The next dialogue and evaluation of our monetary situation and outcomes of
operations needs to be learn along side our condensed consolidated
monetary statements and the associated notes thereto included elsewhere on this
Quarterly Report on Type 10-Q and in our Annual Report on Type 10-Ok for the yr
ended December 31, 2021, filed with the SEC on February 11, 2022, or our Annual
Report. As mentioned within the part titled "Be aware Concerning Ahead-Trying
Statements," the next dialogue and evaluation accommodates forward-looking
statements that contain dangers and uncertainties. Our precise outcomes might differ
materially from these mentioned under. Components that would trigger or contribute to
such variations embody, however will not be restricted to, these recognized under and
these mentioned within the part titled "Threat Components" beneath Half II, Merchandise 1A in
this Quarterly Report on Type 10-Q and beneath Half I, Merchandise IA in our Annual
Report.

Overview

JFrog’s imaginative and prescient is to energy a world of repeatedly up to date, version-less
software-we name this Liquid Software program.


We offer an end-to-end, hybrid, common DevOps Platform that powers the
software program provide chain, enabling organizations to repeatedly ship software program
updates throughout any system. This platform is the crucial bridge between software program
improvement and deployment of that software program, paving the best way for the fashionable
DevOps paradigm. We allow organizations to construct and launch software program sooner
and extra securely whereas empowering builders to be extra environment friendly.

We've got designed our subscription construction and go-to-market technique to align
our development with the success of our prospects. Our enterprise mannequin advantages from
our capability to serve the wants of all prospects, from particular person software program
builders and IT operators to the most important organizations, in a value-oriented
method. All references to our prospects included on this Quarterly Report on
Type 10-Q consult with paying prospects.

We generate income from the sale of subscriptions to prospects. We provide
subscription tiers for self-managed deployments, the place our prospects deploy and
handle our merchandise throughout their public cloud, on-premise, personal cloud, or
hybrid environments, in addition to JFrog-managed public cloud deployments, which we
consult with as our SaaS subscriptions. Income from SaaS subscription contributed
29% and 28% of our whole income for the three and 9 months ended September
30, 2022, respectively, in comparison with 24% for every of the corresponding durations in
2021.

Our self-managed subscriptions are supplied on an annual and multi-year foundation,
and our SaaS subscriptions are supplied on an annual, multi-year and month-to-month
foundation. Income from subscriptions that present our prospects with entry to
a number of merchandise represented roughly 95% and 94% of our whole income for
the three and 9 months ended September 30, 2022, respectively, in comparison with
92% for every of the corresponding durations in 2021. Income from Enterprise Plus
subscription represented roughly 39% and 37% of our whole income for the
three and 9 months ended September 30, 2022, respectively, in comparison with
roughly 34% and 32%, respectively, for the corresponding durations in 2021.
The expansion in income from our Enterprise Plus subscription demonstrates the
elevated demand for our end-to-end options for patrons' total software program
provide chain administration.

We've got an unwavering dedication to the software program developer and IT operator
communities, and present this dedication by providing various types of free entry
to our merchandise along with the paid subscriptions described above. This free
entry takes the type of freemium choices, free trials, and open supply
software program, and helps generate demand for our paid choices throughout the software program
developer and IT operator communities.

We had $434.0 million of money, money equivalents, and short-term investments as
of September 30, 2022. We generated income of $72.0 million and $53.7 million
for the three months ended September 30, 2022 and 2021, respectively,
representing 34% development. We generated income of $203.5 million and $147.4
million for the 9 months ended September 30, 2022 and 2021, respectively,
representing 38% development. We incurred web lack of $23.6 million and $20.5 million
for the three months ended September 30, 2022 and 2021, respectively, and $67.0
million and $41.5 million for the 9 months ended September 30, 2022 and 2021,
respectively. We generated working money movement of $14.1 million and $10.2
million through the 9 months ended September 30, 2022 and 2021, respectively.

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COVID-19 Replace


The COVID-19 pandemic has impacted worldwide financial exercise, monetary
markets, and enterprise practices because it emerged in 2020. Because the first
quarter of 2022, because of the elevated vaccination price and fewer virulent
strains, many government-imposed restrictions have been lightened or eliminated. We
totally reopened all of our workplaces and are conducting enterprise as standard beneath
hybrid working schedules. Nevertheless, the tip of the COVID-19 pandemic remains to be
unsure. We'll repeatedly monitor and consider the scenario and reply
appropriately to assist our workers, prospects, companions and communities.

Components Affecting Our Efficiency

We consider that our future efficiency will rely on many elements, together with
the next:

Extending Our Expertise Management


We intend to proceed to reinforce our platform by growing new merchandise and
increasing the performance of current merchandise to keep up our expertise
management. Since our preliminary launch of JFrog Artifactory, we now have launched
a number of further merchandise that collectively create a unified DevOps platform. For
instance, in October 2022, we launched JFrog Superior Safety, a binary-focused
safety answer offering protection from any supply to any vacation spot.

