Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number: 001-39492 JFrog Ltd. (Exact name of Registrant as specified in its charter) (State or other jurisdiction of incorporation or organization) Israel 98 ...

Financial Data and Key Metrics Changes - JFrog's Q1 2023 revenue was $79.8 million, reflecting a 25% year-over-year growth [5][28] - Cloud revenue reached $25 million, increasing 49% year-over-year [5][28] - Self-managed revenues were $54.8 million, up 17% year-over-year [16] - Gross profit was $66.2 million, with a gross margin of approximately 83% compared to 84% in the previous year [17] - Non-GAAP operating profit was $2.7 million, representing a 3.4% operating margin, compared to 0.9% in the prior year [18] - Net dollar retention for the trailing four quarters was 124%, a decline of 4 points due to macroeconomic headwinds [16] Business Line Data and Key Metrics Changes - Customers with ARR over $100,000 grew to 785, a 31% increase year-over-year [5] - Customers with ARR over $1 million increased to 21, also up 31% year-over-year [5] - 44% of total revenue came from Enterprise Plus subscriptions, up from 35% in Q1 2022 [16] Market Data and Key Metrics Changes - The company noted an acceleration in cloud usage, particularly in pay-as-you-go and annual SaaS customers [62] - The transition of pay-as-you-go customers to annual contracts is a natural progression, indicating increased customer commitment [73][120] Company Strategy and Development Direction - JFrog aims to support enterprises in their cloud migration and hybrid topology adoption [10] - The company is focusing on consolidating security capabilities within its platform, positioning itself as a comprehensive DevSecOps solution [25][64] - JFrog anticipates a 5-year revenue CAGR of 22% to 24% through fiscal year 2027, with a potential revenue range of $775 million to $825 million [27][29] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism about customer growth and efficiency improvements moving forward [15] - The company believes that the need for software generation remains a secular trend despite macroeconomic challenges [15] - Management highlighted the importance of security in driving future revenue growth, particularly with the launch of JFrog Advanced Security [48][110] Other Important Information - JFrog ended Q1 2023 with $447 million in cash and short-term investments, up from $443 million at the end of 2022 [19] - The company made a strategic hire, welcoming a new CIO with extensive experience in IT and cybersecurity [14] Q&A Session Summary Question: Demand trends throughout the quarter - Management noted that cloud consumption started similarly to Q4 trends but accelerated as the quarter progressed [38][44] Question: Confidence in long-term growth model - Management cited the cloud business and security investments as key drivers for sustainable growth over the next five years [47][48] Question: Impact of Advanced Security SKU - The self-hosted version of Advanced Security launched in March did not have a material impact on quarterly results, but customer engagement is promising [50] Question: Transition of pay-as-you-go customers - The transition to annual contracts is a natural progression, allowing for better long-term planning and value delivery [73][120] Question: Capital deployment and M&A appetite - Management indicated a willingness to explore M&A opportunities in a fragmented market while also considering stock buybacks [111]

