JFrog (FROG) Q1 2025: Cloud Revenue Jumps 42% as Usage Outpaces Commitments
JFrog’s Q1 saw a step-change in cloud adoption, with customer usage surging above contractual minimums and multi-year commitments broadening. Security and AI/ML platform unification drove strategic wins, but management’s cautious guidance signals ongoing macro headwinds and a conservative outlook on consumption durability.
Summary
- Cloud Consumption Outpaces Commitments: Broad-based customer usage exceeded contractual minimums, expanding JFrog’s platform footprint.
- AI/ML Integration and Security Consolidation: New platform capabilities unified DevOps, DevSecOps, and MLOps, securing major AI deals and industry partnerships.
- Guidance Remains Prudent: Despite strong Q1 execution, management de-risks outlook, citing macro uncertainty and pipeline conservatism.
Performance Analysis
JFrog delivered 22% year-over-year revenue growth in Q1, with cloud revenue up 42% and now representing 43% of total revenue. Enterprise Plus subscriptions (higher-value, platform-wide contracts) contributed 55% of revenue, up from 49% a year ago, reflecting increased platform adoption and larger deal sizes. Free cash flow margin reached 23%, a record for Q1, highlighting operating leverage as the business scales.
The surge in cloud revenue was attributed to increased customer consumption above contractual minimums across a broad base, not isolated to a few large clients or regions. Self-managed (on-premises) revenue grew 10%, but the mix continues to shift toward cloud as customers migrate. Multi-year deals drove a 62% year-over-year increase in remaining performance obligations (RPO), signaling enhanced revenue visibility and customer commitment. Gross margin compressed to 82.5% from 85.1% due to higher cloud mix, but management expects margins to stabilize within this range as cost optimization with cloud providers continues.
- Cloud Usage Surpassed Commitments: Broad-based overage signals platform stickiness and developer-led expansion.
- Enterprise Plus Momentum: Larger customers are consolidating spend on the full platform, driving higher retention and upsell.
- Security and ML Adoption: Security core and new MLOps features contributed to larger deals and new logos, including a marquee AI leader.
While Q1 outperformance was notable, management’s commentary emphasized caution given the volatile macro environment and uncertain sustainability of overage-driven cloud growth.
Executive Commentary
"Our first quarter results underscore JFrog's essential role as a system of record for software delivery from creation to production for customers prioritizing automation, scale, speed, and trust. The JFrog platform plays a pivotal role at the intersection of development, security, AI, and MLOps."
Shlomi Ben-Haim, CEO and Co-founder
"Our growth in the cloud was primarily driven by data consumption across our customer portfolio which exceeded contractual minimum commitments. We believe this highlights the mission-critical nature of JFrog to our customers, and we strategically work towards converting this usage into annual commitments while continuing to navigate a rigid purchasing environment."
Ed Grabscheid, CFO
Strategic Positioning
1. Cloud-First Expansion and Multi-Year Commitments
JFrog’s cloud-first strategy is accelerating, with customers not only migrating from on-premises but also increasing actual usage beyond initial commitments. This consumption-based momentum has led to a significant rise in multi-year agreements, broadening the company’s RPO base and improving revenue visibility. However, management is explicit that the current overage may not be sustainable and is not fully baked into forward guidance.
2. Platform Consolidation: DevOps, Security, and MLOps
The company is positioning itself as the only unified platform for DevOps, DevSecOps, and MLOps, following the integration of Quark AI. Customers now have access to JFrog ML for model management, with hybrid support launching soon. This strategic move enables customers to manage, secure, and deploy both traditional software and AI models in a single system of record, an increasingly critical need as machine learning adoption accelerates and security threats proliferate.
3. Security as a Growth Lever
Security consolidation is driving both upsell and new logo wins, as seen with WalkMe migrating from point solutions to JFrog Advanced Security and Curation. The partnership with Hugging Face to scan 1.5 million open-source ML models highlights JFrog’s growing relevance in securing the AI supply chain. The company’s annual Software Supply Chain State of the Union Report further cements its thought leadership and product differentiation in vulnerability management and secret detection.
