JFrog Ltd Q3 FY2021 Earnings Call

Good day, and thank you for joining us. Welcome to JFrog's Third Quarter Fiscal 2021 Financial Results Conference Call. Now I'd like to hand the conference over 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 Q3 fiscal '21 financial results, which were announced following market close via press release today. Joining us will be JFrog's CEO and Co-Founder, Shlomi Ben Haim; and Jacob Shulman, JFrog's CFO. Before we get started, let me review the safe harbor. 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 and full year 2021. The words anticipate, believe, continue, estimate, expect, intend, will, and similar expressions are intended to identify forward-looking statements or similar indications of future expectations. You are cautioned not to place undue reliance on these forward-looking statements, which reflect our views only as of today and not as of any subsequent date. Please keep in mind that we are not obligating ourselves to revise or publicly release the results of any revision 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 a discussion of material risks and other important factors that could affect our actual results, please refer to our Form 10-K for the year ended December 31, 2020, filed with the SEC on February 12, 2021, and our Form 10-Q for the quarter ended June 30, 2021, filed with the SEC on August 6, 2021, which are available on the Investor Relations section of our website and the earnings press release issued earlier today. Additional information will be made available in our quarterly report on Form 10-Q for the quarter ended September 30, 2021, and other filings and reports that we may file 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 and in isolation from GAAP measures. Please refer to the tables in our earnings release for a reconciliation of those measures to the most directly comparable GAAP financial measures. A replay of this call will be available on the JFrog Investor Relations site 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. Greetings from the swamp, and thanks for joining us for JFrog's 2021 Third Quarter Earnings Call. I'm happy to report that in Q3, all JFrog's metrics are trending upwards. Q3 was $53.7 million, a growth of 38% over last year, accelerating from 34% growth reported in Q2. Our cloud revenue in Q3 grew by 50% year-over-year, accelerating from 47% reported in Q2. Customers with over $1 million in ARR are growing as a result of our investment in the strategic sales team alongside strong growth in the number of customers with ARR over $100,000. JFrog continues to expand the business this quarter. And as predicted, I'm happy to report that for trailing quarters net dollar retention stabilized at 129% as customers increased usage and adopted more of our DevOps end-to-end platform that includes the software package repository, distribution, and security. In addition, JFrog was again profitable this quarter, even after including the impact of our recent acquisitions. Team JFrog, you delivered a strong quarter, which exceeded our commitments to the market. This success belongs to you. The DevOps market is growing fast. Analyst firms such as IDC believe that only one-quarter of companies have actually begun to build roadmaps for complex digital transformation initiatives. As companies scale in cloud and on-prem environments, we believe this is the beginning of an even larger adoption pattern. As we continue to see, in order to scale, companies need to unify DevOps solutions, integrating across the ecosystem while securely distributing software packages into production. JFrog is the only end-to-end binary solution that bridges the gap between the world of Git-based tools for source code and the secure delivery of software packages. In a world of fast and secure software big-to-release life cycles, category leaders must coexist and together help organizations fulfill their future digital needs. Now on to some product and business highlights. First, for Q3, I would like to tell you about our acquisition of Upswift, an IoT connected device management company that we believe will significantly expand our market. The Upswift team is tasked with extending our DevOps platform reach all the way to the device, allowing for software updates, security, and device fleet management from anywhere in the world. This technology innovation will extend our portfolio offering, support new personas, and expand our total addressable markets to serve the DevOps needs of the multibillion-dollar IoT market. In fact, the second largest automobile manufacturer in Europe is already partnering with Upswift and JFrog saying, and I quote, 'We are using Upswift for our pilot product and look forward to using Upswift in the future more and more to monitor our fleet of IoT devices in Europe and all over the world. We appreciate the joint venture of Upswift and JFrog, and hopefully, we are able to use other solutions from JFrog in combination with Upswift to get a 360-degree view of our fleet.' In the future, the world of CI/CD will be connected to the end devices, and the JFrog DevOps platform will connect these two worlds. Amit Ezer and Eitan Chudnovsky, Co-Founders of Upswift, we welcome you and the team and are already excited to drive customers' initiatives forward. Second, I would like to update you on the impressive progress of last quarter's Vdoo acquisition, that not only included a leading cloud-native security platform but also exposed us to new personas in the security market and brought a team of experts that are now an integral part of our R&D, product, sales, and marketing forces. This technology and team are boosting JFrog's impact and not only driving cross-selling for Xray, our DevSecOps product, but also amplifying our position as thought leaders in the security community. In fact, the JFrog security research team has already uncovered multiple risks in common packages and public repositories. For example, JFrog just recently exposed the vulnerability in a popular open-source tool created by 23andMe, a leading provider of DNA and biotechnology services. Their tools are utilized in an estimated 200 public software repositories, potentially affecting thousands of applications