Q2 2025 Cellebrite DI Ltd Earnings Call
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I would now like to turn the call over to your first speaker today, Mr. Andrew Kramer Mr. Kramer the floor is yours.
Thank you very much Angela good morning, everybody welcome to celebrate second quarter 2025 financial results Conference call.
Im joined here today at our U S headquarters outside of Washington D. C. Our primary speakers on the call will be Tom Hogan celebrate CEO and David Barter celebrate CFO also with us in the room are Dana Garner, our former CFO and Marcus Jewell our CRO.
Joining us remotely will be Adam Clamor celebrates chairman of the board will also have some remarks for today.
This call is being recorded and a replay of the recording will be made available on our website. Shortly after the call and eventually we will post a copy of our prepared remarks. Please note that a copy of today's press release and financial statements, including GAAP to non-GAAP Reconciliations is available on the Investor Relations website at investors <unk> celebrate.
Operator: Please stand by. Your program is about to begin.
Angela: Welcome to the Cellebrite second 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 your questions following the presentation. If at any point you would like to ask a question at that time, please press star one on your telephone keypad. If at any point your question has been answered, you may remove yourself from the queue by pressing star two. So others can hear your questions clearly, we ask that you pick up your handset for best sound quality. Lastly, if you should require operator assistance, please press star zero. I would now like to turn the call over to your first speaker today, Mr. Andrew Kramer. Mr. Kramer, the floor is yours.
Dot Com in addition to the press release, we've also posted an investor presentation that provides a detailed overview of our business and recent financial performance along with publishing the quarterly financial tables, and supplemental historical financial information for each quarter for the past.
Speaker #1: If at any point you would like to ask a question at that time, please press *1 on your telephone keypad. If at any point your question has been answered, you may remove yourself from the queue by pressing *2.
Three years, it's available on our Investor Relations website also unless stated otherwise our discussion of our second 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 second quarter of 2024.
Speaker #1: 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 *0.
Speaker #1: I would now like to turn the call over to your first speaker today, Mr. Andrew Kramer. Mr. Kramer, the floor is yours.
In addition, please note that statements made on this call that are not statements of historical facts.
Speaker #3: Thank you very much, Angela. Good morning, everybody. Welcome to the Sellebrite second quarter 2025 financial results conference call. I'm joined here today at our US headquarters outside of Washington, DC.
Thomas E. Hogan: Thank you very much, Angela. Good morning, everybody. Welcome to the Cellebrite DI Ltd. second quarter 2025 financial results conference call. I am joined here today at our U.S. headquarters outside of Washington, D.C. Our primary speakers on the call will be Thomas E. Hogan, Cellebrite DI Ltd.'s CEO, and David Barter, Cellebrite DI Ltd.'s CFO. Also with us in the room are Dana Gerner, our former CFO, and Marcus Jewell, our CRO. Joining us remotely will be Adam Klammer, Cellebrite DI Ltd.'s Chairman of the Board, who will also have some remarks for today. This call is being recorded, and a replay of the recording will be made available on our website shortly after the call, and eventually we will post a copy of our prepared remarks.
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.
Speaker #3: Our primary speakers on the call will be Tom Hogan, Sellebrite CEO, and David Barter, Sellebrite CFO. Also with us in the room are Dana Gerner, our former CFO, and Marcus Jewell, our CRO.
That could also cause actual results to differ materially from historical results <unk> from our forecasts. Some of these forward looking statements are discussed.
Under the heading risk factors and elsewhere in the Companys annual report on form 20-F filed with the SEC on March 18th 2025. The company does not undertake to update any forward looking statements to reflect future events or circumstances in terms of today's agenda, Adam Clamor will share his thoughts on our CEO announce.
Speaker #3: Joining us remotely will be Adam Kramer, Sellebrite's chairman of the board, who will also have some remarks for today. This call is being recorded and a replay of the recording will be made available on our website shortly after the call and eventually we will post a copy of our prepared remarks.
Speaker #3: Please note that a copy of today's press release and financial statements, including GAAP to non-GAAP reconciliations, is available on the Investor Relations website at investors.sellebrite.com.
Tom will then provide a brief review of our quarterly performance discuss key strategic achievements and milestones and offer his perspective on market conditions and the outlook for 2025, Donna Garner will offer some brief parting thoughts before she retires and Dave Barter will review the quarterly results and.
Thomas E. Hogan: Please note that a copy of today's press release and financial statements, including GAAP to non-GAAP reconciliations, is available on the investor relations website at investors.cellebrite.com. In addition to the press release, we have also posted an investor presentation that provides a detailed overview of our business and recent financial performance, along with publishing the quarterly financial tables and supplemental historical financial information for each quarter for the past three years. It is available on our investor relations website. Also, unless stated otherwise, our discussion of our second quarter 2025 financial metrics, as well as the financial metrics provided in our outlook, will be done on a non-GAAP basis only. All historical comparisons are with the second quarter of 2024. In addition, please note the statements made on this call that are not statements of historical facts constitute forward-looking statements.
Speaker #3: In addition to the press release, we've also posted an investor presentation that provides a detailed overview of our business and recent financial performance, along with publishing the quarterly financial tables and supplemental historical financial information for each quarter for the past three years, it's available on our investor relations website.
Cover our outlook in more detail.
And with that said I'll now turn the call over to Adam Clamor Adam.
To you.
Thank you Andy it's a pleasure to be on today's call to briefly share the board's perspective on the appointment of Tom Hogan as celebrates CEO.
Speaker #3: Also, unless stated otherwise, our discussion of our second quarter 2025 financial metrics as well as the financial metrics provided in our outlook will be done on a non-gap basis only.
<unk> has long been the preferred choice of our board to serve as CEO given his vast technology experience.
Speaker #3: And all historical comparisons are with the second quarter of 2024. In addition, please note the statements made on this call that are not statements of historical facts.
Intense focus on strategy and intimacy with celebrates executive team workforce and customers gained over the last two years.
Speaker #3: 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.
Thomas E. Hogan: 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. That could also cause actual results to differ materially from historical results and/or from forecasts. Some of these forward-looking statements are discussed under the heading Risk Factors and elsewhere in the company's annual report on Form 20F 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. In terms of today's agenda, Adam Klammer will share his thoughts on our CEO announcement. Thomas E. Hogan will then provide a brief review of our quarterly performance, discuss key strategic achievements and milestones, and offer his perspective on market conditions and the outlook for 2025.
Since joining celebrate.
Speaker #3: They could also cause actual results to differ materially from historical results and/or from forecasts. 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.
<unk> Chairman in August of 2023, and continuing through his service as interim CEO over the past eight months Palm has played an important active role in every major initiative that has helped drive substantial value creation.
And for celebrate with tangible and infectious.
Speaker #3: The company does not undertake to update any forward-looking statements to reflect future events or circumstances. In terms of today's agenda, Adam Kramer will share his thoughts on our CEO announcement, Tom will then provide a brief review of our quarterly performance, discuss key strategic achievements and milestones, and offer his perspective on market conditions and the outlook for 2025.
As celebrates chair and the managing partner of one of the company's largest shareholders I could not be happier.
Given that backdrop youre likely wondering why it took so long for this appointment to occur.
In the summer of 2020 for Tom was diagnosed with stage four non Hodgkin's lymphoma.
Speaker #3: Dana Gerner will offer some brief parting thoughts before she retires, and Dave Barter will review the quarterly results and cover our outlook in more detail.
Thomas E. Hogan: Dana Gerner will offer some brief parting thoughts before she retires, and David Barter will review the quarterly results and cover our outlook in more detail. With that said, I will now turn the call over to Adam Klammer. Adam, to you.
That precluded his ability to commit to serving us celebrate CEO when the company announced its succession plans in mid November of 2024.
Speaker #3: And with that said, I'll now turn the call over to Adam Kramer. Adam, to you.
At the time of the Ocs departure, Tom was on the back end of six months of chemotherapy at MD Anderson.
Speaker #4: Thank you, Andy. It's a pleasure to be on today's call. To briefly share the board's perspective on the appointment of Thomas Hogan as Cellebrite's CEO.
David Barter: Thank you, Andy. It's a pleasure to be on today's call to briefly share the board's perspective on the appointment of Tom Hogan as Cellebrite's CEO. Tom has long been the preferred choice of our board to serve as CEO, given his vast technology experience, his intense focus on strategy, and intimacy with Cellebrite's executive team, workforce, and customers gained over the last two years. Since joining Cellebrite as Executive Chairman in August of 2023 and continuing through his service as Interim CEO over the past eight months, Tom has played an important active role in every major initiative that has helped drive substantial value creation. His passion for Cellebrite is tangible and infectious. As Cellebrite's Chair and the Managing Partner of one of the company's largest shareholders, I could not be happier. Given that backdrop, you're likely wondering why it took so long for this appointment to occur.
He finished up his final treatments in December with his cancer Fortunately in complete remission.
Speaker #4: Tom has long been the preferred choice of our board to serve as CEO, given his vast technology experience, his intense focus on strategy and intimacy with Sellebrite's executive team, workforce, and customers gained over the last two years.
It was the board strong desire in preference to retain Tom is the full time CEO given the performance of the company since his arrival I would remind the shareholders. Despite the pullback in the stock price. This year celebrates value has more than doubled since Tom joined as executive Chairman.
Speaker #4: Since joining Cellebrite as executive chairman in August 2023, and continuing through his service as interim CEO over the past eight months, Tom has played an important active role in every major initiative that has helped drive substantial value creation.
Entering yossi and working closely with the team.
Tom was willing and able to step in as interim CEO on January one.
But given the rigorous demands of a global CEO role. He wanted time to fully recover and confirm his ability to run at 120% and provide the leadership this company deserves.
Speaker #4: His passion for Sellebrite is tangible, and infectious. As Sellebrite's chair and the managing partner of one of the company's largest shareholders, I could not be happier.
Given that backdrop, our board executed a thorough external search that yielded a number of very qualified candidates. This is a fabulous company in the position attracted substantial interest we had multiple highly qualified.
Speaker #4: Given that backdrop, you're likely wondering why it took so long for this appointment to occur. In the summer of 2024, Tom was diagnosed with stage four non-Hodgkin's lymphoma.
David Barter: In the summer of 2024, Tom was diagnosed with stage four non-Hodgkin's lymphoma that precluded his ability to commit to serving as Cellebrite's CEO when the company announced its succession plans in mid-November of 2024. At the time of Yossi's departure, Tom was on the back end of six months of chemotherapy at MD Anderson. He finished up his final treatments in December, with his cancer fortunately in complete remission. It was the board's strong desire and preference to retain Tom as the full-time CEO, given the performance of the company since his arrival. I would remind the shareholders that despite the pullback in the stock price this year, Cellebrite's value has more than doubled since Tom joined as Executive Chairman, mentoring Yossi and working closely with the team. Tom was willing and able to step in as Interim CEO on January 1st.
Prior public CEO experienced candidates that wanted this position and we were prepared to go down that path if necessary.
Speaker #4: The precluded his ability to commit to serving as Sellebrite's CEO when the company announced its succession plans in mid-November of 2024. At the time of Yossi's departure, Tom was on the back end of six months of chemotherapy at MD Anderson.
Fortunately Tom's cancer has remained in full remission as he has steadily regained his energy and stamina, we were thrilled when Tom raised his hand to remove the interim designation, which made our choice very easy.
Speaker #4: He finished up his final treatments in December with his cancer fortunately in complete remission. It was the board's strong desire and preference to retain Tom as the full-time CEO, given the performance of the company since his arrival.
Board is unanimous in its conviction that Tom is the right individual to lead celebrate providing valuable continuity for the company its people shareholders and customers.
Celebrate future is incredibly bright despite the near term uncertainty with U S. Federal spending this company is making an impact with customers, while delivering durable profitable growth and outstanding free cash flow.
Speaker #4: I would remind the shareholders that despite the pullback in the stock price this year, Sellebrite's value has more than doubled since Tom joined as executive chairman.
Speaker #4: Mentoring Yossi and working closely with the team, Tom was willing and able to step in as interim CEO on January 1st. However, given the rigorous demands of a global CEO role, he wanted time to fully recover and confirm his ability to run at 120% and provide the leadership this company deserves.
Myself and the board.
<unk> confidence in the strategic initiatives already underway, some of which Tom and Dave will discuss today and those that will be further developed and executed on over the coming quarters. It will elevate the company's value with customers and lead to a stronger celebrate.
David Barter: But given the rigorous demands of a global CEO role, he wanted time to fully recover and confirm his ability to run at 120% and provide the leadership this company deserves. Given that backdrop, our board executed a thorough external search that yielded a number of very qualified candidates. This is a fabulous company, and the position attracted substantial interest. We had multiple highly qualified prior public CEO experienced candidates that wanted this position, and we were prepared to go down that path if necessary. Fortunately, Tom's cancer has remained in full remission. As he has steadily regained his energy and stamina, we were thrilled when Tom raised his hand to remove the interim designation, which made our choice very easy. The board is unanimous in its conviction that Tom is the right individual to lead Cellebrite DI Ltd., providing valuable continuity for the company, its people, shareholders, and customers.
Tom's appointment as CEO is a great outcome for celebrate the shareholders its people and its customers.
Speaker #4: Given that backdrop, our board executed a thorough external search that yielded a number of very qualified candidates. This is a fabulous company, and the position attracted substantial interest.
That concludes my comments and I will now hand, the call over to Tom.
Adam Thanks for the kind words.
As you know I look forward to the next chapter together and completely share.
Speaker #4: We had multiple highly qualified prior public CEO-experienced candidates who wanted this position, and we were prepared to go down that path if necessary.
Your optimism for the future of this company. So let me let me jump in.
We see 2025, playing out largely as originally planned and the majority of our businesses with U S state and local government.
Speaker #4: Fortunately, Tom's cancer has remained in full remission. As he has steadily regained his energy and stamina, we were thrilled when Tom raised his hand to remove the interim designation, which made our choice very easy.
In Latin America position actually to deliver exceptional full year results as.
As we shared in our last call a variety of changes within the U S. Fed sector has resulted in an atypical spending activity and constrained visibility into the timing of new orders.
Speaker #4: The board is unanimous in its conviction that Tom is the right individual to lead Cellebrite, providing valuable continuity for the company, its people, shareholders, and customers.
These dynamics along with our ongoing focus on the responsible management of our cost structure.
David Barter: Cellebrite DI Ltd.'s future is incredibly bright. Despite the near-term uncertainty with U.S. federal spending, this company is making an impact with customers while delivering durable, profitable growth and outstanding free cash flow. Myself and the board have confidence in the strategic initiatives already underway, some of which Tom and Dave will discuss today and those that will be further developed and executed on over the coming quarters. It will elevate the company's value with customers and lead to a stronger Cellebrite DI Ltd. Tom's appointment as CEO is a great outcome for Cellebrite DI Ltd., its shareholders, its people, and its customers. That concludes my comments, and I will now hand the call over to Tom.
Speaker #4: Sellebrite's future is incredibly bright. Despite the near-term uncertainty with US federal spending, this company is making an impact with customers, while delivering durable, profitable growth and outstanding free cash flow.
I have informed our revised 2025 financial targets.
Some up some down.
Discuss current market conditions.
Speaker #4: Myself and the board have confidence in the strategic initiatives already underway, some of which Tom and Dave will discuss today, and those that will be further developed and executed on over the coming quarters.
Our full year 2025 outlook in more detail shortly.
But first I'd like to address several important developments and achievements that are enhancing celebrates clarity and our confidence around our strategic direction leadership and new vectors of growth.
Speaker #4: It will elevate the company's value with customers and lead to a stronger Sellebrite. Tom's appointment as CEO is a great outcome for Sellebrite. The shareholders, its people, and its customers.
Let's begin with celebrates strategic direction.
Despite current spending challenges.
Speaker #4: That concludes my comments, and I will now hand the call over to Tom.
Several important kpis illustrate that our value proposition continues to resonate in the market and that we're making important progress against many of our top 2025 priorities first in terms of insights our flagship digital forensic software, we continue to see customers upgrade from.
Speaker #3: Now, Adam, thanks for the kind words and, as you know, I look forward to the next chapter together and completely share your optimism for the future of this company.
