Q2 2022 Jamf Holding Corp Earnings Call
The conference will begin shortly to raise your hand during Q&A you can dial star one one.
[music].
Good day and thank you for standing by welcome to the gym second quarter 2022 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 one on your telephone please be advised that today's conference is being recorded I would now like to hand, the conference over to your speaker today, Jennifer Goldman Please begin.
Good afternoon, and thank you for joining us on today's conference call to discuss second quarter financial results.
With me on today's call are deemed Hager, Chief Executive Officer, Joe Putman current Chief Financial Officer, John throw saw President and Chief operating Officer, and Ian Good kind, who as we recently announced has been appointed Chief Financial Officer effective September one.
Before we begin I'd like to remind you that shortly after the market close today, we issued a press release announcing our second quarter financial results. We also published the Q2 earnings presentation, along with an updated investor presentation, and excel file containing the quarterly financial statements to assist with modeling.
Additionally, we issued a press release announcing <unk> appointment to CFO and Joe's retirement, 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 reports, 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 Jeff performance you can find a reconciliation of those measures to the nearest comparable GAAP measures in our SEC reports and earnings 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 Dean CAGR theme.
Thank you Jim and thank you everyone for joining us on today's call John and I will share some highlights from <unk> second quarter and recent customer successes, then Joe will review the second quarter financial results and provide jumps financial outlook for the third quarter and for full year 2022.
But before I get started I want to publicly congratulate Jill on her retirement.
So incredibly grateful to Jill for her many contributions to jump over the last eight years, Joe has been instrumental in <unk> success, including leading us through our IPO in 2020.
As many of you know Jeff is not the first time I've had the great pleasure of working with gel and she is one of the main reasons I am here today.
I'm fortunate enough to have had her as a colleague for many years and I'm, even more fortunate to call Jill a friend I wish nothing but the best as she embarked on this next phase of her life and I would also like to extend our congratulations to Ian.
It has been a key member of our leadership team since he joined as our Chief Accounting Officer in 2019.
Every confidence that Ian will be excellent in his new role now.
Now some highlights from the quarter.
Q2 represents another successful quarter for Jim with continued strong results, we achieved a record quarter for new <unk> added and again exceeded expectations with a growth of 40% year over year to $466 million in revenue growth of 34%.
Despite an uncertain macro environment hardware supply issues, causing delayed projects in a challenging market for recruiting and retaining talent. The diversity of <unk> business has proven resilient as we navigate these factors James.
James IRR and commercial markets grew a strong 53% year over year, and James <unk> and education markets grew 16% over the same period, maintaining the balance between jumps higher growth commercial markets, which represents over 70% of our business and a healthy education market.
When it comes to Jim's momentum by product line, we are noticing a strengthening replacement market for Jeff's robust core Apple device management products like Jam Pro driven by two factors continued Apple innovation and market consolidation.
Innovation by Apple has created the need for device management partners to adapt quickly in order to embrace Apple's latest capabilities. Many cost platform providers are slower to embrace these innovations, which can impact device security as well as the user experience.
With respect to market consolidations. The majority of the software providers that were considered leaders in the enterprise mobility management market. Just five years ago have been consolidated into other organizations, leading to additional challenges for their engineering teams to continue innovating at the pace of Apple.
Meanwhile, <unk> unique approach to support and extend Apple innovations. The same day. They were made available is proving to be more valuable than ever to existing and new customers.
In Q2, Jeff replaced over 35000 seats of one leading enterprise mobility management solution across just four separate customer wins one of these customer wins was red ball. We have now consolidated all of their Mac and iOS devices into jumped from this.
This was a strategic move to guarantee the best in class user experience across all of their managed Apple devices.
James robust management capabilities and commitment to innovating at the pace of Apple health, Jeff extend its lead in Apple Enterprise management.
And when combined with our security platform <unk> is the only solution provider at scale, who can fully support the apple growth within large organizations delivering an experience that is both enterprise secure and consumer simple.
With JMP security product line, we've seen tremendous growth over the past few years and we have as we've expanded our offerings to meet the needs of the mobile workforce.
Currently our security products represent 18% of our IRR, increasing one percentage point from last quarter with 17 of our top 20 largest deals during Q2, including one or more of our security products.
This increase was driven by a number of customer wins across Champs broad line of security solutions.
For example data policy, we landed at 13000 seats sale to a multinational food distributor, who is able to re allocate surplus hardware budget to purchase these data policy seats.
For threat defense and National network of behavior therapy centers purchased 6000 seats to deploy across their network of facilities, which spans most of the United States.
Additionally, we want to nearly 15000 seat sale of jam come out with a prominent e-commerce and online retail company and another 7000 seats with okta, a leading identity provider as organizations embrace jumped connects ability to Mac accounts to all major cloud.
