JAMF HOLDING CORP.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(in thousands, except share amounts)
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Class
|
|
Additional Paid‑In
Capital
|
|
Accumulated Other Comprehensive Loss
|
|
Accumulated
Deficit (1)
|
|
Stockholders’
Equity (1)
|
|
Common
|
|
|
|
|
|
Shares
|
|
Amount
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(As Revised)
|
|
(As Revised)
|
Three Months Ended September 30, 2021:
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, June 30, 2021
|
118,249,912
|
|
|
$
|
118
|
|
|
$
|
917,116
|
|
|
$
|
—
|
|
|
$
|
(113,275)
|
|
|
$
|
803,959
|
|
Exercise of stock options
|
269,416
|
|
|
1
|
|
|
1,506
|
|
|
—
|
|
|
—
|
|
|
1,507
|
|
Vesting of restricted stock units
|
507,776
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Share‑based compensation
|
—
|
|
|
—
|
|
|
15,836
|
|
|
—
|
|
|
—
|
|
|
15,836
|
|
Purchase of capped calls
|
—
|
|
|
—
|
|
|
(36,030)
|
|
|
—
|
|
|
—
|
|
|
(36,030)
|
|
Foreign currency translation adjustments
|
—
|
|
|
—
|
|
|
—
|
|
|
(8,120)
|
|
|
—
|
|
|
(8,120)
|
|
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(30,383)
|
|
|
(30,383)
|
|
Balance, September 30, 2021
|
119,027,104
|
|
|
$
|
119
|
|
|
$
|
898,428
|
|
|
$
|
(8,120)
|
|
|
$
|
(143,658)
|
|
|
$
|
746,769
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, 2020:
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, June 30, 2020
|
102,862,404
|
|
|
$
|
103
|
|
|
$
|
570,434
|
|
|
$
|
—
|
|
|
$
|
(78,467)
|
|
|
$
|
492,070
|
|
Issuance of common stock upon initial public offering, net of underwriting discounts and commissions and offering costs
|
13,500,000
|
|
|
14
|
|
|
318,979
|
|
|
—
|
|
|
—
|
|
|
318,993
|
|
Private placement
|
85,880
|
|
|
—
|
|
|
2,233
|
|
|
—
|
|
|
—
|
|
|
2,233
|
|
Exercise of stock options
|
15,000
|
|
|
—
|
|
|
82
|
|
|
—
|
|
|
—
|
|
|
82
|
|
Share‑based compensation
|
—
|
|
|
—
|
|
|
2,328
|
|
|
—
|
|
|
—
|
|
|
2,328
|
|
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(5,388)
|
|
|
(5,388)
|
|
Balance, September 30, 2020
|
116,463,284
|
|
|
$
|
117
|
|
|
$
|
894,056
|
|
|
$
|
—
|
|
|
$
|
(83,855)
|
|
|
$
|
810,318
|
|
(1) Certain prior period amounts have been revised to correct immaterial errors. See Note 1 for more information.
The accompanying notes are an integral part of these consolidated financial statements.
JAMF HOLDING CORP.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (continued)
(in thousands, except share amounts)
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Class
|
|
Additional Paid‑In
Capital
|
|
Accumulated Other Comprehensive Loss
|
|
Accumulated
Deficit (1)
|
|
Stockholders’
Equity (1)
|
|
Common
|
|
|
|
|
|
Shares
|
|
Amount
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(As Revised)
|
|
(As Revised)
|
Nine Months Ended September 30, 2021:
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, December 31, 2020
|
116,992,472
|
|
|
$
|
117
|
|
|
$
|
903,116
|
|
|
$
|
—
|
|
|
$
|
(92,219)
|
|
|
$
|
811,014
|
|
Exercise of stock options
|
1,526,856
|
|
|
2
|
|
|
8,568
|
|
|
—
|
|
|
—
|
|
|
8,570
|
|
Vesting of restricted stock units
|
507,776
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Share‑based compensation
|
—
|
|
|
—
|
|
|
22,774
|
|
|
—
|
|
|
—
|
|
|
22,774
|
|
Purchase of capped calls
|
—
|
|
|
—
|
|
|
(36,030)
|
|
|
—
|
|
|
—
|
|
|
(36,030)
|
|
Foreign currency translation adjustments
|
—
|
|
|
—
|
|
|
—
|
|
|
(8,120)
|
|
|
—
|
|
|
(8,120)
|
|
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(51,439)
|
|
|
(51,439)
|
|
Balance, September 30, 2021
|
119,027,104
|
|
|
$
|
119
|
|
|
$
|
898,428
|
|
|
$
|
(8,120)
|
|
|
$
|
(143,658)
|
|
|
$
|
746,769
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30, 2020:
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, December 31, 2019
|
102,843,612
|
|
|
$
|
103
|
|
|
$
|
568,756
|
|
|
$
|
—
|
|
|
$
|
(68,137)
|
|
|
$
|
500,722
|
|
Issuance of common stock upon initial public offering, net of underwriting discounts and commissions and offering costs
|
13,500,000
|
|
|
14
|
|
|
318,979
|
|
|
—
|
|
|
—
|
|
|
318,993
|
|
Private placement
|
85,880
|
|
|
—
|
|
|
2,233
|
|
|
—
|
|
|
—
|
|
|
2,233
|
|
Exercise of stock options
|
33,792
|
|
|
—
|
|
|
185
|
|
|
—
|
|
|
—
|
|
|
185
|
|
Share‑based compensation
|
—
|
|
|
—
|
|
|
3,903
|
|
|
—
|
|
|
—
|
|
|
3,903
|
|
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(15,718)
|
|
|
(15,718)
|
|
Balance, September 30, 2020
|
116,463,284
|
|
|
$
|
117
|
|
|
$
|
894,056
|
|
|
$
|
—
|
|
|
$
|
(83,855)
|
|
|
$
|
810,318
|
|
(1) Certain prior period amounts have been revised to correct immaterial errors. See Note 1 for more information.
The accompanying notes are an integral part of these consolidated financial statements.
JAMF HOLDING CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30,
|
|
2021
|
|
2020 (1)
|
|
|
|
(As Revised)
|
Cash flows from operating activities
|
|
|
|
Net loss
|
$
|
(51,439)
|
|
|
$
|
(15,718)
|
|
Adjustments to reconcile net loss to cash provided by operating activities:
|
|
|
|
Depreciation and amortization expense
|
33,249
|
|
|
28,632
|
|
Amortization of deferred contract costs
|
9,034
|
|
|
5,518
|
|
Amortization of debt issuance costs
|
573
|
|
|
700
|
|
Non-cash lease expense
|
3,705
|
|
|
—
|
|
Provision for bad debt expense and returns
|
(7)
|
|
|
894
|
|
Loss on extinguishment of debt
|
449
|
|
|
5,213
|
|
Share‑based compensation
|
22,774
|
|
|
3,903
|
|
Deferred tax benefit
|
(2,568)
|
|
|
(5,169)
|
|
Adjustment to contingent consideration
|
4,837
|
|
|
(3,100)
|
|
Other
|
1,144
|
|
|
(277)
|
|
Changes in operating assets and liabilities:
|
|
|
|
Trade accounts receivable
|
3,184
|
|
|
(18,274)
|
|
Income tax receivable/payable
|
(107)
|
|
|
(183)
|
|
Prepaid expenses and other assets
|
(8,129)
|
|
|
(4,200)
|
|
Deferred contract costs
|
(18,052)
|
|
|
(13,970)
|
|
Accounts payable
|
5,020
|
|
|
2,987
|
|
Accrued liabilities
|
1,644
|
|
|
(4,207)
|
|
Deferred revenue
|
59,464
|
|
|
47,189
|
|
Other liabilities
|
52
|
|
|
3,161
|
|
Net cash provided by operating activities
|
64,827
|
|
|
33,099
|
|
Cash flows from investing activities
|
|
|
|
Acquisitions, net of cash acquired
|
(352,711)
|
|
|
—
|
|
Purchases of equipment and leasehold improvements
|
(7,261)
|
|
|
(1,836)
|
|
Proceeds from sale of equipment and leasehold improvements
|
35
|
|
|
—
|
|
Net cash used in investing activities
|
(359,937)
|
|
|
(1,836)
|
|
Cash flows from financing activities
|
|
|
|
Proceeds from convertible senior notes
|
373,750
|
|
|
—
|
|
Proceeds from bank borrowings
|
250,000
|
|
|
—
|
|
Payment of bank borrowings
|
(250,000)
|
|
|
(205,000)
|
|
Payment for purchase of capped calls
|
(36,030)
|
|
|
—
|
|
Debt issuance costs
|
(12,636)
|
|
|
(1,264)
|
|
Payment of debt extinguishment costs
|
—
|
|
|
(2,050)
|
|
Proceeds from initial public offering, net of underwriting discounts and commissions
|
—
|
|
|
326,316
|
|
Cash paid for offering costs
|
(543)
|
|
|
(6,601)
|
|
Proceeds from private placement
|
—
|
|
|
2,233
|
|
Cash paid for contingent consideration
|
(4,206)
|
|
|
—
|
|
Proceeds from the exercise of stock options
|
8,570
|
|
|
185
|
|
Net cash provided by financing activities
|
328,905
|
|
|
113,819
|
|
Effect of exchange rate changes on cash, cash equivalents and restricted cash
|
(865)
|
|
|
—
|
|
Net increase in cash, cash equivalents and restricted cash
|
32,930
|
|
|
145,082
|
|
Cash, cash equivalents and restricted cash, beginning of period
|
194,868
|
|
|
32,375
|
|
Cash, cash equivalents and restricted cash, end of period
|
$
|
227,798
|
|
|
$
|
177,457
|
|
(1) Certain prior period amounts have been revised to correct immaterial errors. See Note 1 for more information.
The accompanying notes are an integral part of these consolidated financial statements.
JAMF HOLDING CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
(in thousands)
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30,
|
|
2021
|
|
2020 (1)
|
|
|
|
(As Revised)
|
Supplemental disclosures of cash flow information:
|
|
|
|
Cash paid for:
|
|
|
|
Interest
|
$
|
944
|
|
|
$
|
12,647
|
|
Income taxes, net of refunds
|
1,047
|
|
|
703
|
|
Non-cash activities:
|
|
|
|
Deferred consideration accrued but not paid
|
50,000
|
|
|
—
|
|
Debt issuance costs accrued but not paid
|
489
|
|
|
—
|
|
Operating lease assets obtained in exchange for operating lease liabilities
|
1,469
|
|
|
—
|
|
|
|
|
|
Reconciliation of cash, cash equivalents and restricted cash within the consolidated balance sheets to the amounts shown in the consolidated statements of cash flows above:
|
|
|
|
Cash and cash equivalents
|
$
|
227,148
|
|
|
$
|
177,457
|
|
Restricted cash included in other current assets
|
650
|
|
|
—
|
|
Total cash, cash equivalents and restricted cash
|
$
|
227,798
|
|
|
$
|
177,457
|
|
(1) Certain prior period amounts have been revised to correct immaterial errors. See Note 1 for more information.
The accompanying notes are an integral part of these consolidated financial statements.
JAMF HOLDING CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Note 1. Basis of presentation and description of business
Description of business
Jamf Holding Corp. and its wholly owned subsidiaries, collectively, are referred to as the “Company,” “we,” “us” or “our.” We are the standard in Apple Enterprise Management, and our cloud software platform is the only vertically-focused Apple infrastructure and security platform of scale in the world. We help organizations connect, manage and protect Apple products, apps and corporate resources in the cloud without ever having to touch the devices. With our products, Apple devices can be deployed to employees brand new in the shrink-wrapped box, automatically set up and personalized at first power-on and continuously administered throughout the life of the device. Our customers are located throughout the world.
Initial public offering
On July 24, 2020, the Company closed its initial public offering (“IPO”) through which it issued and sold 13,500,000 shares of common stock at the IPO price of $26.00 per share. In connection with the IPO, the Company raised approximately $319.0 million after deducting the underwriting discount and commissions of $24.7 million and offering expenses of $7.3 million. Upon completion of the IPO, authorized capital stock consisted of 500,000,000 shares of common stock, par value $0.001 per share, and 50,000,000 shares of undesignated preferred stock, par value $0.001 per share.
Concurrently with the Company’s IPO, the Company issued and sold 85,880 shares of its common stock in a private placement to certain of its named executive officers, certain of its other employees and its independent directors at the IPO Price for aggregate consideration of approximately $2.2 million.
Upon closing of the IPO, the Company repaid $205.0 million of the principal amount of its then existing Term Loan Facility (the “Prior Term Loan Facility”) and paid $3.4 million of accrued interest and $2.0 million of prepayment penalty. The Company also wrote off $3.2 million of remaining debt issuance costs upon repayment of the debt. The Company recorded a loss on debt extinguishment of $5.2 million for the prepayment penalty and write off of debt issuance costs in the third quarter of 2020.
Emerging growth company status
We are currently an emerging growth company as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act, until such time as those standards apply to private companies.
