Q4 2021 Jfrog Ltd Earnings Call

Good day and thank you for standing by welcome to <unk> fourth quarter fiscal 2021 financial results Conference call. At this time all participants are in a listen only mode. After the speakers.

Presentation, there will be a question and answer session to ask a question. During this session you will need to press star one on your telephone. Please be advised that today's conference is being recorded.

Any further assistance. Please press star Zero I would now like to hand, the conference over to Joann Horne with Investor Relations. Please go ahead.

Speaker 1: Thank you, Norma. Good afternoon, and thank you for joining us as we review JFrog's fourth quarter and full year 2021 financial results, which were announced following market close today via press release.

Thank you Lauren good afternoon, and thank you for joining us as we review <unk> fourth quarter and full year 2021 financial results, which were announced following market close today via press release beginning.

Speaker 1: Leading the call today will be JFrog CEO and co-founder Shlomi Benheim and Jacob Shulman, JFrog CFO . Before Madison shares her remarks, let me review.

Leading the call today will be <unk>, CEO and co founder Shlomi behind.

Jacob Shulman Chief CFO .

Magna shares their remarks, let me review the Safe Harbor statement.

Speaker 1: During this call, we may make statements related to our business that are forward-looking under federal securities laws and are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995, including statements related to our future financial performance, including our outlook for the first quarter and full year of 2022.

During this call we may make statements related to our business that are forward looking under federal Securities laws and are made pursuant to the safe Harbor provisions of the private Securities Litigation Reform Act of 1095, including statements related to our future financial performance, including our outlook for the first quarter and full year of 2022.

Speaker 1: The words anticipate, believe, continue, estimate, expect, intend, will, and similar expressions are intended to identify forward-looking statements or similar indications of future expectations.

The words anticipate believe continue estimate expect intend will.

Similar expressions are intended to identify forward looking statements or similar indications of future expectations.

Speaker 1: Your caution not to place undue reliance on these forward-looking statements, which reflect our views only as of today, and 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.

You are cautioned not to place undue reliance on these forward looking statements, which reflect our views only as of today and that 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.

Speaker 1: These statements are subject to a variety of risks and uncertainties that could cause actual results to differ materially from expectations.

These statements are subject to a variety of risks and uncertainties that could cause actual results to differ materially from expectations.

Speaker 1: For a discussion of material risks and other important factors that could affect our actual results, please refer to our Form 10-K for the year ended December 31st, 2020, filed with the SEC on February 12th, 2021, and our Form 10-Q for the quarter ended September 30th, 2021, filed with the SEC on November 5th, 2021, all of which are available on the Investor Relations section of our website, along with the earnings for less release issued.

For a discussion of material risks and other important factors that could affect our actual results. Please refer to our Form 10-K for the year ended December 31, 2020 filed with the SEC on February 12, 2021, and our Form 10-Q for the quarter ended September 32021 filed with the SEC on November five 2021, all of which are available on <unk>.

Investor Relations section of our website.

Along with the earnings press release issued earlier today.

Speaker 1: Additional information will be made available in our Form 10-K for the year ending December 31, 2021, and other filings and reports that we may file from time to time with the SEC.

Additional information will be made available in our Form 10-K for the year ended December 31, 2021, and other filings and reports that we may file from time to time with the SEC.

Speaker 1: Additionally, non-GAAP financial measures will be discussed on this conference call. These non-GAAP financial measures, which are used as measures of J-SPARK's 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 reconciliation of those measures to the most directly comparable GAAP financial measures.

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.

Speaker 1: A replay of this call will be available on the JFrog Investor Relations website for a limited time.

A replay of this call will be available on <unk> Investor Relations website for a limited time.

Speaker 1: With that, I'd like to turn the call over to JFrog's CEO , Shlomi Ben-Hai. Shlomi?

With that I'd like to turn the call over to <unk> CEO Shlomi, Ben Hi, Shlomi.

Speaker 2: Thank you, Joanne, and greetings to all of you from the swamp. I'm excited to welcome you to our fourth quarter and fiscal 2021 earnings call.

Thank you Joanne and greetings to all of you from the Swan.

I'm excited to welcome you to our fourth quarter and fiscal 2021 earnings call.

Speaker 2: Every end of year urges us to pause, look back, and observe the leaps the company has taken from all perspectives. I'm grateful for our customers and community. Their faith in J-FOB and their determination to innovate and digitalize the world inspires us to bring our best to work every day.

Every end the fear urges us to pause and look back and observe believes the company has taken from all perspective, I am grateful for our customers and community.

J, Paul and Delta termination to innovate and digitalize the world inspires us to bring bes to work every day.

2021 ended on a strong note our multiple strategies across technology.

Speaker 2: 2021 ended on a strong note. Our multiple strategies across technology, business, and culture continue to bear fruit that I'm happy to share with you today.

And culture continue to bear fruit, but I'm happy to share with you today.

Speaker 2: I'm pleased to report that we delivered another strong quarter and that in Q4, all of J-Prog's key metrics continued to trend upwards, reflecting the continuous demand for our platform in an expanding market.

I am pleased to report that we delivered another strong quarter and that in Q4, all of <unk> key metrics continue to trend upwards, reflecting the continued demand for our platform in an expanding market.

Speaker 2: Q4 revenue was $59.2 million, a growth of 39% over the same period last year, and compared to 38% year-over-year growth reported in the previous quarter.

Q4 revenue was $59 2 million a growth of 39% over the same period last year and compares to 38% year over year growth reported in the previous quarter.

Speaker 2: Our cloud revenue in Q4 grew by 52% year-over-year and increased from 50% reported in the previous quarter. This reflects our ongoing strategy of accelerating our multi-cloud and hybrid goals.

Our cloud revenue in Q4 grew by 52% year over year and increased from 50% reported in the previous quarter. This reflects our ongoing strategy.

Accelerating our multi cloud and hybrid.

Speaker 2: Growth in customers with over $100,000 in ARR accelerated to 53% year-over-year, reflecting a compelling market need for a complete JFrog platform solution with our Enterprise Plus subscription.

Growth in customers with over $100000 in ASR accelerated to 53% year over year.

Reflecting a compelling market need for complete J for platform solution with our enterprise cloud subscription.

Speaker 2: I'm also happy to report that our 4 trailing quarters net dollar retention climbed to 130% as predicted compared to 129% reported in the previous quarter. This was driven by customers' increased usage of our product as a unified platform with binary management, security, and software distribution as key drivers.

I'm also happy to report that our four trailing quarters net dollar retention clients to 130% as predicted compared to 129% reported in the previous quarter. This was driven by customers increased usage of our product as a unified platform with binary.

<unk> management security and software distribution as key drivers.

Speaker 2: This year, hundreds of new customers adopted our solutions, and I'm pleased to report that we closed the year with approximately 6,650 customers across industries, which represents 10% year-over-year net growth.

This year hundreds of new customers adopted our solutions and I'm pleased to report that we closed the year with approximately 6650 customers.

<unk>, which represents 10% year over year net goal.

Speaker 2: Team JFrog, these 2021 results are a testament to your hard work and dedication, allowing us to better serve developers, DevOps, and security communities, exceeding our revenue commitments in every single quarter of the year. This success belongs to you and reflects the unique spirit of the Frogs.

DJ for these 2021 results are a testament to your hard work and dedication, allowing us to better serve developers Dev ops and security communities.

Seeding our revenue commitments in every single quarter of the year. The success belongs to you and reflects the unique spirit of the clubs.

Now I would like to share with you some additional market and business highlights.

Speaker 2: Now, I would like to share with you some additional market and business highlights.

In award the demand faster CQ more innovative software to the edge. The Dev ops driven software supply chain is more top of mind and mission critical than ever before.

Speaker 2: In a world that demands faster, secure, more innovative, software to the edge, the DevOps-driven software supply chain is more top-of-mind and mission-critical than ever before.

Speaker 2: Getting software updates to your vehicle, mobile application, medical devices, and more requires the ability to build, release, secure, distribute, and deploy binaries, often also called software packages.

Getting software updates to your vehicle mobile application medical devices and mall requires the ability to build relief CQ distribute and deploy binary.

And also called software packages.

Speaker 2: Complementary solutions for CICD and source code management make development more efficient. But this isn't enough to bring software quickly to the market.

Complementary solutions for see ICD and source code management make development more efficient, but this isn't enough to bring software quickly to the market.

Speaker 2: The moment first or third party code is compiled, it changes to a binary form and requires full binary lifecycle management from the developer's machine to the deployment environment to meet the demands of the business.

The moment first all third party code is compiled it changes to a binary phone and requires full binary lifecycle management from the developers machine to the deployment environment to meet the demands of the business.

Speaker 2: This transformation into a digital and secure reality can be only achieved by managing the binary.

This transformation into a digital and secured reality can be only achieved by managing the binary.

Speaker 2: To illustrate this, we only need to look at the major news item that shook the software industry late in 2021. The log4j vulnerability, or as coined by the community, the software pandemic.

To illustrate this.

We only need to look at the major news item that shook the software industry late in 2021, the Lac <unk> ability always coined by the community.

Software pandemic.

This affected almost every organization in the world within days of its discovery frustrating millions of developers, who had to drop everything and rush to identify patient zero across all software environment.

Speaker 2: This affected almost every organization in the world within days of its discovery, frustrating millions of developers who had to drop everything and rush to identify patient zero across all software environments.

Speaker 2: This forced many companies to bring their entire structural delivery organization to a halt until the vulnerability was found, fixed, and replaced.

This forced many companies to bring the entire software delivery organization to a hub until the vulnerability was found fixed and replace.

Speaker 2: J-Corp customers were able to quickly identify where they were impacted and address the risk.

<unk> customers were able to quickly identify whether were impacted and address the risk.

Speaker 2: For example, one of the Fortune 100 banks with over 20,000 developers globally was able to identify where the infected Lock4j binary was hosted in their business and what dependencies it carried across the global pipeline.

For example, one of the Fortune 100 banks with over 20000 developers globally was able to identify where the infected look for Jay binary was hosted in their business and what dependencies is carried across the global pipeline.

Speaker 2: This identification happened in a matter of minutes with JFrog Artifactory serving as the bank's single source of proof and the database of DevOps, allowing them to replace the vulnerable Log4j binary with a patch version and applying it across the organization automatically instead of manually finding every place it was being used in every application.

This identification.

Happen in a matter of minutes with J product the factory, serving as the bank single source of truth, and the database of Dev ops, allowing them to replace the vulnerable local J binary with the patch version and applying it across the organization automatically instead of manually finding every place it.

It's being used in every application.

Speaker 2: Using JFrog X-Ray alongside Artifactory, they were able to easily protect themselves from additional exposure, setting security policies that automatically ensured vulnerable log4j binaries could not be used again by developers, and keeping the repository from further risk.

Using <unk> extra alongside our factory they were able to easily protect themselves from additional exposure setting security policies that automatically ensure vulnerable look for Jay binaries could not be used again by developers and keeping the repository from further risk.

Speaker 2: And finally, JFrog distribution, rapidly delivered and validated the release to fix the software in all environments, including production.

And finally, <unk> distribution rapidly delivered and validated release to fix the software in all environments, including production.

Speaker 2: Altogether, this bank automatically found, rebuilt, replaced, and protected themselves against the all-vulnerable log4j binaries in under 12 hours.

Altogether this bank automatically font rebuild replace and protected himself against the all vulnerable look for Jay binaries and under 12 hours.

The speed is only achievable with a unified integrated <unk> platform that automates. This activities across the company development organizations without the support have taken weeks hunting. This binary is down and many are still in the trenches trying to recover to date.

Speaker 2: This speed is only achievable with a unified, integrated JFOG platform that automates these activities across a company. Development organizations without this approach have taken weeks hunting these binaries down, and many are still in the trenches trying to recover today.

During the last four <unk> the power of a binary centric approach to Dev ops saved J for customers potential millions of dollar and lost business due to downtime all security breaches and calm and countless hours spent by millions of global developers fortifying the software.

Speaker 2: During the Lock4J episode, the power of a binary-centric approach to DevOps saved J4 customers potential millions of dollars in lost business due to downtime or security breaches, and countless hours spent by millions of global developers fortifying their software supply chain.

Supply chains.

Speaker 2: The log4j vulnerability will not be the last impactful binary discovered by our industry.

They look for Jay Benet mobility will not be the last impactful binary discovered by our industry.

Speaker 2: This happened in 2021 with NPM, Python, and it will happen again. This reality reinforces JFrog's strategy to manage the entire DevOps flow from the binary repository to security and through distribution to deliver complete automated pipeline control for every development organization. As a result, we are seeing a growing demand for our end-to-end platform.

This happened in 2021 with NPM Python and it will happen again.

This reality reinforces <unk> strategy to manage the entire Dev ops flow from the binary repository to security and through distribution to deliver a complete automated pipeline control for every development organization. As a result, we are seeing a growing demand for our end to end platform.

Speaker 2: Now, on to some product and business highlights from Q4 and the fiscal year.

Now onto some product and business highlights from Q4 and the fiscal year.

Speaker 2: In support of our liquid software vision, our roadmap in 2021 brought many innovations and enhancements to our holistic platforms, deepening our commitment to deliver integrated automated solutions to the DevOps and DevSecOps communities.

In support of our liquid software vision, our roadmap in 2021 bulk many innovations and enhancements to our holistic platform deepening our commitment to deliver integrated automated solution to the Dev ops and depth hiccups community.

Speaker 2: This included delivery for many of our co-product categories, such as artifact management, CICD, security, and software distribution. Importantly,

This included delivery for many of our core product categories, such as artifact management.

ICD security and software distribution importantly.

Speaker 2: All of the solutions delivered in 2021 continue to fulfill our promises to always deliver universal, scalable products across self-hosted, hybrid, and cloud environments.

All of the solutions delivered in 2021 continue to fulfill our promises to always deliver universal scalable product cross sell fostered hybrid and cloud environment.

Speaker 2: As a result, we continue to see strong demand for our hybrid and multi-cloud subscriptions. In Q4 specifically, we were proud to partner with AWS for the announcement of EKS Anywhere on the AWS Marketplace, which makes Amazon Cloud Services available for self-hosted customers as well.

As a result, we continue to see strong demand for our hybrid and multi cloud subscriptions and.

In Q4, specifically, we were proud to partner with AWS for the announcement of <unk> anywhere on the AWS marketplace, which makes Amazon cloud services Evaluable for self hosted customers as well.

This move by AWS is a recognition that many companies see a hybrid model as a strategic move for the business and we are excited to be at the forefront of hybrid level with our customers and cloud partner.

Speaker 2: This move by AWS is a recognition that many companies see a hybrid model as a strategic move for the business. And we are excited to be at the forefront of hybrid DevOps with our customers and cloud partners.

Speaker 2: Our strategic investment in our cloud offering both would again in Q4. And as an illustration of our cloud subscription growth, one of the largest providers of GPS and geolocation services in the world recently became a new customer of JFrog, standardizing their development team on JFrog's SaaS solution.

Our strategic investments in our cloud offering both short again in Q4.

And there are some illustration of our cloud subscription growth one of the largest providers of GPS and geolocation services in the World recently became a new customer of Jay for standardizing their development team on <unk> SaaS solution.

Speaker 2: They were looking for a DevOps partner to scale alongside their company growth and had found their existing competitive offering would no longer scale to meet their needs, nor able to support the cloud-first initiative.

They were looking for a partner to scale alongside the company goals and head founder existing competitive offering with no longer scale to meet their needs.

<unk> to support the cloud first initiatives.

Speaker 2: With the JFrog platform provided as a service in the cloud of their choice, they have managed to successfully migrate all of their binaries and scale across multi-site setups.

With the <unk> platform provided as a service in the cloud of their choice. They have managed to successfully migrate all of the binaries and scale across multi site setup.

Speaker 2: We look forward to partnering with more J4 customers, like TomTom, headquartered in EMEA, or FASAF, a luxury retail delivery company headquartered in North America, to ensure our DevOps solution meets enterprise demands across all vertical and hybrid deployments.

We look forward to partnering with more <unk> customers like Tom Tom headquartered in EMEA.

<unk>.

Our luxury retail delivery company headquartered in North America to ensure our Dev ops solution meets enterprise demand across all verticals and hybrid deployments.

Speaker 2: Across geographies, JFrog distribution, which delivers binaries to production environments such as data centers or Kubernetes, remained a key driver for upgrades to our full-platform subscription.

Across geographies, <unk> distributions, which delivers binaries to production environments, such as data centers of Kubernetes remained the key driver for upgrades to our full platform subscriptions.

Speaker 2: One of the world's largest financial institutions recently upgraded to JFrog's Enterprise Plus subscription in order to distribute binaries for thousands of applications written by thousands of developers delivering to dozens of global locations, each with their own regulations and compliance needs.

One of the world's largest financial institutions recently upgraded to <unk> enterprise plus subscription in order to distribute binaries for thousands of applications written by thousands of developers delivering two dozen of global locations each with their own regulations and compliance needs.

Speaker 2: Examples such as this illustrate a continuing trend we are seeing in organizations. The need to secure, automate, and manage software distribution at scale across all applications and multiple releases per day can no longer rely on manual processes built in-house and implemented a decade ago.

Examples such as this illustrates a continued trend we are seeing in organizations.

Needs to secure automate and manage software distribution at scale across all application and multiple releases per day.

No longer rely on manual processes built in house and implemented a decade ago.

Speaker 2: This complex environment and the pace of releases requires a binary-centric and distribution-capable DevOps platform in order to be successful.

These complex environments and the pace of releases requires a binary centric and distribution capable Dev ops platform in order to be successful.

Speaker 2: To avoid friction with the platform capabilities and to focus on one consolidated platform, we decided to sunset Bintray, our legacy distribution as a service offering that provided a standalone binary store and distribution service.

To avoid friction with the platform capabilities and to focus on one consolidated platform, we decided to sunset Greentree, our legacy distribution as a service offering that provided the standalone binary store and distribution service.

Speaker 2: We managed an extensive and transparent process with our community and customers of shutting down this service in 2021.

We managed an extensive and transparent process with our community and customers of shutting down the service in 2021.

Speaker 2: As a natural extension of the increasing value of JFOG distribution, we also recently made JFOG Connect available following our acquisition of AppSuite.

As a natural extension of the increasing value of Jacob distribution. We also recently made <unk> connect available following our acquisition of <unk> suites.

