Q3 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].
Okay.
Yeah.
Thank you for standing by and welcome to James Third quarter 2022 earnings Conference call. At this time all participants are in a listen only mode. After the speaker's presentation. There will be a question and answer session to ask a question. During this session you'll need to press star one on your telephone as a reminder, today's program is being recorded.
And now I'd 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> third quarter financial results with me on today's call are deemed Hager, Chief Executive Officer, Ian Good kind, Chief Financial Officer, and John Stroup, President and Chief operating officer before we begin I'd like to remind you that shortly after that.
Close today, we issued a press release announcing our third quarter financial results.
We also published a Q3 earnings presentation, along with an updated investor presentation, an excel file containing quarterly financial statements 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 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 performance.
You can find the 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 Hager Dean.
Thank you John and thank you everyone for joining US we are pleased to report for the 10th consecutive quarter, Jeff again exceeded expectations in Q3 with year over year revenue growth of 30% or $2 1 million increase from the high end of our Q3 outlook.
Our growth in Q3 was 27% year over year to $491 million, we continue to see strong demand for our security products with year over year growth of 50%, while growing <unk> device management products, 23% during the same period.
Year over year <unk> growth in commercial markets was 33% and 15% in education market, maintaining the balance between Jim's higher growth commercial markets, which represents 71% of our business and a healthy education market.
The diversity and balance of jumps commercial business continues to provide tremendous strength and resiliency.
Our commercial market, Jeff achieved at least 25% growth year over year across all major geographies all major industries in both direct and indirect channels and across small medium and large enterprises. This performance is especially noteworthy considering that Q3 represents the first quarter post the one year end.
Bursaries of Champs acquisition of one Darryl.
Therefore, all results are from organic operations.
We are also proud we achieved these strong results having faced a number of market challenges. The most notable has been recruiting and retaining talent in order to achieve a fully staffed and ramp sales team to meet the market demand for App first management and security solutions.
As a destination employer jumped 12 month employee retention for the company and specifically within sales and marketing is approximately 89%, which we believe is excellent in this installment climate compared to other technology companies, yet due to an incredibly challenging hiring environment throughout most of this year.
We have fallen short of our new employee Onboarding goals heading into Q4, we are beginning to see greater availability of talent and our intensifying our recruiting efforts. We are optimistic that we can increase the pace of our sales onboarding in Q4, as we prepare to enter 2023.
Secondarily Jam also experienced market challenges in Q3 due to an uncertain macroeconomic environment some.
Some customers have taken a more moderate outlook when planning their future hiring and therefore device growth needs. It has also become clear that the past year of supply chain challenges has impacted customer device growth at their annual renewal. According to IDC map device shipments significantly declined in Q2 of this year.
Year and was approximately flat year over year for the four quarters that preceded Q3. However in Q3 IDC reported that map shipments experienced a record quarter growing 40% year over year, representing over 13% of all PC shipments the highest max share on record this as an.
<unk> that map supply may have normalized considering the growing demand for Apple Mac computers, a reduction in supply chain friction would bode well for customer growth that renewal in the coming year.
Although current macro conditions introduced uncertainties and some short term device reconciliation by our customers' demand for Jam solution remains strong demonstrated by the fact that both Q2 and Q3 were record bookings quarters for James.
New customer acquisition was excellent in Q3 with our active customer base growing by over 2000 organizations and our customer retention remains near its all time high.
<unk> business has proven resilient and we believe we are poised for long term growth with an expanding addressable market as the consumer <unk> of <unk>.
Popularity of remote work and changing workplace demographics continue to drive the popularity of Apple in the enterprise and the need for consumer simple and enterprise secure endpoint technology.
Additionally, champs addressable market growth as our product platform expands including security solutions for Android Chromebook and Windows devices.
Going forward, we believe we will continue to grow market share and deliver strong results due to our diverse business model and four key factors.
One our position as the clear market leader in Apple Enterprise management and security.
<unk> continued innovation by both Janssen Apple.
The increasing demand for enterprise security solutions and for Champs philosophy, and proven capability to deliver balanced growth and healthy profitability I will speak to <unk> market leadership position in innovation, John will discuss the increasing demand for <unk> security solutions, and then we'll hand it over to Ian.
To showcase jumps balance of growth and profitability, along with our results and outlook.
I'll start with Janssen, increasing position as market leader, adding a net of 2000, new active customers in Q3 growing our active installed base to over 69000 customers running $29 3 million total devices clearly demonstrates that <unk> has become an enterprise standard and one of the most used.
Device management solutions in the World, We believe <unk> market leadership as a result of our unique focus on creating an apple Apple.
Apple Best Enterprise solution.
<unk> has a proven track record competing with other Apple focused solution providers as well as cross platform mobility management solutions.
