- Total Revenues of $100.3 million; up 26% Year-over-Year
- Cloud Revenues up 47% in 1Q24; driven by customer usage
- Customers with ARR Greater Than $1 million Reached 40, up 90%
Year-over-Year
- Enterprise+ Subscription Revenues Equaled $49 million; up 39%
Year-over-Year
JFrog Ltd. (“JFrog”) (Nasdaq: FROG), the Liquid Software company
and creators of the JFrog Software Supply Chain Platform, today
announced financial results for its first quarter ended March 31,
2024.
"The landscape of DevOps and security is undergoing dramatic
change, and I'm thrilled about the future prospects for JFrog. Our
platform's evolution into a comprehensive solution spanning DevOps,
DevSecOps, MLOps and MLSecOps sets a new standard in enterprise
capabilities,” stated Shlomi Ben Haim, JFrog CEO and Co-founder.
“Q1 was another quarter of strong execution as we exceeded the
high-end of our guidance measures. Growth in adoption of JFrog
Platform subscriptions - across multiple verticals and geographies
- highlights the need within organizations for a unified Software
Supply Chain Platform.”
First Quarter 2024 Financial Highlights
- Revenue for the first quarter of 2024 equaled $100.3 million,
up 26% year-over-year.
- GAAP Gross Profit was $79.7 million; GAAP Gross Margin was
79.5%.
- Non-GAAP Gross Profit was $85.3 million; Non-GAAP Gross Margin
was 85.1%.
- GAAP Operating Loss was ($16.6) million; GAAP Operating Margin
was (16.6%).
- Non-GAAP Operating Income was $14.1 million; Non-GAAP Operating
Margin was 14.0%.
- GAAP Net Loss Per Share was ($0.08); Non-GAAP Diluted Earnings
Per Share was $0.16.
- Operating Cash Flow was $17.5 million; Free Cash Flow of $16.6
million.
- Cash, Cash Equivalents and Investments were $579.6 million as
of March 31, 2024.
- Remaining performance obligations were $261.7 million as of
March 31, 2024.
Recent Business & Product Highlights
- Cloud revenue equaled $36.9 million during the first quarter of
2024, an increase of 47% year-over-year. Cloud revenue represented
37% of total revenue, compared to 31% in the year ago period.
- Net Dollar Retention rate for the trailing four quarters was
118%.
- Customers with greater than $100K ARR increased to 911,
compared with 785 in the year-ago period.
- Customers with greater than $1 million ARR increased to 40, up
from 21 in the year-ago period.
- Customers adopting the end-to-end JFrog Platform Enterprise+
subscription represented 49% of total revenue during the first
quarter of 2024 versus 44% in the year-ago period.
- Announced MLflow and Qwak MLOps platform integrations to bring
model development and packages in the software supply chain
- Announced partnership with Carahsoft to enhance public sector
channel sales
Second Quarter and Fiscal Year 2024 Outlook
- Second Quarter 2024 Outlook:
- Revenue between $103 million and $104 million
- Non-GAAP operating income between $13 million and $14
million
- Non-GAAP net income per diluted share between $0.13 and $0.15,
assuming approximately 116 million weighted average diluted shares
outstanding
- Fiscal Year 2024 Outlook:
- Revenue between $425.5 million to $429.5 million
- Non-GAAP operating income between $56 million and $58
million
- Non-GAAP net income per diluted share between $0.59 and $0.61,
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 First Quarter 2024 Financial Results Conference
Call
- Date: Thursday, May 9, 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
@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 second quarter and for
the full year of 2024, expectations regarding the market and
revenue potential for JFrog Artifactory, JFrog Xray, JFrog
Distribution, JFrog Connect, 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, 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 successfully integrate acquisitions into our business
operations, including the JFrog Platform, and realize anticipated
benefits and synergies from such acquisitions, our ability to
contribute data to global security standards bodies, and our
ability to innovate and meet market demands and the software supply
chain needs of our customers. 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 reports on Form 10-Q, 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 March
31,
2024
2023
Revenue:
Subscription—self-managed and SaaS
$
95,406
$
74,543
License—self-managed
4,905
5,277
Total subscription revenue
100,311
79,820
Cost of revenue:
Subscription—self-managed and
SaaS(1)(2)(3)
20,459
18,203
License—self-managed(3)
145
218
Total cost of revenue—subscription
20,604
18,421
Gross profit
79,707
61,399
Operating expenses:
Research and development(1)(2)
35,832
34,886
Sales and marketing(1)(2)(3)
43,571
35,486
General and administrative(1)(2)
