Q4 2020 Jamf Holding Corp Earnings Call
Ladies and gentlemen, thank you for standing by and welcome to the <unk> fourth quarter 2020 earnings call.
At this time all participants are in a listen only mode.
After the speaker presentation, there will be a question and answer session to ask a question. During the session you will need to press star one on your Touchtone telephone.
Please be advised that today's conference may be recorded CAGR.
Require any further assistance please press star zero.
I'd now like to hand, the conference over to your host VP Investor Relations, Jennifer Gaumond Madam you may begin.
Good afternoon, and thank you for joining us on today's conference call to discuss the Champs fourth quarter and full year 2020 financial results.
With me on today's call are deemed Hager, Chief Executive Officer, and Jill Putman, Chief Financial Officer.
Before we begin I'd like to remind you that shortly after the market close today, we issued a press release announcing our fourth quarter and full year 2020 financial results. Additionally.
Additionally, we published an updated investor presentation, and an excel file containing quarterly financial statements for fiscal years, 2019, and 2020 to assist with modeling.
You may access this information on the Investor Relations section of <unk> Dot com.
Today's discussion May include forward looking statements. Please refer to our most recent SEC filings, 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 of non-GAAP measures related to Gm's performance you can find the reconciliation of those measures to the nearest comparable GAAP measures in our quarterly financial statements.
Additionally to ensure we can address as many analyst questions as possible during the call. We ask that you. Please limit your questions to one initial question and one follow up now I'd like to turn the call over to Dean CAGR Dean.
Okay.
Thank you Jennifer and thank you to everyone for joining us on today's call I will share highlights from the fourth quarter and fiscal year as well as provide an update on the exciting momentum in our business for 2021, Joe will then review our fourth quarter and fiscal 2020 financial results and provide our.
The initial outlook for fiscal 2021.
For the fourth quarter and full fiscal year, we again showed excellent growth with strong performance across all aspects of our business driven by continued benefits from trends in remote work education technology and telehealth. Despite macroeconomic challenges as a result of the pandemic.
Total revenue in the fourth quarter grew 34% year over year to $76 $4 million driven by recurring revenue growth of 40% year over year to $70 million or 92% of total revenues.
Full year revenue grew 32% to $269 $5 million with recurring revenue also representing 92% of total revenue.
We ended 2020 with annual recurring revenue or <unk> of $285 3 million representing year over year of growth of 37%.
Non-GAAP operating income was $3 million in the quarter or 4% of revenue. This was a five point increase over the fourth quarter of 2019.
For the fiscal year non-GAAP operating income was $34 million, representing a margin of 11%.
Unlevered free cash flow totaled $19 $1 million in the fourth quarter, representing an unlevered free cash flow margin of 25%. This compares with a margin of 18% per fourth quarter 2019.
And full year Unlevered free cash flow was $66 $2 million.
Our exceptional performance with capped off by reaching our five year goal of powering 20 million Apple devices by the end of 2020.
Coming into the year 2015, Jampolis 13 years old and managing less than 4 million devices for approximately 5000 customers that year as the enterprise saw a growing number of professionals demanding to use Apple at work. We set this aggressive goal to empower the new workforce through on.
Our mission to help organizations succeed with Apple we are proud to have achieved this milestone by running on 24 million Apple devices across more than 47000 customers at the end of 2020.
Part of the reason we were able to achieve this goal was our ability to maintain the pace of customer wins throughout 2020, despite the uncertainty created by the pandemic.
2020 was a year like no other where digital transformations of that were once the visionary are now necessary and we will continue even after the pandemic ends like zero touch deployment for at home employees teachers, embracing education technology and remote patient care.
Specifically, we believe in many third party research firms would agree that the remote work trend, which was ignited in 2020 is here to stay in the spring growth of Apple at work across the Apple ecosystem, but in particular with the Mac.
During 2020, and especially in the fourth quarter, we saw much evidence of this.
In addition to Apple reporting strong growth per the math over the past several quarters IDC reported PC sales growth in Q4 with the largest growth for Apple Mac at an incredible 49, 2%.
The momentum of Apple at work also led IDC to publish their first ever market Scape report for unified endpoint management for Apple devices in which <unk> was included as the clear leader in both capabilities and strategies.
Also in this report IDC cites debt Apple map penetration in the U S enterprises of greater than 1000 employees grew from 17% in 2019% to 23% in 2020, an increase of six points of just one year.
This data is further validated by staff count on an organization that tracks Internet usage by operating system and device type.
At the end of December the Statcounter data shows that the mass accounts for approximately 30% of Internet page views in the U S from desktop and laptop computers compared to 61% per windows.
This represents a six point increase per the Mac over 2019, and a dramatic change over the past decade.
Across these datasets the story remains the same.
<unk> penetration in the enterprise is growing exceptionally fast.
We believe this momentum will continue as working from home accelerates the consumer <unk> of.
The need for zero touch device deployments and support and decisions by companies to invest more in improving the environment for employees versus expanding their facilities. After all when working from home. The experience is the employee experience.
