Good day, ladies and gentlemen, and thank you for standing by. Welcome to the Third Quarter 2020 Jamf Earnings Conference Call. At this time, I would like to turn the conference over to Ms. Jennifer Gaumond. Ma'am, you may begin..

Good afternoon and thank you for joining us on today's conference call to discuss Jamf's third quarter 2020 financial results. With me on today's call are Dean Hager, Jamf's Chief Executive Officer; and Jill Putman, the company's Chief Financial Officer.

Before we begin, I would like to remind you that shortly after the market closed today, Jamf issued a press release announcing its third quarter 2020 financial results. Additionally we published an updated investor presentation. You may access the press release and presentation on the Investor Relations section of jamf.com.

Today's discussion may include forward-looking statements, please refer to our most recently filed quarterly report on Form 10-Q and our IPO prospectus dated July 21, 2020, where you will see a discussion of factors that could cause the company's actual results to differ materially from these statements.

I would also like to remind you that during the call, we will discuss some non-GAAP measures related to Jamf's performance. You can find the reconciliation of those measures to the nearest comparable GAAP measures in our quarterly financial statements.

To ensure we can address as many analyst questions as possible during the call, we ask that you please limit your questions to one initial question and one follow-up. Now, I'd like to turn the call over to Dean Hager.

Dean?.

Thank you, Jennifer, and thank you, everyone, for joining us on our third quarter earnings call. For our call today, I will share highlights from the quarter and then provide an update about the exciting momentum in our business.

I'll finish with a recap of our annual user conference before turning it over to Jill to review our third quarter financials. While a challenging macroeconomic environment persists, the tailwinds of telehealth, distance learning and remote work in the third quarter offset economic headwind and drove strong Jamf sales growth and customer acquisition.

Total revenue in the third quarter grew 29% year-over-year to $70.4 million, driven by recurring revenue growth of 40% year-over-year to $65.8 million, now 93% of total revenues. Annual recurring revenue or ARR was $261.5 million growing 37% year-over-year. Non-GAAP operating income was $12 million in the quarter or 17% of revenue.

This was a 0.5 point decrease over the third quarter of 2019. And unlevered free cash flow totaled $28.2 million in the third quarter, representing an unlevered free cash flow margin of 40%. This compares with a margin of 33% for third quarter 2019.

Our strong third quarter results reflect the continuing trend of IT consumerization the fuels the growth of Apple and the enterprise. This trend where employees demand to use at work, the technology they already love at home, has accelerated over the past six months.

Jamf has responded by helping thousands of organizations around the globe implement remote work solutions, as well as helping schools with distance-learning and hospitals with their telehealth solutions.

Jamf's value to customers and our business results continue to strengthen as these trends further route themselves into daily life, both in the short-term and far into the future.

Despite the challenges of 2020, Jamf remains dedicated to our customer success, and we have continued to invest in new features and enhancements that fulfill our mission to help them succeed with Apple.

As organization's work hard to provide a safe environment for their teams and customers, technology plays an important role across industries like retail, transportation and health care.

Jamf continues to support this effort and gain momentum with our innovative products such as Jamf Setup and Jamf Reset that enables shared yet personalized usage of iPhones and iPads.

And for workflows specifically designed for hospitals, Jamf's Healthcare Listener integrates with our hospitals electronic medical record system and listens the messages like a patient discharge or transfer and automatically performs the desired remote command like wiping the device or associating the device with all of the connected things in the patient's new hospital room.

This workflow uses iPads to create a better and more engaged experience for the patient without requiring time or effort from the IT or hospital staff.

Jamf's Virtual Visits solutions, which launched weeks after the COVID-19 outbreak allows patients to seamlessly and securely connect with doctors and their families through third-party video meeting platforms like ZOOM and Microsoft Team. UCHealth in Colorado is just one hospital using all of these innovations.

In 2018, UCHealth began using Jamf to streamline their technology management and practices by offering an iPad at each patient's bedside. They utilized Healthcare Listener, Jamf Setup and Jamf Reset to digitally sterilize the device between each patient and easily set it up for the next patient without the need for IT assistance.

As virtual care need spiked, this quarter UCHealth started using our Virtual Visits workflow and ramped up from less than 50 virtual visits a day to over 1,500. Both Healthcare Listener and Virtual Visits have patents pending.

Also during this quarter, Jamf advanced our relationship with hospitals around the world by implementing clinical communication workflows. Cincinnati Children's Hospital, the number three children's hospital in the U.S. selected Jamf for thousands of iPhones for nurses to help optimize clinical communication and patient care.

And they also used our solution to deploy iPads to patient rooms for entertainment, social connection and access to medical information directly from their Epic electronic medical record system. Additionally, Cincinnati Children's extended their Jamf usage to Apple TVs and patient rooms.

Jamf's unique healthcare capabilities across the entire Apple ecosystem of products led to these hospitals choosing Jamf over legacy MDM solutions in order to succeed with their Telehealth, clinical communication and patient bedside initiatives.

In the third quarter, Jamf also experienced strong growth in the education market, largely driven by a worldwide requirement for schools to be distance-learning ready. These programs are aided through government funding like the CARES Act in the U.S., the GIGA project in Japan, and DiGA pack in Germany.

In Japan, Jamf on-boarded 56 school districts, which include over 1,000 schools in Q3 alone. In the US, Jamf is the clear leader for Apple Enterprise Management in education. We serve 12 of the 15 largest school districts in the United States. Eight of these schools have increased their seat count with Jamf since the COVID-19 outbreak.