and companies. Highly publicized findings such as this one are only the beginning, and we look forward to proactively keeping the developer community aware of security vulnerabilities that affect their supply chains. This protection of the community and customers is foundational to JFrog's security solution goals. In Q3, we started to incorporate the security intelligence derived from Vdoo into the JFrog Xray product. This allows data around hundreds of open-source vulnerabilities discovered by the scanning technology and research team to enrich the embolden JFrog security solution. Not only in technology, but we also already see synergies between JFrog Solutions and Vdoo technologies on the sales front. Post-acquisition security-driven deals are already taking place, including a Vdoo technology-driven deal we won in Q3 with one of North America's top industrial automation companies. In addition, just after the quarter ended, JFrog was announced as an authorized common vulnerabilities and exposure, also known as CVE, numbering authority. JFrog joins an elite group of public and private sector organizations authorized to assign identification numbers to newly discovered security vulnerabilities and publish related details and associated records for public consumption. Now I would like to talk about more DevOps innovation JFrog released to the market in Q3. Our recent release included a capability we anticipate all companies at scale will look at, JFrog calls architect storage. This solution, available this quarter in the JFrog platform, allows organizations to easily store, manage, and retain software artifacts for long periods of time. Enterprises are often required to keep software records for compliance and security reasons, and in some industries, records may need to be kept for years. Companies using cold storage will see decreased storage costs at scale as well as enjoy simple ways to comply with regulations, while retaining development speed. This positions JFrog as a long-term strategic partner for these companies as they set up environments supporting their extended compliance roadmap being entrusted to JFrog. Our team worked closely with enterprises to make this cold storage technology rock solid, and we look forward to working with more JFrog customers like the National Australia Bank to drive further compliance and improvements like this in the DevOps world. Finally, in our product news, I would like to acknowledge the great work of our ecosystem engineering team, who has released open-source updates to our developer community, including integrations to observability tools, collaboration products, and source code repositories. The JFrog tool integrated to fail approach that offers our customers a unique combination of a hybrid DevOps platform that also seamlessly integrates with the leading tools in the developer ecosystem is key to our goal. For example, we are proud to work with the world's leading retailer to help their DevOps team deliver transformative market-leading digital experience at scale. This retailer's DevOps team, who recently migrated to JFrog to allow scale in a multi-site global setup, is in the process of adopting our platform to enable software building, securing, and deployment to production environments. During the process of adopting JFrog's platform, this customer's ARR value to JFrog grew over 200% in 2021, including the latest significant expansion in Q3. The third quarter also included investments in new growth avenues such as the federal sector. I'm excited to say that in Q3, JFrog has achieved Iron Bank certification, authorizing JFrog Artifactory and Xray inclusion in the Federal Platform One initiative. With this achievement, JFrog reinforces its commitment to providing DevOps and DevSecOps solutions for its public sector customers and those in highly regulated industries such as finance, healthcare, energy, and transportation. This certification has the potential to open up a very large market of governmental services, contractors, and public sector segments that rely on Iron Bank certification to adopt modern tools. We look forward to continuing success as we pursue other certifications in the government space, such as FedRAMP in the near future. As another exciting milestone, we recently announced the partnership with SBC&S, a SoftBank company, to drive DevOps and JFrog growth across Japan. SBC&S is one of the most trusted software resellers in Japan and will drive DevOps adoption across one of the world's leading economies. They're joining other JFrog partners in APAC as part of our channel program expansion to drive the region's DevOps transformation. Japan-based customers, like Hitachi, are already powering their DevOps and DevSecOps flow using JFrog. Expanding our footprint in Japan with partners like SBC&S will not only generate new business but also improve the expansion and adoption among existing customers. Finally, a note on enterprise adoption. We continue to see our software distribution and edge node solution as a key driver for the full platform subscription. These capabilities are unique in the marketplace and solve an authentic software delivery pain for enterprises by securely getting software to the last mile where it's consumed. We anticipate this to continue being a strong hybrid differentiator for us moving forward. One of this quarter's most exciting platform buys came from one of the world's largest business consulting firms that recently chose JFrog as a replacement for two vendors, consolidating both existing software package repository and security solutions. JFrog's ability to universally and continuously manage their binary life cycle was key to adoption across the entire platform. Wins such as this are the result of technology and go-to-market development. I'm pleased to see how our sales and marketing teams have grown significantly in Q3. Our focus on building a bottom-up together with the top-down sales funnel led to these performances. We'll keep investing further to ensure that all aspects of the business, community, customers, and prospective users can enjoy JFrog solutions. With that, I would like to turn the call over to Jacob Shulman, JFrog's CFO, to look more deeply at the Q3 financials.

