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Jamf (NASDAQ:JAMF) Surprises With Q1 Sales, Provides Encouraging Quarterly Guidance


Full Report / May 10, 2022
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Apple device management company, Jamf (NASDAQ:JAMF) reported Q1 FY2022 results that beat analyst expectations, with revenue up 33.3% year on year to $108.2 million. Guidance for next quarter's revenue was $113 million at the midpoint, which is 1.59% above the analyst consensus. Jamf made a GAAP loss of $25.6 million, down on its loss of $3.06 million, in the same quarter last year.

Jamf (JAMF) Q1 FY2022 Highlights:

  • Revenue: $108.2 million vs analyst estimates of $105.7 million (2.35% beat)
  • EPS (non-GAAP): $0.03 vs analyst estimates of $0.01 ($0.02 beat)
  • Revenue guidance for Q2 2022 is $113 million at the midpoint, above analyst estimates of $111.2 million
  • The company lifted revenue guidance for the full year, from $469 million to $474.5 million at the midpoint, a 1.17% increase
  • Free cash flow was negative $3.7 million, compared to negative free cash flow of $2.15 million in previous quarter
  • Gross Margin (GAAP): 73.9%, down from 78.7% same quarter last year

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.

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.

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 Business Essentials offering targeted at small and medium sized businesses.

Sales Growth

As you can see below, Jamf's revenue growth has been very strong over the last year, growing from quarterly revenue of $81.1 million, to $108.2 million.

Jamf Total Revenue

And unsurprisingly, this was another great quarter for Jamf with revenue up 33.3% year on year. But the growth did slow down compared to last quarter, as the revenue increased by just $4.45 million in Q1, compared to $8.18 million in Q4 2021. 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 31% year on year to $113 million, slowing down from the 38.5% 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 26.4% over the next twelve months.

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, licenses, technical support and other necessary running expenses was at 73.9% in Q1.

Jamf Gross Margin (GAAP)

That means that for every $1 in revenue the company had $0.73 left to spend on developing new products, marketing & sales and the general administrative overhead. This is around the average of what we typically see in SaaS businesses, but it is good to see that the gross margin is staying stable which indicates that Jamf is doing a good job controlling costs and is not under pressure from competition to lower prices.

Cash Is King

If you follow StockStory for a while, you know that we put an emphasis on cash flow. Why, you ask? We believe that in the end cash is king, as you can't use accounting profits to pay the bills. Jamf burned through $3.7 million in Q1, with cash flow turning negative year on year.

Jamf Free Cash Flow

Jamf has generated $27.2 million in free cash flow over the last twelve months, a decent 6.91% of revenues. This FCF margin is a result of Jamf asset lite business model, and provides it with optionality and decent amount of cash to invest in the business.

Key Takeaways from Jamf's Q1 Results

With a market capitalization of $2.87 billion Jamf is among smaller companies, but its more than $164.5 million in cash and positive free cash flow over the last twelve months give us confidence that Jamf has the resources it needs to pursue a high growth business strategy.

It was good to see Jamf deliver strong revenue growth this quarter. And we were also glad that the revenue guidance for the next quarter exceeded analysts' expectations. Overall, this quarter's results seemed pretty positive and shareholders can feel optimistic. The company is flat on the results and currently trades at $23.87 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. Although we have other favorites, we understand the arguments that Jamf is not a bad business. Its revenue growth has been strong. And on top of that, its strong free cash flow generation gives it re-investment options.

Jamf's price to sales ratio based on the next twelve months is 5.7x, suggesting that the market is expecting more moderate growth, relative to the hottest tech stocks. We don't really see a big opportunity in the stock at the moment, but in the end beauty is in the eye of the beholder. And if you like the company, it seems that Jamf doesn't trade at a completely unreasonable price point.

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