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]

Financial Data and Key Metrics Changes - JFrog's total revenue for Q3 2025 was $136.9 million, representing a 26% year-over-year increase [7][23] - Operating margin improved to 18.7%, up from 13.5% in Q3 2024 [26] - Cloud revenue reached $63.4 million, marking a 50% year-over-year growth and accounting for 46% of total revenues compared to 39% in the prior year [24][26] - Net dollar retention was 118%, consistent with the previous quarter, indicating sustained growth among the customer base [9][25] Business Line Data and Key Metrics Changes - Enterprise+ subscriptions contributed 56% of total revenues, up from 50% in the prior year, with a 39% year-over-year growth in revenue from these subscriptions [24][26] - Self-managed or on-prem revenues were $73.5 million, reflecting a 10% year-over-year increase [24] Market Data and Key Metrics Changes - The number of customers spending over $1 million annually grew to 71, a 54% increase year-over-year [8] - Customers spending more than $100,000 annually increased to 1,121, representing a 16% year-over-year growth [8] Company Strategy and Development Direction - JFrog is focusing on becoming a foundational platform for software delivery, emphasizing cloud growth and security solutions [7][9] - The company is positioning itself as a universal binary repository and model registry for software supply chains, particularly in the context of AI and machine learning [10][16] - JFrog's strategy includes guiding cloud customers towards higher annual commitments to foster long-term partnerships [8][9] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism regarding future growth, particularly in cloud adoption and security solutions, while acknowledging macroeconomic uncertainties [29][30] - The company anticipates continued strong demand for its security offerings due to increasing software supply chain attacks [14][15] - JFrog is preparing for the ongoing AI revolution, focusing on securing AI models and software packages [16][17] Other Important Information - JFrog completed payments of $5.7 million related to the acquisition of Qwak, which was finalized in July 2024 [28] - The company ended Q3 2025 with $651.1 million in cash and short-term investments, up from $522 million at the end of 2024 [28] Q&A Session Summary Question: Was there anything one-time in the cloud revenue results? - Management confirmed that the strong cloud revenues were not one-time but a result of strong usage across multiple package types and security solutions [36] Question: What has changed in the go-to-market execution for cloud growth? - Management highlighted consistent execution and a strategy of converting overusage customers to higher commitments as key factors for cloud growth [38] Question: Can you elaborate on the types of artifacts managed by Artifactory? - Management noted an increase in the usage of AI-related artifacts alongside traditional software artifacts, indicating a growing trend [42] Question: How relevant is the UI/UX change due to AI for JFrog? - Management acknowledged that the JFrog Fly release is designed to accommodate both developers and AI agents, reimagining the software supply chain [45] Question: What is the confidence level in closing big deals in the security pipeline? - Management indicated a growing pipeline for security solutions, with longer sales cycles due to the need for displacing existing solutions [88]