Cellebrite Announces Third Quarter 2022 Results
ARR of $232 million, up 35% year-over-year
Third Quarter revenue of $71.7 million, Increase 9% year-over-year
PETAH TIKVA, ISRAEL, and TYSONS CORNER, VA, November 17, 2022 – Cellebrite (NASDAQ: CLBT), a global leader in Digital Intelligence (“DI”) solutions for the public and private sectors, today announced financial results for the three and nine months ending September 30, 2022.
“We are pleased to report a solid third quarter, delivering strong ARR growth as we continue to execute on our full-year targets set forth last quarter. The demand we are seeing in the market demonstrates that our innovative solutions are highly relevant as public safety organizations and private enterprises recognize the need to modernize their investigative workflow in the face of the ever-growing digital sophistication of crimes and evidence. We are particularly proud of our best-in-class retention rates which prove that our go-to-market strategy is bearing fruit,” said Yossi Carmil, Cellebrite’s CEO. “We have made progress on the initiatives we outlined last quarter, and we remain excited about the opportunity in front of us as we pursue our mission to protect and save lives, accelerate justice, and preserve privacy.”
Third Quarter Financial Highlights
- Revenue of $71.7 million, up 9% year-over-year, of which subscription revenue was $55.6 million, up 8% year-over-year
- Annual Recurring Revenue (ARR) of $232 million, up 35% year-over-year
- Recurring revenue dollar-based net retention rate of 129%
- GAAP gross profit and gross margin of $57.1 million and 79.7%, respectively
- GAAP net income of $25.1 million; Non-GAAP net income of $3.0 million
- GAAP Diluted EPS of $0.13; Non-GAAP Diluted EPS of $0.01
- Adjusted EBITDA and Adjusted EBITDA margin of $5.1 million and 7.0%, respectively
Third Quarter and Recent Digital Intelligence Highlights
- Closed 25 key deals, each valued at $500,000 or more.
- Released the next generation of Cellebrite Guardian which provides critical features aiding law enforcement in handling digital evidence in an ethical way, including storing, managing, and sharing evidence, with unmatched instant review of digital evidence. Additional enhancements create increased flexibility for law enforcement and help them secure privacy to address key pain points in the investigative workflow, including physical duplication, transportation of evidence, and time-consuming evidence review.
- Enhanced Collect & Review offerings by launching an automated and secure system that enables investigative analytics stakeholders to rapidly collect, review, and analyze data in an integrated workflow. By streamlining the transfer of data to the investigative team, customers shave hours off the workflow to bring evidence to prosecutors faster.
- Announced Sandline Global as first private sector customer for Cellebrite Guardian. This multi-year investment is expected to enhance Sandline’s in-house investigative and evidence management operations.
- Won all categories for which the company was nominated at the 2022 Forensic Focus 4:cast awards, including DFIR Commercial Tool of the Year and the Investigator of the Year for the third year in a row, proving our continual leadership in digital forensics
Supplemental financial information can be found on the Investor Relations section of our website at https://investors.cellebrite.com/financial-information/quarterly-results.
“We are proud to deliver ARR growth of 35% year-on-year during the third quarter reflecting a strong demand market for our Digital Intelligence solutions. However, given the strengthening of the USD to the European and other currencies we expect to finish FYE 2022 at the lower end of our guidance” said Dana Gerner, Chief Financial Officer of Cellebrite.
“We remain focused on efficiently investing in our innovations and solutions to deliver on our targets for the year we outlined last quarter,” Gerner concluded.
Conference Call Information
Today, November 17, 2022, at 8:30 a.m. ET, Cellebrite will host a conference call and webcast to discuss the Company’s financial results for the third quarter 2022. The call details are below:
Telephone participants are advised to register in advance at:
Upon registration, participants will receive a confirmation email detailing how to join the conference call, including the dial-in number and a unique registrant ID.
