Q4 2023 Jamf Holding Corp Earnings Call

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Operator: Thank you for standing by, and welcome to the Jamf Fourth Quarter 2023 Earnings Conference Call. At this time, all participants are in listen-only mode.

Thank you for standing by and welcome to the fourth 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.

Operator: 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 1-1 on your telephone. If your question has been answered and you'd like to remove yourself from the queue, simply press star 1-1 again.

To ask a question during the session you will need to press star one on your telephone. If your question has been answered and you'd like to remove yourself from the queue simply press star one again.

Operator: As a reminder, today's program is being recorded. And now, I'd like to introduce your host for today's program, Jennifer Gamon, Vice President, Investor Relations. Please go ahead.

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.

Jennifer Gamon: Good afternoon, and thank you for joining us on today's conference call to discuss Jamf's fourth quarter and full year 2023 financial results. With me on today's call are John Strofel, Chief Executive Officer, and Ian Goodkind, Chief Financial Officer. Before we begin, I'd like to remind you that shortly after the market closed today, we issued a press release announcing our fourth quarter and full year 2023 financial results. We also published a Q4 earnings presentation, investor presentation, and an Excel file containing quarterly financial statements to assist with modeling. You may access this information in the Investor Relations section of Jamf.com.

Good afternoon, and thank you for joining us on today's conference call to discuss Champs fourth quarter and full year 2023 financial results with me on today's call are John struggle, Chief Executive Officer, and Ian Good time, Chief Financial Officer before we begin I'd like to remind you that shortly after the market close today, we issued a press.

The release announcing our fourth quarter and full year 2023 financial result, we also published the Q4 earnings presentation Investor presentation, an excel file containing quarterly financial statements to assist with modeling you may access this information on the Investor Relations section of Jeff Dot Com.

Jennifer Gamon: 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 Jamf's 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 John. Thanks, Jen.

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 Gm's performance you can find a 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 John.

John Strofel: Jamf achieved strong results in Q4 to round out the year, exceeding expectations for the 15th consecutive quarter. Q4 year-over-year revenue growth was 16%, representing the first quarter of revenue growth acceleration since Q2 of 2021. This strong revenue growth led to our highest non-GAAP operating income quarter ever at $21.1 million, with a non-GAAP operating income margin of 14%. This represents a 700 basis points improvement from Q4 of 2022. Full-year revenue growth was 17%, and ARR grew 15% year over year in 2023 to $588.6 million. Full-year non-GAAP operating income was $45.4 million, a 75% increase over 2022.

Thanks, Jen <unk>.

<unk> strong results in Q4 to round out the year exceeding expectations for the 15th consecutive quarter Q4 year over year revenue growth was 16% representing the first quarter of revenue growth acceleration. Since Q2 of 2021. This strong revenue growth led to our highest non-GAAP operating income quarter ever at $21 1 million.

With a non-GAAP operating income margin of 14%.

This represents a 700 basis points improvement from Q4 of 2022.

Full year revenue growth was 17% and <unk> grew 15% year over year in 2023 to $588 6 million.

Full year non-GAAP operating income was $45 4 million or 75% increase over 2022. This resulted in a full year non-GAAP operating income margin of 8%, a 300 basis points improvement over 2022.

John Strofel: This resulted in a full-year non-GAAP operating income margin of 8%, a 300 basis points improvement over 2022. We're especially proud of these strong results as the past six quarters have seen muted growth in the education and tech industries overall, along with slow PC growth. Q4 PC shipments declined nearly 3%, with Mac shipments seeing a decline of 18%.

We're especially proud of these strong results as the past six quarters have seen muted growth in the education and Tech industries overall, along with slow PC growth Q4, PC shipments declined nearly 3% with Max shipments seeing a decline of 18% we remain optimistic regarding our potential for 2024 PC refresh cycle.

John Strofel: We remain optimistic regarding the potential for a 2024 PC refresh cycle, as predicted by IDC. However, our expectations for 2024 are not reliant on a significant uplift in device expansion. Longer term, we're still confident in our prediction that Apple technology will become the number one ecosystem in the enterprise due to continued user preference for Mac at Work. We ended 2023 with 75,300 customers and 32.3 million devices on our platform. Of these customers, 41% run both Jamf management and a security product. This represents a significant increase due to the transition of our Jamf Now customers to Jamf Fundamentals. Jamf Fundamentals provides the complete yet simple IT solution for small to medium-sized businesses to manage and protect their Apple ecosystem.

As predicted by the ITC. However, our expectations for 2024 are not relying on a significant uplift in device expansion.

Longer term, we're still confident in our prediction that Apple technology will become the number one ecosystem and the enterprise due to continued user preference for Mac at work.

We ended 2023 with 75300 customers and $32 3 million devices on our platform.

These customers, 41% run both management and our security product this represents.

That's a significant increase due to the transition of our champion our customers to jam fundamentals funding.

Fundamentals provides the most complete yet simple solution for small to medium sized businesses to manage and protect their apple ecosystem.

John Strofel: Other highlights include continued demand for Jamf's Apple-first security platform with 33% year-over-year growth in security ARR to $134 million, or 23% of Jamf's total ARR. This was our strongest quarter ever for ARR added to the Jamf Business Plan. Many of our largest sales had an upsell component, proving the value of our land-and-expand strategy. We continue to see positive trends across professional services, financial services, and retail, which are three of the top five industries we serve. And we also saw a strong quarter in health care.

Other highlights include a continued demand for Jones, Apple first security platform with 33% year over year growth in security <unk> to a $134 million or 23% of Gm's total air are our strongest quarter ever for our added Virginia business plan. Many of our largest sales had an upsell.

Component proving the value of our land and expand strategy. We continue to see positive trends across professional services financial services and retail which are three of the top five industries. We serve and we also saw a strong quarter in health care.

John Strofel: Our results were driven by strong performance across our strategic focus areas of Mac leadership, management, and security, and Mac and mobile. In Mac leadership, we're seeing continued growth in our customer base with customers like a leading fully integrated biopharmaceutical solutions organization. The company has been a Jamf customer for nine years, and after finding that their Mac platform required fewer support tickets and a lower total cost of ownership, they decided to take the next step and scale out their Mac choice program with Jamf. The company expects to use over 5,000 Macs in the near future as a result of their upcoming refresh cycle.

Our results were driven by strong performance across our strategic focus areas of Mac leadership management and security and back in mobile.

And Mac leadership, we're seeing continued Mac growth in our customer base with customers like a leading fully integrated biopharmaceutical solutions organization.

The company has been a customer for nine years and after finding that their Mac platform required fewer support tickets and a lower total cost of ownership decided to take the next step and scale out there Mac choice program with channels.

The company expects to use over 5000, Max in the near future as a result of their upcoming refresh cycle.

John Strofel: Moving to security, last week, we released our Security 360 report that looks at real-world customer data, cutting-edge threat research, and noteworthy industry events to provide an overview of the evolving threat landscape. Among many striking data points, I wanted to highlight that we are now tracking 300 malware families on the Mac operating system, 21 of those families being found in 2023. It is true that Apple builds one of the most secure out-of-the-box platforms on the market, but hackers are agnostic as to the platforms they target.

Moving to security last week, we released our security 360 report that looks at real world customer data cutting edge threat research and noteworthy industry events to provide an overview of the evolving threat landscape.

Among many striking data points I wanted to highlight we are now tracking 300 malware families on the Mac operating system 21 of those families being found in 2023.

It is true that Apple builds one of the most secure out of the box platforms on the market, but hackers are agnostic as to the platforms they target.

John Strofel: Jamf is the only platform that delivers an Apple-first integrated management and security solution that meets the needs of the modern enterprise. Jamf enhances Apple's built-in security features by increasing visibility, prevention, controls, and remediation capabilities. We anticipate security to continue to become a larger part of our total ARR over time. Much of our success in security has been predicated on our ability to deliver both management and security on one platform. The success of Jamf's bundled solution is a testament to this, with ARR growth of bundled solutions outpacing most of Jamf's individual products. In Q4, over 44% of new customer pipeline generated was for security.

<unk> is the only platform that delivers an Apple first integrated management and security solution that meets the needs of the modern enterprise.

<unk> enhances apples built in security features by increasing visibility prevention controls and remediation capabilities, we anticipate security to continue to become a larger part of our total IRR over time.

Much of our success in security has been predicated on our ability to deliver both management and security on one platform. The success of Champs bundled solution is a testament to this with our growth of bundled solutions outpacing most of Champs individual products in.

In Q4 over 44% of new customer pipeline generated was for security security products are also helping us to increase our win rates when customers come to Champ with security in mind, we win almost twice as often as we do when customers are looking at management alone.

