Q4 2024 Jamf Holding Corp Earnings Call
© transcript Emily Beynon
John Strosahl: John Strosahl, Missy Goodkind, John Strosahl, Jennifer Gaumond, David Rudow, John Strosahl, Jennifer Gaumond, David Rudow, Missy Goodkind, Jennifer Gaumond, David Rudow,
Speaker Change: Thank you for standing by and welcome to JAMF's 4th Quarter 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during this session, you'll need to press star 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. As a reminder, today's program is being recorded. And now I'd like to introduce your host for today's program.
Speaker Change: Today's discussion includes forward looking statements, which involve risks and uncertainties that could cause actual results and trends to differ materially from our forecast for more details. Please refer to the risk factors and other information discussed in our most recent SEC reports, including our most recent annual report on Form 10-K.
Speaker Change: Jeff assumes no obligation to update forward looking statements, which speak only as of the date. They are made we.
Speaker Change: We will also reference some non-GAAP measures related to jams performance reconciliations to the nearest comparable GAAP measures are available in our earnings release kit.
John Strosahl: Militate, a full Q&A. Please limit yourself to one initial question and one follow up now I'll turn it over to John.
Speaker Change: Thanks, Ken Camp achieved strong results in Q4 with year over year revenue growth of 8% and non-GAAP operating income margin of 18% exceeding the high end of our outlook for each metric. This resulted in full year revenue growth of 12% and non-GAAP operating income margin of 16% I'm pleased that we met or.
Speaker Change: Our objective of exceeding our financial targets for all four quarters of 2024, I'm, especially proud of our team for delivering strong bookings growth. In Q4. This performance was driven by contributions across products regions and size of business, reflecting broader stabilization and we have seen in over the past two years.
Speaker Change: <unk> grew 10% year over year to $646 million.
Speaker Change: We continue to successfully target customers impacted by recent consolidation of unified endpoint management vendors are win rates for these customers spanning all industries and business sizes have remained elevated since late 2023. Additionally, we continue to see strength in our core mass business, especially in the tech space.
Speaker Change: Like to share some of our successes we saw in Q4 across our four key growth vectors security mobile.
Speaker Change: The international and channel.
Speaker Change: In security, we continue to see demand for jams, Apple first security platform with 17% year over year growth in security <unk> to a $156 million or 24% of Champs total IRR customers increasingly choose chance to meet both their management and security needs with Q4.
Speaker Change: Another record quarter for our added for Champs business plan. This includes five financial services firms across North America, and Europe, and representing over 400 billion in market cap one of the largest banks in the U K has grown their Mac and GM footprint over the last year with <unk> Pro and select divisions in Q4 the bank.
Speaker Change: Expanding to jump business plan as part of its Mac choice program rollout across the entire organization key to winning this five year renewal with Champs ability to meet the uk's stringent regulatory requirements.
Speaker Change: Champs platform solution is seamlessly integrated across management and security ensuring that only authorized users an enrolled devices can safely access sensitive data.
Speaker Change: In mobile we continue to demonstrate our ability to support organizations in any business setting whether desk bound or not in the tech space one of the world's largest semiconductor manufacturers recently renewed and grew with <unk> pro for mobile with plans to deploy over 60000 mobile devices over three years and the transportation.
<unk> space, we saw three global airlines expand with jumped in Q4 as airlines increasingly seek out solutions for mobile devices, both in the air and on the ground.
Speaker Change: James meets the varying needs of airlines with an integrated solution that can be used by pilots and in flight crews ramp agents baggage handlers and maintenance personnel.
Speaker Change: One of these airlines based in Asia became a customer in Q4 of 2023 with <unk> Pro for pilot iOS devices in just one year the airline expanded with Champs, adding our new mobile security solution. This solution, which was launched in Q3 combines mobile threat defense and data policy with Zero Trust network access.
Speaker Change: Given the pilot iOS devices are mission critical during flight and are often used across the globe on various networks <unk> ability to both manage and protect these devices anywhere was key to this win.
Speaker Change: We believe <unk> opportunities will continue to grow as companies look to manage and secure all devices in their fleet regardless of location.
