if I'm not mistaken. Glad everybody could join us. My name is Shaul Eyal. I lead TD Securities, Cybersecurity Research. We are very happy to host Dave Botter, CFO of Celebrite, Andy Kramer, VP of IR. This is, as you can see, a fireside chat. But by all means, any questions, just raise your hands. feel free to keep it as interactive as possible. Gentlemen, thank you so much for joining us. Andy or Dave, maybe for those slightly less familiar with Celebrite, can you maybe provide us an outline about what is it that Celebrite does for a living?
First off, thank you so much for having us. This is a great highlight for us. Celebrite is really a company that's focused on public safety so as a vertical software company we really do pride ourselves on our ability to to ultimately serve nations communities and quite frankly you know all the citizens in terms of being able to really provide provide and support um lawful um and ethical investigations so that's kind of the heart of what we do our products now represent a full platform, our ability both with a very unique hardware software solution in terms of how you might gather information, whether it might be from a cell phone, whether it could be from a computer, could be something like SD or a SIM chip, or now drones. And so we have the ability to extract information. Our superpower is the ability to do a full file extract. And what that really means is we can ultimately go through over 500 applications, over 50 cloud services, and be in a position where we can garner a tremendous amount of intelligence. We have an evidence management platform that allows customers to maintain full chain of custody. It has an AI viewer that allows not just an examiner to interact with the data, but also allow a detective or potentially even a district attorney. And that platform is growing at a very high rate. we call out over roughly 100% for the last six or seven quarters adoption of cloud is a big deal within public safety particularly the governments are probably laggard adoptions in terms of that type of technology and delivery model and then we have a variety of products around intelligence we can ultimately help you take two or three hundred phones and bring them together we ultimately have a gen AI product that we recently launched. And we also now have a purpose-built solution for investigators and detectives that incorporates AI. So it has full workflow, task management, but it really accelerates lawful investigations. And so really kind of working end-to-end, we're pretty excited about the
platform we've put here. That's great. That's great. And you know, you just, you know, just two weeks ago reported a solid set of results, one-two results with affirmation of your 2026 targets. Maybe, Dave, can you double click on some of these items and also how do you see 2026 potentially unfolding from that perspective?
That's a great question. I think what we were excited about from a customer perspective, first and foremost, we kind of highlighted it because it was really nicely captured in our EMEA theater where we saw growth accelerate about 10 points year over year from mid-teens to mid-20s. And what that really reflects, when you think about national level public safety, is a series of programs. And in the U.S. we're a little bit unique, but overseas, if you think customs and borders as an example, it's a national program, but it usually goes into the defense side of the equation for many countries. And so we saw that defense side of the business within Europe. We also saw it within Asia Pacific as well, continue to accelerate as nations become much more protective of their borders, much more protective of their citizens particularly given all the geopolitical tensions and so that's a commercially speaking we've always had a lot of strength in state and local government and that continues to be a really great part of our business but at a national level having national programs whether it's around safety whether it's around organized crime in some cases it's around narcotics all of those are actually becoming much more important to the company and then the other piece that we alluded to on the call is we're starting to get to that point with a broader array of products. Platform agreements are starting to become a part of how we engage with states. Having a broader product roadmap, we'll have nearly a dozen releases of product this year. All of that is ultimately stimulating that relationship where it wasn't uncommon for a customer previously to only buy one or two, but now you're getting into a situation where we're having a much more holistic conversation. I think just to build on
that you know ironically a year ago compare where we are now versus a year ago new leadership you know Tom's taken the permanent CEO role Dave's joined us as CFO the product portfolio is much more robust it's a you know we're fulfilling the vision we had when we talked about an end-to-end platform and so being able to to deliver a solution for storing not only celebrate data but all evidentiary artifacts being able to analyze all of that rich and robust information you know I think we're at a really interesting inflection point and I think the other dynamic that's starting to change is the level of spend from the US federal government yep well yeah we'll get to that thank you for
that both back in back in late February clearly anthropic released clods security code we've seen a couple of other you know frontier AI related models sending shivers on the one hand you know we've seen nice correction actually over the course of the past say you know four or five six weeks or so curious as to how you see AI as a tailwind as a potential headwind to kind of you know your platform and how you know as you also think about kind of audio product
involvement longer term sure and I think we'd be happy to share some perspective I mean we think of of AI as a tailwind and a force multiplier and ended up positive but I think you know it might be helpful because you published some research pretty recently on we need those and and we know what anthropic is trying to do and with with that particular capability you know maybe share your perspective on how it impacts the security community more broadly and and you know from a celebrate perspective we can share how we think
