JFrog’s first result as a public company came in earlier.
Few operational highlights:
- Number of customers with ARR greater than $100K increased to 313 this quarter from 286 last quarter
- Number of customers with ARR above $1M increased to 9 this quarter from 8 last quarter
- Net Dollar Retention for trailing four quarters declined to 136% for this quarter from 139% last quarter
In terms of financial results, total revenue growth was 39.7%, slightly below my expectation. Gross profit margin was 81.3% which is inline with my expectation.
I missed the assumption of increased SBC in Opex after IPO in my initial model so I significantly underestimated. Since the SBC is a non-cash item, there’s no material difference in non-GAAP profitability metric like Adj. EBITDA below. I notice JFrog is using their onw Non-GAAP metrics so I will add line items so that my metrics are comparable to their metrics later.
JFrog generated $9.7M FCF in third quarter. The major difference between the actual and forecast came from the changes in net working capital.
The topline in last quarter doesn’t provide a positive surprise to the market. The stock dropped 3.5% after market. If the company follows normal growth trajectory, it will be difficult to sustain 30X+ of high EV/Sales multiple .
The guidance for 4Q20 was not very impressive. The lower bound of guidance implies a yoy of 33% which is at the similar level with standalone net dollar retention of 133% in 2Q20. The implied yoy growth from higher bound guidance is at the similar level of net dollar retention of 136% for trailing four quarters.
Assume 4Q20 revenue consists of growth from 4Q19 revenue base and revenue from new customers. If those 4Q19 revenue grew at 33% + $2,000K from new customers, JFrog can easily beat its guidance. Beat will not be enough, JFrog needs to fight the gravity.
Let’s if I can find something interesting in transcript once it comes out.