Speaker Change: Now turning to international in 2020 for revenue from geographies outside the U S grew 17% to just over a third of our total revenue. We expect international revenues continued to increase as a percentage of our total revenue over time as we invest in strategic geographies outside the U S. We've utilized success with lighthouse customers and certain.
Speaker Change: Geographies like Asia, where our involvement in Japan, Giga project, which started back in 2020 has provided additional education opportunities across Asia.
Speaker Change: <unk> School project as a government funded initiative to provide at least one device to every student in Japan in.
Speaker Change: In Q4, Jeff was selected by the Ministry of Education in Singapore for all students ipads due to our ability to meet the ministries requirements for data encryption threat detection and access control with Champs School and GM safe Internet. We're excited about the multiple opportunities that exist with other ministries of education across Asia.
Speaker Change: As we continue to grow our business outside of the U S.
Speaker Change: We're also working to capitalize on the success, we've had outside the U S. In the channel space with the goal of driving more of our business through our partners increasing the efficiency of our go to market organization. One key milestone in this journey with the launch of the general partner hub and our new partner program in Q3.
Speaker Change: While it's early we've seen significant uptick in partner led deal registrations since the program's launch.
Speaker Change: We're encouraged by the progress we've seen in such a short amount of time and are excited for what this is going to come and bring in the space.
Speaker Change: 2024 was a year of transformation for example, with the number of scalability and efficiency initiatives to drive future growth and margin expansion, including the launch of our new partner program and system updates. We're excited to see the continued benefits of these initiatives to our business as we progress toward our goal of achieving the rule of 40.
Speaker Change: Looking forward to 2025, and what it will bring as we continue to help organizations seed with Apple now I'll turn it over to David to review, our Q4 results and provide our 2025 outlook.
David: Thanks, Chuck we achieved strong results again in Q4 and are pleased with our ability to deliver beat and raise quarter throughout the year.
Speaker Change: Year over year total revenue growth was 8% exceeding the high end of our revenue outlook.
<unk> revenue grew 9% and represented 98% of total revenues in Q4.
Speaker Change: This performance resulted in a fiscal year revenue growth of 12%.
Less strategic sources of revenue such as services and license continued to experience year over year declines as expected.
Speaker Change: Our net retention rate decreased slightly as expected to 104% in Q4, when compared to Q3 gross retention rates remained consistent with historical levels.
Speaker Change: non-GAAP operating income exceeded the high end of our Q4 outlook at $30 million or 18% margin and a 400 basis point improvement over Q4 2023.
Speaker Change: For the full year non-GAAP operating income dollars more than doubled to $103 million, resulting in a full year non-GAAP operating income margin of 16%.
Speaker Change: This margin reflects an 800 basis point improvement from 2023.
Speaker Change: And 1100 basis point improvement from 2022.
Speaker Change: This was driven by our continued commitment to disciplined investments, while driving top line growth.
Speaker Change: Journey of non-GAAP operating income margin improvement in 2024 came from two areas, where we have focused our efficiency efforts sales and marketing and general and administrative.
Speaker Change: Sales and marketing as a percent of total revenue improved 500 basis points in 2024 and.
Speaker Change: And G&A improved 200 basis points on a non-GAAP basis.
Speaker Change: Our trailing 12 month, Unlevered free cash flow margin improved to 12% compared to 10% in the prior year with Unlevered free cash flow dollars growing over 30% compared to the prior year.
Speaker Change: While we saw improvement in trailing 12 month, Unlevered free cash flow margin compared to the prior year the.
Speaker Change: 12% margin was lower than expected due to delayed billings and collections associated with their comprehensive systems update.
Speaker Change: We expect the payments related to these delayed billings to benefit 2025.
Speaker Change: Our platform supports approximately $33 2 million devices and 76500 customers as we highlighted in Q3.
Speaker Change: Live with new systems across sales and back office. This process included some minor data reconfiguration.
Speaker Change: Due to the timing of this change validation of accounts and metrics continue through yearend and immaterial impacted our customer account and device count previously reported for Q3.
