Q2 2021 Jamf Holding Corp Earnings Call
Good day, and thank you for sending by welcome to the jams second quarter 2021earnings conference call. At this time all participants are in a listen only mode. After the speaker presentation, there will be a question and.
For session to ask a question during the session you will need to press star 1 on your telephone. Please be advised that today's conference is being recorded and if you require any further assistance. Please press star zero, Oh, and I like to hand, the conference over to your Speaker today, Jennifer Gaumond, Vice President Investor Relations. Please go ahead.
Good afternoon, and thank you for joining us on today's conference call to discuss Jam preliminary second quarter 2021 financial results.
With me on today's call are deemed Hager, Chief Executive Officer, and Joel Kaufman Chief Financial Officer.
Before we begin I'd like to remind you that shortly after the market closed today.
Issued a press release announcing our preliminary second quarter 2021 financial results.
You may access this information on the Investor Relations section of <unk> Dot com.
And the press release, we disclosed our decision to revise our prior period financial statements to correct and immaterial error related to certain commissions that were incorrectly capitalized instead of being expense.
We expect to correct. This immaterial error and our quarterly report on form 10-Q for the quarter ended June 30th 2020, 1 and a supplemental release a revised historical financials.
Throughout this conference call, we are providing our current expectations with respect to our financial results for the second quarter of 2021.
As such and Jim second quarter, 2021 financial results are preliminary and subject to the completion of the audit process.
We plan to provide final financial results for the quarter and filed our related quarterly report on form 10-Q as soon as possible.
<unk> undertakes no obligation to update or supplement the information provided until jams reports its final financial results for the fiscal quarter ended June 30th 'twenty 'twenty 1.
Today's discussion May include forward looking statements. Please refer to our most recent SEC filings, including our most recent annual report on form 10-K, where you will see a discussion of factors that could cause actual results to differ materially from these statements.
I would also like to remind you that during the call. We will discuss some non-GAAP measures related to channel performance.
You can find that preliminary reconciliation of those measures to the nearest comparable GAAP measures and our preliminary earnings release and.
Additionally to ensure we can address as many analyst questions as possible during the call.
Ask that you. Please limit your questions to 1 initial question and 1 follow up.
Now I'd like to turn the call over to Dean Hager Dean.
Thank you Jennifer and thank you everyone for joining us on today's call I will share highlights from the second quarter and an update on the 1 Dara acquisition, which closed on July 1.
Jill will then review our preliminary second quarter financial results and provide our outlook for the third quarter and fiscal 2021.
I'm incredibly pleased with our performance and the second quarter as our teams work diligently to deliver exceptional results, while developing integration plans and closing the 1 day our acquisition our largest acquisition to date.
For the last few quarters, we've talked about the remarkable balance and momentum across our business and the second quarter, we saw continued and even improved balance and growth.
Once again, all jumped products saw year over year AOR growth of at least 25%.
We saw continued strength and our education market and significant building momentum and commercial markets, especially with our add on products jumped connect and gym per cap, which delivered a combined are our year over year growth of over 250 per cent.
Additionally, all 3 major geographies and all of <unk> top 10 commercial industries.
<unk> growth of at least 30%, helping drive our total <unk> growth of 38% our strongest growth rate since becoming a publicly traded company. We believe these strong results demonstrate jams and ability to execute consistently during changing market conditions showcase.
And the incredible strength and durability of our business model.
And both James and commercial and education markets, we saw bookings growth rates returned back to pre pandemic levels and SMB and enterprise businesses growth rates were particularly strong resulting in 75% of our Q2 bookings coming from commercial markets.
This commercial strength and Q2 was well balanced across all geographies with similar bookings growth and each of our 3 key regions Americas EMEA and APAC.
Our pipeline indicates that this commercial strength will continue which bodes well for jump as we launched the products acquired with 1 dara, including private access data policy and threat defense.
Additionally, we continued to see positive trends and the industry as Apple map popularity grows according to IDC Mac again experienced strong growth in Q2.
Perhaps more important IDC reports show over the past 4 quarters total Max shipments grew over 45% compared to the for quarter supplier, which is faster than any other PC covered by the IDC report.
Additionally, According to Forrester report published just last month, the map popularity and businesses driven by higher employee retention and productivity and also lower total cost to deploy and support.
Based on interviews with decision makers from organizations using the new and 1 base map for.
Forest reports that the cost savings of deploying and M..1 Mac is $843 per device when compared to its PC counterpart.
These positive benefits and trends have helped drive seat growth, but jumped customers and partners across all of our products.
In Q2, our new logo growth was an exceptional 51% compared to last year, which helped us grow our total active customers by approximately 3000, new organizations, bringing our total active customer count to over 53000.
