Cellebrite DI Ltd.

Welcome to the Celebrite Third 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 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 so much, operator. Welcome, everybody, to Celebrite's third quarter 2025 financial results call. I'm joined today by Tom Hogan, Celebrite's CEO, David Barter, Celebrite's CFO, and Marcus Jewell, our CRO. 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 our prepared remarks. Please note, 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.celebrite.com. In addition to the press release, we posted a separate investor presentation that provides an overview of our business and our recent financial performance. I'd like to also remind everybody that the slides in your webcast viewer is a placeholder only. There are no actual slides to accompany our prepared remarks. We also publish supplemental historical financial information for each quarter of 2025 and for the past two years on our investor relations website. Additionally, unless stated otherwise, our discussions of the third 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 third quarter of 2024. In addition, I'd like to remind you that today's discussion will contain forward-looking statements, including but not limited to the company's business operations and financial performance. 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 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 18, 2025. The company does not undertake to update any forward-looking statements to reflect future events or circumstances. And with that being said, I'll now turn the call over to Tom.

Thanks, Andy, and thanks to all of you for joining us this afternoon. I'll be a bit briefer this quarter than I was last quarter, but I want to start by thanking the many of you that reached out with kindness and support after our last quarter's call. I'm pleased to share that not only do I remain cancer-free, I've resumed my mountaineering passion and climbed a significant peak last month, and the doctors tell me that I should plan to die of a heart attack in my late 80s, which I guess is a good thing, but gives me lots of runway to help propel this important company. So let's go. First, I'm proud of the job the team at Celebrite delivered in the third quarter. Our results were both solid and balanced. ARR grew 19% for the 12-month period. Subscription revenue grew 21%, led by strong performance in our U.S. state and local segment. and our Latin America region. Adjusted EBITDA exceeded expectations, growing 20% year on year with margin expansion of 60 basis points. We continue to tune our business to optimize top line growth while driving increased scale and operating efficiency to deliver meaningful levels of profitability and a very healthy free cash flow. Good companies grow. Good companies expand margins. Great companies do both, which is exactly what we did. We were also pleased with our third quarter performance in the U.S. federal segment. As we foreshadowed in our last call, we do not expect a full return to normalized growth until calendar 2026, but we did deliver year-to-year growth in the quarter, which included the expansion of several marquee clients and confirmation of our view that growth in this sector will resume as budgets are fully distributed. I think it's fair to say the flywheel in U.S. Federal has begun to move. I want to highlight some important metrics and milestones that contributed to the quarter and position Celebrite for continued growth and leadership. First, we finished Q3 with approximately 47 percent of our installed digital forensics license base converted to our Insights offering. As a refresh for everyone, we set a target at the beginning of 2025 of 50% conversions from a 2024 baseline of 20%. Our year-to-date progress clearly positions us to meet or exceed that target, and importantly, It's a strong proxy for the value of the industry's most complete suite of digital forensics. Second, we continue to see more customers turn to Celebrite's cloud and SaaS offerings to efficiently and securely manage their digital forensics and investigative workflows. ARR for our SaaS and cloud-based solutions grew three times faster than total ARR. Guardian is rapidly emerging as the industry standard for the storage and collaboration of sensitive, evidential artifacts. The number of Cellebrite customers using Guardian more than doubled year over year, while ARR grew triple digits at 100% plus for the fifth consecutive quarter. And this is all before we launched Guardian Investigate in the first quarter of next year. Third, our strategic focus on the global defense and intelligence sector is starting to pay dividends. In the third quarter, we continued to expand our business in the D&I sector as multiple global intelligence and military agencies increased their Cellebrite investment to support high priority use cases across anti-terrorism, border control, and overall military responsiveness and readiness. In particular, I'd highlight our D&I expansion in Europe over the past several quarters as an early proof point validating our intensified go-to-market focus. As we look ahead, we're centered on four core growth factors. First, we're focused on asserting our leadership and breadth in providing unlock and access solutions across the wide range of OEM phone providers and operating systems. Our unlock offerings are now attached to more than 45% of the Insights and Legacy