Summary of JFrog (FROG) FY Conference Call - August 12, 2025 Company Overview - **Company**: JFrog (FROG) - **Industry**: Software Development and Binary Management Key Takeaways Financial Performance - JFrog reported strong results for the recent quarter, driven by three main areas: cloud adoption, increased usage, and conversion of customers to larger annual contracts [4][5] - The company experienced a significant increase in revenue from its cloud services, with guidance raised to a growth rate of 34% to 36% [37] Customer Activity and Product Traction - There was notable growth in cloud services, particularly in security-related products, which contributed to a strong first half of the year [36][40] - The company has seen a shift in customer behavior, with longer contract durations (2-3 years) as customers standardize on JFrog for security solutions [19][49] Security and Binary Management - JFrog emphasizes the importance of binaries in the software development lifecycle, highlighting the shift in how malicious packages are introduced into systems [6][7] - The company is focusing on consolidating security tools to minimize vendor sprawl, offering a platform that integrates multiple security technologies [13][49] Partnerships and Market Position - JFrog is strategically partnering with companies like GitHub and Hugging Face to enhance its offerings and improve security for model registries [14][20] - The partnership with Hugging Face aims to secure AI models, addressing vulnerabilities and fostering community trust [21] Market Trends and Future Outlook - The company is witnessing a trend towards cloud migration, with a focus on hybrid deployment options to accommodate both cloud and on-premise needs [31][33] - JFrog is preparing for potential shifts in workload management as AI technologies evolve, indicating readiness for both cloud and self-hosted solutions [32][33] Growth Metrics - JFrog reported a 75% growth in Remaining Performance Obligations (RPO) and a 43% growth in Contracted Remaining Performance Obligations (CRPO) [53] - The company has expanded its customer base significantly, with a notable increase in million-dollar customers [46] Investment and Operational Efficiency - JFrog is committed to balancing growth and profitability, with a focus on responsible investment in next-generation technologies [44][45] - The company has generated a free cash flow of 29% over the past four quarters, allowing for reinvestment in growth opportunities [44] Additional Insights - The integration of AI tools is expected to increase the demand for binary management solutions, with JFrog looking to develop lighter versions of its products for smaller companies [26][27] - The company is aware of the evolving security landscape, particularly with the rise of MLSecOps, and is positioning itself to adapt to these changes [51] This summary encapsulates the key points discussed during the JFrog FY Conference Call, highlighting the company's performance, strategic initiatives, and market positioning.

JFrog (FROG) Conference Summary - August 11, 2025 Company Overview - JFrog was founded in February 2008 and operates in the DevOps and DevSecOps space, also expanding into ML Ops [4][5] - The company focuses on fast and secure software releases, addressing the needs of developers and Chief Security Officers (CSOs) [5] Financial Performance - JFrog reported a cloud growth of 45% in Q2, with sustained usage and increased annual commitments from customers [6][7] - The company observed significant usage across its portfolio, particularly with Docker, Hugging Face, and PyPI [6][8] Key Drivers of Growth - The growth is attributed to the adoption of security products and increased developer workloads, rather than solely AI workloads [10][11] - JFrog is seeing momentum in discussions with customers to increase their annual commitments, indicating a shift from experimental to sustained usage [7][10] AI and Security Initiatives - JFrog is working with three of the top five AI native companies, with one expanding its subscription significantly during Q2 [13][16] - The company emphasizes the importance of security in its offerings, with a focus on X-ray and advanced security products [18][19] - JFrog's security products are gaining traction, with large enterprises making multi-year commitments [22][24] Strategic Partnerships - The partnership with GitHub is highlighted as a significant strategic move, enhancing distribution and product integration [35][36] - JFrog aims to provide a comprehensive solution from source code to binary management, leveraging the GitHub relationship [38][41] Market Position and Differentiation - JFrog positions itself as a consolidator of security solutions, reducing vendor sprawl for customers [33][34] - The company is focused on being the system of record for binaries, which enhances its value proposition in security [34] Go-to-Market Strategy - JFrog has made significant investments in its enterprise sales team to better engage with C-suite executives [63][64] - The company is also enhancing its product marketing capabilities to explain complex solutions effectively [66] Cloud Migration Trends - JFrog supports customers in migrating workloads from self-hosted environments to the cloud, viewing this as a significant growth driver [67][68] - The company anticipates that as customers migrate, they will also add security solutions, further increasing deal sizes [69] Future Outlook - JFrog is exploring opportunities in AI, particularly in securing AI-generated code and models [42][50] - The acquisition of Quark is expected to enhance JFrog's capabilities in ML Ops, aligning with the growing demand for managing large language models [51][53] Conclusion - JFrog is experiencing robust growth driven by increased cloud adoption, security product demand, and strategic partnerships, positioning itself as a leader in the DevSecOps space while expanding into ML Ops and AI security solutions.

