Jfrog Ltd Q3 2025 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Sanjit Singh - Morgan Stanley - Analyst : Yeah, thank you for taking the questions and congrats. My congrats on the strong results this quarter. Shlomi, I was wondering if you could expand a little bit more on the theme on your script around the broadening of the types of artifacts that Artifactory is managing and storing and serving as a system of record. What does that mix start to look like between kind of traditional software artifacts, containers registries and some of the AI artifacts that are starting to come through? How -- can you speak to some of the underlying trends in terms of what Artifactory is storing and managing these days? Shlomi Ben-Haim - Jfrog Ltd - Chairman of the Board, Chief Executive Officer, Co-Founder Yeah, Sanjit. What we see, and we're obviously monitoring it closely is that artifacts or different type of artifacts that are heavily used by AI creators are seeing kind of a growth in usage in our cloud and on-prem customers. We see that obviously, Hugging Face is scaling up. This is the open source models hub for AI models but also languages that support AI development like Python with PyPI, NPM, Docker containers for distribution of models, all of them are aligned and correlated and growing together. It's still too early for us to say that this trend is actually going to lead to a higher consumption in the future. But it's very encouraging to see that our customers are using JFrog as the system of record for all packages, including AI models, and that obviously drives the higher consumption as we reported.

Question: Kingsley Crane - Canaccord Genuity Corp - Analyst : Hey, thanks for taking the question. Really encouraging results. For Shlomi, the demo of JFrog Fly was really impressive at swampUP. The MCP capabilities are nice to see as well. It got me thinking AI is changing how consumers interact with technology. It's leading many companies to rethink their UI, their UX. How relevant is that for JFrog? And is that something that you're thinking about? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 06, 2025 / 10:00PM, FROG.OQ - Q3 2025 Jfrog Ltd Earnings Call Shlomi Ben-Haim - Jfrog Ltd - Chairman of the Board, Chief Executive Officer, Co-Founder Yeah. Thank you, Kingsley. The JFrog Fly release is a disruption to the entire software supply chain system of record. We understand that software in the future will be created not just by developers but also by agents. And therefore, whatever repository you want to build must come with a agentic capabilities. This is what we wanted first to have a JFrog Fly. The second thing based on our research with thousands of developers was that developers want to be focused on what they need to be focused on, create software, deliver software with trust fast and rapidly. JFrog Fly provide that. So instead of taking it feature by feature within Artifactory, we thought that what we will do better is to build a full agentic experience for our users, reimagining how software supply chain will look like and then slowly bring those capabilities into the JFrog platform, obviously, the enterprise market will adopt it one by one, feature by feature. The community and small team can run faster. So that's the idea behind Fly, and we are very excited to see how the market react to it.

Question: Koji Ikeda - Bofa Merrill Lynch Asset Holdings Inc - Analyst : Yeah, hey guys. Thanks so much for taking the questions.I wanted to ask on NRR and maybe pick on the metric just a little bit because it was flat at 118%. But when I look at the cloud growth, that's really, really strong and just knowing that NRR is calculated on the trailing 12-month metric, on a 12-month basis, that just really means that there's some new customers that are growing very fast. Is that the right interpretation on kind of looking at NRR versus the cloud performance? And if that is true, how sustainable is that growth from these new customers going forward? Shlomi Ben-Haim - Jfrog Ltd - Chairman of the Board, Chief Executive Officer, Co-Founder Thank you, Koji. I'll start and Ed, feel free to chime in. NRR represent a tier of customers that are not committed to an annual NDR --

