Ladies and gentlemen, thank you for standing by and welcome to the Jamf Fourth Quarter 2020 Earnings Call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference may be recorded.

[Operator Instructions] I would now like to hand the conference over to your host, VP Investor Relations, Jennifer Gaumond. Ma'am, you may begin..

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

Before we begin, I would like to remind you that shortly after the market closed today, we issued a press release announcing our fourth quarter and full year 2020 financial results.

Additionally, we published an updated investor presentation and an excel file containing quarterly financial statements for fiscal years 2019 and 2020 to assist with modeling. You may access this information on the Investor Relations section of jamf.com. Today's discussion may include forward-looking statements.

Please refer to our most recently SEC filing where you will see a discussion of factors that could cause 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. Additionally, 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 to everyone for joining us. On today's call, I will share highlights from the fourth quarter and fiscal year, as well as provide an update on the exciting momentum in our business for 2021. Jill will then review our fourth quarter and fiscal 2020 financial results and provide our initial outlook for fiscal 2021.

For the fourth quarter and full fiscal year we again showed excellent growth with strong performance across all aspects of our business driven by continued benefits from trends in remote work, education technology and telehealth, despite macroeconomic challenges as a result of the pandemic.

Total revenue in the fourth quarter grew 34% year-over-year to $76.4 million driven by recurring revenue growth of 40% year-over-year to $70 million or 92% of total revenues. Full year revenue grew 32% to $269.5 million with recurring revenue also representing 92% of total revenue.

We ended 2020 with annual recurring revenue or ARR of $285.3 million representing year-over-year growth of 37%. Non-GAAP operating income was $3 million in the quarter or 4% of revenue. This was a 5 point increase over the fourth quarter of 2019. For the fiscal year non-GAAP operating income was $30.4 million, representing a margin of 11%.

Unlevered free cash flow totaled $19.1 million in the fourth quarter, representing an unlevered free cash flow margin of 25%. This compares with a margin of 18% for fourth quarter 2019 and full-year unlevered free cash flow was $66.2 million.

Our exceptional performance was capped off by reaching our five-year goal of having 20 million Apple devices by the end of 2020. Coming into the year 2015, Jamf was 13 years old and managing less than 4 million devices for approximately 5000 customers.

That year, as the enterprise saw a growing number of professionals demanding to use Apple at work reset this aggressive goal to empower the new workforce.

Through our mission to help organizations succeed with Apple, we are proud to have achieved this milestone by running on 20.4 million Apple devices across more than 47,000 customers at the end of 2020.

Part of the reason we were able to achieve this goal was our ability to maintain the pace of customer wins throughout 2020 despite the uncertainty created by the pandemic.

2020 was a year like no other, where digital transformations that were once visionary are now necessary and will continue even after the pandemic ends, like Zero-Touch deployment for at-home employees, teachers embracing education technology and remote patient care.

Specifically, we believe and many third-party research firms would agree, that the remote work trend, which was ignited in 2020 is here to stay and is spurring growth of Apple at work across the Apple ecosystem, but in particular, with the Mac. During 2020 and especially in the fourth quarter, we saw much evidence of this.

In addition to Apple reporting strong growth for the Mac over the past several quarters, IDC reported PC sales growth in Q4 with the largest growth for Apple Mac at an incredible 49.2%.

The momentum of Apple at work also led IDC to publish their first ever MarketScape report for unified endpoint management for Apple devices, in which Jamf was included as the clear leader in both capabilities and strategies. Also in this report, IDC cites that Apple Mac penetration in U.S.

enterprises of greater than 1000 employees grew from 17% in 2019 to 23% in 2020, an increase of 6 points in just one year. This data is further validated by Statcounter, an organization that attracts Internet usage by operating system and device type.

At the end of December, the Statcounter data shows that the Mac accounts for approximately 30% of Internet page views in the U.S. from desktop and laptop computers compared to 61% for Windows. This represents a 6 points increase for the Mac over 2019 and a dramatic change over the past decade. Across these data sets, the story remains the same.

Mac penetration in the enterprise is growing exceptionally fast. We believe this momentum will continue as working from home accelerates the consumerization of IT. The need for zero-touch device deployments and support, and decisions by companies to invest more in improving the IT environment for employees versus expanding their facilities.

After all, when working from home, the IP experience is the employee experience. One example of this trend is HSBC, one of the world's largest banking and financial services organizations.

Working closely with Apple and Jamf, HSBC launched a new program in the fourth quarter that empowers employees to choose Mac globally as their primary work computer. This was accomplished by developing a zero-touch procurement configuration and deployment experience, such that employees could order and receive a corporate laptop at home.

This process allowed HSBC to efficiently upgrade devices for employees working from home and reduce deployment cost. Additionally, this project was completed during a very busy period for HSBC's IT department, since COVID forced 98% of their employees to shift to remote working.

