Q4 2020 Jfrog Ltd Earnings Call

Ladies and gentlemen, thank you for joining us and welcome to the J for the fourth quarter and fiscal year 2020 earnings Conference call I'll hand, the conference over today to the Joann Horne of the Jay for all of Investor Relations team Joanne. Please go ahead.

Good afternoon, and thank you for joining us I've reviewed day from fourth quarter, and 2020 fiscal year financial results, which were announced following the market close via press release earlier today.

Joining us for Vijay from CEO, and cofounder of Shlomi behind and Jacob Chairman Jay <unk> CFO.

During this call we will 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 first quarter of 2021.

The words anticipate believe continue estimate expect intend will and similar expressions are intended to identify forward looking statements for similar indications of future expectations.

Cautioned not to place undue reliance on these forward looking statements, which reflect our views only as of today not as of 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 a discussion of material risks and other important factors that could affect our actual results. Please refer to our prospectus and our form 10-Q filed with the SEC on September 15, 2020, and November five 2020, respectively, which are available in the Investor Relations section of our website and the earnings press release issued earlier today.

Additional information will be made available in our annual report on form 10-K for the year ended December 31, 2020, and other filings and reports that we may file from time to time with the SEC the.

Additionally, non-GAAP financial measures will be discussed on this conference call.

These non-GAAP financial measures, which are used as measures of <unk> performance should be considered in addition to not as a substitute for or in isolation from GAAP measures.

These are for the tables in our earnings release for a reconciliation of those measures to their most directly comparable GAAP financial measures.

A replay of this call will be available on the J for our Investor Relations website for a limited time.

With that I'd like to turn the call over to Jay for our CEO Shlomi, then hi Shlomi.

Yes.

Thank you Brian good afternoon, and thanks for joining us for <unk>, 2024th quarter and physical the Euro earnings call.

This is our second earnings call as the public company, reflecting the first time, we will be announcing the outperformance versus the prior quarters guidance and I'm proud to say, we exceeded the revenue numbers that we had provided.

Before we start I'd like to take the opportunity to express my appreciation to Egypt from frankly.

For the great job and going beyond the expectations in 2020, well done.

Now I'm excited to share of both our 2020 annual and Q4 results with you.

You Paul was the strong finish to what has been a milestone year for Jay for these.

Votes were driven by large customers adoption further expansion into the APAC region partnerships in the ecosystem and ongoing technology innovation and the J for platform.

That's the brief overview of the business on financials I'm pleased to report that for the physical layer of 'twenty 'twenty ending on December 31, 2020, <unk> of all revenue grew 44% of the previous year for 158 million with 130.

3% net dollar retention for the trailing four quarters and.

In Q4, <unk> revenue climbed to $42 7 million of growth of 39% of of the same period last year.

Our multi cloud business achieved substantial growth of 69% due to the increased demand for power consumption basically of op services, our free cash flow for the fourth quarter came in at the record of $11 9 million.

Despite the COVID-19 pandemic Jay for grew significantly in 2020 successfully securing new customers, while achieving remarkable retention of our installed base in all verticals and of course of company sizes.

This growth and demonstrated customer retention supports our belief the Dev ops solutions and more specifically software packages all day.

Driving the next wave of digital transformation and innovation for modern businesses.

Now I would like to talk about the past 12 months overall.

2020 wasn't on vet. The believed from J program. In addition to worldwide conditions that affected all people and businesses <unk> 'twenty 'twenty, one of the monumental and the broad Dev ops space.

Just a year ago in February 2020, J for launched the first universal hybrid multi cloud and to end the box platform with J, Paul about the factory outlets call.

This included both cloud and self managed offering for our complete platform delivering flexibility and the unified UI for the enterprise.

I think Jeff Hough nature of not only to innovate and create categories, but also to look forward to the next leap the interest it will take and the requirements of companies and those upcoming realities.

We were proud to meet the challenges of the community and customers reflected back to us and the continued software release management's realm and what they needed not only for today, but also for tomorrow's needs.

Specifically the need to scale seamlessly with both product and business model alignment the need to integrate Universal software package management security scanning software distribution and for ICD tools.

This requirements of all we believe critical to meet the demands of modern software development organization and the cloud makes it the.

In March and.

And through the year, the physical and digital effects of the pandemic crystallized Dev ops and software updates as mission critical to the business.

Digital transformation was accelerated with corporate strategies around cloud migration and IC maturation placed on the phone clients.

As we all face the unexpected situation in the spring and summer and as part of our COVID-19 operations plan, we were very clear with our sales and support team you must focus on customer retention.

I'm very proud to say we achieved this growth while also growing our customer base.

As the demonstration of demand for end to end solution like the <unk> platform. Our customers entry point also grew with new customers often joining jay for at our higher level of subscription.

The signals how mission critical Dev ops has become to the software industry.

The combination in 2020 of excellent customer retention, and then fueling growth through new avenues, such as the free community offering drive our belief the 'twenty 'twenty one while still influenced by the pandemic will allow for continued growth in both customer acquisition.

Acquisition as well as expansion through our strategic sales team.

Throughout 2020, we continued to invest in our people and expand our platform offering to support the growing needs of customers, who told us they were facing increased pressure to deliver the mall and faster in the digital age software innovation became the key and sometimes on the competitive differentiator.

Here are a few highlights.

We still had the <unk> three program in the early days of different panic to offer cloud based Dev ops tools to organizations actively fighting COVID-19, we were proud to have global interest in this program from companies involved in medical research contact tracing equipment manufacture.

During the <unk> mall.

We doubled down on software distribution of <unk>.

One of the key drivers for Jacobs platform adoption.

The other day box vendor is focus on securely delivering software packages to the edge of scale, enabling the secure SaaS movement of software packages that supports hybrid environments micro services and beyond.

As the binaries company. We believe there is an extensive market downstream from actual of software development into distribution and our customers are supporting this notion.

The supply is not only to software distribution to end users, but also among development teams, we focus on productivity, even creating peer to peer software distribution protocols that allow global teams sustained zinc as the share of software packages rapidly and effectively.

In fact faster than other providers of pulp.

We launched a free community offering in the cloud to give all developers access to debt to the Jay for platform. This offering is proving to be a globally adopted friction free way to evaluate for product prior to purchase and consolidation by companies.

These offerings allow the first self service way to try the <unk> platform in the cloud the fuel choice, which is also providing us with new data and insights into cash into the customer journey.

The products and experienced improvement driven by these data already fueling greater customers experiences.

We also demonstrated our commitment to universality.

With multiple new technologies supported for both software package management and security tools.

We started the beta program to test end to end project management tools.

The enhanced usability and corporate security functions for Jay for X Ray and we expanded our integrations and the certifications with companies like Atlassian Splunk data dog in a mall.

All of these innovations and evolutions are driven by our approach of listening to the user and the remaining fully universal to cover the entire technology stack of the company, we must always be hybrid multi cloud and multi regional to meet the flexible needs of business we must.

Allow our customers to release, the updates securely and seamlessly to achieve a version less world of world of liquid software.

Let me be clear.

This isn't about just offering development tools J progress laser focus on updating and securing all sorts of packages and delivering them to the edge.

This is the true end game for digital transformation.

If you can update software to the edge rapidly and securely Youll solutions are simply not meeting the needs of the digital business.

We have increased investment in Q4 that we believe.

Our Dev ops platform, one step closer to the embedded software updates.

And laid the foundation for of how Dev ops in the Iot industry will look like in the future.

To build on this a bit more I want to reiterate why end of a society is so important when it comes to develop solutions and software package management and.

In fact, we see our consistent universality approach available on non subscription being followed by the industry.

A few vendors are supporting the only 4% to six technology types, which support level, sometimes as being very nimble all simplistic without the rich set of data to power. The software package lifecycle instead of J Fox support of approximately 30 technology type.

More than any other solution in the market, while also providing reach datasets that allow us to nation security and acceleration of software build on delivery.

We're excited to see our approach validated with the industry emphasis now being placed on managing software packages.

But with Jay for once the company has standardized there is nowhere else for them to go to manage all of their technologies in one place.

If the desktop standard cannot support the entire lifecycle of developing packaging, securing orchestrating and distributing software packages, the forcing development organizations to adopt multiple point solutions and the managed countless integrations themselves.

Our customers tell us.

This homegrown of point solutions are not sustainable in an always on ever demanding world the consume software updates.

This is why we are building and innovating with the J from platform to help companies deliver on their premises in the secure reliable scalable way that supports all of the technology choices.

This is why <unk> without the factory of the coal became the control point for development lifecycle.

To support this we saw in Q4 with over 90% of revenue came from customers subscribe to our multi product offers that go beyond Jay for growth. The factory just the year. After the release of our unified end to end solution, 26% of revenue came from our platforms enterprise plus ups.

Friction, which gives customers access to all of J Fox products.

This rapid adoption is double what it was in 2019.

Due to the added services and value, we give our high level customers.

Turning to sales.

As we've discussed before Jeff on <unk> is driven by inbound inside sales motion.

Now on gas to keep through to our commitment of delivering products that are in demand by developers.

As such we place equal emphasis on the exposing Jay for solutions to the new business opportunity.

As well as the maturing our customers base in the land and expand model.

As the results of the vessels. We ended 2020 with 6050 unique customers up from 5600 at the end of 2019.

As of December 31, we had 352 customers with <unk> greater than $100000 of which 10 customers with over $1 million.

Sure.

We again demonstrated sustainable growth with the adoption and expansion by the enterprise and the cloud hybrid and south part of solutions.

Alongside our inside sales teams, our growing strategic sales team has already begun to build success as the standardized J P of across our top accounts.

We were illustrated this in Q4, we sell a large increase in the number of customers adopting the full end to end Jay for platform.

In fact.

One of the largest organizations in the credit space migrated to Jay for the away from competitive mix due to the competitors' inability to scale and standardize across technologies and geographical regions.

Our strategic accounting expanded to a six figure deal with the potential of further expansion in 2021.

Overall, we saw a significant growth quarter over quarter in adoption of our full platform cloud subscription, reflecting strong demand for hybrid and to and develop solutions.

The strongly validates our approach and signals of rapid maturation of requirements in the Dev ops marketplace.

