Ladies and gentlemen, thank you for joining us. And welcome to the JFrog Third Quarter 2020 Earnings Conference Call. I'll hand the conference over today to JoAnn Horne of the JFrog Investor Relations team. JoAnn, please go ahead.

Good afternoon. And thank you for joining us, as we review JFrog’s third quarter financial results, which were announced following the market closed via press release earlier today. Joining us will be JFrog’s CEO and Co Founder, Shlomi Ben Haim, and Jacob Shulman, JFrog’s CFO. During this call, we may make statements related to our business that are forward-looking under federal securities laws, and are made pursuant to the Safe Harbor provisions of the private securities litigation Reform Act of 1995. Including statements related to our future financial performance, including our outlook for the fourth quarter for the full year of 2020. The words anticipate, believe, continue, estimate, expect, intend, will, and similar expressions are intended to identify forward-looking statements or similar indications of future expectation. You are cautioned not to place undue reliance on these forward-looking statements, which reflect our views only as of today, and not as at any subsequent day. Please keep in mind that we are not obligating ourselves to revise or publicly release the results of any revisions to these forward-looking statements in light of new information or future events. These statements are subject to a variety of risks and uncertainties that could cause actual results to differ materially from expectations. For discussion of material risks and other important factors that could affect our actual results, please refer to our prospectus filed with the SEC dated September 15, 2020, which is available in the Investor Relations section of our website and the earnings press release issued earlier today. Additional information was made available in our quarterly reports on Form 10-Q for the quarter ended September 30, 2020, and other filings reports that we may follow from time to time with the SEC. Additionally, non-GAAP financial measures will be discussed on this conference call. These non-GAAP financial measures which are used as measures of JFrog’s performance should be considered in addition to, not as a substitute for, or not in isolation from GAAP measures. Please refer to the tables in our earnings release for reconciliation of those measures to their most directly comparable GAAP financial measures. A replay of this call will be available there for a limited time. With that, I'd like to turn the call over to JFrog’s CEO, Shlomi Ben Haim. Shlomi?

