Q4 2023 Cellebrite DI Ltd Earnings Call

Operator: and Mike Cikos. Thank you. Please stand by. Your program is about to begin. If you need assistance during your conference call today, please press star zero. Welcome to the Cellebrite fourth quarter and full year 2023 financial results conference call. At this time, all participants have been placed in a listen-only mode, and the floor will be open for your questions following the presentation. If you would like to ask a question at that time, please press star 1 on your telephone keypad. If at any point your question has been answered, you may remove yourself from the queue by pressing star 2.

Please standby your program is about to begin if you need assistance during your conference today. Please press Star zero.

Welcome to the celebrate fourth quarter and full year 2023 financial results Conference call.

At this time, all participants have been placed on a listen only mode and the floor will be opened for your questions. Following the presentation.

If you would like to ask a question at that time. Please press star one on your telephone keypad.

If at any point. Your question has been answered you may remove yourself from the queue by pressing star two.

Operator: So others can hear your questions clearly, we ask that you pick up your handset for best sound quality. Lastly, if you should require operator assistance, please press star zero. I would now like to turn the call over to your first speaker today, Mr. Andrew Kramer. Mr. Kramer, the floor is yours.

So others can hear your questions clearly, we ask that you pick up your handset for best sound quality.

Lastly, if you should require operator assistance, please press star zero.

I would now like to turn the call over to your first speaker today, Mr. Andrew Kramer Mr. Kramer the floor is yours.

Andrew Kramer: Thank you very much, Angela, and good morning, everybody. Joining me today from Washington, D.C., are Yossi Carmel, Cellebrite's CEO, and Donna Gerner, Cellebrite's CFO. Tom Hogan, Cellebrite's Executive Chairman, is also with us today and will be available to participate in the Q&A portion of our call. Additionally, there is a slide presentation that accompanies our prepared remarks.

Thank you very much Angela.

Good morning, everybody joining.

Joining me today from Washington D. C are yossi Carmel celebrate CEO and Donna Garner celebrate CFO, Tom Hogan celebrates executive Chairman is also with US today and will be available to participate in the Q&A portion of our call.

There is a slide presentation that accompanies our prepared remarks. Please advance the slides in the webcast viewer to follow our commentary we will call out the slide number we are referring to in our remarks.

Andrew Kramer: Please advance the slides and the webcast viewer to follow our commentary. We will call out the slide number we're referring to in our remarks. This call is being recorded, and a replay of this recording will be made available on our website shortly after the call.

This call is being recorded and a replay of this recording will be made available on our website shortly after the call.

Andrew Kramer: Starting with slide number two, a copy of today's press release and financial statements, including GAAP to non-GAAP reconciliations, this slide presentation, and the quarterly financial tables and supplemental historical financial information for each quarter of 2023 and 2022, as well as 2021 data, are available on the Investor Relations website at investors.celebrite.com. Also, unless otherwise stated, our discussion of our fourth quarter and full year 2023 financial metrics, as well as the financial metrics provided in our outlook on today's conference call, will be done on a non-GAAP basis only, and all historical comparisons are with the fourth quarter of 2022 or the full year 2022, unless otherwise noted. In addition, please note that statements made during this call that are not statements of historical facts constitute forward-looking statements.

Starting with slide number two a copy of today's press release and financial statements, including GAAP to non-GAAP Reconciliations this slide presentation, and our quarterly financial tables, and supplemental historical financial information for each quarter of 2023 and 2022.

Well, it's 2021 data are available on the Investor Relations website at investors <unk> celebrate dot com.

Unless otherwise stated our discussion of our fourth quarter and full year 2023 financial metrics as well as the financial metrics provided in our outlook on today's conference call will be done on a non-GAAP basis, only and all historical comparisons with the fourth quarter of 2022 or the full year 2022.

Otherwise noted.

In addition, please note that statements made during this call that are not statements of historical facts constitute forward looking statements. All forward looking statements are subject to risks and uncertainties and other factors that could cause matters expressed or implied by those forward looking statements not to occur.

Andrew Kramer: All forward-looking statements are subject to risks and uncertainties and other factors that could cause matters expressed or implied by those forward-looking statements not to occur. They could also cause the actual results to differ materially from historical results and or from those in force. Some of these forward-looking statements are discussed under the heading risk factors and elsewhere in the company's annual report on form 20 F filed with the SEC on April 27, 2023. The company does not undertake any obligation to update any forward-looking statements to reflect future events or circumstances.

Could also cause the actual results to differ materially from historical results <unk> from forecasts. Some of these forward looking statements are discussed under the heading risk factors and elsewhere in the Companys annual report on form 20-F filed with the SEC on April 27, 2023, the company does not undertake.

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Any obligation to update any forward looking statements to reflect future events or circumstances.

Andrew Kramer: This slide, number three, provides the agenda for today's call. As you will hear, we closed 2023 with another strong quarter. As a result of our accomplishments today and the near-term opportunities we see, we are excited about our prospects to build on our momentum in 2024, which is reflected in our financial expectations. With that said, I'll now turn the call over to Yossi Carmel, Cellebrite's CEO. Thank you, Andy, and thank you all for joining us today.

Slide number three provides the agenda for today's call.

As you'll hear we closed 2023 with another strong quarter as a result of our accomplishments today in the near term opportunities. We see we are excited about our prospects to build on our momentum in 2024, which is reflected in our financial expectations.

That said I will now turn the call over to Yossi Carnival celebrates CEO.

Thank you Andrea and thank you all for joining us today.

Shaul Eyal: So Cellebrite delivered an outstanding performance in 2023, and we closed the year with another strong quarter. Our team did a great job executing on our plans throughout the year. We delivered impactful, customer-centric innovation. We extended our customers' relationship, built our brand, and thoughtfully managed all aspects of our operation. Our accomplishments and strategic progress enabled us to exceed our original and upgraded 2023 financial targets. We also surpassed the rule of 45 status in 2023 with ARR growth of 27% and adjusted EBITDA margins of 19%.

So soundbite delivered an outstanding performance in 2023, and we closed the year with another strong quarter.

Our team did a great job executing on our plans throughout the year.

We delivered impactful customer centric innovation, we extended our customers relationships.

And our brand and thoughtfully managed all aspects of our operation.

Our accomplishments and strategic progress enabled us to exceed our original.

An upgrade to 2023 financial targets.

We also surpassed 145 startups in 2023 with Halo gross of 27% and.

And adjusted EBITDA margins of 19%, we moved into 2020 for an even stronger market and technology leader.

Shaul Eyal: We move into 2024 as an even stronger market and technology. Now, we began 2024 by announcing Cellebrite expanded case to closure, our C2C software platform. Our C2C platform is trusted by thousands of public and private sector customers in support of their efforts to close more cases faster. Now, every day, our customers see that Cellebrite solutions deliver on our brand promise of justice accelerated throughout the entire digital investigation lifecycle.

No. We began 2024 by announcing celebrate expanded case to closure our seem to see software platform.

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Every day.

Customers see that celebrates solution delivering our brand promise of justice accelerated for the entire digital investigation lifecycle.

Shaul Eyal: Our solutions play an important role in helping our customers transform their investigative workflows and make digital evidence more accessible, more intelligent, and more actionable. And as a result, we have built a strong foundation for us to continue thriving as a market and technology leader going forward. Before I dive into the details, I want to say that it is definitely an exciting time for Cellebrites and Cellebrite shareholders.

Our solutions play an important role in helping our customers transform their investigation workflows and makes digital evidence more accessible more intelligent and more actionable.

And as a result.

<unk> built a strong foundation for us to continue thriving as a market and technology leader going forward.

But before I dive into the details.

I want to say that it is definitely an exciting time for celebrates and some of our children.

Shaul Eyal: And we want to share more about how exciting our development is. And over the past years, we've taken important steps to improve our investors' communication, and we are building on this effort in two additional important ways. First, I'm happy to inform you that we'll be holding our first-ever Investors' Day next month, which will be a great opportunity for us to share more about our healthy growing market, about our value proposition that is resonating with customers, about our attractive opportunities for strong growth, and our very bright future. As of this quarter, we are providing quarterly guidance as a complement to the annual outlook that we have always offered.

And we want to share more about how exciting our development.

And over the past years, we've taken important steps to.

Update our Investor Communications and we are building on this effort in two additional important ways first I'm happy to inform that we'll be holding our first ever Investor day next month.

Will be great opportunity for us to share more about our healthy growing market about our value proposition that is resonating with customers.

A lot of attractive opportunities for strong growth and our very bright future.

And second.

As of this quarter, we are providing quarterly guidance as a complement to the annual outlook that we have always offered.

Shaul Eyal: Now, while I plan to share more... about opportunities that lie ahead of Cellebrite in a moment, I would like to turn now to slide 4 to recap our Q4 performance and selected KPIs, and more specifically, ARR grew 27% to 316.7 million.

No well I plan to share more.

And found opportunities that lie ahead will celebrate in a moment.

I would now like to turn now to slide four to recap, our Q4 performance and selected Kpis.

And more specifically.

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Shaul Eyal: Total revenue of $93 million increased 26% on the strength of a 26% increase in subscription software revenue. We delivered adjusted EBITDA of $22.27 million, or 24% on a margin basis, and non-GAAP EPS of $0.11. And lastly... We end 2023 with cash, deposits, and investments totaling approximately $332 million, an increase of 62% since the end of 2020. Now, looking at our full-year performance, Cellebrite exceeded its targets and the rules of 45 statutes.

Total revenue of $93 million increased 26% on the strength of our 26 increase in subscription software revenue.

We delivered adjusted EBITDA of 22.2 dollars 7 million or 24% on a margin basis and non-GAAP EPS of 11.

Lastly, we ended 2023 with cash deposits and investments totaling approximately $332 million an increase of 62% since the end of 2022.

Now looking at our full year performance soundbites exceeded its targets and rule of 45 starts as.

Shaul Eyal: We achieved record ARR and revenue, mainly due to our success in expanding existing customer relationships, and nearly doubled our adjusted EBITDA margins. We aim to build on these results going forward by delivering a balanced mix of strong ARR growth and healthy profitability in 2024. Now, there are a number of factors that reinforce our confidence about our prospects for continued success in 2024. Let's move to slide 5 to cover these.

We achieved record <unk> and revenue, mainly due to our success and expanding existing customer relationships and nearly doubled our adjusted EBITDA margins.

We aim to build on these results going forward by delivering a balanced mix of strong growth and healthy profitability in 2024.