about it absolutely I'll put it as a note it's a good point happy happy you brought it up so just over the weekend the 90 days update came out and I think the major takeaways are on the one hand 10x velocity with kind of the ability to spot you know new threats a couple of companies couple of partners that participated say like Clowter for example flagged many many concerns that they were able come to spot given a 10x velocity of scanning capabilities I think it also brings up the question, you know, whether we're seeing the big platform providers as becoming more of beneficiaries. There's going to be pretty much, much more partnerships along these lines. It's not going to be a zero-sum game from that perspective. Yet, you know, there's going to be a couple of categories and subcategories that are slightly more qualitative risk given cloud's capabilities, say application testing, which is a really kind of a smaller subsector we don't have a publicly traded company in Palo Alto they do have like a small asset that they acquired three four years ago but it's tiny there's several private companies in the space they could be seeing potential headwind we don't have any standalone call it public entity in that respect but again the takeaways partnerships platform providers and And probably more of a tailwind rather than a headwind as initially perceived back in late February into early March.
That's great.
Is that also, could that be how you guys, you know, be observing it from where you sit?
I think we are just a pro-AI company in many respects. Pro-AI meaning similar to an anthropic, we employ researchers. Similar to anthropic, we have inference engineering. We are, I'd say, on the balls of our feet in the sense that we have a very unique ecosystem of people that represent our human capital in the form of what do we do around research or what do we do around the engineering. And so our general viewpoint is our innovation, particularly around our product, and I brought it up earlier, we have a hardware appliance, we have a cloud, we have a very unique approach. And so from that standpoint, we look at AI as a net positive to our business in the sense of it certainly is changing our innovation cycles in terms of how we build product, certainly changing how we run our company. It's certainly leading to new products that we're bringing to market. I think we remain positively encouraged. Again, we believe based on our calls with all the mega caps, we feel pretty comfortable with the path that we're on. But we're humble because we still view it as early days around AI. Again, we love the feedback we're getting on our agentic product, Genesis, from customers. And so from that standpoint, I think we're probably in awe of the power of AI. I think we're excited about it, and we are running about as fast as we can. And we take nothing for granted.
Sure, sure. So maybe on that topic, on Genesis and your Dave. So not even two months, about, you know, two months, give or take, that you launched it, not GA yet, kind of letting some of your customers play with it, let us know. And it would appear as if they are quickly becoming addictive, given some of, you know, the commentary made on the recent conference call. Maybe you want to kind of share some thoughts and views on Genesys.
Andy, do you want to hear a couple of highlights?
Yeah, so, you know, maybe I'll sort of set the table and then Dave, you know, can build off of it. You know, I think that when we launched Genesys, you know, whenever we launch a new product, we typically sign up a cadre of customers, could be a half dozen to a dozen customers, to really help us, we call them design partners, you know, test that solution and their feedback will help guide future enhancements and what we need to get that product into general availability. we were overwhelmed with the interest levels that came from our customer base. Instead of 6 to 12 customers and users, we had over 500 users representing several hundred agencies globally. These are national agencies, these are regional, these are local police departments. And, you know, the feedback came in very quickly and was incredibly compelling relative to accelerating the speed at which these detectives, investigators, prosecutors could get to the signal from the noise in terms of all of the data that they were trying to analyze. taking weeks of investigative manual painstaking and tedious work and compressing that into 15 minutes in some cases half hour hours so you're talking orders of magnitude of productivity and ultimately that is enabling them to get to prosecute and or exonerate much faster than they would have otherwise been able to do so I'll pause there and maybe Dave if you want to build on that
I think you really hit on it. I think the pieces that really kind of came to me were customers saying, gosh, I would have spent two weeks and incurred massive overtime in order to do something that now is a 15-minute exercise. I met another customer, and this kind of got to, how will they pay for it? One customer observed, if I go to court, it will cost me $15,000 to $25,000. And they look at this and say, gosh, a DA would love to have access to this product or perhaps that special analyst or a special investigator that works for the DA to be able to get to a point where they can say, gosh, I really have a great foundation of evidence. This is a case that naturally should be settled. Let's save all of our taxpayers a lot of money. The last part that really, I'd say, kind of hit home for me was there was a case involving a younger person and the evidence really stacked up against this person. But through Genesis, they actually exposed a lot of interesting and unique insights and quickly actually came down to it became an exoneration as opposed to one of those situations where the prosecution geared up. And so in the world that I think we're very warrant-based, we're very lawful in our approach, very ethical in our approach to AI, I think we're very encouraged around how this is actually changing the game for law enforcement.
