- Total Revenues of $103.0 million; up 22% Year-over-Year
- Cloud Revenues up 42% Year-over-Year
- Customers with ARR Greater than $1 million equaled 42, up 75%
Year-over-Year
- Enterprise+ Subscription Revenues Equaled $51 million; up 35%
Year-over-Year
- Partnership with GitHub offering a unified best of breed
Platform experience
- Acquired Qwak AI; Expanding the JFrog Platform to include
MLOps
JFrog Ltd. (“JFrog”) (Nasdaq: FROG), the Liquid Software company
and creators of the JFrog Software Supply Chain Platform, today
announced financial results for its second quarter ended June 30,
2024.
"We are on a mission to revolutionize the software industry with
a unified platform that encompasses EveryOps and streamlines the
software supply chain flow," said Shlomi Ben Haim, Co-founder and
CEO of JFrog. "With the innovative power of our Qwak AI
acquisition, JFrog proudly stands as the first to support DevOps,
Security, and MLOps in a single platform. We are committed to
providing a solution that fosters seamless collaboration among
machines, developers, and data scientists," Ben Haim added.
Second Quarter 2024 Financial Highlights
- Revenue for the second quarter of 2024 equaled $103.0 million,
up 22% year-over-year.
- GAAP Gross Profit was $81.2 million; GAAP Gross Margin was
78.8%.
- Non-GAAP Gross Profit was $86.9 million; Non-GAAP Gross Margin
was 84.4%.
- GAAP Operating Loss was ($19.1) million; GAAP Operating Margin
was (18.6%).
- Non-GAAP Operating Income was $13.6 million; Non-GAAP Operating
Margin was 13.2%.
- GAAP Net Loss Per Share was ($0.13); Non-GAAP Diluted Earnings
Per Share was $0.15.
- Operating Cash Flow was $16.7 million; Free Cash Flow of $16.0
million.
- Cash, Cash Equivalents and Investments were $591.3 million as
of June 30, 2024.
- Remaining performance obligations were $272.0 million as of
June 30, 2024.
Recent Business & Product Highlights
- Cloud revenue equaled $39.3 million during the second quarter
of 2024, an increase of 42% year-over-year. Cloud revenue
represented 38% of total revenue, compared to 33% in the year-ago
period.
- Net Dollar Retention rate for the trailing four quarters was
118%.
- Customers with greater than $100K ARR increased to 928,
compared with 813 in the year-ago period.
- Customers with greater than $1 million ARR increased to 42, up
from 24 in the year-ago period.
- Customers adopting the end-to-end JFrog Platform Enterprise+
subscription represented 50% of total revenue during the second
quarter of 2024 versus 45% in the year-ago period.
- Announced Microsoft GitHub and JFrog Platform integrations
bringing seamless navigation between source code and binaries.
- Announced the acquisition of Qwak MLOps platform and intent to
integrate into the JFrog Platform.
Third Quarter and Fiscal Year 2024 Outlook
- Third Quarter 2024 Outlook:
- Revenue between $105 million and $106 million
- Non-GAAP operating income between $10 million and $11
million
- Non-GAAP net income per diluted share between $0.09 and $0.11,
assuming approximately 115 million weighted average diluted shares
outstanding
- Fiscal Year 2024 Outlook:
- Revenue between $422 million to $424 million
- Non-GAAP operating income between $52 million and $54
million
- Non-GAAP net income per diluted share between $0.54 and $0.56,
assuming approximately 116 million weighted average diluted shares
outstanding
The section titled "Non-GAAP Financial Information" below
describes our usage of non-GAAP financial measures. Reconciliations
between historical GAAP and non-GAAP information are contained at
the end of this press release following the accompanying financial
data.
Conference Call Details
- Event: JFrog’s Second Quarter 2024 Financial Results Conference
Call
- Date: Wednesday, August 7, 2024
- Time: 2:00 p.m. PT (5:00 p.m. ET)
A live webcast of the conference call will be accessible from
the investor relations website at
https://investors.jfrog.com/events-and-presentations.
About JFrog
JFrog Ltd. (Nasdaq: FROG), is on a mission to create a world of
software delivered without friction from developer to device.