Thomas E. Hogan: Adam, thanks for the kind words. As you know, I look forward to the next chapter together and completely share your optimism for the future of this company. Let me jump in. First, we see 2025 playing out largely as originally planned in the majority of our businesses, with the U.S. state and local government and Latin America positioned to deliver exceptional full-year results. As we shared in our last call, a variety of changes within the U.S. federal sector have resulted in atypical spending activity and constrained visibility into the timing of new orders. These dynamics, along with our ongoing focus on the responsible management of our cost structure, have informed our revised 2025 financial targets, some up and some down. I will discuss current market conditions and our full-year 2025 outlook in more detail shortly.
Speaker #3: So, let me jump in. First, we see 2025 playing out largely as originally planned in the majority of our businesses, with the U.S., state, and local government, and Latin America positioned actually to deliver exceptional full-year results.
Our legacy offerings to our digital investigation platform.
At the end of the second quarter insights been deployed by over 40% of our license base and is tracking comfortably ahead of our full year objective for conversions.
Speaker #3: As we shared in our last call, a variety of changes within the US Fed sector has resulted in atypical spending activity and constrained visibility into the timing of new orders.
Perhaps more importantly, our NPS scores on insights technical capabilities, including usability and workflows device support and decoding have continued to trend favorably.
Speaker #3: These dynamics, along with our ongoing focus on the responsible management of our cost structure, have informed our revised 2025 financial targets—some up and some down.
Second we continue to see strong adoption of our cloud and SaaS based solutions, which are now 20% of total IRR.
More specifically guardian continues to gain traction with customers.
Speaker #3: I'll discuss current market conditions and our full-year 2025 outlook in more detail shortly. But first, I'd like to address several important developments and achievements that our enhancing Sellebrite's clarity and our confidence around our strategic direction, leadership, and new vectors of growth.
This product has outstanding market fit enabling more efficient management of the examination process greater collaboration and strong chain of custody.
Thomas E. Hogan: First, I would like to address several important developments and achievements that are enhancing Cellebrite's clarity and our confidence around our strategic direction, leadership, and new vectors of growth. Let's begin with Cellebrite's strategic direction. Despite current spending challenges, several important KPIs illustrate that our value proposition continues to resonate in the market and that we are making important progress against many of our top 2025 priorities. First, in terms of Insights, our flagship digital forensic software, we continue to see customers upgrade from our legacy offerings to our digital investigation platform. At the end of the second quarter, Insights had been deployed by over 40% of our licensed base and are tracking comfortably ahead of our full-year objective for conversions. Perhaps more importantly, our NPS scores on Insights' technical capabilities, including usability and workflows, device support, and decoding, have continued to trend favorably.
For Guardian grew by more than 100% year on year now for the fourth consecutive quarter.
Speaker #3: Let's begin with Sellebrite's strategic direction. Despite current spending challenges, several important KPIs illustrate that our value proposition continues to resonate in the market, and that we're making important progress against many of our top 2025 priorities.
Much of Guardians growth to date is from U S. S LG customers, but its been further bolstered by inroads this quarter in Latin America, and the UK. While also closing the first Guardian deal.
In Australia.
Our pipeline for Guardian also remains strong and is accelerating as we position the strategic offering for other European markets over the coming quarters.
Speaker #3: First, in terms of insights, our flagship digital forensic software, we continue to see customers upgrade from our legacy offerings to our digital investigation platform.
Third we're gaining important momentum in the global defense and intelligence sector, which was approximately 25% of our international AOR last year.
Speaker #3: At the end of the second quarter, insights have been deployed by over 40% of our licensed base and is tracking comfortably ahead of our full-year objective for conversions.
We believe shifting budgetary priorities will fuel an acceleration of spending in this segment.
Speaker #3: Perhaps more importantly, our NPS scores on insights technical capabilities including usability and workflows device support and decoding have continued to trend favorably. Second, we continue to see strong adoption of our cloud and SaaS-based solutions, which are now 20% of total ARR.
Which we are already starting to capture in our European region.
Finally in addition to continued growth with insights and Guardian are contributions from Pathfinder also improved and accelerated due to strength in new bookings combined with improvements in customer retention.
Thomas E. Hogan: Second, we continue to see strong adoption of our cloud and SaaS-based solutions, which are now 20% of total ARR. More specifically, Guardian continues to gain traction with customers. This product has outstanding market fit, enabling more efficient management of the examination process, greater collaboration, and strong chain of custody. ARR for Guardian grew by more than 100% year-on-year, now for the fourth consecutive quarter. Much of Guardian's growth to date is from U.S. state and local government customers, but it has been further bolstered by inroads this quarter in Latin America and the U.K., while also closing the first Guardian deal in Australia. Our pipeline for Guardian also remains strong and is accelerating as we position the strategic offering for other European markets over the coming quarters.
In addition to this progress we took an important strategic step forward in June when we announced our agreement to acquire carillon.
Speaker #3: More specifically, Guardian continues to gain traction with customers. This product has outstanding market fit enabling more efficient management of the examination process, greater collaboration, and strong chain of custody.
We believe this is an important transaction that will accelerate innovation.
Spanned our addressable market.
Speaker #3: ARR for Guardian grew by more than 100% year-on-year now for the fourth consecutive quarter. Much of Guardian's growth to date is from US SLG customers but it's been further bolstered by inroads this quarter in Latin America and the UK while also closing the first Guardian deal in Australia.
And help fuel long term growth across both our private and public sector businesses.
Trillium arm virtualization technology brings vulnerability and penetration testing to the wide range of arm based endpoints, including smartphones tablets laptops drones and Iot devices.
We know firsthand just how powerful <unk> technology is for the past five years.
Speaker #3: Our pipeline for Guardian also remains strong and is accelerating as we position the strategic offering for other European markets over the coming quarters. Third, we're gaining important momentum in the global defense and intelligence sector which was approximately 25% of our international ARR last year.
Our internal mobile research teams, who have been using <unk> mobile vulnerability solution to efficiently evolve and advance our lawful access capabilities.
Thomas E. Hogan: Third, we are gaining important momentum in the global defense and intelligence sector, which was approximately 25% of our international ARR last year. We believe shifting budgetary priorities will fuel an acceleration of spending in this segment, which we are already starting to capture in our European region. Finally, in addition to continued growth with Insights and Guardian, our contributions from Pathfinder also improved and accelerated due to strength in new bookings, combined with improvements in customer retention. In addition to this progress, we took an important strategic step forward in June when we announced our agreement to acquire Corellium. We believe this is an important transaction that will accelerate innovation, expand our addressable market, and help fuel long-term growth across both our private and public sector businesses.
Trillions mobile vulnerability research solution, clearly expands our addressable market and specifically in the defense and intelligence sector.
Speaker #3: We believe shifting budgetary priorities will fuel an acceleration of spending in this segment, which we are already starting to capture in our European region.
Based on the nearly immediate post announcement interest in the Carillion solutions.
Speaker #3: Finally, in addition to continued growth with insights and Guardian, our contributions from Pathfinder also improved and accelerated due to strength in new bookings, combined with improvements in customer retention.
We quickly executed a reseller agreement.
Which we closed roughly three weeks ago.
And within two weeks of closing that reseller agreement closed our first sale.
A European intelligence agency for nearly $500000.
Speaker #3: In addition to this progress, we took an important strategic step forward in June when we announced our agreement to acquire Carilium. We believe this is an important transaction that will accelerate innovation, expand our addressable market, and help fuel long-term growth across both our private and public sector businesses.
And we think this use case has broad applicability across the globe intelligence community and gives you some insight.
Our enthusiasm around the opportunity for significant growth post close.
To that point, we clearly expect that carillon will be an accelerant to.
Speaker #3: Carilium's ARM virtualization technology brings vulnerability and penetration testing to the wide range of ARM-based endpoints including smartphones, tablets, laptops, drones, and IoT devices. We know firsthand just how powerful Carilium's technology is.
Thomas E. Hogan: Corellium's ARM virtualization technology brings vulnerability and penetration testing to the wide range of ARM-based endpoints, including smartphones, tablets, laptops, drones, and IoT devices. We know firsthand just how powerful Corellium's technology is. For the past five years, our internal mobile research teams have been using Corellium's mobile vulnerability solution to efficiently evolve and advance our lawful access capabilities. Corellium's mobile vulnerability research solution clearly expands our addressable market, specifically in the defense and intelligence sector. Based on the nearly immediate post-announcement interest in the Corellium solutions, we quickly executed a reseller agreement, which we closed roughly three weeks ago. Within two weeks of closing that reseller agreement, we closed our first sale with a European intelligence agency for nearly $500,000. We think this use case has broad applicability across the global intelligence community and gives you some insight to our enthusiasm around the opportunity for significant growth post-close.
To celebrate overall growth and Dave will share some details on the transaction in just a few minutes.
Let me turn to innovation and I want to highlight three areas.
First late last month, we announced that the department of Justice will serve as the official sponsoring agency for celebrates fed ramp high authorization to operate or the acronym Ato.
Speaker #3: For the past five years, our internal mobile research teams have been using Carilium's mobile vulnerability solution to efficiently evolve and advance our lawful access capabilities.
Youll hear quite frequently.
This Ato designation will cover our solutions delivered on the celebrate government cloud, namely insights and Guardian.
Speaker #3: Carilium's mobile vulnerability research solution clearly expands our addressable market and specifically in the defense and intelligence sector. Based on the nearly immediate post-announcement interest in the Carilium solutions, we quickly executed a reseller agreement, which we closed roughly three weeks ago.
The sponsorship is the critical next step required for the celebrate government cloud to advance from its current fed ramp ready.
Designation to in process and marks a major milestone that significantly accelerates celebrates journey toward a full ato, which will enable us to sell the breadth of our cloud assets to our installed base of U S Federal agency customers.
Speaker #3: And within two weeks of closing that reseller agreement, we closed our first sale with a European intelligence agency for nearly $500,000. And we think this use case has broad applicability across the global intelligence community and gives you some insight to our enthusiasm around the opportunity for significant growth post-close.
We look forward to working with the Doj to elevate their productivity efficiency and efficacy with Guardian and the breadth of our cloud based product line.
The second area is mobile research, we continue to invest significant resources, both people and dollars to keep pace with the mobile phone Oems.
Speaker #3: To that point, we clearly expect that Carilium will be an accelerant to Sellebrite's overall growth. And Dave will share some details on the transaction in just a few minutes.
Thomas E. Hogan: To that point, we clearly expect that Corellium will be an accelerant to Cellebrite's overall growth. David Barter will share some details on the transaction in just a few minutes. Let me turn to innovation. I want to highlight three areas. First, late last month, we announced that the U.S. Department of Justice will serve as the official sponsoring agency for Cellebrite's FedRAMP High Authorization to Operate, or the acronym ATO that you will hear quite frequently. This ATO designation will cover our solutions delivered on the Cellebrite government cloud, namely Insights and Guardian. The sponsorship is the critical next step required for the Cellebrite government cloud to advance from its current FedRAMP-ready designation to in-process. It marks a major milestone that significantly accelerates Cellebrite's journey toward a full ATO, which will enable us to sell the breadth of our cloud assets to our installed base of U.S.
Last month, we released a powerful new update to our unlock software that covers more than 100, Android Oems and thousands of models. This milestone underscores our long standing technological leadership for Android smartphones, which have more than 70% of global market share.
Speaker #3: Let me turn to innovation, and I want to highlight three areas. First, late last month, we announced that the Department of Justice will serve as the official sponsoring agency for Cellebrite's FedRAMP High Authorization to Operate, or the acronym ATO that you'll hear quite frequently.
This progress complements our ongoing focus and capabilities on the iOS ecosystem.
We remain committed to extending our leadership position in providing lawful mobile access to law enforcement defense and intelligence agencies across the world's democratized nations.
Speaker #3: This ATO designation will cover our solutions delivered on the Sellebrite government cloud namely insights and Guardian. The sponsorship is the critical next step required for the Sellebrite government cloud to advance from its current FedRAMP-ready designation to in-process.
Finally, AI continues to be a critical enabling technology that is powering our entire platform.
Our commitment to innovation in this area remains the highest priority as we envision radically improved systems and solutions powered by Gen AI.
Speaker #3: It marks a major milestone that significantly accelerates Sellebrite's journey toward a full ATO, which will enable us to sell the breadth of our cloud assets to our installed base of US federal agency customers.
The good news is much of this innovation is already being delivered real time in our newest releases of Guardian with more to come over the coming months.
Thomas E. Hogan: federal agency customers. We look forward to working with the DOJ to elevate their productivity, efficiency, and efficacy with Guardian and the breadth of our cloud-based product line. The second area is mobile research. We continue to invest significant resources, both people and dollars, to keep pace with the mobile phone OEMs. Last month, we released a powerful new update to our unlocked software that covers more than 100 Android OEMs and thousands of models. This milestone underscores our longstanding technological leadership for Android smartphones, which have more than 70% of global market share. This progress complements our ongoing focus and capabilities on the iOS ecosystem. We remain committed to extending our leadership position in providing lawful mobile access to law enforcement, defense, and intelligence agencies across the world's democratized nations. Finally, AI continues to be a critical enabling technology that is powering our entire platform.
With respect to leadership since I joined celebrate two years ago, we've worked diligently to strengthen our management team by recruiting executives with proven experience and relevant domain expertise at leading technology companies with global scale and impact.
Speaker #3: We look forward to working with the DOJ to elevate their productivity, efficiency, and efficacy with Guardian and the breadth of our cloud-based product line.
Speaker #3: The second area is mobile research. We continue to invest significant resources both people and dollars to keep pace with the mobile phone OEMs. Last month, we released a powerful new update to our unlock software that covers more than 100 Android OEMs and thousands of models.
We apply that same philosophy to the appointment David barter as our new CFO.
Dave brings proven credentials as a public company CFO at top software and SaaS businesses.
Speaker #3: This milestone underscores our long-standing technological leadership for Android smartphones which have more than 70% of global market share. This progress complements our ongoing focus and capabilities on the iOS ecosystem.
We're thrilled to have Dave on board.
It also means saying goodbye to Dan <unk>.
Who will be retiring from celebrate effectively after today's call.
Donnelley financial and accounting acumen through intimate knowledge of our business our work ethic and her passion enabled her to play a major role in celebrate success over the past 11 years.
Speaker #3: We remain committed to extending our leadership position and providing lawful mobile access to law enforcement, defense, and intelligence agencies across the world's democratized nations.
On behalf of everybody affiliated with celebrate I want to thank you for everything you've done for us and wish you all the health and happiness, you rightfully earned and deserve.
Speaker #3: Finally, AI continues to be a critical enabling technology that is powering our entire platform. Our commitment to innovation in this area remains the highest priority as we envision radically improved systems and solutions powered by GenAI.
Thomas E. Hogan: Our commitment to innovation in this area remains the highest priority as we envision radically improved systems and solutions powered by GenAI. The good news is much of this innovation is already being delivered real-time in our newest releases of Guardian, with more to come over the coming months. With respect to leadership, since I joined Cellebrite two years ago, we have worked diligently to strengthen our management team by recruiting executives with proven experience and relevant domain expertise at leading technology companies with global scale and impact. We applied that same philosophy to the appointment of David Barter as our new CFO. David brings proven credentials as a public company CFO at top software and SaaS businesses. We are thrilled to have David on board. It also means saying goodbye to Dana Gerner, who will be retiring from Cellebrite DI Ltd. effectively after today's call.
And let me invite you to just say a few words to the folks on the line.
Thank you very much stouffer a contrary.
For the partnership.
Gave me over the past three years.
Speaker #3: The good news is much of this innovation is already being delivered real-time in our newest releases of Guardian, with more to come over the coming months.
It was remarkable.
And I will keep my comments brief and directly from my heart.
And their academic journey and credit right.
Speaker #3: With respect to leadership, since I joined Cellebrite two years ago, we've worked diligently to strengthen our management team by recruiting executives with proven experience in relevant domain expertise at leading technology companies with global scale and impact.
Exciting challenging we've already been able to work is amazing people and teams, including many of you in the community.
I went to great special Thanks to my finance team.
<unk>.
We'll make a can do attitude any tenants today, that's why I am very proud of the field.
Speaker #3: We applied that same philosophy to the appointment of Dave Barter, as our new CFO. Dave brings proven credentials as a public company CFO at top software and SaaS businesses.
And Dave.
