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spk16: Thank you for standing by. My name is Rochelle and I will be your conference operator today. At this time, I would like to welcome everyone to the Jamf first quarter 2024 earnings call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, Press star 1 again. Thank you. I would now like to turn the call over to Jennifer.
spk18: Please go ahead.
spk14: Good afternoon, and thank you for joining us on today's conference call to discuss JANF's first quarter 2024 financial results. With me on today's call are Josh Drossel, 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 first quarter financial results. We also published a Q1 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 the non-GAAP measures related to chance performance. You can find the reconciliation of those measures to the nearest possible GAAP measures in our earnings release. Additionally, to ensure we can address as many analysts' 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 Strozel. John?
spk06: Thanks, Jen. Jam started off the year strong, reaching the milestone of $600 million of total ARR. At the end of Q1, ARR grew 14% year-over-year to $602.4 million. We're delivering on the expectations we set for 2024. Both Q1 revenue and non-GAAP operating income exceeded the high end of our outlook. Q1 year-over-year revenue growth was 15%, and non-GAAP operating income was $22.1 million, with non-GAAP operating income margin of 15%. This margin represents a 1,000 basis points improvement from Q1 of 2023. We ended Q1 with 75,900 customers and 32.8 million devices on our platform. Of these customers, 41% run a Jamf management and security product. We continue to drive cross-sell with 31% year-over-year growth in security ARR to $138 million, or 23% of Jamf's total ARR. Our largest industries, tech and K-12, remain muted, impacting device expansion. The remaining industries in our top five continue to see positive trends. were also encouraged by growth in the PC market in Q1 after two years of decline. According to IDC, Q1 year-over-year worldwide PC shipments grew 1.5% to nearly 60 million units, representing a similar level of shipments to pre-pandemic. Apple saw the highest year-over-year growth in shipments of any company in Q1 at 14.6% and also increased its market share. IDC remained optimistic regarding PC sales in 2024 as companies began refreshing PCs that were purchased during the pandemic. While we are encouraged by this Q1 data, our outlook for 2024 does not rely on a significant uplift in device expansion. We continue to innovate and deliver solutions to help organizations succeed with Apple. In April, we held a special Jamf event to showcase a number of new offerings with a focus on compliance. IT and security teams are being asked to get more involved beyond traditional device management functions to help meet these various compliance standards across their Apple devices. Jamf is proud to deliver tools that help customers navigate the vast and varied compliance landscape. Product updates highlighted at the event include a customizable compliance dashboard in Jamf Protect, allowing admins to view an aggregate baseline score and detailed information to understand and remediate compliance issues. Compliance editor tool for Jamf Pro for iOS that generates deployable configurations to make endpoints compliant with a chosen compliance benchmark. Jamf Routines Tool for Jamf Bundled Solutions, which offers customers new no-code automations and integrations to streamline management and security workflows, while also providing seamless integration with Slack and Microsoft Teams to alert IT teams when devices fall out of compliance. Privilege Elevation Feature that utilizes an organization's cloud identity provider and Jamf Connect to temporarily allow admin privileges for local macOS accounts based on valid user authentication and authorization. We also recapped our recent announcement that support for Apple Vision Pro is now available across the entire Jamf platform. With Jamf Pro, organizations can enroll and streamline deployment of enterprise apps and settings for Apple Vision Pro. Jamf Connect allows Apple Vision Pro to securely access enterprise resources for any of the web and native apps that require secure identity-based access controls. Jamf Protect extends the same mobile threat defense, network protection, and content filtering use cases to the Apple Vision Pro. We also announced that support for watchOS management is coming later this year, including enrollment and inventory display. We're excited about the opportunities that watchOS management provides, especially as it relates to deskless workflows across a number of industries. Enabling these new device types is a testament to Jamf's commitment to simplifying Apple at work and giving users the ability to be productive however they work best. In addition to the spring event, we hosted another important event, our first Investor Day in mid-March. We outlined the next phase of Jamf Evolution, which is all about efficient scalability. If you hadn't had a chance to review the event yet, I encourage you to do so. The replay and presentation can be found on our investor relations website. During the event, we highlighted our differentiated position in competitive mode our large and growing addressable market, our strategic growth drivers, and our financial expectations through 2026. I'd like to use the strategic growth drivers we discussed during this event as the framework for the remainder of my remarks, highlighting some of the specific successes we saw in Q1. First, in Mac leadership, we continue to demonstrate how Jamf's Apple-first, Apple-best solutions deliver the best outcomes for our customers. In Q1, a leading online travel company renewed with Jamf for three years. Key to this win was our ability to demonstrate how Jamf's solution can help with the customer's current strategic initiative around process automation. We also delivered a long-term roadmap for expanding with Jamf, including Jamf Pro for iOS and Jamf Protect. Our ability to build multiple strong relationships with the customers at the management level was also beneficial, helping streamline the approval process. and our suggestion to utilize AWS Marketplace to leverage their committed spend was a win-win, simplifying procurement for the customer and resulting in a timely renewal for Jamf. We're excited about continued growth through the AWS Marketplace, as customers can use committed spend towards their Jamf contract, like Netlify, a cloud platform for front-end teams to build, deploy, and scale modern web applications. Netlify is now using Jamf with committed spend for AWS to manage its Apple devices and connect their end users to the resources they need. Second, with respect to expanding with mobile, we continue to see customers utilizing Jamf across their mobile fleets, especially for deskless workflows. In Q1, one leading specialty retailer expanded with Jamf beyond Mac by adding Jamf Pro for 15,000 iOS devices used across nearly 1,500 retail locations. This was a great win for Jamf against the legacy UEM provider, a testament to Jamf's continued commitment to innovating at the pace of Apple to securely manage multiple device types across multiple use cases. We're strongly encouraged by our progress in the retail space, which represents one of our top five largest industries. Retail, along with financial services and professional services, continue to see strong growth, helping balance the softness we are seeing in tech and K-12 education. Tech is seeing muted hiring and lower IT investments, while K-12 experienced a bit of a COVID overhang with record device deployments in 2020 and 2021. The third growth driver, management and security, or what we refer to as delivering our trusted access vision, is an area of opportunity we expect to become a larger part of our total ARR over time. Our ability to deliver both management and security on one platform is a key differentiator for Jamf. Both legacy UEM providers and Apple-specific management providers lack the complete platform requiring customers to utilize a number of third-party vendors to deliver management, connection, and protection capabilities. Smaller organizations often don't have the bandwidth, budget, or the desire to engage multiple third parties, making Jamf's trusted access platform an appealing solution. We continue to see an increased number of deals with both a management and a security component. We see this by continued strong growth of Jamf's bundled commercial solutions, which grew 63% year-over-year in Q1. And currently, 45% of Jamf's new customer commercial pipeline is made up of security opportunities. Additionally, when a customer consolidates management and security with Jamf, we see reduced churn compared to customers with just a management solution or just a security solution. In Q1, a precision medicine company became a Jamf Business Plan customer for their 1,200 devices. This company chose to move away from the legacy UEM provider and chose Jamf due to the value of trusted access brings to their organization and the strength of our capabilities for a mixed device environment. The customer's device environment includes Mac, PCs, Chromebook, and Android. Also in Q1, one of our largest airline customers, a mainline American carrier, expanded beyond management, adding Jamf Connect and Jamf Protect to 15,000 other iOS devices, which are utilized globally. We were able to demonstrate our industry leadership in managing and securing mission-critical mobile use cases and remote work situations, which were key to this win. Our solutions allowed the customer to have a defined practice for continuously securing mobile devices, something the customer only had previously for PCs. This success will serve as the blueprint for further expansion with customers in other areas of their business. Inclarian Housing Group, the largest housing association in the United Kingdom with 125,000 properties across more than 170 local authorities, recently became a Jamf customer using Jamf Pro and Jamf Connect for their Mac and iOS fleets. These three wins showcase the strength and leadership of Jamf's management and security platform, which is able to deliver the right solution for each organization, whether that is purchasing both management and security at the onset or expanding beyond management at the right time. And lastly, with respect to international expansion, Jamf continues to invest in strategic geographies where we're seeing growing adoption for Apple. Revenues outside of the U.S. continue to grow at a faster rate than U.S. revenues. In Q1, we saw a number of international wins for our Jamf Executive Threat Protection product with government agencies in the Middle East and India. The win in India represented our first government agency win in the country. The agency has embarked on a journey to curb cybercrime, and Jamf Executive Threat Protection, along with other products, will be used by forensic teams to investigate and, for instance, response. Jamf Executive Threat Protection was chosen due to its ability to identify sophisticated digital threats and extend visibility into attacks that target high-value users. Wins like these help our footprint in these regions and offer a blueprint for similar organizations in the area to utilize Jamf. We've seen success with this strategy in the past in countries like Japan. We'll continue to leverage this success in select geographies where we're seeing the most potential. I'll now turn it over to Ian to review our results and provide our Q2 and 2024 outlook. Thanks, John.
