Le Lézard
Classified in: Science and technology, Business
Subjects: EARNINGS, Conference Call, Webcast

JFrog Announces Third Quarter Fiscal 2023 Results


JFrog Ltd. ("JFrog") (Nasdaq: FROG), the Liquid Software company and creators of the JFrog Software Supply Chain Platform, today announced financial results for its third quarter ended September 30, 2023.

"JFrog exceeded the high end of our guidance with solid performance in the third quarter. The numbers clearly illustrate the successful enterprise adoption of our hybrid Software Supply Chain Platform, which is focused on binary lifecycle management and incorporates comprehensive security solutions," said Shlomi Ben Haim, JFrog CEO and Co-founder. "The new additions to our DevOps, Security and MLOps capabilities pave the way for future expansion, and we remain confident about driving further growth in the final quarter of the year."

Third Quarter 2023 Financial Highlights

Recent Business & Product Highlights

Fourth Quarter and Fiscal Year 2023 Outlook

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.

About JFrog

JFrog Ltd. (Nasdaq: FROG), is on a mission to create a world of software delivered without friction from developer to device. Driven by a "Liquid Software" vision, the JFrog Software Supply Chain Platform is a single system of record that powers organizations to build, manage, and distribute software quickly and securely, ensuring it is available, traceable, and tamper-proof. The integrated security features also help identify, protect, and remediate against threats and vulnerabilities. JFrog's hybrid, universal, multi-cloud platform is available as both self-hosted and SaaS services across major cloud service providers. Millions of users and 7K+ customers worldwide, including a majority of the Fortune 100, depend on JFrog solutions to securely embrace digital transformation. Learn more at www.jfrog.com or follow us @JFrog.

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 2023, expectations regarding the market and revenue potential for JFrog Artifactory, JFrog Xray, JFrog Distribution, JFrog Connect and JFrog Curation , including the efficacy and benefit of integrating of any of the foregoing with other products and platform, our expectations regarding the mission-critical nature of the "JFrog Software Supply Chain Platform" to our customers' infrastructure, the growth potential of our cloud business, including hybrid and multi-cloud, our ability to provide effective tools and solutions to detect and remediate security vulnerabilities, the ability of our strategic sales team to grow the business across top-tier accounts, our ability to expand usage of our platform in the government and commercial sectors, our ability to successfully integrate acquisitions into our business operations, including the JFrog Platform, and realize anticipated benefits and synergies from such acquisitions, our ability to contribute data to global security standards bodies, and our ability to innovate and meet market demands and the software supply chain needs of our customers. 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 incident or product vulnerability; 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 acquisitions, into our offerings; our ability to provide continuity to our respective customers and realize innovation following our acquisitions; general market, political, economic, and business conditions, including the impact and the duration of the war between Hamas and Israel. 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, 2022, 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; (4) legal settlement costs and (5) 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.

Legal settlement costs. From time-to-time JFrog incurs charges related to litigation settlements. We exclude these charges and related professional service costs when associated with a significant settlement because they are not reflective of JFrog's ongoing business and operating results.

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. Diluted GAAP and non-GAAP weighted-average shares are the same, except in periods that there is a GAAP loss and a non-GAAP income. The non-GAAP weighted-average shares used to compute the non-GAAP net income per share - diluted are adjusted to reflect dilution equal to the dilutive impact had there been GAAP income.

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,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Revenue:

 

 

 

 

 

 

 

 

 

 

 

 

Subscription?self-managed and SaaS

 

$

84,131

 

 

$

67,750

 

 

$

238,141

 

 

$

190,498

 

License?self-managed

 

 

4,505

 

 

 

4,241

 

 

 

14,485

 

 

 

12,996

 

Total subscription revenue

 

 

88,636

 

 

 

71,991

 

 

 

252,626

 

 

 

203,494

 

Cost of revenue:

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

19,532

 

 

 

15,678

 

 

 

55,966

 

 

 

44,345

 

License?self-managed(3)

 

 

218

 

 

 

220

 

 

 

654

 

 

 

660

 

Total cost of revenue?subscription

 

 

19,750

 

 

 

15,898

 

 

 

56,620

 

 

 

45,005

 

Gross profit

 

 

68,886

 

 

 

56,093

 

 

 

196,006

 

 

 

158,489

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Research and development(1)(2)

 

 

33,358

 

 

 

31,698

 

 

 