As we discussed last quarter. The majority of cross platform software providers that were considered leaders in the enterprise mobility management market. Just five years ago had been consolidated into other organizations leading to uncertainty regarding continued support of Apple innovations one of the most critical ingredients to <unk>.
Having the Apple market well is innovating at the pace of Apple Unlike with other computing platforms. The Apple market expect Apple innovations to be supported same day by both management and security providers.
<unk> commitment to provide customers with certainty and uninterrupted workflows, while closing security gaps created one solutions don't support the latest Apple technology has been a critical component of success.
In Q3, consistent with past years, Apple announced new operating systems for all platforms with significant new capabilities. As a result of jumps consistent same day support we saw increased interest and a growing replacement market, which resulted in <unk> again, displacing thousands of devices.
Obviously managed by less specialized cross platform providers as Apple continues to innovate and evolve their frameworks with Apple only capabilities like account based user enrollment and declarative management, managing and securing Apple at work will require a greater specialization in the coming years not less.
Recently, one of jams customers highlighted the power of our same day Apple support.
Early in the day on October 24th the launch day of Mac OS ensuring a longtime generic customer with over 36000, math and 90000 iOS devices announced they're all internal support of Mac OS Fincher and encourage their employees to upgrade.
Is it direct or posted on.
On Linkedin listing several employee benefits of upgrading right away, which resulted in 37% of their Mac users upgrading and the first week.
It's rare for a solution provider to announce same day operating.
System support, but it's nearly unheard of with any system other than Jan for customers, who have already tested that support prior to the operating system being generally available.
When achieving the same day readiness jam customers eliminate upgrade projects reduced support costs and improve their security posture accomplishing this feat for an implementation of over 36000 map would be extremely difficult to do without Champ.
Champs position as the market leader for managing and securing Apple at work was showcased in September at the 13th annual Janssen Nation user conference in San Diego, joining us during the keynote presentation, which was viewed by thousands where representatives from Apple there to showcase continued advancement of Apple only free.
Remarks from work and school.
After to discuss collaboration with Jim for enrollment and platform single sign on.
Google to demonstrate co development with Champ on Chrome browser cloud management and their Google Beyond Corp, Zero Trust security framework.
Amazon to present, a brand new partnership between our companies, where <unk> is the only solution to manage virtual AWS easy to map and Microsoft to promote integration between our management connection and protection platforms. These five partners represent the top III endpoint operating system.
The top three cloud identity providers in the top three cloud infrastructure providers in the world.
Together these industry leaders sharing the same stage demonstrates jams market leadership and our commitment to collaborate with the industry's best to provide a stronger whole solution for customers.
I know some of you were able to join Jay not in person, while others joined virtually.
Thank you for taking time to learn more about <unk> I hope you were able to see some of the exciting innovations firsthand and get a sense for the truly unique Jeff nation community, which we believe is the tightest community and high Tech.
For those of you who didn't attend we focused our new innovations on helping customers accomplish the most important goal for ITN imperfect teams, providing technology that users love piece that makes them better at their jobs and access to corporate resources in a manner that organizations Trust.
I will now hand things over to John to take you through the increasing demand for <unk> unique security solutions and our most recent addition to jam security portfolio John .
Thanks, Steve as Apple continues to grow market share in the enterprise combined with a more mobile workforce. There is a corresponding greater need for protection from a new class of cyber threats.
Becoming increasingly critical for full stack.
Teams to deploy a specialized solution was to keep users devices and enterprise resources sake.
The need to meet the security requirements, while creating an excellent consumer like user experience is driving increased demand for <unk> security solutions and.
In Q3, we saw this momentum continue with 18% of our Q3 are coming from our security products, resulting in our security business now surpassing $90 million.
Which represents 50% organic growth year over year.
We closed seven six figure deals, which included one or more of our security products with several flagship names across a number of industries involved.
And while demand for our security products has been growing in large corporations, we've seen significant penetration in small and medium sized businesses, where a single economic buyer chooses gm's full management and security solution.
In total <unk> has 12500 customers, who run one of our management solutions in combination with the GM security solution.
That number grew by over 900 customers in Q3 alone, which demonstrates the attractiveness of combining a security solution that identifies potential risk with the management solution that can automatically take action to mitigate risk.
Seeing many customers have taken interest and jam and Apple innovations that a pack of the primary issue experience with the new Iot devices, which is still a security that employees personally owned device, while honoring the rights of personal privacy.
The Apple lynching up approach is completely unique compared to all other platforms on the market customers and prospects are in the early stages of taking notice with China, having taken place late in Q3 dozens of prospects already chose Geo for BYOB late in Q3, many having implemented policies that require all devices accessing corporate risk.
