Cellebrite DI Ltd.

Welcome to the Celebrite First Quarter 2025 Financial Results Conference Call. At this time, all participants have been placed on a listen-only mode, and the floor will be open for questions following the presentation. If you would like to ask a question at that time, please press star 1 on your telephone keypad. If at any point your question has been answered, you may remove yourself from the queue by pressing star 2. So others can hear your questions clearly, we ask that you pick up your handset for best sound quality. Lastly, if you should require operator assistance, please press star zero. 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, Erica. Welcome, everybody, to Celebrate's first quarter 2025 financial results call. I'm joined here today at our U.S. headquarters outside of Washington, D.C., by our primary speakers, Tom Hogan, Celebrite's interim CEO, and Donna Gurner, Celebrite's CFO. Joining us in person is Marcus Jewell, our CRO, and Ronen Armand, our chief products and technology officer, is participating remotely. Marcus and Ronen will be available during Q&A. There's a slide presentation that accompanies our prepared remarks. Please advance the slides in the webcast viewer to follow our commentary. we'll call out the slide number we're referring to in our remarks. This call is being recorded, and a replay of the recording will be made available on our website shortly after the call, along with a copy of the prepared remarks. Starting on slide number two, a copy of today's press release and financial statements, including GAAP to non-GAAP reconciliations, the slide presentation, and the quarterly financial tables and supplemental historical financial information for each quarter of the past couple of years are available on the Investor Relations website at investors.celebrite.com. Also, unless stated otherwise, our discussion of our first quarter 2025 financial metrics, as well as the financial metrics provided in our outlook, will be done on a non-GAAP basis only, and all historical comparisons are with the first quarter of 2024. In addition, please note that statements made during this call that are not statements of historical facts constitute forward-looking statements All forward-looking statements are subject to risks and uncertainties and other factors that could cause matters expressed or implied by those forward-looking statements not to occur. They 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 18, 2025. The company does not undertake to update any forward-looking statements to reflect future events or circumstances. Slide number three provides the agenda of the topics we'll cover on today's call. And with that being said, I'll now turn the call over to Tom Hogan. Tom?

Thanks, Andy. Let's just jump right in. Cellbrite delivered strong 23% year-on-year AR growth in the first quarter. Consistent with our stewardship in managing both revenue and spend, we also delivered 34% year-on-year growth in our adjusted EBITDA, resulting in a 22% margin. The combination delivered a 45 rule of X in the quarter and 48 for the trailing 12 months, both within our committed range of balanced performance. We remained committed to growth as our priority, while dynamically tuning our spending to support our bottom line objectives. Overall, our value proposition continues to resonate in the market. Interest in our platform remains healthy, uptake on our insights solution continues to increase, and customers are realizing the brand promise of justice accelerated. Strength and overachievement in the U.S. state and local, LATAM, and the Asia Pacific regions were offset by modest shortfalls in the U.S. federal segment and our EMEA geography. The strength of our total performance was a byproduct of our global diversification and the range of our solutions across federal, state and local, defense, intelligence, and the private sector. Before adding further context to our federal business, I'll highlight two important barometers that continue to signal strength. First, we remain on track with our overall insights migration, which is a direct reflection of the value delivered with our core digital forensics offering. We finished the first quarter with over 30% of our install base converted, and we remain on track to hit our 2025 objective of a 50% conversion. Second, as we've shared, extending our value proposition to the critical cloud-based Guardian product as adoption of an interest in this purpose-built platform for collaboration and chain of custody continues to accelerate. We delivered our third consecutive quarter of year-over-year ARR growth of over 100%. The power of the Celebrite platform is also reflected in our pipeline, where transactions that involve two or more of our flagship solutions carry a disproportionate increase in average deal size, in many cases representing 10x the size of Insight standalone transactions. Now, let me add some perspective around our federal business. I first want to remind people that this business has produced a 25% CAGR in ARR over each of the past three years, and it represents roughly 17% of our 2024 revenue. Today, despite current volatility, our view is that the opportunities for future growth not only remain attractive, but have increased meaningfully over the past two quarters. This is a function of multiple current and emerging tailwinds, starting with the structural changes associated with the recent launch of our Celebrite Federal Solutions Unit and our ongoing investment to achieve FedRAMP authorization to operate. These actions are amplified by the emerging macros around the increased sophistication of technology used in the pursuit of crime, including AI, along with the increased alignment of our portfolio with the new administration's focus on securing our borders, mitigating the fentanyl epidemic and overall drug trafficking, reducing the heinous human trafficking industry, and finally improving the overall productivity of all government agencies. While the short-term federal environment remains choppy, our full year 2025 pipeline continues to expand. Our solutions are simply mission critical to safety and security across all levels of government and the spend related to the Celebrite solutions remains small relative to both our societal impact and overall department budgets. Dana will cover our second quarter guidance in detail, but I want to share in advance that while our outlook assumes that a continuation of the first quarter federal spending environment will persist into the second