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spk10: The conference will begin shortly. To raise your hand during Q&A, you can dial star 1-1.
spk01: Good day and thank you for standing by. Welcome to the JAMF Second Quarter 2022 Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1-1 on your telephone. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Jennifer Gohmann. Please begin.
spk09: Good afternoon, and thank you for joining us on today's conference call to discuss JAMF's second quarter financial results. With me on today's call are Dean Hager, Chief Executive Officer, Jill Putman, current Chief Financial Officer, John Strohsal, President and Chief Operating Officer, and Ian Goodkind, who, as we recently announced, has been appointed Chief Financial Officer effective September 1. Before we begin, I'd like to remind you that shortly after the market closed today, we issued a press release announcing our second quarter financial results. We also published a Q2 earnings presentation, along with an updated investor presentation and Excel file containing four quarterly financial statements to assist with modeling. Additionally, we issued a press release announcing Ian's appointment to CFO and Jill's retirement. You may access this information on the investor relations section of gf.com. Today's discussion may include forward-looking statements. Please refer to our most recent SEC reports, including our most recent annual report on Forum 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 SAC reports and earnings 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 Tager. Dean.
spk12: Thank you, Jen. And thank you everyone for joining us. On today's call, John and I will share some highlights from Jamf's second quarter and recent customer successes. Then Jill will review the second quarter financial results and provide Jamf's financial outlook for the third quarter and for full year 2022. But before I get started, I want to publicly congratulate Jill on her retirement. I'm so incredibly grateful to Jill for her immense contributions to Jamf over the last eight years. Jill has been instrumental in Jamf's success, including leading us through our IPO in 2020. As many of you know, Jamf is not the first time I've had the great pleasure of working with Jill, and she is one of the main reasons I am here today. I'm fortunate enough to have had her as a colleague for many years, and I'm even more fortunate to call Jill a friend. I wish Jill nothing but the best as she embarks on this next phase of her life. And I'd also like to extend a congratulations to Ian. Ian has been a key member of our leadership team since he joined as our chief accounting officer in 2019. I have every confidence that Ian will be excellent in his new role. Now, some highlights from the quarter. Q2 represents another successful quarter for Jamf with continued strong results. We achieved a record quarter for new ARR added and again exceeded expectations with ARR growth of 40% year over year to $466 million and revenue growth of 34%. Despite an uncertain macro environment, hardware supply issues causing delayed projects, and a challenging market for recruiting and retaining talent, the diversity of Jamf's business has proven resilient as we navigate these factors. Jamf's ARR in commercial markets grew a strong 53% year over year, and Jamf's ARR in education markets grew 16% over the same period, maintaining the balance between Jamf's higher growth commercial markets, which represents over 70% of our business, and a healthy education market. When it comes to Jamf's momentum by product line, We are noticing a strengthening replacement market for Jamf's robust core Apple device management products like Jamf Pro, driven by two factors, continued Apple innovation and market consolidation. Continued innovation by Apple has created the need for device management partners to adapt quickly in order to embrace Apple's latest capabilities. Many cross-platform providers are slower to embrace these innovations, which can impact device security as well as the user experience. With respect to market consolidation, the majority of the software providers that were considered leaders in the enterprise mobility management market just five years ago have been consolidated into other organizations, leading to additional challenges for their engineering teams to continue innovating at the pace of Apple. Meanwhile, Jamf's unique approach to support and extend Apple innovations the same day they were made available is proving to be more valuable than ever to existing and new customers. In Q2, Jamf replaced over 35,000 seats of one leading enterprise mobility management solution across just four separate customer WENs. One of these customer wins was Red Bull, who have now consolidated all of their Mac and iOS devices into Jamf Pro. This was a strategic move to guarantee the best in-class user experience across all of their managed Apple devices. Jamf's robust management capabilities and commitment to innovating at the pace of Apple helped Jamf extend its lead in Apple enterprise management. And when combined with our security platform, Jamf is the only solution provider at scale who can fully support the Apple growth within large organizations, delivering an experience that is both enterprise secure and consumer simple. With Jamf's security product line, we've seen tremendous growth over the past few years as we've expanded our offerings to meet the needs of the mobile workforce. Currently, our security products represent 18% of our ARR, increasing one percentage point from last quarter, with 17 of our top 20 largest deals during Q2, including one or more of our security products. This increase was driven by a number of customer wins across Jamf's broad line of security solutions. For Jamf data policy, we landed a 13,000-seat sale to a multinational food distributor who was able to reallocate surplus hardware budget to purchase these data policy seats. For threat defense, a national network of behavior therapy centers purchased 6,000 seats to deploy across their network of facilities, which spans most of the United States. Additionally, we won a nearly 15,000 seat sale of Jamf Connect with a prominent e-commerce and online retail company, And another 7,000 seats with Okta, a leading identity provider. As organizations embrace Jamf Connect's ability to sync Mac accounts to all major cloud identity providers. And Jamf Protect was chosen by organizations like Payfit, an apparel e-commerce company. And Jamf Protect was also chosen by a leading provider of security operations services to protect their own internal Apple Mac computers. The fact that leaders in both identity and security each chose Jamf's identity and security solutions is a testament to the strength and value of Jamf's platform. While most of the deals I mentioned are for corporately owned devices, Jamf strengthens the security posture of all devices accessing corporate