FROG - Earnings call transcript Q1 2024

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Operator

Ladies and gentlemen, thank you for joining us, and welcome to JFrog's First Quarter 2024 Financial Results Conference Call. I'll now hand the conference over to Jeffrey Schreiner, VP, Investor Relations. Jeffrey, please go ahead.

Jeffrey Schreiner

Good afternoon, and thank you for joining us as we review JFrog's First Quarter 2024 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 Ben Heim; and Ed Grabscheid, JFrog's CFO.

provisions may under related are XXXX. federal to safe we that our made call, Securities the forward-looking Private are securities harbor this make Act to statements business pursuant Litigation During Reform the of of laws and statements financial and outlook our including year of future the QX and full to XXXX. related our Including performance for or The intended to are and similar words expressions expectations. anticipate, believe, future forward-looking continue, similar statements estimate, of expect, intend, will indications identify

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

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

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

from time. Please of for Ben CEO, not call Additionally, will on to in JFrog's available limited directly substitute release the Heim. those as to measures be of website our for that, call addition considered to a or should non-GAAP to in measures. the non-GAAP conference A used measures. GAAP comparable JFrog's I'd Shlomi replay as financial over a are will for turn on JFrog refer which a financial measures be the be discussed of tables With to, Relations measures, like this most These this earnings GAAP performance, isolation Investor financial their call. Shlomi? reconciliation measures in

Shlomi Haim

Good and million, portfolio. all thank market, our Jeff. platform a In MLOps of guidance in afternoon DevSecOPs, MLSecOps the with to single total to call. quarter JFrog, metrics you, DevOps, of Thank range. you continues for delivered Unification all, up end in in quarter year-over-year. XXXX, first report exceeding across XX% expansion you another of resonate I'm for JFrog our $XXX.X high the the revenue the continued of resulting joining to strong pleased and

equaling and mid-XXs QX, positive Our compared revenue Customers million the the XX% with of a XX software our chain platform of ARR XXX continued supported of $XX.X to increasing quarter, team supply by in cloud customer sales in JFrog ARR from year in growing year, growth to increased by X% efforts in than in XX% continued the with year-over-year. XX. momentum customers consumption. $XXX,XXX enterprise. growth In XX% increases year-over-year, grew greater This greater of was range $XXX adoption our the above than guidance of show up $X equaling QX, prior period, success Cloud by reflecting the top-down to million, is year-over-year. ago total a the now complete

is business. of record and that allows security that mission-critical customers of their to binaries Our a system DevOps tell seamless continue us for to single flow the having secure

discussed to machine mandatory incorporating solutions include MLSecOps the Gen-i to our organizations of first today. and users see unified and being On practices led chain the we learning. applications JFrog already the past MLOps wish will be implemented enable software addition, approach This and year, to of including we In supply cover adoption the the today, things successes our as some security In the next embedded to of holistic call alongside the platform, comprehensive DevOps expanded solutions. solutions. our we requirements behind will generation by JFrog support of that that DevOp platform continued DevSecOps quarter

look cloud Next, the usage and at migration will I trends.

go-to-market updates share also about will our partners We and integration. game-changing and activity channel technology

I how support JFrog's ML Finally, would of needs AI the solutions our and customers. share emerging

Let me largest of by the the adoption address world's the companies. platform JFrog

most chain as the core, at the to mission-critical on As of chosen partner standardize the platform its highly unified supply enterprises by looking to regulated who be holistic platform are continues world's software Artifactory demanding JFrog and some increasingly with solutions.