Revenue Performance - Revenue for the three months ended March 31, 2023, was $79.8 million, representing a 25% increase from $63.7 million in the same period of 2022[82]. - Total subscription revenue for the three months ended March 31, 2023, was $79,820,000, representing a 25% increase from $63,696,000 in the same period of 2022[108]. Customer Metrics - SaaS subscription revenue contributed 31% of total revenue for Q1 2023, up from 26% in Q1 2022[79]. - Revenue from Enterprise Plus subscriptions accounted for approximately 44% of total revenue in Q1 2023, compared to 35% in Q1 2022[80]. - The number of customers with an ARR of $100,000 or more increased to 785 as of March 31, 2023, from 736 as of December 31, 2022[88]. - The net dollar retention rate was 124% as of March 31, 2023, down from 131% in the same period of 2022[87]. Financial Performance - The company reported a net loss of $20.8 million for Q1 2023, compared to a net loss of $19.7 million in Q1 2022[82]. - Free cash flow for Q1 2023 was $(1.4) million, compared to $3.9 million in Q1 2022[93]. - Operating loss for the three months ended March 31, 2023, was $(23,213,000), compared to $(19,139,000) in the same period of 2022[108]. - Gross profit for the three months ended March 31, 2023, was $61,399,000, with a gross margin of 77%, slightly down from 78% in 2022[109][110]. Expenses - Research and development expenses increased by 29% to $34,886,000 for the three months ended March 31, 2023, primarily due to increased headcount and share-based compensation[111]. - Sales and marketing expenses rose by 22% to $35,486,000 for the three months ended March 31, 2023, driven by higher personnel-related costs and commissions[112]. - Share-based compensation expense increased by 41% to $19,912,000 for the three months ended March 31, 2023, reflecting grants to new and existing employees[114]. Cash Flow and Financing - As of March 31, 2023, the company had cash, cash equivalents, and short-term investments totaling $447,200,000, sufficient to meet operational needs for the next 12 months[118]. - Net cash used in operating activities for the three months ended March 31, 2023, was $(1,129,000), a decrease from $5,031,000 in the same period of 2022[120]. - The company may seek additional equity or debt financing in the future to support growth and expansion efforts[119]. - Net cash used in investing activities for Q1 2023 was $9.2 million, primarily from net purchases of short-term investments of $8.9 million[123]. - Net cash provided by financing activities for Q1 2023 was $5.0 million, mainly from employee share purchases of $3.5 million and share options exercise of $1.2 million[124]. Obligations and Investments - Total non-cancellable contractual obligations as of March 31, 2023, amounted to $82.2 million, with $28.7 million in operating lease obligations and $53.5 million in purchase obligations[126]. - Cash and cash equivalents as of March 31, 2023, were $40.3 million, with short-term investments totaling $406.8 million[134]. Strategic Initiatives - The company plans to continue investing in research and development to enhance its product offerings and maintain technology leadership[84]. - The company aims to expand its customer base through self-service and inbound sales models, leveraging freemium offerings and free trials[89]. - International expansion is viewed as a significant opportunity, with ongoing efforts to increase brand awareness in global markets[90]. Economic Factors - A hypothetical 10% change in foreign currency exchange rates would not have had a material impact on the results of operations for Q1 2023[131]. - The company does not believe inflation has materially affected its business, but rising costs could harm financial condition and results[135].

JFrog Ltd. (NASDAQ:FROG) Q4 2022 Earnings Conference Call February 8, 2023 5:00 PM ET Company Participants Jeff Schreiner - VP, IR Shlomi Ben Haim - CEO and Co-Founder Jacob Shulman - CFO Conference Call Participants Pinjalim Bora - JPMorgan Sanjit Singh - Morgan Stanley Kingsley Crane - Canaccord Genuity Koji Ikedawith - Bank of America Jonathan Ruykhaver - Cantor Fitzgerald Mike Cikos - Needham Ittai Kidron - Oppenheimer Michael Turits - KeyBanc Ethan Weeks - Piper Sandler Operator Ladies and gentlemen, t ...

The Liquid Software Company This presentation contains forward-looking statements that reflect our current views with respect to, among other things, the operations and financial performance of JFrog Ltd. and its subsidiaries (collectively, "JFrog," "we," "us," or "our"). All statements other than statements of historical facts contained in this presentation, including statements regarding matters such as our industry, business strategy, goals, and expectations concerning our market position, future operati ...

