Earnings call transcript Q2 2023

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Jeffrey Schreiner

Good afternoon, and thank you for joining us as we review JFrog's Second Quarter 2023 Financial Results, which were announced following market close today via press release. Leading the call today will be JFrog's CEO and Co-Founder, Shlomi Haim; and Jacob Shulman, JFrog's CFO.

During this call, we may make statements related to our business that are forward-looking under federal security laws and are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, including statements related to our future financial performance, including our outlook for Q3 and the full year of 2023.

The words anticipate, believe, continue, estimate, expect, intend, will and similar expressions are intended to identify forward-looking statements or similar indications of future expectations.

You are cautioned not to place undue reliance on these forward-looking statements, which reflect our views only as of today and not as of any subsequent date. of that release not revision the forward-looking in mind revise ourselves to in future statements publicly or or results light keep we obligating are to these events. Please information new of any These and that statements differ from could risks to uncertainties expectations. results are a actual of to materially subject variety cause

filed For could Form results, XXXX, actual to website our the affect XX-K release December today. press of the with please available risks ended issued Investor earnings Relations other and February which material discussion section on our a important of that year for X, our factors SEC is the earlier the refer and XX, XXXX, on

XX, may will reports available Additional be XXXX, from XX-Q file in other made for filings to SEC. that Form the and time ended with we information our and time March the quarter

financial Additionally, measures discussed call. conference be non-GAAP on will this

reconciliation Relations used be for limited for to, of measures, the These measures their will JFrog's our of available as tables call financial isolation most in JFrog in or measures. A of as GAAP to a a performance those Please not GAAP from which refer non-GAAP measures. to addition in a are replay this measures earnings considered be the on directly website release for comparable Investor to financial time. substitute

to call that, CEO, Shlomi JFrog's With Shlomi? the Haim. like over to I'd turn

Shlomi Haim

joining exceeded the to JFrog our us. of increased Thank you, of our and consumption, by happy for driven quarter Platform. Supply everyone. solutions Chain continued Jeff. guidance cloud I'm you security afternoon, that thank Software the prior JFrog Good report And second adoption revenue expansion

we usage accelerate was XX% million revenue reflecting of increasing year-over-year $XX.X as growth. revenues continue Cloud Our delivering million year-over-year. $XX.X XXXX XX% Second quarter to expected at

core year versus in XXXX, period, to to guidance grew year-over-year. ago non-GAAP increasing in a the Customers quarter with ARR Customers investing while million the still $X profitability of ago million in year up XXX exceeded $XXX,XXX XX period. XXX XX second also profit compared to compared $XX.X ARR team. the over our our XX% with We with over XX% increase of

that three and DevOps, IoT reflect for of JFrog our to security critical our hold that results the be platform infrastructure pillars strategic as and prioritized These value continues customers.

expand me for another made on what Let QX JFrog. strong quarter

are recognize begin Let's Advanced for other organizations multiple adoption Security and offerings. among ongoing software security JFrog capabilities, alongside security, detection, secret that security analysis, Most the code such DevSecOps with in JFrog contextual analysis, solutions. container the included of other composition infrastructures, JFrog as leaks, features key need

As we comprehensive noted chain in we our together security as across of the supply capabilities a have provide ambitious solution. to end to set bundled software previous a consolidated call, goals end with

I'm in market. pleased in market, We point believe report outpace since short displace automation Security their of of the not serves of Artifactory because integration advanced with as software gaining only the in indicated record. for and market, but this in we and this solutions tens source DevSecOps enthusiasm single the the gained native of will to Advanced scanners to customers added customers Advanced that subscriptions the the capability that packages, period also is Security the our of have already availability momentum that the approach JFrog that

release. excited that recent product security I'm our On note, mention to

original less know and world, know, Many often instead, over development the the obtain critical as to these of As libraries internet being software of to And open repositories in from speed in up and more binaries and containers, estimates source XX% are often is we software cash industry open public comprised code. packages, all features. developers from add that binaries, to industry being the is our written outside source. brought time, less

compliance and While security teams form in composition organization. dependency to understanding and wants developers may fast the security a software's management. This move creates of who clear and risk unknowingly add want who between of and be to friction faster, these developers entering don't practices the the vulnerabilities compromise can require

availability entering and Curation packages was a our them. Curation, and which open is with entering the tools automatically centrally build Security and partnering as everything further malicious components by build licenses chain. enterprise of organization. look ever announce ago teams Curation seamlessly source organization. already compromising fence In the happening the is the organization JFrog and ever security stop We prevents natively before or JFrog solution JFrog and malicious from proud to mid-July. in automatically of shifted checks entering development the protect organization now XRAY the across Many to apply and of scale JFrog policy add-ons to community. for are weeks forward to defined software released and the and curation an at exploring the organizations. our few subscriptions. with source the general class open factory within chain, and offered has partnership supply JFrog basic we from unvalidated customers software Advanced X to be global process enterprise Curation without Policies left supply a software security of them to I'm software the the This automates integrated companies around even JFrog can violating begins.