We spent the last week working together no doubt Tom and the board has selected a great.
The CFO role.
Although it is still too.
Neil did I say goodbye today. It is now the time for me to harness make period nowadays.
Speaker #3: We're thrilled to have Dave on board; however, it also means saying goodbye to Dana Gerner, who will be retiring from Cellebrite. Effectively, after today's call, Dana's financial and accounting acumen, her intimate knowledge of our business, her work ethic, and her passion enabled her to play a major role in Cellebrite's success over the past 11 years.
They came in more than 35 years as CFO in business.
And put it to good use.
Getting back to my community.
And of course, I look forward to working side by side.
Thomas E. Hogan: Dana's financial and accounting acumen, her intimate knowledge of our business, her work ethic, and her passion enabled her to play a major role in Cellebrite DI Ltd.'s success over the past 11 years. Dana, on behalf of everybody affiliated with Cellebrite DI Ltd., I want to thank you for everything you've done for us and wish you all of the health and happiness you rightfully earned and deserve. Let me invite you to just say a few words to the folks on the line.
Guidelines and.
Sorry that I am going to be.
Excited but I will now turn the call back to you with them.
Thank you and thank you again.
Speaker #3: Dana, on behalf of everybody affiliated with Sellebrite, I want to thank you for everything you've done for us and wish you all of the health and happiness you rightfully earned and deserve.
We wish you all the best and we I think I can probably speak for all of US here and on the phone and we look forward to monitoring the next chapter in your life and wish you well.
I guess the other big news.
Speaker #3: And let me invite you to just say a few words to the folks on the line.
On the leadership front as my appointment as CEO, which Adam covered at the start of the call.
Speaker #5: Well, thank you very much, Tom, for your kind words. And for the partnership and the trust that you have given me over the past two years.
Marcus Jewell: Thank you very much, Tom, for your kind words and for the partnership and the trust that you gave me over the past two years. It was remarkable. I will keep my comments brief and directly from my heart. I spent the last 11 years journeying in Cellebrite DI Ltd., and it was exciting, challenging, rewarding. I have been able to work with amazing people and teams, including many of you in the investment community. I want to grant special thanks to my finance and ops teams and leaders, who met with a can-do attitude any challenge they asked for us. I am very proud of you. Dave, we spent the last weeks working together. No doubt, Tom and the board have selected a great successor to the CFO role.
And I will make my comments on this topic brief as well first.
Speaker #5: It was remarkable. And I will keep my comments brief and directly from my heart. I spent the last 11 years journeying Sellebrite and it was exciting, challenging.
Want to say I'm incredibly grateful.
To be cancer free today.
And I want to thank the doctors nurses and other medical staff at MD Anderson in Houston, which is if any of you have friends or family. It's a world class institution that literally saved my life. Thank my family My friends and all the people at celebrate that we're supportive.
Speaker #5: Rewarding. I've been able to work with amazing people and teams including many of you in the investment community. I want to grant special thanks to my finance and ops teams and leaders.
Speaker #5: Who met with a can-do attitude any challenge they'd ask for us. I am very proud of you. And Dave, we spent the last weeks working together, no doubt.
During the six months of chemo, which is not anything I'd wish on my worst enemy for all their stuff.
Steady and continued support.
I wanted to steal this moment just make a public service broadcasting.
Speaker #5: Tom and the board have selected a great successor to the CFO role. Though it is still surreal that I say goodbye today, it is now the time for me to harness my experience, knowledge, and skills I gained in more than 35 years as CFO in business and put it to good use giving back to my community.
I had no idea <unk>.
Marcus Jewell: Though it is still surreal that I say goodbye today, it is now the time for me to harness my experience, knowledge, and skills I gained in more than 35 years as CFO in business and put it to good use, giving back to my community. Of course, I look forward to watching Cellebrite DI Ltd. smile from the sidelines. I am sorry that I am a little bit excited, but I will now turn the call back to you, Tom.
18 months ago that I was sick.
He was talked into doing a proactive full body scan by a friend.
Only discover a week later stage four cancer tumors all over my body.
That scan literally saved my life.
Speaker #5: And of course, I look forward to watching Cellebrite thrive from the sidelines. I’m sorry that I’m a little bit excited, but I will now turn the call back to you, Tom.
And I would just tell you if you're over 30 and if you are on this phone you have got the financial means.
Go get one of these scans and if anybody has any questions about it E Mail me directly I feel like one of my missions and purposes in life is to share that and I promise I'll promptly reply and share my experience with you because.
Speaker #3: Dana, thank you, and thank you again. We wish you all the best, and I think I can probably speak for all of us here and on the phone.
David Barter: Donna, thank you, and thank you again. We wish you all the best. I think I can probably speak for all of us here and on the phone. We look forward to monitoring the next chapter in your life and wish you well. I guess the other big news on the leadership front is my appointment as CEO, which Adam covered at the start of the call. I will make my comments on this topic brief as well. First, I want to say I am incredibly grateful to be cancer-free today. I want to thank the doctors, nurses, and other medical staff at MD Anderson in Houston, which is, if any of you have friends or family, it is a world-class institution that literally saved my life. Thank my family, my friends, and all the people at Cellebrite DI Ltd.
Speaker #3: We look forward to monitoring the next chapter in your life and wish you well. I guess the other big news on the leadership front is my appointment as CEO, which Adam covered at the start of the call.
It was literally lifesaving.
So I have been asked repeatedly by friends family and business colleagues why do you continue to work.
Speaker #3: And I'll make my comments on this topic brief as well. First, I want to say I'm incredibly grateful to be cancer-free today. I want to thank the doctors, nurses, and other medical staff at MD Anderson in Houston, which is, if any of you have friends or family, a world-class institution that literally saved my life.
Your agent as a cancer survivor for minimally why didn't you take a medical leave.
And the answer is simple.
This is an honest genuine response.
If it were any company other than celebrate.
That's precisely what I would've done.
But I've never had the privilege and I would argue in this case the obligation to lead our company.
Speaker #3: Thank my family, my friends, and all the people at Sellebrite that were supportive during the six months of chemo, which is not anything I'd wish on my worst enemy.
That truly makes the world a safer place every day.
David Barter: that were supportive during the six months of chemo, which is not anything I would wish on my worst enemy, for all their steady and continued support. I want to steal this moment to make a public service broadcast. I had no idea 14 months ago that I was sick. I was talked into doing a proactive full-body scan by a friend, only to discover a week later I had stage four cancer and tumors all over my body. That scan literally saved my life. I would just tell you, if you are over 30 and if you are on this phone, you have got the financial means, go get one of these scans. If anybody has any questions about it, email me directly. I feel like it is one of my missions and purposes in life is to share that.
I Love This company.
Speaker #3: For all their steady and continued support. And I want to steal this moment to just make a public service broadcast. I had no idea 14 months ago that I was sick.
I love, our people and all of our customers who are the brave men and women that risk their lives every day to.
To make our lives a little better a little safer.
I'm grateful for my cure.
And I can tell all of you.
Speaker #3: I was talked into doing a proactive full-body scan by a friend, only to discover a week later that I had stage four cancer and tumors all over my body.
I couldnt be more energized to ignite a new and exciting chapter for celebrate.
Theres a lot of work to do to combat bad actors around the world, but I in the 200 strong celebrated embrace and welcome that challenge every day.
Speaker #3: That scan literally saved my life. I would just tell you, you know, if you're over 30 and if you're on this phone, you've got the financial means.
Let me close with a view to the overall market the macro tailwind that have driven the expansion of our business remains strong.
Speaker #3: You know, go get one of these scans. And if anybody has any questions about it, email me directly. I feel like it's one of my missions and purposes in life is to share that.
And our arguably improving.
Unfortunately, the usage and sophistication of technology in the pursuit of crime continues decline in.
Speaker #3: And I promise I'll promptly reply and share my experience with you because it was literally life-saving. So I've been asked repeatedly by friends, family, and business colleagues, why do you continue to work at your age and as a cancer survivor? Or, minimally, why didn't you take a medical leave?
David Barter: I promise I will promptly reply and share my experience with you because it was literally life-saving. I have been asked repeatedly by friends, family, and business colleagues, why do you continue to work at your age and as a cancer survivor, or minimally, why did not you take a medical leave? The answer is simple. If, and this is an honest, genuine response, if it were any company other than Cellebrite DI Ltd., that is precisely what I would have done. I have never had the privilege, and I would argue in this case, the obligation to lead a company that truly makes the world a safer place every day. I love this company. I love our people.
And technology like ours is the best and most efficient path to preserving public safety.
As we move into the second half of the year, we anticipate healthy growth across the majority of our regions and segments with sequential acceleration in our <unk> over the next two quarters.
Speaker #3: And the answer is simple. And this is an honest and genuine response. If it were any company, other than Sellebrite, that's precisely what I would have done.
The one sector in our business that carries second half uncertainty.
Despite a robust pipeline and strong demand signals is the timing of orders from our U S Federal segment.
Speaker #3: But I've never had the privilege. And I would argue in this case, the obligation to lead a company that truly makes the world a safer place every day.
To be clear.
We believe that celebrate is incredibly well positioned with highly differentiated solutions that enable our federal clients to better execute on the new administration's priorities around things like border protection drug enforcement human trafficking child exploitation.
Speaker #3: I love this company. I love our people. And I love our customers who are the brave men and women that risk their lives every day to make our lives a little better and a little safer.
David Barter: I love our customers who are the brave men and women that risk their lives every day to make our lives a little better and a little safer. I am grateful for my cure, and I can tell all of you I could not be more energized to ignite a new and exciting chapter for Cellebrite DI Ltd. There is a lot of work to do to combat bad actors around the world, but I and the 1,200 strong Cellebriters embrace and welcome that challenge every day. Let me close with a view to the overall market. The macro tailwinds that have driven the expansion of our business remain strong and are arguably improving. Unfortunately, the usage and sophistication of technology in the pursuit of crime continues to climb, and technology like ours is the best and most efficient path to preserving public safety.
Speaker #3: I'm grateful for my cure. And I can tell all of you I couldn't be more energized to ignite a new and exciting chapter for Sellebrite.
Sovereign security.
And overall operational efficiency.
Speaker #3: There's a lot of work to do to combat bad actors around the world, but I and the 1,200 strong Sellebriters embrace and welcome that challenge every day.
We view the recent legislation in the U S is a catalyst that will soon convert the current spending headwind into a tailwind.
Based on the ongoing dialogue with our customers. We expect these needs will lead to a resurgence of growth in 2026.
Speaker #3: Let me close with a view to the overall market. The macro tailwinds that have driven the expansion of our business remain strong. And our arguably improving.
Early signs of improved spending in this sector are already starting to surface.
Speaker #3: Unfortunately, the usage and sophistication of technology, along with the pursuit of crime, continues to climb. Technology like ours is the best and most efficient path to preserving public safety.
One of our longstanding U S. Federal law enforcement customers recently increased its seven figure annual spend on celebrates portfolio that includes both our digital forensic software and Pathfinder.
Speaker #3: As we move into the second half of the year, we anticipate healthy growth across the majority of our regions and segments, with sequential acceleration in our ARR over the next two quarters.
David Barter: As we move into the second half of the year, we anticipate healthy growth across the majority of our regions and segments with sequential acceleration in our ARR over the next two quarters. The one sector in our business that carries second-half uncertainty, despite a robust pipeline and strong demand signals, is the timing of orders from our U.S. federal segment. To be clear, we believe that Cellebrite DI Ltd. is incredibly well-positioned with highly differentiated solutions that enable our federal clients to better execute on the new administration's priorities around things like border protection, drug enforcement, human trafficking, child exploitation, sovereign security, and overall operational efficiency. We view the recent legislation in the U.S. as a catalyst that will soon convert the current spending headwind into a tailwind. Based on the ongoing dialogue with our customers, we expect these needs will lead to a resurgence of growth in 2026.
<unk> is also moving forward with its plans for its insights conversion, which will improve their process for collecting and reviewing digital evidence.
And the opportunity in this agency lastly is further enhanced with our pending fed ramp Ato.
Speaker #3: The one sector in our business that carries second-half uncertainty, despite a robust pipeline and strong demand signals, is the timing of orders from our U.S. federal segment.
Authorization and the associated ability to leverage and deploy our guardian solution.
Also important to note that renewals are proceeding smoothly.
Speaker #3: To be clear, we believe that Sellebrite is incredibly well-positioned with highly differentiated solutions that enable our federal clients to better execute on the new administration's priorities around things like border protection, drug enforcement, human trafficking, child exploitation, sovereign security, and overall operational efficiency.
Retention levels for this sector well above the corporate average for retention and renewals in the mid 90% range.
Although the mid to long term demand signals remain vibrant we believe it is prudent to modestly adjust our full year <unk> revenue expectations until we see purchasing activity in the U S. Federal segment returned to more conventional cadence.
Speaker #3: We view the recent legislation in the U.S. as a catalyst that will soon convert the current spending headwind into a tailwind. Based on the ongoing dialogue with our customers, we expect these needs will lead to a resurgence of growth in 2026.
Last quarter I referenced the fact that this sector was 17% of last year's <unk> and it had a 25% CAGR over the past three years.
The reduction in our 2025 U S federal AAR our growth.
Speaker #3: Early signs of improved spending in this sector are already starting to surface. One of our long-standing U.S. federal law enforcement customers recently increased its seven-figure annual spend on Cellebrite's portfolio, which includes both our digital forensic software and Pathfinder.
David Barter: Early signs of improved spending in this sector are already starting to surface. One of our longstanding U.S. federal law enforcement customers recently increased its seven-figure annual spend on Cellebrite DI Ltd.'s portfolio that includes both our digital forensic software and Pathfinder. The agency is also moving forward with its plans for its Insights conversion, which will improve their process for collecting and reviewing digital evidence. The opportunity in this agency is further enhanced with our pending FedRAMP High Authorization to Operate authorization and the associated ability to leverage and deploy our Guardian solution. It is also important to note that renewals are proceeding smoothly, with retention levels for this sector well above the corporate average for retention and renewals in the mid-90% range.
Translates to approximately four points of total growth for the company. This year and also accounts for the majority of the revised full year guidance.
As we have shared repeatedly.
Our income statement and our emerging scale.
Speaker #3: The agency is also moving forward with its plans for its insights, conversion, which will improve their process for collecting and reviewing digital evidence. And the opportunity in this agency lastly is further enhanced with our pending FedRAMP ATO authorization and the associated ability to leverage and deploy our Guardian solution.
<unk> leverage.
And if and when we experienced a short term dip in our historical growth rates, we possess and we will execute the requisite spend discipline.
To continue deliver expanding EBITDA and free cash flow.
All without compromising our ability to capitalize on the large long term opportunity for growth and market share.
Speaker #3: It's also important to note that renewals are proceeding smoothly, with retention levels for this sector well above the corporate average for retention and renewals in the mid-90% range.
We have leveraged AI across all functions to protect growth and innovation and consequently have scaled back planned hiring in 2025.
Our disciplined approach to spending has translated to the elevation of the low end of our existing EBITDA guidance.
Speaker #3: Although the mid-to-long-term demand signals remain vibrant, we believe it's prudent to modestly adjust our full-year ARR and revenue expectations until we see purchasing activity in the US federal segment return to more conventional cadence.
David Barter: Although the mid-to-long-term demand signals remain vibrant, we believe it is prudent to modestly adjust our full-year ARR and revenue expectations until we see purchasing activity in the U.S. federal segment return to more conventional cadence. Last quarter, I referenced the fact that this sector was 17% of last year's ARR, and it had a 25% CAGR over the past three years. The reduction in our 2025 U.S. federal ARR growth translates to approximately four points of total ARR growth for the company this year and also accounts for the majority of the revised full-year guidance. As we have shared repeatedly, our income statement and our emerging scale carry leverage.
We will ensure another exceptional year for free cash flow.
In summary.
The need for celebrates purpose built solutions for public safety has never been higher.
Speaker #3: Last quarter, I referenced the fact that this sector was 17% of last year's ARR and it had a 25% CAGR over the past three years.
Every day.
We literally witness the impact of our technology, whether it's helping save children from being traffic into a life of horrible abuse dismantling spent in all distribution channels are putting murderers behind bars.
Speaker #3: The reduction in our 2025 U.S. federal ARR growth translates to approximately 4.0 points of total ARR growth for the company this year and also accounts for the majority of the revised full-year guidance.
