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Jamf Holding Corp. (JAMF) Q2 2021 Earnings Call Transcript

By Motley Fool Transcribing – Aug 10, 2021 at 11:31PM

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JAMF earnings call for the period ending June 30, 2021.

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Jamf Holding Corp. (JAMF -0.48%)
Q2 2021 Earnings Call
Aug 10, 2021, 4:30 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:


Operator

Good day, and thank you for standing by. Welcome to the Jamf's second-quarter 2021 earnings conference call. [Operator instructions] Please be advised that today's conference is being recorded. [Operator instructions] I would now like to hand the conference over to your speaker today, Jennifer Gaumond, vice president of investor relations.

Please go ahead.

Jennifer Gaumond -- Vice President, Investor Relations

Good afternoon, and thank you for joining us on today's conference call to discuss Jamf's preliminary second-quarter 2021 federal results. With me on today's call are Dean Hager, chief executive officer; and Jill Putman, chief financial officer. Before we begin, I'd like to remind you that shortly after the market closed today, we issued a press release announcing our preliminary second-quarter 2021 financial results. You may access this information on the Investor Relations section of jamf.com.

In the press release, we disclosed our decision to revise our prior-period financial statements to correct an immaterial error related to certain commissions that were incorrectly capitalized instead of being expensed. We expect to correct this immaterial error in our quarterly report on Form 10-Q for the quarter ended June 30, 2021, and a supplemental release of revised historical financials. Throughout this conference call, we are providing our current expectations with respect to our financial results for the second quarter of 2021. As such, Jamf second 2021 financial results are preliminary, and subject to the completion of the audit process.

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We plan to provide final financial results for the quarter and file the related quarterly report on Form 10-Q as soon as possible. Jamf undertakes no obligation to update or supplement the information provided until Jamf reports its final financial results for the fiscal quarter ended June 30, 2021. Today's discussion may include forward-looking statements. Please refer to our most recent SEC filings, including our most recent annual report on Form 10-K, where you will see a discussion of factors that could cause actual results to differ materially from these statements.

I would also like to remind you that during the call, we will discuss some non-GAAP measures related to Jamf's performance. You can find the preliminary reconciliation of those measures to the nearest comparable GAAP measures in our preliminary earnings release. Additionally, to ensure we can address as many analyst questions as possible during the call, we ask that you please limit your questions to one initial question and one follow-up. Now I'd like to turn the call over to Dean Hager.

Dean?

Dean Hager -- Chief Executive Officer

Thank you, Jennifer, and thank you, everyone, for joining us. On today's call, I will share highlights from the second quarter and an update on the Wandera acquisition, which closed on July 1. Jill will then review our preliminary second-quarter financial results and provide our outlook for the third quarter and fiscal 2021. I'm incredibly pleased with our performance in the second quarter as our teams work diligently to deliver exceptional results while developing integration plans and closing the Wandera acquisition, our largest acquisition to date.

For the last few quarters, we've talked about the remarkable balance and momentum across our business. In the second quarter, we saw continued and even improved balance and growth. Once again, all Jamf products saw a year-over-year ARR growth of at least 25%. We saw continued strength in our education market and significant building momentum in commercial markets, especially with our add-on products, Jamf Connect and Jamf Protect, which delivered a combined ARR year-over-year growth of over 250%.

Additionally, all three major geographies and all of Jamf's top 10 commercial industries experienced ARR growth of at least 30% helping drive our total ARR growth of 38%, our strongest growth rate since becoming a publicly traded company. We believe these strong results demonstrate Jamf's ability to execute consistently during changing market conditions, showcasing the incredible strength and durability of our business model. In both Jamf's commercial and education markets, we saw bookings growth rates return back to pre-pandemic levels and SMB and enterprise businesses, growth rates were particularly strong, resulting in 75% of our Q2 bookings coming from commercial markets. This commercial strength in Q2 was well balanced across all geographies, with similar bookings growth in each of our three key regions: Americas, EMEA, and APAC.

Our pipeline indicates that this commercial strength will continue, which bodes well for Jamf as we launch the products acquired with Wandera including private access, data policy, and threat defense. Additionally, we continue to see positive trends in the industry as Apple Map popularity grows. According to IDC, Mac again experienced strong growth in Q2. Perhaps more important, IDC reports show over the past four quarters, total Mac shipments grew over 45% compared to the four quarters prior, which is faster than any other PC covered by the IDC report.

Additionally, according to a Forrester report published just last month, the Mac popularity in business is driven by higher employee retention and productivity and also lower total cost to deploy and support. Based on interviews with decision makers from organizations using the new M1-based Mac, Forrester reports that the cost savings of deploying an M1 Mac is $843 per device when compared to its PC counterpart. These positive benefits and trends have helped drive seat growth with Jamf customers and partners across all of our products. In Q2, our new logo growth was an exceptional 51% compared to last year, which helped us grow our total active customers by approximately 3,000 new organizations, bringing our total active customer count to over 53,000.

It is worth noting that Jamf's customer count is conservatively stated. Many large organizations like the largest school districts in the U.S. are counted as one customer, even though Jamf solutions are deployed to hundreds of the district schools. Additionally, Jamf has over 300 certified managed service providers as partners who use Jamf to serve thousands of their customers who are additive to Jamf's base of 53,000 customers.

