Israeli software firm JFrog files prospectus to raise $100 million in Nasdaq IPO

Netanya-based software provider JFrog has submitted a prospectus to the US Securities and Exchange Commission to raise $100 million in an initial public offering of shares on the Nasdaq.

The firm has developed a platform that helps organizations build and release updates to software continuously. As of end June 2020, some 5,800 organizations globally, including all of the top 10 technology firms, including Google and Microsoft, and eight of the top 10 financial services organizations, used JFrog’s so called Liquid Software, the prospectus said.

“Digital transformation has become an imperative for all organizations, and as such, organizations of all types and sizes are increasingly dependent upon software to better engage with their customers, partners, and employees,” the prospectus said. “As a result, the continuous and reliable release of new software has become mission critical. An organization’s failure to keep software current or react to problems with timely software updates can not only cost lost revenue and reputation, but also threaten human safety and lives. The increased pace and volume of new software and updates have made releasing software in monolithic, discrete versions (e.g., v1.0, v2.0, v3.0) too slow to adequately address dynamic customer demands.”

Since its founding in 2008, the JFrog has raised $227 million from investors, including Battery Ventures, Vintage Partners, and Dell Technologies Capital, according to the database of Start-Up Nation Central.

The firm’s revenues jumped 50 percent in the first six months of 2020, to $69.3 million from $46.1 million for the six months ended June 30, 2019 and 2020. The company posted a net loss of $400,000 for the first six months of 2020, compared to a net loss of $2.1 million in the same period a year earlier. Revenue for 2019 was $104.7 million, with a net loss of $5.4 million for the year.

To continue to grow, the firm plans to continue to invest in building new capabilities and extending its offerings, while also buying new technologies to complement its organic innovation efforts to be able to quickly adapt to the changing needs of the market. The firm also plans to expand its existing customer base.

As a result of the COVID-19 pandemic, the firm has experienced “slowed growth,” the prospectus said, adding that it expects to experience slowed growth and/or a decline in new customer orders for its product, primarily due to changes in customer spending patterns and IT budgets. Even so, the firm believes that long-term demand for its offerings “remains strong.”

Risks to the firm, listed in the prospectus, include the fact that the markets for the firm’s products are “new, unproven and evolving,” and may develop more slowly and differently than expected. The company also has a “history of losses” and “may not be able to achieve profitability on a consistent basis.”

“If we cannot achieve profitability, our business, financial condition, and results of operations may suffer,” the prospectus said.

The company was founded in 2008 by Shlomi Ben Haim, who is also the CEO of the firm, Yoav Landman, the chief technology officer, and Frederic Simon, the chief data scientist. The firm has research and development teams primarily in Israel and in India, the prospectus said. As of the end of June, the firm had over 590 employees operating across six countries, including some 300 workers in Israel, and some 200 located in the United States.

The firm is co-headquartered in Sunnyvale, California and in Netanya, Israel.