JFrog To Gain From Pipeline Strength Amid Positive Consumption Trend, Analyst Forecasts Multi-Year Growth

Needham analyst Mike Cikos reiterated a Buy rating on JFrog Ltd FROG, raising the price target to $36 from $25.

FROG recently reported Q2 results, where total revenues of $84.2 million increased 24% Y/Y.

The analyst believes JFrog can capture a long-tailed, developer-driven opportunity in a capital-efficient manner in the software business, as demonstrated by its robust revenue growth plus margin metrics. 

The analyst remains particularly upbeat about the company's pipeline opportunities, constructive conversations with customers, continued positive consumption and commitment trends, and moderation of the challenging macro demand environment.

The sequential growth in Data Transfer and Storage that JFrog experienced in the second quarter led the management to believe that the initial wave of Cloud optimization was behind them.

Cikos highlights multiple ways for the company to generate sustainable growth over a multi-year time horizon.

While NRR has declined for four straight quarters, management remains confident that it will stabilize at ~120% in 2H, notes the analyst.

For FY23, the analyst raised EPS estimates to $0.32 from $0.21. The revenue estimate is increased to $344.3 million from $344 million.

For FY24, Cikos raised the EPS estimate to $0.34 from $0.32. The revenue forecast is increased to $415.7 million from $415.1 million.

Price Action: FROG shares are trading higher by 3.2% to $29.28 on the last check Thursday.