From Anthropic scare to $12.5 billion valuation: JFrog's AI comeback
Shares jump 35% as cloud revenue surges 60% and the Israeli-founded company raises its forecast.
When Anthropic unveiled an AI model that can find software vulnerabilities, JFrog lost about half its value. On Friday, the Israeli-founded company told investors that AI is now driving demand for its products, and the shares jumped 35% to about $101. That put its market value at about $12.5 billion, just below its all-time high.
JFrog reported third-quarter revenue of $179.2 million, up 31% from a year earlier. In August it had guided to $164 million to $166 million, so the result beat the midpoint by about $14 million. Cloud revenue rose 60% to $101.5 million and now makes up 57% of the total, against 46% a year ago. The company raised its 2026 revenue forecast to $680 million to $682 million, from $648 million to $652 million.
The clearest evidence for management's argument was a $76 million multiyear agreement with a global telecom company. CEO Shlomi Ben Haim said the contract reflects 167% growth in the customer's cloud data consumption compared with its previous usage commitment, and covers "tens of thousands of developers that are powered by tens of thousands of agents." He said the relationship began years ago with a migration from Sonatype Nexus to JFrog's Artifactory and grew through the move to the cloud and the addition of security products, and that AI then "changed everything in terms of the attack surface and the governance requirement."
JFrog customers pay for storage and data transfer, and those who exceed their contractual minimums pay more. CFO Eduard Grabscheid said the company is converting customers' overuse into larger annual commitments, and that guidance excludes any usage above those minimums. Ben Haim said developers now manage "tens or hundreds of agents," and that the result of everything they build "will end as a binary" that must be stored, secured and governed. "Generating source code by agents or developers becoming commoditized," he said, "obviously raises the volume and the demand for the JFrog platform."
The question investors raised most pointedly was whether an AI lab could simply build its own version. An analyst noted that Anthropic reportedly spent six to nine months developing an internal version control system. Ben Haim said Anthropic spoke on stage at JFrog's swampUP conference, that Anthropic and OpenAI are both customers, and that what the labs build is "complementary" to a system of record. Anything not universal, he said, "will be a one vendor or one agent focused solution."
Other measures improved. The number of customers paying more than $1 million a year rose to 112, from 71 a year earlier. Net dollar retention was 124%, up from 118%, with gross retention of 97%. Remaining performance obligations reached $812.4 million, up 60%. Free cash flow was $66.5 million, 37% of revenue, against $28.8 million a year ago. The GAAP operating loss narrowed to $1.8 million from $21.6 million, and GAAP net income was $6.6 million, against a $16.4 million loss. Cash and short-term investments reached $880.9 million, from $704.4 million at the end of 2025. Ben Haim said no customer accounts for more than 3% of revenue.
Management was careful on some points. Grabscheid said the first half of the year saw "a hesitation," with customers spending beyond their minimums "almost like an insurance policy." He said timelines for converting that spending into commitments haven't necessarily shortened, though "the clarity around the decision-making became much clearer in Q3." Asked about the telecom deal, he said, "We're not going to go into the math."
The quarterly filing shows JFrog investing in Israel. Its lease assets rose to $109.3 million from $12.1 million at the end of 2025, with leases running to May 2036. The company also disclosed four insider trading plans adopted in the quarter, including one for director Frederic Simon covering up to 900,000 shares.
