JFrog (FROG) Reports Strong Q4 Results But Growth In 2021 To Slow Down Slightly

Adam Hejl /
2021/02/12 1:43 am EST

Software development tools maker JFrog (NASDAQ:FROG) reported Q4 FY2020 results that beat analyst expectations, with revenue up 38.79% year on year to $42.69 million. JFrog made a GAAP loss of $3.714 million, down on its loss of $211.0 thousand, in the same quarter last year.

JFrog (FROG) Q4 FY2020 Highlights:

  • Revenue: $42.69 million vs analyst estimates of $41.52 million (2.8% beat)
  • EPS (non-GAAP): $0.02 vs analyst estimates of $0.02 (17.65% beat)
  • Revenue guidance for Q1 2021 is $44.50 million at the midpoint, below analyst estimates of $44.80 million
  • Management's revenue guidance for FY2021 of $200.0 million at the midpoint, predicting 32.60% growth
  • Free cash flow of $11.91 million, up 23.07% from previous quarter
  • Net Dollar Retention Rate: 133%, down from 136% previous quarter
  • Gross Margin (GAAP): 81.03%, in line with previous quarter

Software Is Eating The World

Founded in 2008, JFrog provides software as a service platform that makes developing and releasing software easier and faster, especially for large teams. Typically any software built these days is using a large number of reusable components that provide functionalities developers don’t want to spend time building themselves. JFrog provides a central storage that ensures that everybody on the engineering team is using the same version of the components, and automates testing, compliance review and deployment of the new code.

As you can see below, JFrog's revenue growth has been impressive over the last couple of years.

JFrog Software Revenue

And unsurprisingly, this was another great quarter for JFrog with revenue up an absolutely stunning 38.79% year on year. On top of that, revenue increased $3.803 million quarter on quarter, a very strong improvement on the $2.455 million increase in Q3 2020, and a sign of acceleration of growth.

Dollar-based Net Expansion Rate As A Percent

JFrog's net dollar retention rate, an important measure of how much customers from a year ago were spending at the end of the quarter, was at 133% in Q4. That means even if they didn't win any new customers, JFrog would have grown its revenue 33.00% year on year. Despite it going down over the last year this is still a great retention rate and a clear proof of a great product. We can see that JFrog's customers are very satisfied with their software and are using it more and more over time.

Key Takeaways from the Q4 Results

With more than $598.1 million of cash on the balance sheet, we're confident that JFrog has the resources it needs to pursue a high growth business strategy. We enjoyed seeing JFrog’s impressive revenue growth. And we were also excited to see it that it outperformed analysts' revenue expectations. On the other hand, it was disappointing that the revenue guidance for next year was quite weak and that the revenue retention rate deteriorated a little. Overall, this quarter's results were not the best we've seen from JFrog. Based on its track record of strong revenue growth, some JFrog shareholders may be left nonplussed by these quarterly results; but they don't change the fact that this is a company worth watching.