delivering users to over to solution that all control JFrog Our on an software of binaries. by gain organization's lifecycle focuses the is the goal of highest a level and consolidated development enable visibility

millions database in We hybrid products bring security multi and by suite which will JFrog, all innovative the of JFrog already DevOps. are available versions. the market solutions cloud joins to Curation continue offered and with of them security to of coupled served which the Artifactory as

is to I address critical which complete uniquely every flow JFrog for JFrog enterprise. the want of consolidation on as software Next, and the expansion positions customers flow The tooling supply chain platform. binaries, mission

binary centric tooling pipelines for operations the As see around streamline their customers security. them and continue to our both we platform, DevOps with consolidating

pharmaceutical top XXXX example, Fortune of a For container decision five healthcare companies management made retail QX services. from in migrate away cloud one of Google's the to and XXX

development platform, the a team registries of complete QX point our in repository months consolidating package some began year, platform. solutions. proof-of-concept And and the few later, Only the one next to they that management, to pipeline under this they as of security the multiple successfully with consolidation was solution JFrog container completed binary explore of

As a platform. composition capabilities other exploring proof-of-concept, consolidation decided customers move strategi now as from to software cover security result part are the to of JFrog of JFrog around needs, this to and the JFrog’s Snyk analysis a standardization and away

expect and core could and save up of dollars developer to for with of the developers flow. hours platform security could expect efficiency conducted JFrog, our millions macro investing defend our a the Force across productivity XXX potentially this by binary a XX three per findings recent in These value report XXXXs consolidation through eye nearly could JFrog’s Forrester months. across customers [inaudible] organization commissioned in will years, a AI JFrog enterprises XX an of study that the and to In XXs utilizing per their of save to results by We of JFrog year, some automation study, and when the and in continue trend of control enterprise tooling business imperative, costs consolidation reflects improving of believe be both tooling and XXX platform. type DevSecOps that organizations over DevOps found reflect

integration industry chain vision. another and to Forrester JFrog that to quote, the technological this value enterprises supply ways reduce across on the platform noted them At great in place fulfill portfolio time, that, Customers are for same JFrog recent discover costs. allows looking report to high is software security. the And

organizations to see a security in ago, multi want and focus When solution source more. phrase. languages, years not security, first of distribution the are management, And deployments, our entered developers programming technologies, When we as multiple three platform high today, goals a cloud DevSecOps across first market, DevOps tasked software native infancy. the JFrog enterprise and with few we introduced cloud subscriptions. open even now and the its development ongoing I was our adoption on was value XRAY JFrog

stay into updated XXs growing connected With no the of the billions, number that boundaries. truly software of devices has must

continue We see trusting customers delivery. with to this software boundless JFrog

revolutionize to inventories. medical they innovative to of help and an devices, leading aim medical a company inorganic them with processes biopharmaceutical connected supply example, staff Using and hospitals software how combination For and turns simplify a medical approach. organic JFrog consume to trace and

fleet the first guarantee security driven sensor the and to integrity JFrog considered over a solution. extensive the Looking They the management network of update, field. as of in and for the air software Connect devices

change to benefits their an Partnering Security Advanced upon mitigating repository, they system JFrog moving software developers helped of of software platform. And DevSecOps such chain to single attacks, industry to with way the platform Artifactory record. consolidate JFrog XRY, with thinks adopt every and JFrog binary this from the universal look a them the and JFrog edge. realizing to companies a supply managing and as as working for DevOps as distributed around we of decided secure forward However, forward to delivering

software I solutions view impact of for platform, generating JFrog potential and of artificial to the within chain technologies Now, like supply would address individual intelligence our security developers.

powered and that's increase machines. number noted, software believe by within binaries that will the a the [inaudible] of organizations, As we’ve increase developers we of leading being an from code business drastically AI generated perspective, overall previously created in to or

our we software builds look enterprise forward be chain supply which platform, equals to AI more continues advances. alongside huge for a in with equal binaries, to opportunity JFrog helping driven As the more More management, scale builds, more gold code creates their companies JFrog. standard artifact