We have elected to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date that it is (i) no longer an emerging growth company or (ii) affirmatively and irrevocably opt out of the extended transition period provided in the JOBS Act. As a result, our consolidated financial statements may not be comparable to companies that comply with the new or revised accounting pronouncements as of public company effective dates.
On June 30, 2021, the last day of our second fiscal quarter in 2021, the market value of our common stock held by non-affiliates exceeded $700.0 million. Accordingly, we will be deemed a large accelerated filer as of December 31, 2021 and will no longer qualify as an emerging growth company or be able to take advantage of the extended timeline to comply with new or revised accounting standards applicable to public companies beginning with our Annual Report on Form 10-K for the year ending December 31, 2021.
Unaudited interim consolidated financial information
The accompanying interim consolidated balance sheet as of September 30, 2021, the consolidated statements of operations and of stockholders’ equity for the three and nine months ended September 30, 2021 and 2020 and the consolidated statements of cash flows for the nine months ended September 30, 2021 and 2020 and the related footnote disclosures are unaudited. These unaudited interim consolidated financial statements have been prepared on the same basis as the annual
JAMF HOLDING CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
consolidated financial statements and, in management’s opinion, include all adjustments necessary for the fair presentation of the consolidated financial position, results of operations, and cash flows of the Company. Except for the revision discussed below, all adjustments made were of a normal recurring nature. The results for the three and nine months ended September 30, 2021 are not necessarily indicative of the results to be expected for the year ending December 31, 2021 or for any future period.
Basis of presentation
The accompanying consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). Certain reclassifications of prior period amounts have been made to conform to the current presentation. In the fourth quarter of 2020, the Company reclassified on-premise subscription revenue from license revenue to subscription revenue in the consolidated statements of operations on a retroactive basis. The amount reclassified for the three and nine months ended September 30, 2020 was $7.8 million and $18.2 million, respectively. The revised presentation is consistent with our disaggregated revenue disclosure and is more consistent with how investors and other users of the financial statements evaluate overall subscription revenue. The reclassification had no impact on total revenue.
Revision of previously issued consolidated financial statements
In connection with the preparation of its financial statements for the quarter ended June 30, 2021, the Company identified immaterial errors related to certain commissions that were incorrectly capitalized in prior periods. The commissions, as well as the associated payroll taxes and retirement plan contributions, were not incremental to the acquisition of customer contracts and should have been expensed as incurred in accordance with GAAP, rather than capitalized. As a result, sales and marketing expenses were understated and deferred contract costs were overstated by $2.5 million, $2.0 million, $1.8 million and $0.8 million for the years ended December 31, 2020, 2019 and 2018 and the three months ended March 31, 2021, respectively.
In accordance with Staff Accounting Bulletin (“SAB”) No. 99, Materiality and SAB No. 108, Considering the Effects of Prior Year Misstatements When Quantifying Misstatements in Current Year Financial Statements, the Company evaluated the materiality of this error both quantitatively and qualitatively and determined that it was not material to our previously issued consolidated financial statements. However, adjusting for the cumulative effect of this error in the consolidated statement of operations for 2021 would be material to the Company’s results for this period as the cumulative amount of the error increased over time. As such, the Company has revised its previously issued consolidated financial statements as of and for the years ended December 31, 2020, 2019 and 2018 and its unaudited consolidated financial statements as of and for the quarter ended March 31, 2021 and quarters and year-to-date periods ended June 30, 2020 and September 30, 2020 to correct the error.
The revisions also include the corrections of other immaterial errors that the Company had previously recorded as out-of-period adjustments in the period of identification, as well as other previously identified immaterial errors. The previously recorded out-of-period adjustments included the establishment of state valuation allowances, as well as other immaterial errors. The Company had previously determined that these errors did not, both individually and in the aggregate, result in a material misstatement of our previously issued consolidated financial statements and reached the same conclusion when aggregating these immaterial errors with the commissions error described above.
The accompanying financial statements and relevant footnotes to the consolidated financial statements in this Quarterly Report on Form 10-Q have been revised to correct for the immaterial errors discussed above. The tables below provide reconciliations of our previously reported amounts to revised amounts to correct for these immaterial errors in our consolidated financial statements as of December 31, 2020 and for the quarter and year-to-date periods ended September 30, 2020.
JAMF HOLDING CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2020
|
|
As Previously Reported
|
|
Adjustments
|
|
As Revised
|
|
|
Commissions
|
|
Other
|
|
|
(in thousands)
|
Assets
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
$
|
194,868
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
194,868
|
|
Trade accounts receivable, net of allowances
|
69,056
|
|
|
—
|
|
|
—
|
|
|
69,056
|
|
Income taxes receivable
|
632
|
|
|
—
|
|
|
—
|
|
|
632
|
|
Deferred contract costs
|
9,959
|
|
|
(1,675)
|
|
|
—
|
|
|
8,284
|
|
Prepaid expenses
|
13,283
|
|
|
—
|
|
|
—
|
|
|
13,283
|
|
Other current assets
|
1,113
|
|
|
—
|
|
|
—
|
|
|
1,113
|
|
Total current assets
|
288,911
|
|
|
(1,675)
|
|
|
—
|
|
|
287,236
|
|
Equipment and leasehold improvements, net
|
12,755
|
|
|
—
|
|
|
2,375
|
|
|
15,130
|
|
Goodwill
|
541,480
|
|
|
—
|
|
|
—
|
|
|
541,480
|
|
Other intangible assets, net
|
202,878
|
|
|
—
|
|
|
—
|
|
|
202,878
|
|
Deferred contract costs, non-current
|
26,770
|
|
|
(4,568)
|
|
|
—
|
|
|
22,202
|
|
Other assets
|
5,359
|
|
|
—
|
|
|
—
|
|
|
5,359
|
|
Total assets
|
$
|
1,078,153
|
|
|
$
|
(6,243)
|
|
|
$
|
2,375
|
|
|
$
|
1,074,285
|
|
Liabilities and stockholders’ equity
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
Accounts payable
|
$
|
6,967
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
6,967
|
|
Accrued liabilities
|
31,574
|
|
|
—
|
|
|
342
|
|
|
31,916
|
|
Income taxes payable
|
713
|
|
|
—
|
|
|
—
|
|
|
713
|
|
Deferred revenues
|
160,443
|
|
|
—
|
|
|
(441)
|
|
|
160,002
|
|
Total current liabilities
|
199,697
|
|
|
—
|
|
|
(99)
|
|
|
199,598
|
|
Deferred revenues, non-current
|
45,507
|
|
|
—
|
|
|
—
|
|
|
45,507
|
|
Deferred tax liability, net
|
6,422
|
|
|
(1,535)
|
|
|
200
|
|
|
5,087
|
|
Other liabilities
|
11,046
|
|
|
—
|
|
|
2,033
|
|
|
13,079
|
|
Total liabilities
|
262,672
|
|
|
(1,535)
|
|
|
2,134
|
|
|
263,271
|
|
Commitments and contingencies
|
|
|
|
|
|
|
|
Stockholders’ equity:
|
|
|
|
|
|
|
|
Preferred stock
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Common stock
|
117
|
|
|
—
|
|
|
—
|
|
|
117
|
|
Additional paid‑in capital
|
903,116
|
|
|
—
|
|
|
—
|
|
|
903,116
|
|
Accumulated deficit
|
(87,752)
|
|
|
(4,708)
|
|
|
241
|
|
|
(92,219)
|
|
Total stockholders’ equity
|
815,481
|
|
|
(4,708)
|
|
|
241
|
|
|
811,014
|
|
Total liabilities and stockholders’ equity
|
$
|
1,078,153
|
|
|
$
|
(6,243)
|
|
|
$
|
2,375
|
|
|
$
|
1,074,285
|
|
JAMF HOLDING CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, 2020
|
|
As Previously Reported (1)
|
|
Adjustments
|
|
As Revised
|
|
|
Commissions
|
|
Other
|
|
|
(in thousands, except share and per share amounts)
|
Revenue:
|
|
|
|
|
|
|
|
Subscription
|
$
|
65,782
|
|
|
$
|
—
|
|
|
$
|
(148)
|
|
|
$
|
65,634
|
|
Services
|
3,605
|
|
|
—
|
|
|
292
|
|
|
3,897
|
|
License
|
1,017
|
|
|
—
|
|
|
—
|
|
|
1,017
|
|
Total revenue
|
70,404
|
|
|
—
|
|
|
144
|
|
|
70,548
|
|
Cost of revenue:
|
|
|
|
|
|
|
|
Cost of subscription (exclusive of amortization expense shown below)
|
10,117
|
|
|
—
|
|
|
(85)
|
|
|
10,032
|
|
Cost of services (exclusive of amortization expense shown below)
|
2,443
|
|
|
—
|
|
|
4
|
|
|
2,447
|
|
Amortization expense
|
2,679
|
|
|
—
|
|
|
—
|
|
|
2,679
|
|
Total cost of revenue
|
15,239
|
|
|
—
|
|
|
(81)
|
|
|
15,158
|
|
Gross profit
|
55,165
|
|
|
—
|
|
|
225
|
|
|
55,390
|
|
Operating expenses:
|
|
|
|
|
|
|
|
Sales and marketing
|
23,251
|
|
|
488
|
|
|
34
|
|
|
23,773
|
|
Research and development
|
12,736
|
|
|
—
|
|
|
21
|
|
|
12,757
|
|
General and administrative
|
13,921
|
|
|
—
|
|
|
(76)
|
|
|
13,845
|
|
Amortization expense
|
5,633
|
|
|
—
|
|
|
—
|
|
|
5,633
|
|
Total operating expenses
|
55,541
|
|
|
488
|
|
|
(21)
|
|
|
56,008
|
|
Loss from operations
|
(376)
|
|
|
(488)
|
|
|
246
|
|
|
(618)
|
|
Interest expense, net
|
(1,207)
|
|
|
—
|
|
|
—
|
|
|
(1,207)
|
|
Loss on extinguishment of debt
|
(5,213)
|
|
|
—
|
|
|
—
|
|
|
(5,213)
|
|
Foreign currency transaction loss
|
(154)
|
|
|
—
|
|
|
—
|
|
|
(154)
|
|
Loss before income tax benefit
|
(6,950)
|
|
|
(488)
|
|
|
246
|
|
|
(7,192)
|
|
Income tax benefit
|
1,857
|
|
|
119
|
|
|
(172)
|
|
|
1,804
|
|
Net loss
|
$
|
(5,093)
|
|
|
$
|
(369)
|
|
|
$
|
74
|
|
|
$
|
(5,388)
|
|
Net loss per share, basic and diluted
|
$
|
(0.04)
|
|
|
|
|
|
|
$
|
(0.05)
|
|
Weighted-average shares used to compute net loss per share, basic and diluted
|
113,203,074
|
|
|
|
|
|
|
113,203,074
|
|
(1) Previously reported amounts reflect the reclassification of on-premise subscription revenue from license revenue to subscription revenue, which we applied on a retrospective basis in the fourth quarter of 2020. See further information in Basis of Presentation above.
JAMF HOLDING CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30, 2020
|
|
As Previously Reported (1)
|
|
Adjustments
|
|
As Revised
|
|
|
Commissions
|
|
Other
|
|
|
(in thousands, except share and per share amounts)
|
Revenue:
|
|
|
|
|
|
|
|
Subscription
|
$
|
179,148
|
|
|
$
|
—
|
|
|
$
|
(710)
|
|
|
$
|
178,438
|
|
Services
|
10,066
|
|
|
—
|
|
|
550
|
|
|
10,616
|
|
License
|
3,811
|
|
|
—
|
|
|
—
|
|
|
3,811
|
|
Total revenue
|
193,025
|
|
|
—
|
|
|
(160)
|
|
|
192,865
|
|
Cost of revenue:
|
|
|
|
|
|
|
|
Cost of subscription (exclusive of amortization expense shown below)
|
28,127
|
|
|
—
|
|
|
(107)
|
|
|
28,020
|
|
Cost of services (exclusive of amortization expense shown below)
|
7,736
|
|
|
—
|
|
|
11
|
|
|
7,747
|
|
Amortization expense
|
8,034
|
|
|
—
|
|
|
—
|
|
|
8,034
|
|
Total cost of revenue
|
43,897
|
|
|
—
|
|
|
(96)
|
|
|
43,801
|
|
Gross profit
|
149,128
|
|
|
—
|
|
|
(64)
|
|
|
149,064
|
|
Operating expenses:
|
|
|
|
|
|
|
|
Sales and marketing
|
65,735
|
|
|
1,722
|
|
|
101
|
|
|
67,558
|
|
Research and development
|
37,282
|
|
|
—
|
|
|
62
|
|
|
37,344
|
|
General and administrative
|
31,813
|
|
|
—
|
|
|
(225)
|
|
|
31,588
|
|
Amortization expense
|
16,941
|
|
|
—
|
|
|
—
|
|
|
16,941
|
|
Total operating expenses
|
151,771
|
|
|
1,722
|
|
|
(62)
|
|
|
153,431
|
|
Loss from operations
|
(2,643)
|
|
|
(1,722)
|
|
|
(2)
|
|
|
(4,367)
|
|
Interest expense, net
|
(10,675)
|
|
|
—
|
|
|
—
|
|
|
(10,675)
|
|
Loss on extinguishment of debt
|
(5,213)
|
|
|
—
|
|
|
—
|
|
|
(5,213)
|
|
Foreign currency transaction loss
|
(471)
|
|
|
—
|
|
|
—
|
|
|
(471)
|
|
Other income, net
|
91
|
|
|
—
|
|
|
—
|
|
|
91
|
|
Loss before income tax provision
|
(18,911)
|
|
|
(1,722)
|
|
|
(2)
|
|
|
(20,635)
|
|
Income tax provision
|
5,105
|
|
|
430
|
|
|
(618)
|
|
|
4,917
|
|
Net loss
|
$
|
(13,806)
|
|
|
$
|
(1,292)
|
|
|
$
|
(620)
|
|
|
$
|
(15,718)
|
|
Net loss per share, basic and diluted
|
$
|
(0.13)
|
|
|
|
|
|
|
$
|
(0.15)
|
|
Weighted-average shares used to compute net loss per share, basic and diluted
|
106,333,836
|
|
|
|
|
|
|
106,333,836
|
|
(1) Previously reported amounts reflect the reclassification of on-premise subscription revenue from license revenue to subscription revenue, which we applied on a retrospective basis in the fourth quarter of 2020. See further information in Basis of Presentation above.