One example of this trend as HSBC, one of the world's largest banking and financial services organizations working closely with Apple and Jam HSBC launched a new program in the fourth quarter that empowers employees to choose Mac globally as their primary work computer this was accomplished by developing.
A zero touch procurement configuration and deployment of experience such that employees could order and receive our corporate laptop at home the.
This process allowed HSBC to efficiently upgrade devices for employees working from home and reduced deployment cost.
Additionally, this project was completed during a very busy period for Hsbc's IP Department since Covid force, 98% of their employees to shift to remote working.
<unk> the employees supporting this project.
The zero touch process can also be used on Max with the new M. One chip for improved performance and an even lower price. This is expected to drive demand from employees, even further which has already exceeded expectations.
At <unk>, we feel projects like HSBC are indicative of a growing movement to supply employees with technology choice.
Further we believe the power efficiency and speed of the M. One map will make it a popular choice for the current and next generation of employees.
Availability also showcases the importance of deploying that with jams Apple Enterprise management platform. As we were same day ready for all of the new Apple operating systems, including Mac OS Big sur and the M. One chip that were released in Q4, something many cross platform solution providers.
Unable to do.
Another example of an organization responding to at home needs is shipped a company founded on the mission to simplify the lives through delivery of groceries and everyday essentials.
In 2020, Covid fueled an increase in demand for ships services, resulting in the need to build their team rapidly.
<unk> turned to jam to help implement their remote workforce efficiently and better meet their security needs with tools built from Mac OS in the fourth quarter shipped licensed over 1000 users of <unk> business plan, which was launched to new customers in October to increase the <unk> product adoption.
And simplify the customer purchasing purchasing process the.
Bundle includes jumped pro Jeff protect and Jeff connect across all Apple devices.
In addition to shipped approximately 100 other new customers chose jam business plan during the fourth quarter its first quarter of availability the.
The success has led jumped to expand the offering to include all existing customers globally in February of this year.
Shifting from remote work requirements to unique organization challenges.
<unk> industries have been impacted more by Covid, then the airline industry.
Bill in Q4, Cathay Pacific Airways headquartered in Hong Kong selected jams, Apple Enterprise management platform to replace their legacy MDM solution for 5000 ipads to be used for several airlines specific workflows in.
Including electronic flight bags and cockpit in flight services in the cabins and aircraft maintenance on the ground.
Our solutions jumped setup and reset for which we were granted a U S patent in the fourth quarter were integral components in order to provide shared yet personalized deployment of these ipads.
This unique workflow led to Cathay Pacific switching to jam in the middle of a global pandemic that was significantly impacting their business.
Jeff was also granted a U S patent in Q4 for our new health care solution virtual visits, which we launched shortly after the pandemic began last spring.
James virtual visit solution allows patients to seamlessly and securely connect with doctors and their families through third party video meeting platforms like zoom and Microsoft teams without the assistance.
Starting in November of this solution along with the <unk> setup and Jam preset was used to rollout of 11000 ipads to 9000 care homes across England by the National Health service, the Uk's public health system.
Care homes can now utilize shared ipads between care home staff and residents, allowing care staff to easily communicate with each other and to support residents with virtual visits to seamlessly and securely connect with their doctors and hold long overdue calls with family members during the holiday season.
Who many residents had not seen from nearly a year.
Additionally, a number of NHS hospitals in central London are utilizing our virtual visit solution in neonatal intensive care units to securely connect newborns to parents, who are unable to be at hospitals, allowing the parent child bonding process.
To continue despite COVID-19 restrictions.
One on the NHS as key reasons for choosing US was our unique solution that can be utilized across multiple workflows throughout NHS jansa ability to deliver technology in new and innovative ways continues to lead hospitals and other of care facilities to look to jump over legacy MDM solutions as they navigate their.
Ever evolving healthcare technology landscape.
<unk> unique ability to enhance the industry specific workflows also has positively impacted business in our education market, where jam solutions Foster teacher monitoring and control student engagement and parental guidance to help focus students on their studies, both at home and in the classroom.
In Q4 growth in the education market continued well beyond the traditional buying season per schools in part driven by government funded programs across the globe like Japan, The Giga project and Germany's digital pack project and cares Act funding in the United States.
The Giga School project in Japan, as the government funded initiatives provide at least one device to every one of the 9 million elementary and junior High school students in Japan.
Originally planned to be implemented over a five year period. The project was accelerated due to the pandemic.
<unk> partnered with the Apple education team and Apple reseller in Japan, Kokomo to build a robust sales effort for iPad by the end of 2020 over 100 boards of education of Japan implemented ipads with channel.
Including the Yokohama City, Japan's largest board of education.
In 2021, we plan to continue empowering teachers and students with ipads and jump in schools throughout Japan as the gig of project shifts its focus to nearly 3 million high school students.
In Germany, historically, many schools haven't used technology in the classroom and as such some German schools struggled to continue lessons for their students at the beginning of the lockdown.
The German government stepped in last April and dedicated nearly 500 million euro to help support students teachers and education institutions.
