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01/11 07:32
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call summary shows strong financial performance with optimistic guidance, particularly in ARR and revenue growth. The Corellium acquisition and FedRAMP authorization are strategic positives. The Q&A reveals confidence in resolving CFIUS issues and strong demand in defense and intelligence sectors. Despite some management vagueness, the overall sentiment is positive, supported by strategic initiatives and growth prospects.
ARR (Annual Recurring Revenue) ARR grew 19% year-over-year to $440 million. Sequentially, ARR increased 5%, reflecting increased spending by existing customers.
Subscription Revenue Subscription revenue grew 21% year-over-year, driven by strong performance in the U.S. state and local segment and the Latin America region.
Adjusted EBITDA Adjusted EBITDA grew 20% year-over-year to $37.7 million, with a margin expansion of 60 basis points to 29.9%. This reflects thoughtful capital allocation and disciplined hiring.
Revenue Revenue increased 18% year-over-year to $126 million, primarily due to subscription revenue growth.
Gross Profit Gross profit increased to $106.5 million, representing a gross margin of 84.5%. This reflects ongoing investment in cloud infrastructure and federal ATO processes.
Net Income Net income was $36.9 million, or $0.14 per diluted share, reflecting a slight increase in weighted average diluted shares outstanding.
Free Cash Flow Free cash flow for the third quarter was $30 million, and for the trailing 12 months, it was $140 million, representing a 31% margin compared to 27% in the prior 12-month period.
SaaS and Cloud-Based Solutions ARR ARR for SaaS and cloud-based solutions grew three times faster than total ARR, with Guardian ARR growing over 100% year-over-year for the fifth consecutive quarter.
Inseyets Offering Conversion: 47% of the installed digital forensics license base converted to Inseyets, with a target of 50% by year-end 2025.
Guardian Investigate Launch: New AI-powered SaaS solution to launch in early 2026, aimed at transforming investigation workflows.
Corellium Acquisition: Pending acquisition of Corellium to expand TAM and value proposition, particularly in defense and intelligence sectors.
U.S. Federal Segment Growth: Year-over-year growth achieved in Q3, with expectations for a resurgence in 2026.
D&I Sector Expansion: Growth in global defense and intelligence sectors, particularly in Europe, supporting use cases like antiterrorism and border control.
ARR Growth: Annual Recurring Revenue grew 19% year-over-year to $440 million.
SaaS and Cloud ARR Growth: ARR for SaaS and cloud-based solutions grew three times faster than total ARR.
Adjusted EBITDA: Increased 20% year-over-year with margin expansion to 29.9%.
AI and Digital Investigations: Focus on AI-driven solutions like Guardian Investigate to enhance investigation capabilities.
Unlock and Access Solutions: Leadership in Android and iOS unlock solutions, with 45% of Inseyets and legacy forensics base attached to unlock offerings.
U.S. Federal Segment Growth: The company does not expect a full return to normalized growth in the U.S. Federal segment until calendar 2026. Spending headwinds, leadership changes, and government seasonality, combined with a recent shutdown, are cited as challenges. These factors are considered transitory but could impact near-term performance.
Corellium Acquisition: The acquisition of Corellium is pending and subject to CFIUS requirements. Delays or complications in closing this acquisition could impact the company's ability to expand its TAM and value proposition, particularly in defense and intelligence sectors.
Macroeconomic and Geopolitical Risks: Crime and geopolitical risks are increasing, which could drive demand for Cellebrite's solutions. However, constrained budgets for public safety labor could limit customer spending, impacting revenue growth.
U.S. Federal Sector Spending: The timing and magnitude of spending in the U.S. Federal customer segment remain uncertain. This has been a challenge in 2025 and could continue to impact financial performance.
Cloud Infrastructure Investment: Ongoing investments in cloud infrastructure, including the federal ATO process, are increasing costs. While these are strategic, they could pressure margins in the short term.
AI and Digital Investigations: The company is investing heavily in AI-powered solutions like Guardian Investigate. While these innovations are promising, they require significant upfront investment and carry execution risks.
Sun Corporation Shareholder Overhang: Sun Corporation owns 40% of Cellebrite's shares. This concentrated ownership could create an overhang, potentially impacting shareholder value and limiting strategic flexibility.
ARR Growth: ARR grew 19% year-over-year to $440 million in Q3 2025. Sequential ARR growth is expected to continue in the mid-single digits for Q4 2025. ARR for SaaS and cloud-based solutions grew three times faster than total ARR.
Revenue Projections: Full-year 2025 revenue is projected to be in the range of $470 million to $475 million, representing 17% to 18% growth. Q4 2025 revenue is expected to be between $123 million and $128 million.
Adjusted EBITDA: Full-year 2025 adjusted EBITDA is projected to be in the range of $124 million to $127 million, with a margin of approximately 26% to 27%. Q4 2025 adjusted EBITDA is expected to range from $35 million to $38 million, with a margin of 28% to 30%.
Free Cash Flow: The company expects a free cash flow margin of approximately 30% for 2025, with a trailing 12-month free cash flow of $140 million.
U.S. Federal Sector Growth: Growth in the U.S. federal sector is expected to resume in 2026, driven by targeted funding, pent-up demand, and FedRAMP authorization to operate with DOJ sponsorship in early 2026.
Guardian Investigate Launch: The AI-powered Guardian Investigate solution is set to launch in early 2026, aimed at transforming the investigation lifecycle and driving AI-enabled insights.
Corellium Acquisition: The acquisition of Corellium is expected to close by the end of 2025, expanding TAM and value proposition, particularly in defense, intelligence, and private sectors. Initial ARR contribution from Corellium is anticipated in 2026.
2026 ARR Growth Drivers: ARR growth in 2026 is expected to be driven by new customer acquisitions, price increases, broader adoption of Inseyets, and expansion of Guardian and Pathfinder solutions. Corellium solutions are expected to contribute incremental ARR growth.
Profitability and Margins: The company plans to maintain a free cash flow margin of 30% or greater in 2026, with incremental improvement in adjusted EBITDA margin driven by operating leverage and AI investments.
The selected topic was not discussed during the call.
The earnings call summary shows strong financial performance with optimistic guidance, particularly in ARR and revenue growth. The Corellium acquisition and FedRAMP authorization are strategic positives. The Q&A reveals confidence in resolving CFIUS issues and strong demand in defense and intelligence sectors. Despite some management vagueness, the overall sentiment is positive, supported by strategic initiatives and growth prospects.
The earnings call summary provides a mixed picture. While there is strong ARR growth and positive developments in AI and cloud innovations, the reduction in full-year revenue guidance and weaker U.S. federal environment are concerns. The Q&A section highlights confidence in federal spending recovery and strong renewal rates, but also notes timing issues impacting ARR. The company's market cap suggests moderate stock volatility. Overall, the combination of positive long-term growth drivers and current challenges leads to a neutral sentiment, with stock price likely moving between -2% and 2% in the next two weeks.
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