This conference call transcript was computer generated and almost certianly contains errors. This transcript is provided for information purposes only.EarningsCall, LLC makes no representation about the accuracy of the aforementioned transcript, and you are cautioned not to place undue reliance on the information provided by the transcript.
spk13: Thank you for standing by, and welcome to the first quarter 2022 Jeff Earnings Conference Call. At this time, all participants are in listen-only mode. Later, we will conduct a question and answer session, and instructions will be given at that time. If anyone should require assistance during the program, please press star then zero on your touchtone telephone. As a reminder, today's program is being recorded. And now I'd like to introduce your host for today's program, Jennifer Gamon, Vice President, Investor Relations. Please go ahead.
spk07: Good afternoon, and thank you for joining us on today's conference call to discuss Jamf's first quarter financial results. With me on today's call are Dean Hager, Chief Executive Officer, Jill Pubman, Chief Financial Officer, and John Strossel, President and Chief Operating Officer. Before we begin, I'd like to remind you that shortly after the market closed today, we issued a press release announcing our first quarter financial results. We also published a Q1 earnings presentation an updated investor presentation, and Excel file containing quarterly financial statements to assist with models. You may access this information on the investor relations section of Jamf.com. Today's discussion may include forward-looking statements. Please refer to our most recent SEC filings, including our most recent annual report on Form 10-K, where you will see a discussion of factors that could cause actual results to differ materially from these statements. I would also like to remind you that during the call, we will discuss some non-GAAP measures related to JANF performance. You can find the reconciliation of those measures to the nearest comparable GAAP measures in our FTC filings and press release. Additionally, to ensure we can address as many analyst questions as possible during the call, we ask that you please limit your questions to one initial question and one follow-up. Now, I'd like to turn the call over to Dean Hager.
spk11: Thank you, Jen. And thank you everyone for joining us. On today's call, I will share some highlights from Jamf's first quarter and exciting updates from our recent Jamf virtual customer event, where we announced several key product enhancements. John will then walk you through recent customer successes and how we're enabling our go-to-market teams. Then Jill will review the first quarter financial results and provide Jamf's financial outlook for the second quarter and fiscal 2022. Q1 marks the eighth quarter of Jamf reporting business results as a publicly traded company. Over those two years, Jamf's company, market, and product have transformed significantly. We have exceeded expectations every quarter despite facing a pandemic, recession, a challenging environment for recruiting and retaining talent, and most recently, the war in Europe. In Q1 of 2022, we continued to exceed expectations. growing ARR to $436.5 million, a 42% increase over the same period last year. Since Jamf's IPO, we have added over $200 million of ARR, approximately 23,000 customers, over 10 million devices, and onboarded over 1,000 new Jamf team members. We are especially proud of Jamf's growth in Q1, since we have now completely lapped the surge in education buying that occurred in Q3 and Q4 of 2020 and in Q1 of 2021, where programs like the Giga Project in Japan drove device growth in the education market never before seen in history. To better understand how Jamf's business evolved throughout different stages of the pandemic, I'd like to compare Jamf's Q1 growth rates in education and commercial markets versus the past two years. To assist you, we have included a quarter-by-quarter representation of these metrics over the past two years in Jamf's earnings presentation, which is available via the webcast and Jamf's IR website. At the start of the pandemic in Q2 2020, Jamf's first quarter as a public company and prior to the surge in education buying, Jamf reported year-over-year ARR growth of 36%, which was comprised of 50% growth in commercial markets and 18% growth in education markets. Over the course of the next three quarters, we reported that market dynamics had pushed our commercial and education growth rates closer together, culminating in Q1 of 2021, where Jamf's year-over-year commercial ARR growth was 39% and education growth was 33%. From that point on, education growth rates started to return to normal levels, as expected, and Jamf's commercial growth rates accelerated, also as expected. This has continued each quarter and is reflected in our Q1 2022 results, where year-over-year ARR growth in education was 15%, despite lapping an incredibly strong prior year. And ARR growth in commercial markets was 57% in Q1, now for the first time representing over 70% of total ARR. We are very pleased with the balance between GENT's healthy education market and higher growth commercial markets, with the larger portion of our business growing at significantly faster rates. Going forward, we believe that buying cycles and year-over-year comparisons will no longer have significant pandemic anomalies. We celebrate the return to a healthier balance across markets, but we are also proud that our business was flexible enough to adapt during the pandemic in order to