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JFrog Ltd. (NASDAQ:FROG)
Q3 2021 Earnings Call
Nov 04, 2021, 5:00 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:


Operator

Good day, and thank you for joining us. Welcome to JFrog's third quarter fiscal 2021 financial results conference call. [Operator instructions]. And now I'd like to hand the conference over to JoAnn Horne of the JFrog investor relations team.

JoAnn, please go ahead.

JoAnn Horne -- Investor Relations

Good afternoon, and thank you for joining us as we review JFrog's Q3 fiscal '21 financial results, which were announced following market closed 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 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?

Shlomi Ben Haim -- Chief Executive Officer and Co-Founder

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 a quarter of companies have actually begun to build road maps for complex digital transformation initiative. As companies scale in cloud and on-prem environment, we believe this is the beginning of an even larger adoption pattern. As we continue to see, in order to scale company 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 organization 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 TAMs to serve the DevOps needs to 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 looking 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 words. Amit Ezer and Eitan Chudnovsky, Co-Founders of Upswift, we welcome you and the team and are already excited to drive customers' initiative forwards.

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 is 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, affecting potentially 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 made aware of security vulnerability 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 JFrog Xray product.

This allows data around hundreds of open source venerability 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 Solution 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 company. In addition, just after 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 assigned identification numbers to newly discovered security vulnerability 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 we 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 a long periods of time. Enterprises are often required to keep softer 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 position JFrog as a long-term strategic partner for these companies as they set up environments that support their extended compliance road map 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 product, and sourced 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. These retailers DevOps team, who recently migrated to JFrog to allow scale in a multi-site global setup, is in the process of adoption of 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 solution 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 [Inaudible] tools. We look forward to continuing success as we pursue other certification 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 the 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 at the last mile to 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 buy came from one of the world's largest business consulting firm, which recently chose JFrog as a displacement of 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 results 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 be sure that all aspects of the business, community, customers, and prospective users are going to be able to 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.

Jacob Shulman -- Chief Financial Officer

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 of 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 two 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 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 onetime 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 zero 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 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.

Shlomi Ben Haim -- Chief Executive Officer and Co-Founder

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 the company that values close relationships with our community and each other, we are gradually and safely welcome the Frog's 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 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.

Questions & Answers:


Operator

[Operator instructions]. Your first question comes from the line of Jason Ader with William Blair. Your line is open.

Jason Ader -- William Blair and Company -- Analyst

Thank you. Good to hear from you and hope everybody is doing well. 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?

Shlomi Ben Haim -- Chief Executive Officer and Co-Founder

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 this vendor joining. One thing that we were very excited to see is that these tools coexist one next to the 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 in order 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.

Jason Ader -- William Blair and Company -- Analyst

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?

Shlomi Ben Haim -- Chief Executive Officer and Co-Founder

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 following by security and observability.

The standards that we see in the market, and you saw it with the amount 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, each vendor would consolidate around an asset. JFrog is the company that manages your full software package life cycle. And we are the standard in the market.

And I guess that we will see more vendors that coexist next beyond the developer's ecosystem right to Artifactory and back to the developer's ecosystem left to Artifactory. We are very pleased about it.

Jason Ader -- William Blair and Company -- Analyst

OK. Thank you.

Operator

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

Jack Andrews -- Needham and Company -- Analyst

Good afternoon. Thanks for taking my question. 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?

Shlomi Ben Haim -- Chief Executive Officer and Co-Founder

Yes. Thank you for this question. Actually, Vdoo or what we call now the JFrog security solution, combined forces with our composition analysis securities tool, which is callled 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 this earnings, most of our customers are looking for a solution that not only accelerate B2 deploy process, it's not only the CI/CD and how fast they build and release software, but also how they secure it. And when we look at security, the naive traditional security solution that kind of guided developers are not good enough because you are now released seven times a day, eight times a day.