For example, one of the most recognizable companies in the payment processing growth recently upgraded from the lower level subscription that was just about managing software packages to our complete platform subscription.

They told US the ultimate goal was to take the projects from being managed manually at the developer level to managing the process of delivering software to the edge.

They needed the complete universality scale security and distribution capability, we uniquely provided and debt differentiated us from the competition.

As more companies look to revolutionize the of customers experienced in order to remain competitive customers continue to look to Jay for to deliver faster, we see longtime customers, including one of the largest banks in Europe expand the subscription with us from the several departments with the one.

<unk> mix of subscription to a full platform standardization across the company. They tell us that we help them consolidate development environments manage and secure open source components build and deliver software of more quickly and allow them to deliver the best user experience as a digital bank.

But it's not just expanding customers.

We have started seeing new logos lending on the high level of subscriptions in fact, one of the most recognizable companies in cyber security chose Jay for in Q4 with the new business contract in six figures.

As they were looking for a solution that could scale and secure the Dev ops pipeline and distribute software affected.

Another allowance corporation, one of the largest investment banks in the world came to Jay for to support the end to end Dev ops requirements across hybrid and multi cloud the policies.

They found Jay for up to be the partner as the only vendor to support the growth infrastructure and signed a net new contracts in the mid six figures.

As Jay for has moved from a single product company to a six product platform, our persona and stake holders continue to expand within customers organization.

We plan for the extend sales cycles that would come with this upmarket moving in.

On the business drivers have corresponded with our co investment areas software package management embedded pipeline automation checkups and distribution all aligned with our hybrid business model and of itself so to generate opportunities from both the bottom up and top down.

As the final point on sales, we continue to expand in the Asia Pacific region with the huge opportunities from some of the world's largest economy.

We have hired and expanded our sales and support leaders in China, Japan, and India to increase the focus and expand the footprint of <unk> in these territories.

I would also like to briefly address our cloud businesses.

While our self faster than sales managed subscription business remains strong and growing the hybrid capabilities of Jay for continued to drive cloud adoption.

Geoff Hauck allowed businesses to choose where and when they want to consume services, even extending the multi cloud technologies to deliver maximum flexibility.

As the results of this flexibility and ongoing cloud migration SaaS revenue growth has significantly exceeded sales managed solution growth for the past several quarters.

The accelerated during COVID-19, our hybrid the model is part of our multiyear strategy and included the vast investments over the past three years.

We are also driving our sales pipeline through strategic partnerships with major cloud providers. In fact in Q4, we hosted three day event with AWS, Google Cloud and Microsoft Azure, The Dicks store Dev ops and the modern landscape best practices and case studies.

The event attracted thousands of attendees with the majority of also we just stirring for hands on workshops.

Our partnerships with the cloud providers continue to expand into strategic co selling and co marketing opportunities that we expect to drive further cloud and hybrid expansion.

As an example, one of the largest cloud the 90 of operating companies in North America came to Jay profit through our partner AWS with the private marketplace offer price over a quarter of millions of dollars.

Ah as lending as the landing point.

We look forward to multiple selling activities with our partners to drive similar new businesses.

One of our key marketing strategy to drive new businesses is to build top of funnel activities via the free cloud offering as well.

This investment not only generate sales of opportunities, but also provides the users with the friction the setup of the full platform free of charge.

We're seeing growing the results from this long term strategy beginning to bear fruit in Q4, I am excited to say, we continue to see rapid adoption of this free version, but also as anticipated thousands of registrations are choosing Jay for starting as users and then entering the <unk>.

Sales funnel and beginning to convert to paying subscribers.

Ultimately, we haven't seen this new offering decreased the amount of demand for on Prem down the book price.

Reflecting a well balanced hybrid customer base.

This cloud conversion is occurring not just with low level of subscriptions.

We also see free users ultimately signing up for larger enterprise wide subscription after being exposed to Jay for value.

With this enterprise scale subscription originating from the free offering and across clouds as well as the geographies. We're pleased to be able to give back in support of the community as well as generate a reliable pipeline for the Dev ops platform students.

We are excited about the many innovations we are walking on in Q1 and beyond to continue to drive ever more value, including further worldwide cloud expansion, specifically into the APAC region, and introducing Jay frog in new cloud providers marketplaces.

Community adoption across the globe continues to be a priority for us as well, we continue to invest in tools and solutions that address the real community pain, our roots of developers in this community drives us to always be better to serve this space to improve and innovate.

Our roadmap as we continue to work on features integration and ecosystem improvements to enable adoption at scale for.

For example in late 2020, our teams for.

Other improve the shape of command line interface to enable easier ecosystem integrations with any of the better personal attack.

We delivered partner integration that allows developers to more easily walk with lifecycle of tools, such as Atlassian data dog Jenkins agile Dev ops and more.

We updated developers connection with popular cloud based Dev ops tools such as article.

We released key updates and integrations to popular building collaboration tools, including improved Atlassian, Gerard and beat the buckets integration plank of observed ability integration and more.

We are committed to support our partners and acknowledging the fact that every vendor in the Dev ops ecosystem use of software package makes it got the requiring tools like Jay Forbes artifacts of the repository. We are also committed to providing developers the freedom to choose what to integrate without the factory as the.

Our database of Dev ops.

In early Q1, we further announced a form of partnership with Docker the leader in software container technology sales.

Each one of this agreement will allow seamless access by developers to the Doctor hub the number one container how big the world.

This partnership fitness, our commitment to seamless application development for cloud native and micro services based technologies.

Developers all of US the world can now enjoy the combined power of the best Docker registry provided by Jay for with free access for cloud users to talk on hub is the leading center for containers.

To summarize we believe we have significant opportunities to expand our platform portfolio in 2021.

Based on the data we have collected on the market demand customers feedback and broad market movement.

We are enhancing the only package distribution solution as a major of focusing 2021 businesses clearly need a full circle of trust, making sure. The software packages are not just being build but also secure distributed and deployed all of the way to one thing.

We are doubling down on security across the pipeline recent headlines have solidified the Dev ops is the epicenter of the digital business.

And security decisions made at the Central point have ripple effects throughout the organization.

We are working to ensure that security Nevertheless flows downhill.

Company and debt your pipelines are signed and secure.

Just recently Jay for X Ray was announced as best <unk> solution as voted by the community. This award honors the best debt checkout solution that enables security to be included earlier and continuously throughout the software development lifecycle.

We were honored to be the communities choice.

We'll also continue to drive technology universality, the ICD innovations cloud technology, and regional expansion and ecosystem integration to ensure that the package centric approach serves the entire organization regardless of technology preference.

All of this investment and focus area will support the growth throughout 2021 positioning us for scale and success as the market recovers.

Because <unk> is on a mission to change the way software is being built and released we will keep offering superior technology and superb services for Dev and ops to make sure Jay profit becomes the deepening of software development for our consumers.

With that.

I'd like to turn it over to our CFO Jacob Shulman for a more detailed financial results.

Thank you Shlomi and good afternoon, everyone.

Why the brief overview of our AR.

Fourth quarter and full year 2020 financial result.

And discuss our outlook for 2021.

For the one and the full year.

As a reminder, please note that all numbers referenced in my remarks.

On a non-GAAP basis on.

Less otherwise stated Eric.

A reconciliation to comparable GAAP measures can be found in today's earnings release, which is available on our website and as an exhibit to the form 8-K furnished to the SEC.

So, let's turn to our financial the results. We're pleased to have finished the year on the solid quarter.

The most work trends again drove faster growth in our cloud business.

Total revenues for the three months ended December 31, 2020 were $42 $7 million.

39% year over year.

Self managed revenues also often called on Bram <unk> of $32 9 million up 32% cloud revenues again grew significantly faster up 69% to $9 8 million or 23% of total revenues compared to 19% of sales.

The other revenues last year.

For the full fiscal year total revenues were $158 million up 44% year over year.

Self managed revenues were at $118 $2 million.

Up 38%.

Cloud revenues for the year were up 71% to $32 $6 million of 22% of total revenues compared to 18% in 2019.

The net dollar retention for the trailing four quarters was 133%.

As of quarter end, we had 352 customers with <unk> of over $100000 up from 313 customers as of September 30 of <unk>.

The sequential increase of five quarters.

Of this group and customers got air are greater than $1 million, adding an additional $1 million customer in Q4.

At the year end, we had approximately 6050 customers compared to approximately 50 of 600 customers at the end of 2019.

We continue to believe covered the most significant impact is on the length of the sales cycle.

In addition, more and more customers are landing on high level of subscriptions, which also requires longer sales cycles.

As Shlomi discussed our fully integrated platform continues to differentiate Jay for OCA in the marketplace.

And the recognition of that values of accelerating it.

In Q4, 26% of total revenue came from enterprise class customers up from 13% in Q4 of 2019 for.

For the full year enterprise class customers represent the 20% of total revenue increased from 10% at the end of 2019.

Now, let's review of the income statement in more detail.

Gross profit in the quarter was $35 2 million.

Representing the gross margin of 82, 6% compared to 81, 2% in the year ago period.

For the fiscal of 2020 gross profit was $124 $3 million.

Presenting on the gross margin of 82, 4% compared to 82, 2% in fiscal 2019.

During the year, we made significant investments in improving the efficiency of our operations, particularly in our cloud business, which improved our margins.

R&D expense for the quarter was $10 2 million.

Oh, it's one of our percentage of revenue compared to 22% of revenue in the year ago period.

We have continued to invest significantly in R&D, including the rollout of a free tier along with expanding the capabilities of X Ray and distribution.

Sales and marketing expenses for the quarter were $16 1 million of.

For 38% of revenue compared to 37% in the year ago period, we benefited from a number of cost saving measures. This quarter as a result of COVID-19, including the reduced travel budget and convert the marketing programs for virtual node sequentially. We saw an increase in sales and marketing largely due to cash.

Costs associated with our free cloud from unions offering we expect the expense on the free tier will stabilize here as we benefit from the infrastructure improvements I mentioned earlier.

G&A expense for the quarter was $6 $8 million of 16% of revenue compared to 14% in the year ago period, G&A reflect an increase in our public company costs.

Non-GAAP operating income for Q4 was $2 2 million or five 1% the operating margin compared to $2 3 million or seven 4% of operating margin in the year ago period for.