We will continue to grow at healthy rates in spite of short term headwinds in federal.
We are leveraging our scale to improve our margins net income and free cash flow.
Speaker #3: As we have shared repeatedly, our income statement and our emerging scale carries leverage, and if and when we experience a short-term dip in our historical growth rates, we possess and we will execute the requisite spend discipline to continue to deliver expanding EBITDA and free cash flow.
We're optimistic that when the federal market turns it will turn with a vengeance.
David Barter: If and when we experience a short-term dip in our historical growth rates, we possess and we will execute the requisite spend discipline to continue to deliver expanding EBITDA and free cash flow, all without compromising our ability to capitalize on the large long-term opportunity for growth and market share. We have leveraged AI across all functions to protect growth and innovation and consequently have scaled back planned hiring in 2025. Our disciplined approach to spending has translated to the elevation of the low end of our existing EBITDA guidance and will ensure another exceptional year for free cash flow. In summary, the need for Cellebrite's purpose-built solutions for public safety has never been higher.
Equally exciting about celebrate our plans to catapult our value through a powerful combination of AI, driven internal innovation strategic partnerships and targeted acquisitions.
We have big plans for this company and I look forward to that journey as its leader with that said I'll now turn it over to Dave.
Speaker #3: All without compromising our ability to capitalize on the large long-term opportunity for growth and market share. We have leveraged AI across all functions, to protect, growth, and innovation and consequently have scaled back planned hiring in 2025.
Thank you Tom.
Where I review the second quarter results I'd like to briefly describe why I am so excited to serve as celebrate CFO.
You'll find that many of the same characteristics that appeal to me as the CFO likely resonate with those of you in the investment community.
Speaker #3: Our disciplined approach to spending has translated to the elevation of the low end of our existing EBITDA guidance and will ensure another exceptional year for free cash flow.
First like other leading vertical software companies celebrate has compelling secular tailwind with high barriers to entry on account of our purpose built software and the relationships, we maintain with our customers.
Speaker #3: In summary, the need for Sellebrite's purpose-built solutions for public safety has never been higher. Every day, we literally witness the impact of our technology, whether it's helping save children from being trafficked into a life of horrible abuse dismantling fentanyl distribution channels or putting murderers behind bars.
Second we are fortunate to have an experienced team with deep domain expertise that is motivated by the mission and commitment to public safety.
David Barter: Every day, we literally witness the impact of our technology, whether it is helping save children from being trafficked into a life of horrible abuse, dismantling fentanyl distribution channels, or putting murderers behind bars. We will continue to grow at healthy rates in spite of short-term headwinds in federal. We are leveraging our scale to improve our margins, net income, and free cash flow. We are optimistic that when the federal market turns, it will turn with a vengeance. What is equally exciting about Cellebrite are our plans to catapult our value through a powerful combination of AI-driven internal innovation, strategic partnerships, and targeted acquisitions. We have big plans for this company, and I look forward to that journey as its leader. With that said, I will now turn it over to Dave.
Celebrate team operates with incredible focus we deeply care about partnering with our customers, who make a real difference in protecting life and our communities.
Speaker #3: We'll continue to grow, at healthy rates, in spite of short-term headwinds in federal. We are leveraging our scale to improve our margins net income and free cash flow.
And finally celebrate is regarded as the clear product and technology leader. This allows us to build a business that not only serves our customers well, but it also produces durable top line growth.
Our active profit margins and very meaningful levels of free cash flow.
Speaker #3: We're optimistic that when the federal market turns, it will turn with a vengeance. What is equally exciting about Sellebrite are our plans to catapult our value through a powerful combination of AI-driven internal innovation strategic partnerships, and targeted acquisitions.
Let's move on to the review of our second quarter results.
<unk> grew 21% to $419 million.
Our growth was primarily driven by increased spending within our customer base the Americas.
Represented 54% of total IRR.
Speaker #3: We have big plans for this company, and I look forward to that journey as its leader. With that said, I'll now turn it over to Dave.
EMEA represented 34% and Asia Pacific was a 12% in terms of growth rates by geography. The Americas grew 24% led by excellent expansion within U S state and local government and Latin America.
Speaker #3: Thank you, Tom. Before I review the second quarter results, I'd like to briefly describe why I am so excited to serve as Sellebrite's CFO.
Thomas E. Hogan: Thank you, Tom. Before I review the second quarter results, I would like to briefly describe why I am so excited to serve as Cellebrite's CFO. I think you will find that many of the same characteristics that appeal to me as a CFO likely resonate with those of you in the investment community. First, like other leading vertical software companies, Cellebrite has compelling secular tailwinds with high barriers to entry on account of our purpose-built software and the relationship we maintain with our customers. Second, we are fortunate to have an experienced team with deep domain expertise that is motivated by the mission and commitment to public safety. The Cellebrite team operates with incredible focus. We deeply care about partnering with our customers who make a real difference in protecting life and our communities. Finally, Cellebrite is regarded as the clear product and technology leader.
<unk> grew 21% in the Asia Pacific region, followed by 17% growth in EMEA, which improved sequentially from Q1 levels.
Speaker #3: I think you'll find that many of the same characteristics that appeal to me as a CFO likely resonate with those of you in the investment community.
In terms of product family performance insights have continued to see healthy AOR growth as customers continue to upgrade from our legacy software to the insight solution.
Speaker #3: First, like other leading vertical software companies, Sellebrite has compelling secular tailwinds with high barriers to entry on account of our purpose-built software and the relationship we maintain with our customers.
More than 40% of our installed base with using insights at the end of the second quarter.
Speaker #3: Second, we are fortunate to have an experienced team with deep domain expertise that is motivated by the mission and commitment to public safety. The Sellebrite team operates with incredible focus.
We also continued to see strong growth for our unlock offering which is now attached to more than 40% of the insights and legacy customer base.
Speaker #3: We deeply care about partnering with our customers who make a real difference in protecting life, and our communities. And finally, Sellebrite is regarded as the clear product and technology leader.
On a combined basis Guardian, and Pathfinder continue to grow faster than our overall IRR. These two products now represent approximately 10% of our total they are.
One other important milestone worth repeating our cloud enabled and SaaS solutions reached 20% of total IRR this quarter, which reflects over 50% growth in these offerings.
Speaker #3: This allows us to build a business that not only serves our customers well, but also produces durable top-line growth, attractive profit margins, and very meaningful levels of free cash flow.
Thomas E. Hogan: This allows us to build a business that not only serves our customers well, but it also produces durable top-line growth, attractive profit margins, and very meaningful levels of free cash flow. Let's move on to the review of our second quarter results. ARR grew 21% to $419 million. Our growth was primarily driven by increased spending within our customer base. The Americas represented 54% of total ARR, while EMEA represented 34% and Asia-Pacific was at 12%. In terms of growth rates by geography, the Americas grew 24%, led by excellent expansion within U.S. state and local government and Latin America. ARR grew 21% in the Asia-Pacific region, followed by 17% growth in EMEA, which improved sequentially from Q1 levels. In terms of product family performance, Insights has continued to see healthy ARR growth as customers continue to upgrade from our legacy software to the Insights solution.
Turning to revenue, we generated second quarter revenue of $113 3 million, which increased 18% from the prior year due primarily to subscription revenue growth of 21% approximately.
Speaker #3: Let's move on to the review of our second quarter results. ARR grew 21% to $419 million. Our growth was primarily driven by increased spending within our customer base.
Speaker #3: The Americas represented 54% of total ARR, while EMEA represented 34% and Asia Pacific was at 12%. In terms of growth rates by geography, the Americas grew 24%, led by excellent expansion within US, state, and local government, and Latin America.
Approximately 91% of total revenue was associated with subscription based software solutions this growth translated into improving levels of profitability.
Our gross profit increased 20% to $96 4 million, which represents a gross margin of 85%.
Speaker #3: ARR grew 21% in the Asia Pacific region, followed by 17% growth in EMEA, which improved sequentially from Q1 levels. In terms of product-family performance, insights have continued to see healthy ARR growth as customers continue to upgrade from our legacy software to the insight solution.
Second quarter, adjusted EBITDA of $27 $9 million increased 29% over the prior year and the margin increased 200 basis points to 24, 6%.
We're pleased with this operating leverage as a company we are focused on maintaining a powerful combination of healthy revenue growth and thoughtful capital allocation to key investments that we believe will lead to increased product adoption and long term durable and profitable growth.
Speaker #3: More than 40% of our installed base was using insights at the end of the second quarter. We also continue to see strong growth for our unlock offering, which is now attached to more than 40% of the insights and legacy customer base.
Thomas E. Hogan: More than 40% of our installed base was using Insights at the end of the second quarter. We also continued to see strong growth for our unlock offering, which is now attached to more than 40% of the Insights and legacy customer base. On a combined basis, Guardian and Pathfinder continue to grow faster than our overall ARR. These two products now represent approximately 10% of our total ARR. One other important milestone worth repeating, our cloud offerings and SaaS solutions reached 20% of total ARR this quarter, which reflects over 50% growth in these offerings. Turning to revenue, we generated second quarter revenue of $113.3 million, which increased 18% from the prior year, due primarily to subscription revenue growth of 21%. Approximately 91% of total revenue was associated with subscription-based software solutions. This growth translated into improving levels of profitability.
We ended the quarter with 1216 employees.
We reported second quarter operating income of $26 2 million with non-GAAP net income of $30 8 million or <unk> 12 on a fully diluted basis.
Speaker #3: On a combined basis, Guardian and Pathfinder continue to grow faster than our overall ARR. These two products now represent approximately 10% of our total ARR, one other important milestone worth repeating, our cloud-enabled and SaaS solutions reached 20% of total ARR this quarter, which reflects over 50% growth in these offerings.
Overall, our average weighted diluted shares outstanding increased slightly from first quarter levels. It is important to note that our weighted average share count has started to stabilize we expect relatively minimal dilution going forward.
Speaker #3: Turning to revenue, we generated second quarter revenue of $113.3 million. Which increased 18% from the prior year, due primarily to subscription revenue growth of 21%.
Let's turn to the balance sheet, we ended the second quarter with $558 million in cash cash equivalents and investments an increase of $48 million from the first quarter of 2025, and an increase of $191 9 million compared to the prior year.
Speaker #3: Approximately 91% of total revenue was associated with subscription-based software solutions. This growth translated into improving levels of profitability. Our gross profit increased 20% to $96.4 million, which represents a gross margin of 85%.
Free cash flow for the second quarter was $29 million and the free cash flow margin was 25, 6%.
Thomas E. Hogan: Our gross profit increased 20% to $96.4 million, which represents a gross margin of 85%. Second quarter adjusted EBITDA of $27.9 million increased 29% over the prior year, and the margin increased 200 basis points to 24.6%. We are pleased with this operating leverage. As a company, we are focused on maintaining a powerful combination of healthy revenue growth and thoughtful capital allocation to key investments that we believe will lead to increased product adoption and long-term durable and profitable growth. We ended the quarter with 1,216 employees. We reported second quarter operating income of $26.2 million, with non-GAAP net income of $30.8 million, or $0.12 on a fully diluted basis. Overall, our average weighted diluted shares outstanding increased slightly from first quarter levels. It is important to note that our weighted average share count has started to stabilize. We expect relatively minimal dilution going forward.
For the trailing 12 months free cash flow was $150 million or 34% on a margin basis compared to $91 million or 25% margin in the previous period.
Speaker #3: Second quarter adjusted EBITDA of $27.9 million increased 29% over the prior year, and the margin increased 200 basis points to 24.6%. We're pleased with this operating leverage.
In terms of upcoming uses of capital our acquisition of Carillon will lead to a net cash outflow of $150 million when this Ken.
Speaker #3: As a company, we are focused on maintaining a powerful combination of healthy revenue growth and thoughtful capital allocation to key investments that we believe will lead to increased product adoption, and long-term durable and profitable growth.
When this transaction closes.
The company reported.
<unk> of approximately $15 million at the end of June.
We plan to share additional details around carillon and its financial performance. When we report Q3 results in November.
Speaker #3: We ended the quarter with 1,216 employees. We reported second quarter operating income of $26.2 million, with non-GAAP net income of $30.8 million, or $0.12 on a fully diluted basis.
Prior to sharing our outlook I'd like to share some perspective as to how we developed it.
As a reminder, we have historically generated the majority of our revenue and adjusted EBITDA in the second half of the year we.
Speaker #3: Overall, our average weighted diluted shares outstanding increased slightly from first quarter levels. It is important to note that our weighted average share count has started to stabilize.
We anticipate this trend will hold true in 2025 or.
Our guidance is informed by several inputs first there is a sizable base of remaining performance obligations or RPM.
Speaker #3: We expect relatively minimal dilution going forward. Let's turn to the balance sheet. We ended the second quarter with $558 million in cash, cash equivalents, and investments.
Second, we assess expiring agreements, including renewal timing and the related expansion opportunity across our customer base.
Thomas E. Hogan: Let's turn to the balance sheet. We ended the second quarter with $558 million in cash, cash equivalents, and investments, an increase of $48 million from the first quarter of 2025, and an increase of $191.9 million compared to the prior year. Free cash flow for the second quarter was $29 million, and the free cash flow margin was 25.6%. For the trailing 12 months, free cash flow was $150 million, or 34% on a margin basis compared to $91 million, or a 25% margin in the previous period. In terms of upcoming uses of capital, our acquisition of Corellium will lead to a net cash outflow of $150 million when this transaction closes. The company reported ARR of approximately $15 million at the end of June. We plan to share additional details around Corellium and its financial performance when we report Q3 results in November.
Our model contemplates our gross dollar retention, which has been in the lower 90% range.
Speaker #3: An increase of $48 million from the first quarter of 2025 and an increase of $191.9 million compared to the prior year. Free cash flow for the second quarter was $29 million and the free cash flow margin was 25.6%.
Third we consider the contribution of new business from customers expressing a need to expand in the middle of their agreement terms and.
And finally, we look at new logos, which tends to be a smaller contributor to <unk> revenue given our land motion.
Speaker #3: For the trailing 12 months, free cash flow was $150 million or 34% on a margin basis compared to $91 million or a 25% margin in the previous period.
We anticipate that our third quarter <unk> will grow sequentially in the mid single digits, followed by a similar increase in the fourth quarter.
This is stronger than sequential growth we saw in the first half.
Speaker #3: In terms of upcoming uses of capital, our acquisition of Carilium will lead to a net cash outflow of $150 million, when this transaction closes.
We're planning for temporary delays with U S federal agencies, while customer interest and engagement in this sector is high we're planning it will take time before the recent U S legislation will help drive higher spending on celebrate by U S federal agencies.
Speaker #3: The company reported ARR of approximately $15 million at the end of June. We plan to share additional details around Carilium and its financial performance when we report Q3 results in November.
We believe it is prudent to adjust our outlook until we have clarity on the timing of orders.
We expect third quarter 2025, <unk> in the range of $435 million to $445 million or growth between 17% and 20%.
Speaker #3: Prior to sharing our outlook, I'd like to share some perspective as to how we developed it. As a reminder, we have historically generated the majority of our ARR revenue and adjusted EBITDA in the second half of the year.
Thomas E. Hogan: Prior to sharing our outlook, I'd like to share some perspective as to how we developed it. As a reminder, we have historically generated the majority of our ARR revenue and adjusted EBITDA in the second half of the year. We anticipate this trend will hold true in 2025. Our guidance is informed by several inputs. First, there is a sizable base of remaining performance obligations, or RPO. Second, we assess expiring agreements, including renewal timing and the related expansion opportunity across our customer base. Our model contemplates our gross dollar retention, which has been in the lower 90% range. Third, we consider the contribution of new business from customers expressing a need to expand in the middle of their agreement terms. Finally, we look at new logos, which tends to be a smaller contributor to ARR and revenue, given our land motion.
We now expect full year <unk>.
$460 million to $475 million or growth of 16% to 20%.
Speaker #3: We anticipate this trend will hold true in 2025. Our guidance is informed by several inputs. First, there is a sizable base of remaining performance obligations, or RPO.
This updated outlook assumes minimal growth from U S federal customers that change to our growth assumptions around U S. Federal customers impacts our total AOR growth by approximately four percentage points.
