Jfrog at Canaccord Genuity: Growth Fueled by Cloud and Security

On Tuesday, 12 August 2025, JFrog Ltd (NASDAQ:FROG) presented at Canaccord Genuity’s 45th Annual Growth Conference, highlighting a robust Q2 performance driven by cloud adoption and security offerings. While the company is experiencing significant growth, it remains vigilant about potential challenges, including the impact of AI on software development.

Key Takeaways

• JFrog reported strong Q2 performance with a focus on cloud adoption and security.
• Partnerships with GitHub and Nvidia are central to its strategic growth.
• The company raised its cloud guidance from 34% to 36%.
• JFrog’s E+ platform represents 55% of revenues, indicating room for growth.
• CFO Ed Grabshied emphasizes balancing growth with profitability.

Financial Results

JFrog’s financial performance in Q2 was marked by:

• Cloud growth driven by strong adoption, leading to a guidance increase from 34% to 36%.
• The E+ platform accounting for 55% of revenues, despite being adopted by only 10% of the customer base.
• Significant traction in security leading to longer-term contracts, typically spanning 2 to 3 years.
• An increase in free cash flow generation, reaching 29% over the past four quarters.
• RPO and CRPO growth of 75% and 43%, respectively.

Operational Updates

Key operational strategies include:

• Expansion of the JFrog Advanced Security platform, consolidating multiple security tools.
• Strategic partnerships with GitHub and Nvidia to enhance software development and security solutions.
• A hybrid approach supporting both cloud and self-hosted deployments.
• Exploration of an "Artifactory Light" version for smaller companies, catering to AI-driven needs.

Future Outlook

JFrog’s future initiatives focus on:

• Announcements at the upcoming user conference, especially regarding GitHub and Nvidia collaborations.
• Continued execution in cloud and security sectors, with an emphasis on acquiring million-dollar customers.
• Adapting to the evolving AI landscape, potentially offering solutions for MLSecOps.

Q&A Highlights

During the Q&A session, JFrog addressed:

• The importance of curation in securing and managing code assistance tools.
• Opportunities to engage with smaller companies over the next two to three years.
• Challenges related to AI talent and investment in next-generation technologies, with attractive margin expansion noted by CFO Ed Grabshied.

In conclusion, JFrog’s strategic focus on cloud and security, coupled with strong partnerships, positions it well for future growth. Readers are encouraged to refer to the full transcript for more detailed insights.

Full transcript - Canaccord Genuity’s 45th Annual Growth Conference:

Kingsley Crane, Software Analyst, Canaccord Genuity: Hey everyone, thanks for joining. I’m Kingsley Crane, I’m a software analyst here at Canaccord Genuity. With me today, have Jay Frog, I have the CFO, Ed Grabshied, and VP of Investor Relations, Jeff Schreiner. Thanks for being here, guys.

Ed Grabshied, CFO, JFrog: Thank you for having us.

Jeff Schreiner, VP of Investor Relations, JFrog: Thank you.

Kingsley Crane, Software Analyst, Canaccord Genuity: Let’s kick it off. I’d like to start with the recent quarter. You reported some really strong set of results last week. What are the key takeaways for you in terms of customer activity, product traction, macro signals?

Ed Grabshied, CFO, JFrog: Yeah. So it was a very strong execution quarter by the team and because of that we had great results. We saw three areas of, that really excelled. First is the cloud. And within the cloud, we saw an uptake

So many of our customers, regarding security will land in the cloud, and we saw significant growth being driven by, that activity. The second is usage. Usage, was very strong. We saw usage in q one that was an acceleration above our minimum commits and we weren’t sure if that was going to be experimental and if that was gonna carry forward, but we saw a sustained usage carried over from the first quarter into second quarter. And the third piece is being able to convert those customers with usage over the minimum commits to larger annual contracts, and we’re able to accomplish that during the second quarter.

All of this contributing to a really nice quarter for us and a good setup going into the second half.