For the full year non-GAAP operating income was $30 million or eight 6% operating margin compared to $5 $9 million or five 7% of the great margin in 2019, we will continue to balance investments in growing the business and leveraging of the opportunity in front of Jay for all with profit of.

Ability our target for the near future is to remain in the low to mid single digit operating margin.

Non-GAAP net income in the quarter was $2 2 million of <unk> <unk> per diluted share based on approximately $103 6 million weighted average diluted share outstanding.

Non-GAAP net income for the full year was $13 $5 million of 13 cents per diluted share based on approximately $101 3 million weighted average diluted shares outstanding.

Turning to the balance sheet on cash flow.

We ended the year with $598 million in cash and short term investments cash flow from operations was $12 $8 million in the quarter after taking into consideration of Capex free cash flow was a record $11 $9 million for the full year free cash flow was $25 nine.

<unk>.

Now, let's look at how our progress in 2020 positions us for a strong 2021 for.

For the full year, we expect revenue of between $196 million to $204 million with non-GAAP operating income between $5 million and $7 million and then approximately of 4% increase in fully diluted shares at the midpoint of the guidance revenue growth is approximately 30.

The 3%.

For Q1, we expect revenue of $44 million to $45 million with non-GAAP operating income of for half a million dollars to $1 $5 million and non-GAAP EPS of zero to one of them.

Assuming the share count of approximately 100 formularies shares at the midpoint of the guidance, we expect growth of 36% following on the very strong pre COVID-19 Q1 in 2020.

Let me provide some color on the cadence of quarterly revenue growth this year.

The first quarter is benefiting from the strong net dollar retention in Q1 'twenty.

In the second quarter year over year growth will be weaker as we saw lower up sales in Q2, 'twenty, which was the first full quarter impacted by Covid.

We expect the second half of 2021 will be stronger as we will benefit from a rebound of new customer additions as well as leverage investments made over the past year.

Now, let me turn the call back the Shlomi for some closing remarks before we take your questions.

Thank you Jacob 2020 was the challenging and unexpected yields for every business yet Jay from exceeded the guidance we had provided.

We believe J for continues to be positioned well in the market to address the growing needs of digitally reach businesses. Our success to date is a testament to our core business value J for the hybrid Universal Dev ops end to end platform gives companies and.

Easy way to manage the queue built and released software updates fearlessly and with the joy for customers experience.

As we close 2020 and moving into 2021, I couldnt be more proud of the frogs, our employees, who are taking us through an unforgettable year the.

Platform innovation the <unk>.

Germany through our IPO and their never ending commitment to quality and success have inspired our entire team.

I would like to thank our community and customers who partner with US on this journey in 2020, we couldnt have done it without you and we look forward to more success together.

Thanks for your attention.

Best wishes for a healthy new year and made the frog Bill with US all of them and now we'll be happy to take your questions.

To ask the question at this time, you will need to press star one on your telephone and to withdraw your question press the pound key.

In the interest of time, please limit yourself to one question one follow up please on viable we compile the Q&A roster.

The first question on comes from the line of <unk> Singh from Morgan Stanley.

Again.

Yeah.

Thank you for taking the questions and congrats to the team on for <unk>.

Another sort of year of 40% plus revenue growth I wanted to start.

With the the momentum Youre seeing on the enterprise plus that had a big jump in the quarter on I wanted to get a sense.

Shlomi, what's sort of driving that did you see of benefit kind of after the solar wind compromise with X ray or is the more about pipeline. If you can sort of unpack.

The momentum we're seeing in that Andrew.

Enterprise plus subscription net would be that will be at the.

This is true.

Yeah sure Sanjay it's great to hear you again and greeting from Israel.

Thank you for your question actually is.

Three different questions I'll try to address it one by one.

Regarding the growth we see in the adoption of the enterprise class.

The one thing we see very very impactful.

Is the distribution software packages the ability that we added to the platform a bit more than a year ago companies are not any more satisfied with just see ICD and security solution. They also want to make sure the software packages on reaching the destination and with Jay for platform. They have an embedded solution.

From from build to secure to release the software packages. This is what we call. The circle of trust that's one of the main.

The drivers for customers to adopt the enterprise class solution. The second thing that you have asked about is security and SEC ops and referring to solar on wing and this is a very good question because we expect all of our customers to understand the theme of the Waldorf.

The automation and software acceleration, where machines are building software and bringing some sort of from the outside world you should secure repository of especially software packages that comes in on.

<unk> types from from the public market and from the internal development team. So with X Ray you can actually scan and secure real are the factory of repository.

It's also pockets of software from the outside it natively seats on an artifact of it now back to the original question. When you get all six products under one subscription the enterprise plus subscription which represent the platform and the full access to all of our product. Obviously this drives a lot of <unk>.

<unk>.

To the market and Jay Frog provides an end to end solution with the hybrid notion. So you can have it in the cloud and on Prem. So we see more and more customers are using our platform not just on the self hosted solution, but also in the cloud and multi cloud.

Yeah.

Understood and then if I could go back to sort of the components of growth the day.

The basic net expansion of sustaining of the 130% that's great to see on the new customer on the customer base growth side of the equation that was about 7% growth this year versus 20% last year, and obviously that was sort of impacted by COVID-19, but I wanted to understand what the impact of the free offering has on your paid customer growth and what is that.

There is some sort of pent up demand you sort of seeding the market today to maybe drive that day.

Based conversion on later this year or maybe next is that the right way to think about potential improvements on the new customer growth side.

Yes so.

We committed we aimed our sales to have a greater than 130% net dollar retention and obviously, we exceeded that and we're very proud of the team, but the one thing that we did and the management level and the highest management level and Jay for once Covid started we actually put together.

Three scenarios playbook and one of the elements that we were very clear with our sales and support team was no matter what happens we keep our customers and we make sure that we retain our customers at whatever cost it means whatever engage engagement it requires.

Ever level of support it requires we work very hard and this the goal was achieved during the pandemic obviously.

New logos in the first quarter of the pandemic Q2 in the second quarter of the pandemic Q3.

Had a lot of them had some budget reviews and budget concerns some of them also expressed some.

Difficulties to reach out the procurement and legal so the sales lifecycle debt a bit longer so the new logo slowdown that we see was the combination of of both our focus on retaining our installed base, making sure that our net dollar retention is high as the committed.

And the second thing is what's happened due to the pandemic. The third thing and you mentioned Nathan you are very right. We launched in the end of Q3.

And throughout two for the the free tier the free tier is very promising providing us.

The the insights from from the customer's journey, but also what we see is thousands of new logos starting to use J for full platform exposed to all of our abilities all of the capabilities of the platform, but now they are not limited by the time. This is not the downloadable trial. This is acts.

Chile of cloud based consumption based.

The three three til for them to use when we expect to see them convert as they adopt our tool and use more of our cloud services.

Thank you Shlomi congrats on the Q4.

Thank you very much on it.

The question will come from the line of Brad.

And the way back from Stifel.

And again.

Great. Thanks very much.

Jacob as we think about the the significant growth from the SaaS product and how that is going to become a larger and larger percentage of revenue going forward. How should we think about the mix change and the potential impact of gross margin from that.

Yes.

So obviously our of cloud margins lower bid on the on Prem margins therefore as the.

Cloud revenue represent the bigger portion that we will see some impact on our overall gross margin. We just don't see that in 2020, because we did a lot of work on streamlining our infrastructure and the and improving the cloud margins.

Our long term, we will see convergence toward the about 80% gross margin, but in the short term we'll see.

Around similar levels of margins as we continue to grow and cloud business continued to grow only the enviable see gradual convergence towards the 80%.

Great. Thanks very much.

Thank you.

Next question will come from the line of Jack Andrews from some of them.

They begin.

Good afternoon, and thanks for taking my question I wanted to ask about the customers who have reached the $1 billion threshold for you are there any lessons learned.

<unk>.

As you taken a look at the at these customers' journeys and there could be applied more broadly to your customer base and how how many customers do you think might be able to potentially reach that threshold over time.

Yeah.

Yes, Jack that's a that's of great question, and we built the platform aiming to to have customers of this size, we understand that the Dev ops and the and software automation is kind of driving the digital transformation, which according to any survey that we read recently is the number one priority of.

Of the CIO.

So obviously the budget is there the need is there the demand is there the pain is there.

And we see more and more customers are.

Grading too high of subscriptions and two of multiple zones now what will drive over $1 million.

<unk>.

In the.

The number one is a full hybrid solution not just sales fostered but also in the cloud in order to be able to provide the flexibility to the organization to push software closer to the developers into the consumers. The number of two thing is the multiple projects that you have in the in the company.

And when you need to consolidate that into one platform debt obviously.

Provide a benefit to the organization and the bigger opportunity for us to go and then the third thing is the multi cloud solution <unk> is the only Dev ops provider that offers for you not just the hybrid solution, but also a multi cloud solution. So you can you can actually choose.

Where and when you want to push of software too and the and if Jay for have.

End to end solution. That's not just serves your on Prem to your thousands of developers in this specific case of the over 1 million.

<unk> account and and pushes to all clouds, that's obviously, a great Avenue for us to generate growth.

No I appreciate that the perspective, there just as a follow up question I wanted to ask specifically about.

How are you thinking around a little bit more about what youre doing in CIC day in particular, and how you're thinking about the opportunity of pipelines.

We view this as sort of a greenfield market or is there a potential displacement, which with other CIC tools that the people are using today.

Yeah.

Yes, so the.

The <unk>, we used to think the ICD like its the one market will start to see the.

The Ci is what is closer to the developers what we call left of the factory CD is more closer to your production deployment environment on term environments, what we call right two out of factory at the factories. The control point now of February organization.

And the jape of pipelines fully embedded into the platform and natively speaks without the factory in X Ray provides you with Q benefits over the other the ICD towards the first thing is the shape of pipeline is agnostic to to any to debt you have on the Ci side and integrate.

Seamlessly with OCI towards the second thing is that the continuous deployment coming from your binaries is something that every continuous deployment solutions will have to you. So instead of going to a different repository pipeline is natively integrated without the factory and other benefits that we added two pipeline just.