Driven by a “Liquid Software” vision, the JFrog Software Supply
Chain Platform is a single system of record that powers
organizations to build, manage, and distribute software quickly and
securely, ensuring it is available, traceable, and tamper-proof.
The integrated security features also help identify, protect, and
remediate against threats and vulnerabilities. JFrog’s hybrid,
universal, multi-cloud platform is available as both self-hosted
and SaaS services across major cloud service providers. Millions of
users and 7K+ customers worldwide, including a majority of the
Fortune 100, depend on JFrog solutions to securely embrace digital
transformation. Learn more at www.jfrog.com or follow us on X
@JFrog.
Forward-Looking Statements:
This press release and the earnings call referencing this press
release contain “forward-looking” statements, as that term is
defined under the U.S. federal securities laws, including but not
limited to statements regarding JFrog’s future financial
performance, including our outlook for the third quarter and for
the full year of 2024, expectations regarding the market and
revenue potential for JFrog Artifactory, JFrog Xray, JFrog Curation
and JFrog Advanced Security, including the efficacy and benefit of
integrating of any of the foregoing with other products and
platform, our expectations regarding the mission-critical nature of
the “JFrog Software Supply Chain Platform” to our customers’
infrastructure and its growth potential, the growth potential of
our cloud business, including hybrid and multi-cloud, our
expectations regarding potential for growth in binary management
within MLOps/MLSecOps, our ability to provide effective tools and
solutions to detect and remediate security vulnerabilities, the
ability of our strategic sales team to grow the business across
top-tier accounts, our ability to expand usage of our platform in
the government and commercial sectors, our ability to contribute
data to global security standards bodies, our ability to innovate
and meet market demands and the software supply chain needs of our
customers and our expectations regarding the acquisition of Qwak AI
by us, including our ability to successfully integrate the
acquisition into our business operations, including the DevOps
platform, and realize anticipated benefits and synergies from the
proposed acquisition. These forward-looking statements are based on
JFrog’s current assumptions, expectations and beliefs and are
subject to substantial risks, uncertainties, assumptions and
changes in circumstances that may cause JFrog’s actual results,
performance or achievements to differ materially from those
expressed or implied in any forward-looking statement.
There are a significant number of factors that could cause
actual results to differ materially from statements made in this
press release and our earnings call, including but not limited to:
risks associated with managing our rapid growth; our history of
losses; our limited operating history; our ability to retain and
upgrade existing customers our ability to attract new customers;
our ability to effectively develop and expand our sales and
marketing capabilities; our ability to integrate and realize
anticipated synergies from acquisitions of complementary
businesses; risk of a security breach incident or product
vulnerability; risk of interruptions or performance problems
associated with our products and platform capabilities; our ability
to adapt and respond to rapidly changing technology or customer
needs; our ability to compete in the markets in which we
participate; our ability to successfully integrate technology from
acquisitions into our offerings; our ability to provide continuity
to our respective customers and realize innovation following our
acquisitions; and general market, political, economic, and business
conditions. Our actual results could differ materially from those
stated or implied in forward-looking statements due to a number of
factors, including but not limited to, risks detailed in our
filings with the Securities and Exchange Commission, including in
our annual report on Form 10-K for the year ended December 31,
2023, our quarterly report on Form 10-Q for the quarter ended March
31, 2024, and other filings and reports that we may file from time
to time with the Securities and Exchange Commission.
Forward-looking statements represent our beliefs and assumptions
only as of the date of this press release. We disclaim any
obligation to update forward-looking statements.
About Non-GAAP Financial Measures:
JFrog discloses the following non-GAAP financial measures in
this release and the earnings call referencing this press release:
non-GAAP operating income (loss), non-GAAP gross profit, non-GAAP
gross margin, non-GAAP operating expenses (research and
development, sales and marketing, general and administrative),
non-GAAP operating margin, non-GAAP net income (loss), non-GAAP net
income (loss) per diluted share, non-GAAP net income (loss) per
basic share, and free cash flow. JFrog uses each of these non-GAAP
financial measures internally to understand and compare operating
results across accounting periods, for internal budgeting and
forecasting purposes, for short- and long-term operating plans, and
to evaluate JFrog’s financial performance. JFrog believes they are
useful to investors, as a supplement to GAAP measures, in
evaluating its operational performance, as further discussed below.