Fidelity their SLA in capabilities security supporting the the expanded relationship JFrog One scale companies XXXX, of thousands the for enterprise and and theme. processes robust has Fidelity partner applications with with cloud of to got a support world XX% DevSecOps most become in drive of symbiotic. over and Fidelity customers multi-cloud noted McMahon, services webcast scale with over to of the by million at a the XX recognizable whole in capabilities JFrog recently much DevOps alongside needed their stated cloud-first the with more financial Head of increasing Tools hybrid ALM development Platforms their while developers, Gerald

shift shift and middle We shift left, right. to have

through practices, life point continue and environments. in companies. security at already we have failing the as to of embracing Fidelity entire enterprises streamline is cloud ability supply strategies DevOps integrating higher security We more cycle in to place most taken planning minimizing known stakeholders alone. expenses, tool by wasted see automate of risk. But and organization into much DevOPs time and will As JFrog possibly ownership face tools DevSecOps and increasingly solutions ingrained software security also and consolidation, tools security to the use Artifactory, Xray not software JFrog like scalability security hybrid is and companies full delivery. multi-cloud

vulnerabilities only report. despite XX point union supposedly to have important Futurum of analyst about security using engineers into an or market, of reveals vulnerabilities not noted securing both The venerability One from XX% of the the critical for Reflecting and exploitable. of also state many and is it report finding, sizable companies sometimes Paul security code are anyone value distinguish the Nashawaty not have JFrog strongest regarding that half that and solutions, crucial are before revealed report detect crucial scanning data, percentage else between chain reported its in reality, those companies few analysis processes. the unique a actively team often the exploitable. emphasizes tools that Industry company's the with pose supply JFrog's differentiators reveals delivering Group security software research research DevSecOps is this companies are nearly that been binaries. It still gaps team security even unable real how that This concerns. consequences. and more to a released with theoretical that recently major

reports capabilities, JFrog tracked JFrog groundbreaking Security to of they protection. by cloud team's research our ensuring our exiting insights. Our now Advanced unmatched serve as our findings enhancing business, closely the as and Curation security often the JFrogXray, quarter first address for market These tool the detects like are users XXXX. uncover deliver would cornerstone I

We continue the to for budgetary see organizations tight looking for environment. in cloud optimization spend

pipeline the will they are XXXX. anticipate for how migration similar throughout year, building and cloud We approach to enterprise accelerate efforts actively the

standardize to We on are delivery. customers looking manage the seeing cloud software to best-of-breed also effectively platforms

breadth the deep Informatica, our deal for DevSecOps their development a the their to leveraging customer, noted, our Informatica the software JFrog's grow customers with chain as chain. partnering of and the to experience. to their universality, recently supercharge JFrog advantage approach, Attractive empower management and solution JFrog the solutions realize power supply to record new supply team capabilities software data company's to Informatica, system AI across transformative improve platform take of signed able platform needs, cloud practices JFrog utilizing efficiency. example, data, By for best platform. we're For of Their

gradually We budget JFrog year previous emerge, usage cloud be XXXX, the migration We that in to projects Cloud growth expect carefully expansion. within managed continue anticipate to constraints. driven like by much will

aligns evolving market our collaborating supply platform. we of with our with to committed customers guidance software to the chain trends, and partners Our adoption facilitate and remain

as to our across partner partners. and want channel constantly retailer and integrators network our growth. address resellers, is expanding I of our Now partner JFrog strategic network part technology

in across allows Natalie recent Public governmental company our for to JFrog phase integrated a sectors Carahsoft, we their As Solution security part mind binaries with in chain single we of into JFrog's to Source software indirect the platform nparalleled agencies have and Open programs "Supply growth recently further development." leading an anticipate as along continue of sales distributor, highlighted the peace as chain. investment in each a Distributor. for President partner of said, years JFrog provide serve formalized with Artifactory JFrog the expand in tools of a solution DevSecOps A reseller and We attacks and Vice area, with Carahsoft of a holistic geographies. our Sector integrating Gregory, agility at partnership software this security for of to supply enterprise importance the like source as

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data Qwak a integration. make JFrog an designed source chain. provide announced scientists depository AI Autifactory a like management allowing more other software CEO allowed proof to the construction, at efficient models Lev, engineers ML expands artifactacto also them to secure the ML single allowing to like to we supply noted, engineers models. and noted, the package As integration platform ML despace with providing JFrog in workflows, platform manage Alon DevOps speed Qwak This software by Qwark the monitoring of facilitate of catering holistic users Qwak of proven their applications and any integrating capabilities to automation with and JFrog that deployment, scale. further and while is a and MLOps AI deliver for

emerging As DevSecOps, the together MLSecOps to to to ongoing we further and expand JFrog of supply and enterprise-grade chain. continues consolidation aim a forward our MLops single needs enable software platform users look platform, to needs across the bring DevOps, into supporting their

expanding of and forward us about our and platform With leap and and fiscal QX over to customers. part MLSecOps opportunity, I for of for XXXX. direction the the MLOps Ed you towards results both world our Ed? revolution, introduced our the Grabsheid, will Gen our excited its will natural who and outlook the CFO, QX that, AI keep as as for update we We of will growth of year the in-depth recap are full turn financial on call provide