Kingsley Crane, Software Analyst, Canaccord Genuity: So let’s talk some products that software development has really transformed over the past two years, continues to do so. Can you tell us why binaries are as important as ever?

Ed Grabshied, CFO, JFrog: Yeah, well binary is the primary asset. Everything is becoming critically important because of the binary. First, what we see is that the way to bring in malicious packages is no longer through source code, it’s through binaries. Putting a malicious package into a repository, bringing that through open source into your organization as a vector in which you can attack, and so we see significant opportunity from the security aspect, but also models are binary. The pace in which you do software updates because of the machine language as being a binary and the open source aspect of it is today, you’re doing the automation and many updates, which is being done through the binaries, and that’s becoming very much an important factor.

And this is where JFrog excels, and and we see binaries critical to the software development life cycle.

Kingsley Crane, Software Analyst, Canaccord Genuity: Right. This is similar, but in terms of tools like Copilot and Cursor, it’s changing how developers are writing code. Are you seeing different expectations for speed or automation within JFrog’s platform? And then have you just seen an acceleration in code creation in general and then how does that benefit you?

Ed Grabshied, CFO, JFrog: Yeah, so there’s a couple benefits that are coming from these code assistance tools. First off, the theme is that more code means more binaries and more binaries would be a benefit to JFrog. We’re still in the very early stages of this code assistance with these applications driving incremental production in terms of software, but we do see some benefit coming from that as I mentioned during the beginning opening statements that we see some growth in certain packages like Python and Hugging Face, which could indicate that large language models and some experimentation around AI. The second piece is around security. So as more code is being created and more packages are coming into your organization, there’s an opportunity through curation to manage what is being brought into the organization.

So we see curation as being critical to companies in the way that they secure and manage these code assistance tools, and what they allow into their organization.

Jeff Schreiner, VP of Investor Relations, JFrog: Yeah, I’ll just add quickly, Kingsley. Think that the setup now for developer is the IDE, you know, a coding assistant and a source code management. And the coding assistants are here to stay as part of that development architecture. And I think as it relates to JFrog, what you’re seeing is an opportunity, as Ed noted, to tie in not only to the system of record in Artifactory, but also an opportunity for us to help secure the organizations when you look at curation and the integration of curation with some of these coding assistants, similar to the integration that we already have today with GitHub. So I think that these are becoming critical in the overall development process, and we’ll certainly start to expedite the production of code over time.

Kingsley Crane, Software Analyst, Canaccord Genuity: So developers are notoriously finicky in terms of the products and the tools that they like to use. But so how can you help companies handle tool sprawl? And how do you think about, I guess, focusing on different parts of your platform versus partnering with others in the ecosystem? I think you’ve you’ve recently really leaned into partnerships with the likes of GitHub and others.

Ed Grabshied, CFO, JFrog: Yeah. Yeah, let me first start with security. We saw a big opportunity for consolidation and this is where the market was going. Consolidation of tools and minimizing tool sprawl as you mentioned. And we really saw that opportunity open up for security where we offer JFrog Advanced Security a platform that consolidates seven or eight different technologies allowing companies to consolidate vendors, eliminate the point solutions, and standardize on JFrog.

So that’s first. In addition to that, you mentioned the partnerships. We see an opportunity to strategically partner with some of the really outstanding companies like GitHub, that’s one of them, where you now take the best of breed in terms of the source code and you build together with JFrog, the best of breed in terms of the binary. You create a single pane of glass which creates visibility being able to go from the source code all the way to production and have remediation all the way back to trace vulnerabilities. So we see opportunity not only to develop internally, organically for tool sprawl, but also to do strategic partnerships.

Jeff Schreiner, VP of Investor Relations, JFrog: And I think Kingsley, you’ve written about this over the last few years in terms of developers do love their tools. And I think in a different world, you would have seen the likes of Cursor and Windsurf probably overtaken a lot more of the enterprise today than they have. They haven’t really seen a lot of enterprise adoption, and why is that? That’s really due to the platformization, the standardization on a few vendors that the industry is now moving towards that has changed the fact that the developers can love their tools, and they certainly do. But the organizations are now much more top down in terms of here’s the tools that we will allow you to use, and within our organization and within the platforms that we have chosen.

