Q1 2025 Cellebrite DI Ltd Earnings Call

Operator: Welcome to the Cellebrite First Quarter 2025 Financial Results Conference Call. At this time, all participants have been placed on a listen-only mode and the floor will be open for 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. 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 0.

Welcome to the celebrate first quarter 'twenty 25 financial results conference call. At this time, all participants have been placed on a listen only mode and the floor will be opened for 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 too.

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.

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

Speaker Change: I'd now like to turn the call over to your first speaker today, Mr. Andrew Kramer Mr. Kramer the floor is yours.

Andrew Kramer: Mr. Kramer, the floor is Thank you very much, Erica, and welcome, everybody, to Cellebrite's first quarter 2025 financial results call. I'm joined here today at our U.S. headquarters outside of Washington, D.C., by our primary speakers.

Andrew Kramer: Thank you very much Erika and welcome everybody to celebrate its first quarter 2025 financial results call.

I'm joined here today at our U S headquarters outside of Washington D. C. By our primary speakers, Tom Hogan celebrates interim CEO and Donna Garner celebrate CFO.

Andrew Kramer: Tom Hogan, Cellebrite's interim CEO, and Dana Gerner, Cellebrite's CFO.

Andrew Kramer: Joining us in person is Marcus Jewell, our CRO, and Ronnen Armon, our chief products and technology officer, is participating remotely. Marcus and Ronnen will be available during Q&A.

Andrew Kramer: Joining us in person as market stool, our CRO and run at our mine, our chief products and Technology officer is participating remotely Marcus and Ronan will be available during Q&A.

Andrew Kramer: There's a slide presentation that accompanies our prepared remarks. Please advance the slides in the webcast viewer to follow our commentary. We'll call out the slide number we're referring to in our remarks.

Andrew Kramer: Slide presentation that accompanies our prepared remarks, please advance the slides in the webcast viewer to follow our commentary we'll call out the slide number we're referring to in our remarks. This call's being recorded and a replay of the recording will be will be made available on our website. Shortly after the call along with a copy of the prepared remarks.

Andrew Kramer: This call is being recorded, and a replay of the recording will be made available on our website shortly after the call, along with a copy of the prepared remarks.

Andrew Kramer: Starting on slide number two, a copy of today's press release and financial statements, including GAAP to non-GAAP reconciliations, the slide presentation, and the quarterly financial tables and supplemental historical financial information for each quarter of the past couple of years are available on the Investor Relations website at investors.celebrite.com. Also, unless stated otherwise, our discussion of our first quarter 2025 financial metrics, as well as the provided in our outlook, will be done on a non-GAAP basis only, and all historical comparisons are with the first quarter of 2024.

Andrew Kramer: Starting on slide number two a copy of today's press release and financial statements, including GAAP to non-GAAP reconciliations the slide presentation, and our quarterly financial tables, and supplemental historical financial information for each quarter of the past couple of years are available on the Investor Relations website at investors start to celebrate dot com.

Andrew Kramer: Also unless stated otherwise our discussion of our first quarter 2025 financial metrics as well as the financial metrics provided in our outlook will be done on a non-GAAP basis, only and all historical comparisons are with the first quarter of 2024. In addition, please note that statements made during this call that are not statements of historical.

Andrew Kramer: 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. They also could cause actual results to differ materially from historical results and or from forecasts.

Andrew Kramer: <unk> 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. They could also cause actual results to differ materially from historical results <unk> from forecasts. Some of these forward looking statements are discussed.

Andrew Kramer: 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 March 18, 2025. The company does not undertake to update any forward-looking statements to reflect future events or circumstances.

Andrew Kramer: Under the heading risk factors and elsewhere in the Companys annual report on form 20-F filed with the SEC on March 18th 2025. The company does not undertake to update any forward looking statements to reflect future events or circumstances.

Andrew Kramer: Slide number three provides the agenda of the topics we'll cover on today's call.

Andrew Kramer: Slide number three provides the agenda of the topics we'll cover on today's call.

Thomas Hogan: And with that being said, I'll now turn the call over to Tom Hogan. Tom. Thanks, Andy. Let's just jump right in. Cellebrite delivered strong 23% year-on-year ARR growth in the first quarter. Consistent with our stewardship in managing both revenue and spend, we also delivered 34% year-on-year growth in our adjusted EBITDA, resulting in a 22% margin. The combination delivered a 45 rule of X in the quarter and 48 for the trailing 12 months, both within our committed range of balanced performance. We remain committed to growth as our priority, while dynamically tuning our spending to support our bottom line objectives.

Andrew Kramer: And with that being said I'll now turn the call over to Tom Hogan Tom.

Tom Hogan: Thanks, Andy let's just jump.

Tom Hogan: Jump right in and celebrate delivered strong 23% year on year growth in the first quarter.

Tom Hogan: Consistent with our stewardship and managing both revenue and spend we also delivered 34% year on year growth in our adjusted EBITDA, resulting in a 22% margin.

Tom Hogan: The combination delivered a 45 rule of X in the quarter, It's 48 for the trailing 12 months balls.

Tom Hogan: Within our committed range of balanced performance.

Tom Hogan: We remain committed to growth is our priority, while dynamically tuning our spending to support our bottom line objectives.

Thomas Hogan: Overall, our value proposition continues to resonate in the market. Interest in our platform remains healthy. uptake on our insights solution continues to increase. customers are realizing the brand promise of Justice Accelerator. Strength and overachievement in the U.S. state and local, LATAM, and the Asia-Pacific regions were offset by modest shortfalls in the U.S. federal segment and our EMEA geography. The strength of our total performance was a byproduct of our global diversification and the range of our solutions across federal, state and local, defense, intelligence, and the private sector. Before adding further context to our federal business, I'll highlight two important barometers that continue to signal strength.

Overall, our value proposition continues to resonate in the market interest in our platform remains healthy.

Tom Hogan: Take on our insights solution continues to increase and customers are realizing the brand promise of justice accelerated.

Tom Hogan: Strengthen over achievement in the U S state and local law.

Tom Hogan: Latam and the Asia Pacific regions were offset by modest shortfalls in the U S. Federal segment in our EMEA geography.

Tom Hogan: The strength of our total performance was a byproduct of our global diversification and.

Tom Hogan: The range of our solutions across federal state and local defense intelligence and the private sector.

Tom Hogan: Before adding further context to our federal business.

Tom Hogan: Late two important parameters that continue to signal strength.

Thomas Hogan: First, we remain on track with our overall insights migration, which is a direct reflection of the value delivered with our core digital forensics offering. We finished the first quarter with over 30% of our install base converted and we've remained on track to hit our 2025 objective of a 50% conversion. Second, as we've shared, extending our value proposition to the critical cloud-based Guardian product as adoption of and interest in this purpose-built platform for collaboration and chain of custody continues to accelerate. we delivered our third consecutive quarter of year-over-year ARR growth of over 100 percent. The power of the Cellebrite platform is also reflected in our pipeline.

Tom Hogan: First we remain on track with our overall insights migration.

Tom Hogan: Which is a direct reflection of the value delivered with our core digital forensics offering.

Tom Hogan: We finished the first quarter with over 30% of our installed base converted.

Tom Hogan: We remain on track to hit our 20 twenty-five objective of a 20 or a 50% conversion.

Tom Hogan: Second as we've shared extending our value proposition to the critical cloud based guardian product as adoption of an interest in this purpose built platform for collaboration and chain of custody continues to accelerate.

Tom Hogan: We delivered our third consecutive quarter of year over year growth of over 100%.

Tom Hogan: The power of the celebrate platform is also reflected in our pipeline.

Thomas Hogan: where transactions that involve two or more of our flagship solutions. carry a disproportionate increase in average deal size, in many cases representing 10X the size of Insight's standalone transaction.

Tom Hogan: Were transactions that involve two or more of our flagship solutions.

Tom Hogan: Carry a disproportionate increase in average deal size in many cases, representing 10 X the size of insight Standalone transactions.

Thomas Hogan: Now, let me add some perspective around our federal business. I first want to remind people that this business has produced a 25% CAGR in ARR over each of the past three years, and it represents roughly 17% of our 2024 revenue. Today, despite current volatility Our view is that the opportunities for future growth not only remain attractive, but have increased meaningfully over the past two quarters. This is a function of multiple current and emerging tailwinds starting with the structural changes associated with the recent launch of our Cellebrite Federal Solutions Unit and our ongoing investment to achieve FedRAMP authorization to operate.

Tom Hogan: Now, let me add some perspective around our federal business.

Tom Hogan: I first want to remind people.

Tom Hogan: This business has produced a 25% CAGR and a R. R over each of the past three years and it represents roughly 17% of our 2020 for revenue.

Tom Hogan: Today, despite current volatility.

Tom Hogan: View is that the opportunities for future growth not only remain attractive but has increased meaningfully over the past two quarters.

Tom Hogan: This is a function of multiple current and emerging tailwind starting with the structural changes associated with the recent launch of.

Tom Hogan: Our celebrate federal solutions unit and.

Tom Hogan: Our ongoing investment to achieve fed ramp authorization to operate.

Thomas Hogan: These actions are amplified by the emerging macros around the increased sophistication of technology used in the pursuit of crime, including AI, along with the increased alignment of our portfolio with the new administration's focus on securing our borders, mitigating the fentanyl epidemic and overall drug trafficking, reducing the heinous human trafficking industry, and finally, improving the overall productivity of all government agencies. While the short-term federal environment remains choppy, Our full year 2025 pipeline continues to expand. Our solutions are simply mission critical to safety and security across all levels of government and the spend related to the Cellebrite solutions remains small relative to both our societal impact and overall department budget.

These actions are amplified by the emerging macros around the increased sophistication of technology used in the pursuit of crime include.

Tom Hogan: Including AI.

Tom Hogan: Along with the increase the alignment of our portfolio with the new administration's focus on securing our borders mitigating the fentanyl epidemic and overall drug trafficking.

Tom Hogan: <unk>, the heinous human trafficking industry, and finally, improving the overall productivity of all government agencies.

Tom Hogan: While the short term federal environment remains choppy.

Tom Hogan: Our full year 2025 pipeline continues to expand.

Tom Hogan: Our solutions are simply mission critical to safety and security.

