JFrog Ltd. (FROG) — Company Overview
What They Do
JFrog operates a cloud-native software development platform that manages the entire software supply chain — from code creation to deployment. They help developers and enterprises securely store, manage, and distribute software packages while ensuring security throughout the development process. The company generates revenue through subscription-based software licenses for both cloud-hosted and self-managed solutions.
Investment Thesis
**Security-driven expansion** — Security products now represent over 10% of ARR and 16% of RPO, growing rapidly as software supply chain attacks increase, providing a significant growth vector beyond core DevOps**AI wave positioning** — Management positions JFrog as foundational infrastructure for the "tsunami of binaries" from AI agents, with AI-native companies increasingly choosing JFrog as their system of record**Strong unit economics** — 76% gross margins, 119% net dollar retention, and 97% gross retention demonstrate sticky, profitable customer relationships with clear expansion potentialKey Risks
**Growth deceleration** — Revenue growth is expected to slow from 24% in 2025 to ~18% in 2026, with cloud growth moderating from 45% to 30-32%**Competitive pressure** — Operating in the crowded DevOps/security space with well-funded competitors who could commoditize core offeringsGrowth Story
JFrog delivered 24% revenue growth in 2025 to $532M, with cloud revenue accelerating 45% to represent 46% of total revenue. The company is capitalizing on two key trends: increased focus on software supply chain security following high-profile attacks, and the explosion of AI-generated code requiring sophisticated management infrastructure. Security products are becoming a meaningful growth driver alongside continued cloud migration.
Profitability Profile
JFrog demonstrates strong profitability with 83.7% gross margins and generated $142M in free cash flow (27% margin) in 2025. The company achieved 17.7% operating margins while investing in growth, and expects to maintain gross margins in the 82-83% range. With $704M in cash and consistent profitability, the company has a strong financial foundation for continued investment.
Competitive Position
JFrog has established itself as a leading platform in the DevOps toolchain with over 7,400 customers including 74 paying over $1M annually. Their comprehensive platform approach — spanning artifact management, security, and now AI/MLOps — creates switching costs and positions them well against point solutions. The company's early investment in security capabilities differentiates them in an increasingly security-conscious market.
Recent Momentum
Q4 2025 results exceeded expectations with 25% revenue growth and strong cloud acceleration, driven by larger annual commitments and security product adoption. The company beat revenue estimates and EPS guidance while demonstrating continued momentum in large customer growth (42% increase in $1M+ customers). Management's positioning around AI infrastructure and security resonated positively with investors.
What Wall Street Thinks
Analysts appear constructive on JFrog's positioning in high-growth markets (AI, security) while monitoring the expected growth deceleration in 2026. The consensus estimates suggest revenue growth of 19.4% in 2026 with continued margin expansion and EPS growth to $0.90-$1.09. The debate likely centers on whether security and AI opportunities can offset broader DevOps market maturation.
The Bottom Line
JFrog is successfully evolving from a DevOps infrastructure company to a comprehensive software supply chain security platform, with AI tailwinds providing additional momentum just as growth from their core business begins to moderate.