Speaker 2: This early offering for connected device management aims to greatly increase our addressable market by bringing binaries all the way to device.

This early offering for connected device management aims to greatly increase our addressable market by bringing binaries all the way to devices J for connect will bridge the wall. The Dev ops with the exploding market of Iot and connected devices, we look forward to driving this growth.

Speaker 2: J4Connect will bridge the world of DevOps with the exploding market of IoT and connected devices. We look forward to driving this growth at the edge in the future.

At the edge in the future.

Speaker 2: We are innovating, extending, and maturing our platform, which we believe will serve not just millions of developers, but billions of devices, with the ability to build, manage, protect, update, and automate next-gen software supply chain from any source to any device.

We are innovating extending and maturing our platform, which we believe will serve not just millions of developers, but billions of devices with the ability to build manage and protect update and automate next gen software supply chain from any source to any device.

Speaker 2: On the go-to-market front, during the year, we also focus on building our strategic sales team backed up with high-touch support, field marketing, and solution architects in order to expand business with our key accounts.

On the go to market front during the year. We also focus on building our strategic sales team backed up with high touch support field marketing and solution architects in order to expand business with our key accounts.

Speaker 2: During Q4, we continue to see the fruits of this investment as we welcome more and more large enterprises who are expanding their JPOC product adoption.

During Q4, we continued to see the fruits of this investment as we welcome more and more large enterprises, who are expanding the <unk> product adoption.

Speaker 2: In fact, one of the world's largest telecommunications providers, managed by our strategic team, is continuing to standardize on JFrog in order to reduce the usage of ad hoc tool sets and to develop DevOps best practices across the organization.

In fact, one of the world's largest telecommunications providers managed by our strategic team is continuing to standardize on <unk> in order to reduce the usage of our tool set and to develop Dev ops best practices across the organization.

Speaker 2: This over $1 million customer grew over 80% over a year and continues to expand.

This over 1 million customer grew over 80% year over year and continues to expand.

Speaker 2: We believe that the expanded strategic sales team will continue to drive this consolidation pattern as we bring more solutions into the market. We look forward to extending our deep customer relationships and innovative technologies to meet this enterprise need.

We believe that the expanded strategic sales team will continue to drive this consolidation pattern as we bring more solutions into the market, we look forward to extending our deep customer relationships and innovative technologies to meet this enterprise needs.

Speaker 2: As a final note, before we dive into the financials, I wanted to extend a warm welcome to the newest member of JFrog's board, Mira Rajabel. Mira currently serves as the CIO of Citrix and brings more than 20 years of experience in enterprise software and cybersecurity. We are proud to have her joining our board and look forward to her guidance as JFrog continues to grow.

As a final note before we dive into the financials I wanted to extend a warm welcome to the newest member of <unk> Board Mirror of our job will mirror currently serves as the CIO of Citrix and brings more than 20 years of experience in enterprise software and cyber security.

We are proud to have her joining our board and look forward to her guidance as Jennifer continues to grow.

Speaker 2: With that, I would like to turn the call over to our CFO , Jacob Shulman, to look more deeply at the 2021 Q4 and fiscal year financial numbers and share our outlook for 2022. Jacob, the stage is yours.

With that I would like to turn the call over to our CFO Jacob few months to look more deeply at the 2021 Q4 and fiscal year financial numbers and share our outlook for 2022 Jacob stages yours.

Speaker 2: Thank you, Shlomi, and good afternoon, everyone. We are very pleased to have ended the year with a strong quarter in line with the commitment we made back in Q1 of this year that the second half of the year would show acceleration across the business.

Thank you Shlomi and good afternoon, everyone. We are very pleased to have ended the year with a strong quarter in line with the commitment we made back in Q1 of this year that the second half of the year would show acceleration across the business I will start with a brief overview of our fourth quarter and fiscal year 2021 financial results.

Speaker 2: I will start with a brief overview of our fourth quarter and fiscal year 2021 financial results and provide our outlook for Q1 and the full year of 2022. As a reminder, note that all numbers referenced in my remarks are on a non-GAAP basis, unless otherwise stated. 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 8K furnished to the SEC.

And provide our outlook for Q1 and the full year of 2022.

As a reminder, note that all numbers referenced in my remarks are on a non-GAAP basis, unless otherwise stated.

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.

Speaker 2: Now let's turn to our financial results. Total revenues for the three months and the December 31st, 2021 were $59.2 million, up 39% year over year. This is our strongest growth rate in four quarters, and we continue to see a better business environment.

Now, let's turn to our financial results.

Total revenues for the three months ended December 31, 2021 were $59 2 million up 39% year over year. This was our strongest growth rate in four quarters, and we continue to see a better business environment sales.

Speaker 2: Self-managed revenues, also often called on-prem, were $44.4 million, up 35%. Cloud revenues, again, grew faster, up 52%, to $14.8 million, or 25% of total revenue.

Self managed revenues also often called on Prem were $44 4 million up 35%.

Revenues again grew faster up 52% to $14 8 million or.

425% of total revenues.

Speaker 2: For the full fiscal year, total revenues were $206.7 million, up 37% year-over-year. Self-managed revenues were $157 million, up 33%. Cloud revenues for the year were up 52% to $49.7 million, or 24% of total revenues, compared to 22% in 2020.

For the full fiscal year total revenues were $206 7 million.

Up 37% year over year self managed revenues were at $157 million.

Up 33%.

Revenues for the year were up 52% to $49 7 million.

Or 24% of total revenues compared to 22% in 2020.

Speaker 2: Net dollar retention for the four trailing quarters was 130%. We expect net dollar retention for the trailing four quarters to remain at approximately 130% for the foreseeable future.

Net dollar retention for the four trailing quarters was 130% we expect net dollar retention for the trailing four quarters to remain around approximately 130% for the foreseeable future.

Speaker 2: We ended the year with approximately 6,650 customers, a 10% increase over 6,050 customers at the end of 2020.

We ended the year with approximately 6650 customers at 10% increase over 6050 customers at the end of 2020.

Speaker 2: As noted by Shloming, we sunset the bean tray product. While the vast majority of bean tray customers adopted our other distribution solutions, we lost approximately 200 customers as a result of this change.

As noted by Shlomi, we can sell the <unk> product, while the vast majority of <unk> customers adopted our other distribution solutions. We lost approximately 200 customers as a result of this change these customers who are light users of the <unk> resolution and represented a negligible revenue impact.

Speaker 2: These customers were live users of the Binge Resolution and represented a negligible revenue impact.

Speaker 2: Our gross retention rate remained at historic levels in the high 90s for the year.

Our gross retention rate remains at historic levels, and the kind of 90% for the year.

As of quarter end, we had 537 customers with <unk> of over $100000 up from 466 customers as of September 32021.

Speaker 2: As of the quarter end, we had 537 customers with ARR of over $100,000, up from 466 customers as of September 30, 2021. On a year-over-year basis, we grew the number of over 100,000 ARR customers 53%.

On a year over year basis, we grew the number of over 100000 customers 53%.

Speaker 2: In addition, we grew the number of over $1 million ARR customers to 15, up from 14 in the previous quarter, and 50% increase year-over-year. This increase in the number of large customers is driven primarily by the greater adoption of our full platform, both in cloud and on-prem. In Q4, 35% of total revenue came from enterprise-plus customers, up from 26% in Q4 of 2020. For more information, visit our website at www.microsoft.com or call 1-800-637-8170.

In addition, we grew the number of over $1 million at our customers $2 15 up from 14 in the previous quarter and 50% increase year over year. This increase in the number of large customers is driven primarily by the greater adoption of our full platform both in cloud and on Prem.

In Q4, 35% of total revenue came from enterprise class customers.

Up from 26% in Q4 of 2020.

Speaker 2: Now let's review the income statement in more detail. Gross profit in the quarter was $50.2 million, representing a gross margin of 84.8% compared to 82.6% in the year-ago period.

Now, let's review the income statement in more detail gross profit in the quarter was $50 2 million.

Representing a gross margin of 84, 8% compared to 82, 6% in the year ago period for.

Speaker 2: For fiscal 2021, gross profit was $173.9 million, representing a gross margin of 84.1%, compared to 82.4% in fiscal 2020.

For fiscal 2021 gross profit was $173 9 million.

Representing a gross margin of 84, 1% compared to 82, 4% in the fiscal 2020.

Speaker 2: We continue to see our south-west margin expand as a result of the steps we took early in the year to improve our cost structure.

We continue to see our sales gross margin expand and result of the steps. We took early in the year to improve our cost structure.

Speaker 2: R&D expense for the quarter was $17.9 million or 30% of revenue compared to 24% of revenue in the year-ago period. We continue to invest significantly in enhancing our product solutions, along with integrating Vito and UpSwift technologies into the platform.

R&D expense for the quarter was $17 9 million or 30% of revenue compared to 24% of revenue in the year ago period, we continue to invest significantly in enhancing our product solutions, along with integrating video Netflix technologies into the platform.

Speaker 2: Sales and marketing expenses for the quarter were $23.2 million, or 39% of revenue, compared to 38% of revenue in the year-ago period. G&A expense for the quarter was $9.1 million, or 15% of revenue, compared to 16% of revenue in the year-ago period.

Sales and marketing expenses for the quarter were $23 2 million.

A 39% of revenue compared to 38% of revenue in the year ago period G&A.

G&A expense for the quarter was $9 1 million.

15% of revenue compared to 16% of revenue in the year ago period.

Speaker 2: non-GAAP operating income for Q4 was $49,000.

non-GAAP operating income for Q4 was $49000.

Speaker 2: or 10 basis point operating margin compared to an operating income of $2.2 million or 5.1% operating margin in the year-ago period. As we discussed, integrating VIDA and Apps Swift would impact our profitability. For the full year, non-GAAP operating income was $4.2 million or 2% operating margin compared to $13 million or 8.6% operating margin in 2020.

The 10 basis point operating margin compared to an operating income of $2 2 million.

A five 1% operating margin in the year ago period, as we discussed integrating within apps would impact our profitability for the full year non-GAAP operating income was $4 2 million.

Four 2% operating margin compared to $13 million or eight 6% operating margin in 2020.

non-GAAP net loss in the quarter was $965000, while negative one per diluted share based on approximately 97 million weighted average shares outstanding non.

Speaker 2: non-GAAP net loss in the quarter was $965,000, or negative one cent per diluted share, based on approximately 97 million weighted average shares outstanding.

Speaker 2: non-GAAP net income for the full year was $2.7 million, or $0.03 per diluted share, based on approximately 103.6 million weighted average diluted shares outstanding.

non-GAAP net income for the full year was $2 7 million.

Our <unk> per diluted share based on approximately $103 6 million weighted average diluted shares outstanding.

Speaker 2: Turning to the balance sheet and cash flow, we ended the year with $421 million in cash and short-term investments, up from $402 million last quarter. Cash flow from operations was $17.7 million in the quarter.

Turning to the balance sheet and cash flow, we ended the year with $421 million in cash and short term investments up from $402 million.

Last quarter cash flow from operations was $17 7 million in the quarter.

Speaker 2: After taking into account CAPEX, free cash flow was $16.6 million. For the full year, free cash flow was $23.7 million. As discussed last quarter, Q3 cash flow was impacted by one-time payment of $19 million related to holdback agreements associated with VIDU and UpSwift acquisitions.

After taking into account.

Capex free cash flow was $16 6 million.

For the full year free cash flow was $23 7 million.

As discussed last quarter Q3 cash flow was impacted by one time payments of $90 million related to hold back agreements associated with visa and <unk> acquisition.

Speaker 2: Normalized for this, free cash flow for the year would be $42.7 million.

Normalized for this free cash flow for the year would be $42 $7 million.

Speaker 2: Let's briefly discuss the cadence of the financial model in 2022. We expect to see linear top-line revenue growth on a year-over-year basis throughout 2022. Additionally, beginning in Q2, we will see higher expenses due to merit increases in employee compensation and alignment with labor market benchmarks. As a result, the second quarter will be the low point from a profitability standpoint and will recover in the back half of the year.

Let's briefly discuss the cadence of the financial model in 2022.

We expect to see linear topline revenue growth on a year over year basis throughout 2022 <unk>.

Additionally, beginning in Q2.

We will see higher expenses due to merit increases in employee compensation and alignment with labor market benchmarks. As a result, the second quarter will be the low point from a profitability standpoint, and will recover in the back half of the year.

Speaker 2: Turning to guidance, for Q1, we expect revenue of $60.8 to $61.8 million, with non-GAAP operating results between a loss of $0.5 million to income of $0.5 million, and non-GAAP operating earnings per share of negative one cent to positive one cent, assuming a share count of approximately 104 million shares.

Turning to guidance for Q1, we expect revenue of 68 to $61 8 million.

With non-GAAP operating results between a loss of a half a million dollar to income of <unk> 3 million and non-GAAP operating earnings per share of negative <unk> <unk> to positive <unk>, assuming a share count of approximately 104 million shares.

Speaker 2: For the full year of 2022, we're establishing revenue guidance of $273 million to $275 million. non-GAAP operating results between a loss of $1 million to income of $1 million and non-GAAP earnings per share of negative one cent to positive one cent, assuming a share count of approximately 107 million shares.

For the full year of 2022, we are establishing revenue guidance of 273 million to $275 million non.

non-GAAP operating results between a loss of $1 million to income of $1 million and non-GAAP earnings per share of negative <unk>.

Two positive <unk>, assuming the share count of approximately 107 million shares.

Speaker 2: Now let me call back to Shlomi for some closing remarks before we take your questions. Shlomi?

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

Speaker 2: Thank you, Jacob. JFOG successfully marked its first complete fiscal year as a public company, exceeding revenue commitment in every single quarter of 2021. We met our product delivery goals while continuing to build an efficient and healthy business.

Thank you Jacob.

<unk> successfully marked its first complete fiscal year as a public company exceeding revenue commitment in every single quarter of 2021, we met our product delivery goals, while continuing to build an efficient and healthy business.

Speaker 2: JFrog's post-water performance is a great foundation to build upon as we leap into 2022, providing further evidence that we have the right strategy and portfolio for growth in 2022 and beyond.

<unk> fourth quarter performance is a great foundation to build upon as we lead into 2022, providing further evidence that we have the right strategy and portfolio for growth in 2022 and beyond.

Speaker 2: During 2021, under the pandemic reality, we also nearly doubled the size of the company in terms of employee headcount and recently crossed the 1,000 employee bar.

During 2021 under the pandemic reality, we also nearly doubled the size of the company in terms of employee head counts and recently crossed the 1000 employee bar.

Speaker 2: This growth is reflective of the strong, uncompromising culture we have built that cuts through a challenging labour market.

This growth is reflective of the strong uncompromising culture, we have built that cuts through a challenging labor market.

Speaker 2: In the last year, greater than ever before, we saw more and more companies identifying software binaries as the primary asset to allow fast and secure digital transformation. We believe JFrog is well positioned to drive strong results in 2022. We look forward to delivering for developers, companies, customers, and shareholders throughout the year.

In the last year greater than ever before we saw more and more companies identifying software binaries as the primary asset to allow fast and secure digital transformation. We believe <unk> is well positioned to drive strong results in 2022, we look forward to delivery.

<unk> for developers companies' customers and shareholders throughout the year.

Speaker 2: Next week, on February 15, we'll hold our first Investors Day. We look forward to virtually hosting you as we share more in-depth details about JForks technology and business. I'd like to thank you all for your attendance. May the prod be with you. And now, we are happy to take your questions.

Next week on February 15, we will hold our first Investor day, we look forward to virtually hosting U as we share more in depth details about J Fox technology and business.

I'd like to thank you all for your attendance may be with you and now we are happy to take your questions.

Speaker 3: To ask a question, you will need to press star 1 on your telephone. We ask that you please limit yourself to one question and one follow-up question. You may then return to the queue. To withdraw your question, press the pound key. Please stand by while we compile the Q&A roster. Our first question will come from Mike Seacoast with Needham and Co. Please go ahead.

Thank you to ask a question you will need the quest star one on your telephone we ask that you. Please limit yourself to one question and one follow up question. You May then with Jackie. Thank you to withdraw your question press the pound.

Please standby, while we compile the Q&A roster.

Our first question will come from Mike <unk> with Needham <unk> co. Please go ahead.

Speaker 4: Hi, guys. Thanks for taking the questions here. I appreciate it. The first question that I wanted to ask about, I know that you guys had mentioned an impact of 4Q profitability as it relates to the Upswift acquisition. Can you help us fine-tune what that impact was and then maybe parse out what kind of impact we should be thinking about from the Upswift acquisition as we look at the guidance that you guys provided us for fiscal year 22?

Hi, guys. Thanks for taking the questions here I appreciate it.

First question that I wanted to ask about I know that you guys had mentioned an impact to <unk> profitability as it relates to the <unk> acquisition.

Could you help us fine tune what that impact was and then maybe parse out what kind of impact we should be thinking about from the upswing acquisition as we look at the guidance that you guys provided us for fiscal year 'twenty two.

Yes, Hi, Mike This is Jacob.

Speaker 2: Yes. Hi, Mike. This is Jacob. As you know, we acquired two companies in Q3. It's Vizu and AppSuite. Actually, Vizu was the larger company that we acquired and had more material impact than AppSuite acquisition. Both of them are currently being integrated technologies and we're making very nice progress with that. So, specifically to your question, AppSuite did not have any material impact on our profitability. It just was a very small team. It was very small team. The Vizu acquisition had a bigger impact because it's a much bigger team. Overall, our security division today is around 100 people. A significant portion of that is coming from Vizu.

As you know we acquired two companies in Q3, <unk> and absolutely. Thanks with visa was a larger company that we acquired and had more material impact in absolute acquisition both of them.

They've been integrated technologies and.

We are making very nice progress with that so specifically to your question absolute did not have any material inputs and outputs to build it just was a very small team.

It was.

These acquisitions have been important because it's a much bigger team overall, our security division.

Division today is around 100 people significant portion of that is coming from Houston.

Understood. Thank you for that and then the other question I wanted to ask is if I'm thinking about Q4 and the revenue upside that you guys delivered can you help us think about the outperformance what what went better for you guys. This quarter that helped deliver that upside.

Speaker 4: Understood. Thank you for that. And then the other question I wanted to ask is if I'm thinking about Q4 and the revenue upside that you guys delivered, could you help us think about the outperformance? What went better for you guys this quarter that helped deliver that upside versus your

Versus your.