resources, whether corporately or personally owned. In Q2, many customers, including a global leader in gene therapy and diagnostics, leveraged Jamf's brand new BYOD management pricing to deploy hundreds of BYOD phones along with Jamf Private Access configured with per app VPN so that all work done on the BYOD device is automatically protected and encrypted without the user ever having to think about it. Using Jamf and Apple's unique BYOD separation of personal and work data, the customer's employees are able to have a personal iPhone with privacy protection and secure access to everything they need to do their job. Jamf and Apple are at the forefront of BYOD with unique combination of five critical capabilities that are unrivaled in the industry, including, first, the ability to separate personal and work data and apps upon user enrollment. Second, support for the sign-in to work or school functionality found in the iPhone and iPad general settings. empowering each employee to set up their own BYO device and eliminating hacking opportunities during enrollment. Third, zero trust network access to replace legacy VPNs with Jamf private access or a cloud-based next-gen VPN. Fourth, Customers are able to use Jamf Pro for per-app VPN configuration so that Jamf Private Access is initiated automatically when needed without the user ever having to think about it. And fifth, Jamf Self-Service Solution presents an enterprise app store to all employees, empowering them to install, configure, and secure apps on their BYO device with one simple tap on the app. With these capabilities, employees can now use their favorite device knowing their privacy is protected and IT is able to best serve employees while still protecting the organization. Innovating at the pace of Apple is critical to winning with Apple. And this year at Apple's Worldwide Developers Conference, new innovations were announced that equip Jamf with greater capability to serve customers and further differentiate from organizations who don't focus on Apple's native functionality. Examples from this past year's event are platform single sign-on for the map, enrollment single sign-on to strengthen BYOD solutions, device attestation to make it nearly impossible to impersonate a device, strengthening Apple and Jamf security posture, and declarative management, a new device reporting methodology that turns MDM upside down creating greater capabilities for customers while emphasizing the criticality for solution providers to focus specifically on Apple's uniqueness. Jamf is excited to showcase how we plan to embrace and extend these capabilities at the Jamf Nation User Conference in San Diego in late September. We will again host a product innovation-focused investor event during JNUC which will be in person in San Diego and webcast live for those who cannot attend. Event details will be sent out shortly. I'll now hand it over to John to talk to our successes in healthcare and education.
spk16: Thanks, Dean. Many of the wins that Dean highlighted represent customers that have purchased more than one Jamf product, which we believe will be a key driver for our growth in the future. Currently, for commercial customers utilizing our flagship product, Jamf Pro, 33% are running more than one Jamf product, and we anticipate that number will increase as we continue to expand our platform capabilities. Additionally, for our SMB commercial customers utilizing Jamf Now, 16% are running our recently launched Jamf Fundamentals plan. One industry where we are seeing continued adoption of Jamf products and workflows is healthcare. Q2 represented a very strong quarter for healthcare, aided by continued management, patient, and care provider workflows and security expansion within organizations. One of Florida's largest hospital networks recently switched to Jamf Pro, along with adding Jamf Connect, Jamf Protect, Jamf Private Access, and Jamf Healthcare Listener. This win is another example of the robust replacement market that Dean mentioned. The hospital network was struggling with their management provider, and our teams were very quickly able to demonstrate how Jamf could alleviate their issues along with provide additional value-added products and workflows. Our growing commitment to supporting and securing Apple devices in healthcare was key to winning this customer. Jamf's commitment to continue to innovate across our platform and within industry workflows, all while maintaining the pace with Apple innovations, provides a compelling value proposition to customers as we continue to drive Apple adoption in the enterprise. And now turning to education. In Q1, we discussed Jamf's strong education growth despite a tough comp with the surge in education buying that occurred in late 2020 through Q1 of 2021, where programs like DigitalPack in Germany and the Giga Project in Japan drove device growth rates never seen before in history. Now, in Q2, a quarter that is typically strong for the education market, Jamf's business was aided by a nationwide education program in Taiwan aimed to distribute devices to K-12 students across the country. Schools were given the ability to choose the type of device as well as the software to manage and secure them. I'm delighted to share that 80% of the schools in this program have chosen Jamf. This win helped drive the total increase of approximately 1.6 million devices for Jamf in Q2, as well as an increase of approximately 5,000 customers. At the end of Q2, Jamf served over 67,000 active customers with more than 28.4 million devices on the Jamf platform. The Jamf APAC team's strong partnership with Apple, along with our demonstrated success with Japan's Giga project, were key differentiators for Jamf in the selection process. Additionally, Jamf's unmatched combination of device management and content filtering was compelling for many of the schools and helped drive the improvement in Jamf's overall average ARR per device in Q2. This Taiwan opportunity represents only the initial phase of this government program. Jamf's success in this initial phase puts us in a strong position to win as it is rolled out to additional schools as well as opens the door to commercial opportunities in Taiwan. Jamf is one of the very few companies in the world that offers both endpoint management and security, making Jamf a one-stop shop for organizations like schools that have both device management and security needs. And now with Jamf Safe Internet, Jamf provides the only Apple-first education-focused cybersecurity solution to ensure students can navigate the internet safely with content filtering and network threat prevention technologies. Made generally available in all markets earlier this summer, Jamf Safe Internet integrates with Jamf School and Jamf Pro, providing a seamless experience for both management and security and allows for multi-product adoption in education. Now, I'll turn it over to Jill for our financial results and guidance.