Speaker Change: Excluding this reset Q4 'twenty 'twenty four device ads were similar to Q4 last year.
Speaker Change: Looking ahead, we plan to disclose device and customer count on an annual basis. These metrics do not capture the large opportunity that we have related to cross sell mobile and security, which has been a key driver of our growth. Additionally, given our very large and diverse installed base. These counts are less meaningful and can vary based on that.
Speaker Change: Of devices and size of customers, we have on a quarterly basis.
Speaker Change: We believe that our quarterly disclosure better informs investors of our financial performance.
Speaker Change: Q3, <unk> was impacted by the Mitre data configuration work that continued through year end by $5 million.
Speaker Change: The adjustment impacted multiple historical periods and we chose to apply the cumulative impact to Q3 2024.
Speaker Change: This adjustment included system corrections, the air contract values post contract close and standardization of air calculations for customer billing frequency.
As a result, we ended Q4 with air are up $646 million representing year over year growth of 10%.
Speaker Change: Security Air grew 17% year over year to 156 million.
Speaker Change: Now turning to our outlook for 2025.
Speaker Change: We remain committed to being a profitable growth company and we'll build upon the progress we made in 2024, improving efficiencies while strategically investing for growth.
Speaker Change: Ive spent my first four months of Jam immersing myself in our business to fully understand our strategy.
Speaker Change: Value proposition and growth opportunities during this time.
Speaker Change: Only become more excited for Champs future part of my work included analyzing our financial model and historic targets laid out during the analyst day last March.
Speaker Change: I believe in creating an achievable model that reflects current trends in our business, which is consistent with our guidance has been provided in the past given this our 2025 revenue outlook reflects our growth profile exiting Q4.
Speaker Change: <unk> from what was presented at the Analyst day include.
Speaker Change: The annualized impact of our adjustments made to our Q3 2024 airbase.
Speaker Change: Continued uncertainty in the selling environment due to ongoing layoffs and budget constraints in our end markets.
Speaker Change: And a higher contribution from mobile which is at a lower price point than Mac, but represents a large opportunity.
Speaker Change: As a result for the first quarter of 2025, we expect total revenues of 165, 5% to $167 5 billion.
Speaker Change: Representing year over year growth of 9% to 10%.
Speaker Change: non-GAAP operating income of $35 5 million to $37 $5 million, representing a non-GAAP operating income margin of 22% at the midpoint.
Speaker Change: For the full year 2025, we expect total revenue.
Speaker Change: $675 5 million to $685 million.
Speaker Change: Representing year over year growth of eight 1% at the midpoint.
Speaker Change: non-GAAP operating income of $142 5 million to $146 5 million, representing a non-GAAP operating income margin of 21% at the midpoint at approximately 500 basis point improvement over fiscal year 2024.
Speaker Change: Given our strong margin profile, we anticipate unlevered free cash flow growth of at least 75%.
Speaker Change: We are committed to driving incremental operating margin improvement regardless of the environment.
Speaker Change: Have you seen over the last few years, we have significantly improved our non-GAAP operating margin.
Speaker Change: And we plan to continue this trend in 2025.
Speaker Change: Our objective is to exit fiscal 2026.
Speaker Change: At a rule of 40 run rate as defined as the sum of the year over year revenue growth plus trailing 12 month Unlevered free cash flow margin I.
Speaker Change: I would also like to thank the entire global Champ team for all the hard work and efforts over the last year and for welcoming me into my new role.
Speaker Change: Our team really personifies jams values of selflessness and relentless self improvement. They have made my transition seamless, helping me get up to speed quickly.
Speaker Change: Look forward to working alongside this great team as we execute our plan in 2025.
Speaker Change: Now we will take your questions operator.
Speaker Change: Certainly and our first question for today comes from the line.
Jake Roberts: Jake Roberts from William Blair Your question. Please.
Speaker Change: Hey, thanks for taking the questions.
Jake Roberts: Can you John can you just talk about the recent trends, we're seeing in the tech and education sectors. I know those spaces has seen some headwinds over the past few years, but it sounds like you're starting to see some signs of stability in the quarter. So I'd love to just dig into those comments a little deeper and then what what exactly you are expecting from those industries in 2025, yes.