Patients coming into the quarter.

Speaker 2: Yes, you're absolutely right that we were very pleased with the adoption of our platform. What we've seen is better than expected adoption of the platform. And Shlomi talked about different drivers behind that, distribution capabilities and enhanced security capabilities were the primary drivers for the adoption of the platform. And that is also indicated in the acceleration for the growth of large customers.

Yes.

That we were very pleased with adoption of our platform.

What we've seen as better than expected and also on the platform and Shlomi talked about different drivers behind them.

Distribution capabilities and enhanced security capabilities were the primary drivers for the adoption of the platform and that is also indicators in the acceleration acceleration of the growth of large customers specifically over 100 key customers grew 23% year over year and entry points into the platform.

Speaker 2: Specifically, over 100K customers grew 53% year-over-year, and as entry point into the platform is $115,000, that kind of gives you approximate number of new customers that adopted the platform.

Is $115000 that kind of gives you approximate.

A number of new customers adopting the platform.

Great. Thank you I'll turn it over to my colleagues I appreciate it.

Speaker 3: Thank you. Our next question will come from Sterling Audie with J.P. Morgan. Please go ahead.

Thank you. Our next question will come from Sterling Auty with Jpmorgan. Please go ahead.

Speaker 5: Hey, this is Doug on for Sterling. Thank you for taking my question. Can you talk about what you're seeing in terms of the adoption of X-ray now that it's included in the enterprise price?

Hey, this is Doug on for Sterling. Thank you for taking my question can you talk about what Youre seeing in terms of the adoption of X Ray now that it's included in the enterprise price.

Speaker 2: Yes, hi, and thanks for the question. This is Shlomi. X-ray, or if I may say, the security solution is landing on a very strong demand around software supply chain and binary security requests and requirements from our customers.

Yes, hi, and thanks for the question this is shlomi.

X Ray.

I may say the security solution is lending on a very strong demand around software supply chain in binary security.

Okay.

Environment from.

Our customers.

Speaker 2: Basically, what we have seen lately, especially in 2021, is that most of the vulnerable pieces of your software supply chain are coming from binaries, third party or first party. X-Ray sits natively on top of Artifactory. It's part of three subscriptions in the self-hosted offering and offered to all of the cloud customers. So obviously, we see a growing number of customers that are adopting X-Ray.

Basically what we have seen lately, especially in 2020 . One is that most of the vulnerable pieces of pure software supply chain coming from binaries third party of first party X Ray seats natively on top of the factory, it's part of three subscriptions and DSO positive offering and offers to the.

All of the cloud customers. So obviously, we see a growing number of customers.

Adopting XC.

Speaker 6: Speaking of Lock4j specifically, that was at the end of the year.

Speaking of <unk>.

Fuji specifically that was at the end of the year, but.

Speaker 6: But it echoes everything that we are saying about what type of security the world of DevOps and DevSecOps demand and need. And obviously, this generated a much greater demand by the market. So you see more adoption of our platform. You see more adoption of X-Ray. And the integration of X-Ray and video technology have also a very promising roadmap ahead.

Everything that we are seeing about what type of security to Walt of Dev ops and difficult demand the need and obviously these generated.

Much greater demand by the market so you'll see more adoption of our platform you see more adoption of.

X Ray and the integration of <unk> and <unk> technology have also a very promising roadmap ahead.

Great. Thank you so much.

Thank you. Our next question will come from Quinoa grain with Dan Burton. Please go ahead.

Speaker 3: Thank you. Our next question will come from Kingsley Crane with Barenburg. Please go ahead.

Speaker 4: Hi, I'm wondering on Log4j, so how much did helping customers with this open up a broader conversation on other platform products?

Hi, I'm wondering on log for Jay So how much did helping customers with this open up a broader conversation on other platform products.

On the other platform product Kingsley regarding local J specifically.

Speaker 6: on other platform products, Kingsley, regarding Log4j specifically?

Speaker 7: Well, yeah, if you help them with Log4J, you can become a trusted partner and maybe they'll expand into other products.

Well, yes, you help them with like <unk> become a trusted partner and maybe they'll expand into other products.

Yes so.

Speaker 6: Let's take a step back for a moment and see how the Sol toolchain kind of supported this.

Let's take a step back for a moment and see how the solar.

To change kind of support that this.

Speaker 6: software pandemic as was coined by the community. First of all, you have to identify.

Software pandemic is whats going by the community first of all you have to identify.

Speaker 6: the vulnerable binary, and this obviously happened in a matter of minutes by using AltiFactory.

Vulnerable binary and this obviously happened in a matter of minutes by using up the factory. The database of Dev Ops point, a factory is the co product of our platform. Then you have to publish and to place all type of security policy on top of it.

Speaker 6: the database of DevOps. Point A of the factory is the core product of our platform.

Speaker 6: Then you have to establish and to place all type of security policy on top of your repository to protect it so no developer

So we can protect it so no developer will try to get the vulnerable piece again and this is where you use X Ray and now you have to ask all of your deployment environment and development environment to build against the new patch of the La <unk> and this is for distribution comes in place. So obviously the <unk>.

Speaker 6: We'll try to get a vulnerable piece again, and this is where you use x-ray. And now you have to ask all of your deployment environment and development environment to build against the new fetch of the log4j, and this is where JFrog distribution comes in place. So, obviously,

Speaker 6: The different sides of the platform playing together.

Different sides of the platform playing together emphasize amplified by the local J F.

Speaker 6: Emphasized, amplified by the Log4J episode was a great driver to tell the story, not only of the J-Book platform, but overall.

With a great driver.

The story not only of the <unk> platform, but overall.

Speaker 6: DevOps with a binary-centric approach.

Dev ops with binary centric approach.

Okay. That's really helpful. That's it for me now thank you.

Thank you. Our next question will come from Sanjay <unk> with Morgan Stanley . Please go ahead.

Speaker 3: Thank you. Our next question will come from Sanjit Singh with Morgan Family. Please go ahead.

Thank you. Thank you so much for taking the question to congrats on the strong Q4 and the guidance was was very healthy.

Speaker 8: Thank you so much for taking the question to congrats on the strong Q4 and the guidance was very healthy too, so I feel glad to see on both accounts. One of the things in the metrics that you sort of disclosed was the customer-based growth. And I was really happy to see that growth get back into the double digits.

Glad to see on both accounts.

One of the things in the metrics and sort of disclosed was the customer base growth.

And I'm really happy to see that get back into the double digits.

Speaker 8: Sean, I was wondering if you could talk about how that sort of progressed through the year. I know we had a, we took a deliberate focus on, focusing on existing customers in 2020, and now it seems like we're starting to see growth again. How durable is that going into 2022? And, you know, are there any sort of incentives that you guys are using to drive that free-to-pay conversion, any sort of commentary on that?

So I was wondering if you could talk about how that sort of progressed through the year I know, we had we took a deliberate.

Focus on focusing on existing customers in 2020 and now it seems like we're starting to see growth again, how durable is that.

Going into into 2022.

Are there any sort of incentive that you guys are using to drive that free to paid conversion.

Any sort of commentary on the customer base would be it would be helpful.

Yes.

Speaker 6: Yeah. Hey, Sanjit. And thanks for the question. Obviously, we were very excited about all the

Yeah, Hey, Sanjay and thanks for the question. Obviously, we were very excited about all the.

Speaker 6: all the metrics of 2021 and also the growth in new logos, new customers, new onboarding users that are using the JFrog platform. We committed in 2021 to perform in a higher pace.

All the metrics of 2021.

<unk>.

Also the growth in new logos, new customers new Onboarding.

Users that are using digital platform, we committed in 2021 to perform in a higher pace and.

Speaker 6: and add more new logos than 2020 and we delivered. And that, although we had to remove friction and remove bin trade from our portfolio, and by that even, as Jacob mentioned in the script, we lost 200 customers. And still, we go as expected.

As more new logos in 2020, and we delivered and therefore, though.

We had to remove friction and we move into April .

From our portfolio and by that even.

As Jacob mentioned in the script.

200 customers and see we go.

As expected. So we were very pleased to see this growth happening again these trends of adopting the product again and what they see moving forward is that our investments.

Speaker 6: So we were very pleased to see this growth happening again, this trend of adopting the J-POP product again.

Speaker 6: And what I see moving forward is that our investments will bear fruit. It happened in 2021. It will happen even further in 2022. The security investment is very much appealing to the market. This is a booming market. Everyone, everyone that we speak with.

It happened in 2020 , one it will happen even further in 2022.

The security investment is very much appealing to the market. This is a booming.

Market.

We won every one that we speak with speak about the pain of securing the full software supply chain X ray the perfectly poised the enforcements of data technology and the team is very.

Speaker 6: speak about the pain of securing the full software supply chain. X-Ray is the perfect fit for it.

Speaker 6: The enforcement of V2 technology and the team is very, very well aligned with the market needs.

Very very well aligned with the market need.

Speaker 6: The enhancements added to artifactory to manage binaries from all types will be also very appealing to it. And also, our strategic move to the cloud with the free tier, as you remember, also start to show higher adoption in terms of active users that are lending on JPEG solution rather than taking any other solution in the market. So I'm very optimistic regarding the goal.

Enhancements.

Added to Oxy factory to manage.

Finally from OPEC will be also very appealing to us and also our strategic move to the cloud with a fleet deal as you remember also start to show.

Higher adoption in terms of active users that are lending on <unk> solution other than taking any other solution in the market. So I'm very optimistic regarding Nicole.

Speaker 6: of additional customers in the next year.

Additional customers in the next year.

Speaker 6: And if I may also say, although it's the very early beginning of JFO Connect.

<unk>.

If I may also see although it's very early beginning of Jay for connect.

Speaker 6: This is also a very unique solution to the market. There is no other distribution solution from the DevOps environment that is secured going all the way to devices. This will open a new field for JFrog and introduce us to new users that currently are not necessarily using any kind of DevOps practices. So bottom line, I'm very pleased and I'm very positive regarding the future.

This is also a very unique solution to the market there is no other.

<unk> solution from the Dev ops environment 50, Skus going all the way to devices. This will open a new field for April .

And introduce us to new users this currency not necessarily using any kind of developed practices. So bottom line.

Very pleased and I'm very positive regarding the future.

Speaker 2: If I may just add to that, Sanjeev.

I may just add to that.

Sanjay.

Speaker 2: Majority of our customers now join in on cloud. And that's a big attribution of that this free tier that we launched late last year. Actually, of the new customers, about 60% now join in on cloud, and that portion of new customers on cloud continues to grow.

Majority of our customers now Julien on cloud.

And thats the biggest traditional embedded <unk> launched.

Late last year actually of the new.

Customers about 60% now join in on the cloud.

The portion of new customers on cloud continues continues to grow.

Speaker 8: That's very encouraging to hear. And just to sort of dovetail off the previous question,

That's very that's very encouraging to hear.

Just sort of dovetail off the previous question, if we look back to last year. The other part of the last year.

Speaker 8: If we look back to last year, the other part of last year, there was a new pricing sort of rolled out for server customers. And I think in Q1, you saw a sizable cohort sort of take advantage of the opportunity to upgrade their subscription tiers to sort of bypass that price increase.

There was a new pricing sort of rolled out for for server customers and I think in Q1.

Sizeable cohort sort of take advantage of the opportunity to upgrade their subscription tiers.

Two.

Yes.

Bypass a price increase.

Speaker 8: What is sort of the team's sort of base case view on what those customer cohorts will do when they sort of come up for renewal this spring? Do you expect them to sort of, should we expect those price increases to sort of flow through starting in the spring, or do we expect some customer behavior to minimize the impact there, any sort of base case view?

The team sort of base case view on what those customer cohorts will do will they sort of come up for renewal. The Sprague do you expect that to sort of should we expect those price increases to sort of flow through.

It started starting in.

Sprague or do we expect some customer behavior to minimize the impact there and any sort of base case it would be helpful.

Speaker 2: Yes, I'll take that question. So as you know, the price increase went into effect on April 1st.

Yes, I'll take that question.

So as you know the price.

The increase.

On April one.

Speaker 2: And since then, actually, significant portion, actually majority of our customers have already renewed.

And since then actually significant margin absolute majority of our customers have already renewed at new prices. So we continued to see same retention levels.

Speaker 2: at new prices. So we continue to see same retention levels, gross retention levels as previously, so our customers understand why we did that and they accept new pricing and move forward.

Some levels of previously so our customers understand why would they invest in.

<unk>, new pricing and move forward actually specifically to your question on Q1, our renewal base of customers in Q4 was dividend in Q1, so really.

Speaker 2: Actually, specifically to your question on Q1, our renewal base of customers in Q4 was bigger than in Q1. So really, I think that the market and the customers understand the value that we provide. They accept it and move forward.

Think that the market and the customers understand the value that we provide.

Accepted in.

Move forward. So we don't expect any changes in this.

Speaker 2: So we don't expect any changes in this pattern in Q1.

This pattern in Q1, and just to remind everyone. This is only the net.

Speaker 6: And just to remind everyone, this is only relevant to the self-hosted solution. So the ghost in the cloud was not impacted by the price changes.

I went to the self hosted solutions. So the growth in the cloud was not impacted by the price changes and it was not just price changes, but also a huge amount of technology added to our platform. During this year, so as Jacob mentioned.

Speaker 6: And it was not just price changes, but also a huge amount of technology added to our platform during this year. So as Jacob mentioned,

Speaker 6: The churn is very low, retention very high, and also the net dollar retention has climbed up. So we are very pleased with the results.

The churn is very low retention very high and also the net dollar retention is committed.

So we are very pleased with the results.

I appreciate all the color. Thank you guys.

Speaker 3: Thank you. Thank you. Our next question will come from Jason Ader with William Blair. Please go ahead.

Thank you. Thank you. Our next question will come from Jason Ader with William Blair. Please go ahead.

Speaker 9: Hey, this is Sebastian on for Jason. Thanks for taking the question. Um, I wanted to double click a little bit on this, uh, you know, DevOps for connected devices market, uh, where connect and distribution products play. Can you maybe help us, you know, define what this market is and how it might be a little different from sort of the traditional DevOps market, uh, and any type of, you know, TAM metrics or market opportunity metrics you could provide.

Hey, this is Sebastian on for Jason Thanks for taking the question.

Wanted to double click a little bit on this.

Deb ops for connected devices market.

And distribution products play can you maybe help us define what this market is and how it might be a little different from sort of the traditional <unk> market.

And any type of Tam metrics or market opportunity metrics you could provide.

Okay.

Speaker 6: Thank you, Sebastian. We are very excited about this opportunity. And, you know, JFrog was established 12 years ago. We pioneered the DevOps market by introducing the binary solution.

Yes, Thank you Sebastian.

We are very excited about this opportunity.

<unk> was established 12 years ago, we pioneered the developed market by introducing binary solution, but we had the end in mind already from the start like what is it that we really ask Paul.

Speaker 6: But we had the end in mind already from the start. Like, what is it that we really ask for? We ask for software update to happen at the edge. We want our devices to be connected. And therefore, any kind of effort that you invest only on the developer side or secure only part of your organization is lame. It's half-baked.

For software update to happen at the edge, we want our devices to be connected and therefore any kind of efforts that you invest on the on the developer side or secure only part of your organization is lean is big and.

Speaker 6: And when we looked at the liquid software vision, our end in mind was getting the binaries all the way to the devices.

When we looked at the link with software vision, our end in mind was getting the binaries all the way to the devices when we.

Speaker 6: When we started to build JFrog distribution a bit more than three years ago, we listed two years ago, we knew that there is a missing part. What happened after the data center? What happened after the cloud? What happened after your Kubernetes environment? And this missing part was connecting the devices to the CI.

Started to to be Jacob distribution, a bit more than three years ago. We looked at two years ago. We knew that there is a missing part what's happened after the data center what's happened after the cloud what happened after your kubernetes environment and this missing part was connecting the devices.

To this the ICD world So from the developers machine from the developers keyboard you will be able to push it all the way to the devices now what we see in the future is the best thing is not just millions and tens of millions of developers building 10 times to 20 times a day, we see billions of devices that need to be updated.

Speaker 6: So from the developer's machine, from the developer's keyboard, you will be able to push it all the way to the devices. Now what we see in the future, Sebastian, is not just millions and tens of millions of developers building 10 times, 20 times a day. We see billions of devices that need to be updated.

Speaker 6: And since binary is the only digital asset that moves from the developer hand to the device, to your iPhone, to your coffee maker, to any device that we use, we see a huge avenue of growth. We started with distribution. We then extended with PDN. We now acquired AppSuite and built J4Connect.

And since binary is the only digital asset that moved from the developer hand to the device through your iPhone <unk> coffeemaker to any device that we use we see a huge avenue of growth. We started with distributions. We then extended with PD.

We now acquired Upsweep NPG for connect and Im sure that the market would follow that this is the real demand the real change of digital transformation.

Speaker 6: And I'm sure that the market will follow, but this is the real demand, the real change of digital transformation.

Got it that's very helpful. And then if I could just follow up could you maybe talk a little bit about the go to market investments that you've made that could help accelerate new customer acquisition. The new logo lands and then are you are you lending at higher <unk> as customers demand sort of a broader platform or because.

Speaker 9: Got it, that's very helpful. And then if I could just follow up, could you maybe talk a little bit about the go-to-market investments that you've made that could help accelerate the new customer acquisitions, the new logo lands, and then are you landing at higher ARRs as customers demand sort of a broader platform, or because a lot of these new customers are adding the cloud version, are they actually lower ARR lands?

A lot of these new customers are adding the cloud version or they actually lowered our lands.

Okay.

Speaker 6: So when you adopt the platform on-prem or cloud, you already pay more than $100,000. And this is the highest subscription of what we call the Enterprise Plus.

So when you adopt the platform on Prem or cloud you're already paying more than 100000.

And this is the highest subscription or what we call the enterprise plus in the cloud. Obviously you also go by consumption, but the base prices in both the both cases over $100000 in terms of the go to market.

Speaker 6: In the cloud, obviously, you also go by consumption, but the base price is, in both cases, is over $100,000. In terms of the go-to-market, what we have did on the self-hosted and in the cloud.

What we have believed.

It's still positive and in the cloud.