And if you think about, maybe just to build up of that further, this is a pretty meaningful opportunity for us. We'll be a first mover in this space if you think about the traditional buying centers and users of Celebrite technology that have been largely technical in the digital forensic units and labs of various national defense, intelligence, law enforcement, state, local police departments. So this gives detectives, analysts, prosecutors, very powerful tool to get to actionable intelligence much faster than they could do through a manual review so the you know compressing the cycle times we believe that it opens up you know meaningful tam to us that you know previously we have been limited in our ability to tap into yeah so maybe
relating to that on your recent conference call. Tom, the CEO, made several bullish comments about investigative AI and that potential to expand celebrates TAM opportunity. Do you want to go back and double-click on that? I don't know if we want to add even numbers around it.
The approach that we took on the call and the approach we took to sizing was really geared around the idea that within law enforcement there's a heuristic and for example a customer might say hey we budget a thousand dollars for a gun a handgun that's where that sits in the line item or maybe even for a taser it's ten thousand dollars and where we started to get to where with our customers i said we can imagine a quarter of a detective ultimately you know ultimately starts to amount to ai spend and so So that was our approach that said you may start off at $1,000 per detective per month or you may start even at a lower level of spend commitment. But the tipping point of, hey, this is a force multiplier, we think actually gets to be about a quarter of a detective. And so that was actually our approach to sizing and saying, okay, you have a heuristic in mind for every part of law enforcement. Let's lean in on that, and let's figure out, okay, if that's where we're skating towards, where you're actually thinking about it as a tradeoff between human capital investment versus human capital productivity. That's an interesting way for us to size it since so much of your spend is already sized that way. And so that was kind of a leading indicator for us of how we thought about the potential of this market. Our view right now is, quite frankly, very centered on adoption and using it exactly the way Andy described it. There's not a frontier model that seems to be really scratching the itch for law enforcement. They seem to need something that looks more akin to a vertical language model. That's where we put all of our research, our training, and our engineering effort is really to meet that need. Our focus is let's drive adoption, and then probably towards the end of June, we'll start driving monetization among some of the early adopters who have been using it for several months.
And as you start to think about that, and you described, and I think our language on our call, as this can be addictive for detectives they won't go backward after they've tried a product like this because their productivity is elevated to a very different level and so if you're a counterterrorism you know professionally counterterrorism unit you're a detective there and you're able to you know spend a couple of hours and untangle a financing network for a terrorist organization that would have taken several people several weeks and or months worth of time that's a game-changer and you know I don't think the the you know that opportunity with that particular customer there are ten people in that unit you know they want to spend money they want to buy that product but more importantly there are several hundred detectives across various other crime types who you know that initial foot in the door will hopefully open wider into those other opportunities let's maybe touch on
insights all right just for a second maybe that you can outline the insights and where are we in the migration process of insights yeah that's fair yeah
that's a great question so maybe just for those who have been tracking and we we ultimately when we launched the ability to unlock and have an extraction process We had a variety of tiers. What we've been running, I think last year we finished about 55% of our customer base had moved over to Insights. What Insights represented was actually a very simple offer. It was at a fundamental level, do you want a premium UFDR experience? And so the UFDR is the extraction that comes out of the phone. If you want a premium experience, this is probably for you. If you want better manageability and be able to manage your fleet and be able to manage all these upgrades that come through Android or iOS or other platforms, You want better manageability, this is probably an offer for you. And finally, if you want more automation in the platform, then you ultimately want to migrate. And so in the end, we've had something in there for everybody in terms of, do you want a premium experience? Do you want better manageability? Do you want automation? And ultimately, for that benefit, there's certainly a modicum of cost, but there is a lot of inherent customer value in three different ways. And so our view is we've been taking down 20%, 25% of the customer base in any given year. We think we'll certainly cross 80% this year roughly and maybe do a little bit better. But I'd say the value seems to be working well for the customer base.
