Jamf Holding Corp. (NASDAQ:JAMF) Q1 2025 Earnings Call Transcript

Jamf Holding Corp. (NASDAQ:JAMF) Q1 2025 Earnings Call Transcript May 6, 2025

Jamf Holding Corp. beats earnings expectations. Reported EPS is $0.22, expectations were $0.21.

Operator: Thank you for standing by and welcome to Jamf’s First Quarter 2025 Earnings Conference Call. At this time, all participants are in listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. [Operator Instructions]. As a reminder, today’s program is being recorded. And now, I’d like to introduce your host for today’s program, Jennifer Gaumond, Vice President, Investor Relations. Please go ahead.

Jennifer Gaumond: Good afternoon, and thank you for joining today’s call to discuss Jamf’s first quarter 2025 financial results. Joining me on today’s call are John Strosahl, CEO; and David Rudow, CFO. Before we begin, a reminder that shortly after the market closed today, we issued a press release announcing our first quarter financial results. We also published our Q1 investor and earnings presentation, along with an Excel file containing quarterly financial statements to assist with modeling. You may access this information on the Investor Relations section of jamf.com. Today’s discussion includes forward-looking statements, which involve risks and uncertainties that could cause actual results and trends to differ materially from our forecast.

For more details, please refer to the risk factors and other information discussed in our most recent SEC reports, including our most recent Annual Report on Form 10-K. Jamf assumes no obligation to update forward-looking statements, which speak only as of the date they are made. We will also reference some non-GAAP measures related to Jamf’s performance. Reconciliations to the nearest comparable GAAP measures are available in our earnings release. [Operator Instructions]. Now, I’ll turn it over to John.

John Strosahl: Thanks, Jen. Jamf achieved solid results in Q1 with year-over-year revenue growth of 10% and non-GAAP operating income margin of 22% exceeding the high end of our outlook for both metrics. Total ARR grew 9% year-over-year to $658 million. Our net new commercial ARR saw year-over-year growth. And excluding FX, total net new ARR growth accelerated for the first time since Q2 of 2022. Additionally, we saw strong new logo bookings in both commercial and education driven by higher ARR per customer. Security bookings were also strong, driving 17% year-over-year growth in security ARR to $162 million. Contributing to this performance was the successful launch of two new platform solutions in early March, Jamf for Mac and Jamf for K-12.

These device based offerings represent the next evolution of Jamf’s platform capabilities, helping remove barriers to Apple adoption by providing customers with everything they need for security and management in a single SKU. These solutions are tailored to specific buyer personas and leverage Jamf’s strong relationships with the IT admin. This enables Jamf to deliver across our four key growth factors: security, mobile, international and channel. Jamf for Mac empowers customers to easily embrace Mac in their operations, including multi-layered security that integrates with existing tooling while reducing the organization’s security risk footprint. A global education publishing group recently expanded and converted to Jamf for Mac. The solution provided the IT admin the ability to enhance the company’s device security posture with the IT and not the Infosec [ph] budget.

Jamf for K-12 is an enhanced education solution that provides IT admins with a powerful yet simple security and management solution combining Jamf Pro or Jamf School with Jamf Safe Internet. With this platform solution, we’re transforming classrooms, supporting student success, and ensuring equitable opportunities for every learner, whether an individual school, district, or an entire nation. A large school district in Louisiana recently converted for Jamf K-12. The district’s previous security product did not meet their growing security needs and required too many IT hours to manage. Jamf for K-12 provided the perfect solution at an attractive price, meeting the district’s requirements and making the IT team more efficient. Deals like this have helped drive strong education performance in Q1, typically a seasonally light quarter for education.

On the heels of this performance and leading into the traditional education buying season, we closed the acquisition of Identity Automation, a dynamic identity and access management platform solution. Security remains a key growth driver contributing to continued demand for Jamf’s Apple first security platform, especially in the mobile space. By acquiring Identity Automation, Jamf gained almost 90 employees as well as a key product differentiator, which is dynamic identity management for mobile. In K-12 education and other mobile centric industries, roles and accesses constantly shift. Identity Automation’s platform dynamically adjusts access, device and security policies in real time based on schedules, locations and role changes. Identity Automation has a strong foothold in education with more than 500 customers, primarily in the U.S. Identity Automation has been a longstanding Jamf partner with over 250 shared customers, including five of the top 10 school districts.