The live conference call will be webcast in listen-only mode at: https://edge.media-server.com/mmc/p/7dttnkrq
The webcast will remain available after the call at: https://investors.cellebrite.com/events-presentations
Non-GAAP Financial Information and Key Performance Indicators
This press release includes non-GAAP financial measures. Cellebrite believes that the use of non-GAAP net income, non-GAAP operating income, and Adjusted EBITDA is helpful to investors. These measures, which the Company refers to as our non-GAAP financial measures, are not prepared in accordance with GAAP.
The Company believes that the non-GAAP financial measures provide a more meaningful comparison of its operational performance from period to period and offers investors and management greater visibility to the underlying performance of its business. Mainly:
- Share-based compensation expenses utilize varying available valuation methodologies, subjective assumptions, and a variety of equity instruments that can impact a company’s non-cash expenses;
- Acquired intangible assets are valued at the time of acquisition and are amortized over an estimated useful life after the acquisition, and acquisition-related expenses are unrelated to current operations and neither are comparable to the prior period nor predictive of future results;
- To the extent that the above adjustments have an effect on tax (income) expense, such an effect is excluded in the non-GAAP adjustment to net income;
- Tax (income) expense, depreciation, and amortization expense vary for many reasons that are often unrelated to our underlying performance and make period-to-period comparisons more challenging; and
- Financial instruments are remeasured according to GAAP and vary for many reasons that are often unrelated to the Company’s current operations and affect financial income.
Each of our non-GAAP financial measures is an important tool for financial and operational decision-making and for evaluating our own operating results over different periods of time. The non-GAAP financial measures do not represent our financial performance under U.S. GAAP and should not be considered as alternatives to operating income or net income or any other performance measures derived in accordance with GAAP. Non-GAAP measures should not be considered in isolated from, or as an alternative to, financial measures determined in accordance with GAAP. Non-GAAP financial measures may not provide information that is directly comparable to that provided by other companies in our industry, as other companies in our industry may calculate non-GAAP financial results differently, particularly related to non-recurring, unusual items. In addition, there are limitations in using non-GAAP financial measures because the non-GAAP financial measures are not prepared in accordance with GAAP, and exclude expenses that may have a material impact on our reported financial results. Further, share-based compensation expense has been and will continue to be for the foreseeable future, significant recurring expenses in our business and an important part of the compensation provided to our employees. In addition, the amortization of intangible assets is expected recurring expense over the estimated useful life of the underlying intangible asset and acquisition-related expenses will be incurred to the extent acquisitions are made in the future. Furthermore, foreign exchange rates may fluctuate from one period to another, and the Company does not estimate movements in foreign currencies.
A reconciliation of each of these non-GAAP financial measures to their most comparable GAAP measure is set forth in a table included at the end of this press release, which is also available on our website at https://investors.cellebrite.com.
Annual recurring revenue (“ARR”) is defined as the annualized value of active term-based subscription license contracts and maintenance contracts related to perpetual licenses in effect at the end of that period. Term-based license contracts and maintenance contracts for perpetual licenses are annualized by multiplying the revenue of the last month of the period by 12. The annualized value of contracts is a legal and contractual determination made by assessing the contractual terms with our customers. The annualized value of maintenance contracts is not determined by reference to historical revenue, deferred revenue, or any other GAAP financial measure over any period. ARR is not a forecast of future revenues, which can be impacted by contract start and end dates and renewal rates.
Dollar-based net retention rate (“NRR”) is calculated by dividing customer recurring revenue by base revenue. We define base revenue as recurring revenue we recognized from all customers with a valid license at the last quarter of the previous year period, during the four quarters ended one year prior to the date of measurement. We define our customer revenue as the recurring revenue we recognized during the four quarters ended on the date of measurement from the same customer base included in our measure of base revenue, including recurring revenue resulting from additional sales to those customers.