Speaker #3: Second, we assess expiring agreements, including renewal timing and the related expansion opportunity across our customer base. Our model contemplates our gross dollar retention, which has been in the lower 90% range.
Factoring in the update to our anticipated growth for 2025, we now expect third quarter revenue to be in the range of $121 million to $126 million or growth of 13% to 18% we.
Speaker #3: Third, we consider the contribution of new business from customers expressing a need to expand in the middle of their agreement terms. Finally, we look at new logos, which tend to be a smaller contributor to ARR and revenue given our land motion.
We expect full year revenue in the range of $465 million to $475 million or growth of 16% to 18%.
We expect our Q3 gross margin to be within our full year 2025 gross margin target range of 84% to 85%.
Speaker #3: We anticipate that our third quarter ARR will grow sequentially in the mid-single digits, followed by a similar increase in the fourth quarter. This is stronger than sequential growth we saw in the first half.
Thomas E. Hogan: We anticipate that our third quarter ARR will grow sequentially in the mid-single digits, followed by a similar increase in the fourth quarter. This is stronger than the sequential growth we saw in the first half. We are planning for temporary delays with U.S. federal agencies. While customer interest and engagement in this sector is high, we are planning it will take time before the recent U.S. legislation will help drive higher spending on Cellebrite by U.S. federal agencies. We believe it is prudent to adjust our outlook until we have clarity on the timing of orders. We expect third quarter 2025 ARR in the range of $435 million to $445 million, or growth between 17% and 20%. We now expect full-year ARR of $460 million to $475 million, or growth of 16% to 20%. This updated outlook assumes minimal growth from U.S. federal customers.
We remain focused on thoughtful capital allocation to fund the investments. We believe are critical to addressing customer needs and fueling durable growth over the long term.
Speaker #3: We are planning for temporary delays with U.S. federal agencies. While customer interest and engagement in this sector is high, we're planning that it will take time before the recent U.S. legislation helps drive higher spending on Cellebrite by U.S. federal agencies.
We expect Q3 adjusted EBITDA in the range of 31% to 34%.
Excuse me, we expect Q3 adjusted EBITDA in the range of $31 million to $34 million.
Speaker #3: We believe it's prudent to adjust our outlook until we have clarity on the timing of orders. We expect third quarter 2025 ARR in the range of $435 to $445 million or growth between 17 and 20%.
Approximately 26% to 27% on a margin basis.
For the full year, we now expect adjusted EBITDA in the range of $118 million to $123 million or 25% to 26% on a margin basis and.
Speaker #3: We now expect full-year ARR of $460 to $475 million or growth of 16 to 20%. This updated outlook assumes minimal growth from US federal customers.
And finally I'd like to reiterate our view that 2025 will be an excellent year for free cash flow.
Given the strong cash flow from operations, thus far into 2025 and relatively minimal capital intensity, we expect the company's free cash flow margin will be approximately 30%.
Speaker #3: The change to our growth assumptions around US federal customers impacts our total ARR growth by approximately 4 percentage points. Factoring in the update to our anticipated ARR growth for 2025, we now expect third quarter revenue to be in the range of $121 to $126 million or growth of 13 to 18%.
Thomas E. Hogan: The change to our growth assumptions around U.S. federal customers impacts our total ARR growth by approximately four percentage points. Factoring in the update to our anticipated ARR growth for 2025, we now expect third quarter revenue to be in the range of $121 million to $126 million, or growth of 13% to 18%. We expect full-year revenue in the range of $465 million to $475 million, or growth of 16% to 18%. We expect our Q3 gross margin to be within our full-year 2025 gross margin target range of 84% to 85%. We remain focused on thoughtful capital allocation to fund the investments we believe are critical to addressing customer needs and fueling durable growth over the long term. We expect Q3 adjusted EBITDA in the range of 31% to 34%. We expect.
In summary, celebrate remains well positioned to deliver another year of healthy growth strong profitability and excellent free cash flow with a minimal amount of dilution to shareholders.
This concludes our prepared remarks, operator, we're now ready for Q&A.
Okay.
Speaker #3: We expect full-year revenue in the range of $465 to $475 million, representing growth of 16% to 18%. We anticipate our Q3 gross margin will fall within our full-year 2025 gross margin target range of $84 to $85.
The floor is now open for questions.
At this time, if you have a question or comment please press star one on your telephone keypad.
If at any point. Your question is answered you may remove yourself from the queue by pressing star two.
Again, we ask that you pick up your handset when posing your questions to provide optimal sound quality.
Speaker #3: We remain focused on thoughtful capital allocation to fund the investments we believe are critical to addressing customer needs and fueling durable growth over the long term.
Thank you.
Okay.
Our first question is coming from Shaul IOL with TD Cowen. Your line is open. Please go ahead.
Speaker #3: We expect Q3 adjusted EBITDA in the range of $31 to $34%. Excuse me. We expect Q3 adjusted EBITDA in the range of $31 to $34 million or approximately 26 to 27% on a margin basis.
Thank you good morning, everybody congrats to everyone on their new roles and also on solid performance, we kept peers to be more timing driven.
Angela: Q3 adjusted EBITDA in the range of $31 million to $34 million, or approximately 26% to 27% on a margin basis. For the full year, we now expect adjusted EBITDA in the range of $118 million to $123 million, or 25% to 26% on a margin basis. Finally, I would like to reiterate our view that 2025 will be an excellent year for free cash flow. Given the strong cash flow from operations thus far into 2025 and relatively minimal capital intensity, we expect the company's free cash flow margin will be approximately 30%. In summary, Cellebrite DI Ltd. remains well-positioned to deliver another year of healthy growth, strong profitability, and excellent free cash flow with a minimal amount of dilution to shareholders. This concludes our prepared remarks. Operator, we are now ready for Q&A.
Thanks for the honest and candid comments regarding your personal health.
Speaker #3: For the full year, we now expect adjusted EBITDA in the range of $118 million to $123 million, or 25% to 26% on a margin basis.
The process is behind you.
Donna we can do nothing but the best it has been a pleasure working with you over the past few years.
Speaker #3: And finally, I'd like to reiterate our view. The 2025 will be an excellent year for free cash flow. Given the strong cash flow from operations thus far into 2025, and relatively minimal capital intensity, we expect the company's free cash flow margin will be approximately 30%.
Two part question on my end if I may.
Tom What's your confidence level as we think about this ongoing recovery in federal spending.
And maybe the second part for David as we think about retention rates this quarter.
Can you outline with any key drivers.
Speaker #3: In summary, Cellebrite remains well-positioned to deliver another year of healthy growth, strong profitability, and excellent free cash flow, with a minimal amount of dilution to shareholders.
Anything which has been tied to U S federal spending and agencies in that regards.
<unk>.
Yeah, I'll take the macro and by the way. Thank you for your kind words, it's much appreciated.
But let me take the macro and then I'll, let a mix of maybe Dave and Marcus comment.
Operator: The floor is now open for questions. At this time, if you have a question or comment, please press *1 on your telephone keypad. If at any point your question is answered, you may remove yourself from the queue by pressing *2. Again, we ask that you pick up your handset when posing your questions to provide optimal sound quality. Thank you. Our first question is coming from Shaul Eyal with PD Cowan. Your line is open, please go ahead.
On the renewals.
There's actually a good story behind that story.
But at a macro level.
I would tell you the confidence level is high and when you. When you script. These things as you guys know everybody is very careful about what you say and for so for me to tell people that when this turns its going to turn with a vengeance.
I don't I wouldn't use those words lightly which I think is a good harbinger indicator of how we feel about the business in federal and we're.
Shaul Eyal: Thank you. Good morning, everybody. Congrats to everyone on their new roles and also on solid performance, which appears to be more timing-driven. Tom, thanks for the honest and candid comments regarding your personal health. Glad the process is behind you. Dana, wishing you nothing but the best. It has been a pleasure working with you over the past few years. Two-part question on my end, if I may. Tom, what is your confidence levels as we think about this ongoing recovery in U.S. federal spending? And maybe the second part for David. As we think about your retention rates this quarter, can you outline to us any key drivers, anything which has been tied to U.S. federal spending and agencies in that regards? Thank you.
We're seeing strong renewals I talked about renewal rates in the mid nineties.
We've talked to comment on one specific transaction that actually has.
A positive kind of backend and ending to this but.
The macros that drive who we are unfortunately for all of us, they're not only not going away theyre getting worse, I mean crime is not going away and the sophistication and usage of digital is becoming more pervasive.
Whether and whether Youre, an intelligence agency, where the ear defense agency or local law enforcement, you don't have enough labor and budget dollars to hire labor to try to navigate and prosecute the amount of data needed to drive safety both at a sovereign securities.
Thomas E. Hogan: I will take the macro. By the way, thank you for your kind words. It is much appreciated. Let me take the macro, and then I will let a mix of maybe Dave and Marcus comment on the renewals, because there is actually a good story behind that story. At a macro level, I would tell you the confidence level is high. When you script these things, as you guys know, everybody is very careful about what you say. For me to tell people that when this turns, it is going to turn with a vengeance, I would not use those words lightly, which I think is a good harbinger or indicator of how we feel about the business in federal. We are seeing strong renewals. I talked about renewal rates in the mid-90s.
Fence level or the state and local so the dim.
The demand drivers are not going to go away. Unfortunately.
At least I think a decade.
And so that's there are product in our portfolio.
We still are highly convicted as market leading in the industry.
And when we talk to when we talk to the customers in federal the talk track is and Gs I don't know they are frustrated because they need and want our product.
They are waiting they are waiting for the BBB to get get passed and now they are waiting for that to trickle down and Thats, just going to take a little bit of time and that doesn't really kick in until October one anyway.
So our view is once that new fiscal cycle and the allocation of.
Thomas E. Hogan: We are going to talk, we will comment on one specific transaction that actually has a positive kind of backend and ending to this. The macros that drive who we are, unfortunately for all of us, they are not only not going away, they are getting worse. Crime is not going away, and the sophistication and usage of digital is becoming more pervasive. Whether you are an intelligence agency, whether you are a defense agency or a local law enforcement, you do not have enough labor and budget dollars to hire labor to try to navigate and prosecute the amount of data needed to drive safety, both at a sovereign security defense level or a state and local. The demand drivers are not going to go away, unfortunately, I do not know, at least I think a decade. That is there.
I am told roughly two trillion dollars of budget, that's been allocated to the DNI segment.
Which is where we're very focused.
All of those things combined with the pending Ato ability to deploy our cloud based assets and the federal government.
Lead us to be Super bullish about 2026.
Just.
No.
This company has a reputation and I think all of us here of transparency and integrity in our four.
Reported and are in our guidance and rather than than hope or predict when that trickle down is going to hit.
Our strategy has been to call it as we see it right now and when when the wave hits the beach.
Thomas E. Hogan: Our product and our portfolio, we still are highly convicted as market leading in the industry. When we talk to the customers in federal, the talk track is, and geez, I do not know, they are frustrated because they need and want our product, and they are waiting, they were waiting for the BBB to get passed. Now they are waiting for that to trickle down, and that is just going to take a little bit of time, and that does not really kick in until October 1 anyway. Our view is once that new fiscal cycle and the allocation of, you know, I am told roughly it is a trillion dollars of budget that has been allocated to the D&I segment, which is where we are very focused.
We're gonna be delighted to share that news.
And we think that tsunami is coming but let me, let Dave and Mark as comment on the renewal thing because there is a really positive story in that as well.
Thank you for your question, it's a great one I think maybe as context, our federal business has traditionally operated when you think about our gross dollar somewhere between mid to really upper nineties and this quarter. There was certainly one particular transaction, where we have multi multiple customer and this customer has multiple contracts.
And one of their contracts as they were preparing preparing for the new legislation ultimately did start to slip out of the quarter. So I'm going to turn it over to Mark just to give you a little bit more color, but that was one element that did ended up weighing on the statistic and figure that you have in mind sure. Thank you David.
Under this up in Q1.
Thomas E. Hogan: All those things combined with the pending ATO ability to deploy our cloud-based assets in the federal government lead us to be super bullish about 2026. We just, you know, this company has a reputation, and I think all of us here, of, you know, transparency and integrity in our reporting and our guidance. Rather than hope or predict when that trickle down is going to hit, our strategy has been to call it as we see it right now. When the wave hits the beach, we are going to be delighted to share that news, and we think that tsunami is coming. Let me let Dave and Marcus comment on the renewal thing, because there is a really positive story in that as well.
We talked about in the Q1 call. There was a retention of a large contract which was looking delight. This was of our program base.
Through the Doge confusion the program did not get renewed however, the customer need is only increasing it's a shame that we can't talk about the customer specifics on the call. Because you would then understand how important this is for Phil.
Civilians safety.
We are now bidding in agreement, which we expect to be roughly two exiting size on the customer is still an active customers. So what I would say is we have a new bid, but we are comfortable with our technical position and we are waiting for the flow off to 10, one to be able to get that back on the docket.
Yes, so just.
To summarize that.
Main point for a delay.
But we have high.
Expectations and optimism.
I will recommit.
David Barter: Thank you for your question. It is a great one. I think maybe as context, our federal business has traditionally operated, when you think about our gross dollar, somewhere between mid to really upper 90s. This quarter, there was certainly one particular transaction where we have multiple customers, this customer has multiple contracts, and one of their contracts, as they were preparing for the new legislation, ultimately did start to slip out of the quarter. I am going to turn it over to Marcus to give you a little bit more color, but that was one element that did end up weighing on the statistic and figure that you have in mind.
The better news is when they do and we think that will be in the next one to two quarters that renewal actually be two X. The old rule. So that's it.
If every customer.
<unk> be in a really happy place, but we think thats a good indication of that.
Stability in demand and just points back to the timing issue.
Understood. Thank you so much.
Thank you.
We'll go next to Mike <unk> with Needham. Your line is open. Please go ahead.
Marcus Jewell: Sure, thank you, David. I think I can button this up. In Q1, we actually talked about in a Q1 call, there was a retention of a large contract, which was looking delayed. This was a program based, which through the U.S. Department of Justice confusion, the program did not get renewed. However, the customer need is only increasing. It's a shame that we can't talk about the customer specifics on the call, because you would then understand how important this is for civilian safety. We are now bidding an agreement, which we expect to be roughly 2x in size. The customer is still an active customer. So what I would say is we have a new bid, we are confident with our technical position, and we are waiting for the flow after 10/1 to be able to get that back on the docket.
Hey, guys. Thanks for taking the question here.
I'll Echo.
<unk> comments great.
Great to hear on the personal health front Tom.
Don.
Sorry to see you go it's been an absolute pleasure working with you. These last few years.
And David.
Looking forward to working with you again, given our our shared time over at new relic.
I think the the first question I just wanted to.
I know that you guys I'll walk through different insurers and your views and whatnot, but David really in going through this.
Transition process with Donald recently.
Curious to get a sense.
Thomas E. Hogan: Yeah, just to summarize that, pain point for a delay, but we have high expectations and optimism that they will recommit. The better news is when they do, and we think that will be in the next one to two quarters, that renewal will actually be 2x the old renewal. That is, you know, if every federal customer renewed at 2x, we would be in a really happy place. But we think that is a good indication of the stability in demand and just points back to the timing issue.
What are some of the initial findings that you've.
Uncovered how do you you.
Your role here at celebrate and is there any change that we should think about as far as.
Different levers you plan on pulling the company willing to reiterate.
Target set as disclosed previously at the Investor day anything there from a from a longer term or vision standpoint would be beneficial.
Mike.
Looking forward to working with you.
It was a real pleasure working with you at new relic and this will be a ton of fun I guess, maybe at a fundamental level.
I should actually I'd be remiss, if I didn't start with just thanking Donna I mean, she has been just fantastic to partner with over the last month.
Marcus Jewell: Understood. Thank you so much.
Thomas E. Hogan: Yeah.
Marcus Jewell: Thank you.
Operator: will go next to Mike Sikos with Needham. Your line is open, please go ahead.
Her generosity and her commitment has been fantastic I think from a value perspective, I think youll.