The entity providers.
And Jeff protect was chosen by organizations like paper and apparel E Commerce Company and <unk> was also chosen by a leading provider of security operation services to protect their own internal Apple Mac computers.
The fact that leaders in both identity and security each chose jumps identity and security solutions is a testament to the strength and value of jams platform.
While most of the deals I mentioned are for Corporately owned devices jumped strengthened the security posture of all devices accessing carpet resources, whether corporately or personally owned in Q2, many customers, including a global leader in gene therapy, and diagnostics leverage <unk> brand new <unk>.
Management pricing to deploy hundreds of BYOB phones, along with Jeff private access configured with per App VPN. So that all work done on the <unk> device is automatically protected and encrypted without the user ever having to think about it.
Using jump in apples unique be yod's separation of personal and work data. The customers employees are able to have a personal iPhone with privacy protection and secure access to everything they need to do their job.
Janssen Apple are at the forefront of <unk> unique combination of five critical capabilities that are unrivaled in the industry, including first the ability to separate personal and work data and apps upon user enrollment.
Support for the sign into work or school functionality bound in the iPhone and iPad general settings, empowering each employee to set up their own <unk> device and eliminating hacking opportunities journey enrollment.
Zero Trust network access to replace legacy VPN with private access or a cloud based nextgen VPN.
<unk> customers are able to use <unk> pro for per App VPN configuration. So that jumped private access is initiated automatically when needed without the user ever having to think about it and fifth Gen. Self service solution presents an enterprise app store to all employees empowering them to install and configure.
<unk> and secure apps on their B Y O device with one simple path on the App.
With these capabilities employees can now use their favorite device knowing their privacy is protected and it is able to best serve employees, while still protecting the organization.
Innovating at the pace of Apple is critical to winning with Apple and this year. It apples worldwide developers conference New innovations were announced that equip jump with greater capability to serve customers and further differentiate from organizations, who don't focus on apples native functionality.
Examples from this past year's event, our platform single sign on for the map enrollment single sign on to strengthen <unk> solutions device attestation to make it nearly impossible to impersonator device strengthening Apple and James security posture and declared of management a new device.
Putting methodology that turns MDM upside down, creating greater capabilities for customers, while emphasizing the criticality for solution providers to focus specifically on apples uniqueness.
<unk> is excited to showcase how we plan to embrace and extend these capabilities at the Jeff Nation user conference in San Diego in late September we will again host a product innovation focused investor event during Jane up which will be in person in San Diego and webcast live for those who cannot attend.
Event details will be sent out shortly.
Ill now hand, it over to John to talk to our successes in healthcare and education.
Thanks team.
Many of the wins that Dean highlighted represent customers that have purchased more than one <unk> product, which we believe will be a key driver for our growth in the future.
Currently for commercial customers utilizing our flagship product pro 33% are running more than one channel product and we anticipate that number will increase as we continue to expand our platform capabilities. Additionally for our SMB commercial customers utilizing Jeff now 16% are running our recently launched fundamentals plan.
One industry, where we are seeing continued adoption of <unk> products and workflows as healthcare Q2 represented a very strong quarter for healthcare aided by continued management patient and care provider workflows and security expanded and within organizations one of Florida's largest hospital networks recently switched to tier CRO, along with adding Jeff connect.
Protect private access and James healthcare listener. This win is another example of the robust replacement market that Dean mentioned the hospital network with struggling with their management provider and our teams were very quickly able to demonstrate how jab could alleviate their issues along with provide additional value added products and workflows are growing committee.
To supporting and securing Apple devices in health care was key to winning this customer.
James commitment to continuing to innovate across our platform and within industry workflows, all while maintaining the pace with Apple innovations provides a compelling value proposition to customers as we continue to drive Apple adoption in the enterprise.
And now turning to education in Q1, we discuss Gm's strong education growth. Despite a tough comp with the surge in education buying that occurred in late 2020 through Q1 of 2021, where programs like digital pack in Germany, and the Giga project in Japan drove device growth rates never seen before in history now in Q.
Two a quarter that is typically strong for the education market James business was aided by a nationwide education program in Taiwan aimed to distribute devices to K through 12 students across the country.
<unk>, where given the ability to choose the type of device as well as the software to manage and secure them.
I'm delighted to share that 80% of the schools in this program have chosen jam. This win helped drive the total increase of approximately $1 6 billion devices for <unk> in Q2, as well as an increase of approximately 5000 customers at the end of Q2, Jeff served over 67000 active customers with more than $28 4 million.
Devices on the GM platform jumped APAC teams strong partnership with Apple along with our demonstrated success with Japan's Giga project were key Differentiators for Champ in the selection process. Additionally, jams unmatched combination of device management and content filtering with compelling for many of the schools and helped drive the improvement in <unk> overall.