This funding priority was to ensure underprivileged students and communities throughout Germany could purchase the technology they needed to succeed in the distance learning environment. This funding was in addition to a longer term 7 billion Euro digital path on aim to improve digital infrastructure for schools.
One beneficiary of this funding with the city of Bremen, who in Q4 ordered approximately 100000 ipads all managed by jam for each student to have their very own.
Thanks to the success students and teachers had in 2020 with their new ipads and adapting to of distance learning environment. The German government will continue the funding into 2021 to ensure these schools remains successful.
Here in America. The education market was also supported with the initial cares Act funding last spring.
The schools were able to use this funding to establish or grow their apple footprint for students in Q4, the Mississippi Department of Education was able to use cares act funding to further on initiative to create digital equity for students.
With a large number of students across the state residing in underserved or impoverished areas. The state took the opportunity to use these funds to bring more Mississippi districts and students to technology parity with other schools across the country. Nearly 9000 ipads were rolled out to students along with hot spots for those without <unk>.
The Internet access, bringing the total devices managed by June of two approximately 55000.
Momentum in the U S education is continuing into 2021 fueled further by of New Education Emergency Relief Fund announced in December which also includes funding for higher education to help serve students and ensure learning continues.
In total in 2020 Jam helped empower millions of students globally with new ipads and Macs to help them complete their studies, despite an incredibly challenging environment. We believe one positive debt has come out of 2020 and continues in 2021 is the incredible supply of <unk>.
<unk> technology provided to teachers and students that enhance student engagement with mass personalized an act of learning curriculum, whether the students are at home or in the classroom.
For all of these industries and organization.
<unk> accelerates the Apple at work and Apple in school movements, we continue to invest in innovation that extends our leadership position and fulfills our mission to help organizations succeed with Apple.
We are pleased with the momentum of our newer add on products, specifically jam connect and Jeff protect our meeting the growing needs of companies to remotely and securely connect employees from their homes in 2020, we added over 900 jam connect customers with over 350 in Q4 alone.
And in the first full year of availability Jam protect was selected by over 400 organizations. In 2000 2200 in Q4 alone the momentum of both products is accelerating as we enter 2021.
As we look across our business in 2020 jumped shows remarkable balance of momentum in every category. For example, our 2020 our year over year growth for every one of our price products was at least 25% of.
Additionally, our <unk> growth in all three major geographic regions Americas, EMEA and APAC was also at least 25% in each geography.
And when examining the top 10 industries <unk> search.
Our growth year over year was again at least 25% in all 10.
With any strategy some initiatives on more successful than others. We are very proud of the chance to finish 2020 with tremendous consistent high growth across every product geography, and the top industries we serve.
As we look the 2021, we believe these trends in a remote work education technology, and telehealth will continued to strengthen our value to customers as well as our business results. Additionally, we're energized by recent industry reports, which validate the momentum of Apple on the enterprise. We believe we are best positioned.
To help organizations succeed with Apple through leveraging technology in new and innovative ways.
We remain a customer first organization dedicated to our customer success by continued investment in new features and enhancements that fulfill our mission to help organizations succeed with Apple we continue to innovate at the pace of Apple supporting New operating systems and hardware on the same day, it's released.
We continue to bring new innovations to market in order to further enhance the depth and breadth of our Apple Enterprise management platform as evidenced by recent announcements to jump school and Jeff protest as well as the recent acquisition of the technical assets of CMV security and Apple Macs specific security and compliance.
<unk>.
We've built the largest Apple management community and the World, Jeff Nation, providing greater access to Apple enterprise experts, which serve as a cloud source of support community.
We continue to remove friction for our customers and sales implementation and support we have a remarkably well balanced portfolio with no one industry product or geography, driving our overall financial performance and we're committed to maintaining our outstanding culture, and providing an environment where employees enjoyed the freedom to.
Their authentic selves. This is evidenced by our certification as a great place to work as well as 96 per cent of our employees, indicating they are proud to work at June.
In closing I could not be more proud of our team and what we've accomplished we've built a fantastic group of passionate committed and bright people, who continued to deliver despite numerous challenges this year.
We're excited for what's to come in 2021, and we continue to live our values and fulfill our mission to help organizations succeed with Apple.
Now Joe will walk you through our financial results and guidance Joe.
Thanks, Dan and thanks to everyone for joining us today.
As Dean mentioned, we saw continued momentum in our business in the fourth quarter.
Total revenue for the fourth quarter was $76 $4 million growing 34% euro per year.
Recurring revenue was $70 million in the fourth quarter, an increase of 40% year over year and accounted for 92% of our total revenue versus 88% in the fourth quarter last year.
Total IRR as of December 31st with $285.3 million, an increase of 37% year over year. This is driven by greater than 25% growth across every product.
You can see on each of our top 10 industry with the.
The strength in our international business with a IRR growing over 50% year over year.
As a reminder.
<unk> represents the annualized value of all subscription and support and maintenance contracts as of the end of the period.