We make investments closely in integrating our merchandise with the most important bundle
applied sciences in order that our merchandise may be simply adopted in any improvement
surroundings. We consider that these integrations enhance the worth of our
platform to our prospects, as they supply freedom of selection for software program
builders and IT operators and assist keep away from vendor lock-in. We intend to expend
further assets sooner or later to proceed introducing new merchandise,
options, and performance.

Increasing Utilization by Current Clients


We consider that there's a important alternative for development with lots of our
current prospects. Many purchasers buy our merchandise by means of self-service
channels and sometimes materially develop their utilization over time. Elevated engagement
with our merchandise offers our assist and buyer success groups alternatives
to work immediately with prospects and introduce them to further merchandise and
options, in addition to drive utilization of our merchandise throughout massive groups and extra
broadly throughout organizations. We'll proceed to develop our strategic staff to
establish new use circumstances and drive growth and standardization on JFrog inside
our largest prospects, to keep up engineering-level buyer assist, and to
introduce new merchandise and options which can be attentive to our prospects' wants.

We quantify our growth throughout current prospects by means of our web greenback
retention price. Our web greenback retention price compares our annual recurring
income ("ARR") from the identical set of consumers throughout comparable durations. We
outline ARR because the annualized income run-rate of subscription agreements from
all prospects as of the final month of the quarter. The ARR consists of month-to-month
subscription prospects as long as we generate income from these prospects. We
annualize our month-to-month subscriptions by taking the income we'd contractually
anticipate to obtain from such prospects in a given month and multiplying it by 12.
We calculate web greenback retention price by first figuring out prospects (the "Base
Clients"), which had been prospects within the final month of a selected quarter (the
"Base Quarter"). We then calculate the contracted ARR from these Base Clients
within the final month of the identical quarter of the following yr (the "Comparability
Quarter"). This calculation captures upsells, contraction, and attrition since
the Base Quarter. We then divide whole Comparability Quarter ARR by whole Base
Quarter ARR for Base Clients. Our web greenback retention price in a selected
quarter is obtained by averaging the consequence from that individual quarter with
the corresponding outcomes from every of the prior three quarters. Our web greenback
retention price could fluctuate because of a variety of elements, together with the
stage of penetration inside our buyer base, growth of merchandise and
options, and our capability to retain our prospects. As of September 30, 2022 and
2021, our web greenback retention price was 130% and 129%, respectively.

We give attention to rising the variety of massive prospects as a measure of our capability to
scale with our prospects and appeal to bigger organizations to undertake our merchandise.
As of September 30, 2022, 696 of our prospects had ARR of $100,000 or extra,
growing from 537 prospects as of December 31, 2021. We had 18 prospects with
ARR of not less than $1.0 million as of September 30, 2022, growing from 15
prospects as of December 31, 2021.

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Buying New Clients


We consider there's a important alternative to develop the variety of prospects
that use our platform. Our outcomes of operations and development prospects will
rely partially on our capability to draw new prospects. So far, we now have
primarily relied on our self-service and inbound gross sales mannequin to draw new
prospects. Potential prospects can consider and undertake our merchandise by means of our
freemium choices, free trials, and open supply software program choices. The prices
related to offering these freemium choices, free trials, and open supply
software program choices are included in gross sales and advertising. Whereas we consider we now have a
important market alternative that our platform addresses, we might want to
proceed to put money into buyer assist, gross sales and advertising, and analysis and
improvement so as to tackle this chance.

Moreover, we consider our merchandise tackle the software program launch wants of
prospects worldwide, and we see worldwide growth as a significant alternative.
We've got been working and promoting our merchandise in worldwide markets since
our inception. Whereas we consider international demand for our merchandise will proceed to
enhance as worldwide market consciousness of our model grows, our capability to
conduct our operations internationally would require appreciable administration
consideration and assets and is topic to the actual challenges of
supporting a quickly rising enterprise in an surroundings of a number of languages,
cultures, customs, authorized and regulatory programs, different dispute programs,
and industrial markets.

Non-GAAP Monetary Measures

Along with our outcomes decided in accordance with GAAP, we consider that
free money movement, a non-GAAP monetary measure, is helpful in evaluating the
efficiency of our enterprise.

