Q3 2021 Cellebrite DI Ltd Earnings Call
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Good day, ladies and gentlemen, and welcome to the celebrate Q3 2021 earnings call. At this time all participants on a listen only mode. Later, you conduct a question and answer session and instructions will follow at that time, if anyone should require operator assistance. Please by star.
And then zero on your Touchtone telephone as a reminder, this call may be recorded I would now like to introduce your host for today's conference.
Ami feel boy V P Investor relations to celebrate you may begin.
Thank you Justin [noise] welcome.
Alright.
2021 financial results and East Coast January today are you have to go meal.
He's also sir.
Chief Financial Officer.
This call is being recorded and a replay of this recording as well.
A copy of the presentation that accompanies.
Will be made available on our website shortly after the call.
A copy of today's press release and financial statements, including gas to non-GAAP reconciliation.
Well as supplemental financial information for the third quarter are available on the Investor Relations website I think that's it.
Dot com.
Statement made three calls, but they're not segment of historical fact constitute a total different statements. All forward looking statements are subject to it.
And other factors that could.
Cause matters.
Oh and flies by those forward looking statements not to occur.
Also cause the actual results.
Some historical results and all of them.
Some of these forward looking statements are discussed under the heading risk factors and elsewhere in the company's registration statement on phone F. One.
Maybe I should see on October 20th anyway.
The company that sound, Okay to update any further.
Next teacher events or circumstances.
Nope that in the coming weeks management with like the debate and a number of investors conferences S. H as in today's press release.
The events section of being best to upset to access the webcast presentation at these conferences where applicable.
With that I'd like to turn the call over to you I think O'neill said it lets me Oh, yes. He please go ahead.
Thank you and and thank you for joining article today.
This is our first earning cool as a public company, but many of you have been pulling up progress since the beginning of the going public crosses backing up real and I would firstly, we'd like to thank you for your interest and support.
We are thrilled to start our journey of the public company by delivering progress on our strategy and all that together with a strong financial results just to refresh our strategy is to lead the digital transformation of our customers investigative units and becoming one stop shop digital intelligence leading vendor.
[noise] in Q3, we continued to see him momentum with large multi solution deals, which we had highlighted earlier in the year.
I'm pleased to report this quarter twenty-five deal larger than half a million U S dollars compared to which you've seen such deals in Q3 last year, including our largest still ever of approximately 10 billion us dollars with a U S federal account.
In the first nine months of this year, we had 58 such deals reflecting a growth of 76% compared to the same period last year.
The large deals reflect a successful option of additional licenses or new solutions to existing customers as well as the increase in multiyear term based deals.
Oh this momentum is a reflection of the success, we have had within the public safety sector as part of the digital transformation process or strategic accounts.
And the success and transitioning these customers to determine based models from there prior preference for one time perpetual license, giving their budgetary structure.
We're excited to see up till driven this year by premium or high and collected review solution with new license sales in Q3, two customers such as two federal agencies in one state Police force in the United States and European Ministry of Interior Affairs, and I'm initial police force in the nearest.
We are also successfully you'll be successfully launched a premium enterprise solution and begun deployment of the orders made even before solution of the inability while receiving new orders from customers such as a county police force in the U K two county sheriff's offices in the USA at Customs Authority.
And others as a reminder.
Premium is our advanced collected review solution, providing unlocked can extract capabilities for leading Iowa's an Android devices.
It is typically installed in a central location that can meet our strict security requirements now the the new solution to premium enterprise is designed to decentralize the hour advance capabilities, while maintaining the strict security requirements found in premium.
Premium enterprise allows remote connectivity to you fits the most widely adopted Prime collection review solution and do some tables are special capabilities on every use it and improving significantly customers investigative multiple operation.
Let me share with you to win stories.
Which provide some color on demand driver's fault.
So typical demand factor and growth driver to celebrate he's backed local devices that needs to be investigated for example, one of the large wins in the quarter was with a national correction facilities network in one of our large markets.
Historically this customer spend between 100000 to 200000 U S dollars with us annually.
While the network includes multiple corrections facilities the customer was all the facilities, we're all working with one lab and a small team.
Now this lab was unable to keep up with the numbers of mobile devices that were smuggled into prisons.
Engaging with a senior government officer and conducting an extensive proof of concept, we secured a seven digit order, which includes distributing responders or simplify it feels solution in the correction facilities and also using commander all license management solution in order to ultimate the generating.