It is worth noting that James customer count is conservatively stated.
Many large organizations like the largest school districts and the U S are counted as 1 customer even though <unk> solutions are deployed to hundreds of the district schools.
Additionally, <unk> has over 300 certified managed service providers as partners, who use jumped the served thousands of their customers who are additives to jams base of 53000 customers.
1 jump partner electric and I T outsourcing company that provide solutions and support to manage all types of device endpoints for small and medium businesses has seen tremendous growth as these businesses realize the operational and compliance benefits of Apple enterprise management without having to implement.
Or manage channel solution on their own.
Consistent with trends, we see across the industry, 70% of the devices that electric supports our Apple and using Gimp electric has seen their Mac device.
Average more than 40% quarter over quarter for the past year significantly outpacing other platforms.
Electrics customer survey data indicates that this strong growth will likely continue as top customer priorities over the next 12 to 18 months are supporting a hybrid workforce, while bolstering the security posture.
And it's not only small and medium businesses that are embracing map jumped from the vast majority of large mass deployments and the world and we've seen larger enterprises significantly grow their map fleets as James platform has expanded beyond management into connection and protection solutions.
Specifically to Jim customers and the financial services space, 1 of top asset management firm and the other a leading global payments provider have both grown their map fleets by at least 50% over the past 2 years.
During this period, both also added Janse expansion products for map purchasing jumped connect shortly after I became available and expanding to jam protect in Q2.
These 2 customers demonstrates the power of our expanding platform as customers grow both through deploying additional Max and also jams add on solutions.
These examples are not isolated cases and fat Janse top 12 deals in Q2 were primarily driven by Janssen expansion products for map with all 12, having purchased either jam connect jam protect our jams. Most recent addition compliance reported which was just launched.
And Q2 after having closed the CMT reporter acquisition earlier this year.
In total for these 12 accounts alone Janse expansion products were added to over 85000, Mac all deployed through our flagship product jump from.
This tremendous execution with newly launched products is a testament to both the incredible loyal and growing customer base for <unk> Pro and also our far reaching and efficient and effective sales channel.
Less than 3 years since its launch in late 2018 Jam connect has grown to over 3000 active customers.
Complementing this product in Q2, <unk> raised the bar on access security and simplicity by launching jam unlock a jam connect workflow app built for both iPhone and iPad.
With jam unlock organizations can provide enterprise grade password less multifactor security to users and it consumer simple manner.
Using the iPhone the 1 item that no 1 forgets when they go to work users can simply use base idea on their phone to authenticate to their Mac and cloud identity provider, giving them immediate access to the resources they need to do their job.
<unk> seen similar success with our jump protect product and.
And only a year and a half hour jam for protect customer base has grown to over 1000 customers as the demand increases for an Apple for security solutions.
Jim protect provides a compelling value to our customers as organizations often find malicious threats with Jim protect that other cross platform security solutions and yes.
And Q2 Champ expanded our security solutions, even further for highly regulated organizations, who cannot leverage cloud Native security solutions Jam launched compliance reported them a solution that provides even greater visibility into Mac activity for threat hunting and compliance checks and our very first.
Quarter offer and compliance reported it was selected by multiple companies to help protect their map fleet and <unk>.
<unk> conduit and a leading business services provider for companies and governments, who purchased a subscription and compliance reporter for a large portion of their 60000, plus global work force devices.
In addition to offer and each of these add on products individually. We also offer the gems business plan, which is a simple way for customers to experience the full value of jams, Apple Enterprise management platform.
Q2 was another successful quarter with more than 250 prospects and long term customers choosing a gym business plan subscription, including a leading U S insurance company, who converted their 2005 hundred Jeff proceeds to Jam business plan.
In addition to map products and expansion, we continued to see strength and iOS and iPad OS which represent the fastest growing device type on our platform and both the education and commercial markets for the past 3 quarters, we continue to innovate and expand our iOS offering including <unk>.
The newly launched single logging for setup and jam reset to simplify and secure share device deployments, which are critical for industries like retail transportation and health care and field services to implement transformational digital business processes.
Single log and helps organizations like Etfs are cloud based warehouse management system provider deliver a solution that gives warehouse operators more efficient workflows instant communications are elimination and safety and regulatory compliance all with a great user experience.
Of course iPad expansion also continued in the education market and Q2, which is traditionally a buying season for schools.
This quarter jump experience buying pattern similar to pre pandemic levels the.
And the difference now is that schools are fully aware of the power of education technology and the importance of equitable access to learning no matter the student's circumstances.
1 example of continuing to move learning and the right direction is the city of Edinburgh Council, who recently announced a 1 for 1 student rollout of 39000 ipads as part of that and ambitious and inclusive education strategy Edinburgh learns for life. These ipads along with expanded.