You need to find the zero days 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 secured all the way to deployment, all the way to the edge. The acquisition of Vdoo brings this technology and this team, the technology of a detail 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 capabilities will bring. And as a platform, we cannot just set steel and enjoy the standard that we pioneered with Artifactory, but also to provide what the market demands, which is a full end-to-end solution for your software packages.

Jack Andrews -- Needham and Company -- Analyst

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?

Shlomi Ben Haim -- Chief Executive Officer and Co-Founder

Yes. Again, very important point. It's very easy to understand today why dev and op came together on a 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 yet didn't find the common ground.

There are pains that the organizations try to protect and there are vulnerabilities that the 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 hand, from the developer's keyboard to the deployment. And therefore, Vdoo as an addition to Xray, will provide that would provide the common ground between the developer and the security stakeholders of the organization.

Jack Andrews -- Needham and Company -- Analyst

Got it. That is helpful. Thank you.

Shlomi Ben Haim -- Chief Executive Officer and Co-Founder

Thank you.

Operator

And your next question is from Ittai Kidron with Oppenheimer. Your line is open.

Ittai Kidron -- Oppenheimer and Company -- Analyst

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, should shape up through '22?

Shlomi Ben Haim -- Chief Executive Officer and Co-Founder

Yes. Well, as we committed to the market and we spoke about it in the previous earnings, previous quarters, 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 build the company that way. We built the company together with the community. And what we were invested in the past three quarters specifically is building our strategic team. And by that, I mean that we are going direct, we are going top down, we are expanding our footprint within our portfolio.

And this team comes with a different profile. These are people that know how to reach out to different persona 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 demand, 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, professional services, premium support people, field marketing. Nothing, nothing in this combination can be missed.

And 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.

Ittai Kidron -- Oppenheimer and Company -- Analyst

That's great. Maybe as a follow-up, just on this point, you talked about the Enterprise Plus growing very strongly now 34% of revenue. Is there a way to transpose this on 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 this transition, 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 appropriate solution for them?

Jacob Shulman -- Chief Financial Officer

Yes, Ittai, this is Jacob. I'll take the first part of the question. So to remind you that the entry-level -- entry point into the Enterprise Plus into the full platform is $115,000. So you'll transition to the platform automatically puts you in this category of over $100,000.

So out of 466, not all of them transition to the platform because we have significant customers who have to transition to the platform but already in this category. So you could see that it's only a small portion of our customers that transition to the platform, and therefore, the potential to grow within our installed base and transitional installed base to the full platform is very significant.

Shlomi Ben Haim -- Chief Executive Officer and Co-Founder

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 road map together with this demand is that the market requires more than just a repository, more than just CI/CD, more than just security, more than just distribution. And what you pointed the 34% Enterprise Plus customers, compared to 19% of last year, just to represent the adoption of the full platform and not necessarily represent the growth in subscription, as Jacob mentioned.

Ittai Kidron -- Oppenheimer and Company -- Analyst

All right. That is great. Awesome. Good stuff, guys.

Keep it up. Thanks.

Operator

[Operator instructions]. Your last question is from Koji Ikeda with Bank of America. Your line is open.

Koji Ikeda -- Bank of America Merrill Lynch -- Analyst

Thanks for taking my question. 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?

Shlomi Ben Haim -- Chief Executive Officer and Co-Founder

Yes, Koji. So just to remind you that license revenues really is more portion of the revenue from the on-prem subscription that we recognized 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 the revenue and of the bookings and the size of the bookings.

So 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.

Koji Ikeda -- Bank of America Merrill Lynch -- Analyst

Got it. Got it. OK. And then I was looking at the press release, I noticed the Department of Defense Iron Bank sort of certification.

Just kind of 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?

Shlomi Ben Haim -- Chief Executive Officer and Co-Founder

Yes, Koji. Iron Bank addresses the highly regulated industry, those that require certification first, adoption later. And even if you are an excited developer or a DevOps engineers that want to adopt JFrog tool, if you don't have the certification, it will not scale within the organization. I'm not even sure that you will give it the try.