JFrog’s non-GAAP financial measures may not provide information
that is directly comparable to that provided by other companies in
its industry, as other companies in its industry may calculate
non-GAAP financial results differently, particularly related to
non-recurring and unusual items. In addition, there are limitations
in using non-GAAP financial measures because the non-GAAP financial
measures are not prepared in accordance with GAAP and may be
different from non-GAAP financial measures used by other companies
and exclude expenses that may have a material impact on JFrog’s
reported financial results.
Non-GAAP financial measures should not be considered in
isolation from, or as a substitute for, financial information
prepared in accordance with GAAP. A reconciliation of the
historical non-GAAP financial measures to their most directly
comparable GAAP measures has been provided in the financial
statement tables included below in this press release. A
reconciliation of non-GAAP guidance measures to corresponding GAAP
measures is not available on a forward-looking basis without
unreasonable effort due to the uncertainty regarding, and the
potential variability of, reconciling items that may be incurred in
the future such as share-based compensation, the effect of which
may be significant.
JFrog defines non-GAAP gross profit, non-GAAP operating expenses
(research and development, sales and marketing, general and
administrative), non-GAAP gross margin, non-GAAP operating margin,
non-GAAP operating income (loss) and non-GAAP net income (loss) as
the respective GAAP balances, adjusted for, as applicable: (1)
share-based compensation expense; (2) the amortization of acquired
intangibles; (3) acquisition-related costs; and (4) income tax
effects. JFrog defines free cash flow as Net cash provided by (used
in) operating activities, minus capital expenditures. Investors are
encouraged to review the reconciliation of these historical
non-GAAP financial measures to their most directly comparable GAAP
financial measures.
Management believes these non-GAAP financial measures are useful
to investors and others in assessing JFrog’s operating performance
due to the following factors:
Share-based compensation. JFrog utilizes share-based
compensation to attract and retain employees. It is principally
aimed at aligning their interests with those of its shareholders
and at long-term retention, rather than to address operational
performance for any particular period. As a result, share-based
compensation expenses vary for reasons that are generally unrelated
to financial and operational performance in any particular
period.
Amortization of acquired intangibles. JFrog views amortization
of acquired intangible assets as items arising from pre-acquisition
activities determined at the time of an acquisition. While these
intangible assets are evaluated for impairment regularly,
amortization of the cost of acquired intangibles is an expense that
is not typically affected by operations during any particular
period.
Acquisition-related costs. Acquisition-related costs include
expenses related to acquisitions of other companies. JFrog views
acquisition-related costs as expenses that are not necessarily
reflective of operational performance during a period.
Income tax effects. JFrog’s non-GAAP financial results are
adjusted for income tax effects related to these non-GAAP
adjustments and changes in our assessment regarding the
realizability of our deferred tax assets, if any. Excluding income
tax effects of non-GAAP adjustments provides a more accurate view
of JFrog’s operating results.
Non-GAAP weighted average share count. Diluted GAAP and non-GAAP
weighted-average shares are the same, except in periods that there
is a GAAP loss and a non-GAAP income. The non-GAAP weighted-average
shares used to compute the non-GAAP net income per share - diluted
are adjusted to reflect dilution equal to the dilutive impact had
there been GAAP income.
Additionally, JFrog’s management believes that the non-GAAP
financial measure, free cash flow, is meaningful to investors
because management reviews cash flows generated from operations
after taking into consideration capital expenditures due to the
fact that these expenditures are considered to be a necessary
component of ongoing operations.
Operating Metrics
JFrog’s number of customers with annual recurring revenue
(“ARR”) of $100,000 or more is based on the ARR of each customer,
as of the last month of the quarter. JFrog’s number of customers
with ARR of $1 million or more is based on the ARR of each
customer, as of the last month of the quarter. JFrog defines ARR as
the annualized revenue run-rate of subscription agreements from all
customers as of the last month of the quarter. The ARR includes
monthly subscription customers, so long as JFrog generates revenue
from these customers. JFrog annualizes its monthly subscriptions by
taking the revenue it would contractually expect to receive from
such customers in a given month and multiplying it by 12.
