Jamf Holding Corp.

Thank you for standing by and welcome to JAMP's third quarter 2024 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during this 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 Gamon, Vice President, Investor Relations.

Good afternoon, and thank you for joining today's call to discuss Jamf's third quarter 2024 financial results. Joining me on today's call are John Strozel, CEO, Ian Goodkind, outgoing CFO, and David Rudow, incoming CFO. Before we begin, a reminder that shortly after the market closed today, we issued a press release announcing our third quarter financial results. We also published our Q3 investor and earnings presentations, along with an 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 includes forward-looking statements, which involve risks and uncertainties that could cause actual results and trends to differ materially from our forecast. For more details, please refer to the risk factors and other information discussed in our most recent SEC report, including our most recent annual report on Form 10-K. Jamf assumes no obligation to update forward-looking statements, which speak only as of the date they are made. We will also reference some non-GAAP measures related to chance performance. Reconciliations to the nearest comparable GAAP measures are available in our earnings release. To facilitate a full Q&A, please limit yourself to one initial question and one follow-up. Now I'll turn the call over to John.

Thanks, Jen. Q3 was another quarter of strong performance, with revenue and non-GAAP operating income exceeding the high end of our outlook. Q3 year-over-year revenue growth was 12%, with subscription revenue representing 98% of the total. Non-GAAP operating income reached $27.7 million, representing a non-GAAP operating income margin of 17%, an 800 basis points improvement from the prior year period. ARR grew 12% year-over-year to $635 million, driven by our commercial business and continued demand for our security solutions. Our platform now supports 33.9 million devices and 76,000 customers. Due to our recent comprehensive systems update, we made a one-time adjustment to reset both our device and our customer counts. The adjustment includes items like updating MSPs to count as a single customer each. In addition, we recognize revenue for certain licenses that mirrors the expected life of the device or expected usage of the product. Some customers with these licenses are extending the usage of devices past the revenue recognition period. Therefore, as we are no longer recognizing revenues for these licenses, we have removed them from our device and customer accounts. Excluding these adjustments, device ads would be similar to Q2 and customer ads would be similar to Q1. 42% of our customers run both a Jamf management and security solution, up from 41% in Q2. Security ARR reached another milestone, surpassing $150 million of ARR in Q3. We ended Q3 with security ARR of $152 million, representing growth of 26%. Security represented 24% of Jamf's total ARR in Q3, up from 23% in Q2. This growth was driven primarily by demand for Jamf Business Plan, which saw its largest customer increase in the history of the bundles. Demand remains strong across a diverse set of industries despite tight customer budgets and extensive approval processes. We're encouraged by growth again in three of our top five industries, professional services, financial services, and retail, while we continue to see muted growth in tech and K-12. PC shipment reports showed slightly overall industry declines in Q3, following two quarters of growth. Mac shipment data was mixed, with IDC showing a decline and Gartner showing growth in Q3. When looking at year-to-date shipments, Apple shipments remained flat. Despite the slowness in the PC market, industry analysts expect a recovery fueled by demand for AI PCs and the end of Windows 10 support in late 2025. Shipment data and quarterly fluctuations therein do not directly impact our business and are more of a barometer for the health of the industry. This is even more true in the mobile space due to the large number of overall devices currently in the market that are unmanaged or undermanaged. I'm especially proud of our strong performance this quarter given the recent go-live of our comprehensive system update, which will enhance both the customer and partner experience. This is a key milestone for our scalability and efficiency initiatives to drive future growth and margin expansion. We also launched our Jamf Partner Hub, and new partner program which will drive more business through our channel partners, increasing the efficiency of our go-to-market organization. We recently brought on a new channel leader to execute our strategy, focusing on ecosystem growth and removing friction from the sales process. In Q3, we entered into two strategic agreements with key partners to help drive additional value for customers. First, a five-year agreement as part of the Microsoft ISV Partner Program, expanding our existing collaboration with Microsoft with new and innovative Microsoft Cloud and AI-powered solutions