Although a number of factors that reinforce our confidence about our prospects for continued success in 2024, let's move to slide five to cover this.

Okay.

Shaul Eyal: I will begin with our markets, and we continue to operate in a healthy market. Now, while overall spending on public safety continues to grow at a steady, but I would say moderate pace, we expect that customer spending on Cellebrite solutions will keep increasing at a much faster rate. That's because our customers remain resource-constrained. They are perpetually understaffed, under-equipped, and under pressure.

I'll begin with our markets and we continue to operate in a healthy market.

Now while overall spending on public safety continues to grow at a steady, but I will say moderate pace, we expect that the customer spending on celebrate solutions will keep increasing at a much faster rate that's.

That's because our customers remain resource constrained they are perpetually understaffed underequipped and under pressure.

Shaul Eyal: Now against this backdrop, our customers increasingly recognize that disruptive technology like ours, like Cellebrite, will help them work smarter, faster, and more effectively. Our case-to-closure platform, our C2C platform, is designed to enable our customers to close more cases faster by addressing major challenges, challenges around surging data volumes and increased complexity, operational inefficiencies, and Building Public Confidence in Law Enforcement's Ethics and Accountability. The second prospect is around customer relationships. We are fortunate to have built durable, expansive relationships with a wide range of government agencies at the national level, the regional level, and the local level.

Now against this backdrop, our customers increasingly recognize that disruptive technology like ours like celebrates we'll have them work smarter faster and more effectively.

Alright, thanks to close our platform. Our CTC platform is designed to enable our customers to close more cases faster by addressing major challenges challenges around searching data volumes and increased complexity.

Operational inefficiencies.

And building public confidence in law enforcement ethics and accountability.

The second prospect is around customer relationship.

We are fortunate to have build durable.

We have relationships with a wide range of government agencies at national level regional level and local level.

Shaul Eyal: And as a result, most of our revenue comes from upselling and cross-selling into our installments. Now, digital forensic software solutions are both trusted and pervasive within the digital forensic units of our customers. This privileged position, in combination with our case-to-closure platform, is unlocking further expansion with digital forensic units and opening the door for accelerated growth within investigators. Now the fourth quarter, so healthy attachment rates of sales, involving multiple side sheet solutions within our case-to-closure platform. And then there is also the platform factor.

And as a result, most of our growth comes from Upselling and cross selling into our install base.

Digital forensic software solutions are both trusted and pervasive within the digital forensic unit of our customers.

This privileged position in combination with our case to close the platform is unlocking further expansion with digital forensics and opening the door for accelerated growth within investigate disconnect now the fourth quarter, so healthy attachment rates of sale.

Involving multiple sanctioning solutions within our case to close the platform.

And there is also the platform factor.

Shaul Eyal: Cellebrite has evolved from offering cutting-edge point products into a true end-to-end platform provider with solutions used throughout the digital investigation lifecycle with deployment flexibility spanning on-premises, virtual private cloud, or in full SaaS. Now, this is a major differentiator in the marketplace which enables Cellebrite to effectively address a broader range of our customers' pain points. Our case-to-closure platform is composed of three primary tools. First, within digital forensic units, Cellebrite is widely recognized for its best-in-class digital forensic software that is used to access mobile phones, extract data, and reveal important digital evidence.

Hello, Brian has evolved from offering cutting edge point products into a true end to end platform provider with solutions used throughout.

Could you tell me Mr. Gibson lifecycle, when deployment flexibility spanning on trim virtual private cloud or in <unk> mode.

Now this is a major differentiator in the marketplace, which enables us to effectively address a broader range of our customer's pain points. Our case to close the platform is composed of three primary items.

First within digital forensic unit celebrating is widely recognized for best in class digital forensic software that is used to access mobile phones extracted data and was an important digital evidence.

Shaul Eyal: Now, building on this rich experience, Cellebrite is moving our industry forward once again with last month's introduction of Cellebrite Insights. Now, Cellebrite Insights is a game-changer, enabling customers of all sizes to complete an examination up to twice as fast as before by leveraging improving Cellebrite technology and adding new capabilities that will allow our customers to access more devices, extract more data, and reveal more Insights represents a compelling upgrade for an install base of more than 30,000 existing licenses for our legacy digital forensic software solutions. Now, the strong and enthusiastic interest we've seen from customers, combined with our success in swiftly upgrading our install base in prior product cycles, provides us with confidence about expected adoption rates over the next couple of years.

Now building on this rich experience celebrate is moving our industry forward once again with last month's introduction of celebrating sites.

Well first of all I can say, it's a game changer, enabling customers of all sizes to complete an examination up to twice as fast as previously by leveraging proving celebrate technology and adding new capabilities that will allow our customers to access more devises extract more data and was even more important inflammation.

Insightful presented compelling upgrade for an installed base of more than 30000 existing licenses for our legacy digital forensic software solutions.

Now the strong and enthusiastic interest we've seen from customers combined with our success in swiftly upgrading our installed base in prior product cycles provide us with confidence about the expected adoption rates over the next couple of years.

Shaul Eyal: Now, while the higher value provided by Insights commands a higher price tag that will certainly contribute to our growth over the next several years, we do expect that more of our growth will come from upselling high-value Insights modules, modules such as advanced lawful access, automation, extraction of complementary digital data sources, and sharing digital evidence reports. The second major solution on our C2C platform is Guardian, our SAS-based case evidence management offering that delivers tangible benefits to both digital forensic units and investigative units. Guardian offers greater operational efficiency for managing digital evidence workflows.

Now, while the higher value provided by insides commence definitely a higher price deck that will certainly contribute to our growth over the next several years, we do expect that more of our growth will come from Upselling high value insights modules modules, such as advanced lawful axis automation extraction.

Of complementary digital data sources and sharing digital evidence supports.

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Second major solution, one hour Ctrip platform as Guardian, our SaaS base case evidence management offering.

Delivers tangible benefits to both digital forensics and investigative unit.

The Guardian offers greater operational efficiencies for managing digital evidence workflows Gordian also enables better collaboration between examiners any investigators.

Shaul Eyal: Guardian also enables better collaboration between examiners and investigators. Now, we believe Guardian will be the go-to tool that investigators use as they advance cases involving digital evidence. Guardian strengthens the overall chain of custody when it is used end-to-end.

Now we believe Guardian will be the go to tools that investigator is used as the advanced cases involving digital evidence.

And Guardian strengths is that overall chain of custody. When it is used end to end.

Shaul Eyal: While we are still in an early stage of Guardian adoption, we are very pleased with our traction and confident that executing on our roadmap will make it even more attractive for more of our installed base to benefit from Guardian's features and functionality over the coming quarter and to the third solution, with digital evidence, which is so integral to closing more cases faster. Investigative units is an emerging Cellebrite second growth engine, as we establish Pathfinder as an essential analytic solution to help investigators expedite their cases. Now, by applying powerful AI technology and machine learning models, Pathfinder quickly surfaces leads and identify connections buried with a mountain of structured and unstructured data across multiple digital devices.

Why do we are still in an early stage of adoption. We are very pleased with our traction and confident that executing on our roadmap will make it even more attractive for more of our installed base to benefit from benefits from Guardian features functionality over the coming quarter.

And to the third solution.

With digital evidence.

Integral to closing more cases foster.

Investigative unit you as an emerging celebrate second growth engine as we establish pathfinder as an essential analytic solution to help investigators expedite the accident the cases.

Now by applying powerful AI technology and machine learning modules, that's fine to quickly surface fleet and identified connection batteries with a mountain of structured and unstructured data across multiple digital devices.

Shaul Eyal: Now, we closed a record number of Pathfinder deals in the fourth quarter of 2023 to finish 2023, with approximately 200 agencies now using this solution. And looking ahead, we plan to bring Pathfinder to the cloud, which will make our investigative offering even more compelling and easier to deploy for our entire installation. And there is the element of technology.

Now we closed a record number of Pathfinder deals in the fourth quarter of 2020 feet to finish 2023 with approximately 200 agencies now using this solution and looking ahead, we plan to bring pathfinder on the cloud, which will make our investigative offering even more compelling and easy.

Year to deploy foreign entire installed base.

And there is the element of technology.

Shaul Eyal: And I have to say that we are making really sizable technology investments that are elevating the value of our C2C platform. One important area of focused technology investment is the cloud. Now, while we have historically delivered our software through on-premise deployment, our customers are increasingly interested in cloud-based offerings. Although our client-based revenue was less than 10% of our total 2023 revenue, I have to say it grew very rapidly in 2023, and we expect that growth to continue. Now with the investments we are making... to scale our SaaS infrastructure. Our roadmap for 2024 includes cloud-enabling offerings previously only available on-prem and developing cloud-native offerings that will further transform key elements of the investigative lifecycle. Related to this, we are investing significant resources this year to achieve FedRAMP for their participation in our SAS offering, a milestone that we believe will open up more federal opportunities and support large deployments at scale. A second fundamental technology building block is automation.

I have to say that we are making really sizable technology investments.

Elevating the value of our CTC platform.

One important area of focus technology investments in the cloud.

Nine while we have historically delivered our software through on Prem deployment.

Customers are increasingly interested in cloud based offering.

Although our cloud based revenue was less than 10% of our total 2023 revenue.

It's grown very rapidly in 2023, and we expect that growth to continue.

Now with the investments we are making to scale our soft infrastructure. Our roadmap for 2024 include cloud, enabling offering previously only available on trend and developing cloud native offerings that will further transform key elements of the investigative lifecycle.

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<unk> significant resources this year to achieve fed ramp certification for our SaaS offering and milestone that we believe will open up more federal opportunities and support large deployment at scale.

The second fundamental technology building block is automation.

Shaul Eyal: By leveraging AI, cloud technology, and our unique insights into the workflows of our customers, we are helping customers increase operational efficiency by automating time-consuming manual tasks, streamlining complex processes, and by minimizing capital investment in compute-heavy systems that further tax limited IT resources. AI is an important foundational technology that is already deeply embedded within both our Insight Solution and our Pathfinder Analytics. By advancing and applying our proprietary machine learning modules while also exploring the potential of generative AI, our solutions can quickly capture powerful, timely insights into digital evidence that's been collected, can support automation, our solutions can expedite investigations more efficiently, and, this is important, can also limit the emotional toll that viewing certain images can have on examiners and investigators.

By leveraging AI cloud technology, and our unique insights into the workflows of our customers, we're helping customers increase operational efficiency by automating time consuming manual tasks by streamlining complex processes and by minimizing capital investment in computer systems that further attacks.

