Cellebrite DI Ltd. (CLBT) Q4 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call summary indicates strong financial performance with 19% ARR growth and optimistic guidance for 2026, including a significant TAM expansion through the Corellium acquisition. The Q&A section provides additional positive insights, such as strategic investments in AI and mobile forensics, and confidence in federal sector growth. However, there are minor concerns regarding cost impacts from acquisitions and FX headwinds. Considering the company's market cap, the overall sentiment is positive, with expected stock price movement in the 2% to 8% range over the next two weeks.
Key Financial Performance
ARR (Annual Recurring Revenue) ARR grew 21% to $481 million in 2025, including Corellium's contribution of $16.1 million. Excluding Corellium, ARR grew 17% year-over-year. Growth was driven by expansion across major geographies and flagship offerings.
Revenue Revenue grew 18% in Q4 to $128.8 million and 19% for the full year to $475.7 million. Growth was primarily driven by software solutions, which accounted for 90% of total revenue.
Free Cash Flow Free cash flow for 2025 was $160 million, representing a 34% margin and a 30% year-over-year increase from $124 million in 2024. Growth was attributed to ongoing spend discipline and strong operational performance.
Gross Margin Gross margin for Q4 was 86%, and for the full year, it was 85%. This reflects strong profitability from software solutions.
Adjusted EBITDA Adjusted EBITDA for Q4 was $38.3 million, a 33% increase year-over-year, with a margin of 29.8%. For the full year, adjusted EBITDA was $127.6 million, representing a 26.8% margin. Growth was supported by balanced investments and operational efficiency.
Geographical ARR Growth The Americas grew 19%, EMEA grew 24%, and Asia Pacific grew 23%. Growth was led by U.S. state and local government and Latin America teams in the Americas.
SaaS and Cloud ARR ARR for SaaS and cloud offerings grew over 50% and now represents 22% of total ARR. Guardian Forensics achieved over 100% year-over-year growth for six consecutive quarters.
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Operating Highlights
Inseyets offering: Cemented as the gold standard in digital forensics, with 55% of the installed base converted, exceeding the 50% target.
SaaS and cloud-based offerings: Strong adoption with ARR growth of over 50%, now representing 22% of total ARR.
Guardian Forensics: Achieved six consecutive quarters of 100%+ year-on-year growth, becoming the industry's de facto repository for critical evidence.
Corellium acquisition: Completed in December 2025, with its ARM virtualization technology exceeding expectations in customer interest and growth potential.
Drone forensics: New strategic focus with the acquisition of SCG Canada, addressing the growing need for drone forensic capabilities.
Geographical ARR growth: Americas grew 19%, EMEA grew 24%, and Asia Pacific grew 23%.
U.S. Federal segment: Expected to reaccelerate growth in 2026 after flat performance in 2025, supported by federal funding and new authorizations.
Global certifications: Anticipated certifications in Australia, New Zealand, and select European nations to expand market reach.
Free cash flow: Generated $160 million in 2025, with a 34% margin, representing 30% growth over 2024.
Adjusted EBITDA: Achieved $127.6 million in 2025, with a margin of 26.8%, despite FX headwinds.
Sales team expansion: Increased sales executives by 20% and invested in enablement and training.
AI and GenAI integration: Focused on applying AI for productivity, customer retention, and monetizing applications for various use cases like cybercrime and major investigations.
Product innovation: Launch of Guardian Investigate in 2026, targeting criminal investigators with advanced AI-enabled analytics.
Rule of X performance: Shifted focus to ARR growth and free cash flow margin as key metrics, aiming for a Rule of X in the upper 40s to 50+.
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Risk or Challenges
U.S. Federal Unit Performance: The U.S. Federal unit experienced a 4-point headwind in ARR growth due to underperformance against the original plan in 2025. This segment faced disruptions, though these are expected to be resolved in 2026.
CFIUS Clearance for Corellium: The acquisition of Corellium is still awaiting final clearance from the Committee on Foreign Investment in the United States (CFIUS), which could delay full integration and growth realization.
Regulatory Approvals for FedRAMP Level 4: The lengthy 18-month process to obtain DOJ-sponsored authorization for FedRAMP Level 4 has delayed the deployment of Guardian and cloud assets in the U.S. Federal market.