Including the employees supporting this project, the zero-touch process can also be used on Macs with the new M1 chip for improved performance and an even lower price. This is expected to drive demand from employees even further which has already exceeded expectations.

At Jamf we feel projects like HSBC are indicative of a growing movement to supply employees with technology choice. Further, we believe the power, efficiency and speed of the M1 Mac will make it a popular choice for the current and next generation of employees.

Its availability also showcases the importance of deploying Mac with Jamf's Apple Enterprise Management platform as we were same day ready for all of the new Apple operating systems, including macOS Big Sur and the M1 chip that were released in Q4, something many cross platform solution providers were unable to do.

Another example of an organization responding to at-home needs is Shipt, a company founded on the mission to simplify lives through delivery of groceries and everyday essentials. In 2020 COVID fueled an increasing demand for Shipt services, resulting in the need to build their team rapidly.

Shipt turned to Jamf to help implement their workforce efficiently and better meet their security needs with tools built for macOS. In the fourth quarter, Shipt licensed over 1000 users of Jamf's Business Plan, which was launched to new customers in October to increase Jamf product adoption and simplify the customer purchasing process.

The bundle includes Jamf Pro, Jamf Protect and Jamf Connect across all Apple devices. In addition to Shipt, approximately 100 other new customers chose Jamf Business Plan during the fourth quarter, its first quarter of availability. This success has led Jamf to expand the offering to include all existing customers globally in February of this year.

Shifting from remote work requirements to unique organizational challenges, few industries have been impacted more by COVID than the airline industry.

Still, in Q4 Cathay Pacific Airways headquartered in Hong Kong, selected Jamf's Apple Enterprise Management platform to replace their legacy MDM solution for 5000 iPads to be used for several airline specific workflows, including Electronic Flight Bags in cockpits, in-flight services in the cabins, and aircraft maintenance on the ground.

Our solutions, Jamf Setup and Jamf Reset for which we were granted a U.S. patent in the fourth quarter, were integral components in order to provide shared, yet personalized deployment of these iPads. This unique workflow led to Cathay Pacific switching to Jamf in the middle of a global pandemic that was significantly impacting their business.

Jamf was also granted a U.S. patent Q4 for our new healthcare solution, Virtual Visits, which we launched shortly after the pandemic began last spring.

Jamf's Virtual Visit solution allows patients to seamlessly and securely connect with doctors and their families through third-party video meeting platforms like Zoom and Microsoft Teems without IT assistance.

Starting in November, this solution, along with Jamf Setup and Jamf Reset was used to rollout 11,000 iPads to 9000 care homes across England by the National Health Service, the UK's public health system.

Care homes can now utilize shared iPads between care home staff and residents allowing care staff to easily communicate with each other and to support residents with virtual visits to seamlessly and securely connect with their doctors and hold long overdue calls with family members during the holiday season whom many residents had not seen for nearly a year.

Additionally, a number of NHS hospitals in central London are utilizing our Virtual Visit solution in neonatal intensive care units to securely connect newborns to parents who are unable to be at hospital, allowing the parent-child bonding process to continue despite COVID restrictions.

One of NHS's key reasons for choosing us was our unique solution that can be utilized across multiple workflows throughout NHS.

Jamf's ability to deliver technology in new and innovative ways continues to lead hospitals and other care facilities to look to Jamf's over legacy MDM solutions as they navigate their ever evolving healthcare technology landscape.

Jamf's unique ability to enhance industry specific workflows also has positively impacted business in our education market where Jamf's solutions foster teacher monitoring and control, student engagement and parental guidance to help focus students on their studies, both at home and in the classroom.

In Q4, growth in the education market continued well beyond the traditional buying season for schools, in part driven by government-funded programs across the globe, like Japan GIGA project and Germany's Digital Path [ph] project, and CARES Act funding in the United States.

The GIGA school project in Japan is a government-funded initiative to provide at least one device to every one of the nine million elementary and junior high school students in Japan. Originally planned to be implemented over a five-year period, the project was accelerated due to the pandemic.

Jamf partnered with the Apple education team and Apple reseller in Japan, Docomo to build a robust sales effort for iPad. By the end of 2020, over one hundred boards of education in Japan implemented iPads with Jamf including Yokohama City, Japan's largest Board of Education.

In 2021 we plan to continue empowering teachers and students with iPads and Jamf in schools throughout Japan as the GIGA project shifts its focus to nearly 3 million high school students.

In Germany, historically many schools haven’t used technology in the classroom and as such some German schools struggled to continue lessons for their students at the beginning of the lockdown. The German Government stepped in last April and dedicated nearly €500 million to help support students, teachers, and educational institutions.

This funding's priority was to ensure underprivileged students and communities throughout Germany could purchase the technology they needed to succeed in a distance learning environment. This funding was in addition to a longer-term €7 billion Digital Path fund aimed to improve digital infrastructure for schools.