JFrog’s net dollar retention rate compares its ARR from the same
set of customers across comparable periods. JFrog calculates net
dollar retention rate by first identifying customers (the “Base
Customers”), which were customers in the last month of a particular
quarter (the “Base Quarter”). JFrog then calculates the contracted
ARR from these Base Customers in the last month of the same quarter
of the subsequent year (the “Comparison Quarter”). This calculation
captures upsells, contraction, and attrition since the Base
Quarter. JFrog then divides total Comparison Quarter ARR by total
Base Quarter ARR for Base Customers. JFrog’s net dollar retention
rate in a particular quarter is obtained by averaging the result
from that particular quarter with the corresponding results from
each of the prior three quarters.
JFROG LTD.
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
(in thousands, except per
share data; unaudited)
Three Months Ended June
30,
Six Months Ended June
30,
2024
2023
2024
2023
Revenue:
Subscription—self-managed and SaaS
$
98,404
$
79,467
$
193,810
$
154,010
License—self-managed
4,639
4,703
9,544
9,980
Total subscription revenue
103,043
84,170
203,354
163,990
Cost of revenue:
Subscription—self-managed and
SaaS(1)(2)(3)
21,748
18,231
42,207
36,434
License—self-managed(3)
145
218
290
436
Total cost of revenue—subscription
21,893
18,449
42,497
36,870
Gross profit
81,150
65,721
160,857
127,120
Operating expenses:
Research and development(1)(2)
37,117
33,544
72,949
68,430
Sales and marketing(1)(2)(3)
45,896
36,352
89,467
71,838
General and administrative(1)(2)
17,264
14,732
34,204
28,972
Total operating expenses
100,277
84,628
196,620
169,240
Operating loss
(19,127
)
(18,907
)
(35,763
)
(42,120
)
Interest and other income, net
6,898
4,896
13,985
8,888
Loss before income taxes
(12,229
)
(14,011
)
(21,778
)
(33,232
)
Income tax expense
2,074
1,456
1,315
3,044
Net loss
$
(14,303
)
$
(15,467
)
$
(23,093
)
$
(36,276
)
Net loss per share, basic and diluted
$
(0.13
)
$
(0.15
)
$
(0.21
)
$
(0.36
)
Weighted-average shares used in computing
net loss per share, basic and diluted
108,945
102,513
107,985
101,890
(1) Includes share-based compensation
expense as follows:
Cost of revenue: subscription—self-managed
and SaaS
$
3,247
$
2,019
$
6,339
$
4,215
Research and development
10,175
7,798
19,842
14,970
Sales and marketing
10,440
6,740
20,253
13,213
General and administrative
4,794
4,765
9,508
8,836
Total share-based compensation expense
$
28,656
$
21,322
$
55,942
$
41,234
(2) Includes acquisition-related costs as
follows:
Cost of revenue: subscription–self-managed
and SaaS
$
4
$
5
$
8
$
10
Research and development
489
2,745
977
5,680
Sales and marketing
32
—
64
70
General and administrative
674
64
676
140
Total acquisition-related costs
$
1,199
$
2,814
$
1,725
$
5,900
(3) Includes amortization of acquired
intangibles as follows:
Cost of revenue: subscription–self-managed
and SaaS
$
2,386
$
2,387
$
4,772
$
4,774
Cost of revenue: license—self-managed
145
218
290
436
Sales and marketing
358
358
716
716
Total amortization expense of acquired
intangible assets
$
2,889
$
2,963
$
5,778
$
5,926
JFROG LTD.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(in thousands;
unaudited)
June 30, 2024
December 31, 2023
Assets
Current assets:
Cash and cash equivalents
$
218,303
$
84,765
Short-term investments
373,013
460,245
Accounts receivable, net
82,041
76,437
Deferred contract acquisition costs
12,662
11,378
Prepaid expenses and other current
assets
17,169
12,976
Total current assets
703,188
645,801
Property and equipment, net
6,529
6,663
Deferred contract acquisition costs,
noncurrent
18,316
18,032
Operating lease right-of-use assets
18,372
22,427
Intangible assets, net
19,990
25,768
Goodwill
247,955
247,955
Other assets, noncurrent
6,793
5,910
Total assets
$
1,021,143
$
972,556
Liabilities and Shareholders’
Equity
Current liabilities:
Accounts payable
$
16,222
$
16,970
Accrued expenses and other current
liabilities
39,958
35,815
Operating lease liabilities
8,109
8,272
Deferred revenue
205,501
201,118
Total current liabilities
269,790
262,175
Deferred revenue, noncurrent
15,822
12,987
Operating lease liabilities,
noncurrent
9,651
13,954
Other liabilities, noncurrent
4,447
4,317
Total liabilities
299,710
293,433
Shareholders’ equity:
Share capital
308
297
Additional paid-in capital
1,036,377
968,245
Accumulated other comprehensive income
(loss)
(1,727
)
1,013
Accumulated deficit
(313,525
)
(290,432
)
Total shareholders’ equity
721,433
679,123
Total liabilities and shareholders’
equity
$
1,021,143
$
972,556
JFROG LTD.