Speaker Change: Ross all levels of government and the spend related to celebrate solutions remains small relative to both our societal impact and overall department budgets.

Thomas Hogan: Dana will cover our second quarter guidance in detail, but I want to share in advance that while our outlook assumes that a continuation of the first quarter federal spending environment will persist into the second quarter, We see a clear opportunity to re-accelerate in the second half, given the expanding pipeline and the traditionally strong seasonality of the third quarter in the U.S. government. In EMEA, we're equally bullish on our pipeline and interest and expect our investments in our go-to-market teams will deliver an acceleration in the region in the second half of 2025. Within the past 30 days, our entire board and our executive team have spent two full weeks in the UK region and Germany to clearly demonstrate the company's commitment to the region, and both visits were well received by customers, by prospects, and by our team on the ground.

Speaker Change: Dana will cover our second quarter guidance in detail, but I want to share an advance that while our outlook assumes that a continuation of the first quarter federal spending environment will persist into the second quarter we.

Speaker Change: We see a clear opportunity to reaccelerate in the second half given the expanding pipeline and the traditionally strong seasonality of the third quarter in the U S government.

Speaker Change: In EMEA.

Speaker Change: We are equally bullish on our pipeline and interest and expect our investments in our go to market teams will deliver an acceleration in the region in the second half of 2025.

Speaker Change: Within the past 30 days, our entire board and our executive team have spent two full weeks in the U K region in Germany to clearly demonstrate the company's commitment to the region in both visits were well received by customers by prospects and by our team on the ground.

Thomas Hogan: Finally, I want to call out one segment in particular across the globe that has witnessed a material increase in opportunities, which is the intelligence and defense sector, which tracks with what I think we're all seeing in global geopolitics. This is a segment we're doubling down on from a messaging, positioning, and coverage perspective to ensure we meet demand and the opportunity.

Speaker Change: Finally, I want to call out one segment in particular across the globe that has witnessed a material increase in opportunities, which is the intelligence and defense sector, which which tracks with what I think we're all seeing.

Speaker Change: Global G. O politics. This is a segment, we're doubling down on from a messaging positioning and coverage perspective to ensure we meet demand and the opportunity.

Thomas Hogan: Before moving forward, I would reiterate that our U.S. state and local, Asia-Pac, and Latin America units delivered strong growth and continued momentum in the quarter.

Speaker Change: Before moving forward I would reiterate that our U S state and local.

Speaker Change: Asia Pac and Latin America units delivered strong growth and continued momentum in the quarter.

Thomas Hogan: To summarize. Our first quarter performance, before doing a quick click down on a few strategic milestones. I'd reiterate four things. First... Cellebrite continued to deliver robust year-over-year growth in ARR and revenue to support a Rule of X performance in our target 45 to 50 range. Second, intelligence and defense needs, combined with digitally-enabled crime, continue to escalate in both size and sophistication, thus driving increased demand. Third, our bottom line grew faster than the top line at 34 percent, highlighting the operating leverage inherent in our business model and reflecting positively on our ongoing commitment to drive profitable growth.

Speaker Change: To summarize.

Speaker Change: Our first quarter performance before doing a quick click down a few strategic milestones.

I'd react reiterate four things first celebrate continued to deliver robust year over year growth in our or in revenue.

Speaker Change: To support a rule of ex performance in our target 45 to 50 range.

Speaker Change: Second intelligence and defense needs combined with digitally enabled crime.

Speaker Change: Continue to escalate in both size and sophistication that's driving increased demand.

Speaker Change: Third our Bottomline grew faster than the top line at 34% highlighting the operating leverage inherent in our business model and reflecting positively on our ongoing commitment to drive profitable growth and fourth traction with our insights migration and the strategic.

Thomas Hogan: And fourth, traction with our Insights migration and the strategic penetration of our Guardian and Pathfinder products remain strong and on track.

Speaker Change: Penetration of our Guardian, and Pathfinder products remained strong and on track.

Thomas Hogan: Let me switch gears and talk about a couple of important milestones that were core to our business.

Speaker Change: Let me switch gears and talk about a couple of important milestones that were core to our business.

Thomas Hogan: First, a major go-to-market highlight occurred last month when we held our first-ever user conference. This Washington, D.C. event was sold out, attracting roughly 700 attendees from approximately 350 agencies and enterprises spanning 27 different countries. The energy, feedback, and collaboration with our customers was both palpable and motivating.

Speaker Change: First our major go to market highlight occurred last month, when we held our first ever user conference.

Speaker Change: This Washington D. C event was sold out attracting roughly 700 attendees from approximately 350 agencies and enterprises spanning 27 different countries. The.

Speaker Change: The energy feedback in collaboration with our customers was both palpable and motivating.

Thomas Hogan: We also launched our inaugural Digital Justice Awards. The winners of the 2025 justices represented 10 categories, including the case of the year, and recognized law enforcement and intelligence officers for exceptional service in the pursuit of justice. our 2025 User Conference. represented meaningful progress toward our goal of establishing the justice and this summit as the premier customer event in digital investigation.

Speaker Change: We also launched our inaugural digital Justice Awards. The winners of the 2025, just these represented 10 categories, including the case of the year.

Speaker Change: And recognize law enforcement and intelligence officers for exceptional service and the pursuit of Justice.

Speaker Change: Our 2025 user conference.

Speaker Change: Representing meaningful progress toward our goal of establishing the justice and the summit as the premier customer event and digital investigations.

Thomas Hogan: We look forward to next year's award ceremony, along with a significant expansion in our 2026 summit attendance.

Speaker Change: We look forward to next year's award ceremony, along with a significant expansion in our 2026 summit attendance.

Thomas Hogan: From a product and portfolio perspective, we announced our new spring 2025 release on May the 6 featuring our new cloud foundation and AI-powered innovations across the portfolio. The evolution of the Cellebrite cloud enables us to deliver a purpose-built user experience. that scales investigative capabilities and accelerates decision-making across public safety, intelligence, and enterprise sectors. We continue to see strong adoption of our cloud-enabled offerings, which are rapidly approaching 20% of our total ARR. At the same time, we delivered new AI-powered features and functionality aimed at elevating productivity and efficiency across our flagship offerings. while always keeping human expertise and engagement at its core.

Speaker Change: From a product and portfolio perspective, we announced our new spring 2025 release on May the sixth feature.

Speaker Change: Featuring our new cloud Foundation, and AI powered innovations across the portfolio.

Speaker Change: Evolution of the celebrate cloud enables us to deliver a purpose built user experience.

Speaker Change: That scales investigative capabilities and accelerates decision, making across public safety intelligence and enterprise sectors.

Speaker Change: We continue to see strong adoption of our cloud enabled offerings, which are rapidly approaching 20% of our total E. R. R.

At the same time, we delivered new AI powered features and functionality aimed at elevating productivity and efficiency across our flagship offerings.

Speaker Change: While always keeping human expertise and engagement at its core.

Thomas Hogan: To better reflect the emerging importance of Cellebrite to both the intelligence and defense segments, as well as our ongoing value in the private sector, the Case to Closure platform has been rebranded as the leading digital investigation platform.

Speaker Change: To better reflect the emerging importance of celebrate to both the intelligence and defense segments.

Speaker Change: As well as our ongoing value in the private sector. The case to closure platform has been rebranded as the leading digital investigation platform.

Thomas Hogan: Finally.

Speaker Change: Finally.

Thomas Hogan: Let me update you all on the status of our CEO search. Over the past four months, we've had the pleasure of meeting with a long list of eminently qualified candidates. We can't share those names for obvious reasons. and our interest in several of these candidates remains high. As we committed, we've been deliberate in this process to ensure we secure the right, best leader. It's not just our shareholders, our employees, and our customers that deserve a world-class leader. Our belief is that safety of our world also depends on it.

Speaker Change: Let me update you all on the status of our CEO search.

Speaker Change: Over the past four months we've.

Speaker Change: We've had the pleasure of meeting with a long list of eminently qualified candidates, we can't share those names for obvious reasons.

Speaker Change: And our interest in several of these candidates remains high.

Speaker Change: As we committed we've been deliberate in this process to ensure we secure the right best leader, it's not just our shareholders our employees and our customers that deserve a world class leader.

Speaker Change: Our belief is that safety of our world also depends on it.

Thomas Hogan: I want to also assure all of you that this company has not been in a holding pattern while this search has progressed. On the contrary, our board, our team of senior leaders, and I have moved with daily urgency, balancing the requisite focus on the present with an equally important eye on our future. As a result, we've elevated work on our strategic options, including, as you would expect, inorganic opportunities to expand our TAM and help fuel our long-term growth.

Speaker Change: I want to also assure all of you that this company has not been in a holding pattern. While this search has progressed.

On the contrary our board our team of senior leaders and I have moved with daily urgency balancing the requisite focus on the present with an equally important eye on our future.

Speaker Change: As a result, we've elevated workout our strategic options, including as you would expect inorganic opportunities to expand our Tam and help fuel our long term growth.

Thomas Hogan: As I've discussed in multiple forums over the past three months, I consider my current duties. the professional privilege of my lifetime. While I've led organizations 100 times the size, I've never led a company that wakes up every morning dedicated to making our neighborhoods, cities, country, and institutions safer. I'm honored every day to partner with the men and the women at Cellebrite and the dedicated and courageous customers we serve. My commitment to our board and our shareholders is to optimize value creation, enable the important mission of our customers, grow and reward our people, and usher in the next generation of leadership.

Speaker Change: As I've discussed in multiple forums over the past three months.

Speaker Change: I consider my current duties.

Speaker Change: The professional privilege of my lifetime.

Speaker Change: Well I've led organizations 100 times the size I've never let a company that wakes up every morning dedicated to making our neighborhoods cities country an institution safer.

Speaker Change: I'm honored everyday to partner with the men and the women at celebrate and the dedicated and courageous customers we serve.

Speaker Change: My commitment to our board and our shareholders is to optimize value creation enabled the important mission of our customers grow and reward our people and usher in the next generation of leadership.

Thomas Hogan: Let's turn to slide six to conclude my remarks. We delivered solid first quarter top line growth. while modestly expanding operating margins to outperform on the bottom line. We live in unusually turbulent times, and the world needs the mission-critical IP we uniquely deliver. The tailwinds and malfeasance, now exacerbated by the increased technological sophistication of bad operators, provide a firm foundation for healthy global demand over the coming years. As the market leader and technology innovator in this space, we're committed to extending our capabilities in AI, cloud-related agility, and investigative case and evidential management. Our mission and our impact remain in the early innings.

