JFrog’s Q2 Earnings Call: Security Growth Drivers and OpenAI Incident Portrayal Clash

Date of Call: Aug 6, 2026

Financials Results

• Revenue: $163.8 million, up 29% year-over-year
• EPS: Non-GAAP EPS not explicitly provided; Q3 guidance is $0.22 to $0.24 per diluted share
• Gross Margin: 83.2%, versus 83.1% in the year-ago period
• Operating Margin: 19.9%, compared to 15.2% in the second quarter of 2025

Guidance:

• Q3 revenue anticipated to be in the range of $164 million and $166 million.
• Q3 non-GAAP operating profit anticipated to be between $27 million and $29 million.
• Q3 non-GAAP earnings per diluted share expected to be $0.22 to $0.24.
• Full year 2026 revenue guidance raised to a range of $648 million to $652 million, representing 22% year-over-year growth at the midpoint.
• Full year non-GAAP operating income expected to be between $116 million and $120 million.
• Full year non-GAAP diluted earnings per share expected to be $0.96 to $1.00.
• Full year 2026 baseline cloud growth raised to be in the range of 41% to 43%.
• Net dollar retention floor for 2026 now expected to be 120%.

Business Commentary:

Revenue Growth and Cloud Expansion:

• JFrog reported total revenue of $163.8 million for Q2 2026, representing 29% year-over-year growth. Cloud revenue grew 53% year-over-year, now representing 53% of total revenues.
• The growth was driven by increased secure binary consumption through Artifactory and strong execution of an enterprise-focused go-to-market strategy.

Security Business Momentum:

• More than 80% of customers joining the over $1 million cohort added security, and over 40% of new logo wins included security initially.
• The momentum in the security business is due to the increasing recognition of JFrog security as a mission-critical component, with a focus on integrating security directly with the software supply chain.

Enterprise Customer Growth:

• 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, a 20% increase year-over-year.
• This growth is a result of the company's enterprise sales strategy, focusing on securing long-term commitments and expanding platform usage.

AI Impact and Platform Evolution:

• JFrog's platform is evolving to treat AI agents as trusted participants, with partnerships and integrations solidifying its position as the enterprise standard for AI-powered software supply chain infrastructure.
• The adoption of AI development practices and the increasing creation of AI-specific packages are driving the need for JFrog's platform to manage and secure the growing volume of software artifacts.

Sentiment Analysis:

Overall Tone: Positive

• Management expressed being "pleased with our second quarter results, which exceed the high end of our guidance across all metrics" and "incredibly energized by our second quarter results." The tone was confident, highlighting strong execution, momentum, and strategic positioning in AI and security, with raised guidance.

Q&A:

• Question from Matt Kalitrion (Needham): We were hoping you could share some color on the conversations you've been having since the open AI models discovered the self-hosted artifactory zero days vulnerability... did it delay pipeline conversions at all, or if there's any plan to continue to leverage these AI models to search for other potential patches going forward?
  Response: The incident was handled in partnership with OpenAI; JFrog remediated quickly, used it as an opportunity to promote the more secure SaaS/cloud solution, and views the ongoing relationship as a way to improve the product.

• Question from Miller Jump (Truist Securities): ...did that have an impact on the Q2 security contribution in your view? And was there any of the second half pipeline of security that actually got pulled forward into the first half as a result of those vulnerabilities?
  Response: Yes, the increase in software supply chain attacks generated traction for JFrog's security solutions, contributing to Q2 security growth and reinforcing security as a strong growth engine.

• Question from Mark Cash (Raymond James): ...how have customers reacted? What have you done to ensure customers are patched and the risk wouldn't spread? And then could you actually turn this to a positive for demand...?
  Response: JFrog patched self-hosted customers immediately and transparently, used the incident to highlight the security advantages of the cloud SaaS model, and sees an opportunity for increased security adoption and platform demand.

• Question from Howard Ma (Guggenheim): ...how would you compare the mix of higher commitments and overages relative to Q1? And if you could comment on if there was any contribution from the fourth Frontier Lab customer...
  Response: Strong usage across a diverse customer base continued in Q2, with no decline in usage over minimum commitments. A new Frontier AI Lab customer was added during the quarter, contributing to results.

