Q1 2025 JFrog Ltd Earnings Call

Shlomi Haim: Good afternoon, and thank you for joining the call. We're kicking off 2025 on a strong note. Our first quarter results underscore JFrog's essential role as a system of record for software delivery from creation to production for customers prioritizing automation, scale, speed, and trust. The JFrog platform plays a pivotal role at the intersection of development, security, AI and MLOps. And today We're excited to share more details about quarterly performance driven by the solid execution of our strategic initiative. In Q1, JFrog's total revenue was $122.4 million, up 22% year over year. Our operating margin of 17.4% demonstrates our commitment to profitable growth during a period of market uncertainty.

Good afternoon, and thank you for joining the call.

Kicking off 2025 on a strong note.

Our first quarter results underscore <unk> essential role as the system of record for software delivery from creation to production for customers prioritizing automation scale speed and trust.

The <unk> platform plays a pivotal role at the intersection of development security AI and ml ops and today.

We're excited to share more details about our quarterly performance driven by the solid execution of our strategic initiatives in.

In Q1, <unk> total revenue was $122 4 million up 22% year over year, our operating margin of 17, 4% demonstrates our commitment to profitable growth during a period of market uncertainty.

Shlomi Haim: Cloud revenue for Q1 equaled $52.6 million, representing 42% of your vehicles, driven by increased consumption in addition to steady customer commitment. Our greater than $1 million customers grew to 54 compared to 40 in the year-ago period, equalling 35% growth year-over-year. Customer spending more than $100,000 annually grew to $1,051 compared to $911 in the year-ago period, equalling 15% growth year-over-year. Our strategic enterprise sales motion fueled by JFrog's software supply chain platform drove both gross and high enterprise customer retention, resulting in stabilizing net dollar retention, which Ed will further discuss later today.

Cloud revenue for Q1 equals $52 6 million representing.

Representing 42% year old vehicles, driven by increased consumption. In addition to steady customer commitment.

Our greater than $1 million customers grew to 54 compared to 40 in the year ago period, equaling, 35% growth it'll be you.

Customers spending more than $100000 annually grew to 1051 compared to 911 in the year ago period, a cooling 15% growth.

Yeah.

Our strategic enterprise sales motion fueled by J folks after supply chain platform drove both growth and high enterprise customer retention, resulting in stabilizing net dollar retention, which Ed will further discuss later today.

Shlomi Haim: Now, allow me to address the co-drivers behind our Q1 achievement. First, cloud goals. In Q1, we saw an overachievement in the cloud driven by increased customer usage beyond contractual commitments primarily fueled by developer activities. However, purchasing and budget constraints across our portfolio persist, resulting in longer sales cycles and delayed decisions to convert into commitment at higher usage due. Given continued macroeconomic uncertainty, we remain cautious and do not yet view this overage as a sustained trend. We have strategically invested in our multi-cloud and hybrid solutions, establishing them as a market standard, and work closely with our self-hosted customers to migrate to JFrog's SaaS offering.

Ed: Now allow me to address the core drivers behind our Q1 achievements.

Ed: First cloud deals in Q1, we saw an over achievement in the cloud driven by increased customer usage beyond contractual commitments, primarily fueled by developer activity.

Ed: However, purchasing and budget constraints across our portfolio persist, resulting in longer sales cycles and delayed decision to convert into commitment at higher usage deals.

Ed: Given continued macroeconomic uncertainty, we remain cautious and do not yet viewed this average as a sustained trend.

Ed: We have strategically invested in our multi cloud and hybrid solutions, establishing them as the market standard and work closely with our self hosted customers to migrate to <unk> SaaS offerings, we remain committed to capturing Q1 momentum across all coal area Dev ops six.

Shlomi Haim: We remain committed to capturing Q1's momentum across all core area, DevOps, security, and ML. Next, to AI and machine learning. JFrog is the only platform that unifies DevOps, DevSecOps, and MLOps in a single solution. In Tier 1, we were proud to announce that all cloud enterprise customers now have access to JFrog ML, giving thousands of companies machine learning and model management technologies as part of their software supplies and solutions. With the upcoming release of JFrog ML for hybrid customers, the JFrog platform is further solidifying its position as the system of record, not only for software packages, but also for AI models and outages.

Ed: <unk> and I'm a loss.

Ed: Next to AI and machine learnings JP.

Speaker Change: <unk> is the only platform that unifies Dev ops Dev ops and MLR ops in a single solution. In Q1, we were proud to announce that all cloud enterprise customers now have access to Jay programming, giving thousands of companies machine learning and modern management technologies as part of the software supply chain solution.

Speaker Change: We routinely upcoming release of <unk> for hybrid customers. The <unk> platform is further solidifying its position as the system of record not only core software packages, but also for AI model then artifacts.

Shlomi Haim: We believe we are leading the market with our natural model package approach, giving customers the 360 degree ability to manage the secure development of traditional software applications, as well as testing, training, experimenting, hosting, securing, and deploying machine learning models in a single solution. Driven by our security research and product teams, we also recently expanded our platform capabilities to include detection of malicious ML models with unmatched accuracy as validated by the community. Attacks on the ML supply chain are growing more frequent, requiring a new set of tools to protect all companies from threats that utilize malicious ML models as a Trojan horse into companies' AI development process.

Speaker Change: We believe we are leading the market with our natural.

Speaker Change: The package approach, giving customers. The 360 degree ability to manage the secured development of traditional software applications as well as testing training experiments in costing securing and deploying machine learning models in a single solution.

Speaker Change: Driven by our security research and product teams. We also recently expanded our platform capabilities to include detection of malicious ml models with unmatched accuracy as validated by the community.

Speaker Change: Tax on the Amazon supply chain ongoing more frequent requiring a new set of tools to protect all companies from threats that utilized malicious ml models as a Trojan horse into company's AI development processes.

Shlomi Haim: This critical capability in security for ML, or ML SecOps, allows us to provide holistic security tooling across all package types, including AI artifacts in one platform. Recognizing this reality, HackingFace, the world's largest open source AI and machine learning model hub, approached JFrog to help secure their entire repo of 1.5 million open source ML models. Millions of global developers look to Hugging Face as their ML model hub, and Hugging Face is looking to JFrog to help fortify the community against malicious models. The CTO of Hugging Face, Julian Chaumont, said, quote, We are delighted to deepen our partnership with JFrog to implement high quality scanning capabilities for our AI and ML models and deliver greater peace of mind for developers looking to create the next generation of AI powered applications.

Speaker Change: This critical capability and security for AML, all and <unk> allows us to provide holistic security tooling across all packaged types, including AI artifact in one platform.

Speaker Change: Recognizing this reality hagging face the world's largest open source AI and machine learning model hub approach <unk> to help secure their entire April of $1 5 million open source ml models.

Speaker Change: Millions of global developers look to hugging face as the ml model hub and having faced is looking to <unk> to help fortify the community against malicious models.

Speaker Change: The CTO of hugging phase Julien Chairman said.

Speaker Change: We are delighted to deepen our partnership with <unk> to implement high quality scanning capabilities for our AI and ml models and deliver greater peace of mind for developers looking to create the next generation of AI powered applications and quote.

Shlomi Haim: END QUOTE As part of our focus on security for the community, we were also proud to recently release our annual Software Supply Chain State of the Union Report, driven by customer data, global surveys, and our security research team's unique findings. For example, the report shows that there were over 40,000 new CVEs published in 2024. However, our security research team revealed only a very small amount of these vulnerabilities were exploitable, highlighting the value of research-backed tools that help DevSecOps teams prioritize tasks. The report also revealed more than 25,000 secrets, such as login information or API keys were unintentionally revealed publicly, highlighting the need for secret detection as part of a consolidated software supply chain management and security approach.

Speaker Change: As part of our focus on security for the community. We were also proud to recently released our annual software supply chain state of the Union report driven by customers' data global surveys and our security research teams unique findings.

Speaker Change: For example, the report shows that there were over 40000, New CV is published in 2024. However, our security research team revealed only a very small amount of these vulnerabilities, where exploitable highlighting the value of research back tools that help desk ops teams.

Speaker Change: Unitize tasks.

Speaker Change: The report also revealed more than 25000 secrets, such as Logan informational API keys were unintentionally revealed publicly highlighting the need for secret detection as part of our consolidated software supply chain management and security approach.

Shlomi Haim: A great example in Q1 of security tool consolidation alongside DevSecOps policy enforcement comes from WalkMe, an SAP company, which provides a leading digital adoption platform that helps organizations streamline user experience. WalkMe serves over 1,600 customers, including approximately 30% of the Fortune 500, with more than 35 million users across 42 countries. Using JFrog Artifactory as their binary repository, RockMe made a decision in 2024 to migrate from various point solutions to JFrog Advanced Security and JFrog Curation. This migration delivered significant efficiency gains, unified the software supply chain security under a single platform, and enabled policy enforcements to curate and secure all externally sourced packages.

Speaker Change: A great example, in Q1 of security tool consolidation alongside <unk> policy enforcement come from walk me, an SAP company, which provides a leading digital adoption platform that helps organization streamlined user experiences.

Speaker Change: Walk me serves over 600 customers, including approximately 30% of the fortune 500 with more than 35 million users across 42 countries.

Speaker Change: I think Jay for about the factory is the binary repository walk me made the decision in 2024 to migrate from various point solutions to <unk> advanced security and Jay population.

Speaker Change: This migration delivered significant efficiency gains unified those software supply chain security under a single platform and enable policy enforcements to curate and secure all externally sourced packages.

Shlomi Haim: Benedica, CEO of WalkmeShirt. Moving to JFrog not only improved our security posture across the software supply chain, but also allowed us to optimize our vendor landscape and consolidate around one system of record for depth JFrog is looking forward to helping many organizations like WalkMe regain control and trust over the software supply chain as we continue to see trends in consolidation of tooling and a move towards a holistic platform based approach for DevSecOps.

Jay: <unk> CEO of walk me shared.

Jay: Moving to <unk>, not only improved our security posture across the software supply chain, but also allowed us to optimize our vendor landscape and consolidate around one system of record for desktops.

Jay: <unk> is looking forward to helping many organizations like walk me regain control and trust over the sort of supply chain as we continue to see trends and consolidation of tooling and a move towards a holistic platform based approach for bps hiccups.