Data on their usage.
Addition, the deal include services to bolster the customers left capabilities trained the teams and implement best practices.
Despite the fact that the customer books this quarter approximately 10 times its previous you spend with US. We believe there was additional opsal potential within these customer in the future.
A second example is a European country National Police force the purchase multiple solutions, including you fit in physical analyzer Pathfinder premium you fit cloud seeker Inspector in digital collector as well as training.
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These police force will now be able to collection review data for mobile phone computer video and the cloud.
And analyze they're finding across numerous investigation units throughout the country and not only is so far in central police stations.
This customer is adopting a highly progressive approach to investigations spiralling to extend the adoption of digital intelligence and the police force to overcome bottlenecks and increase efficiency.
We expect this approach to become more widespread as part of global trend to digitize multiple aspects of the police force.
The swing was achieved through close engagement with senior level at the agency and a flexible approach that enables tailoring the deployment to the agency strategy and specific needs.
Now these two examples like shared help explain how we constantly and successfully generate best in class net retention rate, which was 179% for the 12 months ending September 30th 2021.
Furthermore, we believe the spending potential of our existing customer base is significant and we are very focused on capturing distributional opportunity.
Our vision of a comprehensive digital intelligence platform that allows us as an agency to collect review analyze and manage do the digital data is a significant step forward from today Siloed manual and backlog process.
The discussions of such a step forward are held at the agency's executive level and in Q3. For example, we engaged with the most senior officers of the police forces. It three of the largest 20 cities in the United States to discuss our end twin digital intelligence platform.
No I haven't such discussions is first and foremost.
Testament to the quality of our sales force, we invested in high caliber account executive and by that upgraded our ability to manage strategic accounts and second we view such discussions as a positive sign into continued interest of major law enforcement organizations to educate themselves and adult leading.
Digital intelligence tools now of course such.
Such a step forward will also take time, but.
Processes involved in digital transformation of a complex because it requires not only are solutions, but also investments in infrastructure and personnel on the agency side.
This complexity is one of the reasons, we extended our service offering as I elaborated on our previous call the consulting services and training we offer assist customer in this transition.
Now in the past few months.
We continue to enhance and extend our doctors.
To make the investigative process smarter faster and efficient and pursue our vision of digitizing the entire investigative lifecycle.
Starting with organic development in Q3, we introduced a new version of Guardian or digital evidence management solution and the industry's first remote mobile collection.
Let me start with the Guardian.
Now we view the Guardian solution, we introduced as an important and strategic component in our digital intelligence platform.
The oldest digital evidence management is evolving quickly as public safety agencies are very challenged by the need to manage an increasing amount of digital evidence while at the same time, maintaining the channels evidence ensuring compliance protecting privacy and meeting an increasing number of accountability requirements.
Now most agencies today are still managing data manually.
And most of the alternative to that manual process or digital evidence management solution that specializes in operational data, which is generated by agencies themselves. For example from in car body, one cameras or cod flesh Rms systems.
While such solutions are transforming agencies operational ecosystem.
Celebrate Guardian is a digital evidence management solution that specializes in the investigative ecosystem.
It is linked to actual investigative data generation Swallow collection review offering this enables and holistic approach toward data evidence workflow and case management, including elemental storing sharing and review through the investigation processing in order to make investigation faster and more efficient.
Now oldies now is offered in a soft solution further enhancing efficiency and cost effectiveness and this is our first saw solution, which is another dimension of strategic importance.
We believe that the readiness of the public safety fixed for soft solutions is on the rise and we are committed to enhance and expand our offering in this space.
Regarding remote mobile collection, the remote mobile collection is an important capability for the private sector, where corporate investigations E. Discovery, an incident response, often required collecting information from a dispute distributed workforce.
Now with constant based automated remote collections from both computer and mobile devices. The disruption to the workforce is minimized celebrate is the first to market with this capability due to our domain expertise on the mobile collection.
Let's discuss the inorganic portfolio extension.
We recently announced the acquisition of digital clues.
We are obviously excited about this acquisition as we see open source intelligence is an expansion of our digital intelligence offering upgrading celebrates competitive differentiation as an end to end digital intelligence platform provider.
Open source intelligence is the collection and analysis of data from many public publicly available sources, including the surface web deep web and dark wood.
