Q4 2021 Jamf Holding Corp Earnings Call
Thank you for standing by and welcome to the fourth quarter 2021, <unk> earnings Conference call. At this time all participants are in listen only mode. After the speaker's presentation. There will be a question and answer session to ask a question. During this session you will 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 Gaumond, Vice President Investor Relations. Please go ahead.
Good afternoon, and thank you for joining us on today's conference call to discuss <unk> fourth quarter and full year 2021 financial results with me on today's call are Jim 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 fourth quarter and full year 2021 financial results.
We also published the Q4 earnings presentation.
The investor presentation, an excel file containing quarterly financial statements for fiscal years 2019 through 2021 to assist with modeling.
You may access this information on the Investor Relations section of <unk> Dot com.
Today's discussion May include forward looking statements. Please refer to our most recent SEC filings, including our most recent annual report on Form 10-K .
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 Jeff's performance.
You can find the reconciliation of these measures to the nearest comparable GAAP measures in our SEC filings and press release.
Additionally to ensure we can address as many analyst questions as possible during the call. We ask that you. Please limit your questions to one initial question and one follow up.
Now I'd like to turn the call over to Dave Hager.
Thank you Jen.
Thank you everyone for joining us on today's call I will share highlights from <unk> fourth quarter and fiscal year and how we plan to build upon our continued momentum in the coming year.
Joe will review, the fourth quarter and fiscal 2021 financial results and provide our financial outlook for 2022.
2021 was a pivotal year for <unk> as we continued our mission to help organizations succeed with Apple we strengthened our Apple enterprise management platform with new products and functionality with an emphasis on security and hybrid work, we completed Champs a largest acquisition to date close to three large.
Customer contracts in <unk> history.
Added a record number of devices to our platform completed our first full fiscal year as a public company.
And consistently delivered strong financial results that exceeded expectations.
In February last year, we strengthened our security platform with the acquisition of CMT reported a suite of security and compliance tools purpose built for Mcelreath base.
Based on this technology, we launched our new compliance reporter solution in the second quarter closing, a 14000 Mcafee subscription its very first quarter of availability.
Compliance for quarter was a significant addition to James platform continuing to produce results all year.
New and existing customers, including in Q4, where we closed both in 8000 Mcafee subscription to a net new customer who is not running jams management solution and at 10000 feet subscription to an existing <unk> customer extending the value of our Apple Enterprise management platform.
In July we continue with our product expansion with the acquisition of <unk>, a leader in Zero Trust cloud security and access solutions. This acquisition uniquely positions <unk> to help it and.
Security teams confidently protect devices data and applications across windows, Android and Apple endpoints, while delivering the intended Apple best experience when coupled with the most robust and scalable Apple enterprise management platform on the market.
The acquisition of one Daryl led to launching several rebranded Jim solutions that are sold both through the traditional one dara resellers like carriers and security partners and now through Champs highly effective sales team.
These products include <unk> private access a zero Trust network access solution that replaces legacy VPN and conditional access technology.
<unk> threat defense mobile security solution that protects endpoint from threats with zero day, phishing prevention and jump data policy, a solution to automate enforced and manage usage policies in data consumption.
All three of these products enhanced chance Apple enterprise management platform, creating substantial upsell and cross sell opportunities, while also providing new landing products that deliver value for Apple windows, and Android endpoints, regardless of the device management solution used.
We have been very encouraged by the early customer response to these new solutions and our ability to minimize disruption from the acquisition.
Employee turnover has been very low from the one they are a team and for the first six months. The one Dara solutions were offered by channel in the second half of 2021, new annual subscription bookings grew by more than 30% year over year.
In Q4, the traditional one Dara sales channel alone delivered 38% bookings growth year over year.
When combined with the additional sales through June total new annual subscription bookings from the products. We acquired from one Darryl grew by over 60% year over year in Q4.
Altogether, Jeff has seen significant success with all of our new security solutions, ending 2021 with approximately 8000 commercial customers running jumped connect Jeff <unk> Jeff.
Private access Gen threat defense or chimp data policy on millions of Apple devices, and also on Android and Windows devices.
In October at the chance Nation user conference, we also announced key product enhancements to help organizations to succeed in today's hybrid world, including new bring your own device or B Y O D functionality industry, leading application lifecycle management capabilities device compliance integration with <unk>.
Google and data loss prevention features.
We expect that all of these announcements will be generally available by early spring of this year further cementing <unk> as the most complete and scalable Apple Enterprise management platform available.
For Q4, and the full fiscal year, we demonstrated our continued ability to drive consistent balanced growth across our business strong new logo acquisition and device expansion resulted in Champ, adding over 6 million devices.
<unk> thousand customers to the platform ending the year with $26 6 million devices and more than 60000 customers over.
Over the past two years <unk> added over 10 million devices, and 24000 customers demonstrating both market leadership and continued consistent momentum throughout changing market conditions.
Just total <unk> growth in Q4 was 45% year over year, driven by new customers device expansion, a growing portfolio of add on products and the <unk> acquisition.
Once again, all legacy <unk> products saw year over year <unk> growth of at least 25%.
All three major geographies and all of Jeff's top 10 commercial industries experienced a growth of at least 30%.
In education growth rates have returned to pre pandemic levels, while we continue to see acceleration in commercial markets.
Despite every economic geographic and industry specific challenge, we've been calling in <unk> has continued to deliver consistent strong results.
