Jamf Holding Corp. (NASDAQ:JAMF) Q1 2022 Earnings Conference Call May 10, 2022 4:30 PM ET Company Participants Dean Hager – Chief Executive Officer John Strosahl – President & Chief Operating Officer Jill Putman – Chief Financial Officer Jennifer Gaumond – Vice President, Investor Relations Conference Call Participants Brian Essex – Goldman Sachs Rob Owens – Piper Sandler Matt Stotler – William Blair Joshua Reilly – Needham Nick Mattiacci – Craig-Hallum Vinod Srinivasaraghavan – Barclays Joey Marincek – JM ...

[GLOSSARY](index=3&type=section&id=GLOSSARY) This section defines key acronyms, abbreviations, and terms used throughout the quarterly report - The glossary defines key acronyms, abbreviations, and terms used throughout the quarterly report, including financial accounting standards (ASC 606, ASC 805, ASC 820, ASC 850), business metrics (ARR), and company-specific entities or agreements (Wandera, Digita, 2026 Notes)[9](index=9&type=chunk)[10](index=10&type=chunk) [PART I. FINANCIAL INFORMATION](index=4&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements (unaudited)](index=4&type=section&id=Item%201.%20Financial%20Statements%20(unaudited)) This section presents unaudited condensed consolidated financial statements and notes for Q1 2022 and 2021, covering financial position, performance, and cash flows [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Condensed Consolidated Balance Sheet Highlights (in thousands) | Metric | March 31, 2022 | December 31, 2021 | | :-------------------------- | :--------------- | :------------------ | | Cash and cash equivalents | $164,595 | $177,150 | | Total current assets | $284,079 | $291,598 | | Goodwill | $841,984 | $845,734 | | Other intangible assets, net | $251,072 | $264,593 | | Total assets | $1,466,324 | $1,480,420 | | Total current liabilities | $289,131 | $286,526 | | Deferred revenues | $234,389 | $223,031 | | Convertible senior notes, net | $362,648 | $362,031 | | Total liabilities | $744,403 | $741,994 | | Total stockholders' equity | $721,921 | $738,426 | [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Condensed Consolidated Statements of Operations Highlights (in thousands) | Metric | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | YoY Change (%) | | :---------------------------------- | :-------------------------------- | :-------------------------------- | :------------- | | Subscription Revenue | $102,201 | $74,482 | 37% | | Services Revenue | $3,944 | $4,003 | (1)% | | License Revenue | $2,113 | $2,242 | (6)% | | **Total Revenue** | **$108,258** | **$80,727** | **34%** | | Total Cost of Revenue | $28,227 | $17,256 | 64% | | Gross Profit | $80,031 | $63,471 | 26% | | Total Operating Expenses | $103,768 | $67,664 | 53% | | Loss from Operations | $(23,737) | $(4,193) | 466% | | Net Loss | $(25,629) | $(4,589) | 458% | | Net Loss per Share, basic and diluted | $(0.21) | $(0.04) | 425% | [Condensed Consolidated Statements of Comprehensive Loss](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Loss) Condensed Consolidated Statements of Comprehensive Loss (in thousands) | Metric | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Net loss | $(25,629) | $(4,589) | | Foreign currency translation adjustments | $(8,083) | — | | **Comprehensive loss** | **$(33,712)** | **$(4,589)** | [Condensed Consolidated Statements of Stockholders' Equity](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity) Condensed Consolidated Statements of Stockholders' Equity Highlights (in thousands) | Metric | Balance, Dec 31, 2021 | Exercise of Stock Options | Share-based Compensation | Foreign Currency Translation Adjustments | Net Loss | Balance, Mar 31, 2022 | | :-------------------------- | :-------------------- | :------------------------ | :----------------------- | :--------------------------------------- | :------- | :-------------------- | | Common Shares | 119,426,064 | 211,200 | — | — | — | 119,659,455 | | Additional Paid-In Capital | $913,581 | $1,197 | $16,010 | — | — | $930,788 | | Accumulated Other Comp. Loss | $(7,866) | — | — | $(8,083) | — | $(15,949) | | Accumulated Deficit | $(167,408) | — | — | — | $(25,629) | $(193,037) | | **Total Stockholders' Equity** | **$738,426** | **$1,197** | **$16,010** | **$(8,083)** | **$(25,629)** | **$721,921** | [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Condensed Consolidated Statements of Cash Flows Highlights (in thousands) | Cash Flow Activity | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :-------------------------------------- | :-------------------------------- | :-------------------------------- | | Net cash (used in) provided by operating activities | $(2,990) | $4,023 | | Net cash used in investing activities | $(5,979) | $(6,319) | | Net cash (used in) provided by financing activities | $(3,441) | $4,019 | | Effect of exchange rate changes on cash and cash equivalents | $(145) | $(401) | | Net (decrease) increase in cash and cash equivalents | $(12,555) | $1,322 | | Cash and cash equivalents, end of period | $164,595 | $196,190 | [Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) [Note 1. Basis of presentation and description of business](index=9&type=section&id=Note%201.%20Basis%20of%20presentation%20and%20description%20of%20business) This note describes Jamf's business as an Apple Enterprise Management provider and its global operations - Jamf Holding Corp. is the standard in Apple Enterprise Management, providing a cloud software platform for Apple infrastructure and security globally[23](index=23&type=chunk) Revenue by Geographic Region (in thousands) | Region | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :--------------------------------- | :-------------------------------- | :-------------------------------- | | The Americas | $75,149 | $58,845 | | Europe, the Middle East, India, and Africa | $25,997 | $16,229 | | Asia Pacific | $7,112 | $5,653 | | **Total** | **$108,258** | **$80,727** | [Note 2. Summary of significant accounting policies](index=10&type=section&id=Note%202.%20Summary%20of%20significant%20accounting%20policies) This note details the company's significant accounting policies, including revenue recognition, business combinations, and the early adoption of ASU No. 2021-08 Disaggregation of Revenue (in thousands) | Category | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :--------------------------------- | :-------------------------------- | :-------------------------------- | | SaaS subscription and support and maintenance | $96,350 | $66,776 | | On-premise subscription | $5,851 | $7,706 | | **Subscription revenue** | **$102,201** | **$74,482** | | Professional services | $3,944 | $4,003 | | Perpetual licenses | $2,113 | $2,242 | | **Non-subscription revenue** | **$6,057** | **$6,245** | | **Total revenue** | **$108,258** | **$80,727** | - Remaining performance obligations as of March 31, 2022, totaled **$343.9 million**, with **72%** expected to be recognized as revenue over the succeeding 12 months[41](index=41&type=chunk) - The Company early adopted ASU No. 2021-08 on January 1, 2022, for business combinations, which did not impact the condensed consolidated financial statements[44](index=44&type=chunk) [Note 3. Financial instruments fair value](index=12&type=section&id=Note%203.%20Financial%20instruments%20fair%20value) This note describes the categorization of fair value measurements into Level 1, Level 2, and Level 3 inputs, and details the fair value of financial instruments - Fair value measurements are categorized into Level 1 (quoted prices in active markets), Level 2 (observable inputs), and Level 3 (unobservable inputs)[47](index=47&type=chunk)[48](index=48&type=chunk)[49](index=49&type=chunk) - Contingent consideration for Digita and cmdReporter acquisitions are measured at fair value using Level 3 inputs, such as probability of growth of subscription services and projected contract wins[51](index=51&type=chunk) Fair Value of Financial Instruments (in thousands) | Instrument | March 31, 2022 | December 31, 2021 | | :----------------------- | :--------------- | :------------------ | | Money market funds (Level 1) | $126,048 | $146,037 | | Contingent consideration (Level 3) | $5,600 | $10,100 | | 2026 Notes (Estimated Fair Value, Level 2) | $371,044 | $398,044 | [Note 4. Acquisitions](index=16&type=section&id=Note%204.%20Acquisitions) This note details the company's acquisition activities, including two Q1 2022 acquisitions and the Wandera acquisition, and related purchase price allocations and contingent consideration - In Q1 2022, the Company completed two acquisitions for a combined **$4.0 million** cash, allocating **$3.0 million** to goodwill[56](index=56&type=chunk) - The acquisition of Wandera on July 1, 2021, for **$409.3 million** cash, expanded the Company's security offering with Zero Trust Network Access (ZTNA), mobile threat defense, and data policy features[57](index=57&type=chunk)[58](index=58&type=chunk) Wandera Acquisition Purchase Price Allocation (as of March 31, 2022, in thousands) | Asset/Liability | Amount | | :-------------------------- | :------- | | Intangible assets acquired | $102,050 | | Goodwill | $310,356 | | Total purchase consideration | $409,275 | - A cash payment of **$4.6 million** was made in Q1 2022 for Digita contingent consideration due to achieving minimum revenue milestones, with potential for an additional payment by December 31, 2022[65](index=65&type=chunk) [Note 5. Goodwill and other intangible assets](index=18&type=section&id=Note%205.%20Goodwill%20and%20other%20intangible%20assets) This note provides details on the carrying amount of goodwill and the net carrying value of other intangible assets, along with amortization expense Goodwill Carrying Amount (in thousands) | Metric | Three Months Ended March 31, 2022 | | :-------------------------------- | :-------------------------------- | | Goodwill, beginning of period | $845,734 | | Goodwill acquired | $3,014 | | Foreign currency translation adjustment | $(6,764) | | **Goodwill, end of period** | **$841,984** | Net Carrying Value of Intangible Assets (in thousands) | Asset Type | March 31, 2022 | | :-------------------- | :--------------- | | Trademarks | $15,789 | | Customer relationships | $168,025 | | Developed technology | $63,491 | | Non-competes | $1,200 | | Order backlog | $2,567 | | **Total intangible assets** | **$251,072** | - Amortization expense increased to **$12.2 million** for Q1 2022 from **$8.4 million** for Q1 2021, primarily due to the Wandera acquisition[68](index=68&type=chunk) [Note 6. Leases](index=19&type=section&id=Note%206.