Thank you, JoAnn. Good afternoon. And thanks for joining us for JFrog’s 2020 third quarter earnings call, which is our very first as a publicly traded company. We're proud and excited to have become a public company listed on NASDAQ under the symbol FROG in mid-September. Before we get started, I would like to wish you and your loved ones the best of health as we all face the new reality in how we learn, work, communicate, and more. We are all affected by the current environment, and we look forward to better days ahead. This is JFrog’s first quarterly report. Therefore, I would like to take a moment to thank JFrog’s employees for what we have built together. These employees we call the frogs are the reason for the company's success and what makes us leap forward. Let me begin by explaining both our business and vision to put JFrog’s Q3 results into context. As I start, I'd like you to ask yourself a couple of simple questions. What version of video or audio conference software are you using right now to attend this call? On your LinkedIn or Facebook application, what is the current software version you're using? When you watch Netflix at home, what version do you use? Of course, you don't know. No one knows. I don't know. And frankly, as a user, you don't care. You just want up-to-date reliable, secure software without any hassle. Imagine there are no versions. This is JFrog’s liquid software vision: a world without software versions, where the word software is updated seamlessly and securely without the hassle of update processes and downtime. My co-founders, Fred Simon, Yoav Landman, and I launched JFrog in 2008 with a mission to make software development and delivery easier to manage through a process known today as DevOps. As developers ourselves, we predicted the change in the way software is built, released, and deployed, not only by developers but also by machines. Since that time, JFrog has pioneered the complete end-to-end platform for continuous software release management, also known as CSRM. We are honored that more than 75% of Fortune 100 companies use JFrog to build and deliver software rapidly and securely daily. As a brief overview of the business and financials, I'm pleased to report that for the quarter ending September 30, 2020, JFrog revenue was $38.9 million, a growth of 40% year-over-year for the same period. Non-GAAP operating income was $5.1 million, more than double the prior year level. Also, in Q3, we achieved a record level of quarterly free cash flow of $9.7 million. We continue to have broad customer diversification, and no single customer represented more than 2% of the company's revenues. Our product continues to be mission-critical to our customers, regardless of COVID headwinds, and our growth retention remained in line with historical trends, demonstrating this criticality. In Q3, approximately 87% of revenue came from customers subscribed to our multi-product offers. 19% of revenue came from our platform enterprise plus subscription, which gives customers access to all JFrog’s products as an end-to-end solution. We are proud and humbled by this growth to date, and we believe these results demonstrate JFrog’s increased adoption in the marketplace as organizations continue to embrace modern software infrastructures and transform into a digital world. By saying that every company has become a software company, or software is eating the world almost sounds like a cliché. However, we realized that conversations in company board rooms are now focused on delivering digital experience and gaining competitive advantage through software, especially during today's challenges. It is not a question of should we do it, but more when and how? How can we improve our user experiences and engagement with software? How can we be faster than our competitors yet be secure? What change is required so rapid software releases will run on a smooth yet resilient platform and increase go-to-market speed? JFrog is leading the charge in these areas. Since the only way to implement software fast, securely, and efficiently, with no downtime, is through the automation of the CSRM processes. And for that exact reason, DevOps shines. As the world experiences this exploding amount of software as a result of digital transformation, everyone is looking to be part of the software gold rush. And JFrog is the provider of the picks and shovels to millions of software developers around the world. We introduced the world with the first binary repository manager in 2008 and claimed that binaries, also known as software packages, will become the primary asset in the new software lifecycle. Today, JFrog offers an end-to-end hybrid, multi-cloud universal DevOps platform to empower organizations, developers, and DevOps engineers to meet increased delivery requirements. Of course, DevOps isn't a single process, but many connected tasks and tools across teams. And with the explosion of cloud-native technologies, across open source, containers, Kubernetes and others, these teams face an even bigger challenge for organizations: how to manage the different technology types, each have their own requirements. This is why JFrog strategy of universal package management is so important. Modern development organizations use more than five different software package types regularly, and our customers routinely utilize more than 20 of them. If you cannot centralize your package repository manager or you isolate management to a single technology, your development lifecycle will be slow and messy, and no software automation or integration process will meet the needs of the organization. Our product philosophy is based on the user's freedom of choice: we provide you with a universal solution that integrates with every developer’s ecosystem and can be deployed in every environment. Our federal developers call it the Switzerland of DevOps, while our enterprise customers call it an anti-vendor lock-in solution. Starting with our flagship product, the heart of the JFrog platform is JFrog Artifactory. Not only is it the industry standout and the mother of all repositories, but also the only universal tool that supports over 25 technology types, comes in high availability version, and scales to infinity. Then JFrog Xray, our security tool that natively integrates with Artifactory and provides a full vulnerability and license compliance solution that integrates with the developer’s ecosystem. Xray helps the CISO of the world shift left and avoid security bottlenecks. JFrog is how you take a Blaze software package release bundle and deploy it into edge security. This tool chain creates the circle of trust in the CSRM and workflow. JFrog pipelines, our CI/CD solution and the result of an acquisition we made in 2018, integrates and automates the flow of binaries through the DevOps pipes. We build JFrog Mission Control and JFrog Insight, the admin user dashboard to provide a holistic view of the platform and simplify the configuration and resource management in a multi-zone, multi-server environment. These tools together form our complete end-to-end platform. And this is what sets us apart from the competition, who are years behind in the approach. JFrog’s market is very large and growing at a fast pace. Looking at the landscape, we see several additional tiers of opportunity for our business. Many potential customers still rely on legacy solutions built only 5 or 10 years ago. These solutions are often incomplete and will be replaced with robust but simple solutions like JFrog that support modern cloud-native technology and scale. The market also attracts competitors who attempt to solve certain aspects of the software development cycle. These point solutions fall short by not focusing the solution around software packages, not being fanatically universal, not offering security tools as part of a platform, nor being hybrid or multi-cloud. Focusing on legacy technologies that their business has relied on for years instead of adopting DevOps innovation to solve this pain. In Q3, we were proud to deliver updates requested by our customers and community. Our R&D core team focused on solid roadmap execution that prioritized feature releases that specifically answered work-from-home challenges. This includes improvements in security tools, distribution, and team collaboration around DevOps. For example, we released peer-to-peer download functionality for automated software package distribution. This capability not only accelerates the distribution flow but also eases the strain on network resources. We also greatly enhanced our customers’ ability to operate in highly regulated, secure environments, helping users find and validate release bundles with JFrog distribution. New security scanning, scan reporting, and license compliance capabilities were added to JFrog Xray to serve companies with multiple security stakeholders. JFrog pipelines extended its reach into the community by releasing the ability for users to define their own reusable pipeline steps to centralize and simplify automation. Alongside, a self-managed offering, our hybrid platform continues to be a growth engine for JFrog and drives speed, security, and efficiency for our customers. The adoption of the cloud was accelerated by COVID-19, which created the need for more data transfer and software delivery for our customers. The remote working environment driven by COVID makes customers appreciate the ease of setup while addressing the remote access required. Our cloud format and SaaS revenue growth have significantly exceeded self-managed solution growth for the past two quarters. In fact, JFrog was recently named number 14 on the Forbes Cloud 100, which lists the world's most influential and successful cloud companies. This is our third year in a row selected to this list. To continue this cloud momentum, in the third quarter we launched the JFrog free community offering in the cloud, responding to the demands of the community and giving developers easy access to our platform. This offering includes JFrog repository Artifactory, as well as security scanning and software development pipelines orchestration tools, which are now available to the community on all major cloud providers, AWS, Microsoft Azure, and Google Cloud in multiple regions. We already see this offering increasing the number of JFrog’s cloud users by thousands, as well as increasing traffic to other digital and educational resources we provide. From a cloud partnership perspective, in Q4, we are hosting a dedicated DevOps Cloud Days Conference alongside our partners AWS, Microsoft, and Google. This event is co-marketed, co-hosted, addressing the needs of cloud communities and developers in a dedicated day for cloud issues. JFrog always balances between the needs of the business and the needs of the developer, since software packages are being produced and consumed by millions every day. These packages are the lifeblood of liquid software, that starts in developer communities that create them for all organizations. A key component of addressing developer community needs is providing tools that support their ecosystem toolchain with minimum sales and marketing innovation. For example, in Q3, our teams improved the JFrog command line interface to enable easier ecosystem integrations with JFrog products, released more open-source plugins to serve the community better, including CI/CD and observability tool integrations, and released chart center as the community hub for cloud-native developers' assets. We led the C and C++ community with JFrog’s common package manager to further enhance these technologies and support the evolving IoT world. Over 70 companies have already shown interest in joining this effort. JFrog held the first automotive DevOps summit with users from companies like Toyota, Volvo, Daimler, and more. The demand from the market and our community involvement is at an all-time record. This is also a great opportunity for me to welcome Ms. Micheline, our new Chief Marketing Officer. Micheline is a veteran marketer who brings vast experience in building high growth organizations from leading companies where she served such as Zscaler, Xactly, Salesforce, and Sun Microsystems. Turning to sales, JFrog is driven by inbound insight sales motion only, allowing us to keep the mantra of delivering products both by developers and not sold. Our land and expand revenue growth is driven by upsells to current customers, alongside initial entry point sales to new customers. In fact, as of September 30, we had 313 customers with ARR greater than $100,000, of which nine customers were over $1 million. We are focusing on our sales and marketing growth and will keep investing while scaling. Alongside our inside sales team, we started to build JFrog strategic sales team by region. This team is already expanding our footprint among our top 100 accounts and ensuring a smooth adoption of our platform. As such, our cohort goals are solid, and net dollar retention for the trailing four quarters was 136%. This is an important metric to judge our progress. In terms of our overall sales performance and funnel conversion, we saw a trend of time to sell increasing slightly during COVID-19. These are increasingly getting escalated higher in the organization due to budget cuts or people's to executive approvals for expenses, and distributed workforce are making customers' internal processes more complex. We saw a brief dip in demand at the beginning of the pandemic, as well as a longer conversion time from trial or proof-of-concept customers to paying customers. Since then, we've seen demand growth improve, and we are confident that the ongoing free trials and new community cloud offerings will be converted in the future. This momentum demonstrates the adoption of our multi-product offerings by the enterprise despite COVID and expressed budget concerns. Our expansion model in the self-hosted offering grows not only by adding additional servers but also through demand for other products on top of Artifactory, such as Xray and Distribution. To illustrate this, in Q3, we landed one of the world's largest retail brands utilizing JFrog across both self-managed and SaaS services and hosted on Microsoft Azure. These drivers included the need to diversify their deployment across self-managed SaaS and multi-region offerings to allow easy and smooth access for their team. In addition, in Q3, our customer, a market-leading company in cloud software for customer engagement and operational excellence, expanded its SaaS agreement to over $1.2 million in ARR while upgrading to the complete JFrog platform to support distributed development teams around the globe. This is a small sampling of successes, and we're excited about where we're going next in Q4. As we wrap up 2020, we plan to invest our resources in supporting new package types and technology enhancements that help our customers build and deliver even more rapidly and securely. These investments will support our growth in 2021, allowing us to scale even further when the market recovers. With that, I'd like to turn it over to our CFO, Jacob Shulman for more detailed financial results.