Speaker 6: is the combination of the freedom of choice to the user, to the developer, comes with more value and capabilities of the platform. So when you upgrade, you get security. When you upgrade again, you get highly available solutions, VR and so on. When you upgrade to the platform, you get distribution capabilities and so on and so forth.

The combination of the freedom of choice to the user to the developer comes with more value and.

And capabilities of the platform. So when you upgrade you get security when you upgrade again youll get highly available solutions, Dr and so on when you upgrade to the platform you get distribution capabilities and so on and so forth in terms of the cloud obviously when you use more you pay more simple go to market philosophy that we haven't.

Speaker 6: In terms of the cloud, obviously, when you use more, you pay more. That's the simple go-to-market philosophy that we have in J-PROB. On top of that, we provide you with a multi-cloud solution, so it's not just one cloud that you can run on, and this is also very appealing. And one thing that we hear from all enterprises, and remember, currently we have approximately 7,000 customers,

On top of that we provide you with a multi cloud solution. So it's not just one cloud that you can count on and this is also very appealing and one thing that we do from all of the enterprise and remember currently we have approximately 7000 customers.

This is something that we hear from all fortune 100, or global 2000 cloud is happening, but we need a hybrid environment and <unk> is also very unique with providing that giving you a hybrid environment for the same tool whether it's in the cloud also posted by <unk>. So the overall.

Speaker 6: something that we hear from all Fortune 100 or Global 2000. Cloud is happening, but we need a hybrid environment. And J-PoG is also very unique with providing that, giving you a hybrid environment for the same tool, whether it's in the cloud or self-hosted by you. So the overall go-to market.

Go to market is.

Speaker 6: is evolving together with the evolution and the adoption of DevOps and DevSecOps in the market and very focused.

Evolving together with the evolution and the adoption of Dev ops and the pickups in the market and very focused on this binary piece.

Speaker 6: on this binary piece that the number of binaries in your organization is just growing.

<unk> binaries in your organization is just growing.

Speaker 2: And if I may just add to that, you also derived that the majority of new customers land on cloud and typically the landing point on cloud is lower ASP. Having said that, given the fact that many of our customers have an opportunity to try the products on free tier and also the platform resonates with a lot of value to the customers, we started seeing some of the customers landing on the platform. It doesn't happen a lot.

And if I might just add to that view.

Also derived the majority of new customers lend on cloud and typically the landing points on cloud as a lower ASP.

Having said that given the fact that many of our customers have an opportunity to try the products on <unk> and also the platform resonate with a lot of value to the customers. We started seeing some of the customers landed on the platform it doesn't happen a lot.

Speaker 2: but every quarter we might have a few cases where new customers land on the platform. So on average ASP did not change much, increased slightly for new land, but on average it did not change much.

Every quarter, we might have a few cases, where are they new customers lend on the platform. So on average ASP did not change much increased slightly.

<unk> learned but on average did not change much.

Got it thank you very helpful.

Yes.

Speaker 3: Thank you. Our next question will come from Koji Ikeda with Bank of America. Please go ahead.

Thank you. Our next question will come from Koji Ikeda with Bank of America. Please go ahead.

Hi, Shlomi, Hey, Jacob apologies. If these questions were asked I've been bouncing around for a couple of calls here.

Speaker 10: Hey, Shlomi. Hey, Jacob. Apologies if these questions were asked. I've been bouncing around for a couple of calls here. I wanted to ask you on billing.

Wanted to ask you on billings.

Speaker 10: Taking a look at the billings in the quarter, it grows 34% according to our model. I guess the top comps do realize a lot of mechanics this year with billings, especially around the pricing change. But should we be heading into a period of normalization for billings over the next year? And I guess thinking about with cloud usage, should we be looking at billings at all, or is there something else that you suggest as a better forward-looking growth metric?

Taking a look at the billings in the quarter a growth 34% according to our model against the tough comp.

You realize a lot of mechanics, this year with billings, especially around the pricing change.

Should we be should we be heading into a period of normalization for billings over the next year.

And I guess thinking about with cloud usage should we be looking at billings at all or is there something else that you suggest is a better forward looking growth metric.

Speaker 2: Yes. Koji, thank you for this question. And just to remind you that due to various dynamics, you know, billings is not a very good predictor of future revenue growth, because of core terms and the other billing dynamics that we see from time to time.

Yes.

Thank you for this question and just to remind you that due to various dynamics.

Billings is not a very good predictor of our future revenue growth.

Because of courtyards and few other billing dynamics that we see from from time to time now you also have the horizon. During this year and the dealings feature was kind of skew towards Q1, where we did have.

Speaker 2: Now, you also derived that during this year, the billing picture was kind of skewed towards Q1, where we did have...

Speaker 2: significant pull-ins, but Q4 came out very strong in billings. We don't see any one-time items there. We don't see any significant changes in duration, average duration of our contracts.

Significant pull ins, but Q4 came out very strong in billings, we don't see any onetime items there.

We don't see any significant changes in duration average durations of our contracts. So it's kind of normalized for us.

Speaker 2: So it's a kind of normalized course.

Speaker 2: Going forward, again, cloud is primarily annual.

Going forward again cloud is primarily annual.

Speaker 2: term for on-prem, for self-hosted solutions, we have sometimes multi-year deals, but we don't see any changes right now in average duration, in average contract duration. So Billings should be probably normalized. Again, to remind you, Billings is not a very good predictor of revenue growth because of this core term dynamic that we experience from time to time.

Term for on Prem for self hosted solutions, we have.

Sometimes multiyear deals, but we don't see any changes in right now in annual duration and average contract durations so billing permits.

Probably normalize again to remind you billings is not a very good predictor of revenue growth because of this quarter and dynamics.

Experienced from time to time.

Speaker 10: Got it, got it. And then, I think I overheard in the prepared remarks, I was just talking about net revenue retention. And, you know, Jacob, I think you made the comment that NRR should kind of hang around 130% level. But just thinking about cloud usage, you know, the cloud growth acceleration here in the fourth quarter, I mean, is there a potential for net revenue retention to actually end up over 130% in the future?

Got it got it and then.

I think I overheard in the prepared remarks, just talking about net revenue retention and Jacob I think you made the comment that NRI actually kind of hanging around 130% level, but just thinking about cloud usage the cloud growth acceleration here in the fourth quarter. I mean is there a potential for net revenue retention to actually ended up over.

130% in the future.

Speaker 2: Yes, our cloud customers expand more than 130 percent as the cloud continues to become a bigger portion of our revenues, that's definitely a potential right now. In our model and our guidance, we're assuming to be around 130 percent. Got it. Got it. All right.

Yes, our cloud customers extend more than 100.

30%.

Cloud continues to become a bigger portion of our revenues that is definitely a potential right now and our model and our guidance, we assume it to be around 130%.

Got it got it alright, thanks, guys. Thanks for taking my questions.

Okay.

Speaker 3: Thank you. Our next question will come from Natai Kidron with Oppenheimer. Please go ahead.

Thank you. Our next question will come from Macquarie Kitchell with Oppenheimer. Please go ahead.

Speaker 10: Thanks, hey guys, and nice to see the acceleration and growth in the cloud. Jacob, I had a couple of questions for you. First, I just want to make sure I understand the Enterprise Plus.

Thanks, Hey, guys nice to see the acceleration in growth and in the cloud.

Jacob I had a couple of questions for you first I just wanted to make sure I understand the enterprise plus.

Speaker 10: In the last couple of quarters, you've been growing that business 150% year over year.

And the last couple of quarters, you've been growing that business, 150% year over year.

Speaker 10: We're now down to under 90. I guess, don't get me wrong, it's still a very impressive number. I'm just wondering if there's anything going on there in the adoption of Enterprise Plus.

We're now down to under 9%.

Don't get me wrong still very impressive number I'm just wondering if there's anything going on there and your adoption of enterprise plus.

Speaker 2: No, we continue to see very strong adoption of Enterprise Plus subscription. The revenue continues to grow. Today, it represents 35% of the revenue. The number of customers adopting Enterprise Plus actually grew nicely in Q4. We don't see any unique trends.

No we continue to see very strong adoption of enterprise plus.

Subscription revenue continued to grow today represents 35% of the revenue the number of customers adopting enterprise plus actually grew nicely in Q4, we don't see any any any.

Unique trends.

Speaker 11: As a follow-up on the OPEX, a lot of companies that have bases in Israel have been calling out a lot of FX headwinds. Can you elaborate a little bit? I know you've been hedging somewhat, but I don't know how far out you do, but as I think about your guidance for the year, what kind of a headwind are you seeing from FX and how should I think about that going forward?

Okay very good and then as a follow up.

On the Opex.

A lot of companies that have basically in Israel have been calling out a lot of FX headwinds.

Can you kind of elaborate a little bit I know you've been hedging somewhat but I don't know how far out do you do.

But as I think about your guidance for the year, what kind of a headwind are you seeing from FX.

How should I think about that going forward.

Speaker 2: Yes, if I am to the right, uh, uh, that, um,

Yes, if I answer the right.

<unk>.

Speaker 2: We have a significant portion of our operating expenses denominated in Israeli shekels and Israeli shekels have been in over the past year and a half significantly. We do hedge.

We will have significant portion of our operating expenses denominated in Israeli shekel and Michele <unk>.

And over the past year end.

Currently we do hedge but.

Speaker 2: But you cannot catch forever. And eventually, the lower the less probable rates catch up.

You cannot hedge forever and.

Eventually.

Hello.

Less favorable rates catch up so the impact on overall profitability as we see right now is about two percentage points in 2022.

Speaker 2: So the impact on overall profitability, as we see right now, is about 2 percentage points in 2022.

Speaker 2: And if the situation changes and we see opposite trend, then it will help us. But this is what we're currently seeing. Very good. Good luck.

And.

If the situation changes and we see a positive trend then.

It will help us, but the business was behind the scene.

Very good good luck guys. Thanks.

Thank you.

Speaker 3: Thank you. Our next question will come from Rob Owens with Piper Sandler. Please go ahead.

Thank you. Our next question will come from Rob Owens with Piper Sandler. Please go ahead.

Yes, hi, Thanks for taking my question guys I'm curious on the customer count front. Realizing you just disclose it once a year, but there was a few acquisitions during the year itself is that an organic 600 customers as a net addition, because you mentioned the 200 that had churned off as well.

Speaker 5: Yeah, hi, thanks for taking my question, guys. I'm curious on the customer count front, realizing you just disclose it once a year, but there was a few acquisitions during the year itself. Is that an organic 600 customers? Is that a net addition? Because you mentioned the 200 that had turned off as well.

Speaker 6: Yes, thank you for the question. As we reported in Q3, when we acquired Vidu and AppSwift, there was no material revenue coming from this acquisition and also no significant amount of customers. So the answer is yes, this is an organic growth of the J-POP customers on the J-POP platform.

Yes. So thank you Paul for the question as we reported that in Q3 win.

When we.

We do and obviously.

There was no material revenue coming from this acquisition and also no significant amount of customers. So the answer is yes. This is.

Organic growth of the Jay for customers on the platform.

In most.

Speaker 5: And given the opportunity post-Log4j, how do you think about customer growth as you look at 2022? Should that again be an accelerating type of metric for you?

And given the opportunity post log for Jay.

How do you think about customer growth as you look at 2022 should that again be an accelerating.

A metric for you.

Speaker 6: Yeah, well obviously I'm not happy about what happened with block 14 in the world, it's not that we're celebrating it.

Yeah, well, obviously I'm not happy about what's happened with block four chamber in the world, it's not as mature in ratings.

Speaker 6: It emphasized the need for solutions like what JFrog provides, because there is no other solution in the DevOps public market that gives you such a binary-centric approach, not only to security, but the old remediation of episodes like Log4j. It happened before with NPM, it happened before with Python, and be sure we will hear about another.

As emphasized.

Need for solutions like <unk>.

<unk> will provide because there is no other solution in the Dev ops.

The public market that gives you such a binary centric approach not only to security, but beyond <unk>.

Remediation of.

Ethical to backlog for JD happened before with MTN, It happened before with Python and <unk>.

<unk>, we will hear about another binary a software package that comes with the vulnerable.

Speaker 6: binary or software package that comes with a vulnerable impact in the near future.

Impact in the near future it will just happen and what.

Speaker 6: And what we see is more and more customers starting to understand that the holistic security solution must come with a single source of record solution, like a repository that also controls what you bring in and outside of your organization. And then a security solution that goes across the old pipeline, gives you control over your repository or distribution, build, test, deployment environment.

We see more and more customers starting to understand the holistic security solution must come with a single source of political solution like a repository that also control what you bring in an outside of your organization and then.

Our security solutions that go across the whole pipeline give you control over youll be positively or distribution field test deployments environment, and obviously to the Capitol tests with the distributions. So local Jay is one example, he's got all the way through the Whitehouse.

Speaker 6: and obviously to recover fast with the distribution. So Log4J is one example. It got all the way to the White House, but J4 customers were not just well-protected, but also well-recovered.

<unk> customers will not just well protected but also.

Will be covered and saved.

Speaker 6: millions of developers around the world by using Alto. So I believe that we will see a significant adoption of security solution under the Bitcoin subscription coming from JTOR. Great. Thank you very much.

Some developers around the world.

Using a little so I.

Believe that we will see a significant adoption of security solution under the between subscription coming from vivo.

Great. Thank you very much for the color.

Thank you.

Speaker 3: Thank you. And we do have time for one more question. That will come from Steve Enders with KeyBank Capital Markets. Please go ahead.

Thank you and we do have time for one more question that will come from Steve Enders with Keybanc capital markets. Please go ahead.

Speaker 8: Great, thanks for taking questions here. I just want to follow up on that last point there, Shalini, around securing the software supply chain in Log4j. I mean, is this seeing an increased pipeline activity at this point where now that people have maybe gotten on the other side of Log4j and spent all of the holidays and into January dealing with it, is this leading to increased opportunities for JFrog to go execute again?

Great. Thanks for thanks for taking the questions here I just want to follow up on that last point.

They're showing me around.

Around.

Security software supply chain, an analogue for Jamie is this seen increased pipeline activity at this point, where now that people are maybe on the other side of log for James.

Holidays.

Into January dealing with it is this leading to increased opportunities for J probably to go execute against.

Yes, the answer is yes clearly.

Speaker 6: Yes, the answer is yes, clearly, and the amazing, you know, research and engineering security team in JFrog posted, I think, more than any other company in the market, following the LogPoJ, what would be the best practices to manage it in the future and to protect your company from it. So the answer to the pipeline is yes.

And.

Amazing.

Sure.

Research and engineering security team.

In jail for posted I think more than any other company in the market pulling the applegate what will be the best practices to.

<unk> in the future to predictive company from it so the answer to the pipeline is yes.

Speaker 6: We hope that there will be no more O4J, but yes, it helps the pipeline a lot.

We hope that there will be no more <unk>, but yes. It has.

The pipeline.

Okay.

Speaker 8: Okay, that's helpful. And just want to touch on the, it looks like there's good traction within the global 2000 that happened in 2021 from what you disclosed. I guess, how would you kind of attribute what led to the, you know, really good customer growth within the G2K in 21? Is this, you know, a function of...

Helpful and just wanted to touch on the it looks like there is good traction within the global 2000 that happened in 2021 from a you disclose.

I guess, how would you kind of attribute what led to the really good customer growth within the GTK.

In 'twenty one is this a function of.

Speaker 8: the increased focus on strategic sales teams that have been built up in the past couple of years, and I guess how penetrating do you see the opportunity within the GTK accounts today?

The increased focus on our strategic sales team that had been built up in the past couple of years and I guess, how penetrated do you see the opportunity within the GTK accounts today.

Speaker 6: Yeah, so global 2000 customers that are adopting digital transformation practices are not just looking at one solution usually.

Yes.

<unk> thousand customers that are adopting digital transformation practices are not just looking at the one solution usually when they look at the the.

Speaker 6: When they look at the old solution, they are looking at cloud strategy versus on-prem.

<unk> solution. They are looking at cloud strategy versus on Prem.

Speaker 6: They are looking at security versus DevOps practices, and obviously replacing in-house solutions that were built 10, 15, 20 years ago. All of the above.

Looking at security versus dental practices, and obviously, replacing in house solution that would be 10, 15 20 years ago.

All of the above is addressed by our strategic sales team because they have the capability to lend on the customer side work with different persona answers different need bringing along architect that can help our customers and partner with them as they are adopting digital transformation. So.

Speaker 6: is addressed by our strategic sales team because they have the capabilities to land on the customer's side, walk with different persona, answer different needs, bringing along architects that can help our customers and partner with them as they are adopting digital transformation.

Speaker 6: Global 2000 customers will go in different avenues.

Global 2000 customers will go in different avenues.

Speaker 2: And if I may just add to that, when we went public, our penetration to global 2000 was about low 20s.

And different deployment environment, and the fact that.

When we went public with our penetration to the global 2000 was about low twenties.

Speaker 2: I think it was 22%, and today we're above 30% in denigration on Global 2000. So we continue our adoption of the Global 2000 customers continue adoption of our products at a nice pace.

22% and today, we are above 30% in penetration in global 2000, So we continue.

The option.

The global 2000 customers continued adoption of our products at a nice pace.

Perfect. Thanks for taking my questions.

Okay.

Speaker 3: Thank you for participating in today's question and answer session. I would now like to turn the call back to Mr. Shlomi Benhaim for any closing remarks.

Thank you for participating in today's question and answer session I would now like to turn the call back to Mr. Shlomi Yanai for any closing remarks.

Speaker 6: Well, everyone, thank you for joining us. That was ahead of the year, and we are very excited about our performance. We are happy to see the company growing and the community and our customers adopting more and more of our products and technology. I'd like to thank again for the amazing Frogs team that made this year happen. And I would like to thank you for joining us today. Next week.

Well, everyone. Thank you for joining us.

Was the ahead of the year and we are very excited about our performance. We are happy to see the company growing in the community and our customers adopting more and more of our products and technology I'd like to thank again for the amazing frog theme.

Maybe sort of happen.

And I would like to thank you for joining US today next week, we are welcoming us to join US on our first <unk> vessel day podcasting from NASDAQ in New York, Thank you, everyone and maintenance won't be with you.

Speaker 6: We are welcoming you to join us on our first Investor Day podcasting from NASDAQ in New York. Thank you, everyone, and may the flow be with you.

