JFrog soars 50% on first day of trading

JFrog CEO Shlomi Ben Haim joins Yahoo Finance’s Zack Guzman to break down the software company’s stellar public debut.

Video Transcript

ZACK GUZMAN: Today is a big day when it comes to new companies out there. Now, publicly traded companies in the software and Cloud space, and today, one of those software companies making its big debut. JFrog is seeing in more than 50% pop on its day one of trading. They priced shares above the initial range at $44 a share. Opened at $71.27 a share here to trade.

So a big debut, as well as one of those companies that is getting closer and closer, dare I say, at the breakpoint in profitability, something that a lot of these software companies cannot say. So what is JFrog doing differently to get them there? Here to discuss that with us is the CEO of JFrog. Shlomi Ben Haim joins us now. And Shlomi, I mean, congrats. Day one debut, you're up more than 50%.

It's a big, hot start out of the gate, but talk to me about how it's been in growing this business. Because what you guys do for viewers out there that might not be familiar, is you guys focus on continuous software release management. The idea that you're going to enable some of these tech companies to roll out maybe less discreet updates to their software so they can get this out there in real time. So talk to me about how important that market has grown here since you guys have been working on it.

SHLOMI BEN HAIM: Yeah, Zack. Well, greetings from the [? Sunnyvale ?] swamp. We are obviously very excited about this first day of trading. Thank you for having me. So what CSRM is, or continued software release management, well, look at our wall. Everything is digitalized, and digital transformation is kind of power the world by using more and more software. Even this interview is being powered by software.

But if I will ask you, any of the viewers, what version of the software we use, we don't know. And why? Because we don't care. We just want to have a seamless process of software updates pushing into our Facebook or LinkedIn or Google, and this is what JFrog is doing. We are in the business of DevOps making sure that software packages are moving quickly and secure from the developer and all the way to the end user.

ZACK GUZMAN: Yeah, and what's interesting too, I mean, you guys talked about this in your S1. I mean, you have some big organizations using you guys. As of June, eight of the top 10 financial services organization, nine of the top 10 retail organizations, eight of the top 10 health care organizations. I could go on and list all of these in the Fortune 500, and we've seen that in your guys' growth.

I mean, your revenue is up 65% year over year 2018 to 2019. You've also shrunk your net loss pretty much down to about flat in the first half of this year. So I mean, I guess the question out there for investors who might not even know what CSRM meant before this interview, I mean, when you talk about that, talk to me about the growth that still exists here if you have so many large companies already using your services.

SHLOMI BEN HAIM: Yeah, well, JFrog is a [? called ?] DevOps company, and CSRM, this category is evolving. There are more open source users and more open source software, more developers, more deployment environment. This market is evolving, and it's booming. DevOps became the darling of the enterprise software, and it's powered digital transformation, and every company on Earth will need that.

It's not a question of if, it's more a question of why, and this is why it's so this very amazing list that we are honored to have as our customers. The 75% of the Fortune 100 are already powered by users, 6,000 customers all over the world, and we are very, very grateful to have them as our customers. This list is just growing, because the competitive advantage of every organization now is powered by software. Regarding efficiency--

ZACK GUZMAN: No, keep going.

SHLOMI BEN HAIM: JFrog was born in 2008 into a recession, and the company was efficient from day one. We deploy our capital into our goal, doing it together with the community, being very good listeners, and building this demand from the bottom up, from the developers to the developers. And we are planning to build the business and the technology and stay efficient.

ZACK GUZMAN: Yeah, that efficiency is something that I think is praised by investors. I mean, we saw the same thing with Zoom when they came out last year one of those rare profitable companies. Obviously, you guys are almost there, but you did note some risks associated with the pandemic here, noting that it has resulted in travel restrictions. We were talking about the hit to retail a little bit earlier on in the show. When you weigh that with what you have ahead here and the opportunity to become profitable in short order, what do you attribute maybe that trimming of your net losses to, and how would COVID-19 and the pandemic play into that in terms of expectations moving forward?

SHLOMI BEN HAIM: Yeah, that's a great question. COVID-19 actually crystallized the need for DevOps in the enterprise software. You need to push software faster. You need to be fast and secure. You need to make sure that you deploy to multi-deployment environment, and every organization will need that. COVID-19 just magnified and amplified the need for this kind of solution, and DevOps play a significant role in the continued software release lifecycle. With regard to what we saw in COVID is obviously in March, all of our employees worldwide moved to working from home.

The engagement that we saw there of our employees with the community and with our customers didn't change that, and therefore, we had a wonderful Q2. So I think that JFrog will keep on scaling. However, we see more and more organizations that are looking into their budget, and maybe things are taking a bit longer. But I'm sure that with the demand we see, the addressable market will just grow.

ZACK GUZMAN: And that's the big question that we've been seeing play out in the software space too. It's one, I mean, it's already been a hot sector. You can look at the way you guys priced above your range, and today, trading in day one all showing the demand out here for companies like yours. But JFrog CEO, Shlomi Ben Haim, appreciate you taking the time to chat, and congrats again on the hot start.

SHLOMI BEN HAIM: Thank you, Zack, and may the frog be with you.