Our our mitigate fluctuations due to seasonality contract term on the sales mix of subscriptions for term based licenses.
Yeah.
The three primary drivers of our growth.
First our consistently high device expansion rate.
Our strong new logo acquisition and third the Upselling and cross selling of products into our installed base.
We expect to continue benefiting from the trends going forward.
We ended the fiscal year of 24 million devices on our platform, representing 30% year over year growth as it continued to realize the strength in both the education and commercial verticals and all the geographies.
As Dan mentioned this represented <unk> of an aggressive goal we set in 2015, when we had less than 4 million devices on our platform.
Through our devices by more than $4 million in this year alone.
Our ability to grow the number of devices on our software platform will continue to be a key indicator of our growth and trajectory.
We have a history of attracting new customers and growing their annual spend with us over time, which drives our high dollar based net retention rate.
Accomplish this by adding devices to our platform expanding our customers' adoption of add on products.
Our dollar based net retention rate remains strong at 117% for the true.
Mailing 12 months ended December 31 2020.
The remainder of my remarks on margin expense items and profitability will be on it.
Non-GAAP basis.
Our GAAP financial results along with the reconciliation between GAAP and non-GAAP are found in our earnings release.
Gross profit was $62 $7 million or <unk> 82 per cent compared to 78% in the prior year quarter.
One of the most recent quarters gross profit margins benefited from the impact of Covid.
The gross margin to increase slightly over time, when compared to the rates, we delivered prior to the impact of Covid.
Recurring revenue becomes a larger proportion of revenue and as the increase the average <unk> per device.
With the that's the operating expenses, we remain focused on improving the leverage of our business, while balancing investments for growth.
After from Covid related delays in the second quarter, we pulled those earlier planned investments into the fourth quarter by continuing to invest in our go to market activities.
The preparations for our Workspaces book in the office and at home in response to Covid.
And execute on our original 2020 hiring plan.
In 2020, the grew our head count by 322 to nearly 1500 employees with 262 employees on boarded remotely since the start of the pandemic utilizing the same solutions our customers did.
The Testament to the power of Jam, coupled with Apple technology.
Additionally, we of incremental expense related to being a public company.
Total operating expense for Q4 was $59 7 million compared to $45 $2 million on Q4 last year.
Our operating income in the fourth quarter, it was $3 million compared to the loss of $800000 in Q4 last year.
Operating margin of 4%, representing a five point increase compared to the same period last year.
Reflecting improved gross margin and R&D efficiency, partially offset the investments required to be of public company.
During the fourth quarter of 2020, our annual effective tax rate was impacted by changes in valuation allowances and foreign currency exchange rates.
The annual effective tax rate for Q4 was 15, 4%.
Our basic average share count was $116 6 million and on diluted average share count was $121 million per the quarter as compared to $102 8 million for both metrics in the fourth quarter of 2019.
Unlevered free cash flow was $19 $1 million from Q4 compared to $10 $4 million for Q4 2019.
Fourth quarter Unlevered free cash flow represented 25% margin up from 18% in a year ago.
Our operating model of high growth and improving efficiency continues to yield strong cash flow generation and allows us to continue to make investments for growth.
We ended the fourth quarter with $194 9 million and cash on cash equivalent.
I'll quickly touch on a few of full year 2020 highlights.
Fiscal 2020, total revenue was $269 $5 million, representing 32% year over year growth.
Full year of recurring revenue as a percentage of total revenue was 92% and grew 42% year over year.
Gross margin for fiscal 2020 was 82%.
Total operating expenses were $189 $8 million.
Operating income was $34 million, representing a margin of 11% CAGR.
The annual effective tax rate was 17, 3%.
Unlevered free cash flow of $66 $2 million of margin of 25 per cent.
Before I discuss fiscal 2021 guidance I wanted to make you aware of the change in presentation. Many of our income statement.
We reclassified on subscription revenue.
Revenue from license revenue to subscription revenue, which is consistent with or just the aggregated revenue disclosure that was previously shown in the footnotes to the financial statements.
And how we evaluate overall recurring subscription revenue.
Now I'll provide our initial thoughts on guidance for the first quarter and full year 2021.
Given our performance in fiscal 2020 and continued momentum in our business from emerging trend accelerated by the pandemic.
We expect our strong performance to continue to build.
The timing of the pandemic trying the benefits will differ from the prior year with the first half of fiscal 2021 benefiting from continued strength in education, what sort of a stronger than typical impact in the first half of the year.
This will be balance the increasing strength in our commercial business in the second half of the year as the economy improves and enterprise hiring rebound.
Overarching these trends and the continued uncertainty related to the pandemic and its impact on the spending environment.
Beginning of the third quarter planned updates to how we deliver our channel connect product will result in a change in revenue recognition with less revenue recognized upfront as on premise of subscription revenue as it will now be recognized ratably over the term of the subscription in line with the majority of our revenue.
Well there is no impact or do you anticipate this change will defer approximately $9 million in the second half of the ear into future quarters.
Our full year revenue growth by approximately three percentage points.