Shlomi Haim: As an important part of our commitment to developers and development teams, I'm also excited to provide an update on our partnership with GitHub. In Q1, JFrog was on the road, meeting with top customers across North America and Europe, sharing our 2025 roadmap and strategic direction. Powerful partnership between GitHub and JFrog unifies processes across our best of breed platform. With both solutions already standardized in many customers development teams, we are jointly dedicated to providing a single platform experience for you.

Jay: As an important part of our commitment to developers and development teams I'm also excited to provide an update on our partnership with Github.

Jay: In Q1 <unk> was on the road meeting with top customers across North America, and Europe, showing our 2025 road map and strategic direction.

Jay: The powerful partnership between Github and Jay for unified processes across our best of breed platforms.

Jay: With both solutions already standardized in many customers development teams, we are jointly dedicated to providing a single platform experience for users.

Shlomi Haim: We were proud to have GitHub CEO, Thomas Donke, join JFrog for our annual LEAP events in New York and France. part of a fireside chat alongside customers he knows. Both GitHub and JFrog are parts of the same system. GitHub is the single source of tools for source code and JFrog is the binary side of that wall. We are bringing the best of bridge systems together to enable customers' experiences, end quote.

Jay: We were proud to have <unk> CEO, Thomas Donkey joined <unk> for our annual leap events in New York and Frankfurt as part of a fire side chat alongside customers. He noted.

Jay: Detailed and Jay for all parts of the same system.

Jay: <unk> is the single source of tools for source code and <unk> is the binary side of that workflow we have.

Jay: Bringing the best of breed systems, together to enable customers experiences and quote.

Shlomi Haim: We are committed to building more strategic partnerships and integrations to deliver a two-integrated-to-fail experience across our customer software supply chain, whether developing software, implementing AI and ML practices, or securing the flow end-to-end.

Jay: We are committed to building more strategic partnerships and integrations to deliver it to integrate it to fail experience across our customers' software supply chain, whether developing software implementing AI and ml practices, all securing the flow and to end.

Shlomi Haim: Before I hand it over to Ed, I'm proud to share that the outcomes highlighted today have positioned JFrog as the backbone not only for the majority of Fortune 100 companies, but also for some of the most cutting-edge new innovators. In Q1, we won a sizable enterprise class deal with one of the world's most recognizable AI technology leaders. who are actively shaping the future of general artificial intelligence. Recognizing JFrog's unique hybrid capabilities, enabling fast developer velocity alongside enterprise grade security, they selected JFrog as the system of record for software development and management.

Ed: Before I hand, it over to Ed I am proud to share that the outcomes highlighted today have positioned <unk> as the backbone not only for the majority of Fortune 100 companies, but also for some of the most cutting edge new innovators.

Ed: In Q1, we won a sizable enterprise class deal with one of the worlds most recognizable AI technology leaders.

Ed: Who are actively shaping the future of general artificial intelligence, recognizing <unk> unique hybrid capabilities, enabling fast developer velocity alongside enterprise grade security. They selected <unk> as their system of record for software development and management.

Shlomi Haim: While the broad market remains challenging, and the adoption of new technology faces growing pains and regulatory hurdles, we are energized by the strong business and technology accomplishments of Q1. We enter Q2 with excitement about the opportunities ahead, both across the industry and within our own.

Ed: While the broad market remains challenging and the adoption of new technology faces growing pains and regulatory hurdles. We are energized by the strong business and technology accomplishments of Q1, we enter Q2 with excitement about the opportunities ahead, both across the industry and.

Ed: Within our augment.

Eduard Grabscheid: With that, I will turn the call over to our CFO, Ed Grabscheid, with an in-depth recap of Q1 financial results and our updated outlook for Q2 and the full fiscal year of 2025. Thank you, Shlomi, and good afternoon, everyone. During the first quarter of 2025, total revenues were $122.4 million, up 22% year over year. Strong revenue results demonstrate continued execution of our go-to-market strategy with strength in our cloud revenues, growth in our Enterprise Plus subscription, and ongoing demand for our Security Core products. First quarter cloud revenues grew to $52.6 million, up 42% year over year, and represented 43% of total revenues versus 37% in the prior year.

Speaker Change: With that I will turn the call over to our CFO Ed group shape with an in depth recap of Q1 financial results and our updated outlook for Q2, and the full fiscal year of 2025 AD.

Ed Group: Thank you Shlomi and good afternoon, everyone. During the first quarter of 2025 total revenues were $122 4 million up 22% year over year.

Ed Group: Our strong revenue results demonstrate continued execution of our go to market strategy with strengthen our cloud revenues growth in our enterprise plus subscription and ongoing demand for our security core products.

Ed Group: First quarter cloud revenues grew to $52 6 million up 42% year over year and represented 43% of total revenues versus 37% in the prior year.

Eduard Grabscheid: Our growth in the cloud was primarily driven by data consumption across our customer portfolio, which exceeded contractual minimum commitment. We believe this highlights the mission critical nature of JFrog to our customers, and we strategically work towards converting this usage into annual commitments while continuing to navigate a rigid purchasing environment. During the first quarter, our self-managed or on-prem revenues were $69.8 million, up 10% year over year. As a result of our cloud first approach, we continue to observe our on-prem customers shift their investments in favor of capturing even greater value coming from our cloud solution. In Q1, 55% of total revenues came from Enterprise Plus subscriptions, up from 49% in the prior year.

Ed Group: Our growth in the cloud was primarily driven by data consumption across our customer portfolio, which exceeded contractual minimum commitments.

Ed Group: We believe this highlights the mission critical nature of <unk> customers and we strategically work towards converting this usage into annual commitments, while continuing to navigate a rigid purchasing environment.

Ed Group: During the first quarter, our self managed or on Prem revenues were $69 8 million up 10% year over year.

Ed Group: As a result of our cloud first approach, we continue to observe our on prem customers shift their investments in favor of capturing even greater value coming from our cloud solutions.

Ed Group: In Q1, 55% of total revenues came from enterprise plus subscriptions up from 49% in the prior year.

Eduard Grabscheid: Driven by the ongoing execution of our enterprise go-to-market strategy. and broader customer adoption of the JFrog platform, revenue contribution from enterprise plus subscriptions through 37% year over year. Net dollar retention for the four trailing quarters was 116%. We continue to demonstrate that our customers view JFrog solutions as mission critical to their software supply chain with gross retention that equaled 97% as of the first quarter 2025.

Ed Group: Driven by the ongoing execution of our enterprise go to market strategy.

Ed Group: And broader customer adoption of the <unk> platform revenue contribution from enterprise plus subscriptions grew 37% year over year.

Ed Group: Net dollar retention for the four trailing quarters was 116%.

Ed Group: We continued to demonstrate that our customers view Jay fraud solutions as mission critical to their software supply chain with gross retention that equaled 97% as of the first quarter 2025.

Eduard Grabscheid: Now I'll review the income statement in more detail. Gross profit in the quarter was $101 million, representing a gross margin of 82.5% in line with our guidance, compared to 85.1% in the year ago period. The change in gross margin relative to the year ago period was primarily driven by the increased mix of our cloud revenue. We expect annual gross margins to remain between 82.5% and 83.5% in the near future due to continued focus on cost optimization with cloud service providers. Operating expenses in the first quarter were $79.7 million, up 5% sequentially, equaling 65% of revenue.

Ed Group: Now I'll review the income statement in more detail.

Ed Group: Most profit in the quarter was $101 million rep.

Ed Group: Representing a gross margin of 82, 5% in line with our guidance compared to 85, 1% in the year ago period.

Ed Group: The change in gross margin relative to the year ago period was primarily driven by the increased mix of our cloud revenues.

Ed Group: We expect annual gross margins to remain between 82, 5% and 83, 5% in the near future due to continued focus on cost optimization with cloud service providers.

Ed Group: Operating expenses in the first quarter were $79 7 million up 5% sequentially equaling 65% of revenues. This compares to $71 3 million or 71% of revenues in the year ago period.

Eduard Grabscheid: This compares to $71.3 million, or 71% of revenues in the year ago period. The balance between strategic investments and operational efficiency demonstrates our commitment to profitable growth. Our operating profit in Q1 increased to $21.4 million or an operating margin of 17.4% compared to $14.1 million or 14% operating margin in the first quarter of 2024. Cash flow from operations equaled $28.8 million in the first quarter. After taking into consideration CapEx requirements, our free cash flow reached $28.1 million, or 23% margin, compared to $16.6 million, or 17% in the year-ago period.

Ed Group: The balance between strategic investments and operational efficiency demonstrates our commitment to profitable growth.

Ed Group: Our operating profit in Q1 increased to $21 4 million or an operating margin of 17, 4% compared to $14 1 million or.

Ed Group: Our 14% operating margin in the first quarter of 2024.

Ed Group: Cash flow from operations equaled $28 8 million in the first quarter after taking into consideration capex requirements, our free cash flow reached $28 1 million or.

Ed Group: 23% margin compared to $16 6 million or 17% in the year ago period.

Eduard Grabscheid: Now turning to the balance We ended the first quarter of 2025 with $563.5 million in cash and short-term investments, compared to $522 million at the end of 2024. As of March 31, 2025, our RPO totaled $424.2 million, a 62% increase year over year, benefiting from customers' multi-year commitments to the JFrog platform.

Ed Group: Now turning to the balance sheet.

Ed Group: We ended the first quarter of 2025 with $563 $5 million in cash and short term investments compared to $522 million at the end of 2024.

Ed Group: As of March 31, 2025, our RP O totaled $424 2 million.

Ed Group: A 62% increase year over year benefiting from customers multi year commitments to the <unk> platform.

Eduard Grabscheid: And now let's turn to our outlook and guidance for Q2 and the full year 2025. While we see pipeline opportunities continuing to build, the full year guidance does not capture the complete outperformance we achieved in Q1 due to the volatile macroeconomic environment, which has grown more uncertain relative to the beginning of the fiscal year. We believe it is prudent to exercise caution in our forward outlook due to the current economic backdrop. Our updated guidance range suggests growing contributions from the JFrog security core, broader adoption of the full JFrog platform, and migration activity consistent with 2024.

Ed Group: And now, let's turn to our outlook and guidance for Q2 and the full year 2025.