Thank you, Shlomi. And thanks for joining us for our first earnings call. It's been an exciting time, and I want to thank my team and everyone who helped get us to this point. We are very pleased to have started our public company life with such a strong quarter. Before we look at the results, I wanted to quickly review our revenue model. JFrog generates revenue from subscriptions. We categorize our customers into two segments, self-managed and cloud SaaS, both of which pay a subscription fee. Self-managed customers pay based upon the number of servers, tied to a multi-tier subscription price. Self-managed customers can operate on-prem or in a private or public cloud. Our cloud SaaS customers pay a subscription fee based upon consumption of storage and data transfer. We report two revenue lines. The license line is related to a small percentage of the revenue from the self-managed customers, which must be recorded as license and the remainder as subscription revenues. So let us turn to the third quarter results. Please note that all numbers referenced in my remarks are on a non-GAAP basis unless otherwise stated. A reconciliation to comparable GAAP metrics can be found in today's earnings release, which is available on our website and as an exhibit to the Form 8-K furnished to the SEC. Total revenues for the three months ended September 30, 2020 was $38.9 million, up 40% year-over-year. Self-managed revenues, also often called on-prem, were $30.1 million, up 32%. Cloud revenues grew faster, up 74% to $8.8 million, or 22% of total revenues compared to 18% of total revenues last year. Our installed base continues to expand, driving 136% net dollar retention for the trailing four quarters. During COVID, we saw lower upsells from some customers, which reduced our net dollar retention in Q2. Net dollar retention in Q3 was largely flat with the rate in Q2 on a standalone basis, and we are seeing the same trend quarter-to-date. As such, we expect our trailing four-quarter net dollar retention will remain above 130% for the next several quarters. As of the quarter-end, we had 315 customers with ARR of over $100,000, up from 286 customers as of June 30. Of the 315 customers, nine had an ARR greater than $1 million as compared to eight customers in the previous quarter. Now let's review the income statement in more detail. Gross profit in the quarter was $32.2 million, representing a gross margin of 82.7% compared to 82.5% in the year-ago period. We continue to improve the cost structure of our cloud infrastructure and gain better margins on our cloud deployments. R&D expense was $8.9 million, or 23% of revenue, in line with the same ratio in the year-ago quarter. We have continued to invest significantly in R&D, including the rollout of our free tier in Q3, along with expanding the capabilities of Xray and Distribution. Sales and marketing expenses were $13.3 million or 34% of revenue compared to 36% in the year-ago period. We've benefited from a number of cost-saving measures this quarter as a result of COVID, including reduced travel and converting marketing programs to an online mode. Note that approximately half of our sales and marketing costs are spent on community-related functions, which are key to our developer-driven model. G&A expense was $4.8 million or 12% of revenue compared to 14% in the year-ago period. G&A reflects an increase in our public company costs, including our D&O insurance policy costs only for a portion of the quarter since the IPO. Non-GAAP operating income was $5.1 million or a 13% operating margin, increasing from $2.5 million or a 9% margin in the year-ago period. Non-GAAP net income in the quarter was $5.3 million or $0.05 per diluted share, based on approximately 100.8 million weighted average diluted shares outstanding. Turning to the balance sheet and cash flow, we ended the quarter with $578 million in cash and short-term investments, including $393 million in IPO proceeds. Cash flow from operations was $10.8 million in the quarter, after considering CapEx, free cash flow was a record $9.7 million. We are pleased to have been cash flow positive for more than five years, though we continue to review the balance between growth and cash generation every quarter. I would now like to turn to our outlook for the fourth quarter and the full year 2020. Revenue for Q4 will be $40.9 million to $41.9 million, with non-GAAP operating income of $1.2 million to $2.2 million and EPS of $0 to $0.02, assuming a share count of approximately 104 million shares. While we don't provide guidance on operating expenses, we do expect an increase as a percentage of revenue in Q4 due to several items, including increased R&D, public company costs, the bounce back from some of the reduced spend due to the COVID shutdown, along with sales and marketing costs related to the new cloud community offering. For the full year, we expect revenue of $129 million to $150 million, non-GAAP operating income of $12 million to $13 million, and non-GAAP EPS of $0.11 to $0.13, based on a share count of approximately 101 million diluted shares. Now, let me turn the call back to Shlomi for some closing remarks before we take your questions.

