JFrog(US:FROG)2025-08-07 22:00Financial Data and Key Metrics Changes - JFrog's total revenue for Q2 2025 was $127.2 million, representing a 23% year-over-year increase [5][18] - Operating margin improved to 15.2%, up from 13.2% in the previous year [6][21] - Cloud revenue reached $57.1 million, a 45% increase year-over-year, accounting for 45% of total revenue compared to 38% in the prior year [6][18] - Net dollar retention rate for the trailing four quarters was 118%, up two points sequentially [20] - Free cash flow for Q2 was $35.5 million, or a 28% margin, compared to $16 million, or a 15% margin, in the year-ago period [22] Business Line Data and Key Metrics Changes - Cloud revenue growth was driven by increased annual commitments and the adoption of security products [18][19] - Self-managed or on-premises revenues were $70.1 million, up 10% year-over-year [19] - Revenue contribution from Enterprise Plus subscriptions grew to 55% of total revenues, up from 50% in the prior year [19] Market Data and Key Metrics Changes - JFrog's RPO (Remaining Performance Obligations) totaled $476.7 million, a 75% increase year-over-year, benefiting from multi-year commitments [22] - The company noted a strategic shift in customer infrastructure towards hybrid solutions due to the unpredictable costs associated with AI [10][11] Company Strategy and Development Direction - JFrog aims to become the system of record for all software packages, focusing on DevOps, security, and MLOps [7][12] - The company is deepening partnerships with AI industry leaders and expanding support for the AI ecosystem [13][14] - JFrog is positioning itself as a model registry for AI, emphasizing the importance of a unified software supply chain [13][51] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's alignment with modern software demands and the ongoing growth in cloud and security solutions [8][11] - The company is cautious about future guidance due to macroeconomic uncertainties but expects continued growth in cloud commitments and security adoption [23][25] - Management highlighted the resilience of the team amid external challenges, reinforcing the strength of the business [26][27] Other Important Information - JFrog will hold its Annual User Conference on September 9, 2025, to announce new products and strategic partnerships [17] - The company is committed to addressing emerging security threats associated with AI and MCP (Model-Centric Programming) [14][100] Q&A Session Summary Question: Can you discuss the evolution of customer hesitations regarding self-managed data centers? - Management noted that customers are rethinking their cloud strategies due to the unpredictability of AI costs, leading to a more cautious approach to cloud migration [34][35] Question: How has the sunsetting of JFrog Pipeline affected partnerships with CI/CD players? - The decision to sunset JFrog Pipeline has allowed for better integration and partnerships with companies like GitHub, focusing on security and cloud migration [38][39] Question: Can you provide insights into the pipeline of large enterprise deals? - Management highlighted a focus on migrating workloads to the cloud and the addition of security solutions as key factors driving large enterprise deals [43][45] Question: What impact have AI coding tools had on the DevOps toolchain? - The introduction of code assistance tools has changed the developer landscape, increasing the need for a model registry and security solutions [85][88] Question: How is JFrog leveraging hyperscaler partnerships for co-selling? - Collaboration with cloud providers is crucial for accelerating deals and optimizing costs, with strong relationships established with AWS, GCP, and Microsoft Azure [78][79] Question: What is the outlook for security's contribution to JFrog's business? - Management plans to provide metrics around security's contribution and sees strong momentum in this area [92]