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AI is an important foundational technology that is already deeply embedded within both our insight solution and I'll pass on to analytics.

So by advancing and applying our proprietary machine learning modules, while also exploring the potential of general Dji, our solutions can quickly capture powerful timely insights into digital evidence that being collected can support automation.

Our solutions can expedite investigations more efficiently and and this is important can also limit the emotional toll that viewing certain images can have on examiners and investigators.

Shaul Eyal: And the final area of our technology priorities lies in mobile research. On that front, as always, we plan to continue applying our expertise in smartphone operating systems and security to ensure that Insights will keep pace with ongoing changes in smartphone hardware, operating systems, and applications. And the last growth factor I want to talk about is our team.

And the final area of our technology priorities rising mobile research.

That is France as always we plan to continue applying our expertise in smartphones operating systems and security to ensure that the insights will keep pace ongoing changes in smartphone hardware operating systems and applications.

And the last factor I want to talk about is our team.

Shaul Eyal: Now, over the past year, we've added key leadership talent across our organization in many areas. More recently, we added Marcus Juhl as Chief Revenue Officer. Now, under Marcus' direction, we recently took steps to intensify our customer-centric focus by establishing a new global pre-sales organization and post-sales customer success organization while also adding new sales leadership for EMEA and for the private sector. Our board and senior leadership are also benefiting from the counsel of Tom Hogan, who joined us as an executive chairman in the past summer.

Now over the past year.

We've added key leadership talent across our organization many of us.

More recently, we added Marcus Chu as Chief revenue Officer now on the market direction. We recently took steps to intensify our customer centric focus by establishing new global pre sales organization.

And Poston customer success organization, while also adding new sales leadership for EMEA and for the private sector.

Our board and senior leadership are also benefiting from the comfort of Tomo Hogan will join us as an executive chairman in the past summer.

Shaul Eyal: Now, we move into 2024 with plans to add to our talent workforce, especially in areas focused on going to market and innovation initiatives. I would like to move to slide six to cover strategic priorities and customer success. Now, last quarter, we shared our top four strategic priorities for expanding our business over the coming year. The priorities are, one, increasing our leadership in the Digital Forensic Unit. Second, accelerating our growth within the investigating. 3.

Now we move into 2024 with plans to add to our talent workforce, especially in areas focused on go to market and innovation initiatives.

I would like to move to slide six to cover strategic priorities in customer success.

Now last quarter, we shared our top four strategic priorities for extending our business over the coming year.

The priorities are one increasing our leadership in the digital forensic units second accelerating our growth with an investigative unit three.

Three building, our business and the private sector and for harnessing the power of cloud.

Shaul Eyal: Building our business in the private sector, and 4. Harnessing the power of the cloud. Now, we had a number of fourth quarter customer wins that illustrate our success with each priority. So let's talk about that for a second.

Now we had a number of fourth quarter customer wins that illustrates our success with each priority. So let's talk about it for a second.

Shaul Eyal: Addressing the needs of digital forensic units has long been a major strength of Cellebrite, and our strong fourth quarter revenue and ARR performance demonstrated our continued success in expanding within the digital forensics units of our customers. We've continued to see strong demand for advanced unlocked solutions that deliver local access to the most advanced iOS and Android smartphones. For example, we closed a large deal with the National Police in a Western European country that will extend its use of our advanced solution out into the field and thereby reduce time to evidence.

Addressing the needs of digital forensic unit has long been a major strength of shift to celebrate.

Our strong fourth quarter revenue any outperformance demonstrate that our continued success in expanding within the judicial forensic units of our customers.

We've continued to see strong demand for advance unlock solutions that leaves a lawful access to the most advanced iOS and Android smartphones.

For example, we closed a large deal with the national police in the Western European countries that will extend its use of our advanced solution out into the field and thereby reducing time to evidenced now this specific deal.

Shaul Eyal: Now, this specific deal grew the accounts ARR by more than 25%. In terms of Insights, our new solution, we are already seeing strong interest from our installed base. Now, we've closed a handful of Insights upgrades at a level that was above our expectations at such an early stage. A great example of this was a national police force in the Benelux region who upgraded to Insights in order to support its examiners with richer data through full file system extraction and cloud-based content and access, obviously, more devices through an unlimited unlock package. The Insights deal produced a 65% ARR increase at this agency. The second priority is to accelerate our growth within the investigative units of our law enforcement customers. One existing Q4 Pathfinder deal involves a state-based military agency in the United States. Now this agency is deploying Pathfinder and our software for advanced lawful access as part of its initiatives aimed at fighting human trafficking. As a result, this agency's ARR has more than doubled.

I would say our ROI by more than 25%.

In terms of insights our new solution, we are already seeing strong interest from our installed base now we've closed a handful of insights upgrades at the liver, which were above our expectation at such an early stage. A great example of this was a national police force in the Benelux region.

<unk> two insights in order to support its examiners with richer data through full file system extraction and cloud based content and access obviously more devices through.

Unlimited unlock package the insights steel produced a 65% increase at these agency.

The second priority is to accelerate our growth within the investigative units of our law enforcement customers.

One existing Q4 Pathfinder deal involves the state based military agency in the United States. Now. This agency is deploying Pathfinder and all software for advanced lawful access as part of its initiative aimed at fighting against human trafficking. As a result these agencies are evolving.

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Shaul Eyal: The third priority is focused on building on our business in the private sector, where our solutions are currently used by enterprises and service providers in the areas of corporate investigations and e-discovery. Now, we delivered solid top-line expansion in the private sector during 2023, and we expect to continue this progress over the coming year. With deployment flexibility ranging from SaaS to on-premises, our integrated suite of solutions shines bright when customers' requirements involve a range of data sources, different work environments, and diverse users' considerations. For example, our secure remote access software continues to gain traction within enterprises as an important part of our enterprise solutions. During the fourth quarter, we closed multiple deals with new customers who selected this offering, including a leading US-based diversified media company that needed a defensible, repeatable process for collecting relevant targeted data from geographically dispersed employees in order to upgrade its e-discovery and corporate investigation activities. And the fourth and last strategic priority is to help our customers harness the power of the cloud to address their challenges in a manner that is both cost One of the largest U.S. Police Departments is leveraging solutions across our C2C platform as it builds its dedicated Digital Forensic Center focused on standing up investigative capabilities at scale to close more cases.

The first priority is focused on building on our business and the private sector, where all solutions are currently used by enterprises and service providers in the areas of corporate investigations any discovery.

Now we delivered solid top line extension in the private sector. During 2023, and we do expect to continue this progress over the coming year.

And when deployment flexibility ranging from SaaS to on Prem.

Integrated suite of solution Shine bright when customers' requirements involves a range of data sources different work environments and diverse uses considerations.

For example, our secure remote access also continues to gain traction within enterprises as an important part of our insights for enterprise solution. During the fourth quarter, we closed multiple deals with new customers, who selected this offering including a leading U S based diversified media company that needed.

At a defensible repeatable process for collecting relevant targeted data from geographically dispersed employees in order to upgrade its E discovery and cooperating mitigation activities.

And the fourth and last strategic priority.

Thanks to help our customers harnessed the power.

Cloud to address their challenges and manage that.

Both cost effective and secure.

One of the largest U S police departments is leveraging solution across our CTC platform.

Build our dedicated their dedicated digital forensics center focused on standing up investigative capabilities at scale to close more cases.

Shaul Eyal: Now, in addition to our solution for advanced access and Pathfinder, this customer will use Guardian to manage digital evidence and streamline how key findings and reports are securely shared within investigators. Now, this deal produced a 12 times increase in ARR at this specific account. Let's move to slide 7.

Now in addition to our solution for advanced Axis and Pathfinder. These customer will use guardian to manage digital evidence and streamline how key findings and reports are securely should within investigators now. These deal produced 12 times increase in E. R. R.

This specific account.

Let's move to slide seven.

Shaul Eyal: Now, I would like to conclude my remarks by reiterating how proud we are of our accomplishments last year on behalf of our customers, our employees, and our shareholders. We reported outstanding financial results that exceeded our targets throughout the year, and we plan to build on this progress going forward. We move into 2024 with powerful tailwinds from a fundamentally healthy market, solid business momentum, and attractive prospects that support the continued expansion of our business around the world. Our financial targets for 2024 demonstrate the durability of our growth as we expect another year of solid ARR and revenue expansion. We also see good potential for incremental improvement in our operating profitability as we drive for 20% plus adjusted EBITDA margin. Now Dana will share additional details on our full year 2024 financial expectations along with our view into the first quarter of the year in just a moment.

Now I would like to conclude my remarks by reiterating how proud we are of our accomplishments last year on behalf of our customers our employees and our shareholders.

We reported outstanding financial results that exceeded our targets throughout the year and we plan to build on this progress going forward.

When we move into 2024 with powerful pain leads from a fundamentally healthy market solid business momentum and attractive prospects.

Support the continued expansion of our business around the world.

Our financial targets for 2024 demonstrate the durability of our growth as we expect another year there'll still needs and revenue expansion.

Now we also see good potential for incremental improvement in our operating profitability as we drive for 20% plus adjusted EBITDA margins.

I will share additional details on our full year 2024 financial expectation along with our view into the first quarter of the year in just a moment.

Shaul Eyal: As we further scale our global organization, we do believe that our ability to continue to enhance the flagship solutions within our C2C platform and execute on our go-to-market plans will enable us to more than double the size of our business over the next several years. At a high level, we do believe that our business should continue to deliver a combination of ARR growth and adjusted EBITDA at or around a baseline of 45, with a focus on elevating our performance over the longer term. I have to say it is really gratifying to see Cellebrite recognized as an essential partner to those who have dedicated their lives to protecting our communities, stopping bad actors, and preserving privacy. We passionately believe in our mission and in the power of technology to make a profound difference. And perhaps nothing symbolizes our conviction more than Operation Find Them All, a collaboration between Cellebrite and three non-profit organizations under a collective goal to accelerate investigations of online crime against children. This project is dedicated to helping law enforcement find missing children, solve crimes involving exploited minors, remove harm from online images, and bring perpetrators to justice.

As we further scale our global organization, we do believe that our ability to continue to enhance the flagship solutions within our <unk> platform and execute on our go to market plans will enable us to more than double the size of our business over the next several years.

At a high level, we do believe that our business should continue to deliver a combination of our growth in adjusted EBITDA at or around baseline rule of $45 with a focus on elevating our performance over the longer term.

