Cellebrite DI Ltd.

Good day and thank you for standing by. Welcome to the CELEBRATE Q122 earnings call. At this time all participants are in a listen-only mode. After the speaker's presentation there will be a question and answer session. To ask a question during the session you will need to press star 1 on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance please press star 0. I would now like to hand the conference over to your speaker today Please go ahead.

Thank you, Sandra. Welcome to Celebrite's first quarter 2022 financial results earnings call. Joining me today are Yossi Carmel, Celebrite's CEO, and Dana Gerner, Celebrite's CFO. This call is being recorded and a replay of the 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 gap to non-cap reconciliations, as well as supplemental financial information for the first 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 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 annual report on Form 20F filed with the SEC on March 29, 2022, as amended on April 14, 2022. 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 investors' website to access webcasts of our presentations at these conferences where applicable. With that, I'd like to turn the call over to Yossi Cormil, Celebrite's CEO.

Thank you, Anat, and thank you all for joining us. I would like to focus in this call on three main topics. First, our strong results for the quarter. Second, the healthy market environment. And third, the substantial growth potential we have within our existing customer base. Now, we are excited to report a strong start to the year, delivering strong growth on top of an already robust comparable quarter last year. We are pleased to report that ARR increased 33% year-on-year and reached $201 million, and revenue increased 17% and reached $62.4 million. This puts us on track to deliver on our targets for the full year and on our long-term growth objectives. Next, our successful execution was also reflected in a net retention rate of 128% as of the end of March. This is the 13th consecutive quarter with NRR higher than 120%, and we are very pleased with the strength of this metric. And moreover, during the quarter, we booked 18 deals larger than half a million dollars, compared with 17 such deals in Q1 2021, driven by wider adoption of our digital intelligence suite of solutions. Now, our performance reflects our position as a leading vendor in a growing and healthy market. Our growth is a result of two main pillars. The first is providing law enforcement agencies the broadest, deepest, and most innovative digital intelligence suite of solutions on the market. Our solutions provide digital evidence collection, review, investigative analytics, investigative management, and relevant services, addressing the entire value chain of digital investigations. The second pillar is our focus on significantly increasing our wallet share within our existing customers. Our go-to-market strategy is designed to leverage Cellebrite's leading market position and strong customer base. Cellebrite has been a driving force in the field of digital collection review market for many years, and it has always been focused on building a suite of solutions that addresses 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, case management, and services, opens vast opportunities in a very large market, and we believe that we have only scratched the surface of our opportunity in this market. Now, given our status as the go-to solution with thousands of law enforcement agencies globally, we believe we are strongly positioned to continue to provide faster, higher effectiveness and more accurate solutions for our broad customer base. Moving to the second topic on today's agenda, I would like to share our perspective on the market environment. Now, over the past few quarters, we have seen a healthy budget environment. This trend continued in the first quarter of 2022, and we expect this to be the case for the rest of 2022. There is a growing pressure on governments to increase police funding, to fight crime more effectively, and therefore to deal with the massive growth in digital evidence. A recent example is President Biden's 2023 proposed budget that includes support for law enforcement largely at or above 2022 levels. The willingness to spend in the USA our main market, reflects an acknowledgement that the fundamental demand drivers for our solution are continuous. Clearly, the quantity, variety, and complexity of digital evidence in investigations are all growing in our world and worldwide customer landscape. In addition, criminals are increasing their use of technology. For example, a few weeks ago, the FBI released its Internet Crime Report that reveals that the number of Internet crime complaints increased by a compounded annual growth rate of 29% over the past four years. Again, this backdrop, the investigation process must modernize and cannot remain as manual, siloed and inefficient as it is. An example that reinforced this necessity is the UK Channel 4 news investigation that revealed in late February 2022 that a total of over 21,000 devices, including mobile phones, tablets, and computers, are waiting to be examined in the UK alone. Now, moving to the third topic, let's talk about the substantial growth potential we have within our existing customer base. While some customers are more mature than others, essentially, all of them are still at the early stages of transforming and modernizing their investigative workflow. Let me now share with you a few examples from the first quarter. While many agencies continue to focus on adding advanced capabilities at centralized forensic lab sites, a rapidly growing number of forward-thinking agencies are investigating significantly to empower frontline officers in the field. Allowing earlier access to investigative data enables law enforcement to jumpstart investigations. The $2 million win that we announced in early April with the National Police Force in EMEA is an example of this type of expansion. The deal reflects one of the largest collection review enterprise deployments to date, connecting over 100 police stations nationwide. Another critical growth factor is modernizing the agency's mode of operation through the adoption of high-end investigative analytics and management solutions. In a deal reaching nearly $3 million, a national police force purchased from us multiple solutions, including investigative analytics to assist with major investigations in a division specializing in organized and drug-related crime. During the proof of concept, investigators achieved quick, actionable intelligence for their investigation. Within a matter of hours, they discovered not only what previously took them approximately six weeks, but also identify the new person involved in a murder case. And lastly, our domain expertise and scale of operation make our professional services, which we view as an integral part of our digital intelligence suite of solutions, an additional avenue to increase wallet share. In Q1, a large municipal police force engaged with us to help it overcome its digital device backlog through outsourcing advanced collection services at a scope of approximately $700,000. Now let's talk about what we do to ensure we continue to realize this massive growth potential and our progress on the plan for 2022 we articulated on our last call. First, we continue to invest in our go-to-market as planned in order to develop close and direct relationship with an even larger number of customers. To that end, we assign senior account executives to dozens of additional large customers. Now, this facilitates higher level of discussions with senior officers that have the mandate to implement digital transformation within the organizations. In addition, in Q1, we launch customer councils, which are forums comprising senior decision makers that we intend to convene periodically to exchange ideas on digital intelligence matters. Further, we believe this type of interaction will cement our thought leadership position in the market. We continue to invest in our offering in order to expand the suite of solutions and capture an even bigger share of the investigation-related spending. We highlighted on our last call the need to bring advanced access capabilities to the broader customer base, not just the large law enforcement agencies. As we speak, our team is at Technosecurity, one of the leading trade shows in our space, showcasing our premium as a service, our cloud-based collection review solution. This is a flexible licensing option that allows law enforcement agencies of all size to access our most cutting-edge technology through a cost-effective cloud-based solution. We are glad to bring our most advanced capabilities to more customers and help them protect and save lives. And last, we are pleased to announce the collaboration with Chainalysis, which will bring to our customers an integrated blockchain analysis, enriching investigations with information about transactions or networks related to cryptocurrency. Now, such partnerships helps us ensure that we offer a truly comprehensive digital intelligence suite and bolster our streamlined end-to-end investigative solution. And we intend to continue and pursue additional integration and cooperation opportunities in the future. So in summary, we are very pleased with the performance in our first quarter of 2022. Our market position is strong and the opportunities in front of us are vast. IDC recently validated our position as a market leader in its first ever market scape for digital forensics. The report is an acknowledgement that the digital forensic disciplines as part of the broader digital intelligence market, has reached a new level of maturity. And it is a testament for our leadership, cutting-edge technology and domain expertise. It also reflects the crucial and expanding role we play in safeguarding public safety around the world. And with that, I will turn the call to Dana.