Horses to VEGF enroll.
Using prior methods of implementing BYOB employee devices, where either left unmanaged, which is the security risk are fully managed which violates employee privacy. According to IDC. Prior to 2020, the lack of adequate B Y O D security led to corporate liable mobile devices, gaining favor over BYOB programs. However.
Out of necessity in 2021 U S organizations dramatically expanded the scope of their mobile <unk> programs in order to able employees to work at home. We believe this trend will continue as hybrid work is here to stay with organizations looking for new <unk> solutions that balanced privacy and security and therefore eliminate the need for employees to.
Kerry to mobile phones in today's challenging economic environment, having a secure b Y O. D program can also be used to reduce and organizations. It spend for these reasons since Jane out our pipeline for <unk> has been building and we believe it represents a significant new opportunity for us in 2023.
Next the security is TSA Internet, which provides the only Apple first education focused cyber security solution to ensure students can navigate the internet safely with content filtering and network threat prevention technologies.
Made generally available to all markets in Q3, <unk> Internet integrates with <unk> School NGL pro providing a seamless experience for both management and security and allows for multi product adoption and education.
James take the Internet is our first add on product sales at Champs developed specifically for education. We believe the timing of this product is perfect. After the greatest device expansion that it ever occur in education during the heart of the pandemic in Q3, its first quarter of availability over 200 customers chose safety.
Our net surpassing the first quarter bookings staffs of both Jeff connect and protect making it Jeff strongest performing product launch to date.
In other exciting security news in late September , we announced Champs intent to acquire Zach ops, a leader in mobile detection and response.
Todays mobile security solutions, often have a limited visibility when compared to what's possible on computers through tools like protect on Mac or Microsoft defender for Windows does that guidance takes a unique approach by capturing and analyzing logs as other system data to provide deeper visibility into the present a threat this new mobile security capability.
Allow <unk> to identify a sophisticated attacks that target individuals with access to the most sensitive data capabilities.
Capability is extremely unique and will allow us to bring the iOS security and visibility standard up to the standard we already set with GM protect for Mac with.
With the inclusion of <unk> from the portfolio. We will also add more telemetry and data sources to an already rich set that include endpoint data network data mobile data and application data, we have an opportunity to have the largest subset of Apple focused data in the world, creating the ability to make work more secure and privacy centric.
Was that the ops, Jim on a comprehensive set of capabilities that allow customers to secure devices stock prep on device and in network streamed telemetry compliance and threat hunting and remediate across Mac and mobile devices.
Couldn't be more excited about the opportunities. This acquisition provides GMP and we look forward to welcoming the <unk> team to the <unk> family. After the acquisition closes which is currently expected in the fourth quarter pending satisfaction of standard closing conditions now I'll hand, it over to Ian to cover Gms balanced growth and healthy profitability as well as our financial results and outlook.
Thanks, John Jam philosophy of balanced growth and profitability provides us with the financial flexibility and stability to weather uncertainty related to rapidly changing market and economic conditions. For example, during the pandemic, we were able to continue to invest in innovation to drive.
Sustainable top line growth, while pivoting some of our spend to our education go to market to meet unprecedented demand going forward, we will continue to be prudent with our expense structure, while reinvesting in areas with the highest expected return and continuing to drive strong consistent cash flow generation, we believe.
Cash flow generation profile continues to differentiate <unk> from many other high growth Tech companies and now for our results and outlook. We ended Q3 is serving more than 69000 customers with more than $29 3 million total devices on our platform QC revenue growth is 30% year.
Over year and total air growth is 27% driven primarily by to by its expansion new logo acquisition and upsell and cross sell efforts, we saw balanced growth across many facets of our business, including management and security commercial and education major geographies top commercial industries.
Channels and size of enterprise.
It should be noted that our <unk> is.
As reported on a constant currency basis, if we were to report <unk> in actual currency the year to date impact would be less than 1% of the total.
As Dean mentioned, we continue to navigate an uncertain macro environment with hardware supply issues now for an entire year, having led up to Q3 music customer hiring expectation and increased scrutiny and customer approval processes.
These factors impacted customer device growth and annual renewal. Additionally, Champ experienced a unique challenge in Q3 with our <unk> installed base.
<unk> represents the largest renewal month for the <unk> product, while our customer retention for Jam school and all gem products remained very strong some schools reconciled the number of devices they needed to support their students now that they are all back in the classroom. All of these factors had an impact on total company net retention lowering it.
Slightly to 115% in Q3.
If device supply chain issues continue to ease as the IDC numbers may suggest and now that we have gone through an entire year of students being back in the classroom. Some of these challenges will subside as we progress into 2023.
Additionally, with the increasing popularity of Jam security products, we believe <unk> net retention will become less dependent on device expansion over time.