John Strofel: Security products are also helping us to increase our win rates. When customers come to Jamf with security in mind, we win almost twice as often as we do when customers are looking at management alone. This was true in both Q3 and Q4, and we expect this trend to continue. We also see long-term management customers expanding with Jamf Pro for security. In Q4, a European payments company added Jamf Protect to its 5,000 max as part of a three-year agreement. Given the company's exposure to PII and payment information, it has strict security and regulatory requirements.

This was true in both Q3 and Q4 and we expect this trend to continue.

We also see long term management customers expanding with Champ with security in Q4, our European payments company added jumped protect to its 5000, Max as part of a three year agreement given the companys exposure to P. III and payment information it has strict security and regulatory requirements. Our team was able to demonstrate how data.

John Strofel: Our team was able to demonstrate how data flows through the product in order to meet their complex needs and deliver the powerful insights and analytics of Jamf Protect. In addition to demand for complete management and security platforms, customers are also reorganizing their InfoSec and IT departments so they can manage and secure devices by technology ecosystems. This also allows end users to get the most from all of their devices while organizations can trust solutions built for the unique technology of their environment. Industry analysts like Omnia are recognizing Jamf for its mobile-first management and security, saying Omnia has seen Jamf become the primary UEM solution adopted by businesses that are well invested in the Apple ecosystem. Jamf was also early to market with capabilities to securely manage shared iOS devices. Jamf's management capabilities for iOS and iPad extend well beyond basic device management, including the ability to provision connectivity through eSIM and physical access tokens through key cards stored in digital wallets.

Those through the product in order to meet their complex needs and deliver the powerful insights and analytics of data protect.

In addition to demand for complete management and security platforms customers are also reorganizing their info second it department. So they can manage and secure devices by technology ecosystem.

This also allows end users to get the most from all of their devices. While organizations can trust solutions built for the unique technology of their environment.

Industry analysts like Omnia are recognizing Jim for its mobile first management and security, saying.

<unk> seen <unk> become the primary U E M solutions adopted by businesses that are well invested in the Apple ecosystem.

Jim was also early to market with capabilities to securely manage shared iOS devices.

<unk> management capabilities for iOS, and iPad OS extend well beyond basic device management, including the ability to provision connectivity through E Sim and physical access tokens through key card stored in digital wallets.

John Strofel: This makes Jamf a strong choice for businesses looking to effectively manage and secure their Apple devices. A great example of Jamf's leadership in securely managing iOS devices is the Q4Win Learning Care Group. Learning Care Group is the second largest for-profit child care provider in North America and a leader in early education. It operates over 1,000 schools across 38 states.

This makes chair of a strong choice for businesses looking to effectively manage and secure their apple devices.

A great example of Champs leadership and securely managing iOS devices is a Q4 win learning care group learning care group has the second largest for profit childcare provider in North America, and a leader in early education and operates over 1000 schools across 38 states.

John Strofel: Learning Care Group will be migrating its 20,000 iOS devices across its locations to Jamf. With Jamf, the company is easily able to manage its entire fleet, as well as keep all of the native apps that teachers and children use at school up to date. We continue to see many industries, especially nontraditional tech industries, reach for Apple technology, then turn to Jamf to make that tech work for their organization. As I stated earlier, we're seeing strong momentum in professional services, financial services, retail, and health care. One example is Sharp Healthcare. Sharp HealthCare is the leading healthcare provider in San Diego and a trailblazer in healthcare innovation.

Learning care group will be migrating their 20000 iOS devices across its locations to jail.

With <unk> the company is easily able to manage its entire fleet as well as keep all of the native apps that teachers and children use at school up to date.

We continue to see many industries, especially non traditional tech industries reached for Apple technology than to jump to make that tech work for their organization as I stated earlier, we're seeing strong momentum in professional services financial services retail and health care.

One example is sharp healthcare.

Sharp healthcare is the leading health provider in San Diego in a trailblazer in health care innovation.

John Strofel: Their mission is to be the best place to work, the best place to practice medicine, and the best place to receive care. One recent innovation is the deployment of more than 1,500 iPads to patient bedsides, providing access to their medical records, patient education, and entertainment. These iPads are powered by Jamf's Healthcare Listener patented technology, which receives patient admit, discharge, and transfer messages from the Epic Electronic Healthcare System.

Their mission is to be the best place to work the best place to practice medicine, and the best place to receive care.

One recent innovation is the deployment of more than 500 ipads to patient bedside, providing access to their medical records patient education and entertainment.

Ipads are powered by Champs healthcare listener patented technology, which receives patient admit discharge and transfer messages from the epic electronic health care system.

John Strofel: The technology can automatically trigger management tasks such as remote wipe and full device reset between patients to automatically personalize the experience for each patient while ensuring personal identifiable information and protected health information are secure. Another example of a company reaching for Jamf to power its unique industry-specific workflows is the longest-running airline in India. This customer chose Jamf Pro over their existing management solution and two competing solutions to manage 5,000 iPads with future plans to implement additional products to achieve trusted access. Jamf continues to lead the way with continued innovation across our business. One recent Apple innovation that we are particularly excited about is Vision Pro and its potential for the enterprise. Recently, Apple highlighted a number of enterprises that are deploying Vision Pro.

The technology can automatically trigger management tasks, such as remote wipe and full device reset between patients to automatically personalize the experience for each patient, while ensuring personal identifiable information and protected health information are secure.

Another example of a company reaching for <unk> to power its unique industry specific workflows is the longest running airlines in India.

This customer chose <unk> pro over their existing management solution and to competitive solutions to manage 5000 ipads with future plans to implement additional products to achieve trusted access <unk>.

<unk> continues to lead the way with continued innovation across our business. One recent Apple innovation that we are particularly excited about his vision pro and its potential for the enterprise recently Apple highlighted a number of enterprises that are deploying vision pro this month, we announced we are the first to market with support for Apple vision Pro adding this powerful new.

John Strofel: This month, we announced we are the first to market with support for Apple Vision Pro, adding this powerful new endpoint to our Apple first security and access products, Jamf Protect and Jamf Connect. This means Jamf customers can now confidently explore new ways of working while maintaining security, performance, and privacy. Additionally, with the introduction of MDM support for Vision OS 1.1 Beta, announced earlier this month by Apple, Vision Pro will soon include the key foundations for deploying and leveraging an enterprise-grade device at scale.

And point to our apples first security and access products generic protect in jail connect.

This means Champ customers can now constantly explore new ways of working while maintaining security performance and privacy.

Additionally, with the introduction of MDM support provision OS 1.1 Beta announced earlier this month by Apple Vision probe will soon include the key foundations for deploying and leveraging an enterprise grade devices at scale Champ will be working alongside Apple to support M. D. M envision pro and we're excited to continue to fill the gap between <unk>.

John Strofel: Jamf will be working alongside Apple to support MDM in Vision Pro, and we are excited to continue to fill the gap between Apple's powerful technology and the security, identity, and management needs of the enterprise. As we look ahead to 2024, we will continue to execute on our strategy. We are committed to simplifying work by helping organizations succeed with Apple and by doing so at the pace of Apple. To do that, we need to ensure we have a healthy company in service to our stakeholders over the long term.

<unk> powerful technology, and the security identity and management needs of the enterprise.

As we look ahead to 2024, we will continue to execute our strategy. We are committed to simplify work by helping organizations succeed with Apple and by doing so at the pace of Apple to do that we need to ensure we have a healthy company and service to our stakeholders over the long term.

John Strofel: Our business has evolved, both because of continued innovation in the space and because of the changing needs of our customers. For the last few years, Jamf has been on a dedicated journey to align our workforce to meet the evolving needs of today's IT and security teams while remaining a sustainable and profitable business. Over the last year, we've seen reduced customer budgets and muted hiring and layoffs in the technology space, which in turn has elongated sales cycles and decreased customer purchases of new devices. This has put pressure on our land and expand strategy. And in education, K-12 remains in a COVID overhang.

Our business has evolved both because of continued innovation in this space and because of the changing needs of our customers over the last few years <unk> has been on a dedicated journey to align our workforce to meet the evolving needs of today's it and security teams, while remaining sustainable and profitable business over the last year.

You've seen reduced customer budgets and muted hiring and layoffs in the technology space, which in turn has elongated sales cycles and decreased customer purchases of new devices.

This has put pressure on our land and expand strategy and.

And in education K through 12 remains in a COVID-19 overhang.

John Strofel: These challenges in tech and K-12 will likely remain throughout 2024. On the flip side, we are seeing expansion in industries outside of these two, as I mentioned earlier. We are controlling what we can by transforming and adjusting our investments and resources consistent with our current growth rate. This involves a more rigorous approach than we've taken in the past.

These challenges in tech and K through 12 will likely remain throughout 2024 on the flip side, we are seeing expansion in industries outside of these two as I mentioned earlier.

We are controlling what we can by transforming and adjusting our investments and resources consistent with our current growth rate.