Speaker 3: Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.

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

Speaker 12: Music

[music].

Okay.

[music].

[music].

Speaker 12: you

Speaker 13: Good day, and thank you for standing by. Welcome to the JFROG's fourth quarter fiscal 2021 financial results conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there'll be a question and answer session. To ask a question during this session, you'll need to press star one on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star zero. I would now like to hand the conference over to Joanne Horn with Investor Relations. Please go ahead.

Good day and thank you for standing by welcome to the J Fox fourth quarter fiscal 2021 financial results Conference call. At this time all participants are in a listen only mode. After the speaker's presentation there'll be a question and answer session to ask a question. During this session you will need to press star one on your telephone please be advised that today's conference.

Is being recorded if you require any further assistance please press star zero.

I would now like to hand, the conference over to Joann Horne with Investor Relations. Please go ahead.

Speaker 1: Thank you, Norma. Good afternoon, and thank you for joining us as we review JFrog's fourth quarter and full year 2021 financial results, which were announced following market close today via a press release.

Thank you Laura good afternoon, and thank you for joining us as we review <unk> fourth quarter and full year 2021 financial results, which were announced following market close today via press release.

Speaker 1: Leading the call today will be JFrog's CEO and co-founder, Shlomi Ben-Haim, and Jacob Shulman, JFrog's CFO . Before Madeline shares her remarks, let me review.

Leading the call today will be <unk>, CEO and cofounder somebody behind.

Jacob Shulman, Chief our CFO .

Before matching chairs the remarks, let me review the Safe Harbor statement.

Speaker 1: During this call, we may make statements related to our business that are forward-looking under federal securities laws and are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, including statements related to our future financial performance, including our outlook for the first quarter and full year of 2022.

During this call we may make statements related to our business that are forward looking under federal Securities laws and are made pursuant to the safe Harbor provisions of the private Securities Litigation Reform Act of 1995, including statements related to our future financial performance.

Our outlook for the first quarter and full year of 2022 words.

Speaker 1: The words anticipate, believe, continue, estimate, expect, intend, will, and similar expressions are intended to identify forward-looking statements or similar indications of future expectations.

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

Speaker 1: Your caution not to place undue reliance on these forward-looking statements, which reflect our views only as of today, and 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.

Youre cautioned not to place undue reliance on these forward looking statements, which reflect our views only as of today and that is 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.

Speaker 1: These statements are subject to a variety of risks and uncertainties that could cause actual results to differ materially from expectations.

These statements are subject to a variety of risks and uncertainties that could cause actual results to differ materially from expectations.

Speaker 1: For a discussion of material risks and other important factors that could affect our actual results, please refer to our Form 10-K for the year ended December 31st, 2020, filed with the SEC on February 12th, 2021, and our Form 10-Q for the quarter ended September 30th, 2021, filed with the SEC on November 5th, 2021, all of which are available on the Investor Relations section of our website. Along with the earnings for less release,

For a discussion of material risks and other important factors that could affect our actual results. Please refer to our Form 10-K for the year ended December 31, 2020 filed with the SEC on February 12, 2021, and our Form 10-Q for the quarter ended September 32021 filed with the SEC on November five 2021, all of which are available on.

Investor Relations section of our website alone.

Along with the earnings press release issued earlier today.

Speaker 1: Additional information will be made available in our Form 10-K for the year ended December 31st, 2021, and other filings and reports that we may file from time to time with the SEC.

Additional information will be made available in our Form 10-K for the year ended December 31, 2021, and other filings and reports that we may file from time to time with the SEC.

Speaker 1: Additionally, non-GAAP financial measures will be discussed on this conference call. These non-GAAP financial measures, which are used as measures of J-SPARK's 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 reconciliation of those measures to the most directly comparable GAAP financial measures.

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.

Speaker 1: A replay of this call will be available on the JFrog Investor Relations website for a limited time.

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

Speaker 1: With that, I'd like to turn the call over to JFrog's CEO , Shlomi Ben-Hai. Shlomi?

With that I'd like to turn the call over to <unk> CEO Shlomi, Ben Hi, Shlomi.

Speaker 6: Thank you, Joanne, and greetings to all of you from the swamp. I'm excited to welcome you to our fourth quarter and fiscal 2021 earnings call.

Thank you Joanne and greetings to all of you from the small I'm excited to welcome you to our fourth quarter and fiscal 2021 earnings call.

Speaker 6: Every end of year urges us to pause, look back, and observe the leaps the company has taken from all perspectives. I'm grateful for our customers and community. Their faith in JFrog and their determination to innovate and digitalize the world inspires us to bring our best to work every day.

Every ended the fear urges us to both look back and observe believes the company has taken from all perspective, I am grateful for our customers and communities.

J, Paul and then Terry.

Domination to innovate and digitalize the world inspires us to bring out best to work everyday.

Speaker 6: 2021 ended on a strong note. Our multiple strategies across technology, business, and culture continue to bear fruit that I'm happy to share with you today.

2021 ended on a strong note our multiple strategies across technology business and culture continue to bear fruit, but I'm happy to share with you today.

Speaker 6: I'm pleased to report that we delivered another strong quarter and that in Q4, all of JFrog's key metrics continued to trend upwards, reflecting the continuous demand for our platform in an expanding market.

I am pleased to report that we delivered another strong quarter and that in Q4 all of J E T.

Key metrics continue to trend upwards, reflecting the continued demand for our platform in an expanding market.

Speaker 6: Q4 revenue was $59.2 million, a growth of 39% over the same period last year, and compared to 38% year-over-year growth reported in the previous quarter.

Q4 revenue was $59 2 million a Gulf of 39% over the same period last year and compares to 38% year over year growth reported in the previous quarter.

Speaker 6: Our cloud revenue in Q4 grew by 52% year-over-year, an increase from 50% reported in the previous quarter. This reflects our ongoing strategy of accelerating our multi-cloud and hybrid goals.

Our cloud revenue in Q4 grew by 52% year over year and increased from 50% reported in the previous quarter. This reflects our ongoing strategy of accelerating our multi cloud and hybrid.

Speaker 6: Growth in customers with over $100,000 in ARR accelerated to 53% year-over-year, reflecting a compelling market need for a complete JFrog platform solution with our Enterprise Plus subscription.

Growth in customers with over $100000 in ASR accelerated to 53% year over year.

Reflecting a compelling market need for complete J for platform solution with our enterprise cloud subscription.

Speaker 6: I'm also happy to report that our 4 trailing quarters net dollar retention climbed to 130% as predicted compared to 129% reported in the previous quarter. This was driven by customers' increased usage of our product as a unified platform with binary management, security, and software distribution as key drivers.

I'm also happy to report that our four trailing quarters net dollar retention clients to 130% predicted compared to 129% reported in the previous quarter. This was driven by our customers increased usage of our product as a unified platform with binary.

Management security and software distribution S key drivers.

Speaker 6: This year, hundreds of new customers adopted our solutions, and I'm pleased to report that we closed the year with approximately 6,650 customers across industries, which represents 10% year-over-year net growth.

This year hundreds of new customers adopted our solutions and I am pleased to report that we closed the year with approximately 6650 customers across industries with represents 10% year over year net goal.

Speaker 6: Team JFrog, these 2021 results are a testament to your hard work and dedication, allowing us to better serve developers, DevOps, and security communities, exceeding our revenue commitments in every single quarter of the year. This success belongs to you and reflects the unique spirit of the Frogs.

DJ for these 2021 results are a testament to your hard work and dedication, allowing us to better serve developers Dev ops and security communities.

Leading our revenue commitments in every single quarter of the year. The success belongs to you and reflects the unique experience of the folks.

Speaker 6: Now, I would like to share with you some additional market and business highlights.

Now I would like to share with you some additional market and business highlights.

Speaker 6: In a world that demands faster, secure, more innovative, software to the edge, the DevOps-driven software supply chain is more top-of-mind and mission-critical than ever before.

In award the demand faster secure more innovative software to the edge. The Dev ops driven software supply chain is more top of mind and mission critical than ever before.

Speaker 6: Getting software updates to your vehicle, mobile application, medical devices, and more requires the ability to build, release, secure, distribute, and deploy binaries, often also called software packages.

Getting software updates to your vehicle mobile application medical devices and mall requires the ability to build relief CQ distribute and deploy binary.

Also called software packages.

Speaker 6: Complementary solutions for CICD and source code management make development more efficient. But this isn't enough to bring software quickly to the market.

Complementary solutions for see ICD and source code management make development more efficient, but this isn't enough to bring software quickly to the market.

Speaker 6: The moment first or third party code is compiled, it changes to a binary form and requires full binary lifecycle management from the developer's machine to the deployment environment to meet the demands of the business.

The moment first all third party code is compiled it changes to a binary fall and requires full binary lifecycle management from the developers machine to the deployment environment to meet the demands of the business.

Speaker 6: This transformation into a digital and secure reality can be only achieved by managing the binary.

This transformation into a digital and secure reality can be only achieved by managing the binary.

Speaker 6: To illustrate this, we only need to look at the major news item that shook the software industry late in 2021. The log4j vulnerability, or as coined by the community, the software pandemic.

To illustrate this we.

You may need to look at the major news item that shook the software industry late in 2021, the Lac <unk> ability or it's going by the community the software pandemic.

Speaker 6: This affected almost every organization in the world within days of its discovery, frustrating millions of developers who had to drop everything and rush to identify patient zero across all software environments.

This affected almost every organization in the world within days of its discovery frustrating millions of developers, who had to drop everything and rush to identify patient zero across all software environments.

Speaker 6: This forced many companies to bring their entire software delivery organization to a halt until the vulnerability was found, fixed, and replaced.

This forced many companies to bring their entire software delivery organization to a hub until the vulnerability was found fixed and replace.

Speaker 6: J4 customers were able to quickly identify where they were impacted and address the risk.

<unk> customers were able to quickly identify whether were impacted and address the risk.

Speaker 6: For example, one of the Fortune 100 banks with over 20,000 developers globally was able to identify where the infected Log4j binary was hosted in their business and what dependencies it carried across the global pipeline.

For example, one of the Fortune 100 banks with over 20000 developers globally was able to identify where the infected look for Jay binary was hosted in their business and what dependencies. It carried across the global pipeline.

Speaker 6: This identification happened in a matter of minutes with JFrog Artifactory serving as the bank's single source of proof and the database of DevOps, allowing them to replace the vulnerable Log4j binary with a patch version and applying it across the organization automatically instead of manually finding every place it was being used in every application.

This identification.

Happen in a matter of minutes with J product the factory, serving as the banks single source of truth, and the database of Dev ops, allowing them to replace the vulnerable local J binary with the patch version and applying it across the organization automatically instead of manually finding every place it.

It's being used in every application.

Speaker 6: Using JFrog X-ray alongside artifactory, they were able to easily protect themselves from additional exposure, setting security policies that automatically ensured vulnerable log4j binaries could not be used again by developers, and keeping the repository from further risk.

Using <unk> extra alongside our factory they were able to easily protect themselves from additional exposure setting security policies that automatically ensure vulnerable look for Jay binaries could not be used again by developers and keeping the repository from further risk.

Speaker 6: And finally, JFOG distribution. Rapidly delivered and validated the release to fix the software in all environments, including production.

And finally, <unk> distribution rapidly delivered and validated relief to fix the software in all environments, including production.

Speaker 6: Altogether, this bank automatically found, rebuilt, replaced, and protected themselves against the all-vulnerable Lock4j binaries in under 12 hours.

Altogether. This bank automatically found rebuild replace and protect themselves against the all vulnerable look for Jay binary in under 12 hours.

Speaker 6: This speed is only achievable with a unified, integrated JFOG platform that automates these activities across a company. Development organizations without this approach have taken weeks hunting these binaries down, and many are still in the trenches trying to recover today.

This is.

He is only achievable with a unified integrated <unk> platform that automates this activities across the company development organizations without the support have taken weeks hunting. This binary is down and many are still in the trenches trying to recover to date.

Speaker 6: During the Lock4J episode, the power of a binary-centric approach to DevOps saved J4 customers potential millions of dollars in lost business due to downtime or security breaches, and countless hours spent by millions of global developers fortifying their software supply chain.

During the last four <unk> the power of a binary centric approach to Dev ops saved J for customers potential millions of dollars in lost business due to downtime all security bridges and calm and countless hours spent by millions of global developers fortifying the software.

Okay.

Speaker 6: The log4j vulnerability will not be the last impactful binary discovered by our industry.

The luxury driven our ability will not be the last impactful binary discovered by our industry. This happened in 2021 with NPM Python and it will happen again this reality reinforces <unk> strategy to manage the entire Dev ops flow from the binary repository.

Speaker 6: This happened in 2021 with NPM, Python, and it will happen again. This reality reinforces JFrog's strategy to manage the entire DevOps flow from the binary repository to security and through distribution to deliver complete automated pipeline control for every development organization. As a result, we are seeing a growing demand for our end-to-end platform.

To security and through distribution to deliver a complete automated pipeline control for every development organization. As a result, we are seeing a growing demand for our end to end platform.

Now onto some product and business highlights from Q4 and the fiscal year.

Speaker 6: Now on to some product and business highlights from Q4 and the fiscal year.

Speaker 6: In support of our liquid software vision, our roadmap in 2021 brought many innovations and enhancements to our holistic platform, deepening our commitment to deliver integrated automated solutions to the DevOps and DevSecOps communities.

In support of our liquid software vision, our roadmap in 2021 bulk many innovations and enhancements to our holistic platform deepening our commitment to deliver integrated automated solution to the Dev ops and depth of cups communities.

Speaker 6: This included delivery for many of our co-product categories, such as artifact management, CICD, security, and software distribution. Importantly,

This included delivery for many of our core product categories, such as artifacts management, CIC deep security and software distribution.

Accordingly.

Speaker 6: All of the solutions delivered in 2021 continue to fulfill our promises to always deliver universal, scalable products across self-hosted, hybrid, and cloud environments.

All of the solutions delivered in 2021 continue to fulfill our promises to always deliver universal scalable product a cross sell fostered hybrid and cloud environment.

Speaker 6: As a result, we continue to see strong demand for our hybrid and multi-cloud subscriptions. In Q4 specifically, we were proud to partner with AWS for the announcement of EKS Anywhere on the AWS Marketplace, which makes Amazon Cloud Services available for self-hosted customers as well.

As a result, we continue to see strong demand for our hybrid and multi cloud subscriptions and.

In Q4, specifically, we were proud to partner with AWS for the announcement of <unk> anywhere on the AWS marketplace, which makes Amazon cloud services Evaluable for self hosted customers as well.

Speaker 6: This move by AWS is a recognition that many companies see a hybrid model as a strategic move for the business, and we are excited to be at the forefront of hybrid DevOps with our customers and cloud partners.

This move by AWS is a recognition that many companies see a hybrid model as a strategic move for the business and we are excited to be at the forefront of hybrid therefore, with our customers and cloud partners.

Speaker 6: Our strategic investment in our cloud offering both would again in Q4. And as an illustration of our cloud subscription goal, one of the largest providers of GPS and geolocation services in the world recently became a new customer of JFrog, standardizing their development team on JFrog's SaaS solution.

Our strategic investments in our cloud offerings, both fourth again in Q4.

And then as an illustration of our cloud subscription growth one of the largest providers of GPS and geolocation services in the World recently became a new customer of Jay for standardizing their development teams on <unk> SaaS solution.

Speaker 6: They were looking for a DevOps partner to scale alongside their company growth and had found their existing competitive offering would no longer scale to meet their needs, nor able to support the cloud first initiative.

They were looking for a Dev ops partner to scale alongside the company goals and ahead founder existing competitive offering with no longer scale to meet their needs now able to support the cloud first initiatives.

Speaker 6: With the JFrog platform provided as a service in the cloud of their choice, they have managed to successfully migrate all of their binaries and scale across multi-site setups.

With the <unk> platform provided as a service in the cloud of their choice. They have managed to successfully migrate all of the binaries and scale across multi site setup.

Speaker 6: We look forward to partnering with more J4 customers, like TomTom, headquartered in EMEA, or FASAF, a luxury retail delivery company headquartered in North America, to ensure our DevOps solution meets enterprise demands across all vertical and hybrid deployments.

We look forward to partnering with more <unk> customers like Tom Tom headquartered in EMEA.

As a.

<unk> retail delivery company headquartered in North America to ensure our Dev ops solutions meet enterprise demand across all vertical and hybrid deployments.

Speaker 6: Across geographies, JFrog distribution, which delivers binaries to production environments such as data centers or Kubernetes, remained a key driver for upgrades to our full platform subscription.

Across geographies jape of distribution, which delivers binaries to production environments, such as data centers. Our kubernetes. We remained the key driver for upgrades to our full platform subscriptions.

Speaker 6: One of the world's largest financial institutions recently upgraded to JFrog's Enterprise Plus subscription in order to distribute binaries for thousands of applications written by thousands of developers delivering to dozens of global locations, each with their own regulations and compliance needs.

One of the world's largest financial institutions recently upgraded to <unk> enterprise plus subscription in order to distribute binaries for thousands of applications written by thousands of developers delivering two dozen of global locations each with their own regulations and compliance needs.

Speaker 6: Examples such as this illustrate a continuing trend we are seeing in organizations. The need to secure, automate, and manage software distribution at scale across all applications and multiple releases per day can no longer rely on manual processes built in-house and implemented a decade ago.

Examples such as this illustrates a continued trend we are seeing in organizations.

We need to secure automate and manage software distribution at scale across all application and multiple releases per day can no longer rely on manual processes built in house and implemented a decade ago.

Speaker 6: This complex environment and the pace of releases requires a binary-centric and distribution-capable DevOps platform in order to be successful.

This complex environments and the pace of releases requires a binary centric and distribution capable Dev ops platform in order to be successful.

Speaker 6: To avoid friction with the platform capabilities and to focus on one consolidated platform, we decided to sunset Bintray, our legacy distribution as a service offering that provided a standalone binary store and distribution service.

To avoid friction with the platform capabilities and to focus on one consolidated platform, we decided to sunset Greentree, our legacy distribution as a service offering that provided the standalone binary store and distribution service.

Speaker 6: We managed an extensive and transparent process with our community and customers of shutting down this service in 2021.

We manage an extensive and transparent process with our community and customers of shutting down this service in 2021.

