Summary
JFrog's fiscal 2024 second quarter revenue reached $103.0 million, up 22.4% from the prior-year quarter. Gross profit was $81.2 million, up 23.5%, and gross margin was 78.8%, up 0.7 percentage points. The company still posted a GAAP operating loss of $19.1 million, compared with $18.9 million, so the loss widened. GAAP net loss was $14.3 million, narrowed from $15.5 million. Diluted GAAP loss per share was $0.13, improved from $0.15. On a non-GAAP basis, operating income was $13.6 million and diluted earnings per share was $0.15.
Six-month revenue was $203.4 million, up 24.0%. Six-month gross profit was $160.9 million, up 26.5%. The six-month GAAP operating loss was $35.8 million, narrowed from $42.1 million. Six-month GAAP net loss was $23.1 million, narrowed from $36.3 million. Six-month diluted GAAP loss per share was $0.21, improved from $0.36. Gross margin for the six months was 79.1%, up 1.6 percentage points. Operating margin for the quarter was negative 18.6%, up 3.9 percentage points, and for the six months it was negative 17.6%, up 8.1 percentage points.
Cloud revenue was $39.3 million, up 42% year over year, and represented 38% of total revenue, compared with 33% in the year-ago period. Enterprise+ subscription revenue was $51 million, up 35% year over year, and accounted for 50% of total revenue, compared with 45% in the year-ago period. Net dollar retention was 118%. Customers with more than $100,000 in ARR rose to 928 from 813, and customers with more than $1 million in ARR rose to 42 from 24. Remaining performance obligations were $272.0 million, up 27.3%, and deferred revenue was $221.3 million, up 20.0%.
Operating cash flow was $16.7 million, flat versus the prior-year quarter, while free cash flow was $16.0 million. Capital expenditures were $0.7 million, up 44.4%. For the six months, operating cash flow was $34.2 million, up 119.3%. For the third quarter, management guided revenue to $105 million to $106 million, non-GAAP operating income to $10 million to $11 million, and non-GAAP net income per diluted share to $0.09 to $0.11, assuming about 115 million weighted average diluted shares. For the full fiscal year 2024, management guided revenue to $422 million to $424 million, non-GAAP operating income to $52 million to $54 million, and non-GAAP net income per diluted share to $0.54 to $0.56, assuming about 116 million weighted average diluted shares.
The quarter included the acquisition of Qwak AI Ltd. on July 9, 2024, which JFrog expects to expand its platform into MLOps. The company also announced a partnership with GitHub. Risks include the Israel-Hamas war and related hostilities, which could disrupt operations or call employees into military service. JFrog said there has been no major interruption or material adverse impact as of the date of the quarterly report. Other risks include integrating Qwak, a history of losses, rapid growth, security breaches, product vulnerabilities, competition, and general market and economic conditions.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q2 FY2024 | Q1 FY2024 | QoQ | Q2 FY2023 | YoY |
|---|---|---|---|---|---|
| Revenue | $103.0M | $100.3M | +2.7% | $84.2M | +22.4% |
| Gross profit | $81.2M | $79.7M | +1.8% | $65.7M | +23.5% |
| Gross margin | 78.8% | 79.5% | -0.7 pp | 78.1% | +0.7 pp |
| Research & development | $37.1M | $35.8M | +3.6% | $33.5M | +10.7% |
| Sales & marketing | $45.9M | $43.6M | +5.3% | $36.4M | +26.3% |
| General & administrative | $17.3M | $16.9M | +1.9% | $14.7M | +17.2% |
| Total operating expenses | $100.3M | $96.3M | +4.1% | $84.6M | +18.5% |
| Operating income (loss) | -$19.1M | -$16.6M | -15.0% | -$18.9M | -1.2% |
| Operating margin | -18.6% | -16.6% | -2.0 pp | -22.5% | +3.9 pp |
| Net income (loss) | -$14.3M | -$8.8M | -62.7% | -$15.5M | +7.5% |
| Net margin | -13.9% | -8.8% | -5.1 pp | -18.4% | +4.5 pp |
| Diluted EPS | -$0.13 | -$0.08 | -$0.05 | -$0.15 | +$0.02 |
| Customers | 886 | 886 | ±0.0% | 736 | +20.4% |
| Net retention rate | 118.0% | 118.0% | ±0.0 pp | 120.0% | -2.0 pp |
Risks
JFrog faces risk that competitors or third parties incorporate AI technology into their products more quickly or successfully, and its support for MLOps may fall behind rapidly changing standards. The July 2024 Qwak acquisition is intended to enhance machine learning model management, but integration and market acceptance are uncertain.
Adverse macroeconomic conditions, including inflation, higher interest rates, and tighter credit, have led to longer sales cycles and enhanced budget scrutiny by customers. Customers may also develop in-house software as an alternative, limiting JFrog's ability to grow its business.
The Israel-Hamas war and regional conflict in the Middle East could disrupt operations because a material part of research and development is conducted in Israel and approximately half of employees and consultants are located there. Employees have been called for military service, and absences may materially and adversely affect business.
The length of JFrog's sales cycle can be unpredictable, particularly for large customers, and large individual sales have occurred in quarters later than anticipated or not at all. Because a substantial proportion of expenses are relatively fixed in the short term, revenue shortfalls in a quarter could harm results.
The market is nascent and highly fragmented, and JFrog competes with homegrown solutions, DevOps vendors, cloud providers, security point solutions, and diversified vendors, many with greater resources. A limited-functionality version of JFrog Artifactory is licensed under AGPL, which could allow competitors to offer it for free and pressure pricing.
The company completed the Qwak AI Ltd. acquisition on July 9, 2024 and paid $163.7 million cash, which may require significant management attention and disrupt ongoing business. Failure to integrate Qwak's AI development platform could adversely affect revenue and results of operations.
JFrog depends on key personnel and has experienced recent management changes, including the departure of its CFO in the last twelve months, a new CFO and Chief Legal Officer, and its Chief Data Scientist transitioning to a consulting role. Competition for DevSecOps engineers is intense, especially in Israel and the San Francisco Bay Area, increasing wage pressure.
New or modified legal obligations for AI, such as the EU AI Act, may impose compliance burdens and fines up to €35 million or 7% of global income. The AI Act may impact incorporation of AI technologies into JFrog's offerings in Europe.
JFrog outsources substantially all cloud infrastructure to third-party providers such as AWS, Microsoft Azure, and Google Cloud, and these providers may also compete with a subset of JFrog functionality. Service interruptions, capacity limits, or changes in provider offerings could harm operations and financial results.
Rapid growth has strained management, operational, and financial resources, and JFrog expects its revenue growth rate to decline in future periods. Net dollar retention rate declined to 118% as of June 30, 2024 from 120% as of June 30, 2023, which may pressure future growth.
SaaS KPIs
All quarters →Free Cash Flow
Non-GAAP Operating Margin
Cloud Revenue
Non-GAAP Gross Margin
Cloud Revenue % of Total Revenue
Net Dollar Retention
Remaining Performance Obligations (RPO)
Customers with >$100K ARR
Customers with >$1M ARR
Enterprise+ Subscription % of Total Revenue
Non-GAAP Operating Income
Summary, forecast, risks and KPIs are extracted from JFrog Ltd's SEC filings for Q2 FY2024 (10-Q / 10-K and the 8-K earnings release); GAAP figures in the summary are checked against the reported XBRL data. They can contain errors; the filings are authoritative. Processed Oct 2, 2026.