Cellebrite DI Ltd. (CLBT) Earnings

Management highlights

### AI Product Innovation Launch and Early Traction - Launched Genesys, Celebrite's agentic next-generation AI solution for investigative analytics, built on two decades of domain expertise embedded in pre-processing, prompt engineering, and inference training, creating a purpose-built vertical AI model that outperforms generic large language models. - Genesys can be deployed in one day with no required end-user training, making it immediately usable for non-technical law enforcement and intelligence officers. Early access has generated over 500 registered early adopters across 15 countries with zero marketing, exceeding expectations of 1-2 dozen sign-ups. Early customer feedback is overwhelmingly positive, with documented use cases including rapid identification of 16 previously unknown child exploitation victims that would have required two weeks of manual investigator work. - Additional AI offerings include AI-integrated Guardian Investigate (now generally available) and an in-progress on-premises air-gapped AI solution for disconnected environments. Internal use of AI is also expected to drive operating efficiency gains and optimize resource allocation for growth. - Management estimates the 4-year total addressable market (TAM) for investigative AI at $12.5 billion, with the potential for AI revenue to equal Celebrite's current total annual revenue over this period, effectively doubling the company with strong execution. ### Core Product and Platform Milestones - Guardian Investigate, an AI-powered end-to-end digital case management and evidence platform supporting all digital data types (including mobile, video, CCTV, drones, and more), reached general availability at the end of Q1, with strong early adopter feedback and expected growth in H2 2026. - Celebrite launched the industry's most comprehensive advanced mobile unlock and access platform for the latest Android and iOS devices, developed through sustained R&D investment combined with AI capabilities and Carilium acquisition assets. Early demand is strong, with proven pricing power and recent high-profile validation assisting a U.S. federal agency in accessing a critical device for an active investigation. - After over two years of investment, Celebrite obtained FedRAMP High Authorization to Operate, sponsored by the U.S. Department of Justice. This rare certification (held by fewer than 100 companies) opens access to all U.S. federal agency cloud offerings, positioning the company to capture planned fiscal 2027 federal technology spending. ### Geographic and Segment Growth - U.S. federal segment, which was flat in 2025 due to budget pressures and organizational changes, is rebounding rapidly, driven by stabilized agency leadership, new targeted funding for digital and cyber initiatives, and elevated geopolitical instability. The U.S. federal sales pipeline has grown 35% YoY, with growth expected to return to the mid-20% range, with potential to exceed historical rates. - EMEA ARR growth accelerated 10 percentage points YoY to 25%, driven by 30%+ growth in the defense and intelligence sector, matching the outcome of a strategic focus launched one year prior that management expects to now repeat in the U.S. federal market. ### Organizational and Brand Updates - C2C user conference in Washington D.C. attracted 850 attendees (up 20% YoY) from 30 countries and 500 organizations, with strong industry engagement. The annual Justies awards ceremony was broadcast live to 7.5 million Law and Crime Network subscribers, raising funds for non-profits supporting families of fallen law enforcement officers. - Chief Product and Technology Officer Ronen Arman will retire on July 1 after six years of service. Shiv Ramji, previously of Auth0, Okta, Amazon, and DigitalOcean, has been appointed President of Products and Technology, bringing deep expertise in security, AI, and cloud, and will work with Arman for a smooth transition. - Celebrite's team in Israel has maintained full operational resilience and commitment through recent escalating regional conflicts, demonstrating strong organizational stability.

Guidance

- Full year 2026 guidance is maintained at prior levels, consistent with management's original thesis. Management has increased confidence in full year results based on stronger-than-expected early product traction, expanded portfolio, growing pipeline, and increasing platform RFP activity. The original 2026 plan assumed zero AI-specific revenue, which will now be exceeded due to faster-than-expected adoption. - By the end of 2026, growth products are expected to account for nearly 20% of total ARR. - Q2 2026 ARR guidance is $510 million to $513 million, representing $17 million to $20 million in net new ARR, a 50% sequential increase at the midpoint from Q1 net new ARR. - Q2 2026 total revenue guidance is $130 million to $133 million, representing 15% to 17% YoY growth. - Q2 2026 adjusted EBITDA guidance is $29 million to $31 million, representing an adjusted EBITDA margin of 22% to 23%. This guidance incorporates an estimated 2 percentage point FX headwind and costs for the annual C2C conference and regional product launch events.