Mike Sikos: Hey guys, thanks for taking the question here. I will echo Shaul's comments. Great to hear on the personal health front, Tom. Dana, I am sorry to see you go. It has been an absolute pleasure working with you these last few years. Dave, I am looking forward to working with you again, given our shared time over at New Relic. I think the first question I just wanted to get at, I know that you guys all walk through different intros and your views and whatnot, but David, really in going through this transition process with Dana recently, I am curious to get a sense, what are some of the initial findings that you have uncovered? How do you view your role here at Cellebrite DI Ltd.? Is there any change that we should think about as far as different levers you plan on pulling?
Certainly find us very similar certainly quite frankly as we've built the financial model for the second half I think we have the same orientation almost in terms of having a a bottoms up view in terms of how we build our outlooks for IRR for revenue argued.
Arguably on the cost structure I think we had to share a similar philosophy almost.
<unk> zero based budgeting of how do you build yourself up.
Bottom to top to make sure that your funding and putting head count in all of our capital relative to things that we think are really pro growth and in some cases that is.
Areas around product in other cases, it's around how you put AI into product or AI, how you put it into our processes.
And so.
It sounds like.
I don't want to belabor, the point, but I think Donna and I kind of think and work very similar ways in terms of kind of thinking about.
Our approach on analyst day, all kind of come back to you.
I think similar to dawn I, usually build the operating plan for which we will start to offer perspective, as we get into the latter part of autumn and into November and then we will certainly refresh the long range plan and in the spring and so happy to share more on that but again I think you'll find the way I work against some of the new relic is very similar to the way <unk> has been working.
Mike Sikos: Is the company willing to reiterate the targets that it disclosed previously at the investor day? Anything there from a longer term or vision standpoint would be beneficial.
David Barter: Well, Mike, I too am looking forward to working with you. It was a real pleasure working with you at New Relic, and this will be a ton of fun. I guess maybe at a fundamental level, I should actually be remiss if I didn't start with just thanking Dana. She's been just fantastic to partner with over the last month, and her generosity and her commitment has been fantastic. I think from a values perspective, you'll certainly find us very similar. Quite frankly, as we've built the financial model for the second half, I think we have the same orientation almost in terms of having a bottoms-up view in terms of how we build our outlooks for ARR, for revenue, arguably on the cost structure.
Does that help Mike.
It does thank you very much Dave I really appreciate it.
And the follow up here.
For markets or Tom just given the commentary and great to hear on that to exercising.
Even though we are facing that that near term pain, you had alluded to.
Is there anything else you can point us to comment I was really.
The comment from your prepared remarks that we're seeing early signs of improved spending already starting to surface.
Anything else that you would point us to beyond this.
David Barter: I think we share a similar philosophy almost around zero-based budgeting of how you build yourself up from bottom to top to make sure that you're funding and putting headcount in all of our capital relative to things that we think are really pro-growth. In some cases, that is areas around product. In other cases, it's around how you put AI into product or AI, how you put it into our processes. It sounds like I don't want to kind of belabor the point, but I think Dana and I kind of think and work very similar ways. In terms of kind of thinking about our approach on analyst day, I'll kind of come back to you. I think similar to Dana, I usually build the operating plan, for which we'll start to offer perspective as we get into the latter part of autumn and into November.
One agency here that we can kind of hang our hats on as we think about what the what the spending environment looks like or how it's evolving.
Yes, I'll, let mark is call. It two data points one is just the funding.
That is being released in spite of the drive for efficiency ends up landing in our sweet spot, which which is why we're actually.
It's a tough pill right now because we're pretty bullish about the mid to long term.
We're right in the strike zone of what the administration wants to go fix and where they've allocated dollars and the other data point that we didn't get into in the script or call is our coverage and our pipeline in the federal segment is very strong and so that combined with the recent signing of a meaningful.
David Barter: Then we will certainly refresh the long-range plan in the spring. I'm happy to share more on that. Again, I think you'll find the way I work, again, similar to New Relic, is very similar to the way Dana has been working. Does that help, Mike?
Deal that came in early in the quarter.
With the size of this other big deal that we think we will still take a quarter or two but we think theres going to be minimally <unk>. Those are a bunch of data points and up markets. If you could add more color or confidence, yes. I think there are three points I want to Orient to two so first of all.
Mike Sikos: It does. Thank you very much, Dave. I really appreciate it. For Marcus or Tom, just given the commentary, and great to hear on that 2x sizing, even though we are facing that nearer term pain you had alluded to. Is there anything else you can point us to, Tom? I was really, the comment from your prepared remarks that we are seeing early signs of improved spending already starting to surface. Anything else that you would point us to beyond this one agency here that we can kind of hang our hats on as we think about what the spending environment looks like or how it is evolving?
Government that we refer to as the U S. Federal government when we look outside of the U S. Federal Central government spending is increasing at a clip and both the defense and intelligence and what that points to is that the use case is correct. A return on investment is correct, but we accordingly.
Pending issue as many many operators are currently in the U S. Federal the second thing is the indications as we look at our renewals in this quarter from.
From a bookings perspective are increasing in terms of value. So we see a value increasing renewals, which again points to an extension of what we do.
Thomas E. Hogan: Yeah, I will let Marcus comment, but there are two data points. One is just the funding that is being released in spite of the drive for efficiency ends up landing in our sweet spot, which is why we are actually, you know, it is a tough pill right now because we are pretty bullish about the mid to long term. You know, we are right in the strike zone of what the administration wants to go fix and where they have allocated dollars. The other data point that we did not get into in the script or call is our coverage and our pipeline in the U.S. federal segment is very strong.
And then the two other points to think about is the interest in carillon is exceptionally high as you can imagine we told you about our initial deal in Europe and Intelligence Bureau.
So you're seeing that interest grow into the federal government into the decision makers, we already know and expansion of use case and then let's not forget that we're now preparing for being first in the market with a fed level high secure cloud forensic solution, which will give another big tailwind to our business. When we are ready to execute on that.
Thomas E. Hogan: That combined with the recent signing of a meaningful deal that came in early in the quarter, that with the size of this other big deal that we think will still take a quarter or two, but we think is going to be minimally 2x, those are a bunch of data points. Marcus, if you could add more color or confidence.
Program.
Okay.
We'll take our next question from Eric Martin Newsy with Lake Street. Your line is open. Please go ahead.
Yes, I wanted to follow up on the issue from Q1, there was U S. Federal and then it seemed like the results of some European pipeline issues.
Marcus Jewell: Yeah, I think there are three points I want to orient to. First of all, the federal government that we refer to is the U.S. federal government. When we look outside of the U.S. federal, central government spending is increasing at a clip in both the defense and intelligence. What that points to is that the use case is correct, our return on investment is correct, but we are caught in a spending issue as many, many operators are currently in the U.S. federal. The second thing is the indications as we look at our renewals in this quarter, from a bookings perspective, are increasing in terms of value. We see a value increase in renewals, which again points to an extension of what we do. The two other points to think about are the interest in Corellium is exceptionally high, as you can imagine.
Based on the results of Q2, it looks like that is.
We're not facing that anymore in Europe is that the case.
Are we back on track as far as defense and Intel pipeline Europe, Yes.
Yes, great.
Ill do the quick voice over and then I'll, let Marcus.
Fill in the blanks, but where we are.
Our European leader has done a nice job of implementing I think a really thoughtful strategy you could argue he was a first mover on the focus on DNI.
Which is starting to pay dividends and we are seeing ramps in both growth rates and pipeline and we're pretty bullish about Europe. So there is still work to go but your observation I think is spot on markets.
Marcus Jewell: We talked about our initial deal in Europe for an intelligence bureau. We are actually seeing that interest grow into the federal government, into the decision makers we already know, an expansion of use case. Let us not forget that we are now preparing for being first in the market with a FedRAMP High Authorization to Operate secure cloud forensic solution, which will give another big tailwind to our business when we are ready to execute on that program.
It's just great execution, we've talked about a pivot in our strategy. We felt that we haven't we didn't have enough sharing of DNI market outside of the U S.
Order to but we think is going to be minimally. 2x those are a bunch of data points and not Marcus. If you could, you know, add add more color or confidence. Yeah. I I think there's 3, there's 3 points. I want to orient to to. So, first of all, um, federal government that we refer to is, is the US federal government. When we look outside of the US Federal central government spending is increasing at a clip in both the defense and intelligence. And what that points to is that the use case is correct. Our return on investment is correct, but we are caught in a, uh, a spending issue. As many, many operators are currently, uh, in the US Federal. The second thing is the indications as we look at our renewals in this quarter, um, from a booking perspective, our increasing in terms of value. So, we see a value increase in renewals which again, points to an extension of what we do and then the 2 other points to think about is the interesting. Curriculum is exceptionally High. Um, as you can imagine, uh, we talked about our initial deal in Europe for an intelligence Bureau. Um,
At dominant leader there has done a great job in re pivoting and covering and we've had significant orders in DNI and weak.
Continued to see an acceleration there and we're playing into a nice area because of the NATO spend increases. So we see continued strength in Korea is only.
We're actually seeing that interest grow into the federal government into the decision makers. We already know and expansion of use case and then let's not forget that we're now preparing for being first in the market with a Fed level, high secure, Cloud forensic solution, which will uh give another big Tailwind to our business when we are ready to execute on that program.
Operator: We'll take our next question from Eric Martinuzzi with Lake Street. Your line is open, please go ahead.
Showing that as well and obviously you all first resale order of Carillion into Europe is sharing the way and we feel we feel very confident about our growth rates in EMEA going forward.
We'll take our next question from Eric Martin, Newsy with Lake Street. Your line is open, please go ahead.
Eric Martinuzzi: I wanted to follow up on the issue from Q1. There was U.S. federal, and then it seemed like there were also some European pipeline issues. Based on the results of Q2, it looks like that has, we are not facing that anymore in Europe. Is that the case? Are we back on track as far as defense and intel pipeline Europe?
And by the way.
You step back geopolitically and the logic is pretty obvious with with the.
The U S pressuring.
The EU to step up on their defense spending when you look at the conflict with Ukraine, and Russia and the issues that that presents from a border border protection issue around the EU. Those are all initiatives that benefit from the celebrate portfolio and the spend.
Thomas E. Hogan: Yeah, great. I will do the quick voiceover, and then I will let Marcus Jewell fill in the blanks. Our European leader has done a nice job of implementing, I think, a really thoughtful strategy. You could argue he was a first mover on the focus on D&I, which is starting to pay dividends, and we are seeing ramps in both growth rates and pipeline, and we are pretty bullish about Europe. There is still work to go, but your observation, I think, is spot on, Marcus Jewell.
Yeah, I wanted to follow up on the issue from Q1. There was U.S. Federal, and then it seemed like there was also some European pipeline issues. Based on the results of Q2, it looks like we’re not facing that anymore in Europe. Is that the case? Are we back on track as far as the defense and Intel pipeline in Europe?
Celebrate relative to the increased focus and spend by the EU countries to address both of those issues.
As the perfect storm for Us and the reason that we're focused on it and the reason we're starting to see the traction. Yes. There is also one thing to add Simon. Thanks appointed my direction. There is that the the migrant crisis in Europe is the worst it's been and there is significant additional funding being added.
Marcus Jewell: Yeah, I mean, I think it is just great execution. We talked about a pivot in our strategy. We felt that we did not have enough share in the D&I market outside of the U.S. Ed Dolman, the leader there, has done a great job in repivoting and covering, and we have had significant orders in D&I, and we continue to see an acceleration there. We are playing into a nice area because of the NATO spend increases. So we see continued strength, and Corellium has only shown that as well. Obviously, our first resale order of Corellium into Europe is showing the way, and we feel very confident about our growth rates in EMEA going forward.
And we are right in the midst of securing those funding opportunities for incremental business in new task force, which are being formed across Europe to deal with the module prices.
Okay.
We'll move next to Bobbin Shah with Deutsche Bank. Your line is open. Please go ahead.
Great. Thanks for taking my questions and I Echo the statement, both shallow and Mike mentioned that.
Sure.
I guess just a clarifying question on the guidance you mentioned that.
Kind of impact they are just from kind of the changes in <unk>.
Since you made around the timing of U S. Federal I guess, what else is going to the remainder of the reduction where you kind of being a little bit more conservative are you seeing anything else in the macro that's gotten more cautious.
Really thoughtful strategy, You could argue, he was a first mover on the focus on dni, um, which is starting to pay dividends. And we're, we're seeing ramps in both growth rates and Pipeline, and we're pretty bullish about, uh, Europe. So there's still work to go but your observation I think is spot-on Marcus. Yeah. I mean, I think it's, it's just great execution. We talked about a pivot in our strategy. Um, we felt that we had a, we didn't have enough share in the dni market outside of the US, um, at dolman. The leader. There was on a great job in re pivoting and covering and we've had significant orders in dni and we continue to see an acceleration there. And we're playing into a nice area because of the NATO spending increases. So we see continued strength and curium as only, um, shown that as well. And obviously our first resale order of kurill, uh, into Europe is showing the way and we feel we feel very confident about, um, our growth rates in in m, going forward.
Thomas E. Hogan: You step back geopolitically, and the logic is pretty obvious with the U.S. pressuring the EU to step up on their defense spending. When you look at the conflict with Ukraine and Russia and the issues that presents from a border protection issue around the EU, those are all initiatives that benefit from the Cellebrite portfolio. The spend on Cellebrite relative to the increased focus and spend by the EU countries to address both of those issues is the perfect storm for us and the reason that we're focused on it and the reason we're starting to see the traction.
Yes.
End of the year.
I'll, let Dave comment on that the one thing the.
The one other thing.
We didn't get into the details.
We had a pretty modest quarter in the in the private sector.
But.
But there is another when you start looking for.
By the way, you mean, just, you step back to your politically in the logic is is pretty obvious with with, uh, you know, the US, pressuring, uh, the EU to step up on their defense spending. Uh, when you look at the conflict with Ukraine and Russia in the issues that that presents from a border border protection, issue around the EU. Those are all initiatives that benefit from the celebrate portfolio and the spend on celebrate relative to
Logic.
Four.
Increased optimism around growth in 2026.
Increased focus and spend by the EU countries to address both of those issues.
The carillon asset is a big play in DNI as Marcus just mentioned, but.
Marcus Jewell: Yeah, there's also one thing to add, Tom, and thanks for pointing my direction there, is that the migrant crisis in Europe is the worst it's been, and there is significant additional funding being added. We are right in the midst of securing those funding opportunities for incremental business in new task forces which are being formed across Europe to deal with the migrant crisis.
<unk>.
The hidden secret here is we think <unk> has massive.
Potential in our private sector business so.
It's still a small part of our P&L I think it's seven or 8%.
Correct.
So it's not a big contributor, but when you look at the balance of the business, whether it's product geography cohorts.
Um, is the perfect storm for us. And the reason that we're focused on it and the reason we're starting to see the traction. Yeah, there's also 1 thing to add to, and thanks for pointing my direction. There is that the, the migrant crisis in Europe is is, is the worse. It's been and there is significant additional funding being added, uh, and we are, are right in the mix of, um, securing those funding opportunities for for incremental business, in new task force, which are being formed, uh, across Europe to deal with the migrant crisis.
Operator: will move next to Bobin Shaw with Deutsche Bank. Your line is open, please go ahead.
We're pretty bullish about growth. If you look at for example, if you look at our growth in the <unk> business. This year.
Bobin Shaw: Great, thanks for taking my questions. I echo the statements both Shaul and Mike mentioned at the beginning of the statement. I guess just a clarifying question on the guidance. Tom, you mentioned the four-point kind of impact to ARR just from the changes in assumptions you made around the timing of U.S. federal. What else is going to the remainder of the reduction? Where are you being a little bit more conservative? Are you seeing anything else in the macro that has gotten you more cautious on the ex-federal side for the remainder of the year?
We'll move next to Bob and Shaw with Deutsche Bank. Your line is open. Please go ahead.
I don't know, if we disclose that number but its been strong.
And.
No.
No correlation with budgets and does or anything else. The uptake there has been exceptional but David I don't know if you.
I would add anything to that I guess, the only complement as I think we have a very detailed process of going through and assessing our deals and looking at growth. They are looking at deal timing and I think we've just been very thoughtful in the build and the primary driver here is bad and then we really I think tightened up the forecast across all of our sales matches, So I think where we feel.
Great. Thanks for taking my questions and I got the same as well, might mention at the beginning of the payment, uh, I guess, uh, just a clarifying question on the guidance. Tom you mentioned the 4-point. Kind of impact are just from kind of the changes in assumptions you made around the timing of US Federal just what else is going to the remainder of the reduction, where you kind of being a little bit more conservative, are you seeing anything else in the macro that's going to be more cautious?