Artifactory, repository for enabler JFrog JFrog learning see an for models. already We also AI AI the as customers, serving our We observed machine customers. and

consumed of at Machine JFrog generate often as other another Therefore, and the packages ML natively locally, natively processes benefit form conduct models are Artifactory. organization by as their Conda or managing AI [inaudible] for utilizing from incremental and use Learning packages. Python development the potentially of as ops models and companies binary major AI of already reinforces AI data single customers technologies well Crun and yet within alongside company's the data platform. as supported builders The the of This JFrog software source scientists are processes, scale, the initiative. developers in

security within we enhance near forward JFrog DevOps to updates regarding are our several the we progress will exploring JFrog, look Finally, AI solution, future. approaches version future and and that on in providing of

our guidance Schulman in an fiscal CFO, over for turn Jacob? for the recap as results, Jacob With you to on who QX I'll financial as depth update provide will of year well XXXX. call QX and that, our

Jacob Shulman

you, Thank and Shlomi, afternoon, good everyone.

revenues of and supply software JFrog second higher by our platform. the subscription revenues business million, cloud of continued chain XX% the total quarter threat quarter, During were expected than year-over-year, the adoption in across up our stronger $XX.X were tiers at driven

XX% year-over-year. our customer quarter, usage, second the revenues In $XX.X sequential up saw in expansion cloud million, equaling of business

to While a continue cloud during the pleased with half year, XXXX. of prior compared pace of user we to we're first see improving slower strength migrations the

enterprises Going up Self-Managed of the remain were year year-over-year forward, believe exercise cloud to $XX.X large growth. revenues we quarter. efficient growth during million, ongoing XXXX. on Cloud will on-prem an continue focus customers as We rate reiterate optimization our baseline fiscal or within during mid-XXs XX%

Overall years revenue self-hosted as and deployments, organizational constrained towards customer transition future business which on prior our within to growth within expansion focus hybrid relative self-hosted remains deployment. has and expansion reduced cloud

within we many catalyst positive and a that We self-hosted solutions accelerate Security Advanced Curation be security self-hosted potential our interest expansion with deployment, being growth optimistic regarding have to these revenue feedback JFrog engagements customer of re in business. and from received customers can JFrog our initial remain

Net four self-hosted to and XXX%, ongoing was point dollar macro of retention quarter due four low sequentially for headwinds our decline business. the within a retention trailing

net year around the started or retention MDR We of XXX%. have levels expect stabilization to for these dollar continue the and be seeing around to

customer XX% be from XX% subscriptions, an Our continues QX, XX% in of revenue plus revenue gross overall our In in total from XX% no retention XXXX, QX came year-over-year. of churn increase change in enterprise terms. to with of contribution up

million revenue and set $X of line contribution. control or of with $XX.X income a period. representing statement period, year flat me Operating Now for expenses of XX.X% XX.X%, sequentially, million high ago the in quarter cost XX.X% detail. cloud the with gross $XX.X more ago $XX.X million, let expectations in margin and as of in the equaling discuss scale million, economies second was were with revenues year essentially our Gross revenues, in have quarter down profit the compared

During from timing being into the certain quarter. the expenses of benefited second we've third quarter, pushed

while technology discipline, invest expense and on focused innovation. remain to continue We to in strategically continuing initiatives go-to-market

to margin operating X% better Our than year QX operating operating of $X.X million profit in an a or negative in operating efficiencies. to was $X or million margin prior X.X% expected the due loss compared cost

equating Second loss $XXX outstanding per or loss on a of quarter million shares year income diluted net $XX.X versus a million diluted $X.X diluted million, net share. ago per based equals $X.XX $X.XX share of to

and the investments, Turning short flow up ended flow. $XXX into and from the from flow We term double cash margins operations quarter. with as cash XXXX. balance After Cash $XX.X CapEx, a million in margin. for was XX, $XXX sheet the We June expectations XXXX. into million digit $XX.X of quarter free in fiscal million our free cash cash $XX.X flow in million low was consideration flow cash taken generated December reiterate

performance As of our June million. obligations totaled remaining $XXX.X XX, XXXX,

to like third the our about I'd speak year quarter for Now, XXXX. full guidance and

ongoing to discipline. estimate year expectations XXXX expense growth Our continue business full cloud strong and our in

and non-GAAP operating $X.XX million between shares. non-GAAP note in employee per will operating we to will $X.XX, that expect which related be User QX, would a million of to expenses share share swampUP revenue $X to sequential quarter between increases assuming approximately earnings with For third merit include count million $XX of up. Conference, diluted costs step XXX million cause to our profit $X million $XX to I a our

be year approximately full $X.XX million a to $XXX.X anticipate to XXX $X.XX, total non-GAAP million share range revenue of of between in to per the million million. is earnings share income $XX Non-GAAP For diluted $XXX.X of and between count and operating $XX shares. we assuming million XXXX, expected

