FROG - Earnings call transcript Q2 2024

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Operator

Ladies and gentlemen, thank you for joining us and welcome to JFrog's Second 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 second quarter 2024 financial results, which were announced following market close today via a press release. Leading the call today will be JFrog's CEO and Co-Founder, Shlomi Ben Haim, and Ed Grabscheid, JFrog's CFO.

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

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

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

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

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

Shlomi Haim

Jeff. JFrog comprehensive the you, was We quarter demonstrating platform by software a for margin, fronts, our fortified EPS. our revenue, productive that and enhanced for you joining solid Good all capabilities Thank afternoon free a QX of cash and extended a organizations. security on provider leading supply results you into chain all JFrog, call. being by thank in are to evolving gross adopted world's flow

quarter the XX% was million, $XXX over for revenue year total year. up Our

transitioning successfully are We to sales achieving strategic impressive efficiency. an selling and increasing all while average business enterprise outbound our price,

the highlights performance our business. Our sustainability of

supply current we now in our with and flow, software expand platform. market MLOps. crucial future Infused chain aligned and with organization DevSecOps a role plays JFrog As DevOps, encompassing demands, innovation

a with sales are bottom to shift evidenced to enterprise a hybrid an of quarter, with results a XXX to greater grew JFrog's customers previous year-over-year the in of This The model sales from Ed ASP added sales shift reached sales. quarter, represents the approach growth. inbound during X numbers from exceptional by growth customers. year-over-year in year. our call. Throughout ARR ARR During up growth. that the today's for both number enterprise successful the QX. total an second and dynamics to purely net In $X enterprise and of increased new this reaching cloud XXX JFrog's inside will $XXX,XXX our year, we XX% inbound revenue than past which $XX.X category. XX, customers logos in increase rewards The new on cloud combines the million a exceeding discuss representing business XXX XX% existing of further this are up million category the with

high are taking be second budget as of deal This into However, constraints. XXXX. due longer the cycles we half to look will than addressed anticipated reality TCV

rate retention vast our renewal. growth the exceptional XX% every indicates majority choose that Our of JFrog customers on consistently

database on over around half JFrog chain strict let platform anticipate Artifactory, expansion with customers of projects packages, upgrade to embarked creating ago, to has significant Given first on deliver standard by results, the processes, being. With that, base X single a the capabilities offerings of in coupled some portion and budget various solution delayed, of the our food we influential of markets. environment, yet cycles software the source me now software become customers personas platform, procurement to We little we which holistic of a ongoing and companies. journey to that durable our in of rigid with cater years has sales our adoption A DevOps. and addressable being new security the developed enterprise for we platform growth time capabilities that the the and supply the longer believe centered total the and we expansion world's address expand future. slower for innovation Based most added gold platform can full

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both with to our stage we swampUP, a excited left Technology JFour John upcoming are best the Nattle, worlds. DevSecOps select of and require the unveil of be package tools. the higher of GitHub the At the integration exposure capabilities. binary integrations, Additionally, to developers including right keynote conference co-pilot of This due across to noted, significantly relations chain, sold secure beyond will future and will partnership co-pilot GitHub's SMB user Director the we software and co-pilot The AT&T, changer. welcome AI with advanced for efficiency the solutions. the security our enhance advanced to can offers and based phase interactions to and co-pilot anticipate supply market environments. AI users game DevOps focused to next metadata GitHub the Chatting catalog, practices, and in shift code extensive AI on software

that scientists in of both AI-powered security, and JFrog JFrog be JFrog QX. of software. late of the and and beyond DevOps uniquely the a offer DevOps positioned goes we experiment Artifactory that advanced about and delivering platform in end-to-end choice, engineers JFrog into in and train expansion already the our expansion op the excited the the with Qwak's of model world into share In lifecycle acquisition Qwak reliability we this same acquiring enjoy. platform. DevSecOps. bring platform production, solution MLOps of the AI application and machine-learning for more and to AI-powered platform our AI early engineers with agility, machine-learning registry and to company as a With one the and build, traditional Finally, as With to company, our to and announced finalized the data was developing, believe level is comprehensive developers is deal I'm first Qwak model June, would securing acquisition, and X-ray platform every MLOps protecting efficiency we

building the to the coverage DevOps swamp. offer team, teams Our lifecycles. and forward Qwak users solution comprehensive across MLOps To look integrated to welcome an our to

data only as also one, but first team, not machine-learning developers, the scientists. the of a We unify world are the and platform now of united engineers to creators as