Kingsley Crane, Software Analyst, Canaccord Genuity: Right, yeah, and the good thing is that both can work together even in the enterprise potentially. So you’ve spoken to some of this. You have advanced security, you have curation, you have MLOps. The platform has really expanded over the past couple of years. How has that changed the customer adoption journey and then, you know, how has the spend ceiling grown

Ed Grabshied, CFO, JFrog: Yeah. Over time? Yeah. So the the platform has evolved quite a bit. I’ve been in the company six years.

When we went public, we talked about creating a platform. We were artifactory as a point solution, created the platform for artifactory, and we’ve done exceptionally well in terms of adoption of the platform. E plus represents 55% of our revenues. It’s still around 10% of our customer base. That’s the full adoption of the platform.

But in addition to that, we’ve expanded through advanced security. It’s a little different motion today. What you’re starting to see, and there was an inflection point the 2024, customers are looking to take a longer term position with JFrog, where we would have annual sales in terms of selling our artifactory platform, it might be one year with the renewal. Now we’re starting to see customers take a much longer position, two to three years because of security. What we’re hearing is that from the CSOs, there is no one willing to rip out tools that are working effectively in security, but they’re willing to standardize on JFrog.

It will take time, and if they’re going to choose JFrog as their security provider, they’re gonna do it over a period of time, and this is why we’re seeing the duration of the contracts going much longer than what we had historically done. So that sale in terms of the size of the opportunity and the length of negotiations tends to be a little bit longer, but the outcome is very positive. You see this in our RPO numbers and the CRPO numbers, and in terms of the ASPs are growing because of the change in the go to market regarding the duration of the contract and security on top of that.

Kingsley Crane, Software Analyst, Canaccord Genuity: So we’ve danced around this a bit in terms of partnerships. I wanna just dive a bit deeper into the Hugging Face partnership. JFrog is known as binary repository, completely synonymous with the market. But there’s this idea that that might be applicable as well to model registry and just ML artifacts. Early are we in that market life cycle and how well positioned do you think that you are?

Jeff Schreiner, VP of Investor Relations, JFrog: Yeah, so if we stick to the Hugging Face reference that you mentioned, Hugging Face is model repository, the leading model repository with over one and a half million models today. And the relationship with JFrog has continued to expand and did so and such in a way that we’ve been trying to work with Hugging Face to help the community, help the community feel comfortable about using repositories as you quite well listed, Kingsley, in the fact that these model registries are going be much like a Maven repository, instead I’ll be going and grabbing models from these. And as it relates to Hugging Face, they had been working with another vendor who had gone through their models and scanned and stated that, sorry guys, about 90% of your models are vulnerable. You know, it’s tough. They came to JFrog and asked us to do similar types of scans with our x-ray tools and some of our other security offerings.

And we found that these were essentially not vulnerabilities that put the models at risk. And I think what that did is it helped the community to feel more secure. Certainly JFrog customers knowing that JFrog was helping to secure Hugging Face in hopes to better the community and spur further adoption of the use of large language models and the adoption of repositories for large language models such as Hugging Face.

Kingsley Crane, Software Analyst, Canaccord Genuity: So some landmark AI partnerships, you also have some key AI customers. Anything else you’re excited about either on the partnership front or you can tell us in terms of some of the progress with some of those larger spenders.

Jeff Schreiner, VP of Investor Relations, JFrog: I think that on the partnership front, stay tuned. In a few weeks at our user conference, I think there’s going to be a lot of new interesting announcements that tie into two of the key partnerships we’ve talked about. You’ve heard us talk about obviously GitHub and Nvidia and where we may be able to go further with with those partners. And I think that we’ve always been a company that believes too integrated to fail has been our model. And thus partnerships in a way, certainly these more technical or co marketing partnerships really fit well with JFrog because a lot of these technologies tend to integrate and utilize JFrog in some way.