Therefore, we believe <unk> is in an excellent position to continue growing through a period, where customer hiring baseload ulta.
Ultimately, we believe all of these concerns to be short term issues in the market presents an excellent opportunity for us to succeed despite macroeconomic challenges and accelerate as conditions improve.
The remainder of my remarks, our margins 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 Q.
Q3, non-GAAP gross profit margin was 82%, which is slightly higher than both Q2 and the prior year.
We continue to anticipate gross margins in the low 80% range and expect slight fluctuation each quarter.
We saw an improvement in non-GAAP operating margin in Q3 over the prior year, resulting in Q3, non-GAAP operating margin of 6% compared to 2% in the prior year quarter.
non-GAAP operating income was $6 9 million exceeding our expectation due to revenue outperformance.
Our trailing 12 month Unlevered free cash flow margin was 14% compared to 24% in the prior year. The prior year benefited from a large number of multiyear education deals where the full amount is typically paid upfront, we anticipate unlevered free cash flow margin to improve slightly from this 14% for the full year.
Our annual effective tax rate is one 4% consistent with our expectations.
As we indicated during our last two calls starting with Q1 2022 for non-GAAP metrics, we will use our statutory rate for calculating tax impacts which is currently 24%. We have included calculations using this updated methodology for current and prior periods will make sell file containing our quarterly <unk>.
Actual statements that has been posted to our IR website. Please note that we do not pay cash taxes on a U S federal base.
Now I'll provide thoughts on our financial outlook for the fourth quarter and full year 2022.
Due to continued macroeconomic uncertainty we remain cautious with our outlook. However, we believe demand for Champs innovative solution remains solid this coupled with our continued strong performance and the factors. We've outlined on today's call will help us deliver on our outlook.
For the fourth quarter of 2022, we expect total revenue in the range of $128 five to $129 $5 million representing growth of 24% to 25% year over year.
non-GAAP operating income in the range of six 5% to $7 $5 million.
For the full year 2022, we expect total revenue in the range of $4 77 to $4 $78 million representing growth of 30% year over year.
non-GAAP operating income in the range of $23 five to $24 5 million.
Additionally for modeling purposes, we provide 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 I have now been in the CFO seat for just over two months, but I have played a key role in jams finance team since 2019, including our IPO I believe we have the right balance of growth and profitability and when coupled with our commitment to innovation and doing the right thing for our customers. We are well positioned to continue to deliver.
For our stakeholders.
Had the pleasure of meeting a lot of these so far and I look forward to gains you better and for those that I haven't met I hope we can meet in the future.
And now Dean John and I will take your questions operator.
Certainly ladies and gentlemen, if you have a question at this time. Please press star one on your telephone one moment for our first question.
And our first question comes from the line of Joshua Reilly from Needham Your question. Please.
Alright, Thanks for taking my question nice job on execution here in a challenging quarter.
Maybe starting off on the macro.
Can you give us a sense of how the quarter developed in terms of.
Sales cycle elongation and demand trends early in the quarter versus late in the quarter and where do we stand today in terms of demand trends of customers become incrementally cautious here in Q4.
Yes, Thanks for the question, Josh and maybe ill start out on this and then John can chime in a little bit.
No.
Overall, I don't know that there was a significant change in the rhythm of the quarter throughout Q3 for the most part.
Please go ahead.
We are very pleased that the demand for our overall solutions.
Hi.
Anything any of the.
Concerns that we would have had from a from an economic procurement.
To do with the number of devices that were being licensed in particular.
Organizationally.
<unk> are a little bit more.
Cautious on how many people they expect to hire in the future.
But overall from an activity perspective interest.
Leads companies interested interesting.
Our logo retention and our new customers with 2000 customers joining us during the quarter that all remain very strong and really had more to do with the number of devices that were being licensed John did you notice anything.
With the rhythms of the quarter as the quarter progressed.
No.
In fact, our asps in our sales cycle hasnt changed significantly over the past several quarters, so that remains pretty strong.
Our our lower average sales price for our company and for US It department or for a security team.
So we're not the first one is evaluated heavily there are some bigger spends.
And their budgets than us and so we've enjoyed being in that position and continued strong outlook.
And the demand that we've seen so.
Things as things have been pretty consistent.
Got it and then maybe just a quick follow up we saw the NR moved down to 115% here in the quarter do you guys shift your focus a bit more towards new customer growth with some of the commentary here versus upsell cross sell in the current environment.
Again, I don't know that I would call it shifting our good customer growth.
Obviously, I think what the things that has been changing with jump over the last two years as Youll recall Josh.
Bob.
Our NR was almost exclusively dependent on device expansion within the customer base.
Over the past.