spk04: We ended Q1 with year-over-year revenue growth of 15%, exceeding the high end of our revenue outlook by $2.1 million. Total ARR reached $602.4 million, representing year-over-year growth of 14% exceeding expectations. We continue to believe that CHAMP's commercial business and specifically commercial security, will be a key growth driver both now and in the future. The strategic core of Jamf's business, SaaS recurring revenue, remains strong, and Q1 growing 18%. Less strategic revenue sources like licenses, services, and on-premise revenues continue to experience year-over-year declines, but came in slightly better than expected. Our net retention rate decreased slightly, as expected, to 107%, in Q1 when compared to Q4 2023. 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% and within our expectations. We continue to anticipate gross margins in the low 80% range and expect slight fluctuations each quarter. Non-GAAP operating income exceeded the high end of our Q4 outlook at $22.1 million, or 15% margin, due to cost-saving initiatives and increased revenues, representing an approximate 1,000 basis point improvement over Q1 2023. Our trailing 12-month unlevered free cash flow margin was 13% compared to 14% in the prior year. Our effective tax rate for Q1 was negative 5.4%, consistent with our expectations. As a reminder, for our non-GAAP metrics, we use a domestic statutory rate for calculating tax impacts, which is currently 24%. Please note that we pay a negligible amount of cash taxes on a U.S. federal basis and pay an immaterial amount of cash taxes outside the U.S. During our Investor Day, we outlined some key milestones that will help you track our progress against our goals. One, meet our quarterly financial outlook. In Q1, we exceeded the high end of both our revenue and non-GAAP operating income guidance ranges. Two, achieve at least 25% growth in security ARR. Q1 year-over-year growth of security ARR was 31%. Three, decrease general and administrative expense as a percentage of total revenue. Q1 non-GAAP G&A margin was 14%, an approximate 100 basis point reduction from Q4 2023. Four, decrease sales and marketing expense as a percentage of total revenue. Q1 non-GAAP sales and marketing margin was 34%, an approximate 200 basis point reduction from Q4 2023. With respect to sales and marketing expense, given that we anticipate the largest portion of cost savings coming from this area, we are providing additional details on current efficiency and scalability initiatives. First, earlier this year, we adjusted our workforce with a focus on higher productivity. Second, we're adjusting our sales incentive structure to further drive cross-sell of security and mobile and price capture. Third, we are enacting programs to drive enhanced value from our channel partners. Fourth, we continue to focus on educating customers on the value we provide with our trusted access outcomes. And fifth, we are aligning resources to geographies with the highest growth potential, like the Asia-Pacific region. Now, turning to our outlook for Q2 and full-year 2024. With respect to revenue growth, we expect continued pressure on device upsell through 2024. We will continue to focus on the strategic growth drivers John outlined, building on the successes we achieved in Q1. We will invest in growth and scalability, which focus on scalable go-to-market organization, platform optimization, and back office automation. Our scalability initiatives will set Jamf up for possible growth in the future and return draft to Rule 40, as outlined at our Investor Day. Many of these initiatives are in process with some themed benefits in 2024 and others with benefits expected throughout the next few years. Based on these factors, for the second quarter of 2024, we expect total revenue of $150.5 to $152.5 million, representing year-over-year growth of 11% to 13%. Non-GAAP operating income of $21.5 to $22.5 million, representing a non-GAAP operating income margin of 15% at the midpoint. Given our strong performance in Q1, we are increasing our expectations for the full year 2024. Total revenue of $618.5 to $622.5 million, representing year-over-year growth of 11% at the midpoint. This reflects an increase of $3.5 million at the midpoint. Non-GAAP operating income of $92.5 to $95.5 million, representing a non-GAAP operating income margin of 15% at the midpoint and an approximate 700 basis point improvement over fiscal year 2023. This reflects an increase of $3 million at the midpoint. While we don't provide an outlook for ARR, we would expect to end fiscal year 2024 with ARR growth similar to full-year revenue growth. With respect to unlevered free cash flows for full-year 2024, we expect unlevered free cash flow margin to be similar to non-GAAP operating income margin. We also provide estimates for amortization, stock-based compensation-related payroll taxes, and other metrics to assist with modeling in the earnings presentation as part of the webcast and also posted on our investor relations website. With respect to the longer term financial outlook we present as part of our investor day, we remain committed to the goals we outlined during the event. And now John and I will take your questions. Operator?
spk16: Thank you. We will now begin the question and answer session. If you have dialed in and would like to ask a question, please press star one on your telephone keypad. If you would like to withdraw your question, simply press star one again. If you are called upon to ask your question and are listening via loudspeaker on your device, please pick up your handset and ensure that your phone is not on mute when asking your question. Again, press star one to join the queue. And your first question comes from the line of Joshua Riley of Needham & Company. Your line is open.
spk20: All right, nice job on the quarter here, and thanks for taking my questions. I guess the starting point probably people are interested in here is the ARR growth was a bit better than what we expected and kind of what you laid out at the analyst day. Can you just give us a sense of what are some of the puts and takes for the rest of the year in terms of how much has pricing benefited ARR growth here in Q1 relative to your expectations, and has there really been any change in the macro with a little bit of a talk-up? In the ARR growth, it sounds like it's going to be closer to 11% for exiting year.
spk04: Yeah, so hey, Josh. Good to hear from you at the end. I'll jump in there. So you're right, and I appreciate the way you asked your question. ARR came out generally how we expected and what we outlined at our investor day. We did come off a strong Q4, and there we did pull forward some deals from Q1. Q1 is our seasonally low, but we did – in the first quarter have our first reduction in workforce, and we didn't assign quotas until after that. And, you know, tech continues to be muted, you know, from the macro, and education continues to have the COVID overhang. We did see a little bit more churn in January from a specific competitor, but that's normalized within February and March. So as we march forward throughout the year, we do see some additional bright spots. We've seen some strengths in professional services, financial services, and a wholesale and retail. And those non-leaning tech industries have been leaning more into it. In Q1, we actually saw higher rep productivity, and they call it the double-digit improvement from the prior year. We also saw a little bit of an upsell on some of the deals, not to the levels we've seen historically, but we saw that as well. We saw our bundles continue to be strong. It was a 63% year over year. And then what we're continuing forward with, we've been continuing to tweak our incentive plans, which is voting well, that we've seen our pipeline start to build within the security space. We see our new local commercial pipeline represent 45%, which is good. And we've also just seen a few green shoots in EDU. So, as a reminder, our 2024 outlook was based on the same economics we saw in 2023. 20 things both well and could help us overachieve on 2024. We feel good about what we said as guidance.