Jamf has been preparing schools for kids to learn from their homes for years whether they know it or not. Our Jamf Teacher app provides educators with real-time classroom remote control of each student's Apple technology from any distance. And our Jamf Parent app allows parents to do the same.

Both these apps are designed to empower adults to help students avoid potential distractions and focus on their studies.

Since the pandemic began, Jamf has further advanced our solution, including new capabilities such as teachers as a virtually ringing the bell in order to easily starts their video class room, and allowing students to virtually raise their hand in order to gain further assistance from educators, which is valuable for students learning at home or in a classroom setting.

Last month, we also launched Jamf Assessment, an app that empowers schools to issue remotely proctored exams, where it's necessary to visually supervise students like with college placement exams or other high-stake testing, something that was not previously possible on the iPad.

Sewanhaka Central High School District in New York used Jamf Assessment this quarter to allow students to take the Accuplacer test, a test that assist colleges in placing students in the right courses, helping them continue to build their future, despite the uncertainty stemming from the pandemic.

Additionally Jamf is seeing strong interest for both Mac and iPad in higher education. The Ohio State University has been providing iPads for every incoming freshman since 2018 as part of their digital flagship program.

In the third quarter of 2020, Ohio State conducted a survey that own well over 90% of their students agreed that iPads are useful for academic purposes and a valuable tool for their education. Similarly, the University of Kentucky is in the second year of issuing iPad technology to first year students.

More than 11,000 devices have been distributed as part of a wider smart campus strategy geared toward better leveraging technology in new and innovative ways. In total, over 300 universities or higher education customers have expanded their use of Jamf, since the COVID-19 pandemic began.

We believe the strong Apple usage in universities further confirmed Jamf's research finding that over 70% of college students would prefer to use a Mac at work if given the choice after graduation.

Speaking of using Apple at work, the need to remotely and securely connect and empower employees working from their homes has continued to lead companies to choose Jamf, and grow their Apple and, specifically Mac usage.

This trend, which was gaining popularity before the pandemic, has been accelerated this year and we believe will continue into the future. In the third quarter, Jamf advanced workflows that improve the employee experience, security and IT efficiency through Jamf Connect and Jamf Protect.

Jamf released new capabilities in Jamf Protect, and announced a new version of Jamf Connect that make it easier to deploy and further streamline employee on boarding and authentication using single sign-on and biometrics with password-must access to the Mac using Face ID from an iPhone.

These advancements led to approximately 700 customers choosing Jamf Connect, and approximately 200 customers choosing Jamf Protect, which was launched exactly one year ago today since the COVID-19 outbreak began. In the third quarter, Upwork, Everlane and HSBC are all examples of new Jamf Connect wins.

And examples of Jamf Protect wins include Gilead Sciences, Data health and SAP, but SAP having already deployed Jamf Protect to over 28,000 MacBooks. These customers are part of a fast-growing trend, where organizations leverage Jamf's entire Apple Enterprise Management platform.

As part of our expansion initiatives, Jamf is now offering a new user base pricing bundle called Jamf Business Plan, which includes Jamf Pro, Jamf Protect and Jamf Connect across all Apple devices used by employees. Jamf Business Plan provides organizations with a complete solution that delivers a strong return on investment and lower support costs.

All of these new capabilities were showcased as we closed Q3, when we hosted approximately 20,000 attendees at our virtual Jamf Nation User Conference, also known as JNUC, which is 10 times our normal in-person conference attendance.

JNUC is annually the largest gathering of Apple IT admins globally and we believe this year's JNUC was the largest gathering of Apple IT admins anywhere ever.

This year we welcomed many first-timers, who have not participated in previous conferences, plus an amazing 28% of attendees this year were Jamf prospects, not customers, which supports the strong and growing demand we have seen for Apple Enterprise Management.

JNUC provides a forum for collaboration in this year was no different, based on the communication threads during the event and Chatter that we experienced post event.

On average virtual JNUC attendees spent more than 30 hours in the platform, engaging and participating in Jamf content, and nine and 10 agreed that JNUC 2020 met their expectations and plan to attend again a virtual next year. The theme of the conference was a year like no other.

And we showcased many of the platform enhancements, I mentioned earlier, that are powering the learn, care and work anywhere trends, along with customer and partner stories and how they were able to succeeded during this time using Apple and Jamf.

Apple and Microsoft representatives also joined us on stage, again this year, to talk about our important partnerships and what they bring to the Apple IT and security communities. We announced we are expanding our collaboration with Microsoft Enterprise Mobility and Security by launching iOS Device Compliance.

Through this offering, which adds to our already robust partnership, organizations are empowered to choose Jamf or Apple Enterprise, including device compliance and security monitoring for remote staff, and Microsoft Endpoint Manager for any other devices.

As trends like employee technology choice programs and IT continue to grow organizations need management tools that can adapt and shift to hybrid environment, while still giving the native and intended end-user experience. At JNUC, we also announced our acquisition of Mondada.

Mondada's Kinobi solutions are considered the leading solution and patch management for the Apple platform. Built exclusively around Jamf, Kinobi and Kinobi Pro managed software compliance on macOS, a major initiative and pain point for today's IT teams.

We believe with Jamf's resources, we can extend these capabilities and bring even greater value to organizations using the Apple ecosystem through a complete application lifecycle management solution. We closed this tuck-in acquisition on October 15.

As we look into the future, we are excited about the continued transformation of the enterprise, as the consumerization of IT results in more Apple devices, empowering employees at work, educating students in school and helping provide care for patients and hospitals and at home.

