Cellebrite at TD Cowen Conference: Strategic Shifts and Growth Plans

On Thursday, 29 May 2025, Cellebrite (NASDAQ:CLBT) presented at TD Cowen’s 53rd Annual Technology, Media & Telecom Conference. The company offered insights into its digital intelligence solutions, highlighting both opportunities and challenges. While celebrating strong first-quarter results, Cellebrite also acknowledged uncertainties in government spending but remained optimistic about future growth.

Key Takeaways

• Cellebrite emphasized its "rule of 45" metric achievement and ARR growth driven by upsells.
• The company is transitioning from per-seat to volume-based pricing, enhancing accessibility.
• AI advancements are integrated carefully to support, not replace, human investigators.
• The Insights platform is central to Cellebrite’s strategy, with a 25% higher price point.
• Cellebrite’s market is estimated at over $16 billion globally, with significant growth potential.

Financial Results

First-quarter results were robust, with Cellebrite achieving its "rule of 45" metrics. ARR growth was primarily driven by upsells to existing customers, particularly through the Insights platform. New customers, mainly state and local agencies in the US, contributed about 1.5% to ARR growth. The Pathfinder and Guardian solutions also played a key role, with Guardian experiencing over 100% growth for three consecutive quarters.

Operational Updates

• Customer Base: Cellebrite supports 7,000 customers worldwide, including 5,300 public sector agencies and 1,700 enterprises.
• Market Segmentation: The total addressable market exceeds $16 billion, covering digital forensics, management and analytics, and professional services.
• Insights Platform: A modern cloud-enabled solution, Insights has seen 30% of the installed base transition, with expectations to reach 50% by year-end. It offers improved workflows and features, priced 25% higher than previous offerings.
• Geographic Market Share: Android dominates globally with 80% market share, while iPhones are prevalent in the US and Europe.

Future Outlook

• Government Spending: While there is uncertainty due to administrative transitions, Cellebrite’s pipeline has grown, aligning with new spending plans, particularly in the Department of Defense and civilian agencies.
• R&D and Innovation: Cellebrite’s internal research team focuses on addressing challenges from OEMs. AI is used cautiously to enhance investigations without generating evidence.
• Pricing Strategy: The shift to volume-based pricing for cloud offerings allows for agile pricing and packaging, making solutions more accessible to smaller customers.

Q&A Highlights

• Impact of Insights: Insights is priced higher than previous solutions, offering better customer satisfaction and retention rates.
• Competition: Cellebrite is noted for its comprehensive device coverage, a key differentiator in the digital forensics space.

In conclusion, for further details, readers are encouraged to refer to the full transcript of the conference call.

Full transcript - TD Cowen ’s 53rd Annual Technology, Media & Telecom Conference 2025:

Unidentified speaker, Host: Good morning, everybody. Almost afternoon, almost noon. We are delighted to host the management team of Celebrite.

We have Dana Garner, CFO Andy Kramer, VP of IR. This is a fire site chat, but if anyone has questions, by all means, do not hesitate to raise your hands so we can keep it as interactive as possible. Donna, Andy, maybe for the benefit of the audience, slightly less familiar with Celebrite. Can you describe what Celebrite does, who your primary customers are and what problems they are trying to solve?

Donna Garner, CFO, Celebrite: Great. So Celebrite is a leading provider of digital intelligence solutions for many law enforcement agencies, defense and intelligence, and private sector. What does it mean? In today’s world, crime is digital in nature. Each and everyone is carrying mobile phones, vehicles are powered by computers, CCTVs everywhere, and when a crime is being taken, to be able to investigate it, you need to be able to collect the digital data, make sense out of it, and use it for investigation.

We are providing a set of software solution on our digital intelligence platform that allows law enforcement agencies and other customers of us to be able to access the most important data source in investigation, the DNA of our life, mobile phone, extract the entire data, make sense out of the data, and use it for investigations. Doing the same also for computers and cloud applications, social media and so forth, And within the private sectors that we serve, this type of information is being collected for internal investigation and e discovery processes. It’s a little bit different than what law enforcement agencies are doing for investigation, but has a lot of similarities, and we have dedicated solutions for those purposes. The main challenge of our customer is the fact that actually investigation are becoming more and more digitized, and the amount of information that is being collected per investigation and the amount of sources and the complexity of data is growing year over year, our assumption that it grows in a range of around 15% annually. So they need to deal with the complexity, they need to deal with the backlog.

The head count of police forces is growing two to 3% annually. The data they need to process is growing 15%. It’s a big challenge. We call it the safety gap and we are trying to step in because we believe that this can only be bridged through technology. How big is the TAM?

