IPO Preview: Jamf Holding Begins U.S. IPO Effort


Jamf Holding Corp. (JAMF) intends to raise $100 million in an IPO of its common stock, according to an S-1 registration statement.

The firm provides enterprises of all sizes with IT support services for Apple products, apps and corporate resources.

JAMF is growing revenue and has achieved an impressive dollar retention rate for its customer cohorts.

I’ll provide an update when we learn more IPO details from management.

Minneapolis, Minnesota-based Jamf was founded to provide a comprehensive set of services it calls Apple Enterprise Management.

Management is led by Chief Executive Officer Mr. Dean Hager, who has been with the firm since June 2015 and was previously CEO of Kroll Ontrack and prior to that held various senior roles at Lawson Software, later acquired by Infor.

Below is a brief overview video of Jamf's cloud offering:

Source: Jamf

The firm enables enterprises to more easily integrate all types of Apple products and software into their existing systems 'without ever having to touch the devices.'

Jamf has received at least $570 million from investors including Vista Equity Partners, a private equity firm.

The company has more than 40,000 customers in over 100 countries as of June 29, 2020.

Jamf sells its SaaS solutions via a subscription revenue model and sells larger accounts through a direct sales force and smaller accounts via its online portal.

The firm also sells through channel partners, which includes Apple itself.

Sales & Marketing expenses as a percentage of total revenue have been uneven as revenues have increased.

The Sales & Marketing efficiency rate, defined as how many dollars of additional new revenue are generated by each dollar of Sales & Marketing spend, dropped to 0.7x in the most recent reporting period.

The Rule of 40 is a software industry rule of thumb that says that as long as the combined revenue growth rate and EBITDA percentage rate equal or exceed 40%, the firm is on an acceptable growth trajectory. JAMF’s most recent calculation was 36% as of March 31, 2020, so the firm needs some improvement to reach this rule’s hurdle rate.

Management states that its dollar-based net retention rate ‘has exceeded 115% as of the end of each of the last nine fiscal quarters, calculated on a trailing twelve months basis.’

A dollar based net retention rate of more than 100% means that for a given cohort of customers, the firm is adding new revenue from that same cohort over time.

A figure of above 115% is impressive and shows the firm’s ‘land and expand’ strategy is working as well as its services have achieved market fit.

According to a management-cited recent IDC survey of U.S. commercial IT decision makers that expects the penetration of Apple Mac computers to increase from 11% to 14% within two years.

Additionally, more enterprises are seeking to allow employees to use more of the technology of their choice, as solutions to integrate various platforms become more available and cost effective.

Statcounter also reported that Apple OSs 'comprised 22% of global web traffic (both business and consumer) in December 2019, up from 4% in January 2009.'

The increase in the use of mobile devices is mostly the reason for Apple's use growth in the enterprise, although the Mac has been an important contributor.

The company's competitors are typically 'large cross-platform enterprise providers and early stage providers of Apple enterprise solutions. Large enterprise providers, such as VMWare, Microsoft and IBM typically compete with us on one particular solution (e.g. device management, identity or endpoint-security) intended for cross-platform use and not specialized for Apple. Given Jamf's success, a number of early-stage companies are following our approach to deliver on an Apple ecosystem vision.'

Management says its focus on providing a vertically integrated suite of options means it can compete better against the small startups that are usually focused on one functionality as well as against the large providers who do not offer specialized solutions.

Jamf’s recent financial results can be summarized as follows:

  • Growing topline revenue
  • Increased gross profit but reduced gross margin
  • Uneven operating losses and negative operating margin
  • A swing to sharply negative cash flow from operations

Below are relevant financial results derived from the firm’s registration statement:


Source: Company registration statement

As of March 31, 2020, Jamf had $22.7 million in cash and $397.4 million in total liabilities.

Free cash flow during the twelve months ended March 31, 2020, was $3.5 million.

Jamf intends to raise $100 million in gross proceeds from an IPO of its common stock, although the final amount may differ.

Management says it will use the net proceeds from the IPO ‘ to repay outstanding borrowings under our Term Loan Facility and the remainder of such net proceeds will be used for general corporate purposes. The contract interest rate on the indebtedness that we intend to repay was 8.70% per annum as of March 31, 2020, and the maturity date is November 13, 2022.’

Management’s presentation of the company roadshow is not available.

Listed bookrunners of the IPO are Goldman Sachs, J.P. Morgan, BofA Securities, Barclays, RBC Capital Markets, Mizuho Securities, HSBC, Canaccord Genuity, JMP Securities, Piper Sandler, William Blair, Loop Capital Markets, and CastleOak Securities, L.P.


Jamf is seeking to tap public capital markets to pay down debt.

The firm is private equity-owned by Vista Equity Partners, so it isn’t surprising that it is using the IPO to pay down debt likely incurred as it has paid dividends to Vista.

At least the company isn’t heavily in debt and is growing revenue quickly, unlike many other private equity-owned firms at IPO.

JAMF’s financials show strong growth but still-negative operating profit and a swing to cash used in operations in the most recent reporting period.

Sales & Marketing expenses as a percentage of total revenue have moved upward as revenues have increased; its Sales & Marketing efficiency rate has dropped slightly also.

The market opportunity for providing enterprises with IT services for their Apple users is large and likely to continue to grow at a significant rate, so the company has positive market dynamics in its favor.

Goldman Sachs is the lead left underwriter and IPOs led by the firm over the last 12-month period have generated an average return of 91.7% since their IPO. This is a top-tier performance for all major underwriters during the period.

With a dollar net retention rate consistently above 115%, per management, the firm is performing well on a customer dollar retention basis.

When we learn more details about the IPO’s pricing and valuation assumptions, I’ll provide a final opinion.

Expected IPO Pricing Date: To be announced.

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(I have no position in any stocks mentioned as of the article date, no plans to initiate any positions within the next 48 hours, and no business relationship with any company whose stock is mentioned in this article. IPO stocks can be very volatile in the days immediately after an IPO. Information provided is for educational purposes only, may be in error, incomplete or out of date, and does not constitute financial, legal, or investment advice.)


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