Jay: Sure Jay Thanks for the question.
Jay: Let's let's let's take it in parts.
Jay: Q4 was a was a great quarter, we mentioned that in the prepared remarks, we had nice bookings.
Jay: One one quarter doesn't make a trend, but we're encouraged by that so we're excited about that in the tech space, we've seen some growth as well, particularly in the Mac, which.
Jay: Which is which is always good mobile, especially mobile and mobile security are two areas that we've seen a lot of uptake in <unk>.
Jay: Cross retail across transportation Airlines as an example, we use that as well in the prepared remarks, those are very encouraging signs and we shouldn't forget about education at all it's wanted to still Embeds a material part of our business.
Jay: And it's something that as we watch and work with these jurisdictions both in the U S and internationally.
Jay: They spent money in in late 2020, and then throughout 2021 now in 2025, we are starting to see the beginnings of some of those.
Jay: Those organizations coming back and not only refreshing some devices, but also having some.
Jay: <unk> spend we saw some of that in early in the gig a project example for the version two of the Giga project.
We've also announced the Ministry of Education in Singapore is also selected us for.
Jay: For their for their country. There. So we're we're looking at a lot of opportunity on both the education side as well as the tech side as we see buyer confidence return.
Jay: That's helpful and then security growth ticked below 20% can you help us understand how much of that growth was impacted by the the data reclassification that you went through this quarter and then could you just talk about how demand in pipeline is trending for that suite as you as we've gotten into the new year.
Jay: Yes, Jake this is David I'll take that first part of the question, Yes. The air adjustment did impact the security business that was it takes about 2% of growth off of the numbers would've been 19% versus 17% and I think John might have mentioned this as well, but on the mobile side, we did see a very nice quarter of mobile as well which does.
Jay: <unk> and half the cost about <unk> <unk>.
Jay: And then what was it.
Speaker Change: Hey, Jay what was the second question was just around how just demand for that solution and pipeline is trending in the new year.
Speaker Change: For the security for the security solution.
Jay: Yeah, I mean, that's like.
Jay: And like I mentioned before we're seeing a lot of interest in that even even companies or organizations that have started with the management side of it they've really seen the benefit of the Apple specific security side of it as well and last year, We announced I think it was Q3, we got an award for the best Mobile security solution.
Jay: And that is really picking up.
Jay: <unk>.
Jay: Across both commercial as well as education as we look some of these jurisdictions are required to have security products.
Jay: On their on their educational devices and we benefited from from both of those so we're seeing again, we're seeing some encouraging signs.
Jay: A bit early to call it call it a trend.
Jay: Every come back I've seen has been a bit choppy and so we're making sure that we're we're looking at that and managing it according to what our customers need.
Jay: Very helpful. Thanks for taking the questions.
Speaker Change: Thank you and our next question comes from the line of Koji Ikeda from Bank of America. Your question. Please.
Speaker Change: Yeah, Hey, guys. Thanks. Thanks, so much for taking the question I just have one and so.
Speaker Change: Well when I look at the commentary or Im sorry, the guidance. It does imply you're going to reach somewhere around a rule of 30 for 2025 with revenue growth and Unlevered free cash flow margins somewhere around there with the backup the.
Speaker Change: Envelope math, but I think I just heard David I think you said in your prepared remarks that youre trying to get to a rule of 40 in 2026, and so that does imply some sort of either revenue XL or unlevered free more unlevered free cash flow unlocking so I know youre not guiding to 2026, but how do we think about the kind of.
Speaker Change: The levers to get to that rule of 40 in 2026, yes, no. Thanks for the question Koji, Yes, I think in the prepared remarks, our goal is to exit 2026 at a rule of 40 run rate.
Speaker Change: And so that will come from revenue growth and our continued focus on margin expansion. If you look over the last two years, we've increased margins by 100 basis points and based on our guidance for this year, we expect to increase margins by another 500 basis points.
Speaker Change: Got it. Thank you that's super helpful actually and maybe if I could squeeze in one here.