Given these considerations for the first quarter of 2021, we expect total revenue in the range of 76 million to $77 million representing growth of 26% to 27% year over year.
Non-GAAP operating income in the range of 6 million to $7 million.
For the full year 2021.
Total revenue in the range of 330 million to $336 million, representing growth of 23% to 25% year over year.
Non-GAAP operating income in the range of 27 million to $31 million.
Additionally for modeling purposes, we are providing the following information.
We expect the annual effective tax rate to be less than 5%, which would also be used in calculating tax effects of non-GAAP adjustments.
This annual effective tax rate is impacted by the establishment of the valuation allowance during 2021.
In addition, we did not pay cash taxes on the U S federal basis.
The calculating EPS.
Basic and diluted weighted average shares outstanding to the approximately $117 3 million and $126 million, respectively for the first quarter of 2021 for the <unk>.
Full year, we expect the basic and diluted weighted average shares outstanding to be approximately $117 $5 million on $121 6 million respectively.
And clothing accessories adults in the fourth quarter capped off a remarkable year for Jim.
We expect continued strong performance in 2021, and we look forward to sharing our progress with you.
With that Dean and I will take your questions.
Operator.
Thank you as a reminder to ask a question you will need to press star one on your Touchstone telephone.
To withdraw your question press the pound key.
Please standby, while we compile the Q&A roster.
Our first question.
Comes from the line of Sterling Auty of J P. Morgan Your question. Please.
Yeah. Thanks, Hi, guys wanted to start off with the question around the mix of devices that you saw in the quarter you made a number of comments around kind of the new chip in on the Max platform wondering if youre seeing any changes in that mix and what you're expecting here for 2021.
Yeah. Thanks for the question Sterling.
Regarding the overall on across the Apple devices, whether it be of math.
IPad iPhone, even apple Tvs of rigs.
Growing across the board.
And definitely the emergence of the new Mac is we see as the increasing demands of the map that's out there.
But our fastest growing apps or devices by count our iOS devices on iphones and ipads and that is largely driven we believe on not only of course by the demand of those devices.
Because of our strong presence in the map out there on commercial markets, especially on.
<unk>.
Customers already have great experience with us and they see the benefit of being able to run all of their apple devices into one system. So the strength of what we have on the map is actually creating much of the growth from we're seeing on the ILS fund.
That makes sense and maybe one follow up would be you know.
Contemplate the possibility of of five G rolling into the iPad platform knock on wood, hopefully with the iPad throw here.
What opportunity by that bring to see that platform drive further adoption in the enterprise, specifically and maybe even the education and what might you do if anything to your pricing.
Oh gosh regarding the demand of the device itself I mean, we would see five G is only being good news.
Being always connected is certainly a benefit for anybody who is at work in particular, obviously with very rapid speed.
But youre right that you should also keep an eye on education historically.
Ipads deployed in education, where all of you know Wifi only ipads, but what this last year of has taught US is we cannot assume that people are going to have Wi Fi set up in their home and with the speed the five G promises.
An iPad with.
Cellular connection is the best way to ensure a rapid connection into school or work.
Got it thank you.
Sure thing.
Thank you. Our next question comes from the line of Raimo <unk> of Barclays. Please go ahead.
Can you just double click a little bit on the international success in terms of the 50% of your Agra was certainly very very strong.
Can you.
Elaborate a little bit in terms of the educational programs. You saw you mentioned, Germany, Japan like where are we in the lifecycle. There and then maybe some of the drivers for the strength of them. Thank you.
Thanks for the question Raimo, Yes, we're very pleased with the international growth that we saw really for the year and of course, the especially in the quarter.
As we mentioned we grew rapidly across all of our geographic regions all of our project products and also our top 10 industries.
But without a doubt the.
The education growth of.
Probably.
Over achieved more than any other industry and that was the especially so internationally in the two countries that you mentioned, specifically, Japan and Germany. Those programs. The digital program and also the Giga program in Japan. They were not created specifically for the pandemic of.
Matter of fact, they were something that were announced pre pandemic.
The multi year initiative within those countries. So what ended up happening is the pandemic simply accelerated the.
Moving so theres still a lot of work to be done there is still a lot of students that don't have devices in their hands. So we're even seeing that roll into 2021, as well and as we mentioned in our prepared remarks for Japan, specifically the initial funding was for our primary schools and also.
The Middle School age kids, whereas this upcoming year is when the funding is being added for the high school age students.
Perfect. Thank you very much.
Congrats.
Thanks.
Thank you. Our next question comes from Greg Moscowitz of Mizuho. Your question. Please.
Okay. Thank you very much and good afternoon, guys very nice quarter.
From my first question.
This is our second consecutive quarter I believe where you set a record in terms of new devices under management and it is also tracking at levels that are up more than two X. So on.
On a year over year basis. So when you look at this type of activity.
Tend to think of this as more of a new normal or more of a temporary surge in response to the pandemic.
Well I mean, that's a great question and it really differs a little bit by industry, what we've been mentioning all year long is that the.
Three trends that we've seen a create some tailwind in business has been the trend around remote work.
