Q3 2021 Jamf Holding Corp Earnings Call

Thank you for standing by and welcome to the <unk> third quarter 2021 earnings Conference call. At this time all participants are in a listen only mode. After the speaker's presentation. There will be a question and answer session to ask a question during the session you'll need to press star one on your telephone as a reminder, today's program is being recorded I would now like to.

Introduce your host for today's program, Jennifer Martin Vice President of Investor Relations. Please go ahead.

Good afternoon, and thank you for joining us on today's conference call to discuss <unk> third quarter 2021 financial results.

With me on today's call are gain Hager, Chief Executive Officer, and Joel Putman, Chief Financial Officer.

Before we begin I'd like to remind you that shortly after the market closed today, we issued a press release announcing our third quarter 2021 financial results.

Also published an investor presentation, and an excel file containing quarterly financial statements for fiscal years 2019, 2020 in 2021 year to date to assist with modeling.

This 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 chance performance you can find a 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 Hager.

Thank you Jen and thank you everyone for joining us on today's call I will share highlights from the third quarter and recap our annual Janssen Nation user Conference. Jill will then review our third quarter financial results provide our outlook for the fourth quarter and fiscal 2021 and give some high.

Level thoughts on fiscal 2022.

Over the last few quarters, we've talked about the remarkable momentum consistency and balance across our business in Q3 was no exception.

Total AOR growth was 47%.

As a reminder, jumped completed the acquisition of one Dara at the beginning of Q3. So this <unk> is reflective of our combined companies.

Jeff Q3 organic.

<unk> was 37%, which matches our average IRR growth, where the six quarters, we've been a public company demonstrating remarkable consistency.

Going forward, we will not break out our growth.

Growth by product or acquired company.

But we felt it important to provide this clarity since Q3 represents the first quarter post acquisition.

This <unk> growth was driven by both strong new logo acquisition growing jumps total active customers to over 57000 by the end of Q3 and also a tremendous growth within our customer base due to Apple device expansion and customers purchasing new add on products.

Still despite customers growing their use of jail no one customer represents more than 1% of our total airline a testament to the diversification of our revenue streams. Additionally.

Additionally, once again, we saw excellent year over year growth for all jam products, all three major geographies and all of jams top 10 commercial industry.

We talked last quarter about how in both Champs commercial and education markets. We saw bookings growth rates returned back to pre pandemic levels.

As expected in Q3 after a tremendous growth last year.

Education market leveled off a bit while growth in James commercial markets accelerated even further commercial markets again made up nearly 75% of our total bookings with both the Americas and EMEA markets showing substantial strength.

<unk> growth is reflective of Apple's device growth across global enterprises, driven by the acceleration of consumers Asian user preference and financial savings for organizations.

Our Q2 earnings call. We cited a new Forrester report finding that cost savings of deploying an M. One Mac is $843 per device when compared to its PC counterpart in.

In Q3 constant <unk> company, a leading research firm focused on total cost of ownership and return on investment studies conducted new independent research, specifically with Champ customers and found that our Apple Enterprise management solution address several specific customer challenges across.

Both large and small enterprises to deliver a quick and compelling ROI. This.

The study identified that jumps platform delivers significant benefits to organizations across three broad business objectives.

Simplifying our it management improving end user experience and mitigating risk.

Respondents indicated a 90% reduction in time spent on device provisioning deployment ongoing management and application management.

And user productivity also benefited with customers seeing a 90% reduction in productivity loss as support Paas were virtually eliminated with gap.

And as security continues to be a key focus for organizations customer saw a 70% reduction in time spent remediated incidents and vulnerabilities. We believe the significant value of Apple Enterprise management, and specifically the gem platform will continue to drive organizations too.

Span their Apple fleet through employee choice program.

In particular for Mac.

Today <unk> serves more than 50 customers, who have deployed greater than 10000.

Far more than any other provider of management and security solutions in the world.

And no industry has mapped choi spend more prolific than in the technology industry, where the math because it becomes the device of choice for software Engineers Janse Apple Enterprise management solutions are used by eight of the top 10 technology companies in the world.

Three of which have deployed more than 100000 map.

In Q3 alone five technology companies grew their jams deployments from supporting a total of approximately 160000 map to over 175000, we believe the changing employee demographics combined with the consumers Asian.

Growth in remote work and overwhelming popularity of the new line of Apple Silicon that is changing the landscape of the PC marketplace.

According to the latest analysis by IDC in Q3, Apple shipped more math than in any quarter in history with a growth rate double that of the industry. More importantly, this apple Mac momentum has been sustained with greater than 29% year over year growth for the full year.

<unk> 2020, as well as 2021 year to date, making masks the fastest growing computer over those seven quarters of growth rate approximately twice the industry.

As James platform capabilities broadened to solve more and security challenges, while helping enterprise map become more affordable we've seen map choice expand at even faster rates. One example, a clear jump and Mac ROI benefits is found that BJ SaaS are you.

K based technology and engineering consulting firm.

When the M. One chip in Big sur arrived in 2020, B J F F as existing systems provide the support they needed for Apple's new technology. So they purchased 1400 seats of Jam business plan, which includes all Janssen management connection and protection solutions and <unk>.

B J S. S tells us their new ability to purchase the more affordable M. One map and manage and secure them out of the box has resulted in rapidly achieving return on their investment.

James value and momentum is also accelerating as we help organizations, but industry digital transformation, which has led to iOS and iPad OS representing the fastest growing device types on our platform for the past four quarters.

<unk> differentiates with a patented ability to automate unique industry workflows for rapid adoption of Apple devices, specifically to transform mission critical processes and customer touch points. In Q3. This capability led to jam signing the largest commercial iOS and iPad.

At OFC deal in <unk> history.

One example of jams industry digital transformation can be found in the transportation industry, where one of our partners Lifesaver mobile provides a solution that prevents employees own use while driving as they did with bee sweet citrus a key supplier of citrus to Costco.

Lifesaver mobiles apps can be deployed to every employee phone.

With each managed by our cloud based fleet portal that includes the device restriction by implementing real time locking of iPhone devices. When the employee is behind the wheel enhancing driver safety.

Continuing with the travel industry in aviation Jampa has become the go to partner for airlines around the world for numerous workflows that engage flight attendant gate agents and ground crews one specific workflow that leverages, our patented jumped setup and reset applications provides pilots with cockpit.

Flight bags on iPad, where the content available changes based on whether the pilot is in cockpit or off duty.

Over the past year. This is led to jam being used to deploy over 100000 devices for airlines specific workflows globally.

Q3 represented our best quarter ever for the airline industry and.

And finally on the topic of travel industry, Jeff was proud once again to partner with Spacex to manage the ipads used in the first all civilians space flight in September.

The power and value of jams industry workflows can also be seen in the education market, our patented gym teacher Champs student and parent functionality are completely unique with no other traditional MTM provider matching jumped in classroom capabilities.

Sacramento City Unified School District, who was previously deployed Jem school jumped pro or jumped setup and reset apps and jam connect expanded their deployment to include Jim protect in Q3, and therefore is now running our all Apple Enterprise management platform. The result is that.

Sacramento City now has unique in classroom capability, they give teachers control of their classroom. So that they can best empowers student learning with Apple technology.

'twenty 'twenty was a year of transformation and education with tremendous device growth as schools became aware of the power of education technology in the importance of equitable access to learn as well.

While last year's focus was on device distribution and connectivity focus has now shifted to ensuring students safety while using these devices.

With the recently passed federal K 12, cyber security App, along with funding to strengthen schools. It security protocols, we anticipate a greater need for students safety solutions.

<unk>, new student safety, offering which builds upon technology acquired from one Darryl and was announced that Jean Marc in October provides content filtering threat defense acceptable use and data policy, along with device and network protection meeting this growing need to protect our students and gift.

Peace of mind to teachers and parents.

Another example of leveraging the power of <unk> technology, combined with new capabilities. One Dara can be seen with Berkshire Healthcare NHS Foundation Trust, which provides mental health services and other community based health services, primarily to the Royal County of Berkshire, and the U K.

Shire healthcare NHS Leverages, both Champ and one there are two the play new devices and ensure these devices are protected and in compliance joined.

During the height of the pandemic they saw a 25% increase in mobile device demand and utilized jam for efficient zero touch deployment crossed its users and facilities. They have also seen significant value in point jams, new data policy solution from one Darryl for ongoing data saves.

For both iOS and Windows 10 devices.

Integration of one Dara into Jim brings additional efficiencies as the Berkshire healthcare NHS team will be able to seamlessly update mobile devices as they change hands within the organization building on Jim's strengths to provide health care workflows for shared yet personal Apple devices. This case.

Ability during our first quarter together led to multiple health care wins in Q3, as well as several cross sell and upsell wins of the want their products through our sales channel across multiple industries. We were also pleased that the existing one there are sales channel continued undistracted.

In closing its largest deal since 2019 with a major defense organization for this win given the new customers vast data privacy and protection requirements. We engaged in a one month proof of concept, where the new gym team deployed threat defense and data policy across the organization.

This resulted in the customer fully committing to purchase these products for their 10000 plus devices demonstrating the ability for these new gimp products to rapidly meet the needs of organizations with the strip the security requirements.

Q3, we also advanced Champs security solution through partnerships prior to the acquisition one Dara established a partnership with cyber reason a provider of threat prevention detection and response per endpoint.

In Q3, cyber reason and <unk> extended the partnership to fully embed jams threat capability at scale for iOS and Android devices to help security leaders achieve comprehensive protection across all of their enterprise endpoint no matter their location.

In addition, <unk> also announced a new strategic partnership with Red can marry a security operations company trusted by hundreds of the world's best security team.

Janssen Red Canary will help organizations succeed with Apple by bringing an integrated Apple native solution for threat detection and response to market.

At Canary uses telemetry generated by Jan protect to analyze device and user activity for risky behavior. When a real threat is identified red Canary responds quickly to prevent harm and data loss.

We highlighted this new partnership along with our new Champ branded solutions like threat defense data policy and safe Internet along with other innovations during our virtual Jam Nation user conference also known as Jay now a few weeks ago.

<unk> has become the single largest gathering of Apple enterprise experts in the world and provide a forum for collaboration and learning and this year was no exception.

Along with showcasing these industry, leading innovation, many customers and partners shared their stories and how they succeed using apple and jobs.

The quality and engagement in this year's event, where extraordinary we offered 140 sessions across nine trap, providing nearly 8000 attendees a significant amount of excellent content. The average person attended seven five sessions equaling a total of approximately.

<unk> 57000 sessions viewed over three days showing that even though the event was virtual attendees were incredibly engaged. These numbers don't include the on demand use that happened over the 30 days that the content remains available to registered.

Additionally for the first time Jam hosted a Jane <unk> Investor event, which summarized key takeaways from this year's conference, including gyms focus and differentiation, providing solutions that our enterprise to cure it consumer simple while protecting personal privacy.

Specifically, we highlighted four key areas, where we believe our solutions will be mark that movie.

If you missed the event the replay is available on our IR website.

In closing Q3, again demonstrated the remarkable balance consistency and strength of our business. We continued to see momentum in the markets. We serve and are poised to continue leading and innovating and Apple Enterprise management.

Now I will turn it over to Jim.

Thanks, Dane and thanks again to everyone for joining us today.

As Dean mentioned, we continued to see strength across all aspects of our business.

Revenue for the third quarter with $95 million.

Representing growth of 36% year over year.

Exceeding our expectations due to outperformance across all without any counterparty.

<unk> contributed $5 $1 million of revenue in the quarter.

Total IRR.

September 3rd yet, it's $384 $8 million.

An increase of 47% year over year well.

Organic growth of 37%.

Consistent with the past two quarters.

