Jamf Holding Corp.

Thank you for standing by and welcome to the Jamf 4th Quarter 2023 Earnings Conference Call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you'll need to press star 1-1 on your telephone. If your question has been answered and you'd like to remove yourself from the queue, simply press star 1-1 again. As a reminder, today's program is being recorded. And now I'd like to introduce your host for today's program, Jennifer Gaumont. Vice President, Investor Relations. Please go ahead.

Good afternoon, and thank you for joining us on today's conference call to discuss JAMS' fourth quarter and full year 2023 financial results. With me on today's call are John Strobel, Chief Executive Officer, and Ian Goodkind, Chief Financial Officer. Before we begin, I'd like to remind you that shortly after the market closed today, we issued a press release announcing our fourth quarter and full year 2023 financial results. We also published a Q4 earnings presentation, investor presentation, and Excel file containing quarterly financial statements to assist with modeling. You may access this information on the investor relations section of Jamf.com. Today's discussion may include forward-looking statements. Please refer to our most recent SEC reports, 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 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 John.

Thanks, Jen. Jamf achieved strong results in Q4 to round out the year, exceeding expectations for the 15th consecutive quarter. Q4 year-over-year revenue growth was 16%, representing the first quarter of revenue growth acceleration since Q2 of 2021. This strong revenue growth led to our highest non-GAAP operating income quarter ever at $21.1 million, with a non-GAAP operating income margin of 14%. This represents a 700 basis points improvement from Q4 of 2022. Full-year revenue growth was 17% and ARR grew 15% year-over-year in 2023 to $588.6 million. Full-year non-GAAP operating income was $45.4 million, a 75% increase over 2022. This resulted in a full-year non-GAAP operating income margin of 8%, a 300 basis points improvement over 2022. We're especially proud of these strong results, as the past six quarters have seen muted growth in education and tech industries overall, along with slow PC growth. Q4 PC shipments declined nearly 3%, with max shipments seeing a decline of 18%. We remain optimistic regarding the potential for a 2024 PC refresh cycle, as predicted by IDC. However, our expectations for 2024 are not reliant on a significant uplift in device expansions. Longer term, we're still confident in our prediction that Apple technology will become the number one ecosystem in the enterprise due to continued user preference for Mac at work. We ended 2023 with 75,300 customers and 32.3 million devices on our platform. Of these customers, 41% run both Jamf management and a security product. This represents a significant increase due to the transition of our Jamf Now customers to Jamf Fundamentals. Jamf Fundamentals provides the most complete yet simple IT solution for small to medium-sized businesses to manage and protect their Apple ecosystem. Other highlights include a continued demand for Jamf's Apple-first security platform with 33% year-over-year growth in security ARR to $134 million, or 23% of Jamf's total ARR. Our strongest quarter ever for ARR added for Jamf Business Plan. Many of our largest sales had an upsell component, proving the value of our land and expand strategy. We continue to see positive trends across professional services, financial services, and retail, which are three of the top five industries we serve. And we also saw a strong quarter in healthcare. Our results were driven by strong performance across our strategic focus areas of MAC leadership, management and security, and MAC and mobile. In MAC leadership, we're seeing continued MAC growth in our customer base with customers like a leading fully integrated biopharmaceutical solutions organization. The company has been a Jamf customer for nine years, and after finding that their Mac platform required fewer support tickets and a lower total cost of ownership, decided to take the next step and scale out their Mac choice program with Jamf. The company expects to use over 5,000 Macs in the near future as a result of their upcoming refresh cycle. Moving to security, last week we released our Security360 report that looks at real-world customer data, cutting-edge threat research, and noteworthy industry events to provide an overview of the evolving threat landscape. Among many striking data points, I wanted to highlight we are now tracking 300 malware families on the Mac operating system, 21 of those families being found in 2023. It is true that Apple builds one of the most secure out-of-the-box platforms on the market, but hackers are agnostic as to the platforms they target. Jamf is the only platform that delivers an Apple-first integrated management and security solution that meets the needs of the modern enterprise. Jamf enhances Apple's built-in security features by increasing visibility, prevention, controls, and remediation capabilities. We anticipate security to continue to become a larger part of our total ARR over time. Much of our success in security has been predicated on our ability to deliver both management and security on one platform. The success of Jamf's bundled solution is a testament to this, with ARR growth of bundled solutions outpacing most of Jamf's individual products. In Q4, over 44% of new customer pipeline generated was for security. Security products are also helping us to increase our win rates. When customers come to Jamf with security in mind, We win almost twice as often as we do when customers are looking at management alone. This was true in both Q3 and Q4, and we expect this trend to continue. We also see long-term management customers expanding with Jamf with security. In Q4, a European payments company added Jamf Protect to its 5,000 max as part of a three-year agreement. Given the company's exposure to PII and payment information, it has strict security and regulatory requirements. our team was able to demonstrate how data flows through the product in order to meet their complex needs and deliver the powerful insights and analytics of Jamf Protect. In addition to demand for complete management and security platforms, customers are also reorganizing their InfoSec and IT departments so they can manage and secure devices by technology