Question-and-Answer SessionI guess just to set the stage, JFrog has been quite an incredible story for 2025. I guess set the stage for anyone in the room that maybe is new to the story, like how has the year been? What are the key takeaways for you? What have been the key drivers for growth acceleration throughout the year? Anything maybe you'd point out?Jeffrey SchreinerVice President of Investor Relations Yes. So I think as it relates to JFrog and '25, it certainly, as it relates to the stock price and ce ...

Summary of JFrog's 2025 TMT Conference Call Company Overview - **Company**: JFrog - **Event**: Barclays 2025 TMT Conference - **Key Speaker**: Jeff Schreiner, Head of Investor Relations Key Industry Insights - **Growth Drivers**: In 2025, JFrog's growth has shifted from migration-driven to consumption-driven revenue, with increased customer engagement in AI and ML technologies [3][4][5] - **Security Offerings**: There is a notable increase in demand for JFrog's security products, particularly following recent industry attacks, which have heightened interest in their security solutions [5][21][24] Financial Performance - **Revenue Recognition**: JFrog recognizes revenue based on customer commitments, with a "use-it-or-lose-it" model that incentivizes higher consumption levels [9][10] - **Contractual Commitments**: The company has seen strong usage and overages, particularly in Q1 and Q3, driven by AI and ML experimentation [11][12] Product Development and Strategy - **Security Product Development**: JFrog's security offerings have gained traction, with a 50/50 split in deployment and pipeline between Advanced Security and Curation products [26] - **Curation Product**: Following the NPM attack, demand for the Curation product has surged, as it acts as a firewall for software development organizations [22][24] - **New Product Announcements**: JFrog introduced several new products at SwampUp, including JFrog Fly, AppTrust, and AI Catalog, aimed at enhancing software development processes [38][42] Market Position and Competitive Advantage - **Platform Strategy**: JFrog's transition to a platform-based model has improved customer retention and allowed for larger contract commitments [52][53] - **AI and ML Integration**: The company is positioning itself as a key player in the AI/ML space, with significant interest from foundational AI companies [55][63] Future Outlook - **Guidance Philosophy**: JFrog plans to continue guiding based on signed commitments rather than usage, reflecting a more stable forecasting approach [68][69] - **Retention Rates**: The company maintains a high gross retention rate of 97%, attributed to its comprehensive platform offerings [50] Additional Considerations - **Budget Constraints**: Customers are expressing challenges in finding budget for new security products despite increased interest [24][25] - **Market Dynamics**: The evolving landscape of software development and security necessitates continuous adaptation and innovation from JFrog to maintain its competitive edge [46][49]

JFrog Conference Call Summary Company Overview - **Company**: JFrog (NasdaqGS:FROG) - **Founded**: 2010 - **Core Product**: Artifactory, a repository manager for binaries and open-source packages [3][4] Industry Context - **Market Opportunity**: Transition from monolithic software development to a more modular approach, necessitating better management of binaries and security [3][4] - **Shift in Software Development**: Increasing reliance on open-source packages and external binaries in software development [3][4] Key Value Proposition - **Security Integration**: Transitioning from a product-led organization to a security-focused platform with the acquisition of Vdoo, enhancing the value proposition with security features [5][50] - **Enterprise Plus Platform**: Offers additional security-related products, including AppTrust, which integrates governance into the software development lifecycle [5][50] Financial Performance and Guidance - **Revenue Growth**: Accelerating revenue growth driven by cloud consumption, security add-ons, and higher-tier adoptions [19][21] - **Guidance Philosophy**: Shifted to a more conservative guidance approach post-Q2 hiccup, focusing on commitments rather than overusage [18][19] Growth Drivers - **Cloud Migration**: Significant uplift (20%-80%) from migrating customers from self-hosted to cloud solutions [20][21] - **Security Demand**: Addition of security features has led to larger deal sizes and new customer acquisitions [21][22] - **RPO Growth**: Record visibility with RPO doubling since the end of 2023, indicating increased customer commitment [22][24] Competitive Landscape - **Main Competitors**: - **DevOps**: Sonatype (focus on security, less on DevOps), Cloudsmith (AI-focused but limited by consumption concerns) [28][30] - **Security**: Competing against point solutions like Aqua, Checkmarx, Veracode, and Black Duck [30] - **AI/ML**: Emerging competitive landscape with potential new entrants [31] Strategic Initiatives - **Platformization**: Emphasis on consolidating vendors and creating a comprehensive platform for software development [23][24] - **Security Products**: Advanced Security and Curation products are critical for addressing customer needs in software development security [50][51] Future Outlook - **AI/ML Integration**: Anticipated growth in the importance of binaries in AI/ML development, with JFrog positioned as a leader in managing these assets [56][57] - **Cash Management**: Strategic cash allocation for potential acquisitions and employee compensation adjustments [54][55] Conclusion - **Key Message for Investors**: JFrog is positioned as a leader in managing binaries, with a focus on security and the emerging AI/ML landscape, indicating strong future growth potential [57][58]