Combining forces, we’ll continue to deliver a solution to benefit schools and other industries that rely on mobile centric and deskless workflows, especially where Jamf has a strong presence such as healthcare, retail, aviation and field services. Additionally, a significant opportunity exists for leveraging our 40,000 existing Jamf education customers, international footprint and established Jamf channel relationships. While Jamf is known for its Apple best platform, Identity Automation offers solutions across multiple endpoints. By unifying Jamf’s endpoint management and security expertise with Identity Automation’s adaptive identity technology, organizations can streamline and enhance overall user experience all within a single platform.

We’re excited to have the Identity Automation team on board and looking forward to bringing the power of Jamf and Identity Automation to our customers. David will review the financial impact of the acquisition later. Now there’s one key growth factor that I haven’t touched on yet, which is our channel. With respect to the channel, as you recall, we launched our new global partner program in August of 2024 to accelerate the growth of Jamf’s channel partners and managed service providers. In just six months, the program is delivering measurable results. Since the launch, Jamf has streamlined partner led deal registration, allowing for real time visibility into status, progress and upcoming renewals, helping Jamf partners engage more effectively with customers.

This has resulted in deal registration growth of nearly 50% year-over-year and more than 25% growth as new partners added since the program launch, expanding Jamf’s global reach. We continue to be a strong channel first visit with partner driven ARR representing over 60% of Jamf’s total ARR. Outside of the U.S, partner driven ARR accounts for over 80%. In recognition of our channel efforts, Jamf recently received the 5-Star rating in the 2025 CRN Partner Program Guide. The 5-Star award is an elite recognition given the companies that have built their partner programs on the key elements needed to nurture lasting profitable and successful channel partnerships. The Jamf Global Partner Program reaches partners in over 70 countries worldwide. The program leverages a point based system that rewards partners and equips them with the necessary resources they need to grow their business while helping organizations of all sizes succeed with Apple.

Jamf’s Partner Hub is the one-stop-shop for Jamf’s partner community, offering them the ability to monitor deal registration status, check on upcoming customer renewal, complete training certifications and a host of other co-selling functionality. Now before I hand it over to David, I want to discuss how we are operating given the current geopolitical climate. We continue to see demand for Jamf Solutions and expect it to continue given Jamf’s industry leading Apple-first solutions. We’re closely monitoring customer sentiment and buying cycles. The cost of Jamf is a relatively small portion of an overall IT or security budget, and we believe Jamf’s mission critical status for many organizations allows Jamf to be insulated from efficiency efforts.

With respect to our federal government exposure, outside of education, government related ARR makes up approximately 2% of our total ARR. This amount includes state, local and federal with federal being the smallest portion. In K-12 education, the vast majority of funding comes from the state and local level with only a small portion coming from the federal funds. As such, we haven’t seen an impact to our K-12 budgets. It should be noted that Q2 and Q3 are technically our strongest K-12 education quarters, so we’ll be watching this space closely over the next coming months. In summary, considering the fluid situation, we’re continually monitoring and adjusting as needed. We believe that we are well positioned given Jamf’s ability to meet both the security and the management needs for Mac and mobile devices with the most robust Apple-first platform.

In closing, I want to thank our customers, our partners, employees and shareholders for all of your ongoing support. Next, I’ll turn it over to David to review our Q1 results and provide our Q2 and full year 2025 outlook.

David Rudow: Thanks, John. As a reminder, all non-revenue metrics I’ll be discussing will be on a non-GAAP basis. We achieved solid results again in Q1, exceeding the high end of our revenue outlook. Year-over-year, total revenue growth was 10%. Recurring revenue grew at 11%, representing 98% of total revenues. Less strategic sources of revenue such as services and license continue to experience year-over-year declines. Our Q1 net retention rate remained flat from Q4 at 104% and gross retention rates remained consistent with historical levels. Non-GAAP operating income exceeded the high end of our Q1 outlook at $37.6 million or a 22% margin, an 800 basis point improvement over Q1 2024. This was driven by our continued commitment to disciplined investment and efficiency efforts.

