Cellebrite DI Ltd.

Good day and thank you for standing by. Welcome to the Celebrite Q2 2022 earnings call. At this time, all participants are in a listen-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 TAR 1-1 on your telephone. You will then hear an automated message advising your hand is raised. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Danette Aaron-Halborn. Please go ahead.

Thank you. Welcome to Celebrite Second Quarter 2022 Financial Results Earnings Call. Joining me today are Yossi Carmel, Celebrite CEO, and Dana Gerner, Celebrite CFO. This call is being recorded and a replay of this recording, as well as 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 second quarter, are available on the Investor Relations website at investors.celebrite.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 annual report on Form 20-F 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. With that, I'd like to turn the call over to Yossi Cormil, Celebrite CEO.

Thank you, Anat, and thank you all for joining us today. I would like to start the call today by sharing that we continue to see healthy business environments for digital intelligence solutions across our core markets. I'm pleased to share with you that in Q2, our ARR grew 35% year-on-year, to reach $214 million. Total revenue in the second quarter was up 6% to reach $62.6 million. Our net retention rate for the quarter came in at 128%. This represents the 14th consecutive quarter that we've delivered NRR of greater than 120% as we continue to expand wallet share within our target accounts, mainly in the public sector. Additionally, we closed 29 large divs in a quarter compared to 18 in the first quarter of this year. I would like to spend some time today first going through what we are seeing in our market and the go-to market, then update some dynamics we saw in the second quarter, and lastly, outlining our expectations for the second half of the year. So we'll start with perspective on the market environment and impact to Q2 results. Now, while we are operating in a healthy environment, there are several factors that impacted our result in Q2. First, in Q2, we saw some longer sales cycles for some of our strategic customers that impacted our ability to close some larger deals in the timeframe anticipated. The positive aspect of it is that we've built a robust pipeline that is increasingly focused on large deals. This is part of our growth strategy. and it provides an exposure to large budgets within our accounts. An important distinction here is that the vast majority of the delays we are seeing are no deals going away or lost pipeline. In fact, some deals have already closed with the majority expected to close in the third quarter. In addition, we are moving successfully and faster than planned from perpetual to subscription new deals. However, as a result, our revenue for the quarter was lower than we planned. This had a short-term impact on the top and bottom line, but supports a healthy longer-term business. And third, we also faced some hiring issues in our go-to-market organization, which have been properly addressed. So short update on macro business environment and on go-to-market strategy. In the U.S., that's our main largest market. We continue to see federal funds going to law enforcement as well as state and local governments to support safety. Additionally, we generally see similar budget environments in Europe and in Asia-Pacific, where spend on safety remains a top priority. Our primary market, the USA, is a prime example of not only the willingness to spend, but increasing pressure on governments to more effectively address and fight crime. These initiatives cannot be successful without addressing the massive growth in digital evidence by leveraging a solution like ours to modernize the investigative process. Our technology enables law enforcement to solve more crimes ranging from child trafficking to homicide by dramatically decreasing the time to evidence for investigators and analysts. And in addition, our domain expertise and scale of operation are critical to the effectiveness of our solutions. As far as technology, We are pleased with our ability to innovate and expand our offering both within and outside collection review. Premium as a Service is an important recent offering as it enables a much larger customer base to benefit from our advanced capabilities by lowering the total cost of ownership for the agencies and we are seeing strong tractions since it was released to the market earlier this year. We also recently released Physical Analyzer Ultra the next generation of our review solution, which today represents the de facto industry standards for the digital data examination. Aside from its ability to process higher volume of data, the new release also advanced physical analyzer toward an enterprise architecture, a crucial milestone as investigative centers around the globe continue to accelerate their digital transformation journeys. Shortly about our go-to-market strategy, Our focus remains on significantly increasing our wallet share within our existing customers. We continue to deliver strong growth and best-in-class in our hours by selling more solutions and expanding into more buying centers or user groups within our existing customers. I would like to take you through a few examples. The first is an investigative analytics deal. We closed a sale of over 800K within an existing customer, a European state police force. This is the first expansion of this customer outside of our collect and review offering. Key success factors for this win were our ability to address their customers' specific requirements with a tailored solution for their needs, including better results from extracting and analyzing mobile-derived data, better performance in text and image analytics, and fastest enablement to find the critical evidence quicker. Another exciting wallet share increase through our broader offering is our largest Guardian contract to date. This win was part of a larger seven-figure deal. The investigative management portion included 500 Guardian licenses to be used across this major U.S. Metropolitan Police Department. This was a competitive situation in which Guardian stood out with its superior cloud functionality and its compatibility with our collection review solutions. our solution fulfilled the need for an evidence management solution that would meet reporting and chain of custody requirements as a cloud-based system that could scale for the organization needs. The third and last example is our very early access with premium as a service, which only became available in late Q2 and immediately saw a seven-figure multi-year win with the U.S. State Police Force. Now, this win will bring our advanced collect and review capabilities to approximately 20 field units and is a significant upsell from this customer's previous spending with us. I would like to add that during the first half, we'll continue to transition our go-to-market organization to take the dual role of supporting larger strategic opportunities in combination with our classical velocity business. We believe that this transition will be completed by the end of the year. As for our 2022 plan and outlook, as you saw in the press release we issued today, we've made the strategic decision to recalibrate our expectation for the second half of the year to a level that reflects the internal initiatives we are undertaking to position Celebrite for durable growth and continued innovation in the digital intelligence market. We believe that the trends that we have seen in the first half will continue in the second half. We therefore expect a healthy growth of ARR exceeding 30% in the foreseeable future, while revenue and bottom line may be impacted for the short term. So before I turn the call over to Dana, our CFO, I would like to emphasize the excitement I have for the opportunity that remains in front of Cellebrite. As we look at our broad product portfolio of industry-leading technology across our core markets, I think Cellebrite represents one of the best pure play opportunities to invest in public safety and digital intelligence. This, in turn, supports public safety and saves lives in communities worldwide. At the end of the day, we could not be more excited about our positioning due to our technology, customers, and market penetration, and look forward to updating you on our growth to come. And with that, I will turn the call to Dana.