When when when we think about it, how is it maybe segmented between federal and public safety and the private market?

Unidentified speaker, Host: Sure.

Andy Kramer, VP of IR, Celebrite: So we believe that the market for our solutions is over 16,000,000,000 globally. You know, if you wanted to segment that between digital forensics, maybe 4 and a half billion, 7 plus billion for the management and analytical capability and a couple of billion dollars for professional services would sort of be how you build that bottoms up assessment of the market. And it’s a market, digital forensics has grown historically in the 15% to 20% range, with the analytics and management piece growing 35% to 50%. Digital forensics, think about where it is in its life cycle. It’s moving from, I’d say, into its teenage years of growth.

Whereas the management and analytics components of the business, they’re more in their infancy. Toddler type growth. So we’re seeing that we service and support 7,000 customers around the world, 5,300 public sector agencies, 1,700 enterprises. And only a very small percentage today have either our Guardian solution for evidence management or Pathfinder analytics or both. And so for us, the opportunity to really monetize a full platform to help our customers end to end from the time a crime has been committed and a device has been seized through to the closure of that case becomes a very tangible opportunity for us.

Unidentified speaker, Host: Maybe can you provide us with recent customer examples where Celebrite’s solutions have been used to fight crime?

Donna Garner, CFO, Celebrite: You’ll start with the Americans and then another European.

Andy Kramer, VP of IR, Celebrite: So I’ll give you a couple of very high level and topical use cases. And Donna can provide, I think, a much more fulsome story as well. Think about the first assassination on now President Trump. The shooter’s phone was collected in Butler, Pennsylvania. The nearest field office was in Pittsburgh.

They took the phone, which the Pittsburgh field office had some Celebrite capability, but they didn’t have all of our most advanced technology. They were unable to open that phone. The phone was then taken to a different lab a few hours away where they did have all of our latest and greatest bells and whistles. They opened that phone in forty minutes. So, you know, very high urgency to understand what information could be gleaned from that device.

Take a look at a case that’s dominating the headlines in the Northeast, especially in the Boston area where I live. Karen Reed, accused of running over her boyfriend, a Boston Police Officer. That digital evidence on her phone, on the investigator’s phone, on the phones of individuals connected to, either related to or connected to the deceased will either help convict or exonerate that individual. So it’s very powerful technology. Donna, maybe you can talk about the case in Europe.

Donna Garner, CFO, Celebrite: Yeah. I think one of the challenges that we are seeing and where money is actually being allocated to is to fight drug trafficking and border controls. And in our user forum that we have held first time in our lives in April, ’1 of our customers in Europe told us, and the rest of his colleagues, a very interesting story on how his authorities took down an international drug program that was, and seized few tens of millions, sorry, few hundreds of millions of drugs through that. Their border control naval organization identified a ship that was shipping next to the borders, they couldn’t understand what it’s doing there, it didn’t look like a fishing ship or anything that has been registered. The sea was very high and very difficult for that specific ship to go through.

They came and boarded the ship itself. The people there threw to the sea whatever they had, but the only thing they kept was their phones. And this is very typical for criminals. They think that, you know, nobody is going to touch their phones. They took them to shore, they extracted the phones and uploaded the data extracted into Pathfinder and created a picture of a small drug trafficking organization.

And through this, the analysis of the data, they understood that they are communicating with someone outside of those three people, they understood who is the leader of those three people, and they understood that there is another ship out there in the water waiting to drop to that specific one drugs to be taken to land. And so based on the information collected there, they started following and tracking the other ship. They succeeded in capturing it. They captured drugs in hundreds of thousands of non US dollar amount. They took the phones from the people there and they actually revealed an international drug trafficking organization where the drugs came from South America.

Most of the people on the ship were from Asia, the finance came from The Middle East, and they couldn’t have done it without capturing the phones and analyzing the entire data and creating the network using our Pathfinder. And so this is what we are trying to do in helping law enforcement executing on their mission.

Unidentified speaker, Host: Got it. You showed healthy first quarter results, rule of 45 metrics. Can you provide us with more granularity on the ARR growth during the first quarter? How much of that growth was in a way driven by upsells versus new customers, new logos?

Donna Garner, CFO, Celebrite: So Ceramite is working with law enforcement agencies on the digital forensics market and digital intelligence since 02/2007. So over the years, through superior technology, we’ve become vendors to, I would say, the vast majorities of the Western European, American, South American leading agencies. And so we don’t really target a lot of new customers. Most of our sales and up sales is actually to new departments within existing customers. New customers traditionally contribute to around one and a half percent of our ARR growth, mostly from, I would say, agencies like state and local here in The States.