I'm pleased what we call signed pipeline and Thats secure Yo Yo.

Youll build and secure the software delivery through the different game.

So as we see pipeline getting more and more mature and more and more integrated to the platform. We think that it will bring new benefits to the world of see ICD and we'll complete the circle of trust of not only build and test, but also deploy and the.

Bush software packages to the on time.

Got it that's really helpful. Thanks for taking my questions.

Yeah.

And our next question on comes from the line of Alex Kurtz from Keybanc you may begin.

Hi, This is Michael on for Alex and congrats on the corner.

So how do you see the expansion of our factory server licenses in the existing customers isn't the growth sector for signing new accounts.

Hi, Michael of Alex.

I think that the.

I'm, sorry, Michael right.

Did I get the old name right, Yes, that's right.

Michael I think that what the what we see now is that the.

Every organization started two to understand debt in the wall of the.

The cloud native when containers on the number one software package debt every organization would use you Steve used multiple technologies, we spoke about universality, we spoke about the radical universality of posted we Havent Jacob we now support over 30 different technology type and this increases the demand and the <unk>.

The option of 40 factory at the call.

In every organization of the second thing that is aligned.

Completely with our technology is the fact that the RT factory is part of every subscription from the treaty solely from the open source to the fleet due to our higher subscriptions are the factory is based on the call and every product every other product that we have is added on top of it with the different value.

So to your question, we would see more and more adoptions of the factory.

Not just.

In the self hosted solutions, but also in the cloud on every cloud.

Okay, Great and then if I could just ask on more on the billing side could you give any color on what how can I of the outperformance on the corner.

Yes, so we believe that the best metric to assess our performance is.

Is the actual.

<unk> and billings dependent on on various factors, including sometimes customers enter into multiyear agreements, which actually what's happened in Q4.

Therefore, we believe that the best the debt.

Thus the Kpis just as our growth is net of retention and the era.

Okay. Thanks, a lot.

Sure.

And our next question will come from the line.

<unk> Kidron from Oppenheimer you may begin.

Thanks, Hey, guys congrats on a great quarter.

And so for interesting speech shlomi.

I wanted to kind of dig into pipelines.

It certainly feels like the CD side is broken and so I think pipelines is really offers a very unique opportunity.

I guess I'm kind of wondering would you just given the growing maturity of pipelines and given how the market for remains a good CD total solution out there and given the agnostic nature of pipelines as you've described the just a minute ago.

I guess the kind of wonder if there is an opportunity do you see for selling pipelines independently not part of all of your enterprise cloud subscription.

Would you be looking to also potentially.

<unk> dot product independently aggressively or you would just want to make debt.

As a driver for enterprise plus.

It's the highest die great to hear from you again.

I think that the U you actually pointed tried the real pain that we've seen the market is in the world of C. D. Continuous deployment I don't want to say broken but continuous deployment. It is this environment is not yet completed windows are adopting new technologies as we speak.

The kubernetes is challenging everyone.

Peer to peer distribution is something that we just recently released and it boosts the distribution in every organization that work with our platform.

And powered by pipeline now pipeline is the results of an acquisition. We've done three years ago, We acquired the company called cheaper Bell they've been the see ICD tool based on binaries and meet the data the binaries brings with them. We were very excited about debt and since then we are working closely with.

The team.

The grew significantly in order to improve the integration with the with our platform now to be clear pipeline is available on every.

On every package every tier of our cloud offering the pipeline is also part of our deal pipeline.

Is the.

As the ICD tool that natively seats and speaks with the Arctic factory in X Ray and Jape of the distribution now for your question about maybe.

Offer pipeline as a standalone product maybe in the future we will consider it currently what we see di is that the power of the plot on the end to end solution. What Jay for can gives you not just the one security tools. The scans Yo Yo repository of not just as of the ICD towards the to be honest the.

<unk> is commoditized CD is very challenging and it cannot come without the very powerful distribution it cannot come without the very powerful access to the meet the data of all binaries, but when it comes with these kind of assets when it comes to this benefit pipeline is.

For more advanced than all of the CD tools that you will see in the market pipeline comes with the vision of not just the managing your automation between one day to another but also seamlessly securely of pipeline seamlessly.

Your software packages and distribute the quickly to every edge and when we look to the future. As you know, we think that Dev ops journey of the depth of journey is not ending in the data center. It will end on the device and the edge devices and we see pipeline of great catalysts at all.

In this in this journey, so we might consider in the future of selling pipeline as a standalone currently we see the benefit of all six product playing together stronger and more valuable to all of our customers.

Got it okay very helpful and then the Jacob.

Thanks for working on sort of cadence of the quarters, just given all the moving pieces, but maybe you can talk about it also on the context of the.

Net retention rate.

Clearly, it's been slowly coming down here.

Yeah, I guess with people landing at the higher tiers, how does that complicate our retention rate stability.

Help us think about what should we really expect from that metric as we go through this complicated year over year comps over the next year for your.

Two or three quarters.

Yes of our midpoint of our guidance for 2021 implies 33% growth. So obviously the revenue growth is primarily driven by expansion on the for existing customers. Therefore, we will continue to targets on the dollar doesn't to be approximately 130 of our Buffalo bills.

Got it thank you very much good luck.

Yes.

The next question comes from the line of Jason Adder for William Blair You may begin.

Yeah. Thank you hey, guys.

My question is what is the biggest gating factor for.

For you in getting more customers to adopt the on.

On the end platform enterprise plus and how important is it for you to keep building out of field sales force.

As you strive to increase the attach rates for enterprise plus.

Yes.

I think that what the what you see in <unk> now that the.

We are.

Working very hard to.

To have a first access to our new customers and existing customers by the way.

Two of full platform.

It is a completely different the playbook to allow our customers having go on in the trial on one product or even two products versus the full platform and therefore, we've created the the.

The free tier the free offering in the cloud by the way available on every cloud on every region.

To expose those customers too.

So all of our all of our products. So what we what we can see is that the start their journey using the the full platform and the and we are also looking forward to convert the thousands of new users we have on the free tier.

As we move on.

Regarding the strategic team.

What you mentioned is the field team.

Our strategic team is focus on the top 100 customers. This is the the team that we hired in order to expand.

Our footprint within our.

The top 100 customers. This team is already working already in action already start to bring the results. We mentioned some of those successes and win.

In the script.

The biggest companies in the world on now looking at the second wave of digital transformation and obviously this team can introduce them to more and more solutions coming from Jacob.

Thank you and Jacob one follow up for you.

Is there any change on the average new customer of <unk> as you guys.

Have more success with.

The the bundled platform.

Yes, Jason what do you start see the slowed me alluded to at the customer's landing on the high level of subscription.

Still the majority of customers today lend on the entry level of subscriptions, but the gradually we will see increase in the.

In London every chair of our per new customer.

So the if you kind of a consistent trend line, you expect kind of up.

Up into the right.

Yes.

Thank you.

And then the next question will come from the line.

Rob Owens from Piper Sandler you may begin.

Thanks for taking my question Jacob mentioned.

Value within the business just kind of look is <unk> and I think you guys give the here are relative to the large accounts, but are you willing to offer with the overall areas right now where with the growth rate's been there.

Overall, there are met our targets and the business of the metric that.

We currently are not disclosing.

Net all of it definitely of the primary metric.

The metrics to assess our growth in revenue.

Okay sounds good and then as I look at some of the international expansion that you guys are doing the incremental sales capacity when you follow a similar model.

It's going to be more inside sales drove the initially before you have field sales where are you looking at the fuel source the right way.

Yeah.

Yes.

We are expanding.

Our presence and footprint in different territories, and obviously work very hard with our strategic team to analyze what the authorities we want to penetrate first it's a combination of.

On the maturity of Dev ops in these territories and also the the potential the size of the markets in different places like China, and Japan, obviously, it's a completely different playbook in Japan, we see of lots of.

The integration and relations that we built with the.

With larger companies that the sales of <unk>.

System integrators in China, It requires the lots of.

Professional services, sometimes so we have partners in this field and the locality is also very important in these territories.

In terms of support language and supporting our views of the so we are coming with the same subscription and adopting some of these territories.

On the need.

Order to scale our footprint in this new area.

Yes.

Great. Thank you for the color.

And our next question on comes from the line of Brad Sills from Bank of America, you may begin.

Hi, This is actually <unk> on for Brian So on congrats on the restaurant Anthony here.

You saw the strong customer growth of this quarter. So I wanted to ask if he weren't moving.

The car any vertical industries or geographies are you, particularly strong adoption. Thank you.

Yes.

It's a great question, we spoke about the new territories obviously.

Japan, China, India, Australia, the APAC territory is almost a greenfield for Bev upset the great thing about that is that while coming gain late they are adopting.

Adopting immediately the enterprise solutions, they don't start with the ICD or sorry, the start with the enterprise solution and the scale immediately those are.

One of two of the biggest organizations in these territories are already in touch with us and we are in process and we see the demand though.

Regarding the new verticals.

We believe that we should reinforce our footprint in the fed the federal and government.

Vertical this requires.

More than just a field team of strategic team that is expert with this vertical but also.

Regulations that we are completing now and preparations and the fed ramp that we are in the process of completing the <unk> will exceed.

The.

The the ALLL generated from this vertical in 2021.

Awesome. Thank you for from my question.

Yeah.

Thank you and for the last question will come from the line of Sterling Auty from Jpmorgan you may begin.

Our guidance was Matt on for Sterling. Thanks for taking the question.

I know that the net retention rate is disclosed on a trailing 12 months basis. So I was just curious what did the net retention rate look like.

Just in the December quarter, and have you seen the customer expansion trends improving.

Yes, Matt.

As discussed previously we believe that the best metric to assess our performance of the trailing four quarters net dollar retention rate, which is called we just closed standalone back in Q2, only as the onetime disclosure because of two illustrate the cover of the impact and from now on we'll be focusing only on trailing four quarter another on retention.

Yeah.

Okay that makes sense thanks, Chris.

Yeah.

Thank you.

And I'm showing any further questions I'd like to turn the call back over to Shlomi for any closing remarks.

Hi, guys first of all thank you so much for your attention and for taking the time to join us today.

We are very happy and very pleased with the with the strong quarter that we showed the results with you.