I have to say it is really gratifying to see celebrates recognized as an essential partner to dose with dedicated alive to protecting our communities stopping bad actors and preserving privacy.

We passionately believe in our mission and in the power of technology to make a profound difference and perhaps nothing symbolizes our conviction more than operation find them all a collaboration between <unk> and three nonprofit organizations under our collective goal is to accelerate investigations of online crime against you.

Now this project is dedicated to helping law enforcement, finding missing children solve crimes and holding exploited miners remove harmful online images and bring the perpetrators to justice.

Shaul Eyal: I am incredibly proud of the role that Cellebrite is playing in Operation Climbable. And on a final note... I would like to express my sincere gratitude to my colleagues in Cellebrite for the focus, resilience, hard work, and sacrifice. Now, despite some very challenging circumstances, especially for our team in Israel, we persevered, and we delivered this year. We move into 2024 with confidence that we have great people, great products, great partners, and programs. And we are excited about our prospects for making 2024 another successful year. Now that concludes my remarks, and I'd like to turn the call over to Dana. Thank you. Hi,

Incredibly proud of the role that celebrate just playing with operation flammable.

And on a final note I would.

I'd like to express my sincere gratitude to my colleagues and set up right for the focus resilience hard work and sacrifice.

<unk>, some very challenging circumstances, especially for our team and he is one we preserved and we delivered this year.

We move into 2024 with confidence that we have great people great products, great partners and programs and we are excited about our prospectus for making 2020 for another successful year now.

That concludes my remarks, and I'd like to turn the call over to Donna.

Thank you Yossi.

Hi.

Dana: At a high level, 2023, as Josie said, was excellent. Cellebrite outperformed its original targets and exceeded the rule of 45 milestones with strong ARR expansion and a significant increase in our adjusted EBITDA margin. I will begin the financial review on slide 9. Fourth quarter revenue of $93 million is good.

At a high level of 2023 as you said was an exiting tier set of rights at the Swan.

<unk> and exceeded it would've 45 milestones with strong AOR expansion and significant increase in our adjusted EBITDA margin.

And we'll begin the financial review on slide nine.

First quarter revenue of $93 million grew 26% top line growth was fueled by 26% increase in subscription revenue complemented by growth in other nonrecurring insufficient with services revenue.

Dana: Our top-end growth was fueled by a 26% increase in subscription revenue, complemented by growth in other non-recurring and professional services revenues. We exceeded our top-line targets primarily due to the combination of strong overall demand, favorable product mix, and higher-than-expected demand for trade. For the full year, revenue increased 20% to $325.1 million due to subscription revenue growth of 30%.

Exceeded our targets primarily due to the combination of strong local demand favorable product mix and higher than expected demand for training.

For the full year revenue increased 20% to 325, one medium donors due to subscription revenue growth of 30%.

Dana: The 30% growth in subscription revenue was partially offset by a 36% decline in other non-recurring revenue associated with lower perpetual license revenue and a 7% decrease in professional services revenue, which saw reduced demand for Cellebrite Advanced Services as more customers adopted our Advanced Low Flow Access Solution, with Subscription revenue representing 85% of total 4-year revenue. We move into 2024 with the transition to subscription now in the rear-view mirror. Tonight, 10 details our ARR growth, which we believe helps investors better appreciate our prospects for future revenue growth over the coming year. Our ARL grew 27% year-on-year to $316 million at the end of the year. Looking closer at the breach details provided on this slide, you can see that existing customers continue to fuel ARR expenses.

30% growth in subscription revenue was partially offset by 36% decline in other nonrecurring revenue associated with our perpetual license revenue and a 7% decrease in professional services revenue.

So reduce demand for Citibank to advance services small customer adopted.

Lawful access solutions.

Subscription revenue represented 85% of Scopus video revenue, we move into 2024 with the transition to subscription now.

Mirror.

Slide 10 details, our AOR growth, which we believe helps investors better appreciate our prospects for the future revenue growth over the coming year.

<unk> grew 27% year on year to $316 million at the end of 'twenty three.

Closer at the breach details provided on the slide you can see that existing customers continued to fuel. Our expansion. This is largely attributable to ongoing success in cross selling and upselling into the digital fluency pursuant to for customers complemented by our progress in driving the adoption of our Pathfinder solution.

Dana: This is largely attributed to ongoing success in cross-setting and up-setting into the digital forensics units of our customers, complemented by our progress in driving adoption of our Pathfinder solution within investigations. In terms of geography, the Americas continue to be our single largest geography at 53% of total food year 23 ARR, followed by EMEA at 36% and Asia-Pacific at 11%.

We've seen in Vista AWD.

In terms of <unk>.

The Americas continued to be our single largest geography at 53% of full year 'twenty three AOR, followed by EMEA at 36% and Asia Pacific did even Christine.

Dana: We are generally pleased with the fully ARR extension in each major region, with the Americas growing 30%, EMEA increasing 23%, and Asia Pacific up 29%. Slide 11 details the historical trends for a non-gap gross margin and non-gap operating expenses, which excluded share-based compensation, amortization of intangible assets, and acquisition-related expenses. We reported a fourth quarter gross margin of 84.5%, which was in line with our plans entering the quarter and not 400 basic points from the same quarter one year ago. The improvement is due to higher training revenue on a relatively similar cost basis. In terms of operating expenses, fourth-quarter operating expenses were $57.6 million, a 21% increase from the prior year, primarily due to higher incentive compensation costs, the timing of certain marketing programs, and the timing and phasing of hiring. For the foodier, operating costs increased by 8%.

Generally pleased with the <unk> expansion in each major region with the Americas growing 30%, EMEA, increasing 23% and Asia Pacific.

29%.

Can I deliver details historical trend for our non-GAAP gross margin and non-GAAP operating expenses, which excluded share based compensation amortization of intangible assets and acquisition related expenses.

We reported fourth quarter gross margins of 84, 5%, which was in line with our plans entering the quarter and that 400 basis points from the same quarter one year ago. The improvement is due to higher trading revenue on a relatively similar cost base versus 2020.

In terms of operating expenses fourth quarter operating expenses were $57 $6 million or 21% increase from the prior year, primarily due to higher incentive compensation costs, the timing of certain marketing programs and the timing and phasing of hiring of GDP for the full year operating cost increased 8%.

Dana: Carefully managed our cost structure by also realizing benefits from a favorable fore. We ended the year with 1,008 employees, which was really consistent with our plan. In addition to our hiring activity, we were delighted to welcome back a good number of our colleagues in Israel who had been activated into military service. These individuals have resumed their work for us in a full-time capacity, and we are immensely grateful for their military service. They have completed their assignments. As you have noted earlier, we move into 2024 with a strong team and a plan to expand the workforce by approximately 15% over the course of the coming year. Now, turning to slide 12, the combination of higher revenue and disciplined spending resulted in outstanding fourth quarter profitability.

As we carefully managed our cost structure. We're also realizing benefits from favorable Forex environment.

We ended the year with 1000 and Nathan Please which was really consistently for plan. In addition to our hiring the activity we are delighted to welcome.

According to the Nashville wed been activated into military service. These.

Visuals have resumed the work for us full time capacity and we are immensely grateful for their immediate three service and Theyre completed.

Simon safety.

You guys had noted earlier, we move into 'twenty four with a strong team and a plan to expand the workforce by approximately 15% over the course of the coming year.

Now turning to slide 12, the combination of higher revenue and disciplined spending resulted in outstanding fourth quarter profitability with adjusted EBITDA of $22 $7 million or 24% with margin basis for.

Dana: We had adjusted EBITDA of $22.7 million, or 24% of March. For the full year, we ended 2023 with adjusted debit down $61.9 million, or 19% on a margin basis, thanks primarily to our top-end growth, meaningful growth margin improvement, and a focus on prudently managing our cost trend. Our Q4 non-GAAP operating income was $21 million, with non-GAAP net income of $22 million, or $0.11 on a fully diluted basis.

For the full year. We ended 2003, we suggested EBITDA of $61 $9 million or 19% and margin basis. Thanks, primarily towards open growth meaningful gross margin improvement and our focus on prudent managing our cost structure.

Q4, non-GAAP operating income was $21 million with non-GAAP net income of $22 million.

And even on a fully diluted basis.

Dana: On a four-year basis, we delivered 23 non-GAAP operating income of $55.3 million dollars, non-GAAP net income of $60.9 million dollars, and a fully diluted EPS of $28 million dollars. We finished 23 with $331.8 million in cash, cash equivalents, and investments, up $48.5 million from the end of this third quarter and $126 million higher than our cash position at the end of this quarter. The increase for the quarter and the year primarily reflected a sizable increase in the net cash provided by OCR. Our free cash flow for 2023, defined as cash flow provided by operations, risk capital expenditure, and the purchase of intangible assets, was $94.1 million.

When the full year basis, we delivered <unk> 23, non-GAAP operating income was $55 $3 million non-GAAP net income of $60 9 million and fully diluted EPS of 28.

We finished <unk> with $331 8 million doors in cash cash equivalent and investments.

48, and a half million doors from third.

Third quarter and $126 million higher.

Cash position at the end of 2022.

The increase for the quarter ended year, primarily reflected a sizable increase in the net cash provided by operations.

Our free cash flow.

<unk> defined as cash flow provided by operating.

Operation today's capital expenditure and the purchase of intangible assets and was $94 1 million doors.

Dana: Thank you all for joining us today, and we hope that you will reflect on our 2023 progress and performance. It has been gratifying to see interest in our company from investors. As you know, today we are continuing to evolve and enhance our disclosures to help current and prospective analysts and investors better understand our business with a focus on providing greater transparency into our prospects for driving sustainable, profitable growth over the long term. To that end, we will host an investor day on Wednesday, March 27th in Newark. Information about the event has been posted on the investor relations section of our website. An invitation to attend the event in person will be sent to you by email.

This will reflect on our 2023 progress and performance. It has been gratifying to see interest in our company from the investment community.

He also noted earlier, we are continuing to evolve and enhance our disclosures to help current and prospective analyst and investors better understand our business. This will focus on providing greater transparency into our postpaid for driving sustainable profitable growth over the long term.

And we will host an investor day on Wednesday March 27th in New York City.

Formation about event has been posted on our Investor Relations section of our website and invitation to attend the event in person will be sent next week.

