JFrog Ltd. (FROG) Q4 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call summary indicates strong financial performance and optimistic guidance, particularly in cloud revenue growth and net dollar retention. The Q&A reveals positive sentiment towards AI-driven growth and strategic partnerships, like those with NVIDIA and Hugging Face, which are expected to drive new customer acquisition. Despite some concerns about revenue estimates tied to security incidents, the overall outlook remains positive, with disciplined investment plans and increased demand for products like JFrog ML. Given the company's market cap, the stock price is likely to react positively within the next two weeks.
Key Financial Performance
Total Revenue (Fiscal Year 2025) $531.8 million, up 24% year-over-year. The increase was driven by strong growth in cloud revenue and customer expansion.
Cloud Revenue (Fiscal Year 2025) $243.3 million, up 45% year-over-year. Growth was attributed to increased cloud usage, DevOps adoption, and security product demand.
Q4 Total Revenue $145.3 million, up 25% year-over-year. Growth was driven by cloud revenue expansion and customer commitments.
Q4 Cloud Revenue $70.2 million, up 42% year-over-year. Growth was driven by increased demand for security products and annual customer commitments.
Customers Spending >$1 Million Annually 74 customers, up 42% year-over-year from 52 customers. Growth reflects alignment with enterprise market needs.
Customers Spending >$100,000 Annually 1,168 customers, up 15% year-over-year from 1,018 customers. Growth reflects broader customer adoption of the platform.
Enterprise Plus Subscriptions (Q4) 57% of total revenues, up from 54% in the prior year. Revenue growth of 33% year-over-year driven by broader customer adoption.
Security Core Revenue (Fiscal Year 2025) 7% of total revenues, with Security Core products comprising over 10% of total ARR. Growth driven by customer consolidation of point solutions.
Remaining Performance Obligation (RPO) $566 million, up 40% year-over-year. Growth driven by larger multiyear commitments to DevSecOps offerings.
Net Dollar Retention Rate 119%, up 1 percentage point from the prior quarter. Growth driven by adoption of Security Core products and increased cloud data consumption.
Gross Retention Rate 97% as of Q4 2025. Reflects the mission-critical nature of JFrog solutions.
Operating Cash Flow (Fiscal Year 2025) $145.7 million. Reflects strong financial performance and operational discipline.
Free Cash Flow (Fiscal Year 2025) $142.2 million, a 27% margin. Reflects disciplined spending and strong cash generation.
Cash and Short-Term Investments (End of 2025) $704 million, up from $522 million at the end of 2024. Reflects strong cash flow generation and financial health.
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Operating Highlights
JFrog Advanced Security and JFrog Curation: Expanded offerings to provide end-to-end trust and governance for software supply chain security. These products now comprise over 10% of total ARR and have driven significant growth in customer adoption.
JFrog AI Catalog and agentic remediation capabilities: Introduced to address challenges from AI models and agent-generated code in the software supply chain. Partnered with NVIDIA and Hugging Face to strengthen position in AI artifact management.
Cloud revenue growth: Achieved 45% year-over-year growth in cloud revenue, driven by increased customer commitments, security deals, and partnerships with major cloud providers.
Enterprise Plus subscriptions: Revenue from these subscriptions grew 36% year-over-year, reflecting broader customer adoption of the JFrog platform.
Operational efficiency: Maintained gross margins of 83.7% in Q4 2025 and focused on cloud hosting cost optimization. Free cash flow for 2025 was $142.2 million, a 27% margin.
Customer retention: Gross retention rate was 97%, with net dollar retention at 119%, highlighting strong customer loyalty and expansion.
AI and MLOps: Built JFrog ML foundation to automate and govern AI-driven software lifecycles. Released integrations for AI agents and LLMs, and expanded partnerships to secure AI models.
Security market positioning: Unified security and DevOps on a single platform, challenging traditional security point solutions. Security Core products now represent 16% of RPO, up from 12% in the prior year.
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Risk or Challenges
Cloud Usage Volatility: Increased cloud usage and early AI workload trends could result in a tailwind for JFrog, but the company is proactively derisking exposures to volatile usage-driven and sizable deals. This indicates potential risks in managing unpredictable cloud consumption patterns.
Regulatory and Security Challenges: Evolving security and regulatory requirements, especially with AI adoption, pose challenges for CIOs and could impact JFrog's ability to meet customer needs effectively.