2021 was a historic year for Jam and a testament of our commitment to deliver outstanding customer results.
Ernest focus on customer success led to the lowest gross revenue churn rates and James history of tracking this metric, which resulted in completing the year with a record high net revenue retention.
In 2021, <unk> top 10 flagship commercial accounts, all renewed and all grew their subscription contract with Jim <unk>.
Additionally, Jeff retained 100% of our top 100 customers across both commercial and education markets and 82% of these customers grew their existing subscription.
During the year, we also closed the three largest deals in <unk> history.
Two of which were the current customers expanding apple footprint and one was to a new customer implementing a transformative business workflow with ipads all three customers committed to jam for multiple years deploying a total of over 250000 Apple devices.
Despite this success at the high end of the market no single customer represents 1% against total ALR.
We believe jumps consistent results are due to our market leading solutions.
Difficult competitive differentiation extraordinary focus on customer success, and the increasing momentum of Apple's popularity in the enterprise.
In particular with the Max.
According to IDC data the map has been the fastest growing computer worldwide for the past two years with a compound annual growth rate of 25% more than 10 percentage points faster than the growth of the PC industry and faster than all other major PC brands.
We believe the changing employee demographics preference per Apple amongst younger workers combined with the consumers Asian of <unk> growth in remote work and the popularity of the new line of Apple Silicon is changing the landscape of the PC marketplace and we are still in the early stages.
We've seen this change firsthand and have played a vital role in accelerating it by helping customers deploy approximately $1 million map powered by the M. One chip during the first year of availability.
With each Apple innovation apples competitiveness in the enterprise and education increases.
And Jeff has always been there to support and extend those innovations same day and.
In addition to supporting new hardware and operating system.
<unk> business manager Apple classroom and Apple School manager are all examples of Apple cloud services that Jeff has historically been the first to support and extend.
All having led to accelerated <unk> success in the market.
We expect the same to be true when Apple business Essentials comes to market.
True to our mission, Jeff will help customers succeed with Apple business Essentials, which we expect to reach the low end of the market in a way that no third party provider has been able to thus, creating more opportunity for channel to offer our solutions that extend the value of Apple in a manner that uniquely enhanced.
The experience for users.
And information security teams, especially as organization scale and their Apple deployments and business needs. This unique approach to supporting Apple customers has led to 20 years of the mutually beneficial relationship with Apple.
With all our customers jansa ability to deliver a combination of enterprise security personal privacy and consumer simplicity has played a significant role in the growth of market work in particular with the emerging employee choice program.
One example of the continued prevalence of employee choice program is HSBC, one of the worlds largest banking and financial services organizations.
<unk> is on the forefront of employee choice within financial services launching this program in late 2020, empowering employees to choose map globally as their primary work computer.
<unk> renewed their contract with <unk> in Q4, expanding in both <unk> and <unk> connect Additionally, HSBC purchased Jeff protected Q4, showing the power of our broad platform capabilities to solve more.
And security challenges for organizations and our ability to continue growing customers use of Jim.
In late 2020, we made it easier for customers to take advantage of our full platform for map with <unk> business plan.
During 2021 over 1000 customers purchase camp business plan with more purchases in Q4 than in any other quarter.
<unk> <unk> business plan has transformed the buying process, eliminating multiple sales and approval cycle, enabling customers to experience faster return on investment.
One of our first GMP business plan customers a year ago was shipped an organization founded on the mission to simplify lives through the delivery of groceries and everyday essentials.
Last year shipped license over 1000 users of <unk> business plan to help implement their remote workforce efficiently and better meet their security needs for macro less.
One year later in Q4 of 2021 due to the popularity of market work shipped was able to simply and significantly we knew and grow their business plan subscription as they continued to meet the increasing demand for <unk> services.
<unk> is also continuing to transform the customer experience, but the whole industry solutions in healthcare or jam workflows like virtual visits supports the social and care connectivity needs of patients and families.
Clinical communications changes the iPhone experience for providers and staff and patient bedside empowers hospitals to digitally sanitize hospital on ipads and Apple Tvs between patient visits, which alleviates the need for manual or care team intervention.
To simply manage the security privacy and complexity of these health care workflows, we employed jumped one of a kind healthcare listener solution, which integrates jump directly into hospital electronic medical records.
One customer experiencing <unk> commitment to health care at Stanford Health care the <unk>.
<unk> hospital in the United States, Stanford selected Champs healthcare listener in 2019 or their interactive patient system project, which included ipads and Apple Tvs inpatient rooms for entertainment education and access to the Stanford My health applications.
They later expanded to deploy their nursing iPhone clinical workflow and communication apps like epic Rover and bolt one.
In Q4, Stanford expanded these programs by thousands of Apple devices and are now also testing jumped single login workflow and are excited to explore how it can simplify and secure their shared iPhone deployment at scale.
Jeff recently was challenged by a top 10 children's hospital in the U S to combine the value of our unique health care and education solutions. This hospital selected <unk> in 2020 to deploy more than a thousand nursing iphones and also use <unk> to deploy ipads to patient rooms for kit.
Recently this hospital ask if we could enable jump parent for hospitals.
<unk> parent as an iPhone and Android based solution, we designed for the education market to our parents with the ability to focus their students on specific education content.
In Q4, we extended this technology to hospitals, where our customer now has deployed Jeff parent across all of their patient bedside devices.