One beneficiary of this funding was the City of Bremen, who in Q4 ordered approximately 100,000 iPads, all managed by Jamf for each student to have their very own.

Thanks to the success students and teachers had in 2020 with their new iPads and adapting to a distance learning environment, the German Government will continue the funding into 2021 to ensure these schools remain successful. Here in America, the education market was also supported with the initial CARES Act funding last spring.

Thousands of schools were able to use this funding to establish or grow their Apple footprint for students. In Q4, the Mississippi Department of Education was able to use CARES Act funding to further on an initiative to create digital equity for students.

With a large number of students across the state residing in underserved or impoverished areas, the state took the opportunity to use these funds to bring more Mississippi districts and students to technology parity with other schools across the country.

Nearly 9000 iPads were rolled out to students along with hotspots for those without regular Internet access, bringing the total devices managed by Jamf to approximately 55,000. Momentum in U.S.

education is continuing into 2021, fueled further by a new Education Emergency Relief fund announced in December which also includes funding for higher education to help serve students and ensure learning continues.

In total, in 2020 Jamf helped empower millions of students globally with new iPads and Mac to help them complete their studies despite an incredibly challenging environment.

We believe one positive that has come out of 2020 and continues in 2021 is the incredible supply of education technology provided to teachers and students that enhance student engagement with mass personalized and active learning curriculum, whether the students are at home or in the classroom.

For all these industries and organizations Jamf accelerates the Apple at work and Apple in school movements. We continue to invest in innovation that extends our leadership position and fulfills our mission to help organizations succeed with Apple.

We are pleased with the momentum of our newer add-on products, specifically Jamf Connect and Jamf Protect, our meeting the growing needs of companies to remotely and securely connect employees from their homes. In 2020 we added over 900 Jamf Connect customers with over 350 in Q4 alone.

And in the first full year of availability, Jamf Protect was selected by over 400 organizations in 2020, 200 in Q4 alone. The momentum of both products is accelerating as we enter 2021. As we look across our business in 2020, Jamf shows remarkable balance and momentum in every category.

For example, our 2020 ARR year-over-year growth for every one of our price products was at least 25%. Additionally, our ARR growth in all three major geographic regions, Americas EMEA and APAC was also at least 25% in each geography. And when examining the top-10 industries Jamf serves, ARR growth year-over-year was again at least 25% in all TAM [ph].

With any strategy some initiatives are more successful than others. We are very proud at Jamf to finish 2020 with tremendous consistent high growth across every product, geography and the top industries we serve.

As we look to 2021, we believe these trends in remote work, education technology and telehealth will continue to strengthen our value to customers as well as our business results. Additionally, we're energized by recent industry reports, which validate the momentum of Apple and the enterprise.

We believe we are best positioned to help organizations succeed with Apple through leveraging technology in new and innovative ways. We remain a customer first organization, dedicated to our customer success by continued investment in new features and enhancements that fulfill our mission to help organizations succeed with Apple.

We continue to innovate at the pace of Apple, supporting new operating systems and hardware on the same day it's released.

We continue to bring new innovations to market in order to further enhance the depth and breadth of our Apple Enterprise Management platform as evidenced by recent announcements to Jamf School and Jamf Protect as well as the recent acquisition of the technical assets of CMD Security and Apple Mac specific security and compliance solution.

We built the largest Apple IT management community in the world, Jamf Nation, providing greater access to Apple enterprise experts which serve as a crowd source support community. We continue to remove friction for our customers in sales, implementation and support.

We have a remarkably well balanced portfolio with no one industry, product or geography, driving our overall financial performance. And we are committed to maintaining our outstanding culture and providing an environment where employees enjoy the freedom to be their authentic selves.

This is evidenced by our certification as a great place to work, as well as 96% of our employees indicating they are proud to work at Jamf. In closing, I could not be more proud of our team and what we've accomplished. We build a fantastic group of passionate, committed and bright people, who continue to deliver despite numerous challenges this year.

We're excited for what's to come in 2021 and we continue to live our values and fulfill our mission to help organizations succeed with Apple. Now Jill will walk you through our financial results and guidance.

Jill?.

Thanks Dean and thanks again to everyone for joining us today. As Dean mentioned, we saw continued momentum in our business in the fourth quarter. Total revenues for the fourth quarter were $76.4 million growing 34% year-over-year.

Recurring revenue were $70 million in the fourth quarter, an increase of 40% year-over-year and accounted for 92% of our total revenue, versus 88% in the fourth quarter last year. Total ARR as of December 31 was $285.3 million, an increase of 37% year-over-year.

This was driven by greater than 25% growth across every product, geography, and each of our top-10 industries with particular strength in our international business with ARR growing over 50% year-over-year. As a reminder, ARR represents the annualized value of our subscriptions, support and maintenance contracts as of the end of the period.