JAMF HOLDING CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Class
|
|
Additional Paid‑In
Capital
|
|
Accumulated
Deficit
|
|
Stockholders’
Equity
|
|
Common
|
|
|
|
|
Shares
|
|
Amount
|
|
|
|
|
(in thousands, except share amounts)
|
As Previously Reported
|
|
|
|
|
|
|
|
|
|
Balance, June 30, 2020
|
102,862,404
|
|
|
$
|
103
|
|
|
$
|
570,434
|
|
|
$
|
(73,694)
|
|
|
$
|
496,843
|
|
Issuance of common stock upon initial public offering, net of underwriting discounts and commissions and offering costs
|
13,500,000
|
|
|
14
|
|
|
318,979
|
|
|
—
|
|
|
318,993
|
|
Private placement
|
85,880
|
|
|
—
|
|
|
2,233
|
|
|
—
|
|
|
2,233
|
|
Exercise of stock options
|
15,000
|
|
|
—
|
|
|
82
|
|
|
—
|
|
|
82
|
|
Share‑based compensation
|
—
|
|
|
—
|
|
|
2,328
|
|
|
—
|
|
|
2,328
|
|
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(5,093)
|
|
|
(5,093)
|
|
Balance, September 30, 2020
|
116,463,284
|
|
|
$
|
117
|
|
|
$
|
894,056
|
|
|
$
|
(78,787)
|
|
|
$
|
815,386
|
|
|
|
|
|
|
|
|
|
|
|
Commissions Adjustment
|
|
|
|
|
|
|
|
|
|
Balance, June 30, 2020
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(3,753)
|
|
|
$
|
(3,753)
|
|
Issuance of common stock upon initial public offering, net of underwriting discounts and commissions and offering costs
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Private placement
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Exercise of stock options
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Share‑based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(369)
|
|
|
(369)
|
|
Balance, September 30, 2020
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(4,122)
|
|
|
$
|
(4,122)
|
|
|
|
|
|
|
|
|
|
|
|
Other Adjustments
|
|
|
|
|
|
|
|
|
|
Balance, June 30, 2020
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(1,020)
|
|
|
$
|
(1,020)
|
|
Issuance of common stock upon initial public offering, net of underwriting discounts and commissions and offering costs
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Private placement
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Exercise of stock options
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Share‑based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
74
|
|
|
74
|
|
Balance, September 30, 2020
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(946)
|
|
|
$
|
(946)
|
|
|
|
|
|
|
|
|
|
|
|
As Revised
|
|
|
|
|
|
|
|
|
|
Balance, June 30, 2020
|
102,862,404
|
|
|
$
|
103
|
|
|
$
|
570,434
|
|
|
$
|
(78,467)
|
|
|
$
|
492,070
|
|
Issuance of common stock upon initial public offering, net of underwriting discounts and commissions and offering costs
|
13,500,000
|
|
|
14
|
|
|
318,979
|
|
|
—
|
|
|
318,993
|
|
Private placement
|
85,880
|
|
|
—
|
|
|
2,233
|
|
|
—
|
|
|
2,233
|
|
Exercise of stock options
|
15,000
|
|
|
—
|
|
|
82
|
|
|
—
|
|
|
82
|
|
Share‑based compensation
|
—
|
|
|
—
|
|
|
2,328
|
|
|
—
|
|
|
2,328
|
|
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(5,388)
|
|
|
(5,388)
|
|
Balance, September 30, 2020
|
116,463,284
|
|
|
$
|
117
|
|
|
$
|
894,056
|
|
|
$
|
(83,855)
|
|
|
$
|
810,318
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Class
|
|
Additional Paid‑In
Capital
|
|
Accumulated Deficit
|
|
Stockholders’
Equity
|
|
Common
|
|
|
|
|
Shares
|
|
Amount
|
|
|
|
|
(in thousands, except share amounts)
|
As Previously Reported
|
|
|
|
|
|
|
|
|
|
Balance, December 31, 2019
|
102,843,612
|
|
|
$
|
103
|
|
|
$
|
568,756
|
|
|
$
|
(64,981)
|
|
|
$
|
503,878
|
|
Issuance of common stock upon initial public offering, net of underwriting discounts and commissions and offering costs
|
13,500,000
|
|
|
14
|
|
|
318,979
|
|
|
—
|
|
|
318,993
|
|
Private placement
|
85,880
|
|
|
—
|
|
|
2,233
|
|
|
—
|
|
|
2,233
|
|
Exercise of stock options
|
33,792
|
|
|
—
|
|
|
185
|
|
|
—
|
|
|
185
|
|
Share‑based compensation
|
—
|
|
|
—
|
|
|
3,903
|
|
|
—
|
|
|
3,903
|
|
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(13,806)
|
|
|
(13,806)
|
|
Balance, September 30, 2020
|
116,463,284
|
|
|
$
|
117
|
|
|
$
|
894,056
|
|
|
$
|
(78,787)
|
|
|
$
|
815,386
|
|
|
|
|
|
|
|
|
|
|
|
Commissions Adjustment
|
|
|
|
|
|
|
|
|
|
Balance, December 31, 2019
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(2,830)
|
|
|
$
|
(2,830)
|
|
Issuance of common stock upon initial public offering, net of underwriting discounts and commissions and offering costs
|
—
|
|
.
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Private placement
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Exercise of stock options
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Share‑based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,292)
|
|
|
(1,292)
|
|
Balance, September 30, 2020
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(4,122)
|
|
|
$
|
(4,122)
|
|
|
|
|
|
|
|
|
|
|
|
Other Adjustments
|
|
|
|
|
|
|
|
|
|
Balance, December 31, 2019
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(326)
|
|
|
$
|
(326)
|
|
Issuance of common stock upon initial public offering, net of underwriting discounts and commissions and offering costs
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Private placement
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Exercise of stock options
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Share‑based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(620)
|
|
|
(620)
|
|
Balance, September 30, 2020
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(946)
|
|
|
$
|
(946)
|
|
|
|
|
|
|
|
|
|
|
|
As Revised
|
|
|
|
|
|
|
|
|
|
Balance, December 31, 2019
|
102,843,612
|
|
|
$
|
103
|
|
|
$
|
568,756
|
|
|
$
|
(68,137)
|
|
|
$
|
500,722
|
|
Issuance of common stock upon initial public offering, net of underwriting discounts and commissions and offering costs
|
13,500,000
|
|
|
14
|
|
|
318,979
|
|
|
—
|
|
|
318,993
|
|
Private placement
|
85,880
|
|
|
—
|
|
|
2,233
|
|
|
—
|
|
|
2,233
|
|
Exercise of stock options
|
33,792
|
|
|
—
|
|
|
185
|
|
|
—
|
|
|
185
|
|
Share‑based compensation
|
—
|
|
|
—
|
|
|
3,903
|
|
|
—
|
|
|
3,903
|
|
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(15,718)
|
|
|
(15,718)
|
|
Balance, September 30, 2020
|
116,463,284
|
|
|
$
|
117
|
|
|
$
|
894,056
|
|
|
$
|
(83,855)
|
|
|
$
|
810,318
|
|
JAMF HOLDING CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30, 2020
|
|
As Previously Reported
|
|
Adjustments
|
|
As Revised
|
|
|
Commissions
|
|
Other
|
|
|
(in thousands)
|
Cash flows from operating activities
|
|
|
|
|
|
|
|
Net loss
|
$
|
(13,806)
|
|
|
$
|
(1,292)
|
|
|
$
|
(620)
|
|
|
$
|
(15,718)
|
|
Adjustments to reconcile net loss to cash provided by operating activities:
|
|
|
|
|
|
|
|
Depreciation and amortization expense
|
28,378
|
|
|
—
|
|
|
254
|
|
|
28,632
|
|
Amortization of deferred contract costs
|
6,705
|
|
|
(1,187)
|
|
|
—
|
|
|
5,518
|
|
Amortization of debt issuance costs
|
700
|
|
|
—
|
|
|
—
|
|
|
700
|
|
Provision for bad debt expense and returns
|
894
|
|
|
—
|
|
|
—
|
|
|
894
|
|
Gain on disposal of equipment and leasehold improvements
|
(23)
|
|
|
—
|
|
|
23
|
|
|
—
|
|
Loss on extinguishment of debt
|
5,213
|
|
|
—
|
|
|
—
|
|
|
5,213
|
|
Share‑based compensation
|
3,903
|
|
|
—
|
|
|
—
|
|
|
3,903
|
|
Deferred tax benefit
|
(5,357)
|
|
|
(430)
|
|
|
618
|
|
|
(5,169)
|
|
Adjustment to contingent consideration
|
(3,100)
|
|
|
—
|
|
|
—
|
|
|
(3,100)
|
|
Other
|
—
|
|
|
—
|
|
|
(277)
|
|
|
(277)
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
Trade accounts receivable
|
(18,332)
|
|
|
—
|
|
|
58
|
|
|
(18,274)
|
|
Income tax receivable/payable
|
(183)
|
|
|
—
|
|
|
—
|
|
|
(183)
|
|
Prepaid expenses and other assets
|
(4,699)
|
|
|
—
|
|
|
499
|
|
|
(4,200)
|
|
Deferred contract costs
|
(16,879)
|
|
|
2,909
|
|
|
—
|
|
|
(13,970)
|
|
Accounts payable
|
3,145
|
|
|
—
|
|
|
(158)
|
|
|
2,987
|
|
Accrued liabilities
|
(4,207)
|
|
|
—
|
|
|
—
|
|
|
(4,207)
|
|
Deferred revenue
|
47,528
|
|
|
—
|
|
|
(339)
|
|
|
47,189
|
|
Other liabilities
|
3,161
|
|
|
—
|
|
|
—
|
|
|
3,161
|
|
Net cash provided by operating activities
|
33,041
|
|
|
—
|
|
|
58
|
|
|
33,099
|
|
Cash flows from investing activities
|
|
|
|
|
|
|
|
Purchases of equipment and leasehold improvements
|
(1,836)
|
|
|
—
|
|
|
—
|
|
|
(1,836)
|
|
Net cash used in investing activities
|
(1,836)
|
|
|
—
|
|
|
—
|
|
|
(1,836)
|
|
Cash flows from financing activities
|
|
|
|
|
|
|
|
Payment of bank borrowings
|
(205,000)
|
|
|
—
|
|
|
—
|
|
|
(205,000)
|
|
Debt issuance costs
|
(1,264)
|
|
|
—
|
|
|
—
|
|
|
(1,264)
|
|
Payment of debt extinguishment costs
|
(2,050)
|
|
|
—
|
|
|
—
|
|
|
(2,050)
|
|
Proceeds from initial public offering, net of underwriting discounts and commissions
|
326,316
|
|
|
—
|
|
|
—
|
|
|
326,316
|
|
Cash paid for offering costs
|
(6,601)
|
|
|
—
|
|
|
—
|
|
|
(6,601)
|
|
Proceeds from private placement
|
2,233
|
|
|
—
|
|
|
—
|
|
|
2,233
|
|
Proceeds from the exercise of stock options
|
185
|
|
|
—
|
|
|
—
|
|
|
185
|
|
Net cash provided by financing activities
|
113,819
|
|
|
—
|
|
|
—
|
|
|
113,819
|
|
Net increase in cash and cash equivalents
|
145,024
|
|
|
—
|
|
|
58
|
|
|
145,082
|
|
Cash and cash equivalents, beginning of period
|
32,433
|
|
|
—
|
|
|
(58)
|
|
|
32,375
|
|
Cash and cash equivalents, end of period
|
$
|
177,457
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
177,457
|
|
Supplemental disclosures of cash flow information:
|
|
|
|
|
|
|
|
Cash paid for interest
|
$
|
12,647
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
12,647
|
|
Cash paid for income taxes, net of refunds
|
703
|
|
|
—
|
|
|
—
|
|
|
703
|
|
JAMF HOLDING CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
Subsequent events
The Company evaluated events or transactions that occurred after the balance sheet date for potential recognition or disclosure through the date the financial statements were issued. No subsequent events or transactions were identified.