Sales and marketing as a percent of total revenue improved approximately 400 basis points compared to the prior year period and G&A improved approximately 200 basis points. Our trailing 12 month unlevered free cash flow margin decreased slightly to 12.3% compared to 12.5% in the prior year. Unlevered free cash flow margin continues to be impacted by the timing of billings and collections associated with our comprehensive systems update. In the quarter, we made good progress on collections and expect DSOs to return to normal levels over the next few quarters. From a cash perspective, we ended Q1 with $222 million. On April 1st, we closed the Identity Automation acquisition. Under the terms of the agreement, the $215 million purchase price is payable on two installments, $175 million paid at the close and $40 million payable on October 1.

Given Jamf’s growth and improving profitability, we remain in a healthy liquidity position. Now turning to our outlook for the second quarter and full-year 2025. We remain committed to being a profitable growth company and will build on the progress we’ve made improving efficiencies, while strategically investing for growth. We believe in creating an achievable model. This outlook reflects current market conditions and we will continue to monitor potential risks as they pertain to the current macro environment. Our outlook is based on current FX rates and any future currency fluctuations are not factored in. We’ve taken a prudent approach to the remainder of 2025 by maintaining our previously provided revenue outlook. With the U.S. dollar weakening relative to other currencies and our growing international expense base, we are seeing headwinds of about $2 million to $3 million for the remainder of the year and in turn are including this in our operating income outlook.

The Q2 and FY ’25 guidance also includes the revenue and operating income from the recently closed Identity Automation acquisition. It should be noted that Identity Automation has seasonality with respect to ARR and revenue, with the second half of the year generating higher levels than the first half. For the second quarter of 2025, we expect total revenue of $167.5 million to $169.5 million representing year-over-year growth of 10% at the midpoint. Non-GAAP operating income of $29.5 million to $30.5 million representing a non-GAAP operating margin of 18% at the midpoint. This includes some additional go-to-market investment and Identity Automation as well as the previously mentioned impact of FX. For the full-year of 2025, we expect total revenue of $691 million to $695 million representing year-over-year growth of 10.5 at the midpoint.

Non-GAAP operating income of $144.5 million to a $147.5 million representing a non-GAAP operating margin of 21% at the midpoint and approximately 500 basis point improvement over fiscal year 2024. These amounts include the contribution from Identity Automation of approximately $15 million of revenue for the remaining three quarters of the year, while being margin accretive for the balance of the year. This also embeds the previously mentioned impact of FX. As you model the seasonal impact of Identity Automation, remember that its revenue contribution is highest in Q3. Additionally, given our strong margin profile, we continue to expect to generate unlevered free cash flow growth of at least 75% for the year. In closing, we are committed to growth, while driving incremental operating margin improvement regardless of the environment.

Our objective is to exit fiscal ’26 at a rule of 40 run rate as defined as the sum of the year-over-year growth plus adjusted EBITDA margin. To be more in line with our comparable group and for ease of calculation, we have made the decision to move to adjusted EBITDA margin for calculating the Rule of 40. I look forward to sharing our progress against this objective as we move through the year. I also want to thank the entire Jamf team for another great quarter and for expertly serving our customers. Now we will take your questions. Operator?

Q&A Session

Operator: Certainly. And our first question comes from the line of Joshua Riley from Needham. Your question please.

Joshua Riley: Awesome. Thanks for taking my questions and nice job on the quarter here. As you highlighted in the press release, the Identity Automation acquisition is set to enhance your mobile and security adoption. It seems the solutions initially target at the education market. How do you think about moving the solution more to commercial markets, over time as well and including kind of the go-to-market strategy on that front as well?

John Strosahl: Yes, Josh. This is John. I’ll take the question. And then, we actually have Henry Patel in the room as well, our Chief Strategy Officer. He can add some color to certainly part of this acquisition. We really saw this benefit, the education market. We’ve gone to market with Identity Automation for quite a while. As mentioned in the prepared remarks, we have a lot of joint customers. And so we already had some traction there. We really like the fact that it provides the identity to the person, whether it’s a shared device or a device that they have. It’s based on context. And by extending that security out and proving it out in an education setting, you can imagine all of the different areas that the deskless workflow would benefit from that similar type of model.