Speaker 6: As a natural extension of the increasing value of JFOG distribution, we also recently made JFOG Connect available following our acquisition of AppSuite.

As a natural extension of the increasing value of Jacob distribution. We also recently made <unk> connect available following our acquisition of <unk> suites.

Speaker 6: This early offering for connected device management aims to greatly increase our addressable market by bringing binaries all the way to devices.

This early offering for connected device management aims to greatly increase our addressable market by bringing binaries all the way to devices <unk> connect will bridge the award of Dev ops with the exploding market of Iot and connected devices, we look forward to driving this growth.

Speaker 6: J4Connect will bridge the world of DevOps with the exploding market of IoT and connected devices. We look forward to driving this growth at the edge in the future.

At the edge in the future.

Speaker 6: We are innovating, extending, and maturing our platform, which we believe will serve not just millions of developers, but billions of devices with the ability to build, manage, protect, update, and automate next-gen software supply chain from any source to any device.

We are innovating extending and maturing our platform, which we believe will serve not just millions of developers, but billions of devices with the ability to build manage opex update and automate nextgen software supply chain from any source to any device.

Speaker 6: On the go-to-market front, during the year, we also focus on building our strategic sales team, backed up with high-touch support, field marketing, and solution architects, in order to expand business with our key accounts.

On the go to market front during the year. We also focus on building our strategic sales team backed up with high touch support field marketing and solution architects in order to expand business with our key accounts.

Speaker 6: During Q4, we continue to see the fruits of this investment as we welcome more and more large enterprises who are expanding their J-PROC product adoption.

During Q4, we continued to see the fruits of this investment as we welcome more and more large enterprises, who are expanding their <unk> product adoption.

Speaker 6: In fact, one of the world's largest telecommunications providers, managed by our strategic team, is continuing to standardize on JFrog in order to reduce the usage of ad hoc tool sets and to develop DevOps best practices across the organization.

In fact, one of the world's largest telecommunications providers managed by our strategic team is continuing to standardize on <unk> in order to reduce the usage of AD hoc toolset and to develop Dev ops best practices across the organization.

Speaker 6: This over $1 million customer grew over 80% over a year and continues to expand.

This over 1 million customer grew over 80% year over year and continues to expand.

Speaker 6: We believe that the expanded strategic sales team will continue to drive this consolidation pattern as we bring more solutions into the market. We look forward to extending our deep customer relationships and innovative technologies to meet this enterprise need.

We believe that the expanded strategic sales team will continue to drive this consolidation pattern as we bring more solutions into the market, we look forward to extending our deep customer relationships and innovative technologies to meet this enterprise needs.

Speaker 6: As a final note, before we dive into the financials, I wanted to extend a warm welcome to the newest member of JFrog's board, Mira Rajabel. Mira currently serves as the CIO of Citrix and brings more than 20 years of experience in enterprise software and cybersecurity. We are proud to have her joining our board and look forward to her guidance as JFrog continues to grow.

As a final note before we dive into the financials I wanted to extend a warm welcome to the newest member of <unk> Board Mirror of our job will mirror currently serves as the CEO of Citrix and brings more than 20 years of experience in enterprise software and cyber security.

We are proud to have her joining our board and look forward to her guidance as <unk> continues to grow.

Speaker 6: With that, I would like to turn the call over to our CFO , Jacob Shulman, to look more deeply at the 2021 Q4 and fiscal year financial numbers and share our outlook for 2022. Jacob, stage is yours.

With that I would like to turn the call over to our CFO Jacob few months to look more deeply at the 2021 Q4 and fiscal year financial numbers and share our outlook for 2022 Jacob stages yours.

Speaker 2: Thank you, Shlomi, and good afternoon, everyone. We are very pleased to have ended the year with a strong quarter, in line with the commitment we made back in Q1 of this year, that the second half of the year would show acceleration across the business.

Thank you Shlomi and good afternoon, everyone. We are very pleased to have ended the year with a strong quarter in line with the commitment we made back in Q1 of this year that the second half of the year would show acceleration across the business.

Speaker 2: I will start with a brief overview of our fourth quarter and fiscal year 2021 financial results and provide our outlook for Q1 and the full year of 2022. As a reminder, know that all numbers referenced in my remarks are on a non-GAAP basis, unless otherwise stated. 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 8K furnished to the SEC.

I will start with a brief overview of our fourth quarter and fiscal year 2021 financial results and provide our outlook for Q1 and the full year of 2022.

As a reminder, note that all numbers referenced in my remarks are on a non-GAAP basis, unless otherwise stated.

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.

Speaker 2: Now let's turn to our financial results. Total revenues for the three months and the December 31st, 2021 were $59.2 million, up 39% year over year. This is our strongest growth rate in four quarters, and we continue to see a better business environment.

Now, let's turn to our financial results.

Total revenues for the three months ended December 31, 2021 were $59 2 million up 39% year over year. This was our strongest growth rate in four quarters, and we continue to see a better business environment sales.

Speaker 2: Self-managed revenues, also often called on-prem, were $44.4 million, up 35%. Cloud revenues, again, grew faster, up 52%, to $14.8 million, or 25% of total revenue.

Sales in managed revenues also often called on Prem were $44 4 million up 35% cloud revenues again grew faster up 52% to $14 8 million.

Or 25% of total revenues.

Speaker 2: For the full fiscal year, total revenues were $206.7 million, up 37% year-over-year. Self-managed revenues were $157 million, up 33%. Cloud revenues for the year were up 52% to $49.7 million, or 24% of total revenues, compared to 22% in 2020.

For the full fiscal year total revenues were $206 7 million.

Up 37% year over year sales managed revenues were at $157 million.

Up 33%.

Revenues for the year were up 52% to $49 7 million.

Or 24% of total revenues compared to 22% in 2020.

Speaker 2: Net dollar retention for the four trailing quarters was 130%. We expect net dollar retention for the trailing four quarters to remain around approximately 130% for the foreseeable future.

Net dollar retention for the four trailing quarters was 130% we expect net dollar retention for the trailing four quarters to remain around approximately 130% for the foreseeable future.

Speaker 2: We ended the year with approximately 6,650 customers, a 10% increase over 6,050 customers at the end of 2020.

We ended the year with approximately 6650 customers at 10% increase over 6050 customers at the end of 2020.

Speaker 2: As noted by Shlomi, we sunset the Bintray product. While the vast majority of Bintray customers adopted our other distribution solutions, we lost approximately 200 customers as a result of this change.

As noted by Shlomi, we sunset the <unk> product, while the vast majority of <unk> customers adopted our other distribution solutions. We lost approximately 200 customers as a result of this change.

Speaker 2: These customers were live users of the Binge Resolution and represented a negligible revenue impact.

These customers will light users of the beans resolution and represented a negligible revenue impact.

Speaker 2: Our gross retention rate remained at historic levels in the high 90s for the year.

Our gross retention rate remained at historic levels in the high 90% for the year.

Speaker 2: As of the quarter end, we had 537 customers with ARR of over $100,000, up from 466 customers as of September 30, 2021. On a year-over-year basis, we grew the number of over 100,000 ARR customers 53%.

As of quarter end, we had 537 customers with IRR of over $100000 up from 466 customers as of September 32021 on.

On a year over year basis, we grew the number of over 100000 customers 53%.

Speaker 2: In addition, we grew the number of over $1 million ARR customers to 15, up from 14 in the previous quarter, and 50% increase year-over-year. This increase in the number of large customers is driven primarily by the greater adoption of our full platform, both in cloud and on-prem. In Q4, 35% of total revenue came from enterprise-plus customers, up from 26% in Q4 of 2020. For more information, visit our website at www.microsoft.com or call 1-800-637-8170.

In addition, we grew the number of over $1 million at our customers to 15 up from 14 in the previous quarter and 50% increase year over year. This increase in the number of large customers is driven primarily by the greater adoption of our full platform both in cloud and on Prem.

In Q4, 35% of total revenue came from enterprise class customers up from 26% in Q4 of 2020.

Speaker 2: Now let's review the income statement in more detail. Gross profit in the quarter was $50.2 million, representing a gross margin of 84.8% compared to 82.6% in the year-ago period.

Now, let's review the income statement in more detail gross profit in the quarter was $50 2 million.

Representing a gross margin of 84, 8% compared to 82, 6% in the year ago period for.

Speaker 2: For fiscal 2021, gross profit was $173.9 million, representing a gross margin of 84.1%, compared to 82.4% in fiscal 2020.

For fiscal 2021 gross profit was $173 9 million.

Representing a gross margin of 84, 1% compared to 82, 4% in fiscal 2020.

Speaker 2: We continue to see our south-west margin expand as a result of the steps we took early in the year to improve our cost structure.

We continue to see our sales gross margin expand as out of the steps. We took early in the year to improve our cost structure.

Speaker 2: R&D expense for the quarter was $17.9 million, or 30% of revenue, compared to 24% of revenue in the year-ago period. We continue to invest significantly in enhancing our product solutions, along with integrating video and apps with technologies into the platform.

R&D expense for the quarter was $17 9 million.

About 30% of revenue compared to 24% of revenue in the year ago period.

We continue to invest significantly in enhancing our product solutions, along with integrated and visa announced with technologies into the platform.

Speaker 2: Sales and marketing expenses for the quarter were $23.2 million or 39% of revenue compared to 38% of revenue in the year-ago period. G&A expense for the quarter was $9.1 million or 15% of revenue compared to 16% of revenue in the year-ago period.

Sales and marketing expenses for the quarter were $23 2 million.

Our 39% of revenue compared to 38% of revenue in the year ago period.

G&A expense for the quarter was $9 1 million or 15% of revenue compared to 16% of revenue in the year ago period.

Speaker 2: non-GAAP operating income for Q4 was $49,000.

non-GAAP operating income for Q4 was $49000.

Speaker 2: or 10 basis points operating margin compared to an operating income of $2.2 million or 5.1% operating margin in the year-ago period. As we discussed, integrating VISA and OpsWift would impact our profitability. For the full year, non-GAAP operating income was $4.2 million or 2% operating margin compared to $13 million or 8.6% operating margin in 2020.

10 basis points of operating margin compared to an operating income of $2 2 million or five 1% operating margin in the year ago period, as we discussed integrating with <unk>.

Would impact our profitability for the full year non-GAAP operating income was $4 2 million or.

Four 2% operating margin compared to $13 million or eight 6% operating margin in 2020.

Speaker 2: non-GAAP net loss in the quarter was $965,000, or negative one cent per diluted share, based on approximately 97 million weighted average shares outstanding.

non-GAAP net loss in the quarter was $965000, while negative one cent per diluted share based on approximately 97 million weighted average shares outstanding.

Speaker 2: non-GAAP net income for the full year was $2.7 million, or $0.03 per diluted share, based on approximately 103.6 million weighted average diluted shares outstanding.

non-GAAP net income for the full year was $2 7 million.

Our three cents per diluted share based on approximately $103 6 million weighted average diluted shares outstanding.

Speaker 2: Turning to the balance sheet and cash flow, we ended the year with $421 million in cash and short-term investments, up from $402 million last quarter. Cash flow from operations was $17.7 million in the quarter.

Turning to the balance sheet and Gaslog, we ended the year with $421 million in cash and short term investments.

Up from $402 million.

Last quarter cash flow from operations was $17 7 million in the quarter.

Speaker 2: After taking into account CAPEX, free cash flow was $16.6 million. For the full year, free cash flow was $23.7 million. As discussed last quarter, Q3 cash flow was impacted by one-time payment of $90 million related to holdback agreements associated with VIDU and Napswift acquisitions.

After taking into account Capex free cash flow was $16 6 million.

For the full year free cash flow was $23 7 million.

As discussed last quarter Q3 cash flow was impacted by one time payments of $90 million related to hold back agreements associated with visa in absolutes acquisition.

Speaker 2: Normalized for this, free cash flow for the year would be $42.7 million.

Normalized for this free cash flow for the year would be $42 7 million.

Speaker 2: Let's briefly discuss the cadence of the financial model in 2022. We expect to see linear top-line revenue growth on a year-over-year basis throughout 2022. Additionally, beginning in Q2, we will see higher expenses due to merit increases in employee compensation and alignment with labor market benchmarks. As a result, the second quarter will be the low point from a profitability standpoint and will recover in the back half of the year.

Let's briefly discuss the cadence of the financial model in 2022.

We expect to see linear topline revenue growth on a year over year basis throughout 2022. Additionally, beginning in Q2, we will see higher expenses due to merit increases in employee compensation and alignment with labor market benchmarks as a result, the second quarter will be the low point from a pro.

<unk> standpoint, and we will recover in the back half of the year.

Speaker 2: Turning to guidance, for Q1, we expect revenue of $60.8 to $61.8 million, with non-GAAP operating results between a loss of $0.5 million to income of $0.5 million, and non-GAAP operating earnings per share of negative one cent to positive one cent, assuming a share count of approximately 104 million shares.

Turning to guidance for Q1, we expect revenue of 68 to $61 $8 million with non-GAAP operating results between a loss of a half a million to income of $5 million and non-GAAP operating earnings per share of negative <unk> <unk>.

Positive <unk>, assuming a share count of approximately 104 million shares.

Speaker 2: For the full year of 2022, we're establishing revenue guidance of $273 million to $275 million. non-GAAP operating results between a loss of $1 million to income of $1 million and non-GAAP earnings per share of negative one cent to positive one cent, assuming a share count of approximately 107 million shares.

For the full year of 2022, we are establishing revenue guidance of $273 million to $275 million non.

non-GAAP operating results between a loss of $1 million to income of $1 million and non-GAAP earnings per share of negative <unk>.

Two positive one assuming the share count of approximately 107 million shares.

Speaker 2: Now let me call back to Shlomi for some closing remarks before we take your questions. Shlomi?

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

Speaker 6: Thank you, Jacob. JFOG successfully marked its first complete fiscal year as a public company, exceeding revenue commitment in every single quarter of 2021. We met our product delivery goals while continuing to build an efficient and healthy business.

Thank you Jacob.

<unk> successfully marked its first complete fiscal year as a public company exceeding revenue commitment in every single quarter of 2021, we met our product delivery goals, while continuing to build an efficient and healthy business.

Speaker 6: JFrog's fourth quarter performance is a great foundation to build upon as we leap into 2022, providing further evidence that we have the right strategy and portfolio for growth in 2022 and beyond.

<unk> fourth quarter performance is a great foundation to build upon as relating to 2022, providing further evidence that we have the right strategy and portfolio for growth in 2022 and beyond.

Speaker 6: During 2021, under the pandemic reality, we also nearly doubled the size of the company in terms of employee headcounts and recently crossed the 1,000 employee bar.

During 2021 under the pandemic reality, we also nearly doubled the size of the company in terms of employee head counts and recently crossed the 1000 employee bar.

Speaker 6: This growth is reflective of the strong, uncompromising culture we have built that cuts through a challenging labour market.

This growth is reflective of the strong uncompromising culture, we have built that cuts through a challenging labor market.

Speaker 6: In the last year, greater than ever before, we saw more and more companies identifying software binaries as the primary asset to allow fast and secure digital transformation. We believe JFrog is well positioned to drive strong results in 2022. We look forward to delivering for developers, companies, customers, and shareholders throughout the year.

In the last year greater than ever before we saw more and more companies identifying software binaries as the primary asset to allow fast and secure digital transformation. We believe <unk> is well positioned to drive strong results in 2022, we look forward to delivery.

<unk> for developers companies' customers and shareholders throughout the year.

Speaker 6: Next week, on February 15, we'll hold our first Investors Day. We look forward to virtually hosting you as we share more in-depth details about JFrog's technology and business. I'd like to thank you all for your attendance. May the Frog be with you. And now, we are happy to take your questions.

Next week on February 15, we will hold our first in vessels days, we look forward to virtually hosting U as we share more in depth details about <unk> technology and business.

I'd like to thank you all for your attendance may be with you and now we are happy to take your questions.

Speaker 3: To ask a question, you will need to press star 1 on your telephone. We ask that you please limit yourself to one question and one follow-up question. You may then return to the queue. To withdraw your question, press the pound key. Please stand by while we compile the Q&A roster. Our first question will come from Mike Sigos with Needham & Co. Please go ahead.

Thank you to ask a question you will need the quest star one on your telephone we ask that you. Please limit yourself to one question and one follow up question. You May then return to the queue to withdraw your question press the pound.

Please standby, while we compile the Q&A roster.

Our first question will come from Mike <unk> with Needham <unk> co. Please go ahead.

Speaker 4: Hi, guys. Thanks for taking the questions here. I appreciate it. The first question that I wanted to ask about, I know that you guys had mentioned an impact of 4Q profitability as it relates to the Upswift acquisition. Can you help us fine-tune what that impact was and then maybe parse out what kind of impact we should be thinking about from the Upswift acquisition as we look at the guidance that you guys provided us for fiscal year 22?

Hi, guys. Thanks for taking the questions here I appreciate it.

First question that I wanted to ask about I know that you guys had mentioned an impact to <unk> profitability as it relates to the <unk> acquisition could.

Could you help us fine tune what that impact was and then maybe parse out what kind of impact we should be thinking about from the <unk> acquisition as we look at the guidance that you guys provided us for fiscal year 'twenty two.

Speaker 2: Yes. Hi, Mike. This is Jacob. As you know, we acquired two companies in Q3. It's Veedoo and AppSuite. Actually, Veedoo was the larger company that we acquired and had more material impact than AppSuite acquisition. Both of them are currently being integrated technologies and we're making very nice progress with that. So, specifically to your question, AppSuite did not have any material impact on our profitability. It just was a very small team. It was the Veedoo acquisition that had a bigger impact because it's a much bigger team. Overall, our security division today is around 100 people. A significant portion of that is coming from Veedoo.

Yes, Hi, Mike This is Jacob.

As you know we acquired two companies in Q3, we do an absolutely excellent visa was a larger company that we acquired and had more material impact than absolute acquisition both of them currently being.

The greatest technology and.

Making very nice progress with that so specific to your question absolute did not have any material inputs and outputs to do is just wasn't a very small team.

It was.

These acquisitions have been.

Because it's a much bigger team overall our security.

Division today is around 100 people significant portion of that is coming from.