Forensics install base, reflecting healthy quarterly expansion and sustained demand for this critical capability. Last quarter, we highlighted our clear leadership on Android phones. We extended that leadership this quarter with the addition of industry-first capabilities and even broader coverage across the Android universe. As we finish 2025, we are equally excited about our leadership opportunity in iOS with pending and added enhancements. We believe the choice will be clear for any customer looking for unlocked strengths across multiple platforms, combined with industry-leading capabilities for extraction, decryption, and decoding. Second, we are accelerating innovation in AI and digital investigations with the upcoming launch of Guardian Investigate. This new SaaS AI-powered solution is designed to transform the entire investigation lifecycle, enabling investigative teams to build stronger case narratives, collaborate seamlessly in a secure, unified workspace, and drive AI-enabled insights and analytics and workflow across a diverse set of data sources, including smartphones, computers, call detail records, open source intelligence, and case files. Guardian Investigate will launch in early 2026, and we couldn't be more excited. Guardian Investigate is the logical extension of our 20-year history of leadership in forensics. We are well positioned to empower hundreds of thousands of investigators, detectives, analysts, and prosecutors in their mission of prevention, exoneration, and prosecution. Third, we expect a resurgence of growth in calendar 2026 across the U.S. federal sector. After navigating spending headwinds and leadership changes throughout the first half, this segment returned to growth in the third quarter. We remain cautious on the federal fourth quarter given normal government seasonality combined with the shutdown the past six weeks, but we view both as transitory and believe the strategic spending we enjoyed in our third quarter are harbingers of a strong rebound in 2026. Our conviction in this segment is grounded in three areas. First, the release of targeted funding combined with pent-up 2025 demand should elevate investments in our unlock and insights solutions. Second, achieving FedRAMP authorization to operate with DOJ sponsorship in early 2026 should unlock a large opportunity for us to leverage our guardian offerings across U.S. federal agencies. And third, assuming Carilium is closed by year end, this asset has tremendous product fit across the US federal space. Our final growth factor is the pending close of Carilium, which we believe will expand both our TAM and our value proposition, particularly across global defense and intelligence agencies and the private sector. Carilium's ARM-based virtualization software is already enabling some of the world's most sophisticated D&I agencies to harden their cyber defenses by more efficiently and effectively identifying vulnerabilities across a broad range of digital devices. What has us super excited is the consistent surfacing of new and powerful use cases across both the private and the public sector. We're addressing CFIUS requirements real time and expect to complete our purchase of Carilium later this quarter. And as a reminder, our current results and guidance do not contemplate carillium results or performance. As we step back and consider the big picture, the macros remain strong. Crime and geopolitical risk is not going away, unfortunately. The application and sophistication of technology in the pursuit of crime grows weekly, and budgets for labor to protect public safety remain constrained at best. The deployment of advanced technologies like Celebrite remain the best path to make our nations, our communities, and our businesses safer. We're focused on sprinting through the tape over the next six weeks, but we couldn't be more enthusiastic about 2026 with the confluence of the release of several new value generating assets between the fourth quarter of this year and the first quarter of 2026. We'll reserve 2026 guidance for our February call and plan to remain prudent when it comes to setting expectations. Nevertheless, our confidence in the re-acceleration of our top line growth in 2026 builds every week along with our commitment to continued stewardship with respect to spending, margins, and free cash flow. That ongoing discipline not only delivered a third quarter beat on the bottom line, but also triggered a raise on our full year 2025 adjusted EBITDA target. And Dave will talk more about this in just a minute. Finally, I want to sincerely thank the roughly 1,250 strong Celebrite operatives, which are our people, and our customers who place huge trust in us every day. It's an honor and a privilege to serve all of you. I was excited about the prospects and the mission of this company when I joined as executive chairman in 2023. I can tell you with absolute conviction, I am more enthused about our future today than when I joined two and a half years ago. I believe the best is yet to come as we continue to innovate internally and tap much further and deeper into the enormous power and potential of AI complemented by disciplined and targeted acquisitions and strategic partnerships. We're confident the combination of strong execution with a growing and mission critical TAM will drive material value creation for our customers, our employees, and our shareholders. With that, I'll turn it over to Dave.