spk20: Got it. That's super helpful. And then just following up on the SMB segment of the market, some of the other peers and, you know, staff world have been seeing some challenges from SMB customers. I know that's a smaller mix of your business relative to some of these other areas, but are you seeing the hire for longer interest rate dynamics beginning to impact these customers as well? Thank you.
spk07: Josh, this is John. I can answer that question. Yeah, interesting. I was just talking to some of the sales guys about this particularly.
spk05: And, you know, we still are a volume business.
spk06: And, you know, we've seen the longer interest rates being higher affect some of these businesses. We typically see a bit of a canary in the coal mine with our SMV business in that when we see them start to purchase more, then enterprise generally follows. And, you know, we've had some very consistent new logo growth, but we've also seen some of those smaller companies fall out as a result of the longer-than-expected interest rates. But we do feel pretty good about our year-over-year bundled sales, which typically goes to the SMB market, and Ian mentions over 60% year-over-year. And we continue to see more interest, although sales cycles have remained elongated, but we're starting to get more interest from both the SMB and the enterprises.
spk16: Your next question comes from the line of Koji Ikeda of Bank of America. Your line is open.
spk10: Yeah, no, thanks guys. Thanks for taking the questions. Lots of good commentary in the prepared remarks. Thank you for that. I just wanted to ask you a question on how you're feeling about the three-year model and very specifically about the revenue growth and ARR growth that you guys laid out at the investor day, which is accelerating and the growth is accelerating in 2025 and 2026. You know, of course that, setup is very, very attractive. But when I look at some of the growth metrics in one queue, a lot of them decel. So I was wondering, you know, maybe what you're seeing from your end that is giving you that increased confidence. Maybe there was something, you know, this quarter that's increasing your confidence to be so committed to those three-year growth targets.
spk04: Yeah, I'll jump in on that one. And thanks for the question, Koji. I think the first short answer, and I'll expand on the answer, is yes, we still have conviction over our three-year model. We laid it out in a manner where this year we laid out 10%, now it's 10.7% growth rate on revenues, and we've overachieved that. And we knew, again, it would be a little bit of a slower start from the standpoint of the items I just talked about, from the fact we knew we were taking some steps with the workforce adjustment. We knew we were making some adjustments to comp plans. We knew a lot of it. And we've also, what we focused on at Investor Day, if you remember, we showed you NRR kind of historically and what it looks like going forward and that it doesn't have a huge macro return and that's still what we're factoring in. We do believe that's going to come at some point, so there's that. And then I talked about just a little bit ago about the security pipeline and we're starting to see that build and customers are having interest. And when I look at our bundles, again, that continues to have a lot of interest with customers. And one thing on our bundles that I should note, we continue to add a value there. We just released Jamf Routines. And Jamf Routines is something you only find within our bundle, and it automates certain workflows and integrates with certain collaboration tools, and it does help with a lot of customer issues. So those are the types of things you can expect. And we also, last comment I'd make on this, In my prepared remarks, I talked about the five areas that we were focused on from a sales and marketing perspective. And you see we have a clear plan of how we're going to check through those things. We've met the things we've outlined on our checklist from Investor Day so far this year. So when you take all those things together, yes, we have conviction around that plan.
spk10: Got it, Ian. Thank you so much. And maybe a follow-up for you, sir. I noticed the Q just came out, and I punched into our little spreadsheet here, the remaining performance obligations. And I did notice that on the RPO front, it declined sequentially just a tick. And I did notice that it happened last year in the first quarter, too. Just wanted to understand anything in particular about the dynamics of the first quarter in RPO that we need to understand. Thank you.
spk04: Yeah, good question. So on RPO and actually every first quarter, if you go back historically on all our first quarters, it's actually seasonality. It's always our slowest quarter. And so just as a reminder, Q1 is our slowest quarter. Q2 and Q3 are supported by our education business. And then Q3 and Q4 are heavier commercial businesses. As I talked about, we had a pretty good Q4, which pulled some deals forward. So I wouldn't read into that any farther than that. It is what we generally expected.
spk09: Got it. Thank you very much.
spk16: Your next question comes from the line of Raimo Lenzchao of Barclays. Your line is open.
spk21: Hey, this is Isaac on for Raimo. Thanks for taking the question. Security ARR came in pretty strong again this quarter. And I know you guys guided to 25% at the analyst day. How much upside do you see to that number versus what you initially guided? And how should we think about the shape of net new ARR there as we go through the remainder of the year?
spk09: I can jump in there. So a couple of things.
spk04: Yeah, I mean, we said we were going to achieve at least 25%. So we're above that, what we showed on our analysis slide that there was, you know, saying here's the things you should monitor throughout the year to show our success. We had 33% growth in Q4, 31% now. So it continues to bode well for us. And as we talked about it at Investor Day, you know, we are very focused on cross-sell. And that comes in three forms. That comes in the form of commercial security, education security, and then there's mobile. And mobile has been good, but just talking about security, I mean, some of the way we're thinking about our incentive plans focuses on the cross-sell, focuses on the security. And we are seeing customers ask more and more about that. It has just become a really good opportunity when customers customers see that you can consolidate on one platform, both your management and security. That has been boding well for us. And in the SMB side, since there's one economic buyer, that's been boding well. And we've been working with enterprises and we get, you know, a couple of those, you know, we get one of those once in a while here. And those are things that I think could accelerate if we see more of those come through. And I think, you know, just again, you know, buyers are sitting a little bit on the sideline, just nervous to make changes. But we are seeing this be successful in this economy when you consolidate. So those are the things I think could bode well for us and could help us continue along this path. John?
spk06: I'll just add that, you know, on the enterprise side, we have seen the security be successful, and particularly on the iOS side. And when you look at the retail and wholesale markets as the deskless workflows, you know, it had become more and more prevalent. in those industries, we're seeing a lot more mobile security on that side as well. So we're seeing some really good traction there, and we're continuing to double down on it, as Ian said, really incentivizing our sales teams to promote that cross-sell and really lead with our trusted access opportunity, which our customers have really taken kindly to.
spk04: Yeah, one other thing I thought about was education, too. In the first quarter, we did actually see a few extra deals in the education security piece. So we have seen some success and some green shows there as well.
spk21: Great. That's super helpful. Thanks. And then, Ian, maybe one more for you. If I think about the margin guidance, Q1 came in ahead of expectations and seems like Q2 is also slightly ahead. But the full year guide on margin stayed consistent. Is there anything we need to think about in Q3 and Q4 that You know, maybe there are reasons for that margin guide not moving incrementally up through the remainder of the year.
spk04: Yeah, I think you're talking about the margin percentage versus the dollars, right? And so the dollars did go up with consistent and actually slightly more than what our overachievement in the first quarter was. So we did pass that through and we actually brought it up. I think what you're asking is, hey, both are getting close to 15%. Your guide is 15% for the year. And what I would think about there is a couple things. What we talked about in Investor Day is two things. We're going to still continue to invest in growth and scalability, and those are continuing throughout the year. I listed in my prepared remarks today around the initiatives that we're spending on on the go-to-market side. We also still have the platform capabilities where we're continuing to optimize our platform, and we are focused on back-office automation. So I wouldn't adjust the spending for those long-term initiatives that make us more scalable.
spk02: Great. That's super helpful. Thank you.
spk16: Your next question comes from the line of Dan Bergstrom of RBC Capital Markets. Your line is now open.