One Jamf partner, Electric, an IT outsourcing company that provides solutions and support to manage all types of device endpoints to small to medium businesses has seen tremendous growth as these businesses realize the operational and compliance benefits of Apple Enterprise Management without having to implement or manage Jamf's solution on their own. Consistent with trends we see across the industry, 70% of the devices that electric supports are Apple and using Jamf, Electric has seen their Mac device growth average more than 40% quarter over quarter for the past year, significantly outpacing other platforms. Electric customer survey data indicates that this strong growth will likely continue as top customer priorities over the next 12 to 18 months are supporting a hybrid workforce while bolstering the security posture. And it's not only small and medium businesses that are embracing that.

Jamf runs the vast majority of large Mac deployments in the world. and we've seen larger enterprises significantly grow their Mac fleets as Jamf's platform has expanded beyond management into connection and protection solutions. Specifically, to Jamf customers in the financial services space, one, a top asset management firm and the other, a leading global payments provider have both grown their Mac fleets by at least 50% over the past two years. During this period, both also added Jamf's expansion products for Mac, purchasing Jamf Connect shortly after it became available and expanding to Jamf Protect in Q2.

These two customers demonstrate the power of our expanding platform as customers grow both through deploying additional Mac and also Jamf's add-on solutions. These examples are not isolated cases. In fact, Jamf's top 12 deals in Q2 were primarily driven by Jamf's expansion products for Mac with all 12 having purchased either Jamf Connect, Jamf Protect or Jamf's most recent edition compliance reporter, which was just launched in Q2 after having closed the CMD reporter acquisition earlier this year. In total, for these 12 accounts alone, Jamf's expansion products were added to over 85,000 Mac, all deployed through our flagship product, Jamf Pro.

This tremendous execution with newly launched products is a testament to both the incredible loyal and growing customer base for Jamf Pro and also are far-reaching efficient and effective sales channel. In less than three years since its launch in late 2018, Jamf Connect has grown to over 3,000 active customers. Complementing this product in Q2, Jamf raised the bar on access security and simplicity by launching Jamf Unlock, a Jamf Connect workflow app built for both iPhone and iPad. With Jamf Unlock, organizations can provide enterprise-grade, passwordless multifactor security to users in a consumer simple manner.

Using the iPhone, the one item that no one forgets when they go to work. Users can simply use face ID on their phone to authenticate to their Mac and cloud identity provider, giving them immediate access to the resources they need to do their job. Jamf has seen similar success with our Jamf Protect product. And only a year and a half, our Jamf Protect customer base has grown to over 1,000 customers.

As the demand increases for an Apple first security solution. Jamf Protect provides a compelling value to our customers as organizations often find malicious threats with Jamf Protect that other cross-platform security solutions miss. In Q2, Jamf expanded our security solutions even further for highly regulated organizations who cannot leverage cloud-native security solutions, Jamf launched compliance reporter, a solution that provides even greater visibility into Mac activity for threat hunting and compliance checks. In our very first quarter offering compliance reporter, it was selected by multiple companies to help protect their Mac fleet, including Conduent, a leading business services provider for companies and governments who purchased a subscription of compliance reporter for a large portion of their 60,000-plus global workforce devices.

In addition to offering each of these add-on products individually, we also offer the Jamf Business Plan, which is a simple way for customers to experience the full value of Jamf's Apple Enterprise Management platform. Q2 was another successful quarter with more than 250 prospects and long-term customers choosing a Jamf business plan subscription, including a leading U.S. insurance company who converted their 2,500 Jamf proceeds to Jamf Business Plan. In addition to Mac products and expansion, we continue to see strength in iOS and iPadOS, which represent the fastest-growing device type on our platform in both the education and commercial markets for the past three quarters.

We continue to innovate and expand our iOS offering, including the newly launched single login for Jamf setup and Jamf reset to simplify and secure shared device deployments which are critical for industries like retail, transportation, healthcare, and build services to implement transformational digital business processes. Single login helps organizations like EDS, a cloud-based warehouse management system provider, deliver a solution that gives warehouse operators more efficient workflows, instant communications, aero elimination and safety and regulatory compliance, all with a great user experience. Of course, iPad expansion also continued in the education market in Q2, which is traditionally a buying season for schools. This quarter, Jamf experience buying patterns similar to pre-pandemic levels.

The difference now is that schools are fully aware of the power of education technology and the importance of equitable access to learning, no matter the student circumstances. One example of continuing to move learning in the right direction is the city of Edinburgh Council, who recently announced a one-for-one student rollout of 39,000 iPads as part of an ambitious and inclusive education strategy Edinburgh learns for life. These iPads along with expanded wireless connectivity provides students with fair and equal access to digital learning with a teacher in school or at home. Jamf world-class customer loyalty, our success with Mac-specific expansion solutions and our growth in iOS device seats all give us confidence in our ability to drive adoption of the latest extensions to our platform, Wandera's mobile security solutions.