Question: Mark Cash - Raymond James - Analyst : Thank you. Shlomi, if I could start with you. I also want to ask around Fly but more around if you see Fly opening up new customers or buying centers that you haven't serviced previously? And then what kind of go-to-market plans or tweaks would be required to drive market awareness versus maybe the market mostly thinking about JFrog more large-scale artifacts. And then if I could sneak one in for Ed. I'm just -- I mean, you beat by $9 million, raised by additional $6.5 million. So I guess maybe some of that comes with better visibility from RPO, cRPO strength but you're still taking a prudent approach you laid out. So what are the key drivers that give you confidence to raise by such an amount maybe compared to 90 days ago? Shlomi Ben-Haim - Jfrog Ltd - Chairman of the Board, Chief Executive Officer, Co-Founder Yeah, I'll start with Fly. This is obviously an opportunity but it's not our goal. Our goal is to make sure that everything that you have at the JFrog platform in the future will support both agents and developers as they manage their software supply chain. And why is that important? Because we know that in the future, the way that engineering team will be structured will be a combination of developers and agents. It will not be just developers. So software will be made by agents. And if you don't provide them, these agents will not have access to your repository, then they will have another system of record. So with Fly success, basically, what we see is how we fuel and power the entire JFrog platform. Now can small team use FLY and this will be another avenue of revenue generation? Yes, maybe. But our main goal is to make sure that we adopt this agentic experience across the platform and Fly is the North Star of adopting AI experience.

Question: Miller Jump - Truist Securities - Analyst : Hey, thank you for taking the questions and congratulations on the strong results. Yes. So for Shlomi, maybe for a couple of quarters now, we've heard about the demand for hybrid solutions correlated with AI. I'm just trying to reconcile this with the clear momentum that you're seeing in cloud. Like is this something that you're seeing shift the pipeline composition right now? And then if I could ask one for Ed as well, just throughout this year, maybe the last two quarters really, you've talked about the conversion of customers that are going over commit. And I'm just curious, like what are you seeing from the customers that do move on to new contracts? Like are they continuing to ramp up their consumption? How has that played out versus your expectations? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 06, 2025 / 10:00PM, FROG.OQ - Q3 2025 Jfrog Ltd Earnings Call Shlomi Ben-Haim - Jfrog Ltd - Chairman of the Board, Chief Executive Officer, Co-Founder Yeah. Thank you, Miller. I'll start. Well, first, what we see is what we reported in the past, and we see it still. In our pipeline, there are some big deals that part of them include cloud migration. So we hear from our customers that they need more certainty before they double down on the cloud and go there with the entire AI workload that is currently being built. So for sure, the fit for purpose that we reported in the past is still relevant. But you also know that part of our guidance philosophy, these deals are being derisked from our pipeline. And we are being very cautious with kind of hanging the expectations high when it comes to cloud migration and cloud consumption. In terms of the consumption, as I answered before to Sanjit's question, we see more software packages that are related to the AI world being used. And still, we want to make sure that this is a new behavior and not just a trend that will pass when people will decide whether they go with cloud or on-prem.

Question: Brian Essex - JPMorgan Chase & Co - Analyst : Hi, good afternoon. Thank you for taking the question and congrats from me as well on these results. They are really nice to see the acceleration. Maybe for Shlomi, could you -- any way to quantify what kind of lift you get in the quarter or you had in the quarter from conversions to cloud? And maybe what percentage of your customer base is kind of remaining to convert? Shlomi Ben-Haim - Jfrog Ltd - Chairman of the Board, Chief Executive Officer, Co-Founder Yeah. So we are not disclosing this number, Brian. But what I can tell you that if you look at the report of the over $1 million customers, we have now 71. That's a growth of 54% year over year. I can say that the majority of them were not just using of more platform capabilities but also use it in the cloud. So while we are not disclosing it, the cloud for sure is a strong growth engine for the company.

Question: Shrenik Kothari - Robert W. Baird & Co Inc - Analyst : Yeah, thanks a lot for taking my question. So Shlomi, definitely securing the software supply chain for AI models, continuous packages sounds like a critical pain point right now. I just wanted to hear your thoughts on what do you think about customers of truly allocating new budgets towards this and just the sustainability of these budgets? Or do you think it's getting bundled into existing DevSecOps and you are gaining from consolidation. You did note many attacks like the recent NPM and PyPI threats that are thwarted by Curation. Just curious how customers are thinking about the budgets going forward? And then I have a follow-up for Ed. Shlomi Ben-Haim - Jfrog Ltd - Chairman of the Board, Chief Executive Officer, Co-Founder Yeah, Shrenik, that's actually two different questions. First of all, there is a higher threat on software supply chain because hackers are after your software packages. And if you don't cover your software, it's -- as I said, it's a matter of when and not a matter of if you will be attacked. NPM, PyPI, MCP, in the past, you remember Log4j, these are all software packages and attackers are going there because this is binaries and binaries are also the asset that our customers have in the run time. So basically, if you are attacked from run time for the binaries, you have full access to the software supply chain. That's front and center for every CISO now. And the other question regarding new budget allocated to security in the world of AI, I believe the answer is yes. And it's not only the traditional security but also GRC budgets. So cyber risk organizations are also looking at what happened in terms of governance and regulation, a moment before AI is fully adopted by the biggest bank and the biggest car manufacturers and the biggest retail companies. And the gap between full adoption of AI to what we see now is basically trust, control, security and governance. So for sure, there is more budget there and more attention of CISOs and CIOs to make sure that software delivery driven by AI is not putting the company in a risk.