Foreign Exchange Volatility: The strengthening of the Israeli shekel against the U.S. dollar has created a material headwind, impacting profitability and financial performance.
Integration of Corellium: The transition from a reseller to a fully integrated selling motion for Corellium requires significant education and training, which could slow short-term growth.
Drone Forensics Market Entry: The acquisition of SCG Canada to enter the drone forensics market represents a new and emerging area, but its current small scale and the need for integration pose risks to immediate returns.
AI and Ethical Use: While AI is seen as a growth driver, its ethical use and traceability in sensitive areas like crime and sovereign defense require careful management to maintain trust and compliance.
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Guidance & Outlook
Revenue Growth: Cellebrite expects revenue growth of 19% to 20% in 2026, with revenue projected to be in the range of $565 million to $571 million.
ARR Growth: Annual Recurring Revenue (ARR) is expected to grow by 18% to 19% in 2026, reaching $567 million to $573 million. ARR growth is driven by new customer acquisitions, product upgrades, and increased adoption of solutions like Guardian and Pathfinder.
Adjusted EBITDA: Adjusted EBITDA is projected to be in the range of $149 million to $155 million, with a margin of 26% to 27% for 2026.
Free Cash Flow: Free cash flow margins are expected to exceed 30% in 2026, continuing strong cash generation.
U.S. Federal Segment Growth: The U.S. Federal segment is expected to reaccelerate growth in 2026, exceeding the company's overall growth rate, driven by pent-up demand, increased federal funding, and the anticipated FedRAMP Level 4 authorization.
Product Launches and Market Expansion: Cellebrite plans to launch Guardian Investigate in spring 2026, targeting criminal investigators and prosecutors. The company also expects to expand certifications in Australia, New Zealand, and select European nations.
Corellium Integration: Corellium is expected to contribute significantly to growth, exceeding the company's overall growth rates. The integration is expected to drive meaningful growth across public and private sectors.
Drone Forensics Market: Cellebrite anticipates significant growth in the drone forensics market, with the acquisition of SCG Canada expected to close by Q1 2026. The drone market is projected to grow over 20% annually, reaching $53 billion by 2026.
AI and GenAI Initiatives: Cellebrite plans to leverage AI and GenAI to enhance productivity, customer retention, and develop new applications for investigations, including child exploitation and cybercrime cases.
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Shareholder Return Plan
The selected topic was not discussed during the call.
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Key Q&A
Q:How is the company planning to execute its strategy for recent acquisitions while maintaining focus on its core business?
A:The CEO explained that the Corellium transaction took longer to close, allowing the company to establish a rhythm and cadence. The SCG deal is expected to close by the end of the quarter, and the company believes the complexity of integrating these acquisitions is low. The SCG acquisition aligns with their core business, focusing on drone forensic capabilities, which is a growing market.
Q:What drove the decision to pursue the drone forensic market, and how is customer demand shaping this move?
A:The CEO and CRO highlighted that the decision was driven by both customer demand and strategic planning. Customers in defense and intelligence are already using the technology, and the company sees significant growth potential in the drone forensic market. The total addressable market (TAM) for drones and analytics is about 5x the core TAM.
Q:What investments have been made to extend mobile forensics leadership, and what impact is expected?
A:The company has doubled down on internal research and external partnerships to enhance capabilities in both Android and iOS platforms. These investments aim to maintain leadership in mobile forensics and are expected to drive growth in Unlock Access and Inseyets penetration.
Q:What is the outlook for U.S. federal government spending, and what factors contribute to the company's confidence?
A:The company sees strong demand in defense, intelligence, and border security use cases. Events like the FIFA World Cup are also driving demand. Federal agencies have a 2-year budget under the Big Beautiful Bill, allowing for strategic planning. The company is optimistic about its Guardian solution, which is unique in storing and sharing forensic data under FedRAMP approval.
Q:What are the details of the small drone acquisition, including its financial impact and growth potential?
A:The company is acquiring a market-leading drone forensic solution with a low single-digit ARR run rate for $15-20 million. They expect the ARR growth potential to exceed the acquisition cost in the midterm.
Q:How should the financial model for the second half of the year be viewed compared to the first half?