Ed Grabscheid

good and afternoon, Shlomi, Thank you, everyone.

During total up were the year-over-year. revenues XXXX, XX% first quarter of million, $XXX.X

in all and First subscriptions. high growth quarter strength of exceeded our our results result range revenues cloud a of the end in guidance our measures Plus across Enterprise ongoing as

to looking solution. platform towards customers their We supply best-of-breed continue to consolidate see a software chain tools

the Our results demonstrate strong execution quarter. during first

in Shlomi, development during in XXX%, will XX% customer for Net cloud in growth reiterate versus XXXX saw XXXX, with line a XXXX. full fiscal efficiency in the baseline mid-XXs quarter the their driven around to million, first accelerating Self-managed XX% were $XX.X usage quarter software mid-XXs million, levels above revenues first year. revenues XXXX focus by the We new we high by the trend are guidance The the equaled versus of similar growth quarters in in the growth commitments. revenue XXXX. prior allocating year-over-year was customers dollar be for on self-hosted on-prem above trailing of revenues quarter. $XX.X retention up for We XX% our teens the the towards year. up guidance projects. year-over-year, anticipate the during in noted in revenues cloud efforts As representing for spend Cloud total our was XXXX XX% X

Our at gross XX%. rate remained retention

Our complete the In up Enterprise by Plus consolidating saw of in Revenue platform point XX% from Enterprise first year. Plus subscriptions, came of supply prior year-over-year. XX% customers revenue contribution QX, strong subscriptions software quarter customer total XX% their JFrog adoption results chain. full and the from grew securing driven from solutions

costs is elimination and Now ago I'll in increase to relative the the Gross quarter representing from was Vdoo margin a ongoing the outsourced the XX.X% million, of to gross statement The year year in XX.X% ago up period. low gross to cost more discipline the review first synergies future, income of the model derived related were our acquisition annual targets the detail. period. compared in $XX.X in $XX.X the aligned margin near to period reiterate between of year attributable XXs XX% from remaining up growth. long-term XX% for efforts. of for in We million the revenues, equaling to sequentially, expenses the with million, in million quarter cloud and trend XX% expectation the $XX.X ago XX% towards then or revenues of $X.X Operating profit

investing enterprise remain to ecosystem discipline while continue sales in R&D We scaling focused strategic spending. and partner expense on team, channel our

million the diluted margin million QX of profit of period, Our share shares shares. $X.XX $XX.X million operating the prior XX% weighted weighted or operating Earnings compared $X.X points. on equaled or share to year percentage profit per an in to in ago operating XX.X compared based an $X.XX per was approximately XXX.X diluted million year XXX.X improvement in X.X% average operating margin on average

estimated within our We was consideration flow an coming taking cash flow cash into implying Turning to XX.X% quarter sheet XX% targets to flow. midpoint the of cash our from $XX.X $XX.X After million with balance requirements, years. short-term and flow margin. Cash operations and XXXX. flow CapEx or the free remain committed million free $XXX cash XXXX free million of We the first up quarter. as XX, cash in ended million over $XXX.X in was from investments, long-term December provided the model, margin our of

remaining XXXX, totaled $XXX.X performance As of million. obligation XX, March our

speak would year about second to quarter XXXX. full the guidance I Now for our like and

expense resources the the initiatives increasing driven expectations Our within contribution customer towards by the continued accelerates outlook adoption new platform to implies first seasonality consistent our XXXX usage, are rationalization focus second from half for through our as after XXXX business, and customer during momentum as security with Enterprise by be activity XXXX year, products. cloud key in anticipate to budgets quarter. Plus We of and weighted more likely customers for allocated on