Kingsley Crane, Software Analyst, Canaccord Genuity: So with AI enabling smaller teams to ship faster, you see a world where JFrog’s even more critical to smaller orgs. Yeah. Call me off guard there.

Ed Grabshied, CFO, JFrog: Yeah. Well, first of all, we’re we’re very much focused on enterprise, but that doesn’t mean we ignore smaller companies. We see a lot of value, obviously, in landing the smaller company because we know that they could be the enterprise, the next enterprise, and grow. But the model itself, in terms of the platform, is probably a little heavier for some of these companies that are small developer shops. But with AI and the pace of innovation that will come from AI and having to manage a binary, it will be critically important to have a binary management tool.

We believe that, excuse me, that AI will open up an opportunity, and and maybe not all companies will require all the different languages that are being supported in our platform today. And so we’ll look at maybe like an artifactory light or some type of product that will support a smaller company, but ensure that as we move into the era of AI, that JFrog becomes critically important.

Jeff Schreiner, VP of Investor Relations, JFrog: And I think this helps us as well, going back to your question earlier about the sales motion, Kingsley, and the fact that in the instant today, if I found JFrog to be overkill for my small shop, I may go to a competitive solution, but in two to three years find the need for JFrog as my sophistication has grown. We see the opportunity now to close that gap, that two to three year gap, work with them originally, and use that two to three years to hopefully build the relationship with security and MLOps and other products. So I think that to Ed’s point, the fact that at some point if we can come in with a tool, artifactory light for a better word, I think it helps opens up a broader aspect of the enterprise market or the SMID market that we haven’t had all of the resources to focus on given our focus on the enterprise.

Kingsley Crane, Software Analyst, Canaccord Genuity: So to a generalist software investor, they may look at the business and and not understand why there’s a mix between self managed and cloud. But in in developer market, makes a ton of sense and you want to be able to meet customers where they are. In addition to that, we’ve seen, you know, pretty steady transition towards the cloud. Mhmm. We saw some headwinds in the past year, and then now with some of these AI customers, maybe we’re thinking that that might be deployed on premise.

So can you just tell us more about that balance between on prem and cloud and then just broader trends on the cloud Yeah.

Ed Grabshied, CFO, JFrog: Strategically, we’re focused on driving migrations to the cloud. So our self hosted customers, as we get to a point of renewal, we look at trying to migrate those customers to the cloud. We see better opportunity from a monetization perspective. We have an uplift of anywhere from 20 to 80% on a like for like subscription when you move from self hosted to cloud, and so this remains a strategic focus for us. We also know that there’s a secular trend and customers will eventually move to the cloud and we help with different products to ensure that they move there.

We don’t force the hand, we let that kind of migrate, but we know that the capabilities in the cloud and that the standardization across your organization makes a lot of sense and that we own the infrastructure. So from a trending and market perspective, we see that shift. But as you alluded to, as you move into the era of AI, there’s this potential uncertainty around where are the workloads going to sit. It’s a heavy workload, and we’re hearing this fit for purpose. So these very large organizations that have data centers on-site, as they start to figure out and learn about the cost structure and get to a point of predictability around budgets, we may see some customers choose to remain self hosted in this era of AI.

And the great thing about where we are and where we sit with JFrog is we’re hybrid. So you can deploy self hosted, but you can also do other capabilities in the cloud like security, for example, or other DevOps related workloads could move to the cloud while you still focus on AI type workloads, large language model workloads, as self hosted. So this hybrid motion and this fit for purpose, we’re ready for that. We don’t know that that’s necessarily the direction. We called it out during q two, but the point is JFrog is ready for that.

