In recent years, Apple (NASDAQ: AAPL) has been steadily progressing in the company, partnering with companies including IBM, SAPand Cisco, among others, to expand their business offerings. Corporate bring-your-own-device (BYOD) programs have also proliferated, giving the Mac maker another way thanks to its popularity among average consumers.
That has been a blessing for Jamf (NASDAQ: JAMF), which operates a business management platform for Apple devices. Jamf’s shares hit the public market today after the company set its IPO at $ 26 last night. The deal was extended due to strong investor demand, and the shares opened 77% more at $ 46 this morning. This is what you need to know about Jamf.
Image source: Apple.
The basics of business
Jamf was founded in 2002 by Zach Halmstad and Chip Pearson, just as Apple’s transformation was taking shape: the original iPod had just been introduced the year before. Halmstad was a student who worked in a university’s IT department and helped manage Mac implementations for both students and faculty. Halmstad and Pearson served as co-CEOs before passing the torch on to IT vet Dean Hager, who was named CEO in 2015.
The company focuses exclusively on Apple devices, helping business customers deploy and manage Macs in their organizations. Jamf uses the software as a service (SaaS) model that investors know and love, charging a monthly subscription fee that ranges from $ 2 per month to over $ 7 per month for various levels that come with different features that cater to Small businesses (Jamf Now) to IT teams from large businesses (Jamf Pro). There are also offers for educational institutions (Jamf School), authentication and identity management (Jamf Connect) and cybersecurity (Jamf Protect).
By the end of the second quarter, Jamf’s platform had grown to more than 40,000 customers managing 17 million Apple devices in 100 countries. As Apple products continue to gain momentum at the company, Jamf’s growth accelerated: More than a third of those customers joined in the past 18 months alone.
Jamf points to an IDC survey of U.S.-based IT business decision makers that shows that 11% of deployed laptops are Macs, but that number is expected to rise to 14% in the next two years. At the same time, the COVID-19 pandemic is accelerating a broader shift toward remote work, increasing the demand for mobile device management (MDM) systems and other tools for remote management.
The numbers speak for themselves
Total revenue in 2019 increased 39% to $ 204 million, of which almost 80% was subscription revenue. The company still spends a lot on sales (35% of revenue), which is quite normal for business software companies. Research and development gobbled up another 21% of the top line, and Jamf posted an operating loss of $ 20.3 million and a net loss of $ 32.6 million last year.
SaaS investors will also be familiar with other common metrics for SaaS companies. Annual recurring revenue (ARR) at the end of the first quarter was $ 224.9 million, an increase of 40% year-over-year. Jamf is still finalizing its second quarter results, but believes ARR last quarter was in the range of $ 238 million to $ 241 million.
Jamf’s dollar-based net retention rate, which measures sales growth with existing customers, has been hovering around a healthy 120% level for the past two years. A 100% net dollar retention rate shows that the company is successfully selling existing customers to new services and expanding relationships.
Controlled by Vista
In 2017, private equity firm Vista Equity Partners acquired a majority stake in Jamf and through a variety of different funds owned almost 90% of the outstanding shares immediately prior to the offering. Vista retains majority control of Jamf after the IPO, with a voting power of 75% to 77%, depending on whether subscribers exercise options to buy more shares.
That means public investors will have no say in how Jamf is run or who is on the board of directors. Additionally, Jamf’s bylaws are structured in a way that allows Vista to unilaterally appoint the chairman of the board as long as he has only 30% voting power, as well as all board nominees if he maintains 40% of the actions you currently have; Vista does not necessarily need majority control to have considerable influence.
What’s next for Jamf?
Jamf raised nearly $ 320 million through the offer and plans to use most of that cash to pay off $ 205 million in debt under an existing line of credit. The rest will be used for general corporate purposes, and Jamf ended the first quarter with $ 22.7 million in cash and cash equivalents.