Now take let turn remarks call the before closing questions. for Shlomi back to we me your some

Shlomi Haim

Jacob. you, Thank

into goal and customers quarters our to We alongside well platform. and nature continue us critical positioned plan mission JFrog is our the ongoing validate commitments of coming to partnerships our achieve believe that

I strong close, we JFrog Before the a want to entire for thank team quarter.

joining annual San product and XX. results our any to themselves. updating from macro Games, announcements, And Your also than QX resilience our strategy DevOps companies be for may the the call. User community on others. industry and for And speak you headwinds. want looking swampUP September with to and Jose alongside us amazing the attend in Breyers everyone like Thank passion stronger stories belongs invite you. major forward earnings and customers DevSecOps are Fidelity, on to success I to Frog and our Netflix, for I'm all JFrog you. QX Conference

Now, happy we'd be your questions. Operator? take to

Operator

[Operator Instructions]

from We'll our Bora, today question take first Pinjalim JP Morgan.

Noah Herman

Pinjalim. Hey Thanks for your taking Noah guys, is for this on questions.

just you recently on feature lifecycle? you on recent elaborate helped out. bit how potential than or rolled curation this targeting a [inaudible] different click double to products? want Just ship the more has and And now you've less Thanks. buyer just you Can saw maybe as DevSecOps are you

Shlomi Haim

each Curation and very Hi, extending plan that the of even to as by avoid Pinjalim. a office, the automate of I've having was of like whole DevSecOps to public the automated we Actually, solution of software process. and way combination Yes. release this And organization CISO JFrog Curation. the left, binaries of to enforce an CISOs. the and policies the of mentioned, developers And have part are the shift office the are from buyers to into actually our get further the JFrog hubs that are to that coming from excited would CIO about of caching

both. it's stakeholder So between combination of DevSecOps the partnership the I'm still, securities this CIO. but the and a basically, really And the yet demand DevOps CISO few not and a came engineers a So from

Operator

comes question next Stanley. The Morgan from Sanjit Singh,

Chris Quintero

the was that X will customer Chris customer our results. wanted yourself, helpful. versus questions. -- you Hey, [square And Sanjit, add, slow of ask thanks around the on adds be those] this this is to I work between million your back to trying congrats just I taking Quintero plus for really both disparity the think on for XXXk

Shlomi Haim

Yes, this question. I take will

goal expand is all different And diversification customers. see the of our customers, between we to So segments.

the important DevOps just actually to of it industries, dollar a provide and multiple enterprise specifically technology And we what value. DevSecOps that to our industries. our that subscription from customers strong So also plus come customers, see kind expansion capabilities see that happy industries, outside lot coming we of continues in of that banking, and other to shows we're million of across and those offer that from platform these traditional segments,

prior of we that QX, right added in absolute quarter. absolutely You're than number in less

of over to periods. prior a we last it's However, lot comparable XX-trailing see the engagements months,

really any issues. the the timing we likely more don't here. trends It's see So in just change probably

Chris Quintero

Got of that with timing, can you makes more it, sense. kind optimizations? and the those maybe then may terms also to And want kind kind optimizations there Cloud what give I seeing customers, any ask that of are -- you're around from we in JFrog of are with of and side where we color, around

Shlomi Haim

as prepared still our in see March, customers pickup continue we expansion trends Yes, previously, did you and our baroque Then the was very to usage, throughout April year we the continued optimizations. a started quarter. like in of slow that in by on see to usage know and subject our that January know, remarks, which we we the

those forward, revenues to to optimization terms efficient So expect using grow mid-XXs we expect usage, going in we continue therefore do for that emphasis cloud in continue believe our customers us, initial year. customers that of do we headwinds will our of the behind more on and will platform, power growth. But we that put

Operator

is Genuity. Crane, Canaccord Next Kingsley up

Kingsley Crane

question. thanks taking my Hi, for

duration. to I'd So like ask about

it an I I appeals But individual the of of platform think of is of is around to developer that this exciting one Obviously, one the product, it's in developers. more stakeholders. kinds ones of interesting all most think aspects velocity. your focused for terms

gain revenue of will think to play will drive through in terms encouraging carte. more out pricing adoption? premium ala or are then how this you thinking And So you do upselling bundles that