And the rest is coming from upselling to our existing customer base. What do we upsell? First and foremost, the biggest contributor of our upsell come from our insights, collection and review and analysis for the digital forensics unit solutions, whether it’s more licenses, whether it’s migrating our customers to our newer platform, or selling advanced capabilities around accessing the more newer phones that are being introduced to the market. The second contributors are actually the Pathfinder and the Guardian. Guardian is doing finished its third consecutive quarter of growing more than 100%.

Pathfinder is growing similarly, a little bit faster than the average growth of the entire installed base.

Unidentified speaker, Host: Back in the fourth quarter of late last year, on the heels of Doge growing macro uncertainty, You indicated potential softness. I recall at the time you mentioned lack of personnel to pretty much approve some of the procurement on the side of the customers. That has seemed to evaporate, pretty much go away, when listening to your first quarter public safety commentary. You provide us maybe with more color along these Sure.

Andy Kramer, VP of IR, Celebrite: Maybe I’ll start. What I would say is that as you move through the transition of you know, the old administration and the individuals there who depart and then the incoming administration, new individuals are appointed. And that process is still ongoing within certain agencies. But I think that top down, there’s also a much different level of pressure on how the government spends money. And that’s across any and all of its different agencies.

Combine that with changes in personnel, combine that with changes in procurement processes, combine that with processes, combine that with potential uncertainty around what happens to certain agencies. You know, you can think about the easy one is Department of Education. We don’t sell to them, but nobody knows when exactly that’s going to could go away. But there are smaller agencies that we sell to that don’t necessarily, aren’t in control of their own destiny. Department of ATF, Alcohol, Tobacco and Firearms, as an example.

And so I think that what we’ve seen through the first quarter and what we expect to see in the second quarter is that I think that there’s a level of uncertainty around when spending will reengage in more meaningful levels among the customers that we sell to. We look at our pipeline, and our pipeline grew meaningfully between mid February and mid May. That’s a great sign. You look at the things that are associated with the new programs and the increase in our pipeline, those align really well with the current administration’s new spending plan or new spending package that’s currently being debated in the Senate. It’s billions of dollars for Department of Defense and civilian agencies like the Secret Service, Homeland Security, Department of Justice, ICE, you know, agencies that are going to be charged with border control, going to be charged with deportation of illegal immigrants, charged with drug enforcement, charged with preventing and stopping human trafficking.

These are global issues and they’re big issues in The US. And so, you know, we can see a potential headwind today converting to a meaningful tailwind into the future. The crystal ball is still a little murky exactly when some of that will, that change will happen. But it is a, you know, we do believe it’s a when, not an if scenario.

Unidentified speaker, Host: From an R and D standpoint, you’re always faced with new model releases. Can you talk about your success with the latest iPhone and how your work with iPhone iOS offers differs, actually, from your work with the Android.

Donna Garner, CFO, Celebrite: So Celebrite has its own internal vulnerability research team. It’s a global team and has very good track record of success with tackling the new challenges that the OEM are setting to all of us. You know, they need to follow their commitment to privacy, we need to follow our commitment to support law enforcement in investigating crimes. We have been the leading provider around Android for for years. We’ve been very successful in iOS as well.

We are actually the first one to be able to access iOS phones, and we believe that based on what we are bringing to the table, we’ll be able to continue providing such success. Sometimes it takes very short period of time, sometimes the challenge is bigger, and we take a little bit more time. I think the uniqueness of our market in comparison, I would say, to the intelligence market is that phones are being collected through investigation, are coming in different size and models and ages. And the vendor that actually has the biggest success is the one that has the biggest coverage of phones over time. And since we are in this market for many years and had provided success in a constant manner, we are the best to be able to meet this challenge.

Unidentified speaker, Host: How many I think there there are more Androids than iPhones. What’s kind of the

Donna Garner, CFO, Celebrite: Yeah. I would say that the from a market perspective, Android is close to 80% of the global market. But when you look at where we are playing, whether it’s The US, Europe, you see very large percentage of usage of iPhones. You go to Asia Pacific, you go to Latin America and other places, Android is a very respectable is a very respectable share.

Andy Kramer, VP of IR, Celebrite: You know, what I would say to to to add on to that is that Android is not ubiquitous. Each phone OEM customizes Android to their particular set of phones and so, you know, the ability to do both Android and iPhone along with feature phones, burner phones, legacy mobile phones, all of that. You know, if you can do iOS or iPhone 16 and iOS 18, that’s awesome. But if your phone was a Samsung Galaxy from four years ago and that’s the phone that needs to be examined, that’s the challenge challenge for law enforcement. And so, you know, that breadth and depth of coverage really does make a difference.