Agencies are all engaged in such activities in a simple and manual manner. This can be as basic as checking suspects Facebook profile, but for use an ultimate solution as part of their investigative work flow.
The addition of this all seemed capability to our digital intelligence platform is a natural extension it.
It enables quick information gathering in early stages of the investigation and as such feats, our value proposition of making investigations smarter faster and more efficient.
Our extensive footprint and strong customer base provided significant cross selling opportunity here and as such it's almost another billion dollar to our town.
Now, reaching the scale will require delivering the strong digital includes cloud based technology as an integrated solution. So that open source intelligence is fused into pathfinder. Our analytic solution is another layer of data that enriches pathfinders analytics capabilities.
This will require some investment in R&D and it will require time.
We are excited about this new offering that expands our addressable market and we welcome the digital clues team, which will join us in the coming days after the upcoming closing of the acquisition.
So in summary.
We are very pleased with our performance in the third quarter.
And with the continued success, we have had in executing on our strategy.
We are excited also that our top customers remain committed to leveraging our suite of solutions to improve the efficiency and outcomes we.
You continue to innovate our portfolio by increasing the scope of our offerings as we focus on helping our customers apply the digital transformation initiative in the investigative workflow now combined with a healthy spending environment and budget availability of law enforcement organizations, we have a tremendous market opportunity.
And we are confident in our ability to execute is more organization recognized the vast potential of our digital intelligence platform and above all we remain committed to our mission to accelerate justice protecting save lives and preserve privacy and I'm proud of our team success in this quarter.
Now with that I will turn the call over to Donna to discuss the financial.
Thank you.
Hi.
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[noise] non-GAAP operating expenses 14 $45 million.
30% from Q3 last year, primarily due to head cook and clean and traveling and marketing related expenses rebuilding from the market opening face to face meeting we.
We increase headcount by 23 employees during the quarter any September with 843 and please.
Continues to recruit mainly in the areas of R&D and failing and are aiming to reach 900 employees by the end of March 20th.
NASDAQ operating incoming Martinez.
2021 for $35 million.
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I guess that'd be that exceeded our expectations for 15% margins on an annual basis basically reflecting the operating leverage is a result of it cause I think I'm going to get the station for the third quarter slowly at nine months.
A 50% market expectation was also based on the exclusion of costs associated with becoming a fabric company mainly board expensive indirectly.
Insurance.
We started incurring be costing to stand there and hopefully they'll have never debate Geneva hide everything.
Q4 would be the first quarter that made me think those expensive.
Cute Sweet net income was 811 medium soda and 40, they look at earnings per share with five pain.
Non-GAAP net income $13.
And then got pretty basic earnings per share with eight okay.
However, please note that these are not representing Sega going forward.
They are based on a share count wasted every two months.
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From weathering purposes, we recommend taking into account the 40 days with a chair as outstanding as it was at the end of history.
We can be estimated to be approximately.
198.5 million border.
Yeah.
10 million shares would be added.
Operating cash a cash outflow in the third quarter of 2021 with $8 million impacted mainly by the going public related expenses.
In the 12 months ending September 32021, there was an operating cash flow of approximately $38 million and free cash flow of $30 million.
We ended September with approximately $172 million with cash cash equivalents and short term investments.
These days, we expect to spend approximately $20 million on digital clause acquisition.
The acquisition will close in Q4, it would not have a significant impact when a 2021 financial reports either densification.
In 2022, we expanded digital close to have a small positive impact when a L. L. In subscription revenue and 20 pure higher R&D expenses as we integrate open source intelligence into the ice platform.
We will provide an update on our 22 outlook for Q4 'twenty one legal.
And with that I would parents, who are obligated plenty one outlook. We are very pleased with our results for the first four.
For the third quarter and the first nine months of the year, which have exceeded our expectations in most parameters.
We now increase those 2021 guidance. So that revenue is now expected to be between 241, and a half and 243 and a half million daus.
Second growth of 24% at the midpoint.
From our previous expectation of $236 million and 21% books.
Expects adjusted that'd be that could be between 45, and <unk> 46, and a half million dollars, reflecting a margin of approximately 19% at the midpoint up from our previous expectation of $36 million and 15% margin.
Actually I would not expect to end the year with our growth of approximately 34%.
This guidance reflects the mix between term licenses and so picture of everything was so far in 2021 a threat if they don't get red administrative and budgetary processes.