Thank you, Jacob. We believe JFrog continues to be positioned well in the market to address the needs of businesses going through rapid digital transformation. As a co-DevOps vendor, we see it as our responsibility to lead the market through the must-happen changes in the software update landscape. It is our mission to make DevOps a bridge not only between developers and IT operators but to an era of liquid software. Thanks for your attention, and may JFrog be with us.

Our first question comes from Sterling Auty with JPMorgan. Your line is now open.

Yeah, thanks. Hi guys. In your prepared remarks, you talked about the health of the free trials in the community and expressed confidence in being able to convert that into new customers. I'm just curious, what is it that's giving you confidence that you should see healthy customer conversion as you finish off 2020 and head into 2021?

Yes, good afternoon. This is Shlomi. I'll take this question, actually a great one. And I'll start by saying that we are very excited to have our first earnings call. With regard to the demand, what we are looking at is a world that, you know, food is being delivered by software, our kids are learning from home enabled by software, even COVID is being monitored by software. So the demand is there because software needs to be updated. And organizations already get that, and the transformation that organizations are now facing is not just the transformation of making businesses digital, but also making sure that you build and deploy software securely and faster. Now COVID started with what I think a market shock. And what we've seen is that more and more demand for solutions like JFrog came from cloud users and cloud-native technologies. Therefore, we saw a growth in demand in our cloud. And therefore, we established this free tier in the cloud on the multi-cloud deployment environment to enable this demand on JFrog solutions. It is not just the demand for one tool, but the demands for an end-to-end solution that is expressed by all companies from all sectors. We are positive that as the market continues to digitalize businesses, we are positive that the demand will be converted into a customer funnel.

Got it? And then one follow-up. You mentioned the strength of R&D and some of the investment areas, including support for additional package types that you're working on towards the end of this year. Can you give us a sense of maybe what some of those package types are that you don't currently support? And what the opportunity there might look like?

Yeah, what a great question. And yes, we will continue to invest in R&D and innovation in DevOps. When you sell to developers, we have to remember that developers might be the community that enables this change. But all of us are enjoying this change by consuming better and more secure software. This is a result of millions of software packages that are being distributed and consumed daily. These software packages come in different types, and developers today are overwhelmed with the amount of technology that they have to face. When you provide the community with a fanatically universal solution that supports all package types, then you can actually consolidate it all under one platform that makes their life easier and smoother as they build secure release software. Just recently, we released another support for a new package type called Alpine, which supports containers and cloud-native technologies. We are looking at the new package types that the community is asking for, and the community communicates with us on a daily basis through different systems in order to let us know what is the next challenge they see and what is the most popular software package that they will have to support. On a daily basis, every enterprise that uses JFrog manages more than 20 different package types. And when you give them universal support, or what they call the Switzerland of DevOps, that obviously alleviates the pain and minimizes all kinds of management resources.