Speaker Change: So security maybe a follow up to the prior question about the slowdown in security growth and fully understand the re class of the E. R. But what is your confidence today of security being one of the stronger growth drivers of <unk> growth in 2025 and beyond.
Speaker Change: Koji. This is John I'm very confident I mean, we we've actually won management deals because of our security component in fact, we even announced when we won the Ministry of Education for Taiwan. The only reason we got that is because we had security alongside our management piece of it and there is no other company that does Apple specific management and security at scale.
Speaker Change: Other than us and as we see it but they don't do it all at once they'll start with a department.
Speaker Change: Other departments will start to use that or they'll start with management and now they've expanded into the securities part of it. So I really see that as a bright spot I see I wouldn't imagine us not having a security component at this point, so I'm I'm encouraged.
Speaker Change: Thanks, guys.
Speaker Change: Yes.
Speaker Change: Thank you and our next question comes from the line of Matt Hedberg from RBC. Your question. Please.
Matt Hedberg: Great. Thanks for taking my questions John.
Matt Hedberg: I think at the top of the call you mentioned some share shift presumably.
Matt Hedberg: Being more Broadcom I was wondering if you could maybe double click on them a little bit of that is that is that a excellent improved now I mean, we've heard of some pretty significant price increases in the channel.
Matt Hedberg: Just a little bit more commentary on some of the competitive dynamics youre seeing there.
Matt Hedberg: Yeah.
John Strosahl: Hey, Matt This is John from a competitive standpoint, it's been pretty consistent with what we've seen over the past.
Matt Hedberg: I'd say year year and a half.
Speaker Change: We haven't really seen any any more.
Speaker Change: Much ebbs and flows there we continue to have a replacement market that's not all going to happen at once because a lot of those customers that have a longer multiyear contracts as they come up.
Speaker Change: But we are seeing them come over there is concern about innovating at the pace of Apple without the funding and investment in R&D to do that of course, that's what we do everyday all day, so we're winning customers because of it and we're going to continue to do so.
Speaker Change: Got it helpful and then David for you on the guide for this year I know you don't guide to <unk> should we think you should <unk> grow roughly in line I think revenue was guided if I if I looked at it was an 8% growth, but if I looked at that rate is it should we think about you are kind of growing in line with revenue.
Matt Hedberg: And maybe just some of the underlying conservatism that you embedded in kind of your full year outlook for from a from a revenue perspective would be helpful. Yeah, no that sounds good thanks, Matt Yeah. So.
Speaker Change: We do not guide to air I think.
Speaker Change: The numbers that we posted nine 8% growth I mean, that's what we're entering into 2025 with and that was the starting point of our growth for the year that we were looking at on the revenue side I think to give a little more color on the guidance in terms of sequentially, we expect it to be down sequentially seasonally as it was.
Speaker Change: Last year in Q2, and then it continued to improve sequentially throughout the year and then the margin side, we think operating margins will be down sequentially as well, we do have merit increases and some additional cost cloud costs that are coming in we have azure now as a partner in the marketplace and then at the operating margins should increase throughout the year as well.
Speaker Change: Got it thanks, a lot guys.
Speaker Change: Thank you and our next question comes from the line of P. J Hynes from Canaccord Genuity. Your question. Please.
Speaker Change: Hey, good evening guys.
Speaker Change: Maybe I could pick up on the thread that David just mentioned, which is the azure.
Speaker Change: Channel now live I look you have experience of already adding AWS as a channel partner and seeing how that's progressed.
Speaker Change: Realizing it's still super early with Azure, but how has that looked relative to what you saw in the early days of the AWS relationship and I guess more interestingly.
Speaker Change: Like any learnings from working with that first Hyperscale a relationship that you can apply to what you're doing with Microsoft.
John Strosahl: Yeah T. J this is John.
John Strosahl: It's encouraging again, we are we had great success and we've continued to have great success with with Amazon and being on that marketplace and that's one of the reasons why we lead really hard into the Azure marketplace. Because we saw such good success. There we had customers buy because of it because they could use AWS dollars and now as your dollars as well as spend toward into buyers.