As a reminder, Wandera is a cross-platform Apple-first provider of unified cloud security for mobile devices, bringing zero-trust network access, data policy enforcement, and mobile threat defense to Jamf platform. solidifying Jamf as a provider of enterprise security solutions that are consumer simple for users while protecting their personal privacy. The transaction closed on July 1st. And since then, we've been hard at work integrating our teams and products.

Since closing, we've seen our pipeline rapidly grow with significant interest from Jamf customers. This, along with the opportunity to get to know the one Wandera team and their products better, has made us even more bullish on the strategic fit of Wandera within Jamf and the opportunities it provides us to expand our leadership in Apple Enterprise Management. Once again, with the advantages of our flagship product, Jamf Pro, our loyal 53,000 customers in an effective, high-performing global direct and indirect sales channel. We believe we can help more organizations and drive significant adoption of Wandera solutions.

In fact, we already have. While the Wandera sales channel has remained undisrupted, we have already invested in a new Jamf go-to-market channel, built the pipeline, and have even won several new customers. And it's only been a few weeks since we closed the acquisition. Going forward, we believe zero trust private access, data policy enforcement, and mobile threat defense will all be successful add-on products for Jamf customers much like we've seen with Jamf Connect and Jamf Protect.

Finally, I would like to comment on some recent announcement from who important partners, Apple and Microsoft. Each June, Apple host their worldwide developer conference known as WWDC. It's at this conference that the world learned a great deal of the work Apple is headed. It's Jamf job to support Apple technology the same day it's available.

To ensure workflows are undisrupted and to prevent security vulnerabilities, it is critical that Jamf support all-new Apple operating systems and devices the same day they become available, which we plan to do again this year. It's also a Jamf's job to anticipate Apple's strategy and innovate solutions ahead of the rest of the market. In 2019, we launched Jamf Connect from Microsoft Azure AD prior to Apple announcing Federated Apple IDs with Azure AD at WWDC 2019. In 2020, we launched Jamf Protect months before the availability of the Mac M1 chip, which disrupted support from many other security providers.

This year, once again, we believe our most recent product investments are synergistic with Apple's management, security, and privacy announcements at WWDC 2021. And that the combination of Apple and Jamf innovations will change the way enterprises think about security, privacy, and simplicity. Combine these capabilities with Microsoft's announcement that Windows 365 will run in a web browser, including Safari on iPad and Mac without the complexity of users setting up a virtual environment and even greater potential exist for Apple expansion in the enterprise. I believe that Jamf has never been more aligned with Apple's and Microsoft's direction than we are right now.

And we're excited to bring more products to market later this year, which we plan to showcase at our upcoming virtual Jamf Nation User Conference, known as JNUC, scheduled for October 19 to the 21. In closing, Q2 marked another quarter where Jamf continued to deliver high, consistent, and balanced growth, in large part due to our team's focus on helping customers succeed every day. This results in accelerated adoption of Apple in the enterprise using Jamf and we believe positions us for success through the remainder of this year and beyond. Now I will turn it over to Jill.

Jill Putman -- Chief Financial Officer

Thanks, Dean, and thanks again to everyone for joining us today. Before I get into our preliminary results, I want to discuss our decision to revise our prior period financials. As we outlined in our release, we recently identified an immaterial error related to how we account for certain types of commissions that should have been expensed as incurred in accordance with GAAP rather than capitalized. Given the fact that we recently discovered this error our second-quarter 2021 financial statements are preliminary and subject to the completion of the audit process.

My comments on our preliminary results reflect our current expectations. We plan to provide final financial statements for Q2 and file the related 10-Q and the supplemental revised historical financial statements as soon as possible. This revision has no impact on key business metrics, including revenue, ARR, dollar-based net retention, operating cash flow and unlevered free cash flow for the previously cited period. We expect the expense adjustments to be no greater than 1% of our total GAAP expenses in any of these periods.

Additionally, we do not expect this to have an impact on future operating margins. Now turning to our preliminary second-quarter results. As Dean mentioned, we had a strong start to the year with continued momentum across all aspects of our business. Total revenue for the second quarter is $86.2 million representing growth of 39% year over year, exceeding our expectations due to outperformance across all revenue categories.

Total ARR as of June 30 is $333 million, an increase of 38% year over year. Consistent with the past few quarters, this is driven by greater than 25% growth across every Jamf product, with all three major geographies and all of Jamf's top 10 commercial industries experiencing ARR growth of at least 30%. The three primary drivers of our ARR growth are our consistently high device expansion rates; our strong new logo acquisition and the upselling and cross-selling of products into our installed base. We expect to continue benefiting from these trends going forward.

We ended the quarter with 23.2 million devices on our platform, representing 35% year-over-year growth as we continue to see strength in both the education and commercial verticals in all geographies, driven by new logo acquisition and device expansion within our installed base. Our dollar-based net retention rate remained strong, growing to 119% for the 12 months ended June 30. The remainder of my remarks on margins, expense items, and profitability, will be on a non-GAAP basis. Our preliminary GAAP financial results, along with the reconciliation between GAAP and non-GAAP are found in our earnings release.

