FROG: Cloud And Security Momentum Will Sustain Upside Into Next Year

JFrog's fair value estimate has increased significantly from $56.44 to $69.22. Analysts cite sustained Q3 outperformance, rising cloud and security momentum, and enhanced growth expectations as key drivers behind their higher price targets.

Analyst Commentary

Recent research updates reveal a predominantly positive outlook on JFrog, with price targets raised across the board in response to the company’s strong Q3 performance, sustained cloud momentum, and product expansion. Analysts continue to cite robust execution and favorable positioning within the DevOps and Security landscape as key drivers.

Bullish Takeaways

Bullish analysts highlight JFrog’s accelerating cloud growth and note that the ongoing convergence of growth initiatives supports momentum and higher price targets.
Expanded valuation reflects enhanced confidence in JFrog’s enterprise strategy, particularly as the company positions itself as a leading platform for release governance, compliance, and supply chain security.
New product launches and upgrades, especially in areas like Security and AppTrust, are seen as addressing critical customer needs and unlocking additional growth potential.
Strong Q3 results and consistent outperformance across all business segments have encouraged higher revenue forecasts through FY27 as well as greater confidence in sustained, long-term growth rates.

Bearish Takeaways

Bearish analysts express concern that JFrog’s current valuation, trading around 11x projected 2026 revenues, may limit further upside unless the pace of business acceleration increases meaningfully.
Some caution that developer headcount growth is moderating across the industry, which could temper broader DevOps spending, even though JFrog’s business model may be relatively insulated.
While recent results have exceeded expectations, a few analysts recommend a more neutral stance due to the elevated valuation and the need for JFrog to continue outperforming to justify its premium multiple.
Industry channel checks note that while expectations are broadly positive, conditions are solid rather than exceptional, suggesting cautious optimism about near-term growth.

What's in the News

JFrog introduced Shadow AI Detection for its Software Supply Chain Platform, enabling enterprises to identify and manage all internal and external AI models and API gateways. This helps organizations enforce security and compliance policies and aligns with emerging regulations such as the US Transparency in Frontier AI Act and the EU AI Act (Key Developments).
The company provided financial guidance, forecasting Q4 revenue between $136.5 million and $138.5 million, and full-year 2025 revenue between $523 million and $525 million (Key Developments).
JFrog launched new AI-powered agentic remediation capabilities, offering automated software vulnerability detection and fixes through integration with GitHub Copilot. This aims to bolster code security and developer productivity (Key Developments).
JFrog unveiled JFrog Fly, a platform focused on agentic workflows. It streamlines storage, sharing, and deployment of software artifacts using AI agents across the development lifecycle (Key Developments).
JFrog expanded its AppTrust solution and launched the first set of Evidence Ecosystem partners, providing centralized audit trails and automated evidence collection to improve compliance and release readiness for enterprise software (Key Developments).

Valuation Changes

Fair Value Estimate: Increased significantly from $56.44 to $69.22, reflecting higher expected growth and market confidence.
Discount Rate: Decreased marginally from 8.46% to 8.39%, indicating a slightly lower risk perception in the valuation model.
Revenue Growth: Projected annual growth rate has risen from 15.67% to 16.69%.
Net Profit Margin: Lowered modestly from 12.79% to 12.38%.
Future P/E: Expanded from 101.88x to 121.29x, suggesting higher future earnings valuation expectations.

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.

How well do narratives help inform your perspective?

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.

AI And Cloud Expansion Will Drive Platform Momentum And Market Reach