JFrog (FROG) Q3 2026 Earnings Call Transcript

Image source: The Motley Fool.

DATE

Thursday, Nov. 5, 2026

CALL PARTICIPANTS

• Chief Legal Officer – Shanti Ariker
• Chief Executive Officer and Co-Founder – Shlomi Ben Haim
• Chief Financial Officer – Ed Grabscheid

TAKEAWAYS

• Revenue — $179.2 million, up 31% year over year driven by cloud revenue acceleration and increased adoption of security core products.
• Cloud Revenue — $101.5 million, representing 60% year-over-year growth reflecting higher consumption and the conversion of customer overages into higher annual contracts.
• Cloud Revenue Concentration — 57% of total revenues, up from 46% in the prior year as customers shift workloads to SaaS and hybrid environments.
• Customers with ARR Over $1 Million — 112 customers, representing 58% year-over-year growth from 71 in the prior-year period.
• Customers with ARR Over $100,000 — 1,357 customers, an increase of 21% year over year from 1,121 customers.
• Net Dollar Retention — 124% for the trailing four-quarter period, reflecting a 6 percentage point increase year over year and a 3 percentage point sequential improvement.
• Gross Retention — 97%, highlighting the mission-critical nature of the platform as a trusted system of record for software supply chains.
• Enterprise+ Subscription Revenue — 61% of total revenues, up from 56% in the prior year as customers adopt the full end-to-end platform.
• Enterprise+ Revenue Growth — 42% year over year, driven by the execution of the company’s enterprise go-to-market strategy.
• Non-GAAP Gross Margin — 83.6%, reflecting stable performance through cloud hosting cost optimization despite cloud becoming a larger share of the revenue mix.
• Non-GAAP Operating Margin — 22.7%, up from 18.7% in the prior year due to a balance between strategic investment and operational efficiency.
• Free Cash Flow — $66.5 million, representing a 37% margin compared to a 21% margin in the year-ago period.
• Remaining Performance Obligations — $812.4 million, a 60% increase year over year reflecting larger enterprise commitments to the JFrog platform.
• Multiyear SaaS Agreement — $76 million, signed with a global telecommunications company and representing 167% growth in cloud data consumption over the customer’s prior commitment.
• Self-Managed Revenue — $77.7 million, up 6% year over year as the company proactively migrates on-prem customers to cloud or hybrid offerings.
• FY 2026 Revenue Guidance — $680 million to $682 million, representing 28% year-over-year growth at the midpoint of the range.
• FY 2026 Baseline Cloud Growth Guidance — 52% to 54%, raised from prior estimates due to strong year-to-date results and security core product adoption.
• FY 2026 Net Dollar Retention Floor — 122%, reflecting anticipated contributions from security products and increased cloud growth assumptions.
• FY 2026 Non-GAAP EPS Guidance — $1.14 to $1.16, assuming a weighted average share count of approximately 129 million shares.
• Q4 2026 Revenue Guidance — $183 million to $185 million, supported by a strong pipeline heading into the end of the fiscal year.
• Q4 2026 Non-GAAP EPS Guidance — $0.28 to $0.30, assuming approximately 131 million shares.
• Cash and Short-Term Investments — $880.9 million, as of Sept. 30, 2026, compared to $704.4 million at the end of 2025.
• Customer Concentration — All individual customers account for 3% or less of total revenue, representing a diverse customer portfolio.
• Large-Scale Data Migration — 1 petabyte of artifacts, migrated by Ford Motor Company to Artifactory to consolidate software package management and security.
• Security Evaluation Volume — 47 million new open-source package requests, evaluated by JFrog Curation for a single enterprise customer in one quarter.

Need a quote from a Motley Fool analyst? Email [email protected]

RISKS

• CFO Grabscheid stated, “We continue to derisk our outlook by excluding our largest opportunities due to timing uncertainties,” noting that large contract signatures can affect quarterly guidance visibility.

SUMMARY

JFrog Ltd. (FROG -13.57%) reported third-quarter results marked by accelerating cloud revenue and the growing influence of AI-generated code on software supply chain infrastructure. Management reported that the proliferation of AI agents is creating a surge in software binaries, which requires centralized systems of record to ensure every artifact is stored, secured, and governed. The company stated that its platform is increasingly serving as the control plane for large enterprises seeking to consolidate security and DevOps functions. Strategy is currently focused on migrating self-managed customers to SaaS and hybrid environments while expanding the product portfolio into governance and compliance through DevGovOps initiatives.

• Management identified a shift in the developer landscape, with CEO Haim stating, “coding agents are empowering human developers and the creation of source code, which is then compiled into more binaries than ever before.”
• The company is addressing governance bottlenecks in AI development, with Haim noting that “Manual governance processes take weeks or months,” necessitating the adoption of automated compliance tools like AppTrust.
• Security consolidation is a primary growth driver, and CEO Haim observed, “Customers choose to consolidate their security solutions alongside the system of record with one platform that holistically covers modern software supply chain needs.”
• JFrog is expanding its reach beyond typical DevOps stakeholders, with management reporting that an increasing number of contracts and budgets are being signed by Chief Information Security Officers.
• CEO Haim emphasized the universal nature of the company’s repository management, stating that “JFrog Artifactory is the Switzerland of system of record,” as it supports all technologies and binaries regardless of the specific AI agent or vendor used.
• Management confirmed that the rise of AI is introducing new artifact types such as models, datasets, and MCP servers, which customers are managing within the same governed workflow as traditional software packages.

INDUSTRY GLOSSARY

• AppTrust: A JFrog solution designed to integrate governance, compliance, and auditability directly into the software development pipeline.
• Artifact: A machine-readable file produced during the software development process, such as a binary, library, or container image.
• Artifactory: JFrog’s universal repository manager that serves as a single source of truth for all software binaries and packages.
• Binary: The executable version of software code that has been compiled from human-readable source code.
• DevGovOps: A management framework that integrates governance and compliance into the DevOps workflow to automate security and policy enforcement.
• DevOps: A set of practices that combines software develo

  Source: www.fool.com — article syndicated from the publisher’s feed; all rights remain with the original publisher.