Jamf Holding Corp. Q1 2023 Earnings Call
Okay.
Thank you for standing by and welcome to the jump first quarter 2023 earnings Conference call. At this time all participants are in listen only mode. After the speaker's presentation. There will be a question and answer session to ask a question. During this session you will need to press star one on your telephone to remove yourself from the.
Simply press Star one again.
As a reminder, today's program is being recorded and now I'd like to introduce your host for today's program, Jennifer Martin Vice President Investor Relations. Please go ahead.
Good afternoon, and thank you for joining us on today's conference call to discuss first quarter financial results.
With me on today's call are being Hager, Chief Executive Officer, and good kind, Chief Financial Officer, and John <unk>, President and Chief operating Officer.
Before we begin I'd like to remind you that shortly after the market close today, we issued a press release announcing our first quarter financial results.
We also published our Q1 earnings presentation, along with an updated investor presentation, an excel file containing quarterly financial statements to assist with modeling.
Additionally, we issued a press release announcing Dean's retirement, and John's appointment to CEO effective September <unk> 2023, you may access this information on the Investor Relations section of jump 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. She has the performance you can find the reconciliation of those measures to the nearest comparable GAAP measures in our 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.
Thank you John and thank you everyone for joining us.
<unk> is pleased to report that our first quarter of 2023 March the 12th consecutive quarter, where Jeff outperformed expectations Q1 year over year revenue growth was 22% and non-GAAP operating margin was 5% both of which exceeded the high.
And although our jumps.
<unk> grew 21% year over year in Q1, two $526 $6 million.
These results are reflective of continued strong performance and made this difficult macroeconomic environment.
We ended Q1 with more than 72500 customers running jam on 38 million devices, adding approximately 800000 devices within the quarter.
Slightly more than we added in Q1 or Q4 of 2022.
Similar to last quarter, we saw continued demand for <unk> management and security offerings with strong new logo growth and customer retention.
While the demand for <unk> solutions remains high.
The rate at which devices have been purchased within organizations has significantly slowed due to continued macro economic uncertainty.
This uncertainty has led to a muted hiring environment, causing both new and existing customers to limit their device growth expectations at the time of purchase and renewal.
And as we outlined last quarter as part of our 2023 outlook. We anticipate these macro headwinds to continue for most of the year.
<unk> remains well positioned to navigate these challenges due to a number of factors, including significant product differentiation customer value and continue to take a prudent approach to growth and profitability.
In Q4 of last year, we made targeted investments in our sales team and enacted a number of cost initiatives to position <unk> for both margin expansion and future growth when macro conditions improve in Q1. We continued this approach in order to deliver both strong top line.
And Bottomline improvements this year.
As we look across the global market or observation that device expansion has significantly slowed is supported by industry research. According to Gartner Q4 marked the largest quarterly PC shipment decline since they began tracking the PC market.
Q1, PC shipments declined year over year EBIT further.
Well no PC maker has escaped this trend despite a significant Q1 decline in Max shipments Apple has fared better than most over the past four quarters Max shipments have declined 6% compared to the prior four quarters, while shipments of all non map computers.
Climbed 23% over the same period.
This has resulted in mass market share expanding by 2% over the past year.
It's worth noting over a similar period <unk> achieved the largest year over year Mac device growth in Jeff's history in 2022, adding over 1 million math under management for the first time showing that GM continues to win a larger share of an existing under managed and under six.
Sure Mark.
<unk> continues to see employee preference for Mac increase leaving more organizations to create map choice programs to meet demand from employees, who choose to use the same technology at work as they use at home.
One example was documented in a recent case study of Jeff customer Cisco by creative strategies.
24% of employees with a windows laptop choose to switch from windows to map when their laptop is up for refresh.
In Q1, another jam customer who also provides employ technology choice grew their map fleet by 36000 devices at their renewal.
Combining this trend with idc's expectations at PC shipments will return to growth towards the end of the year and that by 2020 or an aging installed base will start to come up for refresh.
Believes that both the Mac and iPad will be the choice of a growing population of employees to replace aging chromebook and windows computers.
Overall <unk> strategy is based on three key beliefs, one the continued consumer <unk>.
Remote work and Apple hardware innovation will lead to greater Apple market share within the enterprise.
As most management of security solutions are not designed Apple first Jeff will continue to expand market share as more organizations move away from suboptimal non specialized solutions that do not deliver the same apple user experience that employs enjoying their personal lives.