This involves a more rigorous approach than we've taken in the past.

John Strofel: We will continue to invest in areas that further solidify Jamf's position as the leading platform for managing and securing Apple devices at work. We remain committed to innovating at the pace of Apple and enhancing our platform to deliver the best solution for our customers today and in the future. We're prioritizing investments in areas where we're seeing tremendous growth and opportunity, like security and AI, while reducing spend in areas not providing as fast or as high returns. We've also embarked on a number of scalability and efficiency efforts, including realigning our organizational structure to match our investment areas, which resulted in a reduction in force we announced in January. These efforts span every area of our business, and we're subjected to a rigorous process that involves each member of my management team.

We will continue to invest in areas that further solidified <unk> position as the leading platform for managing and securing Apple at work, we remain committed to innovating at the pace of Apple and enhancing our platform to deliver the best solution for our customers today and in the future.

We're prioritizing investments in areas, where we're seeing tremendous growth and opportunity like security and AI, while reducing spend in areas not providing as fast or as high returns.

We've also embarked on a number of scalability and efficiency efforts, including realigning our organizational structure to match our investment areas, which resulted in a reduction in force we announced in January these.

These efforts span every area of our business and we're subject to a rigorous process that involved each member of my management team.

Ian Goodkind: Ian will provide more detail on the scalability and efficiency efforts in a bit. As a result, we are anticipating achieving nearly 700 basis points of non-GAAP operating income margin expansion in 2024 when compared to 2023. We believe this is the right course of action to align Jamf's current revenue growth profile and establish a foundation for success in the future. With that, I'll now turn it over to Ian to review our results and give more color around our 2024 outlook. Thanks, John. We ended Q4 with year-over-year revenue growth of 16%, exceeding the high end of our revenue outlook by $1.6 million. This resulted in fiscal year-over-year revenue growth of 17%.

Ian will provide more detail on these scalability and efficiency efforts that a bit.

As a result, we are anticipating achieving nearly 700 basis points of non-GAAP operating income margin expansion in 2024, when compared to 2023. We believe this is the right course of action to align Champs current revenue growth profile and establish a foundation for success in the future.

With that I'll now turn it over to Ian to review, our results and give more color around our 2020 for outlook.

Thanks, John we ended Q4 with year over year revenue growth of 16% exceeding the high end of our revenue outlook by $1.6 million. This resulted in fiscal year over year revenue growth of 17%.

Ian Goodkind: Total ARR reached 588.6 million, representing year-over-year growth of 15% exceeding expectations. For the first time since Q3 2022, we saw year-over-year new bookings growth, with Q4 representing one of our strongest quarters for commercial new bookings. This helped drive Q4 net new ARR of $22 million, resulting in Jamf's commercial ARR increasing to 74% of Jamf's total ARR, and security ARR increasing to 23% of the total ARR. These results benefited from the conversion of Jamf Now customers to Jamf Fundamentals.

Total <unk> reached $588 6 million representing year over year growth of 15% exceeding expectations for.

For the first time since Q3 2022, we saw year over year, new bookings growth with Q4, representing one of our strongest quarters for commercial new bookings.

This helped drive Q4, net new <unk> of $22 million, resulting in jams commercial AAR are increasing to 74% of <unk> total <unk> and security.

Our increasing to 23% of the total.

These results benefited from the conversion of chance now customers to Jam fundamentals, we continue to believe that chance commercial business and specifically security will be a key growth driver.

Ian Goodkind: We continue to believe that Jamf's commercial business, and specifically security, will be a key growth driver. Similar to Q2 and Q3, the strategic core of Jamf's business, SaaS recurring revenue, remains strong in Q4. However, less strategic revenue sources like license, services, and on-premise revenues continue to experience year-over-year declines.

Similar to Q2 and Q3, the strategic core of Champs business SaaS recurring revenue remained strong in Q4.

Strategic revenue sources like license services and on premise revenues continued to experience year over year declines.

Ian Goodkind: Additionally, softness in Jamf's two largest industries, tech and K-12 education, remained while Jamf's next three largest industries, professional services, financial services, and wholesale and retail, saw continued momentum. And in addition, healthcare saw momentum too. Our net retention rate remained flat at 108% in Q4 when compared to Q3.

Additionally, softness in Jan two largest industries Tac in K through 12 education remained while Champs next three largest industries professional services financial services and wholesale and retail saw continued momentum and in addition, healthcare ciber momentum too.

Our net retention rate remained flat at 108% in Q4, when compared to Q3.

Ian Goodkind: The remainder of my remarks on 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. Q4's non-gap gross profit margin was 82% and within our expectation. We continue to anticipate gross margins in the low 80% range and expect slight fluctuations each quarter. Non-GAAP operating income exceeded the high end of our Q4 outlook at $21.1 million or 14% margin due to increased revenues representing a 700 basis point improvement over Q4 2022. For full year, non-GAAP operating margin was 8% of a 300 basis point increase over fiscal 2022 due to revenue outperformance and cost containment measures. Our trailing 12-month unlevered free cash flow margin was 10% compared to 18% in the prior year.

The remainder of my remarks on 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.

Q4, non-GAAP gross profit margin was 82% and within our expectations. We continue to anticipate gross margins in the low 80% range and expect slight fluctuations each quarter.

non-GAAP operating income exceeded the high end of our Q4 outlook at $21 1 million or 14% margin due to increased revenues, representing a 700 basis point improvement over Q4 2022.

For full year non-GAAP operating margin was 8% a 300 basis point increase over fiscal 2022 due to revenue outperformance and cost containment measures.

Our trailing 12 month Unlevered free cash flow margin was 10% compared to 18% in the prior year. It's important to note that year over year decrease in Unlevered free cash flow is not indicative of lost customers nor that customers are committing to shorter and lower dollar contracts with us in fact.

Ian Goodkind: It's important to note that the year-over-year decrease in unlevered free cash flow is not indicative of lost customers, nor is it indicative that customers are committing shorter and lower dollar contracts with us. In fact, customers are growing with Jamf, just not paying their full contract value of $4. Additionally, the trailing 12-month unlevered free cash flow margin of 10% was slightly lower than expected, primarily related to a shift in customer payments during year-end. Our effective tax rate for Q4 was negative 7 percent, resulting in a full year effective tax rate of negative 2.1 percent, with both rates 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 U.S. federal basis and pay an immaterial amount of cash taxes outside.

Customers are growing with Jeff just not paying their full contract value upfront.

Additionally, the trailing 12 month Unlevered free cash flow margin of 10% was slightly lower than expected primarily related to a shift in customer payments during year end.

Our effective tax rate for Q4 was negative 7%, resulting in a full year effective tax rate of negative two 1% with both rates consistent with our expectation.

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 our U S federal basis, and pay an immaterial amount of cash taxes outside the U S.

Ian Goodkind: Now, turning to our outlook for 2024. As John discussed, we are aligning investments and resources to match Jamf's current revenue growth profile, focus on key investment areas, and scalability and efficiency initiatives. Now is the right time to take these measures to set Jamf up for profitable growth in the future and return Jamf to the Rule of Forty. Some of the scalability and efficiency initiatives include adjusting the sales organization for current and expected growth levels. Enhancing the customer journey to make it easier to do business with them; Enhancing channel relationships through stronger programs and automation; and reducing reliance on field sales.

Now turning to our outlook for 2024.

As John discussed, we are aligning investments and resources to match Champs current revenue growth profile with a focus on our key investment areas and scalability and efficiency initiatives.

Now is the right time to take these measures to set jam up for profitable growth in the future and return <unk> to the rule of 40.

Some of the scalability and efficiency initiatives include adjusting the sales organization for current and expected growth levels.

Enhancing the customer journey to make it easier to do business with us.

Enhancing channel relationships through stronger programs and automation, reducing reliance on field sales.

Ian Goodkind: Investing in process improvement and automation in sales and marketing and general administration, leveraging leadership talent to create more efficient organizational structures, and optimizing our global footprint to align with where our customers need us most. Most of these initiatives are in process, some seeing benefits in 2024, and others with benefits expected throughout the next few years with respect to revenue growth, given the subscription nature of our business. Softness and device upsell in 2023 will impact our 2024 revenue growth rate. We expect continued pressure on device upsell through 2024. Based on these factors, for the first quarter of 2024, we expect total revenue of $148-$150 million, representing year-over-year growth of 12-13%. Non-GAAP operating income of $19 to $20 million, representing a non-GAAP operating income margin of 13% at the midpoint. For the full year 2024, total revenue of $614.5 to $619.5 million, representing year-over-year growth of 10% at the midpoint While we don't provide an outlook for ARR, we would expect to end fiscal year 2024 with ARR growth similar to full-year revenue growth. With respect to unlevered free cash flows for the full year 2024, we expect unlevered free cash flow margin to be similar to non-GAAP operating income margin.