Speaker Change: So, let's turn to slide six to conclude my remarks, we delivered.

Speaker Change: Solid first quarter topline growth.

Speaker Change: While modestly expanding operating margins to outperform on the bottom line.

Speaker Change: We live in unusually turbulent times and the world needs. The mission critical IP, we uniquely deliver.

Speaker Change: The <unk> and malfeasance now exacerbated by the increased technological sophistication of bad operators provide a firm foundation for healthy global demand over the coming years.

Speaker Change: As the market leader and technology innovator in this space, we're committed to extending our capabilities in AI.

Speaker Change: Cloud related agility, and investigative case evidential management.

Speaker Change: Our mission and our impact for main in the early innings.

Thomas Hogan: as we bring the world's most advanced technologies to ensuring a better, safer world. The future remains incredibly bright for this company.

Speaker Change: As we bring the world's most advanced technologies to ensuring a better safer world.

Speaker Change: The future remains incredibly bright for this company.

Dana Gerner: With that, I'll turn the call over to Dana to provide further detail on our results and our outlook. Dana? Thank you, Tom. Despite market turbulence in the U.S. federal sector, Cellebrite delivered top-line results for the first quarter that were in line with our plans, while the combination of our revenue growth and prudent spending enabled us to outperform our Q1 profitability target.

Speaker Change: With that I'll turn the call over to Dana to provide further detail on our results and our outlook Donna.

Speaker Change: Thank you Tom.

Speaker Change: Despite market turbulence in the U S centers deliver top line results.

Speaker Change: For the first quarter.

Speaker Change: Well, it's a combination of revenue growth.

Speaker Change: <unk> enabled us to outperform our Q1 profitability target.

Dana Gerner: Just as important, we remain well-positioned to continue expanding our...

Speaker Change: Jeff It's important we remain well positioned to continue expanding our business.

Dana Gerner: Let's start a review on slide. Our ARR for the 12-month period grew 23% to $408 million, largely driven by increased spending within our installed base. Consistent with Tom's earlier commentary, we enjoyed ARR results that were largely in line with our plans in most geographics and customer verticals, although the spending headwinds within the U.S.

Speaker Change: Let's start.

Speaker Change: On slide eight.

Speaker Change: For the 12 months period.

Speaker Change: 8% to $408 million.

Speaker Change: Largely driven by increased spending within our installed base.

Speaker Change: Consistent systems.

Terry: Terry we enjoyed.

Terry: Largely in line with.

Terry: In most geographies and customer verticals.

Terry: So the spending headwinds that we've seen in the U S federal.

Dana Gerner: federal and EMEA sectors limited our upside for the past year. As noted on the slide, our gross retention held relatively steady at 92%. to extend out retention levels in the U.S. and Asia.

Terry: Victor has limited our upside for the quarter.

Terry: As noted on the slide our gross retention held relatively steady at 92% leased.

Speaker Change: Our retention levels in the U S and Asia.

Speaker Change: C C.

Dana Gerner: Geographically, the March 2025 ARR mix was in line with the prior year. The Americas represented 54% of total ARR, with RMA at 34% and Asia-Pacific at 12%. In terms of growth rates by geography, the America grew 27% with a vibrant performance in the SLG and Latin America sectors. ARR grew 28% in the Asia-Pacific region, followed by 15% expansion in America.

Terry: Geographically.

Terry: March 2025.

Terry: <unk> was in line with the prior year.

Terry: <unk> represented 64% are still kind of era.

We assume that 34% and Asia Pacific at 12%.

Terry: In terms of close rates, Thank Joe coffee.

Terry: 27%.

Terry: Performance in Asia, and Latin America segment.

Terry: 28% in the Asia Pacific region, followed by 15% expansion.

Dana Gerner: Let's turn to slide 9 to dive a little deeper into the ARL growth drivers from a product family perspective. as well as highlight a few deals that stood out in the quarter. As illustrated on the chart on the left-hand side of the slide, the majority of our NetARR expansion was driven by higher demand for our family of insights offering, including our legacy digital forensics solution. If in the blue Insights contribution, we outline the financial uplift associated with transitioning our installed base of legacy digital forensics licenses to Insights, which was a high single digit percentage of the $104 million net increase in ARR.

Terry: Now, let's turn to slide nine to dive deeper into the air alcoholic drivers. Please.

Terry: So many perspective.

Terry: I'll highlight a few deals that stood out in the quarter.

Terry: Illustrated on the chart on the left.

Terry: The majority of our niche.

Terry: Pension was driven by higher demand for affinity of insight offering.

Terry: Our legacy digital forensic solution.

Terry: We think the Bureau insights contribution we are trying to finance it at least associated.

Terry: Our installed base of legacy.

Terry: <unk> licenses to insight.

Terry: Which was a high single digit percentage of the $104 million increase.

Terry: Increasing.

Dana Gerner: To be clear, this is intended to represent only the increased spend by customers when they move forward. The first WIN listed on this slide, a new logo WIN, is a great example of how customers are deploying our technology in the field, in addition to conventional lab environments. We are seeing more opportunities to extend our technology out into the field, as one of our competitors has become increasingly vulnerable in this area. The second deal, in the middle, reinforces our success in expanding adoption of our UNLOCK module when customers convert to Insight, as well as the opportunity within the global defense and intelligence sector.

Terry: To be clear. This is intended to represent only the increased spend by customer when they move to <unk>.

Terry: The first lien.

Terry: And you know that lean is a great example of how customer deploying our technology in the field. In addition to venture in a lab environment.

Terry: Seeing more opportunities to extend our technology out into the field.

Terry: Competitors have become increasingly vulnerable in this area.

Terry: Secondly, in the middle reinforces our success in expanding adoption of our <unk> module when customers convert to insight as well as the opportunity we see in the global defense and intelligence sector.

Dana Gerner: The third ring, involving Guardian, highlights how this solution is fortifying the chain of custody while enabling us to expand our water share within existing accounts. As we look ahead, we remain optimistic about the growth opportunity for both Guardian and Pathfinder, as each product family remains under 5% penetrated across our installed customers.

Terry: The third man in halting Guardian.

Terry: How this solution is fortifying the chain of custody.

Terry: To expand on what did you hear me okay.

Terry: Yeah.

Terry: As we look ahead, we remain optimistic about the close opportunity for both garden and Pathfinder.

Terry: So many remains under 5% penetrated across our installed customer base.

Dana Gerner: Guardian's ARL growth rate is accelerating, exceeding 100% for the third straight quarter, as the number of customers using both Insight and Guardian nearly tripled from one year Turning to slide 10, we generated first quarter revenue of $107.5 million, which increased 20% from the prior year due primarily to subscription revenue growth of 21%. Approximately 89% of total revenue was associated with subscription-based software solutions. Our Q1 revenue was at lower end of our targeted range due primarily to the timing of orders within U.S. Federal and EMEA.

Terry: Yes.

Terry: He is accelerating exceeding 100% for the third straight quarter as the number of customers using both <unk> and Guardian nearly tripled from one year ago.

Terry: Turning to slide 10, we generated first quarter revenue of $107 5 million.

Terry: Which increased 20% from the prior year due primarily to subscription revenue growth of 21% Approx.

Terry: Approximately 89% of total revenue was associated with subscription based software solution. Our Q1 revenue was ignored and targeted range due primarily to the timing before and everything from U S Federal and EMEA theaters.

Dana Gerner: Let's move to slide 11 for a view of our non-GAAP gross margins and non-GAAP operating expenses, which exclude share-based compensation. Amortization of Intangible Assets, and Acquisition Related. Our first quarter 2025 growth margins of 84.4% was in line with our food year 2025 target. The 130 basis point decline from prior year primarily reflects higher incremental cost for hosting, an investment to build out our customer success organization. In terms of operating expenses, first quarter operating costs were $68.8 million, a 13% year-over-year This primarily reflects higher personnel costs associated with higher headcounts and annual merit adjustments, increased event costs, and higher consulting costs.

Terry: Let's move to slide 11 for if you will.

Terry: For non-GAAP gross margins and non-GAAP operating expenses, which exclude share based compensation with.

Terry: Amortization of intangible assets.

Terry: <unk> related expenses.

Terry: First quarter 2025 gross margins of 84, 4% was in line with our full year 2025 targets range.

Terry: 130 basis point decline from prior year, primarily reflects higher incremental costs for hosting and investments to build out our customer success organization.

Terry: In terms of operating expenses first quarter operating costs were $68 $8 million, 13%.

Terry: Increased.

Terry: Primarily reflects higher personnel costs associated with higher headcount and annual Merit increase.

Terry: Increased defense costs and higher consulting expenses, we ended the first quarter.

Dana Gerner: We ended the first quarter with 1,186.

Terry: 102 entry.

Dana Gerner: Turning to slide 12, the combination of top-line growth, solid gross margins, and prudent spending resulted in Q1 adjusted EBITDA of $23.7 million, or 22% on a margin of 10%. The year-over-year improvement of 2.3 percentage points reflects solid operating leverage as our top-line growth continues to outpace operations. We reported first quarter non-GAAP operating income of $22 million, with non-GAAP net income of $26.2 million, or $0.10 on a fully diluted basis. Our diluted non-GAAP EPS grew 25% despite a 20% increase in our average weighted diluted shares output. We ended the first quarter with $509.8 million in cash equivalents and investment, an increase of $26 million from the fourth quarter of 2024, and an increase of $199.8 million in $5 million from the same period one year ago.

Terry: Turning to slide 12, the combination of top line growth solid gross margins and put it spending resulted in Q1, adjusted EBITDA was $23 $7 million or 22% on a margin basis.

Terry: Are you off of your improvement of two three percentage points.

Terry: Solid operating leverage as our store count growth continues to outpace the information.

Terry: We reported first quarter non-GAAP operating income of $22 million.

Terry: GAAP net income of $26 2 million doors or 40.

Terry: Fully diluted basis.

Terry: Our diluted non-GAAP EPS.

Terry: 5%.

Terry: 20%, increasing our average weighted diluted shares outstanding.

