Jamf Holding Corp. Q1 FY2023 earnings

Jamf closed its fiscal 2023 first quarter with total revenue of $132.2 million, up 22.1% from $108.3 million in the prior-year quarter. Gross profit rose 28.0% to $102.5 million, and gross margin climbed to 77.5% from 73.9% a year earlier. Management tied the margin gain to revenue growing faster than the cost required to deliver it, helped by lower amortization expense as certain intangible assets reached the end of their useful life. Subscription revenue made up 96% of total revenue, up from 94% a year earlier, as the mix kept shifting away from perpetual licenses.

GAAP profitability remains negative. Operating loss widened 7.4% to $25.5 million from $23.7 million, although operating margin improved to -19.3% from -21.9%. Net loss narrowed 5.6% to $24.2 million from $25.6 million, and diluted loss per share improved to $0.20 from $0.21. The spread between GAAP and non-GAAP results stays wide. Non-GAAP operating income was $6.1 million, or 5% of revenue, against $5.8 million a year ago, and non-GAAP net income was $6.1 million versus $4.3 million. Non-GAAP gross profit was $108.4 million, or 82% of revenue, compared with $87.5 million a year earlier. Stock-based compensation of $19.6 million and amortization of $10.5 million are the biggest items excluded from those adjusted figures.

Cash generation turned negative in the quarter. Net cash used in operating activities was $24.8 million, compared with $3.0 million a year earlier. The MD&A points to a $20.3 million decrease in accounts payable and accrued liabilities, mostly from cash paid for employee bonuses and contingent consideration tied to the Digita acquisition, plus an $8.6 million increase in prepaid expenses and other assets. Capital expenditures fell 42.9% to $1.1 million. Over the trailing twelve months ended March 31, 2023, the company reported operating cash flow of $68.2 million and unlevered free cash flow of $72.8 million, each 14% of TTM total revenue.

Backlog metrics held up. Deferred revenue rose 16.5% to $340.8 million, and remaining performance obligations grew 23.4% to $424.5 million. ARR reached $526.6 million as of March 31, 2023, up 21% year over year. Devices on the platform totaled 30.8 million, up from 26.8 million, and customers grew to more than 72,500 from 62,000. ARR from security solutions rose to 20% of total ARR from 17% a year earlier. The dollar-based net retention rate slipped to 111% from 120%, a sign that expansion within the existing base is cooling even as new customer additions continue.

For the second quarter of 2023, Jamf guided to non-GAAP operating income of $4.5 million to $5.5 million. For the full year 2023, the company expects non-GAAP operating income of $41.0 million to $43.0 million. Amortization is expected to be about $10.5 million in the second quarter and $42.0 million for the full year, with stock-based compensation and related payroll taxes of roughly $31.4 million and $107.4 million, respectively. Jamf also announced a CEO transition. John Strosahl, currently President and Chief Operating Officer, becomes Chief Executive Officer effective September 2, 2023, succeeding Dean Hager, who retires effective September 1, 2023 and stays on the board.

Management flagged a difficult macroeconomic backdrop. The MD&A cites record inflation, elevated interest rates, supply chain challenges, financial instability and concerns about banking liquidity, and the possibility of a recession. Some customers have taken a more moderate outlook on hiring and device growth, and Jamf expects those conditions to continue through 2023. The company said its cash sits in a diversified portfolio of global banks and that it has no material exposure to recent banking-sector events.