Thank you, Yossi. As Yossi mentioned earlier, ARR grew 35% year-on-year, reaching $214 million by the end of June 2022. As we continued to move customers to a subscription model from our traditional perpetual licensing model, we saw incremental ARR growth in the quarter, reflective of our transition efforts. The variance between our revenue and ARR growth was driven by two factors. One, we experienced better-than-expected adoption of new business sales in a subscription model and made significant progress in this area during the quarter. Two, because the quarter was very back-end loaded, high proportions of our wins that are included in ARR have very small percentage of revenue recognized in the second quarter. Subscription licenses also continue to be an important growth driver for Cetebrite, as it helps create a long-term incentive to increase customer spending with us. Revenue for the second quarter was up 6% from the second quarter of last year and reached $62.5 million, while subscription revenues were up 20% and continue to be a primary driver of total revenue. I would note that our transition from perpetual to subscription has been quite successful with more than 98% of our software revenue is now subscription. Total subscription represents 80% of the quarter's total revenue in comparison to 70% in the second quarter of last year. We saw strong performance in professional services revenue, which was up 16% compared to a strong Q2 last year, as in-person training activities resumed to pre-COVID levels in most countries. Supporting growth in professional services remains important to us as it helps drive larger deals and retention. Our GAAP growth margin was 79% in Q2 as compared to 83% from the second quarter of last year. That is mainly a result of introducing, in the cost of goods sold, expenses related to our SaaS and cloud solution infrastructure and hosting services, a business which is still in the early stages. Moving to operating expenses, I will discuss this on a non-GAAP basis. So the share-based compensation, amortization of intangible assets, acquisitions-related expenses, and one-time expenses are all excluded. Non-GAAP operating expenses were $50.8 million in the quarter. Similar to last quarter, although expenses increased significantly compared to last year, they only grew marginally on a sequential basis. The year-on-year growth reflects our cost structure as a public company, resumption of in-person activities, the operational costs associated with adding SAS and OSINT offering to our development efforts, and our ability to execute on hiring. Adjusted EBITDA in the quarter was $0.7 million, or 1% on a margin basis. Our Q2 adjusted EBITDA results are reflective of our continued investment in headcount to capture the large growth opportunity, celebrate seats at the fell front of, as well as maintaining our technical leadership. Looking at the remainder of the year, we are focused on optimizing our stand for efficiency while supporting our go-to-market efforts and ongoing commitment to product innovation. This includes prioritizing hiring key positions and investing in areas that will help us achieve our goals in the near and long term by responsibly managing to profitability. We ended the month of June with 969 employees, up 18% from the end of June last year, and we expect to end the year with over 1,000 employees. Non-GAAP net income in Q2 was $0.2 million, and non-GAAP fully diluted EPS was break even, Operating cash outflow in the second quarter was $4.1 million, and in the last 12 months, we generated $7.1 million of cash inflow. We ended June with approximately $165 million of cash, cash equivalents, and investments. Turning to guidance. As Yossi mentioned, we have made the decision to update our fiscal year 2022 guidance. We now expect the December 2022 ARR will range between $245 and $206 million. We expect full-year 2022 revenue to range between $270 and $285 million. We expect gross margins to be between 80% to 82%, and we now expect adjusted EBITDA in the range between $20 to $27 million. As we enter the second half of the year, which has traditionally been stronger than the first half, we remain confident in overall market demand and our ability to execute on these targets. Cetabright remains well positioned to capture the demand for modern digital intelligence solutions, and we see long runway for growth within our business. With that, I will turn the call to the operator to open the Q&A session.