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(in thousands;
unaudited)
Three Months Ended June
30,
Six Months Ended June
30,
2024
2023
2024
2023
Cash flows from operating
activities:
Net loss
$
(14,303
)
$
(15,467
)
$
(23,093
)
$
(36,276
)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation and amortization
3,826
3,828
7,625
7,675
Share-based compensation expense
28,656
21,322
55,942
41,234
Non-cash operating lease expense
2,115
2,123
4,219
4,145
Net amortization of premium or discount on
investments
(1,738
)
(1,582
)
(3,746
)
(2,870
)
Losses (gains) on foreign exchange
101
(224
)
354
(591
)
Changes in operating assets and
liabilities:
Accounts receivable
(15,336
)
617
(5,555
)
(221
)
Prepaid expenses and other assets
(986
)
1,153
(5,018
)
(1,961
)
Deferred contract acquisition costs
(1,382
)
(801
)
(1,568
)
(1,594
)
Accounts payable
1,579
(827
)
(937
)
(1,913
)
Accrued expenses and other liabilities
6,105
2,620
2,892
3,030
Operating lease liabilities
(2,051
)
(2,033
)
(4,167
)
(3,770
)
Deferred revenue
10,111
5,981
7,218
8,693
Net cash provided by operating
activities
16,697
16,710
34,166
15,581
Cash flows from investing
activities:
Purchases of short-term investments
(91,240
)
(81,356
)
(255,943
)
(204,572
)
Maturities and sales of short-term
investments
227,160
68,845
345,783
183,171
Purchases of property and equipment
(732
)
(507
)
(1,573
)
(773
)
Net cash provided by (used in) investing
activities
135,188
(13,018
)
88,267
(22,174
)
Cash flows from financing
activities:
Proceeds from exercise of share
options
861
2,211
7,707
3,367
Proceeds from employee share purchase
plan
—
—
4,494
3,499
Proceeds from employee equity
transactions, net of payments to tax authorities
(5,534
)
520
(279
)
817
Net cash provided by (used in) financing
activities
(4,673
)
2,731
11,922
7,683
Effect of exchange rate changes on cash,
cash equivalents and restricted cash
(294
)
(75
)
(817
)
9
Net increase in cash, cash equivalents,
and restricted cash
146,918
6,348
133,538
1,099
Cash, cash equivalents, and restricted
cash—beginning of period
71,397
40,358
84,777
45,607
Cash, cash equivalents, and restricted
cash—end of period
$
218,315
$
46,706
$
218,315
$
46,706
Reconciliation of cash, cash
equivalents, and restricted cash within the Condensed Consolidated
Balance Sheets to the amounts shown in the Condensed Consolidated
Statements of Cash Flows above:
Cash and cash equivalents
$
218,303
$
46,694
$
218,303
$
46,694
Restricted cash included in prepaid
expenses and other current assets
12
12
12
12
Total cash, cash equivalents, and
restricted cash
$
218,315
$
46,706
$
218,315
$
46,706
JFROG LTD.
