JFrog's (FROG) Q4 sales topped expectations, driven by a 37% jump in cloud revenue, while enterprise deals and cloud migration trends will bolster H2, Morgan Stanley said Friday in a report.
The security segment contributed 3% to revenue and 12% to remaining performance obligations by the end of 2024 and growth in the segment positions JFrog as a multiproduct company in the market for development, security and operations, the report said.
JFrog is prioritizing larger enterprise customers, leading to churn among smaller accounts with a loss of 740 lower-dollar subscription customers with a gain of 640 higher-value customers, Morgan Stanley said.
The company expects flat operating margins and decreased cash flow margins in 2025 with 17% revenue growth, the report said.
Morgan Stanley raised its price target on JFrog's stock to $44 from $36 and kept its overweight rating.
JFrog shares rose 5.9% in recent Friday trading.
Price: 39.93, Change: +2.22, Percent Change: +5.89
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