We wish you great rest of the day and made the probably with you. Thank you very much.

Ladies and gentlemen, this concludes today's conference call. Thank you for participating you may now disconnect.

[music].

[music].

[music].

Ladies and gentlemen, thank you for joining us and welcome to the J for the fourth quarter and fiscal year 2020 earnings conference call on.

On the accomplished over today.

Joanne on of the Jay for all of Investor Relations team.

Please go ahead.

Good afternoon, and thank you for joining us as we review Jay from the fourth quarter and 2020 fiscal year financial results, which were announced following the market close the press release earlier today joining.

Joining us will be due from the CEO and co founder of Shlomi behind and Jacob Chairman Jay <unk> CFO.

During this call we will 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 first quarter of 2021.

The words anticipate believe continue estimate expect intend will and similar expressions are intended to identify forward looking statements for similar indications of future expectations.

Cautioned not to place undue reliance on these forward looking statements, which reflect our views only as of today.

Of any sort of subset.

The current day.

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 of risks and uncertainties that could cause actual results to differ materially from expectations for.

For a discussion of material risks and other important factors that could affect our actual results. Please refer to our prospectus and our form 10-Q filed with the SEC on September 15th 2020, and November 5th 2020, respectively, which are available in the Investor Relations section of our website and the earnings press release issued earlier today.

Additional information will be made available in our annual report on form 10-K for the year ended December 31, 2020, and other filings of 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 <unk> performance should be considered in addition to not as a substitute for or in isolation from GAAP measures.

Please refer to the tables in our earnings release for a reconciliation of those measures to the most directly comparable GAAP financial measures.

A replay of this call will be available on the J for our Investor Relations website for a limited time.

With that I'd like to turn the call over to Jay for our CEO Shlomi Blenheim Shlomi.

Thank you Joanne and good afternoon, and thanks for joining us for <unk>, 2024th quarter and physical year earnings call.

This is all the second earnings call as the public company, reflecting the first time, we will be announcing our performance versus the prior quarters guidance and I'm proud to say, we exceeded the revenue numbers we had provided.

Before we start I'd like to take the opportunity to express my appreciation to simply for.

For the great job and going beyond expectations in 2020, well done.

Now I'm excited to share of both our 2020.

Annual and Q4 results with you.

Q4 was a strong finish to what has been a milestone year for Jay for these.

We are driven by large customers adoption further expansion into the APAC region partnerships in the ecosystem and ongoing technology innovation and the J for platform.

That's the brief overview of the business on financials I'm pleased to it for the toward the physical Alere of 2020, ending on December 31, 2022, pronged overall revenue grew 44% over the previous year two of <unk>.

On this and 58 million.

With the 133% net dollar retention for the trailing four quarters and Q4 day pulled revenue climbed to $42 7 million of growth of 39% of the same period last year.

Our moved their cloud business achieved substantial growth of 69% due to the increased demand for power consumption basically of ups services, our free cash flow for the fourth quarter came in at the record of $11 9 million.

Despite the COVID-19 pandemic Jay for grew significantly in 2020 successfully securing new customers, while achieving the remarkable retention of our installed base and all the verticals and across all of the company sizes.

This growth and demonstrate the customer retention supports our belief the Dev ops solutions and more specifically software packages all driving the next wave of the digital transformation and innovation for modern businesses.

Now I would like to talk about the past 12 months overall.

2020 wasn't on congrats on <unk>. In addition to worldwide conditions that affected all people and businesses 2020 was the monumental and the broad Dev ops space.

Just a year ago in February 2020, J for launched its first universal hybrid multi cloud and two ends of the box platform with J, Paul about the factory as it's called the.

This included both cloud and self managed offering for our complete platform delivering flexibility and the unified UI for the enterprise.

It's a J park nature of not only to innovate and create the categories, but also to look forward to the next leap day.

The state will take and the requirement of companies and those upcoming realities.

We were proud of can meet the challenges of the community and customers the reflected back to us and the continued software release management's realm and what they needed not only for today, but also help the malls needs.

Specifically the need to scale seamlessly with both product and business model alignment the need to integrate Universal software package management security scanning software distribution and see ICD tools.

This requirements on we believe critical to meet the demands of modern software development organization in the cloud makes you there.

In March and.

And through the year, the physical and digital effects of the pandemic crystallized Dev ops and software updates as mission critical to the business.

Digital transformation was accelerated with corporate strategies around cloud migration and IC maturation placed on the phone clients.

As we all face the unexpected situation in the spring and summer and the start of our COVID-19 operations plan, we were very clear with our sales into the 14, you must focus on customer retention.

I'm very proud to say we achieved this growth while also growing our customer base.

As a demonstration of the demand for end to end solution like the <unk> platform. Our customers entry point also grew with new customers often joining jay for at our higher level of subscription.

The signals how mission critical Dev ops has become to the software industry.

The combination in 2020 of excellent customer retention, and then fueling growth through new avenues, such as the free community offering drives our belief the 'twenty 'twenty one while still influenced by the pandemic will allow for continued growth in both customers.

Acquisition as well as expansion through our strategic sales team.

Throughout 2020, we continued to invest in our people and expand our platform offerings to support the growing needs of customers, who told us they were facing increased pressure to deliver the mall and faster in the digital age software innovation became the key and sometimes on the competitive differentiator.

Here are a few highlights.

We still had the the <unk> free program in the early days of different than the offer cloud based Dev ops tools to organizations actively fighting COVID-19, we were proud to have global interest in this program from companies involved in medical research contact tracing equipment manufacture.

During the <unk> mall.

We doubled down on software distribution.

One of the key drivers for Jacobs platform adoption.

The other day box vendor is focused on securely delivering software packages to the edge of scale and they believe the secure SaaS movement of software packages that supports hybrid environments micro services and beyond.

As the binaries company. We believe there is an extensive market downstream from actual of software development into distribution and our customers are supporting this notion.

The supply is not only to software distribution to end users, but also among the development teams we focus.

On productivity, even creating for peer to peer software distribution protocols that allow global teams to stay in sync as the share of software packages rapidly and effectively.

In fact faster than other providers of the boat.

We launched a free community offering in the cloud to give all developers access to debt to the J for platform. This offering is proving to be a globally adopted friction free way to evaluate Jeff of product prior to purchase and consolidation by companies.

These offerings allow the first self service the way to try the Jacob platform in the cloud the fuel of choice.

Which is also providing us with new data and insights into cash into the customer journey.

The products and experienced improvement driven by these data already fueling greater of customers' experiences.

We also demonstrated our commitment to universality with multiple new technologies supported for both software package management and security tools.

We started the beta program the test end to end project management tools.

We enhanced usability and corporate security functions for Jay for X Ray and we expanded our integrations and the certification with companies like Atlassian Splunk data dog in a mall.

All of these innovations and the evolutions are driven by our approach of listening to the user and remaining fully universal to cover the entire technology stack of the company, we must always be hybrid multi cloud and multi regional to meet the flexible needs of business we might.

The allow our customers to released the updates securely and seamlessly to achieve a version of less world of world of liquid softwood.

Let me be clear.

This isn't about just offering development tools J focused laser focused on updating and securing all sorts of packages and delivering them to the edge.

This is the true end game for digital transformation.

If you turn to update software to the edge rapidly and securely Youll solutions are simply not meeting the needs of the digital business.

We have increased investments in Q4 that we believe.

Our Dev ops platform, one step closer to the embedded software updates.

And laid the foundation for how Dev ops in the Iot industry will look like in the future.

To build on this a bit more I want to reiterate why on the pathology is so important when it comes to Dev ops solutions and software package management.

In fact, we see our consistent universality approach available on non subscription being followed by the industry.

A few vendors are supporting the only 4% to six technology types with support levels, sometimes being very nimble all simplistic without the rich set of data to power the software package lifecycle instead, Jay for support of approximately 30 technology type.

More than any other solution in the market, while also providing reach datasets that allow us the nation security and acceleration of software build on delivery.

We're excited to see our approach validated with the industry emphasis now being placed on managing software packages.

But with Jay for once the company has standardized there is nowhere else for them to go to manage all of their technologies in one place.

If the desktop spend on cannot support the entire lifecycle of developing packaging, securing orchestrating and distributing software packages. The fall things development organizations to adopt multiple point solutions and the managed countless integrations themselves.

Our customers tell us.

This homegrown all point solutions are not sustainable.

The always on ever demanding world the consume software updates.

This is why we are building and innovating with the <unk> platform to help companies deliver on their promises and the secure reliable scalable way that supports all of the technology choices.

This is why Jay fog without the factory of the coal became the control point for development lifecycle.

To support this we saw in Q4 of its over 90% of revenue came from customers subscribe to our most of that product offers that go beyond Jay for golf. The factory just the year. After the release of our unified end to end solution.

86% of revenue came from our platforms enterprise SaaS subscription, which gives customers access to all of J Fox products.

This rapid adoption is double what it was in 2019.

Due to the added services and value, we give our high level customers.

Turning to sales.

As we have discussed before Jeff on <unk> is driven by inbound inside sales motion, allowing us to keep true to our commitment of delivering products that are in demand by developers.

Such we place equal emphasis on the exposing <unk> solutions to the new business opportunity as well as the maturing of our customers base in the land and expand model.

As the result of the vessels. We ended 2020 with 6050 unique customers up from 5600 at the end of 2019.

As of December 31, we had 352 customers with <unk>.

Greater than 100000 dollar of.

Which then customers well over $1 million.

Yes.

We again demonstrated sustainable growth with the adoption and expansion by the enterprise and the cloud hybrid and sales part of solutions.

Alongside our inside sales teams, our growing strategic sales team has already begun to build success as the standardized jape of across our top accounts.

The illustrated this in Q4, we sell a large increase in the number of customers adopting the full end to end Jay for the platform.

In fact.

One of the largest organizations in the credit space migrated to Jay from the away from competitive mix due to the competitors' inability to scale and standardize across technologies and geographical regions.

Our strategic accounting extended to a six figure deal with the potential of further expansion in 2021.

Although we saw significant growth quarter over quarter.

Adoption of our full platform cloud subscription, reflecting strong demand for hybrid and to end of <unk> solutions.

The strongly validates our approach and signals of rapid maturation of requirements and the depth of marketplace.