And open devices to security threats and three management security solutions delivered as an integrated platform provide greater automation reduce exposure and achieve the goals of both Iot and infrastructure.
Despite what we believe are temporary macroeconomic challenges jumps market and customer experience through Q1 provide us confidence in our ability to consistently grow expand margins deliver for our customers and continue our role as the market standard for Apple at work. This.
Strategy also provides the opportunity to successfully expand as we already have two other mobile platforms, when and where it makes strategic sense for the market and customers.
Jeff showcased our latest innovations last week during our annual spring about which was live streamed by thousands of customers and prospects. During the event, we highlighted a number of our new offerings across identity connection endpoint protection and device management to help organizations deliver.
And enterprise secure consumer simple environment that protects personal clients.
Specifically, our Champ connect product, which is used by over 7000 organizations. Now include Zero Trust network access capabilities, which can automatically be set up during the first power on a device, helping enforced encrypted access to an organization's applications while not.
Interfering with private browsing.
All accomplished by simply activating the trust app on the device.
Champ also announced a new capability to detect whether the user has disabled Champ trust, even after authentication and immediately block access and guide the user to reactivate, Jeff trusts with a single click.
Additionally, with Jeff's Q1 delivery of iOS support for Google Beyond Corp, and last week's announcements of new support for AWS verified access.
Provides the only management and security solution integrated with the TNA frameworks for all three of the largest cloud providers, Microsoft Google and AWS.
Jeff has also expanded its partnership with us.
And together delivered best in class identity security for macos devices.
That form SSL enabled after password stake, which activates offer verify and after fast pass on the device, while Jeff connect deliver secure provisioning of local backhaul west user accounts using okta credentials.
With enrolment SSO, Jeff takes a major step forward to simplify the account driven user enrollment onboarding process, while dramatically enhancing logging security on b, while iphones and ipads. This means after enrollment users are able to enjoy a fast and secure logins.
Using face I'd or touch I'd to all of their company apps on their personally owned devices using okta.
And education last year, we launched Champ safe Internet, a best in class web content offering threat prevention solutions tailor made for education in.
In Q1 of this year, we announced Champ safe Internet Chromebook and last week, we announced <unk> Internet will be coming to Windows Pcs. This summer our sales team and customers are excited to have this cross platform solution available. This summer during the traditional education buying period.
As educators prepare for the next school year Adil.
Additionally, we announced last week, new controls for safe Internet embracing apples unique framework that delivers additional on device protection and privacy.
For administrators and all industries, Jeff continues to focus on improving their efficiency. This summer we will launch Jeff Promotive test, which allows admins to initiate a secure remote desktop directly in the <unk> pro console with no additional purchases needed.
Again saving cost per customers. Jim has also continued to expand the number of applications title supported by the <unk> App catalog as we have also improved our app installers empowering.
To automatically notifies users when an updated development.
We're excited to see these new innovations come to market to help customers save money through platform consolidation, achieving labor efficiencies and reducing security risks.
Before I hand things over to John I want to share some thoughts on today's announcement regarding my retirement and John's appointment to CEO .
Our decision to retire has been part of the personal plan with my wife, Jay for quite some time with the support of Jeff Sport. Knowing my intent has given us ample time for succession planning.
Recently informed the board that I felt now is the right time to begin the transition process.
Serving as JF CEO has been the greatest honor and experience of my 34 year career over the past eight years I've been blessed to know incredible people, who have come together to create the most customer focused southwest team I've ever had the pleasure to work with.
They have taught me more than I could ever teach them.
When I joined Champ in 2015, My first hire was John stressful he and I have worked together side by side, probably eight years, John brings a wealth of knowledge operational rigor global experience that is rare in the industry, having succeeded with businesses and lift in countries all over the world.
No.
John has been preparing for this role for years continuing to succeed as he took on additional responsibility serving as <unk> since 2020 and president since January 2022.
For the past year and a half most of our organization has already reported to John including all engineering product marketing support in all sales channels functions.
Of course, John is also played an integral role in the development and execution of <unk> successful strategy. During his eight year tenure.
As for my retirement I plan to continue my role on <unk> Board of Directors I will also enjoy having more time to focus along with Jenny on one of my passions, bringing technology to young people through work with the matter innovation hubs.
