FROG, JFrog

Will it survive?

• Can it pay its interest? —
  No meaningful interest burden
  Little or no interest expense reported
  What this means

  Little or no interest expense reported, the business isn't leaning on lenders to operate.

• How heavy is the debt, net of cash? +$704M
  Net cash, debt-free
  Cash $76M + ST investments $629M − debt $0
  What this means

  Cash and short-term investments exceed every dollar of debt by $704M, on net the company owes nothing, and can act from strength when others can't. Net debt is the leverage figure that matters: the cash is already set against the debt. Strategic or illiquid investments aren't counted here.

• How long is cash tied up? 40d
  Tight
  DSO 82 + DIO 0 − DPO 42 days
  What this means

  Days cash is tied up between paying suppliers and collecting from customers. Lower is better; a long cycle means growth itself eats cash. (Little or no inventory, a services / asset-light model, so the inventory leg is ~0.)

Is it a good business?

• Return on invested capital —
  Not enough data
  Industry peers: median -1%
  What this means

  The filing data didn't include the inputs for this check.

• Owner-earnings margin 14%
  Solid through the cycle
  8-yr median margin, range 6%–27%; latest $142M = operating cash $146M − maintenance capex $3M
  Industry peers: median 6%
  What this means

  What an owner could take out without starving the business: operating cash less the maintenance capital it must spend to hold its position — Buffett's owner earnings. That's 27% of revenue this year, a 14% median across 8 years. Treating stock comp as the real expense it is (less $157M of SBC) leaves ($14M).

• Are earnings backed by cash? $146M
  Loss, but cash-generative
  Net income ($72M) · cash from operations $146M
  What this means

  The company reported a net loss, so a conversion ratio isn't meaningful. What matters then is whether operations still threw off cash, here, they did.

How is the cash used?

• Where do the earnings go? —
  Not enough data
  What this means

  The filing data didn't include the inputs for this check.

• Investing or harvesting? 0.14×
  Harvesting
  Capex $3M ÷ depreciation $25M
  What this means

  Descriptive, not a grade. Above ~1× means investing faster than assets wear out (growth, or, sustained for years, today's earnings carrying less depreciation than tomorrow's will). Below means spending less than it's wearing out (efficiency, or a melting asset base). The ratio won't tell you which; the filings will.

The promise and the pay packet

• What does winning a customer cost? 42%
  Heavy selling cost
  Selling and marketing $224M ÷ revenue $532M
  Retention and the customer ladder, in the filing’s words

  net dollar retention rate119%

  “As of December 31, 2025 and 2024, our net dollar retention rate was 119% and 116%, respectively.”

  ✓ the figure is the sentence’s own characters · the prior filing’s figure agrees

  Customers from $100,0001,168

  “As of December 31, 2025, 1,168 of our customers had ARR of $100,000 or more, increasing from 1,018 customers as of December 31, 2024.”

  Customers from $1.0 million74

  “We had 74 customers with ARR of at least $1.0 million as of December 31, 2025, increasing from 52 customers as of December 31, 2024.”

  What this means

  Sales and marketing as a share of revenue, kept apart from administrative overhead because it answers a different question: how much a business must spend to win the next customer. A company whose product pulls customers in spends little here and keeps the difference; one that must buy its growth is running to stand still, and the spending has to keep rising for revenue to keep rising. Read it beside the growth rate, not alone.

• Is the buyback buying ownership, or mopping up? 29.5%
  The count is rising
  Stock compensation $157M (fiscal 2025), 29.5% of revenue · no repurchases · diluted shares +17.1% since 2022
  What this means

  Stock handed to employees is a real cost paid in the owner's own currency: it is charged against profit, but the shares it creates are permanent. Many companies repurchase stock at the same time, which looks like a return of capital and often is not — if the count barely moves, the cash merely cancelled the pay packet and bought the owner nothing. The three states worth telling apart are a count genuinely shrinking, a count standing still despite large repurchases, and a count rising because the issuance was never offset at all.

Graham’s defensive tests · 1 of 3 met

Graham’s numerical criteria for the defensive investor (The Intelligent Investor, ch. 14), run on the filings. A floor of safety, not a buy signal; many fine modern businesses fail his strictest liquidity rules by design.

• Adequate size Miss
  Revenue ≥ $2B · $532M
  What this means

  Big enough to weather a storm. Graham's 1972 floor was ~$100M of sales (≈ $700M today); we use a $2B revenue line as a conservative modern stand-in.

• Strong liquidity Pass
  Current ratio ≥ 2× · 2.14×
  What this means

  Current assets at least twice current liabilities, near-term bills covered without touching the business. Strict by design: many cash-rich modern firms run leaner and miss it, holding their cushion in longer-dated securities.

• Earnings stability Miss
  A profit every year (8-yr record) · 8 loss years
  What this means

  Graham wanted earnings in each of the past ten years, the stability a defensive owner leans on.

• Dividend record —
  Uninterrupted dividends · no dividend line tagged in the data
  What this means

  An unbroken dividend was Graham's mark of durability. This record carries no dividends-paid line in any year — common for partnerships, whose distributions file under tags the chain doesn't read — so the criterion is withheld rather than judged on silence.

• Earnings growth —
  Earnings +33% over the record · —
  What this means

  Earnings were negative early in the record, a growth rate isn't meaningful.

• Moderate price —
  P/E ≤ 15 and P/E × P/B ≤ 22.5 · decided by the price
  What this means

  Graham's valuation gate, the wall he kept between a sound business and a sound investment. Three-year average earnings are $-0.56/share (latest year $-0.59), the averaged base the calculator's gate runs on, and book value is $7.33/share. Enter a price in “What the price implies” just below for the P/E, P/B, and whether it clears. But this is the rule Buffett outgrew: there's no hard P/E law, and a wonderful business can deserve a far richer multiple if the thesis holds, treat it as the bargain-hunter's floor, not a verdict on the price.

Durability & moat, 2018–2025

Whether the record’s returns held, and what the capital reinvested earned.

• Profitable years 0 of 8
  What this means

  Lost money in 8 year(s), look at what happened there before trusting the average.

• Operating margin −19% → −20% (3-yr avg ends)
  What this means

  Through the cycle the operating margin held roughly steady — about −19% early, −20% lately, median −22%.

• Owner earnings growth +49%/yr
  What this means

  Owner earnings grew about 49% a year over the record.

• Worst year 2018 · −42.3% op. margin
  What this means

  Operations went underwater in 2018, understand why before trusting the good years.