Wireless connectivity provides students with fair and equal access to digital learning with a teacher in school or at home.
Jeff's World class customer loyalty, our success with Max specific expansion solutions, and our growth and iOS device seats, all give us confidence and our ability to drive adoption of the latest extensions to our platform 1 darrow's mobile security solutions.
As a reminder, 1 Dara has a cross platform Apple first provider of unified cloud security for mobile devices, bringing zero Trust network access data policy enforcement and mobile threat defense to jams platform solidifying Jim as a provider of enterprise security solutions that are consumed.
Simple for users while protecting their personal privacy.
The transaction closed on July 1 and since then we've been hard at work integrating our teams and products since closing we've seen our pipeline rapidly grow with significant interest from jam customers. This along with the opportunity to get to know the 1 Derek and team and their products better has made us even more bullish on the strategic.
Net of 1 day or within the jam and the opportunities. It provides us to expand our leadership and Apple Enterprise management.
Once again with the advantages of our flagship product jump from our loyal 53000 customers and and effective high performing global direct and indirect sales channel. We believe we can help more organizations and drive significant adoption of 1 Dara solutions and.
In fact, we already have while the 1 Dara sales channel has remain Undistracted, we have already invested and a new channel go to market channel built the pipeline and have even 1 several new customers and it's only been a few weeks since we closed the acquisition.
Going forward, we believe zero trust private access data policy enforcement and mobile threat defense will all be successful add on products for jam customers much like we've seen with gimp connect and Jack for tests.
Finally, I would like to comment on some recent announcements from 2 important partners Apple and Microsoft.
And all.
Each June Apple hosted their worldwide developer conference known as W. W. D C.
At this conference at the World learned a great deal about what Apple is headed.
It's James <unk> job to support Apple technology. The same day, it's available to ensure workflows, our undistracted and to prevent security vulnerabilities. It is critical that jam support all new Apple operating systems and devices. The same day, they become available, which we plan to do again this year.
It's also jan's job to anticipate Apple strategy and innovate solutions ahead of the rest of the market.
And 2019, we launched <unk> connect from Microsoft Azure a D.
Prior to Apple announcing Federated Apple Ids with Azure, a day at Ww D C 2019 and.
In 2020, we launched Jeff protect months before the availability of the Mack M..1 chip, which disrupted support from many other security providers.
This year once again, we believe our most recent product investments are synergistic with Apple's management security and privacy announcements at Ww D. C 2021, and that the combination of Apple and jump innovations will change the way enterprises think about security and privacy.
And simplicity.
Combined these capabilities with Microsoft announcement that Windows 365 will run in a web browser, including Safari on iPad and Mac without the complexity of users setting up a virtual environment and even greater potential exists for Apple expansion and the enterprise.
I believe the GM has never been more aligned with Apple's and Microsoft's direction than we are right now and we're excited to bring more products to market later this year, which we plan to showcase at our upcoming virtual Jeff mentioned user conference known as Jane schedule for October 19th to the 21.
In closing Q2 marked another quarter, where jumped continued to deliver high consistent and balanced growth and large part due to our team's focus on helping customers succeed every day.
This results and accelerated adoption of Apple and the enterprise using jam and we believe positions us for success through the remainder of this year and beyond.
Now I will turn it over to Jill.
Thanks, Dean and thanks again for everyone for joining us today.
Before I get into our preliminary results I want to discuss our decision to revise our prior period financials as.
As we outlined in our release.
Recently identified and immaterial error related to how we account for certain types of commission that should have been expensed as incurred in accordance with GAAP rather than capitalized.
Given the fact that we recently discovered this air our second quarter 2021 financial statements are preliminary and subject to the completion of the audit process.
My comments on our preliminary results reflect our current expectations.
We plan to provide final financial statements for Q2 and filed the related 10-Q, and the supplemental revised historical financial statements as soon as possible.
This revision has no impact on key business metrics, including revenue.
Sure.
Based on that and retention operating cash flow and Unlevered free cash flow for the previously stated period.
We expect the extensive adjustments to be no greater and 1% of our total GAAP expenses and any of these periods.
Additionally, we do not expect this to have an impact on future operating margin.
Now turning to our preliminary second quarter results.
As Dean mentioned, we had a strong start to the year with continued momentum across all aspects of our business.
Total revenue for the second quarter is $86.2 million, representing growth of 39% year over year exceeding our expectations due to outperformance across all revenue categories.
Total <unk> as of June 30th, it's $333 million and increase of 38% year over year.
Consistent with the past few quarters. This is driven by greater than 25% growth across every channel product with all 3 major geographies and all of <unk> top 10 commercial industry is experiencing a IRR growth of at least 30%.
