Q2 2026 Jfrog Ltd Earnings Call Transcript
Key Points
- JFrog Ltd (FROG) delivered strong Q2 2026 results, exceeding the high end of guidance across all metrics, with total revenue of $163.8 million, up 29% year-over-year.
- Cloud revenue accelerated to $87.5 million, up 53% year-over-year, driven by increased consumption of secure binaries and AI-specific software packages.
- The company's enterprise strategy is paying off, with customers spending over $1 million annually growing 59% year-over-year to 97, and over 40% of new logo wins including security in their initial land.
- JFrog's Security Core products are gaining significant traction, with over 80% of new $1 million+ customers adding security, and the company was named a leader in the Gartner Magic Quadrant for software supply chain security.
- The company achieved record free cash flow of $53.8 million (33% margin) and raised its full-year 2026 revenue guidance to $648-$652 million, reflecting strong operational discipline and profitable growth.
- Net dollar retention improved to 121%, and RPO grew 38% year-over-year to $659 million, indicating strong customer commitment and platform consolidation.
- Strategic partnerships with AI leaders like Anthropic and Cursor, along with winning a new AI-native customer by displacing a competitor, solidify JFrog's position in the AI-driven software supply chain market.
- The company's guidance philosophy excludes usage above contractual commitments, meaning actual cloud consumption is outpacing reported figures, which could create uncertainty for investors.
- The recent OpenAI-discovered zero-day vulnerability in self-hosted Artifactory highlights potential security risks for the 47% of business that is self-hosted, though the cloud version was not breached.
- Customers are facing uncertainty in the evolving AI economy, making forecasting difficult and potentially leading to more conservative spending or delayed large deals.
- The company anticipates a larger share of revenue from cloud, which may pressure gross margins, as they reiterate annual gross margins to be in the range of 82%-83% in 2026.
- The rapid escalation of AI-powered software supply chain attacks, such as the recent NPM package incident, poses an ongoing threat that requires constant vigilance and could impact customer operations.
- While AI adoption is a growth driver, the shift toward token economy optimization and CFO budget control could lead to more cautious spending on AI-related infrastructure in the future.
Ladies and gentlemen, thank you for joining us, and welcome to the JFrog second-quarter 2026 financial results earnings call. (Operator Instructions)
I will now hand the conference over to Jeffrey Schreiner, Head of Investor Relations. Jeffrey, please go ahead.
Thank you, Nicole. Good afternoon, and thank you for joining us as we review JFrog's second-quarter 2026 financial results, which were announced following the market close today via press release. Leading the call today will be JFrog's CEO and Co-Founder, Shlomi Ben Haim; and Ed Grabscheid, JFrog's CFO.
During this call, we may make statements related to our business that are forward-looking under federal securities laws and made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995, including statements related to our future financial performance and including our outlook for the third quarter and full year of 2026.
The words anticipate, believe, continue, estimate, expect,
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