101,788

 

 

 

87,744

 

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

 

 

37,915

 

 

 

33,152

 

 

 

109,753

 

 

 

94,323

 

General and administrative(1)(2)(4)

 

 

15,663

 

 

 

14,682

 

 

 

44,635

 

 

 

41,410

 

Total operating expenses

 

 

86,936

 

 

 

79,532

 

 

 

256,176

 

 

 

223,477

 

Operating loss

 

 

(18,050

)

 

 

(23,439

)

 

 

(60,170

)

 

 

(64,988

)

Interest and other income, net

 

 

5,733

 

 

 

1,369

 

 

 

14,621

 

 

 

2,159

 

Loss before income taxes

 

 

(12,317

)

 

 

(22,070

)

 

 

(45,549

)

 

 

(62,829

)

Income tax expense

 

 

1,430

 

 

 

1,482

 

 

 

4,474

 

 

 

4,200

 

Net loss

 

$

(13,747

)

 

$

(23,552

)

 

$

(50,023

)

 

$

(67,029

)

Net loss per share, basic and diluted

 

$

(0.13

)

 

$

(0.24

)

 

$

(0.49

)

 

$

(0.68

)

Weighted-average shares used in computing net loss per share, basic and diluted

 

 

104,135

 

 

 

99,618

 

 

 

102,646

 

 

 

98,825

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

Cost of revenue: subscription?self-managed and SaaS

 

$

2,650

 

 

$

1,903

 

 

$

6,865

 

 

$

4,822

 

Research and development

 

 

8,596

 

 

 

6,806

 

 

 

23,566

 

 

 

17,268

 

Sales and marketing

 

 

8,248

 

 

 

6,548

 

 

 

21,461

 

 

 

16,095

 

General and administrative

 

 

6,192

 

 

 

3,960

 

 

 

15,028

 

 

 

10,183

 

Total share-based compensation expense

 

$

25,686

 

 

$

19,217

 

 

$

66,920

 

 

$

48,368

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2) Includes acquisition-related costs as follows:

 

 

 

 

 

 

 

 

 

 

 

 

Cost of revenue: subscription?self-managed and SaaS

 

$

6

 

 

$

6

 

 

$

16

 

 

$

19

 

Research and development

 

 

1,251

 

 

 

2,304

 

 

 

6,931

 

 

 

6,828

 

Sales and marketing

 

 

19

 

 

 

228

 

 

 

89

 

 

 

464

 

General and administrative

 

 

18

 

 

 

10

 

 

 

158

 

 

 

244

 

Total acquisition-related costs

 

$

1,294

 

 

$

2,548

 

 

$

7,194

 

 

$

7,555

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(3) Includes amortization of acquired intangibles as follows:

 

 

 

 

 

 

 

 

 

 

 

 

Cost of revenue: subscription?self-managed and SaaS

 

$

2,386

 

 

$

2,386

 

 

$

7,160

 

 

$

7,158

 

Cost of revenue: license?self-managed

 

 

218

 

 

 

220

 

 

 

654

 

 

 

660

 

Sales and marketing

 

 

357

 

 

 

298

 

 

 

1,073

 

 

 

770

 

Total amortization expense of acquired intangible assets

 

$

2,961

 

 

$

2,904

 

 

$

8,887

 

 

$

8,588

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(4) Includes legal settlement costs as follows:

 

 

 

 

 

 

 

 

 

 

 

 

General and administrative

 

$

?

 

 

$

?

 

 

$

?

 

 

$

216

 

JFROG LTD.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands; unaudited)

 

 

 

September 30, 2023

 

 

December 31, 2022

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

60,984

 

 

$

45,595

 

Short-term investments

 

 

441,194

 

 

 

397,605

 

Accounts receivable, net

 

 

60,922

 

 

 

62,117

 

Deferred contract acquisition costs

 

 

10,211

 

 

 

8,102

 

Prepaid expenses and other current assets

 

 

13,924

 

 

 

18,603

 

Total current assets

 

 

587,235

 

 

 

532,022

 

Property and equipment, net

 

 

6,582

 

 

 

8,021

 

Deferred contract acquisition costs, noncurrent

 

 

16,161

 

 

 

13,501

 

Operating lease right-of-use assets

 

 

25,212

 

 

 

24,602

 

Intangible assets, net

 

 

28,657

 

 

 

37,544

 

Goodwill

 