Question: Ittai Kidron - Oppenheimer & Co Inc - Analyst : Thank you, and hey, congrats, guys, really impressive. Maybe a couple for me. And just on this last comment that you made about that you don't give guide over the minimum commits. Can you tell us in the quarter itself this quarter, what was the upside from kind of spillover over the minimum commits? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 06, 2025 / 10:00PM, FROG.OQ - Q3 2025 Jfrog Ltd Earnings Call

Question: Ittai Kidron - Oppenheimer & Co Inc - Analyst : Okay. And then Shlomi, for you. Clearly, you're doing very well. I'm kind of wondering internally, what percent of your sales force is running above quota for the year? And if that's running at a level that's higher than your normal internal averages. I'm just trying to think about, you're soon to finish the year, you have to start thinking about how you make tweaks and changes. I was wondering if you have any initial thoughts given the change in the landscape, AI, the breadth of your portfolio, do you have any initial thoughts on how you're going to tinker with comp as you go into next year? Shlomi Ben-Haim - Jfrog Ltd - Chairman of the Board, Chief Executive Officer, Co-Founder Yeah, Ittai. So obviously, we will not share some operational metrics but of course, we are tracking it. There are very important takers for the go-to-market team when it comes to the growth engine, when it's security, when it's cloud, cloud migration, AI and MLOps adoption, now DevGovOps and compliance. What you can see in the numbers, and this is not the first quarter, it's, I think, the fifth quarter in a row that we are consistently deliver what we are committed to is that not only the sales team is focused but also they use the methodologies of top down enterprise sales, things that in the past, we didn't practice like three years ago or four years ago, when we used to sell to developers, there were no expansion. And now what you can see not only by the reports of the big numbers or the big companies but also the entire revenue growth and the consistent growth is that the team is focused on enterprise sales upmarket, know exactly how to expand the platform, and we are very pleased with the results.

Question: Brad Reback - Stifel, Nicolaus & Company Inc - Analyst : Great, thanks very much. Shlomi, I'll take the five quarters one step further and say the magnitude of the SaaS speed over those five quarters continues to get bigger. So maybe building on Ittai's question, is there any reason why you wouldn't accelerate sales and marketing headcount spend as we head into next year to take advantage of all this opportunity you see? Shlomi Ben-Haim - Jfrog Ltd - Chairman of the Board, Chief Executive Officer, Co-Founder No reason. We are investing in go-to-market. We are investing in go-to-market in a responsible way. We want to see that what we deploy also comes out as the right ROI for our investment. And it's on all fronts. You can see the amount of releases from the product side, but you can also

Question: Andrew Sherman - Cowen and Company LLC - Analyst : Great, thank you. Shlomi, I wanted to ask about the security wins and pipeline, some good color there in the quarter. But for the Q4 pipeline and beyond that, how is that tracking? How much is that pipeline up? What's your confidence in closing some of these big deals? Have the sales cycles changed at all? How is the market kind of shaping up competitively for these deals, too? Shlomi Ben-Haim - Jfrog Ltd - Chairman of the Board, Chief Executive Officer, Co-Founder Yeah. Great question. We see a lot of opportunities in our pipeline, including security. Obviously, JFrog Curation following the incident of NPM is something that a lot of our customers are asking and inquiring about. The sales cycles are longer when it comes to security because no customer comes with 0 security coverage. So obviously, it's not just a matter of upgrading themselves but also displacing something that they used in the past. So the answer regarding the pipeline, it's growing, and we are very pleased with what we see there. It's also -- to remind you, it's only part of our Enterprise X and Enterprise+ subscription. So sometimes it's also drive an upgrade in the subscription. And through to our methodology, when it comes to mega deals, in the world of platform that also includes security, we are derisking it to make sure that we are not missing a quarter because the customer needs a bit more time to conclude the proof of concept. Overall, the sales cycles are a bit longer but not massively longer. I would say three quarters in average, sometimes it's four quarter really depends on how many persona are involved in what you need to adopt from JFrog.

