mobileiron deck
DESCRIPTION
Enterprise mobility management (EMM) will present investors with many opportunities. Here is a look at one company paving the way.TRANSCRIPT
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NASDAQ: MOBLJason A. Moser
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The world is going mobile, plain and simple. Consumers have led the way and now the workplace is following suit.
The adoption of smartphones and tablets in the enterprise presents cost, security, and management challenges that traditional IT tools can’t address.
MobileIron addresses these challenges.
The idea
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What does MobileIron do?
MobileIron is a purpose-built mobile IT platform for enterprises both small and
large to secure and manage mobile applications, content and devices while providing their employees with device
choice, privacy and a native user experience.
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Market opportunity
1.2B According to IDC this was the number of total smartphones and tablets shipped in 2013.
280M This is the number of business-use smartphones and tablets IDC estimates will ship in 2014.
480M This is the number of business-use smartphones and tablets IDC estimates will ship in 2017.
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Market opportunity
498M & 887M Based on a two-year replacement cycle management estimates a global
installed base of 498 million enterprise smartphones and tablets in 2014 and approximately 887 million by 2017. Gartner estimated the cost of mobile IT management software in 2012 was $55 per device. Management sees these
costs increasing over the coming years as companies become Mobile First organization. Is this a reasonable assumption?
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Market opportunity
$27B & $49B Management estimates the size of the global mobile IT market at
$27 billion in 2014 and will reach $49 billion in 2017. These estimates are based on the projected number of mobile devices
in enterprises multiplied by the estimated amount that enterprises will spend annually to manage these devices.
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How does MobileIron make money?
MobileIron sells both subscriptions for their services as well as perpetual licensing agreements. It’s not all or nothing,
customers can start small and build over time. Renewal rates of 90% and better are a good indicator of value customers
feel they are getting from the service.
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How does MobileIron make money?
Click here to go to a brief video to learn more about what MobileIron does or copy and paste this link in your browser:
http://www.mobileiron.com/en/customers
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Where does it make money?
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Renewal ratesGross billingsRecurring billingsRecurring billings as a percentage of
gross billingsDevice salesTotal customers
What metrics matter?
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Mobile matters
Source: Gartner (May 2014)
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Where we are today
Source: Gartner (May 2014)
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It’s crucial to understand that mobile devices require different management and security approaches from PC’s. Therefore
it’s not like an enterprise’s IT team can just take their PC strategy and implement it on mobile devices. This is what makes a pure
play (such as MobileIron) attractive; this is their specialty. It’s what they do.
PC versus mobile
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PC versus mobile
PC management is mature.
Users (like me) don’t know much about the architecture.
Management requires little time of the user.
Management is very labor intensive for IT.
Mobility requires more upfront from the user.
Mobility is less labor intensive on IT.
But the user can be unreliable.
Requires more compliance reporting and monitoring.
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With a $650 million market cap today the stock trades at 5.5X full year 2014 estimated sales. A fresh IPO, MOBL is still not profitable.
Long-term gross margin target is mid-to-high 80% range. Very reasonable considering the capital-light and scalable model.
Sales are expected to hit $280 million for 2017 representing 33% CAGR.
At $280 million sales and a multiple of 5.5 we have a $1.5 billion market cap.
VMWare acquired AirWatch (~$100 million in sales) this year for $1.5 billion implying a multiple of 15X.
Understanding future worth
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ManagementBob Tinker
CEO since 2008Formerly with Cisco
Suresh BatchuCTO since 3/2007
Co-founder of MobileIron
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ManagementAjay Mishra
Chief Customer OfficerCo-founder of MobileIron
Todd FordCFO since 2/2014
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Disruption: Lots of competition and money in the space. Security: Breaches in security could be fatal for a smaller player. Float: Still a recent IPO (June 2014); float is 41% today. VC/PE firms hold
54.2% of the shares outstanding, insiders 3.85%. Consolidation: This can go either way, but there is definitely consolidation
in the space and MOBL is a small player. Distribution: MOBL sells via channel partners (telecom carriers and other
third-party resellers). AT&T as a reseller is responsible for 25% of 2014 sales thus far.
Switching: Costs are low to change products, though the more they renew, the more integrated customers become.
Power: Many today compete on cost, pricing power will need to be proven over time.
Risks
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VMWare: A $43 billion company with $5.6 billion in sales. AirWatch is their offering. It was acquired.
Citrix: A $11.3 billion company with $3 billion in sales. Not a pure play.
IBM: A $187 billion company with $98 billion in sales. IBM’s global division actually resells MOBL products.
SOTI: Private company based out of Canada. SAP: A $92 billion company with $23 billion in sales. Not
a pure play. Good Technology: Private company based out of CA.
Competition
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Gartner’s Magic Quadrant
To qualify as a “Top Player” (leader) an EMM provider must have the “highest product revenue in the EMM market, several years of proven customer implementations, customer mind share and
extensive partnerships with channel and other technology providers."
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The move to enterprise mobility is the long-term trend in play here and it IS happening, make no mistake about that.
Enterprise mobility management (EMM) is the platform that allows enterprises to become Mobile First.
Early consolidation in the space is an indicator of the relevance bigger tech names attribute to this movement.
It’s a large market. Gartner’s Magic Quadrant enlightens us to MobileIron’s position as a leader in the space.
Co-founders still involved with the business is encouraging. MobileIron looks like one potential way for investors to profit
from this long-term trend.
Bottom line for investors
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Remember, investing is all about the future. There are
never any guarantees and you're taking a measure of a leap of faith
every single time.