help organizations work, care, and learn remotely while continuing to succeed as a public company, maintaining consistent, strong growth throughout this period. Perhaps most impressive has been the transformation in Jamf's product platform over the past two years. At the time of Jamf's IPO, our business was primarily driven by Apple device management solutions, and we had just recently entered the security market with products like Jamf Connect and Jamf Protect. Two years ago, in Q1 of 2020, Jamf's total ARR from security solutions was approximately $5 million. We are very pleased to report that ARR from Jamf's expanding line of endpoint security solutions has grown well over tenfold to $75 million in Q1 of 2022, with the vast majority of our security ARR coming from commercial markets. We have accomplished this impressive growth with Jamf's security portfolio while continuing high growth for our Apple management products. For commercial markets, Jamf's Q1 ARR growth for our Jamf Pro and Jamf Now Apple management solutions was over 30% year-over-year in every geography. Today, Jamf is a leading provider in both Apple device management and cross-platform mobile security that includes identity-based account management and authentication, next-generation Zero Trust VPN, prevention of malware, phishing, and malicious downloads, content filtering, data capping, compliance, and reporting solutions. Jamf is one of the very few companies in the world that offer both endpoint management and security, giving Jamf the unique ability to identify, prevent, and remediate security threats automatically. Of the few companies in the market that offer both endpoint management and security, Jamf is the only provider that manages and secures an Apple-first enterprise. which is a critical differentiator since the iPhone is the number one smartphone used in the enterprise. The iPad is the number one enterprise tablet, and the Mac is the fastest-growing computer in the enterprise. According to IDC data, Apple's growth has continued in 2022 with near-record Mac shipments in Q1, still growing despite a very strong Q1 2021 when Mac shipments grew an amazing 111%. Jamf not only supports this Apple growth, we help drive it by delivering a consumer simple experience that employees love and an enterprise secure solution that organizations trust, fulfilling our purpose to simplify work. Jamf will continue to win the trust of organizations by developing innovative solutions that are Apple first and Apple best, further solidifying Jamf as the provider best suited to power the Apple run enterprise of the future. A great example of this is the recently launched Jamf Fundamentals plan. Jamf Fundamentals is a simple yet powerful solution that provides a superset of mobile device management capabilities, along with the ability to simply turn on malware prevention and password sync with the most popular cloud identity providers. Ideal for growing small and medium-sized businesses, this plan helps provide the management and security functionality Businesses need to thwart modern threats all within one simple platform. Any new customer can deploy Jamf Fundamentals with no training required and without speaking to a Jamf sales representative. And all current Jamf Now management customers can upgrade to Jamf Fundamentals with one simple click. We launched Jamf Fundamentals in late March and have seen an impressive number of devices enrolled into the plans. We showcased this new solution along with several other platform capabilities a few weeks ago at the Jamf Spring event. During this event, which was attended by thousands, we took the opportunity to update Jamf customers on the progress we've made on what we announced at JNUC last October, along with some new features, including BYOD, app installers, and new security solutions. Leveraging Apple's latest native technology, Jamf has now delivered a new BYOD solution that strikes the right balance between organizational security and end-user privacy, all for a compelling price point, 85% less than the cost of corporately owned iPhones and iPads. This new capability transforms Jamf's competitiveness in the large and underserved BYO markets. With the delivery of new app installers as part of Jamf's app catalog, we are now providing a workflow for software delivered directly by third parties that mirrors the simplicity of the Mac App Store. We believe Jamf's solution is significantly differentiated in the volume, velocity, and validation of the third-party software we support. And we anticipate customers will save an average of 5 to 15 hours per week using this new capability. Continuing our strategy to expand our security portfolio, we also announced significant enhancements to Jamf Protect for Mac, with the goal of providing the entire solution needed to maintain good Mac security hygiene, detect attacks, and stop malware from compromising endpoints. With this new announcement, Jamf also prevents incoming network threats, like phishing and malicious downloads, before they put users or devices at risk. These enhancements, combined with Jamf's mobile security suite, make Jamf the only comprehensive endpoint and network security platform built first for Apple, yet also available for Android and Windows. Innovations like these, built for the purpose of simplifying work, help Jamf extend its lead in Apple enterprise management and ultimately help drive Apple adoption in enterprises of all sizes. For more on Jamf's recent customer successes and how we're enabling go-to-market teams to deliver Jamf's comprehensive platform, here's John.