Kingsley Crane, Software Analyst, Canaccord Genuity: And we’ve seen this in prior cycles where the top ten, fifteen, 20 companies may act quite different than the rest of the market and not every company is gonna have the ability to build their own data center or to pursue that route. I think the cloud still makes a lot of sense for for the vast majority of AI companies. I wanna open it up to the audience just to make sure if we have any questions, we’d be happy to take the mic around if anyone has any. No worries, can circle back at the end. Let’s see, so really strong sequential growth in cloud over these past two quarters.

You know, typically it’s been pretty back end loaded particularly in q four. So how should we expect seasonality to play out this year, especially looking at q four?

Ed Grabshied, CFO, JFrog: Yeah. So we had a really strong first half. The first half was driven by, as I mentioned, an uptake in security. We saw a strong penetration of our security product. We also saw usage over minimum commit, something that we had not seen for a year.

So all of a sudden you had this significant usage. We called out specifically two packages, Hugging Face and and Python, which off a small base grew. Now going into the second half, when you think about my guidance philosophy, I derisk for the largest deals, and we typically see in the back half of the year. This is when budgets start to come together, and and some of the larger deals will tend to materialize in the second half, but it’s been derisked out of my guidance and out of my pipeline. These are deals that, as a definition, tend to be over $5,000,000.

They have migration and possibly even security added on top of that, so those are being de risked. And of course, I exclude any usage over minimum commit. I only forecast on what I have committed. So I’ve raised my guidance in terms of cloud, so I moved that 34 to 36%. So increased our our guidance on the cloud based on what we’ve committed or what we see committed from the customers.

But, you know, we have a good setup, a very responsible setup going into the second half when you start to take out these, you know, these factors, and I believe that, you know, as long as we can execute, it can be a strong second half. Yep.

Kingsley Crane, Software Analyst, Canaccord Genuity: It’s nice when you can have a great great first half and still feel comfortable Yeah. Heading into the second half.

Ed Grabshied, CFO, JFrog: Yeah. One thing, unlike maybe 2024 where I had three of the largest deals in the history of the company happen in the second half, and we needed those deals to really secure 2024. 2025 looks a little bit different. I don’t have to have those really large deals in order to have a successful 2025. I think we’ve set up a really strong 2025 in the first half, which, you know, now if I was able to to see those large deal wins, it’s additive rather than needed.

So this is

Kingsley Crane, Software Analyst, Canaccord Genuity: a bigger picture financial question, but on the one hand AI talent is notoriously expensive and sometimes it makes me question, you know, what we’re doing in our seats when you see those paychecks. But on the other hand, software developers are becoming more productive, they’re producing more code, even you have some of this digital workforce emerging at the Gentek AI. So just in terms of efficiency and R and D spend, how how do you balance those within JFrog?

Ed Grabshied, CFO, JFrog: Yeah. Yeah. Well, you’re you’re talking about something that’s happening in the market, this tsunami of innovation that’s being driven by the era of AI. And we, JFrog as a company, see a huge opportunity that we wanna win. It’s binary.

This is creating more binary. It’s binary management, and we’re going to invest in this opportunity, but we’re going be responsible in the way that we invest. We always have. This is part of our DNA. We’re going to balance growth, we’re going balance profitability, and we’re going to do it in a responsible way.

But we understand talent is expensive. Investing in next generation technologies are expensive, but I’ve had very attractive margin expansion. I generate significant free cash flow, 29% free cash flow generation over the past four quarters. This gives me the opportunity to reinvest responsibly. This gives me the opportunity to deploy capital as needed as the market and technology shifts are happening, and and we’ll remain disciplined in our approach, and we’ll remain very operationally efficient.

This is how we built the company and and that will not change, but we recognize that in order to win, you have to invest and we’ll continue to invest, but in a very responsible way.

Kingsley Crane, Software Analyst, Canaccord Genuity: So the business has been performing really well. Know, there were some headwinds, just general macro headwinds over the past couple years, and so and there’s a set of long term targets out there that may have been deemphasized. But so are you planning to reevaluate those? Is that at at the user conference, or when could we maybe expect another look at that long term outlook?