Buying by our customers in transitioning that out you should install base to terminate senses and two adult and end to end digital intelligence platform. It feels you mentioned it let's say.
In time, we see the quality of our AOR improving more than we had originally expected given the higher proportion of multiyear deals it comprises.
We are constantly evaluating the addition of avenues for investment in our top line growth our expectations to end 2021 with higher earnings compared to the initial thing enables us to make such investments and we are glad to be in this position.
We will provide more color on our next call.
And with that I would turn the call to the operator to open the Q&A session.
Thank you.
To ask a question you will need to press star one on your telephone to withdraw your question press the pound key please standby we compile the Q&A roster and once again that is star one if you would like to ask a question.
And our first question comes from Sean <unk> from Cowen. Your line is now open.
Thank you.
Good afternoon, guys congrats on when he loves and guidance.
You'll see us as we think about the overall healthy trends you.
Youre seeing in expressing a when.
We apply that into your product offering your end to end platform is is it one product, which is stemming out rather than the entire portfolio or the strength you were seeing is pretty broad based right now.
Charles Thank you first of all for all the congratulations highly appreciated and to your question.
I would say that our we are let's say performing very well in all fronts, but particularly particularly in the collection and review piece.
And over there with a premium ad.
And with our premium enterprise, the new launch premium and premium enterprise. It tests are in we are about to launched two launch of the management solution. So that's basically not getting action. We've got commanders bid that the license management fleet and then the investigative analytic.
And we are growing.
But nothing as compared to at this stage to the success that we had with our premium and premium enterprise I would say that that is a specific reason because we have to remember that I'm in the field out there. We've got approximately 28000, new foods well entrenched as the primary tool for.
Collection and review.
The the premium contains specific capabilities, which are related to the highest modems, both Android and iOS and obviously there is a wish to get those special capabilities, but under as I mentioned before pretty much strict security environments.
The premium was therefore.
And based on the fact that I think done a one year ago, we have changed our model right.
And then unlimited.
It was basically well embraced and enable the much larger distribution over the premium and this is before we just mentioned came with a premium enterprise we chose a tremendous impact on the ability of every use it to get it distributed special unlock capabilities to eat you fit in the cylinder.
So improves dramatically not only the ability of the usage to get to a special capability, but also enables the forces to improve their mode of operation rather form a slow manual work you know sometimes entities of hundreds of users, but only few premiums.
So it really easy to use they sometimes it has to move evidenced manually between one location to another the fact that we bring right now at distributed capability and decentralized where the premium enterprise basically solve that issue cost saves expenses and improve the mode of operation. So those.
Are the main reasons that the premium is a over achieving and we anticipate that it will continue to be swayed the sweet spot of this potential opportunity with a premium and premium enterprises enormous.
Understood understood. Thank you for that and my follow up.
One of the main discussion points.
Within the technology and non technology sectors over the course of the past few months has been obviously a supply chain constrained.
It would appear from your performance and guidance that you are not supposed to be seen but just want to hear how.
You guys are thinking about it internally.
Kind of what you're looking for just a.
So thank you shall actually we've seen those trains more than a year ago, and we started our injecting our supply chain methodologies.
To be able to purchase Exxon for a much longer lead time components and as such we have.
Inhibiting succeeded to conclude Q3, and we will be able to conclude Q4 before and our ability to provide all of our sales needs.
We actually also stepping into 2022 we said very strong position and of course, nobody knows what's going on to be there, but we have a good contingency plans.
And we hope you'll be able to continue to perform accordingly.
Understood. Thank you so much congrats.
Thank you. Thank you very much.
And thank you.
And our next question comes from Jonathan Ho for million Blair.
Your line is now open.
Hi, Good morning, and let me Echo my congratulations as well.
Yeah, just wanted to start out with I guess can you give us a sense of the customer spending environment, maybe how budgets are these days and help us understand how to think about you know potential stimulus from the Baidu and administration.
Okay.
Yeah, maybe I will start until especially in the in the U S market.
You referred to this 10 minutes time.
We are seeing them.
Actually the opposite of what we we were afraid of which we're a budgetary cuts we see enough budget, if our customers what.
What we see is mainly the challenge of our catalog to be able to obtain those signs for digital intelligence. Although in some cases many of those even if times were a.