spk03: Thanks, Dean. With the enhancements we've outlined at the Jamf event, the Jamf Security Platform now provides a one-stop shop for organizations looking to secure devices across macOS, iOS, iPadOS, Android, and Windows. And combined with our robust management capabilities, Jamf is the only vendor at scale who can fully support the Apple growth within large organizations, especially for the Mac. Nowhere is this more evident than in our technology industry, as enterprises are growing their fleet with Mac, serving as a key device of choice for software engineers. In Q1, we signed over 26-figure deals, many of which were in the technology industry. We're excited to continue working with industry leaders like Salesforce as well as Amazon Web Services who is proud to offer employee technology choice and now has one of the largest and fastest growing Apple and specifically Mac deployments in the world. We believe this strong Mac trend in the technology industry will play a significant role in Mac growth across all industries. As our expanding line of product continues its impressive growth, we've enabled our go-to-market teams to identify customer needs holistically across both management and security. And with the help of security overlay sales expertise to provide insights related to complex security requirements, our teams can demonstrate the power and the value of utilizing Jamf for all of their device management and security needs. Success stories in delivering a comprehensive solution to customers in various industries across both management and security and across device types have helped guide our go-to-market strategy. Like, for example, in healthcare, First, the University Medical Center Utrecht is one of the largest academic healthcare centers in the Netherlands, with over 1,100 beds and more than 11,000 employees. UMC Utrecht has been a Jamf Pro customer for nine years, starting with MAC management in the research department. Now, over time, they began managing MAC not only for the researchers, but also for doctors and nurses doing patient care, as well as for the medical students. The onset of the pandemic posed a new challenge of supporting a dispersed network and workforce while meeting the medical center's security and privacy requirements. During this time, UMC was able to quickly scale its deployment from 400 to over 1,800 max while not having to increase the size of its IT team. Over the past two years, the IT team has both improved their security posture and simplified their user experience with Jamf by adding Jamf Connect, Jamf Protect, and most recently, Jamf Private Access. In January, UMC renewed all of its licenses while also growing its MAC fleet. Also in healthcare, Soleo Health is an innovative national provider of complex specialty pharmacy services administered in the home or an alternative site of care. They have a team of experienced pharmacists, nurses, and clinicians throughout the United States. Soleo has leveraged Jamf Pro, Jamf Threat Defense and Jamf Data Policy since 2020 to deploy their fleet of iPads and smartphones and ensure these devices are protected and in compliance while in the field. In Q1, Saleo renewed both its Jamf Threat Defense and Jamf Data Policy for a three-year term with license growth built in annually. As Saleo Health grows, Jamf is helping simplify Saleo's device management while addressing their mobile security needs. We are excited to extend this partnership and continue our efforts to bring value to their IT admins as well as their leadership team. We're seeing the benefits of this strategy across a number of industries. In Q1, over half of our top 20 largest deals included one or more of our security products. Another element of our security go-to-market strategy is expanding our relationships with mobile carriers. If you'll recall, one of the key opportunities related to last year's Wondera acquisition was the ability to expand in the mobile carrier channel given Wanderer's strong carrier relationships. Since then, we've expanded and landed carrier relationships internationally with carriers like Docomo, BT, Telstra, and others, with the ability to deliver our full Jamf platform. So far, we're incredibly pleased with the results of these efforts, and in one expanded carrier relationship, yielding a new deal from the first day of launch. We're excited about the opportunity to help organizations simplify their device management while also addressing their security needs. We look forward to sharing more of our progress in future quarters. Now I'll turn it over to Jill for our financial results and guidance.
spk10: Thanks, John. Our Q1 results again reflect continued strong growth. I'm so proud of how consistently we've delivered such strong results over the last two years. The foundation of these consistent strong results lies in our high-quality recurring revenue, our solid net revenue retention, and our disciplined investment approach. These factors, combined with our loyal customer base and award-winning culture, make Jamf unique amongst many of our peers and position us well as we navigate the ever-changing macro environment. We ended Q1 serving more than 62,000 customers with more than 27.3 million devices on our platform. As Dean mentioned, we've now lapped tough comparables related to the education buying surge in late 2020 and early 2021. Now, with a healthier balance between commercial and education markets, we expect this more normalized customer and device growth going forward. Q1 revenue growth is 34%, and total ARR growth is 42% year-over-year, driven primarily by device expansion, new logo acquisition, and upsell and cross-sell efforts. This growth represents at least 25% growth across every Jamf product, with all major geographies and all of Jamf's top commercial industries experiencing growth of at least 30%. And it's worth noting that our suite of security offerings is now contributing over 15% of our ARR. Dollar-based net retention remains steady at 120% for