JFrog – FY3Q20 ER

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.

JFrog – Guess FY3Q20

Once you have a model, you can play around numbers and make some guess on quarterly results. My first guess on Frog’s first earnings below. Will revisit the difference after the earnings release. Hopefully, this process improves my predictive power on this specific company over time.

I don’t have consensus numbers so will need to rely on news to see whether it’s a beat or miss and the magnitude.