spk07: Thanks, John, and thanks, Dean, for those kind words earlier. Q2 reflects another record new ARR quarter with added ARR growth accelerating year-over-year compared to the prior two quarters and balanced growth across the business as we continue to deliver our robust platform of management and security solutions. We ended Q2 serving more than 67,000 customers with more than 28.4 million devices on our platform. As John mentioned, this was a particularly strong quarter for customer and device growth due to the Taiwan Ministry of Education project. Q2 revenue growth is 34% year-over-year, and total ARR growth is 40%, driven primarily by device expansion, new logo acquisition, upsell and cross-sell efforts, and the impact of the Wondera acquisition, which occurred in Q3 of 2021. Commercial ARR growth remained strong at 53% year-over-year, with all of Jamf's top commercial industries experiencing growth of at least 30%. And again, we achieved ARR growth of at least 25% across every Jamf product, and at least 30% growth across all major geographies. Additionally, our security products are becoming a larger portion of our ARR, and are now 18% of total ARR at the end of Q2. We've updated our dollar-based net retention disclosure to now include OneDara, as we now have 12 months of trailing data. Now, combined total company net retention is 117%. As expected, we did see a slight decline in this metric due to the addition of Wondera, but we expect net retention to increase over time. 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. Q2 non-GAAP gross profit margin was 81%, which is flat to the prior year and consistent with recent quarters. We saw increases in non-GAAP operating expenses in Q2 over the prior year, primarily due to added headcount in sales and R&D to support top line growth, as well as absorbing one-day operating costs. This resulted in Q2 non-GAAP operating margin of 4% compared to 9% in the prior year quarter. Non-GAAP operating income was $4.5 million, exceeding our expectations due to revenue outperformance. Our trailing 12 months unlevered free cash flow margin was 11% compared to 26% in the prior year period. The prior year period benefited from expense savings related to the pandemic, and the current period includes the operating costs associated with Lendera operations, as well as the impact of the timing of cash collections in Q2. This timing difference was due to a larger number of sales occurring at the end of Q2 than in previous quarters, creating a shortened window for cash collection related to these sales. Fortunately, this is purely timing related and is not related to increased collection time. We believe our strong, consistent cash flow generation differentiates Jamf 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 allows us to continue to make investments in innovation and sustainable top line growth. Our annual effective tax rate is 1.4% consistent with our expectations. And as we indicated last quarter, starting with Q1 2022, 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 statement that has 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 third quarter and full year 2022. As Dean mentioned earlier, our continued strong performance is a testament to the diversity and resiliency of Jamf's business. Demand for Jamf's innovative solutions remains solid. We expect this to continue due to a number of factors, including Jamf is often one of the smaller dollar items in IT budgets and therefore is not often one of the areas subject to budget cuts should a business scale back their spending in the future. Additionally, if companies are looking to do more with less money, Jamf can be deployed rapidly across an enterprise with minimal IT effort and deliver an ROI that is measured quickly, usually in months. However, we are seeing some elongated sales cycles in some areas, as well as customers purchasing additional seats to meet only current as opposed to anticipated future needs. Additionally, Apple recently stated their device supply constraints have continued and are particularly acute for Mac and iPad. These factors, along with continued macroeconomic uncertainty, cause us to be more cautious with our outlook. For the third quarter of 2022, we expect total revenue in the range of 121.5 to $122.5 million, representing growth of 27 to 28% year over year. As a reminder, we acquired Wondera at the beginning of Q3 last year, so year over year growth rates will now be on a comparable basis going forward. Non-GAAP operating income in the range of $4 to $5 million. For the full year 2022, we expect Total revenue in the range of $475 to $477 million, representing growth of 30% year over year, and a $1.5 million raise of the midpoint from our prior outlook. Non-GAAP operating income in the range of $21 to $23 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. We continue to anticipate 2022 unlevered free cash flow margins similar to what we achieved in 2021. Additionally, for modeling purposes, we provided estimates for amortization, stock-based compensation and related payroll taxes, annual effective tax rate, 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. In closing, it has been a pleasure working with all of you over this past two years. Since our IPO, Jamf has driven substantial growth led by innovation and a relentless focus on delivering the most robust solution set to help organizations succeed with Apple. And I couldn't be more proud of what we've accomplished and am honored to have been part of such an incredible team and journey here at Jamf. I have complete confidence in Ian and wish the entire Jamf team continued success well into the future. And now Dean, John, Ian, and I will take your questions. Operator.