Board in-depth with Before we year recap on independent board. With that, of the will over the with Visoso. provide his for outlook our I'll of forward look of Alto to as and be along experience our a and Board Ed? having Splunk, dive results QX Luis both who working CFO take invaluable deeply welcome to the fiscal him I on like XXXX. as and newest and director will Grabscheid, member, an growth an Ed AWS Networks, QX the Palo to turn at Luis' update scale CFO, our financial into to to you want full and role him I moment call companies Unity, financials, JFrog.

Ed Grabscheid

Thank you, Shlomi, good and afternoon, everyone.

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

platform Customers solution results chain acquisition measures. across to MLOps to quarter were software highlight security their with AI. tools as all Qwak within continue recent breed supply JFrog such the best second towards a Our the now our need range and guidance the of of plus platform consolidate of

growth revenue retention waiting up for as quarters self-managed versus Shlomi, by on-prem XX% XXXX the X revenues representing year, the over up anticipate second investment equaled trailing total over compared XXX%, have XXXX were cloud the the migrate revenues in quarter. $XX.X noted on-prem year the XX% paused to prior during cloud slightly We to line million, year. decline XX% or guidance. XX% was dollar trends in million, with customers in As our Self-managed $XX.X of year their year to revenues in to in quarter deployments. Net

from the Our prior came over from XX%. subscriptions, Plus In QX, plus XX% year. of total remained in XX% contribution from revenue gross up Enterprise rate subscriptions grew Revenue year year. at XX% enterprise retention

review more to in to detail. increase costs XX% is XX.X% in between focused XX.X% equaling from cloud aligned the in expenses million, the gross margin targets near of in Gross the profit VDOO related acquisition and in gross in trending period. annual income the We relative $XX.X the XX.X% of quarter the year-ago derived The elimination the statement discipline a due year-ago period efforts. was compared ongoing margin I'll expectations and reiterate the XX% Now, cost synergies to future, growth. Operating R&D to were then for and remain outsourced of from towards remaining our long-term of expenses the the expense period. our of second operating channel revenues, revenues in and on XXs $XX.X strategic low the level up scaling acquisition partner quarter absorbing maintain of with $X million, million model sales $XX.X of for through XX.X% sequentially investment up team, discipline We continuing or enterprise to spending. million, Qwak the proper ecosystem while year-ago and representing our

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

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

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

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

revenues average million be shares in income expect We from operations in non-GAAP of estimated range the to per outstanding. XXX million. in be we $XX $X.XX on share forecast to net $XXX to based million and range to quarter, of third of to million weighted the the diluted to be million $XX $X.XX $XXX non-GAAP range income For the

operations shares weighted full range $XXX net of to XXX of fiscal expect per of from million we based and to million $XXX be non-GAAP to $XX income revenue diluted $X.XX to the to non-GAAP be For estimated range range the million $X.XX the the million, in in $XX be to XXXX, share on outstanding. average million in year income

for our achieve in fiscal anticipated growth more XXXX. habits. changes anticipated our lower the growth reflects XXXX cloud me guidance Let around quarter, The mid-XXs and guidance. to more purchasing environment revised entering a year context macroeconomic challenging year-over-year third provide revenue cloud in We revenue customer

subscribers However, uncertainty, slowdown expect being monthly to commitments, macro quarter, pronounced relative in have no usage we prior coupled our growth expectations. increased during cloud we experienced customer second consumption migrations for a slow cloud postponed revenue with the to now who

monthly the XXXX be full would believe represents XX%. second now enterprise Given future macro note still within revised growth that the in in customer derisking our uncertainty, our a strong subscribers we around will and migration projects cloud headwinds challenging growth cloud execution half, We year cloud market.

for We manage security see curation growth software of a in advanced solutions. view customer customers and enterprise with revenue becoming industry's secure will driver looking solid We're sales critical their and point future. deliver We of continue remain to a consolidate security combined JFrog JFrog and into the to larger platform deals and as durable chains, the optimistic supply second stepping the that security the with half the pipeline. year choice