John Strosahl: Our product because we use cycles for that cloud product.
John Strosahl: You like you said, it's early days, we've done a lot of go to market and sales enablement for the Microsoft team as well as our own team. We've had their executives didn't hear talking to our salespeople getting them up to speed and we've got great traction. So again I'm encouraged by the early days and watching this move forward I'm encouraged also by the partnership with Microsoft.
John Strosahl: They've leaned into it heavily which I was pleasantly.
John Strosahl: Pleasantly surprised I guess by that but we continue to work together and I'm I'm looking for great things from this on the Azure side, just like we saw and continue to see on the Amazon site.
John Strosahl: Yeah good okay.
Speaker Change: And then John look I know you guys went through a period of kind of downside pressures, but I'm curious.
Speaker Change: How much shelf, where our unused license capacity do you think is still out there in the base and the reason I asked like if we start to see an improvement in hiring at some point.
Does jumps immediately start to benefit from that or is there unused capacity that still needs to be soaked up first just help me think through those dynamics, yes, we monitor that pretty closely because cloud product we know what what.
Speaker Change: Devices have been enrolled and what's being used at that point in time. So there is not.
Speaker Change: We're not.
Speaker Change: Afraid of that are worried about that at this point, we do see.
Speaker Change: When companies continue to expand both our Apple footprint, and then also adding management onto the security or security onto the management piece of it. So we've got that expansion there as well.
Speaker Change: We win.
Speaker Change: When hiring does return and we saw some.
Speaker Change: Tick of that in Q4 in some areas, but not across the board yet and something we can count on going forward. So we're looking at that very closely but I don't see like we have to take a big pause when hiring returns before we can start generating again I think that that is commensurate with hiring as well.
Speaker Change: But that's not our only way to grow revenues.
Speaker Change: Through device expansion, but certainly is one of them.
Speaker Change: Yes, very clear okay. Thank you guys appreciate it.
Speaker Change: Yes.
Linda Chen: Thank you and our next question comes from the line of framework Linda Chen from Barclays. Your question. Please.
Speaker Change: Perfect. Thank you.
Speaker Change: Going back to like you saw this quarter like strength in mobile and obviously that's come in at the lower price point as you said, but it's kind of a bigger market do you think thats, a beginning of a trend what's driving that.
Speaker Change: Can you kind of talk to that a little bit more because obviously the opportunity that would be exciting.
John Strosahl: Yes, Raimo this is John it is exciting.
John Strosahl: And when people ask me what excites me about the business. It's the desk. This workflow and that's primarily mobile we're seeing companies and the education use mobile in ways that they had we havent anticipated in the past and it's just a market that hasn't been there before and so we saw like I mentioned in the prepared remarks, we saw.
John Strosahl: A couple of airlines expand tremendously I mean, it started in the pilot cockpit with ipads and then it went to the behind above the wing with with.
John Strosahl: The the iphones up and down the aisle and then an extended from that onto a below the wing and the maintenance people are using ipads to make sure that they have all of the instructions they need for their maintenance work and tool tracking and all of those things stuff, we never thought about so and all of that's mobile. So that's really what's encouraging me as the mobile side of it and then when.
John Strosahl: Two expanded the mobile they think ooh, there's we need to make sure that these endpoints are secured as well as managed and Thats, where we can lean into the security side.
John Strosahl: Yes, Okay, perfect makes sense and then David it's kind of like your guidance now.
John Strosahl: Do you think about your the level of conservatism.
John Strosahl: Conservatism, you've kind of built in here, how does macro play into your guidance outlook, just kind of talk a little bit about your philosophy here. Thank you, yes, yes. So I believe in an achievable model and I would say the guidance process is very similar my belief in how to do it is very similar to what <unk> Champs has done it over the years the beaten race model of <unk>.
John Strosahl: But at the end of the day, what we looked at is what is the exit run rate for <unk> and then we based our model on that.
John Strosahl: There is.
Speaker Change: Business as John said mobile is strong security as strong international.
Speaker Change: It feels like we are in a very good position entering into 25.