While the events of 2020 have accelerated these trends, we believe we are still in the early innings of this transformation.

Going forward, Jamf commits to continue innovating at the pace of Apple, supporting new operating systems and hardware on the same day it's released, including the recently announced Mac lineup based on the Apple M1 chip, and Apple's latest operating system Big Sur, which became generally available today.

We believe Mac will become increasingly the device of choice for many in the workplace, especially the newest generation of workers and that Jamf is best positioned to help organizations easily adapt and get the most out of this new technology over time.

Unlike cross platform management and security solutions that are still struggling to fully support macOS Catalina let alone macOS Big Sur. Jamf is solely focused on Apple and for a decade has supported an extended Apple's latest innovations from the day they are available.

In closing, we are excited to be a part of this movement and to support the continued growth in the large and growing Apple Enterprise Management market. Now I would like to turn the call over to Jill to walk through our financial results and guidance.

Jill?.

Thanks Dean, and thanks again to everyone for joining us today. I'll start by discussing our third quarter results in detail before moving on to guidance. As Dean mentioned, we had a very strong third quarter.

Total revenue for the third quarter was $70.4 million, growing 29% year-over-year, reflecting strong growth across all of our subscription products.

Recurring revenue totaled $65.8 million in the third quarter, an increase of 40% year-over-year and accounted for 93% of our total revenue versus 86% in the third quarter last year, while non-recurring revenue was $4.6 million.

Due to product mix shift, we saw a favorable impact from products that deliver in-quarter recurring revenue as the education vertical and our Jamf's Connect product outperformed our expectations. ARR, as of September 30th, was $261.5 million, an increase of 37% year-over-year.

As a reminder, ARR represents the annualized value of all subscription, support and maintenance contracts as of the end of the period. ARR mitigates fluctuations due to seasonality, contract term and the sales mix of subscription for term-based licenses versus staff. Three primary drivers underpin the growth of our ARR.

First, our consistent high device expansion rates, second, our strong new logo acquisition, and third, the upselling and cross-selling of products into our installed base. We expect to continue benefiting from these trends going forward.

We believe our ability to grow the number of devices on our software platform is a key indicator of our growth and trajectory.

As of the end of Q3, we had 18.6 million devices on our platform, representing strong growth in both the education and commercial verticals and across all major geographies as demand continue for organizations to remotely connect, manage and protect their Apple devices.

We have the history of attracting new customers and growing their annual spend with us over time, which drives our high-dollar-based net retention rate. We accomplished this by adding devices to our platform and expanding our customers' adoption of our add-on products.

Our dollar-based net retention rate remained strong at 117% for the trailing 12 months ended September 30, 2020. Before turning to expense items and profitability, I would like to highlight that I will refer to non-GAAP results for my remaining remarks.

Our GAAP financial results along with reconciliation between GAAP and non-GAAP are found in our earnings release. Gross profit was $58.2 million, up 35% year-over-year, while gross margin expanded four points to 83%.

We expect our gross margin to increase over time as compared to the rates we delivered prior to the impact of COVID, as recurring revenue becomes the larger proportion of revenue and as an increase the average ARR per device. Turning to operating expenses.

We remain focused on improving the leverage in our business, while balancing our investments for growth. With the strength of our operating results year-to-date, we've been able to increase our investment throughout the organization by turning our original 2020 hiring plan back on.

As a result, to date, Jamf has on-boarded 250 new employees since the beginning of the year, which has been aided by leveraging Jamf's zero touch technology in the midst of the pandemic. Total operating expense for Q3 was $46.3 million compared to $33.6 million in Q3 last year.

Year-over-year growth was driven primarily by continued investments in our global go-to-market strategy as well as investments in research and development as innovation in both our existing and new products and features remains a top priority for us.

In addition, beginning in the third quarter, we now have incremental expense related to being a public company. As a reminder, we delayed some planned spending in Q2 due to COVID, and invested a portion of that expense savings this quarter.

The larger portion of that savings will be invested between now and the end of the year, resulting in an uptick in spending in the fourth quarter. Our operating income in the quarter was $12 million compared to $9.6 million in Q3 last year.

Operating margin was 17%, representing a 0.5 point decrease compared to the same period last year, reflecting investments required to be a public company, partially offset by improved gross margin.

Our basic average share count was 113.2 million and our diluted average share count was 116.7 million for the quarter as compared to 102.8 million and 104.6 million, respectively in the third quarter of 2019. Unlevered free cash flow was $28.2 million in Q3 compared to $17.9 million for Q3 2019.

Third quarter unlevered free cash flow represents 40% of total revenue, up from 33% of total revenue a year ago.

Our operating model of high growth and improving efficiency yield strong cash flow generation, which in the third quarter also benefited from seasonally strong billings in the education vertical, which outpaced the increase in our operating cost investments.

Late in the quarter, we accelerated our hiring efforts and expect to make further investments in the fourth quarter. Turning to the balance sheet. We ended the third quarter with $177.5 million in cash and cash equivalents. And finally, we turn to guidance for the fourth quarter.

Our business has seen some benefits from several trends emerging during this challenging time, including the proliferation of telehealth, remote learning and the rise of a more permanent work-from-home movement.

At the same time, there is embedded uncertainty around the IT spending environment as renewals, capital spending and new IT projects are subject to more scrutiny across organizations everywhere.

In light of these dynamics and our strong performance in the third quarter, we are increasing our full-year 2020 revenue and non-GAAP operating income expectations.