One of the frequent investors' questions we get, which sometimes could be observed as a potential risk, is that ongoing ability to unlock for example the iOS landscape and what we've been telling investors from that perspective if history is any guy I know that past performance is not indicative of future performance but it's still if history is any guide it'll always take you know a few months and it will be sorted out, as by the way I think we had seen, when thinking about the iOS, like the 17. Is that the right way to think about it? Could that longer term change? It would appear as if, you know, Apple has been trying to put more guardrails, more obstacles from that perspective, yet.
I think when you look at it macro-wise, and you'd say, gosh, the leading competitors generate about a billion dollars of revenue today, maybe a little bit more. And the OEM manufacturers generate hundreds of billions of dollars. Yet, they have great confidence in terms of, I'd say, the engineering they do, but also the engineering that we do and the value of the service that we provide. And I'd say Andy and I have a lot of conviction, as does Tom, in terms of our approach around R&D. So I think, you know, having worked at Microsoft earlier in my career, You know, it's one of those I never doubt the power of one of the bulge bracket or big brands But at the same time I guess I have a lot of confidence in what we do and the role that we play And so I think it is one where we approach the world with a lot of humility around the you know The fact that we are competing against companies that are much bigger than we are and yet for a number of years We've always you know managed to deliver that service that is so important to public safety and so So my general view is, you know, the will will find a way in the form of this is incredibly important forensic information. Law enforcement can't work without it. The unlock is a key piece. The ability to forensically extract all of that information might even be more important because, as you know, we're going after over 500 applications, over 50 cloud services, some of the most encrypted information. even after the phone is unlocked we still have to get all that information and so that's the power maybe of our research team is not just doing a I'll call it the magic trick of unlocking a phone but really to be able to garner all that insight and so I'd say we feel really good about our technical chops but I would never want to say that I would never want you to think that we're arrogant because we do compete against larger companies and you know the level of investment
that we're making today is I think meaningfully and demonstrably higher than where we were maybe 24 months ago, we now own an asset, Corellium, that specializes in vulnerability research. We work with multiple third-party specialist firms who build their IP around stringing together vulnerabilities and building exploits. And so they augment the teams that we have that are globally dispersed and that are expert in the tradecraft. So, you know, I think that, as Dave said, I mean, we don't want to be, you know, presumptive around our ability to continue doing it, but we've built a good track record and just the same as, you know, a portfolio manager has a track record for outperforming the marketplace, we have our own track record for continuing to deliver solutions that impact our customers. and as Dave mentioned I mean the the capable you know what's interesting is that even when a phone goes into a lab unlocked it won't stay that way and the majority of the time it doesn't stay that way is because there's a victim there's a witness there's even a suspect who readily provide their consent to examine that device and they'll provide the password and in the minority of cases where there is no compliance then technology like celebrate is is you know impactful but the same exploits that we build to get access to the device are necessary and impactful in extracting the data and decoding that data and the
you mentioned at the early part of the conversation fed ramp it has been a key focus for investors last year without it out into 2026 can can you guys update us on the progress achieved so far and maybe in that context your May 6th
announcement mm-hmm you're on a roll all right I'll start so yeah we were thrilled you know to receive the the formal authorization to operate for our FedRAMP compliant cloud solutions and it opens up a new opportunity within the US federal government the Department of Justice was our sponsor and it was a multi-year two plus year multi-million dollar investment on celebrite's part and if you think about the opportunities to grow with us federal now they are multifold in that we can continue to support their needs for digital forensics but that next step and think about the types of agencies that we work with civilian department of war but department of defense you know those are our agencies particularly on the civilian side that into interoperate and collaborate with state and local agencies so not only is the the FedRAMP authorizations significant and opens up new spend within the US federal government but that collaboration will undoubtedly create a halo effect where agencies around the world not only in the US will look to the US federal government and say if it's good enough for the US federal government why aren't we looking at a solution like this and you know i think that we're very um you know we've we've tried to set um realistic expectations that you know we we do expect to have some monetization to occur uh this year uh timing wise you know we'll see whether that happens sooner rather than than later in terms of first half versus second half but that having that authorization to operate now you know allows us to also identify opportunities that attach to the government's fiscal 2027 which starts on October 1st so I think that we're very optimistic that there will be you know some initial signs of success this year and that you'll start to see that scale in 27 and beyond I know Dave if there's anything else to offer there