Cellebrite’s (NASDAQ: CLBT) mission is to enable its customers to protect and save lives, accelerate justice, and preserve privacy in communities around the world. We are a global leader in Digital Intelligence solutions for the public and private sectors, empowering organizations in mastering the complexities of legally sanctioned digital investigations by streamlining intelligence processes. Trusted by thousands of leading agencies and companies worldwide, Cellebrite’s Digital Intelligence platform and solutions transform how customers collect, review, analyze and manage data in legally sanctioned investigations. To learn more, visit us at www.cellebrite.com and https://investors.cellebrite.com.
Caution Regarding Forward-Looking Statements
This document includes “forward-looking statements” within the meaning of the “safe harbor” provisions of the United States Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by the use of words such as “forecast,” “intend,” “seek,” “target,” “anticipate,” “will,” “appear,” “approximate,” “foresee,” “might,” “possible,” “potential,” “believe,” “could,” “predict,” “should,” “could,” “continue,” “expect,” “estimate,” “may,” “plan,” “outlook,” “future” and “project” and other similar expressions that predict, project or indicate future events or trends or that are not statements of historical matters. Such forward-looking statements include estimated financial information. Such forward-looking statements with respect to revenues, earnings, performance, strategies, prospects, and other aspects of Cellebrite’s business are based on current expectations that are subject to risks and uncertainties. A number of factors could cause actual results or outcomes to differ materially from those indicated by such forward-looking statements. These factors include, but are not limited to: Cellebrite’s ability to keep pace with technological advances and evolving industry standards; Cellebrite’s material dependence on the acceptance of its solutions by law enforcement and government agencies; real or perceived errors, failures, defects or bugs in Cellebrite’s DI solutions; Cellebrite’s failure to maintain the productivity of sales and marketing personnel, including relating to hiring, integrating and retaining personnel; uncertainties regarding the impact of macroeconomic and/or global conditions, including COVID-19 and military actions involving Russia and Ukraine; intense competition in all of Cellebrite’s markets; the inadvertent or deliberate misuse of Cellebrite’s solutions; political and reputational factors related to Cellebrite’s business or operations; risks relating to estimates of market opportunity and forecasts of market growth; Cellebrite’s ability to properly manage its growth; risks associated with Cellebrite’s credit facilities and liquidity; Cellebrite’s reliance on third-party suppliers for certain components, products, or services; challenges associated with large transactions and long sales cycle; risks that Cellebrite’s customers may fail to honor contractual or payment obligations; risks associated with a significant amount of Cellebrite’s business coming from government customers around the world; risks related to Cellebrite’s intellectual property; security vulnerabilities or defects, including cyber-attacks, information technology system breaches, failures or disruptions; the mishandling or perceived mishandling of sensitive or confidential information; the complex and changing regulatory environments relating to Cellebrite’s operations and solutions; the regulatory constraints to which we are subject; risks associated with different corporate governance requirements applicable to Israeli companies and risks associated with being a foreign private issuer and an emerging growth company; market volatility in the price of Cellebrite’s shares; changing tax laws and regulations; risks associated with joint, ventures, partnerships and strategic initiatives; risks associated with Cellebrite’s significant international operations; risks associated with Cellebrite’s failure to comply with anti-corruption, trade compliance, anti-money-laundering and economic sanctions laws and regulations; risks relating to the adequacy of Cellebrite’s existing systems, processes, policies, procedures, internal controls and personnel for Cellebrite’s current and future operations and reporting needs; and other factors, risks and uncertainties set forth in the section titled “Risk Factors” in Cellebrite’s annual report on Form 20-F filed with the SEC on March 29, 2022,as amended on April 14, 2022 and in other documents filed by Cellebrite with the U.S. Securities and Exchange Commission (“SEC”), which are available free of charge at www.sec.gov. You are cautioned not to place undue reliance upon any forward-looking statements, which speak only as of the date made, in this communication or elsewhere. Cellebrite undertakes no obligation to update its forward-looking statements, whether as a result of new information, future developments, or otherwise, should circumstances change, except as otherwise required by securities and other applicable laws.
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