For the fourth quarter of 2020, we expect total revenue in the range of $70 million to $71 million, representing growth of 23% to 25% year-over-year and a 3.7% increase from previous implied guidance. Non-GAAP operating income in the range of $1 million to $2 million.

For the full year 2020, we expect total revenue in the range of $263 million to $264 million, representing growth of 28% to 29% year-over-year and a 2.9% increase from previous guidance.

Non-GAAP operating income in the range of $28.5 million to $29.5 million, reflecting the increase in operating expenses related to accelerated hiring and reinvesting our over-performance back into the business, as discussed earlier. For modeling purposes, we are providing the following information. We expect an annual effective tax rate of 25%.

As a reminder, we use our statutory tax rate when calculating tax effects of non-GAAP adjustments, which is not materially different from our annual effective tax. For calculating GAAP EPS, we expect basic weighted average shares outstanding to be approximately $116 million for the fourth quarter and $109 million for the full year 2020.

In closing, we are very pleased with our performance in the third quarter and look forward to sharing our results in the quarters ahead. With that, Dan and I will take your questions.

Operator?.

[Operator Instructions] Our first question or comment comes from the line of Sterling Auty from JPMorgan. Your line is open..

I didn't know I could actually make comment. I would have prepared some remarks for you. Maybe just to get started, let's talk about the education vertical in particular.

Can you give us a sense of what was the mix of products that you saw most in demand? You had given some anecdotal highlights, but what are you seeing in terms of the uptake in the product portfolio, specifically to education? And can you give us a sense of what was the education mix as a percentage of either bookings or revenue, whichever you feel comfortable giving?.

What I'll do is I'll just comment a little bit about products. Thanks, Sterling, by the way for the question and for joining us. And then I'll kick it over to Jill for the mix. So on products, you'll recall that our cross-sell products of Jamf Protect and Jamf Connect are the primary cross-sell products we have.

Those, to date, have been mostly selling within commercial markets. So therefore, the bookings that are occurring within education are either for the Jamf Pro product or the Jamf School product.

And both in Q3 just performed extremely well as educators around the world have diverse needs, and one of those solutions seems to fit each customer's need uniquely. So both performed very, very well worldwide..

As far as the split of where the business comes from between commercial and education, Sterling, not to dissimilar to our run rates, however, education was a little bit heavier than a typical Q3 because of the kind of the tail end of some of the COVID-related distance learning spend.

But our revenues - because revenues driven by the ARR, the revenue split continues to be in the range of 60% commercial, 40% education..

All right. Great.

And then in terms of follow-up, how should we think about 5G in the way that Apple is starting to incorporate them into their devices? And as we think about, M1 chip and maybe a 5G-enabled iPad, how do you expect that to impact enterprise adoption and ultimately Jamf's uptake?.

Yes, very interesting question Sterling. I for one think that 5G is transformative. And again different areas of the world were at different spots on and their maturity in that area. And there are some areas of the world that frankly are more keen on 5G connectivity, then Wi-Fi connectivity in some spots.

And I think it has the potential, especially within education to be very transformative During the pandemic, one of the big concerns has been our students are able to get connected from their homes. We have seen an uptick of LTE-enabled iPads in those situations, so that educators could make sure that our students had connectivity from their home.

And again, these will be school issued iPads. I think with the emergence of 5G on its way, it could potentially be very transformative to both education and in commercial markets to just have connectivity all the time. That's very, very fast..

Our next question or comment comes from the line of Rod Hall from Goldman Sachs. Your line is open..

This is RK on behalf of Rod. Thanks for taking my question. And congrats on the solid results. Could you give us an update on your pipeline and the demand trajectory you're seeing? And based on your conversations with customers, how long do you expect this favorable environment to persist? And I have a follow-up..

Yes, thank you for the question. So the question being about pipeline, we are seeing a type of pipeline coverage that is very similar to what we would have expected to see had a pandemic not occurred. We're very confident in our pipeline coverage.

And again, from a total coverage perspective, it's about the same as what we would have expected and what we've experienced in the past. As a matter of fact, at this moment, it's a little bit stronger than it's been over say the course of the last six months or so. The difference is a little bit of the mix.

We see, obviously, tremendous strength in education. So it's a little bit stronger than normal. But overall, it's about what we would expect. And as we go forward, we don't have visibility to a time where that's really changing.

Again, what we've noticed more than anything as the pandemic has progressed or the time period has progressed is the mix from a geography or an industry might shift, but the overall value remains roughly about what we would have expected..

And as a follow up, when can we expect Jamf's Connect and Jamf Protect for IOS? And could you also give us an update on your plans to target any other adjacent markets? Thank you..

So on Jamf Connect and Jamf Protect, you are correct, that they are designed today for macOS. And I would just say that it is within our strategic intent to be able to add our access management and identity capabilities and endpoint security capabilities eventually on the other Apple devices like iOS an iPadOS.

I have nothing to announce in terms from a timing perspective, but strategically you're right in line of what we would intend to do going forward. From a market perspective, there are a couple of ways of answering that. One would be from a geographic standpoint.

One of the markets that is emerging for us this year has been Latin America and we're very excited about its potential in the future, although it's very young for us. Other markets that we launched into a few years ago like Japan are performing extraordinarily well. Japan was very much a highlight for us in Q3.

When it comes to industries, it's going to be - those industries, especially that remote work is supported that we're going to do extraordinarily well in, and then also industries where iOS devices have a transformative ability to sit between customer and the provider in order, one, to keep people safe, but also just to have a more efficient workflow.