Average <unk> per device in Q2.
This Taiwan opportunity represents only the initial phase of this government program Jam success in this initial phase puts us in a strong position to win as it is rolled out to additional schools as well as opens the door to commercial opportunities in Taiwan.
James This is one of the very few companies in the World that offers both endpoint management and security, making Jeff a one stop shop for organizations like schools that have both device management and security needs.
And now with safe Internet <unk> provides the only Apple first education focus cyber security solution to ensure students can navigate the internet safely with content filtering and network threat prevention technologies made generally available in all markets earlier. This summer camp safe Internet integrates with Champs School NGL pro providing a seamless.
<unk> for both management and security and allows for multi product adoption and education.
Now I'll turn it over to Jill for our financial results and guidance.
Thanks, John and thanks, Steve for those kind words earlier.
Q2 reflects another record.
Quarter with added <unk> growth accelerating year over year compared to the prior two quarters and balanced growth across the business as we continue to deliver to deliver a robust platform with management and security solution.
We ended Q2, serving more than 67000 customers with more than $28 4 million devices on our platform.
As John mentioned this is a particularly strong quarter for customer and device growth due to the Taiwan Ministry of education projects.
Q2 revenue growth is 34% year over year and total aircraft, it's 40% driven primarily by device expansion.
Logo acquisition upsell and cross sell efforts and the impact of the <unk> acquisition, which occurred in Q3 of 2021.
Commercial aircraft remained strong at 53% year over year with all of Jeff's top commercial industry is experiencing.
30%.
We achieved <unk> growth of at least 25% across every product and at least 30% growth across all major geographies.
Additionally, our security products and becoming a larger portion of our IRR and Theyre now 18% of total IRR at the end of Q2.
We have updated our dollar based net retention disclosure to now include one Dara.
I will have 12 months of training data.
Now combined total company net retention is 117%.
As expected we did see a slight decline in this metric due to the addition of one there, but with respect to net retention to increase overtime.
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 are found in our earnings release.
Q2, non-GAAP gross profit margin was 81%, which is flat to the prior year and consistent with recent quarter.
We saw increases in non-GAAP operating expenses in Q2 over the prior year, primarily due to added headcount in sales and R&D to support top line growth as well as absorbing when their operating costs.
This resulted in Q2, non-GAAP operating margin of 4% compared to 9% in the prior year quarter.
non-GAAP operating income was $4 $5 million exceeding our expectation due to revenue outperformance.
Our trailing 12 month Unlevered free cash flow margin was 11% compared to 26% in the prior year period.
The prior year period benefited from expense savings related to the pandemic.
Current period includes the operating costs associated with one of their operation as well as the impact of the timing of cash collections in Q2.
This timing difference, let's say to a larger number of sales occurring at the end of Q2 than in previous quarter, creating a certain window for cash collections related to the sale.
Fortunately this is purely timing related and is not related to increased collection times.
We believe our strong consistent cash flow generation differentiate camp for many other high growth Tech company and provides us with financial flexibility and stability, helping protect us from any rapidly changing market or economic condition.
This cash flow generation allows us to continue to make investments in innovation and sustainable top line growth.
Our annual effective tax rate at one 4% consistent with our expectations.
And as indicated last quarter.
With Q1, 2022, non-GAAP metrics, we will use our statutory rate for calculating tax impacts which is currently 24%.
We have included calculations using the updated methodology for current and prior periods <unk>.
They'll file containing our quarterly financial statement that has been posted to our IR website.
Please note that we do not pay cash taxes on a central basis.
Now I'll provide thoughts on our financial outlook for the third quarter and full year 2022.
As Dean mentioned earlier, our continued strong performance is a testament to the diversity and resiliency of the business.
Demand for <unk> innovative solutions remain solid and expect this to continue due to a number of factors, including Jeff is often one of the smaller dollar items in it budgets and therefore, not often one of the areas subject to budget cuts should the business scale back spending in the future.
Additionally, if companies are looking to do more with less money can be deployed rapidly across an enterprise with minimal effort and deliver ROI that is measured quickly usually in that.
However, we are seeing.
<unk> sales cycles in some areas as well as customers purchasing additional only current as opposed to anticipated future needs.
Additionally, Apple recently stated by supply constraints have continued and are particularly acute for Mac and iPad.
These factors along with continued macroeconomic uncertainty.
Just to be more cautious with our outlook.
For the third quarter of 2022, we expect total revenue in the range of 121, five to $122 $5 million representing growth of 27% to 28% year over year.
As a reminder, we acquired one there at the beginning of Q3 last year, so year over year growth rates will now be on a comparable basis going forward.
non-GAAP operating income in the range of $4 million to $5 million.