The 3 primary drivers of our growth or our consistently high device expansion rates, our strong new logo acquisition and the Upselling and cross selling of products into our installed base.
We expect to continue benefiting from these trends going forward.
We ended the quarter with $23.2 million devices on our platform, representing 35% year over year growth as.
And we continue to see strength and both the education and commercial verticals and all geographies driven.
Driven by new logo acquisition and device expansion within our installed base.
Our dollar based net retention rate remains strong and growing to 119% for the 12 months ended June 30th.
The remainder of my remarks, and margin expense items and profitability will be on a non-GAAP basis.
Our preliminary GAAP financial results, along with a reconciliation between GAAP and non-GAAP are found in our earnings release.
Gross profit margin is 81% compared to 82% and the prior year quarter.
And we continue to expect our gross margin to remain at approximately these levels going forward.
With respect to operating expenses.
We remain focused on improving the leverage and our business while balancing investments for growth.
Increases in operating expenses over the prior year were primarily due to these investments for growth such as sales and R&D head count as well as building in public company costs.
Operating margin is 9%.
During the second quarter, our annual effective tax rate was negative <unk>, 5%, which was impacted by the establishment of a valuation allowance as previously disclosed.
Unlevered free cash flow is $33 million and Q2 and risk.
Electing and approximately 38% unlevered free cash flow margin compared to $21 million are and approximately 34% margin and the prior year period.
Our operating model of high growth and efficient deployment of capital continues to yield strong cash flow generation and allows us to continue to make investments and innovation and top line growth.
We ended the second quarter of $226 million and cash and cash equivalents.
Now I'll provide thoughts and guidance for the third quarter and full year 2021.
We expect strong performance to continue given what we achieved and the first half of the year and the momentum and our business day.
<unk> business continues to remain strong as we are currently and the traditional U S education buying period.
Additionally, we saw our commercial business bookings growth nearly double and Q2 compared to Q1 and enterprise spending and hiring has improved.
We saw the U S market led this growth with particular strengthening and bookings and the financial services professional services health care and manufacturing industry.
As we discussed during our previous calls beginning in the third quarter, we updated how we deliver our jump connect product, resulting in a change and revenue recognition with less revenue recognized upfront and on premise subscription revenue as it will now be recognized ratably over the term of the subscription in line with the majority of.
Of our revenue.
Well there is no impact to our or we anticipate this change will defer approximately $9 million of revenue and the second half of the year into future quarters.
Which impacts our full year revenue growth by approximately 3 percentage points.
Our our our growth rate typically exceeds our revenue growth rate each quarter, because the E. R. R excludes services and license revenue, which grow at a slower pace than our recurring revenue and.
And are are added later and a quarter has a smaller contribution to revenue in the quarter.
Additionally, we've incorporated the impact of the 1 Dara acquisition into our outlook given the transaction closed at the beginning of the third quarter.
Our expectations regarding 1 Dara include the impact of the purchase price accounting adjustments as well as planned investments related to go to market and customer success head count to support 1 day hours grow.
Given these considerations for the third quarter of 2021, we expect total revenue and the range of 92.5 to $94.5 million representing growth of 31% to 34% year over year.
This range includes anticipated 1 day or a revenue contribution of approximately $5 million.
Non-GAAP operating income and the range of <unk> 5 to $1.5 million, including 1 day or negative impact to net operating income of approximately $5 million.
For the full year 2021, we expect total revenue and the range of $3.57 million to $361 million representing growth of 33% to 34% year over year income.
Leading the 1 day or a contribution of approximately $11 million.
Non-GAAP operating income and the range of $18 million to $20 million, including when there is negative impact to the net operating income of approximately $10.5 million.
As mentioned earlier and net operating loss anticipated from 1 Dara reflects the impact of purchase price accounting adjustments.
1 day or as run rate operating losses.
As well as approximately $5 million of planned investments and go to market headcount to support growth as well as customer support and customer success head count and the second half of fiscal 2021.
We anticipate 1 dara to be accretive to GAAP non-GAAP operating income as we exit 2020.2.
Additionally for modeling purposes, we are providing the following information.
For the third quarter and full year 2021 amortization is expected to be approximately $11.8 million and $46 million respectively.
These amounts reflect the preliminary 1 day or a purchase price allocation and are subject to change upon completion of that analysis.
For the third quarter and full year 2021 stock based compensation and related payroll taxes is expected to be approximately $9.5 million and $5$9.5 million respectively.
We expect an annual effective tax rate to be less and 5%, which would also be used in calculating tax effects of non-GAAP adjustments.
Annual effective tax rate is impacted by the establishment of the valuation allowance during 2021.
In addition, we do not pay cash taxes and U S federal basis.
