JFrog Q2 Earnings Call Highlights
Key Points
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- Strong Q2 performance: Revenue rose 29% year over year to $163.8 million, led by 53% cloud growth, increased security adoption and larger enterprise commitments. Free cash flow reached a record $53.8 million, while operating margin expanded to 19.9%.
- Security and AI are key growth drivers: More than 80% of new customers spending over $1 million annually added security products, while JFrog expanded integrations with AI coding tools Claude Code and Cursor. The company also patched an Artifactory zero-day vulnerability identified by an OpenAI model; its cloud offering was not breached.
- 2026 outlook raised: JFrog increased its full-year revenue forecast to $648 million-$652 million, raised its baseline cloud-growth outlook to 41%-43%, and established a 120% floor for net dollar retention.
JFrog (NASDAQ:FROG) reported second-quarter 2026 results above the high end of its guidance, with revenue growth led by cloud consumption, security-product adoption and larger enterprise commitments.
Total revenue rose 29% year over year to $163.8 million. Cloud revenue increased 53% to $87.5 million and represented 53% of Total revenue, compared with 45% a year earlier. Self-managed, or on-premises, revenue grew 9% to $76.3 million.
Chief Executive Officer and Co-Founder Shlomi Ben Haim said AI-driven software development is increasing the volume of binaries, packages, models and other artifacts that organizations must manage, secure and distribute. He described JFrog’s platform as evolving to support AI agents as participants in the software supply chain alongside human developers.
Cloud and Enterprise Growth
Management attributed cloud growth to higher usage across its customer base, including usage above contractual minimum commitments, as well as adoption of Security Core products. The company said it continues to seek to convert excess usage into higher annual commitments, while excluding usage above committed levels from its outlook.
JFrog reported 97 customers with annual spending above $1 million at the end of the quarter, up from 61 a year earlier. The number of customers spending more than $100,000 annually grew 20% year over year to 1,291.
Enterprise+ subscriptions accounted for 59% of total revenue, up from 55% in the prior-year period. Revenue from Enterprise+ subscriptions increased 39% year over year. Net dollar retention for the trailing four quarters was 121%, improving three percentage points from a year earlier, while gross retention was 97%.
Chief Financial Officer Ed Grabscheid said the company is continuing to encourage on-premises customers to move workloads to cloud or hybrid offerings as customers evaluate options that better align with changing security requirements.
Security Momentum and AI Development
Ben Haim said software supply chain attacks are prompting customers to seek security tools integrated with their system of record for software artifacts. He said more than 80% of customers joining JFrog’s over-$1 million annual-spend cohort in the second quarter added security products. More than 40% of overall new-logo wins included security in their initial purchase.
JFrog highlighted its Curation product, which is integrated with Artifactory and is intended to block malicious or risky packages before they enter an organization. In response to analyst questions, Ben Haim said customers are increasingly focused on a “firewall” for the software supply chain as open-source package attacks become more frequent.
The company also discussed a recently disclosed Artifactory zero-day vulnerability identified through an OpenAI model operating in a sandboxed environment. Ben Haim said OpenAI contacted JFrog after finding the issue, and JFrog released a patch for self-hosted customers. He said JFrog’s cloud offering was not breached and that OpenAI confirmed the patch resolved the vulnerability.
Ben Haim said the incident underscored the importance of secure AI-model deployment, configuration guardrails and rapid remediation. He also said it could increase customer interest in JFrog’s SaaS cloud offering and security products, though the company did not quantify any impact on demand.
During the quarter, JFrog announced integrations with AI coding tools Claude Code and Cursor. Ben Haim said the integrations are intended to provide developers and coding agents with security policy enforcement and remediation guidance within AI-driven development workflows.
Profitability and Commitments
JFrog generated gross profit of $136.2 million, for an 83.2% gross margin, compared with 83.1% in the year-earlier quarter. Operating profit was $32.6 million, or a 19.9% operating margin, compared with a 15.2% margin a year earlier.
Cash flow from operations totaled $57.1 million. Free cash flow reached a record $53.8 million, or a 33% margin, compared with $35.5 million and a 28% margin in the prior-year period.
The company ended June with $824.5 million in cash and short-term investments, up from $704.4 million at the end of 2025. Remaining performance obligations totaled $659 million, a 38% year-over-year increase. Grabscheid said larger security-related average selling prices and multi-year agreements contributed to the RPO growth.
Management said it did not pull material business from the third quarter into the second quarter. Grabscheid added that security adoption was a key factor in larger and longer-duration agreements.
Raised 2026 Outlook
For the third quarter, JFrog forecast revenue of $164 million to $166 million, non-GAAP operating profit of $27 million to $29 million, and non-GAAP diluted earnings per share of $0.22 to $0.24, based on approximately 130 million diluted shares.
For full-year 2026, the company raised its revenue outlook to $648 million to $652 million, representing 22% year-over-year growth at the midpoint. It projected non-GAAP operating income of $116 million to $120 million and non-GAAP diluted earnings per share of $0.96 to $1.00.
JFrog also raised its estimated baseline cloud growth outlook for 2026 to 41% to 43% and set a 120% floor for full-year net dollar retention. The company reiterated its expected annual gross-margin range of 82% to 83% as cloud revenue becomes a larger portion of its business.
About JFrog (NASDAQ:FROG)
JFrog is a software company specializing in DevOps solutions designed to streamline the management, distribution and security of software binaries. Its core offering, JFrog Artifactory, serves as a universal artifact repository manager compatible with all major package formats, enabling development teams to store, version and share build artifacts across the software delivery pipeline. The company's platform also includes tools for continuous integration and delivery (CI/CD), security scanning and release automation.
Among JFrog's flagship products are JFrog Xray, a security and compliance scanning service that analyzes artifacts and dependencies for vulnerabilities; JFrog Pipelines, a CI/CD orchestration engine that automates build and release workflows; and JFrog Distribution, which accelerates the secure distribution of software releases to edge nodes and end users.
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