JFrog Ltd. Ordinary Shares 2026 Q2 Earnings Call

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 CEO and co-founder, Shlomi Ben Haim, and Ed Grabscheid, JFrog 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, intend, will, and similar expressions are intended to identify forward-looking statements or similar indications of future expectations.

You are cautioned not to place undue reliance on these forward-looking statements, which reflect our views only as of today and not as of any subsequent date. Please keep in mind that we are not obligating ourselves to revise or publicly release the results of any revisions to these forward-looking statements in light of new information or future events. These statements are subject to a variety of risks and uncertainties that could cause actual results to differ materially from expectations. For a discussion of material risks and other important factors that could affect our actual results, please refer to our Form 10-Q for the quarter ended March 31st, 2026, which is available on the investor relations section of our website, and the earnings press release issued earlier today.

Additional information will be made available in our Form 10-Q for the quarter ended June 30th, 2026, and other filings and reports that we may file from time to time with the SEC. Additionally, non-GAAP financial measures will be discussed on this conference call. These non-GAAP financial measures, which are used as measures of JFrog's performance, should be considered in addition to, not as a substitute for, or an isolation from GAAP measures. Please refer to the tables in our earnings release for a reconciliation of those measures to their most directly comparable GAAP financial measures. A replay of this call will be available on the JFrog Investor Relations website for a limited time. With that, I'd like to turn the call over to JFrog CEO, Shlomi Ben Haim.

Shlomi? Thank you, Jeff. Good afternoon, and thank you all for joining the call.

We are pleased with our second quarter results, which exceed the high end of our guidance across all metrics. Our first half 2026 achievements reflect strong execution and the clear strategic importance of JFrog in enterprise software supply chains. It is clear now that the world is moving at the speed of AI. What began as a technology shift is becoming the foundation of every business and increasingly ambient infrastructure as they build and deliver software. As AI accelerates software creation, engineering velocity, and code quality, the challenge is no longer generating source code, but managing the tsunami of binaries compiled. It is now about establishing trust in these software artifacts, models, agents, and packages that AI and human increasingly produce without sacrificing speed.

The JFrog Platform is evolving for a future where AI agents become first-class citizens of the software supply chain. By extending our platform to treat AI agents as trusted participants alongside human developers, we believe JFrog is building the control plane for the next generation of software delivery. We see software engineering evolving into software supply chain engineering, not because every developer becomes a supply chain expert, but because every developer or AI agent must rely on a trusted software supply chain delivered by the organization. For this new era, our customers are reaffirming JFrog as the single source of truth. We believe this reality is fueling the momentum we are seeing across our business. During the second quarter, JFrog's total revenue was $163.8 million, representing 29% year-over-year growth.

Cloud revenue grew 53%, driven by increased secure binary consumption through Artifactory, reinforcing its central role as the single source of truth for software supply chains. In addition to continued strength in cloud growth, our enterprise focus go-to-market strategy continues to deliver strong result at the high end of our customer base. Customers with annual spend exceeding $1 million grew to 97, up from 61 a year ago, representing 59% year-over-year growth. Customers spending more than $100,000 annually grew to 1,291 compared to 1,076 in the prior year, an increase of 20% year-over-year. On today's call, I will walk you through the second quarter in more detail. Ed will then follow with additional financial insights and outlook. First, I will cover our cloud business, where strong consumption trends continue to drive demand across traditional and AI software artifacts. Second, I will discuss our security business.

As software supply chain attacks grow in scale and sophistication, customers are looking for unified security integrated with their system of record. Last, I will discuss governance and compliance. The era of agentic software development is driving the industry's next evolution, DevGovOps. I'll start with cloud. In Q2, our cloud business continued to expand as we supported the scaling volume of software artifacts flowing through our customers' software supply chain pipelines. As AI accelerates software development, customers are creating, storing, and distributing more binaries than before. Over the past several quarters, even more since the beginning of the year, we have observed the following key trends driving this change in cloud consumption.

First, the rapid adoption of AI tools accelerates software development activity and increases the volume of binaries moving through our platform as agents and tools consume more software at a pace and scale no human workflow ever could. Second, the increase in the number of AI-specific software packages such as MCP Skills and others that organizations create and manage. Third, continued uncertainty is making forecasting difficult for customers in the evolving AI economy, leading them to sometimes favor the flexibility of a consumption-based, on-demand cloud model. These trends and the first-half results validate our strategy and business model, continuing to reinforce the value of our cloud offering, which enables customers to scale with demand while maintaining efficiency and operational flexibility. Our enterprise sales teams remain focused on securing long-term enterprise commitments, allowing customers better unit economics in the evolving AI spending environment.

At the same time, as always, we give customers the flexibility to determine the balance between committed capacity and on-demand usage. Consistent with our guidance philosophy, we continue to exclude usage above committed levels from our outlook. Ed will refer to it later on the call. Now to the continued momentum we're seeing in security. JFrog provides the infrastructure for creating, managing, and securing software artifacts at enterprise scale. By integrating comprehensive software supply chain security directly with Artifactory, our customers' single source of truth, we enable them to build and deploy software with trust at the scale and speed of AI. As software supply chain threats continue to grow in scale and sophistication, CISOs increasingly see JFrog Security as a mission-critical component of their software infrastructure, not an optional capability.

Validating this fact, JFrog was recently named a leader in the Gartner Magic Quadrant for software supply chain security, based not only on our highest-rated ability to execute, but also on our strategy of incorporating security alongside the software supply chain single source of truth in one platform. We continue to see strong momentum in our security business reflected in higher attach rate on new customers win, continued expansion with existing accounts, and an increasing number of larger security-led transactions. In the second quarter, more than 80% of the customers that joined our over $1 million cohort added security. This momentum extends to our new logo business, where over 40% of overall new logo wins included security as part of their initial land with JFrog. In addition, AI-powered software supply chain attacks continued to escalate this quarter, with threat actors increasingly targeting open source package ecosystems.

As AI accelerates software creation, it also accelerates the pace and sophistication of software supply chain attacks. Throughout these incidents, customers using JFrog Curation remain protected. By tightly integrating Curation with Artifactory, JFrog delivers a trusted, policy-driven software supply chain firewall that blocks malicious and risky packages before they enter the enterprise, allowing developers and AI coding agents to move fast without compromising trust or security. In Q2, we will focus on making sure our security solutions become too integrated to fail, powered by the AI ecosystem. In the past, we focused on securing human developers. Today, we are extending that same trusted experience to AI agents that increasingly interact with the JFrog Platform.

Consistent with our universal trust layer strategy, we recently announced integrations with leading AI coding agents, including Claude Code and Cursor, protecting our customers, developers, and agents from vulnerable or malicious dependencies, enforcing enterprise security policies, and receiving trusted remediation guidance in real time. By embedding security directly into AI-driven development workflows, JFrog helps customers accelerate software delivery while preserving trust across the entire software supply chain. The continued validation of our strategy by security leaders, accelerating customers' adoption, expanding platform usage, larger security-driven transactions, and our deep partnerships across the AI ecosystem reinforce our confidence in JFrog's security roadmap. We expect our Security Core to remain one of JFrog's most significant long-term growth drivers. On security, we are excited to welcome keynote security executive from both Anthropic and Cursor as speakers at our annual swampUP user conference this September in New York City.