 

247,955

 

 

 

247,955

 

Other assets, noncurrent

 

 

7,805

 

 

 

7,576

 

Total assets

 

$

919,607

 

 

$

871,221

 

Liabilities and Shareholders' Equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

14,712

 

 

$

14,867

 

Accrued expenses and other current liabilities

 

 

32,083

 

 

 

28,848

 

Operating lease liabilities

 

 

8,163

 

 

 

7,132

 

Deferred revenue

 

 

179,446

 

 

 

158,725

 

Total current liabilities

 

 

234,404

 

 

 

209,572

 

Deferred revenue, noncurrent

 

 

12,489

 

 

 

16,990

 

Operating lease liabilities, noncurrent

 

 

15,903

 

 

 

16,829

 

Other liabilities, noncurrent

 

 

3,713

 

 

 

3,057

 

Total liabilities

 

 

266,509

 

 

 

246,448

 

Shareholders' equity:

 

 

 

 

 

 

Share capital

 

 

294

 

 

 

283

 

Additional paid-in capital

 

 

935,445

 

 

 

856,438

 

Accumulated other comprehensive loss

 

 

(3,442

)

 

 

(2,772

)

Accumulated deficit

 

 

(279,199

)

 

 

(229,176

)

Total shareholders' equity

 

 

653,098

 

 

 

624,773

 

Total liabilities and shareholders' equity

 

$

919,607

 

 

$

871,221

 

JFROG LTD.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands; unaudited)

 

 

 

 

 

 

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

$

(13,747

)

 

$

(23,552

)

 

$

(50,023

)

 

$

(67,029

)

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

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

3,837

 

 

 

3,698

 

 

 

11,512

 

 

 

10,789

 

Share-based compensation expense

 

 

25,686

 

 

 

19,217

 

 

 

66,920

 

 

 

48,368

 

Non-cash operating lease expense

 

 

2,149

 

 

 

1,847

 

 

 

6,294

 

 

 

5,449

 

Net amortization of premium or discount on investments

 

 

(1,718

)

 

 

626

 

 

 

(4,588

)

 

 

3,014

 

Losses (gains) on foreign exchange

 

 

(278

)

 

 

1,937

 

 

 

(869

)

 

 

1,937

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

Accounts receivable

 

 

1,558

 

 

 

3,736

 

 

 

1,337

 

 

 

1,215

 

Prepaid expenses and other assets

 

 

2,491

 

 

 

969

 

 

 

530

 

 

 

5,105

 

Deferred contract acquisition costs

 

 

(3,175

)

 

 

(1,864

)

 

 

(4,769

)

 

 

(5,470

)

Accounts payable

 

 

1,794

 

 

 

(99

)

 

 

(119

)

 

 

2,128

 

Accrued expenses and other liabilities

 

 

1,905

 

 

 

(2,268

)

 

 

4,935

 

 

 

3,189

 

Operating lease liabilities

 

 

(2,048

)

 

 

(1,786

)

 

 

(5,818

)

 

 

(7,212

)

Deferred revenue

 

 

7,527

 

 

 

2,667

 

 

 

16,220

 

 

 

12,628

 

Net cash provided by operating activities

 

 

25,981

 

 

 

5,128

 

 

 

41,562

 

 

 

14,111

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

 

 

 

 

Purchases of short-term investments

 

 

(98,738

)

 

 

(124,436

)

 

 

(303,310

)

 

 

(305,715

)

Maturities and sales of short-term investments

 

 

83,676

 

 

 

117,906

 

 

 

266,847

 

 

 

273,775

 

Purchases of property and equipment

 

 

(591

)

 

 

(1,306

)

 

 

(1,364

)

 

 

(3,437

)

Payments related to business combination

 

 

?

 

 

 

?

 

 

 

?

 

 

 

(179

)

Purchase of intangible asset

 

 

?

 

 

 

(300

)

 

 

?