Terry: We ended the first quarter with $509 8 million endorsed in cash cash equivalents and investments an increase of $26 million from the fourth quarter of 2024, and an increase of $162 $5 million from the same period, one year ago.

Dana Gerner: The free cash flow for the first quarter, which we define as net cash provided by operating activities, less capital expenditure, and the purchase of intangible assets, was $18.5 million, up strongly from one year ago, due primarily to strong fundamentals.

Terry: Free cash flow.

Terry: The first quarter, which we define as net cash provided by operating activities capital expenditure and the purchase of intangible assets was $18 5 million.

Terry: Strongly from one year ago, due primarily to strong fundamental results.

Dana Gerner: Now let's move to slide 13 for our outlook, along with some insights on the factor trends that we believe will shape the future. A reminder, we have historically generated the majority of our ARR revenue and adjusted EBITDA in the second half of any given year, and we believe that this trend will repeat itself. Looking at the second quarter, we currently expect Q2 ARR in the range of $416 to $426 million, which represents growth of 20 to 25%. While most geographies and customer verticals are anticipated to continue performing well during the first half of the year, we believe it is prudent to model a continuation of spending constraints in the U.S.

Terry: Now, let's move to slide 13 for outlook, along with some insights on the tax rate trend that we believe will shape this year.

Terry: I mean, my there they have historically generated the majority of from AOR revenue and adjusted EBITDA in the second half of any given year and we believe that this trend will repeat itself in 2025.

Terry: Looking at the second quarter. We currently expect Q2 <unk> in the range of $416 million to $426 million, which represents growth of 20% to 23%, but in most geographies and customer verticals are anticipated to continue performing well during the first half of the year. We believe it is prudent.

Terry: More than a continuation of spending constraints in that you would say that my same store.

Dana Gerner: federal system. Our pipeline does suggest a possible recovery in the second quarter, but until that manifests itself in closed transactions, we will remain justifiably cautious. Our Q2 revenue outlook ranges from $110 to $116 million, which translates into growth of 15% to 21%. This would result in our first half revenue of approximately $218 to $224 million, or approximately 46% of what we expect for a full year 2025 revenue, which is generally consistent with historic revenues. The expanding climate within the U.S. federal market is also affecting those who provide consulting and other professional services. We are not immune from those headwinds, and we see near-term pressure on one-time professional services revenue from U.S.

Terry: That suggests the possibility of covering the second quarter until that manifests itself in closed transaction, we will remain justifiably question.

Terry: Our Q2 revenue outlook ranges from $110 million to $116 million, which translates into growth of 15% to 21%.

Terry: This would result in a first half revenue of approximately $218 million to $224 million or approximately 46% of what we expect for full year 2025.

Terry: Which is generally consistent with historical trends.

The spending climate is we've seen the U S. Federal market is also facing those who provide consulting and other professional services. We are not immune from those headwinds and we see near term pressure on one time professional services revenue from U S Federal agency.

Dana Gerner: federal agencies. Consistent with our cautious stance on the second quarter, we have marginally reduced the low end of the full year 2025 revenue by $10 million, but also resetting the high end. But we remain optimistic that we will see stronger second-half spending by our customers, particularly in the U.S. Federal and EMEA. We believe that adjusting the revenue range in such a manner more accurately captures the top-line risks associated with an expansion of the U.S. Federal Reserve. The majority of low-end revenue reduction is associated with the shifted timing of new business to the second half of the year, combined with lower one-time professional services revenue.

Terry: Consistent with our cautious stance on the second quarter, we have marginally reduce the low end of the full year of 2025, everything you buy $10 million.

Terry: Resetting the high end of this range, but we remain optimistic that we will see stronger second half spending by our customers, particularly in that you would say no I didn't mean that we believe the suggesting they are raising your range in such a manner.

Terry: Accurately captures the top line lease associated with an extension instead spending constraints.

Terry: The majority of flow and revenue reduction associated with the shift in timing of new business to the second half of the year combined with floor at one time professional services revenue.

Dana Gerner: We are not adjusting our four-year guidance on ARR in any way. We expect our Q2 growth margins to be within our 40-25 growth margins target range of 84-85%. We remain very focused on disciplined cost management while funding important investments that are critical to the further expanding of our business over the long term. While U.S. tariff policies remain fluid and require careful assessment in the event of any meaningful changes, we do believe that the current tariff of imports of our housing to the U.S. will be the minimum to our overall cost of living. We anticipate our Q2 operating costs will be in the range of $69 to $71 million, which is set to slightly higher than over Q1 levels, and consistent with the historical cadence of our operating expense growth from the first quarter.

Terry: Not adjusting our full year guidance.

Terry: Yeah.

Terry: We expect our Q2 gross margins to be we've seen a 40 or 25 gross margin target range of 84% to 85%.

Terry: Very focused on disciplined cost management with funding important investments that are critical to the fire to expanding of our business over the long term.

Terry: What are your policies remain fluid and require careful assessment in the event of any meaningful changes, we do believe that the current tariff on imports.

Terry: To the U S will be the minimus to our overall cost of goods sold.

Terry: We anticipate our Q2 operating costs will be in the range of $69 million to $71 million would you say slightly higher than over Q1 levels.

Terry: Consistent with the historical cadence of operating expense growth from the first quarter to the second.

Dana Gerner: These expectations set the standard for Q2 adjusted EBITDA in the range of and Zev Ishaq. In terms of a weighted average diluted share count, we expect you to approximately be in the mid 250 million share range. In summary, we remain focused on growth while equally committed to the responsible management of our cost structure in order to achieve our adjusted EBITDA targets in absolute dollar terms under different potential revenue outlooks. Since entering the public safety market in 2007, we have established a track record for doable, profitable growth, which is reflected in both our absolute ARL and in the strength of our balance.

These expectations.

Terry: For Q2, adjusted EBITDA in the range of $26 million to $28 million or approximately 24% on a margin basis, which keeps us on track with about $40 target.

Terry: In terms of her weighted average stated with the share count we expect you to approximate should be in the mid 250 million share range.

Terry: In summary, we remain.

Terry: <unk> focused on both but equally committed to the responsible management of our cost structure in order to achieve our adjusted EBITDA targets in absolute dollar terms, either a different potential revenue outcome.

Terry: Since entering the public safety market in 2007, we have established a track record for durable profitable growth.

Terry: Strength in both our absolute a O L.

Terry: And in the strength of our balance sheet.

Dana Gerner: That type of performance speaks volumes about the global need for our solutions and our ability to successfully navigate our business through an area of geopolitical, macroeconomics, and technology.

Terry: This type of performance speaks volumes about the global need for our solution and our ability to successfully navigate our business through an area of geopolitical market core economics and technology shifts.

Dana Gerner: We are executing well against our plans and remain enthusiastic about the prospects for achieving the ambitious target we set for Cellebrite.

Executing well against our plans and remain enthusiastic about the prospects for achieving the ambitious targets set by PCR.

Dana Gerner: That concludes our prepared remarks.

Terry: That concludes our prepared remarks, operator, we are now ready for Q&A.

Operator: Operator, we are now ready for Q&A. Thank you. 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 question to provide optimal sound quality. Thank you.

Terry: Thank you.

Speaker Change: 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.

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

Speaker Change: Again, we ask that you pick up your handset when posing your question to provide optimal sound quality.

Tomer Zilberman: Our first question is coming from Tomer Zilberman with Bank of America. Your line is open, please go ahead. Hey guys, good morning. If I think about your commentary last quarter about the Fed, I believe you said that you said that the weakness was really stemming from, you know, stabilization of the new administration coming in. And as you look to the outlook today, the question is, are you seeing any deterioration in the demand environment in terms of anything from doge or tariffs or policy changes, anything different that you're seeing from 90 days ago?

Speaker Change: Our first question is coming from.

Tumors Gorman: Tumors Gorman with bank of America.

Speaker Change: Your line is open. Please go ahead.

Speaker Change: Hey, guys good morning.

Speaker Change: If I think about your commentary last quarter about the fed I believe you said that you felt that the weakness was really stemming from.

Speaker Change: Stabilization of the new administration coming in and.

Speaker Change: As you look to the outlook today. The question is are you seeing any deterioration in the demand environment in terms of.

Speaker Change: Anything from Doge or tariffs or policy changes anything different that youre seeing from 90 days ago.

Thomas Hogan: You know, I'm going to let Marcus make a comment here. This is Tom, you know, that there's no material change from from a, you know, a leadership decision making perspective. That's there's still a little bit of. Edited by Dan Ariely pipeline and new opportunities that are surfacing given the administration's priorities and where they are allocating dollars is actually, we've witnessed a fairly meaningful uptick. The bottom line is crime is not going away. The need for this software is getting more important given the sophistication of technology in the pursuit of crime and a bulk of the efforts that are sort of doge related are more focused, we believe, on a combination of personnel and for those of you that follow software, shelfware.

Tom Hogan: I'm going to let mark is to make a comment here. This is Tom.

Speaker Change: Yeah.

Speaker Change: There's no material change from from a you know a.

Speaker Change: Our leadership decision, making.

Speaker Change: Perspective that there's still a little bit.

Speaker Change: Fluidity in that environment, but what we are seeing.

Speaker Change: Which gives us the optimism.

Speaker Change: Alluded to in the second half as well.

Speaker Change: The pipeline and new opportunities that are surfacing.

Speaker Change: Given.

The administration's priorities and where they are allocating dollars is is actually we've witnessed a fairly meaningful uptick.

Speaker Change: The bottom line is crime is not going away.

Speaker Change: Need for this software is getting more important given the sophistication of technology in the pursuit of crime.

Speaker Change: Bulk of the efforts that are sort of dose related or more focused I. We believe on a combination of personnel.

Speaker Change: And for those of you that follow software Shelfware and the one thing that celebrates never been accused of Shelfware. If anything agencies are starving for more of our product to keep up with backlogs. So so the short term is choppy and we wish it weren't so.

Marcus Jewell: The one thing that Cellebrite's never been accused of is shelfware. If anything, agencies are starving for more of our product to keep up with backlogs. So the short term is choppy and we wish it weren't so, but as we think about the need and the opportunity in federal for us, we're actually gaining more optimism versus concern.

Speaker Change: But as we think about the need and the opportunity in federal for US, we're actually gaining more optimism versus concern.