That makes perfect sense. Thank you.

Hi, Shlomi. Hi, Jacob. Thank you for taking the questions. And congrats on your first call as a public company and congrats on the IPO and really solid results coming out of…

Thank you…

Thank you. And so my question, maybe to start with you, Shlomi, is just to talk about the CSRM vision and how we can sort of track progress. I think you mentioned in your script that Enterprise Plus was 19% of revenue, which seems like an improvement over last quarter. Can you give us a sense, Shlomi, of like, what are some of the trigger points or the inflection points in terms of customers going from, let's say, a Pro X subscription to an Enterprise to Enterprise Plus? If you're getting to a certain number of servers for Artifactory, it's bringing on Xray; what are sort of the patterns that give you guys the signal that this is going to be more of an end-to-end platform customer?

Absolutely. And thank you for joining this call. Great to hear from you again, Sanjit. And this question is something that we will look at when we put together the strategy of the company moving forward. First, coming from the community demand, what is it that you really need? What do you need? Do you just need a best-of-breed solution, or do you want to have a holistic end-to-end solution that kind of points out each of your pain? So one thing we've seen is that every company now builds software will identify software packages as first-level citizens, as primary assets, and therefore they will need the database of DevOps; they will need the repository. On top of that, if you build more benefits for the community and the enterprise, such as security, distribution, CI/CD enablement, dashboards, and easy configuration on multi-site, multi-server environment, you bring enterprise value to the developers' hands and help them adopt DevOps much faster. So with our different subscriptions and the full alignment with our product portfolio, what we are seeing through your question is that more and more customers are looking for a secured repository. This is why Xray is being adopted quite rapidly. And something that happened just recently in the past two years is that every organization, especially under COVID, needed to distribute software packages securely and rapidly. Therefore, JFrog distribution became a main trigger for companies to upgrade to the enterprise class. What we reported in Q3, which was a wonderful quarter for us, is not just growth in ARR, not just growth in revenues, but also more and more customers are upgrading to a multi-product solution and consolidating the DevOps practices around the JFrog platform.

Understood those great details, Shlomi. My follow-up question is sort of around the cloud. It looks like the SaaS mix of the business improved again this quarter, was like about 22% of revenue. You see other companies in the DevOps space like Atlassian, sort of aggressively pushing their customers to cloud. I guess my question for me is, where's the sort of DevOps market and the overall cloud transition? And then where is sort of the JFrog customer base? Is that something that you guys are trying to push them towards? Are they sort of pushing you guys along that, hey, you want to go to the cloud faster? Thank you.

Yeah, well, you look at DevOps as one part of the software lifecycle, but let's look at the overall world. Everyone is now looking at a distributed team and distributed deployment environments and trying to avoid any kind of vendor lock-in. So what is the solution? The solution is the freedom to choose what you want to use inside your organization to not only support your software lifecycle or CSRM, continuous software release management, but also to make sure that you bet right in the next year. Now, it's not enough to say that there is a cloud momentum. Of course, there is a cloud momentum. JFrog started nine years ago to support both the cloud and on-prem requests. But the freedom of choice in the hybrid world is what the world is really demanding. What we are seeing is that none of our top 100 customers will bet only on cloud or only on-prem. They want to have a hybrid solution that plays the same, whether it's cloud or on-prem. The second thing we see is that we live in a transition period. Nobody just moved from 20 or 30 years of building and releasing software to a different development and deployment environment in one day or one year. So we will continue to see the growth of the cloud alongside the establishment of private cloud and self-hosted solutions. The third thing we see is the request for multi-cloud environments. We are collaborating and partnering with all the major cloud providers. But what we see coming from the enterprise is the solution of a multi-cloud environment. I just don’t want to have AWS as my only deployment environment; I want to have other clouds and avoid any kind of vendor lock-in or region locking for my solution moving forward. Now more and more assets are moving through the cloud and being duplicated in both environments for different reasons, like security, disaster recovery, and deployment in different geographies. And I think the JFrog solution, having this hybrid philosophy and multi-cloud philosophy, along with identical software in both self-hosted and on-prem, serves the community very well. Therefore, we see the acceleration in our cloud adoption alongside the other solutions.

Appreciate it, Shlomi. Congrats on Q3.

Thanks for taking the question. And congrats, everyone on your first quarter as a public company. Maybe you could just touch on customer growth. I know we're not going to see it until maybe the end of the year. But what trends did you see in terms of new logo, new customer growth this quarter versus last quarter? And then Shlomi, one axis of growth is additional servers going into large enterprises. And I don't know if there was an update in the quarter to come to a conclusion about how that tracked. But just wanted to see if there was an update on sort of the densification of server licenses in your larger accounts?