On the topic of education as we've discussed each quarter of 2020 was a year of tremendous Apple device growth as schools initially needed to enable distance learning. But then also became aware of the power of education technology and the importance of equitable access to learning.
Now after the largest expansion of technology in education history. Many schools are facing the challenges of device connectivity and students safety.
The need to protect our students from the dangerous technology was one of our motivations when acquiring one Dara last July as a Standalone company <unk> did not focus on the education market.
<unk>, leading position in education, where we empower more than 36 million students with Apple technology.
Opens up a tremendous opportunity to extend the acquired one Darryl products like Gimp data policy to launch a brand new students safety solutions.
Around the World Champ is now supporting safe in classroom and virtual line in Taiwan Bouchon Elementary school deployed jump on over 2000 ipads that are being used by students while they learn at home.
Ipads are provisioned with Janssen school, and Jim data policy to provide sufficient support and guidance for teachers, while protecting students from accessing unwanted website.
Sean Elementary has been able to say school or resources and increase efficiency.
What lessons using Apple and Jam technology together.
The local government has provided funding for this initiative and push on elementary is just one of approximately 90 schools in Taiwan that will benefit.
Education is not the only industry worldwide <unk> technology has helped us extend jams value to customers.
As we discussed on our last call Jam has become a go to partner for airlines around the world for numerous workflows that engage flight attendants gate agents and ground crews with over 100000 devices deployed in the last year for airline specific workflows globally using our patented Jim.
Setup and reset applications with one Dara, we have even more value to offer Airlines. One example is a major airline based in Asia. In Q4, this customer committed to all three Jeff products based on the technology acquired from one Darryl, including Gen threat defense and Jeff data policy.
For flight crew ipads and also jumped private access for secure encrypted Zero Trust network connection and access across the entire fleet of devices, including both Apple and Android.
Not only have the products from one Dara help win new customers, but we have also used these products to expand our relationship with current customers like with I office space IQ a global leader in the digital transformation of workplace and asset management to.
Together they are a pro customer that recently purchased 500, JMP private access licenses to improve regional performance over their previous VPN. They needed a remote access solution that would support their diverse devices state, which includes windows Mac OS iOS and Android.
And quickly and securely connect users no matter where in the world. They are located.
Private access pass the test and integrate seamlessly with our cloud identity provider.
These examples demonstrate the continued strength in their traditional one dara sales channel as well as the momentum for the <unk> products sold through channel, which helped drive the 60% plus year over year, new subscription bookings growth in Q4, I mentioned earlier for these products.
As we look to 2022, there are several areas of momentum that will help drive <unk> continued strong performance.
We believe the significant value of Apple Enterprise management, and specifically the <unk> platform will continue to drive organizations to expand their Apple fleet through employee choice programs bolstered by the acceleration of IP consumers Asian user preference and financial savings for our organization.
Second we will continue our efforts to win the enterprise by developing innovative solutions that are Apple <unk> and Apple.
Further solidifying <unk> as the most dominant apple provider.
Last our broad solution set offered numerous growth drivers like compliance per quarter Chimp data policy, Jim threat defense and private access in addition to Jim connect and protect which all have significant runway for growth.
In closing I would like to thank our team for an exceptional 2021, we achieved a number of milestones and delivered strong financial results all while experiencing unprecedented growth.
We on boarded over 800, new Janssen in 2021, and we're able to preserve our unique culture maintain 90% plus employee retention and received great places to work recognition in several categories.
Im excited to see what our team can accomplish in 2022 as we live our purpose to simplify work by leading and innovating in Apple Enterprise management.
Now I will turn it over to Jill.
Thanks, Dean and thanks, again to everyone for joining us today.
We're eager to share our Q4 and full year results.
But continued strong growth across all of that.
All of our business.
Total revenue for the fourth quarter grew 36% to $103 $8 million, resulting in total revenue for the fiscal year, a 36% or $366 4 million.
Meeting our expectations.
Total IRR as of December 31 is four.
$412 5 million.
An increase of 45% year over year.
On an organic basis in Q4 and for each quarter of 2021.
Growth was driven by at least 25% growth across every campus product.
With all three major geographies and I'll look at top commercial industry expansion.
Growth of at least 30%.
Diversity.
<unk> business model that is not reliant on any one product geography or industry to deliver on our financial outlook.
We saw commercial AOR growth rates continue to accelerate.
Education growth rates remained strong and similar to pre pandemic level.
We ended the year with $26 6 million devices on our platform, adding over 6 million devices in 2021 or 30% year over year growth.
This growth was driven by new local acquisition device expansion within our installed base and the addition of <unk> devices.
Our upsell and cross sell efforts and our efforts to reduce churn.
Our dollar based net retention rate to 120% for the trailing 12 months ended December 31st.
As a reminder, this figure will not include one day until we have 12 months of training data.
The remainder of my remarks on margin expense items and profitability will be on a non-GAAP basis.
GAAP financial results, along with a reconciliation between GAAP and non-GAAP are found in our earnings release.
Q4 gross profit margin is 80%.
It's 82% in the prior year quarter.
When normalizing for the can't connect revenue recognition changes.
Dan in the second half of 2021 gross margin is consistent with the prior year quarter.
As it continues to grow we remain focused on improving the leverage in our business, while balancing investments to support this growth.