the through cloud the remainder the rate and XXXX, a dollar reiterate net of year. in fiscal businesses, of exiting stability our year high teens suggesting Given implying the the retention we expectation guidance self-hosted our

expenses expand dollar XXXX as strategic operating will to continue investment on and but see We discipline cost room a for during basis operating leverage ongoing balanced. remain

and and expect count to revenue and million midpoint, at we $XX non-GAAP equaling year-over-year diluted between between operating QX, $XX For $XXX million $X.XX growth XXX million shares. $X.XX, XX% approximately a profit million $XXX per of share be assuming the of to earnings with share non-GAAP million,

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

turn remarks to I'll for Now closing some before back Shlomi the call take your questions. we

Shlomi Haim

Thank Despite of and Ed. macroeconomic hostages like period, by civilian in day. you war to cannot The its admirable. was you, In Israel can start JFrog consistent the the are challenges families, unwavering This XX in but mark are milestone I'm delivery Gaza Independence since only held commitment your truly still be the and celebrated year, for safely goals our saluting an until in Hamas X culture. Israel us and observe will reunited solid celebrate dedicated the important JFrog, uncertainties, the Independence year. week, that X remains they for Day. full. thank with resilience outlook. reminds Team truly XXX your Day their October a ongoing global team QX your Israel and

to world growth emerging a for for is in security positioned potential in believe JFrog, DevOps seeing system as well supply as GenAI. the market chain and that as entire of uniquely continue We record of software expanding of the success the

With we the our the to with open thanks community to take moving Operator, and held be in as change landscape and will We annual recently September the Texas. together This conference, key to user also made attending again call set questions. MLOps our DevSecOps announced you. partners industry DevOps, in swampUP, now we that, our forward. are Frog be year's for notes with prepare standards Austin, and

Operator

Thank you.

session. from Stanley. line Your now with the question Sanjit begin of Singh will Morgan comes We Instructions] [Operator first the question-and-answer

Sanjit Singh

the year, last read also they're mode same time time, the still were the JFrog in spending wanted watching cost hesitant macro and cloud This optimization to spend. including get environment. the data sort customers center. I Shlomi, invest your environment just market and on of in latest At their to

And any willing then? sort extent of so remain back as has what improvement terms trends And XXXX started, invest? to of similar to seeing sort of to are you customers in what your

Shlomi Haim

Sanjit, for question. thank the you

we back in market and see our cloud growing included being of is than in consumption slowly cloud on-prem because mainly environment direction. both keeps user see the what coming that we actually as project cloud pipeline migration very So our faster the the that

we the adoption but it on bit XXXX. of same see a in the expansion, remains sale it and the and a lot cloud we a remind as the Overall, On growth us costs, as toward was QX on-prem [indiscernible]. looking and with migration from XX% started and speak cloud the reported growth more multiyear cloud. they more more XXXX. year-over-year in on when subscription are migration customers And about betting

Sanjit Singh

past $X.X And maybe million. the When back a the think, this if do it And in I been quarter sequential years. out was it once growth lower normal than lower that Any follow-up of Ed growth look QXs the prior sequential quarter, cloud at reason Understood. for was has in they just normalization? from cloud, I couple on around true-up for which business. last for I the the

Ed Grabscheid

is Sanjit, thank digestion of What question. as a this we the was saw of QX consumption. We see a for significant quarter. QX quarter Ed, you and in more

a we prior at did you than much XX%. QX year-over-year basis, grew we in quarter. On a in dollar the it more basis, on we when Now grew look

took expanded we're to QX. think of customers what digest project more development a usage bit terms in spend towards that they So software little projects In more QX, opportunity and that is quarters. about later and seeing in