Shlomi Haim

of as mentioned, chain terms it an holistic the the X as and Solutions, add-on an will increase enterprise subscriptions. model. Kingsley, comes to buy the by adoption software option the security, you, JFrog a thank seat it's, plus Security curation as usage in of the So enterprise year And supply

the coming enterprise number enterprise we expecting as from well, not of and users, we adoption the by the by only in but see X enterprise So expansion use. that developers to the the brands of are number organization the JFrog Curation of also in

Kingsley Crane

very the let one And financial. then for thanks on me Okay, that's helpful.

talk month quarter to if number. XX in trailing four So want think I significant. think So a one XXX% But that great about NRR percentage a is I is is metric, points declining NRR?

that think a does so higher half imply order or in would the the year. I for that I back So are in reacceleration a below NRR suggest the well performance Thank encoder was guess, XXX% that to or full you. reach in

Shlomi Haim

Yes, year, you from X% we are in our our if that absolutely actually when retention was with when right, levels. around we Currently, prior we go these the dollar declined expect this net go quarter. to stabilization said rates with to we line This dollar you net year expectations to guided NRR see expect did and down these levels. finish around the around finalize level retention

Operator

Brad Reback from Stifel is our next.

Brad Reback

Jacob, much, accelerate? did continue or a very the like June look to cloud July thanks it on lot consumption Did Great, trends. actually

Jacob Shulman

I I July, for for cannot we month, comment, continue I final strong numbers don't data July. the during Brad, performance. the have have don't yet But see to

Brad Reback

you no the of then of But I prepared remarks. network commentary And I on any global sort great. the it, you last in Thanks. about the partner not the I Got quarter, sure if don't, world missed momentum would Shlomi, think talked be problem. And seeing it earlier there? rest were and

Shlomi Haim

point. good a that's Yes,

to alliances XX. program on actually, swampUP, and user conference our happening accelerate, continue mentioned I partners Our September

XXX we that before AWS, GCP of time, a of the also celebrate that motion program co-sell enabled having year, Azure into aside is day co-marketing partners through the all in over clouds, and and past the working marketplace. we three with Partner to the built also first a the accelerating Day For are with,

also partners by join see not but So new we the only And to that pleased geography. also security are portfolio. also it DevOps, by but just self-hosted and only by very partners not not cloud partners, goals, the but supported region

Operator

question. Cikos Needham the & Michael next has from Company

Michael Cikos

NRR. thanks for to comment earlier me circle just on Jacob’s wanted Hey, guys, around I the here. to getting back

Is had the current of was tone I the finishing based be expect there level. year maybe I going we you renewal think you anything really see just the that it with around finish see it coming like this the to, on with at gives levels? to JFrog that customers to this just what base would And incremental? I'm where that these conversations to year really the is confidence

Shlomi Haim

we when see with of think the about at their obviously around That of forecasts, retention so and environment what net the will Yes, gives we're that the demand analysis And front stay kind commitments of trends and and of environment. in our evaluating them we plans. seeing of the overall first And half renewal customers that continued dollar on that looking and economic of us year. stabilization SaaS finally, looking the also of customers, regard. kind on pipeline, We're all, opportunities the for these talking what in consumption to retention confidence our levels. annual their net of our second dollar we're us that's And are SaaS. their us at analysis gives

Michael Cikos

And appreciate the well. around that are Great. adopting I Security the as Advanced customers commentary also,

effort existing of sales of and has findings drive lot a that what of you testimonials the within types you what At Can and your early adoption help have around how building your least who think awareness to through us is feedback or have adopted to your drive customer customer -- go-to-market those excited did additional driving are Security? up those from it. I success force been offering. customers us Advanced about guess about some think I base

Shlomi Haim

already Obviously, our JFrog announced of advanced is to also many capabilities so we software map offer. see are that some that obviously, about JFrog and them. quarter interest thing just are on them JFrog availability ahead of of Security securities so focusing To TX showing into additional for uses Mike, first we in with also XRAY paid of of in the analysis, results. as you very go-to-market the this have customers great XRAY the education. the the team XXs therefore, customers second them composition year news is goes market these security the public already our remind are are hybrid to us. the that And Yes, subscription. and and pool who Advanced renewals us and excited for The main we the see the

So new consolidation. call coming of in some today, attracting customers, that JFrog, to mentioned because the them we've mainly of the

So chain and repository, but provide they want stop and the software to distribution capabilities that or team, not two that. one capability process only one see everything the supply DevOps around to secure DevSecOps and your also

So operate for the and the gives main these that environments. on-prem the it's deployment adoption. different us are the to catalysts two obviously, in also The fact available in freedom cloud