ecosystem. This also allows end users to get the most from all of their devices while organizations can trust solutions built for the unique technology of their environment. Industry analysts like Omnia are recognizing Jamf for its mobile-first management and security, saying Omnia has seen Jamf become the primary UEM solution adopted by businesses that are well-invested in the Apple ecosystem. Jamf was also early to market with capabilities to securely manage shared iOS devices. Jamf's management capabilities for iOS and iPad iOS extend well beyond basic device management including the ability to provision connectivity through eSIM and physical access tokens through key cards stored in digital wallets. This makes Jamf a strong choice for businesses looking to effectively manage and secure their Apple devices. A great example of Jamf's leadership in securely managing iOS devices is a Q4 win, Learning Care Group. Learning Care Group is the second largest for-profit child care provider in North America and a leader in early education. It operates over 1,000 schools across 38 states. Learning Care Group will be migrating their 20,000 iOS devices across its locations to Jamf. With Jamf, the company is easily able to manage its entire fleet as well as keep all of the native apps that teachers and children use at school up to date. We continue to see many industries, especially non-traditional tech industries, reach for Apple technology, then to Jamf to make that tech work for their organizations. As I stated earlier, we're seeing strong momentum in professional services, financial services, retail, and healthcare. One example is Sharp Healthcare. Sharp Healthcare is the leading health provider in San Diego and a trailblazer in healthcare innovation. Their mission is to be the best place to work, the best place to practice medicine, and the best place to receive care. One recent innovation is the deployment of more than 1,500 iPads to patient bedsides. providing access to their medical records, patient education, and entertainment. These iPads are powered by JAMS Healthcare Listener patented technology which receives patient admit, discharge, and transfer messages from the Epic Electronic Healthcare System. The technology can automatically trigger management tasks such as remote wipe and full device reset between patients to automatically personalize the experience for each patient while ensuring personal identifiable information and protected health information are secure. Another example of a company reaching for Jamf to power its unique industry-specific workflows is the longest-running airline in India. This customer chose Jamf Pro over their existing management solution and two competitive solutions to manage 5,000 iPads with future plans to implement additional products to achieve trusted access. Jamf continues to lead the way with continued innovation across our business, One recent Apple innovation that we are particularly excited about is Vision Pro and its potential for the enterprise. Recently, Apple highlighted a number of enterprises that are deploying Vision Pro. This month, we announced we are the first to market with support for Apple Vision Pro, adding this powerful new endpoint to our Apple's first security and access products, Jamf Protect and Jamf Connect. This means Jamf customers can now confidently explore new ways of working while maintaining security, performance, and privacy. Additionally, with the introduction of MDM support for Vision OS 1.1 Beta announced earlier this month by Apple, Vision Pro will soon include the key foundations for deploying and leveraging an enterprise-grade device at scale. Jamf will be working alongside Apple to support MDM in Vision Pro, and we are excited to continue to fill the gap between Apple's powerful technology and the security, identity, and management needs of the enterprise. As we look ahead to 2024, we will continue to execute our strategy. We are committed to simplifying work by helping organizations succeed with Apple and by doing so at the pace of Apple. To do that, we need to ensure we have a healthy company in service to our stakeholders over the long term. Our business has evolved both because of continued innovation in the space and because of the changing needs of our customers. Over the last few years, Jamf has been on a dedicated journey to align our workforce to meet the evolving needs of today's IT and security teams, while remaining a sustainable and profitable business. Over the last year, we've seen reduced customer budgets and muted hiring and layoffs into the technology space, which in turn has elongated sales cycles and decreased customer purchases of new devices. This has put pressure on our land and expand strategy. And in education, K-12 remains in a COVID overhang. These challenges in tech and K-12 will likely remain throughout 2024. On the flip side, we are seeing expansion in industries outside of these two, as I mentioned earlier. We are controlling what we can by transforming and adjusting our investments and resources consistent with our current growth rate. This involves a more rigorous approach than we've taken in the past. We will continue to invest in areas that further solidify Jamf's position as the leading platform for managing and securing Apple at work. We remain committed to innovating at the pace of Apple and enhancing our platform to deliver the best solution for our customers today and in the future. We're prioritizing investments in areas where we're seeing tremendous growth and opportunity, like security and AI, while reducing spend in areas not providing as fast or as high returns. We've also embarked on a number of scalability and efficiency efforts, including realigning our organizational structure to match our investment areas which resulted in a reduction in force we announced in January. These efforts span every area of our business and were subject to a rigorous process that involved each member of my management team. Ian will provide more detail on these scalability and efficiency efforts in a bit. As a result, we are anticipating achieving nearly 700 basis points of non-GAAP operating income margin expansion in 2024 when compared to 2023. We believe this is the right course of action to align Jamf's current revenue growth profile and establish a foundation for success in the future. With that, I'll now turn it over to Ian to review our results and give more color around our 2024 outlook.