However, environment, now proof a of material be processes revenue our concept challenging will XXXX. achieved from security in in longer cycle we sales and anticipate purchasing given core

high-teens likely dollar the now noted the we expectation the Given first to compared quarter versus we exiting prior changes of net for expectations, our year had believe retention full is our XXXX. the range the mid-teens in

beginning the the anticipate year meaningful in the any full July. third for revenue contribution closed quarter of We acquisition Qwak in or Finally, of not XXXX. the do

integrate updates Qwak into and provide regarding JFrog, anticipated As contribution growth profitability. will to further we our we

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

Shlomi Haim

Last you, since marked the in Israel week, Thank we days Ed. began. war XXX

is chain growing DevOps software to edge. inspire pursuing MLOps one and In Frogs, the software, powered challenges, platform ensuring We you upholding and the of world the continue the culture reinforced our the runs to more these on and world's of hostages face work drives capabilities, machines. company. The continue strategic security honored us the commitment a that still underground I'm to return with in delivery holistic you remains Gaza region safe and held or to steadfast through for proud that me trusted days greatest macroeconomic devotion by geopolitical whether to company's goals supply JFrog our daily from and in and securely address challenges, building world. developers to the XXX pray flow The rapid team forward. engineered the software depends the updates, for and efficiently peaceful for and seamless and I and effort, the in of of thank by practices

about We our limitless be attending Operator, it we thanks holds future the and that, call open with now questions. are you. the for possibilities frog and may excited us. With to the for are take

Operator

today first [Operator take Pinjalim question our Instructions]. JPMorgan. from We'll Bora,

Pinjalim Bora

I little just wanted to a understand on transpired. bit what more

reaffirmed month help Maybe mainly quarter. guidance, the had it sales of through in July. days of You you towards July? the think, that. deteriorate X I in dynamics the end about help notice the Did the remaining of changes us in cycle think kind Did

Ed Grabscheid

push days month a a macroeconomic change few Pinjalim, of remarkable in this in quarter the the Ed. environment We noticed and in final quarter. new the out is the of the first

So until we days of therefore, the quarter. the final QX during see didn't much

strategic the deals which us noticed a and our we as Therefore, deals, out, also in full forecast guidance year We for forward revisited significant change that our adjusted purchasing going strategic large and derisked well. time, being pushed in indicated environment. the to

Pinjalim Bora

one Yes, understand coming it the down understood. possible of how much on as X cloud? revenue annual cloud and Is question cloud by monthly part points. the more guidance that to is And the driven

Ed Grabscheid

X for X subscribers growth monthly points. to the is percentage So around cloud

Shlomi Haim

remind go Ed a it's very no pay commitment, you subscribers If so Pinjalim, what and cloud regarding as much I macro articulated may have the it's aligned environment. you with

Operator

Ryan Up next, Barclays. we'll take MacWilliams, a question from

Ryan MacWilliams

what far, on partnership, we just Just on side. so a it Microsoft more and also the than but sales this go-to more like market seems From heard partnership. is product the

potential opportunity, forward? GitHub what opportunity to you going you JFrog customers. how their this for JFrog partnership this And think size means think of the product a Shlomi, the standpoint for from So love we'd do about hear

Shlomi Haim

and it's customers best have joint platforms, rapid the breed shows it other of a market when the adoption platform our to experience. of demand customer by and from customers' partnership, biggest every demand, tools both with driven Obviously expectation the the especially one

So of the in bit this We to integration a Austin, and complete month this we have next ago swampUP first phase phase a announcement than Texas. released month with that the high we are hopes. more going

We the hopes. are very hear so have like co-engineering much this, excited and it. we GitHub about we customers high excited about We with

and our early environment, I with adoption, our in AI to will change environment, it think is security and around the what too integration but it's the how everything expect. happens DevOps that this DevSecOps narrative DevOps, joint customers say

Ryan MacWilliams

color. delaying about for that better is the a Ed, put existing XQ going a to to XQ for then from to that contribution that and think historical XXXX the revenue over way us for from so And their moving is Appreciate customers is on-prem? macro the now to slipped customers cloud or there something on? then And cloud growth transition, relook from pause, this at just in on something in like they're maybe are

