Cellebrite DI Ltd. Q3 FY2024 earnings call

• Strong Q3 performance with ARR growth, $100M quarterly revenue, and outstanding profitability.
• Strategic actions include launching Cellebrite Federal Solutions, augmenting sales force, and focusing on Insights upgrade with 15% adoption target for 2024.
• Four strategic priorities: extend leadership in digital forensic units, accelerate growth in investigative/intelligence units, expand private sector business, and help customers harness cloud.
• Cloud investments with Pathfinder in the cloud announced, and Guardian seeing traction in international markets.

Cellebrite's ARR grew 26% year-on-year to $371 million at the end of September 2024. The Insights suite drove the majority of ARR growth, complemented by Guardian and Pathfinder. Third quarter revenue was $106.8 million, the first time exceeding $100 million, with a 27% year-on-year growth. Subscription revenue represented approximately 87% of total revenue. Geographically, Americas accounted for 54% of ARR, EMEA 34%, and APAC 12%.

• Raised 2024 revenue range to $397 million to $401 million, adjusted EBITDA to $96 million to $100 million, and ARR low end to $390 million.
• Fourth quarter revenue expected to be between $105 million and $109 million, adjusted EBITDA between $25 million and $29 million.
• Anticipates solid ARR expansion and profitability in 2025 to meet or exceed Rule of 45 baseline.

Forward-looking statements subject to risks and uncertainties as outlined in the company's annual report on Form 20-F filed with the SEC, including factors that could cause actual results to differ from forward-looking statements.

Q: Shaul Eyal asked about CEO location and CyTech acquisition contribution.

A: Thomas Hogan said search is wide open geographically; Dana Gerner said CyTech contribution this quarter was slightly below $0.5 million.

Q: Mike Cikos asked about CEO search progress and long-term models.

A: Thomas Hogan said no fundamental change to business plan; search firms are building candidate slate.

Q: Jeffrey Van Rhee asked about Insights adoption and unlock trends.

A: Yossi Carmil and Dana Gerner discussed Insights adoption potential and unlocks driving ARPU uplift.

Q: Brian Essex asked about CEO transition criteria.

A: Thomas Hogan said search has wide aperture, focusing on best leader regardless of specific criteria.

Q: Jonathan Ho asked about net retention and AI leverage.

A: Dana Gerner talked about ARR growth from expansion; Yossi Carmil discussed AI's role in investigative speed and efficiency.

Q: Tomer Zilberman asked about government budgets.

A: Yossi Carmil said federal and state/local budgets performed as expected with no impact from administration changes.

Q: Max Michaels asked about EBITDA and pro services.

A: Dana Gerner explained EBITDA expectations and pro services related to an APAC customer.