JFrog (FROG) Q3 2024 earnings summary

Executive summary

• Q3 2024 revenue reached $109.1 million, up 23% year-over-year, with cloud revenue growing 38% to $42.4 million, now 39% of total revenue.

• Major platform wins, robust customer expansion, and strong enterprise adoption, especially in cloud and security segments, highlighted the quarter.

• Strategic partnerships and product innovation, including the launch of JFrog ML and Runtime Security, reinforced platform differentiation and expanded MLOps capabilities.

• The company completed the acquisition of Qwak AI Ltd. in July 2024, enhancing machine learning model management capabilities.

• 7,400 customers as of FY23, with 83% of Fortune 100 companies using the platform.

Financial highlights

• Total Q3 revenue was $109.1M, up 23% year-over-year; cloud revenue reached $42.4M, up 38% year-over-year, now 39% of total revenue.

• Gross profit was $90.3M (non-GAAP, 82.8% margin); GAAP gross profit was $81.8M (75% margin), with margin decline due to higher cloud mix and hosting costs.

• Operating profit was $14.7M (non-GAAP, 13.5% margin); GAAP operating loss was $29.9M.

• Free cash flow was $26.7M for Q3 and $59.3M for the nine months ended September 30, 2024; cash and short-term investments ended at $467.8M.

• Net dollar retention for the trailing four quarters was 117%; gross retention rate was 97%.

Outlook and guidance

• Q4 revenue expected between $113.5M–$114.5M; non-GAAP operating income $14M–$15M; non-GAAP EPS $0.13–$0.15.

• FY2024 revenue guided to $425.9M–$426.9M; non-GAAP operating income $56.4M–$57.4M; non-GAAP EPS $0.59–$0.61.

• Cloud revenue growth for 2024 forecasted at ~40% year-over-year; net dollar retention expected in the mid-teens.

• Guidance remains conservative, de-risking large-scale pipeline opportunities due to ongoing macro uncertainty.

• Long-term (FY27) targets: $775M–$825M revenue, 21–23% operating margin, and 26–29% free cash flow margin.