JFrog(US:FROG)2025-05-08 22:02Financial Data and Key Metrics Changes - Total revenue for Q1 2025 was $122.4 million, representing a 22% year-over-year increase [8][18]. - Operating margin improved to 17.4%, up from 14% in Q1 2024 [22]. - Cloud revenue reached $52.6 million, a 42% increase year-over-year, accounting for 43% of total revenue compared to 37% in the prior year [18][19]. - Gross profit was $101 million, with a gross margin of 82.5%, down from 85.1% year-over-year [21]. - Free cash flow for Q1 was $28.1 million, reflecting a 23% margin compared to 17% in the previous year [23]. Business Line Data and Key Metrics Changes - Self-managed or on-premises revenues were $69.8 million, up 10% year-over-year [19]. - Revenue contribution from Enterprise Plus subscriptions grew to 50% of total revenues, up from 49% in the prior year, with a 37% year-over-year growth in this segment [19][20]. Market Data and Key Metrics Changes - The number of customers spending over $1 million annually increased to 54, a 35% growth year-over-year [9]. - Customers spending more than $100,000 annually grew to 1,051, a 15% increase year-over-year [9]. Company Strategy and Development Direction - The company is focusing on capturing momentum in cloud, DevOps, security, and MLOps markets [10][11]. - JFrog aims to unify DevOps, DevSecOps, and MLOps in a single solution, enhancing its position in the market [11][27]. - The partnership with Hugging Face aims to secure open-source machine learning models, indicating a strategic focus on AI and security [12][27]. Management's Comments on Operating Environment and Future Outlook - Management expressed caution regarding macroeconomic uncertainties affecting sales cycles and customer commitments [10][24]. - The outlook for Q2 and the full year 2025 reflects a conservative approach due to market volatility, with expected revenue growth of 19% year-over-year for Q2 [24][25]. - The company anticipates a full-year cloud growth rate of 31% to 33% [25]. Other Important Information - The company reported a net dollar retention rate of 116% and a gross retention rate of 97% [21]. - JFrog's cash and short-term investments totaled $563.5 million at the end of Q1 2025, up from $522 million at the end of 2024 [23]. Q&A Session Summary Question: Clarification on cloud consumption above commitment - Management confirmed that the increased consumption was broad-based across various customers and industries, not limited to a narrow set [33]. Question: Details on a significant deal with an AI technology leader - The deal involves using JFrog as the system of record for all models, with potential future expansions into security and ML models [35][36]. Question: Guidance construction and macro impact - The company remains cautious due to market uncertainty and has derisked its guidance by excluding large deals [40][41]. Question: Customer behavior regarding cloud commitments - Customers exceeding their commitments may continue to use services but are in a rigid purchasing environment, making future commitments uncertain [52]. Question: RPO growth and deal concentration - RPO growth was broad-based, not concentrated in a few large deals, indicating strong demand across multiple customers [56]. Question: Security sales cycles and renewals - Sales cycles for security remain consistent, with renewals aligned with projections and some upselling occurring [102].