%20Leases) This note provides information on the company's operating lease assets and liabilities Operating Lease Information (in thousands) | Metric | March 31, 2022 | December 31, 2021 | | :-------------------------- | :--------------- | :------------------ | | Operating lease assets | $28,603 | $21,600 | | Total operating lease liabilities | $32,239 | $25,337 | [Note 7. Commitments and contingencies](index=20&type=section&id=Note%207.%20Commitments%20and%20contingencies) This note states that the company had no material liabilities for contingencies as of March 31, 2022, or December 31, 2021 - The Company had no material liabilities for contingencies as of March 31, 2022, or December 31, 2021[70](index=70&type=chunk) [Note 8. Debt](index=20&type=section&id=Note%208.%20Debt) This note details the issuance of 0.125% Convertible Senior Notes due 2026 and the repayment of the 2021 Term Loan Facility - The Company issued **$373.8 million** aggregate principal amount of 0.125% Convertible Senior Notes due 2026 in September 2021[71](index=71&type=chunk) 2026 Notes Interest Expense (in thousands) | Metric | Three Months Ended March 31, 2022 | | :-------------------------- | :-------------------------------- | | Contractual interest expense | $117 | | Amortization of issuance costs | $617 | | Effective interest rate | 0.81% | - The **$250.0 million** 2021 Term Loan Facility, used to finance the Wandera acquisition, was repaid in September 2021 with proceeds from the 2026 Notes[75](index=75&type=chunk) [Note 9. Share-based compensation](index=21&type=section&id=Note%209.%20Share-based%20compensation) This note provides a breakdown of share-based compensation expense and details unrecognized compensation expense for various equity awards Share-based Compensation Expense (in thousands) | Category | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :-------------------------- | :-------------------------------- | :-------------------------------- | | Cost of subscription | $1,955 | $324 | | Cost of services | $304 | $77 | | Sales and marketing | $5,859 | $842 | | Research and development | $3,859 | $778 | | General and administrative | $4,033 | $811 | | **Total** | **$16,010** | **$2,832** | - Unrecognized compensation expense as of March 31, 2022, includes **$33.0 million** for return target options, **$0.8 million** for service-based options, and **$224.5 million** for unvested RSUs[79](index=79&type=chunk)[80](index=80&type=chunk)[81](index=81&type=chunk) - The conversion of Long-Term Incentive Plan (LTIP) grants into RSUs in Q3 2021 resulted in **$1.6 million** of stock-based compensation expense recognized in Q1 2022[82](index=82&type=chunk)[83](index=83&type=chunk) [Note 10. Net loss per share](index=23&type=section&id=Note%2010.%20Net%20loss%20per%20share) This note presents the calculation of basic and diluted net loss per share and discusses the exclusion of antidilutive securities Net Loss Per Share (in thousands, except per share amounts) | Metric | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :------------------------------------------ | :-------------------------------- | :-------------------------------- | | Net loss | $(25,629) | $(4,589) | | Weighted-average shares used to compute net loss per share, basic and diluted | 119,594,341 | 117,386,322 | | **Basic and diluted net loss per share** | **$(0.21)** | **$(0.04)** | - Potentially dilutive securities, totaling **20,933,142 shares** in Q1 2022, were excluded from diluted EPS calculation due to their antidilutive impact from reported losses[88](index=88&type=chunk) [Note 11. Income taxes](index=24&type=section&id=Note%2011.%20Income%20taxes) This note provides the effective tax rates for the periods and explains the primary factors impacting the rate Effective Tax Rates | Period | Effective Tax Rate | | :-------------------------------- | :----------------- | | Three Months Ended March 31, 2022 | (1.0)% | | Three Months Ended March 31, 2021 | (2.8)% | - The effective tax rate for Q1 2022 was primarily impacted by valuation allowances and **$0.6 million** of discrete income tax expense[89](index=89&type=chunk) [Note 12. Related party transactions](index=24&type=section&id=Note%2012.%20Related%20party%20transactions) This note discloses accrued liabilities related to JNGF pledges and the company's relationship with Vista Equity Partners - Accrued liabilities related to JNGF pledges were **$0.6 million** as of March 31, 2022[90](index=90&type=chunk) - Vista Equity Partners, though no longer a majority owner, remains a principal owner; no material transactions occurred with Vista or its affiliates in Q1 2022 or Q1 2021[91](index=91&type=chunk) [Forward-Looking Statements](index=25&type=section&id=Forward-Looking%20Statements) This section cautions that forward-looking statements are subject to risks and uncertainties, which may cause actual results to differ materially - All forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from expectations[93](index=93&type=chunk) - Key risks include the impact of the COVID-19 pandemic, potential customer dissatisfaction with Apple, changes in Apple's features, reliance on channel partners, ability to develop new products, customer acquisition and retention, scaling business, data center disruptions, cybersecurity events, and compliance with privacy laws[94](index=94&type=chunk)[96](index=96&type=chunk) - Forward-looking statements are made only as of the report date, and the Company undertakes no obligation to update or revise them, except as required by law[98](index=98&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=29&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's Q1 2022 financial condition and results, including business overview, performance drivers, revenue, expenses, non-GAAP measures, liquidity, and capital resources [Overview](index=29&type=section&id=Overview) This overview introduces Jamf's role as a leader in Apple Enterprise Management, its platform, and strategic acquisitions - Jamf is the standard in Apple Enterprise Management, providing a cloud software platform for IT and security teams to protect Apple devices, data, and applications[102](index=102&type=chunk) - The Company aims to be the enterprise leader for Apple device management, leveraging its long-standing relationship and technical expertise with Apple[104](index=104&type=chunk) - The acquisition of Wandera in July 2021 enhanced Jamf's Apple Enterprise Management Platform by adding zero trust cloud security and access for mobile devices[106](index=106&type=chunk) [Response to COVID-19](index=30&type=section&id=Response%20to%20COVID-19) This section outlines Jamf's response to COVID-19, focusing on employee and customer well-being, and the potential business impact - Jamf's COVID-19 approach focuses on employee choice, health, safety, customer service, and business continuity, with its product portfolio supporting hybrid work, distance learning, and telehealth[108](index=108&type=chunk)[109](index=109&type=chunk) - While not adversely affected to date, a prolonged public health crisis could materially impact the business, operating results, and financial condition[110](index=110&type=chunk) [Key Factors Affecting Our Performance](index=30&type=section&id=Key%20Factors%20Affecting%20Our%20Performance) Key performance factors include customer acquisition and expansion, product innovation, technology leadership, and strategic investments in growth - Performance is driven by attracting new customers through effective pricing, marketing, and channel partners, and expanding within the existing customer base via product enhancements and cross-selling[112](index=112&type=chunk)[113](index=113&type=chunk) - Sustaining product innovation and technology leadership, including new products like Jamf Connect and Jamf Protect and acquisitions like Wandera, is crucial for competitive advantage[114](index=114&type=chunk) - Continued investment in sales, marketing, and R&D, along with international expansion and enhancing partner networks, are key growth strategies[115](index=115&type=chunk)[116](index=116&type=chunk)[117](index=117&type=chunk)[118](index=118&type=chunk) [Key Business Metrics](index=31&type=section&id=Key%20Business%20Metrics) This section highlights key business metrics including the number of devices on the software platform, Annual Recurring Revenue (ARR), and Dollar-Based Net Retention Rate - Number of Devices on the software platform grew **25%** year-over-year to **27.3 million** as of March 31, 2022, reflecting growth across industries, products, and geographies, and the Wandera acquisition[122](index=122&type=chunk) - Annual Recurring Revenue (ARR) increased **42%** year-over-year to **$436.5 million** as of March 31, 2022, driven by device expansion, new customer acquisition, upselling, cross-selling, and the Wandera acquisition[125](index=125&type=chunk) - Dollar-Based Net Retention Rate was **120%** for the trailing twelve months ended March 31, 2022, up from **117%** in the prior year, primarily due to device expansion and cross-selling Jamf Connect and Jamf Protect (excluding Wandera)[128](index=128&type=chunk) [Components of Results of Operations](index=32&type=section&id=Components%20of%20Results%20of%20Operations) This section outlines the primary revenue sources, expected revenue growth, changes in revenue recognition, and anticipated increases in operating expenses - Revenue is primarily derived from SaaS subscriptions and support and maintenance contracts, with subscription revenue expected to increase as the customer base expands[130](index=130&type=chunk)[131](index=131&type=chunk) - A change in revenue recognition for Jamf Connect, starting Q3 2021, shifted from upfront on-premise subscription revenue to ratable recognition over the subscription term[131](index=131&type=chunk) - Operating expenses (Sales and Marketing, Research and Development, General and Administrative) are expected to increase in absolute dollars due to expansion of personnel, marketing efforts, and technology infrastructure[137](index=137&type=chunk)[138](index=138&type=chunk)[139](index=139&type=chunk) [Results of Operations](index=35&type=section&id=Results%20of%20Operations) This section provides a detailed comparison of revenue, gross margin, and operating expenses for the three months ended March 31, 2022, and 2021 Revenue Comparison (in thousands) | Revenue Type | Q1 2022 | Q1 2021 | Change ($) | Change (%) | | :--------------------------------- | :------ | :------ | :--------- | :--------- | | SaaS subscription and support and maintenance | $96,350 | $66,776 | $29,574 | 44% | | On-premise subscription | $5,851 | $7,706 | $(1,855) | (24)% | | **Subscription revenue** | **$102,201** | **$74,482** | **$27,719** | **37%** | | Professional services | $3,944 | $4,003 | $(59) | (1)% | | Perpetual licenses | $2,113 | $2,242 | $(129) | (6)% | | **Non-subscription revenue** | **$6,057** | **$6,245** | **$(188)** | **(3)%** | | **Total revenue** | **$108,258** | **$80,727** | **$27,531** | **34%** | - Total revenue increased by **34%** year-over-year, primarily driven by a **37%** increase in subscription revenue due to device expansion, new customers, cross-selling, and the Wandera acquisition[150](index=150&type=chunk) - Gross margin declined from **79%** in Q1 2021 to **74%** in Q1 2022, due to a **64%** increase in total cost of revenue (driven by hosting fees, employee compensation, and amortization from Wandera) and the change in Jamf Connect revenue recognition[151](index=151&type=chunk)[152](index=152&type=chunk) Operating Expenses Comparison (in thousands) | Operating Expense | Q1 2022 | Q1 2021 | Change ($) | Change (%) | | :-------------------------- | :------ | :------ | :--------- | :--------- | | Sales and marketing | $46,325 | $30,167 | $16,158 | 54% | | Research and development | $24,802 | $15,626 | $9,176 | 59% | | General and administrative | $25,612 | $16,244 | $9,368 | 58% | | Amortization expense | $7,029 | $5,627 | $1,402 | 25% | | **Total Operating Expenses** | **$103,768** | **$67,664** | **$36,104** | **53%** | - Operating expenses significantly increased across all categories (Sales & Marketing **+54%**, R&D **+59%**, G&A **+58%**) primarily due to higher headcount, increased stock-based compensation, and costs related to the Wandera acquisition[153](index=153&type=chunk)[154](index=154&type=chunk)[155](index=155&type=chunk)[156](index=156&type=chunk) [Non-GAAP Financial Measures](index=40&type=section&id=Non-GAAP%20Financial%20Measures) This section presents non-GAAP financial measures, including gross profit, operating income, net income, and Adjusted EBITDA, and notes a change in the calculation method for non-GAAP income taxes Non-GAAP Financial Measures (in thousands) | Metric | Q1 2022 | Q1 2021 | | :-------------------------- | :------ | :------ | | Non-GAAP Gross Profit | $87,546 | $66,649 | | Non-GAAP Gross Profit Margin | 81% | 83% | | Non-GAAP Operating Income | $5,845 | $7,848 | | Non-GAAP Operating Income Margin | 5% | 10% | | Non-GAAP Net Income (New Method) | $4,305 | $5,923 | | Adjusted EBITDA | $7,491 | $9,228 | - The Company changed its method of calculating non-GAAP provision for income taxes in Q1 2022, now using a blended U.S. statutory rate of **24%** for current and deferred income tax expense[181](index=181&type=chunk) [Liquidity and Capital Resources](index=44&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses the company's principal liquidity sources, deferred revenue, debt financing activities, and cash flow from operating, investing, and financing activities - As of March 31, 2022, principal liquidity sources were **$164.6 million** in cash and cash equivalents and the available 2020 Revolving Credit Facility[188](index=188&type=chunk) - Deferred revenue totaled **$292.5 million** as of March 31, 2022, with **$234.4 million** expected to be recognized within 12 months[189](index=189&type=chunk) - Net proceeds of approximately **$361.4 million** from the 2026 Notes offering were used to repay the **$250.0 million** 2021 Term Loan Facility and fund **$36.0 million** in capped call transactions[191](index=191&type=chunk) - Net cash used in operating activities was **$3.0 million** in Q1 2022, a shift from **$4.0 million** provided in Q1 2021, primarily due to net loss, changes in operating assets and liabilities, and increased capitalized deferred contract costs[194](index=194&type=chunk)[196](index=196&type=chunk) - Net cash used in investing activities was **$6.0 million** in Q1 2022, driven by **$4.0 million** for acquisitions and **$2.0 million** for equipment purchases[199](index=199&type=chunk) - Net cash used in financing activities was **$3.4 million** in Q1 2022, primarily due to **$4.6 million** paid for Digita contingent consideration, partially offset by **$1.2 million** from stock option exercises[201](index=201&type=chunk) [Indemnification Agreements](index=46&type=section&id=Indemnification%20Agreements) This section notes the company's indemnification agreements with various parties and confirms no material demands have been made - The Company enters into indemnification agreements with customers, partners, vendors, and officers, but no material demands for indemnification have been made[203](index=203&type=chunk) [Critical Accounting Estimates](index=46&type=section&id=Critical%20Accounting%20Estimates) This section states that there have been no material changes to the critical accounting estimates previously disclosed in the Annual Report on Form 10-K - There have been no material changes to the critical accounting estimates disclosed in the Annual Report on Form 10-K for the year ended December 31, 2021[206](index=206&type=chunk) [Recent Accounting Pronouncements](index=46&type=section&id=Recent%20Accounting%20Pronouncements) This section refers to Note 2 for details on recently adopted accounting pronouncements and recently issued accounting standards not yet adopted - Refer to Note 2 for a description of recently adopted accounting pronouncements and recently issued accounting standards not yet adopted[208](index=208&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=43&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section reports no material changes to market risk disclosures during Q1 2022, referring to the Annual Report on Form 10-K for details - No material changes to quantitative and qualitative disclosures about market risk occurred during the three months ended March 31, 2022[209](index=209&type=chunk) [Item 4. Controls and Procedures](index=44&type=section&id=Item%204.%20Controls%20and%20Procedures) This section addresses the effectiveness of disclosure controls and internal control, noting a material weakness in commission capitalization but affirming fair financial statement presentation [Evaluation of Disclosure Controls and Procedures](index=44&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were not effective due to a material weakness, yet the financial statements are deemed to present fairly in conformity with GAAP - Management concluded that disclosure controls and procedures were not effective as of March 31, 2022, due to a material weakness[210](index=210&type=chunk) - Despite the material weakness, the unaudited condensed consolidated financial statements are deemed to present fairly the financial position, results of operations, and cash flows in conformity with GAAP[210](index=210&type=chunk) [Material Weakness in Internal Control over Financial Reporting](index=44&type=section&id=Material%20Weakness%20in%20Internal%20Control%20over%20Financial%20Reporting) A material weakness was identified in controls over the commissions process, leading to incorrect capitalization and misstatements, with remediation efforts underway - A material weakness was identified in controls over the commissions process, leading to incorrect capitalization of certain commissions and misstatements in prior financial periods[212](index=212&type=chunk) - Remediation efforts, including hiring a third-party consultant and implementing process changes, began in 2022 with the intention of remediation later in the year[213](index=213&type=chunk) [Changes in Internal Control](index=44&type=section&id=Changes%20in%20Internal%20Control) This section reports that no material changes in internal control over financial reporting occurred during the quarter ended March 31, 2022 - No material changes in internal control over financial reporting occurred during the quarter ended March 31, 2022[214](index=214&type=chunk) [Inherent Limitations on Effectiveness of Controls](index=44&type=section&id=Inherent%20Limitations%20on%20Effectiveness%20of%20Controls) Control systems provide only reasonable assurance, acknowledging that misstatements due to error or fraud may occur and not be detected due to inherent limitations - Control systems provide only reasonable, not absolute, assurance that objectives are met, and misstatements due to error or fraud may occur and not be detected due to inherent limitations[215](index=215&type=chunk)[216](index=216&type=chunk) [PART II. OTHER INFORMATION](index=46&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=46&type=section&id=Item%201.%20Legal%20Proceedings) This section incorporates legal proceedings information from Note 7, confirming no material liabilities for contingencies - Information on legal proceedings is incorporated by reference from Note 7, which states no material liabilities for contingencies[218](index=218&type=chunk) [Item 1A. Risk Factors](index=46&type=section&id=Item%201A.%20Risk%20Factors) This section states that there have been no material changes to the risk factors previously disclosed in the Annual Report on Form 10-K for the year ended December 31, 2021 - No material changes to the risk factors disclosed in the Annual Report on Form 10-K for the year ended December 31, 2021[219](index=219&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=46&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section reports that there were no unregistered sales of equity securities and use of proceeds during the period - No unregistered sales of equity securities and use of proceeds[220](index=220&type=chunk) [Item 3. Defaults Upon Senior Securities](index=46&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This section reports that there were no defaults upon senior securities during the period - No defaults upon senior securities[220](index=220&type=chunk) [Item 4. Mine Safety Disclosures](index=46&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section states that mine safety disclosures are not applicable to the company - Mine safety disclosures are not applicable[220](index=220&type=chunk) [Item 5. Other Information](index=46&type=section&id=Item%205.%20Other%20Information) This section reports that there is no other information to disclose - No other information to disclose[221](index=221&type=chunk) [Item 6. Exhibits](index=47&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed or furnished as part of the report, including corporate documents, certifications from the Chief Executive Officer and Chief Financial Officer, and Inline XBRL documents - Exhibits include the Second Amended and Restated Certificate of Incorporation, Amended and Restated Bylaws, certifications of the CEO and CFO (Exhibits 31.1, 31.2, 32.1, 32.2), and Inline XBRL documents[223](index=223&type=chunk) [Signatures](index=48&type=section&id=Signatures) This section contains the required signatures, confirming the due authorization and filing of the report - The report was signed on May 10, 2022, by Ian Goodkind, Chief Accounting Officer of Jamf Holding Corp[228](index=228&type=chunk)