Thank you, Shlomi, and good afternoon, everyone. To echo Shlomi's comments, we are pleased that Q3 was a solid start to the second half of the year. I will start with a brief overview of our third quarter financial results and provide our outlook for Q4 and the full year of 2021. As a reminder, please note that all numbers referenced in my remarks are on a non-GAAP basis, unless otherwise stated. A reconciliation to comparable GAAP measures 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. Now let's turn to our financial results. Total revenues for the three months ended September 30, 2021, were $53.7 million, up 38% year-over-year, our strongest growth in three quarters. Self-managed revenues, also often called on-prem, were $40.6 million, up 35%. Cloud revenues again grew faster, up 50% to $13.1 million, or 24% of total revenues. Net dollar retention for the four trailing quarters was 129%. We continue to see sequential growth and expansion of our customers in the past three quarters and remain confident that our net dollar retention will stabilize around 130%. As of the quarter-end, we had 466 customers with ARR over $100,000, up from 415 customers as of June 30, 2021. This was the largest increase in the quarterly over $100,000 ARR customers to date. In addition, we grew the number of over $1 million ARR customers to 14, up 2 from the previous quarter. This increase in customer size is driven primarily by adoption of our full platform under the Enterprise Plus subscription. In Q3, 34% of total revenue came from Enterprise Plus customers, up from 19% in Q3 of 2020. Now let's review the income statement in more detail. Gross profit in the quarter was $45.4 million, representing a gross margin of 84.5% compared to 82.7% in the year-ago period. We continue to see our SaaS gross margins expand, a result of the steps we took early in the year to improve our cost structure. R&D expense for the quarter was $16.3 million or 30% of revenue compared to 23% of revenue in the year-ago period. We continue to invest significantly in enhancing our product offerings along with integrating Vdoo and Upswift technologies into the platform. Sales and marketing expenses for the quarter were $19.4 million or 36% of revenue compared to 34% of revenue in the year ago period. G&A expense for the quarter was $8.4 million or 16% of revenue compared to 12% of revenue in the year-ago period. Non-GAAP operating income for Q3 was $1.3 million or a 2.5% operating margin compared to $5.1 million or a 13.2% operating margin in the year-ago period. We are pleased that we achieved profitability in the quarter despite the costs associated with Vdoo and Upswift acquisitions, along with building out our infrastructure. Our profitability is a result of higher-than-expected revenues, significant improvements in the efficiency of our cloud infrastructure, and better-than-expected synergies from the acquisitions. Non-GAAP net income in the quarter was $900,000 or $0.01 per diluted share based on approximately 104.1 million weighted average diluted shares outstanding. Turning to the balance sheet and cash flow. We ended the quarter with $402 million in cash and short-term investments, down from the last quarter, largely due to payments of $215 million associated with M&A activity during the quarter. Cash flow from operations was negative $17.7 million in the quarter. After taking into consideration CapEx, free cash flow was negative $18.7 million. These results are impacted by a one-time payment of $19 million related to holdback agreements associated with Vdoo and Upswift acquisitions recognized as operating activity due to ongoing employee service requirements. Turning to guidance. For Q4, we expect revenue of $57.5 million to $58.5 million, with non-GAAP operating income between $100,000 to $1 million and non-GAAP earnings per share of $0.00 to $0.01, assuming a share count of approximately 104 million shares. For the full year, we now expect revenue of $205 million to $206 million, up from $202 million to $205 million we guided to previously. Non-GAAP operating income is expected to be between $4.2 million and $5.2 million and non-GAAP earnings per share of $0.04 to $0.05, assuming a share count of approximately 104 million shares. Now let me turn the call back to Shlomi for some closing remarks before we take your questions.

