Apple's (NASDAQ:AAPL) much-hyped 4-for-1 stock split is now complete, and though the event does nothing to change Apple's fundamental value as a business, shares have been off to the races anyway. Granted, part of the reason the world's most valuable publicly traded stock has doubled from March lows is better-than-expected earnings during the pandemic -- including a 15% increase in the "services" segment and an overall revenue increase of 11% during the quarter ended in June.

Nevertheless, for investors who think Apple's service and software business will be the primary driver of results going forward, there's a new way to bet on the tech titan: recent IPO Jamf (NASDAQ:JAMF). Fresh off its second-quarter 2020 earnings report, this enterprise software company deserves serious attention.

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Image source: Getty Images.

Apple for business is where it's at

Jamf is the leader in Apple enterprise software management, providing security and remote management software-as-a-service (SaaS) for businesses using Apple devices. While most of the more than 1.5 billion Apple devices in use around the world are at the individual consumer level, many of them are deployed in organizations -- from hospitals to schools to various other businesses. 

Apple devices for business are on the rise, though, and Jamf built on its 39% revenue gain in 2019 with a solid Q2 2020 report -- its first since it made its high-flying debut in July -- led by a 42% year-over-year gain in its SaaS segment (which was 85% of total revenue). Annual recurring revenue, the yearly value of all subscription-based sales, increased 36% to $241 million in Q2.  

Metric

Q2 2020

Q2 2019

% Change

Revenue

$62.2 million

$48.3 million

29%

Gross profit margin

78.1%

72.1%

6.0 pp

Operating expenses

$44.4 million

$39.3 million

13%

Adjusted net income (loss)

$4.99 million

($876,000)

N/A

Free cash flow

$16.5 million

($3.68 million)

N/A

Data source: Jamf. Pp = percentage point. 

Free cash flow will improve meaningfully going forward as Jamf had previously disclosed it would use the bulk of the $320 million raised from its IPO to pay off the $202 million in debt on its balance sheet at the end of June. Jamf said it paid $4.53 million in interest during the second quarter, so adding that amount back into free cash flow (since that interest expense will be eliminated from the equation going forward) results in $21.0 million -- good for a free cash flow profit margin of 34% during the last period.  

Given the world has been in the grip of a global pandemic and many companies put a temporary freeze on new spending during the period, this enterprise software outfit's results were impressive. Full-year guidance was also issued for total revenue of $255 million to $257 million, which would represent 25% growth over 2019 at the midpoint of the outlook.  

Jamf has a (relatively) attractive price tag

Based on management's full-year expectations, Jamf is trading for 17.3 times 2020 sales (after an initial 10% tumble post-earnings report). The premium pricing assumes Jamf will continue growing in the double-digit percentages as Apple enterprise software needs expand. Given the higher rate of use of Macs and iPads for business, and the potential that Apple eventually opens up the Watch for enterprise use, there's reason to believe Jamf will indeed keep growing -- and at a highly profitable rate, given the latest free cash flow print.

Things look even better when comparing Jamf to Apple itself. After its massive run this year and now valued at nearly $2.3 trillion, Apple shares trade for 8.4 times trailing 12-month sales and over 33 times trailing 12-month free cash flow. Apple is indeed no value stock.  

Put simply, if you're bullish on Apple's continued long-term prospects, Jamf is worthy of consideration. This small cloud software company is set to ride Apple's coattails -- with perhaps greater upside potential with its highly profitable focus on software services. As I sold half of my sizable Apple position early in the summer, Jamf has my attention.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.