[Part I: Business and Risk Factors](index=4&type=section&id=Part%20I) This section details Jamf's business model, market position in Apple Enterprise Management, and the key risks impacting its operations and financial performance [Business Overview](index=4&type=section&id=Item%201.%20Business) Jamf is the global standard in Apple Enterprise Management, providing a cloud platform for managing and securing Apple devices for over 60,000 customers - Jamf is the standard in Apple Enterprise Management, with a cloud software platform for infrastructure and security. As of December 31, 2021, the company served over **60,000 customers** managing **26.6 million devices** across more than 100 countries[21](index=21&type=chunk)[24](index=24&type=chunk) - On July 1, 2021, Jamf acquired Wandera, a leader in zero trust cloud security, to enhance its platform's capabilities in protecting devices, data, and applications for mobile workforces[27](index=27&type=chunk)[363](index=363&type=chunk) - The company's diverse customer base includes **9 of the 10 largest Fortune 500 companies**, **22 of the 25 most valuable brands**, and **10 of the 10 largest U.S. banks**[25](index=25&type=chunk)[111](index=111&type=chunk) - Jamf Nation, the world's largest online community of Apple-focused IT professionals, serves as a key asset for customer support, feedback, and brand building[26](index=26&type=chunk)[64](index=64&type=chunk) [Industry Background and Trends](index=5&type=section&id=Industry%20Background%20and%20Trends) Key industry trends driving Jamf's market include IT consumerization, increasing Apple device adoption, and accelerated digital transformation - Key industry trends driving Jamf's market include the consumerization of IT, where employees demand consumer-grade technology at work, and the increasing momentum of Apple devices in the enterprise[33](index=33&type=chunk)[37](index=37&type=chunk) - According to IDC, macOS device penetration in U.S. enterprises (1,000+ employees) grew from **17% in 2019 to 23% in 2020**. iPhones account for **49% of the smartphone installed base** in U.S. enterprises[39](index=39&type=chunk) - The COVID-19 pandemic accelerated digital transformation, making remote work, distance learning, and telehealth workflows essential, thereby increasing demand for solutions that can manage and secure devices remotely[41](index=41&type=chunk)[42](index=42&type=chunk) - Legacy and cross-platform management solutions are often limited as they do not fully leverage Apple's native capabilities, leading to a degraded user experience, higher support costs, and potential security vulnerabilities[44](index=44&type=chunk)[45](index=45&type=chunk)[46](index=46&type=chunk) [Our Solution and Strengths](index=8&type=section&id=Our%20Solution%20and%20Strengths) Jamf's platform offers zero-IT-touch deployment, self-service apps, same-day OS support, and endpoint protection, demonstrating significant ROI - Jamf's platform provides key benefits including zero-IT-touch deployment, a customizable self-service app for end-users, same-day support for new Apple OS releases, automated application lifecycle management, and purpose-built endpoint protection for Apple[50](index=50&type=chunk)[54](index=54&type=chunk) - A 2021 study commissioned by Jamf found that its solution could reduce time spent on device provisioning, ongoing management, and app management by **90%**, leading to a potential **781% three-year ROI**[53](index=53&type=chunk) - Jamf has a multi-faceted relationship with Apple, being a customer since 2010, a channel partner since 2011, and a member of Apple's Mobility Partner Program since 2014[56](index=56&type=chunk)[61](index=61&type=chunk) - The Total Addressable Market (TAM) for Apple Enterprise Management was estimated at **$12.2 billion in 2020**, projected to grow to **$23.4 billion by 2024**. The Wandera acquisition added an estimated **$6 billion** to this TAM[58](index=58&type=chunk)[59](index=59&type=chunk) [Growth Strategy](index=12&type=section&id=Our%20Growth%20Strategy) Jamf's growth strategy focuses on expanding sales to existing customers, increasing global presence, and extending technology leadership through R&D and acquisitions - A key growth strategy is increasing sales to the existing customer base of over **60,000**. This "land and expand" model is evidenced by a dollar-based net retention rate exceeding **116%** for each of the twelve fiscal quarters ended December 31, 2021[70](index=70&type=chunk) - The company plans to expand its global presence, noting that **34% of new subscriptions in FY2021** originated outside North America, up from **32%** in the prior year[70](index=70&type=chunk) - Jamf intends to extend its technology leadership through R&D and acquisitions. Following the Wandera acquisition, it launched Jamf Private Access (ZTNA), Jamf Data Policy, and Jamf Threat Defense, expanding into cross-platform support for some solutions[68](index=68&type=chunk) - The company will continue to cultivate its partner ecosystem, including hundreds of integrations on the Jamf Marketplace, and deepen its go-to-market efforts with resellers, MSPs, and Apple[69](index=69&type=chunk)[70](index=70&type=chunk) [Products and Technology](index=14&type=section&id=Our%20Products) Jamf offers a comprehensive product portfolio, including Jamf Pro, Jamf Now, Jamf School, Jamf Connect, and Jamf Protect, with enhanced security solutions from the Wandera acquisition - Jamf's flagship product, Jamf Pro, offers robust Apple ecosystem management for complex IT environments and serves the largest portion of the customer base[72](index=72&type=chunk) - The product portfolio is tailored to different market segments: Jamf Now for SMBs, Jamf School for education, Jamf Connect for identity management, and Jamf Protect for Mac-specific endpoint security[74](index=74&type=chunk)[75](index=75&type=chunk)[82](index=82&type=chunk)[85](index=85&type=chunk) - Following the Wandera acquisition, Jamf launched new products in 2021: Jamf Data Policy, Jamf Private Access (a ZTNA solution), and Jamf Threat Defense, expanding its security capabilities and offering cross-platform support for some solutions[79](index=79&type=chunk)[84](index=84&type=chunk)[91](index=91&type=chunk) - The technology platform is optimized for the cloud (primarily AWS), designed for global availability, scalability, and enterprise-grade security, holding SOC2 Type II and ISO27001 certifications[93](index=93&type=chunk)[94](index=94&type=chunk)[95](index=95&type=chunk)[100](index=100&type=chunk) [Sales, Marketing, and Customers](index=20&type=section&id=Sales%20and%20Marketing) Jamf employs a global, multi-faceted go-to-market strategy through direct sales, online self-service, and a network of over 200 channel partners - Jamf employs a global, multi-faceted go-to-market approach using a direct sales force, online self-service, and a network of over **200 channel partners**[102](index=102&type=chunk)[104](index=104&type=chunk) - Channel partners facilitated approximately **54% of bookings** for the year ended December 31, 2021. Apple, as a key channel partner, facilitated approximately **6% of bookings**[104](index=104&type=chunk)[105](index=105&type=chunk) - As of December 31, 2021, the company had over **60,000 customers**, with no single end customer representing more than **1% of Annual Recurring Revenue (ARR)**[111](index=111&type=chunk)[112](index=112&type=chunk) [Competition](index=24&type=section&id=Competition) Jamf primarily competes with large cross-platform enterprise providers like VMware, Microsoft, and IBM, focusing on user experience and Apple specialization - Jamf primarily competes with large cross-platform enterprise providers such as VMware, Microsoft, and IBM, which offer solutions not specialized for Apple[129](index=129&type=chunk) - Key competitive factors include user experience, breadth of product offerings, IT efficiency, total cost of ownership, reliability, and speed of support for new operating systems[130](index=130&type=chunk)[132](index=132&type=chunk) [Human Capital and Regulation](index=25&type=section&id=Human%20Capital%20Resources) Jamf had 2,212 employees as of December 31, 2021, with a 91% retention rate, and is subject to various data privacy regulations - As of December 31, 2021, Jamf had **2,212 employees**, with **1,407 in the United States** and **805 internationally**. The voluntary employee retention rate was **91%**[135](index=135&type=chunk) - The company is subject to various laws and regulations, particularly concerning data privacy and protection, such as the GDPR in Europe and the CCPA in California[138](index=138&type=chunk)[140](index=140&type=chunk) [Risk Factors](index=27&type=section&id=Item%201A.