quarter, we see a clear opportunity to re-accelerate in the second half given the expanding pipeline and the traditionally strong seasonality of the third quarter in the U.S. government. In EMEA, We're equally bullish on our pipeline and interest and expect our investments in our go-to-market teams will deliver an acceleration in the region in the second half of 2025. Within the past 30 days, our entire board and our executive team have spent two full weeks in the UK region and Germany to clearly demonstrate the company's commitment to the region, and both visits were well received by customers by prospects, and by our team on the ground. Finally, I want to call out one segment in particular across the globe that has witnessed a material increase in opportunities, which is the intelligence and defense sector, which tracks with what I think we're all seeing in global geopolitics. This is a segment we're doubling down on from a messaging, positioning, and coverage perspective to ensure we meet demand and the opportunity. Before moving forward, I would reiterate that our U.S. state and local, Asia-Pac, and Latin America units delivered strong growth and continued momentum in the quarter. To summarize our first quarter performance before doing a quick click down on a few strategic milestones, I'd reiterate four things. Cellebrite continued to deliver robust year-over-year growth in ARR and revenue to support a rule of X performance in our target 45 to 50 range. Second, intelligence and defense needs combined with digitally enabled crime continue to escalate in both size and sophistication, thus driving increased demand. Third, Our bottom line grew faster than the top line at 34%, highlighting the operating leverage inherent in our business model and reflecting positively on our ongoing commitment to drive profitable growth. And fourth, traction with our insights migration and the strategic penetration of our Guardian and Pathfinder products remain strong and on track. Let me switch gears and talk about a couple of important milestones that were core to our business. First, a major go-to-market highlight occurred last month when we held our first ever user conference. This Washington DC event was sold out, attracting roughly 700 attendees from approximately 350 agencies and enterprises spanning 27 different countries. The energy, feedback, and collaboration with our customers was both palpable and motivating. We also launched our inaugural digital justice awards. The winners of the 2025 JustEase represented 10 categories, including the case of the year, and recognized law enforcement and intelligence officers for exceptional service in the pursuit of justice. Our 2025 user conference represented meaningful progress toward our goal of establishing the Justies and this summit as the premier customer event in digital investigations. We look forward to next year's award ceremony, along with a significant expansion in our 2026 summit attendance. From a product and portfolio perspective, we announced our new spring 2025 release on May the 6th. featuring our new cloud foundation and AI-powered innovations across the portfolio. The evolution of the Celebrite Cloud enables us to deliver a purpose-built user experience that scales investigative capabilities and accelerates decision-making across public safety, intelligence, and enterprise sectors. We continue to see strong adoption of our cloud-enabled offerings which are rapidly approaching 20% of our total ARR. At the same time, we delivered new AI-powered features and functionality aimed at elevating productivity and efficiency across our flagship offerings, while always keeping human expertise and engagement at its core. To better reflect the emerging importance of Celebrite to both the intelligence and defense segments, as well as our ongoing value in the private sector, the case to closure platform has been rebranded as the leading digital investigation platform. Finally, let me update you all on the status of our CEO search. Over the past four months, we've had the pleasure of meeting with a long list of eminently qualified candidates. We can't share those names for obvious reasons, and our interest in several of these candidates remains high. As we committed, we've been deliberate in this process to ensure we secure the right best leader. It's not just our shareholders, our employees, and our customers that deserve a world-class leader. Our belief is that safety of our world also depends on it. I want to also assure all of you that this company has not been in a holding pattern while this search has progressed. On the contrary, our board, our team of senior leaders, and I have moved with daily urgency, balancing the requisite focus on the present with an equally important eye on our future. As a result, we've elevated work on our strategic options, including, as you would expect, inorganic opportunities to expand our TAM and help fuel our long-term growth. As I've discussed in multiple forums over the past three months, I consider my current duties the professional privilege of my lifetime. While I've led organizations 100 times the size, I've never led a company that wakes up every morning dedicated to making our neighborhoods, cities, country, and institutions safer. I'm honored every day to partner with the men and the women at Celebrite and the dedicated and courageous customers we serve. My commitment to our board and our shareholders is to optimize value creation, enable the important mission of our customers, grow and reward our people, and usher in the next generation of leadership. Let's turn to slide six to conclude my remarks. We delivered solid first quarter top line growth while modestly expanding operating margins to outperform on the bottom line. We live in unusually turbulent times and the world needs the mission-critical IP we uniquely deliver. The tailwinds and malfeasance now exacerbated by the increased technological sophistication of bad operators provide a firm foundation for healthy global demand over the coming years. As the market leader and technology innovator in this space, we're committed to extending our capabilities in AI, cloud-related agility, and investigative case and evidential management. Our mission and our impact remain in the early innings as we bring the world's most advanced technologies to ensuring a better, safer world. The future remains incredibly bright for this company. With that, I'll turn the call over to Donna to provide further detail on our results and our outlook. Donna?