Where appropriate are cooperating for crime fighter needs due to the increased crime that there is a experienced in the U S. Now so our sales force are actually working with those customers are only two out of those sites are there things you can intelligence needs and.
Don't see any budgetary constraints substantially on our customers, yes, we see that I would like I would like to tour that we see the contrarian, but thank you for the congrats.
One year ago, or maybe even two or three quarters ago. The world lots of concerns about police Dupont and now we hear more and more about police refunds and especially in the segment of the state and local in the United States I'm, referring in the U S language.
50% of our.
Strategic accounts are north American accounts, so in that context state and local government. They are basically showing a positive context of of our refunding and indeed, the U S. Fed golfers basically created this rescue funds to be used at the state level, but.
It's funny you bring in the U S last week as part of our jewelry are in plans for next year.
And are those the it's unclear the usage of many of those funds are if it's not necessarily for the.
Acknowledging that it's all over the place and that there is a little bit unclear alrighty on that respect one thing and one trend is clear.
We are if we have concerns three to four quarters ago as I said right now it's more in the pre funding it in a pro funding and where pretty much optimistic about that also for the future. It will relates to the fact that the PD as local state.
It will be the major I would say investment segment will celebrate into the future.
Got it and then just as a follow up can you give us some additional color on some of the large deal activity that you're seeing I mean, this has picked up pretty significantly can you help us understand how much is coming from up sell to premium versus how much is coming from new product areas and how sustainable.
Is your ability to kind of capture more wallet share from existing customers. Thank you.
I would say are the following first of all one needs to understand that the premium enterprises is he's an uphill it's a.
It's a new solution.
The premium enterprise is not just a feature or a capability, which is just a new version of the premium it's a complete new solution.
And with a complete different distribution system.
Dedicated hardware, which is completely different and very smart doctor protected and to come also very soon you know or to come later on also in a in a in a sauce.
Flavor.
Which by the way enabled not only strategic accounts, but also small long tail and mid sized prime account to get that capability. So first of all premium enterprise is a classic upsell.
As to the wider.
As we said.
From the beginning as we did the journey in an already now we are pretty much confident in and stable with our growth plan and the growth plan is based on the fact that we are sitting I'll take the public the public safety, we're sitting by 5000 agencies.
Out of which ran about 250 by the way going to be a higher number in the beginning of 2022.
Strategic accounts.
And as we analyzed and our penetration level.
Within.
Those accounts in comparison to the potential that we analyzed to mid 2020.
Was around 20% so are our potential growth within our I would say a few hundreds of strategic accounts and midsized pharma cough is tremendous and this is why we stand with our.
Forecast or our estimation that on every dollar that we have seen so far in the lab and in the field based mainly on collection and review and slowly, but surely and honestly with services like training Academy and the start of the investigative analytics, we plan to seek additional $4 eight.
From those customers in the coming three years. So it's a wonderful ratio and I have to say that in all the places where we really implement if you remember My example, during the the opening we don't see a ratio of one two for when they do B I investigators for digitized investigative decision or.
Digital transformation, it's actually more of a one to 10, 1% to 15, 1% to 18 ratio. So we are very confident about it we have a great position in the 11 outside of the lab with collection and review and with a great ability to expand.
With more collection and review selling more to new buying centers.
Our new labs, new fusion centers and also grow within the investigative flow with investigative analytics and the Guardian, the management, which is a key element.
So I hope that answers, but that's in a nutshell.
Yes, that's helpful. Thank you.
Yeah.
Thank you and our next question comes from Mike Cecos from Needham <unk> Company.
Your line is now open.
Thanks for thanks for getting me on here guys and I appreciate the questions I have two but the first thing that I did want to come back to just so youre aware, but there was a lot of I guess scratching of papers and then at one point the earnings call actually went quiet.
For maybe a couple of minutes.
Just for so you know it was during his comments.
When you were talking to the the last.
I had heard really was the fully diluted share count at the end of Q3 was around $198 5 million shares out.
And then it kind of tuned back in right before you provided the updated guidance on calendar 'twenty one.
I did just want to call that out because I know that you're trying to provide a.
All of these new disclosures since this is your first quarter and I just.
Just wanted to bring that to your attention. If you wanted to hedge that out again.
The call was quiet earlier.
But I just wanted to make you aware of.
Yeah, I think yeah.