%20Risk%20Factors) The company faces risks from its reliance on the Apple ecosystem, intense competition, cybersecurity threats, and financial obligations including convertible notes - A primary risk is the company's dependence on the Apple ecosystem. Customer dissatisfaction with Apple, changes in Apple's features, or a slowdown in enterprise adoption of Apple products could negatively impact Jamf's results[157](index=157&type=chunk)[159](index=159&type=chunk)[160](index=160&type=chunk) - Competition from large cross-platform providers and the potential for Apple to compete more directly are significant risks. Apple's launch of Apple Business Essentials for SMBs is noted as a potential competitive development[163](index=163&type=chunk)[202](index=202&type=chunk)[204](index=204&type=chunk) - The company faces substantial risks related to cybersecurity events, potential failures or bugs in its products, and interruptions of its cloud services hosted by third parties like AWS[183](index=183&type=chunk)[219](index=219&type=chunk)[227](index=227&type=chunk) - As of December 31, 2021, Vista Equity Partners beneficially owned approximately **45.5% of common stock**, giving it significant influence over corporate actions, board composition, and strategic decisions[312](index=312&type=chunk) - Risks related to indebtedness, including the ability to service debt and settle conversions of its 2026 Convertible Senior Notes, could adversely affect the business[287](index=287&type=chunk)[291](index=291&type=chunk) [Part II: Financial Information](index=69&type=section&id=Part%20II) This section provides Jamf's detailed financial performance, including revenue growth, profitability, key business metrics, and liquidity, along with audited financial statements and internal control assessments [Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=72&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Jamf's 2021 revenue grew **36% to $366.4 million**, driven by subscription growth, but net loss increased due to higher operating expenses and the Wandera acquisition Key Business Metrics (as of Dec 31, 2021) | Metric | 2021 | 2020 | % Change | | :--- | :--- | :--- | :--- | | Number of Devices (millions) | 26.6 | 20.4 | 30% | | Annual Recurring Revenue (ARR) ($M) | $412.5 | $285.3 | 45% | | Dollar-Based Net Retention Rate | 120% | 117% | +3 p.p. | - The acquisition of Wandera was completed on July 1, 2021, for total consideration of **$409.3 million**, extending Jamf's leadership in Apple Enterprise Management and security[363](index=363&type=chunk)[447](index=447&type=chunk) - The company issued **$373.8 million of 0.125% Convertible Senior Notes due 2026**, using the proceeds to repay a **$250.0 million term loan** taken for the Wandera acquisition and to fund capped call transactions[448](index=448&type=chunk)[669](index=669&type=chunk) [Results of Operations (2021 vs. 2020)](index=78&type=section&id=Results%20of%20Operations) Total revenue increased by **36% to $366.4 million**, primarily from subscription growth, while net loss significantly widened due to increased operating expenses Consolidated Statement of Operations Data (in thousands) | | Year Ended Dec 31, 2021 | Year Ended Dec 31, 2020 | % Change | | :--- | :--- | :--- | :--- | | **Total Revenue** | **$366,388** | **$269,132** | **36%** | | Subscription Revenue | $344,243 | $248,879 | 38% | | Gross Profit | $276,031 | $208,124 | 33% | | *Gross Margin* | *75%* | *77%* | *-2 p.p.* | | Loss from Operations | $(76,202) | $(17,452) | 337% | | **Net Loss** | **$(75,189)** | **$(24,082)** | **212%** | - Total revenue increased by **$97.3 million (36%)**, driven by a **$95.4 million (38%) increase** in subscription revenue from device expansion, new customers, cross-selling, and the Wandera acquisition[409](index=409&type=chunk) - Gross margin decreased from **77% to 75%** due to higher third-party hosting fees, increased amortization from the Wandera acquisition, and a change in revenue recognition for the Jamf Connect product[410](index=410&type=chunk)[411](index=411&type=chunk) - Operating expenses increased by **$126.7 million (56%)**, primarily due to higher employee compensation costs from increased headcount (including Wandera), increased marketing, public company costs, and a **$7.0 million increase** in acquisition-related earnout expense[412](index=412&type=chunk)[413](index=413&type=chunk)[414](index=414&type=chunk) [Non-GAAP Financial Measures](index=85&type=section&id=Non-GAAP%20Financial%20Measures) Non-GAAP Operating Income decreased to **$20.5 million in 2021**, with adjustments for amortization, stock-based compensation, and acquisition expenses Non-GAAP Financial Measures Reconciliation (in thousands) | Measure | 2021 | 2020 | | :--- | :--- | :--- | | **Non-GAAP Gross Profit** | **$296,632** | **$219,748** | | *Non-GAAP Gross Profit Margin* | *81%* | *82%* | | **Non-GAAP Operating Income** | **$20,461** | **$27,489** | | *Non-GAAP Operating Income Margin* | *6%* | *10%* | | **Adjusted EBITDA** | **$26,218** | **$32,763** | - Non-GAAP Operating Income decreased to **$20.5 million in 2021** from **$27.5 million in 2020**. Key adjustments to GAAP operating loss include adding back amortization (**$41.3 million**), stock-based compensation (**$35.8 million**), and acquisition-related expenses (**$6.4 million**)[431](index=431&type=chunk) [Liquidity and Capital Resources](index=89&type=section&id=Liquidity%20and%20Capital%20Resources) Jamf's liquidity as of December 31, 2021, included **$177.2 million in cash** and a **$150.0 million revolving credit facility** - As of December 31, 2021, principal sources of liquidity were **$177.2 million in cash and cash equivalents** and an available **$150.0 million revolving credit facility**[444](index=444&type=chunk)[678](index=678&type=chunk) Consolidated Cash Flows Summary (in thousands) | | Year Ended Dec 31, 2021 | Year Ended Dec 31, 2020 | | :--- | :--- | :--- | | Net cash provided by operating activities | $65,165 | $52,801 | | Net cash used in investing activities | $(387,418) | $(6,876) | | Net cash provided by financing activities | $305,528 | $115,964 | - Net cash used in investing activities was **$387.4 million**, primarily due to the **$349.7 million net cash paid** for the Wandera acquisition[455](index=455&type=chunk) - Net cash from financing activities was **$305.5 million**, mainly from the **$373.8 million proceeds** from the convertible notes issuance, offset by the purchase of capped calls (**$36.0 million**) and payment of deferred consideration (**$25.0 million**)[457](index=457&type=chunk) [Financial Statements and Supplementary Data](index=96&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents Jamf's audited consolidated financial statements for 2021, 2020, and 2019, including an adverse auditor's opinion on internal controls Financial Statement Highlights (as of Dec 31, 2021, in thousands) | Account | 2021 | 2020 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $177,150 | $194,868 | | Goodwill | $845,734 | $541,480 | | Total Assets | $1,480,420 | $1,074,285 | | **Liabilities & Equity** | | | | Deferred revenues (current) | $223,031 | $160,002 | | Convertible senior notes, net | $362,031 | $0 | | Total Liabilities | $741,994 | $263,271 | | Total Stockholders' Equity | $738,426 | $811,014 | - The auditor's report from Ernst & Young LLP expressed an adverse opinion on the company's internal control over financial reporting as of December 31, 2021, due to a material weakness in the commissions accounting process[492](index=492&type=chunk)[508](index=508&type=chunk)[509](index=509&type=chunk) - Note 5 details the acquisition of Wandera for **$409.3 million**, which resulted in the recognition of **$310.4 million in goodwill** and **$102.1 million in intangible assets**[623](index=623&type=chunk)[627](index=627&type=chunk)[628](index=628&type=chunk) - Note 9 describes the issuance of **$373.8 million in 0.125% Convertible Senior Notes due 2026** and the concurrent purchase of capped call transactions for **$36.0 million** to reduce potential dilution[669](index=669&type=chunk)[676](index=676&type=chunk) [Controls and Procedures](index=146&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that disclosure controls and internal control over financial reporting were ineffective due to a material weakness in commissions accounting - Management identified a material weakness in internal control over financial reporting related to the commissions accounting process[733](index=733&type=chunk) - The weakness stemmed from a lack of effective controls over (i) communication of commission plan changes to accounting and (ii) the review and application of accounting guidance to commission plans. This resulted in misstatements where certain commissions were incorrectly capitalized[734](index=734&type=chunk)[735](index=735&type=chunk) - Due to this material weakness, the CEO and CFO concluded that the company's disclosure controls and procedures were not effective as of December 31, 2021[729](index=729&type=chunk)[730](index=730&type=chunk) - A remediation plan is in progress, including hiring a third-party consultant to help standardize and automate commission processes, with new controls intended for implementation in 2022[736](index=736&type=chunk) [Part III & IV: Other Information](index=148&type=section&id=Part%20III%20%26%20IV) This section covers corporate governance, executive compensation, security ownership, and related party transactions, with details incorporated by reference from the Proxy Statement [Corporate Governance and Other Matters](index=148&type=section&id=Item%2010-14) This section incorporates corporate governance, executive compensation, security ownership, and related party transaction details from the 2022 Proxy Statement - Information required by Items 10 (Directors, Executive Officers and Corporate Governance), 11 (Executive Compensation), 12 (Security Ownership), 13 (Certain Relationships and Related Transactions), and 14 (Principal Accountant Fees and Services) is incorporated by reference from the company's 2022 Proxy Statement[742](index=742&type=chunk)[744](index=744&type=chunk)[745](index=745&type=chunk) - The company has adopted a Code of Ethics applicable to all employees, officers, and directors, which is available on its investor relations website[743](index=743&type=chunk) [Exhibits and Financial Statement Schedules](index=149&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists all exhibits filed with the 10-K, including key corporate and financial agreements and CEO/CFO certifications - A comprehensive list of exhibits filed with the report is provided, including key corporate and financial agreements[748](index=748&type=chunk) - Key filed exhibits include the Agreement and Plan of Merger for the Wandera acquisition (Exhibit 2.1), the Indenture for the **0.125% Convertible Senior Notes due 2026** (Exhibit 4.3), and the Jamf Holding Corp. Omnibus Incentive Plan (Exhibit 10.2)[749](index=749&type=chunk)

Jamf Holding Corp (NASDAQ:JAMF) Q3 2021 Earnings Conference Call November 11, 2021 4:30 PM ET Company Participants Jennifer Gaumond - IR Officer Dean Hager - CEO & Director Jill Putman - CFO Conference Call Participants David Hynes - Canaccord Genuity Chad Bennett - Craig-Hallum Sterling Auty - JPMorgan Chase & Co. Matthew Hedberg - RBC Capital Markets Raimo Lenschow - Barclays Bank Koji Ikeda - Bank of America Merrill Lynch Gregg Moskowitz - Mizuho Securities Robbie Owens - Piper Sandler & Co. Matthew Stot ...

