• Annual Recurring Revenue (ARR): Grew 25% year-over-year to $396 million.
• Free Cash Flow: $122 million for the full year 2024.
• Adjusted EBITDA Margin: 25% for the full year 2024.
• Revenue: $401.2 million for the full year 2024, a 23% increase from the previous year.
• Gross Margin: 85% for the full year 2024, up from 84.2% in 2023.
• Net Income: Non-GAAP net income of $97.8 million for 2024.
• Cash Position: Ended 2024 with $483.8 million in cash, cash equivalents, and investments.
• Operating Expenses: $65.1 million in Q4, a 13% year-over-year increase.
• Subscription Software Revenue: Increased by 26% for the full year 2024.
• Guardian ARR Growth: Triple-digit percentage growth year-over-year in the second half of 2024.
• Pathfinder ARR Growth: Year-on-year ARR expansion in the 35% to 50% range.
• Cloud-based ARR: Nearly doubled to 17% of total ARR in 2024.
• 2025 ARR Outlook: Expected to range from $480 million to $495 million, a 21% to 25% increase over 2024.
• 2025 Revenue Outlook: Expected to range from $480 million to $490 million, a 20% to 22% growth over 2024.
• 2025 Adjusted EBITDA Outlook: Expected to range from $113 million to $123 million, or 24% to 25% of total revenue.

• Warning! GuruFocus has detected 1 Warning Sign with CLBT.

Release Date: February 13, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Cellebrite DI Ltd (NASDAQ:CLBT) exceeded its original revenue and adjusted EBITDA targets for 2024, delivering at the higher end of ARR expectations.
• The company achieved a Rule of 50 performance with 25% ARR growth and 25% adjusted EBITDA margins.
• Cellebrite DI Ltd (NASDAQ:CLBT) generated $122 million in free cash flow in 2024, showcasing strong cash generation.
• The company reported significant growth in its Guardian and Pathfinder solutions, with Guardian ARR generating triple-digit percentage growth year-over-year.
• Cellebrite DI Ltd (NASDAQ:CLBT) achieved FedRAMP ready status, enhancing its potential to expand within the US federal sector.

Negative Points

• The CEO search is ongoing, with no specific timeline for the appointment of a new leader.
• There are modest headwinds due to geopolitical changes and regime disruptions in the US and Europe.
• The company faces challenges in expanding its customer base in certain countries, impacting growth retention rates.
• Cellebrite DI Ltd (NASDAQ:CLBT) anticipates a modest impact on Q1 2025 results due to decisions to exit certain countries.
• The magnitude of the EBITDA beat in Q4 2024 was lower than in previous quarters, with guidance for Q1 2025 in line with expectations.

Q & A Highlights

Q: Can you provide an update on the CEO search and any potential impacts of federal spending changes on Cellebrite? A: Thomas Hogan, Interim CEO, explained that the CEO search is ongoing with a focus on finding a world-class leader. The search firm initially considered over 150 candidates, narrowing it down to 30-50, with interviews conducted for at least a dozen. Regarding federal spending, Hogan noted modest headwinds due to regime changes but emphasized potential upside from new administration priorities, such as combating fentanyl trafficking and border control, which align with Cellebrite's capabilities.

Q: What are the main challenges your customers face, and how is Cellebrite addressing them? A: Marcus Jewell, Chief Revenue Officer, highlighted that 90% of cases now require digital assets for proof, leading to increased demand for efficiency tools. Cellebrite's solutions, such as Inseyets and Pathfinder, help expedite case closures by providing analytical platforms and lightweight products for field investigators.

Q: Can you quantify the impact of exiting specific countries and discuss the 30% unlock attach rate for Inseyets? A: Dana Gerner, CFO, stated that exiting certain countries had less than a 2% impact in 2024 and is expected to be less than 1% in 2025 and 2026. To drive higher unlock attach rates, Cellebrite offers a variety of Inseyets packages to cater to agencies of all sizes, encouraging adoption across the public sector.

Q: How is Cellebrite progressing with the migration to the C2C platform, and what initiatives are in place for 2025? A: Dana Gerner, CFO, and Marcus Jewell, CRO, discussed the importance of the C2C platform, which connects Inseyets, Guardian, and Pathfinder. Cellebrite is investing in specialist sales and running its own events to increase awareness and adoption, aiming to have 50% of the install base on Inseyets by the end of 2025.

Q: What is the opportunity for Cellebrite with FedRAMP certification, and how does it impact federal revenue? A: Thomas Hogan, Interim CEO, explained that achieving FedRAMP high-level certification could double Cellebrite's total addressable market (TAM) in the federal sector. Currently, federal accounts for about 20% of revenue, and FedRAMP certification will enable Cellebrite to participate in more programs, potentially accelerating growth in 2026.

Q: How is Cellebrite building out its sales motion for the investigative persona, and what is the current progress? A: Marcus Jewell, CRO, stated that Cellebrite is mid-innings in developing its sales strategy for the investigative unit. The company is investing in specialist sales and running its own events to engage with investigative units, aiming to refine its approach and achieve repeatable growth by 2026.

Q: What are the main alternatives to Guardian, and how does Cellebrite differentiate itself? A: Ronnen Armon, Chief Products & Technologies Officer, noted that while there are multiple storage solutions, Cellebrite offers a comprehensive digital investigation solution that includes data extraction, manipulation, analysis, and dissemination, tailored to meet the needs of digital investigations.

Q: How does the current federal disruption impact Cellebrite's revenue, and what percentage of revenue is from the US federal vertical? A: Dana Gerner, CFO, stated that the US federal government accounts for about 20% of revenue, primarily through subscription models. The current disruption mainly affects new business signings, not renewals, and Cellebrite expects continued healthy growth once stability returns.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.