JFrog buys Israeli security startup Vdoo for $300m

Shlomi Ben Haim

"Vdoo will accelerate JFrog’s vision of becoming the company behind all software updates," the company says.

Israeli software company JFrog (Nasdaq: FROG), which held its IPO on Nasdaq last year, has found a use for part of the money that it raised, and has announced the acquisition of Israeli startup Vdoo for $300 million, of which $210 million is in cash and $90 million is in JFrog shares, on the basis of an average price of the average price in the past fifteen days.

JFrog, headed by co-founder Shlomi Ben Haim, provides a solution for continuous software updates. Nine months ago, it raised $428 million in an offering at a valuation of $4 billion. After ups and downs in its share price following the flotation, it is now traded at nearly $50 per share, giving it a market cap of nearly $4.7 billion. At the end of the first quarter, the company had $606 million cash.

JFrog's announcement of the acquisition states, "JFrog has accelerated its efforts to provide an industry-leading security offering to support DevOps users as they respond to the disruption in the market for continuous software delivery. As part of the JFrog Platform, Vdoo will accelerate JFrog’s vision of becoming the company behind all software updates and creating a world of Liquid Software by expanding its end-to-end DevOps Platform offering, providing holistic security from the development environment all the way to edges, IoT and devices.

"Many of today’s DevOps solutions are missing proper security capabilities that are fully integrated into the software lifecycle. Security tools are disparate, each with its own data set, which creates friction between development and security teams, slowing the releases of software updates - especially when continuously delivering to the edge or across a large fleet of devices. As a result, many of these security tools are not delivering on the promise of fast, automated, and secure releases.

"The market demands a holistic process that secures software components all the way to the edge, consolidates security data for efficient decision-making, saves time and resources, and blesses an end-to-end delivery system with the highest integrity for security-certified releases -- from any source to any endpoint."

Vdoo was founded in 2017 by Netanel (Nati) Davidi, its CEO, Uri Alter (president), and Asaf Karas (CTO). According to IVC, the company employs over 90 people, most of them in Israel. It has raised $70 million in two fund raising rounds, the second of which took place this year. Among its investors are 83North, Dell Technology Capital, GGV Capital, Qumra Capital, NTT Doccomo, and Verizon.

"We are excited to have Vdoo join the JFrog family," said JFrog's Ben Haim. "It is clear to us that the joint vision of changing the way software is being created, released, and updated to the edge will be our compass as we offer the market a binary-focused solution to secure their organization’s software assets."

For Vdoo, Davidi said "This proposed acquisition is a great fit for both our companies. We share a vision around DevOps and security: if any DevOps company isn’t also a security company, it is solving only a small piece of the puzzle."

At the same time as announcing the acquisition, JFrog also reiterated its guidance. For the second quarter, the company expects revenue of $47.6 million to $48.6 million, with non-GAAP operating income of $0.5 million to $1.5 million and non-GAAP earnings per share of $0.00 to $0.01, assuming approximately 104 million weighted average diluted shares outstanding. For 2021, revenue is expected to be $198 million to $204 million, with non-GAAP operating income between $5 million and $7 million and an approximately 3% increase in weighted average diluted shares.

In the first quarter, JFrog's revenue totaled $45.1 million, 37% more than in the corresponding quarter, and it posted a non-GAAP net loss of $0.09 per share,

Subject to the closing of the proposed acquisition, JFrog anticipates its consolidated operating expenses to increase by approximately $9-10 million for the remainder of 2021.

Published by Globes, Israel business news - en.globes.co.il - on June 29, 2021

© Copyright of Globes Publisher Itonut (1983) Ltd. 2021

Shlomi Ben Haim
Shlomi Ben Haim
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