As a reminder, to ask a question, you will need to press star one one on your telephone. Again, that is star 1-1 on your telephone. You will then hear an automated message advising your hand is raised. Please stand by while we'll compile the Q&A roster. Our first question comes from the line of Mike Sikos from Neuterman Company. Your line is now open.

Thank you. Thanks for taking the questions here. I did want to circle up on the commentary that you guys had about some of these longer sales cycles. And I just wanted to get some more color there. Can you help us think about when you started seeing those lengthening sales cycles? And has there been any change even within 2Q as far as going from April to May to June? Did the cycles extend or did you see that lengthening take place throughout the quarter? And what is the customer behavior been like in July and now in the first couple of weeks of August?

Thank you for the question. I'll start with saying that the fact that we are going into larger accounts, having a dedicated focus on strategic accounts and penetrating and entering more buying centers in Collect and beyond Collect and Review, to the investigative area, to the analyst area, and to decision makers, enable us to grab opportunities for larger budgets based on the expanded offering. So the nature is that within time, we see a larger amount of such larger deals, which are normally, I would say, characterized by, if I call it, they are, first of all, large, I mean, seven, high-end, six, seven, and even eight digits. They are typical to strategic accounts. They include extended digital intelligence solutions with an enterprise impact and are normally multi-year deals. Now, as such, basically those processes involve decision-maker and it takes time and sometimes longer than anticipated in order to come to decisions. We had such deals already as updated in 2021. We had also such deals in Q1. And those deals that we spoke about that are, let's say, moving or not being closed in a timely manner, some of them are Q2, some of them started already in Q1. And Dana, maybe you would like to add on top of that?

Yeah, I think, Mike, and thank you for asking this question, is that with more large deals coming on board and with larger number or higher dollar value per deal, we are seeing a longer or high level approval, level of requirements by our customers. That means that not always they are being closed in the timely manner that we used to have in the mid-size, I would say, large deals. Saying that, that we have seen very large deals coming really at the end of the quarter And as I said, we were heavily backed up with deals coming at the last minute, which not all of them had been signed within the quarter, and as such have not been reported. We are very confident because we are seeing some of them already closed in the first six weeks of July, but still ramping up with new large deals on board in our pipeline.

That's great. And if I could just build on that, right? So I want to be very specific to this question. When I think about longer sales cycles, we've heard about this from a number of different companies in our coverage universe. And so I'm trying to get a better sense. Are these longer sales cycles because your deals are getting bigger as you work with some of these larger, more strategic accounts? Or is there a higher level of requirements for some of these budgeting and programs because we're in a more difficult economic backdrop today?

It's the first one. I will basically eliminate the second one because we do not see any impact of political climate whatsoever. I have, by the way, to mention that we had two deals, specific two deals in Q2. which were delayed or let's say influenced by political climate, one by the way in North American federal area and one in one of the largest Western countries. But in general, I don't think that there is, I'm confident that there is no such a trend. It's basically more decision-making involved or more decision-makers, longer cycles, large budgets, and then approval processes that create basically a longer cycle.

Thank you for that. And if I could just squeeze one more in, I know that you guys spoke about some of these go-to-market issues, which have now been rectified. Can you help me understand, like, what was it that needed to be corrected and what are the steps that have been in place to remove that, whatever that issue or dynamic was?