Thank you, Jacob. A year ago, we celebrated our IPO virtually under the influence of the pandemic. In the 12 months since, we have added over 300 employees who are all now joining us back to the office across the globe. As a company that values close relationships with our community and each other, we are gradually and safely welcoming the Frogs and the developer community back in person. The performance of Q3 on all fronts demonstrated continuous growth of the company across new business, solid net dollar retention and extensions period. We take pride in the innovation and vision being introduced and deployed to the market alongside the high-growth efficiency, profitability, and culture we preserve at JFrog. We believe JFrog is well-positioned to end 2021 on a strong note, taking the trust given to us from the community, customers, and shareholders very seriously. The opportunities are ahead of us, and I believe we are just getting started. Thanks for your attendance and may the Frogs be with us all as we leap into 2022. Now we are happy to take your questions.

Your first question comes from the line of Jason Ader with William Blair.

My question is about the competitive landscape. We're seeing, obviously, some IPOs here, very successful IPOs. And then a lot of talk in the industry about kind of end-to-end platforms. I know you guys are trying to build your own, but can you just talk about the customer feedback and the customer perspective right now? Do customers want end-to-end platforms from what you've seen? And if not, what do they want?

Yes. Jason, great to hear from you. Yes, obviously, we are very excited to see that the market is growing. The addressable market is growing with the amount of solutions that joined and DevOps supports the acceleration of digital transformation. We will see more and more of these vendors joining. One thing that we were very excited to see is that these tools coexist next to each other in order to support our customers' DevOps journey. When we look at the customer-specific names, we saw customers that are using JFrog's enterprise platform together with other tools to fulfill their full DevOps pipeline. So tools like repository, binary repository, security, observability will coexist. And the greater the market is, we will see more of this competition, and we are very excited about it.

And do you feel that there's going to be more and more pressure from IT organizations, sort of IT managers, to standardize on specific products or specific platforms?

Absolutely. I think that the standards are now being taken. As we speak, companies adopt DevOps. They took the first leap into DevOps when they established their CI/CD environment and then started to manage their binary repository, followed by security and observability. The standards that we see in the market, and you saw it with the number of over $100,000 customers goal, the standards are now being set. And each of those vendors, and I believe it will be a consolidation process, will consolidate around an asset. JFrog is the company that manages your full software package lifecycle. And we are the standard in the market. I guess that we will see more vendors that coexist next to the developer's ecosystem right to Artifactory and back to the developer's ecosystem left to Artifactory. We are very pleased about it.

Your next question comes from the line of Jack Andrews with Needham.

I apologize, I joined the call a little bit late, but I wanted to ask if you could update us in terms of the Vdoo integration? Essentially, what has been done and what still needs to be done? And how do we think about Vdoo heading into next year?

Yes. Thank you for this question. Actually, Vdoo, or what we call now the JFrog security solution, combined forces with our composition analysis security tool, which is called Xray. What we invested in this quarter is to boost our security solution alongside our repository solution. When you think about the landscape of DevOps, being fast is not good enough. You also have to be secured. And as we reported in these earnings, most of our customers are looking for a solution that not only accelerates the deployment process, it's not only the CI/CD and how fast they build and release software, but also how they secure it. When we look at security, the naive traditional security solutions guiding developers are not good enough because you are now releasing seven times a day, eight times a day. You need to find the zero-day vulnerabilities, you need to protect the organization, and you have to build a solution that sits on top of your primary asset, which we believe is the software packages and secures all the way to deployment, all the way to the edge. The acquisition of Vdoo brings this technology and this team, the technology of detailed scanning from the moment the software is being created all the way to your on-prem environment, securing your binaries and software packages, all the way to the edge, including configuration and network management. So what we see now is just the beginning of what this joint capability will bring. As a platform, we cannot just stand still and enjoy the standard that we pioneered with Artifactory but also provide what the market demands, which is a full end-to-end solution for your software packages.

