JFrog Ltd

Previous wording

We have designed our subscription structure and go-to-market strategy to align our growth with the success of our customers. Our business model benefits from our ability to serve the needs of all customers, from individual software developers, security teams, and IT operators to the largest organizations, in a value-oriented manner. All references to our customers included in this Quarterly Report on Form 10-Q refer to paying customers.

Current wording

We have designed our subscription structure and go-to-market strategy to align our growth with the success of our customers. Our business model benefits from our ability to serve the needs of all customers, from individual software developers, security teams, MLOps teams, and IT operators to the largest organizations, in a value-oriented manner. All references to our customers included in this Quarterly Report on Form 10-Q refer to paying customers.

Previous wording

We generate revenue from the sale of subscriptions to customers. We offer subscription tiers for self-managed deployments, where our customers deploy and manage our products across their public cloud, on-premise, private cloud, or hybrid environments, as well as JFrog-managed public cloud deployments, which we refer to as our SaaS subscriptions. Revenue from SaaS subscriptions contributed 39% and 38% of our total revenue for the three and nine months ended September 30, 2024, respectively, compared to 35% and 33% for the corresponding periods in 2023, respectively.

Current wording

We generate revenue from the sale of subscriptions to customers. We offer subscription tiers for self-managed deployments, where our customers deploy and manage our products across their public cloud, on-premise, private cloud, or hybrid environments, as well as JFrog-managed public cloud deployments, which we refer to as our SaaS subscriptions. Revenue from SaaS subscriptions contributed 43% of our total revenue for the three months ended March 31, 2025, compared to 37% for the three months ended March 31, 2024.

Previous wording

Our self-managed subscriptions are offered on an annual and multi-year basis, and our SaaS subscriptions are offered on a monthly, annual, and multi-year basis. Revenue from Enterprise Plus subscription represented approximately 50% of our total revenue for the three and nine months ended September 30, 2024, compared to approximately 46% and 45% for the corresponding periods in 2023, respectively. The growth in revenue from our Enterprise Plus subscription demonstrates the increased demand for our end-to-end solutions for customers’ entire software supply chain management.

Current wording

Our self-managed subscriptions are offered on an annual and multi-year basis, and our SaaS subscriptions are offered on a monthly, annual, and multi-year basis. Revenue from Enterprise Plus subscription represented approximately 55% of our total revenue for the three months ended March 31, 2025, compared to approximately 49% for the three months ended March 31, 2024. The growth in revenue from our Enterprise Plus subscription demonstrates the increased demand for our end-to-end solutions for customers’ entire software supply chain management.

Previous wording

We have an unwavering commitment to the software developer, security team, and IT operator communities, and show this commitment by offering varying forms of free access to our products in addition to the paid subscriptions described above. This free access takes the form of free trials and open source software, and helps generate demand for our paid offerings within the software developer, security, and IT operator communities.

Current wording

We have an unwavering commitment to the software developer, security teams, MLOps teams, and IT operator communities, and show this commitment by offering varying forms of free access to our products in addition to the paid subscriptions described above. This free access takes the form of free trials and open source software, and helps generate demand for our paid offerings within the software developer, security and IT operator communities.

Previous wording

We generated revenue of $109.1 million and $88.6 million for the three months ended September 30, 2024 and 2023, respectively, representing 23% growth, and $312.4 million and $252.6 million for the nine months ended September 30, 2024 and 2023, respectively, representing 24% growth. We have continued to invest in our business and had a net loss of $22.9 million and $13.7 million for the three months ended September 30, 2024 and 2023, respectively, and $46.0 million and $50.0 million for the nine months ended September 30, 2024 and 2023, respectively.

Current wording

We generated revenue of $122.4 million and $100.3 million for the three months ended March 31, 2025 and 2024, respectively, representing 22% growth. We have continued to invest in our business and had a net loss of $18.5 million and $8.8 million for the three months ended March 31, 2025 and 2024, respectively.