Use of estimates
The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities as of the reporting date, and the reported amounts of revenues and expenses during the reporting period. These estimates are based on management’s best knowledge of current events and actions that the Company may undertake in the future and include, but are not limited to, revenue recognition, stock-based compensation, commissions, the fair values of assets
acquired and liabilities assumed in business combinations, useful lives for finite-lived assets, and accounting for income taxes. Actual results could differ from those estimates.
Segment and geographic information
Our chief operating decision maker (“CODM”) is our Chief Executive Officer, who reviews financial information presented on a consolidated basis for purposes of making operating decisions, assessing financial performance and allocating resources. We operate our business as one operating segment and therefore we have one reportable segment.
Revenue by geographic region as determined based on the end user customer address was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
|
2021
|
|
2020 (1)
|
|
2021
|
|
2020 (1)
|
|
|
|
(As Revised)
|
|
|
|
(As Revised)
|
|
(in thousands)
|
Revenue:
|
|
|
|
|
|
|
|
The Americas
|
$
|
69,865
|
|
|
$
|
54,707
|
|
|
$
|
195,408
|
|
|
$
|
149,723
|
|
Europe, the Middle East, India, and Africa
|
19,543
|
|
|
11,786
|
|
|
49,721
|
|
|
32,347
|
|
Asia Pacific
|
6,213
|
|
|
4,055
|
|
|
17,457
|
|
|
10,795
|
|
|
$
|
95,621
|
|
|
$
|
70,548
|
|
|
$
|
262,586
|
|
|
$
|
192,865
|
|
(1) Certain prior period amounts have been revised to correct immaterial errors. See above for more information.
Note 2. Summary of significant accounting policies
The Company’s significant accounting policies are discussed in Note 2 to the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020. Except for the accounting policies for leases that were updated as a result of adopting the new accounting standard and the accounting policies for foreign currency remeasurement discussed below, there have been no significant changes to these policies that have had a material impact on the Company’s consolidated financial statements and related notes for the three and nine months ended September 30, 2021. The following describes the impact of certain policies.
Foreign currency remeasurement
Our reporting currency is the U.S. dollar. The functional currency of our foreign operations, except for Wandera Ltd. and its subsidiaries, is the U.S. dollar. The functional currency of Wandera Ltd. and its subsidiaries is the British Pound (“GBP”). The assets, liabilities, revenues and expenses of our foreign operations are remeasured in accordance with ASC Topic 830, Foreign Currency Matters. Remeasurement adjustments are recorded as foreign currency transaction gains (losses) in the consolidated statement of operations. Assets and liabilities of Wandera Ltd. and its subsidiaries are translated into U.S. dollars based upon exchange rates prevailing at the end of each period. Revenues and expenses of Wandera Ltd. and its subsidiaries are translated at weighted average exchange rates on a monthly basis. The resulting translation adjustment is included in accumulated other comprehensive income (“AOCI”).
JAMF HOLDING CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
Revenue recognition
The Company applies ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”) and follows a five-step model to determine the appropriate amount of revenue to be recognized in accordance with ASC 606.
Disaggregation of Revenue
The Company separates revenue into subscription and non-subscription categories to disaggregate those revenues that are term-based and renewable from those that are one-time in nature. Revenue from subscription and non-subscription contractual arrangements are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
|
2021
|
|
2020 (1)
|
|
2021
|
|
2020 (1)
|
|
|
|
(As Revised)
|
|
|
|
(As Revised)
|
|
(in thousands)
|
SaaS subscription and support and maintenance
|
$
|
83,775
|
|
|
$
|
57,785
|
|
|
$
|
222,672
|
|
|
$
|
160,279
|
|
On‑premise subscription
|
6,925
|
|
|
7,849
|
|
|
23,228
|
|
|
18,159
|
|
Subscription revenue
|
90,700
|
|
|
65,634
|
|
|
245,900
|
|
|
178,438
|
|
Professional services
|
4,083
|
|
|
3,897
|
|
|
12,015
|
|
|
10,616
|
|
Perpetual licenses
|
838
|
|
|
1,017
|
|
|
4,671
|
|
|
3,811
|
|
Non‑subscription revenue
|
4,921
|
|
|
4,914
|
|
|
16,686
|
|
|
14,427
|
|
Total revenue
|
$
|
95,621
|
|
|
$
|
70,548
|
|
|
$
|
262,586
|
|
|
$
|
192,865
|
|
(1) Certain prior period amounts have been revised to correct immaterial errors. See Note 1 for more information.
Contract Balances
If revenue is recognized in advance of the right to invoice, a contract asset is recorded. The balances of contract assets, which are included in other current assets in the consolidated balance sheets, were $1.7 million and $0.9 million as of September 30, 2021 and December 31, 2020, respectively.
Contract liabilities consist of customer billings in advance of revenue being recognized. The Company invoices its customers for subscription, support and maintenance and services in advance.
Changes in contract liabilities, including revenue earned during the period from the beginning contract liability balance and new deferrals of revenue during the period, were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
|
2021
|
|
2020 (1)
|
|
2021
|
|
2020 (1)
|
|
|
|
(As Revised)
|
|
|
|
(As Revised)
|
|
(in thousands)
|
Balance, beginning of the period
|
$
|
238,457
|
|
|
$
|
157,282
|
|
|
$
|
205,509
|
|
|
$
|
140,449
|
|
Acquisitions
|
5,200
|
|
|
—
|
|
|
5,200
|
|
|
—
|
|
Revenue earned
|
(71,574)
|
|
|
(49,823)
|
|
|
(144,038)
|
|
|
(115,784)
|
|
Deferral of revenue
|
98,284
|
|
|
80,179
|
|
|
203,696
|
|
|
162,973
|
|
Balance, end of the period
|
$
|
270,367
|
|
|
$
|
187,638
|
|
|
$
|
270,367
|
|
|
$
|
187,638
|
|
(1) Certain prior period amounts have been revised to correct immaterial errors. See Note 1 for more information.
There were no significant changes to our contract assets and liabilities during the three and nine months ended September 30, 2021 and 2020 outside of our sales activities.
JAMF HOLDING CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
Remaining Performance Obligations
Revenue allocated to remaining performance obligations represents contracted revenue that has not yet been recognized, which includes deferred revenue and noncancellable amounts to be invoiced. As of September 30, 2021 and December 31, 2020, the Company had $310.3 million and $224.1 million, respectively, of remaining performance obligations, with 81% and 80%, respectively, expected to be recognized as revenue over the succeeding 12 months, and the remainder generally expected to be recognized over the three years thereafter. Previously reported remaining performance obligations as of December 31, 2020 have been revised. See Note 1 for more information.
Deferred Contract Costs
Sales commissions as well as associated payroll taxes and retirement plan contributions (together, contract costs) that are incremental to the acquisition of customer contracts are capitalized using a portfolio approach as deferred contract costs in the consolidated balance sheets when the period of benefit is determined to be greater than one year.
Total amortization of contract costs for the three months ended September 30, 2021 and 2020 was $3.1 million and $2.0 million, respectively. Total amortization of contract costs for the nine months ended September 30, 2021 and 2020 was $9.0 million and $5.5 million, respectively. Previously reported amortization of contract costs for the three and nine months ended September 30, 2020 have been revised. See Note 1 for more information.
The Company periodically reviews these deferred costs to determine whether events or changes in circumstances have occurred that could affect the period of benefit of these deferred contract costs. There were no impairment losses recorded during the three and nine months ended September 30, 2021 and 2020.
Concentration of Credit Risk
For the three and nine months ended September 30, 2021, the Company had one distributor that accounted for more than 10% of total net revenues. Total receivables related to this distributor were $10.8 million as of September 30, 2021. For the three and nine months ended September 30, 2020, the Company had two distributors that accounted for more than 10% of total net revenues. Total receivables related to these distributors were $19.8 million as of December 31, 2020.
No single end customer accounted for more than 10% of total revenue during the three and nine months ended September 30, 2021 and 2020.
Recently issued accounting pronouncements not yet adopted
From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (“FASB”) or other standard setting bodies and adopted by us as of the specified effective date. Unless otherwise discussed, the impact of recently issued standards that are not yet effective will not have a material impact on our financial position or results of operations upon adoption.
Financial Instruments — Credit Losses
In June 2016, the FASB issued Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”), which introduces a model based on expected losses to estimate credit losses for most financial assets and certain other instruments. In November 2019, the FASB issued ASU No. 2019-10, Financial Instruments — Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842): Effective Dates (“ASU 2019-10”). The update allows the extension of the initial effective date for entities which have not yet adopted ASU No. 2016-02, Leases (Topic 842) (“ASU 2016-02”). For private companies, the standard is effective for annual reporting periods beginning after December 15, 2022, with early adoption permitted. We will be deemed a large accelerated filer as of December 31, 2021 and will no longer qualify as an emerging growth company and be able to take advantage of the extended timeline to comply with new or revised accounting standards applicable to public companies beginning with our Annual Report on Form 10-K for the year ended December 31, 2021. As such, the Company will adopt ASU 2016-13 in the fourth quarter of 2021 with an effective date of January 1, 2021 through a cumulative-effect
JAMF HOLDING CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
adjustment to retained earnings. The Company is currently evaluating the effect the standard will have on its consolidated financial statements.
Reference Rate Reform
In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU 2020-04”), which provides entities with temporary optional financial reporting alternatives to ease the potential burden in accounting for reference rate reform and includes a provision that allows entities to account for a modified contract as a continuation of an existing contract. ASU 2020-04 is effective upon issuance and can be applied through December 31, 2022. The adoption of this standard is not expected to have a material impact on the Company’s consolidated financial statements.
Business Combinations — Accounting for Contract Assets and Contract Liabilities from Contracts with Customers
In October 2021, the FASB issued ASU No. 2021-08, Business Combinations (Topic 805), Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, which requires contract assets and contract liabilities acquired in a business combination to be recognized and measured by the acquirer on the acquisition date in accordance with ASC 606. Generally, this new guidance will result in the acquirer recognizing contract assets and contract liabilities at the same amounts recorded by the acquiree. Historically, such amounts were recognized by the acquirer at fair value in accordance with acquisition accounting. The new guidance should be applied prospectively to acquisitions occurring on or after the effective date. The standard is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. Early adoption is permitted, including in interim periods, for any financial statements that have not been issued. The Company will evaluate whether to early adopt the standard for future acquisitions.
Adoption of new accounting pronouncements
Leases
In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) to increase transparency and comparability among organizations related to their leasing arrangements. The update requires lessees to recognize most leases on their balance sheets, with the exception of short-term leases if a policy election is made, while recognizing lease expense on their income statements in a manner similar to current GAAP. The guidance also requires entities to disclose key quantitative and qualitative information about its leasing arrangements. The Company adopted the new lease standard on January 1, 2021 using the optional transition method to the modified retrospective approach. Under this transition provision, results for reporting periods beginning on January 1, 2021 are presented under ASC Topic 842, Leases (“ASC 842”) while prior period amounts continue to be reported and disclosed in accordance with the Company’s historical accounting treatment under ASC Topic 840, Leases (“ASC 840”).
To reduce the burden of adoption and ongoing compliance with ASC 842, a number of practical expedients and policy elections are available under the new guidance. The Company elected the “package of practical expedients” permitted under the transition guidance, which among other things, did not require reassessment of whether contracts entered into prior to adoption are or contain leases, and allowed carryforward of the historical lease classification for existing leases. The Company has not elected to adopt the “hindsight” practical expedient, and therefore measured the right-of-use (“ROU”) asset and lease liability using the remaining portion of the lease term at adoption on January 1, 2021.
The Company made an accounting policy election under ASC 842 not to recognize ROU assets and lease liabilities for leases with a term of twelve months or less. For all other leases, the Company recognizes ROU assets and lease liabilities based on the present value of lease payments over the lease term at the commencement date of the lease (or January 1, 2021 for existing leases upon the adoption of ASC 842). The ROU assets also include any initial direct costs incurred and lease payments made at or before the commencement date and are reduced by any lease incentives.
Future lease payments may include fixed rent escalation clauses or payments that depend on an index (such as the consumer price index). Subsequent changes to an index and other periodic market-rate adjustments to base rent are recorded in variable lease expense in the period incurred.
JAMF HOLDING CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
The Company has made an accounting policy election to account for lease and non-lease components in its contracts as a single lease component for all asset classes. The non-lease components typically represent additional services transferred to the Company, such as common area maintenance for real estate, which are variable in nature and recorded in variable lease expense in the period incurred.
The Company uses its incremental borrowing rate to determine the present value of lease payments as the Company’s leases do not have a readily determinable implicit discount rate. The incremental borrowing rate is the rate of interest the Company would have to pay to borrow on a collateralized basis over a similar term and amount in a similar economic environment. Judgement is applied in assessing factors such as Company specific credit risk, lease term, nature and quality of the underlying collateral, currency and economic environment in determining the incremental borrowing rate to apply to each lease.
