The Liquid Software Company

News Release Details

JFrog Announces Third Quarter Fiscal 2021 Results

Nov 04, 2021 at 4:05 PM EDT

Quarterly Revenue Increases 38%; Cloud Revenue Increases 50%

Customer Count with ARR Greater than $100K Increases 49%

Completes Acquisition of Upswift

SUNNYVALE, Calif.--(BUSINESS WIRE)--Nov. 4, 2021-- JFrog Ltd. (NASDAQ: FROG), the Liquid Software company and creators of the DevOps Platform, today announced financial results for its third quarter ended September 30, 2021.

“JFrog’s strong performance in Q3 across all metrics demonstrated the company’s commitment to both new business and expansion of existing customers,” said Shlomi Ben Haim, CEO and Co-Founder of JFrog. “We successfully delivered on numerous fronts including technology innovation, revenue growth, cloud expansion, net dollar retention and gross margin. We started the second half of 2021 strong, and we will continue investing in our team and technology to drive further growth.”

Third Quarter Financial Highlights

  • Revenue for the third quarter of 2021 was $53.7 million, an increase of 38% over $38.9 million in the third quarter of 2020, and compared to 34% growth in the prior quarter.
  • GAAP Gross Profit was $42.2 million; GAAP Gross Margin was 78.7%.
  • Non-GAAP Gross Profit was $45.4 million; Non-GAAP Gross Margin was 84.5%.
  • GAAP Operating Loss was ($20.9 million); GAAP Operating Margin was (38.9%).
  • Non-GAAP Operating Income was $1.3 million; Non-GAAP Operating Margin was 2.5%.
  • GAAP Net Loss Per Diluted Share was ($0.21); Non-GAAP Net Income Per Diluted Share was $0.01.
  • Operating Cash Flow was ($17.7) million, with Free Cash Flow of ($18.7) million, due to $19.0 million in holdbacks related to recent acquisitions.
  • Cash, Cash Equivalents and Investments were $402.4 million as of September 30, 2021.

Third Quarter & Recent Business Highlights

  • Accelerating growth to 466 customers with ARR greater than $100k at quarter end, an increase of 49% from 313 as of September 30, 2020.
  • Strong growth to 14 customers with ARR greater than $1 million at quarter end, an increase of 56% from 9 as of September 30, 2020.
  • Cloud revenue in Q3 was $13.1 million, 50% growth over the same period last year, compared to 47% growth in the previous quarter. Cloud represented 24% of total revenue, up from 22% in the same period last year.
  • Net Dollar Retention rate for the trailing four quarters remained at 129%.
  • Customers using the complete JFrog Platform (Enterprise+ subscription) represented 34% of revenue in the third quarter of 2021, versus 19% in the same period last year.
  • Completed the acquisition of Upswift to deliver the industry’s first complete development-to-device platform, expanding the total addressable market.
  • Received U.S. Department of Defense “Iron Bank” certification for JFrog products to expand usage of JFrog in the government sector.
  • Partnered with SBC&S, a SoftBank company, as part of the APAC channel program, to accelerate DevOps adoption in Japan with the JFrog Platform.
  • Achieved CVE Numbering Authority (CNA) certification to contribute data to global security standards bodies, which is consumed by millions of developers that rely on CVEs as a trusted security source.

Fourth Quarter and Full Year 2021 Outlook

  • Fourth Quarter 2021 Outlook:
    • Revenue between $57.5 million and $58.5 million
    • Non-GAAP operating income between $0.1 million and $1.0 million
    • Non-GAAP net income per share between $0.00 and $0.01, assuming approximately 104 million weighted average diluted shares outstanding
  • Full Year 2021 Outlook:
    • Revenue between $205 million to $206 million
    • Non-GAAP operating income between $4.2 million and $5.2 million
    • Non-GAAP net income per share between $0.04 and $0.05, assuming approximately 104 million weighted average diluted shares outstanding

The section titled "Non-GAAP Financial Information" below describes our usage of non-GAAP financial measures. Reconciliations between historical GAAP and non-GAAP information are contained at the end of this press release following the accompanying financial data.