For the full year 2022, we expect total revenue in the range of $475 million to $477 million representing.
Representing growth of 30% year over year, and a $1 $5 million raise at the midpoint from our prior outlook.
non-GAAP operating income in the range of 21% to $23 million.
As a reminder, our non-GAAP operating income is impacted by the full year impact of the one Dara acquisition, which occurred in July 2021.
We continue to anticipate 2022, Unlevered free cash flow margin similar to what we achieved in 2021.
Additionally for modeling purposes.
We provided estimates for amortization stock based compensation and related payroll taxes.
Annual effective tax rate and basic and diluted weighted average shares outstanding and the earnings presentation as part of the webcast and also posted on our Investor Relations website.
In closing, it's been a pleasure working with all of you over the past two years.
As our IPO can't Fitzgibbon substantial growth led by innovation and our relentless focus on delivering the most robust solution set to help organizations 60 with Apple.
And I couldn't be more proud of what <unk> accomplished and I'm honored to have them part of such an incredible team and journey here at <unk>.
I have complete confidence in analyst entire team continued success well into the future.
And now John and I will take your questions.
Operator.
Thirdly, ladies and gentlemen, if you have a question at this time. Please press star one one on your telephone one moment for our first question.
And our first question comes from the line of Matt Hedberg from RBC capital markets. Your question. Please.
Great. Thanks for taking my questions first of all congrats on the results and Jill.
We're obviously miss working with you congrats on the retirement and look forward to working with you as well.
Maybe I'll start.
A lot of this thing in the quarter.
I think that's reflected in the results and the guidance that Joe you did talk about some elongated sales cycles.
I Wonder if you could provide a bit more color there.
Was there anything unique with it maybe when it started to happen.
One of the commercial side versus the education side.
Hey, Matt its Joe and thanks, Thanks for taking the call. So we did start to see this earlier pretty early in the quarter actually and from.
From what we're hearing that's not unusual or hearing that kind of throughout the industry as our.
Our customers are taking a little bit longer to get spend through their budget cycles, maybe a couple of extra levels of approval on purchases in the <unk> World. However, we believe that.
Those deals and they did end up closing and if you think about it we're a little bit insulated and what's going on right now because our average our average deal size of the customer as less than $10000, so and our customers.
When companies are looking at their it budget and trying to rationalize what their spend is going to be we don't feel like we're going to.
Yes, we are going to be impacted materially by any of that it's just the cycles are just taking a little bit longer.
That makes sense and then maybe one for John .
The success in security Cross sellers.
It's really really exciting.
Can you talk about sort of.
Whats driving that I mean, I think a lot of us feel like security is one of the more durable aspects of it spend especially in times of economic challenges, but is there anything unique with what's driving sort of the strong accelerated attached there.
Yes, and thanks for the question there certainly is and Thats really the combination of management and security together that really that the ability to deploy the security solutions with the management product is really what sets us apart.
Really resonated as you've seen from the script. It was 17 of the top 20 deals had a security product at least one security product included in that so we expect that to continue going forward.
Okay.
Thank you.
One moment for our next question.
And our next question comes from the line of Chad Bennett from Craig Hallum. Your question. Please.
Great. Thanks for taking my question and just reiterate Jill Congrats good luck on the next phase and then look forward to working with with Ian going forward. So.
New customer count in the quarter look look very very strong and dollars per device look look good.
Though you pointed out in the quarter.
Pretty significant Taiwan education, when in the quarter I think it was in the quarter.
Was that im not sure how you kind of segment each district.
Taiwan, However, it works from a customer standpoint, but was that meaningful from a new customer count standpoint in the quarter.
Yeah, John why don't you jump in on this as you know got.
Thanks for the thanks for the question as well it was about half of our customer increased new customer.
In this past quarter. So it was pretty significant and each one of those school districts make their own choice and they can choose the device and they can choose the software to manage it and as we mentioned we were able to secure 80% of the availability of the funding in that particular quarter again initial phase but.
Certainly vary.
Very good headwinds, yes, just to add one comment on their wallet was roughly half of our customer account nowhere near that and device companies were very small deployment across schools.
And then as we think about it might be for particular for you just in terms of now that we're annualizing on one Dara and.
Every metric revenue <unk> and so forth.
How should we think about.
I know technically arent guiding for <unk> in the back half, but I assume there is some type of deceleration.
Expected in <unk> in the second half and just kind of I know you don't Love just segment.
But just education versus commercial.
And how you view kind of the second half of the year as you stand today from an <unk> growth perspective.