Upon adoption, the Company recorded ROU assets and lease liabilities of approximately $25.0 million and $28.6 million, respectively, related to the Company’s operating leases. The adoption of the new lease standard did not materially impact our consolidated statements of operations or consolidated statements of cash flows. See Note 6 for more information.
Debt with Conversion and Other Options and Contracts in Entity’s Own Equity
In August 2020, the FASB issued ASU No. 2020-06, Debt — Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging — Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (“ASU 2020-06”), which simplifies the accounting for certain financial instruments with characteristics of liabilities and equity. Among other changes, the standard eliminates the beneficial conversion and cash conversion accounting models for convertible instruments. As a result, entities will account for a convertible debt instrument wholly as debt unless the instrument contains features that require bifurcation as a derivative in accordance with ASC Topic 815, Derivatives and Hedging, or a convertible debt instrument was issued at a substantial premium. In addition, the amendments also require the if-converted method to be applied for all convertible instruments when calculating diluted earnings per share. The standard is effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. Early adoption is permitted. The Company early adopted the new standard on January 1, 2021. The adoption of the standard did not have a material impact on the Company’s consolidated financial statements.
Note 3. Financial instruments fair value
We report financial assets and liabilities and nonfinancial assets and liabilities that are recognized or disclosed at fair value in the consolidated financial statements on a recurring basis in accordance with ASC Topic 820, Fair Value Measurement (“ASC 820”). ASC 820 defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities, which are required to be recorded at fair value, we consider the principal or most advantageous market in which we would transact and the market-based risk measurements or assumptions that market participants would use in pricing the asset or liability, such as inherent risk, transfer restrictions and credit risk.
ASC 820 also establishes a fair value hierarchy, which prioritizes the inputs to valuation techniques used to measure fair value into three levels. Fair value represents the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. GAAP established a hierarchy framework to classify the fair value based on the observability of significant inputs to the measurement. The levels of the fair value hierarchy are as follows:
Level 1: Fair value is determined using an unadjusted quoted price in an active market for identical assets or liabilities.
Level 2: Fair value is estimated using inputs other than quoted prices included within Level 1 that are observable, either directly or indirectly.
Level 3: Fair value is estimated using unobservable inputs that are significant to the fair value of the assets or liabilities.
JAMF HOLDING CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
The Company invests in money market funds and U.S. Treasuries with original or remaining maturities at the time of purchase of three months or less, which are measured and recorded at fair value on a recurring basis. Money market funds are valued based on quoted market prices in active markets and classified within Level 1 of the fair value hierarchy. U.S. Treasuries include treasury bills that generally mature within 30 days and are classified within Level 1 of the fair value hierarchy. The fair value of these financial instruments were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2021
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
|
(in thousands)
|
Cash equivalents:
|
|
|
|
|
|
|
|
Money market funds
|
$
|
153,026
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
153,026
|
|
Total cash equivalents
|
$
|
153,026
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
153,026
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2020
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
|
(in thousands)
|
Cash equivalents:
|
|
|
|
|
|
|
|
Money market funds
|
$
|
100,000
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
100,000
|
|
U.S. Treasuries
|
25,000
|
|
|
—
|
|
|
—
|
|
|
25,000
|
|
Total cash equivalents
|
$
|
125,000
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
125,000
|
|
The carrying value of accounts receivable and accounts payable approximate their fair value due to their short maturities and are excluded from the tables above. See Note 7 for the fair value of our 2026 Notes, which are recorded as debt at the principal amount net of issuance costs on the consolidated balance sheet.
Note 4. Acquisitions
Wandera
On July 1, 2021, the Company completed its previously announced acquisition of Wandera, Inc. (“Wandera”) pursuant to the terms of the Agreement and Plan of Merger, dated as of May 5, 2021 (the “Merger Agreement”). Wandera is a leader in zero trust cloud security and access for mobile devices. As an Apple-first provider of unified cloud security, Wandera expands the Company’s security offering for the enterprise. Building on the Company’s existing capabilities, Wandera adds Zero Trust Network Access (“ZTNA”), mobile threat defense and data policy features to ensure mobile workers can simply and safely access the network resources they need while complying with organizational policies and reducing mobile charges. This acquisition uniquely positions the Company to help IT and security teams confidently protect the devices, data and applications used by a mobile workforce, while extending the intended Apple experience through the Company’s robust and scalable Apple Enterprise Management platform.
Under the terms of the Merger Agreement, the Company acquired 100% of the voting equity interest in Wandera and paid total cash consideration of $409.3 million. The total consideration consists of an initial payment of $359.3 million at close and deferred consideration of $50.0 million payable in $25.0 million increments on October 1, 2021 and December 15, 2021. The initial payment of $359.3 million includes $0.7 million held back as partial security for post-closing true-up adjustments as well as indemnification claims made within one year of the acquisition date. The amount held back is recorded as restricted cash in other current assets on the consolidated balance sheet. The Company recorded the fair value of deferred consideration in accrued liabilities on the consolidated balance sheet as of September 30, 2021. The acquisition was initially financed with cash on hand and borrowings under the New Term Loan Facility (as defined in Note 7 below).
JAMF HOLDING CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
Acquisition-related costs were expensed as incurred and were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30, 2021
|
|
Nine Months Ended
September 30, 2021
|
|
(in thousands)
|
Cost of revenue:
|
|
|
|
Subscription
|
$
|
17
|
|
|
$
|
17
|
|
Sales and marketing
|
34
|
|
|
34
|
|
Research and development
|
549
|
|
|
590
|
|
General and administrative
|
1,859
|
|
|
4,007
|
|
|
$
|
2,459
|
|
|
$
|
4,648
|
|
The Company accounted for the acquisition by applying the acquisition method of accounting for business combinations in accordance with ASC Topic 805, Business Combinations (“ASC 805”). Accordingly, the purchase price was allocated to the assets acquired and liabilities assumed based on their estimated fair values as of the date of acquisition. In accordance with U.S. GAAP, fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Any residual purchase price is recorded as goodwill. The allocation of the purchase price requires management to make significant estimates in determining the fair value of assets acquired and liabilities assumed, especially with respect to intangible assets. These estimates can include, but are not limited to:
•future expected cash flows from subscription contracts and acquired developed technologies;
•historical and expected customer attrition rates and anticipated growth in revenue from acquired customers;
•royalty rates applied to acquired developed technology platforms;
•obsolescence curves and other useful life assumptions, such as the period of time and intended use of acquired intangible assets in the Company’s product offerings;
•discount rates; and
•uncertain tax positions and tax-related valuation allowances.
The final purchase accounting allocations for the Wandera acquisition will be determined within one year from the acquisition date and depend on a number of factors, including the final valuation of our intangible assets acquired and liabilities assumed, and finalization of income tax effects of the opening balance sheet. The actual fair values of Wandera’s assets acquired, liabilities assumed and resulting goodwill may differ materially from the adjustments set forth in this Form 10-Q.
JAMF HOLDING CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
The purchase price was allocated using information currently available to the Company. As a result, the Company may continue to adjust the assumptions used in the valuation of intangible assets acquired, deferred revenue and tax-related balances. The following table summarizes the preliminary allocation of the purchase price to the estimated fair values of the assets acquired and liabilities assumed (in thousands):
|
|
|
|
|
|
Assets acquired:
|
|
Cash and cash equivalents
|
$
|
9,605
|
|
Trade accounts receivable, net
|
3,882
|
|
Prepaid expenses
|
900
|
|
Equipment and leasehold improvements, net
|
58
|
|
Intangible assets acquired
|
102,050
|
|
Operating lease assets
|
1,474
|
|
Deferred tax asset
|
849
|
|
Liabilities assumed:
|
|
Accounts payable
|
788
|
|
Accrued liabilities
|
3,464
|
|
Income taxes payable
|
94
|
|
Deferred revenue
|
5,200
|
|
Operating lease liabilities
|
1,474
|
|
Deferred tax liability
|
9,356
|
|
Goodwill
|
310,833
|
|
Total purchase consideration
|
$
|
409,275
|
|
The goodwill represents the excess of the purchase consideration over the fair value of the underlying net identifiable assets. The goodwill recognized in this acquisition is primarily attributable to expected synergies in sales opportunities across complementary products, customers and geographies and cross-selling opportunities. The goodwill is not deductible for income tax purposes.
The estimated useful lives and fair values of the identifiable intangible assets are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
Useful Life
|
|
Gross Value
|
|
|
|
(in thousands)
|
Developed technology
|
6.5 years
|
|
$
|
60,500
|
|
Customer relationships
|
11.0 years
|
|
35,600
|
|
Order backlog
|
2.5 years
|
|
3,800
|
|
Non-competes
|
2.5 years
|
|
1,750
|
|
Trademarks
|
3.0 years
|
|
400
|
|
Total identifiable intangible assets
|
|
|
$
|
102,050
|
|
Developed technology represents the estimated fair value of the features underlying the Wandera products as well as the platform supporting Wandera customers. Customer relationships represent the estimated fair value of the underlying relationships with Wandera customers. Order backlog represents the estimated fair value of existing order backlog with Wandera customers. Non-competes represent the estimated fair value of non-compete agreements acquired from Wandera. Trademarks represent the estimated fair value of the Wandera brand.
Wandera contributed revenue and net loss of $5.1 million and $8.3 million, respectively, from the acquisition date through September 30, 2021, excluding the effects of the acquisition and integration costs.
JAMF HOLDING CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
The following unaudited pro forma information presents the combined results of Jamf and Wandera assuming the acquisition was completed on January 1, 2020. As required by ASC 805, these unaudited pro forma results are presented for informational purposes only and are not necessarily indicative of what the actual results of operations of the combined companies would have been had the acquisition occurred at the beginning of the period presented, nor are they indicative of future results of operations. The pro forma results below have been adjusted for the amortization of acquired intangibles, reduction of deferred revenue, deferred commissions, stock-based compensation expense and additional interest expense. The pro forma results for the three and nine months ended September 30, 2021 have also been adjusted to exclude the impact of $2.5 million and $4.6 million, respectively, of acquisition-related costs (pre-tax) incurred by the Company that are directly attributable to the transaction. The adjustments do not reflect the effect of costs or synergies that would have been expected to result from the integration of the acquisition.
Pro forma consolidated revenues and net loss for the three and nine months ended September 30, 2021 and 2020, calculated as if Wandera had been acquired as of January 1, 2020, are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
|
(in thousands)
|
Revenues
|
$
|
95,621
|
|
|
$
|
75,104
|
|
|
$
|
274,194
|
|
|
$
|
206,943
|
|
Net loss
|
(28,537)
|
|
|
(10,061)
|
|
|
(61,237)
|
|
|
(31,451)
|
|
cmdReporter
On February 26, 2021, the Company entered into an asset purchase agreement with cmdSecurity Inc. (“cmdSecurity”) to acquire certain cmdSecurity assets, including cmdReporter, a suite of security and compliance tools purpose-built for macOS. With cmdReporter, the Company further extends the security capabilities of its expansive Apple Enterprise Management platform. cmdSecurity’s software complements the Company’s existing product offerings. The Company accounted for the acquisition by applying the acquisition method of accounting for business combinations in accordance with ASC 805. The final aggregate purchase price was approximately $3.4 million. This acquisition was funded by the Company’s cash on hand and included future contingent consideration due to the sellers. The goodwill represents the excess of the purchase consideration over the fair value of the underlying net identifiable assets. The goodwill recognized in this acquisition is primarily attributable to the cmdSecurity assembled workforce and was not material. The acquired intangible assets and goodwill are deductible for income tax purposes.
At the time of the acquisition, the contingent consideration was valued at $0.4 million, which was based on the acquired business signing new business or renewing acquired contracts during the 90 days following the close of the acquisition. The estimated fair value of these contingent payments was determined using projected contract wins, which used Level 3 inputs for fair value measurements, including assumptions about the probability of closing contracts based on their current stage in the sales process. As of September 30, 2021, the fair value of the contingent consideration was nil as $0.3 million was earned by the acquired business and the unearned portion of $0.1 million was written off during the second quarter of 2021. The Company did not make a cash payment for the earned portion of the liability as the sellers received the cash directly from the customers. As such, the reduction of the liability was offset by a reduction in accounts receivable.
Substantially all of the purchase price consideration related to the fair value of the acquired separately identifiable intangibles assets, which related to acquired developed technology and in-process research and development (“IPR&D”). The fair value of the identifiable intangible assets was estimated using the replacement cost method, whereby the components of the acquired intangibles were reviewed to determine the cumulative cost of development for each component, inclusive of a developer’s profit and an entrepreneurial incentive. The cumulative cost of development was not discounted to account for obsolescence factor as the replacement cost accounted for present day development. The developed technology is amortized over its estimated weighted-average useful life, which was determined to be 5.0 years. The IPR&D is an indefinite lived intangible asset that is not amortized, but is evaluated at least annually for impairment. For more information on intangible assets, see Note 5.