Investing in process improvement and automation and sales and marketing and general and administrative.

Leveraging leadership talent and create more efficient organizational structures and optimizing our global footprint aligning to where our customers need us most.

Most of these initiatives are in process with some <unk> benefits in 2024 and others with benefits expected throughout the next few years.

With respect to revenue growth given the subscription nature of our business softness and device upsell in 2023 will impact our 2020 for revenue growth rates. We expect continued pressure on device upsell through 2024.

Based on these factors for the first quarter of 2024, we expect.

Total revenue of $148 million to $150 million, representing year over year growth of 12% to 13%.

non-GAAP operating income of $19 million to $20 million, representing a non-GAAP operating income margin of 13% at the midpoint.

For the full year 2024, total revenue of $614 five to $619 $5 million representing year over year growth of 10% at the midpoint.

non-GAAP operating income of $89 million to $93 million, representing a non-GAAP operating income margin of 15% at the midpoint and a nearly 700 basis point improvement over fiscal year 2023.

While we don't provide an outlook for <unk>, we would expect to end fiscal year 2024, with <unk> growth similar to full year revenue growth.

With respect to Unlevered free cash flows for full year 2024, we expect unlevered free cash flow margin to be similar to non-GAAP operating income margin.

Ian Goodkind: We also provide estimates for amortization, stock-based compensation, and related payroll taxes, and other metrics to assist with modeling and earnings presentation as part of the webcast and also posted on our investor relations website. As we look beyond 2024, we remain committed to Jamf achieving the Rule of 40. Using our historical calculation method of revenue growth and unlevered free cash flow margin, we anticipate approaching the Rule of 40 by the end of 2025. We plan to exceed the Rule of 40 in 2020. We look forward to sharing more regarding our plans through 2026 as part of our Investor Day on March 13, 2024, at NASDAQ in New York. If you would like to attend in person or virtually and have yet to register, please reach out to InvestorEventsatJamf.com.

We also provide estimates for amortization stock based compensation and related payroll taxes and other metrics to assist with modeling and the earnings presentation as part of the webcast and also posted on our Investor Relations website.

As we look beyond 2024, we remain committed to chance achieving the rule of 40.

Using our historical calculation method of revenue growth and Unlevered free cash flow margin, we anticipate approaching the rule of 40 by the end of 2025.

We plan to exceed the rule of 40 in 2026.

We look forward to sharing more regarding our plans through 2026 as part of our Investor Day on March 13th 2024 at NASDAQ In New York, If you would like to attend in person or virtually and have yet to register please reach out to investor events at Champs Dot com.

Operator: And now, John and I will take your questions. Operator. Certainly, and as a reminder, ladies and gentlemen, please limit yourselves to one question and one follow-up. You may get back in the queue as time allows.

<unk>.

And now John and I will take your questions operator.

Certainly and as a reminder, ladies and gentlemen, please limit yourselves to one question and one follow up you may get back in the queue as time allows one moment for our first question.

Operator: One moment for our first question. And our first question comes from the line of Joshua O'Reilly from Needham & Company. Your question, please. All right, thanks for taking my questions.

And our first question comes from the line of Joshua Reilly from Needham <unk> Company. Your question. Please.

Alright, Thanks for taking my questions starting off on the macro here Tech obviously remains a headwind maybe some color where the Q4 renewals consistent with your expectations entering the quarter and then overall with tech incrementally weaker than what you expected entering the quarter as well.

John Strofel: Starting off on the macro here, you know, tech obviously remains a headwind. Maybe some color, were the Q4 renewals consistent with your expectations entering the quarter? And then overall, was tech marginally weaker than what you expected entering the quarter as well? Hey, Josh.

Hey, Josh.

John Strofel: Yeah, this is John. For the Q4 renewals, no, that was in line with what we had expected, but hadn't anticipated. And we're pretty happy with the Q4 performance, especially as it ended the year. And as far as the tech, you know, weakness, you know, we just haven't seen the hiring resume in tech yet. We anticipate that it's going to come along with IDC and everyone else, but we haven't seen it yet.

Yes. This is John.

Further Q4 renewals no that was that was in line with what we had expected hadn't anticipated in and we're pretty happy with the with the Q4 performance, especially as it ended the year and as far as the attack.

Weakness.

We just haven't seen the hiring resume and Tac yet we anticipate that's going to come along with IDC and everyone else, but we haven't seen it yet and we also have a contemplated in our guidance either.

Ian Goodkind: And we also haven't contemplated it in our guidance. Got it. That's helpful. And then just one follow-up. If you look at the guidance for 2024, can you just help us understand if you are also assuming more conservative assumptions around new customer activity as well? And are you planning for more contract renewals with device downsell in these assumptions? Thank you. Yeah, thanks, Josh.

Got it that's helpful. And then just one follow up if you look at the guidance for 2024 can you just help US understand are you also assuming working conservative assumption around new customer activity as well and are you planning for more contract renewals with device down sell in these assumptions. Thank you.

Yeah. Thanks, Josh.

Ian Goodkind: We build our guidance using that bottom-up approach, and in 2024, we're factoring in the same muted economics that we saw in 2023. Also impacting our revenue growth rates in 2024 is the reduced upsell in 2023 because we are a high recurring revenue business. And as we just talked about, you alluded to, you know, 46% of our AR comes from information communication, i.e. tech, which has reduced customer hiring practices, and EDU still has the COVID overhang.

We build our guidance using a bottoms up approach and in 2024, we're factoring in the same muted economics that we saw in 2023 also impacting our revenue growth rates in 'twenty 'twenty four is the reduced upsell in 2023, because we are a high recurring revenue business.

And as we just talked about or you alluded to.

46% of our AAR does come from information communication, Ie, Tac, which has the customer reduce customer hiring practices and <unk> still has the COVID-19 overhang on the new logos, specifically, we are factoring in our assumptions similar to 2023.

Ian Goodkind: On the new logo specifically, we are factoring in assumptions similar to 2023. In addition, on the less strategic copy revenue sources, we have those factored in at a slightly lower level than what we saw in 2023. But we are focused on those things we can control.

In addition on the less strategic choppy revenue sources, we have those factor in a slightly lower level than what we saw in 2023, but we are focused on those things. We can control. We're focused on the cross sell opportunity focused on security and selling in the mobile and the things we haven't factored in is if the upsell return.

Ian Goodkind: We're focused on the opportunities, focused on security, and selling into mobile. And the thing we haven't factored in is if the upsell returns, that would be something that would drive that number higher. In the form of customers hiring more employees, it would come back in the form of more refresh programs within 2024 and choice programs with that on the commercial side, and on the education side, and then the replacement market being even stronger than we've been. Got it. Very helpful.

<unk> that would be something that would drive that number higher.

In the form of customers hiring more employees it would come back in the form of more refresh programs within 2024 and choice programs with that macpherson's launch and on the education side, and then the replacement market being even stronger than we've anticipated.

Operator: Thank you, guys. Thank you. One moment for our next question, and our next question comes from the line of Rob Owens from Piper.

Got it very helpful. Thank you guys.

Thank you one moment for our next question.

And our next question comes from the line of Rob Owens from Piper Your question. Please.

Operator: Your question, please. Great, thanks for taking my question. And I guess just around some of those dynamics, you stated a net retention rate of 108%, which I believe was flat quarter over quarter. First part, can you just remind us of the calculation of that if that's point in time versus trailing 12 months? And second, as we contemplate 2024, what are the expectations there given some of the turnover issues I think we're seeing in high tech and not seeing the upsell that you were likely to see in the last couple of years? Thanks.

Great. Thanks for taking my question and I guess just around some of those dynamics you started net retention rate of 108%, which I believe was flat quarter over quarter first part can you just remind us of the calculation of that if that's a point in time versus trailing 12 months and.

And second as we contemplate 2024, what are your expectations there given given.

Some of the turnover issues I think we are seeing in high tech and not seeing the up sell that you were likely in the last couple of years. Thanks.

Ian Goodkind: Hey Rob, I'll jump in on that question. So you're correct that our net retention rate didn't change from Q3 to Q4, and it remained at 108. And as a reminder to your question, it is based on a trailing 12 month measure. What we are looking forward to, based on the guidance that we just provided, is that the net retention rate will trickle down throughout the year by about 100 basis points per quarter. But we do believe that actually bottoms out at the end of the year and stabilizes from our cross-sell efforts. And as the macro turns and as we get better and better, which we have already gotten really good at selling security, those will go well, and we'll accelerate that number. Thank you very much.

Hey, Rob I'll I'll jump in on that question. So you are correct that our net retention rates didn't change from Q3 to Q4 remained at one way and as a reminder to your question. It is based on a trailing 12 month measure.

