Cellebrite DI Ltd. Q1 FY2025 earnings call

• Cellebrite continued to deliver robust year - on - year growth in ARR and revenue to support a rule of X performance in the target range of 45 to 50. - Intelligence and Defense needs combined with digitally enabled crime continue to escalate, driving increased demand. - Bottom line grew faster than the top line at 34%, highlighting operating leverage. - Traction with Insights migration and strategic penetration of Guardian and Pathfinder products remain strong and on track. - Major go - to - market highlight: first ever user conference in Washington D.C. was sold out, attracting 700 attendees from 350 agencies and enterprises in 27 countries; launched inaugural Digital Justice Awards. - Product and portfolio milestone: announced Spring 2025 release featuring Cloud foundation and AI powered innovations; cloud enabled offerings rapidly approaching 20% of total ARR; Case to Closure platform rebranded as leading digital investigation platform. - CEO search: met with long list of qualified candidates, board and executive team spent time in U.K. and Germany to demonstrate commitment.

Cellebrite delivered 23% year - on - year ARR growth in the first quarter. Revenue for the first quarter was $107.5 million, an increase of 20% from the prior year. Adjusted EBITDA grew 34% year - on - year to $23.7 million, with a margin of 22%. Geographically, The Americas represented 54% of total ARR, with EMEA at 34% and Asia Pacific at 12%. The Americas grew 27%, Asia Pacific grew 28%, and EMEA grew 15%. Within product families, the majority of net ARR expansion was driven by higher demand for the Insights offering. Guardian's ARR growth rate exceeded 100% for the third consecutive quarter, with nearly tripling the number of customers using both Insight and Guardian from one year ago. Guardian and Pathfinder each remain under 5% penetrated across the installed customer base.

• Second quarter ARR is expected to be in the range of $416 million to $426 million, representing growth of 20% to 23%. - Q2 revenue outlook ranges from $110 million to $116 million, translating to growth of 15% to 21%. - Q2 gross margins are expected to be within the full - year 2025 target range of 84% to 85%. - Q2 operating cost is anticipated to be in the range of $69 million to $71 million. - Q2 adjusted EBITDA is expected to be in the range of $26 million to $28 million, or approximately 24% on a margin basis. - Weighted average diluted share count in Q2 is expected to be in the mid - 250 million share range. - Full - year revenue range adjusted due to timing of new business and lower one - time professional services revenue, but ARR and EBITDA guidance remains unchanged.

• Uncertainty in U.S. Federal and EMEA spending environments. - Fluid U.S. tariff policies which require careful assessment, although current tariffs on imports of hydra to the U.S. are deminimis to overall cost of goods sold. - Volatility in federal government spending and decision - making processes affecting deal timing and revenue forecasts.

Q: Tomer Zilberman with Bank of America asked about deterioration in the demand environment in terms of DOGE, tariffs or policy changes since 90 days ago.

A: Tom Hogan and Marcus Jewell responded that there's no material change from a leadership decision - making perspective, but pipeline and new opportunities are surfacing given the administration's priorities, with crime not going away and the need for Cellebrite's software increasing. Marcus also gave a real - life example of a DoD program being replaced by a larger one.

Q: Jeff Rhee at Craig - Hallum asked for an update on FedRAMP and deal cycles to be ready for FedRAMP certification.

A: Tom Hogan said they're still pushing for FedRAMP ATO in the third quarter, received level four readiness status about three months ago, and are close to getting a federal agency to sponsor, with expectation to get ATO in next 30 days plus 30 days. Also talked about EMEA effort with executive team visiting Europe to demonstrate commitment.

Q: Mike Cikos from Needham asked why not embed more conservatism in the back half of the year given uncertainty.

A: Tom Hogan and Marcus Jewell responded that Cellebrite's software is a must - have for agencies dealing with terrorists, murderers, paedophiles, and macros aren't changing, with pipeline opportunities and strong demand from agencies, giving confidence in an uptick in the second half.

Q: Jonathan Ho with William Blair asked about Pathfinder's performance and if strong adoption of other products helps smooth its adoption.

A: Tom Hogan and Marcus Jewell said Pathfinder is growing more in line with the rest of the business but new enhancements will change trajectory, with expected penetration rates of 50% for Guardian and 25% for Pathfinder, and Pathfinder had a major release in Q1 with new features.

Q: Shaul Eyal with TD Cowen asked about quantification of US Federal slippage and about the buyer in intelligence and defense sector and corporate opportunity.

A: Dana Gerner said closing of new business is deferred and delayed impacting Q2 and year - end revenue. Marcus Jewell talked about buyers in defense (securing forward operations, protecting defense bases) and intelligence (counterintelligence, triage), and Tom Hogan said corporate opportunity is growing in line with enterprise market with significant wins from Fortune 50 customers.

Q: Eric Martinuzzi with Lake Street asked about the billion dollar plan and EMEA delay.

A: Tom Hogan said the billion dollar plan is still on track with current impacts from federal spending time and EMEA having a combination of slowdown in public safety and growth in D&I, with faith in EMEA team to pivot and see uptick.