For calculating EPS we.
Basic and diluted weighted average shares outstanding to be approximately $118.5 million and $121 million, respectively for the third quarter of 2021.
For the full year, we expect basic and diluted weighted average shares outstanding to be approximately $118 million and $121 million respectively.
In closing our strong Q2 results reflect continued momentum and our business as we look to the second half of the year, we're well positioned to deliver on our outlook and are excited about the opportunity to expand our platform with the 1 day our acquisition.
With that Dean and I will take your questions operator.
Yeah.
Thank you.
As a reminder to ask a question you will need to press star 1 on your telephone and towards other question press the pound key police them viable we compile the Q&A roster.
Our first question will come from the line of <unk> Suri from William Blair You may begin.
Hey, Deane Jill Thanks, taking my question congrats on the.
Solid solid quarter there.
Nicely done.
I wanted to start off and at a high level, so you're talking about sort of doing all of these pieces for Apple.
But if you think about the business strategically you've got Jeff connect you've got the business plan and got the endpoint security and the follow the Apple model, which which you know while it sounds simplistic as complicated, but it feels more tactical and I'd love for you to talk about more strategically how you think about.
Ending the Tam and the business outside of.
Sort of more devices, which will happen naturally, but sort of what more sort of product portfolio features what things more can you do strategically around the apple ecosystem that sort of drive the growth of the business.
Yeah. Thanks for <unk> for the question I'll tell you the way that we strategically think about it.
We actually at the end of the day don't think of ourselves as a solution provider around the Apple ecosystem, we think about ourselves as a solution provider for connecting users protecting data and managing workflows.
And with technology across the enterprise and ultimately what we want to do is create an environment that is enterprise secure.
And it helps.
Helps protect personal privacy and as consumer simple and we don't think that the enterprise by and large operates that way today, So and we think about expanding solutions. We think about wherever there is complexity and how people do work.
And then we look to.
The vast and solutions around that area to make a consumer simple and example would be our launching of jam unlocked.
Quarter, where when you take a look at multi factor authentication on a Mac nobody really thought of connecting that to the cloud identity provider and then using face idea and a phone to authenticate both to the Mac and to the cloud identity provider and as you're using some other more complicated method. So.
We're continually trying to expand our solution set to make things easier to use and the enterprise.
Gotcha Gotcha helpful and a quick follow up here just from 1 Dara I guess, what I'm, most interested here and and the dynamics is 1 day or brought these really strong carrier relationships.
And I know you gave some color on the narrow, but love to dig into a little more of the process or how are you sort of tactically thinking about expanding those carrier relationships to include the full.
Jim.
And I owe less and Mac portfolios like how should we think for these carriers and do they have as much interest and providing capabilities for Mac and I O ex that you offer like I'd love to chat and you think about expanding and leveraging that and how are you thinking about that thank you.
Yeah, absolutely and carriers are a terrific channel.
Generally for value add software that will run on your cellular connected devices, mostly iphones.
And 1 Dara as a security solution and also wanted as a data policy solution and ends up being a great and add on sales through those carrier channels.
Our efforts first and foremost our to go out and make sure that those carriers know that we plan to serve them every bit as good and even better with more investment and what Dara has done in the past and provided that we prove ourselves to them.
Our hope and our strategy and is that they would look to jump then for additional solutions.
And to run on devices that would help I G better served all day.
Those and claims and that is really where jam specializes versus where the 1 day our solution for focus on security. So you know first of all just make sure that they understand that we're here to serve them and their customers and with that earn the right to be able to add additional solutions to the Max.
Gotcha Gotcha very nice. Thank you taking my questions guys I appreciate it and flopped.
Our next question and Central line of Sterling Auty from Jpmorgan you may begin.
Yeah, Thanks, Hi, guys, a lot to unpack there and what you presented and 1 of the things that I thought was interesting was the comment that you made about forward thinking both on Apple and Microsoft and the idea of kind of windows and a browser et cetera, and what I'm wondering is how are you starting to think.
<unk> about the possibility of changing pricing structure for different types of technology that you might think is coming down the pipe over the next year or 2.
Thank you for a lot for the question Sterling.
To be honest from a pricing structure perspective, there's a few different methods that we look at you know the per seat per user and also of course, there's the consumption model as well.
And then various bundles of that so we explore all of those avenues other than what we have out there today.
And I don't know that I'm ready to disclose any changes to that model going forward, but what I will say is I think you've zeroed in on something that we consider to be really exciting and.
This space the notion of simply streaming windows through a web browser and again, it's very early it just became available on August 2nd.
Opens up some great potential for users using their device of choice, but yet still being able to use that 1 or 2 or 3 applications that has tied them to a specific device type historically I think it opens up great potential within the market and if you think about.