Conference Call Details

A live webcast of the conference call will be accessible from the investor relations website at https://investors.jfrog.com/events-and-presentations/events.

About JFrog

JFrog is on a mission to be the company powering all of the world’s software updates, driven by a “Liquid Software” vision to allow the seamless, secure flow of binaries from developers to the edge. The company’s end-to-end DevOps platform – the JFrog Platform - provides the tools and visibility required by modern organizations to solve today’s challenges across critical pieces of the DevOps cycle. JFrog’s hybrid, universal, multi-cloud DevOps platform is available as both self-managed and SaaS services on AWS, Microsoft Azure, and Google Cloud. JFrog is trusted by millions of users and thousands of customers, including a majority of the Fortune 100 companies that depend on JFrog solutions to manage their mission-critical software delivery pipelines. Learn more at jfrog.com.

Forward-Looking Statements:

This press release and the earnings call referencing this press release contain “forward-looking” statements, as that term is defined under the U.S. federal securities laws, including but not limited to statements regarding JFrog’s future financial performance, including our outlook for the fourth quarter and for the full year of 2021, our leadership position in the markets in which we participate, our ability to drive growth, our expectations regarding recent acquisitions by us, including our ability to successfully integrate the acquisition into our business operations, including the DevOps platform, and realize anticipated benefits and synergies from the acquisition, our ability to expand usage of our platform in the government sector, our ability to contribute data to global security standards bodies, and our ability to meet market demands. These forward-looking statements are based on JFrog’s current assumptions, expectations and beliefs and are subject to substantial risks, uncertainties, assumptions and changes in circumstances that may cause JFrog’s actual results, performance or achievements to differ materially from those expressed or implied in any forward-looking statement.

There are a significant number of factors that could cause actual results to differ materially from statements made in this press release and our earnings call, including but not limited to: risks associated with managing our rapid growth; our history of losses; our limited operating history; our ability to retain and upgrade existing customers our ability to attract new customers; our ability to effectively develop and expand our sales and marketing capabilities; our ability to integrate and realize anticipated synergies from acquisitions of complementary businesses; risk of a security breach; risk of interruptions or performance problems associated with our products and platform capabilities; our ability to adapt and respond to rapidly changing technology or customer needs; our ability to compete in the markets in which we participate; our ability to successfully integrate technology from recent acquisitions, including Upswift, into our offerings; our and Vdoo’s ability to provide continuity to our respective customers following our recent acquisitions, and our ability to realize innovations following the acquisition; general market, political, economic, and business conditions; and the duration and impact of the COVID-19 pandemic. Our actual results could differ materially from those stated or implied in forward-looking statements due to a number of factors, including but not limited to, risks detailed in our filings with the Securities and Exchange Commission, including in our annual report on Form 10-K for the year ended December 31, 2020, our quarterly reports on Form 10-Q, and other filings and reports that we may file from time to time with the Securities and Exchange Commission. Forward-looking statements represent our beliefs and assumptions only as of the date of this press release. We disclaim any obligation to update forward-looking statements.

About Non-GAAP Financial Measures:

JFrog discloses the following non-GAAP financial measures in this release and the earnings call referencing this press release: non-GAAP operating income (loss), non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating expenses (research and development, sales and marketing, general and administrative), non-GAAP operating margin, non-GAAP net income (loss), non-GAAP net income (loss) per diluted share, non-GAAP net income (loss) per basic share, and free cash flow. JFrog uses each of these non-GAAP financial measures internally to understand and compare operating results across accounting periods, for internal budgeting and forecasting purposes, for short- and long-term operating plans, and to evaluate JFrog’s financial performance. JFrog believes they are useful to investors, as a supplement to GAAP measures, in evaluating its operational performance, as further discussed below. JFrog’s non-GAAP financial measures may not provide information that is directly comparable to that provided by other companies in its industry, as other companies in its industry may calculate non-GAAP financial results differently, particularly related to non-recurring and unusual items. In addition, there are limitations in using non-GAAP financial measures because the non-GAAP financial measures are not prepared in accordance with GAAP and may be different from non-GAAP financial measures used by other companies and exclude expenses that may have a material impact on JFrog’s reported financial results.

Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP.

A reconciliation of the historical non-GAAP financial measures to their most directly comparable GAAP measures has been provided in the financial statement tables included below in this press release. A reconciliation of non-GAAP guidance measures to corresponding GAAP measures is not available on a forward-looking basis without unreasonable effort due to the uncertainty regarding, and the potential variability of, reconciling items that may be incurred in the future such as share-based compensation, the effect of which may be significant.

JFrog defines non-GAAP gross profit, non-GAAP operating expenses (research and development, sales and marketing, general and administrative), non-GAAP gross margin, non-GAAP operating margin, non-GAAP operating income (loss) and non-GAAP net income (loss) as the respective GAAP balances, adjusted for, as applicable: (1) share-based compensation expense; (2) the amortization of acquired intangibles; (3) acquisition-related costs and (4) income tax effects. JFrog defines free cash flow as Net cash provided by (used in) operating activities, minus capital expenditures. Investors are encouraged to review the reconciliation of these historical non-GAAP financial measures to their most directly comparable GAAP financial measures.

Management believes these non-GAAP financial measures are useful to investors and others in assessing JFrog’s operating performance due to the following factors:

Share-based compensation. JFrog utilizes share-based compensation to attract and retain employees. It is principally aimed at aligning their interests with those of its shareholders and at long-term retention, rather than to address operational performance for any particular period. As a result, share-based compensation expenses vary for reasons that are generally unrelated to financial and operational performance in any particular period.

Amortization of acquired intangibles. JFrog views amortization of acquired intangible assets as items arising from pre-acquisition activities determined at the time of an acquisition. While these intangible assets are evaluated for impairment regularly, amortization of the cost of acquired intangibles is an expense that is not typically affected by operations during any particular period.

Acquisition-related costs. Acquisition-related costs include expenses related to acquisitions of other companies. JFrog views acquisition-related costs as expenses that are not necessarily reflective of operational performance during a period.

Income tax effects. JFrog’s non-GAAP financial results are adjusted for income tax effects related to these non-GAAP adjustments and changes in our assessment regarding the realizability of our deferred tax assets, if any. Excluding income tax effects of non-GAAP adjustments provides a more accurate view of JFrog’s operating results.

Non-GAAP weighted average share count. JFrog defines non-GAAP weighted-average shares used to compute non-GAAP net income (loss) per share, basic and diluted, as GAAP weighted average shares used to compute net income (loss) per share attributable to common shareholders, basic and diluted, adjusted to reflect the ordinary shares issued in connection with the IPO that are outstanding as of the end of the period as if they were outstanding as of the beginning of the period for comparability.

Additionally, JFrog’s management believes that the non-GAAP financial measure, free cash flow, is meaningful to investors because management reviews cash flows generated from operations after taking into consideration capital expenditures due to the fact that these expenditures are considered to be a necessary component of ongoing operations.

Operating Metrics

JFrog’s number of customers with annual recurring revenue (“ARR”) of $100,000 or more is based on the ARR of each customer, as of the last month of the quarter. JFrog’s number of customers with ARR of $1 million or more is based on the ARR of each customer, as of the last month of the quarter. JFrog defines ARR as the annualized revenue run-rate of subscription agreements from all customers as of the last month of the quarter. The ARR includes monthly subscription customers, so long as JFrog generates revenue from these customers. JFrog annualizes its monthly subscriptions by taking the revenue it would contractually expect to receive from such customers in a given month and multiplying it by 12.

