JFrog(US:FROG)2023-05-04 07:34Financial 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]