JAMF HOLDING CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
Acquisition-related expenses were expensed as incurred and totaled nil and $0.1 million for the three and nine months ended September 30, 2021, respectively. These expenses were recognized as acquisition costs in general and administrative expenses in the consolidated statement of operations.
The Company allocated the net purchase consideration to the net assets acquired based on their respective fair values at the time of the acquisition as follows (in thousands):
|
|
|
|
|
|
Cash consideration
|
$
|
3,041
|
|
Contingent consideration
|
359
|
|
Final aggregate purchase price
|
$
|
3,400
|
|
|
|
Intangible assets acquired:
|
|
Developed technology
|
$
|
2,630
|
|
IPR&D
|
400
|
|
Goodwill
|
370
|
|
Total purchase consideration
|
$
|
3,400
|
|
Digita Security LLC
In 2019, the Company recorded contingent consideration in connection with its purchase of the outstanding membership interests of Digita. The maximum contingent consideration is $15.0 million if the acquired business achieves certain revenue milestones by December 31, 2022. In the second quarter of 2021, the acquired business achieved the minimum revenue milestone, which resulted in the Company making a cash payment of $4.2 million to the acquired business. Additional cash payments will be made within 30 days of December 31, 2021 and December 31, 2022 if the acquired business achieves the revenue milestones.
The estimated fair value of these contingent payments is determined using a Monte Carlo simulation model, which uses Level 3 inputs for fair value measurements, including assumptions about the probability of growth of subscription services and the related pricing of the services offered. During the three and nine months ended September 30, 2021, the fair value of the contingent consideration was increased by $0.6 million and $4.9 million, respectively, which was reflected in general and administrative expenses in the consolidated statement of operations. The adjustment for the three and nine months ended September 30, 2021 primarily reflected updated assumptions about the probability of growth of subscription services. As of September 30, 2021, the fair value of the contingent consideration was $8.9 million, of which $4.5 million was included in accrued liabilities and $4.4 million was included in other liabilities in the consolidated balance sheet. As of December 31, 2020, the fair value of the contingent consideration was $8.2 million, which was included in other liabilities in the consolidated balance sheet.
Note 5. Goodwill and other intangible assets
The change in the carrying amount of goodwill is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
|
(in thousands)
|
Goodwill, beginning of period
|
$
|
541,850
|
|
|
$
|
539,818
|
|
|
$
|
541,480
|
|
|
$
|
539,818
|
|
Goodwill acquired
|
310,833
|
|
|
—
|
|
|
311,203
|
|
|
—
|
|
Foreign currency translation adjustment
|
(6,626)
|
|
|
—
|
|
|
(6,626)
|
|
|
—
|
|
Goodwill, end of period
|
$
|
846,057
|
|
|
$
|
539,818
|
|
|
$
|
846,057
|
|
|
$
|
539,818
|
|
JAMF HOLDING CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
The gross carrying amount and accumulated amortization of intangible assets other than goodwill are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Useful Life
|
|
Gross Value
|
|
Accumulated
Amortization
|
|
Net Carrying
Value
|
|
Weighted‑
Average
Remaining
Useful Life
|
|
(in thousands)
|
Trademarks
|
8 years
|
|
$
|
34,320
|
|
|
$
|
13,454
|
|
|
$
|
20,866
|
|
|
4.8 years
|
Customer relationships
|
2 ‑ 12 years
|
|
214,428
|
|
|
55,810
|
|
|
158,618
|
|
|
8.7 years
|
Developed technology
|
5 years
|
|
54,563
|
|
|
31,173
|
|
|
23,390
|
|
|
2.3 years
|
Non‑competes
|
2 years
|
|
90
|
|
|
86
|
|
|
4
|
|
|
0.1 years
|
Balance, December 31, 2020
|
|
|
$
|
303,401
|
|
|
$
|
100,523
|
|
|
$
|
202,878
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trademarks
|
3 - 8 years
|
|
$
|
34,690
|
|
|
$
|
16,683
|
|
|
$
|
18,007
|
|
|
4.1 years
|
Customer relationships
|
2 ‑ 12 years
|
|
249,483
|
|
|
70,239
|
|
|
179,244
|
|
|
8.5 years
|
Developed technology
|
5 - 6.5 years
|
|
116,158
|
|
|
41,956
|
|
|
74,202
|
|
|
5.2 years
|
Non‑competes
|
2 - 2.5 years
|
|
1,796
|
|
|
264
|
|
|
1,532
|
|
|
2.3 years
|
Order backlog
|
2.5 years
|
|
3,744
|
|
|
379
|
|
|
3,365
|
|
|
2.3 years
|
IPR&D
|
Indefinite
|
|
400
|
|
|
—
|
|
|
400
|
|
|
|
Balance, September 30, 2021
|
|
|
$
|
406,271
|
|
|
$
|
129,521
|
|
|
$
|
276,750
|
|
|
|
Amortization expense was $12.2 million and $8.3 million for the three months ended September 30, 2021 and 2020, respectively. Amortization expense was $29.1 million and $25.0 million for the nine months ended September 30, 2021 and 2020, respectively.
The expected future amortization expense as of September 30, 2021 for intangible assets acquired in connection with the Wandera acquisition is as follows:
|
|
|
|
|
|
|
|
|
Years ending December 31:
|
|
|
2021 (remaining three months)
|
|
$
|
3,725
|
|
2022
|
|
14,897
|
|
2023
|
|
14,897
|
|
2024
|
|
12,611
|
|
2025
|
|
12,544
|
|
Thereafter
|
|
39,652
|
|
Total amortization expense
|
|
$
|
98,326
|
|
There were no impairments to goodwill or intangible assets recorded for the three and nine months ended September 30, 2021 and 2020.
Note 6. Leases
The Company determines if an arrangement is or contains a lease at inception, which is the date on which the terms of the contract are agreed to and the agreement creates enforceable rights and obligations. Under ASC 842, a contract is or contains a lease when (i) explicitly or implicitly identified assets have been deployed in the contract and (ii) the customer obtains substantially all of the economic benefits from the use of that underlying asset and directs how and for what purpose the asset is used during the term of the contract. The Company also considers whether its service arrangements include the right to control the use of an asset. See Note 2 for more information on the Company’s accounting policies for leases.
The Company leases office facilities and vehicles under operating lease agreements that have initial terms ranging from 1 to 9 years. Some leases include one or more options to renew, generally at our sole discretion, with renewal terms that can extend the lease term up to 10 years. In addition, certain leases contain termination options, where the rights to terminate
JAMF HOLDING CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
are held by either the Company, the lessor, or both parties. These options to extend or terminate a lease are included in the lease terms when it is reasonably certain that the Company will exercise that option. The Company’s leases generally do not contain any material restrictive covenants or residual value guarantees. The Company also leases office equipment under a finance lease agreement with a term of 4 years. The Company’s finance lease was not material to the consolidated financial statements as of September 30, 2021.
Supplemental balance sheet information related to the Company’s operating leases is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Leases
|
|
Balance Sheet Classification
|
|
September 30, 2021
|
|
|
|
|
(in thousands)
|
Assets
|
|
|
|
|
Operating lease assets
|
|
Other assets
|
|
$
|
22,892
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
Operating lease liabilities - current
|
|
Accrued liabilities
|
|
$
|
5,367
|
|
Operating lease liabilities - non-current
|
|
Other liabilities
|
|
21,442
|
|
Total operating lease liabilities
|
|
|
|
$
|
26,809
|
|
The weighted-average remaining term of the Company’s operating leases was 6.0 years as of September 30, 2021. The weighted-average discount rate used to measure the present value of the operating lease liabilities was 3.5% as of September 30, 2021.
The components of lease expense were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30, 2021
|
|
Nine Months Ended
September 30, 2021
|
|
|
(in thousands)
|
Operating lease cost
|
|
$
|
1,541
|
|
|
$
|
4,424
|
|
Short-term lease cost
|
|
83
|
|
|
187
|
|
Variable lease cost
|
|
508
|
|
|
1,388
|
|
Total lease expense
|
|
$
|
2,132
|
|
|
$
|
5,999
|
|
Operating lease cost is recognized on a straight-line basis over the lease term. The Company leases certain office facilities with a related party, including the office space in Eau Claire, Wisconsin. Operating lease cost with related parties was $0.3 million and $0.8 million for the three and nine months ended September 30, 2021, respectively.
Total lease expense, including the Company’s share of the lessors’ operating expenses, was $1.2 million and $3.7 million for the three and nine months ended September 30, 2020, respectively. Previously reported total lease expense for the three and nine months ended September 30, 2020 have been revised. See Note 1 for more information. Lease expense with related parties, including the Company’s share of the lessors’ operating expenses, was $0.3 million and $0.8 million for the three and nine months ended September 30, 2020, respectively.
For the nine months ended September 30, 2021, operating cash flows included $4.3 million of cash paid for operating lease liabilities.
JAMF HOLDING CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
Maturities of the Company’s operating lease liabilities as of September 30, 2021 were as follows:
|
|
|
|
|
|
|
|
|
|
|
Operating Leases
|
|
|
(in thousands)
|
Years ending December 31:
|
|
|
2021 (remaining three months)
|
|
$
|
1,599
|
|
2022
|
|
6,077
|
|
2023
|
|
5,681
|
|
2024
|
|
4,605
|
|
2025
|
|
2,519
|
|
Thereafter
|
|
9,482
|
|
Total lease payments
|
|
29,963
|
|
Less: imputed interest
|
|
3,154
|
|
Total present value of lease liabilities
|
|
$
|
26,809
|
|
Note 7. Debt
Convertible Senior Notes
On September 17, 2021, the Company issued $373.8 million aggregate principal amount of 0.125% Convertible Senior Notes due 2026 (the “2026 Notes”) in a private offering. The 2026 Notes were issued pursuant to an indenture, dated September 17, 2021 (the “2026 Notes Indenture”), among the Company, JAMF Software, LLC, as subsidiary guarantor, and U.S. Bank National Association, as trustee. The 2026 Notes are general senior, unsecured obligations of the Company and mature on September 1, 2026, unless earlier converted, redeemed, or repurchased. The 2026 Notes bear interest at a rate of 0.125% per year, payable semiannually in arrears on March 1 and September 1 of each year, beginning on March 1, 2022. The Company recorded the principal amount of the 2026 Notes, net of issuance costs, as a liability in the consolidated balance sheet in accordance with ASU 2020-06, which the Company early adopted on January 1, 2021.
The Company’s net proceeds from the offering were approximately $361.4 million after deducting the initial purchasers’ discounts and commissions and the offering expenses paid by the Company. The Company used (i) approximately $250.0 million of the net proceeds to repay the Company’s New Term Loan Facility and to pay any associated prepayment penalties and accrued and unpaid interest to the date of repayment and (ii) approximately $36.0 million of the net proceeds from this offering to fund the cost of entering into the Capped Calls (as defined and described below), and will use the remainder of the net proceeds for general corporate purposes, which may include working capital, capital expenditures, and potential acquisitions and strategic transactions.
The 2026 Notes are convertible at the option of the holders at any time prior to the close of business on the business day immediately preceding March 1, 2026, only under the following circumstances: (1) during any calendar quarter commencing after the calendar quarter ending on December 31, 2021 (and only during such calendar quarter), if the last reported sale price of the Company’s common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day; (2) during the five business day period after any ten consecutive trading day period (the “measurement period”) in which the trading price (as defined in the 2026 Notes Indenture) per $1,000 principal amount of the 2026 Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of the Company’s common stock and the conversion rate for the 2026 Notes on each such trading day; (3) if the Company calls such 2026 Notes for redemption, at any time prior to the close of business on the scheduled trading day immediately preceding the redemption date, but only with respect to the 2026 Notes called (or deemed called) for redemption; and (4) upon the occurrence of specified corporate events as set forth in the 2026 Notes Indenture. On or after March 1, 2026 until the close of business on the second scheduled trading day immediately preceding the maturity date (September 1, 2026), holders of the 2026 Notes may convert all or any portion of their 2026 Notes at any time, regardless of the foregoing conditions. Upon conversion, the Company may satisfy its conversion obligation by paying or delivering, as the case may be, cash, shares of the Company’s common stock or a combination of cash and shares of the
JAMF HOLDING CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
Company’s common stock, at the Company’s election, in the manner and subject to the terms and conditions provided in the 2026 Notes Indenture.
The initial conversion rate for the 2026 Notes is 20.0024 shares of the Company’s common stock per $1,000 principal amount of 2026 Notes, which is equivalent to an initial conversion price of approximately $49.99 per share of common stock. The initial conversion price of the 2026 Notes represents a premium of approximately 40.0% to the last reported sale price of the Company’s common stock on The Nasdaq Global Select Market on September 14, 2021. The conversion rate for the 2026 Notes is subject to adjustment under certain circumstances in accordance with the terms of the 2026 Notes Indenture. In addition, following certain corporate events that occur prior to the maturity date of the 2026 Notes or if the Company delivers a notice of redemption in respect of the 2026 Notes, the Company will, under certain circumstances, increase the conversion rate of the 2026 Notes for a holder who elects to convert its 2026 Notes (or any portion thereof) in connection with such a corporate event or convert its 2026 Notes called (or deemed called) for redemption during the related redemption period (as defined in the 2026 Notes Indenture), as the case may be.
