Jamf (JAMF)

Apple device management company, Jamf (NASDAQ:JAMF) beat Wall Street’s revenue expectations in Q1 CY2025, with sales up 10.2% year on year to $167.6 million. Guidance for next quarter’s revenue was better than expected at $168.5 million at the midpoint, 1.5% above analysts’ estimates. Its non-GAAP profit of $0.22 per share was in line with analysts’ consensus estimates.

Company Overview

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.

Reviewing a company’s long-term sales performance reveals insights into its quality. Any business can put up a good quarter or two, but many enduring ones grow for years. Over the last three years, Jamf grew its sales at a 17.7% compounded annual growth rate. Although this growth is acceptable on an absolute basis, it fell slightly short of our standards for the software sector, which enjoys a number of secular tailwinds.

This quarter, Jamf reported year-on-year revenue growth of 10.2%, and its $167.6 million of revenue exceeded Wall Street’s estimates by 0.8%. Company management is currently guiding for a 10.1% year-on-year increase in sales next quarter.

Looking further ahead, sell-side analysts expect revenue to grow 7.3% over the next 12 months, a deceleration versus the last three years. This projection doesn't excite us and suggests its products and services will see some demand headwinds.

Billings is a non-GAAP metric that is often called “cash revenue” because it shows how much money the company has collected from customers in a certain period. This is different from revenue, which must be recognized in pieces over the length of a contract.

Jamf’s billings came in at $161.3 million in Q1, and over the last four quarters, its growth was underwhelming as it averaged 8.9% year-on-year increases. This performance mirrored its total sales and suggests that increasing competition is causing challenges in acquiring/retaining customers.

The customer acquisition cost (CAC) payback period measures the months a company needs to recoup the money spent on acquiring a new customer. This metric helps assess how quickly a business can break even on its sales and marketing investments.

It’s relatively expensive for Jamf to acquire new customers as its CAC payback period checked in at 99.8 months this quarter. The company’s slow recovery of its sales and marketing expenses indicates it operates in a highly competitive market and must invest to stand out, even if the return on that investment is low.

For software companies like Jamf, gross profit tells us how much money remains after paying for the base cost of products and services (typically servers, licenses, and certain personnel). These costs are usually low as a percentage of revenue, explaining why software is more lucrative than other sectors.

Jamf’s robust unit economics are better than the broader software industry, an output of its asset-lite business model and pricing power. They also enable the company to fund large investments in new products and sales during periods of rapid growth to achieve outsized profits at scale. As you can see below, it averaged an excellent 79.2% gross margin over the last year. That means Jamf only paid its providers $20.80 for every $100 in revenue.

Jamf’s gross profit margin came in at 77.9% this quarter, marking a 1.4 percentage point decrease from 79.3% in the same quarter last year. Zooming out, the company’s full-year margin has remained steady over the past 12 months, suggesting its input costs have been stable and it isn’t under pressure to lower prices.

While many software businesses point investors to their adjusted profits, which exclude stock-based compensation (SBC), we prefer GAAP operating margin because SBC is a legitimate expense used to attract and retain talent. This is one of the best measures of profitability because it shows how much money a company takes home after developing, marketing, and selling its products.

Jamf’s expensive cost structure has contributed to an average operating margin of negative 8.1% over the last year. Unprofitable software companies require extra attention because they spend heaps of money to capture market share. As seen in its historically underwhelming revenue performance, this strategy hasn’t worked so far, and it’s unclear what would happen if Jamf reeled back its investments. Wall Street seems to think it will face some obstacles, and we tend to agree.

Over the last year, Jamf’s expanding sales gave it operating leverage as its margin rose by 11 percentage points. Still, it will take much more for the company to reach long-term profitability.

In Q1, Jamf generated a negative 2.5% operating margin. The company's consistent lack of profits raise a flag.

If you’ve followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can’t use accounting profits to pay the bills.

Jamf has shown mediocre cash profitability over the last year, giving the company limited opportunities to return capital to shareholders. Its free cash flow margin averaged 6.4%, subpar for a software business.

Jamf broke even from a free cash flow perspective in Q1. This result was good as its margin was 12.2 percentage points higher than in the same quarter last year, but we wouldn’t read too much into the short term because investment needs can be seasonal, causing temporary swings. Long-term trends carry greater meaning.

Over the next year, analysts predict Jamf’s cash conversion will improve. Their consensus estimates imply its free cash flow margin of 6.4% for the last 12 months will increase to 19.3%, giving it more flexibility for investments, share buybacks, and dividends.

Jamf reported $222.4 million of cash and $370.1 million of debt on its balance sheet in the most recent quarter. As investors in high-quality companies, we primarily focus on two things: 1) that a company’s debt level isn’t too high and 2) that its interest payments are not excessively burdening the business.

With $125.5 million of EBITDA over the last 12 months, we view Jamf’s 1.2× net-debt-to-EBITDA ratio as safe. We also see its $5.90 million of annual interest expenses as appropriate. The company’s profits give it plenty of breathing room, allowing it to continue investing in growth initiatives.

It was encouraging to see Jamf’s full-year revenue guidance beat analysts’ expectations. We were also glad its revenue guidance for next quarter exceeded Wall Street’s estimates. Overall, this print had some key positives. The stock remained flat at $11.36 immediately following the results.

Updated: May 21, 2025 at 10:15 PM EDT

When considering an investment in Jamf, investors should account for its valuation and business qualities as well as what’s happened in the latest quarter.

Jamf doesn’t top our investment wishlist, but we understand that it’s not a bad business. Although its revenue growth was a little slower over the last three years and analysts expect growth to slow over the next 12 months, its forecasted free cash flow margin suggests the company will have more capital to invest or return to shareholders next year. Investors should still be cautious, however, as Jamf’s operating margins are low compared to other software companies.

Jamf’s price-to-sales ratio based on the next 12 months is 2.1x. While this valuation is reasonable, we don’t really see a big opportunity at the moment. We're pretty confident there are more exciting stocks to buy at the moment.

Wall Street analysts have a consensus one-year price target of $17.91 on the company (compared to the current share price of $10.74).

Want to invest in a High Quality big tech company? We’d point you in the direction of Microsoft and Google, which have durable competitive moats and strong fundamentals, factors that are large determinants of long-term market outperformance.

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