A:The CFO suggested modeling the top line similar to the previous year, with about 40% in the first half and 60% in the second half, reflecting the timing of new offers coming to market.
Q:What are the company's plans for AI applications, and how will they be monetized?
A:The company is integrating AI into its core products to enhance productivity and developing agentic applications for specific use cases like cybercrime and child exploitation. Monetization strategies are being developed, and the current guidance does not assume revenue from these applications in 2026.
Q:How is the company allocating new sales resources, and what areas are being prioritized?
A:The company is increasing sales coverage in public safety, enterprise (especially financial services), and defense and intelligence (D&I). They have also brought back a leading salesperson to head global D&I development.
Q:What is the status of the FedRAMP approval and its impact on large deals?
A:The company is confident in obtaining FedRAMP approval, which will enable them to secure large federal contracts. They are tracking multiple seven-figure deals and have scoped an initial contract for a large federal agency requiring over 9 petabytes of storage.
Q:How did the adoption of Inseyets and unlocks trend in Q4, and what are the expectations for the coming year?
A:Inseyets adoption reached about 55%, and unlocks are expected to gain momentum in Q2 as new technology is introduced. The company is monitoring market reactions to refine its guidance.
Q:What is the cost impact of the Corellium acquisition and FX headwinds on the 2026 guidance?
A:The Corellium acquisition is causing about 1 point of margin compression, with leverage expected in the second half of the year. FX headwinds are adding more than a point of compression, but these are expected to be temporary.
Q:What changes have been made to the guidance philosophy, and how does it reflect conservatism?
A:The company has narrowed the ARR guidance range from $15 million to $6 million, reflecting improved forecast accuracy and a focus on customer base motion. This approach incorporates high visibility and conservatism.
Q:What improvements are expected in gross retention, and what factors contribute to this?
A:Improvements are expected due to the adoption of Inseyets and unlocks, as well as the maturity of Pathfinder and Guardian solutions. AI integration is also expected to drive increased customer engagement and retention.
Q:How are customers influencing AI investments, and what is the company's approach?
A:Customers are showing strong interest in the company's AI capabilities, which are tailored to their specific needs. The company is focusing on delivering high-quality AI outputs that align with its core competencies.
Q:How is AI being used in forensic R&D, and what role does the Corellium asset play?
A:AI is not currently being used to identify vulnerabilities in forensic R&D. Instead, the company is leveraging the Corellium asset to accelerate the identification of vulnerabilities and exploits.
Q:Review of Unclear Management Responses
A:Management avoided providing specific details on the monetization of AI applications, stating that strategies are still being developed. They also did not provide clear timelines or specifics on the large federal deals mentioned, citing ongoing processes and conditions.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
AI analytics
AI decade
AI force
AI functionality
AI improvement
AI intimacy
AI platform
AI tailwind
AI threat
ARR combination
ATO market
ATO way
Android capability
Cellebrite Full
Corellium
Full Financial
GenAI
Guardian Forensics
Inseyets
SaaS cloud
asset market
child
deployment
drone
engine
evidence
flagship
forensics
law enforcement
lever
material
percent
portfolio
quality
slide
source
training
trust
unit
unlock
upgrade
CLBT Transcript
Cellebrite DI Ltd. (CLBT) Presents at J.P. Morgan 54th Annual Global Technology, Media and Communications Conference Transcript
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Positive5-14
Cellebrite's earnings call shows strong financial performance with a 21% ARR growth and a 29% increase in adjusted EBITDA. The company has a solid cash position and geographic ARR growth. Despite some uncertainties in AI adoption and flat net new ARR, management remains optimistic about future growth and product adoption. The Q&A session reveals confidence in overcoming competitive threats and leveraging new products, contributing to a positive outlook. With a market cap of $2.43 billion, the stock is likely to experience a positive movement (2% to 8%) in the next two weeks.
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Positive3-3
Financial performance shows solid growth in revenue, RMR, and net income, with improved margins. Analysts' Q&A responses indicate confidence in maintaining growth without additional expenses and optimism about demand stability. The company's focus on M&A and innovation, along with positive guidance, supports a positive outlook. Given the market cap of $2.4 billion, the stock price is likely to react positively, but not dramatically.
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CLBT Report
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