What we are looking forward to based on the guidance that we just provided is that the net retention rate will trickle down throughout the year by about 100 basis points per quarter, but we do believe that actually bottomed out at the end of the year and stabilizes from our cross sell efforts and as the macro turns then as we get better and better which.

We already have gotten really good at selling security those are all well and we will accelerate that number upward.

Thank you much.

Ian Goodkind: Thank you. One moment for our next question, and our next question comes from Gregg Moskowitz from Mizzou. Your question, please, for taking the questions. Good afternoon, guys. I guess my first question is, can you expand on your latest thoughts on PC and Mac refresh activity in 2024? I think we all have seen what IDC is saying.

Yes.

Thank you one moment for our next question.

And.

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

Okay. Thank you for taking the questions. Good afternoon, guys. I guess first question can you expand on your latest thoughts on PC and Mac refresh activity in 2024, I think we all have seen with ITC, you're saying I'm wondering if you have any additional perspective from your conversations with customers and then also what sort of assumptions around refresh are.

Operator: I'm wondering if you have any additional perspective from your conversation with customers. And then also, you know, what sort of assumptions around refresh are baked into this Revenue 5 for the full year? Hey, Gregg.

Into this revenue guidance for full year.

John Strofel: I'll take the first part of that question, and then Ian can expand on expectations. You know, with respect to the PC refresh, you know, and speaking with our customers, they're just being prudent with their expense management as well. And they're, they're just looking out into the future years, looking at what their hiring practices are. And they're just, you know, they're not, we're not seeing a great We're seeing budget management, we're seeing platform consolidation, and that's kind of how we set our guidance accordingly in 2024. Ian, you've got some more?

Hey, Greg.

I'll take the first part of that question and then Ian can expand on expectations with respect to the to the PC.

Refresh.

In speaking with our customers. They are just being prudent in their expense management as well and there are just looking out into the into the out years.

At what their hiring practices are and they're just they're not we're not seeing a great.

Anticipation.

Higher I'm kicking in at least of course, partly 2012 kind of half of the year.

But again, we're seeing budget.

Budget management, we're seeing platform consolidation and that's kind of how we set our guidance accordingly in 'twenty four and you've got tomorrow, yes, what I'll add on that refresh program within 2024, we are factoring the same economics. We saw in 2023. So we saw that lack of upsell our device expansion.

Ian Goodkind: Yeah, what I'll add to that refresh program within 2024, we are factoring in the same economics we saw in 2023, so we saw that lack of upsell or device expansion in 2023, so we're factoring in that same muted upsell at renewal, but if that comes back, we see that as a good opportunity for us as choice programs come into play. We do note in that IDC article and other places and other checks that we've heard there is an opportunity next year for a refresh cycle, so that is something we think could be a trend. Thank you. And then, just as a...

In 2023, so we're factoring in that same muted.

Up sell at renewal and but if that comes back we see that as a good opportunity for US is choice programs come into play we do know in that IDC article in other places and other checks that we've heard is that an opportunity next year for a refresh cycle. So that is something we think could be a tailwind for us next year.

120 for you and then just as that person.

John Strofel: Perfect. Thanks, Ian. Just as a follow-up, you mentioned, John, that you saw a benefit from Jamf Now conversions to Jamf Fundamentals. Are you able to put a finer point perhaps on how this is impacting the business today, as well as how it may help in 2024 and beyond? Yeah, I can certainly speak to what the customer is seeing from the benefit, and then Ian can follow up with some numbers if needed. You know, really, we've seen tremendous value; our customers have seen tremendous value with the security and the management being part of the same product. In fact, you know, when we go to market with security and management, we go almost twice as many times as when we just talk about security on its own.

Thanks, Ian just as a follow up you mentioned John that you saw a benefit from a chance now conversion to <unk> fundamentals are you able to put a finer point, perhaps on how this is impacting the business today as well as how it may it may help in 2024 and beyond thank you.

Yes, I can certainly speak to what the customer is seeing from the benefit and then Ian can follow up with some with some numbers if if needed you know really.

We've seen a tremendous value of our customers have seen a tremendous value with the security and the management being part of the same product in fact, when we go to market with security and management. We went almost twice as many times as if we just were talking about security on its own and we also have a greater stickiness when those customer using our using both our management and security products together and.

John Strofel: And we also have greater stickiness when those customers are using both our management and security products together. And so this was really something our customers had asked for with respect to the security side. And so we wanted to, we wanted to make sure that we had that bundled solution for those customers, and there's been a great benefit. We did that a few months ago, and we haven't really seen any negative pushback or attrition from that as a result. So we're getting good feedback from our customers. I would just add some number points that out of the net new AR of $22 million, the impact was about $6 million.

So this was really something our customers have asked for with respect to the security side and so we wanted to.

We wanted to make sure that we had that bundled solution for those customers and there has been a great benefit and we've done that a few months ago, and we haven't really seen any negative pushback or attrition from that as a result, so we're getting good feedback from our customers.

I would just add some number of points that.

The net new <unk> of 22 million the impact was about $6 million, we haven't seen any material changes in churn. There. So customers are loving it and accepting it and we are seeing success in our other bundles and just quote to other stats there one we see 79% growth year over year, when combining both our <unk>.

Ian Goodkind: We haven't seen any material changes in turn there, so customers are loving it and accepting it. And we are seeing success in our other bundles, and just to quote two other stats there. One, we see 79% growth year-over-year when combining both our business plan and enterprise plan. And in the fourth quarter alone, Jamf Business Plan had its most successful quarter in the form of net new ARR, very helpful. Thank you. Thank you.

The plan, an enterprise plan and in the fourth quarter alone Jam business plan had its most successful quarter in the form of net new <unk>.

Very helpful. Thank you guys.

Yes.

Operator: One moment for our next question, and our next question comes from the line of D.J. Hynes from Canaccord Genuity.

Thank you one moment for our next question.

Yes.

And our next question comes from the line of D. J Hynes from Canaccord Genuity. Your question. Please.

Operator: Your question, please. Hey, guys, this is Ryan on for DJ. So I just wanted to double check on some of the go-to-market motions you're building out, I guess, particularly the self-directed in the partner-led motions we've spoken about before. Can you just elaborate on any traction you're seeing there? I guess when we start to see any of that progress reflected in S&M as we progress through 2024. Okay, Ryan. This is John here.

Hey, guys. This is Ryan on for DJ. So I just wanted to double click on some of the go to market motions for building out I guess, particularly the.

Self directed in the partner led motions, we've spoken up.

Before can you just elaborate on any traction you're seeing there.

When we start to see any of that progress reflected in personnel as we progressed through Q4.

Okay. Ryan this is John here. So I've got two parts of that question. One is how the go to market has been optimized through self directed and the other's through our partner.

John Strofel: So I've got two parts to that question. One is how the go-to-market has been optimized through self-directed, and the other is through a partner. We would classify that as our third-party channel as well as our strategic partnerships. And with respect to the first one, the self-directed, that's really the investment opportunity or investments that we have made in our systems to gain some efficiencies there that we'll see primarily toward the back half of the year. And those are things like, you know, the partner portal, when partners can come in and actually put data directly into the portal and make their own quotes. It's also buying products from within the product, whether that's additional seats on a renewal or additional products from within our product.

Ultimately, we would classify that as our third party channel as well as our strategic partnerships and with respect to the first one the self directed.

That's really what the investment opportunities or investments that we have done in our systems to gain some efficiencies there that we'll see primarily towards the back half of the year and also things like the partner portal when that when partners can come in and actually put data directly into into the portal and make their own quotes it's also buying <unk>.

<unk> from within the product, whether that's additional seats on there on a renewal or additional products from within our product and those are all things that we're putting into place from a technological investment with respect to our third party channel. We've actually increased the amount of business going through that third party channel.

John Strofel: And those are all things that we're putting into place with a technological investment. With respect to our third-party channel, we've actually increased the amount of business going through that third-party channel on a global basis. We've always run primarily channel-led outside the U.S. And in the U.S., that's becoming even more so, in fact, increasing in its percentage there.

On a global basis, we've always run primarily channel business channel led in outside the U S and in the U S thats, becoming even more so in fact.

Increasing in its percentage there and we're going to continue to do that some of the optimizations that we've done in our go to market teams. Just early even this year are really focused on that leveraging more in the channel, which we've talked about for some time and that's actually coming to fruition and we're seeing that in the percentage of our business going through our channel partners.

John Strofel: And we're going to continue to do that. Some of the optimizations that we've done in our go-to-market teams just early this year are really focused on that, leveraging more in the channel, which we've talked about for some time, and that's actually coming to fruition. And we're seeing that in the percentage of our business going through our channel partners. Okay, awesome. Great to hear.

Okay Awesome, great to hear and then I guess just a quick follow up I know you have your investor day coming up in a couple of weeks.