So if you are a shift worker, if you are a traveling nurse, if you are name you’re Retail Manager, all of those things require the provisioning and the identity based on where that person is, and it could be time based as well. So we really believe that we can extend this out beyond education. But, again, we have a lot of room to grow in the education. We have over 40,000 education customers worldwide and Identity Automation sold little to none outside the U.S. So we’re really looking to double down on that. I don’t know, Henry, do you have [Technical Difficulty].

Henry Patel: Sure, John. Yes, I’ll just make a quick comment here. I think John has kind of outlined all the different opportunities we have within education and outside of education. And really what we’re looking for is how do we actually tie ourselves to workflows that we can serve our customers. And if we look at some of the retail aviation, the benefit here is really tying that identity to that device and how do we make that workflow better. Obviously, we’re focused on the Apple devices and we want to make that whole experience much better.

Joshua Riley: Got it. That’s helpful. And then just one quick follow-up from me. Now that you have the Jamf for Mac, how do you think about the marketing of that relative to Jamf’s business plan going forward? And I guess in terms of like what will you be pushing in terms of customers to adopt? And what’s the right scenario where you want to use Jamf for Mac versus the Jamf business plan? Thanks.

John Strosahl: Yes, Josh. This is John. It’s really — the Jamf business plan really was oriented more towards the smaller business customer. And Mac for enterprise is really designed for the enterprise and how we have our go-to-market and the buying motion, all of those things are oriented around that enterprise buyer, and including the solution. So really kind of differentiation there as the smaller customers are going to be more business plan, and the enterprise customers are going to be more on the enterprise for Mac. And after releasing that, we’ve really seen some good traction there just given the fact that you can talk to an IT buyer who’s trusted a customer of ours and has been for years, and they can help extend the security within their environment without having to go through a separate buying motion.

Joshua Riley: Understood. Helpful. Thank you, guys.

Operator: Thank you. And our next question comes from the line of Koji Ikeda from Bank of America. Your question, please.

Koji Ikeda: Yes. Hey, guys. Thanks so much for taking the questions. A couple from me today. So when I listened to the prepared remarks and specifically on the commentary on demand, it sounds like demand is very good out there. And so with you guys keeping the guide, it feels kind of interesting. And so where I’m going with this is, is the guidance and the keeping of the guide, a reflection of the good demand as coming in as expected and you’re pulling it forward, therefore keeping the guide? Or could you have potentially kept or raised the guide, meaning has the demand improved, but you’re maintaining the guide because of an uncertain macro environment?

David Rudow: Yes. Thanks, Koji. This is David. Yes, as we thought about the guidance for the balance for Q2 and the guidance of the year, I think you have to keep in the back of your mind of kind of the noise that’s out there. Q1, I think there was like little things that we saw, like nothing big. April seems more or less in line. I mean, it’s first month of the quarter. And so I think to be prudent, I think it was reasonable for us to just kind of maintain our guidance for the year. I think we feel comfortable doing that. Obviously, we’re going to keep our eyes open, watch for any changes in the marketplace and we correct accordingly. But I think it’s just prudent right now to provide and just maintain the guidance for the year.

Koji Ikeda: Got it. Thank you. And appreciate all the color on FX and the impacts there on operating expenses. But I wanted to ask, maybe FX as the potential of FX as being an international demand driver, just thinking about a weakening USD. Could you remind us how is Jamf priced internationally? Is it all in USD or is it translated, to local currency? And is a weakening dollar potentially better for you guys from a demand perspective for international customers? Thank you.

David Rudow: Yes. So we went live with our new system. We did a system update in August of last year. And part of the reason for that is because we solely build and collect it in U.S. dollars. Now that the system is live and up and running, we have the flexibility and the ability to bill in local currency. So we are in fact doing that now. It’s going to be a slow transition as we sign new deals. And as customers renew, we will switch them to local currency billings. So we saw very minimal benefit with the dollar weakening on the top line, but we do have over 25% of our cost in international locations. We are seeing a negative impact on the cost side.

Koji Ikeda: Thank you so much.

Operator: Thank you. [Operator Instructions]. Our next question comes from the line of Jake Roberge from William Blair. Your question please.

Jake Roberge: Yes, thanks for taking my questions. Can you talk a little bit more about the Identity Automation acquisition? I know it’s still early, but would love to hear what the initial reception has been like from customers and partners. And then I know you’ve historically had some partnerships with some of the more traditional identity vendors in the space. So curious if you see those changing at all moving forward?