Previous wording

On October 7, 2023, Hamas militants and members of other terrorist organizations infiltrated Israel’s southern border from the Gaza Strip and conducted a series of terror attacks on civilian and military targets. Following the attack, Israel’s security cabinet declared war against Hamas and commenced a military campaign against these terrorist organizations. Since the commencement of these events, there have been additional active hostilities, including with Hezbollah in Lebanon, Iran, and most recently, the Houthi movement which controls parts of Yemen. The conflict has recently expanded into Lebanon and it is possible that hostilities will escalate in the future into a greater regional conflict, and that additional terrorist organizations and countries could actively join the hostilities.

Current wording

On October 7, 2023, Hamas militants and members of other terrorist organizations infiltrated Israel’s southern border from the Gaza Strip and conducted a series of terror attacks on civilian and military targets. Following the attack, Israel’s security cabinet declared war against Hamas and commenced a military campaign against these terrorist organizations. Since the commencement of these events, there have been additional active hostilities with other parties in the region. Although certain ceasefire agreements have been reached, these agreements have failed to be upheld, and military activity and hostilities continue to exist at varying levels of intensity. The situation remains volatile, with the potential for escalation into a broader regional conflict involving additional terrorist organizations and possibly other countries (including Hezbollah and Lebanon). Also, the current political situation in Syria may create further geopolitical instability in the region.

Previous wording

We intend to continue to enhance our end-to-end, hybrid, universal Software Supply Chain Platform by developing new products and expanding the functionality of existing products to maintain our technology leadership.

Current wording

We intend to continue to enhance our hybrid, universal, end-to-end software supply chain platform by developing new products and expanding the functionality of existing products to maintain our technology leadership.

Previous wording

We quantify our expansion across existing customers through our net dollar retention rate. Our net dollar retention rate compares our annual recurring revenue (“ARR”) from the same set of customers across comparable periods. We define 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 we generate revenue from these customers. We annualize our monthly subscriptions by taking the revenue we would contractually expect to receive from such customers in a given month and multiplying it by 12. We calculate 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”). We then calculate 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. We then divide total Comparison Quarter ARR by total Base Quarter ARR for Base Customers. Our 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. Our net dollar retention rate may fluctuate as a result of a number of factors, including the level of penetration within our customer base, expansion of products and features, and our ability to retain our customers. As of September 30, 2024 and 2023, our net dollar retention rate was 117% and 119%, respectively. We expect our net dollar retention rate to remain relatively stable, with minor fluctuations around current levels.

Current wording

We quantify our expansion across existing customers through our net dollar retention rate. Our net dollar retention rate compares our annual recurring revenue (“ARR”) from the same set of customers across comparable periods. We define 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 we generate revenue from these customers. We annualize our monthly subscriptions by taking the revenue we would contractually expect to receive from such customers in a given month and multiplying it by 12. We calculate 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”). We then calculate 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. We then divide total Comparison Quarter ARR by total Base Quarter ARR for Base Customers. Our 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. Our net dollar retention rate may fluctuate as a result of a number of factors, including the level of penetration within our customer base, expansion of products and features, and our ability to retain our customers. As of March 31, 2025 and 2024, our net dollar retention rate was 116% and 118%, respectively. We expect our net dollar retention rate to remain relatively stable, with minor fluctuations around current levels.

Previous wording

We focus on growing the number of large customers as a measure of our ability to scale with our customers and attract larger organizations to adopt our products. As of September 30, 2024, 966 of our customers had ARR of $100,000 or more, increasing from 886 customers as of December 31, 2023. We had 46 customers with ARR of at least $1.0 million as of September 30, 2024, increasing from 37 customers as of December 31, 2023.

Current wording

We focus on growing the number of large customers as a measure of our ability to scale with our customers and attract larger organizations to adopt our products. As of March 31, 2025, 1,051 of our customers had ARR of $100,000 or more, increasing from 1,018 customers as of December 31, 2024. We had 54 customers with ARR of at least $1.0 million as of March 31, 2025, increasing from 52 customers as of December 31, 2024.