 

 

 

(300

)

Net cash used in investing activities

 

 

(15,653

)

 

 

(8,136

)

 

 

(37,827

)

 

 

(35,856

)

Cash flows from financing activities:

 

 

 

 

 

 

 

 

 

 

 

 

Proceeds from exercise of share options

 

 

2,066

 

 

 

1,802

 

 

 

5,433

 

 

 

4,675

 

Proceeds from employee share purchase plan

 

 

3,166

 

 

 

1,923

 

 

 

6,665

 

 

 

5,176

 

Payments to tax authorities, net of proceeds from employee equity transactions

 

 

(1,149

)

 

 

335

 

 

 

(332

)

 

 

(160

)

Net cash provided by financing activities

 

 

4,083

 

 

 

4,060

 

 

 

11,766

 

 

 

9,691

 

Effect of exchange rate changes on cash, cash equivalents and restricted cash

 

 

(121

)

 

 

(2,293

)

 

 

(112

)

 

 

(2,293

)

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

 

 

14,290

 

 

 

(1,241

)

 

 

15,389

 

 

 

(14,347

)

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

 

 

46,706

 

 

 

55,434

 

 

 

45,607

 

 

 

68,540

 

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

 

$

60,996

 

 

$

54,193

 

 

$

60,996

 

 

$

54,193

 

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

 

$

60,984

 

 

$

53,971

 

 

$

60,984

 

 

$

53,971

 

Restricted cash included in prepaid expenses and other current assets

 

 

12

 

 

 

12

 

 

 

12

 

 

 

12

 

Restricted cash included in other assets, noncurrent

 

 

?

 

 

 

210

 

 

 

?

 

 

 

210

 

Total cash, cash equivalents, and restricted cash

 

$

60,996

 

 

$

54,193

 

 

$

60,996

 

 

$

54,193

 

JFROG LTD.

RECONCILIATION OF GAAP TO NON-GAAP RESULTS

(in thousands except per share data; unaudited)

 

 

 

 

 

 

 

 

 

Three Months Ended
September 30,

 

 

Nine Months Ended
September 30,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Reconciliation of gross profit and gross margin

 

 

 

 

 

 

 

 

 

 

 

 

GAAP gross profit

 

$

68,886

 

 

$

56,093

 

 

$

196,006

 

 

$

158,489

 

Plus: Share-based compensation expense

 

 

2,650

 

 

 

1,903

 

 

 

6,865

 

 

 

4,822

 

Plus: Acquisition-related costs

 

 

6

 

 

 

6

 

 

 

16

 

 

 

19

 

Plus: Amortization of acquired intangibles

 

 

2,604

 

 

 

2,606

 

 

 

7,814

 

 

 

7,818

 

Non-GAAP gross profit

 

$

74,146

 

 

$

60,608

 

 

$

210,701

 

 

$

171,148

 

GAAP gross margin

 

 

77.7

%

 

 

77.9

%

 

 

77.6

%

 

 

77.9

%

Non-GAAP gross margin

 

 

83.7

%

 

 

84.2

%

 

 

83.4

%

 

 

84.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of operating expenses

 

 

 

 

 

 

 

 

 

 

 

 

GAAP research and development

 

$

33,358

 

 

$

31,698

 

 

$

101,788

 

 

$

87,744

 

Less: Share-based compensation expense

 

 

(8,596

)

 

 

(6,806

)

 

 

(23,566

)

 

 

(17,268

)

Less: Acquisition-related costs

 

 

(1,251

)

 

 

(2,304

)

 

 

(6,931

)

 

 

(6,828

)

Non-GAAP research and development

 

$

23,511

 

 

$

22,588

 

 

$

71,291

 

 

$

63,648

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP sales and marketing

 

$

37,915

 

 

$

33,152

 

 

$

109,753

 

 

$

94,323

 

Less: Share-based compensation expense

 

 

(8,248

)

 

 

(6,548

)

 

 

(21,461

)

 

 

(16,095

)

Less: Acquisition-related costs

 

 

(19

)

 

 

(228

)

 

 

(89

)

 

 

(464

)

Less: Amortization of acquired intangibles

 

 

(357

)

 

 

(298

)

 

 

(1,073

)

 

 

(770

)

Non-GAAP sales and marketing

 

$

29,291

 

 

$

26,078

 

 

$

87,130

 

 

$

76,994

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP general and administrative

 

$

15,663

 

 

$

14,682

 

 

$

44,635

 

 

$

41,410

 

Less: Share-based compensation expense

 

 

(6,192

)

 

 

(3,960

)

 

 

(15,028

)

 

 

(10,183

)

Less: Acquisition-related costs

 

 

(18

)

 

 

(10

)

 

 

(158

)

 

 

(244

)

Less: Legal settlement costs

 

 

?

 

 

 

?

 

 

 

?