Those are going to be the markets that we're going to do best in..

Our next question or comment comes from the line from Bhavan Suri from William Blair. Your line is open..

I guess I want to touch a little bit on two things. One is we've always seen some great news about the progress of the vaccine, but we've also seen cases spike and potential lock downs in Europe, certainly, and then potentially in the US. You've had some deals pushed, deal cycles extended and obviously offset by some traction.

I'm not talking about the quarter, but as you look forward, how are you thinking about the business given that environment? Do you think that we end up going back to what happened in March, April, May? Or do you think that actually we've sort of gone around that we understand how this works? And we might be able to kind of see those pipelines, you just mentioned, Dean, so we actually play out a little faster with less delays.

How should we think about what you're thinking about and modeling for the future so to strategically?.

Yes. So, thanks Bhavan for your question. And well, I wish I could predict the future. I wish I had that talent that pertains to the pandemic. I'm not there..

You don't have to for alone..

Yes. But I will remind you that one of the interesting things with Jamf is, I mean, we're really tracking on the year about where we would have predicted to be last January 1. We just ended up getting there a different way.

In this particular case, diversity is our friend, diversity in industry and diversity in geography, so that even if there are certain areas of the business that are down, others for completely different reasons are up.

As we've mentioned before, we see the same economic headwinds as do everyone else, but we've got these great tailwinds like telehealth and distance-learning and work-from-home that have really benefited our business.

And going forward, frankly, I can look at areas of the business that will strengthen when the pandemic passes, and I will look at areas of the business that will strengthen or should the pandemic persist for a bit. I think more than anything what we've noticed is that the pandemic has awakened industries to what is possible with technology.

And we think more than anything, it is actually accelerated the adoption of work-from-home and industry transformation in such a way that once the headwinds persist, we believe the tailwinds will continue forward..

Yes. No. That's helpful. I mean, I think, you're probably right there even despite not having the pure crystal ball. I'd like to touch a little bit around partners. You have a great set of partners, you've got resellers, you've got a whole bunch of interesting relationships where you've engaged, despite the current set of environments.

I guess I'd love to saying how you think about investing more there and what back to potentially be as a percentage of revenue long-term against - not any necessarily guidance, but sort of how you think that plays out of the next three years to five years, given they're so valuable and so well set up to sort of play this game as long as they understand, especially, including, for example, the deeper relationship with Microsoft.

So I'd love to understand how you think about that the investments we're making, what that might be as a percentage of revenue? Thanks..

Sure. Thanks again. And there is a couple of different ways to look at partners. Obviously, just channel partners is one of them when it comes to just splits on that, maybe I'll kick that over to Jill to make a few comments. But overall on partnerships, of course, it's going to be part of our solution consideration.

Every single piece of new value that we want to bring to our customers, we are going to make a wise - make partner or buy decision. And in many cases, we're going to be looking for an influential partner that has an excellent solution that could accompany ours as a matter of fact.

If you go to marketplace.jamf.com you'll find that we have hundreds of integrations with our development partners out there to bring greater value to our customers. In addition to those partnerships, of course, we have the very strategic partners and the two most notable there, of course, are going to be Apple and Microsoft.

On the Microsoft front, if you were able to tune into our JNUC Conference at the end of September, we announced some excellent new capabilities along with Microsoft, for instance iOS Device Compliance that allows customers to choose Jamf for Apple Enterprise Management and Microsoft for everything else.

And yet, still, experience all the compliance checking that Microsoft has across their Enterprise and the single pane of glass reporting in inventory that so many organizations want. So we believe that almost all of the devices in an enterprise are either Windows or Apple-based.

And so by Microsoft and Jamf working together, we just make things easier for the customer.

Then on channels, Jill, if you want to make a few comments?.

So when we think about our indirect versus our direct business in - outside of the US, already greater than 80% of our business comes to us through the channel. On the Americas side, however, it's around 40%. And you blend that all out, it's about a 50/50 split on a global basis.

But if we think about the Americas, we definitely have some opportunity there. And that is part of our strategy going forward to look for more opportunities for more channel routes to the market..

Our next question or comment comes from the line of Brad Sills from Bank of America Securities. Your line is open..

Wanted to ask one on the dollar-based net retention. We're very healthy there in the 117 range.

Has the mix of expansion changed at all since you've seen the success here with Connect and Protect more towards kind of product data on in those two categories versus, say device expansion? Any comment you can make on just the balance of what's driving that between devices and add-ons?.

As a reminder, our net - dollar-based net retention expands based on devices and add-on products.

So specifically to address your question on the add-on products with Connect and Protect, while Protect is still too new and too immaterial to have an impact, Connect, if you think - sees back at our retention rates 1.5 year, 2 years ago, we were in the 115%, and when bringing Connect on, we saw that nice little pop up to about 117% run rate that we've been hovering at.

So being able to maintain that, so it's kind of already - that growth and lifted baked in. And at this point, and then from here on, we'll continue to see some uplift coming from Protect as well..

And wanted to ask about kind of early interest on some of the new vertical solutions you launched at the conference, virtual visits and assessments, how are those tracking? What's the level of interest there? And what might that due to ASP for customers? Thank you..

Yes. Sure, Brad. And just for those are workflows that we've launched in our existing solutions - so there, those are not add back sales, but rather workflows that we've released that we would get the traditional pricing for, for instance, our Jamf Pro product.

So we shouldn't be thinking about those products is being add-on sales, but rather part of the expanded device deployment to Jill's point, most of our net retention is because a device deployment. So the more that we released workflows that encouraged to greater device adoption, we end up growing with the customer because of that.