the trailing 12 months ended March 31st. While device expansion is the primary driver of our net retention, add-on security products are increasingly contributing to our expansion. As a reminder, our net retention disclosures will not include WANDERA until we have 12 months of trailing data. WANDERA's historical net retention was lower than JAMP. However, we believe that after one year as part of JAMP, WANDERA net retention will have minimal impact to our overall dollar-based net retention once it's added to our third quarter reporting. Now, the remainder of my remarks on margins, expense items, and profitability will be on a non-GAAP basis. Our GAAP financial results, along with the reconciliation between GAAP and non-GAAP, are found in our earnings release. Q1 non-GAAP gross profit margin was 81 percent, a decrease of two percentage points from prior year due to the impact of the WANDERA acquisition and the impact of the Jamf Connect revenue recognition changes, both of which occurred in early Q3 2021. We saw increases in non-GAAP operating expenses in Q1 over the prior year, primarily due to added headcount in sales and R&D in support of top-line growth, as well as observing one-day operating costs. As such, Q1 non-GAAP operating margin is 5% compared to 10% in the prior year quarter. Non-GAAP operating income exceeded our expectations in Q1, partially due to the timing of certain license revenues which are recognized upfront and have minimal associated costs, along with the timing difference of some new hire expenses related to recruiting and hardware, which we anticipate will be recognized over the remainder of the fiscal year. Our trailing 12 months on levered free cash flow margin was 16% compared to 24% in the prior year period. The prior year period benefited from expense savings related to the pandemic and the timing of cash collections and multi-year education contracts, while the current period now includes the operating costs associated with one-day operations. Our trailing 12 months unlevered free cash flow margin, when combined with our trailing 12 months revenue growth of 36%, again exceeds a rule of 50. We anticipate 2022 unlevered free cash flow margins to be at or slightly above the 18% margin we achieved in 2021. We believe our strong, consistent cash flow generation differentiates JAMP from many other high growth tech companies and provides us with financial flexibility and stability, helping protect us from any rapidly changing market or economic conditions. This cash flow generation also allows us to continue to make investments in innovation and sustainable top line growth. Our annual effective tax rate is 1.3% consistent with our expectations. Going forward, For non-GAAP metrics, we will use our statutory rate for calculating tax impacts, which is currently 24%. We have included calculations using this updated methodology for current and prior periods in the Excel file containing our quarterly financial statements that have been posted to our IR website. Please note that we do not pay cash taxes on a U.S. federal basis. Now I'll provide thoughts on our financial outlook for the second quarter and full year 2022. As Dean mentioned earlier, we are very pleased with the balance between our healthy education markets and our higher growth commercial markets, with the larger commercial portion of our business growing at significantly faster rates. This momentum, along with continued investments in our go-to-market activities and new product offerings, many of which Dean and John highlighted earlier, will drive strong revenue growth in 2022. From the perspective of investing for continued growth, We continue to remain focused on investment in strategic innovation, increased capacity and infrastructure as we scale, geographic expansion in strategic markets, and investment in our people. And as we have done historically, we will continue to reinvest over performance against our plan back into the business in support of these initiatives. Given these considerations, for the second quarter of 2022, We expect total revenue in the range of $112 to $114 million, representing growth of 30 to 32% year-over-year. Non-gas operating income in the range of $2 to $3 million. For the full year 2022, we expect total revenue in the range of $472 to $477 million, representing growth of 29 to 30% year-over-year and a $5.5 million raise from the midpoint from our prior outlook. Non-GAAP operating income in the range of $19 to $22 million. As a reminder, our non-GAAP operating income is impacted by the full year impact of the WANDERA acquisition, which occurred in July 2021. Additionally, for modeling purposes, we provided estimates for amortization, stock-based compensation and related payroll taxes, annual effective tax rates, and basic and diluted weighted average shares outstanding in the earnings presentation as part of the webcast and also posted on our investor relations website. And now Dean John and I will take your questions. Operator?
spk13: Certainly. Ladies and gentlemen, if you have a question at this time, please press star then 1 on your touch-tone telephone. If your question has been answered and you'd like to remove yourself from the queue, please press the pound key. Our first question comes from the line of Brian Essex from Goldman Sachs. Your question, please.
spk14: Hi. Good afternoon. Thank you for taking the question and congratulations on the results for the quarter. Dean, I wanted to start with a quick question for you, you know, particularly as you've highlighted the increasing contribution from security on your platform. I wanted to ask, are you starting to see a change in the buying patterns, particularly on the enterprise side, and who you're selling to and the appetite for a greater endpoint security given the elevated threat environment? Are you starting to see CISOs enter the conversation a little bit more frequently, or are you still selling through to the traditional type of enterprise contact person?