For example, one of the most recognizable companies in the payment processing growth recently upgraded from the lower level of subscription that was just about managing software packages to our complete platform subscription.

They told US the ultimate goal was to take the projects from being managed manually at the developer level to managing the process of delivering software to the edge.

They needed the completion of the facility is scale security and distribution capabilities, we uniquely provided and thats differentiated us from the competition.

As more companies look to revolutionize the of customers experienced in order to remain competitive customers continue to look to Jay for to deliver faster, we see longtime customers, including one of the largest bank in Europe expand the subscription with us from the several departments with the one.

The mix of subscription to a full platform standardization across the company. They tell us that we help them consolidate development environment manage and secure open source components built and believe the software more quickly and allow them to deliver the best user experience as the digital bank.

But it's not just expanding customers.

We have started seeing new logos lending on the high level of subscriptions in fact, one of the most recognizable companies in cyber security chunk Jay for in Q4 with the new business contract in six figures.

As they were looking for a solution that could stay and secure the Dev ops pipeline and distribute software effectively.

Another of large corporation, one of the largest investment banks in the world came to Jay for to support the end to end Dev ops requirements across hybrid and multi cloud topologies.

The found <unk> to be the partner as the only vendor to support the growth infrastructure and signed and net new contracts in the mid six figures.

As Jay progress has moved from a single product company to a sixth product platform, our personas and stakeholders continue to expand within customers organization.

We plan for the extend sales cycles that would come with this upmarket moving.

And the business drivers have corresponded with our co investment areas.

For a package management embedded pipeline automation setups and distribution all aligned with our hybrid business model and the sales fell to generate opportunities from both the bottom up and top down.

As the final point on sales, we continued to expand in the Asia Pacific region with the huge opportunities from some of the world's largest economy.

We have hired and expanded our sales and support leaders in China, Japan, and India to increase the focus and expand the footprint of <unk> in these territories.

I would also like to briefly address our cloud businesses.

While our self hosted and SaaS managed subscription business remains strong and growing the hybrid capabilities of Jay for continues to drive cloud adoption J.

<unk> allows businesses to choose where and when they want to consume services, even extending to multi cloud apologies to deliver maximum flexibility.

As the results of this flexibility and ongoing cloud migration of SaaS revenue growth has significantly exceeded sales managed solution growth for the past several quarters.

The accelerated during COVID-19, our hybrid the model is part of our multiyear strategy and included the best investment over the past three years.

We are also driving our sales pipeline through strategic partnerships with major cloud providers. In fact in Q4, we hosted three day event with AWS, Google Cloud and Microsoft Azure that the.

All of Dev ops in the modern landscape best practices and case studies.

The event attracted thousands of attendees with the majority of also registering for hands on workshops.

Our partnerships with the cloud providers continue to expand into strategic co selling and co marketing opportunities that we expect to drive further cloud and hybrid expansion.

As an example of one of the largest cloud the Nike operating companies in North America came to <unk> through our partner AWS with the private marketplace offer price over a quarter of a million dollars.

As lending as the landing point.

We look forward to multiple selling activities with our partners to drive similar new businesses.

One of our key marketing strategy to drive new businesses is to build on top of funnel activities via the free cloud offering as well the.

These investments not only generate sales of opportunities, but also provide the.

Users with the friction the setup of the full platform free of charge.

We're seeing growing the results from this long term strategy beginning to bear fruit in Q4, I am excited to say, we continue to see rapid adoption of this free version, but also as anticipated thousands of registrations are choosing Jay for starting as users and then entering the sale.

Funneled and beginning to convert to paying subscribers.

Ultimately, we haven't seen this new offering decrease the amount of demand for on Prem down the bold price.

Reflecting a well balanced hybrid customer base.

This cloud conversion is occurring not just with low level of subscriptions, but we also see free users ultimately signing up for larger enterprise wide subscription after being exposed to Jay for value.

With this enterprise scale subscription originating from the free offering and across clouds as well as geographies. We're pleased to be able to give back in support of the community as well as generate a reliable pipeline of the Dev ops platform business.

We are excited about the many innovations we are working on in Q1 and beyond to continue to drive ever more value, including further worldwide cloud expansion, specifically into the APAC region, and introducing Jay frog in new cloud providers marketplaces.

Community adoption across the globe continues to be a priority for us as well, we continue to invest in tools and solutions that address the real community Bank.

We have lots of developers in this community drives us to always be better to serve this space to improve and innovate our roadmap as we continue to work on features integration and ecosystem improvements to enable adoption of scale for.

For example in late 2020, our teams for.

Further improve the shape of command line interface to enable easier ecosystem integrations with any of the better personal stock.

We delivered faster integration that allows developers to more easily walk with lifecycle tools, such as Atlassian based adult Jenkins agile Dev ops and more.

We updated developers connection with popular cloud based Dev ops tools such as article.

We released key updates and integrations to popular built on collaboration tools, including improved Atlassian, Gerard and beat the buckets integration plank of Absorbability integration and more.

We are committed to support our partners and acknowledging the fact that every vendor in the Dev ops ecosystem use the software package makes the debt requiring tools like Jay for because of the factory repository.

We are also committed to providing developers the freedom to choose what to integrate without the factory as the database of Dev ops.

In early Q1, we further announced a form of partnership with Docker the leader in software container technology sales.

One of this agreement will allow seamless access by developers to Doctor hub. The number one container hub in the World. This partnership deepness of our commitment to seamless application development for the cloud native and micro services based technologies.

Developers all of the World can now enjoy the combined power of the best Docker registry provided by Jay for with free access for cloud users to talk on hub is the leading center for containers.

To summarize we believe we have significant opportunities to expand our platform portfolio in 2021.

Based on the data we have collected on the market demand customers feedback and broad market movement.

We are enhancing the only package distribution solution as a major of focus in 2021 businesses clearly need a full circle of trust, making sure. The software packages on not just being build but also secure distributed and deployed all the way to one thing.

We are doubling down on security across the pipeline recent headlines and solidify the Dev ops is the epicenter of the digital business and.

And the security decisions made at the Central point have ripple effects throughout the organization.

We are working to ensure the security Nevertheless, slows down for your company and Thats Your pipelines are signed and secure.

Just recently Jay for X Ray was announced as best <unk> solution as voted by the community. This award honors the best debt checkout solution that enabled security to be included earlier and continuously throughout the software development lifecycle.

We were honored to be the communities choice.

We'll also continue to drive technology universality, the ICD innovation cloud technology, and regional expansion and ecosystem integration to ensure the package centric approach serves the entire organization regardless of technology preference.

All of this investment and focus area will support the growth throughout 2021 positioning us for scale and success as the market recovers.

Because <unk> is on the mission to change the way software is being built and released.

We will keep offering superior technology, and superb services for Dev and ops to make sure Jay profit becomes the deepening of software development for our consumers.

With that.

I'd like to turn it over to our CFO Jacob Shulman for a more detailed financial results.

Thank you Shlomi and good afternoon, everyone.

The brief overview.

Fourth quarter and full year 2020 financial results.

And discuss our outlook for 2021 of the one and the full year.

As a reminder, please note that all numbers referenced in my remarks.

On a non-GAAP basis on.

Less otherwise stated Eric.

A reconciliation to comparable GAAP measures can be found in today's earnings release, which is available on our website and as an exhibit to the form 8-K furnished to the SEC.

So, let's turn to our financial the results. We're pleased to have finished the year on the solid quarter.

The remote work trends again drove faster growth in our cloud business.

Total revenues for the three months ended December 31, 2020 were $42 $7 million.

Up 39% year over year.

Sales managed revenues also often called on Bram <unk> of $32 $9 million.

Up 32% cloud revenues again grew significantly faster up 69% to $9 8 million or 23% of total revenues compared to 19% of total revenues last year.

For the full fiscal year total revenues were $158 million up 44% year over year sales managed revenues were at $118 2 million.

38%.

Revenues for the year were up 71% to $32 $6 million of 22% of total revenues compared to 18% in 2019.

Net dollar retention for the trailing four quarters was 133%.

As of quarter end, we had 352 customers with <unk> of our $100000.

Up from 313 customers as of September 30 of <unk>.

The sequential increase of five quarters.

This group of customers has air are greater than $1 million.

Adding an additional $1 million customer MQ for.

At the yearend, we had approximately 6050 customers compared to approximately 50 of 600 customers at the end of 2019.

Continue to believe probably the most significant impact is on the length of the sales cycle.

In addition, more and more customers are landing on high level of subscriptions, which also requires longer sales cycles.

As let me discuss our fully integrated platform continues to differentiate Jay for OCA in the marketplace.

And the recognition of that value is accelerating in.

In Q4, 26% of total revenue came from enterprise class customers up from 13% in Q4 of 2019.

For the full year enterprise class customers represent the 20% of total revenue increasing from 10% at the end of 2019.

Now, let's review of the income statement in more detail grasp.

The gross profit in the quarter was $35 2 million.

Representing the gross margin of 82, 6% compared to 81, 2% in the year ago period.

For the fiscal of 2020 gross profit was $124 $3 million.

Presenting on the gross margin of 82, 4% compared to 82, 2% in fiscal 2019.

During the year, we made significant investments in improving the efficiency of our operations, particularly in our cloud business, which improved our margins.

R&D expense for the quarter was $10 $2 million or its one of 4% of revenue compared to 22% of revenue in the year ago period will.

We have continued to invest significantly in R&D, including the rollout of our free tier along with expanding the capabilities of X rate and distribution.

Sales and marketing expenses for the quarter were $16 1 million.

Of 38% of revenue compared to 37% in the year ago period, we benefited from a number of cost saving measures. This quarter as a result of COVID-19, including the reduced travel budget and convert the marketing programs for virtual node sequentially. We saw an increase in sales and marketing largely due to <unk>.

Costs associated with our three cloud community offering.

We expect the expense on the free tier will stabilize here as we benefit from the infrastructure improvements I mentioned earlier.

G&A expense for the quarter was $6 $8 million of 16% of revenue compared to 14% in the year ago period, G&A reflect an increase in our public company costs.

Non-GAAP operating income for Q4 was $2 2 million or five 1% the operating margin compared to $2 $3 million or of seven 4% of the operating margin in the year ago period for.

