Does Jamf Holding (NASDAQ:JAMF) Have A Healthy Balance Sheet?

Some say volatility, rather than debt, is the best way to think about risk as an investor, but Warren Buffett famously said that 'Volatility is far from synonymous with risk.' It's only natural to consider a company's balance sheet when you examine how risky it is, since debt is often involved when a business collapses. Importantly, Jamf Holding Corp. (NASDAQ:JAMF) does carry debt. But is this debt a concern to shareholders?

Why Does Debt Bring Risk?

Generally speaking, debt only becomes a real problem when a company can't easily pay it off, either by raising capital or with its own cash flow. In the worst case scenario, a company can go bankrupt if it cannot pay its creditors. However, a more frequent (but still costly) occurrence is where a company must issue shares at bargain-basement prices, permanently diluting shareholders, just to shore up its balance sheet. Of course, plenty of companies use debt to fund growth, without any negative consequences. When we think about a company's use of debt, we first look at cash and debt together.

See our latest analysis for Jamf Holding

What Is Jamf Holding's Net Debt?

As you can see below, Jamf Holding had US$368.2m of debt, at June 2024, which is about the same as the year before. You can click the chart for greater detail. However, it also had US$200.9m in cash, and so its net debt is US$167.4m.

A Look At Jamf Holding's Liabilities

According to the last reported balance sheet, Jamf Holding had liabilities of US$409.0m due within 12 months, and liabilities of US$445.4m due beyond 12 months. Offsetting these obligations, it had cash of US$200.9m as well as receivables valued at US$109.1m due within 12 months. So its liabilities total US$544.6m more than the combination of its cash and short-term receivables.

This deficit isn't so bad because Jamf Holding is worth US$2.22b, and thus could probably raise enough capital to shore up its balance sheet, if the need arose. However, it is still worthwhile taking a close look at its ability to pay off debt. There's no doubt that we learn most about debt from the balance sheet. But ultimately the future profitability of the business will decide if Jamf Holding can strengthen its balance sheet over time. So if you want to see what the professionals think, you might find this free report on analyst profit forecasts to be interesting.

In the last year Jamf Holding wasn't profitable at an EBIT level, but managed to grow its revenue by 15%, to US$598m. We usually like to see faster growth from unprofitable companies, but each to their own.

Caveat Emptor

Importantly, Jamf Holding had an earnings before interest and tax (EBIT) loss over the last year. Indeed, it lost US$72m at the EBIT level. When we look at that and recall the liabilities on its balance sheet, relative to cash, it seems unwise to us for the company to have any debt. Quite frankly we think the balance sheet is far from match-fit, although it could be improved with time. For example, we would not want to see a repeat of last year's loss of US$89m. So to be blunt we do think it is risky. The balance sheet is clearly the area to focus on when you are analysing debt. But ultimately, every company can contain risks that exist outside of the balance sheet. Case in point: We've spotted 1 warning sign for Jamf Holding you should be aware of.

If you're interested in investing in businesses that can grow profits without the burden of debt, then check out this free list of growing businesses that have net cash on the balance sheet.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.