Core Insights - The company has maintained its strategic direction, showing strong execution in 2025 compared to 2024 [1] - There is significant growth in cloud services, with a year-over-year increase of 50%, driven by usage exceeding minimum commitments [1] Group 1: Financial Performance - Unlike 2024, which featured three of the largest deals in the company's history, 2025 is seeing an increase in the number of large deals [2] - The average selling prices (ASPs) are increasing, indicating a positive trend in pricing power [2] - There is a notable acceleration in the velocity of large deals, contributing to robust growth in the enterprise sector [2]

Summary of JFrog Conference Call Company Overview - **Company**: JFrog - **Event**: UBS Global Technology and AI Conference - **Key Speakers**: CFO Ed, IR Jeff Schreiner Industry Insights - **Software Industry**: Notable acceleration in the software sector, with JFrog experiencing a 26% growth in the most recent quarter, a 6% top-line beat above expectations [7][9] - **Cloud Growth**: JFrog reported a 50% year-over-year growth in cloud services, driven by increased usage over minimum commitments and larger deal sizes [7][12] Key Growth Drivers - **Cloud Migration**: Transition from self-hosted to cloud solutions is a significant growth driver, with potential uplifts of 20-80% in subscription value [23] - **Security Demand**: Increased focus on security, particularly in response to recent events affecting npm, is driving higher average selling prices (ASPs) [12][66] - **AI Integration**: The rise of AI technologies is creating new opportunities for JFrog, particularly in managing and securing AI-generated code and binaries [33][34] Financial Guidance and Performance - **Guidance Philosophy**: JFrog's guidance excludes unpredictable variables such as large deals and usage over minimum commitments, focusing instead on committed revenue [12][15] - **Q4 Outlook**: Anticipated deceleration in cloud growth for Q4, with a responsible guidance approach that considers previous large deals [14][15] Product Innovations - **App Trust**: A new product aimed at automating compliance in software delivery, generating significant interest in the market [25] - **AI Catalog**: Designed to secure large language models, with a 100% increase in model usage since Q1 [26] - **Fly**: Aimed at small teams, this product is more of an R&D initiative to capture emerging technology users [27] Competitive Landscape - **GitHub and GitLab**: JFrog has strengthened its relationship with GitHub, positioning itself as a leader in binary management while GitHub focuses on source code [61][62] - **Model Registry**: JFrog's acquisition of Qwak enhances its capabilities in managing AI models, providing a competitive edge in the model registry space [39][40] Security and Compliance - **Curation Demand**: Increased demand for curation services, particularly following npm security incidents, is seen as a key growth area [66][68] - **Vendor Consolidation**: JFrog aims to consolidate multiple point solutions into its platform, which is a significant part of its growth strategy [70] Future Outlook - **Investment in Technology**: JFrog plans to continue expanding its platform with new technologies, including DevSecOps and MLOps, to maintain its competitive advantage [77] - **Long-term Strategy**: The company is focused on building a comprehensive solution that integrates various aspects of software development and security, ensuring customer retention through added value [78] Conclusion - JFrog is positioned for strong growth driven by cloud migration, security demands, and AI integration, while maintaining a responsible guidance approach and focusing on product innovation to enhance its competitive moat in the software industry [7][12][77]

Core Viewpoint - The AI trade has been a significant driver in the stock market, but recent volatility has led investors to explore alternative opportunities outside the core AI theme [1][7]. Group 1: Analyst Insights - DA Davidson analyst Gil Luria remains bullish on AI overall but highlights strong potential in smaller tech stocks that are often overlooked [2][6]. - Luria emphasizes the focus on infrastructure software stocks as they are clear beneficiaries of AI usage without the perceived risks associated with application software companies [3][6]. Group 2: Recommended Stocks - Luria identifies three tech stocks: Snowflake, Datadog, and JFrog, which operate in the AI infrastructure and software space [2][4]. - Year-to-date performance for these stocks includes Snowflake at +62%, Datadog at +11%, and JFrog at +113%, with JFrog outperforming its peers and the Magnificent Seven [3][4]. Group 3: Market Dynamics - Luria believes that regardless of how enterprise customers build AI tools, they will require more data lakehouse capacity (Snowflake), more applications and infrastructure for observation (Datadog), and more binary code management (JFrog) [5][6]. - The continued growth of AI will benefit these companies as larger enterprises will always need their services to scale AI tools effectively [6].