Yeah, so it's a great question, Alex. And thank you. In terms of the customer goals, obviously, we look at it on an annual basis, and then we see the growth, and we see more and more customers adopting. What we are really excited about is that demand, is that all-time record. We see more and more customer prospects and community members joining our free tier in the cloud on all clouds, as well as more and more trials that are being downloaded. With regard to the growth, as we reported this year, this quarter, we sold 313 and we report the 313 customers with over $100,000 in ARR, which also goes from the last time we spoke. We saw growth in companies that are in the $1 million club now, while adopting our platform. We see these goals; we monitor it very closely. The other thing that's worth mentioning is that it's cross-industries; it's across sizes. People and companies are adopting DevOps rapidly. We also are happy to report that the overall number of customers is growing. And not just by logo, but also more accounts and more regions of the same customer, and more and more adoption of our tools, not just Artifactory as the flagship product and the base of all subscriptions, but also Xray and other services like distribution and hybrid solutions that are being adopted by our customers. So overall, we see this growth not just in logos but also in account numbers. We also see the growth of the multi-product adoption. And on an annual basis, we will share these details with you - we will obviously keep on tracking.

Great. And just on server growth, you know, per customer, maybe that's embedded in the net retention rate. But is there anything worth noting or revisit at another time?

No, it's a small thing because as you all know, our subscription model is in full alignment with our offering. So if you start with the lowest entry point in the JFrog subscription model, you get one server, if you go all the way up to the platform and do end-to-end illusions, then you start with six servers. So obviously, the growth in customers over $100,000 or million dollar accounts also points to the growth in the number of servers. So you will see more and more servers of JFrog being adopted, not just through one product but also by the adoption of the end-to-end solution. The second thing is that in the cloud, unlike the self-hosted solution, we are seeing growth in terms of usage because in the cloud, our model is not by server but by consumption. And the overwhelming amount of data transferred that we see, especially during COVID, accelerates our growth in the cloud, not just by server but by usage per customer.

Great, and thanks for taking my question. You mentioned during the third quarter that there was a large win in the retail vertical. Curious when you go into an account that is a new customer for you. Who are you typically displacing? And if there's any bake-off, who are you typically going up against at this point?

Yeah, well, as I mentioned, Rob, the DevOps adoption happens across verticals. It's happening everywhere in the world. It's not a matter of size. It's not even a matter of where you are in the adoption of CSRM. What we have noticed in the earlier use of DevOps is that it happened by sector, because obviously, CIOs are speaking with CIOs and sharing best practices. What we see today is a race to adopt modern technology. The modern industry requires that because they all understand that everything is powered by software. So we see it coming from all industries, specifically around the adoption that we currently see. It comes from organizations that fell behind and COVID got them by surprise. So they have to accelerate the process. They have to move to cloud-native; they have to change what they built 5 or 10 years ago, and what served them until now will not fulfill their needs, and they will be overwhelmed with the amount of software that needs to be built, produced, and distributed. Therefore, we see a huge demand request for being educated, the request for more material about what this means. Therefore, we are also positive that this will be converted to customers and paying customers that will use our platform.

Great. And the second, I know you guys embarked on a small number of direct sales folks right as COVID was effectively heading; any update you can give on that front? What kind of customer success metrics maybe they have had driven since you've had them on board over the last six months?

Yeah, so as I mentioned, our sales team is driven by enterprise inside sales and by funnel that provides everything in JFrog so far was built on inbound inside sales. Obviously, we scale to the enterprise and to procurement processes that generate more than $1 million deals in ARR. But what we are currently focusing on is building the strategic team that goes after the top 100 customers and accelerates the adoption of our end-to-end solution, not just by products but also by deployment environments. So it's a hybrid strategic elite team that identifies the top customers. And we'll be working on expanding our solution among these accounts. Every year, these customers will be identified, and it's part of our strategy moving forward in terms of go-to-market, and our sales and marketing team are aligned in how to build them and enable that.

Great, thanks very much. If you guys think about the 130% dollar expansion, like I mentioned earlier on a go-forward basis, how should we think about that breaking out between server unit growth versus pricing gains as customers move to higher skews? Thanks.

Thank you for this question. Obviously, MDR is one of the key KPIs for JFrog to measure our success and to make sure that we are aligned with our goals. What we've seen in the market is that net dollar retention, especially around subscription, is very important; what we are looking at and focusing on is the fourth quarter measurement of net dollar retention. I will start by saying that we are accelerating our upsell mechanism not just by more servers or more consumption in the cloud, but by providing the community with more benefits. We are very focused on fanatical happiness for our customers and developers, and to see them get more benefits and to upgrade with more products and not just more of what they already have. In terms of the numbers, the quarterly MDR, I will turn it over to Jacob Shulman, our CFO.

So Brad, our Q3 trailing four-quarter net dollar retention rate was 136%. If I look forward and net dollar retention is over 130%, that will give you an idea about our expected revenue growth. To remind you, our revenues are primarily contributed by the expansion of existing customers rather than new customers. There is some stability; we intend to invest back into the business. Shlomi talked about different areas of investment and focus areas. In the near future, we expect our profitability to be low to mid-single digits in terms of percent of revenue.

Thank you. Good to talk to you guys. Hope everyone's well. On the new customer count, can you give us the total customer count or new customers so we can just track that?

Yeah, so Jason, our customer count continues to grow from - in Q3. However, the primary driver behind revenue growth is the expansion of existing customers. As of the end of the quarter in Q3, we've had more than 5800 customers. The revenue growth in Q3 is driven primarily by those customers. The contribution of new customers to our revenue growth typically remains minimal at the beginning. Therefore, we will be reporting our total customer counts on an annual basis.