Yes from an IRR Youre right just as a reminder, we don't guide on <unk>, but I think it's a great question to bring in and for the first time you want to take that sure. Thanks, Dan. Thanks for the question, Yes, Youre correct, but we would expect in the second half of the year for those numbers, both <unk> growth and revenue growth to converge.
Got it okay. Thanks, so much.
Thank you.
Thank you.
Our next question comes from the line of Matt Stotler from William Blair. Your question. Please.
Hey, Tim Thanks for taking the question Joe we're going to Miss you. Obviously, it's been great working with you and and excited to get to know you better.
I think the first question here would just be on the international.
Opportunity and kind of your efforts there more on the commercial side, obviously, you talked a lot about the opportunities and what's been going on the education side. So if you look at kind of the pipeline there.
August is going on the macro would love to just kind of get your your feel of how that's progressing going forward and whether there is any sort of.
Maybe kind of the same elongation that youre seeing broadly and how that plays into your.
Your expectations for contribution from those markets going forward.
Yeah, I'll kick it to John here. This is dean to talk a little bit about the international opportunity and any impact that we're seeing from a market perspective, but I would just remind.
Everybody that the balance of our growth as we've mentioned.
Several quarters in a row that our <unk> growth for for every single product that we have is north of 25% and for all of our top commercial industry is north of 30%.
And then also for all of our geographies major geographies north of 30% so.
Balance and diversity is our friend, but to talk specifically about the international opportunity wanted to kick it over to John Okay. Thanks.
Well certainly the international markets are great opportunity for US we know just by looking at the it spend that theres, a greater addressable market outside the U S. Even inside the U S and we have invested accordingly in our international markets that continue to grow.
Faster outside the U S than inside the U S. We really believe that for a couple of reasons one the addressable market and two it also diversifies our revenue source. So that if we're seeing headwinds in one market. We certainly have the other markets to bolster us in that and we've seen that happen. We saw it happen through Covid and we're seeing it in some of the current economic situations today.
Got you that's helpful. And then one on the you obviously have fundamentals, which meant Jay earlier this year.
<unk> also talked about the business plan package.
In prior quarters.
Just get some color on how you think buying patterns at customer is going to evolve over time right. The land and expand motion has clearly been strong.
But do you expect that at some point youre going to see kind of the buying behavior move more over to favoring these bundles and how does that change your view of kind of that that would that land and expand motion looks like on a longer term basis, yes.
Yes, that's a great question Dean here.
Our product expansion.
Since we went public two years ago has been immense I mean to some extent, we're almost a different company than we were two years ago. We have so much more product that go back into our base of of now 67000 customers and I would also mentioned that.
Most of that cross sell historically has been in commercial markets, but on July one we also launched safe Internet.
Which is we anticipate it's going to be our best cross sell rhythm within the education space as well, but one of the things that we've noticed is our product expansion has been so significant is we do need to make it continue to make it easier for our customers to do business with us and we have found that.
They really don't want to go through their procurement office to purchase each product that we have and in even if we list each product on the.
The purchase order to explain what each one is and so it just sort of simplifies and smooth out the rhythm of the cell. We put together bundles that are very often purchased together and so we're not just going to have one or two bundles will have a few bundles that are the most common <unk>.
<unk> to purchased together to make it easier on our customers and Jim fundamentals, specifically like nothing could be easier than that if youre a jump now customer today.
Can literally sign on to your system and with one mouse click upgrade to the fundamentals plan that also includes anti malware and identity sink.
And I mean, you're live.
One second later or two seconds later.
And that's one of the reasons why in the short time since it's been available I think we launched it in March we already have 16% penetration within that Jeff now base of Jam fundamentals and of course, the dollar per device doubles when going from jump now to Jim fundamentals, so making that super easy for customers is key.
That's great. Thanks again.
Thank you. Our next question comes from the line of Rob Owens from Piper Sandler Your question. Please.
Great. Good afternoon, so I wonder if you could perhaps duration of contract this quarter and just looking at the strength that you saw in <unk> and in particular in long term deferred revenue. So I'm wondering if that's attached to the successors to one with education vertical or or something else.
Hey, Rob go ahead, Jeff.
Hey, Rob.
Hi.
On average not a big uptick our average our average term and about 20% to 22 months.
Ticking up a bit over the last couple of years.
Driven by not only the deal that we just did with Taiwan, but as you recall that.
Deal with Japan in 'twenty, one also had extended payment terms as well and these are primarily education. So we're seeing it in the education market and it's because they will not only is it not only driven by the funding and the timing of the funding, but they tend to buy the license that has a lifecycle that thinks about the lifecycle of the devices are putting it on which could be three to five years.
In commercial we're not seeing necessarily a longer term on average.
And could you remind us how you price overseas.
And what's your what's your FX exposure.
Yes, so we have primarily primarily.