Ed Grabscheid

from migrating First, hosted those anywhere expansion subscription, that to for are those therefore uplift for self an in of customers. terms cloud, providing in XX% increase to see customers from an we the XX% in

of derisked timing the that at that push any for we our point. this forward-looking outs we saw, forward forecast looked and and Regarding we at the migrations going

Operator

next The from Stanley. Morgan question Singh, Sanjit comes

Sanjit Singh

to the to back weakness. wanted saw go I you where

of enterprise incremental SMB, stood monthly out geographic segments broad that the weakness or whether terms different even migrations the business, we've any particular end So or of quarter based? that the going what cloud versus about that and drove July, across you into it's industries, saw talked in towards or pay-as-you-go was the exposures, mid there were market like

Shlomi Haim

about goes concern It's hear security customers. we from Shlomi. budget environment. This is across about whether more demands, different rigid it No, customer's our it's geographies, profile, and more or it's what DevOps. procurement this is Sanjit,

Sanjit Singh

of the I online, coming outage why Understood. I'd have of I timing CrowdStrike And the globally, obviously just GitHub major security, guess be bit out. push advanced of then sort it mean, you a the would little situation. contribution we the surprised on but had a with integration

big ever. half. and on software roll the than out And to we potential business that outages would seem how So I supply chain the focus in expected updates more from that to it would a like have becomes me second critical the tailwind the

industry reason any post saying maybe a that of experiencing? and outage behind security is of just out advanced not the So global broader business the push a benefit more pretty the material

Shlomi Haim

point customers you our about Sanjit, than expected the we solution. can again that was look What with was led of Yes, to solutions, perspective. adoption in strategic look what early hear higher to share When happened at entered I from what of we most at security us thought and our customers expectation. which of XXXX, TCV the started our we consolidation

and But be more of processes. procurement So concept potential again, proof longer we leads piece we security. With motivation this month conservative a also security higher the GitHub, be higher to processes to solution. then of then more will that we potential. platform consolidations And the generate are looking solution even it at to that I next for regard is will point is bit something the about and hope why to want announced as longer mentioned, security

Operator

of from question. America the Ikeda Koji Bank has next

Koji Ikeda

Q&A I wanted in linearity asked that up first about the was cloud the to to the bit question little a deals. try and understand more really and of follow

given think big coming this the consumed. debates one the just that in guidance guys quarter how X/XX final month, first on of JFrog mentioned, the With the environment of cloud [ results, I the is off ], component the deteriorated days understanding demand even you is few on was

the typically the be So we big that how It or this buyers days the the few is should quarter the in way are comes expecting are month. in Is consuming buying how final that users the cloud? of product?

Ed Grabscheid

of quarter. quarter purchasing the we'll typically the see in the towards of seasonality end the So

that see in majority majority are quarter deals not quarter. done of of to is that end something that. QX. the unique the of every with This So the We is

that had challenging were periods. were where of based to that our second migration rigid of we're specifically in migration later purchase from removed around the deals, QX We that mentioned on We macro I high felt pushed deals, decisions what with we as a environment, very around was saw significant environment. probability during have it's re-evaluated, terms seeing we forecast been forward. these large half, concepts what derisked forecast. those going In completed, we proof large those Therefore, deals our were

Koji Ikeda

then mid to does half. that up XXs rate the year guidance in second cloud for on the growth for that, imply the And around full somewhere cloud, Okay. on revised follow with the a the

taken sounds of it anything bunch is taking you've assumptions. a number? that from migrations like you're for aside the migration else out guidance so And But that there consideration that into the within cloud

Ed Grabscheid

Sure.

that, environment In of migrations and rigid this forward. the purchasing half. that addition to expansion renewals the of we're are environment, Therefore, the macro on because guidance into we combination not the factored and seeing level being second the in expected going the expansion of

Shlomi Haim

add over growth I are XX% to we it, if Koji, in the looking cloud. at year may year

are at profitable a business We here. looking

We the market what have saw based about and in a very looked on us that is reacted think introduced the we pipeline the and in and what year. at the responsible we projects to our the to conservative half first be telling way, and therefore pipeline of big