John Strofel: And then I guess just a quick follow-up. I know you have your investor day coming up in a couple weeks, but when you talk about meeting the rule of 40 by the end of 2025 and exceeding it in 2026, can you help me think about, what are your expectations there between the balance of growth and profitability? Yeah, I can talk about that, Zia.

But when you talk about meeting rule of 40 by the end of 2025 exceeding it.

Can you help me think about like what are your expectations there between the balance of growth and profitability.

Yeah, I can talk to that.

Ian Goodkind: So we would expect our revenue to have a higher growth rate in 2025 and 2026 than what we see in 2024 for all the reasons of the tailwinds that we mentioned that we haven't factored into 2024. And with 2025 and 2026 profitability, we would expect that to expand as well. As we talked about, we have certain initiatives to make the customer journey easier. We have certain back office automation, and both of those will provide benefits in 2025 and 2026. And as the last reminder I make here, you'll hear more specifics on that at our investor day on March 13th at nasdaq.com. Okay, awesome. Thanks, guys. I appreciate the time.

So we would expect our revenue to be a higher growth rate in 'twenty, five and 26 and what we see in 2024 for all the reasons of the tailwind that we mentioned that we haven't factored into 2024 with.

With 2025, and 2026 profitability, we would expect that to expand as well as we talked about we have certain initiatives to make the customer journey easier.

We have certain back office automation in both of those will provide benefits in 2005 and 'twenty six.

And as last reminder, I'd make here is you'll hear more specifics on that at our Investor day on March 13th at NASDAQ In New York.

Okay Awesome. Thanks, guys appreciate the time.

Ian Goodkind: Thank you. One moment for our next question. And our next question comes from the line of Jake Roberts from William Blair. Your question, please. Hey, thanks for taking the questions.

Thank you one moment for our next question.

Yeah.

And our next question comes from the line of Jay <unk> from William Blair. Your question. Please.

Hi, Thanks for taking the questions I know, it's hard to predict on hiring really starts to ramp more meaningfully but as you look into 2024 should we expect the headwinds in tech and education to trough. This year or is that a dynamic that will still have to kind of deal with and worked through in 2025 as you work through some of the longer renewal cycles from.

Operator: I know it's hard to predict when hiring really starts to ramp more meaningfully, but as you look into 2024, should we expect the headwinds in tech and education to peak this year, or is that a dynamic that we'll still have to kind of deal with and work through in 2025 as you work through some of the longer renewal cycles from potentially larger tech customers and education customers? Just curious how those renewal cycles are shaping up heading into next year. Yeah, Jake, this is this is John.

Potentially larger tech customers and education customers just curious.

How those renewal cycles are shaping up heading into next year.

Yes, Jay this is John.

John Strofel: You know, we, along with a lot of the market, had anticipated the tech hiring to resume in 2023 or the back half of 2023, but we didn't see that. And so, really taking that into consideration, we wanted to have a balanced approach going into our 2024 guidance, which is what we see here. So, you know, we're gonna continue to run a balanced growth profile with investing in growth as well while maintaining profitability in the meantime. One thing I'd add, as we look at our, let's say, top five industries, so we talked about tech and education, we are seeing continued strength in the next three pieces or industries, so professional services, financial services, retail, and wholesale, and those have provided a really good strength and growth rate for us And the last thing I'm going to mention here is, as we've talked about, non-tech leading forward industries have really been looking at the deathless use of our products, and that has been a success story. Okay, very helpful.

We along with a lot of the market had anticipated.

The tech hiring to resume.

In 2023 or the back half of 'twenty, three but we didn't see that in so really taken that into consideration that we wanted to have a balanced approach going into our 2024 guidance, which is which is what we see.

We see here so we're going to continue to run.

Balanced growth profile with investing in growth as well while maintaining profitability.

In the meantime.

One thing I'd add as we look at our let's say top five industry. So we talked about tech and energy efficient alright, we actually continued strength in the next three pieces or industries, So professional services financial services.

Retail and wholesale and those have provided a really good strength in growth rate for us and we're really excited about the opportunities in those segments and the last thing I'd mention here.

As we've talked about non tax leading towards the industry and have really been looking at the deaths lift.

Use of our products and that has been a success story for us as well.

Okay very helpful and then.

John Strofel: And then really nice growth in the security suite this quarter. Now that you're hitting a more meaningful scale there, how should we think about a durable growth rate in that segment? And then, just kind of on the other side of the coin, do you expect to see similar headwinds in the security business in 2024, as you see on the device management side? Or could that actually be more insulated heading into next?

Nice growth in the security suite this quarter.

But you are heading a more meaningful scale there how should we think about a durable growth rate in that segment.

And then just kind of on the other side of that coin do you expect to see similar headwinds in the security business in.

In 2024 as you see on the device management side or could that actually be more insulated heading into next year.

Ian Goodkind: Yeah, on the security side, look, we have a business that grew 33% year over year and now represents 23% of our total ARR. We continue to think that's a really strong focus point for us that we've allocated resources that way. And we think that can continue to be a very strong rate of growth in the future.

Yeah on the security side look we have a business that grew 33% year over year and now represents 23% of our total.

We continue to think that's a really strong focus point for us that we've allocated resources that way and we think that can continue to be a very strong rate growth rate in the future.

John Strofel: I would say that we are going to provide more details around that at our investor day. But what we are seeing, and this goes back to our bundles discussion before, when we combine management and security, it has been a very successful win rate. And we actually are seeing customers stay a little bit more sticky and are happier when we combine those products. And Jake, I'll just add to that as well.

I would say that we are going to provide more details around that at our investor day about what we are seeing and it goes back to our bundles discussion before when we are combining management and security. It has been a very successful.

Win rates and we actually are seeing customers stay a little bit more sticky and are happier when we combine those products together and Jake I'll, just add to that as well I mean, you know speaking to our customers. They are certainly not.

John Strofel: I mean, speaking to our customers, they're certainly not investing less in security. And as our customers will come back to us and talk about, you know, the Apple-specific functionality that we have, that's really been a benefit. And when you combine that with the management piece, not only can you identify the threat, but you can also do something about it and actually deploy it. That's really what we've seen. So we're continuing to be optimistic about the management and security piece together and how that resonates with our customers. It sounds great.

Investing less in security and as our customers will come back to us and talk about Apple specific functionality that we have.

That's really been a benefit and when you combine that with the management piece not only can you identify the threat, but you can also do something about it and actually deploy that that's really what we've seen so we're continue to be optimistic about.

The management and security piece, together, and how that resonates with our customer base.

Operator: Thanks for taking the questions. 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, guys. Thanks for taking my questions.

Sounds great. Thanks for taking my questions.

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 guys. Thanks for taking my questions.

Operator: Um, you know, John, have you noticed anything competitively, maybe an increased pipeline or anything of that from VMware AirWatch? You know, just kind of given the ongoing acquisition there by Broadcom and just sort of want to see if there's anything there, maybe improving a bit?

John have you noticed anything competitively.

Maybe an increased pipeline or anything of that from Vmware Air watch.

Given the ongoing acquisition, thereby broadcom and just sort of wondering competitively if there's anything there.

Maybe improving a bit.

John Strofel: Yeah, thanks, Matt. It certainly has. You know, we've been working on this for quite a while, and, you know, while we're really optimistic about that replacement opportunity, it's not going to happen all at once, just given that customers have multi-year contracts, and we're really tied into that customer base. And so when those renewals come up, we're certainly showing the advantage of not only management and security together, but then an Apple-led and Apple-focused ecosystem support And that, again, is responding with our customer base. So, you know, we continue to remain optimistic about that. And now, with the recent events that have transpired over the last few days, we're even just as, if not even more, optimistic about. Got it. That's great.

Yes, Thanks, Matt It certainly has.

We've been working on this for quite a while and while we are really optimistic about that replacement opportunity, it's not going to happen all at once just given those customers have multiyear contracts in and were real tied into that customer base and so when those renewals come up we're certainly showing the advantage of not only management security together, but then an apple OLED Napa focused.

Ecosystem support and that again is resonating with our customer base. So we you know we continue to remain.

Optimistic about that and now with the recent events that just transpired over the last few days, we were even just as if not even more optimistic about it.

John Strofel: And then, you know, there was a lot of good commentary on, you know, specifically what you guys are doing to maybe offset some of the tougher spending that you're seeing out there, device ads, headcount, growth, et cetera. But, you know, I still reflect on the opportunity. It still seems like such a greenfield opportunity, just as it stands. Are there things from, you know, either strategic marketing or targeting, you know, greenfield accounts through like ROI-based selling that can drive, you know, sort of above Jamf growth above market trends, maybe from, you know, just trying to go after what feels like, you know, a really, really greenfield opportunity still? Yeah. Yeah. There's all of the above.

Got it that's great and then.