Speaker Change: Okay. That's clear thank you.
Speaker Change: Thank you and our next question comes from the line of Joshua Reilly from Needham <unk> Company. Your question. Please.
Joshua Reilly: Alright, thanks for taking my questions.
Joshua Reilly: And our declining two points sequentially I believe it was.
Spot on with the guidance that you gave for NR I believe it was at the beginning of last year I'm. Just curious how did you have such strong visibility into the direction of the NR throughout the course of the year and should we expect that maybe this is a bottom or could it decline again sequentially into 2025 or maybe just how are you thinking.
Speaker Change: About trends around NR moving throughout the course of this year, yes. Thanks, Josh Yes, we have a very good modeling team here at Jan France does a great job on the <unk> side, yes. It did decline 105 to 104 and.
Speaker Change: And looking forward into our assumptions for the coming year, we do think it will begin to improve during the year probably in the back half of the year.
But we are focused on the upsell and the cross sell.
Speaker Change: And I think as the macro does improve I think we're in a really good position to see some traction there as well, but yeah. So 104 for the quarter and it should.
Speaker Change: Improve throughout the year.
Speaker Change: Got it and then as we're looking at the guidance for the year with the pretty significant ramp in free cash flow can you just talk to the line of sight that you have right now to that cash flow ramp in <unk> billings or collections disrupt that potentially is that something we should be considering and how do you consider us.
Speaker Change: The excess cash.
Speaker Change: Throughout the course of the year given that there is convertible debt. That's due I believe in fall of 2026, yeah. Yeah. So on the cash flow side Dsos increased to 82 days in Q4 normally its in the high <unk>. So we anticipate that that will improve throughout the year as our collections increase throughout the time period.
Speaker Change: In terms of the capital allocation strategy.
Speaker Change: We'd look at that quarterly we have a $175 million a line of credit that's untapped, we have $225 million.
Speaker Change: On the books at the end of the year.
Speaker Change: And so we look at that whether it's look at it.
Speaker Change: M&A.
Speaker Change: Additional organic growth opportunities that we look at.
Speaker Change: So I think.
Speaker Change: We're fairly comfortable with our cash flow numbers for the year and where we're sitting right now and I'd also like to touch on kind of the system upgrade that we did.
Speaker Change: I think it positions us really well as we look out towards the future.
Speaker Change: We upgraded to Oracle, we have salesforce that we implement as well and it really puts us in a position to scale the business looking out towards the future we can now.
Speaker Change: Bill in local currency, we have the partner channel that we've seen really strong growth from good traction right out of the gate.
Speaker Change: And this will take us for the next number of years as we continue to grow Theres, probably no limited how big we can get on this platform.
Speaker Change: Great. Thanks, guys.
Speaker Change: Thank you and our next question comes from the line of Patrick <unk> from citizen JMP. Your question. Please.
Speaker Change: Alright. Thanks for taking my question. This is Nick on for Pat John One for you. So Apple devices typically have an end of life of five years.
Speaker Change: Sent with what Youre seeing with your customers.
Speaker Change: How has this changed over the past three years.
Nick: Yeah, Nick this is.
Nick: It's pretty consistent I mean, we've typically factor in four years, but we've seen that elongate a little bit just given some uncertainties in the market and there were some some budget constraints.
Nick: And things like that for Mark from our buyers across the board not just for <unk>, but across the board and so we've seen companies extend the lifecycle of those products a little bit I remember when everybody had to learn from home and work from home in 2020. There was a lot of devices is purchased at that point in time, and so we watch that very closely talk to our customers on when that's going to come.
Nick: And those choice programs really worked to our benefit because as we've seen in the studies that have been published two thirds of the people given a choice of a device will choose an apple device, even if they had a P. C. They're first time around and then they will they will choose that so we tend to are encouraged by by that as those devices come to.
Nick: In the life.
Nick: Got it thank you very much.
Speaker Change: Thank you and our next question comes from the line of Rob Owens from Piper Sandler Your question. Please.
Speaker Change: Hi, This is Ian on for Rob Owens. Thank you for taking my question.