for our joint customers. Jamf Solutions will be hosted on Azure and available for purchase on the Azure Marketplace by late 2024. Second, we joined the Okta Elevate Partner Program to drive further go-to-market alignment and accelerate our product innovation between our two companies. This partnership will enhance our cloud identity solutions for Apple devices, providing a seamless, secure login experience for shared customers. We're excited to see the benefits of these initiatives to our business as we continue to progress toward our goal of achieving the Rule of 40, as outlined in our Investor Day. We capped off a busy Q3 with our premier customer event, the 15th Annual Jamf Nation User Conference, or JNUC. Under the theme Go Further, we highlighted innovations making management and security simpler for Apple-driven teams. Key announcements included enhancements to compliance features, our new AI assistant, and insights from partners like Apple. We also hosted an investor product session led by our Chief Innovation Officer, Jason Woody, showcasing our latest innovations and how each drives value for our key buyer personas, which are Mac Enterprise, Enterprise Mobile, SMB, and K-12. Moving forward, we will be focusing on these buyer personas as we refine our go-to-market approach. For the remainder of my remarks, I'd like to use the strategic growth drivers we discussed during our investor day, MAC leadership, mobile expansion, management plus security, and international expansion to highlight some of the successes we saw in Q3. In MAC leadership, we continue to demonstrate our ability to support MAC in any business setting, a clinical healthcare company that leverages AI to automate their patient journey, recently expanded from Jamf Pro to Jamf Business Plan, adding nearly 1,000 devices. The company is a longtime Jamf customer who previously utilized Jamf Pro through an MSP, but has now moved IT entirely in-house. Key to this win was our ability to demonstrate the value of our trusted access platform for a seamless user experience and vendor consolidation. Second, mobile expansion. saw a number of large deals in Q3 with seven of the top 10, including a mobile component. Our largest deal was one of the world's largest biotech companies that expanded with Jamf for their 30,000 iOS devices. Customers are not only expanding with mobile for their desk-bound workers, but also in the deskless space. Jamf's deskless workflows continue to provide unique solutions for use cases across transportation, healthcare, and many other industries. We believe the deskless opportunity is significant and will continue to grow as companies look to manage and secure all devices in their fleet, regardless of location. In Q3, we saw a number of customers in the emergency care space choose Jamf. A US-based air ambulance service provider was struggling with iPads updating mid-flight, creating safety issues along with slow performance and decreased reliability of their solution. An upcoming device refresh gave our team the opportunity to showcase Jamf Pro as well as introduce our new mobile security SKU. This new SKU is the perfect solution, providing a cost-effective way to solve these pain points. We've seen great traction with this solution since its launch in August. The power of and, management and security, delivered seamlessly on one platform, continues to resonate with our customers as they heighten their security posture and look for ways to reduce overall vendor spend. The number of deals we saw with both a management and security component continues to grow, with 16 of our top 20 deals in Q3 including a security component. Currently, approximately 40% of our overall commercial pipeline is made up of security opportunities. Investments in strategic geographies with growing Apple adoption is a key area of focus, given the growth opportunities we see outside the United States. In Q3, a leading public IT service provider in Germany serving over 270 schools purchased 18,500 seats of Jamf Safe Internet after facing a youth protection case when a student accessed a violent website from a home network. Our teams were able to provide a long-term solution that not only covered the customer's immediate issue, but equipped them with a solution to potentially deploy across their entire customer set. In Q3, a military organization purchased Jamf Executive Threat Protections. for its executives and VIPs in an effort to improve their security posture and reduce administrative workload. As a reminder, JetP is a one-of-a-kind solution that provides deep analysis of mobile security threats that's easy to use, scalable, and privacy-centric, and it looks for indicators of attacks as well as indicators for compromise in mobile devices. JetP opens up additional opportunities for Jamf with high-profile global organizations and further cements Jamf as a leader in security. Before I hand it over to Ian, I'd like to thank him for his contributions over the last five years and wish him the best. I'd also like to welcome David Rudow as our new CFO. David will say a few words at the end of our prepared remarks.