ARR mitigates fluctuations due to seasonality, contract term, and a sales mix of subscription for term based licenses versus staff. There are three primary drivers of our ARR growth.

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

We ended the fiscal year with 20.4 million devices on our platform representing 30% year-over-year growth as we continue to realize strength in both the education and commercial verticals in all geographies.

As Dean mentioned, this represents the achievement of an aggressive goal we set in 2015, when we had less than 4 million devices on our platform. We grew our devices by more than 4 million in this year alone. Our ability to grow the number of devices on our software platform will continue to be a key indicator of our growth and trajectory.

We have a 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 customer’s adoption of add on products.

Our dollar based net retention rates remained strong at 117% for the trailing 12 months ended December 31, 2020. The remainder of my remarks on margin, expense items and profitability will be on a non-GAAP basis. Our GAAP financial results along with the reconciliation between GAAP and non-GAAP are found in our earnings release.

Gross profit was $62.7 million or 82% compared to 78% in the prior year quarter.

Although the most recent quarters gross profit margins benefited a bit from the impact of COVID we expect our gross margin to increase slightly over time when compared to the rates we delivered prior to the impact of COVID as recurring revenue becomes a larger proportion of revenue and as we increase the average ARR per device.

With respect to operating expenses, we remain focused on improving the leverage in our business while balancing investments for growth.

After some COVID related delays in the second quarter, we pulled those earlier planned investments into the fourth quarter by continuing to invest in our go-to-market activities, make preparations for our workspaces both in the office and at home in response to COVID and execute on our original 2020 hiring plan.

In 2020, we grew our headcount by 322 to nearly 1500 employees, with 262 employees on boarded remotely since the start of the pandemic utilizing the same solutions our customers use, a testament to the power of Jamf coupled with Apple technology. Additionally, we have incremental expense related to being a public company.

Total operating expense for Q4 was $59.7 million, compared to $45.2 million in Q4 last year. Our operating income in the fourth quarter was $3 million, compared to a loss of $800,000 in Q4 last year.

Operating margin was 4% representing a 5 point increase compared to the same period last year, reflecting improved gross margin and R&D efficiency, partially offset by investments required to be a public company.

During the fourth quarter of 2020, our annual effective tax rate was impacted by changes in valuation allowances and foreign currency exchange rates. The annual effective tax rate for Q4 was 15.4%.

Our basic average share count was 116.6 million, and our diluted average share count was 120.1 million for the quarter, as compared to 102.8 million for both metrics in the fourth quarter of 2019. Unlevered free cash flow was $19.1 million in Q4 compared to $10.4 million for Q4, 2019.

Fourth quarter unlevered free cash flow represented 25% margin up from 18% a year ago. Our operating model of high growth and improving efficiency continues to yield strong cash flow generation and allows us to continue to make investments for growth. We ended the fourth quarter with $194.9 million in cash and cash equivalents.

I'll quickly touch on a few full year 2020 highlights. Fiscal 2020 total revenue was $269.5 million, representing 32% year-over-year growth. Full year recurring revenue as a percentage of total revenue was 92% and grew 42% year-over-year. Gross margin for fiscal 2020 was 82%. Total operating expenses were $189.8 million.

Operating income was $30.4 million, representing a margin of 11%. The annual effective tax rate was 17.3% and unlevered free cash flow was $66.2 million a margin of 25%. Before I discuss fiscal 2021 guidance, I wanted to make you aware of a change in presentation made to our income statement.

We reclassified on-premise subscription revenue from license revenue to subscription revenue, which is consistent with our just aggregated revenue disclosure that was previously shown in put next to the financial statements, and how we evaluate overall recurring subscription revenue.

Now I'll provide our initial thoughts and guidance for the first quarter and full year 2021. Given our performance in fiscal 2020 and continued momentum in our business to emerging trends accelerated by the pandemic, we expect our strong performance to continue.

We believe the timing of the pandemic trend benefits will differ from the prior year, with the first half of fiscal 2021 benefiting from continued strength in education, which will have a stronger than typical impact in the first half of the year.

This will be balanced by increasing strength in our commercial business in the second half of the year, as the economy improves, and enterprise hiring rebounds. Overarching these trends is the continued uncertainty related to the pandemic and its impact on the IT spending environment.

Beginning in the third quarter, planned updates to how we deliver our Jamf Connect product will result in a change in revenue recognition, with less revenue recognized upfront as on-premise subscription revenue, as it will now be recognized ratably over the term of the subscription in line with the majority of our revenue.

While there is no impact to ARR, we anticipate this change will defer approximately $9 million in the second half of the year into future quarters, which impacts our full year revenue growth by approximately three percentage points.

Given these considerations, for the first quarter of 2021, we expect total revenue in the range of $76 million to $77 million, representing growth of 26% to 27% year-over-year, non-GAAP operating income in the range of $6 million to $7 million.