Of course to do this properly we will be using Champ solutions in the classroom in short I will continue to have a policy to watch suggests success as a member of the board as a shareholder and as a customer.
I'll now hand things over to John to highlight areas gas momentum in Q1 with John .
Thanks, Steve for the kind words, I'm grateful for your guidance and partnership over the years and I look forward to continuing our work together on the board.
So our investors I'm also looking forward to working more closely with you as they take on this new role.
My decision to join <unk> and JM back in 2015 has been the best decision that my career.
Today <unk> is more than 10 times, what it was when Dan and I, both joined which is a direct result of Gm's laser focus on customers innovation and employees I could not be more honored to lead this team and I'm excited to see what the future brings our business.
In Q1, <unk> made great progress expanding our relationships with key partners, expanding our reach and influence to bring the power of the GM platforms, even more customers.
These relationships spanned numerous ecosystems, including technology industry, Influencers like AWS, Google and Microsoft Channel partners like British Telecom and managed service providers.
Last quarter, we discussed <unk> participation in the AWS ISP accelerate program, making <unk> available in the AWS marketplace, bringing together AWS and Champ sales teams to collaborate the best serve customers and allowing joint customers to use their AWS credits are committed annual spend to purchase products.
In Q1, AWS and <unk> sales teams worked side by side successfully winning in dozens of accounts together for the first time.
We anticipate this collaboration to grow substantially as we train and introduce our go to market teams.
Participation with Microsoft also expanded in Q1, which we announced two weeks ago. Jeff is excited to now be a member of the Microsoft Intelligent Security Association, which is the ecosystem of independent software providers, who have integrated their solutions with Microsoft security technology to help customers better defend themselves against increasingly sophisticated cyber threats.
This partnership paves, the way for Champ, and Microsoft to position. The work we've done together integrating our products in order to seamlessly monitor and protect customer Mac and mobile devices through Microsoft.
Benefiting from the deep visibility and monitoring provided by Jeff protect.
This integration is the latest of over a dozen integrations between <unk> and Microsoft solutions, including the ability to bear all inventory from Gm's management systems.
It's a Microsoft endpoint management.
In the carrier space, we expanded our relationship with British Telecom one of the world's leading communication services Army Bt's sales team with all Champ solutions across the management and security space.
BT with a key partner to one there are prior to the Champ acquisition and we are delighted to further expand this partnership across channels the entire platform.
While most of our partners focus on providing solutions for Apple Mac and mobile devices. Many have an increasing focus on bringing the power of the entire Apple ecosystem to the workplace for example.
One Champ solution partner <unk> digital signage collaborated with Champ to provide a solution for a large fast food franchisees to deploy Apple Tvs across the retail locations as simple to manage digital signage.
Porting Apple Tvs as an example of how Champs simply makes all Apple technology enterprise ready.
But certainty JF offers and providing the latest support for all Apple operating systems, including complex and unique workflows is the key reason, Jim and Apple's partnership has sustained for over 20 years.
Another Great example of Champ strength supporting unique industry use cases, as a leading athletic wear manufacturer and retailer who recently chose <unk> to replace their legacy Cross platform MDM solution for all.
<unk> 1000, Mac and buy it.
The iOS devices to be used in retail stores, both for point of sale and dressing or management.
James Apple first solution with a differentiating factor in this competitive takeaway, which is consistent with a growing trend Champ begin to identify in 2022 again at Q1 saw significant interest from organizations moving away from legacy MDM solutions, forming an emerging replacement market. This trend is opening up.
<unk> for Champ to gain market share in a very large installed base of existing ipads and iphones.
In Q1, just two accounts, who left the legacy MTM provider accounted for 35000, new iOS seats managed by general probe.
Further increasing our competitiveness for mobile devices, we recently launched jumped executive threat protection to help customers defend against advanced global threats. This solution is built upon the technology acquired as part of the <unk> acquisition, which we closed last November .
This mobile security capability is extremely unique in the industry, providing organizations with an efficient remote method to monitor mobile devices and respond to advanced attacks greatly reducing investigation periods.
Apple began offering extreme protections for users who might be personally targeted by some of the most sophisticated digital threats with the introduction of Lockdown mode in Iowa 16 Champ.
<unk> executive threat protection is designed to identify these sophisticated digital threats going beyond the traditional device management and endpoint security to extend visibility into a tax that target high value users such as government officials journalists and high ranking employees.
