Apple-First Security Platform Will Attract Future Clients Across Industries

Key Takeaways

• Jamf's Apple-first security platform and mobile expansion promise significant revenue growth as industries prioritize security and mobility.
  
• Strategic international investments and partnerships, particularly in education projects, are expected to enhance sales efficiency and expand revenue outside the U.S.
  
• Declining net retention rates and challenges in revenue sources, alongside market uncertainty and funding concerns, may hinder Jamf's growth and competitive edge.

Catalysts

Provides management and security solutions for Apple platforms in the Americas, Europe, the Middle East, India, Africa, and the Asia Pacific.

• Jamf's Apple-first security platform is experiencing a 17% year-over-year growth in security ARR, with large financial institutions adopting Jamf's solutions. This is likely to drive future revenue growth as security becomes a higher priority across industries.
  
• Jamf's expansion in the mobile space, with growing deployments in industries like transportation and tech, indicates potential for significant revenue growth by capturing markets that require mobility and security solutions for mobile devices.
  
• Jamf's international revenue grew by 17% in 2024, especially with educational projects like Japan's GIGA project. Continued investments and opportunities in strategic geographies outside the U.S. are positioned to drive international revenue growth.
  
• The launch of the Jamf Partner Hub and a new partner program is expected to optimize channel partner contributions and enhance sales efficiency. This could improve operating margins by leveraging the partner network for distribution.
  
• Jamf's focus on scalable and efficient operations, including system updates and partner program enhancements, aims to achieve the Rule of 40, suggesting an ongoing strategy to improve net margins and operating efficiency as the company grows.

Jamf Holding Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming Jamf Holding's revenue will grow by 8.6% annually over the next 3 years.
• Analysts are not forecasting that Jamf Holding will become profitable in next 3 years. To represent the Analyst Price Target as a Future PE Valuation we will estimate Jamf Holding's profit margin will increase from -10.9% to the average US Software industry of 12.0% in 3 years.
• If Jamf Holding's profit margin were to converge on the industry average, you could expect earnings to reach $96.1 million (and earnings per share of $0.73) by about March 2028, up from $-68.5 million today.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 34.2x on those 2028 earnings, up from -24.9x today. This future PE is greater than the current PE for the US Software industry at 29.5x.
• Analysts expect the number of shares outstanding to grow by 0.69% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 7.95%, as per the Simply Wall St company report.

Jamf Holding Future Earnings Per Share Growth

Risks

• The decrease in net retention rate to 104% and ongoing decline in less strategic sources of revenue such as services and licenses could signal challenges in maintaining current revenue levels, potentially impacting overall revenue growth and earnings.
  
• The lower price point of mobile products compared to Mac products could suppress revenue growth, even as mobile increases its share of the business, potentially impacting net margins.
  
• The uncertainty in the current selling environment, influenced by ongoing layoffs and budget constraints in end markets, may limit revenue growth opportunities and impact earnings projections.
  
• There are concerns about innovating at the pace of Apple without sufficient funding and investment in R&D, which could hinder Jamf's ability to maintain competitive advantage and impact future revenues.
  
• The potential delays in billings and collections associated with system updates that occurred this year may affect cash flow projections, potentially influencing free cash flow and net margins.

Valuation

• The analysts have a consensus price target of $19.8 for Jamf Holding based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $27.0, and the most bearish reporting a price target of just $16.0.
  
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $802.7 million, earnings will come to $96.1 million, and it would be trading on a PE ratio of 34.2x, assuming you use a discount rate of 8.0%.
  
• Given the current share price of $13.17, the analyst price target of $19.8 is 33.5% higher.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.