JFrog’s net dollar retention rate compares its ARR from the same set of customers across comparable periods. JFrog calculates net dollar retention rate by first identifying customers (the “Base Customers”), which were customers in the last month of a particular quarter (the “Base Quarter”). JFrog then calculates the contracted ARR from these Base Customers in the last month of the same quarter of the subsequent year (the “Comparison Quarter”). This calculation captures upsells, contraction, and attrition since the Base Quarter. JFrog then divides total Comparison Quarter ARR by total Base Quarter ARR for Base Customers. JFrog’s net dollar retention rate in a particular quarter is obtained by averaging the result from that particular quarter with the corresponding results from each of the prior three quarters.

JFROG LTD.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data; unaudited)

             

 

 

Three Months Ended
September 30,

 

Nine Months Ended
September 30,

 

 

2021

 

2020

 

2021

 

2020

Revenue:

 

 

 

 

 

 

 

 

 

 

 

 

Subscription—self-managed and SaaS

 

$

49,248

 

 

$

35,714

 

 

$

135,898

 

 

$

99,172

 

License—self-managed

 

 

4,455

 

 

 

3,172

 

 

 

11,549

 

 

 

8,966

 

Total subscription revenue

 

 

53,703

 

 

 

38,886

 

 

 

147,447

 

 

 

108,138

 

Cost of revenue:

 

 

 

 

 

 

 

 

 

 

 

 

Subscription—self-managed and SaaS(1)(2)(3)

 

 

11,262

 

 

 

7,047

 

 

 

28,379

 

 

 

19,712

 

License—self-managed(3)

 

 

199

 

 

 

214

 

 

 

580

 

 

 

642

 

Total cost of revenue—subscription

 

 

11,461

 

 

 

7,261

 

 

 

28,959

 

 

 

20,354

 

Gross profit

 

 

42,242

 

 

 

31,625

 

 

 

118,488

 

 

 

87,784

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Research and development(1)(2)

 

 

23,142

 

 

 

10,381

 

 

 

53,666

 

 

 

29,452

 

Sales and marketing(1)(2)(3)

 

 

24,321

 

 

 

14,839

 

 

 

66,112

 

 

 

42,744

 

General and administrative(1)(2)

 

 

15,695

 

 

 

11,804

 

 

 

44,469

 

 

 

21,748

 

Total operating expenses

 

 

63,158

 

 

 

37,024

 

 

 

164,247

 

 

 

93,944

 

Operating loss

 

 

(20,916

)

 

 

(5,399

)

 

 

(45,759

)

 

 

(6,160

)

Interest and other income, net

 

 

20

 

 

 

384

 

 

 

726

 

 

 

1,522

 

Loss before income taxes

 

 

(20,896

)

 

 

(5,015

)

 

 

(45,033

)

 

 

(4,638

)

Income tax expense (benefit)

 

 

(432

)

 

 

250

 

 

 

(3,525

)

 

 

1,053

 

Net loss

 

$

(20,464

)

 

$

(5,265

)

 

$

(41,508

)

 

$

(5,691

)

Net loss per share attributable to ordinary shareholders, basic and diluted

 

$

(0.21

)

 

$

(0.14

)

 

$

(0.44

)

 

$

(0.18

)

Weighted-average shares used in computing net loss per share attributable to ordinary shareholders, basic and diluted

 

 

95,707

 

 

 

37,516

 

 

 

94,029

 

 

 

31,359

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Includes share-based compensation expense as follows:

 

 

 

 

 

 

 

 

 

 

 

 

Cost of revenue: subscription—self-managed and SaaS

 

$

1,180

 

 

$

327

 

 

$

2,766

 

 

$

666

 

Research and development

 

 

4,547

 

 

 

1,086

 

 

 

9,056

 

 

 

2,782

 

Sales and marketing

 

 

4,307

 

 

 

1,263

 

 

 

10,552

 

 

 

3,033

 

General and administrative

 

 

6,823

 

 

 

6,984

 

 

 

20,337

 

 

 

7,918

 

Total share-based compensation expense

 

$

16,857

 

 

$

9,660

 

 

$

42,711

 

 

$

14,399

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2) Includes acquisition-related costs as follows:

 

 

 

 

 

 

 

 

 

 

 

 

Cost of revenue: subscription–self-managed and SaaS

 