Free Money Move


Free money movement is a non-GAAP monetary measure that we calculate as web money
offered by working actions much less purchases of property and gear. We
consider it is a helpful indicator of liquidity that gives data to
administration and buyers about the amount of money generated from our core
operations that, after the purchases of property and gear, can be utilized for
strategic initiatives, together with investing in our enterprise, making strategic
acquisitions, and strengthening our stability sheet. Free money movement has
limitations as an analytical device, and it shouldn't be thought of in isolation
or as an alternative choice to evaluation of different GAAP monetary measures, reminiscent of web
money offered by working actions. A few of the limitations of free money movement
are that this metric doesn't mirror our future contractual commitments and should
be calculated otherwise by different corporations in our trade, limiting its
usefulness as a comparative measure. We anticipate our free money movement to fluctuate
in future durations as we put money into our enterprise to assist our plans for development.

The next desk summarizes our money flows for the durations offered and
offers a reconciliation of web money from working actions, probably the most
immediately comparable monetary measure calculated in accordance with GAAP, to
free money movement, a non-GAAP monetary measure, for every of the durations offered:


                                                            9 Months Ended September 30,
                                                              2022                   2021
                                                                    (in 

hundreds)

Internet money offered by working actions               $         14,111       $         10,241
Much less: purchases of property and gear                         (3,437 )               (3,190 )
Free money movement                                          $         10,674       $          7,051
Internet money utilized in investing actions                   $        (35,856 )     $        (88,243 )
Internet money offered by (utilized in) financing actions     $          9,691       $         (1,094 )




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Elements of Outcomes of Operations

Income


Our revenues are comprised of income from self-managed subscriptions and SaaS
subscriptions. Subscriptions to our self-managed software program embody license,
assist, and upgrades and updates on a when-and-if-available foundation. Our SaaS
subscriptions present entry to our newest managed model of our product hosted
in a public cloud.

Subscription-Self-Managed and SaaS


Subscription-self-managed and SaaS income is generated from the sale of
subscriptions for our self-managed software program merchandise and income from our SaaS
subscriptions. For subscriptions to our self-managed software program merchandise, income
is acknowledged ratably over the subscription time period. For our SaaS subscriptions,
income is acknowledged based mostly on utilization because the utilization happens over the contract
interval.

License-Self-Managed


The license part of our self-managed subscriptions displays the income
acknowledged by offering prospects with entry to proprietary software program options.
License income is acknowledged upfront when the software program license is made
out there to our buyer.

Price of Income

Subscription-Self-Managed and SaaS


Price of subscription-self-managed and SaaS income primarily consists of
bills associated to offering assist to our prospects and cloud-related prices,
reminiscent of internet hosting and managing prices. These prices primarily encompass
personnel-related bills of our providers and buyer assist personnel,
share-based compensation bills, amortization of acquired intangible property,
public cloud infrastructure prices, depreciation of property and gear, and
allotted overhead. We anticipate our value of subscription and SaaS income to
enhance in absolute {dollars} as our subscription and SaaS income will increase.

License-Self-Managed

Price of license self-managed income consists of amortization of acquired
intangible property.


Working Bills

Analysis and Growth

Analysis and improvement prices primarily encompass personnel-related bills,
share-based compensation bills, related to our engineering personnel
liable for the design, improvement, and testing of our merchandise, value of
improvement environments and instruments, and allotted overhead. We anticipate that our
analysis and improvement bills will proceed to extend as we enhance our
analysis and improvement headcount to additional strengthen and improve our
merchandise and put money into the event of our software program.

Gross sales and Advertising and marketing


Gross sales and advertising bills primarily encompass personnel-related bills,
share-based compensation bills, gross sales commissions immediately related to
our gross sales and advertising organizations, public cloud infrastructure prices
related to our free trials, freemium choices, and open supply software program
choices, and prices related to advertising packages and consumer occasions. Advertising and marketing
packages embody promoting, promotional occasions, and brand-building actions.
We plan to extend our funding

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in gross sales and advertising over the foreseeable future, as we proceed to rent
further personnel and put money into gross sales and advertising packages.

Common and Administrative


Common and administrative bills primarily encompass personnel-related
bills, share-based compensation bills, related primarily with our
finance, authorized, human assets and different operational and administrative
features, skilled charges for exterior authorized, accounting and different consulting
providers, administrators and officer's insurance coverage bills, and allotted overhead. We
anticipate to extend the scale of our normal and administrative operate to
assist the expansion of our enterprise. Consequently, we anticipate our normal and
administrative bills to extend for the foreseeable future.

Curiosity and Different Earnings, Internet

Curiosity and different revenue, web primarily consists of revenue earned on our money
equivalents and short-term investments. Curiosity and different revenue, web additionally
consists of overseas alternate good points and losses.