spk05: Certainly. Ladies and gentlemen, if you have a question at this time, please press star 1-1 on your telephone. One moment for our first question. And our first question comes from the line of Matt Heddenberg from RBC Capital Markets. Your question, please.
spk02: Great. Thanks for taking my questions. First of all, congrats on the results. And Jill, uh we obviously miss working with you congrats on the retirement and ian look forward to working with you uh as well um maybe i'll start uh a lot of the things in the quarter uh and i think that's reflected in the results in the guide but you know jill you did talk about some elongated sales cycles one of you could provide a bit more color there when did was there anything unique with it you know maybe when it started to happen you know was it more on the commercial side versus education side
spk07: Hey, Matt, it's Jill, and thanks. Thanks for joining the call. So we did start to see this earlier, you know, pretty early in the quarter, actually. And, you know, from what we're hearing, you know, that's not unusual. We're hearing that kind of throughout the industry as our customers are taking a little bit longer to get spend through their budget cycles, maybe a couple extra levels of approval on purchases in the IT world. However, we believe that, you know, those deals ended up, they did end up closing. And if you think about it, we're a little bit insulated in what's going on right now because our average, you know, our average deal size with a customer is less than $10,000. So when a customer's, when companies are looking at their IT budget and trying to rationalize what their spend is going to be, we don't feel like we're going to, that we're going to be impacted materially by any of that. It's just their cycles are just taking a little bit longer.
spk02: That makes sense. And then maybe one for John. You know, to see the success in security cross-sell is really, really exciting. You know, can you talk about sort of, you know, what's driving that? I mean, I think a lot of us feel like security, you know, is one of the more durable aspects of IT spend, especially in times of economic challenges. But, you know, is there anything unique with what's driving sort of the strong accelerated attach there?
spk16: Yeah, and thanks for the question. There certainly is, and that's really the combination of management and security together. That really, the ability to deploy the security solutions with the management product is really what sets it apart, and that's really resonated. As you've seen from the script, it was 17 of the top 20 deals had a security product, at least one security product included in that. So we expect that to continue going forward.
spk05: Thank you. One moment for our next question. And our next question comes in the line of Chad Bennett from Craig Hallam. Your question, please.
spk15: Great. Thanks for taking my question and just reiterate, Jill, congrats, good luck on the next phase, and then look forward to working with Ian going forward. So, you know, new customer count in the quarter looked very, very strong. and dollars per device look good. I think though you pointed out in the quarter a pretty significant Taiwan education win in the quarter. I think it was in the quarter. Was that, and I'm not sure how you kind of segment each district in Taiwan, however it works from a customer standpoint, but was that meaningful from a new customer count standpoint in the quarter?
spk12: Yeah, John, why don't you jump in on this as you're most familiar with it.
spk16: Thanks for the question as well. It was about half our customer increased new customer in this past quarter, so it was pretty significant. And each one of those school districts made their own choice, and they could choose the device, and they could choose the software to manage it. And As we mentioned, we were able to secure 80% of the availability of the funding in that particular quarter, again, initial phase, but certainly very good headwinds.
spk12: Yeah, just to add one comment on there, while it was roughly half of our customer count, nowhere near that in device count. These were very small deployments across schools.
spk15: Right. And then as we think about, it might be for And just in terms of now that we're annualizing on WANDERA and from every metric, revenue, ARR, and so forth, how should we think about, and I know you technically aren't guiding for ARR in the back half, but I assume there's some type of deceleration expected in ARR in the second half. And just kind of, I know you don't love to segment the business, but just, you know, education versus commercial in how you view kind of the second half of the year as you stand today from an ARR growth perspective.
spk12: Yeah, from an ARR, you're right. Just as a reminder, we don't guide on ARR, but I think it's a great question to bring Ian in for the first time. Ian, do you want to take that?
spk00: Sure. Thanks, Dan. Thanks for the question. Yeah, you're correct. What we would expect in the second half of the year for those numbers, both ARR growth and revenue growth to converge.
spk15: Got it. Okay. Thanks much.