$

3

 

 

$

 

 

$

3

 

 

$

 

Research and development

 

 

2,305

 

 

 

352

 

 

 

3,007

 

 

 

1,051

 

Sales and marketing

 

 

279

 

 

 

114

 

 

 

279

 

 

 

342

 

General and administrative

 

 

511

 

 

 

 

 

 

872

 

 

 

 

Total acquisition-related costs

 

$

3,098

 

 

$

466

 

 

$

4,161

 

 

$

1,393

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(3) Includes amortization of acquired intangibles as follows:

 

 

 

 

 

 

 

 

 

 

 

 

Cost of revenue: subscription–self-managed and SaaS

 

$

1,773

 

 

$

 

 

$

1,773

 

 

$

 

Cost of revenue: license—self-managed

 

 

199

 

 

 

214

 

 

 

580

 

 

 

642

 

Sales and marketing

 

 

327

 

 

 

183

 

 

 

691

 

 

 

547

 

Total amortization expense of acquired intangible assets

 

$

2,299

 

 

$

397

 

 

$

3,044

 

 

$

1,189

 

JFROG LTD.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands; unaudited)

             

 

 

September 30, 2021

 

December 31, 2020

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

84,607

 

 

$

164,461

 

Short-term investments

 

 

317,776

 

 

 

433,595

 

Accounts receivable, net

 

 

43,845

 

 

 

37,048

 

Deferred contract acquisition costs

 

 

4,491

 

 

 

3,247

 

Prepaid expenses and other current assets

 

 

19,031

 

 

 

14,210

 

Total current assets

 

 

469,750

 

 

 

652,561

 

Property and equipment, net

 

 

6,421

 

 

 

4,963

 

Deferred contract acquisition costs, noncurrent

 

 

7,550

 

 

 

4,949

 

Operating lease right-of-use assets

 

 

27,421

 

 

 

 

Intangible assets, net

 

 

50,835

 

 

 

4,047

 

Goodwill

 

 

247,776

 

 

 

17,320

 

Other assets, noncurrent

 

 

19,926

 

 

 

5,391

 

Total assets

 

$

829,679

 

 

$

689,231

 

Liabilities and Shareholders’ Equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

9,705

 

 

$

9,911

 

Accrued expenses and other current liabilities

 

 

19,638

 

 

 

21,039

 

Operating lease liabilities

 

 

6,917

 

 

 

 

Deferred revenue

 

 

110,905

 

 

 

91,750

 

Total current liabilities

 

 

147,165

 

 

 

122,700

 

Deferred revenue, noncurrent

 

 

16,013

 

 

 

11,087

 

Operating lease liabilities, noncurrent

 

 

21,118

 

 

 

 

Other liabilities, noncurrent

 

 

1,140

 

 

 

1,550

 

Total liabilities

 

 

185,436

 

 

 

135,337

 

Shareholders’ equity:

 

 

 

 

 

 

Share capital

 

 

269

 

 

 

257

 

Additional paid-in capital

 

 

760,378

 

 

 

628,054

 

Accumulated other comprehensive income (loss)

 

 

(107

)

 

 

372

 

Accumulated deficit

 

 

(116,297

)

 

 

(74,789

)

Total shareholders’ equity

 

 

644,243

 

 

 

553,894

 

Total liabilities and shareholders’ equity

 

$

829,679

 

 

$

689,231

 

JFROG LTD.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands; unaudited)

             

 

 

Three Months Ended
September 30,

 

Nine Months Ended
September 30,

 

 

2021

 

2020

 

2021

 

2020

Cash flows from operating activities:

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

$

(20,464

)

 

$

(5,265

)

 

$

(41,508

)

 

$

(5,691

)

Adjustments to reconcile net loss to net cash provided by operating activities:

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

3,058

 

 

 

928

 

 

 

5,140

 

 

 

2,683

 

Share-based compensation expense

 

 

16,857

 

 

 

9,660

 

 

 

42,711

 

 

 

14,399

 

Non-cash operating lease expense

 