Earnings Tax Expense (Profit)


Earnings tax expense (profit) consists primarily of revenue taxes associated to the
U.S. and different overseas jurisdictions by which we conduct enterprise. We preserve a
full valuation allowance on sure deferred tax property in Israel as we now have
concluded that it's not extra seemingly than not that the deferred tax property will
be realized. Our efficient tax price is affected by tax charges in overseas
jurisdictions and the relative quantities of revenue we earn in these jurisdictions,
in addition to non-deductible bills, reminiscent of share-based compensation, and
modifications in our valuation allowance.

Outcomes of Operations


The next tables set forth chosen condensed consolidated statements of
operations information and such information as a proportion of whole income for every of the
durations indicated:

                                                  Three Months Ended          9 Months Ended September
                                                     September 30,                        30,
                                                 2022             2021           2022             2021
                                                                    (in hundreds)

Income:

Subscription-self-managed and SaaS            $   67,750       $   49,248     $  190,498       $  135,898
License-self-managed                               4,241            4,455         12,996           11,549
Whole subscription income                        71,991           53,703        203,494          147,447
Price of income:
Subscription-self-managed and SaaS(1)(2)(3)       15,678           11,262         44,345           28,379
License-self-managed(2)                              220              199            660              580
Whole value of revenue-subscription                15,898           11,461         45,005           28,959
Gross revenue                                      56,093           42,242        158,489          118,488
Working bills:
Analysis and improvement(1)(3)                    31,698           23,142         87,744           53,666
Gross sales and advertising(1)(2)(3)                      33,152           24,321         94,323           66,112
Common and administrative(1)(3)(4)               14,682           15,695         41,410           44,469
Whole working bills                          79,532           63,158        223,477          164,247
Working loss                                   (23,439 )        (20,916 )      (64,988 )        (45,759 )
Curiosity and different revenue, web                     1,369               20          2,159              726
Loss earlier than revenue taxes                         (22,070 )        (20,896 )      (62,829 )        (45,033 )
Earnings tax expense (profit)                       1,482             (432 )        4,200           (3,525 )
Internet loss                                      $  (23,552 )     $  (20,464 )   $  (67,029 )     $  (41,508 )




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_________________________________________

(1) Consists of share-based compensation expense as follows:

                                             Three Months Ended September 30,           9 Months Ended September 30,
                                                2022                  2021                2022                  2021
                                                                           (in hundreds)
Price of income:
subscription-self-managed and SaaS         $         1,903       $         1,180     $         4,822       $         2,766
Analysis and improvement                             6,806                 4,547              17,268                 9,056
Gross sales and advertising                                  6,548                 4,307              16,095                10,552
Common and administrative                           3,960                 6,823              10,183                20,337

Whole share-based compensation expense $ 19,217 $ 16,857 $ 48,368 $ 42,711

(2) Consists of amortization expense of acquired intangible property as follows:

                                             Three Months Ended September 30,         9 Months Ended September 30,
                                               2022                  2021              2022                  2021
                                                                          (in hundreds)
Price of income:
subscription-self-managed and SaaS          $    2,386         $          1,773     $    7,158         $          1,773
Price of income: license-self-managed              220                      199            660                      580
Gross sales and advertising                                298                      327            770                      691
Whole amortization expense of acquired
intangible property                           $    2,904         $          

2,299 $ 8,588 $ 3,044

(3) Consists of acquisition-related prices as follows:

                                             Three Months Ended September 30,         9 Months Ended September 30,
                                               2022                  2021              2022                  2021
                                                                          (in hundreds)
Price of income:
subscription-self-managed and SaaS          $        6         $              3     $       19         $              3
Analysis and improvement                         2,304                    2,305          6,828                    3,007
Gross sales and advertising                                228                      279            464                      279
Common and administrative                          10                      511            244                      872
Whole acquisition-related prices             $    2,548         $          

3,098 $ 7,555 $ 4,161

(4) Consists of authorized settlement prices as follows:

                                                Three Months Ended September 30,               9 Months Ended September 30,
                                                2022                         2021                2022                      2021
                                                                                (in hundreds)
Common and administrative                 $            -               $            -     $             216           $          -




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                                              Three Months Ended September 30,            9 Months Ended September 30,
                                               2022                     2021               2022                     2021
Income:
Subscription-self-managed and SaaS                    94 %                     92 %               94 %                     92 %
License-self-managed                                   6                        8                  6                        8
Whole subscription income                           100                      100                100                      100
Price of income:
Subscription-self-managed and SaaS                    22                       21                 22                       19
License-self-managed                                   -                        -                  -                        1
Whole value of revenue-subscription                    22                       21                 22                       20
Gross revenue                                          78                       79                 78                       80
Working bills:
Analysis and improvement                              44                       43                 43                       36
Gross sales and advertising                                   46                       46                 47                       45
Common and administrative                            21                       29                 20                       30
Whole working bills                             111                      118                110                      111
Working loss                                       (33 )                    (39 )              (32 )                    (31 )
Curiosity and different revenue, web                         2                        -                  1                        -
Loss earlier than revenue taxes                             (31 )                    (39 )              (31 )                    (31 )
Earnings tax expense (profit)                           2                       (1 )                2                       (3 )
Internet loss                                             (33 )%                   (38 )%             (33 )%                   (28 )%