Unidentified speaker, Host: Gen AI, without a doubt, has been topic du jour over the course of the past eighteen months during this conference. Can you talk to us how Celebrite uses AI, maybe internally, also externally, when we think about it from the insights, Guardian and Pathfinder solutions?

Donna Garner, CFO, Celebrite: Gen AI is an amazing advancement in technology, but in law enforcement and in what we are doing, we need to be very careful not to break this very, you know, very delicate line between surfacing evidence and generating evidence. And it is clear through our customer advisory board that our customer expects us to use AI, to use Gen AI, but always, always in a manner that involve the examiners and the detective in the process. So we have started implementing some models into specifically our Pathfinder and our Guardian, which are investigative analytics, provide investigative analytics capabilities, but in a manner that you always take the detective or the examiners to the source. So if I would ask a question, what is the relation between Andy and Xiao? And the answer will be business relationships, the underlying data that brought the conclusion will be surfaced and presented for the eye of the investigator to be able to verify.

We have internally our own AI, I would say innovation team, that looks into advancements in the market, look at what our customer are looking for, and have its own roadmap to be implemented in our solution, and we will follow suit.

Unidentified speaker, Host: Who do you view as your chief competitor? And why do customers choose kind of you guys rather than some of the other players out there? It would appear as if the barriers of entry are very high, that there aren’t too many newcomers. Kind of help us understand what you’re seeing out there.

Donna Garner, CFO, Celebrite: Sure.

Andy Kramer, VP of IR, Celebrite: You know, I think you’re right. And to the extent that Celebrite delivers a digital investigation platform that really helps customers from the start of a crime through to its completion. And that’s around collecting and reviewing information contained on digital devices, being able to store, share, collaborate, and then being able to analyze. So in the digital forensics side of our business, and we do have competitors in each of those primary areas. So in digital forensics, you know, we’re very fortunate.

Celebrite’s both a verb and a noun. You celebrate a device and then you create a Celebrite report. And, you know, I think that the capabilities that matter most in digital forensics, the ability to access, the ability to extract all of the data off the phone, hidden data, deleted data, data that’s not connected to the operating system itself. And then the ability to, once you’ve done the full file system extraction, all of that data, convert it, reconvert it, decode that binary code and convert it back into human readable information. And so in some ways, we’re almost agnostic as to what extraction tool may be used.

Eight out of 10 of our customers are going to use our decoding engine, which is very important. It’s a multi vendor environment. We’re very fortunate to be the primary for mobile for the primarily around the breadth and depth of our coverage there. The larger the customer, the more likely they are to have a myriad of tools at their disposal. They want multi vendor environment because they want to be able to validate and verify findings from one software solution on another.

And then I think just the range of devices that are out there, range of phones, applications that sit on phones, computers, laptops, tablets, CCTV, drones, automobile infotainment systems. It’s simply too much for any one vendor to be able to do everything. And so there’s specialists that are out there to augment that. And then as you move into the other areas, I would just say that those are more greenfield opportunities and they’re ones where the mode of operation is shifting. When you look at evidence management, the way that information has historically been shared is on USB drives.

So we don’t have to displace a competitor. We have to convince our customer that the cloud is a secure place to share that type of information that the benefits, the way you can fortify your chain of custody is worth the investment.

Unidentified speaker, Host: Questions from the audience before we proceed?

Donna Garner, CFO, Celebrite: Great, thank you. So if you would have come to buy from Celebrite two years ago our collection of solutions for access, collect, and review data, you would see a long list of bespoken solutions, very known to the market, and you will need to subscribe one by one and not necessarily work in a very integrative manner between themselves. In Insight, what we’ve taken a decision was to take the most important capabilities that have been sold to customers and package them under one, I would say, how do you call it, happy meal? Yeah. Okay.

But add to that a proper workflow and additional capabilities that have not been sold before and we thought that are very important for our customers, including triaging and, for example. And that allowed us to offer to our customers a more modern platform that is cloud enabled for those customers that want to collect some of those capabilities to the cloud in three different flavors and with additional add ons that before that had no we didn’t have the proper workflow and UI to work with the insights. So insights is a newer, modern, much more capable solution that our customer could have bought from us before. Average price compared to, I would say, the most comparable solution we had before, which was the UFID and the physical analyzer, is around 25% more expensive, but if you would have taken all those capabilities we’ve integrated in and sold them separately, our customer would have bought it for much more. The impact of transitioning customers to Insight, which we started after the announcement in January 24, was preceding our expectations.

