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Is the "Liquid Software" Vision Finally Starting to Solidify?
JFrog delivers 45% cloud growth and expands its high-value customer base as AI agents begin to reshape the software supply chain landscape.
02/17/2026
By the numbers:
- Total Revenue: $531.8 million (up 24% year-over-year)
- Cloud Revenue: $243.3 million (up 45% year-over-year)
- Non-GAAP Diluted EPS: $0.82
- Free Cash Flow: $142.3 million
- Customers >$1M ARR: 74 (up 42% year-over-year)
Key Highlights:
- The transition to the cloud is accelerating, with cloud revenue now representing nearly half of the company's total sales.
- JFrog is successfully moving up-market, nearly doubling its count of million-dollar customers in a single year.
- Security is becoming a core pillar of the platform, with JFrog Security now accounting for 10% of total annual recurring revenue.
- Management is betting heavily on "Shadow AI" detection as a critical enterprise requirement for 2026.
The News:
JFrog recently reported its fourth-quarter and full-year 2025 results, characterized by a significant beat in cloud adoption and a robust expansion in large-scale enterprise contracts. The company also introduced new AI-centric security features designed to manage the risks of unauthorized AI model usage within the developer workflow. For more detailed financial data, you can find the full report here.
Analyst Take:
I have been watching JFrog for some time, and increasingly so after the rockstar CMO, Genefa Murphy, joined a few weeks ago, and this latest set of results suggests a company that is finally moving past its identity as a "repository tool" and into its intended role as a comprehensive software supply chain platform. The "Liquid Software" vision that CEO Shlomi Ben Haim often discusses is starting to look less like a marketing slogan and more like a reflected reality in the company's balance sheet.
What stands out to me is the composition of the revenue. While a 24% total revenue growth is respectable, the 45% growth in cloud revenue is the real story here. We are seeing a fundamental shift in how enterprises manage their binaries and artifacts. The fact that cloud revenue now makes up 48% of the total pie, compared to 43% just a year ago, indicates that the friction of moving mission-critical DevOps infrastructure to the cloud is dissipating. This isn't just about convenience; it is about the scale required to support modern AI-driven development.
What was Announced
The primary product focus of this announcement was the launch of Shadow AI detection capabilities. This feature is architected to give organizations visibility into how their developers might be using unauthorized AI models or APIs. In an era where a developer might "hallucinate" a security hole by feeding proprietary code into an unsecured LLM, this is a timely addition. Furthermore, JFrog highlighted its 2025 "Tech Partner of the Year" award from GitHub, which reinforces its positioning as a neutral, "system of record" that sits alongside the major version control systems. The company also continues to push its "Enterprise+" subscription, which now accounts for 57% of total revenue, showing that customers are buying into the full platform rather than just picking individual tools.
We find the "System of Record" argument particularly compelling. In the enterprise, once you become the place where all "gold standard" software artifacts live, you become incredibly sticky. The 119% net dollar retention rate bears this out. It tells me that once a customer lands on the platform, they aren't just staying; they are expanding their footprint. This expansion is increasingly driven by security. Seeing security grow to 16% of the remaining performance obligations (RPO) suggests that the "DevSecOps" trend is finally moving from a buzzword to a line item in the budget.
However, it is not all smooth sailing. The company is still operating at a GAAP loss of $91.9 million for the year. While non-GAAP metrics show a healthy 17.3% operating margin, the gap between the two remains wide, largely driven by share-based compensation. For the more conservative investor or analyst, this reliance on non-GAAP "magic" to show profitability remains a point of contention. We also have to consider the competitive landscape. With GitHub and GitLab aggressively moving into the security and package management space, JFrog must continue to prove its "best-of-breed" status is worth the premium of a separate platform.
The focus on AI agents is a clever pivot. There will be a huge explosion in AI-driven App development in the coming years. Ben Haim mentioned that developers and AI agents are now building software together. This is an observant take on the market. If we move to a world where 80% of code is generated by agents, the volume of software artifacts will explode. JFrog’s platform is designed to handle this volume, but the company must ensure its pricing models don't become a barrier as the sheer number of automated releases increases.
Looking Ahead
Based on what we are observing, JFrog is successfully navigating the transition from a niche tool to an enterprise platform. The key trend that we are going to be tracking is the "Shadow AI" adoption rate. If enterprises view AI security as a mandatory gatekeeper, JFrog has a massive tailwind. Based on my analysis of the market, my perspective is that the battle for the "Software Supply Chain" is narrowing down to a few key players, and JFrog’s neutrality across different clouds is its greatest asset. Going forward, we are going to be looking for how the company performs on its 2026 revenue guidance of $623 million to $628 million.
The most recent earnings confirm that the "Dev" and "Sec" parts of DevSecOps are finally merging at the artifact level. HyperFRAME will be closely monitoring how the company does in maintaining its 40%+ cloud growth in future quarters, as this is the primary engine for its valuation. While also focusing on underlying profitability.
Steven Dickens | CEO HyperFRAME Research
Regarded as a luminary at the intersection of technology and business transformation, Steven Dickens is the CEO and Principal Analyst at HyperFRAME Research.
Ranked consistently among the Top 10 Analysts by AR Insights and a contributor to Forbes, Steven's expert perspectives are sought after by tier one media outlets such as The Wall Street Journal and CNBC, and he is a regular on TV networks including the Schwab Network and Bloomberg.