Probably the only additive piece is this is a wave of digital transformation that we've seen play out before. And so anyone who's kind of gone through the hyperscaler journey and then started to see how it would impact some of the laggards, whether it was financial services or even health care, I think what we see with the U.S. federal government is they're going through their own digital transformation around all the data associated with just, again, it was no surprise that the DOJ was the sponsor. so criminal justice at a national level and then all the way down to state and local has a tremendous opportunity to unlock value associated with chain of custody but how they collaborate across all of these crimes whether they're at a national level or a state level or a local level and so the ability to be able to go from legacy on-prem storage solutions to a contemporary cloud solution is pretty exciting questions from the audience
before we proceed oh sorry it's funny I'm not actually aiming to be more sticky as much as I'm
aiming to go where my customer needs me to go and I think the drones were represented a great you know case study for us where they said gosh when you look at the types of data and the data artifacts we need to ingest drones are becoming just increasingly more common I think in Andy's backyard. There was a situation with a drone that went into Fenway Park. The reality is drones are actually now one of the most persistent threats within the prison system around how contraband ultimately gets into a prison. And so my general view is as we extend the platform, we're really extending it where our customers need us to play. And that's opening up opportunities. And that really, I guess early on when I came in, I had the benefit of actually reading a report where we engaged with one of the state-level agencies, and they share a viewpoint on their IT infrastructure and their footprint. And it was a variety of siloed applications that was used for both operational and judicial data. And that, for me, it really opened up my eyes to the opportunity of saying, gosh, I actually think this has a lot of the digital transformation aspects where you can say, you have siloed applications. You really need to have the connective tissue between what we do as it goes from operational all the way into judicial, where we can ultimately, again, almost like what we're doing with Genesis, can I take weeks and months and compress them into, you know, kind of minutes and hours and really fundamentally just bend the curve in terms of how they're working? And so I don't think I need to work hard at being sticky. I'm already sticky. The question is, how can I really unlock it as the leading software provider to this segment of the economy? That's a great question.
Is the barrier just not living, right, the private department and the police department do you see that more as a cultural barrier because the technology is less
the technology is only in a barrier in the sense that people don't have yet the solution that actually meets the needs and so there was a situation where somebody in one of the states said what we really would like to do is when a parolee actually comes in for their report a parole officer would like to be able to run an extraction use your platform cloud enabled to find out have they actually been compliant with the terms of their parole it's a generational shift in technology where they haven't actually thought about using the cloud ultimately to automate those types of workloads or there is a member of Congress who recently said gosh create internet crimes against children all of the judicial data is in siloed systems now the year through ATO we actually could have a national system that actually is focused on internet crime against children or different attacks like that and so the cloud enabled layer I think has been missing and now we have actually the connective tissue to work either at a national level or at a state level to bring the isolated pop the populations of the on-prem data together to affect a judicial outcome and I and so I think I don't think it's as much cultural as it is they just didn't have actually the approved
tooling in place I certainly I if I take Genesis as an example our first agentic
AI product where we've had customers from over 15 countries say a sovereign data cloud is no longer about all that important to me if you can accelerate judicial outcomes with a cloud solution I'm interested and so I think that's the that's why I think it has those those characteristics that make a digital transformation almost a good analog where this part of the economy has been on-prem for such a long time. Now that they're seeing either AI or cloud delivered solutions, I think they're seeing
lawful investigation shift in a pretty quick way. And I think our acquisition of SCG for drone forensics is also instructive for how we need to get better tools, better technology, more actionable information faster out into the field so whether you're a parole officer whether you're working the border and passport control whether you're a homicide investigator and there was a nightclub shooting and you've picked up 40 phones the the better we can help these these different user groups determine the the the viability of okay I've got 40 phones only six of them are relevant if I can to return the other 34 quickly and focus on those six I'll save time I'll save energy I'll save budget and and and get to my information faster and that is relevant to a homicide investigation it matters to an officer a soldier in the field if they're looking at a drone forensic so portability insta you know faster access to information and you know more intuitive usability are all driving our development activity Dave Andy thank you so much thank you so much for having us appreciate it thanks a bunch