Our deals are primarily denominated in U S dollars, we have less than low single digits of our total business has actual FX exposure too so not much of an impact at all year to date.
Less than $2 million year to date, roughly with those more products was there a lot of discounting that happened in the period.
Where people paying the higher U S dollar.
I'll, let al.
I'll, let John jump in here, but I don't think that the finance team noticed anything more unusual around the discounting.
No and in fact, 80% in some markets are done through the channel outside the U S.
So we would have that as an intermediary for currency.
Great. Thank you guys for the color.
Okay.
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 first of all Joe.
Mike Congratulations to you both.
Great to see.
And congrats on the results in the quarter.
Maybe to start Deane.
I think you noted.
You commented around.
Apple supply chain headwinds in the quarter could you maybe offer a little bit of context for someone who I won't cover the stock with long maybe some other thoughts.
How often our deals.
I guess greenfield versus displacement and haul financiers lucid deployed concurrently with.
New device acquisition.
Yes, great question good to hear from you Brian .
So one of the things that we've always.
<unk> people is to not take a look at apples in quarter results and tie them to ours directly because the market is so large out there that there is plenty of expansion for jump within the current base of Apple devices and as our product line.
Rose.
Two where we have a lot to sell back into even our existing base there really isn't a correlation there.
With that said.
One is the supply constraints have been well documented now for several quarters in a row. So there does get to be a bit of a cumulative effect.
And I would say when it comes to aligning around device purchases that tends to occur a little bit more in education than in commercial markets, where the basis. There for instance, education will be getting ready for a new school year and they will order a set of new devices to come in for that school.
Year end since Q2.
More education heavy quarter, we probably saw some of that.
Those supply issues in Q2 more than we have in other quarters, but overall as you look at kind.
Everything that everybody is dealing with whether it be supply where the war on talent or the macroeconomic uncertainties all of those things are counterbalanced with.
Increasing demand and need as you well know covering the space for security solutions.
As John said.
We really see security and management is two sides of the same coin, whereas you are able to monitor for vulnerabilities and mitigate those within the same platform.
It's something that I made a comment on my.
The prepared remarks, but I will reiterate given some of the activities that are occurring in the market. We are now seeing that the space of management solutions is becoming in it.
Increasingly attractive replacement market because of some of the consolidation that has occurred and also because of apples recent significant innovations. It is super important to keep pace with Apple. So as a result of all of those things, we don't necessarily require or.
Needed all Apple to expand their market share in order for <unk> to expand on.
Got it that makes sense really helpful color. So thank you for that and maybe just a follow up.
You commented about.
<unk> now being included in net dollar retention would it still has been.
120 range without one Dara could you maybe also wrap a little context around how dollar retention has improved at one Dara some of the key kind of gating factors there that might drive continued improvement and ongoing improvement in consolidated net dollar retention.
So yes, I mean, as we've mentioned really over the last year, we were expecting.
Somewhere in between the two to three point drop.
Consolidated net dollar retention.
So yes, I mean, as we've mentioned really over the last year, we were expecting.
We're in between the two to three point drop in net dollar retention when we started to consolidate that with one Darryl largely because.
The historic.
Jim.
Gross retention is so high.
Retention is so high and an all time high because of the historic one dara selling mostly through carrier channels, just somewhat the nature of that channel does not lend itself well to gross retention. So that's why we.
Been anticipating that to go down a couple of points.
For quite some time, but as we redefine the channel for selling those security solutions not only still through the carrier channel, but increasingly through Gm's historic channel and a channel of security providers that lends itself to a much higher gross retention over time.
And that's why.
We expect that to continue to go up in addition to the plethora of opportunities. We now have for cross sell since we have so many solutions to go back and the customers as well.
Got it very helpful. Thank you so much.
Thanks, Brian .
Thank you. Our next question comes from the line of <unk> from Barclays. Your question. Please.
Oh.
Right and wrong.
No it's actually.
Can you hear me okay.
Yes, we can.
Yes.
All the best we will Miss you.
My first.
So if I think about you brought up a good point around the.
The consolidation in the space or like Citrix has gotten the number has gone.
Iron is gone in a way so so who do you see if you think about like the.
The players do you see in the market like who is from Europe .
Do you see the consultation already playing out or is that something that you would.
Anticipating that will kind of happen more going forward.
So thank you, even though a good good to hear your voice.
If you take a look at.
Parties.
From past years that have been consolidated.
Without a doubt that has changed the dynamics.
Of.
Of the competitiveness of those solutions for instance, some of those organizations, who we competed with let's say <unk>.
Five years ago.
We simply don't compete with at all anymore.
<unk> only when we a.
Our customer is really needing to get on a solution that's going to keep pace with Apple. So if we're going in and actually doing a replacement.