spk11: Hey, it's Dan Bergstrom for MadHeadBerg. Thanks for taking our questions. It's nice to see the PC shipments return to growth following a couple years of declines in the gains for Apple. I guess, are there any additional observations you have from conversations with customers around refresh or anything otherwise here? I guess they'd remain prudent around hiring on expense still.
spk06: Yeah, Dan, this is John. I can take the question. You know, just ancillary discussions with our customer and the sales team as well. You know, we have seen a bit of elongated refresh cycle. I mean, the uncertainty in the market, you know, has caused some of that. Like I said before, we have seen some more interest and some more engagement, although sales cycles have still remained elongated. We also noted that it was a Wall Street Journal article that came out. IDC and both Gardner had identified that Apple's growth had been over 14, about 14.5% year-over-year in shipments. And while that bodes well for us, we don't track that on a quarter-by-quarter basis, but several quarters in a row certainly have an impact on the install base. And so Your assumption is right. We have seen a bit of elongated refresh cycles, both in the enterprise as well as in education, but we are seeing some of that loosen a bit.
spk11: Thanks, and I appreciate the additional color so far around security in the Q&A here. I guess on security and the go-to-market, where's the sales force here around security versus, say, a year ago? It sounds like there have been some adjustments, some incentives, more focus on cross-sells. maybe any more color here or anything you're leaning into from a security perspective to start the year.
spk06: Yeah. Well, the sales teams have become much better versed in our security opportunity or our security offering. You remember, we had the management first, and then our customers asked us to extend into security, and we did that. And we have a pretty decent sales force, pretty sizable sales force, and they don't necessarily turn on a dime, but we're really seeing the traction that they're getting, especially when they lead with trusted access. And that being that management and security together, really being able to identify those things and then actually go ahead and remediate them through the device management product. And so those, you know, having the sales team better well-versed and leading with trusted access is gaining traction. And we've also taken more recent sales hires from the security space. So they bring a wealth of knowledge into the company and it helped cross-pollinate that to our other sales teams. You know, we did adjust the compensation plan early in the year and really to focus on ARR to make sure that those customers that we're making sure that we're retaining the customers that we have in an environment that we don't know when the PC shipments and all that will return. And in the The process of that, we really, what we needed to do more of is focus on the cross-sell. And we saw that in Q1, toward the end of Q1, we adjusted compensation. We're continuing that through Q2 and the rest of the year. And so that's had also some green shoots. And when Ian talked about our security pipeline, I think a lot of that is also a direct result of some of those changes that we made.
spk12: That's great. Thanks.
spk16: The next question comes from the line of Jake Robertsh. Off William Blair, your line is open.
spk19: Hey, thanks for taking the questions and congrats on the great results. I'm curious, now that you've had a quarter or two following the acquisition and then subsequent divestiture of Workspace ONE, have you started to see any incremental opportunities get presented from customers that might be frustrated from the changes of control? Just curious if there's any incremental opportunities or pipeline that's building from those deals this year.
spk06: Oh, absolutely, Jake. This is John again. I'll take this question. We certainly have. And the issue with that is because the acquisition went through of that competitor to a financial sponsor, we're not expecting, and we've said this before, we don't expect all of those deals to come in one quarter. They all have renewal cycles. And so we're engaged with a lot of those pretty much all of those customers, of when that renewal cycle is coming up and promoting our products. We've replaced tens of thousands of devices every quarter with that competitor, and we have a pretty healthy pipeline directed at that. And our advantage here is that we innovate at the pace of Apple, and our competitors have had some difficulty with that, especially when they're cross-platform. And then you kind of dilute the user experience down to the lowest common denominator and And so that's where we really excelled. And then you put that on top of having the perception of not innovating at the pace of Apple. Given the ownership structure, that is something that we've really taken advantage of and our salespeople have leaned into heavily.
spk19: Okay, very helpful. And then obviously great to see the 31% security ARR growth. You've had some really solid comments on the call about pipeline and then the go-to-market tweaks. you're making there. But given RSAs this week, I'm curious if there are any areas on the product side that you're looking to dig deeper into throughout the year and maybe opportunities that could be more upsell throughout the 2025 and 2026 timeframe that you're really digging into this year.
spk06: We certainly are. In all aspects, we've got a lot of opportunity in front of us with the security products that we have, but we also know there's other areas of security that we're leaning into as well. And we continue to be very acquisitive in looking at companies, particularly in the tech and talent side that are Apple first and Apple best. And that's something that we'll continue to do. to enhance the feature set of our security products. But we're seeing that from our customers, and we're listening to our customers. The reason we went into security in the first place is because that's what our customers asked us to do, and we're following their lead in adding functionality to those security products. The other one I might mention, and I mentioned in the prepared remarks, is the Jamf Executive Threat Protection. That is done really, really well in that it becomes kind of a halo effect in that when you're speaking to a CISO very high level in the organization about securing high-value targets, you're talking to the same person that can make decisions on Jamf Protect and Jamf Connect, so the connectivity, other parts of the organization. And so once they see the value of Jamf Executive Threat Protection, we have an opportunity to discuss other security products, and we've done that over and over again. So there again, we're seeing some nice green shoots.
spk08: Great. Thanks for taking my questions, and congrats again on the results.
spk09: Thanks.
spk16: Your next question comes from the line of Vinod Srinivas Saragavan from Mizuho. Your line is open.
spk03: Hey, guys. Thanks for taking my question. I just wanted to dig into NRR a little bit. Can you give us a sense of what the mix of upsells versus downsells versus churn was this quarter? And is this much different than what you saw in Q1 last year?
spk04: Yeah, thanks for the question. So it did decline from 108 to 107. And so when I look at Q4 to Q1, about 75% of that decline related to upsell. It continues the same macro customer spending effects continue to impact that. In this quarter, we saw in the trailing 12-month metric, or sorry, when I looked from Q4 to Q1, the other 25% did relate to lost logos. That did relate to that January extra churn that we saw. But again, February and March came back and actually was better than what we expected. And just a comparison point, because you asked Q1 of last year, when I look at that and the decline, 81% of that related to upsell, 14% related to downsell, and then 5% related to lost logo. So in our trailing 12 months, lost logo isn't really that big of an impact. And our competitors come and go, but we've seen them go for the time being. And we're excited about the things we're seeing in our pipeline and in our second quarter.
spk03: Okay, great. That's helpful. And then just in general, how did GM business plan do this quarter? And are you seeing, you know, just more momentum now as, you know, that's been out for a while now?
spk04: Yeah, we've had 63% year over year with the growth in our business plans, which includes enterprise plans. So it continues to be successful. It has been something our customers have been asking for. They see the benefits when you combine management and security together, not just from a cost perspective, but they know that things just work together. And I did mention routines a little bit earlier. You know, that's just something we had our spring release and we announced, you know, all the different things related to compliance. And then we also announced Routines, and Routines is a really interesting piece that's just available in Business Plan, and it is something that is going to, or helps automate workflows and helps with collaborative tools. So, for example, if you see a device that you need to reset, well, this actually has an automated workflow for that, and it actually tells you through whatever tool you're using from a collaboration standpoint. So we see a lot of success there, and we're really excited about that. And again, when customers have both management and security, we see our churn improve on those customers because customer health is stronger.
spk03: Thanks, guys. Appreciate it.
spk16: There are no further questions from the line at this time. I will now turn the conference back over to Jennifer for the closing remarks.
spk15: Thank you all for joining us today. This is the end of the call. Have a good rest of your day. Thank you.
