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JFrog reported a strong third quarter with revenue of about 179 million dollars, up 31 percent from last year. The most important part of the report was the cloud business, which grew 60 percent to reach 101 million dollars. This shift is vital because cloud-hosted subscriptions are more predictable and often easier to expand than older software installed on a company's own servers.
The company is also succeeding at winning over the largest customers. It now has 112 clients spending over 1 million dollars a year, a 58 percent increase from a year ago. As AI tools generate more code, companies need a central place to store and secure the resulting software blocks. These results suggest that JFrog is becoming that essential system of record for big enterprises, which makes its business much harder for rivals to displace.
See the full quarter, and how our tracked metrics did
Source: 8-K filing
After JFrog reported its November results, we updated our fair value. We moved our rating from Avoid to Watch because the company reached positive net income after all expenses including share-based pay. We have added the way AI agents generate vast amounts of software code to what we track as a growth driver. We also raised our expectations for how many customers will spend more than $1 million annually after that group grew by 58% over the past year.
JFrog will share its latest numbers today. Analysts expect the company to earn about 23 cents per share. The stock has a long history of beating these expectations, having done so for eight quarters in a row. We are watching for growth in cloud-hosted subscriptions and the number of large customers spending over 1 million dollars. These metrics show whether big companies are truly making JFrog the central home for their software building blocks, which is the core of why this business is hard for rivals to replace.
JFrog launched a new feature called Zero-Touch Remediation, which helps companies fix security vulnerabilities in their software automatically. This tool connects various third-party patching services into a single system, allowing developers to update their software building blocks without manual work.
This is a step toward making JFrog a complete security platform rather than just a storage space for code. For the business to grow, it needs customers to pay for these extra security tools on top of their basic subscriptions. By making it easier to fix flaws, the company is giving large enterprises a clearer reason to consolidate their software tools onto JFrog's platform.
Source: Business Wire
Oppenheimer raised its price target for the software company from $115 to $125 on Wednesday. This new target is higher than the average analyst estimate of $111 and suggests the firm sees significant room for the stock to grow from its current price of about $98. While a target change on its own is routine, it shows that analysts remain optimistic about the company's ability to sell more security and AI tools to its existing customers. This kind of steady support from Wall Street firms can help provide a floor for the stock price as long as the company continues to meet its growth goals.
Source: Oppenheimer
Management consistently sets a low bar and clears it with small, predictable beats. This steady execution shows they have a firm handle on their growth and do not overpromise.
| Expectation | |
|---|---|
| EPS | $0.21 |
| Revenue | $168M |