Dana: Our commitment is also reflected in our guidance, which we've expanded to include our quarterly expectations for ARR revenue and adjusted EBIT. Tri-13 details our financial expectations for the first quarter of 2024-25. Our 2024 ARR targets range from $380 to $400 million, or 20 to 27% increase over. On a related note, we are optimistic about the potential for modest improvement on our share level as a result of the impact of our decision to withdraw from certain markets and cease selling to certain customers. Our first quarter of 24 ARR targets ranges from $325 to $335 million, which would equate to 24 to 28% growth over the first quarter. We expect 4024 revenue to range from $370 to $385 million, which represents 14% to 18% growth.

Our commitment is also reflected in our guidance, which we've expanded to include our quarterly expectations for revenue and adjusted EBITDA.

Slide 13 details our financial expectations for the first quarter of 2004 and for the full year.

More specifically.

24, <unk> target ranges from $380 million to $400 million or 20% to 27% increase over 2003.

On a related note we are optimistic about the potential for modest improvement on our churn level is the impact from our decision to withdraw from certain markets and <unk> setting to certain customer DCP.

Our first quarter of 2004, <unk> target ranges from 325 to 335 million doors, which would equate to 24% to 28% growth over the first quarter of 'twenty three.

We expect full year 'twenty for revenue to range from $370 million to $385 million, which represents 14% to 18% growth over 2003.

We look forward our revenue expectations of further supported the healthy pipeline, including opportunities to drive insights upgrades and related add on modules Upselling cross selling and Upselling pitch Feynman guardian into the install base and private sector expansion.

Dana: Revenute and ARR Expectations are further supported by a healthy pipeline, including opportunities to drive inside upgrades and related Add-on Modules upsells, cross-selling, and upselling pet finder and guardians into the install base, and in private. We expect Q1 of 2024 revenue in the range of $83-88 million, or 17-24% higher than the first quarter. In line with this historical trend, we expect approximately 52% to 55% of food revenue to be generated in the second half, along with a higher quarterly revenue growth rate in the second half. These dynamics primarily reflect our expectations for product mix in conjunction with the timing of typical year-end spending. With our U.S. Federal Customers in September and most other accounts in December, we expect our 24 gross margins to be in the 82% to 84% range and to increase the investment required to build out the hosting infrastructure to further scale our SaaS business. We expect gross margins to be in line with or slightly above the four-year target. We anticipate 2024 non-GAAP operating costs in the range of $240 to $250 million, with a marginal sequential increase from Q4'23 into Q1'20.

We expect Q1 of 'twenty for revenue in the range of $83 million to $88 million or 17% to 24% higher than the first quarter of 'twenty three.

In line with historical trends, we expect approximately 52% to 55% of <unk> revenue to be generated in the second half along with higher quality revenue growth rate in the second half of the year.

These dynamics, primarily with snakes are expectations for product mix in conjunction with the timing of typical year end spending activities associated with our U S. Federal customers in September and most other accounts into December.

We expect our 24 gross margins to be in the 82% to 84% range as we increase the investments required to deal with out to be hosting infrastructure to further scale. Our scottsville. Frank we expect Q1 gross margin to be in line with or slightly above the full year targets.

We anticipate 2024 non-GAAP operating cost in the range of $240 million to $250 million. Mr. Martin a sequential increase from Q4 2000 suite into Q1 'twenty four.

We are optimistic about the potential to continue improving our profit profile and currently anticipate adjusted EBITDA in the range of $70 million to $80 million or 19% to 21% will still kind of amazing.

Dana: We are optimistic about our potential to continue improving our profit profile and currently anticipate adjusted EBITDA in the range of $70-80 million, or 19-21% of total EBITDA. Consistent with historical trends and in connection with our 24 top-line outlook, we expect higher adjusted EBITDA and higher adjusted EBITDA margins during the second half of the year. We expect Q1 adjusted debit downranging from $12 to $15 million or 14.5% to 17% on a March. Strong cash flow from operations has been a hallmark of our company, and we expect that to continue in 2024. Our business has minimal capital intensity, and we expect capital expenditures between $8 to $12 million.

Consistent with historical trends and in connection with our 2004 top line outlook, we expect higher adjusted EBITDA and higher adjusted EBITDA margins during the second half of the year.

Q1, adjusted EBITDA, ranging from $12 million to $15 million or 14, 5% to 17% on a margin basis.

Strong cash flow from operation has been a hallmark of our company and we expect that to continue in 2004, our business has minimal capital intensity and we expect capital expenditures between $8 million to $12 million in 'twenty four.

Murray.

Please we celebrate the performance and progress in 2000 and suite. We are also excited about our prospects to expand our business around the globe and look forward to sharing our progress with you over the coming quarters.

Operator that concludes our prepared remarks, we are now ready for Q&A.

Dana: In summary, we are pleased with Cellebrite's performance and progress in. We are also excited about our prospects to expand our business around the globe and look forward to sharing our progress with you over the coming months. Operator, that concludes our prepared remarks. We are now ready for Q&A. The floor is now open to questions. At this time, if you have a question or comment, please press star one on your telephone keypad. If at any point your question is answered, you may remove yourself from the queue by pressing star 2.

The floor is now open for questions. At this time, if you have a question or comment. Please press star one on your telephone keypad.

If at any point. Your question is answered you may remove yourself from the queue by pressing star two.

Again, we ask that you pick up your handset when posing your questions to provide optimal sound quality.

<unk>.

Okay.

Our first question comes from Brad Zelnick with Deutsche Bank. Please go ahead.

Great. Thanks, very much and congrats on a strong finish to the year.

Operator: Again, we ask that you pick up your handset when posing your questions to provide optimal sound quality. Thank you. Our first question comes from Brad Zelnick with Deutsche Bank. Please go ahead.

Got one for USD and then one for Donna Youll see the innovation.

You talked about with insights driving this feat of investigation sounds really powerful.

And I picked up on your example of the agency that saw a 65% increase in what they were spending but can you talk a little bit more in terms of how it's priced and if we look forward a year from now.

Brad Zelnick: Great, thanks very much. And congratulations on a strong finish to the year. I've got one for Yossi and then one for Donna.

Shaul Eyal: Yossi, the innovation that you talked about with Insights, driving the speed of investigation, sounds really powerful. And I picked up on your example of the agency that saw a 65% increase in what they were spending. But can you talk a little bit more in terms of how it's priced? And if we look forward a year from now?

What percentage of new and expansion coming from insights will make you. Please.

And maybe also as well what's the risk that it makes investigators so much more productive.

Your customers actually need fewer units.

I would ask you to repeat the last part of your question what was the add on at the end.

I didn't hear you so I believe it.

Shaul Eyal: You know, what percentage of new and expansion coming from Insights will make you pleased? And maybe also, as well, what's the risk that it makes investigators so much more productive that your customers actually need fewer years? I would ask you to repeat the last part of your question. What was the add-on at the end? I didn't hear it properly.

If it makes investigators that much more productive that they are able to achieve with their.

What they are trying to do.

At <unk> the speed.

The customer needs fewer units because they have fewer people doing the same job.

Hmm.

So okay. So first of all.

I have to say that.

In the bigger scheme.

Insights is part obviously of the.

The value proposition and a really differentiated.

Shaul Eyal: If it makes investigators that much more productive, that they're able to achieve what they're trying to do. Mike Cikos, Andrew Kramer, Cellebrite DI, because they have fewer people doing the same job. So, okay, so first of all, you know, I have to say that, in a bigger scheme, Insights is a part, obviously, of a value proposition and a really differentiated case-to-closure platform. And with Insights, everything starts. All the attractive elements of collecting review with special capabilities in a way that we didn't offer before. The Cellebrite Insights is a leading collection review piece.

I used to closure platform.

And with the insights everything starts on the attractive elements of it.

Collection review with special capabilities in a way that we didn't offer before.

The celebrate insights leading collection review piece.

The offer is first of all more value than any other legacy software that we're providing in the past it brings higher value because it combines capabilities that were pretty much trading. So overall I would say standalone solution that we're offering on the part of the entire scheme.

Shaul Eyal: It offers, first of all, more value than any other legacy software that we have provided in the past. It brings higher value because it combines capabilities that were pretty much spread in several, I would say, stand-alone solutions that offered only part of the entire scheme. Either collection is stand-alone, or the review is stand-alone.

Section as stand alone or the review as Standalone It combines everything under one roof.

This is juan.

It's definitely the good news by the way it brings higher value to the customers and the higher value can be translated to a higher price deck.

We anticipate and you were asking about the price that we can offer that's part in a range of 20% to 25% higher than what we used to price the former solutions in the past.

Shaul Eyal: It combines everything under one roof. This is just one example. It's definitely good news, by the way. It brings higher value to customers, and higher value can be translated to a higher price tag. And we anticipate, and you were asking about the price, that we can offer that part in a range of 20 to 25% higher than what we used to price the former solutions in the past. And obviously, part of the scheme is that we are coming with additional models as part of it. There are models and capabilities, and I mentioned a few of them in the past, like for example automation, that can basically increase the value and justify value pricing. And on top of that, there is the element of unlocking.

And obviously part of the scheme.

Is that we are coming with additional models as part of it.

Model and capabilities that I mentioned few of them in the past like for example, automation that can basically increased the value and justify basically.

The pricing and on top of that the element of the analogue I am glad to say I don't want you know we launched it two months ago, when the private sector one months ago.

In our public sector and there is a huge interest okay, and we believe that.

Right now in a phase of let's say.

Shaul Eyal: I'm glad to say, by the way, you know we launched it two months ago in the private sector, one month ago in the public sector, and there is a huge interest. And we believe that right now, in a phase of, let's say, probably three years' cycle, we can basically cover most, if not all, of our current installed base. As for the need, The pain by our customers, and we talk about it a lot, is clearly about the huge amount of data, the quantity, and the amount of data per digital source. But to your question specifically about the increasing needs, there is an element of a backlog in the way, I would say, the old way or inefficient way, investigations and data are being managed. And that will obviously increase the need for more licenses in that spectrum. Very, very helpful, and I appreciate all the color you've shared.

Probably three year cycle.

Basically cover most if not all of our current installed base.

As for the need.

The pain by our customers and we talk about it a lot is clearly about the huge amount of data quantity and and the amount of data per digital source, but to your question specifically about the increasing needs. There is an element of our backlog overall I would say.

All the way or inefficient way the way investigators investigations and data is being managed and that obviously increase the need for more licenses.

At spectrum.

Very very helpful and I appreciate all the color you've shared.

Maybe just for Donna.