Organic growth is driven by a greater than 25% growth across every cancer product with all three major geographies and all of top commercial industries.

A growth of over 30%.

We ended the quarter with 25 million devices on our platform, representing 34% year over year growth.

We continue to see strength in both the education and commercial verticals and all geographies.

Okay, then by both new logo acquisition and device expansion within our installed base.

This device count just like stamp plus on their devices, excluding any duplicate.

Additionally, we continue to see the benefits of our upsell and cross sell products into our installed base.

Our dollar based net retention rate remains strong at 119% for the trailing 12 months ended September 30, yet.

If they gave them out in the Cleveland area until they have 12 months of training data.

The remainder of my remarks on margin expense items and profitability will be.

On a non-GAAP basis.

Our GAAP financial results, along with a reconciliation between GAAP and non-GAAP.

In our earnings release.

Gross profit margin at 80% compared to 83% in the prior year quarter.

Normalizing for the channel connect revenue recognition changes gross margin is consistent with the prior year quarter.

With respect to operating expenses.

We remain focused on improving the leverage in our business, while balancing investments for growth.

Increases in operating expenses over the prior year were primarily due to these investments for growth.

Sales and R&D head count as well as building and public company costs.

Operating margin was 2%.

Our annual effective tax rate for the nine months of 2021 increased to two eight.

8% to negative <unk>, 5% due to the one their acquisition.

This increased our effective tax rate third quarter to four 7%.

Unlevered free cash flow for the trailing 12 months ended September 30th and $81 $5 million, reflecting a 24% unlevered free cash flow margin compared to $57 $6 million or 23% margin in the prior year period.

Our operating model, Tycho and efficient deployment of capital.

<unk> strong cash flow generation.

Just to continue to make investments in innovation and top line growth.

We ended the third quarter was $227 $1 million in cash and cash equivalents.

Now for my thoughts and guidance for the fourth quarter and full year 2021.

We expect strong performance to continue given what we've achieved so far this year and the momentum in our business.

As we discussed during our previous calls beginning in the third quarter.

Updated how we deliver I can't connect product, resulting in a change in revenue recognition, that's less revenue recognized upfront as on premise subscription revenue.

As it will now be recognized ratably over the term of the subscription in line the majority of our revenue.

Well there is no impact to our.

This change will defer revenue in the second half of the year in the future quarters.

Our full year revenue percentage.

Our organic growth.

Close rate typically exceeds our revenue growth rate because the IRR excludes services and license revenue should grow at a slower pace than our recurring revenue.

And <unk> added later in the quarter had a smaller contribution to revenue in the quarter.

Given these considerations.

For the fourth quarter of 2021.

Total revenue in the range of $99 million to $101 million.

Representing growth of 30% to 32% year over year.

Non-GAAP operating income in the range of one five to $2 $5 million.

For the full year 2021.

We expect total revenue in the range of 361.5 to $363 $5 million.

Representing growth of 34% to 35% year over year.

Non-GAAP operating income in the range of $19 million to $20 million.

As a reminder, non-GAAP net operating income reflects the impact of the one their acquisition.

<unk> purchase price accounting adjustment on.

And there is run rate operating losses.

Approximately $5 million of planned investments in go to market headcount.

Growth as well as customer support and customer success headcount.

Additionally for modeling purposes, we are providing the following information.

For the fourth quarter and full year 2021 amortization is expected to be approximately $12 2 million and $41 $3 million respectively.

These amounts reflect the preliminary when their purchase price allocation and is subject to change upon the completion of the analysis.

For the fourth quarter and full year, 2021 stock based compensation and related payroll taxes.

<unk> to be approximately $47 6 million and $74 million respectively.

We expect an annual effective tax rate of less than 5%.

Also be used when calculating tax effects of non-GAAP adjustments.

This annual effective tax rate is impacted by the establishment of a valuation allowance in 2021.

In addition, we do not currently pay cash taxes on a U S type of thing.

For calculating EPS, we expect basic and diluted weighted average shares outstanding to be approximately $119 1 million and $138 million, respectively for the fourth quarter of 2021.

For the full year.

Basic and diluted weighted average shares outstanding to be approximately $118 3 million and $124 7 million respectively.

Looking ahead with.

The momentum we're seeing across all geography.

Industry and all products along with the continued investment in our go to market activities.

We expect to continue to deliver strong revenue growth in 2022, bolstered by new products and increasing strength in our commercial business.

In closing our Q3 results reflect the continued strength balance and consistency of our business.

Replace a strong finish to the air as it continued to deliver for our customers.

With that Dan and I will take your questions.

Operator.

Certainly ladies and gentlemen, if you have a question at this time. Please press Star then one on your Touchtone telephone. If your question has been answered I'd like to remove yourself from the queue. Please press the pound key but before we go to questions I'd like to hand, the program back to Dean Hager for any for a few words.

Thank you Jonathan Hello, again, everyone I wanted to take just a couple of more minutes to comment on the announcement yesterday of Apple business Essentials, which is now in beta in the United States.

For clarity Apple business Essentials is a paid subscription service offered by Apple that includes icloud storage applecare support and simple device management capability. It is in beta with expectations to become generally available next year for small businesses within the U S.

This offer has been long anticipated ever since Apple's acquisition of fleet Smith June 'twenty 'twenty I've been asked about it many times over the past year and a half and so now I'd like to take a little time to provide clarity on this latest development with three key points.

First this announcement has been expected we are very close to Apple frequently releasing products at just the right time prior to an Apple announcements like we did with Geoff protect prior to the announcement of the M. One chip with jam connect prior to Federated managed Apple Ids and just a few weeks ago with our private access launch with.

Days of Apple's private related data complementary products that protect organizations and people when the fleet Smith acquisition occurred I said it would result in three things improvement to Apple business manager a cloud service that jump embraces for several of our solutions. That's a good thing. We also said that afterwards.

Likely maintain a first party small business capability to perform some simple MDM command.

Additionally, we said that the acquisition will not have a material impact on our business. All three statements have proven accurate and Janssen partnership with Apple has never been stronger.

Second nearly all valued delivered in <unk> business plan and Apple business Essentials is additive Jim works closely with Applecare and has no interest in competing with ipod storage and Apple's device management capabilities support only a subset of the MDM framework. There is no overlap with Champs identity and <unk>.

Access management or device and data protection and jumps management capability as a super set of MTM going well beyond the framework.

None of jumps growth drivers, including math education industry transformation, and health care transportation and international security or access management are impacted in fact, I think Apple business Essentials will have a positive impact on these growth drivers.

Which brings me to my final point as with all Apple innovations. We believe this latest offer presents new opportunity for Jabil.

Anything that raises apples profile and business is great for Jill.

<unk> has always coexisted with first party apple compatible or capability ever since they launched MDM in 2010 and profile manager in 'twenty 11, which is Apple's free M. D. M D.

With this most recent announcements Apple has extended Apple business manager to create a simple on ramp for small companies to get started with Apple devices that work. This is excellent news as it grows the total market size and provides champ more strategic addressable targets most of our product portfolio.

<unk> adds value and is sellable to customers, who choose Apple business essentials, meaning we are going to continue to do what we always do.

Fill the gap between what Apple builds and the enterprise requires.

Additionally, with our new cross platform threat defense data policy and private access products. Our solutions are no longer apple on them, but they are Apple best considering the incredible momentum of enterprise Apple devices globally. We believe this expected announcement is good news and presents.

With a terrific opportunity when Apple innovates jumped celebrates I hope that provides some clarity now we are prepared to take your questions Jonathan.

Our first question comes from the line of T. J Hynes from Canaccord. Your question. Please.

Hey, Thanks, guys.

Dean really nice to see the consistent growth here I want to follow up on the business essentials topic, just because it seems the most topical but go to a bunch of questions on it so.

Just three simple questions. So first have there been any change in your relationship with Apple as a customer.

Second as there been any change your relationship with Apple as a channel partner I think the answer is no based on what you said about those but I like to hear you say it.

Third what percent of your revenue comes from companies with less than 500 employees today.

So I'll take those first two and then I'll kick it over to Joe.

First of all yes, no change in our relationship with Apple across any channel customer or any of those things. So you're absolutely right you heard me say it.

Bill why don't you take the network.

Yeah, Hey, T J could hear opinion, you know when we measure the number of customers that we have of course youre going to have quite a few at that low end of the market, but it's just a small sliver of the number of devices that we have because that's actually our economic unit that that we really focus on what's gone any evaluated how much of our current <unk> is actually addressable with the Apple business.

Central.

Got it.

Low single digits of our current <unk> and even if that were not concerned because.

Our retention right now have been higher than ever.

And this new solution is in tenant sales are small businesses. They actually don't use another solution. So there's really no financial functional benefits. The customers that are currently on our platform to flat. So I think that we're really looking at this.

In greater opportunity as the Apple market calls.

Perfect. Thanks for the clarification, and then I want to ask about one Dara and just on the numbers. There. So if my maths right I think it added 26 or $27 million in IRR.

In the quarter. So first the purchase accounting impact that and second any color on how fast one Dara is growing.

So I'll take that one D J.

The purchase price accounting does not impact the <unk>.

There are impacts the revenue the deferred revenue that we brought over and we did have a haircut something less than a million dollars in the quarter and you're right in the ballpark on that on the ore that came over as well and when we think about how one dara it's going to grow well.

The quarter meeting up to end the quarter right on the heels of.

Integration of the acquisition, Yeah, we did see growth.

Slower than what we were where it had been but right in line, what we expected and then when we look forward we expect it to grow at the same pace as the rest of the campaign has been growing okay. Perfect. Thank you guys.

Thank you. Our next question comes from the line of Chad Bennett from Craig Hallum. Your question. Please.

Great. Thanks for taking my question, just as we look into <unk> into 'twenty two Jill.

Just on the connect revenue Rec piece is is that you know.

I know it was the second half of 'twenty one headwind.

Just on a net net basis is that still a headwind for all of fiscal year 'twenty two from a revenue standpoint subscription revenue standpoint.

No you can think of it as a slight headwind in the first half of the year and as our business has grown quarter over quarter and year over year, becoming such a small percentage of our business for the first half of the year.

Probably consider it could be just a couple of percentage point impact on our <unk> and it will start to normalize once we lap the one year of that.

In the third quarter.

Got it and then I don't know.

Between a couple calls but in terms of where we are.

Attach rate wise for protect and connect and kind of the whole threat defense landscape and did you guys give an update on.

Where you are there in terms of attach rate and if you care to share maybe what you think that growth could be from a penetration standpoint over the next.

12 months.

Yeah, Hey, this is Jeff so.

When we think about the attach rate of peanuts and protests, we have we have been getting some color on that.

Product began to ramp in our portfolio. We added about 700 customers on the connect platform in the quarter and about 400 unprotected and that's pretty similar to the previous couple of quarters, it's ramping a bit when we think about what that can where that can get over time, you know, we think of it as being you know 50% of our customers.

Patching to wind those products over time, and probably thinking about it.

Yes, we are announced that Jay that we had now over 3500 customers of jam connect in over 500 customers have jumped protect so that gives you an indication of all of our interface.

Got it and then if I could just squeeze in one more I apologize.

Just in terms of how we think about.

<unk> growth relative to subscription growth.

Think we're at a point right in the model where they should be.

Be fairly similar correlate.

It looks like again knock on wood, if kind of seasonality plays out the way it should in the fourth quarter for you guys.

Youre going to have another very good <unk> growth quarter again knock on wood.

In the same ballpark is where you were this quarter.

But I guess.

If you look at.

Kind of subscription growth rates I guess out there right now.

On the street.

There is there's a pretty big Delta.

Where are you putting up what are your AOR growth is today right.

And where those subscription growth numbers at least today sit for next year.

Is there something we're missing in theory I don't want you to.