Economic and Currency Headwinds: The weakening U.S. dollar against global currencies has created a year-over-year headwind for operating expenses, which could impact profitability.
Competitive Pressures in Security Solutions: JFrog faces competition in the security point solution market, which it is addressing by unifying security and DevOps on a single platform. However, this remains a competitive challenge.
Customer Purchasing Behavior: CIOs are shifting focus from mega cloud migration initiatives to hybrid and multi-cloud architectures, which may impact the pace of cloud adoption and related revenues.
Supply Chain Security Threats: The increasing frequency of software supply chain attacks, such as the Shai-Hulud npm incident, highlights the growing threat landscape that JFrog must address to maintain customer trust.
AI-Driven Consumption Spikes: AI-driven software package ecosystems are causing consumption spikes that sometimes exceed customer commitments, creating potential risks in aligning commitments with usage patterns.
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Guidance & Outlook
Revenue Projections for 2026: JFrog anticipates full-year 2026 revenues to be in the range of $623 million to $628 million, representing 17.5% year-over-year growth at the midpoint. Q1 2026 revenues are expected to range between $146 million and $148 million.
Cloud Growth: Baseline cloud growth for 2026 is estimated to be in the range of 30% to 32%. JFrog expects durable growth in the cloud driven by higher annual customer commitments and increased adoption of security solutions.
Net Dollar Retention Rate: The company projects a net dollar retention rate of 117% for 2026, reflecting growing contributions from JFrog Security Core products and cloud growth.
Operating Income and Margins: Non-GAAP operating income for 2026 is expected to be between $106 million and $108 million. Gross margins are estimated to remain in the range of 82% to 83% for the year.
Security Solutions Growth: JFrog anticipates sustained customer adoption of its holistic security solutions, driven by the increasing need for trusted infrastructure to manage and secure software supply chains at scale. Security Core products are expected to contribute significantly to growth.
AI and MLOps Expansion: The company plans to expand its AI and MLOps capabilities in 2026, focusing on automating speed, trust, and control across the software lifecycle. This includes new functionalities to support hybrid engineering teams and AI-driven software creation.
Market Trends and Customer Behavior: JFrog expects CIOs to increase investments in cloud infrastructures as AI adoption matures and clarity on cost predictability and ROI improves. The company also anticipates customers to align commitments as usage patterns stabilize.
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Shareholder Return Plan
The selected topic was not discussed during the call.
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Key Q&A
Q:How should we think about the customer count going forward, and how far along are we in the transition to focusing on larger customers?
A:The company is focused on building for the enterprise, which has resulted in significant growth in customers spending over $1 million and $100,000. This strategy involves letting go of low-ASP customers and focusing on big enterprise opportunities. Internal consolidation has reduced friction in the go-to-market team, and regulatory churn in geographies like China and Russia has also impacted customer count. However, the new customers brought in are spending more and adopting additional services, aligning with the company's strategy.
Q:Are security incidents becoming structural growth drivers, and how should we think about their long-term contribution?
A:Security incidents are becoming more frequent and are anticipated to grow as threats to the software supply chain increase. The company has built its JFrog security suite to address these threats, which are driven by faster code generation and increased use of open-source software packages.
Q:Is there a general rule of thumb to estimate revenue impact from security incidents like the NPM hack?
A:The company focuses on the potential revenue growth from enterprise customers who have not yet adopted JFrog security. Growth avenues include new enterprise logos adopting security from the start and scaling within companies already using JFrog Security. The company does not provide specific revenue estimates tied to individual incidents.
Q:Are customers increasing their commitments and consumption beyond re-up levels, especially with AI-driven coding agents?
A:Yes, customers are increasing their commitments and consumption due to the 'tsunami of binaries' created by AI-driven coding agents. These agents are faster than developers, creating more binaries and requiring a single source of truth for governance and security, which JFrog provides.
Q:Are new bottlenecks emerging in the software pipeline due to AI tools, and how does AppTrust address these?
A:Yes, governance has become a new bottleneck as both humans and AI agents generate code. AppTrust addresses this by providing automated governance and regulation before binaries go to production, ensuring a trusted software supply chain.
Q:What are the prospects of winning over AI-native companies not currently using JFrog?
A:The company is optimistic about winning over AI-native companies not currently using JFrog. Some are evaluating tools or building their own, and JFrog is gradually bringing them on board as customers.
Q:What usage trends are being observed with JFrog Fly and MCP server integrations?
