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]

Financial Data and Key Metrics Changes - 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, a 50% increase year-over-year, accounting for 46% of total revenue compared to 39% in the prior year [24][26] - Gross profit was $114.9 million, with a gross margin of 83.9%, up from 82.8% in the year-ago period [25][26] - Net dollar retention was 118%, consistent with the prior quarter, indicating sustained growth among existing customers [9][25] Business Line Data and Key Metrics Changes - Enterprise Plus subscriptions contributed 56% of total revenues, up from 50% in the previous year, with a 39% year-over-year growth in revenue from these subscriptions [24][25] - Customers spending over $1 million annually grew to 71, a 54% increase year-over-year [8][26] - Customers spending more than $100,000 annually increased to 1,121, a 16% year-over-year growth [8] Market Data and Key Metrics Changes - The company noted strong cloud growth driven by increased usage of various software packages, including AI-related artifacts [8][10] - The demand for JFrog's security solutions has been a significant driver of cloud revenue growth [36] Company Strategy and Development Direction - JFrog aims to position itself as a foundational platform for software delivery, focusing on cloud and security solutions [7][10] - The company is embracing AI and machine learning, integrating these capabilities into its platform to enhance software supply chain management [16][22] - JFrog introduced the DevGovOps solution to address the growing need for governance and compliance in software delivery [18][19] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism regarding future growth, emphasizing the importance of security and governance in the current market landscape [15][29] - The company is prepared for ongoing macroeconomic volatility while maintaining a focus on profitable growth [28][30] 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 revenue was not due to one-time events but a combination of strong usage across multiple package types and security solutions [36] Question: What has changed in the go-to-market execution for cloud? - Management highlighted consistent execution and a strategy of converting customers with overusage to higher commitments, leading to stable 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 the importance of adapting to AI-driven software creation and emphasized the need for agentic capabilities in their offerings [45] Question: What is the outlook for net dollar retention? - Management indicated that net dollar retention remains stable at 118%, with expectations for continued growth driven by security solutions and increased cloud usage [50] Question: How is the pipeline for security deals tracking? - Management reported a growing pipeline for security solutions, although sales cycles are longer due to the need to displace existing solutions [88]

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]

Financial Data and Key Metrics Changes - JFrog's total revenue for Q3 2025 was $136.9 million, representing a 26% year-over-year increase [5][20][27] - Operating margin improved to 18.7%, up from 13.5% in Q3 2024 [24] - Cloud revenue reached $63.4 million, marking a 50% year-over-year growth and accounting for 46% of total revenues [22][27] - Gross profit was $114.9 million, with a gross margin of 83.9%, compared to 82.8% in the previous year [23][24] - Net dollar retention was 118%, consistent with the prior quarter, indicating strong customer growth [7][23] Business Line Data and Key Metrics Changes - Cloud revenue growth was driven by increased usage of software packages and artifacts, including PyPI, Docker containers, and NPM [6][10] - Self-managed or on-prem revenues were $73.5 million, up 10% year-over-year [22] - The number of customers spending over $1 million annually grew to 71, a 54% increase from the previous year [6][23] Market Data and Key Metrics Changes - JFrog's enterprise focus led to significant wins across various verticals and geographies, including a $9 million deal with the UK Customs and Revenue Agency [11][12] - The company noted a rise in software supply chain attacks, emphasizing the need for robust security solutions [12][13] Company Strategy and Development Direction - JFrog aims to be the universal binary repository and model registry for software supply chains, focusing on AI and machine learning developments [8][15] - The company is committed to integrating security solutions into its platform, addressing the growing demand for software supply chain security [12][41] - JFrog introduced new products like JFrog Uptrust to enhance governance and compliance in software delivery [17][60] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism regarding future growth, particularly in cloud adoption and security solutions [26][30] - The company is monitoring AI-driven usage closely, believing it is still early to predict significant cloud usage growth [10][46] - JFrog's guidance for 2025 suggests sustained contributions from security products and customer commitments, with a projected revenue range of $523 million to $525 million [27][26] Other Important Information - JFrog completed payments of $5.7 million related to the acquisition of Qwak [25] - The company ended Q3 2025 with $651.1 million in cash and short-term investments, up from $522 million at the end of 2024 [25] 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 [31][32] Question: What has changed in the go-to-market execution for cloud growth? - Management highlighted consistent execution and a strategy of converting customers with overusage to higher commitments, leading to stable cloud growth [33] Question: Can you elaborate on the types of artifacts managed by Artifactory? - Management noted a growth in AI-related artifacts, including those from Hugging Face and various programming languages, indicating a trend towards using JFrog as a system of record for all packages [34][35] Question: How relevant is the UI/UX change due to AI for JFrog? - Management emphasized that JFrog Fly is designed to accommodate both developers and AI agents, reimagining the software supply chain [36][37] Question: What is the sustainability of new budgets allocated towards security? - Management indicated that there is an increasing focus on security budgets, especially in light of recent software supply chain attacks [50][52] Question: How is the pipeline for security tracking for Q4 and beyond? - Management reported a growing pipeline for security solutions, although sales cycles are longer due to the need for customers to upgrade from existing solutions [57][58]

Core Insights - JFrog has seen significant increases in institutional ownership, with 85.02% of its stock currently held by institutional investors and hedge funds [1] - Analysts have generally positive outlooks on JFrog, with multiple firms raising their target prices and maintaining "buy" or "outperform" ratings [2] - The company's recent quarterly earnings report showed a revenue increase of 23.5% year-over-year, surpassing consensus estimates [4] Institutional Holdings - Vanguard Group Inc. increased its position by 0.4%, owning 8,871,984 shares valued at $283.9 million after purchasing an additional 35,458 shares [1] - TimesSquare Capital Management LLC raised its holdings by 6.5%, now owning 3,622,911 shares valued at $115.9 million after an additional purchase of 222,635 shares [1] - AllianceBernstein L.P. significantly increased its position by 1,974.0%, owning 2,151,008 shares worth $68.8 million after acquiring 2,047,294 shares [1] Analyst Ratings - Canaccord Genuity Group raised its target price from $52.00 to $55.00, maintaining a "buy" rating [2] - KeyCorp increased its target price from $52.00 to $57.00, giving an "overweight" rating [2] - The average rating for JFrog's stock is "Moderate Buy" with a consensus target price of $53.44 [2] Stock Performance - JFrog's stock opened at $47.48, with a market cap of $5.54 billion and a PE ratio of -61.66 [3] - The stock has a 52-week range with a low of $27.00 and a high of $51.94 [3] Earnings Report - JFrog reported earnings per share (EPS) of $0.18, exceeding the consensus estimate of $0.16 by $0.02 [4] - Revenue for the quarter was $127.2 million, above the consensus estimate of $122.8 million [4] - The company has set FY 2025 guidance at 0.680-0.70 EPS and Q3 2025 guidance at 0.150-0.17 EPS [4] Insider Transactions - CRO Tali Notman sold 13,067 shares at an average price of $50.26, reducing her position by 1.94% [5] - Director Yvonne Wassenaar sold 1,372 shares at an average price of $47.94, decreasing her ownership by 4.47% [5] - Over the last ninety days, insiders sold 481,492 shares worth $23.1 million, with insiders currently owning 14.10% of the stock [5] Company Overview - JFrog Ltd. provides a hybrid software supply chain platform, including products like JFrog Artifactory and JFrog Xray, which help organizations manage and secure their software packages [7]

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]