Segment performance

By geography: The Americas accounted for 53% of total ARR, with 18% YoY growth; EMEA accounted for 35% of total ARR, with 25% YoY growth; Asia Pacific accounted for 12% of total ARR, with 21% YoY growth. By product category: Growth products (including Guardian, Pathfinder, Carilium, and drone forensics) doubled in ARR on a year-over-year basis. Overall consolidated financial performance: Total Q1 2026 revenue was $128.3 million, up 19% YoY; total subscription revenue grew 23% YoY, partially offset by an expected decline in non-recurring training, hardware, and professional services. Gross profit increased 21% YoY to $110.2 million, with a gross margin of 86%. Adjusted EBITDA was $30.6 million, up 29% YoY, with an adjusted EBITDA margin of 23.9% (up 190 bps YoY). Trailing 12-month free cash flow was $159 million, up 19% YoY, with a 32% free cash flow margin. Total ARR grew 21% YoY to $493 million, with $12 million sequential ARR growth from Q4 2025.

Risks & headwinds

- AI market growth and adoption are dynamic and unpredictable, with actual outcomes potentially differing from management's TAM and revenue projections. - Large federal deals can experience delays due to multi-level budget approval processes and framework changes that shift ordering from central to regional levels, pushing revenue recognition into subsequent quarters. - Actual AI product pricing may differ from initial management expectations, potentially impacting near-term monetization. - Generic AI tools like Methos that accelerate vulnerability discovery do not replace Celebrite's deep domain expertise required to build forensically sound extraction processes, but competitive pressures from generic AI offerings remain a potential risk.

Analyst Q&A

• Q: Could early customer trials of Genesis and other new AI products cause customers to delay purchases of Celebrite's core existing offerings? /

  A: Management reports no evidence of delayed core purchases. Genesys is complementary to existing core offerings, fitting at the end of the investigative value chain: customers still need core device access, evidence extraction, and secure storage before they can use AI to analyze the growing volume of digital evidence. AI turns the existing mountain of collected evidence into actionable insights, rather than replacing any step of the existing workflow.

• Q: What is your go-to-market plan to drive adoption and revenue for new AI products, and do customers have available budget for these new offerings? /

  A: Early free access to over 500 registered users has already driven strong organic word-of-mouth, which is especially powerful in the close-knit global law enforcement community. Celebrite already has an existing customer base of 100,000+ existing users and unparalleled trust built over two decades, giving it immediate access to agency leadership. The total addressable audience for AI tools is 10x larger than Celebrite's historical addressable market (including detectives in addition to forensic examiners), creating massive expansion potential. Management expects adoption to proceed faster than typical enterprise software due to the clear, life-or-death value proposition.

• Q: Can you frame the potential size of the investigative AI opportunity that could double the company's revenue? /

  A: Management estimates there are roughly 500,000 potential detective and investigator users globally. The $12.5 billion 4-year TAM is calculated based on an average of $20,000 to $30,000 per user per year, a reasonable investment for a 10x productivity gain for personnel earning an average of $120,000 annually. Even a conservative 5% penetration of this TAM would yield annual AI revenue equal to Celebrite's current total ARR, demonstrating the large upside even with low market capture.

• Q: Why is the Q1 net new ARR result relatively muted, given all the positive growth drivers? /

  A: Q1 is seasonally one of Celebrite's weakest quarters, with few global budget cycles ending, and Q1 2026 had an unusually small pool of expiring contracts. A number of larger, more complex deals were pushed into Q2 and Q3, including large federal deals whose budget approval was delayed until the end of Q1. No deals were lost, just delayed, and the pushed deals contribute to the stronger expected growth in Q2.

• Q: Do macro geopolitical events create budget pressure, or are they a tailwind for Celebrite? /

  A: Geopolitical instability and global events are a tailwind, not a headwind, for Celebrite. There is more targeted government funding for digital investigation and security capabilities than ever before, including over $30 million in recently approved U.S. appropriations for solutions matching Celebrite's offerings. With its unique FedRAMP High certification, Celebrite is well-positioned to capture this new funding. No meaningful negative impacts from recent regional conflicts have been observed.