spk16: Thank you. That concludes today's conference call. Thank you all for joining. You may now disconnect. Please wait. The conference will begin shortly. We'll be right back. We'll be right back. We'll be right back. We'll be right back. you Thank you. Thank you. Thank you for standing by. My name is Rochelle and I will be your conference operator today. At this time, I would like to welcome everyone to the Jamf first quarter 2024 earnings call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, Press star 1 again. Thank you. I would now like to turn the call over to Jennifer.
spk18: Please go ahead.
spk14: Good afternoon, and thank you for joining us on today's conference call to discuss JANF's first quarter 2024 financial results. With me on today's call are Josh Drossel, 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 first quarter financial results. We also published a Q1 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 the non-GAAP measures related to chance performance. You can find the reconciliation of those measures to the nearest possible 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 Strozel. John?
spk06: Thanks, Jen. Jam started off the year strong, reaching the milestone of $600 million of total ARR. At the end of Q1, ARR grew 14% year-over-year to $602.4 million. We're delivering on the expectations we set for 2024. Both Q1 revenue and non-GAAP operating income exceeded the high end of our outlook. Q1 year-over-year revenue growth was 15%, and non-GAAP operating income was $22.1 million, with non-GAAP operating income margin of 15%. This margin represents a 1,000 basis points improvement from Q1 of 2023. We ended Q1 with 75,900 customers and 32.8 million devices on our platform. Of these customers, 41% run a Jamf management and security product. We continue to drive cross-sell with 31% year-over-year growth in security ARR to $138 million, or 23% of Jamf's total ARR. Our largest industries, tech and K-12, remain muted, impacting device expansion. The remaining industries in our top five continue to see positive trends. were also encouraged by growth in the PC market in Q1 after two years of decline. According to IDC, Q1 year-over-year worldwide PC shipments grew 1.5% to nearly 60 million units, representing a similar level of shipments to pre-pandemic. Apple saw the highest year-over-year growth in shipments of any company in Q1 at 14.6% and also increased its market share. IDC remained optimistic regarding PC sales in 2024 as companies began refreshing PCs that were purchased during the pandemic. While we are encouraged by this Q1 data, our outlook for 2024 does not rely on a significant uplift in device expansion. We continue to innovate and deliver solutions to help organizations succeed with Apple. In April, we held a special Jamf event to showcase a number of new offerings with a focus on compliance. IT and security teams are being asked to get more involved beyond traditional device management functions to help meet these various compliance standards across their Apple devices. Jamf is proud to deliver tools that help customers navigate the vast and varied compliance landscape. Product updates highlighted at the event include a customizable compliance dashboard in Jamf Protect, allowing admins to view an aggregate baseline score and detailed information to understand and remediate compliance issues. Compliance editor tool for Jamf Pro for iOS that generates deployable configurations to make endpoints compliant with a chosen compliance benchmark. Jamf Routines Tool for Jamf Bundled Solutions, which offers customers new no-code automations and integrations to streamline management and security workflows, while also providing seamless integration with Slack and Microsoft Teams to alert IT teams when devices fall out of compliance. Privilege Elevation Feature that utilizes an organization's cloud identity provider and Jamf Connect to temporarily allow admin privileges for local macOS accounts based on valid user authentication and authorization. We also recapped our recent announcement that support for Apple Vision Pro is now available across the entire Jamf platform. With Jamf Pro, organizations can enroll and streamline deployment of enterprise apps and settings for Apple Vision Pro. Jamf Connect allows Apple Vision Pro to securely access enterprise resources for any of the web and native apps that require secure identity-based access controls. Jamf Protect extends the same mobile threat defense, network protection, and content filtering use cases to the Apple Vision Pro. We also announced that support for watchOS management is coming later this year, including enrollment and inventory display. We're excited about the opportunities that watchOS management provides, especially as it relates to deskless workflows across a number of industries. Enabling these new device types is a testament to Jamf's commitment to simplifying Apple at work and giving users the ability to be productive however they work best. In addition to the spring event, we hosted another important event, our first Investor Day in mid-March. We outlined the next phase of Jamf's evolution, which is all about efficient scalability. If you hadn't had a chance to review the event yet, I encourage you to do so. The replay and presentation can be found on our Investor Relations website. During the event, we highlighted our differentiated position in competitive mode, our large and growing addressable market, our strategic growth drivers, and our financial expectations through 2026. I'd like to use the strategic growth drivers we discussed during this event as the framework for the remainder of my remarks, highlighting some of the specific successes we saw in Q1. First, in Mac leadership, we continue to demonstrate how Jamf's Apple-first, Apple-best solutions deliver the best outcomes for our customers. In Q1, a leading online travel company renewed with Jamf for three years. Key to this win was our ability to demonstrate how Jamf's solution can help with the customer's current strategic initiative around process automation. We also delivered a long-term roadmap for expanding with Jamf, including Jamf Pro for iOS and Jamf Protect. Our ability to build multiple strong relationships with the customers at the management level was also beneficial, helping streamline the approval process. and our suggestion to utilize AWS Marketplace to leverage their committed spend was a win-win, simplifying procurement for the customer and resulting in a timely renewal for Jamf. We're excited about continued growth through the AWS Marketplace, as customers can use committed spend towards their Jamf contract, like Netlify, a cloud platform for front-end teams to build, deploy, and scale modern web applications. Netlify is now using Jamf with committed spend for AWS to manage its Apple devices and connect their end users to the resources they need. Second, with respect to expanding with mobile, we continue to see customers utilizing Jamf across their mobile fleets, especially for deskless workflows. In Q1, one leading specialty retailer expanded with Jamf beyond Mac by adding Jamf Pro for 15,000 iOS devices used across nearly 1,500 retail locations. This was a great win for Jamf against a legacy UEM provider, a testament to Jamf's continued commitment to innovating at the pace of Apple to securely manage multiple device types across multiple use cases. We're strongly encouraged by our progress in the retail space, which represents one of our top five largest industries. Retail, along with financial services and professional services, continue to see strong growth, helping balance the softness we are seeing in tech and K-12 education. Tech is seeing muted hiring and lower IT investments, while K-12 experienced a bit of a COVID overhang with record device deployments in 2020 and 2021. The third growth driver, management and security, are what we refer to as delivering our trusted access vision. In an area of opportunity, we expect to become a larger part of our total ARR over time. Our ability to deliver both management and security on one platform is a key differentiator for Jamf. Both legacy UEM providers and Apple-specific management providers lack the complete platform requiring customers to utilize a number of third-party vendors to deliver management, connection, and protection capabilities. Smaller organizations often don't have the bandwidth, budget, or the desire to engage multiple third parties, making Jamf's trusted access platform an appealing solution. We continue to see an increased number of deals with both a management and a security component, We see this by continued strong growth of Jamf's bundled commercial solutions, which grew 63% year-over-year in Q1. And currently, 45% of Jamf's new customer commercial pipeline is made up of security opportunities. Additionally, when a customer consolidates management and security with Jamf, we see reduced churn compared to customers with just a management solution or just a security solution. In Q1, a precision medicine company became a Jamf Business Plan customer for their 1,200 devices. This company chose to move away from the legacy UEM provider and chose Jamf due to the value of trusted access brings to their organization and the strength of our capabilities for a mixed device environment. The customer's device environment includes Mac, PCs, Chromebook, and Android. Also in Q1, one of our largest airline customers, a mainline American carrier, expanded beyond management, adding Jamf Connect and Jamf Protect to 15,000 of their iOS devices, which are utilized globally. We were able to demonstrate our industry leadership in managing and securing mission-critical mobile use cases and remote work situations, which were key to this win. Our solutions allowed the customer to have a defined practice for continuously securing mobile devices, something the customer only had previously for PCs. This success will serve as the blueprint for further expansion with customers in other areas of their business. Inclarian Housing Group, the largest housing association in the United Kingdom with 125,000 properties across more than 170 local authorities, recently became a Jamf customer using Jamf Pro and Jamf Connect for their Mac and iOS fleets. These three wins showcase the strength and leadership of Jamf's management and security platform, which is able to deliver the right solution for each organization, whether that is purchasing both management and security at the onset or expanding beyond management at the right time. And lastly, with respect to international expansion, Jamf continues to invest in strategic geographies where we're seeing growing adoption for Apple. Revenues outside of the U.S. continue to grow at a faster rate than U.S. revenues. In Q1, we saw a number of international wins for our Jamf Executive Threat Protection product with government agencies in the Middle East and India. The win in India represented our first government agency win in the country. The agency has embarked on a journey to curb cybercrime, and Jamf Executive Threat Protection, along with other products, will be used by forensic teams to investigate and, for instance, response. Jamf Executive Threat Protection was chosen due to its ability to identify sophisticated digital threats and extend visibility into attacks that target high-value users. Wins like these help our footprint in these regions and offer a blueprint for similar organizations in the area to utilize Jamf. We've seen success with this strategy in the past in countries like Japan. We'll continue to leverage this success in select geographies where we're seeing the most potential. I'll now turn it over to Ian to review our results and provide our Q2 and 2024 outlook. Thanks, John.
