DevOps platform provider JFrog Ltd. reported strong revenue growth today as it beat Wall Street’s targets on earnings, but it failed to grow fast enough to satisfy shareholders and its stock fell after-hours.

The company reported a fourth-quarter net loss of $23.2 million, up slightly from the $22.7 million loss it posted a year earlier. Earnings before certain costs such as stock compensation came to four cents per share, while revenue rose 29% from a year ago, to $76.5 million. The results were mixed, with Wall Street looking for earnings of just two cents per share but on higher revenue of $76.9 million.

JFrog did at least do better in terms of cloud adoption, reporting cloud revenue of $22.6 million for the quarter, up 53% from a year ago. Cloud now represents 30% of the company’s total sales, it said, up from 25% last year.

For the full year, JFrog posted total revenue of $280 million, up 35% from the previous year. Cloud sales generated $80 million of that amount, up 60%.

Despite showing solid growth, investors were clearly hoping for more, as the company’s stock fell more than 5% after-hours.

Co-founder and Chief Executive Shlomi Ben Haim (pictured) said the company delivered results in line with guidance, despite increasing macroeconomic headwinds toward the end of the year. “We are excited to see the continued expansion in the adoption of the JFrog Software Supply Chain Platform, as customers continue to favor a single, universal platform to manage their DevOps and DevSecOps processes,” he said. “The release of JFrog Advanced Security saw rapid adoption by both new and existing customers looking to incorporate the comprehensive set of capabilities and consolidate current security point solutions.”

JFrog is a provider of software developer tools, best known for its open-source binary code repository manager Artifactory. The offering is somewhat similar to GitHub, which is used by developers to store their code. But it caters to a different part of the development lifecycle, storing the binary files that are created when engineers compile code into a functioning program.

The JFrog Platform also includes JFrog Pipelines, a continuous integration and continuous delivery platform. It’s used to create automated software workflows that transform raw code into binaries before deploying them automatically.

JFrog’s strategy has focused on getting customers started with one of its core offerings and then convincing them to adopt the rest of its products, and it appears to be paying off for the company. It said customers who have adopted the complete JFrog Platform now account for 43% of its total revenue, up from 35% one year earlier.

Officials said this number, and the cloud revenue growth, were driven by customer expansion, and to emphasize that point the company revealed that it now counts 736 customers delivering at least $100,000 in annual revenue, up from 537 last year. It also has 19 customers that deliver at least $1 million in revenue each year, up from 15 before.

“As enterprises become software companies, they need to manage their software and that’s what JFrog helps them to do, differentiating itself by looking into the supply chain,” said Holger Mueller of Constellation Research Inc. “Its growth is a testament to that. But as it continues growing, JFrog needs to look at profitability too. It’s losing approximately one dollar for every three it makes in revenue, and so it needs to find a way to improve on this. Investors are watching for signs it can.”

One reason for the after-hours stock drop may have been JFrog’s somewhat cautious guidance, which suggests it may fall shy of Wall Street’s revenue growth projections again. For the first quarter of fiscal 2023, the company sees earnings of between three and five cents per share on sales of $78 million to $79 million. Analysts had earlier forecast earnings of a penny per share on revenue of $81.1 million.

Photo: JFrog