Previous wording

Subscription—self-managed and SaaS revenue is generated from the sale of subscriptions for our self-managed software products and the sale of our SaaS subscriptions. For subscriptions to our self-managed software products, revenue is recognized ratably over the subscription term. For our SaaS subscriptions, revenue is recognized based on usage over the contract period, including minimum usage commitments.

Current wording

Subscription—self-managed and SaaS revenue is generated from the sale of subscriptions for our self-managed software products and the sale of our SaaS subscriptions. For subscriptions to our self-managed software products, revenue is recognized ratably over the subscription term. For our SaaS subscriptions, revenue is recognized ratably over each commitment period within the subscription term, based on minimum usage commitments and any excess usage in the corresponding commitment period.

Previous wording

Income tax expense (benefit) consists primarily of income taxes related to the United States and other foreign jurisdictions in which we conduct business. We maintain a full valuation allowance on certain deferred tax assets in Israel as we have concluded that it is not more likely than not that the deferred tax assets will be realized. Our effective tax rate is affected by tax rates in foreign jurisdictions and the relative amounts of income we earn in those jurisdictions, non-deductible expenses, excess tax benefits from share-based compensation awards, and changes in our valuation allowance.

Current wording

Income tax expense (benefit) consists primarily of income taxes related to the U.S. and other foreign jurisdictions in which we conduct business. We maintain a full valuation allowance on deferred tax assets in Israel as we have concluded that it is not more likely than not that the deferred tax assets will be realized. Our effective tax rate is affected by tax rates in foreign jurisdictions and the relative amounts of income we earn in those jurisdictions, non-deductible expenses, excess tax benefits from share-based compensation awards, and changes in our valuation allowance.

Previous wording

The increase in total subscription revenue for the three months ended September 30, 2024 compared to the three months ended September 30, 2023 consisted of approximately $17.1 million in growth from existing customers and the remaining attributable to new customers.

Current wording

The increase in total subscription revenue for the three months ended March 31, 2025, compared to the three months ended March 31, 2024, consisted of approximately $18.8 million growth from existing customers and the remaining attributable to new customers.

Previous wording

Total cost of revenue increased for the three months ended September 30, 2024 compared to the three months ended September 30, 2023. The increase was primarily attributable to an increase of $2.8 million in third-party hosting costs mainly driven by increased revenue from SaaS subscriptions, an increase of $2.0 million in intangible amortization mainly as a result of our acquisition of Qwak AI Ltd. (“Qwak”) in July 2024, an increase of $1.8 million in personnel-related expenses mainly as a result of increased headcount, and an increase of $1.2 million in share-based compensation expense as discussed in the section titled “Share-Based Compensation Expense” below.

Current wording

Total cost of revenue increased for the three months ended March 31, 2025 compared to the three months ended March 31, 2024. The increase was primarily attributable to an increase of $3.8 million in third-party hosting costs mainly driven by increased revenue from SaaS subscriptions, an increase of $2.1 million in intangible amortization mainly as a result of our acquisition in July 2024, an increase of $1.6 million in personnel-related expenses mainly as a result of increased headcount, and an increase of $1.1 million in share-based compensation expense as discussed in the section titled “Share-Based Compensation Expense” below.

Previous wording

Gross margin decreased for the three months ended September 30, 2024 compared to the three months ended September 30, 2023 primarily due to increased hosting costs and intangible amortization.

Current wording

The decrease in gross margin for three months ended March 31, 2025, compared to the three months ended March 31, 2024, was primarily due to a continuous shift in our revenue mix towards SaaS subscriptions, which incur higher hosting costs, and intangible amortization as discussed above.

Previous wording

Research and development expense increased for the three months ended September 30, 2024 compared to the three months ended September 30, 2023. The increase was primarily attributable to an increase of $5.0 million in share-based compensation expense and an increase of $2.7 million in personnel-related expenses mainly as a result of increased headcount.

Current wording

Research and development expense increased for the three months ended March 31, 2025 compared to the three months ended March 31, 2024. The increase was primarily attributable to an increase of $4.3 million in share-based compensation expense and an increase of $2.1 million in personnel-related expenses mainly as a result of increased headcount.