Our increases in operating expenses in Q4 over the prior year, primarily due to investments for growth such as added head count in sales and R&D as well as expanded public company costs.
Q4, operating margin, 3%, Kentucky, 2% in the prior year quarter.
Our annual effective tax rate increased to three 9% from two 8% primarily as a result of activity related to the one day or acquisition.
This increased our effective tax rate in Q4 to 12, 1%.
Unlevered free cash flow for the trailing 12 months ended December 31.
The $66 $4 million.
Reflecting an 18% unlevered free cash flow margin.
When combined with our 2021 revenue of 36% overall of 15.
Our operating model of high growth and efficient deployment of capital continues to yield strong consistent cash flow generation.
<unk> camp and many other hydro test company.
This provides us with financial flexibility and stability.
Helping protect us from any rapidly changing market or economic condition.
This cash flow generation also allows us to continue to make investments in innovation and sustainable top line growth.
We ended the year with $177 $2 million in cash and cash equivalents.
We believe our cash and cash equivalents, our revolving credit facility and cash from future operations will be sufficient to meet our working capital and capex needs for 2022 and beyond.
Now I'll provide thoughts on our financial outlook for the first quarter and full year 2022.
In 2021 education markets remains strong similar to pre pandemic level, while commercial markets continuing to strengthen across all geographies.
This commercial momentum along with continued investments in our go to market activities and new product offerings.
Strong revenue growth in 2022.
As we have discussed on prior earnings calls, we do not believe our business to be market limited.
Many of market opportunity available as Apple continues to grow in the enterprise and we continue to expand our offering.
Key areas of investment for 2022 include.
So that product investment in strategic areas of the business, including our security platform <unk>.
<unk> functionality and state Internet Festival.
Increasing capacity to drive new logo acquisition.
Nice expansion and cross sell into our install base.
Continued geographic expansion and strategic market.
And continued investment in our people to ensure janssen the destination workplace.
While making these investments we will continue to be mindful of hygiene to ensure we have the infrastructure to support the business now and in the future.
As we have done historically, we will continue to reinvest any over performance against our plan back into the business to fuel growth.
Given these considerations for the first quarter of 2022.
We expect total revenue in the range of $104 five to $106 5 million representing growth of 29% to 32% year over year.
non-GAAP operating income in the range of $1 million to $2 million.
For the full year of 2022.
Total revenue in the range of $466 million to $472 million.
Representing growth of 27% to 29% year over year.
Compared to current consensus of 25%.
non-GAAP operating income in the range of 18% to $22 million.
As a reminder, our non-GAAP operating income is impacted by the full year impact of the one Dara acquisition.
Continue to expect to be accretive to non-GAAP operating income.
2022.
Additionally for modeling purposes, we are providing the following information.
For the first quarter and full year 2022.
Amortization is expected to be approximately $12 6 million and $47 $6 million respectively.
For the first quarter and full year 2022 stock based compensation and related payroll taxes is expected to be approximately $16 9 million and $114 $2 million respectively.
We expect the annual effective tax rate of less than 5%, but should also be used in calculating tax effects of non-GAAP adjustment.
In addition, we do not currently pay cash taxes.
Well basis.
For calculating EPS.
Basic and diluted weighted average shares outstanding to be approximately $119 4 million and $129 three respectively for the quarter for the first quarter of 2022.
For the full year, we expect.
Basic and diluted weighted average shares outstanding.
Recently $121 million and $131 8 million effectively.
As we embark on 2022 with the momentum we're seeing across the key geographies, our top commercial industries and all products.
The continued investment in our go to market activities.
<unk> continues to deliver strong revenue growth.
And now I will take your questions.
We also have our president and Chief operating Officer, Jon <unk>, joining us for Q&A.
Operator.
Certainly ladies and gentlemen at this time. Please press Star then one if your question has been answered and you'd like to remove yourself from the queue. Please press the pound key our first question comes from the line of Rob Owens from Piper Sandler Your question. Please.
Great. Thank you guys for taking my question as we contemplate the guidance both for Q1 and 'twenty. Two how are you discounting some of the supply chain issues that Apple has seen have you actually seen despite the strength youre seeing have you seen some customers pushing out just because they're not getting apple gear.
Okay.
Thanks for your question Rob.
And John if he has anything to add to this as well, but my perspective on that is.
One is we will hear anecdotally occasionally.
There will be a supply its supply chain.
Issue, perhaps for a school that is purchasing but then on the flip side, sometimes we will hear scenarios, where an organization can actually not yet another type of device that they were going to acquire and so as a result went to Apple. So you get a little bit of a mixed bag. There John do you want to comment just a bit on whether you.
You're seeing supply chain issues.
Yes, Thanks, Dean you answered it we've seen some of that happen before and then.
Thankfully the deal that we're working with that customer has just migrated to when they get that device, which is generally not very far off but we haven't we haven't seen.
Tremendous negative impact from that.
And Dave along the lines of Apple Realizing Youre, just one quarter into the beta if you will but business essentials.
It looks like Youre looking through this potentially would be more of a catalyst at the low end, so where our partner discussion.
Partnering discussions customer discussions at this point in time thanks.
Yes, you bet.
Our partnership with Apple remains as strong or stronger than it's ever been our communication lines are opened well.
We view the.
The arrival of Apple business essentials to be very similar to in the past when apples come our cloud services like Apple School manager Apple business manager and as I've mentioned several times the low end of the market for some technical reasons are actually a very hard place for third parties to get to an <unk>.
