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Jamf (NASDAQ:JAMF) Q2: Strong Sales, Lifts Full Year Guidance


Full Report / August 10, 2021
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Apple device management company, Jamf (NASDAQ:JAMF) reported Q2 FY2021 results topping analyst expectations, with revenue up 38.5% year on year to $86.2 million. Jamf made a GAAP loss of $16.4 million, down on its loss of $423 thousand, in the same quarter last year.

Jamf (JAMF) Q2 FY2021 Highlights:

  • Revenue: $86.2 million vs analyst estimates of $83 million (3.83% beat)
  • EPS (non-GAAP): $0.06 vs analyst estimates of $0.05 (20.3% beat)
  • Revenue guidance for Q3 2021 is $93.5 million at the midpoint, above analyst estimates of $85.1 million
  • The company lifted revenue guidance for the full year, from $338 million to $359 million at the midpoint, a 6.21% increase
  • Free cash flow of $33.1 million, up from $797 thousand in previous quarter
  • Gross Margin (GAAP): 77.5%, down from 78.7% previous quarter

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.

Apple is known for making user-friendly computing devices and it is not surprising that the demand for its products has grown over the years. As their adoption became widespread across the business and education world, so did the need to manage these devices at scale. Keeping hundreds and thousands of devices up-to-date, with all the necessary apps installed and required level of security enforced can be really time consuming, and if it was to be done manually it would require a large number of IT technicians.

Jamf’s software provides the IT department with an online dashboard where they can see the status of every device, and remotely install updates, apps and security fixes. By providing the tools to make the process of managing Apple products simple and easy, Jamf drives productivity within organizations and also frees up more IT resources that could be deployed to tackle more important problems.

For example, when a public school needed to shift to remote learning, Jamf helped to deploy thousands of iPads and Macs to its students. Instead of the school’s IT team spending weeks manually setting up every device, using Jamf they were able to create a software package and automatically install it on every device within a few hours. It connected students without access to the internet to WiFi hotspots provided by the school, installed remote collaboration apps and provided the students with access to learning materials, ensuring that they were able to continue learning remotely without an interruption.

As remote collaboration becomes mainstream due to COVID and enterprise digital transformation, more organizations are expected to depend on remote management software that makes it easy for IT admins to manage the increasing number of hardware devices.

Jamf competes with cross-platform enterprise providers such as VMware (NYSE:VMW) or Microsoft’s Intune (NASDAQ:MSFT) and smaller companies like Addigy and Kandji. Apple is also showing interest in the device management space via its recent acquisition of Fleetsmith.

Sales Growth

As you can see below, Jamf's revenue growth has been very strong over the last year, growing from quarterly revenue of $62.2 million, to $86.2 million.

Jamf Total Revenue

And unsurprisingly, this was another great quarter for Jamf with revenue up an absolutely stunning 38.5% year on year. On top of that, revenue increased $5.07 million quarter on quarter, a solid improvement on the $4.74 million increase in Q1 2021, and even a sign of slight acceleration of growth.

Analysts covering the company are expecting the revenues to grow 17.3% over the next twelve months, although we would expect them to review their estimates once they get to read these results.

Profitability

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, licences, technical support and other necessary running expenses was at 77.5% in Q2.

Jamf Gross Margin (GAAP)

That means that for every $1 in revenue the company had $0.77 left to spend on developing new products, marketing & sales and the general administrative overhead. Despite it going down over the last year, 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 Q2 Results

With market capitalisation of $3.78 billion Jamf is among smaller companies, but its more than $226.4 million in cash and positive free cash flow over the last twelve months put it in a very strong position to invest in growth.

We were impressed by the very optimistic revenue guidance Jamf provided for the next quarter. And we were also glad that the revenue guidance for the rest of the year was upgraded. On the other hand, there was a deterioration in gross margin. Zooming out, we think this was a fantastic quarter that should have shareholders cheering. The company is up 1.84% on the results and currently trades at $32 per share.

Is Now The Time?

When considering Jamf, investors should take into account its valuation and business qualities, as well as what happened in the latest quarter. We think Jamf is a good business. We would expect growth rates to moderate from here, but its revenue growth has been strong, over the last two years. On top of that, its bountiful generation of free cash flow empowers it to invest in growth initiatives, and its impressive gross margins are indicative of excellent business economics.

Jamf's price to sales ratio based on the next twelve months is 10.1, suggesting that the market is expecting more moderate growth, relative to the hottest tech stocks. There is definitely a lot of things to like about Jamf and looking at the tech landscape right now, it seems that the company trades at a pretty interesting price point.

The Wall St analysts covering the company had a one year price target of $43.5 per share right before these results, implying that they saw upside in buying Jamf even in short term.