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Cellebrite reported a strong third quarter, with earnings of 17 cents per share coming in well ahead of the 9 cents analysts expected. Revenue hit 150 million dollars, matching targets, while annual recurring revenue, the predictable subscription income the company relies on, grew 20 percent to reach 535 million dollars. Management noted that growth was driven by strong performance in international markets and a pickup in demand from U.S. federal agencies.
This result is a good sign for the company's shift into a broader software platform. Its new "Genesis" product gained traction in its first full quarter, and the business is proving it can grow while staying highly profitable, reporting a 31 percent free cash flow margin. For long-term owners, the key is that federal adoption and new product launches are successfully offsetting any tighter budgets at the local police level.
See the full quarter, and how our tracked metrics did
Source: Company earnings report
Cellebrite has appointed Rogerio Rizzi as Executive Vice President of Corporate Strategy and Development. Rizzi joins from Okta and previously held leadership roles at SAP, bringing experience in managing software platforms and mergers and acquisitions.
This role is important because the company is currently trying to move beyond its roots in unlocking mobile phones to become a broader data management platform for law enforcement. Having a dedicated leader for strategy and acquisitions suggests Cellebrite may look to buy smaller software firms to fill out that platform and keep its recurring revenue growing.
Source: PRNewsWire
Cellebrite is scheduled to report its latest quarterly results on November 12. Analysts are looking for revenue of about 150 million dollars and earnings of roughly 9 cents per share. For a long-term owner, the most important numbers will be the annual recurring revenue, which measures the steady subscription income the business brings in, and net retention. Net retention shows if existing police and federal agencies are spending more on the company's software over time, which is a key sign of a healthy, growing software business.
Cellebrite is beginning the process to redomicile, which means it will move its legal headquarters and incorporation from Israel to the United States. While the company already has a large presence in Virginia, this formal move can make the stock easier for more U.S. investment funds to own.
For a company that sells digital investigation tools to government agencies, being a U.S. corporation can also simplify the process of winning large federal contracts. It removes certain regulatory hurdles and perception issues that can sometimes come with being a foreign-domiciled firm in the sensitive public safety and defense sectors.
Source: PRNewsWire
Cellebrite Guardian, the company's cloud-based tool for managing digital evidence, completed an independent security assessment in Australia. It reached the "Protected" level, which is a specific standard required for many Australian government and national security agencies to use cloud software. This is a small but necessary step for Cellebrite to grow its business outside of the U.S. and Israel. By meeting these local security standards, the company makes it easier for international police and defense departments to move their evidence management away from old paper or hard-drive systems and onto Cellebrite's subscription software.
Source: PRNewsWire
After four straight quarters of falling short, management just delivered a massive profit beat. This suggests they have finally caught up with the rapid growth in their federal business.
| Expectation | |
|---|---|
| EPS | $0.11 |
| Revenue | $147M |