Customer Growth and Employee Headcount - The total number of customers grew to approximately 7,200 organizations as of December 31, 2022, up from approximately 6,650 organizations as of December 31, 2021, representing an increase of about 8.3%[91] - Employee headcount increased significantly from approximately 1,000 as of December 31, 2021, to approximately 1,300 as of December 31, 2022, indicating a growth of 30%[91] Financial Performance - Total revenues for the years ended December 31, 2022, 2021, and 2020 were $280.0 million, $206.7 million, and $150.8 million, respectively, reflecting a growth rate of 35% for 2022 and 37% for 2021[95] - The company incurred a net loss of $90.2 million, $64.2 million, and $9.4 million for the years ended December 31, 2022, 2021, and 2020, respectively, leading to an accumulated deficit of $229.2 million as of December 31, 2022[97] Market and Competition Risks - The markets for the company's products are new and evolving, which may develop more slowly than expected, impacting future growth and demand[98] - The company faces risks related to competition, technological developments, and market acceptance, which could impact its financial condition and results of operations[99] - The company faces competition from various vendors, including home-grown solutions, DevOps-focused vendors, and cloud providers, which may impact market share[113] Revenue Recognition and Subscription Model - The company recognizes a significant portion of revenue from subscriptions over the term of the relevant subscription period, affecting the immediate reflection of sales downturns or upturns in results[91] - A significant portion of subscription revenue is recognized over the subscription period, leading to delayed reflection of sales downturns in financial results[122] - The company’s subscription structure is critical, with JFrog Artifactory at the core, and any decline in its demand will negatively impact overall business performance[115] Operational Challenges - The company anticipates that operating expenses will increase substantially in the foreseeable future due to efforts to enhance products and expand operations[97] - The company has experienced seasonality in customer bookings, with a higher percentage of subscription agreements typically occurring in the fourth quarter[119] - The company’s ability to integrate products with third-party technologies is essential for maintaining competitiveness and marketability[107] Customer Relations and Support - Customer satisfaction and the perceived need for additional features significantly influence the expansion of deployments within existing customers[118] - Customer support quality is crucial for renewals and sales; inadequate support could adversely affect business and reputation[140] Compliance and Regulatory Risks - The company is subject to stringent and changing laws related to privacy and data protection, which could harm its business if not complied with[173] - Non-compliance with privacy laws, such as the California Consumer Privacy Act, could result in significant liability and impact the company's reputation[177] - The General Data Protection Regulation (GDPR) imposes heavy penalties for non-compliance, potentially resulting in fines up to €20 million or 4% of global annual turnover[179] Intellectual Property Risks - The company’s ability to protect its intellectual property rights is crucial for its success, and failure to do so could harm its business[163] - The incorporation of open source software in products may lead to compliance risks and potential litigation, affecting product commercialization[172] Economic and Geopolitical Factors - The ongoing COVID-19 pandemic and geopolitical tensions may continue to harm the company's business and results of operations[91] - Adverse macroeconomic conditions, including inflation and reduced IT spending, may negatively impact consumer and business demand for the company's products[152][153] Financial Management and Capital Structure - The company had net operating loss carryforwards of $107.3 million in Israel, $0.2 million in U.S. federal, and $48.8 million in U.S. state as of December 31, 2022[221] - The company does not intend to pay dividends in the foreseeable future, relying on share price appreciation for investor returns[236] International Operations and Currency Risks - The company has customers located in over 90 countries and aims to continue international expansion[199] - The company utilizes foreign currency contracts to protect against foreign exchange risks, particularly with the NIS against the U.S. dollar[213] Management and Governance - The management team has limited experience managing a public company, which may strain resources and divert attention from daily operations[248] - The company is subject to significant legal and financial compliance costs due to its public company status, which may increase over time[249]

JFrog Ltd. (NASDAQ:FROG) Q3 2022 Earnings Conference Call November 2, 2022 5:00 PM ET Company Participants Jeff Schreiner - VP of IR Shlomi Ben Haim - CEO and Co-Founder Jacob Shulman - CFO Conference Call Participants Mike Cikos - Needham & Company Brad Reback - Stifel Kingsley Crane - Canaccord Bob Guan - Morgan Stanley Pinjalim Bora - JPMorgan Jason Ader - William Blair Ethan Weeks - Piper Sandler Ittai Kidron - Oppenheimer Operator Ladies and gentlemen, thank you for joining us, and welcome to JFrog's T ...