So, Mike, I'll start and maybe Yossi will try to add then after. We spoke about the fact that we want to increase our go-to-market sales force in 22. We started working on it already late 21. We've seen a little bit higher than expected turnover, which does impact, especially with larger customers, some delays in the execution of the deals, not the disappearing of the deals or disappearing of the budget, which is very natural, I would say, in such environment. We are very well equipped already entering into Q3 with the headcount, especially on the strategic accounts level, to execute that. So this is one thing which we spoke about. The other thing is really the dual effort of serving both strategic and what we call, as we remember, long-term prime accounts, making sure that we have the right people in front of the right customer in this perspective. This is ongoing investment. Again, we feel that we are in a very strong position towards the second half of the year.

Maybe to add that obviously the employment market is challenging as a whole. Our sales force experienced, I would say, the same behavior, let's say, in average. In some of the group's situation, we're about 25 to 35% of new headcounts, which are on our part. As Dana said, we are basically mostly beyond that phenomena, so we close the gaps. And obviously onboarding to full scalability and execution maturity is in celebrate three to six months, especially when it comes to managing strategic accounts. So we have a well-structured onboarding process. And we believe that we've taken the necessary steps in this area to support the growth.

Thanks for that. And so I guess the implication is with some of that higher attrition that you guys saw in the second quarter, that you're probably a little bit behind where you wanted to be when thinking about the headcount. And I guess the follow-up would be that when you say that you've taken necessary action to rectify these issues, it's really a matter of you guys have taken steps to improve that retention or bring down that attrition that we saw on 2Q?

First of all, yes, and I would say that it's mostly behind us if I look at each one of the regions. And maybe to emphasize that it's a Q2 phenomenon, but obviously there is an impact in Q1, but in Q1 obviously you are not in a situation that you see mostly the impact of that when you look at April about the effect of the ability to bring the new business that you plan to bring. But to start again with Ian, it's behind us and we are well equipped.

Thank you for that. I'll turn it over to my colleagues.

And your next question We'll come from the line of Jonathan Ho from William Blair. Your line is now open.

Hello. Good morning. I just wanted to maybe start out with trying to understand the magnitude of the deals that have subsequently closed. And just what was the impact from those delays? Can you just quantify for us what the revenue impact was, what the impact to deferred was, and how to think about... Yeah, I guess I'll start there.

I think we spoke about three main drivers, and I would say each of them had the same portion on the delays, whether it's the fact that we have sold much lesser perpetual deals, which of course comes with an immediate revenue recognition. The other one was with the fact that we have sold some slippage of deals. And the third one, as we mentioned as well, uh was um sorry uh with the longer sales cycle so all in all i would say that each and every one of them contributed to a third of our delay uh in the revenue impact compared to how we plan to finish the quarter got it and then you know with the the reduction in guidance you know like

I guess I'm a little bit surprised to see the magnitude of the reduction given that you subsequently closed these deals. Can you maybe again help us understand with the guidance reduction how much is coming from each of these factors or other factors and why the continued reduction if you've subsequently closed these deals?

I think an important part of it is actually the faster than we expected a reduction in a perpetual business. We've done a certain dollar amount of perpetual in this year's sales and revenue, which is currently at less than 50% of what we expected. And as I said, this does not impact the ARR, but it does impact immediately the revenue portion. So we assume that the trend that we've seen in half one will also continue in half two. compared to our original thought about the transition pace, I would say. And then every deal which is coming later in a subscription model does impact the revenue for the entire year, right? So we assume that we will see, with the increase in number of large deals, we will see continuous delays in closing to our original plans. So may I say... Maybe around half of it from the perpetual business and the rest from the sales cycle.

Got it, got it. And then just one last one for me. I guess I'm just trying to understand also, was there a specific type of product that was more in these delays? Was it sort of the newer products that were there? Was it product bundling? Can you just help us understand maybe the nature of some of the delays that took place and whether it was a specific product, specific region of the world, just something that gives us a little bit more color on what happened there?

Yeah, I think actually the good things about this slippage is the fact that these are deals which are large in nature, enterprise in nature, involved a more sophisticated DI solution, so not only collect and review, but may include also our investigative management solutions, or our investigative analytics solutions, or OSINT solutions. So, the slippage may be that we have even closed the deal, but we didn't have into, get into, turn it into revenue by concluding the installation and operation of those systems. So some of the deals actually closed in the quarter and their fulfillment slipped into the next quarter.

And Jonathan, to your question, we've seen it a little bit more in Europe than in the Americas.

Correct.

Thank you. Your next question comes from the line up .

Your line is now open.