On the trend around of virtual or telehealth.
And then the trend around our distance learning.
I would say for the year and I've mentioned this in prior calls as well.
That when you have the headwinds and tailwind space each other that it's been more tailwind than headwind in education.
Health care, it's been a balance I think we had about the year, we would have expected to have which was high growth.
In the other commercial markets, we believe that it's actually been a little bit more headwind and tailwind and as <unk>.
Joe mentioned in her remarks.
When the hiring.
Really starts to ignite, which we're expecting to have happen towards the end of 2021.
We see that that will.
Some of those headwinds that we've seen in the commercial markets will subside, but still even with the macro economic headwinds that we've seen the trend for remote work.
We don't believe that that is that's the new normal in our view not everybody will be working from home, but without a doubt organizations are going to view that they're going to have to on a remote workforce more than ever before and that's just something that is all.
Well designed for Apple and well designed for James.
Alright, that's great perspective, Thanks, Dean and then just I wanted to ask as well just about the channel business plan, obviously off to a strong start over 100 wins in the Q4.
How are you thinking about penetration rates of the business plan over the long term in other words, you know roughly what percentage of your customer base do you think represents viable candidates for this plant.
Oh, Yes, we were very pleased with our 100 <unk>.
My 100 customers in Q4, especially since we only offered it to new customers. We did not offer at the current customers in Q4 in February we launched it as a.
Upgrade path.
For the current customers as well so we expect to see an uptick in 2021.
Overall in terms of penetration within our customer base right now as the name would suggest it fits the commercial businesses more so than the education side. So right of way I would say that it would be our commercial businesses that would be potential candidates for the solution.
And frankly, we don't think there's anybody outside of.
The market in terms of making sense for jam business plan. It is the solution that would make sense for any of our commercial customers.
Alright terrific thanks very much.
Okay.
Thank you. Our next question comes from book on Suri of William Blair. Please go ahead.
Hi, Deane and team let me Echo my Congrats just a just a great job there. So that's awesome I wanted to touch quickly on.
The investment priorities when you look at what you've introduced.
Connect protect school, you've got the full enterprise management stack, how are you thinking about the development roadmap going forward. There's obviously apple keeps doing stuff. So you have to keep doing stuff to make sure all of that works, but as you think about sort of material potential extension of the platform, where do you think the next kind of most potential to add incremental value for customers.
Well, we obviously have made some recent moves thanks for the question by the way we've made some recent moves specifically in application lifecycle management with the acquisition of my daughter last fall and we're just getting started with the potential of that solution.
Saw an acquisition that we announced actually just a few days ago of the assets of the <unk>.
CMT security our CMT reporter, we believe that that is going to build out out of our security solution on as well and again, we're just getting started with the potential of that so I would suggest that around apps and app of lifecycle management and security expansion would.
The two of the biggest areas of expansion on which we've already started but then in addition to that.
We always have on eye on continuing to build value added workflows around industries like we already have with education of gym teacher jumped student jumped parent and then also the workflows that we built out for health care.
With on a virtual visits and patient bedside. You recently saw an announcement that we had as well in partnership with truth to build out of value added workflow for worker safety. So it's one of the things that we do industry by industry looking for how we can improve the workflow, which then inspire is greater.
Device of expansion.
Gotcha Gotcha Gotcha, I think the security piece and Youre really really interesting too overtime, Jill Dean talked about sort of the puts and takes I think they are starting the question Covid on.
Or maybe it's the Ramius I forget, but the puts and takes the tailwind headwinds et cetera. If we were to apply that to net dollar retention rates. How would you think about the puts and takes there and how do you think about the trajectory of that metric, especially as we look beyond COVID-19.
Yeah, Hey, great to hear from you guys today.
Probably a little bit more of a net.
I'm not sure which way the put and take goes that we probably saw a little bit of.
Trying to hit.
Sure.
As the commercial budgets had some tightening in the year, whereas the education had the funding so it got a little bit of a flip flop on what those rates. It normally have looked like in the quarter. The when we think about going forward.
We think about the fact that our net retention rate, it's really predominantly the expansion comes from device expansion rate and as the industry studies show in the the the Tam that's out there Apple is still just on the front edge of gaining penetration in the enterprise.
Starting to see significant uptick on Apple adoption in the enterprise device expansion as Dean referred to you know inspiring device expansion of some of the strategic workflows that we're partnering partnering with our customers and providers to provide as well. So we are pretty comfortable that we'll maintain if not improve.
The PON or existing retention rate.
That's great great. Thanks for the candor on the color guys and congrats.
Thank you. Our next question comes from Rod Hall of the Goldman Sachs. Your question. Please.
Yeah. Thanks for the question I wanted to ask you Deane first of all if you've seen any.
You think impact of your business by the way good numbers.
But any impact of the business from supply constraints, we know the day, one Mac was supply constrained headed into the back of the year probably at the beginning of the year and then we know ipads or severely supply constraints. So just curious if that had any impact on I have a follow up for Joe.
