Software supply chain company JFrog Ltd. kicked off its fiscal 2023 year with an impressive earnings and revenue beat, and its share price rose more than 7% in after-hours trading as investors nodded their appreciation.

The company reported earnings before certain costs such as stock compensation of six cents per share, blowing past Wall Street’s estimate of a three-cent-per-share profit. Revenue for the quarter rose 25%, to $79.8 million, ahead of the $78.4 million consensus estimate.

All told, JFrog reported a net loss for the period of $20.8 million, up slightly from the $19.7 million loss it delivered one year earlier.

JFrog has emerged as a respected name in DevOps in recent years. The company is best known for its open-source binary code repository manager, called Artifactory. It’s somewhat similar to GitHub, an open platform that developers use to host their application code. However, Artifactory caters to a different aspect of the development lifecycle, storing the binary files created when engineers compile their code into a functioning application.

As well as Artifactory, the JFrog Platform also includes JFrog Pipelines, which is a continuous integration and continuous delivery or CI/CD platform. It’s used by developers to create automated software workflows that are able to transform raw code into binaries before deploying them automatically.

Co-founder and Chief Executive Shlomi Ben Haim (pictured) said the company’s growth during the first quarter was driven by “improved usage” of its cloud services. He also called out the “solid execution” of the company’s direct enterprise sales team. “The market continues to validate the JFrog Software Supply Chain Platform as a mission-critical piece of companies’ infrastructure,” the CEO said.

Ben Haim added that JFrog’s success reflects the reality that software packages and binaries are seen by companies as “primary assets.”

Like many companies, JFrog employs a strategy of getting developers hooked on just one of its offerings, before enticing them to adopt its full platform. That strategy is working, as the company said customers who have adopted the complete JFrog Enterprise+ subscription contributed 44% of its overall revenue, up from 35% a year earlier.

It also highlighted strong growth in the cloud, with sales rising 49% to $25 million in the quarter. Cloud now accounts for 31% of its total revenue, the company said. Finally, it drew attention to its customer growth. It said it now has 785 customers that deliver at least $100,000 in annual revenue, up from 599 in the same period one year ago.

Constellation Research Inc. analyst Holger Mueller said JFrog’s growth was driven by the enterprise need to understand and secure their software supply chains. “JFrog had a good quarter but it needs to watch its cost base more carefully,” the analyst declared. “Costs grew a little too much to keep its losses at the same level as one year earlier. In adverse economic conditions, this is not what ISVs want to see.”

For the second quarter, JFrog said it is expecting revenue of between $82.5 million and $83.5 million, compared with Wall Street’s forecast of $81.8 million.

Photo: JFrog