Whatever you can share their gel, but just curious it's a pretty wide spread right now.

No we did.

We're getting to the point, where our IRR and our subscription revenue growth rates are going to start to converge because they can have we have less historically, we've had some of our <unk> that was recognized upfront and on Prem.

Took it on premise you have less and less of that especially now with it.

Correction or that.

The change that we've made and how we're deploying that can't connect product. So by the time, we get to the end of 'twenty two the amount of on hand will be so small that there won't be much of a difference between those two growth rates.

It sounds like there shouldn't be a big Delta, that's what you're saying.

No. Thank you. Thank you.

Sure.

[laughter].

Thank you. Our next question comes from the line of Sterling Auty from J P. Morgan Your question. Please.

Yeah, Thanks, Hi, guys Dean in terms of back to the Apple and a B E.

Did they give you any indication that this is the beginning of the strategy starting with SMB and should we anticipate that.

At some point here in the future. The next step is going to be their full on competitor up and down the stack in terms of small business enterprise.

So obviously, we work very closely with Apple I'm never going to.

Chad speak for Apple in any way so I will just give you my perspective.

My perspective is that.

Apple is in the position, we've actually and we've communicated this before at the small business level not at the enterprise level, but in the small business layer.

<unk> actually had an issue where it was not easy to onboard Apple devices I've shared a little bit about some of the technical complexity, even at the low end of jams now.

And so what apple needed to do is to be able to provide a very simple first party method two for an ITT for instance to lock a device that might get lost.

They were the only manufacturer a major manufacturer of systems that didn't provide this level of first party.

Controlled through the cloud and so it's something that they needed in order to improve Apple adoption, the very low and they don't have that same issue really even a medium sized businesses or large sized businesses. So it was a very targeted approach. Just so you know I mean as you well know when we talked about our fleet Smith when they were first acquired it.

We're a very low end providers. So much so that our words were that we did not consider it a competitive solution. We also do not consider this a competitive solution. It actually supports less of the MDM framework that lead Smith did when they were actually acquired.

This is not something that generally gets in our space. We're pleased that it will contribute to the overall growth of that pulls UC business.

That makes a lot of sense. Thank you for that and then one follow up would be on the education sector, you kind of game.

Alluded to maybe a cooling of spend can you elaborate more on that what is it specifically that you see as cooling because I think a lot of investors think about the federal funding that's going into the K through 12, and why wouldn't that continue to be a big tailwind.

I think it will be a tailwind actually I think it's in a period of time within Q3, specifically, where some of that hasn't really taken off yet again organizations are still identifying what they can actually spend on it and it isn't really a cooling of spend it's just a growth rate versus last years core.

Ching Q3 within education, So, it's really more a testament of that than anything else.

Understood. Thank you.

Yeah.

Thank you. Our next question comes from the line of Matt Hedberg from RBC capital markets. Your question. Please.

Hey, Thanks for taking my question.

I think we're still to me too was a lot of strength in on the commercial side of the house.

When you sort of think towards <unk> and even even more so 2022 and what are some of the things that give you confidence that that strength will continue.

So thank you so much for the question.

Well first of all our entire business.

Eight of this for some time is driven by the consumers Asian of IP I still continue to say that Sunday everybody to work at home for over a year has accelerated the consumers I should've I T.

The first answer to your question would just be an incredible apple adoption, the consumer <unk> Iot, the changing and demographics and the unbelievable hardware that Apple's releasing right now is just increasing the demand around the world I cited in my.

Prepared remarks that Idc's numbers have the Max for instance throughout 2020 in the first three quarters of 2021 growing at over twice the rate of the industry and the fastest growing locked up so.

We that is our best market and yet we're growing faster as I mentioned earlier as well and in iOS and iPad are less so.

The specialty around Apple the incredible experiences that we can create for individuals and frankly, the ease at which the it and security teams are able to use our tools to be able to deliver a secure enterprise are the things that are going to continue to drive use in commercial Marvin.

That's great. Thank you and then Joe I think you noted there was $1 8 million devices added in the quarter and I could I think you said that thats that it also included some from one Dara is that correct.

That doesn't include some from one there are devices in their devices.

It had some duplicate some of it there where we had overlapping devices to reflect the decrease in that.

A decrease for that.

So then because I think last quarter you added about $1 4 million devices is that kind of in the ballpark, maybe a kind of the organic adds for <unk>.

So one of the thing that's different about the Q3 adds versus the Q2 ads, it's really the mixture between commercial and education.

<unk>.

Slow down a bit from where it had been the previous four quarters commercial really started to take off and commercial they get fewer devices for the air and so it's really more of a mix just based on seasonality and where we are in a court in here.

I see that makes lot of sense. Thanks, a lot guys.

Thank you. Our next question comes from the line of Raimo <unk> from Barclays. Your question. Please.

Thank you.

I apologize for the question that bumps because it's a number of quick question.

As we have been discussing with investors like it wont be comparison that comes up it's like Microsoft with the E.

M S offering where you started low and then they kind of you know with very low end offering just kind of walk up the market and it's got a lot of like volume in there like could you maybe kind of go one more time through like how the Apple offering is different.

In terms of how comprehensive visits et cetera to kind of that offering that's kind of Microsoft used to kind of pull up that market and then a second question worth any commentary around the AOS and momentum you guys seeing in the installed base.

Do you have the mark but the IRS is done by other providers like what are you seeing there in the field at the moment. Thank you.

Thank you Raimo for the question. So first of all I mean, obviously, the most significant answer to your Apple versus Microsoft as Microsoft has always been a giant in the enterprise. It is a strategic market for them they have been there forever.

And Apple has never really had an enterprise solution.

There are 45 year history, so that's a pretty stark.

Between the two organizations, but if I couldn't give you. An example, maybe that will help so let's say you were all small business owner and you're just trying to decide between.

Giving your employees chromebooks Mac or windows.

And you don't have that much money you just want to make sure that you don't lose the devices. So you ask each of the providers. If I lose this can I press the button in a web browser and just what the screen well the answer for Google has been yes, and the answer for Microsoft has been yes, and the answer for Apple has been to that small business owner, if you buy from third parties.

Software and.

And clearly that is going to impact the adoption of Apple at the very low end of the market as soon as you get into the mid range of the market or the larger into the market.

It doesn't apply because you have teams and you also have a.

Systems that are in place, but at the very entry level a.

First party ability to be able to do some simple MDM function again, which apples actually had since 2011 and an on premises solution. So this is not new this is something that they've always had and now is available through a pilot.

But essentially that's the problem that they were attempting to solve with this and we applaud it we've actually been leaning on them to have a simpler solution at the very low end of the market, which for technical reasons I won't go through it it's really kind of a problem that only apple can solve they really had to take it on themselves. So it's something we've been asking for.

They've done it and we think that's going to benefit the rest of the market regarding iOS.

We have a couple of key reasons, why we win and why we've been growing there so fast.

First of all is we handle the complex industry workflows.

<unk> health care transportation retail simply the best on the market and they are very complex as you get into shared and yet personal devices.

The other reason why we win is we have such a strong presence as you well know 23 of the top 25 brands in the world.

Most of the leading companies in all industries using us for math and what they're finding is that they just.

You have some solutions on our issues on the iOS side that they don't have on the map slide so they end up moving their iOS devices over to a proper Apple enterprise management solution with their maps.

Those issues are pretty much go away. So for those two reasons I call them industry and ecosystem are the primary reasons why.

We when we actually don't go out to compete for simple MDM commands.

That generally is kind of a race to the bottom of the market and there isn't a lot of interest to us.

We're more interested in solving business problems, which is what we focus on and that's why we want.

Perfect. That's very clear thank you very much for that income.

All right.

Thank you. Our next question comes from the line of Koji Ikeda from Bank of America. Your question. Please.

Hey, guys. Thanks for taking my questions and apologies for my end to another Apple question, maybe on the other side of the equation I read somewhere that this Apple business Essentials is good for up to about 500 employees and now I was wondering could this potentially create like an effect of as Apple business essentials good enough for us.

So maybe you could help us understand a bit more about the key or maybe multiple key technology pieces for our customer around that 500 range that would not want to switch to Apple business essentials.

Well once again Apple by their own words have no interest in going after customers, who are actually have a system in place remember the problem that I just described apples trying to solve.

For a new small business that isn't running anything that has some pretty simple capabilities that they wanted to take what the device.

<unk> has been a space that we've never really attempting to compete on an apples trying to solve an issue for those customers.

Yes, there are literature says up to 500 customers, but there's another element of that are up to 500 employees, but there's another element to that it's up to 500 employees, where the I T team only has a need for a few simple MDM commands no security need no.

No identity cloud connections need no threat defense need no private access need none of those types of needs.

With fewer than 500 employees the need for some simple commands, that's really where it's targeted and again, that's where the market needed a solution and by Apple offering. This it is actually going to open up for more small businesses to start using Apple.

And I'd add Apple devices, which is what we want.

Got it no thanks for that and switching gears off Apple I noticed in the press release and I saw the.

The announcement to earlier.

And I was wondering if you could talk a bit more about what you mean by a modern hybrid workplace in and I guess more importantly, what could that mean for margin margins and capex in the future.

Oh sure I'll, let Jill take the margin of Capex, but I'll just talk about what we meant about that announcement.

I've mentioned before that I actually wrote my thesis paper on Telecommuting and 1995. So it took 20 years in a pandemic, but I was spot on and the predictions.

Where I was at one <unk>.

I don't know in my mid twenties herself, but I've always been.

Someone who believes that employees can be their most productive and they're most comfortable environment, where they choose and have great flexibility in where they work and so our office environments that jam have always been put together to facilitate that kind of flexibility and ALS.

We have a body of employees, who used to come into work every day and then immediately went home and now we're going to have more of a new come in as you want to sort of environment that necessitates a brand new set of kind of facility.

Ts.

<unk> facilities relationship with it.

Lin Lam, our new CIO actually owns not only our I T infrastructure, but also our facilities, so kind of where Apple technology. Since that's what we use meets office environment that we're pretty excited to be able to create some new experiences for employees.

If you want to talk a little bit about our capital.

Yeah, I would just I would just add that you know as you think about that with the resources that will deploy we're not too far away from a gain just described that we've been working on that for years actually and so we've already made a lot of those investments to take the opportunity during COVID-19. When our offices are empty. If you get a lot of that intersection places now.

And prior to that the reason that we've been so efficient and effective when we went home a year and a half ago because they already had those tools in place and in the hands of all of our employees, but going forward one of the things we're going to have that links can be working on is making sure. We've got the.

The best and the proper foundation when it comes to our business systems that can help us scale to that billion dollar organization level and really placed in focus there and making sure. We've got that all buttoned down so that's what we'll be putting some effort.

24 months.

Got it thank you very much.

Thank you. Our next question comes from the line of Gregg Moskowitz from Mizuho. Your question. Please.

Okay. Thank you for taking the question good afternoon guys.

So you mentioned that your commercial business has further accelerated are you able to put a finer point on what youre seeing anything Dean in terms of transaction velocity deal sizes et cetera.

While I mentioned that I mean, there were two vectors of growth one was our new logos that brought us up over 57000.

Customers and we see that are.

Our CFO, John <unk> and the revenue team that we have there is just extremely.

Effective and efficient at bringing new customers in the door and then as Joe mentioned with our 119% net revenue retention, we have our customers continuing to expand adoption of devices and also purchasing new add on products. So.

The product family that we offer as part of <unk> business plan has definitely proven valuable for those customers and it's been pretty clear.

They voted with.

Frankly, there are dollars that.

That a solution that best fits them.

As a single solution intended for Apple that brings together the management of the device the connection of the user and the protection of the data and thereby it together.

Just seen tremendous success with that combination.