So therefore, what we have invested in is to get the certification of Iron Bank first, this is for the on-prem solution. So everyone that uses platform one, Department of Defense platform will be able to freely adopt Artifactory and Xray. The second challenge for us would be approving the FedRAMP. So everything that comes from JFrog, and remember that part of our philosophy is having a hybrid solution.

So also the cloud will be certified by the FedRAMP certification. And 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.

Koji Ikeda -- Bank of America Merrill Lynch -- Analyst

Got it. Thank you so much for taking the question, guys. Appreciate it.

Operator

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

Kingsley Crane -- Berenberg Bank -- Analyst

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

Shlomi Ben Haim -- Chief Executive Officer and Co-Founder

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

Kingsley Crane -- Berenberg Bank -- Analyst

Yes.

Shlomi Ben Haim -- Chief Executive Officer and Co-Founder

Yes. That's a very good question that we hear not only on earnings, but also customers that are asking the same thing. The first and foremost is scalability. Organizations today generates millions of software packages a day, million, not just by building it yourself, but also from what you bring from outside.

This is not just due to the amount of software packages, but also through the universality of software packages. JFrog today supports almost 30 technologies. No other depository in the market can support this amount of technology. Basically, it gives the developers the freedom of choice and the organization the freedom to scale.

The second thing is that all of the cloud repositories are actually just container registries, supporting the old docker images. JFrog supports everything that you have around software packages and binary. Third one is that JFrog is hybrid. Same identical solution can run on-prem and cloud.

And you know what we hear from over 2,000 big enterprise customers in our portfolio that they will forever have some instances on-prem and some in the cloud. The fixed differentiator is that JFrog is the multi-cloud solution. So I don't know of one big developers organization that will go just with one cloud. They will all ask a multi-cloud solutions on a multi-topology -- a multi-site topology setup.

Therefore, JFrog is a solution for them, not just to have it on-prem, but also in Google Cloud, Azure, Amazon at the same time -- in different regions at the same time. And the last is also the combination and this very tight integration with your full DevOps pipeline. Registry is just one piece of the DevOps inclusion. You need security, you need distribution, you need to CI/CD, JFrog is the only end-to-end platform that covers all of it in one platform.

Kingsley Crane -- Berenberg Bank -- Analyst

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?

Shlomi Ben Haim -- Chief Executive Officer and Co-Founder

Yes. JFrog pipeline is the result of one of the acquisitions we've done in the past is existing to make your platform experience using 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. And I think that the non-brainer is that it's included in our platform and integrate with whatever CI/CD you have and invested in.

So if you use Jenkins like the majority of the market, almost 90% of our customers using Jenkins in different environments, it's seamlessly integrated with your CI/CD. You don't have to replace it in order to upgrade your CI/CD experience to a cloud-native experience. So what we see is more and more adoption and interest. And 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, the end device, will be the story of the future DevOps.

Kingsley Crane -- Berenberg Bank -- Analyst

Thank you. It sounds like the Jenkins support is really critical there. So thanks again.

Shlomi Ben Haim -- Chief Executive Officer and Co-Founder

Thank you.

Operator

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

Shlomi Ben Haim -- Chief Executive Officer and Co-Founder

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.

Operator

[Operator instructions]

Duration: 46 minutes

Call participants:

JoAnn Horne -- Investor Relations

Shlomi Ben Haim -- Chief Executive Officer and Co-Founder

Jacob Shulman -- Chief Financial Officer

Jason Ader -- William Blair and Company -- Analyst

Jack Andrews -- Needham and Company -- Analyst

Ittai Kidron -- Oppenheimer and Company -- Analyst

Koji Ikeda -- Bank of America Merrill Lynch -- Analyst

Kingsley Crane -- Berenberg Bank -- Analyst

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