I think he's very thank you very much farther I think I would just oh because.
Because we know that the count share.
Can you point to the analysis I will just say a few words about that so oh clear. So in principle. If you could also see in the presentation, our current count of shares.
On a fully diluted basis was 198 5 million shares.
He is comprised from 100 million shares and <unk> 18, and a half million shares underlying the granted employees option.
These cracks further was the fact that on top of that we had a seven and a half million earn out shares owned by cooling capital the sponsor and 15 million set our earn out shares.
Which are both conditions, reaching certain thresholds on share price and as such are not included.
On top of that there are 20 median a puppy coring to $9 seven median private oriented.
That can be added to that we do believe that.
Maybe for calculations.
We looked at it on a on a cashless basis, which is.
Bring them down to approximately 10 million shares.
So that would I hate to say.
We got the share counts and I hope, it's an even more clear now.
Okay.
Thank you.
Yes.
Go ahead.
The explanation about the guidance that you did you hear that where we back by then.
We were yes, we had gotten back right around the time they've done it started to talk about the <unk>.
The reason the revenue.
With the new midpoint being plus 24% year on year and then the adjusted EBITDA the updated range with the 19% margin at the midpoint.
So I think the main issue that was necessary to stay to this I mentioned that our cash balance is around 172 million barrels that we are bound to spending in the coming few days upon closing.
$20 million and that we do not expect that they just had a clue thinking there. Thanks.
We will be making Q4 will contribute significantly to the financial results of these here. Nevertheless, they did mention that we in 2022 we expect digital because they had a small positive impact on our AUR and.
Fixed revenue and has an acre and fewer higher R&D expenses and why do we are integrating the open source intelligence into our platform.
As we mentioned and he's Uh huh.
Got you and then to make that but and I believe then it went to the guidance. So we are now caught up on the entire meeting far thank you.
Yes. Thank you and thank you very much for the clarification I was hoping to get.
Just a couple of questions since I know, we were just clarifying some of the prepared remarks.
The first question I had was actually about this digital clues acquisition.
I was curious to hear.
Can you walk us through the criteria that celebrate went through when going.
About it's process on the build versus buy in this acquisition and then the other thing that I wanted to ask you as I noted the acquisition hasn't closed just yet.
But what has the initial feedback been like from some of your your customers. As an example, I'm curious if customers had been pulling you into ocean or this is somewhere where you had been planning on evolving the D. I platform, even before the acquisition was announced.
So first of all to the process.
Regarding I call it a make or buy.
We are.
Basically.
In the offing.
But the open source intelligence as a discipline, which is emerging on we anticipate that it will emerge within law enforcement as part of I would say standards investigations was always on our radar and not always but in the last one one in Austria in our radar.
And it was always an element of a make or buy sorry, an element of why never an element of make it's a dedicated discipline.
So in terms of what when I look at our Nonorganic growth major criteria, which are mainly basically increasing the span of the digital intelligence or even the Tom.
By enlarging the ability of celebrate to be in a wider spectrum of investigation, one criteria second technical capabilities that we either can do by ourselves that will take long time or cannot and third customers. It definitely ticked the box in the first two.
The open source intelligence was for us a clear.
Expansion of the digital intelligence offering I would say the relevance of celebrate earlier in the investigation. Because every investigation starts with this open source searches before one go into seizing of any digital device or any digital source and second obviously, bringing in technology or technology.
That we are we do not have.
So that's the pick the books about these two.
I started basically already answering the second question, but I will emphasize first and foremost also impede the natural expansion of the enabling quick information gathering in early stages of an investigation and it's basically adding another source of investigative and intelligence data to the <unk> offering.
And now the fit is obviously.
Clear because when we think about the three main value creation objectives.
As I mentioned, then we are taking this focus and I would say that in terms of the digital intelligence offering it's definitely something that.
I would say as a stand alone it is a value, but when we integrate that and that's what we are planning basically overtime, there will be a roadmap to integration, which will include among other things the ability to ingest open source intelligence data into other celebrate solution such as the investigative analyst.
Fix the Pathfinder and then reaching data for other celebrate collection tools with often detail. So I'll stop here I hope that was clear.
Yes. It was thank you for that and definitely.
It sounds like a check the box, especially when you're talking about the Tam expansion provided by that acquisition as well.
The other question that I had for you and I know that we touched on it earlier, but the upsell opportunity really comes into focus given the number of.