Revenue Growth - JFrog generated revenue of $72.0 million for the three months ended September 30, 2022, representing a 34% growth compared to $53.7 million in the same period of 2021[81]. - For the nine months ended September 30, 2022, JFrog's revenue was $203.5 million, a 38% increase from $147.4 million in the corresponding period of 2021[81]. - Revenue from SaaS subscriptions contributed 29% of total revenue for the three months ended September 30, 2022, up from 24% in the same period of 2021[78]. - Total subscription revenue increased by $18.3 million, or 34%, for the three months ended September 30, 2022, compared to the same period in 2021, reaching $71.99 million[109]. - Total subscription revenue for the nine months ended September 30, 2022, increased by $56.0 million, or 38%, reaching $203.5 million, with approximately $50.1 million of the increase attributed to growth from existing customers[119]. Customer Metrics - The net dollar retention rate for JFrog was 130% as of September 30, 2022, compared to 129% in the same period of 2021[86]. - As of September 30, 2022, JFrog had 696 customers with an ARR of $100,000 or more, an increase from 537 customers as of December 31, 2021[87]. - Approximately $15.4 million of the revenue increase was attributed to growth from existing customers, with the remainder from new customers[109]. Financial Performance - JFrog incurred a net loss of $23.6 million for the three months ended September 30, 2022, compared to a net loss of $20.5 million in the same period of 2021[81]. - The net loss for the three months ended September 30, 2022, was $23.55 million, compared to a net loss of $20.46 million in the same period of 2021[105]. - Operating loss for the three months ended September 30, 2022, was $23.44 million, compared to an operating loss of $20.92 million in the same period of 2021[105]. - Net cash provided by operating activities for the nine months ended September 30, 2022, was $14.1 million, an increase from $10.2 million in the same period in 2021[134]. - Net cash provided by operating activities for the nine months ended September 30, 2022, was $14.1 million, related to a net loss of $67.0 million adjusted for non-cash charges of $69.6 million[135]. Expenses - Research and development expenses rose by $8.6 million, or 37%, for the three months ended September 30, 2022, totaling $31.70 million[112]. - Sales and marketing expenses increased by $8.8 million, or 36%, for the three months ended September 30, 2022, amounting to $33.15 million[113]. - General and administrative expenses decreased by $1.0 million, or 6%, for the three months ended September 30, 2022, totaling $14.68 million[114]. - Research and development expenses rose by $34.1 million, or 64%, for the nine months ended September 30, 2022, totaling $87.7 million, primarily due to increased headcount and share-based compensation[123]. - General and administrative expenses decreased by $3.1 million, or 7%, for the nine months ended September 30, 2022, totaling $41.4 million, primarily due to a reduction in share-based compensation[125]. Cash and Investments - JFrog's cash, cash equivalents, and short-term investments totaled $434.0 million as of September 30, 2022[81]. - Cash, cash equivalents, and short-term investments amounted to $434.0 million as of September 30, 2022, providing sufficient liquidity for at least the next 12 months[131]. - Net cash used in investing activities for the nine months ended September 30, 2022, was $35.9 million, primarily from net purchases of short-term investments of $31.9 million and capital expenditures of $3.7 million[137]. - Net cash provided by financing activities for the nine months ended September 30, 2022, was $9.7 million, mainly from employee share purchases under the ESPP of $5.2 million and proceeds from the exercise of share options of $4.7 million[139]. - As of September 30, 2022, cash and cash equivalents totaled $54.0 million, and short-term investments amounted to $380.0 million[151]. Internal Controls and Risks - There were no changes in internal control over financial reporting that materially affected, or are likely to materially affect, the company's internal control over financial reporting during the period covered by the report[156]. - The effectiveness of internal control over financial reporting is subject to inherent limitations, including the exercise of judgment in design and evaluation[157]. - Management acknowledges that internal controls can only provide reasonable assurance, not absolute assurance, of achieving control objectives[157]. - Resource constraints impact the design of disclosure controls and procedures, requiring management to evaluate benefits relative to costs[157]. - Future evaluations of effectiveness are at risk due to potential changes in conditions or compliance deterioration[157]. - The company intends to monitor and upgrade internal controls as necessary but cannot guarantee that improvements will be sufficient[157]. Market Conditions - The company does not believe that inflation has had a material effect on its business, financial condition, or results of operations, other than its impact on the general economy[152]. - A hypothetical 10% change in foreign currency exchange rates would not have had a material impact on the company's results of operations for the three and nine months ended September 30, 2022[148]. - The company’s hedging program aims to reduce the impact of foreign exchange risks associated with forecasted future cash flows and certain existing assets and liabilities[148]. Product Development - JFrog launched JFrog Advanced Security in October 2022, enhancing its product offerings in the security domain[83]. - The company plans to increase investment in sales and marketing to support growth and attract new customers[101].