So we started ’24 expecting to transition around 10% of our customer base, understanding that the public sector, if they didn’t have the budget ready upfront, they might not be able to finance this upgrade and its financial implications. We finished the year with more than 20%, and we are now at the end of the q one with 30% of the customers already, of the installed base already in sites, installed base. And as Andy mentioned before, we expect to finish the year with 50%. I think the added value is much more than just in price. I think the added value is the impact on customer satisfaction, our ability to improve our gross retention rate, and the easiest mode of operation of our customers to integrate with our analog capabilities, with Guardian, and the readiness of the offering to to work with the cloud as we are moving more and more of our capabilities from on prem to be cloud enabled.

This would allow us to unlock later on additional monetization of those capabilities.

Andy Kramer, VP of IR, Celebrite: And just to build on that real quick, I mean, the other evolution that is well underway is a shift of, you know, sort of from per seat, per user pricing to, you know, more pricing that’s geared around volume and value and more enterprise centric in its nature. And so we’ve seen that that allows us, especially around cloud related offerings, to be much more agile in the way we price and package. And so that the smaller customers that we service and support can use and leverage the same capabilities that, you know, the three letter agencies use.

Unidentified speaker, Host: Understood. With that, I think we are just on time. Dana, Andy, thank you so much for joining us. Late. Good morning, every this is a fireside chat, but, if anyone has questions, by all means, do not hesitate to raise your hands so we can keep it as interactive as possible.

Donna, Andy, maybe for the benefit of the audience, slightly less familiar Can you describe what Celebrite does, who your primary customers are and what problems they are trying to solve?

Donna Garner, CFO, Celebrite: Great. So Celebrite is a leading provider of digital intelligence solutions for many law enforcement agencies, defense and intelligence, and private sector. What does it mean? In today’s world, crime is digital in nature. Each and everyone is carrying mobile phones, vehicles are powered by computers, CCTVs everywhere, and when a crime is being taken, to be able to investigate it, you need to be able to collect the digital data, make sense out of it, and use it for investigation.

We are providing a set of software solution on our digital intelligence platform that allows law enforcement agencies and other customers of us to be able to access the most important data source in investigation, the DNA of our life, mobile phone, extract the entire data, make sense out of the data, and use it for investigations. Doing the same also for computers and cloud applications, social media and so forth, and within the private sectors that we serve, this type of information is being collected for internal investigation and e discovery processes. It’s a little bit different than what law enforcement agencies are doing for investigation, but has a lot of similarities and we have dedicated solutions for those purposes. The main challenge of our customer is the fact that actual investigation are becoming more and more digitized, and the amount of information that is being collected per investigation and the amount of sources and the complexity of data is growing year over year, our assumption that it grows in a range of around 15% annually. So they need to deal with the complexity, they need to deal with the backlog, The head count of police forces is growing two to 3% annually.

The day that they need to process is growing 15%. It’s a big challenge. We call it the safety gap, and we are trying to step in because we believe that this can only be bridged through technology.

Unidentified speaker, Host: How how big is the TAM? When when when we think about it, how is it maybe segmented between your federal and and public safety and the private market? Sure.

Andy Kramer, VP of IR, Celebrite: So we believe that the market for our solutions is over 16,000,000,000 globally. If you wanted to segment that between digital forensics, maybe 4 and a half billion, 7 plus billion for the management and analytical capability and a couple of billion dollars professional services would sort of be how you build that bottoms up assessment of the market. And it’s a market digital forensics has grown historically in the 15% to 20% range, with the analytics and management piece growing 35 to 50%. Digital forensics, think about where it is in its life cycle. It’s moving from, I’d say, into its teenage years of growth.

Whereas the management and analytics components of the business, they’re more in their infancy, toddler type growth. So, you know, we’re seeing that we service and support 7,000 customers around the world, 5,300 public sector agencies, 1,700 enterprises. And only a very small percentage today have either our Guardian solution for evidence management or Pathfinder analytics or both. And so for us, the opportunity to really monetize a full platform to help our customers end to end from the time a crime has been committed and a device has been seized through to the closure of that case becomes a very tangible opportunity for us.

Unidentified speaker, Host: Maybe can you provide us with recent customer examples where Celebrite’s solutions have been used to fight crime?

Donna Garner, CFO, Celebrite: Will start with the Americans and then another European.

Andy Kramer, VP of IR, Celebrite: So I’ll give you a couple of very high level and topical use cases. And Donna can provide, I think, a much more fulsome story as well. You know, think about the first assassination on now President Trump. The shooter’s phone was collected in Butler, Pennsylvania. The nearest field office was in Pittsburgh.