Gross profit margin is 81%, compared to 82% in the prior-year quarter. We continue to expect our gross margins to remain at approximately these levels going forward. With respect to operating expenses, we remain focused on improving the leverage in our business while balancing investments for growth. Increases in operating expenses over the prior year were primarily due to these investments for growth, such as sales and R&D headcount, as well as building in public company costs.

Operating margin is 9%. During the second quarter, our annual effective tax rate was negative 0.5%, which was impacted by the establishment of a valuation allowance as previously disclosed. Unlevered free cash flow is $33 million in Q2 reflecting an approximately 38% unlevered free cash flow margin, compared to $21 million or an approximately 34% margin in the prior-year period. Our operating model of high growth and efficient deployment of capital continues to yield strong cash flow generation and allows us to continue to make investments in innovation and top-line growth.

We ended the second quarter with $226 million in cash and cash equivalents. Now I'll provide thoughts on guidance for the third quarter and full-year 2021. We expect strong performance to continue given what we achieved in the first half of the year and the momentum in our business. The education business continues to remain strong as we are currently in the traditional U.S.

education buying period. Additionally, we saw our commercial business bookings growth nearly double in Q2 compared to Q1 as enterprise spending and hiring have improved. We saw the U.S. market lead this growth with particular strengthening in bookings in the financial services, professional services, healthcare, and manufacturing industries.

As we discussed during our previous calls, beginning in the third quarter, we updated how we deliver our Jamf Connect product, resulting in a change in revenue recognition with less revenue recognized upfront as on-premise subscription revenue as it will now be recognized ratably over the term of the subscription in line with the majority of our revenue. While there is no impact to ARR, we anticipate this change will defer approximately $9 million of revenue in the second half of the year into future quarters, which impacts our full-year revenue growth by approximately 3 percentage points. Our ARR growth rate typically exceeds our revenue growth rate each quarter because the ARR excludes services and license revenue, which grew at a slower pace than our recurring revenue and ARR added later in the quarter has a smaller contribution to revenue in the quarter. Additionally, we've incorporated the impact of the Wandera acquisition into our outlook given the transaction closed at the beginning of the third quarter.

Our expectations regarding Wandera include the impact of the purchase price accounting adjustments as well as planned investments related to go-to-market and customer success headcount to support Wandera's growth. Given these considerations, for the third quarter of 2021, we expect total revenue in the range of $92.5 million to $94.5 million, representing growth of 31% to 34% year over year. This range includes an anticipated Wandera revenue contribution of approximately $5 million; non-GAAP operating income in the range of $0.5 million to $1.5 million, including Wandera's negative impact to net operating income of approximately $5 million. For the full-year 2021, we expect total revenue in the range of $357 million to $361 million representing growth of 33% to 34% year over year, including the Wandera contribution of approximately $11 million.

Non-GAAP operating income in the range of $18 million to $20 million including Wandera's negative impact to the net operating income of approximately $10.5 million. As mentioned earlier, the net operating loss anticipated from Wandera reflects the impact of purchase price accounting adjustments. Wandera's run rate operating losses as well as approximately $5 million of planned investments in go-to-market headcount to support growth as well as customer support and customer success headcount in the second half of fiscal 2021. We anticipate Wandera to be accretive to Jamf non-GAAP operating income as we exit 2022.

Additionally, for modeling purposes, we are providing the following information. For the third quarter and full-year 2021, amortization is expected to be approximately $11.8 million and $40.6 million, respectively. These amounts reflect the preliminary Wandera purchase price allocation and are subject to change upon completion of that analysis. For the third quarter and full-year 2021, stock-based compensation and related payroll taxes is expected to be approximately $9.5 million and $59.5 million, respectively.

We expect an annual effective tax rate to be less than 5%, which should also be used in calculating tax effects of non-GAAP adjustments. This annual effective tax rate is impacted by the establishment of the valuation allowance during 2021. In addition, we do not pay cash taxes on a U.S. federal basis.

For calculating EPS, we expect basic and diluted weighted average shares outstanding to be approximately 118.5 million and 121 million, respectively, for the third quarter of 2021. For the full year, we expect basic and diluted weighted average shares outstanding to be approximately 118 million and 121 million, respectively. In closing, our strong Q2 results reflect continued momentum in our business. As we look to the second half of the year, we're well-positioned to deliver on our outlook and are excited about the opportunity to expand our platform with the Wandera acquisition.

With that, Dean and I will take your questions. Operator?

Questions & Answers:


Operator

Thank you. [Operator instructions] Our first question will come from the line of Bhavan Suri from William Blair. You may begin.

Bhavan Suri -- William Blair & Company -- Analyst

Hey, Dean and Jill. Thanks for taking my question. Congrats. Solid, solid quarter there.

Nicely done. I want to start off at a high level, sort of you talked about sort of doing all these pieces for Apple. But if you think about the business strategically, you've got Jamf Connect, you've got the business plan, you've got the endpoint security. And the follow the Apple model, which -- while it sounds simplistic, is complicated, but it feels more tactical.

I'd love for you to talk about more strategically how you think about expanding the TAM of the business outside of sort of more devices, which will happen naturally. But sort of what more sort of products, portfolio features, what things more can you do strategically around the Apple ecosystem to sort of drive the growth of the business?

