JFrog’s third quarter delivered results that surpassed Wall Street expectations, with strong market reaction reflecting confidence in the company’s execution. Management credited broad-based cloud adoption and increased security product usage as central to the quarter’s growth. CEO Shlomi Ben Haim highlighted, “Our cloud revenue grew 50% year-over-year, driven by increased usage of AI-related artifacts and a clear go-to-market strategy that converts usage overages into higher annual commitments.” The company also pointed to notable customer expansion in large enterprise accounts and cited continued success in growing its security-focused offerings.
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JFrog (FROG) Q3 CY2025 Highlights:
- Revenue: $136.9 million vs analyst estimates of $128.4 million (25.5% year-on-year growth, 6.6% beat)
- Adjusted EPS: $0.22 vs analyst estimates of $0.16 (34.4% beat)
- Adjusted Operating Income: $25.61 million vs analyst estimates of $17.81 million (18.7% margin, 43.8% beat)
- Revenue Guidance for Q4 CY2025 is $137.5 million at the midpoint, above analyst estimates of $131.2 million
- Management raised its full-year Adjusted EPS guidance to $0.79 at the midpoint, a 14.5% increase
- Operating Margin: -15.8%, up from -27.4% in the same quarter last year
- Customers: 1,121 customers paying more than $100,000 annually
- Net Revenue Retention Rate: 118%, in line with the previous quarter
- Annual Recurring Revenue: $534.4 million vs analyst estimates of $526.3 million (23.7% year-on-year growth, 1.5% beat)
- Billings: $163.8 million at quarter end, up 24.1% year on year
- Market Capitalization: $7.20 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From JFrog’s Q3 Earnings Call
- Michael Cikos (Needham): asked whether cloud revenue growth was driven by one-time events or sustained trends. CFO Ed Grabscheid clarified that growth was broad-based across geographies and product types, with no one-time factors.
- Sanjit Singh (Morgan Stanley): inquired about the mix of traditional versus AI-related artifacts managed by JFrog. CEO Shlomi Ben Haim explained that usage of AI packages is rising but emphasized it is too early to predict if this will drive sustained higher consumption.
- Koji Ikeda (Bank of America): questioned the sustainability of net revenue retention given strong cloud growth. Grabscheid highlighted that both security adoption and increased usage over minimum cloud commitments are contributing to stable net revenue retention.
- William Kingsley Crane (Canaccord): asked about the significance of JFrog Fly and how it may open new markets. Ben Haim stated that Fly is intended to support both developers and AI agents, with potential to broaden JFrog’s addressable market.
- Robbie Owens (Piper Sandler): probed the barriers to cloud migration for some customers. Ben Haim pointed to concerns over cost predictability, security, and governance, noting that JFrog’s hybrid model addresses these hesitations.
Catalysts in Upcoming Quarters
In upcoming quarters, the StockStory team will watch (1) the pace at which enterprise customers increase cloud commitments and adopt new security features, (2) the adoption rate and customer feedback for recently launched products like JFrog Fly and AppTrust, and (3) the progression of hybrid deployment strategies amid continued uncertainty around AI workload migration. Execution on product integration, security expansion, and addressing compliance needs will be critical metrics for monitoring.
JFrog currently trades at $61.49, up from $47.27 just before the earnings. Is there an opportunity in the stock?Find out in our full research report (it’s free for active Edge members).
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