Finally, we're also seeing momentum with customers, replacing not just one but multiple vendors across management and security with <unk> business plan and enterprise plan.
Deploying an integrated management and security solutions for both corporate and personal Apple devices delivers a customer outcome that we simply call trusted access one of our key partners okta upgraded to <unk> enterprise plan in Q1, adding Champ connect NGF protect to their existing jail pro contract for this reason.
Customers have contacted yet because they are struggling with the time lag between incident, and Remediated action, which opens up the possibility that a compromise device can gain access to vital enterprise resources, if only for a few minutes, but a few minutes is too long and it still exposed to as an organization to cyber security threats Champs combination of device man.
<unk> patented dynamic grouping zero trust access controls and endpoint protection closed the critical gap between security exposure and blocking access with Remediated action.
While providing trusted access is the primary reason, we pursued our management and security strategy. We have found especially in this economy. Another benefit to customers is simply cost savings one customer a global technology company recently purchased 3000 feet of business plan that replaced five different incumbent solutions.
Including their existing cross platform MDM patch management endpoint protection that antibody a privileged access solutions point detection and response solution. We are also seeing customers like but big Commerce and still all Australia benefit from cost savings ultimately their management and security solutions with Jim.
In today's economy info SEC teams needed affordable solutions to respond to rapidly evolving external threats, while teams require best in class solutions to meet the needs of today's work from anywhere workforce Champ.
Provides both with that.
I'll turn it over to Ian.
Thanks, John we ended Q1 with revenue growth of 22% year over year exceeding the high end of our outlook, although challenged by tough economy. A strong performance was driven by the net addition of over 1500, new customers. The net additions of over 800000 devices running on Champs platform.
Which is 100000 devices more than the prior year, including one customer who added 36000 Mac to their private cloud deployment.
And Ah per device expansion to over $17 per device versus slightly over $16, one year ago, which is a testimony to the success of Champs cross sell and upsell of security solutions.
Total <unk> grew 21% year over year to $526 $6 million as a reminder, <unk> is reported on a constant currency basis using FX rates established at the beginning of each fiscal year as a result, FX had a negative impact on our Q1 <unk> of approximate.
$3 million.
As anticipated we saw a decline in total company net retention rates to 111% in <unk>.
Q1, due to the impact of four consecutive quarters of meeting customer hiring expectation.
<unk> device growth at renewal as well as increased churn.
We believe this decline is primarily driven by the difficult macro environment, and we would expect that metric to increase as macro conditions improve the.
The remainder of my remarks, some 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.
Q1, non-GAAP gross profit margin was 82% and within our expectations. We continue to anticipate gross margin in the low 80% range expect slight fluctuations each quarter.
non-GAAP operating margin also exceeded the high end of our outlook in Q1 at $6 1 million or 5% due to revenue outperformance and the impact of cost initiatives are.
Trailing 12 month Unlevered free cash flow margin was 14% decreasing compared to the prior year as a reminder, in Q1, we pay our annual bonus and renew large annual software contracts.
Our effective tax rate for Q1 negative two 5% consistent with our expectations as a reminder, for non-GAAP metrics, we use our domestic statutory rate for calculating tax impacts which is currently 24%. Please note that we pay a negligible amount of cash taxes on a year.
S federal basis, and pay an immaterial amount of cash taxes outside the U S.
Now turning to our outlook for the rest of the year, we believe the underlying fundamentals of our business remain intact and we expect continued demand for innovative solutions as you heard from Dean and John We continue to innovate and extend our platform to provide unique.
That bring tremendous value to our customers. However, given the likelihood of macroeconomic headwinds persisting through most of the year, we remain prudent in our revenue outlook.
Our overall philosophy of balancing growth and profitability remain and we continue to be judicious with our expense structure, while reinvesting in areas with the highest expected returns and continuing to drive strong consistent cash flow generation.
We continue to execute the cost initiatives, we outlined last quarter and have been able to more quickly realize savings in some areas, giving us confidence as we look to the rest of the year by the end of Q1, we had lowered our onboard head count by 60, Ftes, resulting in cost savings to help drive some of the older.
Performance, we achieved in non-GAAP operating income.
We've also begun making investments in projects for efficiency and scalability in both customer facing operations and back office functions. We will continue to pursue investments and operational excellence that will provide further cost savings.
