JFrog (FROG) Q3 2025: Cloud Revenue Jumps 50% as Security and AI Drive Platform Expansion
Cloud revenue acceleration and deepening security adoption propelled JFrog’s Q3, with AI-driven software supply chain complexity fueling platform expansion. The company’s hybrid architecture and focus on holistic security positioned it to capture both traditional and emerging workloads, while measured guidance reflects ongoing macro caution and deal timing variability. Investors should watch for sustained enterprise expansion and the monetization of new AI and DevGovOps offerings as JFrog navigates rapid industry change.
Summary
- Cloud Momentum Accelerates: Security and AI artifacts are fueling sustained cloud adoption across enterprise customers.
- Enterprise Expansion Deepens: Large customer wins and multi-year deals highlight platform stickiness and upmarket traction.
- AI and Governance Innovation: New product launches and partnerships position JFrog for the next wave of software supply chain complexity.
Performance Analysis
JFrog delivered a standout Q3 with total revenue of $136.9 million, up 26% year-over-year, as cloud revenue surged 50% to $63.4 million, now comprising 46% of total revenue. This outperformance was driven by broad-based usage across software package types, including AI-related artifacts such as Hugging Face models, Docker containers, and Python packages. Security offerings—especially JFrog Curation and Advanced Security—were key contributors, with notable new wins in both government and commercial sectors.
Enterprise Plus subscriptions now account for 56% of total revenue, up from 50% a year ago, as customers increasingly consolidate spend on JFrog’s platform. The company reported 71 customers spending over $1 million annually, a 54% increase, and 1,121 customers spending over $100,000, up 16%. Net dollar retention (NDR) held steady at 118%, reflecting stable expansion and high gross retention of 97%. Operating margin improved to 18.7% and free cash flow was $28.8 million, underpinned by disciplined investment and efficient go-to-market execution.
- Cloud Expansion Fueled by AI and Security: Usage growth in AI model packages and security solutions drove both new commitments and upsells.
- Enterprise Mix Shift: Larger deals and longer-term contracts are increasing visibility and stickiness, with multi-year government and energy sector wins.
- Hybrid Demand Persists: Many customers remain hybrid or on-prem, citing unpredictable AI compute costs and governance concerns, validating JFrog’s multi-cloud positioning.
Overall, financial results signal JFrog’s successful transition from developer tool to enterprise platform, with cloud and security adoption outpacing legacy on-prem growth.
Executive Commentary
"Our ongoing growth in the cloud is supported by two vectors, our expertise in managing customers' binaries as they scale alongside AI-generated artifacts, and our observation of emerging trends in AI software package volume. We believe Q3's cloud performance reinforces how customers view the JFrog platform and artifactory at the core of their operations."
Shlomi Benhaim, CEO and Co-founder
"Our overachievement during the quarter was the result of strong go-to-market and operational execution, continued momentum in our cloud revenues, growing adoption of JFrog security products, and expansion by customers within our enterprise-level subscriptions."
Ed Grabscheid, CFO
Strategic Positioning
1. Cloud and Hybrid Flexibility
JFrog’s hybrid architecture—supporting both cloud and on-premises deployments—remains a core differentiator as customers grapple with AI-driven workload unpredictability and governance requirements. The company’s ability to capture expansion regardless of deployment model (public cloud, hybrid, or on-prem) is resonating, especially with large enterprises hesitant to fully commit AI workloads to the cloud.
2. Security as a Platform Anchor
Security is now embedded at the heart of JFrog’s platform, with holistic offerings like Curation and Advanced Security driving both net new wins and expansions. Recent high-profile attacks on software supply chains have elevated customer urgency, leading to multi-year, multi-million dollar deals in both the public sector and Fortune 50 enterprises. JFrog’s system-of-record approach, integrating binary management and end-to-end security, is outcompeting point solutions.
3. AI and DevGovOps Innovation
Product innovation is accelerating, with launches such as JFrog ML, AI Catalog, AppTrust, and JFrogFly (the first agentic repository) targeting the next phase of software delivery and governance. The company’s vision of “agentic” software creation—where AI agents become co-builders alongside developers—positions JFrog as the model registry and governance hub for the coming era of AI-driven software supply chains. Partnerships with NVIDIA and ServiceNow reinforce this ecosystem-first approach.