Dana: Maybe just for Donna, it's great to see the ARR guidance in excess of what we expect, reflecting the confidence that you guys have and all the good things happening in the business. Can you maybe just give us a little bit more insight into the key assumptions? underlying the ARR guidance, and specifically the assumption that you have for net retention, which I'm not sure we saw for Q4, but any insight there would be helpful.

Great to see the <unk> guidance in excess of what we expected.

Reflecting the confidence that you guys have and all the good things happening in the business can you maybe just.

Give us a little bit more insight into the key assumptions.

Underlying the AOR guidance and specifically the assumption that you have for net retention, which I'm not sure. We we saw for Q4, but any insight there would be helpful. Thank you.

Great.

Dana: Great, so if we look at the ARL growth expected for 2024, it actually follows exactly what Yossi discussed in his prepared comments about the three main offering contributions to the growth. So when we look at a market, and a market is healthy, we continue to see demand for our insights offering to the digital forensics unit. We've been growing it substantially in 23. We'll continue to grow it through the introduction of insights in 24. PATHFINDER and GUARDIAN are getting increasing traction in the market. We believe that they will grow faster than our collection and review insights offering will grow. And all three of them together will provide ARR growth in 24.

Look at the AOR growth expected for 'twenty four it actually for us exactly what Youll see discussing these.

Yes.

<unk> comments about the three main offering contribution to the closer to the company. So when looking at the market and the market is healthy we continue to see demand for our insights offering to the DG confines excuse me we've been growing it.

Essentially in 'twenty three will continue to grow it.

He is reduction of insights in 'twenty four.

This Friday with Guardian.

Increased.

Get increasing traction in the market.

We believe that they would grow faster than our collection and review insights offering with <unk> and both of all three of them together will provide the AOR growth in 2004, when you look at net retention rate.

Mike Cikos: When we look at the net retention rate, the increase in ARR related to new customers ranges from 2% to 3%. So if you look at an ARR growth of 23 of 27%, the net retention rate is around 125%. Okay, thanks.

Related to new customer ranges from 2% to 3%. So if you look at an annual growth in 'twenty three 'twenty.

27% and net retention rate is around 125%.

Okay. Thank you.

Dana: The next question comes from Mike Cikos with Needham. Hey guys, thanks for taking the questions here. And I did just want to double check on the revenues in this quarter as well. I know that Donna, I believe you opened up your remarks by calling out some of the strengths in, let's say, Perpetual or ProServe, which were both stronger than we had modeled. And I'm just trying to get a better sense, like, for the ProServe and the training dynamics.

The next question comes from Mike <unk> with Needham.

Hey, guys. Thanks for taking the questions here and I did just want to go.

Double check on the on the revenues in this quarter as well.

No.

Don I believe you opened up your remarks by calling out some of the strength.

And let's say perpetual or proserv, which were both stronger than we had modeled.

I'm, just trying to get a better sense like where the pro serve and the training dynamics specifically.

Mike Cikos: Is this in any way underscoring the benefit of the learning management system that Cellebrite unveiled as part of its customer portal back in mid-October? Or is there something else to think through as far as the strength and training that we need?

Is this in any way underscoring the benefits of the learning management system that celebrate.

<unk> as part of its customer portal back in mid October or is there something else to think through.

As far as the strength in training that we're seeing there.

Shaul Eyal: I think, overall, Q4 was a very strong quarter. We grew our subscription business very highly, 26%, and we've grown the entire rest of the offerings as well at the same rate. Training was outperforming. The LMS launched in October actually supported the ability to better deliver the training that is being required by the customer, and we believe that it's attributed to some of this growth with a better platform. I hope this answer helps you. It does. It does indeed.

I think all together Q4 was very strong quarter, we grew our subscription business.

Very highly 26% in this quarter the impairments of the offerings while at the same rate training was outperforming database launched in October actually supported the ability to better deliver the training that is being required by the customer and we believe the data attributes that leads to some of these growth.

If the data.

Last one I hope this answers your question.

It does it does.

Mike Cikos: And I... I guess it's a bit of a two-parter. One, to build off that last one with... But maybe you or Yoshi could touch on this.

I guess a bit of a two parter one that bill go up that last one with the training.

Maybe your Yossi you could touch on this it's more of a.

Mike Cikos: It's more of a and Industry Dynamics. But I'm trying to get a better sense of whether training is considered a gating factor to broader adoption of the technology. And what I mean by that, like, I don't expect, let's say the NYPD is an example. I don't know if they're an agency or not, just because they're readily available. So if the NYPD is going to make cuts to its budget somewhere, I imagine the budget cuts might be more in training because that's considered a soft skill and maybe a hangup for having technical expertise to use Cellebrite, whereas I don't expect the NYPD to maybe make cuts around, let's say, patrol cars or bulletproof vests.

And industry dynamics.

I'm trying to get a better sense.

Is is training considered a gating factor to broader adoption of the technology.

What I mean by that.

I don't expect.

Let's say the NYPD is an example, I don't know if there an agency or not but just because they are readily available NYPD is going to make cuts to its budget somewhere I imagine the budget cuts might be more in training because thats considered as soft skill and maybe a hang up for <unk>.

<unk> technical expertise you celebrate whereas I don't expect.

The NYPD debated, making cuts around let's say patrol cars or a bulletproof vest as an example can you talk about that training element as far as what it means for feeder system into celebrates demand.

Shaul Eyal: Can you talk about that training element as far as what it means for a feeder system into Cellebrite demand? I hope that makes sense. I know it's a bit of a long story. No, no, no, that's cool, that's fine. At least I'll try.

Hope that makes sense I know, it's a bit of a along with your question.

No no.

That's fine.

I will try and I'll take it first of all from the.

Shaul Eyal: And I'll take it first of all from the customer's point of view and the element of training in our customers' lives. It is an essential element, especially in the United States, imperative. At the end of the day, our game in the quality of our C2C platform is to enable customers, we're talking about law enforcement, and I'm talking about the public sector, to go to court and stand behind the evidence. And as such, training is an essential element, was, is, and will continue to be. I'll talk to you in a minute about what we are going to do with it. When it comes to Cellebrite, I see the training as, I would say, something with two heads.

From the customers' point of view and the element of planning in our customers' lives. It is an essential element, especially in the United States.

At the end of the day.

Our game in the quality of our CTC platform is to enable customers talking about law enforcement and I'm talking about the public sector to go to court and stand behind the evidence and as such training is an essential element was is and will continue to be.

I will touch on them and that's what we're going to do with it.

When it comes to celebrate IC the training.

Yes.

I would say something with two heads one is a base to educate the customers in order to sell more software and by the way that's dynamic and trend is something that exist.

Shaul Eyal: One is a basis to educate customers in order to sell more software. And by the way, that's a dynamic and trend is something that exists, that existed this year and throughout the years. And second, it's a revenue source. That's obvious.

What was interesting this year and throughout the us and secondly, it's a revenue source that's all of you.

As for the budget I am less concerned first of all in the generic statement, you mentioned NYPD or others, we do not see any change in the trends of healthy budgets related to what our customers are offering I also want to say that.

Shaul Eyal: As for the budget, I am less concerned. First of all, in the generic statement, you mentioned NYPD or others. We do not see any change in the trend of healthy budgets related to what our customers are offering.

Shaul Eyal: I also want to say that while the budgets are growing, and the part of the budget for digital investigations, Cellebrite, with what we do, represents only a fraction of the overall budget of police forces. So I'm less concerned about any mega-development. We are not going to be disturbed, and the budget factor is going to remain healthy.

While.

The budgets are growing and the part of it.

Our budget for digital.

Investigations.

Celebrate with what we do it represents what budgets, which are related to also present, a fraction of the overall budget of police forces.

I'm less concerned about any major development, we are not going to be disturbed in the budget.

<unk> is going to remain healthy last word we see training as part of a much bigger scheme of investment in post sale customer experience and customer engagement in order to educate and push to see to see by the way customers are requesting for that this is why I mentioned earlier this is Paul.

Shaul Eyal: We see training as part of a much bigger scheme of investment in post-sale customer experience and customer engagement in order to educate and push the C2C, but in the way customers are requesting that. This is why I mentioned earlier that as part of the new structure under the new CRO, we are building or starting to build a dedicated post-sale customer experience, and training is part of it. So we see lots of value, customers see lots of value, and I hope that I gave you a full perspective. No, very clear, Yossi.

Out of the new structure under the new CLO well, we are building will start to build a dedicated cross sale customer experience and the training is part of it. So we see lots of value customer feel a lot of value and I hope that gave you a full perspective here.

No very clear very clear I appreciate you calling that out I don't know, it's just it's a small piece when I think about the revenue pie in that I'm not trying to take away from that at all.

Mike Cikos: Very clear. I appreciate you calling it out. And I know it's just a small piece when I think about the revenue pie. I'm not, I'm not trying to take away from that at all.

Mike Cikos: But just wanted to highlight that as I'm trying to piece together this broader industry dynamic and what training needs to celebrate specifically. So thank you for all that. I do appreciate it.

Just wanted to highlight that as I'm trying to piece together this broader industry dynamics and what the training means to celebrate specifically so thank you for all that I do appreciate it.

Tomer Zilberman: Thank you. The next question comes from Tal Liani with Bank of America. Hey guys, it's actually Tomer Zilberman, On4Tall.

Thank you.

The next question comes from Tao Liana <unk> with Bank of America.

Hey, guys, it's actually tomer Silverman on for Tal. Thank you for the question.

Shaul Eyal: Thank you for the questions. My first one, you know, you talked a little bit in your prepared remarks about the success you're seeing on Pathfinder and Guardian. Just wondering what the overall contributions are of your Analyze and Manage solutions. I think at one point in time, we knew that Analyze, I think roughly 5-6% of your revenue managed was close to zero, so I'm curious how that's trending now and where you expect that to go. Okay, so first of all, I would like to say, you know, I went back to the case-to-closure platform.

My first one you talked a little bit in your prepared remarks about the success, you're seeing on Pathfinder and Guardian.

Wondering what the overall contributions are of your analyzed and managed solutions.

And one point in time, we knew that analyzes I think roughly 56% of your revenue manage with close to zero. So curious how that's trending now and you know where do you expect that to go to in 2024 and beyond.

Okay. So first of all I would like to say you know I go back to the case to closure platform.

And one needs to understand that.