Previous wording

Sales and marketing expense increased for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023. The increase was primarily attributable to an increase of $12.3 million in share-based compensation expense, an increase of $10.3 million in personnel-related expenses mainly as a result of increased headcount, and an increase of $2.6 million in commissions.

Current wording

Sales and marketing expense increased for the three months ended March 31, 2025 compared to the three months ended March 31, 2024. The increase was primarily attributable to an increase of $2.9 million in share-based compensation expense, an increase of $1.9 million in personnel-related expenses mainly as a result of increased headcount, an increase of $1.8 million in commissions, and an increase of $1.6 million in allocated overhead costs.

Previous wording

General and administrative expense increased for the three months ended September 30, 2024 compared to the three months ended September 30, 2023, primarily attributable to an increase of $1.7 million in personnel-related expenses mainly as a result of increased headcount.

Current wording

General and administrative expense increased for the three months ended March 31, 2025 compared to the three months ended March 31, 2024. The increase was primarily attributable to an increase of $1.2 million in share-based compensation expense and an increase of $0.8 million in personnel-related expenses mainly as a result of increased headcount.

Previous wording

Share-based compensation expenses increased for the three months ended September 30, 2024 compared to the three months ended September 30, 2023, primarily attributable to grants to new and existing employees.

Current wording

Share-based compensation expenses increased for the three months ended March 31, 2025 compared to the three months ended March 31, 2024, primarily attributable to grants to new and existing employees. Additionally, during the three months ended March 31, 2025, we recognized $2.6 million in share-based compensation expense primarily in research and development, related to acquisition holdback ordinary shares and replacement RSUs.

Previous wording

Interest and other income, net increased for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023 primarily due to higher interest income on deposits and marketable securities as a result of higher interest rates.

Current wording

Interest and other income, net decreased for the three months ended March 31, 2025 compared to the three months ended March 31, 2024, primarily due to lower interest income on deposits and marketable investments as a result of lower interest rates.

Previous wording

As of September 30, 2024, our principal sources of liquidity were cash, cash equivalents, and short-term investments of $467.8 million. Cash and cash equivalents primarily consist of cash in banks and money market funds. Short-term investments generally consist of bank deposits, certificates of deposit, commercial paper, corporate debt securities, municipal securities, and government and agency debt. We believe our existing cash, cash equivalents, and short-term investments, together with cash provided by operations, will be sufficient to meet our needs for the next 12 months, as well as in the long-term.

Current wording

As of March 31, 2025, our principal sources of liquidity were cash, cash equivalents, and short-term investments of $563.5 million. Cash and cash equivalents primarily consist of cash in banks and money market funds. Short-term investments generally consist of bank deposits, certificates of deposit, commercial paper, corporate debt securities, municipal securities, and government and agency debt. We believe our existing cash, cash equivalents, and short-term investments, together with cash provided by operations, will be sufficient to meet our needs for the next 12 months, as well as in the long-term.

Previous wording

Net cash provided by operating activities of $41.6 million for the nine months ended September 30, 2023 was related to our net loss of $50.0 million adjusted for non-cash charges of $79.3 million, including share-based compensation expense of $66.9 million and depreciation and amortization expense of $11.5 million, and changes in our operating assets and liabilities of $12.3 million. The changes in our operating assets and liabilities were primarily related to an increase of $16.2 million in deferred revenue driven by higher sales and an increase of $4.9 million in accrued expenses and other liabilities primarily due to higher income tax obligations, partially offset by a decrease of $5.8 million in operating lease liabilities as a result of payments and an increase of $4.8 million in deferred contract acquisition costs related to capitalized commissions.

Current wording

Net cash provided by operating activities of $28.8 million for three months ended March 31, 2025 was related to our net loss of $18.5 million, adjusted for non-cash charges of $44.0 million, including share-based compensation expense of $36.8 million and depreciation and amortization of $6.7 million, and changes in our operating assets and liabilities of $3.3 million. Changes in our operating assets and liabilities consisted primarily of a decrease of $6.5 million in accounts receivable due to timing of billing and collections, partially offset by a decrease of $2.2 million in operating lease liabilities as a result of lease payments.