We believe that Apple offering that low end solution in the U S is actually going to open up that market, a little bit and the bulk of our product portfolio now is actually.
Add on value to a simple MDM solution. So yeah, we're completely treating it like if a customer does get a device under management that they haven't been able to do before that that essentially gives us a way to deploy the rest of our security solutions. So we see it as a net ads.
Yeah.
Thank you.
Thank you. Our next question comes from the line of Sterling Auty from Jpmorgan. Your question. Please.
Yeah. Thanks, Hi, guys I'm, just going to ask one question from my side, just focused around the security it sounds like.
The success in the quarter, but what I'm curious about is.
Is just the cyber security environment things that are happening on a global macro geopolitical front are they changing dramatically at all the sales cycles as well as the pipeline build for security in particular.
Yes, So let me chat just a little bit of what were these Uruguay. It is a very sensitive topic right now let me just talk about our security.
Posture right now and then I'll kick it over to John to just comment a little bit about what he's seeing on the demand side for security. So first of all given the environment that we're in are info SEC team is highly engaged and on constant for potential threats.
Our security posture here, Jeff is very strong we worked with the industry's best cloud and identity providers and also remember that <unk> employees are assigned Corporately provided apple devices, which are inherently.
Heightened security posture, when coupled with jumped out and probably therefore.
Our ethylene price management system for device security malware threat hunting anti phishing and zero Trust network access.
And of course, what we used to protect ourselves our customers also use or we used to also protect our customers and although unfortunate sterling.
Good observation that when security concerns are heightened that usually creates an opportunity for us to serve more jam, Oregon or more organizations. John what are you seeing from a demand for our security solutions.
Well, we're certainly seeing.
Higher security posture by our customers and those that we've been speaking about security with some of those some of them have accelerated that process and we've had some more inbound.
Requests about our security position in what we can provide them because we are seeing customers really bolster their security positions.
Makes sense. Thank you.
Thanks, Rob Thanks Sterling.
Thank you. Our next question comes from the line of Brian Essex from Goldman Sachs. Your question. Please.
Hi, good afternoon, and thank you for taking the question.
I was maybe wondering if you could talk to.
What youre seeing with regard to wonder now that you've had that under your belt for a little while.
Are you getting better traction with private access how is how are those.
Conversations evolving and what kind of considerations are enterprises, making when you when you win deals there.
Yes, so first of all we couldnt be happier with.
How much how little disruption noise theres been in the process I mentioned.
As I was in my earlier comments that the employee retention has been extremely high we.
We had mentioned in the past that Janssen historical customer retention is higher than <unk> historical customer retention predominantly because investing in customer success and so we believe that we're going to bring a lot of value to that over time, but the good news is that the retention post acquisition of customers pretty.
Mirrors, what it was pre acquisition and then also as I mentioned.
After Q3, we said that we had growth, but not a lot of growth because those really were just getting started in Q4. We were really pleased to see as I mentioned earlier, our bookings growth combined be over 60% and I can't really say of the three big products private access threat defense and <unk>.
Data policy.
It.
The demand is there for all three and in some cases the entire suite. So as of right now I can't tell you, which one of those is.
Emerging has greater demand than the others and thats kind of a good thing because we're sort of excited about it across the board. So we're pleased with the demand as a matter of fact, just this morning I spoke to.
Account executive.
Who had spoken with a prospect who wasn't actually looking for a management solution. So they pivoted and went into talking about our new security products.
In that moment got an opportunity. So its just broadened the level of discussion that we can have with prospects and given us much more to offer them.
Yeah.
That's helpful.
When you go through that process are they considering any other solutions like <unk>.
The zee scalar maybe or or are you just winning based on the conversation and overall breadth of your platform.
You kind of present that opportunity to your customers is there I guess thats, what im getting is there a bake off involved or is there a comparison head to head involved.
Yes, both scenarios are true we will have we've had situations that we've had a jump customer and frankly, they didn't do a bake off they just saw that jump had another solution and we observe them. So well historically that they said you know what I'm going to expand to that additional solution and then of course, when we're out there competing for.
New business, usually that's going to be a bake off and our competitive positioning of course is were strongest with apple, especially when coupled with our Apple enterprise management system, but our field personnel now for the very first time ever are able to go in there and compete at the network level as well that is also <unk>.
<unk> platform. So a couple of the roadblocks that they've had to get over historically now with our cross platform network security environment. They are actually able to compete for business that they haven't been upload before but yes in those situations that will frequently be a bake off and we compete very favorably in those environments.
Got it that's helpful. Thank you.
Thank you Brian .
Thank you. Our next question comes from the line of Gregg Moskowitz from Mizuho. Your question. Please.
Alright. Thank you good afternoon, guys and congrats on a good quarter.
So I had a follow up on <unk> I know that last quarter Dean.
That business grew a little slower than it had been growing on a standalone basis, but as you just mentioned in Q4. Your total new subscription bookings for <unk> grew over 60% is this more than seasonality benefit though in other words do you think you've truly turned the corner with one Dara upsell and cross sell and I'd also be curious to hear any.
Any commentary on how you're thinking about wind there is a growth potential in 2022 as compared with the overall business.
Yes, thanks for the question Greg.
