Last Update 14 Dec 25

FROG: Cloud And Security Momentum Will Support Balanced Long Term Outlook

Analysts have raised their price target for JFrog to $70 from $55, citing accelerating cloud momentum, growing security contributions, and converging enterprise growth initiatives that support a stronger long term outlook despite only modest tweaks to discount rate and margin assumptions.

Analyst Commentary

Recent Street research reflects a broadly positive reassessment of JFrog, with multiple firms lifting price targets following stronger than expected Q3 performance and improving confidence in the company’s cloud and security trajectory.

Bullish Takeaways

Bullish analysts highlight that Q3 results were driven by accelerating cloud growth and robust security demand, reinforcing confidence in JFrog’s ability to sustain double digit top line expansion.
The convergence of multiple enterprise growth initiatives, including platform expansion and deeper large account penetration, is seen as evidence that JFrog’s strategy is executing well and scaling efficiently.
Several updated models assume that security can add incremental growth points through the next few fiscal years, supporting higher long term revenue estimates and justifying price target increases into the $60 to $70 range.
Stronger conviction in the durability of growth, combined with operational discipline, is leading bullish analysts to argue that current valuation can be supported by continued upside in cloud and security bookings.

Bearish Takeaways

More cautious analysts acknowledge the strong execution but argue that the current valuation, including forward revenue multiples in the low double digits, leaves limited room for multiple expansion without further acceleration.
Some remain Neutral despite raising price targets, suggesting that, at current levels, upside is more dependent on JFrog outperforming already elevated growth expectations than on rerating alone.
There is a view that any slowdown in cloud or security momentum could pressure the stock, as recent price target hikes have largely priced in continued broad based beat and raise quarters.
Cautious perspectives also note that channel checks ahead of results, while solid, were not universally stellar, reinforcing the need for consistently strong execution to support the higher valuation bar.

What's in the News

Expanded AI governance capabilities with the launch of Shadow AI Detection within the JFrog Software Supply Chain Platform, aimed at identifying and inventorying all internal AI models and external AI APIs used across the organization to reduce security and compliance risks (Key Developments).
Shadow AI Detection will allow enterprises to centrally govern newly discovered AI assets, enforce security and compliance policies, define approved paths to third party AI services such as OpenAI and Gemini, and maintain fully auditable usage of external AI models and APIs (Key Developments).
The new AI detection features are designed to help companies comply with emerging global regulations, including the US Transparency in Frontier AI Act, EU Cyber Resilience Act, EU AI Act, Germany’s BSI Guidelines, the EU’s NIS2, and guidelines for securing AI systems end to end (Key Developments).
JFrog stated that Shadow AI Detection will be available as part of the JFrog AI Catalog, with general availability targeted for 2025 (Key Developments).
The company issued revenue guidance, expecting between $136.5 million and $138.5 million for the fourth quarter of 2025, and between $523 million and $525 million for the full year 2025 (Key Developments).

Valuation Changes

Fair Value: Unchanged at approximately $69.22 per share, reflecting stable long term intrinsic valuation assumptions.
Discount Rate: Risen slightly from about 8.39 percent to 8.44 percent, implying a modestly higher required return on equity.
Revenue Growth: Effectively unchanged at roughly 16.69 percent, indicating no material revision to long term top line expectations.
Net Profit Margin: Risen slightly from about 12.38 percent to 12.41 percent, incorporating a marginally more optimistic view on future profitability.
Future P/E: Fallen slightly from around 121.29x to 121.13x, signaling a small adjustment to the long term earnings multiple applied in the model.

Leadership in AI artifact management, hybrid cloud readiness, and security is fueling enterprise demand, deeper partnerships, and market share gains in software development.
Ongoing product innovation and strategic integrations are boosting customer retention, supporting revenue acceleration, and driving sustainable earnings growth through digital transformation.
Reliance on enterprise deals, competition in security, industry shifts, and commoditization threaten JFrog's growth, margins, and ability to maintain pricing power and relevance.

Catalysts

About JFrog

Provides software supply chain platform in the United States, Israel, India, and internationally.What are the underlying business or industry changes driving this perspective?