Comparability of the Three Months Ended September 30, 2022 and 2021

Income

                                            Three Months Ended September
                                                         30,
                                             2022               2021            $ Change        % Change
                                                         (in hundreds, besides percentages)
Subscription-self-managed and SaaS         $  67,750       $        49,248     $   18,502               38 %
License-self-managed                           4,241                 4,455           (214 )             (5 )%
Whole subscription income                 $  71,991       $        53,703     $   18,288               34 %


Whole subscription income elevated $18.3 million, or 34%, for the three months
ended September 30, 2022 in comparison with the three months ended September 30, 2021.
Roughly $15.4 million of the rise in income was attributable to the
development from current prospects, and the remaining enhance in income was
attributable to new prospects.

Price of Income and Gross Margin

                                             Three Months Ended September 30,
                                                2022                  2021            $ Change       % Change
                                                            (in hundreds,

besides percentages)
Subscription-self-managed and SaaS $ 15,678 $ 11,262 $ 4,416

              39 %
License-self-managed                                   220                   199             21              11 %
Whole value of revenue-subscription         $        15,898       $        11,461     $    4,437              39 %
Gross margin                                            78 %                  79 %


Whole value of income elevated $4.4 million, or 39%, for the three months ended
September 30, 2022 in comparison with the three months ended September 30, 2021. The
enhance was primarily attributable to a rise of $1.7 million in
personnel-related bills primarily because of elevated headcount, an
enhance of 1.0 million in third-party internet hosting prices primarily pushed by
elevated income from SaaS subscription, and a rise of $0.7 million in
share-based compensation expense as mentioned within the part titled "Share-Primarily based
Compensation Expense" under.

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Gross margin was 78% for the three months ended September 30, 2022, in comparison with
79% for the three months ended September 30, 2021. The lower primarily
resulted from increased personnel-related expense to develop our assist and repair
organizations.

Working Bills

Analysis and Growth

                                             Three Months Ended September 30,
                                                2022                  2021            $ Change       % Change
                                                            (in hundreds, besides percentages)
Analysis and improvement                   $        31,698       $        23,142     $    8,556              37 %


Analysis and improvement expense elevated $8.6 million, or 37%, for the three
months ended September 30, 2022 in comparison with the three months ended September 30,
2021. The rise was primarily attributable to a rise of $4.3 million in
personnel-related bills primarily because of elevated headcount and an
enhance of $2.3 million in share-based compensation expense as mentioned within the
part titled "Share-Primarily based Compensation Expense" under.

Gross sales and Advertising and marketing

                        Three Months Ended September 30,
                           2022                  2021            $ Change       % Change
                                      (in hundreds, besides percentages)
Gross sales and advertising   $        33,152       $        24,321     $    8,831             36 %


Gross sales and advertising expense elevated $8.8 million, or 36%, for the three months
ended September 30, 2022 in comparison with the three months ended September 30, 2021.
The rise was primarily attributable to a rise of $3.2 million in
personnel-related bills primarily because of elevated headcount, an
enhance of $2.2 million in share-based compensation expense as mentioned within the
part titled "Share-Primarily based Compensation Expense" under, and a rise of $0.9
million in advertising program prices.

Common and Administrative

                                            Three Months Ended September
                                                         30,
                                             2022               2021            $ Change        % Change
                                                         (in hundreds, besides percentages)
Common and administrative                 $  14,682       $        15,695     $   (1,013 )             (6 )%


Common and administrative expense decreased $1.0 million, or 6%, for the three
months ended September 30, 2022 in comparison with the three months ended September 30,
2021. The lower was primarily attributable to a lower of $2.9 million in
share-based compensation expense as mentioned within the part titled "Share-Primarily based
Compensation Expense" under, partially offset by a rise of $1.8 million in
in personnel-related bills primarily because of elevated headcount.

Share-based Compensation Expense

                                            Three Months Ended September
                                                         30,
                                             2022               2021            $ Change       % Change
                                                         (in hundreds, besides percentages)
Price of income:
subscription-self-managed and SaaS         $   1,903       $         1,180     $      723              61 %
Analysis and improvement                       6,806                 4,547          2,259              50 %
Gross sales and advertising                            6,548                 4,307          2,241              52 %
Common and administrative                     3,960                 6,823         (2,863 )           (42 )%

Whole share-based compensation expense $ 19,217 $ 16,857

   $    2,360              14 %




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Share-based compensation bills elevated $2.4 million, or 14%, for the three
months ended September 30, 2022 in comparison with the three months ended September 30,
2021, primarily attributable to grants to new and current workers. The
share-based compensation expense generally and administrative decreased as a result of
$4.3 million expense acknowledged for the three months ended September 30, 2021
associated to the RSU granted to our CEO, which totally vested in September 2021.