spk05: Thank you. Thank you. Our next question comes from the line. I'm Matt Steller from William Blair. Your question, please.
spk14: Hey, team. Thanks for taking the question. You know, Jill, we're going to miss you, obviously. It's been great working with you, and Ian, excited to get to know you better. I think the first question here would just be on the international opportunity and kind of your efforts there. More on the commercial side, obviously you talked a lot about you know, the opportunities and what's been going on the education side. But as you look at, you know, kind of the pipeline there, and obviously it's going with the macro, I'd love to just kind of get your feel of, you know, how that's progressing going forward, and whether there is any sort of, you know, maybe kind of the same elongation that you're seeing broadly, and then how that plays into your expectations for contribution for those markets going forward.
spk12: Yeah, you know, I'll kick it to John here, this is Dean, to talk a little bit about the international opportunity and any impact that we're seeing from a market perspective. But I would just remind everybody that the balance of our growth, as we've mentioned several quarters in a row, that our ARR growth for every single product that we have is north of 25%. And for all of our top commercial industries, north of 30%. And then also for all of our geographies, major geographies, north of 30%. So You know, balance and diversity is our friend, but to talk specifically about the international opportunity, I wanted to kick it over to John.
spk16: Okay, thanks. Well, certainly, the international markets are a great opportunity for us. We know just by looking at the IT spend that there's a greater addressable market outside the U.S. even than inside the U.S., and we've invested accordingly, and our international markets have continued to grow faster outside the U.S. than inside the U.S., and, you know, we really believe that for a couple reasons. One, the addressable market, and two, It also diversifies our revenue source so that if we're seeing headwinds in one market, we certainly have the other markets to bolster us. And we've seen that happen. We saw it happen through COVID, and we're seeing it in some of the current economic situations today.
spk14: Gotcha. That's helpful. And then one on the – you obviously have fundamentals, which went GA earlier this year. You've also talked about the business plan package in prior years and quarters. Let's just get some color on how you think buying patterns at customers are going to evolve over time. The land and expand motion has clearly been strong, but do you expect that at some point you're going to see the buying behavior move more over to favoring these bundles? And how does that change your view of what that land and expand motion looks like on a longer-term basis?
spk12: Yeah, that's a great question, Dean, here. Our product expansion... since we went public two years ago has been immense. I mean, to some extent, we're almost a different company than we were two years ago. We have so much more product to go back into our base of now 67,000 customers. And I would also mention that, you know, most of that cross-sell historically has been in commercial markets. But on July 1st, we also launched Safe Internet, which we anticipate is going to be our best cross-sell rhythm within the education space as well. But one of the things that we've noticed as our product expansion has been so significant is we do need to continue to make it easier for our customers to do business with us. And we have found that they really don't want to go through their procurement office to purchase each product that we have. And even if we list each product on the purchase order list, to explain what each one is. And so it just sort of simplifies and smooths out the rhythm of the cell if we put together bundles that are very often purchased together. And so we're not just going to have one or two bundles. We'll have a few bundles that are the most common products to purchase together to make it easier on our customers. And Jamf Fundamentals specifically, like nothing could be easier than that. If you're a Jamf Now customer today, You can literally sign on to your system and with one mouse click upgrade to the fundamentals plan that also includes anti-malware and identity sync. And I mean, you're live one second later or two seconds later. And that's one of the reasons why in the short time since it's been available, I think we launched it in March, we already have 16% penetration. within that Jamf Now base of Jamf Fundamentals. And, of course, the dollar per device doubles when going from Jamf Now to Jamf Fundamentals. So making that super easy for customers is key.
spk05: That's great. Thanks again. Thank you. Our next question comes from the line of Rob Owens from Piper Sandler. Your question, please.
spk11: Great. Good afternoon. I wonder if you could tell us the duration of contract this quarter and just looking at the, the strength that you saw in particular in long-term deferred revenue. So wondering if that's attached to the success you're seeing in Taiwan with Education Vertical or something else.
spk07: Hey, Rob. Hey, Rob. Hi. Not saying, you know, on average, not a big uptick. Our average term is about 20 to 22 months. That is ticking up a bit over the last couple of years. driven by not only the deal that we just did with Taiwan, but as you recall, the deal with Japan in 21 also had extended payment terms as well. And these are primarily education. So we're seeing it in the education market. And it's because they will, not only is it not only driven by the funding and the timing of the funding, but they tend to buy the license that has a life cycle that syncs up with the life cycle of the device that they're putting it on, which could be three to five years. In commercial, we're not seeing necessarily a longer term.
spk11: term on average. And could you remind us how you price overseas and what your FX exposure is?
spk07: Yeah. So our deals are primarily denominated in US dollars. We have low single digits of our total business has actual FX exposure to it. So not much of an impact at all year to date. Less than $2 million year to date, roughly.