Different agencies that you're touching into already and the fact that we're talking about these very low penetration rates.
And I'm curious from a from a go to market perspective.
Can you remind us how your how you were talking to these customers and continuing to help get that get that cross sell or up sell cross. The finish line is it just a matter of having subject matter experts that are constantly working with these customers or what's the process there.
Maybe to refresh.
And as he said remind we are I'm talking public sector now and within the public sector, where we have to targeted groups of accounts or customers.
The what we call the strategic accounts, those let's say 250 to 300 accounts.
They are strategic because we identified first of all our potential growth and there is a threshold of <unk>.
750000 average customer lifetime value and revenue in three years. This marks them above the rest are below and there are some hundreds a few hundreds of midsized prime accounts.
Which are about to become strategic the way we anticipate that.
And then there is the long tail of the prime accounts, a few thousands prime accounts of celebrate which are less relevant for the entire digital intelligence platform.
Strategic accounts are those accounts were either already decided or about to decide do we anticipate that they decide to do with digital or digitization of the investigative low end to end that the decision maker will implement that's part and those accounts are being managed by us with the.
Direct or a dedicated account executives and a dedicated and most of the case of technical account manager, which is there. So that basically that's so to say for ice principle in the account management and on top of that a group of customer success, which are nurturing the implementation of solutions within visa.
And we intend to basically to invest the majority in those strategic accounts make over there all possibilities or make the available budget and the relevant processes in order to create upsell and cross sell.
And nurturing more of digital intelligence solutions and more of each digital intelligent solutions within these accounts in existing and within new buying centers within those accounts. So it is a dedicated sales force account management technical account management dedicated account based marketing budgeted for those.
Account, unlike the long tail of prime accounts, which are being managed by a group of inside sales.
Techniques are one to few or one too many.
I'll stop here.
Thank you very much I really do appreciate the comments there youll see.
Thank you.
And thank you.
And our next question comes from Louie Dipalma familiar Blair.
Your line is now open.
Great. Thank you Dana and good afternoon, and congrats on closing the Truing merger.
Thank you. Thank you.
Upselling to you said premium appears to be one of your main near term revenue growth drivers. It seems we are very early in the cycle can you provide an estimate for what percent of your you said base.
Is on you said premium is it is it less than 20%.
And how many years do you estimate that it will take.
For most of your you said base beyond you said premium.
Okay. So in principle, we have signed around 20 and premium enterprise deals they need to keep working.
Before the end of the quarter, we sold I believe only too so.
So that's still comprise a very small number a few FID to be connected to.
To the premium.
We see customers its personnel at least their footing store base, but gradually.
No.
I would say that.
I'm out of my memory here now we have around us.
7% to 10% of the fed's been contracted under your fifth premium to be connected to the rofin premium some of them are in their installed base fee.
But this is at the very early stage of Fei.
Hey, Phil.
We are trying to make an order in those in that respect first of all positioning.
There is no real foot premium the review said the 28000 trapped and there is a premium solution that we are selling two versus agencies for several years by now, but only a few hundredths in not more than 40 countries. The premium enterprise is our newest solution and within that solution that has the opportunity to connect.
Are you fed into the premium and that that one is as Dennis said in an early stage as you can understand I spoke about the mode of operation So far agencies to fuel premiums and sometimes dozens and hundreds of you said without the ability to connect them. So the premium enterprise, which is just at the start.
Right now I agree.
<unk> done a very early stage, that's the upgrade but a few premiums hundreds of premium out there and are not connected to any open because that's the nature of the premium. They are the thousands of 28000 users in the premium enterprise, which is coming now with the new solution is the one with the ability to connect all the <unk> fits into the specialty.
And what I tried to say.
Deals that we have now in the pipeline, we're talking about 5% to 8% of the new fed.
When all those deals will be implemented will be already connected to the premium.
The premium enterprise, so very strong potential of growth areas I'm very strong charcoal.
Yeah.
Excellent that's all that I have.
Okay.
And thank you.
I am showing that is our last question I would now like to turn the call back to Yossi car mill for any further remarks.
First of all no further remarks from my end besides.
And before we conclude today's call I would like to thank you all for joining us.
And thank you for listening and for your support and wishing you all and I say.
Thank you. This concludes today's conference call. Thank you for participating you may now disconnect.
Okay.
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