Thanks, Ryan Great question, and I'll tell you what over the last year, we frequently would get together and talk about the potential of seeing a.
The business issue from the constraint in supply and there were times where.
We thought that might be the case, but then I never proved out.
I can't really think of of material situation over the course of the last year, where the supply problem ended up causing us issues.
If anything we saw some interest in Apple specifically, because apple was able to provide the supply that was needed.
Some other alternative vendors. So we're really pleased with that they did on the year and it did not negatively impact of our business.
Okay, that's great and then.
Joe I wanted to ask you the the guidance range for the year.
Wider than last year for obvious reasons tough year to predict but I'm. Just curious if you could dig into the the revenue range and maybe what would characterize performance at the higher end of the range what would characterize the performance at the bottom end of the range within your forecast like what sorts of differences on assumptions would you make at each end of that range.
Yes.
Yeah, so when we set our guidance.
The strength of our air or is he came out of 2020 made assumptions around.
Our expansion you know new bookings as well as churn assumption and based on what we have is on on the puts and takes going into that model.
On the uplift.
A number that feels responsible that we can execute on the only thought about the debt the balance between education and commercially now we're seeing the strength of education continue into the first half which is not a typical Q1 that we wouldn't be saying, so really sort of balancing from strength in education on the first half expecting and hoping that commercial than price.
The bounce back stronger in the second half as the budget free as it starts to be removed.
The enterprise enterprise, the F&B started shipping their workers back and sort of balancing the two so a similar mix of what we would have seen this year, but maybe flip flopped quarter over quarter, and that's kind of how we play out to get to the high end of Chile, probably the commercial coming back stronger than we're anticipating at this point.
Do you think it's more about timing of commercial return maybe it's later, it's a little toward the toward the low end of the range of its earlier, it's toward the high end is that the way you thought about it or.
Yeah, Yeah, it's really going to be all about timing right. We believe it will come back so they're going to bring the workers back as the economy starts to recover.
Too soon for us to have absolute confidence of the timing of that so we've taken kind of a balanced approach to it.
Okay, alright, thanks very much.
Okay.
Okay.
Thank you. Our next question comes from Rob Owens of Piper Sandler Your question. Please.
Great and thank you for taking my question wanted to ask a little bit around your security.
Opportunity specifically with <unk>.
The next malware written for that just where the security of discussions have gone relative to the match.
Had mentioned the gym projects at the very strong fourth quarter. So as we look at just trends exiting the fourth quarter and 21 of the kind of opportunity that might be.
Hey, Rob on thanks for the question and might I say, great question on not that all of them arent because you are drilling into a problem that the market has seen and frankly jump is well positioned for.
The M. One Mac has come.
Uh huh.
It's become clear that.
Some providers of security solutions.
Provided those solutions by running code in the Microsoft or the operating system kernel of Mac OS and that's something that.
Yeah on Apple has been attempting to get security providers to eliminate from the last couple of years and with the emergence of the M. One it has been clear that some have not done done that the result has been that several security solutions out there simply would not work for the on one one.
One was presented GAAP. So of course, I was able to because we build our solution specifically to the architecture of the map without running code in the operating system kernel. So.
Yeah, we believe overall of the N one.
Map of not only presents an opportunity for us because it's going to increase the demand of the new generation of employees in the laptop that they choose to use but also highlight the fact that jump is uniquely positioned to support Apple technology on the same day that is released.
Great and then from Jill if we normalize around.
The change in Rev. Rec, and so you can get to a mid to high teens revenue growth rates.
On the apples to apples compare.
Guidelines.
Guardrails as we think about ear on growth for 2021 relative to the revenue growth in the compare there.
Yeah, no here about the absolutely right. If you normalize for the connect Rev. Rec. So we're making mid year. It does get us into the 27% year over year growth rate and then when we think about how to frame up.
Our revenue growth in relation to our revenue growth.
Our debt to grow faster than revenue part of.
But because of the timing in the quarter of one of our arent gets added to the roster for since the Rev. Rack of that underlies the revenue and then we also have some a little bit of Lumpiness of course with services and license and that's not growing as fast.
As our total revenue.
As our recurring revenue and then we have this notion of we still have a small portion of our revenue is coming from on Prem subscription that causes a little bit of of lumpiness, as well and causing such growth rates of debt for so oftentimes that'll cause the difference in the rate, but the <unk> growth in relation to the revenue and you'll see that in a couple of different if you look back.
The quarter, you'll see the difference on that relationship because of that.
Great. Thank you very much from the color.
Thank you on the next question comes from Matt Hedberg of RBC capital markets. Please go ahead.
Hi, Thanks, guys.
Somebody asked earlier about the the business plan, which was great to hear I guess Dean now that you've got a few more data points.
Is there any sort of help you can provide us in terms of like the <unk> uplift when you're selling the business plan.
Versus just jump pro.
Yes, I don't know how to.
Specifically quantify that at this point thanks for the question and perhaps Joe can chime in with some thoughts on this as well we offered the business plan for two purposes. Most importantly is that simplified customer buying and gave our customers a more complete solution for Apple enterprise manager.