Ed Group: While we see pipeline opportunities continuing to build the full year guidance does not capture the complete outperformance we achieved in Q1 due to the volatile macroeconomic environment, which has grown more uncertain relative to the beginning of the fiscal year.

Ed Group: We believe it is prudent to exercise caution and our forward outlook due to the current economic backdrop.

Ed Group: Our updated guidance range suggests growing contributions from the <unk> security core broader adoption of the full <unk> platform and migration activity consistent with 2024 weeks.

Eduard Grabscheid: We continue to de-risk our outlook by excluding our largest opportunities, given the uncertainty regarding the timing of customer deployment. We estimate full year 2025 baseline cloud growth to now be in the range of 31 to 33%. Cloud revenue guidance continues to exclude any contribution from usage above our annual customer's minimum commitment. We continue to expect our net dollar retention rate to stabilize in the mid. For Q2, we expect revenues to be in the range of $121.5 million and $123.5 million, equaling 19% year-over-year growth at the midpoint, with non-GAAP operating profit anticipated to be between $17 million and $18 million, and non-GAAP earnings per diluted share of $0.15 to $0.17, assuming a share count of approximately 120 million shares.

Ed Group: We continue to Derisk, our outlook by excluding our largest opportunities given the uncertainty regarding the timing of customer deployments.

Ed Group: We estimate full year 2025 baseline cloud growth to now be in the range of 31% to 33%.

Ed Group: Cloud revenue guidance continues to exclude any contribution from usage above our annual customers minimum commitments.

Ed Group: We continue to expect our net dollar retention rate to stabilize in the mid teens.

Ed Group: For Q2, we expect revenues to be in the range of $121 5 million and $123 5 million.

Ed Group: Equaling, 19% year over year growth at the midpoint with non-GAAP operating profit anticipated to be between 17 million and.

Ed Group: And $18 million and non-GAAP earnings per diluted share of <unk> 15 to 17, assuming a share count of approximately 120 million shares.

Eduard Grabscheid: For the full year of 2025, we anticipate a revenue range of $500 million to $505 million. Non-GAAP operating income is expected to be between $74 million and $77 million, and non-GAAP diluted earnings per share of $0.68 to $0.70, assuming a share count of approximately 120 million shares.

Ed Group: For the full year of 2025, we anticipate a revenue range of $500 million.

Ed Group: The $505 million.

Ed Group: non-GAAP operating income is expected to be between $74 million and $77 million and non-GAAP diluted earnings per share of <unk> 68 to 70.

Ed Group: Assuming a share count of approximately 120 million shares now.

Shlomi Haim: Now, I'll turn the call back to Shlomi for some closing remarks before we take your questions. Thank you, Ed. Our strong Q1 results were a reflection of the successful execution of our strategy across all three goals. Before we take your questions, let me quickly recap a few key highlights from Q1. We launched the world's first platform to unify DevOps, DevSecOps, and MLOps with the release of JFrogML. We announced a partnership with HuggingFace to help secure millions of open-source machine learning models and fortify the AI community. We also armed the community with our annual Software Supply Chain State of the Union report, illuminating the status of the enterprise software supply chain.

Shlomi: Now I'll turn the call back to Shlomi for some closing remarks before we take your questions.

Shlomi: Thank you Ed our strong Q1 results were a reflection of the successful execution of our strategy across all three calls.

Shlomi: Before we take your questions. Let me quickly recap a few key highlights from Q1.

Shlomi: We announced the world's first platform to unify Dev ops Dev ops and <unk> with the release of <unk>, We announced the partnership with hugging face to help secure millions of open source machine learning models and fortify the AI community. We also on the community with our annual software supplier.

Shlomi: <unk> state of the Union report, eliminating the status of the enterprise software and supply chain.

Shlomi Haim: We hit the road and welcomed our partners at GitHub as we met with top customers around the world, all while efficiently growing the business and exceeding our guidance. The JFrog team delivered amazing results.

Shlomi: We hit the road and welcomed our partners at Github as we met with top customers around the world all while efficiently growing the business and exceeding our guidance.

Shlomi: The <unk> team delivered amazing results.

Shlomi Haim: To my team, I'm proud of your efforts and grateful to stand beside you as we drive JFrog forward. These successes belong to you.

Shlomi: To my team I'm proud of your efforts and grateful to stand beside U as we drive J portfolio. These successes belongs to you.

Shlomi Haim: Now, while we are energized by these accomplishments, we also recently recognized Memorial Day and Independence Day holidays in Israel. We were quickly reminded of the many sacrifices that freedom requires. It is hard to truly celebrate when we know that 59 of our brothers and sisters, including American and European citizens, are still held captive in Gaza. We continue to hope and pray for a safe journey home and for peaceful days ahead.

Shlomi: Now while we are energized by these accomplishments. We also recently recognized memorial day and Independence day holidays in Israel, We will quickly reminded of the many sacrifices that freedom requires.

Shlomi: It is hard to truly celebrate when we know that 59 of our brothers and sisters, including American and European citizens are still held captive in Gaza.

Shlomi: We continue to hope and pray for a safe journey home and for peaceful days ahead with that thank you for joining our call and made the progress with your operator, we're now open to take questions.

Shlomi Haim: With that, thank you for joining our call and may the Frog be with you.

Operator: Operator, we're now open to take questions. We will now begin the question and answer session. Please limit yourself to one question and one follow up. If you would like to ask a question, please raise your hand now. If you have dialed into today's call, please press star 9 to raise your hand and star 6 to unmute.

Shlomi: We will now begin the question and answer session. Please limit yourself to one question and one follow up if you would like to ask a question. Please raise your hands now.

Shlomi: If you have dialed in to today's call. Please press star nine to raise your hand and <unk> on mute. Please standby, while we compile the Q&A roster.

Operator: Please stand by while we compile the Q&A roster.

Pinjalim Bora: Your first question comes from the line of Pinjalim Bora with J.P. Morgan. Your line is open. Please go ahead. Oh, great.

Pendulum Bora: Your first question comes from the line of pendulum Bora with J P. Morgan. Your line is now open. Please go ahead.

Eduard Grabscheid: Thanks for taking the questions and congrats on a very solid quarter. I just want to go back to some of your comments on the cloud numbers, Ed. Just want to make sure I understand this correctly. What's the consumption above commitment? Was that broad based across your customer base or was that a narrow set of customers? And what have you seen in terms of consumption so far in April?

Pendulum Bora: Oh, great. Thanks for taking the questions and congrats on a very solid quarter I just wanted to go back to some of your comments on the cloud numbers Ed.

Pendulum Bora: Just wanted to make sure.

Pendulum Bora: And it is currently.

Speaker Change: What's the consumption above commitment was that broad based across your customer base or was that a narrow set of customers and what have you seen in terms of consumption. So far in April and then lastly, when you're talking about the longer sales cycles and delayed decisions is that something incremental.

Eduard Grabscheid: And lastly, when you talk about the longer sales cycles and delayed decisions, is that something incremental that you have seen in Q1? Or are you saying kind of that's been the environment so far in the last several quarters? First of all, thank you for your question. It was a really strong quarter. And as I mentioned, it was driven by data consumption. This was across a broad set of our customers, not only from the customer, in terms of industry, but also from the geo perspective.

Speaker Change: That you have seen in Q1 or are you seeing.

Speaker Change: That's been the environment, so far so far and in the last several quarters.

Speaker Change: First of all thank you for your question. It was a really strong quarter and as I mentioned it was driven by data consumption. This was across a broad set of our customers not only from the customer in terms of industry, but also from the Geo perspective.

Eduard Grabscheid: Now, regarding your question on in-quarter, we don't comment on the in-quarter. So you'll have to wait until the public call in which we do a scheduled normal call in Q2.

Speaker Change: Now regarding your question on in quarter, we don't comment on the end quarter. So you'll have to wait until the public call in which we do scheduled normal call in Q2.

Eduard Grabscheid: And then regarding the third question, which lifecycle, the the lifecycle on the third question. This is consistent with what we saw previously, it hasn't been an increase in terms of the sales cycle. This is what we stepped into into 2025. Understood.

Speaker Change: And then regarding the third question.

Speaker Change: Which lifecycle the lifecycle on the third question. This is consistent with what we saw previously it hasn't been an increase in terms of the sales cycle. This is what we stepped into into 2025.

Pinjalim Bora: And Shlomi, I think you talked about a Q1 deal, most recognizable AI technology leader. I want to just understand, maybe help us understand a little bit more on that particular deal. Are we talking about a LLM provider? What kind of competitive dynamics did you see in the deal? Why did they make that choice? And is that basically an end-to-end from artifactory to advanced security to everything?

Shlomi: Understood and Shlomi.

Speaker Change: I think you talked about a Q1 deal most recognizable technology leader.

Speaker Change: Wanted to just understand maybe help us understand a little bit more on that particular deal or are we talking about.

Speaker Change: 11 provider.

Speaker Change: Kind of a.

Speaker Change: Competitive dynamics <unk> seen the deal why did you make that choice on are there is that basically an end to end up from the factory to advanced security to everything.

Shlomi Haim: Hi, Pinjalim. Wow, this is an amazing deal that we won, a new logo, a company that we all know. And the first use case that they are now committed to is having JFrog platform as their system of records for all models and to provide services and agent services to their customers. Next, they will consider, according to their roadmap, JFrog security to secure the models before they leave their data centers. And last, they will also look at the ML models solution that we provide with the platform. So this is just the first quarter. We won it in Q1.

Tien Tsin: Hi, Tien tsin.

Tien Tsin: This is an amazing deal that we won a new logo a company that we all know.

Tien Tsin: And the first use case that they are.

Tien Tsin: Now committed to is.

Tien Tsin: Having <unk> platform as the system of record for all models and to provide services and agent services to their customers next that they will consider according to their road map.

Tien Tsin: <unk> security to secure them orders before they leave their own data centers and lost they will also look at the MLP model.

Tien Tsin: <unk> that we provide with the platform. So this is just the first quarter. We wanted in Q1, we are very excited about it but the potential is amazing and this logo demonstrate exactly what we built the platform.

Shlomi Haim: We are very excited about it, but the potential is amazing. And this logo demonstrates exactly what we built the platform to do. Thank you so much.

Speaker Change: Understood. Thank you so much.

Michael Cikos: Your next question comes from the line of Mike Cikos with Needham.

