Why JFrog Stock Is Falling Today

What happened

Shares of JFrog (NASDAQ:FROG) are falling today, down by 11% as of 12:30 p.m. EST, after the company reported third-quarter earnings. This was the software specialist’s first earnings release as a public company following its IPO in September.

So what

Revenue in the third quarter jumped 40% to $38.9 million, topping the $37.9 million in sales that analysts were modeling for. That resulted in adjusted earnings per share of $0.05, while Wall Street was expecting JFrog to break even. The software development platform company now has 313 customers that generate annual recurring revenue (ARR) greater than $100,000, with nine customers with ARR above $1 million.

Falling red stock chart with numbers in the background

Image source: Getty Images.

“Our customers continue to adopt cloud-based and hybrid solutions as they embrace digital transformation through modern, cloud-native technologies,” CEO Shlomi Ben Haim said in a statement. “As DevOps continues to change the software update landscape, we look forward to leading the market in the fourth quarter and beyond.”

Now what

JFrog issued guidance for the fourth quarter that calls for revenue of $40.9 million to $41.9 million, compared to the consensus estimate of $40.5 million in sales. Adjusted earnings per share are forecast at breakeven to $0.02, with Wall Street still expecting breakeven next quarter. The company also offered an outlook for the full year. Revenue in 2020 is expected to be $149 million to $150 million, with adjusted earnings per share of $0.11 to $0.13.

Needham reiterated a buy rating on JFrog shares, with analyst Jack Andrews increasing his price target from $89 to $91.

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