So first of all I am absolutely not going to say like we're over the hump I am not going to Qunar. Our chickens. There we had a good we've had good pipeline building and we've started to show that it was paying off in Q4, but I still believe the greatest benefit that those solutions are going to have to us are still yet to come in 2022 and it is.
Grow over time.
So it's really the longevity.
The value of the broader portfolio that is going to bring good news to janssen to our customers. When it comes to its AOR growth frankly, we're kind of done.
Measuring.
The one Dara company AOR growth because we're using now the same sales channel that we're using to sell all of the rest of our products. So we don't think of it that way, we will measure we don't disclose but we will measure internally or by.
Product and we will measure the one Darryl products in the exact same way that we measure the growth of Jeff connected Jeff protect for instance.
Okay. That's helpful. Thanks, Dean and then you briefly referenced B Y O D. I know you've been talking about that a bit over the past few months how actively.
Might be go after the B Y O D market going forward. How are you thinking about this as an opportunity for incremental growth.
Yes, historically speaking we have not aggressively competed for <unk> devices is quite frankly, our belief was that there wasn't a differentiated.
<unk> with B Y O D and therefore, it just became a race to the bottom on price we preferred to differentiate with the more complex devices that are being deployed within an organization. However, with apples recent innovations around user enrollment and device data separation on a <unk> device.
We now have a <unk> solution that we believe is significantly competitive.
Or has competitive differentiation and so yes, you will see us market.
<unk> package more aggressively for B Y O D going forward than you saw us historically.
And the great thing about that is.
You know about.
Of the Tam that we have available to us a very large percentage of it is <unk> and it's going to just open up that with a much more competitive solution than we've ever had before.
That's great. Thanks, David.
Okay.
Thank you. Our next question comes from the line of Joshua Reilly from Needham Your question. Please.
Yeah.
Hey, guys. Thanks for taking my questions. Congrats on the strong quarter and year. There can you give us a sense of the assumptions that you have built into guidance around moderating education growth. This year and then are there some large country deployments that could really move the needle one direction or another based on timing of deployments this year.
Yes, why don't we in terms of our guidance on how we modeled commercial versus education, what our thinking was there Gerald do you want to take that.
Certainly thanks for the.
Good question Josh.
We talked a little bit about as we exited the second half of 2021 and commercial starts to come back stronger and continue into the fourth quarter and as we turned the corner this year and education.
Strong, but back to more what we consider the pre pandemic rates call it somewhere in that 20% rate.
We're going to continue to model that.
Going forward in 2002, we don't really see a big shift really reverting back to what Lynn.
More than normal, but still some opportunity and room for commercial.
Still pull forward a bit from where it has been the last few quarters.
Got it that's Super helpful. And then does having a full year of the connect revenue and SaaS does that impact impact of model or create any tailwind to growth versus the split last year in terms of revenue recognition.
There is a little bit of it so it really the biggest impact was in the second half of last year, let's be a little bit of that cost 2 million Bucks in the first half of the year and then that really starts to normalize as the as the annualized on it in the beginning of the third quarter.
Got it thank you.
Thank you. Our next question comes from the line of P. J Hynes from Canaccord. Your question. Please.
Hey, guys congrats on the strong quarter here.
Appreciate all the gross retention stats sure that's super impressive.
Dino ask.
How significant do you think monetization of non Apple devices can be over time.
To be honest I don't even know where it stands today, but can it get to 10% to 20% of revenue overtime I know that's hard to answer given how fast the Apple business is growing but I'd love to get your thoughts.
Thanks D J appreciate it to.
To tell you the truth, we really don't model it out as how much of it is going to come from the Apple devices versus non and just so you know how we break that out we now have a suite of very device specific solutions and we have a suite of solutions that are focused on network security.
It stands to reason that those network security solutions would be broader than the platforms. They support in the device solutions would be more narrow, but together as they exist. They just create a great Apple first Apple best solution, while being able to broaden the network solutions to cross platform.
Have seen and to be perfectly honest.
Wondered being such a strong Apple brand.
Whether or not we would be able to step in and compete with those new network solutions.
Our cost non Apple devices.
And I got to tell you.
I'm pretty impressed with it our account executives have done a very good job in their dialogues just sort of naturally introducing them explaining why we expand beyond Apple with those solutions and it has really opened up a whole new market for us and just quantify a little bit when we've talked about.
The Tam historically expanding to $18 billion.
After the acquisition of one Dara we didn't even include non Apple devices in that Tam because we didn't want to get over our skis and assume something we would be able to do but in the early goings, it's feeling pretty natural to be able to more easily just extend that network security sale.
For the non Apple devices.
Yes, yes, that's great to hear.
And then in terms of you alluded to some of the success that youre, having with the business plan are there additional bundles that you're considering now as the portfolio expands like can you can you.
We'll learn some of these network security solutions into a bundle that will kind of increase landing asp's. How are you thinking about that.
Great question that could be part of our product marketing team. If you wanted to be we are.
We're doing exactly that and youre right in that its more.
And then one bundle.
Our product portfolio has gotten so broad broad I mean, we are in many ways almost a different company than the company that IPO less than two years ago with the amount of product that we have and as a result, the way. We think of it is you almost think of it as a matrix where the columns.
Our management connection and protection and the Roes are device network and we've got a lot of different bundles that we can create in there and we're actually just doing that right now so I think in the coming.
Months and throughout this year youre going to see us actually launch a few more bundles.