For the full year 2021 we expect total revenue in the range of $330 million to $336 million, representing growth of 23% to 25% year-over-year, non-GAAP operating income in the range of $27 million to $31 million. Additionally, for modeling purposes, we are providing the following information.

We expect an annual effective tax rate to be less than 5%, which should also be used in calculating tax effects of non-GAAP adjustments. This annual effective tax rate is impacted by the establishment of a valuation allowance during 2021. In addition, we do not pay cash taxes on a U.S. Federal basis.

For calculating EPS, we expect basic and diluted weighted average shares outstanding to be approximately 117.3 million and 120.6 million respectively for the first quarter of 2021. For the full year, we expect basic and diluted weighted average shares outstanding to be approximately 117.5 million and 121.6 million respectively.

In closing, our exceptional results in the fourth quarter capped off a remarkable year for Jamf. We expect continued strong performance in 2021 and we look forward to sharing our progress with you. With that, Dean and I will take your questions.

Operator?.

Thank you. [Operator Instructions] Our first question comes from the line of Sterling Auty of JP Morgan. Your question please..

Yes, thanks. Hi, guys.

I'm going to start off with a question around the mix of devices that you saw in the quarter, you made a number of comments around kind of the new chip and on the Mac platform, wondering if you're seeing any changes in that mix and what you're expecting here for 2021?.

Yes, hi, thanks for the question Sterling. Regarding the overall on across Apple devices, whether it be a Mac, iPad, iPhone, even Apple TVs, we're growing across the board. And definitely the emergence of the new Mac is we see as increasing demand for the Mac that's out there.

But our fastest growing apps or devices by count are iOS devices, iPhone and iPads, and that is largely driven we believe, not only of course, by the demand of those devices, but because of our strong presence in the Mac out there in commercial markets especially.

Customers already have great experience with us and they see the benefit of being able to run all of their Apple devices into one system. So the strength of what we have on the Mac is actually creating much of the growth we're seeing on the iOS side..

That makes sense and maybe one follow up would be, contemplate the possibility of 5G rolling into the iPad platform, knock on wood, hopefully with the iPad Pro here, what opportunity might that bring to see that platform drive further adoption in the enterprise specifically, and maybe even education and what might it do if anything to your pricing?.

Oh, gosh, regarding the demand of the device itself, I mean, we would see 5G as only being good news. Being always connected is certainly a benefit for anybody who is at work in particular, obviously, with very rapid speed.

But you're right that you should also keep an eye on education historically, iPads deployed in education, were all Wi-Fi only iPads, but what this last year has taught us is we cannot assume that people are going to have Wi-Fi setup in their home.

And with the speed that 5G promises, an iPad with cellular connection is the best way to ensure a rapid connection into school or work..

Got, it. Thank you..

Sure. Thanks..

Thank you. Our next question comes from the line of Raimo Lenschow of Barclays. Please go ahead..

Can you just double click a little bit on the international success in terms of the 50% ARR growth was certainly very, very strong. Can you elaborate a little bit in terms of the educational programs you saw, you mentioned Germany, Japan, like where are we in that lifecycle there? And then maybe some other drivers were distinctive? Thank you..

Thanks for the question. Raimo. Yes, we're very pleased with the international growth that we saw, really for the year and of course, especially in the quarter. As we mentioned, we grew rapidly across all of our geographic regions, all of our project -- products, and also our top-10 Industries.

But without a doubt the education growth probably over achieved more than any other industries. And that was especially so internationally in the two countries that you mentioned, specifically, Japan and Germany. Those programs, the Digital Prep [ph] program, and also the GIGA program in Japan, they were not created specifically for the pandemic.

As matter of fact, they were something that were announced pre-pandemic, as a multiyear initiative within those countries. So what ended up happening is the pandemic simply accelerated the movement. So there's still a lot of work to be done. There's still a lot of students that don't have devices in their hands.

So we're even seeing that roll into 2021 as well. And as we mentioned in our prepared remarks for Japan specifically, the initial funding was for our primary schools, and also kind of, middle school aged kids, whereas this upcoming year is when the funding is being added for the high school age students..

Perfect. Thank you very much. Congrats..

Thanks..

Thank you. Our next question comes from Gregg Moskowitz of Mizuho. Your question please..

Okay, thank you very much and good afternoon, guys, very nice quarter. For my first question, so this is a second consecutive quarter, I believe, where you set a record Dean in terms of new devices under management and it's also tracking at levels that are up more than 2x so on a year-over-year basis.

So when you look at this type of activity, do you tend to think of this as more of a new normal or more of a temporary surge in response to the pandemic?.

Well, I mean, that's a great question and it really differs a little bit by industry. What we've been mentioning all year long, is that the three trends that we've seen create some tailwinds in business has been the trend around remote work, the trend around a virtual or telehealth, and then the trend around distance learning.