Speaker Change: If you want to add anything but yes, it's a great question Thomas so adding to Toms point look we're mission critical we are not what I call a bright shiny object or.

Marcus Jewell: It's a great question, Tomer. So adding to Tom's point, look, we're mission critical. We are not what I call a bright, shiny object or an IT widget, which Tom calls pleasantly shelfware. The key there that what we're seeing is certain programs under Doge have come to an end, but they're being replaced by new programs. And let me give you a real-life example. We had a special funding program into the DoD, we can't name it for obvious reasons, which was multiple millions for forward deployed operatives, people that are out there doing the real hard graft protecting the US.

Speaker Change: At <unk>, which is Tom's cool pleasantly shelf, where the key there to what we're seeing is certain programs under dos.

Speaker Change: I've come to light.

Speaker Change: But they are being replaced by new programs and let me give you a real life example.

Speaker Change: We had a special funding program into the D. O D. We can't name it for obvious reasons, which was multiple millions for Ford deployed all produce you know people that are out there doing the real hard rock protecting the U S. Dod programs actually replaced by a larger program.

Marcus Jewell: That program is actually replaced by a larger program, which will come into play in the next three months. And we feel very comfortable in our position there at the executive level. So what we're seeing is this change through DOJ. And what we have seen a little bit is everything got wrapped up through the process. So when they did the blanket cuts that they did, there was just some freezing and deployment changes. But we feel very comfortable about the future. And, in fact, we see new projects accelerating. We're just hoping that the Memorial Day budget, which is a big impact for us, if that gets approved, things settle down to a certain extent, and then we'll have more clarity going into Q3.

Speaker Change: Which will come into play in the next three months and we feel very comfortable of the opposition there at the executive level. So what we're seeing is this change through dose and what we have seen a little bit is is everything got wrapped up through the process. So when they did the blanket cups. So they did there was just some freezing and deployment changes, but we feel very comfortable about the future and in fact.

Speaker Change: We see new projects accelerating.

Speaker Change: We're just hoping that the memorial day budget, which is a big impact for us if that gets approved things settled down to a certain extent and then we will have more clarity going into Q3.

Tomer Zilberman: Got it.

Tomer Zilberman: And maybe as a follow up to the pipeline comment, if I look back to 2022, you had a trend of deal slippage with kind of low visibility into when that was going to close up, if we look to the outlook today, what kind of visibility do you have? And, you know, what indicators are you seeing that suggest that this is really only a timing issue and not indicative of sort of a bigger trend of maybe spending we can It's great. I mean, so basically, on that basis, what you can look at is what what are the use cases we're solving for.

Speaker Change: Got it and maybe as a follow up to the pipeline comment if I look back to 2022.

Speaker Change: You had a trend of deal slippage with kind of low visibility into when that was going to.

Speaker Change: Close up if we look to the outlook today.

Speaker Change: What kind of visibility do you have and you know.

Speaker Change: What indicators are you seeing that suggests that there's really only a timing issue and not indicative of sort of a bigger.

Speaker Change: Trend of maybe spending weakness.

Speaker Change: It's great I mean, so basically on that basis. What you can look at is what are the use cases, we're solving for and so the use cases, we're solving for in the federal government are fundamentally around three elements there around intelligence counterintelligence human trafficking.

Marcus Jewell: And so the use cases we're solving for in the federal government are fundamentally around three elements. They're around intelligence, counterintelligence, human trafficking. Those crimes and those necessities are increasing. There's certain things which are going to happen in the U.S. There's a World Cup coming to the U.S., which, if you guys think about, will be one of the biggest human trafficking issues that this country is going to face in a long time. It will drive that. So we're seeing these new projects come in very early in the pipeline and then mature very quickly, which gives us confidence that on the net ads for what I call early pipeline, that is increasing.

Speaker Change: Those crimes and those necessities are increasing because certain things, which are going to happen in the U S. As the World Cup coming to the U S, which if you guys think about will be one of the biggest human trafficking issues that this country is going to face in a long time. It will drive that so we're seeing these new projects come in very early in the pipeline and then mature very quickly which gives us confidence.

Speaker Change: On the net adds for what I call early pipeline that is increasing its the decision making in the executive teams, which are taking time to settle into their new roles, which means that the second half of the sale has been a little cloudy, but we see that clearing up and again I do think I'm going to repeat that the budget element after memorial day will give stability and clarity to some.

Marcus Jewell: It's the decision-making and the executive teams which are taking time to settle into their new roles, which means that the second half of the sale has been a little cloudy, but we see that clearing up. And again, I do think, I'm going to repeat, that the budget element after Memorial Day will give stability and clarity to some of those projects. And I think that's consistent feedback from other people that sell to the federal market, have given their feedback.

Speaker Change: Those projects and I think that's consistent feedback from other people that sell to.

Speaker Change: The federal market have given in this quarter yeah.

Thomas Hogan: Yeah, and if I, if I kicked up that comment one level, and having sort of been through the stuff a bunch of times over the last 45 years, the, you know, the three things you look at are, is your pipeline growing or shrinking? are you do the competitive analysis? Are you losing to competition? And the answer is no. And then are the macros changing? And sadly, populations going up, the use of technologies going up, crime is minimally flat, maybe. violent crime may be flat to down a little bit, crime overall, and some of the things like drug trafficking, human trafficking, internet crimes against children, those crimes are going up.

Speaker Change: If I picked up that comment one level and having sort of been through the stuff a bunch of times over the last 45 years.

Speaker Change: Three things you look at our because your pipeline growing or shrinking.

Speaker Change: You do the competitive analysis are you losing to competition and the answer is no.

Speaker Change: And then are the macro is changing.

Speaker Change: Sadly populations going up the use of technologies going up crime is minimally flat maybe.

Speaker Change: Violent crime, maybe flat to down a little bit crime overall, and some of the things like drug trafficking human trafficking.

Speaker Change: Internet crimes against children. Those those crimes are going up so the macros are building in a favorable way there's no change in the competitive win loss dynamic and our pipeline is improving so now it's just a matter of you know.

Tomer Zilberman: So the macros are building in a favorable way. There's no change in the competitive win-loss dynamic, and our pipeline is improving. So now it's just a matter of, you know, timing and clearing some of these timing hurdles and executing. Got it. Thank you.

Speaker Change: The timing and clearing some of these timing hurdles and executing.

Speaker Change: Got it thank you.

Speaker Change: Okay.

Speaker Change: Thank you and we will take our next question from Jeff Van <unk> with Craig Hallum. Please go ahead.

Jeff Van Ree: And we will take our next question from Jeff Van Ree with Craig Holland. Please go ahead. Great. Thanks for taking the questions. Just a couple for me.

Speaker Change: Great. Thanks for taking the questions just a couple for me maybe Tom on fed ramp at this point I think midyear was the target June July obviously, a lot of chaos in federal but just talk about timing towards fed ramp and then also what you can do with deal cycles to be ready.

Jeff Van Ree: Maybe, Tom, on FedRAMP at this point, I think mid-year was the target, June, July, obviously a lot of chaos in federal. But just talk about timing towards FedRAMP and then also what you can do with deal cycles to be ready for when you get the actual FedRAMP certification. So a little update there, please. Yeah. We're still pushing, I think the last time, the last call we talked about getting ATO in the third quarter. For those of you that are FedRAMP, you know, mavens, there's two pieces to it. One is getting readiness, which is have you done all the things you need to do to your stack and your product to deliver the security requirements and compliance for FedRAMP certification.

Speaker Change: For when you get the actual fed ramp certification so.

Speaker Change: A little update there please.

Speaker Change: Yeah we're.

Speaker Change: Still pushing I think the last time the last call, we talked about getting a T O in the third quarter is it for those of you that are fed ramp.

Speaker Change: Mavens.

Speaker Change: Pieces to it one is getting.

Speaker Change: Readiness, which is have you done all the things you need to do to your stack in your product to deliver the the security requirements and compliance for fed ramp certification. That's the long pole in the tent. That's the that's the effort that it took us a little over a year.

Thomas Hogan: That's the long pole in the tent. That's the effort that took us a little over a year. As we shared, there's different levels of FedRAMP. We shot for the highest level given, you know, our aspirations to solve the most complex sensitive issues in the government, which was level four. We received level four readiness status about three months ago. So the last thing we needed was to get a federal agency to sort of raise their hand and say, we're going to be your godfather and sponsor. And once that happens, it's typically about a 90-day process to get authorization to operate.

Speaker Change: As we shared there's different levels of fed ramp we shot for the highest level given our aspirations to solve the most complex sensitive issues in the government, which was level four we received.

Speaker Change: At level four readiness status about three months ago. So the last thing we needed was to get a.

Speaker Change: Federal agency to sort of raise their hand, and say, we're gonna be your godfather and sponsor and once that happens its typically about a 90 day process to get authorization to operate.

Thomas Hogan: Candidly, we think we're close. We thought we were close 60 days ago, sort of on the five or ten yard line, to getting one of two targeted agencies to raise their hand. And just given all the DOJ-related activity, those organizations remain interested but haven't committed yet. So our expectation is to get that done. As I said, in the next 30 days, then add another 30 days for the ATO. And so we're still pushing for the end of third quarter.

Speaker Change: Candidly, we think we're close.

Speaker Change: We thought we were closed 60 days ago sort of on the five or 10 yard line to getting one of two targeted agencies to raise their hand.

Speaker Change: And just given all of the dose related activity those organizations remain interested but haven't committed yet so our expectation is to get that done.

Speaker Change: As I said in the next 30 days then add another 30 days for the a T O and so we're we're still pushing for the end of third quarter to your point on what can you do.

Thomas Hogan: To your point on, you know, what can you do? You know, it's the good news is the agencies that would want to take advantage of our FedRAMP status are well aware that we've achieved readiness. So number one, they know we're committed. Number two, we've spent a lot of money and time already to get the readiness status. They all understand the last mile is the sponsorship. And so we're able to, and the Cellebrite federal team has been able to engage in discussions with target agencies, knowing that this is pending. The last thing we can't do just yet is bid a project that might be scheduled to close, say in the next quarter or two.

Speaker Change: You know it's the good news is the agencies.

Speaker Change: Would want to take advantage of our fed ramp status are well aware that we've achieved readiness. So they know number one they know we're committed number two we've spent a lot of money and time already to get the readiness status. They all understand the last mile is the sponsorship.

