Unidentified Analyst: This is Isaac on for Raimo. John, you’ve talked about enterprise being a bit more resilient than SMB over the last couple of quarters. And I was wondering if there was anything to call out here whether to the benefit of enterprise again or the weakness of SMB?
John Strosahl: Yes. Thanks, Isaac. We’ve seen — when we talk about the volatility in the SMB as the market’s uncertain, you have small businesses that can go out of business or get bought or there’s a lot of reasons for them that volatility. They have nothing to do with the products that you’re using necessarily. So we’ve seen some there, but I don’t think any more than the industry on average. We have — 2/3 of our business is volume based, is small to medium sized, but we have a good chunk of that business in enterprise and we’ve seen the scalability that we provide over doing this for over 20 years. alongside Apple that has really, really resonated with our customers. In fact, when we get into the enterprise, the higher we get up, generally, the less competition we have, especially as it relates to the Apple as it relates to the Apple ecosystem.
So there are good benefits in the enterprise. We saw Q4 finish strong. We saw companies that had budget at the end of the quarter that went ahead and pulled the trigger on that. we’ve seen some good progress earlier this year even with the enterprise groups.
Unidentified Analyst: Great. That’s really helpful. And then one for Ian on cash flow. You talked again about the shift from upfront to annual billings. Was the level there similar to last quarter? Should we think about that being a bit more predominant now in the customer base? And then as we look into FY ’24, should we expect that shift to move back to upfront towards the end of the year?
Ian Goodkind: Yes. Just to clarify a couple of things there. So when comparing ’23 to ’22, the primary driver was that shift in multiyear being — that used to be paid upfront to annually paid. That was the primary driver within the quarter itself. We actually saw customers just defer payments to basically January of ’24. So it was just a timing issue, not indicative of our business, neither of those are. As we roll forward, I would say operating income or margin is the bigger driver of our unlevered free cash flow as we move forward. And we just raised our operating income about 700 basis points. And we’ve said that unlevered free cash flow is going to be about consistent with that. And that has factored in all the changes in customer payment behaviors.
Operator: Our next question comes from the line of Chad Bennett from Craig-Hallum.
Chad Bennett: So just, Ian, maybe just in terms of how we should think about device growth and ARR per device relative to your revenue growth guidance. Is there any type of correlation there? And how should we think about those two metrics?
Ian Goodkind: Yes. I would call your attention back to our growth algorithm. We have new logos. We have upsell, right, device expansion and we have cross-sell. And we are going to continue to focus on those things that we can control, which is cross-sell specifically. We are factoring in the same upsell — muted upsell at renewal, but we are definitely focused on the successes we’ve had and seeing customers see the value in both management and security. That is where we’re going to drive and specifically in the bundles because we think that’s what drives the most customer value.
Chad Bennett: And then maybe one quick follow-up for John. Just kind of a follow-up on the competitive question, I guess, a couple of questions ago. Just specific to the endpoint security market in Protect and obviously, that products still growing nicely. Just kind of — is there any kind of new regulations there just competitively now that you’re another quarter and year into that product and into that endpoint security market that you’d like to share?
John Strosahl: Yes. I mean you’re right. Protect has done really well, and we’re very happy about it. In fact, in security, in general, 44% of our pipeline was security. And so we’re really seeing a good traction there. With Protect, we continue to add functionality to it. We’re going to continue to add more pieces of security as our customers request that. And yes, I mean that’s pretty much all we have to do with Protect, it’s done well. Our reps are becoming even more well versed in selling that, especially as it relates to — in conjunction with security, and we’re going to continue to double down on that.
Operator: And our next question comes from the line of Pat Walravens from JMP.
Pam Walravens: Great. I mean, John, usually, companies guide revenue below where expectations are after they’ve had a disappointing bookings or a renewal quarter. But in your case, it sounds like bookings and renewals in Q4 were actually pretty good. So when did you guys decide it was time to increase the profitability to align with the current growth profile as you worded in the press release.
John Strosahl: Thanks, Pat. Good question. No, we understand that. And what we’re really trying to do is have a balanced approach to profitability and growth going into 2024. And as I mentioned earlier, we, as the rest of the market expected that return to come in mid even to late — or ’23, and that didn’t happen. And so we’re just trying to be judicious in our approach and our guidance in ’24. As Ian mentioned, there are things that could impact that in 2024, the tech hiring could resume we expect that there’s going to be an EDU refresh. But we haven’t anticipated that in our guidance because the market hasn’t behaved like we thought it was going to in ’23, and so we’re just making sure that we’re doing the right thing for the business and our customers long term.
and that’s making sure that we’ll optimize for efficiency and scalability as we go into ’24. But we are well poised to be able to scale up when those growth vectors continue start to resume, and we’re watching that very, very closely. So we’re on point.
Operator: And our next question comes from the line of Koji Ikeda from Bank of America Securities.
Koji Ikeda: Just a couple for me here. First one, — maybe a question for John or Ian, what do you view as the most attractive levers to drive upside to growth in 2024?
John Strosahl: I’ll take that one, Koji. So our most attractive levers, we have many of them. We really do. I mean that certainly the replacement market — absent of the tech hiring resuming and the EDU refresh and those things we’ve already talked about. But certainly, the replacement market as it becomes more apparent. And again, the events over the last few days have continued our optimism in that as we really lean into those customers and show the value of management and security together, especially at scale and focused on Apple First and Apple Best. So those are the areas that we really see. International is a great opportunity for us. We saw some softness in international in the middle of the year in ’23. We saw that pick up toward the end of the year, and we continue to see that at the beginning of this year.
So as Apple mentioned on their earnings call that they’ve had some success internationally as well. We work very closely with Apple outside the U.S. and in the U.S., but certainly outside the U.S. And so we’re continuing to leverage that as we expand internationally. So those would be some of the biggest areas. And then I guess to wrap it up would be security. I mean every device can have one device management product on it. every device can have five or six more security products on it. And IT and Infosec teams generally do that. They want belt and suspenders on security. And then when we offer something that’s Apple-specific, along with the management piece, that again is a good opportunity and really a lever to increase.
Koji Ikeda: Got it. No, that’s super helpful. And maybe following up to Pat’s question, just bookings sound good. So what sort of triggers are you looking for a maybe a signal that it’s time to invest at a greater rate than what the plan is currently set for?
John Strosahl: We’ve seen close ratios. While sales cycles have been elongated. We’ve seen close ratios maintain pretty similar. We measure our go-to-market organization very — with a very disciplined and rigorous approach. Our cadence is very, very tight on that. And so we can get those leading indicators and shift accordingly. So we know if that sales cycle is starting to drop, we know if that conversion rate is starting to go higher. We know if the ASPs of each one of those deals in the pipeline are starting to raise. So any one of those indicators are going to lead us to really lean into that and to invest in that growth. And also geographically, to the extent that we’ve seen international continue to take the momentum up, we’re going to look at that and invest in that area as well.
Ian Goodkind: I would just add one thing on our operating income guidance there at a midpoint of 15%. We are committed — to John’s point, we have optimized our organization and made it so we can commit — continue to commit to that 15% margin.
Operator: This does conclude the question-and-answer session of today’s program. I’d like to hand the program back to Jennifer Gaumond for any further remarks.
Jennifer Gaumond: Thanks, Jonathan. Thank you again for joining us today. We hope to see you at our Investor Day on March 13 in New York. If you’d like to attend in person, please reach out to investor events at jamf.com. Thank you.
Operator: Thank you, ladies and gentlemen, for your participation in today’s conference. This does conclude the program. You may now disconnect. Good day.