I would say for the year and I've mentioned this in prior calls as well, that when you have the headwinds and tailwinds face each other that it's been more tailwind and headwind in education. In healthcare, it's been a balance. I think we had about the year we would have expected to have which was high growth.

In other commercial markets, we believe that it's actually been a little bit more headwind and tailwind. And as Jill mentioned in her remarks, when hiring really starts to ignite, which we're expecting to have happen towards the end of 2021, we see that that will, some of those headwinds that we've seen in the commercial markets will subside.

But still, even with the macroeconomic headwinds that we've seen, the trend for remote work, we don't believe that that is, that's a new normal in our view, not everybody will be working from home. But without a doubt, organizations are going to view that they're going to have to arm a remote workforce more than ever before.

And that's just something that is well designed for Apple and well designed for Jamf..

Hi, that's great perspective, thanks, Dean. And then just, I wanted to ask as well, just about the Jamf Business Plan, obviously you're off to a strong start over 100 wins in the Q4.

How are you thinking about penetration rates of Business Plan over the long term? In other words, roughly what percentage of your customer base do you think represents viable candidates for Business Plan?.

Yes, we were very pleased with 100, approximately 100 customers in Q4, especially since we only offered it to new customers, we did not offer it to current customers in Q4. In February, we launched it as an upgrade path for current customers as well, so we expect to see an uptick in 2021.

Overall, in terms of penetration within our customer base, right now as the name would suggest, it fits the commercial businesses more so than the education side. So right away, I would say that it would be our commercial businesses that would be potential candidates for the solution.

And frankly, we don't think there's anybody outside of the market in terms of making sense for Jamf Business Plan. It is a solution that would make sense for any of our commercial customers..

All right, terrific. Thanks very much..

Thank you. Our next question comes from Bhavan Suri of William Blair. Please go ahead..

Hi, Dean and team, let me echo my Congrats, just a great job there, so that's awesome. I wanted to touch quickly on investment priorities. When you look at what you've introduced, Connect, Protect, School, you've got the full enterprise management stack.

How are you thinking about the development roadmap, going forward as obviously Apple keeps doing stuff, so you have to keep doing stuff to make sure all that works? But as we think about sort of material potential extension of platform, where do you think the next kind of most potential to add incremental value is for customers?.

Well, we obviously have made some recent moves. Thanks for the question. By the way, we've made some recent moves specifically in application lifecycle management, with the acquisition of Mondada last fall and we're just getting started with the potential of that solution.

You saw an acquisition that we announced actually just a few days ago, of the assets of cmdSecurity, that's now called cmdReporter. We believe that that is going to build out of our security solution, as well. And again, we're just getting started with the potential of that.

So I would suggest that around apps and app lifecycle management and security expansion would be two of the biggest areas of expansion on which we've already started.

But then in addition to that, we always have an eye on continuing to build value-added workflows around industries, like we already have with education in Jamf teacher, Jamf student, Jamf parent and then also the workflows that we built out for healthcare with virtual visits and patient bedside.

You recently saw an announcement that we had as well in partnership with TRUCE, to build out a value added workflow for worker safety. So it's one of the things that we do industry-by-industry looking for how we can improve the workflow, which then inspires greater device expansion..

Got you. I think the security pieces are really, really interesting too over time. Jill, Dean talked about sort of the puts and takes, I think to Sterling's question COVID or maybe just Raimos, I forgot, but the puts and takes, tailwinds, headwinds, et cetera.

If we were to apply that to net dollar retention rates, how would you think about the puts and takes there and how do you think about the trajectory of that metric especially as we look beyond COVID?.

Yes, hey, great to hear from you guys today. Probably a little bit more of a, I'm not sure which way the put and take goes, but we probably saw a little bit of a stronger hit commercial, as commercial budgets had some tightening in the year, whereas education had the funding.

So a little bit of a flip-flop on what those rates would normally have looked like in the quarter. But when we think about going forward, we think about the fact that our net retention rate is really predominantly expansion comes from device expansion, right? And as the industry studies show and the TAM is out there.

Apple is still just on the front edge of gaining penetration in the enterprise. So we're expecting to see, significant uptick on Apple adoption in the enterprise device expansion, as being referred to, inspiring device expansion with some of the strategic workflows that we're partnering with our customers and providers to provide as well.

So we're pretty comfortable that will maintain if not improve upon our existing retention rates..

That's great. Great, thanks for the candor and the color, guys and congrats..

Thank you. Our next question comes from Rod Hall of Goldman Sachs.

Your question please?.

Yes, thanks for the question. I wanted to ask you, Dean first of all, if you've seen any, you think impact to your business, by the way, good numbers. But any impact to the business from supply constraints? We know that the M1 Mac was supply constrained, headed into the back of the year, probably at the beginning of the year.

And then we know, iPads are severely supply constrained. So just curious if that had any impact? And I have a follow up for Jill..