Speaker Change: So we're able to in the.

Speaker Change: Celebrate federal team has been able to engage in discussions with target agencies, knowing that this is pending.

Speaker Change: The last thing we can't do just yet as you know bid a project that might be scheduled to close say in the next quarter or two so this by the way. We also shared when we announced this that you shouldn't expect a big uplift in federal bookings in performance in 2025 that is still.

Thomas Hogan: So this, by the way, we also shared when we announced this that you shouldn't expect a big uplift in federal bookings and performance in 2025. That is still the case because of the timing issues. But we do think it's important to get this over the line in the timeframe I just discussed so that as people start to plan their 2026 spend, we're able to participate more fully. And so that sort of opportunity and plan remains on track for us.

Speaker Change: The case because of the timing issues, but we do think it's important to get this over the line in the timeframe I just discussed so that as people start to plan their 'twenty 'twenty six spend we're able to participate more fully and so that that sort of opportunity and plan remains on track for us.

Yes.

Thomas Hogan: Great, thanks for the color there. And then on the EMEA effort, it sounds like you took the initiative, you mentioned UK, Germany, I don't want to read my color anyway just the promptings to lead you to go do that and and the results of that trip Yeah, I'd say it was two things. One... We make a point of communicating to the market, to our investors, to our customers, our prospects, our employees, that this is truly a global company. Our genesis and our roots are clearly in Israel, but our ownership, as you know, Jeff, is north of 40% owned by a Japanese corporation.

Speaker Change: Great. Thanks for the color there.

Speaker Change: And then on the EMEA effort. It sounds like you took the initiative you mentioned UK, Germany.

Speaker Change: I don't want to.

Speaker Change: Read my Colorado, just said the prompting us to lead you to go do that and the results of that trip.

Speaker Change: Yeah, I'd say it was it was two things one.

Speaker Change: We make a point.

Speaker Change: Communicating to the market to to our investors to our customers or prospects are employees that this is truly a global company, our Genesis and our roots are clearly in Israel.

Speaker Change: Our ownership as you know, Jeff as you know north of 40% owned by a Japanese Corporation.

Thomas Hogan: Over 50% of our business is conducted in the United States. Over 50% of our employees are outside of Israel. So we're very much a global company. And my view is, you walk the talk. You don't just tell people you're global, you get off, you get out of your office, and you get out into the world, so that you can meet and greet and put names and faces and demonstrate commitment, not only to our employees, but to our customers and with our with the big presence and footprint we have in the U.S. and here in Washington, D.C.

Speaker Change: Over 50% of our business is conducted in the United States.

Speaker Change: Over 50% of our employees are outside of Israel. So we're very much a global.

Speaker Change: And my view is you walk the talk you don't just tell people you're global you get off you get out of your office and you get out into the world. So that you can meet and greet and put names and faces and demonstrate commitment not only to our employees, but to our customers and with our.

Speaker Change: Real with the big presence at footprint, we have in the U S and here in Washington D C.

Thomas Hogan: And the fact that Europe represents, Dana, what's the percentage roughly of our revenue? Thirty-four percent. Thirty-four percent of our business. We said, you know, when do we bring our executive team, when do we bring our board to Europe? And for that matter, down in AsiaPAC.

Speaker Change: And the fact that Europe represents Donald what percentage roughly of our revenue, 34%, 34% of our business. We said you know when do we bring our executive team when do we bring our board to Europe and for that matter down and in Asia Pac and so so this was a decision by took.

Thomas Hogan: And so this was a decision I took. We hosted our executive quarterly off-site meeting, brought the whole leadership team to London three weeks ago for a full week of meeting with customers and employees. And then last week, for the first time, we hosted the Cellebrite quarterly board meeting in Munich to do the exact same thing. Spent the entire week there, met with multiple agencies, met with the Met Police in London, met with the Fed Police, which is a federal police department in Germany. We hosted a C2C equivalent event that we did two months ago in Washington.

Speaker Change: Hosted our executive quarterly Offsite meeting brought the whole leadership team to London, three weeks ago for a full week of meeting with them with customers and employees and then last week for the first time, we hosted the celebrate quarterly board meeting in Munich to do the exact same thing spent the entire week there.

Speaker Change: Met with multiple agencies met with the met police and London met with the Fed police, which is a federal police department in Germany, We hosted a C to C equivalent event that we did two months ago in Washington, We ran one in Germany, where it was very well attended so it was really well.

Thomas Hogan: We ran one in Germany. It was very well attended. So it was really the long answer to your short question is we're a global company, and my view is let's get the leadership of this company out in the field listening and connecting with both our customers and our people.

Speaker Change: So long answer to your short question is we're a global company and my view is let's get the leadership of this company out in the field listening and connecting with both our customers and our people.

Mike Cikos: Thank you, and we'll take our next question from Mike Cikos from Needham. Please go ahead. Hey, thanks for taking the questions guys. I just wanted to get a little bit more. I know on the guidance outlook, we've spoken about this a couple of times now, but we have this This embedded prudence, if you will, for this June quarter based on what's taking place in federal with the anticipation of the re-acceleration in the back half of the year based on the pipeline and the opportunity you're seeing. Just curious, again, we have this pipeline, but why not embed more conservatism in the back half of the year?

Speaker Change: Thank you and we'll take our next question from Mike signals from Needham. Please go ahead.

Speaker Change: Hey, Thanks for taking my questions guys I, just wanted to get a little bit more I know on the guidance outlook. We've spoken about this a couple of times now but.

Speaker Change: Yeah.

Speaker Change: This embedded pruning if you will for this June quarter.

Speaker Change: And what's taking place in federal with the anticipation of the Reacceleration in the back half of the year based on the pipeline and the opportunity you see.

Speaker Change: Just curious again, we have this pipeline, but why not give you a bit more conservatism in the back half of the year again, just just given this uncertainty out there.

Dana Gerner: Again, just giving this uncertainty out there. Why not be more conservative on the second half? It's a fair question, and trust me, as you go through these things, and we decided in the spirit of transparency and integrity on the revenue, given the shift in seasonality, combined with some of the one-time services, you know, business flow, we felt like it was the right thing to do to adjust the low end by, I think we took it down $10 million. But as we look at run rates, as we look at pipeline and performance across the rest of the portfolio, and I'll highlight again, you know, we had strong performance in the U.S.

Speaker Change: Yeah.

Speaker Change: Well.

Speaker Change: Why not be more conservative on the second half.

Speaker Change: What gives you that confidence again, just because it feels.

Speaker Change: Feels like there's such a move.

Speaker Change: Wait a day yeah, it's a.

Speaker Change: It's a fair question and Trust me as you go through these things and we decided in the spirit of transparency and integrity on the revenue given the shift in seasonality combined with some of the onetime services.

Speaker Change: Business flow, we felt like it was the right thing to do to just the low end by I think we took it down $10 million.

Speaker Change: But as we look at run rates.

Speaker Change: As we look at pipeline and performance across the rest of the portfolio and I'll highlight again, you know we had strong performance in the other in the U S state and local was extremely strong which is a reflection of the value and the impact of our software Latin America's untrue.

Thomas Hogan: State and local was extremely strong, which is a reflection of the value and the impact of our software. Latin America is on fire. AsiaPAC had a great quarter. And so, and then you come back to federal and say, okay, it's almost 20% of our business. If they show up, even if they just get a little better, I think it positions us to deliver the full year guide that we shared, which we thought was pretty strong to start with. And when you combine that with the fact that if you go, you know, I wish all of our investors could sit down with senior leadership at some of these agencies, and I do it every day, every day.

Speaker Change: Fire Asia Pac had a great quarter, and so and then you come back to federal and say, Okay. It's almost 20% of our business if they show up even if they just get a little better I think it positions us to deliver the full year guide that we shared which we thought was.

Speaker Change: Which was pretty strong to start with and when you combine that with the fact that if you go I wish all of our investors could sit down with senior leadership at some of these agencies and I do it every day every day and when these people sit across the table from you.

Thomas Hogan: And when these people sit across the table from you, and tell you how they cannot do their job, they cannot keep up with terrorists and murderers and pedophiles without our software. It's, what that tells you is, this isn't a gosh, do we need this? Gosh, you know, Elon's pushing us to save 30% and you're a casualty. They have to have this software. And so, when that's a must have and the macros aren't changing, that's why we believe as soon as this, as soon as this world settles down just a little bit more, we will see an uptick.

Speaker Change: Tell you how they cannot do their job they cannot keep up with terrorists and murderers and pedophiles without our software.

Speaker Change: What that tells you is this isn't a gosh do we need. This gosh you know Elon is pushing us to save 30% in euro casualty they have to have the software and so when when that's a must have in the macros aren't changing that's why we believe as soon as this thing as soon as this.

Speaker Change: World settles down just a little bit more we will see an uptick now the issue is is it a big whoosh, which it could be based on some of the pipeline opportunities that were unanticipated that are starting to flow or is it just an uptick but that's what gives us.

Thomas Hogan: Now, the issue is, is it a big whoosh, which it could be, based on some of the pipeline opportunities that were unanticipated that are starting to flow, or is it just an uptick? But that's what gives us, you know, the confidence that, enough confidence to say. Because you could do, which a lot of companies are doing, we're abandoning guidance because we don't know. Or they're just, it's the, it's the, you know, the baby with the bathwater, if you're going to take revenue down, take it all down. Take your lumps now.

Speaker Change: You know the confidence that there's enough confidence to say.

Speaker Change: Because you could do which a lot of companies are doing we're abandoning guidance because we don't know or they're just it's the it's the you know the baby with the bathwater, if you're gonna take revenue down take it all down and take your lumps now I mean, you can imagine those conversations take place everywhere, but it's our belief that that's not going to come to pass in the <unk>.

Thomas Hogan: I mean, you can imagine those conversations take place everywhere, but it's our belief that that's not going to come to pass and that the company's going to rebound and have a strong second half. We also have intimate relationships with our largest customers. You know, it's been long standing. They still need to protect the world, and we're bearing with them, and they're bearing with us. I mean, that's the reality. This is a longstanding executive relationship where they know this too shall pass, and we will come good.

Speaker Change: Company is going to rebound and have a strong second half. We also have intimate relationships with our largest customers you know its been long standing.