Dean Hager -- Chief Executive Officer

Yes. Thanks, Bhavan, for the question. I'll tell you the way that we strategically think about it. We actually, at the end of the day, don't think of ourselves as a solution provider around the Apple ecosystem.

We think about ourselves as a solution provider for connecting users, protecting data, and managing workflows with technology across the enterprise. Ultimately, what we want to do has created an environment that is enterprise secure, helps protect personal privacies and its consumer simple. And we don't think that the enterprise by and large, operates that way today. So when we think about expanding solutions, we think about wherever there is complexity in how people do work.

And then we look to invest in solutions around that area to make it consumer simple. An example would be our launching of Jamf Unlock this quarter, where you take a look at multifactor authentication on a Mac, nobody really thought of connecting that to the cloud identity provider and then using face ID on a phone to authenticate both to the Mac and to the cloud identity provider as using some other more complicated methods. So we're continually trying to expand our solution set to make things easier to use in the enterprise.

Bhavan Suri -- William Blair & Company -- Analyst

Gotcha. Gotcha. That's helpful. And a quick follow-up here just on Wandera.

I guess what I'm most interested here in the dynamics is when Wandera brought these really strong carrier relationships. I just -- and I know you gave some color on Wandera, but I'd love to dig into a little bit more of the process of how are you sort of tactically thinking about expanding those carrier relationships to include the full Jamf kind of iOS and Mac portfolios. Like how should we think about these carriers? And do they have as much interest in providing these capabilities to Mac and iOS that you offer? Like I'd love to talk you think about expanding and leveraging that and how you're going about that?

Dean Hager -- Chief Executive Officer

Yes. Absolutely. And carriers are a terrific channel generally for value-add software that will run on your cellular-connected devices, mostly iPhones. And Wandera as a security solution and also as a data policy solution ends up being a great add-on sale through those carrier channels.

So our efforts first and foremost, are to go out and make sure that those carriers know that we plan to serve them, every bit is good and even better with more investment than what Wandera has done in the past and provided that we prove ourselves to them our hope and our strategy is that they would look to Jamf them for additional solutions to run on devices that would help IT better serve those endpoints. And that is really where Jamf specializes versus where the Wandera solutions were focused on security. So first of all, just make sure that they understand that we're here to serve them and their customers. And with that, earn the right to be able to add additional solutions to the mix.

Bhavan Suri -- William Blair & Company -- Analyst

Got it. Very nice. Thanks for taking my questions, guys. Appreciate it.

Dean Hager -- Chief Executive Officer

Thanks a lot.

Operator

Our next question is from the line of Sterling Auty from J.P. Morgan. You may begin.

Sterling Auty -- J.P. Morgan -- Analyst

Yes. Thanks. Hi, guys. A lot to unpack there in what you presented.

And one of the things that I thought was interesting was the comment that you made about forward thinking both on Apple and Microsoft and the idea of kind of windows in a browser, etc. And what I'm wondering is how are you starting to think about the possibility of changing pricing structure for different types of technology that you might think is coming down the pipe over the next year or two?

Dean Hager -- Chief Executive Officer

Thanks a lot for the question, Sterling. To be honest, from a pricing structure perspective, there's a few different methods that we look at per seat, the per user, and also, of course, there's the consumption model as well and then various bundles of that. So we explore all those avenues other than what we have out there today. I don't know that I'm ready to disclose any changes to that model going forward.

But what I will say is I think you zeroed in on something that we consider to be really exciting in this space. The notion of simply streaming windows through a web browser. And again, it's very early. It just became available on August 2, opens up some great potential for users using their device of choice, but yet still being able to use that one or two or three applications that has tied them to a specific device type historically.

I think it opens up great potential within the market. And if you think about what's happened in the last year, it was just last November that Apple announced that iOS and iPadOS apps could also run on the Mac with the new M1 chip. So all of a sudden something that had historically been considered a weakness of the Mac, being able to run all of the apps that are needed within the enterprise. It's becoming a bit of an app consolidator as more and more solutions become available to run different types of apps on the Mac.

So we think that could potentially break open the Mac market even further.

Sterling Auty -- J.P. Morgan -- Analyst

Excellent. And then one follow-up is you mentioned the strength in new logo adoption. I'm curious, are you landing bigger? Meaning are the initial sales taking a bigger portion of the product portfolio from the start? Or what are you seeing from a trend-wise from that perspective?

Dean Hager -- Chief Executive Officer

I would say the answer -- short answer is yes, that we're closing bigger deals initially, but it's not materially so at present. Our objective is to still go in there, solve the immediate problem that the customer has, win their loyalty and expand. That is the engine that has proven to be very, very fruitful for both our customers and for Jamf. So while they're growing in size initially, it's happening gradually over time.

I will say this, that in our initial deals that we've closed with Wandera through our Jamf channel, those have been terrific in that the customer has called us for our historical Jamf products and our reps have actually upsold them on the Wandera products with the value that Wandera delivers in conjunction with Jamf and those deal sizes have more than doubled in value and those were initial deal sizes. So short answer to your question is yes, with the add-on products, but we still have the same strategy of going in and solve the initial problem and grow.