Operator

of Bora line comes question Pinjalim next from with JPMorgan. Our the

Pinjalim Bora

of you but any kind the with hugging is it conversations for Are Shlomi, of talk of kind as platform Autifactory us on at And model the JFrog have. MLOps lot a JFrog that since or trending of of underscoring security considering proxy kind the about -- MLOps. as point. I'll use customers lot you of JFrog we even you are repositories. a phase Is a MLOps open-source seeing your ask interesting, how library. aspect works this of kind maybe

from customers what So you MLOps, would anything are hearing help? around

Shlomi Haim

as the obviously announced it is is treat the serves are models for we expansion they source have of hear others market, the a all models hear scanner binary. JFrog of Xray that for the our QX Autifactory for is from call the model. get single natural and natural record we they serves we what lease review. what obviously the as other way, from a malicious And as What in we MLOps to customers, back what have package, well as of the we community by looking packages. that another this from the as we just from what

super AWS and with maker. platform MLflow, and a a we scientists millions versality as Now with are balance other freedom whatever providing other or engineers whether data mind, the choice, choose philosophy popular, stage like ML for month we coming of it's in you, of mentioned, which with all from Qwak works is

So it around factory, models for as the the universality well the the oftefactory make the as for will choice other binaries. of all is registry out today

Pinjalim Bora

Yes. you, Ed. Understood. for question One

if me wrong, by efforts efficiency correct you're business, customers incremental cloud the seeing but it by seems like I QX. optimization in heard efforts On customers this

optimization customers different wanted consumption April to And And the heard far sure maybe of are this Just others May. how maybe that's those help what was mostly. that something trend saying so that than already into kind because in or going point are done understand I at us optimizing correctly. make

Ed Grabscheid

mid-XXs what with reiterating XXXX, purchasing second well seeing around XXXX. the guidance that the projects will are towards year. a What of year-over-year we strong our most we're QX. a you after What on decisions a question, that first -- the is seeing come is half terms what the basis. the as in we this of terms the mid-XXs, large in XX% likely as seeing, we're more aligned were towards of Thank exceeded today, very trends But is the quarter for digestion we're our in customer guidance behavior to We off, and of Pinjalim. being that, for guided and full again, we

Operator

line Bank Koji Our America. Ikeda next of the question of from with comes

Koji Ikeda

side. ask line know a SaaS on this maybe here. item to I on a lot here of the question wanted another revenue is for there focus question I

question And normalizing so ask wanted fourth for that about in revenue on quarter. as When the net at to it as visibility looks SaaS. a onetime, the in we think SaaS you I after about look the the -- same I new

to your looks really rest your customers, for like understand trying what with of SaaS visibility so And say, the business? your

Ed Grabscheid

Yes.

So and before what see we mid-XXs it's we've commit towards anything we what usage, on necessarily guide would commented we is don't be and guide that above mid-XXs, the on usage.

So if What we the see a at above to and That is consumption. percentage growth to see business. continue is today the cloud we for our we that we mid-XXs. visibility commitments, is what have reiterate because mid-XXs in additional and

Koji Ikeda

a Got DevSecOps. enterprise That sense. And an JFrog, view we may. I here, you just guys it. makes definitely follow-up if as

that. markets you as SMB there's customers. no denying I have smaller mid But do think and

And the on base? lower wanted the how ask end so resiliency your question I to of demand out is in customer and shaking

Shlomi Haim

Koji. Thanks, Yes.

companies. a it's of thing all security, for Specifically on sizes known

changed supply Software threat because runtime being only. been security in you the binary have environment which changed, of has that the and consolidated, stresses only not but from coming is

Security, the a the coverage but shops, is this Security comprehensive JFrog that supply are and what solutions software the over provide solution are development chain, Curation all for sure, now SMB Advanced for and is all speaking Xray these and JFrog of customers, SMBs I'm customers, about profile JFrog types the real small the needs were of attracted for So by. not covering looking

Operator

with question from of Mike Needham. the next comes Our line Cikos

Michael Cikos

SaaS on cloud. the all about since here jump asking and we're bandwagon I'll And

we're Just from visibility, on with And XX% just the idea right? is full it's in I that growth to really get I back i.e., to folks year that like hand, the of to punctuate upside QX, Koji. were mid-XXs, is Is go want we're lot the fair the drive of here to what from make commitments, is And mid-XXs to things skinny that, like hey, think in sure for And the context a in about the will. But for the to upside sounds the limbo. I that point getting you it characterization? I'm the reiterating leave that is So a one Ed, you've if that of go doesn't delivered could you getting mid-XXs we comments, speaking year. it is that. your a earlier you consumption then the that to based guided if mid-XXs clients