So about that added very now And as thing the XRAY we well. the we and But roadmap, last plus quarter. Security Curation. speaking we our transparent since last that in with the the JFrog Advanced are is are is in available market

their supply demand our build we what a a security, really see that includes to roadmap that software shop is a future pipeline. customers for also help us items from holistic So chain stop for one also

Operator

Ader, next question is Jason Your Blair. William

Jason Ader

for are for Yes, in at, QX figure the what's to three correct, numbers QX. my XX your first because the you're with you're at thank to for going your full basically But guided XX year. just guidance, trying you you. Jacob guidance if XX for I'm on out based to on quarters question you.

would of us of year, lowest there? through that talk the $X.XX like earnings, can would the be what's So QX you that and going implies have on

Jacob Shulman

for for $X.XX for results So first our $X.XX. to about months six the this, actual the about $X.XX. Last year are

So it's about XX.

QX. operating I profitability, to EPS expect think higher in be for kind slightly be levels in probably to QX to if that in QX. And operating same So comparable, we you the at I expect QX going look the than profitability of comparable

So that sense. makes hope I

Jason Ader

doesn't you But is if QX. that the said just for the And for full imply $X.XX work. right? the because And three say that you $X.XX for quarters, mean, midpoint year. first would math I $X.XX

the QX year the something been. the trends looks like QX. EPS of where there's to line income bit that's below has on rest and healthy. pretty in But a be would maybe below looks get So like I But it quite be going the operating continuing

So offline I I mean, want, if we to wanted can but that. flag you just avail

Jacob Shulman

note. outstanding Thank you any items the in your expect don't below And QX. for I line

Jason Ader

security on that are And about All side side might go-to-market. for do you Shlomi, for right. what now offering and how to last go-to-market then you I that security. of different just go-to-market up I the maybe, guys past packages guess learning for the question the wanted Okay. what to follow these be security of for in in terms than had some different the are is you've that on

Shlomi Haim

Yes.

are and CIO, to from in apply we to taken cloud. the So ground decision company. the interesting, The it's -- security, we up that mechanism groups a it the security, trying by super the scale catch comes it. to different, with the see what size But the are seen strategic it's of we guys supply taken the up hand, chain bit a DevOps, software this different is what flat, we what between start and when and to What and want the then first let's or to regarding of is so CTO, on. it popular the CIO by be CISO when the security In a bottom to down, decisions migration most R&D, bit see they to leaders, the first being security, CIO, one we've also VP being of quite comes Maybe like, partnership of the top different. maybe PO, say, was the see, on and up. what and usually the most build is is engineers, by very the all, DevOps of being adopted developers up or security

the So helping is into needs. chain supply any those of automation to the applies bridge kind that software obviously

it more cycle will usually average down. when it, one we four most the take than of it meet over more quarter be of comes would these to PO security, most or to than opportunities So persona month of one complete. top And most

Jason Ader

the the teams. are budget usually -- its and the it And budget Great. CISO the versus is own CIO developer pool has

that have because budget is different tap in creating actually to you So to two friction pools.

Shlomi Haim

analysis, this So the all them, the security the secret distribution discussed we chose call solution strategy into of And marked consolidation displacement the consolidated like displaced will new the is CISO. then is the to to like a have. software start to would a Sonatype, in CIO. to the with capabilities Curation, discussed the of Snyk, JFrog solution not detection, J binary it's but of the they by those with already when by gate they a is budget it consolidating scanning to platform, probably stakeholders. the that strategy displacements there from scanning And the the there like If that majority is, capability security composition being of bring already all be security the a to security obviously, of usually were the compared we happening, is

Jason Ader

helpful, that's so to very Okay, Shlomi. clarify, just

part that to are CISO CIOs on the budget? the that those just budget, part clarify are the of of Just the are security tool depending those Or of company. tools sold is chain, DevOps kind into the

Shlomi Haim

with pleased very deal sell opportunities and were merged including one, CIO depends with, CIO one. office. the retail, XX% over and the in into big financial that some what to the also on already and we It CISO the combination were offices the of discussion Most And see Institute, both organization, that CISO leading company we the of office the of we enterprise. Exactly.