Speaker 4: Understood. Thank you for that. And then the other question I wanted to ask is if I'm thinking about Q4 and the revenue upside that you guys delivered Can you help us think about the outperformance what what went better for you guys this quarter that helped deliver that upside? versus your

Understood. Thank you for that and then the other question I wanted to ask is if I'm thinking about Q4 and the revenue upside that you guys delivered could you help us think about the outperformance what what went better for you guys. This quarter that helped deliver that upside versus your.

Patients coming into the quarter.

Speaker 2: Yes, you're absolutely right that we're very pleased with the adoption of our platform. What we've seen is better than expected adoption of the platform. And Shlomi talked about different drivers behind that, distribution capabilities and enhanced security capabilities were the primary drivers for the adoption of the platform. And that is also indicated in the acceleration for the growth of large customers.

Yes.

That we were very pleased with adoption of our platform.

What we've seen as better than expected and also on the platform and Shlomi talked about different drivers behind that.

Distribution capabilities and enhanced security capabilities were the primary drivers for the adoption of the platform and that is also indicated in the acceleration acceleration of the growth of large customers.

Speaker 2: Specifically, over 100K customers grew 53% year-over-year, and as Entry Point into the platform is $115,000, that kind of gives you approximate number of new customers that adopted the platform.

Typically over 100 key customers grew 23% year over year and entry points into the platform is $115000 that kind of gives you approximate.

A number of new customers adopting the platform.

Great. Thank you I'll turn it over to my colleagues I appreciate it.

Speaker 3: Thank you. Our next question will come from Sterling Audie with J.P. Morgan. Please go ahead.

Thank you. Our next question will come from Sterling Auty with Jpmorgan. Please go ahead.

Speaker 5: Hey, this is Doug on for Sterling. Thank you for taking my question. Can you talk about what you're seeing in terms of the adoption of X-ray now that it's included in the enterprise price?

Hey, this is Doug on for Sterling. Thank you for taking my question can you talk about what Youre seeing in terms of the adoption of X Ray now that it's included in the enterprise price.

Speaker 6: Yes, hi, and thanks for the question. This is Shlomi. X-ray, or if I may say, the security solution is landing on a very strong demand around software supply chain and binary security requests and requirements from our customers.

Yes, hi, and thanks for the question this is shlomi.

X Ray.

I may say the security solution is lending on a very strong demand around software supply chain in binary security.

Ric.

The requirement from our customers.

Speaker 6: Basically, what we have seen lately, and especially in 2021, is that most of the vulnerable pieces of your software supply chain are coming from binaries, third party or first party. X-Ray sits natively on top of Artifactory. It's part of three subscriptions in the self-hosted offering and offered to all of the cloud customers. So obviously, we see a growing number of customers that are adopting X-Ray.

Basically what we have seen lately, especially in 2021 is that most of the vulnerable pieces of pure software supply chain coming from binary third party of first party X Ray seats natively on top of the factory as part of three subscriptions and the surplus was offering and offers to the all.

The cloud customers. So obviously, we see a growing number of customers that are adopting <unk>.

Speaker 6: Speaking of Lock4G specifically, that was, you know, at the end of the year.

Speaking of lawful J, specifically that was at the end of the year, but.

Speaker 6: But it echoes everything that we are saying about what type of security the world of DevOps and DevSecOps demand and need. And obviously, this generated a much greater demand by the market. So you see more adoption of our platform, you see more adoption of X-Ray, and the integration of X-Ray and video technology have also a very promising roadmap ahead.

<unk> everything that we are saying about what type of security to halt of Dev ops and difficult demand the need and obviously these generated.

A much greater demand by the market. So you'll see more adoption of our platform you see more adoption of X Ray and the integration of <unk> technology have also a very promising roadmap ahead.

Great. Thank you so much.

Speaker 3: Thank you. Our next question will come from Kingsley Crane with Berenberg. Please go ahead.

Thank you. Our next question will come from Quinoa grain with Dan Burton. Please go ahead.

Speaker 7: Hi, I'm wondering on Log4j, so how much did helping customers with this open up a broader conversation on other platform products?

Hi, I'm wondering on log for Jay So how much did helping customers with this open up a broader conversation on other platform products.

Speaker 6: on other platform products, Kingsley, regarding Lock4j specifically?

On the other platform product Kingsley regarding look for J specifically.

Speaker 7: Well, yeah, if you help them with Log4J, you can become a trusted partner and maybe they'll expand into other products.

Well, yes, you help them Mclaughlin.

Trusted partner, maybe it'll expand into other products.

Yes, so let's take a step back for a moment and see how the soul.

Speaker 6: Let's take a step back for a moment and see how the Sol toolchain kind of supported this.

<unk> kind of supported this.

Speaker 6: software pandemic, as was coined by the community. First of all, you have to identify.

Software pandemic is what's growing by the community first of all you have to identify.

Speaker 6: the vulnerable binary, and this obviously happened in a matter of minutes by using AltiFactory.

Vulnerable binary and this obviously happened in a matter of minutes by using out the factory. The database of Dev Ops point. Our factory is the co product of our platform. Then you have to establish and to place all type of security policy on top of your report.

Speaker 6: the database of DevOps. Point A of the factory is the core product of our platform.

Speaker 6: Then you have to establish and to place all type of security policy on top of your repository to protect it so no developer will try to get a vulnerable piece again, and this is where you use X-Ray. And now you have to ask all of your deployment environment and development environment to build against the new patch of the Log4j, and this is where JFrog distribution comes in place. So obviously, the different sides of the platform playing together.

So we can protect it so no developer will try to get the vulnerable piece again and this is where you use X Ray and now you have to ask all of your deployment environment and development environment to build against the new patch of the La <unk> and this is where Jay for distribution comes in place. So obviously there.

Different sides of the platform playing together emphasize amplified by the local J F.

Speaker 6: Emphasized, amplified by the Love4J episode was a great driver to tell the story not only of the J-Book platform, but overall.

With a great driver.

The story not only of the Jabil platform, but overall.

Speaker 6: DevOps with a binary-centric approach.

Dev ops.

Binary centric approach.

Okay.

Okay. That's really helpful. That's it for me now thank you.

Speaker 3: Thank you. Our next question will come from Sanjit Singh with Morgan Stanley . Please go ahead.

Thank you. Our next question will come from Sanjay <unk> with Morgan Stanley . Please go ahead.

Speaker 8: Thank you so much for taking the question to congrats on the strong Q4 and the guidance was very healthy too, so I'm glad to see on both accounts. One of the things in the metrics you sort of disclosed was the customer-based growth. And I was really happy to see that growth get back into the double digits.

Thank you ladies electric taking the questions and congrats on the strong Q4 and the guidance was was very healthy too so glad to see on both accounts.

One of the things in the metrics disclosed was the customer base growth.

And I'm really happy to see that get back into the double digits.

Speaker 8: I was wondering if you could talk about how that sort of progressed through the year. I know we took a deliberate focus on focusing on existing customers in 2020, and now it seems like we're starting to see growth again. How durable is that going into 2022, and are there any sort of incentives that you guys are using to drive that free-to-pay conversion, any sort of commentary on that?

So I'm wondering if you could talk about how that sort of progressed through the year I know we had a we took a deliberate.

Focus on focusing on existing customers in 2020 and now it seems like we're starting to see growth again, how durable is that going into it into 2022.

Are there any certain centers that you guys are using to drive that free to paid conversion.

Any sort of commentary on the customer base would be it would be helpful.

Speaker 6: Yeah, hey Sanjit and thanks for the question. Obviously we were very excited about all the.

Yes.

Yeah, Hey, Sanjay and thanks for the question, obviously, we were very excited about <unk>.

Speaker 6: all the metrics of 2021 and also the growth in, you know, those new customers, new onboarding users that are using the JFrog platform. We committed in 2021 to perform in a higher pace.

All the metrics of 2021.

<unk>.

Also the growth in new logos, new customers new Onboarding.

Users that are using digital platform, we committed in 2021 to perform in a higher base and add more new logos in 2020, and we delivered and therefore, though.

Speaker 6: and add more new logos than 2020 and we delivered. And that, although we had to remove Brickshamp and remove Brintree from our portfolio, and by that even, as Jacob mentioned in the script, we lost 200 customers. And still, we go as expected.

We had to remove friction and moving away from.

From our portfolio and by that even.

As Jacob mentioned in the script.

200 customers and see we go.

As expected. So we were very pleased to see this growth happening again. This trend is adopting the <unk> product again and what they see moving forward is that our investments will.

Speaker 6: So we were very pleased to see this growth happening again, this trend of adopting the JFrog product again.

Speaker 6: And what I see moving forward is that our investments will bear fruit. It happened in 2021. It will happen even further in 2022. The security investment is very much appealing to the market. This is a booming market. Everyone, everyone that we speak with.

It happened in 2020 months it will happen even further in 2022.

The security investment is very much appealing to the market. This is a booming.

Market.

Everyone, everyone that we speak with speak about the pain of securing the full software supply chain X Ray is a perfect fit for it the enforcements of video technology and the team is very.

Speaker 6: speak about the pain of securing the full software supply chain. X-Ray is the perfect fit for it.

Speaker 6: The enforcement of V2 technology and the team is very, very well aligned with the market needs.

Very very well aligned with the market need.

Speaker 6: The enhancements added to Artifactory to manage binaries from all types would be also very appealing to it. And also, our strategic move to the cloud with a free tier, as you remember, also sought to show higher adoption in terms of active users that are lending on JPEG solution rather than taking any other solution in the market. So I'm very optimistic regarding the goal.

The enhancements.

Added to octave factory to manage.

<unk> will be also very appealing to us and also our strategic move to the cloud with a fleet deal as you remember also salt will show.

Higher adoption in terms of active users that are lending on <unk> solution other than taking any other solution in the market. So I'm very optimistic regarding Nicole.

Speaker 6: of additional customers in the next year.

Additional customers in the next year.

Speaker 6: And if I may also say, although it's the very early beginning of JFrog Connect.

And.

If I may also say, although it's very early beginning of Jeff will connect.

Speaker 6: This is also a very unique solution to the market. There is no other distribution solution from the DevOps environment that is secured going all the way to devices. This will open a new field for JFrog and introduce us to new users that currently are not necessarily using any kind of DevOps practices. So bottom line, I'm very pleased and I'm very positive regarding the future.

This is also a very unique solution to the market. There is no other distributions solution from the Dev ops environment that is secure going all the way to devices. This will open a new field for April .

And introduce us to new users.

Not necessarily using any kind of developed practices. So bottom line I am very pleased and I'm very positive regarding the future.

Speaker 2: If I may just add to that, Sanjeev.

If I may just add to that.

Sanjay.

Speaker 2: Majority of our customers now join in on cloud. And that's a big contribution of that is free tier that we launched late last year. Actually of the new customers, about 60% now joining on cloud. And that portion of new customers on cloud continues to grow.

Majority of our customers now Julien on cloud.

And Thats, a big distribution of the <unk> launch.

Late last year actually of the new.

Customers about 60% now Julian on cloud and that the portion of new customers on cloud continues continues to grow.

Speaker 8: That's very encouraging to hear. And just to sort of dovetail off the previous question,

Military it looks very encouraging to hear.

Sort of dovetail off the previous question, if we look back to last year. The early part of last year.

Speaker 8: If we look back to last year, the other part of last year, there was a new pricing sort of rolled out for server customers. And I think in Q1, you saw a sizable cohort sort of take advantage of the opportunity to upgrade their subscription tiers to sort of bypass that price increase.

There was a new pricing sort of rolled out for for server customers and I think in Q1.

Sizeable cohort sort of take advantage of the opportunity to upgrade their subscription tiers.

Two.

Sort of.

Bypass a price increase.

Speaker 8: What is sort of the team's sort of base case view on what those customer cohorts will do when they sort of come up for renewal this spring? Do you expect them to sort of – should we expect those price increases to sort of flow through starting in the spring, or do we expect some customer behavior to minimize the impact there? Any sort of base case view.

The team sort of base case view on what those customer cohorts, what do where they sort of come up for renewal. This spring.

Spec them to sort of should we expect those price increases to sort of flow through.

It's starting to starting in.

Sprague or do we expect some customer behavior to minimize the impact there and any sort of base case it would be helpful.

Speaker 2: Yes, I'll take that question. So as you know, the price increase went into effect on April 1st.

Yes, I'll take that question.

As you know the price.

Great.

On April one.

Speaker 2: And since then, actually, significant portion, actually majority of our customers have already renewed.

And since then actually significant portion hedged the majority of our customers have already renewed at new prices. So we continued to see same retention levels.

Speaker 2: at new prices. So we continue to see same retention levels, growth retention levels as previously, so our customers understand why we did that and they accept new pricing and move forward.

National levels as previously so our customers understand why we invest in the new pricing and move forward actually specifically to your question on Q1, our renewal base of customers in Q4 was dividend in Q1, so really.

Speaker 2: Actually, specifically to your question on Q1, our renewal base of customers in Q4 was bigger than in Q1. So really, I think that the market and the customers understand the value that we provide. They accept it and move forward.

I think that the market and the customers understand the value that we provide.

Accepted in.

Move forward. So we don't expect any changes.

Speaker 6: So we don't expect any changes in this pattern in Q1. And just to remind everyone, this is only relevant to the self-offset solution. So the cost in the cloud was not impacted by the price changes. And it was not just price changes, but also a huge amount of technology added to our platform during this year. So as Jacob mentioned.

This pattern in Q1, and just to remind everyone. This is only the net.

All of them to the <unk> solution. So the cost in the cloud was not impacted by the price changes and it was module price changes, but also a huge amount of technology added to our platform. During this year, so as Jacob mentioned.

Speaker 6: The churn is very low, retention very high, and also the net dollar retention has climbed up. So we are very pleased with the results.

The churn is very low retention very high and also the nasal our retention is committed.

So we are very pleased with the results.

I appreciate all the color. Thank you guys.

Speaker 3: Thank you. Thank you. Our next question will come from Jason Ader with William Blair. Please go ahead.

Thank you. Thank you. Our next question will come from Jason Ader with William Blair. Please go ahead.

Speaker 9: Hey, this is Sebastian on for Jason. Thanks for taking the question. I wanted to double-click a little bit on this, you know, DevOps for connected devices market where connect and distribution products play. Can you maybe help us, you know, define what this market is and how it might be a little different from sort of the traditional DevOps market and any type of, you know, TAM metrics or market opportunity metrics you could provide?

Hey, this is Sebastian on for Jason Thanks for taking the question.

Wanted to double click a little bit on this.

Deb ops for connected devices market, where connect and distribution products play can you maybe help us define what this market is and how it might be a little different from sort of the traditional Dev ops market.

And any type of Tam metrics or market opportunity metrics you could provide.

Okay.

Speaker 6: Thank you, Sebastian. We are very excited about this opportunity. And, you know, JFrog was established 12 years ago. We pioneered the DevOps market by introducing the binary solution.

Yes, Thank you Sebastian.

We are very excited about this opportunity and.

<unk> was established 12 years ago, we pioneered the developed market by introducing binary solution, but we've had the end in mind already from the start like what is it that we really ask Paul.

Speaker 6: But we had the end in mind already from the start. Like, what is it that we really ask for? We ask for software update to happen at the edge. We want our devices to be connected. And therefore, any kind of efforts that you invest only on the developer's side, or secure only part of your organization, is lame. It's half baked.

For software update to happen at the edge, we want our devices to be connected and therefore any kind of efforts that you invest only on the developer side or <unk> only part of the organization is lean is half big and when we looked at the link with software vision our end in mind.

Speaker 6: And when we looked at the liquid software vision, our end in mind was getting the binaries all the way to the devices.

Getting the binaries all the way to the devices when we.

Speaker 6: When we started to build JFrog distribution a bit more than three years ago, we listed two years ago, we knew that there is a missing part. What happened after the data center? What happened after the cloud? What happened after your Kubernetes environment? And this missing part was connecting the devices to the CI.

Started to to build <unk> distribution, a bit more than three years ago, we'll exit two years ago. We knew that there is a missing part what's happened after the data center what's happened after the cloud what happened after your kubernetes environment and this missing part was connecting the devices.

To this the ICD world So from the developers machine from the developers people you will be able to push it all the way to the devices now what we see in the futures. The back pain is not just millions and tens of millions of developers building 10 times 20 times a day, we see billions of devices that need to be updated.

Speaker 6: So from the developer's machine, from the developer's keyboard, you will be able to push it all the way to the devices. Now what we see in the future, Sebastian, is not just millions and tens of millions of developers building 10 times, 20 times a day. We see billions of devices that need to be updated.

Speaker 6: And since binary is the only digital asset that moves from the developer hand to the device, to your iPhone, to your coffee maker, to any device that we use, we see a huge avenue of growth. We started with distribution. We then extended with PDN. We now acquired AppSuite and built J4Connect.

And since binary is the only digital asset that moved from the developer hand to the device through your iPhone to your Coffeemaker to any device that we use we see a huge avenue of growth. We started with distributions. We then extended with PD and.

We now acquired upswing in DJ for connect and Im sure that the market will follow but this is the real demand the real change of digital transformation.

Speaker 6: And I'm sure that the market will follow, but this is the real demand, the real change of digital transformation.

Speaker 9: Got it, that's very helpful. And then if I could just follow up, could you maybe talk a little bit about the go-to-market investments that you've made that could help accelerate the new customer acquisitions, the new logo land? And then are you landing at higher ARRs as customers demand sort of a broader platform, or because a lot of these new customers are adding the cloud version, are they actually lower ARR land?

Got it that's very helpful. And then if I could just follow up could you maybe talk a little bit about the go to market investments that you've made that could help accelerate new customer acquisition. The new logo lands and then are you are you lending at higher <unk> as customers demand sort of a broader platform or because.

A lot of these new customers are adding the cloud version or they actually lower our lands.

Speaker 6: So when you adopt the platform on-prem or cloud, you're already paying more than $100,000. And this is the high subscription of what we call the Enterprise Plus.

Okay.

So when you adopt the platform on prem or cloud, you're already paying more than $100000.

And this is the highest subscription or what we call the enterprise plus in the cloud. Obviously, you also grow by consumption, but the base prices in both the both cases over $100000 in terms of the go to market.

Speaker 6: In the cloud, obviously, you also go by consumption, but the base price is, in both cases, is over $100,000. In terms of the go-to market.

Speaker 6: What we have did on the self-hosted and in the cloud.

What we have believed.

On the still clustered and into cloud.