<unk> success in education, and can you talk about the partner channel internationally and so how are you thinking about the future roadmap for added security capabilities.
John Strosahl: Okay. So this is John so just so I understand the question.
Speaker Change: How do we think about our channel program.
John Strosahl: And how it relates to education, and then how security impacts that did I get that right.
John Strosahl: Yes, okay.
Speaker Change: Oh Wow.
John Strosahl: On the channel program.
Speaker Change: For education again, we're encouraged by the signs we've seen in education, both domestically and internationally. We mentioned a couple of those international opportunities that we've had.
John Strosahl: Not just across Europe, but also across Asia and in the U S as well.
John Strosahl: Our resellers.
John Strosahl: <unk>.
John Strosahl: They worked very closely with education, especially outside the U S. Our product does go through the channel partners.
John Strosahl: Outside the U S and inside the U S for education.
John Strosahl: The security component.
John Strosahl: Really is is something that does set us apart and it's a requirement for more and more jurisdictions to include a security Ponant a component as I mentioned earlier on the call that the reason that we won the Ministry of Education in Taiwan was specifically, because we had a security component and we're seeing that consistent across other areas.
John Strosahl: As in other jurisdictions as well so we're encouraged by the fact that we do have management and security not just on device security, but also the network filtering security piece as well.
John Strosahl: And then also how that works and how that relates to the channel because they have to supply both of those solutions into the extent that they can provide both of them in one product.
John Strosahl: That's really what's important to them into their customers.
John Strosahl: Yes.
John Strosahl: Does that answer your questions.
John Strosahl: Yes. Thank you.
Speaker Change: Thank you. Our next question comes from the line of semi Chatterji from J P.
Speaker Change: Your question please.
Speaker Change: Hi, Priyanka Chopra on food.
Speaker Change: Mike.
Matt Hedberg: I have a couple of questions first of all you're seeing you saw some growth in Mac and the tech vertical are there any verticals, where you are like noticing some sluggishness in the Mac, what's kind of driving that and what can be done.
Matt Hedberg: What trends need to happen in order for that to improve if anything and I have a follow up.
John Strosahl: This is John as far as sluggishness in the Mac, we haven't seen it really we've not seen as robust of a growth that we've seen in the past, but we haven't seen it go backwards by any way shape or form as I mentioned when when end users are given a choice and more and more companies are providing that choice to their employees, we do see them choose a Mac bar.
Often.
John Strosahl: We just havent seen as robust growth in the past just given the hiring trends in and buyer confidence so, but we look forward to that continuing we have seen.
John Strosahl: Nice little uptick in Mac into Tech Tech is one of our largest industries only because a lot of them again were immediately remote workers and their kind of the first wave of that as those devices get.
John Strosahl: Get a little older.
Speaker Change: Alright, fantastic and basically my follow up is along those lines what are your expectations for hiring trends and like 2025, do you expect something more like stronger through like tech and other verticals or is this going to be like a broad based uplift.
Speaker Change: It's hard for us I'm not an economist I don't know I read the same documents that you read.
Speaker Change: We were encouraged by some some nice uptick in Q4, but one quarter does not a trend make so we're we're mate.
Speaker Change: Honestly optimistic, but we're not ready to call that yet along with the broader market.
Speaker Change: Alright, thank you so much.
John Strosahl: Thank you and this does conclude the question and answer session of today's program I'd like to hand, the program back to John stressful for any further remarks.
Jonathan and thanks to everyone for your time today, we finished fiscal year 2024 with great momentum, we look forward to extending our leadership position and I'm exceptionally proud of the team's agility and adaptability they've shown in the past year all of US are very energized about the future. If you can't tell both David and I will be will be participating in some conferences next week.
John Strosahl: And we look forward to seeing some of you. There. So hopefully you can join us. Thank you again for joining us today and have a great evening.
John Strosahl: Yes.
Speaker Change: Thank you, ladies and gentlemen for your participation in today's conference. This does conclude the program you may now disconnect good day.
John Strosahl: Okay.
John Strosahl: Okay.
John Strosahl: [music].
John Strosahl: Okay.