Thank you. Good afternoon, guys. Yossi or Dana, so Sunrise Business is driven predominantly by upsells, expansion with your existing customer base. My question is actually, did you have any new logos this quarter? And I have a follow-up.

So first of all, again, just to emphasize on the strategic part, Those large customers which are about to execute and expand and where we see more wallet share with the entire digital intelligence suite of solutions, we are not looking for new logos, but we definitely had new buying centers within the same logo. Like I mentioned in one of my examples, that 800K deal that was executed with the European customer It was beyond collection review. It was investigative analytics. That was a different department, different units, so on. And when it comes to the long-tail prime, we have a dedicated target which is related to new logos, even net new logos, and we got basically an additional amount of net new logos. Dana, can you?

Around 130, 150 new logos on the long-tail customers.

Understood, thank you for this color. And my follow-up, I know that you mentioned also in the prior response to Jonathan on EMEA. EMEA was the only territory that declined from a year-on-year perspective. Was there any specific country that might have stood out, or was it pretty much broad-based? Because it is coming, and again, I know that this is a DI business rather than a pure cyber play but most other cases many companies reporting that are actually reported you know solid performance in Europe so just just want to find out if it was like a country specific or maybe kind of maybe more of a broad-based phenomenon first of all I will start with the fact that it's a one not country-specific most of our business even in Europe is done in the

let's call it the Western side, okay? We are, it's business with entities in Italy, in Spain, in the UK, in Germany, in France, Scandinavia, and we mentioned the fact that we had that fluctuation within existing employees in Q1 and the later hiring, which happened in Q2, by the way, especially over there, we are completely well-equipped. So one phenomenon was over there in terms of the teams which worked on that, let's say the West European countries, and it is not one specific country. Dana, what would you like to add?

I think also the abortion, I would say, of the perpetual model in EMEA, which was very dominant in... ...the social revenue...

And in principle, this is what we are seeing there. Also, as I said before, the language was in the EMEA region. Got it. Thank you.

And your next question comes from the line of Jamie Shelton from Joy Shoot Bank. Your line is now open.

Hi, guys. Can you hear me okay? Yes, so far so good. So apologies if I cut up. My signal's playing up a little bit. I just wanted to double click. You said three kind of factors that took place, the kind of transition away from perpetual slippage of deals and longer sales cycles. Now, the perpetual transition, well understood. The longer sales cycle, well understood. I just want to double-click. Slippage of deals. Are you talking about because of the kind of distractions you've had in your headcount and go-to-market, the slippage of deals associated with that attrition? Am I correct in thinking that?

I would say that the slippage of deals, Jamie, is related really to what I mentioned beforehand. about the fact that we closed the deal, but from revenue recognition, we want to only recognize it in a Q3 because of installation and acceptance of systems. Because these are larger deals, more complex, and the time from closing to recognizing is slightly longer than the regular revolving business.

But apologies if I'm being stupid. Isn't that the same point as longer sales cycles? These deals are taking longer to close. When they do close, there's that degree of slippage or they're still in the negotiation stage. Specifically, the kind of revenue headwind from your headcount attrition. Can you quantify that?

Well, first, I cannot classify you as stupid, Jamie, you know. But I think the difference is that the normal sales cycle is about actually signing off the deal, so closing the deal in a way that is a committed deal from the customer to us. And that actually attributes, again, to the larger the deal is, the more approval processes is required within the customer's

takes a little bit longer and as we said before we did connect it a little bit to the go-to-market challenges we had uh with having the right people at the right place to help drive it to closure understood thanks just one more on this kind of guidance and um i mean your points are well understood but if we just take a step back what gives you guys confidence that in 90 days from now you don't have to lower again I appreciate everything that you're saying and it's all well understood, but just to give us an investor's confidence, do you see this as the guidance as now kind of easy achievable or still risk to kind of further cuts? Thanks.

We did not try to build into the guidance an aggressive model. We took our regular seasonality model which you can see over here in the past few years of how much of the business we are generating in half one and how much of the business is being generated in half two, and actually introduced it into our revised guidance because we believe this is the most confident way that we can have in the business. We did not inspire it to be more than that at this stage. So this gives us a lot of confidence in our ability to execute.

um okay maybe there is no need to add but i just want to make it very clear that uh we have confidence in our new gardens and we believe the interceptor level basically to execute it uh beyond what uh dana said about um first of all there is a pipeline coverage if i look at um the h2 is in line not only with our historicals but also uh is very robust in order to meet that new updated guidance. Also, take into consideration that in Q2, we brought those two, three new solutions where premium of the service in collect and review and the physical analyzer Ultra, which is an upgrade of RPA and with a range of premium offering that we're bringing to the market. We have basically all what is needed in order to basically have that confidence in our ability to meet the guidance.

