Jamf (NASDAQ:JAMF) Surprises With Q1 Sales But Gross Margin Drops

Adam Hejl /
2023/05/04 4:22 pm EDT

Apple device management company, Jamf (NASDAQ:JAMF) reported Q1 FY2023 results topping analyst expectations, with revenue up 22.1% year on year to $132.2 million. The company expects that next quarter's revenue would be around $134.5 million, which is the midpoint of the guidance range. That was roughly in line with analyst expectations. Jamf made a GAAP loss of $24.2 million, improving on its loss of $25.6 million, in the same quarter last year.

Is now the time to buy Jamf? Access our full analysis of the earnings results here, it's free.

Jamf (JAMF) Q1 FY2023 Highlights:

  • Revenue: $132.2 million vs analyst estimates of $129.4 million (2.19% beat)
  • EPS (non-GAAP): $0.05 vs analyst estimates of $0.02 ($0.03 beat)
  • Revenue guidance for Q2 2023 is $134.5 million at the midpoint, below analyst estimates of $135.1 million
  • The company reconfirmed revenue guidance for the full year, at $561 million at the midpoint
  • Free cash flow was negative $25.9 million, down from positive free cash flow of $25.1 million in previous quarter
  • Gross Margin (GAAP): 77.5%, down from 78.8% same quarter last year

“Jamf is pleased to report that our first quarter of 2023 marks the 12th consecutive quarter where Jamf outperformed expectations,” said Dean Hager, CEO.

Founded in 2002 by Zach Halmstad and Chip Pearson, right around the time when Apple began to dominate the personal computing market, Jamf (NASDAQ:JAMF) provides software for companies to manage Apple devices such as Macs, iPads, and iPhones.

The whole purpose of software is to automate tasks to increase productivity. Today, innovative new software techniques, often involving AI and machine learning, are finally allowing automation that has graduated from simple one- or two-step workflows to more complex processes integral to enterprises. The result is surging demand for modern automation software.

Sales Growth

As you can see below, Jamf's revenue growth has been very strong over the last two years, growing from quarterly revenue of $80.7 million in Q1 FY2021, to $132.2 million.

Jamf Total Revenue

This quarter, Jamf's quarterly revenue was once again up a very solid 22.1% year on year. But the growth did slow down compared to last quarter, as the revenue increased by just $1.89 million in Q1, compared to $5.77 million in Q4 2022. We'd like to see revenue increase by a greater amount each quarter, but a one-off fluctuation is usually not concerning.

Guidance for the next quarter indicates Jamf is expecting revenue to grow 16.3% year on year to $134.5 million, slowing down from the 34.1% year-over-year increase in revenue the company had recorded in the same quarter last year. Ahead of the earnings results the analysts covering the company were estimating sales to grow 16.4% over the next twelve months.

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What makes the software as a service business so attractive is that once the software is developed, it typically shouldn't cost much to provide it as an ongoing service to customers. Jamf's gross profit margin, an important metric measuring how much money there is left after paying for servers, licenses, technical support and other necessary running expenses was at 77.5% in Q1.

Jamf Gross Margin (GAAP)

That means that for every $1 in revenue the company had $0.78 left to spend on developing new products, marketing & sales and the general administrative overhead. Despite the recent drop, this is still a good gross margin that allows companies like Jamf to fund large investments in product and sales during periods of rapid growth and be profitable when they reach maturity.

Key Takeaways from Jamf's Q1 Results

With a market capitalization of $2.21 billion Jamf is among smaller companies, but its more than $200.3 million in cash and positive free cash flow over the last twelve months put it in a very strong position to invest in growth.

It was good to see Jamf outperform Wall St’s revenue expectations this quarter. That feature of these results really stood out as a positive. On the other hand, it was less good to see the pretty significant deterioration in gross margin and free cash flow missed. Also, both revenue and adjusted operating profit guidance for the next quarter missed analysts' expectations. Overall, this quarter's results could have been better. The company is flat on the results and currently trades at $17.92 per share.

Should you invest in Jamf right now? It is important that you take into account its valuation and business qualities, as well as what happened in the latest quarter. We look at that in our actionable report which you can read here, it's free.

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The author has no position in any of the stocks mentioned.