As such our outlook for the second quarter and full year 2023 is as follows.
For the second quarter of 2023, we expect total revenue in the range of $133 five to $135 5 million representing growth of 15% to 17% year over year non-GAAP operating income in the range of four five to $5 $5 million for.
For the full year 2023, we are holding our previous total revenue range of $559 million to $563 million representing growth of 17% to 18% year over year, and we are both raising and tightening the range for non-GAAP operating income to 41%.
A $43 million.
<unk> for Q2, we anticipate non-GAAP operating margin to decline slightly from Q1 due to the impact of planned merit increases that were rolled out at the end of Q1 and planned Q2 marketing events, including last week's annual spring event in upcoming jams nation live events you.
You will note. This match is the seasonality of our non-GAAP operating income for the past two years.
As the year progresses, we will drive further margin expansion expect to exit 2023, with a Q4 non-GAAP operating income margin percentage in the low teens and while we don't provide an outlook for unlevered free cash flow margins, we anticipate that seasonality decline from Q1 to Q2, and then increase in.
In the second half of the year.
Full year 2023, Unlevered free cash flow margins similar to 2022.
Also provide estimates for amortization stock based compensation related payroll taxes, and other metrics to assist with modeling and the earnings presentation as part of the webcast and also close to our Investor Relations website, and now Dean John and I will take your questions operator.
Certainly once again, ladies and gentlemen, if you have a question at this time. Please press star one on your telephone one moment for our first question.
Our first question comes from the line of Matt Hedberg from RBC. Your question. Please.
Great. Thanks. Thank you very much first of all congrats Dean firsthand your retirement.
Exciting news for you and John obviously on your promotion.
It certainly seems like the company is in really good hands here on a go forward basis. So congrats to both of you.
John maybe for you and I'll keep it to one question for the sake of time.
What continues to resonate with us and when we talk to channel partners is the success, we're having on the security side. You spent a lot of time in your script and obviously you talked about okta as well yes.
I'm curious as device ads are under pressure.
How much of that initial land is like both device management and Security Act imagine thats become increasingly focused today on some of those initial lands versus just a straight upsell.
Yes, Matt Thanks for the question and you're absolutely right.
Did the security adding of the security products has given us many more vectors into a customer within the pit in the flooring, while customer may have one device management for device. They can certainly have five different security products and so we've had to.
This large deals actually this last quarter were securities that came in with clarity.
And we've expanded from there. So we really we're bullish on that we've had great success in our business plan, especially in the SMB area, which includes of course, our security products as well and we will continue to invest accordingly.
Thank you very much nice job.
Thank you one moment for our next question.
Thank you.
If you were retiring a few really all Chris I don't think you are at I don't know.
Alright.
Yes.
Quick question, if you if you think.
The seat based model, obviously with the economy.
Suffering you kind of suffered a little bit, but like where are we do you think on the journey in terms of normalization in terms of customers kind of thinking about their deployment deployment size et cetera, It's obviously a journey like.
How do you feel about your customer conversations where are we on that journey and then I had one follow up.
Thanks, Raimo for the question just for clarity.
Speaking.
In terms of our penetration within the devices for our customers or are you thinking more on where we're at from a market perspective on device shipments.
Okay.
The latter I actually like device shipments and that's kind of playing out.
So thank you for that well if you go straight to as I mentioned in my comments straight to the IDC and Gartner numbers.
Clearly the year over year comparable on device shipments is pretty tough, but we've gone through now six months of the biggest decline.
<unk> recorded record really since Gartner has been watching it but if you go in and read the reports.
Both Gartner and IDC seem to report that.
There is a little bit more of a bullish attitude on 2024, because that's really when the beginning of the pandemic buying occurred in those devices are going to be coming up for refresh.
What I find interesting is the <unk>.
You take a look at what Mac market share was at the end of 2019 versus what it is today, it's three four points higher today, so when the aging chromebooks and windows computers.
Come up for refresh more and more of those are going to flip to Mac. If they followed the same market trends.
We've been seeing today. So we're I'm looking at is I would love to say that we're going to start to see a little bit of recovery on the device shipments towards the end of this year and IDC would agree with that I think 2024, it seems to be a little bit more of the bullish here on that.
Yes, Okay, perfect and then on a follow up like you had a few price increases.
And our product lines at the beginning of the year.
How does that impact like what's the impact on.