I appreciate the update. And maybe if I could just broaden out the question then. As you continue to push more into security, maybe what are the lessons learned from the previous conversions of dev and ops that maybe can be applied to gaining traction now in DevSecOps? And maybe how is the convergence of security perhaps different in terms of personas or other things that you may need to adjust for?

Yes. Again, a very important point. It's very easy to understand today why dev and ops came together on common ground, and the IT people and the developers started to find some joint assets to work on and collaborate. If you look at 99% of the organization that we see in the market, what we hear from our customers, what we hear from the community is that security and developers have not yet found common ground. There are pains that organizations try to protect and vulnerabilities that developers are trying to find before it goes to production. Our challenge, our mission is to make sure that you protect it all the way from the developer's hand, from the developer's keyboard to the deployment. And therefore, Vdoo as an addition to Xray will provide that common ground between the developer and the security stakeholders of the organization.

And your next question is from Ittai Kidron with Oppenheimer.

Nice to see the acceleration of the business. Maybe Shlomi, we can talk about the sales force and productivity. Maybe you can help us think about how your hiring has been on the sell side? And how do you think about the productivity gains over the past quarter? And how should those, in your opinion, shape up through '22?

Yes. Well, as we committed to the market and we spoke about it in the previous earnings calls, we are in the process of building a joint funnel. What we know for the past 12 years, we know great how to build it from the bottom up and inbound and inside sales. We built the company that way. We built the company together with the community. What we were investing in the past three quarters specifically is building our strategic team. By that, I mean that we are going direct, we are going top down, we are expanding our footprint within our portfolio. This team comes with a different profile. These are people who know how to reach out to different personas in the organization. They know how to reach out to the C level. They know how to analyze the potential, not just by what the organization demands, but also by mapping the competition and the landscape and the future needs. This team is not just quota holders. I want to be very clear about that. We are building a commando team of solution engineers, premium support people, and field marketing. Nothing in this combination can be missed. We are very pleased to see the results. I think that when you look at 466 customers that grew over $100,000 in ARR, a 50% growth year-over-year, it's clear that we managed to crack the system and to have a hybrid funnel of bottom-up together with the top down.

That's great. Maybe as a follow-up, just on this point, you talked about the Enterprise Plus growing very strongly now at 34% of revenue. Is there a way to transpose this on the number of customers? What percent of your customers are Enterprise Plus? I'm just trying to gauge where we are on this tail of transition to Enterprise Plus. Where are we in your installed base? And when you look at your entire customer base, realistically speaking, what percentage of your installed base do you think Enterprise Plus would be an appropriate solution for them?

Yes, Ittai, this is Jacob. I'll address the first part of your question. To remind you, the entry point into the Enterprise Plus is $115,000. By transitioning to the platform, you automatically fall into the category of over $100,000. Not all customers make this transition, as we have significant clients who are already in this category. You can see that only a small portion of our customers transition to the platform, indicating that there is considerable potential for growth within our existing customer base toward the full platform.

And if I may add, Ittai, one of the things that we see more and more, and we hear it from our customers and we get the feedback, and we build the product roadmap together with this demand is that the market requires more than just a repository, more than just CI/CD, more than just security, and more than just distribution. What you pointed out about the 34% Enterprise Plus customers compared to 19% of last year just represents the adoption of the full platform, and not necessarily the growth in subscription, as Jacob mentioned.

Your next question comes from Koji Ikeda with Bank of America.

Got a question here for Jacob. And thinking about the Q4 revenue guide, I think it's very interesting because we see the potential here for a subscription revenue acceleration in the fourth quarter. But the wildcard is really license. So I guess could you help us understand license revenue in Q4? Anything we should be aware of with this segment, any sort of seasonality or renewals, things of that nature would be really helpful?

Yes, Koji. So just to remind you that license revenues are really a portion of the revenue from the on-prem subscriptions that we recognize upfront. It's typically dependent on the type of subscription and, on average, approximately 10% of the bookings. So it really depends on the composition of revenue and bookings and the size of bookings. This is what we've experienced so far. As you see, our bookings continue to grow, and we expect our license revenue will continue to grow as well.