Operator

from next our Kingsley Genuity. to Crane, go Canaccord We'll question

William Kingsley Crane

So I want that to about. talking everyone's return to cloud guide the

know, still back it new be you sequential changes half. re-acceleration would conservative. that sense to some and The You saw in the want you guide, imply believe makes I

take sense despite deteriorate want what's here? the to here. is derisked further then taken guidance this conservative the how that just of out could a So And get the we've risk

Ed Grabscheid

in and coming the not growth which X% in decline we had that to I year-over-year growth during in very stated customers what the represents of the the us, still with do cloud. our know a monthly from we've call, mentioned So past. with good have commitments is feel over-year X% that comfortable the we're Shlomi number year- cloud, XX% mentioned we presenting and today, that around that

very forecast second close of derisking our and for forward as In in addition we in and forecast much taken going at pipeline XXXX. with half comfortable deals the felt to as derisk the we've a that, look any our

William Kingsley Crane

that's helpful. just And you. one Okay, for Shlomi,

about You worlds. best GitHub partnership to how users bring Copilot both and help know, hear of it the can it's great the

to on it business this a Is GitHub's of ramp for through of to JFrog? Just much impacts. be translate can how explore base feature user sort of for want how some existing think an large to users, nice this could

Shlomi Haim

JFrog relevant it's using and think I migrate or organization that might then Kingsley or GitHub GitHub. Bitbucket to that first is to from organization any any

Copilot very So differentiators platforms, fact enhanced collaboration. security high, provide, and JFrog the that with other vendors obviously cannot that these of the it because potential consolidation is brings mainly security also some like X

with platform. actually build Copilot a get So users this consolidation point collaboration don't And can can on the is so market moving binary information. based in see our to from customers go GitHub solutions The with wrong. feedback, and for trend the chat how I also grid

and We are very honored this very about excited partnership.

Operator

The next Mike question comes from Cikos, Needham.

Michael Cikos

take or the does Does I colleagues know wanted on put confused experienced all are some we're at? we lift help under to pay XX% cloud. a guidance year for a calling and of growth the we're in the what QX a just the for little finer half contemplate by sense, 'XX? looking commitments, second I out that true-ups currently And like of that these my growth QX point in in it, explain a I dynamics to get

Ed Grabscheid

Ed. is this Mike,

cloud have our use did as during as XXXX or it move QX annual expect over customers of XXXX. lose it we true-up to or we it large don't it, an fewer a a that see monthly time would of use we during we As true-ups. from we lose Therefore, would

during of wouldn't So expect I saw XXXX. the what we same level

Michael Cikos

guide Okay, have but today. some this sort that's into be anticipated we baked there of an is currently just to benefit clear,

Ed Grabscheid

that. consider not do we No,

Michael Cikos

in TCV tickets you the increased segments you did on know, I some like really behavior larger closing weakness delayed deals. as customer helpful. these board. We're think the cloud about cycles, it and like or the out And to ASPs for would the Shlomi, that. for to the far come the those the help calling back any I on cited more Since as in that us more it's for changes want had monthly the prevalent Okay. those were of across then different Thank you be showing for granularity really loop but Can there just the or higher is users, the prepared up. remarks comments

Shlomi Haim

customers, the it's Yes, not What different the process. that And understand successful industries, board. we however, TCV of that higher it's to different but than and also about different proof us across sectors. technology which DevOps lead Security, that, more Geographies, a concept. only see, longer demanded, requires procurement habits the the

but cycles today's platform, longer but deploy see a the when it takes good you why it projection the we sales This you in is if consolidate under good of conservative it of set on want $XXX,XXX, would in HX are TCV. funds what to not So tools is leads when was implement news. We a news, longer. be the this be it around maybe HX, more we a is higher easier, to This and environment, such

Operator

Stifel the next Reback question. Brad from has

Brad Reback

Ed, of us what is cloud the month can to you percent remind month?

Ed Grabscheid

of is approximately percentage the Yes, XX% cloud our business monthly.