And just one last one from me. Speaking on the premium enterprise, you guys have provided some really helpful color over the last couple of quarters of kind of momentum there. If it's not quantitative, just anecdotally, how is momentum getting your existing UFED base onto premium enterprise? if you can provide kind of a percentage of that existing base or how you expect that to trend, that'd be great. Cheers.

So we are very, very excited with the adoption of the premium enterprise. We see the number of endpoints and number of users that are actually enjoying the best of class capabilities that the premium enterprise are bringing. And it is exceeded in a way what we expected for the first half of the year. So we see it as a very important driver of growth of the company. Of course, coupled with the premium .

Thank you, guys.

And your next question comes from the line of We'll read the comment from William Blair. Your line is now open.

Yossi, Dana, and Anat, good afternoon.

Good afternoon.

Yossi and Dana, you discussed revenue pressure from the shift from perpetual licenses to the subscription model. How much longer should this shift continue? And when should perpetual licenses revenue hit a bottom and general stability?

So I would say, Louis, and this is very high level, right? Because in the end, it really depends on how the customer had built their budget. We had a certain assumption of reducing our perpetual business at about 50% year over year. We see a faster decline. We assume this will continue, and we always said that it will take us two years to get to a certain situation where the perpetual is only minor or for total business. It seems that it's happening faster than we expected.

Great. And for Yossi, you mentioned that you have robust pipeline coverage in the second half. And currently the low end of your guidance implies a pretty strong 17% increase in revenue in the second half of the year compared with the first half. And I was wondering, does the guidance assume further deal delays and does it take into account this new timing in terms of closing the more complicated deals involving lots of products or are you assuming that um the close rate for your deals resembles like what took place in in 2021 when conditions were more healthy first of all uh you know what i would like to um start with with uh the final word of your sentence were the conditions more healthy i would like to emphasize that uh again look at our arr

And I would say that the conditions in the market are healthy as they were and as we basically originally anticipated. One needs to distinguish between that timing gap and the fact that we are not losing deals and that the budgets are there. Second, Louis, if I look at the trend and basically, you know, we have seasonality. in the way we look at our business. H1 is normally 42, let's call it 42 to 45, and if I look at a ratio which is relatively modest of 45% in H1 and 55 normally would do a little better. When you look at the midpoint, basically you see that it's pretty much in the range and it's reasonable. If you look at the revenue and you look at the ARR in the mid-range, we are at the right spot, so to say.

Sounds good.

Thanks for the color. And I know you highlighted certain wins for Guardian, and Dana just discussed how premium enterprise Sounds good. Thanks for the color. And I know you highlighted certain wins for Guardian and Dana just discussed how premium enterprise has gained a ton of traction in the market and potential. But can you provide any commentary on how like Pathfinder and your enterprise endpoint inspector have experienced in terms of adoption?

In terms of the Pathfinder, I would say that, let's say that, first of all, market is healthy. And we are, I would say, very pleased with the growing pipeline of the investigative analytics, where the Pathfinder is the leading solutions over there. There is also customer satisfaction, which is coming from the value proposition, and also the product matureness that we've reached. On the other end, there is a long sales cycle here, which is involved, and customer education. Would you like to add? You were asking about Pathfinder, and then you were asking about something else, Louis. What was it? yeah the um the enterprise endpoint inspector okay i would say that first of all in um in general when it comes to the private sector we um let's put it this way um we and we are below our plan in general okay over there also we're missing some headcount but uh there is uh I would say also here a key capacity that we've refilled ever since. And the portfolio is there. I would say that when it comes to the endpoint inspector and, by the way, remote collection in general, the same cycle is longer. And the opportunity is still there, but we still basically would like and believe that we'll see the breakthrough, but it's not yet there.

Great. Thanks, everyone.

Thank you. Thank you.

And there are no further questions at the queue. I would now like to turn the conference back to Yossi Carmel.

Thank you very much. Thank you all for joining us and for the participation and for the very good questions.

And have a great day. Goodbye. Thank you. This concludes today's conference call. Thank you for your participation. You may now disconnect.