JFrog (NasdaqGS:FROG) 2025 Conference Transcript

Financial Data and Key Metrics Changes - JFrog reported Q2 2025 revenue of $127.2 million, a year-over-year increase of 23% [6] - Cloud revenue grew 45% year-over-year to $57.1 million, now representing 45% of total revenue [6] - Remaining performance obligations (RPO) reached $477 million as of June 30, 2025, a 75% year-over-year increase [7] - The trailing four-quarter free cash flow margin is 29%, indicating strong operational efficiency [8] - The trailing four-quarter rule of 40 was 51 in Q2 2025, reflecting a balance of growth and profitability [8] Business Line Data and Key Metrics Changes - Security core products, including JFrog Curation and JFrog Advanced Security, are gaining momentum, contributing to enterprise wins [6] - At year-end 2024, security offerings represented 3% of total revenue and 5% of annual recurring revenue [7] - The enterprise customer base includes 61 customers with annual recurring revenue above $1 million, representing a 45% growth year over year [7] Market Data and Key Metrics Changes - The majority of Fortune 100 companies are JFrog customers, indicating strong market penetration [6] - The focus on operational efficiency has led to a 16.3% operating margin during the first half of 2025, an increase of over 1,500 basis points since fiscal year-end 2022 [7] Company Strategy and Development Direction - JFrog aims to unify the software supply chain, positioning itself at the intersection of software development, security, and AI [5] - The company is forming strategic partnerships with major players like NVIDIA and Microsoft GitHub to enhance its offerings [8] - JFrog is focusing on maturing partnerships and expanding its platform into compliance, agentic AI, and model security [9] Management's Comments on Operating Environment and Future Outlook - Management emphasized the importance of a foundational platform for enterprises to manage software supply chains, especially in the context of AI and ML [5] - The company is optimistic about future growth driven by cloud expansion and rising demand for unified security solutions [9] - Management acknowledged the challenges of AI adoption, including cost predictability and trust issues, but remains positive about the future [46] Other Important Information - JFrog's focus on DevOps, security, and MLOps aligns with modern software demands, driving consistent business growth [8] - The company is transitioning to a hybrid model, allowing flexibility for customers in their cloud and on-premise needs [73] Q&A Session Summary Question: How do the recent announcements impact business growth? - Management clarified that the announcements are not in a specific order of impact, with a focus on gradual adoption and integration into the JFrog Platform [41] Question: What are the challenges customers face in adopting AI? - Key challenges include cost predictability, trust in AI, and regulatory issues, which JFrog aims to address through its offerings [46] Question: How does the pace of software updates change with AI? - The pace of releases is expected to accelerate due to AI agents augmenting developer capabilities, leading to more frequent updates [51] Question: What is the strategy for integrating new products like FLY? - FLY is designed to run on top of the JFrog Platform, with plans for gradual integration to enhance the developer experience [58] Question: How will new security bundles drive conversion from existing products? - New bundles are designed to simplify the transition for customers currently using Xray, with a focus on providing value through integrated solutions [82]