JFrog — Third Quarter 2026 Earnings Summary

Financial Performance:

• Total third quarter 2026 revenue was $179.2 million, a 31% increase year-over-year.
• Cloud revenue reached $101.5 million, a 60% increase year-over-year, representing 57% of total revenue compared to 46% in the prior year period.
• GAAP gross profit was $142.7 million with a 79.6% margin; Non-GAAP gross profit was $149.8 million with an 83.6% margin.
• GAAP operating loss was $1.8 million with a (1.0)% margin; Non-GAAP operating income was $40.7 million with a 22.7% margin.
• GAAP diluted earnings per share were $0.05; Non-GAAP diluted earnings per share were $0.32.
• Operating cash flow was $69.3 million; Free cash flow was $66.5 million.
• Cash, cash equivalents, and investments totaled $880.9 million as of September 30, 2026.
• Remaining performance obligations were $812.4 million as of September 30, 2026, up 60% year-over-year.
• Trailing four-quarter Net Dollar Retention was 124%, up from 118% in the prior year.

Guidance and Future Outlook:

• Fourth quarter 2026 revenue is projected between $183 million and $185 million.
• Fourth quarter 2026 Non-GAAP operating income is projected between $36.2 million and $38.2 million.
• Fourth quarter 2026 Non-GAAP net income per diluted share is projected between $0.28 and $0.30, assuming approximately 131 million weighted average diluted shares outstanding.
• Full fiscal year 2026 revenue is projected between $680 million and $682 million.
• Full fiscal year 2026 Non-GAAP operating income is projected between $142.5 million and $144.5 million.
• Full fiscal year 2026 Non-GAAP net income per diluted share is projected between $1.14 and $1.16, assuming approximately 129 million weighted average diluted shares outstanding.

Business Segments and Product Lines:

• Customers with ARR greater than $1 million grew to 112, up 58% year-over-year from 71.
• Customers with ARR greater than $100,000 increased to 1,357, up from 1,121 in the prior year.
• The end-to-end JFrog Platform Enterprise+ subscription represented 61% of total revenue in Q3 2026, up from 56% in the prior year.
• Introduced Zero-Touch Remediation and the Self-Healing Software Supply Chain Security Ecosystem in partnership with Broadcom, Chainguard, Echo, IBM/Red Hat, Moderne, TuxCare, and Seal Security.
• Extended the JFrog Platform to secure the agentic workforce with AI Asset Scanning, Agent Guard, and support for Microsoft's Agent Package Manager.
• Partnered with Wiz to connect code, cloud, and runtime in a single source of truth.

Market and Competitive Landscape:

• Growth in Net Dollar Retention and ARR customers is driven by demand for software supply chain security solutions and cloud consumption.
• Enterprises are standardizing on the JFrog Platform as a system of record for their software supply chain to address the challenge of AI agents writing code faster than developers can review it.
• The company serves millions of users and thousands of organizations, including a majority of the Fortune 100.

Risks and Challenges:

• Forward-looking statements note risks including managing rapid growth, sustaining profitability, retaining and upgrading existing customers, and attracting new customers.
• Risks include the ability to develop and expand sales and marketing capabilities, integrate acquisitions, and realize synergies from strategic collaborations.
• Potential risks include security breach incidents, product vulnerabilities, interruptions or performance problems, and adapting to rapidly changing technology or customer needs.
• Competition and general market, political, economic, and business conditions, including macroeconomic uncertainty, are cited as factors that could cause actual results to differ materially from expectations.

Management Commentary and Tone:

• CEO Shlomi Ben Haim stated that "Speed without trust can't scale" and highlighted that enterprises are standardizing on the JFrog Platform as a control plane for software supply chain.
• Management noted that Q3 performance reflects momentum in the adoption of the platform for AI asset governance.
• The tone emphasizes the mission-critical nature of the platform for trusted software delivery and the growing impact of AI on the business.

Other Key Points:

• The company reported $2,028 thousand in repurchases of ordinary shares during the nine months ended September 30, 2026.
• Acquisition-related refundable research and development tax credits of $3,612 thousand were recognized in the first three quarters of 2026 following tax legislation enacted in the third quarter effective retroactively to January 1, 2026.
• Key employee holdback payments related to the acquisition of Qwak AI Ltd. totaled $5,654 thousand.
• Deferred revenue increased from $309.6 million at December 31, 2025, to $387.9 million at September 30, 2026.
• Operating lease right-of-use assets increased significantly from $12.1 million at December 31, 2025, to $109.3 million at September 30, 2026.