Alright, Thanks, Dan that's helpful. And then if you'll indulge one more applebee's essentials question and I think we're all by the way just are well aware of.

Where the stock is trading right now about $1.4 billion of market cap has had.

It has effectively gone away over the past 48 hours. So that's the spirit I think of all these questions, but I did want to ask one on one more so you were very clear that you know the under 500 employees.

Segment only represents low single digits of your total a R. R.

Now at about $3 per month, the starting point for Apple business Essentials is smack in the middle between Euro Champs now and Jeff now plus products and so it's interesting that it's not even being priced at a meaningful discount.

Frankly see any concerns about displacement, but you know to the extent that new small business is comparing these two solutions at some point in the future can you provide maybe a bit more color as to what features beyond remote lock our most valued by your chance now customers.

Yeah, so for whatever it's worth just again I mentioned earlier, we don't consider this a competitive solution competitors generally tried a beach one functionality undercut you on price and come after your customers and Apple has done none of those things.

On the there is no financial incentive or functional incentive or even process incentive.

To switch.

This is but just to give you a data point the key is not necessarily I mean, Jim now and jump now plus.

Significantly more capability.

But the challenge that Apple has had in the small business space.

Is to bring in any M D M, even including the MDM capability to jam packed and sync it up with Apple business manager is actually kind of a complex process and I think ive mentioned during our prior calls that envelope with jump now we actually noticed a pretty substantial.

<unk> fall off between when a customer signs up and when they get their first device involved because of the steps that they have to do interchanging with Apple by Apple actually taking disability within Apple business manager and connecting to Apple business manager Theres going to be able to onboard those customers of that.

We have very simple needs are pretty easily and again, that's going to create more small business use of jam also remember that most of our products now are actually sellable back into any MDM, we kept jumped connect MDM agnostic, we check Jan protect MDM agnostic.

All of the products that we acquired from <unk> MDM agnostic. So we have a lot of value that can be added.

No matter, what MDM that they run, but as they want to scale and have one single integrated solution for management connection and protection championed up offering that path as well.

Super helpful. Thank you.

Yep.

Thank you. Our next question comes from the line of Rob Owens from Piper Sandler Your question. Please.

Great. Thank you guys for taking my question.

Curious on the one Dara front now that you've had a quarter of it under your belt just customer reception number one and any plans on bundling it moving forward.

Answer the second one first we are absolutely going to create some packages similar to what we did with <unk>.

Jeff business plan and there's a few different options that we're working towards and we will be working towards that end in 2022, and we think that that will make purchasing just much easier for customers.

I will tell you. This that you know in terms of pipeline development in the first three months through our <unk> channel not even considering the one Dara channel that that was brought over and of course as I mentioned in my prepared statements that that continued undistracted, including closing the largest deal through that.

Channel since 2019, so we were pleased that that happened in the first three months of us being together, but through the <unk> channel. The pipeline development around these solutions was significantly greater than any other solution that we've launched or acquired but in the first quarter.

So it is a relatively simple thing to position would you like to have.

Anti phishing and preventing malicious download for your mobile devices.

Would you like to have private conditional connection to your enterprise resources without users ever having to sign onto a V P.

And would you like to enforce appropriate data usage on those devices.

Only a few questions that are necessary.

And when you talk about it being integrated with the rest of the jump that we've seen a lot of early customer interest.

And then second could you touch a little bit not on the Apple, but on the international opportunity and what you guys are seeing you talked about the commercial acceleration and as you compete internationally is there anything interesting from a localized competitive perspective.

Thank you.

Thank you for the question again.

You've mentioned a few times that our growth outside of.

The U S is even stronger.

Then it is inside the U S. We have a great presence, we have announced several times that our growth in all three major geographies are greater than 30% year over year from an AUR perspective, and again, it's just a tick higher outside of the U S and there really isn't from a like a product localization we have multiple languages.

Those types of things, but the trick is to make sure that we have the channel to be able to get to any customer in any geography larger small anywhere in the world and we Fortunately have that both through our direct channel through our partnership with Apple.

And also through our indirect selling channels and then also we have ecommerce ability to be able to purchase our products and.

And we'll take our several purchases that way as well. So we are there we're.

Pretty much in any country, we would want to do business and we have the ability to reach all of the organizations that would be interested in our product large or small.

Thanks, Steve.

Sure.

Thank you. Our next question comes from the lineup.

Sur from William Blair Your question. Please.

Hi, This is Matt Stotler on for <unk>.

For taking the questions and thanks for all the color and nice to Super helpful. I guess, maybe just one from US in terms of you talked previously about vertical specific products and workflows, you're seeing changed pretty strong adoption here, whether that is health care.

He was also travel hospitality, let's just get an update on those products and then as you think about opportunities to expand the set of offerings from afford development perspective, what's kind of top of mind for you.

Yeah. So one of the reasons why we do so well in those markets as big jump I mentioned it several times has patented capability that allows for shared usage of Apple devices that are also personalized and what I mean by that is think about various whether it's raw.

<unk> within a hospital whether it be.

<unk> flight attendants on an airline whether it be our retail worker in a store, we actually have the ability to power up the device to a set multiple choice setup screen you choose what you want and Bam.

Personal lives with single sign on and the ability to be able to use that device for the purpose of that particular shift that's being worked.

When it hands off to the next person who is going to work you can reset and set up again and once again you get that person a productive there is nobody else in the world that has functionality similar to that and it has shown that we are.

We really end up serving are part of the market that nobody really served.

As far as the future of that I will tell you we're really very interested in.

Workflows, where devices automatically change states based on the state whether it'd be a location or Wi Fi or what have you that they happen to be in until this notion of state based configurations.

We think has a lot of potential to even solve more industry workflows. So we'll be continuing to invest in that area and once again like I said earlier.

Not managing devices.

Solving business problems is why Jeff has done well and we will continue to do that.

Got it thanks again.

Okay.

Thank you. Our next question comes from the line of Rod Hall from Goldman Sachs. Your question. Please.

Yeah. Thanks for fitting me in guys.

Two quick questions one on the numbers kind of going back to this educational question, but I noticed the the on Prem number was down sequentially and I guess I I seem to remember a lot of that pulse and spending there was related to the schools, but I wonder where you think that on Prem number kind of settles out do we see it.

Again in December kind of what's the trajectory of that number I guess and does it kind of settle at the level. We saw back in 19 or where do we end up on that.

And then.

Then I have a follow up to that thanks.

Hey, Rob, it's Joe I'll take that.

I'm proud of is really being impacted primarily because of that that change in our revenue recognition for jumped connect that the revenue was hitting their prior to the third quarter and then what's the change now that's been treated radically ethanol subscription line. That's the biggest driver right. There anything out that did that would be immaterial.

Seasonality differences.

So do you think Jill that just kind of then very seasonally from here. This is just kind of a new normal for it and then we should be modeling it seasonally.

Ah, yes, it'll be seasonal during the education season is about seasonality there and then it's just going to become a smaller piece a smaller percentage of our total again as theyre moving but can't connect out of that bucket and as we continue to migrate the remaining straggling account into the cloud.

Okay. Thank you and then I did I've got a kind of a technical question on the business essentials from Apple I noticed that they're providing separate encrypted.

Areas for data for business data and personal data and I'm, assuming that extends to Mac and I don't I don't think we've seen them.

Provided a secure area for business data protect users' privacy that way and I'm. Just curious what did you guys take on that is I mean.

Does seem architecture like a little bit of a difference.

Not maybe something I would've expected them to do so just curious what your thoughts are there.

Oh, what they're referring to there thanks rod.

Is actually functionality that they came out with in the fall of 2020 called user enrollment and it is awesome and obviously, Jeff was the first to support it and we actually announced some new capabilities around that at <unk>. This year.

Whether it be what I've mentioned this before that B Y O D has always had a problem in the market where on one side you don't really want to fully manage B Y O D devices. These up violates the person's privacy, but on the flip side.

If you're only just try and manage an application or two on the device without any device management, you're not really providing that user with any services. So therefore, the organization wants to be secured in the user wants to be private and there hasn't been a solution for that and Apple originally.

Leased an early version of user enrollment as I mentioned in fall of 2020, we supported that and then in 2021 offered a great New service discovery feature with Jeff announced support of at <unk>, which actually allows B Y O D users to go into general settings, VPN and <unk>.

Profile, our device management and simply tap the button signed into work school or work and when they do that.

Jump wakes up and automatically enrolls that device that separates the personal side the data partition from the worksite keeping everything for the user completely private I believe this is absolutely the future of BYOB and this is a market that we historically haven't really even.

You know strategically approach because there hasn't been a good way to do it up until now and.

Now with this new capability, we are very excited for.

We're putting together some interesting new offers for 2022.

Alright, that's great Super helpful. Thank you.

You bet.

Thank you. Our next question comes from the line of Josh Reilly from Needham Your question. Please.

Hey, everyone. This is Michael Rackers I'm on for Josh Reilly I'm. Just one quick question for me I know you mentioned that a little bit earlier, but can you talk a little bit about the sales cycle length around the one dara products versus the <unk> portfolio.

Maybe some different go to market strategies with then the mix of one therapy.

Products.

So regarding sales cycle lengths.

They've actually been in the portfolio now for three months and of course as you know the sales cycle lengths you only can measure them based on the practices you have for when you entered into the pipeline and different sales forces might enter it into the pipeline at different stages of the.

Sale itself, so I really don't want to comment on the historical sales cycle, one Dara as.

As they were a Standalone company and I don't think it's probably appropriate to comment on it based on our first three months of ownership.

But what I do know is from kind of an overall AOSP you might notice that given our <unk> and number of devices here in Q3, we actually took a nice little hop up from an overall <unk> per device that is because of the ASP that we're able to get from the one Dara solutions now.

As well that are in the mix. So we have long been able to by adding additional products within the Mac space continue to get more value out of each individual device and now with the one darrow products not only do we get even more value out of the math device, but we also get more.

Dollar value out of each iOS devices as well.

Great. Thank you.

Thanks.

Our next question comes from the line of Pat Walraven from JMP Securities. Your question. Please.

Hey, Tim It's Joe <unk> on for Pat. Thank you for the question. The last one on competition competitive dynamics, that's the way it but can you just give us an update on win rates overall and then one for Jill is there anything else to call out in the gross margin this quarter.

And then maybe how should we think about the trajectory going forward of that thanks guys.

Yeah.

We've never really released when rates, but I will tell you. This.

The win rates throughout this year as a matter of fact over the last couple of years.

Our higher than what they were at any other time in our history. So we're at a peak when it comes to.

Hopefully actually will probably.

Ideally continue to improve but our win rates have consistently improved.

It's also worth noting Jill mentioned it that our gross churn is also at the lowest point that it's ever been in history.

So we're it's out a really great spot, where our customers are engie.

Enjoying the value that they get they're staying with us and actually purchasing additional solutions as well as I mentioned earlier so yeah.

Yeah.

All of those metrics are at a kind of a jam historical best.

Yeah, and then when you think about our gross margins for the quarter. The biggest driver of the slight dip that we thought it was really the fact that we've got that depth connect revenue recognition change that's pushing some of that revenue into future periods. While it was still better cost to support it and then also a little bit of.

Investments that were starting to make on behalf of the one day or acquisition really focusing on improving customer support and success and making things better.

The two things that are hitting the margin this quarter going forward.

Could consider those.

The margin being somewhere in the range you know kind of normalize in the last couple of quarters.

Thank you Bill it's Super helpful.

Thank you I'm not showing any further questions at this time, thank you ladies and gentlemen for your participation you may now disconnect.

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Thank you for standing by and welcome to the Champs <unk> third quarter 2021 earnings Conference call. At this time all participants are in a listen only mode. After the speaker's presentation. There will be a question and answer session to ask a question. During the session you will need to press star one on your telephone as a reminder, today's program is.