PART I. FINANCIAL INFORMATION [Item 1. Financial Statements (unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements%20(unaudited)) Presents Jamf Holding Corp.'s unaudited consolidated financial statements, revised due to sales commission capitalization errors [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets) Total assets grew to **$1.53 billion** due to acquisitions and convertible notes, increasing liabilities to **$783.3 million** Consolidated Balance Sheet Highlights (in thousands) | Account | Sep 30, 2021 (Unaudited) | Dec 31, 2020 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $227,148 | $194,868 | | Goodwill | $846,057 | $541,480 | | Other intangible assets, net | $276,750 | $202,878 | | **Total assets** | **$1,530,079** | **$1,074,285** | | **Liabilities & Stockholders' Equity** | | | | Deferred revenues (Current) | $211,029 | $160,002 | | Convertible senior notes, net | $361,474 | $— | | **Total liabilities** | **$783,310** | **$263,271** | | Total stockholders' equity | $746,769 | $811,014 | | **Total liabilities and stockholders' equity** | **$1,530,079** | **$1,074,285** | [Consolidated Statements of Operations](index=4&type=section&id=Consolidated%20Statements%20of%20Operations) Q3 2021 revenue grew **36%** to **$95.6 million**, but net loss widened to **$30.4 million** due to increased expenses Consolidated Statements of Operations (in thousands, except per share data) | Metric | Q3 2021 | Q3 2020 (As Revised) | Nine Months 2021 | Nine Months 2020 (As Revised) | | :--- | :--- | :--- | :--- | :--- | | Total revenue | $95,621 | $70,548 | $262,586 | $192,865 | | Gross profit | $69,151 | $55,390 | $199,518 | $149,064 | | Loss from operations | $(29,874) | $(618) | $(50,122) | $(4,367) | | Net loss | $(30,383) | $(5,388) | $(51,439) | $(15,718) | | Net loss per share, basic and diluted | $(0.26) | $(0.05) | $(0.44) | $(0.15) | [Consolidated Statements of Cash Flows](index=8&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Operating cash flow increased to **$64.8 million**, investing used **$359.9 million** for acquisitions, and financing provided **$328.9 million** from notes Consolidated Statements of Cash Flows Highlights (Nine Months Ended Sep 30, in thousands) | Activity | 2021 | 2020 (As Revised) | | :--- | :--- | :--- | | Net cash provided by operating activities | $64,827 | $33,099 | | Net cash used in investing activities | $(359,937) | $(1,836) | | Net cash provided by financing activities | $328,905 | $113,819 | | Net increase in cash, cash equivalents and restricted cash | $32,930 | $145,082 | - Cash used in investing activities for the nine months ended Sep 30, 2021, included **$352.7 million** for acquisitions, net of cash acquired, primarily related to the Wandera purchase[22](index=22&type=chunk) - Cash from financing activities for the nine months ended Sep 30, 2021, included **$373.8 million** in proceeds from convertible senior notes and **$250.0 million** from bank borrowings, which were subsequently repaid, partially offset by a **$36.0 million** purchase of capped calls[22](index=22&type=chunk) [Notes to Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) Notes detail accounting policies, revision of prior financial statements due to sales commission errors, acquisitions, **$373.8 million** convertible notes, and a **$4.2 million** legal contingency - The company identified and corrected immaterial errors related to certain commissions that were incorrectly capitalized in prior periods, resulting in a revision of previously issued financial statements to expense these costs as incurred, understating prior sales and marketing expenses and overstating deferred contract costs[38](index=38&type=chunk)[39](index=39&type=chunk) - On July 1, 2021, the company acquired Wandera, a zero trust cloud security provider, for total cash consideration of **$409.3 million**, and the acquisition added **$310.8 million** in goodwill[95](index=95&type=chunk)[96](index=96&type=chunk)[101](index=101&type=chunk) - On September 17, 2021, the company issued **$373.8 million** of 0.125% Convertible Senior Notes due 2026, with net proceeds used to repay a **$250.0 million** term loan and purchase **$36.0 million** in capped call transactions to reduce potential dilution[128](index=128&type=chunk)[129](index=129&type=chunk)[140](index=140&type=chunk) - The company accrued **$4.2 million** for a legal contingency related to allegations of patent infringement, with the potential loss in excess of the accrued amount estimated to be up to **$2.3 million**[144](index=144&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=40&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses **36%** revenue growth, strategic acquisitions, increased operating expenses leading to wider net loss, and strong liquidity bolstered by operations and convertible notes [Key Business Metrics](index=46&type=section&id=Key%20Business%20Metrics) Key metrics show strong growth as of September 30, 2021, with devices on platform up **34%** to **25.0 million**, ARR up **47%** to **$384.8 million**, and dollar-based net retention at **119%** Key Business Metrics as of September 30 | Metric | 2021 | 2020 | YoY Growth | | :--- | :--- | :--- | :--- | | Number of Devices (millions) | 25.0 | 18.6 | 34% | | Annual Recurring Revenue (ARR, millions) | $384.8 | $261.5 | 47% | | Dollar-Based Net Retention Rate | 119% | 117% | +2 p.p. | [Non-GAAP Financial Measures](index=47&type=section&id=Non-GAAP%20Financial%20Measures) Non-GAAP Gross Profit was **$76.4 million** (**80% margin**) and Non-GAAP Operating Income was **$2.0 million** (**2% margin**) for Q3 2021, with Adjusted EBITDA decreasing to **$3.5 million** Non-GAAP Financial Measures Reconciliation (in thousands) | Measure | Q3 2021 | Q3 2020 (As Revised) | Nine Months 2021 | Nine Months 2020 (As Revised) | | :--- | :--- | :--- | :--- | :--- | | **Gross Profit (GAAP)** | **$69,151** | **$55,390** | **$199,518** | **$149,064** | | Non-GAAP Gross Profit | $76,445 | $58,445 | $213,269 | $157,550 | | **Operating Loss (GAAP)** | **$(29,874)** | **$(618)** | **$(50,122)** | **$(4,367)** | | Non-GAAP Operating Income | $1,970 | $11,714 | $17,519 | $25,739 | | **Net Loss (GAAP)** | **$(30,383)** | **$(5,388)** | **$(51,439)** | **$(15,718)** | | Non-GAAP Net Income | $965 | $8,280 | $16,181 | $11,936 | | Adjusted EBITDA | $3,458 | $12,864 | $21,658 | $29,487 | [Results of Operations](index=54&type=section&id=Results%20of%20Operations) Total revenue for Q3 2021 increased **36% YoY** to **$95.6 million**, driven by subscription growth, while gross margin declined to **72%** and operating expenses rose **77%** to **$99.0 million** Revenue Comparison (in thousands) | Revenue Type | Q3 2021 | Q3 2020 (As Revised) | % Change | | :--- | :--- | :--- | :--- | | Subscription | $90,700 | $65,634 | 38% | | Services | $4,083 | $3,897 | 5% | | License | $838 | $1,017 | (18)% | | **Total Revenue** | **$95,621** | **$70,548** | **36%** | - Sales and marketing expenses increased **72%** in Q3 2021 YoY, primarily due to a **$10.0 million** increase in employee compensation costs from higher headcount and the Wandera acquisition, and a **$4.4 million** increase in stock-based compensation[255](index=255&type=chunk) - Research and development expenses increased significantly in Q3 2021 YoY, driven by a **$5.9 million** increase in employee compensation costs and a **$4.8 million** increase in stock-based compensation, largely related to business growth and the Wandera acquisition[257](index=257&type=chunk) - General and administrative expenses for the nine months ended Sep 30, 2021 increased by **$37.7 million** YoY, driven by higher headcount, public company costs (**$3.9M**), a legal reserve (**$4.2M**), and a **$7.9M** increase in acquisition-related earnout expense[260](index=260&type=chunk) [Liquidity and Capital Resources](index=62&type=section&id=Liquidity%20and%20Capital%20Resources) The company had **$227.1 million** in cash, with liquidity significantly impacted by **$361.4 million** net proceeds from convertible notes used to repay a **$250.0 million** term loan and purchase **$36.0 million** in capped calls, while operating cash flow was strong at **$64.8 million** - Principal sources of liquidity as of September 30, 2021, were **$227.1 million** in cash and cash equivalents and an available revolving credit facility[271](index=271&type=chunk) - Completed the acquisition of Wandera for **$409.3 million**, initially financed with cash and a **$250.0 million** term loan, which was subsequently repaid with proceeds from the 2026 Notes offering[274](index=274&type=chunk) - Issued **$373.8 million** of convertible senior notes in September 2021, receiving net proceeds of approximately **$361.4 million**[275](index=275&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=60&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risks are related to foreign currency exchange rates and interest rates, with most sales in U.S. dollars mitigating revenue risk, and no current hedging instruments - The company's primary market risk exposures are from potential changes in foreign currency exchange rates and interest rates[294](index=294&type=chunk) - Most sales are denominated in U.S. dollars, but operating expenses are in various foreign currencies, creating exposure to fluctuations in exchange rates, and the functional currency of the newly acquired Wandera is the British Pound (GBP)[295](index=295&type=chunk) - The company has not entered into any hedging arrangements for foreign currency risk and does not believe a **10%** change in rates would have a material impact[295](index=295&type=chunk) [Controls and Procedures](index=61&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were **not effective** as of September 30, 2021, due to a material weakness in internal control over financial reporting related to sales commission accounting, leading to a revision of prior financial statements - Management concluded that disclosure controls and procedures were **not effective** as of September 30, 2021[297](index=297&type=chunk) - A material weakness was identified in internal control over financial reporting concerning the accounting for sales commissions, as the company did not have effective controls to identify commissions that should have been expensed rather than capitalized[298](index=298&type=chunk)[299](index=299&type=chunk) - This material weakness resulted in the revision of previously issued consolidated financial statements for years 2018, 2019, 2020, and interim periods in 2020 and 2021[299](index=299&type=chunk) - A remediation plan is in process, including hiring a third-party consultant to help standardize and automate the commissions process, but it is not yet complete[300](index=300&type=chunk) PART II. OTHER INFORMATION [Legal Proceedings](index=62&type=section&id=Item%201.