Cellebrite DI .(CLBT) - 2023 Q1 - Quarterly Report

Cellebrite Fourth Quarter 2022 Results Overview Fourth Quarter 2022 Financial Highlights Cellebrite's Q4 2022 revenue grew 9% to $74.0 million, with subscription revenue up 24% and Adjusted EBITDA reaching $16.1 million Q4 2022 Key Financial Metrics | Metric | Q4 2022 | YoY Change | | :--- | :--- | :--- | | Total Revenue | $74.0 million | +9% | | Subscription Revenue | $62.3 million | +24% | | Adjusted EBITDA | $16.1 million | N/A | | Adjusted EBITDA Margin | 21.8% | N/A | | GAAP Gross Margin | 83.6% | N/A | | GAAP Diluted EPS | $0.04 | N/A | | Non-GAAP Diluted EPS | $0.08 | N/A | - The recurring revenue dollar-based net retention rate was 130% for the fourth quarter[42] Full Year 2022 Financial Highlights Full year 2022 revenue grew 10% to $270.7 million, with ARR up 33% to $249 million, though Adjusted EBITDA decreased Full Year 2022 Key Financial Metrics | Metric | Full Year 2022 | YoY Change | | :--- | :--- | :--- | | Total Revenue | $270.7 million | +10% | | Subscription Revenue | $216.0 million | +18% | | Annual Recurring Revenue (ARR) | $249 million | +33% | | Adjusted EBITDA | $25.9 million | N/A | | Adjusted EBITDA Margin | 10% | N/A | | GAAP Net Income | $120.8 million | N/A | Management Commentary Management emphasized strong market leadership and a successful subscription model transition, positioning for accelerated 2023 growth and profitability - CEO Yossi Carmil stated the company ended 2022 with solid results, fueled by industry-leading technology and investments in platform innovation and go-to-market strategy[2] - CFO Dana Gerner highlighted the successful transition to a subscription model, with 84% of Q4 revenue from subscription licenses and a 33% annual growth in ARR[22] - The company is positioned to increase its revenue growth rate and sustain ARR momentum in 2023, while aiming for its long-term EBITDA margin target of 20% or greater[22] Business and Operational Highlights Key Business Developments in Q4 2022 Cellebrite secured 29 large deals including $14 million and $10+ million contracts, launching new cloud capabilities and partnerships against human trafficking - Closed 29 large deals, each valued at $500,000 or more[20] - Secured major contracts, including a $14 million deal with a leading law enforcement agency in Asia and a $10+ million deal with a major West European national police force[36][59] - Launched new cloud workplace app collection capability for Cellebrite Endpoint Inspector to improve eDiscovery for corporate investigations[44] - Partnered with organizations like the GLAA and The Exodus Road to help combat forced labor and human trafficking[37] Financial Outlook Full Year 2023 Guidance Cellebrite projects full year 2023 revenue of $305-315 million, ARR of $300-310 million, and Adjusted EBITDA of $35.0-40.0 million Full Year 2023 Financial Outlook | Metric | 2023 Guidance | YoY Growth | | :--- | :--- | :--- | | Revenue | $305 - $315 million | 13% - 16% | | ARR | $300 - $310 million | 21% - 25% | | Adjusted EBITDA | $35.0 - $40.0 million | N/A | | Adjusted EBITDA Margin | 11% - 13% | N/A | Financial Statements Condensed Consolidated Statements of Income Full year 2022 revenue increased to $270.7 million, gross profit rose, operating income decreased, but net income surged to $120.8 million due to financial income Full Year Income Statement Highlights (in thousands) | Account | 2022 | 2021 | | :--- | :--- | :--- | | Total Revenue | $270,651 | $246,246 | | Gross Profit | $219,905 | $203,689 | | Operating Income | $1,044 | $13,822 | | Net Income | $120,805 | $71,396 | Condensed Consolidated Balance Sheets As of December 31, 2022, total assets increased to $403.3 million, liabilities decreased, and shareholders' equity turned positive to $73.9 million Balance Sheet Summary (in thousands) | Account | Dec 31, 2022 | Dec 31, 2021 | | :--- | :--- | :--- | | Cash and cash equivalents | $87,645 | $145,973 | | Total Assets | $403,293 | $339,783 | | Total Liabilities | $329,428 | $413,130 | | Total Shareholders' Equity (Deficiency) | $73,865 | $(73,347) | Condensed Consolidated Statements of Cash Flow Full year 2022 operating cash flow was $20.6 million, with a $56.7 million net decrease in cash due to investing activities Full Year Cash Flow Summary (in thousands) | Account | 2022 | 2021 | | :--- | :--- | :--- | | Net cash provided by operating activities | $20,577 | $36,052 | | Net cash (used in) provided by investing activities | $(91,231) | $45,226 | | Net cash provided by (used in) financing activities | $13,970 | $(68,397) | | Net (decrease) in cash and cash equivalents | $(56,684) | $12,881 | Reconciliation of GAAP to Non-GAAP Financial Information This section reconciles GAAP to non-GAAP financial measures, adjusting for non-cash items, with full year 2022 GAAP net income of $120.8 million adjusted to $19.7 million non-GAAP Reconciliation of Net Income to Adjusted EBITDA (Full Year, in thousands) | Account | 2022 | 2021 | | :--- | :--- | :--- | | Net Income (GAAP) | $120,805 | $71,396 | | Financial expense (income), net | $(119,716) | $(68,483) | | Tax expense (income) | $(45) | $10,909 | | Share based compensation | $13,708 | $6,480 | | Depreciation & Amortization | $9,194 | $7,007 | | Adjusted EBITDA (Non-GAAP) | $25,906 | $47,905 | Supplemental Information Key Performance Indicators (KPIs) The company uses Annual Recurring Revenue (ARR) and Dollar-Based Net Retention Rate (NRR) as key performance indicators for subscription and customer revenue growth - Annual Recurring Revenue (ARR) is defined as the annualized value of active term-based subscription license contracts and maintenance contracts in effect at the end of a period[25] - Dollar-based Net Retention Rate (NRR) measures recurring revenue growth from existing customers over a trailing four-quarter period[66] Non-GAAP Financial Information Explanation Cellebrite uses non-GAAP measures to provide a clearer view of operational performance by excluding non-cash and acquisition-related adjustments - The company uses non-GAAP measures to provide a more meaningful comparison of its operational performance from period to period[8][63] - Adjustments typically exclude non-cash expenses like share-based compensation and amortization of intangible assets, as well as acquisition-related costs and the impact of financial instrument remeasurement[8][24][48] Forward-Looking Statements This report contains forward-looking statements subject to various risks and uncertainties, including technological changes, market competition, and macroeconomic conditions - The document includes forward-looking statements regarding revenues, earnings, performance, and strategies, which are subject to risks and uncertainties[11] - Key risk factors include the ability to keep pace with technology, dependence on law enforcement and government agencies, intense competition, and macroeconomic conditions[11]