 

1,640

 

 

 

 

 

 

4,298

 

 

 

 

Net amortization of premium or discount on investments

 

 

1,596

 

 

 

588

 

 

 

4,482

 

 

 

1,012

 

Changes in operating assets and liabilities, net of business combinations:

 

 

 

 

 

 

 

 

 

 

 

 

Accounts receivable

 

 

(7,150

)

 

 

1,620

 

 

 

(6,172

)

 

 

(807

)

Prepaid expenses and other assets

 

 

(17,311

)

 

 

(2,965

)

 

 

(18,684

)

 

 

(4,285

)

Deferred contract acquisition costs

 

 

(1,565

)

 

 

(549

)

 

 

(3,845

)

 

 

(994

)

Accounts payable

 

 

(510

)

 

 

1,492

 

 

 

(679

)

 

 

2,273

 

Accrued expenses and other liabilities

 

 

957

 

 

 

1,909

 

 

 

5,663

 

 

 

4,063

 

Operating lease liabilities

 

 

(1,293

)

 

 

 

 

 

(3,935

)

 

 

 

Deferred revenue

 

 

6,442

 

 

 

3,360

 

 

 

22,770

 

 

 

3,989

 

Net cash provided by (used in) operating activities

 

 

(17,743

)

 

 

10,778

 

 

 

10,241

 

 

 

16,642

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

 

 

 

 

Purchases of short-term investments

 

 

(19,460

)

 

 

(149,718

)

 

 

(170,674

)

 

 

(235,773

)

Maturities and sales of short-term investments

 

 

56,019

 

 

 

39,346

 

 

 

281,973

 

 

 

108,421

 

Purchases of property and equipment

 

 

(916

)

 

 

(1,105

)

 

 

(3,190

)

 

 

(2,611

)

Payments for business combinations, net of cash acquired

 

 

(195,752

)

 

 

 

 

 

(195,752

)

 

 

 

Prepayment for purchase of intangible asset

 

 

 

 

 

 

 

 

(600

)

 

 

 

Net cash used in investing activities

 

 

(160,109

)

 

 

(111,477

)

 

 

(88,243

)

 

 

(129,963

)

Cash flows from financing activities:

 

 

 

 

 

 

 

 

 

 

 

 

Payments of deferred offering costs

 

 

 

 

 

397,685

 

 

 

 

 

 

395,211

 

Proceeds from exercise of share options

 

 

1,154

 

 

 

817

 

 

 

4,760

 

 

 

1,723

 

Proceeds from employee share purchase plan

 

 

3,092

 

 

 

 

 

 

3,092

 

 

 

 

Payments to tax authorities from employee equity transactions, net

 

 

(239

)

 

 

 

 

 

(8,946

)

 

 

 

Net cash provided by (used in) financing activities

 

 

4,007

 

 

 

398,502

 

 

 

(1,094

)

 

 

396,934

 

Net increase (decrease) in cash, cash equivalents, and restricted cash

 

 

(173,845

)

 

 

297,803

 

 

 

(79,096

)

 

 

283,613

 

Cash, cash equivalents, and restricted cash—beginning of period

 

 

259,488

 

 

 

26,753

 

 

 

164,739

 

 

 

40,943

 

Cash, cash equivalents, and restricted cash—end of period

 

$

85,643

 

 

$

324,556

 

 

$

85,643

 

 

$

324,556

 

Reconciliation of cash, cash equivalents, and restricted cash within the Condensed Consolidated Balance Sheets to the amounts shown in the Condensed Consolidated Statements of Cash Flows above:

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

84,607

 

 

$

324,288

 

 

$

84,607

 

 

$

324,288

 

Restricted cash included in prepaid expenses and other current assets

 

 

787

 

 

 

14

 

 

 

787

 

 

 

14

 

Restricted cash included in other assets, noncurrent

 

 

249

 

 

 

254

 

 

 

249

 

 

 

254

 

Total cash, cash equivalents, and restricted cash

 

$

85,643

 

 

$

324,556

 

 

$

85,643

 

 

$

324,556

 

JFROG LTD.