So the more of that happens the more the competitive dynamics of the industry changes.
And it just keeps on happening as you well know if you'll go back into history seems like every year somebody has been getting consolidated in the Apple space.
It isn't a set it and forget it you have to keep pace with innovating with Apple and so it just doesn't lend itself well to less investment.
With consolidated organizations for their engineering organization so.
I think it is.
As we've seen is continuing to happen and I think that is going to bode very well for our market and our ability.
To compete in it going forward and I apologize that I have.
Just repeating the operator raimo, it's good to hear you.
Sorry, sorry, sorry.
Yes.
Yeah.
And my.
Follow up is and maybe it's for Chile.
If you think about.
This space in this earning season a lot of people talk about the backend loaded nature of the quarter you guys did actually.
In comparison very very very rarely here because you've got most of the stuff done we're always kind of struggled actually.
How are you what are you seeing in terms of customer conversations on how long does that continue to be played out if you think about July as well.
That weakness at peoples sold in the market or that slight hesitation. In June has that continued for you in July or what are you seeing in the field there. Thank you.
Yes.
Yes sure.
To some extent.
Anytime there is changes in the market.
There's just almost a bit of a some organizations will do a bit of a pause and just an assessment.
We're really not seen.
Budget going away.
We're really and then frankly.
As far as the minority of the deals, but we are seeing a little bit of just hey, let me just make sure my device count is exactly right before I finish this agreement.
So whether that resulted in a bit more towards the tail end of the quarter in Q2 than normal.
It's possible, but I would concur with your one comment I'm sitting right here next to Mr. Stroll fallen.
It is.
He runs an organization.
They'll dump that they have 12 quarter closes they do an X. This team doesn't lorden aerie job.
Treating each month as if it's a quarter and so comparatively speaking.
<unk> is actually is well balanced through the quarter as any organization that I've ever worked with so we might see a little bit more towards the tail end, but we are very much not a typical hockey stick type of sales organization, we're pretty spread well throughout the quarter and I expect that to be the case in Q3 as well.
Okay perfect. Congrats again, thank you.
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.
You have a couple of new bundles and education that recently launched curious what's the initial reception from customers on those and then more broadly how of the education opportunities shaped up this summer versus your expectation. Our work has found that from large district that switch to chromebooks that few years ago.
Now actually going back to Apple is that what youre seeing as well.
Well.
I think that that is a great data point that you offer I've actually seen a few people write about that as well.
See apple as popular as ever.
And then education and quite frankly, if im going to.
Do just a bit of an apple commercials for a moment. What we have found is that there is a very big difference between technology in the classroom.
Technology enabled asked of learning using the form factor that Apple provides in order to change the way education gets done and.
More and more districts are realizing.
That you can actually change the way learning is done with Apple in my view.
More than you can with chromebooks and so yes, we are seeing some districts who have prior deployed chromebooks to say that they want to move to the Apple form factor and it's not just the U S. Jeff has a tremendous international presence within healthcare or I'm, sorry, our education.
And as John mentioned for instance, the Taiwan opportunity.
Four jam to win 80% of those schools means.
April one the majority of those schools, so more and more I think schools are realizing the value of.
Truly changing the way education gets done with Apple and then as far as our bundles go.
We don't just offer management, we don't just offer security we are in the classroom, we have gym teacher to engage the teachers Jim students to engage the students we have Jim parent to engage the parents and we offer not only the empowerment of those students, but the protection now, let's say for Andrew.
Right.
Got it and then just as a follow up how much of a catalyst with the deal announcement for the cross platform vendor.
Getting acquired I think it was in late May when the announcement came out how much was that a catalyst for some of these deals I think you mentioned four deals in the quarter or where those deals are already in place.
Well, you rarely turnaround some things with the <unk>.
Deals that I mentioned.
All rather sizable.
So those typically do not turnaround in a matter of days, which is they all occurred.
After the event.
Speaking here, but I will tell you that.
It is rather unusual to complete.
<unk>.
That many replacement deals of that size in such a short amount of time, which is my way of saying we are seeing early opportunities from from that set of events.
Got it thanks guys.
Yes.
Thank you and our next question comes from the line of Julian Merit check from JMP Securities. Your question. Please.
Hi team. Thanks, so much for the question and honestly, Joe I wanted to dig in a bit on the competitive set and maybe more specifically on the lower end.
Are you seeing there and particularly at the more difficult funding environment.
Kind of what kind of opportunities could that mean for for example.
I'm, sorry, I didn't catch that question.
Okay.
Yes.
Sorry about that yeah, I, just wanted to dig in a bit more on the competitive set and more specifically on the lower end what are you guys seeing there and what the.
