JFrog (FROG) Q2 2024 earnings summary

Executive summary

• Q2 2024 revenue reached $103 million, up 22% year-over-year, with cloud revenue up 42% to $39.3 million, now 38% of total revenue.

• Enterprise Plus subscriptions contributed 50% of total revenue, with revenue from this segment growing 35% year-over-year.

• Customers with ARR over $1 million rose to 42, a 75% increase year-over-year; customers with ARR over $100,000 grew to 928.

• Strategic shift to outbound enterprise sales increased average selling price and expanded large customer base.

• Notable partnerships and acquisitions include a deep integration with GitHub and the acquisition of Qwak AI to expand into MLOps.

Financial highlights

• Non-GAAP gross profit was $86.9 million (84.4% margin); GAAP gross profit $81.2 million (78.8% margin).

• Non-GAAP operating income was $13.6 million (13.2% margin); GAAP operating loss was $19.1 million.

• Non-GAAP diluted EPS was $0.15, up from $0.11 year-over-year; GAAP net loss per share was $(0.13).

• Free cash flow for Q2 was $16 million (15.5% margin); for the six months ended June 30, 2024, it was $32.6 million.

• Cash, cash equivalents, and short-term investments totaled $591.3 million as of June 30, 2024.

Outlook and guidance

• Q3 2024 revenue expected between $105–$106 million; non-GAAP operating income $10–$11 million; non-GAAP EPS $0.09–$0.11.

• FY2024 revenue expected between $422–$424 million; non-GAAP operating income $52–$54 million; non-GAAP EPS $0.54–$0.56.

• Cloud revenue growth for FY2024 revised to ~40% due to delayed migrations and slower expansion.

• Material revenue from security offerings now expected in 2025 due to longer sales cycles and proof of concept processes.

• No meaningful revenue contribution from Qwak expected in Q3 or FY2024.