some of our larger customers, and while we haven't seen the refresh yet, we are in discussions about it. For the Tech sector, we are seeing signs of stabilization, particularly within SMB, which bodes well for the future.
Q: Can you remind us if a customer takes both management and security products, what that typically does to deal size versus them taking one or the other?
A: If you took everyone on Jamf Pro today and moved them to the business plan at today's ASPs, it represents about a $350 million opportunity. Jamf Connect typically adds a 50% uplift and Jamf Protect adds a 75% uplift. The business plan can almost double the value of Jamf Pro alone.
Q: Wanted to get your thoughts on the progress you're seeing in cross-selling iOS security and management to existing Mac customers and whether that's being reflected in Jamf business plan or just multi-device sales.
A: We've had really good success bundling management and security products together, which resonates well with our customers. Two of our largest deals for the quarter had a significant mobile component, showing that new customers are taking on both management and security sides of our product capabilities.
Q: As we look at the guidance for Q3, how would you characterize your view into your own internal business?
A: The visibility is pretty similar to what it has been before. We are seeing some stabilization and have good conversations with prospective and existing customers about expansion.
Q: Was the linearity of the quarter pretty consistent with what you would expect into Q2? And have things in July trended similarly to what you saw in June?
A: We have seen some stabilization, and our quarters tend to be more back-end loaded. This pattern has been consistent for the first two quarters of this year, similar to past years.
Q: Could you talk about the importance of the partner distribution channel into the back half of this year and how meaningful could ramping partner contribution be in that accelerating story?
A: We are really focused on leveraging partners, particularly in the US. We are implementing technology infrastructure advancements like partner portals, which will allow partners to generate their own quotes independently. This, along with a new partner program, will significantly help us.
Q: On the security side, were there any nuances to be aware of or anything else that you would call out?
A: Compared to Q2 last year, we had a significant enterprise deal then, which we are lapping. We added approximately $7 million shy of that in Q2, which is a similar run rate to other periods. We saw a security component in 16 of our top 20 deals, and we believe this traction will continue.
Q: Could you provide commentary on the overall pricing environment throughout the Q2 period?
A: We did see acute competitive pressure, particularly in January, but it did not persist through the rest of Q1 and into Q2. We believe other factors for that competitor, such as needing funding, may have driven that pressure.
Q: What's different or unique about the current and upcoming demand cycle for Jamf that is enabling these good results and guidance?
A: The longer we talk about management and security together, the more it resonates with our customers. We continue to see traction on the mobile side for protection and management, and innovative use cases for Apple endpoints are driving demand.
Q: Could you remind us of the correlation and lag effect between your business and device shipment data?
A: There isn't a direct quarter-to-quarter correlation, but continued year-over-year increase in device sales impacts us down the road. It creates a bigger environment for us to sell into, although the exact timing of this impact can vary.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