More difficult funding environment, what kind of opportunities could that mean for example.
Yes sure so.
I think it is fairly well known about win.
Someone enters this particular market to attempt to do what <unk> does they usually attempt to enter it on the low end of the market and there are a couple of competitors out there.
Who have.
Some of <unk> strategy and as they have been relatively well funded historically.
<unk>.
But when when we face conditions like what we're facing right now.
Generally speaking that bodes well for market leaders and dependable bets, where you can consolidate on a few solutions and also get a more affordable overall solutions. So we.
We think that there is opportunity for us there.
Especially as we have bolstered up some of our lower end market solutions like Jim fundamentals, where with one simple purchase.
It shops can get management identity security and.
Brett security all within one simple purchase all in an e-commerce purchase so.
Yeah, we see the opportunity there we know that also.
Low end organizations will probably be a little bit more budget conscious in the current environment.
And so that just creates a really nice environment for jam fundamentals also I should mention Jim fundamentals for a customer to take advantage of it. It is a pay as you go month by month, So that also bodes well for <unk>.
Financially strapped a low end business that just wants to go out given a taste try it for a month and know that they are not locked in and I think that's one of the reasons, we've done such a nice uptick there.
Super helpful. Thank you so much and just a quick follow up I know theres a lot of uncertainty out there, but where do you see the most opportunity for them in the near term.
Oh got you.
So many questions there in terms of geography product.
And.
And industry.
But I'm going to say that.
Right now in the in the short short short term.
It is going to be this great growth of management with security two sides of the same coin create automation and help customers.
Feel like they truly have a trusted access.
Two enterprise resources from all employees that employees, absolutely love and that isn't Super unusual bank. So I believe that we are going to grow our product sets within our customer base as we also bring on new logos, but as we look longer term.
I do believe that once for instance, apples through some of the supply constraints issues that they're facing today.
Think the math is.
The Mac on the iPad I believe are going to become the mobile laptops of the future within the enterprise.
And we are going to continue to see that penetrate and that's going to bode very very well for <unk> as we kind of grease the skids for that type of an enterprise penetration of those devices.
Thank you.
Our next question comes from line of <unk> <unk> from Bank of America. Your question. Please.
You cannot.
Thanks for taking my questions and best of luck T tailwind looking forward Youre working with you or Ian.
Just actually wanted to follow up on the previous question and.
Asked about the mix.
Matt, Matt and I'll add.
It seems like Mac is a strong driver.
Tom that drive it in Iowa.
How should we think about <unk> versus <unk> mix from here and any impact from Apple supply chain.
Okay. So first of all that doesn't sound like Koji Im assuming that Thats Laurie.
Alright.
And.
Historically speaking.
<unk> really got its start in Mac years ago, and as a result, it is the most contributing factor to our overall financials. However.
In recent years.
<unk> has really started to penetrate the much larger.
Pos space and iOS, especially in commercial markets continues to be the segment that is actually the fastest growing for us and the reason for that is a couple of fold.
But most notably as we've mentioned several times that.
We have been.
Very very strong market share.
Managing and securing Macs that are out there, including 22 of the top 25 global brands. So when you have that kind of install base.
It really isn't a question of whether organizations need to bring in another solution. It's a question of do the iOS devices balloon in a cross platform.
More generic mobile solution provider or does it belong in the Apple Enterprise management system and managing.
IOS devices quite frankly these days is much more similar to managing math than it is to managing Android and so we end up having tremendous growth.
Our iOS base because organizations that already have.
Mac.
Find it a natural fit to move their iOS devices as a matter of fact in our prepared remarks, you heard from one of those customers Red Bull that was exactly what was happening there. They had long used us <unk> decided to consolidate their iOS devices in <unk> as well.
Yes that makes sense.
Sure. Thanks, Thanks Mark.
Thank you. This does conclude the question and answer session of today's program I'd like to hand, the program back to Dean Hager for any further remarks.
Well. Thank you very much and thank you for joining us today on a very busy earnings day. So I know it isn't easy to catch up with everybody I also want to thank and congratulate Jill once again on our retirement down on an incredible career and of course were contributions here at jam in closing I just want to say, we had an exceptionally strong Q2.
And are optimistic for the rest of the year given the macroeconomic uncertainty we are being pragmatic as we look ahead, while balancing our outright.
Outlook with strong market demand for our security and our management solutions, we are well positioned to continue to win the trust of organizations by developing innovative solutions that are Apple <unk> and Apple best further solidify and Jim is the provider best suited to power the Apple. Thank you very much.
Sure. Thank you very much.
Thank you, ladies and gentlemen for your participation in today's conference. This does conclude the program you may now disconnect good day.
The conference will begin shortly.
As Johan during Q&A, you can dial one one.
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