John Strosahl: Yes, I’ll take the first part of the question, and I’d like Henry to add some color as well. I mean, as I mentioned before, we’ve been selling with Identity Automation for some time now, so it’s not a new go-to-market motion with us. And I think on day two, we closed our first deal. So it’s been — it’s gotten, it’s continued and we’ve been very happy with the results and how that’s going with the integration and the traction that the go-to-market teams are going. Again, we’re using our go-to-market team to support theirs so that we can really expand it certainly internationally and then think about how to do other industries outside of education. But Henry, why don’t you add a little as well?

Henry Patel: Yes, absolutely. Jamf’s posture is always that we’re trying to integrate into existing customer environments. How do we fit in? How do we stand out? We have great partnerships in the identity market. We continue to have those partnerships and we will strengthen those as well. What Identity Automation brings to the table is that dynamic identity. How do we actually build on that workflow for those customers in those specific segments and population of customers that we want to actually try to drive more solutions. It is an additive to the existing identity enterprise provider, so we’re actually federating. So we don’t lose the ability to partner. In fact, we’re enhancing the partnership here.

Jake Roberge: Okay. That’s helpful. And then great to hear that net new ARR reaccelerated during the quarter. Can you talk about some of the drivers of that and whether anything stood out between security, mobile or maybe even some of the key industries within tech or education that that helped drive that?

John Strosahl: Yes, Jake, this is John. Really, the Mac for the Enterprise and the Mobile for Enterprise, both of them saw some good traction as we released those and it really simplifies our go-to-market motion there as well. So that that certainly was helpful. We continue to see demand. As David mentioned, there’s caution out there and it’s the same across the industry. I’ve spoken with other CEOs, and they’re seeing similar things. There’s caution, but there’s still demand. And with the mobility and the increase of mobility and the need for mobile security, all of those things play really, really well into our commercial performance since last quarter.

David Rudow: Yes. And Jake, just to add on, in terms of vertical performance, I think we saw strength in healthcare, financial services, education. And on the regional side, we had a good APAC quarter. And then in Europe, Central, Southern and U.K., Ireland also performed well.

Jake Roberge: Very helpful. Thanks for taking the questions.

Operator: Thank you. And our next question comes from the line of DJ Hynes from Canaccord Genuity. Your question, please.

Unidentified Analyst: Hey, guys. This is Luke on for DJ. Thanks for taking the question. So, we’ve seen reports out there of customers pulling forward Apple device purchases that trying to get ahead of potential tariffs. I understand the impact to you there isn’t going to be direct, but wondering if you have any thoughts about how that might play out for your business, if there is any change in sort of pull forward in those device counts at your customers?

John Strosahl: Yes, Luke, I can try to answer that question. Of course, I can’t speak for Apple. We have seen — we haven’t seen necessarily the pull forward. I don’t doubt that that would happen if companies are trying to buy ahead of potential tariffs and things like that down the road. And you’re right, it doesn’t have a direct or an immediate correlation to our business, but longer term, obviously as Apple expands, that gives us a bigger footprint. I guess the only thing from the Apple side is that they tend to navigate these types of things really, really well in the past and they’re a healthy company. So I think that, if a company, a hardware company is going to be able to navigate it well, it’s certainly Apple.

Unidentified Analyst: Yes, that’s great and helpful. Thank you. And then maybe a follow-up, just on your cloud marketplace momentum. The AWS marketplace has been a strong channel for you guys in the past. I think Azure just went online in Q4. Just wondering if you’re seeing any early signs of pipeline build in that channel, for that marketplace and how do you see that evolving over time?

John Strosahl: Yes, we do actually, it’s nice to see. As I mentioned in past calls, we were very pleasantly surprised on the AWS marketplace and now extending that into the Azure marketplace. We’re seeing similar traction. It’s early days, but we have — we have closed deals through it, and we know that there’s pipeline building. We speak very regularly with our Microsoft sales partners, and they’re continuing to trudge ahead along with our teams. And so I’m optimistic about how Azure will do in a similar way that AWS did.

Operator: Does that answer your question?

Unidentified Analyst: Yes, that’s great. Thank you.

Operator: Thank you. And our next question comes from the line of Raimo Lenschow from Barclays. Your question please.