16,940
14,240
Total operating expenses
96,343
84,612
Operating loss
(16,636
)
(23,213
)
Interest and other income, net
7,087
3,992
Loss before income taxes
(9,549
)
(19,221
)
Income tax expense (benefit)
(759
)
1,588
Net loss
$
(8,790
)
$
(20,809
)
Net loss per share - basic and diluted
$
(0.08
)
$
(0.21
)
Weighted-average shares used in computing
net loss per share, basic and diluted
107,025
101,261
(1) Includes share-based compensation
expense as follows:
Cost of revenue: subscription—self-managed
and SaaS
$
3,092
$
2,196
Research and development
9,667
7,172
Sales and marketing
9,813
6,473
General and administrative
4,714
4,071
Total share-based compensation expense
$
27,286
$
19,912
(2) Includes acquisition-related costs as
follows:
Cost of revenue: subscription–self-managed
and SaaS
$
4
$
5
Research and development
488
2,935
Sales and marketing
32
70
General and administrative
2
76
Total acquisition-related costs
$
526
$
3,086
(3) Includes amortization of acquired
intangibles as follows:
Cost of revenue: subscription–self-managed
and SaaS
$
2,386
$
2,387
Cost of revenue: license—self-managed
145
218
Sales and marketing
358
358
Total amortization of acquired intangible
assets
$
2,889
$
2,963
JFROG LTD.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(in thousands;
unaudited)
March 31, 2024
December 31, 2023
Assets
Current assets:
Cash and cash equivalents
$
71,385
$
84,765
Short-term investments
508,229
460,245
Accounts receivable, net
66,570
76,437
Deferred contract acquisition costs
11,869
11,378
Prepaid expenses and other current
assets
17,569
12,976
Total current assets
675,622
645,801
Property and equipment, net
6,473
6,663
Deferred contract acquisition costs,
noncurrent
17,727
18,032
Operating lease right-of-use assets
20,323
22,427
Intangible assets, net
22,879
25,768
Goodwill
247,955
247,955
Other assets, noncurrent
6,101
5,910
Total assets
$
997,080
$
972,556
Liabilities and Shareholders’
Equity
Current liabilities:
Accounts payable
$
14,247
$
16,970
Accrued expenses and other current
liabilities
39,597
35,815
Operating lease liabilities
8,135
8,272
Deferred revenue
198,240
201,118
Total current liabilities
260,219
262,175
Deferred revenue, noncurrent
12,972
12,987
Operating lease liabilities,
noncurrent
11,705
13,954
Other liabilities, noncurrent
4,382
4,317
Total liabilities
289,278
293,433
Shareholders’ equity:
Ordinary shares
303
297
Additional paid-in capital
1,006,865
968,245
Accumulated other comprehensive income
(loss)
(144)
1,013
Accumulated deficit
(299,222)
(290,432)
Total shareholders’ equity
707,802
679,123
Total liabilities and shareholders’
equity
$
997,080
$
972,556
JFROG LTD.
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(in thousands;
unaudited)
Three Months Ended March
31,
2024
2023
Cash flows from operating
activities:
Net loss
$
(8,790
)
$
(20,809
)
Adjustments to reconcile net loss to net
cash provided by (used in) operating activities:
Depreciation and amortization
3,799
3,847
Share-based compensation expense
27,286
19,912
Non-cash operating lease expense
2,104
2,022
Net amortization of premium or discount on
investments
(2,008
)
(1,288
)
Losses (gains) on foreign exchange
253
(367
)
Changes in operating assets and
liabilities:
Accounts receivable
9,781
(838
)
Prepaid expenses and other assets
(4,032
)
(3,114
)
Deferred contract acquisition costs
(186
)
(793
)
Accounts payable
(2,516
)
(1,086
)
Accrued expenses and other liabilities
(3,213
)
410
Operating lease liabilities
(2,116
)
(1,737
)
Deferred revenue
(2,893
)
2,712
Net cash provided by (used in) operating
activities
17,469
(1,129
)
Cash flows from investing
activities:
Purchases of short-term investments
(164,703
)
(123,216
)
Maturities and sales of short-term
investments
118,623
114,326
Purchases of property and equipment
(841
)
(266
)
Net cash used in investing activities
(46,921
)
(9,156
)
Cash flows from financing
activities:
Proceeds from exercise of share
options
6,846
1,156
Proceeds from employee share purchase
plan
4,494
3,499
Proceeds from employee equity
transactions, net of payments to tax authorities
5,255
297
Net cash provided by financing
activities
16,595
4,952
Effect of exchange rate changes on cash,
cash equivalents and restricted cash
(523
)
84
Net decrease in cash, cash equivalents,
and restricted cash
(13,380
)
(5,249
)
Cash, cash equivalents, and restricted
cash—beginning of period
84,777
45,607
Cash, cash equivalents, and restricted
cash—end of period
$
71,397
$
40,358
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
$
71,385
$
40,346
Restricted cash included in prepaid
expenses and other current assets
12
12
Total cash, cash equivalents, and
restricted cash
$
71,397
$
40,358
JFROG LTD.