Curiosity and Different Earnings, Internet

                                            Three Months Ended September
                                                         30,
                                              2022                2021          $ Change       % Change
                                                        (in hundreds, besides percentages)
Curiosity and different revenue, web             $     1,369         $        20  

$ 1,349 6,745 %



Curiosity and different revenue, web elevated $1.3 million for the three months ended
September 30, 2022 in comparison with the three months ended September 30, 2021,
primarily as a result of increased curiosity revenue because of increased rates of interest and
funding balances.

Earnings Tax Expense (Profit)

                                               Three Months Ended September 30,
                                                 2022                      2021           $ Change       % Change
                                                             (in hundreds, besides percentages)
Earnings tax expense (profit)               $          1,482           $         (432 )   $    1,914           (443 )%
Efficient revenue tax price                                (7 )%                     2 %


We recorded revenue tax expense of $1.5 million and revenue tax advantage of $0.4
million for the three months ended September 30, 2022 and 2021, respectively.
This alteration was primarily a results of the combination of pre-tax revenue (loss) in
totally different tax jurisdictions. Our efficient tax price was (7)% and a couple of% for the
three months ended September 30, 2022 and 2021, respectively. Our efficient tax
price is affected primarily by tax charges in overseas jurisdictions and the
relative quantities of revenue we earn in these jurisdictions, in addition to
non-deductible bills, reminiscent of share-based compensation, and alter in our
valuation allowance.

Comparability of the 9 Months Ended September 30, 2022 and 2021

Income

                                           9 Months Ended September
                                                       30,
                                              2022             2021         $ Change       % Change
                                                       (in hundreds,

besides percentages)
Subscription-self-managed and SaaS $ 190,498 $ 135,898 $ 54,600

              40 %
License-self-managed                           12,996           11,549          1,447              13 %
Whole subscription income                 $  203,494       $  147,447     $   56,047              38 %


Whole subscription income elevated $56.0 million, or 38%, for the 9 months
ended September 30, 2022 in comparison with the 9 months ended September 30, 2021.
Roughly $50.1 million of the rise in income was attributable to the
development from current prospects, and the remaining enhance in income was
attributable to new prospects.

Price of Income and Gross Margin

                                              9 Months Ended September 30,
                                                2022                  2021            $ Change       % Change
                                                            (in hundreds,

besides percentages)
Subscription-self-managed and SaaS $ 44,345 $ 28,379 $ 15,966

              56 %
License-self-managed                                   660                   580             80              14 %
Whole value of revenue-subscription         $        45,005       $        28,959     $   16,046              55 %
Gross margin                                            78 %                  80 %




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Whole value of income elevated $16.0 million, or 55%, for the 9 months ended
September 30, 2022 in comparison with the 9 months ended September 30, 2021. The
enhance was primarily attributable to a rise of $5.5 million in
amortization of intangibles primarily because of our acquisition of Vdoo
Join Belief Ltd ("Vdoo") within the third quarter of 2021, a rise of $4.9
million in personnel-related bills primarily because of elevated headcount,
a rise of $2.1 million in share-based compensation expense as mentioned in
the part titled "Share-Primarily based Compensation Expense" under, and a rise of
$2.0 million in in third-party internet hosting prices primarily pushed by elevated
income from SaaS subscription.

Gross margin was 78% for the 9 months ended September 30, 2022, in comparison with
80% for the 9 months ended September 30, 2021. The lower displays increased
amortization expense as mentioned above.

Working Bills

Analysis and Growth

                              9 Months Ended September 30,
                                2022                  2021           $ Change       % Change
                                           (in hundreds, besides percentages)
Analysis and improvement   $        87,744       $        53,666     $  34,078             64 %


Analysis and improvement expense elevated $34.1 million, or 64%, for the 9
months ended September 30, 2022 in comparison with the 9 months ended September 30,
2021. The rise was primarily attributable to a rise of $16.8 million in
personnel-related bills primarily because of elevated headcount, together with
headcount from our acquisitions in 2021, a rise of $8.2 million in
share-based compensation expense as mentioned within the part titled "Share-Primarily based
Compensation Expense" under, and a rise of $4.7 million in compensation
expense related to holdback and retention preparations as a part of our
acquisitions.

