JFrog Cloud Business Surges as AI and Security Adoption Expand

JFrog Ltd. (NASDAQ:FROG) shares are trading about 22% higher premarket after the company reported stronger-than-expected third-quarter results and issued fourth-quarter guidance above analyst estimates. The company also raised its full-year 2026 revenue and adjusted EPS forecasts above consensus expectations.

Earnings Snapshot

Adjusted EPS came in at 32 cents, beating the analyst estimate of 23 cents.

Revenue rose 31% year over year to $179.17 million, exceeding the consensus estimate of $165.89 million.

Cloud revenue surged 60% to $101.5 million, accounting for 57% of total sales, compared with 46% a year earlier. Self-managed revenue grew 6% to $77.7 million.

Remaining performance obligations (RPO) reached a record $812 million, up 60% year over year, reflecting larger enterprise commitments, increased cloud consumption and stronger security adoption.

Net dollar retention reached 124%, up 6 percentage points year over year and 3 percentage points sequentially, while gross retention remained at 97%.

Enterprise and Customer Growth

JFrog signed a $76 million multi-year SaaS agreement with a major telecommunications company, reflecting a 167% increase in cloud data consumption. Higher usage, larger commitments and increased security adoption supported cloud growth.

Customers generating more than $1 million in ARR increased 58% year over year to 112 from 71, while those generating more than $100,000 rose 21% to 1,357 from 1,121.

AI Adoption and Security Expansion

Management highlighted AI adoption as a growth driver, as coding agents generate increasing volumes of software binaries, models, datasets, MCP servers, plugins and other digital assets requiring storage, security and governance.

JFrog aims to provide a centralized platform for managing both human- and AI-generated software assets.

Security offerings, including Curation, Advanced Security and Xray, continued supporting customer expansion.

JFrog is expanding its DevGovOps strategy through AppTrust, embedding compliance, auditability and governance into software development.

Management sees growing demand for controls over AI agents’ permissions, resources and outputs as they increasingly automate development tasks.

Cash Flow and Balance Sheet

Operating cash flow reached $69.3 million, while free cash flow totaled $66.5 million, representing a 37% margin, compared with $28.8 million and a 21% margin a year earlier.

Cash and short-term investments totaled $880.9 million as of Sept. 30, compared with $704.4 million at the end of 2025.

Fourth-Quarter and FY2026 Outlook

For the fourth quarter, JFrog expects adjusted EPS of 28 cents to 30 cents, above the analyst estimate of 21 cents. Revenue is projected at $183 million to $185 million, compared with the $167.9 million consensus estimate.

The company raised its full-year 2026 adjusted EPS outlook to $1.14 to $1.16 from its previous range of $0.96 to $1.00, exceeding the analyst estimate of $0.98.

JFrog also increased its FY2026 revenue forecast to $680 million to $682 million from $648 million to $652 million, above the consensus estimate of $651.9 million.

JFrog Stock Trend: Rebound Nears the 50-Day Average

The premarket jump puts JFrog back near the top of its recent range. At about $91, the stock trades well above its 200-day moving average of $72.32 and just below its 50-day average of $93.48, after Thursday’s close of $74.62 left it barely above the 200-day line.

JFrog hit a 52-week closing high of $104.03 on Aug. 27 and a low of $34.75 in late February. The stock was up about 20% year to date through Thursday’s close.

FROG Stock Price Activity: JFrog shares were up 22.29% at $91.25 during premarket trading on Friday, according to Benzinga Pro data.

Photo: Funtap / Shutterstock