RECONCILIATION OF GAAP TO
NON-GAAP RESULTS
(in thousands except per share
data; unaudited)
Three Months Ended March
31,
2024
2023
Reconciliation of gross profit and
gross margin
GAAP gross profit
$
79,707
$
61,399
Plus: Share-based compensation expense
3,092
2,196
Plus: Acquisition-related costs
4
5
Plus: Amortization of acquired
intangibles
2,531
2,605
Non-GAAP gross profit
$
85,334
$
66,205
GAAP gross margin
79.5
%
76.9
%
Non-GAAP gross margin
85.1
%
82.9
%
Reconciliation of operating
expenses
GAAP research and development
$
35,832
$
34,886
Less: Share-based compensation expense
(9,667
)
(7,172
)
Less: Acquisition-related costs
(488
)
(2,935
)
Non-GAAP research and
development
$
25,677
$
24,779
GAAP sales and marketing
$
43,571
$
35,486
Less: Share-based compensation expense
(9,813
)
(6,473
)
Less: Acquisition-related costs
(32
)
(70
)
Less: Amortization of acquired
intangibles
(358
)
(358
)
Non-GAAP sales and marketing
$
33,368
$
28,585
GAAP general and administrative
$
16,940
$
14,240
Less: Share-based compensation expense
(4,714
)
(4,071
)
Less: Acquisition-related costs
(2
)
(76
)
Non-GAAP general and
administrative
$
12,224
$
10,093
Reconciliation of operating income
(loss) and operating margin
GAAP operating loss
$
(16,636
)
$
(23,213
)
Plus: Share-based compensation expense
27,286
19,912
Plus: Acquisition-related costs
526
3,086
Plus: Amortization of acquired
intangibles
2,889
2,963
Non-GAAP operating income
$
14,065
$
2,748
GAAP operating margin
(16.6
)%
(29.1
)%
Non-GAAP operating margin
14.0
%
3.4
%
Reconciliation of net income
(loss)
GAAP net loss
$
(8,790
)
$
(20,809
)
Plus: Share-based compensation expense
27,286
19,912
Plus: Acquisition-related costs
526
3,086
Plus: Amortization of acquired
intangibles
2,889
2,963
Plus: Income tax effects
(3,938
)
778
Non-GAAP net income
$
17,973
$
5,930
Net income per share - basic
$
0.17
$
0.06
Net income per share - diluted
$
0.16
$
0.06
Shares used in non-GAAP net income per
share calculations:
GAAP weighted-average shares used to
compute net loss per share - basic and diluted
107,025
101,261
Add: Dilutive ordinary share
equivalents
7,580
5,597
Non-GAAP weighted-average shares used to
compute net income per share - diluted
114,605
106,858
JFROG LTD.
RECONCILIATION OF GAAP CASH
FLOW FROM OPERATING ACTIVITIES TO FREE CASH FLOW
(in thousands;
unaudited)
Three Months Ended March
31,
2024
2023
Net cash provided by (used in) operating
activities
$
17,469
$
(1,129
)
Less: purchases of property and
equipment
(841
)
(266
)
Free cash flow
$
16,628
$
(1,395
)
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240509945856/en/
Investor Contact: Jeff Schreiner jeffs@jfrog.com
JFrog (NASDAQ:FROG)
Historical Stock Chart
From Apr 2024 to May 2024
JFrog (NASDAQ:FROG)
Historical Stock Chart
From May 2023 to May 2024