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Tech Unicorn JFrog Files for IPO

By Danny Vena – Aug 25, 2020 at 4:00PM

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This company could command a $2 billion valuation in connection with its public debut.

JFrog, a company that makes tools for software developers, filed a preliminary S-1 with the Securities and Exchange Commission (SEC) in preparation for its initial public offering (IPO). The company plans to trade on the Nasdaq stock exchange using the ticker symbol FROG.

Since this is the company's initial regulatory filing, JFrog listed a $100 million placeholder as the amount it hopes to raise, and has yet to disclose how many shares it will offer or a timeline for its debut. It is expected to be valued at as much as $2 billion. 

The company has developed what it calls "liquid software," which lets users implement automatic software updates without having to manually initiate them.

A developer coding on computer with multiple monitors.

Image source: Getty Images.

In 2019, JFrog reported revenue of $105 million, up 65% year over year. At the same time, the company narrowed its losses from $26 million in 2018 to just $5 million in 2019. That trend has continued during the first six months of 2020, as revenue of $69 million grew 50% year over year, and JFrog cut its losses to just $426,000. The company also has a rock-solid balance sheet with about $170 million in cash and short-term investments and no debt.

JFrog also boasts impressive customer metrics. As of June 30, its customer base had grown to 5,800 organizations, including 75% of the Fortune 100 companies. 

Customers that generate more than $100,000 in annualized recurring revenue (ARR) increased to 286, notching growth of 56% and 45%, respectively, during the first and second quarters of 2020, compared with 63% and 66% in the corresponding prior-year periods. JFrog noted the slowdown was the result of the pandemic. The company also has eight customers generating ARR of more than $1 million, up from just one to close out 2018.

Not only is the company attracting new customers, but existing customers are also spending more, as evidenced by JFrog's net dollar retention rate of 139%.

Danny Vena has no position in any of the stocks mentioned. The Motley Fool recommends Nasdaq. The Motley Fool has a disclosure policy.

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