JFrog shares are jumping on big cloud revenue growth and strong guidance

The shares of the software supplier JFrog Ltd. rose more than 25% in extended trading today after posting solid third-quarter results that beat analyst expectations and followed with strong expectations for the future.

The company reported earnings before certain costs such as stock compensation of 22 cents per share, exceeding Wall Street’s target of 16 cents. Revenue for the period rose 26% to $139.6 million, beating analyst forecasts of $128.3 million. The results helped the company move closer to profitability, with a net loss of $16.4 million, compared to a loss of $22.9 million in the previous year’s quarter.

JFrog is the creator of a comprehensive software supply chain platform used by DevOps, DevSecOps, MLOps, and MLSecOps teams to secure and manage the components of mission-critical applications. The platform is centered on Artifactory, an open-source code repository, somewhat similar to GitHub, except it is used for storing binaries instead of application code. These are the files used by the underlying server hardware to understand the human-readable programming language in which these apps are written.

In addition, the company sells a continuous integration and continuous delivery platform called JFrog Pipelines, which is used to create automated software workloads that transform raw application code into binaries.

JFrog co-founder and CEO Shlomi Ben Haim (pictured) said the results underscore how his company has become the “system of record” for how modern software is built, secured and deployed by enterprises. “(We are) the foundation of enterprise software supply chains in the age of AI,” he said. “Our results highlight strong execution across DevOps, DevSecOps and MLOps as we continue to expand into governance and compliance, innovating and automating in the evolving domain of DevGovOps.”

The expansion into governance and compliance came in September at JFrog’s annual user conference JFrog swampUp in Napa, California, when it unveiled a series of new product releases that it says represent a turning point in the way companies deliver, secure and govern artificial intelligence software. Headlining that release was a new offering called JFrog Fly, which was said to be the first “agentic repository” for accelerating the delivery of AI agents that automate work on behalf of humans.

Additionally, JFrog announced the world’s first “DevGovOps” solution in JFrog AppTrust, which is designed to autonomously perform audits and compliance of new software.

The company seems confident that it will continue its strong performance in the current quarter. Indicatively, it forecasts earnings of between 78 and 80 cents per share, above the consensus analyst estimate of 70 cents. In terms of revenue, the company is targeting a range of $523 million to $525 million, well ahead of the Street forecast of $509 million.

JFrog said much of its growth was driven by new cloud subscriptions. During the quarter, cloud revenue rose 50% to $63.4 million, meaning it now accounts for more than half of the company’s total revenue. The company said customers who adopted the full JFrog Platform Enterprise+ subscription accounted for 55% of total revenue, up from 50% last year.

Today’s late rise means JFrog shares are up more than 60% so far this year, well ahead of the broader S&P 500 Index, which has gained just over 14% so far this year.

Photo: JFrog