Gross sales and Advertising and marketing

                         9 Months Ended September 30,
                           2022                  2021           $ Change       % Change
                                      (in hundreds, besides percentages)
Gross sales and advertising   $        94,323       $        66,112     $  28,211             43 %


Gross sales and advertising expense elevated $28.2 million, or 43%, for the 9 months
ended September 30, 2022 in comparison with the 9 months ended September 30, 2021.
The rise was primarily attributable to a rise of $9.7 million in
personnel-related bills primarily because of elevated headcount, an
enhance of $5.5 million in share-based compensation expense as mentioned within the
part titled "Share-Primarily based Compensation Expense" under, and a rise of $5.1
million in advertising program prices.

Common and Administrative


                                           9 Months Ended September 30,
                                             2022               2021        

$ Change % Change

                                                         (in hundreds, besides percentages)
Common and administrative                 $  41,410       $        44,469     $   (3,059 )             (7 )%


Common and administrative expense decreased $3.1 million, or 7%, for the 9
months ended September 30, 2022 in comparison with the 9 months ended September 30,
2021. The lower was primarily attributable to a lower of $10.2 million in
share-based compensation expense as mentioned within the part titled "Share-Primarily based
Compensation Expense" under, partially offset by a rise of $5.4 million in
personnel-related bills primarily because of elevated headcount.

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Share-based Compensation Expense

                                              9 Months Ended September 30,
                                                2022                  2021           $ Change       % Change
                                                           (in hundreds, besides percentages)
Price of income:
subscription-self-managed and SaaS         $         4,822       $         2,766     $   2,056             74 %
Analysis and improvement                            17,268                 9,056         8,212             91
Gross sales and advertising                                 16,095                10,552         5,543             53
Common and administrative                          10,183               

20,337 (10,154 ) (50 )
Whole share-based compensation expense $ 48,368 $ 42,711 $ 5,657

             13 %


Share-based compensation bills elevated $5.7 million, or 13%, for the 9
months ended September 30, 2022 in comparison with the 9 months ended September 30,
2021, primarily attributable to grants to new and current workers. In
addition, fairness awards and holdback preparations related to our Vdoo
acquisition resulted in a rise of $4.0 million share-based compensation
expense primarily in analysis and improvement. Share-based compensation expense
generally and administrative decreased as a result of $14.6 million expense acknowledged
for the 9 months ended September 30, 2021 associated to the RSU granted to our
CEO, which totally vested in September 2021.

Curiosity and Different Earnings, Internet

                                           9 Months Ended September 30,
                                              2022                 2021          $ Change       % Change
                                                         (in hundreds, besides percentages)
Curiosity and different revenue, web             $     2,159         $        726     $    1,433            197 %


Curiosity and different revenue, web elevated $1.4 million for the 9 months ended
September 30, 2022 in comparison with the 9 months ended September 30, 2021
primarily as a result of increased curiosity revenue because of increased rates of interest on
our deposits and marketable securities.

Earnings Tax Expense (Profit)

                                              9 Months Ended September 30,
                                               2022                   2021            $ Change       % Change
                                                           (in hundreds, besides percentages)
Earnings tax expense (profit)               $       4,200         $        (3,525 )   $    7,725           (219 )%
Efficient revenue tax price                             (7 )%                    8 %


We recorded revenue tax expense of $4.2 million and revenue tax advantage of $3.5
million for 9 months ended September 30, 2022 and 2021, respectively. This
change was primarily a results of the combination of pre-tax revenue (loss) in numerous
tax jurisdictions. Our efficient tax price was (7)% and eight% for 9 months ended
September 30, 2022 and 2021, respectively. Our efficient tax price is affected
primarily by tax charges in overseas jurisdictions and the relative quantities of
revenue we earn in these jurisdictions, in addition to non-deductible bills, such
as share-based compensation, and alter in our valuation allowance.

Liquidity and Capital Assets


Since our inception, we now have financed our operations primarily by means of gross sales of
fairness securities and money generated from operations. Our principal makes use of of money
in current durations have been funding our operations, investing in capital
expenditures, and enterprise and asset acquisitions.

As of September 30, 2022, our principal sources of liquidity had been money, money
equivalents, and short-term investments of $434.0 million. Money and money
equivalents primarily consist of money in banks and cash market funds.
Quick-term investments usually encompass financial institution deposits, certificates of
deposit, industrial paper, company debt securities, municipal securities, and
authorities and company debt. We consider our current money, money equivalents, and
short-term investments, along with money offered by operations, might be
adequate to fulfill our wants for not less than the following 12 months.