The Company may not redeem the 2026 Notes prior to September 6, 2024. The Company may redeem for cash all or any portion of the 2026 Notes, at its option, on or after September 6, 2024, if the last reported sale price of the common stock has been at least 130% of the conversion price for the 2026 Notes then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period (including the last trading day of such period) ending on, and including, the trading day immediately preceding the date on which the Company provides notice of redemption at a redemption price equal to 100% of the principal amount of the 2026 Notes to be redeemed, plus accrued and unpaid interest, to, but excluding, the redemption date. If the Company redeems less than all the outstanding 2026 Notes, at least $50.0 million aggregate principal amount of 2026 Notes must be outstanding and not subject to redemption as of the date of the relevant notice of redemption. No sinking fund is provided for the 2026 Notes.
If the Company undergoes a fundamental change (as defined in the 2026 Notes Indenture), holders may require, subject to certain conditions and exceptions, the Company to repurchase for cash all or any portion of their 2026 Notes at a fundamental change repurchase price equal to 100% of the principal amount of the 2026 Notes to be repurchased, plus accrued and unpaid interest, to, but excluding, the fundamental change repurchase date.
The 2026 Notes Indenture includes customary covenants and sets forth certain events of default after which the 2026 Notes may be declared immediately due and payable and sets forth certain types of bankruptcy or insolvency events of default involving the Company or its significant subsidiaries after which the 2026 Notes become automatically due and payable.
The following table sets forth the interest expense related to the 2026 Notes:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
|
(in thousands)
|
Contractual interest expense
|
$
|
18
|
|
|
$
|
—
|
|
|
$
|
18
|
|
|
$
|
—
|
|
Amortization of issuance costs
|
95
|
|
|
—
|
|
|
95
|
|
|
—
|
|
In the third quarter of 2021, the Company recorded debt issuance costs of $12.4 million related to the issuance of the 2026 Notes as a reduction to the liability in the consolidated balance sheet. Debt issuance costs are amortized to interest expense over the term of the 2026 Notes using the effective interest rate method. The effective interest rate on the 2026 Notes was 0.81% for the three months ended September 30, 2021.
As of September 30, 2021, the net carrying amount of the 2026 Notes was $361.5 million, with unamortized debt issuance costs of $12.3 million. The estimated fair value (Level 2) of the 2026 Notes was $389.0 million as of September 30, 2021, which was determined based on quoted bid prices of the 2026 Notes in an over-the-counter market on the last trading day of the reporting period.
JAMF HOLDING CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
Capped Calls
On September 14, 2021, concurrently with the pricing of the 2026 Notes, and on September 17, 2021, concurrently with the initial purchasers’ exercise of their option to purchase additional 2026 Notes, the Company also entered into privately negotiated capped call transactions (the “Capped Calls”) with third-party banks. The Capped Calls each have an initial strike price of approximately $49.99 per share, subject to certain adjustments, which corresponds to the initial conversion price of the 2026 Notes. The Capped Calls have initial cap prices of $71.42 per share, subject to certain adjustments. The Capped Calls cover, subject to anti-dilution adjustments, approximately 7.5 million shares of the Company’s common stock. The Capped Calls are generally intended to reduce or offset the potential dilution to the common stock upon any conversion of the 2026 Notes with such reduction or offset, as the case may be, subject to a cap based on the cap price. The Company paid approximately $36.0 million from the net proceeds from the issuance and sale of the 2026 Notes to purchase the Capped Calls. The Company recorded the Capped Calls as a reduction to additional paid-in capital in the consolidated balance sheet. The Capped Calls are subject to either adjustment or termination upon the occurrence of specified extraordinary events affecting the Company, including a merger event, a tender offer, and a nationalization, insolvency or delisting involving the Company. In addition, the Capped Calls are subject to certain specified additional disruption events that may give rise to terminations of the Capped Calls, including changes in law, failures to deliver, and hedging disruptions.
Credit Agreements
On July 27, 2020, the Company entered into a secured credit agreement (the “Credit Agreement”) for an initial revolving credit facility of $150.0 million (the “Revolving Credit Facility”), which may be increased or decreased under specific circumstances, with a $25.0 million letter of credit sublimit and a $50.0 million alternative currency sublimit. In addition, the Credit Agreement provides for the ability of the Company to request incremental term loan facilities in a minimum amount of $5.0 million for each facility. The maturity date of the Credit Agreement is July 27, 2025. The Credit Agreement contains customary representations and warranties, affirmative covenants, reporting obligations, negative covenants and events of default. We were in compliance with such covenants as of both September 30, 2021 and December 31, 2020. As of both September 30, 2021 and December 31, 2020, we had $1.0 million of letters of credit outstanding under our Revolving Credit Facility.
In connection with the closing of the Wandera acquisition on July 1, 2021, the Company entered into the Incremental Facility Amendment No. 1 (the “Credit Agreement Amendment”), which amended the Company’s existing Credit Agreement. The Credit Agreement Amendment provided for a new 364-day term loan facility (the “New Term Loan Facility”) in an aggregate principal amount of $250.0 million on substantially the same terms and conditions as the Company’s existing Revolving Credit Facility. The Company repaid the principal amount of the New Term Loan Facility on September 23, 2021 with proceeds from the issuance and sale of the 2026 Notes. The Company accounted for this transaction as a debt extinguishment and recorded debt extinguishment costs of $0.4 million for the write-off of remaining debt issuance costs.
In the third quarter of 2020, the Company recorded debt issuance costs of $1.3 million related to the Credit Agreement. In the second quarter of 2021, the Company recorded debt issuance costs of $0.7 million related to the Credit Agreement Amendment. Debt issuance costs are amortized to interest expense over the term of the Credit Agreement using the effective interest rate method. As of September 30, 2021 and December 31, 2020, debt issuance costs related to the Company’s credit agreements of $1.0 million and $1.1 million, respectively, were included in other assets in the consolidated balance sheets.
Note 8. Commitments and contingencies
Contingencies
The Company has been engaged in discussions with an entity regarding the entity’s patented technology and allegations regarding the Company’s infringement of that technology. While no legal proceedings have been initiated, the Company accrued $4.2 million to general and administrative expenses during the nine months ended September 30, 2021 based on its most recent discussions with the entity. It is reasonably possible the estimated loss will change. The exposure to loss in excess of the amount accrued as of September 30, 2021 is estimated to be up to $2.3 million.
JAMF HOLDING CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
From time to time, the Company may be subject to various claims, charges and litigation. The Company records a liability when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. The Company maintains insurance to cover certain actions and believes that resolution of such claims, charges, or litigation will not have a material impact on the Company’s financial position, results of operations, or liquidity. The Company had no liabilities for contingencies recorded as of December 31, 2020.
Note 9. Net loss per share
The following table sets forth the computation of basic and diluted net loss per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
|
2021
|
|
2020 (1)
|
|
2021
|
|
2020 (1)
|
|
|
|
(As Revised)
|
|
|
|
(As Revised)
|
|
(in thousands, except share and per share amounts)
|
Numerator:
|
|
|
|
|
|
|
|
Net loss
|
$
|
(30,383)
|
|
|
$
|
(5,388)
|
|
|
$
|
(51,439)
|
|
|
$
|
(15,718)
|
|
Denominator:
|
|
|
|
|
|
|
|
Weighted-average shares used to compute net loss per share, basic and diluted
|
118,640,565
|
|
|
113,203,074
|
|
|
117,983,463
|
|
|
106,333,836
|
|
Basic and diluted net loss per share
|
$
|
(0.26)
|
|
|
$
|
(0.05)
|
|
|
$
|
(0.44)
|
|
|
$
|
(0.15)
|
|
(1) Certain prior period amounts have been revised to correct immaterial errors. See Note 1 for more information.
Basic net loss per share is computed by dividing the net loss by the weighted-average number of common shares outstanding for the period. Because we have reported a net loss for the three and nine months ended September 30, 2021 and 2020, the number of shares used to calculate diluted net loss per common share is the same as the number of shares used to calculate basic net loss per common share because the potentially dilutive shares would have been antidilutive if included in the calculation.
The following potentially dilutive securities outstanding have been excluded from the computation of diluted weighted-average shares outstanding because such securities have an antidilutive impact due to losses reported:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
Stock options outstanding
|
5,707,634
|
|
|
7,727,158
|
|
|
5,707,634
|
|
|
7,727,158
|
|
Unvested restricted stock units
|
3,427,190
|
|
|
1,291,056
|
|
|
3,427,190
|
|
|
1,291,056
|
|
Shares related to the 2026 Notes
|
7,475,897
|
|
|
—
|
|
|
7,475,897
|
|
|
—
|
|
Total potentially dilutive securities
|
16,610,721
|
|
|
9,018,214
|
|
|
16,610,721
|
|
|
9,018,214
|
|
The Company uses the if-converted method for calculating any potential dilutive effect of the conversion options embedded in the 2026 Notes on diluted net income per share, if applicable. The conversion options of the 2026 Notes are dilutive in periods of net income on a weighted average basis using an assumed conversion date equal to the later of the beginning of the reporting period and the date of issuance of the 2026 Notes.
Note 10. Share-based compensation
On July 21, 2020, the Company adopted the Jamf Holding Corp. Omnibus Incentive Plan (the “2020 Plan”). The 2020 Plan provides for grants of (i) stock options, (ii) stock appreciation rights, (iii) restricted shares, (iv) performance awards, (v) other share-based awards and (vi) other cash-based awards to eligible employees, non-employee directors and consultants of the Company. We initially reserved 14,800,000 shares of our common stock for issuance under the 2020 Plan. The total number of shares reserved for issuance under the 2020 Plan increases on January 1st of each of the first 10 calendar years during the term of the 2020 Plan by the lesser of: (i) a number of shares of our common stock equal to 4% of the total number of shares of our common stock outstanding on December 31st of the preceding calendar year or (ii) a number of shares of our common stock as determined by our board of directors. The maximum number of shares of common stock available for issuance under the 2020
JAMF HOLDING CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
Plan was 19,479,699 shares as of January 1, 2021. As of September 30, 2021, 15,544,733 shares of common stock are reserved for additional grants under the 2020 Plan.
The 2017 Stock Option Plan (“2017 Option Plan”) became effective November 13, 2017 upon the approval of the board of directors and, prior to the adoption of the 2020 Plan, served as the umbrella plan for the Company’s stock-based and cash-based incentive compensation program for its officers and other eligible employees. The aggregate number of shares of common stock that may be issued under the 2017 Option Plan may not exceed 8,470,000 shares. As of September 30, 2021, 128,928 shares of common stock are reserved for additional grants under the 2017 Option Plan. All stock options granted by the Company were at an exercise price at or above the estimated fair market value of the Company’s common stock as of the grant date. No options were granted during the nine months ended September 30, 2021.
The table below summarizes return target options activity for the nine months ended September 30, 2021:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options
|
|
Weighted‑
Average
Exercise
Price
|
|
Weighted‑
Average
Remaining
Contractual
Term (Years)
|
|
Aggregate
Intrinsic
Value
(in thousands)
|
Outstanding, December 31, 2020
|
3,687,664
|
|
|
$
|
6.75
|
|
|
7.8
|
|
$
|
85,444
|
|
Granted
|
—
|
|
|
—
|
|
|
|
|
—
|
|
Exercised
|
—
|
|
|
—
|
|
|
|
|
—
|
|
Forfeitures
|
—
|
|
|
—
|
|
|
|
|
—
|
|
Outstanding, September 30, 2021
|
3,687,664
|
|
|
$
|
6.75
|
|
|
7.0
|
|
$
|
117,158
|
|
Options exercisable at September 30, 2021
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
—
|
|
Vested or expected to vest at September 30, 2021
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
—
|
|
There was approximately $33.0 million of unrecognized compensation expense related to these return target options as of September 30, 2021. The aggregate intrinsic value in the table above represents the total intrinsic value that would have been received by the optionholders had all optionholders exercised their options.
Restricted stock unit (“RSU”) activity for the nine months ended September 30, 2021 is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
Units
|
|
Per Unit
Fair Value
|
Outstanding, December 31, 2020
|
1,293,107
|
|
|
$
|
26.34
|
|
Granted
|
2,725,991
|
|
|
34.86
|
|
Vested
|
(507,776)
|
|
|
30.32
|
|
Forfeited
|
(84,132)
|
|
|
27.64
|
|
Outstanding, September 30, 2021
|
3,427,190
|
|
|
$
|
32.49
|
|
RSUs under the 2020 Plan vest ratably over four years. RSUs under the 2017 Option Plan vest 100% on the one-year anniversary of the date of the grant. The estimated compensation cost of each RSU, which is equal to the fair value of the award on the date of grant, is recognized on a straight-line basis over the vesting period. There was $102.2 million of total unrecognized compensation cost related to unvested restricted stock that is expected to be recognized over a weighted-average period of 3.3 years as of September 30, 2021.