Speaker Change: Your next question comes from the line of Mike <unk> with Needham. Your line is open. Please go ahead.

Eduard Grabscheid: Your line is open, please go ahead. Hi, I'll go ahead and start and then Shlomi can fill in. So first off, we had a very strong quarter, as I mentioned, during Q1, and we did not carry forward the full benefit of that overperformance into the full year. Why didn't we do that? It's not necessarily based on something we saw at JFrog, it's the fact that we see uncertainty in the market, and we are being more cautious and adding prudence into the outlook based on this uncertainty in the markets. So there's no change in our philosophy.

Mike: Hey, Timna.

Speaker Change: Adrian I'll turn makes it goes over at Needham Thanks for taking our questions.

Speaker Change: I was wondering if you can give a little more color on how you thought through guidance construction.

Speaker Change: Are you seeing any macro impact so far and how exactly to do further derisk the guidance on top of the more cautious approach you took entering New York wasn't more pipeline scrubbing or a broad cut any thoughts there would be great.

Speaker Change: Hi, I'll go ahead and start mentioned roaming can fill in so first off we had a very strong quarter as I mentioned during Q1, and we did not carry forward the full benefit of that over performance into the full year why didn't we do that it's not necessarily based on something we saw J frog. It's the fact that we see uncertainty in the market and we are.

Speaker Change: More.

Speaker Change: Cautious in adding prudence into the outlook based on this uncertainty in the markets.

So theres no change in our philosophy as you recall, we went into the full year with conservative guidance, we've de risked our pipeline of the largest deals and in addition to that we're adding.

Eduard Grabscheid: As you recall, we went into the full year with conservative guidance. We've de-risked our pipeline of the largest deals. And in addition to that, we're adding more caution based on the outlook and uncertain macro environments. In terms of the second half, again, we exclude our largest, more complex deals. And on a year-over-year comparison, if you remember, three of the largest deals were closed in the second half of 2024. Therefore, there may be some possible upside, but it's still too soon.

Speaker Change: More caution based on the outlook and uncertain macro environment.

Speaker Change: Terms of the second half again, we exclude our largest more complex deals and on a year over year comparison. If you remember three of the largest deals were closed in the second half of 2024. Therefore, there may be some possible upside, but it's still too soon we want to get through Q2, and then we can reevaluate where the markets are in.

Eduard Grabscheid: We want to get through Q2, and then we can reevaluate where the markets are and provide updated guidance after Q2.

Speaker Change: <unk> updated guidance after Q2.

Shlomi Haim: Yeah, Mike, not not a lot to add. But I will just tell you that everything that we wanted to see in Q1 happened from the deliveries, the overachievements and the pipeline building. But it's just the first quarter as Ed mentioned, and we need to be cautious with how we guide you guys. So we're very happy about it and also happy to update the guidance according to our philosophy. That makes sense.

Mike: Yeah, Mike could not not a lot to add.

Mike: But I would just tell you that everything that we wanted to see in Q1 happen from the deliveries the over achievement in the pipeline building, but it is just the first quarter as Ed mentioned.

Mike: We need to be cautious with how we guide you guys. So.

Mike: We're very happy about that and also happy to update the guidance according to our philosophy.

Mike: That makes sense. Thank you.

Eduard Grabscheid: Thank you.

Eduard Grabscheid: And then on the on the lower commitment in the in the tighter environment.

Mike: And then on the.

Mike: On the.

Mike: Lower commitments and a tighter.

Mike: Tighter environment in the past you've spoken about customers.

Eduard Grabscheid: In the past, you've spoken about customers sort of stopping on prem expansion, on prem expansion while they await migrating to the cloud. Did you see any hesitancy or delays of any sort connected to the macro exacerbating this during the quarter? We haven't seen any changes from the behavior through Q1 that we saw during 2024. It's a very similar behavior in terms of migration activity. Customers that are waiting to migrate will remain in their self-hosted instance, and they will not typically expand unless it's maybe security. However, we continue to build the pipeline and we continue to see growth in our pipeline.

Mike: Stopping on Prem expansion on Prem expansion, while they await migrating to the cloud.

Mike: See any hesitancy in delays and any sort of connected to the macro exacerbating that during the quarter.

Mike: We haven't seen any changes from the behavior through Q1 that we saw during 2024, it's a very similar behavior in terms of migration activity customers that are waiting to migrate will remain in.

Mike: They are self hosted incidence.

Mike: We'll not typically expand unless it's maybe security. However, we continue to build the pipeline and we continue to see growth in our pipeline and if everything plays out we may see some of those opportunities in the second half.

Eduard Grabscheid: And if everything plays out, we may see some of those opportunities in the second half.

Eduard Grabscheid: Awesome. Thanks so much.

Mike: Awesome. Thanks, so much.

Sanjit Singh: Your next question comes from the line of Sanjit Singh with Morgan Stanley. Your line is open. Please go ahead. Yeah, thank you for taking my question. And congrats on the really strong start to the year.

Mike: Your next question comes from the line of Sanjeev Singh with Morgan Stanley. Your line is open. Please go ahead.

Sanjeev Singh: Yes. Thank you for taking my question and congrats on the really strong start to the year.

Shlomi Haim: Shlomi, I can't remember the last time you spent so much time talking about the ML opportunity in your script. And so I wanted to dive into why and why now you're emphasizing this so much as part of your messaging. I mean, is there a theory there around, you know, new binaries and JFrog, not making that shift from, you know, compiled code binaries to securing models and how important that is to the business? I'd love to see if you could just expand on the ML opportunity as you see it.

Mike: Shlomi I can't remember.

Mike: The last time, you spend so much time talking about the ml opportunity in your script and so I wanted to dive into.

Mike: Why and why now you're emphasizing this so much as part of your messaging.

Mike: There are ceiling there around.

Mike: Our model is being the new binaries, and Jay fog that making that shift.

Mike: Compiled code binaries to securing models and how important that is to the business I'd love to if you could just expand on the <unk> opportunity as you see it today.

Shlomi Haim: Yes, well, this is one of the most exciting exciting things that we've released ever. Following the acquisition of QuarkAI, we worked very hard to implement their platform into the JFrog platform. And currently, JFrog is the only platform that provides DevOps, DevSecOps and MLOps practices under the same solution. We are excited about it, mainly because of the fact that it's opened so many doors, including the Hugging Face integration, the integration with NVIDIA that we discussed in the past. Our customers that are telling us that they start to use JFrog Artifactory as their model registry and JFrog X-Ray as their scanner.

Mike: Yes.

Mike: This is <unk>.

Mike: One of the most exciting exciting to think that we have released ever.

Mike: Following the acquisition of Quark AI, we work very hard to implement their platform into the <unk> platform and currently <unk> is the only platform that provides dev ops that pickups in MLR practices under the same solution.

Mike: We are excited about the mainly because of the fact that it's opened so many goals, including the hugging face integration the integration with Nvidia that we've discussed in the past.

Mike: Our customers that are telling us that they start to use <unk> factory as the modern registry and J P X-ray as the scanner.

Shlomi Haim: Listen, we stand ready to what this model revolution brings to the universe and I'm happy that we expanded the platform. We are looking forward to see how it will be translated into the pipeline.

Mike: Nathan we stand ready to what this model evolution brings to the universe.

Mike: And I'm happy that we extended the platform. We are looking forward to see how it would be translated into the pipeline.

Eduard Grabscheid: Excellent.

Eduard Grabscheid: And then, Ed, sort of a question back on, like, the cloud business. Those customers that are, you know, consuming in excess of contract, what do you think their behavioral response is likely to be as the year goes on? Is it a situation where ultimately they'll have to sign a new commitment contract with higher usage? Do they just get to consume sort of on demand at their original unit pricing? Or do you expect them to sort of curtail or optimize usage to get usage more in line with their commitment? From what you see today, how do you see that element from those customers exceeding commitment playing out?

Ed Group: Excellent and then Ed.

Ed Group: Sort of a question back on like the cloud business those customers that are.

Ed Group: Consuming excess of contract what do you think the behavior will sponge is likely to be as the year goes on is it a situation where ultimately they will have to sign a new commitment contract with higher usage do they just get to consume sort of on demand at your sort of original unit price.

Ed Group: Or do you expect them to sort of curtail or optimize usage to get usage more in line with.

Ed Group: With their commitment for mobile that you see today, how do you see that elevated from those customers exceeding commitment playing out.

Eduard Grabscheid: Well, that's a great question, Sanjit. It's one quarter that we've actually seen usage over our minimum commit. If you recall, in 2024, we didn't have cases where we had so many customers across our portfolio, across geographies that have form above our minimum commits at these levels. So we have to first evaluate, is this sustainable or is this something that is just one quarter? Now, what do we see? We still know that we're in a rigid purchasing environment. We know that it has become uncertain in terms of the macro environment developers are using. There is opportunity and they're being pushed not only by their boards, by their management, to continue to innovate and develop.

Ed Group: Well, that's a great questions Angie, it's one quarter that we've actually seen usage over a minimum committed if you recall in 2024, we didnt have cases, where we had so many customers across our portfolio across geographies that have.

Ed Group: Performed above our minimum commits at these levels. So we have to first evaluate is this sustainable or is this something.

Ed Group: That is just one quarter now what do we see we still know that we're in a rigid purchasing environment. We know that it has become uncertain in terms of the macro environment environment developers are using there is opportunity and theyre being pushed not only by their boards by their management to continue to innovate and develop but you have the other side.

Eduard Grabscheid: But you have the other side, which is the procurement and the office of the CFO that is pushing back. We're still in a cost-optimized type of environment. So it's still too soon to know what's going to happen. They can continue to use over their minimum commits and will happily take that. It's not part of my guidance looking forward and we'll have to see what happens. Understood.

Ed Group: Which is the procurement and the office of the CFO that is pushing back we're still in a cost optimized type of environment. So it is still too soon to know what's going to happen. They can continue to use over their minimum commit and we will happily take that it's not part of my guidance looking forward.

Ed Group: And we'll have to see what happens.

Eduard Grabscheid: Thanks so much, Ed, for the insights.

Ed Group: Understood. Thanks, so much for the insights.