%20Legal%20Proceedings) The company refers to Note 8 of the financial statements for information on legal proceedings, which discloses a **$4.2 million** accrued contingency related to patent infringement allegations - Information regarding legal proceedings is incorporated by reference from Note 8 to the consolidated financial statements[303](index=303&type=chunk) [Risk Factors](index=62&type=section&id=Item%201A.%20Risk%20Factors) This section updates the company's risk factors, adding significant new risks including an identified material weakness in internal control over financial reporting and increased indebtedness from **$373.8 million** in convertible senior notes - A new risk factor has been added regarding the identified material weakness in internal control over financial reporting, which could adversely affect investor confidence and the stock price if not remediated[305](index=305&type=chunk) - The company's indebtedness of **$374.8 million** as of September 30, 2021, could adversely affect business and growth prospects by requiring diversion of funds for debt service[307](index=307&type=chunk) - The company may not have the ability to raise funds to settle conversions of the 2026 Notes in cash or to repurchase them upon a fundamental change, which could lead to a default[311](index=311&type=chunk) - Conversion of the 2026 Notes may dilute the ownership interest of existing shareholders or depress the stock price[316](index=316&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=65&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) On September 17, 2021, the company completed a private offering of **$373.8 million** aggregate principal amount of its 0.125% Convertible Senior Notes due 2026, sold to qualified institutional buyers under Securities Act exemptions - On September 17, 2021, the company sold **$373.8 million** of its 2026 Convertible Senior Notes in a private offering exempt from registration under Section 4(a)(2) of the Securities Act[325](index=325&type=chunk) [Defaults Upon Senior Securities](index=66&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reports no defaults upon senior securities - **None**[328](index=328&type=chunk) [Mine Safety Disclosures](index=66&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - **Not applicable**[329](index=329&type=chunk) [Other Information](index=66&type=section&id=Item%205.%20Other%20Information) The company reports no other information for this item - **None**[330](index=330&type=chunk) [Exhibits](index=67&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the report, including the indenture for the 2026 Convertible Senior Notes, the form of the Capped Call Confirmation, and certifications by the CEO and CFO

Financial Performance - Annual Recurring Revenue (ARR) increased to $333.0 million as of June 30, 2021, up 38% year-over-year from $241.0 million in 2020[196]. - Total revenue for Q2 2021 was $86,238,000, up 38.5% from $62,264,000 in Q2 2020[237]. - Subscription revenue increased to $80,718,000 in Q2 2021, a 37.7% rise from $58,600,000 in Q2 2020[237]. - Total revenue increased by $24.0 million, or 39%, for the three months ended June 30, 2021, compared to the same period in 2020, driven by higher subscription revenue, services revenue, and license revenue[241]. - Total revenue increased by $44.6 million, or 37%, for the six months ended June 30, 2021, compared to the same period in 2020[242]. - The company reported a net loss of $16,467,000 for the three months ended June 30, 2021, compared to a net loss of $834,000 for the same period in 2020[215]. - The company reported a net loss of $21.1 million for the six months ended June 30, 2021, adjusted for non-cash charges of $39.0 million[272]. - Adjusted EBITDA for Q2 2021 was $8,972,000, compared to $11,981,000 in Q2 2020, reflecting a decrease of approximately 25%[220]. - Non-GAAP Gross Profit for the three months ended June 30, 2021, was $70,175,000, compared to $51,352,000 for the same period in 2020, reflecting a growth of 36.7%[206]. - Non-GAAP Net Income for the three months ended June 30, 2021, was $7,496,000, compared to $4,813,000 for the same period in 2020, representing an increase of 55.5%[215]. Customer Metrics - The number of devices on the software platform grew to 23.2 million as of June 30, 2021, representing a 35% year-over-year growth rate from 17.2 million in 2020[193]. - The dollar-based net retention rates were 119% and 117% for the trailing twelve months ended June 30, 2021 and 2020, respectively, indicating strong customer expansion[199]. - Customer retention rate improved to 85%, up from 80% in the previous quarter[295]. - The increase in subscription revenue was attributed to device expansion, new customer additions, and cross-selling efforts[242]. Operational Strategy - The company plans to continue investing in its sales team to target expansion within midmarket and enterprise customers, as well as to attract new customers[187]. - The company intends to continue international expansion by investing in sales and marketing channels to capitalize on market opportunities[188]. - The company plans to enhance internal controls and commissions processes, including hiring a third-party consultant for standardization and automation[293]. - The company plans to enter two new international markets by the end of 2024[295]. Acquisitions and Investments - The acquisition of Wandera, completed on July 1, 2021, enhances the company's position in Apple Enterprise Management and strengthens its security offerings[177]. - The company completed the acquisition of Wandera for total consideration of $409.2 million on July 1, 2021, financed with cash on hand and proceeds from a new term loan facility[267]. - The company completed a strategic acquisition of a tech startup for $200 million to bolster its product offerings[295]. - The company is investing $500 million in R&D for new technologies aimed at enhancing user experience[295]. Market Performance - User base grew to 10 million active users, a 20% increase compared to the previous quarter[295]. - Market expansion efforts have led to a 25% increase in market share in the Asia-Pacific region[295]. - The company provided guidance for Q4 2023, expecting revenue to be between $2.7 billion and $2.9 billion, indicating a growth of 8% to 16%[295]. Expenses and Losses - Operating expenses for Q2 2021 totaled $82,951,000, compared to $44,892,000 in Q2 2020, reflecting an increase of 84.6%[237]. - General and administrative expenses for Q2 2021 were $27,508,000, significantly higher than $6,528,000 in Q2 2020, indicating a rise of 320.5%[237]. - Sales and marketing expenses rose by $11.8 million, or 57%, for the three months ended June 30, 2021, primarily due to increased employee compensation costs and marketing initiatives[247]. - Research and development expenses rose to $17,203,000 in Q2 2021, up from $11,949,000 in Q2 2020, marking a 43.5% increase[237]. - The company reported a net loss of 19% for the three months ended June 30, 2021, compared to a net loss of 1% in the same period in 2020[239]. Cash Flow and Financial Position - As of June 30, 2021, the company had cash and cash equivalents totaling $226.5 million, which are expected to support ongoing investments and operational needs[264]. - Deferred revenue as of June 30, 2021, amounted to $238.5 million, with $180.7 million expected to be recognized as revenue in the next 12 months[266]. - Net cash provided by operating activities was $38.0 million, a significant increase from $9.5 million in the same period of 2020[270][272]. - Cash and cash equivalents at the end of the period were $226.5 million, up from $194.9 million at the beginning of the period[270]. Internal Controls and Compliance - The company identified a material weakness in internal control over financial reporting related to the misstatement of commissions, leading to revisions of previously issued financial statements[291][292]. - The company has not entered into any hedging arrangements regarding foreign currency risk, and a hypothetical 10% change in foreign currency exchange rates would not have had a material impact on its consolidated financial statements[288].

Jamf Holding Corp. (NASDAQ:JAMF) Q2 2021 Earnings Conference Call August 10, 2021 4:30 PM ET Company Participants Jennifer Gaumond – Vice President-Investor Relations Dean Hager – Chief Executive Officer Jill Putman – Chief Financial Officer Conference Call Participants Bhavan Suri – William Blair Sterling Auty – JPMorgan DJ Hynes – Canaccord Josh Reilly – Needham Rob Owens – Piper Sandler Chad Bennett – Craig-Hallum Gregg Moskowitz – Mizuho Pat Walravens – JMP Securities Rod Hall – Goldman Sachs Operator G ...

jamf 0 The Standard for Apple in the Enterprise Investor Presentation: First Quarter 2021 1 Safe Harbor Unless otherwise specified, financial information and other data presented in this presentation is presented as of December 31, 2020. The financial results contained herein as of March 31, 2021 and for the three months ended March 31, 2021, March 31, 2020 and March 31, 2019 are unaudited. These numbers are derived from Jamf's unaudited interim consolidated financial statements. The unaudited interim conso ...