Yeah.
Our security business from just over 9%.
Over $90 million of IRR. It really has offered a whole new trajectory for us for expanding NR and I think that we would have seen that continue to expand had we not seen some cushion.
During Q3.
Got it thanks guys.
Yes.
One moment for our next question.
And our next question comes from the line of Matt Stotler from William Blair. Your question. Please.
Hi, there thanks for taking the questions first just maybe a follow up on the.
The head count dynamic that you mentioned, we would look to kind of get a sense from you of the impact on the limited capacity or less than expected capacity. When you think about <unk>.
Going forward and then your hiring plans from here and expectations for.
We're filling that capacity.
Yes, Thanks, Matt and I will tell you this.
It was a very deliberate decision on our part to be responsible in our spending this year.
We don't.
In my 34 years in the industry, probably as tough a hiring environment.
Okay.
And as.
As you well know we could absorb that with overspending.
We would've wanted to say, we're going to get head count onboard at all cost, but we just thought that was unwise for the organization and so we kept a disciplined in our approach.
With the new people that would stay because as you know <unk> has very high retention.
As a result, our QBR are quota bearing rep.
Growth was slower this year than it has in past years and does that probably more than anything.
Had an impact on the pace at which.
<unk> was group for instance, and I've mentioned several times that we do not feel like we're market limited at all our greater limitation is the ability to be able to earn board.
That market demand and we think just numerically.
The math just comes out and prove that that has.
Don faster.
We would've grown faster now the great news is.
There are a lot of reasons that are apparent.
And on the industry right now we are seeing a greater availability of talent of late.
It was actually our number one higher.
And so we're seeing that loosen up a little bit.
That's very helpful. Thank you and then maybe just one follow up.
Follow up on the macro point good good to hear some of the some of the.
No data point in terms of activity be lead et cetera, you.
You mentioned, a little bit of kind of tough.
No results in the education market, specifically due to seasonality there.
Any color on the commercial side of the business any any particular areas of strength or weakness when you look at that and marketer.
<unk> markets.
Again on the situation was slightly different in education.
Commercial.
When it comes to the device reconciliation on the commercial side.
Looking at the looking at just breaking.
And your expectations and on the education side. It was more just kind of reconciling the number of devices that they purchase when they were going through the whole distance learning.
Year earlier.
Once again the balance of all of our offers together in between our commercial and education. We are quite pleased with this book.
School a reconciliation on devices.
We ended up launching gem safe Internet, which.
Brian .
It doesn't surprise in that it was the fastest growing product in the first quarter of our launch.
In our history with over 200 customers.
Yes.
Selling both jumped connect and jumped protect them their first quarters. When we launched those we thought that they were excellent launches so yes.
Yes.
In the future.
Both device expansion that will come, but but even being in a better position for product expansion.
Great. Thanks again.
Yes.
Thank you one moment for our next question.
And our next question comes from the line of Raimo <unk> from Barclays. Your question. Please.
Hey, Thanks, Thank you.
Dean.
A couple of things you mentioned on the call, but I'm slightly confused in terms of the magnitude of the impact from all of them could you just try to.
We treat them like the macro gives catastrophe.
And the issues in the education side in terms of like so is this kind of more like a macro driven as micro with minor point and it was more capacity driven can you help us understand a little bit because there are several items that you kind of called out but I wasn't sure. How do you kind of connect you can cover.
Yes.
The order in which we went.
Was the order in which they had impacts.
In my prepared remarks, I said, most notably was actually the head count growth being a bit lower.
Sure.
Actually the number one impact not necessarily on the demand side.
It's been to that.
There were three things all to a lesser degree that impacted us one an educated version.
It was a bit of.
Some schools realizing that they did some panic buying during the.
This is Gary.
Move and they just realize they didn't need quite as many devices at renewal those schools didn't leave us. They just reconcile the number of devices, that's kind of a one time thing a year later.
The first week of organizations that are a little bit more muted on your hiring expectations for between now and the end of the year then.
Bit less but nevertheless did and then finally, probably the lowest impact but yes. It did have some.
Because the supply chain constraints that really now have lasted about a year. So you can imagine since <unk>.
We renew on an annual basis.
After the presentation.
Youll have a little bit less of the seat count that are renewed two or not as rapid growth. So we listed them in the order of their impact. So at the end of the day, we really our view is that we were more constrained by our internal.
ROE than we were by the market.
Okay, perfect and then a follow up it's more for Ian.
Think about the.
And this sort of environment.
Demand is something it's difficult, it's not fully ambulatory control, but cost and profitability is a little bit more under your control. So how do you think about that balance between growth and profitability in this environment, especially.