The meaningful is that coming through all at once or how should we think about that thank you.
Then I will pass it back on.
Yeah, Danielle Thanks for the question Yeah. The impact on <unk> is just pennies I mean, we just announced it now.
Customers are just getting into it we are talking to customers that will come in in the latter half that'll impact, but right now thats a de minimus impact whats really driving that again is our security posture and John talked about it earlier, we're starting to get really savvy and we're starting to see really good business plan sales and that is helping drive it. The good news is that the receptivity.
<unk> from our customers on the price increase has been positive that there is significant more value that's delivered.
It seems to be being received well.
Okay perfect. Thank you. Thank you.
Thank you one moment for our next question.
Okay.
And our next question comes from the line of Matt Stotler from William Blair. Your question. Please.
Hey, guys. This is Alex on for Matt. Thanks for taking my questions also echoing congratulations Dean John I'm excited to.
Or could you even more in the future.
So just one from me on the macroeconomic environment.
Are there any further updates you have to share.
Any observations in the first quarter and into April and early May any particular areas of strength or weakness you can call out.
Well thanks for the question rooms, good talk to you Alex.
I will tell you what I'm most excited about coming off of first quarter.
<unk>.
Historically Jam has had a best of breed management solution that frequently we have sold to customers and sold despite perhaps somebody else.
<unk>.
Okay.
Putting in air quotes good enough solution for a lesser price.
But now all of that we offer an entire platform of identity connection security and management solutions, we are finding more and more customers that are not comparing jumps price on any one product, but rather what our platform offers.
Several submissions.
Three questions.
John .
Okay.
Thanks, five different solutions with the <unk> business plan and they werent. The only one we saw probably more than we've ever seen before in coupon customers decide for the pure purpose of saving money that it was advantageous to consolidate on the <unk> platform.
And then in addition to that bring the additional value of our management and security solution working together to shut the door or they give it to be.
Bolder ability and Remediated action, so thats really probably what I exited Q1.
Got it perfect. Thank you for that and then just one quick other follow up for me.
You touched on a little bit in your prepared remarks, but is there anything else that you have to.
You could comment on with customer buying behavior. In this environment have you seen customers reduce any deployments or are they just a little slower to expand.
Yes, Alex I'll take that this is John thanks.
Thanks for the question, we have we have similar across the industry.
Companies are taking a little longer to discern whether or not they're going to spend their waiting a bit to see line of sight.
We've been able to offset that in many cases by having a broader variety of products to sell into them, but we are seeing some more judicious approach from our customers just like we're taking ourselves internally.
Got it. Thank you I appreciate that I'll pass it on.
Thank you one moment for our next question.
And our next question comes from the line of Joshua Reilly from Needham <unk> Company. Your question. Please.
Hey, guys. Thanks for taking my question then.
Put out my congrats as well to both Dean and John there.
If you look at the <unk> cycle for Apple here versus the M. One launch our work indicates that the material change in top power consumption price in security with M. One.
And the MQ.
<unk> offers a similar value proposition so that wave of initial upgrade with and one is in a strong with <unk> can you just comment is that what youre seeing as well.
And does that create a tough comp for you. This year. In addition to the macro challenges that we're seeing in the market.
No.
Thanks for the question, Josh, but I don't know that I'd be an expert on that in terms of the uptake on the two versions.
We haven't really seen dialogue with them.
Our customers.
That that would either.
Our founder deployment.
More so from our perspective, it really comes down to what is the price for performance if the price for efficiency versus an alternative non map computer and then of course does the producer of computer and as you well know back in the day they used to.
Have to battle against user preference versus.
It's expensive, but today's price performance the macro is not a more expensive machine as a matter of fact.
Okay.
The iOS.
Provide very strong cases is a matter of fact I was going to run with a dozen CIO last week talking about the cost advantages of buying specifically the Macbook air. So if you look over the last year I mentioned in my in my commentary for the last four quarters, not one quarter, but four quarters.
The Mac declined year over year, and 6% versus 23% for non Mac computers. So that's really about our focus is.
Got it that's helpful. And then if you look at the year over year device growth of 13%, that's actually pretty strong off a tough comp in the current macro I think while the AAR managed device growth did slow a bit sequentially. What are you seeing in terms of cross sell trends and the mix of devices that were actually sold in the quarter and was there.
Some more education devices sold in the quarter ahead of the buying season that might have impacted that.