The Liquid Software Company DISCLAIMER This presentation contains forward-looking statements that reflect our current views with respect to, among other things, the operations and financial performance of JFrog Ltd. and its subsidiaries (collectively, "JFrog," "we," "us," or "our"). All statements other than statements of historical facts contained in this presentation, including statements regarding matters such as our industry, business strategy, goals, and expectations concerning our market position, fut ...

Financial Data and Key Metrics Changes - JFrog reported Q2 revenue of $67.8 million, reflecting a 39% year-over-year growth compared to 41% in the previous quarter [10][30] - Cloud revenue grew by 68% year-over-year, up from 63% in the previous quarter, indicating strong demand for cloud solutions [10][30] - The number of customers with ARR over $100,000 increased to 647, a 56% year-over-year growth [11][33] - Net dollar retention for the trailing four quarters was 132%, slightly up from 131% in the previous quarter [11][33] - Gross profit was $56.8 million, with a gross margin of 83.7%, compared to 83.4% in the year-ago period [34] Business Line Data and Key Metrics Changes - Self-managed revenues (on-prem) were $48.6 million, up 31% year-over-year, but growth has slowed as new customers increasingly adopt cloud solutions [30][32] - The adoption of the full platform is a key factor in increasing customer size, with 36% of total revenue coming from Enterprise Plus customers, up from 32% in Q2 2021 [33][88] Market Data and Key Metrics Changes - Asia Pacific, the smallest geographic region for JFrog, has seen slower levels of DevOps adoption than expected [28] - The company noted that elongated sales cycles for large new business deals have emerged, particularly in the current macroeconomic environment [27][70] Company Strategy and Development Direction - JFrog continues to focus on strategic investments in R&D, particularly in security and IoT, while also enhancing cloud efficiency [92][96] - The introduction of the Advanced Security Package aims to provide a holistic solution for software supply chain protection, expected to be available commercially in Q3 [80][81] - The company is committed to maintaining a long-term revenue growth rate of 30% or greater, despite macroeconomic headwinds [29][38] Management's Comments on Operating Environment and Future Outlook - Management observed increased demand for cloud solutions and noted that elongated sales cycles for large deals are a concern [45][46] - The company remains confident in its ability to grow revenue and maintain operational efficiency, even in a challenging economic environment [38][39] Other Important Information - JFrog's cash flow from operations was $4 million in the quarter, with free cash flow of $3 million, maintaining a positive cash flow since going public [36] - The company expects revenue for Q3 to be between $70.5 million and $71.5 million, with non-GAAP operating profit ranging from negative $0.5 million to positive $0.5 million [39][40] Q&A Session Summary Question: Confidence in sustaining 30% growth - Management noted increased demand for cloud solutions and attractive expansion rates among existing customers, despite elongated sales cycles for large deals [45][46][47] Question: Economic uplift from customer migration to cloud - Migration to the cloud typically results in ARR growth, driven by increased data transfer and additional capabilities added by customers [56][59] Question: Efficiencies in spending and hiring - Management indicated a careful review of hiring and spending, focusing on strategic areas while improving cloud efficiency [60][62] Question: Differences in sales cycles across regions - Elongated sales cycles are observed for large deals, with no significant impact on smaller deals, and similar trends noted in EMEA and North America [71][72] Question: Advanced Security Package details - The Advanced Security Package will be available for Enterprise Plus and Enterprise X customers, with expected contributions to revenue assessed in Q4 [81][83] Question: R&D investment focus - R&D investments will focus on security, IoT, and enhancing cloud efficiency, with a rich roadmap for Artifactory improvements [92][93]