RECONCILIATION OF GAAP TO NON-GAAP RESULTS

(in thousands; unaudited)

             

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

 

2021

 

2020

 

2021

 

2020

Reconciliation of gross profit and gross margin

 

 

 

 

 

 

 

 

 

 

 

 

GAAP gross profit

 

$

42,242

 

 

$

31,625

 

 

$

118,488

 

 

$

87,784

 

Plus: Share-based compensation expense

 

 

1,180

 

 

 

327

 

 

 

2,766

 

 

 

666

 

Plus: Acquisition-related costs

 

 

3

 

 

 

 

 

 

3

 

 

 

 

Plus: Amortization of acquired intangibles

 

 

1,972

 

 

 

214

 

 

 

2,353

 

 

 

642

 

Non-GAAP gross profit

 

$

45,397

 

 

$

32,166

 

 

$

123,610

 

 

$

89,092

 

GAAP gross margin

 

 

78.7

%

 

 

81.3

%

 

 

80.4

%

 

 

81.2

%

Non-GAAP gross margin

 

 

84.5

%

 

 

82.7

%

 

 

83.8

%

 

 

82.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of operating expenses

 

 

 

 

 

 

 

 

 

 

 

 

GAAP research and development

 

$

23,142

 

 

$

10,381

 

 

$

53,666

 

 

$

29,452

 

Less: Share-based compensation expense

 

 

(4,547

)

 

 

(1,086

)

 

 

(9,056

)

 

 

(2,782

)

Less: Acquisition-related costs

 

 

(2,305

)

 

 

(352

)

 

 

(3,007

)

 

 

(1,051

)

Non-GAAP research and development

 

$

16,290

 

 

$

8,943

 

 

$

41,603

 

 

$

25,619

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP sales and marketing

 

$

24,321

 

 

$

14,839

 

 

$

66,112

 

 

$

42,744

 

Less: Share-based compensation expense

 

 

(4,307

)

 

 

(1,263

)

 

 

(10,552

)

 

 

(3,033

)

Less: Acquisition-related costs

 

 

(279

)

 

 

(114

)

 

 

(279

)

 

 

(342

)

Less: Amortization of acquired intangibles

 

 

(327

)

 

 

(183

)

 

 

(691

)

 

 

(547

)

Non-GAAP sales and marketing

 

$

19,408

 

 

$

13,279

 

 

$

54,590

 

 

$

38,822

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP general and administrative

 

$

15,695

 

 

$

11,804

 

 

$

44,469

 

 

$

21,748

 

Less: Share-based compensation expense

 

 

(6,823

)

 

 

(6,984

)

 

 

(20,337

)

 

 

(7,918

)

Less: Acquisition-related costs

 

 

(511

)

 

 

 

 

 

(872

)

 

 

 

Non-GAAP general and administrative

 

$

8,361

 

 

$

4,820

 

 

$

23,260

 

 

$

13,830

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of operating income (loss) and operating margin

 

 

 

 

 

 

 

 

 

 

 

 

GAAP operating loss

 

$

(20,916

)

 

$

(5,399

)

 

$

(45,759

)

 

$

(6,160

)

Plus: Share-based compensation expense

 

 

16,857

 

 

 

9,660

 

 

 

42,711

 

 

 

14,399

 

Plus: Acquisition-related costs

 

 

3,098

 

 

 

466

 

 

 

4,161

 

 

 

1,393

 

Plus: Amortization of acquired intangibles

 

 

2,299

 

 

 

397

 

 

 

3,044

 

 

 

1,189

 

Non-GAAP operating income

 

$

1,338

 

 

$

5,124

 

 

$

4,157

 

 

$

10,821

 

GAAP operating margin

 

 

(38.9

)%

 

 

(13.9

)%

 

 

(31.0

)%

 

 

(5.7

)%

Non-GAAP operating margin

 

 

2.5

%

 

 

13.2

%

 

 

2.8

%

 

 

10.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of net income (loss)