Sterling Auty -- J.P. Morgan -- Analyst

Makes sense. Thank you.

Operator

Our next question comes from the line of DJ Hynes from Canaccord. You may begin.

DJ Hynes -- Canaccord Genuity -- Analyst

Hey, guys. Congrats on another really nice quarter here. I'm not sure if this one's best for Dean or Jill, but if we think about what's driving expansion in existing accounts. Is there any way to frame how significantly the pendulum has swung from device count growth to add-on modules? And I realize this is all still like pre-Wandera, but it seems like add-ons are maybe carrying more of the weight now.

And I wonder if there's any way to kind of quantify.

Jill Putman -- Chief Financial Officer

Yes. Thanks, DJ, for the question. This is Jill. One way to think about how we quantify it, if we look at our dollar-based net retention that we reported for the quarter, increasing from $110 million up to $119 million an actual -- most of that is reflecting the strength of those add-on products with Connect and Protect as well as some small amount of churn improvement that we're starting to recognize.

But that's primarily what's driving that and is going to sustain that high net retention rate.

DJ Hynes -- Canaccord Genuity -- Analyst

OK. Got it. And then, Dean, we picked up some commentary that suggests there's been a bit of softening in the tech buying cycle in education. And I don't know if that's comparing to a record year last year and it sounds like you guys are still feeling really good about what you're seeing in education.

But I'd love to have you speak to kind of what you're seeing in that vertical in the current quarter and how that might shake out as we enter the new school year?

Dean Hager -- Chief Executive Officer

Yes. I figured I would get that question. Thanks, DJ. Obviously, the last year was tremendously strong for education.

But a way of thinking about it historically, we always had growth in both the commercial markets and education markets. And prior to the pandemic, on any given quarter, our bookings growth for the commercial markets would be about twice that of what it is for the education markets. And then during -- starting with Q2 of last year through Q1 of this year, let's say that those growth rates were more similar to each other. Q2 this year saw more of what we would have seen pre-pandemic, where education still had a nice bookings growth quarter.

But commercial growth was about twice that. So we believe strategically going forward, it's going to be what most of our history over the last years -- five years have had, and that is the growth engine is the commercial growth. Nevertheless, education growth still remains quite strong. And remember that we do business in education and everywhere else globally.

And so different regions of the world may have strength. Q2 was particularly strong in Europe in the education market.

DJ Hynes -- Canaccord Genuity -- Analyst

Perfect. That's helpful color. Thank you, guys.

Operator

Next question will come from the line of Joshua Reilly from Needham. You may begin.

Josh Reilly -- Needham & Company -- Analyst

Hey, guys. Thanks for taking my questions. Maybe starting off, how is Jamf's business plan trending versus your expectations year to date? And then second, do you plan to include securing iOS devices in the bundle going forward? And then have you had any customer feedback about adding that functionality? And how might that impact pricing power?

Dean Hager -- Chief Executive Officer

Yes. Thanks for the question, Josh. First of all, a business plan is tracking. We're pleased with how it's tracking.

We did not have expectations that it would become the standard way to buy Jamf just yet. We thought for those organizations interested in the full platform, it would be by far the easiest way to acquire Jamf. And also for clarity, that does include seat licenses of Jamf Pro or iOS as well. That Jamf business plan bundled pricing does.

It does not yet include any of the security solutions that we acquired from Wandera for iOS. However, we're looking at potential for different types of bundles there going forward.

Josh Reilly -- Needham & Company -- Analyst

OK. Great. And then maybe just a quick follow-up. I noticed that monthly ARR per device ticked up $0.02 in the quarter from $1.18 to $1.20 after being roughly flat for several quarters.

Is there anything to note there? Is there some modest positive impact from Jamf business plans starting to kick in?

Jill Putman -- Chief Financial Officer

Josh, this is Jill. So really, what's driving that uptick is the fact that we've got mix shift that goes on in different quarters, and we have a stronger commercial quarter. it carries a higher price point per device. And so that's really what's influencing that in this quarter because commercial did represent about 75% for add-on bookings this quarter.

Josh Reilly -- Needham & Company -- Analyst

Got it. Thanks, guys.

Operator

Our next question will come from the line of Rob Owens from Piper Sandler. You may begin.

Rob Owens -- Piper Sandler -- Analyst

Great. Thanks for taking my question. I want to add on to DJ's question from earlier. Just from the standpoint that there are some major worldwide federal initiatives around the education vertical.

And just curious if there's still capacity in some of those issues -- some of those initiatives, whether here domestically or internationally, where that could provide a nice source of upside as we look at the third and fourth quarters?

Dean Hager -- Chief Executive Officer

Yes. Thanks, Rob. Real quick, that what we saw happen is, first of all, you have the CARES Act in the U.S. and much of the money that was released with the CARES Act actually hasn't been spent yet.

So we actually think that's still there are going into the future. And as we mentioned, we're still in Q2 saw strong education bookings growth, and we think some of that might still be from that funding. But there's still a lot of money left alter that hasn't been spent yet. Of course, we talked in past quarters about the GIGA project in Japan.

