JFrog Ltd. Discusses Software Supply Chain Mgmt and AI Oppt'y at BofA Global Tech Conf 2025

Key Takeaways

TL;DR: JFrog’s call highlighted robust Q1 performance powered by record enterprise deals and unexpected cloud usage, while outlining strategic moves toward the booming GenAI/MLOps market. The co remains focused on secure binary mgmt, deepening security penetration, and strong FCF discipline amid cautious guidance for deal timing and volatile usage metrics.

• Strategic Biz Model & Product Differentiation
  • JFrog uniquely manages the software supply chain by converting source code into binary and supports three core apps: Artifactory, DevSecOps, and JFrog ML.
  • Quote: “We are the only co in the world that has binary and Artifactory as a platform.” (Ed Grabscheid)
  • The platform’s comprehensive approach, incl. support for multiple programming languages, forms a key barrier to entry for competitors.
• Q1 Performance & Enterprise Penetration
  • Robust Q1 results are the culmination of several Qs of strategic investments aimed at shifting from developer-driven sales to targeting the C-suite and broadening enterprise penetration.
  • Notable large deals include a $30M ACV contract and several 8-figure deals—contrasting sharply w/ past mega deals of ~$0.5M.
  • Security integration, enhanced by the Vdoo acquisition, has now spilled into rev. streams: contributing 3% of rev., 5% of ARR, and 12% of RPO.
  • Unexpectedly strong cloud usage was observed, w/ overusage beyond min. committed levels, suggesting robust adoption across varied geographies and customer sizes.
• AI & MLOps/GenAI Market Oppt'y
  • JFrog is positioning itself to be a key player in the GenAI space by managing the binaries produced by large language models.
  • The acquisition of Qwak AI has already yielded a cloud-native product release in Q1, w/ a self-hosted version scheduled for the end of the current Q.
  • Increased package usage in Docker, Hugging Face, and Python (PyFi) hints at growing AI experimentation among developers.
  • Quote: “When you bring a large language model into your org, it's a binary. And we are the co that manages the binaries.” (Ed Grabscheid)
• Security Growth Trajectory & Sales Strategy
  • Security is viewed as a major growth vector, w/ over half of 7,000+ customers utilizing JFrog X-ray—the entry point to advanced security products.
  • The sales approach now unifies the developer mindset w/ the CIO/CISO panel, integrating previously separate IT and security budgets.
  • This integration underpins broader penetration in large orgs that are increasingly prioritizing cybersecurity.
• Guidance & Rev. Forecasting Considerations
  • The co excl. variable factors such as significant self-managed cloud migrations and non-committed usage overage from guidance due to their uncontrollable nature.
  • A cautious rev. forecast is in place because large complex deals present timing challenges, exemplified when one anticipated deal (w/ 99% closure probability) slipped, impacting rev. expectations.
  • Quote: “I don't have deals tens of deals that I can pull into the Q…” (Ed Grabscheid)
• Competitive Landscape & Differentiation
  • Competitors are limited; aside from a PE-backed private player (Sonatype) and a few minor cloud-native start-ups, JFrog faces little direct rivalry.
  • Hyperscalers offer basic container registry solutions, but JFrog’s deep tech stack and focus on comprehensive binary security create a robust competitive moat.
• M&A Strategy & FCF Discipline
  • Maintaining robust FCF (26% margin in Q1) enables JFrog to remain agile in pursuing tactical M&A oppt'ys—particularly small, tuck-in deals to plug platform gaps in ML/AI.
  • The co remains committed to balancing innovation against profitability, w/ an ongoing focus on maintaining near-term FCF targets (26%-29%) and ensuring adherence to the Rule of 40.
  • Quote: “I’m not going to spend $3 to earn $1.” (Ed Grabscheid)
• Future Outlook & Demand Environment
  • An update on the evolving demand landscape will follow after Q2 closes, as the team monitors the tug-of-war between innovation-driven usage and budget constraints from procurement.
  • The converging focus on ML/AI, security, and expanded enterprise initiatives positions JFrog for significant long-term growth despite current market uncertainties.

Overall, the conversation underscores JFrog’s progress from a developer tool to an enterprise platform w/ broad applications in security and AI, backed by strong financial discipline and a clear strategic roadmap.

Call Q&A

• Koji Ikeda: What is JFrog? What do you guys do?
  • Ed Grabscheid: JFrog makes developers more efficient by managing binaries. They have a platform w/ binary and Artifactory, DevSecOps, and JFrog ML. They focus on managing assets securely and delivering updates, w/ future plans to work w/ large language models.
• Koji Ikeda: What does it mean to be the supply chain of software?
  • Ed Grabscheid: It involves converting source code into machine language and managing the rapid pace of updates. JFrog manages the process of taking binaries, testing, securing, and distributing them.
• Koji Ikeda: Tell me about the highlights of the first Q and investor feedback.
  • Ed Grabscheid: Q1 was a culmination of efforts over many Qs, incl. strategic sales and security integration. They closed large deals and saw unexpected robust cloud usage, leading to a great result.