spk04: We ended Q1 with year-over-year revenue growth of 15%, exceeding the high end of our revenue outlook by $2.1 million. Total ARR reached $602.4 million, representing year-over-year growth of 14% exceeding expectations. We continue to believe that CHAMP's commercial business and specifically commercial security, will be a key growth driver both now and in the future. The strategic core of Jamf's business, SaaS recurring revenue, remains strong, and Q1 growing 18%. Less strategic revenue sources like licenses, services, and on-premise revenues continue to experience year-over-year declines, but came in slightly better than expected. Our net retention rate decreased slightly, as expected, to 107%, in Q1 when compared to Q4 2023. 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% and within our expectations. We continue to anticipate gross margins in the low 80% range and expect slight fluctuations each quarter. Non-GAAP operating income exceeded the high end of our Q4 outlook at $22.1 million, or 15% margin, due to cost-saving initiatives and increased revenues, representing an approximate 1,000 basis point improvement over Q1 2023. Our trailing 12-month unlevered free cash flow margin was 13% compared to 14% in the prior year. Our effective tax rate for Q1 was negative 5.4%, consistent with our expectations. As a reminder, for our non-GAAP metrics, we use a domestic statutory rate for calculating tax impacts, which is currently 24%. Please note that we pay a negligible amount of cash taxes on a U.S. federal basis and pay an immaterial amount of cash taxes outside the U.S. During our investor day, we outlined some key milestones that will help you track our progress against our goals. One, meet our quarterly financial outlook. In Q1, we exceeded the high end of both our revenue and non-GAAP operating income guidance ranges. Two, achieve at least 25% growth in security ARR. Q1 year-over-year growth of security ARR was 31%. Three, decrease general and administrative expense as a percentage of total revenue. Q1 non-GAAP G&A margin was 14%, an approximate 100 basis point reduction from Q4 2023. Four, decrease sales and marketing expense as a percentage of total revenue. Q1 non-GAAP sales and marketing margin was 34%, an approximate 200 basis point reduction from Q4 2023. With respect to sales and marketing expense, given that we anticipate the largest portion of cost savings coming from this area, we are providing additional details on current efficiency and scalability initiatives. First, earlier this year, we adjusted our workforce with a focus on higher productivity. Second, we're adjusting our sales incentive structure to further drive cross-sell of security and mobile and price capture. Third, we are enacting programs to drive enhanced value from our channel partners. Fourth, we continue to focus on educating customers on the value we provide with our trusted access outcomes. And fifth, we are aligning resources to geographies with the highest growth potential, like the Asia-Pacific region. Now, turning to our outlook for Q2 and full-year 2024. With respect to revenue growth, we expect continued pressure on device upsell through 2024. We will continue to focus on the strategic growth drivers John outlined, building on the successes we achieved in Q1. We will invest in growth and scalability with focus on scalable go-to-market organization, platform optimization, and back office automation. Our scalability initiatives will set JANF up for possible growth in the future and return JANF to the Rule 40 as outlined at our Investor Day. Many of these initiatives are in process with some theme benefits in 2024 and others with benefits expected throughout the next few years. Based on these factors, for the second quarter of 2024, we expect total revenue of $150.5 to $152.5 million dollars representing year-over-year growth of 11 to 13 percent. Non-GAAP operating income of $21.5 to $22.5 million, representing a non-GAAP operating income margin of 15 percent at the midpoint. Given our strong performance in Q1, we are increasing our expectations for the full year 2024. Total revenue of $618.5 to $622.5 million representing year-over-year growth of 11% at the midpoint. This reflects an increase of $3.5 million at the midpoint. Non-GAAP operating income of $92.5 to $95.5 million, representing a non-GAAP operating income margin of 15% at the midpoint and an approximate 700 basis point improvement over fiscal year 2023. This reflects an increase of $3 million at the midpoint. While we don't provide an outlook for ARR, we would expect to end fiscal year 2024 with ARR growth similar to full-year revenue growth. With respect to unlevered free cash flows for full-year 2024, we expect unlevered free cash flow margin to be similar to non-GAAP operating income margin. We also provide estimates for amortization, stock-based compensation-related payroll taxes, and other metrics to assist with modeling in the earnings presentation as part of the webcast and also posted on our investor relations website. With respect to the longer term financial outlook we present as part of our investor day, we remain committed to the goals we outlined during the event. And now John and I will take your questions. Operator?
spk16: Thank you. We will now begin the question and answer session. If you have dialed in and would like to ask a question, please press star one on your telephone keypad. If you would like to withdraw your question, simply press star one again. If you are called upon to ask your question and are listening via loudspeaker on your device, please pick up your handset and ensure that your phone is not on mute when asking your question. Again, press star one to join the queue. And your first question comes from the line of Joshua Riley of Needham & Company. Your line is open.
spk20: All right, nice job on the quarter here, and thanks for taking my questions. I guess the starting point probably people are interested in here is the ARR growth was a bit better than what we expected and kind of what you laid out at the analyst day. Can you just give us a sense of what are some of the puts and takes for the rest of the year in terms of how much has pricing benefited ARR growth here in Q1 relative to your expectations, and has there really been any change in the macro with a little bit of a talk-up? In the ARR growth, it sounds like it's going to be closer to 11% for exiting the year.
spk09: Yeah. So, hey, Josh. Good to hear from you at the end.
spk04: I'll jump in there. So, you're right, and I appreciate the way you asked your question. ARR came out generally how we expected and what we outlined at our investor day. We did come off a strong Q4, and there we did pull forward some deals from Q1. Q1 is our seasonally low, but we did – in the first quarter have our first reduction in workforce, and we didn't assign quotas until after that. And, you know, tech continues to be muted, you know, from the macro, and education continues to have the COVID overhang. We did see a little bit more churn in January from a specific competitor, but that's normalized within February and March. So as we march forward throughout the year, we do see some additional bright spots. We've seen some strengths in professional services, financial services and a wholesale and retail. And those non-leaning tech industries have been leaning more into it. In Q1, we actually saw higher rep code activity and they call it the double digit improvement from the prior year. We also saw a little bit of an upsell on some of the deals, not to the levels we've seen historically, but we saw that as well. We saw our bundles continue to be strong. It was a 63% year over year. And then what we're continuing forward with, we've been continuing to tweak our incentive plans, which is voting well, that we've seen our pipeline start to build within the security space. We see our new local commercial pipeline represent 45%, which is good. And we've also just seen a few green shoots in EDU. So, as a reminder, our 2024 outlook was based on the same economics we saw in 2023. 20 things both well and could help us overachieve on 2024. We feel good about what we said as guidance.