 

 

 

 

 

 

 

 

 

 

 

 

GAAP net loss

 

$

(20,464

)

 

$

(5,265

)

 

$

(41,508

)

 

$

(5,691

)

Plus: Share-based compensation expense

 

 

16,857

 

 

 

9,660

 

 

 

42,711

 

 

 

14,399

 

Plus: Acquisition-related costs

 

 

3,098

 

 

 

466

 

 

 

4,161

 

 

 

1,393

 

Plus: Amortization of acquired intangibles

 

 

2,299

 

 

 

397

 

 

 

3,044

 

 

 

1,189

 

Less: Income tax effects(1)

 

 

(858

)

 

 

 

 

 

(4,754

)

 

 

 

Non-GAAP net income

 

$

932

 

 

$

5,258

 

 

$

3,654

 

 

$

11,290

 

Net income per share - basic

 

$

0.01

 

 

$

0.06

 

 

$

0.04

 

 

$

0.12

 

Net income per share - diluted

 

$

0.01

 

 

$

0.05

 

 

$

0.04

 

 

$

0.11

 

Shares used in non-GAAP net income per share calculations:

 

 

 

 

 

 

 

 

 

 

 

 

GAAP weighted-average shares used to compute net loss per share - basic

 

 

95,707

 

 

 

37,516

 

 

 

94,029

 

 

 

31,359

 

Add: Non-GAAP unweighted adjustment for ordinary shares issued in connection with IPO

 

 

 

 

 

53,180

 

 

 

 

 

 

58,997

 

Non-GAAP weighted-average shares used to compute net income per share - basic

 

 

95,707

 

 

 

90,696

 

 

 

94,029

 

 

 

90,356

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP weighted-average shares used to compute net loss per share - diluted

 

 

95,707

 

 

 

37,516

 

 

 

94,029

 

 

 

31,359

 

Add: Non-GAAP unweighted adjustment for ordinary shares issued in connection with IPO

 

 

 

 

 

53,180

 

 

 

 

 

 

58,997

 

Add: Dilutive ordinary share equivalents

 

 

8,407

 

 

 

11,092

 

 

 

9,353

 

 

 

10,120

 

Non-GAAP weighted-average shares used to compute net income per share - diluted

 

 

104,114

 

 

 

101,788

 

 

 

103,382

 

 

 

100,476

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Income tax effects of non-GAAP adjustments in the three months and nine months ended September 30, 2020 were immaterial.

JFROG LTD.

RECONCILIATION OF GAAP CASH FLOW FROM OPERATING ACTIVITIES TO FREE CASH FLOW

AND SUPPPLEMENTAL DISCLOSURE

(in thousands; unaudited)

             

 

 

Three Months Ended
September 30,

 

Nine Months Ended
September 30,

 

 

2021

 

2020

 

2021

 

2020

Free cash flow reconciliation:

 

 

 

 

 

 

 

 

 

 

 

 

Net cash provided by (used in) operating activities

 

$

(17,743

)

 

$

10,778

 

 

$

10,241

 

 

$

16,642

 

Less: purchases of property and equipment

 

 

(916

)

 

 

(1,105

)

 

 

(3,190

)

 

 

(2,611

)

Free cash flow

 

$

(18,659

)

 

$

9,673

 

 

$

7,051

 

 

$

14,031

 

Supplemental disclosure:

 

 

 

 

 

 

 

 

 

 

 

 

Key employee holdback prepayments related to acquisitions(1)

 

$

(19,037

)

 

$

 

 

$

(19,037

)

 

$

 

(1) During the three months ended September 30, 2021, as part of our acquisitions of Vdoo Connected Trust Ltd. and Upswift Ltd., we entered into holdback agreements with key employees of the acquired companies and made aggregate prepayments of $19.0 million, which will be released to the employees subject to their continued employment with us. The holdback amount is being expensed primarily in research and development over the required service period up to four years.

Investor Contact:
JoAnn Horne
jhorne@marketstreetpartners.com

Source: JFrog Ltd.

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