Operator

question of America. Koji Ikeda, next Bank Your is

Koji Ikeda

couple thanks me. the taking from A for questions. guys, Hey,

of going to curation. back Just kind

model. based You mentioned earlier, seat the

I Security is So the all is of about on how the think Is TAM? of folks, all folks? mean, And then curation? for the think you curation do part How because do second, it out it them? to it in the could it you the going be where's TAM there? begin So based, developers about question it in where recognition? trying it eventually it where fit? out? seat to Is it's Just to understand to show and growth. going up contributing understand will break start self-managed revenue we to to self-subscription ops

Shlomi Haim

cover much very Jacob tam of are aligned elaborate Actually, Yes, then from after tam it the Curation more organization. with opportunity JFrog outside the first Koji. part the can recognized. The take the the question, will to the And about of the I'll we Hi. all is developers be where DevSecOps market. of

that outside the that consume it, the it that value of packages the price goes the alignment we between reason there organization. the software number and So is is from an developers way by

software that consuming the multiplied this let's to the a there repository, Artifactory and and is of go security So by Security your that And combination will curated are want you it to you models. of Advanced of developers from be supply be and public say from on the go, inside supply the get an number that between chain with the alignment service. Artifactory JFrog software or organization, obviously, top sits chain

and is of basically open it's based source software is research the that And therefore all is made all that on. using, to So the developers world it's on so being outside now initiatives, coming from the software the from XX% number are relevant cashed organizations of in being the organizations is by organization.

tam. same the at looking are we So

the share. it's so market thing, second same tam, bigger with The a

from the a that preventing and and hub, is putting thing obviously fact from than second completely there There the the around that public the different fragmented. so out for solution bringing the get are The is, this with the very organization competition that next DevSecOps not market the J J the step are logs many you is curations go. solution for fence between that

the also this not it's what So it's grab, is embedded market to having platform. the can of solution just the size shall by our that time, we

Jacob Shulman

would split to types, the between existing it's to really deployment an it add-on be regards And with subscriptions. since

main for, then if report it's SaaS, if it SaaS. will be subscription subscribed self-managed, will as it’s the So the it reported self-managed, be customer is be dependent that will a on

Shlomi Haim

in cases. by seat both And

Jacob Shulman

Right.

Koji Ikeda

may, helpful. quarter added it think follow-up then the ARR customers, to that's $X you've if the most million wanted one Got in here, and I super customers And now is you customers, a the which XXXk ever sequentially. plus about added I dollar ask million

So recent congratulations there, light the XXXk bit versus maybe quarters. a little

X the and So million just between trying XXXk. the to plus understand dynamic

Shlomi Haim

demonstrate are also at six we looking quarters, to, the JFrog that also it. very least not size are or In this an Koji, from using last we the when of PO, the while Yes, growing platform monitoring we the only capabilities group, customers pleased our that of which actually because we it, guys the platform. are added the these of of are subscriptions obviously, amount and to million at but $X are they adoption upgrading adoption

looking I'm over during changes new are group the at we may, year expecting Regarding I'm And the last hoping see and I the with all in that I'm this I coming the higher technologies changes $XXX,XXX the to actually the market. to goal. perspective XXX, add it, pipeline I'm than if the the in all the bit when different at see that, customers, looking market. pleased the to with even that in go it a in the to XXX over recession, customers and

Operator

Your next Turits, Michael KeyBanc Market. Capital question is

Michael Turits

Hey, optimization. have the go Microsoft Shlomi, behind you talked about quarter, job some -- is that And quarters still you are yet several Jacob. to you. good there that on largely being and And others on optimization said

you optimization your around the different question, projects? down of new terms overlapping with an whether can hyperscalers? development in could not So And software what's be maybe new on and of describe some to beginning be of in terms going they're what might this or projects cycle

Jacob Shulman

will question. I take Michael, this

of growth for see we in hyperscalers different different of and I we be by see comment to data was workloads. sequentially hard in the to And we transparent optimization that storage, multiple needs work provide infrastructure me not? big continue DevOps of that what systems. critical kind types think that is was what terms our What seen impacted it's to

workloads, that what picture. they're that of the different So fact between is it's hyperscale that's impacts, we provide they what see kind the seen maybe variety really of what maybe and the difference

Michael Turits

it is where why asking broad sense earlier seems rebound. earlier then their have your rebound qualitatively comment -- want would to seeing, that on another like that obviously, to just again, not an you why But I'm business. start from it optimizations you're you So does business a that's And troughed make than it. theirs

Jacob Shulman

shorter we optimization were by more about more those typically low last see longer. our discussed, of deployments monetize QX efforts year, transfer fruit, QX kind required. storage, those efforts in Kind hanging data to SaaS time and previously we of which we accelerated optimization, more As of optimization, data transfer and did storage, and

requires Sometimes to it customers to on because doesn't it significant sense engineering even for make effort. focus that

will that continue to So they us. to their to monitor of continue initial what optimizations is strive we impact really believe the usage, will customers were grow efficiently. But behind