spk20: Got it. That's super helpful. And then just following up on the SMB segment of the market, some of the other peers and, you know, staff world have been seeing some challenges from SMB customers. I know that's a smaller mix of your business relative to some of these other areas, but are you seeing the higher for longer interest rate dynamics beginning to impact these customers as well? Thank you.
spk07: Josh, I can – this is John. I can answer that question. Yeah, interesting. I was just talking to some of the sales guys about this particularly.
spk05: And, you know, we still are a volume business.
spk06: And, you know, we've seen the longer interest rates being higher affect some of these businesses. We typically see a bit of a canary in the coal mine with our SMB business in that when we see them start to purchase more, then enterprise generally follows. And, you know, we've had some very consistent new logo growth, but we've also seen some of those smaller companies fall out as a result of the longer-than-expected interest rates. But we do feel pretty good about our year-over-year bundled sales, which typically goes to the SMB market, and Ian mentions over 60% year-over-year. And we continue to see more interest, although sales cycles have remained elongated, but we're starting to get more interest from both the SMB and the enterprise.
spk16: Your next question comes from the line of Koji Ikeda of Bank of America. Your line is open.
spk10: Yeah, no, thanks, guys. Thanks for taking the questions. Lots of good commentary in the prepared remarks. Thank you for that. I just wanted to ask you a question on how you're feeling about the three-year model and very specifically about the revenue growth and ARR growth that you guys laid out at the Investor Day, which is accelerating and the growth is accelerating in 2025 and 2026. Of course, that setup is very, very attractive. But when I look at some of the growth metrics in one queue, a lot of them decel. So I was wondering, you know, maybe what you're seeing from your end that is giving you that increased confidence. Maybe there was something, you know, this quarter that's increasing your confidence to be so committed to those three-year growth targets.
spk04: Yeah, I'll jump in on that one. And thanks for the question, Koji. I think the first short answer, and I'll expand on the answer, is yes, we still have conviction over our three-year model. We laid it out in a manner where this year we laid out 10%, now it's 10.7% growth rate on revenues, and we've overachieved that. And we knew, again, it would be a little bit of a slower start from the standpoint of the items I just talked about, from the fact we knew we were taking some steps with the workforce adjustment. We knew we were making some adjustments to comp plans. We knew a lot of it. And we've also, what we focused on on investor day, if you remember, we showed you NRR kind of historically and what it looks like going forward and that it doesn't have a huge macro return and that's still what we're factoring in. We do believe that's going to come at some point, so there's that. And then I talked about just a little bit ago about the security pipeline and we're starting to see that build and customers are having interest. And when I look at our bundles, again, that continues to have a lot of interest with customers. And one thing on our bundles that I should note, we continue to add a value there. We just released Jamf Routines. And Jamf Routines is something you only find within our bundle, and it automates certain workflows and integrates with certain collaboration tools, and it does help with a lot of customer issues. So those are the types of things you can expect. And we also, last comment I'd make on this, In my prepared remarks, I talked about the five areas that we were focused on from a sales and marketing perspective. And you see we have a clear plan of how we're going to check through those things. We've met the things we've outlined on our checklist from Investor Day so far this year. So when you take all those things together, yes, we have conviction around that plan.
spk10: Got it, Ian. Thank you so much. And maybe a follow-up for you, sir. I noticed the Q just came out, and I punched into our little spreadsheet here, the remaining performance obligations. And I did notice that on the RPO front, it declined sequentially just a tick. And I did notice that it happened last year in the first quarter, too. Just wanted to understand anything in particular about the dynamics of the first quarter in RPO that we need to understand. Thank you.
spk04: Yeah, good question. So on RPO and actually every first quarter, if you go back historically on all our first quarters, it's actually seasonality. It's always our slowest quarter. And so just as a reminder, Q1 is our slowest quarter. Q2 and Q3 are supported by our education business. And then Q3 and Q4 are heavier commercial businesses. As I talked about, we had a pretty good Q4, which pulled some deals forward. So I wouldn't read into that any farther than that.
spk09: It is what we generally expected. Got it. Thank you very much.
spk16: Your next question comes from the line of Raimo Lenzchao of Barclays. Your line is open.
spk21: Hey, this is Isaac on for Raimo. Thanks for taking the question. Security ARR came in pretty strong again this quarter. And I know you guys guided to 25% at the analyst day. How much upside do you see to that number versus what you initially guided? And how should we think about the shape of net new ARR there as we go through the remainder of the year?
spk09: I can jump in there.
spk04: So a couple of things. Yeah, I mean, we said we were going to achieve at least 25%. So we're above that, what we showed on our analysis slide that there was, you know, saying here's the things you should monitor throughout the year to show our success. We had 33% growth in Q4, 31% now. So it continues to bode well for us. And as we talked about it at Investor Day, you know, we are very focused on cross-sell. And that comes in three forms. That comes in the form of commercial security, education security, and then there's mobile. And mobile has been good, but just talking about security, I mean, some of the way we're thinking about our incentive plans focuses on the cross-sell, focuses on the security. And we are seeing customers ask more and more about that. It has just become a really good opportunity when customers customers see that you can consolidate on one platform, both your management and security. That has been voting well for us. And in the SMB side, since there's one economic buyer, that's been voting well. And we've been working with enterprises and we get, you know, a couple of those, you know, we get one of those once in a while here. And those are things that I think could accelerate if we see more of those come through. And I think, you know, just again, you know, buyers are sitting a little bit on the sideline, just nervous to make changes. But we are seeing this be successful in this economy when you consolidate. So those are the things I think could bode well for us and could help us continue along this path. John?
spk06: I'll just add that, you know, on the enterprise side, we have seen the security be successful, and particularly on the iOS side. And when you look at the retail and wholesale markets as the Deskos workflows, you know, it had become more and more prevalent. In those industries, we're seeing a lot more mobile security on that side as well. So we're seeing some really good traction there, and we're continuing to double down on it, as Ian said, really incentivizing our sales teams to promote that cross-sell and really lead with our trusted access opportunity, which our customers have really taken kindly to.
spk04: Yeah. One other thing I thought about was education, too. In the first quarter, we did actually see – a few extra deals in the education security piece. So we have seen some success and some green shows there as well.
spk21: Great. That's super helpful. Thanks. And then, Ian, maybe one more for you. If I think about the margin guidance, Q1 came in ahead of expectations and seems like Q2 is also slightly ahead. But the full year guide on margin stayed consistent. Is there anything we need to think about in Q3 and Q4 that You know, maybe there are reasons for that margin guide not moving incrementally up through the remainder of the year.
spk04: Yeah, I think you're talking about the margin percentage versus the dollars, right? And so the dollars did go up with consistent and actually slightly more than what our overachievement in the first quarter was. So we did pass that through and we actually brought it up. I think what you're asking is, hey, both are getting close to 15%. Your guide is 15% for the year. And what I would think about there is a couple things. What we talked about in Investor Day is two things. We're going to still continue to invest in growth and scalability, and those are continuing throughout the year. I listed in my prepared remarks today around the initiatives that we're spending on on the go-to-market side. We also still have the platform capabilities where we're continuing to optimize our platform, and we are focused on back-office automation. So I wouldn't adjust the spending for those long-term initiatives that make us more scalable.
spk02: Great. That's super helpful. Thank you.
