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    Cellebrite DI (CLBT)

    Q2 2024 Earnings Summary

    Reported on Mar 25, 2025 (Before Market Open)
    Pre-Earnings Price$13.94Last close (Aug 14, 2024)
    Post-Earnings Price$15.60Open (Aug 15, 2024)
    Price Change
    $1.66(+11.91%)
    • Cellebrite is experiencing strong ARR growth, raising the midpoint of their ARR guidance for 2024 to levels higher than their long-term target of 24%, indicating durable and profitable growth prospects.
    • The acquisition of CyTech and the creation of Cellebrite Federal Solutions enable direct engagement with U.S. federal agencies, with the potential to double the size of this segment—which already represents 19% of ARR with 21% growth—in the next 3 to 5 years, contributing significantly to future growth.
    • Cellebrite maintains a strong competitive position as the industry leader with an end-to-end platform, clear leadership in Android and iOS digital forensics, and limited competition in delivering credible end-to-end solutions, which reinforces their market position and growth potential.
    • Net Retention Rate (NRR) decreased slightly to 124%, potentially signaling a slowdown in expansion within the existing customer base.
    • While revenue guidance was raised significantly, the ARR guidance increase was more modest, suggesting that revenue growth may be driven more by non-recurring factors like multi-year deals or product mix rather than sustainable recurring revenue growth.
    • The benefits from heavy investments in sales personnel and the CyTech acquisition might take time to materialize, potentially impacting near-term profitability due to increased operating expenses without immediate revenue contribution.
    1. Inseyets Migration Progress
      Q: Is the 10% Inseyets migration goal dollar-based or customer-based? Is the 20-25% price uplift being realized?
      A: The migration goal is based on both dollars and number of licenses. We are exceeding our 2024 upgrade targets by 60%, now expecting 15% of our installed base to upgrade to Inseyets during 2024. The 20-25% price uplift is being successfully realized when customers upgrade, validating the value proposition of Inseyets.

    2. Federal Government Traction
      Q: How are we measuring the success of the Cellebrite Federal Solutions investment?
      A: The federal sector represented 19% of our ARR in 2023, with growth of 21%. The acquisition of CyTech and creation of Cellebrite Federal Solutions allows us to engage directly with federal agencies earlier, driving meaningful deployments. We expect this segment could potentially double in size over the next 3 to 5 years.

    3. AI Initiatives Impact
      Q: How will AI impact product introductions and revenue over the next year or two?
      A: Customers highly value our AI capabilities, enhancing speed, efficiency, and effectiveness. We plan to advance AI innovation across our entire C2C platform, focusing on media analysis, text analytics, and cybercrime investigation, including cryptocurrency. This investment will drive product enhancements and revenue uplift across our portfolio.

    4. Margin Outlook
      Q: Are there any major margin headwinds or dilutive acquisitions that could impact the long-term margin profile?
      A: We are pleased with our performance and have raised our full-year EBITDA guidance by 23%. At this stage, we are not changing our long-term model. We will revisit and update our outlook, if necessary, early next year. No significant margin headwinds or dilutive acquisitions are currently anticipated.

    5. Net Retention Rate Trend
      Q: NRR ticked down slightly; what's driving this, and how should we think about it going forward?
      A: Our NRR of 124% supports our long-term growth. NRR is usually 2 points below ARR growth. We are pleased with our business trajectory and have added quota carriers in the first half, which we expect to contribute further in the second half and into 2025.

    6. Increasing Multi-Year Commitments
      Q: Are multi-year commitments from customers a new trend, and will it persist with Inseyets migration?
      A: Historically, 25-30% of contracts were multi-year, mainly outside the Americas. We are seeing an uptick in multi-year deals across all regions as customers migrate to Inseyets. This trend secures our stickiness and long-term commitments, especially with strategic and federal accounts.

    7. Competitive Landscape
      Q: How is the competitive landscape, specifically regarding Magnet Forensics?
      A: We have seen no material changes in the competitive landscape this quarter. Our end-to-end portfolio and leadership in Android and iOS positions us strongly. Competitors are emulating our platform orientation, affirming our market leadership.

    8. Relativity Partnership Impact
      Q: What are the economics of the Relativity partnership, and how much customer overlap is there?
      A: The partnership has substantial potential to increase ARR. By combining our mobile capabilities with Relativity's leading eDiscovery platform, we can reach a larger installed base in the Enterprise Solutions segment. We are in the early stages and believe it will help us meet our private sector targets for 2024 and beyond.

    9. Sales Investment Contribution
      Q: Are new sales reps scaling faster than expected, contributing to guidance raise?
      A: We are following our plans, investing heavily in EMEA and Americas sales organizations. New quota carriers take time to contribute fully, and we expect them to start bearing fruit in Q3, Q4, and into 2025.

    10. Revenue vs ARR Guidance Difference
      Q: Why is revenue guidance raised more than ARR guidance?
      A: The improved revenue is due to product mix, with more on-premises products and multi-year deals in the first half than expected. ARR growth is in line with our expectations and supports our long-term growth.

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