spk11: And with those more expensive products, was there a lot of discounting that happened in period or were people paying the higher U.S.
spk07: dollar? I'll let John jump in here, but I don't think that the finance team noticed anything more unusual around the discounting.
spk16: No. In fact, 80% in some markets are done through the channel outside the U.S. so we would have that as an intermediary for currency.
spk11: Great. Thank you guys for the color.
spk05: Thank you. Our next question comes from the line of Brian Essex from Goldman Sachs. Your question, please.
spk04: Hi, good afternoon, and thank you for taking the question. First of all, Jill and Ian, I'll echo my congratulations to you both. Great to see. And congrats on the results in the quarter. I guess maybe to start, Dean, I think you noted, you commented around, you know, Apple supply chain headwinds in the quarter. Could you Maybe offer a little bit of context for someone who hasn't covered the stock as long as maybe some others have. How often are deals, I guess, greenfield versus displacement, and how often is your solution deployed concurrently with new device acquisitions?
spk12: Yeah, great question. Good to hear from you, Brian. So one of the things that we've always encouraged people is to not take a look at Apple's in quarter results and tie them to ours directly because the market is so large out there that there is plenty of expansion for Jamf within the current base of Apple devices. And as our product line grows to where we have a lot to sell back into even our existing base, there really isn't a correlation there. With that said, one is the supply constraints have been well documented now for several quarters in a row. So there does get to be a bit of a cumulative effect. And I would say when it comes to aligning around device purchases, that tends to occur a little bit more in education than in commercial markets where the base is there. For instance, education will be getting ready for a new school year, and they will order a set of new devices to come in for that school year. And since Q2 is a more education-heavy quarter, We probably saw some of those supply issues in Q2 more than we have in other quarters. But overall, as you look at kind of everything that everybody's dealing with, whether it be supply or the war on talent or the macroeconomic uncertainties, all of those things are counterbalanced with increasing demand and need, as you well know, covering the space for security solutions. And as John said, we really see security and management as two sides of the same coin, whereas you are able to monitor for vulnerabilities and mitigate those within the same platform. And just something that I may comment on my prepared remarks that I will reiterate, given some of the activities that are occurring in the marketplace, We are now seeing that the space of management solutions is becoming an increasingly attractive replacement market because of some of the consolidation that has occurred. And also because of Apple's recent significant innovations, it is super important to keep pace with Apple. So as a result of all of those things, we don't necessarily require or need at all Apple to expand their market share in order for Jamf to expand ours.
spk04: Got it. That makes sense. Really helpful callers, so thank you for that. And maybe just to follow up, you commented about, you know, Wondera now being included in that dollar retention. Would it still have been, you know, in that 120 range without Wondera? And could you maybe also wrap a little context around how dollar retention's improved at Wandera, some of the key kind of gating factors there that might drive continued improvement and ongoing improvement in consolidated net dollar retention?
spk12: So, yeah, I mean, as we've mentioned, really, over the last year, we were expecting, you know, somewhere in between the two to three point drop in consolidated net dollar retention. So, yeah, I mean, As we've mentioned really over the last year, we were expecting somewhere in between the two to three point drop in net dollar retention when we started to consolidate that with Wandera, largely because the historic gross retention is so high and all-time high because of the historic Wandera selling mostly through carrier channels, just somewhat the nature of that channel does not lend itself as well to gross retention. So that's why we've been anticipating that to go down a couple of points for quite some time. But as we redefine the channel for selling those security solutions, not only still through the carrier channel, but increasingly through Jamf's historic channel and a channel of security providers, That lends itself to a much higher gross retention over time, and that's why, you know, we expect that to continue to go up in addition to the plethora of opportunities we now have for a cross-sell since we have so many solutions to go back to the customer as well.
spk04: Got it. Very helpful. Thank you so much.
spk12: Absolutely. Thanks, Brian.
spk05: Thank you. Our next question comes from the line of Vinod Sreenivasaracharan from Barclays. Your question, please.
spk13: Oh, hey, it's Raymond for Vinod, actually. Can you hear me okay?
spk09: Yes, we can.
spk13: Yeah, it's funny. Hey, Jill, all the best. We will miss you. My first question was for Dean. Dean, if I think about you brought up a good point around the, uh, uh, the consolidation in the space. So like Citrix has gone, VMware has gone, uh, mobile iron has gone in a way. So, so who do you see, if you think about like the, um, uh, the players you see in the market, like who, who's from your perspective, like what's the, do you see that consultation already playing out or is that something that you were anticipating that will kind of happen more going forward?