Eduard Grabscheid: Your next question comes from the line of Brad Reback with Steeple. Your line is now open. Please go ahead. Great, thanks very much. And just following up on Sanjit's question, if a customer goes, if they use up their full commit, do they then go to the rack rate? Or do they continue to be able to consume at the price they had under the contract? When they go over their commit, they we actually have a penalty rate that they go and they use. But typically, what we find is that customers will re up if they see that this usage becomes consistent.

Speaker Change: Your next question comes from the line of Brad Reback with Stifel.

Speaker Change: Your line is now open. Please go ahead.

Speaker Change: Great. Thanks, very much and just following up on <unk> question.

Speaker Change: If a customer goes if they use up their full commit do they then go to the rack rate or do they continue to be able to consume at.

Speaker Change: The price they had under the contract.

Speaker Change: When they go over their commit they we actually have a penalty rate that they go and they use but typically what we find is that customers will re up if they see that this usage becomes consistent so we work very closely with the customer together with our sales organization to increase the data consumption package and get them price.

Eduard Grabscheid: So we work very closely with the customer together with our sales organization to increase the data consumption package and get them pricing that's in line with expectations moving forward.

Speaker Change: <unk> that's in line with expectations moving forward.

Eduard Grabscheid: Great.

Eduard Grabscheid: And the RPO growth was as strong as it's been since the first quarter of 21 sequentially. Was that concentrated in a few large deals or was that broad based? Well, Brad, you remember, in Q3, we closed three of the largest deals, and we continue to close sizable deals. These are multi-year deals. These include security. The timing of our booking will certainly depend on, you know, how the performance of the RPO and the CRPO. But in addition to that, we now start to see our customers doing multi-year agreements, and that's what's reflected in our RPO. So we're seeing it across a broad number of customers.

Speaker Change: And the <unk> growth was.

Speaker Change: As strong as it's been since the first quarter of 'twenty one.

Speaker Change: Sequentially.

Speaker Change: Was that concentrated in a few large deals or was that broad based.

Speaker Change: Well, Brad you remember in Q3, we closed three of the largest deals and we continue to close a sizable deals. These are multi year deals. These include security.

Speaker Change: The timing of our booking will certainly depend on how the performance of the <unk> and the <unk>, but in addition to that we now start to see our customers doing multi year agreements and that's what's reflected in our <unk>. So we're seeing it across a broad number of customers. It's not concentrated to a few its not all of the customers, but its certainly a strong.

Eduard Grabscheid: It's not concentrated to a few. It's not all of the customers, but it's certainly a strong indication of the demand coming to JFrog by our customers.

Speaker Change: <unk>.

Speaker Change: Indication of the demand coming to Jay fraud by our customers.

Eduard Grabscheid: Great, thanks very much.

Speaker Change: Thanks very much.

Kingsley Crane: Your next question comes from the line of Kingsley Crane with Canaccord. Your line is open. Please go ahead. Hey, thank you.

Speaker Change: Your next question comes from the line of Kingsley Crane with Canaccord. Your line is open. Please go ahead.

Kingsley Crane: Hey, Thank you.

Kingsley Crane: So for Shlomi, over a million new models and data sets were out of the hucking phase in 2024, tripled from the year prior, it's approaching Docker and NPM. We also saw a six and a half increase in malicious models.

Shlomi: So for Shlomi over 1 million, new models and datasets for out of the how can face in 2024.

Shlomi: From the year prior it is approaching Docker and MTN. We also saw a 6% increase and malicious models. So what inning are we in in terms of the maturation of this ecosystem and then with malicious model is increasing at a faster pace. How aware are builders in the space of the potential risks out there.

Kingsley Crane: So what inning are we in in terms of maturation of this ecosystem? And then with malicious models increasing at a faster pace, how aware are builders in the space of the potential risks out there?

Shlomi Haim: So Kingsley, thanks for the question. We are in the very early stage of implementing MLOps. Actually, to be honest with you, what we hear from our customers, specifically the enterprise customers, that there are two big question marks floating around the ML adoption. The first one is the security of the models and where models will go and how it would be governed and secured. And the second one, how much it's going to cost me when it will go up to production. So together with our customers, we are building the roadmap. We are working with them on QBRs to prepare to the strategy to answer their bold questions.

Shlomi: Okay, great. Thanks, Thanks for the question.

Shlomi: We are in.

Shlomi: In the very early stage of implementing the MLR actually to be honest with you what we hear from our customers specifically the enterprise customers that they are two big question Mark floating around <unk> adoption. The first one is the security of the model and where our models will go.

Shlomi: And how it would be gallons in the Q and the second one how much it's going to cost me when they will go up to production. So together with our customers. We are building the road map.

Shlomi: We are working with them on <unk> to refer to the strategy to answer both questions and I think that though we are at the early beginning of ml adoption. It's unstoppable.

Shlomi Haim: And I think that though we are at the early beginning of ML adoption, it's unstoppable. Developers are already using it. They are not waiting. So I think that what you will see next is that the enterprise start to align themselves with the demand coming from the bottom up. Thanks, that's helpful.

Shlomi: Developers are already using it they will not waiting so I think that what you will see next is that the enterprise start to align themselves with the demand coming from the bottom up.

Shlomi: Thanks, that's helpful and then so forth.

Eduard Grabscheid: And so for Ed, I want to circle back on RPO. So obviously, we've had some really strong commitments starting back from Q3, but even some great sequential growth this quarter. So I just am trying to foot that with some of the challenges that you're seeing, securing more commitments in Q1. I mean, were you expecting even higher RPO growth in this Q1? Kingsley, we did exactly what we expected to do in Q1. In fact, we did better than we expected to do because the cloud usage was much higher than expectations. So we don't guide for it, but we were pleasantly surprised by our cloud usage ending the quarter.

Speaker Change: Wanted to circle back on Rps. So obviously, we've had some really strong commitments starting back from Q3, but even some great sequential growth. This quarter. So just trying to to foot that with some of the challenges that youre seeing securing more commitments in Q1, I mean, what are you expecting even higher RPM growth and in.

Shlomi: And this Q1.

Kingsley Crane: Kingsley, we did exactly what we expected to do in Q1 in fact, we did better than we expected to do because of the cloud use.

Kingsley Crane: Usage was much higher than expectation. So we don't guide for it but we were pleasantly surprised by our cloud usage ending the quarter now I would tell you. The RP O again is based off of the multi year and the strength in the multi year that we see from several customers and where the market is going they want to secure in this <unk>.

Eduard Grabscheid: Now, I would tell you, the RPO, again, is based off of the multi-year and the strength in the multi-year that we see from several customers and where the market is going. They want to secure in this environment multi-year agreements to lock in pricing. And we also see now security being added on top of this. So all of these factors.

Kingsley Crane: <unk> multi year agreements to lock in pricing and.

Kingsley Crane: And we also see now security being added on top of this so all of these factors and in addition to that Kingsley the timing of when these bookings happened so Q1.

Eduard Grabscheid: And in addition to that, Kingsley, the timing of when these bookings happen, so Q1 of this quarter, as it's comparing to the prior year, is a significant increase because of the timing of the bookings, these large bookings happening towards the second half of 2024.

Kingsley Crane: This quarter as it is comparing to the prior year.

Kingsley Crane: The significant increase because of the timing of the bookings these large bookings happening towards the second half of 2024.

Eduard Grabscheid: Really helpful, impressive results. Thanks, guys.

unknown: Really helpful impressive results. Thanks, Ed.

Miller Jump: Your next question comes from the line of Miller Jump with Truist. Your line is now open. Please go ahead.

Speaker Change: Your next question comes from the line of Miller jump with Truest. Your line is now open. Please go ahead.

Miller Jump: Miller, I think you're on mute. Hi, can you hear me now? Yes. Sorry about that. So thank you for taking the question. Just just to follow up on that, you know, the the scope of the deals has been obviously a big evolution point over the last year.

Speaker Change: Miller I think youre on mute.

Speaker Change: Hi can you hear me now.

Speaker Change: Yes.

Speaker Change: That.

Speaker Change: So thank you for taking the question just to follow up on that.

Speaker Change: The scope of the deals has been obviously, a big evolution point over the last year can you just talk about maybe any more detail on the pipeline you are seeing right now in terms of volume and number and dollar value of deals versus where you are at the same time last year.

Shlomi Haim: Can you just talk about maybe any more detail on the pipeline you're seeing right now in terms of volume and number and dollar value of deals versus where you were at the same time last year? So what we are seeing as we saw in the previous year is that our big companies, big enterprise companies are securing bigger deals, especially around the platform adoption, including security. And our sales team is also triggering discussions around that to encourage the adoption of the full platform and security on top of DevOps. So just like last year and the year before, the second half of the year is where we see more sizable deals coming in.

Speaker Change: Yes, so what we what we are seeing as we saw in the previous year is that a big companies Big enterprise companies.

Speaker Change: Securing bigger deals, especially around the platform adoption, including security and our sales team is also triggering discussions around that.

Speaker Change: To encourage the adoption of the full platform and security on top of Dev ops.

Speaker Change: So just like last year in India before the second half of the areas, where we see more sizable deals coming in.

Shlomi Haim: And this is something that, as Ed mentioned, we are also de-risking when we provide you some guidance, but we see the pipeline growing and we are very encouraged about that.

Speaker Change: This is something that as Ed mentioned, we are also derisking. When we provide you some guidance, but we see the pipeline growing and we are very encouraged about.

Eduard Grabscheid: Thanks. And then maybe for Ed, you know, you talked about de-risking on the on the revenue side, we have the guide for the bottom line as well. But just any color on are you changing the way that you're thinking about investments going forward, given the macro uncertainty you called out, you know, either in the type of investment or the volume Well, Miller, you know, we're part of our DNA is to very much focus on profitability and make wise decisions. We balance our investments and our profitability and therefore never really get ahead of ourselves so that we can manage through these uncertain periods of time.

Speaker Change: Thanks, and then maybe for Ed.

Speaker Change: You talked about.

Speaker Change: Derisking on the on the revenue side, we have the guide for the bottom line as well, but just any color on are you changing the way that you're thinking about investment going forward given the macro uncertainty you called out either in the type of investments or the volume.

Speaker Change: Well Miller unit, how were part of our DNA is to very much focus on profitability and make wise decisions, we balance our investments in our profitability and therefore never really get ahead of ourselves. So that we can manage through these uncertain periods of time and the way that we built the guidance because of the concern.