And of those we launched virtual visit. I believe it was right around the end of March. It was just very soon after the pandemic broke out.

We had our healthcare customers coming to us and saying, they needed a simple process that would connect patients to either caregivers or their families without the patient having to know how to do anything or set up each individual call.

So we are able to get that out there relatively quick because of our electronic medical record systems integration without IT staff ever having to help. So dozens of hospitals within a matter of month or so started looking at that solution beginning their implementations. On the Assessments app, that is free app that's available from the App Store.

And that adoption has not taken off quite as much as what you saw with Virtual Visits, but it is really served a few customers extraordinarily well to be able to observe students take a test, especially for some of those college type of preparation tests..

Our next question or comment comes from the line of Raimo Lenschow from Barclays. Your line is open..

And two questions. Jill, last quarter you talked a little bit about the slightly slower expansion of seats in the commercial space.

Can you talk a little bit to what you saw this quarter? And then on the education side, Dean, would that just typical Q3 thing - back-to-school et cetera or because of COVID do you think there will be kind of follow-on or there will build-in impact Q4 and other quarters as kind of people kind of closed down again and school home again et cetera.

Just talk to that dynamic a little bit? Thank you..

When it comes to our commercial device expansion, Q3 look very similar to Q2 with the exception of at a little bit of a slower start to Q2 because of April.

And now as we think about our Q4 pipeline and what we're seeing, we're actually starting to see a little bit of an expansion opportunity there, where there is - some of those IT budgets that were frozen or delayed or may be restricted in some capacity because of cash constraints, starting to see some confidence to build back up with our commercial customer base.

And so we're hoping to see a little bit of that free back up for us..

On the education side, you're right, that, of course, the buying season for education is very heavily weighted towards June and July, which marks the fiscal year move for educators in the United States. And then also, of course, are preparing for the upcoming school year. And we saw those two months as being a strong as ever, this year.

But the difference this year was that the tail of the education buying season extended into September, much more aggressively than it had before.

And there is a couple of reasons for that, one of which is simply the source for funding on those purchases often came through government programs and sometimes you just took a little bit of work in order to get that going. We are seeing that that tail is extending even further into Q4, which is a little bit unusual compared to past years as well.

I'm actually believe - the next couple of quarters, we're going to see an unusual amount of education buying compared to past seasons through the winter. And I think there is a few reasons for that. One is going to be because Jamf is more global than ever in education.

And if you take a look, obviously, not all of them have the exact same buying season as we have here in the US. And we have some countries as I've already mentioned that are doing national deployment of technology to students and they are still in the very early stages of those deployments.

So we're anticipating that that's going to continue through beyond the normal education buying season. And in addition to that, it's really interesting but the pandemic has, as I mentioned a little bit earlier, has almost awake in some industries to the potential that technology can provide.

So while some schools had shared technology programs, what they've done just in some isolated cases with the pandemic is realized the potential of one-to-one technology for students. For instance, the hand raising capability that a student can do from home turns out.

That's pretty valuable in the classroom as well in order to get more students speaking up that they need help. So I think it's going to continue for a while. I think that we're going to see more education buying as a percent of our overall buying this winter than we've seen in past winters..

Our next question or comment comes from the line of Matt Hedberg from RBC Capital Markets. Your line is open..

A little bit of a follow-up to Raimo's question on the strength in education. Our school districts approaching their contracts this year differently with, obviously, elevated levels of at-home.

Or Dean as you suggest, is it more a function like this could be the new normal, in other words, even if kids aren't at home, the use of iOS devices in school will sort of permanently be higher than maybe what it once was. Therefore, maybe the contracts are no different than maybe at elevated levels.

But you wouldn't necessarily expect that the kind of sort of come bring their seats down, let's say at some point?.

As far as the contracting goes, I think, a very common method of contracting is actually along with a leasing arrangement that they might have from Apple for the devices themselves. And it's very frequently actually that those leases are for multi-year periods and then they'll buy Jamf to use with them for that same period of time.

So that is somewhat common to history, but this year, maybe we are even seeing it more than ever. And no, I don't think we'll ever see on a mass scale that schools go into reverse on the technology front. I think now that they're leasing these devices for the next several years.

That is going to be something that, like I said earlier, has awaken them to the potential. And there are things that you can now think about in education. Of course, we want kids ultimately in the classroom, but even the classroom environment can be helped.

We actually call it a technology-enabled active learning, where students aren't just sitting through a lecture, but they're doing something. It's been proven that learning environments can be enhanced with that. And I think more schools are going to realize that.

And then, of course, Matt, as you well know, even earlier this week, we might have had a Snow Day in Minnesota under normal circumstances and who knows perhaps snow days will be a thing of the past..

I'm sure. Any - if there is kid listening, they probably don't like to hear that, but maybe you're probably right. And then as a follow-up, you mentioned in your prepared remarks, I think, you said Jamf Business Plan, which to me sounds like a bundled offering of multiple products.

I'm just sort of curious is that the right way to think about that in terms of trying to sell sort of more products through a bundle into the basin, maybe make it easier to consume and price? Is that the right way to think about that?.

Yes, we are seeing just a terrific early demand for both Jamf Connect and Jamf Protect. As I mentioned in my prepared remarks that just since the COVID outbreak, over 700 customers of Jamf Connect are new to that solution, over 200 customers of Jamf Protect, and this is the first year that we have the solution available.

So what we're hearing from customers is they just, they want it to be easier to work with us and to buy those solutions and renew those solutions.