Brad Reback

back guess be it commits. fairly going quarter, you just mid-XXs were on the Okay. achieved I just adamant last would that at And changed? your What

Ed Grabscheid

visibility pipeline Yes been That quarter what we derisked. significant saw had has into that a deals. migration last was

in those have to taken the into adjustment saw consideration the of made of are again, decline that, cloud forward. purchasing we've monthly which consumption, growth. customers. those to factors have changed commitments. addition monthly We that the going rigidness purchases and Therefore, In certainly a Both do our significant not being

Operator

has Andrew Cowen the question. TD Sherman from next

Andrew Sherman

the on no no migrations and be topic want just with committed there, XX% the usage. it's all up Brad's question has that but scratching all clear SMB, we're Following now same our it assumed obviously, of kind on in to heads no

bottom, if will. So the XX% the you should be

Shlomi Haim

XX% significant a is yet growth. very

and second derisked and that the So from learned this some migrations we happen. is why looking quarter are what But the adjust. we've we will of course, we migrations at we strategic assume big

Andrew Sherman

may is across of kind only And something June, that you slowed what do board? migration-wise, there in not vendor migrations changed that Okay. cloud in the industry-wide, called have happened June, think? or that's the out, budget-wise You're this abruptly, but

Shlomi Haim

the the to And heard few Yes, are these of mainly you It's why We pushed. saw it the being based last around the even heard quarter, projects well, we when and yes, quarter. of budget the on constraints in it's week June. market. strategic of not of it last saw from quarter, from not And days see big that started took the same. the last we act It's procurement days only JFrog, processes. the this we you few what is more

Operator

Securities. Jump, Truist comes next from question The Miller

William Miller Jump

I in just cycle guys base. or called a curious, guess I'm changes, as improvement to a the there? of last did digestion theme deal you see quarter customer the this continuation you have out in addition quarter did headwind that

Ed Grabscheid

to We're uncertain that in starting anything see not of related the they to with. think macro decisions. towards anything environment What delaying saw related did are digestion. as week seeing quarter. we didn't that of see we're We is we're spend optimization But digestion. last purchasing We continue to the this a environment, faced terms the now see rigid their about very that customers purchasing to

William Miller Jump

And then I actually as might one you come back on to this Ed. well,

targets. revenue more end Just your of Can given here? at the like where cut position timing of we're see a now how drivers the low about in you talk you and the from It that a to FY'XX out just the specifically, looks to playing need see you re-acceleration guidance.

Ed Grabscheid

Yes.

guidance we X%. off, first only changed our So

So from adoption course, migration pillars, our we of the our the execution or of the continue stool full went cloud, of security. model, of the is focus guidance. XX% maintain annual X to we X legs XX% our and long-term on of to which on And platform, to

think now, in to in factors, model the though long-term years and in presented we confident based that even about faced we we're that macro may that multiple So from feel model. line we AI very fact the that top right those and long-term growth potential we still that the environment the baked we a have go, with not model, and when tailwind on with the get in MLOps,

Operator

comes question Jeff Hickey, next The from UBS.

Joseph Hickey

project-oriented just got visibility their work those or Have cycles, procurement elongated it more perspective? I scrutiny more customers The you'd first And a in obviously your driven any expectation see to general budget as just into plans. that be by focus is sales just one would HX, on on just color business start maybe is projects changed how been. a more Have There evolved? in was, have cloud those come online still model. customer from lot conversations an more think, a conversations in way,

Shlomi Haim

hear. hard the I to the hear if heard I'm was we bit sorry, right, conversation, a what customer following. customers Customer So is our it question conversation, from

the platform. are our security is environment. everybody that consolidations that that third, The about of today's point in this solution are future into first of point a speaking lot to Obviously, cloud. customers a thing There solution. into is the And on-prem migration not to embedded is happening

comes the have bring together. what also practices, DevOps support So MLOps the of we when future security so it MLOps DevOps they standalone. or lot will partners them is platform with standalone to also at our A And that they chose fact only are to no the the be know It extend part that pointing of and go with with. there ecosystem, but we to the want to that we services. push those not will look therefore,

hear side also their the on they this have their is disciplined on as the in that this as side. What on. So is is we very situation procurement to apply and hear on strict, commitment, the optimization budget cost to we technology and very be of going long all what market the types to

Joseph Hickey

one Ed. quick you, for One

a earlier. crystal be just made to comment this. on clear You want I

to [ annual expect we customers as monthly to we move closer ] true-ups. up you're said monthly, You something edge should that XX% we'd fewer we as QX? that witness Is shift to from like of expect business that