The, the, the expected end of the year.
Thomas E. Hogan: I will let Dave comment on that. The one other thing that we did not get into the details is we had a pretty modest quarter in the private sector. There is another, when you start looking for the logic for increased optimism around growth in 2026, the Corellium asset is a big play in DI, as Marcus just mentioned. The sort of the hidden secret here is we think Corellium has massive potential in our private sector business. So it is still a small part of our P&L. I think it is what, 7% or 8%?
Good about our plan for the next six months.
You know, I'll let, uh, Dave comment on that, the 1 thing. Um, the 1 other thing that, that, you know, we didn't get into the details, is I, you know, we had a pretty modest quarter in the in the private sector. Um,
Yes, I know, it's easy to oversimplify, but but the truth in this cases.
If if the federal business showed up this year like they have the last three years.
Uh, but but there's another, when you start looking for uh, logic, uh, uh for uh, increased optimism around growth in 2026.
We we'd be positioned to meet or exceed on.
On the top line and probably the same on the <unk> I mean, we are delivering on the bottom line in spite of the federal headwinds. So it really is.
And again, it's not a we're not losing any competition. It's not demand is going away. Its a timing issue that we just need to navigate and to get to get through.
Bobin Shaw: Correct.
Thomas E. Hogan: It is not a big contributor. When you look at the balance of the business, whether it is product, geography, cohorts, we are pretty bullish about growth. If you look at, for example, if you look at our growth in the U.S. state and local government business this year, I do not know if we disclosed that number, but it has been strong. There is no correlation with budgets and U.S. Department of Justice or anything else. The uptake there has been exceptional. Dave, I do not know if you would add anything to that.
Our next question comes from Brian Essex with J P. Morgan. Your line is open. Please go ahead.
Um, the the curium asset is a big play in dni is Marcus just mentioned, but but the sort of the, the hidden secret here is we think kurill has massive, uh, potential in our private sector business. So um, it's still a small part of our p&l. I think it's what 7 or 8% correct. You know, so it's not a big contributor but when you look at the balance of the business, whether its product geography cohorts,
Hi, Good morning. Thank you for taking the question first of all Tom Congratulations on the health Battle, That's fantastic news.
And then data and David Congratulations to you as well David looking forward to working with you.
Maybe maybe for Tom.
To follow on some of the federal questions.
Could you maybe educate me a little bit on the sales cycle.
David Barter: I guess the only compliment is I think we have a very detailed process of going through and assessing our deals and looking at gross ARR, looking at deal timing. I think we've just been very thoughtful in the build. The primary driver here is Fed. We've really, I think, tightened up the forecast across all of our sales patches. I think we feel good about our plan for the next six months.
And where youre seeing the bottleneck is this is this merely just a wallet issue I think we've heard from some peers that sell into that vertical that.
Um, you know, we're pretty bullish about, uh, growth, if you, if you look at. For example, if you look at our growth in the SLG business this year, um, I don't know if we disclose that number, but it's, it's been strong. Um, and in in, in, in no, you know, no correlation with budgets and Doge or anything else. The uptake there has been exceptional, but uh, Dave, I don't know if you would add anything to that. I guess that the only compliment is I I think we
Theres been some head count turnover and maybe finding the right person the sign off on a deal was the bottleneck, but how do you. How do you kind of go whats the sales cycle, what do you find a sponsor that that commits to the platform and then that sponsor gets approval and then someone just needs to write a check like how do you.
Have a um a very detailed process of going through and assessing our deals and looking at gross are looking at deal timing and I think we've just been very thoughtful in the build and the primary driver here is fed and then we really I think tightened up the forecast across all of our sales patches. So I think we, you know, we feel good about our plan for the next 6 months.
Thomas E. Hogan: Yeah, I know it is easy to oversimplify, but the truth in this case is if the federal business showed up this year like they have the last three years, we would be positioned to meet or exceed on the top line and probably the same on the bottom. We are delivering on the bottom line in spite of the federal headwind. It really is a, you know, and again, it is not a, we are not losing to any competition. It is not that demand is going away. It is a timing issue that we just need to navigate and get through.
yeah, I know it's it's easy to oversimplify but but the truth in this case is
Is this a procurement.
Process issue or is this.
if, if the Federal Business showed up this year, like they have the last 3 years. Um,
More of a spot.
Sponsorship penetration issue, maybe you could just give us a little bit of color on that.
We we we'd be positioned to meet or exceed.
Sure Tom pointed to me so.
I'm going to take.
Who would love to over complicate the sales process, so I'm going to break it down to the four simple thing.
In spite of the federal headwind. So it really is a
Effectively what you do remember we're on the mission side of the business, we're not in the general ITE side. So we serve the mission and so most of our work is done through programs grants baked into the core budget. So what happens is first of all you understand the needs. You then present a solution and then you win the solution technically and not as effective.
You know, and again it's not a we're not losing to any competition. It's not the demand is going away. It's a timing issue that we just need to navigate and get through.
Operator: Our next question comes from Brian Essex with JPMorgan. Your line is open, please go ahead.
Our next question comes from Brian Essex. With JP Morgan, your line is open. Please go ahead.
Brian Essex: Hi, good morning. Thank you for taking the question. First of all, Tom, congratulations on the health battle. That is fantastic news. Dana and David, congratulations to you as well. David, looking forward to working with you. Maybe for Tom, to follow on some of the federal questions, could you educate me a little bit on the sales cycle and where you are seeing the bottleneck? Is this merely just a wallet issue? I think we have heard from some peers that sell into that vertical that there has been some headcount turnover and maybe finding the right person to sign off on a deal was the bottleneck. How do you kind of go, what is the sales cycle like? Do you find a sponsor that commits to the platform and then that sponsor gets approval and then someone just needs to write a check?
You all the chosen technology and they're on the run the return on investment, which in all cases saving lives, which is a pretty high return on investment is approved then you are in the final part with these what program are they going to use what budget they going to use all of the business is stuck in that fourth element. It is literally I think 50% of the decision.
Hi, good morning. Thank you for taking the question. First of all, Tom, congratulations on on the health battle, uh, fantastic news. Uh, and then data and David, congratulations to you as well. Uh, David looking forward to working with you. Um, maybe. Maybe for Tom.
Makers in central government have been changed.
The items are being changed mission people are being changed.
Working through flow of funds I'm getting the new resolution signed and.
It is literally that is right at the tail end of the deal is not a qualification or an execution issue. It is flow of funds, which start coming after 10, one as Tom said.
So I can't point to any major changes of regime or culture or.
Brian Essex: How do you, is this a procurement process issue or is this more of a sponsorship penetration issue? Maybe give us a little bit of color around that.
Or different sentiment it has literally.
The budgets were frozen they'd been reissued I might go to work through the procurement systems now on the right programs have to be applied.
You know, to follow on some of the federal questions. Um, you know, could you maybe educate me a little bit on the sales cycle. Um and where you're seeing the bottleneck is this is this merely just a wallet issue. Um, I think we've heard from some peers that sell into that vertical that. Um, there's been some headcount turnover and maybe finding the right person to sign off on a deal was the bottleneck but how do you how do you kind of go? Uh, what What's the sales cycle? Like do you find a, a, a sponsor that, that commits to the platform and then that sponsor gets approval and then someone just needs to write a check. Like how how do you you know? Is this a procurement?
process issue or is this, um, you know, more of a
And we will start seeing things like.
Sponsorship penetration issue; maybe to give us a little bit of color around that.
Marcus Jewell: Sure, yeah, Tom has pointed to me. As a Chief Revenue Officer, I am going to take that one. Chief Revenue Officers always love to overcomplicate the sales process. I am going to break it down to the four simple things. In the federal government, effectively what you do, remember we are on the mission side of the business. We are not in the general IT side. So we serve the mission. Most of our work is done through programs, grants, and baked into the core budget. What happens is, first of all, you understand the need, you then present a solution, and then you win the solution technically. That is effectively, you are the chosen technology and the return on investment, which in our case is saving lives, which is a pretty high return on investment, is approved.
Our next question comes from Jeff Van <unk> with Craig Hallum. Your line is open. Please go ahead.
Great. Thanks for taking the questions and Tom So glad to hear the conviction around the health to take the permanent role David Welcome and Donna its been a phenomenal run you've been just a pleasure to work with so wish you the best.
A couple for me if I could.
Tom in terms of the AI progression and how your vision for its impact on the celebrate business has evolved talk to me about your thinking both internally and externally the optimal way to employ AI and the benefits you think you can see from it.
Yeah, that's great. It's a great question.
Im going to answer.
Marcus Jewell: Then you are in the final part with this, what program are they going to use? What budget are they going to use? All of the business is stuck in that fourth element. It is literally, I think 50% of the decision makers in central government are being changed. CIOs are being changed. Mission people are being changed. We are working through flow of funds and getting the new resolution signed. It is literally that. It is right at the tail end of the deal. It is not a qualification or an execution issue. It is flow of funds, which start coming after 10/1, as Tom said. I cannot point to any major changes of regime or culture or different sentiment.
Jeff at a higher level because.
We actually have really we have aggressive.
Ambitious plans for how we're going to leverage <unk> AI to differentiate this company and.
We believe it'll be a.
Sure. Yeah I'm I'm Tom's pointed to me so as a cro I'm I'm going to take that 1 always love to over complicate the sales process. So I'm going to break it down to you to 4 simple things in the federal government. Effectively what you do, remember, we're on the mission side of the business. We're not in the general it side. So we serve the mission. And so most of our work is done through programs grants and and baked into the core budget. So what happens is, first of all, you understand the needs, you then present the solution and then you win the solution technically and that is effectively, you're the chosen technology and uh, there and the and the return on investment which in our in our case is Saving Lives, which is a pretty high return. On investment is approved. Then you're in the final part with is, what program are they going to use? What budget are they going to use? All of the business is stuck in that, fourth element. It is literally I think 50% of the decision makers in central government have been changed. Um cios have been changed Mission. People have been changed and we are working through flow of funds and
An enabler for the next chapter of growth and Tam for us so.
So that's how important we view.
AI in general I'll, just say that upfront and if your question is spot on because it is a hybrid of internal.
And getting the new resolution signed and it and it is literally, that is right the tail end of the deal. It's not a qualification or an execution issue. It is flow of funds which start coming after 101 as Tom said,
Marcus Jewell: It is literally, the budgets were frozen. They have been reissued, and they have got to work through the procurement systems now, and the right programs have to be applied. We will start seeing things flood.
Efficiency. So we are using AI.
Across the company already.
To drive efficiency and I alluded to it.
How we've managed to.
So, I can point to any major changes of regime or culture, or or different sentiment. It is it is literally, um, the budgets were frozen, they've been reissued and they've got to work through the procurement systems now and the right programs have to be applied. Um, and we will start seeing things flow.
Meet or beat Bottomline, while we've had some softness from U S. Federal.
Operator: Our next question comes from Jeff Vanree with Craig Hallam. Your line is open, please go ahead.
And.
<unk>.
Our next question comes from Jeff Vanrai with Craig Hallum. Your line is open; please go ahead.
Some of the steps we've taken there have enabled us to maintain our delivery commitments.
Brian Essex: Great, thanks for taking the questions. Tom, so glad to hear the conviction around the health to take the permanent role. David, welcome. Dana, you know, it has been a phenomenal run. You have been just a pleasure to work with, so wish you the best. A couple for me, if I could. Tom, in terms of the AI progression and how your vision for its impact on the Cellebrite business has evolved, talk to me about your thinking both internally and externally, the optimal way to employ AI and the benefits you think you can see from it.
With the same or similar amounts of people, which is different from what we planned at the beginning of the year. So by the way. This isn't just the obvious thing people point to is they are using AI for.
Co development and in.
In R&D, yes.
And that's still early innings, but it's not just.
Thomas E. Hogan: Yes, it's great. It's a great question. I am going to answer it, Jeff, at a higher level because we actually have really, we have aggressive, ambitious plans for how we are going to leverage GenAI to differentiate this company. I think we believe it will be an enabler for the next chapter of growth and TAM for us. That is how important we view AI in general. I will just say that upfront. Your question is spot on because it is a hybrid of internal efficiency. We are using AI across the company already to drive efficiency. I alluded to it in how we have managed to, you know, meet or beat bottom line while we have had some softness from U.S. federal.
Great. Thanks for taking the questions. And I'm so glad to hear the conviction around the health to take the, the permanent role, David welcome and Donna. You know, it's been a phenomenal run. You've been just a pleasure to work with. So wish you the best, um, couple from me. If I could, um, Tom in terms of the AI progression and how your vision for its impact on the celebrate business, has evolved talk to me about your thinking, both internally and externally, the optimal way to employ Ai and the benefits, you think you can see from it.
It's not just R&D if I asked Marcus you can talk about some really amazing things that our CIO is driving right now with the <unk> bots and assistance to help drive productivity and efficiency in our sales forecasting and our sales operations area.
Yeah, it's great. It's a great question and I'll and I'm going to answer it. Um, yeah. Have at a higher level because
um, we actually have really, we have a aggressive
Dave and Donna they're doing work and Theyre finding areas to apply AI and the financial operation space. So that's across the board and it's just getting started externally.
I just.
Uh ambitious plans for how we're going to leverage gen AI to differentiate this company and and think we believe it'll be a uh, an enabler for the next chapter of growth and Tam for us. Um, so that's how important we we View.
If this was the cone of silence I would give you more details, but we know that these calls include our competitors in it.
I would just tell you that we are only just getting started.
AI in general. I'll just say that up upfront and it your your question spot on because it it it is a hybrid of internal.
And the art of the possible of applying AI.
To the challenge of public safety, when you think about the breadth of.
And diversity of evidential artifacts.
Think about the data from a cell phone, which is the most valuable in the hardest to get but then you add on top of that data like CCTV fixed cameras drones.
Thomas E. Hogan: It is some of the steps we have taken there have enabled us to maintain our delivery commitments with the same or similar amounts of people, which is different from what we planned at the beginning of the year. By the way, this is not just, you know, the obvious thing people point to is, hey, are you using AI for, you know, for code development and in R&D? Yes. That is still early innings. It is not just R&D. If I asked Marcus Jewell, he can talk about some really amazing things that our CIO is driving right now with agentic bots and assistants to help drive productivity and efficiency in our sales forecasting and our sales operations area. If I ask David Barter and Dana Gerner, they are doing work and they are looking, they are finding areas to apply AI in the financial operations space.
Uh, efficiency. So we are using AI, uh, across the company already, um, to drive efficiency, and I alluded to it, uh, in how we've, uh, managed to, uh, you know, meet or beat the bottom line while we've had some softness from the U.S. Federal, um, and it's it, it's.
some of the steps we've taken their have enabled us to maintain our delivery commitments.
Ballistics license plate.
Tower dumps.
List goes on and on.
It becomes daunting.
And the ability to navigate and interrogate.
The breadth of those data sources.
With a machine.
And L. L M. That's been trained.
To deliver value and insights to investigators detectives corporate compliance people.
It feels saying you Ain't seen nothing yet and so.
Thats, probably more than I want to share right now, but it's it's it's going to play a big role both internally and externally.
Thomas E. Hogan: That is across the board and it is just getting started. Externally, I just, you know, if this was a cone of silence, I would give you more details, but we know that these calls include our competitors. I would just tell you that we are only just getting started in the art of the possible of applying AI to the challenge of public safety. When you think about the breadth of and diversity of evidential artifacts, you think about the data from a cell phone, which is the most valuable and the hardest to get, but then you add on top of that data like CCTV, fixed cameras, drones, ballistics, license plate, tower dumps. I mean, the list goes on and on.
I think there's one thing we're not going to do we're not going to just put in LLM in front of our product and cyber and AI company.
But it's just a poor use of AI.
And I think people need to see through that it is about using AI to deliver a better outcome, which has multiple threats as Tom alluded to.