So we've come up with - you're right, a bundled offer called Jamf Business Plan, where we're putting Jamf Pro, Jamf Protect, Jamf Connect altogether for all of the users of devices, whether it'd be just Mac or whether it would be iOS as well, on a usage-based pricing offer. Super easy to buy super easy to renew just based on head count..

Our next question or comment comes from the line of Gregg Moskowitz from Mizuho. Your line is open..

So, a bit of a follow-up to Raimo's question. You added, in total 1.4 million devices under management this quarter. And I think that's the strongest quarterly performance for Jamf that we've ever seen. And I know that you don't, of course, guide to incremental devices under your management on a go-forward basis.

But it sounds like Dean that just following your comments, specifically around education and sort of the longer-tail that exists, it sounds like you don't sort of look at any kind of cliff event, if you will, where you might see - now that we sort of exit this back-to-school period you might see this kind of material degradation and incremental unit.

It sounds like the demand drivers seem pretty solid for a little while, but I just wanted to follow up on that..

Absolutely, I do not see I do not see what's happening right now as a pull-forward or a temporary action. I actually see it as more of an accelerator to what technology can be used for in the future. And a lot of organizations are thinking kind of differently about their spend. I mean, think about it this way.

Of course, we know the work-at-home and learn-from-home initiatives are igniting some of this activity.

But some organizations are realizing, hey, you know what, we don't have to spend as much on travel as we have historically spent provided that people have excellent technology to where they don't have to travel, or maybe we don't have to grow our facilities as fast as we did before provided that people have an excellent technology environment that is their office at home.

And then in many industries, as I mentioned as well, in order to be safe and stay open should whatever happens in the future, put technology between the customer and the consumer, between the teacher and the student, between the patient and the doctor, between the store retailer and the shopper.

You can go through industry-by-industry and realize how not only would that help keep people safe and help keep organizations open, but it will actually make those organizations more efficient in the long run. And I believe that what we've experienced in the last 6 months has really shown organizations that..

And then just as a follow-up, getting back to JNUC, which, by the way, was one of the best virtual conference introduction I've seen. And I know the number of attendees that you talked about was much higher than usual, but, of course, there is no physical interaction, right.

And so I'm just curious if you've seen any change in top of funnel versus what you typically experience after this event. Thanks..

Thanks a lot, Gregg. And I appreciate the compliment and we're so proud of what our marketing team put together. But it's really an entire company event. I would remind you that the core purpose of JNUC is to be an educational event where Apple admins can collaborate and learn. And this year was no different. We didn't want it to be a marketing event.

We wanted it to be an education event. However, what we did discover is when you take cost and travel out of the equation, we are able to see exactly how many people really want to come to JNUC. And as we mentioned was approximately 20,000 attendees, 10 times what typically is, with 28% of them being prospects.

So while it's an education event, yes, some people come to plan their future investments. We've already seen leads come out of it. And we're expecting more of that activity because of the very large attendance that we had..

Our next question or comment comes from the line of David Hynes from Canaccord. Your line is open..

Dean, maybe I could ask one about Protect. You noted a nice win with SAP. I think it's been a customer for a while.

So I guess, I'm curious kind of what was the catalyst to get SAP to kind of act and take on Protect? What's the early feedback been from them? And then when you talk about 28,000 Protect licenses, is that just a portion of their Mac base? Is there still an opportunity to grow there? Just kind of how are they thinking about the rollout?.

Thanks for joining and thanks for the question. So two questions there. One is just about SAP's rollout. And yeah, they've been pretty open that they're up to about 28,000 Mac. And that is their Mac fleet. But SAP continues to grow their Mac fleet every year. As do so many of our customers as Mac continues to gain popularity within the enterprise.

And especially with Apple's announcements this week, we do not see that going away anytime soon as a matter of fact we see especially with the announcements this week. And today's general availability of Big Sur, we think that that is going to continue to grow.

When it comes to feedback on protect, we have been - there have been some really terrific testimonials that have come in that I'm sure our marketing team will get busy on making sure that we make that information public.

But the biggest thing that we've noted with our early installations is that our customers have been putting Jamf Protect out there for their Macs. And almost instantly finding things that they wish they would have known about those Macs that the past security software that was, let's face it, predominantly Windows-focused, simply didn't find.

And this is because we look specifically for Mac exploits whether their behaviors or whether it'd be malware because of our Apple specific focus, they are finding things on their Mac's that they wish they would have known ahead of time. And the user experience is still excellent because we actually have an architected for Mac solution..

And then maybe a follow-up on the healthcare segment, which I don't think we've talked about.

Yeah, just the dynamics there --I'm curious, when you land a customer in that segment do you tend to land more expanded? In other words, like is a hospital system typically like hey we're in Apple organizations, so you get a bunch of devices upfront? Or is there still that device penetration story that we might see kind of play out more in the enterprise market?.

It's the latter. It is not a go in and win all devices, all types on the very first day. As a matter of fact almost more so in health care occurs over time because it's very frequent that let's face it. For healthcare providers out there, if they have Mac, they are more than likely using Jamf already.

And so it will be a step forward to say, hey, I've heard of what Jamf's doing either with clinical communication or patient bedside or Virtual visits. I think I would like to try that in a pilot. And then they roll out in a pilot. After that they might roll it out to an entire ward, after that maybe an entire hospital.

And then, of course, many integrated healthcare networks have many hospitals under their management, so they'll roll out hospital-by-hospital. So health is very frequently a start smaller and just continues to grow industry..