For the full year non-GAAP operating income was $13 million.

Or eight 6% operating margin compared to $5 9 million or five 7% of the operating margin in 2019, we will continue to balance investments in growing the business and leveraging the opportunity in front of Jay for all with profitability.

Our target for the near future is to remain in the low to mid single digit operating margin.

Non-GAAP net income in the quarter was $2 2 million of <unk>.

<unk> per diluted share based on the approximately $103 6 million weighted average diluted share outstanding non-GAAP net income for the full year was $13 $5 million of 13 cents per diluted share based on approximately $101 3 million weighted average debt.

The shares outstanding.

Turning to the balance sheet on cash flow, we ended the year with $598 million in cash and short term investments cash.

Cash flow from operations was $12 $8 million in the quarter of the taken into consideration of Capex free cash flow was a record $11 9 million for the full year free cash flow was $25 $9 million.

Now, let's look at how our progress in 2020 positions us for a strong 2021.

For the full year, we expect revenue of between $196 million to $204 million with non-GAAP operating income between $5 million.

And $7 million and then approximately of 4% increase in fully diluted shares at the midpoint of the guidance revenue growth is approximately 33%.

For Q1, we expect revenue of $44 million to $45 million with non-GAAP operating income of a couple of million dollars to $1 5 million and non-GAAP EPS of zero to one.

Assuming the share count of approximately 100 formularies shares at the midpoint of the guidance, we expect growth of 36% following on the very strong pre COVID-19 Q1 in 2020.

Let me provide some color on the cadence of quarterly revenue growth this year.

The first quarter is benefiting from is the strong net dollar retention in Q1 'twenty.

In the second quarter year over year growth will be weaker as we saw lower op sales in Q2, 'twenty, which was the first full quarter impacted by Covid.

We expect the second half of 2021 will be stronger as we will benefit from the rebounds of new customer additions as well as leverage investments made over the past year.

Now, let me turn the call back the Shlomi for some closing remarks before we take your questions.

Thank you Jacob 2020 was the challenging and unexpected yields for every business Jay for exceeded the guidance we had provided.

We believe J for continues to be positioned well in the market to address the growing needs of digitally reach businesses. Our success to date is a testament to our core business values Jay for hybrid Universal Dev ops end to end platform gives companies and easy.

Way to manage the queue built in the release software updates fearlessly and with the joyful customers experience.

As we close 2020 and moving into 2021, I couldnt be more proud of the frogs, our employees who of taking us through an unforgettable leader the.

Lots of them innovation the journey through our IPO and there are never ending commitment to quality and success have inspired our entire team.

I would like to thank our community and customers who partner with US on this journey in 2020, we couldnt have done it without you and we look forward to more success together.

Thanks, Tony of attention.

Best wishes for a healthy new year and made the frog bill with the Salt and now we'll be happy to take your questions.

To ask the question at this time, you will need to press star one on your telephone.

To withdraw your question press the pound key.

On the interest of time, please limit yourself to one question one follow up please some Bible, we compile the Q&A roster.

The first question comes from the line of Sanjay <unk> from Morgan Stanley.

You may begin.

Thank you for taking the questions and congrats to the team on for <unk>.

For a year of 40% plus revenue growth I wanted to start.

With the the momentum Youre seeing on the enterprise class that had a big jump in the quarter and I wanted to get a sense.

Shlomi, what's sort of driving that did you see of Dennis it kind of after the solar wind compromise with X Ray was the more about pipelines, if you can sort of unpack.

The momentum we're seeing in that.

The enterprise plus subscription Leds.

Sure.

Yes sure of essentially it's great to hear you again and grading from Israel.

For your question actually it's the <unk>.

Three different questions I'll try to address it one by one.

Yeah.

Regarding the growth we see in the adoption of the enterprise class.

The one thing we see very very impactful is the distribution software packages the ability that we added to the platform a bit more than a year ago companies are not any more satisfied with just see ICD and security solution. They also want to make sure of the software packages on.

Reaching the destination and with <unk> platform. They have an embedded solution from from build to secure to release. The software packages. This is what we call. The circle of trust that's one of the main.

Drivers for customers to adopt the enterprise plus solution. The second thing that you have asked about the security and SEC ops and referring to slowing and this is a very good question because we expect all of our customers to understand the thing the wall the softer automation and software acceleration.

We are the machines are building software and bringing some sort of from the outside the world you should secure repository of especially software packages that comes in all the <unk>.

<unk> and types from from the public market and from the internal development team. So with X Ray you can actually scan and secure our the factory of repository debt.

Also pockets of software from the outside it natively seats on an artifact of it now back to the original question. When you get all six products on the one subscription the enterprise plus subscription which represent the platform and the full access to all of our product. Obviously this drives a lot of attention.

<unk>.

To the market and Jay fog provides an end to end solution with the hybrid notion. So you can have it in the cloud and on Prem So we see more and more customers.

Using our platform not just on the self hosted solution, but also in the cloud and multi cloud.

Understood and then if I could go back to sort of the components of growth on.

The dollar based net expansion of sustaining about the 130% that's great to see on the new customer on the customer base growth side of the equation that was about 7% growth this year versus 20% last year, and obviously that was sort of impacted by COVID-19, but I wanted to understand what the impact of the free offering has on your paid customer growth and weather.

There is some sort of pent up demand youre sort of seeding the market today to maybe drive that fee based conversion on.

Later this year or maybe next is that the right way to think about potential improvement on the new customer growth.

Yes, so we can meet the we aimed our sales to have a greater than 130% net dollar retention and obviously, we exceeded that and we're very proud of the team, but the one thing that we did and the management level and the highest management level and Jay for.

Once COVID-19 started we actually put together of three scenarios playbook and one of the elements that we were very clear with our sales and support team was no matter what happens we keep.

Our customer and we make sure that we retain our customers at whatever cost it means whatever engage engagement. It requires whatever level of support it requires we work very hard and this the goal was achieved during the pandemic obviously.

New logos in the first quarter of the pandemic Q2 in the second quarter of the pandemic Q3.

Had a lot of them had some budget reviews and budget concerns some of them also expressed some.

Difficulties to reach out the procurement and legal so the sales of lifecycle debt a bit longer so the new logo slowdown that we see was the combination of.

Both our focus on retaining our installed base, making sure that our net dollar retention is high as the committed and the second thing is whats happened due to the pandemic. The third thing and you mentioned Nathan you're very right. We launched in the end of Q3.

And throughout the Q4, the the free tier the free tier is very promising providing guests.

The the insights from from the customer journey, but also what we see is thousands of new logos starting to use J for the full platform exposed to all of our liabilities all of the capabilities of the platform, but now they are not limited by the time. This is not the downloadable trial. This is <unk>.

Chile of cloud based consumption based.

Three three til for them to use when we expect to see them convert as they adopt our tool and use more of our cloud services.

Thank you Shlomi congrats on the Q4.

Thank you very much on it.

Yeah.

The question will come from the line of Brad.

And the way back from Stifel you may begin.

Great. Thanks very much.

Jacob as we think about the the significant growth in the SaaS product and how that's going to become a larger and larger percentage of revenue going forward. How should we think about the mix change and the potential impact of gross margin from that.

Yes.

So obviously, our cloud margins are lower than the on Prem margins therefore as the.

Cloud revenue represent the bigger portion of that we'll see some impact on our overall gross margin.

Did not see that in 2020, because we did a lot of work on streamlining our infrastructure.

And the and improving the cloud margins.

Our long term, we will see convergence toward the about 80% gross margin, but in the short term we will see around.

It seemed low levels margins as we continue to grow and cloud business continues to grow only then we will see gradual convergence towards the 80%.

Great. Thanks very much.

Thank you. Our next question on come from the line of Jack Andrews from some of them may begin.

Good afternoon, and thanks for taking my question I wanted to ask about the customers who have reached the $1 billion threshold for you are there any lessons learned.

As you taken a look at these customers' journeys and there could be applied more broadly to your customer base and how how many customers do you think might be able to potentially reach that threshold over time.

Yes Jack.

It's a great question and we built the platform aiming to have customers of this size, we understand that the Dev ops and the.

In software automation is kind of driving the digital transformation, which according to any survey that we read recently is the number one priority of the CIO.

So obviously the budget is there the need is there the demand is there the pain is there.

And we see more and more customers.

Grading to hire subscriptions and two of multiple zones now what will drive over $1 million of appeal.

No.

In the.

The number one is a full hybrid solution not just faster, but also in the cloud in order to be able to provide the flexibility to deal with organization to put software closer to the developers into the consumers. The number of two thing is the multiple projects that you have in the in the company.

And when you need to consolidate that into one platform debt obviously.

Provide a benefit to the organization and the big of opportunity for US to go and then the third thing is the multi cloud solution. The <unk> is the only Dev ops of provider that offers for you not just the hybrid solution, but also of multi cloud solution. So you can you can actually choose.

Where and when you want to push of software and the and if Jay <unk> have.

End to end solution. That's not just serves your on Prem to your thousands of developers in this specific case of the over 1 million.

<unk> account and.

Pushes to all clouds, that's obviously, a great Avenue for us to generate growth.

I appreciate that the prospective there just as a follow up question I wanted to ask specifically about.

How you are thinking around a little bit more about what youre doing in <unk> in particular, and how you're thinking about the opportunity of pipelines.

We view this as sort of a greenfield market or is there a potential displacement, which with other CIC tools that the people are using today.

Okay.

Yes, so the.

The <unk>, we used to think the ICD like its the one market will start to see the.

The Ci is what is closer to the developers what we call left of the factory CD is more closer to your production deployment environment on term environments, what we call right throughout the factory artifacts of the as the control point now of February organization.

And Jay for pipelines fully embedded into the platform and natively speaks without the factory in X Ray provide you with few benefits over the others. The ICD towards the first thing is the <unk> pipeline is agnostic to any.

Any two debt you have on the Ci side and integrate seamlessly with the OCI towards the second thing is the continuous deployment coming from your binaries is something that every continuous deployment solution will have to use so instead of going to a <unk>.

Different repository pipeline is natively integrated without the factory.

Another benefit that we added to pipeline just recently is what we call signed pipeline and Thats secure Yo Yo.