Got it. Got it. Okay. And then I was looking at the press release; I noticed the Department of Defense Iron Bank sort of certification. Just looking for some additional clarity there on what does that mean? I guess I'm really only familiar with FedRAMP. So maybe could you help put into context what an Iron Bank certification is and what that could mean for the rest of the government sector?

Yes, Koji. Iron Bank addresses the highly regulated industry, those that require certification first, adoption later. Even if you are an excited developer or a DevOps engineer that wants to adopt JFrog tools, if you don't have the certification, it will not scale within the organization. I'm not even sure that you will give it a try. Therefore, what we have invested in is to get the certification of Iron Bank first; this is for the on-prem solution. Everyone that uses Platform One, the Department of Defense platform, will be able to freely adopt Artifactory and Xray. The second challenge for us would be approving the FedRAMP. Everything that comes from JFrog, and remember that part of our philosophy is to have a hybrid solution. So also, the cloud will be certified by the FedRAMP certification. This is something that we are currently working on, and we are very positive that we will increase our footprint in the federal sector. There is a lot of DevOps adoption happening there, and it's just the beginning of the journey.

Apologies, but we have an additional question from the line of Kingsley Crane with Berenberg.

Just one quick one for me. So would just like to know when you look at the public cloud products that just hit the binary depository level like Cold Artifact or Azure Artifact, what do they most lack compared to JFrog?

Just to make sure that I follow the question, are you asking about the public cloud artifact management versus JFrog's technology?

Yes.

That's a very good question that we hear not only on earnings calls but also from customers. The primary factor is scalability. Organizations today produce millions of software packages daily, not only by creating them themselves but also through external sources. This is driven not just by the volume of software packages but by their universal applicability. JFrog supports nearly 30 technologies, a level of support unmatched by any other repository in the market. This allows developers to choose freely and provides organizations the ability to scale. Additionally, many cloud repositories function merely as container registries supporting outdated Docker images. In contrast, JFrog accommodates all software packages and binaries you may have. Furthermore, JFrog operates as a hybrid solution, meaning the same system can run both on-premises and in the cloud. Feedback from over 2,000 major enterprise customers indicates they will always maintain some instances on-prem and some in the cloud. JFrog stands out as a multi-cloud solution; I don’t know of any large developer organization that relies solely on one cloud provider. They all seek multi-cloud solutions and a multi-site setup. JFrog serves this need, enabling deployment both on-prem and across platforms like Google Cloud, Azure, and Amazon simultaneously in different regions. Lastly, there's the tight integration with the entire DevOps pipeline. A registry is merely one part of the DevOps equation. Security, distribution, and CI/CD are all essential; JFrog uniquely provides a comprehensive end-to-end platform that encompasses all these aspects.

Right. That's so helpful. And that's a great reminder. Such about the other products. So specifically on pipelines, how have your conversations evolved with customers about using that in addition to everything else that you offer?

Yes. JFrog pipeline is the result of one of the acquisitions we've done in the past, existing to make your platform experience using the software package CI/CD tool much more efficient. So when we hear our customers comparing our CI/CD solution to others, it's not about how fast it integrates with my source code repository, it's mainly about security, with the signed pipeline that JFrog is the only one to offer that. Cryptomizing your pipeline. So what you push in the beginning will be released at the end. We also hear about the integration with Artifactory that works much more seamlessly for our users. The non-brainer here is that it's included in our platform and integrates with whatever CI/CD you have invested in. If you use Jenkins like the majority of the market, almost 90% of our customers use Jenkins in different environments; it's seamlessly integrated with your CI/CD. You don't have to replace it to upgrade your CI/CD experience to a cloud-native experience. What we see is more and more adoption and interest. As we bounded to the distribution side with the Upswift acquisition, pushing software all the way to the devices, CI/CD connected to the device, will be the future story of DevOps.

That concludes the question-and-answer session for the call. I will now hand the conference back to Shlomi Ben Haim for closing remarks.

Thank you, everyone, for your attendance. We are looking forward to meeting you during the quarter and of course, to leap forward with you to 2022. Thank you very much.

This concludes today's conference call. Thank you for joining. You may now disconnect. Have a great day. Stay safe.