Ed Grabscheid

the for Thanks Yes. question, Mike.

all, guidance mid-XXs, our consumption. suggests support first -- our pipeline that would that our and based the is of So on

on from I'm the to of don't Any pick acceleration above driver the mid-XXs that that perspective from -- although migrations, we growth. would based commitments, Secondly, anticipate usage sorry, migration a we XXXX. secondly, be anything saw the of anything would what a be beyond up at levels

Shlomi Haim

if to it, may Mike. And I add

are predicted about market Sorry, not the sentence wood the it's their is with migration and at being still the They big what and at executing They magnifier. and go. are exactly hesitation of planning. their happening XXXX, with this will and volatility And we here the then about more eye projects the are This same even year see is just The more market same XXXX to in out year. a point. big not started in one there. and They as start cloud to We customers and spending stabilize people Cloud that yet then cautious this first we the utilization. with are on the on the looking budgets. not discussed want cloud finished expenses quarter expansion are far

guidance. target. portfolio. is with pretty look QX also it's our aligned you dollar our in It's very much much the exceeded at among But even if We a line. our base, So big success

Michael Cikos

follow-up a here. then And Understood. just

the response around little of on purview the just bit transparently, of comment think is to a scratching question. digestion Sanjit's head outside I earlier your in the

it half behavior the been any the to like a more change that that give has looking loaded just in second this coming again, in some year. going are those in you sort back-end are start that people get anticipated? digestion, QX? at follow-up front-end is, of I'd to to there loaded? that the online interim, to of And Was that confidence Has projects then sense was So been

Ed Grabscheid

not Yes. decisions scratcher typically behavior QX something was see customer as being a This of The are made. in weaker This expected. in what be seasonably budget for and us. was seasonality, there's we to head terms

New and year, grow the software of scale development projects throughout are the being that and and the we're course trend that will determined is through seeing. this typically

Operator

Our of Ader Jason next from Blair. with line William question comes the

Jason Ader

maybe sales terms what thing seeing the Shlomi, JFrog the wanted to there with the pipeline guys and you really out I this people reps. about the seeing just then ask getting of onto security out and build you're And for platform? on security, challenges in what there about are talk getting biggest ground are

Shlomi Haim

are X great these Jason, questions. Yes.

about pipeline. First the

are pipeline enterprise free see portfolio. is versus see but growing our And very Curation, JFrog Curation Security, a subscription considering with different of And to you, compass. are are only coming also JFrog or Advanced that versus with we Security We to not Advanced they to on model top happy the this both. our remind

So received supplies adoption enterprises at and we pipeline are software full see promising security. are the looking growing. that These of very

security to proof coming security of to are solutions. concept. on other a the the of of side longer. building all displace the pipeline They is is of consolidate flip base, from on the and They taking dock. none landscape the side, are On them all have They looking running or all

consolidating about of organized customers very So running book excited a or a tools. on that concept, the type X solid us and the and are one one, more approaching hand, very dime one, we're pipeline

of the security hand, longer than concept DevOps for one. life proof of is a other cycle the On the

Jason Ader

Got you.

Okay.

expected? and sort that is ago? it some is -- it's with X you of taking Or just I are as a take guess, expected is So more it's bit your how in the you optimistic -- I slower little as terms still of value it is months going little mean, this but proposition, time. to expectations, aligned than you bit what ever a

Shlomi Haim

We business. are guys confidence year's what saying we that material a targets become in security piece our guided performance and our will of this in you with

Operator

Truist the of from comes line Securities. question next Our Jump with Miller

William Miller Jump

I'll guess Great. self-managed of the the on I business. maybe ask side one

there quarter. modest You a reacceleration actually had this

for expectations actually indicate you might the year? that in if curious or your anything Just business was of there part this that onetime anything nature this made exceed

Ed Grabscheid

Miller, that business. be in one acceleration in saw this we in costed will to would self-hosted slight our in -- based, similar XXXX. nothing onetime what We is trend No cell XXXX the very expect Ed.