We saw that slow down a little bit in Q2 as we just did -- as we ended up winning much of that market. But in Europe, there are actually still several governmental programs that didn't get establish until we were well into the year of the pandemic. And so I think that's been more of the realization of how important education technology is to schools no matter whether you're learning from a distance or in class. And so those are all programs that are still pretty early on.

So we're still pretty bullish on the growth that we're going to see there. And having the balance that we have around the world is very much beneficial.

Rob Owens -- Piper Sandler -- Analyst

Great. And second, Jill, thanks for the disclosure around Wandera and the incremental revenue. Can you help us with what that incremental ARR might look like here for the third quarter, given it was a July 1 close?

Jill Putman -- Chief Financial Officer

Yes. Thanks, Rob. So we disclosed prior -- in prior earnings call that there -- the end of the first quarter at approximately $25 million of ARR. We did see that grow a bit in the second quarter, in a quarter when they were going through integration disruption, we'll be disclosing the third quarter ARR at the end of the third quarter, so you guys can bridge the models.

Rob Owens -- Piper Sandler -- Analyst

All right. Thank you very much.

Operator

Our next question come from the line of Chad Bennett from Craig-Hallum. You may begin.

Chad Bennett -- Craig-Hallum Capital Group -- Analyst

Great. Thanks for taking my question. Just a follow-up on the Wandera projections or forecasts. So how should we think about the economics behind Wandera from an add-on standpoint, whether it's kind of per user per device relative to how you spoke about Jamf Pro or Connect or Protect, it's just -- what's kind of the incremental dollar value, at least rough range we should think about each of their products or in aggregate?

Jill Putman -- Chief Financial Officer

Thanks, Chad. This is Jill. I'll take that. So they do -- their pricing model is similar to ours.

It's per device per month. So very similar to us on a -- on the average, it's about a two-year annual commitment that the customers are making. As far as the pricing going forward, their price -- their average price point is higher than ours a little bit accretive to our overall ASP, and we'll be sharing more of that as we gain more color on our experience with them.

Chad Bennett -- Craig-Hallum Capital Group -- Analyst

Got it. And then maybe one quick follow-up on Wandera. Jill, again, was there any material deferred rev write-down in the purchase price adjustment here? And meaning is the $11 million you projected for the second half, really, on a run rate basis higher than that? Or was there nothing that material from a deferred rev write down there?

Jill Putman -- Chief Financial Officer

Yes. It was material. it was in line with what you typically see software somewhere in the 20% to 25% range.

Chad Bennett -- Craig-Hallum Capital Group -- Analyst

OK. So on an annual basis, that's what you'd expect once you annualize on that. Correct?

Jill Putman -- Chief Financial Officer

Correct.

Chad Bennett -- Craig-Hallum Capital Group -- Analyst

OK. Thanks so much. Nice job on the quarter.

Jill Putman -- Chief Financial Officer

Thank you.

Dean Hager -- Chief Executive Officer

Thank you.

Operator

Our next question is come from the line of Gregg Moskowitz from Mizuho. You may begin.

Gregg Moskowitz -- Mizuho Securities -- Analyst

All right. Thank you for taking the questions, and very nice quarter. So we know it to be the case that Jamf's business is not highly correlated with Mac and PC cycles. That being said, now that unit growth has been somewhat coming back down to earth.

Can you speak to what that might mean for Jamf's business going forward? Is this a partial offset to an improving economy? How do you see this playing out?

Dean Hager -- Chief Executive Officer

Thanks for the question, Gregg. And you're right. We have stated a few times in the past that it's not best to try and model Jamf's growth with Apple specifically because there isn't any given quarter or really, frankly, any year that Apple's unit sales equate to Jamf's business. And the reason for that is because the market size is now with the add of Wandera $18 billion, of which, as you see in our ARR, we have $333 million.

So the market size is plenty big for Jamf to continue to grow. And many of those devices are not secured or running any management at all. And many of them are running either security or management solutions that are not geared toward Apple. So as long as the enterprise continues to adopt Apple at an increasing rate, that is really the driver of our growth.

And again, if we went as far back in history, as Jill and I are aware, there have been years that Apple's growth hasn't been all that significant, and yet they've been some of our best growth years. So they're really mutually exclusive. Overall, we love that Apple popularity continues to grow because when that happens, more enterprises are willing to accept them within their enterprise workflows. And again, that's the driver of our business.

Gregg Moskowitz -- Mizuho Securities -- Analyst

Perfect. And then just a follow-up. So it's now, of course, been several months since the M1 chip has been GIGA and your zero-day support was a significant advantage from the outset. How would you characterize, though, the quality or the level of third-party support that exists with the M1 today as compared with Jamf? Thank you.

Dean Hager -- Chief Executive Officer

Thank you. So Apple did a terrific job of ensuring that there would be a compatibility of apps and operating systems going forward. So the journey was fairly straightforward, especially when you have something that significant like a ship. From Jamf's perspective, I would say our greatest opportunity as it turns out was perhaps the biggest disruption we saw in the market.

And that is that there were more than 1 security providers out there that simply weren't ready for the M1 in big sir. And those organizations, we were thrilled with the opportunity to be able to go in and help them. And as you've seen, I mentioned that it's just been a year and a half since launch. We have over 1,000 Jamf Protect customers.