There was a lot of good commentary on specifically what you guys are doing to maybe offset some of the tougher.

Spending that youre seeing out there device sales head count growth et cetera, but I still.

<unk> on the opportunities still seems like such a greenfield opportunity.

Just as it stands are there things from either strategic marketing or targeting greenfield accounts through like ROI based selling that can drive above.

<unk> growth above market trends, maybe from just trying to go after what feels like a really really greenfield opportunity still yeah, yes.

John Strofel: I mean, we're certainly doing all the account-based marketing, we're doing all the analytics and making sure that we target the accounts that are available. And, you know, with just what we mentioned earlier, just with budgets being rather muted this year in anticipation of, you know, tech hiring and the refresh cycle and education, we're certainly poised for that. We've done a lot of market research, and, you know, we've just had some elongated sales cycles, like many of us in the industry have had. But again, you know, the opportunity is there.

All of the above I mean, we're certainly doing all of the account base, we're doing all the analytics and making sure that we target the accounts that are available and with just what we mentioned earlier just with the with budgets being rather muted this year in anticipation of tech hiring in the refresh cycle in education I mean, we're certainly poised for that we've done a lot.

Out of the market research and we're just we've had some elongated sales cycles like like many of us in the industry have but again you know the opportunity is there.

John Strofel: We've got great win rates, especially when we put management and security together. We're just going to keep doubling down on those things that have been successful and open up new areas where they become available. And the replacement market is just one.

We've got great win rates, especially when we put management and security together, we're just going to keep doubling down on on those things that have been successful and open up new areas, where they become available in the replacement market is just one Ian mentioned earlier about the desk list workflows and industry workflows that we're seeing with all the other additional devices that are coming out.

John Strofel: You know, Ian mentioned earlier about the deskless workflows and industry workflows that we're seeing with all the other additional devices that are coming out from Apple and the ones that are out now just being put into process in a lot of different functions and in ways that we hadn't anticipated before. And that's also something that we're really focused on and working with our channel partners to really optimize and take advantage of that opportunity. Great, thanks a lot, John.

From Apple.

And the ones that are out now just being put into process and a lot of different functions and in ways that we hadn't anticipated before and that's also something that we're really focused on and working with our channel partners to really optimize and take advantage of that opportunity.

Alright, Thanks, a lot John.

Operator: Thank you. One moment for our next question. And our next question comes from the line of Raymo Lenchel from Barclays. Your question, please. Hey, this is Isaac Onforimo.

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, this is Isaac on for Raimo. Thanks for taking the question, John you've talked about enterprise being a bit more resilient than SMB over the last couple of quarters and I was wondering if there was anything to call out here weather to the benefit of enterprise again or the weakness of SMB.

Operator: Thanks for taking the question. John, you've talked about enterprise being a bit more resilient than SMB over the last couple quarters. And I was wondering if there was anything to call out here, whether it was to the benefit of enterprise again or the weakness of SMB. You know, yeah, Isaac. You know, we've seen, when we talk about the volatility in the SMB, you know, as the market's uncertain, do you have small businesses that can, you know, go out of business or get bought? Or there are a lot of reasons for them, that volatility, that have nothing to do with the products they're using necessarily.

Yes, Thanks, Isaac we've seen when we talk about the volatility in the SMB.

As the market's uncertainty you have small businesses that can go out of business or get bought or there's a lot of reasons for them that volatility that have nothing to do with the products that using necessarily so we've seen we've seen some there, but I don't think any more than the industry on average.

John Strofel: So we've seen some there, but I don't think any more than the industry on average. You know, two-thirds of our business is volume-based, is small to medium size, but we have a good chunk of that business in the enterprise. And we've seen the scalability that we provide by doing this for over 20 years alongside Apple that has really, really resonated with our customers. In fact, when we get into the enterprise, the higher we get up, generally, the less competition we have, especially as it relates to the Apple ecosystem.

We have.

Two thirds of our business is volume based as small to medium size. So we have a good chunk of that business and enterprise and we've seen we've seen the scalability that we provide over doing this for over 20 years alongside Apple that is really really resonated with our customers in fact, when we get into that enterprise the higher we get up generally the less competition.

Have especially as it relates to the Apple.

As it relates to the Apple ecosystem. So they are good benefits in the enterprise.

Ian Goodkind: So the good benefits in the enterprise, we saw Q4 finish strong. We saw companies that had budgets at the end of the quarter that went ahead and pulled the trigger on that. And we've seen some good progress earlier this year, even with the enterprise. Great, that's really helpful. And then one for Ian, on cash flow. You talked again about the shift from upfront to annual billings. Was the level there similar to last quarter?

We saw Q4 finished strong we saw companies that had budget at the end of the quarter that went ahead and pulled the trigger on that and we've seen some good some good progress earlier this year, even with the enterprise groups.

Great. That's really helpful. And then one for Ian on cash flow you talked again about the shift from upfront to annual billings was the level theyre similar to last quarter should we think about that being a bit more predominant now in the customer base and then as we look into FY 'twenty four should we expect that shift to move back to <unk>.

Ian Goodkind: Should we think about that being a bit more predominant now in the customer base? And then, you know, as we look into FY 24, should we expect that shift to move back to upfront towards the end of the year? Yeah, just to clarify a couple things there. So when comparing 23 to 22, the primary driver was that shift in multi-year being from that used to be paid up front to annually paid. That was the primary driver within the quarter itself. We actually saw customers just defer payments to basically January 24.

Upfront towards the end of the year.

Yeah, just to clarify a couple of things there so when comparing 'twenty three to 'twenty. Two the primary driver was that shift in multiyear being from that used to be paid upfront to annually paid that was the primary driver within the quarter itself. We actually saw customers just defer payments to basically January of <unk>.

Ian Goodkind: So it was just a timing issue, not indicative of our business; neither of those are. As we roll forward, I would say operating income or margin is the bigger driver of our unlevered free cash flows as we move forward. And we just raised our operating income by about 700 basis points. And we've said that unlevered free cash flow is going to be about consistent. And that has factored in all the changes to customer payment. All right, great, thank you.

24, so it was just a timing issue and not indicative of our business. Neither of those are as we roll forward I would say operating income or margin is the bigger driver of our Unlevered free cash flows as we move forward and we just raised our operating income about 700 basis points.

And we've said the Unlevered free cash flow is going to be about consistent with that and that has factored in all of the changes in customer payment behaviors.

Alright, great. Thank you.

Operator: Thank you. Please take a moment for our next question. Our next question comes from the line of Chad Bennett from Craig Callum. Your question, please. Great. Thanks for taking my questions and fitting me in. So just, Ian, maybe just in terms of how we should think about device growth and ARR per device relative to your revenue growth guidance, is there any type of, you know, correlation there? And how should we think about those two metrics?

Thank you one moment for our next question.

And our.

And our next question comes from the line of Chad Bennett from Craig Hallum. Your question. Please.

Great. Thanks for taking my questions and fitting me in so just and maybe just in terms of how we should think about device growth in <unk> per device relative to your revenue growth guidance is there any any type of.

Correlation there and how should we think about those two metrics.

Ian Goodkind: Yeah, I would call your attention back to our growth algorithm. We have new logos, we have upsell, right device expansion, and we have cross sell. And we are going to continue to focus on those things that we can control, which is cross-selling specifically; we are factoring in the same upsell, muted upsell at renewal, but we're definitely focused on the successes we've had and seeing customers see the value in both management and security. That is where we're going to drive, and it's specifically in the bundles because we think that's what drives the most customer value.

Yeah, I would call your attention back to our growth algorithm, we have new logos, we have upsell rate device expansion and we have cross sell and we are going to continue to focus on those things that we can control.

Which is cross sell specifically we are factoring in in the same upsell muted upsell at renewal, but we are definitely focused on the successes, we've had and seeing customers see the value in both management and security that is where we're gonna driving and specifically in the bundles because we think that's what drives the most customer value.

John Strofel: And then maybe one quick follow-up for John, just kind of a follow-up on the competitive question, I guess, a couple of questions ago, just specific to the endpoint security market and Protect, and obviously, you know, that product's still growing nicely. Just kind of, is there any kind of, you know, new revelations there just competitively now that you're, you know, another quarter and year into that product and into that endpoint security market that you'd like to share? Yeah, I mean, you're right.

And then maybe one quick follow up for John just kind of follow up on the competitive.

Question I guess, a couple of questions go.

Just specific to the endpoint security market and protect and obviously.

That product is still growing nicely.

Just kind of is there any kind of.

New regulations, there just competitively now that you or another.

Another quarter and year into that into that product in there that endpoint security market that you'd like to share.