Core Insights - The article compiles significant research calls from Wall Street, highlighting upgrades and downgrades of various companies that investors should be aware of [1] Upgrades - Wells Fargo upgraded Merck (MRK) to Overweight from Equal Weight with a price target of $125, increased from $90, citing business development and pipeline progress as key factors for revenue growth in the early 2030s [2] - Wolfe Research upgraded Morgan Stanley (MS) to Outperform from Peer Perform with a price target of $198, anticipating accelerated revenue growth from investment banking share gains and organic growth in wealth management [3] - HSBC upgraded Flutter Entertainment (FLUT) to Buy from Hold with a price target of $228, reduced from $265, viewing the recent share selloff as a buying opportunity [3] - BofA upgraded Booking Holdings (BKNG) to Buy from Neutral with an unchanged price target of $6,000, believing that concerns regarding disintermediation risks from Google and OpenAI are overstated [4] - Wedbush upgraded Carvana (CVNA) to Outperform from Neutral with a price target of $400, increased from $380, suggesting that the recent share pullback is overdone [5] Downgrades - UBS downgraded JFrog (FROG) to Neutral from Buy with a price target of $65, up from $48, indicating that while AI-related benefits are significant, the larger revenue impact is likely 12-18 months away [6] - Jefferies downgraded Exact Sciences (EXAS) to Hold from Buy with a price target of $105, up from $90, due to the pending acquisition by Abbott, which is seen as a win for Exact Sciences [6] - Evercore ISI downgraded QuantumScape (QS) to In Line from Outperform with a price target of $12, up from $8, citing valuation concerns as shares have risen 200% year-to-date [6] - UBS downgraded Jazz Pharmaceuticals (JAZZ) to Neutral from Buy with a price target of $188, up from $163, stating that the stock appears fairly valued after a strong Phase 3 GEA update and a 25% stock increase [6] - TD Cowen downgraded PureCycle Technologies (PCT) to Hold from Buy with a price target of $9, down from $16, due to delays in orders and growth plans, prompting a more cautious stance [6]

Company Overview - JFrog Ltd. is a leading provider of a unified DevOps, DevSecOps, and MLOps platform, aiming to deliver software seamlessly from development to production [2][8] - The company operates under a "Liquid Software" vision, offering a Software Supply Chain Platform that ensures software is built, managed, and distributed quickly and securely [2][8] - JFrog's platform includes integrated security features to identify and mitigate threats and vulnerabilities, supporting organizations in their digital transformation efforts [2] Upcoming Investor Conferences - JFrog will present at three major investor conferences in Q4 2025: - UBS Global Technology and AI Conference on December 2nd at 7:55 a.m. PDT [3] - Raymond James TMT and Consumer Conference on December 8th at 11:20 a.m. PDT [3] - Barclays 23rd Annual Global Technology Conference on December 10th at 1:20 p.m. PDT [3] Recognition and Achievements - JFrog has been named GitHub's 2025 Tech Partner of the Year, highlighting its exceptional performance and commitment to enhancing customer value through its partnership with GitHub [7]

Core Insights - JFrog has introduced a new capability called Shadow AI Detection to enhance AI governance within its Software Supply Chain Platform, aimed at providing enterprises with visibility and control over AI models and API usage [1][4][12] - The initiative addresses the risks associated with Shadow AI, which refers to the uncontrolled use of AI models and APIs that can lead to security and compliance vulnerabilities [2][3][4] AI Governance and Compliance - The rapid integration of AI in development pipelines has created governance challenges, as developers often use AI models from providers like OpenAI and Google without oversight, leading to compliance violations and data leaks [3][4] - JFrog's Shadow AI Detection capability helps organizations create an inventory of internal AI models and external API gateways, enabling centralized governance and compliance tracking [4][5] Security and Risk Management - The new capabilities are designed to enforce security and compliance policies across all AI assets, ensuring that interactions with third-party AI services are controlled and auditable [5][6] - JFrog's solution aligns with emerging global regulations, such as the US Transparency in Frontier AI Act and the EU AI Act, which emphasize accountability and resilience in the AI supply chain [6][12] Market Position and Future Plans - JFrog aims to strengthen its leadership in securing the AI supply chain, helping companies utilize AI safely and responsibly [2][4] - The Shadow AI Detection feature is part of the JFrog AI Catalog, with a general availability release planned for 2025 [6][12]

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