Is being recorded I would now like to introduce your host for today's program, Jennifer Martin Vice President of Investor Relations. Please go ahead.

Good afternoon, and thank you for joining us on today's conference call to discuss <unk> third quarter 2021 financial results.

With me on today's call are Dave Hager, Chief Executive Officer, and Joe Putman, Chief Financial Officer.

Before we begin I'd like to remind you that shortly after the market close today.

Issued a press release announcing our third quarter 2021 financial results.

Also published an investor presentation, and an excel file containing quarterly financial statements for fiscal years 2019, 2020 in 2021 year to date to assist with modeling.

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 were.

You'll see a discussion of factors that could cause actual results to differ materially from these statements.

I'd also like to remind you that during the call. We will discuss some non-GAAP measures related to chance to performance you can find a reconciliation of those measures to the nearest comparable GAAP measures in our quarterly financial statements. Additionally.

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 being Hager.

Thank you Jen and thank you everyone for joining us on today's call I will share highlights from the third quarter and recap our annual Janssen Nation user Conference. Jill will then review our third quarter financial results provide our outlook for the fourth quarter and fiscal 2021 and give some high.

Level thoughts on fiscal 2022.

For the last few quarters, we've talked about the remarkable momentum consistency and balance across our business. In Q3 was no exception, our total <unk> growth was 47%.

As a reminder, jam completed the acquisition of one Dara at the beginning of Q3. So this <unk> is reflective of our combined companies jumped Q3 organic growth was 37%, which matches our average IRR growth for the six quarters, we've been a public company.

Demonstrating remarkable consistency.

Going forward, we will not break out <unk>.

Byproduct or acquired company, but we felt it important to provide this clarity since Q3 represents the first quarter post acquisition.

This <unk> growth was driven by both strong new logo acquisition growing jumps total active customers to over 57000 by the end of Q3 and also a tremendous growth within our customer base due to Apple device expansion and customers purchasing new add on products.

Phil despite customers growing their use of jam no one customer represents more than 1% of our total ALR a testament to the diversification of our revenue stream.

Additionally, once again, we saw excellent year over year <unk> growth for all Jam products, all three major geographies and all of <unk> top 10 commercial industry.

We talked last quarter about how in both Champs commercial and education markets. We saw bookings growth rates returned back to pre pandemic levels.

As expected in Q3 after a tremendous growth last year, the education market levelled off of that while growth in James commercial markets accelerated even further commercial markets again made up nearly 75% of our total bookings with both the Americas and EMEA markets showing.

<unk> strength.

<unk> growth is reflective of Apple's device growth across global enterprises, driven by the acceleration of consumers Asian user preference and financial savings for organizations.

Our Q2 earnings call, we said at our New Forrester report finding that cost savings of deploying N. One map is $843 per device when compared to its PC counterpart in.

In Q3 constant <unk> company, a leading research firm focused on total cost of ownership and return on investment studies conducted new independent research, specifically with jam customers and found that our Apple Enterprise management solution addressed several specific customer challenges across.

Both large and small enterprises to deliver a quick and compelling ROI.

The study identified that jumps platform delivers significant benefits to organizations across three broad business objectives.

Simplifying our it management improving end user experience and mitigating risk.

Respondents indicated a 90% reduction in time spent on device provisioning deployment ongoing management and application management.

And user productivity also benefited with customers seeing a 90% reduction in productivity loss as support tasks were virtually eliminated with gap.

And as security continues to be a key focus for organizations customer saw a 70% reduction in time spent remediated incidents and vulnerabilities. We believe the significant value of Apple Enterprise management, and specifically the <unk> platform will continue to drive organizations too.

Span their Apple fleet through employee choice program.

In particular for Mac.

Today <unk> serves more than 50 customers, who have deployed greater than 10000.

Far more than any other provider of management and security solutions in the world.

And no industry has mapped choi spend more prolific than in the technology industry, where the math does become the device of choice for software Engineers Janse Apple Enterprise management solutions are used by eight of the top 10 technology companies in the world.

Three of which have deployed more than 100000 map.

In Q3 alone five.

Energy companies grew their jams deployments from supporting a total of approximately 160000 map to over 175000, we believe the changing employee demographics combined with the consumers Asian growth.

Growth in remote work and overwhelming popularity of the new line of Apple Silicon that is changing the landscape of the PC marketplace.

According to the latest analysis by IDC in Q3, Apple shipped more math than in any quarter in history with a growth rate double that of the industry. More importantly, this apple Mac momentum has been sustained with greater than 29% year over year growth for the full year.

2020, as well as 2021 year to date, making masks the fastest growing computer over those seven quarters of growth rate approximately twice the industry.

As jams platform capabilities broadened to solve more and security challenges, while helping enterprise math become more affordable we've seen map choice expand at even faster rates. One example, a clear jump and Mac ROI benefits is found at B J S House are you.

<unk> based technology and engineering consulting stuff.

When the M. One chip in Big sur arrived in 2020.

P. J S. S S existing systems Couldnt provide the support they needed for Apple's new technology.

They purchased 1400 seats of Jam business plan, which includes all jams management connection and protection solutions and now BJ SaaS tells us their new ability to purchase the more affordable M. One map and manage and secure them out of the box has resulted in rapidly.

<unk> return on their jam investment.

<unk> value and momentum is also accelerating as we help organizations with industry digital transformation, which has led to iOS and iPad OS representing the fastest growing device type on our platform for the past four quarters.

<unk> differentiates with a patented ability to automate unique industry workflows for rapid adoption of Apple devices, specifically to transform mission critical processes and customer touch points. In Q3. This capability led to jam signing the largest commercial iOS and iPad OS.

S deal in <unk> history.

One example of jams industry digital transformation can be found in the transportation industry, where one of our partners Lifesaver mobile provides a solution that prevents employees own use while driving as they did with bee sweet citrus a key supplier of citrus to Costco Lifesaver mobiles.

<unk> can be deployed to every employee phone with each app managed by our cloud based portal that includes the device restriction by implementing real time locking of iPhone devices. When the employee is behind the wheel enhancing driver safety.

Continuing with the travel industry in aviation Jampa has become the go to partner for airlines around the world for numerous workflows that engage flight attendant gate agents and ground crews one specific workflow that leverages, our patented jumped setup and reset applications provides pilots with cockpit.

Flight bags on iPad, where the content available changes based on whether the pilot is in cockpit or off duty.

Over the past year. This has led to jam being used to deploy over 100000 devices for airline specific workflows globally.

Q3 represented our best quarter ever for the airline industry.

And finally on the topic of travel industry, Jeff was proud once again to partner with Spacex to manage the ipads used in the first all civilian space flight in September.

The power and value of jams industry workflows can also be seen in the education market, our patented gym teacher Champs students and parents functionality are completely unique with no other traditional MTM provider matching jumped in classroom capabilities.

Sacramento City Unified School District, who had previously deployed <unk>, Google Jam pro or jumped setup and reset apps and jam connect expanded their deployment to include protect in Q3, and therefore is now running our all Apple Enterprise management platform. The result is that.

Sacramento City now has unique in classroom capabilities, they give teachers control of their classroom. So that they can best empowers student learning with Apple technology.

2020 was a year of transformation and education with tremendous device growth as schools became aware of the power of education technology in the importance of equitable access to learning while last year's focus was on device distribution and connectivity focus has now shifted to ensuring students safety while you.

Using these devices with the recently passed federal K 12, cyber security App, along with funding to strengthen schools security protocols, we anticipate a greater need for student safety solutions Champs, new students safety offering which builds upon technology acquired from one Darryl and was.

Announced that Jean Marc in October provides content filtering threat defense acceptable use and data policy.

Along with device and network protection meeting this growing need to protect our students and give peace of mind to teachers and parents.

Another example of leveraging the power of <unk> technology, combined with new capabilities. One Dara can be seen with Berkshire Healthcare NHS Foundation Trust, which provides mental health services and other community based health services, primarily to the Royal County of Berkshire in the U K.

Berkshire healthcare NHS Leverages, both Champ, and one day or two to play new devices and ensure these devices are protected and in compliance.

During the height of the pandemic they saw a 25% increase in mobile device demand and utilized jam for efficient zero touch deployment crossed its users and facilities. They have also seen significant value employing jams, new data policy solution from one Darryl for ongoing data savings.

For both iOS and Windows 10 devices.

Integration of one Dara into Jim brings additional efficiencies as the Berkshire healthcare NHS team will be able to seamlessly update mobile devices as they change hands within the organization building on <unk> strength to provide health care workflows for shared yet personal apple devices.

This capability during our first quarter together led to multiple healthcare wins in Q3 as well as several cross sell and upsell wins of the one dara products through our sales channel across multiple industries.

We were also pleased that the existing one Dara sales channel continued undistracted closing its largest deal since 2019 with a major defense organization for this win given the new customers vast data privacy and protection requirements. We engaged in a one month proof of concept with.

The new gym team deployed threat defense and data policy across the organization. This resulted in the customer fully committing to purchase these products for their 10000 plus devices demonstrating the ability for these new products to rapidly meet the needs of organizations with the strip.

The security requirements.

Q3, we also advanced Champs security solution through partnerships prior to the acquisition one Dara established a partnership with cyber reason a provider of threat prevention detection and response for endpoints in Q3, cyber reason and <unk> extended the partnership to fully embed jams threat.

<unk> adds scale for iOS and Android devices to help security leaders achieve comprehensive protection across all of their enterprise endpoints no matter their location.

In addition, <unk> also announced a new strategic partnership with Red can marry a security operations company trusted by hundreds of the world's best security team Jansen Redken area will help organizations succeed with Apple by bringing an integrated Apple native solution for threat detection and response tomorrow.

Red Canary uses telemetry generated by Jan protect to analyze device and user activity for risky behavior. When a real threat is identified red Canary responds quickly to prevent harm and data loss.

We highlighted this new partnership along with our new <unk> branded solutions like threat defense data policy and safe Internet along with other innovations during our virtual Jam Nation user conference also known as Jay now a few weeks ago, Jay Nutt has become the single largest gathering of Apple enterprise experts in the.

World and provide a forum for collaboration and learning and this year was no exception.

Along with showcasing these industry, leading innovation, many customers and partners shared their stories and how they succeed using apple and jobs.

Quality and engagement in this year's event, where extraordinary we offered 140 sessions across nine trap, providing the nearly 8000 attendees a significant amount of excellent content.

The average person attended seven five sessions equaling a total of approximately 57000 sessions viewed over three days showing that even though the event was virtual attendees were incredibly engaged. These numbers don't include the on demand deals that happened over the third.

The days that the content remains available to registered.

Additionally for the first time Jam hosted a J not investor event, which summarized key takeaways from this year's conference, including gyms focus and differentiation, providing solutions that our enterprise to cure and consumer simple while protecting personal privacy.

Specifically, we highlighted four key areas, where we believe our solutions will be mark that movie.

If you missed the event the replay is available on our IR website.

In closing Q3, again demonstrated the remarkable balance consistency and strength of our business. We continue to see momentum in the markets. We serve and are poised to continue leading and innovating and Apple Enterprise management.

Now I will turn it over to Joe.

Thanks, Dane and thanks again to everyone for joining us today.

As Dean mentioned, we continue to see strength across all aspects of our basement.

Total revenue for the third quarter with $95 million.

Representing growth of 36% year over year exceeding our expectation due to outperformance across all revenue categories.

<unk> contributed $5 $1 million of revenue in the quarter.

Total IRR at the <unk>.

September 3rd yet, it's $384 $8 million.

An increase of 47% year over year with organic growth of 37%.

Consistent with the past two quarters. This organic growth is driven by a greater than 25% growth across every cancer product.