Ed Grabscheid

an the was from which uplift hosted believe to see do would in customers to clarify self cloud, an question. over cloud, immediately. not move think, allow, we question No, we an in I me us, don't within to customers. let Customers and from monthly, we budgets anywhere to the of see see time, expansion start those when those I to But annual improvement an uplift uplift commitments as we move have from that the XX% XX%. customers

Operator

next Ader, Jason the Blair. question take William from We'll

Jason Ader

are issue or execution wanted to there's that guys here no just ask whether very competitive I confident issue. you

had we an I about for strategic you never simple get But outbound you know, all organization talked think that. macro, model. You that are new That's moving that. not sales this to

wanted competitive. just execution identified to or of any issues top know macro So you've issues if the on

Shlomi Haim

retention suggesting Shlomi. that We which to competitors. rate the be of to a that kind call need and Well, we are XX% are in that in [indiscernible] taken into or few customers said not is moving these not there of ARR, This our consideration. we mentioned moving have is short

second they at never but need end, invest competitor, more never a an time, a telling is that and we me to I customer concept moving quarters in then enterprise The X, of X thing a that bit the proof that saw happening. saw

solution competitive hear the platform the looking is we competition, customers In about about pipeline and the you with addition check And to we pipeline. well. best we what the CISOs and is between less And to and we the macro coming the you our usually. see in environment, but and more are another about when experience? So partnership market go with is the will it's not don't narrative the else hear I'm are of when them that, when this speak always is In our from looking one JFrog think market. at certain together as that the for our provide breeds this that. CIOs about the Who last X There the GitHub, think of something you customers, environment. that thing about it's

Jason Ader

do you can have motivation think All right. security deal? it's is you partnership. kind co-sell advanced quick that capabilities this that follow they Then, GitHub think of their now a main do What up Do the is just, to in reps to you mean, on would special security recommend? GitHub the they for then of their sort and have way range other alternative I vendors, example, that any to partnerships with do be with of that partnerships? for an the

Shlomi Haim

and behalf them. we've speak what my of customers heard can of speak myself can maybe I from for I well, Yes, on

there all, binary this to long next of it's the the First code partnership. coming together, the a the and run expertise. differentiators source expertise code. in That's source binary few are of A, kind

as chat bring from the Artifactory and when JFrog together. the our one it they your a Copilot very to X-ray developer thing The GitHub, information chain, to and it are platform and source more of adoption, and application the And goes binaries, we that complementary the very They that capabilities, other. from very thing, is and your growing the especially second well. next for with protect the with a binaries view. and JFrog and code, this both is it's and can something fast each GitHub Copilot insights other. requires getting a is And security, collaboration on one protect we one your the customers, appealing AI-driven We appealing to is third customers between software advanced coexist see and metadata protect the supply security introducing

differentiations the our can So, and as driven mentioned customers in come this consolidation from quote, the are by collaboration. that

Operator

Lee, We'll take the next Fu question Fitzgerald. from Yi Cantor

Yi Lee

I guys a multi that I migration and on the We going clarity quarter, the ] on the that great that. at continue want spheres average. with guess, see reconcile. are will guess comfortable you the terms, CTOs basis that [ slowdown, forward. look CIO, more daily question get to a basis, like my I rates comment just this And in animal monthly basis, We what migration on of you Ed, more Shlomi dashboards is hyperscaler like appreciate growth above weekly to get

Ed Grabscheid

Ed. is This

looking looking with So internal our is indication at through well an the out we're team. pipeline. how with we always as discussions This have believe as that and play will customers forward of sales those the the we

addition that, macro and in environment, change at purchasing the change In and environment, And the the behaviors we also the now to the in look what And we what how in terms see our based this market. opted on and of our of to cloud the guidance. forecasts, see is we make in is decision. lower those be conservative the we approach we in why this derisk

Shlomi Haim

not is general to projects. it's the big we your add may saying we stages. win. those Ed at is also to a our pipeline the we are number, give question us brought us looking What derisk our at to pipeline, to looking confidence if just what is This after when had the at technology different it, And conclusion I that are looking

this discussions, the before we dashboard win late after at. at are looking budget the main is that looking tech stage So

Yi Lee

I should say. my last some of news then I over think up step follow month, And little of activities. on there a, were chatter competitor a GitLab more out M&A bit, I direct is if

the consolidation Any commentary in on thoughts Your this space? on that.