Just a lot of great success, with simplifying that buying process or with <unk> business plan.
Great. Thanks for the color.
Sure. Thanks.
Thank you. Our next question comes from the line of Chad Bennett from Craig Hallum. Your question. Please.
Great. Thanks for taking my questions nice job again exiting the year very strong.
Just in terms of.
When you look back at last year and the drivers of growth both from an IRR and subscription perspective, and how youre thinking about this year.
Just I guess conceptually.
How should we think about device or customer growth.
From from kind of compared to last year and heading into this year relative to kind of dollars per device growth are you guys thinking about that any differently, especially it's fairly early obviously in the penetration is still with the security products.
The demand seems to be very very strong you can hear it in deemed voids. So how are you guys thinking about that as the year plays out here.
Why don't I just comment.
Comment quickly about.
The the kind of the device versus additional product and then kick it over to Joe, but maybe give a little bit of a quantification on that dollars per device, a bit, but but youre right because of our.
Expanding product portfolio.
So many avenues now for <unk> expansion other than.
Customers deploying new devices, Joe has talked about that many times in the past that our primary net revenue retention.
Our expansion has been through device expansion, but we've got a lot more avenues for that now, especially in commercial markets and Jill if you want to comment on that a little bit and how thats changing that dollars per per device a little bit.
Yes, it was quarter over quarter, our price per device has been increasing nicely and it's really driven by a couple of different things.
Recently, the addition of <unk>, which comes to us.
At a nice price point, that's higher than what our average, but a large portion of our products, but then as the mix shifts between commercial and education devices with commercial garnering a higher price per device as well as the Mac device garners, a significantly higher price than the Iowa, and so and commercial is our fastest.
Sector right now that's going to continue to be a pull in.
Current direction of the average price per domain.
Okay, and then maybe just one quick follow up for me.
I think the math is pretty straightforward Jill just.
First half second half story from an operating margin standpoint from what I can tell obviously, we we annualize on the one Dara and the cost there starting in the second half and.
By the way Im looking at it you should see pretty significant operating margin leverage in the second half of this year all else equal.
I guess I'm, assuming that's the right way to look at it first of all in.
And as we kind of go forward.
Operating leverage.
Should continue to improve as we head into next year.
So as far as seasonality.
Operating leverage in the second half just as our revenues are growing faster in the second half and our expenses are where we're going to continue to innovate and we still believe that the best use.
He used to buy our profits to reinvest in the topline to chase that that momentum that we see in the market and that that untapped Tam that we have and we're going to and then given the fact that we also have.
Our land and expand strategy, which is where we focus all of our go to market dollars because.
I have such a high lifetime value of that customer once you win them with an extremely high renewal rate and then the front frame within that customer base.
Got it thanks, so much.
Thank you. Our next question comes from the line of Matt Hedberg from RBC capital markets. Your question. Please.
Great guys. Thanks for taking my question I'll, just keep it to one year for the second time.
Jill you, obviously, you don't guide to IRR and obviously the comparisons are more difficult in the second half due to one dara.
I am wondering directionally, how should we think about <unk> growth relative to the 28% mid point revenue guide I mean should it grow similar to that or are there any puts and takes that we should consider.
Hey, Matt Thanks for the question.
So.
We've got some at the first half of the year.
Comping against an organic number.
With one opening in the second and third quarter.
The way to think about growth rates that have been similar to what we were experiencing.
Kind of in the third and fourth quarter, and really that mix shifts between commercial growing faster than it had been earlier in the year with education normalizing back to pre pandemic levels.
Got it thanks, a lot guys well done.
Okay.
Thank you. Our next question comes from the line of Bhavan Suri from William Blair. Your question. Please.
Hey, Joel it's actually up Matt Stotler. Thanks for taking the questions. Just a couple quick ones here one more on one Dara obviously, some some really good momentum in that business in Q4.
We would love to just kind of.
Maybe get an update on the integration there obviously, there's been good retention.
Personnel, so far clearly youre moving forward. So when we go to market stuff that particularly.
What's left there and particularly interested in the ability to sell core Jeff products through that traditional those traditional one dara channels in the carrier specifically I'd love an update on that.
Yes, very interesting so first of all the functional integration.
It has occurred all of the personnel by the end of 2021, we're reporting up into the functional areas of the business.
They kind of.
We look forward.
And that is all went well obviously we've got the.
<unk>.
The systems integrations not all of the internal systems are completely integrated yet, but we've identified that the most important.
Revenue.
Synergy opportunity, we had with selling <unk> products through the <unk> channel that was our priority, but you have identified another one and that is selling jump products through the historical one dara channels, which are mostly carriers and let's say we have not.
What struck up any additional partnerships in those areas. They are still in the early discussions.
But a few of those discussions have been encouraging and so yes, we do see that as a potential but that has not started yet.
Got it that's super helpful.
And then one follow up your recent recently announced.
And is this Google integration and beyond corporate Alliance membership, but would love to just get your thoughts on the importance of this integration that membership and how enabling Mac use with TCP, either augments the market opportunity or augments. The access that you have for your market opportunity.
Yes, one of the unique things about Champ is we do partner with major industry players very well and that is largely because of the market leadership position that we have with Apple. So the Google beyond core partnership is very similar to the Microsoft partnership that we have enjoyed for years now around device compliance and Bo.