All three major geographies and all of the top.

And it's changed.

Hum.

<unk> growth of over 30%.

We ended the quarter with 25 million devices on our platform, representing 34% year over year growth as they continue to see strength in both the education and commercial verticals and all geographies.

Driven by both new logo acquisition and Dubai expansion within our installed base.

This device count it looks like stamp plus one they're activated.

Putting any duplicate.

Additionally, we continue to see the benefits of our upsell and cross sell products into our installed base.

Our dollar based net retention rate remains strong at 119% for the trailing 12 months ended September 30, yet.

If they gave them mountain Cleveland ore until they have 12 months of training data.

The remainder of my remarks on margin expense items and profitability.

On a non-GAAP basis.

Our GAAP financial results, along with a reconciliation between GAAP and non-GAAP.

In our earnings release.

Gross profit margin was 80% compared to 88% in the prior year quarter.

On the license for the channel connect revenue recognition changes gross margin is consistent with the prior year quarter.

With respect to operating expenses.

Remain focused on improving the leverage in our business, while balancing investments for growth.

Increases in operating expenses over the prior year were primarily due to these investments for growth.

Sales and R&D head count as well as building and public company costs.

Operating margin was 2%.

Our annual effective tax rate for the nine months of 2021 increased to two 8% from negative 5% did over one their acquisition.

This increased our effective tax rate well third quarter to four 7%.

Unlevered free cash flow for the trailing 12 months ended September 30th and $81 $5 million, reflecting a 24% unlevered free cash flow margin compared to $57 $6 million or 23% margin in the prior year period.

Our operating model, a tiger and efficient deployment of capital.

<unk> strong cash flow generation.

Just to continue to make investments in innovation and top line growth.

We ended the third quarter was $227 $1 million in cash and cash equivalents.

Now I'll provide thoughts on guidance for the fourth quarter and full year 2021.

We expect strong performance to continue given what we've achieved so far this year and the momentum in our business.

As we discussed during our previous calls beginning in the third quarter.

Updated how we deliver I can't connect product, resulting in a change in revenue recognition, that's less revenue recognized upfront as on premise subscription revenue.

As it will now be recognized ratably over the term of the subscription in line the majority of our revenue.

Well there is no impact to IRR is.

This change will defer revenue in the second half of the year into future quarters.

Our full year revenue percentage.

Our organic growth.

Close rate typically exceed our revenue growth rate because the IRR excludes services and license revenue, but you call it slower pain and our recurring revenue.

And <unk> added later in a quarter has a smaller contribution to revenue in the quarter.

Given these considerations.

The fourth quarter of 2021.

We expect total revenue in the range of $99 million to $101 million.

And growth of 30% to 32% year over year.

Non-GAAP operating income in the range of one five to $2 $5 million.

For the full year 2021, we expect total revenue in the range of 361.5 to $363 $5 million.

Representing growth of 34% to 35% year over year.

Non-GAAP operating income in the range of $19 million to $20 million.

As a reminder, non-GAAP net operating income reflects the impact of the one their acquisition.

<unk> purchase price accounting adjustment.

<unk> run rate operating losses.

Approximately $5 million of planned investments in go to market head count to support.

Growth as well as customer support and customer success head count.

Additionally for modeling purposes, we are providing the following information.

For the fourth quarter and full year 2021 amortization is expected to be approximately $12 2 million and $41.3 million respectively.

These amounts reflect the preliminary when their purchase price allocation and is subject to change upon the completion of the analysis.

For the fourth quarter and full year, 2021 stock based compensation and related payroll taxes.

<unk> to be approximately $47 6 million and $74 million respectively.

We expect an annual effective tax rate of less than 5%, but she also be used when calculating tax effects of non-GAAP adjustments.

This annual effective tax rate is impacted by the establishment of a valuation allowance in 2021.

In addition, we do not currently pay cash taxes on a U S Federal thing.

For calculating EPS.

We expect basic and diluted weighted average shares outstanding to be approximately $119 1 million and $138 million, respectively for the fourth quarter of 2021.

For the full year, we expect basic and diluted weighted average shares outstanding to be approximately $118 3 million and $124 7 million respectively.

Looking ahead with the momentum we're seeing across all geography top industries and all products along with the continued investment in our go to market activity.

That's it can deliver strong revenue growth in 2022.

The new products and increasing strength in our commercial business.

In closing our Q3 results reflect the continued strength and consistency of our business.

Replace a strong finish to the air as it continued to deliver for our customers.

With that Dan and I will take your questions.

Operator.

Certainly ladies and gentlemen, if you have a question at this time. Please press Star then one on your Touchtone telephone. If your question has been answered I'd like to remove yourself from the queue. Please press the pound key.

Before we go to questions I'd like to hand, the program back to Dean Hager for any for a few words.

Thank you Jonathan Hello, again, everyone I wanted to take just a couple of more minutes to comment on the announcement yesterday of Apple business Essentials, which is now in beta in the United States for.

For clarity Apple business Essentials is a paid subscription service offered by Apple that includes icloud storage applecare support and simple device management capability. It is in beta with expectations to become generally available next year for small businesses within the U S.

This offer has been long anticipated ever since Apple's acquisition of fleet Smith in June 2020.

I've been asked about it many times over the past year and a half and so now I'd like to take a little time to provide clarity on this latest development with three key points.

First this announcement has been expected we are very close to Apple frequently releasing products at just the right time prior to an Apple announcements like we did with Geoff protect prior to the announcement of the M. One chip with jam connect prior to Federated managed Apple Ids and just a few weeks ago with our private access launch with <unk>.

Days of Apple's private relay beta complementary products that protect organizations and people when the fleet Smith acquisition occurred I said it would result in three things improvement to Apple business manager a cloud service that jump embraces for several of our solutions. That's a good thing. We also said that afterwards.

Likely maintain a first party small business capability to perform some simple MDM command.

Additionally, we said that the acquisition will not have a material impact on our business. All three statements have proven accurate and Janssen partnership with Apple has never been stronger.

Second nearly all value delivered in <unk> business plan and Apple business Essentials is additive Jim works closely with Applecare and has no interest in competing with icloud storage and Apple's device management capabilities support only a subset of the MDM framework. There is no overlap with Champs identity and <unk>.

Access management or device and data protection and jumps management capability as a super set of MTM going well beyond the framework.

None of Champs growth drivers, including Mac education industry transformation, and health care transportation and international security or access management are impacted in fact, I think Apple business Essentials will have a positive impact on these growth drivers.

Which brings me to my final point as with all Apple innovations. We believe this latest offer presents new opportunity for Jabil.

Anything that raises apples profile and business is great for Jabil.

<unk> has always coexisted with first party apple compatible or capability ever since they launched MDM in 'twenty town and profile manager in 'twenty 11, which is Apple's free M. D. M D.

With this most recent announcements Apple has extended Apple business manager to create a simple on ramp for small companies to get started with Apple devices that work. This is excellent news as it grows the total market size and provides champ more strategic addressable targets most of our product portfolio.

<unk> adds value and is sellable to customers, who choose Apple business essentials, meaning we're going to continue to do what we always do.

Fill the gap between what Apple builds and the enterprise requires.

Additionally, with our new cross platform threat defense data policy and private access products or solutions are no longer apple on them, but they are Apple best considering the incredible momentum of enterprise Apple devices globally. We believe this expected announcement is good news and presents.

With a terrific opportunity when Apple innovates jumped celebrates I hope that provides some clarity now we are prepared to take your questions Jonathan.

Our first question comes from the line of D. J Hynes from Canaccord. Your question. Please.

Hey, Thanks, guys.

Dean really nice to see the consistent growth here.

Want to follow up on the business essentials topic, just because it seems the most topical but go to a bunch of questions on it so.

Just three simple question. So so first have there been any change in your relationship with Apple as a customer.

Second as there been any change your relationship with Apple as a channel partner I think the answer is no based on what you said about those but I like to hear you say it.

Third what percent of your revenue comes from companies with less than 500 employees today.

So I'll take those first two and then I'll kick it over to Joe.

First of all yes, no change in our relationship with Apple across any channel customer or any of those things. So you're absolutely right you heard me say that.

Bill why don't you take that question.

Yeah, Hey, T J good to hear from you you know when we measure the number of customers that we have of course youre going to have quite a few at that low end of the market, but it's just a small sliver of the number of devices that we have because that's actually our economic unit that that we really focused on with gone any evaluated how much of our current <unk> is actually addressable with the Apple business.

Central.

Did it at the very low single digit of our current <unk> and even at that we're not concerned because.

Our retention right now have been higher than ever.

And this new solution is in tenant does or small businesses actually don't use another solution. So there's really no financial functional benefit for customers that are currently on our platform to flash. So like Dave said, we're really looking at that.

In greater opportunity as the aftermarket growth.

Yeah perfect. Thanks for the clarification, and then I want to ask about one Dara and just on the numbers. There. So if my math right I think it added 26 or 27 million an IRR.

In the quarter. So first the purchase accounting impact that and second any color on how fast one Dara is growing.

So I'll take that one D J.

The purchase price accounting does not impact the <unk>.

Impacts the revenue the deferred revenue that we brought over and they didn't have a haircut something less than a million dollars in the quarter and you're right in the ballpark on that on the ore that came over as well and when we think about how one dara it's gonna grow while.

But the quarter, leading up to and the quarter right on the heels of the integration of the acquisition Yeah, We did see growth.

Slower than what we were where it had been but right in line, what we expected and then when we look forward we expect it to grow at the same pace as the campaign has been growing okay. Perfect. Thank you guys.

Thank you. Our next question comes from the line of Chad Bennett from Craig Hallum. Your question. Please.

Great. Thanks for taking my question, just as we look into <unk> into 'twenty two Jill.

Just on the connect revenue Rec piece is is that you know.

I know it was the second half of 'twenty one headwind.

Just on a net net basis is that still a headwind for all of fiscal year 'twenty two from a revenue standpoint subscription revenue standpoint.

No you can think of it as a slight headwind in the first half of the year and as our business has grown quarter over quarter and year over year, becoming a small percentage of our business for the first half of the year. You know you could probably consider it could be just a couple of percentage point impact on our <unk> and it will start to normalize once the lap.

The one year of that.

In the third quarter.

Got it and then I don't know.

Between a couple calls but in terms of where we are.

Attach rate wise for protect and connect.

And you know kind of the whole threat defense landscape and did you guys give an update on.

Where are you are there in terms of attach rate and if you care to share maybe what you think that growth could be from a penetration standpoint over the next.

12 months.

Yeah, Hey, this is Jeff so.

When we think about the attach rate of peanuts and protests, we have we have been getting some color on that.

Products have begun to ramp in our portfolio. We added about 700 customers on the connect platform in the quarter and about 400 unprotected and that's pretty similar to the previous couple of quarters, it's ramping a bit when we think about what that can where that can get over time, you know, we think of it as being you know 50% of our customers.

Attaching to win those products over time, probably thinking about it.

Yeah, I mean, we are announced that Jay not that we had now over 3500 customers of jam connect in over 500 customers have jumped protect so that gives you an indication of all of our interface.

Got it and then if I could just squeeze in one more I apologize.

Just in terms of how we think about.

<unk> growth relative to subscription growth.

Think we're at a point right in the model where they should be.

Be fairly similar correlate.

It looks like again knock on wood, if if kind of seasonality plays out the way it should in the fourth quarter for you guys you know.

Youre going to have another very good <unk> growth quarter again knock on wood kind of in.

In the same ballpark is where you were this quarter and so.

I guess.

If you look at.

Subscription growth rates I guess out there right now on.

On the street.

There is there's a pretty big Delta.

Where are you putting up what are your AOR growth as it's today right in and where those subscription growth numbers at least today sit for next year.

