JFrog (NASDAQ:FROG) Beats Expectations In Strong Third Quarter, Shares Rise 22.7%

Software supply chain platform JFrog (NASDAQ:FROG) reported revenue that beat Wall Street expectations in the third quarter of CY2025, with revenue up 25.5% year over year to $136.9 million. Furthermore, revenue guidance for the next quarter ($137.5 million at the midpoint) was surprisingly good and 4.8% higher than what analysts expected. Non-GAAP earnings of $0.22 per share were 34.4% above analyst consensus estimates.

Is Now the Time to Buy JFrog? Find out in our full research report.

Gain: $136.9 million vs. analyst estimates of $128.4 million (25.5% year-over-year growth, 6.6% better)
Custom EPS: $0.22 vs. analyst estimates of $0.16 (34.4% better)
Adjusted operating result: $25.61 million vs. analyst estimates of $17.81 million (18.7% margin, 43.8% better)
Revenue guidance for Q4 CY2025 is in the middle at $137.5 million, above analyst estimates of $131.2 million
Management raised expectations for full-year adjusted earnings per share to $0.79 at the midpoint, up 14.5%
Operating margin: -15.8%, compared to -27.4% in the same quarter last year
Free cash flow margin: 21%, compared to 27.9% in the previous quarter
Customers: 1,121 customers pay more than $100,000 annually
Net Income Retention Rate: 118%, in line with the previous quarter
Invoices: $163.8 million at quarter end, up 24.1% year over year
Market capitalization: $5.38 billion

“JFrog has become the system of record for how modern software is built, secured and deployed; the foundation of enterprise software supply chains in the age of AI,” said Shlomi Ben Haim, CEO and co-founder of JFrog.

Named after the amphibian that continually evolves from egg to tadpole to adult, JFrog (NASDAQ:FROG) provides a platform that allows organizations to securely create, store, manage and distribute software packages across any system.

A company’s long-term performance is an indicator of its overall quality. Any company can perform well for a quarter or two, but the best ones grow consistently over the long term. Over the past five years, JFrog has grown its revenue at an impressive annual growth rate of 29.3%. Its growth exceeded that of the average software company and shows that its offering is resonating with customers, which is a useful starting point for our analysis.

Quarterly revenue from JFrog

At StockStory, we place the greatest emphasis on long-term growth, but within software, a half-decade historical view can ignore recent innovations or disruptive industry trends. JFrog’s annualized revenue growth of 23.6% over the past two years is below the five-year trend, but we still think the results indicate healthy demand.

This quarter, JFrog reported robust year-over-year revenue growth of 25.5%, and revenue of $136.9 million exceeded Wall Street estimates by 6.6%. The company’s management is currently targeting an 18.5% year-over-year revenue increase in the next quarter.

Looking further ahead, sell-side analysts expect revenue to grow by 12.6% over the next twelve months, a slowdown from the past two years. This projection doesn’t make us excited and indicates that the company’s products and services will face some demand challenges. At least the company is doing well on other measures of financial health.

As Wall Street chases Nvidia at record highs, an under-the-radar semiconductor supplier is dominating a crucial AI component that these giants can’t build without. Click here to access our free report, one of our favorite growth stories.

Billings is a non-GAAP metric often called “cash revenue” because it shows how much money the company collected from customers in a given period. This differs from revenue, which must be recognized in parts over the term of a contract.

JFrog’s billings totaled $163.8 million in the third quarter, and over the past four quarters, growth has been impressive, with an average increase of 22.9% year over year. This performance was in line with overall revenue growth, indicating robust customer demand. The high level of cash raised from customers also improves liquidity and provides a solid foundation for future investment and growth.

One of the best parts of the software-as-a-service business model (and one reason they trade at high valuations) is that customers typically spend more on a company’s products and services over time.

JFrog’s net revenue retention, a key performance metric that measures how much money existing customers from a year ago are spending today, was 117% in the third quarter. This means that JFrog would have grown its revenue by 17% even if it had not gained any new customers in the past 12 months.

JFrog has a good net retention rate, which proves that customers are happy with the software and are getting more value from it over time, which is always great to see.

It was great to see JFrog exceed analyst expectations across the board this quarter and raise its earnings estimates. We were also pleased to see revenue and billing growth accelerate while CAC payback period continued to decline, indicating better go-to-market efficiency. Zooming out, we think this quarter has some significant positives to offer. The stock rose 22.7% to $58 immediately after the report.

Sure, JFrog had a solid quarter, but looking at the bigger picture, is this stock a buy? What happened in the last quarter matters, but not as much as business quality and longer-term valuation, when deciding whether to invest in this stock. We cover that in our useful full research report which you can read here. It’s free for active Edge members.