I will jump in and add to it that what we are seeing now, Jason, is also a different adoption of JFrog tool. We were used to see customers, new customers joining our portfolio due to the need for the repository. With JFrog Xray, our security tool, and JFrog distribution that helps you deploy software faster with the circle of trust mechanism, we see customers coming from different corners of the organization and joining our portfolio. The huge demand that we see in the free tier and the free trial represents the future as I see it in terms of the number of customers that will join the JFrog family not just because of the repository solution, but the holistic end-to-end solution. So you should expect to see that in the future as well.

Well, first of all, as we all experienced, we are living in an unknown reality. I'm also tracking the news regarding the election trying to understand how our reality will look tomorrow. But we are stepping into a year that the pandemic is still around us. And the demand is different. Developers are not just serving the organization, but also serving the business. Obviously, we will be focused on different investment. The first and probably the most important driver for JFrog success is our R&D and our ecosystem development, not just the core product that we will invest in, not just a better, stable, scalable, reliable software that comes from JFrog, but also the ecosystem support. How can we provide more plugins and more community tools that will help you to adopt DevOps? This is what we call the two integrated to fill solution. So R&D investment is my top priority for 2021. Alongside the R&D investment, we are also looking at the sales and marketing mechanism that scales with the business. We introduced the world with new software solutions, new capabilities, and therefore our top of the funnel, all the way to the conversion of trials to paying customers, is focusing on enablement and reaching out to the enterprise at all different levels. You probably assume that a conversation with developers sounds A and a consultation with the security team sounds B; therefore, our capabilities, not just in R&D level but also sales and marketing, especially focusing on the strategic team, will be my main priority. And if I may, one last thing and maybe the most important: JFrog is in its transition, as well as the company; we just a month ago were a private company, we are now a public company active in 10 different countries and our team is amazing. This team needs to grow and it needs to go everywhere in the world so we will be able to support you guys better as the company scales.

Thanks. Hey guys, again, congrats on your first call as a public company. Good start. I have questions. Also, Shlomi, and this is I'm trying to tie your Enterprise Plus and the Xray product. If you could talk about, first of all, Xray, how much of the focus over there is on proprietary closed versus open-source? And how do you feel about the maturity level of Xray? I'm just trying to think how much of a key factor is that in Enterprise Plus adoption or some of the other pieces like distribution or the pipeline as the main drivers for upgrades?

Hey, Ittai, and good evening to you in Israel. I think this question is to the point because of what the community requires, and it's not about how can we scan and secure open-source components; this is just the technology organizations adopted 10 to 15 years ago, and different companies provide different scanners. I think that what Xray is really unique in is the fact that Xray is natively sitting on top of Artifactory and securing your number one hub for all software packages from all types. When you look at Xray and look at the database that Xray comes with in order to compare and reference open-source license compliance and security vulnerability, Xray gives you a different solution, with a completely new vision of securing your software packages, and not necessarily your source code repository. Now, why is this important? Because Artifactory is also your proxy. Artifactory is also your bridge to the outside world, bringing open-source components, and you need Xray to support that. And the second thing, which is even more important, you want to power your organization with automation because you want to be fast, not just secure, and Xray integrates with your CI/CD environment; Xray can automatically break your build if something was identified. So Xray is a fundamental product for that and is becoming more and more mature, adopted by the biggest organizations in the world. We will keep on investing in Xray because the CSRM world is incomplete if you just have a binary management without the security and distribution alongside it. Other security solutions will fall behind not just because of the fact that they aren't good enough to secure your package management or your software package solution, but also because more and more of our customers are looking for an end-to-end solution. They don't want to have a security solution for containers for one company, a security solution for the repository from another, and a security solution for Artifactory from a third company. Having Xray embedded into your DevOps platform is a big plus. We see more and more customers upgrading to what we call the Enterprise Plus, which is the platform that includes Xray, and more customers upgrading to Pro X, which is the secured Artifactory.

So first of all, in terms of some stats about enterprise class adoption, our revenues from enterprise class in the second quarter was 17%. If I remember correctly, our revenues in the 2019 from Enterprise class was 10%. So we see very nice growth in Enterprise Plus adoption, and the customer expands there as we expand our capability with Enterprise Plus and customers adopt this end-to-end solution. We will see these revenues contributing even bigger portions in the future.

Very good. And on next year.

Can you repeat the question about next year?

Is there a general framework you'd like us to keep in mind as we think about how we model next year, you know, either growth or profitability measures?

As we see our net dollar retention staying above 130%, this will give you an idea about our expected revenue growth. To remind you, our revenues are primarily contributed by the expansion of existing customers rather than new customers. There is some stability; we intend to invest back into the business. Shlomi talked about different areas of investment and focus areas. In the near future, we expect our profitability to be low to mid-single digits in terms of percent of revenue.

Thanks for taking the questions. As you guys try to push deeper into the Fortune 100 accounts, can you please talk about how you think your go-to-market strategy is going to evolve? And we're in the process of building an overlay direct sales force?