Talk about the capacity upgrades you wanted to update you wanted to do on the field side like how would you think about protecting margins in this environment, which seems to be on the mind of many investors. Thank you and congrats from me as well.
Yes, thanks for the question.
You've seen what we've done before we set our guidance that achievable, we start with the balance sheet.
We look at pipeline, where we've got churn we look at these macroeconomic and they take a balanced and prudent approach we do bounce that.
Stability and what Youll see in the last quarter and this quarter and in our guidance, we've actually reflected more profitability on the bottom line.
Free cash flow margin in Q3 of this year at 36% compared to last year at 30%. So we are <unk>.
I'll provide more profitability for the business now.
Perfect. Thank you.
Hey, Brian Thank you.
One moment for our next question.
And our next question comes from the line of DJ Hynes from Canaccord. Your question. Please.
Hey, guys. Thanks for taking the question.
Maybe for John but I'd love to hear you guys talk a little bit about what youre doing and the success Youre seeing in terms of getting in front of the right security buyers in the enterprise.
Sounds like where that's the same person who makes device management decisions are doing quite well, but it'd be great to hear more about like what you are seeing further upmarket and how that's progressing.
Yes, DJ thanks for the question.
And so we'll see so we've already segmented our go to market teams and on the small and medium sized businesses Thats. The same economic buyer across the board, we're having great success, there selling business and his appointment.
<unk> in there.
What we're seeing on the on the higher end, probably mid tier and above when companies starting to start to get an info SEC team in place that then by better than does shift to the to the info SEC team, but we've got such strong relationships in the group and good credibility there that we can leverage.
Into the end of the Intelsat organization, what we've done is we've hired in some of our recent hirings and it will continue to do this really focusing on some of your securities.
Okay.
Also have different personas.
We market to so we've got sequences that are dedicated to <unk> versus the people and the teams and we're seeing great traction as I mentioned, we signed 706 figure deals just in the last quarter with Securities included so we're having we're seeing good traction in that and we'll just continue to double down on that DJ if I can pile on here for a moment that.
If you look at the things that needs to be remembered is not only does <unk> have a solution for the.
Team, but the solution that we have.
Is the thing that used to install all security solutions out on the devices that we manage so were actually be prudent.
To install those security solutions, so an it team who has to ultimately do the deployment of the security solution.
All season checks to make sure that the security software is not tampered with or within the product they already own click and collect the box that says deploy jem protect so you can imagine just the difference in sort of holiday. They think together, but you need to have and we have to be offered.
The solution actually deploys the security solutions.
Yes, that's helpful color and then.
Maybe kind of a related question just I am curious, how youre thinking about kind of the.
<unk> R&D allocation between core jams pro.
And then your newer security products right I mean any signals, we can take there is to kind of.
Where the future of the company.
Yes, well I mean.
How does one now where our security IRR is about 18% of our total and of course growing we believe ultimately that the Tam long term, it's going to be.
For the growing family of security solutions that we have with that said it is Jim Peters.
Ambition and Apple management that really sets the stage for everything else. We do so we absolutely the convenient innovator on the management side and B just laid out the market leader in new capabilities. So it's a balancing act between now.
But we should not in any way nor do we ever intend to send to the impression that in <unk>.
<unk>.
Our dollar is going to the security solutions because.
Our entire strategy hinges on our continued leadership with management and we are continuing as I mentioned 2000 customers being added in the quarter.
Yes that makes perfect sense very helpful. Thank you guys.
Thank you one moment for our next question.
And our next question comes from the line of Matt Hedberg from RBC. Your question. Please.
Great. Thanks for taking my question just one for me.
We continue to think that the Vmware replacement opportunity could be significant.
Sure ship perspective, and just you guys gaining just broader market share awareness can you talk about are you seeing any benefits of that have to mention youre not assuming anything in guidance, but just sort of curious if.
If that sort of the show up yet in win rates or anything of that nature.
Thanks, Matt and as you know.
Tend to resist talking about any one specific competitor.
I would have bet Seth.
What we have noticed consistently when cross platform less specialized managed.
Year to date.
Get a player.
No.
That market is a consolidator holiday.
That.
Okay.
Indication of the future.
That those providers, then will frequently fall behind keeping pace with Apple in it.
Only takes about a year.
And once you are behind your back.
All right.
Spoke a little bit.
Okay.
That will happen.
Stubhub.
I think that next fall is going to be a really telling period when it comes to that.
Even this last fall the Apple iPad.
Both load of new capabilities like the.
Declared a device management, which really.
Just almost really demand how MDM works completely different in some ways than Android and Windows and if you don't support it youre already behind on the App.
I will tell you that we've had numerous calls.
From customers, who have not historically been jam customers, just asking you about lateral parts of that.