Shlomi Haim

no So is co-marketing see about GitLab. with well, don't hear any with security hyperscale, we the the migrating specifically, they there. if competition don't and And with the to question see and solution that we capabilities MLOps customers GitLab management potential are GitLab co-selling, we solution, our landscape package the from

customers our a is they see aligning speak in GitHub our our of the XX% are of see with competition prefer in using under that future So what when lot But consolidation. about don't we this to guess with us GitLab more customers GitLab, I partnership pipeline.

Operator

question Rob We'll from take the next Piper Sandler. today Owens,

Robbie Owens

on I Qwak guess to just to the acquisition clarification ask shift a would like from a standpoint. bit, little

forward, no revenue guessing in the in is expense said expectations moving expectations. the there that You

over investment standpoint, time quantify Is will you contemplate can this So should think of about #X, plug-and-play that from that integration. perspective? or simple that period this and how we from a require should we relatively margins increased some

Ed Grabscheid

in is this of the integration, course, There continued our absorbing, be model we're operational and integrating Yes, profitability. closed Qwak and and much we to of aligned The them. week will the that will balance the investment. a as well. and expenses our expense being the diligent know, process. first way process JFrog is you has the the expectations history terms July, manage still we efficiency integration, proven This ongoing we're And as and of that focused Ed. we be which, in from complete will long-term in very that with on We still very we're of be as of

Shlomi Haim

I may answer Rob. it, If

we And we with Pagemaker announced will to matter It of you it's integrated and or be AWS be. quarters, a know, Qwak. with MLOps,yes previous with the as market, in On adopted. the and the no. MLflow, we integration solution not as will It and integrated the

model. adopting only Xray is already next So for this but very it's as scanning of your in leap the technologies, Artifactory logical serving is JFrog. the the registry not model market choice. of is forward that based already the on fact a trends AI also

expectations completed, will our So share improving forward Ed as for integration And once mentioned, was expanding you. or platform next will JFrog. be with we also step a mandatory our the

Operator

And Nick we'll next go Altmann, Scotiabank. to

Nicholas Altmann

follow I curation. a is this scrutiny related product I just more security about or now security a post as of sort secondly, offering. revenue should curation we think and becoming we timeline contribute advanced what about year? is talked newer up advanced on as goal that this historically, material I of how wanted portion macro you material think to Maybe talk any or year. on guess, given about this to to just confidence the for And can when what more budgets revenue this gives market and fit, be can product to versus then that

Shlomi Haim

look we willing that what starting Well, consider Security saw to are they with our came into Advanced consolidation and Curation. around advanced wanted full curation. JFrog see and very And is We security humbled at to JFrog adoption. we portfolio to the a XXXX

we looking pipeline, the deals. looking strategic at are at are We

it's see, only less on. based competition also have in code, also And the more the the therefore, and it's the displacing from in are and around persona. only solution the static coming on of leading Security but consolidation we not platform, to Curation interest is innovative that in analysis lot movement so confidence detection, JFrog DevOps enterprise. And we the the security on organization. the X hearing very A. B, concept solutions, directions also We market this see point JFrog world's me and it's secret solution, but persona, about gives to the not one Advanced point security infrastructure what appealing a proof of

are the we looking We we looking are at the size pipeline, the the deals, at looking customers. names are at of the of

We their face macro with own this also know challenges they that environment.

in with competitor. deal somewhere will but to not deal, patience, displace a any my day just take small I and have get over a We big a higher TCV to

accordingly. this So we and we derisk see and this project this now, to is is pipeline the decided why what

Operator

Shlomi closing questions. time, no are Everyone, the at hand any conference for to this remarks. there to back I'd like further additional or

Shlomi Haim

may physical and you forward. much. moving for May days ] [ very you, you much very Thank frog we with us today. be more the Thank joining have

Operator

you Once again, Thank your everyone conclude today's for that participation. does conference.

may disconnect. now You

JFrog (FROG) 7 Aug 242024 Q2 Earnings call transcript