Ed Grabshied, CFO, JFrog: Sure. Yeah. You know, we’re we’re looking at what we’ve done and and especially over the first six months of 2025. I look at the the growth, what we put as the growth drivers, I’ve executed in cloud, it’s becoming a significant piece of my revenue, I’ve expanded my my platform in terms of the number of million dollar customers, $61,000,000 customers now, Six of or seven of those were added in q two alone. In terms of security, we broke into the security budgets.

We gave the metrics at the 2024. We’re continuing to see significant traction in security. My pipeline today, most of my large deals are being led by security, so I see significant opportunity there in security. I’ve expanded my operating margins. I’ve talked about the free cash flow and what we’ve done in the free cash flow.

So right now, the focus is on execution. We have six months to go in 2025, and we’ll see what we do from there.

Kingsley Crane, Software Analyst, Canaccord Genuity: Fair enough. On so just to check, any any last questions? Now we can keep going. Okay. Thanks, Jack.

Jeff Schreiner, VP of Investor Relations, JFrog: You mentioned you wanted to go more into security. Where exactly what appeals to you in the security space?

Ed Grabshied, CFO, JFrog: Well, we actually feel like we’re very well positioned in security. The approach that we’re taking is a platform approach and consolidation of vendor sprawl, and we see an opportunity and it’s resonating with our customers. Replace point solutions, have one vendor to work with, and that vendor should be JFrog. We manage the binaries, therefore, we should be securing the binaries. As I talked about in the beginning, there’s no CISO in the world that’s willing to rip out tools, so they’re taking a multi year approach with JFrog, they commit to us, at least for these large agreements, two to three years, start with a replacement of one set of tools.

We typically see infrastructure as a code or secrets detection, contextual analysis, these would be maybe the primary three that they start with and then over time will replace the complete security stack. But this is kind of the direction we’re heading. We feel like we’ve invested in security, we feel like we’re well positioned in terms of the sales and go to market motion, and at this point it’s around execution.

Jeff Schreiner, VP of Investor Relations, JFrog: Yeah, would just add, I think we’ve met security where the market is today, but the team will tell you that the market is quickly evolving and that MLSecOps will be different than DevSecOps. And thus that will continue to need investment not only in the security knowledge we have, but in understanding the security market as it changes. And as large language models move left, there’s more machines, there’s more of automation brought into the process. We are certainly looking at MLSecOps as another opportunity to show our quote unquote chops within the security market. And one of those was represented in early discussion with Hugging Face and what we were able to demonstrate with their repository in the large language models.

Thank you.

Unidentified speaker: You had tremendous growth in RPO and kind of long term deals. And know, CRPO came in around ’19. Is that, is CRPO number a better way to think about your long term growth rate or how do we kind of look at those two?

Ed Grabshied, CFO, JFrog: Yeah, we had tremendous growth in RPO, 75% growth this quarter in RPO and I CRPO was actually 43% growth. Yeah. So it was, again, an outstanding quarter for us. And how do we look at this? We also know that there’s some timing in terms of the bookings.

We’re coming off of a relatively easy comp in the first half compared to 2024 where we had some headwinds around the recession, and we really saw the inflection in the 2024 where we started to land very large multiyear deals. We had three of the largest deals in the history of the company closed during the 2024. So although we’re very happy with the execution and very happy with the results, we also know that that number is impacted by timing. So I focus more on the revenue guide than I do on the RPO and CRPO, but it’s certainly an indication of the health of the business and we’re very pleased with the execution and where we’re going right now with these large deals and security on top of that.

Kingsley Crane, Software Analyst, Canaccord Genuity: I’d love to have more time, but we have to keep this operation moving. So thanks again Ed and Jeff for your time.

Ed Grabshied, CFO, JFrog: Thank you very much.

Jeff Schreiner, VP of Investor Relations, JFrog: You Kingsley.

Ed Grabshied, CFO, JFrog: Thank you. Thank you. Appreciate that.

Jeff Schreiner, VP of Investor Relations, JFrog: Thank you sir. Thanks.

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