Israeli technology company JFrog (Nasdaq: FROG) released its third quarter financials, its first as a public company, after the close of trading in New York yesterday. JFrog, which provides solutions that facilitate continuous software updates, was floated in September at a price of $44 per share, giving a valuation of $3.9 billion. Since then, the company's share price has risen by 63%, and its market cap stands at $6.4 billion.
Ten analysts cover JFrog, and their consensus bottom line estimate for the third quarter was a net loss of $0.02 per share, but in fact JFrog reported positive earnings per share (non-GAAP) of $0.05.
Revenue for the third quarter of 2020 was $38.9 million, higher than the analysts' estimate, and representing an increase of 40% from $27.8 million for the third quarter of 2019. Revenue divides between subscriber revenue and license revenue. Subscriber revenue grew by 42.5% to $35.7 million (with a gross margin of 80.3%), while license revenue grew by 14.3% to $3.2 nm (with a gross margin of 93.3%).
On a GAAP basis, JFrog posted an operating loss of $5.4 million for the third quarter, higher than the $3.3 million operating loss in the corresponding quarter of 2019, and a net loss of $5.3 million, which compares with a net loss of $3.1 million in the corresponding quarter. On a non-GAAP basis, JFrog posted a net profit for the third quarter of $5.3 million, almost double the figure for the corresponding quarter.
Revenue for the first nine months of 2020 was $108.1 million, an increase of 46% from $74.0 million for the first nine months of 2019. Revenue from subscriptions grew 48.6% to $99.2 million, while revenue from licenses grew by a more modest 24.4%, to $9 million. The net loss for the first nine months of 2020 was $5.7 million, which compares with a net loss of $5.2 million in the corresponding period of 2019. On a non-GAAP basis, the company posted a net profit of $11.3 million, or $0.11 per share, for the first nine months of 2020. The company generated net cash flow in that period of $16.6 million from regular activity, and free cash flow of $14 million. At the end of the third quarter, it had cash of $578 million.
Looking ahead, JFrog sees revenue and profit higher than the analysts' estimate for the fourth quarter. Its guidance is for revenue of $40.9-41.9 million and a non-GAAP net profit of $0-2.1 million, or $0.00-0.02 per share. This will mean that for 2020 as a whole the company will have revenue of $149-150 million and earnings per share of $0.11-0.13.
"In our first quarter as a public company, JFrog’s demonstrated growth, high retention and strong momentum reflected the mission-critical nature of JFrog products to our customers," said JFrog CEO and co-founder Shlomi Ben Haim. "Our customers continue to adopt cloud-based and hybrid solutions as they embrace digital transformation through modern, cloud-native technologies. As DevOps continues to change the software update landscape, we look forward to leading the market in the fourth quarter and beyond."
Published by Globes, Israel business news - en.globes.co.il - on November 5, 2020
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