Apple device management company, Jamf (NASDAQ:JAMF) reported results ahead of analyst expectations in the Q2 FY2022 quarter, with revenue up 34% year on year to $115.6 million. Guidance for the full year also exceeded estimates, and guidance for the next quarter came in at $122 million, 0.24% below analyst estimates. Jamf made a GAAP loss of $63.1 million, down on its loss of $16.4 million, in the same quarter last year.
Jamf (JAMF) Q2 FY2022 Highlights:
- Revenue: $115.6 million vs analyst estimates of $113.1 million (2.18% beat)
- EPS (non-GAAP): $0.03 vs analyst estimates of $0.01 ($0.01 beat)
- Revenue guidance for Q3 2022 is $122 million at the midpoint, roughly in line with what analysts were expecting
- The company reconfirmed revenue guidance for the full year, at $476 million at the midpoint
- Free cash flow of $17.1 million, up from negative free cash flow of $3.7 million in previous quarter
- Gross Margin (GAAP): 74.5%, down from 77.5% 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.
As you can see below, Jamf's revenue growth has been very strong over the last year, growing from quarterly revenue of $86.2 million, to $115.6 million.
And unsurprisingly, this was another great quarter for Jamf with revenue up 34% year on year. On top of that, revenue increased $7.38 million quarter on quarter, a very strong improvement on the $4.45 million increase in Q1 2022, and a sign of acceleration of growth.
Guidance for the next quarter indicates Jamf is expecting revenue to grow 27.5% year on year to $122 million, slowing down from the 35.8% 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 24.9% over the next twelve months.
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 74.5% in Q2.
That means that for every $1 in revenue the company had $0.74 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's free cash flow came in at $17.1 million in Q2, down 48.1% year on year.
Jamf has generated $11.3 million in free cash flow over the last twelve months, 2.67% of revenues. This FCF margin is a result of Jamf asset lite business model, and provides it with at least some cash to invest in the business without depending on capital markets.
Key Takeaways from Jamf's Q2 Results
With a market capitalization of $3.12 billion Jamf is among smaller companies, but its more than $182.3 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 deliver strong revenue growth this quarter. And we were also excited to see the positive free cash flow. Zooming out, we think this was a decent quarter showing the company is staying on target. The company currently trades at $23 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.
Jamf's price to sales ratio based on the next twelve months is 6.1x, 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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