Shaul Eyal: And one needs to understand that we went in this direction and we went in the direction of streamlining, streamlining, our entire portfolio because today, talking about one stand-alone without the others doesn't make much sense, from our perspective, but I'm glad to say also from our customers' perspective. The entire element of integrating or looking at one integrated platform which serves one integrated flow in the investigative world is critical for the success of our customers, and obviously, as a result, as we look into the future, the Pathfinder and Guardian both, we have left a much bigger room in our total top line and then portfolio. I can say that we had pretty much strong growth in Q4 and throughout the entire 2023 for both Pathfinder, again investigative analytics, and Guardian, our evidence management, and, as I said, we are serving an emerging need. At the moment, the volume of both solutions is around 10% of our entire result in 2023, and we expect, basically, a greater pipeline and potential to accelerate both solutions. The Guardian, specifically.

We went in this direction and we went in the direction of streamlining streamlining our entire portfolio today talk about one stand alone without the others doesn't make much sense from our perspective, but I would like to say also from our customers' perspective and the entire elementals integrate.

<unk> are looking at one integrated platform, which serves one integrated slowing the investigative world is critical for the success of our customers and obviously as a result, as we look into the future the Pathfinder and Guardian, both we live a much bigger room.

In an hour.

Total topline and then portfolio.

I can say that we had for both Pathfinder again investigative analytics and Guardian, our evidence management.

Strong growth in Q4 and throughout the entire 2023 and.

As I said, we are serving in an emerging need it.

At the moment.

That.

The volume of both solutions is around the 10% of our entire.

Results in 2023, and we expect basically I would say greater python and potential to accelerate both solutions.

The Guardian specifically.

Shaul Eyal: The meaning is not mostly in the volume of business. Clearly, it's something that is about to grow 50% and even more year over year. But it's the fact that this is an integrative component that brings together the entire C2C on the digital forensics unit side and on the investigative unit side. And it has, I would say, strategic meaning.

The meaning is not mostly in the volume of business clearly something that is about to grow 50% and even more year over year, but it's the fact that this is an integrity component that combines together the entire CTC on the.

Digital for us into new sites and on the investigators unit side and it does as well.

Strategic many so I'll stop here and see if I answered your question properly.

Dana: So I'll stop here and see if I answered your question properly. Yes, absolutely. And then just as a follow-up, you talked about subscriptions now being 85% of revenue and, you know, the transition to subscriptions being largely in the rearview mirror, but question, you know, should we assume that 85%, give or take, as the benchmark for where a subscription will fit? I mean, your perpetual grew much stronger than anticipated this quarter. And I assume that, you know, you'll have some level of government customers that will still require perpetual. So the question is really around, you know, where do you see the benchmark? So maybe I'll take the answer, and I'll start with Dan.

Yes, absolutely and then just as a follow up you talked about subscription now being 85% of revenue and the transition to subscription being <unk>.

Largely in the rearview mirror, but question.

Should we assume that 85% give or take is is it a benchmark for where subscription will sit I mean, your perpetual grew much stronger than anticipated this quarter and I assume that you will have some level of government customers that will still require perpetual. So my question is really around.

Where do you see the benchmark for subscription going forward.

So maybe I'll take the answer and I'll start with Dan Firstly, a very good to see that customers around the globe actually.

Shaul Eyal: First, we are very grateful to see that our customers all around the globe are actually accepting the subscription business, and our perpetual business in the last half year was almost null. So that means that even the strongest part of our selling portion of the year, they have to, with the federal government and with larger agencies, they all accepted our subscription offering and the advantages that are coming. 85% is a good point for our subscription business to be out of total revenue, considering what Yossi said before about training and the importance of training, professional services that will be attributed also in the future to our enterprise solutions, and the fact that we still have some harder components in our product line. That's great, thank you. The next question comes from Jeff VanRieh with Greg Hollum. Please go ahead.

<unk>, the subscription business and a perpetual business.

The year was almost not so that means that even in the strongest as far the <unk> setting.

A portion of the year and a half two with federal government and we could argue agencies. They are assistant our subscription offering and the advantages that are coming receipt.

85% is a good point for our subscription business to be out of the total revenue considering what you said before on training and the importance of training.

Professional services that will be attributed also in the future to our enterprise solutions and the fact that we still have some hardware components.

Mix.

That's great. Thank you guys.

Okay.

The next question comes from Jeff Van <unk> with Craig Hallum. Please go ahead.

Shaul Eyal: Great, I'd echo my congratulations, obviously, on Hamas and the conflict. You guys are in the center of just really impressive performance by the team. Three questions for me. One, on the sales motion, Yossi, where would you grade yourself in terms of your efforts to get from the DFU to the IU? You know, how dialed in do you have that motion?

Great idea Echo my congratulations obviously with Maas in the conflict you guys are in the center of just really impressive performance by the team three questions for me one on the sales motion Youll see where would you grade yourself in terms of your efforts to get from the.

<unk> you.

How dialed in do you have that motion.

Shaul Eyal: Just maybe put that in a little context. Let's put it this way, there is a clear growth engine for the company, and this has been the leading growth engine for years by now, and that's the DSG and the Digital Forensic Unit, with the relevant portfolio, which is around our entire offering of insights as a flagship solution, and The Guardian. That movement will continue to grow. We continue to invest in that direction. And with it, by the way, a dedicated sales force in each one of our sub-regions, America, EMEA, and Asia-Pacific. And, by the way, not to mention the collection piece as part of the private partnership.

Just maybe put that in a little context.

Let's put it this way.

There is.

A clear growth engine for the company.

This is the leading growth engine for us by now and Thats the issue.

And the digital forensic unit.

With the.

The relevant portfolio, which is around our entire offering of insights as the flagship solution and the guardian that motion.

We'll continue to grow we continue to invest in that direction.

And with that by the way they indicate that sales force in each one of our sub regions America, EMEA and Asia Pacific and by the way not to mention the collection piece as part of the private sector.

Shaul Eyal: The investigative units, the more we grow, I'm glad to say that we see that and we take it very seriously as, I would say, another growth engine by itself. The KPIs over there for the end-users are different, the budgets over there are impressive, and the pains and the needs of the customers force us basically to manage them in an upgraded way with a dedicated sales force, and, by the way, dedicated marketing, and so on and so forth. So on the one-on-one need to understand, we are working with an agency, and as I said, there is a C2C platform, but when it comes to the investigative role, we will add more forces along the road in order to make sure that we are, I would say, fulfilling the potential. And just to remind you, potential in that space, only if I take the pathfinder alone, is a pace or anticipated growth pace of 35 to I'll stop here, just to see if my answer was in your direction. It was, thank you.

The investigators units the more we grow.

We I'm glad to say that we see that and we take it very seriously as I would say another growth engine by itself.

The kpis over there for the end users are different.

The budgets over there are impressive and the pain and the needs of the customers forced us basically to manage it.

Upgraded way with a dedicated sales force and by the way that it can take marketing and so on and so forth. So.

On the one and one needs to understand we are working with an agency and as I said, there is a CTC platform, but when it comes to the investigative world.

And more process along the road in order to make sure that we are.

I would say fulfilling the potential and just to remind potential in that space only if I take the bet fund that alone is a pace of anticipated growth pace of 35% to 50% year over year.

I'll stop here.

Just to see if I my answer was in your direction.

It was thank you.

Shaul Eyal: And you'll see then, just shifting gears, M&A, you know, obviously a real nice cash generation. I think as you look at the digital tools that are relevant to law enforcement and federal agencies and incorporating them into your platform, it seems like a lot of opportunity. How should we think about M&A and the role it's going to play maybe in 24? It's a great item, let's put it this way.

And Youll see then just shifting gears M&A, obviously real nice cash generation I think as you look at the digital tools that are relevant to law enforcement and federal agencies and incorporating them into your platform. It seems like a lot of opportunity how should we think about M&A in the role it's going to play maybe in 'twenty four.

It's a great item, let's put it this way.

Shaul Eyal: In a wider context, one needs to look at Cellebrite, and as you said, right now it is a platform company, and the C2C platform will enable us basically to make much better decisions regarding make or buy. There is also, if you look at our market, an impressive TUM that we are dealing with, and there is a big growth opportunity over there. And on top of that, clearly, there is the element of the Cellebrite balance sheet, and we have a very strong balance sheet, as you mentioned, and that enables us to make smart moves, but..., in the right target and in the right arm. I would like to say clearly that inorganic growth is... and Chris.

And in the wider context, one need to look at celebrate.

And as you said right now it is a platform company and the <unk> platform and enable us basically to match much better our decisions regarding medical by.

There is also if you look at our market and impressive as Tom.

We're dealing with and there is a big growth opportunity over there and on top of that clearly there is the element of the celebrate balance sheet.

And we have.

Strong balance sheets as you mentioned.

And that's enabled us to make smart moves but.

In the right targets and in the Reits Army.

I would like to say clearly interesting inorganic growth is.

Clear part of our long term strategy by the way both technological as tuck ins and maybe some larger opportunities if that would make sense and <unk>.

Shaul Eyal: Both technological packings and larger opportunities, if that would make sense. Clearly, as I mentioned, doing an inorganic move while we are investing a lot in innovation will help us to build a market presence. Just to emphasize all the numbers that you see right now do not include a lot of data, but clearly, we have some targets that we are looking at, and if anything would be relevant, we'll update you. Okay. And if I could sneak in two last smaller questions and briefly, Dana, you touched on churn. I might have missed a little bit of it.

Clearly as I mentioned the Tam.

Doing an inorganic move.

While we are investing a lot of innovation will help us to build a market presence.

Just to emphasize all the numbers that you see right now do not include the include only includes only organic elements, but clearly we have some targets that we're looking at them.

If something would be relevant we loved it.

Okay, great and if I could sneak in two last smaller question isn't briefly Donna you touched on churn I might have missed a little bit of it I know you've had some intentional pruning of the customer base, but just give me a little more context, how do you see churn playing out during 2004.

Dana: I know you've had some intentional pruning of the customer base, but just give me a little more context. How do you see churn playing out during 24? So if you look at our churn, which is slightly above 9%, around 2% was associated with customers that we've decided to stop doing business with. This will dissipate over the next year and a half, and so we believe that our normalized churn should be anything between 7% to 8% on an ongoing basis.

So if you look at our churn, which is slightly above 9%.

2% was associated with customer.

Customers that we've decided to stop our business. Please.

This will dissipate over the next year and a half.

And so we believe that our normalized churn should be anything between 7% to 8% on an ongoing basis.