William Miller Jump

lumpy And large digestion the XXX slowest also more. period that but in like were net they've than then been is metric, customers indicating that anything this one time. adds is Is customers talked about Okay. more it the than looks Obviously, on maybe indicate just a some that, overall? you to there

Ed Grabscheid

in our customers QX, We you're really in in second a saw right, XXXX. significant we is seasonality. of lumpiness what But of large traction and lot half the and had this,

a somewhat this to in was growth, quarter So previous saying that, budgets what there digestion considering would in similar same customers at pace it in as to we're opportunities although We quarters. expect future will that we quarters. QX, And in saw trend expansion we nice XXXX. we saw would that normalized saw start more be it at that are looking their and the wasn't

Operator

KeyBanc from comes question Capital of with Jason next the Our Celino Markets. line

Jason Celino

stand-alone. We competitive this a actually X security last, see that's the player gain more the importantly, seen horizon in spun would private major you call any you do dynamics in over on And big any news some it, out then Have Appsec landscape? share months? incremental in the as changes a be opportunities the week saw on competitive been just

Shlomi Haim

very that's question. good Yes, a

are the platform they customers the mentioning well, around one the all, together. around, quarter best-of-breed events full and of was last security consolidation on changed that around of for especially And DevOps that can need therefore, platform hand, we consolidate everything. First see and

the a acquired, got HashiCorp hand, there changes. Atlassian lot And sold their of has entire On other Synopsys stack. some changes were

consolidate But change the lot moving. the looking Customers comprehensive the are Tectonic thing is same. landscape to landscape And last quarter. solution. that are are of a a there one saying competitive from plates changes. to end, obviously, and on and So then security security didn't have

Jason Celino

consistent seeing one all then The kind the quarter? was And it a for Okay. the you today, pretty very start of maybe beginning Ed. in just throughout? towards Or did just quick that it end or digestion discussing we're

Ed Grabscheid

It quarter. the was consistent throughout

Operator

the question Canaccord. Crane Kingsley from Our next comes of line with

William Kingsley Crane

end up of Some report, those were in past RSA, threats That's security by in not threat year. thousands X the XXXX, impacted in to X talk by from want XX I the about customers day mentioning in spirit Mandiant's vendors impacted of breaches.

your including research talk about addition capabilities, then value You like Can some of JFrog's that to JFrog security the you in things security prepared having team remarks. cited security research and your Curation.

Shlomi Haim

Yes. union will software scanning amount Well, not they we our released also Docker industry, might because reports then we before train the but thank in sharing research included market the our with size by become, you together with finding the solutions. and after finding how the is supply is are know and on of breadth just rest security the for can JFrog security security and by customers the database of amazing Hub This the the team Recently, of noting the Docker. state for of it's Docker and and the of chain customers in that an with one malicious the differentiator community. the the team and from of packages that only largest Hub

great the obviously, also threats So be to it's to get able but them. it's boosting other some tools detect a service tools our for before community, can

William Kingsley Crane

really even really your increases cloud you're you gross talk strong finding Ed, of as And as Can margins overall then the efficiencies helpful. generally revenue? XX%. there a for about That's at percent

Ed Grabscheid

margins, Yes. gross you as pointed out, Very XX.X%. strong

that we we in X, database One standardized a now acquired that we years the third-party X that we strong QX the as eliminated of gross database outsourced is reasons Vdoo had on ago. margins removed such

efficiency some there. gain saw we So

see databases our associated and However, with our in and in invest is margins. what gross costs we other that those to model continue we'll spend

-- during XX% we'll and So margins gross guidance our it's XX% between XXXX. still that as in indicates to model our

Operator

from Fu of Our Fitzgerald. the be with next question comes Yi line Cantor

Yi Lee

Questions could be Shlomi. for

consolidation I the Any other terms opportunity. IoT as like I How other prepared to upsell device as you distribute, CI/CD, the products. in like In security -- on front finance? you about on focus to the talked know remarks, example. of want Maybe products about if an well? could comment Shlomi, the updates that on