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Our future capital necessities will rely on many elements together with our
income development price, subscription renewal exercise, billing frequency, the
timing, and extent of spending to assist additional gross sales and advertising and
analysis and improvement efforts, the persevering with market acceptance of our
services and products, in addition to bills related to our worldwide
growth, the timing, and extent of further capital expenditures to speculate
in current and new workplace areas. We could sooner or later enter into preparations
to amass or put money into complementary companies, providers, and applied sciences,
together with mental property rights. We could also be required to hunt further
fairness or debt financing. Within the occasion that further financing is required
from outdoors sources, we could not have the ability to elevate it on phrases acceptable to us
or in any respect. If we're unable to lift further capital when desired, our
enterprise, outcomes of operations, and monetary situation can be materially and
adversely affected.

The next desk summarizes our money flows for the durations offered:

                                                            9 Months Ended September 30,
                                                              2022                   2021
                                                                    (in hundreds)
Internet money offered by working actions               $         14,111       $         10,241
Internet money utilized in investing actions                   $        (35,856 )     $        (88,243 )
Internet money offered by (utilized in) financing actions     $          9,691       $         (1,094 )


Working Actions

Internet money offered by working actions of $14.1 million for 9 months ended
September 30, 2022 was associated to our web lack of $67.0 million adjusted for
non-cash costs of $69.6 million, together with share-based compensation expense of
$48.4 million and depreciation and amortization expense of $10.8 million, and
modifications in our working property and liabilities of $11.6 million. The modifications in
our working property and liabilities had been primarily associated to a rise of
$12.6 million in deferred income pushed by increased gross sales and a lower of $5.1
million in pay as you go expense and different property primarily as a result of amortization of our
acquisition holdbacks, partially offset by a lower of $7.2 million in
working lease liabilities primarily because of funds and a rise of
$5.5 million in web deferred contract acquisition prices associated to capitalized
commissions.

Internet money offered by working actions of $10.2 million for the 9 months
ended September 30, 2021 was associated to our web lack of $41.5 million adjusted
for non-cash costs of $56.6 million, together with share-based compensation
expense of $42.7 million, and web money outflows of $4.9 million from modifications in
our working property and liabilities, which was primarily as a result of a rise of
pay as you go expense and different property of $18.7 million and a rise of accounts
receivable of $6.2 million, partially offset by a rise of $22.8 million in
deferred income. The will increase in deferred income and accounts receivable had been
pushed by increased gross sales. $17.8 million of the rise in pay as you go expense and
different property had been as a result of prepayments pursuant to holdback agreements related
with our acquisitions.

Investing Actions

Internet money utilized in investing actions of $35.9 million for the 9 months ended
September 30, 2022 consisted primarily of web buy of short-term investments
of $31.9 million and capital expenditure of $3.7 million.

Internet money utilized in investing actions of $88.2 million for the 9 months ended
September 30, 2021 consisted primarily of funds for acquisitions of $195.8
million, web of money acquired, and capital expenditure of $3.2 million,
partially offset by web proceeds from gross sales and maturities of short-term
investments of $111.3 million.

Financing Actions


Internet money offered by financing actions of $9.7 million for the 9 months
ended September 30, 2022 consisted primarily of proceeds from worker share
purchases beneath our ESPP of $5.2 million and proceeds from train of share
choices of $4.7 million.

Internet money utilized in financing actions of $1.1 million for the 9 months ended
September 30, 2021 consisted of web funds of $8.9 million to tax authorities
related to our worker fairness transactions, partially offset by proceeds
from train of share choices of $4.8 million and proceeds from worker share
purchases beneath our ESPP of $3.1 million.

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Contractual Obligations


The next desk summarizes our non-cancellable contractual obligations as of
September 30, 2022:

                                                                       Funds Due by Interval
                                                                                          2023 and
                                                 Whole         2022

(The rest) Thereafter

                                                                   (in hundreds)
Working lease obligations                   $    31,877     $            1,994       $        29,883
Buy obligations                               75,790                    445                75,345
Whole                                         $   107,667     $            2,439       $       105,228


The contractual dedication quantities within the desk above are related to
agreements which can be enforceable and legally binding. Obligations beneath contracts
that we are able to cancel and not using a important penalty will not be included within the desk
above.

Essential Accounting Insurance policies and Estimates


Our condensed consolidated monetary statements are ready in accordance with
GAAP. The preparation of those condensed consolidated monetary statements
requires us to make estimates and assumptions that have an effect on the reported quantities
of property, liabilities, income and bills, in addition to associated disclosures. We
consider our estimates and assumptions on an ongoing foundation. Our estimates are
based mostly on historic expertise and varied different assumptions that we consider to
be affordable beneath the circumstances. As occasions proceed to evolve and
further data turns into out there, our estimates and assumptions could
change materially in future durations.

Our crucial accounting insurance policies and estimates had been disclosed in Merchandise 7,
Administration’s Dialogue and Evaluation of Monetary Situation and Outcomes of
Operations included in our Annual Report. There have been no important modifications
to those insurance policies and estimates through the 9 months ended September 30, 2022.

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