What's happened and the last year. It was just last November that Apple announced that iOS and iPad OS apps could also run on the map with the new M..1 chip.
So all of a sudden and something that had historically been considered a weakness of the map being able to run all of the apps that are needed within the enterprise is becoming a bit of and out consolidator as more and more solutions become available too.
And on different types of apps on the map. So we think that could potentially break open them at market even further.
Excellent and then 1 follow up is you mentioned the you know the strength and new logo adoption.
I'm curious are you landing bigger meaning are the initial sales taking a bigger portion of the product portfolio from from the start or what are you seeing from a trend wise that from that perspective.
And let's say.
The answer short answer is yes that we're closing bigger deals initially, but it's not materially so.
At present.
Our objective is to still go and their solve the immediate problem that the customer has when their loyalty and expand that as the engine that has proven to be very very fruitful for both our customers and for Jim So while they're growing and size initially.
It's happening gradually over time I will say this that in our initial deals that we've closed with 1 dara through our jumped channel.
Those have been terrific and that the customer has called us for our historical channel products and our reps have actually up sold down onto 1 darrow products with the value that 1 dara delivers in conjunction with jam and those deal sizes and more than doubled in value and.
Those were initial deal sizes. So short answer to your question is yell centers with the add on products, but we still have the same strategy of go and solve the initial problem and grow.
Makes sense. Thank you.
Absolutely.
Our next question comes line of D. J Hynes from Canaccord you may begin.
Hey, guys congrats on another really nice quarter here.
Not sure if this one's best for Dean or Joe, but if we think about what's driving expansion and existing accounts is there any way to frame how significantly the pendulum has swung from device count growth to add on modules and I realize this is all still like free 1 dara but.
It seems like add ons are maybe.
Carrying more of the weight now and I wonder if there's any way to kind of quantify that.
Yeah, Hey, Thanks P. J for the question this is Joe.
1 way to think about how we quantify and if we look at our dollar based net retention that we reported for the quarter increasing from 117 up to 119. That's an actual you know most of that is reflecting the strength and those add on products with connect and protect as well as some small amount of churn improvement that we're starting to recognize but that's primarily what's.
Driving that and it's going to sustain that high net retention rates.
Okay got it and then.
Deane, we've picked up some commentary that suggests theres been a bit of softening and a tech buying cycle and education and I you know I don't know if thats comparing to a record year last year and it sounds like you guys are still feeling really good about what youre seeing and education, but I'd love to have you speak to kind of what youre seeing in that vertical and the current quarter and how that might shake out as we enter the new school year.
Yeah, I figured out and get that question and thanks D J.
Obviously, the last year was tremendously strong for education, but a way of speaking about it historically, we always had growth in both the commercial markets and education markets and prior to the pandemic on any given quarter, our bookings growth for the commercial markets would be about twice that of what it is for the education market and then.
And during starting with Q2 of last year through Q1 of this year, let's say that those growth rates were more similar to each other Q2. This year saw more what we would have seen pre pandemic, where education still had a nice bookings.
Growth quarter, but commercial growth was about twice that so we believe strategically going forward, it's going to be what most of our history over the last years 5 years have had and that is the growth engine is the commercial growth. Nevertheless.
<unk> growth still remains.
Quite strong and remember that we do business and education and everywhere else globally, and so different regions of the world May have strength Q2 was particularly strong in Europe and the education market.
Perfect. That's helpful color. Thank you guys.
Our next question comes from the line of Joshua Reilly from Needham you may begin.
Hey, guys. Thanks for taking my questions, maybe starting off how is James business plan are trending versus your expectations here year to date and then second do you plan to include securing iOS devices and the bundle going forward and then have you had any customer feedback about adding that functionality.
And how might that impact pricing power.
Yeah. Thanks for the question Josh first of all our business plan is tracking we're pleased with how it's tracking.
And we did not have expectations that it would become the standard way to buy Jim just yet and we thought for those organizations interested in full platform it would be by bar the easiest way.
To acquire Jam.
For clarity that does include seat licenses of jump pro for iOS as well that jump business plan a bundled pricing does it does not yet include any of the security solutions that we acquired from 1 girl for iOS over we're looking at potential for a different tact.
Bundles, there going forward.
Okay, Great and then maybe just a quick follow up I noticed and monthly a per device ticked up 2 pennies in the quarter from $1.18 to $1.20, after being roughly flat for several quarters is there anything to note. There is there some modest positive impact from Jim business plan starting to kick in.
Hey, Josh this is Joe so really what's driving that uptick is the fact that we've got mix shift that goes on and different quarters and we have.
And your commercial quarter it carries a higher price point per device and so that's really what's influencing that net quarter because commercial day represent about 75.