spk11: Great question, Brian, and thank you for it. Yeah, you make a interesting observation because we are at Jamf, one of the very few, as I mentioned, that has a full management suite of products and security. And as a result, the story that we're able to tell and the value that we're able to deliver is not only a detection of security vulnerabilities, but also action against that. Now, the answer to your question specifically is, is a little bit different depending on whether it's an SMB commercial customer or whether it's an enterprise. In the SMB space, very frequently it's the same economic buyer. And so when we originally launched, for instance, Jamf Connect or Protect a couple of years ago, the first area of traction we got was actually within SMB. And there, the bundle of Jamf Business Plan where we combined Pro, Connect, and Protect together became very popular very fast. Enterprise level, a little bit different. You're likely going to bring in the InfoSet team, the CISO into that buy as well. And so I would say that our rhythm is really get traction with SMB, load up on the references, show the use cases of what we can deliver, and then move to the enterprise, in which case you do than have contacts with additional economic buyers. Does that answer your question?
spk14: Yes, yes, perfect. Super helpful. Maybe one quick one just to follow up. Now that we're kind of entering in a period of more normal buying patterns, kind of lapping that accelerated buying pattern of the pandemic, how should we think about seasonality for ARR revenue as we fine-tune our models for the remainder of the year?
spk11: Jill, do you want to grab that?
spk10: Yeah, hey, Brian, it's Jill. If you're thinking about for the rest of the year, we have to remember that we have the one-day acquisition that occurred in July of last year. So as we come up on the second half of the year, we will see a slightly slower growth rate compared to what we'll post in the first half of the year just because we're lapping that acquisition. But all things held equal and neutralized for that similar growth rate.
spk14: Very helpful. Perfect. Thank you very much.
spk13: Thank you. Our next question comes from the line of Rob Bowens from Piper Sandler. Your question, please.
spk12: Yeah, thanks for taking my question. I want to build on what Brian asks around the security front, especially as we look at your EDR solution. Are you replacing brand name endpoint players like the CrowdStrike Sentinel one or Microsoft? Are you sitting next to them? Just curious how that's logistically playing out within your enterprise base. And then just to add to that, We love some of the early response to Jamf Safe Internet from some of your customers. Thanks.
spk11: Sure. Thanks, Rob. So first of all, on the are we replacing or, you know, cuddling up alongside other security providers that are out there, well, very clearly since Jamf Connect and Protect, and that really was our on-ramp of getting into the security space. since those are Mac-only and almost no enterprise out there is Mac-only, we always coexist with somebody else within the enterprise. The question is, do we actually coexist on the Mac itself? And frequently what customers will do, because we have such a low impact from a performance and experience on the user when we load those solutions on the Mac, that we'll find that customers will actually just go ahead and install us. Of course, using Jamf Pro because they're all using Jamf Pro for the Mac anyway. They'll install us right alongside and run us next and see that we typically will find exploits that other solution providers that aren't built specifically for Apple won't find. And then as we bring on new security solutions like threat defense and data policy and such, Once again, because of our focus predominantly on Mac and now mobile, we really don't focus, because it is adequately served, the Windows ecosystem from a protection perspective that will always coexist with where most of the security industry is focused, which is on the Windows platform. We'll let them continue to focus on that area. We'll focus on the Mac and mobile area. And then we typically partner with those security providers to make sure that our feeds are going into their data logging so that there's a simple one source of truth for CISOs. And then regarding safe internet, very quickly, we actually have announced that product but haven't launched it. We announced that it would be coming to market this summer. And we are seeing a lot of anticipation for it, but no numbers to report yet.
spk12: Great. Thanks for the color.
spk11: Thanks, Rob.
spk13: Thank you. Our next question comes in the line. I have Matt Stoker from William Blair. Your question, please.
spk08: Hey, Dean. Hey, Jill. Hey, Jennifer. Thanks for taking the questions. Just a couple from me. I guess, one, you maybe want to take it all the way back to the Apple relationship. I think we got that really interesting piece of news that Apple is shutting down Fleetsmith, which I think is a pretty strong validation of what you guys have been saying about kind of that move and thoughts around that development over the past couple of years. Obviously, they still have Apple business essentials, but as you've spoken about before, that appears to be more of a new channel rather than anything that's really competitive. Any update you can give, any color you can provide in terms of the relationship with Apple as a partner, as a customer, and then what you're seeing in terms of using that Apple Business Essentials as a channel for kind of upselling Jamf, if you will.