John Strofel: Protect has done really well, and we're very happy about it. In fact, security in general, 44% of our pipeline was security. And so we're really seeing good traction there. You know, with Protect, we continue to add functionality to it. We're going to continue to add more pieces of security as our customers request that. And yeah, I mean, pretty much pretty much all we have to do is protect it, it's done well, we're wrapped, and we're becoming even more well-versed in selling that, especially that relates to security and and we're gonna continue to double down on, Got it. Thanks much.

Yes, I mean youre right protect has done really well and we're very happy about it and in fact in security in general.

44% of our pipeline was security and that's what we're really seeing that get traction there with protect we continue to add functionality to it we're going to continue to add more.

More pieces of security is as our customers request that and.

Yes.

You know pretty much pretty much all we have to do with protect its done well.

Our reps are becoming even more well versed in selling that especially as it relates to in conjunction with security and we're going to continue to double down on that.

Got it thanks, so much.

Operator: Thank you. One moment for our next question, and our next question comes from the line of Pat Wall-Ravens from Citizens GMP.

Okay.

Thank you one moment for our next question.

And our next question comes from the line of Pat Walraven from assistance G. M. Your question. Please.

Operator: Your question, please. Oh, great. Thank you. I mean, John, usually companies guide revenue below where expectations are, you know, after they've had a disappointing bookings or renewal quarter. But in your case, it sounds like,

Oh, great. Thank you.

I mean, John usually companies guide revenue below where expectations are after they've had a disappointing bookings or renewal quarter.

John Strofel: Bookings and renewals in Q4 were actually pretty good. So, when did you guys decide it was time to, um.., you know, increase the possibility to align with the current growth profile, as you worded in the press release? Thanks, Pat.

But in your case it sounded like.

Bookings in our renewals in Q4 were actually pretty good.

When did you guys decided it was time to.

Increase the profitability to align with the current growth profile as you can.

Or did it in the press release.

Thanks Pat.

John Strofel: No, we understand that. And what we're really trying to do is have a balanced approach to profitability and growth going into 2024. And as I mentioned earlier, we, like the rest of the market, expected that return to come in mid, even to late 2023. And that didn't happen.

Good question.

No we.

We understand that and what we're really trying to do is have a balanced approach to profitability and growth going into 2024, and as I mentioned earlier, we as the rest of the of the market expected that returned to come in mid even till late 'twenty or 'twenty, three and that didn't happen and so we're just trying to be judicious in our in our approach and our.

John Strofel: And so we're just trying to be judicious in our approach and our guidance for 2024. As Ian mentioned, there are things that could impact that in 2024. The tech hiring could resume. We expect that there's going to be an EDU refresh. But we haven't anticipated that in our guidance because, you know, the market hasn't behaved like we thought it was going to in 2023.

Guidance in 'twenty four as Ian mentioned.

There are things that could impact that in 2020, Florida tech hiring could resume.

We expect that there's going to be an EU refresh, but we haven't anticipated that in our guidance because the market hasn't behaved like we thought it was going to in 'twenty three and so we're just we're just making sure that we're doing the right thing for the business and our customers long term and that's making sure that will optimize for efficiency and scalability as we go into 'twenty four and.

John Strofel: And so we're just making sure that we do the right thing for the business and our customers long term. And that's making sure that we're optimized for efficiency and scalability, you know, as we go into 2024. But we are well poised to be able to scale up when those growth vectors continue or start to resume. And we're watching that very, very closely. So we're on point. Okay, great.

But we are well poised to be able to scale up when when those growth vectors continue.

Dr to resume in and we're watching that very very closely so we're on point.

Operator: Thank you. Thank you. One moment for our next question. And our next question comes from Koji Aikida from Bank of America Securities. Your question, please. Yeah, hey guys, thanks for taking... Just a couple from me here. First one...

Okay, great. Thank you.

Thank you one moment for our next question.

And our next question comes from the line of <unk> from Bank of America Securities. Your question. Please.

Yeah, Hey, guys. Thanks for taking the questions.

Just a couple from me here first one.

John Strofel: There may be a question for John or, you know, what do you view as the most attractive levers to drive up? I'll take that one, Koji. So our most attractive levers, you know; we have many of them. We really do. I mean, certainly the replacement market, you know, absent of the tech hiring resuming and the EDU refresh and those things we've already talked about, but certainly the replacement market as it becomes more apparent, and again, the events of the last few days have continued our optimism in that as we really lean into those customers and show the value of management and security together, especially at scale and focused on Apple first and Apple best. So those are the areas that we really International is a great opportunity for us. We saw some softness in international in the middle of the year in 23.

Maybe a question for John or in what do you view as the most attractive levers to drive upside to growth in 2024.

I'll take that one koji.

So our most attractive levers.

We have many of them, we really do I mean that certainly.

The replacement market absence of the tech hiring resuming in the ETE refreshing those those things we've already talked about.

But certainly the replacement market as as it becomes more apparent and again the events over the last few days of it.

Continued our optimism in that as we really lean into those customers and show the value of management and security together, especially at scale is focused on an Apple <unk> and Apple vest. So those are those are the areas that we really see international as a great opportunity for US we saw some softness in international in the middle of the year in 'twenty three we saw that pickup towards the end.

John Strofel: We saw that pick up toward the end of the year, and we continue to see it at the beginning of this year. So, as Apple mentioned on their earnings call that they've had some success internationally as well, we work very closely with Apple outside the U.S. and in the U.S., but certainly outside the U.S. And so we're continuing to leverage that as we expand internationally. So those would be some of the biggest areas. And then, I guess, to wrap it up, would be security. I mean, every device can have one device management product on it, but every device can have five or six or more security products on it. And IT and InfoSec teams generally do that. They want belt and suspenders on for security.

Of the year and we continue to see that at the beginning of this year. So as Apple mentioned on their earnings call that they've had some success internationally as well we worked very closely with Apple outside the U S and in the U S, but certainly outside the U S and so we're continuing to leverage that as we expand internationally. So those would be.

Some of them some of the biggest areas and then I guess to wrap it up would be security I mean every device can have one device management product on it but every device can have five or six or more security products on it and and <unk> and <unk> generally do that they want belt and suspenders on security and then when we offer something that Apple specific along with the management fees.

John Strofel: And then when we offer something that's Apple specific along with the management piece, I think it is a good opportunity and really a lever to expand. Got it. Now that's super helpful. And maybe following up to Pat's, Booking sounds good, so.

That gives us a good opportunity and really a lever.

To increase.

Got it no that's super helpful and maybe following up to <unk> question.

Bookings sound good so what sort of triggers are you looking for maybe a signal that it's time to invest at a greater rate.

John Strofel: What sort of triggers are you looking for as maybe a signal that it's time to invest at a greater rate? You know, we've seen close ratios, while sales cycles have been elongated, we've seen close ratios maintained pretty similar. We measure our go-to-market organization with a very disciplined and rigorous approach. Our cadence is very, very tight on that.

Then what the plan is currently set for.

Yeah.

We've seen close ratios while sales cycles have been elongated we've seen close ratios maintained pretty similar.

We measure our go to market organization very with a very disciplined and rigorous approach. Our cadence is very very tight on that and so we can get those leading indicators and shift accordingly. So we know if that sales cycle is starting to drop we know of that conversion rate is starting to go higher we know up asps of each one of those deals in the pipeline are starting to raise.

John Strofel: And so we can get those leading indicators and shift accordingly. So we know if that sales cycle is starting to drop. We know if that conversion rate is starting to go higher. We know if the ASPs of each one of those deals in the pipeline are starting to rise. Any one of those indicators is going to lead us to really lean in to that and to invest in that growth. And also geographically.

Any one of those indicators are going to lead us to really lean in to that and to invest in that growth and also geographically to the extent that we've seen international continue to to take the momentum up we're going to we're going to look at that and invest in that area as well.

Jennifer Gamon: You know, to the extent that we've seen international continue to pick up the momentum, we're going to look at that and invest in that area as well. I would just add one thing to our operating income guidance there at a midpoint of 15%. We are committed to John's point. We have optimized our organization and made it so we can continue to do so. Thank you. This does conclude the question and answer session of today's program. I'd like to hand the program back to Jennifer Gamon for any further remarks. Thanks, Jonathan. Thank you again for joining us today. We hope to see you at our Investor Day on March 13th in New York. If you'd like to attend in person, please reach out to InvestorEvents at Jamf.com.

I would just add one thing on our operating income.

Guidance there at a midpoint of 15% we are committed to John's point, we have optimized our organization and made it. So we can commit continue to commit to that 15% margin.

Thanks, guys. Thanks for taking the questions.

Thank you. This does conclude the question and answer session of today's program I'd like to hand, the program back to Jennifer Gaumond for any further remarks.

Thanks, Jonathan and thank you again for joining US today, we hope to see you at our Investor Day on March 13th in New York, if you'd like to attend in person. Please reach out to investor events at <unk> Dot com. Thank you.

Operator: Thank you. Thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Good day. Thanks for watching!

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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