Question: Eamon Coughlin - Barclays Services Corp - Analyst : Hey guys, thanks for the question and I would reiterate congrats on a great quarter. The strong enterprise customer adds really stood out in the quarter. Can you help us understand some of the key drivers there? Like are you spending more time engaging with your partner ecosystem? Is it REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 06, 2025 / 10:00PM, FROG.OQ - Q3 2025 Jfrog Ltd Earnings Call a function of a more mature sales team? Just curious if there's anything you're doing to adjust a little bit of your sales motion or go-to-market motion.

Question: Jonathan Ruykhaver - Cantor Fitzgerald LP - Analyst : Yeah. Hey, guys. Congrats on the performance. I'm curious, so last week, OpenAI announced a private beta of security application called, I think it's Aardvark. But it seems to differentiate with an LLM-driven approach to vulnerability detection and remediation. And I'm curious if you could just talk about how this compares to X-ray's capabilities. But maybe I think more importantly, the announcement at swampUP around agentic remediation capabilities. How do you think this maybe further differentiates you from emerging competition? Shlomi Ben-Haim - Jfrog Ltd - Chairman of the Board, Chief Executive Officer, Co-Founder Yeah, Jon. Well, this was a very important announcement coming from OpenAI. And obviously, we saw it, and we work with OpenAI on a monthly basis, if not daily basis. This is great news because it's yet another proof that human security is -- sorry, human code creation is being covered by models. That's basically supporting the philosophy that what you need to invest in is to protect your binaries. The announcement from OpenAI is a solution that replaces static code analysis, basically code that is created in human language and not binaries. If it will drive something, I think it will drive more interest in what we bring to the market, which is a complementary solution to protect your entire software supply chain. So yeah, LLM can provide your source code security, but not binaries, and that was the release from OpenAI.

Question: Rob Owens - Piper Sandler - Analyst : Great, good afternoon. Thanks for squeezing me in. Just a couple of quick ones for me. Where you talked about cloud migration and some of those in the pipeline. Taking the other side of that, the customers that aren't moving to cloud, what are some of the governors or some of the reasons that they're not moving to cloud at this point? I understand that having a hybrid architecture is part of your value proposition. But just contemplating that move to cloud and maybe some of the barriers to get certain customers to move. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 06, 2025 / 10:00PM, FROG.OQ - Q3 2025 Jfrog Ltd Earnings Call Shlomi Ben-Haim - Jfrog Ltd - Chairman of the Board, Chief Executive Officer, Co-Founder Yeah. That's a good question, Rob. So assuming that our customers -- enterprise big customers moving to the cloud from an on-prem setup means that they had their own projects. They understood the scope of these projects, and they wanted to move the workload to the cloud in order to kind of provide a better elasticity for the company. Now comes AI and they see a new workload. They don't know how much they will pay for storage. They don't know how much they will pay for data transfer when you train these models, where the data to train this model will be hosted. That takes a bit more time for them to analyze. Putting aside the cost predictability, they also have some security and governance concerns. Who is training this model, how this model is being exposed? What are we doing in order to protect the company from having any type of malicious models coming in. And this, I think, bring them to take a bit more time or at least this is what they tell us. They need a bit more time before they fully bet on the cloud like it used to be maybe in a process a year ago or two years ago. JFrog is positioned to capture the opportunity both ways. Either they will stay an on-prem customer, and we will support them and grow with them there or they will move to the cloud, and we will do it in the cloud with them on a multi-cloud basis or one cloud. Basically, the hybrid solution that JFrog provided is the fit for purpose that they ask for.