Is there something we're missing an interior I don't want you to.

Whatever you can share their gel, but just curious.

Pretty wide spread right now.

No we did.

We're getting to the point, where our IRR and our subscription revenue growth rates are going to start to converge because we can have we have less historically, we've had some of our <unk> that was recognized.

Right.

It's on Prem or a customer.

I took it on premise.

Lots and lots of that especially now with the.

Correction or that the.

The change that we've made and how we're deploying that can't connect product. So by the time, we get to the end of 'twenty two the amount of on hand will be small that there won't be much of a difference between those two growth rates.

It sounds like there shouldn't be a big Delta, that's what you're saying.

Yeah. Thank you. Thank you.

[laughter].

Thank you. Our next question comes from the line of Sterling Auty from J P. Morgan Your question. Please.

Yeah, Thanks, Hi, guys Dean in terms of back to the Apple and a B E.

Did they give you any indication that this is the beginning of the strategy starting with SMB and should we anticipate that.

At some point here in the future. The next step is going to be their full on competitor up and down the stack in terms of small business enterprise.

So obviously, we work very closely with Apple I'm never going to.

Chad or speak for Apple anyway. So I will just give you my perspective.

My perspective is that.

Apple is in the position, we've actually and we've communicated this before at the small business level not at the enterprise later, but in the small business layer.

<unk> actually had an issue where it was not easy to onboard.

Apple devices I've shared a little bit about some of the technical complexity, even at the low end of jams now.

And so what apple needed to do is to be able to provide a very simple first party method two for an ITT for instance to lock a device that might get lost.

They were the only manufacturer a major manufacturer of systems that did provide this level of first party love.

Control through the cloud and so it's something that they needed in order to improve Apple adoption at the very low and they don't have that same issue really even in medium sized businesses or large sized businesses. So it was a very targeted approach. Just so you know I mean as you well know when we talk about our fleet Smith when they were first acquired it.

We're a very low end providers. So much so that our words were that we did not consider it a competitive solution. We also do not consider this a competitive solution. It actually supports less of the MDM framework that lead Smith did when they were actually acquired.

So.

This is not something that generally gets in our space. We're pleased that it will contribute to the overall growth of Apple's Houston business.

That makes a lot of sense. Thank you for that and then one follow up would be on the education sector, you kind of a game.

Alluded to maybe a cooling of spend can you elaborate more on that what is it specifically that you see as cooling because I think a lot of investors think about the federal funding that's going into the K through 12, and why wouldn't that continues to be a big tailwind.

I think it will be a tailwind actually I think it's in a period of time within Q3, specifically, where some of that hasn't really taken off yet again organizations are still identifying what they can actually spend on it and it isn't really a cooling of spend it's just a growth rate versus last years core.

Ching Q3 within education, So, it's really more a testament of that than anything else.

Understood. Thank you.

Yeah.

Thank you. Our next question comes from the line of Matt Hedberg from RBC capital markets. Your question. Please.

Hey, Thanks for taking my question.

Yeah, I think we're still to me too was a lot of strength in on the commercial side of the house.

When you sort of think towards <unk>, even even more so 2022 and what are some of the things that give you confidence that that strength will continue.

So thank you so much for the question.

Well first of all our entire business and I've stated. This for some time is driven by the consumers Asian of I T. I still continue to say that Sunday everybody to work at home for over a year has accelerated the consumers. They should've I T. So the first answer to your question would just be an incredible Apple.

Option for consumers Asian, Iot, the changing and demographics and the unbelievable hardware that Apple's releasing right now is just increasing the demand all around the world I cited in my <unk>.

Prepared remarks that Idc's numbers have the Max for instance throughout 2020 in the first three quarters of 2021 growing at over twice the rate of the industry and the fastest growing locked up so.

We that is our best market and yet we're growing faster as I mentioned earlier as well and in iOS and iPad OS So the specialty around Apple the incredible experiences that we can create for individuals and frankly, the ease at which the I T and security teams are able to.

Use our tools to be able to deliver a secure enterprise are the things that are going to continue to drive use in commercial markets.

That's great. Thank you and then Jill.

Thank you noted there was a $1 8 million devices added in the quarter and I could I think you said that thats that it also included some from one Dara is that correct.

That doesn't include some from one Dara we took our devices in their devices.

I didn't get what catch over there.

Overlapping devices to it rich.

The decrease in that.

A decrease of it out pretty.

Elimination was there so I guess, so then because I think last quarter. You added about 1.41 billion devices is that kind of in the ballpark, maybe a kind of the organic ads.

For <unk>.

So one of the thing that's different about the Q3 and the Q2 ads, it's really the mixture between commercial and education.

Education, that's going to.

It's slowed down a bit from where it had been the previous caller.

Commercial really started to take off and commercial they get fewer devices for the air and so it's really more of a mix just based on seasonality and where we are in a court in here.

I see that makes lot of sense. Thanks, a lot guys yeah.

Thank you. Our next question comes from the line of Raimo Lynch shelf from Barclays. Your question. Please.

Thank you.

I'm I'm I apologize for the question that bumps because it's a number of quick question do you like.

As we have been discussing with investors.

Won't be comparison that comes up it's like Microsoft with <unk> with the E. M. S offering where you started low and then they kind of you know with very low end offering just kind of walk up the market and it's got a lot of volume in there like could you maybe kind of go one more time through like how the Apple offering is different.

You know in terms of how comprehensive visits et cetera to kind of that offering that's kind of Microsoft used to kind of pull up that market and then a second question worth any commentary around the I O S. A momentum you guys seeing in the installed base you know.

Where you have the mark but the IRS is done by other providers like what are you seeing there in the field at the moment. Thank you.

Thank you Raimo for the question. So first of all I mean, obviously, the most significant answer to your Apple versus Microsoft as Microsoft has always been a giant in the enterprise it is.

Strategic market for them they have been there forever.

And Apple has never really had an enterprise solution and there are 45 year history. So that's a pretty stark difference between the two organizations, but I couldn't give you. An example, maybe that will help so let's say you were all small business owner and you're just trying to decide between.

Giving your employees chromebooks Mac or Windows and you know you don't have that much money you just want to make sure that you don't lose the devices. So you ask each of the providers. If I lose this can I press a button in a web browser and just walk the screen.

Well the answer for Google has been yes, and the answer for Microsoft has been yes, and the answer for Apple has been to that small business owner, if you buy some third party software and.

And clearly that is going to impact the adoption of Apple at the very low end of the market as soon as you get into the mid range of the market or the larger into the market.

It doesn't apply because you have it teams and you also have a.

Systems that are in place, but at that very entry level.

First party ability to be able to do some simple MDM function again, which apples actually had since 2011 and an on premises solution. So this is not new this is something that they've always had and now is available through a pilot.

But essentially that's the problem that they were attempting to solve with this and we applaud it we've actually been leaning on them to have a simpler solution at the very low end of the market, which for tactical reasons I won't go through it it's really kind of a problem that only apple can solve they really have to take it on themselves. So it's something we've been asking for.

They've done it and we think that's going to benefit the rest of the market regarding iOS.

We have a couple of key reasons, why we win and why we've been growing there so fast.

First of all is we handle the complex industry workflows.

<unk> health care transportation retail simply the best on the market and they are very complex as you get into shared and yet personal devices.

The other reason why we win is we have such a strong presence as you well know 23 of the top 25 brands in the world.

Most of the leading companies in all industries using us for math and what they're finding is that they just.

You have some solutions on our issues on the iOS side that they don't have on the mats side. So they end up moving their iOS devices over to a proper Apple enterprise management solution with their maps.

Those issues are pretty much go away. So for those two reasons I call them industry and ecosystem are the primary reasons why.

We went we actually don't go out to compete for simple MDM commands.

That generally is kind of a race to the bottom of the market and there's been a lot of interest to us we're more interested in solving business problems, which is what we focus on and that's why we're here.

Perfect. That's very clear. Thank you very much for that income absolutely.

Thank you. Our next question comes from the line of Koji Ikeda from Bank of America. Your question. Please.

Hey, guys. Thanks for taking my questions and apologies for my end to another Apple question, maybe on the other side of the equation I read somewhere that this Apple business Essentials is good for up to about 500 employees and now I was wondering could it potentially create like a an effect of as Apple business essentials good enough for us.

So maybe you could help us understand a bit more about the key or maybe multiple key technology pieces for our customer around that 500 range that would not want to switch to Apple business essentials.

Well once again Apple by their own words have no interest in going after customers, who are actually have a system in place remember the problem that I just described apples trying to solve.

For a new small business that isn't running anything that has some pretty simple capabilities that they wanted to take what the device.

<unk> has been a space that we've never really attempted to compete on an apples trying to solve an issue for those customers.

Yes, there are literature says up to 500 customers, but there's another element of that are up to 500 employees, but there's another element to that it's up to 500 employees, where the I T team only has a need for a few simple MDM commands no security need no.

No our identity cloud connection need no threat defense need no private access need none of those types of needs.

With fewer than 500 employees the need for some simple command, that's really where it's targeted and again, that's where the market needed a solution and by Apple offering. This it is actually going to open up for more small businesses to start using Apple.

Apple devices, which is what we want.

Got it no thanks for that and switching gears off Apple I noticed in the press release and I saw the.

The announcement to earlier.

And I was wondering if you could talk a bit more about what you mean by a modern hybrid workplace in and I guess more importantly, what could that mean for margin margins and capex in the future.

Oh sure I'll, let Jill take the margin of Capex, but I'll just talk about what we meant about that announcement.

I've mentioned before that I actually wrote my thesis paper on Telecommuting and 1995. So it took 20 years in a pandemic, but I was spot on in.

The predictions.

Where I was at $1.

<unk> 20th herself, but I've always been.

Someone who believes that employees can be their most productive and they're most comfortable environment, where they choose and have great flexibility in where they work and so our office environment that jam have always been put together to facilitate that kind of flexibility and ALS.

We have a body of employees, who used to come into work every day and then immediately went home and now we're going to have more of a new come in as you want to sort of environment that necessitates a brand new set of kind of.

Ts.

<unk> facilities relationship with I T.

Lin Lam, our new CIO actually owns not only our I T infrastructure, but also our facilities, so kind of where Apple technology. Since that's what we use meets office environment that we're pretty excited to be able to create some new experiences for employees.

If you want to talk a little bit about our capital.

Yeah, I would just I would just add that you know as you think about that the resources that will deploy we're not too far away from a gain just describe that we've been working on that for years actually and so we've already made a lot of those investments.

We took the opportunity during COVID-19 when our offices are empty if you get a lot of that.

Section places now.

And prior to that you know the reason that we've been so efficient and effective when we went home a year and a half ago because they already have the tools in place and in the hands of all of our employees, but going forward one of the things that they have that link can be working on is making sure we've got that.

The best and the proper foundation when it comes to our business systems that can help us scale to that billion dollar organization level and really placed in focus there and making sure. We've got that all buttoned down. So that's what we'll be putting some effort into in the first 24 months.

Got it thank you very much.

Thank you. Our next question comes from the line of Gregg Moskowitz from Mizuho. Your question. Please.

Okay. Thank you for taking the question good afternoon guys.

So you mentioned that your commercial business has further accelerated are you able to put a finer point on what you are seeing anything dean in terms of transaction velocity deal sizes et cetera.

While I mentioned that I mean, there were two vectors of growth one was our new logos that brought us up over 57000 cut.

Customers and we see that are.

C O O John <unk> and the revenue team that we have there is just extremely.

Effective and efficient at bringing new customers in the door and then as Joe mentioned with our 119% net revenue retention, we have our customers continuing to expand adoption of devices and also purchasing new add on products. So.

The product family that we offer as part of <unk> business plan has definitely proven valuable for those customers and it's been pretty clear that they voted with.