They took the phone, which they Pittsburgh Field Office had some Celebrite capability, but they didn’t have all of our most advanced technology. They were unable to open that phone. The phone was then taken to a different lab a few hours away where they did have all of our latest and greatest bells and whistles. They opened that phone in forty minutes. So very high urgency to understand what information could be gleaned from that device.

Take a look at a case that’s dominating the headlines in the Northeast, especially in the Boston area where I live. Karen Reed accused of running over her boyfriend, a Boston Police Officer. That digital evidence on her phone, on the investigator’s phone, on the phones of individuals connected to, either related to or connected to the deceased will either help convict or exonerate that individual. So it’s very powerful technology. Donna, maybe you can talk about the case in Europe.

Donna Garner, CFO, Celebrite: Yeah, think one of the challenges that we are seeing and where money is actually being allocated to is to fight drug trafficking and border controls, and in our user forum that we have held first time in our lives in April, ’1 of our customers in Europe told us, and the rest of his colleagues, a very interesting story on how his authorities took down an international drug program that was, and seized few tens of millions, sorry, few hundreds of millions of drugs through that. Their border control naval organization identified a ship that was that was shipping next to the borders. They couldn’t understand what it’s doing there, it didn’t look like a fishing ship or anything that has been registered. The sea was very high and very difficult for that specific ship to go through. They came and boarded the ship itself.

The people there flew to the sea whatever they had, but the only thing they kept was their phones. And this is very typical for criminals. They think that nobody is going to touch their phones. They took them to shore, they extracted the phones and uploaded the data extracted into Pathfinder and created a picture of a small drug trafficking organization. And through this, the analysis of the data, they understood that they are communicating with someone outside of those three people.

They understood who is the leader of those three people, understood that there is another ship out there in the water waiting to drop to that specific one drugs to be taken to land. And so based on the information collected there, they started following and tracking the other ship. They succeeded in capturing it. They captured drugs in hundreds of thousands of non US dollar amount. They took the phones from the people there and they actually revealed an international drug trafficking organization where the drugs came from South America.

Most of the people the ship were from Asia, the finance came from The Middle East, and they couldn’t have done it without capturing the phones and analyzing the entire data and creating the network using our Pathfinder. And so this is what we are trying to do in helping law enforcement executing on their mission.

Unidentified speaker, Host: Got it. You showed healthy first quarter results, rule of 45 metrics. Can you provide us with more granularity on the ARR growth during the first quarter? How much of that growth was in a way driven by upsells versus new customers, new logos?

Donna Garner, CFO, Celebrite: So Ceramite is working with law enforcement agencies on the digital forensics market and digital intelligence since 02/2007. So over the years, through superior technology, we’ve become vendors to, I would say, the vast majorities of the Western European, American, South American leading agencies, and so we don’t really target a lot of new customers. Most of our sales and up sales is actually to new departments within existing customers. New customers traditionally contribute to around one and a half percent of our ARR growth, mostly from, I would say, agencies like state and local here in The States. And the rest is coming from upselling to our existing customer base.

What do we upsell? First and foremost, the biggest contributor of our upsell come from our insights, collection and review and analysis for the digital forensics unit solutions, whether it’s more licenses, whether it’s migrating our customers to our newer platform, or selling advanced capabilities around accessing the more newer phones that are being introduced to the market. The second contributors are actually the Pathfinder and the Guardian. Guardian is doing, finished its third consecutive quarter of growing more than 100%. Pathfinder is growing similarly, little bit faster than the average growth of the entire installed base.

Unidentified speaker, Host: Back back in the fourth quarter late last year, on the heels of Doge growing macro uncertainty, you indicated potential softness. I recall at the time you mentioned lack of personnel to pretty much approve some of the procurement on the side of the customers. That has seemed to evaporate, pretty much go away when listening to your first quarter public safety commentary. Can you provide us maybe with more color along these lines?

Andy Kramer, VP of IR, Celebrite: Sure. I’ll start. What I would say is that as you move through the transition of the old administration and the individuals there who depart and then the incoming administration, new individuals are appointed. And that process is still ongoing within certain agencies. But I think that top down, there’s also a much different level of pressure on how the government spends money.

And that’s across any and all of its different agencies. Combine that with changes in personnel, combine that with changes in procurement processes, combine that with potential uncertainty around what happens to certain agencies. You can think about the easy one is Department of Education. We don’t sell to them, but nobody knows when exactly that’s going to could go away. But there are smaller agencies that we sell to that don’t necessarily aren’t in control of their own destiny.