Dana: We work diligently to improve it on an ongoing basis. And then I guess just lastly, the overall backdrop, you talked about budgets, but in particular, you know, there's been talk from time to time of peers getting fairly aggressive on price increases. Just any observations on what the peers are doing? I mean, obviously, insights puts you in a different value proposition. I get what you're doing, but I'm just kind of curious what the competitors have been doing. Generally speaking, I'll take at least for a start, I'm glad to say that this is a value-based market. Budgets are there, this is clear, and there is a clear readiness to pay more for value. If we look, and based on what we know, our competitors are doing the same. Some are increasing prices on an annual basis as part of a systematic approach, sometimes by version. And some are increasing prices as part of, I would say, a long-term strategy.

Working diligently to improve it on an ongoing.

Okay.

And then I guess, just lastly, overall backdrop, you talked about budgets, but in particular.

Talk from time to time of peers getting fairly aggressive on price increases just any observations on what the peers are doing I mean, obviously insights puts you on a different value proposition I get what you're doing but I'm just kind of curious what the competitors have been doing.

Generally speaking I'll take at least towards start.

I am glad to say that this is a value based market.

Budgets are there this is clear and there is a clear readiness to pay more for value.

If we look and based on what we know our competitors are doing the same some are increasing prices on an annual basis as part of a systematic approach sometimes for version and some are increasing prices as part of our I would say long term strategy.

Shaul Eyal: So, one, we are no different. We are different in the fact that we bring a differentiated offering that basically justifies higher pricing. But I would say that's applicable to the entire industry.

No.

One we are no different.

We are different and the fact that we're bringing a differentiated offering that basically justify higher pricing, but I would say that's applicable for the entire industry.

Okay.

Operator: Thank you. The next question comes from Doug Bruhl with J.P. Morgan, a question, maybe one around your FedRAMP authorization announcement.

Got it thank you.

Okay.

The next question comes from Doug <unk> with J P. Morgan.

Okay.

My question, maybe one around your fed ramp authorization announcement any sense of how large of an incremental market you expect at eventual approval to a block.

Shaul Eyal: Any sense of how large of an incremental market you expect that eventual approval to unlock? So, first of all, I would like to say that FedRAMP is a meaningful part, part of the expansion of our value proposition and making an even stronger differentiation in, I would say, our compelling C2C case-to-closure platform. Specifically, that part of activity is more aimed at the area of the federal business in the United States.

So.

First of all I would like to say that federal is.

A meaningful part.

As part of the expansion of our value proposition and making even stronger differentiation.

I'd say, our compelling C to C case to closure platform specifically.

Specifically.

<unk>.

That's part of activity is more aimed to the area of the federal business in the United States.

Shaul Eyal: And clearly, we are investing in FedRAMP in order to open more doors in that space and practically increase the total available market. By the way, I have to say that our federal business is very strong as it is right now, and that's the only reason that we have a very strong base in order to expand. Specific to your question, we assume that this is something that can even double the size of what we do today because, with FedRAMP, it will enable the company to access definitely additional buying centers within existing logos that we have already today. And if we are quick enough, and we intend to be in the middle of 2024, we believe that we'll be in a situation where we pass certain processes in order to talk about it, so in the second half of 20 And with that, we can guarantee or capture budgets of 2025.

And.

Clearly we are investing in federal <unk> in order to open more doors in that space and practically increasing the total available market.

By the way I have to say that our federal business is very strong as it is right now and thats. The only strength that we entered a very strong base in order to expand specific to your question. We assume that this is something that can even double the size of what we do today.

Because with federal.

It will enable the company to access definitely additional buying centers within existing logos that we have already today.

And if we will be quick enough and we intend to be in the middle of 2024, and we believe that will be in a situation that we will pass certain processes in order to talk about it. So in the second half of 2024 and with US we can guarantee or capture a budget of 2025.

Shaul Eyal: I have to emphasize this final statement that FedRAMP is not specifically about one or other solution. It's applicable to the entire offering of our case-to-closure platform. So both for Insights and Pathfinder and the Guardian, everything can be offered not only on-premises but then also in the cloud, and FedRAMP will enable us, as a final rule, to show a level of security which meets the hard demands of this specific segment. Great, thank you so much. Thank you. The next question comes from Jonathan Ho with William Blair.

I have to emphasize his final statement that federal is not specifically to one or other solution is applicable to the entire offering of our case to closure platform. So both for insights.

<unk> Pathfinder.

Pathfinder and the Guardian everything can be offered not only on Prem, but then.

Also on the cloud and federal labeled us as the final rule to show level of security, which meets the higher demands of this specific.

Settlement.

Great. Thank you so much.

Thank you.

The next question comes from Jonathan Ho with William Blair.

Jonathan Ho: Hi, good morning, and congratulations on the strong results. I wanted to start out with a little bit more detail on the insights, sort of a change here. Can you maybe help us understand what's changed with the product and how you're able to speed up investigations and sort of raise productivity with your customers? Sure. Insights, and I'll talk specifically about the Insights Collection Review, basically brings to the table capabilities which are for, well, stand-alone disconnected within some few solutions. On the access part, it enables much quicker access, and it also enables access via Waze or in collection that used to be part of our high-end premium only, example, full file system, and I remember we talked about that in the past. Then it's about the processing and review element. We are talking here about factor four, factor six in terms of speed.

Hi, good morning, and congratulations on the strong results.

I wanted to just start out with a little bit more detail into the insights.

Sort of.

A change here can you maybe help us understand whats changed with the product and how you are able to speed up the investigations and sort of rates productivity with your customers.

Sure.

Insights is.

And I'll talk specifically about the insights collected review.

Basically brings to the table capabilities, which for.

<unk> Standalone disconnected within some few solutions.

On the access part if enables a much quicker access.

It also enables us to access via ways or in collection that used to be part of our high end premium only for example, full file system and I remember we talked about that in the past then it's about the processing and review element. We are talking here about Fox or four factor <unk> in terms of.

Speed at the end of the day, if you think about the major kpis in a typical lab.

Shaul Eyal: At the end of the day, if you think about the major KPIs in a typical lab of our customers, it's how to reduce backlog and how to access more devices faster as part of a growing element of digital sources, as part of growing investigative open cases. So when we bring together methods which were only on the premium, together with the higher speed, combine that with a much better UX and UI. That's the result that you get, and that's basically the value that it's going to bring to our customers. As I said, by the way, since launch, we are getting really terrific feedback about how Insights improves the mode of operation within labs and within investigative units. Excellent. And then, with regard to the C2C platform, do customers today purchase these solutions as a bundle?

Our customers how to reduce backlog and how to access more devices faster as part of a piling.

The element of digital social part of timing investigative open cases, so when we bring together.

Methods, which were only on the premium together with the higher Steve combine that with a much better UX UI.

That's the result that you get and that's basically the value that it's going to bring to our customers and as I said by the way since launch we are getting really terrific.

<unk> about how insights.

Improve motive operation within labs and within investigative unit.

Excellent and then with regards to the CTC platform to.

New customers today purchases solutions as a bundle.

Shaul Eyal: And how do you think about the go-to-market movement and investments that you need to make to maybe shift this to be a bit more of a strategic discussion? Thank you. So I think it's important to understand that today Cellebrite offers a real, end-to-end platform and not just, I would say, a pile of standalones because, at the tactical level, clearly, a lab will continue to buy collection review and will continue to buy insights as such. But as I said in the beginning or as part of an answer to another question, for the commissioner or for the head of investigation and intelligence within the police, it makes less sense today to talk about collection as a standalone. Because there is a need to see the entire scheme of things. How do I collect, but then, with a streamlined platform like ours, how do I share and review as quickly as possible? How do I improve the speed and quality of e-discovery? How do I deal with chain of custody, something that we do with our streamlined guardian, which connects both collected data from insights and analyzed data from Pathfinder?

And how do you think about the go to market motion and investments that you need to make to maybe shift this to be a bit more of a strategic discussion. Thank you.

So I think it's important to understand that today.

Celebrate offers arena.

End to end platform and not just I would say a pile of standalone because.

On the tactical level clearly a lab will continue to buy collection review will continue to buy insights as such but as I said in the beginning or.

As part of an answer to another question for the commissioner or for the head of investigation and intelligence within police. It makes less sense today to talk about collection of Standalone Nichols.

Because there is a need to see the entire scheme of things how do I collect but then with a streamlined platform like ours, how do I share and review as quickly as possible, how do I improve speed and quality of discovery, how do I deal with chain of custody something that we do with our streamline Guardian, which can.

Next both collected data from insides and.

Analyzed data from Pathfinder. So this is not only something that we position its reflects athene.

Shaul Eyal: So this is not only something that we position; it reflects a thing. And the entire direction of our customers is going into a streamlined environment, which forces, basically, or enforces, and makes a necessity for an end-to-end platform. And not just, I would say, a pile of standalone solutions.

And the entire direction all of our customers is going into a streamline environment, which forces basically or enforce it makes it a necessity for an end to end platform and I'll, just I would say piles.

Standalone solutions.

Shaul Eyal: Great, thank you. This concludes the Q&A portion of today's call. I would now like to turn the floor over to Cellebrite CEO Yossi Carmel for additional or closing remarks. All right, so first of all, thank you all for joining us and thank you for taking the time. I'd like to emphasize that it was a very successful year for the company. Especially against the background of several challenges, it was really a

Great. Thank you.

This concludes the Q&A portion of today's call.

I would now like to turn the floor over to celebrate CEO Yossi Carmel for additional or closing remarks.

Alright, So first of all thank you all for joining us and thank you for taking the time.

I would like to emphasize it was a very successful year for the company.

Especially from a background of several challenges it was really a very good year.

Shaul Eyal: The future will be even better, and I have to say that we are excited about the opportunity and about what he's expecting us to do as part of the future of Cellebrite. I would like, as a final word, to thank again all the Cellebrites, the Cellebrite employees, for their professionalism, for their resilience, and for their engagement, and obviously for the great results in 2023. Thank you all. Have a great day! Thank you. This concludes today's Cellebrite fourth quarter and full year 2023 financial results conference call. Please disconnect your line at this time and have a wonderful day with Shaul Eyal, Mike Cikos, Andrew Kramer, Cellebrite DI, and Mike Cikos. We'll see you next time.

The future will be even better and I have to say that we are excited.

About opportunity and about what he is expecting us this part of the future celebrate I would like as a final word to think again.

To all of the celebrated the celebrate employees for their professionalism for the resiliency and for the engagement and obviously for the great results of 2023. Thank you all.

Have a great day.

Thank you. This concludes today's celebrate fourth quarter and full year 2023 financial results Conference call. Please disconnect. Your line at this time and have a wonderful day.

[music].