Scotiabank has revised its price target for JFrog (FROG, Financial), reducing it from $40 to $36. Despite the adjustment, the firm's analyst, Nick Altmann, maintains a Sector Perform rating on the company's stock. This revision is part of a broader update to price targets across the U.S. software sector, reflecting a recent downturn in the industry.
According to Scotiabank, the software sector is currently under scrutiny, particularly with potential impacts from tariffs expected to become more evident in the second quarter and the latter half of the year. These market conditions have prompted analysts to reassess valuation expectations for companies like JFrog, as investors remain cautious about the sector's near-term outlook.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 18 analysts, the average target price for JFrog Ltd (FROG, Financial) is $43.98 with a high estimate of $50.00 and a low estimate of $33.71. The average target implies an upside of 33.20% from the current price of $33.02. More detailed estimate data can be found on the JFrog Ltd (FROG) Forecast page.
Based on the consensus recommendation from 22 brokerage firms, JFrog Ltd's (FROG, Financial) average brokerage recommendation is currently 2.0, indicating "Outperform" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for JFrog Ltd (FROG, Financial) in one year is $41.70, suggesting a upside of 26.29% from the current price of $33.02. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the JFrog Ltd (FROG) Summary page.
FROG Key Business Developments
Release Date: February 13, 2025
- Total Revenue: $428.5 million for fiscal year 2024, up 22% year over year.
- Cloud Revenue: $168 million for 2024, representing 41% year-over-year growth.
- Gross Margin: 83.8% for the year 2024.
- Free Cash Flow: $107.8 million for 2024, with a free cash flow margin of 25%.
- Q4 Revenue: $116.1 million, up 19% year over year.
- Q4 Cloud Revenue: $49.4 million, up 37% year over year, representing 43% of total revenues.
- Enterprise+ Subscriptions: 54% of total revenues in Q4, up from 49% in the prior year.
- Net Dollar Retention: 116% for the trailing four quarters.
- Gross Retention: 96% in 2024.
- Operating Profit: $20.9 million in Q4, with an operating margin of 18%.
- Non-GAAP Earnings Per Share: $0.65 for the full year 2024, up 27% year over year.
- Cash and Short-term Investments: $522 million at the end of 2024.
- Remaining Performance Obligation (RPO): $403 million, a 55% increase year over year.
- Customers with ARR over $100,000: 1,018 in Q4, up from 886 in the year-ago period.
- Customers with ARR over $1 million: 52 in Q4, up from 37 in the year-ago period.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- JFrog Ltd (FROG, Financial) reported a total revenue of $428.5 million for 2024, marking a 22% year-over-year increase.
- Cloud revenue grew by 41% year-over-year, reaching $168 million, demonstrating strong cloud adoption.
- The company achieved a gross margin of 83.8% and a free cash flow of $107.8 million, with a free cash flow margin of 25%.
- JFrog's enterprise-focused strategy resulted in significant multiyear platform subscriptions and increased the number of customers with ARR over $100,000 to 1,018.
- The company's security solutions, including JFrog Advanced Security and JFrog Curation, were adopted by approximately 250 customers, contributing to 5% of ARR and 12% of RPO.
Negative Points
- Despite strong growth, JFrog Ltd (FROG) faces a conservative macroeconomic environment, with customers being cautious about cloud usage and commitments.
- The company experienced a decrease in customer count, focusing on higher-value enterprise customers and parting ways with smaller, low subscription customers.
- JFrog's net dollar retention rate is expected to stabilize in the mid-teens, indicating potential challenges in upselling and expanding within existing accounts.
- The guidance for 2025 reflects a conservative approach, with anticipated revenue growth of 17% year-over-year, which may indicate cautious expectations for future performance.
- JFrog's free cash flow margin guidance for 2025 is lower at 19%, compared to the 25% achieved in 2024, suggesting potential challenges in maintaining cash flow efficiency.