Accelerating adoption of AI and machine learning across enterprises is driving increased demand for trusted, scalable artifact and AI model management; JFrog's position as the system of record for binaries and rapid traction as a model registry (including strategic wins with NVIDIA and AI industry leaders) supports strong expansion in data consumption, customer commitments, and revenue growth.
The need for hybrid and multi-cloud deployment models is intensifying as organizations seek cost predictability, compliance, and flexibility when running AI workloads. JFrog's platform, architected from inception for both cloud and on-prem/hybrid, appeals to enterprises facing this complexity, helping to secure large, multi-year enterprise contracts, boost retention, and expand average deal size.
Growing regulatory and industry focus on software supply chain security, as well as rising threats from new AI/ML development patterns (such as code assistants and MCP servers), are catalyzing customer consolidation around unified DevSecOps solutions. JFrog's security portfolio is seeing accelerating adoption, leading to higher attach rates, cross-sell, and expansion of net dollar retention and operating margin over time.
Deepening partnerships and integrations with hyperscale cloud providers (AWS, Azure, Google Cloud) and leading developer platforms (e.g., Hugging Face, GitHub) are increasing JFrog's relevance in the software development ecosystem, driving co-sell opportunities, improved customer acquisition, and lower churn, which in turn support sustainable top-line growth and enhanced operating leverage.
Continued product expansion and innovation-targeting advanced security features, ML model lifecycle management, and new pricing packages-position JFrog to raise contract values and further penetrate its growing addressable market, supporting both revenue acceleration and long-term earnings growth as digital transformation intensifies across industries.

JFrog Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming JFrog's revenue will grow by 15.8% annually over the next 3 years.
Analysts are not forecasting that JFrog will become profitable in next 3 years. To represent the Analyst Price Target as a Future PE Valuation we will estimate JFrog's profit margin will increase from -18.2% to the average US Software industry of 13.1% in 3 years.
If JFrog's profit margin were to converge on the industry average, you could expect earnings to reach $96.4 million (and earnings per share of $0.72) by about September 2028, up from $-86.3 million today.
In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 92.0x on those 2028 earnings, up from -64.6x today. This future PE is greater than the current PE for the US Software industry at 36.6x.
Analysts expect the number of shares outstanding to grow by 4.64% per year for the next 3 years.
To value all of this in today's terms, we will use a discount rate of 8.41%, as per the Simply Wall St company report.

JFrog Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?

The trend toward hybrid cloud and on-premises deployments, driven by increased AI workloads and cost predictability concerns, could elongate sales cycles and slow down cloud migration; this may moderate JFrog's expected cloud revenue growth and reduce near-term operating leverage.
Increased customer concentration on large enterprise and mega deals, with a significant portion of future bookings reliant on multiyear contracts, exposes JFrog to potential earnings volatility if key deals are lost, delayed, or renegotiated, impacting both revenue visibility and free cash flow.
Reliance on expanding security offerings as a primary growth engine faces risks from intensifying competition-including legacy incumbents and larger cybersecurity and cloud vendors-which could pressure JFrog's pricing power, slow margin expansion, and limit net new customer acquisition.
Ongoing commoditization of DevOps and artifact management tools (including greater adoption of open-source and low-cost alternatives) may erode JFrog's ability to sustain premium pricing and growth in its core Artifactory business, compressing gross profit margins and overall revenue per customer.
Rapid evolution of AI-driven DevOps architectures and industry shifts (e.g., serverless, new agentic toolchains, and changing model registry standards) could diminish the relevance of traditional artifact repositories, requiring continual R&D investment and creating risk that JFrog's platform falls behind customer needs, impacting long-term revenue and market share.

Valuation

How have all the factors above been brought together to estimate a fair value?

The analysts have a consensus price target of $52.312 for JFrog based on their expectations of its future earnings growth, profit margins and other risk factors.
In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $736.3 million, earnings will come to $96.4 million, and it would be trading on a PE ratio of 92.0x, assuming you use a discount rate of 8.4%.
Given the current share price of $47.76, the analyst price target of $52.31 is 8.7% higher. The relatively low difference between the current share price and the analyst consensus price target indicates that they believe on average, the company is fairly priced.
We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.

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Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

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