spk16: Your next question comes from the line of Dan Bergstrom of RBC Capital Markets. Your line is now open.
spk11: Hey, it's Dan Bergstrom for MadHeadBerg. Thanks for taking our questions. It's nice to see the PC shipments return to growth following a couple years of declines in the gains for Apple. I guess, are there any additional observations you have from conversations with customers around refresh or anything otherwise here? I guess they'd remain prudent around hiring on expense still.
spk06: Yeah, Dan, this is John. I can take the question. You know, just ancillary discussions with our customer and the sales team as well. You know, we have seen a bit of elongated refresh cycle. I mean, the uncertainty in the market, you know, has caused some of that. Like I said before, we have seen some more interest and some more engagement, although sales cycles have still remained elongated. We also noted that it was a Wall Street Journal article that came out. IDC and both Gardner had identified that Apple's growth had been over 14, about 14.5% year-over-year in shipments. And while that bodes well for us, we don't track that on a quarter-by-quarter basis, but several quarters in a row certainly have an impact on the install base. And so Your assumption is right. We have seen a bit of elongated refresh cycles, both in the enterprise as well as in education, but we are seeing some of that loosen a bit.
spk11: Thanks, and I appreciate the additional color so far around security in the Q&A here. I guess on security and the go-to-market, where's the sales force here around security versus, say, a year ago? It sounds like there have been some adjustments on incentives, more focus on cross-sells. maybe any more color here or anything you're leaning into from a security perspective to start the year.
spk06: Yeah. Well, the sales teams have become much better versed in our security opportunity or our security offering. You remember, we had the management first, and then our customers asked us to extend into security, and we did that. And we have a pretty decent sales force, pretty sizable sales force, and they don't necessarily turn on a dime, but we're really seeing the traction that they're getting, especially when they lead with trusted access. And that being that management and security together, really being able to identify those things and then actually go ahead and remediate them through the device management product. And so those, you know, having the sales team better well-versed and leading with trusted access is gaining traction. And we've also taken more recent sales hires from the security space. So they bring a wealth of knowledge into the company and it helped cross-pollinate that to our other sales teams. You know, we did adjust the compensation plan early in the year and really to focus on ARR to make sure that those customers that we're making sure that we're retaining the customers that we have in an environment that we don't know when the PC shipments and all that will return. And in the The process of that, we really, what we needed to do more of is focus on the cross-sell. And we saw that in Q1, toward the end of Q1, we adjusted compensation. We're continuing that through Q2 and the rest of the year. And so that's had also some green shoots. And when Ian talked about our security pipeline, I think a lot of that is also a direct result of some of those changes that we made.
spk12: That's great. Thanks.
spk16: The next question comes from the line of Jake Robertsh. Off William Blair, your line is open.
spk19: Hey, thanks for taking the questions and congrats on the great results. Now, I'm curious, now that you've had a quarter or two following the acquisition and then subsequent divestiture of Workspace ONE, have you started to see any incremental opportunities get presented from customers that might be frustrated from the change of control? Just curious if there's any incremental opportunities or pipeline that's building from those deals this year.
spk06: Oh, absolutely, Jake. This is John again. I'll take this question. We certainly have. And the issue with that is because the acquisition went through of that competitor to a financial sponsor, we're not expecting, and we've said this before, we don't expect all of those deals to come in one quarter. They all have renewal cycles. And so we're engaged with a lot of those pretty much all of those customers, and when that renewal cycle is coming up and promoting our products. We've replaced tens of thousands of devices every quarter with that competitor, and we have a pretty healthy pipeline directed at that. And our advantage here is that we innovate at the pace of Apple, and our competitors have had some difficulty with that, especially when they're cross-platform. And then you kind of dilute the user experience down to the lowest common denominator and And so that's where we really excelled. And then you put that on top of having the perception of not innovating at the pace of Apple. Given the ownership structure, that is something that we've really taken advantage of and our salespeople have leaned into heavily.
spk19: Okay, very helpful. And then obviously great to see the 31% security ARR growth. You've had some really solid comments on the call about pipeline and then the go-to-market tweaks. you're making there. But given RSAs this week, I'm curious if there are any areas on the product side that you're looking to dig deeper into throughout the year and maybe opportunities that could be more upsell throughout the 2025 and 2026 timeframe that you're really digging into this year.
spk06: We certainly are. In all aspects, we've got a lot of opportunity in front of us with the security products that we have, but we also know there's other areas of security that we're leaning into as well. And we continue to be very acquisitive in looking at companies, particularly in the tech and talent side that are Apple first and Apple best. And that's something that we'll continue to do to enhance the feature set of our security products. But We're seeing that from our customers, and we're listening to our customers. The reason we went into security in the first place is because that's what our customers asked us to do, and we're following their lead and adding functionality to those security products. The other one I might mention, and I mentioned in the prepared remarks, is the Jamf Executive Threat Protection. That is done really, really well in that it becomes kind of a halo effect in that when you're speaking to a CISO, very high level in the organization about securing high-value targets, you're talking to the same person that can make decisions on Jamf Protect and Jamf Connect, so the connectivity, other parts of the organization. And so once they see the value of Jamf Executive Threat Protection, we have an opportunity to discuss other security products, and we've done that over and over again. So there again, we're seeing some nice green shoots.
spk08: Great. Thanks for taking my questions, and congrats again on the results.
spk09: Thanks.
spk16: Your next question comes from the line of Vinod Srinivas Saragavan from Mizuho. Your line is open.
spk03: Hey, guys. Thanks for taking my question. I just wanted to dig into NRR a little bit. Can you give us a sense of what the mix of upsells versus downsells versus churn was this quarter? And is this much different than what you saw in Q1 last year?
spk04: Yeah, thanks for the question. So it did decline from 108 to 107. And so when I look at Q4 to Q1, about 75% of that decline related to upsell. It continues the same macro customer spending effects continue to impact that. In this quarter, we saw in the trailing 12-month metric, or sorry, when I looked from Q4 to Q1, the other 25% did relate to lost logos. That did relate to that January extra churn that we saw. But again, February and March came back and actually was better than what we expected. And just a comparison point, because you asked Q1 of last year, when I look at that and the decline, 81% of that related to upsell, 14% related to downsell, and then 5% related to lost logo. So in our trailing 12 months, lost logo isn't really that big of an impact. And our competitors come and go, but we've seen them go for the time being. And we're excited about the things we're seeing in our pipeline and in our second quarter.
spk03: Okay, great. That's helpful. And then just in general, how did GM business plan do this quarter? And are you seeing, you know, just more momentum now as, you know, that's been out for a while now?
spk04: Yeah, we've had 63% year over year with the growth in our business plans, which includes enterprise plans. So it continues to be successful. It has been something our customers have been asking for. They see the benefits when you combine management and security together, not just from a cost perspective, but they know that things just work together. And I did mention routines a little bit earlier. You know, that's just something we had our spring release and we announced, you know, all the different things related to compliance. And then we also announced Routines, and Routines is a really interesting piece that's just available in Business Plan, and it is something that is going to, or helps automate workflows and helps with collaborative tools. So for example, if you see a device that you need to reset, well, this actually has an automated workflow for that, and it actually tells you through whatever tool you're using from a collaboration standpoint. So we see a lot of success there, and we're really excited about that. And again, when customers have both management and security, we see our churn improve on those customers because customer health is stronger.
spk03: Thanks, guys. Appreciate it.
spk16: There are no further questions from the line at this time. I will now turn the conference back over to Jennifer for the closing remarks.
spk15: Thank you all for joining us today. This is the end of the call. Have a good rest of your day. Thank you. Thank you. That concludes today's conference call.
spk16: Thank you all for joining. You may now disconnect.
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