Eduard Grabscheid: And the way that we built the guidance because of the conservatism on the top line, we believe anything that we overachieve would flow to the bottom line. Yeah.

Speaker Change: <unk> Chisholm on the topline we believe anything that we overachieve would flow to the bottom line.

Shlomi Haim: And with that, Miller, as you saw in the past, in 2024, it was QuarkAI. Before that, Vidoo and other companies. When we need to move fast, and when we need to invest more, whether it's on the go-to-market side or the R&D, the IP, the expansion of the platform, we use this efficiency also to become fast and to become aggressive toward the opportunities that we see in the JFrog. It's the only solution in the world that provides all three practices under one platform. Understood.

Speaker Change: And with that let me there as you saw in the past in 2024. It was kwok AI before that we do in other companies when we need to move fast and when we need to invest more whether it's on the go to market side or the R&D. The IP the expansion of the platform we use.

This efficiency also to become faster and to become aggressive.

Speaker Change: Forward the opportunities that we see in the market. Therefore, you see now that <unk> is the only solution in the world that provide all the way back practices under one platform.

Eduard Grabscheid: Thank you.

Speaker Change: Understood. Thank you.

Raymo Lenshao: Your next question comes from the line of Raymo Lenshao with Barclays. Your line is now open. Please go ahead.

Speaker Change: Your next question comes from the line of Raimo <unk> with Barclays. Your line is now open. Please go ahead.

Raymo Lenshao: Hey guys, this is Damon Kovlin. I'm for Ryan Lenshow. Thanks for the question. Great to hear your traction with the GitHub partnership. Are you seeing any impact to landing net new deals or expanding usage with your existing base from this partnership? Or is it too early to tell? Ramo, we are completely astonished about the reaction of our customers to this partnership. It was so So it's clear to everyone that these two best-of-breed platforms should play together as one. And as I mentioned in the call, we traveled together with the GitHub CEO, with Thomas in Europe and in the U.S.

Speaker Change: Hey, guys sustained carbon off Ryan for lunch al Thanks, taking the question.

Speaker Change: To your traction with the <unk> partnership are you seeing any impact to landing net new deals or expanding usage with your existing base from this partnership or is it too early to tell.

Raimo: Raimo we are.

Speaker Change: Lately.

Speaker Change: Astonished about the reaction of our customers.

Speaker Change: This partnership it was so.

Speaker Change: Clear to everyone that these two best of breed platform should play to play together as one and as I mentioned in the call. We traveled together with Github CEO with Tomas.

Speaker Change: In Europe and in the U S. We met our top customers hundreds of them already adopting.

Shlomi Haim: We met our top customers, hundreds of them already adopting the solution. Now, regarding new logos and new opportunities, obviously, it makes it much more stronger as a message to the state who's doing source code and who's doing binaries and how the security plays together and how co-pilot and our AI capabilities are playing together. But it's across the board. It's coming from developers' usage. It's coming from security adoption. I'm not sure that we can put the finger on what's specifically growing, but we see the goals and we also see the goals in the pipeline.

Speaker Change: The solution now regarding new logos and new opportunities obviously, it makes it a much more stronger as a message to the street with zinc solves code and who's doing binaries and how the security plays together and how co pilot and our AI capabilities are playing together.

Speaker Change: But it's across the board, it's coming from developers usage is coming from security adoption.

Speaker Change: Not sure that we can put the finger on what specifically growing but we see the growth and we also see the growth in the pipeline.

Shlomi Haim: Got it. Thanks, Shlomi.

Speaker Change: Got it thanks, Shlomi and then for.

Shlomi Haim: And then for the JFrog's core security platform, just curious if the performance in 1Q was better than expected, how we should think about the pipeline for core security throughout 2025, and then how that go-to-market motion is evolving for this product? We are very pleased with what we saw in Q1. As you know, we will disclose all numbers at the end of this fiscal year. We are pleased with what we saw coming in in Q1, and we are very much happy about what we see in the pipeline. Still on us to make sure that it keeps growing at the same pace as we demonstrated in 2024.

Speaker Change: So the <unk> core security platform just curious if the performance in <unk> was better than expected. How we should think about the pipeline for core security throughout 2025, and then how that go to market motion is evolving for this product.

Speaker Change: We are very pleased with what we saw in Q1 as you know we will disclose all numbers at the end of this fiscal year.

Speaker Change: We are pleased with what we so coming in in Q1, and we are very much happy about what we see in the pipeline.

Speaker Change: Still on us to make sure that it's keep growing at the same pace as we demonstrated in 2024.

Shlomi Haim: Got it.

Mark Cash: Thanks, guys.

Speaker Change: Got it thanks guys.

Mark Cash: Your next question comes from the line of Mark Cash with Raymond James. Your line is now open. Please go ahead. Thank you.

Mark Cash: Your next question comes from the line of Mark cash with Raymond James Your line is now open. Please go ahead.

Shlomi Haim: Yeah, so Shlomi, maybe going back to that last question and realizing it was just last week, but JFrog's presence at RSA has really grown over the years. So just really curious to ask any takeaways coming out of RSA for JFrog. Any areas that stood out as advantages to capitalize on from a product or channel partner perspective for you? You mean in overall or specifically on security? Really on security, in like, just because the way we've seen the booth and the presence grow in RSA. Yeah, so what we have heard in our state is that two trends are heavily happening.

Mark Cash: Thank you, yes, so maybe going back to that last question and realizing it was just last week <unk> prices at RSA has really grown over the years. So just really curious as any takeaways coming out of RSA for Jay prod any areas that stood out as a as advantages to capitalize on it from a product or a channel partner perspective here.

Mark Cash: You mean.

Mark Cash: Overall specific around security it.

Mark Cash: Really on security.

Mark Cash: And Mike just because the way we've seen the booth and depressing square in RSA.

Speaker Change: Yeah, So what we inherited and I would say is that.

Speaker Change: <unk> have any happening the first one is consolidation of tools.

Shlomi Haim: The first one is consolidation of tools. One of them was included in today's call when I spoke about WalkMe and the consolidation of tools, moving from other tools, from multiple tools to JFrog as a platform solution. The second thing, and this is another big opportunity for us to grow, is the security around models. It's not anymore just software packages. It's not anymore just a few types of binaries. It's also the new era of AI with the primary asset of models and how you secure that. So you will see more partnerships coming in with JFrog, and you will see more use cases that developers are not just securing their software packages but also models.

Speaker Change: One of them was included in today's call when I spoke about walk me and the consolidation of towards moving from other tools to multiple for multiple tools to <unk> as the platform solution. The second thing and this is another big opportunity for US to go is the security around models, it's not there.

Speaker Change: Any more just software packages, it's not anymore. Just a few type of binaries. It's also the new era of AI, where the primary asset of modern and how your secured debt. So you will see more partnership coming in.

Speaker Change: <unk> will see more use cases that developers are not just securing Dell software packages, but also models.

Shlomi Haim: As I said, we are happy about the Q1 results. We are more than happy, and thank you for reminding me, RSA and RSA results. And we are building the pipeline to make sure that we deliver what we committed to at the end of the year.

Speaker Change: As I said, we are happy about the Q1 results we are more than happy and thank you for reminding me RSA and Alistair result, and we are building the pipeline to make sure that we deliver what we committed to at the end of the.

Eduard Grabscheid: Great, and for Ed, you know, I think last year, you guys had a focus on making sure you had quality accounts that expand, you know, now we're a quarter into 25. I guess, how's your confidence in growing the base, obviously, like the bigger customers doing well, but just kind of growing the, you know, the funnel and the base and then what would be the key drivers of getting momentum there? Thank you. Yeah, we we see still great momentum in our customers moving from lower subscriptions into the enterprise. And in particular, if you look at E-plus, the growth that we generate from our E-plus customers.

Tien Tsin: Great and for Ed I think last year, you guys had a focus on taking share you had quality accounts that expand.

Speaker Change: Now, we're a quarter into 'twenty five.

Speaker Change: How is your confidence in growing the base, obviously, you like the bigger customers doing well, but just kind of growing the funnel in the base and then what would be the key drivers are gaining momentum there. Thank you.

Speaker Change: Yes, we see still great momentum and our customers moving from lower subscriptions into the enterprise and in particular, if you look at E plus the growth that we generate from our E plus customers.

Eduard Grabscheid: Today, now more than 55% of our revenue is coming from E-plus. And we have significant growth over 30 plus percent in year over year revenue growth coming from that particular subscription. So we do see nice momentum. Now regarding how do we continue to carry that going forward, as we add more value to that platform, and we continue to add more products to enterprise, this quarter, we added ML to the to the platform, we will start to see more of our customers moving from the lower subscription to higher subscription. And we have a long runway to go still with less than 10% of our customers in E-plus.

Speaker Change: Today now more than 55% of our revenue is coming from E plus and we have significant growth over 30 plus percent.

Speaker Change: In year over year revenue growth coming from that particular subscription. So we do see nice momentum now regarding how do we continue to carry that going forward as we add more value to that platform and we continue to add more products to enterprise. This quarter, we added ml to the plan.

Speaker Change: Form we will start to see more of our customers moving from the lower subscription to higher subscription and we have a long runway to go still with less than 10% of our customers and E plus yeah, Mark I think.

Eduard Grabscheid: Yeah, Mark, I think, just to add a bit about what is mentioned, the balance between what you want to add as a value only to your enterprise customers and what you have on the lower subscription is something that we work on for the past 15 years. On one hand, you want to promote the top of funnel, those who doesn't start at the at the platform level. And on the other hand, you want to differentiate the platform. This, this quarter, we added MLOps capabilities, we expect to see even more migration from lower subscription to the enterprise plus.

Speaker Change: Just to add a bit about what Dennis mentioned.

Speaker Change: The balance between what you want to add as a value of only <unk> enterprise customers and what you have.

Speaker Change: On the lower subscription is something that we.

Speaker Change: We work on for the past 15 years on one hand, you want to promote the top of funnel those who doesn't stop at the platform level and on the other hand, you want to differentiate the platform. This.

Speaker Change: This quarter, we added <unk> capabilities, we expect to see even more migration from lower subscription to the enterprise.

Koji Ikeda: Your next question comes from the line of Koji Ikeda with Bank of America. Your line is now open. Please go ahead. Hey guys, thanks so much for taking the questions. When I look at the investor deck, I love how you guys are sticking with this 2027 revenue target. I really like the confidence there, but it does seem like growth. You know, it kind of accelerates from here out of 2025.