Speaker 6: is the combination of the freedom of choice to the user, to the developer, comes with more value and capabilities of the platform. So when you upgrade, you get security. When you upgrade again, you get highly available solutions, DR and so on. When you upgrade to the platform, you get distribution capabilities and so on and so forth.

Is the combination of the freedom of choice to the user to the developer comes with more value and.

And capabilities of the platform. So when you upgrade Youll get security when you upgrade again, you'll get highly available solution, Dr. And so on when you upgrade to the platform you get distribution capabilities and so on and so forth in terms of the cloud obviously when you use more you pay more simple go to market philosophy that we havent yet.

Speaker 6: In terms of the cloud, obviously, when you use more, you pay more. That's the simple go-to-market philosophy that we have in J-PROB. On top of that, we provide you with a multi-cloud solution, so it's not just one cloud that you can run on, and this is also very appealing. And one thing that we hear from all enterprises, and remember, currently we have approximately 7,000 customers,

On top of that we provide you with a multi cloud solution. So it's not just one cloud that you can run them and this is also very appealing and one thing that we hear from all of the enterprise and remember currently we have approximately 7000 customers. This is something that we hear from.

Speaker 6: something that we hear from all Fortune 100 or Global 2000.

All fortune 100, or global 2000 cloud is happening, but we need a hybrid environment and <unk> is also very unique with providing that giving you a hybrid environment for focusing too whether it's in the cloud also posted by and so the overall.

Speaker 6: Cloud is happening, but we need a hybrid environment. And J-PoG is also very unique with providing that, giving you a hybrid environment for the same tool, whether it's in the cloud or so it's also by you. So the overall go-to market.

Go to market is.

Speaker 6: is evolving together with the evolution and the adoption of DevOps and DevSecOps in the market and very focused.

Evolving together with the evolution and the adoption of Dev ops and depth of cost in the market and very focused on this binary piece.

Speaker 6: on this binary piece that the number of binaries in your organization is just growing.

The number of binaries and the organization is just growing.

Speaker 2: And if I may just add to that, you also derived that a majority of new customers land on cloud, and typically the landing point on cloud is lower ASP. Having said that, given the fact that many of our customers have an opportunity to try the products on free tier and also the platform resonates with a lot of value to the customers, we started seeing some of the customers landing on the platform. It doesn't happen a lot.

And if I may just answer that and you also derived the majority of new customers lend on cloud and typically the landing point on cloud this lower ASP.

Said that given the fact that many of our customers have an opportunity to try the products on <unk> and also the platform resonate with a lot of value to the customers. We started seeing some of the customers landed on the platform it doesn't happen a lot faster.

Speaker 2: But every quarter we might have a few cases where new customers land on the platform. So on average ASP did not change much, increased slightly for new land, but on average it did not change much.

Every quarter, we might have a few cases, where are they new customers land on the platform. So on average ASP did not change my increased slightly.

When you land, but on average it has not changed much.

Got it thank you very helpful.

Okay.

Speaker 3: Thank you. Our next question will come from Koji Akira with Bank of America. Please go ahead.

Thank you. Our next question will come from Koji Ikeda with Bank of America. Please go ahead.

Speaker 10: Hey, Shlomi. Hey, Jacob. Apologies if these questions were asked. I've been bouncing around for a couple of calls here. I wanted to ask you on billing.

Hey, Shlomi, Hey, Jacob apologies. If these questions were asked and then bounce around for a couple of calls here.

Wanted to ask you on billings.

Speaker 10: Taking a look at the billings in the quarter, you know, it grows 34% according to our model. I guess the top comp, you know, do realize a lot of mechanics this year with billings, you know, especially around the pricing change. But should we be heading into a period of normalization for billings over the next year? And I guess thinking about with cloud usage, should we be looking at billings at all, or is there something else that you suggest as a better forward-looking growth metric?

You can look at the billings in the quarter a growth 34%. According to our model against the tough comp do realize a lot of mechanics, this year with billings, especially around the pricing change.

But should we be should we be heading into a period of normalization for billings over the next year and I guess thinking about with cloud usage should we be looking at billings at all or is there something else that you suggest is a better forward looking growth metric.

Speaker 2: Yes. Koji, thank you for this question. And just to remind you that due to various dynamics, you know, billings is not a very good predictor of future revenue growth, because of core terms and few other billing dynamics that we see from time to time.

Yes.

Thank you for this question and just to remind you that due to various dynamics.

Billings is not a very good predictor of our future revenue growth.

Because of courtyards and few other billing dynamics that we see from from time to time now you also derived debt during this year and the dealings feature was kind of skewed towards Q1, where we did have.

Speaker 2: Now, you're also right that during this year, the billings picture was kind of skewed towards Q1, where we did have significant pull-ins, but Q4 came out very strong in billings. We don't see any one-time items there. We don't see any significant changes in duration, average duration of our contracts.

Significant pull ins, but Q4 came out very strong in billings, we don't see any onetime items there.

We don't see any significant changes in duration average durations of our contracts. So it's kind of normalized for us.

Speaker 2: So it's a kind of normalized course.

Speaker 2: Going forward, again, cloud is primarily annual.

Going forward again cloud is primarily annual.

Speaker 2: term for on-prem, for self-hosted solutions, we have sometimes multi-year deals.

Term for own brand hotel hosted solutions, we have.

Some time multi year deals, but we don't see any changes right now in annual duration and average contract durations. So billings should be probably normalized again to remind you billings is not a very good predictor of revenue growth because of this quarter and dynamics.

Speaker 2: But we don't see any changes right now in average duration, in average contract duration. So Billings should be probably normalized. Again, to remind you, Billings is not a very good predictor of revenue growth because of this quote term dynamic that we experience from time to time.

<unk> from time to time.

Speaker 10: Got it, got it. And then I think I overheard in the prepared remarks, I was just talking about net revenue retention. And, you know, Jacob, I think you made the comment that NRR should kind of hang around 130% level. But just thinking about cloud usage, you know, the cloud growth acceleration here in the fourth quarter, I mean, is there a potential for net revenue retention to actually end up over 130% in the future?

Got it got it and then.

I think I'd overheard in the prepared remarks.

Just talking about net revenue retention and Jacob I think you made the comment that NRI should kind of hanging around 130% level, but just thinking about cloud usage the cloud growth acceleration here in the fourth quarter. I mean is there a potential for net revenue retention to actually end up over 130% in the future.

Speaker 2: Yes, our cloud customers expand more than 130 percent as the cloud continues to become a bigger portion of our revenues, that's definitely a potential right now. In our model and our guidance, we assume it to be around 130 percent. Got it. Got it. All right.

Yes, our cloud customers extend more than 100.

30%.

Cloud continues to become a bigger portion of our revenues that is definitely a potential right now and our model and our guidance, we assume it to be around 130%.

Got it got it alright, thanks, guys. Thanks for taking my questions.

Okay.

Speaker 3: Thank you. Our next question will come from Matai Kidron with Oppenheimer. Please go ahead.

Thank you. Our next question will come from the Thai kitchen with Oppenheimer. Please go ahead.

Speaker 11: Thanks, guys, and nice to see the acceleration and growth in the cloud. Jacob, I had a couple of questions for you. First, I just want to make sure I understand the Enterprise Plus.

Thanks, Hey, guys nice to see the acceleration in growth and in the cloud.

Jacob I had a couple of questions for you first I just wanted to make sure I understand the enterprise plus.

Speaker 11: In the last couple of quarters, you've been growing that business 150% year over year.

In the last couple of quarters, you've been growing that business, 150% year over year.

Speaker 11: We're now down to under 90. I guess, don't get me wrong, it's still a very impressive number. I'm just wondering if there's anything going on there in the adoption of Enterprise Plus.

We're now down to under nine years, So don't get me wrong still very impressive number I'm just wondering if there's anything going on there and your adoption of enterprise plus.

Speaker 2: No, we continue to see very strong adoption of Enterprise Plus subscription. The revenue continues to grow. Today, it represents 35% of the revenue. The number of customers adopting Enterprise Plus actually grew nicely in Q4. We don't see any unique trend.

No we continue to see very strong adoption of enterprise plus.

Subscription revenue continued to grow today represents 35% of the revenue the number of customers adopting enterprise plus actually grew nicely in Q4, we don't see any any any.

Unique trends.

Speaker 11: As a follow-up on the OPEX, a lot of companies that have bases in Israel have been calling out a lot of FX headwinds. Can you elaborate a little bit? I know you've been hedging somewhat, but I don't know how far out you do. As I think about your guidance for the year, what kind of a headwind are you seeing from FX, and how should I think about that going forward?

Okay very good and then as a follow up.

On the Opex.

And a lot of companies that have basically in Israel has been calling out a lot of FX headwinds.

Can you kind of elaborate a little bit I know you've been hedging somewhat but I don't know how far out you do.

But as I think about your guidance for the year, what kind of a headwind are you seeing from FX.

How should I think about that going forward.

Speaker 2: Yes, I also derive that.

Yes, if I answer the right.

Speaker 2: We have a significant portion of our operating expenses denominated in Israeli shekels and Israeli shekels have been in over the past year and a half, it's complete. We do hedge.

We'll have significant portion of our operating expenses denominated in Israeli shekel and Michel Khalaf.

And over the past year and half is complete we do hedge but.

Speaker 2: But you cannot catch forever, and eventually the losses, less fallible rates catch up.

You cannot hedge forever and eventually.

The law says.

Less favorable rates catch up so the impact on overall profitability as we see right now is about two percentage points in 2022.

Speaker 2: So the impact on overall profitability, as we see right now, is about 2 percentage points in 2022.

Speaker 2: And if the situation changes and we see opposite trend, then it will help us. But this is what we're going to see. Very good. Good luck.

<unk>.

The situation changes and we see a positive trend then it.

It will help us but this is what we currently see.

Very good good luck guys. Thanks.

Thank you.

Speaker 3: Thank you. Our next question will come from Rob Owens with Piper Sandler. Please go ahead.

Thank you. Our next question will come from Rob Owens with Piper Sandler. Please go ahead.

Speaker 5: Yeah, hi, thanks for taking my question guys. I'm curious on the customer count front, realizing you just disclose it once a year, but there was a few acquisitions during the year itself. Is that an organic 600 customers? Is that a net addition? Because you mentioned the 200 that had turned off as well.

Yes, hi, Thanks for taking my question guys I'm curious on the customer count front. Realizing you just disclose it once a year, but there was a few acquisitions during the year itself is that an organic 600 customers as a net addition, because you mentioned the 200 that had churned off as well.

Speaker 6: Yes, thank you for the question. As we reported in Q3, when we acquired Vidu and AppSwift, there was no material revenue coming from this acquisition and also no significant amount of customers. So the answer is yes, this is an organic growth of the J-POP customers on the J-POP platform.

Yes. So thank you Paul for the question as we reported that in Q3 win.

When we.

While we do an upswing there was no material revenue coming from this acquisition and also no significant amount of customers. So the answer is yes. This is.

Organic growth of the Jay for customers on the <unk> platform.

Speaker 5: And given the opportunity post-Log4j, how do you think about customer growth as you look at 2022? Should that, again, be an accelerating type of metric for you?

And given the opportunity post log for Jay.

How do you think about customer growth as you look at 2022 should that again be an accelerating type of metric for you.

Speaker 6: Well, obviously, I'm not happy about what happened with Block.14 in the world, it's not that we're celebrating it.

Yeah, well, obviously I'm not happy about what happened with block four chamber in the world, it's not that the churn rate.

Speaker 6: It emphasized the need for solutions like what JFrog provides, because there is no other solution in the DevOps public market that gives you...

As emphasized the need for solutions like what Jay will provide because there is no other solution in the Dev ops.

Public market that gives you such a binary centric approach not only to security but beyond.

Speaker 6: such a binary centric approach not only to security but the old remediation of epitopes like log4j. Happened before with NPM, it happened before with Python and be sure we will hear about another.

Remediation of.

Episodes like clock for Jay happened before with MTN, It happened before with Python and <unk>.

<unk>, we will hear about another binary a software package that comes with the vulnerable.

Speaker 6: binary or software package that comes with a vulnerable impact in the near future.

APAC.

In the near future that will just happen and what.

Speaker 6: And what we see is more and more customers starting to understand that the holistic security solution must come with a single source of record solution, like a repository that also controls what you bring in and outside of your organization. And then a security solution that goes across the old pipeline, gives you control over your repository or distribution, build, test, deployment environment.

What we see is more and more customers are starting to understand the holistic security solution must come with a single source of clinical solution like a repository that also control what you bring in an outside of your organization and then.

Our security solutions that go across the whole pipeline give you control over youll repository of distribution field test deployments environment, and obviously to the capital fast with the distributions. So local J as one example, he's got all the way through the Whitehouse, but <unk> customers will not.

Speaker 6: And obviously, to recover fast with the distribution. So Log4J is one example. It got all the way to the White House. But J4 customers were not just well-protected, but also well-recovered.

Just well protected but also.

Well recovered and saved millions of developers around the world.

Speaker 6: millions of developers around the world by using our tool. So I believe that we will see a significant adoption of security solution under the different subscriptions coming from JTOR. Great. Thank you very much.

Using <unk>. So I believe that we will see a significant adoption of security solution under the different subscription coming from vehicle.

Great. Thank you very much for the color.

Thank you.

Speaker 3: Thank you. And we do have time for one more question. That will come from Steve Enders with KeyBank Capital Markets. Please go ahead.

Thank you and we do have time for one more question that will come from Steve Enders with Keybanc capital markets. Please go ahead.

Speaker 8: Great, thanks for taking some questions here. I just want to follow up on that last point there, Shalini, around securing the software supply chain in Log4J. I mean, is this seeing an increased pipeline activity at this point where now that people have maybe gotten on the other side of Log4J and spent all of the holidays and into January dealing with it, is this leading to increased opportunities for JFrog to go execute again?

Great. Thanks for thanks for taking the questions here I just want to follow up on that last point.

They're showing me around.

Around.

Securing this after supply chain and one for Jay I mean is this scene as increased pipeline activity at this point, where now that people are maybe on the other side of log for Jay and spend all of the holidays.

Into January and dealing with it is this leading to increased opportunities for for Jay probably to go execute against.

Speaker 6: Yes, the answer is yes, clearly, and the amazing, you know, research and engineering security team in JFrog posted, I think, more than any other company in the market, following the Log4J, what would be the best practices to manage it in the future and to protect your company from it. So, the answer to the pipeline is yes.

Yes, the answer is yes clearly.

<unk>.

Amazing.

Research and engineering security team.

And Jay for posted I think more than any other company in the market following the local Jay what will be the best practices.

To manage it in the future to predictive company from it so the answer to the pipeline is yes.

Speaker 6: We hope that there will be no more O4J, but yes, it helps the pipeline a lot.

We hope that there will be no more fuji, but yes. It has the pipeline.

Speaker 8: Okay, that's helpful. And just want to touch on the, it looks like there's good traction within the global 2000 that happened in 2021 from what you disclosed. I guess, how would you kind of attribute what led to the, you know, really good customer growth within the G2K in 21? Is this, you know, a function of...

Okay.

It's helpful and just wanted to touch on the it looks like there is good traction within the global 2000 that happened in 2021 from a you disclose.

I guess, how would you kind of attribute what led to the really good customer growth within the GTK.

In 'twenty one is this a function of.

Speaker 8: The increased focus on strategic sales teams that have been built up in the past couple of years, and I guess how penetrating do you see the opportunity within the GTK accounts today?

The increased focus on our strategic sales team that had been built up in the past couple of years and I guess, how penetrated do you see the opportunity within the GTK accounts today.

Speaker 6: Yeah, so global 2000 customers that are adopting digital transformation practices are not just looking at one solution usually.

Yes, so bill.

2000 customers that are adopting digital transformation practices.

Just looking at a one solution usually when.

Speaker 6: When they look at the old solution, they are looking at cloud strategy versus on-prem.

When they look at the deal.

<unk> solution. They are looking at cloud strategy versus on Prem. They are looking at security versus Dev ops practices, and obviously, replacing in house solution that would be 10, 15 20 years ago.

Speaker 6: They are looking at security versus DevOps practices and obviously replacing in-house solutions that were built 10, 15, 20 years ago. All of the above.

All of the above is addressed by our strategic sales team because they have the capability to lend on the customer side work with different persona answer different need, bringing along architect that can help our customers and partner with them as they are adopting digital transformation. So.

Speaker 6: is addressed by our strategic sales team because they have the capabilities to land on the customer side, work with different persona, answer different needs, bringing along architects that can help our customers and partner with them as they are adopting digital transformation.

Speaker 6: Global 2000 customers will go in different avenues.

Global 2000 customers will grow in different avenues.

Speaker 2: and different deployment environments. And if I may just add to that, when we went public, our penetration to global 2000 was about low 20s.

And different deployment environment, and if I may just add to that when we went public with our penetration into the global two thousands was about.

Low twenties.

Speaker 2: Thank you, look, 22% and today we're above 30% in penetration on Global 2000. So we continue our adoption of the Global 2000 customers continue adoption of our products at a nice pace.

22% and today, we are above 30% in penetration of the global 2000, So we continue our adoption.

The global 2000 customers continued adoption of our products at a nice pace.

Perfect. Thanks for taking my questions.

Okay.

Speaker 3: Thank you for participating in today's question and answer session. I would now like to turn the call back to Mr. Shlomi Benhaim for any closing remarks.

Thank you for participating in today's question and answer session I would now like to turn the call back to Mr. Shlomi Yanai for any closing remarks.

Speaker 6: Well, everyone, thank you for joining us. That was a hell of a year, and we are very excited about our performance. We are happy to see the company growing, and the community, and our customers adopting more and more of our products and technology. I'd like to thank again for the amazing Frogs team that made this year happen. And I would like to thank you for joining us today. See you next week.

Well, everyone. Thank you for joining us.

That was ahead of the year and we are very excited about our performance. We are happy to see the company growing and the community and our customers are adopting more and more of our products and technology I'd like to thank again for the amazing frog steam.

Maybe sort of happen.

And I would like to thank you for joining US today next week, we are welcoming you to join US on our first lien vessel day podcasting from NASDAQ and wheel. Thank you, everyone and made it won't be with you.

Speaker 6: We are welcoming you to join us on our first Investor Day podcasting from NASDAQ in New York. Thank you, everyone, and may the flow be with you.

Speaker 3: Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.

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