Because they were worried that they are less specialized cross platform provider was not so perhaps we see several wins due to that but I think the real potential opportunity is going to occur perhaps around this time.
Well.
Okay.
The clothes snapple.
It's tough.
Thanks, Jane Thanks, everyone.
Thank you one moment for our next question.
And our next question comes from the line of Kochi Akita from Bank of America.
Hey, guys. Thanks for taking the questions.
Wanted to go back to the IRR and the impacts of the education space had on growth.
Apologies if you guys answered this but I just wanted to maybe ask it a different way if you could maybe provide the magnitude of the impact to our growth due to the education side was it a couple million dollars and that.
That could help frame the growth of var for the quarter ex education.
Well I mean, our IRR growth year over year was about 15% we've mentioned before that we would anticipate.
Both markets sort of Q.
Two or you have a education growth that perhaps about half what our commercial growth is going to be a little bit less actually so actually where it all settled in at is about what we've been saying is going to happen from markets.
At this time.
And again, while there has been keeping in mind the way that renewals work in particular with our <unk> product.
We don't necessarily.
Happened by somebody calling up a GMP person in renewing that initially e-commerce built into the product itself. So we have a very elastic.
Base.
<unk> that are being used.
So a school comes up upon a renewal and theyre going to have 20 fewer devices. They will just renew automatically to 2000 fewer devices.
<unk> had an impact on the quarter, but to some extent it was made up for with the launch of the <unk>.
So let's see.
Sort of in the wheelhouse of where we expected it.
Got it got it thanks, Dean and I guess, that's a good segue into my follow up I wanted to ask with all these layoffs going on especially in tech.
Can't help us think theyre, a closet full of Apple notebooks, and ipads and phones just sitting around now.
How should we be thinking about the potential shelf ware attached to these unused devices and what it could potentially mean for renewal cycles.
Okay.
Perhaps.
Theres a apple R R.
I won't make a comment.
The bottom line.
What we see.
Is that.
In addition to of course were seeing some of the layoffs that are out there, but at the same time.
The percent of Pcs that are being shipped are actually greater on the Mac and the most important.
Do you see.
You had a 40% growth of Mac and you had a decline for the rest of the PC space. So I don't think what we're seeing.
Overall reduction in employment necessarily means a drop in the number of Apple devices as a matter of fact because of the share shift that is going to occur.
I for one think that the Mac is actually going to continue to grow.
Light of this environment because as organizations are looking for creating a great employment environment.
Back to the particular good answer so we don't require employment to grow out there in order for Mac devices to grow.
The share shift is going to do that.
Got it got it thanks, Dan Thanks, so much for taking the questions.
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 fitting me in so just in terms of how youre thinking about with every all the different things you guys talked about macro and otherwise how you're thinking about.
At least seasonality in <unk> for this quarter I think seasonal strength is typically.
Kind of up sequentially high single digits is that.
That kind of how youre thinking about <unk> overall.
<unk> should perform in the December quarter.
Well just as a reminder of course.
The actual an annual metric there isn't any one quarter.
Thats going to.
Significantly change that I, when I think of seasonality I think a little bit more work on but we don't see anything different seasonality wise from a bookings perspective than what you would expect.
Really the only difference right now is as I mentioned.
Think some organizations.
Perhaps.
In the past.
An organization might say, well, hey, I'm going to estimate the high isn't going to have six months from now and Thats, what I am getting a contract to our that's where we win a renewed too.
And organizations are just very hesitant as kind of a permanent project what they might have been six months theyre more renewing what they have right now.
And that's okay by US again, we offer elasticity for our customers.
Grow their devices or reduced their number of spices and sort of the benefits of a subscription but one of the things that we've noticed in the past is.
The organizations that are really nimble that.
Lowering of device count there also the very first to grow out right back up again. So this isn't the first time that we've seen this type of thing you historically.
In Q2 of 2020 as well.
Then we saw a rebound from that so it's one of the values that we deliver to our customers and projects to do it.
Got it and then maybe one quick follow up James So just in terms of.
As much as you can tell in this world we live in just in terms of.
The expectations for for commercial growth and I think you indicated obviously the.
Split, we think education growth half of what commercial growth.
<unk> been playing out.
Have your expectations for commercial growth rate.
Moderated in the last three to six months.
I don't I don't have.
Any company in the World, who Hasnt had their expectations of what's happening on the commercial side via touch moderated in the last six months.
And a lot of that is simply.
Unknown I think we're all sort of curious of what's going to happen chemically over into 2023.
So we're clearly mindful of it.
And as I've mentioned, we have received.
Moderation on expectations from a hiring that's just the reality of what we've seen.
But all of that ultimately we believe to be a.
Short term phenomenon and we just can't say, how short term it's going to be.
Hum.
