JFrog Ltd.

Good day and thank you for joining us. Welcome to JFrog's Third Quarter Fiscal 2021 Financial Results Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during this session, you will need to press star 1 on your telephone. If you require any further assistance, please press star 0. And now, I'd like to hand the conference over to Joanne Horn of the JFrog Investor Relations Team. Joanne, please go ahead.

Good afternoon, and thank you for joining us as we review JFrog's Q3 Fiscal 21 financial results, which were announced following market close via press release today. Joining us will be JFrog's CEO and co-founder, Shlomi Van Heim, and Jacob Shulman, JFrog's CFO. Before we get started, let me review the Safe Harbor. During this call, we may make statements related to our business that are forward-looking under federal securities laws and are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995, including statements related to our future financial performance, including our outlook for the fourth quarter and full year 2021. The words anticipate, believe, continue, estimate, expect, intend, will, and similar expressions are intended to identify forward-looking statements or similar indications of future expectations. We are cautioned not to place undue reliance on these forward-looking statements, which reflect our views only as of today and not at any subsequent date. Please keep in mind that we are not obligating ourselves to revise or publicly release the results of any revision to these forward-looking statements in light of new information or future events. These statements are subject to a variety of risks and uncertainties that could cause actual results to differ materially from expectations. For discussion of material risks and other important factors that could affect our actual results, please refer to our Form 10-K for the year ended December 31, 2020, filed with the SEC on February 12, 2021, and our Form 10-Q for the quarter ended June 30, 2021, filed with the SEC on August 6, 2021, which are available on the Investor Relations section of our website. and the earnings press release issued earlier today. Additional information will be made available in our quarterly report on Form 10-Q for the quarter ended September 30th, 2021, and other filings and reports that we may file from time to time with the SEC. Additionally, non-GAAP financial measures will be discussed on this conference call. These non-GAAP financial measures, which are used as measures of JFROG's performance, should be considered in addition to, not as a substitute for, in isolation from, GAAP measures. Please refer the tables in our earnings release for reconciliation of those measures to the most directly comparable GAAP financial measures. A replay of this call will be available on the JFrog investor relations site for a limited time. With that, I'd like to turn the call over to JFrog's CEO, Shlomi Benhaim. Shlomi.

Thank you, Joanne. Greetings from the swamp and thanks for joining us for JFrog's 2021 third quarter earnings call. I'm happy to report that in Q3, all J4 metrics are trending upwards. Q3 was $53.7 million, a growth of 38% over last year, accelerating from 34% growth reported in Q2. Our cloud revenue in Q3 grew by 50% year-over-year, accelerating from 47% reported in Q2. Customers with over $1 million in ARR are growing as a result of our investment in the strategic sales team alongside strong growth in the number of customers with ARR over $100,000. JFrog continues to expand the business this quarter, and as predicted, I'm happy to report that four trailing quarters net dollar retention stabilized at 129% as customers increased usage and adopted more of our DevOps end-to-end platform that includes the software package repository distribution, and security. In addition, JFrog was again profitable this quarter, even after including the impact of our recent acquisitions. Team JFrog, you delivered a strong quarter, which exceeded our commitment to the market. This success belongs to you. The DevOps market is growing fast. Analyst firms such as IDC believe that only a quarter of companies have actually begun to build roadmaps for complex digital transformation initiatives. As companies scale in cloud and on-prem environment, we believe this is the beginning of an even larger adoption pattern. As we continue to see, in order to scale, companies need to unify DevOps solutions, integrating across the ecosystem while securely distributing software packages into production. JFrog is the only end-to-end binary solution that bridges the gap between the world of Git-based tools for source code and the secure delivery of software packages. In a world of fast and secure software-built-to-release life cycles, category leaders must coexist and together help organizations fulfill their future digital needs. Now, onto some product and business highlights. First, for Q3, I would like to tell you about our acquisition of AppSuite, an IoT connected device management company that we believe will significantly expand our market. The AppSuite team is tasked with extending our DevOps platform reach all the way to the device, allowing for software updates, security, and device fleet management from anywhere in the world. This technology innovation will extend our portfolio offering, support new personas, and expand our time to serve the DevOps needs to the multi-billion dollar IoT market. In fact, the second largest automobile manufacturer in Europe is already partnering with AppSwift and JFrog, saying, and I quote, We are using AppSwift for our pilot product and looking forward to using AppSwift in the future more and more to monitor our fleet of IoT devices in Europe and all over the world. We appreciate the joint venture of AppSwift and JFrog and hopefully we are able to use other solutions from JFrog in combination with AppSwift to get a 360 degree view of our fleet." End quote. In the future, The world of CI-CD will be connected to the end devices, and the J-Frog DevOps platform will connect these two worlds. Amit Ezer and Eitan Hadonovsky, co-founders of AppSwift, we welcome you and the team, and are already excited to drive customers' initiative forward. Second, I would like to update you on the impressive progress of last quarter's video acquisition that not only included a leading cloud native security platform, but also exposed us to new personas in the security market and brought a team of experts that are now an integral part of our R&D product sales and marketing forces. This technology and team is boosting JFrog's impact and not only driving cost selling for X-Ray, our DevSecOps product, but also amplifying our position as thought leaders in the security community. In fact, the JFrog security research team has already uncovered multiple risks in common packages and public repositories. For example, JFrog just recently exposed the vulnerability in a popular open source tool created by 23andMe, a leading provider of DNA and biotechnology services. Their tools are utilized in an estimated 200 public software repositories, affecting potentially thousands of applications and companies. Highly publicized findings such as this one are only the beginning, and we look forward to proactively keeping the developer community made aware of security vulnerability that affect their supply chains. This protection of the community and customers is foundational to JFrog security solution goals. In Q3, we started to incorporate the security intelligence derived from VDU into JFrog X-ray product. This allows data around hundreds of open source vulnerabilities discovered by the scanning technology and research team to enrich the emboldened JFrog security solution. Not only in technology, but we also already see synergies between JFrog solution and video technologies on the cell phone. Post acquisition, Security-driven deals are already taking place, including a video technology-driven deal we won in Q3 with one of North America's top industrial automation companies. In addition, just after quarter ended, JFOG was announced as an Authorized Common Vulnerabilities and Exposure, also known as CVE, numbering authority. JFrog joins an elite group of public and private sector organizations authorized to assign identification numbers to newly discovered security vulnerabilities and publish related details in associated records for public consumption. Now, I would like to talk about more DevOps innovation JFrog released to the market in Q3. Our recent release included a capability we anticipate all companies at scale will look at. JFrog Cold Artifact Storage. This solution, available this quarter in the JFrog platform, allows organizations to easily store, manage, and retain software artifacts for long periods of time. Enterprises are often required to keep software records for compliance and security reasons. And in some industries, records may need to be kept for years. Companies using cold storage would see decreased storage costs at scale. as well as enjoy simple ways to comply with regulations while retaining development speed. This positioned JFrog as a long-term strategic partner for these companies as they set up environments that support their extended compliance roadmap being entrusted to JFrog. Our team worked closely with enterprises to make this cold storage technology rock solid. And we look forward to working with more J4 customers like the National Australia Bank to drive further compliance and improvements like this in the DevOps world. Finally, in our product use, I would like to acknowledge the great work of our ecosystem engineering team, who has released open source updates to our developer community, including integrations to observability tools, collaboration product, and source code repositories. The JFrog2 integrated to fail approach that offers our customers a unique combination of a hybrid DevOps platform that also seamlessly integrates with the leading tools in the developer ecosystem is key to our goal. For example, we are proud to work with the world's leading retailer to help their DevOps team deliver transformative, market-leading digital experience at scale. This retailer's DevOps team, who recently migrated to JFrog to allow scale in a multi-site global setup, is in the process of adoption of our platform to enable software building, securing, and deployment to production environments. During the process of adopting JFrog platform, this customer's ARR value to JFrog grew over 200% in 2021. including the latest significant expansion in Q3. The third quarter also included investments in new growth avenues, such as the federal sector. I'm excited to say that in Q3, JFOG has achieved Iron Bank certification, authorizing JFOG Artifactory and X-ray inclusion in the federal platform one initiative. With this achievement, J-PAL reinforces its commitment to providing DevOps and DevSecOps solutions for its public sector customers and those in highly regulated industries such as finance, healthcare, energy, and transportation. This certification has the potential to open up a very large market of governmental services, contractors, and public sector segments that rely on Iron Bank certification to adopt hardened tools. We look forward to continuing success as we pursue other certifications in the government space, such as FedRAMP, in the near future. As another exciting milestone, we recently announced the partnership with SBCNS, a soft bank company, to drive DevOps and J4 growth across Japan. SBCNS is one of the most trusted software resellers in Japan and will drive DevOps adoption across one of the world's leading economies. They're joining other J-PROG partners in APAC as part of our channel program expansion to drive the region's DevOps transformation. Japan-based customers like Hitachi are already powering their DevOps and DevSecOps flow using J-PROG. Expanding our footprint in Japan with partners like SBCNS will not only generate new business, but also improve the expansion and adoption among existing customers. Finally, a note on enterprise adoption. We continue to see our software distribution and edge node solution as a key driver for the full platform subscription. These capabilities are unique in the marketplace and solve an authentic software delivery pain for enterprises by securely getting software the last mile to where it's consumed. We anticipate this to continue being a strong hybrid differentiator for us moving forward. One of this quarter's most exciting platform buy came from one of the world's largest business consulting firm, which recently chose JFrog as a displacement of two vendors, consolidating both existing software package repository and security solution. JFrog's ability to universally and continuously manage their binary lifecycle was key to adoption across the entire platform. Wins such as these, are the results of technology and go-to-market development. I'm pleased to see how our sales and marketing teams have grown significantly in Q3. Our focus on building a bottom-up together with the top-down sales funnel led to these performances. We'll keep investing further to be sure that all aspects of the business, community, customers, and prospective users are going to be able to enjoy JFrog Solutions. With that, I would like to turn the call over to Jacob Schulman, JFrog's CFO, to look more deeply at the Q3 financials.