Unidentified Analyst: Hey, everyone. This is Isaac [ph] on for Raimo. Thanks for taking the question. Maybe on the education side, great to hear the strong performance in the quarter and how Jamf K-12 has already started to pick up a little bit. As we think about you moving into the seasonally more weighted education portion of the year, how are you feeling from a pipeline perspective? And has Jamf K-12 augmented your visibility at all to any degree?

John Strosahl: Yes. It certainly has. We know we’ve been talking about this education refresh coming for quite a while, and we know that some jurisdictions have paused on that just out of caution and out of expense pressure, but we are seeing some of that. We talked about it last quarter on the call, we’re certainly seeing some pipeline build. We’re in discussions with renewals and expansion of a lot of our international customers, particularly in the APAC region. So we’re again, cost we’re optimistic about the K-12 upcoming season. And certainly with Identity Automation, that really gives us an extra push, not only an experienced sales team that that’s used to working with education, but we have a more holistic solution we can go to market with together. So we’re excited along with our K-12 offering. I’m optimistic about our upcoming season.

Unidentified Analyst: All right. That’s super helpful. And then maybe one for David on the free cash flow side. It was nice to see the improvement year-over-year in Q1 as well as the reiteration of the full-year guide for that 75% growth. As we think about the shape of that through the remainder of the year, should that seasonality mirror what we saw in fiscal ’24 or is that going to be a bit more back end weighted as that collections component starts to normalize again?

David Rudow: Yes. I think what we’ll end up seeing is it will improve — it should improve throughout the year. If you look at DSOs for Q1, we’re about 20 days over. And the reason for that is with the systems update we did last year, there were some billing corrections that we needed to make in the system. So what happened was we ended up having a back end loaded quarter from a billings perspective. We had a very large amount of billings in March. And so those should start being collected looking out in May, mid-May, late May, early June, sometime around that period. And so we would expect DSOs to return to a more normal range as we move out to the year. And in turn the free cash flow margins will improve as well throughout the year.

Unidentified Analyst: Great. Thank you.

Operator: Thank you. And our next question comes from the line of Patrick Walravens from Citizens. Your question please.

Unidentified Analyst: Hi, guys. Thank you very much for taking my question. This is Nick on for Pat. Just one for me. David, it’s been a little over six months, since you’ve started working at Jamf. What is one thing that’s been more challenging than you expected? And what is one thing that’s been easier than you expected?

David Rudow: Yes. I would say probably the challenging piece would be the systems, right? Anytime you move to a new system, we move to a new ERP that went live in August. We have 76,000 plus customers, we sell in 100 different countries. We’re seeing huge benefit from the system as well as we’re getting it optimized and performance is improving. But I would say like anybody that moves to a new system while you’re operating a public company, a big company that will happen. We feel great with where we’re at. We’re getting better visibility on numbers. We’re getting better — we can bill in different currencies now. We have the partner portal set up. So there’s a lot of good things that are coming out of it. So challenges, but I think in the long run, this will be a complete asset for us.

On the good side, I would say it’s our product and our customers. We have a rich set of blue chip customers around the world. We sell into all verticals. This is a horizontal solution. It’s not verticalized in any way. We can sell it any vertical. And our international reach as well, there’s quite a bit of opportunity internationally still. I mean, I think it’s very early days international. So challenges system, of course, but then also the customer base and with the product — the strength of the product is a pleasant surprise.

Unidentified Analyst: Great. Thank you very much.

Operator: Thank you. And our next question comes from the line of Samik Chatterjee from JPMorgan. Your question please.

Unidentified Analyst: Hi. This is Priyanka on for Samik. How are you guys doing?

John Strosahl: Great. How are you?

Unidentified Analyst: Good. Good. So one question. I see from Identity Automation that you kind of have a fifth if we’re doing the back of the math, back of the paper math right here, we got $15 million uplift in the full-year guide — and then — for revenue and then $1.5 million for operating profit for 21% operating margin. Is this basically just to kind of keep it at 21%? What do — what does Identity Automation’s operating margins look like typically? And can it be improved once you kind of move away well, move into commercial from the education heavy portion that you see right here? And I have a follow-up.