Department of ATF, Alcohol, Tobacco and Firearms, as an example. And so I think that what we’ve seen through the first quarter and what we expect to see in the second quarter is that I think that there’s a level of uncertainty around when spending will reengage in more meaningful levels among the customers that we sell to. We look at our pipeline and our pipeline grew meaningfully between mid February and mid May. That’s a great sign. You look at the things that are associated with the new programs and the increase in our pipeline, those align really well with the current administration’s new spending plan or new spending package that’s currently being debated in in the senate.

It’s billions of dollars for Department of Defense and civilian agencies like the Secret Service, Homeland Security, Department of Justice, ICE, you know, agencies that are going to be charged with border control, going to be charged with deportation of illegal immigrants, charged with drug enforcement, charged with preventing and stopping human trafficking. These are global issues and they’re big issues in The US. And so, you know, we can see potential headwind today converting to a meaningful tailwind into the future. The crystal ball is still a little murky exactly when some of that change will happen. But it is a, you know, we do believe it’s a when, not an if scenario.

Unidentified speaker, Host: From an R and D standpoint, you’re always faced with new model releases. Can you talk about your success with the latest iPhone and how your work with iPhone iOS differs actually from your work with the Android?

Donna Garner, CFO, Celebrite: So Celebrite has its own internal vulnerability research team. It’s a global team and has very good track record of success with tackling the new challenges that the OEM are setting to all of us. You know, they need to follow their commitment to privacy, we need to follow our commitment to support law enforcement in investigating crimes. We have been the leading provider around Android for years. We’ve been very successful in iOS as well.

We are actually the first one to be able to access iOS phones, and we believe that based on what we are bringing to the table, we’ll be able to continue providing such success. Sometimes it takes very short period of time, sometimes the challenge is bigger, and we take a little bit more time. I think the uniqueness of our market in comparison, I would say, to the intelligence market is that phones are being collected through investigation, are coming in different size and models and ages. And the vendor that actually has the biggest success is the one that has the biggest coverage of phones over time. And since we are in this market for many years and had provided success in a constant man constant manner, we are the best to be able to meet this challenge.

Unidentified speaker, Host: How many I think there there are more Androids than iPhones. What’s kind of

Donna Garner, CFO, Celebrite: I would say that the mark from a market perspective, Android is close to 80% of the global market. But when you look at where we are playing, whether it’s The US, Europe, you see very large percentage of usage of iPhones. You go to Asia Pacific, you go to Latin America and other places, Android is a very respectable is a very respectable share.

Andy Kramer, VP of IR, Celebrite: You know, what I would say to to to add on to that is that Android is not ubiquitous. Each phone OEM customizes Android to their particular set of of of phones. And so, you know, the ability to do both Android and iPhone along with feature phones, burner phones, legacy mobile phones, all of that. You know, if you can do iOS or iPhone 16 and iOS 18, that’s awesome. But if your phone was a Samsung Galaxy from four years ago and that’s the phone that needs to be examined, that’s the the challenge for law enforcement.

And so, you know, that breadth and depth of coverage really does make a difference.

Unidentified speaker, Host: Gen AI, without a doubt, has been topic du jour over the course of the past eighteen months during this conference. Can you talk to us how Celebrite uses AI, maybe internally, also externally, when we think about it from the insights, guardian, and pathfinder solutions?

Donna Garner, CFO, Celebrite: Gen AI is an amazing advancement in technology, but in law enforcement and in what we are doing, we need to be very careful not to break this very, you know, very delicate line between surfacing evidence and generating evidence. And it is clear through our customer advisory board that our customer expects us to use AI, to use Gen AI, but always, always in a manner that involve the examiners and the detective in the process. So we have started implementing some models into specifically our Pathfinder and our Guardian, which are investigative analytics, provide investigative analytics capabilities, but in a manner that you always take the detective or the examiners to the source. So if I would ask a question, what is the relation between Andy and Xiao? And the answer will be business relationships, the underlying data that’s brought the conclusion will be surfaced and presented for the eye of the investigator to be able to verify.

We have internally our own AI, I would say innovation team, that looks into advancements in the market, look at what our customer are looking for, and have its own roadmap to be implemented in our solution, and we would follow suit.

Unidentified speaker, Host: Who do you view as your chief competitor? And and why do customers choose kind of you guys rather than some of the other players out there? It would appear as if the barriers of entry are very high, that there aren’t too many newcomers. Kind of help us understand what you’re seeing out there.

Donna Garner, CFO, Celebrite: Want start?

Andy Kramer, VP of IR, Celebrite: Sure. You know, think you’re right. And, you know, to the extent that Celebrite delivers a digital investigation platform that really helps customers from start of a crime through to its completion. And that’s around collecting and reviewing information contained on digital devices, being able to store, share, collaborate, and then being able to analyze. So in the digital forensics side of our business, and we do have competitors in each of those primary areas.

