Takeover buzz boosts JFrog stock as investors await turnaround from AI play
Despite takeover denials, JFrog’s market value climbed to over $3.4 billion amid private equity interest.
Israeli software company JFrog is garnering takeover interest, according to Bloomberg. Among those reportedly exploring the possibility of acquiring JFrog are private equity firms Permira and Hellman & Friedman. However, Bloomberg noted that these considerations may not ultimately lead to a formal transaction, with a spokesperson for JFrog saying the company “is not in discussions with any private equity or financial adviser regarding M&A at this time” and “it is not JFrog’s practice to comment on industry rumors and speculation.”
Despite JFrog’s denials, the company's shares saw a notable increase on Friday. After declining by 14% in 2024, the company’s stock rose by 4.5%, giving the company a market value of over $3.4 billion.
JFrog shares plunged by over 30% over a single day in August after publishing lukewarm reports for the second quarter of 2024, coupled with a weak annual forecast.
According to the forecast provided by JFrog with its earning reports, the company expects annual revenues of $422-$424 million, falling short of the anticipated $428 million. Despite investors' disappointment, these revenues would still reflect an annual growth rate of approximately 20% compared to 2023. Operating profit before non-recurring and accounting items is expected to reach $52-$54 million.
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JFrog noted that sales cycles remain slow due to tighter budgets among its customers and potential clients. The acquisition of the Israeli company Qwak in June is intended to add AI capabilities to JFrog's offerings, potentially making the company more competitive and enabling it to charge higher prices for its products. However, this has yet to be reflected in the financial results.