<unk> cases, if you want to access of a user wants to access resources that are governed by the Microsoft identity.
Or the Google identity, we now have partnerships with them that they will turn and Chuck with jump and say does Jeff know what this device and is this device income in compliance.
And if not actually kick it over to jump to get that device properly enrolled or properly compliant. So provide access into the Google enterprise or into the Microsoft enterprise that are governed by those identity so to be in the position to be so well partner with both of those organization.
<unk> puts us in a great position from an zero Trust enterprise security.
Perspective.
Absolutely.
Again.
Yes.
Thank you. Our next question comes from the line of Raimo <unk> from Barclays. Your question. Please.
Nope.
Thanks for squeezing me in here. Thank you two quick ones.
The <unk>.
120%.
Very very strong numbers.
If you think about the success you guys have been one Dara and but also the cross sell up sell how do you think about the evolution of that number going forward and then also on.
The investments we have.
The plan that you're seeing here, what do you see in terms of that's driving your willingness to kind of double down a little bit on spending given what you talked about in terms of the opportunity set. Thank you.
So as far as the net retention.
To be primarily driven by domestic expansion within our installed base, but as we add more products and bring one dara and as well that's another another product to land with that we can expand office there'll be continuing to be expanding devices to also add on products.
King.
Better than kind of ever retention rates.
Particularly on the commercial side when it comes to our operating profit and our appetite to.
I guess squeezed a little bit more on the bottom line I guess is what you're getting at.
We could absolutely do that we've got levers that we could quickly pull to do that but we continue to believe that the best use of those profits to reinvest back into not only go to market thrust of our product development. We've got a lot of technology innovation that we're working on and then again just going after it.
Until we don't see the opportunity in the top line momentum, we're going to continue to grow and it's really that land and expand we land up demand our customers and then we've got this incredible expansion rate.
And our retention rate as well so we have a very high lifetime value for that investment, we're making in that go to market. Okay.
Okay perfect. Thank you congrats.
Yes.
Thank you. Our next question comes from the line of could you add Kita from Bank of America. Your question. Please.
Hi, This is <unk> on for Koji. Thanks for taking my question.
So just a follow up on the security and Barra.
I was wondering what the contribution from one Dara.
Security offerings.
What are the contributions.
From a functional perspective, the Tam perspective.
So what exactly are you asking.
Yes, maybe on the product front.
Kind of what is sure yeah.
What what one Dara has brought US is essentially a suite of network security solutions, one anti phishing threat defense malicious downloads. Another is a zero trust.
Private access essentially a VPN replacement that has conditional access capability.
And then the third is data policy being able to govern data volumes on a sell plan and also appropriate use of data on the Internet. All three of those solutions now have given us what I'll refer to as a depth of defense now.
Or are customers, whereas before we were defending at the device level and now we're able to defend at the network level that would prevent threats from ever reaching the device and that is really that depth of defenses with Scott our customers' soft sided.
Okay.
Great got it and then you have so many product offerings I was just curious about what how do you think about bundling and rebranding what's the strategy.
That.
Yes. So thank you for that and obviously, we do sell byproduct and we have a wealth of.
You.
Don't even have the count off the top of my head of how many products that we have right now, but we will as I mentioned earlier likely create bundles that are similar to the business plan, but also potentially around.
Connection protection and management.
So we will create a variety of bundles to make that purchasing process simpler for our customers.
Great. Thank you.
Thank you.
Thank you. Our next question comes from the line of Pat Walraven from JMP security.
Hey, guys its Joe I'm ready to take on for Pat. Thank you for the question just one on <unk> and how are you thinking about hiring plans for this year and then how do you feel about your ability to attract and retain the talent, especially in this environment. Thank you guys.
Jill do you want to take that one.
Yeah.
So those are great questions and I think that's top of mind for most most every executive out there our hiring plans for 2022, we're going to look pretty similar to what we did in 2021, which is two <unk>.
We added close to 800 people this year, including the one Dara integration and on an organic basis.
Similar similar and it's coming here and there.
Theres not a week doesn't go by it.
Staff meeting so we don't talk about this and how we're going to track, but not only attract but retain employees and we spent a lot of energy on that and we're in a fortunate spot we would be able to get some really cool thing we've.
And some of the time opportunities for our employees, we've held medical benefit cost to our employees relatively flat.
Standard this offering.
Now looking at some really important as it maintain flexibility in where we work and how we work and then just really kind of it.
I call me in I'll, just big has been virtual hubs to our team.
When people are.
Feeling a little bit of burn out but leave.
Levi with <unk>.
It very well and I think a lot of it is the fact that we've got a great tone at the top of the organization that goes all the way down through our management group and we spent a lot of time working together as a team on how to take care of our people and it's really paid off nicely.
Yes, I wanted to give props to the management team and I mean, the first level managers.
I speak to a lot of Ceos and honestly I don't know that I've spoken to one that had 90 plus percent.
Terry retention.
Of their employees during this last year and our engagement survey that we took in September something like 90% of our employees answered favorably to the question My manager genuinely cares about my wellbeing and I think that that is the core reason why.
So many stay at Janssen, we've created kind of an appointment of an environment that we have.
That's super helpful. Thank you both and congrats.
Thank you.
Thank you.
This does conclude the question and answer session as well as today's program. Thank you, ladies and gentlemen for your participation you may now disconnect. Good day.
Okay.
Okay.
Okay.
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