Thanks, Rod, and great question. And I'll tell you what, over the last year, we frequently would get together and talk about the potential of seeing a business issue from a constraint in supply.

And there were times where, we thought that might be the case, but then it never proved out, I can't really think of a material situation over the course of the last year, where the supply problem ended up causing us issues.

If anything, we saw some interest in Apple specifically, because Apple was able to provide the supply that was needed versus some other alternative vendors. So we're really pleased with that they did on the year, and it did not negatively impact our business..

Okay, that's great. And then, Jill, I wanted to ask you the guidance range for the year, wider than last year for obvious reasons, tough year to predict.

But I'm just curious if you could dig into the revenue range? And maybe what would characterize performance at the higher end of the range? What would characterize performance at the bottom end of the range within your forecast? Like what sorts of, differences and assumptions would you make at each end of that range? Thanks..

Yes. Hi Rod. So when we set our guidance, it really looked at the strength of our ARR as you came out of 2020, made assumptions around ARR expansion, new bookings, as well as churn assumptions. And, based on what we have eyes on, on the puts and takes going into that model, coming up with a number that feels responsible that we can execute on.

So when we thought about the debt, the balance between education and commercial, we're seeing some strength of education continue into the first half, which is not a typical Q1 that we would be seeing.

So really, some balancing some strengthened education in the first half expecting and hoping that commercial then starts to bounce back stronger in the second half as the budget freezes starts to be removed, as enterprise and SMB starts to bring their workers back.

And so balancing the two, so similar mix of what we would have seen this year, but maybe flip flopped quarter-over-quarter. And that's kind of how we play out to get to the high end, it's really probably the commercial coming back stronger than rent dissipating at this point..

You think it's like a more of a timing of commercial return? Maybe it's if it's later it's a little toward the low end of the range, if its earlier it's toward the high end, is that the way you thought about it or…?.

Yes, it's really going to be all about timing. Right, we believe it will come back. So they're going to bring the workers back as the economy starts to recover, too soon for us to have absolute confidence in the timing of that. So we've taken kind of a balanced approach to it..

Okay, all right. Thanks very much..

Thank you. Our next question comes from Rob Owens with Piper Sandler.

Your question, please?.

Great and thank you for taking my question. I wanted to ask a little bit around your security opportunity? And specifically with M1 and specific malware written for that, just where the security discussions have gone relative to that? You did mention that Jamf Protect had a very strong fourth quarter.

So as we look at just trends, exiting the fourth quarter and ‘21, what kind of opportunity that might be?.

Hey, Rob, thanks for the question and might I say great question. Not that all of them aren't. Because you are drilling into a problem that the market has seen and Frankly, Jamf is well positioned for.

With the M1 Mac has come, it's become clear that some providers of security solutions have provided those solutions by running code in the Microsoft or in the operating system kernel of macOS. And that's something that is Apple has been attempting to get security providers to eliminate for the last couple of years.

And with the emergence of the M1 it has been clear that some have not done that. The result has been that several security solutions out there simply would not work for the M1 when the M1 was presented.

Jamfs of course, was able to because we build our solutions specifically to the architecture of the Mac without running code in the operating system kernel.

So yes, we believe overall, that M1 Mac not only presents an opportunity for us because it's going to increase the demand of the new generation of employees and the laptop that they choose to use, but also highlight the fact that Jamf is uniquely positioned to support Apple Technology on the same day that it's released..

Great, and then Jill, if we normalize around the change in revrec, and I think it can get to a mid to high 20s revenue growth rates on an apples-to-apples compare any guidelines or guardrails as we think about ARR our growth for 2021, relative to that revenue growth and compare there?.

Yes. Hey, Rob, you're absolutely right. You see normalized for the Connect revrec change that we're making midyear, it does get us into the 27% year-over-year growth rate.

And then when we think about how to frame up ARR revenue growth in relation to our revenue growth, our ARR is going to grow faster than revenue, partly because of the timing in the quarter of when our ARR gets added to the roster versus the revrec that underlies the revenue.

And then we also have some, a little bit of lumpiness, of course, with services and license and that not growing as fast as our total revenue, but as a recurring revenue.

And then we have this notion of, we still have a small portion of our revenue that's coming from on prem subscription, that causes a little bit of lumpiness as well, and causes those growth rates to differ. So oftentimes, that'll cause a difference in the rate that the ARR grows in relation to the revenue.

And you'll see that in a couple different if you look back two quarters, you'll see a difference in that relationship because of that..

Great, thank you very much for the color..

Thank you. Our next question comes from Matt Hedberg of RBC Capital Markets. Please go ahead..

Hi, thanks guys. Somebody asked earlier about the Business Plan, which was great to hear.

I guess, Dean now that you've got a few more data points, is there any sort of, help you can provide us in terms of like the ARPU uplift, when you're selling the Business Plan versus just Jamf Pro?.

