DevOps company JFrog Ltd. edged past Wall Street’s expectations today with its fiscal first-quarter financial results, but its shares fell sharply in after-hours trading as a result of cautious guidance.

The company reported a profit before certain costs such as stock compensation of two cents per share on revenue of $45.1 million, up 37% from the same period one year ago. The results were just ahead of Wall Street’s forecast of earnings of a penny a share on revenue of $44.82 million.

“Our strong first-quarter results are setting a solid tone for the year, with 37% revenue growth, 130% net dollar retention rate for the trailing four quarters, and increasing net new customer additions,” said JFrog Chief Executive Shlomi Ben Haim (pictured).

JFrog sells some widely used developer tools and is perhaps best known for its open-source binary repository manager Artifactory. The offering is somewhat similar to GitHub, which is used by developers to store their code. But it caters to a different part of the development lifecycle, storing the binary files that are created when engineers compile code into a functioning program.

The JFrog Platform also includes JFrog Pipelines, a continuous integration and continuous delivery platform that’s used to create automated software workflows that transforms raw code into binaries before deploying them automatically.

Haim explained in an interview on SiliconANGLE’s livestreaming studio theCUBE in December that JFrog’s vision is all about “liquid software” that enables fast, automated, seamless and invisible software updates that end users don’t even notice.

“In Q1, we took a significant leap forward in product innovation, releasing capabilities around modern DevOps scalability; enhanced security, software distribution and the developer ecosystem in response to increasing demand for a full, end-to-end DevOps platform,” Ben Haim said today. “It’s our goal to make developers the transformers in the digital era as they continuously deliver software rapidly and securely to the edge.”

The company pointed out some positive developments in its business, with its cloud revenue growing by 63% in the quarter, to $10.3 million. That’s about 23% of its total sales, up from 19% of total sales one year ago.

JFrog grew its customer base too, saying it had 395 customers with annual recurring revenue greater than $100,000 at the end of the quarter. Of those, 10 have ARR of more than $1 million, JFrog said.

Holger Mueller, an analyst with Constellation Research Inc., told SiliconANGLE that DevOps is a critical aspect of today’s economy because every enterprise is powered by software these days. And those enterprises all need to build, deliver and operate new software to stay on top of digital transformation, he said.

“JFrog is one of the clear winners of this trend and it may well break $200 million in revenue this year as it’s showing strong and solid growth,” Mueller said. “It also managed its costs well, with its loss per share only going up by one cent.”

But Mueller said the company needs to keep an eye on its product research and development. “A year ago R&D spend was approximately 50% of its sales and marketing and general and administrative costs, but now it’s down to 41%,” he noted. “Product innovation and development speed is critical in the DevOps space.”

All in all, it was a decent quarter from JFrog, so its cautious guidance going forward might have disappointed some investors, pushing its stock down more than 8% in after-hours trading.

For the next three months, JFrog is guiding between breakeven and a profit of a penny per share, the latter matching Wall Street’s estimate. For revenue, JFrog is forecasting a range of $47.6 million to $48.6 million, versus the consensus of $48.12 million.

For the full year, JFrog expects revenue of $198 million to $204 million, the midpoint of which is just below Wall Street’s forecast of $201.26 million.

Here’s last year’s interview with Ben Haim in full:

Photo: SiliconANGLE