Yes, thank you, Nikolay. Going with JFrog is actually agnostic to the size of the company when it comes to technology. We build a foundation for developers and DevOps companies; therefore, their product portfolio evolution starting from 2008, all the way up until 2020, has been improved based on what we hear. It's not just the product, but also the package types that we support and the integration with the ecosystem. However, when it comes to the enterprise, you hear all kinds of other requirements. Let me share some examples. Our package for data analysts is not something that you see in a 100, 200, or 500-person company; you see it in the enterprise, you see it in the financial sector. They need support for a certain package that gives thousands of developers a solution under the JFrog repository. A second thing that you will see in the enterprise is scalability; they need to make sure that our product scales to the extreme while consuming and distributing software. The last thing I would say is that in big organizations and in the enterprise, it's basically a world with all technologies; they have all the products, they have a variety of technologies, and they are adopting on one side of the world faster than the other side of the world. They also want to make sure that they can consolidate it all under one platform. So we learn a lot from the enterprise. But the innovation starts from the community; millions and tens of millions of developers communicate with us daily and tell us what the pain is. On the business side, enterprise sales and SMB sales obviously look different than our sales team, which is based on these different tiers. Although the majority of our sales team is inside inbound, this strategic team is at the top of the pyramid; it's still built on these tiers of SMB, enterprise, and strategic. Moving forward, what we are seeing now is that the enterprise, while adopting the platform, requires someone that understands the organization and not just the technological solution. Let me give you an example: One organization can introduce us to the DevOps team and the day after to the security team and the day after to the product team because one will need security, the other will need distribution, and the third will need to build software. Our evolution happens alongside enterprise adoption; obviously, we are learning fast what all this means, and our strategic team is very aligned with the market change and the adoption of DevOps in the enterprise.

And my second question is around CI/CD. What is the state of the land? Everybody looks like everybody's using Jenkins at this point; what is the level of innovation at the Jenkins ecosystem? And how can you convince customers to begin to use your CI/CD? And what's your edge on that front of the platform?

That's a great question, Nikolay. And obviously, you see, and I see the same reality. Jenkins is a great CI server supporting the largest community for the past 10 years. It's an open-source solution that has spread around the world and has been very successful. But what's happening now is that cloud-native steps into our world, and containers and microservices are exploding the market. Therefore, you need your developers to be faster; they need to be faster, not just in terms of how they build and how they automate, but also by the fact that they need concurrent pipelines. In terms of concurrent pipelines, JFrog pipelines is the most advanced innovative technology that the market now has to offer. The second thing they will need is the freedom of choice, not just by building with a CI server but looking at CI and CD, continuous integration and continuous deployment. When you look at that, you also want to allow them to get those sources not just from one Git repository but for multiple vendors, and JFrog pipelines is the only tool in the world that will get it from any source to any destination. The third thing, which is also very unique to JFrog, is that the JFrog pipelines is embedded into the platform, one UI, one unified solution that not just builds your software and deploys your software but also integrates with Xray, integrates with Artifactory, and pushes to the runtime. I think that Jenkins is a wonderful tool, but as companies look at cloud-native tools, they will have to look at solutions like JFrog pipelines.

Thanks so much.

Well, good afternoon, and congratulations on the results. And thanks for fitting me into the call here. I just want to ask one high-level question if I could. For Shlomi, I was just wondering how much evangelizing do you think that you still need to do just regarding the overall importance of software binary management and moving towards your vision of continuous software delivery versus I mean, how much does this become a true mainstream concept? That's widely understood in the market these days?

Jack, thank you for this question. Actually, we get this question a lot because JFrog was the first company in the world that introduced the community and developers to the need for managing software at the software package or what we call the binary level. For the first five years, we struggled to explain why this is the most important asset and why this is the primary piece of software that you have to be focused on. But now when you need to deliver software several times a day, you just have to look at your pipeline. What you see is yes, software is critical for developers. But what happens from the moment that you create the software package, what happens is that you secure software packages, you distribute software packages, you enable software packages on the edges. You can have incremental software updates with a simple process of just updating the software package. Rapid releases and the CSRM mechanism that organizations are adopting focus on software packages as first-class citizens, and everybody understands that. Another fact is that if you look at the landscape and other solutions in the market, and if you look at the roadmap, just ask yourself, what is it that they are investing in? They invest in package management solution, package management security, package management distribution. In a way, it's kind of, you know, being accepted by all vendors and all organizations. In the world of containers and microservices and the world of fast shipping of software, that's the only thing, the only thing that the world consumes and produces. This is what makes the organization fast, whether they are in the cloud or on-prem. This also enables them to engage faster and more securely with their customers. I believe we will see more and more of this. I'm very honored to be part of the first called DevOps company in the public sector. It also says something about our vision and what liquid software represents in the world of power users.

And that's all the time we have. I will now turn the call back to Shlomi.

Thank you. All thank you very much for your attention. The frogs and I are very excited about what we see looking forward: the adoption of our tool, the adoption of DevOps. I appreciate your time, wish us all better days and secure days, and may the frog be with us all. Thank you very much.

Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.