And our add on bookings this quarter.
Got it thanks guys.
Our next question on the line of Rob Owens from Piper Sandler May begin.
Great. Thanks for taking my question and I wanted to add on to Djs question from earlier just from the standpoint that there are some major worldwide federal initiatives around the education vertical and just curious if there's still capacity and some of those issues. Some of those initiatives excuse me weather here domestically or internationally, where that could provide a nice source of upside as we look at the third and 4.
Fourth quarters.
Yeah. Thanks, Rob.
Real quick that.
What we saw happen is first of all you have the cares act and the U S.
And much of the money that was released with the cares Act actually hasn't been spent yet so we actually think that still there are going into the future and as we mentioned we're you know we're still in Q2 saw strong education bookings growth and we think some of that might still be from that funding, but there's still a lot of money left out there that hasn't been spent yet.
Of course, we've talked in past quarters about the Giga project in Japan, we saw that slow down a little bit in Q2 and as we just did.
We ended up winning much of that market, but in Europe. They are actually still several governmental programs on debt didn't get established until we were well into the year of the pandemic and so I think that's been more of the realization of how important education technology is to schools no.
Matter, whether you're learning from a distance or and class and so those are all programs that are still pretty early on and so we're still pretty bullish on the growth that we're going to see there.
And having the balance that we have around the world is very much beneficial.
Great. Thanks for the color and <unk>.
And Joe Thanks for the disclosure around 1 terra and the incremental revenue can you help us with what that incremental <unk> might look like here for the third quarter given it was a July 1 close.
Yeah. Thanks.
So we disclosed prior in prior earnings call that they're they ended the first quarter at approximately $25 million and they are are we did see that grow a bit in the third and the second quarter and a quarter. When they were going through integration disruption will be disclosed in the third quarter.
And at the end of the third quarter. So that you guys can bridge the models.
Alright, Thank you very much.
Our next question comes from the line of Chad Bennett from Craig Hallum May begin.
Great. Thanks for taking my question just a follow up on on the 1 Dara.
Projections or forecast so how should we think about.
The economics behind 1 Dara from it from and add on standpoint, whether it's kind of per user per device relative to how you've spoke about <unk> pro or connect or per tact, just whats kind of the incremental dollar value them at least rough range, we should think about each of their products or in aggregate.
Yeah.
Thanks, Chad this is Joe I'll take that so they do their pricing model is similar to ours, it's per device per month and it's a.
Very similar to us on it and the average is about a 2 year annual commitment that the customers are making as far as the pricing going forward their price their average price point is higher than ours. So it would be accretive to our overall asps and will.
Sharing more of that as we gave more color on our experiences with them.
Got it and then maybe 1 quick follow up on wonder.
And again was.
Was there any any material deferred Rev right down and in the purchase price adjustment here and it meaning you know as you know.
The $11 million and your projected for the second half you know really on a run rate basis higher than that or was there and nothing that material from a deferred Rev right down there.
Yeah It was material.
Material. It was in line with what you'd typically see software somewhere and 20% to 25% range.
Okay, so on and.
And on annual basis, that's what you'd expect once you annualize on that correct.
Correct.
Okay. Thanks, so much nice job on the quarter and.
Thank you.
Our next question comes from the line of Gregg Moskowitz from Mizuho.
And then.
Alright, Thank you for taking the questions and very nice quarter.
And we know where to be the case that jams business is not highly correlated with Mac and PC cycle that being said now that are either growth has been somewhat coming back down to Earth can you speak to what that might mean for damps basis going forward is this a partial offset to an improving economy. How do you see this playing out.
Thanks for the question and Greg and you're right we have a standard.
Standard a few times in the past debt.
Not best to try and model jumps growth on them with Apple's specifically, because there isn't any given quarter or really frankly any year that apples unit sales equate to <unk>.
<unk> business and the reason for that is it because the market size is now with 1 the out of 1 Dara.
$18 billion of which as you see and are are are we are.
333 million and so the market size is plenty big for <unk> to continue to grow and many of those devices are not secured are running any management at all and many of them are running either security or management solutions that are not geared towards apple so as long as the enterprise continues to adopt.
Apple and an increasing rate that is really the driver of our growth.
And again, if we went as far back in history, as Joe and I are aware.
There've been yeah.
Years' debt apples growth hasn't been all that significant and yet they've been some of our best growth years, So they're really mutually exclusive and overall, we love that Apple popularity continues to grow because when that happens more enterprises are willing to accept them within their enterprise workflows.
And again, that's the driver of our business.
Perfect. Thanks, Dean and then just a follow up so it's now of course been several months since 1 chip has been G E and near Zero day support was a significant advantage from the outset, how would you characterize though the quality or the level of third party support that exists for the ammo and today as compared with GAAP. Thank you.