• Question from George McGreen (Bank of America): ...how do you stack rank the contribution from [security products: advanced security, runtime, curation]?
  Response: Curation (the firewall) is seeing rapid adoption due to the increase in software supply chain attacks, but customers are increasingly requiring more comprehensive security solutions from JFrog because it serves as the single source of truth for all binaries and packages.

Contradiction Point 1

Handling and Communication of the OpenAI Vulnerability Incident

Inconsistent portrayal of the incident's impact on customer trust and business operations.

Matt Kalitrion (Needham) - Matt Kalitrion (Needham)

2026Q2: The incident was handled in partnership with OpenAI... The relationship with OpenAI has strengthened... - [Shlomi Ben-Haim](CEO)

Did the OpenAI discovery of the Artifactory zero-day vulnerability delay pipeline conversions, and will you continue leveraging AI models to search for patches? - Mark Cash (Raymond James)

2026Q2: JFrog acted responsibly by immediately patching self-hosted customers and protecting cloud customers. The incident underscored the security advantages of the SaaS model. - [Shlomi Ben-Haim](CEO)

Contradiction Point 2

Contribution and Ranking of Security Product Suites

Contradictory emphasis on which security product is driving the most traction and value.

What are the key challenges impacting revenue growth this quarter? - George McGreen (Bank of America)

2026Q2: JFrog Curation is currently in the spotlight due to the rise in software supply chain attacks... - [Shlomi Ben-Haim](CEO)

How do you rank the contribution of JFrog X-Ray, JFrog Advanced Security, and JFrog Curation? - George McGreen (Bank of America)

2026Q2: Software supply chain attacks are driving rapid adoption of JFrog Curation... - [Shlomi Ben-Haim](CEO)

Contradiction Point 3

Contribution and Drivers of Security Product Growth

Contradiction on whether security growth is built on prior momentum or driven by new, urgent threats.

Miller Jump (Truist Securities) - Miller Jump (Truist Securities)

2026Q2: Yes, the increased frequency of software supply chain attacks... drove strong security momentum in Q2. - [Shlomi Ben-Haim](CEO)

Did the significant open source vulnerabilities at the end of Q1 impact Q2 security contributions, and was any second-half security pipeline activity accelerated into Q1? - Sanjit Singh (Morgan Stanley)

2026Q1: The strong Q1 cloud growth (50%) drove the outperformance... - [Ed Grabscheid](CFO)

Contradiction Point 4

Role and Adoption Drivers of JFrog's Security Offerings

Contradiction on whether security is a primary driver for cloud adoption or a secondary concern.

Miller Jump (Truist Securities) - Miller Jump (Truist Securities)

2026Q2: CISOs are actively seeking firewalls and scanners to protect their systems. JFrog's integrated solution... generated significant traction. - [Shlomi Ben-Haim](CEO)

Did the significant open source vulnerabilities at the end of Q1 impact Q2 security contributions, and was any second-half security pipeline activity pulled forward into Q1? - Radi Sultan (UBS)

2026Q1: Q1 strength was **broad-based**, involving both AI-native and traditional customers... revenue contribution from them was not the sole driver. - [Ed Grabscheid](CFO)

Contradiction Point 5

Security's Role as a Growth Driver

Inconsistent portrayal of security's contribution to current and near-term growth.

Miller Jump (Truist Securities) - Miller Jump (Truist Securities)

2026Q2: Security results in Q2 built on the strong Q1 performance, supporting both DevSecOps adoption and cloud growth. Security is expected to remain a major long-term growth driver. - [Shlomi Ben-Haim](CEO)

Did Q1's significant open source vulnerabilities impact Q2's security contributions, and was any second-half security pipeline activity pulled forward into Q1? - Radi Sultan (UBS)

20260213-2025 Q4: The trend of attacks on the software supply chain... is growing and is now a persistent threat. JFrog's security suite is built to address this growing trend. - [Shlomi Haim](CEO)