JFrog(FROG) - 2021 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - JFrog's revenue for Q2 2021 reached $48.7 million, representing a 34% year-over-year growth [16][42] - Cloud revenue grew by 47% year-over-year, accounting for 24% of total revenue compared to 21% in the previous year [17][42] - The company achieved a record quarterly free cash flow of$ 18 million [17] - Non-GAAP net income for the quarter was $900,000, or$ 0.01 per diluted share [49] Business Line Data and Key Metrics Changes - Self-managed revenues (on-prem) were $37.2 million, up 30% year-over-year [42] - 32% of total revenue came from enterprise class customers, up from 17% in Q2 2020 [46] - The number of customers with ARR over$ 100,000 increased to 415, with 12 customers having ARR greater than $1 million [44] Market Data and Key Metrics Changes - The company noted a solid growth in customers moving up the subscription stack to gain full access to the JFrog platform [45] - The net dollar retention rate for the trailing four quarters was 129% [42] Company Strategy and Development Direction - JFrog aims to become the company behind all software updates, focusing on making software "liquid" [13] - The acquisition of Vdoo is expected to enhance JFrog's security offerings and drive growth in SecOps [23][28] - The company is expanding its strategic sales team and investing in product innovation to support growth [38][84] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in gaining momentum in the second half of the year through partnerships with major cloud providers [30] - The business environment is improving, with expectations of accelerated growth in the second half of the year [45] - Management acknowledged the need for ongoing education and adoption of their solutions in the market [94] Other Important Information - JFrog's gross profit for the quarter was$ 40.6 million, representing a gross margin of 83.4% [47] - The company ended the quarter with $615 million in cash and short-term investments [49] - The total consideration for the Vdoo acquisition was approximately$ 287 million [51] Q&A Session Summary Question: What are the cloud platforms doing to get JFrog in front of prospective customers? - Management highlighted collaboration on co-selling and co-marketing with AWS, Google Cloud, and Microsoft Azure to enhance customer offerings [57] Question: What impact does customer consolidation have on JFrog's business? - Management noted that customers are optimizing subscriptions and hosting costs, which may affect cloud usage but not significantly impact JFrog's retention [60][74] Question: How should we think about the monetization potential from recent innovations? - Management indicated that innovations like Federated repositories and JFrog distribution will drive ARR growth through increased usage and subscription upgrades [62][65] Question: What is the expected timeline for Vdoo's integration and revenue contribution? - Management expects to see initial impacts from Vdoo's technology by the end of the year, with full integration anticipated in 2022 [80] Question: What challenges does the company foresee in the next 12 months? - Management identified the need for continued investment in deployment and distribution as a challenge, along with educating the market on their solutions [93]