Software development tools maker JFrog (NASDAQ: FROG) reported Q1 CY2025 results exceeding the market’s revenue expectations, with sales up 22% year on year to $122.4 million. Guidance for next quarter’s revenue was better than expected at $122.5 million at the midpoint, 1.2% above analysts’ estimates. Its non-GAAP profit of $0.20 per share was 21.5% above analysts’ consensus estimates.
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JFrog (FROG) Q1 CY2025 Highlights:
- Revenue: $122.4 million vs analyst estimates of $117.3 million (22% year-on-year growth, 4.4% beat)
- Adjusted EPS: $0.20 vs analyst estimates of $0.16 (21.5% beat)
- Adjusted Operating Income: $21.35 million vs analyst estimates of $17.08 million (17.4% margin, 25% beat)
- The company slightly lifted its revenue guidance for the full year to $502.5 million at the midpoint from $501 million
- Adjusted EPS guidance for the full year is $0.69 at the midpoint, beating analyst estimates by 2.1%
- Operating Margin: -18.8%, down from -16.6% in the same quarter last year
- Free Cash Flow Margin: 23%, down from 41.8% in the previous quarter
- Customers: 1,051 customers paying more than $100,000 annually
- Net Revenue Retention Rate: 116%, in line with the previous quarter
- Market Capitalization: $3.96 billion
“The JFrog Platform has become the software system of record for organizations, transforming how software is created and delivered by unifying DevOps, DevSecOps, and AI/MLOps in one platform,” said Shlomi Ben Haim, CEO and Co-founder of JFrog.
Company Overview
Named after the founders' affinity for frogs, JFrog (NASDAQ: FROG) provides a software-as-a-service platform that makes developing and releasing software easier and faster, especially for large teams.
Sales Growth
A company’s long-term sales performance is one signal of its overall quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years. Over the last three years, JFrog grew its sales at a solid 26% compounded annual growth rate. Its growth beat the average software company and shows its offerings resonate with customers, a helpful starting point for our analysis.
This quarter, JFrog reported robust year-on-year revenue growth of 22%, and its $122.4 million of revenue topped Wall Street estimates by 4.4%. Company management is currently guiding for a 18.9% year-on-year increase in sales next quarter.
Looking further ahead, sell-side analysts expect revenue to grow 15.2% over the next 12 months, a deceleration versus the last three years. Despite the slowdown, this projection is commendable and indicates the market is forecasting success for its products and services.
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Customer Retention
One of the best parts about the software-as-a-service business model (and a reason why they trade at high valuation multiples) is that customers typically spend more on a company’s products and services over time.
JFrog’s net revenue retention rate, a key performance metric measuring how much money existing customers from a year ago are spending today, was 117% in Q1. This means JFrog would’ve grown its revenue by 16.7% even if it didn’t win any new customers over the last 12 months.
JFrog has a good net retention rate, proving that customers are satisfied with its software and getting more value from it over time, which is always great to see.
Key Takeaways from JFrog’s Q1 Results
Revenue beat and operating income beat convincingly. It was also great to see JFrog’s full-year EPS guidance top analysts’ expectations. On the other hand, its new large contract wins slowed. Overall, this print had some key positives. The market seemed to be hoping for more, and the stock traded down 3.1% to $34.10 immediately after reporting.
So do we think JFrog is an attractive buy at the current price? If you’re making that decision, you should consider the bigger picture of valuation, business qualities, as well as the latest earnings. We cover that in our actionable full research report which you can read here, it’s free.
