jamf(JAMF) - 2022 Q1 - Quarterly Report

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][10] PART I. FINANCIAL INFORMATION Item 1. Financial Statements (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 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 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 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 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 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 Note 1. Basis of presentation and description of business 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] 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 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] - 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] Note 3. Financial instruments fair value 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][48][49] - 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] 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 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] - 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][58] 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] Note 5. Goodwill and other intangible assets 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] Note 6. Leases 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 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] Note 8. Debt 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] 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] Note 9. Share-based compensation 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][80][81] - 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][83] Note 10. Net loss per share 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] Note 11. Income taxes 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] Note 12. Related party transactions 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] - 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] Forward-Looking Statements 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] - 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][96] - 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] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 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 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] - The Company aims to be the enterprise leader for Apple device management, leveraging its long-standing relationship and technical expertise with Apple[104] - 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] Response to COVID-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][109] - While not adversely affected to date, a prolonged public health crisis could materially impact the business, operating results, and financial condition[110] Key Factors Affecting Our Performance 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][113] - 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] - Continued investment in sales, marketing, and R&D, along with international expansion and enhancing partner networks, are key growth strategies[115][116][117][118] Key Business Metrics 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] - Annual Recurring Revenue (ARR) increased 42% year-over-year to $436.5 million as of March 31, 2022, driven by device expansion, new customer acquisition, upselling, cross-selling, and the Wandera acquisition[125] - Dollar-Based Net Retention Rate was 120% for the trailing twelve months ended March 31, 2022, up from 117% in the prior year, primarily due to device expansion and cross-selling Jamf Connect and Jamf Protect (excluding Wandera)[128] Components of Results of Operations This section outlines the primary revenue sources, expected revenue growth, changes in revenue recognition, and anticipated increases in operating expenses - Revenue is primarily derived from SaaS subscriptions and support and maintenance contracts, with subscription revenue expected to increase as the customer base expands[130][131] - A change in revenue recognition for Jamf Connect, starting Q3 2021, shifted from upfront on-premise subscription revenue to ratable recognition over the subscription term[131] - Operating expenses (Sales and Marketing, Research and Development, General and Administrative) are expected to increase in absolute dollars due to expansion of personnel, marketing efforts, and technology infrastructure[137][138][139] Results of Operations This section provides a detailed comparison of revenue, gross margin, and operating expenses for the three months ended March 31, 2022, and 2021 Revenue Comparison (in thousands) | Revenue Type | Q1 2022 | Q1 2021 | Change ($) | 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 | $27,531 | 34% | - Total revenue increased by 34% year-over-year, primarily driven by a 37% increase in subscription revenue due to device expansion, new customers, cross-selling, and the Wandera acquisition[150] - Gross margin declined from 79% in Q1 2021 to 74% in Q1 2022, due to a 64% increase in total cost of revenue (driven by hosting fees, employee compensation, and amortization from Wandera) and the change in Jamf Connect revenue recognition[151][152] Operating Expenses Comparison (in thousands) | Operating Expense | Q1 2022 | Q1 2021 | Change ($) | 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][154][155][156] Non-GAAP Financial Measures 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] Liquidity and Capital Resources 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] - Deferred revenue totaled $292.5 million as of March 31, 2022, with $234.4 million expected to be recognized within 12 months[189] - 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] - 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][196] - 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] - 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] Indemnification Agreements 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] Critical Accounting Estimates 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] Recent Accounting Pronouncements 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] Item 3. Quantitative and Qualitative Disclosures About Market Risk 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] Item 4. Controls and Procedures 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 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] - 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] Material Weakness in Internal Control over Financial Reporting 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] - 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] Changes in Internal Control 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] Inherent Limitations on Effectiveness of Controls 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][216] PART II. OTHER INFORMATION Item 1. Legal Proceedings 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] Item 1A. Risk Factors 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] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 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] Item 3. Defaults Upon Senior Securities This section reports that there were no defaults upon senior securities during the period - No defaults upon senior securities[220] Item 4. Mine Safety Disclosures This section states that mine safety disclosures are not applicable to the company - Mine safety disclosures are not applicable[220] Item 5. Other Information This section reports that there is no other information to disclose - No other information to disclose[221] Item 6. Exhibits 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] 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]