Previous wording

Net cash provided by operating activities of $61.8 million for nine months ended September 30, 2024 was related to our net loss of $46.0 million adjusted for non-cash charges of $108.5 million, including share-based compensation expense of $92.3 million and depreciation and amortization expense of $14.6 million, and net cash outflow of $0.6 million from changes in our operating assets and liabilities. The total cash outflows of $38.7 million from changes in our operating assets and liabilities were primarily related to an increase of $15.8 million in accounts receivable, an increase of $8.2 million in deferred contract acquisition costs, an increase of $6.9 million in prepaid expenses and other assets mainly due to timing of payments, and a decrease of $6.2 million in operating lease liabilities as a result of payments. These outflows were partially offset by an increase of $30.1 million in deferred revenue and an increase of $8.0 million in accrued expense and other liabilities mainly due to accrued compensation and benefits. The increases in deferred revenue, accounts receivable, and deferred contract acquisition costs were driven by higher sales.

Current wording

Net cash provided by operating activities of $17.5 million for three months ended March 31, 2024 was related to our net loss of $8.8 million, adjusted for non-cash charges of $31.4 million, including share-based compensation expense of $27.3 million, and net cash outflows of $5.2 million from changes in our operating assets and liabilities. Changes in our operating assets and liabilities consisted primarily of an increase of $4.0 million in prepaid expenses and other assets due to timing of payments, a decrease of $3.2 million in accrued expense and other liabilities mainly due to reduction of ESPP withholdings as a result of purchases of shares, a decrease of $2.9 million in deferred revenue due to higher recognition of revenue relative to billings, a decrease of $2.5 million in accounts payable due to timing of payments, and a decrease of $2.1 million in operating lease liabilities as a result of lease payments. The outflows were partially offset by a decrease of $9.8 million in accounts receivable due to timing of billing and collections.

Previous wording

Net cash used in investing activities of $37.8 million for the nine months ended September 30, 2023 consisted primarily of the net purchase of short-term investments of $36.5 million.

Current wording

Net cash used in investing activities of $45.8 million for the three months ended March 31, 2025 consisted primarily of net purchases of short-term investments of $45.1 million.

Previous wording

Net cash used in investing activities of $99.7 million for the nine months ended September 30, 2024 consisted primarily of payments for the Qwak acquisition of $156.7 million, net of cash acquired, partially offset by the net proceeds from maturities and sales of short-term investments of $59.5 million.

Current wording

Net cash used in investing activities of $46.9 million for the three months ended March 31, 2024 consisted primarily of net purchases of short-term investments of $46.1 million.

Previous wording

Net cash provided by financing activities of $16.8 million for the nine months ended September 30, 2024 consisted primarily of proceeds from exercise of share options of $8.8 million and proceeds from employee share purchases under our ESPP of $8.7 million.

Current wording

Net cash provided by financing activities of $11.5 million for the three months ended March 31, 2025 consisted of proceeds from employee share purchases under our ESPP of $6.3 million, proceeds from exercise of share options of $3.8 million, and net proceeds of $1.5 million from our employee equity transactions to be remitted to tax authorities.

Previous wording

Net cash provided by financing activities of $11.8 million for the nine months ended September 30, 2023 consisted primarily of proceeds from employee share purchases under our ESPP of $6.7 million and proceeds from exercise of share options of $5.4 million.

Current wording

Net cash provided by financing activities of $16.6 million for the three months ended March 31, 2024 consisted of proceeds from exercise of share options of $6.8 million, net proceeds of $5.3 million from our employee equity transactions to be remitted to tax authorities, and proceeds from employee share purchases under our ESPP of $4.5 million.

Previous wording

Our critical accounting policies and estimates were disclosed in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report. There have been no significant changes to these policies and estimates during the nine months ended September 30, 2024.

Current wording

Our critical accounting policies and estimates were disclosed in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report. There have been no significant changes to these policies and estimates during the three months ended March 31, 2025.