Cellebrite DI Ltd.

2021 Earnings Conference Call. At this time, all participants and all numbers are in only mode. After the speaker presentation, there will be a question and answer session. To ask a question during the session, you will need to press star one on your telephone. If you require any further assistance, please press star zero. I would like to hand the conference over to your speaker today, Ana Iran Hellborn, Vice President of Investor Relations. Please go ahead.

Ana Iran Hellborn Thank you, Victor. Welcome to Celebrite's fourth quarter and full year 2021 financial results earnings call. Joining me today are Yossi Cormil, Celebrite's CEO, and Dana Gerner, Celebrite's CFO. This call is being recorded, and a replay of this recording, as well as of the presentation that accompanies this call, will be made available on our website shortly after the call. A copy of today's press release and financial statements, including GAAP to non-GAAP reconciliations, as well as supplemental financial information for the fourth quarter, are available on the Investor Relations website at investors.celebrites.com. Statements made during this call that are not statements of historical fact constitute forward-looking statements. All forward-looking statements are subject to risks, uncertainties, and other factors that could cause matters expressed or implied by those forward-looking statements not to occur. They could also cause the actual results to differ materially from historical results and or from forecasts. Some of these forward-looking statements are discussed under the heading Risk Factors and elsewhere in the company's registration statement on Form F1 declared effective by the SEC on October 6, 2021. The company does not undertake to update any forward-looking statements to reflect future events or circumstances. Please note that in the coming weeks, management will participate in a number of investor conferences as detailed in today's press release. Please visit the events section of the investor's website to access webcasts of our presentations at these conferences where applicable. With that, I'd like to turn the call over to Yossi Cormier, Celebrite CEO. Yossi, please go ahead.

Thank you, Anak. And thank you all for joining our call. We are pleased to report that we closed the year with excellent fourth quarter results, and we are happy to share our outlook for 2022. We finished the year with strong Q4 results, delivering record revenue of $68 million and ARR of $187 million, and we ended the year with record bookings, record revenue, and record-adjusted EBITDA. The healthy market environment, coupled with our strong business fundamentals, enable us to increase our revenue forecast for 2022. Furthermore, these factors reinforce our confidence in the long-term growth model, which we shared with you during our going public process in 2021. Now, since this is our second call as a public company, I would like to use the opportunity and provide a brief overview of Celerbite before diving into the results. Celebrite customers are mostly law enforcement agencies, whether federal, state, or local, as well as private sector corporations. Our largest market is in the USA, followed by Europe. Our growth strategy is based on continued product innovation in the digital intelligence space, and based on building a world-class go-to-market focused organization. The context is as follows. For many years, we have been driving and leading the digital collection review business. Our solutions allow tens of thousands of police experts globally to quickly provide digital evidence collected mainly from mobile devices, computers, and the cloud, as well as other digital sources. Now, through our significant R&D investment in this space, we will continue to lead this sub-segment of the digital intelligence market. But Telebrite is also building a suite of solutions that address the needs of hundreds of thousands of investigators, prosecutors, and decision-makers in law enforcement agencies. This digital intelligence suite, which includes collection review, investigative analytics, digital evidence management systems, what we call DANs, case management and services, this DI suite opens vast opportunities in a very large marketplace. and we believe that we are at a very early stage of realizing this potential. We also continue to invest in a world-class enterprise sales organization, which enables us to dramatically increase our wallet share within our customers as we become increasingly strategic to their operations. The demand for our solutions is driven by a few key factors. First, growing crime rates in categories such as violent crimes and organized crimes, as well as homeland security threats. This increase in crime is coupled with an increase in the quantity, variety and complexity of digital evidence in investigations. On top of that, currently prevailing investigation practices are manual, siloed and inefficient, and as such are just unsustainable. And in addition, there is a growing pressure on governments to increase police funding to fight crime more effectively, and therefore to deal with a massive growth in digital evidence. Just as an example, in the USA, pandemic-related federal funding became widely available to law enforcement agencies, and in the UK, the upcoming budget year will see an increase of over £1 billion, or 7%, in policing funding. And in this context, let's view our Q4 business results. We are pleased to report a strong net retention rate of 137% for the end of December, which demonstrates our wallet share expansion. Let me share with you a few examples. The first is a 1.5 million US dollar deal, a three-year subscription deal with a large West European national police agency. The deal includes advanced collect and review capabilities in an enterprise solution that connects dozens of endpoints, and is expected to deliver nationwide benefits. This is an example of growth through the upsell of higher-grade solutions, as well as an expected higher lifetime value through the adoption of subscriptions. The second deal is a multi-million US dollars expansion with an Asia-Pacific-based government entity that includes collector review solutions, investigative analytics solutions, and extensive professional services. The value of this deal was over 11 million US dollars, and to date, the largest deal in Cellebrite history. In this case, we play a key role in planning and designing the investigative flow, and it is an example of the value becoming a customer's trusted advisor. The third is a large US state agency that formed a new narcotics unit following a sharp 20% increase in overdose death cases. In order to accelerate criminal investigations and reduce the flow of illegal narcotics, the unit implemented advanced collect and review solutions. We continue to work with this police force to further enhance their digital intelligence capabilities. And this is an example of growth through selling to additional buying centers within an existing customer. Last, regarding WalletShare, our success in WalletShare expansion is also reflected in the fact that through 2021, we booked 83 deals larger than half a million US dollars compared with 63 such deals in 2020. Now, moving to our offering. We believe that our digital intelligence end-to-end investigative platform is the best solution to address current and future public safety challenges. And in Q4, we continue to enhance the platform. First, we launched our cloud-based digital evidence management system designed to transform the investigative workflow. And second, we added open source intelligence via the acquisition of digital clues to help jumpstart investigations and extend our platform's reach to earlier stage of the case. These additions conclude a very active year from an innovation perspective for Celebrite. Just to remind you, earlier in 2021, we also achieved the following. We enabled mobile data collection on an agency-wide network-based solution. We also boosted our analytic solution with data ingestion from a broader range of sources, and we added remote computer mobile collection to the private sector. Now, let's look at our plans for 2022. We will continue to invest in our go-to market. in order to develop close and direct relationships with an even larger number of customers. We will focus our investment in our offerings on several key areas. First, bringing access capabilities to the broader customer base, specifically for smaller law enforcement agencies as well as the private sector. Second, broadening our cloud offering to allow public safety customers to enjoy scalability and efficiency. And third, further streamlining the investigative flows, allowing closer collaboration between examiners, analysts, investigators, agency managers, prosecutors, and defense teams. Now, before I conclude, I would also like to highlight our Ethics and Integrity Advisory Committee, which we formalized in Q3 2021, with an amazing group of outside experts in the social, legal, academic, and regulatory communities. Their bios are by the way, they can be found on our website. We are actually aware that our solutions are powerful and powerful enablers of digital intelligence and we are committed to working only with customers who use our solutions in a legal and in an ethical manner. Our board will work closely with this group on ethics and corporate integrity issues on an ongoing basis. So in summary, Our results for 2021 show that we have a strong growing business. We start 2022 excited, excited about the opportunity in front of us and we are confident in our ability to drive forward our position as a strategic partner to our customers. We intend to continue, be an undisputed leader of digital transformation in investigations and with that, to lead the growth of our market in the coming years. As a one-stop shop digital intelligence vendor, Cellebrite modernizes the investigative process, and we look forward to continue to help law enforcement and the justice system while delivering growth and profitability to our shareholders. Before I turn the call to Dana Gerner, our CFO, I would like to thank the entire Cellebrite team for the dedication and for the excellence throughout this exceptional year. Dana, please go ahead.