And for those that have been watching each quarter, you know that the majority of those have come just since January of this year. And I think a large part, that's driven by the new chip and the new operating systems.

Gregg Moskowitz -- Mizuho Securities -- Analyst

Terrific. Thank you.

Operator

Our next question will come from the line of Pat Walravens from JMP Securities. You may begin.

Pat Walravens -- JMP Securities-- Analyst

Great. Thank you, and I'll add my congratulations. So Dean, as you look out over the next 12 months, what do you think are the most important one or two things that you got to get done?

Dean Hager -- Chief Executive Officer

Thanks, Pat. Good to hear your voice. Without a doubt, when you're in an organization that's growing at the rate of Jamf and where we have hired quite a few people over the last year that have never had an opportunity to go into a Jamf office yet. Continuing that customer focus culture inside of a company where everybody feels cared for, and that's a big deal for us.

And believe it or not, we think a lot about the strategy a lot, but I think about culture a whole lot more. And so that probably takes the majority of mind share for me. Beyond that, it is just continuing to simplify, simplify, simplify the enterprise with the way that we offer our product. And that's going to be the bulk of what I think about.

Pat Walravens -- JMP Securities-- Analyst

Great. Thank you.

Dean Hager -- Chief Executive Officer

Thanks, Pat.

Operator

Our next question will come from the line of Rod Hall from Goldman Sachs. You may begin.

Rod Hall -- Goldman Sachs -- Analyst

Hey, guys. Thanks for the question. I guess I wanted to come back to the strong ARR growth that you're implying with the guide and also what you delivered in the quarter. And then juxtapose that with ARR increment seasonality in prior years.

And just ask whether -- I mean, usually, we would see your biggest quarter of ARR growth be the last quarter of the year. I'm just curious if you think that we're exiting COVID, so it's incredibly difficult to predict any of this. Do you believe that that season now is more likely to hold than not? Or how do we think about the trajectory of the business as we exit or hopefully exit anyway some of this COVID lockdown? And then I have a quick follow-up as well.

Dean Hager -- Chief Executive Officer

Well, you're correct in that Q4 has traditionally been the biggest uplift that we see from an ARR perspective. Jamf is pretty well balanced across quarters historically, and we generally have pretty solid Q2 is because of it being an education buying quarter as well. But you're right that Q4 is typically the biggest. There's nothing about this year that would suggest that we should see the same type of seasonality that we've seen in the past.

To be frank, the notion of COVID or no COVID or distance learning or in-classroom or remote work or in office, we don't spend a whole lot of time talking about it anymore. Right now, it's just our business, and we see the normal operations of the business. And no matter what, companies and schools are focused on providing really simple to use technology that users love and can help them get their job done. And we're back into those normal rhythms now.

Rod Hall -- Goldman Sachs -- Analyst

OK. That's great, Dean. And I wanted to come back to your comment on Windows 365. What we've actually found is when we have a VDI solution or a Windows 365 solution like that, the Mac doesn't need to be managed.

And so if that world grows, I'm struggling to see how that connects back to a positive environment for you, but I'd like to hear your thoughts on it as -- does Windows 365 really drive more managed Mac using Jamf? Or how does Jamf fit into that world? Maybe in a little bit more detail would be helpful.

Dean Hager -- Chief Executive Officer

Yes. That's a great question, Rod. And just for clarity, yes, it will drive more managed Mac. And the reason is that specifically the Windows 365 solution the way I envision that that's going to be deployed is not somebody deciding to say, well, "hey, I want to run Windows and nothing windows, and I think I'm going to do that on a Mac through a web browser.

I'm not envisioning that's going to be the configuration for very many people. Rather what it's going to be is somebody loves the Mac, and they want to use them and they want to use native Mac every day, all day long. However, there's a windows out, whether it be in healthcare or one of those enterprise Windows apps, whether it be FinServe, that I need to run that one app or two apps to do my whole job. And without having to set up a remote environment on my Mac, I can just bring up a web browser and I can run that Windows app.

I think that that's going to be the use case for Windows 365 on a Mac more so than anybody kind of taking over the Mac experience with a virtualized experience. I'm not seeing that happen.

Rod Hall -- Goldman Sachs -- Analyst

Great. OK. Yes. That's really helpful.

Thanks, Dean.

Dean Hager -- Chief Executive Officer

Absolutely.

Operator

[Operator signoff]

Duration: 57 minutes

Call participants:

Jennifer Gaumond -- Vice President, Investor Relations

Dean Hager -- Chief Executive Officer

Jill Putman -- Chief Financial Officer

Bhavan Suri -- William Blair & Company -- Analyst

Sterling Auty -- J.P. Morgan -- Analyst

DJ Hynes -- Canaccord Genuity -- Analyst

Josh Reilly -- Needham & Company -- Analyst

Rob Owens -- Piper Sandler -- Analyst

Chad Bennett -- Craig-Hallum Capital Group -- Analyst

Gregg Moskowitz -- Mizuho Securities -- Analyst

Pat Walravens -- JMP Securities-- Analyst

Rod Hall -- Goldman Sachs -- Analyst

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