Thank you so Apple did a terrific job of ensuring that there would be a compatibility.
Apps and operating systems going forward. So the journey was.
And you know fairly straightforward and especially when you have something that significant like Chuck.
From <unk> perspective, I would say.
Our greatest opportunity.
And as it turns out was perhaps the biggest disruption we saw and the market and that is that there were.
More than 1 security providers out there the.
And Thats simply Werent ready for the other 1 and big sur.
And those organizations, we were thrilled with the opportunity to be able to go and and.
And help them.
And as you've seen you know I mentioned that it's just been a year and a half since launch we have over 1000 jumped protect our customers and for those that had been watch each quarter. You know that the majority of those come just since January of this year.
And I think a large part that's driven by the new chip and new operating systems.
Perfect. Thank you.
Our next question on comes from the line pipe and Raymond from JMP Securities You may begin.
Oh, great. Thank you and I'll add my congratulations so Deane as you look out over the next 12 months. What do you think are the most important 1 or 2 things that you got to get done.
Thanks, Pat good to hear your voice.
Sure.
Without a doubt when you're in an opinion and organization.
It's growing at the rate of channel.
And where we have hired.
Quite a few people over the last year that have never had an opportunity to go into a jam office yet.
We continue in that group.
Customer focus culture.
Inside of a company, where everybody feels cared for and that's a big deal for us and.
Believe it or not we think a lot about strategy a lot.
But I think about culture, a whole lot more and.
So that probably takes the majority of mind share for me.
Beyond that yet.
Yes.
And just continuing to simplify simplify simplify the enterprise with the way that we offer our products.
And that's going to be the bulk of what I think about it.
Great. Thank you.
Thanks, Doug.
Our next question comes from the line of.
Rod Hall from Goldman Sachs, you may begin.
Yeah, Hey, guys. Thanks for the question.
I wanted to come back to the strong <unk> growth that you're implying with the guide and also what you delivered in the quarter.
And then juxtapose that with a R increment seasonality and prior years and just ask whether I mean, usually we would see your biggest quarter and they are our growth be the last quarter of the year.
I'm just curious if you think that you know.
And we're exiting COVID-19, so it's incredibly difficult to predict any of this do you believe that that seasonality is more likely to hold and not or.
How do we think about the trajectory of the business as we exit or hopefully exited anyway. Some.
Some of this Covid Lockdown and then I have a quick follow up as well.
Well you are correct in that.
Q4.
<unk> has traditionally been.
The biggest uplift that we would see from and our perspective.
Jeff is pretty well balanced across quarters, historically, and we generally have.
Pretty solid Q2s, because of it being and education buying quarter as well, but youre right that Q4 is typically the biggest there's nothing about this year.
That would suggest that we should see the same type of seasonality that we've seen in the past.
To be Frank the notion of COVID-19 or no COVID-19 or distance learning or in classroom or remote work or in office and we don't spend a whole lot of time talking about anymore right now, it's just our business and we see the normal operations of the business.
And no matter what.
Companies and schools are for are focused on providing really simple to use.
Knowledge and that users love and can help them get their job done and we're back into those normal rhythms.
Okay, that's great day, and thank you and then I wanted to come back to your comment on Windows and $3.65.
And what we've actually found is win win.
When we have a VDI solution or a windows and $3.65 solution like that that Mac doesn't need to be managed.
And so as that world grows I'm struggling to see how that connects back to.
A positive environment for you, but I'd like to hear your thoughts on it does does windows 365, really drive more managed Max using jam for how does <unk> fit into that world, maybe and a little bit more detail would be it would be helpful. Yeah. That's a great question not and just for clarity, yes. It will drive more managed mats and the REIT.
And is that specifically the windows 365 solution and the way I envision that that's going to be deployed is not somebody deciding to say, well, hey, I want to run windows and nothing but windows and I think I'm going to do that on a Mac through a web browser I'm not envisioning thats going to be the config.
Figuration for very many people rather what it's going to be is somebody who loves the map and they want to use them at and they want to use native Mac every day all day long however.
Theres, a windows out whether it be and healthcare 1 of those enterprise windows apps, whether it would be and fin serve debt no I need to run that 1 app or 2 apps to do my whole job and without having to set up our remote environment on my math I can just bring up a web browser and I can run net windows App.
No.
Think that that's going to be the use case for windows and 365 on a map more so anybody kind of taking over the Mac experience with a virtualized experience I'm not seeing that happen.
Great. Okay, Yeah, that's really helpful. Thanks Dean.
Absolutely.
Thank you and that will conclude our Q&A segment today with that this completes the conference call for today.
Thank you for your participation you may now disconnect.
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