JAMF HOLDING CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
The table below summarizes the service-based option activity for the nine months ended September 30, 2021:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options
|
|
Weighted‑
Average
Exercise
Price
|
|
Weighted‑
Average
Remaining
Contractual
Term (Years)
|
|
Aggregate
Intrinsic
Value
(in thousands)
|
Outstanding, December 31, 2020
|
3,546,826
|
|
|
$
|
5.65
|
|
|
7.1
|
|
$
|
86,098
|
|
Granted
|
—
|
|
|
—
|
|
|
|
|
—
|
|
Exercised
|
(1,526,856)
|
|
|
5.61
|
|
|
|
|
44,082
|
|
Forfeitures
|
—
|
|
|
—
|
|
|
|
|
—
|
|
Outstanding, September 30, 2021
|
2,019,970
|
|
|
$
|
5.67
|
|
|
6.3
|
|
$
|
66,355
|
|
Options exercisable at September 30, 2021
|
1,533,479
|
|
|
$
|
5.50
|
|
|
6.2
|
|
$
|
50,633
|
|
Vested or expected to vest at September 30, 2021
|
2,019,970
|
|
|
$
|
5.67
|
|
|
6.3
|
|
$
|
66,355
|
|
The aggregate intrinsic value in the table above represents the total intrinsic value that would have been received by the optionholders had all optionholders exercised their options on the last date of the period. The total fair value of service-based options vested during the nine months ended September 30, 2021 was $2.0 million. There was $1.4 million of unrecognized compensation expense related to service-based stock options that is expected to be recognized over a weighted-average period of 1.5 years as of September 30, 2021.
The Company recognized stock-based compensation expense as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
|
(in thousands)
|
Cost of revenue:
|
|
|
|
|
|
|
|
Subscription
|
$
|
1,716
|
|
|
$
|
314
|
|
|
$
|
2,384
|
|
|
$
|
390
|
|
Services
|
229
|
|
|
62
|
|
|
381
|
|
|
62
|
|
Sales and marketing
|
4,833
|
|
|
675
|
|
|
6,763
|
|
|
897
|
|
Research and development
|
5,145
|
|
|
523
|
|
|
7,076
|
|
|
821
|
|
General and administrative
|
3,913
|
|
|
754
|
|
|
6,170
|
|
|
1,733
|
|
|
$
|
15,836
|
|
|
$
|
2,328
|
|
|
$
|
22,774
|
|
|
$
|
3,903
|
|
Note 11. Long-term incentive plan
In 2018, the Company established a long-term incentive plan (“LTIP”) which provided for cash compensation to certain employees upon achievement of the same conditions of the Company’s return target options. In conjunction with the IPO, the conditions of the LTIP were modified to also vest following an IPO and registration and sale of shares by Vista Equity Partners (“Vista”) provided that Vista achieves a cash return on its equity investment in the Company equaling or exceeding $1.515 billion. In the third quarter of 2021, the Company offered employees with LTIP grants the opportunity to convert those awards into RSUs under the 2020 Plan. Upon conversion, 50% of the RSUs vested immediately and the remaining 50% vest on the one year anniversary of the grant date, provided the employee remains continuously employed by the Company through the vesting date. All employees elected to convert their outstanding LTIP grants to RSUs, resulting in grants totaling 413,234 shares.
The conversion of the previously outstanding LTIP grants into RSUs resulted in the recognition of $8.0 million of stock-based compensation expense during the three and nine months ended September 30, 2021. The expense on the unvested RSUs will be recognized on a straight line basis over the vesting period.
Note 12. Income taxes
The Company’s effective tax rates for the three months ended September 30, 2021 and 2020 were 5.0% and 25.1%, respectively. The effective tax rate for the three months ended September 30, 2021 was lower than the prior year period due to
JAMF HOLDING CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
the application of Section 162(m) of the Internal Revenue Code, stock option activity and the domestic valuation allowance. The effective tax rate for the three months ended September 30, 2021 differs from the statutory rate primarily as a result of the domestic valuation allowance.
The Company’s effective tax rates for the nine months ended September 30, 2021 and 2020 were 2.9% and 23.8%, respectively. The effective tax rate for the nine months ended September 30, 2021 was lower than the prior year period due to the application of Section 162(m) of the Internal Revenue Code, stock option activity and the domestic valuation allowance. The effective tax rate for the nine months ended September 30, 2021 differs from the statutory rate primarily as a result of the domestic valuation allowance. The effective tax rate for the nine months ended September 30, 2021 was impacted by $0.1 million of discrete income tax benefit. The Company’s annual effective tax rates for the nine months ended September 30, 2021 and 2020 were 2.8% and 21.1%, respectively.
Note 13. Related-party transactions
The Company made pledges to the Jamf Nation Global Foundation (“JNGF”) of $0.2 million and $0.5 million for the three and nine months ended September 30, 2021, respectively. The Company did not make any pledges to the JNGF for the three and nine months ended September 30, 2020. As of September 30, 2021 and December 31, 2020, the Company accrued $0.7 million and $0.9 million, respectively, related to JNGF pledges, which are included in accrued liabilities in the consolidated balance sheets. The Company has an ongoing lease agreement for office space in Eau Claire, Wisconsin with an entity in which a related party is a minority owner. See Note 6 for further discussion of this lease agreement. The Company may engage in transactions in the ordinary course of business with significant shareholders or other companies whose directors or officers may also serve as directors or officers for the Company. The Company carries out these transactions on customary terms.
Vista is a U.S.-based investment firm that controls the funds which previously owned a majority of the Company. During the three months ended September 30, 2021, Vista sold a portion of its investment in the Company such that its funds no longer owned a majority of the Company as of September 30, 2021. However, Vista is deemed a related party in accordance with ASC Topic 850, Related Party Disclosures (“ASC 850”) as it continues to be a principal owner of the Company. The Company has paid for consulting services and other expenses related to services provided by Vista and Vista affiliates. The total expenses incurred by the Company for these services were $0.1 million for both the three and nine months ended September 30, 2021. The total expenses incurred by the Company for these services were less than $0.1 million and $0.3 million for the three and nine months ended September 30, 2020, respectively. The Company had $0.1 million and less then $0.1 million in accounts payable related to these expenses as of September 30, 2021 and December 31, 2020, respectively.
The Company also has revenue arrangements with Vista affiliates. The Company recognized revenue related to these arrangements of $0.2 million for both the three months ended September 30, 2021 and 2020 and $0.7 million and $0.8 million for the nine months ended September 30, 2021 and 2020, respectively. The Company had $0.1 million and $0.3 million in accounts receivable related to these agreements as of September 30, 2021 and December 31, 2020, respectively.
In addition, the Company pays for services with Vista affiliates in the normal course of business. The total expenses incurred by the Company for services with Vista affiliates were $0.3 million and $0.2 million for the three months ended September 30, 2021 and 2020, respectively, and $0.8 million and $0.5 million for the nine months ended September 30, 2021 and 2020, respectively. The Company had $0.1 million in accounts payable related to these expenses as of both September 30, 2021 and December 31, 2020.
Prior to its termination and repayment in full on July 27, 2020, the Company was party to a term loan facility (the “Prior Term Loan”) and revolving credit facility with a consortium of lenders for a principal amount of $205.0 million and principal committed amount of $15.0 million, respectively. During the three and nine months ended September 30, 2020, affiliates of Vista were paid $0.5 million and $2.1 million, respectively, in interest on the portion of the Prior Term Loan held by them.
JAMF HOLDING CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
Forward-Looking Statements
This Quarterly Report on Form 10-Q contains forward-looking statements that are subject to risks and uncertainties. All statements other than statements of historical fact included in this Quarterly Report on Form 10-Q are forward-looking statements. Forward-looking statements give our current expectations and projections relating to our financial condition, results of operations, plans, objectives, future performance and business. You can identify forward-looking statements by the fact that they do not relate strictly to historical or current facts. These statements may include words such as “anticipate,” “estimate,” “expect,” “project,” “plan,” “intend,” “believe,” “may,” “will,” “should,” “can have,” “likely” and other words and terms of similar meaning in connection with any discussion of the timing or nature of future operating or financial performance or other events. For example, all statements we make relating to our estimated and projected costs, expenditures, cash flows, growth rates and financial results or our plans and objectives for future operations, growth initiatives, or strategies are forward-looking statements. All forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those that we expected, including:
•our ability to realize the potential benefits of the acquisition of Wandera;
•other risks related to our integration of Wandera’s business, team, and technology;
•the impact on our operations and financial condition from the effects of the current COVID-19 pandemic;
•the potential impact of customer dissatisfaction with Apple or other negative events affecting Apple services and devices, and failure of enterprises to adopt Apple products;
•the potentially adverse impact of changes in features and functionality by Apple on our engineering focus or product development efforts;
•changes in our continued relationship with Apple;
•the fact that we are not party to any exclusive agreements or arrangements with Apple;
•our reliance, in part, on channel partners for the sale and distribution of our products;
•the impact of reputational harm if users perceive our products as the cause of device failure;
•our ability to successfully develop new products or materially enhance current products through our research and development efforts;
•our ability to continue to attract new customers;
•our ability to retain our current customers;
•our ability to sell additional functionality to our current customers;
•our ability to meet service-level commitments under our subscription agreements;
•our ability to correctly estimate market opportunity and forecast market growth;
•risks associated with failing to continue our recent growth rates;
•our dependence on one of our products for a substantial portion of our revenue;
•our ability to scale our business and manage our expenses;
•our ability to change our pricing models, if necessary to compete successfully;
•the impact of delays or outages of our cloud services from any disruptions, capacity limitations or interferences of third-party data centers that host our cloud services, including Amazon Web Services (“AWS”);
•our ability to maintain, enhance and protect our brand;
•our ability to maintain our corporate culture;
•the ability of Jamf Nation to thrive and grow as we expand our business;
•the potential impact of inaccurate, incomplete or misleading content that is posted on Jamf Nation;
•our ability to offer high-quality support;
•risks and uncertainties associated with potential acquisitions and divestitures, including, but not limited to, disruptions to ongoing operations; diversions of management from day-to-day responsibilities; adverse impacts on our financial condition; failure of an acquired business to further our strategy; uncertainty of synergies; personnel issues; resulting lawsuits and issues unidentified in diligence processes;
•our ability to predict and respond to rapidly evolving technological trends and our customers' changing needs;
•our ability to compete with existing and new companies;
•the impact of adverse general and industry-specific economic and market conditions;
•the impact of reductions in IT spending;
•our ability to attract and retain highly qualified personnel;
•risks associated with competitive challenges faced by our customers;
•the impact of our often long and unpredictable sales cycle;
•our ability to develop and expand our marketing and sales capabilities;
•the risks associated with sales to new and existing enterprise customers;
•the risks associated with free trials and other inbound, lead-generation sales strategies;
•the risks associated with indemnity provisions in our contracts;
•our management team’s limited experience managing a public company;
•the impact of any catastrophic events;
•the impact of global economic conditions;
•risks associated with cyber-security events;
•the impact of real or perceived errors, failures or bugs in our products;
•the impact of interruptions or performance problems associated with our technology or infrastructure;
•the impact of general disruptions to data transmission;
•risks associated with stringent and changing privacy laws, regulations and standards, and information security policies and contractual obligations related to data privacy and security;
•the risks associated with intellectual property infringement, misappropriation or other claims;
•our reliance on third-party software and intellectual property licenses;
•our ability to obtain, protect, enforce and maintain our intellectual property and proprietary rights;
•the risks associated with our use of open source software in our products;
•risks related to our indebtedness, including our ability to raise the funds necessary to settle conversions of our convertible senior notes, repurchase our convertible senior notes upon a fundamental change or repay our convertible senior notes in cash at their maturity, including our ability to raise the funds necessary to settle conversions of our convertible senior notes, repurchase our convertible senior notes upon a fundamental change or repay our convertible senior notes in cash at their maturity; and
•other factors disclosed in the section entitled “Risk Factors” and elsewhere in our Annual Report on Form 10-K for the year ended December 31, 2020, as supplemented by our subsequent Quarterly Reports on Form 10-Q.
We derive many of our forward-looking statements from our operating budgets and forecasts, which are based on many detailed assumptions. While we believe that our assumptions are reasonable, we caution that it is very difficult to predict the impact of known factors, and it is impossible for us to anticipate all factors that could affect our actual results. Important factors that could cause actual results to differ materially from our expectations, or cautionary statements, are disclosed under “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K and “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our subsequent Quarterly Reports on Form 10-Q. All written and oral forward-looking statements attributable to us, or persons acting on our behalf, are expressly qualified in their entirety by these cautionary statements as well as other cautionary statements that are made from time to time in our other Securities and Exchange Commission filings and public communications. You should evaluate all forward-looking statements in the context of these risks and uncertainties.
We caution you that the important factors referenced above may not contain all of the factors that are important to you. In addition, we cannot assure you that we will realize the results or developments we expect or anticipate or, even if substantially realized, that they will result in the consequences or affect us or our operations in the way we expect. The forward-looking statements included in this Quarterly Report on Form 10-Q are made only as of the date hereof. We undertake no obligation to update or revise any forward-looking statement as a result of new information, future events or otherwise, except as otherwise required by law.