Speaker Change: Your next question comes from the line of Koji Ikeda with Bank of America. Your line is now open. Please go ahead, yes.

Speaker Change: Yeah, Hey, guys. Thanks, so much for taking the questions.

Speaker Change: When I look at the Investor deck.

Speaker Change: I Love how you guys are sticking with this 2027 revenue target target.

Speaker Change: Really like the confidence there, but it does seem like growth.

Speaker Change: Accelerates from here out of 2025, and so just curious on why are you so confident with that 2027 targets Don.

Eduard Grabscheid: And so just, you know, curious on why are you so confident with that 2027 target? Thank you for your question regarding the long term model. We are still evaluating that, as we said, actually last year. You know, we are on track. We're on track. And in fact, after even Q1, we remain on track with the long term model.

Speaker Change: Thank you for your question regarding the long term model, we are still evaluating that as we said actually last year.

We are on track we are on track and in fact, after even Q1, where we remain on track with our long term model, but there is uncertainty right now that we have to take into consideration and we will revisit the long term model and we may come back to you in the second half of 2025 with updates.

Eduard Grabscheid: But there is uncertainty right now that we have to take into consideration and we'll revisit the long term model.

Eduard Grabscheid: And we may come back to you in the second half of 2025 with updates. Got it. Thank you.

Speaker Change: Got it thank you and.

Eduard Grabscheid: And one thing I'm really liking about JFrog, you know, maybe even more than the growth, is the cash flow generation. And so you did 23% free cash flow margin this quarter. I think it's the best ever for a Q1. And when you look historically, free cash flow margin generally builds throughout the year. So I'm not trying to, I'm trying not to get ahead of my skis here. So maybe help me understand the free cash flow dynamics. And in the first quarter, you know, it does sound like cloud overage, maybe helped out a little bit. But, you know, just really thinking about it against the 20% margin guide for 2025.

Speaker Change: One thing I'm really liking about J ferrar, maybe even more than the growth is the cash flow generation and so you did 23% free cash flow margin. This quarter I think it's the best ever for a Q1 and when you look historically free cash flow margin generally builds throughout the year. So I'm not trying to I'm trying not to get ahead of my skis here.

Speaker Change: So maybe help me understand the free cash flow dynamics in the first quarter. It does sound like cloud overage maybe.

Speaker Change: Maybe helped out a little bit, but just really thinking about it against the 20% margin guide for 2025.

Eduard Grabscheid: Yeah, so free cash flow in Q1, seasonably tends to be where we have many of our payments, first off, so annual payments are in Q1. And the second piece to take into consideration is the conservatism on the top line. So because we remain conservative on the top line, we don't take into consideration the large customer opportunities. And we're not taking that into consideration in our free cash flow, it's not captured in free cash flow margin. So today, any overachievement that we would have on our top line would flow to the bottom and potentially improve free cash flow margin and what we're showing in the long term model, or in the investor deck, excuse me.

Speaker Change: Yeah, So free cash flow in Q1 seasonally tends to be where we have many of our payments first off so annual payments are in Q1, and the second piece to take into consideration is the conservatism on the top line. So because we remain conservative on the topline we don't take into consideration the loss.

Speaker Change: <unk> customer.

Speaker Change: Customer.

Speaker Change: Opportunities and we're not taking that into consideration in our free cash flow, it's not captured in free cash flow margin. So today any over achievement that we would have on our topline would flow to the bottom and potentially improve free cash flow margin and what we're showing in the long term model or in the investor deck excuse me.

Andrew Sherman: Thank you. Your next question comes from the line of Andrew Sherman with TD Cowan. Your line is open. Please go ahead. Oh, great. Thanks.

Speaker Change: Thank you.

Speaker Change: Your next question comes from the line of Andrew Sherman with TD Cowen. Your line is open. Please go ahead.

Andrew Sherman: Oh, great. Thanks, Shlomi would love to hear a little bit more about the pipeline of big deals in large enterprise if you can.

Shlomi Haim: Shlomi would love to hear a little bit more about the pipeline of big deals in large enterprise, if you can. And given what you did last year, which was so strong in the second half, do you see that kind of playing out more Q2 or second half? And how is like pipeline coverage versus a year ago levels? Yeah, Andy, you probably all understand that if we have a big deal in the pipe, it's already there. No big deal, no sizable deal of multi-million dollar appeal is coming in a quarter before. So we are working on it, promoting it, building the relationship.

Andrew Sherman: Given what you did last year, which was so strong in the second half do you see that kind of playing out more Q2 or second half and how is like pipeline coverage versus year ago levels.

Andrew Sherman: And they are all a few probably all understand that if we have a big deal in the pipe. It's already there no big deal no sizable deal of multi million dollar deal is coming in a quarter before so we are walking on it.

Andrew Sherman: <unk> thing is building that relationship and steel while we guide you guys we derisk.

Shlomi Haim: And still, while we guide you guys, we de-risk those meaningful, sizable deals. So we have a few of them in the second half of the year currently projected, and we are very excited about it. All of them include not just DevOps, but also security, the majority of them coming from the cloud as we plan it strategically.

Andrew Sherman: Those meaningful sizable deals. So we have a few of them in the second half of the year currently projected and we are very excited about it all of them includes not just Dev ops, but also security the majority of them coming from the cloud as we plan and strategically.

Shlomi Haim: And some of them might even include other elements that we added this year, but it's too early to tell. Okay, great.

Andrew Sherman: And some of them might even include the other elements that we added this year, but it's too early to tell.

Andrew Sherman: Okay, great and speaking of security.

Shlomi Haim: And speaking of security, have you seen any change to the sales cycles there, specifically given that it's a different go-to-market motion? And on customer renewals, for those that have been on advanced security for a while, how have those renewals gone in the reception to the roll-off of intro pricing? And then if you're able to display some point solutions in the process, and that helps fund the budget, we'd be glad to hear about that. Yeah, so first of all, regarding security, the pipeline is being built, as I mentioned, cycles are the same. I'm happy to see that most of our customers and prospects that are now looking at JFrog are taking security as part of the complete solution.

Andrew Sherman: And have you seen any change to sales cycles, there specifically given that it's a different go to market motion.

Andrew Sherman: On customer renewals that are for those that have been on an advanced security for a while.

Andrew Sherman: Uh huh.

Andrew Sherman: All of those renewables gone and the reception to the to the roll off of the intro pricing and then if youre able to display some point solutions in the process and that helps fund the budget would be ready to hear about that.

Andrew Sherman: Yeah. So first of all regarding security the pipeline is being built as I mentioned cycles are the same.

Andrew Sherman: I'm happy to see that most of our customers and prospects that are now looking at <unk>.

Andrew Sherman: Taking securities.

Andrew Sherman: Out of the complete solution so.

Shlomi Haim: So cycles are the same cycles, but maybe with more capabilities included. Regarding renewals, as you remember, the second half of 2024 was a bit more busy in terms of our security deals. So we'll see in the second half, I will be able to come up with maybe more information and insight about it. But what we've seen so far... One quarter behind us, what we've seen so far is very much aligned with our projection in terms of renewables and even upselling some of our customers. Great.

Andrew Sherman: The cycles are the same cycle, but maybe with more.

Andrew Sherman: Capabilities included in it.

Andrew Sherman: Guarding our renewals as you remember the second half of 2024 was a bit more busy in terms of our security deals. So we'll see in the second half I will be able to come up with maybe more information and insight about it.

Andrew Sherman: We are seeing so far.

One quarter behind us what we've seen so far is very much in line with our projection in terms of a nuance and even upselling some of our customers.

Shrenik Kothari: Thanks, guys.

Andrew Sherman: Great. Thanks, guys.

Shrenik Kothari: Your next question comes from the line of Shrenik Kothari with Baird. Your line is open. Please go ahead. Yeah, congrats on the great quarter. So just to follow up on on MLOps, I understand it's early days and you and Ed have said that they're not baking any MLOps related monetization into this fiscal guidance. But I think you said you have rolled out a credit-based monetization model for AI usage. Just as you are kind of test pricing levers across your customers, just if you can comment, Shlomi, on how the adoption telemetry is looking like. Is the AI usage exceeding kind of the comment minimums or any internal thresholds that you had in mind on these early accounts?

Speaker Change: Your next question comes from the line of <unk> <unk> with Baird. Your line is open. Please go ahead.

Speaker Change: Hey, I apologize.

Speaker Change: On the great quarter, So just a follow up on <unk>.

Speaker Change: It's early days and you wouldn't add how sad.

Speaker Change: Not making any animal ops related amortization into.

Speaker Change: This fiscal guidance.

Speaker Change: Thank you Savi you have rollout.

Speaker Change: Right based smart Ization model for he argues that just as you are.

Speaker Change: Pricing levers across your customers just if you can comment on how the adoption Tallo Mitra is looking like as the AI usage are exceeding.

Speaker Change: Uh huh.

Speaker Change: Men amounts are or any internal cash flows that you had in mind on these early accounting just curious like how to think about potential contribution here and then I had a quick follow up for Ed.

Shrenik Kothari: And just curious like how to think about potential contribution here and then had a quick follow for Ed. Yeah, thank you.

Speaker Change: Yeah.

Eduard Grabscheid: Thank you, Shrenik. ML is out as part of the JFrog platform for around two months. So while we are excited, and some of our customers are already starting to use it, it's too early for me to judge whether it's going to be part of the pipeline building, or it's too early. As I mentioned, there are some governance and budget questions, not necessarily technology questions, around it. And this is why we decided that the ML Ops capabilities will be part of your Enterprise Plus subscription. And in order to grow with us, in order to scale with us, then you will be able to buy more ML credits.

Shannon: Thank you Shannon.

Speaker Change: Nick.

Speaker Change: Ml is out as part of the <unk> platform fall around two months so.

Speaker Change: While we are excited and and some of our customers are already starting to using to use it. It's too early for me to judge whether it's going to be part of the pipeline building and go it's too early as I mentioned, there are some governance and budget questions not necessarily technology questions.

Speaker Change: And this is why we decided that the MLR capabilities will be part of your enterprise plus subscription and in order to grow with us in order to scale with US then you will be able to buy more annual credits. So even if someone started to use it two months ago, its still part of the <unk>.