RECONCILIATION OF GAAP TO
NON-GAAP RESULTS
(in thousands except per share
data; unaudited)
Three Months Ended June
30,
Six Months Ended June
30,
2024
2023
2024
2023
Reconciliation of gross profit and
gross margin
GAAP gross profit
$
81,150
$
65,721
$
160,857
$
127,120
Plus: Share-based compensation expense
3,247
2,019
6,339
4,215
Plus: Acquisition-related costs
4
5
8
10
Plus: Amortization of acquired
intangibles
2,531
2,605
5,062
5,210
Non-GAAP gross profit
$
86,932
$
70,350
$
172,266
$
136,555
GAAP gross margin
78.8
%
78.1
%
79.1
%
77.5
%
Non-GAAP gross margin
84.4
%
83.6
%
84.7
%
83.3
%
Reconciliation of operating
expenses
GAAP research and development
$
37,117
$
33,544
$
72,949
$
68,430
Less: Share-based compensation expense
(10,175
)
(7,798
)
(19,842
)
(14,970
)
Less: Acquisition-related costs
(489
)
(2,745
)
(977
)
(5,680
)
Non-GAAP research and
development
$
26,453
$
23,001
$
52,130
$
47,780
GAAP sales and marketing
$
45,896
$
36,352
$
89,467
$
71,838
Less: Share-based compensation expense
(10,440
)
(6,740
)
(20,253
)
(13,213
)
Less: Acquisition-related costs
(32
)
—
(64
)
(70
)
Less: Amortization of acquired
intangibles
(358
)
(358
)
(716
)
(716
)
Non-GAAP sales and marketing
$
35,066
$
29,254
$
68,434
$
57,839
GAAP general and administrative
$
17,264
$
14,732
$
34,204
$
28,972
Less: Share-based compensation expense
(4,794
)
(4,765
)
(9,508
)
(8,836
)
Less: Acquisition-related costs
(674
)
(64
)
(676
)
(140
)
Non-GAAP general and
administrative
$
11,796
$
9,903
$
24,020
$
19,996
Reconciliation of operating income
(loss) and operating margin
GAAP operating loss
$
(19,127
)
$
(18,907
)
$
(35,763
)
$
(42,120
)
Plus: Share-based compensation expense
28,656
21,322
55,942
41,234
Plus: Acquisition-related costs
1,199
2,814
1,725
5,900
Plus: Amortization of acquired
intangibles
2,889
2,963
5,778
5,926
Non-GAAP operating income
$
13,617
$
8,192
$
27,682
$
10,940
GAAP operating margin
(18.6
)%
(22.5
)%
(17.6
)%
(25.7
)%
Non-GAAP operating margin
13.2
%
9.7
%
13.6
%
6.7
%
Reconciliation of net income
(loss)
GAAP net loss
$
(14,303
)
$
(15,467
)
$
(23,093
)
$
(36,276
)
Plus: Share-based compensation expense
28,656
21,322
55,942
41,234
Plus: Acquisition-related costs
1,199
2,814
1,725
5,900
Plus: Amortization of acquired
intangibles
2,889
2,963
5,778
5,926
Less: Income tax effects
(980
)
460
(4,918
)
1,238
Non-GAAP net income
$
17,461
$
12,092
$
35,434
$
18,022
Net income per share - basic
$
0.16
$
0.12
$
0.33
$
0.18
Net income per share - diluted
$
0.15
$
0.11
$
0.31
$
0.17
Shares used in non-GAAP net income per
share calculations:
GAAP weighted-average shares used to
compute net loss per share - basic and diluted
108,945
102,513
107,985
101,890
Add: Dilutive ordinary share
equivalents
6,249
5,580
6,915
5,589
Non-GAAP weighted-average shares used to
compute net income per share - diluted
115,194
108,093
114,900
107,479
JFROG LTD.
RECONCILIATION OF GAAP CASH
FLOW FROM OPERATING ACTIVITIES TO FREE CASH FLOW
(in thousands;
unaudited)
Three Months Ended June
30,
Six Months Ended June
30,
2024
2023
2024
2023
Net cash provided by operating
activities
$
16,697
$
16,710
$
34,166
$
15,581
Less: purchases of property and
equipment
(732
)
(507
)
(1,573
)
(773
)
Free cash flow
$
15,965
$
16,203
$
32,593
$
14,808
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240807606549/en/
Investor Contact: Jeff Schreiner jeffs@jfrog.com
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