JFrog Ltd Reports Q2 2024 Financial Results

Intellectia.AI2024-08-08

Illustration by Intellectia.AI

JFrog Ltd. Reports Q2 2024 Financial Results

JFrog Ltd. (NASDAQ: FROG), the Liquid Software company and creators of the JFrog Software Supply Chain Platform, has announced its financial results for the second quarter ending June 30, 2024.

Key Financial Metrics:

Metric	Q2 2024	Q2 2023	YoY Growth	Consensus Estimate	Beat/Miss	Q1 2024 (QoQ)
Total Revenue	$103.0M	$84.43M	+22%	$103.58M	Miss (by $0.58M)	$98.4M (+4.7%)
GAAP Gross Profit	$81.2M	N/A	N/A	N/A	N/A	$76.8M (+5.7%)
Non-GAAP Gross Profit	$86.9M	N/A	N/A	N/A	N/A	$82.1M (+5.8%)
Non-GAAP Gross Margin	84.4%	83.4%	+1%	N/A	N/A	83.7% (+0.7%)
GAAP Operating Loss	($19.1M)	N/A	N/A	N/A	N/A	($15.8M) (-21%)
Non-GAAP Operating Income	$13.6M	N/A	N/A	N/A	N/A	$12.4M (+9.7%)
Non-GAAP Operating Margin	13.2%	12.6%	+0.6%	N/A	N/A	12.6% (+0.6%)
GAAP Net Loss Per Share	($0.13)	N/A	N/A	N/A	N/A	($0.11) (-18%)
Non-GAAP EPS	$0.15	$0.13	+15.4%	$0.14	Beat (by $0.01)	$0.13 (+15.4%)
Operating Cash Flow	$16.7M	N/A	N/A	N/A	N/A	$15.6M (+7.1%)
Free Cash Flow	$16.0M	N/A	N/A	N/A	N/A	$15.0M (+6.7%)

Interpretation : JFrog demonstrated a strong year-over-year revenue increase of 22%, although it slightly missed consensus revenue estimates. The company showed healthy gross margins and a strong beat on non-GAAP EPS, indicating solid financial management and operational efficiency. However, the GAAP operating loss widened, pointing to ongoing investments or costs that are affecting profitability.

Revenue Performance by Segment:

Segment	Q2 2024	Q2 2023	YoY Growth	Previous Guidance	Beat/Miss
Cloud Revenues	$39.3M	$27.7M	+42%	N/A	Beat
Enterprise+ Subscription Revenue	$51M	$37.78M	+35%	N/A	Beat

Interpretation : JFrog's cloud revenue grew impressively by 42% year-over-year, contributing significantly to the overall revenue increase. The Enterprise+ subscription segment also performed well, showing a 35% growth. These metrics highlight the company's successful expansion in its cloud and enterprise segments.

Key Operational Data:

Metric	Q2 2024	Q2 2023	YoY Growth
Customers with >$1M ARR	42	24	+75%
Customers with >$100K ARR	928	813	+14.1%
Net Dollar Retention Rate	118%	N/A	N/A

Interpretation : The number of customers with annual recurring revenue (ARR) greater than $1 million saw a substantial growth of 75% year-over-year, indicating increasing adoption and larger commitments from significant customers. The net dollar retention rate of 118% demonstrates JFrog's ability to retain and grow revenue from its existing customer base.

Comments from Company Officers:

"We are on a mission to revolutionize the software industry with a unified platform that encompasses EveryOps and streamlines the software supply chain flow," said Shlomi Ben Haim, Co-founder and CEO of JFrog. Ben Haim highlighted the strategic importance of the Qwak AI acquisition for integrating MLOps alongside DevOps and Security capabilities.

Forward Guidance:

Q3 2024 Outlook : - Revenue : Between $105M and $106M - Non-GAAP Operating Income : Between $10M and $11M - Non-GAAP Net Income per Diluted Share : Between $0.09 and $0.11, assuming approximately 115 million weighted average diluted shares outstanding

Fiscal Year 2024 Outlook : - Revenue : Between $422M to $424M - Non-GAAP Operating Income : Between $52M and $54M - Non-GAAP Net Income per Diluted Share : Between $0.54 and $0.56, assuming approximately 116 million weighted average diluted shares outstanding

Stock Price Movement:

After event % change : -0.29%

Interpretation : The slight decline in stock price post-earnings release suggests that the market had mixed reactions, potentially due to the missed revenue estimate despite strong growth metrics and positive forward guidance.

In summary, JFrog showcased robust growth in key revenue segments and delivered a strong non-GAAP performance. The positive forward guidance reflects confidence in continued growth, driven by strategic acquisitions and product integrations.