10-Q: JFrog Ltd. Reports Strong Revenue Growth in Q2 2026

JFrog Ltd. announced a 29% year-over-year revenue increase for the second quarter of 2026, driven by strong subscription growth and expanding customer base.

Summary

• JFrog Ltd. reported a 29% increase in total subscription revenue for the three months ended June 30, 2026, reaching $163.8 million, compared to $127.2 million in the prior year period.
• For the six months ended June 30, 2026, total subscription revenue grew by 27% to $317.7 million from $249.6 million in the same period of 2025.
• The company reported a net loss of $4.2 million for the three months ended June 30, 2026, an improvement from a net loss of $21.7 million in the same period of 2025.
• Free cash flow for the six months ended June 30, 2026, was $91.0 million, up from $63.6 million in the prior year period.
• The number of customers with ARR of $100,000 or more increased to 1,291 as of June 30, 2026, from 1,168 as of December 31, 2025.
• The company's net dollar retention rate was 121% as of June 30, 2026, compared to 118% as of June 30, 2025.
• JFrog announced a share repurchase program of up to $300.0 million, of which $298.0 million remained available as of June 30, 2026.

Sentiment

Score: 7

Explanation: StockSavvy.ai views this filing as generally positive, reflecting strong revenue growth and improved profitability metrics, though net loss persists.

Positives

• Total subscription revenue increased by 29% year-over-year for the three months ended June 30, 2026, reaching $163.8 million.
• Total subscription revenue increased by 27% year-over-year for the six months ended June 30, 2026, reaching $317.7 million.
• Net loss improved significantly to $4.2 million for Q2 2026 from $21.7 million in Q2 2025.
• Free cash flow increased to $91.0 million for the first six months of 2026 from $63.6 million in the same period of 2025.
• The number of customers with ARR of $100,000 or more grew to 1,291.
• Net dollar retention rate improved to 121% as of June 30, 2026.
• Gross margin improved to 78% for both the three and six-month periods ended June 30, 2026.

Negatives

• The company reported a net loss of $4.2 million for the three months ended June 30, 2026, and $12.4 million for the six months ended June 30, 2026.
• Operating expenses increased across all categories (R&D, Sales & Marketing, G&A) in both the three and six-month periods compared to the prior year.
• The company's effective tax rate for the three months ended June 30, 2026, was 25%, compared to a benefit of (10)% in the prior year period.

Risks

• The company's future financial performance, including revenue, cost of revenue, gross profit, operating expenses, and ability to achieve profitability, is subject to various risks.
• Increased competition in the software supply chain market could impact the company's ability to compete effectively.
• Adverse macroeconomic conditions, such as inflation and slower growth or recession, could negatively affect the business and financial condition.
• The company's ability to maintain the security and availability of its products is critical and subject to cybersecurity threats.
• Geopolitical tensions, including the regional conflict in the Middle East, could disrupt operations and impact financial condition.
• The company's reliance on third-party technology partners and cloud providers presents operational risks.
• Failure to protect intellectual property rights could harm the business.
• Changes in laws and regulations related to privacy, data protection, and data security could increase compliance costs and liabilities.

Future Outlook

The company expects its net dollar retention rate to remain relatively stable with minor fluctuations. It plans to continue investing in product enhancement, customer acquisition, and international expansion. The company believes its current cash, cash equivalents, and short-term investments are sufficient to meet its needs for the next 12 months and in the long-term.

Management Comments

• The growth in revenue from our Enterprise Plus subscription demonstrates the increased demand for our end-to-end solutions for customers entire software supply chain management.
• We have an unwavering commitment to the software developer, security teams, AI/ML engineers, and IT operator communities, and show this commitment by offering varying forms of free access to our products in addition to the paid subscriptions described above.
• We believe that there is a significant opportunity for growth with many of our existing customers.
• We focus on growing the number of large customers as a measure of our ability to scale with our customers and attract larger organizations to adopt our products.

Industry Context

StockSavvy.ai notes that JFrog's performance aligns with the growing demand for comprehensive software supply chain management solutions, particularly with the increasing focus on DevSecOps and AI/MLOps within the software development lifecycle.

Comparison to Industry Standards

• JFrog's revenue growth of 27-29% for the six-month period is strong compared to the average growth rates seen in the broader software and cloud infrastructure sectors, which can vary significantly.
• The company's net dollar retention rate of 121% is considered very healthy and indicates strong customer satisfaction and expansion within the existing customer base, often outperforming industry averages which can range from 90% to 115% for mature SaaS companies.
• While JFrog continues to report a net loss, the reduction in loss and positive free cash flow are positive indicators, though profitability remains a key area for investors to monitor against industry benchmarks for companies at a similar stage of growth.

Legal Proceedings

• The company is not aware of any matters that, if determined adversely, would individually or taken together, have a material adverse effect on its business, financial position, results of operations, or cash flows.

Stakeholder Impact

• Shareholders: Potential for share price appreciation driven by revenue growth and improved financial metrics, offset by ongoing net losses and market volatility.
• Employees: Continued investment in R&D and sales may lead to growth opportunities, but increased operating expenses could impact profitability.
• Customers: Continued platform enhancements and focus on customer success are expected to maintain and grow customer satisfaction and adoption.
• Suppliers: Increased operational scale may lead to larger commitments with hosting and software providers.

Next Steps

• Continue to enhance the JFrog Platform with new products and features.
• Expand usage by existing customers through increased engagement and new offerings.
• Acquire new customers through self-service and inbound sales models.
• Continue international expansion efforts.
• Monitor and manage the impact of geopolitical events and economic conditions on operations.
• Execute the share repurchase program as market conditions permit.

Key Dates

Recommendation

The company demonstrates strong revenue growth and improving operational leverage, as evidenced by increased free cash flow and net dollar retention. However, the continued net loss and significant operating expense growth warrant a cautious approach. Investors should monitor the path to profitability and the impact of ongoing investments and geopolitical risks.

Keywords

software supply chain, DevOps, DevSecOps, AI/MLOps, SaaS, subscriptions, cloud security, software development