Shlomi Haim

security supply to to because we that out software getting just with and is our add comes started in dry infrastructure need use With enriched, customers everything chain AI can Jacob it’s to AI. companies. of telling necessarily And I'll automation, to can can some up cloud it, to mentioned, be as will grow even here. them There you infrastructure and so the the the our mentioned, we pending limit. be some to of us, of much infrastructure Shlomi your on Michael, not that faster. walls. as the also for migrate compared budget big a already for deal optimized These as to is released, waiting And customers are they cloud be mode, be also to hear our able

Operator

Next up Ruykhaver, Fitzgerald. Jonathan is Cantor

Jonathan Ruykhaver

for you thank in. getting me guys, Hey, Yesh.

repositories. than is good customers managing competitive recently accelerated that that actually written and GitHub growth the some So said lines of copilot to comments they has XX% later. more to also along code approximately by claimed customer GitHub copilot They've rather go that expect around its and already sooner XX% made making Git is

fairly how comments But will the Now to impact Artifactory out it you competitive management your drive demand that earlier, seems there? do your to for broadly. obvious strategy due LLM? increasing played What see is market LLM Shlomi,

Shlomi Haim

as by of of and because around or Not organizations more whether opportunity more it most are level that it's are more in of by and that discussions is that, developers in kind JFrog, form you But models of the today. are about panic we more to yet copilot create AI managing AI. they the binaries the everybody AI around a and Yes, another the and storage Jonathan, LLM creates around for binary. potential there the take that's AI a understands models the fact lot AI question. let's of made of great binaries, know, regulations And AI the and code, binary the the makers opportunities thing exciting standard only

So or can you or server. outside it that on bring unless only your from just you be inside handle it you dump build organization. tools the a regular organization, support it to you whether the it Artifactory file you want

already CRun, Python coders are I that basically Artifactory. using in copilot are that The last mentioned build developers, data thing that you these and three that using natively scientists are or like that of to would Conda packages supported AI, say all them is

them to the they AI And fetch just not for with going that the also that place So to models familiar is the are just models, are model. a machine. their train AI but coming

So see we opportunities big around that.

on as used goes in our to call, As infrastructure it, that we forward with previous to get the the demand. share to industry, limit are to natively support years. optimization we to from previous back what that will see in point And build mentioned, we a looking question, it this it'll we back what the to get

Jonathan Ruykhaver

what and that these it a Shlomi models, for of is Artifactory just another the you're opportunity of around the form really project ability opportunity Okay, is is AI all us, think to so for saying which a I are the broaden binary, right. is support

Shlomi Haim

about I Artifactory is almost when that's ChatGPT the default a solution it, for I asked got. question that,

is that's to tool public that. bring of policy models have way type any you So to thing right the a before of the storage, AI. don't want from also And because most the to the me for repositories authentic have just validate other you dummy enforce XRAY, you to want

the need curation if like to that coming tool XRAY cannot get get the that will this go. a from is you that AI want with organization. it you So your And chain, say licenses, it supply the tools wrong model like software block into protect

proxy not violation. license to any open an be code the will or source So malicious subjected type of

So solution to fruits the of this set is grab opportunity. JFrog all of the

Operator

is Next Robbie Owens, up Piper Sandler.

Robbie Owens

at rates you've between I And retention the us something question. drill in subscriptions. those retention of you. know into that for net difference around again, or this those might my the the a optimizations lot questions retention and want show there self-hosted taking bit, perspective? broken half for I And either trends to gross Thanks. I guess for a point, of the year. from gross in behind that thanks being play net a some optimization you may or Because that Great, don't is if into of back down you cloud out ever little the behind And

Shlomi Haim

will quarters first efficient behind we growth said necessary that effort. us and And optimization be self-hosted we more have at who corporate storage between and and and data efforts believe SaaS Yes, first dollar retention be SaaS transfer self-hosted seeing low that that optimization. started is make only likely that black the of hanging because to and about customers. what is four lower seeing environments, collar is on difference that for higher storage the wanted done time is provided of do It's, for to their that, those fruit, steps than ago. optimization the Again, of we is believe, corporate. information sufficient most to that ongoing of we customers going just we, And look we the kind than net optimization going forward wave our that's

are time. There I'll call back for further to the closing Shlomi at remarks. no turn this questions

Shlomi Haim

Frog us to keep for for forward San and Jose, XX executing looking you joining then news Thank by swampUP, your us this in quarter And more at on and the May Thank earnings you. swamp. all We're call. Join the from thank September be delivering you questions. with you.

Operator

call. attending. today's you Thank for concludes This

You disconnect. may now

JFrog (FROG) 2 Aug 232023 Q2 Earnings call transcript