Frankly, there are dollars that a solution that best fits them.

A single solution intended for Apple that brings together the management of the device the connection of the user and the protection of the data ended the devices together.

Just seen tremendous success with that combination.

Alright, Thanks, Dan that's helpful. And then if you'll indulge one more Apple business Essentials question and I think we're all by the way just are well aware of kind of where the stock is trading right now about $1 4 billion of market cap has has effectively gone away over the past 48 hours. So that's the spirit I think of all of these questions, but I did want to add.

Why not one more so you were very clear that the under 500 employees.

Segment only represents low single digits of your total they are now at about $3 per month, the starting point for Apple business Essentials is smack in the middle between your chance now and Jeff now plus products and so it's interesting that it's not even being priced at a meaningful discount.

I don't frankly see any concerns about displacement, but you know to the extent the new small business is comparing these two solutions at some point in the future can you provide maybe a bit more color as to what features beyond remote lock our most valued by your chance now customers.

Yeah, so for whatever it's worth just again I mentioned earlier, we don't consider this a competitive solution competitors generally try to beat you on functionality undercut you on price and come after your customers.

And Apple has done none of those things.

There is no financial incentive or functional incentive or even process incentive.

To switch this is but just to give you a data point. The key is not necessarily I mean, Jim now and jump now plus.

Significantly more capability.

But the challenge that Apple has had in the small business space.

Is to bring in any MDM, even including the MDM capability the Jam Paas.

And sync that up with Apple business manager.

Is actually kind of a complex process and I think ive mentioned during our prior calls that envelope.

Jump now, we actually notice a pretty substantial falloff between when a customer signs up and when they get their first device in the world because of the steps that they have to do interchanging with Apple I, Apple actually taking disability within Apple business manager and connecting to Apple business.

They're going to be able to onboard those customers that need have very simple needs.

Pretty easily and again, that's going to create more small business use of jam also remember that most of our products now are actually sellable back into any MDM. We kept jumped connect MDM agnostic, we checked jam protect MDM done agnostic all of the products that we acquired from <unk>.

One there are MDM agnostic. So we have a lot of value that can be added.

No matter, what MDM that third one but as they want to scale and have one single integrated solution for management connection and protection championed up offering that path as well.

Super helpful. Thank you.

Yep.

Thank you. Our next question comes from the line of Rob Owens from Piper Sandler Your question. Please.

Great. Thank you guys for taking my question.

Curious on the one Dara front now that you've had a quarter of it under your belt just customer reception number one and any plans on bundling it moving forward.

Hum.

Answer the second one first we are absolutely going to create some packages similar to what we did with <unk>.

Jeff business plan and there's a few different options that we're working towards and we will be working towards that end in 2022, and we think that that will make purchasing just much easier for customers.

I will tell you this that in terms of pipeline development in the first three months through our <unk> channel not even considering the one Dara channel that that was brought over and of course as I mentioned in my prepared statements that that continued undistracted, including closing the largest deal through that.

Channels since 2019, so we were pleased that that happened in the first three months of us being together, but through the <unk> channel.

Pipeline development around these solutions was significantly greater than any other solution that we've launched or acquired but in the first quarter. So it is a relatively simple thing to position would you like to have.

Anti phishing and preventing malicious download for your mobile devices.

Would you like to have private conditional connection to your enterprise resources without users ever having to sign onto our V. P.

And would you like to enforce appropriate data usage on those devices.

Only a few questions that are necessary.

And when you talk about it being integrated with the rest of the jump that we've seen a lot of early customer interest.

And then second could you touch a little bit not on Apple, but on the international opportunity and what you guys are seeing you talked about the commercial acceleration and as you compete internationally is there anything interesting from a localized competitive perspective. Thank you.

Thank you for the question again.

You've mentioned a few times that our growth outside of.

The U S is even stronger.

Then it is inside the U S. We have great presence, we have announced several times that our growth in all three major geographies are greater than 30% year over year from an AUR perspective, and again, it's just a tick higher outside of the U S and there really isn't from a like a product localization we have multiple languages.

And those types of things, but the trick is to make sure that we have the channel to be able to get to any customer in any geography larger small anywhere in the world and we Fortunately have that both through our direct channel through our partnership with Apple.

And also through our indirect selling channels and then also we have ecommerce ability to be able to purchase our products and.

And we will take several purchases that way as well. So we are there we're.

Pretty much in any country, we would want to do business and we have the ability to reach all of the organizations that would be interested in our product large or small.

Thanks, Steve.

Sure.

Thank you. Our next question comes from lineup.

Sur from William Blair Your question. Please.

Hi, This is Matt Stotler, an entre per van.

For taking the questions and thanks for all the color and nice to Super helpful. I guess, maybe just one from US in terms of you talked previously about vertical specific products and workflows.

Are you seeing change in pretty strong adoption, you know whether that is health care.

And he was also travel hospitality, let's just get an update on those products and then as you think about opportunities to expand our set of offerings from afford development perspective, what's kind of top of mind for you.

Yeah. So one of the reasons why we do so well in those markets as the jump I mentioned it several times has patented capability that allows for shared usage of Apple devices that are also personalized what I mean by that is think about various whether it's raw.

Rounds within a hospital, whether it would be.

Flight attendants on an airline whether it be our retail worker in a store, we actually have the ability to power up the device to a set multiple choice setup screen you choose what you want and Bam, It's personal lives with single sign on and the ability to be able to use that device for the purpose.

Of that particular shift that's being worked.

It hands off to the next person who is going to work you can reset and set up again and once again you get that person a productive there is nobody else in the world that has functionality similar to that and it has shown that we are we really.

Really and observing.

A part of the market that nobody really search.

No as far as the future of that I will tell you we're really very interested in.

<unk> workflows, where devices automatically change states.

Based on the.

The state whether it be location or Wi Fi or what have you that they happen to be in and so this notion of state based configurations.

We think has a lot of potential to even solve more industry workflows. So we'll be continuing to invest in that area and once again like I said earlier.

Not managing devices.

But solving business problems is why Jeff has done well and we will continue to do that.

Got it thanks again.

Okay.

Thank you. Our next question comes from the line of Rod Hall from Goldman Sachs. Your question. Please.

Yes, thanks for fitting me in guys.

Two quick questions one on the numbers kind of going back to this educational question, but I noticed the on Prem number was down sequentially and I guess I I seem to remember a lot of that pulse and spending there was related to schools, but I wonder where you think that on Prem number kind of settles out do we see it.

Again in December kind of what's the trajectory of that number I guess and does it kind of settle at the level. We saw back in 19 or where do we end up on that.

And then.

Then I have a follow up to that thanks.

Hey, Rob, it's Joe I'll take that.

<unk> is really being impacted primarily because of that that change in our revenue recognition project connect that.

The revenue was hitting their prior to the third quarter and then what the change now that's being treated radically up in the subscription line. That's the biggest driver right there anything outside of that would be immaterial seasonality differences.

So do you think Joel that just kind of then very seasonally from here. This is just kind of a new normal for it and then we should be modeling it seasonally.

Ah, yes, it'll be seasonal.

The education season is well hidden seasonality there and then it's just going to become a smaller piece a smaller percentage of our total again as theyre moving but can't connect out of that bucket and as we continue to migrate the remaining strangling account into the cloud.

Okay. Thank you and then I did I've got a kind of a technical question on the business essentials from Apple I noticed that they're providing separate encrypted.

Areas for data for business data and personal data and I'm, assuming that extends to Mac and I don't I don't think we've seen them.

<unk> provided a secure area for business data protect users' privacy that way and I'm. Just curious what did you guys take on that is I mean, it does seem architecture like a little bit of a difference.

Not maybe something I would've expected them to do so just curious what your thoughts are there.

No what they're referring to there thanks rod.

It was actually functionality that they came out with in the fall of 2020 called user enrollment and it is awesome and obviously, Jeff was the first to support it and we actually announced some new capabilities around that.

Jane off this year, where where the B what I've mentioned this before that B Y O. D has always had a problem in the market where on one side you don't really want to fully manage B Y O D devices. These are violates the person's privacy, but on the flip side.

If you're only just try and manage an application or two on the device without any device management.

Not really providing that user with any services. So therefore, the organization wants to be secured in the user wants to be private and there hasn't been a solution for that and Apple. Originally released an early version of user enrollment as I mentioned in fall of 2020, we supported that and then in 2021 offered a great new service discover.

He feature with Jeff announced support of at Jayhawk.

Which actually allows b y O D users to go into general settings, VPN and profile of our device management and simply tap the button signed into work school or work when they do that.

<unk> wakes up and automatically enrolls that device that separates the personal side the data partition from the worksite keeping everything for the user completely private I believe this is absolutely the future of BYOB and this is a market that we historically haven't really even.

You know strategically approached because there hasn't been a good way to do it up until now and.

Now with this new capability, we are very excited.

We're putting together some interesting new offers for 2022.

Alright, that's great Super helpful. Thank you.

You bet.

Thank you. Our next question comes from the line of Josh Reilly from Needham Your question. Please.

Hey, everyone. This is Michael Rackers I'm on for Josh Reilly I'm. Just one quick question for me I know you mentioned that a little bit earlier, but can you talk a little bit about the sales cycle length around the one dara products versus the <unk> portfolio.

Maybe some different go to market strategies within the mix of of one therapy.

Products.

So, yes regarding sales cycle lengths.

They've actually been in the portfolio now for three months and of course as you know the sales cycle lengths you only can measure them based on the practices you have for when you entered into the pipeline and different sales forces might enter it into the pipeline at different stages of.

The sale itself, so I really don't want to comment on the historical sales cycle one Dara.

They were a Standalone company and I don't think it's probably appropriate to comment on it based on our first three months of ownership.

But what I do know is from a kind of an overall AOSP you might notice that given our <unk> and number of devices here in Q3, we actually took a nice little hop up from an overall.

Our per device.

That is because of the ASP that we're able to get from the <unk> solutions now as well that are in the mix. So we have long been able to by adding additional products within the Mac space continue to get more value out of each individual device and now with the one darrow products not only do.

We get even more value out of the mass device, but we also get more dollar value out of each iOS devices as well.

Great. Thank you.

Thanks.

Thank you. Our next question comes from the line of Pat Walraven from JMP Securities. Your question. Please.

Hey, Tim It's Joe I'm ready to take on for Pat. Thank you for the question the last one on competition.

That's the way it but can you just give us an update on win rates overall and then one for Jill is there anything else to call out in the gross margin this quarter.

And then maybe how should we think about the trajectory going forward of that thanks guys.

Yeah.

We've never really released when rates, but I will tell you. This.

The win rates throughout this year as a matter of fact over the last couple of years.

Our higher than what they were at any other time in our history. So we're at a peak when it comes to Oh, well actually we'll probably are.

Ideally continued to improve but our win rates have consistently improved.

It's also worth noting Jill mentioned it that our gross churn is also at the lowest point that it's ever been in history.

So we're at a really great spot, where our customers are.

Enjoying the value that they get they're staying with us and actually purchasing additional solutions as well as I mentioned earlier so yeah.

Yeah.

All of those metrics are at a kind of a jam historical best.

Yeah, and then when you think about our gross margins for the quarter. The biggest driver of the slight dip that we thought it was really the fact that we've got that connect revenue recognition change that's pushing some of that revenue into future periods, while still best cost to support it and then I'll feel a little bit of invest.

Investments that were starting to make on behalf of the one day or acquisition really focusing on improving customer support and success and making things better.

Two things that are hitting the margin this quarter and going forward you know you could consider those.

Now the margin being somewhere in the range.

Normalizing in the last couple of quarters.

Thank you both super helpful.

Thank you I'm not showing any further questions at this time, thank you ladies and gentlemen for your participation you may now disconnect.