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- The share price of DevOps company JFrog popped during its market debut on Wednesday, and the stock was up 47% by the end of the day.
- JFrog CEO and cofounder Shlomi Ben Haim says he hopes its IPO paves the way for other DevOps companies to go public, and notes how its nearly $6 billion market cap isn’t far from the $7.5 billion that Microsoft paid to acquire DevOps firm GitHub.
- The coronavirus crisis ultimately increased demand for JFrog’s tools, Ben Haim said, because companies wanted to use DevOps tools to release code faster.
- JFrog sees increased competition from cloud giants like Amazon Web Services, Microsoft, and Google Cloud, as well as legacy vendors like IBM and VMware.
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The stock price of American-Israeli software company JFrog popped in its market debut on Wednesday and cofounder and CEO Shiomi Ben Haim tells Business Insider that he’s “very honored to have the company to get to this place.”
The firm, which has a market cap of nearly $6 billion as of Thursday afternoon, builds tools to allow customers to release software updates continuously and more efficiently. It had been planning to go public earlier in the year, but pumped the brakes when the coronavirus crisis started raging in March, it to wait to see how the market would play out. After pricing at $44 per share, it’s stock surged as much of 62% Wednesday, and was up over 47% by the end of the day. It was trading at about $63.40 per share as of writing.
JFrog hopes to pave the way for other companies working on DevOps (a term that combines “development” and “operations” and refers to tools that help companies work more efficiently), Ben Haim said, describing the area as “probably the fastest growing market in the software industry.” Previously, investors murmured about the possibility of JFrog getting acquired, but Ben Haim told Business Insider at the time that he wanted the company to stay independent — now he points out that it’s market cap is getting close to the $7.5 billion that Microsoft paid for DevOps firm GitHub.
“We see a huge demand from organizations that want to know more about how they can accelerate the process of adopting DevOps methodologies and tools,” he told Business Insider.
While JFrog has seen some slowdown in the life-cycle and customers putting their projects on hold during the pandemic, Ben Haim says many customers are also taking this time to replace their in-house DevOps software with more upgraded platforms.
“We see that our customers are staying with us because they need the product,” Ben Haim said.
JFrog had a “wonderful Q2,” with its biggest purchase orders from customers ever, he says, adding that customer demand rose because remote work accelerated the need for many companies to use DevOps.
Today, JFrog serves over 5,000 customers, including over 75% of the Fortune 100. It saw 50% year-over-year revenue growth, and also achieved a retention rate of 98%, according to its S-1. It competes with cloud giants like Amazon Web Services, Microsoft Azure, and Google Cloud which are stepping into the world of DevOps, as well as legacy companies like VMware and IBM.
Ben Haim says that what makes JFrog stand out is that its DevOps platform has a hybrid model, meaning it can run both in data centers and in the cloud
“JFrog will lead the market and stay the de facto standard,” he said.
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Still, some challenges may lie ahead for JFrog. In the past five years, JFrog has been cash flow positive, but it is not yet profitable. Last year, it incurred a net loss of $5.4 million, and had a net loss of $426,000 in the first half of this year.
It will keep spending more on building out, marketing, and selling its products. For example, it plans to hire sales and customer success teams, expand its operations, and develop its technology.
“The challenge ahead of us is to make sure the market is adopting this tool,” Ben Haim said. “What JFrog builds is a path to a different future where software is being consumed seamlessly and software updates are happening behind the scene.”
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