We're pleased in is that the demand for us and our solutions remains high.
Just the device.
Lower than what it would've been a year ago.
But youre going to youre going to lean in on hiring in the fourth quarter on the sales side. That's what we are.
We are going to take advantage of.
A bit more of attractive employment in procurement.
Go to market side, and we think we're going to be able to.
We're pleased.
What we believe we will pursue between energy here in order to set ourselves up for future growth in 2023 versus how challenging it was I'll say between January .
Earlier this year.
Got it thanks, so much.
Yes.
Thank you one moment for our next question.
Yes.
And our final question for today comes from the line of Michael Romanelli from Mizuho. Your question. Please.
Yes, Hey, guys Mic on here for Greg Moskowitz. Thanks for squeezing me in and then perhaps just one quick one for sort of just wondering what the current penetration rate for Champ fundamentals within the chance now basis I believe it was 60% last quarter.
Yeah.
With spring here just to make sure we have right.
If you recall in our earlier call I think we had already gone through.
Two of them could be lucky.
So again.
What we I.
Believe Ian had mentioned it.
It is commentary or.
I forget now that we have 12500 are customers running at least.
Sure.
And one of our security solutions and of course fundamentals as a package management and security solution.
So.
Three we actually saw that number grow by 900, which is really an excellent number.
Showing that we're really leading with the combination of management and security, which we consider to be two sides of the same coin both being able to detect at random.
We mitigate those.
Let's just completely unique in the industry and we're sort of setting a new standard leave.
Leave that.
As the.
The first one.
No.
That there will be increasing demand for that full solution as we head into next year.
Thanks.
Thank you one moment for our next question.
And our next question comes from the line of Joe <unk> from JMP Securities. Your question. Please.
Hi team. Thanks for the question unemployed retention can you talk about the culture Jam why do you think you have such high employee retention and how do you expect to maintain that Jan culture continuing to grow. Thank you.
Boy I kind of want to camp out the rest of the call here and just talk about the I'll tell you we do an annual engage.
And the question every single year, we just did it in September .
A question every single year.
I'm most proud of them.
We get a really high participation in our employee engagement survey.
The question is no.
My manager genuinely care about my wellbeing.
And.
And over 90% of Jan.
Having a good year I think at the end of the day that is yet I think that we have a leadership team here and I'm not just talking about.
Talking about every single first mine manager within this organization that genuinely cares about the people.
That response.
Understood.
Great flexible and remote largely.
Impairment.
People feel connected and they feel cared for the.
The result of that as we've been seeing that.
We tend to protect us from those end of September numbers that I mentioned on the call. So it's been remarkably high has always been real high retention.
It starts with John about one another.
And really being excited about.
Ben.
In creating solutions for our customers, we had and we're here in Minneapolis today, and we had our our SC.
Meeting, where our subscription to Netflix from world came out and gathered too.
Learn best practices from each other and the excitement that I see in them all to social.
Is just inspiring so I think it's about solving problems and carrying about one another I think thats the core of our strategy.
<unk> scores continue to be higher year. Thank you for that question.
Yes.
That's great to hear that culture is definitely on display at Dana and then last question here can you can.
Can you talk about the Okta partnership just love to hear more about that relationship and sort of how you see that progressing. Thank you again.
Yeah, you bet, John I'll answer that and then I'll just make some remarks, and we will wrap it up octave.
Terrific partner of ours, as we mentioned during <unk>.
At each other's customers.
Because where each other's customers.
And because of that.
Really wanted to implement internally first what we ended up offering to our customers.
It means that we.
Now that doesn't mean that we also don't collaborate with all of the identity providers out there, we have integrations with Google and Microsoft as a D and with our friends at pain.
But.
After Jim very frequently we will sort of start.
Seeds of an innovative new solution in it right now between.
Conditional.
Ah self saloon.
And also Onboarding for <unk> devices, we have got some joint projects going on right now as a matter of fact.
Our numbers is that octane sent me a picture just.
Last night of how Jampacked standing room, only as Lee has said.
They're so theres just a lot of interest in heartburn Jam working together and we're pretty committed to each other so thank you for that final question and thank you all.
For joining us here today.
I'm glad you didn't mention RJ I think our culture was on display there, but most excitingly is the fact that we're here to innovate on behalf of our customers is to make sure Apple at work. So that every single user of technology in the workplace just loved the technology.
Slide <unk>.
So that the organization trusts that access to every corporate resource they have and I'll tell you that is.
It's really easy to love technology that does not secured or two trust technology that is not easy to use but but accomplishing the cushion is what <unk> is uniquely focused on so again. Thank you for taking the time to learn a little bit more about our story and how we delivered in Q3.
<unk> results and we're bullish on the future. 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.
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