spk12: Um, So thank you, Vinod. Good to hear your voice. If you take a look at parties from past years that have been consolidated, without a doubt that has changed the dynamics of the competitiveness of those solutions. For instance, Some of those organizations who we competed with, let's say, you know, five years ago, we simply don't compete with at all anymore. Really only when a customer is really needing to get on a solution that's going to keep pace with Apple. So if we're going in and actually doing a replacement. So the more that happens, the more the competitive dynamics of the industry changes. And it just keeps on happening. As you well know, if you go back into history, it seems like every year somebody has been getting consolidated. And in the Apple space, it isn't to set it and forget it. You have to keep pace with innovating with Apple. And so it just doesn't lend itself well to less investment with consolidated organizations for their engineering organizations. So uh i think it's as we've seen is continuing to happen and i think that is going to bode very well for uh our market and our ability um to compete in it uh going forward and and i apologize that uh i am just repeating the operator ramo it's good to hear you yeah sorry i was like oh and and my
spk13: And the follow-up is, and maybe it's for Jill and for you, Dean, if you think about the space in this earnings season, a lot of people talk about the back-end-loaded nature of the quarter. You guys did actually a comparison very well here because you've got most of the stuff done where others kind of struggled, actually. What are you seeing in terms of customer conversations and how has that continued to play out if you think about now July as well. That weakness that people saw in the market or that slight hesitation in June, has that continued for you in July or what are you seeing in the field there? Thank you.
spk12: Yeah, sure. I, you know, to some extent, any times there's changes in the market, you know, there's just almost a bit of a, some organizations will do a bit of a pause and just an assessment. It isn't, we're really not seeing budgets going away. We're really, and frankly, it's by far the minority of the deals, but we are seeing a little bit of just, you know, hey, let me just make sure my device count is exactly right before I finish this agreement. So whether that resulted in a bit more towards the tail end of the quarter in Q2 than normal, Um, it's possible, but I would concur with your one comment. I'm sitting right here next to Mr. Stroll fall. And, you know, I've always, uh, he runs an organization, uh, that, you know, they'll dub that they have 12 quarter closes. Uh, they do an ex this team does an extraordinary job of treating each month as if it's a quarter. And so comparatively speaking, Jamf is actually as well balanced through the quarter as any organization that I've ever worked with. So we might see a little bit more towards the tail end, but we are very much not a typical hockey stick type of sales organization. We're pretty spread well throughout the quarter, and I expect that to be the case in Q3 as well.
spk13: Okay, perfect. Congrats again. Thank you.
spk05: Thank you. And our next question comes from the line of Joshua Riley from Needham. Your question, please.
spk06: Hey guys, thanks for taking my questions. You have a couple of new bundles in education that recently launched. Curious, what's the initial reception from customers on those? And then more broadly, how have the education opportunities shaped up this summer versus your expectations? Our work has found that some large districts that switched to Chromebooks a few years ago are now actually going back to Apple. Is that what you're seeing as well?
spk12: Well, I think that that is a great data point that you offer. I've actually seen a few people write about that as well. We are seeing Apple as popular as ever within education. And quite frankly, if I'm going to do just a bit of an Apple commercial for a moment, what we have found is that there is a very big difference between technology in the classroom and technology-enabled active learning using the form factor that Apple provides in order to change the way education gets done. And more and more districts are realizing that you can actually change the way learning is done with Apple, in my view, more than you can with Chromebooks. And so, yes, we are seeing some districts who have prior deployed Chromebooks to say that they want to move to the Apple form factor. And it's not just the U.S. Jamf has that tremendous international presence within healthcare or within, I'm sorry, education. And as John mentioned, for instance, the Taiwan opportunity for Jamf to win 80% of those schools means that Apple won the majority of those schools. So more and more I think schools are realizing the value of truly changing the way education gets done with Apple. And as far as our bundles go, We don't just offer management. We don't just offer security. We are in the classroom. We have Jamf Teacher to engage the teachers, Jamf Student to engage the students. We have Jamf Parent to engage the parents. And we offer not only the empowerment of those students, but the protection now with safe internet.
spk06: Got it. And then just as a follow-up, how much of a catalyst was the deal announcement for the cross-platform vendor getting acquired, I think it was in late May when the announcement came out. How much was that a catalyst for some of these deals that I think you mentioned four deals in the quarter, or were those deals already in place?
spk12: Well, you rarely, you know, turn around something because the four deals that I mentioned were all rather sizable. So those typically do not turn around in a matter of days, which is they all occurred after the event you're speaking of, but I will tell you that it is rather unusual to complete that many replacement deals of that size in such a short amount of time, which is my way of saying we are seeing early opportunity from that set of events.
spk06: Got it. Thanks, guys.
spk05: Thank you. And our next question comes from the line of Joey Marachek from JMP Securities. Your question, please.
spk03: Hi, team. Thanks so much for the questions. And we'll miss you, Joe. I want to dig in a bit on the competitive side and maybe more specifically on the lower end. What are you seeing there? And, you know, particularly as a more difficult funding environment, what kind of opportunities could that mean for Jamf?