spk11: Right. Thank you, Matt. First of all, the partnership with Apple and the relationship continues to be as strong as ever from a customer perspective, from a reseller perspective. from a development perspective and, of course, from an influence in the market, which is our primary existence out there together within the enterprise. So nothing has changed there. It is, as I mentioned, as strong as ever. You're absolutely right that pretty much everything that we were providing predictions for what would happen with FleetSmith was indeed what ended up happening. I wasn't surprised at all by that announcement. And on the Apple Business Essentials, again, we consider that at the very, very low end of the market to be a great, I mean, frankly, our security solutions, as you can see, are growing so fast. They are best served if there is some MDM in the picture that can actually help deploy those solutions. So the more devices out there that actually have an MDM running on it, the better for Jamf. And so therefore, again, we applaud Apple attempting to provide a service to a segment of the market that largely goes unmanaged typically. So I have yet, and I can say this actually completely, since the announcement even of the beta last fall, I have not talked to a single customer that was confusing whether they should run Jamf or bring Apple Business Essentials into that implementation. It really is designed to meet a segment of the market that nobody's really reaching. So it is exactly what we thought it was, and the results are what we expected as well. As it pertains to actually expanding the channel for us to give us more to sell to, it's so early on with Apple Business Essentials, we haven't really seen any impact there either.
spk08: Understood, understood. And then just maybe one follow-up. You mentioned the, you know, kind of the carrier relationships that you're building out. That's something you had talked about previously as a, you know, potential, you know, benefit from bringing Wondera into the picture. We'd love to just get, you know, kind of obviously it's relatively early, it seems, with some of these relationships, though the traction seems to, you know, already be, you know, pretty encouraging. We'd love to just get some updated thoughts on kind of the timeline for ramping those relationships and, you know, thoughts on how that I guess expands your effective SAM from here, your serviceable adjustable market.
spk11: Yeah, I tell you what, I'm going to bring John into this discussion a bit just to talk about some of the work that we're doing with carriers. But before I do, I'll just remind everybody that you're right. We typically had not gone to market through carriers. Jamf has an incredibly productive and effective Salesforce that is led by John and And we believe that the primary points of synergy with the one Dara acquisition was actually bringing their products to our customers through our channel. But a secondary benefit was going out there and furthering our relationships with one Dara's channel, which is predominantly through either other security companies or carriers, but I just wanted to remind you that it was kind of a secondary factor from a channel perspective. But, John, do you want to comment just to touch on some of the work that we're doing with carriers?
spk03: Yeah, sure. Thanks, Dean. You know, Matt, as you said, because we had those original channels with Jamf channels and then we're taking the Wondera products and putting them in through those channels, but we already had them, the expansion for us is really leveraging the carrier relationships that Wondera had previous to that. I've personally been in discussions with several carriers, and they're very open and eager to add some of the functionality that we have in the legacy Jamf products to the carrier relationships today. In fact, we've been listed on several of those carriers in their price list. So when their enterprise reps go out to their enterprise customers, they can now quote not just the Wanderer products but also the Jamf legacy products and put those in. And as I mentioned in my script, we actually had a deal closed immediately once we did that because that just – That just multiplies our reach into those enterprises through those carriers.
spk08: Great to hear.
spk13: Thanks again. Thank you. Our next question comes from the line of Joshua Riley from Needham. Your question, please.
spk05: Hey, guys. Thanks for taking my questions. If you look at your international business, how should we think about your exposure to Europe versus APAC or LATAM? And have you seen any divergence in demand between the U.S. market and these international geos as the macro has become more challenging in the last couple months?
spk11: Okay, so real quick, I think I'll kick it over to Jill in a second. But first of all, when talking about the overall impact, you know, there's a couple of factors. One would be, of course, the unrest that's over there, and specifically some sanctioned customers and also investors. some FX impact. But Jill, do you want to comment or try to quantify that impact?
spk10: Yeah, it's really those couple factors. We had to, you know, cease doing business with a few sanctioned organizations. We had to stop selling into Russia. We had a few deals in our pipeline. And then, as Dean mentioned, the FX, if you kind of bundle it all together, really the international economic impact for the quarter was about a million dollars of loss to our ARR that we were projecting for the quarter. No one significantly individual significant customer, just a handful of smaller ones that existed.
spk05: Got it. That's helpful. And then you now have a BYOD SKU on the website at, I believe it's $6 per year. I'm curious, you know, given some of the changes that Apple's made to privacy, are your salespeople going to be pitching this offering more aggressively now? And how is that resonating with customers after I know you've done some initial marketing around this?