We planned at the beginning of the year. So, and by the way, this isn't just, you know, the obvious thing people point to is, hey, are you using AI for, you know, for for code development and and and R&D, yes. Um, and that's still early Innings but it's not just, uh, it's not just R&D. If I asked Marcus, he can talk about some really amazing things that our CIO is driving right now with the gentic, uh, Bots and assistance to help Drive productivity and efficiency in our sales, forecasting, and our sales operations area. If I asked Dave and Donna, they're they're doing work and they're looking, they're finding areas to apply AI in the financial operations space. So that's across the board and and and and and it's just getting started externally. Um, I I just you know, if this was a cone of silence, I'd give you more details but we know that these calls include our competitors. And and, and I would just tell you
We're getting close to time I know that Theres, a couple of people who have signaled in so we want to be sensitive to try to get their questions and we will extend the call for another few minutes and operator, if you want to open the line for next question.
We'll go next to Tomer Doberman with Bank of America. Your line is open. Please go ahead.
Hey, guys.
Similar similar sentiments from before Tom first of all congrats on the recovery Donna.
Tell you that we are only just getting started in in the art of the possible of applying AI to the challenge of Public Safety. When you think about the breadth of of diversity of evidential artifacts, you think about the data from a cell phone, which is the most valuable and the hardest to get. But then you add on top of that data like CCTV, fixed, cameras drones,
Thank you for your partnership.
Ballistics.
The last few years, David looking forward to working with you.
License plate.
We're now in the third quarter.
Thomas E. Hogan: It becomes daunting and the ability to navigate and interrogate the breadth of those data sources with a machine and an LLM that has been trained to deliver value and insights to investigators, detectives, corporate compliance people. I mean, it is the old saying, you ain't seen nothing yet. That is probably more than I want to share right now, but it is going to play a big role both internally and externally.
No.
Tower dumps. I mean the list goes on and on um it it becomes daunting.
Weaker fed discussion.
Just wanted to ask are you seeing any more degradation in the fed environment as it pertains to what you mentioned earlier about regime changes.
And the ability to navigate and interrogate.
The breadth of those data sources.
Pausing on budget are you seeing weakness.
Uh, with a machine and a a, you know, an llm that's been trained.
Further weakness there or is it yet.
This constrained visibility, that's giving you that incremental caution.
No.
There is basically zero indication of weakness as I said.
Two drivers all the use of mobile technology and bad people doing both things both both tend to increase so we don't see any detriment and in fact, we're more confident in our competitive position than we have been as we extend our technology advantage. So it is purely on the financial side and the budget release.
Um, to deliver value and insights to investigators detectives corporate compliance people. I mean, it feels saying, you ain't seen nothing yet and so um, that's probably more than I want to share right now. But it's it's, uh, it's going to play a big role, both internally and externally.
Marcus Jewell: I think there's one thing we're not going to do. We're not going to just put an LLM in front of our product and say we're an AI company. I mean, that is just a poor use of AI. I think people need to see through that. It is about using AI to deliver a better outcome, which has multiple threads, as Tom Hogan alluded to.
And by the way I will just reiterate the renewal rates in this segment remain extremely solid and strong so.
That'd be the first place if that were happening that'd be the first place you would see it as people would start to scale back or downsize downscale their commitments in <unk>.
Thomas E. Hogan: We are getting close to time. I know that there are a couple of people who have signaled in, so we want to be sensitive to try to get their questions in. We will extend the call for another few minutes. Operator, if you want to open the line to the next question.
<unk> seen none of that.
Operator: will go next to Tomer Zilberman with Bank of America. Your line is open, please go ahead.
We'll go next to Louie Dipalma with William Blair. Your line is open. Please go ahead.
I I think there's 1 thing we're not going to do we're not going to just put an llm in front of our product and say we're an AI company. I mean that is that is just a poor use of AI uh that is and I think people need to see through that it is about using AI to deliver a better outcome which has multiple threats of time and duty to you. So um you know we're getting close to time. Uh I know that there's a couple of people who've signaled in so we want to be sensitive to try to get their questions in. We'll extend the call for another few minutes and uh operator if you want to open the line to the next question.
We'll go next to tour, zilberman with Bank of America. Your line is open, please go ahead.
Okay.
Louis DePalma: Hey guys, I will echo similar sentiments from before. Tom, first of all, congrats on the recovery. Dana, thank you for your partnership for the last few years. David, looking forward to working with you. We are now in the third quarter of this weaker Fed discussion. I just want to ask, are you seeing any more degradation in the Fed environment as it pertains to what you mentioned earlier about regime changes, pausing on budgets? Are you seeing weakness or further weakness there, or is it just this constrained visibility that is giving you this incremental caution?
Adam Donna David market and Andy Good morning.
Tom Health and life is Paramount to congrats on the.
Favorable diagnosis and your appointment as CEO, and Donna and thoroughly enjoyable to work with you and congrats on the tremendous success.
Hey guys. Um, I'll Echo similar similar sentiments from before Tom, first of all, congrats on the recovery. Donna, uh, thank you for your partnership, uh, for the last few years and David looking forward to working with you.
um, we're now in the third quarter of, you know, this
<unk> that celebrate over the years and David Congrats on joining celebrate lots of congratulations.
For my for my question.
Just wanted.
Some more commentary on investors are focused on on the long term and I'm. Tom you discussed how you expect a resurgence in 2026 and I was just wondering if you could provide more elaboration on that okay.
Marcus Jewell: No, I mean, there's basically zero indication of weakness. As I said, our two drivers are the use of mobile technology and bad people doing bad things. Both tend to increase, so we don't see any detriment. In fact, we're more confident in our competitive position than we have been as we extend our technology advantage. So no, it is purely on the financial side and the budget releasing.
Weaker Fed discussion. I just want to ask, are you seeing any more degradation in the Fed environment as it pertains to what you mentioned earlier about, you know, regime changes? Uh, pausing on budgets, are you seeing weakness or further weakness there, or is it just, you know, this constrained visibility that's giving you this incremental caution?
Yes.
Well I mean, if you look at what those growth drivers are.
There is a list.
No. I mean, there's there's there's basically zero indication of weakness, as I said, you know, our our 2 drivers are the use of mobile technology and bad people. Doing bad things. Both both tend to increase, so we don't see any detriment. And in fact, we're, we're more confident in our competitive position than we have been as we extend our technology Advantage. So no, it is purely on the financial side and the budget releasing
Thomas E. Hogan: The renewal rates in this segment remain extremely solid and strong. That would be the first place, if that were happening, that would be the first place you would see it is people would start to scale back or downsize, downscale their commitments, and we have seen none of that.
We talked about Guardian.
Doubling year over year for the fourth straight quarter.
Pretty good I'd be great to get the entire portfolio portfolio, doubling but but the penetration of Guardian is still a fraction of the opportunity.
And so we've got a lot of runway and the pipeline, there, which I don't think we disclose but the pipeline and Guardian has.
And, and by the way, I will just reiterate the renewal rates in this segment, remain extremely solid and strong. So that'd be the first place if that were happening, that would be the first place you'd see. It is people would start to to scale back or downsize, downscale their commitments, and we've seen none of that.
Operator: We'll go next to Louis DePalma with William Blair. Your line is open, please go ahead.
Continues to explode in parallel with the year on year growth. So all indications are and by the way.
We'll go next to Lewes. De Palma with William, Blair, your line is open. Please go ahead.
Louis DePalma: Tom, Adam, Dana, David, Marcus, and Andy, good morning. Tom, health in life is paramount, so congrats on the favorable diagnosis and your appointment as CEO. Dana, it was thoroughly enjoyable to work with you, and congrats on the tremendous success that you have experienced at Cellebrite over the years. David, congrats on joining Cellebrite. Lots of congratulations. For my question, I just wanted some more commentary on investors are focused on the long term. Tom, you discussed how you expect a resurgence in 2026. I was just wondering if you could provide more elaboration upon that. Thanks.
Tom Adam. Donna, David Marcus and Andy good morning.
Capability perspective.
And value delivered and also more comparative data between Guardian and other options for repositories. All of those things are extremely positive and give us a lot of confidence and guardian continuing to be a growth contributor.
Tom's health and life are paramount. So, congrats on the!
We're targeting 50 I think the target we gave was 50% for insights. So that tells you that when we look to 2006, you still have half of our installed base and by the way the people that are converting.
Feedback has been extremely positive so the value prop, we're delivering with insights is resonating and so that is a.
<unk> built in growth driver for 2026, and the federal space, we've beat that to death, the only the only good news about having a tough year.
Thomas E. Hogan: Well, I mean, if you look at what those growth drivers are, there is a list. We talked about Guardian doubling year over year for the fourth straight quarter. That is pretty good. It would be great to get the entire portfolio doubling. But the penetration of Guardian is still a fraction of the opportunity. So we have got a lot of runway. The pipeline there, which I do not think we disclosed, but the pipeline in Guardian continues to explode in parallel with the year-on-year growth.
Congratulations. Um, but for for my, uh, for my, for my question, um, I just wanted, um, some more commentary on investors are focused on, on the long term. And, um, Tom, you discussed how you expect, a a Resurgence in in 2026. And I was just wondering if you could provide more elaboration upon that, thanks.
Yeah.
Your year to year is look a lot better than next year.
So.
As I said earlier.
It will turn and when it does it'll turn hard and strong.
Well, I mean, if you look at what those growth drivers are um um you know, there's a there's a list. Um, we talked about Guardian.
With all the capabilities that focus on DNI, but.
Global allocation of dollars to DNI, our Ato certification, which we expect to get in early 2026 that gives us a bunch of <unk> and the federal business.
And in the analytic piece that I, just touched on carillon, which which we think we're going to turbocharge that business based on.
Doubling year-over-year for the fourth straight quarter. Um, that's pretty good. So, it would be great to get the entire portfolio doubling, but the penetration of Guardian is still a fraction of the opportunity. Um, and so we've got a lot of runway and the pipeline there, which we, I don't think we disclose, but the pipeline in Guardian has.
Thomas E. Hogan: So all indications are, and by the way, from a capability perspective and value delivered, and also more comparative data between Guardian and other options for repositories, all those things are extremely positive and give us a lot of confidence in Guardian continuing to be a growth contributor. We are, you know, we are targeting 50%, I think the target we gave was 50% for Insights. So that tells you when we look to 2026, you still have half of our install base. By the way, the people that are converting, the feedback has been extremely positive. So the value prop we are delivering with Insights is resonating. So that is a built-in growth driver for 2026. The U.S. federal space, we have beat that to death. The only good news about having a tough year is your year-to-years look a lot better than next year.
Customer conversations we've had in the last.
Four to six weeks off people off the chain interest in that asset.
Continues to explode in parallel, with the year-on-year growth. So all indications are, and by the way, from a capability perspective,
So we're excited about what that can do for growth.
So theres a lot of lot of.
A lot of work to do we got to execute but there's a lot of.
Cause for optimism as we look to.
January in 2026.
I'd like to add we can we are now in the lead of the ability to analyze virtualized <unk> based system, which so it's worth counting up how many arm based systems and sensors are across the globe.
Um, and value delivered and also more comparative data between guardian and other options for repositories. All those things are extremely positive and give us. Um, a lot of confidence in Guardian, continuing to be a growth contributor, we're you know, we're targeting 50. I think the target we gave was 50% for insights. So that tells you when we look to 26, you still have half of our install base. And by the way, the people that are converting
It gives us a huge opportunity to do on some of our growth story.
Yes.
One last thing I will add is.
We've.
<unk> been working hard as a team since I stepped into the interim role in January on strategy.
Thomas E. Hogan: As I said earlier, we think it will turn, and when it does, it will turn hard and strong with all the capabilities, the focus on DI, the global allocation of dollars to DI, our ATO certification, which we expect to get in early 2026. That gives us a bunch of tailwinds in the U.S. federal business. The analytic piece that I just touched on, Corellium, which we think we are going to turbocharge that business based on just customer conversations we have had in the last four to six weeks, people off the chain interest in that asset. So we are excited about what that can do for growth. So there is a lot of work to do. We have got to execute, but there is a lot of cause for optimism as we look to January and 2026.
And our strategy is all about how do we better serve our mission globally.
And what can we do that's a logical significant expansion in our Tam.
And we're pretty fired up about the vision we have.
Obviously, not here to disclose any of that but in addition to everything you know in everything we just shared.
A bunch of new internally driven innovation from R&D.
We've got some interesting partnership conversations in flight in the market and we continue to scope the market for strategic and thoughtful M&A and those are all additive to the organic things I outlined.
The feedback has been extremely positive, so the value prop or delivering with insights is resonating. And so that is a, you know, is a built-in growth driver for 2026 and the federal space, we beat that to death. You know, the only the only good news about having a tough year, uh, is your year to years. Look, a lot better the next year and and and so um and as I said earlier, you know, we think it'll turn and when it does it'll turn hard and strong um with with all the capabilities the focus on dni the bud, the the global allocation of dollars to dni our atto certification which we expect to get an early 2026 that gives us a bunch of Tailwinds in the Federal Business um and and the analytic piece that I just touched on curium which which we think we're going to turbocharge that business based on just, you know,
Customer conversations. We've had in the last
This concludes the Q&A portion of today's call.
I would now like to turn the floor over to Andrew Kramer for additional or closing remarks. Thank.
Thank you very much Angela and thanks again to everybody for joining us today.
You know, 4 to 6 weeks, people are off the chain interest in that asset. Um so we're excited about what that can do for growth. Um, so you know, there's a lot of a lot of, you know, a lot of work to do, we got to execute but but there's a lot of
I appreciate your patience.
With.
The long call that we ran today, we look forward to engaging with you over the coming days weeks and throughout the quarter. So if you do have questions feel free to reach out directly to me. Thank you.
Cause for optimism as we look to, uh, you know, January in 2026.
Marcus Jewell: Yeah, I would like to add we can, we are now in the lead of the ability to analyze and virtualize any ARM-based system, which, it is worth counting up how many ARM-based systems and sensors are across the globe. It gives us a huge opportunity to add to our growth stock.
Thank you. This concludes today's celebrate second quarter 2025 financial results Conference call. Please.
Thomas E. Hogan: Yep. One last thing I will add is we have been working hard as a team since I stepped into the interim role in January on strategy. The strategy is all about how do we better serve our mission globally and what can we do that is a logical, significant expansion in our TAM. We are pretty fired up about the vision we have. Obviously, not here to disclose any of that. In addition to everything you know and everything we just shared, there is a bunch of new internally driven innovation from R&D. We have got some interesting partnership conversations in flight in the market, and we continue to scope the market for strategic and thoughtful M&A. Those are all additive to the organic things I outlined.
Yeah, I'd like to add we can we're we're now in the lead of the ability to analyze and virtualize any Arm based system, which um, so it's worth counting up how many Arm based systems and sensors are across the globe. Gives us a huge opportunity to to add to our Growth Store.
Yep.
Please disconnect. Your line at this time and have a wonderful day.
you know, 1 1, last thing I will add is
We've.
Been working hard as a team since I stepped into the interim role in January on strategy. And the strategy is all about how do we better serve our mission globally?
And what can we do? That's a logical significant expansion in our Tam.
And we're pretty fired up about the vision we have. Um, obviously not here to disclose any of that. But in addition to everything, you know, and everything we just shared.
There's a bunch of new internally driven Innovation from R&D. We we've got some interesting partnership conversations in Flight in the market and we continue to scope the market for strategic and thoughtful m&a, and those are all additive to the organic things I outlined.
Operator: This concludes the Q&A portion of today's call. I would now like to turn the floor over to Andrew Kramer for additional or closing remarks.
This, concludes the Q&A portion of today's call.
Thomas E. Hogan: Thank you very much, Angela. Thanks again to everybody for joining us today. Appreciate your patience with the long call that we ran today. We look forward to engaging with you over the coming days, weeks, and throughout the quarter. If you do have questions, feel free to reach out directly to me. Thank you.
I would now like to turn the floor over to Andrew Kramer for additional or closing remarks.
Thank you very much, Angela. Thanks again, to everybody for joining us today. Uh, appreciate your patience, uh, with, uh, the, the long, uh, call that we ran today. We look forward to engaging with you, uh, over the coming days weeks and throughout the quarter. So uh, if you do have questions, feel free to reach out directly to me. Thank you.
Operator: Thank you. This concludes today's Cellebrite Second Quarter 2025 Financial Results Conference Call. Please disconnect your line at this time and have a wonderful day.
Second quarter, 2025 financial results conference call.
Please disconnect your line at this time and have a wonderful day.