But the second is that we do believe strategically that ultimately our asps.
On a per device is going to rise with this as a.
More of our solutions are going to be used per device out in the commercial markets.
And for Us.
Quantifying that I wouldn't have specifics for you at this time.
Joe anything to add to that.
As Matt said, if you took the list price of the three products compared to the bundled price of the business plan at net debt to about 15% discount, but what the you know the benefit to us in offering a discount is removing friction in the sales cycle with our customers versus three separate sales cycles. So that did that transaction going to move through the system.
Quite a bit faster with less friction.
Got it thanks, Joe that's Super helpful and then.
Jim you talked about my daughter.
On a little bit more of last quarter and then in a prior answer to a question I guess as you think about you know patch management you know.
Because it seems like it's an intriguing area for you guys to do more and how do you. How do you think that could benefit the model longer term.
Well first of all of Yeah, we're so thrilled with the acquisition and our customer response has been terrific. We've already just quantify.
What we've been able to provide to our customers. We were performing a patch management capabilities are monitoring about let's call. It 80, plus application titles out there and we've already moved that to more than 200 for our customers. So.
Our customers are already seeing value, we plan on adding on many many many more titles to that solution as well and then as customers have greater visibility on it.
Into the suite of applications that are running on their map and the level of currency debt they have.
They will likely come back to jam.
For a more complete solution on keeping those applications.
Fresh and up to date and of course of the security benefits of that but we get of.
More of from selling new solutions, but the biggest thing that we get out of it frankly is improved retention.
Because as our customers get on.
All of our more satisfied with our solution, obviously, our strong retention even gets better.
Got it thanks, a lot of games.
Thank you. Our next question comes from Brad Sills of Bank of America of your question. Please.
Hi, This is Jerry on the back on.
It seems like you're on a very strong end of the year from protect and connect.
Can you talk about what drove the strong adoption. Thank you.
Yeah. Thank you for the question.
<unk>.
Being the right security solution for the Mac is the primary driver as I mentioned, a little bit earlier on.
On the and the one that was released the M. One chip or the math that was released in Q4 and a big serve the our latest macos operating system. They put a spotlight on the need for security providers to have properly architected map of specific security and so that was something that.
Drove those products the remote work, we believe actually created a greater demand for security solutions as well.
As you know the.
Those people working from those homes all of the more important to make sure that they are protected from threats.
And then of course.
When it comes to jump connect.
It's just such a simpler experience to be able to tie into all of your enterprise resources through your of cloud identity provider by capturing the identity of the individual at the device Apple devices do an extraordinary job of capped capturing the identity of the person through face.
Through our fingerprint.
To be able to manage to that person's access to everything that they require in the cloud through that simple way of authenticating on.
On just creates a better user experience, which results in fewer calls into support which of course, especially with the remote workforce becomes even more important.
Got it. Thank you and can you talk about any changes that you may have seen in the demand environment, especially given how some regions are contemplating now returning back to in person the way. Thanks again.
I'm, sorry, I didn't catch that could you repeat that question. Please.
Yeah can you just talk about any changes that you may have seen in the demand environment.
Given the chance on regions are contemplating.
Turning back to in person work.
Sure.
Well first of all from a demand perspective on the demand for our solutions certainly are not dependent on remote work whether youre in the office at school learning at home or working at home.
They'll need to work on a system that is properly secured and managed and connected to any of the resources that you need on.
Even though organizations are bringing employees back into work they still need to support that secure environment and support.
<unk> support of employees, who do choose to work from home overall Apple in the enterprise is something that's driven by what is referred to as the consumer of <unk> of <unk>.
Using at work, what you already love at home and when you come off of a year, where you've had more employees working at home than any time in our history. We believe that will do nothing but fueled the consumers Asian of Iot, which.
Which will create more demand for Apple and create more demand for Jack.
Great. Thank you.
Thank you on our next question comes from Patrick Wall Ravens of JMP. Please go ahead.
Oh, great. Thank you and congratulations to you guys, Hey, Dean following up on that last one I'm curious what are you.
What are you thinking about work from home for your company is jammed long term is jampa work from home company.
Uh Huh thankful of the question Pat I always kind of expect something interesting from you of.
Well, we have told our employees is going forward. We will continue to have facilities and we will continue to have offices that employees will come in to work at and we want of creating great environment, where they want to come into work. However, our facilities will no longer be an expectation of our.
It will be of service that we provide debt.
Okay.
That's great and then if I could add one more what's something that.
You would love your platform to be able to do that it can't do today.
Oh My word.
Somehow I love our platform to be able to do we've currently on the security side.
We do threat detection the threat prevention.
We have not yet launched on a data loss prevention solution.
But yet we just recently acquired some tech.
Tech that will allow us the launch that sometime in the future, but that is certainly an area that we wanted to expand into.
Alright, great. Thanks, a lot.
Okay.
And ladies and gentlemen. This concludes today's conference call. Thank you for participating you may now disconnect.
Okay.
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