Jamf Holding Corp (NASDAQ:JAMF) Q1 2021 Earnings Conference Call May 11, 2021 4:30 PM ET Company Participants Jennifer Gaumond - VP, Investor Relations Dean Hager - CEO & Director Jill Putman - CFO Conference Call Participants Roderick Hall - Goldman Sachs Group Raimo Lenschow - Barclays Bank Robbie Owens - Piper Sandler & Co. Matthew Hedberg - RBC Capital Markets Gregg Moskowitz - Mizuho Securities David Hynes - Canaccord Genuity Sterling Auty - JPMorgan Chase & Co. Joshua Reilly - Needham & Company Koji I ...

PART I. FINANCIAL INFORMATION [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) Jamf Holding Corp.'s Q1 2021 unaudited financials report **$1.12 billion** in total assets, **$81.2 million** revenue (34% YoY growth), and a **$3.1 million** net loss, an improvement from the prior year [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets) Total assets increased to **$1.115 billion** as of March 31, 2021, driven by cash and other assets, while total liabilities rose to **$295.9 million** Balance Sheet Summary | Balance Sheet Items | March 31, 2021 (in thousands) | December 31, 2020 (in thousands) | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $196,190 | $194,868 | | Goodwill | $541,850 | $541,480 | | Total current assets | $301,193 | $288,911 | | **Total assets** | **$1,115,184** | **$1,078,153** | | **Liabilities & Equity** | | | | Deferred revenues (Current) | $167,868 | $160,443 | | Total current liabilities | $202,896 | $199,697 | | **Total liabilities** | **$295,921** | **$262,672** | | **Total stockholders' equity** | **$819,263** | **$815,481** | [Consolidated Statements of Operations](index=5&type=section&id=Consolidated%20Statements%20of%20Operations) Q1 2021 total revenue grew **34%** to **$81.2 million**, driven by subscription revenue, with net loss narrowing to **$3.1 million** due to improved gross profit and lower interest expense Consolidated Statements of Operations Summary | Metric | Q1 2021 (in thousands) | Q1 2020 (in thousands) | YoY Change | | :--- | :--- | :--- | :--- | | Subscription Revenue | $74,923 | $54,618 | +37% | | **Total Revenue** | **$81,168** | **$60,390** | **+34%** | | Gross Profit | $63,912 | $45,379 | +41% | | Loss from Operations | $(2,778) | $(6,483) | Improvement | | Interest Expense, net | $(55) | $(4,778) | -99% | | **Net Loss** | **$(3,069)** | **$(8,290)** | **Improvement** | | Net Loss Per Share | $(0.03) | $(0.08) | Improvement | [Consolidated Statements of Cash Flows](index=7&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Q1 2021 operating cash flow turned positive at **$4.0 million**, driven by a smaller net loss and deferred revenue, while investing activities used **$6.3 million** Consolidated Statements of Cash Flows Summary | Cash Flow Activity | Q1 2021 (in thousands) | Q1 2020 (in thousands) | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $4,023 | $(7,355) | | Net cash used in investing activities | $(6,319) | $(1,039) | | Net cash provided by (used in) financing activities | $4,019 | $(1,362) | | **Net increase (decrease) in cash** | **$1,322** | **$(9,756)** | [Notes to Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) Notes detail accounting policies, the adoption of ASC 842, the **$3.4 million** acquisition of cmdReporter, and the planned **$400.0 million** acquisition of Wandera - The company operates as a single reportable segment. Revenue from The Americas constituted the largest portion of geographic revenue, growing to **$61.3 million** in Q1 2021 from **$47.0 million** in Q1 2020[27](index=27&type=chunk) - On February 26, 2021, the company acquired cmdReporter for an aggregate purchase price of approximately **$3.4 million**, funded by cash on hand. The acquisition included **$0.4 million** in contingent consideration[55](index=55&type=chunk) - On May 11, 2021, the company announced a definitive agreement to acquire Wandera, Inc. for **$400.0 million** in cash. The transaction is expected to close in Q3 2021[90](index=90&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=25&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes **34% revenue growth** to strong subscription performance, with **ARR up 37%** to **$308.0 million** and a solid liquidity position of **$196.2 million** cash [Key Business Metrics](index=38&type=section&id=Key%20Business%20Metrics) Key business metrics show strong growth, with **21.8 million devices managed** (34% YoY increase) and **Annual Recurring Revenue (ARR) up 37%** to **$308.0 million** Key Business Metrics Overview | Metric | As of March 31, 2021 | As of March 31, 2020 | YoY Growth | | :--- | :--- | :--- | :--- | | Number of Devices | 21.8 million | 16.3 million | 34% | | Annual Recurring Revenue (ARR) | $308.0 million | $224.9 million | 37% | | Dollar-Based Net Retention Rate | 117% | 120% | -3 p.p. | [Non-GAAP Financial Measures](index=40&type=section&id=Non-GAAP%20Financial%20Measures) Non-GAAP measures for Q1 2021 show **Gross Profit of $67.1 million** (83% margin) and **Adjusted EBITDA nearly doubled** to **$10.6 million** year-over-year Non-GAAP Financial Performance | Non-GAAP Metric | Q1 2021 (in thousands) | Q1 2020 (in thousands) | | :--- | :--- | :--- | | Non-GAAP Gross Profit | $67,090 | $48,094 | | Non-GAAP Operating Income | $9,263 | $4,279 | | Non-GAAP Net Income (Loss) | $9,258 | $(245) | | Adjusted EBITDA | $10,643 | $5,569 | [Results of Operations](index=49&type=section&id=Results%20of%20Operations) Q1 2021 total revenue grew **34%** to **$81.2 million**, with gross margin improving to **79%**, while operating expenses increased **29%** due to growth investments - Total revenue increased by **$20.8 million (34%)** in Q1 2021 compared to Q1 2020, primarily due to a **$20.3 million (37%) increase in subscription revenue** from device expansion and new customers[179](index=179&type=chunk) - Gross margin improved to **79%** in Q1 2021 from **75%** in Q1 2020, as revenue grew faster than the cost of revenue[182](index=182&type=chunk) - Operating expenses increased by **$14.8 million (29%)**, driven by higher employee compensation costs from headcount growth in Sales & Marketing and R&D, and increased public company costs in G&A[183](index=183&type=chunk)[184](index=184&type=chunk)[186](index=186&type=chunk) [Liquidity and Capital Resources](index=57&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains **$196.2 million** in cash and equivalents, with **$4.0 million** operating cash flow, and secured a **$250.0 million** term loan for the Wandera acquisition - Principal sources of liquidity as of March 31, 2021, were cash and cash equivalents of **$196.2 million** and an available revolving credit facility[194](index=194&type=chunk) - On May 5, 2021, the company secured a commitment letter for a **364-day term loan facility of up to $250.0 million**, intended to be used for the Wandera acquisition[195](index=195&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=42&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Primary market risk stems from foreign currency exchange rates impacting operating expenses, though most revenue is USD-denominated, and no hedging is employed - The company's primary market risk is from foreign currency exchange rates, as operating expenses are located in countries like the U.S., Poland, and the Netherlands. Most revenue is denominated in U.S. dollars[215](index=215&type=chunk) - The company has not entered into any hedging arrangements for foreign currency risk and believes the effects of inflation have not been significant[215](index=215&type=chunk)[216](index=216&type=chunk) [Item 4. Controls and Procedures](index=42&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of March 31, 2021, with no material changes to internal control over financial reporting - The principal executive officer and principal financial officer concluded that as of March 31, 2021, the company's disclosure controls and procedures were effective at the reasonable assurance level[217](index=217&type=chunk) - No material changes to internal control over financial reporting occurred during the quarter ended March 31, 2021[218](index=218&type=chunk) PART II. OTHER INFORMATION [Item 1. Legal Proceedings](index=43&type=section&id=Item%201.%20Legal%20Proceedings) The company is not currently involved in any material litigation that would adversely affect its business or financial condition - The company is not presently a party to any material litigation[222](index=222&type=chunk) [Item 1A. Risk Factors](index=43&type=section&id=Item%201A.%20Risk%20Factors) New risk factors primarily concern the proposed Wandera acquisition, including completion uncertainty, integration challenges, and significant transaction costs - The completion of the Wandera acquisition is subject to customary closing conditions, including U.S. regulatory approvals, and there is no assurance these will be met[224](index=224&type=chunk) - The company will incur significant non-recurring costs related to the acquisition, including fees for advisors and potential integration expenses, regardless of whether the acquisition is completed[230](index=230&type=chunk)[231](index=231&type=chunk) - Potential difficulties in integrating Wandera's business include loss of key employees, disruption of ongoing business, and inconsistencies in policies, which could adversely affect operating results[232](index=232&type=chunk)[236](index=236&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=45&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No unregistered sales of equity securities were reported during the period - None[239](index=239&type=chunk) [Item 6. Exhibits](index=46&type=section&id=Item%206.%20Exhibits) Exhibits filed with Form 10-Q include the Wandera acquisition merger agreement and CEO/CFO certifications - Key exhibits filed include the Merger Agreement for the acquisition of Wandera, Inc. and certifications by the CEO and CFO[245](index=245&type=chunk)