Speaker Change: They still need to protect the world.

Speaker Change: We're bearing with them that bearing with us I mean, that's the reality. This is a long standing executive relationship where they know this too shall pass and we will come good.

Thomas Hogan: One other thing that we haven't highlighted yet that we think could contribute to the answer to your question. is one area that is not getting, I'll just say, as much pressure on the cost side is the area of intelligence and defense. For reasons that we all understand, if you follow geopolitics and what's happening around the world, and just to make an example, we all know that NATO and Europe is amping up their spend in defense. nobody's confused about that. And as they look at doing that and they look at securing the Eurozone borders. Guess who might be able to help them?

Speaker Change: The other one other thing that we haven't highlighted yet that we think could contribute to the answer to your question.

Speaker Change: Is one area that is not getting.

Speaker Change: I'll, just say as much pressure on the cost side is the area of intelligence and defense for reasons that we all understand if you've followed geopolitics and what's happening around the world.

Speaker Change: And just to make an example, we all know that NATO in Europe is amping up their spend in defense.

Speaker Change: Nobody is confused about that and as they look at doing that.

Speaker Change: And they look at securing the Euro zone borders.

Speaker Change: Guess, who might be able to help them.

Thomas Hogan: And so Cellebrite is moving swiftly to elevate our positioning, our messaging, our coverage, to make sure that we're bringing our assets to bear in what is actually emerging as a growth segment that needs our technology. contrasted with some of the pressure points in some of the more traditional agencies.

Speaker Change: And so.

Speaker Change: Celebrate is moving swiftly to elevate our positioning our messaging our coverage.

Speaker Change: To make sure that we're bringing our assets to bear and what is actually emerging as a growth segment that needs our technology.

Speaker Change: Trashed it with some of the pressure points in some of the more traditional agencies.

Operator: Thank you. Once again, if you do have a question, you may press the star 1 on your touchtone telephone keypad at this time.

Speaker Change: Thank you once again, if you do have a question you May press star one on your Touchtone telephone keypad at this time, we will take our next question from Jonathan Ho with William Blair. Please go ahead.

Jonathan Ho: We'll take our next question from Jonathan Ho with William Blair. Please go ahead. Hi, good morning. One thing I wanted to understand a little bit better is, you know, can you talk a little bit, I think you gave some great color around the Guardian and Insights adoption. Can you help us understand how Pathfinder is performing and does the strong adoption of the other two products maybe help smooth the Pathfinder adoption process over time? Yeah, you know, again, and I'll let Marcus comment because he's close, he's close on the ground on this, but but I would tell you that the Pathfinder is growing more in line with the core business as contrasted with Guardian, which is delivered its third straight quarter, over 100%.

Jonathan Ho: Hi, Good morning, one thing I wanted to understand a little bit better is you know can you talk a little bit.

Jonathan Ho: I think you gave some great color around the Guardian and insights adoption can you help us understand how pathfinder is performing and does the strong adoption of the other two products maybe help smooth the pathfinder adoption process over time.

Jonathan Ho: Yes.

Speaker Change: You know again and I'll, let Marcus comment because he's close things close on the ground on this but but I would tell you that the pathfinder is growing more in line with the core business. As contrast did with Guardian, which has delivered its third straight quarter over 100% in.

Thomas Hogan: And we want to avoid specifics, but I would just tell you, it's, it's, it's a healthy beat above 100%. So that technology is the market's leading, and we would argue only purpose built repository for collaboration and chain of custody, and is also a strategic control point in the enterprise is doing exceptionally well. Pathfinder is, as I said, is growing more in line with the rest of the business, but we've delivered some new enhancements and capabilities, as of very recently, that we think will change the way that we do business, and we're looking forward to continuing to do business with Pathfinder in the near future.

Speaker Change: We want to avoid specifics, but I would just tell you. It's a healthy beat above 100%. So that technology is the market's leading and we would argue only purpose built repository for collaboration and chain of custody.

And is also a strategic control point in the enterprise is doing exceptionally well.

Speaker Change: Pathfinder is as I said is growing more in line with the rest of the business, but we've delivered some new enhancements and capabilities as of very recently that we think will change the trajectory now all that said, we expect the penetration of Pathfinder.

Speaker Change: Perfect World you'd want a 100% penetration of both products relative to insights we think a realistic target on Guardian right now is 50% and that's really only constrained by sovereign level adoption of cloud technologies. So there are certain countries that just don't right now I was just in Germany.

Speaker Change: And they're pretty reluctant to do anything in the cloud right now and that will change, but right now that's where they stand and that's where Japan stands.

Marcus Jewell: But right now, that's where they stand. That's where Japan stands. Pathfinder, we think, just given the scale dynamics is probably a 25% penetration versus 50.

Speaker Change: Pathfinder, we think.

Speaker Change: Just given the scale dynamics is probably a 25% penetration versus 50, but let me. Let me ask Mark is to give you. His view on the current but I think more important our optimistic view of the future a pathfinder.

Marcus Jewell: But let me let me ask Marcus to give you his view on on the current, but I think more important, our optimistic view of the future of Pathfinder. Yeah, so Pathfinder was a major release of 10.4 this quarter, which brought a number of additional features, including a cloud-delivered opportunity for the product. What we're seeing with Pathfinder is it is an excellent product market fit, and a number of people on this call actually saw the demonstrations we did recently at our C2C, and I think you all agreed how powerful that product is. What we're now working on is making it more consumable for mass adoption.

Speaker Change: Yeah. So.

Speaker Change: One it was a major release of $10 four this quarter, which brought a number of additional features including our cloud delivered opportunity for the products. What we're seeing with Pathfinder is excellent product market fit.

Speaker Change: Number of people on this call actually sold the demonstrations. We did recently at all so you can see and I think you'll agree how powerful that product is what we're now working on is making you more consumable for mass adoption. So when you bring out a product of the top items do not need to scale. It back and that's what we've done in template for so we're now seeing and increasing pipeline.

Marcus Jewell: So when you bring out a product at the top end, you now need to scale it back, and that's what we've done in 10.4. So we're now seeing an increasing pipeline where we're actually growing, and we're very, very focused on the areas that we see adoption, and in line with Tom, we will see penetration rates as he aligns.

Speaker Change: We're actually growing and we're very very focused on the areas that we see adopt.

Speaker Change: Adoption and in line with time, we will see penetration rates as he align too.

Okay.

Marcus Jewell: Perfect.

Jonathan Ho: And then just as a quick follow-up, are there any specific items in the Memorial Day budget that are maybe earmarked programs that are particularly attractive that you're looking at? Thank you. Yes, indeed, there are a number. So the main thing of the Memorial Day budget, and fingers crossed it happens, probably not Memorial Day, but I think that the move music is it will happen that week. It allows to move from CR into the general tax status being set, which actually means then the department heads actually know that they've got their money for an extended period of time.

Speaker Change: Perfect and then just as a quick follow up are there any specific items in the memorial day budget on that or maybe your mark programs that are particularly attractive that you are looking at thank you.

Speaker Change: Yes, Indeed, there are a number so the main thing out of the Memorial day budget.

Speaker Change: And fingers crossed that happens probably know memorial day, but I think that the mood music is it will happen about week. It allows us to move from C or into the general tax status being set which actually means then the department head is actually know that they've got that money for an extended period of time, rather than does it reinvestigation reinvigorate. The special programs. There are a number we can list them.

Marcus Jewell: What that then does is it reinvestigates and reinvigors the special programs. There are a number, we couldn't list them all, they're all published on the website. But with our business development team, we've been doing a lot of work on Capitol Hill and at the state and local executive to make sure that we're well positioned for that security. So I would say there's probably eight or nine key programs, which we don't document, which will flow from that program, which are exciting. They're all around the same use cases, human trafficking, fentanyl, border safety. So you can look on the FedGov and see those programs pretty well.

Speaker Change: The rule published on the website.

Speaker Change: But with our business development team, where we're at.

Speaker Change: We've been doing a lot of work on Capitol Hill, and at the state and local executive to make sure that we're well positioned for that security. So I would say, there's probably eight or nine programs, which we don't document which will flow from that program, which are exciting for us.

Speaker Change: But they're all around the same use cases human trafficking.

Speaker Change: Sentinel border safety. So you can look on the fed governor and see those programs are pretty well documented.

Marcus Jewell: Thank you.

Speaker Change: Thank you and we'll go next to the line of Charles <unk> with TD Cowen. Please go ahead.

Shaul Eyal: And we'll go next to the line of Shaul Eyal with TD Cowan. Please go ahead. Thank you. Good afternoon, Tom, Dana, Andy. Tom, my question is on, obviously, on the federal, the U.S. federal softness. I wanted to ask if you or Dana can quantify for us maybe the level of slippage you've seen during the quarter. Is it just a handful of deals that are pushed? And I'm getting some emails from investors asking, was there any business that got canceled? And I have a follow-up.

Speaker Change: Thank you good afternoon, Tom Donna Andy.

Speaker Change: Tom My question.

Speaker Change: <unk> is on obviously on the federal U S federal softness.

Speaker Change: I wanted to ask.

Speaker Change: If you or Don I can quantify for us maybe the level of slippage you seem doing well.

Speaker Change: Is it just a handful of deals that have pushed.

Speaker Change: And I'm getting some emails from investors asking was there any business.

Speaker Change: That got canceled.

Speaker Change: I have a follow up.

Dana Gerner: So maybe I'll start. So in principle, Q1 for the federal government is usually a very weak or less important spending quarter. And that's what we are seeing in Q1 results is very much in line with what we shared with the market. And we feel very comfortable with what we've seen there. But what we are seeing, as was alluded by both Tom and Marcus before, is that closing of new business is being deferred and delayed. And that is what we are expecting to see in Q2 and impacting our forecast for Q2 and altogether the revenue for the year.

Speaker Change: So maybe I'll start so in principle Q1 for the federal government is usually a very.

Speaker Change: Weak or less important spending quarter.

Speaker Change: And that's what we are seeing in Q1 result is very much in line with what we shared with the market and we feel very comfortable with what we've seen there, but what we are seeing this was eroded by both Tom and Mark as before is that closing of new business is being deferred and delayed and that is what we are expecting to see in Q2.

Speaker Change: And impacting our forecast for Q2 and altogether the revenue for the year. Please note we did not change.