Yes, I don't know how to specifically quantify that at this point. Thanks for the question. And perhaps Jill can chime in with some thoughts on this as well. We offered the business plan for two purposes. Most importantly, is that simplified customer buying and gave our customers and more complete solution for Apple Enterprise Management.

But the second is that we do believe strategically that ultimately, our ASP per device is going to rise with this as more of our solutions are going to be used per device out in the commercial markets. And - are quantifying that. I wouldn't have specifics for you at this time.

Jill, anything to add to that?.

Add Matt, if you took the list price of the three products compared to the bundled price of the business plan, it missed up to about a 15% discount.

But what the, the benefit to us in offering that discount is there removing friction in the sales cycle with our customers versus three separate sales cycles, so that transaction is going to move through the system quite a bit faster, with less friction..

Got it, thanks, Jill. That's super helpful.

And then, Dean you talked about Mondada a little bit more last quarter, and then in a prior answer to a question, I guess, as you think about, patch management, because it seems like it's an intriguing area for you guys to do more and how do you think that could benefit the model longer term?.

Well, first of all, yes, we're still thrilled with the acquisition and our customer response has been terrific.

We've already, just to quantify what we've been able to provide to our customers, we were performing patch management capabilities or monitoring about, let's call it 80 plus application titles out there, and we've already moved that to more than 200 for our customers. So our customers are already seeing value.

We plan on adding many, many, many more titles to that solution as well.

And then as customers have greater visibility into the suite of applications that are running on their Mac and the level of currency that they have, they will likely come back to Jamf for a more complete solution on keeping those applications fresh and up-to-date, and of course, the security benefits of that.

But we get more from selling new solutions, but the biggest thing that we get out of it frankly, is improved retention, because as our customers get, are more satisfied with our solution, obviously, our strong retention even gets better..

Got it. Thanks a lot Dean..

Thank you. Our next question comes from Brad Sills of Bank of America.

Your question, please?.

Hi, this is Sherry on for Brad. So it seems like you had a very strong end of the year for Protect and Connect. Can you maybe talk about what drove the strong adoption? Thank you..

Thank you for the question. Well, being the right security solution for the Mac is the primary driver.

As I mentioned a little bit earlier, the M1 that was released, the M1 chip for the Mac that was released in Q4 and Big Sur, the latest macOS operating system, they put a spotlight on the need for security providers to have properly architected Mac specific security. And so that was something that drove those products.

The remote work, we believe actually created a greater demand for security solutions, as well. As those people working from those homes, all the more important to make sure that they are protected from threats.

And then of course, when it comes to Jamf Connect, it's just such a simpler experience, to be able to tie into all your enterprise resources through your cloud identity provider by capturing the identity of the individual at the device.

Apple devices do an extraordinary job of capturing the identity of the person through face or through fingerprint, to be able to manage that person's access to everything that they require in the cloud through that simple way of authenticating.

It just creates a better user experience, which results in fewer calls into support, which of course, especially with a remote workforce becomes even more important..

Got it. Thank you. And can you talk about any changes that you may have seen in the demand environment, especially given how some regions are contemplating returning back to in-person work? Thanks again..

I'm sorry, I didn't catch that.

Could you repeat that question please?.

Yes, can you just talk about any changes that you may have seen in the demand environment given some regions are contemplating returning back to in-person work?.

Sure. Well, first off from a demand perspective, the demand for our solutions certainly are not dependent on remote work. Whether you're in the office, at school, learning at home or working at home, you still need to work on a system that is properly secured and managed and connected to any of the resources that you need.

Even though organizations are bringing employees back into work, they still need to support that secure environment and support employees who do choose to work from home. Overall, Apple in the enterprise is something that's driven by what is referred to as the consumerization of IT, using at work what you already love at home.

And when you come off a year where you've had more employees working at home than any time in our history, we believe that will do nothing but few of the consumerization of IT, which will create more demand for Apple and create more demand for Jamf..

Great, thank you..

Thank you. Our next question comes from Patrick Walravens of JMP. Please go ahead..

Great, thank you and congratulations, you guys.

Hey Dean, following up on that last one, I'm curious, what are you thinking about work from home for your company, is Jamf, long term is Jamf work from home company?.

Thanks for the question, Pat. I always can expect something interesting from you. Well, we have told our employees is going forward, we will continue to have facilities and we will continue to have offices that employees will come in to work at and we want to create a great environment where they want to come into work.

However, our facilities will no longer be an expectation of our employees, it will be a service that we provide them..

Okay, that's great.

And then if I could add one more, what's something that you would love your platform to be able to do that it can't do today?.

My word something I’d love our platform to be able to do we've currently on the security side, we do threat detection and threat prevention. We have not yet launched data loss prevention solution. But yet we just recently acquired some tech that will allow us to launch that sometime in the future.

But that is certainly an area that we wanted to expand into..

All right, great. Thanks a lot..

Thanks..

And ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect..