JAMF - Jamf: A Growth Opportunity In The Apple Ecosystem

2023-03-27 09:34:23 ET

Summary

• Jamf is poised to benefit from increasing Mac adoption in the enterprise market.
• Jamf has a strong moat with a dominant market position in Apple device management, supported by a growing ecosystem of integrations and partnerships.
• With an EV of 2.5 billion dollars and expected revenues of 670 million dollars next year, Jamf appears to be trading at a discount compared to its peers.

Executive Summary

Jamf ( JAMF ) is a technology company that provides Apple device management solutions for businesses, schools, and government organizations. The company has a Total Addressable Market ((TAM)) of approximately $35 billion, targeting about 150 million education devices and 575 million commercial devices. Jamf has been growing its Annual Recurring Revenue ((ARR)) at a compound annual growth rate of approximately 40%, and its revenue is expected to reach $670 million next year. Despite this growth, the company's Enterprise Value (EV) is around $2.5 billion, making it relatively cheap compared to its peers.

Business Overview

JAMF is the leading mobile device management (MDM) company for the Apple ecosystem. They specialize in helping businesses, schools, and government branches manage and secure their Apple devices at work. With over 71,000 customers, including Apple, JAMF is the industry standard for Apple device management. As Apple continues to gain market share in the enterprise, the need for an Apple-native enterprise solution becomes more evident, providing JAMF with several tailwinds.

JAMF provides a range of services to its clients, including Jamf Pro, a complete Apple device management solution for enterprise, Jamf Now, a simple MDM solution for small businesses, and Jamf Connect, which provides secure identity and access management for Apple devices. The company also offers professional services such as consulting, training, and support to help clients get the most out of their Apple device management.

Examples of JAMF's services in action can be seen across a range of industries. In healthcare, JAMF helps medical professionals securely access and share patient data on their Apple devices while ensuring compliance with regulations such as HIPAA. In education, JAMF helps teachers and students to use Apple devices in the classroom and remotely, with features such as app and content distribution, classroom management, and remote screen sharing.

In the business world, JAMF helps organizations to manage and secure their Apple devices across all departments, from finance to marketing. For example, JAMF enables marketing teams to securely access and distribute marketing materials on their Apple devices, while ensuring the data remains secure and compliant with company policies. Overall, JAMF is a crucial player in the growing Apple ecosystem and is essential for any organization looking to deploy and manage Apple devices in the workplace

The Apple IT Ecosystem

Apple has made significant strides in the enterprise tech market since Steve Jobs publicly stated his dislike for it. While Windows dominated the market ten years ago, Apple is now the most used OS company in the U.S. and is also gaining share in the enterprise market. According to IDC, Mac shipments grew by 60% between 2019-2022, while PC shipments only grew 6%, resulting in Macs accounting for 10.8% of all global PC shipments and 17% in the U.S. In contrast, Windows PC shipment volumes declined by 18% last year. Apple's dominant position in smartphones, tablets, and wearable markets is also becoming a bigger part of the enterprise, as employees demand to use their personal devices at work. JAMF predicts that Apple will become the number one device ecosystem in the enterprise by the end of this decade, and recent trends indicate continued market share gains for the Apple ecosystem.

A 2021 survey conducted by Vanson Bourne (commissioned by JAMF) found that 89% of workers were willing to make a salary sacrifice for device choice, and nearly two-thirds would choose Apple. Real-life examples, such as Cisco, show that 59% of new hires and 65% of employees eligible for a laptop refresh choose Macs over PCs. Forrester conducted a study that shows an M1 Mac in the enterprise results in cost savings ($843 per device), 20% improvement in employee retention, and a 5% increase in productivity. These trends indicate that more employees are demanding a full Apple experience at work, and JAMF provides the most comprehensive and easy-to-deploy platform in the market for Apple device management and support.

Since its founding in 2002, JAMF has focused exclusively on the Apple ecosystem, allowing them to develop a device management platform that maximizes the inherent strengths of Apple. Jamf's SaaS solution is designed bottom-up with Apple in mind, providing the central management and security features that enterprises need while ensuring a full native Apple experience. Jamf's focus on Apple is hard to replicate for other windows-first solutions, as they often severely limit the user experience on an Apple device. With over 71,000 customers, JAMF enjoys scale advantages, and JAMF Nation, the largest online community of Apple IT administrators in the world with over 100k+ IT professionals as members, gives the company a competitive advantage as no other competitor has a community this large to help answer questions from such a diverse body of users.

VMware has historically been JAMF's largest competitor, but as Broadcom waits for approval for its acquisition of VMware, JAMF management expects to face "the largest replacement market that JAMF has ever been faced with." Despite the acquisition, JAMF's leadership in the Apple device management market has not been challenged meaningfully for a while. At today's scale and integration with channel partners, no competitor is meaningfully challenging JAMF yet.

Growth

With revenue of less than $500 million last year, there is ample room for the business to grow several times larger in the long term. The company, Jamf, served approximately 30 million devices as of the fourth quarter of 2022, targeting a market that includes about 150 million education devices and 575 million commercial devices. According to estimates by Jamf and Frost & Sullivan, the Total Addressable Market ((TAM)) is around $35 billion. When considering Mac devices alone, at a cost of $50 to $100 ASP (Jamf Pro costs $44 per year, and the most popular all-in-one business plan is $163 per year) per device, multiplied by the 35 million commercial Macs in the installed base, this opportunity alone is worth between $1.7 to $3.5 billion. Furthermore, the overall market is growing, with low double-digit growth per management, driven by the consumerization of IT, resulting in Mac share gains, remote work and learn trends, and the security needs arising from increased Apple devices in the enterprise.

The pandemic provided a significant boost to Jamf's business, and the release of M1-equipped Macs in late 2020 was a crucial catalyst that further fueled demand. Even though some of the demand may have been pulled forward, the company still expects a normalized 25% topline growth going forward.

Valuation

Jamf currently has an enterprise value of 2.5 billion dollars. With projected revenue of $670 million for the next year, the company's valuation may seem high. However, when compared to other companies in the same industry, Jamf's valuation appears reasonable, if not cheap. The company's forward price-to-sales ratio is approximately 3.7x, while peers are trading at over 8x.

Moreover, Jamf has been profitable, with a net income margin of 6.3% for the last fiscal year. This profitability is uncommon among technology companies that have high growth potential but are not yet profitable. It indicates that the company has a solid business model and has been able to scale effectively without sacrificing profitability.

The company's strong financial position, along with its growth potential, makes it an attractive investment opportunity. Furthermore, with the growing demand for device management solutions and the increasing use of Apple devices in the enterprise, Jamf is well-positioned to capture a significant share of the market. Investors may see potential for significant long-term growth in Jamf and view its current valuation as a reasonable entry point into a growing industry.

Risks

Customer Concentration: Jamf's revenue is heavily reliant on a small number of large customers. The loss of a key customer or a significant reduction in orders from a major customer could have a material adverse effect on its business.

Cybersecurity Risk: As more devices are connected to the internet, cybersecurity risk is a growing concern for businesses. Jamf's software manages and secures devices, making it a potential target for cybercriminals. A security breach could damage the company's reputation, result in legal or regulatory action, and cause significant financial harm.

Dependency on Apple: Jamf's software is designed specifically for Apple devices, which means it is dependent on Apple's operating systems and hardware. Any changes in Apple's technology or business practices could adversely impact Jamf's business. Additionally, if Apple were to develop its own device management solution or choose to partner with a competitor, it could potentially harm Jamf's market position.

Conclusion

In conclusion, Jamf appears to have a significant growth opportunity in the enterprise device management market, targeting both education and commercial verticals. The company has a strong track record of serving its customers' needs and adding new features that improve the user experience and address security concerns. Despite some potential risks to the business, such as competition, customer concentration, and macroeconomic factors, Jamf's profitability and low valuation compared to its peers make it an attractive investment opportunity for those seeking exposure to the enterprise software space. Overall, with a growing TAM and continued product innovation, Jamf has the potential to continue its growth trajectory in the coming years.

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