 

 

 

(216

)

Non-GAAP general and administrative

 

$

9,453

 

 

$

10,712

 

 

$

29,449

 

 

$

30,767

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of operating income (loss) and operating margin

 

 

 

 

 

 

 

 

 

 

 

 

GAAP operating loss

 

$

(18,050

)

 

$

(23,439

)

 

$

(60,170

)

 

$

(64,988

)

Plus: Share-based compensation expense

 

 

25,686

 

 

 

19,217

 

 

 

66,920

 

 

 

48,368

 

Plus: Acquisition-related costs

 

 

1,294

 

 

 

2,548

 

 

 

7,194

 

 

 

7,555

 

Plus: Amortization of acquired intangibles

 

 

2,961

 

 

 

2,904

 

 

 

8,887

 

 

 

8,588

 

Plus: Legal settlement costs

 

 

?

 

 

 

?

 

 

 

?

 

 

 

216

 

Non-GAAP operating income (loss)

 

$

11,891

 

 

$

1,230

 

 

$

22,831

 

 

$

(261

)

GAAP operating margin

 

 

(20.4

)%

 

 

(32.6

)%

 

 

(23.8

)%

 

 

(31.9

)%

Non-GAAP operating margin

 

 

13.4

%

 

 

1.7

%

 

 

9.0

%

 

 

(0.1

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of net income (loss)

 

 

 

 

 

 

 

 

 

 

 

 

GAAP net loss

 

$

(13,747

)

 

$

(23,552

)

 

$

(50,023

)

 

$

(67,029

)

Plus: Share-based compensation expense

 

 

25,686

 

 

 

19,217

 

 

 

66,920

 

 

 

48,368

 

Plus: Acquisition-related costs

 

 

1,294

 

 

 

2,548

 

 

 

7,194

 

 

 

7,555

 

Plus: Amortization of acquired intangibles

 

 

2,961

 

 

 

2,904

 

 

 

8,887

 

 

 

8,588

 

Plus: Legal settlement costs

 

 

?

 

 

 

?

 

 

 

?

 

 

 

216

 

Less: Income tax effects

 

 

420

 

 

 

639

 

 

 

1,658

 

 

 

2,020

 

Non-GAAP net income (loss)

 

$

16,614

 

 

$

1,756

 

 

$

34,636

 

 

$

(282

)

Net income (loss) per share - basic

 

$

0.16

 

 

$

0.02

 

 

$

0.34

 

 

$

(0.00

)

Net income (loss) per share - diluted

 

$

0.15

 

 

$

0.02

 

 

$

0.32

 

 

$

(0.00

)

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

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

104,135

 

 

 

99,618

 

 

 

102,646

 

 

 

98,825

 

Add: Dilutive ordinary share equivalents(1)

 

 

6,056

 

 

 

5,603

 

 

 

5,747

 

 

 

?

 

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

 

 

110,191

 

 

 

105,221

 

 

 

108,393

 

 

 

98,825

 

(1)

Potentially dilutive shares are excluded in calculating the non-GAAP diluted shares for the nine months ended September 30, 2022 as the inclusion of such shares would have been anti-dilutive due to net loss in the period.

JFROG LTD.

RECONCILIATION OF GAAP CASH FLOW FROM OPERATING ACTIVITIES TO FREE CASH FLOW AND SUPPLEMENTAL DISCLOSURE

(in thousands; unaudited)

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Free cash flow reconciliation:

 

 

 

 

 

 

 

 

 

 

 

 

Net cash provided by operating activities

 

$

25,981

 

 

$

5,128

 

 

$

41,562

 

 

$

14,111

 

Less: purchases of property and equipment

 

 

(591

)

 

 

(1,306

)

 

 

(1,364

)

 

 

(3,437

)

Free cash flow

 

$

25,390

 

 

$

3,822

 

 

$

40,198

 

 

$

10,674

 

Supplemental disclosure:

 

 

 

 

 

 

 

 

 

 

 

 

Retention bonus related to acquisition(1)

 

$

(1,857

)

 

$

(2,073

)

 

$

(1,857

)

 

$

(2,073

)

(1)

Retention bonuses were distributed to current employees from the acquisition of Vdoo Connected Trust Ltd. in July 2021. Vdoo's continuing employees are entitled to three annual installments of retention bonus as part of the acquisition arrangements. The retention bonus has been expensed primarily in research and development over the service period.

 


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