Episode Details

JFrog Ltd. (FROG) Q2 2026 — Q2 2026 (quarter ended June 30, 2026): revenue $163.8M vs $127.2M, up 28.7% and ACCELERATING from 25.8% last quarter, against a $155.6M bar - a 5.2% beat. Cloud revenue $87.5M, up 53%, now 53% of the mix vs 45%. Non-GAAP diluted EPS $0.27 against a $0.2405 bar, a 12.3% beat; GAAP was a LOSS of $0.03. The 8-K was accepted 4:10pm ET Thursday Aug 6, so Friday Aug 7 is the reaction: FROG OPENED at $96.26, up 15.9%, and that opening print was the HIGH of the day. It traded down to $84.79 and closed $89.52, up 7.80% on the session but 7.0% BELOW its own open. When a company beats and raises, the question is not whether it raised - it is whether it raised by MORE than it beat. JFrog beat its own Q2 revenue guidance by $8.77M and raised the full year by $20.0M, from $630M to $650M. That is 2.28x the beat, meaning $11.2M of genuinely NEW second-half revenue. Run the identical sum on last quarter and it is 0.64x: in May they beat by $6.98M, raised the year by only $4.5M, and quietly took $2.5M OUT of the back half. Three months later they put $11.2M back in. And the balance sheet corroborates it: remaining performance obligations went $565.7M in December to $574.9M in March to $659.0M in June - $9.2M added in Q1 and $84.1M in Q2, up 38% year on year against revenue up 28.7%. The backlog is growing faster than the revenue. But in the same release, Q3 operating profit is guided to $28M against the $32.6M just delivered - a $4.6M sequential DECLINE on more revenue, margin 19.9% to 17.0%. Across the year they raised revenue $20M and operating income $4M. They are not banking the acceleration. They are spending it. THE CALL: SELL (4/5, A GENUINELY ACCELERATING BUSINESS AT A PRICE THAT NEEDS 31% COMPOUND GROWTH FOR FIVE YEARS AND BEST-IN-CLASS MARGINS) — base-case value ~$51.0 vs ~$89.52 today. KEY METRICS: - CALL: SELL 4/5, fair value $51 vs the $89.52 Aug 7 close (-43%). Bull $106, bear $23, buy under $43. Street: 19 buy / 3 hold / 0 sell, average target $113 from 11 targets all raised Aug 7. - THE PRINT: revenue $163.8M +28.7% (bar $155.6M), cloud $87.5M +53% and 53% of mix, RPO $659.0M +38%, NDR 121% vs 118%, customers over $1M ARR 97 vs 61. - WHAT AN OWNER KEEPS: FY26E free cash flow ~$200M less ~$166M of stock comp = $34M of owner earnings on a $10.2B EV. EV/revenue 15.7x. 2026 is the FIRST year FCF exceeds SBC. What to watch: UP: stock-based compensation staying flat in absolute dollars - it grew just 4.1% year on year while revenue grew 28.7%, and if that holds for four more quarters our $106 bull case becomes the base case; remaining performance obligations adding another ~$80M in Q3; net dollar retention pushing past 121%; AI/MLOps attach turning into disclosed revenue. DOWN: SBC re-accelerating with headcount; the Q3 non-GAAP operating margin coming in at 17% for cost reasons rather than by choice; cloud growth dropping below 40%; the guide-beat cadence breaking below its 5.79% average. DATES: the Q3 2026 print on November 4, 2026, where the Street models $165.3M and $0.23 - and where this company's own history says $174M is the number to beat. Also on YouTube: @ChargedAlpha DISCLAIMER: For informational and educational purposes only. Not financial advice. Do your own research before any investment decision.