Youll build and secure the software delivery towards the different gate, so as we see pipeline getting more and more mature and more and more integrated to the platform. We think that it will bring new benefits to the world of see ICD and we'll complete the circle of trust of not only build and test but also deploy.

And the Bush software packages to the on time.

Got it that's really helpful. Thanks for taking my questions.

And our next question on comes from the line of Alex Kurtz from Keybanc you may begin.

Hi, This is Michael on for Alex and congrats on the corner.

So how do you see the expansion of our factory of server licenses from existing customers isn't the growth sector for us planning new account.

Hi, Michael of Alex.

I think that the.

I'm, sorry, Michael right did I get your name right, Yes, that's right.

Michael I think that what.

What we see now is that the.

Every organization started to to understand debt in the wall of the cloud native when containers all of the number one software package debt every organization would use you Steve used multiple technologies, we spoke about universality, we spoke about the radical universality of posted it we havent jape of we know.

Support over 30 different technology type and this increases the demand and the adoption of 40 factory at the call.

In every organization of the second thing that is aligned.

Completely with our technology is the fact that at the factory is part of every subscription from the fleet the totally from the open source to the fleet deal to our higher subscriptions are the factory is based on the call and every product every other product that we have is added on top of it with the different value.

So to your question, we would see more and more adoptions of the factory.

Not just the.

And the self hosted solutions, but also in the cloud on every cloud.

Okay, Great and then if I could just ask on more on the billing side could you give any color on what helped drive the outperformance in the corner.

Yes, so we believe that the best metric to assess our performance is.

Is actually.

And the length dependent on on various factors, including sometime customers enter into multiyear agreements, which actually happened in Q4.

Therefore, we believe that the best the.

Right.

That's the the Kpis the assess our growth is the net of retention in the era.

Okay. Thanks, a lot.

Sure.

And our next question comes from the line.

<unk> Kidron from Oppenheimer you may begin.

Thanks, Hey, guys congrats on a great quarter.

And so for interesting speeds shlomi.

I wanted to kind of dig into pipelines.

It certainly feels like the CD side is broken and so all of the St. Pipelines is really offers a very unique opportunity I guess on kind of wondering would you just given the growing maturity of pipelines and given how the market for remains a good day.

For the solution out there and given the agnostic nature of the pipelines as you've described the just a minute ago.

I guess the kind of wonder if there is an opportunity of do you see for selling the pipelines independently not part of all of your enterprise price subscription.

Would you be looking to also potentially.

<unk> dot product independently aggressively or you would just want to make debt.

As the driver for enterprise for Us.

Yes, Hi, Ty great to hear from you again, I I think that the U you.

You actually pointed tried the.

Real pain that we've seen the market is in the world of CD continuous deployment I don't want to say broken but continuous deployment. It is this environment is not yet completed rentals are adopting new technologies as we speak kubernetes is challenging everyone.

The two pill distribution is something that we just recently released and it boosts the distribution in every organization that work with our platform and and powered by pipeline now pipeline is the results of an acquisition. We've done three years ago, We acquired the company called <unk>.

When the ICD tool based on the binaries and meet the debt that the binaries brings with them. We were very excited about debt and since then we are working closely with the team.

The grew significantly in order to improve the integration with the with our platform now to be clear pipeline is available on every.

On every package every tier of our cloud offering the pipeline is also part of our deal pipeline.

Is the.

As of the ICD tool that natively seats and speaks with the Arctic factory in X Ray and Jeff on the distribution now for your question about maybe.

All of our pipeline as a standalone product maybe in the future. We will consider it currently what we see the die is that the power of the plots on the end to end solution. What Jay for can gives you not just the one security tools. The <unk> youll repository of not just as the the ICD to the to be honest the.

<unk> is commoditized CD is very challenging and it cannot come without the very powerful distribution it cannot come without the very powerful access to the meet the data of all binaries, but when it comes with these kind of assets when it comes to reduce the benefits pipeline is.

For more advanced than all of the CD tools that you will see in the market pipeline comes with the vision of not just the managing your automation between one day to another but also seamlessly securely of pipeline seamlessly.

Bush of software packages and distribute the quickly to every edge and when we look to the future. As you know we think that Dev ops journey. The depth of journey is not ending in the data center. It will end the on the device on the edge devices, and we see pipeline of great catalysts at all.

In this in this journey so.

We might consider in the.

The future selling pipeline of Standalone currently we see the benefit of all six product playing together stronger and more valuable to all of our customers.

Got it okay very helpful and then Jacob.

Thanks for what kind of sort of cadence for the quarter of just given all the moving pieces, but maybe you can talk about the also in context of the.

The net retention rate.

Clearly, it's been slowly coming down here.

I guess with people landing at the higher tiers, how does that complicate our retention rate stability.

Help us think about what should we really expect from that metric as we go through this complicated year over year comps over the next two for you.

The three quarters.

Yes.

Midpoint of our guidance for 2021 implies 33% growth. So obviously the revenue growth is primarily driven by expansion of existing customers. Therefore, we will continue to target or another cash it to be approximately 130 of our Buffalo bills.

Got it thank you very much good luck.

And the next question will come from the line of Jason Adder for William Blair You may begin.

Thank you Hey, guys.

The question is what is the biggest gating factor for <unk>.

For you in getting more customers to adopt the end to end platform enterprise plus and how important is it for you to keep building out of field sales force.

As you strive to increase the attach rates for enterprise plus.

Yes.

I think that what the what you see.

In <unk> now that the.

We all.

Working very hard.

To have first access to our new customers and existing customers by the way.

Two of full platform.

It is a completely different the playbook to allow our customers having go on in the trial on one product or even two products versus the full platform and therefore, we've created the the free tier the free offering in the cloud by the way available on every cloud on every region too.

Both of those customers too.

To all of our all of our products. So what we what we can see is that the start their journey using the full platform and the and we also looking forward to convert the thousands of new users we have on the <unk> deal as as we move on.

Regarding the strategic team.

What you mentioned is the field team.

Our strategic team is focus on the top 100 customers. This is the team that we hired in order to expand our.

Our footprint within our.

The top 100 customers. This team is already working already in action already start to bring the results. We mentioned some of those successes and wins.

In the script.

The biggest companies in the world on now looking at the second wave of digital transformation and obviously this team can introduce them to more and more solutions coming from Jay for.

Thank you and Jacob one follow up for you.

Is there any change on the average new customer of <unk> as you guys.

Have more success with.

The the bundled platform.

Yes, Jason what do you start see the slowed me alluded to at the customer's landing on the high level of subscription.

Still the majority of customers today lend on the entry level of subscriptions, but the gradually we will see increase in the inland and average IRR per new customer.

So the if you kind of a consistent trend line, you expect kind of up.

Moving to the right.

Yes.

Thank you.

And our next question will come from the line, Rob Owens from Piper Sandler.

You may begin.

Great. Thanks for taking my question Jacob you mentioned the Guy.

Are you winning the business just kind of look as <unk> <unk> and I think you excuse me here of relative to the larger sales, but are you willing to offer with the overall IRR is great now with the growth rate's been there.

Overall, there are met our targets and the business the metric that we currently are not disclosing.

Net all of it definitely of the primary Mi.

Metrics to assess our growth on revenue.

Okay sounds good and then as I look at some of the international expansion that you guys are doing the incremental sales capacity will you follow the similar model.

It's going to be more intensive nature of it initially before you have field sales where are you looking on fuel source their right of way.

Yeah.

Yes, we are expanding.

Our presence and footprint in different territories, and obviously work very hard with our strategic team to analyze what the it's always if we want to penetrate first it's the combination of.

The majority of Dev ops in the territories and also the the potential the size of the markets in different places like China, and Japan, obviously, it's a completely different playbook in Japan, we see a lot of.

The integration and relations that we built with the.

With larger companies that the sales of <unk>.

System integrators in China, It requires the lots of.

Professional services, sometimes so we have partners in this field and the locality is also very important in this the it's always.

In terms of support language and supporting our hour of use of the so we are coming with the same subscription and adopting some of the territories day.

The need in order to scale our footprint in this new area.

Great. Thank you for the color.

And our next question on comes from the line of Brad Sills from Bank of America, you may begin.

Hi, This is actually CRE on for Brad sills on congrats on the restaurant Anthony here.

You saw strong customer growth this quarter. So I wanted to ask if you would maybe call out any vertical industries or geographies, where you saw particularly strong adoption. Thank you.

Yes.

It's a great question, we spoke about the new territories obviously.

Japan, China, India, Australia, the APAC territory is almost a greenfield for Bev upset the great thing about that is that while coming in late they are adopting.

Adopting immediately the enterprise solutions, they don't start with the C ICD or so at the start with the enterprise solution on the scale immediately those are.

One of two of the biggest organizations in this day, it's always are already in touch with us and we are in process and we see the demand though.

Regarding new verticals.

We believe that we should reinforce our footprint in the fed the federal and government.

Vertical this requires.

More than just a field team of strategic team that is expert with this vertical but also.

Regulations that we are completing now and preparations and the fed ramp that we are in the process of completing the <unk> will exceed.

The.

The the ALLL generated from this vertical in 2021.

Awesome. Thank you for taking my question.

Thank you and for our last question will come from the line of Sterling Auty from Jpmorgan you may begin.

Our guidance is Matt on for Sterling. Thanks for taking the question.

I know that the net retention rate is.

<unk> closed on a trailing 12 months basis. So just curious what did the net retention rate look like.

Just in the December quarter, and have you seen the customer expansion trends improving.

Yes, Matt.

As discussed previously we believe that the best metric to assess our performance of the trailing four quarters net dollar retention rate, which is called we disclosed standalone back in Q2, only as the one time disclosure because of two illustrate the cover the impact and from now on we'll be focusing only on trailing four quarter on a go on retention.

Okay.

Okay that makes sense thanks, Chris.

Yeah.

Thank you.

Not showing any further questions I'd like to turn the call back over to Shlomi for any closing remarks.

Guidance first of all thank you so much for your attention on for taking the time to join us today.

We are very happy and very pleased with the with the strong quarter debt. We showed the results with you.

We wish you great rest of the day and made the probably with you. Thank you very much.