Jfrog Ltd. ((FROG)) has held its Q4 earnings call. Read on for the main highlights of the call.
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JFrog’s latest earnings call struck a notably upbeat tone, pairing strong 2025 execution with a more cautious outlook for 2026. Management highlighted robust cloud-driven growth, expanding large-customer spend, and rising security traction, while acknowledging FX pressures, cloud usage volatility, and some margin normalization as the business tilts further toward SaaS.
Record Annual Revenue Growth
JFrog closed fiscal 2025 with record revenue of $531.8 million, up 24% year over year, underscoring steady demand for its DevOps platform. Fourth-quarter revenue rose 25% to $145.3 million, signaling that momentum exiting the year remained solid even as management prepares investors for slower growth ahead.
Strong Cloud Momentum
Cloud continued to be the primary growth engine, with full-year cloud revenue jumping 45% to $243.3 million and reaching 46% of total sales, up from 39% a year earlier. In Q4, cloud revenue grew 42% to $70.2 million, accounting for 48% of quarterly revenue and reinforcing the company’s shift toward recurring usage-based SaaS.
Customer Base Upshift to Larger Accounts
The customer mix is steadily skewing toward large enterprises, supporting durable growth and expansion potential. Accounts spending more than $100,000 annually climbed to 1,168, while the number of million-dollar-plus customers rose to 74, reflecting strong wallet-share gains among strategic customers.
Security Product Traction
Security offerings are becoming a more important pillar, with security core products surpassing 10% of total ARR and rising to 16% of ending RPO, up from 12% last year. Yet security accounted for only 7% of 2025 revenue, suggesting substantial embedded demand that has yet to fully convert into reported sales.
RPO and Retention Strength
Remaining performance obligation surged 40% to $566 million, giving solid visibility into future revenue streams. Net dollar retention improved to 119% on a trailing four-quarter basis, while gross retention held at a high 97%, indicating that existing customers are both staying and expanding.
Healthy Profitability and Cash Generation
Profitability remained a strong point, with Q4 gross margin at 83.7% and operating margin at 17.7%, backed by disciplined cost control. For the full year, non-GAAP EPS rose 26% to $0.82 and free cash flow reached $142.2 million, a 27% margin, reinforcing JFrog’s ability to fund growth internally.
Stronger Balance Sheet
The company exited 2025 with $704 million in cash and short-term investments, up from $522 million a year ago, bolstering financial flexibility. This strengthened balance sheet gives JFrog ample room to invest in product, sales, and potential acquisitions without stressing its capital structure.
Strategic AI & Partnership Wins
Management spotlighted a broader push into AI and MLOps, including launches such as JFrog ML, MCP server, AI Catalog, and agentic remediation capabilities. New partnerships with NVIDIA’s enterprise AI platform and Hugging Face aim to position JFrog as a secure registry for models and artifacts, expanding its ecosystem reach.
Slower Overall Growth Outlook
Despite the strong 2025 showing, JFrog guided to 2026 revenue of $623–$628 million, implying about 17.5% growth at the midpoint and a clear deceleration. Executives framed this as a deliberate, conservative stance designed to manage expectations as the growth base gets larger and macro and usage trends remain uneven.
Cloud Usage Volatility and Deal Timing Risk
While cloud adoption and early AI workloads are tailwinds, they also introduce more variability in usage-based revenue and the timing of large contracts. JFrog’s guidance explicitly de-risks this by limiting assumptions around overage usage and big deals, aiming to avoid surprises even if upside materializes later.
Rising Operating Expenses and FX Headwind
Operating expenses climbed to $95.8 million in Q4, or 66% of revenue, partly driven by wage inflation magnified by a weaker U.S. dollar. Management noted that FX is now embedded in operating profit expectations, signaling that currency pressure is a real, ongoing cost factor rather than a temporary blip.
Margin Pressure from Cloud Mix
As cloud becomes a larger share of the business, JFrog expects gross margins to ease toward 82–83% in 2026, reflecting higher hosting and infrastructure costs. The company is working on optimization, but investors should anticipate some structural margin normalization as the model shifts further toward SaaS.
Free Cash Flow Margin Decline
Free cash flow remained robust in Q4 but the margin slipped to 34% from 42% a year earlier, pointing to the cost of supporting rapid cloud and product expansion. Even so, full-year free cash flow of $142.2 million underscores that JFrog continues to convert a meaningful portion of revenue into cash.
On-Premise Business Growing Slower
Self-managed, on-premise revenue grew only 11% to $288.5 million for the year, well below the pace of cloud, as customers steadily migrate workloads. This slower segment underscores both the drag on overall growth and the long runway for shifting the installed base into higher-growth, cloud-based offerings.
Customer Count Consolidation and Geographic Churn
Headline customer counts dipped as JFrog consolidated around 300 smaller subsidiary accounts into parent entities, prioritizing larger relationships over logo volume. The company also cited churn in regions like China and Russia as part of a refined go-to-market strategy, trading marginal geographies for higher-quality revenue.
Security Revenue Still a Small Top-Line Component
Despite strong ARR and RPO indicators, security revenue remains just 7% of the total, highlighting a lag between bookings momentum and recognized revenue. For investors, this creates a medium-term opportunity: as these commitments convert, security could become a more visible growth driver.
Guidance and Forward-Looking Outlook
For 2026, JFrog guided Q1 revenue to $146–$148 million and non-GAAP EPS of $0.20–$0.22, with full-year revenue of $623–$628 million and EPS of $0.88–$0.92. Management is planning for 30–32% cloud growth, net dollar retention around 117%, and gross margins of 82–83%, while maintaining a conservative posture that excludes potential upside from cloud usage above contracted levels.
JFrog’s earnings call painted the picture of a company balancing high-growth cloud and security opportunities with a more measured near-term outlook. Strong execution, cash generation, and AI-driven partnerships support the bullish long-term story, even as investors adjust to slower headline growth and modest margin pressure in 2026.