Our next question or comment comes from the line of Pat Walravens from JMP Securities. Your line is open..

So, one question for each of you if that's okay. Dean, first, I enjoyed your conversation with Jeremy Butcher on Jamf Nation. And between that and the fact that it's been six months since Apple bought Fleetsmith, I just wonder if there is anything new that you've learned about their thinking behind that acquisition.

I know that's something that some investors were worried about..

Sure. Thanks, Pat, and I'll pass on your thoughts to our good friend Jeremy at Apple. The short answer is no. There has really been nothing more significant that has happened around that acquisition hasn't changed the competitive dynamic at all.

And the way that our viewpoint of it in the last earnings call and our viewpoint of it several months ago, when we first talked about, it is the same as it is today that - anything that increases Apple's usage in the enterprise is great news for Jamf.

And we don't really compete with that particular solution at all, and that we believe it's ultimately going to be used, and those talented individuals are going to be used at Apple just to continue to strengthen Apple's cloud services that Jamf will then be able to leverage to build stronger solutions for our customers..

And then, Jill, I know you very clearly have not guided to it.

But I'm just wondering if there's any thoughts you would want to share with investors about things they ought to think about when they look at 2021?.

And, no, clearly, we have not guided to '21 when we have. But I think the thing we can think about is this is an unusual year. So as we exit this year, we're going to have a different exit rate than we maybe would have had on our expense base. But our revenues are right in line with where we are expecting them to be as we exited the year.

We'll continue to invest at rates that were very similar to kind of, you think about our pre-COVID expense investment levels, particularly on the go-to-market energy and where we put dollars there and continuing to invest at a rate very consistent with prior periods in that we still have - we're early in our opportunity in the TAM.

And so we've got a lot of customers to go and grab, and so we'll continue to spend there. And then also continuing to expand - invest at a similar rate in R&D as we continue to innovate on both of our existing and new technologies.

And then probably the only other - the only thing that will be slightly different next year is, of course, it will be our first year - first full-year as a public company. So we'll have some incremental spend in our G&A and back office functions there..

Our last question comes from the line of Rob Owens from Piper Sandler. Your line is open sir..

Dean, you have something little bit in some of your comments.

But with Apple drops major operating systems and hardware updates, what's been performance your business historically? Have you ever seen a step function associated with that or is this just driving more consumerization, so it's more of a longer-term momentum opportunity?.

Yes. Thanks a lot for the question. And this is a big week. It's actually a terrific week.

For those that watched the Apple event earlier this week, not only is the new Mac operating system Big Sur available today, but earlier this week, Apple announced that probably the biggest move with the Mac that they've made in a very, very long time where the new MacBooks with the M1 chip are coming available.

And really of all the Apple Enterprise Management providers that are out there, only Jamf was here. The last time Apple did something like this when they moved from the PowerPC chip back in 2005 to Intel. And we helped organizations through that. But as you can imagine, not every single Mac within an enterprise is going to move all on the same day.

For a Mac for a couple of years, you're going to have enterprises that have a mix of Intel Macs and M1 chip Macs. And nobody has a larger Mac inventory than does Jamf, and nobody can get to information on the Mac's better than Jamf.

And as a result, we're going to be able to help with policy management and security and those types of things for the next couple of years for organizations.

And of course the thing that really distinguishes Jamf is that, while there are companies out there right now saying they're nervous about their customers upgrading to Big Sur, Jamf is a matter of fact, there are Jamf's all around the world today, upgrading to Big Sur without concern, because we just know that we're going to work with it.

In addition to that, the same goes for the processor. Again, a little anecdotal story on that. And this will kind of reflect what will - why we tend to do well when these changes occur is, I bought my MacBook Air with the M1 chip five minutes after that Apple event was over.

I didn't need to call anybody in IT or anybody in security to find out whether it was okay or whether it would work within our organization. I will get it within a couple of weeks delivered to my home. I'll power it up and I will enroll it in management connection and protection at Jamf.

And I will be up and running with all my data from my prior Mac and with all access and security applied inside a 30-minute to moment as to blip. And nobody from IT will be involved and nobody from IT will help me. That is just a new world of enterprise operations that very few people exist in.

And the more organizations we can show that kind of simplicity to, the more Mac adoption with Jamf will grow within the enterprise..

Perfect. And then regarding some of your earlier channel comments, are there enough channel partners out of scale within the Apple ecosystem to truly drive channel leverage? And if so, what you kind of take on your partners that more opportunistic on more of 1G, 2G basis? Thanks..

I mean, well, there are obviously some major channel partners out there because, of course, as you know, in the enterprise Apple devices sell entirely through the channel. And so those organizations, a lot of times organizations just want to have their management in security and access controls purchased right along with the devices.

And so they'll go on one order form into these large resellers. Of course, we're also going to have regional resellers around the world going to market, but it's a mix. In total, Jamf's have got hundreds of resellers that we work with. But of course, we've got the top five or six that represent a very good chunk of the selling..

Thank you. At this time, I'd like to turn the conference back over to Mr. Dean Hager for any closing remarks..

Sure. Thanks everybody for joining today. We really appreciated the questions. I'm so proud of what the Jamf team members have accomplished in Q3. And we look forward to continue to help organizations succeed with Apple in the future, no matter what the future holds. Now go out there and buy your new MacBook with the M1 chip, you won't regret it.

Stay safe and be well. Thanks..

Ladies and gentlemen, thank you for participating in today's conference. This concludes the program. You may now disconnect. Everyone have a wonderful day..