A:Customers are increasingly using JFrog Artifactory as the single source of truth for all MCPs in the market. MCP servers allow agents to interact with the JFrog platform, ensuring consistency, security, and governance in the software supply chain.
Q:What is the framework for investment in sales, marketing, and R&D through fiscal '26, and what is the FX impact?
A:The company is disciplined in operational execution, maintaining expenses while continuing to invest. FX impact is mitigated through a strong hedging program, and potential outperformance on the top line would contribute to operating margins.
Q:How are top-down partnerships with NVIDIA AI Factory and Hugging Face driving new logos and monetization?
A:Partnerships with NVIDIA and Hugging Face validate JFrog as a trusted source for AI tools and models. NVIDIA supports enterprise adoption, while Hugging Face serves as a top-of-funnel for open-source users. These partnerships drive new logos and support monetization through AI catalog adoption and governance tools like AppTrust.
Q:What are the greatest risks to the business, and could AI pose a threat?
A:The greatest risk is losing focus and following trends instead of serving enterprise customers. AI is seen as an opportunity rather than a threat, as it reinforces the importance of binaries, which are JFrog's core focus.
Q:Is the $800 million FY '27 revenue target aspirational, and how does the 'tsunami of binaries' impact growth?
A:The $800 million target is based on disciplined execution and historical performance. The 'tsunami of binaries' driven by AI is expected to accelerate growth, but the company guides based on customer commitments rather than usage trends.
Q:Has demand for Curation accelerated post the second NPM attack, and did it pull deals forward?
A:Yes, demand for Curation has accelerated due to the NPM attack, building both immediate performance and future pipeline growth.
Q:What is the potential for convergence of the DevOps tool chain to address MLOps, and how is JFrog ML being adopted?
A:The convergence of DevOps and MLOps is driven by the need for unified pipelines for security and governance. JFrog ML, which treats models as binaries, is being adopted by customers to manage the full lifecycle of models, supporting this convergence.
Q:What is the consumption profile for LLMs compared to traditional binaries, and why is JFrog well-positioned?
A:LLMs have a higher consumption profile due to their larger size compared to traditional binaries. JFrog is well-positioned as it provides a secure, unified platform for managing these binaries, ensuring governance and scalability.
Q:Is cloud revenue seasonality becoming more stable as it grows as a portion of total revenue?
A:Cloud revenue seasonality remains influenced by large enterprise deals and usage trends. While it is becoming a larger portion of revenue, variability is still expected due to these factors.
Q:Review of Unclear Management Responses
A:Management avoided providing specific revenue estimates tied to individual security incidents, such as the NPM hack, and did not detail the exact growth rate of the core business excluding security. Additionally, they did not provide a clear timeline for when the 'tsunami of binaries' would translate into measurable revenue growth.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
AI adoption
AI agent
AI catalog
AI software
ARR
ASP
CEO Chairman
CIOs
Core product
Founder CEO
Hugging Face
PyPI
Security Core
Security Curation
adoption Security
alignment
availability
binary AI
clarity
cloud AI
cloud contribution
developer AI
discipline
incident
infrastructure software
model software
momentum success
opportunity value
platform AI
product portfolio
purchasing
purpose
remediation
revenue cloud
solution Security
source truth
success security
tailwind
tsunami binary
way software
workload
FROG Transcript
JFrog Ltd. (FROG) Q4 2025 Earnings Call Transcript
Positive2-14
The earnings call summary indicates strong financial performance and optimistic guidance, particularly in cloud revenue growth and net dollar retention. The Q&A reveals positive sentiment towards AI-driven growth and strategic partnerships, like those with NVIDIA and Hugging Face, which are expected to drive new customer acquisition. Despite some concerns about revenue estimates tied to security incidents, the overall outlook remains positive, with disciplined investment plans and increased demand for products like JFrog ML. Given the company's market cap, the stock price is likely to react positively within the next two weeks.
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Neutral12-10
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Neutral12-2
JFrog Ltd. (FROG) Q3 2025 Earnings Call Transcript
Positive11-7
The earnings call summary and Q&A indicate strong cloud growth, successful go-to-market strategies, and a significant increase in RPO, all positive signs. Despite a decrease in margins, optimistic guidance and execution in cloud and security sectors suggest positive sentiment. The market cap indicates moderate sensitivity, but overall, the outlook is positive due to strong strategic positioning and growth drivers.
FROG Slides
FROG Report
Frequently Asked Questions
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