What Happened?
Shares of software development tools maker JFrog (NASDAQ: FROG) jumped 7.2% in the morning session after the company reported strong second-quarter financial results that surpassed analyst expectations. The software provider announced revenue of $127.2 million, a 23% increase year-over-year, and an adjusted earnings per share of $0.18, beating forecasts. A significant driver of this growth was the company's cloud revenue, which surged 45% year-over-year to $57.1 million. The positive earnings report was accompanied by an optimistic outlook for the full year, with JFrog raising its revenue guidance. The strong quarterly performance and encouraging forecast prompted a wave of positive reactions from Wall Street analysts. Several firms, including Keybanc, Cantor Fitzgerald, and Stifel, raised their price targets for JFrog's stock, citing the impressive cloud growth and expanded security adoption.
Is now the time to buy JFrog? Access our full analysis report here, it’s free.
What Is The Market Telling Us
JFrog’s shares are quite volatile and have had 15 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was 6 months ago when the stock gained 15.3% on the news that the company reported strong fourth-quarter 2024 results, which revealed an acceleration in its new large contract wins, enabling it to exceed Wall Street's revenue and operating profit estimates, the latter by a very convincing amount. Cloud revenue importantly exceeded expectations. Adoption of its cloud business remained strong, now accounting for 43% of total revenue, up from 37% a year ago. While revenue guidance for the full year was in line with Wall Street's estimates, full-year operating income guidance was ahead, showing better profitability. Again, Cloud revenue growth was guided ahead, allowing the market to look past the in line full-year total revenue guidance. Zooming out, we think this was a very solid quarter featuring some areas of strength for the stock.
JFrog is up 38.5% since the beginning of the year, and at $42.51 per share, it is trading close to its 52-week high of $45.14 from July 2025. Investors who bought $1,000 worth of JFrog’s shares at the IPO in September 2020 would now be looking at an investment worth $656.12.
Today’s young investors won’t have read the timeless lessons in Gorilla Game: Picking Winners In High Technology because it was written more than 20 years ago when Microsoft and Apple were first establishing their supremacy. But if we apply the same principles, then enterprise software stocks leveraging their own generative AI capabilities may well be the Gorillas of the future. So, in that spirit, we are excited to present our Special Free Report on a profitable, fast-growing enterprise software stock that is already riding the automation wave and looking to catch the generative AI next.