Yeah, so not necessarily on the.
On the education.
But it's.
Astute of you to recognize the fact that we grew devices in this atmosphere by 13% year.
To be perfectly honest when we look at our year over year expansion.
<unk> devices specifically.
In commercial market in some ways, it's kind of surprising given the overall shipment numbers of Mac in the last year and what that tells us is.
Jeff is just winning a larger share.
So therefore.
There's just a lot of under managed and under secured Maxalt Theyre still so even though the Mac.
Did it grow in shipments over the last year, we still did that bodes pretty well for when we believe the device shipments will normalize and come back.
Got it thanks guys.
Yes.
Thank you one moment for our next question.
Okay.
And our next question comes from the line of Koji Ikeda from Bank of America. Your question. Please.
Hey, guys. Thanks for taking the questions I Echo everyone's sentiment here congrats Dan on the retirement.
John and Hey, Youre nice to speak to you just a couple of questions from me.
Dean just just starting off with you.
I guess kind of going back to the why now and want to frame. This question a little bit differently I totally get it on the personal front. The announcement of Jon makes a whole lot of sense I totally get it but what did you see from the business side that made you kind of made that helped easier decision for the why now.
John .
John is here.
I have been.
Partnered in this for the last.
Eight years now and for anybody watching closely.
<unk>, John was chief revenue officer, when I begged him to join us and them.
Two and a half years ago to Chief operating officer, and then yeah.
Year, and a half ago, President and most of the company has been reporting up into him. So frankly as we looked at the organization and John is really.
<unk> been running things it just made.
That decision all the easier as I mentioned this has really been a part of our long term plan for with myself.
My wife, Jennie and so just knowing that the company is in such good hands.
Yes, I made it an easy decision.
Got it got it no that's helpful and I guess since the spotlight is on John <unk> question directed to you.
Just kind of thinking about it.
In the past, maybe an easier times of the better times in 2020 'twenty one when companies are buying units in anticipation of of hiring how do we think about the effects of that more just in time mentality as we can.
Think about 2003, 2023, and 2024 and really the question here is when do you think we could start.
Maybe anniversarying or the comps get easier from these this change in buying patterns.
Yes, Thanks Koji.
We've.
We've talked a lot about the macroeconomics you've heard a lot of other earnings calls.
And as we see the headwinds for device.
We've taken an opportunity during that time to really learn how to better sell.
Security and get that muscle memory going in so the reports we're looking at can can suggest that.
And we plan this way that we will look for headwinds to the end of the year as device shipments come back and device expansion comes back we anticipate.
Early next year, we've got a great tailwind of not having just the device on that device expansion device management, but then also security on top of that and so that's really what we're what we're planning around.
Got it thanks, guys. Thank you for taking the questions.
Thanks Koji.
Thank you once again, if you have a question at this time. Please press star 111 moment for our next question.
And our next question comes from the line of Nik Modi Archie from Craig Hallum. Your question. Please.
Hi, This is Nick on for Chad, Thanks for taking our questions.
Just one for me if you could talk about how your partner channel has been performing and if there are any geographies verticals or are other segments, where channel partners are becoming more impactful on them.
Specifically, if anything has changed in regard to your go to market relationship.
John I'll take that so if I understand the question Nick is how are we.
Working with our channel and how is that advancing.
Obviously the channel partners that we work also worked with now also work with Apple and Apple is in fact, the channel of our reserves on the education side.
We've put a concerted effort into building our channel organization with the vast majority of our sales coming internationally through the channel and the increasingly amount coming in the U S through our channel partners as well. So we're going to continue that because we believe theres great efficiencies. There we've seen as I mentioned, great traction outside the United States and we're learning a lot from.
That and bringing that into the U S as well to gain more efficiencies in our go to market through the channel.
The one other thing I'll just add on top of that is in <unk>.
John commented on it that we continue to expand our go to market relationships like we did with entering to me. It's a program with Microsoft which is good.
While not a co selling relationship and excellent co marketing relationship with the AWS relationship as opposed selling relationships.
Our very first quarter.
After launching us as part of the AWS marketplace, and we couldn't have been happier with the traction that we saw that in Q1 and.
And we think that's going to build overtime.
Got it thanks for taking the question.
Thank you.
Does conclude the question and answer session as well as today's program. Thank you, ladies and gentlemen for your participation you may now disconnect. Good day.
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