JFrog Ltd Q3 FY2024 earnings call

• Held 10th Annual User Conference SwampUp in Austin, where industry leaders shared experiences and new partnerships were announced (e.g., with GitHub, NVIDIA).
• Launched JFrog ML, extending the platform to integrate DevOps, DevSecOps, and MLOps. Introduced JFrog Runtime Security for full software integrity and lineage traceability.
• Secured large platform wins driven by DevOps workload migration to the cloud and comprehensive software supply chain security.
• Enterprise Plus subscriptions contributed 50% of total revenue in Q3, up from 46% in the prior year, with revenue growth of 35% year-over-year.

JFrog's Q3 2024 total revenue was $109.1 million, up 23% year-over-year. Cloud revenue for the quarter was $42.4 million, representing a 38% year-over-year growth and 39% of total revenues. Self-managed (on-prem) revenue was $66.7 million, up 15% year-over-year. Net dollar retention for the four trailing quarters was 117%, and gross margin was 82.8% in Q3, with expectations to remain between 83% and 84% for fiscal year 2024.

• Fourth quarter revenue expected to be in the range of $113.5 million to $114.5 million. Non-GAAP income from operations forecasted to be $14 million to $15 million, and non-GAAP net income per share $0.13 to $0.15.
• Full year 2024 revenue expected $425.9 million to $426.9 million. Non-GAAP income from operations $56.4 million to $57.4 million, and non-GAAP net income per share $0.59 to $0.61.
• Anticipate cloud revenue to achieve around 40% year-over-year growth in 2024. Continue to be cautious with large-scale pipeline opportunities, de-risking them from guidance.

• Macro-economic challenges impacting spending and procurement. Uncertainty in the timing of large-scale cloud migrations and security deals. Potential delays in large pipeline opportunities due to cautious customer spending and decision-making.

Q: How would you characterize Q3 as a function of deals closing and broad-based strength?

A: Ed Grabscheid stated Q3 was strong due to significant projects, including deals pushed from Q2 that closed in Q3.

Q: What are the proof points for security contribution in 2025?

A: Shlomi Ben Haim mentioned security is part of all big deals secured in Q3 and integrated into platform plays.

Q: How are billings and RPO related to larger deals?

A: Ed Grabscheid said billings and RPO were strong due to large deals, including multi-year deals contributing to RPO.

Q: How is macro impacting cloud usage?

A: Shlomi Ben Haim said large customers are planning cloud migration but execution is delayed, with proof of concepts and deal negotiations taking longer.

Q: What drives net dollar retention?

A: Ed Grabscheid and Shlomi Ben Haim mentioned net dollar retention is triggered by security add-ons and cloud migration.