spk11: Yeah, thanks for the question. I'll tell you what we can do in the BYOD space. Balancing privacy for the individual and security for the organization. I will say is It's still not well known out there. I think most organizations don't even know that what we and Apple do together on BYOD devices is even possible, which is a native way of segmenting an iPhone into a personal partition and a work partition and actually giving the management software the ability to natively put apps in the work partition and set up with Jamf's new private access solution a per app VPN to make sure that all communications from those apps are secure and the same thing with email. We are just conditioning the market with that story. I don't think that there is going to be a huge surge of a move to this solution for BYOD in the short term because so little of the market is even aware of really how special what we can do is. So we'll be getting, and we've seen some interest early on as we've talked to customers and explained what's possible, but this is something that I think is going to deliver for the long haul because as you well know, The BYOD market is absolutely enormous. And I almost think of it very similarly to when Jamf first entered into the zero trust deployment market back in 2014 or 15 using native Apple technology. It was slow at first because, frankly, organizations didn't even know what was possible. But eventually, it just became the standard way to deploy. I think that's going to happen in BYOD as well.
spk05: Got it. Thanks, guys.
spk13: Thank you. Our next question comes from the line of Koji Akita from Bank of America. Your question, please.
spk09: Hi, this is Laurie. I'm for Koji. Thanks for taking the question. So things like the ARR per device has increased. So I was wondering what's the driver for that? And under the current inflation environment, How do you think about the pricing increase and the bundling strategy?
spk11: Why don't you, Jill, why don't you take both of those?
spk10: Yeah. Hey, good afternoon. So when it comes to the increase that you're seeing in our ARR per device, a couple different things are going on there. One of them is, you know, we're starting to sell more products per device with our add-on product offering, particularly with the security suite. And then there's also a mix shift that's occurring between our commercial and education business. Now, as you'll recall, our commercial device carries about a 5X price point, all blended compared to education. And with Q1 being our largest commercial booking quarter that we've had, really starting to see the weight of that, and especially when you consider the fact that commercial now represents over 70% of the business that we're doing. So it's a mixed shift we're seeing between commercial and education, as well as the benefit of the add-on products that we're seeing great traction with. In fact,
spk09: over 20 of our commercial customers have more than one product on their devices so that's that's one of the biggest drivers as well great thanks for the color and then just on that international expansion just want to drill down on particular the china impact given their kobe lockdown situation so apple has commented on their earnings i was wondering how that kind of intern impact you guys uh
spk11: Thank you for that question. Not in a material way today. Our largest business in APAC is in Japan. But John, do you want to just chime in just a little bit as to whether you've been seeing anything from something that would be material impactful in China?
spk03: No, in fact, China has not been a big target market selling into. We've had some opportunities there, but really our focus, in fact, Taiwan has grown quite a bit as far as the demand, and we've also seen demand in South Korea increase. But primarily, as Dean mentioned, is Japan, and we still see tremendous growth, opportunity and actual growth in Japan. We've grown outside the U.S. at a faster clip than we've grown inside the U.S., so we'll continue that investment internationally because it's over half the total addressable market.
spk09: Great. Thanks.
spk13: Thank you. Our next question comes from the line of Nick Mattiacchi from Craig Hallam. Your question, please.
spk01: Hi. This is Nick on for Chad Bennett. Thanks for taking our question. So just a question on the education segment. Where are we at today in terms of attaching security products into education customers? And then as we begin to gear up for the next school year, can you speak to the cross-sell opportunities you see in the education base?
spk11: Yeah, thanks for the question, Nick. Thanks for joining us as well. I would say the products that we have, the security products that we have, you know, if it were a baseball game, it's in the first inning of actually starting to penetrate into the education market. We originally, by design, focused on the commercial markets, with our new security offers. However, we're starting to see picked up demand as we position them more within the education space and as there's continued even regulations out there and legislation of the importance of protecting students not only from safe use but also ensuring that students don't accidentally expose the organization to security threats. We're seeing an increase in demand But when we really expect to see it is when we launch the safe Internet solution that we just talked about earlier. That's coming this summer. We see a lot of interest in it. And I think not only will that drive volumes of the safe Internet solution itself, but it will open the door to conversation for the remainder of our security portfolio that can come in and benefit them.
spk01: Got it. Thank you.
spk13: Thank you. Our next question comes from the line of Vinod Srini Vasarathan from Barclays. Your question, please.
spk06: Thanks for taking my question. Just a follow-up on BYOD. Given that it's early, is it fair to say that a potential uplift from BYOD is not built into guidance yet?