4. Upmarket and Expansion Motion
JFrog’s go-to-market execution is increasingly focused on enterprise expansion, evidenced by the rising share of revenue from large customers and the success of top-down sales methodologies. The company is proactively converting usage-based customers to higher annual commitments, reducing volatility and improving revenue predictability.
5. Prudent Guidance and Pipeline De-Risking
Management continues to guide conservatively, excluding usage above minimum commitments and de-risking the outlook for large, complex deals with uncertain timing. This approach aims to build credibility and avoid over-promising amid macro and deal-cycle unpredictability.
Key Considerations
JFrog’s Q3 showcased a business scaling its enterprise platform strategy while navigating rapid shifts in AI, security, and cloud consumption. Investors should weigh the following:
- Cloud Growth Sustainability: Recent outperformance is broad-based, not one-time, but management remains cautious on forecasting further acceleration given customer uncertainty around AI cloud workloads.
- Security Budget Expansion: Heightened cyber risk and regulatory scrutiny are driving new budget allocation for software supply chain security, with JFrog benefiting from consolidation and GRC (governance, risk, compliance) needs.
- Deal Timing and Visibility: Large, multi-year deals are increasing, but sales cycles for security and platform upgrades are lengthening, particularly in government and regulated industries.
- AI Monetization Potential: Early traction in AI model registry and agentic software creation could open new revenue streams, but adoption curves remain uncertain.
Risks
Deal timing variability and elongated sales cycles, especially in security and government, introduce quarter-to-quarter unpredictability. Customers’ hesitancy to fully migrate AI workloads to the cloud, combined with macroeconomic caution and budget alignment challenges, could temper near-term growth. Competition from both point security solutions and emerging AI-native players also remains a persistent threat.
Forward Outlook
For Q4, JFrog guided to:
- Revenue of $136.5 million to $138.5 million
- Non-GAAP operating profit of $21 million to $22 million
- Non-GAAP EPS of $0.18 to $0.20
For full-year 2025, management raised guidance:
- Revenue of $523 million to $525 million (22.3% YoY growth at midpoint)
- Baseline cloud growth of 40% to 42% (excluding overages)
- Net dollar retention above 116%
Management highlighted continued de-risking of guidance, excluding large uncertain deployments and usage over minimum commitments, and noted Q4 seasonality and macro caution in outlook.
- Enterprise pipeline remains robust, with security and cloud as key growth drivers
- AI and DevGovOps product launches still in early monetization phase
Takeaways
JFrog is capitalizing on the convergence of cloud, security, and AI-driven software supply chain complexity, with a hybrid platform approach and disciplined go-to-market execution.
- Cloud and Security Drive Expansion: Broad-based cloud adoption and holistic security wins are powering both revenue growth and enterprise stickiness.
- Innovation Pipeline Well-Positioned: New AI and DevGovOps offerings, though early, set JFrog up for the next phase of software delivery transformation.
- Watch for Monetization and Deal Timing: Investors should monitor the conversion of innovation into revenue and the pace of large deal closures as leading indicators of sustained momentum.
Conclusion
JFrog’s Q3 results underscore its evolution into a mission-critical enterprise platform, with cloud, security, and AI at the core of its growth strategy. While management’s cautious guidance reflects real-world deal variability, the company’s expanding footprint and innovation velocity position it well for long-term value creation as the software supply chain landscape transforms.
Industry Read-Through
The surge in JFrog’s cloud and security revenue, driven by AI model proliferation and heightened cyber risk, signals a broader industry shift toward platform consolidation and hybrid delivery models. Customers’ reluctance to fully commit AI workloads to the cloud, due to cost and governance concerns, mirrors trends across the DevSecOps and enterprise software landscape. The rising demand for holistic, system-of-record solutions—integrating security, compliance, and AI governance—will likely benefit platform-centric vendors while challenging point solution providers. Emerging agentic software creation and automated governance are set to reshape how enterprises manage software risk and innovation at scale.