Shlomi Haim

Yes.

is the we all solution, mentioned, of capabilities top what you one the the source are of usage surpasses cloud. of sizes database by one also registrable security by center And factory, in location in more packages versus by around around on. adoption. platform, we comes, package. distribution, the do expansion of obviously, on the servers the expansion all platform to than on automation, coming but them. as potential the have the the number looking So mentioned, a it, are the just real and of the consolidation one season teams more self-cost these the see In of based And more by by It's and differently that of single tools offering consumption I packaged in cloud, to project, so

with motion on expansion that's platform. the see we So now the that product additional

Yi Lee

actually Got then my follow-up that opportunity. the the to, on in And guess, I MLOps lock It's of could all have be more you've last great significant it. don't do they contribution JFrog? And to anything they helpful. That's MLOps you going charge where opportunity? freedom the to given customer, mature like up to was is the themselves use I pacemaker. it's how housing wondering is think to obviously,

Ed Grabscheid

that being MLOps best not is built scientists, DevOps is we mature. the But DevSecOps the to to the is thing what now. practice practice the practice engineers, Yes. mature. actually of python fasting and and AI data the ML engineers, all see to about the practice nice MLSecOps. And using is not MLOps the discos

in be it's XXXX expand that our mature. JFrog prepared year. we This next more invest big So sending more guidance. to are it's to this and to tailwind, not might platform coming going going opportunity but is And the a change not

Operator

comes of question Reback the Brad next from with line Our Stifel.

Brad Reback

feels to June you're towards the the last digestion pronounced year, us cloud years. seasonality trying for growth the seen Ed, less the of commentary, we've sure point quarter on the than I in mid-XX% in understand like but couple it

maybe we're the lower of towards So that XQ? mid-XXs end in

Ed Grabscheid

is points, the mid-XXs. around factor is could the it's full the around points. be know look quarter-to-quarter. that be will seasonality. to is a would few that today it has around the Brad, could that be that's monthlies. we anything we commitments and in few means mid-XXs is a see we what and is a What year, what It above it way because metric seasonality guiding Yes, could mid-XXs usage What play -- we that at up we're mid-XXs. Anything and But that the in a this that down that, below that be see of for

Operator

line Nick Scotiabank. the with Altmannn from Our next question of comes

Nicholas Altmann

the some from over up force channel Just of sales of efforts newly and the the have productivity bulked maybe then maybe partners, you go-to-market direct given just event. year, you to And first the how talk you overall last the can the and some your side, specifically just onboard partner when held guys last to guys both year on productivity. sales kind talk of

Ed Grabscheid

Yes.

channel and with channels expertise. the think with it's it's partners the are running. we updating geography, is by top-down The sales to that keep the indirect one of you, and as I and partners we the collaboration the enterprise by transition

last that DevOps. partners would would will different see on that that you see you in partners you It's versus on France see partnership also different So it's see different in different announced added Japan. regulated we the the that is go environment, after you highly they will familiar super the And security versus sector, partners one are partners and to thing with. the now which that public Carahsoft

more platform relationship are we have that promote expanding and partners and the more with to in our field our retailers JFrog offering. more channels So the can the with

Nicholas Altmann

Okay. to up digestion I wanted then on And follow comment. the

granularity digestion? would you sector helpful. geo-specific Just made in and it Was within the of around that call of I on about any the trends side of patterns think sort that it you geared But equation. more towards it trends that SMB other was it's saw be sort base you sort broad-based? out any whether that comment Was digestion any more specific? or the of installed QX Koji asking the

Ed Grabscheid

base of specifically. saw there was was a we can in trends. point broad out that portfolio, nothing we terms nothing across Yes, the that It

Operator

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

Shlomi Haim

had Thank quarter. for a everyone, call. you, joining our We wonderful

much. you the in very peaceful more be for region may with Prague looking and Thank are you. We the day

Operator

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

may now disconnect. You

JFrog (FROG) 9 May 242024 Q1 Earnings call transcript