spk11: I don't expect that an uplift – thank you, Vinod. I don't expect that BYOD would – materially change any guidance that we provide at this time. And as I mentioned, I'm not expecting a lot of near-term uplift there. It's more of a long-term uplift that I believe will exist. Again, if you look historically at Jamf, we've just never really been focused. Now, we could run always on BYOD devices and bring value to them. But just the way the market is structured for BYOD, it's a low-price market where no provider out there really provides a lot of differentiation on BYOD devices. And if they do, they more than likely wreck the potential for those users to be able to upgrade to the latest operating system when those operating systems come out. With Apple's what's called user enrollment and device partitioning technology that exists and Jamf embracing it and really being alone in doing so, we're providing the best of both worlds of being able to connect that device for work but yet have it be completely personal and be able to upgrade on the user's timetable. So that opens up, we're focusing on it for the first time. And we just announced this pricing for BYOD. We didn't even have special pricing for BYOD before because we just, you know, it just wasn't that attractive of a market for us. Now with a differentiated solution, it is. And in the out years to 2022, I think we'll have a more meaningful impact. It will have some penetration this year, but it's more of a long-term play.
spk06: Got it. That makes sense. And then one more for me. Can you talk about some of the early adoption patterns for Wendera security solutions versus initial adoption patterns from Connect and Protect? Are there any similarities, differences, and what have you learned from rolling out Connect and Protect that you're kind of using now to drive adoption here?
spk11: Yeah, well, one of the things we've learned was what I mentioned to Brian earlier, that It's very popular that there is a single economic buyer in SMB. And so it becomes an area where we can ignite our sales force very rapidly. And you're asking the right question about, you know, in the early days of sales of the products that we acquired are Jamf Threat Defense, Jamf Data Policy, and Jamf Private Access, is how are those products selling today? comparative to say Jamf Protect when we launched that product. Now, coincidentally, both of the Wandera products launched on Jamf paper in Q4 of 2021 and Jamf Protect launched to our Jamf customers in Q4 of 2019. So we actually contract the first two quarters of sales pretty equally. And if you look at just those couple of quarters of sales, we're very pleased with how the Wandera products have sold. We're tracking ahead of the first two quarters of selling Jamf Protect. So given where Jamf Protect ended up two years later, contributing to that $75 million security number that we have for ARR right now, we're pleased that the Wandera products are tracking ahead of that pace. And again, that's, by the way, just selling those products through the Jamf direct sales channel, not including the Wondera sales that come through the already established Wondera carrier and security company sales. So it's really a pretty good apples-to-apples comparison, and we're ahead of the pace that we had set on Jamf Protect a couple years ago.
spk06: That's helpful. Thank you, Dean.
spk13: Yep. Thank you. Our next question comes in the line at Pat Walravens from JMP Securities. Your question, please.
spk04: Hey team, it's Jay Merzikoff for Pat. Thank you so much for the question. I was hoping you could touch on your relationship with Google and give us an update on the Google cloud partnership. How's that playing out so far? Thank you so much.
spk11: Oh yes, absolutely. Thank you for your question. You know, we have tremendous partnerships with a lot of the major platform providers out there and especially on the identity front. You know, Jamf Connect, for instance, integrates with all of the identity providers in order to provide the most seamless on-ramp of any Apple device within a network that has the identity secured by either a Microsoft or an Okta or, for instance, a Google. And Google is a great partner on that front. And then most recently, we expanded that partnership to... somewhat similar capability as we've had with Microsoft for some time. It's part of their ZTNA or Zero Trust Network Access Strategy. It's called Google Beyond Corp. And it's where Google can actually look to Jamf to see if a user and device is compliant. And as a result, we can signal and we have a flag actually within Google that can be set. that we can tell Google to block a device from their network based on them checking with us. So it's one of the reasons why we provide both management and security is because we're getting so much security data now. And in a dynamic way, we can take that security data and instantly set a flag within either Microsoft or within Google using Google Beyond Corp to say block this device from your network. So being able to do that with Google was one of the reasons why it was so attractive to our customers for us to enter into the security space given the management partnerships that we had with the Google and Microsofts of the world.
spk04: That's really helpful. Thank you so much for the call.
spk09: Absolutely.
spk13: Thank you. This does conclude the question and answer session of today's program. I'd like to hand the program back to Dean Hager for any further remarks.
spk11: Well, hey, thank you again, everybody, for joining the call. Just in closing, this quarter, like the past two years now, Jamf has continued to deliver innovative solutions to the market that now comprise a broad, multi-platform product portfolio. And once again, we have exceeded financial expectations with consistent, balanced, and financially healthy growth. And going forward, we're as optimistic as we've ever been. Jamf is well positioned to continue delivering for our customers, employees, and shareholders. Given the demand that we see in the market, our high quality recurring revenue, loyal customer base, strong net revenue retention, and balanced approach to revenue growth and margins. So thank you and have a great evening.
spk13: Thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Good day.
Disclaimer