David Rudow: Yes. That’s a great question. Yes, Identity Automation has a similar shape to revenues throughout the year as we do on the education side. So the second half is stronger than the first half. In turn, they do have large customers, it’s U.S. based, so naturally they’re more profitable and we expect that profitability to continue. We anticipate it well — we said from the beginning, it was accretive on the top and the bottom line, and we still think that holds true. In Q2, we did add some additional expenses. For go-to-market, we’re seeing good demand out there. We’re seeing some international demand as well and we’re preparing for the Southern Hemisphere school season. And then also as a side note, we have FX too in Q2 and throughout the year. But we expect that the Identity Automation margins will improve in the second half of the year from the second quarter.

Unidentified Analyst: All right. Fantastic. And on the product line, you have Jamf for Mac and a few other things that you’ve launched. What makes it very differentiated from your offerings? There could be like some sort of risk of seeing a bunch of different offerings that may or may not be differentiated. And will it drive cannibalization of bundling solutions where customers are choosing, I want this X, Y and Z? So I would love to get into those parts.

John Strosahl: Yes, I can take that first part of it at least. We’re not — we really oriented the products certainly between the Mac for enterprise and the mobile for enterprise. There’s different products in there. Some of them are similar, but many of them are very different oriented towards the mobile piece of that, for example. So there’s a differentiation there. As I mentioned earlier, with business plan and Mac for enterprise, the differentiation there is those products in the business plan are more oriented towards the smaller customers and what we’ve included in that. And we don’t anticipate any cannibalization in that. Those if — we’re if we have to go through two buying motions to get that same product into that customer, we’ve noted that with our platform solutions, not only do we have a higher conversion rate at a higher ASP, but we also have better retention.

So those are all things that play into the fact that that providing those platform solutions is the right thing for our customer. And again, we listen to our customers and how they want to buy and this is what we’ve been in discussions with them about. So that’s why we’re providing them.

David Rudow: And Priya, one additional comment on Identity Automation revenues. We go-to-market with a cloud-based solution, but the company does have some legacy term based that result in immediate recognition of a portion, a good portion of the revenues and then there’s maintenance that’s pro rata over time. And so you’ll see that increase in Q3 and Q4, but it’ll end up being a little lumpy between Q3 and Q4 because of that.

Unidentified Analyst: All right. Thank you so much.

Operator: Thank you. And our next question comes from the line of Aidan Perry from Piper Sandler. Your question please.

Aidan Perry: Hi, this is Aidan on for Rob Owens. Thank you for taking my question. With the latest acquisition of Identity Automation, how should we think about R&D spend going forward and the product roadmap for security?

David Rudow: Yes. On the R&D spend, I don’t — it’s — we’re integrating the company together from a product perspective and go-to-market perspective and that will happen. And we are committing a little more money upfront, because we see the need. And I think the addition of R&D to our total, it shouldn’t throw the percentages off too much, because it’s part I mean, it’s a smaller company and it probably won’t be that noticeable as you look out as to the consolidated R&D as a percent of revenues in the coming periods.

Aidan Perry: Thank you. And any more thoughts on how to think about the security product roadmap going forward?

John Strosahl: Yes. As far as the security roadmap, again, it enhances. We listen to our customers. We actually got into security because our customers asked us to. And this is just one more step in that continued direction, allowing, especially as we have had a lot of success as we’ve mentioned before in the deskless workflow, we saw a great opportunity for this not only for our 40,000, education customers, but as we look to the deskless workflows, all of those things outside, outside of education on the security standpoint. Again, this is an all security play, so it’s going to help enhance our security footprint.

Aidan Perry: Very helpful. Thank you.

Operator: Thank you. This does conclude the question-and-answer session of today’s program. I’d like to hand the program back to John Strosahl for any further remarks.

John Strosahl: Yes. Thanks, Jonathan. And thanks, everyone, for your time today. We’re pleased with our solid performance this quarter. We continue to monitor potential risks as they pertain to the current geopolitical environment and will adjust as needed. For now, we continue to execute on our growth and profitability initiatives and remain committed to our goal of achieving the Rule of 40. We hope to see some as we participate in the conferences over the next month. And thank you again for joining us and have a great evening.

Operator: Thank you, ladies and gentlemen, for your participation in today’s conference. This does conclude the program. You may now disconnect. Good day.