Dana Gerner: Please note we did not change the AOR because revenue is impacted by when the programs will come. AOR is for the full year is less impactful by that. We assume that some of the new business decisions for Q2 will be deferred to Q3. And we will have an opportunity to have an uplift in Q3 still to be. We visited after Memorial Day, as mentioned by... by Mark. Got it. Thank you for that, Dana.

Speaker Change: Because.

Speaker Change: Revenue is impacted by win programs.

Speaker Change: For the <unk>, Inc.

Speaker Change: Actual buyback.

Speaker Change: We.

Speaker Change: Assume that some of the new business decisions for Q2 will be deferred to Q3.

Speaker Change: And we will have an opportunity to have an uptick from Q3 still to be.

Speaker Change: When he visited after memorial day.

Tim: Tim mentioned by.

Speaker Change: By market.

Got it.

Speaker Change: Thank you for that Donna.

Thomas Hogan: Tom, you've indicated doubling down on the intelligence and defense sector, totally understandable. Curious, who is the buyer within those departments? And I understand the difference between U.S. state and local. And maybe just a word about the corporate opportunity. I know it's small, but how has that performed this quarter? Thank you. Do you want to take the buyer? So the buyer and D&I, they're two different buyers, obviously. So in defense, we are mainly securing forward operations. So if you think about what happens... I mean, we can use the Ukraine war. I think Ukraine will talk to us about pretty much 95% of the soldiers captured from Russia will have a cell phone on them.

Speaker Change: Tom you've indicated doubling down on the intelligence and defense sector totally understandable.

Speaker Change: <unk>, who is the buyer.

Speaker Change: Within those augments and.

Speaker Change: I understand the difference between U S state and local and May be just too worried about the corporate opportunity I know, it's small, but how has that performed this quarter. Thank you.

Speaker Change: Do you want to take the buyer, yes, so the buyer in DNI to different buyers over so in defense. We are we are mainly securing forward operations. So if you think about what happens.

Speaker Change: We can use the Ukraine War, I think Ukraine, who will talk to us about pretty much 95% of the soldiers captured from Russia will have a cell phone on them I'm not cell phone will obviously needs to be extracted because there'll be very relevant data. There is going to protect psywar is very different than people imagine the second thing and defense use cases, mainly security defense basis foreign defense bases around the world.

Thomas Hogan: And that cell phone will obviously need to be extracted because there'll be very relevant data that's going to protect. So war is very different than people imagine. The second thing in defense use case is mainly security of defense bases, foreign defense bases around the world being defended. Contractors come in and those contractors can be terrorists or counter-terrorists. So there's a number of looking at the people that are working on those sites in the civil sector protecting. So that's the defense use case. When you then move into intelligence, you're really moving into counterintelligence and This is field agents which are capturing multiple phones and looking for certain amounts of And so what you see is a much bigger scale opportunity because the number of users is exponentially higher than there will be in SLG.

Speaker Change: Being defended.

Speaker Change: Trying to just come in and those can travelers can be terrorists with kind of the terrorists. So theres a number of looking at the people that are working on those sites in the civil sector protecting so that's that's the defense use case. When you then move into intelligence Youre really moving into cancer intelligence and triage. This is field agents, which are capturing multiple phones and looking for.

Or certain amounts of evidence and so what you see is a much bigger scale opportunity because the number of users is exponentially higher than there will be an X L. G. So if you think about a DEA agent may be or gchq agent from or M. I five agent. There was many more of them then there will be a lab technician in S. LG. So we're tuning our product to take advantage of that.

Thomas Hogan: So if you think about a DEA agent, maybe a GCHQ agent or MI5 agent, there's many more of them than there will be a lab technician in SLG. So we're tuning our product to take advantage of that. And the buyer is simply the person that's in command of those field agents. So it's the equivalent of a chief of police. It'll be an intelligence chief or a base chief or an army chief will be the actual buyer that we're after.

Speaker Change: On the buyer.

Speaker Change: Simply the person leasing command of those field agents.

It's the equivalent of a chief of police it'll be an intelligence chief or a base cheap or an army chief will be the actual by that.

Speaker Change: Got it.

Dana Gerner: Maybe just a word about the corporate opportunity. Yeah, I mean, the corporate opportunity, I mean, our enterprise business has grown in line with the enterprise market. We feel that we're making progress. I mean, we have the who's who of accounts that we always say. We had some significant wins out of, you know, Fortune 50 customers this quarter. We are optimistic about our partnership relativity adding to that and also partnerships with other service providers. So the corporate opportunity led by Phil O'Reilly, who's a world class leader, is really starting to come around and we're satisfied with our revenue in that area.

Maybe just a word about.

Speaker Change: The corporate opportunity.

Speaker Change: Yes, I mean, the corporate opportunity I mean, our enterprise business is growing in line with.

Speaker Change: The enterprise market, we feel that we're making progress I mean, we have the who's who of accounts that we always say we have some significant wins out of fortune 50 customers this quarter.

Speaker Change: We are optimistic about our partnership of relativity, adding to that and also partnerships with other service providers. So the corporate opportunity led by fellow Raleigh is a world class leader.

Speaker Change: <unk> is really starting to come around and we're satisfied with all our revenue in that area.

Shaul Eyal: Thank you so much for the cover. Thank you.

Speaker Change: Thank you so much for the color.

Speaker Change: Thank you and we'll move next to Eric Martin Buzzi with Lake Street. Please go ahead.

Eric Martinuzzi: And we'll move next to Eric Martinuzzi with Lake Street. Please go ahead.

Dana Gerner: A year ago you laid out a plan to grow to a billion dollars by 2028. That anticipated revenue CAGR of 20% and ARR of 24%. I'm noticing the midpoint here for 2025 at 19% on the revenue and 23% on the ARR. Are we effectively stepping away from that billion dollar plan or is the expectation that growth in the out years would recover that? I think when we've given, and thank you, Eric, for the question, we've given this vision and plan to get to the $1 billion, it was relying on a few factors that we are actually seeing being executed.

Speaker Change: Yes, a year ago, you laid out a plan to grow to $1 billion by 2028 is that anticipated revenue CAGR of 20% and 24% I'm noticing the midpoint here for 2025, 19%.

Speaker Change: On the revenue in 'twenty three on the E. R. R. R. We effectively stepping away from that $1 billion plan or is the expectation that growth in the out years would recover that.

Speaker Change: I think when we've given and thank Harry for the question. We've given this vision and plan to get to the $1 billion.

Speaker Change: The language few factories that we are actually seeing being executed.

Dana Gerner: And as you said, it's built on Kager, so lastly, we've done better than that this year. Current guidance alluded that we are slightly below, but that doesn't mean that we are getting away from our overall performance expected. What we are seeing this year, the impact in both revenue and AR is actually what we said before on the spending time, especially with the federal government, and we believe that this will be released and we will see 2026. Catching up on what we are missing here and I think what Marcus spoke before about the World Cup will provide us more opportunities that are currently are not captured in our 2025 forecast.

Speaker Change: I still don't CAGR, so and obviously, we've done better than that this year, but the current guidance.

Speaker Change: Or slightly below but it doesn't mean that we are getting away from our overall performance expected.

Speaker Change: What we are seeing this year that are impacting both revenue and actually what we said before.

Speaker Change: Pending.

Speaker Change: Especially with the federal government and we believe that this will be released.

Speaker Change: We will see 2026.

Speaker Change: Catching up on what we are missing here and I think what mark spoke before about the <unk>.

Speaker Change: Coppola provide us more opportunities that are currently are not captured in our 2025 forecast.

Dana Gerner: Altogether we are not changing our trajectory to get to a $1 billion goal. Got it.

Speaker Change: Altogether, we are not changing too much.

Speaker Change: Check to me to get to a $1 billion company.

Speaker Change: Got it and then you discussed the federal business being a little bit slower than expected, but you also called out EMEA with that.

Dana Gerner: And then you, we've discussed the federal business being a little bit slower than expected, but you also called out EMEA. Was that a handful of transactions or an overall kind of across the board delay in decision making on pipeline? It's a combination of both. I mean, the two are actually pretty much interlinked. I would say there was a general slowdown from public safety, but an increase in D&I. And so the D&I has a longer maturation and a longer sales cycle, but the deals are a lot bigger. We have huge faith in RMEA teams that are making the pivot towards where that market is, and we're going to see a big uptick from them as that market matures.

Speaker Change: A handful of transactions or an overall kind of across the board delay in decision making on pipeline.

Speaker Change:

Speaker Change: There's a company as a combination of both I mean, the two are actually pretty much into linked I would say there is there was a general slowdown.

Speaker Change: From from public safety, better, but an increase in DNI and so the DNI has a longer maturation of a longer sales cycle, but these deals are a lot bigger we.

Speaker Change: We have huge faith in our EMEA team theyre, making the pivot towards where the market is and we're going to see a big uptick from them as that market matures, but there's nothing to see there from really anything outside of normality.

Dana Gerner: But there's nothing to see there from really anything outside of normality as we make those transitions and back our leadership in the region. Thank you.

Speaker Change: As we make those transitions and backhaul leadership in the region.

Speaker Change: Thank you.

Speaker Change: Thank you.

Operator: And this concludes the Q&A portion of today's call. I would like to now turn the floor over to the Cellebrite team for additional or closing remarks.

Speaker Change:

Speaker Change: And this concludes the Q&A portion of today's call I would like to now turn the floor over to celebrate team for additional or closing remarks.

Thomas Hogan: Great.

Thomas Hogan: Well, Thank you very much, everybody, for participating today. We will be participating in a number of investor conferences over the next few weeks. For those of you who have questions, feel free to reach out to Investor Relations, and we look forward to seeing you at those conferences. Thank you.

Speaker Change: Great.

Speaker Change: Thank you very much everybody for participating today.

Speaker Change: We will be participating in a number of investor conferences over the next few weeks for those of you have questions feel free to reach out to Investor Relations and we look forward to seeing you at those conferences. Thank you.

Speaker Change: Thank you. This concludes today's celebrate first quarter 2025 financial results Conference call. Please disconnect. Your line at this time and have a wonderful day.

Operator: This concludes today's Cellebrite first quarter 2025 financial results conference call.

Operator: Please disconnect your line at this time and have a wonderful day.

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