So in digital forensics, you know, we’re very fortunate. Celebrate’s both a verb and a noun. You celebrate a device and then you you create a Celebrite report. And, you know, I think that the capabilities that matter most in digital forensics, the ability to access, the ability to extract all of the data off the phone, hidden data, deleted data, data that’s not connected to the operating system itself. And then the ability to, once you’ve done the full file system extraction, all of that data, convert it, reconvert it, decode that binary code and convert it back into human readable information.

And so in some ways, we’re almost agnostic as to what extraction tool may be used. Eight out of 10 of our customers are going to use our decoding engine, which is very important. It’s a multi vendor environment. We’re very fortunate to be the primary for mobile for the, you know, primarily around the breadth and depth of our coverage there. The larger the customer, the more likely they are to have a myriad of tools at their disposal.

They want multi vendor environment because they want to be able to validate and verify findings from one software solution on another. And then I think just the range of devices that are out there, range of phones, applications that sit on phones, computers, laptops, tablets, CCTV, drones, automobile infotainment systems. It’s simply too much for any one vendor to be able to do everything. And so there’s specialists that are out there to augment that. And then as you move into the other areas, I would just say that those are more greenfield opportunities and they’re ones where the mode of operation is shifting.

When you look at evidence management, the way that information has historically been shared is on USB drives. So we don’t have to displace a competitor. We have to convince our customer that the cloud is a secure place to share that type of information and that the benefits, the way you can fortify your chain of custody is worth

Unidentified speaker, Host: Questions from the audience before we proceed?

Unidentified speaker: You. Yeah. Thank you for doing this. First question is on, can you talk a bit, Dan, about insights and the impact insights has had on your pricing and the margins and added to that your spring release?

Donna Garner, CFO, Celebrite: Great, thank you. So if you would have come to buy from Celebrite two years ago our collection of solutions for access, collect, and review data, you would see a long list of spoken solutions, very known to the market, and you will need to subscribe one by one and not necessarily work in a very integrative manner between themselves. In Insight, what we’ve taken a decision was to take the most important capabilities that have been sold to customers and package them under one, I would say, how do you call it, Happy Meal?

Andy Kramer, VP of IR, Celebrite: Yeah.

Donna Garner, CFO, Celebrite: Okay. But add to that a proper workflow and additional capabilities that have not been sold before and we thought that are very important for our customers, including triaging and, for example. And that allowed us to offer to our customers a more modern platform that is cloud enabled for those customers that want to collect some of those capabilities to the cloud in three different flavors and with additional add ons that before that had no we didn’t have the proper workflow and UI to work with the insights. So insights is a newer, modern, much more capable solution that our customer could have bought from us before. Average price compared to, I would say, the most comparable solution we had before, which was the Eufid and the physical analyzer, is around $20.25 percent more expensive, but if you would have taken all those capabilities we’ve integrated in and sold them separately, our customer would have bought it for much more.

The impact of transitioning customers to Insight, which we started after the announcement in January 24, was preceding our expectations. So we started ’24 expecting to transition around 10% of our customer base, understanding that the public sector, if they didn’t have the budget ready upfront, they might not be able to finance this upgrade and its financial implications, we finished the year with more than 20, and we are now at the end of the q one with 30% of the customers already of the installed base already in sites, installed base. And as Andy mentioned before, we expect to finish the year with 50%. I think the added value is much more than just the increase in price. I think the added value is the impact on customer satisfaction, our ability to improve our gross retention rate, and the easiest mode of operation of our customers to integrate with our analog capabilities, with Guardian, and the readiness of the offering to to work with the cloud as we are moving more and more of our capabilities from on prem to be cloud enabled.

This would allow us to unlock later on additional monetization of those capabilities.

Andy Kramer, VP of IR, Celebrite: And just to build on that real quick, I mean, the other evolution that is well underway is a shift of, you know, sort of from per seat, per user pricing to more pricing that’s geared around volume and value and more enterprise centric in its nature. And so we’ve seen that that allows us, especially around cloud related offerings, to be much more agile in the way we price and package. And so that the smaller customers that we service and support can use and leverage the same capabilities that, you know, the three letter agencies use. Understood.

Unidentified speaker, Host: With that, I think we are just on time. Dana, Andy, thank you so much for joining us.

Donna Garner, CFO, Celebrite: Thank you for hosting.

Andy Kramer, VP of IR, Celebrite: Thank you. Thank you.

Unidentified speaker, Host: All right.

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