4. Strategic Partnerships Bolster Ecosystem
JFrog’s deepening partnership with GitHub is resonating with customers, as the two platforms are increasingly viewed as complementary pillars of the modern software development toolchain—GitHub for source code, JFrog for binaries and artifacts. This integration is expected to drive both new customer acquisition and expansion within the installed base.
Key Considerations
JFrog’s Q1 showcased the business model’s leverage and platform breadth, but management’s forward tone remains measured given the macro backdrop and uncertain durability of overage-driven growth.
Key Considerations:
- Cloud Consumption Outperformance: Q1’s broad-based overage is a positive signal, but management is not extrapolating it into future quarters, reflecting discipline in guidance.
- Security and AI/ML Platform Unification: The move to integrate MLOps and advanced security into the core platform is creating new upsell vectors and defensible differentiation.
- Multi-Year Agreement Momentum: RPO growth reflects customer confidence, but larger deals are often weighted to the second half, and not all are included in guidance.
- Margin Dynamics and Capital Allocation: Gross margin compression from higher cloud mix is offset by operating leverage and record free cash flow, supporting continued investment in R&D and go-to-market.
Risks
Macro uncertainty and rigid purchasing environments remain the principal risks, potentially impacting deal cycles, cloud migration pace, and the conversion of overage usage to committed contracts. Gross margin pressure from cloud mix and competitive intensity in DevOps, security, and MLOps could weigh on profitability if not offset by scale or pricing discipline. The durability of recent cloud overage is unproven, and management’s conservative guidance reflects this uncertainty.
Forward Outlook
For Q2, JFrog guided to:
- Revenue of $121.5 million to $123.5 million (19% YoY growth at midpoint)
- Non-GAAP operating profit of $17 million to $18 million
- Non-GAAP EPS of $0.15 to $0.17
For full-year 2025, management maintained a cautious stance:
- Revenue range of $500 million to $505 million
- Cloud growth baseline of 31% to 33% (excluding overage)
- Non-GAAP operating income of $74 million to $77 million
Management highlighted ongoing pipeline growth, but guidance excludes the largest, most complex deals and any contribution from usage above annual minimums. Upside remains possible if current consumption trends persist, but visibility remains limited.
Takeaways
JFrog’s Q1 performance confirms the platform’s mission-critical status and the growing need for unified software supply chain management in a world of AI and security threats.
- Cloud Outperformance Is Broad-Based: Usage above commitments signals strong developer adoption, but sustainability is uncertain and not fully captured in guidance.
- Security and AI/ML Integration Are Driving Strategic Wins: New platform capabilities and partnerships are expanding JFrog’s relevance and deal sizes, especially in the enterprise.
- Guidance Reflects Discipline Amid Macro Volatility: Management is not extrapolating Q1’s upside, keeping expectations realistic and risk-adjusted for the rest of 2025.
Conclusion
JFrog’s Q1 2025 results reflect a business gaining momentum in cloud and platform adoption, with security and AI/ML features fueling strategic differentiation. Management’s conservative guidance and risk-aware outlook signal discipline and realism as macro headwinds persist.
Industry Read-Through
JFrog’s results reinforce the secular trend toward platform consolidation in DevOps, security, and MLOps, with enterprise buyers seeking unified solutions to manage both traditional software and AI models. The surge in cloud consumption and multi-year agreements is a positive signal for SaaS vendors with true platform breadth, but also highlights the need for disciplined forecasting in a volatile macro environment. Security for AI/ML artifacts is emerging as a new battleground, and JFrog’s partnership with Hugging Face may set a precedent for other tool providers. Vendors offering seamless integration across the software supply chain—including partnerships with developer tools like GitHub—are best positioned to capture share as organizations prioritize automation, governance, and trust.