Eduard Grabscheid: So even if someone started to use it two months ago, it's still part of the package. We don't yet see a significant impact on the pipeline.

Speaker Change: <unk>, we don't yet see a significant impact on the pipeline but.

Eduard Grabscheid: But we are looking forward to providing you with more information once we will have evidence from the market. Got it. I appreciate that, Shlomi.

Speaker Change: But we are looking forward to.

Speaker Change: To providing you with more information once we would have evidenced from the market.

Speaker Change: Got it I appreciate that Snowman, and Ed I know you sat on the call I won't comment on end quarter, but just if you can elaborate.

Eduard Grabscheid: And Ed, I know you said on the call, I won't comment on in-quarter, but just if we can elaborate on anything, if at all, any changes in linearity across the first quarter, particularly in enterprise accounts, are you seeing more deals late in the quarter versus more the usual, even staggered patterns that you typically see, just any sense there? So Shrenik, outside of the usage that we saw in Q1 that on a year over year basis is totally different than what we saw in Q1 of 2024, the linearity and what our expectations were perfectly in line.

Speaker Change: On anything of atoll, any any changes in linearity.

Speaker Change: Across the first quarter, particularly in enterprise accounts are you seeing kind of more.

Speaker Change: Sales late in the Waterworks is more the usual.

Speaker Change: Iran staggered.

Speaker Change: Items that we typically see.

Speaker Change: Any sense there.

Speaker Change: And so <unk> outside of the usage that we saw in Q1 that on a year over year basis is totally different than what we saw in Q1 of 2024, the linearity and what our expectations were perfectly in line.

Jason Celino: Perfect. Thanks a lot. Appreciate it.

Speaker Change: Perfect. Thanks, a lot appreciate it.

Jason Celino: Your next question comes from the line of Jason Celino with KeyBank. Your line is now open. Please go ahead. Yep. Thanks for taking my question.

Speaker Change: Your next question comes from the line of Jason <unk> with Keybanc. Your line is now open. Please go ahead.

Jason: Thanks for taking my question.

Jason Celino: You know, when we look at the sequential growth on the cloud side, it's the biggest Q1 we've seen and frankly, one of your biggest quarters outside of a Q4 on the cloud side. It sounds like most of this was driven from consumption. Did any of the upsides or the things you saw come from that enterprise deal that you signed or was it just signed too late in the quarter that it wouldn't have contributed anyway?

Speaker Change: When we look at the sequential growth on the cloud side, it's the biggest Q.

Speaker Change: Q1, we've seen and frankly one of your biggest.

Speaker Change: Orders outside of the Q4 on the cloud side.

Speaker Change: It sounds like most of this was driven from consumption.

Speaker Change: Did any of the upside or the things you saw come from that.

Speaker Change: Enterprise deal that you signed or was it just spend too late in the quarter that it would contribute to it anyway.

Shlomi Haim: Hey, Jason. Consumption was above the average, especially after 23 and 24. We were excited to see developers coming back and using and consume from our cloud services. But let me be clear, it was across the board. The deals that we submitted in Q1, the contracts that we secured in Q1, the long term contract, the adoption of our security solution, I think that on all fronts, and if you add to it also the free cash flow, RPO, all fronts, we scored high.

Speaker Change: Yes, Hi, Jason.

Speaker Change: Consumption was.

Above the average, especially after the 'twenty three 'twenty four we were excited to see developers coming back and using and consume.

Speaker Change: From our cloud services, but.

Speaker Change: Let me be clear it was across the board.

Speaker Change: The deals that we submitted in Q1 that the contract that we secured in Q1.

Speaker Change: Our long term contract.

Speaker Change: Adoption of our security solution I think that on all fronts and if you add to it also the free cash flow RVO all farms.

Shlomi Haim: And may I also remind you and everyone else, this is the third quarter in a row that we are exceeding our guidance. And we see a momentum here that we want to keep. It's not only because of technology adoption, it's also because of the strategic way we build and execute on the pipeline.

Speaker Change: It's called high and May I also.

Speaker Change: Remind you and everyone else. This is the third quarter and at all that we are exceeding.

Speaker Change: Our our guidance and.

Speaker Change: And we see a momentum here, but we want to keep it small it's only because of technology adoption. It's also because of the strategic way, we build and execute on the pipeline.

Eduard Grabscheid: Okay, excellent. And then maybe just a clarification for Ed, you know, given it was an acceleration in Q1, and then the guide you're taking up for cloud for the full year goes up by about a point. So your visibility to the rest of the year, I understand you're trying to be, you know, prudent and thoughtful with how you're thinking about the rest of the year. But how should we think about the pace, you know, of decel? Because, you know, you're, you're looking at 10 points of deceleration, you know, just to end the year on an average basis.

Speaker Change: Okay excellent and then maybe just a clarification Brad given it was an acceleration in Q1 and then the guide you are taking up for cloud for the full year. It goes up by about a point.

Speaker Change: So your visibility to the rest of the year I understand you're trying to be.

Speaker Change: <unk> and thoughtful with how you're thinking about the rest of the year.

Speaker Change: Or how should we think about the pace.

Speaker Change: Cell.

Speaker Change: Youre looking at 10 points of deceleration just to end the year on an average basis.

Eduard Grabscheid: You know, what would you think that the pace of decel would be, you know, more second half weighted or any, any help you can, you can help with the linearity there?

Speaker Change: Would you think that the pace of.

Speaker Change: Diesel would be more second half weighted or any any help you can you can help with that.

Speaker Change: So linearity there.

Eduard Grabscheid: I'm happy to help. And I'll give you three very easy bullets to understand. Number one, the de-risk of a pipeline from the largest deals. And as you know, those typically happen in the second half. And those are typically cloud migration deals. They're not factored into our guide. The second is the conservatism that we've already built in our guidance, which we've explained as we stepped into 2025. So we're being more conservative. And the fact that I'm not carrying over the full outperformance of Q1 into the full year, we have to evaluate to see where we're at after Q2.

Speaker Change: I'm happy to help and I will give you three very easy bullets to understand that number one the derisk our pipeline from the largest deals and as you know those typically happened in the second half and those are typically.

Speaker Change: Cloud migration deal.

Speaker Change: They are not factored into our guide the second is the conservatism that we've already built in our guidance, which we've explained as we step into 2025, so we're being more conservative and the fact that I'm not carrying over the full outperformance of Q1 into the full year, we have to evaluate to see where we're at after Q2 and you may see some opportunity, but again, it's too soon to know.

Eduard Grabscheid: And you may see some opportunity, but again, it's too soon to know.

Eduard Grabscheid: Okay, thank you, Ed.

Speaker Change: Okay. Thank you Ed.

Speaker Change: Okay.

Jonathan Recaver: Your next question comes from the line of Jonathan Recaver with Kantor. Your line is now open. Please go ahead. Yeah, hey, guys. So I just have one question.

Speaker Change: Your next question comes from the line of Jonathan <unk> with Cantor. Your line is now open. Please go ahead.

Jonathan: Yeah, Hey, guys.

Jonathan Recaver: And I realized that code suggestion is not a focus of JFrog. But just, you know, looking at the impact of OpenAI's proposed acquisition of Windsurf, it just, you know, makes one think, you know, there's a lot of dynamics at play, you know, OpenAI seemingly is going to be competing more directly with GitHub Copilot, in addition to Amazon Code Whisperer. But I think that, you know, from my perspective, it seems to point to heightened competition, obviously, between the AI platforms. And, you know, we're seeing those platforms move towards tighter integration of the various solutions across the development tool chain.

Jonathan: So I just have one question.

Jonathan: I realize the code suggestion is not a focus of <unk> for <unk>, but just looking at the impact of opening <unk> proposed acquisition of <unk>.

Jonathan: It just.

Jonathan: Makes one think there are a lot of dynamics at play.

Jonathan: Seemingly is going to be competing more directly.

Jonathan: Co Pi in addition to Amazon code with Ferrari.

Jonathan: From my perspective, it seems to point to heightened competition, obviously between the AI platforms and we're seeing those platforms move towards tighter integration of the various physicians cross the development tool chain.

Jonathan: So I'm just curious slowly add your perspective on how this potentially impacts the repository opportunity. It does it drive more strategic partnerships.

Shlomi Haim: So I'm just curious, Shlomi, on your perspective on how this potentially impacts the repository opportunity? It doesn't, you know, drive more strategic partnerships? Yeah, that's a great question. And as we know, this market evolves very fast. Currently, from what we see, and specifically from the player you mentioned, that we work very closely with them. The more, the merrier. It's not overlapping the model registry we provide. For sure, it's not overlapping the other software packages that you need to use in order to drive AI. It's not covering the security and the model scanning that we provide.

Jonathan: Yeah, that's a great question and as we know this market that goes very fast.

Jonathan: Currently on what we see and specifically on the plan and you mentioned that we work very closely with them.

Jonathan: Uh huh.

Jonathan: Yeah.

Jonathan: The mall of the Marriott.

Jonathan: Not that it's not overlapping.

Jonathan: Modern registry, we provide for sure it's not overlapping the other software packages that you need to use in order to drive AI.

Jonathan: It's not covering their security and their module scanning that we provide so what the future will bring I don't know, but constantly we are collaborating and it's up it's the synergy is actually what our customers are asking for so currently my answer is that I.

Operator: So what the future will bring, I don't know. But currently, we are collaborating. And the synergy is actually what our customers are asking for. So currently, my answer is that I see more collaboration than competition. Yeah. Okay, great. Thank you. There are no further questions at this time.

Jonathan: More corporate collaboration than competition.

Jonathan: Yes.

Jonathan: Great. Thank you.

Jonathan: There are no further questions at this time I will now turn the call back to Shlomi for closing remarks.

I will now turn the call back to Shlomi for closing remarks. Thank you, everyone. We are very, very excited about this quarter. We are excited about what ahead. And we wish you from here from the swamp at Sunnyvale a great afternoon. Thank you. This concludes today's call. Thank you for attending. You may now disconnect.

Jonathan: Thank you everyone. We are very very excited about this quarter. We are excited about what they have and we wish you from here from the swamp that Senate Bill a great afternoon.

Jonathan: This concludes today's call. Thank you for attending you may now disconnect.