spk12: I'm sorry. I didn't catch that question.
spk03: Hey, can you guys hear me?
spk12: Yes, now I can, yeah.
spk03: Sorry about that. Yeah, I just wanted to dig in a bit more on the competitive side and more specifically on the lower end. What are you guys seeing there? And, you know, with a more difficult funding environment, what kind of opportunities could that mean for Jamf?
spk12: Yes, sure. So I think it is fairly well known that when – someone enters this particular market to attempt to do what Jamf does, they usually attempt to enter it on the low end of the market. And there are a couple of competitors out there who have, you know, mimicked some of Jamf's strategy and they've been relatively well funded historically. But, you know, when when we face conditions like what we're facing right now, generally speaking, that bodes well for market leaders and dependable bets where you can consolidate on a few solutions and also get a more affordable overall solution. So we think that there's opportunity for us there, especially as we have bolstered up some of our lower-end market solutions like Jamf Fundamentals, where with one simple purchase, IT shops can get management, identity security, and threat security all within one simple purchase, all in an e-commerce purchase. So, yeah, we see the opportunity there. We know that also, you know, small, low-end organizations will probably be a little bit more budget-conscious in the current environment. And so that just creates a really nice environment for Jamf Fundamentals. Also, I should mention, Jamf Fundamentals, for a customer to take advantage of it, it is a pay-as-you-go month by month. So that also bodes well for a financially strapped low-end business that just wants to go out, give it a taste, try it for a month, and know that they're not locked in. And I think that's one of the reasons we send such a nice uptick there. awesome super helpful thank you so much and just a quick follow-up i know there's a lot of uncertainty out there but where do you see the most opportunity for jams in the near term oh i got to that there's there's so many questions there uh in terms of geography product uh and uh um and industry um but i'm gonna say that um Right now in the short, short, short term, it is going to be this great growth of management with security, two sides of the same coin, create automations and help customers feel like they truly have a trusted access to enterprise resources from all employees that employees actually love. And that is the super unusual thing. So I believe that we are going to grow our product sets and within our customer base as we also bring on new logos. But as we look longer term, I do believe that once, for instance, Apple's through some of the supply constraints issues that they're facing today, I think the Mac and the iPad, I believe, are going to become the mobile laptops of the future within the enterprise market. And we are going to continue to see that penetrate, and that's going to bode very, very well for Jamf as we kind of grease the skids for that type of enterprise penetration of those devices.
spk05: Thank you. Our next question comes from the line of Koji Aikida from Bank of America. Your question, please.
spk10: Aikida? Thanks for taking my questions, and best of luck to you, Jill, and looking forward to working with you, Ian. Just actually want to follow up on the previous question and ask about the mix on Mac and iOS. You know, things like Mac is a stronger driver than iOS. Just how should we think about Mac versus iOS mix from here, and if there are any impacts from Apple supply chain?
spk12: Okay, so first of all, that doesn't sound like Koji. I'm assuming that that's Laurie out there. Yeah, this is Laurie, yes. And, you know, historically speaking, you know, of course, Jamf really got its start in Mac years ago, and as a result, it is the most contributing factor to our overall financials. However, in recent years, you know, Jamf has really – started to penetrate the much larger iOS space. And iOS, especially in commercial markets, continues to be the segment that is actually the fastest growing for us. And the reason for that is a couple of folds. But most notably, as we've mentioned several times, that we have very, very strong market share growth. managing and securing Macs that are out there, including, you know, 22 of the top 25 global brands. So when you have that kind of install base, it really isn't a question of whether organizations need to bring in another solution. It's a question of do the iOS devices belong in a cross platform, more generic mobile solution provider, or does it belong in the Apple Enterprise Management System? And managing iOS devices, quite frankly, these days is much more similar to managing Mac than it is to managing Android. And so we end up having tremendous growth of our iOS base because organizations that already have Mac just find it a natural fit to move their iOS devices. As a matter of fact, in our prepared remarks, you heard from one of those customers, Red Bull, that was exactly what was happening there. They had long used us for Mac and decided to consolidate their iOS devices in Jamf as well.
spk10: Yeah, it makes sense. Thanks, Dean.
spk12: Sure thing. Thanks, Laurie.
spk05: 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.
spk12: Well, thank you very much, and thank you for joining us today on a very busy earnings day, so I know it isn't easy to catch up with everybody. I also want to thank and congratulate Jill once again on her retirement and on an incredible career and, of course, her contributions here at Jamf. In closing, I just want to say we had an exceptionally strong Q2 and are optimistic for the rest of the year. Given the macroeconomic uncertainty, we are being pragmatic as we look ahead. While balancing our outlook with strong market demand for our security and our management solutions, we are well positioned to 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. Thank you very much. Thank you very much.
spk05: Thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Good day.
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