Financial Performance - JFrog's 2Q'25 Last Twelve Months (LTM) revenue reached $475 million, demonstrating a YoY growth of 22%[6] - The company's 2Q'25 LTM Free Cash Flow was $139 million[6] - JFrog's 2Q'25 LTM Net Dollar Retention Rate stood at 118%[6] - The company projects FY'25 revenue between $507 million and $510 million[81] Market and Customer Base - JFrog estimates its Total Addressable Market (TAM) to be over $40 billion[6] - The company has a customer base of 7,300 as of FY24[6] - JFrog serves 82% of the Fortune 100 companies[6] Platform and Strategy - JFrog's platform manages binaries from creation to distribution, covering the entire software supply chain[24] - The company emphasizes a land and expand growth strategy, showcasing consistent expansion within existing customer accounts[70, 71, 72, 73, 74, 75] - JFrog is focused on extending its technology leadership, expanding within its existing customer base, acquiring new customers, and developing its technology partnership ecosystem[69]

Financial Data and Key Metrics Changes - JFrog reported a revenue growth rate of 22% in the last quarter, with guidance for the current year set at 18% [12][60] - The company has shifted to a more conservative guidance approach after experiencing unexpected challenges in the past [12][15] Business Line Data and Key Metrics Changes - The company has seen a significant increase in larger deals, with "mega deals" now reaching eight figures in size, driven by cloud migration and security needs [15][20] - Security has become a major driver for deal sizes, with many contracts now incorporating security solutions, leading to larger initial adoptions [20][21] Market Data and Key Metrics Changes - Approximately 80% of JFrog's cloud revenue is derived from annual contracts, providing more visibility into revenue streams compared to pure usage models [17] - The company has a strong presence in the enterprise market, with over 50% of revenue coming from the Enterprise Plus tier, which has grown significantly over the past two years [30][46] Company Strategy and Development Direction - JFrog is focusing on expanding its security offerings and integrating them with its existing products to create a comprehensive platform for customers [26][28] - The partnership with GitHub is seen as a strategic move to enhance integration and drive new customer acquisition, although a joint go-to-market strategy is not yet in place [39][44] Management's Comments on Operating Environment and Future Outlook - Management noted a disconnect between corporate America and Wall Street perceptions, indicating a cautious spending environment among customers [61][62] - The company is optimistic about future growth, particularly in cloud migrations, which are expected to drive higher net retention and better economics [52][55] Other Important Information - JFrog has successfully met or exceeded its long-term targets set in 2023, with a focus on profitable growth and maintaining a "Rule of 40" as a guiding principle [59][60] - The importance of binaries has increased as they have become a central attack vector in cybersecurity, emphasizing the need for robust security measures [66][67] Q&A Session Summary Question: What drove the recent increase in developer activity? - Management attributed the increase to experimentation with AI and MLOps, although they cautioned that it may not be a sustained trend [4][6] Question: How has the guidance philosophy changed? - The company has adopted a more conservative approach to guidance to protect investors after past experiences with unexpected customer behavior [12][15] Question: What is the impact of cloud migrations on revenue? - Cloud migrations have led to significant revenue uplifts, with customers experiencing a 20% to 80% increase in revenue after migrating to the cloud [52][55] Question: How does JFrog's security offering differentiate it from competitors? - JFrog's security solutions are integrated with its core offerings, allowing for the consolidation of multiple point solutions, which is a key competitive advantage [26][28] Question: What is the outlook for new customer acquisition? - Management sees potential for new customer acquisition, particularly in the SMB market, as they consider developing a lighter version of their products [32][39]

JFrog Overview - JFrog's Total Addressable Market (TAM) exceeds $40 billion[6] - The company has over 7,300 customers as of FY24[6] - JFrog's Last Twelve Months (LTM) Free Cash Flow for 1Q'25 is $119 million[6] - The LTM Net Dollar Retention Rate for 1Q'25 is 116%[6] - LTM Revenue for 1Q'25 reached $450 million, with a year-over-year growth of 22%[6] - JFrog employs over 1,600 individuals[6] - 82% of the Fortune 100 are JFrog customers[6] Financial Performance & Targets - FY'24 Revenue was $428.5 million[80] - The company projects FY'25 Revenue between $500 million and $505 million[80] - JFrog anticipates FY'27 Revenue to be in the range of $775 million to $825 million[80] - The company's long-term target for Free Cash Flow is between $200 million and $240 million by FY'27[80]